Civil Action2003

KO HON YUE v. LIU CHING LEUNG AND OTHERS

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CACV294/2008KO HON YUE v. LIU CHING LEUNG AND OTHERS
FACV8/2011KO HON YUE v. CHIU PIK YUK, the wife and intended adminstratrix of LIU CHING LEUNG, deceased AND OTHERS
FAMV17/2011KO HON YUE v. CHIU PIK YUK AND OTHERS

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[2018] HKCFI 1973-EN-2018-08-24

KO HON YUE v. CHIU PIK YUK,the wife and intended administratrix of LIU CHING LEUNG, deceased AND OTHERS

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HCA 3494/2003

[2018] HKCFI 1973

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 3494 OF 2003

(Transferred from Labour Tribunal Claim No. LBTC 5616 of 2003)

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BETWEEN
	KO HON YUE (高翰儒)	Plaintiff
and
	(1) CHIU PIK YUK, the wife and intended administratrix of LIU CHING LEUNG (廖正亮), deceased	1^st Defendants
	(2) LIU POON KEUNG (廖本强)
	(3) CHEUNG FO TAI (張伙泰)
	(4) CHONG KAM LING (莊金寧)
	(5) LAI KIM HUNG (賴劍虹)
	(6) LIU LAI KEUNG (廖勵强)
	(7) LIU WAI KI (廖惠其)
	(8) LIU GUN SUN (廖更新)
	(9) LIU KIT MING (廖傑明)
	(10) LIU MAN FUK (廖萬福)
	(11) LIU TIM WAN (廖添穏)
	(12) YAN CHUEK NING (甄灼寧)
	(13) LEE TAK CHING (李德貞)
	(sued collectively as the Management Committee of Fung Kai No.1 Secondary School for the year 2001)
	FUNG KAI NO.1 SECONDARY SCHOOL	2^nd Defendant
	(Ceased to be a party pursuant to the order dated 8^th October 2007)

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Before: Hon Chu JA (sitting as an additional judge of the Court of First Instance) in Court

Date of Decision: 24 August 2018

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DECISION ON COSTS

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A. The application

1. On 29 September 2017, I handed down the judgment (“2^nd CFI Judgment”) on the determination of two issues directed by the Court of Final Appeal in [79] of its judgment dated 23 February 2012^{^[1]} (“CFA Judgment”). My findings on the two issues are: (1) The plaintiff’s contract of employment had not been lawfully terminated by the 1^st defendants (“the defendants”)[2] in July 2001; and (2) The damages to be awarded to the plaintiff for wrongful termination of his employment contract is $354,081.80. At [106(2)] of the judgment, I made a costs order nisi that the defendants pay the plaintiff the costs of the determination.

2. By summons filed on 11 October 2017, the plaintiff applies to vary the costs order nisi to the following:

“The defendants pay the plaintiff the costs of the determination and those in respect of the trial of this action. The costs order made in paragraph 267 of the judgment dated 4 August 2008 be varied and rescinded accordingly.”

In effect, the plaintiff seeks to have, in addition to the costs of the determination of the two issues, the costs of the trial of the action.

3. The defendants oppose the application. It is, however, clear from the written submission of Mr Lee for the defendants that the opposition only relates to the costs of the trial. The defendants have not sought to vary the costs order nisi in relation to the determination of the two issues.

4. Both sides have lodged written submissions, and have no objection to the application being determined on paper without an oral hearing.

B. Costs of the trial of the action

5. In [267] of the judgment handed down on 4 August 2008 after the trial (“1^st CFI Judgment”), there is an order nisi that the plaintiff pays the defendants the costs of this action, including all costs reserved, to be taxed if not agreed. There was no application to vary the order and it had accordingly become absolute.

6. On the plaintiff’s appeal, the Court of Appeal allowed the appeal and ordered that the case be remitted to the trial judge for assessment of damages. In [115] of the Court of Appeal’s judgment[3] (“CA Judgment”), the Court of Appeal made an order nisi that the plaintiff shall have the costs of the appeal and further ordered that “[t]he costs of the trial should wait the assessment of damages”.

7. On the defendants’ appeal to the Court of Final Appeal, the Court of Final Appeal allowed the appeal in part and remitted the case to the trial judge for the determination of two issues and ordered the defendants to pay 75% of the plaintiff’s costs in the Court of Final Appeal. The Court of Final Appeal made no order on the costs of the trial. Neither did it deal with the Court of Appeal’s order relating to the costs of the trial.

8. The defendants do not dispute that as a result of the order in [115] of the CA Judgment, which has not been reversed or varied by the Court of Final Appeal, the costs of the trial may be dealt with by the trial judge after the determination of the two issues. I pause here to observe that the Court of Appeal’s order, and similarly the plaintiff’s present application, only touches on the costs of the trial. The other costs in the action are not engaged in this application.

C. The arguments

9. The plaintiff’s principal argument is that the normal rule of costs follow event should apply and he should have the costs of the trial. This is on the basis that he is the winning party in the action both in terms of liability and quantum, given that in respect of the eight issues identified in the 1^st CFI Judgment (see [32] below), he has succeeded on six of them, and that the failure on the remaining two issues should not justify a different costs order.

10. The defendants, on the other hand, argue that the Court should take an overall view of the case. It is pointed out that the plaintiff has taken a too narrow and simplistic approach in contending that he has succeeded on six of the broad issues in the trial of the action. The defendants say that the bulk of the trial preparation and the evidence as well as a substantial part of the trial had been devoted to issues and disputes that were decided against the plaintiff. It is further said that the plaintiff had acted unreasonably and improperly in grossly exaggerated his claim and advanced claim that was neither justified nor supported by evidence. The defendants contend that the plaintiff should be deprived of 75% of his costs and the costs should be taxed on the District Court scale since the amount of damages awarded falls within the jurisdiction of the District Court.

D. Relevant legal principles

D1. Order 62 rules 3 and 5

11. It is trite that costs are in the discretion of the court. Order 62 rule 3(2) of the Rules of the High Court, Cap. 4A provides that in the exercise of the discretion, the Court shall, subject to Order 62, order the costs to follow the event, except when it appears to the Court that in the circumstances of the case some other order should be made as to the whole or any part of the costs.

12. Order 62 rule 5 deals with matters to be taken into account by the court in exercising its discretion as to costs. With the Civil Justice Reform (“CJR”), the rule was amended as from 2 April 2009 by the Civil Justice (Miscellaneous Amendments) Ordinance 2008, L.N. 152 of 2008 (“Amendment Rules 2008”). Rule 5(1) now provides that the Court in exercising its discretion as to costs shall, to such extent as may be appropriate in the circumstances, take into account the underlying objectives set out in Order 1A rule 1 (rule 5(1)(aa)); the conduct of all parties (rule 5(1)(e)); and whether a party has succeeded on part of his case even if he has not been wholly successful (rule 5(1)(f)).

13. Rule 5(2) further provides that for the purpose of rule 5(1)(e), the conduct of the parties includes (a) whether it was reasonable for a party to raise, pursue or contest a particular allegation or issue; (b) the manner in which a party has pursued or defended his case or a particular allegation or issue; (c) whether a claimant who has succeeded in his claim, in whole or in part, exaggerated his claim; and (d) conduct before, as well as during, the proceedings.

14. The underlying objectives in Order 1A rule 1 include to increase the cost-effectiveness of practice and procedure in proceedings (rule 1(a)); and to promote a sense of reasonable proportion and procedural economy in the conduct of proceedings (rule 1(c)).

15. The Court of Appeal had held that, post-CJR, the approach is not to regard the proposition that costs should follow the event as a general rule, but only to operate in shifting to the unsuccessful party the burden of showing why some different approach should be adopted on the particular fact of the case: Wong Kam Tong v. Tin Shing Court, Yuen Long (IO) (No. 2) [2012] 2 HKLRD 1128 at [11] to [13]; Hung Fung Enterprises Holdings Ltd v. Agricultural Bank of China [2012] 3 HKLRD 679 at [100]; Pfeiffer GmbH v. Cheung Hay Kit t/a Sun Wai Construction, unreported, CACV 245/2013, 29 October 2014 at [7] to [10] and [20]; and Chan Shun Kei t/a Chan Shun Kei Construction Works v. Hong Kong Construction (Hong Kong) Limited (formerly k/a Hong Kong Construction (Holdings) Limited, unreported, CACV 192/2014, 7 March 2016 at [24].

16. At the same time, post-CJR the Courts are more ready to make costs orders that reflect the outcome of different issues, and it is no longer necessary for the winning party to have acted unreasonably or improperly to be deprived of his costs of a particular issue on which he has failed: Pfeiffer GmbH v. Cheung Hay Kit t/a Sun Wai Construction, supra, at [20]; and Chan Shun Kei t/a Chan Shun Kei Construction Works v. Hong Kong Construction (Hong Kong) Limited formerly k/a Hong Kong Construction (Holdings) Limited at [25]. The objective, as explained by Lord Woolf MR in AEI Rediffusion Music Ltd v. Phonographic Performance Ltd [1999] 1 WLR 1507 at 1522-1523, is to require litigants to be selective as to the points to take because “[i]f you recover all your costs as long as you win, you are encouraged to leave no stone unturned in your effort to do so.” In this regard, the third principle[4] in Re Elgindata (No. 2) [1992] 1 WLR 1207, 1214 A-C should be less generally followed.

17. Moreover, Order 62 rule 5(1)(e) and rule 5(2)(a) and (b) also direct the Courts to have regard to the conduct of the parties, including whether it was reasonable to raise, pursue or contest a particular allegation or issue, and the manner in which an allegation or issue was pursued. Whether a matter is an issue will depend on the circumstances of the case. However, in the light of the underlying objectives in Order 1A rule 1, in construing rule 5(2), “issue or allegation” should not be narrowly confined: see Wong Kam Tong v. Tin Shing Court, Yuen Long (IO) (No. 2) at [16]; and Chan Shun Kei t/a Chan Shun Kei Construction Works v. Hong Kong Construction (Hong Kong) Limited (formerly k/a Hong Kong Construction (Holdings) Limited at [25].

D2. Applicability of the CJR amendments

18. Ms Wong submits in the reply submissions that I should not take into account the provisions in Order 62 rule 5 that were introduced with the CJR (namely, rule 5(1)(aa), (e), (f), (g) and rule 5(2)) and the principles that flow from them (see [15] to [17] above) because the trial took place before the CJR and parties proceeded on the basis that costs of the trial would be decided on the pre-CJR law, notably the principles in Re Elgindata (No. 2), supra, including the third principle.

19. In Wing Fai Construction Co Ltd v. Yip Kwong Robert (2011) 14 HKCFAR 935, the Court of Final Appeal had to consider the extent to which the Court has to, or can, take into account the CJR in considering an application to strike out an action for delay, which was issued before, but heard after, the coming into effect of the Reform. After pointing out (at [23]) that the important question, when statutory amendments have intervened, is to inquire whether the amended law will apply to events which have taken place prior to the coming into effect of the amendments, the Chief Justice went on to consider the impact of the CJR on proceedings in existence at the time the Reform came into effect and laid down the principles at [25] to [28] as follows:

“25. Clearly, some aspects of the CJR cannot be applied retrospectively. For example, the new O.5 r.1 prescribes that, now, civil proceedings may only be commenced either by writ of summons or originating summons. This provision does not apply to proceedings which, prior to the CJR taking effect, had already been commenced by some other originating process. Such proceedings would continue as though the amendment had not been made: O.5 r.7.
26. Other provisions introduced under the CJR however – indeed the majority of them – will govern pre-existing proceedings. As a matter of commonsense alone, this must be so. This is also the position as a matter of statutory construction. Mr Barlow drew our attention to a number of authorities to this effect; among them the older cases of Gardner v Lucas (1878) 3 App. Cas. 582, at 603 and Attorney General v Vernazza [1960] AC 965 at 975 and 977, where it was held that statutory provisions dealing with procedural matters will generally be construed so as to apply to proceedings of which the Court was seized at the time the provision came into effect.
27. Some provisions in the new Rules under the CJR (I will in this Judgment refer to the Rules of the High Court) are expressly stated to apply to existing proceedings. One of the most important of these is the new O.25 dealing with the case management summons and conference, one of the most important changes introduced under the CJR. The new procedures under O.25 will apply to actions existing at the time the CJR took place: see O.25 r.11.
28. Even without such express indication that provisions are to apply, it is clear that many other new provisions will apply to existing proceedings. For example, the underlying objectives (contained in O.1A) will clearly apply to all proceedings which were in existence at the time the CJR took effect. It would be odd to suggest that they did not. Nothing in the language of the new O.1A suggests that they would not be so applicable. Further, it would be not only illogical but contrary to the ethos of the CJR were an artificial distinction to be drawn between proceedings in existence at the time the Reform was implemented and post-CJR proceedings.”

20. Applying the principles, it was held that applications to strike out for delay must take into account the CJR (at [29]):

“The approach to applications such as the present must therefore take into account the Reform that has taken place in Hong Kong. This was held by Fok JA to be the position: see Winpo Development Ltd v Wong Kar Fu [2011] 2 HKC 524, at 532D-F (para. 31). This was also the position in England when the Woolf Reform took effect – see Biguzzi v Rank Leisure PLC [1999] 1 WLR 1926; John Ian Purdy v Philip John Cambran [2000] CP Rep 67; Annodeus Entertainment v Gibson, unreported, Chancery Division, 2 February 2000. The Court is to apply the law that exists today. However, this is not to say that when an evaluation is made of the conduct of a party in proceedings (in the present case to examine the delay that has taken place), the Court then somehow disregards the circumstances and the statutory structure in place at the relevant time. There is a distinction to be made between, on the one hand, the application of the law that applied pre-CJR in determining an application and, on the other, taking into account circumstances prevailing at the relevant time, when making a factual evaluation (such as whether or not delay in proceedings was excusable). There is no inconsistency between a court adopting the latter approach without applying the former. This is the position in England: see Biguzzi.”

21. In dealing with the defendants’ complaint of the two-year delay on the plaintiff’s part, the Chief Justice said (at [81(2)]:

“… Mr Barlow made several references to the administration of justice and that under the CJR, delays will no longer be tolerated. These are of course legitimate factors for the court to take into account, but in the present case, there is nothing more than the delay found by Kwan J. As stated earlier, it is important to view any delay in the context in which it arose. The two year delay took place before the CJR came into effect, at a time when the liquidators were perhaps not expected to do as much to move the proceedings along than obviously would be the case nowadays. I daresay a delay in the post-CJR era of two years would almost inevitably involve several breaches of court orders and Rules of court, and would be indicative perhaps of an intention not to bring proceedings to a proper conclusion.”

22. Ms Wong prays in aid [29] and [81(2)] of the Court of Final Appeal’s judgment to support her argument that in considering the present application the court should not take into account the post-CJR rules on costs and the related case law. It is argued that when the trial took place in 2007, the parties were proceeding on the basis that the costs of the trial would be decided on the pre-CJR law, and that the conduct of the trial, including all the pre-trial preparations, took place at a time when parties were arguably less of an obligation to be very cautious in terms of costs in raising, pursuing or contesting issues or allegations.

23. In my view, these arguments have taken too narrow a view of the Court of Final Appeal’s judgment. Similar to the case considered by the Court of Final Appeal, the present case is a “straddle” case (see [79]). Although the trial took place before the CJR with the initial costs order also made before the coming into effect of the amendment to the Rules, it is after the CJR that the question of the costs of the trial was ordered to be re-opened and re-considered. It is thus important to take note of the emphasis of the approach to be adopted for the “straddle” cases as laid down by the Court of Final Appeal. They are: (1) the CJR should in general apply to proceedings in existence at the time the Reform came into effect, and the majority of the amended or new procedural rules will govern pre-existing proceedings; and (2) importantly, the underlying objectives in Order 1A rule 1 should apply to pre-existing proceedings, even when this is not expressly provided for in the Rules (at [25] to [28] of the judgment, see [15] and [16] above).

24. In the context of litigation costs, Order 62 rule 5(1) has made express reference to the underlying objectives in Order 1A rule 1. In my view, it is plain that the approach to the exercise of discretion on costs should take into account the CJR principles and the related case law, even though the proceedings in question were commenced before the Reform. The objectives of achieving cost-effectiveness, proportionality and procedural economy are of particular relevance when exercising the judicial discretion on costs. A key aim of the CJR, as reflected by the underlying objectives, is to reduce litigation costs as much as practicably possible, with an emphasis on proportionality. Courts should attach significance to these considerations, which involve commonsense notions of reasonableness and a sense of proportion, when making orders for costs.

25. Ms Wong also relies on Order 62 rule 37(4) and argues that the amendments made to Order 62 under the CJR are not intended to be applied to costs of events that took place before the CJR. Order 62 rule 37(4) provides that:

“No costs for work undertaken before the commencement of the Amendment Rules 2008 are to be disallowed if those costs would have been allowed under this Order as in force immediately before the commencement.”

26. Order 62 rule 37 was added under Part 23 of the Amendment Rules 2008. It contains transitional provisions, which, as the heading of the rule suggests, relate only to Part 23. The amendments to Order 62, however, come under two parts. Apart from Part 23, which relates to taxation of costs, there is also Part 22, which concerns general approach to inter-party costs and includes the amendments to Order 62 rule 5 (see [12] and [13] above). Also included in Part 22 is an amendment to Order 62 rule 7(2), the effect of which is that the underlying objectives in Order 1A rule 1 shall be taken into consideration when the court decides on costs arising out of a party’s misconduct or neglect (see rule 7(2)(aa)).

27. As a matter of construction, given that the transitional provisions in rule 37 apply only to Part 23 and that the amendments to Order 62 rule 5 are separately contained in Part 22, rule 37 cannot be read as having any bearing on the application of the amendments to Order 62 rule 5. I do not accept that rule 37(4) supports or throws light on the argument that the amendments made to Order 62 under the CJR are not intended to be applied to costs of proceedings or events that took place before the CJR. On the contrary, the clear legislative intent is that the amendments under Part 22 shall apply irrespective of whether the costs in question arose before or after the CJR. This is evidenced by the fact that: (1) the amendments to Order 62 rule 5 are separately contained in Part 22; (2) the amendment to Order 62 rule 7(2), which similar to Order 62 rule 5(2) makes express reference to the underlying objectives in Order 1A rule 1, is also separately contained in Part 22; and (3) unlike Part 23, Part 22 does not contain any transitional provisions.

28. Additionally, it should be recognized that independent of the CJR, the Court has always enjoyed a wide discretion on costs, including depriving a winning party of part of his costs to reflect the justice of the case. Likewise, the manner in which a party conducts his litigation is always a factor that the Court can, and should, take into account in exercising the judicial discretion on costs.

29. In short, I am of the view that when deciding how the discretion should be exercised in relation to the present application, I should have regard to the amendments to Order 62 rule 5 and the related case law in [15] to [17] above.

E. Application of the legal principles

30. The pertinent question in the present application is whether, having regard to the circumstances of the case, costs of the trial should follow event or some other order should be made as to the whole or any part of the costs of the trial. In this regard, the relevant considerations to be taken into account when taking an overall view of the case will include: (1) the extent of the plaintiff’s success; (2) the unsuccessful claim in breach of implied term; and (3) the litigation conduct of the plaintiff.

E1. The extent of the plaintiff’s success

31. The plaintiff’s claim for damages was pleaded on three bases: wrongful termination of employment contract, constructive dismissal and breach of implied term. His pleaded claim was for over $14 million, which was revised to $6.9 million at the trial and further revised downwards to $2.6 million at the hearing of the determination of the two issues remitted by the Court of Final Appeal. The plaintiff succeeds in the claim for wrongful termination of employment contract but fails in the claim for constructive dismissal and, significantly, the claim for breach of implied term. He was awarded damages in the sum of $ 354,081.80.

32. At the trial, on the basis of the pleadings, eight broad issues for determination were identified (see [52] of the 1^st CFI Judgment). They are:

(1)   Whether the action amounted to an abuse of court process.
(2)   Whether the 1st defendants were correctly sued in this action.
(3)   Whether the Code of Aid (“COA”) formed part of the plaintiff’s employment contract.
(4)   Whether the employment contract was continuous until the plaintiff’s retirement.
(5)   Whether the termination of the plaintiff’s employment was wrongful and whether there was constructive dismissal.
(6)   Whether the implied term pleaded by the plaintiff exists in law and whether there was any breach of it.
(7)   What would be the quantum of damages that the plaintiff was entitled to.
(8)   What was the appropriate costs order consequent upon the order that the 2nd defendant ceased to be a party to the action.

33. Issues (1) and (2) stemmed from the defendants’ defence. Issues (3), (4) and (5) concerned the plaintiff’s claim for wrongful termination of employment contract and constructive dismissal. Issue (4) also impacted on the quantum of damages. Issue (6) was about the claim for breach of implied term. There were two limbs to this implied term, the first is a duty to act in good faith towards the plaintiff, and the second is a duty not to damage the relation of confidence and trust between the plaintiff and the defendants (see [9A] of the Re-Re-Amended Statement of Claim). Issue (7) was on the quantum of damages. Issue (8) arose from the plaintiff’s acceptance that the 2^nd defendant (i.e. the School) is not a legal person and therefore not a proper party to the action, hence the discontinuance of the action against it.

34. In contending that costs of the trial should follow event, Ms. Wong’s principal argument is that the plaintiff has succeeded on six out of the eight issues, namely, Issues (1) to (5) and (7). Mr. Lee, on the other hand, argues the eight issues identified in the CFI Judgment are broad issues involving a number of sub-issues. It is said that, upon an analysis of how these issues were fought at the trial and the Court’s reasoning on these issues (see [15] to [46] of the defendants’ written submission), it can be seen that in relation to Issues (1), (2), (5) and (7), although they were determined in his favour, the plaintiff did not succeed in a lot of the sub-issues or arguments under these issues.

35. In my view, there is force in Mr. Lee’s argument and his analysis of the extent of the plaintiff’s success under these issues. Under Issues (1) and (2), the plaintiff had advanced a wide range of sub-issues and arguments at the trial, which were not accepted at trial (see [72] to [85] and [108] to [127] of the 1^st CFI Judgment). In the Court of Final Appeal, Issue (1) was held in favour of the plaintiff[5] on a point not pursued by the plaintiff at the trial, namely, it was too late for the defendants to raise the issue of abuse of process since the action had proceeded to trial. It should also be noted that, contrary to the thrust of the plaintiff’s position and arguments at trial, the Court of Appeal agreed that the plaintiff’s claim in this action could have been included in the first claim he brought in the Labour Tribunal (see [91] of the CA Judgment). On Issue (2), the defendants failed because they had not pleaded, and put forward evidence on, the point that they were merely agents of the school sponsoring body[6].

36. In the case of Issue (5), the plaintiff had failed in his very extensive challenge to the events associated with the issue, which took up a significant part of the trial (see section E.2 below). In the 2^nd CFI Judgment (at [14] to [52] and [81] to [88]), I held that, on the facts, the defendants were fully entitled to summarily dismiss the plaintiff, and there were also good and sufficient reasons for terminating his employment under clause 56(g) of the COA. The termination of the plaintiff’s employment was held to be wrongful because the defendants’ termination letter did not rely on summary dismissal but purported to pay one month’s salary in lieu of notice, which did not conform to the termination procedure in the COA. As for Issue (7), although the plaintiff was awarded damages, it was based neither on his pleaded case on quantum nor on the case on quantum that was put forward at the trial. It is also relevant to note the large gap between the amount claimed and the award of damages eventually ordered.

37. In short, while Issues (1), (2), (5) and (7) were determined in favour of the plaintiff, it is fair to say that he has not been successful with regard to many of the arguments or sub-issues underlying these issues, and also the case he sought to run on these issues.

38. Ms. Wong argues in her reply submission that issues that had been identified and framed by the court for adjudication at trial should not, when it comes to consideration of costs, be further divided into sub-issues based on the parties’ arguments made at the trial. It is said that to deprive the plaintiff of his costs on winning Issues (1) to (5) and (7) is wrong in principle and not supported by authorities.

39. In my view, the argument misses the nub of the matter. It is not about performing a forensic, microscopic exercise of dividing the eight broad issues identified and determined in the CFI Judgment into sub-issues, or splitting up the costs by reference to the sub-issues or the arguments made by the parties at trial. The true importance of Mr Lee’s analysis, as I see it, lies in affording a broad and overall view of the manner in which the trial was conducted (i.e. whether the plaintiff had been selective in the points to take and how did the plaintiff framed and pitched his case) as well as giving a proper perspective of the outcome of the action (i.e. what is the extent of the plaintiff’s success). This reflects the objective of what the authorities referred to as the “issue-based” approach, and as explained by Lord Woolf in AEI Rediffusion Music Ltd v. Phonographic Performance Ltd, supra, at 1522-1523 (see [16] above). It also accords with the approach to costs under Order 62 rule 5(2) and the underlying objectives in Order 1A rule 1. The manner in which an issue or allegation is pursued, and whether the proceedings were conducted with reasonable proportion and procedural economy are relevant considerations in the exercise of the discretion on costs. The Court of Appeal had held that what constitutes an issue or an allegation will depend on the circumstances of the case, and it should not be narrowly confined (see [17] above).

40. The analysis of the plaintiff’s arguments and the sub-issues involved in Issues (1), (2), (5) and (7) and their outcome has brought out the non-selective approach, to the extent of being unrealistic, that the plaintiff had adopted at the trial. It is not an overstatement to say that his trial legal team had left no stone unturned. The indiscriminate approach had led to a multiplicity of legal and factual issues and arguments and had unnecessarily added to the complexity and length of the case. This is a relevant consideration when deciding on the present application not only because of the impact on the costs, but also because it reflects the litigation conduct, both of which be further addressed in the latter part of this decision.

E2. The claim in breach of implied term

41. I turn next to consider the impact of the unsuccessful claim in breach of implied term on the conduct of the trial.

42. The trial lasted for 19 days. The first four days were spent on: (1) the plaintiff’s opening, which dealt primarily with the facts of the plaintiff’s case; (2) the subpoenas issued to the officers of the Education Department to produce documents bearing on the acrimonious dispute between the plaintiff and the two schools involved in this litigation; and (3) the plaintiff’s unsuccessful application to further amend the Statement of Claim to add a new cause of action in breach of statutory duty. This was followed by 11 days of oral evidence and four days of closing submissions from both sides.

43. Among the eight broad issues, Issues (1) to (4), (7) and (8) turned primarily on construction of documents and arguments on law with no or very little factual dispute. Issues (5) and (6) were, however, different. Although they both involved some legal arguments and Issue (5) also involved the construction of the COA, they were heavily bounded with facts that were hotly contested. The two issues shared some common factual issues. The factual disputes concerned the events associated with what the 1^st and 2^nd CFI Judgments referred to as the 1^st to 4^th Warnings/Incidents, the 5^th Incident, and what happened in the 2000-2001 school year when the plaintiff taught at FK-LMST School. These events formed the subject matter of the bulk of the oral evidence adduced at the trial. A total of 15 witnesses gave evidence, of which ten were called by the plaintiff (nine factual witnesses and one expert witness) and five were the defendants’ witnesses (four factual witnesses and one expert witness). The evidence of the plaintiff’s witnesses lasted for six and a half days while that of the defendants’ witnesses took four and a half days to conclude. The plaintiff and the late principal of the School, who were the key witnesses, each testified for nearly three days. In terms of documentary evidence, the vast majority of the documents in the 13 trial bundles, two of which were produced by the Education Department on subpoena, were also related to the factual disputes, with the issue on quantum of damages also taking up a fair load of the trial bundles.

44. Ultimately, the plaintiff failed badly on the factual disputes, as can be seen from the 1^st CFI Judgment (at [175] to [256]). Importantly, too, the plaintiff also failed completely on Issue (6) and the claim for breach of implied term. The implied duty of good faith towards the plaintiff was held not to be a part of the common law (see [171] and [172] of the 1^st CFI Judgment). It was also held that there was no breach of the implied duty not to damage the relation of confidence and trust in that there was no factual foundation to support a breach (see [175] to [256] of the 1^st CFI Judgment).

45. This issue/claim of breach of implied term was a distinct and independent issue that stood separately from the claim for wrongful termination of employment contract. It also entailed a separate claim for damages in that the plaintiff had raised a claim for damage to reputation occasioned by being terminated in the middle of an academic year, which was plainly unsustainable when the evidence did not support a loss of reputation (see [262] of the 1^st CFI Judgment).

46. Ms Wong submits that this issue/claim of breach of implied term should not be regarded as distinct and separate in itself as it was closely related to the issue/claim of wrongful termination of employment in that the factual events of the two issues/claims were interwoven. I do not agree. It is true that there was some overlapping of the factual disputes of the two claims. However, given that the plaintiff succeeded on the claim for wrongful termination not on the basis of the factual issues (see [36] above), and that, importantly, most of the factual disputes also relevant to the claim for wrongful termination were held against him, the overlapping is of no consequence. Further, the evidence on the factual disputes surrounding the issue/claim of breach of implied term had gone considerably further than those of the issue/claim of wrongful termination as the plaintiff was hoping to elicit evidence of spite and ill-motive on the part of the defendants’ witnesses, notably the late principal of the School and the principal and panel chair of the English subject of FK-LMST School, in their dealings with the plaintiff so as to make good his case that the termination of his employment was made in bad faith and the confidence and trust had been damaged.

47. There can be no doubt that but for this claim for breach of implied term, the load of oral and documentary evidence and the submissions put forward at the trial would have been substantially reduced. The claim had therefore greatly lengthened the trial and increased the costs. While post-CJR, the third principle in Re Elgindata (No. 2), supra, should be less generally followed, even if applying the principle, the significant increase in the length and costs of the trial brought about by the failed claim for breach of implied term justifies depriving the plaintiff of part of his costs of the trial.

E.3 The plaintiff’s litigation conduct

48. Turning thirdly to the plaintiff’s litigation conduct, Mr Lee submits that the plaintiff had acted unreasonably and improperly with particular reference to the advancement and pursuit of the claim for breach of implied term and the grossly exaggerated amount of his claim.

49. As can be seen from the determination of the issue/claim for breach of implied term in the 1^st CFI Judgment (at [165] to [257]), there was no proper factual or legal basis on which this claim can stand. It would appear that the claim was advanced to ward off or water down the criticisms of the plaintiff’s teaching standard and performance in lesson and the way in which he related to students and fellow colleagues, which were the reasons underlying the decision to terminate his employment. The claim was tenaciously fought by the plaintiff, as illustrated by the number of days taken up in examination of witnesses and the volume of documentary evidence. As the discussion in the preceding section shows, this claim had greatly lengthened the trial, unduly compounded the complexity of the dispute and ultimately augmented the costs of the trial. I agree that, on an overall view of this case, it was not reasonable for the plaintiff to maintain the claim for breach of implied term and to pursue it in the way he had done.

50. The manner in which the plaintiff approached the quantum of his claim was even more unreasonable. He had evidently exaggerated his claim. It was excessive to have sought damages on the basis of a complete loss of salary, provident fund contribution and dividend of provident fund for 16 years, being the entire period of the remainder of his working life. This stance was maintained throughout the trial when there was no realistic prospect of substantiating the $14 million claimed on pleading or the $6.9 million sought at trial. The claim for damage to reputation in connection with the claim for breach of implied term was likewise unwarranted in light of the complete lack of evidential basis. Furthermore, the plaintiff was ill prepared to prove his case on quantum (see [262] of the 1^st CFI Judgment). The evidence on quantification of damages had come in dribs and drabs. Further documents, notably with regard to the provident fund contribution and benefits, continued to be introduced as the trial progressed. The table of calculation had to be revised in the course of the trial. Notwithstanding all these, the plaintiff’s evidence on quantum remained patchy and incomplete.

51. All in all, the plaintiff had adopted an indiscriminate and wholly disproportionate approach in the conduct of the trial. I have already alluded to the unreasonable pursuit of the claim for breach of implied term and the improper exaggeration of his claim. It is also relevant to take note of the wide range of arguments raised under the other issues, such as those under Issues (1) and (2), and the resistance to bear the costs of the mis-joinder of the 2^nd defendant (Issue (8)). As a result of the plaintiff’s litigation approach and conduct, the trial which was originally set down for 14 days overran to 19 days. It should also be noted that the trial was preceded by two pre-trial reviews[7] resulting in the discontinuance of the claim against the 2^nd defendant. Despite further amendments to the Statement of Claim were sought and granted at the second pre-trial review, some two weeks later on the third day of the trial, the plaintiff applied to further amend to add a new claim for breach of statutory duty based on non-compliance of Regulation 76 of the Education Regulations Cap. 279A, which was refused (see the Reason for Decision dated 13 November 2007).

52. That the plaintiff had conducted his case at the trial in an unreasonable manner and without any regard to reasonable proportion further justifies depriving him of part of his costs.

E4. Exercise of the discretion

53. For the reasons set out above, and having regard to the legal principles stated in section D above, this is a clear case for departing from the normal rule of costs follow event. Even though the plaintiff was awarded damages in the action, he was not wholly successful. The failed claim of breach of implied term had significantly increased the length and costs of the trial. His conduct in unreasonably exaggerated his claim, and in adopting an indiscriminate and disproportionate approach to issues in dispute had further added to the costs of the trial. All these considerations lend support to the defendants’ contention that the plaintiff should be deprived of a significant portion of his costs of the trial.

54. In considering the extent to which the plaintiff’s costs are to be deprived, I bear in mind that the trial took place before the CJR when litigants and the legal practitioners were less mindful of the importance of achieving cost-effectiveness and reasonable proportion, and adopting a focused and selective approach to the conduct of proceedings. In all the circumstances of the case, I consider that it is appropriate to deprive the plaintiff of 40% of the costs of the trial. Had the trial taken place after the CJR, it would have been appropriate to order a greater reduction in the costs to be awarded to the plaintiff.

F. Taxation on District Court scale

55. I turn finally to the defendants’ argument that the plaintiff’s costs should be taxed on the District Court scale. In Oriental daily Publisher Ltd v. Ming Pao Holdings Ltd (No.2) [2011] 3 HKLRD 425, at [28] to [30], the Court of Appeal proceeded on the basis that where the judgment awarded on a claim brought in the High Court is in a sum within the District Court jurisdiction, the costs will be on the District Court scale unless the High Court is persuaded that, when the plaintiff issued the writ, he had a reasonable prospect of recovering a sum in excess of the District Court jurisdiction.

56. The amount awarded to the plaintiff in this case is $354,081.80, which is well within the District Court jurisdiction, which has since 1 December 2003 stood at $1 million[8]. Ms Wong submits that the plaintiff did have a reasonable prospect of obtaining an award in excess of $1 million, relying on two points:

(1) The Court of Appeal had said that “the plaintiff might be entitled to substantial damages” ([98] and [108] of the CA Judgment).
(2) There is uncertainty involved in assessing the damages that may be awarded in that much depends on the court’s view on the period of time allowed to the plaintiff to obtain alternate employment.

57. On the first point, it is important to consider the context in which the Court of Appeal’s comment was made. In [98] and [108] of the CA Judgment, the Court of Appeal was considering the issue of abuse of process, viz. whether the plaintiff’s claim was liable to be struck out for abuse of process on the basis that the claim could have been included in the earlier claim he brought in the Labour Tribunal and settled with the School.

58. In this context, the Court of Appeal said at [98]:

“… it is not clear whether the learned judge’s decision to strike out the action was influenced by her view that the plaintiff was only entitled to 1 month’s pay from 13 July 2001 in lieu of notice. On the basis of my judgment, subject to assessment, the plaintiff might be entitled to substantial damages. Had the learned judge decided that the plaintiff might be entitled to substantial damages, I doubt whether she would have struck out the claim.”

59. The Court of Appeal made the same point at [108]:

“… I believe the learned judge would not have dismissed the plaintiff’s claim for abuse of process had she concluded that he might be entitled to substantial damages.”

60. The reference to possibility of obtaining “substantial damages” in both paragraphs in the CA Judgment was to contrast the one-month salary in lieu of notice[9], which the plaintiff was found to be entitled to in the 1^st CFI’s judgment. It cannot be taken to mean that the Court of Appeal was of the view that the plaintiff stood to obtain damages in excess of $1 million.

61. As to the second point that there was uncertainty in the amount to be awarded by the court in that much depended on what the court would regard as a reasonable period of time for the plaintiff to obtain alternative employment, it cannot serve to advance the plaintiff’s position on this issue for a number of reasons. Firstly, although there is an element of uncertainty regarding the exact amount of damages that the court would award, the quantification is not arbitrary but is based on well-established legal principles. Ms. Wong has not elaborated on how, in accordance with the legal principles, the plaintiff could reasonably expect to receive an award of damages that came within the High Court jurisdiction.

62. The plaintiff’s claim was pleaded on several bases, but ultimately he only succeeded on the basis that the employment contract was not lawfully terminated in accordance with the procedures under Appendix 17 of the COA (see [90] of the 2^nd CFI Judgment). The Court of Final Appeal had pointed out (at [79(2)] of CFA Judgment) that, in assessing damages on this basis, the objective was to calculate the appropriate period when the plaintiff could be expected to be paid his salary until his employment would have been terminated. On the facts of this case, and bearing in mind the analysis in [94] to [99] of the 2^nd CFI Judgment, there is no realistic basis for expecting the award to exceed $1 million.

63. Secondly, the issue of what would be a reasonable period of time for the plaintiff to obtain alternative employment is an aspect of mitigation. The plaintiff’s pleaded case did not appear to have considered this issue and the wider issue of mitigation. The plaintiff’s pleaded case on damages for wrongful termination was that he should be compensated for the loss of salary and employment benefits for the entire period from the termination of his employment up to his retirement at the age of 60. In respect of the unsuccessful claims in constructive dismissal and breach of implied term of good faith, the plaintiff sought damages in similar amount. The plaintiff had maintained this stance throughout the trial, and was only prepared to give credit for the payments already received from the School and the income from being a part-time or substitute teacher. The amount of damages sought in the pleading and the plaintiff’s quantification of the award he would receive from the court were not tied to any consideration of what would have been a reasonable period for him to obtain alternative employment.

64. Thirdly, even if the issue of what would be a reasonable period of time for the plaintiff to obtain alternative employment was engaged on the pleading, it is relevant to consider the observations on the quantum of damages previously made in the 1^st CFI Judgment (at [258] to [263]), which the Court of Final Appeal took note of when remarking that other factors would have to be taken into account if the court had to resort to other methods of assessment. On any realistic view of the case, the award for wrongful termination of the employment, after giving credit to the payments already received and other income received by the plaintiff after termination of employment, would not have exceeded $ 1 million.

65. In short, I am not persuaded that, when the plaintiff issued the writ, he had a reasonable prospect of recovering a sum in excess of the District Court jurisdiction. The plaintiff’s costs should therefore be taxed on the District Court Scale.

G. Costs of this application

66. On an overall view of this application, the plaintiff and the defendants have each succeeded on some aspects of it and failed on other aspects. I consider a fair exercise of the discretion is to make no order on the costs of the application.

H. Disposition

67. I make the following order on the application:

(1)    The costs order nisi is varied to the following:
(a)   The 1^st defendants pay the plaintiff the costs of the determination, to be taxed if not agreed.
(b)   The costs order made in paragraph 267 of the judgment dated 4 August 2008 be varied and replaced by an order that the 1^st defendants pay the plaintiff 60% of the costs of the trial, to be taxed on District Court scale.
(2)   There is no order as to the costs of the application.

	(Carlye Chu)
	Justice of Appeal Sitting as an additional judge of the Court of First Instance

Ms Linda Wong instructed by Ho Tse Wai & Partners for the plaintiff.

Mr Lee Tung Ming instructed by ONC Lawyers for the 1^st defendants.

[1] (2012) 15 HKCFAR 72, 112.

[2] As the 2^nd defendant has ceased to be a party and for ease of reference, the 1^st defendants were referred to as the defendants in the 2^nd CFI Judgment, and will be similarly referred to in this decision.

[3][2011] 1 HKLRD 733.

[4] The third principle states that the general rule of costs should follow the event does not cease to apply simply because the successful party raises issues or makes allegations on which he fails, but where that has caused a significant increase in the length or cost of the proceedings he may be deprived of the whole or part of his costs.

[5] See [84] to [88] of the CFA Judgment.

[6] See [80], [82] and [85] of the CA Judgment.

[7] They took place on 20 September and 8 October 2007, which was about one month before the trial commenced on 22 October 2007.

[8] When the plaintiff commenced the action, the District Court jurisdiction was $600,000. On 1 December 2003, it was raised to $1 million.

[9] Although the Court of Appeal stated this was in the sum of $76,758, the plaintiff’s monthly salary at the time of termination was in fact $47,590. $76,758 was the sum paid by the School to the plaintiff in the Labour Tribunal claim. It was later discovered that there was a calculation error and the plaintiff had repaid $5,296.25 to the School.

111571-EN-2017-09-29

KO HON YUE v. CHIU PIK YUK, the wife and intended administratrix of LIU CHING LEUNG AND OTHERS

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HCA3494/2003

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 3494 OF 2003

(Transferred from Labour Tribunal Claim No. LBTC 5616 of 2003)

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BETWEEN
	KO HON YUE (高翰儒)	Plaintiff
	and
	(1) CHIU PIK YUK, the wife and intended administratrix of LIU CHING LEUNG (廖正亮), deceased	1^st Defendants
	(2) LIU POON KEUNG (廖本强)
	(3) CHEUNG FOR TAI (張伙泰)
	(4) CHONG KAM LING (莊金寧)
	(5) LAI KIM HUNG (賴劍虹)
	(6) LIU LAI KEUNG (廖勵强)
	(7) LIU WAI KI (廖惠其)
	(8) LIU GUN SUN (廖更新)
	(9) LIU KIT MING (廖傑明)
	(10) LIU MAN FUK (廖萬福)
	(11) LIU TIM WAN (廖添穏)
	(12) YAN CHUEK NING (甄灼寧)
	(13) LEE TAK CHING (李德貞)
	(sued collectively as the Management Committee of Fung Kai No.1 Secondary School for the year 2001)
	FUNG KAI NO.1 SECONDARY SCHOOL	2^nd Defendant
	(Ceased to be a party pursuant to the order dated 8^th October 2007)

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Before: Hon Chu JA (sitting as an additional judge of the Court of First Instance) in Court

Date of Hearing: 27 to 30 April 2015

Date of Judgment: 29 September 2017

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JUDGMENT

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I. Introduction

1. This is the determination of two issues (“Two Issues”) pursuant to the order of the Court of Final Appeal given in [79] of its judgment dated 23 February 2012[1].

2. The Two Issues are: (1) whether the plaintiff’s contract of employment had been lawfully terminated by the defendants[2] (“Issue 1”); and (2) If there was a wrongful termination, the damages that should be awarded to the plaintiff (“Issue 2”).

3. The background and facts leading to this piece of litigation between the parties have been detailed in three judgments, being chronologically my judgment dated 4 August 2008 (“CFI Judgment”), the judgment of the Court of Appeal dated 19 November 2010[3] and the judgment of the Court of Final Appeal (“CFA Judgment”). It is not necessary to recite them in this judgment. I will when dealing with the Two Issues refer to the evidence and facts that are directly relevant.

II. Parameters of the determination

4. In view of the arguments between the parties, which will be discussed below[4], it is necessary to delineate the parameters of this determination before going into the Two Issues. Firstly, this is not a retrial. The scope of the hearing is confined to the determination of the Two Issues as identified and explained in the CFA Judgment, and in accordance with the law stated therein. Accordingly, the parties’ arguments must be similarly confined.

5. Secondly, in respect of the evidence and facts, I had previously refused the plaintiff’s application to adduce further evidence on Issue 2 in the form of supplementary witness statements with documents annexed thereto[5]. The determination will therefore be on the basis of the evidence adduced at the trial. The CFI Judgment had made assessment of the evidence and witnesses and also findings of facts, including evidence and facts relevant to the Two Issues. They have not been overturned in the appeals. They will form the factual matrix of this determination.

III. Issue 1: Had the plaintiff’s employment been lawfully terminated?

A. CFA Judgment

6. The first issue of whether the plaintiff’s employment had been lawfully terminated by the defendants is explained by the Court of Final Appeal in [79(1)] of the CFA Judgment as follows:

“As to whether the contract of employment had been lawfully terminated by the defendants. This would mean an investigation as to whether the terms of clause 56(g) and Appendix 17 of the COA were complied with by the defendants (including whether he had been summarily dismissed). If there had been a lawful termination by the defendants, the action must be dismissed.”

7. Earlier in the Judgment at [65] and [78], the Court of Final Appeal held that the plaintiff’s employment could only be lawfully terminated for cause. This covers two situations. The first is where summary dismissal is justified either under the Termination Clause in the 1999/2000 Conditions of Service and clause 56(g) of the Code of Aid (COA), namely, having been convicted of a criminal offence or committed a grave breach of duty, or under section 9 of the Employment Ordinance, Cap. 57. The second is termination in accordance with clause 56(g) of COA which requires good and sufficient reasons for dismissal and compliance with the procedures set out in Appendix 17 of the COA.

B. Overview of the parties’ position

8. The defendants’ primary position is that the plaintiff had been summarily dismissed. Alternatively, the defendants contend that there has been a lawful termination under clause 56(g). The plaintiff, on the other hand, disagrees that summary dismissal is justified and/or that the plaintiff had been summarily dismissed. The plaintiff further argues that there were no good and sufficient reasons for a termination under clause 56(g) of the COA, and that the procedures under Appendix 17 had not been complied with.

9. The main questions under Issue 1 are therefore twofold:

(1) Whether in July 2001, the defendants were entitled to summarily dismiss the plaintiff, and if so whether the plaintiff had been summarily dismissed; and
(2) Whether in July 2001 the defendants had good and sufficient reasons to dismiss the plaintiff, and if so whether clause 56(g) and Appendix 17 of COA had been complied with.

C. Regulation 76 of the Education Regulations, Cap. 279A

10. The plaintiff takes the point that the termination of the employment is in any event unlawful, having failed to comply with Regulation 76 of the Education Regulations, which provides that the appointment and dismissal of a teacher shall be determined by a majority vote of all the members of the management committee of the school. Ms Wong, who appears for the plaintiff, argues that there is no evidence that the plaintiff’s dismissal in July 2001 was determined by a majority vote of the school management committee (SMC) of Fung Kai No.1 Secondary School (“the School”), with whom the plaintiff was employed.

11. This point about breach of Regulation 76 can be disposed of shortly. In the first place, the point was not part of the plaintiff’s pleaded case at the trial. The plaintiff had after the commencement of the trial sought leave to further amend the statement of claim to include a cause of action based on breach of Regulation 76. The application was refused[6] and there was no appeal from it.

12. Further in [56] of the CFA Judgment, when referring to clause 46(a) of the COA which provides that the appointment and dismissal of teachers must be in accordance with Regulations 76, 77 and 78 of the Education Regulations and the COA, the Chief Justice said: “We have not been provided with Regulations 76, 77 and 78 of the Education Regulations nor any instructions issued by the Director of Education. We are told that they do not feature in the present case.” The argument on breach of Regulation 76 has been put to rest and should not be resurrected in this determination.

13. Thirdly, the plaintiff’s trial counsel, Mr Chiu, had in his closing submission at the trial made a similar argument on Regulation 76, which was rejected (see [160] of CFI Judgment). When remitting the case for determination on whether the plaintiff’s employment had been lawfully terminated, the Court of Final Appeal has set the parameter to be “an investigation as to whether the terms of clause 56(g) and Appendix 17 of the COA were complied with by the defendants (including whether he had been summarily dismissed)” (see [79(1)]). There is no reference to Regulation 76, which therefore does not fall within the scope of the remittance. It is accordingly not open to the plaintiff to argue in this determination that the termination of his employment by the defendants is unlawful on the ground of non-compliance with Regulation 76.

D. Summary dismissal
D1. Summary dismissal not pleaded

14. The plaintiff takes the pleading point that it is not open to the defendants to contend that the plaintiff was summarily dismissed because this has not been pleaded. [18(c)] and [18(d)] of the Re-Re-Amended Defence plead that the plaintiff may be summarily dismissed for having been convicted of a criminal offence or committed a grave breach of duty. It then goes on to plead various misconduct and breaches of duty by the plaintiff and to deny that the termination of the plaintiff’s employment is wrongful or unlawful. It is therefore correct to say that the defendants have not specifically pleaded that the plaintiff was summarily dismissed.

15. Despite the state of the pleadings, at the trial the plaintiff did not take objection to the defendant advancing a case that the plaintiff could have and was in fact summarily dismissed (see defendants’ closing submission [85] to [89]). This would not be an oversight considering that the litigation was highly contentious and the submissions on both sides were detailed and extensive.

16. Most importantly, the Court of Final Appeal in [79(1)] of its judgment expressly directed that the investigation under Issue 1 is to include whether the plaintiff had been summarily dismissed. This direction on the scope of the determination and investigation is binding on this court. It is therefore not open to the plaintiff now to object to the defendants putting forward a case of summary dismissal in this determination.

D2. The four warnings issued by the School to the plaintiff

17. In contending the plaintiff was liable to be summarily dismissed in July 2001, the defendants rely on: (i) four formal warnings given by the School between 1995 and 1999 arising out of four incidents; (ii) the plaintiff’s incompetent teaching and his misconduct during lessons while teaching at the School; and (iii) the plaintiff’s incompetent teaching and poor performance during the 2000-2001 school year when he was transferred to teach in Fung Kai Liu Man Shek Tong Secondary School (“FK-LMST School”).

18. The fact that two verbal and two written warnings were issued to the plaintiff by the School on 14 December 1995, 4 March 1998, 10 February 1999 and 1 June 1999 (respectively “the 1^st Warning”, “the 2^nd Warning”, “the 3^rd Warning” and “the 4^th Warning”, and collectively “the 4 Warnings”) is not in dispute. The four incidents leading to the issue of the 4 Warnings were set out in the CFI Judgment at [176] to [189], [190] to [202], [203] to [216] and [217] to [228] respectively.

19. Briefly stated, the reason for the 1^st Warning was for undermining the effective administration and operation of the School. It was about the circulation of, and collection of teachers’ signatures to, what was referred to as “unofficial minutes” of a staff meeting, followed by the delivery of the signed minutes to the principal in advance of the release of the draft official minutes (“the 1^st Incident”). The 2^nd Warning was issued on the ground that the plaintiff deliberately made a factually incorrect statement at a teachers’ consultative meeting to cause misunderstanding among the teachers and to adversely affect the reputation of the school authority (‘the 2^nd Incident”). The 3^rd Warning was for a serious breach of discipline in making unauthorised markings on three school circulars in the course of a week (“the 3^rd Incident”). The 4^th Warning was also for serious breach of discipline in interfering with and obstructing two teachers in the discharge of their duties as returning officers in the teachers’ representative election (“the 4^th Incident”).

D3. The plaintiff’s behaviour in class and teaching performance in the School (5th Incident)

20. In respect of the plaintiff’s performance and behaviour while teaching at the School, this was discussed in [19], [232] to [246] of the CFI Judgment (referred to as “the 5^th Incident” at the trial). What happened was on 29 March and 14 April 2000, the School received two complaints on the plaintiff’s teaching performance and behaviour made respectively by six Form 5 students and 23 Form 6 students. The School carried out an investigation into the complaints, including administering questionnaires on the two Form 5 and Form 6 classes taught by the plaintiff. The results showed that a significant majority of the students were dissatisfied with the plaintiff’s method and standard of teaching and his behaviour and performance during lessons.

21. In summary, the students complained of: (i) improper use of lesson time, such as criticising school administration, commenting and criticising other teachers, and instead of engaging in teaching, merely made students do exercises in class and gave out answers without explanations and elaborations; (ii) use of inappropriate and disrespectful language when criticising school policies and other teachers; (iii) lack of progress in their English learning, such as failure to familiarise the students with the examination requirements, syllabus and technique; and (iv) the plaintiff’s incompetence in teaching English, such as frequent use of Chinese and dwelling into matters unrelated to the curriculum and learning.

22. The evidence of the defendants’ expert, Dr Pauline KL Lee, which I had accepted and preferred to that of the plaintiff’s expert, lent credence to the students’ complaints and showed that there were serious problems with the plaintiff’s teaching method and performance. Among other matters, the plaintiff’s frequent use of Chinese was unacceptable, being contrary to Education Department’s instructions on teaching English as a subject, especially for Forms 5 and 6 and when the School used English as a medium of instruction for the upper forms. Further, the plaintiff’s explanation that he was adopting the “issue based” approach when he made comments and criticisms of school management and colleagues demonstrated a lack of understanding and an erroneous application of the “issue based” approach to the teaching of English.

D4. The plaintiff’s performance at FK-LMST School

23. As for the plaintiff’s teaching and performance in the following school year (2000-2001) when he taught at the FK-LMST School pursuant to a transfer arrangement concluded in August 2000, this was discussed in [25] to [29] and [247] to [257] of the CFI Judgment. In gist, a routine book inspection in December 2000 that led to a full book inspection before the Christmas holiday revealed serious problems in the plaintiff’s behaviour and teaching performance. These problems include: not following the Scheme of Work and falling substantially behind in the teaching progress, failing to adhere to school policies on assigning homework, writing tasks and compositions, failing to mark students’ assignments and corrections properly, referring to matters unrelated to the curriculum and learning, frequently using Chinese in English lessons and using vulgar and inappropriate language during lessons.

24. Two meetings were held with the plaintiff in early January 2001 to discuss the findings of the book inspections and his performance. A list of suggested follow-up actions was provided by the head of English panel (“Mrs Lui”) to the plaintiff. In the second term, class observations and further assessments of the plaintiff’s work and teaching were carried out in May 2001. It was concluded that despite some improvements, the bulk of the problems had persisted. This included problems in his teaching progress, assignment of homework and writing tasks, marking of students’ assignments, dictations and corrections and his teaching performance, such as the extensive use of Chinese in English lessons. The plaintiff also responded negatively to the assessments and feedbacks given to him by Mrs Lui and the form coordinators, including walking out during a meeting to discuss his teaching and refusing to attend the subsequent meeting. The plaintiff had also complained to the CPCE about, inter alia, the assessment of his teaching and school performance by FK-LMST School, but the CPCE found this part of his complaint to be unsubstantiated.

25. At the same time, FK-LMST School also received complaints from students and parents about the plaintiff’s teaching ability, his attitude and the way he related to students and handled disciplinary issues. Incidents of improper handling of disciplinary issues included making students stand or do copying during lessons thereby depriving the students concerned of the opportunity of learning in class, which was against the Code for the Education Profession. His decision to report students to police for the separate incidents of (i) spraying man-made snow flakes on him after the Christmas party, and (ii) following him around in a shopping mall asking him to treat them to food, and to take lesson time off to make the report was another incident of such impropriety. The police did not accept his report on incident (i) and concluded there was no criminal conduct involved in incident (ii).

26. FK-LMST School concluded that the plaintiff did not meet the required teaching standard and further did not fit in the culture and education philosophies of the school. Consequently, the transfer arrangement was terminated, which was followed by the termination of the plaintiff’s employment with the School that lead to this piece of litigation.

D5. Did the defendants have grounds to summarily dismiss the plaintiff in July 2001?

27. It is the defendants’ case that the incidents giving rise to the 4 Warnings and the plaintiff’s conduct and teaching performance in the School and in FK-LMST School cumulatively justify a summary dismissal in that they showed: (i) the plaintiff to have misconducted himself by deliberately flouting the authority, decisions and instructions of the principal and the management of the School on matters pertaining to school administration; (ii) the plaintiff to have repeatedly misconducted himself during lessons; and (iii) the plaintiff’s incompetence and neglect in the discharge of his teaching duties. In short, it is said that the plaintiff had committed grave breaches of duties that warrant a summary dismissal.

28. The plaintiff, on the other hand, contends that by July 2001, it was not open to the defendants to rely on the 4 Warnings, and that the matters relied on the defendants are not sufficient grave and serious as to justify summary dismissal. These arguments will be considered in turn.

D6. Cancellation of the 4 Warnings

29. It is the plaintiff’s case that the School had agreed not to rely on the 4 Warnings and had further agreed to their cancellation. The plaintiff relied firstly on two letters from the Education Department dated 1 September and 19 October 1998 addressed to him and Hong Kong Professional Teachers’ Union (HKPTU) respectively. This took place after the plaintiff had been issued with the 1^st and 2^nd Warnings, and he had, assisted by HKPTU, made complaints to the Education Department about the warnings and requested that they be cancelled. After investigation, the Education Department found that the plaintiff’s complaint was not substantiated and refused to intervene. It did, however, try to mediate between the plaintiff and the School. Eventually, it informed the plaintiff by the 1 September 1998 letter that the principal had guaranteed that the 1^st and 2^nd Warnings were not made to set the dismissal procedure in motion. In the 19 October 1998 letter, the Education Department further informed HKPTU that it would not permit the School to make use of the verbal warnings to set the dismissal procedure in motion.

30. In my view, the two letters must be read in the context and be given a reasonable construction. What the two letters conveyed was that the School had assured the Education Department that the 1^st and 2^nd Warnings were not issued as an excuse or as part of a plan to get rid of the plaintiff. They should not be read as shielding the plaintiff from being dismissed should cause for so doing arise in future. Hence, the letters cannot be read as barring the School from taking into account the 1^st and 2^nd Incidents in the event there were further misbehaviour that caused the School to consider whether to continue with the employment. Similarly, the Education Department could not be taken to undertake to the plaintiff through HKPTU that it would not permit the School to have regard to his behaviour in the 1^st and 2^nd Incidents in future. All that the Department indicated in its letter to HKPTU was that the School could not dismiss the plaintiff solely on account of the 1^st and 2^nd Warnings.

31. Secondly, the plaintiff referred to an internal file minute of the Education Department dated 14 June 2000 (M.19) and a series of correspondence between the department and the School. The evidence at the trial showed that after the issue of the 3^rd and 4^th Warnings, the Education Department continued to mediate between the plaintiff and the School. According to this internal file minute, officers of the department had met the supervisor and principal of the School on 22 March and 8 May 2000 and separately met the plaintiff several times between 24 March and 23 May 2000. The minute recorded that:

(1) The supervisor had agreed at the 22 March 2000 meeting to cancel the 4 Warnings with effect from 1 May 2000 but he wanted the plaintiff to make commitment to his school performance.
(2) The supervisor’s agreement was communicated to the plaintiff and he accepted it at the meetings on 6 and 7 April 2000.
(3) At the 8 May 2000 meeting, it was suggested that the plaintiff be put on a proposed teacher exchange scheme to be set up among schools of the same sponsoring body.
(4) The plaintiff agreed to join the scheme and was willing to take up a post of special responsibility in FK-LMST School for one year with effect from1 September 2000, and he would further discuss with the school authorities on extending the period of his transfer if he wished to continue with the scheme after the end of one year. He further agreed to forget all the unhappy happenings in the past and to, among others, cooperate with the school authority and colleagues, be dutiful and to accept the school’s disciplinary action in accordance with school regulations, COA, Education Ordinance and Education Regulations if he should fail to observe his commitments.
(5) The School agreed to cancel the 4 Warnings with immediate effect.
(6) A draft letter embodying the agreement was sent to the School on 22 May 2000, and the supervisor verbally indicated on 28 May 2000[7] his consent to the content and agreed that it be sent out right away.

32. A letter dated 29 May 2000 was sent by the Education Department to the supervisor of the School and copied to the plaintiff and HKPTU. It stated that the plaintiff accepted the teacher exchange scheme and was willing to be transferred to FK-LMST School for one year with effect from 1 September 2000. The letter went on to state that the School agreed to cancel all warnings issued to the plaintiff with immediate effect.

33. The supervisor replied by letter dated 13 June 2000 to say that there had been misunderstanding in that what he meant was if the plaintiff was fully committed to his teaching and performed his duties as teacher well, the School could consider cancelling his past warnings. The letter further pointed out that the School was in receipt of complaints by students and teachers against the plaintiff and investigations were ongoing, and in the circumstances the warnings could not be cancelled.

34. The Education Department replied by letter dated 21 June 2000, in which it reiterated there was an oral agreement to cancel the warnings issued to the plaintiff and pointed out that the 29 May 2000 letter was sent out after obtaining the School’s consent to its content. There was no reply from the School to this letter. At the trial, the Supervisor was not called as a witness.

35. At the same time, discussion on the plaintiff’s transfer to FK-LMST School under the teacher exchange scheme was put on halt because of the students’ complaints (see [20] and [21] above).

36. After the School issued the letter dated 22 July 2000 (“1^st Termination Letter’) to terminate the plaintiff’s employment, the Education Department again intervened to mediate between the School and the plaintiff, cumulating in the meeting of 8 August 2000 attended by the plaintiff, officers of the Education Department, the vice-principal of the School, the principal of FK-LMST School and the chief executive of the sponsoring body of the School (FKPS) and FK-LMST School. At this meeting, agreement was reached between FKPS and the plaintiff on the plaintiff’s transfer to teach at FK-LMST School in the 2000-2001 school year. There was, however, disagreement on FKPS’ position that the decision not to renew the plaintiff’s employment was to be suspended during the period when the plaintiff was transferred to FK-LMST School. The plaintiff’s position was that the 4 Warnings should be cancelled. Owing to this disagreement, the plaintiff refused to sign the minutes of the meeting.

37. On the basis of the internal file minute and the letters from the Education Department, Ms Wong submits that the School, having agreed to cancel the 4 Warnings, could not go back and rely on them in July 2001 to summarily dismiss the plaintiff.

38. The defendants dispute there was an agreement to cancel the 4 Warnings. Mr Lee also argues that even if what the Education Department stated in the internal file minute and letters were correct, there was no binding agreement since there was no consideration for the School’s promise. Alternatively, Mr Lee submits that there was no firm and free-standing agreement to cancel the 4 Warnings as discussions on transferring the plaintiff to another school was ongoing. It is further said that even if there was an agreement to cancel the 4 Warnings, the plaintiff had failed to observe his part of the bargain, namely, to cooperate with the School, by reason of his uncooperative conduct over the students’ complaints against him. Mr Lee refers to the 8 August 2000 meeting and argues that if the 4 Warnings had been cancelled, there would not be reference to and disagreement over whether the plaintiff’s termination was to be suspended and whether his performance records were to remain on the file of the School.

39. Notwithstanding the supervisor’s 13 June 2000 letter, in light of the Education Department’s contemporaneous record and letters and the absence of contrary evidence from the supervisor himself, the balance of probabilities must come down in favour of the plaintiff on the issue of whether there was a promise to cancel the 4 Warnings. At the material time, the plaintiff was strenuously challenging the 4 Warnings. The Council on Professional Conduct in Education (CPCE), to whom the plaintiff had lodged complaints against the principal of the School, had recommended to the Education Department to freeze the 4 Warnings. It is therefore not surprising that there were discussions between officers of the Education Department and the supervisor of the School on the suspension or cancellation of the 4 Warnings. On an objective view, had the supervisor not agreed to cancel the 4 Warnings, it is most unlikely that the Education Department officers would record this in the file minute. Neither would they go to the trouble of drawing up a draft letter for his confirmation before sending out the 29 May 2000 letter, and writing further on 21 June 2000 to refute the supervisor’s response in the 13 June 2000 letter. It should also be noted that in his 13 June 2000 reply letter, the supervisor did not dispute having been shown a draft prior to the arrival of the 29 May 2000 letter. In my view and as hinted in the 13 June 2000 letter, probably because of the receipt of the students’ complaints on 29 March and 14 April 2000 and the results of the students’ surveys conducted on 10 April and 7 June 2000, the School and/or the supervisor had changed their mind on the cancellation of the 4 Warnings. In short, I find as a fact that the School acting through the supervisor did promise in meetings with the Education Department to cancel the 4 Warnings. This was communicated to the plaintiff by the Education Department and accepted by the plaintiff.

40. I do not accept the argument that there was no binding, free-standing agreement. Firstly, at the material time, the plaintiff and the School were disputing whether the warnings should be administered and the plaintiff had made various complaints to several external organisations. The agreement to cancel the warnings was to resolve these differences. Secondly, when the agreement was reached, it was not linked to the plaintiff’s transfer to another school. The Education Department’s internal file minute and the evidence at the trial shows that that discussion on including the plaintiff in the teacher exchange scheme took place after the supervisor agreed to cancel the 4 Warnings. I also do not consider that the revival of the issue of cancellation of the 4 Warnings in August 2000 is inconsistent with the existence of an earlier agreement to cancel the 4 Warnings. As the discussions above show, the School had gone back on the agreement. It further made express reference to the 4 Warnings in the 1^st Termination Letter. The revival of the discussion on the 4 Warnings and the plaintiff’s insistence on their cancellation have to be viewed against such background.

41. Furthermore, for reasons which I will come to when dealing with the plaintiff’s teaching performance at the School in the 1999-2000 school year, even if the School had not agreed to cancel the 4 Warnings, the School had by conduct elected not to exercise its right to summary dismissal by relying on the 4 Warnings and the plaintiff’s performance and conduct in the 1999-2000 and 2000-2001 school years.

D7. Did the plaintiff’s conduct and performance justify summary dismissal?

42. I turn next to consider whether in July 2001 the plaintiff’s conduct and teaching performance justified a summary dismissal. Counsel have no disagreement on the relevant legal principles on what may justify summary dismissal. Under section 9(1)(a) of the Employment Ordinance, Cap. 57, an employer may summarily dismiss an employer if he: (i) wilfully disobeys a lawful and reasonable order; (ii) misconducts himself such conduct being inconsistent with the due and faithful discharge of his duties; (iii) is guilty of fraud or dishonesty; or (iv) is habitually neglectful in his duties.

43. Counsel have also referred to the common law position as discussed in Chitty on Contracts: Hong Kong Specific Contracts 4th ed., [11-122] to [11-139] and Chitty on Contracts 31^st ed., Vol. II, [39-179] to [39-185]. Essentially, the onus is on the employer to show that the employee has disregarded the essential conditions of the contract of service. The test is whether the conduct amounts to a sufficiently serious breach of the contract of employment such as to indicate that the employee no longer intends to be bound by the contract.

44. Further, clause 56(g) of the COA provides that “A teacher shall be liable for summary dismissal if it appears to the Management Committee that he has been convicted of a criminal offence or has committed a grave breach of duty.”

45. On the 4 Warnings, Ms Wong submits that the 1^st and 2^nd Incidents did not cause any negative impact on the school administration or the reputation of the school authority while the 3^rd and 4^th Incidents occurred because the plaintiff was legitimately aggrieved by the new election rules which deprived him of the right to be the teachers’ representative, and they did not amount to deliberate flouting of the essential terms of the employment; nor were they incompatible with the due and faithful discharge of the plaintiff’s duties. As to the plaintiff’s behaviour in class and teaching performance, it is argued that while they were regarded as inadequate and below expectations, they were nothing close to a serious or a grave breach of duty. In addition, Ms Wong seeks to challenge the veracity and reliability of the observations and reports made by Mrs Lui, arguing at the same time that it was unfair to the plaintiff in that the primary materials (i.e. the students’ statements and Mrs Lui’s report and appendices) were not given to him at the relevant time in January and May 2001.

46. In respect of the 1^st to 4^th Incidents, they all arose out of the plaintiff’s dissatisfaction with aspects of school administration, noticeably the rules concerning election of teachers’ representative. Before the 1^st Incident, the plaintiff had taught in the School for more than five years. He began to get into difficulties with the principal after he applied for promotion which was eventually unsuccessful. His frustration and bitterness escalated when the rules of teachers’ representative election were changed, with the result that he was no longer eligible to stand as a candidate by reason of the 1^st and 2^nd Warnings. There is no doubt that the plaintiff had misbehaved in the four incidents, which involved challenging the authority of the principal, repeated disregard of instructions of the School and disruptive behaviour towards colleagues. It is also true that the misconduct in the 3^rd and 4^th Incidents could not be regarded as trivial.

47. Notwithstanding all these, I am of the view that, even if the 4 Warnings had not been cancelled, the four underlying incidents individually and collectively did not amount to a disregard of the essential conditions of the contract of service or a sufficiently grave breach of the plaintiff’s duties under the employment contract justifying summary dismissal. The fact that the School had not moved to dismiss the plaintiff and had instead proceeded to issue to the plaintiff Letter Offering Appointment for the 1999-2000 school year, which the plaintiff accepted on the same day he was given the 4^th Warning, best illustrates that the School did not consider the plaintiff’s misconduct in the 1^st to 4^th Incidents so serious as to warrant a dismissal.

48. The plaintiff’s behaviour in class and his teaching performance both in the School and in FK-LMST School, however, stand in very different light. On the evidence, although there were a few students who did not think there was a problem, the results of the students’ surveys show that the vast majority were dissatisfied and had well-founded concerns with his behaviour and performance as a teacher. The students’ feedbacks in the surveys, Mrs Lui’s reports and summaries of book inspections and class observations, and the evidence of the expert, Dr Pauline Lee (see [20] to [26] above), all show the plaintiff’s behaviour and teaching performance to fall seriously short of what is reasonably expected of a teacher, not to say the plaintiff was an experienced teacher with over 15 years of teaching experience. They were not isolated incidents of inadequacy nor momentary lapse in standard.

49. The manner in which the plaintiff discharged his teaching duties, such as not following the teaching scheme and schedule for the year group, misuse of lesson time, failure to mark or properly mark students’ assignments and frequent use of Chinese in English lessons, clearly demonstrates a wilful and habitual neglect and dereliction of duties. The core duties of a teacher and the essential conditions of the plaintiff’s employment contract are to teach and to educate students and to serve as a worthy model for the students[8]. The plaintiff’s persistent and substantial disregard of, and his failure to properly discharge, his core duties, and his inappropriate behaviour during lessons amount to repudiation of the fundamental term of his employment as a teacher that would justify summary dismissal. The gravity was compounded by his inability to see and/or refusal to acknowledge the problems with his teaching performance, as reflected by his uncooperative and confrontational responses to the students’ complaints and his teaching assessments.

50. Mrs Lui had given evidence at the trial. She was found to be a credible witness and her evidence had been accepted[9]. I do not accept the challenge and criticisms that the plaintiff now seeks to put to her reports and observations on the plaintiff’s performance in discharging his duties. The fact that in January and May 2001 he did not have sight of the primary materials relating to his behaviour and performance in class is irrelevant to the issue of whether his performance as a teacher justified summary dismissal or termination of his employment.

51. There is in any event no merit in the complaint of unfairness. Despite not having read the primary materials, the plaintiff had in the 4 January 2001 meeting been made aware of the results of the assessment and he had subsequently provided meticulous written responses. A summary of the minutes and the plaintiff’s comments on them had been adduced at the trial[10] and put to the plaintiff in his cross-examination. Mr Lee has also prepared two tables comparing the contents of the Suggested Follow-up and Work Requirements for the plaintiff that were given to the plaintiff at the material time and that contained in the primary materials. They show that the documents given to the plaintiff had covered all the important points in the primary materials. Moreover, the plaintiff had all the materials by the time of the trial and his counsel had subject and had subject Mrs Lui to detailed and lengthy cross-examinations. Importantly, too, it is evident from the plaintiff’s own evidence that the complaints against him and the assessments were factually not in dispute.[11]

52. It follows that in July 2001, the defendants could have summarily dismissed the plaintiff on account of his poor teaching performance and misconduct during lesson. The question is whether the defendants had summarily dismissed the plaintiff in July 2001. It is to this question that I now turn.

D8. Was the plaintiff summarily dismissed in July 2001?

53. The defendants’ case of termination by summary dismissal is based on the 1^st Termination Letter and the letter of termination dated 13 July 2001 (“the 2^nd Termination Letter”). Mr Lee’s submission is that when the defendants issued the 1^st and 2^nd Termination Letters, they were relying on the right to summarily dismiss the plaintiff, and that on the basis of the decision in Jupiter General Insurance Co Ltd v. Ardeshir Bomanji Shroff [1937] 3 All ER 67, at 68H-69A, the termination letters were to be treated as a summary dismissal in law. Alternatively, even if the defendants did not at the relevant time rely on summary dismissal, they are now still entitled to justify the termination of the plaintiff’s employment by reason of summary dismissal, relying on Boston Deep Sea Fishing and Ice Company v. Ansell (1888) LR 39 Ch D 339, 352, and Ng Ai Kheng Jasmine v. The Open University of Hong Kong (unreported) HCA 9801 of 2000, 29 July 2005, at [6] & [28] to [33], per Deputy High Court Judge Carlson, and [2006] 2 HKLRD 228 at [51] and [52], CA.

54. The plaintiff, on the other hand, argues that the defendants had never summarily dismissed the plaintiff. Ms Wong points out that in the 2^nd Termination Letter, the defendants had purported to terminate the employment by paying one month’s salary in lieu of notice. It is submitted that, in so doing, the defendants have waived the right to summary dismissal and can no longer justify the termination on the ground of summary dismissal. Ms Wong relies on the decisions in Li Heung Sang David v. Compuware Asia Pacific Limited [2004] 2 HKLRD 732, Allidem v. Kwong Si Lin (unreported) HCLA 35 of 2002, 9 June 2003, per Deputy High Court Judge A Cheung (as Cheung CJHC then was) and [2006] 1 HKC 252, per Deputy High Court Judge Carlson.

55. Both the 1^st and 2^nd Termination Letters were issued by the defendants’ then solicitors and therefore on legal advice. In the 1^st Termination Letter, it began by referring to the 1999 Letter of Appointment and the provisions in the Conditions of Service. It then stated that the plaintiff had since 1995 been in breach of the conditions and went on to refer to the 4 Warnings and the 5^th Incident. The letter concluded that:

“In view of the aforesaid circumstances, in particular [the 5^th Incident], you failed to be a competent English teacher for which you were and are employed let alone to serve as a worthy model for students, to help to create an atmosphere which is conducive to the learning process.
The Management Committee of the School always put welfare of students as paramount concern and accordingly has no other option but not to renew the Contract upon its expiry on 31 August 2000. Notwithstanding it appears that you have committed a grave breach of duty and are liable to summary dismissal, the Management Committee shall pay you one month’s salary in lieu of a full period of 3 months’ notice.”

56. As to the 2^nd Termination Letter, the material part of it read:

“As a result of your misconduct and breach of conditions in the letter of employment between you and the Management Committee of the School, your employment with the School should have been terminated last year. However, upon the mediation by the Education Department and your undertaking to improve both in teaching and cooperating with other members to achieve the best education environment for students, the Management Committee had procured the consent of the management committee of Fung Kai Liu Man Shek Tong Secondary School to have you transferred there for a term of one year.
Regrettably, despite the fact that request for improvement had been made you have shown no satisfactory improvement during you period there. Further, numerous complaints were lodged against you by teachers, students and parents. The management committee of Fung Kai Liu Man Shek Tong Secondary School has recently resolved that your service there is no longer required.
In the circumstances, the Management Committee has no alternative but to terminate your employment with the School with immediate effect. Accordingly, we are instructed to send you herewith a cheque for $46,485.00 being a month’s salary in lieu of notice.”

57. There is no dispute that the defendants did pay to the plaintiff a month’s salary in lieu of notice as stated in the 2^nd Termination Letter.

58. On a plain reading of the two letters of termination, I am unable to accept Mr Lee’s submissions that the defendants were exercising the right to summarily dismiss the plaintiff. Far from dismissing the plaintiff summarily, the 1^st Termination Letter made it plain that the plaintiff’s employment was terminated by payment in lieu of notice, notwithstanding that he had “committed a grave breach of duty and [was] liable to summary dismissal”. This is a clear statement that the SMC, with knowledge of its entitlement to summarily dismiss the plaintiff, had nevertheless decided not to adopt that course and had opted instead to make payment in lieu of notice to the plaintiff.

59. I pause here to deal with Mr Lee’s argument that the termination by the 1^st Termination Letter was only temporarily suspended during the one year that the plaintiff was transferred to FK-LMST School. This was the position taken by the chief executive of FKPS at the 8 August 2000 meeting, but it was not agreed to by the plaintiff. The School was aware of the plaintiff’s disagreement on this point, and the matter remained at large when the plaintiff commenced teaching at FK-LMST School in September 2000. With the transfer arrangement, the plaintiff’s employment with the School was continued in the 2000-2001 school year. In the absence of a mutual agreement to the contrary, the termination by the 1^st Termination Letter has effectively been displaced and overtaken by the transfer arrangement and the consequential continuation of the plaintiff’s employment.

60. Returning to the 2^nd Termination Letter, when it stated that the SMC “has no alternative but to terminate your employment with the School with immediate effect”, and “[a]ccordingly send you herewith a cheque for $46,485.00 being a month’s salary in lieu of notice”, it was effecting a termination by payment in lieu of notice to take effect immediately. The defendants were not exercising the right of summary dismissal. Summary dismissal is a very serious step to take against an employee. An employer taking this course is expected to and should communicate it in clear terms to the employee. The 2^nd Termination Letter simply failed to communicate to the plaintiff that he was dismissed summarily.

D9. Is the termination to be treated in law as a summary dismissal?

61. It has been held by the CFA that the plaintiff’s employment could only be terminated by either summary dismissal or for cause in accordance with clause 56(g) and Appendix 17.[12] Mr Lee therefore submits that as the defendants were not entitled to terminate the plaintiff’s employment by paying a month’s salary in lieu of notice, the 2^nd Termination Letter should be treated in law as effecting a summary dismissal. Reliance is placed on the Privy Council judgment in Jupiter General Insurance Co Ltd v. Ardeshir Bomanji Shroff, supra. In Jupiter, the letter terminating the employment stated that the employee’s service was no longer required and the employee was paid one month’s salary in lieu of notice. The employee’s claim for damages for wrongful dismissal was dismissed by the trial judge. The Bombay High Court allowed his appeal. On the employer’s appeal, the Privy Council considered (at 68H-69A) that the employee was entitled to more than one month’s notice and proceeded to treat the termination as a summary dismissal and to consider whether the employee’s conduct justified summary dismissal. It held that on the facts the employee had committed gross negligence that justified summary dismissal and the employer’s appeal was allowed.

62. It would appear from the law report[13] that the issue before the Privy Council was whether a single act of neglect or misconduct could justify a summary dismissal. Unlike in this case, the Privy Council was not called upon to consider and adjudicate on whether an employer who, with knowledge that he was entitled to summarily dismiss the employee and had opted to terminate the employment on notice or payment in lieu, could when being sued for wrongful dismissal, assert that the employee was to be treated as being summarily dismissed, and that the termination was not wrongful. There was no argument on whether in such circumstances he was to be regarded as having elected to abandon his right to rely on summary dismissal, and accordingly, no discussion on how the law of waiver by election may apply to the facts of the case or to situation such as that in the present case. Similarly, the brief and obiter reference to Jupiter in Gilligan v. AHK Air Hong Kong Ltd [1989] 2 HKC 189, at 212C is of no assistance as the Court had found that it was a case of summary dismissal with cause[14].

D10. Waiver by election

63. A situation similar to the present case arose in Li Heung Sang David v. Compuware Asia Pacific Limited, supra. In that case, the employer decided to terminate the employment by payment of one month’s salary in lieu of notice (when the contract provided for six months’ notice) in circumstances where it knew it had a right to summarily dismiss the employee. In defending the employee’s claim for salary in lieu of notice and other termination entitlements, the employer sought to argue that as the employee had committed gross misconduct and was liable to summary dismissal, he was not entitled to six months’ salary in lieu of notice. The Court rejected the argument and held that the employer having elected to proceed to terminate the contract on payment in lieu of notice when it knew of facts which would have entitled it to dismiss summarily and when it had taken legal advice, has waived its right to dismiss without notice.

64. In Allidem v. Kwong Si Lin, the employer appealed against an award of long service payment made by the Labour Tribunal on the ground that the employee was summarily dismissed and was not entitled to long service payment. In upholding the Tribunal’s finding that the employment was terminated by payment in lieu of notice and dismissing the appeal, Deputy High Court Judge Carlson observed that an employer must elect between effecting a termination by summary dismissal or by giving notice or payment in lieu and bear the consequences of his election.

65. Mr Lee refers to Boston Deep Sea Fishing and Ice Company v. Ansell, supra and Ng Ai Kheng, Jasmine v. Open University of Hong Kong, supra, and submits that even if the defendants were found not to have effected a summary dismissal in July 2001, they are now still entitled to justify the termination by reason of summary dismissal.

66. In Boston Deep Sea Fishing and Ice Company, the defendant was dismissed from his office as managing director on the ground of acts of misconduct that the plaintiff could not substantiate at trial. After his dismissal, however, the plaintiff discovered that the defendant had taken a secret commission and brought a claim for an account of commission and bonuses received by him. The defendant counterclaimed for wrongful dismissal and succeeded. The Court of Appeal allowed the plaintiff’s appeal, holding that the receipt of the commission was good ground for dismissal although it was not discovered until after the dismissal had taken place. The passage that Mr Lee relies on appears in the judgment of Cotton LJ (at 352),

“At the time when the company dismissed Mr. Ansell they did not know what had been done by him as regards the contact with Earle’s Shipbuilding Company, and it was not, I think, at all disputed that if there was any circumstance, though unknown to the company at the time when they dismissed Mr. Ansell from his position, which would justify them in so acing, it was immaterial whether that was known and established after the time the action was brought, then they could justify the dismissal by proof of that fact.”

67. The situation in Boston Deep Sea Fishing and Ice Company is rather different in that the employer had dismissed the defendant for misconduct and the issue before the Court of Appeal was whether the plaintiff could rely on a ground discovered subsequent to the dismissal to justify the dismissal. It is not a case where the court had to consider whether the plaintiff could rely on summary dismissal to justify the termination of an employment after it had purported to terminate on notice or payment in lieu. The issue of election and waiver of right was not engaged.

68. That the case was not concerned with election and waiver of right is highlighted by Cotton LJ when he dealt with the defendant’s argument that the receipt of secret commission happened a long time ago. After pointing out that the age of the misconduct might be a reason on an employer’s mind for not acting on his rights, but would be irrelevant to whether the act justified a dismissal when it was found out by the employer, Cotton LJ said (at 358),

“Of course if he knows of the act and still continues to employ him, it might have been held by Judges of fact or by a jury that he had condoned it and prevented himself from insisting on the legal right.”

69. This highlights the point that if, as in this case and in Li Heung Sang David, supra, the employer having knowledge of circumstances that would entitle him to effect a summary dismissal, chose to terminate the employment by giving notice or payment in lieu of notice, he would be regarded to have waived his right to dismiss summarily and would be prevented from relying on his right of summary dismissal to defend a claim of wrongful dismissal when it turned out that the termination was wrongful on the ground that there was no contractual right to terminate on notice or the notice was insufficient and so on[15].

70. In Ng Ai Kheng Jasmine, supra, the defendant terminated the plaintiff’s employment by giving her three months’ salary in lieu of notice. The plaintiff brought a claim for wrongful termination claiming that, under the terms of her employment, she could only be dismissed for cause. In the Court of First Instance, Deputy High Court Judge Carlson found that the defendant had a contractual right to terminate on notice or payment in lieu and that it had lawfully terminated the plaintiff’s employment by payment in lieu of notice. For completeness’ sake, the defendant’s counsel argued that the defendant could also rely on dismissal for cause. It was submitted that there was no inconsistency between the right to terminate by payment in lieu of notice and the right to terminate for cause since the letter of dismissal in that case had referred to the plaintiff’s misconduct. Counsel further submitted that it would be unfair if the defendant having dismissed the plaintiff on grounds that did not involve any criticism of her performance, should be prevented from raising the issue of misconduct when the whole process of dismissal was called into question by the plaintiff. The Deputy Judge agreed with the submissions but had not elaborated on it.

71. On appeal, the Court of Appeal upheld the Judge’s finding that the defendant could terminate the employment by notice or payment in lieu. Like the Judge, it went on to consider whether the defendant was entitled to dismiss the plaintiff for cause in case the matter should go further. The Court of Appeal referred to Boston Deep Sea Fishing & Ice Company and the passage in Cotton LJ’s judgment at 352 (see [61] above), and stated (at [51] and [52]),

“51. We believe it is indisputable that the defendant must be entitled to rely on good cause not known to it at the time of the termination of the contract. In other words, the fact that a contract had been purportedly terminated by notice would not by itself preclude a subsequent reliance on dismissal for cause.
52. In the circumstances of this case, we do not see why the defendant could not rely on good cause known to it at the time of the termination of the contract.”

72. The remarks of the Deputy Judge and the Court of Appeal on this point were made obiter. It does not appear from the judgments that the plaintiff, who acted in person, had addressed the Court on election and waiver of rights, or that Li Heung Sang David had been cited to the Court. Neither the Deputy Judge nor the Court of Appeal had considered whether the defendant, having elected to terminate the employment on payment in lieu of notice when it knew of facts which would have entitled it to dismiss summarily, had waived its right to rely on summary dismissal. There is also no elaboration on how the decision in Boston Deep Sea Fishing & Ice Company provides support to the proposition that the fact that a contract had been purportedly terminated by notice would not by itself preclude a subsequent reliance on dismissal for cause.

73. I am not persuaded that the two cases support Mr Lee’s argument that although the defendants had not effected a summary dismissal in July 2001, it can now assert that the termination of the plaintiff’s employment can be justified on the ground of summary dismissal.

74. Mr Lee further argues that the notion of election between alternative and inconsistent courses of action, as discussed in Motor Oil Hellas (Corinth) Refineries SA v. Shipping Corporation of India (The Kanchenjunga) [1990] 1 Lloyd’s Rep 391 at 398-399 and Large Land Investments Ltd v. Cheung Siu Kwai [2003] 1 HKLRD 313 at [15], has no application in that whether it is by summary dismissal or otherwise, the defendants were terminating the plaintiff’s employment right away. It is further argued that as termination by notice was not a lawful way of terminating the plaintiff’s employment, there was nothing of an election since termination by payment in lieu was not a course which the defendants were entitled to take.

75. I am unable to accept these arguments. The principle of waiver by election was explained in The Kanchenjunga, supra at 397-398,

“It is a commonplace that the expression “waiver” is one which may, in law, bear different meanings. In particular, it may refer to a forbearance from exercising a right or to an abandonment of a right. Here we are concerned with waiver in the sense of abandonment of a right which arises by virtue of a party making an election. Election itself is a concept which may be relevant in more than one context. In the present case, we are concerned with an election which may arise in the context of a binding contract, when a state of affairs comes into existence in which one party becomes entitled, either under the terms of the contract or by the general law, to exercise a right, and he has to decide whether or not to do so. His decision, being a matter of choice for him, is called in law an election. … In particular, where with knowledge of the relevant facts a party has acted in a manner which is consistent only with his having chosen one of the two alternative and inconsistent courses of action then open to him – for example, to determine a contract or alternatively to affirm it – he is held to have made his election accordingly … perhaps because a party who elects not to exercise a right which has become available to him is abandoning that right, he will only be held to have done so if he has so communicated his election to the other party in clear and unequivocal terms ”

76. These principles had been applied in Large Land Investments Ltd v. Cheung Siu Kwai, supra.

77. In the present context, as with The Kanchenjunga, we are concerned with an abandonment of right. In view of the plaintiff’s behaviour and teaching performance, the defendants were entitled to dismiss the plaintiff summarily. When they resolved to terminate the plaintiff’s employment in July 2001, they had to decide whether to exercise the right of summary dismissal. What they had decided was to terminate the employment immediately, and to achieve this by payment in lieu of notice. In deciding to do so instead of exercising the right to dismiss summarily, the defendants had abandoned their right to dismiss summarily and made an election in law. It matters not that by purporting to terminate by payment in lieu, the defendants were also terminating the employment immediately. That the mode of termination chosen by the defendants cannot lawfully terminate the employment does not detract from the fact that they had made an election not to exercise their right to dismiss summarily.

78. I also do not accept Mr Lee’s argument that there was no communication of the defendants’ election to the plaintiff in clear and unequivocal terms. As analysed above, the 2^nd Termination Letter had clearly indicated the defendants’ dissatisfaction over the plaintiff’s performance and had in no uncertain terms informed the plaintiff that his employment was terminated with immediate effect by payment in lieu of notice.

79. Turning finally to the argument that the plea of waiver by election had not been pleaded, in the circumstances of this case, the waiver by election is a simple point and the failure to plead has not led to any difficulties. The plaintiff’s failure to plead waiver by election has also to be considered against the fact that the defendants had in the first place not specifically pleaded a case of termination by summary dismissal (see [14] to [16] above).

D11. Conclusion on summary dismissal

80. For the reasons set out above, I find that in July 2001 there were circumstances that could have justified a summary dismissal, but the termination of the plaintiff’s employment by the 2^nd Termination Letter was not by way of summary dismissal. I also find that the defendants, with knowledge of the circumstances that could have justified a summary dismissal and having elected not to exercise the right to dismiss summarily, have waived the right and cannot now rely on summary dismissal to contend that the plaintiff’s employment was lawfully terminated.

E. Termination under clause 56(g) and Appendix 17 of the COA

81. I now turn to consider the second part of Issue 1, namely, whether the plaintiff’s employment had been lawfully terminated in accordance with clause 56(g) and Appendix 17 of the COA. This entails two sub-questions. The first is whether the requirement in clause 56(g) of good and sufficient reasons for dismissal is met. The second is whether the procedures prescribed by Appendix 17 had been complied with.

E1. Termination for cause not pleaded

82. Before addressing these questions, it is necessary to deal with a pleading point taken by the plaintiff, namely, termination under clause 56(g) and Appendix 17 was not part of the defendants’ case on pleading or at trial. It is submitted that the defendants should not be allowed to raise this as a defence. As pointed out in the beginning of this judgment, I am bound by the order of the Court of Final Appeal, who has directed that there be an investigation as to “whether the terms of clause 56(g) and Appendix 17 of the COA were complied with by the defendants.”[16] I note further that in raising this pleading point, the plaintiff has not alluded to any prejudice or difficulties occasioned by the lack of pleadings.

E2. Clause 56(g) and Appendix 17 of COA

83. The relevant part of clause 56(g) of the COA provides that: “A school Management Committee shall only dismiss a teacher for good and sufficient reasons (See Appendices 17 and 18).” Clause 2 of Appendix 18 further provides that: “The procedures relating to Dismissal or Termination of Appointment of a teacher as spelt out in Appendix 17 should be observed strictly.”

84. Appendix 17, which is entitled “Procedure to be followed in case of Dismissal or Termination of Appointment of a Teacher”, stipulates as follows:

“The procedure to be followed by the School Management Committee should be as follows:
(a) The teacher concerned should be given a warning, or warnings that his work is unsatisfactory. This should be recorded in the school files.
(b) If no improvement in the teachers’ work is noticeable after an appropriate period then a formal written warning embodying relevant criticisms should be given to the teacher, and a copy of this letter should be forwarded to the Director for information. This should be recorded in the school files.
(c) On receipt of this letter, the Director of Education shall investigate the circumstances.
(d) If the teacher after receiving the warning letter still shows no improvement after an appropriate period, normally not less than one month, and the Management Committee intends to dismiss him or not to renew his contract after the date of expiry, the Supervisor shall so inform the Director.
(e) In each case of dismissal of a teacher, a sufficient period of notice of termination of employment must be given in accordance with section 56.”

85. Under clause 56(c), the applicable period of termination for the purpose of paragraph (e) of Appendix 17 is three months.

86. An explanation of the effect and the scheme of clause 56(g) and Appendix 17 was given in [65] of the CFA Judgment at [65], which needs not be repeated here.

E3. Were there good and sufficient reasons for termination?

87. The defendants rely on the 4 Warnings, the 5^th Incident and also the plaintiff’s behaviour and teaching performance in FK-LMST School as constituting good and sufficient reasons for termination under clause 56(g) and Appendix 17. I have in the earlier part of this judgment concluded that the 4 Warnings are not sufficiently grave as to justify summary dismissal. I have also concluded that there had been an agreement to cancel them and that in July 2001, the defendants could not have relied on the 4 Warnings as grounds for summary dismissal. In the same vein, the defendants could not have relied on the 4 Warnings to support a termination under clause 56(g) and Appendix 17.

88. As for the 5^th Incident and the conduct and performance of the plaintiff in the 2000-2001 school year at FK-LMST School, I have concluded that they would have justified a case of summary dismissal. For the reasons set out above, they would also constitute good and sufficient reasons for terminating the plaintiff’s employment under clause 56(g) of the COA.

E4. Had the procedures in Appendix 17 been complied with?

89. The question then is whether the defendants had complied with the procedures set out in Appendix 17. There is no dispute that the 4 Warnings are the only warnings issued to the plaintiff. No formal warning, whether verbal or written had been issued in respect of the 5^th Incident or the plaintiff’s behaviour and teaching performance at the School or FK-LMST School. With the cancellation of the 4 Warnings, paragraphs (a) and (b) and therefore paragraph (d) of Appendix 17 have not been complied with. So far as paragraph (c) is concerned, the Court of Final Appeal had held that it is not a prerequisite before a school is able to dismiss or terminate the employment of a teacher that the Director of Education should have carried out an investigation.[17] As for paragraph (e), the requisite three months’ period of notice of termination had not been met with since the 2^nd Termination Letter had only given one month’s salary in lieu of notice.

E5. Conclusion on termination under clause 56(g) and Appendix 17

90. In short, while the defendants had good and sufficient reasons to dismiss the plaintiff under clause 56(g), the procedures prescribed by Appendix 17 had not been complied with. In the circumstances, the plaintiff’s employment had not been lawfully terminated under the COA.

F. Conclusion on Issue 1

91. As the plaintiff had not been summarily dismissed and the terms of clause 56(g) together with Appendix 17 of the COA had not been complied with, there was no lawful termination of the plaintiff’s contract of employment.

IV. Issue 2: Damages for wrongful termination

92. In the light of the determination on Issue 1, I will proceed to Issue 2 to determine the quantum of damages for wrongful termination to be awarded to the plaintiff.

93. In [79(2)] of the CFA Judgment, the Chief Justice has given the following guidance on how to approach the issue of damages:

“If there was a wrongful termination, as to the damages that should be awarded to the plaintiff. Here, as with all such exercises, the assessment of damages must necessarily be on a somewhat speculative basis. For example, the court must consider aspects of mitigation. Or, where there has been a breach of contract, the court can assess on the basis that the party in breach would be taken to have exercised any power he had to bring the contract to an end in the way most beneficial to him: see Gunton v. Richmond-upon-Thames London Borough Council [1981] 1 Ch 448 at 469C-D. In the present case, the court might have to consider whether, even if the requirements of clause 56(g) and Appendix 17 had not actually been fulfilled (the matter to be determined under sub-para (1) above), that clause and Appendix was relevant in the assessment of damages. This would require the court (when looking at Appendix 17) to see whether the plaintiff’s work had been unsatisfactory, if so whether warnings could have been given, (as required by paras (a) and (b) of the Appendix), whether the plaintiff might have made any improvement and finally, taking into account the requisite period of notice to be given. The object would of course be to calculate the appropriate period when the plaintiff could be expected to be paid his salary until his contract of employment would have been terminated. Even if looking at clause 56(g) and Appendix 17 is not the appropriate method of assessment, the judge will of course take into account other factors. I note that in her Judgment in dealing with the issue of damages, the learned judge made a number of observations (see paras 258-263 of the Judgment).”

94. Mr Lee submits that in view of the plaintiff’s history of misconduct, his persistent incompetence in teaching despite being given feedbacks and guidance on improvement, his confrontational attitude and lack of objectivity which rendered him not receptive to advice and suggestions for improvement, and the very strained relationship he had with the School, the time required for the School to go through the procedures for termination prescribed in Appendix 17 would not be long. I agree.

95. The plaintiff’s behaviour and performance in the 2000-2001 school year at FK-LMST School clearly would have warranted a formal warning. Ms Wong accepts that by September 2001 at the latest, the plaintiff would have been issued with a formal warning.

96. Ms Wong, however, argues that it would not necessarily be the case that the plaintiff would not improve and his performance would continue to be unsatisfactory even after the warning. I am unable to agree. It is pertinent to consider the commonalities between the complaints made by the students of the School on the one hand and the problems identified by Mrs Lui and the form coordinators and complained of by the students of FK-LMST School on the other. These include non-adherence to curriculum, subject syllabus and teaching schedule, not carrying out teaching during lessons, dwelling into irrelevant matters during lessons and frequent use of Chinese in English lessons. The plaintiff was aware of the concerns and problems over his behaviour and performance in class at the School. Yet, these problems persisted and worsened when he was in FK-LMST School. It is also relevant to have regard to how he related to students and handled disciplinary issues. All these not only demonstrate that the plaintiff had fundamental problems with his attitude and ability as a teacher, but also reflect on the gravity and deep-rooted nature of the problems.

97. In light of this and the matters pointed out by Mr Lee (see [94] above), I do not believe that after the warning, the plaintiff would be able to rectify his problems or to make satisfactory improvements on his behaviour and performance. Rather, it is highly probable that the plaintiff would be given a second warning within the following school year (2001-2002), followed by a termination of the employment with the three months’ notice ending latest by the end of the same school year (i.e. July 2002). It is also very probable that given the persistent and grave nature of the plaintiff’s conduct and performance, the School would not hesitate to terminate his contract of employment and would proceed with due expedition to bring about the termination.

98. I therefore do not agree with Ms Wong’s submission that damages should be assessed for a period of five years from 13 July 2001. I also do not accept that a longer period should be adopted because the plaintiff might undergo substantial improvements in the face of the warning. If there were indeed satisfactory improvements lasting over a substantial period after 2001, there would be no case for termination. This, however, is rather unlikely for the reasons stated above.

99. On the basis of the analysis in [97] above, I am of the view that one year should be adopted as the basis for assessing the damages for the wrongful termination. This being the basis for assessment, it is not necessarily to consider the issue of mitigation. Mr Lee in his submission was prepared to allow up to two years for the plaintiff to find an alternative employment. Furthermore, with the 2^nd Termination Letter being issued in July 2001, the prime time for job recruitment for teachers had passed, and the next round of recruitment would be the following February to April. Hence, the earliest time that the plaintiff could have commenced new employment would be September 2002.

100. Ms Wong and Mr Lee have helpfully reached agreement on the calculation of the damages, and have put together a table of agreed figures for different periods of assessment.

101. Counsel have agreed that damages for the plaintiff’s wrongful termination shall make up of:

(1) Loss of income at $47,590 per month; and
(2) Loss of provident fund benefit comprising government donation at 15% of the monthly income, dividend on the government donation at 5% and dividend on the total amount of the previous year(s)[18].

102. Out of this total sum, deductions are to be made for:

(1) Payments that the plaintiff had received from the defendants upon dismissal in July 2001 ($47,590) and pursuant to the settlement reached in the Labour Tribunal[19] in December 2002 ($71,461.75[20]);
(2) Income earned by the plaintiff[21];
(3) MPF at 5% dividend rate after deducting employer’s accumulated contribution; and
(4) Income tax liability at 15% of the monthly income.

103. Adopting one year as the basis for assessment and the figures in the table of agreed figures, the plaintiff’s actual loss is assessed at $354,081.80.

V. Conclusion and disposition

104. In conclusion, the findings on the two issues remitted by the Court of Final Appeal for determination are:

(1) The plaintiff’s contract of employment had not been lawfully terminated by the defendants in July 2001.
(2) The damages to be awarded to the plaintiff for wrongful termination is $354,081.80.

105. Applying the normal rule of costs follow event, as the plaintiff has succeeded in this determination, there will be an order nisi that the defendants pay the plaintiff the costs of the determination.

106. Accordingly, I make the following orders:

(1) The defendants pay the plaintiff the sum of $354,081.80.
(2) There is an order nisi that the defendants pay the plaintiff the costs of the determination.

	(Carlye Chu)
	Justice of Appeal
	Sitting as an additional judge
	of the Court of First Instance

Ms Linda Wong instructed by Ho Tse Wai, Philip Li & Partners for the plaintiff.

Mr Lee Tung Ming instructed by ONC Lawyers for the 1^st defendants.

[1] (2012) 15 HKCFAR 72, 112.

[2] As the 2^nd defendant has ceased to be a party, in this judgment for ease of reference, the 1^st defendants will be referred to as the defendants.

[3] [2011] 1 HKLRD 733.

[4] See [10] to [16] and [82] below.

[5] Decision dated 26 February 2015.

[6] [2008] 1 HKLRD 482.

[7] This was the occasion of the opening ceremony of the PTA of FK-LMST School, and the date was erroneously put down as “25.8.2000” in the minute.

[8] This was embodied in the Conditions of Service that had formed part of the plaintiff’s employment contract since 1996.

[9] CFI Judgment at [254] and [255].

[10] It was annexed to the defendants’ final submissions at the trial.

[11] See the defendants’ skeleton submissions in this determination at [58] and [62].

[12] CFA Judgment at [65].

[13] See the Editorial Note at 67.

[14] See 212H-I.

[15] See also Chitty on Contracts 31^st ed., Vol. II, [39-186] and footnote 1272.

[16] [79(1)] of the CFA Judgment.

[17] [65(9)] of the CFA Judgment.

[18] For the first year of assessment, it will not include dividend on the total amount of the previous year.

[19] In LBTC 8797/2002.

[20] The amount of settlement sum paid by the School to the plaintiff was $76,758, but because of a calculation error, the plaintiff had subsequently repaid $5,296.25 to the School. The net amount received by the plaintiff was $71,461.75.

[21] The plaintiff had earned $166,780 by working as a supply teacher in the first year after the termination (September 2001 to August 2002).

97264-EN-2015-02-26

KO HON YUE v. CHIU PIK YUK AND OTHERS

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HCA3494/2003

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 3494 OF 2003

(Transferred from Labour Tribunal Claim No. LBTC 5616 of 2003)

-----------------------

BETWEEN
	KO HON YUE (高翰儒)	Plaintiff
and
	(1) CHIU PIK YUK, the wife and intended administratrix of LIU CHING LEUNG (廖正亮), deceased	1^st Defendants
	(2) LIU POON KEUNG (廖本强)
	(3) CHEUNG FOR TAI (張伙泰)
	(4) CHONG KAM LING (莊金寧)
	(5) LAI KIM HUNG (賴劍虹)
	(6) LIU LAI KEUNG (廖勵强)
	(7) LIU WAI KI (廖惠其)
	(8) LIU GUN SUN (廖更新)
	(9) LIU KIT MING (廖傑明)
	(10) LIU MAN FUK (廖萬福)
	(11) LIU TIM WAN (廖添穏)
	(12) YAN CHEUK NING (甄灼寧)
	(13) LEE TAK CHING (李德貞)
	(sued collectively as the Management Committee of Fung Kai No.1 Secondary School for the year 2001)
	FUNG KAI NO.1 SECONDARY SCHOOL	2^nd Defendant
	(Ceased to be a party pursuant to the order dated 8^th October 2007)

-----------------------

Before :

Hon Chu JA (sitting as an additional judge of the Court of First Instance) in Chambers

Date of Decision : 26 February 2015

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DECISION

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Introduction

1. After a trial that took 19 days, I handed down judgment on 4 August 2008 dismissing the plaintiff’s claim against the 1^st defendants. The plaintiff successfully appealed to the Court of Appeal.[1] Upon the 1^st defendants’ appeal, the Court of Final Appeal allowed the appeal in part and ordered in §79 of its judgment dated 23 February 2012[2] that the matter be remitted to the trial judge for determination of two issues, namely, (1) whether the plaintiff’s contract of employment had been lawfully terminated by the defendants; and (2) If there was a wrongful termination, the damages that should be awarded to the plaintiff.

2. The hearing of the determination is scheduled to take place on 27 April 2015 with four days reserved.

3. The plaintiff seeks to adduce for the purpose of the determination a 2^nd supplemental witness statement of the plaintiff together with annexes. The 1^st defendants oppose the application. The parties have no objection to the application being dealt with on paper and had, pursuant to my directions, lodged written submissions on it.

The plaintiff’s 2^nd supplemental witness statement

4. The plaintiff’s 2^nd supplemental statement (“the Further Statement”) relates to the second issue of damages. It covers the plaintiff’s post-trial attempts to seek teaching employment, his income after the trial and the quantification / projection of loss of income and provident fund benefits from 2001 to the time when the plaintiff will reach the retirement age of 60. The annexes, which are in excess of 408 pages, cover copies of job application letters written by the plaintiff post-trial, a table of the plaintiff’s income, tax documents, information of salaries adjustments for teachers in subsidized secondary schools up to 2013, the plaintiff’s provident fund and MPF statements, computation of provident fund and MPF projected up to his retirement, and document relating to the plaintiff’s withdrawals from his provident fund account.

The arguments

5. The plaintiff’s purpose in adducing the Further Statement and the annexes are to show: (1) the plaintiff’s efforts in searching for teaching jobs after the trial; (2) the income earned by the plaintiff since his dismissal in 2001 up to present; (3) the salary that the plaintiff expects to be paid by the 1^st defendants had he not been dismissed in 2001; and (4) the provident fund entitlement that the plaintiff expects to receive from 2001 until retirement had he not been dismissed.

6. Miss Wong for the plaintiff argues that in the determination of the two issues, the court is in effect conducting a rehearing of the matter, which should be based on evidence already adduced at the trial as well as relevant fresh evidence, including evidence on matters that have occurred after the trial. It is submitted that, as far as new evidence on matters that already existed at the trial, since there has not been a decision on the issue of quantum of damages, all relevant evidence, including evidence not adduced at the trial, should be received and considered by the court. With regard to evidence on post-trial matters, it is further argued that since the evidence did not exist at the trial, the principles for adducing fresh evidence as laid down in Ladd v. Marshall [1954] 1WLR 1489 do not apply. In support of the plaintiff’s application, Miss Wong relies on Townsend v. Achilleas [2001] C.P. Rep. 45, applied in Chow Siu Po v. Wong Ming Fung, unreported, HCAP3/1998 (23 July 2003), and Charlesworth v. Relay Roads Ltd [2000] 1 WLR 230 which held that fresh evidence may be received after judgment has been rendered but before the order is drawn up and that the trial judge may apply the Ladd v. Marshall principles with slightly more flexibility.

7. Mr Lee for the 1^st defendants, on the other hand, points out that while the Court of Final Appeal has power under section 17(1) and (2) of the Hong Kong Court of Final Appeal Ordinance, Cap. 484 to order a re-trial or new trial on the two issues, it has only remitted the matter to the Court of First Instance for determination and has not stated in its judgment that the parties may adduce further evidence on the two issues. This, together with other objective circumstances, indicates that the Court of Final Appeal contemplates the determination to be based on the evidence that had already been adduced at the trial.

8. Mr Lee further submits that the principles in Ladd v. Marshall are generally applicable to cases where fresh evidence is sought to be adduced, the underlying rationale being the fundamental principle that a party should not be allowed to have multiple “bites of the cherry”. Although it is said in Charlesworth v. Relay Roads Ltd and Townsend v. Achilleas that the principles in Ladd v. Marshall may be applied with slightly more flexibility in an application to adduce fresh evidence before the trial judge, the reasons for adopting a cautious approach to the application of the Ladd v. Marshall principles have no application to the present case, having regard to the circumstances of the case. It is also Mr Lee’s submissions that the fresh evidence that the plaintiff seeks to adduce cannot meet the requirements in Ladd v. Marshall.

Discussions

9. Under section 17(1) and (2) of the Hong Kong Court of Final appeal Ordinance[3], it is within the power of the Court of Final Appeal in disposing of an appeal to order a retrial or to remit the case back to the lower court for further determination. In the present case, the Court of Final Appeal has decided to remit the case to the Court of First Instance for making further findings on two issues in accordance with the law as stated in its judgment. In my view, it is tolerably clear from reading §79 of its judgment that the Court of Final Appeal has not intended a rehearing or admission of evidence afresh and has intended the determination to proceed on the basis of the evidence already adduced at trial.

10. In particular, when giving guidance on how to approach the two issues, the Chief Justice has, in relation to the second issue of damages, made specific references to relevant aspects of the evidence in the case:

“In the present case, the court might have to consider whether, even if the requirements of clause 56(g) and Appendix 17 had not actually been fulfilled (the matter to be determined under sub-para (1) above), that clause and Appendix was relevant in the assessment of damages. This would require the court (when looking at Appendix 17) to see whether the plaintiff’s work had been unsatisfactory, if so whether warnings could have been given, (as required by paras (a) and (b) of the Appendix), whether the plaintiff might have made any improvement and finally, taking into account the requisite period of notice to be given. The object would of course be to calculate the appropriate period when the plaintiff could be expected to be paid his salary until his contract of employment would have been terminated. Even if looking at clause 56(g) and Appendix 17 is not the appropriate method of assessment, the judge will of course take into account other factors. I note that in her Judgment in dealing with the issue of damages, the learned judge made a number of observations (see paras 258-263 of the Judgment).”

11. Further, the trial that had taken place was not a split trial on liability. The plaintiff had adduced extensive evidence on all aspects of the case, including loss and damage said to have flowed from the wrongful termination of his employment contract. There was both oral and documentary evidence from the plaintiff on loss of income and provident fund and also in relation to mitigation of loss. He had also been subject to cross-examinations on these aspects of his case. It is also to be noted that the termination of the plaintiff’s employment took place in 2001, more than ten years before the appeal came before the Court of Final Appeal. There is no reason to believe that the Court of Final Appeal would not have borne in mind the above considerations when coming to the decision to remit the matter for further determination. Had it been contemplated that the determination would proceed on the basis of new or further evidence, the judgment and the order[4] of the Court of Final Appeal would have made this abundantly clear.

12. In light of the above, I do not accept that it is implicit in the order of the Court of Final Appeal or within the contemplation of the Court of Final Appeal, in remitting the case for determination, that the parties may be at liberty to adduce further or new evidence on the two issues to be determined.

13. That said, however, I accept the trial judge has a discretion to admit further or new evidence at the hearing on the determination. In Charlesworth v. Relay Roads Ltd, in allowing in part the defendant’s application, made after judgment was handed down but before the order was drawn up, to amend its pleadings that involved new arguments and further evidence, Neuberger J (as he then was) held that (at 234G-H) as a matter of principle, if “the judge retains control of the case, to the extent of being able to reconsider the matter of his own motion or to hear further argument on a point which he has decided, there must be power to permit pleadings to be amended, even if that involves a new argument being put forward, or further evidence being adduced, or even both.”

14. In my view, this principle also applies here. The issue that falls to be considered is whether the plaintiff ought to be permitted to re-open his case on damages and to adduce the Further Statement and the annexes. I shall first begin with the relevant principles.

15. In Ladd v. Marshall, Denning LJ said (at 1491) the three factors “always applied when fresh evidence is sought to be introduced”. In Charlesworth v. Relay Roads Ltd, Neuberger J said that (at 237F-H) Ladd v. Marshall should be at the forefront of the mind of the court when considering an application to admit new evidence, but that a trial judge is entitled to be somewhat more flexible than the Court of Appeal. It is considered that the trial judge, having heard all the witnesses, would be in a better position to receive fresh evidence than the Court of Appeal, who would have to reassess all the facts or decide what effect the new evidence would have had on the trial judge, or has to take the unsatisfactory course of ordering a retrial. This view was approved in Townsend v. Archilleas. Mummery LJ, giving the judgment of the English Court of Appeal, held that there is a good case for the cautious application of a slightly more flexible test for the reasons given by Neuberger J. In Hong Kong, this approach was applied by Deputy High Court Judge Lam (as he then was) in Chow Siu Po v. Wong Ming Fung §12 and also by Harris J in Re China Medical Technologies Inc,unreported, HCCW 435/2012 (28 August 2014) §20.

16. It is, however, important also to bear in mind the observations of Neuberger J (at 238D-E) that, despite the perceived advantage that the trial judge may enjoy,

“in many cases that exercise will be difficult, bearing in mind the passage of time between the hearing of the original witnesses and the hearing of the new evidence, and the fact that the judge has already given a judgment into which the new evidence will have in some way to be fed.”

And that (at 237G-H):

“in many ways, an applicant seeking to persuade the judge to receive fresh evidence and/or argument on a new point is in a very similar position to an appellant seeking similar relief from the Court of Appeal. He has had a full opportunity to collect his evidence and to marshall his arguments, and there must be a strong presumption against letting him have a second chance, particularly after he has seen in detail from the judgment why he has lost.”

17. Further, it can be seen from the judgments in Townsend v. Archilleas and Charlesworth v. Relay Roads Ltd that the Ladd v. Marshall principles, while of central importance, are not the only relevant considerations. Both judgments had made reference to the overriding objective in rule 1.1 of the Civil Procedure Rules 1998, the balancing exercise of finality of litigation and the interests of justice as well as the court’s duty to ensure fairness to all parties. Mummery LJ also referred to another decision of the Court of Appeal in Stewart v. Engel [2000] 1 WLR 2268 which held that the jurisdiction to reopen a case after judgment had been given should be sparingly exercised and only where there were exceptional circumstances or strong reasons for doing so since finality and the doing of justice requires justice to all parties in the litigation.

18. I next turn to consider the circumstances of this case. It is important to have regard to two matters that will call into consideration the observations made by Neuberger J (see §16 above). First, the underlying reason for a less stringent application of the Ladd v. Marshall principles, namely, the trial judge who had heard the evidence would be in a better position in deciding the effects of the fresh evidence and reassessing the facts of the case, has no real application here. This is because there has been a very long lapse of time since the trial which took place in 2007. On any view, any advantage that the trial judge may enjoy will be minimal. Second, the action had been on foot for nearly four years before it went to trial. Damages and the duty to mitigate are live issues in the case. There was ample opportunity for the plaintiff to gather evidence and to adduce all relevant evidence and arguments that would advance his case. As mentioned above, the plaintiff had adduced a good deal of oral and documentary evidence on the issues of damages and steps taken by him to mitigate his loss during the trial that took 19 days. In fact, some of the documentary evidence and the quantifications relating to loss of income and provident fund were only introduced for the first time in the course of the trial. This is a case where the cardinal principle of finality of proceedings should be accorded due consideration.

19. In my view, it is incumbent upon the plaintiff to demonstrate there are justifiable circumstances for the admission of the Further Statement and the annexes and that they fulfil the requirements in Ladd v. Marshall.

20. With regard to the further evidence on the plaintiff’s loss up to the time of the trial, which includes evidence relating to his income up to 2007 as well as the salary and provident fund benefits he expects to receive between 2001 and 2007 had he not been dismissed in 2001, it clearly fails the first Ladd v, Marshall requirement that the evidence could not be obtained with reasonable diligence for use at the trial. At the trial, the plaintiff had already adduced quite some evidence on these aspects of his case on damages. There is no good explanation why the further evidence he now seeks to introduce were not or could not be produced at the trial. It would therefore be wrong and against the court’s duty to do justice to all parties in the litigation to allow the further evidence to be adduced at the hearing of the determination.

21. As for the evidence on post-trial matters, which includes the job application letters written by the plaintiff, evidence relating to his post-trial income as well as the salary and provident fund benefits he expects to receive after 2007 up to his age of retirement, it has firstly to be considered against the scope of the hearing on the determination. In remitting the matter for determination, the Chief Justice had in sub-paragraph (b) of §79 of the judgment of the Court of Final Appeal set out the matters that will be relevant in the assessment of damages. Of first relevance is clause 56(g) and Appendix 17 of the Code of Aid, the consideration of which will involve looking into the plaintiff’s work performance, whether warnings could have been given and whether any improvements might have been made and also the requisite period of notice to be given for termination of employment. In the context of factors outside clause 56(g) and Appendix 17, the Chief Justice took note of §§258-263 of my judgment in which I observed that (1) the plaintiff had not been completely forthcoming on the real reasons why he was not re-employed as a permanent full-time teacher, which had more to do with his personal circumstances and choice or preference for employment than his dismissal, (2) there was no evidential basis for a case of loss of reputation, and (3) the documents and evidence relating to loss of provident fund entitlements failed to substantiate his claim and quantifications under this head.

22. Plainly, the Further Statement and the annexes only relate to factors that should be considered outside clause 56(g) and Appendix 17. It is aiming to address the three observations and in turn to improve the plaintiff’s case on the claims for (i) loss of income and (ii) loss of provident fund benefits. However, the fresh evidence on the plaintiff’s post-2007 attempts to find employment, taken at its highest, only shows that many applications for teaching positions had been made. It does not go to show the reasons for the plaintiff’s failure or inability to secure a reasonable alternative teaching employment, let alone demonstrate a causal connection with his dismissal in 2001. In relation to the fresh evidence on the plaintiff’s income, it is, as Mr Lee pointed out, incomplete and does not give a full and reliable picture of the plaintiff’s actual income and in turn the extent of loss of income and provident fund benefits. For instance, while the plaintiff has put forward information from the Inland Revenue Department (IRD) extracted from Employer’s Return of Remuneration and Pensions previously reported to the IRD, and a table of income based on the IRD information, the plaintiff has not provided any of his tax returns over the years.

23. As such, the evidence on post-trial matters cannot meet the second and third requirements in Ladd v. Marshall, namely, the fresh evidence would probably have an important influence on the result of the case, though need not be decisive, and that the fresh evidence is apparently credible, though need not be incontrovertible.

24. Moreover, in exercising the court’s discretion, regard should be made to the underlying objectives in Order 1A rule 1 of The Rules of the High Court, Cap. 4A which include increasing the cost-effectiveness of proceedings, promoting a sense of reasonable proportion and procedural economy in the conduct of the case and also ensuring fairness between the parties. If the fresh evidence were allowed to be adduced, it will inevitably lead to request/ application for further discovery and the 1^st defendants will also be put to the task of investigating into the veracity of the evidence. Mr Lee in his submission has also alluded to the possibility of discovery from third parties, such as to verify whether the job application letters had been sent or received. At the same time, if the fresh evidence were to be admitted, the 1^st defendants would most probably have to further cross-examine the plaintiff. All of these would involve increase time and costs and go against the efficient conduct of this very old piece of litigation.

25. Further, given the lapse of time, the 1^st defendants’ concern about the difficulty and inconvenience it would face in having to meet the fresh evidence so many years after the event is a real and genuine one. In this connection, the court should also not lose sight of the fact that, rather than to update the court on the development of the relevant events, the fresh evidence in question is directed at improving the plaintiff’s case on damages in the light of the observations made in my judgment. As said by Neuberger J (at 238G-H), “consideration must be given to anxieties and legitimate expectations of the other party, the efficient conduct of litigation, and the inconvenience caused to other litigants” and that “it is inherently contrary to the public interest and unfair on the other side that an unsuccessful party should be able to raise new points or call fresh evidence after a full and final judgment has been given against him”. Neither the circumstances of this case nor fairness justifies the admission of the fresh evidence.

Conclusion

26. For the reasons set out above, I will not give leave to the plaintiff to adduce his second supplemental witness statement and the annexes. Applying the normal rule of costs follow event, I make an order nisi that the plaintiff pays the 1^st defendants the costs of the application in any event.

	(Carlye Chu)
	Justice of Appeal

Miss Linda Wong instructed by Ho Tse Wai, Philip Li & Partners for the plaintiff.

Mr Lee Tung Ming instructed by ONC Lawyers for the 1^st defendants.

[1] [2011] 1HKLRD 733

[2] (2012) 15 HKCFAR 72, 112.

[3] “17(1) The Court may confirm, reverse or vary the decision of the court from which the appeal lies or may remit the matter with its opinion thereon to that court, or may make such other order in the matter, including any order as to costs, as it thinks fit. (2) For the purpose of disposing of an appeal, the Court may exercise any powers of the court from which the appeal lies (including the power to order a retrial), or may remit the case to that court.”

[4] See §90 of the Judgment.

62111-EN-2008-08-04

KO HON YUE v. LIU CHING LEUNG AND OTHERS

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HCA3494/2003

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 3494 OF 2003

(Transferred from Labour Tribunal Claim No. LBTC 5616 of 2003)

-----------------------

BETWEEN

	KO HON YUE	(高翰儒)
	and

Plaintiff

(1)	LIU CHING LEUNG	(廖正亮)
(2)	LIU POON KEUNG	(廖本强)
(3)	CHEUNG FOR TAI	(張伙泰)
(4)	CHONG KAM LING	(莊金寧)
(5)	LAI KIM HUNG	(賴劍虹)
(6)	LIU LAI KEUNG	(廖勵强)
(7)	LIU WAI KI	(廖惠其)
(8)	LIU GUN SUN	(廖更新)
(9)	LIU KIT MING	(廖傑明)
(10)	LIU MAN FUK	(廖萬福)
(11)	LIU TIM WAN	(廖添穏)
(12)	YAN CHUEK NING	(甄灼寧)
(13)	LEE TAK CHING	(李德貞)

(sued collectively as the Management Committee
of Fung Kai No.1 Secondary School for the year 2001)

1^st Defendants

FUNG KAI NO.1 SECONDARY SCHOOL

2^nd Defendant

-----------------------

Before : Hon Chu J in Court

Date of Hearing : 22-26, 29-31 October, 1, 2, 5-9 November, 10-12 & 14 December 2007

Date of Judgment : 4 August 2008

____________________

J U D G M E N T

____________________

Introduction

1. Between September 1990 and August 2001, the plaintiff was employed to teach at Fung Kai No.1 Secondary School (“the School”), and later at Fung Kai Liu Man Shek Tong Secondary School (“FK-LMST School”). He brings the present action for damages for wrongful termination of his employment contract and for breach of what is pleaded as an implied term of good faith.

The parties

2. The plaintiff was born in 1957. He was educated in Hong Kong up to Form 5. In 1975, he went to England. In 1982, he graduated from University of East Anglia with a LLB degree. In 1987, he received the Postgraduate Certificate in Education from the University of Hong Kong. After his return to Hong Kong from England in January 1983, the plaintiff worked briefly as a primary school supply teacher. Between February and August 1984, he was employed by the Correctional Services Department. In October 1984, he became a full time teacher in a secondary school.

3. In September 1990, the plaintiff began his teaching employment at the School. By agreement reached between him and the sponsoring body of the School and of FK-LMST School, the plaintiff was transferred to teach at FK-LMST School in the 2000-2001 school year. Since September 1983, the plaintiff also taught English on a part-time basis for the adult education evening courses operated by the government at Queen Elizabeth School. This he continued to do after he became a teacher of the School with the consent of the school authority.

4. The School is a government aided school. Its sponsoring body is Fung Kai Public School (“FKPS”), which was incorporated in 1961 under the Companies Ordinance 1950 with limited liability. FKPS also owns the land on which the School is built. Apart from the School, FKPS is also the sponsoring body of several other primary and secondary schools. Among them is FK-LMST School, which was founded in 1996. It is also a government aided school.

5. In the course of this action, the School was joined as the 2^nd defendant. On 8 October 2007, I ordered that it ceased to be a party with the costs reserved to the conclusion of this trial.

6. The 1^st defendants are sued in their capacity as registered managers of the School and as members of the management committee (“SMC”) of the School in 2001. Since August 2005, the School has an incorporated management committee, consequential upon amendments to the Education Ordinance, with which this case is not concerned.

7. At all material times, the 1^st named 1^st defendants, Mr Liu Ching Leung, (“the Supervisor”) was the supervisor of the school. He was also the Chairman of the SMC. The 2^nd named 1^st defendants, Mr Liu Poon Keung, (“the Principal”) was the principal of the School from 1989 to August 2005, when he retired from the school. He has since emigrated to Australia.

The facts

8. As the relationship between the plaintiff and the School goes back a long way to 1990, there are quite a lot of factual matters covered in this action. The parties have also adduced voluminous documents, some of which were only available at the commencement of the trial as a result of subpoenas served on the Education Department. I do not consider it necessary to cover in this Judgment all the facts and documents that had been canvassed, for this will add unnecessarily to the length of this already rather lengthy Judgment. As far as the facts that are directly relevant to the understanding and determination of this action, they are summarised below. Some of the factual aspects will be further elaborated when dealing with the issues to which they relate.

9. The plaintiff commenced teaching in the School on 3 September 1990. This was evidenced by a Letter Offering Appointment – Teachers in Aided School (“Letter Offering Appointment”) dated 20 June 1990 issued by the Supervisor and a Letter of Acceptance dated 21 June 1990 signed by the plaintiff. Attached to the Letter Offering Appointment were two copies of a document called “Conditions of Service – Teachers in Fung Kai No.1 Secondary School” (“Conditions of Service”), which the plaintiff was required to sign and return one copy to the Supervisor.

10. Thereafter until 1999, the plaintiff was issued with a Letter Offering Appointment from the Supervisor every year in about May. Each time the plaintiff signed and returned to the School a Letter of Acceptance together with a copy of Conditions of Service duly signed by him. These Letters Offering Appointment and Letters of Acceptance are very similar in contents. Over the years, there were some changes to the Conditions of Service.

11. The plaintiff mainly taught English in the School. He also taught Economics and Public Affairs (EPA) to Form 1 to Form 3 students. At the same time, he also took up disciplinary duties under the supervision of Mr Yip Kee Churck (葉其芍),who was the Disciplinary Master. Mr Yip had taught in the School since 1965. The Principal was one of his students. When the plaintiff was with the School, Mr Yip was a Principal Assistant Master (PAM) and later became the Vice-Principal. It was common ground that he subsequently became unwell and he retired in 1996.

12. In March 1994, the School invited applications from the teachers for promotion to, inter alia, to Senior Graduate Master (SGM). It was understood that the successful candidate for the SGM post would take up the disciplinary duties of Mr Yip. In April 1994, the plaintiff, who was a Graduate Master (GM) made an application to the Principal for promotion to the post of SGM. Apart from the plaintiff, there was one other applicant, who also carried out disciplinary duties under the supervision of Mr Yip.

13. In support of his promotion application, the plaintiff had requested and obtained several letters of support from past and present teachers and students. Mr Yip also wrote in support of his application. These letters, which were written in June and July 1995, were produced by the plaintiff in this action as demonstration of recognitions of his ability and competence as a teacher. The plaintiff’s promotion application was eventually unsuccessful. According to the plaintiff, he became aware of the outcome in early 1996.

14. Although the plaintiff denies he was keen about the promotion and strongly refutes any connection between his unsuccessful application and his conduct and performance in the School that form the subject matter in this action, the evidence shows that it was around the same time of his promotion application that he began to get into difficulties with the School, notably the Principal.

15. Between 1995 and 1999, the plaintiff had received four formal warnings arising out of four sets of incident (“the 1^st to 4^th Incidents”). The first two warnings were verbal warnings administered by the Principal on 14 December 1995 and 4 March 1998. Being formal warnings, they were recorded in writing. The other two were written warnings issued by the Supervisor on 10 February and 1 June 1999.

16. I shall deal with the details of these four incidents and warnings in the latter part of this judgment. It is sufficient to indicate at this stage that they turn on aspects of school administration and the plaintiff’s conduct in relation to them.

17. In connection with the warnings and other incidents of school administration, including the election of teachers’ representative, the plaintiff had made a number of complaints to various organizations outside the School, including the Education Department, the Hong Kong Professional Teachers Union (“hkptu”) and the Council on Professional Conduct in Education (“CPCE”). The plaintiff had also made requests for access of personal data to the Principal and the Education Department. The HKPTU had taken up his complaints with the Education Department. In February 2000, the plaintiff was elected as the deputy secretary for the Complaints Unit of the HKPTU. At the same time, the CPCE conducted case studies on the incidents giving rise to the warnings and published reports and conclusions adverse to the Principal and the School.

18. Plainly, the plaintiff was invoking the assistance of these external organizations to overturn the decisions of the School and to revoke the warnings against him. The plaintiff said his primary objective was to preserve his employment in the School. Indeed, the CPCE had recommended to the Education Department that the warnings should be freezed. It should, however, be mentioned that during these years, despite the warnings and the plaintiff’s many complaints, the plaintiff continued to be issued with Letters Offering Appointment on an annual basis and he had accepted each one of them. The turning point only came when there were complaints about his teaching performance.

19. On 29 March and 14 April 2000, the School received two separate complaints from a group of six Form 5B and another group of 23 Form 6A students concerning the plaintiff’s teaching performance and behaviour during lessons. The Principal appointed a committee consisting of five teachers to look into the complaints. The committee administered questionnaires on the students in the two classes. The responses of the questionnaires indicated support for the complaints. When asked by the Principal to explain, the plaintiff refused, commenting that it was nonsense and further asked the Principal for evidence by invoking the Personal Data (Privacy) Ordinance. The plaintiff was of the view that the School acted unfairly in handling the complaints. It is said that the questionnaires were set in a leading and biased manner and the investigation was conducted behind his back.

20. In fact in April 2000, before receiving the complaints from Form 6A students, the Supervisor and the Education Department were discussing the possibility of transferring the plaintiff to teach in FK-LMST School in light of the difficulties he exhibited after the unsuccessful promotion and the multiple complaints he made to external organizations. This cumulated in a letter dated 29 May 2000 from Mr Law Kwung Hung (羅君雄) of the Education Department setting out the transfer arrangement, which was copied to the plaintiff. The letter mentioned that the School agreed to cancel all previous warnings issued to the plaintiff effective from 1 May 2000. The Supervisor wrote on 13 June 2000, disputing the agreement. He pointed out that the School had received complaints from students about the plaintiff, thus the warnings could not be cancelled. Mr Law replied by letter dated 21 June 2000, maintaining there was an oral agreement to cancel the warnings and further stated that the previous letter was issued after obtaining the Supervisor’s approval. It should be noted that the plaintiff did not receive copies of these two letters and therefore did not have knowledge of them until much later on. Nevertheless, discussions on the transfer arrangement came to a halt because of the students’ complaints.

21. At a meeting on 4 July 2000, the SMC members present resolved unanimously to terminate the service of the plaintiff.

22. By letter dated 22 July 2000 (“1^st Letter of Termination”) the SMC through its solicitors informed the plaintiff of its decision not to renew his employment upon the expiration of his current contract on 31 August 2000. The letter referred to the incidents giving rise to the four warnings and the complaints about his teaching performance, and went on to state that although the plaintiff had committed a grave breach of duty and was liable to be summarily dismissed, the SMC would pay him one month’s salary in lieu of the full notice of three months.

23. Consequent upon intervention and mediation by the Education Department, at a meeting on 8 August 2000 attended by the plaintiff, the representatives from the Education Department, the Chief Executive of FKPS, the Vice-Principal of the School and the Principal of FK-LMST School, it was agreed that the plaintiff would be transferred to teach in FK-LMST School for one year commencing September 2000 and he would during the one year period remain to be employed on the School’s establishment. It was also agreed that if the plaintiff’s performance at FK-LMST School was up to expectations and if there was vacancy, FK-LMS School would give priority to appointing him as a teacher on its establishment.

24. The position of the School on this transfer agreement was and is that it operated to temporarily suspend the decision not to renew the plaintiff’s employment. The Chief Executive of FKPS had made this point plain at the 8 August 2000 meeting, which was recorded in the minutes. The plaintiff disagreed to this. He wanted the suspension or cancellation of his previous warnings. As a result of his disagreement, the plaintiff refused to sign on the minutes of the meeting.

25. In September 2000, the plaintiff commenced teaching in FK-LMST School. He taught English and EPA. At first, his relationship with the principal, Mr Chan Wing Ping, and other colleagues were amicable. Matters began to take a sharp turn after the book inspections in December 2000. The first one was a routine inspection that took place on 1 December 2000. Owing to unsatisfactory findings in the inspection, a second and full book inspection was carried out on 20 December 2000. The plaintiff’s teaching progress and performance was considered to be inadequate and below the expected standard.

26. On 4 January 2001, the plaintiff had a meeting with the relevant Form co-ordinators and the English Panel Chairperson, Ms Lau Shui Chun (Mrs Lui), followed by another meeting involving the principal and other teachers, to discuss the findings on his work and performance. The plaintiff did not accept the criticisms made about his work and performance. Not surprisingly, the meetings were unpleasant encounter, with the plaintiff accusing Mrs Lui of being hostile and aggressive towards him whereas Mrs Lui said the plaintiff was argumentative and not receptive to comments and suggestions.

27. Thereafter, the relationship between the plaintiff and the principal and other teachers deteriorated substantially. The plaintiff felt he was victimised and he attributed this to the Supervisor working his influence on the principal and teachers of FK-LMST School. In May 2001, there were class observations and further assessments of the plaintiff’s teaching. In the report on the plaintiff’s work for the second term, it concluded that despite there were improvements, the plaintiff’s work was behind schedule and not satisfactory.

28. At the same time, the plaintiff also ran into difficulties with the students in the new school over disciplinary and teaching matters. There were complaints from students and parents. Specifically, there were two occasions that the plaintiff said he was humiliated and harassed by the students. The first happened after the school Christmas party when some students sprayed man-made snowflakes on him outside the school entrance and laughed about it. The second happened some days later when he ran into several female students in a shopping arcade. When he refused the students’ request to treat them to food, the students were said to use bad languages, follow him around and try to prevent him from leaving. The plaintiff said he felt threatened. He complained about this to the teacher in charge of discipline. He was dissatisfied with the school’s handling of his complaint and eventually reported the incidents to the police, resulting in the arrests of the students.

29. The principal and the management committee of FK-LMST School took the view that the plaintiff’s work performance did not meet the requirements of the school and he was further unable to share the school’s culture and philosophy on education and student discipline. By letter dated 23 May 2001, the principal of FK-LMST School informed the Education Department that the school would terminate the transfer agreement at the end of the school year. The Education Department replied on 16 July 2001 that they had no objection to it. By another letter dated 16 June 2001, FK-LMST School informed the SMC of the School of the decision to terminate the transfer arrangement.

30. By letter dated 13 July 2001 (“the 2^nd Termination Letter”), the SMC of the School, through solicitors, gave notice to the plaintiff to terminate his employment with the School. The letter pointed out that had it not been for the transfer agreement, the plaintiff’s employment should have ended in 2000. However, there was no satisfactory improvement when the plaintiff taught in FK-LMST School and the management committee of FK-LMST School had resolved that his service was no longer required. The letter concluded by saying that in the circumstances, the SMC had no alternative but to terminate his employment with the School with immediate effect. A cheque for one month’s salary as payment in lieu of notice was enclosed in the letter.

31. The plaintiff instructed solicitors and wrote to the SMC’s solicitors on 30 August 2001, contending that the termination of his employment was wrongful and indicated he would report for duty on 1 September 2001. The SMC’s solicitors replied, disputing the contention and stated that an injunction would be sought against the plaintiff if he were to insist on coming to the School.

32. In the meantime, the plaintiff had complained to HKPTU and CPCE about the termination of employment. He also complained against the Education Department to the Ombudsman. In addition, he made complaints to CPCE against the FK-LMST School and its principal, including a complaint of forgery on account of alterations to a student’s school report. CPCE found the complaint substantiated and the matter was referred to the police. The police, however, concluded there was no case for prosecution. Despite this and despite protests from FK-LMST School, CPCE has yet to accede to the school’s request to withdraw or rectify its adverse finding and conclusion.

33. As for the plaintiff’s complaint on the termination of his employment, neither the HKPTU nor the CPCE was prepared to take it up. According to the plaintiff, the HKPTU instead persuaded him to settle the dispute and had on his behalf tried to mediate a settlement with the School through the Education Department.

34. As part of the settlement attempt, the plaintiff wrote a letter dated 25 October 2001 to the Supervisor (copied to the Education Department and the Chairman of HKPTU), in which he stated that he would resign for personal reasons with effect from 1 September 2001. The Supervisor wrote to the Director of Education on 5 November 2001 stating there was no objection to let the plaintiff resign on his own accord. According to the plaintiff, however, the Supervisor’s reply was never related to him by the Education Department. And on the further request of HKPTU, he wrote another letter dated 26 November 2001 to the Director of Education to say that he would not take legal action in relation to the matters that happened in July 2001. The plaintiff said because he did not hear any response from the School, he imposed a deadline for acceptance of his resignation in a letter to the Director of Education dated 4 December 2001. Since he still heard nothing, his offer to resign lapsed automatically on 7 December 2001.

35. Then on 7 September 2002, the plaintiff instituted proceedings in the Labour Tribunal against the School (Claim no. LBTC8797/2002), claiming salary from 13 July to 31 August 2002. At the third hearing, on 13 December 1002, the School agreed to pay the amount claimed. On the same day, the Tribunal issued an award for the amount claimed as full and final settlement for all claims. On 19 December 2002, the School paid the amount into the Tribunal.

36. Some six months later on 30 June 2003, the plaintiff commenced a second claim in the Labour Tribunal against the School and the SMC for a total sum of $14,024,190.90. On 4 September 2003, the Presiding Officer transferred the action to the High Court. This became the present claim.

The plaintiff’s claim

36. The plaintiff’s claim in the present action is for damages for:

(1) Wrongful termination of the employment contract and constructive dismissal; and

(2) Breach of an implied term of good faith.

37. The plaintiff’s case is that he was employed by the 1^st defendants under a continuous contract that should have lasted until he reaches retirement at the age of 60 and was not subject to annual renewal. According to the plaintiff, the contract of employment could only be terminated:

(1) For cause:
(a) if the SMC considered on good and sufficient reasons that his service was unsatisfactory;
(b) on giving three months’ notice; and
(c) Upon strict compliance with the procedures laid down in section 56(g) and Appendix 17 of the Code of Aid for Secondary Schools (“the Code of Aid”), which the plaintiff says had been incorporated into his contract of employment by express term.
(2) Alternatively, on summary dismissal if the SMC considered there was a grave breach of duties or if he was convicted of a criminal offence.

38. It is the plaintiff’s case that neither the 1^st nor the 2^nd Letter of Termination constitutes valid termination of his employment. In both cases, the decision to terminate was not made by a majority of the SMC and did not comply with the contractual conditions for bringing about a termination in that the SMC did not give three months’ notice and there was no good and sufficient ground for termination. Specifically, for the 1^st Letter of Termination, it is said that the SMC wrongly took into account the four warnings when they were estopped from so doing by the agreement at the 8 August 2000 meeting, and that there was no prior warning before the incident of complaint on his teaching performance. In the case of the 2^nd Letter of Termination, it is said that the reasons given by FK-LMST School for not continuing with the transfer agreement were not bona fide and were instigated by the Supervisor. It is also said that it was not preceded by verbal or written warnings insofar as the termination was based on the events in FK-LMST School.

39. As for the claim in breach of implied term, the plaintiff relies on:

(1) The four incidents and warnings;

(2) The Supervisor’s letter dated 13 June 2000 to Mr Law of the Education Department disputing an agreement to cancel or revoke all the warnings;

(3) The handling of the complaints from students of Form 5B and Form 6A;

(4) The events in FK-LMST School; and

(5) The 1^st and 2^nd Letters of Termination.

40. For the claim in wrongful termination and constructive dismissal, the plaintiff claims loss and damages represented by:

(1) The prospect of earning basic salary up to the age of 60 (i.e. 16 years of salary);

(2) The loss of monthly provident fund contribution by the government at 15% for 16 years;

(3) The loss of dividend at no less than 5% p.a. of the accumulated provident fund payable by the government for 16 years; and

(3) Three-month salary as wages in lieu of notice together with the provident fund contribution.

The plaintiff agrees to give credit for payments that he had received from the School.

41. On the claim in breach of implied term, the plaintiff claims damages for damage to reputation occasioned by his being terminated in the middle of an academic year. It is said that he has been unable to find compatible full-time teaching post at established education institution. The financial loss is said to equal to the salary and benefits he would receive as a government aided school teacher less the income he had thus far earned as a part-time or substitute teacher.

42. At the trial, the plaintiff’s claim is revised to about $6.9 million, less than half of what was initially claimed.

The defence

43. A number of defences are raised by the defendants. First, it is pleaded that the School is not a legal entity capable of being sued. As for the 1^st defendants, they were merely agents for the School, similar to the directors of a limited company, so that no cause of action lies against them. It is also pleaded that the plaintiff’s employment contract was not made with the SMC.

44. As to the employment contract, the defendants’ case is that the Code of Aid does not form part of the contract. It is denied that the plaintiff’s contract was for continuous employment up to the retirement age. The defendants aver that the plaintiff’s contract was for the fixed term of one school year and was renewed annually. As such, the contract would come to an end upon expiration and no notice of termination is required. Otherwise, under the Conditions of Service, the contract could be terminated by the SMC giving three months’ notice or by way of summary dismissal.

45. The defendants do not accept there is a proper legal basis for the implied term of good faith pleaded by the plaintiff. Further, the defendants say that as a matter of law, any implied obligation of trust and confidence cannot apply to the manner of terminating the employment.

46. Relying on the letter of resignation dated 25 October 2001, the defendants plead that the plaintiff has waived his right to damages or salary in lieu of notice.

47. The defendants further say that the claims in the present action could, and should, have been put forward in the first Labour Tribunal action and that the bringing of the present action amounts to an abuse of the court process.

48. Finally, in respect of the quantum of damages, the defendants challenge the plaintiff’s contention that he has not been able to find alternative full-time employment and say that the plaintiff had failed to mitigate his loss.

The plaintiff’s reply

49. By way of reply, the plaintiff pleads that the SMC was the plaintiff’s employer. Alternatively, it is said that the 1^st defendants are estopped from alleging they were agents of any legal person to the employment contract and/or from denying they were a party to the employment contract.

50. The plaintiff denies that the resignation letter amounts to a waiver, contending that the agreement to resign was aborted by reason of the 1^st defendants’ refusal to respond to the resignation letter. This issue of waiver based on the letter of resignation was not pursued in the closing submissions for the 1^st defendants.

51. As for the first action in the Labour Tribunal, the plaintiff says there was no settlement and that judgment on admission should have been entered against the School. The plaintiff denies that the bringing of the present action constitutes an abuse of court process.

The issues

52. Accordingly, the broad issues that require determination are:

(1) Whether the present action amounts to an abuse of court process.

(2) Whether the 1^st defendants are correctly sued in this action.

(3) Whether the Code of Aid formed part of the employment contract.

(4) Whether the employment contract was continuous until the plaintiff’s retirement.

(5) Whether the termination of the plaintiff’s employment was wrongful and whether there was constructive dismissal.

(6) Whether the implied term as pleaded by the plaintiff exists in law and whether there was any breach of it.

(7) If the plaintiff succeeds in his claim, what is the quantum of damages.

(8) What is the appropriate costs order consequent upon the order that the 2^nd defendant ceased to be a party to the action.

Is the present action an abuse of process?

53. The first issue to be decided is whether the present action constitutes an abuse of process. It is accepted by both sides that if the issue is decided against the plaintiff, it will be the end of the plaintiff’s claim.

54. The 1^st defendants’ submission on this issue is that the plaintiff could and should have put forward the present claim against the 1^st defendant in his first Labour Tribunal action and that in all the circumstances of the case, the plaintiff’s failure to do so amounts to an abuse of process.

55. The facts that are relevant to this issue are not really in dispute. On 7 September 2002, the plaintiff issued the first action in the Labour Tribunal against the School (claim no. LBTC 8797/2002). The claim was stated to be for arrears of wages for the period from 13 July to 31 August 2001 and in the amount of HK$76,758 (at $47,590 per month). In the Statement by Claimant, the plaintiff stated that the termination of his employment was in breach of the Conditions of Service, the Code of Aid and the Education Regulations and that the effective date of termination was not in accordance with the decision of the SMC and the stance taken by the Education Department.

56. The case went through three call-over hearings before it was finally disposed of. The transcripts of the hearings are in evidence in this trial. The first call-over hearing took place on 12 October 2002. The Vice Principal of the School, Mr Lui Wing Chuen, appeared on behalf of the defendant (i.e. the School). From what was said to the Presiding Officer, the dispute between the parties was whether the 2^nd Letter of Termination was issued before or after the commencement of the summer vacation. It was common ground that if the plaintiff’s employment was terminated with due notice during the summer vacation, then under the Conditions of Service, the plaintiff would be entitled to receive salary up to 31 August 2001. The 2^nd Letter of Termination is dated 13 July 2001, which the plaintiff said he only received on 16 July 2001. What happened was according to the school calendar of the School, summer vacation only began after 20 July 2001 whereas for FK-LMST School, summer vacation started on 14 July 2001. Hence the issue became which school calendar should be used for determining whether the termination took place before or during the summer vacation.

57. The Presiding Officer pointed out to Mr Lui that as the 2^nd Letter of Termination enclosed a cheque for payment of one-month salary in lieu of notice, this might have a bearing on when the termination of the plaintiff’s employment took place. He adjourned the claim with the direction that the School should take legal advice on whether the termination took place on the date of the 2^nd Letter of Termination (i.e. 13 July 2001) or one month afterwards (i.e. 13 July 2001).

58. The case went before another Presiding Officer on the adjourned call-over hearing on 11 November 2002. The School was again represented by Mr Lui. The transcript shows that the Principal was also present. The Presiding Officer was keen to ascertain the basis for the School giving one-month as opposed to three-month notice as this was relevant to whether the termination was “with due notice” as stipulated in the Conditions of Service. In the course of the hearing, Mr Lui raised with the Presiding Officer that the plaintiff’s claim was not for insufficient notice whereupon the Presiding Officer pointed out that it was open to the plaintiff to amend his claim. In the end, the Presiding Officer adjourned the case for mention and requested the School to obtain a written legal opinion on whether by giving one-month salary in lieu of notice, the plaintiff’s employment was terminated with due notice.

59. The adjourned hearing took place before the same Presiding Officer on 13 December 2002. The Principal was also present although Mr Lui was the School’s authorized representative. Mr Lui first clarified whether the plaintiff only demanded the salary up to 31 August 2001. He then informed the Presiding Officer that on the basis of the plaintiff’s letter of resignation dated 25 October 2001 and the School had informed the Education Department that they would accept this, their lawyers had advised them to pay the claim for the salary up to 31 August 2001 with a view to alleviating the need to be entangled in what had happened between the parties (唔希望糾纏到點樣之前呀,又點樣後嗰啲嘢, … ). The Presiding Officer then confirmed with the plaintiff his agreement to it and directed that the payment be made through the Tribunal within seven days.

60. Afterwards, the Labour Tribunal issued an award dated 13 December 2002, stating that: (1) By consent, the defendant pays the claimant the sum of $76,758, in full and final settlement of all the claims; and (2) The payment shall be made within seven days. The School had made the payment to the plaintiff through the Tribunal.

61. On 16 December 2002, the plaintiff wrote to the Presiding Officer of the Labour Tribunal. The material part of the letter read:

“ Thank you very much for your painstaking patience in facilitating a settlement in my case. However, I could not consider the settlement made on 13^th December a complete one, since the following elements have not been included expressly into the said agreement:

i) Provident Fund Contribution

ii) Certificate of Service

iii) Interest accrued

…

I have to admit, due to my naivety and inexperience, those points were not raised at the Tribunal, and I wish you could give your careful consideration to these points.

Further, since I intend to take a new civil action in a law court, I would like to have a written record of the proceeding in this case. Please grant me permission to have such a record.

…”

62. Then on 3 January 2003, the plaintiff wrote again to the Presiding Officer. The letter was headed “Settlement”. After referring to his previous letter and the permission to obtain the transcripts of the hearings, the plaintiff went on in the second paragraph to state:

“However, your direction on the other issues raised in that letter has not been given. Thus I would like to request your permission to include these issues, which are: provident fund contribution, certificate of service and interest accrued, into the ‘settlement’.”

63. The trial bundles do not contain the replies of the Labour Tribunal to the plaintiff’s letters. But from the subsequent development of the events, the inference must be that the plaintiff’s requests to include other heads of claim in the award, which effectively amount to an attempt to re-open his Labour Tribunal claim, had not met with success.

64. In the meantime on 8 January 2003, the Principal wrote to the plaintiff referring to his letter of resignation dated 25 October 2001 and enclosed a certificate of service in which the cause of leaving service was stated to be resignation. The Supervisor in another letter dated 13 January 2003 to the plaintiff also indicated that the School accepted the plaintiff’s resignation. However, by letter dated 24 January 2003 to the Secretary of Education and Manpower, the plaintiff sought to clarify that the settlement he reached with the School in the Labour Tribunal was only for the salary for the summer vacation. He stated that he reserved his right to claim against the School and the EMB in connection with his unlawful dismissal. The plaintiff related the same message to the Supervisor in his letter dated 27 January 2003.

65. Six months later on 30 June 2003, the plaintiff commenced another action in the Labour Tribunal (claim no. LBTC 5616/2003). Two defendants were named in the claim: the School and the Management Committee of Fung Kai No.1 Secondary School. The claim was for 16 yeas of unearned salary, loss of provident fund and loss of mortgage interests totalling in excess of HK$14 million. Pursuant to the Order of the Labour Tribunal made on 4 September 2003, the claim was transferred to the Court of First Instance and became the present action.

66. In the Court of First Instance, the plaintiff only proceeded against the present 1^st defendants. The School was later added as the 2^nd defendant, but was by the Order made on 8 October 2007, ceased to be a party. This will be discussed in details in the latter part of the Judgment.

67. The applicable law is well settled and there is no disagreement between counsel. The rule which has its origin in the dictum of Wigram V-C in Henderson v. Henderson (1843) 3 Hare 100 at 114 is that:

“… where a given matter becomes the subject of litigation in, and of adjudication by, a court of competent jurisdiction, the court requires the parties to that litigation to bring forward their whole case, and will not (except under special circumstances) permit the same parties to open the same subject of litigation in respect of matter which might have been brought forward as part of the subject in contest, but which was not brought forward, only because they have, from negligence, inadvertence, or even accident, omitted part of their case.”

68. The rule is seen either as an extension of the doctrine of res judicata: Henderson v. Henderson, supra, at 115, Yat Tung Investment Co Ltd v. Dao Hang Bank Ltd [1975] AC 581, or as a rule of public policy: Barrow v. Bankside Agency Ltd [1996] 1 WLR 257, 260.

69. A recent statement of the law is contained in the judgment of Lord Bingham in Johnson v. Gore Wood & Co [2002] 1 AC 1, 31:

“The underlying public interest is the same: that there should be finality in litigation and that a party should not be twice vexed in the same matter. This public interest is reinforced by the current emphasis on efficiency and economy in the conduct of litigation, in the interests of the parties and the public as a whole. The bringing of a claim or the raising of a defence in later proceedings may, without more, amount to abuse if the court is satisfied (the onus being on the party alleging abuse) that the claim or defence should have been raised in the earlier proceedings if it was to be raised at all. I would not accept that it is necessary, before abuse may be found, to identify any additional element such as a collateral attack on a previous decision or some dishonesty, but where those elements are present the later proceedings will be much more obviously abusive, and there will rarely be a finding of abuse unless the later proceeding involves what the court regards as unjust harassment of a party.”

70. Mere re-litigation does not necessarily render the new proceeding an abuse of process. It is not the case that the maintenance of a second claim that could have been part of an earlier claim per se would automatically amount to an abuse of process: Johnson v. Gore Wood Co, supra, 31& 59. Every case has to be judged according to its facts and circumstances. The court’s approach is to make “a broad, merits-based judgment which takes account of the public and private interests involved and also takes account of all the facts of the case, focusing attention on the crucial question whether, in all the circumstances, a party is misusing or abusing the process of the court by seeking to raise before it the issue which could have been raised before.”: Johnson v. Gore Wood Co, supra, 31. The burden is on the defendant to establish abuse. It has been said that it is a burden of some weight: Harvest Good Development Ltd v. Secretary for Justice & Others (unreported) HCAL32/2006, 16.7.2007 at para.104.

71. In the present case, I have no difficulty concluding that the claims in the present action could have been included in, and brought together with, the first Labour Tribunal action. The claims in both actions all arose out of the plaintiff’s employment and the same set of facts. They are both claims for breach of employment contract. Although the first action was confined to arrears of wages, it is by its nature a claim based on breach of the plaintiff’s employment contract. As for the present action, it is a claim for damages for breach of employment contract in connection with the termination of the employment and the implied term of trust and confidence. The plaintiff had in the first claim made references to the Conditions of Service, the Code of Aid and the Education Regulations, all of which also feature significantly in this action. In fact, the present action is an extension of the first action. Indeed, I do not understand the plaintiff or Mr Chiu to be saying that the claims in the present action could not have been brought in the first action.

72. What Mr Chiu had argued is that the plaintiff was justified in not putting forward the present claims in the first Labour Tribunal action for a number of reasons. The first is that the present claims for damages are unliquidated claims for damages. As such, he said, there was in 2002 some uncertainty as to whether the claims were properly within the jurisdiction of the Labour Tribunal. He argued that there was a real chance that the Labour Tribunal might not have accepted the claim.

73. I do not agree that the Labour Tribunal jurisdiction affords a proper explanation or justification for splitting the claims into two actions. First, although the court had in early years considered that the jurisdiction of the Labour Tribunal did not extend to a claim for unliquidated damages: National Ebauch Ltd v. Rishi Kaumar Bhatnagar [1981] HKLR 114 and Hung Sang Engineering Works Ltd v. Yu Wing Fat [1975] HKLR 394 at 400, the court had in a number of subsequent decisions in the 1980s and 1990s consistently held that the Labour Tribunal has jurisdiction to deal with claims for damages that are unliquidated in law but quantifiable in practice: Panalpina (Hong Kong) Ltd v. Ulrich Haldemann [1983] HKLR 275, 277-8, Ying Cheong Shoe Mfy v. Tam Yuk Bing & Another [1987] 2 HKC 310, David Ireland v. Canton Fitzgerald (HK) Ltd (unreported) HCA 2115/1988 and De Nicolas Nenita Cientos v. Lee Fung Lan (unreported) HCLA 15/1997. There is no real controversy on the jurisdiction of the Labour Tribunal to deal with the present claims for damages. Second, had the plaintiff included the present claims for damages, and if the Labour Tribunal were indeed of the view that this part of the claim was outside its jurisdiction, it could have transferred the plaintiff’s claim to the High Court. There is no question of the plaintiff’s claim not being able to be brought in or accepted by the Labour Tribunal. Third and more fundamentally, it is not the plaintiff’s evidence that it was due to a concern over the Tribunal’s jurisdiction that he did not include the present claims for damages in his first action.

74. Mr Chiu also argued that the issues in the present action do not relate to those in the first action. It is true that different issues are engaged in the two actions. But that is because the plaintiff had split his claims into two sets of proceedings. The first action was founded on a single premise of wages for the summer vacation. The School’s response could only have concentrated on the plaintiff’s entitlement to this. Had the plaintiff also claimed in the first action damages for breach of the implied term of trust and confidence and for wrongful termination, then surely the School would have put forward the defences that are raised in this action. It is a circular argument to say that because the issues in the two actions are different that it cannot be said that the present action could or should have been included in the earlier action.

75. Attempts were also made to justify the bringing of two actions on the basis that the plaintiff was unrepresented in the Labour Tribunal. I see no merit in this argument. As a matter of fact, it is not the case that the plaintiff did not have the benefit of legal advice. He had after receipt of the 2^nd Letter of Termination consulted lawyers and his solicitors had in August 2001 written to the School on his behalf. Further, the plaintiff himself is a law graduate. In any event, in the circumstances of this case, lack of legal advice or ignorance or misunderstanding of the legal position does not mean that the plaintiff could not have brought all the claims in one action.

76. It is quite clear from the transcripts in the first Labour Tribunal claim that the plaintiff was adamant that the termination of his employment was improper and wrongful. He had in fact already raised a number of complaints in connection with his termination. It is also apparent that at the last hearing before the Tribunal, he was contemplating further claims against the School in connection with his termination. This can be seen from the fact that after Mr Lui indicated the School was willing to pay up, the plaintiff twice sought to clarify and confirm with the Presiding Officer that his claim before the Tribunal was only for wages, albeit he did not go on to disclose that he intended to bring further claims. The letters that he wrote to the Presiding Officer shortly after the first claim was settled are also demonstrative of his intention to pursue more claims. All these point to the fact that at the material time, the plaintiff was well aware of and did appreciate there were other potential claims in connection with his termination. In the circumstances, it is only reasonable to expect him to put forward all the claims if he were to litigate with the School over the termination of his employment. Plainly, not only could the plaintiff have included the present claims in the first Labour Tribunal action, he should have done so.

77. The suggestion that he was not legally advised or was not adequately advised when he brought the first action is therefore irrelevant. Likewise, the suggestion that the plaintiff was unaware of the rule in Henderson v. Henderson, supra, and that he had not been warned by the Presiding Officer on the legal implications or restrictions on splitting his claims is not a relevant consideration.

78. Another argument articulated on behalf of the plaintiff is that the present claims involve complicated facts and law and that the plaintiff had to invoke the Personal Data (Privacy) Ordinance to obtain the relevant documents and records from the School and other parties. It is said that because many facts were only discovered from the documents and records thus disclosed, it would be unreasonable to say that the plaintiff should have brought the present claims in the first action.

79. As a start, it should be noted that by the time he brought the first action in the Labour Tribunal, the plaintiff had already made several requests to the School and other parties for documents and records under the Personal Data (Privacy) Ordinance for disclosure of documents and records. And admittedly, he already had with him some of the relevant documents and records. That said, in advancing this argument, Mr Chiu is effectively saying that the plaintiff was not ready to bring the present action in 2002 and this justified him going ahead with the claim for wages first. However, as Hartmann J said in the Harvest Good Development Limited case, supra, at para.113, a litigant cannot “drip feed” his case in this way. The plaintiff has not suggested there was any urgency or necessity to bring action in September 2002. If indeed he did not have all the necessary documents or information, he could, and he should, have waited until he was in a position to bring his whole claim. It should be noted that there was only a nine-month gap between the two actions.

80. It is also argued that as the plaintiff has a complex claim, he is right to cut out the claim for wages and have it dealt with first and then to spend time working out the rest of his claims. I find this argument most surprising. While such a strategy may suit the convenience of the plaintiff, it works most unfairly on his opponents, particularly when he never disclosed that he was to come back after the conclusion of the first action. Such an approach to litigation is directly at odds with the public interest underlying the rule in Henderson v. Henderson that there should be finality in litigation. It is tantamount to saying that because the plaintiff’s claim is complex, it is legitimate for him to vex his opponents twice or more. This cannot be right.

81. In my view, it is both objectionable and oppressive for the plaintiff to bring his first action for a narrow part of his claim and after it was concluded by consent, to bring another action for the other parts of his claim with much wider relief sought. It is clear from what Mr Lui told the Presiding Officer that, in offering the payment, the school authority was hoping to put an end to the disputes between the plaintiff and the School. Yet, six months later, it was landed with another litigation claiming huge sums of damages.

82. The oppression is not removed or made less by the fact that the present action is against the individual members of the SMC whereas the first action was against the School. As a matter of law, the rule is capable of application where the parties to the second action are different from those in earlier action. As explained by Auld LJ in Bradford & Bingley Building Society v. Seddon Hancock & Others [1999] 1 WLR 1482, 2261: “… it is inherent in Sir James Wigram V-C’s reasoning that, a general rule, all persons who are to be sued should be sued at the same time and in the same proceedings where such a course is reasonably practicable, and whenever it is so and is not taken then, in an appropriate case the rule may be invoked so as to render the second action an abuse.”

83. When the second action was brought in the Labour Tribunal, the defendants named were the School and the SMC. It was only upon transfer to the High Court that the individual members of the SMC were named as the 1^st defendants. Mr Chiu made the point that in the first action, Mr Lui represented the School in the three hearings in the Labour Tribunal, but Mr Lui is not among the 1^st defendants in this action, hence there is no oppression or repeated vexing of the same party. This submission overlooks the fact the Principal, who is the 2^nd named 1^st defendants herein, was present at the last two hearings in the first action. More fundamentally, the School, which all parties accept, is managed by the SMC. Both the Supervisor and the Principal were members of the SMC. When the School was sued, the SMC would have to deal with it. It therefore makes no practical difference that it was the School who was named as the defendant in the first action whereas it was the individual members of the SMC who were sued in the present action. The same group of people had been vexed twice. On the contrary, the fact that after dealing with and concluding an action in discharge of their duties as school managers, they were then faced with a huge claim against them personally only adds to the oppression.

84. The plaintiff has been at pain to point out that the award dated 13 December 2002 was erroneous in describing the payment as full and final settlement of all claims. It is said that there was in truth no settlement and that the payment was only in respect of the claim for wages. Having carefully considered the transcript of the hearing, I do not agree with the plaintiff that the Presiding Officer should have entered judgment by admission instead of recording a settlement. The offer of Mr Lui, made on behalf of the School, to pay the amount claimed was without admission of liability. He expressly said the lawyers had advised them to make the payment with a view to avoid being entangled in the events that had happened and emphasized that the payment was offered in light of the plaintiff’s earlier letter of resignation. Objectively speaking, there can be no question that it was a settlement because the action was compromised and disposed of with the consent of the parties, short of adjudication on the merits by the Tribunal. Subjectively speaking, the plaintiff himself had referred to this as a settlement when corresponding with the Tribunal and the Secretary for Education and Manpower. The Principal’s subsequent conduct of issuing a certificate of service on account of the plaintiff’s letter of resignation dated 25 October 2001 is also consistent with the School considering a settlement had been made.

85. In the final analysis, it makes no difference whether the first action was concluded by way of an award or by settlement. The important fact to note is that the litigation was resolved by an agreement between the parties and that when the plaintiff agreed to the School’s offer of payment, the plaintiff did not disclose that he had no intention to let the dispute and claim rest there and then. As the evidence shows, within days of the conclusion of the first action, he wrote and requested the Tribunal to re-open the award or settlement to include other items of payments. Apparently, this was not entertained by the Tribunal. To this extent, it may be said that the second action was a collateral attack of the Tribunal’s decision on the original award.

86. In all the circumstances of this case, the 1^st defendants have demonstrated that, as against them, the present action constitutes an abuse of process. On this ground alone, the plaintiff’s claim herein must fail.

Are the 1^st defendants the proper party to be sued?

87. The next issue is whether the 1^st defendants are correctly joined and sued in this action. Again, if this issue is determined in the 1^st defendant’s favour, then the plaintiff’s claim will also fail, irrespective of the determination on the other issues.

88. It is useful to begin by recalling the procedural history of this action. When the action was first brought in the Labour Tribunal on 30 June 2003, the defendants named are:

(1) Fung Kai No. 1 Secondary School; and

(2) Managing Committee of Fung Kai No. 1 Secondary School.

After it was transferred to the Court of First Instance, the plaintiff obtained leave on 20 November 2003 to substitute the present 1^st defendants as the defendants to the action.

89. Subsequently by the Re-Amended Statement of Claim filed on 9 March 2005, the plaintiff added the School as the 2^nd defendant. Mr Chiu said this was due to the averment in the Re-Amended Defence filed on 29 March 2005 that the employment contract was entered into between the School and the plaintiff.

90. Notwithstanding the re-joinder of the School, the plaintiff pleaded that his primary position is that the School is not a legal entity. The defendants share the same view. In the Re-Amended Defence, it was specifically averred that the School is not a legal entity and that the 1^st defendants are taking over the defence of the School.

91. The parties are undoubtedly correct in their view that the School is not legally capable of being sued. The School is an education establishment run by its sponsoring body, FKPS. Its position is no different from a business operated by a body corporate or partnership or individual. In case of legal dispute, the business cannot sue or be sued, but the body corporate or partnership or proprietor operating it can.

92. Since it is agreed that the School is not a legal entity capable of being sued, I ordered at the pre-trial review on 8 October 2007 that the School ceased to be a party in the action with the costs being reserved to the conclusion of this trial.

93. Turning to the position of the SMC, section 32 of the Education Ordinance, Cap. 279, provides that every school shall be managed by a management committee. Section 33 further makes the management committee responsible for ensuring, inter alia, the School is managed satisfactorily and the education of the pupils is promoted in a proper manner. Thus, the SMC is under a statutory duty to manage the School. Accordingly, the Education Ordinance and its subsidiary legislations contain a number of provisions relating to the power and responsibilities of a management committee in connection with the school administration and management.

94. In the present case, the plaintiff contends that the 1^st defendants were his employer and are personally liable for breaches of the employment contract. The 1^st defendants’ case, however, is that they were mere agents of the School as operated by the sponsoring body, and they had not incurred personal liabilities. In reply, the plaintiff says that the 1^st defendants are estopped from denying they are a party to the plaintiff’s contract of employment and/or from asserting they are agents of the sponsoring body.

95. The employment documents will provide a useful start. For all the Letters Offering Appointment issued to the plaintiff between 1990 and 1999, they were issued in the name of the Supervisor and signed by him. They all began with the sentence:“The management committee of Fung Kai No. 1 Secondary School hereby offers you an appointment as a teacher in the School.” All the Letters of Acceptance were addressed to the Supervisor and stated that: “I accept the appointment offered in your letter dated … in accordance with the attached Conditions of Service…”.

96. These documents are in accordance with the Code of Aid, which regulates the work of the management committee. Section 54(a) provides that a teacher shall on appointment to an aided school, be furnished with, inter alia, a letter of appointment signed by the Supervisor or other member of the management committee so authorized. Section 54(c)(i) further requires the letter of appointment to specify “the name of the school and of the employer, this being the management committee…”.

97. Prima facie, the documents suggest that the employer was the SMC. But this is not the end of the matter. As noted above, the School is not a legal entity. Further, under the Education Ordinance, the SMC is entrusted with the responsibility of managing the School. As part of its management responsibility, the SMC will have to enter into contracts, including employment contracts with teaching and general staff. This is recognised by the Code of Aid when it requires the letter of appointment of teacher to specify the managing committee as the employer. However, the fact that it is within the duty and power of the SMC to make contracts does not necessarily mean that they contract in their personal capacity and/or they incur personal liability on the contracts. It must be recognised that members of the SMC do not manage the School in their own right. They were nominated by the sponsoring body and approved by the Director of Education. The letter dated 25 January 2000 from the Chairman of the Board of FKPS to the Director of Education informing them the managers to be nominated to the SMC is an illustration in point. While the sponsoring body runs and operates the School, the SMC manages the School on behalf of the sponsoring body. Certainly this was the case before the 2004 amendments to the Education Ordinance that provide for the incorporation of a SMC and set out the relationship between an incorporated management committee, the sponsoring body and the government.

98. The important point to ask in this action is whether in all the circumstances of the case, was it intended by the parties that the SMC and its members would incur personal liability on the plaintiff’s employment contract.

99. Pausing here, it is convenient to deal with several points raised by Mr Chiu in relation to the capacity of the SMC. The first point he made was that a managing committee could not be acting in a representative capacity because a school is made up of a fluctuating body of people. Mr Chiu made this submission in the context of Yeung JA’s judgment in Chan Chi Loi v. Cheng For & Ors (unreported), CACV243/2003, paras. 88–91. In that case, Yeung JA commented that the plaintiff, who was also a teacher in an aided school, could and should only make a claim of breach of employment contract against the School and not the school management committee. His Lordship considered there was no possible cause of action against the management committee and no basis to render the management committee personally liable for the claim. The appeal in that case, however, did not turn on whether the plaintiff had sued the correct party. The observations of Yeung JA are therefore obiter. Mr Chiu’s point is that the observations cannot be reconciled with the fact that school is not a legal entity. Hence, the school management committee, being a body of fluctuating individuals could not have represented the school, which is also made up of a fluctuating body of people, viz. teachers, students and general staff.

100. For my part, I have no difficulty with the proposition that a school management committee acts on behalf of the school because although a school is not a legal entity, it is run by a sponsoring body. When it is said that the management committee is an agent, or acts in a representative capacity when managing a school, one is really talking about the management committee acting on behalf of the sponsoring body. It would not be a case of the managing committee managing the school as the representative of the students and staff in the school.

101. Therefore, the legal vacuum or havoc that is said to be caused by the changing membership of a management committee will not arise. I also have reservations whether the creation of incorporated management committee by the 2004 amendments to the Education Ordinance was to fill in the legal vacuum by creating a perpetual legal entity so that it can enter contracts on behalf of the school, sue and be sued.

102. Another submission that Mr Chiu made, following from his submission that a school management committee cannot act on behalf of a school, is that the court should imply into the Education Ordinance, a provision to the effect that “managers of a school are liable for, and entitled to the benefits of, the acts or omissions of the preceding managers of the school as if those were their acts or omissions.”

103. In my view, there is neither necessity nor proper justification for implying such a provision into the Education Ordinance. As said above, a school is run or operated by its sponsoring body with the day-to-day management and administration being carried out by the Principal, the Supervisor or the managing committee. There is no problem over continuity of contract or succession of contractual rights and obligations.

104. Mr Chiu further made the point that in reality all the financial obligations of school managers as employer under contracts they enter into are borne by the government. Hence, it was argued that there can be no objection to making the SMC personally liable under the employment contract of the plaintiff. I do not agree that this is a relevant consideration.

105. Returning to the core question of whether parties to the contract intended that the SMC and its members to incur personal liability for the plaintiff’s employment contract, a relevant and important fact is that the plaintiff was well aware of the existence of the School having a sponsoring body and that he did appreciate the difference between FKPS and the SMC. A vivid example is the letter dated 3 March 1996 that the plaintiff wrote to the Chairman of the Education Unit (教育小組) of FKPS, Mr Liu Yuk Wah (廖煜華). The plaintiff claimed it was in connection with one of the warning letters he received. However, it is plain from the contents that it was written as a result of his unsuccessful application for promotion. The letter indicated that the plaintiff had gone to see Mr Liu as well. It would appear from the letter that the plaintiff was asking FKPS through Mr Liu to review or intervene with the decision made against him. The fact that the plaintiff saw fit to approach the sponsoring body on matters relating to his employment and promotion is very revealing. Not only did it show he understood the SMC to be under the supervision of the sponsoring body, but it also demonstrated that he regarded the sponsoring body to be his employer and to be the one making final decisions on matters relating to his employment.

106. Also of importance is the meeting on 8 August 2000 to finalize the transfer of the plaintiff to teach in FK-LMST. This is an important meeting because but for the transfer agreement confirmed at the meeting, the plaintiff’s employment would have come to an end in 2000. None of the member of the SMC attended the meeting, not even the Supervisor or the Principal. Instead, the Chief Executive of FKPS, Mr Tsui Sau Woo (徐守滬) was present and spoke on the matter, including the question of temporarily suspending the non-renewal of the plaintiff ‘s employment. Mr Tsui had signed the minutes of the meeting to confirm this.

107. Several points emerge from this meeting that are pertinent to the issue under consideration. First, the plaintiff did not question the absence of SMC members and/or the presence of Mr Tsui at this meeting. Second, the plaintiff was ready to and did agree with Mr Tsui (who represented FKPS) on the transfer arrangement and the continuation of his employment with the School in the interim period. Third, in relation to the arrangement for the 2000-2001 school year, the agreement was in fact made between the plaintiff and FKPS acting by Mr Tsui. The 8 August 2000 meeting therefore highlights objectively who was the relevant party to the plaintiff’s employment contract and whom the plaintiff subjectively understood to be the contracting party to his employment contract. It goes directly to negative any suggestion that the plaintiff had always regarded the SMC as his employer and/or was a party liable under his employment contract. The meeting is also relevant to the plaintiff’s arguments on estoppel, to which I now turn.

Estoppel by conduct and/or representation

108. The plaintiff relies on estoppel by conduct and/or representation, estoppel by silence or acquiescence and estoppel by convention to attach personal liability to the 1^st defendants. Insofar as estoppel by conduct and/or representations is concerned, the plaintiff relies on both the conduct of the 1^st defendants and that of the previous differently constituted SMC. A number of conduct or representations were pleaded by the plaintiff and I shall deal with them in turns.

109. The first group of conduct or representation is based on the Letters Offering Appointment, the Conditions of Service and also the Code of Aid (on the assumption that it is incorporated into the employment contract). It is said that the Letters Offering Appointment stated that the SMC offered the plaintiff an appointment as a teacher while the latter two documents contain provisions consistent with the SMC being the employer, such as provisions on the power to terminate the employment. However, these provisions concern the management of the School and are equally consistent with the SMC’s statutory responsibility to ensure the proper management of the School. They do not amount to representations that the SMC were the employer or party to the contract.

110. The second conduct or representation is premised on the fact that the plaintiff’s salaries were paid out of account kept and managed by the Supervisor on behalf of the SMC. The evidence at the trial, however, shows that the plaintiff’s salary was paid by the government.

111. The third group of conduct or representation came from the warning letter dated 1 June 1999 from the Supervisor to the plaintiff and the 1^st and 2^nd Letters of Termination. In the warning letter, the Supervisor pointed out that if the plaintiff had complaints, he should have directed them to the SMC and not to his colleagues. The letter further stated that if the plaintiff misconducted again, he would make recommendation to the SMC to terminate his employment. As for the 1^st and 2^nd Letters of Termination, they referred to the plaintiff being employed by the SMC and the Letters Offering Appointment as being entered into between the plaintiff and the SMC, and also stated that the SMC was terminating the plaintiff’s employment.

112. Again what were stated in these letters are equally consistent with the SMC having the statutory responsibility of managing the School, including the appointment and termination of teachers.

113. The next group of conduct or representation is several letters to the plaintiff and the HKPTU and also the Education Department in connection with the letter of resignation issued by the plaintiff. It was said that they were made out in a manner only consistent with the SMC being a party to the employment contract.

114. However, the letter dated 5 November 2001 to the Education Department was written by the Supervisor, in which no mention was made of the SMC nor was there any indication that the Supervisor was writing on behalf of the SMC. Further, it is the plaintiff’s case that he never received and read this letter. As such, it cannot amount to a representation to the plaintiff.

115. As to the other letter dated 31 January 2002 written by the Education Department, although it seems to be relating a message from the School or the SMC, there is no evidence before the court showing that the passage in question did originate from the SMC. Mr Chiu accepts this.

116. The final group of conduct or representation came from the defendants’ pleadings, which pleaded that the employment contract was between the School and the plaintiff and that the 1^st defendants acted as agents for the School. The plaintiff’s argument on this is that since the School is not a legal person, the 1^st defendants could only be handling these proceedings as a party to the employment contract. I am unable to accept this. Apart from the obvious fact that the 1^st defendants are themselves party to this action, the SMC in discharging their duties to manage the School, will no doubt have to handle litigation involving the School. Their involvement in and handling of these proceedings on behalf of the School is entirely consistent with their being agents for the sponsoring body.

117. The plaintiff says that the 1^st defendants knew or ought to have known that such conduct and representations had induced the plaintiff into believing that the defendants were his employer and the party to be sued in this action and that it will not be just to allow the defendants to deny they were the employers. Specifically, it is pointed out that any cause of action against the sponsoring body is by now time-barred.

118. The main obstacle faced by the plaintiff in mounting an estoppel by conduct and/or representation is his own knowledge. Whereas the plaintiff points to the Letters Offering Appointment, the Conditions of Service and even the Code of Aid as making references to the SMC, there are at the same time other documents indicating that the School was the employer, which are within the plaintiff’s knowledge. For instance, the name of the employer appearing on the Employer’s Return of Remuneration and Pensions has always been the School. As analysed above, the plaintiff clearly knew of the existence of FKPS and its role and power in relation to his employment and promotion. The 3 March 1996 letter and the 8 August 2000 meeting. Most importantly show that the plaintiff was not misled or induced by the Letters Offering Appointment and the 1^st and 2^nd Letters of Termination into believing the SMC was his employer. When he brought the first action in the Labour Tribunal, he did not name the SMC as his employer. Even when he brought this second action in the Labour Tribunal, he continued to name the School as a defendant jointly with the SMC. It should also be remembered that the plaintiff has a law degree. In addition, after this action was commenced, the 1^st defendants had duly disclosed the Certificate of Incorporation of FKPS in their 1^st List of Documents filed on 29 March 2004.

119. Given the plaintiff’s knowledge about FKPS and the discovery made by the 1^st defendants, the plaintiff cannot complain that the 1^st defendants did not in their pleading go further to say that they were agents for the School as operated by FKPS.

120. Even if the matters relied upon by the plaintiff could amount to representations for the purpose of feeding an estoppel, the plaintiff must have knowledge, actual and presumed, that the representation was incorrect. To say the least, the plaintiff would have been put upon enquiry and that by taking reasonable steps, he would have realised that the SMC was not a party to the contract of employment and did not incur personal liability on it. I also agree with Mr Mak’s submission that the fact that any claim the plaintiff may have against the sponsoring body has in the meantime become time-barred cannot constitute a detriment for the purpose of founding an estoppel; it is the consequence of the plaintiff’s failure to make proper investigation. Among other matters, the plaintiff accepted in his cross-examination that at least by the time he brought the second action in the Labour Tribunal, he already knew the School was operated by FKPS.

Estoppel by silence or acquiescence

121. As to estoppel by silence or acquiescence, there must be a duty to speak or to act in a particular way, owed to the person prejudiced: The Indian Endurance (No. 2) Republic of India & Anor v. Indian Steamship Co. Ltd [1998] 1 AC 878, 892H. The plaintiff’s case is that there was a legal relationship between the SMC and him by reason of the fact that he was bound to accept the management of the SMC over school affairs. As such, it is said that he could reasonably expect that the SMC would act honestly and responsibly to disclose to him that they were agents for another legal person, and also the identity of the legal person. It is further said that the 1^st defendants knew or ought to have known that the plaintiff was acting under the belief that they were the party to the employment contract.

122. The plaintiff placed reliance on Pacol Ltdv. Trade Lines Ltd (The ‘Henrik’ Sif) [1982] 1 Lloyd’s Rep. 456, 465 in which Webster J held that an estoppel by silence or acquiescence arises where a reasonable man would expect the person, against whom the estoppel is raised, acting honestly and reasonably to bring the true facts to the attention of the other known by him to be under a mistake to either party’s respective rights and obligations. This aspect of the Pacol Ltd case was doubted in Petromec Inc. v. Petroleo Brasileiro Sa Petrobras & Ors [2004] EWHC 127 (Comm) because it had the effect of creating rights and obligations which did not otherwise exist between the parties. I respectfully agree.

123. Putting it in the context of the present case, the 1^st defendants cannot be said to be under a duty to speak when they are sued by the plaintiff. As Clark J said in The Stolt Loyalty [1993] 2 Lloyd’s Rep. 281, 290:

“…there can be no general duty upon one’s party to litigation or potential litigation to point out the mistakes of another party or his legal advisers. The law sometimes impose a burden on solicitors and counsel to help their opponent’s case, but the burden should only be imposed when it is truly necessary, as otherwise, …the client will be tempted to ask : ‘Whose side are you on?’ ”

No estoppel by silence or acquiescence arises between the plaintiff and the 1^st defendants when they are litigating or contemplating litigations.

Estoppel by convention

124. Turning then to estoppel by convention, the law requires the parties to have entered into some legal relationship on the bases of an assumption that is shared by or common to them both: Unrush v.Seeberger [2001] 2 HKLRD 414.

125. The common assumption relied upon by the plaintiff in this case is that the 1^st defendants or the SMC were the employer of the plaintiff since 1990. However, when the plaintiff brought the first action in the Labour Tribunal, he did not name the SMC or the 1^st defendants as the defendant. This goes against the existence of a common assumption that the 1^st defendants or the SMC were the plaintiff’s employer. It is argued that, in so doing, the plaintiff was only following the practice of suing the School and he did not have legal advice. However, there is no evidence of the alleged practice. Further the lack of legal advice is irrelevant to the question of common assumption, which is factual. And even if there was such an assumption, this was terminated by the first action in the Labour Tribunal in that the plaintiff would be seen as resiling from the common assumption: PW & Co. v. Milton Gate Investments Ltd [2004] Ch 142, 195.

126. Alternatively, Mr Chiu argued that the substance of the common assumption was that the plaintiff was employed by the School and that to him, the SMC and the School is one and the same. If indeed there were this common assumption, then the bringing of the second action in the Labour Tribunal against both the School and the SMC would amount to resiling from the common assumption. In short, there is just no proper foundation for an estoppel by convention.

127. The final point to deal with under this issue is the submission that if the SMC were agents of the School and since the School not being a legal person, the 1^st defendants would be agents for a non-existing principal and would thereby incur personal liability under the principle in Kelner v. Baxter (1866) 2 LRCP 174. As the analysis above shows, neither the SMC nor the 1^st defendants acted for a non-existent principal. It is also not a case of agent for an undisclosed principal, given the plaintiff’s knowledge of the existence of FKPS and its relationship and position vis-à-vis the SMC, as discussed above.

128. Before leaving this issue on the proper party to the action, it has to be noted that the 11^th and 13^th named defendants, Liu Tim Wan (廖添穩) and Lee Tak Ching (李德貞), were on the evidence before the court not managers of the School from 1 January to 31 December 2000. To this extent, the two of them were wrongly named as party to this action.

129. In sum, the 1^st defendants were wrongly sued in this action and the claim against them therefore fails on this basis as well.

Construction of the employment contract

130. The determination of the first two issues would have disposed of the plaintiff’s claim in its entirety. However for completeness sake, I will also deal with the other issues raised on the pleadings.

131. The first is the issue of the construction of the plaintiff’s contract of employment. The main contentions under this issue are: (1) whether the contract of employment was a continuous contract not subject to annual renewal or whether it was a fixed term contract for one year; and (2) what is the manner in which the contract of employment may be properly brought to an end. These issues will in turn impact upon whether the plaintiff’s claim on wrongful termination and constructive dismissal can be sustained.

Was the Code of Aid a part of the plaintiff’s employment contract?

132. Of pivotal importance to these questions is the issue of whether the provisions in the Code of Aid on the duration and the termination of a teacher’s employment contract formed part of the plaintiff’s contract of employment.

133. The position of the Code of Aid and how it may bear on the employment contracts in aided schools were first considered in Lau Chi Fai & Anor v. Secretary for Justice & Anor [1999] 2 HKLRD 494. In that case, the plaintiffs applied for declaratory relief that section 57 of the Code of Aid on retirement age did not apply, or was unenforceable against, principals of aided secondary schools. Keith JA found for the plaintiffs and held that as a matter of privity of contract, the undertaking given by the school management committee in terms of section 57 of the Code of Aid did not become a binding obligation in the principal’s contract of employment. The nature and background of the Code of Aid was described as follows (at 496J to 497B):

“… Many schools in Hong Kong rely on Government funding. One group of schools, which relies heavily on financial support from Government, are aided schools. They are run by religious, community or voluntary organisations. The school of which Lau Chi Fai, the 1st Plaintiff, is the principal is the Sheng Kung Hui Tsang Shiu Tim Secondary School (‘the School’). It has been an aided school since 1982. The terms and conditions on which it receives financial support from Government are contained in the Code of Aid for Secondary Schools (‘the Code’). It is entirely a matter for each secondary school to decide whether or not to accept financial support from Government. But if it chooses to do so, as the School did, it must accept and comply with the terms of the Code.”

134. In Chan Chi Loi v. Cheng For & Ors, supra, the plaintiff, who was employed as a teacher in an aided secondary school on a yearly contract, sued the members of the school management committee for breach of employment contract. It was part of his case that the Code of Aid formed part of his contract with the school and that the non-renewal of his employment was in breach of sections 54 to 56 of the Code of Aid, a position similar to that held by the present plaintiff. In the Court of First Instance, the judge rejected the plaintiff’s argument that the Code of Aid had to be implied into the contract as a matter of necessary implication. The appeal was unanimously dismissed. The majority of the Court of Appeal (Yeung and Yuen JJA held that the Code of Aid was not incorporated into the plaintiff’s employment contract. Yeung JA stated (at paras.48 to 52):

“48. There is no contractual obligation on the part of the School to renew the Plaintiff’s contract of employment every year. The School is entitled to terminate the contract of employment in accordance with the employment conditions.

49. Clause 54(b) of the Code stipulates that ‘the contract of service or letter of appointment shall not be subject to annual renewal’, and clause 55 also provides that ‘after which (the probationary period of two years) the employment of such teacher shall be permanent, subject to such provisions regarding termination of employment as may be contained in such teacher’s contract of service or letter of appointment.’

50. As an aided school, the School is, of course, bound to follow instructions from the Government as set out in the Code; otherwise, it may not continue to receive subsidies from the Government. However, the Plaintiff was not privy to the arrangement between the School and the Government.

51. The fact that the Plaintiff must observe the Code did not mean there was also a contractual obligation vis-à-vis the Plaintiff for the School to follow the Code.

52. The Plaintiff must observe the Code because he had a contractual obligation to do so, whereas the obligation on the part of the School to observe the Code arose out of its arrangement with the Government to which the Plaintiff was not a party.”

135. In the present case, the plaintiff says that the Code of Aid was incorporated into his contract of employment by express provision, namely, the “Other Conditions” clause in the Conditions of Service. It is further said that the present case is therefore very different from Chan Chi Loi and that the Court of Appeal’s reasoning on the Code of Aid forming no part of the contract was only obiter.

136. The Letters Offering Appointment issued to the plaintiff and the Letters of Acceptance signed by him over the years are substantially the same. They are in these terms:

Letter Offering appointment

“The Management Committee of Fung Kai No. 1 Secondary School hereby offers you an appointment as a teacher in the school. The monthly salary scale in respect of this appointment is shown in the conditions of service attached hereto. You will be required to enter the salary scale at $[…] a month, subject to the approval of the Director of Education. If you wish to accept this offer of appointment in the above school under the conditions set out in the attached Conditions of Service — Teachers in Fung Kai No. 1 Secondary School, please sign both copies of the letter of acceptance and both copies of the Conditions of Service and return one copy of each document to me direct or through the Principal. The second copies are for your retention. If no reply is received on or before […], the offer shall be considered withdrawn. If you accept this offer, you are required to report for duty at […] A.M. on […].”

and :

Letter of Acceptance

“I accept the appointment offered in your letter dated […] in accordance with the attached Conditions of Service — Teachers in Fung Kai No. 1 Secondary School. I understand, and agree to abide by, my obligations under these conditions, the Education Ordinance, the Employment Ordinance* and their subsidiary legislation, and the relevant Code of Aid. I also agree to abide by all other instructions as may be issued from time to time by the Director of Education concerning aided schools.”

137. As for the successive versions of the Conditions of Service, they all concluded with an “Other Conditions” clause. Although there were amendments to the clause over the years, the part of the clause that this case is concerned with had remained substantially the same. It reads:

“Conditions other than what are listed above are provided in the Education Ordinance, the Employment Ordinance and their subsidiary legislations, the relevant Code of Aid, and the instructions as the Director of Education may from time to time issue.”

138. Reading these documents together, it is quite clear that the appointment of the plaintiff as a teacher in the School was offered and accepted on the basis that he would abide by the conditions in the attached Conditions of Service. The “Other Conditions” clause in setting out the legislations, the Code of Aid and the instructions of the Director of Education merely reiterates the undertaking that the plaintiff gave in the Letter of Acceptance. As stipulated in the Letter Offering Acceptance, the plaintiff would sign on the Conditions of Service to signify his acceptance of the conditions expressly set out therein and those set out in, inter alia, the Code of Aid.

139. Thus viewed, the present case is not materially different from Chan Chi Loi. The reasoning of Yeung JA on the status of the Code of Aid, which was shared by Yuen JA, is no different from that adopted by Keith JA in Lau Chi Fai. It is founded on the doctrine of privity of contract. The reasoning applies with full force to the present case.

140. The plaintiff’s witness, Mr Poon Tin Chi, who is the chairman of CPCE, had given evidence on the background to the enactment of the Code of Aid and how it was perceived by people in the education field in 1990 when it was revised. I agree with Mr Mak’s submission that no weight can be attached to Mr Poon’s evidence on the Code of Aid as it is simply not relevant to the construction of the Code of Aid: Lord Energy Ltd v. Paul Chen [1998] 2 HKLRD 751, 758.

141. There is also no need to resort to the rule of contra proferentum as there is no ambiguity in the contractual documents.

142. For the reasons set out above, I am of the view that, other than the plaintiff was obliged to comply with the teacher’s obligations under the Code of Aid, there was no incorporation of the Code of Aid into the plaintiff’s contract of employment.

Was the plaintiff’s employment contract continuous until retirement or for a fixed term?

143. The next question of construction of the plaintiff’s employment is the duration of his employment. The plaintiff’s case is that after the initial probation period, his employment was continuous up to his age of retirement at 60 and the employment contract was not subject to annual renewal. The 1^st defendants’ case, however, is that the plaintiff’s employment contract was annual and expired on 31 August, which was the end of the school year.

144. It is common ground that the plaintiff went through a two-year probation in 1990 and 1991. He accepted in evidence that thereafter between 1992 and 1999, he had to sign Letters of Acceptance every year. According to him, this was unlike the practice in other schools. And over the years, there were some changes to the provisions in the Conditions of Service. According to the Principal, the School had been adopting the samples provided by the Education Department and the changes were to keep in line with those changes introduced by the Education Department.

145. Since 1996, the Conditions of Service contained a “Period of Employment” clause, specifying that the employment was for a one-year period from 1 September to 31 August of the following year.

146. On these facts, the conclusion must be that after the completion of the two-year probation in August 1992, the plaintiff’s employment was on annual renewable basis. The employment contracts were for a fixed term of one year, ending on 31 August, being the end of the school year. The last in the series of annual contracts was the one made in 1999, which was evidenced by or contained in the 1999 Letter Offering Appointment and Letter of Acceptance and the 1999 Conditions of Service. The plaintiff’s primary case of a continuous contract was premised on the Code of Aid, which stated that the employment should not be subject to annual renewal. However, I have held that the Code of Aid did not form part of the plaintiff’s contract. As the plaintiff’s employment contracts were fixed term contracts, they would lapse on the expiry date if there were no renewal. No notice of termination was required to bring about this.

Plaintiff’s employment in the school year 2000-2001

147. In the normal course of event, the 1999 contract of employment would have expired on 31 August 1999. The position was not altered by the 1^st Letter of Termination save that it made it clear to the plaintiff that his employment would not be renewed.

148. I pause here to deal with the plaintiff’s complaint that the decision of the SMC on 4 July 2000 did not comply with Regulation 76 of the Education Regulations, which requires the dismissal of teachers to be decided by a majority vote of the management committee. The evidence before the court shows the School only had 13 registered managers for the year 2000-2001. Accordingly, the unanimous vote of the seven registered managers who were present at the SMC meeting was a majority vote. I do not accept the submission that there was no voting within the meaning of the Regulation. Whatever may have been the recollection of the Principal on this, the minutes of the meeting shows that the motion was unanimously carried.

149. It is common ground that notwithstanding the decision not to renew the employment, the plaintiff remained to be employed as a result of the 8 August 2000 meeting. The question that falls to be answered is: What were the terms of the plaintiff’s employment in the 2000-2001 school year?

150. The minutes of the 8 August 2000 meeting recorded an agreement in the following terms:

(a) The plaintiff would be transferred to teach in FK-LMST School in the school year beginning September 2000.

(b) The plaintiff’s performance at FK-LMST School would be monitored by the new school and the Education Department.

(c) The plaintiff undertook to perform to the satisfaction of FK-LMST School.

(d) The School agreed to temporarily suspend its decision not to renew the plaintiff’s employment contract whereas the demands that the plaintiff made of the School should also come to an end. (鳳溪第一中學同意暫時擱置校方過往對高翰儒先生所作的不予續約的決定，而高先生以往對校方的各項要求也應告一段落。)

151. Except for the last term, the plaintiff agrees that these terms were agreed at the meeting. It is also not in dispute that there was an agreement or understanding that if the plaintiff’s performance met the requirements of FK-LMST School and if there was a vacancy, FK-LMST School would give priority consideration to appointing the plaintiff as a teacher on its establishment.

152. In my view, the 8 August 2000 meeting has the legal effect of renewing the plaintiff’s employment contract for one year, which would be on the same terms and conditions as the 1999 contract and subject to the terms agreed at the 8 August 2000 meeting. In other words, the 1999 Conditions of Service continued to govern the contractual relationship, but subject to the variations brought about by the matters agreed at the 8 August 2000 meeting.

153. One of the consequences is that the plaintiff continued to be employed under a fixed term contract for the 2000-2001 school year. Although it was agreed that it was for one year, this was subject to the provision in section 5(2) of the Employment Ordinance, Cap. 57. The subsection reads:

“Notwithstanding that it is proved that a contract of employment is for a period in excess of 1 month such contract shall be deemed to be a contract for 1 month renewable from month to month unless the contract is evidenced in writing signed by each of the parties thereto.”

154. Although the agreement that was reached in the 8 August 2000 meeting was evidenced in writing by the minutes prepared by the Education Department, the minutes were not signed by all each of the parties to the contract because the plaintiff had refused to sign. Accordingly section 5(2) applies and deems the plaintiff’s employment contract to be a monthly contract renewable from month to month. This in turn has a bearing on the manner in which the plaintiff’s contract of employment after August 2000 may be terminated.

Termination of the contract

155. Under section 6(2) of the Employment Ordinance, it is provided that:

“(2) The length of notice required to terminate a contract of employment shall be:

(a) in the case of a contract which is deemed by virtue of the provisions of s. 5 to be a contract for 1 month renewable from month to month and which does not make provision for the length of notice required to terminate the contract, not less than 1 month;

(b) in the case of a contract which is deemed by virtue of the provisions of s. 5 to be a contract for 1 month renewable from month to month and which makes provision for the length of notice required to terminate the contract, the agreed period, but not less than 7 days;

(c) in every other case, the agreed period, but not less than 7 days in the case of a continuous contract.”

156. In the 1999 Conditions for Service, which continued to apply to the plaintiff’s employment after August 2000, the “Termination of Appointment and Period of Notice” clause provides for termination by the SMC as follows:

“(b) By School Management Committee

Where school management committee considers that the service of a teacher is unsatisfactory, even after due warnings, both oral and written, have been given, one month’s notice shall be given to the teacher to terminate his service during the probationary period. Subsequently, three months’ notice shall be given to the teacher after the completion of the probationary period. In the case of teachers with more than five years service, every effort should be made to give a longer period of notice. A teacher shall be liable to summary dismissal if he has been convicted of a criminal offence or if it appears to the management committee that he has committed a grave breach of duty.”

157. On the plaintiff’s construction, this clause only conferred a power to terminate by notice when the SMC considered the plaintiff’s service was unsatisfactory. The 1^st defendants, on the other hand, say that after probation, the right to terminate by giving three months’ notice was not restricted to a case of unsatisfactory service. Plainly, this clause was not happily drafted. However, reading it in context, the sentence “Subsequently, three months’ notice shall be given to the teacher after the completion of the probationary period” must follow from the previous sentence dealing with termination on account of unsatisfactory service within the probation period. I am therefore in agreement with the plaintiff’s construction that the SMC’s power to terminate by notice can only be exercised in a case of unsatisfactory service. Other than this, the 1999 Conditions of Service does not contain any other provision for termination by notice by the SMC.

158. That being the position, section 6(2)(a) of the Employment Ordinance applies and the plaintiff’s employment after August could be terminated without cause on the giving of one month’s notice: see Law Shiu Kai v. Dynasty International Hotel Corp & Others [2004] 2 HKLRD 524, 541-543 at paras.66-69.

159. It follows that the 2^nd Letter of Termination in giving one-month salary in lieu of notice did not fall foul of the notice requirement.

160. The plaintiff argues that the 2^nd Letter of Termination was invalid because there was no evidence of a SMC meeting in which a majority decision to terminate the employment was made. It is correct that under the then version of Regulation 76 of the Education Regulations, the dismissal of a teacher is required to be determined by a majority vote of all the members of the SMC. This was a statutory obligation imposed on the SMC. However, the absence of a majority decision, hence the non-compliance of Regulation 76, does not as a matter of law render the termination of the plaintiff’s employment invalid. Breach of Regulation 76 is not the same as breach of the Employment Ordinance. Further, as against the plaintiff, non-compliance of Regulation 76 would not make the decision to terminate his employment a nullity.

161. In short, even if the plaintiff is able to maintain the present action against the 1^st defendants, the claim in wrongful termination and constructive dismissal cannot stand.

The claim in breach of implied term

162. The other claim of the plaintiff in this action is in breach of an implied term of good faith. Two sub-issues are involved under this claim. They are: (1) Whether the implied term as pleaded by the plaintiff exists in our common law; and (2) Whether the evidence and facts supports a case of breach of an implied term.

The law on the implied term of confidence and trust

163. Paragraph 9A of the Re-Re-Amended Statement of Claim stated that:

“Further it is a term implied in law to the Employment Contract that the management committee and/or the School, through itself or its servants or agents, would act in good faith towards the Plaintiff, and would not without reasonable or proper cause, conduct itself in a manner likely to destroy or seriously damage the relation of confidence and trust between employer and employee (the “Implied Term of Good Faith”).

164. The 1^st defendants’ position is that the implied term of good faith as pleaded by the plaintiff does not exist in law. Specifically, it is said that there is no sound legal basis for implying the term in the context of the non-renewal or termination of the plaintiff’s employment contract.

165. In Malik v. Bank of Credit and Commerce International SA (In liquidation) [1998] AC 20, two former employees of the collapsed BCCI sought to prove in the liquidation damages for being associated with the bank, which had placed them at a serious disadvantage in finding new jobs. The parties were in agreement that in each of the employees’ contracts of employment was an implied term to the effect that the bank 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. Lord Steyn, with whom the other members of the House agreed, affirmed that the implied term was well established in law. The House of Lords proceeded to hold that as one aspect of the implied term, the bank had an implied obligation to its employees not to conduct a dishonest or corrupt business. The House further held that if it could be shown that it was reasonably foreseeable that in consequence of his corruption there was a serious possibility that an employee’s future employment prospects were handicapped, damages were recoverable for any such continuing financial losses sustained.

166. In the subsequent case of Johnson v. Unisys Ltd [2003] 1 AC 518, the House of Lord (except Lord Steyn) distinguished the Malik case and held that although it was possible to conceive of an implied term to allow an employee to recover damages for loss arising from the manner of his dismissal, it would be an improper exercise of the judicial function to do so in light of the elaborate statutory provisions on unfair dismissal, including the restrictions on the application and extent of the remedy.

167. Several points arise from the speeches of Lord Hoffmann and Lord Millett that are relevant to the present discussions:

(1) For the implied term of confidence and trust to apply, it must not contradict the express term of the contract and must be consistent with legislative policy as expressed in statutes. Lord Hoffmann considered that the express contractual provision that the employment may be terminated on four weeks’ notice without reason made it difficult to imply a term that the employer should not do so except for some good cause and after giving him a reasonable opportunity to demonstrate that no such cause existed.

(2) Despite the elaborated provisions on unfair dismissal in Part X of the Employment Rights Act 1996, the Parliament had not legislated to create a statutory implied term that the power of dismissal should be exercised fairly or in good faith. It would therefore go contrary to the evident intention of the Parliament to construct a general common law remedy for unfair circumstances attending dismissal.

(3) Since the implied term of confidence and trust is concerned with preserving the continuing relationship which should subsist between employer and employee, it does not seem appropriate for the implied term to be used in connection with the way that relationship is terminated.

(4) Even though it would be jurisprudentially possible to develop the common law to imply a duty to exercise the power of dismissal in good faith, and even if the courts were free of legislative constraint, it would not be wise to do so. There are potential problems of causation with regard to the loss and damage that flows from the breach as well as with the open-ended nature of liability.

(5) The implied term of confidence and trust cannot sensibly be used to extend the relationship of confidence and trust beyond its agreed duration. Manipulating the implied term for such a purpose would be unrealistic. An employer who summarily dismisses an employee usually does so because, rightly or wrongly, he no longer has any trust or confidence in him, and the real issue is: whose fault is this?

168. In Eastwood & Anor v. Magnox Electric plc [2004] 3 WLR 322, the House of Lords held that where an employee had acquired a common law cause of action in respect of the employer’s failure to act fairly towards him such that it could be said to exist independently of his subsequent dismissal, and financial loss had flowed directly from that failure, he could, subject to the rule against double recovery, bring an action for that loss, notwithstanding the availability of a claim under the unfair dismissal legislation. However, the House acknowledged that the practical consequences of the boundary between the common law and the statutory rights and remedies are difficult.

169. That is the common law position of the implied term of confidence and trust in the UK. In Hong Kong, in Semana Bachicha v. Poon Shiu Man [2000] 2 HKLRD 833, a domestic helper who was badly treated by her employer and forced to leave her employment. The Court of Appeal held that the conduct of the employer amounted to both constructive dismissal and breach of the implied term of confidence and trust. It was further held that apart from damages for wrongful dismissal measured by one month’s salary in lieu of notice, she was also entitled to damages for breach of the implied term to the extent that she had suffered additional pecuniary loss that was not too remote as a result of the defendant’s breach of the implied trust and confidence term. The claimant was awarded loss of a chance of earnings for a period in which she did not have the permission of the Immigration Department to seek alternative employment.

170. The Bachicha, which is a binding case authority, was decided before the House of Lords’ decision in Johnson v.Unisys Ltd. Only the Court of Appeal’s decision in Johnson v. Unisys Ltd had been considered by Ribeiro JA (as he then was), who delivered the judgment of the Court. There was no discussion or deliberation on whether the common law could or should be extended to imply a duty to act in good faith when exercising the power to dismiss an employee or terminate an employment. The issue did not arise from the facts in that case. What Ribeiro JA recognized was that a given set of facts might constitute both wrongful or constructive dismissal and breach of the implied confidence and trust term giving rise to separate entitlements to damages, but subject to the avoidance of double recovery.

171. The legal principles to be drawn from the authorities are these:

(1) The common law does recognize the existence of an implied term of confidence and trust in the context of employment contract. The implied term is as formulated in Malik v. BCCI, as applied in the Bachicha case.

(2) The authorities do not establish an implied duty on an employer to act in good faith towards his employee when exercising the power of dismissal or termination of the employment. Although the viability of developing the common law in that direction is accepted by the House of Lords cases, there are serious reservations as to the desirability of so doing.

(3) In Hong Kong, the protection against wrongful dismissal or termination is contained in the Employment Ordinance. The extent of the statutory protection is limited, as it is concerned only with the giving of due and proper notice for termination. There is no provision for awarding damages for the period after dismissal, except for any notice period that is required. As such the legislative intent is not to confer remedies for loss flowing from the unfair manner in which an employee is dismissed. In my view, it will not be appropriate for the courts to develop the common law to provide remedy for unfair circumstances attending dismissal.

(4) It is possible that an employee may have before his employment was terminated, acquired an independent cause of action for breach of the implied term of confidence and trust, from which pecuniary loss flow directly. In such a case, subject to the rule against double recovery, the employee may bring a claim for the loss.

172. Applying these principles to the present case, the implied term as pleaded in paragraph 9A of the Re-Re-Amended Statement of Claim is flawed. The reference to the SMC or the School under an implied obligation to act in good faith towards the plaintiff is not part of the law.

173. Secondly, to the extent that the plaintiff’s claim is founded on the implied term of confidence and trust, it is not permissible to rely on the non-renewal or termination of his employment as instances of breach. Apart from the reasons set out above, given that the plaintiff was employed before September 2000 under fixed term contracts that would expire byeffluxion of time and after August 2000 under a contract that could be terminated on notice without cause, there is simply no room for implying an obligation of good faith when deciding not to renew or terminate the employment.

174. On the basis that the plaintiff’s claim for breach of implied term is founded on the implied term of confidence and trust, the remaining issue is whether independent from the non-renewal or termination of his employment, the plaintiff has a cause of action for breach of the implied term of confidence and trust. This turns on whether the four warnings, the handling of the complaints from the students of Form 5B and Form 6A as well as the events in FK-LMST School amount to instances of breach.

The 1^st warning

175. The plaintiff is in the habit of making personal records and notes of meetings and of events that he considered important. He had also throughout the years written many letters of complaints in which he set out the relevant facts. Hence, many of the details surrounding the 1^st to 4^th incidents can be gleaned from the personal notes and records and letters taken by the plaintiff. In contrast, owing to the long lapse of time and the fact that he had retired for some years, the Principal does not have recollection of the details of the events. Much of the facts leading to the administration of the four warnings are therefore not in dispute.

176. The 1^st warning was for the circulation of an “unofficial minutes” of the General Staff Meeting held on 29 November 1995. It started with a General Staff Meeting held on 26 April 1995 in which the plaintiff raised some concerns, including the process for teacher promotion and also class arrangements. After receiving the draft minutes of the meeting, the plaintiff wrote on 7 May 1995 to the Principal proposing amendments to the minutes. Later on 15 May 1995, he went to see the Principal to discuss the proposed amendments. According to the plaintiff, the Principal agreed to make the corrections in the next meeting.

177. However, at the General Staff Meeting held on the following day, the Principal made no mention of it. On the next day, the plaintiff went to see him to ask about it. According to the plaintiff’s notes, the Principal said it was a busy time and asked to defer it to September. This, however, did not come about.

178. Then at the General Staff Meeting held on 18 October 1995, another teacher pointed out that the previous minutes did not accurately record what he said. The plaintiff suggested that the minutes should record in full the speech of a teacher, if he so requested. The Principal disagreed. The plaintiff also spoke about the importance of accurate minutes and requested to add confirmation of minutes as an item to the agenda. The Principal eventually agreed that the matter could be raised in the next meeting.

179. At the next General Staff Meeting held on 29 November 1995, the plaintiff reiterated his demands for corrections of the previous minutes and to include confirmation of minutes in the agenda. He was given 20 minutes to speak on this. In the end, the Principal did not agree to his demands.

180. It is the plaintiff’s case that in these General Staff Meetings, the Principal was visibly angry and reacted in a high-handed manner.

181. After the 29 November 1995 meeting, the plaintiff wrote out a minutes of the meeting, which was referred to as the “unofficial minutes”. It is of interest to note that the first matter noted in this “unofficial minutes” was the re-opening of the application for promotion to SGM. The other matter recorded was the plaintiff’s speech in connection with his demands for amendments and confirmation of previous minutes and the way in which the meetings were held.

182. The plaintiff showed and circulated the “unofficial minutes” to other teachers for comments and additions. He also collected the teachers’ signatures to it. On 6 December 1995, the plaintiff delivered the “unofficial minutes” with the teachers’ signatures to the Principal (which was copied to the teachers’ representatives) and requested to have them incorporated in the official minutes.

183. On 14 December 1995, the Principal in the presence of the Vice-Principal, Mr Lui, administered a verbal warning on the plaintiff. The recorded reason for issuing the warning was that the circulation of the “unofficial minutes” would seriously affect school administration and operation. At the plaintiff’s request, a teachers’ representative was also present and had taken a record of the process. Thereafter the plaintiff sent a copy of the record to the Principal and the Education Department. The plaintiff stated on the record that he reserved all his rights on the verbal warning.

184. The plaintiff’s argument on the 1^st warning is that it is entirely groundless and is an abuse of power by the Principal that undermined the plaintiff’s confidence and trust in the school authority. It is said that the plaintiff’s requests in relation to amendment and confirmation of minutes are legitimate requests and the circulation of the “unofficial minutes” is a harmless act. The 1^st warning is a reflection of the Principal’s “directive” and rigid style of management.

185. In his evidence, the Principal pointed out that there were teachers, including the Vice-Principal, assigned to take minutes of the meetings and to have confirmation of minutes as an agenda would lead to more arguments and prolong the already rather lengthy meetings. He considered it unacceptable that the plaintiff used the “unofficial minutes” to influence the views of other teachers and that in delivering the “unofficial minutes” to him before the official minutes was out, the plaintiff had over-stepped the line of authority.

186. It is not necessary for the court to pass judgment on the merits or lack of it of the plaintiff’s demands regarding the amendment and confirmation of minutes. The question that the court has to decide is whether, objectively viewed, the issue of the 1^st warning on account of the plaintiff’s acts of circulating an unofficial minutes to canvass the teachers’ views and collect their signatures and delivering the signed minutes to the Principal, destroys or damages the relationship of confidence and trust between employer and employee.

187. When the plaintiff showed the” unofficial minutes” to his colleagues, the draft official minutes of the meeting was not yet ready. The purpose of the “unofficial minutes” and the circulation of it would have nothing to do with the accuracy of the official minutes which was being prepared or the plaintiff’s demand to have the official minutes confirmed at the subsequent meeting. If the plaintiff’s purpose was to promote the accuracy of the official minutes, he could and should have given the “unofficial minutes” to the Vice-Principal and teachers responsible for taking and compiling the official minutes, or wait until the draft official minutes were circulated before handing his minutes to the Principal.

188. Evidently, what the plaintiff was doing was to rally the support of his colleagues and to demonstrate his strength and thereby exert pressure on the Principal. Mr Chiu in his final submissions accepted that the plaintiff’s purpose was to impress upon the Principal that he had the support of a substantial number of teachers. In this regard, I do not accept the plaintiff’s testimony that he merely showed the “unofficial minutes” to teachers whom he was lunching with. This is inherently incompatible with the uncontroverted fact that he obtained some 10 to 20 teachers to sign on his minutes.

189. In my view, it is not unreasonable for the Principal to find this exhibition of strength unacceptable and out of order. It is not a matter of democratic administration, as the plaintiff would have it, but has all to do with due respect between principal and teachers and good discipline in a school setting. It cannot be seriously denied that the Principal, in managing the School, did have authority over the teachers and students. The plaintiff’s acts, including the handing of the “unofficial minutes” with the signatures to the Principal with a demand that it be made part of the official minutes, did have the effect of undermining the Principal’s authority and in turn the effective administration and operation of the School. The implied obligation of confidence and trust in an employment situation is a mutual obligation. As subsequent events unfold, the manner in which the plaintiff went about to achieve his objective had not been conducive to maintaining confidence and trust between him and the Principal.

The 2^nd warning

190. The second warning was for an incorrect statement made by the plaintiff at the Teachers Consultative Meeting (教師諮議會) in connection with the Teachers Commendation Scheme organised by the Committee on Respect Our Teachers Campaign and his refusal to explain or clarify to the Principal. What happened was in October 1997, the School circulated among the teachers a memo on the selection of teachers’ representative for the Scheme. At the time, the selection procedure adopted by the School was that teachers who were interested would nominate themselves and the Executive Committee, comprising the Principal, the Vice-Principals and a PAM, would make the final decision. At the General Staff Meeting held on 3 December 1997, the Principal announced that one teacher had nominated himself as the teachers’ representative for the Scheme.

191. At the Teachers Consultative Meeting held on 20 January 1998, the plaintiff moved a motion to change the selection procedure for the Scheme by having students and teachers to vote on the teacher to be selected as representative instead of being determined by the Executive Committee. When speaking on the reasons for proposing the motion, the plaintiff stated that the school authority did not announce the nomination and selection procedure for the Scheme. It was immediately pointed out to him by other teacher(s) that the School had circulated a memo on the Scheme.

192. The Principal was not present at the meeting as the Teachers Consultative Meeting was attended by teachers only. The incident was however brought to his attention. On 23 January 1998, the Principal interviewed the plaintiff on the matter. The plaintiff admitted he had made the statement, but when the Principal asked him whether he had said something incorrect at the meeting, he refused to explain or clarify. According to the plaintiff’s personal notes, he told the Principal that the discussion between them should stop there and then, that the Teachers Consultative Meeting was independent and the Principal should not be discussing the matter with him. He also said he felt being pressurized.

193. As a result of the incident, the Principal administered a verbal warning on the plaintiff on 4 March 1998. The reason for it was that the plaintiff had made factually incorrect statement, deliberately aroused misunderstandings among the teachers on school administration and adversely affected the reputation of the school authority.

194. On 16 March 1998, the plaintiff made his first formal complaint to the Education Department, requesting that the 2^nd warning be cancelled. The letter was copied to the Director of Education and the Chairman of HKPTU. The Education Department conducted investigation and by letter dated 17 June 1998 informed the plaintiff that his complaint was unsubstantiated. Through the HKPTU, the plaintiff continued to press his complaint.

195. At the same time, the plaintiff wrote on 26 June 1998 to the Supervisor asking for a “sensible and satisfactory” conclusion by 6 July 1998, failing which he would seek advice from HKPTU. By letter dated 20 July 1998, the Supervisor refused to intervene, pointing out that the Education Department had already investigated the matter and that the plaintiff and the Principal should co-operate with each other in the interest of the students.

196. In the meantime, the plaintiff was issued with the Letter Offering Appointment for the 1998-1999 school year, which he accepted.

197. In relation to the plaintiff’s complaint, the Education Department maintained the view that the plaintiff did make an incorrect statement that could adversely affect the integrity and reputation of the school authority and refused to intervene with the issue of the 2^nd warning. At the same time, however, it tried to mediate between the plaintiff and the School. By letter dated 1 September 1998, the Education Department informed the plaintiff that the Principal had guaranteed that the warnings were not made to set the dismissal procedure in motion.

198. The plaintiff’s position on the 2^nd Incident is that what he said at the Teachers Consultative Meeting was an inadvertent mistake. His evidence is that it was a momentary failure of memory. As it was clarified by other teacher(s) on the spot, his misstatement could not have misled those present at the meeting. In Mr Chiu’s submission, the Principal’s purpose of interviewing the plaintiff was to humble him. When the plaintiff refused to submit, the Principal retaliated by issuing the 2^nd warning.

199. Plainly, the Principal did not accept it was an inadvertent mistake. He also found the plaintiff’s attitude and response at their meeting objectionable.

200. The pivotal point in assessing the incident is whether it was unreasonable for the Principal to take the view that the plaintiff deliberately made the incorrect statement. Look at the matter in context, it is not an unreasonable view. The school memo on the Scheme was issued not long ago. The plaintiff was speaking in support of his own motion to change the selection procedure. The statement was uttered in the course of explaining the reason for the motion. Being a meticulous person, as shown by his habit of taking notes and records of major events, it would be surprising if he did not properly prepare himself for his motion, including finding out what had been done in connection with the latest round of selection. And if he had, there would be no room for a genuine mistake. If it was not a genuine mistake, the Principal was entitled to be concerned.

201. The matter was compounded by the plaintiff’s response to the Principal’s question(s), which was far from genuine. As the Principal said, he could have simply admitted that he was wrong. Instead, he dodged the question and used the independence of the Consultative Meeting as a means to silence the Principal. As it was, his confrontational approach only served to heighten the Principal’s suspicion and widen the rift between them.

202. As in the case of the 1^st Incident, the crux of the problem is the plaintiff’s approach and attitude in dealing with the Principal. It has nothing to do with freedom of speech. The suggestion that because the Teachers Consultative Meeting was designed to open discussions and collect views of teachers without the presence of the Principal, there must be freedom of speech, which includes freedom to make mistakes, is misplaced.

Two events in the 1998-1999 school year

203. Before moving to the 3^rd warning, I should mention two events that happened in the early months of the 1998-1999 school year. These events set the scene for the 3^rd and 4^th incidents. However, it must be borne in mind that they are not pleaded as incidents constituting breach of the implied term.

204. The first event happened in October 1998 when the plaintiff and another teacher were told to step down from the duty of managing school prefects. The plaintiff first went to the Vice-Principal to seek an explanation. Later on the same day, he went to see the Principal to ask for a written explanation. Thereafter the plaintiff demanded a reinstatement as a settlement of the matter. At the request of the plaintiff, the Supervisor and the Vice-Chairman of FKPS met with him on 21 October 1998 during which he complained of being unfairly treated by the Principal. The plaintiff further wrote to the Supervisor on 16 November 1998, complaining of unfair treatment by the Principal in the past two years. The Principal’s evidence is that the appointment of the plaintiff and the other teacher to manage the school prefects was made before there was proper and thorough discussions and he considered the appointments inappropriate. It also appeared that the Supervisor had spoken to him about the plaintiff’s complaints.

205. The second event relates to the election of teachers’ representative. At the General Staff Meeting on 27 November 1998, the Executive Committee, of which the Principal was a member, put forward a set of rules for the election of teachers’ representative to the Parents -Teachers Association (“PTA”). The bulk of the rules were drafted by a teacher at the Principal’s request. The Executive Committee had added one clause, which was to the effect that a teacher who had received formal warning by the Principal or Supervisor would not be eligible to be a candidate in the following three years. The plaintiff took objection to this. He had in the past three years served as a teacher representative and he considered the new rules was to prevent him from continuing to act as a teachers’ representative. He requested the voting to be conducted by secret ballot, but it was refused. The rules were duly passed.

206. In connection with these two events, the plaintiff had through HKPTU, complained to the Education Department. The Education Department declined to intervene. Upon the plaintiff’s complaint, the CPCE found against the Principal on the second event. The evidence suggests that after the plaintiff left the School, the rule disqualifying teachers who had received warnings from being elected as teachers’ representative was removed at the advice of the Education Department.

The 3^rd warning

207. The events leading to the 3^rd warning happened in between the two events mentioned above. It was for marking on three school circulars without authority. As early as 18 October 1995, it was made known at the General Staff Meeting that staff should not make unauthorized alterations or markings to school circulars.

208. On 25 November 1998, the plaintiff was handed with a circular on PTA Committee meeting notice by a general staff. After signing on it, the plaintiff wrote on the circular “清楚未?” (meaning “Was it clear?”). According to the plaintiff, he was responding to the query of the staff who handed him the circular and it was intended to be a joke.

209. Then on 30 November 1998, the plaintiff underlined certain words on a circular on the rules for election of teachers’ representative to the PTA. The words underlined were “過去五年曾任教師委員者可申請豁免成為候選人” (meaning “Those who acted as teachers’ representative in the past five years could apply to be exempted as a candidate.”). This happened shortly after the General Staff Meeting on 27 November 1998.

210. The plaintiff said he did this for the purpose of highlighting the message for the benefits of everyone. On the same day he did this, he wrote to the Supervisor requesting for an urgent meeting in connection with the 2^nd Incident and the election rules. On 2 December 1998, the Supervisor replied that it was not an appropriate time.

211. On the following day (viz. 1 December 1998), the plaintiff wrote on a circular concerning the extension of time for applying to be exempted as a candidate for teachers’ representative to the PTA. The words he wrote are: “我是否已被取消資格？請儘快答覆！” (meaning “Am I being disqualified? Please reply soonest!”). The plaintiff said he wrote this to seek clarification from the School on his eligibility to be elected as a teachers’ representative election.

212. Three days later at the General Staff Meeting on 4 December 1998, the Principal pointed out that unauthorized alteration or marking of school circular was a serious matter. On 5 January 1999, the plaintiff wrote to the Principal apologizing for the unauthorized markings of the circulars and assuring him that he would not do this again.

213. By letter dated 10 February 1999, the Supervisor issued to the plaintiff a written warning in relation to his unauthorized marking of the three circulars. The reason given was that his acts amounted to serious breach of discipline. In accordance with the required procedure, the School gave notice of the warning to the Director of Education.

214. Shortly after this, the plaintiff made personal data requests to the Education Department. Afterwards, the plaintiff wrote two letters to the Director of Education (copied to HKPTU) demanding investigation into the three warnings and warned that he might bring judicial review application. He also lodged complaints with the CPCE.

215. The plaintiff’s contention on the 3^rd Incident is that it was a minor incident that should only have attracted a verbal warning at the most. It is also said that the Supervisor was biased against him.

216. It is evident that the plaintiff was at fault. He admitted this in his letter of apology. He had consciously failed to observe the instruction not to make unauthorized markings to school circulars on three occasions and within a week. In these circumstances, the Supervisor cannot be criticized for regarding his conduct as a serious breach of discipline. Further, given that the plaintiff had had two verbal warnings, the Supervisor cannot be said to be too harsh or acting disproportionately in issuing a written warning. Still less can it be said that the 3^rd warning is an instance of breach of the implied obligation of confidence and trust.

The 4^th warning

217. As for the 4^th warning, it was for interfering with the process of the teachers’ representative election held on 11 December 1998. As mentioned above, the plaintiff took objection to the new election rules that had the effect of disqualifying him as a candidate for teachers’ representative. On the day of election, he approached the two teachers who acted as the returning officers. They were about to draw lots to determine who would be the representative. The plaintiff requested to be entered as a candidate and when being refused, he tried to argue with the teachers, pointing out that he was “appealing” against the warnings. When the teachers tried to carry on with their work at another table, the plaintiff followed them around and continued to pester them and argue. When they later decided to move to the geography room to continue with the work, the plaintiff also followed them until he was stopped from entering the room. Shortly after the event, the two returning officers wrote a complaint report to the Principal.

218. On 26 January 1999, the Principal met with the plaintiff. This was followed by a letter dated 28 January 1999 requesting a written explanation on the incident. On 8 February 1999, the plaintiff gave his written response, which was copied to the Supervisor, the Director of Education and HKPTU. In what his counsel acknowledged to be a strongly worded letter, the plaintiff complained against the returning officers’ refusal to accept him as a candidate, contending that the new election rules should not have retrospective effect. The Principal was further asked to give a written explanation.

219. Two days later on 10 February 1999, the plaintiff received the 3^rd warning from the Supervisor. Mr Chiu submitted that this was not coincidental and that the Supervisor deliberately used the 3^rd warning to rein in the plaintiff. What has been overlooked is that in a subsequent meeting with the plaintiff, the Supervisor indicated that there was initially a much more strongly worded draft for the 3^rd warning, but it was toned down by others. This suggests that the issue of the 3^rd warning had been discussed in the SMC and this probably accounts for the time taken to issue the 3^rd warning.

220. By letter dated 1 June 1999, the Supervisor issued a written warning on the disruption of the election process. The letter pointed out that if the plaintiff had complaints to make, he should direct them to the SMC and not to his colleagues. It concluded by stating that if there were further breach of discipline, the Supervisor would consider recommending to the SMC to terminate the employment. A copy of the warning letter was sent to the Education Department for record.

221. It should be noted that before the issue of the 4^th warning, the plaintiff had been issued with a Letter Offering Appointment for the 1999-2000 school year, which he accepted on the same day he got the 4^th warning. When he was asked about this in cross-examination, the plaintiff accepted that the School had been lenient in this regard and said that it was out of his expectation.

222. On 12 June 1999, the plaintiff had a meeting with the Supervisor and the Vice-Chairman of FKPS. According to the plaintiff’s notes of the meeting, he told them he had stopped making noises in the past months, but as to complaints that he had made, they could not be retracted. As Mr Mak put to him in cross-examination, the truth is: during all this time, he was pressing on with his complaints to HKPTU and CPCE while at the same time also making new complaints against the Principal and the School.

223. Then on 20 March 2000, the plaintiff wrote a letter to the Principal making a formal demand to have all his warnings revoked and to reinstate his right to be elected as a teachers’ representative with immediate effect. The letter also made references to the adverse findings of CPCE against the Principal and stated that the Principal’s professional integrity was tarnished. It was copied to many people, including the Supervisor, Chairman of the PTA, Chairman of Alumni Association, the Education Department and Chairman of HKPTU. The plaintiff explained that he did this because he was desperate. He was very worried that he would lose his job because he knew that the School could have dismissed him on account of the four warnings.

224. It was shortly after the plaintiff sent out this letter that the Supervisor entered into discussions with the Education Department about transferring him to teach in another school operated by the sponsoring body.

225. The plaintiff’s position on the 4^th warning is that his conduct on 11 December 1999 had to be considered against the unfair treatment by the Principal in depriving him of the opportunity to become the teachers’ representative. It is said that he should have the right to protest. It was also pointed out that the obstruction he caused to the two returning officers was neither excessive nor serious. It was all verbal and no physical obstruction was involved. There was only some loss of time. All in all, it was argued that there was a lack of bona fide on the part of the Principal and also the Supervisor.

226. Objectively speaking, by December 1999, the relationship between the plaintiff and the Principal was far from being good. On the one hand, the plaintiff was no doubt upset about the first two warnings and the school prefect incident. It is also not difficult to understand his anger and frustration over the new election rules. It is demonstrably clear from his evidence that he was proud to have been elected as a teachers’ representative in three successive years. On the other hand, the Principal was unlikely to view the plaintiff with favour having regard to his conduct in the 1^st and 2^nd Incidents and the many complaints he made to the various outside organizations naturally. Realistically, the amount of mutual confidence and trust between the plaintiff and the Principal was probably very little.

227. That said, however, I do not agree that the plaintiff was justified in what he did on the day of election. As the Supervisor stated in the warning letter, if he wished to air his grievance or assert his rights, he should have directed it to the school authority and not to the returning officers or other colleagues. The fact that he was disappointed with the responses of the SMC or the Supervisor does not justify him taking his protest to the returning officers. It cannot be disputed that he had caused obstructions to the work of the returning officers. Whether it was only verbal and was not serious is irrelevant. The returning officers should be able to discharge their duties without having to be disturbed or harassed. There is no doubt that the plaintiff had misconducted himself. The issue of a written warning is not disproportionate.

228. In short, the four warnings, whether taken individually or collectively, do not constitute a breach of the implied term.

229. Before moving away from the four warnings, it is necessary to deal briefly with the report of the CPCE on the several complaints made by the plaintiff against the Principal and the Supervisor’s letter to Mr Law of Education Department dated 13 June 2000.

230. The CPCE’s report was published in 19 July 1999. It recommended to the Education Department that the Principal be warned and that the School freeze the four warnings issued to the plaintiff. It does not appear from the evidence that the recommendation to warn he Principal had been adopted. The findings and opinions expressed by the CPCE on the propriety of the Principal’s conduct are not binding on this court. What has to be appreciated is that the CPCE approached the incidents complained of and the four warnings from what they regarded as the best or desired practice for school management as set out in its Code of Professional Conduct whereas the court’s task is to ascertain whether they provide factual support for the plaintiff’s claim in breach of the implied term of confidence and trust.

231. As to CPCE’s recommendation to freeze the four warnings, it would appear that the Education Department had endeavoured to mediate between the plaintiff and the School. This had paved way for the discussions on the possibility of transferring the plaintiff to teach in another school operated by FKPS that led eventually to a series of correspondence between the Supervisor and Mr Law of the Department. In his letter dated 13 June 2000, the Supervisor took issue with Mr Law’s letter dated 29 May 2000, which said that the school had agreed to cancel the four warnings. Mr Law replied, maintaining that the Supervisor had agreed to it. The plaintiff says that the Supervisor did not act bona fide in trying to renege from the agreement to cancel the warnings. I do not consider that the Supervisor’s letter of 13 June 2000 can advance the plaintiff’s case on breach of the implied term. Apart from Mr Law’s letter dated 29 May 2000, the plaintiff did not come to read the other letters exchanged between the Supervisor and Mr Law on the transfer arrangement until much later on. At any rate, by June 2000 there was practically very little mutual confidence and trust between the plaintiff and the school management authority.

The complaints from the students of Form 5B and Form 6A

(The 5^th Incident)

232. On 29 March and 14 April 2000, six Form 5B students and 23 Form 6A students wrote to the Principal complaining about the plaintiff’s teaching performance and behaviour during lessons. The Principal appointed the Vice-Principal, the English Panel Chairman and three other teachers to look into the matter. They prepared two sets of questionnaires, one for each class, to get the views of all the students in the two classes. The questionnaires were issued to the two classes on 10 April and 7 June 2000. All the students in the two classes who were present in school (40 out of 45 in Form 5B and 28 out of 30 in Form 6B) had completed the questionnaires. The answers were analyzed and two separate reports were compiled.

233. The results of the survey tend to confirm the complaints made by the students and show that the majority of the students considered the plaintiff’s teaching inadequate and did not meet their expectations. The complaints mainly fell into three areas: (1) Making criticisms of the school during lessons; (2) Making criticisms of other teachers during lessons; and (3) The teaching performance of the plaintiff and his behaviour during lessons.

234. By letters dated 31 May and 23 June 2000, the Principal gave a summary of the complaints of Form 5B and Form 5A and asked the plaintiff for explanations. The plaintiff wrote on 27 June 2000 asking for the complete sets of materials concerning the complaints. The Principal replied on 29 June 2000 to the effect that the complaints would be referred to the Supervisor.

235. The plaintiff says that the Principal acted with personal spite against him in handling the students’ complaints and that he deliberately held back the relevant materials and conducted the survey behind his back. He also complains that the questions in the questionnaires were leading and suggestive.

236. It is no part of this court’s function to find on the general competency of the plaintiff as an English teacher. This is not an issue that needs to be resolved in this action. What I have to resolve is whether the School did have cause to be concerned with the plaintiff’s performance in the 1999-2000 School year and whether the conduct of the School in this incident had in any way breached the implied term of confidence and trust. For this reason, the various statements made by the plaintiff’s former students and also teachers in the School regarding his general competency and ability are irrelevant and in any event carry no weight.

237. In my view, the plaintiff’s complaints on the administration of the questionnaires and the contents of the questionnaires are misplaced. What is plain and obvious and cannot be overlooked is that: Firstly, there is no suggestion or evidence that these complaints were solicited or incited by the School. Secondly, there were a significant number of students making the complaints. In the case of Form 6A, it was 23 out of a class of 30 students. Thirdly, the response to the questionnaires showed a large majority of students were dissatisfied with the plaintiff’s teaching. Fourthly, the questionnaires did contain open ended questions. The majority of the answers expressed discontents or adverse comments. Although some of them were expressions of opinion, some facts had been cited in the answers. Fifthly, there were at the same time some favourable comments, which show that the students did exercise independent thinking and were not really misled by the way the questions were formulated.

238. The importance of the questionnaires is that they support and give credence to the complaints made to the Principal. Collectively, the students’ complaints and the results of the questionnaires demonstrate that a significant number of students in these two classes were dissatisfied with and had genuine concerns about the plaintiff’s teaching performance. They did find the use of Chinese during lessons and the plaintiff’s so-called “issues- based” teaching a cause for concern.

239. As to the criticism that the School failed to investigate the complaints, the administration of questionnaires on all the students in the two classes would be a most direct way of investigating. The manner of carrying the surveys cannot really be faulted. One must note the delicacy of the situation from the management’s point of view. The School had to balance the interest of the students and that of the plaintiff when deciding when and how to alert the plaintiff of the complaints.

240. The plaintiff had called a student of Form 5B, Miss Sin Yuen, to testify. Mr Chiu submitted that the purpose was to show that the answers given by the students merit further investigations. Miss Sin had written favourable comments in her questionnaire and she disagreed with the criticisms and comments made by her fellow classmates. In my view, her evidence did not add much. It is evident from the questionnaires that while the majority of students were dissatisfied with the plaintiff’s teaching, there were a few who did not think there was a problem.

241. The plaintiff also sought to rely on the witness statement of a student of Class 6A, Miss Chuk Kit Yue, for the same purpose of showing that the answers in the questionnaires of her class should not be accepted without further investigation. Miss Chuk had been subpoenaed, but she refused to attend court. Similar to that of Miss Sin, very little weight can be attached to Miss Chuk’s statement. At the most, she could only speak for herself. It is further worth noting that from the plaintiff’s evidence in court, it would appear that some students in Form 6A had given feedbacks to him on his teaching and he was aware that they had concerns about the progress of their English learning.

242. Mr Chiu also criticised the School for not trying to help the plaintiff with respect to the students’ complaints. But given the plaintiff’s response when being informed of the complaints, there was not much that the Principal or the School could do. It may well be that the plaintiff really felt aggrieved by the incident. However objectively viewed, the plaintiff’s response was a total refusal to co-operate with the School to deal with the complaints. There was no possibility of the School offering counselling or help to him to improve on his teaching.

243. In all the circumstances of the case, the Principal or the school authority cannot be said to have conducted unreasonably in this incident of the students’ complaints. In this regard, the fact that there was hitherto no complaint against the plaintiff does not mean that the Principal and the School should not take the students who complained seriously.

244. Finally on this topic is the two experts called by either side with regard to the plaintiff’s teaching performance and methodology. I am satisfied that both witnesses have an amount of expertise in English teaching in Hong Kong. However in the case of the plaintiff’s expert, Miss Li Yee Lin, it was apparent that she was only provided with a limited amount of materials when she prepared her report. It also appears that she was misinformed on some of the facts. It is, for instance, not the case that the plaintiff was expected to complete ten units of listening practices within the month of May or up to May, as suggested in paragraph 17 of her report. There is also no evidential basis for the criticism of students’ books and exercises being retained for seven weeks for the purpose of book inspections, as stated in paragraph 18 of her report.

245. The focus of Miss Li’s expertise and a major part of her evidence is the issues-based language teaching in the sixth form. But the crux of the dispute is not the value and the method of this teaching, but whether the plaintiff had properly understood the method of teaching and had applied it faithfully. That is a matter that Miss Li could not provide an answer because she had no personal experience of how the plaintiff taught the sixth form in the School in 1999-2000. Likewise, her reference to Mr Stephen Krashen’s theory in the context of using Chinese to teach English is misplaced. The last few paragraphs of her report, especially the criticisms leveled against the School and FK-LMST School are clearly inappropriate for an expert.

246. As for the 1^st defendants’ expert, Dr Pauline KL Lee, it is evident that she is well familiar with the requirements for teaching English at Secondary School level, including the use of teaching medium and the proper application of the “issues-based” teaching approach in the context of English teaching. The reliability and force of her evidence is unaffected by the small error in the last part of her report in assuming that the plaintiff had read the survey findings when he gave his response in July 2001. Dr Lee’s evidence further lends credence to the concerns expressed by the students in the complaint letters and the answers to the questionnaires and show that the School did have cause to be concerned.

The events in FK-LMST School

247. Turning to the events that happened between the plaintiff and the principal and teachers in FK-LMST School, the fundamental point to note is that despite the plaintiff’s accusation, there is no actual evidence that the Supervisor or the SMC had exercised improper influence on the principal and teachers of FK-LMST School and/or in any way brought about what happened between the plaintiff and FK-LMST School. The plaintiff’s case on this point is based upon the witness statement of Yip Sze Wing, who was a former teacher in the FK-LMST School. He was one of the Form Coordinators who had prepared reports on the plaintiff and was also present at the meeting on 4 January 2001.

248. The thrust of Mr Sit’s evidence is that he and the other teachers were told by Mr Chan, the principal of FK-LMST School, that: The plaintiff was unpopular with the School and the SMC because he always complained against them. However, the SMC had no reasonable avenues to dismiss him, it had to comply with the Education Department’s direction and transfer him to FK-LMST School. According to the plaintiff, Mr Sit approached him on his own initiative in 2005 and offered to help him with this action. The witness statement dated 28 June 2005 was made by Mr Sit independently. However, subsequently, the plaintiff was unable to contact him. Then during a telephone conversation on 18 September 2007, Mr Sit told the plaintiff that he was unable to help him. Despite being served a subpoena, he did not turn up.

249. Mr Chiu asked that the witness statement of Mr Sit be admitted as hearsay evidence and to be given full weight. This was opposed. There is no doubt that Mr Sit’s evidence is relevant. But I am of the view that it should not be admitted and even if admitted, no weight can be attached to. There are several reasons for this. First, Mr Sit is clearly an unwilling witness. His unwillingness is however not explained. There has apparently been a sharp change in his attitude, from being very eager and forthcoming to total disinterest and reluctant. The change in attitude is also unexplained. Second, he is a person who is prepared to ignore and defy a court order to attend court. In the absence of cogent explanations, there must be grave doubts as to his the credibility and reliability of what he said in his statement. Third, the part of his evidence, which is set out above, involves multiple hearsay. Fourth, the part of his witness statement that the plaintiff seeks to rely is heavily disputed. Fifthly, given the importance the plaintiff attaches to Mr Sit’s witness statement and the quality of his evidence, it will be unfair to admit his statement when there is no opportunity for the 1^st defendants to cross-examine him. Additionally, what he said about the instruction from the SMC to beware of the plaintiff is inconsistent with the undisputed fact that the plaintiff was on good and amicable terms with everyone in FK-LMST School for at least the first two months. Indeed Mr Chan would have heard at the 8 August 2000 meeting that the SMC had decided not to renew his employment and would also have sensed that there was problem between the plaintiff and the School. Hence, if there was instruction from the SMC to make life difficult for the plaintiff, it would not be that the problems only began to emerge in December 2000.

250. I am therefore not satisfied that the plaintiff has been able to make out a case that the 1^st defendants should be held liable on the basis of events that happened in FK-LMST School. This being the case, the events in FK-LMST School are strictly speaking irrelevant to the claim of breach of implied term.

251. It only leaves me to make several observations under this head. First, while acknowledging that he found the comments on his teaching and work performance harsh and unfair, there were parts of the reports on his performance in the 1^st and 2^nd term that are undoubtedly true. For example, he had not followed the teaching schedule and could not complete the teaching in time. Contrary to what the plaintiff seems to think, this is not a minor or trivial matter because the School, through the Subject Panel Chair, in ensuring proper education for the students, has to ensure that students in the same Form, albeit in different classes, are taught the same things and progress at the same pace.

252. Second, as to the 17 statements made by the students, although some of them contain rather immature personal remarks about the plaintiff, the bulk of the contents show that the students did find problems with his teaching, attitude and handling of disciplinary issues. There are at the same time complaints from parents. There was, to say the least, a prima facie case for the school to be concerned.

253. Third, while the plaintiff might not have expected the detailed scrutiny made of his performance and work and might have even found the 4 January 2001 meetings and the comments made him embarrassing, his written responses demonstrated the argumentative and confrontational approach he had taken. There was a clear lack of objectivity in his reactions.

254. Fourth, with regard to the complaint that the amount of resources that were deployed for the compilation of the subsequent reports on him and Follow-up Suggestions was unprecedented (cynically described as “Rolls-Royce treatment”), the plaintiff has failed to have regard to how he had reacted to the 4 January 2001. His meticulous and unyielding responses would no doubt cause people to be extra cautious in dealing with his work appraisals. In any case, Mrs Lui was then attending a full-time course. She could only deal with the reports in the evenings. There is no basis for a conspiracy suggestion.

255. In this connection, I do not agree that Mrs Lui and Mr Chan are not witnesses of truth. I do not see in Mrs Lui’s evidence that she held personal grudge against the plaintiff. There is no objectively convincing reason for her to put herself and other colleagues to the extent of troubles they had undergone, for the purpose of “framing up” the plaintiff, just because the SMC or the School wanted to get rid of him. In the case of Mr Chan, he was demonstrable more eager and assertive as a principal, when compared to the Principal. That might have to do with the fact that FK-LMST School was in 2000 a relatively new school and had to establish itself. He was clearly taking a very firm line on the plaintiff. But that does not mean that he had a secret agenda to get rid of the plaintiff. There is also no evidence that he acted with improper motive.

256. Fifth, viewing the events that happened between the plaintiff and FK-LMST School, the principal and the management committee of FK-LMST School were justified in concluding that the plaintiff did not fit into their school whether in terms of meeting the teaching requirements or identifying himself with the culture and education philosophies. His decision to report the students to the police does put him in rather dim light, both in terms of his relationship with FK-LMST School and his ability to handle students and discipline matters. Quite apart from the issue of proportionality of response, there was no need to take leave during school hours to make the report. There was after all no urgency.

257. For the above reasons, even if the plaintiff could have maintained the present action against the 1^st defendants, the claim for breach of implied term would have failed.

Quantum of damages

258. Given my conclusion above that the plaintiff’s action cannot succeed, it is not necessary to deal with the issue of quantum of damages. I need only make a few basic observations.

259. First, I find it very hard to accept that as a GM teaching English with some 16 years of experience, the plaintiff was unable to find alternative employment and has no prospect of doing so in the future. There is no evidence in this action to show that the prospects for teaching had been very poor or is projected to be unpromising. It is also the plaintiff’s own evidence that the termination of his employment had not attracted any publicity within the education circle.

260. Admittedly, he had only looked for employments with government aided schools. I had said I do not find his explanation for not attempting employments with private or direct subsidized schools genuine or convincing. As to the suggestion that the initial certificate of service issued by the School would have aroused the suspicion and distrust of potential employers, I find the plaintiff’s reason and logic for not using the subsequent certificate of service that shows he resigned from the School extraordinary. He said it would contravene the Theft Ordinance and amount to the offence of obtaining pecuniary advantage by false pretence.

261. In my view, the plaintiff has not been completely forthcoming with the reasons why he was not re-employed as a full-time teacher. It will appear that it is more to do with his personal circumstances and choice or preference for employment rather than the termination of his employment with the School and the circumstances attending to it. As Mr Mak put to him in cross-examination, he did not pass meet the Language Proficiency Assessment for Teachers (LPAT) until 2005. That naturally would undermine his competitiveness as an English teacher in the market.

262. The second observation that I would make is that there is no evidence of a loss of reputation. The mere fact that the plaintiff had not been employed for full-time teaching since the termination of his employment in the School is insufficient to show that the termination had damaged his reputation.

263. Third, as far as the claim for damages associated with the provident fund contributions and benefits is concerned, the evidence is patchy and confusing. Quite apart from the fact that the quantifications and calculations were only produced at the trial, the documents that were put in are incomplete and do not altogether tally. While I appreciate these are the documents that are currently in the plaintiff’s possession and counsel had used his best endeavour and exercised great diligence to make something out of them, they fall far short of the standard required to substantiate the claim and the calculations. If the plaintiff were indeed minded to seek these heads of the damages, it would be incumbent upon him to make proper preparations.

Costs consequential upon the School ceasing to be a party

264. It is common ground that the School is not a proper party to this action, since it is not a legal person. The 1^st defendants ask for costs of the mis-joinder in that they had incurred costs to take over the defence of the School. As indicated above, it is consistent with their duties to manage the School that the SMC took over the defence of the School and incurred costs to defend the plaintiff’s claim.

265. The plaintiff, however, argued that the 1^st defendants should bear the costs because they had misled him by pleading that they were agents of the School when the School was not a legal person. In substance, the plaintiff is complaining that the defendants have not been completely forthcoming in telling him the School is run by FKPS, thus they were agents of FKPS, until the claim against FKPS became time-barred. I have in the earlier part of this Judgment held that as a matter of law, the defendants have no duty to speak or to assist the plaintiff when they are in litigation or contemplating litigation. I have also for reasons given considered that the plaintiff well knew the School is run by FKPS and further appreciated the relationship between the sponsoring body and the SMC, especially on matters relating to his employment.

266. Having regard to all the circumstances of the case, I am of the view that there is no justification to depart from the normal rule of costs follow event. The plaintiff having improperly joined the School as the 2^nd defendant must bear the costs. There is an order that the plaintiff pays the costs incurred by the 1^st defendant in connection with the defence of the 2^nd defendant.

Conclusion

267. For the reasons above, the plaintiff’s claim against the 1^st defendants is dismissed. Applying the normal rule of costs follow event, there is an order nisi that the plaintiff pays the 1^st defendants the costs of this action, including all costs reserved, to be taxed if not agreed.

(C Chu)
Judge of Court of First Instance
High Court

Mr Simon Chiu instructed by Messrs Chong, So & Co for the plaintiff.

Mr Andrew Mak instructed by Messrs Chan & Associates for the 1^st defendants.

* There was no reference to the Employment Ordinance in the Letters of Acceptance.

59122-EN-2007-11-13

KO HON YUE v. LIU CHING LEUNG AND OTHERS

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HCA3494/2003

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 3494 OF 2003

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BETWEEN

	KO HON YUE	(高翰儒)	Plaintiff
and
(1)	LIU CHING LEUNG	(廖正亮)	1^st Defendants
(2)	LIU POON KEUNG	(廖本强)
(3)	CHEUNG FOR TAI	(張伙泰)
(4)	CHONG KAM LING	(莊金寧)
(5)	LAI KIM HUNG	(賴劍虹)
(6)	LIU LAI KEUNG	(廖勵强)
(7)	LIU WAI KI	(廖惠其)
(8)	LIU GUN SUN	(廖更新)
(9)	LIU KIT MING	(廖傑明)
(10)	LIU MAN FUK	(廖萬福)
(11)	LIU TIM WAN	(廖添穏)
(12)	YAN CHEUK NING	(甄灼寧)
(13)	LEE TAK CHING	(李德貞)
(sued collectively as the Management Committee of Fung Kai No.1 Secondary School for the year 2001)
FUNG KAI NO.1 SECONDARY SCHOOL			2^nd Defendant

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Before : Hon Chu J in Court

Date of Hearing : 25 October 2007

Date of Decision : 26 October 2007

Date of Reasons for Decision: 13 November 2007

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REASONS FOR DECISION

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The application

1. By summons filed on 24 October 2007, which was the third day of the trial, the plaintiff applied to further amend the Re-Re-Amended Statement of Claim. The application was heard after the plaintiff’s Opening had concluded. I refused the application. My reasons are as below.

2. Apart from some minor amendments to correct some clerical errors and typos, the main amendments sought are the addition of a new paragraph 31B and a new relief. Both of them are to reflect a new cause of action for damages for breach of the statutory duty under Regulation 76 of the Education Regulations, cap.279A. The application was made on the basis that no new facts would need to be introduced.

Late application to amend

3. It is not in dispute that this is a late application for amendment. First, it was made at the trial with the summons being filed in the course of the plaintiff’s Opening. Second, it was made at a time when the limitation period for the new cause of action had already expired. Third, the amendment could have been sought at an earlier stage of the litigation, given that the Statement of Claim had already undergone several amendments since the claim commenced in 2003. It is trite that the court does not readily grant leave to amend at the trial. In exercising the discretion, the court will need to consider whether the proposed amendment is properly formulated and is also concerned to see that the proposed amendment is not futile in the sense that it is arguable.

The objections

4. The 1^st defendants opposed the application on two main grounds. First, it was said that Regulation 76 did not confer on the plaintiff a cause of action in private law. Second, it was argued that the breach, even if proved did not cause the loss and damage pleaded. The 1^st defendants are proceeding on the assumption, but without conceding it, that the plaintiff will be able to prove as a matter of fact that the decision to terminate the plaintiff’s employment was not a majority decision of the School Management Committee (“SMC”), hence a breach of Regulation 76. The objections are based on points of law.

A private cause of action for breach?

5. On the first objection, the intended new claim is for breach of statutory duty simpliciter. In order to maintain the claim, it has to be shown that the breach gives rise to an action in private law. The plaintiff has to show, as a matter of construction of the statute, that the statutory duty was imposed for the protection of a limited class of the public and that the legislature has intended to confer on members of that class a private right of action for breach of the duty. As emphasised by Lord Steyn in Gorringe v. Calderdale MBC [2004] 1WLR 1057, 1058 at para.3, the central question in a claim of breach of statutory duty is whether from the provisions and structure of the statute, an intention can be gathered to create a private law remedy, and not whether the statute excludes a private law remedy.

6. The current Education Ordinance was enacted in 1971. Section 84 empowers the Governor (subsequently the Chief Executive) in Council to make regulations for the purposes stated therein. Both the Education Ordinance and the Education Regulations had undergone a number of amendments since 1971. Given that the termination of the plaintiff’s employment took place in July 2000 and/or July 2001, it is the pre-2 February 2003 version of section 84 and the pre-1 January 2005 version of Regulation 76 that the present application is concerned with.

7. Among the many purposes set out in the applicable version of section 84, counsel can only point to two subsections as being relevant to Regulation 76. The first is section 84(t), under which regulations may be enacted to provide for “general matters of school management”. The second is section 84(u), under which regulations may be enacted to provide for “the duties of supervisors and principals”.

8. The Education Regulations contain a number of parts. Under the applicable version, Regulation 76 falls within Part XII, which deals with school management committees and supervisors. Regulation 76 reads:

“ The appointment and dismissal of any member of the teaching staff of any school shall be determined by a majority vote of all the members of the management committee of that school.”

9. Regulation 101 provides that it is a criminal offence to contravene certain provisions of the Education Regulations. Regulation 76 is not among the regulations covered in Regulation 101.

10. Mr Chiu for the plaintiff argued that Regulation 76 is a recognition of the special status of teachers in a school and of the need to protect their position by ensuring that they be treated with due fairness and free from abuses. The best protection, he submitted, is to give to the teachers security of tenure. Accordingly, it is to be inferred that the legislature intended to confer on teachers a remedy in private law where the dismissal did not comply with the majority vote requirement of Regulation 76.

11. However, as a matter of statutory construction, there is nothing in the applicable version of Regulation 76 or the Education Ordinance or the Education Regulations to suggest that Regulation 76 is intended for the protection of teachers. As its long title states, the provisions in the Education Ordinance primarily deal with “the supervision and control of schools and the teaching therein”. As for the pre-2005 Education Regulations, the bulk of its provisions is concerned with regulating the physical and sanitary conditions of school premises, matters relating to students’ discipline and welfare, fees and holidays as well as other general matters on the operation and administration of the school. Part XII, of which Regulation 76 forms part, relates to the constitution of the school management committee and the functions and duties of the supervisor and the school management committee. In the specific case of Regulation 76, it regulates how the school management committee should discharge their duty in connection with the appointment and dismissal of teachers.

12. Upon an analysis of the provisions and structure of the Education Ordinance and the Education Regulations, it can be seen that they essentially prescribe a regulatory system for the promotion of education, which is for the benefit and protection of the public at large. In my view, there is no objective basis for inferring that the statutory duty under Regulation 76 was imposed for the protection of the teachers and that the legislature had intended to confer on the teachers a private right of action for breach of the duty. The construction advocated by the plaintiff does not accord with the overall scheme and framework of the Education Ordinance and the Education regulations. As observed in X (Minors) v. Bedfordshire County Council [1995] 2 AC 633 at 731, “Although regulatory or welfare legislations affecting a particular area of activity does in fact provide protection to those individuals particularly affected by that activity, the legislation is not to be treated as being passed for the benefit of those individuals but for the benefit of society in general.”

13. Further, it is to be noted that Regulation 76 also covers appointment of teachers. In the context of appointment of teachers, it is difficult to see what protection for the teachers was intended by the legislature and how the statutory duty could secure their employment or ensure fairness in their treatment by the school management committee. There is no apparent rationale for conferring on teachers a private cause of action in the event their appointment was not pursuant to a majority vote of the school management committee. This is particular so when the common law has provided for remedies for teachers whose appointments or dismissals have not been properly authorized by the school management committee.

Is the pleaded loss caused by the breach?

14. Turning to the second objection, a party claiming for breach of statutory duty must show that the breach caused his loss. If the damage would have occurred in any event, then the claim would fail. The loss relied upon by the plaintiff for the intended claim of breach of statutory duty is the same as that pleaded for the contractual claim of wrongful termination or constructive dismissal, namely, the loss of salary and provident fund contributions and dividends: see paragraph 31B of the proposed amendment and paragraph 31 of the Re-Re-Amended Statement of Claim.

15. It can be readily seen that the loss as pleaded was not caused by the breach of Regulation 76, but was occasioned by the wrongful termination of employment or constructive dismissal. If the termination were found not to be wrongful, the plaintiff would not be entitled to any future salary or provident fund benefits. He could not therefore claim to have suffered any loss even if the school management committee’s decision to terminate his employment was not pursuant to a majority vote.

Conclusion

16. Thus analysed and for the above reasons, I am of the view that the intended amendment is futile, being unarguable as a matter of law. The application is therefore refused with costs to the 1^st defendant in any event, to be taxed if not agreed.

(C Chu)
Judge of Court of First Instance
High Court

Mr Simon Chiu instructed by Messrs Chong, So & Co for the plaintiff.

Mr Andrew Mak instructed by Messrs Chan & Associates for the 1^st defendants.