Liu v Agiru [1997] PGNC 143; N1639 (31 October 1997)

Unreported National Court Decisions

N1639

PAPUA NEW GUINEA

[NATIONAL COURT OF JUSTICE]

OS 349 OF 1997
BETWEEN: TAU LIU - PROVINCIAL ADMINISTRATOR FOR SOUTHERN HIGHLANDS PROVINCE
PLAINTIFF
AND: ANDERSON AGIRU - GOVERNOR FOR SOUTHERN HIGHLANDS PROVINCE
1ST DEFENDANT
AND: INDEPENDENT STATE OF PAPUA NEW GUINEA
2ND DEFENDANT

Waigani

Sheehan J
8 October 1997
14 October 1997
22 October 1997
31 October 1997

CONTRACT OF EMPLOYMENT - claim of conflict between contract terms and constitutional and statutory provisions.

Counsel

Mr P. Paraka for the Plaintiff

Mr L. Kari for the 1st Defendant

Mr J. Kawi for the 2nd Defendant

DECISION

SHEEHAN J: The Plaintiff is the Provincial Administrator of Southern Highlands Provincial Administration. He was appointed to that position by the National Executive Council on 26th October 1995 for a term of four years. On the same day he entered into a contract with the Independent State of Papua New Guinea which sets out the terms and conditions of his employment in that position. The introduction to the contract states:

“Whereas

(A) &#1he Sts e iiroesirous of s of employing the Administrator and Administrator has agreed to serve the State and

(B) ـ The Nat onal Executxecutive Council has Appoinhe Adtratothe adve advice oice of thef the Provincial Executive Council, following consultation with the Public Services Commission under the Oc Lawrovinand Locd Local-Leal-Level Gvel Government. And

(C) ـ by virtue of e of the Public Services (Management) Act 1995 the Administrator is employed on contract signed by the Head of State on advice, on terms and conditions of employment deted by ational Executiveutive Council from time to time NOW IT HERT HEREBY AGREED AS FOLLOWS:

(1) The Contract comprises thrs agreement and the standard terms and conditions for the employment of Provincial Administrators affected 26 Oc 199520;(trms anditions)” and this agreement and the Terms arms and Cond Conditinditions sons shall hall be read and interpreted together as one document, and the Terms and Conditions have full force and affect of this agreement.

(2) Cone act rs made under the the Public Services (Management) Act 1995 “(the Act)” as amended from time to time and tneralrs isunderAct sprevail when the contract is silent and in the even event of t of any cany conflionflict orct or interpretation as to the contract and the General Orders in the Contract shall prevail.

(3) The dur tionhef tntrCot shct shall be a 3 year period commencing on and from the effective date of this agreement (26 October 1995)....”

Provision is set for tationhe cot both for non-cont-contentioentious reus reasonsasons (par (para 17) and for cause (para 18). There is also provision at paragraph 27 for disciplinary procedures. That section opens as follows:

“27 Disciplinary procedure

27.1 &#Seriosciplinarlinary matt matters pursuant to s. 18 hereunder, allegedly involving the Administrator shall be resolved through tllowi/p>

(a) &#1here the Administrator itor is alleged to hato have cove committed serious offence under s. 18, the Governor shall suspend the Administrator on full pay, and Governor shall formally charge the Administrator in writing with offences he had committed and enable the Administrator to reply to those charges before to submitting a report to the National Executive Council ....”.

On the 7th August 1997 the `1st Defendant in his capacity as Governor of Southern Highlands Province suspended the Plaintiff from his duties as Administrator.

That suspension arose from allegations of misappropriation, mal practice and incompetence made in 1996. The then Governor and Provincial Executive Council had rejected those allegations. No action had been taken against the Plaintiff. However upon the 1st Defendant, the new Governor taking office he has re visited those allegations and suspended the Plaintiff, though two months later charges have still not been laid against him.

The Plaintiff challenges the validity of the suspension asserting that the contractual provisions in paragraph 27 (b) enabling suspension by the Governor is in conflict with Constitutional and statutory powers of appointment of the NEC and therefore is unlawful. He seeks declarations;

“1. A declanatiot tha suheensipension of Plaintiff by the Provincial Executive Council or by the Defendant as the Provincial Administrator for the Southern Highlands Province by letter dated 7th Aug997 il and, and therefore hore has noas no affe affect;

2. ; A declanatiot that the Plae Plaintiff (Tau Liu) is still the lawfully appointed Provincial Administrator of the Southern Highlands Province and shall continue to serve as the Administrfor Srn Prial Public Servicervices, aes, and shnd shall continue to act as chief executive of the Southern Provincial Government, unless the National Executive Council determine otherwise”.

Counsel for the Plaintiff argues that notwithstanding the terms of the contract as to disciplinary procedures, the manner of appointment of the Plaintiff to his post is critical to the manner in which he can be suspended and or terminated. Simply stated it was not open to the parties to contract out of constitutional provisions which governed the manner of his appointment and which also govern the manner of his suspension or termination.

Therefore it is argued that in so far as the contract of employment provided for powers of suspension to be exercised by the Governor, such a provision is null and void and is of no effect to the extent of the inconsistency with the Constitutional powers of the NEC. Further, the power to suspend which resides in NEC is itself subject to the same conditions as apply to an appointment, namely taking of advice and the giving of due notice.

Counsel for the 1st Defendant said that the Defence position is quite simply that it relies on the contract entered into by the parties. The Plaintiff opted to sign that contract and cannot now complain as to its terms.

He points out that the 1st Defendant acting only in accordance with agreed contractual powers has done no more than suspend the Plaintiff. The powers of termination under the contract reside in and remain with the NEC. He said that upon the Defendant the Governor taking office in July of this year he had learnt of the report and allegations against the Plaintiff made in 1996. Acting in reliance of the provisions in the contract (para 27(b)) he suspended the Plaintiff from his duties pending investigation. Counsel added that charges are imminent.

At the outset of these proceedings it was ruled that this was not a matter amenable to the Courts supervisory jurisdiction of Judicial Review. It is was not a matter for review of the actions of a public authority acting in an adverse manner with respect to a persons private rights in public law. It was solely matter of contract with rights and obligations of the parties governed by, and limited to, the provisions set out in the contract.

That ruling was based on the Plaintiffs contentions that his appointment and his rights as Provincial Administrator rested on contract and his assertion that the suspension he challenged was invalid because such matters have already been determined. However later written submissions were filed by the Plaintiff claiming rights arising from s. 193 of the Constitution. This had the effect of challenging the legalityof the disciplinary provisions of the contract.

With the State necessarily joined as 2nd Defendant, submissions were made by all parties on the contract terms and the constitutional and statutory provisions affecting them.

The Plaintiffs contract states that it provides all the terms and conditions of his employment. At issue is whether the terms of that contract override the rights of parties laid down under the constitutional law or statute,

Appointment to the position of Provincial Administrator is made by the National Executive Council pursuant to s. 73(2) of the Organic Law on Provincial Government and Local-Level Government which provides;

Section 73(2) The National Executive Council

(a) &ـ After cter considensidering a list comprising the names of three persons submitted by the Provincial Executive Council concerned, and

(b) ـ&#1fter cter consultnsultation with the Public Service Commission shall by notice in the National Gazette, appoint from the list submitted under paragraph (a) the Provincial Administrator&#8

d by s. 73(5);

>

An Act of the Parliament shall make provisions for -

(a) he selection criteria and procedures of appointment and

(b) &#16ting appointment’8217; and

<ـ҈& term condition of employment

of the Provincial Aial Adminidministratstrators aors and Dind District Administrators.

That Acthe P ServManagement) ent) Act 1Act 1995. 995. Section 60 of this Act partially meets the directive of the Organic Law to provide procedures for appointment of a Provincial Administration.

“60 Appointment Procedures in relations to Provincial Administration where there is, or is likely to be, a vacancy in the office of Provincial Administrator in a province, the Dmentad of epartof Personnel Management shallshall subm submit toit to the the Provincial Governor for the consideration of the Provincial Executive Council a list of persons suitable for appointment to the office.”

This section therefore, while it provides for a list of suitable persons to be submitted for consideration by the Provincial Executive. It does not provide for the actual appointment by the Head of State acting on advice after consultation with the Public Services Commission.

Section 62 of the Act provides Public Service status and for terms of employment;

“(1) &#A -

(a)&#16)  ټ ProvinAdal Administinistrator; ..........

shall be;

(c) an officer ofPublivice;

)ټ  su0ject to the Salaries anes and Conditions ions MonitMonitoringoring Committee Act 1988, employed on term conds deted byDeparal He the Department of t of PersoPersonnel nnel Management after consultation with thth the Proe Provincivincial Governor .......”

There is further provision as to the status of a Provincial Administrator and his contract of employment. By the Act, a Provincial Administrator is deemed by (definition in s 2 and s 75) to be a Departmental Head. As such his contract of employment is provided for, under Division 2 of Part VI of the Act where ss 26 to 30 set out provisions for Contracts of Employment for Departmental Heads.

Section 27 expresses itself to be subject to s. 193 of the Constitution and provides the balance of the procedures for appointment directed by the Organic Law, though in fact as to procedure itself, it does no more than reiterate the Organic Law. It reads:

“27 Appointments to Offices of Departmental Head

(1) This section is subject to s. 193 of the Constitution

(2) ArDepatamenead Hhallsbe apbe appointed b Headtate g on e givter consultation with the Commission.

For thor the pure purposesposes of t of this ahis action the acknowledgement that appoins of tmentads/Provincial Adal Adminisministratotrators are subject to s 193 is not only recognition of the Constitutional authority of the appointments but is also definitive of the mode of appointment that must be followed.

That is the requirements of s 193 as to appointment bring into play Schedule 1.10(4) and (5) which provide;

“Schedule 1.10 ..........

(4) ;&#16bject to ssto ss (5) w(5) where a Constitutional law confers a power to make an appointment, the power includes power to reor su a peappointed, and to appoint another person temporarily in place of a pers person soon so remo removed or suspended or where the appointee is for any reason unable or unavailable perform his duties, to appoint another person temporarily in his place.

(5) the power provided yor b is 4 is exercise only subject to any condition which the exercise of the original power of appointment was subject.”

Schedule 1.1 then determines that the above rules apply unless there is shown to be a contrary intention expressed.

“Sch 1.1

(1) &##160;; The Rule Rules cons contained in these schedule apply, unless the contrary intion appears in the interpretation of the Constitution and of the Organic Laws.”

These provisio the ule to the Constionstitutiotution have lead to the Plaintiff’s contention that because there are set procedures for consultation and the taking of advice for appointment, suspension and or termination must follow the same procedure.

Simply put the Constitutional power of appointment has to be made in accordance with the consultative process of the constitution s. 193. In the absence of any Constitutional or Organic Law directive otherwise, then the power to terminate and in particular the power to suspend can only be exercised following the same consultative procedures. Therefore the contract terms set out in para 27(a) giving power to the Governor to suspend are unlawful and must be struck out of the contract. The parties cannot contract out of Constitutional requirements.

The Defendants point to the Organic Law as expressing “the contrary intention” that excludes the operation of Schedule 1.10 (4) and (5). It provides that the Public Services (Management) Act applies. The Plaintiff in reply contends that an act of Parliament cannot override a constitutional law.

In Re Bourage SCR 1/82 1982 PNGLR 178 the Supreme Court said (p.211) speaking of s. 193.

“If the appointment of such departmental heads is made exclusively under the Constitution then it is axiomatic that any dismissal of a person acting in such a position must likewise come under the Constitution. In addition to this principle, we find that Sch. 1.10 (4) only operates when there is no contrary intention expressed in the constitution itself or an Organic Law (Sch 1.1).

It is not the law that “a contrary intention” means there must be a specific statement that Sch. 1.10 (4) shall not apply. Any provision in the Constitution or an Organic Law which provides for a procedure which would exclude the operation of Sch. 1.10 (4) would suffice. The Organic Law on Provincial Government and Local-Level Government does just that. It provides at s. 73 (5) for an Act of Parliament to make provision for terms and conditions of employment of Provincial Administrators. The Public Services (Management) Act 1995 performs that function.

In summary, it provides procedures for appointment of Provincial Administrators and significantly none of those procedures are inconsistent with the Organic Law or s. 193 of the Constitution. The provisions for the terms and conditions of employment are likewise not inconsistent. The provisions for suspension and termination while excluding the operation of to the of Sch. 1.10(4) and (5) are themselves not inconsistent with the Organic Law or s. 193 of the Constitution.

Returning to the contract. It is certainly true that parties cannot contract on matters which breach the laws of PNG particulary constitutional matters. But Schedule 1.10(4) and (5) of the Constitution are interpretive of procedural matters only and are operative only where the Constitution or Organic Law are silent. There is however no prohibition on parties contracting regarding administrative matters such as methods of employment and supervision of contracts by third party as is done here if there is Constitutional or Organic Law authority to do so.

Thus the provision in the Plaintiff’s contract of employment that a third person - the Governor of the Province - shall have a power and duty to suspend provides no conflict with any Constitutional or Organic Law. The contract provides a power for the First Defendant to act and on the face of the contract the actions of the 1st Defendant appear to be no breach of that contract. Certainly it appears that the State the other party to the Plaintiff’s contract has not categorised the Governor’s actions as interference. It has in fact endorsed the suspension by appointing an interim Administrator; again, an action not in consistent with contract or the Constitution or the Organic Law.

Whether the action to suspend is or is not taken are or are not arbitrary and unjustifiable in the particular circumstance amounting to a breach of contract is a matter for other proceedings.

Accordingly the Plaintiff cannot succeed in this action for the declaration sought. The first declaration asked for by the Plaintiff is refused. The second only states the actual position as stated at the outset of this ruling and is unnecessary. There will be judgment for the Defendant with costs to be taxed if not agreed.