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Eviaisa and Ragi v Yaki, Minister for Finance [1997] PGNC 133; N1642 (15 October 1997)

Unreported National Court Decisions

N1642

PAPUA NEW GUINEA

[NATIONAL COURT OF JUSTICE]

OS 409 OF 1997
BETWEEN
ALOYSIUS EVIAISA - FIRST PLAINTIFF
AND
EREMAN RAGI - SECOND PLAINTIFF
AND
THE HONOURABLE ROY YAKI, MINISTER FOR FINANCE - FIRST DEFENDANT
AND
SHEM PAKE - SECOND DEFENDANT
AND
PUBLIC OFFICERS SUPERANNUATION FUND BOARD - THIRD DEFENDANT

Waigani

Sheehan J
9-10 October 1997
15 October 1997

PUBLIC OFFICERS SUPERANNUATION FUND BOARD - appointment of Managing Director - requirement of Act - challenge that procedures not followed.

Counsel

Mr P Lowing for the 1st Plaintiff

Mr G Sheppard 2nd Plaintiff

Mr J Lightfoot for the 1st Defendant

Mr J Bray for the 2nd Defendant

Mr R Pato for the 3rd Defendant

DECISION

15 October 1997

SHEEHAN J: In application for Judiciadicial Review, the 1st Plaintiff Mr Eviaisa, a Board member of the Public Officers Superannuation Fund Bohallenges the appointment made by Mr Roy Yaki the 1st Defendant of Mr Shem Pake the 2nd Defd Defendant as Managing Director for the Fund on 11 September 1997. to make this application tion was granted by the Chief Justice on 3rd October last.

The challenge is made the ground that the appointment was made in breach of the powers of appointment given to the Minister in that the appointment was made without there being any prior recommendation of POSF Board as required by s. 12 of the POSF Act. Mr ErRagi has been joined ined as a 2nd Plaintiff. As the incumbent ing DirecDirector at the time of disputed appointment, it hen acknowledged that he has an interest in this proceedings.

The Board has also been been joined an interested party. Thas anial question as t as t as to whether the Board should be listed as a Defendant as Counsel seeking to appear on its behalf mainta since it had sought to joined at only the last moment, and because the very questionstion for waal was whether or not the Board made a recommendation for an appointment or not. Challenge t validity of Coof Counsel’s instructions was not resoentirely prior to hearing. Counsel aledging&#160&#160 that he had ntten instructtructions undertook to obtain a resolutiothe Board to confirm his auis authority to act.

In the end the Board was joined as 3rd Defendant and Counsel for the Board thereupollenged the standing of thef the 1st Plaintiff to bring these proceedings. He maintained that aividuavidual Board member has no status of his own to bring an action on behalf of the Board or POSF. The collective Board itse f is the sole authorised ato act for the fund. With the Board oined as a as a ps a party, Mr Eviaisa’s role was subsumed in the Board and he could smissed from the proceedings.

This matter was quickluickly resolved. Whatever the 1st Plainti a or authority or standing to act on behalf of the Board itself or on behalf of the Fund (and there was evidence that he did have Board authority to commence tproceedings) there could be no challenge to the fact that ahat as a Board member he had standing and an interest in the proper legitimate administration of POSF.

He is also a Trustee of the Fund Section 7 (4) of the POSF Act reads:

“(4) the members of the Board are Trustees of the Fund and upon taking office each member of the Board shall - a sign a trust deed in a form determined by the Minister which shall make each member of Board individually and jointly responsible for the management of the Fund.”

As such, a Board member not only has standing as a Administrator of the Fund he has as a statutory trustee, a personal interest in the integrity of the Fund and therefore a duty to ensure that the legislation under which the Fund operates is abided by. Bually importantly he is h is himself contributor to the Fund. Thatus is sufficient in itin itself. Each and every member of the POSF has the standing to inquiry into the financial management and administration of the Fnd if necessary to challenge its administration including sing such matters as appointments to its Board.

It is acknowledged by all parties that s. 12 of the POSF Act governs the appointment of a Managing Director of the POSF Board. That section reads rntly:

“12. ҈ Staff of the Board

(1) Boae shadl:

(5);ټ&##160;termsconditions of employment of:

(a) &##160; t60; th0; the Mahe ianaginnaging dirg director shall be fixed by the Minister;

subject to the Salaries and Conditions Monitoring Committee Act.”

The Plaintiffs maintain that the statutory proe wasfollowed in the pthe purporurported appointment of Mr Pake. Becthe Board made no recomrecommendation for the appointment, there could be no appointment by the Minister.

Further it is the Plaintiffs case that even before the appointment was GazettedBoard had on 9th September mber written to the Minister to register concern at the Minister’s:

“move to remove the Boards current Managing Director, Mr Ereman Ragi, and replace him with Mr Shem Pake.”

The letter went on to say that it was unanimously agre the Bthe Board:

“that we write to you jointly and register our concerns regarding the move...”

The letter continues with the Board giving its support to Mr Ragi continuing as Managing Director pointing to his performance in the post. It pointed also to the fact that Mr Ragi’s contract had already been renewed for a further term and that the then Minister of Finance had executed that contract of renewal.

The Defendants on the other handthat letter in an entirely rely different light. They say that letter of 9tof 9th September is the recommendation that the Minister acted on in appointing Mr Pake.

Mr Lightfoot Counsel for the 1st Defendant submitted that the Ministers powers are mider than merely rubber star stamping a Board recommendation on appointment of Managing Director. By virtue of the provisions of the POSF Act, the Minister is the person charged with the overall control and administration of the Fund. As such the diions to himo him are equally wide.

Thus while it is clear that for an appointment oent of Managing Director it is mandatory there shall first be a recommendation from the Board, once such a recommendation of one or m or more suitable persons - has been made, the Minister can accept or reject those nominations and indeed can put in any other person of his choosing, whether that person has been recommended by the Board or not. It was Counsel&;s contentitention that anything less would be an unlawful fetter on the Ministers discretion.

For the Board, Mr Pato said the evidence was clear that prior to the appointment, in fact September, the Board had diad discussed the position of Managing Director. He said that while twere nere no official minutes of the resolutions at that meeting, it must be inferred that word had got to the Minister that there had been such a discussion.&#That was confirmed to the Minister he said, by the letter oter of the Board members of 9th September.

Mr Pato submitted that that letter is the recommendation. Essentially it recommendat that Mr Ragi remain, that Mr Pake not be appointed.

But he contended that it is not relevant who the Board recommended. The Minister is not obliged to accept a recommendation.& In fact the Minister appoiappointed Mr Pake as it was within his authority to do.

For the 2nd Defendant Mr Bray supported thetions taken by other Defendants.

He submitted that what while there was no fixed procedure of appointment other than the statutory requirement that the Minister act after receipt of a recommendation of the Board, that in fact is what occurred. The ter was made aware of e of the expire of Mr Ragi’s contract in August 1997 and had proceeded to fill the position by appoit of Mr Pake once he had received the recommendation of 9th September. He said that ghat given #8e ‘take-it-or-leave-it’, attitude of that letter, it was perhaps not surprising that the recommendation to retain Mr Ragi had not been followed.It is also the contention of the Plaintiffs, that th0; there cbe not appointpointment in any case when there was no vacancy. nd Plaintiffs appointment ment had been renewed in February 1997 so there was no position to fill. It could not be ar it wid that the purpopurported appointment of the 2nd Defendant, by implication terminated the the appointment of Mr Ragi.

The De denied that the February contract was valid. They pointed to a of formaformal appoinppointment by the Ministers and the lack of SCMC approval. They termed itcret agreemereement, an attempt to pre-empt the Ministers rights of appointment.

It cepted that s 12 makes it a it a pre condition to an appointment of Managing Director that there shall first be a recommendation by the Board to the Minister of a person suitable for the post.

I am satisfied that the appointment of Mr Pake to the Board published in the Gazette on 11 September 1997 was not made following a recommendation by the Board as required by Section 12 of the Act.

There is the letter of 9 September. Extensive suions have been been made as to its meaning and implications but the letter in fact speaks for itself.

I find first of all, that the letter is not a formal letter from the Board of the P#160; It is a letter from irom individual Board Members though in fact signed only by Mr Eviaisa. It is not couched as a letter of recommendation of an appointment by the Board. It states th is a letter fter from the members of the Board to express concern at reported “moves” by the Minister to appoint Mr Pake without referenference to the Board.

It points out there is an incumbent Mana Managing Director whose contract has been renewed by the former Minister of Finance. It states thatwork has bees been exemplary and expresses the view that changes should only be for a person of merit and integrity.

Finat expresses willingness to co-operate in the appointment of a new Managing Director if it i it is done properly.

On its face it is not a letter of recommendation from the Board and the evidence of Mr Eviaisa confirms that.

The Defendants argue that it recommends that Mr Ragi be retained and therefore constitutes a recommendation that Minister could and did act upon as per his discretion.

I find that contention untenable It cannot be maintained, that to provoke a concerned reaction from Board members about ‘reputed moves’ to make an appointment without reference to the Board causing it to write in protection of the incumbent and its own position can be given the status of an official recommendation within the meaning of the Act. Particularly the status of a recommendation which not only need not be accepted but one which having been rejected enables appointment of any other.

I do not accept that is the case, but even were it so, the Minister does not have the discretion to act other than on the recommendation made. It is certainly that the Mthe Minister is not compelled to accept a recommendation. He may in his discretion reject a recommendation. But in dso he must refer tfer the matter back to the Board forrther recommendation.

This is made clear by the Supreme Court in SCR 1 of 1984: Re Morobe Provincial Government 1984 PNGLR 21219 cited by Mr Lowing for tfor the Plaintiff where a similar provision regarding recommendation was considered.

(b) ـ Recommecommendation

This is the final step before an appointment is made. It has a stronger eff#160;#160; It plays a prominent role in the final appointment. At this level the Priainciaincial Government screens and eliminates names of pe Whe appropriate person is n is recommended, that pert person should ordinarily be appointed by the Prime Minister. The PMinisannotint anyt anyt any person outside the recommendation.

The Prime Minister, howevhowever has the final discretion whether toint the person recommended. Ifxercises his discretion tion not to appoint the recommecommended person, then the matter has to go back to the process of recommendation by the Provincial Government...

Fears of possible stalemate voiced by counsel for the Defendants are more theoretical than real because the Minister has the ultimate control over appointments to the Board. I case this Board had alre already indicated a willingness to co-operate.

Equally the purported appointment is open to crim in Judicial Review as unreasonable in the Wednesbury sense, given that there was the dire direct information to the Minister in the letter of 9 September that the incumbent’s term had been extended and his contract endorsed by the Ministers predecessor.

To appoint another to the post without further enquires as to the status of that contract must be seen as failing to take into account matters required to be taken into account before acting on discretion. It i enough to say that that the contract is illegal or void when there is no indication, any enquires was ever made of it, and the incumbent had been holding his pnder the renewed contract terms for some 6 months or more.

There is a further reason why the contention that s. 12 was followed cannot be upheld. Tfendants have throughout hout relied on the letter of 9th September as the recommendation which the Minister acted on in what he believed to be a discretion open to him. Yet the Gazette notic11 Se11 September 1997 is notification of the appointment of Mr Pake made and dated the 22 August 1997. This is well before theussscussions of the Board ms of 4 September which lead to the letter of concern of 9 Sf 9 September. It is compelling evidence that there was no recommend from the Board at all and that the appointment was in fact fact made without reference to it.

There remains the assertion tha Board on 18 September subsequently ratified the appointmenntment of Mr Pake. On the evidence b the cour court that was not the case. Mr Eviaisa’s evide ue - uncontested in any way - is that the Board only conceded to Mr Pake’s appointmecause they were faced with the fact of the confusion of twof two Managing Directors and because of possible moves against their own positions on the Board. Such rattion is no ratifictification and in any case there could be no ratification of an appointment unlawfully made.

For clarity the present position needs to be set out.

Mr Pakes purported appointment notified in the gazette on 11 September was unlawful. He is not the Managing torector of the POSF. Mr Ragi i>

The status otus of his contract has not been questioned by these proceedings but the fact that he has a contract executed by the Minister of Finance, applin has been made fade for SCMC approval of its terms, and thnd that there has been no indication of objection to the contract; and since Mr Ragi has been working and been paid under the terms of that contract for 6 months or more gives rise to a strong presumption as to its validity. Onl Minister, the Board Mrrd Mr Ragi - and the members of the POSF - have the status to inquiry into or question it. Until such ocMr Ragi remairemains Managing Director.