Board of Management of the Bank of New Zealand Officers' Provident Association v McDonald Ca244/01

[2002] NZCA 143

IN THE COURT OF APPEAL OF NEW ZEALAND  CA244/01

BETWEEN      THE BOARD OF MANAGEMENT

OF THE BANK OF NEW ZEALAND OFFICERS’ PROVIDENT ASSOCIATION

Appellant

AND                T K McDONALD & OTHERS

First Respondents

AND                BANK OF NEW ZEALAND

Second Respondent

Hearing:  17 June 2002

Coram:Keith J Blanchard J Glazebrook J

Appearances:             B A Scott and E A France for Appellant

B D Gray and D J Cooper for Bank of New Zealand

Judgment:                 20 June 2002

JUDGMENT OF THE COURT DELIVERED BY BLANCHARD J

[1]    This is an application by the second respondent, the Bank of New Zealand (the Bank), for conditional leave to appeal to Her Majesty in Council against the judgment of this Court on 23 April 2002. The appeal concerned whether in  particular circumstances the Board of Management of the Bank of New Zealand Officers’ Provident Association (the Board) had power to amend the Association’s rules in a manner which would enable it to pay benefits not only to current officers of the  Bank  but  also  to  certain  persons  who  ceased  to  be  officers  on  or  after 1 November 1995.

[2]    We allowed the appeal, quashed an order made in the High Court and made a declaration that the Board was empowered to alter its rules in the manner proposed with effect on and from that date.

[3]    The Board opposes the present application. The first respondents, the directors of the Bank, have said that they abide the decision.

[4]    The Bank concedes in relation to r2(a) of the Privy Council Appeal Rules 1910 that it does not have a direct monetary claim but says that it has a real interest in the questions asked in relation to the Fund and that the value of that interest is of the amount of $5,000 or upwards. It says the matter involves at least indirectly a claim or question to or respecting property or some civil right of that value. In the view we take it is unnecessary for us to go beyond the interest which the Bank says it has through the shortening of its contribution holiday (i.e. the period during which it will not have to make employer contributions to the Fund). This period will very probably terminate at an earlier date by reason of the Court’s decision that rule amendments can be made authorising payments out of the Fund in relation to past years (from 1 November 1995 onwards) to both present members and those who have subsequently ceased to be members.

[5]    The rule amendments were intended when proposed to allow the Board to pay out lump sums calculated in relation to the years in question totalling $43 million, of which $16.3 million would go to persons who are no longer members.

[6]    Mr Scott, for the Board, has argued that the Bank has no interest of $5,000 or upwards in the question which was before the Court, even indirectly. He submitted that the proposed rule amendments are themselves subject to further revision and, when finalised, will have to be submitted to the directors for their sanction. No immediate payment of any particular sum is in prospect. All that has happened, counsel said, is that it has been declared that the Board has the power to propose rule amendments such as those contained in the material before the Court. He suggested that the ruling made by the Court is fundamentally procedural in nature.

[7]    We are not persuaded by this argument. If our decision is to stand, it will preclude the Bank and the directors from in future disputing the ability of the Board

to make rule amendments with backdated effect. That is more than a mere matter of procedure. It affects the level of the payments which can be made out of the Fund at a particular time. Although the exact amount of the payments may now be varied if the Board reconsiders the detail of its proposals, it has not been suggested that the sums involved will be significantly reduced. The Board’s proposal is directed towards achieving equilibrium in the Fund by substantially reducing its size. Practically that is almost bound to lead to a shortening of the Bank’s contribution holiday. Because of the amounts involved, the bringing forward of the point at  which the Bank will recommence its contributions will certainly have, in present value terms, unfavourable consequences for the Bank well in excess of the (now) almost nominal qualifying figure in the Privy Council Rules of $5,000.

[8]    Mr Scott also submitted during his oral argument that the Bank has no binding obligation to make contributions at any particular level and could actually refuse to make additional payments consequent on the rule amendments which it has opposed even if that meant that the Fund became insufficient. We are satisfied, however, that such an option is for practical reasons – and arguably for legal reasons as well - not available to the Bank.

[9]    We have reached the view that the Bank has an indirect interest in the issue the Bank wishes to take to the Judicial Committee which in terms of r2(a) must be taken to exceed the minimum figure. We grant conditional leave accordingly on the usual conditions, save that, as suggested by the Bank which has properly recognised the comparative urgency of the matter, the time for compliance with both conditions, namely provision of security of costs and preparation of the record, is set at eight weeks from the date of the hearing of this application.

[10]   The Bank is entitled to costs on the application of $2000 together with its reasonable expenses, including travel and accommodation costs of one counsel, to be fixed if necessary by the Registrar.

Solicitors:

Chapman Tripp Sheffield Young, Wellington for Appellant Bell Gully, Wellington for Respondents