059-NLR-NLR-V-57-N.-T.-MENDIS-et-al-Appellants-and-COMMISSIONER-OF-LOCAL-GOVERNMENT-Responden.pdf
1955. Present: Gratiaen, J., and Fernando, J.
T. MENDIS ct al„ Appellants, and COMMISSIOXEK OF■ . • LOCAL GOVERNMENT, Respondent
S C. IS? (Inl>/.)—U. C. Appeal L—1 j2919
Urban Councils Ordinance, .Vo. 01 of 1930—Sections 193, 191 (1), 193—Secovcryof surcharges—“ Any person accounting ”—“ Xegligcnce or misconduct ”—Local Government Service Ordinance, A"o. 43 of 1913, s. 31, as amended byAct Ko. S of 1949, s. 19.
Tho two appellants, who weic members of an Urban Council, were opposedto a decision of the Local Government Servico Commission that full pensionshould be paid to a retired officer of 1lio Council. In an applicationmade by tho Commission for a writ- of mandamus to compel tho Council tofulfil its statutory obligation to pay the full pension, the Supreme Court decidedthat tho Council must pay the costs which were taxed at Its. 3,SO!). Thereaftertho Auditor-General sought to charge against tho appellants, as members oftho Council, tho loss which tho Council incurred by payment of the costs.
•Held, that under section 19-4 (1) of the Urban Councils Ordinance it was
necessary to prove negligence or misconduct on tho part of the appellantsbefore tho Auditor-General could call upon them to make good any deficiencyor loss which was not tainted by illegality.
A.PPEAL under section 195 of the Urban Councils Ordinance againstan order made by the Auditor-General.
S.P. C. Fernando, with Stanley Perera, for the 1st and 2nd appellants.
A. C. Allcs, Crown Counsel, for the respondent.
~E. 11. S. R. Coomara-sivamy, with B. A. R. Candappa, for the UrbanCouncil (party noticed).,
Cur. role. cult.
October G, 1955. Ckatiai:x, J.—
Tins is an appeal under section 195 of the Urban Councils OrdinanceXo. G1 of 1939 against an order made by the Auditor-General on 13thJuly 195-1 charging against the 1st and 2nd appellants, as membersof the Panadura Urban Council, a sum of Us. 3,S99 rc|iresentiiig a lossto the Council alleged to have been incurred in consequence of their“misconduct A similar order has been made against- other membersof the Council who are not parties to the present appeal.•
The 1st appellant had been the Chairman, and the 2nd appellant amember, of the Council from 1st January 1950 until 24th Ajiril 1953.The Superintendent of Works of the Council, who had retired frqm officeon 15th March 1950 had requested the Local Government ServiceCommission (hereafter called “ the Commission ”) to fix the amount
payable to him as retiring pension under the Council’s by-laws. Hehad originally been employed directly by the Council, but was transferredby operation of law to the service of the Commission under the provisionsof the Local Government Service Ordinance No. 43 of 194a. Accordingly,the power and discretion to grant him a pension on retirement, thoughpreviously vested in the Council, now vested in the Commission. Never-theless under section 51 of the Ordinance as amended by section 19 of theAct No. S of 19-19 the ultimate financial responsibility for the pensionpayable to him by the Commission continued to be imposed on theCouncil.
.Some members of the Council, including the appellants, took theview that the retiring officer had not qualified himself for the maximumpension payable under the by-laws. On 9th October 1950 the Councilalso resolved by a majority vote that the payment of his pension shouldin any’ event lie withheld “ until this officer hands over all documentsthat were in his charge ”. The terms of this resolution were communi-cated to the Commission which later decided, however, that the officershould be granted the maximum pension payable to him under theCouncil’s by-laws with effect from the date of his retirement.
The appellants and certain other members of the Council were dis-satisfied with the Commission’s decision, and a sub-committee wasappointed to make counter proposals in the matter. In due course,the Council passed a resolution on 9th July' 1951 recommending to theCommission that, as the work and conduct of the officer concernedhad not been " altogether satisfactory ”, his pension should be fixedat a reduced rate rejnesenting two-thirds of the maximum pension.This recommendation was duly considered by' the Commission but wasrejected. The question was again brought up for discussion at a meetingof the Council on 24th August. 1951.- The 1st appellant, as Chairman,proposed “ that eminent counsel should be consulted and that a furtherappeal be made to the Local Government Service Commission ”. Themajority of the members resolved, however, that representations by wayof protest should be made to the (then) Prime Minister. In the meantime,the Council acknowledged its liability to make jiayments to the Coir.-mission in respect of the officer’s pension at the reduced rate, and acheque was tendered on this basis on the 19th September 1951. Threedays later, the Commission returned the cheque and at the same timeapplied to this Court for a mandate in the nature of a writ of mandamusto compel the Council to fulfil its statutory obligation to pay the fullpension as fixed by the Conunission.
The appellants and other members who shared their views now gave upthe unequal struggle. They’ had not succeeded in obtaining an’interviewwith the Prime Minister in time to achieve any practical results, andthey abandoned all hope of persuading the Commission,' with whomthe final decision in the matter of pensions obviously rested, to alter its"earlier ruling. Accordingly, the Council unconditionally" acknowledgedits liability to make good the full amount of the pension payable. Pay-ment on this basis was made before the mandamus proceedings came up
– (104S) 2 K. B. 95.
for hearing. There remained only the question as to who sliould pay thecosts incurred by the Commission in making the application to theSupreme Court. On that- issue tins Court decided that the Councilmust pay the costs which were taxed at hs. 3,S99. This amountwas accordingly paid out of the Council’s funds.
We arc now in a position to examine th^ propriety of the Auditor-General’s order which is under appeal. Having audited the accounts ofthe Council for the relevant period as required l>3' section 193 of theUrban Councils Ordinance, he decided, after hearing the appellants,that the expenditure incurred by the Council in paying the Commission’scosts in terms of the order of the Supreme Court ought to be chargedagainst the appellants and f lie other members of the Council who hadopposed the payment of the full pension fixed for the retired officer.He purported to make this surcharge in pursuance of section 19-1 (1)of the Ordinance which provides as follows :—
Every auditor acting in pursuance of this Part shall disallowevery item of account contrary to law, and surcharge the same on theperson making or authorising the making of the illegal payment,and shall charge against any person accounting the amountof any deficiency or loss incurred by the negligence or misconduct ofthat person and any sum which ought to have been, but is not, broughtinto account by that person, and shall in every ease certify the amountdue from scieh person :’.
The relevant words of the section which the Auditor-General purportedto apply to this particular case arc—”…. and shall charge
against any person accounting the amount of any deficiency or loss incur-red by the negligence or misconduct of that person”
Section 194 (1) corresponds to section 247 (7) of the Public HealthAct, 1S75, of England, and the words “ any person accounting ”have been construed to be wide enough to include any member of thelocal authority whose accounts arc before the auditor . In order toremove doubts as to whether a narrower interpretation ought to bepreferred, the words “ any person ” were substituted for ” any personaccounting ” in the corresponding section of the later Statute (section22S of the Local Government Act, 1933)—see re Dickson It is there-fore clear that in Ceylon any member of an Urban Council may becompelled not only to refund the amount of any payment (made orauthorised by him) which is “ contrary to law ”, but also to make good“ any loss suffered by the Council owing to his negligence or misconductas such member ”. If the payment authorised is contrary to law, theliability to be surcharged is absolute ; but if any deficiency or loss is nottainted by illegality, negligence or misconduct is a condition precedentto liability.
' The Council has doubtless incurred a loss because the majority of itsmembers (including the appellants) persisted for too long in their attempt
to persuade the Commission to reconsider its decision to fix the retiringofficer’s pension at a lerel which they considered too high. But thequestion is whether such conduct amounted to “ misconduct■
The Auditor-General presumably had in mind the decision of theCourt of. Appeal of England in Davies v. Coivperlhwaite 1 which bearssome resemblance to the facts now under consideration. The membersof an Urban District Council had there resolved to make a contributionout of the rate fund in support of a march of unemployed persons toLondon to protest against the unemployment assistance regulations.The proposed expenditure was manifestly ultra vires, and the Councilwas restrained by an order of the High Court from making the illegalpayment. It was held that the costs incurred by the Council in thoinjunction proceedings should be surcharged upon those memberswho had passed the resolution. They had been guilty of “ misconduct ”within the meaning of section 22S (1) (d) of the Local GovernmentAct, 1933—which substantially corresponds to the relevant words ofsection 194 (1) of the local Ordinance—because “ notwithstanding awarning that the conduct which was proposed was unlawful, and withoutin any way combating the correctness of the advice-, they took part inpassing a resolution which they had been told was an illegal resolutionFor these reasons, their behaviour constituted “ misconduct ” andv ent far beyond “ mere imprudence or want of judgment which cannotbe called misconduct ”. In sanctioning an illegal expenditure of therate-jjayers’ money, they had "acted in a way in which no reasonablemen, acting reasonably and desirous of doing their duty to the ratepayers according to law, would have acted ”.
The facts of the present case are clearly distinguishable. The Auditov-General has not suggested that the appellants were actuated by impropermotives ; indeed there is no evidence on the record to support such animputation. It is neither illegal nor improper for the elected membersof a local authority to make recommendations to the Local GovernmentService Commission on the subject of pensions which must ultimately,bepaid out of the rate payers’ money. Let it be assumed that, in seekingto protect the rate payers, the appellants acted with too much tenacityand with insufficient tact. As things turned out, their over-enthusiasmduring the later stages of the discussions resulted in a loss to the Council,but their behaviour cannot be said to contain that element of bad faithwhich is necessarily involved in the term “ misconduct''
I would allow the appeal and quash the order of surcharge by theAuditor-General upon the appellants. As this is the first occasion onwhich the provisions of section 194 of the Ordinance have arisen forclarification in this Court, I think that each party should bear his owncosts in these proceedings.
Fernando, J.—I agree.
• Appeal allotted.
1 (193S) 2 A. B.R. 6SS. ’'