Ko Hon Yue v. Chiu Pik Yuk, The Wife and Intended Administratrix of Liu Ching Leung and Others

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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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.

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.