Application for Judicial Review Refused by Supreme Court
In a significant decision delivered by the Supreme Court, an application for leave to commence judicial review proceedings was refused on multiple grounds. The application, filed on July 11, 2024, sought to challenge the National Reserve Bank of Tonga’s (NRBT) objection to the appointment of Mrs. Lataanga Kava as Chief Operating Officer (COO) and Acting Chief Executive Officer (CEO) of the Tonga Development Bank (TDB).
Background
The application stemmed from a series of events following a Special Board Meeting held by TDB on November 2, 2023. At this meeting, the bank resolved to implement a five-year strategic plan, which included the creation of a new position, COO, although this role was not mentioned in the board memorandum. Mrs. Kava was subsequently appointed to the role by Mrs. Emeline Tuita, CEO of TDB.
The NRBT, however, raised objections to Mrs. Kava’s appointment, citing non-compliance with the Banking Act 2020 and the Prudential Statement No. 8 (PS8) issued by NRBT. The objections were communicated to TDB on June 11, 2024, leading to the bank’s application for judicial review.
Court’s Findings
The court, in its ruling, highlighted several key issues:
Procedural Flaws: The court found that TDB had failed to follow the correct procedure in appointing Mrs. Kava as COO. Specifically, the bank did not notify NRBT of its intention to appoint Mrs. Kava until April 19, 2024—over five months after the decision was purportedly made. According to PS8, NRBT must be notified at least 10 business days before such an appointment, a requirement that TDB did not meet.
Lack of Natural Justice: The plaintiffs argued that NRBT deprived Mrs. Kava of natural justice by not providing her with an opportunity to respond to the objections. However, the court determined that this claim could not be sustained due to the fundamental procedural errors committed by TDB.
Incorrect Legal Provisions: The plaintiffs also contended that NRBT’s objection was based on incorrect legal provisions. The court rejected this argument, stating that even if NRBT did not rely on the correct legal basis, the fundamental mistake in TDB’s appointment process rendered the objections valid.
Academic Nature of the Claim: The court declined to engage with retrospective orders concerning Mrs. Kava’s role as Acting CEO, deeming the issue to be of academic significance rather than presenting a real problem for resolution.
The Supreme Court concluded that the application for judicial review could not be sustained on any of the grounds presented. The decision underscores the importance of adhering to procedural requirements in the appointment of key managerial roles within financial institutions. As a result, the court refused the application in its entirety.
The ruling reaffirms the regulatory authority of NRBT and its role in ensuring compliance with banking laws and prudential standards in Tonga.
Location: Supreme Court, Nuku’alofa
Date: July 19, 2024
