Guina v Warus [2023] PGNC 426; N10568 (13 November 2023)

N10568

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

OS (COMM) NO. 6 OF 2022

DICKSON GUINA
Chairman and Trustee of Local Government Service Benefits Fund
Plaintiff

V

JOE WARUS
Acting Secretary, Department of Provincial & Local Government & Affairs
Defendant

Waigani: Carey J
2023: 18^th October & 13^th November

TRUST- Private Trust Fund – Appointment of Trustee – Management of Private Trust Fund

This is a matter involving the determination of whether a Government Benefits fund is a private trust fund. It contained a number of issues which were analysed in order for the Court to arrive at a decision.

Held:

1. The Local Government Service Benefits Fund (LGSBF) is a private Trust Fund.
   
2. The Plaintiff is the legitimate Chairman and Trustee of the LGSBF appointed by the surviving contributors of the Fund.
   
3. The LGSBF is not subject to the control, direction and management of the Defendant or his successors and the Department of Provincial & Local Government Affairs.
   
4. The freezing of the BSP account at BSP Waigani Drive Branch in the name of LGSBF on the advice of the Defendant is unlawful, and therefore null and void.
   
5. The Plaintiff is the legitimate and duly appointed Chairman & Trustee of the LGSBF.
   
6. The Defendant and his successors and the Department of Provincial & Local Government Affairs are permanently restrained from interfering with the management and operations of the LGSBF.
   
7. The Defendant shall pay the costs of these proceedings to be taxed if not agreed.
   

Cases Cited

The following cases are cited in the judgment.

Dibiaso v Kuma [2005] PNGLR 680
Matthew Pola v ANZ Banking Group (PNG) Ltd (2001) N2049
Medaing v Ramu Nico Management (MCC) Ltd [2011] PGSC 40: SC1144
Re The Public Money Management Regularisation Act 2017 (2020) SC1944

Legislation

The Constitution
Public Money Management Regularisation Act 2017
Trustees & Executors Act 1961

Counsel:

P. H Pato, for the Plaintiff

JUDGMENT

13^th November, 2023

1. CAREY J: BACKGROUND: Dickson Guina (the Plaintiff) was the Chairman and Trustee of a trust fund namely, the Local Government Services Benefit Fund (LGSBF) which was formed in 1971. The Local Government Services Act 1971 was repealed and replaced by the Organic Law on Provincial Government & Local Level Government in 1995.
   
2. The LGSBF operated as a retirement benefits savings and was paid to the contributing members on their retirement or when they left the Local Government service with interest.
   
3. The contributions to the LGSBF ceased in 1995 with the management and operations of the LGSBF vested in the Department of Provincial & Local Government Affairs (the Department).
   
4. As of 1995, the incumbent Secretary for the Department assumed the role of Trustee and was known as the Chairman because he was head of the Department and would appoint the Deputy Chairman and Fund and Properties Manager from within the Department.
   
5. The Plaintiff was appointed Acting Secretary of the Department in July 2015 and became Trustee with his term expiring in June 2021 when his term expired.
   
6. Prior to the expiration of his term as Department Head, the contributors/beneficiaries of the LGSBF appointed him to remain as Chairman and Trustee.
   
7. There are currently 2802 contributors/beneficiaries.
   
8. The beneficiaries were never paid benefits between 1971 to 2015. However, during the Plaintiff’s term, the beneficiaries were paid a portion on their benefits on four occasions. The fifth round of payments was to occur in 2021 when the Defendant requested that BSP Bank freeze the account which stopped the payment process in August 2021.
   
9. The Plaintiff wrote to the Defendant on 16^th November, 2021 to remove the freeze on the account and this proceeding was filed 1^st December, 2021 after the Defendant refused to comply with the request by the Plaintiff.
   

ISSUES

IS THE LOCAL GOVERNMENT SERVICE BENEFITS FUND A PRIVATE TRUST FUND?

10. In Dibiaso v Kuma [2005] PNGLR 680, a trust fund is clarified as a fund held by a trustee for a particular purpose. The Plaintiff contends that this perspective underpins its argument in favour of the position that the LGSBF is a private trust fund.
    
11. The LGSBF operated as a private trust based on the characteristics of the trust fund. It serves no public purpose and is not funded by the Government. Such reality is accepted and it succeeds in establishing the view that the LGSBF is a private trust fund.
    
12. It is instructive that the Defendant offered no alternative as to an explanation of this point of contention.
    
13. In Re The Public Money Management Regularisation Act 2017 (2020) SC1944 it was determined by the Supreme Court by way of Supreme Court Reference that the Public Money Management Regularisation Act 2017 was unconstitutional.
    
14. The argument by the Plaintiff that the LGSBF as a private trust fund succeeds in light of the case law offered which supports such position.
    
15. It then follows that the other questions to be answered on the issues will provide clarity as to how this matter is to be concluded.
    

IS THE PLAINTIFF THE LEGITIMATE CHAIRMAN AND TRUSTEE OF THE LOCAL GOVERNMENT SERVICE BENEFITS FUND?

16. There is no deed specifically indicating the appointment of a trustee. As such, application of Trustees & Executors Act 1961 has relevance.
    
17. The oral evidence presented by Mr. Leo Vali on 18^th October, 2023 supported the proposition that the Plaintiff was the legitimate Chairman and Trustee of the LGSBF.
    
18. The Court accepts the argument that the Plaintiff is the legitimate Chairman and Trustee of the LGSBF.
    
19. The beneficiaries of the LGSBF should have expected certainty with how the LGSBF operates and functions and the actions of the defendant have clearly obliterated such expectation without just cause.
    

WAS THE FREEZING OF LOCAL GOVERNMENT SERVICE BENEFITS FUND ILLEGAL?

20. It is unconscionable that the defendant without reasonable explanation took unilateral action to stop the payment of benefits from the LGSBF to its intended beneficiaries.
    
21. There is no evidence to the contrary of what the plaintiff contends that the action of the defendant should not have occurred.
    
22. As the LGSBF is a private trust fund there is no legal basis for which a freezing of the bank account associated with the fund should have occurred without the lawful instruction by the Chairman and Trustee.
    
23. As this did not happen, the court has determined that the actions to freeze the LGSBF were unlawful.
    

SHOULD THE DEFENDANT AND HIS SUCCESSORS AND THE DEPARTMENT OF PROVINCIAL & LOCAL-GOVERNMENT AFFAIRS BE PERMANENTLY RESTRAINED FROM INTERFERING WITH THE OPERATIONS AND MANAGEMENT OF THE LOCAL GOVERNMENT SERVICE BENEFITS FUND?

24. The LGSBF should be able to function without the interference of the defendant.
    
25. In Medaing v Ramu Nico Management (MCC) Ltd [2011] PGSC 40: SC1144, the Court established the applicability of injunctions and the discretion associated with whether or not it is to be granted.
    
26. The argument that the Plaintiff has put forward states that the defendant is not a beneficiary, the defendant is not a co-trustee, the LGSBF is a private trust and that trust operates independently and not subject to the control or direction of the State after 1995.
    
27. The evidence presented to this Court during the trial supports what is stated in paragraph 26 and is accepted.
    

CONCLUSION

28. The importance of the rule of law cannot be overstated.
    
29. This case is one that impacts persons as the latter years of their life when all of the rewards of their hard work should be assisting them to enjoy a good quality of life.
    
30. There should be greater respect for due process and an appreciation of the exercise of restraint for the actions taken by any individual or group of individuals that can deprive people of their rights unfairly.
    
31. The Court thanks counsel for the Plaintiff for assisting in case law which was helpful.
    

ORDERS OF THE COURT:

1. The Local Government Service Benefits Fund (LGSBF) is a private Trust Fund.
   
2. The Plaintiff is the legitimate Chairman and Trustee of the LGSBF appointed by the surviving contributors of the Fund.
   

100. The LGSBF is not subject to the control, direction and management of the Defendant or his successors and the Department of Provincial & Local Government Affairs.
     

4. The freezing of the BSP account at BSP Waigani Drive Branch in the name of LGSBF on the advice of the Defendant is unlawful, and therefore null and void.
   
5. The Plaintiff is the legitimate and duly appointed Chairman & Trustee of the LGSBF.
   
6. The Defendant and his successors and the Department of Provincial & Local Government Affairs are permanently restrained from interfering with the management and operations of the LGSBF.
   
7. The Defendant shall pay the costs of these proceedings to be taxed if not agreed.
   

So ordered.
________________________________________________________________
Parker Legal: Lawyers for the Plaintiff