Nambawan Super Ltd v Vali [2015] PGNC 160; N6062 (22 July 2015)

N6062

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS 147 of 2011

BETWEEN:

NAMBAWAN SUPER LIMITED
Plaintiff

AND:

TAU VALI
First Defendant

AND:

RARUA BIGA
Second Defendant

AND:

PUBLIC EMPLOYEES ASSOCIATION OF PAPUA NEW GUINEA
Third Defendant

Waigani: Hartshorn J
2014: 22nd August
2015: 22nd July

Questions heard separately – Order 10 Rule 21 National Court Rules

Counsel:

Mr. G. Koi, for the Plaintiff
Mr. B. N. Nouairi, for the Defendants

22nd July, 2015

1. HARTSHORN J: This is a decision on certain questions that were heard separately. The court had ordered by consent that these questions be heard separately pursuant to Order 10 Rule 21 National Court Rules.

Background

2. In April 2010 the Bank of Papua New Guinea (BPNG) directed the then Statutory Manager of PNG Workers Superannuation Fund Ltd (as trustee for the Public Employees Association Superannuation Fund (PEASF)), to arrange the orderly transfer of PEASF members' entitlements to Nambawan Super Ltd, the plaintiff herein.

3. The BPNG made this direction in its capacity as the Central Bank pursuant to s. 60 (2) (a) Superannuation (General Provisions) Act 2000 (SPG Act).

4. The defendants who include the Public Employees Association of Papua New Guinea (PEA Defendants), in November 2010 opened a new bank account in the name of the PEA Welfare Fund (PWF Account) and arranged with the Department of Finance for a certain part of the pay deductions of PEASF members to be paid into the PWF Account.

5. Nambawan Super Ltd claims that the money in the PWF Account are PEASF members' entitlements which it should receive. Nambawan Super Ltd commenced this proceeding seeking amongst others an account of the money in the PWF Account and for that money to be paid to Nambawan Super Ltd.

6. The PEA Defendants contend that amongst others, the money in the PWF Account is for medical, life insurance and death benefits, commonly known as the welfare fund, and not governed by the SPG Act. Consequently, the money in the PWF Account is not comprised of superannuation contributions and Nambawan Super Ltd is not entitled to that money.

7. The questions that this court ordered to be heard separately are:

a) Whether the contributions by the Public Employees Association Superannuation Fund (PEAF) members through pay code DPWIM are superannuation contributions therefore should be received by the Plaintiff?

b) Alternatively, whether the PEASF was mandated under Rules 3, 5.1, 5.2 and 9.4 of its Trust Deed dated 20 January 1989 to provide a medical and life insurance cover as a product of the fund to its members therefore it was part of the fund?

c) Whether the PEASF's Trust Deed of 20 January 1989 is mandated to operate a Welfare fund called a PEA Welfare Fund?

d) If so, what are the parameters of PEA Welfare Fund operations?

e) Whether the Public Employees Association and its employees, officers, associates and agents were authorised by the PEASF members to provide a life and medical benefit separate from the business and functions of the PEASF?

f) Whether the PEASF members who are contributing through salary deductions through pay code DIPWIM are aware and have consented to have the Defendants use their monies to provide Medical and Life Insurance policy in the name PEA Welfare fund?

Question one

Whether the contributions by the Public Employees Association Superannuation Fund (PEAF) members through pay code DPWIM are superannuation contributions therefore should be received by the Plaintiff?

8. Nambawan Super Ltd submits that the said contributions are superannuation contributions and should be received by Nambawan Super Ltd as amongst others:

a) PEASF was created by a Trust Deed. The Trust Deed established and defined a Fund. The Fund is comprised of all monies, policies and other assets and investments held by the Trustees in accordance with the Trust Deed;

b) PEASF members were offered life, medical and disability benefits by virtue of a group policy the premium for which was paid out of the Fund. This was a product that was offered to PEASF members and did not constitute another Fund. The assured under the policy was the Public Employees Association Superannuation Fund and the assured persons are all individual contributing members to the PEASF;

c) there is nothing in the Trust Deed that provides for a welfare fund to operate in any form along with the superannuation fund;

d) Section 77 SPG Act provides for an employee to make voluntary contributions in addition to the rate prescribed.

9. The PEA Defendants submit amongst others that:

a) the funds in the PWF Account are monies that were contributed for medical and life insurance benefits. The pooling of those monies allows for the payment of medical and life insurance policies at an affordable rate and that is why the contributions were made. The contributions were not made for superannuation purposes;

b) there is no connection between the two schemes of superannuation on the one hand and medical and life insurance on the other, and the contribution made by a PEAF member consists of two parts for those two different schemes;

c) the SPG Act does not confer any power upon the Central Bank to administer welfare funds;

d) the funds in the PWF Account are held pursuant to s. 54 (g) and (i) Industrial Organizations Act, and with the approval of the Industrial Registrar;

e) the Trust Deed survived the coming into effect of the SPG Act, other than in respect of "superannuation fund" savings and the Trustees continue to operate.

Consideration

10. As to question one, the wording assumes that for Nambawan Super Limited to receive the subject contributions, those contributions must be superannuation contributions.

11. To determine whether Nambawan Super Ltd should receive the subject contributions, it is necessary to consider the relevant legislation - in this instance the SPG Act and the Superannuation Regulation 2002 - and the PEASF Trust Deed dated 20 January 1989.

12. From a perusal of the Trust Deed, it is clear that one Fund was established the property of which was to be held by the Trustees. Clause 3 of the Deed provides that the Fund comprises all moneys, policies and other assets and investments held by the Trustees in accordance with the Deed.

13. The PEA Defendants do not dispute that PNG Workers Superannuation Fund Ltd was granted a licence to operate the PEASF as an Approved Superannuation Fund (ASF) pursuant to s. 8 SPG Act. They submit however that for the period that the PEASF operated as an ASF, it only did so in respect of superannuation funds. If I understand the PEA Defendants correctly, they submit that although PEASF did manage the welfare funds in that period, it did not do so as an ASF.

14. The PEA Defendants submit that this is because from a consideration of the SPG Act, there are no provisions that would allow Nambawan Super Ltd to provide a welfare fund activity, apart from s. 126 SPG Act, which provides, according to the PEA Defendants, a temporary reprieve. This is in reference to s. 126 (2) SPG Act which the PEA Defendants submit, together with s. 9 Superannuation Regulation 2002, only allows benefits to be paid for amongst others, medical or life insurance for a period of six months after the commencement of the SPG Act.

15. Section 126 (2) has been amended however and provides:

"(2) An Existing Fund or Existing Trustee does not contravene this Act by paying benefits or entitlements if the regulations permit the payment of the benefits or entitlements"

16. Clause 9 (1) Superannuation Regulation 2002 also has been amended and is as follows:

9. Prior benefits to continue.

(1) For the purposes of Section 126(2) of the Act, the payment of the following benefits or entitlements is permitted but only if the right to the benefit or entitlements accrued on or before 30 June 2003—

(a) benefits or entitlements required or permitted by such of the governing rules of the superannuation fund as were in force immediately before the commencement of the Act;

(b) without limiting Paragraph (a), any of the following:—

(i) housing benefits or entitlements in respect of an application made to the trustee of the relevant superannuation fund before the commencement of the Act;

(ii) benefits or entitlements by way of funding for primary, secondary, and tertiary education in respect of an application made to the trustee of the relevant superannuation fund before the commencement of the Act;

(iii) benefits or entitlements by way of funding for medical expenses;

(iv) life insurance benefits or entitlements.

17. The submission of the PEA Defendants as to there not being provision in the SPG Act for Nambawan Super Ltd to provide welfare fund activity has been overtaken by these amendments. From a perusal of s. 126 (2) SPG Act, clause 9 Superannuation Regulation 2002 and s. 90 (6) SPG Act, the SPG Act provides for payments to be made other than superannuation payments.

18. I also make reference to s. 132 SPG Act which provides amongst others, that all property and rights, and assets and liabilities of an Existing Trustee vest in the New Trustee. Given this, I am satisfied that the entire Fund was transferred to the PNG Workers Superannuation Fund Limited as the New Trustee.

19. From a perusal of the letter from the BPNG to Nambawan Super Ltd, it is clear that the BPNG was of the view that PEASF and all of its members interests were to be transferred to Nambawan Super Ltd, by stating that, "NSL will assume full control of the fund ....." Further, in the notice of termination of the statutory manager, BPNG directed the Statutory Manager to transfer the PEASF members' fund to Nambawan Super Limited.

20. I am not of the view that the letter from the Industrial Registrar dated 25th March 2010 to the Secretary Department of Finance has any bearing on the matter given amongst others, a reference to the granting of approval under a subsection, a perusal of which indicates that it does not provide for any approval to be given.

21. Further, notwithstanding that s. 54 (1) (g) and (i) Industrial Organizations Act provide amongst others that the funds of an industrial organization may be expended only for allowances to members or their dependents on account of death, old age, sickness and also for social insurance and medical aid, the deductions made from PEASF members pay were to and in respect of the Fund and have continued on that basis. There is no evidence that the PEASF members have agreed to make deductions from their pay to another fund.

22. I am satisfied that the Fund that was established under the Trust Deed was transferred to the New Trustee, the PNG Workers Superannuation Fund Limited. The Fund was then transferred to Nambawan Super Ltd by the statutory manager at the direction of the BPNG. There is no evidence before me that any of the directions of the BPNG have been the subject of a successful legal challenge. The contributions that members of the PEASF make through pay code DPWIM, although they are for medical and life benefits, they should be made to the successor of the Trustees of the Fund, which is Nambawan Super Limited.

23. Given this, it is not necessary to consider the other submissions of counsel, or the other questions. I will hear counsel as to the relief to be granted.

Nambawan Super Limited: Lawyers for the Plaintiff
Bill N. Nouairi Lawyers: Lawyers for the Defendants