KO HON YUE v. LIU CHING LEUNG AND OTHERS

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)

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BETWEEN

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JUDGMENT

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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 1^st 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 1^st 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 1^st 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 1^st defendants’ decision not to renew the plaintiff’s employment (“1^st termination letter”).  In the 1^st 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:

“The Management Committee of the School always puts welfare of students as paramount concern and accordingly has no other option but not to renew the Contract upon its expiry on 31 August 2000. Notwithstanding it appears that you have committed a grave breach of duty and are liable to summary dismissal, the Management Committee shall pay you one month’s salary in lieu of a full period of 3 months’ notice.”

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 2^nd letter of termination dated 13 July 2001 which reads:

“We act for the Management Committee (‘the Management Committee’) of Fung Kai No.1 Secondary School (‘the School’).

As a result of your misconduct and breach of conditions in the letter of employment between you and the Management Committee of the School, your employment with the School should have been terminated last year. However, upon the mediation by the Education Department and your undertaking to improve both in teaching and cooperating with other staff members to achieve the best education environment for students, the Management Committee had procured the consent of the management committee of Fung Kai Liu Man Shek Tong Secondary School to have you transferred there for a term of one year.

Regrettably, despite the fact that request for improvement had been made you have shown no satisfactory improvement during your period there. Further, numerous complaints were lodged against you by teachers, students and parents. The management committee of Fung Kai Liu Man Shek Tong Secondary School has recently resolved that your service there is no longer required.

In the circumstances, the Management Committee has no alternative but to terminate your employment with the School with immediate effect. Accordingly, we are instructed to send you herewith a cheque for $46,485.00 being a month's salary in lieu of notice.”

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:

“You may wish to note that Appendix 17 to the Coe of Aid (Secondary Schools) spells out the procedures to be followed in case of termination of appointment of a teacher. In this regard, I should be grateful if you would kindly provide this office with relevant documents including written warnings to (the Plaintiff) to show that the said procedures have been followed properly by the Management Committee of your school, please.”

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:

“the Management Committee has no alternative but to terminate your employment with the School with immediate effect”.

It then went on to:

“send you … a month’s salary in lieu of notice”.

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 1^st 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 1^st termination letter.  There was no finding by Chu J to such effect. Nor is this defence open to the 1^st defendants in the absence of a respondents’ notice.  I have said the 1^st termination letter is equivocal.  Moreover, I doubt whether the complaints which led to the 1^st 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:

“a society or body corporate that the Director approves in writing to be the sponsoring body for a school specified by him;” Section 3.

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:

“32. Every school shall be managed by its management committee.

33. The management committee of a school shall be responsible for ensuring-

(a) that the school is managed satisfactorily;

(b) that the education of the pupils is promoted in a proper manner; and

(c) that this Ordinance is complied with.”

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).

“the Director shall, in addition to taking account of the views of the management committee, also take account of the views of the sponsoring body, … and, where the management committee has expressed its views on the matter, the views of the sponsoring body shall prevail”.

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:

“any school that receives subsidies from the Government in accordance with … the code of aid for secondary schools …”

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:

“A school in receipt of aid under the terms of this Code of Aid shall be managed and conducted in accordance with the provisions of the Education Ordinance and of subsidiary legislation made under that Ordinance, and in compliance with the provisions of this Code of Aid and such instructions concerning aided schools as the Director may from time to time issue.”

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):

“69. The Code and the Appendices are not well drafted. There are inherent conflicts in the different clauses and the Appendices and it is not easy to resolve those conflicts.”

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:

“	Appointment and Dismissal of Staff
Director to be notified of appointment and dismissal of staff	46. (a) Appointment and dismissal of staff shall be in accordance with regulations 76, 77 and 78 of the Education Regulations 1971, in conformity with this Code of Aid and in accordance with such instructions as the Director may from time to time issue. (b) All appointments, resignations and dismissal shall be promptly notified to the Director. Such notification shall be in writing, stating the effective dates and indicating, where applicable, the period of notice given.
……
Contract of service; letter of appointment	54. (a) A teacher shall, on appointment to an aided school, be furnished with a contract of service and, in addition, or alternatively, a letter of appointment. Such contract of service or letter of appointment shall be signed by the Supervisor of the school or other member of the Management Committee authorized to sign on its behalf, and shall be countersigned by the teacher on appointment. (b) Such contract of service or letter of appointment shall not be subject to annual renewal, but may specify a period of time to which its terms and conditions shall refer. (c) Such contract of service or letter of appointment shall specify :- (i) the name of the school and of the employer, this being the Management Committee or, if any school has only one manager, that manager; (ii) the date from which the appointment is to have effect; (iii) requirements, if any, relating to probation; (iv) the salary to be paid on commencement of the appointment, and any salary scale relating to the post including the annual incremental date; (v) whether such teacher is to contribute to a provident fund; and if so, what such contribution shall be; (vi) the entitlement of such teacher to paid sick leave or maternity leave; (vii) the minimum period of notice of termination of the contract to be given by either party wishing to terminate such contract as specified under Section 56; (viii) the conditions relating to payment of salary on the resignation or dismissal of such teacher as specified under Section 56 and in the case of a teacher recruited overseas, conditions relating to recovery of cost of passage; (ix) that such teacher shall act in accordance with the terms of the Education Ordinance and of subsidiary legislation made under that Ordinance, of this Code of Aid and of such instructions as the Director may from time to time issue regarding the conduct of aided schools.
Appointment to be initially on probation	55. A teacher on first appointment to an aided school shall serve a probationary period of two years, after which the employment of such teacher shall be permanent, subject to such provisions regarding termination of employment as may be contained in such teacher's contract of service or letter of appointment.
Termination of employment	56. (a)  The employment of a teacher who is serving a period of probation shall be terminable by the giving of one month’s notice either by the Management Committee of the school at which such teacher is employed, or by the teacher. (b)  The employment of an unqualified teacher under the terms of Section 53 of this Code of Aid shall be terminable by the giving of one month’s notice either by the Management Committee of the school or by the teacher, subject to such provisions regarding termination of employment as may be contained in such teacher's contract of service or letter of appointment. (c)  The employment of a teacher who has satisfactorily completed a probationary period, shall be terminable by the giving of three months’ notice in writing by the Management Committee of the school or by the teacher. (d)  A teacher employed for a period of not less than two years as specified in a contract of service or letter of appointment shall, at least three months before the expiry of such specified period, inform the Management Committee of the school whether or not he wishes to seek a renewal of the contract of service. The Management Committee of an aided school shall similarly, at least three months before the expiry of such specified period, inform the teacher whether or not it intends to propose renewal of the contract of service relating to his employment. (e)  A teacher who terminates his employment without having given such notice of intention so to terminate as may be required by the terms of this Code of Aid or of the contract of service or letter of appointment relating to his employment, shall be liable to pay one month’s salary in lieu of notice to be credited to the school's Salaries Grant Account. Nevertheless, the Management Committee may waive the said payment if the teacher's explanation is justified and inform the Director of such a waiver and the reasons thereof (f)  A school Management Committee may, subject to the approval of the Director, suspend a teacher from his normal duties on half pay for a period of not exceeding 14 days under the following circumstances :- (i)  in cases where criminal proceedings of a serious nature have been, or are likely to be instituted; (ii)  in cases where the teacher’s serious misconduct is under investigation and it would be against the interest of the school for him to continue to teach in the classroom. In case of (i), where the criminal proceedings are not concluded within 14 days, the period of suspension on half pay may be extended till the end of such proceedings. (g)  A school Management Committee shall only dismiss a teacher for good and sufficient reasons (see Appendices 17 and 18). A teacher shall be liable to summary dismissal if it appears to the Management Committee that he has been convicted of a criminal offence or has committed a grave breach of duty.”

21.  Clause 57 provided that a teacher shall retire:

“57. (a) … at the end of the school year in which be reaches the age of sixty.”

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:

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

Letter Offering appointment

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

and :

Letter of Acceptance

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

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

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

27.  The learned judge went on to hold that:

“138. … The ‘Other Conditions’ clause in setting out the legislations, the Code of Aid and the instructions of the Director of Education merely reiterates the undertaking that the plaintiff gave in the Letter of Acceptance. …”

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:

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

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:

“… Party A to a contract (i.e. the management committee of the school) is not permitted to break the obligations (i.e. the security of tenure provisions) which it owes to Party B (i.e. the principal) simply because it has agreed with Party C (i.e. the Director) to act in a way (i.e. to remove the principal from office when he reaches the age of 60) which would amount to a breach of those obligations. It would be different if Party B (i.e. the principal) had been a party to the agreement between Party A (i.e. the management committee of the school) and Party C (i.e. the Director), but Mr. Ma does not suggest that the principals of aided secondary schools were themselves parties to the agreement for aid reached between the management committees of their schools and the Director.”

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:

(1)   Clause 54 which provided that the teacher should be furnished with a contract of service, which should not be subject to annual renewal. 

(2)   Clause 55 which provided that the teacher’s employment “shall be permanent”;

(3)   Clause 57 which provided that a teacher should retire at 60.

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:

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

36.  In 1996/1997, for the first time the Conditions of Service included the following statement:

“Period of Employment: From 1^st Sept., 1996 to 31^st Aug., 1997”

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:

“Such contract of service or letter of appointment shall not be subject to annual renewal, but may specify a period of time to which its terms and conditions shall refer.”

38.  Thus, the clause “Period of Employment: From 1^st Sept., 1996 to 31^st 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:

“144. … According to the Principal, the School had been adopting the samples provided by the Education Department and the changes were to keep in line with those changes introduced by the Education Department.”

39.  In Chan Chi Loi, Yuen JA said obiter that:

“102. However, even if the Code applied, there was no breach by the School. The contract was for a fixed term of 1 year only. The Plaintiff’s employment was not terminated during that fixed term. There was nothing in the Code that required the School to renew the contract upon expiry. All that happened in this case was that the School did not renew the contract upon expiry.”

40.  In Chan Chi Loi, the contractual provisions were differently worded.  It was expressly provided by clause (2)B of the employment conditions that:

“ B. The effective period for this contract is one year, commencing from the date of execution to 31^st August next year.”

41.  Yeung JA pointed out:

“45. … Both the letter of offer dated 22 May 1997 and the letter of acceptance dated the same date referred to ‘the employment period commencing from 1^st September 1997 to 31^st August 1998.’”

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:

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

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:

“157. … the [1^st defendants’] power to terminate by notice can only be exercised in a case of unsatisfactory service.”

and rejected the submission on behalf of the 1^st defendants that:

“157. … the right to terminate by giving three months’ notice was not restricted to a case of unsatisfactory service.”

46.  As there has been no finding that the 1^st 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 1^st defendants’ written submissions dated 24 September 2010 the 1^st 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:

“Where a servant is wrongfully dismissed, he is entitled, subject to mitigation, to damages equivalent to the wages he would have earned under the contract from the date of dismissal to the end of the contract. The date when the contract would have come to an end, however, must be ascertained on the assumption that the employer would have exercised any power he may have had to bring the contract to an end in the way most beneficial to himself; that is to say, that he would have determined the contract at the earliest date at which he could properly do so: see McGregor on Damages, 13th ed. (1972), paras 884, 886 and 888.”

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:

(1)   Clause 56(g) for unsatisfactory service after due warning or the equivalent of summary dismissal (the procedure for which were to be found in Appendices 17 and 18);

(2)   Clause 56(c) termination by 3 months’ notice

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):

“where it is considered necessary to terminate a teacher’s appointment for causes other than unsatisfactory service, the fore-going period of notice should apply.”

immediately after

“Subsequently, three months’ notice shall be given by the employer after the completion of the probationary period.”

53.  In Chan Chi Loi, Cheung JA was of the view that the power to terminate given by clause 56(c):

“10. … could only be invoked in circumstances other than those concerning the conduct or performance of the teacher. An example will be when a school has to terminate the teacher’s contract due to the drop in student enrolment. …”

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 1^st defendants have been properly sued. 

59.  On 13 September 2002, the plaintiff commenced proceedings in the Labour Tribunal in LBTC 8797/2002 (the 1^st 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 1^st defendant and the Management Committee of Fung Kai No. 1 Secondary School as the 2^nd 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 1^st 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 1^st defendants asserted:

“… the employment contract was entered between the Management Committee of the School and the Plaintiff.”

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 2^nd defendant in case that the court should hold that the 2^nd 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 1^st defendants and the School) pleaded that the Defence was made without prejudice to the 1^st defendants’ position that:

“… (they) were merely acting as agents for the School with duties similar although not identical to directors of a limited company.”

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:

“(1) Whether the 2^nd Defendant (the School) is a legal entity that is liable to be sued.”

66.  The plaintiff’s written submission identified as a subsidiary issue to be determined:

“… who are the employers of the Plaintiff—whether it be the 1^st Defendants or the 2^nd Defendant, or both?”

67.  At the 1^st 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 2^nd defendant was a proper party.  He traced the pleadings which led to the 2^nd 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 2^nd PTR took place on 8 October 2007 which Mr Chiu began by telling the court that the plaintiff would not proceed against the 2^nd Defendant.  That ultimately held to the disjoinder of the 2^nd 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 1^st and 2^nd defendants, made an affirmation on 19 September 2007 stating that:

“2. We acted for the 2^nd Defendant (the School) …

3. … on or about 2 December 2003 (the date when the action was commenced), Fung Kai No. 1 Secondary School was sponsored by Fung Kai Public School (‘FKPS’) and managed by the 1^st Defendant …

4. In the circumstances, (the School) has no legal existence and was wrongly sued by the Plaintiff.”

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 2^nd 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 1^st defendants, estopping them, inter alia, from:

“… denying that they were themselves a party to the contract”.

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 1^st 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:

“28. The Plaintiff was aware of the sponsoring body employing him, and also the difference between the sponsoring body and the Management Committee.”

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:

“(1) There was pleading that D1 was agents of the school, which is a trade mark that was operated by the sponsoring body … This is sufficient pleading of the issue.”

75.  As noted above, it was indeed pleaded that the 1^st defendants were the agents of the School, but 1^st defendants had never pleaded that the School was a trade name used by the sponsoring body.  Nor had the School, while it was the 2^nd defendant, ever so pleaded.  Instead of pleading that the School was a trade name of the sponsoring body, they had jointly pleaded that:

“… if the 2^nd Defendant is not a legal entity properly sued, the 1^st Defendants are taking over the defence of the 2^nd Defendant in their capacity as the Management Committee of the Fung Kai No. 1 Secondary School and they are entitled to be indemnified for all costs and expenses of this Action.”

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 1^st defendants were agents for the sponsoring body.  He also submitted that the burden was on the plaintiff to prove that the 1^st defendants were the employer of the plaintiff.

77.  The learned judge held that the 1^st 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 1^st 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 1^st 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:

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

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

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

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

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

80.  With respect, I believe the learned judge has failed to place any or adequate weight on the fact that it was never the 1^st defendant’s pleaded case that they were the agents of FKPS. 

81.  In the written submissions of 11 October 2010, the 1^st 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 2^nd named 1^st 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:

“(i) the name of the school and of the employer, this being the Management Committee or, if any school has only one manager, that manger;”

84.  Chu J observed:

“97. Prima facie, the documents suggest that the employer was the [1^st defendants]. …”

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 1^st defendants if FKPS was an undisclosed principal.  If it was an undisclosed principal, as opposed to merely unidentified, the 1^st defendants as its agents would be personally liable.  Bowstead and Reynolds On Agency 19^th 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 1^st 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:

“… hinted obliquely that the sponsoring body might be the employer of the Plaintiff. And that Mr Mak stated that (in para. 70 of his written opening) this was a matter which was arguable …”

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 1^st 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 1^st Labour Tribunal proceedings.  The learned judge held, and I respectfully agree that the present claim could have been raised in the 1^st Labour Tribunal proceedings. 

92.  The learned judge also referred to the fact that Mr Liu, the principal, had informed the Presiding Officer that:

“81. … in offering the payment, the school authority was hoping to put an end to the disputes between the plaintiff and the School.”

93.  The learned judge also mentioned that it was:

“76. … apparent that at the last hearing before the Tribunal, [the plaintiff] was contemplating further claims against the School in connection with his termination. … the plaintiff twice sought to clarify and confirm with the Presiding Officer that his claim before the Tribunal was only for wages, albeit he did not go on to disclose that he intended to bring further claims. … In the circumstances, it is only reasonable to expect him to put forward all the claims if he were to litigate with the School over the termination of his employment. …”

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:

“… there will rarely be a finding of abuse unless the later proceeding involves what the court regards as unjust harassment of a party. It is, however, wrong to hold that because a matter could have been raised in earlier proceedings it should have been, so as to render the raising of it in later proceedings necessarily abusive. That is to adopt too dogmatic an approach to what should in my opinion be a broad, merits-based judgment which takes account of the public and private interests involved and also takes account of all the facts of the case, focusing attention on the crucial question whether, in all the circumstances, a party is misusing or abusing the process of the court by seeking to raise before it the issue which could have been raised before.” page 31.

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 2^nd termination letter.  In this action the 1^st 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 1^st defendants.  The School (and hence directly or indirectly, the 1^st 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:

“… is potent evidence not only that the action was not seen as abusive at the time but also that, on the facts, it was not abusive.” 34D.

102.  Lord Millett said at 61F:

“I do not consider that a defendant should be permitted to raise such an objection as late as this. A defendant ought to know whether the proceedings against him are oppressive. It is not a question which calls for nice judgment. If he defends on the merits, this should be taken as acquiescence.”

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 1^st 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:

“… the management committee and/or the School, through itself or its servant or agents, would act in good faith towards the Plaintiff, and would not without reasonable or proper cause, conduct itself in a manner likely to destroy or seriously damage the relation of confidence and trust between employer and employee (‘the Implied Term of Good Faith’).”

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:

“… the implied mutual obligation of trust and confidence applies only where there is 'no reasonable and proper cause' for the employer's conduct, and then only if the conduct is calculated to destroy or seriously damage the relationship of trust and confidence.” Page 67.

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:

“… no reasonable and proper cause and/or good and reasonable grounds exist based upon which the Principal/Supervisor could give the formal warnings in the 4 Incidents pleaded in the preceding paragraph, or any of them, and that the said warnings were not given bona fide by the Principal/Supervisor, who have engaged in a series of acts based on personal bias and/or dislike against the Plaintiff for his independent and outspoken manner in the affairs of the School.”

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.