General Manager of Gateway v Kiribati Provident Fund [2023] KIHC 45; Civil Appeal 2 of 2021 (1 December 2023)

IN THE HIGH COURT OF KIRIBATI

HIGH COURT CIVIL APPEAL 2 OF 2021

BETWEEN:
GENERAL MANAGER OF GATEWAY
Appellant

AND:
KIRIBATI PROVIDENT FUND
Respondent

Date of Hearing: 15 NOVEMBER 2023
Date of Judgment: 1 DECEMBER 2023

Appearances: Ms. Batitea Tekanito for the Appellant
Ms. Taaira Timeon for the Respondent

JUDGMENT

Case Information

1. This is an appeal against the decision of the Single Magistrate in BaiCiv 104/19, delivered on 6 January 2020. The appeal is out of time by two days, but this is not an issue to the respondent.
2. At the lower court, the appellant did not dispute the claim for unpaid contributions for the years 2010 to 2012 but refused to pay the penalties claimed under section 14 of the Kiribati Provident Fund Act. The magistrate court ruled that the appellant should also pay the penalties as they are not statute-barred when the claim accrued from the date of the last payment in 2018.
   

Ground of Appeal

3. The appellant filed the following ground of appeal;
   • - The Single Magistrate erred in law in holding that the appellant should pay a penalty fee for the years 2010 to 2012 in that the claim for them is statute-barred by section 5 of the Limitation Act 2004.

Analysis

4. At the hearing, Counsel for the appellant made submissions on the relevancy of section 4(5) of the Limitation Act 2004; therefore, I will accept that it is the correct provision instead of section 5. Section 4(5) reads as follows;

“An action to recover any penalty or forfeiture, or sum by way of penalty or forfeiture, recoverable by virtue of any law shall not be brought after the expiration of two years from the date on which the cause of action accrued.”

5. In light of the above provision, the appellant submitted that the right of action to recover the penalty fees accrued from 2009 when the employer failed to pay the contributions for that year (2009) and continued to 2012. The right of action did not start from 2018 when the employer stopped paying the contributions. Therefore, the penalty fees for 2010 to 2012 are statute-barred as the claim was filed with the magistrate court sometime in 2019, more than two years after the claim accrued.
6. The respondent referred this Court to sections 40(2) and (4) of the Kiribati Provident Fund Act, which states;

Section 40(2):

“Proceedings for the recovery of civil debt of any contributions may, notwithstanding anything in any law to the contrary, be brought at any time within 6 years from the date the contributions became due”

Section 40(4):

“In this section, the word “contribution” shall be deemed to include any penalty under the provisions of section 14”

7. It is also necessary to quote section 14 of the KPF Act to determine the meaning of sections 40(2) and (4). Section 14 states as follows:

“Penalty for late payment if any contribution for which an employer is liable under section 13 is not paid by the end of the month in which it is due to be paid, a sum equal to 5 per cent of the amount due to be paid shall be added to the contribution for each month or part of the month during which the contribution remains unpaid after the date by which payment was due unless the Board is satisfied that the employer has not omitted to take all reasonable action to ensure payment by the end of the month in which the contribution is due to be paid: Provided that the Board may, if it thinks fit, remit in whole or in part any penalty imposed by this section.”

8. Section 13 is about the employer's obligation to pay the contributions to the Fund in respect of each of his employees in every month that they are employed and a month following their termination unless the termination occurs in the same month that the employment started.
9. I agree with the respondent that the applicable law is section 40 (2) and (4) of the KPF Act. The Limitation Act would be applicable had the KPF Act failed to provide a limitation period for such claims.
10. Applying sections 40(2) and (4), such provisions require that a claim for unpaid penalties be made within six years from the date the penalties became due. Further, according to section 14 of the KPF Act, a penalty may be imposed if the contribution is not paid at the end of the month in which it is due for the preceding month. For example, contributions for January 2023 must be paid before the end of February 2023. If no payment is made, a penalty of 5% of the sum due may be imposed against the employer. Therefore, the penalties due in 2010, 2011 and 2012 are time-barred after six years from the end of the month they became due. The KPF lodged its case with the magistrate court for these overdue payments in 2019, nine (9) years from 2010, eight (8) years from 2011 and seven (7) years from 2012. It is very clear that the case was filed more than six years from the date the claims accrued; therefore, the claims are time-barred.
    

Outcome:

11. In light of the above, the magistrate court's decision in holding that the claims for the penalties for the years 2010 to 2012 are not time-barred as they accrued from the last payment date, 29 May 2018, is incorrect.
12. I find that the claims are statute-barred as explained in the above paragraphs.
13. Therefore, the appeal is allowed, and the decision of the magistrate in BaiCiv 104/19 is set aside.
14. No order as to cost.
    

Order accordingly.

THE HON TETIRO SEMILOTA MAATE MOANIBA
Acting Chief Justice