Law Yuk-ming and Others v. Attorney General

Read the full judgment text of CACV 44/1980 on BabelCite. This Court of Appeal judgment was delivered on 28 November 1980 before Roberts, C.J., McMullin and Li, JJ.A..

Administrative law – Crown servants – contract of service – Hong Kong Letters Patent – Article XVI – suspension without pay – Civil Service Regulation 611 – Colonial Regulations – prerogative power to legislate for ceded territory – dismissal at pleasure – unilateral variation of contract – trade dispute – work-to-rule. Twenty-six dispensers employed by the Hong Kong Government took part in a work-to-rule campaign in November 1979 over grading, pay, and duties, and were suspended from duty without pay under C.S.R. 611. They sought a declaration that C.S.R. 611 did not form part of their contract of employment, that it was in breach of such contract, and that they were entitled to salary during the period of suspension. Cons J. dismissed the action and the dispensers appealed. Held, dismissing the appeal: (1) Hong Kong is a ceded territory in which the Crown enjoys full legislative authority (Campbell v. Hall), and the Letters Patent Articles XIV and XVI are an exercise of that authority. Inherent in the power to establish and discipline a public service is the power to make regulations for its control and administration, which the Governor has exercised through Government Regulations. (2) The power of suspension conferred on the Governor by Article XVI carries with it the right to suspend without pay, following Wallwork v. Fielding, since suspension simpliciter means the whole contract is suspended, including obligations on both sides. (3) Colonial Regulations are Instructions within the meaning of Article XVI, are subordinate legislation, bind the Governor, but do not form part of the contract of service of public officers (Shenton v. Smith); the only remedy for breach is by declaration or injunction (Rediffusion (H.K.) Ltd. v. Attorney General of Hong Kong). (4) C.S.R. 611 does not conflict with the Col. Regs. on interdiction (Col. Reg. 60), since suspension and interdiction are distinct, and C.S.R. 611 applies only to trade-dispute situations outside the Col. Regs. 54-66 disciplinary framework. (5) There is a contract of service between the Crown and its public officers, mutually enforceable, following Kodeeswaran v. Attorney General of Ceylon, with G.Rs. (including C.S.Rs.) incorporated into the contract by the standard memoranda of conditions of service. (6) The Crown may unilaterally vary the conditions of service of public officers by virtue of an express term in the memoranda reserving that right to the Government, and such a clause does not destroy the contractual relationship, however vulnerable the public officer may be. Accordingly, C.S.R. 611 became a condition of service of every public officer on its promulgation in October 1977, and the appellants were not entitled to the declarations sought. Appeal dismissed.

Legal issues: Crown's power to legislate for control and discipline of public officers · Power of suspension without pay under Article XVI · Status and effect of Colonial Regulations · Whether C.S.R. 611 conflicts with Colonial Regulations · Existence of a contract of service between the Crown and public officers · Unilateral variation of contract by the Crown

Outcome: Appeal dismissed. The court held that C.S.R. 611 was a valid exercise of the Governor's power under Article XVI of the Letters Patent and, by virtue of the unilateral variation clause in the standard memoranda of conditions of service, formed part of the appellants' contract of employment as a condition of service from October 1977.

Cited by 20 cases

Case No.CACV 44/1980[1980] HKLR 815
Court
Court of Appeal
Date28 Nov 1980
JudgeRoberts, C.J., McMullin and Li, JJ.A.
Case Document
100%Judiciary

CACV000044/1980

[Letters Patent - Colonial Regulations - Contractual Relationship of Crown and its servants]

IN THE COURT OF APPEAL

1980 No. 44
(Civil)

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BETWEEN
LAM Yuk-ming 1st Appellant
TANG Kwok-pun 2nd Appellant
CHUNG Siu-ki 3rd Appellant
CHAN Yiu-wo 4th Appellant
MA Yung-kwan 5th Appellant
LOO Wing-shiu 6th Appellant
NG Wai-wo 7th Appellant 
LAM Bik-fai 8th Appellant
LAW Tung-yin Shirlet 9th Appellant
MA Si-yan John 10th Appellant
YU Tak-chuen 11th Appellant
KAN Ying-cheung 12th Appellant
HAU Kwong-wah 13th Appellant
TO Sau-him 14th Appellant
CHAN Kam-ying 15th Appellant
CHU Kit-chung 16th Appellant
CHIU Kwok-kuen 17th Appellant
MAH Wing-gee 18th Appellant
CHAN Siu-wah 19th Appellant
WONG Yu-to 20th Appellant
HO Shai-tim 21st Appellant
Anita CHAN Mi-ha 22nd Appellant
TAM Ka-chau 23rd Appellant
FAN Yuk-tong 24th Appellant
HUI Yiu-sang 25th Appellant
HUNG Chiu-man 26th Appellant
AND

ATTORNEY GENERAL Respondent

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Coram: Roberts, C.J., McMullin and Li, JJ.A.

Date of Judgment: 28 November 1980

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JUDGMENT

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Roberts, C.J.:

Preliminary

1. This is an appeal by twenty-six dispensers, who are Crown servants in the employment of the Government of Hong Kong, against a judgment of Cons, J. delivered on the 12th March, 1980, whereby he dismissed their action for a declaration and held that the Governor of Hong Kong had power, under Article XVI of the Hong Kong Letters Patent, to suspend them from their offices without pay.

2. During 1979, a dispute arose between the Dispensers Staff Association, which represents the interests of dispensers in the public service, and the Hong Kong Government about the grading and pay structure of dispensers and as to their proper duties.

3. In September 1979, the Association advised its members to take active industrial action. However, such action was called off in October, on the understanding that the complaints of the Association would be investigated by the Standing Commission on Civil Service Salaries and Conditions of Service.

4. When the Commission issued its report, the recommendations contained in it did not satisfy the Association, which on 9th November 1979 informed the Secretary for the Civil Service that members of the Association would resort to "work to rule", "go slow" or "strike action", unless they received a satisfactory answer to their representations before the 16th November, 1979.

5. On the 14th November, the Association told the Secretary for the Civil Service that its members would work to rule as from the 16th. On that date all the appellants, save one, refused to perform some part of their duties. For this reason, they were suspended from duty by the Secretary for the Civil Service, most of them with effect from the 26th November.

6. The letters, which gave effect to a decision taken by the Acting Governor on 26th September, were in the following terms -

" I am satisfied that you have refused or omitted to perform all or part of your duties.
          Particulars ..........
(as appropriate to the individual).
          You have already been reminded by the Director of Medical and Health Services in his letter dated the 14th November, 1979, that any officer who refuses or omits to perform for any period any part of the usual duties of his/her office may be subject to action under C.S.R. 611.
          This letter serves to inform you that you are suspended from duty without pay with effect from midnight, the 29th November, 1979 until such time as you resume the full range of your usual duties.
Yours faithfully,
(Sd.) S.K. Chan
for Secretary for the Civil
Service".

7. Civil Service Regulation 611 (C.S.R. 611) which is referred to in the Secretary for the Civil Service's letter, states -

"Suspension from duty without pay

611. An officer who, in connection with a trade dispute, refuses or omits to perform for any period any or any part of the usual duties of his office, may be suspended from duty by the Secretary for the Civil Service and shall not be eligible to receive salary in respect of the period for which he remains suspended."

8. The introduction of C.S.R. 611 was notified to the public service in a Civil Service Branch Circular No. 25/77, dated the 18th October, 1977. This Circular contains explanatory paragraphs as to the reasons for the introduction of the Regulation. The last sentence of paragraph 3 of the Circular states "since action under the Civil Service Regulation is not a disciplinary measure, it will not be regarded as a punishment."

9. Civil Service Regulations (C.S.Rs.) form part of a series of Government Regulations (G.Rs.) made by the Governor for the conduct and control of the public service. Other G.Rs. deal with such matters as financial business, accounting, stores, security and office procedures.

10. By a summons dated the 13th December, 1979, the appellants sought a declaration that C.S.R. 611 does not form part of the contract of employment between the Crown (in its capacity of the Hong Kong Government) and the dispensers, that it was in breach of such contract and that they were entitled to be paid salary in respect of the period of their suspension.

Judgment of Cons, J.

11. Cons, J. made it clear that he had not considered the merits of the action taken either by the dispensers or by the Secretary for the Civil Service. He confined his attention to the legal issues involved in the declarations sought by the dispensers. So have we. The judge's conclusions may be summarized as follows:

(a) that the Crown enjoys in Hong Kong the prerogative power to suspend a public officer, without pay;
(b) that C.S.Rs. do not create a contractual relationship between the Crown and its servants;
(c) that the Crown has power to suspend the dispensers under Article XVI of the Hong Kong Letters Patent ("Article XVI"), even if it has no such power under C.S.R. 611;
(d) that it makes no difference that the Crown had wrongly purported to act under C.S.R. 611, since it had power to suspend under the Letters Patent.

12. This appeal involves not only a consideration of the validity and effect of C.S.R. 611, but an examination of other questions, the answers to which may have effects of some significance on the future relationships of the Crown, in its right of the Government of Hong Kong, and the public officers of that Government.

13. As we see it, the following matters fall to be considered:

1. Does the Crown have power to legislate for the control and discipline of members of the public service of Hong Kong ("public officers")?
2. In accordance with such a power, may the Crown make provision for the suspension of public officers without pay?
3. What are the status and effect of Colonial Regulations? ("Col. Regs.")
(a) Are they "Instructions" issued under the Letters Patent?
(b) Are they mandatory, so as to bind both public officers and the Governor of Hong Kong?
(c) Are they enforceable in law?
4. (a) Are Col. Regs. intended to be exclusive with regard to the matters contained in them?
(b) If not, may the Governor make G.Rs. which conflict with Col. Regs.?
(c) Does C.S.R. 611 so conflict?
5. (a) Is there a contract of service between the Crown and public officers?
(b) If there is, do Col. Regs. and C.S.R. 611 form part of that contract?
6. If there is a contract of service between the Crown and public officers, can the conditions of that contract be varied unilaterally by the Crown, the variations becoming part of the contract?

1. The Crown's power to legislate for public officers

14. Hong Kong is, in constitutional terms, a "ceded territory" within which the Crown, by virtue of its prerogative, enjoys full legislative authority, subject to any act of Parliament which may extend to the territory. See Campbell v. Hall(1).

15. The Crown's legislative power may be exercised by Order in Council, Letters Patent or Proclamation. All such instruments form part of the law of the territory to which they are directed.

16. The Hong Kong Letters Patent 1917 to 1977 ("the Letters Patent") are an exercise by the Crown of its power to legislate for Hong Kong. Articles XIV and XVI thereof deal with the establishment and control of a public service, without which no dependency can function.

"XIV. The Governor may constitute and appoint such Judges, Justices of the Peace and other public officers as may be lawfully appointed, all of whom shall, unless otherwise provided by law, hold their offices during Our pleasure."
"XVI. Subject to the provisions of Article XVIA, the Governor may, subject to such instructions as may from time to time be given to him by Us through one of Our Principal Secretaries of State, upon sufficient cause to him appearing, dismiss or suspend from the exercise of his office any person holding any public office within the Colony, or, subject as aforesaid, may take such other disciplinary action as may seem to him desirable."

Inherent in a power to establish a public service and to dismiss or suspend or take disciplinary action against its members must be power to make Regulations for the control and administration of that public service and its officers. Indeed, it was not disputed by counsel for the appellants that the Governor, by virtue of the Letters Patent and the inherent powers conferred on him thereby, has power to regulate the public service of Hong Kong. He has exercised it by the issue of G.Rs.

2. Suspension of public officers without pay

17. In essence, the argument advanced for the appellants was -

(a) The Crown, in exercising its power to legislate for the territory, can only do so within the limits of the common law power which the Crown enjoys in the United Kingdom. (There is, of course, a common law of Hong Kong which includes most of, but is not limited to, the common law of England.)
(b) By that power, the Crown may suspend a public officer, but not without pay - see Slingsby's Case(2).
(c) Therefore Article XVI should be construed as authorizing the Governor to suspend only with pay.

18. We do not consider the first contention to be well founded. The Crown's authority to legislate for a ceded territory is unrestricted. Whether or not, in the exercise of that power, the Crown legislates in a matter not provided for, or in conflict with, the common law of England is irrelevant.

19. However, if the interpretation of legislation made by the Crown in the exercise of its legislative power in a ceded territory is open to doubt, a reference to the power of the Crown at common law may be appropriate, in order to ascertain the intention of that legislation, but for that purpose only.

20. Article XVI of the Letters Patent refers to "suspension" simpliciter, without any reference to pay. Does the common law assist us in determining the intention of this provision?

21. The trial judge considered a number of authorities. Some suggest that a power to suspend does not include a power to suspend without pay, unless such a provision is conferred by law or can be implied from the terms of the contract - see Slingsby's Case, Hanley v. Pease & Partners Ltd.(3) and McArdle v. Scotbeef Ltd.(4).

22. Others, however, take the contrary view, see Wallwork v. Fielding(5), Bird v. British Celanese(6). This view gains support from the opinion of the law officers delivered in 1838 and quoted by the trial judge.

23. Leaving the law on one side for the moment, what is the sensible approach? We think it is this. It is not in dispute that Article XVI confers a right to suspend "upon sufficient cause". Such a suspension means that the public officer ceases to perform any of the functions of his office. Assuming that his suspension has been for proper cause, why should he be paid, when he has done no work?

24. From the conflicting dicta which appear in the cases mentioned above, we prefer to adopt the approach of Lord Sterndale, M.R. in Wallwork v. Fielding at p.72. Having stated that the exercise of the power of suspension means that the whole contract is suspended and that the obligations on both sides are suspended, he says -

"... there was express statutory power here to suspend the man from duty and that involves the suspension of payment for the discharge of the duty. The contract is suspended with regard to its performance by both sides, not only by one;".

25. Our conclusion is this. That the Crown, when conferring power on the Governor by Article XVI to suspend, intended that the power should carry with it the right to suspend without pay. So C.S.R. 611 is a proper exercise of the power of suspension conferred on the Governor by the Letters Patent, provided that neither the effect of Col. Regs. nor of any contractual relationship between the Crown and public officers invalidates it.

3. Colonial Regulations

26. The disciplinary powers conferred by Article XVI are bare powers. The Article does not contain within itself guidance as to how they are to be exercised, save only that dismissal, suspension or other disciplinary action shall be taken by the Governor "upon sufficient cause to him appearing".

27. It must be expected that flesh would be grafted onto this skeleton. This can be done in two ways -

(a) By the issue of instructions by the Crown to the Governor, which is specifically provided for in Article XVI.
(b) By Regulations made by the Governor, as a necessary incident to his powers under Articles XIV and XVI (see above).

28. The Crown may issue "Instructions" to a Governor in various ways -

(a) By formal "Royal Instructions under the Royal Sign Manual and Signet".
(b) By informal instructions, which may be oral or written and may or may not be published.
(c) By means of Colonial Regulations, though this is a matter of dispute.

29. There can be no doubt that the formal type of Instruction is legislative in character. The Hong Kong Royal Instructions establish both an Executive and Legislative Council. If these Instructions were not legislative in character, the Hong Kong Legislative Council would not have been constituted and none of its laws would be valid.

30. Are Colonial Regulations to be regarded as "Instructions" made under Article XVI? There is little authority as to their status.

31. Sir Kenneth Roberts-Wray, at p.240 of his leading work on "Commonwealth and Colonial Law", which is entitled to great respect in view of his unrivalled practical experience of the subject, expresses the opinion that Col. Regs. must be taken as amounting to the Crown's Instructions to the Governor as to how he should exercise the disciplinary powers which are conferred upon him by Letters Patent.

32. It was argued, however, by the respondent that Col. Regs. do not constitute such Instructions; that they are no more than guidance for the Governor, that he can ignore them as he wishes and that the result of his so doing could, at most, be no more than a remonstrance from the Secretary of State. It was not disputed, however, that no other Instructions (save those of the informal type (b) referred to above) have been issued to the Governor in furtherance of Article XVI.

33. The first paragraph of Col. Regs. states that they are "Directions to Governors for general guidance given by the Crown through the Secretary of State", but does not recite the power under which Col. Regs. are made.

34. We do not think that there is any distinction between Instructions and Directions, though counsel for the respondent sought to persuade us that there is. Both words import the giving of orders which are expected to be obeyed. It was further argued that the words "for general guidance" show that Col. Regs. are merely advisory and not directory. We do not think that that phrase can have been intended to contradict the word "Directions" and so convert an order into a suggestion. If Col. Regs. were merely meant to be for administrative guidance and not to constitute directions, they would not have said that they were directions. It is to be noted that Col. Reg. 1 states that Part I of Col. Regs. "applies ..... to public officers". This is surely the language of direction, not of discretion.

35. If Col. Regs. are to be characterized as Instructions for the purposes of Letters Patent, what is their status? Roberts-Wray suggests that they are in the nature of subordinate legislation and that they have the force of law "if they have mandatory effect", but concludes that they do not have the force of law since they are "directory" only.

36. We do not find this distinction easy to draw. If an instrument has the character of subordinate legislation, it does not lose that character because some of its provisions give guidance and do not impose positive obligations or rights of an enforceable nature.

37. If we are correct in our conclusion that Col. Regs. are Instructions, are a form of subordinate legislation and are mandatory, it becomes necessary to decide whether they form part of the terms of service of a public officer, and whether the latter could institute proceedings against the Governor for breach of contract for non-compliance with them.

38. Shenton v. Smith(7) supports the argument that Col. Regs. do not form part of any contract between the Crown and its servants, a proposition with which Roberts-Wray agrees. Furthermore, Col. Reg. 15 states that "the Regulations as to appointment to public offices do not constitute a contract between the Crown and its servants". We are not prepared to read into this disclaimer an inference that the remainder of Col. Regs. are intended to constitute a contract.

39. We do not think that an instrument which gives directions to the Governor as to how the public service should be regulated can itself become, in the absence of specific words to such effect, part of the terms of service of persons to whom the directions are not addressed. In any event, we are bound, in this respect, by Shenton v. Smith.

40. From this conclusion, it must follow that the only remedy open to the public servant who is aggrieved by the failure of the Governor to conform with Col. Regs. would be to seek a declaration or injunction against the Attorney General (representing the Governor) in the manner to which approval was given by the Privy Council in Rediffusion (H.K.) Ltd. v. Attorney General of Hong Kong(8).

41. To summarize our conclusions as to the status and effect of Col. Regs.

(a) They are "Instructions" within the meaning of Article XVI.
(b) They are subordinate legislation.
(c) They bind the Governor.
(d) They do not, per se, from part of the contract of service of public officers.
(e) The only remedy open to a public officer, if there is a breach of them, is by way of declaration or injunction.

4. Colonial Regulations

42. It follows from our conclusion that Col. Regs. are subordinate legislation binding the Governor that he may not make rules governing the public service which conflict with them.

43. It was submitted for the appellants that C.S.R. 611 does conflict with Col. Regs. 54-66, which are concerned with disciplinary proceedings, and so must be held invalid, for the following reasons -

(a) Col. Regs. are intended to be exclusive.
(b) Even if they are not so intended, Col. Regs. deal in detail with the circumstances in which "interdiction" may be used.
(c) Interdiction is in effect suspension and it must be inferred that suspension is not to be employed in any other way.
(d) C.S.R. 611 purports to evade the protection afforded by Col. Regs. (in particular Col. Reg. 60) by substituting a summary method of suspension without pay for the carefully regulated procedure set out in Col. Regs.

44. We do not accept the first argument. We see no reason why Col. Regs. should be regarded as exclusive. Indeed, Col. Regs. 54 to 66, by the terms of Col. Reg. 54(1) apply only to officers on the permanent establishments. Nor is there anything in Col. Regs. which implies that the Governor may not exercise the inherent powers which, as we have found, he enjoys under Articles XIV and XVI to regulate the public service, in such a way as to supplement the directions to him contained in Col. Regs., though not to conflict with them.

45. Col. Reg. 60 deals with "interdiction". This is, in some of its effects, similar to "suspension". Interdiction is described in Col. Reg. 60 as "interdiction from the exercise of powers and function of his office". Suspension is described in Article XVI as "suspension from the duties of his office".

46. The old Col. Reg. 66, which still governs other dependent territories, applied to Hong Kong until Appendix II to the 1971 Edition of Col. Regs. was promulgated in 1970. That Col. Reg. obliges an officer who is under "interdiction or suspension" to seek the Governor's permission to leave the territory. This is a further indication that the references in Part II to interdiction were not intended to deal with suspension.

47. Thus we find that the Governor may make regulations which provide for suspension so long as these do not conflict with those Col. Regs. which deal with interdiction. As to this we adopt the approach of Warrington L.J. in Wallwork v. Fielding at p. 73, where he commented in relation to the effect of subsequent upon prior legislation that unless they were plainly repugnant, effect should be given to both.

48. C.S.R. 611 deals with the suspension of an officer who has refused to perform any part of his duties, in connection with a trade dispute. Such a situation does not fall within any of the circumstances which give rise to interdiction under Col. Reg. 60.

49. When C.S.R. 611 was promulgated in October 1977, it was brought to the attention of the public service in a circular which stated that action under that C.S.R. was not a disciplinary measure and "so would not be regarded as a punishment". This demonstrates a somewhat naive faith in the forgiving attitude of those about to lose a day's pay. Nevertheless, it shows that the Governor intended that C.S.R. 611 should fall outside Col. Regs. 54-66, which deal with disciplinary procedure, and was intended to supplement them.

50. We find that this intention has been achieved. Interdiction under Col. Reg. 60 is incidental to other disciplinary proceedings or to an investigation of conduct. C.S.R. 611 provides a summary form of suspension from duty without pay in strictly limited circumstances. We do not think that there is a conflict between the two.

51. To summarise our conclusions on this question -

(a) C.S.R. 611 must not conflict with Col. Regs.
(b) Suspension and interdiction are not the same.
(c) Col. Reg. 60 deals with interdiction with pay in specified circumstances.
(d) C.S.R. 611 provides for suspension without pay in other circumstances.
(e) C.S.R. 611 does not conflict with Col. Regs.

5. Is there a contract of service between the Crown and public officers?

52. Having decided that C.S.R. 611 does not conflict with Col. Regs. and is, prima facie, a proper exercise of the Governor's authority to regulate the public service under the Letters Patent, we are obliged to consider the difficult question of what contractual relationship exists between the Crown and public officers, since if there is such a relationship it may be in such terms and of such effect as to inhibit the Governor from imposing C.S.R. 611 on serving public officers.

53. The courts have been reluctant to attribute legal incidents to the relationship between the Crown and its servants. Such reluctance was understandable so long as the fiction were maintained that every public officer was serving the Sovereign personally and was a member of the Royal Household. Such an assumption is hardly appropriate to a hundred thousand public servants working on the coast of China, for whom, for practical purposes, their employer is the Government of Hong Kong.

54. There is a clearly established rule at common law that Crown servants are dismissible at pleasure. This rule, however questionable the logic for it may now be, since it confers on the Crown as employer an autocratic position not enjoyed by other employers, has been expressly preserved by Articles XIV and XVI, by Col. Reg. 55 and by C.S.Rs. It is therefore clearly a part of the relationship between the Crown and a public officer in Hong Kong, though it can be excluded by legislation, as it has been by Article XVIA of the Letters Patent in relation to judges.

55. In passing, we observe that, since Articles XIV and XVI, and Col. Reg. 55, have the force of law and bind the Governor, we doubt if it would be open to him to exclude the Crown's right to dismiss at pleasure by agreement with any public officer, either by implication from the provision of a machinery for dismissal of the servant, or even by express terms which purport to exclude the power.

56. The dismissal at pleasure rule has prevented a public officer from suing in contract for wrongful dismissal. It has, however, become well-established that he can recover, on a quantum meruit, pay which was due to him before his dismissal became effective - see Kodeeswaran v. Attorney General of Ceylon(9).

57. In that appeal, the Privy Council quoted with approval the observation of Lord Atkin in Reilly v. R.(10) that "a power to determine a contract at will is not inconsistent with the existence of a contract until so determined." By implication, this decision has overruled Kennedy-Skipton v. Attorney General of Hong Kong(11), in so far as that case may have decided that a public officer could not recover arrears of salary.

58. Kodeeswaran thus indicates that the Privy Council accepts the existence of a contractual relationship between the Crown and its servants. But what kind of relationship is it?

59. The terms of appointment of the appellants vary. We do not know why, and have assumed that the differences mean no more than that the standard forms of engagement have been revised from time to time.

60. Version A is entitled Memorandum of Conditions of Service for Officers on Temporary Terms, paragraph 2(4) of the Memorandum reads -

"The officer is subject to the Orders and Regulations of the Government and to Departmental Instructions for the time being in force; to any special Ordinances or Regulations (whether administrative or statutory) which apply to the office or to the department in which he is appointed; and to Colonial Regulations. These Regulations do not constitute a contract between the Crown and its servants. The Government reserves the right to alter the terms and conditions of service as may become necessary from time to time."

61. Version B, described as Memorandum of Conditions of Service for Officers on Temporary Terms, contains an equivalent paragraph 2(1) -

"The officer is subject to Colonial Regulations, Government Regulations, Departmental Instructions and to any special Ordinances or Regulations which apply to the office or to the Department to which he is appointed."

62. Paragraph 14(1) of Version C reserves to the Government the "right to alter any of the terms of appointment and/or conditions of service set out in this memorandum".

63. Versions D and E deal with Local Officers on Probation and Offices on Temporary Terms and contain paragraphs in the same terms as paragraph 2(4) in Version A. Thus all versions provide that an officer shall be "subject to" Government Regulations (which include C.S.Rs) and to Col. Regs. And all (with the exception of Version B) state that the Government reserves the right to alter the terms and conditions of service of the officer.

64. In versions A, D and E (but not Versions B and C) it is stated that "These Regulations" do not constitute a contract between the Crown and its servants. The Crown submitted that the phrase "these Regulations", in its context, referred only to Colonial Regulations, and not to the other Regulations listed earlier in the relevant sub-paragraph. He think that this is correct. The phrase is not appropriate to include Orders, Departmental Instructions or Ordinances, all of which appear earlier in the paragraph. Thus the intention is that Col. Regs. shall not constitute part of the contract between the Crown and the public officer. Conversely, the limited terms of this disclaimer can be taken as inferring an intention that such other instruments as are referred to in that paragraph are intended to form part of such a contract.

65. But is the relationship between the Crown and public officers a contract, in the accepted sense of the term? It is indicative of the difficulties of the subject that counsel for the respondent referred to quasi contract, since he wished to hold the position that the Crown is not bound but the public officer is.

66. The letters of offer and the memorandum of appointment use the language of contract. Would not an appointee, when he receives an offer of appointment, to which is attached a memorandum of conditions of service, believe that he is receiving an offer to enter a contract with the Crown?

67. He is told, by the memorandum, what he is expected to do, and warned what will happen to him if he fails to keep to his side of the bargain. If asked what he thought the Crown's obligations were, he would certainly reply "to keep to its bargain as I'm expected to do by the Crown". Would he have any doubt that he was entering a contract with the Crown?

68. What does the Crown intend? We suppose that it is seeking the advantages of a contract without the drawbacks. That is to say that it regards the public officer as bound by G.Rs. but does not want this to give rise to any contractual relationship of a kind which would enable the officer to enforce G.Rs. against the Crown.

69. C.S.R. 2 states that G.Rs are made by the Governor, that authority for their interpretation is vested in him and that "they have no force in law', save in so far as they are set out in an Ordinance or Act.

70. To say that the Governor is the authority for their interpretation can be said to mean, in theory, that the Governor can construe a Regulation in any which he thinks fit, though in practice he would be unlikely to do this in a wholly unreasonable way. Such a provision may weaken the reliance which a public officer can place on G.Rs, but does not strike at their nature. The reference to having "no force in law" appears to be no more than an indication, to persons unfamiliar with the niceties of legislation, in its many disguises, that these regulations are not legislative in effect.

71. We conclude that there is an intention on both sides to enter a binding contract. The public officer does so without reservation. The Crown also intends to enter a contract by which the officer shall be bound but not itself, though the appointee is not warned of the lop-sided nature of the contract, as seen by the Crown. There is no hint that he must keep his promises, but that the Crown need not.

72. We decide that there is a contract between the Crown and its servants and that its terms should be, and are, mutually enforceable, even though this contract contains one anomalous provision (the power of dismissal at pleasure) which overrides the contract and, if used, effectively negates the usual relationship of employer and employee. Col. Regs. do not form part of that contract.

73. An important difficulty remains. What terms and conditions form part of the contract?

74. As indicated above, an appointee receives a letter of offer to which is attached a memorandum of conditions of service. This memorandum will contain a clause which informs the officer that he is subject to G.Rs, Departmental Instructions and Col. Regs.

75. There is no difficulty in finding that the contents of the letter of appointment and the memorandum form part of the contract. But do all the G.Rs. and other instruments to which the public officer is told he is to be subject? Their sheer bulk prevents copies of all of them being sent to each appointee. Nevertheless, he is warned of their existence and could no doubt obtain access to them if he wished to do so before entering his contract of service with the Crown.

76. G.Rs cover a wide variety of matters, some of which are of fundamental importance to the public officer, dealing with promotions, travel allowances, retirement, transfer, pay and quarters. Others are concerned with the Government's housekeeping arrangements, such as responsibility for handling public money, security of documents and office procedures.

77. Thus, many G.Rs. are hardly suitable for incorporation into the contract of every public officer. It might, perhaps, be argued that only those which properly govern the relationship of Crown as employer and the public officer, not those which deal in general terms with the running of the administration, should form part of the contract. But such a distinction would introduce uncertainty and confusion as to what is within the contract and what is not.

78. The Crown, by the form of the contract which it offers to its employees, has chosen to incorporate all G.Rs into the contract of service. And this is what we find the true position to be.

79. It may be that it would be of advantage to the Crown to divide Government Regulations into two parts, those which are to form part of the public officer's contract and those which are not. The chosen part could thereafter be suitably and separately labelled and incorporated into contracts of service by a carefully worded reference to it which excludes any reference to the other part.

6. Can the Crown unilaterally alter its contract with public officers?

80. We have found the following -

(a) There is a contract between the Crown and a public officer.
(b) That contract contains, by incorporation, G. Rs (which include C. S. Rs), plus other orders and instructions which are not relevant to this appeal but not Col. Regs.

81. There remains the question of whether C.S.R. 611 forms part of the contract of the contract of service of the appellants?

82. The Crown faces no difficulty in applying C.S.R. 611 to public officers appointed to the public service after the issue of C.S.R. 611, since it was in effect when they joined the public service. But the appellants were already members of that service before C.S.R. 611 was promulgated. When they accepted offers of appointment, C.S.R. 611 did not form part of their contracts.

83. The Crown, therefore, has to show that it was entitled to vary the contract of service of serving public officers unilaterally, by introducing a form of summary suspension from office without pay which had not existed before.

84. The trial judge observed that he found it difficult to view as part of a true contract provisions which can be changed at will by one party alone. Thus stated, we agree with him. In this instance, however, the contract itself contains, As one of its express terms, a right in one of the parties to vary any of its conditions. So the public officer, when accepting the offer made to him, does so in the knowledge that any of its terms can be varied by the Crown, without his agreement, whether to his benefit or to his detriment.

85. It is not unusual for contracts to contain some terms which can be altered at the option of one party only, for example, many leases allow for an increase of rent at the option of the landlord alone. There is thus no objection in principle to a provision in a contract whereby one party can alter some of its conditions without agreement, so long as this overriding provision was within the terms of the main contract which he entered. With hesitation, we conclude that that principle is applicable also when any term is capable of unilateral variation, and that such a clause does not destroy the contractual relationship between the Crown and public officers, however vulnerable the latter may be as a result. At least public officers can enforce the terms of the contract, so long as they are in force.

86. We must recognize also the practical difficulties of reaching any other conclusion. If, as we have found, there is a contract between the Crown and its servants, and the overriding provision for unilateral variation were held to be inoperative, the Crown would be obliged to secure the agreement of each public officer to every change to G.Rs., however minute. This is unrealistic and unworkable, at least until the Crown has separated, as discussed above, G.Rs. into those which are genuinely referable to a public officer's general contract of service and those which are not.

87. It is perhaps worth noting what the result would have been had we come to the conclusion that the clause for the unilateral variation by the Crown of the contract of service so strikes at the root of the contractual relationship as to destroy it. We should have had to conclude either that the clause prevented there being any contract at all, or that the remainder of the contract stood but that this clause was nugatory.

88. Had we concluded that there was no contract which binds the Crown, this would have left the Crown free, in the exercise of the power inferred by the Letters Patent to regulate and control the public service, to make G.Rs. from time to time, as it thought fit and without any agreement from the public officers concerned. C.S.R. 611 would therefore have been valid and effective for all purposes.

89. Had we decided that there was a contract, but that the unilateral variation clause is inoperative, the result would have been that the Crown could not alter any term of a public officer's contract in future without his consent. It would also, in logic, mean that it could not validly have done so in the past; thus the contract of each serving public officer would have been fossilized as at the date of his employment, unless by some subsequent document he had accepted, or by subsequent conduct he could be deemed to have accepted, such changes as might have been introduced up to the later date. So there would be wide variations as to the terms on which public officers are employed and an unacceptable amount of research would be involved in determining who was subject to what.

90. The appellants, who were under suspension at the date when proceedings were issued, would in such circumstances have been entitled to their declaration. But we would have sought a way of preventing the decision from imposing unacceptable confusion on the administration of the public service. To achieve this, we would have directed that our finding that G.Rs could not be unilaterally altered should take effect only from the date of our decision in relation to all G.Rs other than C.S.R. 611.

Conclusion

91. We have thus decided that there is a contract between the Crown and public officers, which is variable at the will of the Crown if the public officer's initial terms of service indicate to him that such a power is reserved to the Crown.

92. From this it follows that C.S.R. 611 became a condition of service of every such public officer on its promulgation in October, 1977 and that we agree with the trial judge, though in some respects for different reasons, that the appellants must fail to obtain the declarations which they seek. The appeal is dismissed.

Representation:

D. Chang &. Fung (Francis Chaine & Co.) for appellants.

Griffiths, Q.C. , A.G. and Graham (Legal Dept.) for respondent.

(1) 1774 20 St. Tr. 239

(2) 36 E.R. 821

(3) 1915 1 K.B. 698

(4) 1974 S.L.R. 78

(5) 1922 2 K.B. 66

(6) 1945 K.B. 336

(7) 1985 A.C. 229 at p.235

(8) 1970 A.C. 1136

(9) (1970) A.C. 1111.

(10) (1934) A.C. 176, 180 (H.L.).

(11) (1951) H.K.L.R. 234.