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High Court of Fiji |
IN THE HIGH COURT OF FIJI
AT SUVA
CIVIL JURISDICTION
CIVIL ACTION NO. HBC 619 OF 1996
Between:
CHANDRIKA PRASAD
Plaintiff
And
POST FIJI LIMITED
Defendant
Mr. R. Prakash for the Plaintiff
Mr. P. Howard for the Defendant
JUDGMENT
In this case the plaintiff who was employed as a Postman/Sorter with the Posts & Telecommunications Department (‘the Department’) claims `back wages’ due to him during the time that he was interdicted from duties whilst facing criminal charges which were ultimately dismissed by the Nadi Magistrates Court and which dismissal was subsequently upheld on appeal by the High Court, Lautoka.
The relevant dates in so far as the plaintiff’s claim is concerned are:
The period of interdiction involved was just short of five (5) years during which time the plaintiff received no salary or other benefits from the Department. It may be noted here that before the State’s appeal was finally disposed of, the plaintiff resigned from the Department with effect from 31st May 1988.
On its face the case appears to be a straightforward one but intervening events during the plaintiff’s interdiction and before the issuance of his Writ, have somewhat complicated the matter. In essence, during the above-mentioned period the Department was corporatised and then its principal functions were shared between two (2) separate entities namely, Telecom Fiji Limited and Post Fiji Limited.
The relevant dates in so far as the above corporatisation programme was concerned are as follows:
As a consequence of the above metamorphosis the Department ceased to exist and in its place two (2) separate and distinct corporate entities were ultimately substituted. So much then for the background to the claim.
In its amended defence the defendant company pleads the provisions of ‘the Decree’ and claims that it is wrongly named as the defendant. In other words whilst the plaintiff claims that the ultimate successor to the Department is ‘Posts’, the defendant claims it is either ‘Telecom’ or ‘FPTL’.
When the matter eventually came on for trial on 30th August 2001 after an unsuccessful attempt to have the claim struck out and two (2) changes of solicitors, including a change in the judge who was assigned the case, counsels agreed that the matter could be expeditiously and conveniently dealt with by way of Order 33 of the High Court Rules and written submissions. Two (2) preliminary questions were then formulated with the agreement of counsels as follows:
‘(A) Whether or not the defendant company is the proper defendant to this action having regard to its incorporation and the continuity provisions of the Posts and Telecommunications Decree 1989 ? and
(B) If the answer to (A) is Yes, then whether or not section 69 of the Decree provides a complete answer to the plaintiff’s claim?’
Written submissions and a set of agreed documents were eventually completed and filed in December 2001. I am grateful to counsels for the assistance provided to the Court and for the comprehensive submission which I have found extremely helpful.
As for question (A) above plaintiff’s counsel writes that ‘the claim is brought against the defendant on the basis that the defendant is the ultimate successor of the Department of Posts and Telecommunications.’
Defence counsel for his part writes: ‘The plaintiff’s action should have been against the state and not FPTL and certainly not against the Defendant.’ Earlier in his submission counsel wrote: ‘the company referred to in the Fiji Posts and Telecommunications Decree is FPTL.’
Plainly both submissions could not be correct and in order to resolve the conflict it is necessary to carefully trace the metamorphosis of the Department.
It is common ground that the Department was corporatised with effect from 1st January 1990 pursuant to ‘the Decree’ and the several ministerial ‘Designations’ and ‘Orders’ made thereunder [see: Extraordinary Fiji Republic Gazette Supplement dated 27th December 1989]
In particular section 69(1) of the Decree provided that:
‘On such day as the Minister may by order appoint for the purpose of this Part (in this Decree referred to as ‘the transfer date’) all the property rights and liabilities to which the Department of Posts and Telecommunications was entitled or subject immediately before that date, shall without further assurance [subject to the following provisions of this section] become by virtue of this section property rights and liabilities of a company nominated for the purpose of this section by the Minister (in this Decree referred to as ‘the Company’).’
In this latter regard, by Order dated 15th December 1989 the then Minister for Communications, Works and Transport nominated ‘FPTL’ as the relevant company ‘for the purpose of section 69 of the Decree’
By this date ‘Posts’ had not been incorporated and could not therefore have been nominated for the purposes of ‘the Decree’ as ‘the Company’, nor has it been nominated subsequently.
Section 69(1) of ‘the Decree’ cannot therefore be relied upon by the plaintiff to support the assertion that his claim for ‘back wages’ (assuming it was a ‘liability’ of the Department at the relevant date) had become vested in ‘Posts’. Indeed, if anything, by virtue of section 69 and the above-mentioned ministerial Order it had vested in ‘FPTL’.
Additionally, defence counsel seeks to rely on the provision of section 69(4) of ‘the Decree’ as a complete bar to the plaintiff’s claim in so far as it declares that:
‘(d) any reference to the property rights and liabilities of the Department of Posts and Telecommunications shall not include -
(1) any contract of employment ; ‘
and, since the plaintiff’s claim is necessarily predicated upon the existence of a ‘contract of employment’ between the Department and himself, therefore, his claim (or the Department’s ‘liability’) is excluded from those ‘liabilities’ that were vested under Section 69 in ‘FPTL’.
In response however, defence counsel invokes the provisions of section 69(11) which enables:
‘Any proceeding or cause of action pending or existing immediately before the transfer date ... against the Department of Posts and Telecommunication (or) the Government ... (to) be continued or enforced by or against the Company as it might have been enforced against the Department (or) the Government ..., if this Decree had not been made.’
and counsel writes:
‘The plaintiff’s case falls within this provision. Although there was no proceedings pending the plaintiff’s cause of action was pending immediately before the transfer date. It is submitted that if a cause of action was pending before the transfer date, it is irrelevant what the cause of action was or what facts it arose from. There is a clear provision that the pending cause of action survives and can be continued or enforced against the company.’
Later counsel writes about the plaintiff’s ‘cause of action’ as follows:
‘The effective transfer date is 1st January 1990. The plaintiff’s claim arose out of an interdiction on 29th December 1984. The plaintiff’s case relating to the interdiction was dismissed (by the High Court, Lautoka) on 18th December 1989 and he resigned with effect from 31st May 1988. He had actually make his claim through his then solicitors, Khan & Associates by letter dated 3rd June 1988 (exhibit 3). It is clear from these facts that the plaintiff had a cause of action which was pending at the transfer date. Not only there was a pending cause of action the Department was aware of the plaintiff’s claim prior to the transfer date. Accordingly, the plaintiffs cause of action survived and became a liability to be met by FPTL.’
The above submission does not assist however in resolving the problem in so far as ‘the Company’ referred to in section 69(11) against which a ‘cause of action’ may be continued or enforced is ‘FPTL’ and not the named defendant company ‘Posts’. In other words even if section 69(11) could be invoked to support the plaintiff’s claim it would only sustain a claim against ‘FPTL’.
To overcome this apparent ‘lacuna’, plaintiff’s counsel refers to the ‘Separation Agreement’ entered into by ‘FPTL’ and ‘Posts’ wherein all the estate, right, title and interest of ‘FPTL’ in the postal services and postal assets that were formerly owned by the Department were transferred to ‘Posts’ and counsel writes:
‘The Agreement does not mention the exclusion or transfer of liabilities of FPTL to Posts. The Agreement ought not to be interpreted as excluding the transfer of liabilities of FPTL. If transfer of liabilities was not the intention the Agreement would have clearly and specifically excluded it.’
Specifically, counsel refers to Object 3.1.1 of the Objects Clause of ‘Post’s Memorandum of Association’ (Exhibit 2) as evincing an intention on the part of ‘Posts’:
‘to acquire the property, rights and liabilities of the postal and ancilliary services and business held and carried on by ‘FPTL’.’
In summary, counsel writes:
‘The plaintiff was a postal worker. He had a pending cause of action against FPTL which survived at the date of transfer and became a liability of FPTL. That liability passed to Posts when it acquired the property right and liabilities of the postal and ancillary services and business held and carried on by FPTL. Accordingly the defendant is liable to the plaintiff.’
For his part defence counsel, equally forcefully, submits that the plaintiff cannot avail himself of section 69(11) in that ‘(he) had not started any judicial proceeding or action as at 1 January 1990’ and counsel writes:
‘The words (‘any proceeding or cause of action’) are used in this more formal context as pending or existing. They are actual judicial proceedings or actions existing or pending before the court. They are not to be used as any potential or possible proceeding or cause of action’
and further:
‘To allow the loose meaning attributed to the words of section 69(11) by the plaintiff would leave it open to absurd results. Any potential cause of action whether in contract, tort or otherwise could form the basis for all manner of litigation.’
Later in identifying the purpose of ‘the Decree’ to be ‘the transfer of the telecommunications and postal businesses (of the Department) to an independent corporation’ and after referring to the provisions of section 64(4)(c) defence cousel writes:
‘...the proceedings and actions are rather those contingencies that would be reflected in the accounts are revealed and known and in any event would have before 1 January 1990 have been filed in court naming the State and/or the Department. This section [i.e. 69(11)] enables the court to simply substitute the company (FPTL) for the Department without much ......and without complex judicial process.’
In so far as the plaintiff’s reliance on the Objects Clause of the Memorandum of Association is concerned , defence counsel writes:
‘The objects of a company are a mixture of powers and purposes that the company is empowered to do or pursue whether the company actually make use of such powers or pursues such purposes is a matter of evidence. One would have to look at contracts made, securities given or other action taken and draw conclusions from that contract. One would look at the objects only to ascertain whether that contract was within the powers and pursuant to the purposes set out in the Memorandum of Association.’
Accordingly on examining the ‘Separation Agreement’ (Exhibit 13) which is very specific as to what is transferred from ‘FPTL’ to ‘Posts’, counsel writes:
‘The employees are specified by name and attached in the Fifth Schedule. These do not include the plaintiff understandingly as he was not an employee (at the time) but there is no mention of any contingent liability that might be construed implied as referring to the plaintiff.’
Having carefully considered the competing submissions I am satisfied that defence counsel is correct although for somewhat different reasons.
In my considered opinion ‘the Company’ which is referred to in all the various subsections of Section 69 of ‘the Decree’ is, by ministerial Order, ‘FPTL’ and no other.
I also accept that the term ‘liabilities’ in section 69 (1) of ‘the Decree’ is not limited to a pre-determined liquidated amount or book debt but includes a contingent or potential liability such as the plaintiff’s claim for ‘back wages’ during the time of his interdiction from 28th December 1984 up till the date of his resignation from the Department on 31st May 1988, both of which events pre-dates the ‘transfer date’ to ‘FPTL’ i.e. 1st January 1990.
In so finding, I am not unaware of the plaintiff’s claim that his interdiction ‘was removed on 31st March 1988' and further, that he was purportedly dismissed by the Public Service Commission (‘PSC’)with effect ‘from 11th April 1988’, but neither factor in my view, alters the statutory ‘liability’ of the Department in terms of Regulation 26(3) of the Public Service Commission (Constitution) Regulations (cap 74), to pay the plaintiff ‘.... compensation for loss of earnings in respect of the period of interdiction (where) he is acquitted’ of the criminal charge that led to his interdiction in the first place.
I am fortified in this view by the provisions of Section 69(10) which expressly provides inter alia that:
‘All......agreements, and working arrangements (whether or not in writing) subsisting immediately before the transfer date, affecting any of the .....liabilities transferred to the Company under this section......from the Department of Posts and Telecommunications shall be of full force and effect against ......the Company, and enforceable as fully and effectual as if, instead of the Department of Posts and Telecommunication...........the Company had been named therein or had been a party thereto.’
As for the plaintiff’s ‘purported dismissal’ by ‘PSC’ there is little information provided to the Court about the reason(s) for it or the circumstances in which it occurred but in any event it was not accepted by the plaintiff and could not have been back-dated.
Having said that however I do not accept counsel’s submission that the Department’s liability for the plaintiff’s ‘back wages’ which was statutorily vested in ‘FPTL’ in terms of section 69(1) of ‘the Decree’ was subsequently, contractually transferred to ‘Posts’ under the ‘Separation Agreement’ entered into between ‘FPTL’ and ‘Posts’.
Needless to say at the date when the ‘Separation Agreement’ was entered into i.e. 26th June 1996, the plaintiff had long resigned from his employment with the Department. In fact the plaintiff had resigned even before the incorporation of both ‘FPTL’ on 18th August 1989 and ‘Posts’ on 9th May 1996. In other words he was never an employee of either of the principal parties to the ‘Separation Agreement’ at any relevant time and cannot therefore, claim the benefit of Clause 1.3(d) as an ‘employee’.
That is not to say however that no ‘liability’ or ‘cause of action’ was in existence at the date of separation of ‘Posts’ from ‘FPTL’ or that the same was not vested in or enforceable against ‘FPTL’ pursuant to section 69 of ‘the Decree’ but, in the absence of a similar ministerial nomination or statutory provision referring to or affecting ‘Posts’, it is necessary to closely examine what was transferred by ‘FPTL’ to ‘Posts’ under the ‘Separation Agreement’.
Needless to say, however chronologically logical it may seem, the mere fact that the plaintiff was a ‘postal worker’ (as opposed to a switch board operator) in the Department does not mean that the ‘liability’ for his ‘back wages’ which was vested in ‘FPTL’ must have been transferred or inevitably passed to ‘Posts’ when ‘FPTL’ separated its principal functions.
In this latter regard the ‘Separation Agreement’ declares as its main purpose(s) the separation of the postal service business and assets from ‘FPTL’ ; the formation of ‘Posts’ and the ‘transfer of postal services/business and assets of FPTL to Post Fiji Limited’.
In particular, the operative transfer clause in the agreement, Clause 2 provides that: ‘FPTL agrees to transfer and Post Fiji agrees to accept all FPTL’s estate right title and interest in the Postal Services and Post Assets’ and, by way of further clarification, Clause 1 defines ‘Postal Service’ as:
‘the business of postal and ancillary operations presently carried on by the Postal Division of FPTL’ including ‘all the postal business express mail service (EMS), post shop and other services and ancillary business that are being held, managed and operated by the Postal Division of FPTL at and including midnight on the 30th of June 1996'
and ‘Post Assets’ are defined as ‘ the assets both real estate, chattels....agreed to be transferred and more particularly described in the Second Schedule...’
A cusory examination of the ‘Second Schedule’ of the agreement reveals that the transferred assets are comprised of land, buildings, tenancies, plant, furniture and fittings, machinery, equipment and other chattels, business names, trade marks and other intellectual property of a philatelic nature.
By no stretch of the imagination can it be suggested from the foregoing, that FPTL’s statutorily vested ‘liability’ for the plaintiff’s ‘back wages’ was contractually transferred to ‘Posts’ in terms of the operative words of Clause 2 and I so find.
I am fortified by the existence of Clause 5 in the agreement which specifically deals with the transfer of ‘the employees of the postal division’ of FPTL to ‘Posts’. In my view the existence of the clause reinforces the nature of the ‘business’ and ‘assets’ that were transferred to ‘Posts’ under Clause 2 of the ‘Separation Agreement’ and, delimits, the ‘estate right title and interest’ of FPTL in them. Furthermore the absence of any mention in the agreement or even the use of the word ‘liability’ is a factor that weighs heavily against plaintiff counsel’s submission.
In so finding I am not unmindful of recital (E)(e) in the `Separation Agreement’ and of the effect of Section 22(4) of the Companies Act 1983 which provides that:
‘a change of name by a company under this section shall not affect any rights or obligations of the company or render defective any legal proceedings by or against the company and any legal proceedings that might have been continued or commenced against it by it former name may be continued or commenced against it by its new name.’
For the foregoing reasons the answer to question (A) above is: No, ‘Posts’ is not the proper defendant to the action as pleaded, and the claim is accordingly dismissed with cost which are summarily assessed at $750.00.
(D. V. Fatiaki)
Judge
At Suva
28th May 2002
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