Nambawan Super Ltd v Independent State of Papua New Guinea [2018] PGNC 96; N7211 (12 January 2018)

N7211

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

OS (JR) NO. 20 OF 2017

BETWEEN:
NAMBAWAN SUPER LIMITED
Plaintiff

AND:
THE INDEPENDANT STATE OF PAPUA NEW GUINEA
Defendant

Waigani: Gavara-Nanu J
2017: 5^th September
2018: 12^th January

SUPERANNUATION FUND – Fund member’s contributions - Employers’ contributions – State’s contributions – Exit or retirement benefits for Fund members – Superannuation (General Provisions) Act, 2000; ss. 78 and 79 – Penalty rates – Superannuation Regulation 2000; s. 7 – State defaulting in paying its contributions towards the Fund – Default penalty appropriate.

Cases cited:

Goma v. 703 Others, Protect Security & Communication Ltd (2013) SC1300
Ona v. NHC and Nambawan Super Ltd (2009) SC995

Counsel:

M. Tamul, for the Plaintiff.
I. Geita, for the Dependant.

12^th January, 2018

1. GAVARA-NANU J: Pursuant to a notice of motion filed under Order 16 r 5 (1) of the National Court Rules (“NCR”), the plaintiff seeks the following relief. First, a declaration that the defendant breached its statutory duty under s. 78, ss. 6,7,8 and 9 of Schedule 6 and ss. 3 and 4 of Schedule 9 of the Superannuation (General Provisions) Act 2000 in that it failed to pay its component of the retirement benefit contributions for the members of the Public Officers Superannuation Fund (“FUND”) who have exited the Fund since 1 December, 2015, which as at 17 January, 2017 amounted to K11,624,267.42 which continues to accrue. Second, an order in the nature of Mandamus to compel the State to pay to the plaintiff as the trustee of the FUND, through its relevant Departments and officers, its component of retirement benefit contributions for Fund members who have exited the Fund since 1 December, 2015, which as at 17 January, 2017, amounted to K11,624,267.42 which continues to accrue. Third, an order in the nature of Mandamus or a mandatory injunction pursuant to s. 79 of the Superannuation (General Provisions) Act 2000, requiring the defendant to pay its outstanding retirement benefit contributions with penal interest at the prescribed rate from the date on which such payment was due until actual payment. Alternatively, interest pursuant to the Judicial Proceedings, Interest on Debts and Damages Act, Chapter No. 52 at such rate and for such time as the Court considers appropriate. The plaintiff also seeks costs of the application.
   
2. It is appropriate to note at the outset that the State does not dispute that it has defaulted in paying the Fund members’ exit or retirement benefit contributions for the period mentioned above. The State has nonetheless raised a number of issues regarding the relief sought. It argued that it has in recognition of its obligation to pay the Fund members’ exit benefits or contributions already made some payments; therefore it is not necessary for the plaintiff to seek the relief it is seeking, especially mandamus. The State also argued that it has already budgeted for the amount of contribution it is owing to the Fund members and it will pay the outstanding amount once the money becomes available.
   
3. The other argument by the State is that this application is unnecessary because the Superannuation General (Provision) Act 2000, contains penalty provisions which can be invoked against it for its default in paying its contributions to the FUND within the time or period stipulated in the Act.
   
4. The State also argued that the plaintiff has no standing or right to make this application. It argued that any claims against the State should be made by the aggrieved individual Fund members by way of ordinary civil suits and not through judicial review.
   
5. I reject all the arguments by the State. I deal firstly with the last point because it is easy to dispose of. The issue of plaintiff’s standing has already been determined at leave stage so ‘standing’ is really a non-issue. In any event, the plaintiff being the licensed trustee of the FUND has standing to act on behalf of the FUND members.
   
6. The scheme of the Act is very clear it imposes an obligation on the State as the employer of the Fund members to pay its contributions to the Fund members’ retirement benefits. This is a mandatory statutory obligation which must be complied with.
   
7. If I accepted the State’s argument that aggrieved individual Fund members should issue proceedings against the State if they so desired, that would be contrary to the clear legislative intent. More importantly, the individual members would suffer grave injustice because they would not have the financial capacity to institute proceedings against the State.
   
8. The State does not deny its statutory obligation to pay its share of contributions to the FUND, it argues that it is only asking the FUND members to wait until the budgeted funds are available then it will pay. This argument contravenes s. 78 (1) of the Act, which sets the timeline within which the State is required to pay its contributions viz; within 14 days from the end of each calendar month.
   
9. The governing legislations referred to above set out the mechanism by which the Fund members and their employers must pay their contributions to the Fund so that when the members retire, they are paid those contributions as part of their entitlements. For this reason the Act makes it mandatory for both the employee (member) and the employer to contribute to the Fund, and the Act provides for penal interest and other penalties to be paid on any outstanding contributions by the State in the event that the State defaulted in paying its contributions. The Act does not allow for late payment of contributions. A member upon his retirement is entitled to be paid not just his own contributions but the employers’ contributions as well. That is the member’s right conferred by the Act. It would be grave injustice to the members if they are not paid the State’s share of the contributions upon their retirement.
   
10. There is no dispute that the plaintiff is the licensed trustee of the Fund, which includes contributions by the State. In this regard, the State did comply with s. 78 (1) of the Act but then from 30 November, 2014, it started to default in paying its contributions, this has led to the State requesting the plaintiff to pay its (States) share of contributions. Therefore in a partly oral and partly written agreement between the plaintiff and the State, it was agreed that the plaintiff would pay the State’s share of contributions towards the Fund members’ exit benefits. It was also part of the agreement that the plaintiff would then invoice the State for the amounts it paid on behalf of the State towards the members’ exit benefits. The State has however defaulted in paying some of plaintiff’s invoices, this resulted in the plaintiff terminating the agreement. By 30 November, 2015, the plaintiff paid a total of K135 million on behalf of the State towards the Fund members’ exit benefits. Some of this amount has already been repaid to the plaintiff by the State, but the balance still owing.
    
11. The purpose of the agreement between the plaintiff and the State was for the plaintiff to assist the State to fully comply with its statutory obligation under s. 78 (1) of the Act. The plaintiff having been reimbursed with some of the money it paid on behalf of the State, the plaintiff is seeking mandamus to compel the State to pay the outstanding arrears it owes to the plaintiff and for the State to continue paying its contributions to the Fund for the members’ exit benefits. The plaintiff relies on the cases of Ona v. NHC and Nambawan Super Ltd (2009) SC995 and Goma v. 703 Others, Protect Security & Communication Ltd (2013) SC1300. In both cases the Courts held that Fund members have a right of action against the State if it failed to comply with its statutory obligation to pay its share of contributions towards Fund members’ retirement benefits. In Ona’s case, the Court said the Board of the Super Fund had a duty to recover the members’ unpaid superannuation benefits through judicial review.
    
12. In this case, the legal issues for the Court to determine as agreed to by the parties appear under the heading “Legal Issues” in the Statement of Agreed and Disputed Facts (“SADF”); they are:
    
    1. Whether the State breached its statutory obligations under s.78, ss. 6,7,8 and 9 of Schedule 6 and ss. 3 and 4 of the Schedule 9 of the Superannuation (General Provisions) Act 2000, when it failed to pay its component of retirement contributions for Fund members who have been exiting the Fund since 1 December, 2015, which as at 17 January, 2017 amounts to K110, 624, 267.42, which continues to accrue?
       
    2. Whether the State is liable to pay to its outstanding component of retirement contributions for Nambawan Super Limited (“NSL”) members who have exited NSL since 1 December, 2015?
       
13. To answer these two issues, I make following remarks. First, s.79 of the Act, empowers the plaintiff as the licensed trustee of the Fund to require an employer which in this case is the State to pay its outstanding contributions with penal interest at the prescribed rate from the date on which the payments were due until the date of actual payment. Second the plaintiff can commence proceedings under its own name against an employer for the recovery of its outstanding contributions, with interest and costs. Third s.7 of the Superannuation Regulation 2002, prescribes the penal rate of interest. It reads:
    

For the purposes of Section 79 of the Act, the penal rate of interest is 5 % above the 28 day Treasury Bill rate over the period of the late payment.

14. The question then is: Does the writ of mandamus lie against the State? The answer must be in the affirmative because the State is a public authority exercising public powers and functions. Order 16 r 13 of the NCR, provides for this among other things:
    

Judicial review proceedings involve a review of the decision making process of the statutory tribunal or authorities. They involve applications in the nature of mandamus, prohibition, certiorari or quo warrantor under the procedure set out in the Order 16 of the National Court Rules, and they include actions for:-

Commanding or otherwise requiring a public body or public officer to perform a public duty.

15. It also follows that the two questions posed above by the parties in SADF must be answered in the affirmative. The relief sought by the plaintiff are therefore granted with interest at the prescribed rate.

16. Section 79 of the Act and s. 7 of the Superannuation Regulation 2002, provide for the interest to be at the prescribed rate. I consider that it is appropriate for the interest to be at the prescribed rate because the duty on the State to pay the Fund members’ retirement benefits is conferred and regulated by the Superannuation (General Provisions) Act 2000, and the Superannuation Regulation 2002.

17. The defendant (State) will pay the plaintiff’s costs of and incidental to the application.
___________________________________________________________
Allens Lawyers: Lawyers for the Plaintiff
Solicitor-General: Lawyers for the Respondent