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Safoka v Tuvalu National Provident Fund [2006] TVHC 2; Civil Case 2 of 2006 (28 April 2006)

IN THE HIGH COURT OF TUVALU
AT FUNAFUTI
Civil Jurisdiction

Case no: 2/06

Between:

Olataga Safoka
Appellant

v

Tuvalu National Provident Fund
Garnishee

BEFORE THE HIGH COURT

S Barlow for judgment creditor/appellant
K Ulika for garnishee/respondent

Hearing: 25 April 2006
Judgment: 28 April 2006

Judgment

In 2002, the present appellant brought a claim against one Temita Poland in the High Court and judgment was given by consent to the appellant in the sum of $3,800.00 plus $50.00 costs and $7.50 court fee. The defendant was ordered to pay at the rate of $50.00 per fortnight starting at the next payday and, in default, the whole sum fell due with 8% interest. Payments were made until August 2003 and, when they ceased, the judgment debtor still owed $2875and interest at 8%.

On 31 October 2005 an application was made ex parte for a garnishee order nisi for the outstanding sum. No claim was made for interest and the sum claimed was $2932.50. I considered the application in Suva and an order nisi was issued and served on the garnishee on 27 January 2006.

In order to deal with the matter promptly, I summoned the garnishee to show cause before the Senior Magistrate on 10 February 2006. The General Manager of the Tuvalu National Provident Fund appeared and objected. The learned Senior Magistrate refused to make the order on the basis that the Act prohibited payments out of the fund except for specific reasons stated in the Act which did not include payment under garnishee process. In his judgment, he explained:

"The General Manager of the TNPF appears and objects ... The reasons because the sums discharged under the TNPF are made in accordance with the express provisions of the Provident Fund Act, Cap 86. The relevant provisions applicable to this matter are:

1. Male reaching the age of 45 years. The respondent is only 33 years.
2. The purpose of the TNPF when established was to assist a member on retirement so if the Fund accepts this application it will defeat its purpose.
3. The other option is that the member can borrow money from the Fund and secure with his provident fund. But for the respondent the sum that he needs to borrow is well below the sum he needs to pay to the applicant.
   

From the above objection, it appears that the Fund cannot pay the applicant the sum claimed under the application."

The appellant appeals against that decision. The parties agree that, as the Senior Magistrate made the order, appeal lies to this Court.

The sole issue in this appeal is whether or not funds held in a member’s account in the Fund are immune from garnishee proceedings.

Mr Barlow relies on the absence of any specific provision in the Act protecting them. Mr Ulika accepts there is no specific provision but suggests the whole aim and intention of Parliament was to establish a compulsory scheme in order to provide pensions or similar benefits when a man retires or in specific alternative circumstances. That aim will be defeated if payments out of a member’s account are permitted before retirement, etc.

The present Provident Fund Act was passed in 1984 and replaced the Tuvalu Provident Fund Act, 1983, which, in turn, had replaced a similarly named Act of 1981. The 1981 Act was "based on legislation originally written for the scheme operating in Kiribati" which was "considered to be out of date and not readily understandable in the context of Tuvalu" section 2(1). Counsels’ efforts have failed to locate a copy of the 1981 Act but the Court has been provided with a copy of the 1983 Act which was substantially altered when the 1984 Act was drafted.

Section 2(3) of the 1984 Act makes it plain that was the intention:

"(3) The purpose of this Act is: -

(a) to replace the Tuvalu Provident Fund Act 1983 to enable the Fund to operate as intended with the minimum of administrative difficulty; and
(b) to set the framework for a national provident fund which will cover

potentially every person of working age, without discrimination on any grounds of nationality, race or colour, for the contingencies in respect of which benefit is payable in return for compulsory, earnings-related contributions or voluntary contributions."

Section 2(2) referred to the fact that the 1983 Act "contains inaccuracies, anomalies and omissions which would make the administration of it impossible without taking action ultra vires".

Mr Ulika for the respondent suggests that the terms of section 2(3)(b) show the purpose of the Act is to set the framework for a fund which will cover the members for contingencies in respect of which benefit is payable. That means, he suggests, that the purpose is to establish a fund under which there is no contingency covered by the Act unless there is a benefit payable. The benefits are set out in section 20:

"20(1) Subject to subsection (2) [which provides that entitlements cease on reaching the age of 65 and any amount standing to the member’s credit is to be paid as retirement benefit or retirement pension] the benefits payable under this Act shall be of the following descriptions, namely –

(a) retirement benefit ...
(b) retirement pension ...
(c) incapacity benefit ...
(d) emigration benefit ...
(e) woman’s home benefit ...
(f) death benefit ...
(g) special death benefit ...
(h) housing benefit ... and
(i) benefit as security for National Bank of Tuvalu or Development Bank of Tuvalu."

Counsel submits that the use of the word ‘shall’ means that only the listed benefits are available and payable. I accept that those are the only benefits that may be paid but counsel also cites section 4(2) as suggested support for the proposition that nothing else maybe paid:

"(2) There shall be paid out of the Fund –

(a) all benefits;
(b) all refunds of contributions;
(c) all expenses properly incurred in the administration of this Act; and
(d) all expenses properly incurred under section 5 [which establishes a special Investment Scheme Fund]."

With respect to counsel’s arguments, I consider that runs counter to his submission that only benefits can be paid. Section 4(2) includes other heads but he further submits that section 4(2) is an exhaustive list and no other payment may be made. Therefore, he suggests, a payment to clear a member’s debt owed to a third party cannot be covered by a payout from the Fund.

Mr Barlow challenges the contention that those sections give an exhaustive list of possible payments from the Fund. Not only is it not exhaustive but he submits that the absence of specific prohibition supports his suggestion that the money in a member’s account is not immune from legal orders for payment to a third party. He points out that the Kiribati legislation, which was the precursor of the Tuvalu acts, did have a clear provision preventing such use of the Fund.

In Part VII of the Kiribati Act, which is headed ‘Protection of Sums Contributed and Withdrawn’, section 28 provides that "no contribution to the Fund, nor any amount standing to the credit of the member in the fund nor interest on any such contribution or amount, nor withdrawals made by the authority of the Board from the Fund under any of the provisions of this ordinance, ... shall be assignable or transferable or attached, sequestered or levied upon for or in respect of any debt or claim whatsoever,"

Counsel are unable to advise whether that provision was repeated in the 1981 Act but our 1983 Act included an identical provision, also as section 28. No similar provision appears in the Act passed the following year. What clearer indication, Mr Barlow asks, could there be that the drafters of the later Act did not wish to provide such protection?

I am satisfied that the terms of section 4(2) do not provide an exhaustive list of all reasons for payment out of the Fund. It directs that certain payments must be paid out but its terms do not suggest an intention to limit them to those four forms of payment. I do not consider, therefore, that the inclusion unius principle applies.

In many other jurisdictions, contributions paid towards a pension scheme are protected from court process in execution of a judgment by a third party but that protection is the result of specific statutory provisions, frequently similar to the terms of section 28 in the 1983 Act.

I accept Mr Ulika’s contention that the aim of the legislation is to establish a fund which will ensure that anyone reaching retirement should have the protection of a financial scheme. In order to achieve that, the scheme requires compulsory contributions reinforced by legal penalties for failure to pay. I also accept, as I perceive does Mr Barlow, that, if such a scheme is to succeed in its aim, there must be restrictions on the members being able to withdraw the accumulated funds for other purposes prior to the date payment of benefit is due under the scheme.

It is also apparent that the managers of the scheme are well aware of the problem. The provision in section 20(1)(i) allowing a member to use the funds in his account as security in the two banks in Tuvalu was not in the 1984 Act initially. It was added by the amendment Act of 1999. On the face of the provision, it would appear to allow the money so committed to be available to the banks in default of the agreement to which it provided security. The Court has been advised that the Fund managers have interpreted the provision as allowing the security to be realised only when the funds fall due for payment on retirement or any other entitlement to benefit.

Mt Ulika suggests that, even if garnishee proceedings are permissible against a members account, it would only be payable in the same way. Whilst that might appear to assist the Fund to achieve its purpose in the case of any such member, I would suggest it could result in serious injustice. Thus, anyone who, early in his working life, is liable for a judgment debt which includes interest payments will have his liability to repay deferred but, by that very deferment, will reach retirement age with a far greater debt, which could conceivably consume all of his entitlement at retirement.

However, an appreciation solely of the aims and problems is not a proper basis for a legal interpretation of the terms of the Act. I am satisfied that section 20 does not provide a list of the only grounds upon which payment may be made from the Fund. Neither do I accept that where Parliament has omitted a provision from an Act passed for the stated purpose of replacing an Act containing inaccuracies, anomalies and omissions, the Court can properly read such a provision back into the new Act.

In the present case, the judgment debtor owes a sum of money which may be partly or wholly met from funds credited to his benefit in the Fund. A decision that it cannot be withdrawn under court order is to give him a protection that deprives the judgment creditor of the benefit of his judgment. Had the judgment debtor intended to honour his obligations and repay his debt, he could no doubt have protected his rights under the Fund by using his account with the Fund to secure a loan from a Bank. He did not do so. Instead, he simply stopped paying. If Parliament intends that he should be protected in such circumstances, it must enact clear and specific provisions.

The appeal is allowed. The order of the learned Senior Magistrate is set aside and in substitution therefor I order that the garnishee order be made absolute and the garnishee pay forthwith the sum specified or so much of it as may be covered by the funds in the judgment debtor’s account.

Dated: 28th day of April 2006

CHIEF JUSTICE