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

CV 17 of 2017 

BETWEEN	:	RIZVI JURANGPATHY 
-	Plaintiff 

AND 		:	TONGA COMMUNICATIONS CORPORATION

-	Defendant 

JUDGMENT

Before:	LORD CHIEF JUSTICE WHITTEN	
Counsel: 		Mr W. Edwards for the Plaintiff 
Mrs D. Stephenson for the Defendant 	
Date of hearing:	25, 26, 27 and 29 November 2019	
Date of judgment:	18 December 2019	
		
CONTENTS

INTRODUCTION
NARROWING OF THE ISSUES
BACKGROUND
The Plaintiff’s contract of employment
2015 complaints against the Plaintiff
Negotiations for the Plaintiff’s resignation
TCC’s decision to investigate
The financial statements issue
The Frame Contract
The four ‘late’ invoices
The restated accounts
The Subcommittee’s investigation
The Plaintiff’s interviews
The Subcommittee’s report
The Board’s decision to terminate
LIABILITY
Evidence
Rizvi Jurangpathy
Gladys Fukofuka
Tapu Panuve
Submissions
Plaintiff
Defendant
Discussion
Breach of implied terms
Wrongful dismissal
Gross misconduct
‘Burchell’ test:
Jones v Dunkel
Result on liability
DAMAGES
Evidence
Submissions
Plaintiff
Defendant
Discussion
Loss of salary
Reputational harm
Result on damages
ORDERS

INTRODUCTION 
1.	Until 21 April 2017, the Plaintiff, Mr Rizvi Jurangpathy, was employed by the Defendant (“TCC”), a public enterprise company, as its Chief Executive Officer.  
2.	On that day, the Board of the Defendant resolved to terminate the Plaintiff's employment on a number of grounds, which, according to the Defendant, constituted "gross misconduct".  
3.	The Plaintiff claims damages for breach of his employment contract; alternatively, wrongful dismissal.
NARROWING OF THE ISSUES 
4.	The Plaintiff’s contract claims are founded on alleged implied terms of mutual trust, confidence and good faith.  The Plaintiff says that the Defendant, by its subcommittee’s conduct of an investigation into and reporting on complaints against the Plaintiff, failed to accord the Plaintiff natural justice, failed to give him a fair hearing and otherwise breached its implied obligations.
5.	The Plaintiff's alternative cause of action – unfair dismissal -  is that the Defendant wrongfully or unlawfully terminated his employment.  That part of the Plaintiff's case is effectively a challenge to the findings of the subcommittee which were adopted by the TCC Board of directors leading to their decision to terminate the Plaintiff's employment for "gross misconduct".  The grounds of complaint upon which the Defendant's Board reached that decision were threefold: allegations of impropriety in certain relationships between the Plaintiff and a number of staff members; incorrect overstatement of net profit for the 2014/15 financial year based on "wilful omission of pertinent information" (“financial statements issue”) and that the Plaintiff was responsible for an incorrect tender process for the sale of a company vehicle that was being used by the former Chairlady.  The Plaintiff denies each of those allegations and says there was no proper cause for the Defendant to dismiss him on the grounds of gross misconduct.
6.	By its Second Amended Statement of Defence filed 10 December 2018, the Defendant denies the implied terms to the employment contract.  It contends that the Plaintiff was given a fair hearing during the investigation and a right to be heard before the decision was made by the Board to terminate his employment.  The balance of the defence is devoted primarily to the financial statements issue.  The other two grounds of complaint against the Plaintiff were only tangentially referred to. At paragraph 66 of the Defence, the Defendant pleaded that the Board also considered the other information contained in the subcommittee's report and concluded that the Plaintiff was “no longer capable of effectively carrying out the duties of his position…”.
7.	Early in the trial, during discussion with counsel in their respective openings, Mrs Stephenson informed the court that the Defendant had elected to abandon the other two grounds for the Plaintiff's dismissal and to present its defence solely on the basis of the financial statements issue.  The trial was conducted on that basis.  
8.	That narrowing of the issues substantially reduced the number of witnesses who gave evidence and the overall volume of documentary evidence upon which the parties had originally intended to rely.

BACKGROUND
9.	On 22 September 2008, the Plaintiff was employed by the Defendant as its Chief Financial Officer (“CFO”).  On 23 September 2010, his contract was extended for a further term of two years.  On 21 November 2012, his employment contract was further extended and amended to include the position of Acting Chief Executive Officer. On 23 September 2014, that contract was extended for a further two years.  Soon after, he was asked by the Board to resign as CFO and to apply as CEO. 
The Plaintiff’s contract of employment
10.	On 28 November 2014, the Plaintiff was appointed CEO, effective 1 December 2014, for a term of three years.  The recitals to the contract included that in order to achieve the purpose and objectives of the Public Enterprises Act 2002, TCC desired to employ a qualified, experienced and knowledgeable CEO to manage its operations under the direction of the Board of Directors.  It was further acknowledged there that the Plaintiff was "qualified, experienced in, and knowledgeable concerning the administration and management of a telecommunications business."  
11.	The job description in Schedule A to the contract required the CEO, inter alia, to generally control and manage the operations of TCC for the purpose of achieving its aims as directed by the Board.  The duties and responsibilities of the CEO included successfully implementing the corresponding business and operational plans, reviewing and reporting regularly to the Board on the overall progress and results against operating and financial objectives and to initiate courses of action for improvement.  Operational management included developing annual operating forecasts of revenues, expenditures, operational results and financial performance to ensure the financial growth of the company. The CEO was also authorised to commit corporate resources by entering into contracts, leases, etc. in the ordinary course of business in order to pursue the approved strategies, business plans and objectives of the company,provided however, that major commitments, exposures and risks would be reported to the Board on a regular and timely basis.  Relationship management included ensuring that effective communications and appropriate relationships were maintained with the shareholders of the company and other stakeholders such as employees. In relation to compliance, risk management and corporate governance, the CEO was required to keep the Board fully informed on all aspects of the company's operational and financial affairs, to ensure that effective control and coordination mechanisms for all operations and activities were in place including the establishment and development of effective internal controls over financial reporting.  The CEO was required to prepare and recommend the annual budget, monitor performance against budget report monthly and annually to the Board.  He was to manage the operational and financial resources of the company in accordance with the approved budget.  He was also responsible for ensuring the company's systems and processes were efficient and consistent with best practice, and for liaising with the auditors.
12.	The CEO’s salary was TOP$125,000 per annum with a potential annual bonus of up to TOP$20,000 to be paid based on the achievement of targets set against Key Performance Indicators in Schedule B to the contract. In the copy of the contract in evidence, Schedule B was blank. 
13.	The Plaintiff was also entitled to superannuation, a fully furnished house with all public utilities, a vehicle (including fuel and servicing) for business and reasonable private use, business class return travel for himself and his wife once a year to his home country and on repatriation, and the reasonable costs of transfer of his personal assets from Tonga to his home country at the end of the term of his contract.
14.	Clause 18 of the contract provided for termination.  Relevantly, clause 18.2 provided that TCC may terminate the contract and the services of the Plaintiff without notice at any time provided that TCC paid the Plaintiff a termination benefit equivalent to three month’s salary unless the contract was terminated because of the Plaintiff’s dishonesty or gross misconduct, in which case the termination benefit would not be payable.
15.	The Plaintiff's employment was also subject to the TCC Staff Policy & Regulation Manual (Amendment 2015).  The Introduction section, which contained a provision for the Plaintiff’s signature as CEO, described the purpose of the manual as including rules for staff protection.  Section 1 provided the general regulations.  Clause 1.16 concerned discipline.  It required all employees to preserve the good name of the company at all times and that they would be held accountable for any misconduct when on or off duty which may bring discredit on the company.  It provided for a disciplinary committee comprising the CEO, Manager Legal, Manager Administration, Chief Internal Auditor and Head of Division of the accused employee.  There followed a number of non-exhaustive examples of actions of employees that would be subject to disciplinary procedures.  One of them was "gross misconduct" which was described as including but not limited to "dishonesty, physical or verbal abuse of staff, substance abuse while at work."  Subclause 10 provided that the Chairperson and Board of Directors would deal with any disciplinary procedure involving the CEO.
2015 complaints against the Plaintiff
16.	On about 18 June 2015, the Plaintiff signed a letter to a Mr Tonga Fifita terminating his employment with the company.  Soon after, the Plaintiff received a visit from Mr Ofa Vatikani of the Kele’a Newspaper asking about the dismissal and about other allegations against the Plaintiff within the company.  Later that day, he received a telephone call from Mr Tapueluelu, a Member of Parliament, questioning him again about certain matters and Mr Fifita’s dismissal.
17.	On 19 June 2015, he received a letter from Mr Tapueluelu which referred to the "Unfair Dismissal of Mr Tonga Fifita” and contained damaging allegations against the Plaintiff. Mr Tapueluelu concluded:
 "I will now take all possible means to have your decision fully investigated and if warranted, push for the TCC Board to be replaced and your contract terminated."
18.	On 23 June 2015, Mr Finau Moa from the Ministry for Public Enterprises wrote to the Plaintiff and the TCC Board seeking an explanation in relation to the allegations made by Mr Tapueluelu. 
19.	The Plaintiff responded to the allegations and denied them.  
20.	Notwithstanding, on 29 June 2015, the Kele’a Newspaper published accounts taken from Mr Tapueluelu’s letter. That created some public controversy towards the Plaintiff and he was questioned from time to time by members of the public and government officials about the allegations in the newspaper article.  He considered the publication was deliberate and intended to create public outrage so as to create pressure to dismiss him from his employment.  The Plaintiff says it is no coincidence that the publisher of the newspaper was Mr Tapueluelu’s wife.
21.	As a result of the newspaper article, the then Prime Minister, the late Honourable Akilisi Pohiva, wrote to the Plaintiff on 13 July 2015 about the matter and recommended that the Plaintiff consider tendering his resignation.
22.	On 20 July 2015, the Plaintiff filed proceedings in the Magistrates Court against the newspaper for defamation.  
23.	On 30 July 2015, the Plaintiff responded to the Prime Minister, denying the allegations published in the newspaper article and asserted that he had not been given a fair hearing.
24.	On 18 August 2015, the Minister for Public Enterprises wrote to the Chairperson of TCC and recommended that the Board conduct an independent investigation into the allegations and that the Plaintiff be placed on paid leave until the investigation was finalised. 
25.	In November 2015, the TCC Board was summoned to meet with the Prime Minister.  He asked the Board to dismiss the Plaintiff over the Tapueluelu complaints.  The Chairman advised the Prime Minister that the Board would look into the matter.
26.	In July 2016, the Prime Minister advised the Board that he had received a complaint from a number of TCC employees against the CEO.  
27.	On 18 July 2016, an urgent special meeting of the TCC Board was convened.  The Board agreed to take legal advice regarding the CEO's employment contract before deciding how to address any staff complaints and respond to the Prime Minister.  The Board agreed to reconvene the next day.  
Negotiations for the Plaintiff’s resignation
28.	Before the meeting reconvened, the Chairman met with the Plaintiff.  He told the Plaintiff of the staff complaint letter and asked whether there was any possibility of a mutual agreement whereby the Plaintiff would resign from his position as CEO.  The Chairman made it clear to the Plaintiff that their discussion regarding the possibility of his resignation was not based on any allegations which had been made against him by Mateni Tapueluelu. 
29.	On 18 and 19 July 2016, a special meeting of the ICT Shared Board of Directors was conducted.  The minutes of that meeting record the Chairman reporting on his discussions with the Plaintiff in relation to the latter's resignation and the terms on which that might be achieved.  The ensuing discussions on the subject among the other Board members included Mr Moala referring to their previous discussions on invoking clause 18 of the contract of employment and although it had now come to a mutual agreement to part ways amicably, he still questioned why the Board was ‘pushing this against the CEO’.  Ms Johansson did not agree with the solution but agreed to the proposed course as there had been consensus between the Chairman and the CEO. She also encouraged everyone to ‘stay the course of good governance’ and apply correct processes as ‘that is what will protect them’.  Mr Fonau was of the view that it should be a question of whether there was an issue or not.  If there was no issue, he considered they should forget about it and move forward. If there was an issue, then he agreed that the CEO's resignation was the solution.  All directors were recorded as having agreed that ‘the end result had been achieved and that they should let the process take place.’ 
30.	Mr Fusimalohi raised concern about having the matter resolved quickly, and noted that they, the Board, were at a ‘very difficult crossroad’, so that whatever took place, they needed to ensure that ‘it did not come back to haunt them’.  He also noted that if they were now going to ‘take the mutual agreement road’, then ‘everything needed to be dropped so that it was a clean exit’.  
31.	The Chairman clarified that the decision on letting the CEO go was not based on any sexual harassment allegations and he had been clear on that with the CEO during their discussions.  He said that the CEO understood and had stated himself that it was ‘probably in the best interests of the company for him to leave’.  The Chairman expressed the view that they:
 " … needed to keep the issues separate as they have no bearing on each other; rather they were looking for a new sense of direction which was the real reason for them doing this in the first place."
32.	There followed a series of meetings and negotiations with the Plaintiff and the Chairman, and the parties’ respective legal advisors, on the terms of the Plaintiff's resignation and pay out.  The Board was prepared to pay the Plaintiff the balance of his contract which was then 16 months.  However, the Plaintiff asked for a figure of around $600,000, the main component of which was the value of his salary for a three-year period after the end of his existing contract.  The negotiations broke down.  
TCC’s decision to investigate
33.	On 26 July 2016, during a meeting of various officials, the Chairman of the TCC Board informed the Minister of Public Enterprises that the amount of money asked by the Plaintiff was too high and was not accepted.  He also told the Minister that he would recommend to the TCC Board that the staff complaint against the Plaintiff now be investigated.
34.	Later that same day, the Board unanimously resolved to officially lodge the staff complaint with the Ombudsman's office for investigation and to place the Plaintiff on special paid leave while that investigation took place. The Chairman wrote to the Plaintiff advising of complaints concerning serious allegations by 67 staff members against the Plaintiff.  He directed the Plaintiff to take paid leave and advised that the complaint had been referred to the Commissioner for Public Relations (the former name of the Ombudsman). 
35.	It appears that sometime thereafter, Sione Veikoso, who was then Manager of Engineering, was appointed Acting CEO.
36.	It transpired that around the same time, the Prime Minister also separately referred the same complaint to the Ombudsman for investigation.  The Plaintiff made an application to the Court to suspend the Ombudsman's investigation.  That order was not granted. However, Paulsen LCJ held that the TCC Board could not rely on any findings of the Ombudsman as grounds for dismissing the Plaintiff and that the Board would need to reach a decision based on its own enquiries.
37.	On 12 January 2017, the Chairman advised the Board that he had received directions from the Shareholder (the government), the Minister of Public Enterprises and the Acting Attorney General to look into certain matters involving the Plaintiff which were of concern to the company. The Board agreed to appoint a subcommittee of directors comprising ‘Ahongalu Fusimalohi (Chair), Saia Fonua and Pita Moala to conduct an investigation.  The subcommittee was tasked with developing terms of reference for the Board to consider and approve.
38.	On 25 January 2017, the Board approved terms of reference by which the subcommittee was authorised to investigate, review and report to the Board on:
(a)	the impact of allegations made against the CEO by staff in a petition on the CEO's ability to manage the workplace and business operations;
(b)	the procedures followed in the preparation and internal auditing of the company's accounts for the 2014/2015 fiscal year with a focus on the omission of pertinent information affecting the final profit and loss results of those accounts and the decision on the amount of dividend to the shareholder (“the financial statements issue”); and
(c)	the process and procedures followed in a tender process for the sale of a company vehicle.
39.	On 30 January 2017, the Chairman notified the Plaintiff that the Board had appointed the subcommittee to investigate the three areas of complaint against the Plaintiff. He was advised, among other things, that if in the course of the subcommittee’s investigation, it was revealed that any breach of his employment contract had occurred, the Board would deliberate on any disciplinary action which might be taken against him, including, possibly, termination of his employment.
40.	He was also provided with the subcommittee’s terms of reference which included:
"The subcommittee notes that the committee will inevitably need to conduct interviews with a number of company personnel, directors and advisors to fulfil the functions for which it is being formed and convened.
These will be interviewed however, not a formal hearing. The purposes of the interviews will be to gather information necessary to provide the mandated report to the Board.
At the same time however the interviews will provide some of the parties – most notably the  CEO - an opportunity to answer the accusations which have been levelled against them, and thus afford them the opportunity to be heard which the principles of natural justice require TCC (a government-owned body) to afford them."
41.	In the Chairman’s letter, what has been termed above as the ‘financial statements issue’ was then described to the Plaintiff as:
"Possible discrepancies in relation to the preparation of TCC's 2014/15 financial accounts.  Those accounts indicated a Net Profit After Tax of $1.4 million, but those results have now been reviewed and downgraded by TCC's auditors to a figure of $830,000.”
The financial statements issue
42.	In order to understand the significance and context in which the subcommittee investigated the financial statements issue, it is necessary to set out the background to how the issue arose, by reference to various uncontroversial documents in the trial bundle and statements in certain of the briefs of evidence tendered at trial.
The Frame Contract
43.	On 12 August 2013, TCC entered into a contract with Huawei Technologies Ltd (“Huawei”) for the purchase of a new telecommunications network system to replace the existing TCC network. The value of the contract was approximately USD$13.7 million.  It was then TCC’s single largest transaction.  At the time the ‘Frame Contract’ was signed, the Plaintiff was the Acting CEO.  
44.	There were two components to the contract.  Huawei supplied and installed physical hardware and technical components for the new network and also provided ongoing maintenance services and software upgrades once the new network was in place and operating.  The contract set out the invoicing and payment terms for the supply of the equipment and technical components, with different invoicing procedures applying to the provision of the ongoing maintenance services and software upgrades.  
45.	The contract provided for a 12-month warranty period for the equipment and services provided which commenced three months after the first commercial use of the equipment by TCC.  That occurred on 15 December 2013. Therefore, the warranty period ran from 15 March 2014 to 15 March 2015.  After the warranty period ended, TCC was to pay a total of USD$3,650,757.03 to Huawei over four years for maintenance services and software upgrades.  The breakdown of that amount into annual payments was set out in the contract Schedule of Payments.  TCC was required to issue an annual purchase order for the maintenance services for each continuous year starting from the expiry of the warranty period which was referred to as “Year 2”.  Therefore, the first annual purchase order for the maintenance services was due to be raised by TCC on 15 March 2015 in the amount of USD$810,365.26 (or approximately TOP$1.8m).  
The four ‘late’ invoices
46.	A purchase order for that full sum was issued on 6 March 2015, signed by the Plaintiff. However, for reasons which are referred to in the Plaintiff’s evidence below, that purchase order was cancelled and instead of one invoice for the whole amount due for Year 2 services, Huawei agreed to issue separate monthly invoices each for 1/12th of the fee, or USD$67,530.44.
47.	As a result, Huawei issued invoices, relevantly, on 16 March, 17 April, 18 May and 16 June 2015.  Each was addressed to " Tonga Comm.  Corporation”.  Payment terms on each were stated as “monthly in advance”. The liability for payment of the invoices should therefore have been accrued in the 14/15 financial year.
48.	However, as the evidence below reveals, the invoices were not received by the TCC finance or accounts department until August 2015, by which time the 2014/15 financial statements had been completed. As the invoices were not discovered until the next financial year, they were recorded in a suspense account termed “recoverable expenses” awaiting the external auditor’s instructions. 
49.	As a result, TCC says that the 14/15 profit was overstated by the amount of the four invoices, which totalled TOP$621,630.10.
The restated accounts
50.	On 24 October 2016, Teisa Atiola, who was then acting CFO, emailed Steve Pickering of Ernst & Young, TCC’s external auditors, in relation to "support charge for 2015/2016".  Taiho referred to the four invoices as being one of two main issues with the auditor's report.  He stated that the invoices were ‘all support charges for four months in 2014-2015, which we requested to be adjusted to prior year but was not agreed to’. He noted that in addition to that charge was a 12 month (whole year) support charge (for Year 3), which made a total 16 months charged in 2015/16.
51.	Later that same morning, Pickering responded: 
"Can you send through copies of the invoices.  It appears the charges if supported by invoices was a deliberate omission from the 2015 general ledger and books of account.  If this is acknowledged by the company and the invoices support this then it would be in the nature of an error from prior years.  This would also be at odds with the representations we received from management of the time of signing the 2015 accounts."
52.	Teisa emailed Pickering copies of the invoices.  Pickering then emailed: 
"Can you provide what OPEX Year 2 means according to the Schedule in the [Frame] contract and variations thereon - need to be sure this is an expense and not a prepayment."
53.	The company secretary, Ane Mailangi, then emailed Teisa: 
"I am assuming that is the second year support payment (out of the five years) that we contracted for support with Huawei.  First year was the warranty period and second was the first time we paid support charges at USD 810 K+ with the first invoice we received in March 2015."  
54.	That information was passed on to Pickering who then asked to see the relevant sections of the contract.  The following day, Teisa emailed Pickering sections of the contract.  On 27 October 2016, Pickering advised Teisa: 
"I would agree it belongs in 2015".
55.	As a result, Ernst & Young produced restated accounts for the 14/15 year. In those accounts, the four invoices were described as having not been recorded as at 30 June 2015 and therefore expensed in the subsequent year ending 30 June 2016.  The accounting treatment was described as a “prior period error” as the dates of the invoices related to the 2015 year end.  As the prior period error was discovered in the 2016 year, relating to 2015, it needed to be excluded from the 2016 balance sheet.  
56.	Under the heading "Authoritative Guidance", the auditors referred to the applicable accounting standard as ‘IAS 8 accounting policies, changes in accounting estimates and errors’.  The relevant section from that policy was then set out as follows:
“Prior period errors are omissions from, and misstatements in, the entity's financial statements for one or more prior periods arising from a failure to use, or misuse of, reliable information that:
(a) was available when financial statements for those periods were authorised for issue; and
(b) could reasonably be expected to have been obtained and taken into account in the preparation and presentation of those financial statements.
Such errors include the effects of mathematical mistakes, mistakes in applying accounting policies, oversights or misinterpretations of facts, and fraud."
57.	Note 27 to the restated accounts explained the amended accounting of the amounts of the four invoices as: 
"Correction of prior period errors relate to reclassification of support charges of $621,630 from current year expense to prior year since invoices raised by Huawei Technologies are dated 2015.  Consequently, the expense was reversed retrospectively in accordance with IAS 8 Accounting Policies, Estimates and Errors."

The Subcommittee’s investigation
58.	The subcommittee commenced its investigations in February 2017.
59.	On 13 March 2017, the Chair of the subcommittee requested the Plaintiff to attend an interview on 15 March 2017. By that time, the subcommittee had apparently completed its interviews with other staff members.  
60.	Initially, the Plaintiff, through his lawyer, refused to attend his interview without certain conditions being met including a right to question the various staff members that had been interviewed by the subcommittee. After further exchanges between the subcommittee and the Plaintiff's lawyer, on 22 March 2017, the Chair of the subcommittee refused the Plaintiff's request to be able to question the witnesses or to allow his lawyer to make submissions to the subcommittee.
61.	After yet further exchanges on the terms on which the Plaintiff would attend his interview, on 27 March 2017, the Chair wrote, relevantly:  
"Characterisation of the present process as one involving allegations of wrongdoing is misplaced.  It is not, and cannot be, a trial.  The subcommittee is entitled to set its own procedures for this review process.  Court rules have no place.…  the subcommittee is not at this stage alleging misconduct by any party, but rather are trying to determine what has actually occurred in respect of each of the above matters for the purposes of providing a full report to the Board of Directors for its consideration.…  His employment contract requires that he performs under that contract as directed by the Board.  At this point in time the Board is directing that he participate in the investigation and review process of matters which are of considerable managerial and operational importance to the Board and to the Company and its Shareholder… As such he was involved in each of the matters which are presently under review.  With respect, it is not open to your client to refuse to assist his employer in this process unless specific allegations of wrongdoing have been made against him.  His refusal to cooperate is, with all due respect, insubordinate."

The Plaintiff’s interviews
62.	The Plaintiff was interviewed by the subcommittee on a number of occasions between 29 and 31 March 2017.  A transcript of those interviews was tendered in evidence.  During the course of the Plaintiff's evidence at trial, an audio recording of relevant parts of interviews was also played.
63.	Early in the interview and at the end of the session on the 29th, the Plaintiff asked for the 2015/16 financial statements and annual reports for 2014/15 and 2015/16.  The Chair only agreed to provide the 2014/15 statements.  The Plaintiff endeavoured to explain why the other statements and annual reports were necessary to consider the ‘possible’ discrepancy.  The Chair said: 
"Possible means we don't know yet.  So when we get to that issue, we have the financial support team here…".
64.	Throughout the record of interview both prior to and during the passages concerning the financial statements issue, the Chair was recorded variously as saying that he did not want to hear, or, did not care, what the Plaintiff had to say.
65.	The audio recording confirmed what the text of the transcript suggested, namely, that at times during the interview, there were heated exchanges between the Chair and the Plaintiff which, as set out below, culminated in the Chair and another subcommittee member threatening the Plaintiff with violence.  
66.	As the Plaintiff's pleaded complaints about how he was treated during the interview, and the Defendant's defence of the subcommittee’s conduct of the interview and resulting report, is at the heart of the issues for determination, it is necessary to set out, verbatim, relevant passages from the transcript of the questioning in relation to the financial statements issue.
699.  Rizvi: 	Chairman if I may interrupt I did not get my annual reports.	
700.  Chairman: 	Unfortunately Finau you may have something to say about that.	
701. Finau:	We already sent it to you visibly, the final one that one was sent by TCC.	
702.  Rizvi	Finau the driver brought me I noted it was only the financial statements but I asked for the annual report.	
703. Chairman	Well we	
704. Finau	The one that I gave you	
705. Chairman	Only the financial statements.	
706. Finau	That's the final report provided by TCC, in your draft one you provide the whole document there, you see	
707. Chairman	I don't see what the annual report has to do with a particular question that we are looking at the 2014/15 accounts.  So you still	
708. Rizvi	Chairman I will just say the annual report is actually a public document ok, anyone can request for an annual report from the shareholder.  But the annual report also states the statements made by the chairperson plus also the review of the operations from the chief executive officer, like we have in this report, I had copy from my past records when I pulled out my soft copy of 2014/15. But I would want to have the same thing and that's why I requested to have it if I can have.	
709. Chairman	What bearing is the annual report to our questions you have yet to know about.	
710. Rizvi	it is not yet to know, I had in the previous letter stated that there was this 600K because there is 600K discrepancy, there was reports which are being given by a statement given by the Chief financial officer plus the manager engineering has also stated about it.	
711. Chairman	Whatever it has nothing to do with our questions and you can just bring that up because our question is simple it's the 2014/15 because the financial of the profit was restated that's all. The profit of the 2014/15 financial report was restated.		
712. Rizvi	Correct and what I know is.	
713. Chairman	Not what you know, I don't want to hear what you know.	
714.  Rizvi	It was restated and the reason was explained by the person who prepared the financial statements.	
715. Chairman	Let's, doesn't matter who prepared it whatever it doesn't deny us from asking you the questions.  All right.  So will go straight into that the financials of 2014/15 was restated by the auditors we have managed to identify that fact that the reason for the restatement is because 600,000 Tongan Pa’anga, which is US$300,000 was not accrued in the 14/15 financial year but instead it was then going to be accrued in the 15/16 that's when the auditors noticed it, and said no this is an asset and cannot be an asset in the 15/16 year it's supposed to be an expense liability for 14/15 so take it 14/15 and when they took it to 14/15 and the profit had to be restated.  That's how as simple as possible.	
716. Rizvi	I think that's what has been explained by the chief financial officer who prepared the financials.	
717. Chairman	I don't think it's anything to do with the chief financial officer and what he has explained.  I am asking you and you have yet to know what our question is.	
718.  Rizvi	I know what has been stated there okay your question.	
719.  Chairman	My question is did you know about that 600K bill but was not accrued in the 2014/15 financial year.	
720.  Rizvi	As far as I know the document which authorises the expenditure, the owner of the cost centre, that's the manager engineering only agreed and signed it in August 2015. I have the document here.	
721.  Chairman	That's fine with me as long as everybody knows this is an amount owed in 2014/15 to reflect in the 2014/15 accounts that’s all we need to know.  But the fact that who did not provide that invoice, I mean the invoice, Gladys said that the invoice did not come until after the audit of 14/15.  So the invoice came. What surprises me it wasn't accrued.  Why not just accrue  in the 14/15 although the invoice will come at a later date.	
722.  Rizvi	All accruals need to be done by the cost centre head.  The cost centre head who prepares, I think will address to him (Kelepi) is an accountant.	
723.  Chairman	That's correct.	
724.  Rizvi	Ok how the process in TCC works, there is cost centre heads and also chairman I would request if you are in a position to bring the Huawei contract.	
725.  Chairman	We have seen the Huawei frame contract.	
726.  Rizvi	Ok because it has payment milestones clearly stated. You have each cost centre head before the beginning of the financial year shall provide all costs related its own finance cost centre stating that this is my costs of 14/15, okay so for someone to accrue in 14/15 that expenditure has not occurred in 14/15 maybe like the instance you are saying the invoice came late than that amount should have shown in the budget that we have estimated such amount that is coming in but we have not received the invoice then the finance know there is a payment that would come but not triggered yet.  In that case they make an accrual.  In this case I would say you go through the 14/15 budget there was no provision whatsoever made for this particular expense.  And I will tell you why it was not made.  This is not my job I am helping you.  In the frame contract there are payment milestones, they don't say which year where the payments are going to.  They say when we signed the contract and issued the purchase order we pay 25%, when the goods arrive here, you pay another 45%, when we accept the provisional network, that is checked and commercially launched and it can generate revenue I think it's 25% or something we call that the provisional acceptance.  In order to do all that it has to be signed by all the technical teams, Huawei and TCC, everything in the checklist is working in the checklist and email was sent that it provisionally can be accepted you can pay Huawei this amount.  Then this is provisional acceptance then we go to next stage of final acceptance which they say	
727. Kelepi	Sorry under the provisional acceptance that when its satisfied all the requirements by time	
728. Rizvi 	It can generate revenue to the customer.  That is you are able to make money out of the network.  On that day the engineering has checked… everything is okay there is a project manager from both sides it goes to the manager engineering and he says everything is okay we can go ahead and 25% paid.  Once you put the network into up and running still it's not perfect there are fine tuning everything.  They give a period of time we need to sort out.  So TCC will say this is not working, and finally are going the technical or we have the project managers and we had an expatriate consultant engaged on this works on it and when they say everything is fine then we sign off the final acceptance.  We have accepted the network, then we have another 10% we have to pay, and then 100% paid.  Then from there onwards there is a warranty period which doesn't, under the warranty period again Huawei provides you anything goes wrong they will replace it free of charge and repair it free of charge.  And that phase goes off and when the engineering confirms that this warranty is over, during this warranty period has been cleared now triggers the	
729. Kelepi	I get the picture	
730. Rizvi	Then it triggers the support cost. You can't state looking at the contract when the support cost is going to start. It all depends from the engineering confirming that okay everything is good now we can start the support and maintenance and that document was signed by Veikoso only on August 20 something.  So finance was not aware	
731. Chairman	Hold on hold on	
732. Kelepi	So all these acceptance warranty period finished up until after 14/15 or before	
733 Rizvi.	No we finished in 2015	
734. Kelepi	Inside the financial year 14/15 before June	
735. Rizvi	Yes, then only when we asked the manager engineering he had to go back, then he said he was somewhere from, I can't remember if you can provide me the documents I can, somewhere from April 2015. Okay he said there was a delay engineering to go through everything and then only he signed it only on the 20 something of August 2015.  Then only the finance knew so what happened was after that Huawei sent an invoice backdating that it had to start from this and it is.  Okay that's where the problem came was that finance although is preparing the accounts and doing provisions and accruing everything all depends from the respective HOD because finance has no control whatsoever with the cost centre division, that is sales and marketing, because they prepare their budgets and give it to the finance and we all agree and sign off and then present it to the Board.  This is the expenditure which is forecasted.  There was no any expenditure of support.	
736. Kelepi	I think I get the, from what I understand your explanation all the work has just finished some time then or almost before the end of the financial year.	
737. Rizvi	Almost end of financial year 2015.  Correct	
738. Kelepi	Okay so if that's the case we have from your explanation and my understanding that after everything is completed up to the warranty and the engineering is signing all okay there is no fault.  For me from my understanding then that should be when the expenditure realised because now we can say the guarantee is over and we are going to pay the maintenance.  Because everything is working.	
739.  Rizvi	Yes	
740. Kelepi	And now we should include in the budget.  Okay I think, I need to look at the contract, I see this is different	
741.  Chairman	The problem is the milestones in the contract year 1 Free, year 2 800K of support services.  That's after paying 10 million so	
742.  Rizvi	Yes	
743.  Chairman	So 01 was 2013 so no payment for support.  Year 2 840 something US $500 was paid 300 wasn't.  So it's still doesn't answer the fact that why wasn't the 300 accrued.  Because the fact the profits are being restated it's not a simple error it is a fundamental error.	
…		
767. Kelepi	Sorry Rizvi, one of the staff said that the problem arises when he compared the actual and budgeted for 14/15 and then he identified the amount	
768.  Rizvi	Yes correct, I saw his statement saying, that's correct, because	
769.  Kelepi	Why he did not aware about the contract at that time so they can be able to pick up something	
770.  Rizvi	No no no let me explain to you.  So what happens is, when the engineering signs off the document, each payment for engineering services has to be signed by the manager engineering, Sione Veikoso, when he signed and approved saying that all the services are and I endorse you to pay then what happens is it goes to the finance, finance raises purchase order based on this purchase request and the payment is made.  This is on the payment side you have the GL side which is different, GL side will suddenly see the engineering has put a budget of only $800,000 and for half year it has to be only $400,000, but suddenly he sees an extra $300,000 has come in, he finds out there is a variance here and he finds out okay this is something in relation to the past, that's why it is set aside when the auditors come to see.  So the auditors decided to go back and put it in the previous year.  Prior year adjustment.  This is I would say a correct way of accounting.	
771.  Kelepi	So that means your finance team hardly knew anything about the contract with Huawei.	
772.  Rizvi	No no I think, correct they are familiar that much in detail of the contract payment schedules and everything.  Contracts are with the company lawyer.	
773.  Chairman	Whose responsibility is to look after contracts	
774.  Rizvi	The contract is with the company lawyer.  In the ownership of the engineering expenses are in the manager engineering. …  It is based on the budget he has prepared for that particular year how much his expense to run the whole network in regards to the maintenance.  We have maintenance contracts with the engineering, we have maintenance contracts with the billing system, we have maintenance with other equipment suppliers so everything has to be endorsed by them saying that, it has to be first budgeted and then against, even if they do a payment they have to refer to say that in our budget cost centre no.  this and utilising this particular expenditure budgeted for this expense.	
…		
776.  Chairman	We simply want to concentrate on the fact that our profit was restated… [778] And because the profit was restated there was a fundamental error in bookkeeping and how it was recorded and we want to know not only that it was because of that cost of 600,000 in Tongan, but who was responsible for withholding that 600 $ from accruing in the 14/15 year.	
 779.  Rizvi	Sione Veikoso. Because he signed the document and sent it to finance late. Then only they know.  The document is here.	
780.  Chairman	Because to Vaihoi as he usually contracts supposed to come to them, they should know.  They didn't know about it, because they didn't know anything about the contract.	
781.  Rizvi	Well I don't think, I am totally disagreeing to that, I won't say that all contracts come to them	
782.  Chairman	From the point of view from the contracts the schedule of payments is given to them and although the accounts department doesn't receive an invoice for services doesn't matter because at the end of the day when they come to prepare the accounts this amount hasn't been paid they will accrue	
783. Rizvi	You are right	
784. Chairman	Yes	
785. Rizvi	But wait I will explain	
786.  Chairman	I am right and you will keep quiet, so I am done.  Are we clear, your attitude is very unwelcome.	
787.  Rizvi	Ok	
788.  Chairman	Not only disrespectful it also has an arrogance.	
789.  Rizvi	I deny that	
790.  Chairman	I don't care if you deny, but the fact is (you're occasionally) interfering on what I have to say is disrespectful.  Are we clear.	
791.  Rizvi	Yeah	
792.  Chairman	Well try and … show some courtesy. So the point is very simple the fact that the profits were restated means it affects the operation of TCC, because it had previously paid an amount based on the previous profit.  That's what was declared.  And because of that they made about 1 million something, they paid 1.5 and that has a serious effect on the financials of the company.  And that's what we want to know.	
793.  Rizvi	Okay let me analyse your one by one.  The finance if they have a schedule of payments they could have accrued.	
794.  Chairman	That's correct.	
795.  Rizvi	Engineering did not provide a budget.  You check the 14/15 budget. Okay that's it I can't answer beyond that point.  So finance was not aware, because I question finance they were not aware because engineering had not budgeted.  So if they have not budgeted they are unable to provide.  It is the duty of the engineering manager to go through the contracts and see what his expenses and tell the finance in the budget I have these expenses come in this particular year.  If it is not budgeted sorry finance is unable to provide.  Do you agree to that	
796.  Chairman	Unfortunately	
797. Saia Fonua	Can I say something please, if you notice chairperson I don't think the question you have asked is going to give it.  If we ask a question he blames somebody else.  Sorry for the word, that's what he is saying.  We are here for you to talk about what you know, we all know this.	
…		
804.  Rizvi	No you asked me why it was not accrued so I explained it why it wasn't accrued.	
805. Saia Fonua	We are keep going around the circle.  We are not getting anywhere	
…		
809. Saia Fonua	Why is it not in the budget.	
810.  Chairman	That's the point… Hold on, that's the point what the auditors raised it’s a fundamental error and only the top management has the contract. That's the arrangement.  The contract was arranged between the Board and Huawei the CEO should know about it the contract and it is the responsibility of the CEO to make that contract known to the staff.  So the staff didn't know about it.	
811.  Rizvi 	No you don't have to blame me, you are saying, you are blaming	
812.  Chairman	I am saying it’s your responsibility, your responsibility that is the Board enters into a contract it is your responsibility to make that contract known to the staff.  To all staff.	
813.  Rizvi	That has been done but the details of the contract they wouldn't know, but then.  Everyone knows that the contract	
814.  Chairman	Finance does not know, Gladys does not know about the schedule of payments.	
815.  Rizvi	I would say that's wrong.  I would say everyone knows about the contract, the manager engineering is responsible for the cost of the contract the manager engineering explained to us and say that his expenses will come at this point.  Like I told you before these expenses are not fixed to come at this time.	
816.  Chairman	Your comments are noted.	
817.  Rizvi	Okay thank you	
818.  Chairman	No no we come to the very crucial point which were the finances and we can make a clear report on our findings because it is clear at the end of the day 300,000 US was not accrued in the 14/15 financials.  That's truth number one, truth number two, who was responsible to making known that 300,000 US to the staff to their work, that's all we want	
819.  Rizvi	That's right now I explained to you who was supposed to know and tell them.	
820.  Chairman	You have the schedule.	
821.  Rizvi	The schedule of payments doesn't say what the dates are.	
822.  Chairman	Doesn't matter, but there was a US$300,000 that was supposed to be paid in 2014/15, there was 300,000 US that’s supposedly to be paid in 14/15.	
823.  Rizvi	The cost centre had never asked us to pay.	
824.  Chairman	Well the cost centre can be everything but you have a contract in front of you.	
825.  Rizvi	The contract is available for the manager engineering, he knows what has to be done in the contract, he is the cost centre.	
826.  Chairman	How can you blame the manager engineering when you are the CEO.	
827.  Rizvi	Because I rely on his expertise, because he is entrusted.	
828.  Chairman	The schedule of payment is right in front of you.	
829.  Rizvi	But I am not going to check and see the wires are working.	
830.  Chairman	The schedule of payments is right in front of you, all you have to do is give it to the finance so that they know. If it doesn't come up at that time they can accrue it.	
831.  Rizvi	No you are trying to, I am sorry chairman you are trying to point the finger and blame on me when I try to explain you the right thing.	
832.  Chairman	You should be ashamed of yourself.	
833.  Rizvi	I am not ashamed of what's happening.	
834.  Chairman	Oh yes of course everything that has been alleged you should be ashamed.	
835.  Rizvi	No.	
836.  Chairman	You should seriously.	
837.  Rizvi	No we don't have to dig into history.	
838.  Chairman	Will bring our interview to this very issue.  This is the most crucial issue that is affecting us all at the Board level, at management level and now in operations level.  We have confirmed and determined the fact that it's the 600,000 Tongan Pa’anga that affect the restating of our profit for 14/15 and according to the auditor that is a fundamental error.	
839.  Rizvi	According to the auditor can we go to the accounts and see. I don't have the accounts here, can you please go to the accounts and see on that adjustment what is, you said it's a fundamental error, can you go to the notes and check what is being written before I confirm what the auditor has written there.  I don't have the accounts here.  Can you show.  You check 15/16 what has been written on the prior-year restatement was.  What has been written.  You have told me it's a fundamental error.  Let's see what the accounts say.	
840.  Kelepi	Here.	
…		
844. Saia Fonua	Have you seen that one before Rizvi?	
845.  Rizvi	No that's why I'm asking it normally when they do a restatement they have to give the notes in the accounts.	
…		
847.  Rizvi	Okay here it is, changes in accounting policies, estimates and errors and it gives the breakdown of the workings.  The following components have been restated in accordance with the note No. 1 R and it's the breakdown it is the prior period error related to reclassification of support cost of 621,000 for the year expense to prior year since invoices raised by Huawei Technology are dated 2015, you said 2014, consequently the expense was reversed retrospectively in accordance with IAS 8 accounting policies estimates and errors.  Ok	
848.  Chairman	What is okay	
849.  Rizvi	Now that is what is being written they that reclassification to an error so that is a normal accounting practice what happens.	
850.  Chairman	I don't care about the normal accounting practice.  The fact is that	
851.  Rizvi	You can't say you don't care, you need to care these rules and regulations.	
852.  Chairman	I don't care about what is being said there (audited accounts), what I care is about the fact that you restated.	
853.  Rizvi	Now you allege me that I restated the accounts, you don't withdraw you said it's recorded here.  You stated that I restated.	
854.  Chairman	You know how to be quiet, you know how to be quiet.	
855.  Rizvi	Yes.	
856.  Chairman	You are getting on my nerves that's why I am actually getting things wrong.	
857.  Rizvi	Ok	
858.  Chairman	I am trying to say that in 2014/15 the accounts were prepared and it was during the time you were CEO, am I correct.	
859.  Rizvi	Accounts were prepared by the CFO and submitted to the Board.	
860.  Chairman	It doesn't matter during the time of you were the CEO is that correct yes or no.	
861.  Rizvi	Yes.	
862.  Chairman	And lower your voice, I will come over, lower your voice.	
863.  Rizvi	Come over.	
864.  Saia Fonua	Yeah we should.  Should I do the honours first.	
865.  Chairman	You know that's the easiest thing, it's very very easy, but I don't want to come and throw you out the window.	
866.  Rizvi	All right, I know what you are capable of.	
867.  Chairman	Oh you don't know what I am capable of, what was stated in 14/15 was 1.4M and then it was restated during the 15/16 period down to 800,000.  Now that is the concern.	
868.  Rizvi	It is been clearly stated and explained by the chief financial officer who prepared the accounts.	
869.  Chairman	In fact we paid a million dollars, who was going to pay back the million dollars.	
870.  Rizvi	What we paid.	
871.  Chairman	Over a million of dividend to government.	
872.  Rizvi	Ok will come to that one next, will finish this one, I have clearly explained to you what happened, who is responsible.  It's you to decide.	
873.  Chairman	We don't accept.	
874.  Rizvi	If you don't accept, but still I have explained.	
875.  Chairman	Your explanation is noted.	
876.  Rizvi	Noted fine that’s it.	
877. Saia Fonua	Chair can you note his explanation please.	
878.  Chairman	I think we are going overboard.	
879.  Rizvi	I have explained what has happened.	
880.  Chairman	Probably time to have a break.  Unless I go violent on issues not supposed to.  We'll call it a break.	

67.	After the break, the Chair said he had no further questions.
The Subcommittee’s report
68.	On 6 April 2017, the Chair of the subcommittee provided the Plaintiff with a copy of the subcommittee's draft report.  It had been approved by the subcommittee the day before and they intended to sign it before it went to the Board sometime the following week.  He noted that the combined ICT Board was expected to meet on 14 April 2017 to discuss the report together with any further submissions by the Plaintiff which were to be provided before 12:30 PM on 14 April 2017.  
69.	That same day, the Chair of the subcommittee emailed Steve Pickering, copying in the Chairman of the Board.  He wrote:
"As you know, we have completed our investigation regarding the restating of the TCC profit for the FY 2014/15 including other issues concerning the TCC CEO, Rizvi Jurangpathy.
You have stated to me that the error is a fundamental error, hence I would like your kind assistance in providing me with your view in writing.  My apologies but the recording that was made of our interview did not come out clean due to disturbing noise from the background.  Further, can you also provide me with your opinion on whether the fundamental error is serious enough to level a charge of gross misconduct on the person responsible.…"
70.	On 10 April 2017, Pickering replied:
"Please find attached the authority and standards applied for the prior year error.  The Board will now need to decide after investigation:
Whether the documentation was known - if so to whom?
Not recording the expense - who was responsible for this?
By not recording was this a wilful omission or simple mistake?
A wilful omission would in our opinion be serious and the Board should take advice on this."
71.	On 19 April 2017, the Plaintiff wrote to the Chair of the subcommittee expressing his disappointment with the draft report and raising a number of concerns.  They included that the Board had not afforded him natural justice or a right to be heard.  He said that he was not provided with any particulars of the charges or offences he was alleged to have committed.  He repeated concerns about not having been allowed to question the witnesses.  The report contained findings concerning witness statements that were never provided to the Plaintiff and that he knew nothing about.  Further, that the report had misstated answers provided by the Plaintiff during his interviews.  Further on, the Plaintiff complained that the draft report raised matters that were never given to him, nor was he made aware of certain evidence and statements about the report.  He considered that indicated a complete lack of good faith in dealing with the allegations in a matter in which he had asked to be given natural justice.  He therefore concluded that the report was unreliable and asked for an opportunity to address the Board with his lawyer. He also asked again for an opportunity to question the witnesses to show that the statements were unreliable and, in many cases, false.
72.	The Plaintiff was not afforded a further right to address the subcommittee or to address the Board at all.  The subcommittee finalised its report and tabled it before the Board.
73.	Again, in order to consider the Plaintiff’s complaints about his treatment during his interviews and the resulting report, it is necessary to recite a number of relevant passages from the subcommittee’s final report:
“… With regard to the financial accounting issues, the subcommittee suggested that the interviews be conducted in ascending order of responsibility, starting with the CFO, and then the internal auditor, then the CEO and then the members of the Board who approved the accounts.  The parties can be re-interviewed if any questions arise from interviews with subsequent parties.
…
Steve Pickering 
Partner with Ernst & Young.  He stated that the mistake in the 2014/15 Audited Financial Accounts was a fundamental error.  Further states that only the top management of TCC is responsible for such an error.
Points out that although it was not known to them (Auditors) at the time, there was a contract signed in 2013 between the Board of TCC and Huawei which included a schedule of payment.  It clearly states that payments for support services was to begin in year 2 of the contract (2014/15 FY) but was not being accrued so that it could be reflected correctly on the actual profit at the end of the 2014/15 FY.  This payment included the $600k TOP.
As a result the profit declared in the 2014/15 FY was incorrect and falsely reported to the Board and later to the shareholders.
This profit had to be corrected and restated after the 2015/16 Audited Financial Report was completed.  The restated profit after tax came down from 1.4 million TOP to only $800k TOP.
As a consequence, the dividend declared in the 2014/15th FY to be paid to Government was far greater than the actual profit achieved i.e. 1.5 million TOP paid to Government vs 800K actual restated profit.
…
Gladys Fukofuka
Chief Financial Officer of TCC.  Claims she knew nothing about the contract details with Huawei or schedule of payments.  At the same time, she did not receive the invoice from Huawei until well after the audit for the 2014/15 FY was complete.
…
Rizvi Jurangpathy
The CEO blamed the Chief Engineer for not providing the Accounts Department with details of work being carried out as per the contract with Huawei. 
The CEO claims it is the engineering section's responsibility to make known their progress of work carried out in regards to the contract with Huawei, so that the Accounts Department could make the necessary adjustments in the financial report.
Denied that it is the responsibility of the CEO.
However the CEO had the Contract, and he and the Chairperson of the Board at the time were the officers of TCC who had signed the contract and the subsequent purchase orders under it.
As the CEO was aware of the Contract and its terms (including the Schedule of Payment) it does seem that he should have brought this to the attention of the Accounts Department, but the Accounts Department through each of the Senior Accountant, CFO and Internal Auditor confirms that the schedule of payments was not known to them or brought to the attention of the Accounts Department at that time.
Also it would seem to be proper for the CEO to require that he would receive and review financial accounts for the company on a regular basis.  His contract of employment requires that he monitor company performance against budget.
If he received these accounts, and in the view of the committee he should have been ensuring that he did, then it would have been proper for him to question why the contract payments were not being accrued.
(Side Note: As further described in the final ToR(4) below, the CEO was paid his bonus of $20,000 based on the 2014/15 results of 2.1 million TOP gross and 1.4 million TOP net profit.  According to the external auditors, the error was a fundamental error, and as such, the bonus payment was based on the results that was restated and this is a fundamental error).
It must also be noted that, in the view of the Committee, this may also raise the question as to why the former Chairperson of the Board who signed the Contract and the PO's, and signed off on the accounts, and is an accountant by profession, did not raise a question as to why there had not been accruals for the contract payments.
…
FINDINGS OF THE SUB COMMITTEE
Based on the interviews conducted and documents reviewed the members of the subcommittee are of the opinion that:
…
The CEO is the most senior officer between the Board of Directors and the Management of TCC.
It is the duty and responsibility of the CEO to know about any contracts (particularly in the magnitude of $600,000) entered into by the Company.
The fact that the CEO chooses to blame the engineering department especially the Chief Engineer who has no relation to the payment schedules provided in the contract is astounding and suggests a dereliction of duties.  It is noted that the CEO did sign the contract and if he signed it he should have understood what he was signing.
Amongst the duties of the CEO under his employment contract is a requirement that he ensure appropriate recording and documentation of transactions and events for reporting purposes.
The CEO is also charged with preparing and recommending the annual budget, monitoring performance against budget and providing monthly and annual reports to the Board.
He is also required to manage the operational and financial resources of the Company in accordance with the approved budget.
He is required to manage all fixed assets.
He is required to liaise with the company's auditors.
He is given responsibility to ensure the Company’s systems and processes are efficient and consistent with best practice.
It is the responsibility of the CEO to manage the company's operations under the direction of the Board.  In our opinion the CEO should ensure that all Board decisions and contracts entered into by the Board on behalf of the company are given proper effect.  The bill of $600,000 during the 2014/15 FY but was not accrued in the same period so as to reflect the true balance of the company profit after tax has misled the Board and the shareholders to accept the dividend payment estimated out of an incorrect profit result.
The payment of 1.5 million TOP to Government far exceeded the restated profit of $800,000.  As a result the true dividend to be paid to Government would have only been $400,000 from an actual restated profit of $800,000.  As such the company had overpaid the Government with 1.1 million TOP as dividend.
The fact that the CEO actually profited from the error (his bonus was paid) is, in the opinion of the Committee, not acceptable.
In the opinion of the Committee the terms of the CEO employment contract currently employed by the Company to address these matters, but the CEO must meet these requirements if situations such as this are to be avoided.
It does seem to be, in the view of the committee, the need for closer liaison between the CEO and the other senior management staff.  Weekly senior executive meetings with all senior managers and heads of department should, in our opinion, be taking place to make sure, as best as possible, all senior managers and department heads know what the others are doing and that goals are met together. …”

The Board’s decision to terminate
74.	On 21 April 2017, a special meeting was held of the ICT Shared Board to consider the subcommittee’s final report.  The participants of the meeting included the Chairman of the Board and the other three directors who constituted the subcommittee. The minutes of that meeting record, relevantly: 
“… Mr Fusimalohi reported that the CEO had failed to answer the crucial points or the crux of which the report has reached which was basically the financial - that form the core of the whole Report; and whether the issue constitutes to a level of penalty that could add up to the termination of employment.  He went on to say that, CEO’s response focused solely on the letter of petition which from the committee's point of view could either go in favour of him or the staff.
…
Referring to the financial issue, and from the Auditor's point of view - the subcommittee confirmed one specific issue relating to the reasons for the omission of the 600K.  Apparently the 600K invoice had cost TCC TOP$1.1 million - the amount of dividend paid to the Government and the 2014-2015 financial year; and how it was calculated was based on an initial (declaration) of TOP$2.1 million Net profit.  Mr Fusimalohi further explained that according to the Government Policy on dividend payment - over 1 million thresholds Government expects two thirds payment; and below 1 million threshold Government expects 50% hence calculation was based on the TOP $2.1 million net profit; and as such TOP 1.5m was stated to Government as dividends.  During the 2015-2016 auditing, TCC was advised that the TOP 600K did not belong in the 2015-16 fiscal year therefore listed back as expense liability for period 2014-2015; as a result TOP600K would have to be taken from a revised net profit of TOP$1.4 million within the actual net profit from TOP2.1m initially, to TOP1.4m and further down to 800K hence the actual restated profit for 2014-2015.
The Report disclosed the consequence of the revised restatement - that is, dividend profit of TOP1.5m paid to the Government was based on TOP2.1m at an initial [declaration] of profit.  It was concluded that had the omission forgone actual payment would have been only 800K; and TCC would have paid Government a dividend of only TOP400K.  In sum, TOP400K from TOP$1.5m dividend payment to the Government had cost TCC TOP1.1m and having an adverse impact on the cash flow which resulted in the company seeking an overdraft of TOP2.0m.
Referring to the Auditor's Report several issues were identified: 1) was this omission known or not?  Apparently the Report stated that the Accounts department through CFO, Auditor, and Senior Accountant claimed they knew absolutely nothing of the schedule of payment signed on the Contract between TCC and Huawei during 2013-2014 financial year.
…
It was also reported that had Vaihoi, Gladys and Teisa known about the contract, they would have accrued those payments to reflect the true balance at the end of the year.  Unfortunately, all confirmed that it was the first time for each to sight the contract during the interview as well as the schedule of payments. Mr Fusimalohi went on to say that Vaihoi who was the person responsible for accruing any payment did not realise it until 2015-2016 period; and budget compared to the actual did show a major difference of TOP$600K in which he did not know what to do with it hence put it under the recoverable asset (until) advised by the Auditor to take it back to prior year.
This has caused a massive difference in the Net profit and also causing a big error in the payout. Mr Fusimalohi went on to say that such mistake is considered serious.  The Auditor had termed it as a Fundamental Error - described under International Accounting Standard Part 8 section 1 as - omission and misuse of information; an act of fraudulent.  In practice, the former Chairlady and CEO were the ones who signed the contract; they were the first to know about the schedule of payment.  And between the Board to the Management and Staff it is the duty of CEO to make known any contract factor in [sic] by the Board on behalf of the Company. In total, the Committee believe that everyone knew there was a contract with Huawei but did not know the details.
Referring to the schedule of payment Mr Fusimalohi reported that 4 invoices were received in February, March, April and May 2014-2015.  That is, invoice received in Feb was due in March, invoice received in March was due in April; invoice received in April was due in May and invoice received May was due in June.  Hence the raised query as to why the Chairlady signed off the accounts of 2014-2015 without clarifying and verifying the accrued payment of the contract.  Consequently the Committee believed that this ultimately adds up to one simple fact: the CEO employment contract can only be terminated based on gross misconduct. …
2.2 Comments and Discussions of the Board
Mr Chairman referred to those invoices raised by the Auditor then asked to whom those invoices were sent to. Mr Fusimalohi responded stating that no one in the Accounts department had received or seen them.  However, PR order was signed in August 2015 by the former Chairlady and CEO.  He then pointed out that if the PR was signed in August 2015 for 2014-2015 then Gladys and Vaihoi were correct in saying that they did not receive those invoices until after the auditing took place.
Mr Chairman again questioned whether those invoices were passed on to TCC and Mr Fusimalohi replied that he had received confirmation from Oiyang of Huawei that all invoices were promptly sent directly to the CEO. Mr Fusimalohi was of the view that Huawei will not be so reckless with such invoices as they all add up to TOP600K.  It was also confirmed that both CEO and the former Chairlady signed those PR orders then passed on to Finance well after the audit.  Likewise, from the interview meeting, Gladys had confirmed that those invoices were not received until well after the auditing took place; hence it being picked up by the Audit otherwise she would have accrued them.  All in all the Committee had considered such action as wilful omission - as it was brought to the attention of the company of which the CEO is the head of the Department.
Mr Chairman also reported that the 2014-2015 Annual Report had the former Chairlady and CEO declare a net profit after tax of TOP$2.1m; which was corrected by the Auditor to be TOP$1.4m and not TOP$2.1m; and again further amendment to TOP$800K.  He went on to say that this wilful action has put TCC in jeopardy in terms of financial liability and as a result TCC had to go to the bank and increase its overdraft by TOP$2.0m.
…
The Subcommittee Report also disclosed a list of all the CEOs achievements and target for 2014-2015; where 99% were not met yet his entire bonus was fully awarded.  The Committee was of the view that the figure from TCL share could have helped the CEO achieve all his targets.  Likewise, Mr Chairman pointed out that if they had used a figure in 2014-2015 then they should have used the same figure for 2015-2016; and also there was a query of calculating out on the 10%  Tonga Cable share.  In total, Mr Chairman was of the view that inflating the numbers had taken place to help CEO financially to receive his full bonus; and also noting that no one else in the company received any bonus except himself.
	       ….
2.3 Comments and Discussions of the Board
…
With regards to the financial matters - two issues were raised: 1) the question of why the former Chairlady failed to raise those delayed invoices given she was the one who signed the contract and that she is an accountant by profession.  2) failure on her part to raise those accruals for the contract - she was fully aware of the scheduled payment.
Mr Fusimalohi informed the meeting that having reported the subcommittee's findings and in his capacity as a full member of the Board he hereby recommends to terminate the CEO employment contract based on gross misconduct.  …”
[emphasis added]
75.	The Board then unanimously resolved, among other things, to terminate the Plaintiff’s employment contract.
76.	On 21 April 2017, the Chairman of the Board wrote to the Plaintiff (received on the 22nd) advising that the combined ICT Board had unanimously decided to terminate his employment contract with immediate effect.  The termination was stated to be  pursuant to clause 18.2 of his contract, and that the Board had found that the Plaintiff had acted with "gross misconduct" in his performance, and accordingly TCC would not be paying him any benefits otherwise provided by clause 18.2.  
77.	The Board's findings were described as having been based on an internal investigation, prompted by a directive from the Shareholder and a company-wide staff petition that found: [relevantly]
“(i) Incorrect (overstatement) declaration of the net profit 2014/15 FY based on wilful omission of pertinent information.
(ii) Receiving a bonus payment (profited) of $20,000 based on the incorrect declaration of the net profit for 2014/15 FY.
(iii) Misleading report to the Board and Shareholders of net profit and a declaration of an inflated dividend of 1.5 million TOP that resulted in the financial difficulties currently facing the company.”
78.	The Chairman stated that the Board’s decision was made after due consideration of the subcommittee’s report together with ‘all the Plaintiff’s responses’ including his further submission received on 19 April 2017.
79.	The Plaintiff was required to vacate his residence within seven days, return the company vehicle and all benefits and entitlements were ceased immediately including his mobile phone and internet services.
80.	On 28 April 2017, the Plaintiff commenced these proceedings.
LIABILITY 
81.	I turn now to consider the evidence and submissions of the parties on liability.
Evidence
82.	The Plaintiff gave evidence and called Gladys Fukofuka. The Defendant only called the Chairman of the Board at the time, Tapu Panuve.
Rizvi Jurangpathy 
83.	During his evidence at trial, the Plaintiff affirmed the contents of his brief of evidence and elaborated upon a number of aspects of his evidence by reference to various documents in the trial bundle. 
84.	The Plaintiff made the following complaints about the manner in which the subcommittee undertook its investigation and how he was treated during his interviews:
(a)	he was not allowed to question any of the other witnesses to identify to the subcommittee contradictory statements given by those other staff members;
(b)	his legal counsel was not allowed to make submissions during the investigation;
(c)	despite the Defendant’s own terms of references including that he would be accorded natural justice and an opportunity to be heard, he said he was not provided either;
(d)	he was not told the details of the financial statements issue and what allegations were to be made against him before his interviews;
(e)	he was not provided with requested relevant financial and other documents prior to his interviews;
(f)	the subcommittee’s conduct was not fair or impartial and it lacked good faith;
(g)	he was physically threatened during his interviews, and yelled at by the Chair of the subcommittee which affected he said affected his ability to answer questions;
(h)	on several occasions, the Chair stated he did not care what the Plaintiff’s response was and did not give him a full opportunity to address the allegations; 
(i)	in some instances, he said the Chairman put matters to the Plaintiff which were not supported by evidence from the interviews of other staff members;
(j)	the Chair accused him of being arrogant and disrespectful during the interviews, as a result of which the Plaintiff felt that the Chair exhibited bias against him and he felt intimidated when answering further questions; and
(k)	certain statements by members of the subcommittee gave him that the subcommittee had already made up their minds.  An example of that was where the Chairman told him he should be ashamed.
85.	In relation to that part of the interview where the Plaintiff was being threatened by the Chair and Mr Fonua, the audio recording of that part of the interview revealed laughing by all concerned towards the end of those exchanges.
86.	When asked whether his treatment through the interview prevented him from fully answering the questions in relation to the financial statements issue, the Plaintiff said that he could not then think of anything further he would have wished to say but nonetheless felt intimidated by the treatment.
87.	In relation to the Plaintiff’s explanation as to why the four invoices were not recorded in the 2014/15 financial year, in his brief of evidence [79], the Plaintiff maintained his position that the recording of the payments in the 2015/16 financial year was consistent with when the actual payments were made by the company to Huawei. He denied any misconduct on his part with regards to the financial accounts having been allegedly misstated or that there was any misstatement in the accounts at all.
88.	During his evidence at trial, the Plaintiff elaborated upon the circumstances which led to the four invoices being recorded after the end of the 14/15 financial year.  He explained, by reference to historical documents and emails in evidence, that during February and March 2015,  he struck an agreement with the relevant Huawei representative that instead of the full maintenance and support fee for year 2 of US $810,365.26 being due and payable at the beginning of that year (March 2015), the total fee would be broken up into 12 monthly instalments with separate invoices being issued by Huawei each month.  That resulted in the original purchase order being cancelled and the issuing by Huawei of the four invoices in March, April, May and June 2015 each for 1/12th of the total maintenance fee for that year. The remaining eight invoices were issued in the 15/16 financial year.  The purpose of the exercise, the Plaintiff explained, was to aid the company's cash flow, for if the whole of the annual fee had to be paid in the 14/15 financial year, the overall impact on net profit would have been much worse. When asked why he did not bring the monthly instalments agreement to the attention of the Board, he said that at the time, it was "just a cash flow issue…too micro".
89.	The purchase order for the full year’s maintenance fee was reissued on 24 August 2015.  The Plaintiff explained that after the new network came online, there had been an internal restructuring of cost centres.  Originally, the fee was to be charged to cost centre 4151/55. The replacement purchase order identified the relevant expense account as 4151/63.  The change in cost centre, as a result of the manager of engineering restructuring that division, was approved by the CFO.  A purchase requisition in relation to the maintenance fee of the same date was raised and approved by the manager of engineering. 
90.	The Plaintiff said that the monthly invoice agreement was discussed with the engineering division and with other management at the time of preparations of budget and discussing cash flows. During cross examination, he confirmed that payments under the Frame Contract were discussed with engineering early on and that the project manager advised that the start of maintenance Year 2 would be mid-March 2015. 
91.	There were delays in payment of the Huawei invoices.  By 30 June 2015, none of the four invoices have been paid.  When asked why, the Plaintiff said that he believed Huawei sent the individual invoices to engineering. In that regard, he referred to an email on 3 March 2015 from the new network project manager, Sitani Akolo, to the Huawei representative, into which the Plaintiff and the manager of engineering were copied. In it, Sitani asked the Huawei representative to send him the invoices for the maintenance so that they could raise the purchase order.  There was no further evidence adduced at trial, either viva voce or documentary, to explain whether the invoices were actually sent by Huawei to engineering direct or to the project manager, or both.  The Plaintiff was adamant that he did not receive them. It seems clear however on the evidence that the invoices were not either separately or concurrently sent to the accounts department at or about the time that they were issued. 
92.	The Plaintiff continued to explain and that only after engineering had approved each invoice would they then be sent to finance for recording and payment. At the relevant time, the Plaintiff said he was not aware of the delays in engineering forwarding the approved invoices to finance because the payables staff handled those matters.
93.	The Plaintiff said that when he enquired of the senior accountant as to why the four invoices were not recorded in the 14/15 financial year, he was told that the invoices were only received by the accounts department in August 2015 after approval by engineering.  That was the first time the matter came to light.  The accountant saw that the amount of the invoices exceeded the budget for that division.  That triggered an enquiry to find out what had been provided for in the previous year.  
94.	The Plaintiff said that a decision was then made between himself, the CFO and the senior accountant to "park" the amount of the invoices outside the 15/16 year operating expenditure in a suspense account described as "recoverable expenses" and to leave it for the auditors to advise which would occur in December 2015. They could not ‘redo’ the 14/15 accounts because they had already been signed off.  He could not recall whether he raised the issue with the Board of the time.  He did note though that the issue was highlighted in the balance sheet for January 2016 (not in evidence) when the management accounts were presented.  At that time, he said, the Board did not raise any questions.
95.	The Plaintiff said that he tried to explain all this to the subcommittee during his interview.
96.	The Plaintiff denied the suggestion made by the Chair of the subcommittee during his interview, that according to the senior accountant (Vaihoi), the accounts department knew nothing of the Frame Contract or the payments due under it. The contract was one of the biggest TCC had ever signed and it involved a loan from Westpac of some $17 million.  Regular milestones were required to be paid.  Therefore, he said, accounts had to know about the contract because they were the ones who were making or effecting the substantial payments pursuant to it. He added later that if particular personnel within accounts were not aware of the details of the Frame Contract itself, they were certainly aware of the Schedule of Payments because it had to be used to raise purchase orders. 
97.	In relation to the dividend paid by TCC to the government of $1 million for the 14/15 financial year, the Plaintiff did not agree that there was a particular rule in place in relation to what percentage of overall net profit was to be paid to the government shareholder as dividends.  He said that the level of dividend depended on what the government required from year-to-year.  The dividend was paid after consultation between government and management.
98.	In relation to the restated accounts, which the Plaintiff said he only saw during discovery in this proceeding, he confirmed that the decision to suspend the amount of the invoices in a recoverable expenses account for treatment by the auditors was consistent with IAS 8 accounting policy for prior period errors, as referred to by the auditors in the restated accounts.  The Plaintiff described the relevant invoices by reference to the definition of ‘prior period error’ within the said accounting policy as not being available to finance at the relevant time because they had not then been approved and forwarded to finance by the engineering department.
99.	The Plaintiff was taken to that part of the subcommittee’s report which referred to information from Steve Pickering.  He said he was never informed of any such information at the time that he was interviewed or any other time during the investigation.  None of the issues raised by Pickering were ever put to him during his interviews.  He said that the auditors had to have been aware of the 2013 Frame Contract with Huawei, given the sizeable payments and borrowings recorded since in respect of it.  They were therefore in a position to raise any alert in the 14/15 financial year in respect of the fee for maintenance support and whether it should have been accrued.
100.	In relation to the $20,000 bonus paid to the Plaintiff for the 14/15 year, he said that when he was chief financial officer, a table of metrics was used to determine the level of any bonus paid.  However, when he became CEO, the issue of his annual bonus was a matter totally within the discretion of the Board.  He was not privy to their decisions.  He was not aware of whether any of their decisions in relation to his bonus were tied to any particular profit point for the company. 
101.	During cross-examination, the Plaintiff confirmed that he was responsible for ensuring internal systems for accurate financial reporting.  He said that that also involved the chief internal auditor and that controls were reviewed and regularly checked with each department to identify any issues.  His role as CEO also involved overseeing the CFO who produced regular financial reports.  The Plaintiff monitored those reports on an ongoing basis as against budget forecasts and kept the Board informed as to how the company was tracking with its business plan. He said while there had been general delays in payments to various suppliers, he was not aware of any previous issues in relation to delays with invoices being approved by a particular department before being sent to finance.  
102.	The Plaintiff's evidence was uncontradicted and unshaken during cross-examination.  His explanations in relation to the financial statements issue were consistent throughout.  My observations of the Plaintiff during his evidence led me to the view that he was an honest and forthright witness, who had an almost encyclopaedic knowledge of the history of the matter and was at pains to assist both counsel and the court in identifying and understanding the substantial documentary evidence.  I accept the Plaintiff's evidence in full.
Gladys Fukofuka
103.	Ms Fukofuka is currently employed as the Deputy CEO of the Ministry of Finance.  In 2001, she was appointed Manager of Finance of the then newly formed TCC and took leading roles in the finance department over the years.  She was elevated to the position of Chief Financial Officer and remained in that role until she left the company in March 2018. 
104.	In relation to the financial statements issue, Ms Fukofuka confirmed that the payments to Huawei of $621,630 in respect of the four invoices were made in the 2016 financial year and that there was no mistake about those payments.  She disagreed with the subcommittee's assertions that there was something wrong with the payments and that they belonged in the 14/15 financial year.  She said that because the payments were made in August 2015, after the close of the 14/15 financial year, and the end of year accounts had already been forwarded to the auditor, the payments had been correctly recorded.
105.	She further rejected any suggestion of fraud or other wrongdoing because the payments were made in accordance with the sign off by the engineering department for acceptance of work performed by Huawei, and that sign off was a requirement of payment.  In other words, the engineering department had to confirm, according to the Frame Contract, that the work had been completed before payment by finance was to be made.
106.	She said that when she was interviewed, the subcommittee members refused to accept that there was no evidence of any fraud or deliberate misstatement of the accounts.  She added that did not know why the Plaintiff was charged with the allegations when he was not responsible for the actions that caused the payment to be made in the next financial year.
107.	During cross-examination, and questions from the bench, Ms Fukofuka confirmed that the relevant invoices were received by the finance department in August 2015.  She also explained that the treatment of the relevant invoices was not the first time such a practice had occurred.  She said there were standard procedures to put late invoices, regardless of value, in a suspense account called "recoverable expenses" for further instructions by the auditors and that that had happened on a number of occasions in the past.  On those occasions, she said, no one within the company had raised any allegations of misconduct. 
Tapu Panuve
108.	Mr Panuve was appointed director and Chairman of the Board of TCC on 1 October 2015. He ceased those positions on 31 July 2019.
109.	In his brief of evidence, he confirmed most of the chronological and uncontroversial events referred to in the background above. However, in relation to the Plaintiff's evidence, shared by Ms Fukofuka, that approval from the engineering department was required before the relevant invoices were sent to the finance department for payment, Mr Panuve opined that engineering sign off was only necessary for payments to Huawei in relation to the equipment and technical components; not for the ongoing maintenance services and software upgrades.  His evidence (in his brief and during the trial) did not elaborate upon the source of his understanding, whether it was a matter contained in an operating procedural or internal policy or otherwise. 
110.	Mr Panuve described the financial statements issue as a "fundamental error in the preparation of the company's accounts in 2014/2015".  He said the error had caused significant overstatement of the company's profit for that year which resulted in an inflated dividend being declared and paid to the shareholder.  As a result of the error, TCC had been forced to borrow, at significant cost, in order to continue the operations of the company, which included the dividend paid to government. In that regard, he said the Board had relied on the CEO's recommendation as to what the amount of the dividend should be.
111.	The minutes of the Board's meeting on 25 August 2015 - at about the time the four invoices were received by the finance department -  record relevantly:
"5.3.3 CEO reminded the Board of the declaration of dividend and suggestion for the Board to discuss it with the Shareholder in their AGM.  CEO advised that the dividend budgeted was for 1.5 million however is at the final discretion of the Board.  Chairlady was of the view that this would depend on the CEO's recommendation and he would know best financially which the Board would then rely on to make a final decision.  It was to be noted however that the AGM may not necessarily include this current Board thus the CEO's query whether the Board would like to discuss it now or leave it to the Shared Boards.  Following deliberations, CEO was confident that the budgeted dividend could be reached.  The Board therefore agreed to proceed and declare the $1.5 million as a dividend.  It was to be noted that there was a possibility that the Shared Board can make their own decision.  It was to be noted also that the proposed declared dividend had already been included in the Company's business plan which was already approved.  The Board advised CEO that it would be up to him and Management to propose how the dividend payments can be made."
112.	In reaching its decision to terminate, Mr Panuve said that the Board considered that it was the CEO's responsibility, consistent with the duties listed in his job description, to ensure that the information provided to the auditors was correct and that this had not been done.  More specifically, by the terms of his contract, the CEO was required to keep the Board fully informed on all aspects of the company's operational and financial affairs, and on all matters of significant relevance to the company.  The CEO was also contractually required to ensure appropriate recording and documentation of transactions and events for reporting purposes, prepare and recommend the annual budget, monitor performance against the budget and report monthly and annually to the Board.  He was to manage the operational and financial resources of the company in accordance with the approved budget and ensure that the company's systems and processes were efficient with best practice.  
113.	He considered that the ‘fundamental nature and magnitude of the accounting error simply could not be denied and that it had a direct negative impact on TCC's bottom line’.  The Board felt that this was inexcusable on the part of the CEO, particularly given his accounting and financial management background and qualifications, and his six years as chief financial officer of TCC.  Further, based on the incorrectly overstated declaration of net profit, the CEO had received a $20,000 bonus.  The CEO, he said, would not have been entitled to receive that bonus based on the subsequently restated profit.
114.	Mr Panuve said that the Board considered everything contained in the subcommittee’s report and came to the conclusion that the CEO was no longer capable of carrying out his role.  
115.	During cross-examination, Mr Panuve explained that he did not participate in the subcommittee at all other than deciding its composition and approving its terms of reference.  He left the members of the subcommittee to their task.  He only received the final report.  He was never given the underlying witness statements or records of interview of the other staff members or that of the Plaintiff.  
116.	When asked why the Board did not give the Plaintiff an opportunity to address it as requested in his letter of 19 March 2017, Mr Panuve said that the thinking at the time was that the subcommittee was the proxy for the Board and that therefore the Plaintiff had been given an opportunity to be heard by the subcommittee.  He discussed the Plaintiff’s request with the Chair of the subcommittee at the time. The Chair confirmed to Mr Panuve that the Plaintiff's concerns had been addressed and that he had been given a ‘fair go’ in all the circumstances. Mr Panuve said he had to rely on the accuracy of the Chair’s information. 
117.	Mr Panuve was taken to the email exchanges between the Chair and Steve Pickering. He accepted that Pickering's response on 10 April 2017, four days after the subcommittee released its draft report, simply raised a number of questions including whether the 'fundamental error' in the 2014/15 accounts concerning the late invoices was to be regarded by the Board as a "wilful omission". Mr Panuve confirmed that neither he nor any other member of the Board ever received any opinion from the auditors that the error was, in their view, a product of wilful omission.  The only time that was raised was in the minutes of the Board meeting on 21 April 2017, when the Mr Fusimalohi said: "All in all the committee had considered such action as wilful omission - as it was brought to the attention of the company of which the CEO is the head of the department." Mr Panuve was not aware of any other supporting evidence for that conclusion by the Chair of the subcommittee, which became an integral part of the reasons for the termination of the Plaintiff's employment on the grounds of gross misconduct.
118.	Mr Panuve was also asked to compare what the subcommittee had reported in relation to their interview of Gladys Fukofuka, where it was recorded that she claimed she knew nothing about the Frame Contract details or Schedule of Payments, against her actual account to the subcommittee. Mr Panuve accepted that Ms Fukofuka’s statement did not actually contain any statement that she knew nothing about the Frame Contract or Schedule of Payments".  The same was observed in respect of two subsequent interviews with Ms Fukofuka as recorded by the subcommittee. 
119.	He was then taken to that part of the minutes of the Board meeting on 21 April 2017 where the Chair reported that a number of senior staff, including Gladys, said that had they known about the Frame Contract, they would have accrued the payments to reflect the true balance at the end of the year, and that she and the others had confirmed that the first time they had sighted the contract and schedule of payment was during their interviews. Mr Panuve again accepted that that account was not consistent with the actual statements by Ms Fukofuka upon which the subcommittee had purportedly based its report to the Board.
120.	When he was taken to the record of interview between the subcommittee and the Plaintiff, Mr Panuve said that he knew about the yelling and other threats by the Chair towards the Plaintiff.  He described them as ‘unfortunate’ and said that if the Plaintiff had been offended, he apologised.  He was not aware that the Plaintiff had not been given documents he had asked for prior to or during the interviews.  At the time, Mr Panuve considered that, by all accounts, apart from the verbal altercations, he thought that the investigation undertaken by the subcommittee and its interview of the Plaintiff was satisfactory and he knew of no reason to stop it.
121.	When taken back to the minutes of the Board's meeting on 21 April 2017, Mr Panuve agreed that the Chair’s statements to the Board did not include any description as to how the error was thought to have occurred or who was at fault.  It was also not consistent with that part of Ms Fukofuka’s first statement to the subcommittee where she said: “The invoice from Huawei received very lately, and they left it into another account until the auditor’s recommendation for the treatment of this amount”, which was not referred to in the subcommittee’s report.
122.	He also accepted that the restated accounts did not contain any reference to any fraudulent conduct having been identified by the auditors.  He confirmed that at no time did the Board receive any advice or opinion from the auditors that the ‘error’ was due to dishonesty, wilful omission or fraud.  
123.	Mr Panuve also agreed that during the meeting of the Board on 21 April 2017, the Chair of the subcommittee did not suggest that the Plaintiff himself was responsible for the invoices not being recorded until after the end of the 14/15 financial year.  Further, there was nothing in the information reported to the Board to the effect that the Plaintiff did or did not do anything in that regard deliberately.  
124.	In relation to the statement by the Chair that the subcommittee considered 'such action as wilful omission', Mr Panuve agreed that that was not stated as being a wilful omission on the part of the Plaintiff. He also agreed that there was no evidence that the Plaintiff had directed finance not to enter the invoices, assuming they were received by finance prior to the end of the 2015 financial year.  
125.	In that regard, Mr Panuve said that the Chair had told him that the Huawei invoices had been sent to the Plaintiff. He agreed though that the subcommittee's report did not contain any mention of Huawei saying that it had sent invoices to the Plaintiff. He also was not aware of the emails by which the project manager had asked the Huawei representative for invoices to be sent to him.
126.	When asked about the apparent delay in receipt by finance of the relevant invoices from the engineering department, Mr Panuve said that engineering should have let finance know when they received the invoices. However, he also agreed that they would not be recorded for payment until they had been approved. 
127.	When he was shown the emails by which the Plaintiff agreed with Huawei for the maintenance fee to be invoiced by monthly instalments, Mr Panuve said that that was the first time he had heard about it. He said that it should have been referred to in the subcommittee’s report.  He acknowledged that the agreement for monthly instalments would have been beneficial to the company's cash flow.
128.	In relation to the 14/15 dividend paid to government, Mr Panuve said that the matter was discussed and decided at the company AGM in December 2015.  He said that the prior Board had already discussed it with the Minister for Public Enterprises and a decision had already been made to pay the dividend.  He said even though the accounting anomaly had by then been identified, the decision to pay the higher dividend was still carried out.  He said that his “hands were tied”.  He agreed, therefore, that if there was any financial harm to the company in needing to increase its overdraft to pay the dividend, it was caused by the decision to pay the higher dividend despite knowledge of the accounting error and inflated profit.
129.	When asked to consider the above matters and others amounting to discrepancies, anomalies or inconsistencies between the evidence actually gathered by the subcommittee and it report and recommendations to the Board, Mr Panuve agreed that the Board had not been apprised of all the facts, and that any responsibility on the part of the Plaintiff for what occurred could probably at best be characterised as gross negligence or incompetence. However, he agreed that if gross misconduct involved a level of dishonesty, what had occurred was neither misconduct or dishonest.  
130.	He could not recall why the Board had not originally just decided to terminate the Plaintiff's employment for convenience or without cause in accordance with the first limb of clause 18.2 of his employment contract.  He concluded his evidence by saying that if he knew then what he was shown during his evidence, he would have voted to terminate without cause.
Submissions
Plaintiff
131.	The Plaintiff relied on the Court of Appeal decision in ‘Ilangana v Westpac Bank of Tonga as support for the implication in the Plaintiff’s employment contract of the pleaded terms of good faith, mutual trust and confidence. 
132.	In the UK Court of Appeal decision in Malik v Bank of Credit and Commerce International SA, Lord Nicholls described the requirements of mutual trust, confidence and good faith as to the effect that:
“… the [employer] would not, without reasonable and proper cause, conduct itself in a manner likely to destroy or seriously damage the relationship of confidence and trust between employer and employee.”
133.	Mr Edwards submitted further that, in the present case, ‘each party had an obligation not to do anything, whether directly or indirectly, to mislead or deceive the other or that is likely to mislead or deceive the other’. That meant that where, as here, the subcommittee were proposing to make a decision that would or was likely to have an adverse effect on the continuation of the Plaintiff’s employment, it had an obligation to provide him with all relevant information and an opportunity to comment on that information before any decision was made.
134.	The Plaintiff submitted that the Defendant breached those obligations in the manner in which it, through its subcommittee, carried out its investigation, how it treated the Plaintiff during the investigation and his interviews, how it compiled its report relative to the underlying source information it had gathered from various other employees, the subcommittee’s recommendations to the Board and the Board’s ultimate decision to terminate for gross misconduct. That, he submitted, required the Court to undertake an objective assessment both of the fairness and reasonableness of the procedure adopted by TCC when carrying out its inquiry and of its decision to dismiss the Plaintiff. 
135.	The Plaintiff submitted that the Defendant’s breaches included:
(a)	failing to afford the Plaintiff natural justice;
(b)	refusing to allow the Plaintiff to address the Board;
(c)	failing to provide the Plaintiff with the exact details of the allegations against him;
(d)	improper treatment during the Plaintiff’ interviews and acting in bad faith by the Chair:
(i)	refusing to give the Plaintiff the audited financial statements of 2015-16, where the restatement of 2014-15 are mentioned; 
(ii)	stating he did not want to hear what the Plaintiff had to say knew about the profit that was restated for 2014-15;
(iii)	stating that he didn’t care if the Plaintiff denied the allegation;
(iv)	stating that he was right and telling the Plaintiff to keep quiet;
(v)	stating that he didn’t care about normal accounting practice;
(vi)	stating that he didn’t care what was stated in the audited accounts;
(vii)	threatening to throw the Plaintiff out of the window;
(e)	including ‘apparent faults and defects’ in the subcommittee’s draft findings; 
(f)	failing to consider the Plaintiff’s comments on the draft report;
(g)	refusing to correct the errors in the report identified by the Plaintiff; and
(h)	placing the ‘defective report’ before the Board for its consideration.
136.	The Plaintiff submitted that the members of the subcommittee did not undertake their investigation with an open mind and failed to assess the relevant evidence in a fair and balanced way.
137.	The Plaintiff submitted that the alternative claim of wrongful dismissal required an examination of the facts and evidence before the Defendant to ascertain whether they were sufficient to reasonably support a finding of gross misconduct. In that regard, the Plaintiff submitted that misconduct is only sufficiently serious to warrant summary dismissal if it ‘undermines the relationship of trust and confidence between employer and employee’: Mbubaegbu v Homerton University Hospital NHS Foundation Trust, relying upon the following passage in Neary v Dean of Westminster:
“22. … whether the conduct complained of is such as to show the servant to have disregarded the essential conditions of the contract of service’… whether that conduct was of such a type that it was inconsistent, in a grave way - incompatible - with the employment in which he had been engaged as a manager’. … when his conduct is such that it not only amounts to a wrongful act inconsistent with his duty towards his master but is also inconsistent with the continuance of confidence between them’… whether the conduct of the employer ‘constituted a breach of the implied obligation of trust and confidence of sufficient gravity to justify the employee leaving his employment … conduct amounting to gross misconduct justifying dismissal must so undermine the trust and confidence which is inherent in the particular contract of employment that the master should no longer be required to retain the servant in his employment.” [citations omitted]
138.	But if the findings are predicated upon false assertions, then, the Plaintiff submitted, the decision will always be flawed for the reason that the basis for termination was a misleading report and false findings. The Plaintiff submits that on any objective assessment of the facts, TCC did not have a sufficient and reliable evidentiary basis for concluding that the Plaintiff had acted inappropriately or was guilty of misconduct. A fair and reasonable employer would have ensured that, in light of the various inconsistencies and errors identified in the subcommittee’s report, further inquiries ought to have been carried out. Further, a fair and reasonable employer could not have concluded that the Plaintiff had been guilty of the alleged misconduct had the report and recommendations been accurately prepared and presented. 
139.	The Plaintiff submitted that he was wrongly dismissed because there was no evidence to support a finding of ‘gross misconduct.’ The Plaintiff was not responsible for the invoice being forwarded late to the finance department from engineering. In the absence of any direct evidence from the Defendant, and where the evidence clearly established no deliberate act by the Plaintiff, nor any intent to act dishonestly, the Defendant’s termination for gross misconduct was unsupportable, unfair and wrong. 
Defendant
140.	TCC submitted is that it was entitled to terminate the Plaintiff’s employment contract in the manner it did on the grounds that the Plaintiff was guilty of gross misconduct. 
141.	In also referring to Ilangana, and the reference therein to Malik, Mrs Stephenson noted that the Court of Appeal was unable to consider the question of the application of the relevant implied term to contracts of employment in Tonga since in that case, the terms had not been pleaded or raised on appeal or below. 
142.	Mrs Stephenson submitted that TCC could best be described as a ‘quasi-public body’ in that although it is an entity governed by the provisions of the Public Enterprises Act and having as its sole shareholder the government of Tonga, its principal objective as mandated by the Act is to operate as a successful business and, to that end, to be as profitable and efficient as comparable businesses that are not State owned. She submitted therefore that TCC is not strictly a public body performing only public functions to which the principles of natural justice traditionally apply. 
143.	The Defendant did not dispute that where employees are employed under a statutory scheme, then the common law in Tonga is clear that the principles of natural justice apply to that employment relationship. However, counsel was not aware of any case in Tonga where such natural justice principles have been extended to also apply to private employment contracts. She questioned whether it is appropriate for private sector employers to be held to the same requirement to comply with principles of natural justice as, for example, a statutory body performing a purely public function? 
144.	The Defendant referred to the decision in Marlborough Harbour Board v Goulden  which was decided prior to the introduction of employment legislation in New Zealand in 1987. There, the Court of Appeal observed: 
“the position has probably been reached in New Zealand where there are few, if any, relationships of employment, public or private, to which the requirements of fairness have no application whatever. Very clear statutory or contractual language would be necessary to exclude this elementary duty.” 
145.	The Defendant therefore accepted that a contract of employment is a ‘relational’ arrangement into which the common law in other jurisdictions has been willing to imply a term of fairness (good faith) on both parties. In particular, for the employee that would include (in terms of process) the right to be heard, that is, to be given a proper opportunity to respond to any concerns or criticisms that might arise. 
146.	In a similar vein, here in Tonga, in Vaioleti v. Tonga Development Bank, the Court stated the law as being that: 
“… the employer is bound to exercise its rights in a reasonable manner. The obligation in an employment situation is not an obligation of strict compliance, but of reasonable compliance. It follows therefore in law that a dismissal procedure provided as a contractual term is always subject to the overriding principle that it must require and enable the employer to act reasonably. By the same principle, if the employer does not strictly follow a set procedure, the test to apply is not whether the procedure should have been followed, but whether the employer acted reasonably. Whether or not a dismissal procedure is itself reasonable, the employer is not required by the law to adhere strictly to it if to depart from it is reasonable, i.e. fair in its circumstances.” 
147.	As to the requirements of an implied duty of fairness, the Defendant referred to Hill v Northland Hospital Board, where the New Zealand High Court said that an employer was to: 
“permit any person concerning whom a decision is being made as to whether that person should be dismissed, to put forward his or her side of the story. The employer’s duty however will not extend to conducting the enquiry with the formality of a court hearing but rather merely to give a fair opportunity to the employee to correct or contradict any relevant statements or other material which may be prejudicial to the employee’s position.” 
148.	Against those principles, the Defendant submitted that the disciplinary process adopted by the Board and the subcommittee followed the requirements of the procedure set out in section 1.16.5 of the TCC Staff Policy Manual. It submitted further, that the procedure was fair in that the Plaintiff: 
(a)	was advised of the particulars of charges being made against him in the letter of 30 January 2017 as well as the possible consequences; 
(b)	was provided with witness statements made by others to the subcommittee in relation to the matter under investigation; 
(c)	was interviewed (with his lawyer present if he wished) and was given an opportunity to respond to the allegations made; and 
(d)	was provided with a draft copy of the subcommittee’s report and given an opportunity to respond to it. 
149.	In her oral submissions, Mrs Stephenson said that the Board allowed the Plaintiff to have his lawyer present during the interviews and that the interview process gave the Plaintiff “a full opportunity to explain his actions and give reasons that those actions should not give rise to disciplinary action.” 
150.	In relation to the concept of “gross misconduct”, the Defendant referred to the definition in the Staff Policy Manual.  It was submitted that ‘within the realm of the types of conduct indicated (most pointedly, dishonesty) gross misconduct includes a deliberate failure to bring to the attention of the Board a matter of significant financial relevance to the company.’ 
151.	The Defendant submitted that as the Plaintiff was charged with overall control and management of the operations of TCC, he was under a contractual obligation to ensure that the maintenance and support fees payable under the terms of the Huawei Frame contract were properly accrued in the 14/15 financial year. Upon becoming aware that the expense of four months of the year 2 maintenance and support fees under the Huawei Frame contract had not been accrued, the Plaintiff was required to immediately draw that fact to the Board’s attention and seek further direction on it. 
152.	The Defendant pointed to the Plaintiff’s evidence during the trial that once Huawei had agreed to issue the maintenance and support invoices on a monthly basis, on an accrual accounting basis, the liability for payment of the first four of the 12 invoices for the Year 2 Maintenance and Support Charges fell within the 14/15 financial year.
153.	As a consequence, and having knowledge of the facts that (i) the accruals ought to have been made; (ii) the expenses had been “parked” pending further direction from the auditors; and (iii) the Board had not been advised of either of those matters, the ‘Plaintiff’s conduct rose to the level of a deliberate failure to inform the company of a matter of significant financial relevance’. That, it was submitted, was ‘tantamount to the Plaintiff not being honest in his dealings with the Board’. 
154.	The Defendant then relied on what was submitted to be commonly known as the “Burchell test” to determine whether employers have acted reasonably in dismissing employees for misconduct. Regardless of actual guilt, the dismissal will be fair if at the time of the dismissal the employer: 
(a)	believed the employee to be guilty of the misconduct; 
(b)	had reasonable grounds for believing the employee to be guilty of that misconduct; and 
(c)	at the stage at which it formed that belief on those grounds, had carried out as much investigation into the matter as was reasonable in all the circumstances of the case. 
155.	The Defendant submitted that in relation to the third element of the test, the evidence was clear that the subcommittee went to lengths to conduct a full and thorough investigation into the allegations made against the Plaintiff. After considering the subcommittee’s report and the Plaintiff’s response to that report on 21 April 2017, it was submitted that TCC believed, and had reasonable grounds to believe, that the Plaintiff was guilty of gross misconduct. 
Discussion
156.	As there is no statute governing employee relations or employment contracts in the Kingdom of Tonga for private (as opposed to public) employment contracts, the applicable law is the common law of England to the extent that it has not been usurped by statute in that jurisdiction, as it has been developed in Tonga: Leiola Group Ltd v Moengangongo [2010] TOCA 10 at [11]. The common law includes, as a primary consideration, the terms of  the contract of employment between the parties: ‘Ilangana v Westpac Bank of Tonga [2014] TOCA 18 at [2]
Breach of implied terms
157.	In Leiola, the Court of Appeal observed [15], by reference to the leading House of Lords decision in Mahmud (or Malik) v Bank of Credit and Commerce International SA [1998] AC 20, that towards the end of the 20th century, the common law in England recognized an implied term of mutual trust and confidence in employment contracts. The existence of the implied term potentially had important consequences for the way in which damages might be assessed in circumstances which include wrongful dismissal. Their Honours further noted that where statutory regimes governed claims for  unfair dismissal, ‘the implied term of mutual trust and confidence had no field of effective operation in relation to the dismissal itself. That is, no question of breach of the term founding a claim for damages could arise in relation to the actual dismissal. However, it was recognized that events preceding a dismissal, but not the dismissal, might demonstrate a breach by the employer of the implied term of trust and confidence and that the breach might sound in damages.’
158.	A similar view was expressed by the Court of Appeal in Kivalu v Church of Jesus Christ of the Latter Day Saints in Tonga Trust Board [2016] TOCA 19. There, again, the issue of the implied terms had not been pleaded. Nonetheless, the Court was of the view that had such an argument been raised and pursued, it possibly could have had a bearing on the outcome. Their Honours noted that in Koloa v Helu [1999] Tonga LR 227 at 234, the Supreme Court had held that the implied term required an employer to act reasonably when it exercises its right to dismiss an employee, and that while the proposition had not yet been addressed by the Court of Appeal, Malik had been adverted to on at least two occasions, namely, in Leiola  and ‘Ilangana .The Court also noted [10] that such an implied term (there, termination upon reasonable notice) must yield to the express terms of the contract and would be displaced by an express term to the contrary.
159.	Ultimately, in my view, any differences between the parties on this foundational issue became more academic than real. The Court of Appeal has, albeit in obiter and without deciding the point, referred to the principle in Malik with apparent approval. Similar implied terms – that an employer is obliged to treat an employee fairly and in accordance with natural justice - were recognised by the Court of Appeal in Ve'ehala v Kingdom of Tonga [2014] TOCA 23 at [17]. 
160.	The pre-statute New Zealand decisions referred to by the Defendant recognised that employers in deciding on dismissal are required to act fairly (good faith) and reasonably.  In JL Stanley Ltd v Fuji Xerox NZ Ltd, involving a contract employing a commission salesman, Elias J accepted that an obligation of good faith and fair dealing was to be implied whenever a contract is predicated upon mutual confidence. 
161.	However, the range of contracts in which such a term may be implied remains controversial.  The obligation of contracting parties to deal with each other in good faith has long been a feature of continental law but has not generally been assumed in the English law of contract.  In the New Zealand decision of  Livingstone v Roskilly, Thomas J envisaged a more general applicability of good faith. 
162.	In an extra-curial article entitled "Good Faith, Mutual Trust and Confidence: How far have we come; and where are we heading?", Justice Rothman noted:  
“For the purposes of the current discussion, it is important to draw the distinction between the duty or obligation of good faith, on the one hand, and mutual trust and confidence, on the other hand. As is clear from the judgment of the House of Lords in Mahmud, the obligation not to destroy the relationship of trust and confidence is an obligation that restricts the conduct of the parties to a contract of employment in a manner that goes well beyond the terms of that contract. In Mahmud, the conduct held to be in breach of the contract of employment, by destroying the requisite relationship, was corrupt conduct of the employer unrelated to any direction to the employee and not requiring the involvement of the employee. The corrupt conduct was held to be such as to destroy the employee's relationship with the employer, and seriously damaged the employee's capacity to obtain subsequent employment. Good faith deals with either the construction of the rights otherwise contained within the contract of employment, or a separate implied duty to act in good faith in the exercise of those otherwise-conferred rights. The duty to act in good faith is limited to the exercise of rights under the contract of employment and is not concerned with conduct independent of the contract of employment. While the implied duty not to destroy the relationship of trust and confidence may involve, implicitly, a duty to act in good faith, it is not the main thrust of the implied duty. Good faith, in the context of an employment relationship, imports a requirement or obligation on the person doing the act to exercise prudence, caution and diligence, which, in that circumstance, would mean taking due care to avoid or minimise adverse consequences on the other party consistently with the agreed common purpose of the parties to the contract in making the contract and their expectations.” 
163.	Although obligations of mutual trust and confidence in employment contracts are implied in law in the United Kingdom, more recently, the High Court of Australia has taken a more cautious approach to the recognition of any such implied duty, regarding it as a matter more appropriate for the legislature than for the courts to determine. In Commonwealth Bank of Australia v Barker  the plurality held:
“Importantly, the implied duty of trust and confidence as propounded in Malik is directed, in broad terms, to the relationship between employer and employee rather than to performance of the contract. It depends upon a view of social conditions and desirable social policy that informs a transformative approach to the contract of employment in law. It should not be accepted as applicable, by the judicial branch of government, to employment contracts in Australia.”
164.	The High Court noted that that conclusion should not be taken as reflecting upon the question in Australia as to whether there is a general obligation to act in good faith in the performance of contracts. Further, as Gageler J observed, the question whether a standard of good faith should be applied generally to contracts has not been resolved in Australia. His Honour explained one of the reasons was the lack of the prescriptive content of the implied term which creates ‘inherent uncertainty about what the obligation imposed by the implied term actually requires of the employer and of the employee’.  Another reason is that, ‘in its intersection with the law of unfair dismissal, the implied term would intrude a common law policy choice of broad and uncertain scope into an area of frequent, detailed and often contentious legislative activity.’
165.	Returning then to the law on this issue in the United Kingdom, in a recent decision in Stevens v University of Birmingham, Andrews J of the Queens Bench Division summarised the position as follows:
“[23] It is by now well established that a contract of employment is subject to an implied term (by operation of law) that an employer must not, without reasonable and proper cause, conduct itself in a manner likely to destroy or seriously damage the relationship of mutual trust and confidence between itself and the employee: see e.g. Mahmud v BCCI SA (in liq), Malik v BCCI SA (in liq) [1997] 3 All ER 1 , [1998] AC 20 , Gogay v Hertfordshire CC [2000] IRLR 703 ; Deadman v Bristol City Council [2007] EWCA Civ 822 , [2007] IRLR 888 ; and, more recently, Rose v Leeds Dental Team Ltd (2013) UKEAT/0016/13 , [2014] IRLR 8 , [2014] ICR 94, ….
[24] The implied obligation of trust and confidence was described by Lord Steyn in his dissenting speech in Johnson v Unisys Ltd  [2001] 2 All ER 801… (at [24]) as an 'overarching obligation implied by law as an incident of the contract of employment'. Although the remaining members of the House of Lords decided that the obligation did not extend to the exercise of a power of dismissal, they did not dispute its existence or disagree with Lord Steyn's formulation. At [36] Lord Hoffmann described the term of trust and confidence as 'the most far reaching' of the terms that the common law implies in a contract of employment. He went on to say at [37] that although such an implied term could supplement the express terms of the contract, it could not contradict them. In Eastwood v Magnox Electric plc, McCabe v Cornwall CC [2004] UKHL 35 , [2004] 3 All ER 991 , [2005] 1 AC 503 (at [11]) Lord Nicholls of Birkenhead said that the term means, in short, that an employer must treat his employees fairly.”
166.	With those principles in mind, I turn now to their synthesis and application to the instant case. 
167.	I start with the question submitted by the Defendant, namely, whether as a general proposition, private sector employers are to be held to the same requirement to comply with principles of natural justice as, for example, a statutory body performing a purely public function. The question is evidently posed at a level of generality. It is unnecessary to answer it in this case at the same level for there are a number of specific features of the Defendant and what were its contractual arrangements with the Plaintiff which enable a more specific answer. 
168.	Here, the Defendant is a government owned public enterprise. It entered into a contract to employ the Plaintiff as CEO, a high level management position of significant financial and operational responsibility. The allegations in relation to the financial statements issue were serious and had the potential for very grave consequences on the Plaintiff and his employment. While the contract did not contain any express terms for disciplinary proceedings, section 1.16 of the Employee Regulation and Staff Manual did. Those procedures reflected the basic requirements of natural justice. Subsection 10 expressly provided that the Chairperson and Board of Directors would deal with any disciplinary procedure involving the CEO.  That provision did not, in my view, either expressly or impliedly exclude the general requirements of natural justice observed within the general provisions of section 1.16.  It did not, however, stipulate what procedure would be adopted and applied in the event of disciplinary proceedings against the CEO. That was relevantly answered by the subcommittee’s terms of reference, which expressly stated that the Plaintiff would be given an opportunity to answer the accusations levelled against him, and an opportunity to be heard “which the principles of natural justice require TCC (a government-owned body) to afford (him).”
169.	Notwithstanding that the jurisprudence in employment law has developed specific principles, on even what may be regarded as a ‘first principles analysis’ for the implication of terms in any contract, the posited terms here, in my view, arguably satisfy the recognised tests: (1) it must be reasonable and equitable; (2) it must be necessary to give business efficacy to the contract, so that no term will be implied if the contract is effective without it; (3) it must be so obvious that ‘it goes without saying’; (4) it must be capable of clear expression; and (5) it must not contradict any express term of the contract: Hospital Products Ltd v United States Surgical Corporation and Others (1984) 55 ALR 417 referring to BP Refinery Pty Ltd v Hastings Shire Council (1977) 16 ALR 363 at 26–7, Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd 144 CLR 596 at 605–6 and Codelfa Constructions Pty Ltd v State Rail Authority of NSW 149 CLR 337 at 345–7 and 403–4. See also Marks and Spencer plc v BNP Paribas Securities Services Trust Co (Jersey) Ltd and another [2016] 4 All ER 441.
170.	Subject to any legislative controls or conflicting express terms, I see no good reason, in principle or policy, which could justify an employer conducting disciplinary proceedings with a view to dismissal for cause, doing so in a manner which destroyed the relationship of trust and confidence inherent in a contract of employment or other than fairly, reasonably and in good faith. 
171.	For those reasons, I am satisfied that the terms of the Plaintiff’s employment contract included mutual obligations of trust and confidence. In the context of the disciplinary investigation under consideration, its resulting report and the decision whether to terminate the Plaintiff’s employment for gross misconduct, those obligations required the Defendant to afford the Plaintiff natural justice and to act fairly (good faith) and reasonably.
172.	It is particularly important that employers take seriously their responsibilities to conduct a fair investigation where the employee's reputation or ability to work in his or her chosen field of employment is potentially apposite. Where the investigation is usually being conducted by laymen and not lawyers, it is unrealistic and quite inappropriate to require the safeguards of a criminal trial, but a careful and conscientious investigation of the facts is necessary and the investigator charged with carrying out the inquiries should focus no less on any potential evidence that may exculpate or at least point towards the innocence of the employee as he should on the evidence directed towards proving the charges against him: A v B [2003] IRLR 405. 
173.	In practical terms, I consider that the content of the aforesaid obligations required the Defendant, at a minimum, to:
(a)	provide the Plaintiff with full notice of the allegations against him;
(b)	provide the Plaintiff a reasonable opportunity to consider the allegations and all relevant documents or other material obtained by the Defendant relevant to the allegations (whether for or against them);
(c)	provide the Plaintiff a reasonable opportunity to be heard in answer to the allegations; and
(d)	fairly and accurately collate, present and consider all the evidence gathered from its investigation, including all relevant information provided by the Plaintiff, before making any decision on termination. 
174.	For the reasons which follow, I am of the view that the Defendant failed to act fairly or reasonably in respect of each of the above requirements.
175.	The basic procedure for the investigation devised by the subcommittee as advised to the Plaintiff and within its terms of reference was, on its face, reasonable and appropriate. I agree with the Defendant that it was not appropriate for the Plaintiff's lawyer to be able to question or cross-examine the other staff members while giving their accounts to the subcommittee.  Such a measure is not ordinarily a facet of natural justice within investigative proceedings such as that carried out by the subcommittee.
176.	However, it is the manner in which the subcommittee carried out its investigation, and in particular, its dealings and treatment of the Plaintiff during his interviews, that attracts criticism.
177.	At the outset, the subcommittee did not provide the Plaintiff with any or any sufficient details of the financial statements issue or the allegations that were to be levelled against him during his interviews.  The description of the issue in the Chairman's letter to the Plaintiff dated 30 January 2017 could not reasonably have been understood as conveying an allegation that the Plaintiff had engaged in dishonest or wilful misconduct in relation to the accounts. The deficiency in that regard is best reflected by the Plaintiff's own statements during his interview (set out above) when he realised for the first time that he was actually being investigated and that the subcommittee was seeking to blame him.  In those circumstances, it was impossible for the Plaintiff have a reasonable  opportunity, prior to his interviews, to consider the allegations that were to be levelled against him, let alone seek any advice on them.
178.	That deficiency was compounded by the subcommittee's refusal to provide the Plaintiff, in advance, with all documents which were relevant to the allegations including, but not limited to, the audited financial statements for 15/16, where the restated 14/15 accounts were mentioned and corresponding annual reports.  He was not provided with all statements from the other staff members and therefore was not fully aware of what they have said what was being investigated.  
179.	But perhaps the matter of greatest concern was the Plaintiff's treatment during his interviews.  I did not understand counsel for the Defendant during the trial or in closing submissions to seek to defend the conduct of the subcommittee or to dispute the fact that on numerous occasions during the interviews the Chair told the Plaintiff, variously:
(a)	that he did not want to hear him;
(b)	that he was right and for the Plaintiff to keep quiet;
(c)	that the Plaintiff was being arrogant or insubordinate;
(d)	that he did not care if the Plaintiff denied the allegations;
(e)	that he did not care about normal accounting practice when the Plaintiff was endeavouring to explain it to him; and
(f)	that he did not care what was in the audited accounts.
180.	Most regrettably, the Chair and Mr Fonua threatened the Plaintiff with violence, including to "throw him out the window".  I accept that those statements were probably products of frustration and that they were tempered by some laughter.  Nonetheless, I find that those aspects of the subcommittee's treatment of the Plaintiff during his interviews were wholly inconsistent with modern workplace orthopraxy.  There is no place for behaviour like that in any commercial environment, here in Tonga or elsewhere, and especially not by directors of a public enterprise company.  
181.	It follows, in my view, the Plaintiff was not afforded a fair hearing.  Even though during the trial he said that he could not then think of anything further he would have wanted to say during the interviews, the very fact that in his evidence in chief, he went on to elaborate upon a good deal of the reasons for the delays and the invoices and how the whole accounting error occurred, is testament to the fact that had he been given a reasonable opportunity and had the subcommittee demonstrated that they were there to actually listen to him, the Plaintiff could have provided further and important information. One cannot downplay either the effects of the yelling, intimidation and belittling on the Plaintiff’s mindset and ability to fully respond to the questioning.  Not only was he not given a fair hearing, in relevant respects, he was in fact not heard.
182.	The unfortunate behaviour of the Chair and other subcommittee members during the interviews gave a distinct impression of bias and pre-judgement of the issues against the Plaintiff.  It was plain that the Chair, at least, did not really seem to care what the Plaintiff had to say.  In my view, those attitudes went on to infect the subcommittee’s report to the Board.
183.	The report was neither accurate, in relevant respects, nor a sufficiently comprehensive account of the information gathered from the other witnesses, especially that sought to be provided by the Plaintiff. In my view, demonstrated errors, inconsistencies or omissions in the report include the following: 
(a)	The fact that the subcommittee had consulted with Steve Pickering and information recorded from him was never made known or put to the Plaintiff.
(b)	Gladys Fukofuka’s statement did not contain anything to the effect that she knew nothing about the Frame Contract details or Schedule of Payments.
(c)	The Plaintiff did not "blame" the chief engineer, but rather sought to explain that the delay in the invoices being provided to the finance department was due to delay in the engineering department’s approval of the invoices until August 2015.
(d)	The fact that the Plaintiff and Chairperson at the time knew of the Frame Contract was barely a relevant consideration.  The issue was why the four invoices were not received and recorded by the finance department until after the end of the 14/15 financial year.
(e)	There was no recognition that had the full year payment of USD$810k odd been entered and accrued for the 14/15 year, but the monthly invoices for that portion of that year not been paid until the 15/16 year, accounting adjustments would still have to be made to properly reflect the actual liability incurred for the 14/15 year. 
(f)	Any suggestion that the CEO ought to have been receiving and monitoring the relevant invoices to ensure they were recorded by the finance department was unrealistic and outside the scope of his duty.  Others within the finance department were responsible for tracking and entry of invoices.  It could not reasonably be expected for a CEO to have to monitor every invoice that comes through the finance department from other cost centres or departments within the organisation.
(g)	There was no evidence that the Plaintiff ever actually received the invoices. 
(h)	The repeated references to a net profit for the 14/15 year of TOP2.1m were inaccurate.  The accounts clearly show that the original net profit stated for the year was TOP$1,452,075.  An additional line item entitled "Net gain on available for sale financial assets" of $735,054 produced a "Total comprehensive income, net of tax" of TOP$2,187,129.  By reference to the notes to the accounts, the $735,054 represented a remeasure in the value of shares in Tonga Cable Ltd of effectively 10% thereby producing additional book income.  
(i)	The reference to the Plaintiff’s bonus of $20,000 being based on then recorded profit was not based on any demonstrated evidence that the decision to grant the bonus or the calculation of any amount was tied to any particular profit point.  The only evidence in that regard was from the Plaintiff that once he became CEO, all decisions in relation to his bonus were solely within the discretion of the Board, something to which he was never privy.  There is nothing else within his contract which links any bonus to any particular profit point achieved by the company from year to year.  References therefore to the fact that the Plaintiff "actually profited from the error" were misleading.
(j)	The reference to a dividend of TOP$1.5 million TOP being paid to the government is inaccurate.  The accounts show that a dividend of TOP$1 million was paid.
184.	The reference in the last passage recorded in paragraph 73 above to the need for closer liaison between senior management staff with more regular meetings was one of the few, if any,  reasonable and rational observations available upon a proper consideration of what had occurred with the invoices and why it had occurred.
185.	After the draft report was provided to the Plaintiff, he wrote to the Chair of the subcommittee and sought to identify errors and inconsistencies in the contents of the report.  There is no evidence before the Court that either the subcommittee or the Board as a whole ever actually considered the Plaintiff’s concerns about the draft report. Had they genuinely done so, it is highly likely that a different result might have obtained; or, at the very least, further enquiries would have, and should have, been undertaken.
186.	Following on from the issuing of the final report, in my view, the final meeting of the Board which resulted in the resolution to terminate the Plaintiff's employment for gross misconduct, was largely an exercise of the Chair of the subcommittee reiterating and reinforcing the views expressed in the report in an endeavour to satisfy the Chairman of the Board that there was no other option but to terminate the Plaintiff's employment.
187.	In my assessment, the following are but a number of illustrations of how the Chair of the subcommittee failed to present to the Board as a whole (importantly, to the Chairman) a fair, reasonable and/or accurate account of the investigation of the allegations against the Plaintiff:
(a)	The reference to the Plaintiff having "failed to answer the crucial points or the crux of which the report has reached…" was an inaccurate statement of what the Plaintiff had actually endeavoured to explain to the subcommittee during his interviews.
(b)	The reference to the Plaintiff's response being focused “solely on the letter of petition” was again inaccurate.
(c)	The invoices issue did not cost TCC TOP$1.1 million being the amount of dividends paid to the government for the 2014/15 year. As noted above, the dividend paid was $1 million.  The actual net operating profit was $1.4 million odd.  As Mr Panuve testified, the decision to pay the dividend was maintained during discussions between the Board and its shareholder notwithstanding knowledge of the issues with the invoices because a commitment had already been made by the prior Board and the payment was made in any event.
(d)	There was no independent evidence, and Mr Panuve was silent on the issue, as to any formula or criteria by which dividends to the government shareholder were calculated.  The recommendations by the Plaintiff to the Board during their meeting on 25 August 2015, were made at or about the same time the issue of the late invoices was being realised.  There was no evidence that at that meeting, what was to become the resulting consequence of an inflated profit, was known.
(e)	The reference to the accounts department through the CFO, auditor, and senior accountant not knowing anything about the schedule of payments was inconsistent with statements actually made (or not made) by those staff, in particular, Gladys Fukofuka. In any event, whether those staff knew of the details of the Frame contract or the schedule of payments was not entirely to the point.  The trigger for entry into the accounts would be an invoice whether it was for the whole amount of the year 2 maintenance fee or the monthly invoices that actually transpired. Only once those invoices came to the attention of the finance department could they be acted upon.  The delay in bringing those invoices to the attention of the finance department was the root cause for the invoices being recorded after the end of the 14/15 financial year.
(f)	The reference by the Chair to the “Auditor had termed it as a Fundamental Error - described under International Accounting Standard Part 8 section 1 as - omission and misuse of information; an act of fraudulent” was a selective and potentially misleading reference to the accounting standard and the actual notes in the restated accounts by which the auditors explained the proper period error. The reference omitted that part of IAS 8 was defined prior period errors as also arising from a failure to use or misuse reliable information that was available when the financial statements for the periods were authorised to be issued and could reasonably be expected to have been obtained.  Plainly, had a reasonable view been taken of the available evidence, it would have been identified by the subcommittee, and ultimately the Board, that what occurred was an omission from the 14/15 accounts because the invoices were not available and could reasonably be expected to have been obtained (by the finance department at least) at the time the accounts were prepared.
(g)	The statement therefore that "the committee believe that this ultimately adds up to one simple fact: the CEO employment contract can only be terminated based on gross misconduct" was not based on reasonable grounds and was in fact arrived at through an incomplete, inaccurate, selective and misleading representation of the actual evidence that was available.  Further, that conclusion was reached in circumstances where a reasonable Board (through its subcommittee), had it considered all the matters raised by the Plaintiff during his interviews, at the very least ought to have required further enquiries.
(h)	The reference to the Chair having received confirmation from Huawei that all invoices were promptly sent directly to the CEO was never put to the Plaintiff during his interviews.  Indeed, during the trial, no such evidence was forthcoming.  To the contrary, the email exchanges between the relevant Huawei representative and the project manager indicated that the invoices most likely were sent to the project manager, and from him onto engineering.
(i)	Similarly, the statements by the Chair to the Board that "All in all the Committee has considered such action as wilful omission" and further on "… this wilful action has put TCC in jeopardy in terms of financial liability…" were conclusions reached without any reasonable grounds. There was in fact no evidence whatsoever of any dishonesty or wilfulness on the part of the Plaintiff in relation to the omission of the four invoices from the 14/15 financial accounts, nor any knowledge that those four invoices were being delayed in engineering at the relevant time.
(j)	The references to TCC having to go to the bank and increase its overdraft by TOP$2.0m are also questionable.  The accounts show that for the 2015 year the overdraft balance was ($555,032) and that in the 2016 year the balance of overdraft was ($1,029,604).  The relevant notes do not make any reference to a $2 million increase in the overdraft being required as a result of having to pay the government its dividend of $1 million (or even $1,213,541 in the 2016 year).  I also note in that regard that retained earnings for both years after payment of dividend exceeded $31 million.
(k)	The reference to the subcommittee’s report disclosing a list of all the Plaintiff's achievements and targets for 2014/15 and that “99% of them were not met although his entire bonus is fully awarded,” was never put to him during his interviews.  Any such list was also not referred to in the report itself.
(l)	The reference to the figures associated with the TCL (Tonga Cable Ltd) shares and their revaluation as being a basis for the  allegation that the Plaintiff had “inflated the numbers to help himself financially receiving full bonus”, was never put to the Plaintiff during his interviews or any time during the investigation.
188.	Further, there is no objective evidence, by way of reference in the minutes of the Board meeting on 21 April 2017, or elsewhere, that the Board ever in fact took into account “all the Plaintiff’s responses including his further submission received on 19 April 2017”. The close proximity between the date of the Plaintiff's responses and the Board meeting on 21 April makes that all the more unlikely.
189.	Accordingly, in my view, the Defendant breached its obligations to the Plaintiff of mutual trust, confidence and good faith. By its failure to provide the Plaintiff with full details of and all documents pertaining to the financial statements issue, the Defendant failed to afford the Plaintiff natural justice or procedural fairness. Further, the Defendant failed to act fairly or reasonably in the conduct of the investigation, its treatment of the Plaintiff, and its consideration of the information upon which it based its decision to terminate the Plaintiff’s employment for gross misconduct.

Wrongful dismissal
190.	Before turning to the parties’ submissions on the wrongful dismissal claim, it is necessary to consider first, at a level of principle, the concept and requirements for a finding of “gross misconduct” sufficient to justify summary dismissal. 
Gross misconduct
191.	As referred to in the Plaintiff’s submissions citing Mbubaegbu, an employer is entitled to dismiss summarily for gross misconduct, where the conduct so undermines the trust and confidence which is inherent in the particular contract of employment that the employer should no longer be required to retain the employee: Neary v Dean of Westminster [1999] IRLR 288 at [9].
192.	The question must be asked whether a breach is so serious that it amounts to gross misconduct. The question must be a mixed question of law and fact and that will be so when the question falls to be considered in the context of the reasonableness of the sanction in unfair dismissal or in the context of breach of contract: Connolly v Western Health and Social Care Trust [2017] NICA 61 AT [109, 110].
193.	The concept of “gross misconduct” in the employment law context connotes misconduct which justifies summary dismissal, and which therefore amounts to a repudiatory breach of contract.  There is no fixed rule of law defining the degree of misconduct which will justify dismissal.  Gross misconduct may include, but is not limited to, dishonesty or intentional wrongdoing, for example: conduct which is seriously inconsistent with the employee's duties to his employer; or conduct which is of such a grave and weighty character as to amount to a breach of the confidential relationship between employer and employee, such as would render the employee unfit for continuance in the employer's employment, and give the employer the right to discharge him.  The focus is on the damage to the relationship between the parties.  Dishonesty and other deliberate actions which poison the relationship will obviously fall into the gross misconduct category, but so in an appropriate case can an act of gross negligence: Ardron v Sussex Partnership NHS Foundation Trust [2018] EWHC 3157 (QB), [2019] IRLR 233.  Very considerable negligence, historically summarised as “gross negligence”, is therefore required for a finding of gross misconduct: Sandwell & Birmingham Hospitals NHS Trust v Westwood (2009) UKEAT/0032/09 at [112]–[113], where the impugned conduct involved a nurse taking and leaving a patient on a trolley out on the street outside the hospital. Whilst accepting that her conduct was "a failure of professional judgment" and a "serious one" and "fell short of the high standards demanded of a nurse", the tribunal concluded that it could not be reasonably characterised as deliberate wrongdoing or gross negligence
194.	The disobedience must be a deliberate and wilful contradiction of the essential contractual terms: Laws v London Chronicle (indicator Newspapers) Ltd [1959] 1 WLR 698 at 710.
195.	In Adesokan v Sainsbury's Supermarkets Ltd [2017] ICR 590 CA at [21] to [24],  Elias LJ, summarised the principles governing when misconduct may amount to gross misconduct in the following terms:
(a)	Whether misconduct justifies summary dismissal of an employee is question of fact.
(b)	Gross misconduct is not limited to cases of dishonesty or intentional wrongdoing.
(c)	Misconduct inconsistent with the fulfilment of the express or implied conditions of service will justify dismissal.
(d)	It is sufficient that employer can, in all the circumstances, regard what the employee did as being something which was seriously inconsistent—incompatible—with his duty as an employee in the business in which he was engaged.
(e)	If the conduct is of such a grave and weighty character as to amount to a breach of the confidential relationship between master and servant such as would render the servant unfit for continuance in the master's employment and give the master the right to discharge him immediately.
(f)	A single act of serious or gross negligence can amount to gross misconduct.
(g)	The focus is on the damage to the relationship between the parties.
196.	Those statements of principle do not detract from the point that the relevant conduct undoubtedly has to meet a threshold of seriousness. The earlier case law underlines the seriousness of the conduct which needs to be established in cases of claimed gross misconduct and gross negligence: Sandwell & Birmingham Hospitals NHS Trust v Westwood UKEAT/0032/09/LA at [111-112], citing Wilson v Racher [1974] ICR 428; Laws v London Chronicle [1959] 1 WLR 698; and Dietman v LB Brent [1987] ICR 737.
197.	With those principles in mind, I turn to consider the submissions. 
198.	It is common ground that in the context of this case, including by reference to the Staff Policy Manual, gross misconduct was intended to involve or include some form of dishonesty. That is consistent with the Defendant’s use of the phrase “wilful omission”.
199.	The Plaintiff submits that the Defendant's findings were predicated upon false assertions and the decision was flawed because it was based on a misleading report and false findings.  Otherwise, it says that any finding the Defendant could reasonably have made could not have constituted conduct which was so serious that it could be said to have undermined the trust and confidence inherent in the contract of employment. 
200.	The Defendant's submissions in this regard were more fluid. 
201.	The questioning of the Plaintiff during his interviews, in terms of any omissions, was directed at the failure to have included the four invoices in the 14/15 accounts. It is sufficiently clear that, at that time, the subcommittee was focused on trying to ascertain whether the Plaintiff was directly or indirectly responsible for that omission.
202.	In the Defendant's termination letter dated 21 April 2017, the relevant particulars of the gross misconduct relied upon were incorrect (overstatement) declaration of the net profit 14/15 FY based on wilful omission of pertinent information.  The derivative particulars of that basis for the termination were that the Plaintiff received a bonus of $20,000 based on an incorrect declaration of profit and a misleading report to the Board and shareholders of that profit with the resultant inflated dividend of 1.5 million TOP and alleged consequent financial difficulties. 
203.	To that point, the Defendant's case, and the allegations that were levelled at the Plaintiff, could only be interpreted as: by reason of the wilful omission of the four invoices from the 14/15 accounts, and the resultant inflated net profit leading to a higher than otherwise dividend payment to the shareholder, the Plaintiff was guilty of gross misconduct.
204.	However, the pleaded defence painted a slightly different picture. At paragraph 65.4, the relevant allegation was that the Plaintiff “failed or wilfully omitted to provide the information regarding the year 2 annual maintenance fee under the Frame Contract and the four invoices to Ernst & Young, which information was critical and relevant to the preparation of 2015 audit report and financial accounts”.  Further at paragraph 65.7, the Defendant alleged that as a direct result of the overstatement of net profit caused by the Plaintiff's failure or wilful omission to provide relevant information to the auditors relating to the preparation of TCC's financial accounts, and inflated dividends paid to the shareholder which TCC could not afford to pay, TCC suffered financial difficulty and incurred significant borrowing costs.
205.	By closing submissions, the Defendant's case had again transmogrified into an argument that the gross misconduct was a deliberate failure by the Plaintiff to bring to the attention of the Board a matter of significant financial relevance to the company, which failure was tantamount to the Plaintiff not being honest in his dealings with the Board.
206.	In my view, the last two above formulations of the Defendant's case were materially different to what was put to the Plaintiff during the investigation or stated as the basis for the termination at the time.  Further, they were not allegations which were squarely put to the Plaintiff during trial.  Such alterations in the Defendant’s case, in an endeavour to try and support its decision to terminate, were more than mere nuance or emphasis.  In my view, such forensic moves had the effect of detracting from, rather than enhancing, any bona fides or merit in the Defendant's case. They are not consistent with an employer acting fairly or reasonably.
207.	Taking the allegations as first presented to the Plaintiff during his interviews, and to a certain extent as pleaded in the most recent iteration of the Statement of Defence, I find that there was no evidence before the subcommittee, or at trial, of any dishonesty on the part of the Plaintiff.  Further, I find that there was no evidence that the Plaintiff was either directly or indirectly involved in any wilful failure to record the amounts of the four invoices in the 14/15 financial year accounts.  
208.	For whatever reason, the Defendant’s case and submissions at trial conspicuously ignored the uncontroverted evidence that the invoices did not reach finance in time for inclusion in the 14/15 accounts because engineering delayed in approving and sending them on.  In the absence of any evidence to the contrary, the Plaintiff's evidence of that delay by engineering in approving the invoices is the only plausible explanation for why they were not received by finance until August 2015, and therefore, were unable to be recorded in the 14/15 accounts.  In that regard, the Plaintiff’s evidence was corroborated by that of Gladys Fukofuka.  
209.	To the extent that Mr Panuve sought to give evidence about what should or should not have occurred between March and August 2015, it must be recalled that he was not appointed a director of the company until October 2015.  
210.	I also find that the accounting treatment of the invoices, once they were received by finance in August 2015, was consistent with the accounting procedures contemplated by and provided for in IAS 8, namely, that a prior period error occurred because the invoices were not reasonably available at the time of the close of the 14/15 accounts.  That is also consistent with the uncontradicted evidence of Gladys Fukofuka that there had been previous occasions on which 'late invoices' had to be recorded in the recoverable expenses account to await direction by the auditors, and that on those occasions, there had never been any suggestion within the company of misconduct.
211.	All of this leads to the realisation that the real cause of the problem was the fact that the invoices were, most likely, forwarded directly or indirectly to the engineering department without any communication to the finance department that the invoices had been received and that, by their terms, they were payable within the month following the date of issue.  That possible breakdown or lacuna in the internal procedures for notification of invoices to both the receiving department and the finance department is at the heart of the problems that ensued in this case. 
212.	Accordingly, the highest the reliable evidence could arguably make of any case of failure by the Plaintiff was a failure to ensure that the internal procedures included a mechanism by which any invoices received by another department were also notified to finance so that, if required by their terms, they could be accrued in the accounts within the relevant financial year.  Of course, that was not an allegation put to the Plaintiff at the relevant time, nor was it a basis for the Defendant’s decision to terminate. 
213.	That observation highlights the fact that there was no evidence before the Court as to what, if any, internal procedures for such communications were or might have been in place at the time.  In other words, if such procedures were in place, then that would raise yet another question as to why they weren't followed and/or who was responsible for not following them.  It is not for the Court to speculate on such matters.  However, it is for the Court to identify that had the subcommittee conducted its task in a fair and reasonable manner, it would have either been aware, or should have become aware, of this question. In either case, the appropriate response would have been to conduct further enquiries.  
214.	That also raises another question as to whether, after these matters came to light, and the Plaintiff’s employment had been terminated, the company put in place procedures to ensure that this 'omission' ought not happen again.  Again, that was not a matter the subject of evidence at trial.
215.	Even on the Defendant's alternative hypotheses in its Defence and closing submissions, I find that there was no evidence upon which the subcommittee and/or the Board could reasonably have concluded - which in fact they did not - that the Plaintiff had deliberately or dishonestly withheld any information about the invoices from either the auditors or the Board.
216.	On any analysis, I am not satisfied that any of the evidence either before the subcommittee, the Board or at trial, could be regarded as sufficient to support a finding of gross misconduct.  Insofar as gross misconduct may include a one-off instance of gross negligence, I do not regard the conduct or involvement of the Plaintiff as described above as so serious as to constitute gross negligence of a kind which warranted summary dismissal.   This issue, like others canvassed by the subcommittee during its work, seemed to be the subject of resulting ongoing refinements to internal policies and procedures. Any failure by the Plaintiff, as CEO, to have in place appropriate procedures for notification to finance of invoices received by other departments did not, in my view, constitute a repudiatory breach of his contract of employment, nor could it be properly characterised as:
(a)	meeting the requisite threshold of seriousness;
(b)	dishonest or intentional wrongdoing;
(c)	deliberate and wilful contradiction of the essential terms of his employment contract; or
(d)	conduct of such a grave and weighty character,
as to amount to a breach of the confidential relationship between the Plaintiff and TCC such as to render the Plaintiff  unfit for continuance in his employment, or to give TCC the right to discharge him.  
217.	By the evidence of Mr Panuve, any resulting ‘poison’ in the relationship was, in truth, a consequence of the previous Board having committed the company to paying a set dividend to the government shareholder, regardless of the necessary reduction to be made to the 14/15 net profit. 
‘Burchell’ test: 
218.	Finally, I turn to the Defendant’s reliance on the Burchell test. In that case, Arnold J said:
“The case is one of an increasingly familiar sort in this Tribunal, in which there has been a suspicion or belief of the employee's misconduct entertained by the management, it is on that ground that dismissal has taken place, and the tribunal then goes over that to review the situation as it was at the date of dismissal. The central point of appeal is what is the nature and proper extent of that review. We have had cited to us, we believe, really all the cases which deal with this particular aspect in the recent history of this Tribunal over the three or four years; and the conclusions to be drawn from the cases we think are quite plain. What the tribunal have to decide every time is, broadly expressed, whether the employer who discharged the employee on the ground of the misconduct in question (usually, though not necessarily, dishonest conduct) entertained a reasonable suspicion amounting to a belief in the guilt of the employee of that misconduct at that time. That is really stating shortly and compendiously what is in fact more than one element. First of all, there must be established by the employer the fact of that belief; that the employer did believe it. Secondly, that the employer had in his mind reasonable grounds upon which to sustain that belief. And thirdly, we think, that the employer, at the stage at which he formed that belief on those grounds, at any rate at the final stage at which he formed that belief on those grounds, had carried out as much investigation into the matter as was reasonable in all the circumstances of the case. It is the employer who manages to discharge the onus of demonstrating those three matters, we think, who must not be examined further. It is not relevant, as we think, that the tribunal would itself have shared that view in those circumstances. It is not relevant, as we think, for the tribunal to examine the quality of the material which the employer had before them, for instance to see whether it was the sort of material, objectively considered, which would lead to a certain conclusion on the balance of probabilities, or whether it was the sort of material which would lead to the same conclusion only upon the basis of being "sure," as it is now said more normally in a criminal context, or, to use the more old-fashioned term, such as to put the matter "beyond reasonable doubt." The test, and the test all the way through, is reasonableness; and certainly, as it seems to us, a conclusion on the balance of probabilities will in any surmisable circumstance be a reasonable conclusion.”
219.	Burchell has been applied regularly in UK employment cases for unfair dismissal. 
220.	Further to the caution by Arnold J against a tribunal or court seeking to substitute its own decision as to what was the right course for the employer to adopt, it has been held that in judging the reasonableness of the employer’s conduct, in ‘many, though not all, cases, there is a band of reasonable responses to the employee’s conduct within which one employer might reasonably take one view, and another quite reasonably take another.     The function of the (Court) is to determine whether, in the particular circumstances of each case, the decision to dismiss the employee fell within the band of reasonable responses which a reasonable employer might have adopted.  If the dismissal falls within the band, the dismissal is fair; if the dismissal falls outside the band, it is unfair’: Iceland Frozen Foods Ltd  v  Jones [1983] ICR 17 applied in Rogan  v  South Eastern Health & Social Care Trust [2009] NICA 47 and McFall v McKee, t/a Saveways 3 Ardoyne (Unfair Dismissal) [2019] NIIT 05362_18IT.
221.	Also, if an employer forms its belief hastily and acts hastily upon it, without making appropriate inquiries or giving the employee a fair opportunity to explain himself, the belief will not be based on reasonable grounds and they are certainly not acting reasonably: W Weddel & Co Ltd v Tepper [1980] IRLR 96 at 101.
222.	Applying the Burchell test here, by reason of my findings above in relation to the inadequacies of the subcommittee’s report and the resulting information presented by the Chair to the Board on 21 April 2017, and my findings immediately above in relation to the lack of any gross misconduct finding being open on the evidence that was before the Board, I conclude that in respect of the second and third limbs of the test:
(a)	the Defendant did not have reasonable grounds for forming a belief that the Plaintiff was guilty of gross misconduct; and 
(b)	at the time the Defendant formed its belief, had it acted reasonably in relation to all the information the Plaintiff had provided, further investigations were warranted before any decision ought to have been made.
223.	Had those further investigations been genuinely undertaken, and the Defendant had been apprised of at least some of the matters which came to light during the trial, then as Mr Panuve, for his part, suggested in evidence, the Defendant would likely have reached a different decision. 
Jones v Dunkel 
224.	I should not leave this part of the judgment without making a number of observations, further to those in paragraphs 213 and 214 above, not so much about the evidence that was called at trial, but the evidence that was not called and might reasonably have been expected to be called. 
225.	The rule in Jones v Dunkel establishes that two consequences can flow from the unexplained failure of a party to call a witness whom that party would be expected to call. One is that the trier of fact may infer that the evidence of the absent witness would not assist the case of that party. The other is that the trier of fact may draw an inference unfavourable to that party with greater confidence. Importantly, the rule in does not enable a trier of fact to infer that the evidence of the absent witness would have been positively adverse to that party.
226.	In his brief of evidence, Mr Panuve explained [97] that the Chair of the subcommittee, Mr Fusimalohi, was no longer on the TCC Board as of July 2017, was suffering serious health issues and was currently receiving treatment in the United States which prevented him from travelling to Tonga to attend the hearing.
227.	However, no similar explanations were given for the absence of evidence from people or on matters such as:
(a)	Mr Sione Veikoso, the manager of engineering at the relevant time (and who was appointed acting CEO after the Plaintiff had been suspended).  Notwithstanding the information provided by the Plaintiff during interviews, the subcommittee’s report did not even refer to having interviewed Mr Veikoso whether in relation to the receipt of the invoices, alleged delays in approval from his department, when the invoices were provided to finance and how, or otherwise.
(b)	Mr Sitani Akolo, the project manager, in relation to the arrangements for receipt of the invoices and how they were handled by him of it all; 
(c)	other members of the finance department (apart from Gladys Fukofuka) to, for example, better understand the internal procedures in place at the time for dealing with late invoices and whether communication of invoices was shared where they were received directly by an external department (or cost centre) without invoices being copied into finance at the same time; 
(d)	actual email communications in relation to the invoices sent by Huawei to whomever received them within TCC; 
(e)	the engineering department budget in relation to maintenance for the 14/15 year;
(f)	any documented internal procedures for the distribution and recording of invoices and how they were to be provided to the finance department and when;
(g)	any documented internal procedures which required the approval by the receiving department such as engineering here for invoices before being forwarded to accounts for payment;
(h)	the former Chairlady whose name featured regularly in the subcommittee’s report and recommendations to the Board; 
(i)	the company's internal auditor or external auditors such as Steve Pickering or any other expert for that matter in relation to appropriate accounting practice in respect of past period errors, the use of the suspense ‘recoverable expenses’ account in which to ‘park late invoices, as to whether the accounting practices in place at the time including the receipt and distribution of invoices from suppliers accorded with best practice or otherwise. 
228.	It is reasonable to expect that the Defendant could have called those witnesses and presented the said documents. Were it necessary to do so in reaching the conclusions stated above, there would have been strong grounds for an inference that the evidence of the absent witnesses and other documents referred to above would not have assisted the Defendant’s case.
Result on liability
229.	For those reasons, I find the Plaintiff has established its case on liability. 
230.	In conducting the investigation in the manner it did, and by purporting to rely on inaccurate and inadequate information in determining the Plaintiff’s employment for gross misconduct, the Defendant breached its obligations to the Plaintiff of trust, confidence and good faith, and failed to act fairly or reasonably. 
231.	Further, I find that:
(a)	the Defendant did not have reasonable grounds for forming the belief that the Plaintiff was guilty of gross misconduct;
(b)	at the stage it formed that belief, the Defendant failed to carry out as much investigation into the matter as was reasonable in all the circumstances; and
(c)	thereby, the Defendant wrongfully dismissed the Plaintiff from his employment.  

DAMAGES
232.	The Plaintiff claims the following damages:
(a)	loss of salary from the date of termination to what would have been the end of his contract – seven months or (by my calculations) TOP$72,916;
(b)	loss of relocation expenses;
(c)	loss of entitlements and benefits; and
(d)	$120,000 for reputational harm. 
Evidence
233.	The Plaintiff gave evidence that immediately upon termination, he was evicted from his house and security guards were installed by the Defendant who made it difficult for him to come and go while trying to move his belongings out. His company vehicle was repossessed. His mobile phone and internet services were discontinued.  
234.	He also referred to a number of news articles published soon after which referred to the termination of his employment. He said that as a result of that publicity, he did not apply for any other positions here in Tonga. 
235.	By that stage, the Plaintiff been in Tonga for nine years. He said that ‘everyone knew him’ and that he had been a ‘respected member of the community’. Upon his termination, he said he felt embarrassed. 
236.	Eventually, and without employment here, the Plaintiff had to return to Sri Lanka. He gave evidence that the cost of business class airfares to Sri Lanka was about $16,000 and the costs of repatriating his belongings was about $4,000. 
237.	He said that after he left, he received communications from people here about the publications in the newspapers.
238.	The Plaintiff gave evidence that since returning to Sri Lanka, he has applied for over 20 positions for which he is qualified, equivalent to CEO or CFO. He obtained interviews for a couple of those positions. However, to date, he has not been successful in securing employment. He has not been given any reasons for being unsuccessful nor any feedback after initial interviews.  The Plaintiff believes that the reason for his lack of success to date, is that any prospective employer is likely to have researched him on the internet and found the articles on his termination by the Defendant for gross misconduct.
239.	During cross-examination, the Plaintiff was asked about the news articles and his assertion in his brief that TCC had been responsible for their publication. A number of the articles were in fact critical of TCC. Others which were published before termination were said to have only been published in Tongan and not outside Tonga. However, the Plaintiff maintained that one story concerning his termination, on the Tonga Broadcasting Corporation website, must have been provided by TCC because TCC and TBC had a “shared Board” and the information could only have come from TCC. Mrs Stephenson suggested to the Plaintiff that in relation to articles such as that published in the Matangitonga on 8 May 2017, after the Plaintiff had commenced these proceedings, that other unrelated persons could have obtained information by inspecting the Statement of Claim on the court file. 
Submissions
Plaintiff
240.	The Plaintiff’s submissions on damages focused exclusively on the claim for reputational harm. It was submitted that since his dismissal, the Plaintiff had struggled to find new employment in Tonga. Mr Panuve agreed to the likelihood of that difficulty. The Plaintiff further submitted that ‘there was no doubt that the Plaintiff had suffered damages as a direct result of the allegations published where he was accused of ‘gross misconduct’’. In that regard, the Plaintiff relied on the Court of Appeal decision in Leiola. 
241.	The amount claimed of $120,000 was intended to represent one years’ salary. The rationale submitted was that because the Plaintiff had to leave Tonga and return to Sri Lanka, he needed ‘time to get back on his feet to find employment’. Apart from Leiola, the Plaintiff did not refer to any other comparative decisions. 
Defendant
242.	The Defendant opposes the Plaintiff’s claim for loss of salary for the balance of his contract term. It relies on the principle from Withers v. General Theatre Corp Ltd [1933] 2 KB 536 that if a party terminates a contact in breach of a term, then in assessing damages for that breach, the Court proceeds on the basis that the employer would perform the contract in the manner least disadvantageous to them. Here, the Defendant says that by application of that principle to the first limb of clause 18.2 of the Plaintiff’s contract, which enabled the Defendant to terminate for convenience or without cause, damages are limited to the value of the notice period there provided, namely, three month’s salary. 
243.	The Defendant accepts that TOP$20,000 for the Plaintiff’s relocation expenses is reasonable. 
244.	The Defendant says, and the Plaintiff did not refute, that his other contractual benefits and entitlements up to the date of his dismissal have already been paid.
245.	The Defendant denies the Plaintiff’s claim for damages for reputational harm. It denies that it caused the statements or articles to be published post termination which the Plaintiff alleges have resulted in him being unable to secure further employment. 
246.	Further, the Defendant contends that the Plaintiff has not provided clear or persuasive evidence to substantiate this part of his claim. It also refers to the evidence that TCC attempted to settle this matter in a reasonable manner which would have afforded the Plaintiff the opportunity to resign and therefore would have mitigated the reputational damage he now claims. 
247.	During oral submissions, Mrs Stephenson accepted the proposition that if the Plaintiff is found not to have engaged in gross misconduct sufficient to justify his summary dismissal, then as a result, and in the circumstances that followed, he is likely to have suffered reputational harm. 
Discussion
248.	Although the Court has a wide discretion to award such amount as is just and equitable as compensation for wrongful dismissal, as a matter of practice, the well-established heads of compensation include, relevantly:
(a)	loss between the date of dismissal and the date of the hearing;
(b)	future loss: the Court must consider a series of imponderables in the light of the facts of the case. The correct approach is to consider how long it is likely to be before the employee obtains equivalent permanent employment: Courtaulds Northern Spinning Ltd v Moosa [1984] ICR 218. The fact that the employment would have terminated soon may be relevant.  This is not an area for precise calculations: Wardle v Crédit Agricole Corporate and Investment Bank [2011] EWCA Civ 545.
(c)	manner of dismissal: loss may be claimed under this head only if there are financial implications, particularly if the employee will find it more difficult to find new employment because of the manner of his dismissal: Vaughan v Weighpack Ltd [1974] ICR 261.
249.	Neither party’s submissions sought to differentiate between the damages recoverable for breach of the implied terms of the Plaintiff’s contract, on the one hand, and wrongful dismissal on the other. 
250.	If an employer acts in breach of the employment contract in such a way as to repudiate it, the employee may accept the repudiation and sue for damages for breach. Damages for breach of an implied term are awarded to compensate for that breach. Damages for wrongful dismissal are assessed by reference to a Plaintiff's proved financial loss, and damages can be recovered for distress and humiliation arising from the manner in which the employer carried out the dismissal: Helu v Koloa [2000] Tonga LR 299. The measure of damages for wrongful dismissal is not the wages agreed upon, but the actual loss sustained, including compensation for any wages of which the employee was deprived by reason of his dismissal: Lucy v The Commonwealth (1923) 33 CLR 229 at 253.
251.	Only two components of the Plaintiff’s claimed damages were the subject of dispute: loss of salary and reputational harm.
Loss of salary
252.	The issue here is whether the Plaintiff’s claim for loss of salary is limited by the decision in Withers to the equivalent of three months’ notice the Defendant would have been obliged to pay had it terminated for convenience (that is, the manner least disadvantageous to it), even though, in fact, it summarily dismissed the Plaintiff.  
253.	The Plaintiff’s submissions were silent on this issue.
254.	In the case of a contract terminable by notice, the employee is entitled to recover his loss only during the notice period: Kasimili v Vava'u Press [2002] Tonga LR 168. The normal measure of damages is the amount the employee would have earned under the contract for the period until the employer could lawfully have terminated the employee: Fonua v Tonga Communications Corporation [2007] Tonga LR 291.
255.	In Kingdom of Tonga v Tapueluelu [2009] Tonga LR 86, it was held that:
“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) 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."
256.	Withers was referred to in the 2010 Court of Appeal decision in Leiola. The Court of Appeal effectively circumvented the application of Withers by finding that the employment contract there was a comprehensive manual covering all circumstances concerning termination and requisite notice periods. Accordingly, the Court denied the implication of a term requiring reasonable notice and held that the measure of damages was the salary the employee would have received had the employment continued, which allowed at three years. 
257.	I confess to reservations about the correctness of the application of Withers to the instant case. On ordinary principles of assessment of damages for breach of contract, it is difficult to see how agreed compensation in the event of an employer exercising a contractual right to effect early termination for convenience or without cause can dictate the assessment of damages payable by that employer for fundamental breach of the contract.  However, in the absence of any countering submissions by the Plaintiff, I consider any reservations must yield to the weight of authority referred to above recognizing, or consistent with, the principle in Withers.  
258.	Accordingly, the Defendant’s submission must be accepted. The Plaintiff’s claim for loss of salary is therefore limited to the equivalent of three months’ notice provided by the first limb of clause 18.2 of the contract. In terms of gross salary, that amounts to TOP$31,250. The award should be based on net income, that is, after deduction for income tax payable. The pre-June 2017 top tax rate for gross income over TOP$30,000 was 20%. 
259.	There was no evidence to support inclusion of the potential maximum bonus of $20,000 the Plaintiff might have received in the last year of his contract.
260.	Accordingly, the resulting net amount allowed for loss of salary is TOP$25,000.
Reputational harm
261.	Much of the debate on the Plaintiff’s claim for damages for reputational harm appeared to focus on how news of his dismissal made its way into the public domain, and whether the Defendant was directly or indirectly responsible for ‘leaking’ the story to the media. In my view, not a great deal actually turns on the issue of whether the Plaintiff is entitled to damages for reputational harm. 
262.	There had already been a certain level of publicity from 2015 concerning complaints levelled at the Plaintiff well before the Defendant’s decision to terminate. For instance, there was publicity surrounding the Plaintiff’s action for defamation against the newspaper, and then later, the case concerning the referral to the Ombudsman. 
263.	The evidence as to who may have been responsible for the articles published post termination was equivocal. There was no direct evidence that the TCC Board provided or sanctioned provision of the story to the TBC or any other media outlet. The suggestion was flatly denied by Mr Panuve. The Plaintiff’s case therefore rested on inference. I am not satisfied on the evidence that any such inference is sufficiently supported. Nor, as mentioned, do I consider it necessary to make any such inference. 
264.	In my view, the fact of publication of the termination pales by comparison to the effect of the stated grounds for it: gross misconduct. In the unlikely event (in Tonga) that stories of the termination never found their way to the media, as a public enterprise with reporting requirements to government, the news would almost certainly have become public knowledge even if only promulgated by the Defendant via official reporting channels.  Even if it hadn’t, the reality is that the Plaintiff would most likely have had to volunteer it in any subsequent application or interview for a new position; or, any prospective employer would likely have discovered the matter by making enquiries during due diligence. 
265.	As a matter of causation, and consistent with the Defendant’s concession in oral submissions referred to in paragraph 247 above, I find that the fact of the Defendant’s wrongful termination for gross misconduct harmed the Plaintiff’s professional reputation. 
266.	In Leiola, the Court of Appeal held that while it is conceivable that damages for loss of reputation and hardship might be awarded because the conduct of the employer involved a breach of an implied term of mutual trust and confidence, it was made clear in Malik that damages for breach of such a term were to compensate the employee for financial loss. In other words, if an employee is stigmatised and their reputation adversely affected by the conduct of the employer then the damages are intended to compensate the employee for the financial loss flowing from the damage to their reputation which would ordinarily arise because the employee could not get other employment and could not earn income as a result. 
267.	A similar approach was followed by the UK Court of Appeal in Abbey National Plc & Anor v Chagger [2009] EWCA Civ 1202 where it was held as now firmly established that if a stigma attaches to an employee from the unlawful way in which their employer runs his business, then the employer will be liable for losses which may result from the fact that other employers will not want to recruit employees because of their link with the business: see Malik. Here, of course, any stigma to the Plaintiff has resulted not from any unlawfulness in the manner the Defendant conducted its business, but rather the manner in which it dealt with the Plaintiff within its business and effectively branded him as being guilty of gross financial misconduct.  
268.	The UK Court of Appeal in Abbey added that stigma can be one of the difficulties facing an employee in the labour market and will be one of the features which impacts on the question how long it will be before a job can be found. A court should take a sensible and robust approach to the question of compensation. Plainly it would be wrong to infer that the employee will in future suffer from widespread stigma simply from his assertion to that effect, or because he is suspicious that this might be the case. One exceptional case where it could be necessary for a court to award compensation specifically by reference to the impact of stigma on future job prospects is where it is the only head of future loss. The onus is on the employee to prove it. In practice this can be a difficult task. If he does establish such a loss, the court will then be faced with the almost impossible task of having to assess it. The court would have to determine how far difficulties in obtaining employment result from general market considerations and how far from the stigma. In the unlikely event that the evidence of the stigma difficulties is sufficiently strong, it would be open to the court to make an award of future loss for a specific period. But, in the more likely scenario that the evidence showed that stigma was only one of the Plaintiff’s difficulties, it may be that a modest lump sum would be appropriate to compensate him for the stigma element in his employment difficulties. Even then, however, this should not be an automatic payment; there should be some evidence from which the court can infer that stigma is likely to be playing a part in the difficulties facing the employee who seeks fresh employment.
269.	I do not accept the Defendant’s submission that the Plaintiff could have mitigated any reputational harm had he agreed to resign when that issue was first being negotiated. Mr Panuve confirmed that at the time of those discussions, the Defendant was not then accusing the Plaintiff of any wrongdoing notwithstanding it had received the staff petition and mirrored complaint from the former Prime Minister. The Defendant was simply looking for a change of direction. More importantly, by the time the negotiations for the Plaintiff’s resignation broke down, there was no suggestion whatsoever that he was to be investigated in relation to the financial statements issue as a potential basis for his dismissal for gross misconduct. Finally, at no time during the ensuing investigation did the Defendant revive any proposal for the Defendant to resign rather than continue the investigation to its bitter end, nor did the Defendant exercise its right to terminate without cause. 
270.	However, I do accept, to a certain extent, the Defendant’s criticisms of the strength (or lack of it) of the Plaintiff’s evidence on this part of his claim. 
271.	I accept the Plaintiff’s evidence that:
(a)	as a result of the termination and ensuing publicity, he was highly unlikely to secure suitable employment in Tonga, and as a result, had to return to Sri Lanka;
(b)	he has since unsuccessfully applied for over 20 positions for the equivalent of CEO or CFO; and
(c)	it is more likely than not that at least some of those prospective employers would have researched the Plaintiff on the internet and found the articles published here concerning his termination as CEO of the Defendant. 
272.	But that is as far as the evidence goes. There is no objective evidence that any prospective employer has actually rejected the Plaintiff’s application/s by reason of his termination by the Defendant for gross misconduct. There is no evidence of other relevant employment market conditions in Sri Lanka which might inform as to why the Plaintiff has been unsuccessful to date. There is no evidence as to whether, for instance, the Plaintiff’s absence from Sri Lanka for approximately nine years may have been viewed adversely by at least some employers. There is no doubt a myriad of other considerations, but the point as to the ‘thin’ nature of the Plaintiff’s evidence is clear enough. 
273.	If the Plaintiff had found equivalent employment after one year, then the above observations on the evidence of reputational harm would have warranted a substantial discounting of the claim for (just shy of) one years’ salary; probably to somewhere between three and six months. However, the Plaintiff has not yet found employment. It is not known when he might. Even though the passage of time often sees the effects of reputational harm fade, and presumably this judgment will help ameliorate or eliminate any possible ongoing effects, one cannot ignore the fact that it has now been more than two and a half years since the Plaintiff was suitably employed.  
274.	Taking that into account, together with:
(a)	the Plaintiff’s age, qualifications and experience;
(b)	the length of time he spent in Tonga professionally developing and establishing himself to a high management level;
(c)	the level of position and salary he enjoyed while CEO of the Defendant;
(d)	the seriousness and likely endurance of any ‘stigma’ resulting from termination from a highly responsible financial management position for gross misconduct;
(e)	the fact he had to leave Tonga under a cloud to seek employment in a market in which he had not participated for now over a decade; and
(f)	the continuing difficulties the Plaintiff has experienced in being able to secure employment there, 
leads me to the conclusion that the claim for one years’ salary is probably conservative. 
275.	In those circumstances, I see no sound basis for discounting that sum any further. Overall, I consider it a fair and reasonable sum to compensate the Plaintiff for the damage to his reputation suffered as a result of the Defendant’s breaches of contract and wrongful dismissal. 
276.	I am also fortified in that assessment by the fact that in Leiola, albeit not on all fours with the instant case, an award of three years’ salary taken to be inclusive of any damages for reputational harm, was considered to be within the reasonable range. 
277.	Accordingly, I assess the Plaintiff’s damages for reputational harm at TOP$120,000.

Result on damages
278.	For the reasons stated, the Plaintiff’s damages are assessed as follows:
(a)	TOP$25,000 for loss of salary;
(b)	TOP$20,000 for relocation expenses; and
(c)	TOP$120,000 for reputational harm.
ORDERS
279.	There will be judgment for the Plaintiff in the sum of TOP$165,000.
280.	The parties requested to be heard on the question of costs following this decision. 
281.	I also note that while the Plaintiff did not specify any claim for interest in his prayer for relief, a general plea for any further order the court considers appropriate was included.
282.	Any submissions on costs and/or interest are to be filed by 10 January 2020.
283.	Any submissions in response to be filed by 24 January 2020.
284.	Any hearing (to be specified in the submissions, if required) on interest and costs will be conducted on 7 February 2020 at 9AM. If a hearing is not required, final orders will be made on the papers by that date. 

NUKU’ALOFA	M.H. Whitten QC	
18 December 2019	LORD CHIEF JUSTICE