Public Service Commission v Attorney General [1994] SBHC 60; HCSI-CC 185 of 1994 (7 September 1994)

IN THE HIGH COURT OF SOLOMON ISLANDS

Civil Case No.185 of 1994

THE PUBLIC SERVICE COMMISSION

-v-

ATTORNEY GENERAL

High Court of Solomon Islands
(Palmer J.)
Civil Case No. 185 of 1994

Hearing: 1st September 1994
Judgement: 7th September 1994

A. Radclyffe for Plaintiff
P.Afeau for Attorney General

PALMER J: The Plaintiff seeks by Originating Summons, 23rd May, 1994, a number of declarations as follows:

“1. That the Defendant is in breach of Section 3 of the Public Service Act 1988 in that:

(i) the Minister failed to consult with the Plaintiff before developing a new scheme of service for the Permanent Secretaries appointed in or about November, 1993;

(ii) it was not in the public interest to develop such a scheme of service for the said Permanent Secretaries.

2. That parts of the contracts of employment and letters of appointment of the said Permanent Secretaries are ultra vires and void on the grounds that certain terms and conditions are contained therein about which the Plaintiff has not been consulted and which are not in the public interest. The terms and conditions relate to a 10% non taxable establishment allowances, 35% gratuity, vehicle allowance and fuel and oil allowance.

3. That the Public Service Division of the Prime Minister's Office has no power to grant non-taxable allowances and that only the Minister of Finance has power under Section 12 of the Income Tax Act to exempt income from tax.”

THE FACTS:

Paragraph 4 of the affidavit of Waeta Ben Tabusasi, the Chairman of the Public Service Commission, filed on the 23rd of May, 1994, sets out the policy of the N.C.P. Government with regard to the Permanent Secretaries:

“The Public Service work force will be examined properly with the view of reducing costs, achieving productivity and maintaining discipline. As the first step towards realising this stated policy employment contracts of permanent secretaries will be terminated. All posts in the Public Service will be promotional.”

In accordance with this stated policy of the Government, the employment contract of the permanent secretaries were terminated. A vacancy notice number 57/93 and dated the 27th
August 1993 was then sent out advertising the thirteen permanent secretary posts. A copy of that vacancy notice is annexed to the same affidavit of Waeta Ben Tabusasi and marked
‘A’. That vacancy notice inter alia, sets out the duties, qualifications, age limit, and conditions of service of the post of the permanent secretary.

At paragraph 7 of his affidavit, Mr Tabusasi states that the “Public Service Commission met from the 23rd - 27th September, 1993 to consider the applications for the thirteen posts and from the 28th-29th September 1993 to assess the successful applicants.” Thirteen new appointments were soon made thereafter. Those new permanent secretaries consisted of two groups; those appointed on a fixed term of two years, and those appointed on permanent and non-pensionable terms.

In or about November of 1993, a new Agreement of Service was executed by those thirteen permanent secretaries.

Attached to the affidavit of Waeta Ben Tabusasi and marked 'D' and 'E' are copies of the new Agreements of Service executed by the permanent secretaries in November of 1993.

It is not in dispute that the Plaintiff was never consulted about those new Agreements of Service.

THE PLAINTIFF'S CASE:

The Plaintiff's case is based on the provisions of section 3(b) of the Public Service Act, which states that where new schemes of service within the public service are being developed or existing schemes of service are abolished, amended or amalgamated, then the Minister responsible, in this case, the Prime Minister, is obliged to consult the Plaintiff before making such changes. He must also be of the opinion that it is in the public interest to do so. The Plaintiff claims that the Prime Minister had acted in breach of that provision.

THE DEFENDANT'S CASE:

The learned Solicitor General does not dispute that the Plaintiff was never consulted. What is disputed is the contention that a new scheme of service was being developed or introduced. It was argued that there were only three items in those Agreements of Service which the Plaintiff had not been consulted on. These were:

(i) a 10% non taxable establishment allowance,

(ii) 35% gratuity,

(iii) vehicle and fuel and oil allowance.

The learned Solicitor General submits that those three items alone do not constitute a new scheme of service. They are only part of the scheme of service as terms and conditions.

THE MAIN ISSUE:

Both learned Counsels agree that one of the main issues for determination by this Court is the meaning of what a scheme of service is, and whether the Agreements of November 1993 amounted to the development of a new scheme of service.

WHAT IS A SCHEME OF SERVICE?

Learned Counsels also agree that the term should be given its plain and ordinary meaning, since no definition is provided in the Act.

In Australian Consolidated Press, Ltd v. Australian Newsprint Mill Holdings Ltd [1960] HCA 53; (1960) 105 CLR 473 at 479, per Dixon CJ, the learned Chief Justice said: “Scheme is a vague and elastic word. Doubtless it connotes a plan or purpose which is coherent and has some unity of conception.....”

In XCo Pty Ltd V. FC of T [1971] HCA 37; (1971) 124 CLR 343: “The word ‘scheme’ simply means plan, design or programme of action......”

In Black's Law Dictionary, sixth edition, the word ‘scheme’ is defined as: “A design or plan formed to accomplice some purpose; a system.”

In The Australian Little Oxford Dictionary, it is defined as: “systematic arrangement; outline, syllabus; plan of action”.

A scheme of service therefore is an arrangement of service. It refers to a plan or a design of service governing the employment of the permanent secretaries. It refers to the overall arrangement of service. It encompasses the duties of permanent secretaries, their qualifications, age limits and conditions of service.

THE AGREEMENTS OF SERVICE

Was a new Scheme of Service introduced in November 1993? To a certain extent it was not disputed that the new Agreements of Service contained a number of new terms not included in the original conditions of service, as advertised in the vacancy notice no. 57/93. These included; the 10% non-taxable establishment allowance, a 35% gratuity in respect of those on 2 year fixed term contracts, and vehicle allowance and fuel and oil allowance.

Did the introduction of those new terms amount to the introduction of a new scheme of service?

Before answering that question, another question must be posed. Did the Minister of Public Service have the legal authority to introduce those new terms without consulting the Plaintiff? The answer obviously must be obtained from the Public Service Act.

Section 4(1) (a) of the said act reads:

“Not withstanding the provisions of any other law, the Minister, after consulting the Commission, may make rules-

(a) prescribing the terms and conditions of service of......public officers and employees of the Government......”

Apart from this provision, there is no other provision within the Public Service Act which empowers the Minister to introduce new terms and conditions of services. Under what statutory power therefore, was the Minister purporting to exercise, in the introduction of those new terms?

In his submissions to this court on the provisions of section 4(1)(a) of the Public Service Act, the learned Solicitor General recognised to a certain extent, that new contractual terms were being added, but pointed out that this was different from the making of rules.

He submitted that section 4(1) of the Public Service Act empowers the Minister to make rules. He pointed out that section 4(1) did not apply to this case because the Minister was not making rules. He was only adding new terms and conditions of service. Unfortunately, he did not explain further where the Minister got his power from to introduce those new terms. It is my respectful view that section 4(1) is not restricted to the mere making of rules, prescribing the terms and conditions of service. It is not mandatory for the Minister to make rules for that purpose. The key word is 'may'. He may make rules on one hand and on the other hand, he may not make rules. The crucial words however, governing the decision whether to make rules or not, is the words 'after consulting the Commission'.

Whether the Minister makes rules or not, for prescribing the terms and conditions of service, he is obliged to consult the Commission.

The question then arises, is he obliged to consult the Plaintiff for the changes in the conditions of service as contained in the new agreements of Service? The answer in my view must be in the affirmative. The changes (additions) made to the conditions of service of permanent secretaries in my view fall within the powers of the Minister as provided for under section 4 (1) (a) of the Public Service Act. And under that provision the Minister is statutory obliged to consult the Commission.

The learned Solicitor General concedes that the Plaintiff had not been consulted in respect of those new terms. He also concedes that where consultation is statutory required and is not being done, then those items would be void. Accordingly, I so find that those three items are null and void.

Having so ruled it seems unnecessary for me to go on and consider the original question posed earlier on this judgment as to whether the introduction of those new terms amounted to the introduction of a new scheme of service. Nevertheless, I will consider this question as it has been argued in Court.

There are two ways of looking at the New Agreements of Service executed in November of 1993. One is to look at them from the point of, new agreements executed in November 1993, based on the same terms as contained in the vacancy notice no. 57/93. ie. they are new agreements because they have been executed at a later date. The other way is to consider them as new agreements, on the basis that there are new terms contained in the agreement.

THE FIRST CATEGORY:

The learned Solicitor General seeks to argue that actually the so-called new terms mentioned in the Originating Summons are not new terms and that although the plaintiff had not been consulted on them, they were already aware of them. He pointed out that clause (iii) of the Conditions of Service mentioned in the Vacancy Notice No. 57/93, did mention the provision of a vehicle. He submits that that clause should be interpreted widely to include the provision of vehicle and fuel and oil allowances. To a certain extent, that may be so. But how wide should one take the interpretation of that clause to? For instance, there is provision of $120/month allowance for fuel and oil; $900.00/month allowance for those who use their own private vehicles for official duties; and a provision whereby the Government may assist the permanent secretary through a guaranteed loan or hire-purchase scheme if the permanent secretary opts to buy a private vehicle for official purposes. Should these additional terms be read into clause (iii), or shouldn’t it be more appropriate to spell them out in detail before the vacancy notices are put out and before the appointments are made? It may be possible to accept the extension of such a generally word clause to include payment of allowance where the Government is not able to provide a vehicle. But should it be extended to include options to use one's own vehicle for official duties and thereby be able to claim a vehicle allowance of a specified amount per month, instead?

Should it also be extended to include an option to purchase a private vehicle for official purposes?

With respect, it seems that one would be stretching the interpretation of that clause a bit too far.

Mr Afeau also mentioned the provisions of the General Order; such as G.O. chapter F, paragraphs 1801 and 1802, which enable public officers to make claims for vehicle allowance. But with respect, the analogy drawn is inappropriate.

The paragraphs referred to are quite specific. They do not say that the Government should provide a vehicle for public officers, but in the event that a public officer is not provided with one that he may then make claims for vehicle allowance under those paragraphs. If the analogy is correct, then all public officers should be able to turn around and say, “look we prefer not to lodge a claim for vehicle allowance for official duties, we prefer you provide us with a vehicle instead”. The response of the Government would be obvious. There is no provision for that in the General Orders. It is inappropriate therefore to use the paragraphs in the General Orders to justify the extension of the meaning of clause (iii) of the conditions of service of the permanent secretaries as contained in the vacancy notice.

It has also been submitted by the learned Solicitor General that the concept of establishment allowances is not new. He refers to the appointment grants of Constitutional Post Holders as contained in the various Regulations prescribing the terms and conditions of Constitutional Post Holders. Unfortunately, the comparison is again inappropriate, because those appointment grants were clearly stipulated in the Regulations when those posts were being advertised or when the regulations were made. It was not so in this case. There was no provision for such establishment allowance in the vacancy notice No.57/93. The argument therefore that the introduction of the establishment allowance is not novel, carries little significance.

The same argument applies in respect of the addition of gratuity. The mere fact that gratuity was paid to the former permanent secretaries when their employment contracts were terminated makes no difference to this particular case. No mention of gratuity was made in the vacancy notice No. 57/93.

THE SECOND CATEGORY:

It is my opinion that the new Agreements of Service fall within the second category.

The new terms added were as already pointed out, not included in the vacancy notice no. 57/93. Their introduction will also result in an additional cost to the Government purse of at least $149,090.00. And if the vehicle and fuel and oil allowances are added then it would be more than that.

Such changes in my view cannot be brushed aside lightly as mere administrative changes. They amount to substantial changes to the original agreement of service and therefore have been correctly described as new Agreements of Service, executed in November of 1993.

It is not in dispute that the terms and conditions of service, are parts of a scheme of service. Where new terms and conditions of service are being introduced therefore, it only seems logical to conclude that a new scheme of service is being developed.

AMENDMENT OF EXISTING SCHEME OF SERVICES

But if I should be wrong, that no new scheme of service had been developed, it seems to me that the changes made could amount to an amendment of an existing scheme of service, (as also provided for in section 3(b) of the Public Service Act.)

The word ‘amend’ is defined in the Interpretation and General Provisions Act 1978 as:

“.......includes repeal, revoke, rescind, cancel, replace, add to or vary, and the doing of any two or more of such things simultaneously in the same Act or instrument;”.

The crucial question on this point therefore is whether the addition of a number of new terms and conditions will amount to or be described as, an amendment of an existing scheme?

It is not denied that the terms and conditions of an agreement of service comprise part and parcel of a scheme of service. Any changes therefore it seems, to the terms and conditions of service must necessarily mean changes (amendments) to the scheme of service.

But, if I am wrong on the above point, then we fall back to the conclusion earlier reached, as to the question, of whether the Minister had the power to make changes to the terms and conditions of service, of permanent secretaries without consulting the Plaintiff, and it was ruled that Section 4(1) (a) required that the Plaintiff must be consulted even in such changes. The declaration sought therefore in respect of ground l(i) is granted.

As to the question whether it was in the public interest to develop such a scheme of service for the said permanent secretaries, the Minister must necessarily form an opinion to that effect. No submission however, has been raised by the learned Solicitor General on this issue, mainly it seems because he had chosen to concentrate his challenge on the question of whether or not a new scheme of service was developed.

Mr Radclyffe has sought to submit to the Court that it would not be in the public interest to introduce a new scheme of service in view of the extra costs that this would engender, to the tune of at least $149,090.00. However, I am not satisfied that that is conclusive. It may be that the Minister had access to funds which would enable him to meet those extra costs, and therefore it would not be an extra burden to the Government purse. On the evidence and submissions made, I do not feel I am in a position to rule on this issue and accordingly, I decline to make the declaration sought under ground l (ii) of the Originating Summons.

GROUND 2

The issues raised in ground 2 have been canvassed. The declaration sought in respect of those three items is granted on the basis that the Plaintiff had not been consulted.

GROUND 3

The issue raised under this ground is quite simple. The Public Service Division of the Prime Minister’s Office does not have the power to grant non-taxable allowance, if such allowance would be liable to be taxed under the Income Tax Act. As correctly submitted by Mr.Radclyffe, only the Minister of Finance has the power under section 12 of the Income Tax Act to exempt such taxable income from tax. The effect of this is that, despite its inclusion in the Agreement of Service that would not prevent the Commissioner of Income Tax from taxing such allowances. The declaration sought under this ground therefore is allowed.

No order for costs are sought and accordingly none is made.

(A.R.Palmer)
Judge