State v Arbitration Tribunal, ex parte Colonial National Bank [2012] FJHC 1072; HBJ8.2003 (10 May 2012)

IN THE HIGH COURT OF FIJI
AT SUVA
CIVIL JURISDICTION

Judicial Review No.: 08 OF 2003

IN THE MATTER
of the Trade Disputes Act [Cap. 92], Laws of Fiji)

AND

IN THE MATTER
of Award No. 4 of 2003 of the Arbitration Tribunal in the dispute between Fiji Bank and Finance Sector Employees Union and Colonial National Bank.
__________________________________________

BETWEEN:

STATE

AND

THE ARBITRATION TRIBUNAL,
a statutory body created pursuant to the Trade Disputes Act.
RESPONDENT

EX-PARTE:

COLONIAL NATIONAL BANK,
a company duly incorporated in accordance with the laws of Fiji and having its registered office at Suva.
APPLICANT

COUNSELS : Ms Juliet Tembea for Applicant

Mr Pratap A. for Respondent

Date of Hearing : 13th March 2012

Date of Judgement : 10th May 2012

JUDGEMENT

This case was heard before Hon. Justice Jitoko and was pending for Judgement since November 2004.

Background

1. Applicant in this matter had filed an application on 13th March 2003 for Leave to Appeal for Judicial Review against the decision of Arbitration Tribunal made on 12th February seeking (leave granted on 28th August 2003):
   
   • (a) An Order for Certiorari to quash the decision of Arbitration Tribunal;
     
   • (b) A declaration the decision is invalid, void and of no effect.
     
2. Grounds of Appeal
   
   • (a) Decision wrongly restricts application and interpretation of the substantive justification test to the meaning of the "fraudulent activity";
     
   • (b) Tribunal reached certain findings of fact which not properly directed Tribunal could have reached on the evidence;
     
   • (c) Tribunal failed to give the consideration to the employee's conduct warrant his dismissal;
     
   • (d) Arbitrator erred in Law in holding that the Applicant had also acted in procedurally unfair manner in that prior to summary dismissal the griever (employee) must be given an opportunity to mitigate.
     
3. In support of the Application, affidavit dated 11th March 2003 was filed on 23rd March 2003 by Howard Politini the General Manager of the Applicant.
   
4. Ex-parte Notice of Motion was filed by the Applicant and sought stay of the decision by the Tribunal.
   
5. The said motion was supported on 25th March 2003 and it was ordered to stay the reinstatement of the employee until hearing and final determination of the Application for Judicial Review.
   
6. Affidavit of the Secretary to the Arbitration Tribunal was filed on 11th November 2003, annexing the certified records of the Proceedings of the Tribunal marked 'TE1'.
7. Applicant had filed its written submissions on 7th September 2004, and submission was filed by the Attorney General's Chambers on 1st October 2004.
   
8. When this Application came up before Hon. Justice Jitoko on 1st of November 2004, the case was vacated for Ruling which was not delivered.
   
9. Subsequently, this application for Judicial Review was referred to me, and was fixed for oral submission by the Counsels on 13th March 2012, and bundle of Authorities were filed by the Solicitor General's Office on 14th March 2012.
   
10. The Permanent Secretary for Labour and Industrial Relations and Productivity referred the Trade Dispute of Summary Dismissal of Esala Nainoca employee (sometimes hereinafter referred to as "Griever") of the Applicant in this case on 9/5/2002 to the Permanent Arbitrator annexing the Terms of Reference dated 9th Day of May 2002.
    
11. Terms of Reference stated in Page 2 of the Proceedings marked TE1 annexed to the Affidavit filed on 11th November 2003, by the Respondent.
    
12. As stated in the term of reference it was to decide by the Permanent Arbitrator, settlement over the summary dismissal of Mr Esala Nainoca with effect from 20th March 2000 which action the Union (Fiji Bank and Financial Sector Employees Union – FB & FSEU) claimed as unreasonable, unjust, harsh and unfair and sought his reinstatement without loss of benefits.
    
13. Preliminary submissions were submitted to the Permanent Arbitrator on behalf of the employee Mr Esala Nainoca by the Union (FB & FSEU) on 30th July 2002 and on behalf of the Applicant namely, the Colonial Bank on 10th October 2002.
    
14. Matter was heard before the Permanent Arbitrator inter-parte; having heard the witnesses, Union and the Colonial Bank filed their final submissions.
    
15. Award No. 4 of 2003 was delivered by the Permanent Arbitrator on 12th of February 2003, making the following direction (Page 6 of the Award):
    

"Accordingly, I direct the Bank to reinstate the grievant with effect from the date of his dismissal. However, in the exercise of my discretion, I further direct that he is to be paid only 6 months arrears salary, the balance is to be deemed to be Leave Without Pay. In addition, the Bank is to issue him a written 1st warning which is to have a life span of 12 months".

16. Applicant had filed its submissions on 7th September 2004 and oral submissions were made before me on 13th March 2012.
    
17. It was submitted by the Applicant:
    
    • (a) The Arbitration Tribunal erred in law by considering the grounds for dismissal of the employee is "fraudulent activity" The applicant dismissed the employee considering his overall conduct of handling the transaction in question where the employee was in breach of his obligations and duties with the Bank (Applicant) which clearly shows misconduct on the part of the employee;
      
    • (b) It is also submitted that declaration signed by the employee, letter of appointment, Bank's Code of Conduct and the Memorandum of Agreement between Applicant and Fiji Bank and Financial Sector Employees Union which document's overall constituted valid ground for dismissal and where the Tribunal had narrowed down it to a technical interpretation of the Criminal Law.
      
18. It is also submitted by the Applicant, lack of jurisdiction with regard terms of reference. Terms of Reference i.e.
    

"Settlement over the summary dismissal of Mr Esala Nainoca with effect from 20th March, 2000, which action the Union claims as unreasonable, unjust, harsh and unfair and therefore, seeks his reinstatement without loss of benefits".

It was submitted Tribunal was directed to inquire in to the manner and circumstances of the Griever's summary dismissal. It was not the function of Arbitration Tribunal to sit as a Criminal Court and come to a conclusion that employee was not guilty of any fraudulent activity. In doing so, Learned Tribunal, wholly deviated from the terms of reference thereby disrobing itself by the Trade Disputes Act. Being misdirected, Tribunal failed to consider the evidence before it of finding the dismissal of the employee is justified.

19. Further it was submitted that decision by the Arbitration Tribunal on the basis of Griever (Employee) was not guilty for fraudulent activity thus there is no substantial justification for dismissal and was not in line with the Terms of Reference. When the evidence is analysed Applicant's dismissal of the employee is justified.
    
20. It was stated that Tribunal had not properly dealt with the relevant reference.
    
21. By citing the decisions of National Union Hotel and Catering Employees and Plantation Island Resort (Award No. 46 of 1999), it was submitted that Tribunal would have considered substantive justification of dismissal by considering the facts which were known to the Employer at the time of the dismissal.
    
22. It is stated that it was clear from the evidence adduced before the Tribunal Employee was involved with another unauthorized withdrawal by a colleague by using the computer code allocated to him, on a previous occassion.
    
23. The Applicant's decision for dismissal was justified when all incidents are taken place together was stated in the submission.
    
24. Counsel submitted that the Applicant had carefully considered repetition of instances of breaches in terms and conditions of the employment and the gravity of such breaches which were reasonable causes for summary dismissal.
    
25. Under the heading of as to whether decision to dismissal of the employee was warranted the Applicant had quoted the case of Witson v Racher (97) ICR 428:
    

"There can be no doubt that an evidence before the Tribunal, the Griever was guilty of serious misconduct such as to the amount to a breach of the common law duty Fidelity and Good Faith".

26. It was finally submitted that the Griever was properly dismissed summarily and Tribunal erred in holding Applicant's dismissal was not justified.

Submissions by the Arbitration Tribunal (Respondent)

27. Written submissions were filed on behalf of the Respondent by the Solicitor General's Office.
    
28. In the submissions at the commencement, it was stated that submissions was made on the issue of the exercise of discretion by the Tribunal making its award.
    
29. Quoting wade, Administrative Law 5th Edition at Page 817, it stated:
    

".......the reigning rule today is more sophisticated and less legal. It is designed to give greater latitude to tribunals, where there is room for difference of opinion. The rule is, in effect, that the application of a legal definition or principle to ascertain facts is erroneous in a point of law only if the conclusion reached by the tribunal is unreasonable. If it is within the range of interpretations within which different persons might reasonably reach different conclusions, the court will hold that there is no error of law." (emphasis added)

30. The Tribunal had exercised its powers under the Trade Disputes Act, and does not restrict the Tribunal from granting one or many reliefs or to decline an application deliberating on a reference for unreasonable unlawful or unjust dismissal.
    
31. It was submitted that after hearing the evidence of the witnesses and considering the submissions, Tribunal made the finding that employee Mr Nainoca's dismissal was not warranted.
    
32. It was submitted in a judicial review proceedings weight of the evidence lies in the preview and jurisdiction of the decision maker and it's not a matter for a judge to make a decision whether Arbitrator would have accepted the evidence or not. The reference was made to the case Re: Royal Commission on Thomson case (1982) 1NZLR at page 253:
    

"3. The Commission had not acted in breach of the obligations of natural justice as to fair hearing. The Court was not satisfied that any of the challenge to findings of the Commission (apart from one acknowledge mistake) or based on evidence which the Commission was not entitled to regard pro value. The weight of the evidence was a matter for the Commission and not the Court". (emphasis added)

33. Under the heading of Error of Law on the Face of Record stated:
    
    • (a) Conduct of the grievor met the test of "substantive Justification;
      
    • (b) Employer (Applicant in this case had not demonstrated that it accorded the employee procedural fairness and quoted the Tribunal proceedings:
      

"it is this Tribunal humble view that fraudulent activity is generally motivated by greed and dishonesty, with the primary objective to fraudulent to misappropriate to enrich oneself. Yet, in so far as this case is concerned, the griever did not withdraw any monies whatsoever from $867.19 although he had ample opportunity over the weekend to do so. It seems to me, such inaction on his part is so patently at odds with the bank's claim that the griever had engaged in "fraudulent activity", that it severely emasculates the bank's claim to a negligible level. But on the contrary it overwhelmingly supports the griever's explanation that, he genuinely made a mistake". (emphasis)

34. The Respondents in its submission states that the declaration signed by the employee at the commencement of his career with appellant does not refer to any admission or guilt by him and Tribunal had not taken in to account the said declaration when the award was made and found it was a honest mistake.
    
35. It was also stated that Tribunal dealt in terms of the reference.
    
36. It was also submitted that Bank's Code of Conduct and Applicants principles and the Memorandum of Agreement between the Applicant and Fiji Banking and Financial Sector Employees Union have a general application and should not be taken into consideration for determination of the offence committed by the employee. It is also quoted by the Respondent a passage from Judicial Review Hand Book third edition by Michael Fordham the concept of an error of law.
    
37. Under the heading "Lack of Jurisdiction", it was submitted by the Respondent, the Applicant's contention was applying the Criminal Principles in determining whether employee was guilty of any fraudulent activity by the Tribunal is wrong. This position was denied by the Respondent and further submits there was no dishonest motive to withdraw the money for himself.
    
38. Quoting several authorities Respondent had submitted the grounds on which the Applicant sought to quash the decision of the Arbitration Tribunal does not hold any merit and prayed for the Dismissal.
    
39. In addition to the written submissions filed, the Counsels made their oral submissions before me; which too was taken in to consideration to arrive at a conclusion.
    

Analysis and Findings

40. In an application for a judicial review Court is mainly concerned with the procedure in which the decision was reached rather than the merits of the decision.
    

Both Counsels made their submissions on the following two issues:

(a) Error on the face of Record;

(b) Lack of Jurisdiction.

Error on Record

41. The stand taken by the Applicant is described in the submission which was detailed by me in paragraph 2 of this Judgement.
    
42. Respondent's position is detailed in paragraphs 28 to 39.
    
43. It is my duty to analyse the material available in the Record inclusive of the evidence placed before the Tribunal as to whether the employee breached his Fiduciary duty towards Bank and Committed serious misconduct and if the Tribunal had not taken the said matters into consideration whether there is error on the face of Record.
    
44. Internal Audit Report was filed in the Arbitration proceeding 91 to 95 (Annexure K) and the said audit was carried out by Asik Lal, Manager Audit who gave evidence in the Arbitration Proceedings (Page 53 and 54 of the Arbitration Proceedings which was not disputed by the Respondent under cross examination. In answering to the questions by the representative for the Union the witness stated as follows (page 53 under the heading "Cross Examination":
    

"I didn't know when error was corrected. But when I was interviewing griever, the error still not corrected....."

"Reversal was done on 14/3/2002, but I don't know who did it......."

"My Report says Manager reversed the griever's account"

45. The above evidence was corroborated by the evidence given by other witnesses (pages are referred from Annexure to the Affidavit of the Respondent marked TE1):
    
    • (a) Transaction occurred at about 7pm on 10.3.2002. The discrepancy was discovered on 11/3/2002 morning (Mr Jacob David's evidence on page 52);
      
    • (b) Until the griever was questioned by the Manager he had not informed there was an error by him (Mr Rohit Sharma's evidence on page 52);
      
    • (c) It was also evidence placed before the Tribunal (Page 52, Rohit Sharma) that transaction took place not at teller stage but back office after the Bank closed its business;
      
    • (d) The Esala Nainoce, griever's evidence he had not reported this matter to the Manager direct and told one other staff named Daven and Mr Daven report it to the Manager (page 55);
      
    • (e) The Manager's evidence clearly states that the discrepancy of entries were detected by the Bank itself (evidence of Mr Jacob David Page 52);
      
    • (f) The griever's evidence was not corroborated by any other material or Mr Daven's evidence was not led to establish the griever had informed Mr Daven about the error;
      
    • (g) Further, it was stated by the griever that he had done the transaction without having a lodgement voucher, to his personal account and passed 2 entries to Consolidated Account, Suspense Account and his Personal account.
      
46. The Griever also admitted under cross examination that he gave his password to one Peni which resulted defrauding of $15,000 from the Bank on an earlier occasion (page 55).
    
47. In the above circumstances, it is evident that the Learned Permanent Arbitrator had failed to consider above facts available in the record before making his Award.
    
48. In the case of Council of Civil Service Unions vs Minister for the Civil Service (1985) Ac 374, 410D – 411B Lord Diplock states:
    

"Judicial Review has I think developed a stage today when.........once can conveniently classify under 3 the grounds upon which administrative action is subject to control by Judicial review. The First Ground I call it "illegality" the second "irrationality" and the 3rd "procedural impropriety".

49. Lord Diplock further explained.......................
    
    • (a) Illegality – The decision maker must understand correctly the law that regulates this decision-making power and must give effect to it. Whether he has or not is par excellence a justifiable question to be decided, in the event of dispute, by those persons, the judges by whom the judicial power of the state is exercisable;
      
    • (b) Irrationality – It applies to a decision which is so outrageous in its defiance or logic or of accepted moral standards that no sensible person who had applied in his mind to the question to be decided could have arrived at it;
      
    • (c) Procedural impropriety – Rather than failure to observe basic rules of natural justice or failure to act with procedural fairness towards the person who will be affected by the decision.
      
50. Having said above, analysing with the proceedings of the arbitration Tribunal, it is evident that Learned Arbitrator had not properly analysed the evidence placed before him when he arrived at the decision and acted on the basis that the Applicant was unable to prove a charge of fraud against the griever. It is my considered conclusion that proceedings which took place before the arbitrator clearly shows (on analysis of the evidence in para 44 to 47). The Griever, employee committed grave misconduct and as such the summary dismissal is justified.
    
51. In the circumstances, I hold that the Award by the Arbitrator was made causing illegality, irrationality and procedural impropriety as stated by Lord Diplock in the case quoted in para 48 of this Judgement.
    
52. I also agree with the submission made by the Counsel for the applicant applying criminal principles by the Tribunal in determining whether employee was guilty of any fraudulent activity was wrong. The Respondent's submission that griever didn't had fraudulent intention was not established, it create doubt on grievers integrity. Griever's overall conduct by getting involved in fraudulent transactions earlier occasion shall have been considered by the Tribunal.
    
53. I also quote para 29 of this Judgement where a paragraph of Wades Administrative Law 5th edition page 817 was quoted by the Respondent and unable to accept the argument of the counsel for the Respondent "............in effect that the application of a legal definition or principle to ascertain facts is erroneous in a point of law only if the conclusion reached by the tribunal is unreasonable".
    

I conclude, this submission goes in favour of the Applicant since the Learned Arbitrator had arrived at the conclusion by only considering that Applicant had not prove a charge of fraudulent activity and failed to consider other reasons which proved misconduct. Accordingly, I hold Respondent's argument goes in favour of the Applicant.

54. Applicant's counsel also submitted (para 18 of this Judgement) Tribunal was directed on the terms of reference inquire into the manner and circumstances of Griever's summary dismissal. I agree the Tribunal misdirected itself by restricting the issue that the employee was not found guilty of any fraudulent activity and failed to address the evidence placed before the Tribunal to decide on the justification of dismissal. And it was not in line with the Terms of Reference. Accordingly, I hold that Tribunal was lacked of Jurisdiction when the award was made. Respondent's submissions merely stating Employee didn't had dishonest motive cannot be accepted since the Tribunal had to consider overall conduct of the employee to make a award for Justification of dismissal, which Tribunal failed to consider, thereby caused procedural impropriety.
    
55. I further state as suggested by Respondent's Counsel Tribunal cannot exercise the discretion without analysing the overall conduct of the griever. The applicant had submitted that Union's collective agreement clause 4B (11) [a] and [b] states:
    

"Nothing contained in sub-clause (i) above shall be construed as in any way detracting from National Bank's right to dismiss summarily any employee within the regulations agreed to upon the commencement of his or her employment and in the following circumstances-

(a) Where the employee is guilty of misconduct inconsistent with the fulfilment of the express or implied conditions of his or her contract of service;

(b) For wilful disobedience to lawful orders by National Bank or its authorised representative[s]."

Tribunal failed to take into account these clauses which employee was bound as a member of the Union. When it was established serious misconduct on the part of the employee, Applicant exercised its right to dismiss the employee summarily.

56. Code of Conduct signed by the employee states the following:
    
    • The importance of acting within delegated authority;
      
    • The importance of abiding by the law and other regulations observing internal procedures and standards of the Bank;
      
    • Loyalty, honesty and integrity;
      
    • Avoiding conflicts of interest;
      

which too was not properly addressed by the Tribunal before making the Award. It is irrational as stated by Lord Diplock in the case of Council of Civil Service Unions vs Minister for the Civil Service. With material made available to the Tribunal proceedings, no sensible person would have arrived at a conclusion that the griever's dismissal was unjustifiable.

Tribunal caused procedural impropriety and erred in its decision.

57. In the circumstances, I hold that the Tribunal had:
    
    • (a) Made error on the face of record;
    • (b) Acted with lack of jurisdiction;
    • (c) Caused illegality;
    • (d) Acted irrationally;
    • (e) Caused procedural impropriety by not adopting the requirements of procedural fairness and incompliance with the common law rules of "natural justice" and Applicant succeed in its application for Judicial Review.
      
58. Accordingly, I:
    
    • (a) Issue an Order of Certiorari quashing the decision of Arbitration Tribunal and declare that the decision of the Tribunal is invalid, void and no effect;
      
    • (b) Parties to this action should bear their own costs.
      

Delivered on 10th May, 2012

........................................
[C. Kotigalage]
JUDGE