003-SLLR-SLLR-2008-V-1-JEFFERJEE-v.-COMMISSIONER-OF-LABOUR-AND-OTHERS.pdf
12Sri Lanka Law Reports [2008] 1 Sri L.R
JEFFERJEE
v
COMMISSIONER OF LABOUR AND OTHERS
COURT OF APPEALW.L.R. DE SILVA, J.
SALAM, J.
CA 1234/06FEBRUARY 2, 2008APRIL 3, 28, 2008
Employees Provident Fund Act 15 of 1958 amended by 26 of 1981, 42 of1988, 14 of 1992 – 312, S38 (2) Provident Fund dues – Employee orIndependent Contractor? – Inquiry – No reasons given – Is it imperative to givereasons – If not given could the Court arrive at a decision?
The 3rd respondent complained to the 2nd respondent AssistantCommissioner of Labour of the failure on the part of the petitioner to contributeto Employees Provident Fund in favour of the 3rd respondent. It wascontended at the inquiry that the 3rd respondent was an independentcontractor. The respondents held that, the petitioner is liable to contribute tothe Fund.
The petitioner sought a Writ of Certiorari to quash the said decision, asreasons were not given.
Held:
Except in the case of an appealable decision, not giving reasons fora decision does not ipso facto vitiate that decision.
The purported decision does not contain any reasons. Let alonereasons the impugned order for the payment of EPF does not evencontain determination on the crucial issue whether the 3rdrespondent was an independent contractor or an employee, and therespondents have not thought it fit to produce the record or anydocument which contained the reasons.
Per Ranjith Silva, J.
"I do not intend to invoke the jurisdiction of this Court ex mero motu to call forthe record for the examination of this Court. If I do so that would only
Jefferjee v Commissioner of Labour and others
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encourage public officials performing public duties wielding powers underdraconian laws to disregard the sacred duty of observing the principles ofnatural justice and then flout the law unscrupulously.
The remedy by way of Writ of Certiorari cannot be made use of tocorrect errors or to substitute a correct order for a wrong order.Judicial review is radically different from appeals; when hearingappeals the Court is concerned with the merits of the decision underappeal. •
In appeal the Appellate Court can modify, alter, .substitute or rescindthe order or decision under appeal.
In judicial review the Court is concerned with the legality and cannotvary, modify, alter or substitute the order under review.
On appeal the question is right or wrong on review, the question islawful or wrongful.
It is not for the Court of Appeal to decide whether the 3rd respondentwas an employee or not, it was for the 1-2 respondents to decidethat issue.The supervisory jurisdiction does not entitle it to usurp thisresponsibility and to substitute its own view for his
APPLICATION for a Writ of Certiorari.
Cases referred to:
Brook Bond (Ceylon) Ltd. v Tea, Rubber, Coconut and General ProduceWorkers Union – 77 NLR at 6
Unique Gemstones Ltd. v W. Karunadasa – 1995 – 2 Sri LR 357 at 360-361.
Kegalle Plantations Ltd. v Silva and others – 1996 – 2 Sri LR 180.
Karunadasa v Unique Gemstones Ltd. – 1997 – 1 Sri LR 256.
Kusumawathie and others v Aitken Spence & Co. Ltd – 1996 – 2 Sri LR 18
Suranganie Marapana v Bank of Ceylon and others ~ 1997 3 SLR 156.
Bandara v Premachandra – 1994 – 1 Sri LR 301.
Tennekoon v De Silva – 1997 – 1 Sri LR 16.
Guneratne v Ceylon Petroleum Corporation – 1996 – 1 Sri LR 315.
Wickrematunga v Ratwatte – 1998 – 1 Sri LR 201.
Wijepala v Jayawardene – SC 89/95 SCM 30.6.1995.
Footwear (Pvt) Ltd. and two others v Aboosally – former Minister of Labourand Vocational Training and others ~ 1997 – 2 Sri LR 137.
R. v Deputy Industrial Injuries Commissioner – ex parte Moore – 19651 All ER 81 at 84.
14Sri Lanka Law Reports[2008} 1 Sri L.R
14. Chulasubadra v The University of Colombo and others – 1986 – 2 Sri LR288.
A.R Niles for petitioner.
Milinda Gunetilake for respondents.
Cur.adv.vult
June 25, 2008RANJITH SILVA , J.
The petitioner one Mr. Mohamadally I. Jafferjee, a partner of otthe firm "Jafferjee Brothers" filed this application in this Courtinvoking the writ jurisdiction of this Court under article 140 of theConstitution of the Republic of Sri Lanka challenging the proprietyof the order dated 29.06.2006 made by the 2nd respondent, theAssistant Commissioner of Labour Colombo North, directing thepetitioner to pay a sum of Rs. 3,69,825/- to the 3rd respondentbeing the amount due to the 3rd respondent from the petitioner byway of contributions to the provident fund under and in terms of theprovisions of Se. 12 read with Se. 10 of the Employees Provident 10Fund Act No. 15 of 1958 as amended by Acts No. 26 of 1981, No.
42 of 1988 and No.14 of 1992. (Hereinafter referred to as the EPFAct).
The business registration of the said partnership is annexed tothe petition marked as P2. Admittedly the firm known as JafferjeeBrothers (hereinafter referred to as the "firm") had entered into acontract on 20.06.1994 by which the 3rd respondent was appointeda consultant to the wood work project of the said firm. The initialmonthly consultancy fee paid to the 3rd respondent was Rs. 5000/-which over the years had been increased to Rs. 15750 by the said 20firm until the services of the 3rd respondent were terminated in theyear 2003.
The 3rd respondent complained to the 2nd respondent of thefailure on the part of the petitioner to contribute to the employees'provident fund in favour of the 3rd respondent as stipulated underthe EPF Act. Consequently, an inquiry was held and at the inquiryit was contended on behalf of the firm that the 3rd respondent was
Jefferjee v Commissioner of Labour and othersCA (Ranjith Silva, J.)
an independent contractor and not an employee. Hence, the firmdenied its liability to contribute to the EPF. Having inquired into thecomplaint of the 3rd respondent the 2nd respondent decided that 30the work done by the 3rd respondent was in fact that of anemployee and therefore payments received by the 3rd respondentfor the services rendered by the 3rd respondent to the "firm"attracted the provisions of the EPF Act and hence ordered the"firm" to pay a sum of Rs. 3,69,825/- to the 3rd respondent ascontributions for the Employees Provident Fund in respect of the3rd respondent (Vide P-1 and R-1).
Upon the failure of the "firm" to comply with the aforesaidorder, the 1st and 2nd respondents filed a certificate in theMagistrate's Court of Colombo in proceedings bearing No. 40967/2007, under section 38(2) of the EPS Act to recover the moniesdue to the 3rd respondent.
The case for the Petitioner in a nut shell: The 2nd respondent did not give reasons for his decisionmarked P1, and thereby failed to observe the principles ofnatural justice in arriving at the aid impugned decision.
Since the 1st and the 2nd respondents failed to assign reasons
for there decision dated 29.06.2006 which is marked as P1, it isopen to this court to review all the material presented by allparties in this case and to arrive at a decision thereon.50
The 1 st and the 2nd respondents misinterpreted the documentssubmitted to the said respondents by the petitioner, in decidingthe question, whether the 3rd respondent was an independentcontractor or an employee.
The 3rd respondent being a consultant, was a skilled person
and the partners of the firm were not in a position to tell him howto do his work and therefore, the application of the control testto the facts and circumstances of the instant case, would leadto the inevitable conclusion that the 3rd respondent was not anemployee.60
The application of the organization/integration test to the factsand circumstances of the instant case would lead to the
16Sri Lanka Law Reports[2008] 1 Sri L.R
inevitable conclusion that the 3rd respondent was not anemployee.
The application of the economic reality test is not appropriate inthe present case because the present case is a matter of aconsultancy where the ownership of assets does not come intoplay.
Failure to assign reasons as around to avoid liabilityIt is trite law that when a statute confers a right of appeal 70against a decision, the decision making authority is obliged todisclose the reasons for its decision. In Brook Bond (Ceylon) Ltd. vTea, Rubber, Coconut and General Produce Workers' Unioith at06. It was held that where an appeal lies from the order of a tribunalto a higher Court though the appeal may be on a question of law, itis the duty of the tribunal to set down its findings on all disputedquestions of fact and to give reasons for its order. Questions of lawmust necessarily be considered in relation to the facts and it wouldbe impossible for a Court of Appeal to discharge its functionsproperly unless it has before it the findings of the original tribunal 80on the facts as well as its reasons for the order.
In the instant case the decision of the Commissioner is notsubject to an appeal. Therefore the question is whether the duty togive reasons extends to non-appealable decisions as well. Thisneeds a critical evaluation and an in-depth analysis of the currentlaw on this topic. Does Natural Justice require that reasons beprovided by the decision maker? The right to receive reasons flowsby implication from the rules of natural justice, the relevant rule isthe right to be heard, (audi alterem partem). If a person is entitledto be heard before a decision is reached against him, then it follows 90that the person is entitled to a reasoned consideration of what heor she says.
Reasons can become a powerful tool to prevent the arbitraryexercise of power and to ensure public accountability. Reasonsfacilitate open government and transparency. Secrecy with regardto any decision generates suspicion and speculation. Reasons willhelp in ensuring that public decision making is not ad hoc,capricious or arbitrary but closely thought out and rational.
Jefferjee v Commissioner of Labour and others
£^_(Ranjith Silva, J.)1Z_
Undoubtedly it will enhance the confidence of the public reposed inthe decision making authority and will enhance significantly the 100integrity of the public decision making.
In this regard I would tike to quote a paragraph from the book"Administrative Law" by Wade and Forsythn 9th edition, page 522.
I quote, "The principles of natural justice do not; as yet, include anygeneral rule that reasons should be given for decisions.Nevertheless there is a strong case to be made for the giving ofreasons as an essential element of administrative' justice. The needfor it has been sharply expressed by the expanding law of judicialreview, now that so many decisions as liable to be quashed(emphasis is mine) or appealed against on grounds of improper nopurpose, irrelevant considerations and errors of law various kinds.Unless the citizen can discover the reasons behind the decision, hemay be unable to tell whether it is reviewable or not, and so hemay be deprived of the protection of the law. The right to reasonsis therefore an indispensable part of a sound system of judicialreview, (emphasis added.)"
From the above quotation it is quite clear that even in the caseof non appealable decisions reasons should be given by thedecision making authority, for various reasons stated thereinespecially so where the person is given the right to be heard, as in 120the instant case.
It was held by Senanayake, J. in Unique Gemstones Ltd. v W.KarunadasaW 360-361; I quote, "I am of the view theCommissioner should give reasons for his decision. The presenttrend which is a rubric running throughout the public law is thatthose who give administrative decisions where it involves thepublic, whose rights are affected; especially when proprietary rightsare affected should give reasons for its decisions. The action of thepublic officers should be ’transparent1 and they cannot make blankorders. The giving of reasons is one of the fundamentals of good 130administration. In my view it is implicit in the requirement of a fairhearing to give reasons for a decision. The standards of fairnessare not immutable, they may change with the passage of time bothin the general and in there application to decisions of a particulartype. The principles of fairness are not to be applied identically inevery situation. But the fairness demanded is dependent on the
18Sri Lanka Law Reports[2008] 1 Sri L.R
context of the decision. The present trend is to give reasons and afailure to do so amounts to a failure to be manifestly seen to bedoing injustice. I am of the view that it is only in specialcircumstances, the reasons should be withheld, i.e. where the mosecurity of the state is affected, and otherwise a statutory body ora domestic tribunal should give reasons for its decision. Though theT.E. Act is silent on this matter, the Commissioner being a creatureof a statute performing a public function, it is not only only desirablebut also necessary to give reasons for its decision".
Per Senanayake, J.
"The common law as understood by us has now been battereddown. Reasoned orders are the sine qua non of administrativejustice even if the statute is silent" Kegaile Plantations Ltd., v Silvaand others.150
When this matter came up in appeal in the Supreme Court inKarunadasa v Unique Gemstones Ltd.w at 256. The SupremeCourt observed that the matter did not end there; that the legalposition was not clearly appreciated and that the parties have notrealized the need to invite the Court of Appeal to call for an examinethe record and the recommendation. Thus the Supreme Court hastaken the view that in cases where there is no right of appeal thedecision making authority must either give the decision with thereasons for its decision or should make the reasons available to theCourt of Appeal for examination by the Court when required to do 160so. On an examination of the reasons if the Court of Appeal findsthat reasons were given and the decision is not whollyunreasonable, illegal or ultra virus, writ of certiorari will not lie.
But a somewhat deferent view was expressed in the followingOase which appears to be the better view and in keeping with theworld trend.
In Kusumawathie and others v Aitken Spence and Co. Ltcfi5)
18 (C.A.) (as he then was) held "The finding that there is norequirement in law to give reasons should not be construed as agateway to arbitrary decisions and orders. If a decision that is 170challenged is not a speaking order, when notice is issued by aCourt exercising judicial review, reasons to support it have to bedisclosed. Rule 52 of the Supreme Court Rules 1978 is intended to
Jefferjee v Commissioner of Labour and others
CA(Ranjith Silva, J.)19
afford an opportunity to the respondents for this purpose. Thereasons thus disclosed form part of the record and are inthemselves subject to review. Thus if the Commissioner fails todisclose his reasons to Court exercising judicial review, aninference may well be drawn that the impugned decision is ultravirus and relief granted on that basis."
Reasons means not just the evidence recorded and the isodocuments filed but an evaluation of the evidence and wheneverpossible, an interpretation of the documents.
Reasons in the context of Article12 of the ConstitutionIn Suranganie Marapana v the Bank of Ceylon and others<6) at156 the Chairman of the Bank stated in his affidavit submitted to theSupreme Court that the refusal to extend the services of thepetitioner was done bona fide and unanimously after a carefulevaluation of her application and the need of the Bank to increasethe efficiency of the legal department.
The Court held in that case; I quote "The Board failed to show 190the Court that valid reasons did exit for the refusal to grant theextension which was recommended by the corporate management.Instead, a veiled suggestion was made that the efficiency of theLegal Department was not up to expectations. This insinuation wasbaseless and unwarranted. Hence, the refusal to grant theextension of services sought was arbitrary, capricious and unfair. Itwas also discriminatory and violative of the petitioner's right toequal protection of the law under article 12(1) of the constitution"Bandara v Premachandrai7), Tennakoon v De Silva(8),Gunaratne vCeylon Petroleum Corporation<9), Wickramatunge v Ratwatte('°), 200and Wijepala v Jayawardena.b^
In Bandara v Premachandra (supra) Fernando, J. held; "… Inthe Establishment Code "without assigning any reasons' onlymeans that no reason need be stated to the officer but that areason, which in terms of the code justifies dismissal, must exist;and, if not disclosed legal presumptions will be drawn …"
Held further per Fernando, J. "The state must, in the publicinterest, expect high standards of efficiency and services from
20Sri Lanka Law Reports[2008] 1 Sri L.R
public officers in there dealings with the administration and thepublic. In the exercise of constitutional and statutory powers and 210jurisdictions, the judiciary must endeavour to ensure that thisexpectations is realized."
Therefore except in the case of an appealable decision, notgiving reasons for a decision does not ipso facto vitiate thatdecision. Yet valid reasons that justify the decision should bedisclosed. In the instant case the 1st and 2nd respondents in theirobjections filed in this Court and in their submissions both writtenand oral, have drawn our attention to numerous documents and infact have given there own interpretation to the said documents filedby them and the petitioner, but failed to show us any reason given 220by the said respondents in arriving at their decision. The 1 st and the2nd respondents completely failed to invite this Court to call for therecord for the examination of this Court.
The decisions in Karunadasav Unique Gemstone Ltd., (supra)apply with equal force to the facts and circumstance of the instantcase. According to the ratio desidendi in the above case, theAssistant Commissioner (2nd respondent) being a public servant,was under a public duty to give reasons for his decision as it was adecision, made under the provisions of a statute, affecting theproprietary rights of the petitioner. As the impugned decision of the 2302nd respondent was not an appealable order his failure to givereasons in the decision itself or along with the decision would notrender the decision a nullity as long as there were good reasons forthe decision. The Court of Appeal may call for the record andexamine the record on application made in that behalf to ascertainwhether there were valid reasons disclosed, for the decision. If it isfound thereafter, that there were justifiable reasons for the decisionthen certiorari would not lie.
In the instant case we find that the purported decision dated29.06.2006 marked as P1 does not contain any reasons. Let alone 240reasons the impugned order for the payment of EPF does not evencontain determination on the crucial issue whether the 3rdrespondent was an independent contractor or an employee. The1st and the 2nd respondents have not thought it fit to produce therecord or any document which contained the reasons for thedecision although they ought to have known that they could invite
Jefferjee v Commissioner of Labour and othersCAmaniith Silva. J.)?L
the Court of Appeal to call for an examine the record. We haveperused the objections filed by the 1st and the 2nd respondents on30.10.2007 but failed to see that they have produced such recordor document for the examination of this Court or at least have 250invited this Court to call for the record to be examined by this Court.
The 1st and the 2nd respondents were represented by a lawyer butopted not to invite this Court to call for the record, may be forreasons best known to them. For the reasons stated I do not intendto invoke the jurisdiction of this court ex mero motu to call for therecord for the examination of this Court. If I do so that would onlyencourage public officials performing public duties wielding powersunder draconian laws to disregard the sacred duty of observing theprinciples of natural justice and thus flout the law unscrupulously.Every order or decision is not challenged and it is only in a very few 260cases, those who are aggrieved enter litigation which is veryarduous, tedious and unbearably expensive. Decision makingbodies are fully aware of this fact and they might even attempt togive reasons belatedly for their decisions once they realize thattheir decisions are being challenged. Such a practice can lead tocorruption and to a negation of the principles of natural justice.
2nd ground urged by the petitioner is: since the 1st and the2nd respondents failed to assign reasons for their decision dated29.06.2006 which is marked as P1, it is open for this Court toreview all the material presented by all parties in this case and to 270arrive at a decision thereon.
The remedy by way of certiorari cannot be made use of tocorrect errors or to substitute a correct order for a wrong order.Judicial review is radically deferent from appeals when hearing anappeal the Court is concerned with the merits of the decision underappeal. In appeal the appellate Court can modify, alter, substituteor rescind th order or decision under appeal. (Vide Article 138 of theConstitution that gives the forum jurisdiction to the Court of Appealfor the correction of all errors in fact, or in law, committed by Courtsof first instance, tribunal or other institution.) In Judicial review the 280Court is concerned with its legality and cannot vary, modify, alter orsubstitute the order under review. On appeal the question is right orwrong, on review, the question is lawful or unlawful. Instead ofsubstituting its own decision for that of some other body as
22Sri Lanka Law Reports[2008] 1 Sri L.R
happens when an appeal is allowed, a Court on review isconcerned only with the question whether the act or order underattack should be allowed to stand or not. Footwear (Pvt.) Ltd., andtwo others v Aboosally, former Minister of Labour and VocationalTraining and others.b2)
Diplock, L.J. in R. v Deputy Industrial Inquiries Commissioner 290ex parte /WooreO3) at 84 opined as follows I quote; "the requirementthat a person exercising quasi-judicial functions must base hisdecision on evidence means that it must be based on materialwhich tends logically to show the existence or non existence offacts relevant to the issue to be determined, or to show thelikelihood or unlikelihood of the occurrence of some future eventthe occurrence of which could be relevant. It means that he mustnot spin a coin or consult an astrologer; but he may take intoaccount any material which, as a matter of reason, has someprobative value; the weight to be attached to it is a matter for the 300person to whom parliament has entrusted the responsibility ofdeciding the issue. The supervisory jurisdiction of the Court doesnot entitle it to usurp this responsibility and to substitute its ownview for his".
Sharvananda, C.J. quoted this statement of law with approvalin Chulasubadra v The University of Colombo and others O4) at 288.
Therefore it is my view that it is not for us to decide whetherthe 3rd respondent was an employee or an independent contractor.
It was for the 1st and 2nd respondents to decide that issue. Theissue is a mixed question of fact and law and this Court could 310intervene if that decision was illegal or ultra virus. But it is not forthis Court or the Counsel who appeared for the said respondents totry and justify the decision, by belatedly assigning reasons for theimpugned decision if the decision was made without assigningreasons or at least if the record does not show that the 2ndrespondent had even his reasons for his decision.
For the reasons adumbrated I find that; dealing with the rest ofthe grounds urged by the petitioner would be futile. It would beredundant to attempt to go into the correctness of the impugneddecision which is not a reasoned out decision as the said decision 320is ultra virus the enabling statute namely the EPF Act.
Fowzie and others v Vehicles Lanka (Pvt) Ltd.
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Accordingly we issue a writ of certiorari to quash theimpugned decision / notice dated 29.06.2006 made by the 2ndrespondent and a writ of prohibition prohibiting the 1st and 2ndrespondents from initiating or maintaining any proceedings for theenforcement of the said decision.
Application for mandate in the nature of writs of Certiorari andProhibition is hereby allowed. In all the circumstances of the casewe do not order costs.
SALAM, J. – I agree.
Appeal allowed.