Kim Foon & Sons Pty Ltd v Minister of Finance and Planning, The Independent State of Papua New Guinea and National Provident Fund Board of Trustees [1997] PNGLR 484

• Jurisdiction: Papua New Guinea
• Judge: Doherty J
• Judgment Date: 24 July 1996
• Court: National Court
• Citation: [1997] PNGLR 484
• Year: 1997
• Judgement Number: N1464

Full Title: Kim Foon & Sons Pty Ltd v Minister of Finance and Planning, The Independent State of Papua New Guinea and National Provident Fund Board of Trustees [1997] PNGLR 484

National Court: Doherty J

Judgment Delivered: 24 July 1996

PAPUA NEW GUINEA

[NATIONAL COURT OF JUSTICE]

OS 521 OF 1995

BETWEEN:

KIM FOON & SONS PTY LTD — Applicant

And:

MINISTER OF FINANCE & PLANNING — 1st Respondent

And:

THE INDEPENDENT STATE OF PAPUA NEW GUINEA — 2nd Respondent

And:

NATIONAL PROVIDENT FUND BOARD OF TRUSTEES — 3rd Respondent

Waigani

Doherty J

18 December 1995

March 1996

24 July 1996

JUDICIAL REVIEW OF ADMINISTRATIVE DECISION — National Provident Fund Act.

The plaintiff sought review of the 1st respondents gazettal of its name pursuant to S. 3 (2) National Provident Fund Act Ch 377 thereby obliging it and its employees to subscribe to the Fund.

Held:

1. Whilst the Minister had power under S. 3 (2) he had to exercise that power subject to the rules of natural justice including, inter alia, real notice of his intention and cause.

2. The section could not be used to amend or vary the clear provisions of the legislation.

3. Deliberate manipulation of numbers of employees to evade the Act would be a ground for application of S. 3 (2) but there must be actual evidence, suppositions on the part of administrators did not suffice.

4. The two month grace period after gazettal was intended for applications for review, amendment etc.

5. The Minister's decision under S. 3 (2) had to be a genuine exercise of discretion.

6. S. 4 of the Act is intended inter alia to enable officers of the 3rd respondent to make investigations before advising if S. 3 (2) might be applied.

Cases Cited:

MacDhui Development v Genia & State [1992] PNGLR 49

Gegeyo v Minister of Lands [1987] PNGLR 331

Kekedo v Burns Philp (PNG) Ltd [1988/89] PNGLR 122

Gorio v National Parks Board [1982] PNGLR 364

PNG Ready Mixed Concrete Pty Ltd v The State of Papua New Guinea & Others [1981] PNGLR 396

Counsel:

Ms Stylianou for the Applicant

Mr Kawi for 1st & 2nd Respondents

Mr Frank for the 3rd Respondent

DECISION

24 July 1996

DOHERTY J: The applicant seeks certain declarations and review of a decision of the 1st Respondent when he applied the provisions of the National Provident Fund Act Ch 377 (hereinafter "the Act") to the applicant and its employees thereby compelling the applicant and its employees to contribute to the National Provident Fund.

There is no dispute that the applicant has 21 employees, less than provided for in the mandatory provisions of S. 3 of the Act and so is not obliged by law to automatically subscribe.

The facts leading up to these applications are set out in affidavits filed by the Plaintiff's director and representatives of the respondents, there was no application to cross examine on the affidavits and the facts can be outlined as follows:

1. The plaintiff company has been carrying on business since 1972; it is a foreign company and is so registered.

2. It employs 21 people, it employed 21 at time the defendant's personnel visited the company premises and for some time prior to that. The defendant does not dispute this.

3. The Act was passed in 1980, it provides for compulsory contributions to the fund from establishments with 25 or more employees [S. 3 (1) ], contributions by establishments whose employees and employer agree [S. 3 (3) ] and a third category of establishments of less than 25 employees pursuant to S. 3 (2).

4. The National Provident Fund manager wrote to the Plaintiff on 1st October 1992 asking them to fill in a form SPF 3 which was "to determine your eligibility for coverage under "NPF". This the plaintiff did.

5. The letter said inspectors would come but none did.

6. There was no response until a letter of 23rd June 1994 in very similar terms to the letter of October 1992 enclosing the same form SPF3 to "determine eligibility" which the plaintiff completed and returned. The plaintiff says it considered the letter a general enquiry and responded on that basis. There was a visit by an inspector in March 1994, the records of the plaintiff were checked but no further action was taken and there was no formal reply to the plaintiff's form SPF 3.

7. The 1st respondent gave notice in Gazette No 66 of 1st September 1994 under S. 3 (2) to apply the Act to several establishments employing less than 25 people including the plaintiff.

8. On 10th October 1994 the National Provident Fund Assistant Manager wrote advising the Plaintiff of the Ministers decision gazetted on 1st September 1994.

9. The plaintiff enquired how this came about — I do no know when — but was informed on 1/12/94 that "NPF management believes the level of staff is now significantly higher and warrants gazettal under S. 3 (2) of the NPF Act." And that "the Minister has absolute power" and management could not "reverse the gazettal or exempt the company." (I have assumed for purposes of this decision that references to "NPF" in these quotations means the National Provident Fund).

10. The gazettal notice of 1st September 1994 stated the Act would apply to companies including the plaintiff after expiration of 2 months of the gazettal notice.

The defendants filed an affidavit of a former employer saying the plaintiff had no superannuation fund. He did not say the plaintiff had more than 21 employees during his seven years employment nor suggest employee numbers were kept low deliberately.

From affidavits filed by the 3rd defendant's staff it is apparent several companies were being considered as being "eligible to contribute to NPF despite employing numbers just below 25 employees"...and "to force their compliance into the NPF Act" (sic). The plaintiff was one such company.

The attitude of National Provident Fund officers is shown in an exchange of memorandum saying "you will be aware there are companies which maintain their employee numbers at 23 and 24 so as to avoid contributing to the NPF. We can use the section quoted above to force their compliance into the NPF Act."

Subsequently the Fund executive officer advised the Minister "I am advised by my compliance department there are certain employer contributors which deliberately keep their employee numbers below 25 so that the NPF Act will not affect their operations." He set out criteria for application of S. 3 (2) which included those establishments maintaining less then 25 employees to avoid contributions and those where employees had made requests of the National Provident Fund. There is no evidence that the plaintiff came within the latter and the affidavit evidence shows the employees did not wish to join. That has not been challenged.

The internal correspondence put to the Minister suggests that employees of National Provident Fund made their submissions after their own investigations and assessments and the Minister had little or no input. Counsel for the 1st and 2nd Defendant agree this was the situation.

It is common...