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Auditor-General v Attorney-General (representing Accountant-General) [2005] SBHC 30; HCSI-CC 540 of 2004 (20 January 2005)

IN THE HIGH COURT OF SOLOMON ISLANDS

Civil Case No. 540 of 2004

AUDITOR-GENERAL

-v-

ATTORNEY-GENERAL
(REPRESENTING THE ACCOUNTANT GENERAL)

Before: Palmer CJ

Date of Hearing: 9th December 2004
Date of Judgment: 20th January 2005

G. Suri for the Applicant
N. Moshinsky Q.C. and Mrs. J. Gordon for the Respondent

Palmer CJ: The Attorney-General representing the Accountant General applies by Summons filed 2nd November 2004 to have inter alia the Re-Amended Originating Summons of the Applicant filed 1st December 2004 struck out on the following grounds:

(i) that it discloses no reasonable cause of action; and

(ii) that the claim is frivolous and vexatious in that it is an abuse of the court process.

In its Re-Amended Originating Summons filed 1st December 2004, the Applicant sought answers to the following questions:

Whether the Auditor General has the legal power under section 108(3) of the Constitution and section 36(2) (b) of the Public Finance and Audit Act [Cap. 120] to authorize another person to do auditing on his behalf and to report to him?

If the answer to question 1 is in the affirmative, whether the said power of the Auditor General also includes the power to select and award or enter into contract with the person so authorized or is the Auditor General subject to the tender process under the Financial Instructions issued by Minister under section 6(2) of the Public Finance and Audit Act [Cap. 120]?

Whether it is mandatory under section 62(1) of the Interpretation and General Provisions Act [Cap. 85] to lay before the Parliament any Financial Instructions issued by Minister under section 6(2) of the Public Finance and Audit Act [Cap. 120] and to publish such Instructions in the Gazetter pursuant to section 61(1) (a) of the Interpretation and General Provisions Act [Cap. 85] before such Instructions could come into operation?

Whether the Audit Services Contract for provision of auditing entered into between the Applicant and CBL Practising Accountants on or about 30 April 2004 to audit SI Government Annual Accounts for years 1997, 1998 and 1999 is legally enforceable?

Further or other orders as the Court deems meet.

Costs of and incidental to this application be paid by the Respondent.

The Brief facts

The Auditor General is appointed by the Governor General acting in accordance with the advice of the Public Service Commission (section 108(2) of the Constitution. His office is a public office (s. 108(1)). His powers are set out in section 108(3) of the Constitution and Part VI of the Public Finance and Audit Act [Cap. 120]. Section 108(3) of the Constitution states that:

"The public accounts of Solomon Islands, of all Ministries, offices, courts and authorities of the Government, of the government of Honiara city and of all provincial governments, shall be audited and reported on annually by the Auditor-General, and for that purpose the Auditor-General or any person authorized by him in that behalf shall at all times be entitled to access to all books, records, returns and other documents relating to such accounts."

Section 36(2) (b) of the Public Finance and Audit Act provides that:

"In the exercise of his duties to audit, enquire into and examine accounts the Auditor-General may-

(a) authorize any person publicly carrying on the profession of accountant or any public officer to conduct on his behalf any enquiry, examination, or audit and such person shall report thereon to the Auditor-General;"

Subsection 108(5) of the Constitution provides that in the exercise of his functions under this section, the Auditor-General shall not be subject to the direction or control of any other person or authority.

On or about 30th April 2004, the Auditor-General appointed Mr. Mathew Cooper Wale ("MCW") of CBL Certified Practicing Accountants to conduct an audit of the Solomon Islands Government annual accounts for the years 1997, 1998 and 1999 and to report back to him. The value of that contract was for a sum of $540,000.00.

The Auditor-General deposes in his affidavit filed 18th November 2004 that prior to the execution of the Audit Service Contract ("ASC") with MCW, the internal procedures set out in the Solomon Islands Office of the Auditor General Audit Manual ("the Manual") had been complied with.

Sometime in July 2004, the Accountant General queried the validity and enforceability of that contract pointing out that the key provisions of the Financial Instructions as revised in 2004 had not been complied with and refused it seems to release the first set of payments or to commence payment, despite preparatory work having been commenced. The ASC accordingly had to be suspended.

The Claim of the Applicant

A number of issues have been raised by the Auditor-General which he argues require this court’s determination. In essence he argues whatever contract for auditing service he enters into in his capacity as the Auditor-General and having exercised his own deliberate judgment on the matter is not subject to the requirements of Financial Instructions. Any such requirement is an interference on the exercise of his Constitutional functions. He contends the ASC is binding on the Solomon Islands Government.

Further, by requiring the ASC to be suspended on the above grounds, he argues the Accountant General is interfering in the performance of his Constitutional functions. He argues as I understand that the Accountant General has no right to suspend the contract and wants the court to tell the Accountant General to stop interfering and to pay up on the ASC.

Locus Standi

The Respondent challenges the locus standi of the Applicant to proceed with this action on a number of grounds. Learned Counsel Moshinsky says that the facts as disclosed in the Applicant’s supporting affidavit do not reveal any infringement of section 108(5) of the Constitution. What they indicate is that the Applicant is challenging an opinion expressed by the Attorney-General's Chambers. That opinion expresses the view that the practice adopted by the Auditor-General in selecting contractors to perform audit work and engaging their services on behalf of the Solomon Islands Government without compliance with the tender processes provided by the Financial Instructions is unlawful and that accordingly any such contract entered into by the Auditor-General is unauthorized and does not bind the Government. Learned Counsel also submits that there is no evidence to suggest or support the Applicant’s contention that as a result of that advice any form of direction or control had been exerted against or over the Applicant's audit functions.

The Respondent takes the view that the Applicant cannot demonstrate that he has any special interest or private right which he can seek declaratory relief under Order 58 rule 2 of the High Court (Civil Procedure) Rules, 1964 and that therefore this application should be struck out.

The law on locus standi

The test of locus standi which has been accepted and applied in this jurisdiction¹ principally stem from the use of the words "interests are being or are likely to affected" see section 83(1) of the Constitution. These have been construed inter alia to mean sufficient interest², having a genuine grievance or concern, not mere busybodies³, a right, duty or liability which can be established by a court or an interest which affects the applicant not sentimentally, academically or remotely⁴, or someone having suffered special damage for adverse detriment⁵. These are definitions which assist court in exercising its discretion as to whether or not an applicant has locus.

The issues before this court

Does the Applicant have a genuine grievance, concern or interest which warrants the consideration of the court?

I have thought carefully over this question and make the following observations. On one hand, I note the facts deposed to do reveal that in so far as the ASC is concerned, the crucial issue for determination is that of validity and enforceability.

In so far as questions 1, 2 and 3 of the Re-Amended Originating Summons are concerned, they raise issues which relate more to the powers of the Auditor-General as they relate to future contracts. I say this because in respect of the ASC, the Applicant had entered into the contract with MCW on the basis and belief that he had authority to do so, following advice of-course (first advice), from the Attorney-General's Office and that thereby the Government was bound by that contract. To that extent it can be argued that the questions raised relate to matters which have already been acted upon by the Applicant in any event and that it is not necessary for this court to rule upon them.

The same can be said in respect of the validity and application of the Financial Instructions. If the Applicant was genuinely concerned about the validity or applicability of Financial Instructions, whether it was binding on him or not, he should have run to court before entering into the ASC. The evidence deposed to reveals he entered into the contract without taking cognizance of the requirements of Financial Instructions; it was a deliberate omission. It could be argued that to that extent it is no longer necessary for the Applicant to come to court for relief.

When the question in paragraph 4 or the Re-Amended Originating Summons however is considered, it raises in my respectful view a crucial issue as to the validity and enforceability of the ASC which in turn impacts upon the powers or functions of the Applicant. Having said that, I note that an alternative action, which could be pursued in this case is for MCW to apply for specific performance of the ASC or in lieu thereof, damages for breach of contract.

The Applicant however says that the action of the Accountant General, in suspending payments or performance of the contract based on the recent advice (second advice) from the Attorney-General's Office is a direct interference of his Constitutional powers and duties. By "stopping" or requiring compliance with Financial Instructions his Constitutional functions have been affected or subjected to the direction and control of the Accountant General. He says this is of direct interest and concern to him and wants this court to determine whether in the discharge of his Constitutional functions in this instance and in future cases he would be subject to the requirements of Financial Instructions.

I have noted the submissions of learned Counsel Mr. Moshinsky that this is merely a case of difference in legal opinions. In my view, the facts deposed to show that this is more than that in that the difference in legal opinions from the Attorney General's Office has resulted in the ASC being suspended and thereby affecting the performance or discharge of Constitutional functions of the Auditor-General. In the performance of his Constitutional duties to audit and examine accounts of Government, he may authorize another person to carry out auditing on his behalf. The auditing done by that person therefore is done on his behalf in the discharge of his Constitutional duties. Where that function is hindered or obstructed as has happened in this case due to differences in legal opinion of the applicability of Financial Instructions, it could be argued that his functions have been interfered with. To that extent I am satisfied the Applicant has demonstrated that he has a genuine grievance and is entitled to come to court for determination of issues which ultimately will also resolve the stalemate reached between the parties and the status of the ASC regarding its enforceability. It should be borne in mind that even if the Applicant’s claim should be dismissed, it is always open to MCW to seek relief in this court for specific performance or damages and ultimately which will result in similar issues having to be considered by this court.

I am satisfied he has locus standi and grant leave for hearing of the substantive issues in this case to be heard on a date to be fixed by the Registrar of High Court.

Legal Privilege

On the issue of legal privilege I am satisfied the authorities do indicate that the documents, advice correspondence engaged in can be disclosed by consent of the client, which is the case with the Applicant. The privilege does not apply therefore.

Orders of the Court:

Dismiss application of the Respondent.

Reserve issue of costs.

The Court.

ENDNOTES

1. Kenilorea v. Attorney-General (1983) SILR 61, Kenilorea v. The Governor-General CC 415 of 2004.
2. R. v. I.R.C. Exp. Federation of Self Employed (1980) 2 W.L.R. 579
3. (ibid)
4. Gordon v. Minister of Finance (1968) 12 W.I.L.R. 416
5. Australia Conservation Foundation Inc. v. The Commonwealth of Australia and Other (1979) A.L.J.R. 176