WOO KWOK PING v. THE INCORPORATED MANAGEMENT COMMITTEE OF TSUEN WAN TRADE ASSOCIATION PRIMARY SCHOOL

HCA 1523/2013

[2020] HKCFI 186

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1523 OF 2013

____________

____________

_____________

D E C I S I O N

_____________

A. INTRODUCTION

1.  The Defendant (“IMC”) ran and still runs the subject aided primary school (“the School”) which received subvention from the government.  The Plaintiff was employed as a principal of the School until her dismissal.

2.  For about a year, IMC had issued reminders and warnings to the Plaintiff for misconduct until she was summarily dismissed on 27 July 2013.  But for the termination, the Plaintiff would have been due for retirement about a year later, ie on 31 August 2014.

3.  The Plaintiff took the view that IMC had failed to follow the statutory procedure for termination of a principal.  On 20 August 2013, the Plaintiff commenced this action. 

4.  The jurisdiction issue was first raised by a Master at the 1^st case management conference (“CMC”) on 3 October 2018.

5.  On 29 March 2019, IMC issued a striking-out application against the amended statement of claim for want of jurisdiction (“the Striking-Out Application”). One working day before the hearing, the Plaintiff sought leave to re-amend her statement of claim.  IMC withdrew the Striking-Out Application after considering the re-amendments.

6.  Master SP Yip awarded costs to IMC, summarily assessed at $172,000 to be paid to IMC forthwith, on the basis that the Striking-Out Application would have succeeded but was only withdrawn due to the late amendment (“the Costs Order”).

7.  At the 3^rd CMC on 29 July 2019, Master Ho disagreed with the outcome of the Striking-Out Application, and directed the parties to argue on the jurisdiction issue before the listing judge.

8.  On 5 August 2019, the Plaintiff issued a notice of appeal against the Costs Order.

9.  There are thus 2 matters before me:

(1) Whether this claim falls within the exclusive jurisdiction of the Labour Tribunal (“the jurisdiction issue”); and

(2) The Plaintiff’s appeal against the Costs Order.

B.     BACKGROUND FACTS

10.  The Plaintiff’s employment as a principal was pursuant to an employment contract (“the Contract”), which incorporated by reference the Education Ordinance (Cap 279) and its subsidiary regulations, 2 Codes and a Guide.

11.  On 20 August 2013, the Plaintiff commenced the present action for wrongful dismissal. The endorsement of claim was confined to the following causes:

(1) That IMC failed to comply with sections 55-57 of the Education Ordinance by dismissing her before the Permanent Secretary for Education (“the Permanent Secretary”) had withdrawn approval of the Plaintiff or given approval for another principal.  This amounted to breach of the Contract.

(2) That the Plaintiff’s misconduct did not satisfy the requisite standard of seriousness to warrant dismissal under the 2 Codes. IMC had also failed to follow the procedures prescribed under the 2 Codes in dismissing the Plaintiff.  These amounted to breaches of the Contract which incorporated the 2 Codes and breach of statutory duty.

(3) That the Plaintiff’s misconduct did not satisfy any of the grounds for dismissal under section 9 of the Employment Ordinance, Cap 57.  This amounted to breach of the Employment Ordinance.

12.  The Plaintiff prayed for:

(1) a declaration that the summary dismissal was unlawful and wrongful and of no effect (“1^st prayer”);

(2) an injunction to restrain IMC from purporting to dismiss her from the post of principal without having obtained the approval from the Permanent Secretary or from acting upon such dismissal (“2^nd prayer”);

(3) an injunction to compel IMC to exhaust the procedure under the 2 Codes before any purported action against the Plaintiff (“3^rd prayer”); and

(4) damages to be assessed including loss of salary and provident fund (“4^th prayer”).

13.  In the re-amended statement of claim dated 22 July 2019, the Plaintiff further labelled and pleaded her claims under sections 55-57 of the Education Ordinance as breach of statutory duty and breach of common duty of care.

14.  In the meantime, by an order dated 3 October 2013, Chung J granted an injunction to restrain IMC from acting on the dismissal before the Permanent Secretary had withdrawn his approval of the Plaintiff or approved another principal for the School.

15.  Subsequently, on 16 October 2013 and 28 January 2014 respectively, the Permanent Secretary approved 2 persons as acting principals.  On 29 December 2014, the Permanent Secretary also confirmed the appointment of one of them as principal.

16.  Accordingly, the injunctions sought under the 2^nd and 3^rd prayers had become otiose.  The entire claim is now monetary in nature.

C.     LEGAL PRINCIPLES GOVERNING JURISDICTION OF THE LABOUR TRIBUNAL

17.  The Labour Tribunal has exclusive jurisdiction over a claim for a sum of money, whether liquidated or unliquidated arising from, amongst others, (a) the breach of a term of a contract of employment, and (b) the failure to comply with the provisions of the Employment Ordinance.

18.  Notwithstanding that, any claim in respect of a cause of action founded in tort, whether arising from a breach of contract or a breach of a duty imposed by a rule of common law or by any enactment falls outside the Labour Tribunal’s jurisdiction: Labour Tribunal Ordinance, Cap 25 (“LTO”) sections 7(1)-(2); §§1 and 3 to the Schedule.

19.  In deciding the jurisdiction issue, the Court should look at both the pleaded causes of action and reliefs sought.

20.  Mixed claims founded both in employment contracts and torts are excluded from the Labour Tribunal: Uferahal Limited & anor v Hansen Larry Douglas [2015] 2 HKLRD 683 at §20, Au-Yeung J.

21.  Similarly, a mixed claim for monetary and non-monetary reliefs, even though based on breach of contract or of the Employment Ordinance, fall outside the jurisdiction of the Labour Tribunal: Gain Hill (Hong Kong) Ltd v Li Kin Yip [2006] 4 HKLRD 186, §§27-28, Sakhrani J.

22.  The proper approach of the Court is to look at the substance of the dispute and not the labels put on the pleadings.  The Court should assess whether the other claims brought by the plaintiff are merely for “window dressing”, such that the real claim left is one that falls within the Labour Tribunal’s exclusive jurisdiction: Ho Chee Sing James v Secretary for Justice [2015] 4 HKLRD 311, §§32-34, DHCJ Saunders.

23.  A distinction should be drawn between jurisdiction and forum for trial. Whether a claim falls within the jurisdiction of the Labour Tribunal is determined at the time the claim is filed.  On the other hand, the forum for trial is determined at the time the issues are crystallized or when there are changes in circumstances after filing of the writ.

D.    THE JURISDICTION ISSUE

D1.  Pleaded causes

24.  The writ relies on breach of employment contract (which of necessity includes breach of the Employment Ordinance and all breaches of the statutes incorporated into the Contract).

25.  However, an indispensable part of the Plaintiff’s case (which would increase the damages recoverable) turns on the applicability of sections 55-57 of the Education Ordinance.  Section 55 provides that principal of a school shall hold office until (of relevance) the Permanent Secretary withdraws his approval of the principal under section 56 or approves another teacher of the school as the principal under section 57(2).

26.  Section 56 provides that the Permanent Secretary may withdraw his approval of the principal of a school if it appears to the Permanent Secretary that the principal—

“(a) is no longer a fit and proper person to be the principal;

(aa) in the case of a school providing nursery or kindergarten education, is not appropriately qualified to be the principal;

(b) is not performing the duties of the principal satisfactorily;

(c) has ceased to perform the duties of the principal; or

(d) is no longer acceptable as such to the majority of the managers of the school.”

27.  Section 57 provides for approval of subsequent principals as follows:

“(1) If in the case of any school—

(a) the Permanent Secretary refuses under section 54 to approve a teacher who has been recommended to be the principal;

(b) the principal ceased under section 55 to hold office;

(c) the principal ceases to perform the duties of the principal; or

(d) the principal is no longer acceptable as such to the majority of the managers of the school,

the management committee or incorporated management committee (as may be appropriate) of the school shall within 1 month recommend for the approval of the Permanent Secretary another teacher of the school to be the principal.

(2) Subject to section 54, the Permanent Secretary shall approve as the principal of the school the teacher who is recommended under subsection (1).”

28.  The effect of these sections are that as long as a principal does not lose his or her approval, he or she is entitled to hold office until the Permanent Secretary decides otherwise. The incorporated management committee of any school simply does not have the independent power to remove a principal from office. Furthermore, the Permanent Secretary can only withdraw his or her approval for the principal on the limited grounds in section 56. 

29.  These arguments are plainly open to the Plaintiff.  Her cause of action is in breach of duty under an enactment, which is a tort claim.  Applying §3 to the Schedule to the LTO, this is a mixed claim excluded from the Labour Tribunal at the time the writ was filed (and even now on the state of the latest amendments to the statement of claim).

D2.  Reliefs sought

30.  The 1^st prayer seeks a declaration which is not really a relief but a finding of fact that the Court would have to make after trial.

31.  Ms Linda Wong, counsel for the Plaintiff, submits that the use of the word “unlawful” to describe the dismissal meant that IMC had failed to follow the statutory procedure for termination of the employment of a school principal. 

32.  With respect, all dismissals in breach of contract, in breach of the Employment Ordinance or other relevant statutes are unlawful.  Accordingly use of the word “unlawful” does not give the 1^st prayer the character of a relief that it never possesses.

33.  The 2^nd and 3^rd prayers seek injunctions.  At least 2 statutory reliefs were open to the Plaintiff upon failure to following the termination procedure under sections 55-57 of the Education Ordinance.  One was reinstatement of her position as principal under section 32N of the Employment Ordinance, with all the rights and responsibilities attached to that position until her expected retirement date or when the Permanent Secretary withdrew the approval of the Plaintiff.

34.  The other relief was, of course, damages, which is covered by the 4^th prayer. Whether one calls it a statutory claim or contract claim, the damages that the Plaintiff is likely to recover should be the same.

35.  The Labour Tribunal can grant reinstatement as a final relief but, unlike the High Court and District Court, it has no power to grant interim relief or injunctions: Gain Hill.

36.  It was thus clear that by virtue of at least the 2^nd and 3^rd prayers, this was a mixed claim for monetary and non-monetary reliefs at the time the writ was filed.

37.  The Plaintiff did obtain an interim injunction from Chung J along the lines of the 2^nd but not the 3^rd prayer.  Chung J considered that the Plaintiff did not have a frivolous or vexatious claim.  The rationale for his order was that damages would not be an adequate remedy for the deprivation of security of tenure afforded by section 55.  See §5 of his Reasons for Decision dated 16 October 2013.  This decision plainly showed that the 2^nd prayer was not window dressing.

38.  I hold that the Labour Tribunal did not have jurisdiction over this case. The Plaintiff’s confirmation (post-writ) to Chung J that she was not seeking reinstatement and the injunction was not intended to have that effect did not undermine the jurisdiction of the Court. Nor did the fact that the prayers for injunction became spent 4 months after the writ.

39.  Counsel have submitted other points but, in my view, the above analyses are sufficient to dispose of the jurisdiction issue in favour of the Plaintiff.

E.     THE APPEAL ON COSTS

40.  On an appeal against an order for costs made by a Master, the Judge will only allow the appeal where the Master has erred in law: Hong Kong Civil Procedure 2020, Vol 1, §58/1/6; but not where the decision involved the Master’s exercise of discretion.

41.  In this case, the Court of First Instance has had jurisdiction right from the day the writ was filed.  Contrary to Master SP Yip’s reasoning, IMC would have lost on the Striking-Out Application even without the re-amendments. Thus IMC should bear the costs of the Striking-Out Application before the Master. 

42.  As for the costs of this hearing, Mr Laurence Li SC rightly points out that the parties are here to comply with the directions of Master Ho when the parties have in fact resolved between themselves that there was no longer a jurisdiction issue.  However, the jurisdiction issue was inseparable from the appeal itself.  I hold that the costs of both matters should be to the Plaintiff. 

F.     THE WAY FORWARD FOR TRIAL

43.  Counsel for both parties confirm that the case is ready for trial. I have raised issue as to whether this case should be transferred away.

44.  By now, the only relief in the claim and counterclaim is monetary.  The estimated damages of each party is about HK$1,000,000.  The resultant payment under the Mandatory Provident Fund of about HK$2,000,000 to the Plaintiff if she succeeds at the trial is not an issue in this case.  There are multi-factual issues and novel points of law under the Education Ordinance that justify legal representation.

45.  Unless the parties can show cause otherwise, this case should be transferred to the District Court. 

46.  I wish to add 2 points.  Firstly, the core issues turn on breaches of contract and of the Education Ordinance.  Counsel should carefully consider if the additional cause of breach of common duty of care would bring any additional benefit to the Plaintiff.

47.  Secondly, it was shocking to learn that IMC had presented a costs statement for about $400,000 before Master Yip for the Striking-Out Application, although the Master only awarded $172,000.  Such costs claimed were entirely disproportionate to a procedural matter and much too heavy for either party.  In addition, the jurisdiction issue has taken a year to resolve.

48.  Where there is an issue on jurisdiction in the existing Court of First Instance (or District Court) action, if the claim/counterclaim is within limitation period and the factual matrix or legal issues justify trying in a court, the claimant or counterclaimant (as the case may be) should consider seeking a stay of proceedings of the court for a few weeks in order to launch a claim at the Labour Tribunal.  A concise and joint statement of the parties can be submitted to the Tribunal informing the Tribunal of the existing court case and seek transfer (if appropriate) of the claim or counterclaim to the court.

49.  If the Labour Tribunal takes up the claim, the claim or counterclaim in the court can be dismissed.  On the other hand, if the Labour Tribunal transfers the case, the stay of the existing action can be uplifted.  The transferred case can simply adopt the pleadings and other documents filed in the existing action; or, as a matter of case management, be tried together or consolidated with the existing claim in the court.

50.  Filing a claim at the Labour Tribunal would cost $50 for a claim of over $10,000 and the joint letter would cost a few thousand dollars.  The costs involved would be much less than going through striking out proceedings as in the present case.  Any costs arising out of the stay may be disposed of summarily or reserved to the trial judge.

G.    SUMMARY ASSESSMENT OF COSTS

51.  Costs before the Masters are summarily assessed and allowed at $120,000.  The arguments of the jurisdiction issue and appeal are but a re-run of those below.  I therefore assess those costs to be $65,000.  Both sets of costs are to be borne by the Defendant.

H.    CONCLUSION

52.  At the time the writ was filed, both the causes of action and reliefs sought show that this was a mixed claim for monetary and non-monetary reliefs. The Court, as opposed to the Labour Tribunal, had jurisdiction.  The Master had erred in principle and the Costs Order should be set aside. 

53.  The parties have no dispute over the directions to be made.  I therefore order as follows:

(1) With regard to the jurisdiction issue, the Court has jurisdiction over this claim;

(2) With regard to the appeal, the Costs Order be set aside. 

(3) On a nisi basis,

(a) costs of the Striking-Out Application including the hearing before Master Yip shall be borne by the Defendant; summarily assessed at $120,000;

(b) costs of the appeal and the jurisdiction issue are summarily assessed at $65,000, to be borne by the Defendant;

(4) Unless the parties can show cause in writing within 14 days, this case shall be transferred to the District Court for trial; this issue shall be disposed of by Au-Yeung J on the papers;

(5) There be leave to set down this action within 42 days from resolution of item (4) for trial before a single judge, with 10 days reserved;

(6) There be a pre-trial review at least 12 weeks before trial;

(7) The Plaintiff do lodge and serve the paginated trial bundles not later than 56 days before trial; each set of bundle marked A, B, C, etc shall start with page 1; a composite index for all bundles shall be placed in bundle A, whilst each of bundle B, C, etc shall have its own bundle index;

(8) The Plaintiff do lodge and serve her opening submission (with soft copies), authorities and a list of agreed issues, 14 days before trial;

(9) The parties shall be bound by the list of agreed issues;

(10) The Defendant do lodge and serve its opening submission (with soft copies) and authorities 7 days before trial;

(11) There be double-sided printing for all bundles, submissions and authorities;

(12) There be liberty to apply; and

(13) Regardless of the forum for trial, the directions in paragraphs (5) to (12) shall apply.

54.  I thank counsel for their assistance.