Port Vila Municipal Council v Attorney General [2005] VUSC 147; CC 075 2003 (26 October 2005)

IN THE SUPREME COURT
OF THE REPUBLIC OF VANUATU
(Civil Jurisdiction)

CIVIL CASE No. 75 of 2003

BETWEEN:

PORT-VILA MUNICIPAL COUNCIL
Applicant

AND:

ATTORNEY GENERAL
of State Law Office, PMB 9048, Port-Vila
First Respondent

AND:

MINISTER OF INTERNAL AFFAIRS
Second Respondent

Coram: Chief Justice Vincent LUNABEK

Counsel: Mr. Ishmael A. Kalsakau for the Appellant
Mr. Michael Edward and Ms Viran Molisa for Respondents

Date of Decision: 22 August 2005
Date of Publication of Reasons: 26 October 2005

RESERVED JUDGMENT

I - INTRODUCTION: NATURE AND RELIEF SOUGHT

This is an amended application for Judicial Review dated 19 May 2003. The Applicant is the Municipal Council of Port-Vila, Vanuatu. The Respondents are the Attorney-General (First Respondent) and the Minister of Internal Affairs (Second Respondent).

The Applicant applies for the Court to review various directives issued by the Minister of Internal Affairs on 25 March 2003 and as subsequently amended on 16 April 2003 and further on 16 May 2003 against the Applicant, Port-Vila Municipality.

On 22 August 2005, the Court dismissed the claim for judicial review because the Claimant fails to establish how the Directives issued by the Second Respondent Minister were in excess of the powers of the Second Respondent and unlawful or unreasonable. I set out below the reasons of the decision.

The Applicant challenges the directives of the First Respondent upon the grounds that:

1. The directives are in excess of the jurisdiction of the Minister to so make;
   
2. They are unlawful; and
   
3. They are unreasonable as to so expect the Applicant to comply with them.
   

II - ISSUES

The following are the issues to be determined by the Court:

1. Whether or not the Minister of Internal Affairs has the power/jurisdiction to issue the Directives as he did on March, April and May 2003?
   
2. If the Minister has the jurisdiction to do so, whether the exercise of the powers by the Minister was within the scope of his powers under the Municipality Act [CAP. 126] or whether it is in excess of the powers of the Minister and thus, unlawful.
   
3. Whether the Directives are unreasonable so to expect the Applicant Municipal Council to comply with them in the circumstances of their issuance?
   

I will deal with each issue in turn. But before I do that I will set out some factual circumstances leading up to the challenge.

III - FACTUAL BACKGROUND

The following are the factual circumstances leading up to the application for Judicial Review:-

On or about December 2002, allegations were made against the First Respondent for mismanagement.

On or about 15 December 2002, the then Prime Minister Edward Natapei wrote to the Minister of Internal Affairs to follow up the issues of mismanagement of the Applicant.

On or about 24^th January 2003, the Minister of Internal Affairs appointed Mr. Haydn Saunders as an inspector to undertake an inquiry into the affairs of the Port Vila Municipal Council with immediate effect.

On or about 28^th January 2003, the Solicitor for the Applicant wrote to the Respondents seeking clarification of the appointed Inspector.

On or about 29^th January 2003, the Second Respondent responded and outlined to the Applicant why the Inspector was appointed.

On or about February 2003 the inspector submitted his Report about his findings to the Second Respondent.

On or about the 25^th March 2003, and subsequently on April and may 2003, the Second Respondent issued a series of Directives to the Applicant purportedly in exercise of powers vested in him by section 61(2) of the Municipalities Act [CAP.126]. The Directions fall into six (6) classes namely:

(i) Those relating to the payment of monthly allowances to councillors.

(a) That as from the date of [the second Respondent’s] letter the Port-Vila Municipal Council must stop paying monthly allowances to the councillors and the Mayor and Deputy Mayors.

(b) That the Council’s treasurer must immediately cease to make payments of monthly allowances, councillors’ allocation and ex-gratia payments to the councillors and Mayor and Deputy Mayors.

(c) That the Council must put in place a system within two weeks to recover all monies it had illegally paid out since October 1999.

(ii) A Directive relating to the position of Deputy Mayor.

(d) That within two weeks as from the date of [the second Respondent’s] letter the Council must meet and abolish the position of the 2^nd and 3^rd Deputy Mayors.

(iii) Those relating to the payment of councillors allocations.

(e) That as from the date of [the second Respondent’s] letter the Council must stop paying Councillors’ allocation to the Councillors.

(f) That the Council must put in place a system within two weeks to recover all monies it had illegally paid out to the Councillors allocation

(iv) Those relating to the making of ex-gratia payments to Councillors.

(g) That as from the date of [the second Respondent’s] letter the Council may make ex-gratia payments but ONLY with the prior approval of the Minister.

(h) That the Council must put in place a system within two weeks to recover all monies it had illegally paid out as ex-gratia payment.

(v) Those relating to the employment of the Town Clerk.

(i) That the Employment Contracts of the Town Clerk, First Deputy Clerk and Second Deputy Clerk must comply with the provision of section 19(4) o f the Municipal Act CAP 126 and the Council is given two weeks to remedy this situation.

(j) That since section 19 of CAP 126 makes reference to “clerk”, this also includes deputy clerks, therefore their Employment Contracts are also subject to the approval of the Minister.

(k) That the Treasurer of the Council must immediately cease from making payments to the Town Clerk, First Deputy Clerk and Second deputy Clerk under the new Employment agreements signed on 1^st October 2002.

(vi) One relating to the auditor.

(l) That within two (2) months from the date of the letter [the Second Respondent’s] letter the Council must produce all the outstanding audits reports of its finances for the 1995-1996, 1996-1997, 1997-1998, 1998-1999, 1999-2000, 2000-2001 and 2001-20002 financial years.

At the trial, counsel for the Respondents informed the Court, that the Minister was satisfied that the Applicant Council, has complied with directive (l) as far as it can. Directive (l) relating to auditors is no longer an issue. It is now put at rest. The considerations and determinations will be about directives (a) to (k) only.

On or about the 3^rd April 2003, the Applicant through his Solicitor delivered a response to the directives issued by the Second Respondent.

On or about the 16^th April 2003, the second Respondent responded to the Applicant and extended the deadline for compliance of his initial directives maintaining their effect notwithstanding the response given by the Applicant.

A meeting was held between the parties to discuss the above mentioned issues.

On or about 13^th May 2003 the Applicant was advised that the Second Respondent is going to suspend the Applicant and appointed a Commissioner in the stead of the Applicant to administer the Port Vila Municipality.

The Port Vila Municipal Council through its Lord Mayor applies for Judicial Review and applies for interlocutory Orders restraining the Minister of Internal Affairs from suspending the said Council pending the determination of the applicant’s application for judicial review

On 21^st May the Court grants the Interlocutory Orders sought by the Applicant and proceeded to hear the Judicial Review Application challenging the lawfulness and reasonableness of the Directives of the Second Respondent Minister.

IV – EVIDENCE

The evidence is not substantially disputed by the parties. It can be summarised as follows:

The evidence of the Applicant

The Lord Mayor Mr Patrick Crowby and Mrs Madeline Tom filed sworn statements in support of the Applicant’s application for Judicial Review. The substantive part of the statement of Mrs Madeline was objected to and was struck out by the Court. She was not cross-examined by the Respondents’ counsel on the balance of her statement as her evidence is not factually critical for the case of the Applicant.

The Lord Mayor Patrick Crowby gave evidence to the following effect. He is the Lord Mayor of Port-Vila Municipal Council, the Applicant. On 24 January 2003, the Minister of Internal Affairs, Hon Joe Natuman appointed an inspector to undertake an inquiry into the Council’s affairs scoping for the inspector his investigation. The Council received the Minister’s response to the appointment by the Minister on 29 January 2003.

On 4 January 2003, the Council submitted all particulars requested by the Inspector along with an explanatory note prepared by the Council’s solicitor.

The Council was made aware that the Inspector delivered his report and recommendations to the Minister of Internal Affairs on 24 February 2003.

On 15 March 2003 the Minister issued to the Council several directives for Council’s compliance.

The Council instructed its solicitor to respond to such directives which response was given by a letter on the 3^rd April 2003.

The Minister responded to the Council’s letter by a letter to the Port-Vila Municipal Clerk with a further deadline of 25 April 2003 for the Council to comply with the Directives. Due to a visit to Noumea, New Caledonia, by him, the Town Clerk and other Municipal Councillors, to depart for Noumea on 18 April 2003, the Council instructed its solicitors to write to the Minister and to suggest to the Minister that the Council was prepared to have a meeting to discuss the directives of the Minister, which the solicitors did on 24 April 2003.

The Lord Mayor, Patrick Crowby was cross-examined. He stated he received all the corresponding letters by the respondents. He had been a Councillor since 1997 and was well aware of his obligation to act in accordance with the Municipal Act [CAP. 126] and authorities and regulations thereunder. He said the payment of monthly and sitting allowances was done long before he was voted in as a Mayor. He stated that allowances payable would be unlawful if it is not within the Act. However he said the Minister has approved the Standing orders. The Council acted on Standing Orders the Ministers in the past had approved to five (5) former mayors before his time.

Furthermore he stated that there was a procedure in place for Councillors Allocation. He stated in his evidence that the system for allocations was transparent and all records were made of allocations and all corresponding receipts were submitted to the Auditor General.

The evidence of the Respondents

Mrs Tountano Bakokoto was the only witness of the Respondent. Mrs Bakokoto said she was responsible for registering all statutory orders received by the First Respondent for publication in the Official Gazette. The statutory Orders were issued by the Minister of Internal Affairs. They were sent to the State Law Office. She then registered them in the file and she gazetted them in the Official Gazette. Her evidence is that she did not receive the Port Vila Municipal Order No...1999. She never gazetted it until today.

She said there were only two (2) Orders gazetted in 1999. She checked the registration book of 1999 in respect to gazetted statutory Orders. She did not check the records about the years before 1999. She was asked if there were standing Orders issued before 1999. She replied she was aware that there was an early standing Orders of 1989. As to different years she did not know. She was finally asked specifically if she was aware about Orders issued and gazetted in 1993. She replied she did not remember.

V - FINDING OF FACTS

It transpires from the evidence that the following are the facts as found and accepted by the Court:

• On 23 March 2003 and subsequently, the Minister of Internal Affairs issued the Directives against the Council on the belief that the Council was engaged in unlawful conduct. The evidence of Patrick Crowby Manarewo on behalf of the Applicant shows that the Minister believed the Council was engaged in unlawful conduct: see Annexure H to the sworn statement of Patrick Crowby Manarewo sworn on 13 May 2003 (Exhibit C1-1) where the Minister sets out why he believes the conduct is unlawful.
  

On the facts before the Court, the only rational inference to be drawn from the evidence of the Applicant is that the Minister was satisfied the Council was acting unlawfully because:

• He issued the directives in relation to matters he considered unlawful;[ see annexure J to Exhibit Cl.1; and
  
• The Minister issued the directives after receiving the reports of the Inspector, Mr Saunders saying that the actions of the Council were unauthorised [see annexure G to exhibit Cl.1 and annexure M to Exhibit Cl.2].
  
• On the evidence, the directives on their face show that the Minister was satisfied that the Applicant had done things that it is not authorised to do, namely:
  
  • - paying members unlawful monthly allowances;
  • - creating the positions of 2^nd and 3^rd Deputy Mayors;
  • - making ex-gratia payments to Councillors; and
  • - employing the Town Clerks on conditions that he had not approved.
    

The evidence shows that there have been only two (2) Orders issued under Section 4(f) of the Act. The first, the Municipal Council (Payment of Gratuities) Order No. 9 of 1993 which related to gratuities. The second is the Port-Vila Municipalities (Allowances) Order No. of 1999, and the reimbursement of costs, to councillors but not the payment of monthly allowances.

The Applicant’s evidence shows some Council’s Standing Orders. It is not clear as to which Standing Orders it relies on. The Applicant’s lawyer has annexed what purport to be copies of Standing Orders to his submissions. These Standing Orders have not been proved in evidence so they are not considered by the Court as the Court can only take judicial notice of the Standing Orders that have been gazetted. In the absence of proof of gazettal the Applicant must formerly prove the Standing Orders in evidence.

On the evidence the only Standing Orders for Port-Vila Municipal Council that have been gazetted is No. 6 of 1989. Standing Orders 23 in No. 06 of 1989 authorises the payment of sitting allowances of VT5,000. It does not authorise monthly allowances for councillors.

There is no evidence before the Court that the Minister or any of his predecessors have made Orders under the Municipalities Act authorising the payment of monthly allowances to the councillors.

There is evidence that the Councillors allocations were paid. However, there is no evidence as to how the allocations were spent and for what purposes. There is no evidence that Councillors spent their allocations on lawful projects or in compliance with the Municipal Councils Financial Regulations [subsidiary legislation – CAP. 126].

The only evidence before the Court about allocation is that they were paid by the Council’s treasury upon production of a receipt. There is no evidence that the funds were used for lawful purposes. There is no evidence by the Applicant to show there is any proper accounting practices in place or any procedure of acquittal in relation to those allocations to show that the money has been used for proper purposes.

It is a fact that the Applicant made ex gratia payments relying on Standing Orders issued by the Municipal Council of Port-Vila.

It is further a fact that the Council promoted the Town Clerk to her current position (she was a Deputy Town Clerk) on 19 December 2000. On 13 March 2001, the former Minister approved her promotion on her existing terms and conditions. On 1 October 2002, the Council entered into employment contracts with the Town Clerk and her two (2) Deputies. The contracts provided for two (2) new terms (a thirteen month’s salary bonus, and a housing and utilities allowance of VT30,000 per month). On the evidence, the Minister has not approved them.

It is finally a fact that the Applicant claimed that the Minister had acted on improper motives. There is no evidence before the Court to support such a claim.

VI - THE LAW

The following are the relevant provisions of the law:

• Relevant provisions of the Municipalities Act [CAP. 126]:-
  

COMPOSITION OF COUNCIL

Section 4

“4. The Minister may from time to time by Order-

...

(f) prescribe the terms and conditions of office of councillors including the mayor and the deputy mayor.

(g) provide for any other matter not hereinbefore specified which may be necessary for the proper establishment of a council.”

STANDING ORDERS

Section 12

“12. (1) Subject to the provisions of the this Act every council shall make standing orders for –

(a) the regulation and conduct of the meetings of the council and its committees;

(b) the authentication of all documents required to be sealed with the seal of the council; and

(c) such other matters as may be necessary for the purposes of this Act or as may be directed by the Minister.

(2) The clerk shall cause a certified true copy of the standing orders of a council and of all amendments to such standings orders to be forwarded to the Minister.

(3) Standing orders of a council shall not have effect until approved by the Minister and all variations and revocations of such orders shall likewise be subject to his approval.

(4) If any council fails within a reasonable time to make standing orders which have been approved by the Minister under the provisions of this section the Minister may direct the council by letter addressed to the council to make standing orders.

(5) If within 60 days of receipt of such letter the council has not made such standing orders, the Minister may make standing orders for the council and such standing orders shall be the standing orders for the purposes of subsection (1).”

MUNICIPAL CLERK

Section 19

“19. (1) A council shall appoint a fit person, not being a councillor, to be clerk upon such terms and conditions as it may determine.

(2) the clerk shall be the chief officer of the council and shall have the charge and custody of and be responsible for all books, records and other documents of the council.

(3) The clerk may, subject to the general directions of the council, exercise the powers of the council of all acts done by him in the exercise of such powers shall be considered to have been done by the council.

(4) The appointment of a person as clerk and the terms and conditions of such appointment shall in all respects be subject to the approval of the Minister.”

OTHER OFFICERS

Section 20

“20. (1) A council may appoint fir persons, not being councillors, respectively to be treasurer, medical officer of health and engineer upon terms and conditions as it may determine.

(2) A council may appoint such other officers as it may consider necessary for the proper performance of the functions of the council upon such terms and conditions as it may determine and may define the powers and duties of such offices.”

DISMISSAL OF CLERK

Section 21

“21. The clerk shall not be dismissed from office without the consent of the Minister.”

TO ENGAGE STAFF

Section 22

“22. A council may from time to time employ on such terms and conditions as it may determine such agents, servants and workmen as may be necessary for the proper performance of the functions of the council.”

GENERAL DUTIES

Section 25

“25. (1) Subject to and in accordance with the provisions of this Act relating to the duties of the council, it shall be the duty of the council-

(a) to control, manage and administer the municipality;

(b) to safeguard public health;

(c) to develop, control and manage land taken on lease from any statutory land authority including any housing estates thereon; and

(d) to administer education, medical and health services as the Minister may after consultation with the responsible Minister by Order declare.

(2) If the Minister is satisfied that a council is incapable by reason of insufficiency of staff or facilities, of administering any of the services referred to in subsection (1)(d) he may, by order, direct such council to appoint the Government as its agent for the purpose of administering such service and such service shall thereafter be administered by the Government at the expense of such council.”

GENERAL POWERS

Section 26

“26. (1) Subject to subsection (2) and to any law specifically providing for any matter, a council may, in addition to any powers for which specific provision is made by this or any other law, exercise all or any of the powers contained in the Schedule.

(2) The Minister may, in relation to any particular council, by order, restrict the exercise of its scheduled powers.

(3) The Minister may, by Order, from time to time vary the Schedule.”

POWER TO MAKE BYE-LAWS

Section 36

“36. (1) Subject to the provisions of this Part a council may from time to time make by-laws in respect to all such matters as are necessary or expedient for-

(a) the safety of the inhabitants of the municipality; or

(b) the maintenance of health, well-being and good order and government of the municipality; or

(c) the prevention and suppression of nuisances in the municipality.

(2) In particular, and without prejudice to the generality of subsection (1) a council may make bye-laws necessary for carrying out the powers conferred upon the council by this or any other law and for such additional purposes as may be prescribed by the Minister.

(3) Bye-laws made under the provisions of this section may apply to the whole or any part of the municipality.”

BYE-LAWS NOT TO CONFLICT WITH ACTS OR ORDERS

Section 38

“38. Nothing in this Act shall empower a council to make any bye-law which is in conflict with or derogates from the provisions of any Act or order for the time being in force in Vanuatu; and to the extent that any bye-law conflicts with or derogates from any such Act or Order it shall be void and of no effect.”

APPLICATION OF BYE-LAWS

Section 39

“39. Every bye-law shall be published by notification in the Gazette and shall have the force of law in the municipality as from the date of such publication or if a later date is provided in such bye-law, as from that date.”

AUDIT

Section 55

55. (1) The Auditor General or a person approved by him and appointed by a council shall be the auditor of the council, at such rate of remuneration as the council may determine for the purpose of auditing and reporting on the accounts of the council.
    

(2) If the Auditor General so directs, the council shall reimburse to the Government such sum in respect of the Auditor General’s expenses as the Minister may fix.

(3) The council shall-

(a) produce to the auditor within 3 months of conclusion of the year to which they relate all the books and accounts of the council together with all deeds, contracts, documents, receipts and vouchers relating thereto;

(b) permit the auditor to inspect all stores and other assets of the council as he may require; and

(c) give to the auditor such information, explanation and facilities as he may require to be given to enable him to perform the duties of an auditor.

(4) It shall be the duty of the auditor to report to the council not less than once in each year separately in respect of each of the following matters, that-

(a) he has obtained all such information, explanations and facilities as he may have required to be given to enable him to perform the duties of an auditor;

(b) the accounts of the council are in order and present a true view of the financial position of the council;

(c) separate accounts of all undertakings and other accounts required to be kept by the provisions of this Act have been kept;

(d) due provision has been made for redemption and repayment of all moneys borrowed by the council;

(e) such provision as may be required under the provisions of this Act has been made for depreciation or renewal of the assets of the council.

(5) In addition to the report required under subsection (4) the auditor shall report to the Minister an d to the Minister responsible for finance and to the council any matter or thing which is discovered during the course of the audit and which appears to have been done or performed without authority.

(6) The clerk shall-

(a) within 30 days of the receipt of the auditor’s report on the accounts of the council for any year submit the accounts together with such report to the Minister; and

(b) lay the accounts of the council for each year together with the auditor’s report thereon before the council within 30 days of the receipt of such report, or if the council is not sitting, at its next meeting;

and thereafter such extracts from such accounts and such reports as the Minister may approve shall be deposited in the offices of the council and shall at all reasonable hours be open to public inspection without payment. A notice of such deposit shall be published in the Gazette.”

INSPECTIONS

Section 59

“59. (1) The Minister may at any time, by notice published in the Gazette, appoint any person to be an inspector for the purpose of inspecting the observance and performance of a council of the duties and powers imposed or conferred upon it by the provisions of this Act or any other law.

(2) An inspector may-

(a) attend any meeting of the council or any committee of the council;

(b) upon giving due notice to the clerk of his intention so to do, inspect any books, records, documents, contracts, stores or other assets and any undertaking or the council.

(3) An inspector shall report to the Minister the result of an inspection made by him.”

DISALLOWANCE AND SURCHARGE

Section 60

“60. (1) If, on receipt of the report of the auditor or an inspector, the Minister is satisfied that expenditure has been incurred without proper authority he may either sanction or disallow such expenditure and if he disallow such expenditure, he may, subject to the provisions of section 67 by directive in writing surcharge any person responsible for such expenditure for the whole or any part thereof.

(2) If, on receipt of the report of an auditor or an inspector, the Minister is satisfied that-

(a) any failure to collect money due to the council; or

(b) any loss of money or property; or

(c) any damage to property;

has occurred by reason of any wilful or wrongful act or any negligence by any councillor or person in the service of the council, the Minister may, subject to the provisions of section 67 by order in writing surcharge such councillor or person for the whole or any part thereof.

(3) Any sum surcharged on any person under the provisions of this section shall be a debt to the council and shall be payable by such person within 1 month or such longer period as the Minister may approve of the date of serve upon him of the order of the Minister.

(4) Any person aggrieved by an order of surcharge may appeal to the Supreme Court which may confirm, set aside or vary such order and the decision of which shall be final.”

INQUIRIES AND SUSPENSION

Section 61

“61. (1) If the Minister-

(a) has cause to suspect that a council has failed to observe and perform any of the duties and powers conferred or imposed upon it by the provisions of this Act or any other law; or

(b) has cause to suspect that a council has done or performed any act, matter or thing without due authority; or

(c) is otherwise of the opinion that an investigation should be made into the affairs of a council;

he may in his discretion, appoint a person or persons to inquire into such matter.

(2) If upon an inquiry under this section the Minister is satisfied that the council has done or suffered any of the act, matter and thing contained in paragraphs (a) and (b) of subsection (1), he may by directive in writing require the council to remedy the same within such time as he may appoint.

(3) If a council fails to comply with the terms of a directive of the Minister made under subsection (2) or if the Minister, having appointed a person or persons to make an inquiry under subsection (1) considers it expedient so to do, the Minister may in addition to any other powers conferred upon him by the provisions of this Act-

(a) suspend the exercise by the council of any of the powers conferred upon it by this or any other act for such period as he may think fit; or

(b) dissolve the council and, in his discretion, appoint or direct the election of new councillors;

and during such period, or, as the case may be, pending the appointment or election of new councillors, confer upon any person the exercise of any powers so suspended or of the powers of the council so dissolved.

(4) The expenses incidental to-

(a) any inquiry under this section; or

(b) the exercise of any of the powers of the council under this section;

shall be a debt due by the council to the Government and shall be paid and discharged out of the funds or revenues of the council in such manner as the Minister shall direct. Any such direction may include a direction that the expenses shall be deducted from any grant payable by the Government to the council.”

IMMUNITIES FROM PROCEEDINGS

Section 67

“67. No act, matter or thing done or committed by-

(a) any councillor;

(b) any officer or other person in the service of a council;

(c) by any person acting under the directions of a council;

shall if such act, matter or thing was done in good faith in the execution of his duty, render any such councillor, officer or person personally liable to any action, liability, claim or demand whatever.”

EX-GRATIA PAYMENTS

Section 114 of the Municipalities Financial Regulations (Subsidiary Legislation) provides as follows:

“114. (1) Ex-gratia payments may only be made with the prior approval of the Minister. They are made in exceptional circumstances and after reference to the Attorney General. Ex-gratia payments include the following-

(a) compensation payments made to claimants who allege that damage or injury has been caused to them by the council or its servants;

(b) extra contractual and ex-gratia payment to contractors;

(c) other ex-gratia payments as approved by the council.

(2) Before payment is made of any claim, which is being settled on an ex-gratia basis, an acknowledgement will be detained from the claimant that the sum approved for payment is in full and formal settlement of the claim.

(3) All ex-gratia payments will be recorded in the councils accounts in the annual statement of losses.”

• Relevant provision of the Interpretation Act [CAP. 132]
  

DEFINITION OF STATUTORY ORDERS

Section 12

“12. Where an Act of Parliament confers on the President, a Minister or any other authority a power to make or a power exercisable by making proclamations, rules, regulations, by-laws orders or statutory order and the provisions of this Act shall apply thereto accordingly.”

PUBLICATION OF STATUTORY ORDERS

Section 13

“13. Every statutory order shall be published in the Gazette and shall be judicially noticed.”

COMMENCEMENT OF STATUTORY ORDERS

Section 14

“14. (1) Subject to the provisions of this section-

(a) the commencement of a statutory order shall be such date as is provided in or under the order or where no date is so provided the date of its publication as notified in the Gazette;

(b) every statutory order shall come into force immediately on the expiration of the day preceding its commencement.

...”

VII - APPLICATION OF THE LAW

Having set out the relevant legislative provisions, the Court must then apply them to the facts as found and provide answers to the questions to be determined.

1. DOES THE MINISTER HAVE THE POWER TO ISSUE DIRECTIVES? IF SO, WHETHER THE EXERCISE OF SUCH POWER IN THIS CASE IS IN EXCESS OF THE MINISTER’S JURISDICTION.
   

The Minister’s power to issue directives is set out in subsection 61(2) of the Municipalities Act [CAP. 126].

Subsection 61(2) provides:

“If upon an inquiry under this section the Minister is satisfied that the council has done or suffered any of the act, matter and thing contained in paragraphs (a) and (b) of subsection (1), he may by directive in writing require the council to remedy the same within such time as he may appoint.”

The Applicant asserts that the Minister had not complied with the preconditions in subsection 61(2) so his directives are in excess of his jurisdiction.

The onus of proof is on the Applicant to establish that the Minister had not complied with any preconditions he had to meet before issuing any directives. On the facts, there is no evidence to show, or from which an inference can be drawn, that the Minister was not “...satisfied that the council has done or suffered any of the act, matter and thing contained in paragraphs (a) and (b) of subsection (1),...”. I accept the submissions that the evidence of the Applicant actually shows that the Minister believed the Council was engaged in unlawful conduct. The submission is further supported by the fact that the Minister was satisfied the Council was acting unlawfully because-

(a) he issued the directive in relation to matters he considered unlawful; and

(b) the Minister issued the directives after receiving the reports of the Inspector, Mr Saunders saying that the actions of the Council were unauthorised.

By perusing the language of section 61(2) of the Municipalities Act, there is no obligation on the Minister under section 61(2) to specify whether he is satisfied of events in subsection 61(1)(a) and (b).

Further, under section 59(2) and (3) of the Act, the Minister may at any time, by notice published in the Gazette, appoint any person to be an inspector for the purpose of inspecting the observance and performance of a Council of the duties and powers imposed or conferred upon it by the provisions of this Act or any other law and for the inspector to report to the Minister the result of an inspection made by him.

In this case, it is self evident from the nature of the directives whether the Minister is relying on subsection 61(1(a) or (b). I accept the submissions that the directives on their face show that the Minister was satisfied that the Applicant had done things that it was not authorised to do, namely:-

(a) paying members unlawful monthly allowances;

(b) creating the positions of 2^nd and 3^rd Deputy Mayors;

(c) making ex-gratia payments to councillors; and

(d) employing the Town Clerk and Deputy Town Clerks on conditions that he had not approved.

Accordingly, the Applicant has not established the Minister made the directives in excess of his powers under section 61(2) of the Municipalities Act [CAP. 126].

2. ARE THE DIRECTIVES LAWFUL OR UNLAWFUL?

The Claimant/Applicant says that the directives were unlawful because the actions the Minister believed to be unlawful namely:

(a) pay members unlawful monthly allowances;

(b) created the positions of 2^nd and 3^rd Deputy Mayors;

(c) made ex-gratia payments to councillors; and

(d) employed the Town Clerk and Deputy Town Clerk on conditions that he had not approved,

were in fact lawful or done with lawful authority.

The Respondent submits that the Minister’s directives were issued because the above acts of the Claimant were unlawful or done without proper authority. To establish the unlawfulness of the Minister’s directives and discharge its onus of proof the Applicant must show that its conduct, the subject of the directives, is lawful. Each of the directives will be dealt with in turn.

(a) Payment of members’ monthly allowances

The Applicant says it relies on statutory orders No.__ of 1999 signed by the Minister of Internal Affairs, responsible for the Municipalities. The Order which is not gazetted provides for the payment of monthly allowances.

The Respondent submits that under the Municipalities Act [CAP. 126] (‘the Act’) any allowances paid to councillors (including the mayor) must be authorised by Order made pursuant to subsection 4(f) of the Act. There have only been two (2) Orders made under subsection 4(f). The first is the Municipal Council (Payment of gratuities) Order No. 9 of 1993 which related to gratuities. The second is the Port-Vila Municipalities (Allowances) Order No.__ of 1999 which is in effect authorises the payment of sitting allowances, and the reimbursement of costs, to Councillors but not the payment of monthly allowances.

The Applicant seeks to rely on the Council’s Standing Orders although no specific Standing Order was referred to. Counsel for the Applicant has annexed copies of the Standing Orders to his submissions and relies on them on the basis that a Statutory Order shall be judicially noticed. Further a Statutory Order commences at the date stipulated in the Order (ss. 13 & 14) of the Interpretation Act [CAP. 132].

These Standing Orders have not been proved in evidence so should not be considered by the Court. I accept the submission that a Court can only take judicial notice of the Standing Orders that have been gazetted. In absence of proof of gazettal, the Applicant must formally prove the Standing Orders in evidence.

The only Standing Orders for Port-Vila Municipal Council that have been gazetted is No. 6 of 1989. Standing Order 23 in No. 6 of 1989 authorises the payment of sitting allowances of VT5,000. It does not authorise monthly allowances for councillors. Accordingly, it does not assist the Applicant.

However, for completeness, even if the Court could have reference to the latter Standing Orders, it si important to peruse the power to make Standing Orders under Section 12 of the Municipalities Act.

Section 12(1) provides:

“Subject to the provisions of this Act, every council shall made Standing Orders for-

(a) the regulation and conduct of the meetings of the council and its committees;

(b) the authentication of all documents required to be sealed with the seal of the council; and

(c) such other matter as may be necessary for the purposes of this Act or as may be directed by the Minister.”

The power clearly does not extend to making Standing Orders for the provision of allowances to members of the council. The standing Orders authorising the payment of allowances to the council are in excess of the Council’s power under subsection 12(1). The only person with power to prescribe the terms of Councillors, is the Minister by Order under subsection 4(f) of the Act.

Furthermore, none of the standing Orders attempted to be put before the Court authorise allowances in the amounts paid to the Councillors in this case. These standing Orders are also inconsistent with the unnumbered Order of 1999 to which they would be inferior legislation.

In the present case, the only Order made under subsection 4(f) of the Municipalities Act authorising payment of any type of allowances (other than gratuities) to the councillors is the unnumbered Order from 1999. It provides for Councillors to be paid sitting allowances for meetings of the Council and its committees, and to be reimbursed any necessary expenditure incurred. It does not entitle Councillors to be paid monthly allowances, even if those allowances purport to cover sitting allowances and reimbursement for monies spent while carrying out special duties.

The Applicant complaints also about the disparity in the allowances paid to different Councillors. However, it is immaterial to the lawfulness or otherwise of the Minister’s directives as the payment of any allowance is unlawful. No monthly allowances were authorised so any amount paid was unlawful.

The Applicant also relies on the fact that the Minister approved its budget for 2003. First, there is no evidence before the Court that the Minister approved the paying of the allowances to the Councillors by approving the Council’s budget. Second, the Minister cannot authorise illegal expenditure. The payment of monthly allowances can only be authorised by the Minister by Order under subsection 4(f) of the Municipalities Act.

It transpires clearly that there is no evidence before the Court that the Minister or any of his predecessors have made an Order under subsection 4(f) of the Municipalities Act to the Councillors. Therefore, the Minister had lawful authority to issue the directives (a), (b) and (c) and I so rule.

(b) Position of Deputy Mayors

The Minister issued directive (d) to abolish the positions of the 2^nd and 3^rd deputy mayors.

The Applicant submits that that directive was unlawful as Section 4 of the Municipalities Act [CAP. 126] provides for more than one deputy mayor and the Municipal Council Election Regulations provides for the authorisation of more than one office of deputy mayors.

The Respondent says the Applicant has not led any evidence to show the positions were authorised in accordance with section 19 of the Municipalities Act.

Section 19(4) of Order No. 60 of 1982 {set out as subsidiary legislation to [Cap. 126]} of the Municipalities Act, states:-

“The Minister may at the request of or after consultation with a municipal council, authorise the creation of one or more additional offices of deputy mayor.”

By section 4 of the Municipalities Act all the matters from (a) to (g) as set out under section 4 of the Act, will operate only by Order of the Minister. Order No. 60 of 1982 (subsidiary legislation) implements the matters set in (a) to (g) in section 4 of Municipalities Act. Accordingly, section 19(4) of the said Order provides for the Minister to authorise the position of one or more additional offices of deputy mayor at the request of or after consultation with a municipal council.

On the facts, there is no evidence that the positions of the 2^nd and 3^rd deputy mayors are created in accordance with section 19(4) of Order 60 of 1982 (Subsidiary legislation).

Directive (d) to abolish the positions of the 2^nd and 3^rd deputy mayors is, therefore, lawful.

(c) Payment of councillors’ allocations

The Minister issued directive (e) and (f) to stop payments of the allocation of councillors.

The Applicant says that the directives (e) and (f) are unlawful. It contends that the allocation payments are designed to meet the councillors’ obligations and are therefore lawful. It says that it is permitted by the Act to expend monies to meet its obligations.

The Respondent say he does not dispute the applicant’s right to expend money for proper purposes i.e. for purposes of fulfilling its functions under the Municipalities Act. However, the Respondents say there is no evidence that the councillors have spent their allocations on lawful projects or in compliance with the Municipal Council’s Financial Regulations [subsidiary legislation to CAP. 126].

The Respondents further submit that the only evidence before the Court about the allocation is that they were paid by the Council’s treasury upon production of a receipt. There is no evidence that the funds were used for lawful purposes.

I therefore accept the submission that the Minister is entitled to direct the council to stop paying the allocations. The Applicant has brought no evidence to show there is any proper accounting practices in place or any procedure of acquittal in relation to those allocations to show that the money has been used for proper purposes. It is for the Applicant to show that the allowances have been used for proper purposes under the Municipalities Act. In the circumstances, the Minister was authorised to make the directives to stop payments of the allocation. Directives (e) and (f) are therefore lawful and I so rule.

(d) Payment of ex-gratia payments

The Minister directed, among other matters, that the Council must put in place a system, within two (2) weeks, to recover all monies it had illegally paid out as councillors’ ex-gratia payments.

The Applicant contends the directives issued by the Minister in relation to ex-gratia payments are unlawful. It submits that the payments are advances on the councillors’ gratuities under Municipal Council (Payment of gratuities) order No. 9 of 1993. Paragraph 2(1) of the Order states:-

“Subject to... a Municipal Council may pay to its councillors at the end of their term of office gratuities.”

The Order does not authorise the advance payments of such gratuities.

Any ex-gratia payments may only be made:-

(i) with the prior approval of the Minister;

(ii) in exceptional circumstances;

(iii) and after reference to the Attorney-General.

The above preconditions are spelt out under subsection 114(1) of the Municipal Council Financial Regulations (subsidiary legislation to CAP. 126) which provides:-

“114. (1) Ex-gratia payments may only be made with the prior approval of the Minister. They are made in exceptional circumstances and after reference to the Attorney General. Ex-gratia payments include the following-

(a) compensation payments made to claimants who allege that damage or injury has been caused to them by the council or its servants;

(b) extra contractual and ex-gratia payment to contractors;

(c) other ex-gratia payments as approved by the council.

(2) Before payment is made of any claim, which is being settled on an ex-gratia basis, an acknowledgement will be detained from the claimant that the sum approved for payment is in full and formal settlement of the claim.

(3) All ex-gratia payments will be recorded in the council's accounts in the annual statement of losses.”

Any ex-gratia payments made by Councils must comply with subsection 114(1) of the Municipal Councils Financial Regulations.

The Applicant/Claimant seeks to rely on Standing Orders to support those payments. The standing Orders cannot override the clear language of Order No. 9 of 1993. Further, the Applicant says in effect that the standing Orders were used in relation to early payments of gratuities. It is clear that by law, they are ultra vires (beyond) the power of the Council under section 12 of the Municipalities Act.

Also, the standing Orders sought to rely upon are not part of evidence and as such rejected.

Accordingly, the two (2) directives relating to ex-gratia payments are lawful in that all monies paid out without authority must be recovered. As the Council is a body corporate with perpetual succession, it does not matter that the elected members of the Council had changed.

Directives (g) and (h) are therefore lawful and I so rule.

(e) Approval of terms and conditions of Town Clerk

On the facts, it is not disputed that the Council promoted the Town Clerk her current position (she was a Deputy Town Clerk) on 19 December 2000. On 13 March 2001, the former Minister approved her promotion on her existing terms and conditions. On 1 October 2002, the Council entered into employment contracts with the Town Clerk and her two Deputies. The contracts provide for two new terms (a thirteen month’s salary as bonus, and a housing and utilities allowance of VT30,000 per month) which the Minister has not approved.

The question is can the Council proceed with the alteration of the appointment of a clerk without the approval of the Minister? The answer is in the negative. Section 19(4) of the Municipalities Act which deals specifically with this point, states:

“The appointment of a person as clerk and the terms and conditions of such appointment shall in all respects be subject to the approval of the Minister.”

Subsection 19(4) is clear the Minister must approve the terms and conditions of the clerk. The Applicants’ submissions to this effect that the Minister’s approval only relates to fresh appointment has no basis in law. If a clerk is to have his or her terms and conditions of appointment altered, the Minister must approve such alteration. If the Council could change a person’s terms and conditions after appointment without the approval of the Minister, it would render subsection 19(4) of no effect.

Accordingly, directives (i), (j) and (k) are lawful as the new conditions of employment have not been approved by the Minister.

3. OTHER MATTERS RAISED IN THE SUBMISSIONS

(a) Section 67 of the Municipalities Act

The Applicant/Claimant had referred to section 67 of the Municipalities Act as affording it protection from the Minister’s direction.

Section 67 of the Act is to protect individual councillors from civil action. It does not operate to protect them from directions of the Minister under section 61 of the Municipalities Act. As such section 67 has no operation in this context. In any event, section 67 of the Act can in no way make the Minister’s directives unlawful.

(b) Improper Motive

The Applicant had suggested in its statements of case that the Minister’s decision to issue the directive was unlawful because he had acted on improper motives. As found by the Court, there is no evidence before the Court to support such a claim. This submission cannot stand. It is therefore rejected

(c) Directives to the Treasurer

The Applicant contended it was unlawful for the Minister to hold directives to the treasure of the Council. The treasurer is an officer of the Council.

He/she has certain functions and duties under Municipal Councils Financial Regulations. There is no basis in law for holding directives to the treasurer of the Council unlawful if the directive would be lawful if directed to the Councils.

4. UNREASONABLENESS

The Applicant says that the directives of the Minister relating to recovery of monies are unreasonable as there is a process of auditing the financial operations of the Councils under section 55 of the Municipalities Act.

The Claimant/Applicant has to establish that the directives of the Minister were so unreasonable that no reasonable person could have made them. This test is set out in Associated Provincial Picture Houses Ltd v. Wednesbury Corporation [1947] EWCA Civ 1; [1948] 1 KB 223, which is followed and applied in other cases by Vanuatu Courts.

The Applicant submits that section 67 of the Municipalities Act protects Councillors for actions done in good faith. In the context of this case, section 67 has no operation.

The Applicant submits also it is unreasonable to make the council recover “what would otherwise be considered as legitimate expenditure”. On the facts as found and accepted by the Court, there is no evidence that the expenditure was legitimate expenditure. The Council must, therefore recover it.

The Applicant further submits that it is unreasonable for the Minister to expect recovery only for the period back to October 1999 when monthly allowances and the disparity in allowances have been made prior to 1999. The Applicant further says that recovery would not only be nonsensical but expensive also due to the fact it would cover councillors already deceased and where former councillors are not employed it represents a major expense for council to issue proceedings to recover.

Recovery of allowances to October 1999 is reasonable as there may be practical and legal difficulties recovering older payments.

The Applicant again submits that the Minister has no power under the Act to order the Treasurer of Council.

The directions to the Treasurer are not unreasonable. The Treasurer is an officer of the Council and the appropriate person to comply with the directive directed at him/her.

The Applicants also submits that the position of Second Deputy Mayors have been authorised in the past by the Minister of Internal Affairs and it is therefore unreasonable for the Minister to direct the abolition of the offices.

On the facts, there is no evidence before the Court that the positions of deputy mayors had ever been authorised. Further, the Minister has authority to abolish the positions.

The Applicant submits then that if the allocations to Councillors are legitimate expenditure of Council approved by the Minister in budgetary estimates each year and that there is a clear and transparent system, it is unreasonable for the Minister to expect recovery of sums expended toward the betterment of the constituencies of the Applicant where the councillors do not derive any personal benefit from the allocations expended.

The Respondents say they would concede if councillors’ allocations were spent on lawful purposes, then, it would be unreasonable to recover them. However, in the present case, as found by the Court, there is no evidence before the Court that the allocations have been lawfully expended.

What is important to understand is that it is not a question of whether the councillors receive personal benefit or not, it is whether the money is lawfully spent under the Municipalities Act.

In order to appreciate whether or not the directives are unreasonable we shall look at each direction individually and for that purpose, applying the law to the facts as found, the Court accepts the following submissions:-

(a) That as form the date of [the second Respondent’s] letter the Port-Vila Municipal Council must stop paying monthly allowances to the Councillors and the Mayor and Deputy Mayors.

The payment of these allowances was unlawful. It is reasonable to direct that the allowance not be paid. The council has no right to make illegal payments. This was conceded by the mayor in cross-examination.

(b) That the Council’s Treasurer must immediately cease to make payments of monthly allowances, councillors’ allocation and ex-gratia payments to the Councillors and Mayor and Deputy Mayors.

Again, the Council has no right to make illegal payments so it is reasonable to direct the council not make such payments.

(c) That the Council must put in place a system, within two weeks, to recover all monies it had illegally paid out since October 1999.

There is nothing unreasonable in asking for an extension of time or said the time was too short. Also, by the time the Claimant came to challenge the directions it had had over 2 months to put a system in place.

(d) That within two weeks from the date of [the second Respondent’s] letter the Council must meet and abolish the positions of 2^nd Deputy Mayor and 3^rd Deputy Mayor.

The appointments of the 2^nd and 3^rd Deputy Mayors were unauthorised then it is reasonable for the council to be directed to abolish the positions. The time allowed could not be considered unreasonable and there was no request to extend the period.

(e) that as from the date of [the second Respondent’s] letter the Council must stop paying councillors’ allocation to the Councillors.

The allocations were unlawful so it is reasonable to direct that the Claimant stop paying them.

(f) That the Council must put in place a system, within two weeks, to recover all monies it had illegally paid out as councillors’ allocation.

It is not unreasonable in the circumstances to ask for a system to be put in place in two weeks. The Claimant has never asked for an extension of time or said the time was too short.

(g) That as from the date of [the second Respondent’s] letter the council may make ex-gratia [payments] but ONLY with the prior approval of the Minister.

This direction only reinforces the requirements of the Act.

(h) that the Council must put in place a system, within two weeks, to recover all monies it had illegally paid out as ex-gratia payments.

Again, it is not unreasonable in the circumstances to ask for a system to be put in place in two weeks. The Claimant has never asked for an extension of time or said the time was too short.

(i) That the Employment Contracts of the Town Clerk, First Deputy Clerk and Second Deputy Clerk must comply with the provision of section 19(4) of the Municipalities Act [CAP. 126] and the Council is given two weeks to remedy this situation.

The Council is bound to comply with the Act. The contracts do not comply with the Act, so the direction is reasonable. There is no evidence to show that the time for compliance was too short. Again, the effective time for compliance was in excess of two months.

(j) That since section 19 of the [CAP.126] makes reference to ”clerk”, this also includes deputy clerks, therefore, their Employment Contracts are also subject to the approval of the Minister.

This direction is reasonable for the same reason as (i) above.

(k) That the Treasurer of the Council must immediately cease from making payments to the Town Clerk, First Deputy Clerk and Second Deputy Town Clerk under the new Employment Agreements signed on 1^st October 2002.

The payments were unlawful so this directive is reasonable.

VIII - CONCLUSION

The Claimant has not established that the directives were either beyond the power of the Minister, unlawful or unreasonable, therefore the application is dismissed and the Respondents are entitled to their costs as ordered by the Court on 22 August 2005.

Those are the reasons for the Decision of this Court made on 22 August 2005.

DATED at PORT-VILA this 26^th of October 2005

BY THE COURT

Vincent LUNABEK
Chief Justice