Ko Hon Yue v. Liu Ching Leung and Others
Read the full judgment text of CACV 294/2008 on BabelCite. This Court of Appeal judgment was delivered on 19 November 2010.
1. Fung Kai No.1 Secondary School (“the School”) is an aided school. It is common ground that it is not a legal entity. However, for convenience sake I will refer to it as the School when it is not necessary to distinguish between it and its Management Committee. This is the plaintiff’s claim against all 13 members of the Management Committee of the School for the year 2001 (“the 1 st defendants”) for damages for, inter alia, wrongful termination of his contract of employment in July 2001, as we
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CACV 294/2008 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF APPEAL CIVIL APPEAL NO. 294 OF 2008 (ON APPEAL FROM HCA NO. 3494 OF 2003) ----------------------- BETWEEN
----------------------- Before: Hon Tang Ag CJHC, Cheung JA and Yeung JA in Court Date of Hearing: 14 July 2010 Written Submissions: 24 September and 5-11 October 2010 Date of Judgment: 19 November 2010 _______________ JUDGMENT _______________ Hon Tang Ag CJHC: 1.Fung Kai No.1 Secondary School (“the School”) is an aided school. It is common ground that it is not a legal entity. However, for convenience sake I will refer to it as the School when it is not necessary to distinguish between it and its Management Committee. This is the plaintiff’s claim against all 13 members of the Management Committee of the School for the year 2001 (“the 1st defendants”) for damages for, inter alia, wrongful termination of his contract of employment in July 2001, as well as for breach of an implied term of good faith. 2.After a 19-day trial, the plaintiff’s claim was dismissed by Chu J on 4 August 2008. He was represented by Mr Simon Chiu at trial. This is his appeal. He appeared in person but continued to rely on the written submissions used at first instance. Mr Simon Chiu’s written final submission at trial is 202 pages long. Mr Andrew Mak appeared below, and, together with Mr Clark Wang, on appeal, for the 1st defendants. We have been supplied with some of the written submissions used at trial totalling 339 pages. The pleadings were also voluminous. I regret to say, despite the length of the pleadings and the written submissions, I have not found it easy to follow the parties’ respective case. The difficulty was compounded by the fact that the plaintiff acted in person on appeal and his wholesale reliance on the written submissions of Mr Simon Chiu. 3.Between September 1990 and August 2000, the plaintiff taught at the School, the first two years under probation. The plaintiff mainly taught English in the School. He also taught Economics and Public Affairs (“EPA”) to Form 1 to Form 3 students. Fung Kai Public School (“FKPS”) is the sponsoring body of the School. It also owns the land on which the School is built. FKPS was incorporated in 1961 with limited liability. It is also the sponsoring body of other primary and secondary schools, including Fung Kai Liu Man Shek Tong Secondary School (“FK-LMST School”). In the academic year 2000/2001, the plaintiff taught at the FK-LMST School. FKPS is significant because Chu J held that the 1st defendants were its agents and hence not personally liable to the plaintiff in any event. FKPS was not a party to the proceedings. Events leading to these proceedings 4.Between 1995 and 1999, the plaintiff had received four formal warnings from the School. The first two were verbal warnings administered by the Principal on 14 December 1995 and 4 March 1998 respectively. They were recorded in writing. The other two were written warnings issued by the supervisor on 10 February and 1 June 1999 respectively. 5.On 29 March and 14 April 2000, the School received two separate complaints from a group of 6 Form 5B and another group of 23 Form 6A students concerning the plaintiff’s teaching performance and behaviour during lessons (“the complaints”). The Principal appointed a committee to look into the complaints. The committee issued questionnaires to the students in the two classes. The responses supported the complaints. When asked by the Principal to explain, the plaintiff refused, saying that it was nonsense and asked the Principal for evidence invoking the Personal Data (Privacy) Ordinance, Cap. 486. The plaintiff complained about the School’s handling of the complaints. He claimed that the questionnaires contained leading questions and were biased and the investigation was conducted behind his back. 6.Following the four formal warnings and as a result of the complaints by the students, the School decided to terminate the employment of the plaintiff. By a letter from their solicitors, Donald Yap Cheng & Kong, to the plaintiff dated 22 July 2000, the plaintiff was informed of the 1st defendants’ decision not to renew the plaintiff’s employment (“1st termination letter”). In the 1st termination letter, after reciting the warning of 14 December 1995, 4 March 1998, 10 February 1999 and 1 June 1999, as well as the complaints in April 2000 of 23 Form 6A students, it said:
7.However, upon the intervention of the Education Department, at a meeting on 8 August 2000 attended by the plaintiff, the Chief Executive of the FKPS, Vice-Principal of the School and the Principal of the FK-LMST School, it was agreed that the plaintiff should be transferred to teach at FK-LMST School for one year, but he would remain on the establishment of the School. If the plaintiff’s performances were up to expectation and there was a vacancy, FK-LMST School would give priority to appoint the plaintiff as a teacher. The minutes of meeting at the Education Department shows that the School agreed to temporarily suspend the decision not to renew the employment of the plaintiff. According to the plaintiff, however, he did not agree that it was a temporary suspension. In any event as a result of this arrangement, the plaintiff taught at FK-LMST School between September 2000 and August 2001. However, his performance there was said not to have been to the satisfaction of the FK-LMST School which led to the 2nd letter of termination dated 13 July 2001 which reads:
8.There is a Certificate of Service issued by the School, signed by its Acting Principal dated 10 August 2001 where the “cause of leaving service” was given as “dismissal”. However, there is a later Certificate of Service dated 13 August 2001, where the cause of leaving service was left blank. I note in passing that the School had received a letter addressed to the School from the Director of Education dated 17 August 2001, stating:
I do not know whether there had been an earlier and similar oral communication which led to the second Certificate of Service. 9.The termination letters are equivocal. The first spoke of non-renewal upon expiry, it then referred to summary dismissal and concluded by giving one month’s notice in lieu of a full period of 3 months’ notice. The second termination letter mentioned that:
It then went on to:
10.The primary case of the defendants at trial was that the plaintiff’s employment was for a term of one year from 1 September 2000 to 31 August 2001 and that his employment came to an end at the end of the year. The Re-re-amended Defence is not clear. But it appears that at trial the 1st defendants also relied on a termination by 3 months’ notice after warning as well as summary dismissal under section 9 of the Employment Ordinance. However, no finding was made by the learned judge regarding these two latter defences. Nor was there any respondent’s notice in relation to them. However, in the defendant’s further written submission dated 24 September 2010, made in response to the court’s query, it was stated that the defendants had sought to argue at trial that the plaintiff had been summarily dismissed for grave breach of duty by the 1st termination letter. There was no finding by Chu J to such effect. Nor is this defence open to the 1st defendants in the absence of a respondents’ notice. I have said the 1st termination letter is equivocal. Moreover, I doubt whether the complaints which led to the 1st termination letter were sufficient to support a summary dismissal of the plaintiff. The Education Ordinance, Cap. 279 11.I turn to the Education Ordinance, Cap. 279 (“the Ordinance”), which was in force at the material time. A school was required to be registered under section 10 of the Ordinance. An applicant had to fill in a form for the purpose. Names of the members of the proposed management committee as well as the name of the proposed supervisor had to be provided in the form. The form provided that the name of a sponsoring body (if any) should be supplied. It appears that it was not obligatory to have a sponsoring body. In this case, presumably KFPS’s name was supplied as the sponsoring body. Sponsoring body was defined as:
12.Part III of the Education Ordinance dealt with managers and provided for their registration on application, and with the management of a school. Sections 32 and 33 of the Ordinance provided:
13.At the material time, a supervisor (who must be a member of a Management Committee) required approval by the Director of Education (“the Director”) on the recommendation of the Management Committee. His tenure was regulated by section 36. Section 39 dealt with his duties, and provided that all correspondence between a school and the Director or any public officer concerning the management of the school should be conducted on behalf of the school by the supervisor. A principal was approved by the Director on the recommendation of the Management Committee. Section 53. His tenure was governed by section 55. 14.Section 72A of the Education Ordinance provided that, in exercising his powers under sections 30(2), 31(2)(a), 37(d), 38(2) and 38A(2).
15.Section 30(2) provided that the Director should refuse to register an applicant as a manager of a school if it appeared to the Director that the applicant is not acceptable as a manager of the school to the majority of the management committee. Section 31(2)(a) dealt with the cancellation of the registration of a manger. Section 37(d) and section 38(2) dealt with the withdrawal of approval of supervisor and the approval of subsequent supervisors, and section 38A(2) the appointment of an acting supervisor. In these situations, the effect of section 72A was that in the event of a difference of views between the management committee (or a majority thereof) and a sponsoring body, the view of the sponsoring body should prevail. Aided School 16.As noted the School was an aided school. An aided school was defined by section 3 as:
Code of Aid (“the Code”) 17.Clause 3 (to distinguish the Code from the Ordinance I shall refer to sections in the Code as clauses) of the Code read:
18.Such aids could include a “Salaries Grant” (Clause 6). In this case, the plaintiff’s salary was paid directly by the government. Para. 110 of the judgment. 19.The Code and its appendices contained detail provisions dealing with appointment and dismissal of teachers. In Chan Chi Loi v. Cheng For & Ors (unreported), CACV243/2003, Yeung JA said (I respectfully agree):
20.The Code has been amended from time to time. I believe the version supplied to us was up to date as of 2000. Clauses 46, 54 - 56 provided:
21.Clause 57 provided that a teacher shall retire:
22.Appendix 17 to the Code set out the procedure to be followed in case of termination of appointment of a teacher, which required a sufficient notice of termination of employment to be given in accordance with Clause 56. Appendix 17 also required formal warnings(s) “embodying relevant criticisms” to be given to the teacher, and no improvement by the teacher thereafter, before his employment could be terminated for unsatisfactory service. Brief Statement of the Parties’ respective cases 23.The plaintiff’s case is that some of the clauses in the Code had been incorporated into his contract of employment such that after a probationary period of two years (which had expired) the plaintiff’s employment was permanent (Clause 55), until he reaches the retirement age of 60 (Clause 57(a)). It was not contended that every clause in the Code, e.g. Part II of the Code which dealt with the grant of aid, could have been incorporated into the plaintiff’s contract of employment. Only those provisions which concerned the relationship between a school and a teacher might be incorporated by reference. When I refer to the Code or relevant clauses in the Code, I refer to these provisions. It was also the plaintiff’s case that his employment could only be terminated, either summarily for serious misconduct or because “his work is unsatisfactory”, and he “does not improve despite a formal written warning embodying relevant criticism”. Also, that his employer was the Management Committee as provided by Clause 54(c)(i). 24.On the other hand, the defendants’ primary case was that the plaintiff’s employment was for a fixed term of one year, and that no notice was required to terminate it. The Code did not form part of the contract of employment. As will be explained later, the defendants also took the point that they were the agents of FKPS and therefore not personally liable. Undisputed Contract Documents 25.The plaintiff was first employed in 1990 for the academic year 1990/1991. He was on probation for two years from 1 September 1990. 26.This is what the learned judge said about the contractual documents:
27.The learned judge went on to hold that:
Whether the Code is incorporated 28.With respect, I question whether the “Other Conditions” clause is a mere reiteration of the plaintiff’s undertaking. Whether the language of “Other Conditions” is apt to incorporate some of the clauses in the Code to the plaintiff’s contract of employment (and if so, which) is a matter of construction. 29.As noted, the Letter Offering Appointment offered the plaintiff employment “under the conditions set out in the attached Conditions of Service for Teachers in Fung Kai No. 1 Secondary School …” (“the Conditions of Service”). The “Other Conditions” are part of the Conditions of Service. 30.As noted Clause 3 of the Code imposed as a condition of aid that it “shall be managed and conducted in accordance with, inter alia, (the Code)”. In Lau Chi Fai & Anor v. Secretary for Justice & Anor [1999] 2 HKLRD 494 at 496 to 497, Keith JA sitting at First Instance explained:
31.The issue in Lau Chi Fai was whether Mr Lau who was the principal of an aided secondary school was obliged to retire in accordance with clause 57 of the Code when he reached the age of 60. Both Mr Lau and his school wished Mr Lau to continue. He was granted an one-year extension by the Director of Education. Mr Lau’s principal argument was that he was entitled to security of tenure until he reached the age of 70 because of the provisions of the combined effect of sections 47 and 55 of the Education Ordinance, accordingly clause 57 of the Code was unenforceable because it conflicted with the aforementioned provisions of the Ordinance. It was in such context that Keith JA said:
32.In Chan Chi Loi, this Court by a majority (Yeung, Yuen JJA, Peter Cheung JA dissenting) observed that there was no ground for implying a term into a contract that the School was contractually bound to the teacher to follow the Code. However, here, the plaintiff’s case was that the Code had been incorporated and not implied, thus Chan Chi Loi is distinguishable. 33.The Code contained provisions imposing obligations on the part of a school as well as on a teacher. I accept that the Letter Offering Appointment did not expressly say that the School should comply with the Code (which may be explained by the fact that clause 3 of the Code already obliged the School to comply with the Code), whereas the Letter of Acceptance expressly required the plaintiff to agree to abide by the Code, but, I cannot agree that the “Other Conditions” clause was a mere reiteration of the undertaking. In my view those provisions in the Code which touched on or dealt with the relationship between a school and a teacher have been incorporated into the contract of employment by the “Other Conditions” clause. 34.The plaintiff’s case was that the following provisions in the Code were inconsistent with his employment being for a fixed term of employment of one year only:
35.On the basis that the Code had not been incorporated into the plaintiff’s contract of employment, Chu J held that the plaintiff was employed for a fixed term so that no contractual notice of termination would have been required. The plaintiff was transferred to FK-LMST School for the academic year 2000/2001 and there was no written contract for that year, but the parties had proceeded on the basis that 1999/2000 Conditions of Service continued to apply. Chu J held that the absence of a written contract meant that the plaintiff’s contract of employment was deemed under section 5(2) of the Employment Ordinance to be a contract for 1 month renewable from month to month. And that section 6(2) of the Employment Ordinance required that a notice of 1 month be given. Chu J also held that:
36.In 1996/1997, for the first time the Conditions of Service included the following statement:
37.That was repeated, with necessary modification for the subsequent years. This supports the argument that the employment was for one year certain, however, it may be explained by Clause 54(b) which provided that:
38.Thus, the clause “Period of Employment: From 1st Sept., 1996 to 31st Aug., 1997” might have referred to the period of time to which the conditions apply. Indeed Conditions of Service had been amended from time to time and as the learned judge said:
39.In Chan Chi Loi, Yuen JA said obiter that:
40.In Chan Chi Loi, the contractual provisions were differently worded. It was expressly provided by clause (2)B of the employment conditions that:
41.Yeung JA pointed out:
42.In the present case, neither the letter of offer nor the letter of acceptance expressly referred to the period of employment, and as I have said the period of employment stated in the Conditions of Service might be a reference to the period during which those conditions would apply. 43.If I am right that the Code had been incorporated such that it was binding on the School as well, it seems clear to me that the contract was meant to be permanent and no renewal of contract was necessary. In other words, he was not employed for a fixed term of one year only. 44.The Conditions of Service for the year 1999/2000 provided for termination by the School as follows:
I shall refer to this as the termination clause. 45.In respect of the termination clause, Chu J agreed with the plaintiff’s submission that:
and rejected the submission on behalf of the 1st defendants that:
46.As there has been no finding that the 1st defendants were entitled to terminate the employment of the plaintiff because of unsatisfactory service or by summary dismissal, there was no termination of the plaintiff’s employment pursuant to the termination clause. 47.In the 1st defendants’ written submissions dated 24 September 2010 the 1st defendants contended that clause 56(c) of the Code may be relevant to assessment of damages. 48.If clause 56(c) had been incorporated into the plaintiff’s contract of service it would be relevant to quantum of damages because as Buckley L.J. said in Gunton v Richmond-upon-Thames London Borough Council [1981] 1 Ch 448 at 469:
49.There is a difference between the termination clause and the provisions regarding termination in the Code. Clause 56 of the Code provided for termination under three different circumstances:
50.Clause 56(g) is similar to the termination clause. I note, in passing, that the Director’s letter of 17 August 2001 quoted in para. 8 above referred to Appendix 17 of the Code, which suggests that the Director had expected the School to comply with Appendix 17 in the event of a termination for unsatisfactory service. 51.There is no equivalent of clause 56(c) in the “contract of service” or “letter offering appointment”, so unless clause 56(c) had been incorporated under the “Other conditions” clause, clause 56(c) is irrelevant. 52.Between 1 September 1990 and August 1999, the termination clause had included the following additional sentence (the additional sentence):
immediately after
53.In Chan Chi Loi, Cheung JA was of the view that the power to terminate given by clause 56(c):
54.Yeung JA expressed no view. Para. 70. Yuen JA did not find it necessary to decide the point. Para. 103. 55.I express no view on the proper construction of clause 56(c). I note the difference in language between clause 56(c) and the additional sentence. I note also that Gunton is authority that in a suitable case, a power to terminate on notice can co-exist with a power to terminate for cause. 56.The additional sentence was omitted for the year 1999/2000. The learned judge’s conclusion that there was no provision for termination without cause was based on the termination clause in the Conditions of Service of 1999/2000 which did not contain the additional sentence. In such circumstances, should I regard clause 56(c) as having been incorporated into the plaintiff’s contract of service? I believe its omission from the 1999/2000 conditions is significant, and is inconsistent with the incorporation of clause 56(c) into the Conditions of Service. 57.So, although with hesitation, I have come to the conclusion that clause 56(c) has not been incorporated. In other words the plaintiff’s contract of employment could not be terminated merely by 3 months’ notice. Proper Parties 58.I turn to the question whether the 1st defendants have been properly sued. 59.On 13 September 2002, the plaintiff commenced proceedings in the Labour Tribunal in LBTC 8797/2002 (the 1st Labour Tribunal proceedings) against the School claiming salaries from 13 July 2001 to 31 August 2001. These proceedings resulted in an order dated 13 December 2002 stated to be by consent whereby the School was ordered to pay the sum of HK$76,758 to the plaintiff in full and final settlement of all his claim. 60.However, on 30 June 2003, the plaintiff commenced another claim in the Labour Tribunal, namely, LBTC 5616/2003 against the School as the 1st defendant and the Management Committee of Fung Kai No. 1 Secondary School as the 2nd defendant for a sum of $14,024,190.90 for loss of unearned salaries, provident fund and mortgage interest. On 4 September 2003, this claim was transferred to the Court of First Instance and became the present action, namely HCA 3494/2003. However, when the statement of claim was filed, the 1st defendants was the only defendant and the School had not been made a party. 61.In para. 9 of the Defence which was filed on 13 January 2004, the 1st defendants asserted:
62.In its Reply filed on 9 February 2004, the plaintiff pleaded that the School was not a legal entity and had no legal capacity to enter into any employment contract. The plaintiff then re-amended its Statement of Claim on 8 March 2005 to join the School as the 2nd defendant in case that the court should hold that the 2nd Defendant was a legal person. 63.Para. 1 of the Re-Amended Defence filed on 29 March 2005 (presumably filed on behalf of both the 1st defendants and the School) pleaded that the Defence was made without prejudice to the 1st defendants’ position that:
64.On 11 April 2005, in para. 2 of its Amended Reply, the plaintiff explained that the School was joined to avoid unnecessary legal argument on parties. 65.In the written submission prior to the first pre-trial review (“PTR”), the defendants identified as one of the issues:
66.The plaintiff’s written submission identified as a subsidiary issue to be determined:
67.At the 1st PTR which was held on 20 September 2007, Chu J queried whether or not the employer was the sponsoring body. At page 5 of the transcript Mr Chiu dealt with the issue whether the 2nd defendant was a proper party. He traced the pleadings which led to the 2nd defendant’s joinder. Mr Chiu said he needed to give the matter further thought, at page 13, Mr Mak said enough evidence had been put in regarding the School’s, presumably, lack of legal existence, and explained that no application had been made to strike out for the simple reason, that they did not wish to waste the court’s time. In the end it was agreed that there should be a second PTR to “straighten out the parties”. 68.The 2nd PTR took place on 8 October 2007 which Mr Chiu began by telling the court that the plaintiff would not proceed against the 2nd Defendant. That ultimately held to the disjoinder of the 2nd defendant under O. 15 r. 6(2)(a). Costs were reserved. At the conclusion of trial, Chu J ordered the plaintiff to pay the related costs. I should mention that the plaintiff also complained about the order for costs made against him. I see no merit in this complaint. 69.Earlier, on 19 September 2007, Mr Chan Wai Shing, the senior partner of Chan & Associates, solicitors for both the 1st and 2nd defendants, made an affirmation on 19 September 2007 stating that:
70.He also exhibited a Certificate of Incorporation of FKPS, which, as Chu J had pointed out in her judgment, had been disclosed on discovery in 2004. 71.At the 2nd PTR, in response to Chu J’s question whether the plaintiff was suing the sponsoring body, Mr Chiu replied the plaintiff could not, because it was time-barred. He referred to para. 2A of Re-Amended Reply, a long and complicated plea of estoppel against the 1st defendants, estopping them, inter alia, from:
72.The detriment relied on for the estoppels being the plaintiff’s inability to sue the sponsoring body because of the Limitation Ordinance, Cap. 347. Unfortunately, O. 20 r. 5 (3) and (5) had been overlooked. In the circumstances of this case, I believe had an application been made to correct the name of a party, by substituting FKPS for the School, it would have been successful. That being the case, it is difficult to see how the estoppel plea, rightly rejected by the learned judge, could in any event have succeeded. 73.However, in Mr Chiu’s written final submission, at para. 8 he made the point that the 1st defendant had never pleaded that they were the agents of FKPS. Nor was there any factual evidence at trial. Mr Mak’s written final submission at trial did not respond directly to Mr Chiu’s points. It said that:
74.In response to the court’s query, after the conclusion of the hearing of the appeal, Mr Mak in his written submission of 11 October 2010 submitted that:
75.As noted above, it was indeed pleaded that the 1st defendants were the agents of the School, but 1st defendants had never pleaded that the School was a trade name used by the sponsoring body. Nor had the School, while it was the 2nd defendant, ever so pleaded. Instead of pleading that the School was a trade name of the sponsoring body, they had jointly pleaded that:
76.In the written submission of 11 October 2010, Mr Mak also asserted that there was ample evidence during trial from both parties on whether the 1st defendants were agents for the sponsoring body. He also submitted that the burden was on the plaintiff to prove that the 1st defendants were the employer of the plaintiff. 77.The learned judge held that the 1st defendants were the sponsoring body’s agents and as such were not personally liable to the plaintiff. 78.The learned judge had queried whether the parties had intended the 1st defendants to be personally liable. The learned judge then referred to the important role which FKPS played as the sponsoring body in respect of, e.g. the negotiation with the Education Department after the 1st Termination, the plaintiff’s transfer to FK-LMST for the academic year 2000/2001, and the fact that the plaintiff had turned to FKPS for help in his dispute with the School. 79.Chu J said:
80.With respect, I believe the learned judge has failed to place any or adequate weight on the fact that it was never the 1st defendant’s pleaded case that they were the agents of FKPS. 81.In the written submissions of 11 October 2010, the 1st defendants provided the Court with a selection of transcript of evidence in which some aspects of the role of the sponsoring body in the affairs of the School were explored. For example, there was evidence that the plaintiff was aware of the existence of FKPS as the sponsoring body, that he had written to officers of the sponsoring body, met with them and he was aware of the influence which the sponsoring body had on the appointment and dismissal of staff. Also he was aware that Mr Liu Ching Leung was chairman of the sponsoring body as well as the SMC of the School. 82.But we have not been referred to any evidence from the defendants actually asserting that they were the agents of FKPS. We were referred to the cross-examination on behalf of the plaintiff of Defence Witness 1 and the 2nd named 1st Defendants, Mr Liu Poon Keung, a former principal of the School, in which, it was suggested that a teacher was promoted despite Mr Liu’s objection because that teacher had the support of a director of the sponsoring body. We were also referred to the plaintiff’s cross-examination of Mr Chan Wing Ping, the principal of FK-LMST School, which revealed that Mr Show Hoo Hsu, the Chief Executive of the sponsoring body was responsible for the management of all the schools of the sponsoring body. I do not doubt that a sponsoring body would have substantial influence over the affairs of a school sponsored by it. But whether that would make the management committee its agent in the management of the School is a different question. I have earlier referred to section 72A which shows that in some circumstances the view of a sponsoring body should prevail over the views of a management committee. But section 72A does not support the view that a management committee is a mere agent of a sponsoring body. Nor does the 2004 amendment to the Education Ordinance referred to by the learned judge support that view. Indeed, as noted above, the Education Ordinance did not require that there be a sponsoring body. Theoretically, at least, an aided school could be managed by a management committee without a sponsoring body. It also appears that prior to 2004, there was no provision for incorporation of a management committee. 83.Mr Mak also submitted that the burden of proof is on the plaintiff. The plaintiff relied on, for example, the letter offering appointment which says in terms that “the Management Committee … offers you an appointment”, as well as clause 54(c) of the Code which required the contract of service or letter of appointment to specify:
84.Chu J observed:
85.In such circumstances, I believe the burden of showing that the management committee was in fact an agent was on the management committee. Nor would it an answer to say that the plaintiff was aware of the existence of a sponsoring body, because that begs the question, whether the sponsoring body was the principal. Nor would it help the 1st defendants if FKPS was an undisclosed principal. If it was an undisclosed principal, as opposed to merely unidentified, the 1st defendants as its agents would be personally liable. Bowstead and Reynolds On Agency 19th Ed., 9-012. 86.Chu J had queried whether it was intended by the parties that a Management Committee should be personally liable? Except in cases where an intention to enter into legal relation is in issue, normally, liability on the part of a contractual party can be taken for granted. In any event, their intention must be gathered from the language they have chosen to adopt. There is nothing in the language used in the contractual documents expressly or by implication to show that the 1st defendants were not to be bound. Furthermore, since as noted, the plaintiff’s salary was paid directly by the government, it is not inconceivable that members of a Management Committee might be prepared to face the possibility of personal liability believing that the Government or a sponsoring body, if there be one, would be at least in honour bound to indemnify it. 87.Mr Mak also relied on paras. 4 to 7 and 28 to 39 of the plaintiff’s written closing submission. I do not believe these paragraphs help. Indeed in para. 8 Mr Chiu complained that Mr Chan Wai Shing’s affirmation of 19 September 2007:
88.Mr Mak accepted that there was no specific plea that the employer was the sponsoring body but he submitted that the plaintiff had chosen to disregard the pleading and conducted the trial on the basis that the plaintiff was aware of the existence, the role, and power of the sponsoring body on the question of the plaintiff’s employment. Wing Hang Bank Ltd v Crystal Jet International [2005] 2 HKLRD 795 89.I do not believe Mr Chiu could be accused of not having taken the pleading point. 90.I am of the view that the 1st defendants’ defence that they were not the proper party to be sued should fail. Abuse of Process 91.The learned judge held that the present action amounted to an abuse of process, because of the 1st Labour Tribunal proceedings. The learned judge held, and I respectfully agree that the present claim could have been raised in the 1st Labour Tribunal proceedings. 92.The learned judge also referred to the fact that Mr Liu, the principal, had informed the Presiding Officer that:
93.The learned judge also mentioned that it was:
94.The leading authority on abuse of process is Johnson v. Gore Wood & Co [2002] 2 AC 1. There, a company controlled by the plaintiff had sued the defendant solicitors for professional negligence in an earlier action which was eventually compromised during the trial (in late 1992) by payment to the company of a substantial proportion of the sum claimed by it. Prior to the compromise the defendants were aware that the plaintiff thought it was better to wait until the company’s claim had been concluded before dealing with the personal claim. The plaintiff’s action was issued in April 1993. In December 1997, the defendants applied for the action to be struck out as an abuse of process of the court as well as a determination of preliminary issues as to whether they had owed the plaintiff a duty of care and whether the damages claimed by him were in principle recoverable on the facts. The judge refused to strike out the action. He further held that the heads of damage pleaded were not irrecoverable as a matter of law in respect of the breaches alleged by the plaintiff. The Court of Appeal, allowed the appeal in respect of the dismissal of the application to strike out the action. On appeal by the plaintiff, the House of Lords held that the plaintiff’s action was not an abuse of process. 95.In the lead judgment, Lord Bingham said:
96.What then are the facts of which I should take into account? 97.As a result of the earlier proceedings, the School had paid the plaintiff $76,758, being arrears of wages for the period from 13 July 2001 to 31 August 2001. That amount had included the one month pay in lieu of notice given with the 2nd termination letter. In this action the 1st defendants’ primary case is that the plaintiff was employed for a fixed term of one year, so the plaintiff would be entitled to be paid until 31 August 2001. So the first fact I would note is that, this is not a case where, but for the settlement, the School might not have to pay the plaintiff $76,758. 98.Secondly, it is not clear whether the learned judge’s decision to strike out the action was influenced by her view that the plaintiff was only entitled to 1 month’s pay from 13 July 2001 in lieu of notice. On the basis of my judgment, subject to assessment, the plaintiff might be entitled to substantial damages. Had the learned judge decided that the plaintiff might be entitled to substantial damages, I doubt whether she would have struck out the claim. 99.Thirdly, the limited prejudice to the 1st defendants. The School (and hence directly or indirectly, the 1st defendants) were involved in the first Labour Tribunal proceedings. There were a total of 3 call-over hearings. No legal representation was allowed (though apparently the School had legal advice throughout). Was this the unjust harassment which Lord Bingham had in mind? 100.In Johnson, the House of Lord overturned the decision of the Court of Appeal striking out the plaintiff’s claim for abuse, essentially, for two reasons. 101.First, because the defendants’ failure to take action to strike out over a long period of time, which, Lord Bingham said:
102.Lord Millett said at 61F:
103.Here, abuse of process had been pleaded with the original defence as early as January 2004 but no action to strike out had been ever taken. The matter proceeded to a full trial. The costs of the action might be ruinous to a school teacher. The prejudice to the plaintiff of the absence of an earlier application to strike far outweighs the limited prejudice to the 1st defendants outlined above. With respect, the learned judge does not appear to have given any weight to this. 104.Another reason for allowing the appeal in Johnson was that the earlier settlement was made with an express reservations of further proceedings. Here, what the plaintiff said at the Labour Tribunal was an attempted reservation, although it might not have been understood as such by the School. 105.The plaintiff has made the point that, in employee’s compensation cases, a second action by an employee, say, for negligence, against his employer, would not normally be regarded as an abuse or misuse of the process of the court. I believe, an employee who claims, say, arrears of wages against an employer, which was followed by a later action for damages for wrongful dismissal, should not without more be regarded as having misused or abused the process of the court. Whether he had misused or abused the process of the court must depend on all the circumstances of the case. 106.Had the plaintiff misused or abused the process of the court? It is true, as noted by the learned judge, that the plaintiff was a law graduate and holder of an ordinary degree in law. But he was never professionally qualified. He had had very limited legal advice. 107.Whilst, with respect, I agree with the learned judge, that ignorance is not a defence, I believe it was wrong to ignore the relevance of the plaintiff’s ignorance on whether the second action could be regarded as a misuse or abuse of legal process. 108.Also, on the fact of this case, I believe the learned judge would not have dismissed the plaintiff’s claim for abuse of process had she concluded that he might be entitled to substantial damages. In all the circumstances, I believe I may interfere with the learned judge’s exercise of discretion, and hold that the plaintiff’s claim could not be dismissed as an abuse of process. Implied term of good faith 109.An important part of the plaintiff’s claim was for damages for breach of an implied term of good faith. This was pleaded in para. 9(A) of the Re-Re-Amended Statement of Claim as follows:
110.Other breaches of the implied term of good faith relied upon, included, the denial by letter dated 13 June 2000 by the supervisor to Mr Law of Education Department that he agreed to the terms of mediation agreement evidenced by letter dated 29 May 2000 from an education officer Mr Law Kwung Hung issued on behalf of the Director of Education to the supervisor; the allegation that the supervisor and/or the Principal orchestrated or alternatively, unreasonably amplified (incident No. 5 namely the complaints by the Form Class 5B students and Class 6A students) which was not conducted bona fide but by way of further excuse to have the plaintiff dismissed from the School. In para. 27 he also complained about a series of events which took place after 1 September 2000 at the FK-LMST School. 111.This claim is based on Malik v Bank of Credit and Commerce International SA (in liquidation) [1998] AC 20, where employees of the Bank claimed “stigma compensation”. Their claims were upheld on the basis that the employer had a general obligation not to engage in conduct likely to undermine the trust and confidence required if the employment relationship is to continue in the manner the employment contract implicitly envisages. 112.There, Lord Steyn said:
113.That bad faith or absence of good faith is the basis of such claim is made clear in para. 18 of the statement of claim:
114.These factual complaints have been dealt with by the learned judge in paras. 175 to 257 which occupied 82 pages of the judgment. The learned judge had had the benefit of oral evidence from various witnesses which touched upon the incidents complained of by the plaintiff. She came to the conclusion which was adverse to the plaintiff on the facts. I see no basis upon which we could overturn the learned judge’s findings. Conclusion 115.To conclude, I agree with the learned judge’s dismissal of the plaintiff’s claim insofar as it was based on breach of an implied term of good faith. I am of the view, however, that the plaintiff’s employment could only be terminated in accordance with the termination clause. It was and not so terminated. Hence, his employment had been wrongly terminated. For such wrongful termination the plaintiff is entitled to damages which should be assessed by Chu J. I would therefore allow the plaintiff’s appeal and send the matter back to Chu J for assessment of damages in accordance with this judgment. I would make an order nisi that the plaintiff should have the costs of the appeal. The costs of the trial should await the assessment of damages. Hon Cheung JA: 116.I agree. Hon Yeung JA: 117.I agree with the judgment of Tang Ag CJHC and have nothing to add.
The Plaintiff, in person, present Mr Andrew Mak and Mr Clark Wang, instructed by Messrs K B Chau & Co., for the 1st and 2nd Defendants 1st Defendants' application for leave to appeal to Court of Final Appeal refused by Court of Appeal. Please refer to CACV294/2008 dated 25 March 2011 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cases cited in this judgment
Further hearings and rulings under CACV 294/2008