Auditor General v Reserve Bank of Fiji [2008] FJHC 194; HBC42.2008 (8 August 2008)

IN THE HIGH COURT OF FIJI AT SUVA
CIVIL JURISDICTION

Action No. HBC 42 of 2008

BETWEEN:

THE AUDITOR-GENERAL
Plaintiff

AND:

THE RESERVE BANK OF FIJI
Defendant

Coram: Hickie, J

Dates of Hearing: 18 July 2008

Counsel: Mr. P. Knight for the Plaintiff
Mr. M. J. Scott with Ms. M. Chan for the Defendant

Date of Decision: 8 August 2008

JUDGMENT

BACKGROUND

[1] This is an application where the Plaintiff is seeking:

“1. A Declaration that the Plaintiff, pursuant to the provisions of the Reserve Bank of Fiji Act Cap 210, the Audit Act Cap 70 (as amended), the Constitution (Amendment) Act 1997, and the Financial Management Act 2004, is legally required to audit the accounts of the Defendant;

2. A Declaration that the Defendant is legally required, pursuant to the

provisions of the legislation referred to in paragraph 1 above, to allow the Plaintiff to have access for audit purposes to the records and accounts of the Defendant.”

[2] In an Affidavit sworn on 11 February 2008, the Plaintiff has stated:

(a) That he is the Auditor-General;

(b) That he formed the view that under the provisions of the Audit Act (Cap 70), as amended by the Audit (Amendment) Act 2006, the Constitution (Amendment) Act 1997 and the Financial Management Act 2004, he was required to audit the accounts of the Defendant. However, the Governor of the Reserve Bank was of a different view.

(c) That in an attempt to resolve this problem, he entered into correspondence with the Governor of the Reserve Bank.

(d) The attempts made to resolve the problem have not been successful. He is therefore seeking a ruling from the Court as to his rights to audit the accounts of the Defendant and as well as two declarations.

(e) That he has recently been advised by the Minister of Finance, National Planning and Sugar Industry that, pursuant to the provisions of section 55 of the Reserve Bank Act (Cap 210), he was required to audit the accounts of the Reserve Bank of Fiji for the year ending 31st December 2007. Despite this advice, he requested a ruling as to his right under the present law to audit the accounts of the Defendant.

[3] In an Affidavit sworn on 3 April 2008, the BARRY WHITESIDE has stated on behalf of the Defendant:

(a) That he is the Acting Deputy Governor of the Reserve Bank of Fiji;

(b) That while the claim by the Plaintiff refers to the accounts of the Reserve Bank for the year ending 31st December 2007 –

(i) that the audit has already been completed by KPMG;

(ii) that the Plaintiff has been required to conduct a review of that audit as stipulated by the Constitution;

(iii) that no question arises as to the Plaintiff actually auditing the accounts of the bank for the year ended 31 December 2007;

(c) That he has annexed a copy of the relevant “directions” from the Minister of Finance, dated 4 February 2008, which state at paragraph 8 –

“For the 2008 accounts, it is my preference that the Board of the Reserve Bank considers appointing the Auditor-General to be its external auditor”;

(d) That in view of the above “direction” of the Minister which Mr Whiteside has termed an “observation” no justiciable question exists.

[4] Counsel for the Plaintiff filed written submissions in support of their application in summary as follows:

(a) That Section 52(2)(b) of the Financial Management Act provides –

“The annual financial statement for an off-budget state entity must be audited under the applicable requirements of the Audit Act”;

(b) That Section 2 of the Financial Management Act defines as state entity to include a statutory authority;

(c) That Section 6(1)(b)(i) of the Audit Act (as amended by the Audit (Amendment) Act 2006) requires the Auditor-General to audit the accounts of all state entities, except the Office of the Auditor-General and off-budget state entities that are exempted by regulations made under section 19;

(d) That Section 6(6) of the Audit Act (as amended by the Audit (Amendment) Act 2006) provides as follows –

“The power of the Auditor-General to conduct audits has effect despite any contrary provision in –

(a) Any other written law in force immediately before the commencement of the Audit (Amendment) Act 2006 (which substituted this section)”;

(e) That Section 55(1) of the Reserve Bank of Fiji Act provides as follows –

“The accounts of the Reserve Bank shall be audited by auditors appointed annually by the Board with the approval of the Minister”;

(f) That Section 167(5) of the Constitution provides as follows –

“A law made by the Parliament may provide that the accounts of a specified body corporate are not subject to audit by the Auditor-General but are to be audited as prescribed in that law”

(g) That the Auditor-General has the power and is required to audit the accounts of the Reserve Bank, despite the provisions of Section 55 of the Reserve Bank of Fiji Act because –

(i) The provisions of Section 6 (1)(b)(i) of the Audit Act and Section 52 (2)(b) of the Financial Management Act which require the Auditor-General to audit the accounts of all state entities including off-budget state entities;

(ii) Section 55 of the of the Reserve Bank of Fiji Act does not specifically provide that the accounts of the Reserve Bank shall not be subject to audit by the Auditor-General and the provisions of Section 167(5) of the Constitution do not therefore apply; and

(iii) Section 6(6) of the Audit Act says that the Auditor-General has the power to conduct audits despite any contrary provision in any other written law in force immediately before the commencement of the Audit (Amendment) Act (for example, the Reserve Bank of Fiji Act).

[5] Counsel for the Defendant filed written submissions in support of their application in summary as follows:

(a) That Section 55(1) of the Reserve Bank of Fiji Act provides that the Bank’s Board shall annually appoint an external auditor to audit the books of the Reserve Bank with the approval of the Minister, being the Minister for Finance, National Planning, Sugar Industry and Public Utilities (water and energy.

(b) That the amendments to the Audit Act referring to public entities are concerned with public money and public property within the meaning of Section 167(1) of the Constitution which states:

“At least once in every year, the Auditor-General must inspect and audit, and report to the Parliament on:

(a) the public accounts of the State;

(b) the control of public money and public property of the State; and

(c) all transactions with or concerning the public money or public property of the State.

(See Commander of the Republic of Fiji Military Forces & Attorney-General v Auditor-General (Unreported, Civil Appeal No: CBV 0009/2003S, 17 September 2004, Fatiaki P, French and Malcolm JJSC)

(Paclii: [2004] FJSC 13, http://www.paclii.org/fj/cases/FJSC/2004/13.html)

(c) That Section 2 of the Constitution provides –

“(1) This Constitution is the supreme law of the State.

(2) Any law inconsistent with this Constitution is invalid to the extent of the inconsistency.”

Where a law continued in force at the commencement of the 1997 Constitution, it is to be construed with such modification and qualifications as are necessary to bring them in conformity with the Constitution – a principle, which is said to act both prospectively and retrospectively (See Qicatabua v Republic of Fiji Military Forces (Unreported, High Court Suva, Civil No: HBM 90.2006, 22 April 2007, Singh J) (Paclli: [2007] FJHC 132, http://www.paclii.org/fj/cases/FJHC/2007/132.html) (Currently awaiting reserved judgment of Court of Appeal – Byrne, Gounder and Scutt JJ).

(d) That Section 167(5) of the Constitution provides –

' A law made by the Parliament may provide that the accounts of a specified body corporate are not subject to audit by the Auditor-General but are to be audited as prescribed in that law”;

(i) Since Section 55 (1) of the Reserve Bank of Fiji Act has provision for the appointment of such auditors as the Board sees fit (with the approval of the Minister), one can imply that the Auditor-General is not automatically the auditor, nor is the Reserve Bank subject to audit by him or her unless the Board and the Minister sees fit.

(ii) Section 55 (1) of the Reserve Bank of Fiji Act is a law as contemplated by section 167(5) of the Constitution whereas the Plaintiff says any law referred to in section 167(5) must expressly state that the Reserve Bank of Fiji Act shall not be subject to audit by the Auditor-General. The Defendant submits that no Law of Fiji contains such express words, that it would counter to the “purposive” approach to the interpretation of statutes and the phrase “subject to” in section 167(5) means “liable” citing Black’s Law Dictionary, 6th edn, 1990.

(e) That Section 52(2)(b) of the Financial Management Act 2004 is consistent with

section 167(5) of the Constitution and that a sensible meaning must be that if there is a law concerning the audit of the particular entity, then refer to it (in this case Section 55 of the Reserve Bank of Fiji Act), and if there is no law, then refer to the Audit Act and Financial Management Act.

That in the reasons provided when the Financial Management Bill was tabled in Parliament it was stated (See Bill 18/04) in relation to clause 52 that it:

“provides that a state entity’s annual financial statements must be prepared under legislation applying to the entity or (if there is no such legislation requiring the preparation of financial statements) must be prepared in the manner and times required by the regulations and contain the particulars required by the regulations. The financial statements must be as audited under the Audit Act.”

(f) That the Audit Act (as amended by the Audit (Amendment) Act 2006) requires the Auditor-General,as the Plaintiff has submitted, to audit the accounts of all state entities, except the Office of the Auditor-General and off-budget state entities that are exempted by regulations made under section 19. Unfortunately, no regulations have been made pursuant to section 19.

The Defendant submits, however, that it does not apply because –

(i) The 2008 Appropriation Promulgation 2007 (Promulgation 39/07) made by

the President on 23 November 2007 does not list the Defendant as a state entity;

(ii) The Reserve Bank of Fiji Act contains a mechanism for audit;

(iii) The Reserve Bank is not a state entity to which section 6(1)(b)(i) applies;

(iv) Section 6(6) of the Audit Act overrides any other law only if there is no express provision for audits;

(v) If Parliament had intended the Auditor-General to audit the Reserve Bank it would have amended section 55(1) of the Reserve Bank of Fiji Act to expressly include the Auditor-General;

(vi) Section 6(6) of the Audit Act cannot repeal section 55(1) of the Reserve Bank of Fiji Act as section 167(5) of the Constitution dictates otherwise.

(g) That the Audit-General’s submission that because section 55(1) of the Reserve Bank of Fiji Act does not specifically provide that the Bank’s accounts shall not be subject to audit by the Auditor-General, means that they are so subject, would be to nullify the entire modern understanding of statutes, in particular, that express words are required to create offences (see Craies on Legislation, 8th edn, Sweet & Maxwell, London, 2004, Chapter 1, pp. 34-36, and Chapter 18, pp. 555-566).

(h) That the Reserve Bank of Fiji Act was enacted prior to the enactment of the 1997 Constitution is irrelevant. The reference to written laws in section 167(5) of the Constitution, that is, “A law made by the Parliament may provide that the accounts of a specified body corporate are not subject to audit by the Auditor-General but are to be audited as prescribed in that law” must relate both to pre and post Constitution legislation. It must be given a sensible and common sense construction as the Supreme Court of Fiji did in respect of section 167(3) in Commander of the Republic of Fiji Military Forces & Attorney-General v Auditor-General. Where the Constitution seeks to demarcate legislative provisions in terms of time, it expressly so provides, as in the case of Decrees – Section 194(1), which states:

“Interpretation

194.-(1) In this Constitution, unless the contrary intention appears: ...

Decree means:

(a) a Decree made by the President before the convening of the Parliament under the Constitution of 1990; or

(b) a Decree made before 5 December 1987 by the Commander and Head of the Fiji Military Government”

(i) That the Reserve Bank’s “Statement of Assets and Liabilities as at 30 November 2007” have been published in the Republic of Fiji Islands Government Gazette on 4 April 2008. The audit of accounts for the year ended 31 December 2007 has been completed by external auditors KPMG (see paragraph 3 of Affidavit of Barry Whiteside sworn on 3 April 2008) and delivered to the relevant Minister in compliance with the Reserve Bank of Fiji Act. The course open to the Plaintiff is as set out in section 167(6) of the Constitution for the Auditor-General “to review those audits and report the results of a review”.

(j) As for the 2008 accounts, the relevant Minister has written to the Governor of the Reserve Bank on 4 February 2008 stating that “it is my preference that the Board of the Reserve Bank considers appointing the Auditor General to be its external auditor” (my emphasis) (see annexure “BW1” to Affidavit of BARRY WHITESIDE sworn on 3 April 2008). The Defendant submits it “raises no justiciable question in regard to the Plaintiff’s role” and “the question posed as to the future is premature”.

[6] The matter was listed for hearing on 18 July 2008 to hear from the respective parties as to whether they wished to add anything further in relation to their submissions.

[7] Counsel for each party took the opportunity to clarify their submissions set out above. Counsel for the Plaintiff referred the Court to the House of Representatives, Report of the Sector Standing Committee on Economic Services on the Audit (Amendment Bill, 2005 (Bill No.14/2005), Parliament of the Fiji Islands, Parliamentary Paper No. 77 of 2005, Department of Legislature, Parliament House, Suva, November/December 2005.

[8] Counsel for the Defendant had filed the day prior to the hearing “a list of laws and authorities” to which they referred at the hearing. In that list, four important documents were annexed:

(a) “Constitution (Amendment) Bill, 1997”, Hansard, 3 July 1997, pp. 4803-4804;

(b) “Banking Bill, 1994”, Hansard, 15 February 1995, pp. 2437-2438 and 16 February 1995, pp. 2481;

(c) “Debate on the Audit (Amd’t) Bill, 2005”, Hansard, 15 February 2006, pp. 2164-2167;

(d) “Comparative table of extracts relating to sundry statutory bodies concerning the auditing of accounts in the laws of Fiji”, prepared by Counsel for the Defendant, showing some 35 Acts for other bodies whereby some are specifically required to be audited by the Auditor-General whilst others are not.

[9] The matter was then adjourned and the parties advised that judgment would be on notice.

THE LAW

[10] In Commander of the Republic of Fiji Military Forces & Attorney-General v Auditor-General (Unreported, Civil Appeal No: ABU0002 of 2003S, 26 August 2003, Eichelbaum, Tompkins and Penlington JJA) (Paclii: [2003] FJCA 74, http://www.paclii.org/fj/cases/FJCA/2003/74.html), the Court of Appeal held (amongst other matters) that:

“1. Section 167(1) of the Constitution ... sets out minimum requirements for the Auditor-General.

2. By virtue of section 167(3) of the Constitution, Parliament is authorised to give the Auditor-General further powers and functions.”

The Court of Appeal confirmed the decision of Byrne J in the High Court whereby he had found in favour of the Auditor-General such that the funds involved “were ‘public moneys’ under an extended definition of that term in the Audit Act ... and that as a result the Auditor-General was required to audit the funds”.

[11] The Supreme Court said on appeal (see Commander of the Republic of Fiji Military Forces & Attorney-General v Auditor-General [2004] FJSC 13 (supra) at paragraph 30”:

“In our opinion, however, the answer to the Commander's argument is to be found in s.167(3) of the Constitution which, as has been seen, provides that Parliament may make further provision in relation to the office of the Auditor-General and may confer further functions and powers on the Auditor-General. The Court of Appeal correctly concluded that giving s.167(3) a sensible and common sense construction, it clearly authorised Parliament to extend the powers and functions of the Auditor-General beyond those prescribed in s.167(1). It follows that Parliament was entitled by the Constitution to extend the powers and functions of the Auditor-General to the moneys described ... in the Audit Act. It follows that the relevant provision was not repugnant to or ultra vires the Constitution.”

[12] Interestingly, Counsel for the Auditor-General in those previous proceedings, was also Counsel for the Auditor-General in the present matter before me. Thus, not only would he be well aware of those judgments, but also of the fact that Parliament is entitled “to extend the powers and functions of the Auditor-General“. The question for this Court, however, is what of the situation when prior provision has already been made for such external auditing in previous legislation? Is it a case of the prior legislation prevailing due to section 167(5) of the Constitution which states that “A law made by the Parliament may provide that the accounts of a specified body corporate are not subject to audit by the Auditor-General but are to be audited as prescribed in that law”?

[13] On 3 July 1997, Hansard records at page 4804-4804 the parliamentary debate in relation to the “Functions of Auditor-General” (as per what was meant by the then Clause 166 of the Constitution, later section 167), and that the Hon. K.L. MATATOLU said:

“Mr. Speaker, I am not certain about sub-clauses (5), (6), (7) and (8). When you look at sub-clause (5) it states:

“A law made by the Parliament may provide that the accounts of a specified body corporate are not subject to audit by the Auditor-General but ...”

Does this mean that the Auditor-General will also inspect the audits carried out by private accounting firms of corporate bodies? Is this the way to facilitate the present accounts of corporate bodies which are not being presented to Parliament? Is this the way that the Auditor-General will have to inspect that so that it can be presented to Parliament or is it giving the Auditor-General an additional power to have a look at the accounts of the corporate bodies that have already been audited by private accounting firms. Sir, I need clarification for that.”

[14] The Prime Minister of the day replied:

“ .... The honourable Member is right. There are certain corporate bodies that may give their accounts for auditing by private firms in which case when those audited reports are submitted, this clause empowers the Auditor-General to review that report and it also further empowers him to get those reports audited by private firms and tabled in the two Houses.”

Soon afterwards, the question was put and the clause “as amended agreed to”.

[15] Nine years later, on 15 February 2006, Hansard records at pages 2164-2167, that during “Debate on the Audit (Amd’t) Bill, 2005”, it was explained to the House by the HON. RATU J.Y. KUBUABOLA as follows:

“This Bill ... is a consequence of the amendments or the enactment of the Financial Management Act, which came into force in 2004 ...That particular legislation was aimed at ... the need for more accountability and reporting on the whole of Government operations. For that reason, there was a need to extend the powers of audit by the Auditor-General and hence this Bill ...

Discussion then moved to the Reserve Bank of Fiji (RBF):

“Let me mention their provisions in the Constitution, especially section 167(5) which says, and I quote:

‘A law made by the Parliament may provide that the accounts of a specified body corporate are not subject to audit by the Auditor-General but are to be audited as prescribed in that law.’

In some instances like the RBF and some other bodies, those are prescribed in their own legislation that the auditing done outside the Auditor-General’s Office. However, the powers are now vested also with the Auditor-General in accordance with section 167(6), which says, and I quote:

‘If the law so provides, it must also empower the Auditor-General to review those audits and report the results of a review.’

So whilst these are audited outside of the Auditor-General’s Office, the Auditor-General is required to review such audits ...

We have discussed it at length with the Auditor-General and it was agreed that the Minister for Finance and National Planning has the powers, under section 19. The regulations should then spell out the types of information that will be required out of the various auditors that will be undertaking the audits of these entities to satisfy that requirement of review under the Constitution.”

[16] Unfortunately, between February and December 2006, the then Minister for Finance and National Planning never issued regulations pursuant to s.19 and then the events of 5 December 2006 occurred. Thus, as matters presently stand, no regulations have come into force. So what is the Auditor-General as well as the Governor of Reserve Bank and their Board required to do in the time being?

[17] The answer would seem to be to apply their common sense (as the Reserve Bank has been so doing) guided by the above excerpt from Hansard. As Counsel for the Defendant noted in oral submissions, in relation to the interpretation of modern statutes, it is entirely appropriate these days for Courts to look at the observations made at the time of the party moving Bill. Despite (what I took down from his oral submissions) as Counsel citing in support Black-Clawson International Ltd v Papierwerke Waldhof-Aschaffenburg AG [1975] UKHL 2; [1975] 1 All ER 810) which has been referred to recently by Justice Keith Mason as the case whereby “the Hansard exclusionary rule had been restated emphatically by the House of Lords in 1975”, Counsel’s point is correct, as the House of lords affirmed in Pepper (Inspector of Taxes) v Hart [1992] UKHL 3; [1993] 1 AC 593 and this in my view, is the importance of the present case to be decided before me. (See Justice Keith Mason, ‘LEGISLATORS’ INTENT: How judges discern it and what they do if they find it’, speech given to the IALS, 2 November 2006, Supreme Court of NSW Website:
http://www.lawlink.nsw.gov.au/lawlink/Supreme_Court/ll_sc.nsf/pages/SCO_mason021106)

[18] The present case also highlights again the need not only for the Fiji law Reports to be kept up to date (sadly, at present, they are some eight years behind, the most recent being for the year 2000), but also for additional volumes to be added to some years such that important cases, which were unreported initially, can now be published. Bull v Commissioner of Inland Revenue (Majority Judgment) (Unreported, Supreme Court of Fiji, Civil Action Nos. CBV0005 and CBV0006 of 1998S, 10 March 1999, Lord Cooke of Thorndon and Sir Anthony Mason JSC) (Paclii: [1999] FJSC 5, http://www.paclii.org/fj/cases/FJSC/1999/5.html), is a case in point.

[19] Bull was a taxation case decided in the immediate years following the judgment of the House of Lords in Pepper (supra). A majority of the Law Lords in Pepper concurred with the leading judgment of Lord Browne-Wilkinson who, on the issue as to “should the rule prohibiting references to Parliamentary material be relaxed”,(see Pepper [1992] UKHL 3; [1993] 1 AC 593 at 640; and Bailii: [1992] UKHL 3, 26 November 1992, http://www.bailii.org/uk/cases/UKHL/1992/3.html, at page 41) concluded that:

“ ... subject to any question of Parliamentary privilege ... the exclusionary rule should be relaxed so as to permit reference to Parliamentary materials where (a) Legislation is ambiguous or obscure, or leads to an absurdity; (b) The material relied upon consists of one or more statements by a Minister or other promoter of the Bill together if necessary with such other Parliamentary material as is necessary to understand such statements and their effect; (c) The statements relied upon are clear Further than this, I would not at present go.”

[20] In Bull, the majority judgment of the Court of Appeal of Fiji (see Bull v Commissioner of Inland Revenue (Unreported, Court of Appeal of Fiji, Civil Action Nos. ABU0017 of 1997S and ABU0018 of 1997S, 15 May 1998, Tikaram P and Thompson JA) (Paclii: http://www.paclii.org/fj/cases/FJCA/1998/21.html, pages 9-10) applied the reasoning from Pepper as follows:

“Although in Fiji there is no statutory authority for referring to any sources external to the legislation itself in order to construe it, we consider it proper to refer to the reports of the Parliamentary debates on Bills for Acts to the extent, and for the purpose, approved for the courts in England by the House of Lords in Pepper v. Hart [1992] UKHL 3; [1993] AC 593. That is to say we consider it a proper development of the common law that, where the legislation is ambiguous or obscure or where to give it its natural meaning will lead to absurdity, the courts in Fiji should be able to take into account for the purpose of construing that legislation statements by the Minister or other promoter of the Bill, provided that those statements are clear.”

[21] This reasoning was developed further by the majority judgment of the Supreme Court of Fiji also in Bull (Lord Cooke of Thorndon and Sir Anthony Mason JSC), when they said (see Bull (Majority Judgment) (supra), Paclii at pages 6-7):

“Use of History

There was a submission made during the course of argument that the Court should not have regard to extrinsic materials. It is, of course, right to say that the courts resort to extrinsic materials in order to interpret statutes only in cases of ambiguity (Re Bolton; Ex parte Beane [1987] HCA 12; (1987) 162 CLR 514). If the text is clear, the text must prevail. If, however, the text is ambiguous or admits of more than possible interpretation ... it is now widely accepted in many common law jurisdictions that recourse by the courts to legislative history and extrinsic materials is a legitimate aid to interpretation. For present purposes it is sufficient to refer to the decision of the House of Lords in Pepper v. Hart [1992] UKHL 3; [1993] AC 593 where the rule excluding reference to Parliamentary materials as an aid to statutory construction was relaxed so as to permit such reference when-

(1) the legislation is ambiguous or obscure or leads to absurdity,

(2) the material relied upon consists of statements by a Minister or other promoter of a Bill together with such other Parliamentary material as is necessary to understand such statements, and

(3) the statements are clear.In our view, the extrinsic materials to which reference can be made as an aid to statutory construction are not limited to Parliamentary materials. In the past, at least for the purpose of identifying the "mischief" sought to be remedied by legislation, resort has been made to the reports of committees of experts or other persons on which legislation has been based. We see no reason why reports of that kind cannot be used as an aid to statutory construction, without being confined in their use to the identification of the mischief aimed at. Indeed, we consider that it would be unwise to limit the extrinsic materials to which a court can legitimately have regard, so long as the pre-conditions of ambiguity and clarity are observed and the materials are of such a kind that they do throw significant light on the statutory intention.”

[22] As noted above, the issue was discussed in a more recent speech ‘LEGISLATORS’ INTENT: How judges discern it and what they do if they find it’, given by Justice Keith Mason (who, at the time, was both as a non-resident judge of the Supreme Court of the Fiji Islands as well as President of the Supreme Court of New South Wales) when he explained at page 4 the development of Courts referring to Hansard:

“Pepper was a hard case in which the Revenue propounded an interpretation of a taxing statute that flew in the teeth of assurances, illustrated by examples, repeatedly given by the Financial Secretary to the Treasury when promoting the legislation through the Commons. Yet, if ever there were an idea whose hour had come by 1992, it was the legitimacy of referring to Hansard for at least some purposes in construing legislation. The law was already moving away from the “austere judicial literalism” (of Lord Simonds (See The Right Hon Sir Nicholas Lyell QC MP “Pepper v Hart: The Government Perspective”, (1994) 15 Statute Law Review 1-13). The notion of a purposive construction was emerging, pushing the boundaries of the ancient mischief rule stemming from Heydon’s Case ([1584] EngR 9; 1584) 3 Co Rep 7a; 76 ER 637 at 638 (See generally Pepper at 617 per Lord Griffiths). Access to travaux preparatoires had become the acceptable method for construing international treaties and the growing body of municipal legislation giving them effect. Some judges were troubled (in the way their predecessors were not) by the discordance between a rule banning consideration of this material for any purpose and their own practice of taking the odd peek at Hansard for assistance (See Pepper at 618) ... And, by 1992 the House of Lords had declared itself able to revisit its earlier decisions, thereby reflecting the postmodern uncertainties of our current age

As acknowledged in Pepper, there were already decisions (some of them predating confirmatory legislation) in Australia and New Zealand that gave effect to principles similar to those that were to be adopted by the Law Lords. The exclusionary rule has also been abandoned in Canada (See Sullivan, R and Driedger, E, Sullivan and Driedger on the Construction of Statutes, 4th edn, Butterworths, Markham, Ont. 2002 at 485ff), India (KP Varghese v Income Tax Officer [1981] INSC 160; AIR 1981 SC 1922) and Singapore (Tan Boon Yang v Comptroller of Income Tax [1993] 2 SLR 48; see also The “Seaway” [2005] 1 SLR 435), some of the cases in those jurisdictions having preceded Pepper. American law is to similar effect, not without its critics .... On my researches, only the Supreme Court of Ireland has rejected Pepper

As he then noted also at page 4:

“... I would have thought that resort to Hansard to find legislative policy was more defensible than resort to it for finding the meaning of particular words. It would defy common sense to spurn the bridge of Hansard if one was left speculating whether Parliament was responding to the mischief identified in say a law reform commission report or a decided case. My own experience, for what it is worth, is that discovering the policy of an Act as an aid to a purposive construction is the only area where reference to Hansard has ever proved the slightest bit helpful ...

And further at page 10:

We fool ourselves if we think that, in every case, a single “true” meaning will emerge if we wrestle long enough with the text. It follows that we should welcome all the help we can get in resolving genuine ambiguities that emerge, so long as we remember that the task remains that of determining what Parliament meant by the words it used, not what it was intending to say (Black-Clawson at 645 per Lord Simon). Judges must never assume a particular intention and then proceed to find it in Hansard or anywhere else. (Richardson v Austin [1911] ArgusLawRp 46; (1911) 12 CLR 463 at 470 per Griffith CJ; [1911] HCA28)

Hansard may occasionally provide useful and legitimate clues. But not often, for myriads of reasons ... Sometimes the people involved in statute-making were themselves uncertain about where they were aiming. Sometimes they deliberately chose to confer a broad discretion, or to use woolly or fuzzy language ... The Executive in Parliament may be content to let the courts work matters out by trial and error, even or especially if that leaves the judges taking the flack in particular classes of case. Lord Browne-Wilkinson was surely smiling when he wrote in Pepper that “Parliament never intends to enact an ambiguity” (Pepper (supra) at 634).

We would fool ourselves if we thought that even sharper rules of statutory interpretation could iron out ambiguity or avoid hard choices in statutory construction. If our prescient legislators may be taken to recognise this truth of nature, then it is to me inconceivable that Parliament would not want judges to look at all available material that might cast genuine light upon what it was seeking to convey. In several countries, including my own, Parliament has decided to spell out this mandate to the judges by enacting rules similar to those expounded in Pepper.

In 1946, Lord MacMillan, having detected the purpose of an Act, remarked that:

“The legislature has plainly missed fire.”

(Inland Revenue Commissioners v Ayrshire Employers Mutual Insurance Association Ltd [1946] 1 All ER 637 at 641 cited in Kingston & Anor v Keprose Pty Ltd (1987) 11 NSWLR 404 at 424)

Lord Diplock’s extra-judicial riposte in 1978 was that:

“if ... the Courts can identify the target of Parliamentary legislation their proper function is to see that it is hit: not merely to record that it has been missed.”

Lord Diplock “The Courts as Legislators” in The Lawyer and Justice, Sweet and Maxwell, London 1978, at 274 cited in Kingston at 424)

This latter sentiment better captures the true role of judges when interpreting legislation in a parliamentary democracy.(See Kingston ...)

The concept of the intention of Parliament expresses an important constitutional principle rooted in political reality and judicial prudence. Because of it, the principles in Pepper v Hart, properly understood and cautiously applied, should continue to guide our Courts.”

[23] Reference to Hansard in cases involving statutory interpretation has been used in recent years in cases before some of the senior judges of the High Court of Fiji so as to, as Justice Keith Mason has succinctly put it, “find legislative policy”. For example, the use of Hansard to find legislative policy was particularly important in State v Naqa and Ors (Unreported, High Court of Fiji, Criminal Case no. HAA0023J of 2003S, 18 July 2003, Shameem J) (Paclii: [2003] FJHC122, http://www.paclii.org/fj/cases/FJHC/2003/122.html) in relation to the “the scope and meaning of section 29(3) of the Penal Code” where as Shameem J noted:

“State counsel invited me to peruse the Hansard reports of the debate inParliament when section 29(3) was being considered. Counsel for the Respondent objected, saying that the words in section 29 were plain and simple and required no discussion of Parliament’s intent.

In Pepper –v- Hart [1992] UKHL 3; (1992) 3 WLR 1032 the question of the ability of the judiciary to refer to Hansard to assist in statutory interpretation was referred to the House of Lords by the Appellate Committee of the Court of Appeal. The House of Lords held that Hansard could be referred to, to assist in statutory interpretation where legislation was ambiguous, or obscure or led to a patent absurdity. Hansard containing statements by the Minister introducing the Bill was of particular relevance.

Fatiaki J in Saviriano Radovu (Crim. App. No. HAA0006 of 1996) called section 29(3) an anomaly which needed urgent re-drafting. I considered section 29(3) in the State –v- Manoj Kumar Crim. App. No. HAA0002 of 2003S and said that the reference to sentences of less than 6 months imprisonment was difficult to understand and that the sub-section was ambiguous and anomalous. In the circumstances a perusal of the Hansard reports when the Ordinance amending the Penal Code was debated is both helpful and necessary. Did Fiji’s Parliament intend to depart so dramatically from the English provisions on the suspended sentence?

This debate is illuminating for two reasons. The first is that it shows that the words “shall not” in section 29(3) were substituted for the original as an attempt to “tidy-up” the sub-section. The substitution was never intended to change the meaning of the provision. The second is that it was the intention of the legislature to simply incorporate into Fiji law, the provisions of section 39 of the Criminal Justice Act 1967 (UK). There was no intention to alter those provisions either in substance or in form, except to improve on the drafting. This is also evident from the words in section 29(3)(b) – “which the court is not required to suspend.” These words suggest that the subsection was intended to create a class of sentences (6 months and under) which had to be suspended. It is now apparent that Parliament would have done better if it had simply adopted the same words as the UK legislation ...

If that was the intention of Parliament (and this is very clear from Hansard) then section 29(3) was intended to provide that all short sentences (6 months or less) must be suspended unless they fall into any of the exemptions in section 29(3)(a) in which case the sentences can be suspended but need not be. Of course this is quite different from the way the section reads, and the only sensible way to construe the subsection in the light of clear Parliamentary intention is to find (as Fatiaki J found in Radovu (supra) and as I found in Manoj Kumar (supra)) that the statute favours suspensions of short sentences for most cases, but provides that the exempted offences “must be considered prima facie unsuitable to be dealt with by way of a suspended sentence.” (Fatiaki J in Radovu (supra).)

[24] Pathik J in a case involving the Stamp Duties Act, (see JS Hill Associates Ltd v Commissioner of Stamp Duties [2004] FJHC 351 (Unreported, High Court of Fiji, Civil Case no.HBC0172 of 2003S, 31 August 2004, Pahik J) (Paclii: http://www.paclii.org/fj/cases/FJHC/2004/304.html) noted at page 5 that:

"... it is clear according to my construction as to what the import and intention is behind this provision in the Stamp Duties Act, it is open to the Court to refer to the objects and reasons contained in a Bill which precedes an Act."

And further at page 5:

"Some interesting pronouncements have been made in regard to interpretation by reference to legislative history of an enactment. Although in this case I do not need to go to the Hansard for Parliamentary debate in the amendment herein, as the Explanatory Notes is sufficient for our purposes, the ... passages from judgment of Lord Griffiths in Pepper (Inspector of Taxes) v Hart [1993] A.C. (H.L) 593 at 617-8 have been borne in mind which I consider apt"

He also referred at page 6 to the passage cited above from the Court of Appeal in Bull that:

"where the legislation is ambiguous or obscure or where to give it its naturalmeaning will lead to absurdity, the courts in Fiji should be able to take intoaccount for the purpose of construing that legislation statements by theMinister or other promoter of the Bill, provided that those statements are clear."

And concluded at page 6:

"In the case before me on the question of construction as I said I do not have to go to extraneous source like Hansard as it is quite simple to interpret the wording as they are and find in favour of the plaintiff for the crucial question is as to the meaning of the words in the said exemption section of the Act."

[25] Taking into account all of the above from the reasoning of the House of lords in Pepper and the Supreme Court of Fiji in Bull, and how their views have been considered and applied in more recent years in trials before the High Court of Fiji, (as well as the recent speech given on the issue by one of the current justices of our Supreme Court), it would seem entirely appropriate for this Court to be guided by the excerpts from Hansard cited earlier in this judgment in ascertaining the legislative policy behind the matter before me.

[26] The parliamentary debate of 1997 in relation to the "Functions of Auditor-General" which eventuated into section 167(5) of the Constitution, clearly considered the question as to whether it was "giving the Auditor-General an additional power to have a look at the accounts of the corporate bodies that have already been audited by private accounting firms"? The Prime Minister of the day replied that: "The honourable Member is right ... this clause empowers the Auditor-General to review that report and it also further empowers him to get those reports audited by private firms and tabled in the two Houses."

[27] During the passing of the Audit (Amd’t) Bill, 2005, it was explained to the House that "there was a need to extend the powers of audit by the Auditor-General and hence this Bill". In relation to the Reserve Bank of Fiji "and some other bodies" where requirements for external auditing "are prescribed in their own legislation", it was again clearly noted:

(a) That "the powers are now vested also with the Auditor-General in accordance with section 167(6)" such that "whilst these are audited outside of the Auditor-General’s Office, the Auditor-General is required to review such audits";

(b) That those involved had "discussed it at length with the Auditor-General and it was agreed that the Minister for Finance and National Planning has the powers, under section 19"; and

(c) That "the regulations should then spell out the types of information that will be required out of the various auditors that will be undertaking the audits of these entities to satisfy that requirement of review under the Constitution."

[28] Thus, Parliament acknowledged:

(a) That bodies such as the Reserve Bank of Fiji were already meeting the requirements of external audits;

(b) That the Constitution required the Auditor-General to review such audits; and

(c) To do so, regulations would be developed by the Minister.

[29] That no regulations have come into force does not mean that the Auditor-General requires either of the Declarations sought by this Court. Rather, the Auditor-General should continue to review such audits as has been the case in past years and, if, upon review, is not satisfied with them, can then ask from the body concerned (such as in this case the Reserve Bank) for further "types of information that will ... satisfy that requirement of review under the Constitution". Indeed I note that the development of "a template for the review of this audit" is something which the relevant Minister asked the parties to do in his letter of 4 February 2008.

[30] Therefore, it is the respectful view of this Court that until a return to parliamentary democracy, the Reserve Bank, who has been engaging external auditors to audit their accounts (as required by specific legislation) should continue to do so. If they decide to appoint outside auditors other than from the Auditor-General’s Office then they should continue to provide the Auditor-General with a copy of each audit so that he or she can "review those audits and report the results of a review" to the relevant Minister.

[31] Thus the formal Orders of this Court are as follows:

1.The Application for a "Declaration that the Plaintiff, pursuant to the provisions of the Reserve Bank of Fiji Act Cap 210, the Audit Act Cap 70 (as amended), the Constitution (Amendment) Act 1997, and the Financial Management Act 2004, is legally required to audit the accounts of the Defendant" is dismissed.

2.The Application for a "A Declaration that the Defendant is legally required, pursuant to the provisions of the legislation referred to in paragraph 1 above, to allow the Plaintiff to have access for audit purposes to the records and accounts of the Defendant" is also dismissed.

The Court will now hear the parties as to costs.

Thomas V. Hickie
Judge

Solicitors:
Cromptons, Barristers & Solicitors, Suva, for the Plaintiff
Chan Law, Barristers & Solicitors, Suva, for the Defendant