SC1105

PAPUA NEW GUINEA
IN THE SUPREME COURT OF JUSTICE

SCA NO 174 0F 2010

COMRADE TRUSTEE SERVICES LIMITED, TRUSTEES FOR THE DEFENCE FORCE RETIREMENT BENEFITS FUND
Appellant

V

ARNOLD DAUGLE
Respondent

Waigani: Gavara-Nanu J, Cannings J, Yagi J
2011: 26, 29 April

APPEALS – determination by Supreme Court, on appeal, of alleged errors of fact and assessment of evidence by trial judge – superior position of trial judge to make findings of fact.

PRACTICE AND PROCEDURE – whether statement of claim disclosed a cause of action.

JUDGEMENTS AND ORDERS – whether a court may make an order that was not sought by a party – inconsistency between oral pronouncement of order and written order.

STATUTE OF LIMITATIONS – when a cause of action under Defence Force Retirement Benefits Act accrues for purposes of Frauds and Limitations Act 1988.

STATUTES – Defence Force Retirement Benefits Act, Chapter No 76 – exercise of discretion by Board re increased level of disability, Section 36 – circumstances in which Board required to conduct a medical examination of a member of Defence Force discharged on medical grounds, Section 34 – whether person aggrieved by decision of Board obliged to appeal to National Court, Section 60 – whether a person granted and paid a class A invalidity benefit is entitled to be paid any further benefits.

The respondent (then the plaintiff) commenced proceedings in the National Court, seeking unpaid invalidity benefits he claimed were due to him, as a former member of the Defence Force who had been discharged on medical grounds, under the Defence Force Retirement Benefits Act. The National Court upheld his claim, ordering the appellant (then the defendant) as administrator of the Fund, to pay him a sum of K25,729.77 plus "any other accumulated benefits" under the Act, plus interest. The appellant appealed on 12 grounds.

Held:

(1) Eight grounds of appeal were dismissed as the appellant failed to demonstrate that the primary Judge made any significant errors of law or fact in the manner alleged.

(2) Four grounds of appeal, relating to the part of the order of the National Court which ordered the appellant to pay "any other accumulated benefits", and interest on those benefits, were upheld, as that part of the order:

•	was vague and uncertain and had the potential to prolong the litigation rather than bring it to finality;

•	was not supported by any claim for relief and did not relate to any issues of fact or law argued or agreed on by the parties at the trial; and

•	was at variance, in a material respect, with the order pronounced by the trial judge in oral delivery of the judgment.

(3) The appeal was partially allowed and the part of the order which ordered the appellant to pay "any other accumulated benefits", and interest on those benefits, was quashed.

(4) Costs were awarded to the respondent as most of the grounds of appeal were dismissed.

Cases cited

The following cases are cited in the judgment:

Brian John Lewis v The State [1980] PNGLR 219
New Britain Palm Oil Limited and Others v Vitus Sukuramu (2008) SC946
Papua Club Inc v Nusuam Holdings Ltd (2005) SC812

APPEAL

This was an appeal against a decision of the National Court to uphold a claim for benefits under a statute.

Counsel

P J Wright, for the appellant
N Kubak, for the respondent

29 April, 2011

1. BY THE COURT: This is an appeal against a decision of the National Court, constituted by Justice Sakora, to uphold a claim by a former member of the Papua New Guinea Defence Force for invalidity benefits under the Defence Force Retirement Benefits Act.

2. The appellant, Comrade Trustee Services Ltd, administers the Defence Force Retirement Benefits Fund under the Defence Force Retirement Benefits Act. The respondent, Arnold Daugle, joined the PNGDF in July 1971. He was discharged on medical grounds in July 1981. He claimed in the National Court that he had at that time been assessed as having a 60% permanent disability due to a knee injury sustained while on duty in 1974. Soon after his discharge he went home to Chimbu Province, not knowing, he says, because he was not told, that he had a right to a class A invalidity benefit under the Act. In 1999 he came back to Port Moresby and in August 2000 was medically examined and assessed as having a 60% disability. In May 2003 the appellant accepted that the respondent had a 60% disability and decided that he be paid a class A invalidity benefit, backdated to August 2000. The respondent was aggrieved by that decision, claiming that the class A invalidity benefit should be backdated to the date of discharge, July 1981. In June 2003 he commenced proceedings in the National Court, seeking payment of a 60% disability benefit, backdated to July 1981 (the amount claimed was K27,986.60) plus damages. The appellant filed a defence and the matter went to trial in July 2005.

3. On 20 November 2009 the court delivered an oral judgment and pronounced orally the order of the court. No written judgment was published, then or since. A written order, signed by the trial judge was, however, made available to the parties a week after the oral judgment was delivered.

4. The written order stated, in order Nos 1 to 3, that the appellant was to pay the respondent the sum of K25,729.77 (K27,986.60 minus K2,256.83 already paid). It then stated, in order Nos 4 to 7:

4 Any other accumulated benefits under the medical incapacity of "Category A", pursuant to the Defence Force Retirement Benefits Act, outstanding since and because of this litigation, shall be calculated, processed and paid to the plaintiff by the defendant, together with the judgment amount.

5 The unliquidated damages ("general damages, mental distress, discomfort and anguish plus loose [sic] of reputation suffered by the plaintiff") that the plaintiff claims are not pleaded in the amended statement of claim, and, in any case, no evidence was called in respect of these. Thus, no findings of fact have had to be made on these, and, consequently, no orders are capable of being made in respect of them.

6 Interest on the judgment amount together with any accumulated amounts pursuant to the foregoing order 4, in the usual rate of 8% pa under s 1 Judicial Proceedings (Interest on Debts and Damages) Act, shall be paid to the plaintiff by the defendant.

7 The plaintiff shall have his costs of this proceeding paid for by the defendant.

5. The appellant argues, amongst other things, that the part of the written order that referred to "any other accumulated benefits" under the Act, was defective, for various reasons; and it is this part of the order that has proved to be particularly contentious. The respondent's lawyers have, since obtaining the written order, written to the appellant's lawyers claiming that the amount of "any other accumulated benefits" under the Act is approximately K1 million. The appellant has, unsurprisingly, disagreed with that calculation and brought this appeal to the Supreme Court, challenging not only that particularly contentious part of the order but the whole of the order and judgment of the National Court.

6. The appellant relies on 12 grounds of appeal. Nine were set out as grounds (a) to (i) in the notice of appeal and three were later added with the leave of the Court. We have for the sake of convenience renumbered them as grounds 1 to 12 and we will address each one in turn. It is argued that the trial judge erred in law and/or fact in 12 respects.

GROUND 1: ERROR OF LAW BY NOT FINDING THAT THE APPELLANT HAD PROPERLY EXERCISED ITS DISCRETION AS TO COMMENCEMENT DATE OF INVALIDITY BENEFITS

7. The appellant argues that it properly exercised its discretion, having made a decision in May 2003 that the respondent was eligible for a class A invalidity benefit, to backdate payments only to August 2000, that being the date of a medical examination which found that the respondent's condition had deteriorated to the point that he then had a 60% disability. The finding made by the trial judge – that payments should be backdated to the date of discharge from the Defence Force, July 1981 – was contrary to the Act, Section 36 (reclassification of percentage of disability) and against the weight of the evidence.

8. We are not persuaded by these arguments. We are not satisfied that as a matter of law Section 36 prohibited the exercise of discretion by the appellant to backdate payments to the date of discharge. As to the trial judge's finding that payments should be backdated to the date of discharge, we consider that that was a finding that was available to his Honour given the conflicting evidence that was before the National Court. The Supreme Court must be ever-conscious of the superior position of the trial judge to assess the creditworthiness of a witness's evidence (Brian John Lewis v The State [1980] PNGLR 219). The learned trial judge clearly placed considerable weight on the respondent's oral testimony that he was, in fact, suffering from a considerable disability at the date of discharge, and on a medical document which, though attacked as being of suspect authenticity by the appellant, supported that testimony. We find no error in law or fact in the manner in which his Honour made a finding of fact that the respondent suffered from a 60% disability at the relevant time.

Ground No 1 is dismissed.

GROUND 2: ERROR OF LAW BY GRANTING JUDGMENT DESPITE RESPONDENT NOT PLEADING ANY CAUSE OF ACTION

9. The appellant argues that the respondent's statement of claim did not plead any cause of action and that the lack of pleadings misled the appellant as to the nature of the respondent's complaint and prejudiced its defence; and that his Honour erred by granting judgment in these circumstances.

10. We have examined the statement of claim. It is certainly not a perfectly drafted claim. But nor is it so devoid of facts or propositions of law that it fails to disclose a cause of action. It sets out the facts on which the claim for the liquidated sum of K27,986.60 plus damages is sought and adequately pleads that the liquidated sum is an entitlement due to be paid to the respondent by the appellant under the Defence Force Retirement Benefits Act. Any defects in the statement of claim could have been addressed in the pre-trial process. The appellant could have applied to dismiss the proceedings on the ground of failure of the statement of claim to disclose a reasonable cause of action. In any event the statement of claim is adequate to sustain the judgment, at least to the extent that the court ordered payment of the sum of K25,729.77.
.
Ground No 2 is dismissed.

GROUND 3: ERROR OF LAW AND FACT BY NOT FINDING THAT THE APPELLANT'S OBLIGATION TO CONDUCT A MEDICAL EXAMINATION AT THE TIME OF DISCHARGE WAS CONDITIONAL ON THE RESPONDENT BEING REFERRED TO THE APPELLANT BY THE DEFENCE FORCE, WHICH REFERRAL DID NOT OCCUR

11. The appellant argues that by virtue of Section 34(2) of the Act it is necessary for the Defence Force, upon the discharge of a member on medical grounds, to refer the member to the appellant before the appellant is obliged to conduct a medical examination. It is submitted that no such referral took place in this case. Therefore the trial judge erred in law and fact by not finding that there was no obligation on the appellant to conduct a medical examination in this case.

12. We reject those propositions. We do not consider that Section 34(2) of the Act supports them. The argument contended for under ground No 3 seemed more to be founded on evidence at the trial given by Mr Geno of the practice that is usually adopted by the appellant, rather than on an interpretation and application of the relevant law.

Ground No 3 of the appeal is therefore dismissed.

GROUND 4: ERROR OF LAW BY NOT FINDING THAT THE RESPONDENT SHOULD HAVE INSTITUTED PROCEEDINGS IN ACCORDANCE WITH THE DEFENCE FORCE RETIREMENT BENEFITS ACT, SECTION 60(2), BY WAY OF JUDICIAL REVIEW

13. The appellant argues that Section 60(2) of the Act requires that a person aggrieved by a decision of the appellant must institute proceedings by way of judicial review in the National Court and that that is a mandatory procedure that the respondent did not follow. Therefore the trial judge erred by not striking out the claim.

14. Mr Wright, for the appellant, conceded that this ground of appeal contained an error as Section 60(2) refers, not to "judicial review" but an "appeal" to the National Court. No formal application to amend the ground of review was made, however, and it is not a simple typographical error that can be brushed aside. The ground of appeal is itself flawed and for that reason we dismiss it.

15. If we had granted leave to amend the ground of appeal we would still have dismissed it as we do not consider that Section 60(2) necessarily had the effect of prohibiting a person in the respondent's position from commencing proceedings by way of writ of summons. Furthermore, this point of law was not raised in the appellant's defence and appears not to have been raised, or at leat not strongly pursued, before the trial judge. The general rule is that an appellant is confined in argument before the Supreme Court to issues of law that were argued before the National Court; and argument on issues that were not before the National Court will only be allowed with the leave of the Supreme Court (Papua Club Inc v Nusuam Holdings Ltd (2005) SC812). Leave was not sought to argue this point of law, so this ground of appeal could not have been upheld.

We dismiss ground No 4.

GROUND 5: ERROR OF LAW AND FACT BY FINDING THAT THE RESPONDENT'S CAUSE OF ACTION ACCRUED IN AUGUST 2000 RATHER THAN IN JULY 1981 AND BY NOT FINDING THAT THE RESPONDENT'S CASE WAS STATUTE-BARRED

16. This ground of appeal is based on the proposition that the respondent's cause of action accrued on the date of discharge in July 1981 and therefore his claim became time-barred under Section 16(1)(d) of the Frauds and Limitations Act in July 1987. His WS proceedings were not instituted until 16 years later, in July 2003. It is argued that the trial judge erred by finding that the cause of action arose in August 2000, the date to which the class A invalidity benefits were backdated.

17. We do not consider that his Honour erred in the manner contended for. It was in August 2000 that a fresh round of medical examinations was conducted, which confirmed, the trial judge found, that the respondent had a 60% permanent disability. It involved no misapplication of the law on limitations to regard that time as the date on which the cause of action accrued and to set the six-year limitations period running from then.

Ground No 5 is dismissed.

GROUND 6: ERROR OF LAW BY MAKING ORDER NO 4, WHICH ORDERED THE APPELLANT TO "PAY ANY OTHER ACCUMULATED BENEFITS" WHEN THE RESPONDENT WAS NOT ENTITLED TO ANY SUCH BENEFITS

18. The appellant argues that order No 4 of the written order has no basis in law and should be quashed for that reason alone.

19. We uphold this argument. Order No 4 was not one of the orders that the learned trial judge pronounced orally on the day of judgment, 20 November 2009. No part of the reasons given by his Honour referred to or supported such an order. And because his Honour did not publish a written judgment it is not possible to discern any legal basis for it. With respect, order No 4 is vague and uncertain and had the potential to prolong the litigation rather than bring it to finality, and should not have been made.

Ground No 6 is upheld.

GROUND 7: ERROR OF LAW BY MAKING ORDER NO 4, WHICH ORDERED THE APPELLANT TO "PAY ANY OTHER ACCUMULATED BENEFITS" WHEN NO SUCH RELIEF WAS PLEADED OR ADJUDICATED ON AT THE TRIAL AND NO EVIDENCE WAS BROUGHT IN REGARD TO IT

20. The appellant argues that the type of relief granted in order No 4 was not sought in the statement of claim and was not asked for by the respondent at the trial and there was no evidence before the court that supported the order.

21. We uphold this argument. Order 4 was not supported by any claim for relief and did not relate to any issues of fact or law argued or agreed on by the parties at the trial. With respect, it was a significant order that prejudiced one of the parties and if a judge is to contemplate making such an order, the judge should raise the issue in court and allow the parties the opportunity to make submissions on it. Failure to adopt such a procedure may result in a denial of natural justice to the party against whose interests the order is made (New Britain Palm Oil Limited and Others v Vitus Sukuramu (2008) SC946). 

Ground No 7 is upheld.

GROUND 8: ERROR OF LAW BY MAKING ORDER NO 4, WHICH ORDERED THE APPELLANT TO "PAY ANY OTHER ACCUMULATED BENEFITS" WHEN NO SUCH RELIEF WAS GRANTED IN THE ORAL JUDGMENT

22. The appellant argues that it was not open to the trial judge to endorse a written order that included a particular order that was not pronounced orally.

23. We uphold this argument. Perhaps if the learned trial judge had published a written judgment, preferably at the time of delivery of the oral judgment, or even some time afterwards, and the written judgment had included a reference to the sort of order that emerged as order No 4 in the written order, it would be easier to discern some legal basis of it. But that did not happen. Order 4 was at variance, in a material respect, with the order pronounced by the trial judge in oral delivery of the judgment, and in the circumstances has no legal basis.

Ground No 8 is upheld.

GROUND 9: ERROR OF LAW BY MAKING ORDER NO 6, WHICH AWARDED INTEREST ON "ANY OTHER ACCUMULATED BENEFITS", WHEN NO SUCH BENEFITS WERE PAYABLE

24. The appellant argues that order No 6 must be struck down as it purports to award interest on an unspecified and uncalculated amount of money.

25. This argument was bound to rise or fall according to a determination of the previous three grounds of appeal. As we have upheld those grounds it follows that we uphold this ground, at least to the extent that it relates to the "other accumulated benefits" referred to in Order No 4.

Ground No 9 is upheld.

GROUND 10: ERROR OF FACT BY NOT FINDING THAT THE APPELLANT HAD PROPERLY RELIED ON MEDICAL EXAMINATIONS CONDUCTED IN AUGUST 2000 FOR PURPOSES OF DETERMINING THE COMMENCEMENT DATE OF THE RESPONDENT'S INCREASED LEVEL OF BENEFITS

26. This ground of appeal relates to ground No 1. It again raises the argument that the trial judge erred in fact by making the finding of fact that the respondent was actually under a 60% disability at the date of discharge. 

27. We reject the argument for the reasons outlined earlier: the learned trial judge was not in error by making a finding of fact that the respondent suffered from a 60% disability at the relevant time. 

Ground No 10 is dismissed.

GROUND 11: ERROR OF FACT BY FINDING THAT THE RESPONDENT WAS 60% DISABLED AT THE TIME OF HIS DISCHARGE IN JULY 1981

28. This ground of appeal is a rehash of ground 10 and must suffer the same fate.

Ground No 11 is dismissed.

GROUND 12: ERROR OF FACT BY RELYING ON INCORRECT CALCULATIONS

29. This is an arithmetical argument. It challenges the calculation of the figure of K27,986.60 that was used by the trial judge to calculate the net amount payable by the appellant to the respondent. 

30. There was conflicting evidence before the court as to the correct method of calculation. His Honour, in our view, made no error of law or fact either in the method of calculation or the final amount that was found to be payable. 

Ground No 12 is dismissed.

CONCLUSION

31. We have dismissed eight grounds of appeal and upheld four. The appeal will therefore be partially dismissed and partially allowed. As to what consequences flow from this, ie what orders this court should now make for the purposes of determining the appeal, it is useful to reflect on what the powers of the Supreme Court are, on appeal, in its civil jurisdiction.

32. Section 155(2) of the Constitution states:

The Supreme Court—

(a) is the final court of appeal; and

(b) has an inherent power to review all judicial acts of the National Court; and

(c) has such other jurisdiction and powers as are conferred on it by this Constitution or any other law.

33. Section 155(4) of the Constitution states:

Both the Supreme Court and the National Court have an inherent power to make, in such circumstances as seem to them proper, orders in the nature of prerogative writs and such other orders as are necessary to do justice in the circumstances of a particular case.

34. Section 6 of the Supreme Court Act states:

(1) An appeal to the Supreme Court shall be by way of rehearing on the evidence given in the court the decision of which is appealed against, subject to the right of the Supreme Court—

(a) to allow fresh evidence to be adduced where it is satisfied that the justice of the case warrants it; and

(b) to draw inferences of fact.

(2) For the purposes of hearing and determining an appeal, the Supreme Court has all the powers, authority and jurisdiction of a Judge exercising the jurisdiction of the National Court.

35. Section 16 of the Supreme Court Act states:

On the hearing of an appeal, the Supreme Court shall inquire into the matter and may—

(a) adjourn the hearing from time to time; or

(b) affirm, reverse or modify the judgement; or

(c) give such judgement as ought to have been given in the first instance; or

(d) remit the case in whole or in part for further hearing; or

(e) order a new trial. 

36. All of the grounds that have been upheld relate to the contentious order No 4 or the consequential order No 6. We consider that the best and fairest thing to do, in order to do justice in the circumstances of this case, for the purposes of Section 155(4) of the Constitution, and consistently with Sections 6(2) and 16(b) and (c) of the Supreme Court Act, is to quash all of order No 4 and the part of order No 6 that refers to order No 4, and to leave the rest of the orders intact (they not being affected by any errors). 

37. As to the costs of these proceedings, as the bulk of the grounds of appeal have been dismissed, it is appropriate that the appellant pays the respondent's costs.

ORDER

(1)	The appeal is partially dismissed and partially allowed.

(2)	As to the written order of the National Court dated 20 November 2009:

(a) order No 4 is quashed; and

(b) the part of order No 6 that refers to order No 4 is quashed; and

(c) all other orders remain in force.

(3)	The appellant shall pay the costs of these proceedings to the respondent on a party-party basis, to be taxed if not agreed.

Judgment accordingly.

Posman Kua Aisi lawyers: Lawyers for the Appellant 
Norbert Kubak & Co Solicitors and Barristers: Lawyers for the Respondent