Court Dismisses Claims Against Port Authority of Jamaica

The Supreme Court on November 30, 2017, dismissed all the claims brought against the Port Authority of Jamaica (PAJ) by two recently retired executives as it relates to the payment of a discretionary retirement benefit along with gratuity payments.

Giving an update in the House of Representatives on January 23, Prime Minister, the Most Hon. Andrew Holness, explained that in July 2016, the Auditor General issued a special audit report, in which certain key findings were noted.

He said it was highlighted that there were certain executives of the PAJ who had a provision in their contracts for the payment of a discretionary retirement benefit.

Mr. Holness informed that the report noted that the requisite approval was not sought from the Ministry of Finance prior to making the payment, in breach of the Ministry’s guidelines.

“These individuals were also the recipients of a contract gratuity in lieu of pension. The report indicated that the PAJ had informed the Auditor General as to the actions to be taken in treating with the matter. The Auditor General advised the PAJ (in response to the PAJ’s request for advice from that office), that persons entitled to contract gratuities would not also be entitled to retirement benefits,” he informed.

Mr. Holness said in keeping with the advice of the Auditor General, the PAJ requested the approval of the Minister of Finance to pay a reduced retirement benefit, based on an agreement that was negotiated with the executives.

“However, before a response was received from the Minister of Finance, two former executives filed a suit in the Supreme Court against the Port Authority. Declarations that the PAJ acted in error in requesting and acting on the advice of the Auditor General and that the PAJ is liable to pay them the full discretionary retirement benefits provided for in their contracts of employment, were sought,” he said.

The Prime Minister noted that the PAJ defended the claims on the basis that the Auditor General was the appropriate officer to advise on this issue and that it acted properly with the advice from that office.

He also stated that the Court acknowledged the role of the Auditor General and the PAJ’s obligation to comply with the directions of that office.

“The court found that the PAJ had the power to grant discretionary retirement benefits and that in exercising that power, the PAJ must act rationally and in good faith. The court went on to find that the PAJ did not act irrationally or in bad faith when it sought and followed the Auditor General’s advice,” Mr. Holness said.

He noted that the Court specifically considered that it was proper for the PAJ to seek and consider the Auditor General’s advice, given the scope, nature and functions of the Auditor General and the relevant provisions of the Public Bodies Management and Accountability Act and the Financial Administration and Audit Act.

Meanwhile, the Prime Minister said the Court held that it was not necessary or even appropriate for any public body, such as the PAJ, “to question or attempt to confirm the accuracy of the Auditor General’s report”.

He also informed that the recently retired executives have filed an appeal against the court’s decision and that no date has been set for the hearing of the appeal.

In her report in July 2016, the Auditor General directed the PAJ to take action to recover the retirement benefits paid to the retired executives, in circumstances where the payments were not authorised.

“The PAJ had initially delayed taking action pending the court ruling, but now that it has been handed down, the PAJ has initiated steps to recover the payments that have been made,” Mr. Holness said.