Kingdom of Tonga v Palu [2009] TOCA 23; AC 10 of 2008 (25 February 2009)

IN THE COURT OF APPEAL OF TONGA
NUKU'ALOFA REGISTRY
AC 10 of 2008

BETWEEN:

THE KINGDOM OF TONGA
APPELLANT

AND:

SEMISI PALU, also known as
SEMISI PALU'IFONI TAPUELUELU
Respondent

AND BETWEEN

SEMISI PALU, also known as
SEMISI PALU'IFONI TAPUELUELU
Cross-Appellant

AND

THE KINGDOM OF TONGA
Cross-Respondent

Coram: Burchett J
Salmon J
Moore J

Counsel:	Mr Little for Appellant / Cross-Respondent
	Mr Tu'utafaiva for Respondent / Cross-Appellant

Date of hearing: 15th July 2008

Date of judgment: 25th February 2009

JUDGMENT OF THE COURT

1. This is an appeal, in which (by leave) the Respondent filed a cross-appeal, from a decision striking out part of a statement of claim in a wrongful dismissal action brought by the Respondent as plaintiff following his dismissal on 11 October 2001 from the position of Superintendent of Prisons. The Appellant is appealing against the judge's failure to strike out the remainder of the statement of claim, while the cross-appeal is against the order to strike out its central claim that the Cross-Appellant was wrongfully dismissed.
2. The application which led to the striking out was not filed until 12 March 2008, in a proceeding in which the statement of claim had been filed on 20 December 2004 and, following the dismissal on 11 May 2005 of an earlier application to strike out the statement of claim, a statement of defence had been filed dated 9 June 2005. The grounds of the application of 12 March 2008, which relied on Order 8 Rule 8, were that the statement of claim "(a) discloses no reasonable cause of action, (b) is frivolous or vexatious, (c) is an abuse of process" because, in brief, the cause of action alleged is in contract, but the plaintiff was appointed to the civil service of the Crown pursuant to statute, not contract, and subject to dismissal at any time in the manner provided for by section 21 of The Prisons Act, as occurred. Upon the earlier strike-out application, abuse of process was argued on the basis the claim really sought judicial review out of time, although Thomas J, before whom the matter came (as Palu v Kingdom of Tonga [2005] TOSC 33), noted the defendant referred to "the claim for breach of contract [as] minimal", an acknowledgement that there was such a claim. His Honour, however, remarked that the "statement of claim taken at its face value establishes of both express and implied conditions of employment". Thomas J then concluded.

"The real basis of the claim of the plaintiff is that his rights of natural justice were infringed [with] respect to both his suspension and dismissal and that accordingly the implied conditions of his contract of employment have been breached ... [T]he plaintiff is entitled to his day in court. The application is dismissed [with costs]."

3. Against that background, it is surprising that the defendant felt able, and was permitted apparently without objection, to bring the further application to strike out the statement of claim which has given rise to this appeal. Of course, a strike-out application is interlocutory, so that a decision is respect of it does not involve a res judicata, and the second application here relied on a fresh argument. But it was not an argument that arose for the first time almost three years later – it was the basis of the defence filed within one month. Parties are generally expected to bring their full case forward when they make an application, and not to make another application for the same relief merely on the basis they now have a new argument. To let them do so unchecked by the applicable rules of practice, and without requiring applicants who cannot bring themselves within those rules to show why an unusual exercise of discretion should be made in their favour, would raise proper concerns about the need for finality in litigation, and the evil of allowing a litigant with a long purse to exhaust an opponent's resources by repeated interlocutory applications. In their joint judgment in Clairs Keeley v Treacy [2004] WASCA 277 at paragraph 7, Steytler J (as Steytler P then was), Templeman and McKechnie JJ said.

"Because the order made by the Court in December 2003 was interlocutory, it is open to the plaintiffs to apply to lift the stay. However, on an application to vary an interlocutory order it is not generally permissible for the party against whom the order was made to re-argue the original application on the basis of material which was available then, but which was not put before the Court. As was said by the majority of the High Court in Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc [1981] HCA 39; (1981) 148 CLR 170, at 178:

• 'A further order will be appropriate whenever, inter alia, new facts come into existence or are discovered which render its enforcement unjust..' "

Their Honours endorsed the principles stated in the following passages they cited from Brimaud v Honeysett Instant Print Pty Ltd (1988) 217 ALR 44 and Wentworth v Rogers (Supreme Court of NSW (Sperling J), unreported, 28 April 1995, noted in (1996) 70 ALJ 613). In the former case, McLelland J said (at 46):

"In the present case I am dealing with an interlocutory order of a substantive nature made after a contested hearing in contemplation that it would operate until the final disposition of the proceedings. In such a case the ordinary rule of practice is that an application to set aside, vary or discharge the order must be founded on a material change of circumstances since the original application was heard, or the discovery of new material which could not reasonably have been put before the court on the hearing of the original application..."

In the latter case, Sperling J said:

"I hold that, as a general rule, an interlocutory order made after a hearing at which each side has the opportunity to put its case should not be set aside, varied or discharged, except to accommodate a change of circumstances or where evidence has become available which was not available at the earlier time. By the same token, where an application for interlocutory relief has failed, a further application for the same relief should, as a general rule, not be entertained, subject to the same qualifications, at least after a hearing on the merits, particularly where the application is designed to finalise the principal proceedings, such as an application for summary judgment or for a permanent stay." [emphasis added]

Accepting this general rule "as a rule of practice" (the description of it adopted by Mason P in Norminal Defendant v Manning [2000] NSWCA 80; (2000) 50 NSWLR 139 at 143), the joint judgment in Clairs Keeley v Treacy noted (at paragraph 13) that "ultimately, as McLelland J said in Brimaud v Honeysett Instant Print Pty Ltd [at 46]... the court should do whatever the interests of justice require in the particular circumstances of the case", ie the court retained an ultimate discretion. The difficulty in the present case is that there is no indication an exercise of discretion was sought or considered, and little ground for its exercise to permit the application to proceed can be discerned in the material before the court.

4. As we have noted, the defendant in the second application to strike out relied on the contention that the statement of claim nailed its colours to the mast of contract (albeit a contract dependent on statute), whereas the plaintiff was only ever employed pursuant to statute, and subject to dismissal at any time under section 21 of The Prisons Act. Although Andrew J was not convinced of the correctness of the view that an employee under this Act may be dismissed at will on the basis of the common law as it was applied to a servant of the Crown in England, he considered the plaintiff could not show he had been wrongfully dismissed because, in the "end result... [four] serious matters of misconduct were established and the plaintiffs dismissal was in accordance with the Act and the decision to dismiss was approved by cabinet". But there are grave problems with this reasoning, particularly in a strike-out application based on the proposition that the statement of claim "discloses no reasonable cause of action". At the hearing of such an application, the allegations of fact in the pleading must be accepted. In Halsbury, 4 ed reissue, vol 36 (1), at section 81, the rule is stated:

"In judging the sufficiency of a pleading for this purpose [ie the purpose of ascertaining whether it discloses a reasonable cause of action], the court will assume all the allegations in it to be true and to have been admitted by the other party."

5. The suggestion that the plaintiff was dismissed upon the basis of four established charges of misconduct and in accordance with the Act is quite contrary to what is pleaded in the statement of claim. To enable it to be understood how his Honour nevertheless reached the conclusion stated in his reasons, it is necessary to reproduce certain provisions of The Prisons Act and to recount (as briefly as may be) some of the detailed facts set out in the statement of claim. Sections 20 and 21 of the Act provide, with respect to suspension and dismissal:
   • "20. Subject to any rules that may be made hereunder [paragraph 4 (f) of the statement of claim pleads, and paragraph 8 of the statement of defence admits, the application of the ESTACODE, although neither pleading expressly affirms that the relevant provision was "made hereunder" within the meaning of section 20] the Minister of Police may for misconduct or inefficiency [emphasis added] reduce any prison officer to a lower grade and may for alike reason suspend any prison officer.
   • 21. The Cabinet on the recommendation of the Minister of Police or of any court of inquiry constituted according to section 15 may dismiss any prison officer."

Sections 15 and 16, the former being headed "Court of inquiry for major offences by prison officers", provide

"15. The Minister of Police and the magistrate for the district or any person or persons (not exceeding 3 in number) whom the Cabinet may nominate in any particular case shall form a court of inquiry into any charges of breach of discipline or offences brought against any prison officer except those of a petty nature the punishment for which may be provided for by rules made under this Act. The Minister of Police and in his absence the magistrate or such other person as the Cabinet may appoint shall be the president of such court and shall have all the power of a magistrate in regard to summoning and enforcing the attendance of witnesses, the punishment of witnesses for non-attendance or for refusing to answer any question relevant to the inquiry.
16. The court referred to in section 15 shall have power to hear and determine all charges of –

• (a) intoxication, or
• (b) serious breaches of good order or discipline or of any prison rule,

Which may be brought against any prison officer and where no punishment is expressly provided for an offence may impose a fine not exceeding $50 or imprisonment for any term not exceeding 2 months"

Notwithstanding that section 20 refers to cases of "misconduct or inefficiency", which on general principle would at least arguably require the observance of the rules of natural justice, paragraph 9 (h) of the statement of claim pleads that "[w]ithout notice or hearing the Minister of Police under his [communication] dated 22/10/1998 suspended the Plaintiff without pay effective from 22/10/1998 on 14 allegations". Even if the Minister was claiming to act under some implied power, and not under section 20, a suspension without pay, and based on a number of allegations against the employee suspended, would commonly attract the same obligation. Thereafter, on 11 November 1998, Cabinet established a court of inquiry under section 15, later reconstituted to hear eleven charges against the plaintiff, formulated after an investigation that followed the suspension. After commencing its inquiry in November 1999, the court of inquiry (really an administrative tribunal although styled a court in the Act) gave its decision on 3 May 200. It acquitted the plaintiff on all charges except charge number 8, on which it fined him the small sum of $T25. Importantly, it did not recommend the plaintiffs dismissal under section 21.

6. In July 2000, the Minister of Police applied for judicial review of all the decisions of the court of inquiry acquitting the plaintiff. Paragraphs 14(i), (j), and (k) and 16 of the statement of claim are not only pleaded allegations which must be accepted on an application to strike out on the ground that no reasonable cause of action is disclosed, but they are all also admitted in the filed statement of defence. They show that the plaintiff was dismissed by Cabinet on 11 October 2001 on the recommendation of the Minister of Police with stated effect to date back to 11 November 1998, nearly three years earlier. It is pleaded (paragraph 29(c)) that "the Defendant failed to exercise its right to dismiss the plaintiff in a fair and reasonable manner". The first requirement of fairness is, of course, to give a person to be affected by so grave decision an opportunity to answer what is alleged against him and to contend for wholly, or for a partially, different decision. Although, as we have pointed out, a statement of defence has been filed, it is not suggested any opportunity was provided before the Minister of Police made his recommendation to Cabinet, notwithstanding it involved the taking of a quite different attitude to the matter from that taken by the court of inquiry Cabinet had chosen to set up. It is not, and not only for that reason, a case where the plaintiff would not have had anything worthwhile to say, had he been accorded his right to natural justice. In fact, it is admitted on the pleadings (see paragraphs 14(k) of the statement of claim and 24 of the statement of defence) that after the decision of Cabinet the plaintiff was sent by the Acting Superintendent of Prisons letters "specifying the alleged grounds of dismissal", which was stated to be "largely based on the proven facts that the Plaintiff is unfit for further service due to his being found guilty on Charge No. 8. Furthermore, the Minister of Police is legitimately permitted on [sic] S. 21 of The Prisons Act to make recommendations to His Majesty's Cabinet for dismissal of any prison officer". As has been noted, Thomas J, in Palu v Kingdom of Tonga, read the statement of claim as really based on the infringement of the plaintiff's rights of natural justice with respect to both his suspension and his dismissal, so that implied provisions of his contract of employment have been breached.
7. Almost six months after the plaintiff's dismissal, the Supreme Court on 2 April 2002, delivered its decision on the Minister's application for judicial review of the acquittals by the court of inquiry. It ruled the challenges to seven acquittals by the court of inquiry. It ruled the challenges to seven acquittals failed, but the decisions upon three involved errors of law. Of course, as the Supreme Court had heard a judicial review matter, it could only decide questions of law, and then exercise a discretion whether or not to return any question in respect of which an error of law had occurred to the court of inquiry for its decision. The Supreme Court, it its discretion, decided not to return the three questions to the court of inquiry, but simply to declare the acquittals relating to those questions unlawful. That is not at all the same thing as entering convictions, which the court of inquiry might or might not have done upon reconsideration. At the end of the day, the plaintiff remained convicted (and fined $T25) upon one charge only, upon which his dismissal had not been recommended by the court of inquiry. If the plaintiff's action were allowed to go to a hearing, it would be open to the Supreme Court to consider, not only whether he had been denied natural justice so as to have a valid claim for breach of an implied term of his employment, or for breach of an implied obligation of the Minister in his purported exercise of power under section 20, but also whether an infraction, considered to warrant a fine limited to $T25 and not attracting from the court of inquiry constituted to consider the matter a recommendation of dismissal, could have been a proper basis for the recommendation of the Minister. In considering the last question the Court would have to bear in mind also the allegation in the statement of claim, made with appropriate particularity, of malice on the Minister's part. If authority be needed to show that this might invalidate the attempt to exercise the power, it will be found in Jarratt v Commissioner of Police for New South Wales [2005] HCA 50; (2005) 224 CLR 44 at 61.
8. So the judge's conclusion that the plaintiff's claim for wrongful dismissal was met by a finding that he was guilty of four charges of misconduct, putting him in a position where he "cannot be shown ... [to have] been wrongfully dismissed", is incorrect: (a) because the plaintiff has never been "found guilty of [four] charges, but only one; and (c) because, in any case, it could not be said, on an application to strike out his claim summarily, that it was hopeless for him to contend the recommendation and decision under section 21 were each vitiated by breaches of the principle of natural justice, and otherwise.
9. The defendant's argument that the liability of a Crown employee at common law to be dismissed at will (see Ridge v Baldwin [1946] AC 40 at 65-66) applied to the plaintiff, an argument which mirrored the second ground stated for the dismissal set out earlier in these reasons, was rightly rejected by Andrew J (and its rejection should have led to the conclusion the plaintiff's dismissal was arguably based on a ground that was unavailable at law, since it was not claimed to have been wholly base on the finding of guilt by the court of inquiry, and the only other basis claimed was the Minister's (unlawfully asserted) uncontrolled power to recommend dismissal). In Tu'akoi v The Deputy Premier (1958) 2 Tongan LR 196, the Privy Council (Hammett CJ) considered the proposition that, as at common law in England, a police officer could be dismissed at pleasure, and pointed out that the position is in fact governed, not by common law, but by section 34 of The Police Act, which is in much the same terms as section 21 of The Prison Act. In Tu'akoi, no natural justice question was raised but Privy Council, in affirming the validity of each of two dismissals, expressly noted there was "no suggestion that ... the Acting Minister of Police acted in bad faith or with malice in making his ... recommendation to the Cabinet". That is a clear point of distinction from the present case, where such an allegation is made. But to return to the question whether it would be right to regard the position of Superintendent of Prisons as subject to dismissal at will, it is necessary to consider whether the law, it its modern state, can sustain such a proposition. A quite recent decision of the High Court of Australia which has already been referred to on a different point, Jarratt v Commissioner of Police for New South Wales, provides guidance. There, Gleeson CJ said (at 51):

"The common law rule concerning service at pleasure was established long before modern developments in the law relating to natural justice, and the approach to statutory interpretation dictated by those developments. It was also established at a time when public service was less likely to be subject to statutory and contractual regulation than at present. We are here concerned, not with the pristine common law principle, but with a statutory scheme of office-holding and employment."

Just as in the present case section 21 of The Prisons Act confers on Cabinet a power to dismiss on a recommendation of the Minister of Police, so in Jarratt, Gleeson CJ pointed out (at 56):

"Section 51 of the Act [the Police Service Act 1990 (NSW)] confers upon public officials (the Governor, acting on the recommendation of the Commissioner submitted with the consent of the Minister) a power to remove the applicant from public office, and thereby prejudice the applicant's rights and interests. In Annetts v McCann (1990) 170 CLR 596 at 598 per Mason CJ, Deane and McHugh JJ it was said that it can now be 'taken as settled' that the rules of natural justice regulate the exercise of such a power 'unless they are excluded by plain words of necessary intendment."

In applying Gleeson CJ's proposition to section 21 of The Prisons Act, it may be noted that, not only is there no exclusion of the rules of natural justice "by plain words of necessary intendment", but the power available on the Minister's recommendation is treated as an equivalent alternative to the power similarly available on the recommendation of a court of inquiry at which the officer whose dismissal is in question will have had a full opportunity to be heard before the making of its recommendation. It is an unlikely setting for a power of dismissal untrammelled by any concern to observe the requirements of natural justice. But Gleeson CJ continued (at 56-57):

"We are not here concerned with the monarch's 'prerogative' power to dispense with the services of a subject at pleasure. We are concerned with a statutory scheme for the management of the Police Service and for the employment of its members, likely to have been intended to embody modern conceptions of public accountability. Where Parliament confers a statutory power to destroy, defeat or prejudice a person's rights, interests or legitimate expectations, Parliament is taken to intend that the power be exercised fairly and in accordance with natural justice unless it makes the contrary intention plain. This principle of interpretation is an acknowledgment by the courts of Parliament's assumed respect for justice."

In a joint judgment McHugh, Gummow and Hayne JJ expressed (at 61- 62) the same view of the application of the rules of natural justice, and added (at 62) some comments about what their observance entailed: "at the least that, when the Commissioner was contemplating a recommendation of removal of the applicant, the applicant should have been notified of the proposal, advised of any specific allegations against him and the content of any adverse report, and given an opportunity to respond to those allegations and any criticisms of his performance as a Deputy Commissioner". Their Honours then added (at 63):

"Upon the footing that the purported removal of the applicant from his statutory office was invalid, the authorities in this Court indicate that the refusal to allow the applicant to perform his duties for the balance of his term and receive his remuneration was without justification and amounted to, or was 'analogous to', wrongful dismissal. The reasoning in the authorities appears sufficiently from the statement of Starke J in Lucy v The Commonwealth [1923] HCA 32; (1923) 33 CLR 229 at 253....:

• 'The relation between the Crown and its officers is contractual in its nature. Service under the Crown involves, in the case of civil officers, a contract of service – peculiar in its conditions, no doubt, and in many cases subject to statutory provisions and qualifications – but still a contract. And, if this be so, there is no difficulty in applying the general law in relation to servants who are wrongfully discharged from their service. A servant so treated can bring an action against his master for breaking his contract of service by discharging him. The measure of damages in such an action is not the wages agreed upon, but the actual loss sustained, including, of course, compensation for any wages of which the servant was deprived by reason of his dismissal.'

This reasoning indicates why, in the present case, the award of damages by Simpson J did not cut across the principle that, where there has been a denial of procedural fairness in the exercise of statutory or prerogative powers, the law does not recognize a cause of action for damages and confines the complainant to public law remedies.

In assessing damages in a case such as the present and by analogy to an action for wrongful dismissal, it may well be urged that account has to be taken that at some time in the balance of his term the applicant may have been liable for removal under procedures which did meet the requirements of the Act. However, statements of Rich J and of Starke and Dixon JJ in Geddes v Magrath [1933] HCA 57; (1933) 50 CLR 520 at 530- 531, 533-535 appear to suggest the contrary and that the presence of a power of removal would be disregarded in assessing damages against the respondents."

10. The reference in the passage we have cited from the judgment of Gleeson CJ in Jarratt (at 56-57) to "legitimate expectations" suggests yet another basis on which the plaintiff's resort to the principles of natural justice could not simply be brushed aside in a summary application. Having faced the court of inquiry to be fined a small sum on one charge only, which was not considered to warrant a recommendation of dismissal, it was arguable that he had a legitimate expectation the Minister, who had effectively referred all the charges to the court of inquiry, would not himself override its decision by making to Cabinet a recommendation of dismissal without giving him an opportunity, after notice of the grounds proposed to be relied on by the Minister, to urge reasons why the matter should rest where the court of inquiry had left it: cf Haoucher v Minister for Immigration and Ethnic Affairs [1990] HCA 22; (1990) 169 CLR 648; Applicant NAFF of 2002 v Minister for Immigration and Multicultural and Indigenous Affairs [2004] HCA 62; (2004) 221 CLR 1.
11. It is plain, after the examination of the issues which we have undertaken, that there was no ground for the exercise of a discretion to permit a reopening of the issue decided by Thomas J, who rightly decided that the plaintiff had propounded a case, based ultimately on the denial to him of natural justice, which simply could not be stigmatised as bound to fail. The cross-appeal must succeed.
12. The appeal treated the issue of the suspension and the claimed right to a pension as subsidiary to the plaintiff's case for wrongful dismissal. Now that we have decided to allow the cross-appeal, this approach suggests the appeal should be dismissed. So far as the pension question is concerned, we think that follows, and no more need be said. So far as concerns the suspension, there is a little more to say. Even independently, of the basis on which we have held the cross- appeal succeeds, the decision of Ford J (as the Chief Justice then was) in 'Asitomani v Superintendent of Prisons (unreported, 29 April 2003) suggests that the plaintiff, failing all else, would be entitled to recover at least a sum equivalent to the wages he should have received for the whole period of his suspension, except, perhaps, some limited period which might be regarded as a reasonable period pending the conclusion of inquiries. Ford J in 'Asitomani at 8-10 held all but the initial period of three months of a suspension without pay for 535 days was a "grossly excessive period" that was "wholly beyond the bounds of what could be termed 'reasonable' " and "became unlawful after the initial three months". In the present case, of course, the period was much longer, and the plaintiff pleads that, during this period, he was not permitted by the Minister either to take alternative employment or to travel overseas. As for the suspension being continued without pay and the eventual dismissal being backdated to its commencement, Ford J said (at 9-10):

"I do not overlook the fact that the dismissal was said to be backdated to 11 March 1999 but, as the learned authors of Chitty on Contracts, 26 ed (at 3924) note, '... disciplinary suspension cannot be justified by reference to the employer's contractual right to dismiss for misconduct ...'
No authority has been cited to me by Crown counsel to suggest that the Crown can evade liability for wages during the period of the unlawful suspension by backdating the dismissal and, indeed, no such submission was even propounded. In its statement of defence, the Crown acknowledges that the plaintiff was dismissed on 29 August 2000."

It is clear that the plaintiff has an arguable case in respect of the period of suspension and the backdating of his dismissal, whether or not these are separate issues, or should be seen as aspects of his claim for damages for wrongful dismissal.

13. The following orders should be made:
    1. That the appeal be dismissed and the cross-appeal be allowed.
    2. That the order made below striking out the plaintiffs claim for wrongful dismissal be set aside, and in lieu thereof it be ordered that the application to strike out the statement of claim be dismissed with costs.
    100. That the Appellant/Cross-Respondent pay the Respondent/Cross-Appellant's costs of the appeal and cross-appeal.

Burchett J
Salmon J
Moore J