Ona v National Housing Corporation [2009] PGSC 16; SC995 (23 October 2009)

SC995

PAPUA NEW GUINEA
[IN THE SUPREME COURT OF JUSTICE]

SCA NO. 70 OF 2008

BETWEEN:

ANAVE ONA
Appellant

AND:

NATIONAL HOUSING CORPORATION
First Respondent

AND:

NAMBAWAN SUPA LIMITED
Second Respondent

Waigani: Mogish, Manuhu & Makail, JJ.
2009: July 2,
2009: October 23

APPEAL – Appeal against dismissal of proceedings for being time barred – Employer failed to process superannuation contributions – Public Officers Superannuation Fund Board fails to recover contributions – Appellant instituted proceedings to recover unpaid contributions.

PRACTICE AND PROCEDURE – Cause of action – Public Law and Private Law – Cause of action available to a subsisting employee distinguished from when he ceases employment.

PUBLIC INTEREST – Reliance on time bar after failure to comply with statutory duties – Not in public interest and unconscionable to rely on time bar after failure to comply with statutory obligations

Cases cited in the judgment

Ereman Ragi and State Services and Statutory Authorities Superannuation Fund Board (Public Officers Superannuation Fund Board) v Joseph Maingu, (1994) SC459
Tau Gumu v PNGBC (2001) N2288

Counsel

A. Ona, for Himself.
G. Koi, for the Second Respondent

23 October, 2009

1. BY THE COURT: Anave Ona is appealing against the decision of a Waigani motions Judge dismissing the proceeding he instituted against the respondents. Mr. Ona’s claim was for unpaid superannuation entitlements. The claim was dismissed on the basis that it was time barred.

2. It is convenient to state the relevant facts. Mr. Ona was employed by National Housing Corporation (corporation) from 7 February 1989 to 27 February 2001. The corporation was required to deduct and pay his superannuation contributions to Nambawan Super Limited (superfund) when he became a permanent officer. However, the corporation did not commence his superannuation contributions to the superfund until 1 January 1994, nearly five years into his employment. Mr. Ona was aware of the failure and raised the issue with the corporation which did not act on the claim. Following his cessation of employment on 27 February 2001, Mr. Ona’s attempts to get his entitlement for the period in question did not get a positive response. He resorted to legal action.

3. The corporation, which originally was the lone defendant, did not take much issue with the claim. The superfund was not a party until 13 June 2008 when the motions Judge dealt with two applications by the superfund. The first application was for it to be joined as a party. It was unopposed and was granted.

4. The second application was for the proceeding to be dismissed on the basis that, pursuant to section 16 (1) (d) of the Frauds and Limitations Act, it was time barred. Mr. Ona argued that the cause of action was saved when the corporation commenced contributions on 1 January 1994, and; that he, as an employee then, could not sue the corporation.

5. His Honour dismissed Mr. Ona’s argument and found that the cause of action accrued in February 1989 when the alleged failure to deduct superannuation contributions first occurred or on 31 December 1993 when the failure last occurred. Accordingly, the proceeding, which was filed on 8 August 2006, some 13 or 16 years later, was time barred.

6. The grounds of appeal essentially relate to whether the claim is timed barred or not. In his submissions, Mr. Ona repeated his submission before the motions Judge that while he did not take action initially, the cause of action was saved when the corporation commenced payment of his superannuation contributions on 1 January 1994. Mr. Ona submitted that he could not have taken legal action against the corporation when he was still its employee. The only time he could do so was when he left employment on 27 February 2001. The cause of action, it was argued, was still available then. Therefore, 6 years had not lapsed when he filed the proceeding on 8 August 2006.

7. The superfund’s argument was that the cause of action accrued on February 1989 or December 1993. Therefore, in August 2006, 6 years had lapsed. In any event, the superfund argued that it could only pay on the basis of contributions from an employer. In this case, it did not receive the contributions in question and did not owe Mr. Ona anything.

7. The first issue, therefore, is whether the claim was time barred. The answer to this question depends on whether or not the cause of action that was dismissed was available to Mr. Ona at the time he was still in the employ of the corporation. The second issue is whether the claim is maintainable against the superfund.

8. The Frauds and Limitations Act and the Public Officer’s Superannuation Fund Act 1990 (Act) feature prominently in our consideration of the issues. Section 16 of the Frauds and Limitations Act is straight forward. An action that is founded:

- on simple contract or on tort;

- or to enforce a recognisance;

- or to enforce an award, where the submission is not by an instrument under seal;

- or to recover any sum recoverable by virtue of any enactment, other than a penalty or forfeiture or sum by way of penalty or forfeiture,

shall not be brought after the expiration of six years commencing on the date on which the cause of action accrued.

9. On the other hand, the superannuation legislation requires careful consideration. The Act prescribes and imposes certain duties and responsibilities upon an employer and the superfund in relation to employee superannuation contributions. The Act establishes the State Services and Statutory Authorities Superannuation Fund (Fund) as a scheme of superannuation rights for and in respect of citizen officers and employees of the National Public Service and approved Authorities, and for related purposes.

10. A contributor to the Fund means a person liable to contribute to the Fund. Under section 26, an employee shall contribute upon completion of 12 months of service. The rate of contribution is determined under section 28. A contributor contributes at a rate of 6 per cent of his salary. Under section 29(1), such contribution "shall be deducted from his salary by the employer at the time of payment".

11. Provision for employer contributions is provided for under section 32. These contributions are payable for each pay period in the ratio of 7:5 of the employees’ contributions. All of these contributions, subject to terms and conditions imposed by the Act are payable to a contributor upon cessation of employment.

12. Section 3 establishes the Public Officers Superannuation Fund Board (Board). The Board is responsible for the administration of the Act "in the best interest of the contributors." In the event of a breach by an employer, the Board has the statutory duty to take appropriate action and to recover unpaid superannuation contributions.

13. Under section 29(2), where the whole or part of a contribution is not deducted, the arrears "shall" be paid by the contributor and deducted and paid by the employer in such amounts and during such period as determined by the Board. Where an employer fails to facilitate payment of contributions, within 30 days of due date of payment, the Board may issue to the employer a First Notice specifying the amount of payment due and the date on which it was due: section 29(3).

14. A Second Notice may be issued after 60 days thereafter: section 29(4). Where the employer defaults again, under section 29(5), the Board may add penalty interest at a rate of 2 per cent to the amount of payment and "shall" issue a Third Notice requiring payment of all balance due.

15. The Act is silent on the powers of the Board in respect of breaches beyond issuance of Third Notice. However, as a matter of procedural law, the Board would have the right to sue the employer for recovery of unpaid superannuation contributions. Most importantly, a contributor, as a person with sufficient interest, would be entitled to sue his employer and enforce compliance with statutory obligations. A contributor could also sue the Board in similar fashion.

16. The nature of the cause of action available to Mr. Ona when he was still in the employ of the corporation is, therefore, different to the cause of action that was dismissed by the motions Judge. The distinction is amplified in the distinction between public law and private law right to sue.

17. In the case of Ereman Ragi and State Services and Statutory Authorities Superannuation Fund Board (Public Officers Superannuation Fund Board) v Joseph Maingu, (1994) SC459 the Supreme Court observed the distinction as follows:

"... So what is public law as against private law?

"Private Law rights relate to issues which arise either out of contract or out of tort whereby a private individual is claiming against either a private or public body damages or other remedy for a breach of contract or a breach of duty at common law which is owed to him personally.

"Public Law prima facie is the law which governs the actions of bodies designated by statute or by the prerogative where those actions are concerned generally to protect the interests of or to control the activities of the public at large."

18. An employer and the Board are charged with the statutory duty, on behalf of contributors as defined by the Act, to take appropriate steps to manage and restore a contributor’s superannuation contributions. Consequently, in the event of a breach beyond the scope of the Act, a contributor could make an application in the nature of judicial review under Order 16 of the National Court Rules 1983 for mandamus requiring his employer and or the Board to comply with their statutory duty. Indeed, the Board would be entitled to file the same application requiring an employer in default to carry out its statutory obligations in relation a contributor’s superannuation entitlements.

19. On the other hand, a contributor, while still in employment, could not take action for recovery and payment of superannuation contributions to himself. He is not entitled to collect his superannuation contributions unless he ceases to be a contributor. A recovery action would be available to a contributor only when he ceases to be a contributor. His private law right to sue in tort to recover superannuation contributions or entitlements accrues only when he ceases employment in the public service.

20. In this case, the cause of action in the National Court was a claim in tort, which action was not available to Mr. Ona at the time of failure between 1989 and 1993 when he was still in the employ of the corporation. He was only entitled to a public law remedy which he opted not to take. But his failure did not preclude him from exercising his right to sue in tort which became available to him upon cessation of employment.

21. We further note that the superfund could only pay to a contributor what it receives from an employer. Nonetheless, we note with concern that the corporation was initially at fault for failing to process Mr. Ona’s contributions according to law. The superfund then condoned the failure when the Board failed to take appropriate action. It is in the public interest that public bodies charged with statutory duties do not abandon their obligations to comply with the law.

22. It would be unconscionable for an employer and the Board, having failed to comply with their statutory duties, to wear the cloak of Frauds and Limitations Act and deny an employee and a contributor of an entitlement provided for by law. On this note, we endorse the decision of Kandakasi J in the case of Tau Gumu v PNGBC (2001) N2288 where his Honour ruled against an employer who attempted to rely on the Frauds and Limitations Act after it failed to give the required notice under the Workers Compensation Act 1988 resulting in lapse of time beyond 6 years.

23. In this case, a contributor is entitled to the privileges and protection under the Act until such time he ceases to be a contributor. Similarly, an employer, the superfund and the Board are required by law to safeguard the interest of a contributor until such time he ceases to be a contributor. In that regard, the Act does not prescribe any time limitations on compliance with the said statutory duty to make payment and to enforce payment. Accordingly, the statutory duty on an employer to process the payment and the Board to recover the contributions does not cease until such time an employee ceases to be a contributor under the Act.

24. We find, ultimately, that Mr. Ona’s employment ceased on 27 February 2001. The cause of action in the court below accrued then. The proceeding was commenced on 8 August 2006, well within six years, and was not time barred. Secondly, while the superfund did not receive the contributions in question, the Board’s failure to take recovery action under the Act is a cause for Mr. Ona’s alleged loss of superannuation entitlements. The cause of action against the superfund is, therefore, maintainable.

25. Accordingly, his Honour fell into an identifiable error when he dismissed the proceeding on the basis that it was time barred. For that reason, we will allow the appeal and quash the decision to dismiss the proceeding. The proceeding in the National Court is reinstated and shall proceed in the normal course to hearing. We award cost to Mr. Ona which, if not agreed, shall be taxed.

_____________________________________

The Appellant in Person
Nambawan Super Ltd In-House Lawyers: Lawyer for the Respondents