Tonga Development Bank v Moeaki [2024] TOSC 45; CV 24 of 2024 (21 June 2024)

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

CV 24/2024

[1] TONGA DEVELOPMENT BANK
- First Plaintiff/Applicant
[2] EMELINE TUITA
- Second Plaintiff/Applicant
[3] PENISIMANI VEA
- Third Plaintiff/Applicant

-v-

[1] TATAFU MOEAKI
First Respondent
[2] NATIONAL RESERVE BANK OF TONGA
Second Defendant

ORDERS MADE BY: COOPER J
DATE OF ORDER: 21 JUNE 2024

THE COURT ORDERS THAT:

1. Leave for judicial review is granted.
2. Until further order the Defendants, their servants and agents are prohibited from disseminating the material that forms the content of the directives in the correspondence sent by National Reserve Bank of Tonga 17 May and 20 May 2024.
3. The Applicant is to file Writ and Statement of Claim within 7 days of this order;
4. Within 7 days of the writ being issued, the Applicant is to serve the respondent with

1. ex parte application for leave;
2. the affidavits filed in support;

100. the Writ and Statement of Claim; and

4. this Order.

5. Parties have 14 days liberty to apply.
6. Should the intended relief sort under the heading of the ancillary order in the ex parte application be pursued, this must be done inter partes by serving any such application on:
   1. The defendants.
   2. The representative of the shareholders of Tonga Development Bank.
7. Costs are reserved until the determination of this action.
   

REASONS

1. On 28 May 2024 the Plaintiffs filed both an ex parte application for leave to commence judicial review proceedings and an application for ancillary orders, further, an application for an injunction.
2. The application was accompanied by the draft statement of claim; the supporting affidavits of the Second and Third Applicants with annexes “A” to “O” and “A” to “B”, respectively; the Supporting Application of Ms. Teimumu Tapueluelu of Counsel Dated 28 May 2024 and filed that same day.
3. There were then two hearings, conducted with Counsel for the Applicants via AVL on 7 June 2024 and 10 June 2024.
4. The application for judicial review is made in respect of three directives that are set out in two letters sent, of 17 and 20 May 2024, from Mr. Tatafu Moeaki, the Governor (the Governor) of the National Reserve Bank of Tonga (NRBT) the First and Second Defendants respectively.
5. Those letters were sent to Tonga Development Bank (TDB) issuing three directives now complained of:
   1. Putting a condition on the Banking licence of TDB that “Tonga Development Bank shall not directly perform any other activity...” other than the Section 20 (1) (a) to (h) Banking Act activities, without NRBT written approval.
   2. Barring their Chief Executive Officer (CEO) Mrs. ‘Emeline Tuita, from holding that post or any post in TDB.
   3. Requiring TDB remove Mr. Penisimani Vea from his role of Board Chairman.
6. The application for judicial review makes a number of complaints. Whereas the draft Statement of Claim does not identify a breach of natural justice in respect of the first directive. The Application does and Miss Tapueluelu spoke to her Application at the hearing 10 June, raising that claim as a live issue.
7. I note that pursuant to Order 39 Rule 2 (3) (b), at this stage all that is required to be lodged is a “proposed” Statement of Claim. So I take no point in respect of the precise pleadings and instead focus on the application and its substance.
8. Breach of natural justice is argued as one of the grounds for judicial review in respect of each issued directive.
9. Other claims have been made. For the purposes of this ruling it is not necessary for me to consider them all.

Legal Principles

10. The Second Respondent is a public body, the First its Governor. The regulatory role of NRBT as set out in section 4 and 4 A (a) to (q) National Reserve Bank of Tonga Act make it quite clear it functions as a public body.
11. Particularly by virtue of section 4 (1)

The principal objectives of the Bank shall be to maintain internal and external monetary stability.

12. Further, section 4 A (e) and (f).

determine and implement financial stability policy, and oversee the maintenance of the stability of the financial system as a whole;

regulate as required the supply, availability and international exchange of money;

13. Moving on
    • The application was made within 3 months of 17 May 2024, the first letter issuing the directives.
    • The filings comply with O.39 Rule 2 (3) (a) - (c).
    • That the Plaintiff has sufficient interest in the matter.
14. At this stage what is key is whether I conclude one or more proposed causes of action disclose an arguable case in favour of the relief sought.
15. Halsbury’s Laws of England^[1] notes that

The situations in which a duty to act fairly or in accordance with natural justice will arise cannot be exhaustively listed and have tended to expand as the case law has developed. In order to establish that a duty to act fairly applies to the performance of a particular function, it is no longer necessary to show that the function is analytically of a judicial character or that it involves the determination of a lis inter partes, or the determination of a personal right.

It may now be presumed that the duty will apply to the administrative decision-making process, absent any express provision to the contrary, unless the interest affected is insignificant or remote. In most instances the real issue concerns the content of the duty to act fairly rather than whether or not it applies at all.

The content of the duty will be assessed by reference to a wide range of factors including the nature of the individual’s interest and the impact of the decision on it, the importance of the decision for the individual and for society, the type of decision being made, whether the decision is preliminary or final...A duty to act in accordance with natural justice will arise when a decision directly affects ...personal... interest. For example, decisions which affect a person’s livelihood...

16. The annexed correspondence demonstrates the Governor and NRBT repeatedly set out concerns about the way TDB was being run. The correspondence from 12 December 2023 right through to 14 May 2024 was aimed at ensuring NRBT dutifully fulfilled its regulatory role.
17. But, before the issuing of the directives, there was no warning those measures would be put in place should the compliance, NRBT required from TDB, not be implemented.
18. Accordingly, I am sure that the Plaintiffs have established an arguable case that natural justice was not followed in the making of the last two directives.
19. From the foregoing, prima facie it would appear to follow that a right enjoyed by an incorporated body ought also to be afforded such safeguards under the aegis of natural justice.
20. I therefore also conclude there is a tenable argument natural justice was not followed in making the first directive either.

Ancillary orders

21. Counsel for the applicants argue the Court has powers to make the ancillary orders sough pursuant to Order 39 Rule 4 (b)

It may grant such interim relief as appears necessary and just.

22. Though it was argued there was a power to order a stay of the directives, it appears the ancillary orders requested are, in fact, interim injunctive orders to suspend the directives, until the final outcome of this case has been decided.
23. That being so, this Court is concerned that there has been
    • No urgency pleaded in the Applicants’ affidavits, so as to require the application to be heard ex parte
    • No undertaking for damages
24. In a matter of this sensitivity and, so as to assess the balance of convenience and consider the overall justice of the case, this Court will require to have the application for the ancillary orders heard inter partes.
25. It is noteworthy that amongst the material before me is a copy of the correspondence sent by his Eminence Cardinal Mafi, letter dated 1 May 2024, which sets out, in clear terms, the view of the National Retirement Benefits Fund (NRBF) Board of Directors. They raise concerns about the management and running of TDB. The NRBF is a shareholder of TDB.
26. As with the defendants, the views of the shareholders of TDB may be important in assessing the balance of convenience test in assessing an application for interim injunctive relief.

The application for injunction

27. Broadly speaking, the application is that NRBT, its servants and agents do not disseminate the contents of the directives letters at all.
28. The affidavit of Penisimani Vea, dated 27 May 2024, was filed 28 May 2024. It sets out how he heard a broadcast of Broadcom Broadcasting 87.5, wherein the Mrs. Katalina Maka disclosed the contents of those letters on a radio program.
29. Mr. Vea contacted her and was told in reply to his question where she had obtained that material, was told NRBT had provided her with a copy.
30. It is complained that this has
    • Caused distress for those concerned
    • It breaches NRBT’s duty under section 18 National Reserve Bank of Tonga Act which imposes a duty of “secrecy” in respect of the bank’s affairs
    • It breaches section 19 Banking Act that requires NRBT to maintain public confidence in the operation of the financial system.
31. Effectively what is being applied for is an ex parte interim injunction.
32. The test to be applied, as summarised by Paulsen LCJ in Atenisi v TNQAB CV 13/2018 at paragraph 18
    1. Is there a serious question to be tried?
    2. Does the Balance of convenience favour the granting of the injunction?
    3. Does the overall justice of the case favour the granting of the injunction?

Serious question to be tried

33. I conclude there is a real prospect of success in the application for judicial review; there was no warning before the issuance of the directives that step would be contemplated. That of itself can quite properly be argued to be a breach of natural justice.
    

Balance of convenience

34. I have considered a number of factors including
    • The possible damage to the reputations of the Mrs. Tuita and Mr. Vea.
    • There might be unwarranted speculation caused by the discussion on the media of the directives.
    • That there appears to be, prima facie, no harm caused to the defendants in imposing such interim order.
35. In weighing these factors, I conclude that the possible harm to the Plaintiffs and the apparent lack of harm to the Defendants persuades me it would be in the best interests to consider granting this application.

Overall justice

36. There has been demonstrated a real prospect of success, I note the undertaking as to damages made by Mr. Vea.

Orders

8. Leave for judicial review is granted
9. Until further order the Defendants, their servants and agents are prohibited from disseminating the material that forms the content of the directives in the correspondence sent by NRBT 17 May and 20 May 2024.
10. The Applicant is to file Writ and Statement of Claim within 7 days of this order;
11. Within 7 days of the writ being issued, the Applicant is to serve the respondent with:

5. ex parte application for leave;
6. the affidavits filed in support;
7. the Writ and Statement of Claim; and
8. this Order.

12. Parties have 14 days liberty to apply.
13. Should the intended relief sort under the heading of the ancillary order in the ex parte application be pursued, this must be done inter partes by serving any such application on:
    100. The defendants
    4. The representative of the shareholders of TDB
14. Costs are reserved until the determination of this action.
    

SUPREME COURT	21 JUNE 2024
NUKU’ALOFA	COOPER J

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^[1] Volume 61 A (2023)