Chief Justice quashes Minister's decision to terminate board appointments [1]
Monday, April 4, 2016 - 17:48. Updated on Tuesday, April 5, 2016 - 16:36.
Tonga’s Chief Justice has quashed a decision by the Minister of Public Enterprises, Hon. Poasi Tei, to end the terms of two directors of the Tonga Broadcasting Commission (TBC) who had refused to resign from the board voluntarily.
“I have found that the Minister’s decision to remove the plaintiffs was made for an improper purpose and was predetermined,” stated Lord Chief Justice O. G. Paulsen in a Supreme Court ruling on March 29.
“The evidence proves that the Government was on an intractable course to remove all the directors in the ICT and Utilities sectors.”
Unlawful
The judge declared that the Minister’s decision of 16 October 2015 removing the plaintiffs Lady ‘Eseta Fusitu’a (TBC chairperson) and Lady Tuna Fielakepa as directors of TBC was unlawful and is quashed, and the plaintiffs are entitled to their costs, which are to be fixed by the Registrar if not agreed.
Chief Justice Paulsen stated that he was satisfied “and indeed it is plainly obvious in my view, that the only reason the plaintiffs were removed from office was because they would not resign to allow for the introduction of the public enterprises reforms.”
Furthermore, “the requests for the plaintiffs’ resignations…had nothing whatsoever to do with the plaintiffs’ performance as directors of the TBC,” he stated.
Lady ‘Eseta had been reappointed as a director and the chairperson of the TBC Board in May 2014 for a period of three years, and Lady Tuna had been reappointed as director of the TBC Board in December 2013 for a period of three years.
Flaws
The 48-page ruling by the Chief Justice revealed that the process of implementing the removal of directors for the reform was flawed and unfair.
In summing up a case that has been in and out of courts since the Minister terminated the appointments of Lady ‘Eseta and Lady Tuna on 16 October 2015, the ruling exposed failures in the decision making process of the new government.
The Chief Justice said that while “the Court recognizes that it should not trespass on the legitimate policy sphere of Ministers but in some cases, and this is one in my view, the real reasons for a decision do not appear in the decision itself but may emerge inferentially from other evidence.”
He said that Ministers of the Crown have a ”duty of candour” and are expected to show candour and file affidavits which disclose all the relevant facts, the content of the decision making process that was adopted to arrive at the decision challenged and the full reasons for the decision.
The ruling cites lack of evidence about key aspects of the government’s decision making process and no record of the matters which were considered by Cabinet in relation to the plaintiffs’ requests.
“There is no evidence of the matters that Cabinet considered on 16 October 2015 when it approved the letter to be sent to the plaintiffs terminating their appointments.”
The Chief Justice said that Hon. Poasi Tei and Government considered the removal of the plaintiffs was necessary for the good of the country, though the minister had no power to remove the plaintiffs under the Public Enterprise Act. “In doing so the Minister acted unlawfully requiring the Court’s intervention.”
Proposed reforms
The background of the case was the public enterprise reform.
Since March 2015, Hon. Tei has embarked on a program to restructure the boards of Directors of the government’s 15 Public Enterprises by grouping them into sectors with shared boards. During this reform the Tonga Broadcasting Commission was put under a new, shared, ICT sector board along with Tonga Communications Corporation and Tonga Post and Fast Print Ltd.
In a statement of facts the Chief Justice found the Ministry in 2015 had considered restructuring the boards of public enterprises.
“The heft of what was proposed was that the public enterprises would be categorized into sectors (Utilities, Information, Communication and Technology, Transport, Agriculture and Others) and that the public enterprises in each sector would have shared directors. The existing directors were to be removed. They would be replaced by new shared boards following a recruitment and selection process.”
In April 2015 a presentation of the proposed reforms was made at a Ministers’ retreat and they were told of a need to provide severance packages to the existing directors. There was also intended to be a period of further analysis and development of a policy framework, and there was a plan for consultations with existing board directors.
Approved before consultation
However before that process happened, Cabinet went ahead and on 12 June 2015 decided to implement the reforms to combine the boards in the ICT and Utilities sectors.
“Cabinet’s approval of the reforms pre-dated any consultation with the boards of public enterprises,” the Chief Justice found.
“A letter was circulated to all chairpersons of public enterprises inviting them to special meeting to discuss the Government’s proposal for reform of the public enterprises but that meeting did not take place until 19 June 2015.”
On July 1 the Minister then wrote to Lady ‘Eseta the chair of TBC to inform her that government had approved for the ministry to implement major reform to public enterprises. It also stated that by 1 September 2015 the existing directors would be removed from office with the commencement of the term of new and shared boards.
After the Minister requested their resignations the two ladies went through a process of complaining to the Commissioner of Public Relations who issued a view that the request for the voluntary resignation of the directors within a fixed deadline was contrary to the spirit of the terms of their appointments, unreasonable, and, in the Commissioner’s view, unlawful.
Terminated appointments
By September all boards directors had resigned excepting for Lady ‘Eseta and Lady Tuna.
On October 16 Cabinet met to approve a draft letter terminating the appointments of the plaintiffs “who have not yet resigned” and resolved to an effective termination date of 19 October 2015.
The plaintiffs did not voluntarily resign and filed this proceeding in the court. They initially obtained an injunction by Cato J restraining the Minister from terminating their positions as directors of TBC until further order of the court, but it was subsequently discharged by Scott J after a hearing. An appeal was filed by the plaintiffs but rather than proceed by an appeal the parties agreed for the current proceeding.
Predetermined outcome
The Supreme Court ruling concluded, “Having put the plaintiffs on notice in his letter of 29 September 2015 that he was considering removing them the process the Minister then adopted was in my view flawed, unfair and perfunctory, congruous in my view with a predetermined outcome”
He went on to state the Minister had provided almost none of the information that had been sought by the plaintiffs.
“In relation to the first allegation, the Minister failed to provide satisfactory response to the plaintiff’s request for further explanation of the poor financial performance of TBC and in fact, fallaciously correlated revenue and profit,” stated the Chief Justice who described the Minister’s framing of the allegation as “vague”.
The serious allegations were made against the plaintiffs for the first time without supporting documents.
“That would have been unreasonable even if the Minister’s allegations had been sufficiently particularized (which they were not)…The Minister did not offer the plaintiffs an opportunity of a hearing at any stage either before himself for the Cabinet sub-committee.”
However, In finding that the Minister’s decision to remove the plaintiffs was made for an improper purpose and was predetermined, he noted that the Minister’s failures to observe natural justice were therefore not material.
“Had I not been of the view that the decision was unlawful on other grounds, I would have considered the Minister’s breaches of natural justice both substantial and material requiring the Court’s intervention,” stated Chief Justice Paulsen in his ruling.
The plaintiffs were represented by W. C. Edwards and the defendant by A. Kefu SC.