[1997] PNGLR 312

PAPUA NEW GUINEA

[national court of justice]

TAU LIU - Provincial Administrator for Southern Highlands Province

v

ANDERSON AGIRU - Governor for Southern Highlands Province; and
INDEPENDENT STATE OF PAPUA NEW GUINEA

waigani: sheehan j
8, 14, 22, 31 October 1997

employment law – State Services – Contract of employment – Administrator of provincial administration – Whether contractual terms conflict with constitutional and statutory provisions, namely s 73(2) Organic Law on Provincial Government and Local-Level Government by the operation of s 193 and Schedule 1.10(4) and (5) of the Constitution.

Facts

The plaintiff challenges the decision of the first defendant, Anderson Agiru, to have him suspended as Provincial Administrator, by way of judicial review. He argued that since constitutional laws govern his employment, particularly relating to his appointment, the manner of his suspension must also be in accordance with the constitutional law process, and not under the contract of employment that he also entered into with the State at the time of his appointment.

Held

1.	It is accepted that parties cannot contract on matters, which breach the laws of Papua New Guinea, particularly constitutional matters. Schedule 1.10(4) and (5) of the Constitution are interpretive of procedural matters only and are operative only where the Constitution or Organic Law are silent. There is no prohibition on parties contracting regarding administrative matters such as methods of employment and supervision of contracts by third parties as is done here where there is Constitutional or Organic Law authority to do so.

2.	Thus the provisions in the plaintiff’s contract of employment that a third person, the Governor of the Province, shall have a power and duty to suspend the Administrator provide no conflict with any Constitutional or Organic Law.

Counsels

P Paraka, for the plaintiff.
L Kari, for the 1st defendant.
J Kawi, for the 2nd defendant.

31 October 1997

Sheehan j. The plaintiff is the Provincial Administrator of Southern Highlands Provincial Administration. The National Executive Council appointed him to that position on 26th October 1995 for a term of four years. On the same day he entered into a contract with the Independent State of Papua New Guinea, which sets out the terms and conditions of his employment in that position. The introduction to the contract states: 

"Whereas

(A)	the State is desirous of employing the Administrator and Administrator has agreed to serve the State and 

(B)	The National Executive Council has appointed the Administrator on the advice of the Provincial Executive Council, following consultation with the Public Services Commission under the Organic Law on Provincial and Local-Level Government. And 

(C)	by virtue of the Public Services (Management) Act 1995 the Administrator is employed on contract signed by the Head of State on advice, on terms and conditions of employment determined by the National Executive Council from time to time NOW IT HEREBY AGREED AS FOLLOWS:

(1)	The Contract comprises this agreement and the standard terms and conditions for the employment of Provincial Administrators affected from 26 October 1995 "(the Terms and Conditions)" and this agreement and the Terms and Conditions shall be read and interpreted together as one document, and the Terms and Conditions have full force and affect of this agreement.

(2)	The Contract is made under the Public Services (Management) Act 1995 "(the Act)" as amended from time to time and the General Orders issued under the Act shall prevail when the contract is silent and in the event of any conflict or interpretation as to the contract and the General Orders in the Contract shall prevail. 

(3)	The duration of the Contract shall be a 3 year period commencing on and from the effective date of this agreement (26 October 1995)...."

Provision is also set out, for termination of the contract both for non-contentious reasons, for cause, and for disciplinary procedures. Clause 27 dealing with disciplinary procedure states:

"27	Disciplinary procedure 

27.1	Serious Disciplinary matters pursuant to s 18 hereunder; allegedly involving the Administrator shall be resolved through the following; 

(a)	where the Administrator is alleged to have committed serious offence under s 18, the Governor shall suspend the Administrator on full pay, and Governor shall formally charge the Administrator in writing with offences he had committed and enable the Administrator to reply to those charges before to submitting a report to the National Executive Council....".

On the 7th August 1997 the first defendant in his capacity as Governor of Southern Highlands Province suspended the plaintiff from his duties as Administrator. 

That suspension arose from allegations of misappropriation, mal-practice, and incompetence made in 1996. The then Governor and Provincial Executive Council had rejected those allegations. No action had been taken against the plaintiff. However upon the first defendant, the new Governor taking office he has re-visited those allegations and suspended the plaintiff, though two months later charges have still not been laid against him.

The plaintiff challenges the validity of the suspension asserting that the contractual provisions in Clause 27(b) enabling suspension by the Governor is in conflict with Constitutional and statutory powers of appointment of the NEC, and therefore is unlawful. He seeks declarations: 

"1. 	A declaration that the suspension of Plaintiff by the Provincial Executive Council or by the Defendant as the Provincial Administrator for the Southern Highlands Province by letter dated 7th August 1997 is null and void, and therefore has no affect;

2. 	A declaration that the Plaintiff (Tau Liu) is still the lawfully appointed Provincial Administrator of the Southern Highlands Province and shall continue to serve as the Administrator for Southern Highlands Provincial Public Services, and shall continue to act as chief executive of the Southern Highlands Provincial Government, unless the National Executive Council determine otherwise".

Counsel for the plaintiff argues that notwithstanding the terms of the contract as to disciplinary procedures, the manner of appointment of the plaintiff to his post is critical to the manner in which he can be suspended and/or terminated. Simply stated, it was not open to the parties to contract out of constitutional provisions which governed the manner of his appointment and which also govern the manner of his suspension or termination. 

Therefore it is argued that in so far as the contract of employment provided for powers of suspension to be exercised by the Governor, such a provision is null and void. It is of no effect to the extent of the inconsistency with the Constitutional powers of the NEC. Further, the power to suspend which resides in NEC is itself subject to the same conditions as apply to an appointment, namely taking of advice and the giving of due notice.

Counsel for the first defendant said that the defence position is quite simply that it relies on the contract entered into by the parties. The plaintiff opted to sign that contract and cannot now complain as to its terms. 

He points out that the first defendant acting only in accordance with agreed contractual powers has done no more than suspend the plaintiff. The powers of termination under the contract reside in and remain with the NEC. He said that upon the defendant the Governor taking office in July of this year he had learnt of the report and allegations against the Plaintiff made in 1996. Acting in reliance of the provisions in the contract (para. 27(b)) he suspended the plaintiff from his duties pending investigation. Counsel added that charges are imminent. 

At the outset of these proceedings, it was ruled that this was not a matter amenable to the courts supervisory jurisdiction of judicial review. It was not a matter for review of the actions of public authority acting in an adverse manner with respect to a person’s private rights in public law. It was solely a matter of contract with rights and obligations of the parties governed by, and limited to, the provisions set out in the contract.

That ruling was based on the plaintiff’s contentions that his appointment and his rights as Provincial Administrator rested on contract. His assertion that the suspension he challenged was invalid because such matters have already been determined. However, later written submissions were filed by the plaintiff claiming rights arising from s 193 of the Constitution. This had the effect of challenging the legality of the disciplinary provisions of the contract.

With the State necessarily joined as second defendant, all parties made submissions on the contract terms, and the constitutional and statutory provisions affecting them.

The plaintiff’s contract states that it provides all the terms and conditions of his employment. At issue is whether the terms of that contract override the rights of parties laid down under the constitutional law or statute,

Appointment to the position of Provincial Administrator is made by the National Executive Council pursuant to s 73(2) of the Organic Law on Provincial Government and Local-Level Government, which provides:

"Section 73(2) The National Executive Council 

(a) 	After considering a list comprising the names of three persons submitted by the Provincial Executive Council concerned; and 

(b) 	after consultation with the Public Service Commission, shall by notice in the National Gazette, appoint from the list submitted under paragraph (a) the Provincial Administrator."

and by s. 73(5);

"An Act of the Parliament shall make provisions for 

(a)	the selection criteria and procedures of appointment; and 

(b)	acting appointment; and 

(c)	terms and condition of employment

of the Provincial Administrators and District Administrators.

That Act is the Public Service (Management) Act 1995. Section 60 of this Act partially meets the directive of the Organic Law to provide procedures for appointment of a Provincial Administration. 

"60 Appointment Procedures in relations to Provincial Administration where there is, or is likely to be, a vacancy in the office of Provincial Administrator in a province, the Departmental Head of the Department of Personnel Management shall submit to the Provincial Governor for the consideration of the Provincial Executive Council a list of persons suitable for appointment to the office."

This section therefore, while it provides for a list of suitable persons to be submitted for consideration by the Provincial Executive it does not provide for the actual appointment by the Head of State acting on advice after consultation with the Public Services Commission. 

Section 62 of the Act provides Public Service status and for terms of employment:

"(1) A - 

(a) 	Provincial Administrator; ..........

shall be; 

(c) 	an officer of the Public Service; and 

(d) 	subject to the Salaries and Conditions Monitoring Committee Act 1988, employed on terms and conditions determined by the Departmental Head of the Department of Personnel Management after consultation with the Provincial Governor ......."

There is further provision as to the status of a Provincial Administrator and his contract of employment. By the Act, a Provincial Administrator is deemed by definition in s 2 and s 75 to be a Departmental Head. As such his contract of employment is provided for, under Division 2 of Part VI of the Act where ss 26 to 30 set out provisions for "Contracts of Employment for Departmental Heads." 

Section 27 expresses itself to be subject to s 193 of the Constitution. It provides the balance of the procedures for appointment directed by the Organic Law, though in fact as to procedure itself, it does no more than reiterate the Organic Law. It reads: 

"27	Appointments to Offices of Departmental Head 

(1) 	This section is subject to s 193 of the Constitution

(2) 	A Departmental Head shall be appointed by the Head of State acting on advice given after consultation with the Commission.

For the purposes of this action the acknowledgment that appointments of Departmental Heads/Provincial Administrators are subject to s 193 is not only recognition of the Constitutional authority of the appointments but is also definitive of the mode of appointment that must be followed. 

That is the requirements of s 193 as to the appointment, which brings into play Schedule 1.10(4), and (5) which provide: 

"Schedule 1.10 ..........

(4) 	Subject to ss (5) where a Constitutional law confers a power to make an appointment, the power includes power to remove or suspend a person appointed, and to appoint another person temporarily in place of a person so removed or suspended or where the appointee is for any reason unable or unavailable perform his duties, to appoint another person temporarily in his place.

(5) 	The power provided for by s 4 is exercise only subject to any condition which the exercise of the original power of appointment was subject."

Schedule 1.1 then determines that the above rules apply unless there is shown to be a contrary intention expressed.

"Sch 1.1

(1)	The Rules contained in these schedule apply, unless the contrary intention appears in the interpretation of the Constitution and of the Organic Laws."

These provisions of the Schedule to the Constitution have led to the plaintiff’s contention that because there are set procedures for consultation, then the taking of advice for appointment, suspension and/or termination must follow the same procedure. 

Simply put, the Constitutional power of appointment has to be made in accordance with the consultative process of the Constitution s 193. In the absence of any Constitutional or Organic Law directive otherwise, then the power to terminate and in particular the power to suspend can only be exercised following the same consultative procedures. Therefore the contract terms set out in clause 27(a) giving power to the Governor to suspend are unlawful and must be struck out of the contract. The parties cannot contract out of Constitutional requirements.

The defendants point to the Organic Law as expressing "the contrary intention" that excludes the operation of Schedule 1.10 (4) and (5). It provides that the Public Services (Management) Act applies. The plaintiff in reply contends that an act of Parliament cannot override a constitutional law.

In Re Bouraga SCR 1/82 [1982] PNGLR 178 the Supreme Court said (p.211) speaking of s 193.

"If the appointment of such departmental heads is made exclusively under the Constitution then it is axiomatic that any dismissal of a person acting in such a position must likewise come under the Constitution. In addition to this principle, we find that Sch. 1.10 (4) only operates when there is no contrary intention expressed in the constitution itself or an Organic Law (Sch 1.1).

It is not the law that "a contrary intention" means there must be a specific statement that Sch. 1.10 (4) shall not apply. Any provision in the Constitution or an Organic Law, which provides for a procedure would exclude the operation of Sch. 1.10 (4) would suffice. The Organic Law on Provincial Government and Local-Level Government does just that. It provides at s 73 (5) for an Act of Parliament to make provision for terms and conditions of employment of Provincial Administrators. The Public Services (Management) Act 1995 performs that function. 

In summary, it provides procedures for appointment of Provincial Administrators. Significantly none of those procedures are inconsistent with the Organic Law or s 193 of the Constitution. The provisions for the terms and conditions of employment are likewise not inconsistent. The provisions for suspension and termination while excluding the operation of Sch. 1.10(4) and (5) are themselves not inconsistent with the Organic Law or s 193 of the Constitution. 

Returning to the contract, it is certainly true that parties cannot contract on matters, which breach the laws of PNG particularly constitutional matters. But Schedule 1.10(4) and (5) of the Constitution are interpretive of procedural matters only and are operative only where the Constitution or Organic Law are silent. There is, however, no prohibition on parties contracting regarding administrative matters such as methods of employment and supervision of contracts by third party as is done here if there is Constitutional or Organic Law authority to do so.

Thus the provision in the plaintiff’s contract of employment that a third person, the Governor of the Province, shall have a power and duty to suspend provides no conflict with any Constitutional or Organic Law. The contract provides a power for the first defendant to act and on the face of the contract, the actions of the first defendant appear to be no breach of that contract. Certainly it appears that the State, the other party to the plaintiff’s contract has not categorised the Governor’s actions as interference. It has in fact endorsed the suspension by appointing an interim Administrator. Again, an action not inconsistent with contract or the Constitution or the Organic Law.

Whether the action to suspend is or is not taken are or are not arbitrary and unjustifiable in the particular circumstance amounting to a breach of contract is a matter for other proceedings. 

Accordingly, the plaintiff cannot succeed in this action for the declaration sought. The first declaration asked for by the plaintiff is refused. The second only states the actual position as stated at the outset of this ruling, which is unnecessary. There will be judgment for the defendant with costs to be taxed, if not agreed.

Lawyer for the Plaintiff: Paraka Lawyers
Lawyer for the First Defendant: Leslie Kari
Lawyer for the Second Defendant: Solicitor General