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Public Service Commission v Public Service Tribunal [2018] TOSC 53; Civil Case 32 of 2017 (5 October 2018)

IN THE SUPREME COURT OF TONGA
CIVIL JURISDICTION
NUKU’ALOFA REGISTRY

CV 32 of 2017

BETWEEN: THE PUBLIC SERVICE COMMISSION

- Plaintiff

AND: THE PUBLIC SERVICE TRIBUNAL

- First Defendant

AND: BUSBY KAUTOKE

- Second Defendant

BEFORE LORD CHIEF JUSTICE PAULSEN

Counsel: Mr. H. Waalkens QC KC and Ms H Stuart for the plaintiff
No appearance for the first defendant

Mr. D. Laurenson QC and Mrs. ‘A Taumoepeau SC for the second defendant

Date of Hearing: 27 August 2018
Date of Ruling: 5 October 2018

RULING

This action and the grounds of review

[1] This is an action by the Public Service Commission (PSC) for judicial review of a decision of the Public Service Tribunal (the Tribunal) of 18 April 2017 allowing Mr. Kautoke's appeal from the decision of the PSC terminating his employment as Chief Secretary and Secretary to Cabinet. The Chief Secretary and Secretary to Cabinet is the Chief Executive Officer of the Prime Minister’s Office (PMO).

[2] This is in fact the second action for judicial review between the same parties. The first action, under CV 45 of 2013, was in respect of an earlier decision of the Tribunal of 21 March 2013 also allowing Mr. Kautoke's appeal from the PSC’s decision to terminate his employment. This Court required the Tribunal to reconvene and rehear Mr. Kautoke's appeal. The Tribunal reheard the appeal and issued its decision of 18 April 2017. The PSC now seeks an order setting aside this second decision of the Tribunal on Mr. Kautoke’s appeal.

[3] The kernel of the allegation that led the PSC to terminate Mr. Kautoke’s employment was that he failed to ensure that the PMO kept vouchers for payments made from public funds in order to allow for proper accounting records and for audit purposes.

[4] The PSC argues that in its ruling of 18 April 2017 the Tribunal fell into error in five respects, namely:

(a) That it incorrectly held that r. 10(1) of the Public Finance Administration (Public Funds) Regulations (the regulations), which was the provision that Mr. Kautoke was said to have breached, did not impose any duty upon the PMO to retain vouchers;

(b) It failed to consider an application by the PSC to reformulate the charges against Mr. Kautoke if they were found to have been laid incorrectly;

(c) It failed to apply the correct test when determining whether the PSC’s decision to terminate Mr. Kautoke’s employment was invalid;

(d) It failed to consider or ignored evidence relevant and contrary to its finding that vouchers had been removed from the PMO by the Ministry of Finance and National Planning (MOFNP) without Mr. Kautoke’s knowledge; and

(e) The Tribunal wrongly directed that the PSC pay Mr. Kautoke’s costs when it has no power to make such an order.

The context

[5] Mr. Kautoke was employed by the PSC as CEO of the PMO by way of an agreement dated 8 May 2009.

[6] Clause 24 of Mr. Kautoke’s employment agreement provided that the PSC ‘shall’, in consultation with the responsible Minister and with the approval of Cabinet, and ‘subject to any prescribed disciplinary procedures’ terminate Mr. Kautoke’s employment where he had breached the Public Service Code of Conduct or his conduct was such that ‘he should be dismissed under the Public Service Act 2002, Public Finance Management Act 2002 or any Public Service regulation’.

[7] Prior to Mr. Kautoke’s employment in this role, the MOFNP delegated aspects of its financial responsibilities to the PMO as part of a pilot programme. A Savingram of 24 October 2008 from the Secretary for Finance and National Planning to the then Chief Secretary and Secretary to Cabinet, Lady ‘Eseta Fusitu’a, and the Deputy Secretary, Mr. Paula Ma’u, confirmed the arrangements that were agreed upon for the progressive devolution of financial management to the PMO. The Savingram set out various requirements of the PMO including that it was to ensure the safe-keeping of vouchers and supporting documents; that is records of payments made by the PMO. The PMO was also connected to the Sunsystem, which is an electronic database to record payments.

[8] The Tribunal recorded the important content of the Savingram in its ruling at [19] as follows:

(a) A separate bank cheque account at the Westpac Bank of Tonga had been opened in the name of the PMO with 4 signatories, namely, Mrs. Eseta Fusitu’a, Mr. Paula Ma’u, Ms. Unaloto Vaka’uta and Mr. Pita Vuki (all of PMO) with any two to sign but with priority signing by Mrs Fusitu’a and Mr. Ma’u.
(b) The PMO should still ensure compliance with all policies issued and approved;
(c) The responsible accountable officers at PMO who would be assigned to work directly in disbursement of the funds in the account were to be “duly advised to ensure compliance with, relevant requirements of the Public Finance Management Act 2002, related Regulations, Treasury Instructions and Circulars and also other established rules, policies and procedures that govern the disbursements of the public funds. This also includes establishing sound system of internal control and keeping proper books and records to ensure complete and accurate audit trails;
(d) The PMO would be connected to the Sunsystem computer program of the MOFNP;
(e) “Additional processes and training of PMO staff

The PMO staff, through on the job training, has been familiar with the processing of orders and vouchers on a manual and automated system using the sunsystem. In addition to this are: checking of vouchers against established rules, policies and procedures that govern the disbursements of public funds; entering of vouchers into the sunsystem; maintaining registry of cheques and dispersing to customers; posting of cheques to sunsystem; and preparing of bank reconciliation. On the job training of relevant PMO staff on these additional processes had commenced at MOFNP from the beginning of October”;

(f) “Supervision of Accounts

It has been agreed that, the daily supervision of Accounts will be headed by Mr. Paula Ma’u, Deputy Secretary “who would be the principal Supervisor to oversee and manage the operation of the Accounts”;

(g) “Maintaining of Records

PMO shall ensure that all original vouchers and supporting documents are kept in a safe place at all times. This is important not only to ensure money keeping of your Office expenditure records but also for audit purposes. These records are subject to periodic check and review by the relevant MOFNP staff and also the scheduled audit visits by the staff of Audit Office.”

(the emphasis is mine)

[9] The PMO operated a cheque account into which funds were transferred from about 1 November 2008. The funds transferred into that cheque account were public money.

[10] From December 2008, the PMO was also delegated responsibility for dealing with parts of the Constitutional and Electoral Reform Programme (CER) fund, donated by the Australian and New Zealand Governments for Tonga’s Constitutional and Electoral Reforms. The Tribunal noted at [22] that this meant that there were ‘two funds’ in the PMO cheque account. These were the CER fund and the remainder of the PMO fund which was referred to as the PMO Advance Account.

[11] During the period of Mr. Kautoke’s employment various audits of the PMO’s accounts were undertaken. For present purposes a summary of these reports will suffice. Much of what follows is taken from Mr. Waalkens’ submissions to the extent that I understood it was not contentious.

[12] The first audit report produced by the Auditor General and dated 8 June 2011 concluded:

(a) That the PMO’s record keeping had been very poor and did not meet accepted standards as required by law;
(b) That the Audit Office had been unable to account for almost $600,000 relating to the CER project. The Audit Office was unable to express any opinion on the validity of the disbursement of that sum by the PMO on the CER project; and
(c) That the CEO, that is Mr. Kautoke, should be held to account for the amount unaccounted for as the ‘money was under his watch’.

[13] Mr. Kautoke responded to the audit report on 30 June 2011 saying the funds had been used for the correct purposes but that some source documents (the original, signed vouchers) could not be located. He said that the PMO had located most vouchers and was confident of finding the rest. He acknowledged that there was disorganization of record keeping in some areas and requested an extension to provide further explanation for this.

[14] The acting CEO of the PMO, Mr. Alfred Soakai, wrote to the Audit Office on 4 August 2011 claiming, among other things, that the vouchers relating to the CER project had been located. This was incorrect.

[15] The Auditor General responded by way of a further letter dated 17 August 2011 and said that on top of the amount unaccounted for with respect of the CER project, a total of $1,495,469.84 was unaccounted for in the PMO Advance Account. It was said that this sum consisted of 341 cheque payments without supporting vouchers so that it could not be determined if the payments were for proper purposes or whether some of them related to the CER project. The Auditor General signaled an intention to refer the matter to the Standing Committee on Finance and Public Accounts of the Legislative Assembly and to the Public Service Commission for appropriate actions.

[16] A second Audit Office report was produced on 28 October 2011 finding that following further review $447,259.03 remained unaccounted for in relation to the CER project and $1,202,716.19 remained unaccounted for in the PMO Advance Account. This made a total of $1,649,975.22 which it was said had not been properly accounted for by the PMO. In the opinion of the Auditor General, Mr. Kautoke was responsible for this and strong recommendations were made that disciplinary action should be taken against him.

[17] An independent audit by JKCA (Chartered Accountants) was commissioned by the New Zealand High Commission to review the findings of the Audit Office and determine whether funds donated to the CER project had been used for their intended purpose.

[18] JKCA found that CER disbursements amounting to $253,062.63 previously identified as unaccounted for by the Auditor General had been verified. It concluded that a total of $212,196.40 from the CER fund had not been used for its intended purpose and should be reimbursed. It did not review the PMO Advance Account. Notwithstanding that not all vouchers could be found for all PMO transactions JKCA was able to identify which transactions related to the CER project and did not consider and made no findings as to whether there were vouchers in respect of the payments making up the $212,196. JKCA concluded that no instances of fraud were detected and that all transactions reviewed were bona fide.

[19] Mr. Kautoke provided a lengthy response on 19 December 2011. He did not challenge JKCA’s findings. He did challenge the findings of the Auditor General with regard to the PMO Advance Account, saying that the original records had been found for 112 cheques previously thought to have been missing. Mr. Kautoke acknowledged that clerical record keeping in the PMO was ‘messed up’ and also asserted that the Auditor General may have had ulterior motives with regard to the auditing undertaken.

[20] Mr. Kautoke subsequently sought extensions to provide further explanation regarding the missing documents.

[21] On 25 January 2012, the Standing Committee on Finance and Public Accounts wrote to Mr. Kautoke saying that he had not addressed the finding that $212,196.40 from the CER fund had not been used for its intended purpose and had to be reimbursed and requiring an explanation. The Committee also raised an additional concern that Mr. Kautoke had obstructed the Auditor General’s ability to obtain supporting documentation for the unsupported payments.

[22] On 30 January 2012, Mr. Kautoke submitted what he asserted were all remaining supporting documents for 315 outstanding cheque payments. In explanation for the disorganized records of the PMO he referred to the movement of certain records from the PMO to the MOFNP following which ‘a lot of PMO account records went missing’.

[23] These further records were audited by an independent auditor appointed by the PSC, Ms. Daphne Stone. In a report dated 13 March 2012, Ms Stone concluded that the correct supporting documentation had still not been provided for 229 payments, the total value of which came to $796,432.10. She described this as a ‘serious breach of Public trust’ and ‘very significant given the financial capability of the Government of Tonga.’ Ms. Stone also commented on the funds still unaccounted for in relation to the CER project saying: ‘The CS&SC (Mr. Kautoke) still have not provided any valid reason for this unaccounted fund, even though this amount has substantially decreased from $447,259.03 to $212,196.40, it is still a significant amount.’

[24] The PSC considered this information at a meeting on 19 March 2012. The possible suspension of Mr. Kautoke was mooted, however the PSC decided to first meet with the Prime Minister, Lord Tu’ivakano, to discuss the matter.

[25] The Chairperson of the PSC, Ms. Tu’ifua, subsequently met with Lord Tu’ivakano, who advised that he did not intend to interfere with the PSC’s work. He was briefed on the disciplinary process to be followed.

[26] On 5 April 2012, the PSC determined to suspend Mr. Kautoke. This decision was communicated to him that day.

[27] The PSC also appointed a committee to formulate disciplinary charges against Mr. Kautoke. On 3 May 2012, two charges were laid against Mr. Kautoke under clause 24(b) of his employment contract for failing to provide proper vouchers, contrary to r. 10(1) of the regulations.

[28] The particulars of the first charge read:

Busby Kautoke, Chief Secretary and Secretary to Cabinet, on or about the period of 15 May 2009 to 9 July 2010, at Nuku’alofa, while being the chief executive officer of the Prime Minister’s Office, and thus the accountable officer responsible for public expenditure under the Public Finance Management Act 2002 in the Prime Minister’s Office, you failed to ensure that you and your staff keep proper vouchers for payments in the amount of $212,196.40, with regards to the expenditure in relation to the Constitutional and Electoral Reform Project, in order to allow for proper accounting records and audit purposes.

[29] The particulars of the second charge read:

Busby Kautoke, Chief Secretary and Secretary to Cabinet, on or about the period of 15 May 2009 to 9 July 2010, at Nuku’alofa, while being the chief executive officer of the Prime Minister’s Office, and thus the accountable officer responsible for public expenditure under the Public Finance Management Act 2002 in the Prime Minister’s Office, you failed to ensure that you and your staff keep proper vouchers for payments in the amount of $796,432.10 with regards to the expenditure from the Prime Minister’s Office Advance Account in order to allow for proper accounting records and audit purposes, the details of which are set out in Annex 1 to this letter.

[30] The sum of $212,196 referred to in the first charge is based on the JKCA report that of $1,530,918.27 received into the PMO Advance Account for the CER project a sum of $212,196.40 was not used for the purpose of that project.

[31] The sum of $796,432 referred to in the second charge was based on the Stone report that there were 229 cheques totaling $796,432 for which vouchers were not provided. The case against Mr. Kautoke, that he failed to keep vouchers, is based on these 229 cheques and not on cheques that make up the sum of $212,196.40 referred to in the first charge. I understand that there is no evidence of which cheques made up the sum of $212,196.40 nor any evidence whether there were vouchers in respect of those cheques.

[32] The Tribunal found, and I accept, that statements in audit reports that amounts, payments or cheques were ‘unaccounted for’ was not correct because it conveyed the notion that no one knew what had happened to the money when in respect of the 229 cheques that were the subject of the charge against Mr. Kautoke it is known who the cheques were paid to.

[33] A final audit report was subsequently obtained from the Audit Office dated 4 May 2012. The Audit Office found that supporting documentation for 229 payments with a total value to $937,730.21 had still not been provided. The report also advised that the vast bulk of the payments had seemingly been categorised as being for salary, other benefits and travel expenditures, which breached a directive from the MOFNP regarding the use of the PMO’s account.

[34] Mr. Kautoke provided his response to the charges by way of a letter dated 22 June 2012. He denied the charges and explained that the original vouchers relating to the PMO Advance Account had been moved to the MOFNP. He requested a further opportunity to locate them. He also provided letters from three individuals stating that records had been moved to the MOFNP.

[35] Mr. Kautoke’s lawyer, Mrs. Taumoepeau, also provided a response to the charges, raising various issues including that the vouchers had been moved to the MOFNP. Her submissions record Mr. Kautoke’s position that with proper inquiries the documents could be located and sufficient assurances given for audit purposes.

[36] Mr. Kautoke attended an oral hearing before the PSC and was represented by Mrs. Taumoepeau who made submissions on his behalf. The PSC considered the information before it and consulted again with the Prime Minister, Lord Tu’ivakano. He maintained the position that he did not wish to interfere with the work of the PSC.

[37] The PSC decided to terminate Mr. Kautoke’s employment. The decision was made on 8 August 2012.

[38] There is no suggestion that Mr. Kautoke misappropriated or misdirected funds. The case of the PSC is that there were significant omissions in the keeping of proper records and the subsequent fall-out from them occurred under Mr. Kautoke’s ‘watch’ as CEO and that he must bear the ultimate responsibility. In terms of ‘fall-out’, what is being referred to in particular is that the Tongan Government was embarrassed as a result of having to repay $212,196.40 to the New Zealand and Australian Governments from money donated to Tonga’s CER project. It is also said that Mr. Kautoke failed to take any responsibility for his role and provided no explanation, other than to ‘vaguely’ suggest that the MOFNP had removed records relating to the PMO account, without his knowledge.

[39] Following his termination, Mr. Kautoke appealed against the PSC’s decision. As noted earlier, on 18 April 2017 the Tribunal allowed his appeal. Dissatisfied with the Tribunal’s decision the PSC sought and was granted leave to apply for judicial review on 24 July 2017.

First alleged error – regulation 10(1)

The Tribunal’s findings and the submissions

[40] At [47] the Tribunal set out the wording of the charges against Mr. Kautoke (without reference to the particulars that followed). The charges read:

10. The charges are as follows:

(1) Failure to provide proper vouchers, contrary to regulation 10(1) of the Public Finance Administration (Public Funds) Regulations 1984.

(2) Failure to provide proper vouchers, contrary to regulation 10(1) of the Public Finance Administration (Public Funds) Regulations 1984.

[41] The Tribunal then set out rr. 10(1) and (2) (which it had found at [15] were in force). Those provisions are:

10. Particulars to be inserted in vouchers

(1) Vouchers for payment should whenever possible attach an original invoice and order supporting the payment. In cases where original invoices are not available or applicable, vouchers for payment will contain full particulars of each service, such as dates, numbers, quantities so as to enable them to be checked without reference to any other document.

(2) Payment vouchers will be completed in ink or typewritten, signed in ink and otherwise properly completed in every respect before payment is made. Facsimile signature stamps must not be used on original vouchers.

[42] At [49] the Tribunal accepted that r. 10(1) requires particulars to be inserted in payment vouchers and an officer who signs a voucher failing to include those particulars breaches r. 10 and may be charged due to the application of r. 12 which provides:

12 Responsibility for payment of expenditure

The signature of an officer to the accuracy of every detail on the voucher. He will, therefore, be held responsible that the services specified have been duly performed, that the prices charged are either according to contracts or approved scales fair and reasonable according to current local rates, that authority has been obtained as quoted, that the computations and costing have been verified and are arithmetically correct, that the persons named in the vouchers are those entitled to receive payment and that stores purchased have been duly taken on charge or in the case of consumable stores correctly issued.

[43] At [50] of its ruling the Tribunal stated:

The Tribunal therefore accepts that the charge against [Mr. Kautoke], as stated in the above quoted statement of the two charges, is that [Mr. Kautoke] was the officer who either signed the vouchers in issue or who dictated their contents, and those vouchers did not contain the particulars which regulation 10(1) required.

[44] That statement mischaracterizes the nature of the charges against Mr. Kautoke. The charges were not concerned with who signed or dictated the contents of vouchers. The allegation was that vouchers were not kept. The particulars of the charges stated that Mr. Kautoke ‘failed to ensure that you and your staff keep proper vouchers for payments...’ not that Mr. Kautoke had personally signed the vouchers or dictated the vouchers’ content.

[45] The Tribunal’s approach was wrong and is surprising as it had correctly noted earlier in its ruling at [29]:

..the gravamen of the two charges against [Mr. Kautoke] is that he failed to ensure that he and his staff kept proper vouchers...in order to allow for proper accounting records and audit purposes.

[46] The Tribunal then set out, at [51], the particulars of the charges which it noted ‘do not allege any such failure by [Mr. Kautoke]’ referring again to signing or dictating the vouchers ([52] is to the same effect).

[47] The Tribunal then moved to the issue whether r. 10 contains, as Mr. Waalkens submitted for the PSC, an implication that vouchers are to be safely kept after payment was made. The Tribunal concluded at [56] that:

..regulation 10 (1) does not impose any duty upon the officer signing the voucher, or who dictates the contents of the vouchers, to keep the voucher safely for audit purposes after payment has been effected in respect of such voucher.

[48] At [66] and [67] the Tribunal held that the particulars provided of the charges against Mr. Kautoke did not describe any breach or failure under r. 10 and that accordingly the charges were invalid and could not form a valid basis for his dismissal.

[49] Mr. Waalkens submitted that it was as ‘clear as a pike staff’ from the charges and other information provided to Mr. Kautoke that the concern was his alleged incompetence around safe keeping of records (particularly vouchers) for accounting purposes.

[50] He argued that this was plainly understood by Mr Kautoke and his Counsel who never at any stage objected to the charges. He also referred to evidence that supported that submission, such as Mr. Kautoke’s letter of 22 June 2012 in response to the charges in which Mr. Kautoke stated:

I did not fail to ensure keeping of vouchers. There was a system in place. The records were kept and a system in place for its safe keeping. It was monitored periodically at different levels, by accountable officers including myself.

[51] Mr. Waalkens referred me to Vatsyayann v Professional Conduct Committee (HC, Wellington CIV 2009-485-259, 14 August 2009, Simon France J) which he submitted supported the proposition that in disciplinary proceedings what matters is not the technical wording but ‘rather the clear gravamen’ of the charges. He noted that whilst Vatsyayann had been put before the Tribunal it made no mention of the decision in its ruling.

[52] Whilst accepting that r. 10 contains no express requirement that proper vouchers be retained Mr. Waalkens said that this was implicit and followed from a purposive interpretation of the regulation. How otherwise, Mr. Waalkens argued, could vouchers be checked for audit purposes? He also submitted that the Tribunal’s approach was inconsistent with its interpretation of r. 15 (at [14] and [20]), which also contains no express requirement that vouchers be retained but in respect of which the Tribunal held that such an obligation could be implied.

[53] Mr. Laurenson argued that the Tribunal was correct that there could be no implication arising from r. 10 that vouchers were to be retained because r. 10 has nothing to do with what is to happen to vouchers after payment has been made.

[54] Mr. Laurenson accepted the need to keep vouchers but noted that there are other means of providing for that. He referred me, inter alia, to the Savingram from the Secretary for Finance and National Planning to the Chief Secretary and Secretary to Cabinet of 24 October 2008 which included a requirement for ‘daily supervision of Accounts’ and ‘proper keeping of your Office expenditure records but also for audit purposes’ as an example.

[55] Mr. Laurenson submitted that it could not be correct, as he said the PSC contended, that it did not matter whether the particulars of the charges in fact amount to a breach of the regulatory provision that Mr. Kautoke was charged with contravening. He submitted that it must be proven that the ‘statutory/regulatory provision has been contravened by conduct particularised in the charge’.

[56] Mr. Laurenson distinguished Vatsyayann (supra) on the basis that the issue in that case was whether the particulars of the charge were sufficient to inform the appellant of the substance of what was alleged, not whether the conduct particularized could constitute the charge.

[57] Mr. Laurenson also submitted that rr. 10 and 15 are completely different because only r. 10 is concerned with what particulars are contained in vouchers, indicating that its purpose is to ensure that before a payment using public funds is made sufficient information is provided (with or in the voucher) to confirm that it is proper to make it.

Discussion

[58] I agree with Mr. Waalkens that an obligation to retain vouchers must necessarily be implied. The meaning of a statutory or regulatory provision is not limited to its express words but will also include implications which are directly suggested by the words expressed, or because it is legitimate to find the implication having regard to the accepted guides of legislative interpretation; the paramount guide and object being to discover what the legislator intended (Bennion, ‘Statutory Interpretation’ 2^nd Ed at pp 361, 367 and 378).

[59] In Bennion the authors state at pg 362:

So the interpreter of legislation needs to accept that it is a fact of language, indeed of life, that every statement consists not only of what is expressed but also what is implied. Neither portion is more compelling than the other (though there will be more room for argument about the content of what is implied). The implications may arise from the language used, from the context, or from the application of some external rule. They are of equal force, whatever their derivation.

This conveys an important truth about the role of drafters. They draft express provisions, but one might also say that they draft implications...

[60] The regulations were made under the Public Finance Administration Act but were continued in force under s. 48 of the Public Finance Management Act and must be read consistent with the objects of that Act. The Public Finance Management Act is concerned with responsible management of the Kingdom’s finances, transparency and legal accountability of those entrusted with responsibility for handling the Kingdom’s finances and economic assets (Public Service Association Inc and anor v Kingdom of Tonga and anor (Unreported, Supreme Court, CV 48 of 2014, 17 August 2018, Paulsen LCJ)). The retention of proper financial records, such as vouchers, is consistent with these objects.

[61] Turning to the words of r. 10 itself, it requires that vouchers be completed in ‘every respect before payment is made’ (r. 10(2)). The vouchers are to be completed in ink or typewritten and signed in ink thereby creating a permanent record. Consistent with this, the regulation also refers to the circumstance of vouchers containing full particulars so as to enable them to be checked without reference to any other document. Such checks might be necessary both before and after the payment to which the voucher relates has been made. All of these matters support an implication that vouchers are to be retained.

[62] The implication is consistent also with other provisions of Part III of the regulations (in which r. 10 appears). Regulation 12 concerns an officer being responsible for the accuracy of every detail on the voucher. The issue of an officer’s responsibility for the accuracy of a voucher is most likely to be a matter of concern after payment has been made. Furthermore, r. 15(2) provides that entries of payments in a Payment Cash Book will be consecutively numbered and those numbers affixed to the supporting vouchers. The Tribunal itself accepted that an obligation to retain vouchers was implied from this regulation.

[63] In finding against the implication for which the PSC contends, the Tribunal did not refer to the objects of the Act or any principles of interpretation and does not appear to have recognized the incongruity of its conclusion that an obligation to retain vouchers could be implied in r. 15 but not in r. 10.

[64] The Tribunal advanced two grounds for its conclusion (at [55]). First, that if vouchers were to be retained there would have been some clear indication of that in r. 10 or in the regulation’s heading. Secondly, that there would have been mention of which officer was responsible to retain the records. These are logical fallacies. The Tribunal has simply assumed the validity of its own conclusion.

[65] In addition, the Tribunal overlooked that the ultimate responsibility to retain vouchers must have lain with Mr. Kautoke as the Chief Executive Officer of the PMO (section 13A Public Service Act.). He did not dispute this. At page 29 of the transcript Mr. Kautoke acknowledged his responsibility when there was this exchange in the cross examination:

WAALKENS: And there’s never been any dispute on your part that you had the obligation to retain those vouchers and supporting documents as part of your ultimate responsibility. That correct?

BUSBY: That’s right. With the assistance of any support staff Deputy Secretaries, Senior Accountants and so forth.

[66] I do not accept the Tribunal’s conclusion that the particulars of the charges against Mr. Kautoke were not particulars of breach of r. 10 for another reason. The Tribunal’s analysis pays insufficient regard to the words of the charges and the particulars.

[67] The important words in the particulars for present purposes are that:

..while being the chief executive officer of the [PMO]...failed to ensure that you and your staff keep proper vouchers for payments...

[68] Underlying the Tribunal’s approach is the interpretation of the words ‘provide’ (in the charges) and ‘keep’ (in the particulars) as meaning to ‘retain’. This is incorrect. In the context of the charges laid against Mr. Kautoke the word ‘keep’ can mean ‘properly complete’ or to ‘prepare’. In common usage to keep proper accounting records means to properly prepare them. A breach of r. 10 may occur whether vouchers are prepared but not retained or were never prepared. In either sense the vouchers are not kept and cannot be provided (as the charges alleged). This is the way in which the PSC’s case was presented before the Tribunal.

[69] At [46] of Mr. Waalkens’ written submissions to the Tribunal he stated:

With this process in place, followed properly as Mr. Kautoke asserts, it makes no sense that he (or others) did not notice that large numbers of vouchers were missing, if indeed they had ever existed at all..

[70] Similarly at [48] of his submissions Mr. Waalkens stated:

As said, the onus is on Mr. Kautoke to prove that the vouchers existed, that they were moved as he asserts, that they were never returned.

[71] At [50] Mr. Waalkens dealt with this issue in some detail listing seven reasons why it might be doubted that vouchers ever existed at all and concluding that:

It simply makes no sense that, had they existed, they could not be located.

[72] In his oral closing submissions to the Tribunal Mr. Waalkens said:

A major aspect of Mr. Kautoke’s appeal is his assertion that the missing vouchers did exist but that without his knowledge and in breach of the procedures, they’d been transferred to Ministry of Finance. I use the term and quote that they ‘went missing’, I want to be clear I don’t accept they’d gone missing but that the evidence that’s been put up by Mr. Kautoke. As said, the onus is on Mr. Kautoke to prove that the vouchers existed...

[73] The PSC clearly advanced to the Tribunal the argument that the vouchers were not kept in the sense that they never existed; a clear breach of r. 10.

[74] The Tribunal then fell into error in respect to this ground of review in at least three respects as follows:

(a) It mischaracterized the nature of the charges;

(b) It was wrong to conclude that r. 10 does not contain an implication that vouchers are to be retained and safely kept; and

(c) It was wrong to conclude that the particulars of the charges did not state any breach or failure under r. 10.

[75] I would add for completeness that there is to my mind no doubt that Mr. Kautoke and his Counsel were well aware of the nature of the charges and was not prejudiced by the wording of the charges or the particulars.

Second alleged error – amendment of charges

[76] I do not consider it necessary to deal with this ground. I have found that the particulars did adequately describe a breach of r. 10 and so no amendment of the charges was necessary.

Third alleged error – genuine belief on the part of the PSC as employer

The Tribunal’s findings and the submissions

[77] At [64] the Tribunal rejected the argument advanced by the PSC that the issues for the Tribunal to determine were:

...whether the [PSC] held a genuine belief that the Appellant should be dismissed, that there were reasonable grounds for that belief and that the [PSC] had carried out such investigation as was reasonable in the circumstances...

[78] At [7(d)] of his submissions, Mr. Waalkens submitted in relation to this ground that the Tribunal fell into error because it:

Incorrectly determined that the question for the Tribunal was not whether the PSC had acted reasonably on the information before it at the time [when deciding to terminate Mr. Kautoke’s employment] but rather whether the charges, as laid, had been established. In doing so the Tribunal failed to apply the common law principle that an employer, in deciding to terminate an employee’s contract need only:

(i) Hold a genuine belief that the second defendant’s conduct was such that he should be dismissed;
(ii) Have reasonable grounds for that belief; and
(iii) Make its decision following the conduct of a reasonable investigation into the matter.

(the emphasis is mine)

[79] Mr. Waalkens submitted that this three step approach was routinely adopted in Commonwealth jurisdictions. He referred, both in the Tribunal and in this Court, to decisions of the English and New Zealand courts.

[80] Mr. Waalkens also relied upon the decision of the Supreme Court of Tonga in Masila v Tonga Water Board [2002] Tonga LR 156, 167. In Masila there was an issue whether an employee was guilty of serious misconduct warranting dismissal. Ford J held:

An employer is not bound by the legal presumption of innocence or the other rules of evidence applicable to judicial proceedings. Nor is it necessary for a misconduct charge to be proved to the high standard required in criminal cases, of proof beyond reasonable doubt. It is sufficient for the employer to be satisfied in his own mind that it is more likely than not that the employee is guilty of the misconduct charged. The employer’s decision should be based on a reasonably founded belief, honestly held. I am satisfied that in the present case, the Board acted within the ambit of these principles.

[81] The Tribunal found that the English and New Zealand cases Mr. Waalkens relied upon concerned the application of statutory provisions that did not apply in Tonga and noted that in Masila Ford J had not cited any authority for the approach he adopted.

[82] Mr. Laurenson argued that the Tribunal was correct not to apply principles applicable to unfair/unjustified dismissal claims which are based on English and New Zealand statutory provisions which he said are very different from the statutory and regulatory provisions applicable in this case. He submitted that the Tribunal correctly approached the appeal on the basis that the factual allegations supporting the charges had to be proved to the civil standard.

[83] At [47] of his submissions Mr. Laurenson said:

Being a civil regulatory disciplinary proceeding means the applicable approach in terms of sufficiency of evidence to establish relevant facts is to apply the civil standard of proof - the balance of probabilities - which is what the PST correctly applied. The New Zealand Supreme Court [Z v Dental Complaints Assessment Committee [2008] NZSC 55; [2009] 1 NZLR 1, [100]-[103]] has held that in disciplinary proceedings the civil standard is to be ‘applied flexibly according to the seriousness of matters to be proved and the consequences of proving them’, which means that stronger evidence might be required to prove more serious allegations on the balance of probabilities, but that the standard itself does not change.

Discussion

[84] I do not accept the PSC’s submission that the question for the Tribunal was whether in deciding to terminate Mr. Kautoke’s employment the PSC had a genuine and reasonably held belief that grounds for dismissal existed. The cases that the PSC relies upon concerned specific statutory provisions which have no application in Tonga.

[85] England and New Zealand have specific employment legislation creating statutory rights that do not exist at common law. As Mr. Laurenson has pointed out, the English cases relied upon by the PSC concerned s. 98 of the English Employment Rights Act 1996 (and equivalent earlier statutory provisions in British Home Stores Ltd v Burchell [1980] ICR 303) and the New Zealand case (W & H Newspapers v Oram [2001] NZCA 142; [2001] 3 NZLR 29) related to a personal grievance proceeding under s. 27 of the Employment Contracts Act 1991.

[86] Importantly, given the PSC’s reliance upon common law principles, these statutes are substantial departures from the common law. Under the common law an employee who is unlawfully dismissed may bring an action for breach of contract and must prove his or her claim to the civil standard of on the balance of probabilities.

[87] As the Court of Appeal of New Zealand noted in Board of Trustees of Marlborough Girls College v Sutherland [1999] NZCA 315; [1999] 2 ERNZ 611, 617-618:

The common law position is clear in principle. The employee sues for breach of contract.... As with actions for breach of contract generally, it is for the Court hearing the claim to decide whether on the evidence before it the claim is made out.

...

The common law action is one which directly engages, on the basis of the evidence before the Court, the question whether there was just cause or not for dismissal. So far as that issue is concerned, there can be no question of deferring to the employer’s judgment.

[88] In Oram (supra) at [30]-[31] the Court of Appeal noted:

A personal grievance under s 27 [of the Employment Contracts Act] for unjustifiable dismissal differs in significant respects from an action for wrongful dismissal in breach of contract...

[89] In Tonga there is no employment legislation of general application similar to that which applies in England or New Zealand conferring rights on employees to bring actions for unfair or unjustifiable dismissal and I do not consider that Masila is a correct statement of Tongan law.

[90] In the case of employees in the public service the Public Service Act, and regulations made under it, establish processes for dealing with, inter alia, ‘disciplinary matters and terminations in respect of the Public Service’.

[91] Section 12 of the Act provides:

All appointments, promotions, disciplinary matters and terminations in respect of the Public Service shall be made in accordance with this Act and any written policies of Government as directed by Cabinet, provided that employees of the Ministry responsible for education and training below the position of Chief Executive Officer shall be dealt with under the Education Act.

[92] Section 21 provides that the procedure to determine disputes and disciplinary matters under the Act shall be as prescribed by regulations and that any person dissatisfied with a determination may appeal to the Tribunal.

[93] Section 22 provides that the Prime Minister may with the consent of Cabinet make regulations for the proper and efficient administration of the Act. The Public Service (Disciplinary Procedures) Regulations (the Disciplinary Regulations) were made under ss. 21 and 22 of the Act.

[94] Mr. Laurenson noted that Mr. Kautoke faced charges brought under the Disciplinary Regulations:

(a) Containing allegations constituting a ‘serious breach of discipline’ (r. 7);
(b) Formulated by a specialist committee – the Charge Formulation Committee (rr. 7 and 7A);
(c) Pursuant to a process during which there is an emphasis on there being sufficient evidence to support an allegation of serious breach of discipline – in that the Charge Formulation Committee has the power to ‘dismiss an allegation of serious breach of discipline due to lack of sufficient evidence’;
(d) Where Mr. Kautoke had to be ‘found guilty’ of a serious breach of discipline before any of the penalties, including dismissal, could be imposed (r. 10); and
(e) Upon being ‘acquitted’ of the charges Mr. Kautoke was entitled to be reinstated and paid in full the salary for the period of suspension (r. 12).

[95] Mr. Laurenson submitted, correctly in my view, that disciplinary proceedings before the PSC involve a two-step enquiry namely:

(a) Has the conduct that constitutes the charge/s been proven;
(b) If so, does the proven conduct constitute misconduct such that it justifies the imposition of a sanction.

[96] Despite the use in the Disciplinary Regulations of terms like ‘charges’, ‘found guilty’ and ‘acquitted’ with their criminal law overtones, the disciplinary process is civil in nature and before an employee may be found guilty of a breach of discipline the PSC must be satisfied that the charges have been proven against the employee.

[97] In my view, the standard of proof is the civil standard reflecting the nature of the proceeding and the procedures that are applicable to proceedings before the PSC (see Guy v Medical Council of New Zealand [1995] NZAR 67, 77 referred to in Z v Complaints Assessment Committee (supra) at [27]).

[98] Once the PSC has made a determination on the charges and, if proven, any sanction to be imposed, an employee’s right of appeal to the Tribunal is contained in s. 16 of the Act and is a general right of appeal.

[99] The correct approach on such an appeal was described in Austin, Nicols & Co Inc v Stichting Lodestar [2007] NZSC 103; [2008] 2 NZLR 141 (SC) as follows:

Those exercising general rights of appeal are entitled to judgment in accordance with the opinion of the appellate court, even when that opinion is an assessment of fact and degree and entails a value judgment. If the appellate court’s opinion is different from the conclusion of the tribunal appealed from, then the decision under appeal is wrong in the only sense that matters, even if it was a conclusion on which minds might reasonably differ. In such circumstances it is an error for the High Court to defer to the lower Court’s assessment of the acceptability and weight to be accorded to the evidence, rather than forming its own opinion.

[100] It follows that insofar as Mr. Kautoke bore an onus on his appeal to the Tribunal it was to satisfy the Tribunal that the conclusion of the PSC that the charges against him had been proven to the appropriate civil standard justifying his dismissal was wrong.

[101] For its part, the Tribunal had a responsibility to make its own assessment of the merits of the case on the evidence that was before it.

[102] I therefore do not accept the PSC’s challenge to the Tribunal’s decision on this particular ground.

Fourth alleged error – vouchers removed

The Tribunal’s findings and the submissions

[103] The Tribunal accepted Mr. Kautoke’s principal explanation for the absence of vouchers. A summary of its findings are to be found at [30] of the ruling which I set out in full below:

The Tribunal believes, on balance of probabilities, that there was a proper voucher properly made out for every payment for which a cheque was issued by the PMO in respect of the two sums stated in the charges and that those vouchers were removed by the MOFNP in pursuance of their duty to check and review those records and for the entry of those records into the Sunsystem. In removing those records, the MOFNP staff failed to record in writing and signed by them, an inventory of the records that they removed, to be retained by them and by the PMO. The loss and disappearance of those records cannot be attributed to the Appellant, who was not the principal Supervisor or Supervisor of those records and because he was unaware of the removal of the records altogether until after the Auditor General had carried out his audit of the PMO cheque account in October 2001.

[104] Specifically the Tribunal held:

(a) That records of payments, vouchers and supporting documents in respect of the PMO Advance Account were removed by MOFNP staff from the PMO to MOFNP for entry into the Sunsystem by MOFNP staff;

(b) The Sunsystem entries were made from vouchers relating to each cheque and that there was a proper voucher made out for every payment for which a cheque was issued in respect of the two sums stated in the charges;
(c) The MOFNP staff failed to keep an inventory of the records they removed; and
(d) The loss and disappearance of those records could not be attributed to Mr. Kautoke who was not the principal or daily supervisor of those records and because he was unaware of their removal.

[105] Mr. Waalkens submitted that Mr. Kautoke failed to produce any reliable evidence that the records had been moved to the MOFNP without his knowledge and that the Tribunal failed to appropriately weigh or even refer to the relevant evidence which confirmed that the MOFNP had relied upon cheque butts and bank statements (rather than vouchers) to make entries into the Sunsystem. He also submitted that the Tribunal’s finding that Mr. Kautoke was not responsible for the safe keeping of records was ‘nonsensical and contradicted the vast weight of the evidence, including that of Mr. Kautoke himself’.

[106] Mr. Laurenson argued that it is not the function of judicial review to resolve factual errors, except in situations where factual findings are so clearly untenable that it amounts to an error of law. He referred to the New Zealand Supreme Court decision in Bryson v Three Foot Six Ltd [2005] NZSC 34; [2005] 3 NZLR 721 at [26] where it was held:

An ultimate conclusion of a fact-finding body can sometimes be so insupportable – so clearly untenable – as to amount to an error of law: proper application of the law requires a different answer. That will be the position only in the rare case in which there has been, in the well-known words of Lord Radcliffe in Edwards v Bairstow, a state of affairs “in which there is no evidence to support the determination” or “one in which the evidence is inconsistent with and contradictory of the determination” or “one in which the true and only reasonable conclusion contradicts the determination”. Lord Radcliffe preferred the last of these three phrases but he said that each propounded the same test.

[107] Mr. Laurenson submitted that there was evidence to support the Tribunal’s findings and that in truth the PSC’s complaint was no more than that the Tribunal gave too much weight to the evidence called by Mr. Kautoke and not sufficient weight to that adduced by the PSC. An allegation of inappropriate weighting did not, he submitted, satisfy the very high Edwards v Bairstow hurdle required to establish that a factual finding amounts to an error of law.

Discussion

[108] I do not agree with the submission that the PSC’s complaint is only about inappropriate weighting of the evidence. The PSC’s criticism is more profound in that it argues that the Tribunal failed to even consider much of the evidence relevant and contradictory to the conclusions reached by it. That is both substantively unfair, in the sense that it deprived the PSC of a fair hearing, and a clear error of law.

[109] The point is demonstrated by Business Distributors Ltd v Patel [2001] NZCA 301; [2001] ERNZ 124 (in which I must acknowledge I appeared as Counsel). This was an appeal from a decision of the Employment Court dismissing an appeal from the finding of the Employment Tribunal that Mr. Patel had been unjustifiably constructively dismissed from his employment with Business Distributors Limited (BDL). One of BDL’s grounds of appeal was that the Employment Court had made an error of law in failing to consider evidence that established the absence of a causative link between BDL’s conduct and Mr. Patel’s resignation. The evidence in question was the employee’s letter of resignation and the employee’s evidence that he did not think the employer was trying to get rid of him. The Court of Appeal noted, at [13], that none of this evidence was referred to in the Employment Court judgment despite an argument being made to the Employment Court Judge that the Tribunal had failed to make a proper assessment because it had not paid any regard to those aspects of the evidence.

[110] In allowing the appeal the Court of Appeal made observations of the Employment Court Judge’s approach at [14] to [20] that are apposite, which I set out below:

[14] If the Employment Court had traversed these matters even very briefly in its decision, and had concluded that nevertheless the Tribunal’s decision should not be disturbed, BDL could not now expect this Court to interfere with the Employment Court’s judgment unless it was able to clear the very high hurdle of showing that there was no evidence to support the Court’s decision. Mr. Paulsen rightly does not put his case on that basis, accepting that there was some evidence on the point which might have given a measure of support for the Tribunal’s view, as confirmed by the Court. Normally an attempt to have this Court review the balance of the evidence, as if engaged upon hearing a general appeal, must fail, even if we ourselves might have assessed the evidence differently. This is because a complaint about the weight of evidence and the conclusions drawn from it by the adjudicator is an entirely factual question and does not raise any issue of law.

[15] However, we accept Mr. Paulsen’s argument that a complete failure by a Court hearing a general appeal to consider and address material evidential matters which the body appealed from is said to have overlooked, can amount to an error of law. The consequence may be that the appellant is deprived of the general right of appeal which Parliament has conferred on it. When an appellate Court is asked to review and re-assess the evidence which has in material respects been traversed in the judgment of the lower court, it may be permissible for the appellate court simply to record that it has conducted a review and is satisfied, for the reasons given by the lower court, that the lower court’s assessment of the evidence should not be disturbed. But such a course cannot adequately discharge the appellate function where the very ground of appeal is that the lower court has neglected to take account of particular evidential matters. In order to respond properly to an appeal ground of this nature, the appellate court’s judgment rejecting the appeal will need to include its reasons for concluding that either the evidence in question was in fact considered by the lower court, or that the evidence is not material or that its weight is not sufficient to alter the overall balance of the evidence and thereby produce a different result.

....

[17] The Judge has set out counsel’s submissions, often word for word, at some length but then has proceeded straight to a conclusory statement without any apparent attempt to analyse the matter upon which he was making a determination that the Tribunal had not erred. The judgment nowhere indicates that the Judge considered Mr. Paulsen’s argument that the Tribunal overlooked important pieces of evidence. In the absence of any acknowledgement of this argument and a brief response, it cannot be said that the Judge has discharged his appellate function.

.....

[20] We have been brought to the conclusion that, because there has been a failure to give a reasoned response to one of the appellant’s primary arguments, the Employment Court judgment must be set aside.

[111] I am satisfied that the same criticism can equally be made of the Tribunal and that it failed to consider and address material evidence relevant to the four findings set out in [104] above.

[112] The Tribunal relied principally (if not solely) on a spreadsheet prepared by Mr. Kautoke’s daughter to support its findings that vouchers existed and were used by the MOFNP to update the Sunsystem. The Tribunal did not refer to evidence that the entries could have been made from sources other than vouchers, including cheque butts and bank statements. Mr. Waalkens identified evidence relevant to this issue at paragraphs [47] to [51] of his submissions to the Tribunal and also at paragraphs [87] to [99] of his submissions in this Court and in his oral submission to the Tribunal (see for instance pages 267-270 of the transcript).

[113] The only acknowledgment of the PSC’s argument appears at [28] of the Tribunal’s ruling where the Tribunal said (as something of an aside) that the entries in the Sunsystem were not made in the order that they were numbered in the cheque butts ‘so as to substantiate the claim by [the PSC] that the entries were being made only from the cheque butts and not from the vouchers’. Not only did that misstate the PSC’s case (as the PSC did not contend that entries could have been made only from cheque butts) but it also did not respond to the great deal of evidence, that I summarise below, that the PSC relied upon to argue that Mr. Kautoke’s contention (that the entries were made from vouchers) was entirely speculative and the entries could have been made from a range of sources.

[114] The Tribunal’s finding that Mr. Kautoke was not responsible for the loss of vouchers because, inter alia, he was not the principal supervisor or responsible for the daily management of the accounts is a most surprising one for which there was, in my view, an absence of any probative material. The finding is contrary to Mr. Kautoke’s statutory responsibilities as CEO of the PMO. It is also contrary to the letter provided by Mr. Ma’u to Mr. Kautoke’s Counsel dated 7 June 2012 which was put before the Tribunal by Mr. Kautoke. That letter states in Annex 1 that Mr. Kautoke’s duties included to check and sign vouchers and cheques. It is also contrary to Mr. Kautoke’s own evidence which is set out in the transcript from page 17 onwards. The Tribunal did not refer to this evidence in its ruling.

[115] On my reading of the Tribunal’s ruling all of the following material evidence relevant to its principal findings of fact was not considered by it:

(a) The acknowledgment of Mrs. Kautoke that some of the entries in the Sunsystem could have come from cheque butts (and thus not vouchers);

(b) Mrs. Kautoke’s acknowledgment that the evidence that the person entering information into the Sunsystem must have seen source documents was speculation.

(c) That the records of the PMO were in disarray;

(d) That it was not known what records were in fact take to the MOFNP;

(e) That the letters relied upon by Mr. Kautoke from Vea Vaka’uta (Deputy Secretary of Statistics Department at MOFNP) and Elenoa Salt Takataka (former staff member at the PMO) indicated that the records moved to the MOFNP were in fact returned to the PMO;

(f) The sworn statement of Mr. Tonga (a senior officer at the Audit Office) that the MOFNP had been required to rely on cheque butts and bank statements to update the Sunsystem as the PMO had failed to provide the original records;

(g) The failure of Mr. Kautoke to request the MOFNP to make a search for the records;

(h) The lateness with which Mr. Kautoke proffered the explanation that the vouchers had been moved;

(i) That despite searches that were undertaken the vouchers have still not been found; and

(j) The lengthy delays in entering transactions into the Sunsystem of between four to fifteen months which contradicts Mr. Kautoke’s evidence that there were proper procedures in place that were observed and that records had been transferred to the MOFNP because the Sunsystem had gone down.

[116] For completeness, I should note that Mr. Laurenson submitted that the affidavit of Mr. Tonga was considered by the Tribunal and referred to in the ruling but in my view all the Tribunal did was acknowledge that it had been filed without any reference to its contents or giving reasons for not accepting it.

[117] I have concluded that the Tribunal’s failure to consider the evidence set out above was an error of law and the decision of the Tribunal is unsafe and must be set aside.

Fifth alleged error - costs before the Tribunal

Tribunal’s findings and the submissions

[118] Having found that Mr. Kautoke’s appeal was to be allowed the Tribunal dealt with the issue of costs at [70] to [73] of its ruling. At [70] it noted that neither Counsel had made any submissions on costs and that there was no provision in any relevant Act or regulation that costs may be awarded or not awarded. Nevertheless it awarded Mr. Kautoke costs to be agreed or taxed by the Tribunal.

[119] The Tribunal said that under the common law of England (and applying the Civil Law Act) a body exercising a quasi-judicial function, such as the Tribunal, has inherent jurisdiction to make an order as to costs (at [72]).

[120] It went on to find that whilst both parties had incurred substantial costs the PSC could bear those costs but Mr. Kautoke would ill-afford his costs. There was no evidence that Mr. Kautoke could not afford his costs.

[121] In addition, as Mr. Kautoke was successful the Tribunal considered that it would not be fair if he did not receive his costs because ‘any entitlement of his to salaries to be reimbursed to him for his wrongful dismissal would be substantially reduced and lost by reason of payment of his costs of this appeal’ (at [73]).

[122] Mr. Waalkens submits that the Tribunal is a statutory body with no inherent jurisdiction and that although it has inherent powers to control its own procedures that does not extend to the making of an order as to costs as there is no express or implied authority in the relevant legislation to award costs.

[123] Mr. Waalkens referred to Pohiva v Nuku’alofa Magistrate’s Court Anor (Unreported Supreme Court, AM 4 of 2015, 22 June 2015, Paulsen LCJ) where it was held that the Magistrate’s Court did not have power to award costs against a private informant when exercising its preliminary inquiry jurisdiction (although the power now exists under s. 8(n) of the Magistrate’s Court Act as amended by Act 10 of 2016).

[124] Mr. Waalkens also submitted that the Tribunal should not have awarded costs in any event without hearing from the parties and its decision was unsupported by any evidence.

[125] Mr. Laurenson argued that in its statutory and regulatory context the Tribunal had an implied and/or inherent power to award costs. Relying on Seimer v Solicitor General [2013] NZSC 68; [2013] 3 NZLR 441 at [113]- [114] he submitted that the Tribunal’s powers include ‘such powers as are necessary to enable a court to act effectively and uphold the administration of justice within its jurisdiction’ and to ‘prevent an abuse of its own processes’.

[126] In addition, in reliance upon Pohiva (supra) Mr. Laurenson argued that the Tribunal’s ancillary power under r. 12 of the Disciplinary Regulations to reinstate and pay in full the salary of an employee acquitted of charges gives rise to a necessary implication that the Tribunal may award costs as the intention of the power is to ensure the employee does not suffer financially in circumstances where he/she is acquitted of a charge in respect of conduct leading to suspension.

[127] Mr. Laurenson also argued that it would lead to an abuse of the disciplinary process and to a failure to uphold the administration of justice within that disciplinary process if the Tribunal did not have the power to award costs because the employee would suffer significant financial hardship as a result of not being reimbursed for the costs of pursuing a successful appeal.

[128] Finally, Mr. Laurenson noted that in other cases the PSC has agreed and paid costs.

Discussion

[129] The Tribunal has no inherent jurisdiction. It does have express powers to control the conduct of proceedings at hearings before it under r. 25 of the Disciplinary Regulations but there is no provision conferring on it the power to award costs and it has no such power.

[130] The Tribunal was wrong when it said the common law confers on a body exercising quasi-judicial functions the power to award costs. No authority was referred to in support of that submission. The common law courts have no inherent power to make orders for costs (Oshlack v Richmond River Council (1998) 193 CLR 83, 95 and JRS Forbes Justice in Tribunals 4^th Ed at 340 and Pohiva (supra) at [26]). At common law costs are entirely a creature of statute.

[131] I do not accept either that the power to award costs in the Tribunal can or should be implied. The Tribunal’s power to award lost salary during a period of suspension (r. 12 of the Disciplinary Regulations) says nothing about costs. The absence of a power to award costs is consistent with the flexibility to be adopted in the processes of the Tribunal in the hearing of appeals. Those processes are intended to be informal (r. 25 of the Disciplinary Regulations).

[132] In relation to the submission that the Tribunal has accepted an obligation in other cases to pay costs, past practice cannot confer jurisdiction on the Tribunal.

[133] In addition to all of the above, the Tribunal should not have made any order for costs where Mr. Kautoke had not sought costs and the Tribunal had not given the PSC an opportunity to be heard.

[134] The Tribunal had no power to award of costs and the award made in Mr. Kautoke’s favour was unlawful and must be set aside.

Result

[135] The Tribunal fell into error in relation to the PSC’s first, fourth and fifth grounds of review. Because in relation to fourth ground of review the correction of error requires a reassessment of the facts I consider it is necessary to refer the matter back to the Tribunal for re-determination.

[136] I have come to that conclusion with much reluctance. This case has gone on far too long and this is now the second time that this Court has felt it necessary to set aside a decision of the Tribunal in relation to the same matter. One member of the Tribunal is now a Supreme Court Judge, but in this regard I note that the Tribunal may proceed with a quorum of two (s. 21B of the Act). The Tribunal will need to hear from Counsel as to how the resumed hearing should proceed.

[137] The Orders that I make are the following:

(a) The ruling of the Tribunal of 18 April 2017 is set aside;

(b) Mr. Kautoke’s appeal is referred back to the Tribunal and it shall, after hearing from the parties, re-determine the appeal in accordance with this judgment.

[138] I reserve costs. Counsel are agreed that regardless of the result of this action Mr. Kautoke should have costs against the Tribunal of $939.99 for expenses wasted as a result of the loss of an earlier hearing because the transcript was not provided in a timely manner. However, I seek submissions from Counsel more generally in relation to costs between the PSC and Mr. Kautoke and any claim either may wish to make for costs against the Tribunal. I will receive submissions on costs by memoranda within 21 days.

O.G. Paulsen
NUKU’ALOFA: 5 October 2018. LORD CHIEF JUSTICE