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High Court of the Cook Islands |
IN THE HIGH COURT OF THE COOK ISLANDS
HELD AT RAROTONGA
(CIVIL DIVISION)
NO: OA 6/2001
IN THE MATTER OF
the Declaratory Judgments Act 1994
AND
IN THE MATTER OF
the Electoral Act 1998
BETWEEN
NORMAN GEORGE
In his capacity as
ATTORNEY-GENERAL
Applicant
AND
TEPURE TAPAITAU
Member of Parliament for the
constituency of Penrhyn
Respondent
Mr J. McFadzien for the Applicant.
Mr M. C. Mitchell for the Respondent.
Judgment of the Chief Justice
Dated the 3rd day of April 2002
1. This is an application brought in the name of Peri Vaevae Pare as Attorney-General and continued in the name of the present Attorney-General. It seeks two declaratory orders:
• That the Member of Parliament for the constituency of Penrhyn, Hon Tepure Tapaitau, became a Crown servant (as that term is defined in section 2 of the Electoral Act 1998) on or after the 28th August 2000;
• The Parliamentary seat of the said Hon.Tepure Taipatau is vacant by operation of section 8(1)(l) of the Electoral Act.
2. The definition of Crown servant set out in section 2 of the Act is as follows:
"Crown Servant" means any person who is employed in the service of the Crown and remunerated by way of salary or wages, but does not include any person whose salary is paid pursuant to the Civil List Act 1984 or any person remunerated only by way of allowances, commissions or fees.
Section 8(1)(l) of the Act provides that the seat of a member of Parliament shall become vacant if he or she becomes a Crown Servant. It is accepted that the Respondent was not remunerated pursuant to the Civil List Act or by way of allowances or commissions.
3. On 24 June 1999 the Respondent was declared elected as the Member of Parliament for the constituency of Penrhyn. On or about 28 August 2000 the Respondent was appointed engaged or employed as head of the Special Projects Division of the Office of the Prime Minister being a Ministry, department or agency of the Crown or a division of such at a remuneration of $15000.00 per annum. Those facts are accepted by the Respondent. Further the Respondent expressly concedes that he is employed in the service of the Crown. It is submitted by the Respondent that the sole question is the nature of the remuneration whether it is salary or wages or fees. There is however another or alternative response under the Constitution of the Cook Islands.
4. The evidence before the Court on this case is an affidavit, sworn 8 November 2001, in support of the application by Paul Allsworth, the Director of Audit and Head of PERCA, and affidavits, sworn in January 2002, by the Respondent, Robert Woonton (at the time the Deputy Prime Minister) and Edward Drollett, the Chief of Staff for the office of Prime Minister. There was no call for cross-examination of any deponent. No question of credibility arises though the effect or implication of the evidence is in issue. Submissions were made in writing.
5. The proceedings arise out of the investigations which Mr Allsworth instigated in October 2001. As a result of a report to him from his Senior Auditor the Director wrote to the Prime Minister on 17 October 2001 recommending among other things that the Director's findings be referred to the Crown Law Office for further action if necessary. The proceedings were begun on 9 November 2001.
6. The Respondent is a barrister and solicitor having graduated from the Auckland University in 1984. He was formerly a police officer for some 27 years including 8 years to 1994 as Commissioner of Police. He has a number of awards for management or executive skills from Police academies. The Respondent was after election a member of the Cook Islands party. On 27 June 2000 he advised the Prime Minister at a meeting at which (among others) Mr Drollett was present that he was to make a public announcement that he was withdrawing from the party and was to be an independent member of parliament. In a letter stating his intention he expressed his wish to work closely with the Prime Minister and his colleagues "in progressing with the initiatives necessary for the betterment of our people and the country as a whole."
7. In his affidavit the Respondent avers:
• During the discussion it was orally agreed that I was to be engaged as the Management Consultant on a contractual basis overseeing the management and coordination of various projects under the auspices of the Office of the Prime Minister.
• It was also agreed that I was to be paid a fee of $15000 per annum, which is the equivalent of the allowances paid to Under Secretaries to Ministers. It was suggested that I was to assume and accept the post of an Under Secretary. I objected to this, as I did not want to jeopardise my status as an Independent Member of Parliament.
• I stressed to the Parties at the meeting that it was important and essential that I was to be employed on contract as a Management Consultant and my fees for my services were to be paid on a fortnightly basis. This was agreed to by the meeting with an assurance given by the Chief of Staff that he would take care of the matter that all I was to do was to provide him with my bank account for the transaction to be processed. I said that if required I would prepare and file invoices for my fees on a fortnightly basis. The Chief of Staff however replied that this was not necessary, as he would take care of the transactions.
8. All that Mr Drollett states in his affidavit about this meeting is to confirm its existence and that the Respondent advised his intention to change his status to that of an independent Member of Parliament in support of the government at that time. As to the further matters relating to the engagement of the Respondent Mr Drollett avers:
• As a result of the discussions held, I agreed to employ him as a Management Consultant on contract to oversee, manage and coordinate the work of the Special Projects Division of the Office of Prime Minister.
Mr Drollett confirms the other matters about payment, the rejection of the offer of the Under Secretary position, the contractual nature of the appointment and the advice about the lack of need for invoices.
9. By letter, which is undated but which has an handwritten note containing the mark "4/9", Mr Drollett wrote to the Financial Secretary advising that "the following staffs [sic] have been approved to work in the Prime Minister's Special Projects Division and their salary will be charged to the PMs Support Budget" The Respondent's name was included in the letter with a salary $15000 pa. The Financial Secretary was requested to "add them on the payroll effective from Thursday 28 August 2000. I will forward to your office salary arrears claims from 1 July 2000"
10. There are annexed to Mr Allsworth's affidavit pay details pertaining to the Respondent for the fortnightly periods ending 13 September 2000 to 10 October 2001 which show for each period his fortnightly payments for 70 hours work with a deduction for tax. To that affidavit there are also annexed copies of the time sheets relating to the hours worked by the Respondent for the same periods all of which show 70 hours as certified for each period including periods such as Christmas and New Year. It is stated that
"The system of time-keeping, pay details and method of payment relating to the Respondent are identical to those of all salaried employees of Government Ministries and Offices"
11. During the period September 2000 to October 2001 there were no invoices or other accounts kept by the Respondent as to his work or remuneration. There was no contract or other document which evidenced the arrangement made except a paper prepared by the respondent and approved by Mr Drollett outlining the duties and responsibilities which is headed "Special Projects: Consultancy and Coordination Office." They are in 6 paragraphs, the last being "any other projects identified and delegated by the Prime Minister and/or the Deputy Prime Minister or by the Government."
12. On 10 August 2001 there was a meeting with the Prime Minister and the Respondent. Dr Woonton and Mr Drollett were also present. At the meeting the Respondent was told that his remuneration was to be increased from $15,000 per annum to $30,000 per annum because of his good performance in his role and in recognition of additional legal services. Again there was mention of providing an invoice for each payment but the Chief of Staff replied that it as not necessary. By letter dated 7 September 2001 Mr Drollett wrote to the Acting Financial Secretary as follows:
"Re: Staff Salary Adjustment
With the approval of the 2001/02 budget, I am writing to inform you of the salary adjustments for the staff listed below effective from 2 July 2001. The reason for the salary adjustments was based on excellent performance of the concerned staff during the last 12 months."
There followed a list of 7 names including the Respondent showing for him current salary $15000 pa and new salary $30,000 pa. The pay details as mentioned above were amended accordingly. No invoices were produced and no other contract documents followed.
13. On 8 November 2001 Mr Drollett wrote to the Financial Secretary asking him to remove the Respondent's name from the central payroll system effective from 8 November. It was noted that "our office will pay Mr Tapaitau's fees on a fortnightly basis as per his contract arrangements." The letter contained these paragraphs:
For the record, the agreement for Mr Tapaitau from the beginning was that he would be an independent contractor to the office of the Prime Minister and Government for which he would receive a fee. That fee was agreed not to exceed $15,000 per annum. However this fee would be reviewed on an annual basis.
For administration purposes Mr Tapaitau's fees were grouped with the office staff to get him on the central payroll systems. His fees were paid on a fortnightly basis, and was not intended a [sic] salary, and henceforth [sic] no tax will be taken out. Mr Tapaitau will make his own arrangements."
14. Dated 15 November 2001 a written agreement was made between the Chief of Staff, referred to as the Appointer, and the Respondent as Appointee. Such an agreement has to be read as a whole and all of its contents taken into account. I have done that. But a number of particular clauses need to be noted and quoted here as follows:
1.1 This Appointer contracts the Appointee to provide services to the Special Projects Office. This agreement records an oral agreement reached on 27th June 2000.
1.2 The contract commenced on the 1st day of July 2000.
3.1 The Appointer shall throughout this contract pay the Appointee his fee not exceeding $15,000 per annum.
3.2 The fee received by the Appointee pursuant to this agreement shall be deemed to compensate fully the Appointee for all time worked and duties performed under this agreement.
5.2 Either party may terminate this Contract without cause by giving the other party three months notice in writing.
6.1 This Contract, constitutes the full and entire agreement between the Appointor and Appointee, and supersedes all previous negotiations, communications and commitments whether written or oral.
15. The duties and responsibilities were set out in an annexure which was similar to the duties and functions document prepared and agreed in 2000 except that the first paragraph was:
Providing legal advice to the Prime Minister, Deputy Prime Minister, Ministers and Cabinet as required: and attending meetings of Cabinet from time to time for that purpose.
The Respondent under date 26 November 2001 and numbered 0001 sent an invoice for the period 8 to 21 November 2001 in the amount of $1153.80. The gross amount recorded in the pay details, mentioned above, was $1150.69 per fortnight. The description was fees for consultation and legal services "as per contractual arrangements." The Respondent avers that he has rendered other invoices since on the same basis and they have been paid.
16. Both Mr Drollet and Dr Woonton in their affidavits depose to their opinion or belief that the arrangement was for services to be remunerated by fee. The former avers that he had made an administrative error in grouping the Respondent with other staff to avoid having to approve the invoices on a fortnightly basis. The opinions beliefs and intentions of the parties have little if any relevance or probatory value in construing a contract and finding its meaning. In any event in this case the matter has to be decided on the real relations between the parties and the conduct of that arrangement.
17. The issue at the relevant time or times is whether the Respondent falls within the definition of Crown Servant. That means was he in the service of the Crown and remunerated by salary or wage and not by fees only. That is in two parts. The first is the true relation between the parties. Did it amount to being in the service of the Crown? The second is the actual payment for the service. Was it by salary or wages or by fees only? The first part has been conceded against the Respondent but because the fundamental issue is one though in two parts it seems appropriate that I should consider independently of the concession the question of the relations between the parties. I think that on the second part there is no suggestion that the Respondent was paid wages. The whole of the argument has been on the assumption that the payment or remuneration was salary.
18. The phrase "employed in the service of the Crown" is not defined. Counsel did not cite any authority as to its meaning. I have been unable to find any assistance on the whole phrase in any of the texts which are useful in citing the meaning of words and phrases. However Black's Law Dictionary (6th edition 1990) defines "employed" as performing work under an employer and employee relation. The Oxford English Dictionary (2nd Edition 1989) [the OED] defines "employed" as "that is in one's employ" and "employ" as "the state or fact of being employed; esp. that of serving an employer for wages."
19. The distinction between a contract of service and one for services has been a longstanding basis for distinguishing between the servant or employee and the independent contractor. There is no need here to discuss or choose between the various tests which may apply to define the distinction and in any event, as I have said, the whole contract and, where appropriate, its matrix must be considered. What I think follows from what I have said and quoted is that the phrase in the definition requires a master and servant relation, a contract of service and not a contract for services.
20. The other words in issue in this case in the definition of Crown Servant are not separately defined either and in the end one must rely on the ordinary meaning of them. Again I refer to the OED. Salary is a "fixed payment made periodically to a person as compensation for regular work: now usually restricted to payments made for non-manual or non-mechanical work (as opposed to wages)." Fee has a number of definitions following its derivation from the estate in land and the tribute paid therefor. The relevant one is stated to be, "Extended to denote the remuneration paid or due to a lawyer, physician or (in recent use) any professional man, a director of a public company etc. for an occasional service." Counsel for the Applicant referred to a 19th Century case Re Shine Ex parte Shine [1891 - 94] All E R Rep 789. Which was quoted with approval in a 1972 case at first instance in England GLC v Minister of Social Security [1971] 2 All E R 285 where the occasional nature of the payment was of importance to qualify it as a fee. I doubt if the views of even a very learned Lord Justice in the 19th Century are of much assistance today especially when the Judge was careful not to intend any exclusivity in his definition.
21. How does all this apply here? The Respondent is a Member of Parliament who changing his party allegiance and offering support to the Government of the day is offered as a reward a post as Under Secretary. He refuses and instead is appointed as a consultant on Special Projects especially in Tongareva. He has professional qualifications and wide experience in management and executive positions in his career as a policeman. He is paid a salary on a fortnightly basis on identical terms as to payment as any other staff member. He does not render invoices and there is no suggestion that he keeps a time record. He is paid as if he is working a full 70-hour fortnight every fortnight whether he is on holiday or is actually engaged in consultancy work. Tax is deducted as if he was an employee. Mr Drollett states that he "agreed to employ" the Respondent as a Management Consultant "on contract." But I observe that an employee is also employed on contract. The word contract does not help the Respondent but is neutral. Although the word "fees" was referred to in the initial discussions the term of payment on the basis of an annual lump sum paid fortnightly is not consistent with the idea of payment of professional fees. And for whatever reason, error or not, the Respondent was paid a salary, in terms and in actuality, on a basis which is contrary to a fee basis.
22. When the contents and recommendations of the report from the Director of Audit became known steps were taken to rectify and clarify the situation. What was done directly confirms that the previous situation was other than the desired one but confirms that the pre-existing arrangements had treated the respondent as a staff member on a salary. That is the clear implication from Mr Drollett's letter of 8 November 2001. Equally the written agreement a week later which supersedes all other agreements and sets out an arrangement different to the payment situation that had been in existence since August 2000 confirms the previous arrangement and its distinction from the one now recorded in writing. In other words what was done in November 2001 changed the contract or arrangement as it had been carried out since August 2000. It put the contract and arrangement on the footing that the parties now say they had agreed in June 2000 and confirmed in August 2001. But that was not the actuality. The wishes and intentions cannot alter or recall the facts and the conduct of the arrangement between August 2000 and November 2001.
23. In my judgment having regard to all the factual circumstances and in particular the conduct of the parties and their words and intentions actually recorded at the time the arrangement that was made and continued and executed from August 2000 was an arrangement which employed the Respondent in the service of the Crown for which he was remunerated by salary and not by fee only. He thereupon became a Crown servant and in terms of the Act s. 8(1)(l) the seat became vacant.
24. The Respondent raised a Constitutional issue claiming that the provisions of section 8(1)(l) of the Act were invalid if they were to result, by his disqualification, in the constituency of Penrhyn having no representation in Parliament. The argument was that Article 27 of the Constitution establishes and provides for the Parliament which includes a representative of the island of Penrhyn. An Act of Parliament which has the effect of preventing or removing that representation is inconsistent with the Constitution unless passed in accordance with Article 41 of it. Section 8(1)(l) of the Act was not so passed.
25. It may be questioned whether a provision which disqualifies the Member means that the constituency is unrepresented. Death, resignation, refusal to take the oath of allegiance and perhaps other situations may under the Constitution leave the constituency and the seat vacant for the time being. There follows a bye-election by which the seat is filled and the constituency once again fully represented. The question remains however because if the Act and its provision is inconsistent with any provision of the Constitution then it cannot stand unless passed in accordance with Article 41.
26. There is no provision of the Constitution which deals directly or expressly with the issue in this case. No Article provides for the disqualification or removal of an elected Member. Article 30 which prescribes the taking of the oath of Allegiance indirectly deals with the issue by forbidding a Member from sitting and voting in Parliament without taking and subscribing to the oath. That is not the point in this case.
27. The Constitution provides and prescribes the qualifications of candidates for election; Article 28B. It was that Article which was the basis of the decision of the Court of Appeal in Goodwin v Attorney General (CA OA2/94 18 February 1994). The Electoral Amendment Act 1993 prohibited Crown servants as defined from being nominated for election to Parliament. That was held to be inconsistent with the Constitution and its provisions for the qualification of candidates. There was no question in that decision of disqualification of an elected Member. The Constitution also provides in Article 27(3):
Subject to this Article and Articles 28, 28A, 28B, 28C and 28D hereof, the qualifications and disqualifications of electors and candidates, the mode of electing members of Parliament, and the terms and conditions of their membership shall be as prescribed by Act.
It may be observed that the provision in issue in Goodwin's case was re-enacted as paragraph (e) of Article 28B(1) of the Constitution.
28. The Act referred to in Article 27(3) is an ordinary Act not one which is to be passed in accord with Article 41. That follows from the definition of act in the Constitution.
29. The provision in question is not one about qualification of candidates but is about the terms and conditions of Members and their membership of Parliament. There is nothing about that in the Constitution. The disqualification of the Respondent does not mean that the constituency is unrepresented except to the extent that there is a vacancy until the bye-election is held. That temporary vacancy is not what the Constitution prohibits or is intended to prevent. Section 8(1)(l) of the Act is not inconsistent with the Constitution.
30. In the result there will be orders in the terms of the application. Costs are reserved. Counsel may make submissions in the absence of agreement.
L M Greig CJ
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