Re Leung Kwan Tsan Kelvin

HCB 11341/2002

[2019] HKCFI 20

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

BANKRUPTCY PROCEEDINGS NO 11341 OF 2002

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Before: Deputy High Court Judge William Wong SC in Chambers

Date of Hearing: 14 December 2018

Date of Judgment: 4 January 2019

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JUDGMENT

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1.This is the application of Leung Kwan Tsan Kelvin, a bankrupt (the “Applicant”), by summons dated 12 April 2018 (the “Summons”) seeking for a declaration and an order that despite the Applicant’s bankruptcy, the entirety of this provident fund benefits be paid to himself.

2.Further, the Applicant sought for further directions from the court on the following questions:

“ (1) Whether the following statutory provisions, on their natural construction and meaning, are inconsistent or incompatible with Articles 25 and 36 of the Basic Law (‘Basic Law Articles’) and/or Articles 1(1) and 22 of the International Covenant on Civil and Political Rights as incorporated by section 8 of the Hong Kong Bill of Rights Ordinance, Cap.383 (‘ICCPR Articles’),

(a) The definition of bankrupt’s estate under sections 2 and 43 of the Bankruptcy Ordinance, Cap.6 (‘BO’) as to comprise property including the entitlement of the Bankrupt (‘Benefits’) under the Subsidized School Provident Fund Rules, Cap. 279D (‘Rules’);

(b) The vesting of the Benefits in the Trustee in Bankruptcy under section 58 of BO;

(2) Whether the Bankrupt is thus entitled to retain the entire portion of the Benefits attributable to his service despite the Bankruptcy;

(3) Whether, reading under the Basic Law Articles, the ICCPR Articles or otherwise, section 85(3) of the Education Ordinance, Cap. 279 prevents the Benefits from automatic statutory vesting in the Trustee in Bankruptcy;

(4) Whether under the circumstances of this case, the Bankrupt is otherwise entitled to retain any portion of such Benefits under the rule in Re Cordon, ex p James (1873–74) LR 9 Ch App 609.”

3.Alternatively, the Applicant also asked for an order that the decision of Fred Lee, Trustee of the Property of the Applicant (the “Respondent”) that the Benefits or any part thereof be included in the estate of the Applicant be reversed.

4.The Applicant filed his supporting affirmation on 9 May 2018.  In §§7 – 9, he deposed that:

“ 7. As I understand it, the Respondent maintain that they are bound by the decision of the Court of Appeal in Re Ng Shiu Fan [2009] 4 HKLRD 774 and hence they agree only to return the post-discharge benefits to me.

8. Quite separate from the issue of Basic Law, the ICCPR and the HKBOR, I do not accept the Court of Appeal case to be the correct law. Again, I shall leave the legal arguments to my legal representatives but I verily believe that the relevant statutory provisions will have to be interpreted in my favour whether as a matter of law or equity.

9. The facts of this Application are almost identical to the Court of Appeal case.  The truth of the matter is that for all the years whilst being employed by a subsidized school, the SubsidizedSchool Provident Fund Rule made it mandatory for me to make contributions to the scheme.  Honestly, and very naturally, I believe that its purpose was for retirement.  I was never told that it served any other purpose at the time when the contributions were being made.  No one has told me that I stood to lose my part of the pension benefits if I go bankrupt.  No one has thought about it until the case of Ng Shiu Fan.”

5.The first call-over hearing came before Deputy High Court Judge Marlene Ng on 11 May 2018.  A number of directions were given by the learned Judge.

6.The second call-over hearing came before this court at 9:30 am on 18 September 2018 which was listed for 30 minutes.  Mr Nicholas Or for the Respondent then informed the court that the Respondent considered himself to be bound by the Court of Appeal’s decision in Ng Shiu Fan and had no interest in attending the substantive hearing.  Mr Jason Wong for the Applicant informed the court that the Applicant’s primary case was based on the application of articles of the Basic Law and that the relevant sections as set out in the Summons are inconsistent with the Basic Law.  Mr Or submitted that the Basic Law points had been raised and rejected by Kwan J (as she then was).  The Respondent was neutral on this point and would be bound by the order of the court.

7.Mr Wong submitted that the Court of Appeal’s decision is wrong as it did not deal with the Basic Law points.  Hence, this court should give directions to determine the substantive issues despite the Court of Appeal’s decision in Ng Shiu Fan. As the Respondent indicated that he did not wish to participate in the substantive hearing and the issue is an important one, I directed the Official Receiver’s Office to instruct counsel to act as amicus curiae to assist the court.

8.I adjourned this application for substantive hearing to 27 September 2018.  I should mention that despite what was set out at §11 of the Applicant’s affirmation filed on 9 May 2018, Mr Wong’s submission was that as the Court of Appeal in Ng Shiu Fan did not consider the Basic Law points, this court is not obliged to follow the Court of Appeal’s decision.  §11 of the Applicant’s affirmation stated:

“ My legal representatives have explained to me that the Re Ng Shiu Fan case remains good law and this Court is required to follow the precedent in so far as the issues decided are concerned. I am fully aware of that fact, but I am prepared to bring those issues to the Court of Appeal or even to a higher court if necessary.”

9.As will be analyzed below, it is regrettable that Mr Wong for the Applicant did not sensibly inform the court or agree with the Respondent that the Court of Appeal’s decision in Ng Shiu Fan is binding on this court at the second call-over hearing on 18 September 2018.  This court could have simply dismissed the Summons and the Applicant could then take this case higher, if so advised.  That would have been the most appropriate course to take.  Instead, Mr Wong for the Applicant submitted that the Court of Appeal’s decision in Ng Shiu Fan was wrong and this court should proceed to rule on the substantive issues by giving directions, as a result of which this court adjourned this application for substantive argument.

AGREED FACTS

10.The primary facts of this application are not in dispute.  An agreed summary of facts was jointly signed by the Applicant and the Respondent.

11.The Applicant was born on 30 August 1961. By the time of this hearing, he is 57.

12.Between September 1990 and January 2015, the Applicant was employed as a teacher at Madam Lau Kam Lung Secondary School of Miu Fat Buddhist Monastery (the “School”).  His monthly income immediately before termination of employment was HK$59,165.00.

13.At all material times, the School was (and still is) an aided school under the Education Ordinance, Cap 279.  Hence, Mr Leung was required to make contributions to the subsidized schools provided fund (the “Fund”) during his employment under the Subsidized Schools Provident Fund Rules, Cap 279D (the “Rules”).

14.A bankruptcy order was made against the Applicant on 19 September 2002.  He was discharged from bankruptcy on 19 September 2006.

15.Throughout his employment, the Applicant continued to make contributions to the Fund under the Rules.

16.As of 22 January 2016, the total accrued benefits payable to the Applicant from the Fund are as follows:

	Contribution by Applicant	Contribution by Government	Amount of dividend
Pre-discharge benefits	$346,389.70 (“A”)	$567,263.85 (“B”)	$547,269.75 (“C”)
Post-discharge dividends earned on pre-discharged benefits			$1,122,114.99 (“D”)
Post-discharge benefits	$292.716.89 (“E”)	$878,150.67 (“F”)	$322,433.02 (“G”)

17.As at 31 March 2016, the total provable debt against the estate of the Applicant was HK$5,647,356.83.  A dividend equivalent to 7.06% of those debts was being distributed by the Trustee in Bankruptcy.

18.By a letter dated 21 March 2016, the Respondent advised the Education Bureau, inter alia, that, applying the principles in the Ng Shiu Fan case, the Applicant’s pension benefits are to be apportioned such that the pre-discharge benefits go to the Respondent and the post-discharge benefits go to the Applicant.

19.It is against such background that the Applicant took out the Summons to seek a declaration and an order that the entirety of his provident fund benefits be paid to himself.

THE CASE OF NG SHIU FAN

20.I am of the firm view that the Court of Appeal’s decision in Ng Shiu Fan is, beyond doubt, binding on this court.  As a matter of law, this court is obliged to follow the Court of Appeal’s decision.

21.Further, for the reasons set out below, I am of the view that the Court of Appeal’s decision is correct as a matter of sound legal principle and fairness.

22.The facts of Ng Shiu Fan are almost identical to the facts of the present case.  The underlying facts of the case are set out in §§3 – 12 of Kwan J’s judgment.  In the Court of Appeal, Tang VP (as he then was) succinctly summarised the facts as follows:

“ 1. On 23 December 1998, a bankruptcy order was made against Mr. Ng Shiu Fan (Mr Ng) on his own petition dated 3 November 1998.

2. Mr Ng worked first as a teacher, and then as a librarian ina subsidised school from 2 September 1977 until his retirement on 31 August 2005. During his 28 years of service, he was required by Subsidized School Provident Fund Rules (Cap. 279D, Sub.Leg.) (the Rules) to contribute to the provident fund (the Fund) at the rate of 5% of his basic salary. The contributions were deducted from his salary monthly. For each contribution made by him, the Government paid to the Fund a sum described as a Government donation, varying from 5% to 15% depending on the length of his continuous service and the donation is credited to his account (r.9(1), 9(2) and 9(3)). Under r.13, whenever a contributor ceases to be employed as a teacher in a subsidised school for any of the specified reasons, including voluntary retirement after 10 years’ continuous contributory service, his account would be closed and the amount standing to the credit of his account at the date of cessation of employment, including all Government donations and all dividends that have been declared up to and including that date, would be paid to him or his personal representative. I will refer to the amount payable as the ‘Benefits’.

3. The Government donation was at a rate of 5% if the contributor’s continuous contributory service is less than 10 years, 10% if it is not less than 10 years but less than 15 years, and 15% if it is not less than 15 years. Thus, the longer the service, the greater the amount of Government donation. Presumably, so that a nest egg would be available to a contributor upon his retirement.

4. As at the date of the bankruptcy order, 23 December 1998, the Benefits payable to Mr. Ng were $1,285,785.35. He was discharged from bankruptcy on 23 December 2003 at which time his Benefits totalled $1,970,506.02. He continued with his employment after the bankruptcy order until his retirement on 31 August 2005 by which time the Benefits amounted to $2,459,804.39.

5. By summons issued on 19 April 2007, the Official Receiver and trustee applied for directions, pursuant to ss.82(3) and 97 of the Bankruptcy Ordinance (Cap.6) and r.158 of the Bankruptcy Rules (Cap.6A, Sub.Leg.), on the following questions:

(a) Whether the entitlement of Mr Ng under the Subsidized School Provident Fund Rules (the Benefits and the Rules respectively) formed part of his estate under ss.43 and 2 of Cap.6 and vested in the Official Receiver and trustee pursuant to s.58 of Cap.6;

(b) Whether on Mr Ng’s automatic discharge from bankruptcy the Benefits remained vested in the Official Receiver and trustee;

(c) Whether s.85(3) of the Education Ordinance (Cap.279) prevents the Benefits from automatic statutory vesting in the Official Receiver and trustee;

(d) Whether the Official Receiver and trustee is entitled to all payments due under the Rules which would otherwise be due to Mr. Ng; and

(e) Whether Mr Ng is entitled to claim any proportion of the Benefits attributable to his service and contribution after bankruptcy or his discharge from bankruptcy.” 

23.This court notes that Mr Wong, for the Applicant here, also appeared for Mr Ng in the Ng Shiu Fan case.  He appeared on his own before Kwan J (as he then was) and run more or less the same arguments including his arguments on Article 25 of the Basic Law which requires that all Hong Kong residents shall be equal before the law and Article 36 which provides that Hong Kong residents shall have the right to social welfare in accordance with the law and that welfare benefits and retirement security of the labour force shall be protected by law.

24.In Re Ng Shiu Fan [2008] 4 HKLRD 813, Kwan J (as she then was) at §§41 – 50, 53 – 58 comprehensively dealt with the arguments advanced by Mr Wong as follows:

“ Construction of s.85(3) of the Education Ordinance

41. By virtue of s.43(6) of the Bankruptcy Ordinance, s.43(1) which provides that a bankrupt’s estate comprises all property belonging to or vested in the bankrupt at the commencement of the bankruptcy has effect ‘subject to the provisions of any enactmentnot contained in this Ordinance under which any property is to be excluded from a bankrupt’s estate’. Thus, it is recognised by the legislature that provision may be made in other statutes to exclude the property from a bankrupt’s estate so this would not pass to a trustee in bankruptcy.

42. The Education Ordinance was enacted in 1971. Amendments were made to it from time to time, with the latest amendments in 2007. Section 85(1) provides that the Chief Executive in Council may make rules for the purpose of maintaining any provident fund, whether established before or after the commencement of the Ordinance, for the benefit of teachers employed by schools to which grants in aid or subsidies are made by the Government.

43. The Rules in the present case were made under s.53 of the repealed Education Ordinance, and continue to have the like effect as if they had been made under s.85 of Cap. 279.

44. The crucial provision, s.85(3), reads as follows:

Subject to any rules made under sub-s.(1), no contribution or donation to or dividend or interest on a dividend from a provident fund shall be assignable or transferable or liable to be attached, sequestered or levied upon, for or in respect of any debt or claim whatsoever.

45. Mr. Man submitted that the provision in s.85(3), which prohibits assignment, transfer or the taking of property by execution to satisfy a debt or claim, is not sufficient to prevent the Benefits from vesting in the trustee. He contended that an additional express provision—that pension benefits should not pass to the trustee upon bankruptcy—would need to be included in the statutory scheme for effective protection to be given to the pension rights from the claims of creditors in a bankruptcy. He prayed in aid the distinction drawn by Mummery LJ in Patel v Jones at 927, para. [40], between regulations against voluntary assignment or charging of pension benefits, which do not prevent statutory vesting in the trustee in bankruptcy, and regulations expressly providing that pension rights shall not pass to a trustee in bankruptcy.

46. Mr Wong submitted that it would not be right to rely on thekind of distinction drawn in Patel v Jones, as, unlike the legislaturein the United Kingdom, the Hong Kong Legislature has never made that kind of distinction in the enactments passed in relation to pension rights. Hence, it is not possible to say, as in Krasner v Dennison & Others, that the local legislature must be taken to have made a deliberate choice not to provide protection to the pension benefits under the Rules. One cannot infer from the absence of an explicit provision that pension benefits should not pass to the trustee in bankruptcy that the legislature had intended to include or exclude the benefits under the Rules from the estate of a bankrupt. He submitted that the correct approach in construing s.85(3) is to consider the ordinary meaning of the words and phrases in question, without regard to English legislation.

47. I have no problem with that approach. My difficulty is that in applying the ordinary and proper meaning of the relevant words and phrases — that the pension benefits shall not be ‘assignable or transferable or liable to be attached, sequestered or levied upon, for or in respect of any debt or claims whatsoever’ — I am unable to see how these words could be stretched beyond their ordinary meaning to cover the situation where the Benefits are to vest in the trustee in bankruptcy without any assignment or transfer (s.58(1), (2) and (3) of the Bankruptcy Ordinance).

48. Besides, even though the Hong Kong legislature has not enacted express provisions that pension benefits shall not pass to a trustee in bankruptcy, legislative provision has been made, in the Hong Kong War Memorial Pensions Ordinance, that the pension benefit under that Ordinance ‘shall not pass to any other person by operation of law’. In the case of officers in public service and judicial officers, express provisions were made in the statutes that pensions shall cease on bankruptcy, with discretion to the Chief Executive to make payments prior to discharge, and the restoration of pensions on discharge. I do not accept Mr Wong’s submission that such relevant provisions in the Pensions Ordinance, the Pension Benefits Ordinance, and the Pension Benefits (Judicial Officers) Ordinance do not have the effect of excluding the vesting of pension benefits in the trustee in bankruptcy.

49. In my view, it would not be correct to infer that legislative choice has not been made in Hong Kong in the past to give protection to certain kinds of pension rights in the event of bankruptcy of the pensioner.

50. No wording comparable to the Hong Kong War Memorial Pensions Ordinance was used in s.85(3). Section 85(3) does not even provide that any purported disposition of the pension benefit to the contrary is void and of no effect, unlike s.16(1) of the Mandatory Provident Fund Schemes Ordinance, or s.29(1) of the Widows and Orphans Pension Ordinance. So, for present purpose, there is no need to resolve the difficulty left open in Lucas v Harrisat p.139 of the effect of such an avoidance provision in a statute in the case of bankruptcy.

53. Mr Wong also urged upon the court it would be anomalous and harsh to hold that the Benefits should vest in the Official Receiver.

54. It would be anomalous, because on the fact of the wording in s.85(3), a person with the right to pension benefits may not assign or transfer his right to pay his debts, and his creditors who have obtained judgment may not levy execution on this right. However, once he is made bankrupt, this right would be vested in his trustee in bankruptcy for the benefit of his creditors (see similar reasoning in Lucas v Harris at pp.137–138). The apparent objective of s.85(3) in providing for the non-alienability of the pension benefit to secure for the recipient member a source of income to meet his financial needs on retirement would be frustrated.

55. It would be harsh, because a person who was made bankrupt and discharged from bankruptcy many years ago would find that, on retirement, he would stand to lose all the contributions he had made to the Fund, all the Government’s donations and all the dividends declared, as his trustee in bankruptcy would receive those benefits and apply them to satisfy the claims of his creditors in the bankruptcy.

56. I acknowledge the force of these submissions. However, the wording of s.85(3) plainly does not prevent or prohibit the Benefits from vesting in the Official Receiver. The words used in that provision are not reasonably capable of being construed in such a way to bring about the result argued for Mr Ng, desirable though it may be from a social perspective, in that a person who has contributed to a pension scheme during his working life and saved up for his retirement should have his right protected.

57. As to Mr Wong’s arguments on art.25 of the Basic Law (which requires that all Hong Kong residents shall be equal before the law) and art.36 (which provides that Hong Kong residents shall have the right to social welfare in accordance with law and that welfare benefits and retirement security of the labour force shall be protected by law), there is no inequality before the law, the different treatment of the pension rights of civil servants and teachers in subsidized schools upon bankruptcy is not a difference based on discrimination on the ground of status. I do not read art.36 as requiring all pension rights should fall outside the bankruptcy regime, disregarding that creditors have a right to payment of their lawful debts.

58. I hold that s.85(3) does not affect the vesting of the Benefits in the Official Receiver by virtue of s.58 of the Bankruptcy Ordinance.” (Emphasis added)

25.As for the principle in Re Condon, ex p James,Kwan J (as she then was) in §§68, 81 – 82 said:

“ 68. The last issue is whether I should apply the principle in Re Condon, ex p James (1873-74) LR 9 Ch App 609. It was argued for Mr Ng that the bankruptcy court should direct the Official Receiver not to retain the Benefits for distribution among the creditors as it would be contrary to just dealing for a trustee in bankruptcy, as an officer of the court, to act in that way.

81. As Mr Ng had assumed the risk that he was mistaken about the law on the vesting of the Benefits in the trustee, it does not appear to me there is anything unfair or unjust for the Official Receiver to retain the Benefits to which the trustee is entitled under the law. In my view, the Official Receiver has not taken anunfair advantage of Mr Ng, there was no dishonourable behaviour or a threat of dishonourable behaviour. Although under the principle in Re Condon, ex p James, the court has a discretionary jurisdiction to disregard a legal right, that discretion must be exercised on judicial principles. Where statutory provisions either expressly or by necessary implication clearly precluded the course of conduct which the principle in Re Condon,ex p James would otherwise have supported, the principle would not be given weight in that situation. Otherwise, the bankruptcy court would be free to override a piece of legislation if it is of the view that such legislation does not meet the court’s standard of justice or fairness in a given situation.

82. Here, the difficulties that arose were as a result of the provisions made by the Legislature.  To paraphrase the words of Slade LJ in Re TH Knitwear (Wholesale) Ltd at p.291B–C, there is nothing which should or need affect the conscience of the Official Receiver if he proceeds to distribute the assets in accordance with the ordinary rules of law and equity without regard to Mr Ng’s claim, which has no legal basis.  Whilst the Official Receiver should act honourably as an officer of the court, he is also duty bound to gather all property which properly belonged to the bankrupt’s estate.”

26.The case then went to the Court of Appeal.  Tang VP (as he then was) held that:

(1)   The ruling of Kwan J (as she then was) was upheld.  Tang VP (as he then was) agreed with Kwan J that:

(a) The combined effect of the relevant statutory provisionsis that pension benefits of an adjudicated bankrupt would form part of his or her estate and would have vested in the Official Receiver in the absence of an effective non-alienation provision.

(b) Subsequent discharge from bankruptcy does not have the effect of transferring the ownership of the pension benefits back to him or her.  The pensions benefit would remain vested in the Official Receiver after his or her discharge.

(c) Insofar as section 83(3) of the Education Ordinance is concerned, Tang VP (as he then was) said:

“ 16. I agree with the learned Judge that the fact that ‘no contribution or donation to or dividend’ shall be ‘assignable or transferrable’ would not preclude the automatic vesting of the Benefits under s.58(3) of the Bankruptcy Ordinance.”

(2)   A bankrupt is entitled to the proportion of the benefits attributable to his service and contribution after his discharge from bankruptcy (§53).  Tang VP (as he then was) said:

“ 48. I do not believe that a ‘high-minded person’ would have wished to retain the post discharge Benefits.”

27.It is clear to me that all the questions raised in the Summons have been decisively answered in the case of Ng Shiu Fan, both by Kwan J (as she then was) and the Court of Appeal.  As stated previously, this court must follow the Court of Appeal’s decision.

THE DOCTRINE OF PRECEDENT (STARE DECISIS)

28.The doctrine of precedent is a fundamental principle in our legal system.  In Secretary for Justice v Cheng Kam Mun [2015] 5 HKLRD 41, Anderson Chow J at §§24, 26 – 29 said:

“ 24. Mr Dawes argues that the decision of the Court of Appeal in the Effiscient case was reached per incuriam, in that the Court ofAppeal’s attention was not drawn to various conflicting provisions in the Rules of High Court, ….

26. It is with no disrespect to Mr Dawes that I do not propose to examine in detail the merits of his submissions regarding the true construction of O.52 r.3(2), for I am clearly of the opinion that whatever may be my view regarding the true meaning and effect of O.52 r.3(2), I am bound by the decision of the Court of Appeal in the Effiscient case. The holding that entering an originating summons for hearing means issuing a notice of appointment to hear the originating summons was plainly an essential step in the reasoning of the Court of Appeal in that judgment and accordingly forms part of the ratio decidendi of that case. It is also clear that the doctrine of per incuriam cannot be relied upon by a judge at the first instance to refuse to follow a directly relevant decision of the Court of Appeal: see R v Pau Chi Keung and Cheung Hei Lai [1987] HKLR 1148, 1152, per Fuad JA (delivering the judgment of the Court of Appeal comprising also Cons V-P and Clough JA).

27. If any further authority is needed, I can do no better than refer to the opinion of Lord Hailsham of St Marylebone in Broome v Cassell & Co Ltd (No.1) [1972] AC 1027, 1054:

… I am driven to the conclusion that when the Court of Appeal, described the decision in Rookes v Barnard as decided ‘per incuriam’ or ‘unworkable’, they really only meant that they did not agree with it. But, in my view, even if this were not so, it is not open to the Court of Appeal to give gratuitous advice to judges of first instance to ignore decisions of the House of Lords in this way …. The fact is, and I hope I will never be necessary to say again, that the hierarchical system of courts which exists in this country, it is necessary for each lower tier … to accept loyally the decisions of the higher tiers.

28. In my view, this statement applies with equal, if not greater,force to a judge sitting at the first instance when invited not to follow a decision of the Court of Appeal.

29. Mr Dawes has referred me to the decision of Deputy High Court Judge Lugar-Mawson sitting at the first instance in Wong Kwai On v Leung Wing Cheong [1999] 2 HKLRD 779, where the learned judge apparently did not follow an earlier decision of the Court of Appeal in Wong Wai Chi Ann v Cheung Kwok Fung Wilson [1996] 3 HKC 287 on the ground the decisionwas at variance with a binding statutory rule.  With great respect to the learned judge, I do not consider this to be a permissible route for a judge at first instance to take.  In my view, if it is considered that the decision of the Court of Appeal in the Effiscient case is incorrect, the only way to achieve a reversal of that decision would be take the matter to the Court of Appeal (or the Court of Final Appeal) or amend the rules.”

29.I am of the view that Anderson Chow J’s reasoning is undoubtedly correct and this court is bound by the Court of Appeal’s decision in Ng Shiu Fan. The correct approach should be for the Applicant to duly inform the court that it is indeed bound by the Court of Appeal’s decision in Ng Shiu Fan.  The court could then dismiss the Summons and the Applicant could then take the case to a higher court with minimum costs and time.  This is particularly so when the Applicant is legally aided.  Instead of adopting the correct approach, Mr Wong for the Applicant sought directions from this court to argue the Summons substantively on why the relevant sections as set out in the Summons are inconsistent with the Basic Law.  He also submitted that the Court of Appeal had not considered the Basic Law points as set out in the Summons.

30.I should also mention that Mr Wong, for the Applicant, clearly knew that the Basic Law points were argued by him before Kwan J (as she then was), but were not pursued before the Court of Appeal because he appeared in Ng Shiu Fan both before Kwan J (as she then was) and the Court of Appeal.

APPLICATION FOR AMENDMENTS TO THE SUMMONS

31.This court is not impressed by the approach adopted by the Applicant.  This is particularly so when:

(1)  The Applicant took out a summons to amend the Summons on21 September 2018 (Friday), just a few days after the call-over hearing on 18 September 2018 at which he sought directions for substantive hearing of the Summons on 27 September 2018.  The proposed amendments sought to be introduced were:

(a)  A new relief that under the new §2 that:

“ Further or alternatively, for a declaration that s.85(5) of the Education Ordinance, Cap.279 is or are constitutional.”

(b)  A new ground under §3(1)(c) that:

“ … Whether the following statutory provisions, on their natural construction and meaning, are inconsistent or incompatible with Articles 25 and 36 of the Basic Law (‘Basic Law Articles’) and/or Articles 1(1) and 22 of the International Covenant on Civil and Political Rights as incorporated by section 8 of the Hong Kong Bills of Rights Ordinance, Cap. 383 (‘ICCPR Articles’)

…

(c)   Section 85(4) of the Education Ordinance, Cap. 279 has no retrospective effect by virtue of section 85(5) of the same Ordinance.”

(2)   On 24 September 2018 (the following Monday), Mr Wong for the Applicant filed his skeleton submissions (the “Applicant’s Skeleton Submissions”).  §§2 – 8 of the Applicant’s Skeleton Submissions read as follows:

“ 2. The Application was taken out on 12 April 2018.

3. However, the Applicant now applies for leave to amend the original application to:-

(a) add a new §2;

(b) amend the original §2(b), which is now §3(b); and

(c) to add a new §3(c).

4. It is submitted that the amendment is to refine the relief sought and also to include s.85(5) of the Education Ordinance, Cap.279. As will be seen below, the amendments sought relate to form instead of substance, and the Applicant asks for leave to be given.

5. Under the original or if leave is granted then the amended Summons, this application is fundamentally premised on two bases:-

(a) that the following statutory provisions vesting the Pension Benefits in the trustee in bankruptcy are unconstitutional under the Basic Law or the International Covenant on Civil and Political Rights as incorporated by s.8 of the Hong Kong Bill of Rights Ordinance, Cap.383;

ss.2, 43 & 58 of the Bankruptcy Ordinance, Cap. 6

s.85(3) of the Education Ordinance, Cap. 279

(s.85(5) of the Education Ordinance, Cap. 279 under the amended Summons)

(b) alternatively, that the applicant is entitled to retain the entirety of the Pension Benefits under the rule in Re Cordon, ex p James (1873-74) LR 9 Ch App 609.

6. It shall be expressly stated at the start that the Applicant acknowledges that the Court of Appeal decision in Re Ng Shiu Fan [2009] 4 HKLRD 774 is binding on this Court.

7. However,

(a) the issue of constitutionality of the relevant statutory provisions was not placed before or was not considered by the Court of Appeal in the Ng Shiu Fan case;

(b) as for the rule in Re Cordon, ex p James, the Applicant pursues this ground of application and argues that the rule ought to be applied to the full extent of the Pension Benefits notwithstanding the decision of the Court of Appeal.” (Emphasis added)

32.First, it is immediately apparent to the court the proposed amendments were nothing but substantial.  On any analysis, they could not be said to relate to “form instead of substance”.

33.Secondly, whilst the Applicant conceded that the Court of Appeal decision is binding on this court, yet he proceeded to invite the court to determine the issue of constitutionality of the relevant statutory provisions as that very issue was not placed before or was not considered by the Court of Appeal in the Ng Shiu Fancase.  §54 of the Applicant’s Skeleton Submissions reads:

“ 54. It is submitted that the findings on constitutionality in the Ng Shiu Fan case at first instance is not binding on this Court. In any event, the circumstances have further developed since that decision when the Legislature decidedly amended the MandatoryProvident Funds Schemes Ordinance and the Education Ordinance, such that the earlier findings of Her Ladyship are no longer applicable.”

34.Insofar as the rule in Re Condon, ex p James is concerned, the Applicant submitted that:

“ 73. When the CA applied the rule in Re Cordon, ex p Jamesin the Ng Shiu Fan case, it did not have the benefit of the reaction of the Legislature to its decision (or the Court below). The matter was decided in the context of the Court of First Instance reaching a conclusion that, as stated by Kwan J (as she then was) at §49 P.830 of the Ng Shiu Fan case at first instance,

‘ In my view, it would not be correct to infer that legislative choice has not been made in Hong Kong in the past to give protection to certain kinds of pension rights in the event of bankruptcy of the pensioner.’”

35.In view of the Applicant’s Skeleton Submissions, this court circulated the case of Secretary for Justice v Cheng Kam Mun [2015] 5 HKLRD 41 to the parties on 26 September 2018.

THE HEARING ON 27 SEPETMBER 2018

36.At the hearing Mr Wong for the Applicant submitted that he had read the case of Secretary for Justice v Cheng Kam Mun [2015] 5 HKLRD 41 but did not know what was the concern.  I was a bit taken aback by such submission. I told Mr Wong, for the Applicant, that in view of the Court of Appeal’s decision in Ng Shiu Fan and the case of Secretary for Justice v Cheng Kam Mun, this court is bound by the Court of Appeal’s decision even if it had not taken into consideration of the Applicant’s constitutional points.  Mr Wong, for the Applicant, then submitted that:

“ It depends on whether section 85(5) is constitutional. If it is unconstitutional, I succeed.”

37.This shows clearly that the amendments are not merely related to form.  The application for amendments came very late and if allowed, it would inevitably result in an adjournment of the hearing.  There was no explanation for the late amendments except for Mr Wong’s submissions that there was an additional ground.  I was minded to dismiss the Summons and the application to amend the Summons.  However, Mr Wong submitted that if this court were to dismiss the Summons and the application for amendments, the Applicant would take out a new application under section 85(5) subsequently.

38.Most reluctantly, I allowed the application for amendments and adjourned the Summons as amended for substantive arguments but also made it clear to the parties that I had concluded that the Summons prior to amendments had to be dismissed as this court is bound by the Court of Appeal’s decision in Ng Shiu Fan.

39.In order to be focused, and of course also to save time and costs, I directed that at the adjourned hearing, the parties only need to address the court on the additional constitutional challenge as set out in the Summons as amended (§§2 and 3(1)(c)), namely, whether section 85(5) of the Education Ordinance, or specifically, section 85(4) of the Education Ordinance which has no retrospective effect by virtue of section 85(5) of the Education Ordinance, is unconstitutional.

40.As the Applicant is legally aided, I had told Mr Wong for the Applicant that the Director of Legal Aid should be informed of the application to amend and the merits of the Summons as amended as public fund is involved.

CONSTITUTIONALITY OF SECTION 85(5) OF THE EDUCATION ORDINANCE  

41.What happened was that after the Court of Appeal’s decision in Ng Shiu Fan, efforts were made to amend the Education Ordinance in 2013 by introducing, amongst other things, the new sections 85(4) and 85(5) of the Education Ordinance.  Paragraph 1 of the Explanatory Memorandum ofthe Education (Amendment) Bill 2013 states that the new sections were added so that if a subsidized school provident fund member is an undischarged bankrupt of a bankruptcy adjudicated on or after the new section 85(4) comes into operation, his rights or entitlement to the benefits under the subsidized school provident fund are excluded from his property for the purposes of the Bankruptcy Ordinance.  The new sections 85(4) and 85(5) of the Education Ordinance read:

“ (4) If a provident fund member is an undischarged bankrupt, the right or entitlement of the member to any benefits in the fund (whether accrued, accruing or to be accrued) is excluded from the property of the member for the purposes of the Bankruptcy Ordinance (Cap. 6).

(5) Subsection (4) does not apply in relation to a provident fund member’s bankruptcy that is adjudicated before that subsection comes into operation.”

42.Mr Wong, for the Applicant, submitted that section 85(5) is unconstitutional because it infringes the principle of equality.  Mr Wong’s submission comes down to this, without retrospective effect, there is a difference of treatment between those teachers who were adjudicated bankrupt before section 85(4) came into operation, ie, 28 June 2013 (the “Effective Date”) and those who were adjudicated bankrupt after the Effective Date.

43.I must say that this submission struck me as completely devoid of merits. The legislative amendments were effected so as to confer new rights and/or benefits upon those teachers who were adjudicated bankrupt after the Effective Date.  A line has to be drawn somewhere.  Testing Mr Wong’s submission by pushing it to its logical conclusion, it would mean that whenever the Government, by public policy, confers new or additional benefits upon citizens of Hong Kong, it has to do so both prospectively and retrospectively, otherwise such public policy and the relevant legislation would have infringed the principle of equality.  With respect, this cannot be right.

44.The Official Receiver put in a very helpful report (the “Official Receiver’s Report”).  The following paragraphs are highly relevant:

“ 30. The general presumption against retrospective operation of legislation guarantees certainty of the law; it would therefore require strong justifications to displace it. Referring to the Legislative Council Brief and the Background Brief (copies of which are exhibited under ‘LPM-6’ and ‘LPM-7’), the Government was well aware of the presumption against the retrospective operation of EO section 85(4) during its enactment stage; the inclusion of EO section 85(5) was merely for avoiding any doubt given the serious policy concerns (to be elaborated below). At the second reading debate of the Bill on 19 June 2013, the non-retrospective operation of the EO section 85(4) was also acknowledged by several members of the Legislative Council who had spoken without any query thereon ….

Public policy concerns against retrospective operation of EO section 85(4)

33. Other than the general presumption against retrospective operation of newly enacted legislation, the OR also notes that there would be serious public policy concerns if EO section 85(4) were to have retrospective effect. Such public policy concerns include but are not limited to the need to protect and give due regard to the legitimate rights of creditors as well as the public interest in the proper administration of bankrupts’ estates.

34. While it is undeniable that, as a retirement scheme, the SSPFserves to provide teachers subject thereto with a retirement security, in the event of bankruptcy of such teachers, the interests of their respective creditors come into play and have to be weighed against the need to maintain their retirement security at the expense of their respective creditors. With the operation of EO section 85(5), for a bankruptcy case in which the bankrupt was adjudicated before EO section 85(4) came into operation, the bankrupt’s benefits under the SSPF would have formed part of his bankruptcy estate for use in the settlement of the bankruptcy debts. The creditors could have received dividends in settlement (whether in full or in part) of their debts in the bankruptcy, in the reasonable belief and expectation that the inclusion of the bankrupt’s benefits under the SSPF as part of the bankruptcy estate and the settlement of their debts utilizing the bankruptcy estate including such benefits was lawful and based on the correct operation of EO section 85(5). If EO section 85(4) were allowed at this juncture to operate retrospectively, one can readily anticipate that this might open upclaims against such creditors who had already received dividends in settlement of their debts.

35. Therefore, from a public policy perspective, the retrospective operation of EO section 85(4) would result in serious consequences such as the reopening of settled bankruptcy cases,challenging the stability of the administration of bankrupt’s estates. This is highly undesirable:

(a) To allow the retrospective operation of EO section 85(4) would result in a need to unravel old bankruptcies, either taking away assets from creditors who received the benefits under the SSPF payable to the respective bankrupt teachers or, if this cannot be done, making it necessary to provide public funds to compensate such teachers; when it comes to matters involving the utilization of public funds, the general understanding is that the Government shall beaccorded with a wide margin of appreciation to decide andultimately it is a matter for the legislature to scrutinize and endorse.

(b) There is also the desire not to interfere with the legitimate expectations of creditors in respect of bankruptcy cases in which the bankrupts were adjudicated bankrupt before EO section 85(5) came into operation. In addition, it cannot be said that it is ‘unfair’ for creditors to receive what they were owed by the respective bankrupt teachers. There may even be further concerns that to allow the retrospective operation of EO section 85(4) may amount to a deprivation of the legitimate right to property under BL of affected creditors (but I do not see the need to elaborate further for the time being).

36. To give a fuller picture of the extent of impact arising from the reopening of settled bankruptcy cases: EO section 85(3) was enacted back on 1952, meaning that allowing the retrospective operation of EO section 85(4) may result in claims relating to settled bankruptcy cases back to many years ago (perhaps subject to limitation). It is almost impossible for the OR to even estimate the figure of the potentially affected creditors. Further, for most, if not all, of the cases, the benefits received by the creditors may have been dissipated and it would be unfair for them to pay back the bankrupts who owed the creditors money in the first place.” (Emphasis added)

45.§§44.2 and 45 of the Official Receiver’s Report also stated that:

“ 44.2 Ultimately, decisions as to which parts of a person’s pension/retirement benefits shall be subject to vesting upon bankruptcy are questions of policy or political decisions. This is a matter for the legislature to decide after carefullybalancing the relevant interests. For example, a pensioner’s rights and entitlement to his benefits under the respective pension scheme is also not absolute; it is the legislature’s intention that such benefits may be utilised for satisfying debts due to the Government or an order of any court for the payment of money towards the maintenance of his spouse or former spouse or minor child. The Government and the legislature should be accorded with a wide margin of appreciation in this regard.”

“ 45. To declare that the relevant provisions under the BO and EO which have the collective effect of vesting the benefits under the SSPF to the OR/trustee-in-bankruptcy unconstitutional may bring huge prejudicial effect by reopening settled bankruptcy cases and challenging the stability of the administration of bankrupts’ estates ….”

46.I am of the firm view that equality and fairness must be assessed or looked at without ignoring the interests of creditors.  It must be fundamental and basic that one is obliged, both legally and morally, to repay one’s debt.  It matters not that the repayment is to come from one’s savings, whether reserved for retirement or not, or other sources of income.  That must be the starting point.  When legislation intervened so as to confer a special privilege or protection to any person’s pension benefits so that creditors’ rights of repayment is curtailed, that inevitably was a political or social policy choice of both the Government and the Legislature.

47.I must confess that I find it rather difficult to understand and accept the Applicant’s proposition that, as a matter of constitutional principle, a piece of legislation which confers a benefit or right upon citizens as from the effective date as set out in the legislation without retrospective effect is unconstitutional for infringement against the principle of equality.

48.It was Mr Wong’s submission that:

“ 37. The complaint of constitutionality in this Application is a simple one. The starting point is that the Applicant enjoys a constitutional right to equal treatment under the law (Article 25 of the Basic Law), and a right to retirement security protection (Article 36 of the Basic Law). The complaint can be described as two-folded:

(a) in the context where the Applicant being formerly a teacher of an aided school, his retirement security has been deprived by virtue of s.85(5) of the Education Ordinance when there is no identical similar provisions for other pension related legislations (‘Narrow Context’)

(b) in the context where generally members of the work force who were made bankrupt before the new legislative provisions came to force would be deprived of retirement security when members who were made bankrupt afterwards would not (‘Wider Context’)”

49.I am not convinced that the above analysis is correct.  First, there is simply no deprivation of benefits by virtue of section 85(5).  The Applicant’s legal rights (including common law rights) to his pension benefits are set out by the Court of Appeal in Ng Shiu Fan.  The new legislation conferred (and not deprived) additional pension benefits or rights as from the Effective Date of the legislation.  There is simply no deprivation of rights or benefits.

50.Secondly, it is incorrect to consider the pension benefits of the general member of the work force.  Their pension benefits are not all governed by the Education Ordinance.  This application is only concerned with the constitutionality of the Education Ordinance.

Approach of the court in a constitutional challenge

51.This court is greatly assisted by the helpful and comprehensive submissions of Mr Liu of the Department of Justice who represented the Official Receiver at this hearing.  The general approach of the court in dealing with a constitutional challenge has been succinctly set out in the judgment jointly delivered by Fok PJ and Stock NPJ in Official Receiver v Zhi Charles(2015) 18 HKCFAR 467 at §§22 – 23 where the learned judges held:

“ 22. There is a well-established sequence of questions that must be addressed when an issue of constitutionality is raised before a court. The first question is concerned with the identification of a constitutional right and asks whether such a right is engaged. If not, the constitutional challenge fails in limine. The next question is whether the legislative provision or conduct complainedof amounts to an inference with, or restriction of, that right. Again, if the answer is no, the challenge fails without further inquiry. If, on the other hand, the answer to that question is yes, then it is necessary to consider whether those rights are absolute, in which case no infringement or restriction is permitted and no question of proportionality arises, or, if not absolute, whether the relevant infringement or restriction can be justified on the proportionality analysis.

23. The proportionality analysis in a case like the present involves asking, first, whether the infringement or restriction pursues a legitimate societal aim; secondly, whether the infringement or restriction is rationally connected with that legitimate aim; and thirdly, whether the infringement or restriction is no more than is necessary to accomplish that legitimate aim.” (Emphasis added)

52.In Hysan Development Co Ltd v Town Planning Board (2016) 19 HKCFAR 372, Ribeiro PJ at §§65, 67, 73, 76 and 78 said:

“ 65.   However, a substantial body of authority exists for addinga fourth step, as exemplified by Lord Sumption JSC’s judgment inthe Bank Mellat v Her Majesty’s Treasury (No.2) case cited above. Indeed, in common law jurisprudence, a four-step approach can be found dating back to the important judgment in 1986 of Dickson CJ in R v Oakes dealing with proportionality in the context of s.1 of the Canadian Charter of Rights and Freedoms.  Section 1 limits derogations from guaranteed rights to those which ‘can be demonstrably justified in a free and democratic society’.  Dickson CJ held that for such justification to be shown, the objective of the restriction had to be of sufficient importance to warrant overriding the guaranteed right; that the means chosen had to be proportionate, balancing the interests of society and individuals or groups; and that such means had to be rationally connected to the objective and such as to impair the constitutional right ‘as little as possible’.  His Honour added that ‘there must be a proportionality between the effects of the measures which are responsible for limiting the Charter right or freedom, and the objective which has been identified as of “sufficient” importance’.  As McLachlin J explained in RJR-MacDonald Inc v A-G of Canada, the final stage of the proportionality analysis involves ‘balancing the negative effects of the infringement of rights against the positive benefits associated with the legislative goal’.  And as her Honour there pointed out, it is only necessary to consider this fourth step if the first three requirements of legitimate aim, rational connection and minimal impairment are satisfied.

67.   A four-step approach appears now to be generally accepted in the United Kingdom.  As Lord Reed JSC puts it in the Bank Mellat v Her Majesty’s Treasury (No.2) case: ‘… the question at step four is whether the impact of the rights infringement is disproportionate to the likely benefit of the impugned measure.’  And as Baroness Hale of Richmond DPSC states in R (Lord Carlile of Berriew) v Secretary of State for the Home Department, the fourth question ‘can be encapsulated as “do the ends justify the means”?’

73.   In my view, the case for accepting in principle the applicability of a fourth step in the proportionality analysis is logically compelling although in the great majority of cases, its application would not invalidate a restriction which has satisfied the requirements of the first three stages of the inquiry.  One would hope and expect that most laws and governmental decisions at the sub-constitutional level internally reflect a reasonable balancebetween the public interest pursued by such laws and the rights of individuals or groups negatively affected by those laws. In such cases, where the law passes the first three tests, it would be unlikelyto fail the test of proportionality stricto sensu (in the narrow, overall sense) at the fourth stage.  But one may exceptionally be faced with a law whose content is such that its application produces extremely unbalanced and unfair results, oppressively imposing excessive burdens on the individuals affected.

76.   The fourth step therefore requires the Court to examine the overall impact of the impugned measure and to decide whether a fair balance has been struck between the general interest and the individual rights intruded upon, the requirement of such a fair balance being inherent in the protection of fundamental rights ….

78.   While in the great majority of cases the result arrived at after undertaking the first three inquiries is unlikely to be changed by it, a four-step analysis should, in my view, be explicitly adopted in Hong Kong.  Without its inclusion, the proportionality assessment would be confined to gauging the incursion in relation to its aim. The balancing of societal and individual interests against each other which lies at the heart of any system for the protection of human rights would not be addressed.  This requires the Court to make a value judgment as to whether the impugned law or governmental decision, despite having satisfied the first three requirements, operates on particular individuals with such oppressive unfairness that it cannot be regarded as a proportionate means of achieving the legitimate aim in question.  But that should not cause the Court to shy away from the fourth question since such a value judgment is inherent in the proportionality analysis ….”

Question 1: Whether any rights under Articles 1(1) and 22 of the International Covenant on Civil and Political Rights as incorporated by section 8 of Hong Kong Bill of Rights Ordinance, Cap 383 (“ICCPR Articles”) and Article 25 of the Basic Law are engaged

53.Article 1(1) of the ICCPR Articles provides:

“ The rights recognized in this Bill of Rights shall be enjoyed without distinction by any kind, such as race, colour, sex, language, religion, political or other opinion, national or social origin, property, birth or other status.”

54.Article 22 of the ICCPR Articles provides:

“ All persons are equal before the law and are entitled without any discrimination to the equal protection of the law. In this respect, the law shall prohibit any discrimination and guarantee to all persons equal and effective protection against discrimination on any ground such as race, colour, sex, language, religion, political or other opinion, national or social origin, property, birth or other status.”

55.Mr Liu for the Official Receiver submitted that in the area of law concerning equality and discrimination, the question of engagement of rights is important.  In Fok Chun Wa v Hospital Authority (2012) 15 HKCFAR 409, Ma CJ at §57(1) said:

“ The first stage is at the outset to identify the comparators: in everychallenge based on equality, the person complaining is comparing his position with someone who is said to be in a comparable position. The question is asked: are these persons in comparable positions?”

56.In Kong Yunming v Director of Social Welfare [2012] 4 HKC 180, Lam J (as he then was) at §183 said:

“ There is no right to equal treatment in all cases irrespective of thedifferences between the situation of a claimant and another person. When the court addresses the question as to the relevance of a particular difference in personal characteristic, it is not seeking justification for restriction of the right to equality. Rather, the court examines the prior question of whether the right of equality is engaged at all.”

57.I agree with Mr Liu’s submission that the disputed differential treatments are not based on any of the specific grounds as set out in Articles 1(1) and 20 of the ICCPR Articles.  The relevant comparator here, namely, the date of bankruptcy, clearly has got nothing to do with race, colour, sex, language, religion, political or other opinion, national or social origin, property or birth.  This was not disputed by Mr Wong for the Applicant.  Hence, the only issue is whether date of bankruptcy would constitute “other status”.  I am of the view that the answer is no.

58.In Re Malcolm [2005] 1 WLR 1238, the applicant entered into a retirement annuity contract while he was self-employed. He was made bankrupt in December 1996 with the result that, under the law then in force, the pension contract formed part of his estate, pursuant to sections 283(1) and 436 of the Insolvency Act 1986, and vested in his trustee in bankruptcy.  On his automatic discharge from bankruptcy the assets remained vested in the trustee for the purpose of paying the outstanding bankruptcy debts.  In July 2002 the trustee sought to obtain the benefit of the pension contract for distribution among the remaining creditors.  The applicant applied in the bankruptcy proceedings for an injunction to restrain the trustee on the ground that the trustee’s proposed use of his pension  contract unlawfully discriminated against him in the peaceful enjoyment of his possessions, contrary to article 14 of the Convention for the Protection of Human Rights and Fundamental Freedoms, as scheduled to the Human Rights Act 1998, read with article 1 of the First Protocol, since it disadvantaged the applicant on retirement as compared with an employee member of an occupational pension scheme with a forfeiture clause, who did not lose pension benefit on bankruptcy.  Chadwick LJ at §27 said:

“ … It seems to me that, upon a true analysis, the differential treatment in bankruptcy of the contractual pension rights of the self-employed and the pension rights of those employees who are members of an occupational pension scheme set up by way of trust which (under the trust provisions) provides for forfeiture of rights on bankruptcy is not a difference of treatment based on discrimination on the ground of status—or on any other ground which offends that article. For the reasons already set out, the differential treatment under the Insolvency Act 1986 does not arise from a difference in the treatment of persons (of differing status) having the same or similar rights. The differential treatment arises because contractual pension rights fall within the description of property for the purposes of the Act and the rights of a beneficiary under an occupational pension scheme (after forfeiture on bankruptcy) do not fall within that description.”

   (Emphasis added)

59.In Springett and Others v United Kingdom [2010] ECHR 771, the applicants’ requests for payment under the Winter Fuel Payment Scheme was refused on the basis that they had left the United Kingdom before a specific point of time when a change of the relevant policy was introduced.  This gave rise to the question of whether the moment in time that a person left the country for emigration purposes would constitute a ground of discrimination covered by Article 14 of the ECHR.  In dismissing the applicants’ claim, the ECtHR at p 6 held:

“ The Court does not consider that the fact of having, or not having acquired a right to a welfare benefit can be considered to be an aspect of personal status within the meaning of Article 14. Unlike the principal grounds set out in Article 14, such as ‘sex’, ‘race’ or ‘colour’, it is not an innate characteristic which applies from birth. Furthermore, unlike ‘religion’, ‘political or other opinion’ or even place of residence, the fact of having acquired a right to a benefit does not relate to a core or personal belief or choice.” (Emphasis added)

60.In Kjeldsen, Busk Madsen and Pedersen v Denmark (1976) 1 EHRR 711, the ECtHR at §56 held:

“ The Court first points out that Article 14 prohibits, within the ambit of the rights and freedoms guaranteed, discriminatory treatment having as its basis or reason a personal characteristic (‘status’) by which persons or groups of persons are distinguishable from each other.”

61.In Financial Services and Systems Ltd v Secretary for Justice, unreported, HCAL 101/2006, 6 August 2017, Fung J held that the differential treatments between registered Chinese medical practitioners and listed Chinese medical practitioners were not based on any personal characteristics and hence the claim based Article 22 of the ICCPR Articles was dismissed.

62.Of course, in Re Ng Shiu Fan [2008] 4 HKLRD 813, Kwan J (as she then was) at §57 most relevantly said:

“ As to Mr Wong’s arguments on art.25 of the Basic Law (which requires that all Hong Kong residents shall be equal before the law) and art.36 (which provides that Hong Kong residents shall have the right to social welfare in accordance with law and that welfare benefits and retirement security of the labour force shall be protected by law), there is no inequality before the law, the different treatment of the pension rights of civil servants and teachers in subsidized schools upon bankruptcy is not a difference based on discrimination on the ground of status. I do not read art.36 as requiring all pension rights should fall outside the bankruptcy regime, disregarding that creditors have a right to payment of their lawful debts.” (Emphasis added)

63.Mr Liu fairly draw to the attention of the court that the ECtHR has in some cases, such as in Ackermann v Germany (App No 71477/01), G v Austria (App No 10094/82), X v Austria (App No 7624/76) and Matheis v Germany (App No 7371/01), appeared to have expanded the scope of “other status” by including situations beyond innate personal characteristics, such as situations that could loosely be described as impacting on personal circumstances, including a person’s occupation, or a person’s status as a civil servant or as an employee in the private sector.  (See also R (Carson) v Work and Pensions Secretary [2006] 1 AC 173.)

64.In R (RJM) v Secretary of State for Work and Pensions (Equality and Human Rights Commission intervening) [2009] 1 AC 311, Lord Walker at §5 said:

“ The other point on which I would comment is the expression ‘personal characteristics’ used by the European Court of Human Rights in Kjeldsen, Busk Madsen and Pedersen v Denmark (1976) 1 EHRR 711, and repeated in some later cases. ‘Personal characteristics’ is not a precise expression and to my mind a binary approach to its meaning is unhelpful. ‘Personal characteristics’ are more like a series of concentric circles. The most personal characteristics are those which are innate, largely immutable, andclosely connected with an individual’s personality: gender, sexual orientation, pigmentation of skin, hair and eyes, congenital disabilities. Nationality, language, religion and politics may be almost innate (depending on a person’s family circumstances at birth) or may be acquired (though some religions do not countenance either apostates or converts); but all are regarded as important to the development of an individual’s personality (they reflect, it might be said, important values protected by articles 8, 9 and 10 of the Convention). Other acquired characteristics are further out in the concentric circles; they are more concerned with what people do, or with what happens to them, than with who they are; but they may still come within article 14 (Lord Neuberger instances military status, residence or domicile, and past employment in the KGB). Like him, I would include homelessness as falling within that range, whether or not it is regarded as a matter of choice (it is often the culmination of a series of misfortunes that overwhelm an individual so that he or she can no longer cope). The more peripheral or debateable any suggested personal characteristic is, the less likely it is to come within the most sensitive area where discrimination is particularly difficult to justify. There is an illuminating discussion of these points (contrasting Strasbourg jurisprudence with the American approach to the Fourteenth Amendment) in the speech of Baroness Hale of Richmond in AL (Serbia) v Secretary of State for the Home Department [2008] 1 WLR 1434, paras 20 – 35.”

65.Lord Neuberger of Abbotsbury at §45 said:

“ Further, while reformulations are dangerous, I consider that the concept of ‘personal characteristic’ (not surprisingly, like the concept of status) generally requires one to concentrate on what somebody is, rather than what he is doing or what is being done tohim. Such a characterisation approach appears not only consistent with the natural meaning of the expression, but also with the approach of the ECtHR and of this House to the issue.”

66.Lord Mance JSC in R (on the application of Stott) v Secretary ofState for Justice [2018] UKSC 59, [2018] 3 WLR 1831 at §§228 – 229 said:

“ 228. The first question in these circumstances is whether Mr Stott can claim to have an ‘other status’ for the purposes of invoking article 14 of the ECHR. I agree with Lady Black JSC that he can. I accept that the requirement of an ‘other status’ cannot simply be ignored, or subsumed in the question whether any discrimination is unjustified. This is for at least three reasons. First, the language of article 14 states that there must be discrimination on a ground ‘such as’ those specified, the last being ‘other status’. There would be no point in this language, if the only question was whether there was discrimination.

229. Secondly, the ECtHR has expressly accepted as much in Clift v United Kingdom (CE:ECHR:2010:0713JUD007205/07, paras 55 – 56, while at the same time stating, at para 61, that ‘any exception to the protection offered by article 14 … should be narrowly construed’. While it may be odd to speak of a criterion for the application of article 14 as an exception, the general idea is clear enough: (a) the concept of ‘status’ should be construed broadly, but (b) not every difference in treatment is on the ground of status.” (Emphasis added)

67.Mr Wong for the Applicant relied on the case of Clift v United Kingdom, The Times, 21 July 2010.  The court said, at §60:

“ The question whether there is a difference of treatment based on apersonal or identifiable characteristic … is … to be assessed taking into consideration all the circumstances of the case and bearing in mind that the aim of the Convention is to guarantee not rights that are theoretical or illusory but rights that are practical and effective ….” (Emphasis added)

68.Mr Wong submitted that the difference of treatment between those who were adjudicated bankrupt before and after the Effective Date is an identifiable characteristic.  I am of the view that such submission is clearly wrong because it would mean, contrary to what Lord Mance JSC said in R (on the application of Stott) v Secretary of State for Justice (supra), every difference in treatment would be on the ground of status.

69.By reason of the above analysis, I am of the view that none of the rights under Articles 1(1) and 22 of the ICCPR Articles is engaged.  The differential treatments are based on the date of bankruptcy.  Such comparator:

(1)  is not a personal characteristic by which persons or groups of persons are distinguished from each other;

(2)  is not an innate characteristic that applies from birth and does not relate to a core or personal belief or choice; and

(3)  has never been recognised as a personal characteristic that could loosely be described as impacting on personal circumstances.

70.Indeed, Mr Wong has not cited any case where rights under Articles 1(1) and 22 of the ICCPR Articles are engaged simply because a piece of legislation has no retrospective effect as far as social and economic policies are concerned.

71.I am of the view that the same reasoning applies to rights under Article 25 of the Basic Law which provides that:

“ All Hong Kong residents shall be equal before the law.”

72.Mr Liu reminded this court that the Hong Kong courts have not drawn a clear distinction between the right to equality before the law under Article 25 and the right to non-discrimination under Articles 1(1) and 22 of the ICCPR Articles.  Mr Wong submitted that there should be a distinction between fundamental rights and constitutional rights.  I do not agree.  As Mr Liu rightly pointed out, the real issue is whether the rights in question are non-derogable and absolute or not.  In Kong Yunming v Director of Social Welfare (2013) 16 HKCFAR 950, Ribeiro PJ at §38 said:

“ As this Court has recognized, some rights are non-derogable and absolute, in which case, no infringement is permitted and no question of proportionality arises. But in other cases, it is well-established that the law may validly create restrictions on constitutionally protected rights provided that each such restriction can be justified on a proportionality analysis.”

73.Mr Liu also submitted that the preferred approach of Hong Kong courts is to consider whether the complainant is treated less favourably than others in relevantly similar situations.  (See Director of Immigration v QT (2018) 21 HKCFAR 324 at §33.)

74.The right to equality under Article 25 of the Basic Law is not engaged if the complainant is not comparable to the persons alleged to have been treated more favourably by the Administration or the Legislature.  In deciding whether the Applicant is comparable to the other groups, the court shall also consider the arguments advanced in justifying the differential treatment.  In Fok Chun Wa v Hospital Authority (supra), Ma CJ at §58 said:

“ While perhaps in some cases, this two-stage approach can neatly be applied, it is important that it should not be regarded as if it were a statute and treated as such. A step by step approach is useful as far as it goes but it must not give rise to complicated and long-drawn out (but ultimately unproductive) arguments as to whether this step or that step has been overcome. Such arguments will often obscure the real issue in a case. This should be borne in mindwhen dealing with issues of equality when the two-stage approach is useful but must not give rise to complex and unnecessary arguments. I have been guided here by the remarks of Lord Walker of Gestingthorpe in his speech in R (Carson) v Secretary of State for Works and Pensions [2006] 1 AC 173, 194B–F ([63]). For my part, I have no objection in adopting the two-stage approach set out in Yau Yuk Lung as long as one firmly bears in mind the following points:

(1) The object of the exercise (when considering the issue of equality) is ultimately to ask a simple question and here, I would respectively adopt the way in which this was put by Lord Hoffmann in Carson, 186H ([31]), ‘is there enough of a relevant difference between X and Y [the comparators] to justify differential treatment?’

(2) In the majority of cases where equality issues are involved, it will be necessary for the Court to look at the materials which go to the three facets of the justification test before this crucial question is answered. It will be a rare case, I daresay, where the court will comfortably be able to answer this question without any recourse to the issue of justification at all. Seen in this way, it may matter not at all whether the court’s approach is seen as a two-stage one or not.

(3) Here, I associate myself with the approach of Lord Nicholls of Birkenhead in Carson, at 179C–E ([3]):

[3]   For my part, in company with all your Lordships, I prefer to keep formulation of the relevant issues in these cases as simple and non-technical as possible.  Article 14 [of theEuropean Convention on Human Rights—the equivalent of art.22 of the Bill of Rights] does not apply unless the alleged discrimination is in connection with a Conventionright and on a ground stated in art. 14. If this prerequisiteis satisfied, the essential question for the court is whether the alleged discrimination, that is, the difference in treatment of which complaint is made, can withstand scrutiny.  Sometimes the answer to this question will be plain.  There may be such an obvious, relevant difference between the claimant and those with whom he seeks to compare himself that their situations cannot be regarded as analogous.  Sometimes, where the position is not so clear, a different approach is called for.  Then the court’s scrutiny may best be directed at considering whether the differentiation has a legitimate aim and whether the means chosen to achieve the aim is appropriate and not disproportionate in its adverse impact.”

75.Adopting the above approach, I am of the view that teachers who were adjudicated bankrupt before and after the Effective Date are not in relevantly similar situations for the two main reasons already set out in the Official Receiver’s Report.  For completeness, however, I will further analyse below whether section 85(5) of the Education Ordinance is justified in differentiating between someone adjudicated bankrupt before the Effective Date and after it.

Question 2: Whether there are legitimate justifications in the stage two proportionality review

76.I am of the view that the answer to this question must be a definite yes.  I asked Mr Wong for the Applicant how it could be fair to creditors who had received dividends years ago to have to repay the same to bankrupted teachers if section 85(5) of the Education Ordinance were to operate retrospectively.  Mr Wong accepted that it would be unfair and could not be justified.  To my mind, that should really be the end of the matter. 

77.First, it is a cardinal principle in our legal system that legislations should not operate retrospectively so as to disturb or deprive rights and/or benefits acquired by citizens prior to their enactment.

78.In Wilson v First County Trust Ltd (No 2) [2004] 1 AC 816, Lord Scott at §153 said:

“ It is, of course, open to Parliament, if it chooses to do so, to enact legislation which alters the mutual rights and obligations of citizens arising out of events which predate the enactment. But in general Parliament does not choose to do so for the reason that to legislate so as to alter the legal consequences of events that have already taken place is likely to produce unfair or unjust results. Unfairness or injustice may be produced if persons who have acquired rights in consequence of past events are deprived of those rights by subsequent legislation; or it may be produced ifpersons are subjected on account of those past events to liabilities that they were not previously subject to. There is, therefore, a common law presumption that a statute is not intended to have a retrospective effect. This presumption is part of a broader presumption that Parliament does not intend a statute to have an unfair or unjust effect (see Maxwell on Interpretation of Statutes, 12^thed (1969), p 215 and Bennion’s Statutory Interpretation, 4^th ed, pp 265–266 and 689–690). The presumption can be rebutted if it sufficiently clearly appears that it was indeed the intention of Parliament to produce the result in question. The presumption is no more than a starting point.”

79.Here, the Hong Kong Legislature consciously enacted section 85(5) making it clear that section 85(4) is not to operate retrospectively.

80.In Re Malcolm (supra), Chadwick LJ at §13 relevantly said:

“ Section 11 of the Welfare Reform and Pensions Act 1999 was brought into force on 29 May 2000, by statutory instrument [the Welfare Reform and Pensions Act 1999 (Commencement No 7) Order 2000 (SI 2000/1382)] made under section 89 of that Act. There were obvious policy reasons why the section should not have been given retrospective effect—as the judge explained at para. 21 of his judgment. The judge held that it could have no application to Mr Malcolm’s bankruptcy, which had commenced some 3½ years before that date. As I have said, Mr Malcolm has been refused permission to appeal from the judge’s conclusion onthat point. So Mr Malcolm gains no assistance from the change in the law. The change can, of course, be taken as an indication that Parliament recognised that the distinction between the treatment, on bankruptcy, of the rights of a person entitled to benefits under an occupational pension scheme, and the treatment of the rights under a personal pension scheme was unsatisfactory; but it is as clear as can be that Parliament decided to leave the position as it was in respect of pre-existing bankruptcies.”

81.Mr Liu also helpfully submitted that in Fok Chun Wa v Hospital Authority (supra), Ma CJ at §§69, 73, and 75 said:

“ 69. In R (Carson) v Secretary of State for Work and Pensions [2003] 3 All ER 577 (in the Court of Appeal) at 608c–d ([73]), Laws LJ (in a passage approved by Lord Walker of Gestingthorpe in the House of Lords: see [2006] 1 AC 173, 198H-199C ([78]) said:

In the field of what may be called macro-economic policy, certainly including the distribution of public funds upon retirement pensions, the decision-making power of the elected arms of government is all but at its greatest, and the constraining role of the courts, absent a florid violation by government of established legal principles, is correspondingly modest. I conceive this approach to be wholly in line with our responsibilities under the Human Rights Act 1998. In general terms I think it reflects a recurrent theme of the Strasbourg jurisprudence, the search for a fair balance between the demands of the general interest of the community and the protection of individual rights: see Sporrong v Sweden (1982) 5 EHRR 35.

73. I am also of the view that when a line is drawn between those who are entitled to a benefit and those who are not, the court can legitimately take into account the clarity of the line and the administrative convenience of implementing the policy or scheme thereunder. Naturally, this factor must be weighed against other factors, but where, for instance, the line is drawn so vaguely or ambiguously that the underlying policy or scheme may effectively be undermined, if not frustrated, this is a factor that can be considered by the courts. In Carson, Lord Hoffmann at 188E referred to ‘the need for legal certainty and a workable rule’, and Lord Walker of Gestingthorpe (at 202D–E ([91]) referred to demarcation lines having to be ‘reasonably bright lines’. Drawing the line at resident status is a clear line and also convenient to administer.

75. …In the socio-economic context, where policy considerations are best left to the executive, legislative and other authority, the position is as follows:

(1) While the third limb of the justification test does on occasion call for a comparison between the different options that may be available, the purpose of the exercise must be borne in mind: it is to see whether the relevant act or decision satisfies the justification test. The justification test is similar in nature to the test for proportionality: see Yau Yuk Lung, 349D–E ([20]) ([56] above). To ask whether a difference in treatment is justified is the same as asking whether what has been done (or omitted to be done) or decided is a proportionate response to the legitimate aim.

(2) The recognition of the respective roles of the judiciary, the executive and the legislature (or, to use the term, margin of appreciation) is relevant at all three stages of the justification test.

…”

82.Secondly, I am of the view that it is perfectly legitimate for theExecutive and the Legislature to adopt a policy of maintaining our bankruptcy regime’s stability and preventing the reopening of well-settled bankruptcy cases.  (See §38 of the Official Receiver’s Report.)

83.In Re Malcolm [2004] 1 WLR 1803, Lloyd J at §21 relevantly said:

“ 21. … The section came into force on 29 May 2000. According to evidence from the Department of Work and Pensions, the policy behind the limitation to bankruptcy orders made on petitions presented after the section had come into force was, first, the concern that to apply the new rule to bankruptcies which had commenced previously would lead to a need to unravel old bankruptcies, either taking away assets from creditors or, if this could not be done, making it necessary to provide public funds to compensate bankrupts. A second policy reason was the desire not to interfere with the legitimate expectations of creditors in respect of bankruptcy petitions already presented, given that a bankruptcy order has retrospective effect back to the date when the petition was presented.”

84.I am of the view that precisely the same two policy considerations apply to the facts of the present case.  They are fully set out in the Official Receiver’s Report and I entirely agree that they are both legitimate justifications.  Indeed, to allow section 85(4) of the Education Ordinance to operate retrospectively will cause grave injustice and unfairness.

85.For the reasons stated above, I have no doubt that section 85(5) of the Education Ordinance satisfies the 4-step proportionality test:

(1)  It pursues legitimate aims: to avoid retrospective operation of the law and to maintain the bankruptcy regime’s stability;

(2)  The wordings of section 85(5) of the Education Ordinance are rationally connected to the said legitimate aims;

(3)  To achieve the said legitimate aims, section 85(5) of the Education Ordinance is not manifestly without reasonable foundation.  The Executive and the Legislature should be given a wide margin of discretion.

(4)  Based on the evidence, a reasonable and fair balance has been struck between the societal benefits of section 85(5) of the Education Ordinance and its impact on the rights of the Applicant. 

Question 3: Whether Article 36 of the Basic Law is engaged?

86.In my view, the answer is no.  Article 36 of the Basic Law provides:

“ Hong Kong residents shall have the right to social welfare in accordance with law. The welfare benefits and retirement security of the labour force shall be protected by law.”

87.Mr Liu submitted that the first limb of Article 36 of the Basic Law has to be read together with Article 145 of the Basic Law which reads:

“ On the basis of the previous social welfare system, the Governmentof the Hong Kong Special Administrative Region shall, on its own, formulate policies on the development and improvement of this system in the light of the economic conditions and social needs.”

88.Ribeiro PJ in Kong Yunming v Director of Social Welfare (2013) 16 HKCFAR 950 at §33 said:

“ … like many other constitutional provisions, art. 36 is intended tooperate as a framework provision. Read together with art. 145, itprovides the framework for identifying a constitutionally protected right to social welfare ….” (Emphasis added)

89.G Lam J in Choi King Fung and Anor v Hong Kong Housing Authority, unreported, HCAL 191/2015, 17 March 2017 at §§41 – 43 said:

“ 41. Art 145 refers to the ‘previous social welfare system’, ie the system before the Basic Law came into effect in 1997. On the basis of this system, the Government is mandated to formulate policies on its development and improvement in the light of the economic conditions and social needs.

42. In allowing the appeal in Kong Yunming, the Court of FinalAppeal rejected the notion that the protected right to social welfare could be regarded as defined by or subject to the conditions inherent in the legal or administrative arrangements devised from time to time for the provision of the welfare, for that would be to deny any meaningful effect to Art 36. In that case the Court of Final Appeal held that the scheme of comprehensive social security assistance existing prior to 1 July 1997, incorporating an eligibility requirement of one-year’s residence in Hong Kong, which had been applicable since 1970, represented a set of accessible and predictable rules embodying a right to social security benefit in accordance with law, which was as such protected by Art 36. The Government’s policy, implemented since 2004, to increase that requirement to 7 years’ residence infringed the entrenched right and therefore needed to be justified under the proportionality test.

43. This approach requires one to identify the relevant features of the pre-existing system, recognise that a right may exist as crystallised under that system that attracts constitutional protection of Art 36, and then analyse whether that right has been infringed or restricted by a new law, policy or administrative arrangement and, if so, whether the interference with that right is permissible.” (Emphasis added)

90.On the facts of the present case, section 85(3) of the Education Ordinance has taken effect before 1 July 1997 and, on the assumption that pension benefits fall within the meaning of “social welfare” under Article 36 of the Basic Law, it shall form part of the “previous social welfare system” under Article 145 of the Basic Law.  The new sections 85(4) and 85(5) enacted in 2013 sought to relax, not restrict, rights under section 85(3) of the Education Ordinance.

91.I am of the view that there is no deprivation of prior rights of the Applicant by reason of the amendments to the Education Ordinance in 2013.  There is simply no basis for the Applicant to argue that he has a constitutionally protected right to social welfare which protects his pension benefits from being vested in the trustee-in-bankruptcy.  I am of the view that this is the end of the Applicant’s argument on Article 36 of the Basic Law.

92.Mr Liu further submitted that Article 147 of the Basic Law is also relevant for the interpretation of the second limb of Article 36 which concerns “welfare benefits and retirement security of the labour force.” Article 147 provides:

“ The Hong Kong Special Administration Region shall on its own formulate laws and policies relating to labour.”

93.Mr Liu submitted that as public funds are limited, workers’ entitlement to welfare benefits and retirement security under Article 36 cannot be absolute.  In contrast with Article 145, the formulation of labour laws and policies under Article 147 of the Basic Law need not be based on the previous system.  The courts may require the Executive to meet the proportionality test if a worker’s entitlement to retirement security is restricted.  Since matters relating to the labour force and their retirement security belong to the area of macro-economic policies and the use of public funds, it was submitted that the Executive has a wide margin of discretion in the formulation of labour laws and policies.  I agree.

The Rule in Re Condon, ex p James

94.Mr Liu fairly pointed out that for the present proceedings, the issue is whether the Applicant is entitled to the entirety of his benefits under the Rules notwithstanding the express provision of section 85(5) of the Education Ordinance.  The question is, taking into account the context of the disputed differential treatments, “whether ‘a high-minded person’ would have wishes to retain the portion of the benefits attributable to the period before the Applicant’s discharge from bankruptcy.”

95.First, I am of the view that notwithstanding that the question may be framed in a way different from the question in Re Ng Shiu Fan, both questions essentially are related to the same portion of benefits under the Rules being the portion attributable to the period before a bankrupted teacher’s discharge from bankruptcy, therefore this court is also bound by the Court of Appeal’s decision in Re Ng Shiu Fan.

96.Secondly, even if this court is not so bound, I do not find that any high-minded person would apply the principle of fairness and justice so as to deprive creditors of their acquired or accrued rights by having section 85(4) to operate retrospectively.

97.Thirdly, Kwan J (as she then was) in Re Ng Shiu Fan held that the principle cannot override an express legislative provision passed by the Legislature.  At §81, she said:

“ Where statutory provisions either expressly or by necessary implication clearly preclude the course of conduct which the principle in [Re Condon, ex p James] would otherwise have supported, the principle would not be given weight in that situation. Otherwise, the bankruptcy court would be free to override a piece of legislation if it is of the view that such legislation does not meet the court’s standards of justice and fairness in a given situation.”

98.In the Court of Appeal, Tang VP (as he then was) at §35 also said:

“ It is clear from para.81 of her judgment that Kwan J thought the rule in Re Condon, ex p James was inapplicable. She relied on the dictum of Lindsay J. in Re Collins & Aikman Europe SA [2007] 1 BCLC 182 at p.190a–b cited by her at para.75:

I would not, however, expect the rule to have any weight where statutory provisions either expressly or by necessary implication clearly preclude the course of conduct which the rule would otherwise have supported.  To that extent the rule cannot be considered other than within the surrounding statutory structure…”

99.I agree that it is clear that the protection introduced by section 85(4) of the Education Ordinance does not extend to cover teachers subject to the Rules who were adjudicated bankrupt before it came into operation.  There is simply no room for the operation of the rule in Re Condon, ex p James.

CONCLUSION

100.Mr Liu helpfully set out the issues raised by the Applicant in the Summons as amended as follows:

(1)  Whether the definitions of a bankrupt’s estate under sections 2 and 43 of the Bankruptcy Ordinance as to comprise property including the benefits under the Rules are inconsistent with Articles 25, 36 of the Basic Law and Articles 1(1) and 22 of the Hong Kong Bill of Rights incorporating the provisions of the International Covenants on Civil and Political Rights into the laws of Hon Kong (“Issue 1”);

(2)  Whether the vesting of such benefits in the trustee in bankruptcy under section 58 of the Bankruptcy Ordinance or section 85(3) of the Education Ordinance is inconsistent with Articles 25, 36 and Articles 1(1) and 22 of the ICCPR (“Issue 2”);

(3)  Whether section 85(5) of the Education Ordinance which restricts retrospective operation of section 85(4) of the Education Ordinance is inconsistent with Articles 25, 36 and Articles 1(1) and 22 of the ICCPR (“Issue 3”);

(4)  Whether the Applicant is entitled to retain the entire portion of his benefits under the Rules despite bankruptcy (“Issue 4”);

(5)  Whether, reading under Articles of the Basic Law, the Articles of the ICCPR or otherwise, section 85(3) of the Education Ordinance prevents such benefits from automatic statutory vesting in the trustee-in-bankruptcy (“Issue 5”); and

(6)  Whether, under the circumstances of this case, the Applicant is otherwise entitled to retain any portion of his benefits under the Rules under the rule in Re Condon, ex p James (1874) 9 Ch App 609. (“Issue 6”)

101.I am of the view that for Issues 1, 2, 5 and 6, I am bound by the Court of Appeal’s decision in Re Ng Shiu Fan.

102.For reasons stated above, I do not find that section 85(5) of the Education Ordinance is inconsistent with Articles 25, 36 and Articles 1(1) and 22 of the ICCPR.

103.Hence, Issue 4 is answered in the negative.

DISPOSITION

104.For all of the reasons stated above, the Applicant’s Summons as amended is dismissed.

105.I also make a costs order nisi that the Applicant is to pay the costs of the Official Receiver, represented by the Department of Justice, on an indemnity basis, to be taxed if not agreed.  Unless the parties apply to vary the costs order nisi within 14 days from the date hereof, the costs order nisi will be made absolute after the expiry of the 14-day period.

106.I am of the view that costs should be made on an indemnity basis because first, the Applicant has behaved unreasonably.  Instead of informing the court that it is bound by the Court of Appeal’s decision in Re Ng Shiu Fan so that the court could dismiss the Summons, and the Applicant could then apply to a higher court with minimum costs to the public fund,the Applicant chose to seek directions for substantive arguments on unmeritorious grounds.

107.Secondly, the Director of Legal Aid was specifically directed by this court to reconsider the merits of the amendments to the Summons. The Applicant insisted on proceeding to argue the unconstitutionality of section 85(5) of the Education Ordinance at the expense of public money.  This ground of challenge is completely unmeritorious.

108.Finally, it remains for this court to express its gratitude to Mr Liu for his very helpful assistance rendered to this court.

Mr Jason Wong, instructed by Leung, Tam & Wong, for the Applicant

Lee & Chow, for the Respondent did not appear

Mr William Liu, of the Department of Justice, for the Official Receiver