LI CHI SUM v. SECRETARY FOR JUSTICE for and on behalf of THE DIRECTOR OF FIRE SERVICES

CACV 233/2020

[2021] HKCA 82

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 233 OF 2020

(ON APPEAL FROM DCEO NO. 11 OF 2017 and

DCEO NO. 5 OF 2018 (CONSOLIDATED))

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J U D G M E N T

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Hon Cheung JA (giving the Judgment of the Court) :

I. The appeal

1.  This is an appeal brought by the claimant, pursuant to leave granted by this Court, against the decision of H H Judge Winnie Tsui who stayed a consolidated action in the District Court known as DCEO 11/2017 and DCEO 5/2018 (Consolidated) pending the conclusion of the disciplinary proceedings (‘the second disciplinary proceedings’) in respect of the claimant’s suspected disciplinary offences committed between January and July 2012.  The parties agreed to have the appeal being disposed of on paper by reason of the COVID pandemic.

II.  Factual background

2.1  The following factual background is extracted from the judgment below :

1)   The claimant joined the Fire Services Department (‘the FSD’) as a fireman in 2002.

2)  Under the framework laid down by the Fire Services Ordinance (‘the FSO’), Cap. 95, he is a ‘member of other ranks’. 

3)  The claimant claimed that from about 2011 onwards, he was suffering from depression, anxiety, delusionary disorders and adjustment difficulties in his job.

4)  On 23 August 2011, he attempted to commit suicide at the Kong Wan Fire Station by jumping from height.  He was diagnosed with adjustment disorder shortly afterwards.  He alleges that his mental illness had ‘affected his thought processes, perception of reality, emotions or judgment or … had resulted in disturbed behaviour’.

5)  Sick leave was granted to him from 23 August to 2 October 2011.  On 3 October 2011, he was certified by doctor to be mentally stable and mentally fit to resume work.  On 4 October 2011, he resumed operational duties.

6)  Between 2010 and 2012, the claimant underwent four special appraisals and his performance was rated either ‘poor’ or ‘very poor’.  The claimant said that these special appraisals were conducted in disregard of his mental illness.

2.2  On 18 July 2012, the Director of Fire Services (‘the Director’) interdicted the claimant for investigation into ten suspected disciplinary offences, which were alleged to have been committed between 18 January and 4 July of the same year, pursuant to section 14(1)(b) of the FSO. 

2.3  On 25 February 2013, the Director instituted disciplinary proceedings against the claimant (‘the first disciplinary proceedings’).  The proceedings were concluded in March 2015 and the claimant was found guilty.   

2.4  The ten charges that the claimant faced in the first disciplinary proceedings can be grouped into four categories :

1)  On three occasions, without reasonable cause, he failed to promptly and diligently participate in station training which was part of his duty.  This was contrary to paragraph (4)(a) of Schedule 1 to the FSO.

2)  On three occasions, he acted in a disorderly manner by holding a mobile phone and acting like he was making an audio and/or video recording of members of the FSD, causing nuisance to them.  This was contrary to paragraph (12) of Schedule 1 to the FSO.

3)  On three occasions, he acted in a disorderly manner by making insulting remarks concerning other members of the FSD in offensive and foul language in conversations.  This was contrary to paragraph (12) of Schedule 1 to the FSO.

4)  On one occasion, without good and sufficient cause, he removed his uniform and accoutrements from his locker and left them unattended on the floor and left the fire station, contrary to lawful written order.  This was contrary to paragraph (2) of Schedule 1 to the FSO.

2.5  Between February 2014 and March 2015, a total of six hearings were scheduled.  The first five hearings were either adjourned or suspended.  The sixth hearing took place on 13 March 2015.  The presiding officer proceeded with that hearing, notwithstanding that the claimant was absent.  The finding was that all ten disciplinary charges were proved.

2.6  In late March 2014, the claimant sent to the FSD two medical certificates regarding his mood and mental condition.  In light of this, the first disciplinary proceedings were suspended.  The FSD considered that a medical board should be convened to investigate, among other things, (1) whether the claimant’s work performance and suspected misconduct were related to his health condition, and (2) whether he was fit to attend the disciplinary proceedings.  For that purpose, the claimant’s consent was necessary. 

2.7  There was much back-and-forth over the grant of consent by the claimant.  Eventually, on 11 March 2015, he returned a signed consent form to the FSD.  However, the presiding officer rejected it as the claimant’s signature was not witnessed, as required in the form.  The claimant was absent at the hearing which was held two days later on 13 March 2015.  The presiding officer declined to further adjourn the hearing and made the guilty finding after evidence was heard.

2.8  On 16 July 2015, the Director imposed the punishment of ‘dismissal without retirement benefits’ on the claimant for all the charges.

2.9  The claimant applied for judicial review in respect of the guilty finding made by the presiding officer.  The claimant succeeded in the judicial review before Wilson Chan J on 9 March 2018 (see judgment under HCAL 89/2015 at [2018] HKCFI 498).

2.10  Wilson Chan J granted a declaration that the presiding officer’s refusal to adjourn the first disciplinary proceedings so that a medical board could be convened was unlawful.  He quashed the guilty finding of the charges and the punishment.  He made an order of mandamus requiring the Director to convene a medical board on the claimant.

2.11  Wilson Chan J’s reasons were, among other things, that the Director’s refusal to accept the claimant’s consent form for want of a witness’ signature was unreasonable because the witnessing was not required under the FSD guidelines and there was no valid or cogent reason for this requirement.  Further, under the FSD guidelines, medical advice from the medical board ‘is obviously necessary for deciding whether or not there is causation between the officer’s disability and his misconduct’ (paragraph 32).  In the absence of such medical evidence, the presiding officer’s finding that there was no such causation was not supported by evidence, was without basis and could not stand. 

2.12  Pursuant to the order imposed by Wilson Chan J, on 2 August 2018, a medical board was convened to examine the claimant. 

2.13  On 24 August 2018, the board sent its report to the Director.  It stated that the claimant appeared to be in remission of his mental illness but he would warrant regular follow-up and treatment.  At the end of the report, the board opined that :

1)  The claimant’s health condition at the material time provided an exculpatory or mitigating factor for his alleged misconduct under the charges.

2)  He is mentally capable of discharging the principal duties of a fireman.

3)  He is fit to attend a formal disciplinary inquiry.

2.14  On 4 December 2018, the board sent a second report to the Director.  At the end of the report, the board expressed the same opinion as in the first one.  In addition, the board made references to some treatment records of the claimant in 2012.  The board also added that there is a chance of relapse of the claimant’s mental illness and he therefore warrants regular follow-up.  However, it is difficult to comment on the scenarios that might trigger a relapse.  They could be perceived as ‘those that are in incident grounds or those that involve conflicts with colleagues’.

2.15  On 4 February 2019, the Director requested the medical board to provide further clarification of its opinion on, among other things, the risk of relapse, the risk that such relapse may affect the claimant’s discharge of his duties and the safety of the claimant and others. 

2.16  On 15 March 2019, the medical board sent its supplementary report to the Director.  It stated that it is difficult to estimate the risk of relapse because his mental condition could be affected by many factors.  Further, it could not comment on the impact of any relapse on the claimant’s work performance or safety of others during fire-fighting and rescue operations.

2.17  Then, on 25 March 2019, the Director invited the claimant to make representations on whether the second disciplinary proceedings based on the same ten charges should be resumed.  On 9 April 2019, the claimant opposed such resumption.

2.18  By letter dated 31 October 2019, the respondent stated that the FSD would go ahead with the second disciplinary proceedings.

2.19  While the judicial review proceedings were in progress, i.e. from September 2015 to March 2018, the claimant, commenced two actions against the respondent :

1)  In July 2016, he issued a writ under DCCJ 3425/2016.  It was indorsed with a statement of claim settled by counsel under the Bar Free Legal Services Scheme.  In essence, his causes of action were disability discrimination, breach of employment contract and negligence.  In October 2017, the action was transferred to the equal opportunities list and re-designated as DCEO 11/2017. 

2)  In November 2017, he took out a claim in the Labour Tribunal under LBTC 3634/2017, claiming damages for breach of employment contract.  The following month, by agreement, the case was transferred to the District Court and became DCCJ 5720/2017. By order dated 28 February 2018, the second action was also transferred to the equal opportunities list and re-designated as DCEO 5/2018 and was consolidated with the first action.

2.20  The consolidated action came before the Judge on 14 June 2018.  She directed that consolidated notice of claim and consolidated notice of response be filed.  The pleadings had since been filed.

2.21  The respondent then applied to stay the consolidated action. 

III.     The Judge’s reasons

1)  The material considerations

3.1  The Judge identified the following matters as being material considerations in the stay application :

1)  Are there overlapping issues between the two sets of proceedings?  If so, what is the extent of the overlap?  (‘The Overlapping Issues’)

2)  Would any factual finding made in the second disciplinary proceedings give rise to res judicata or, most relevantly, issue estoppel?  (‘Res Judicata/Estoppel Issue’)

3)  Taking into account the answers to the above and all the surrounding circumstances, how should the present court action be case managed so as to achieve justice and fairness between the parties?  (‘Case Management/Discretion Issue’)

2)   Overlapping Issues

3.2  The Judge recognized that the nature of the second disciplinary proceedings and the consolidated action were very different.  In the former proceedings, the issue was whether the claimant committed the misconduct as alleged in the disciplinary charges. The outcome would affect his career and future prospect as a fireman, his remuneration in that position and his retirement benefit.  In the consolidated action, he was seeking a court declaration that he has been discriminated against on the ground of his alleged disability.  He was also claiming monetary compensation for the loss and damage which he has suffered.  The scope of the consolidated action was also considerably wider than that of the second disciplinary proceedings, both in terms of the complaints and the time period involved.  The claimant’s complaints in the former spanned over a much longer period of time from 2010 to 2015 whereas the latter only concerned the ten occasions in 2012.  The factual issues arising in the former were more extensive and wide‑ranging.

3.3  The Judge, however, went on to hold that while the rulings eventually made by the Director and the Court would be different, they would, to some extent, be premised on a number of overlapping factual issues :

‘ 66. In the second disciplinary proceedings, in respect of each of the charges, the presiding officer will have to make factual findings on the following matters in order to reach his ultimate rulings:

  (a)   Was the claimant engaged in the physical act as alleged?  Eg, did he fail to attend and participate in station training on the three occasions as identified?

  (b)   At the time of the alleged physical act, was he suffering from the alleged mental illness or “disturbed” behaviour?

  (c)   If the above questions are answered in the affirmative, was his physical act attributable, wholly or in part, to his mental illness or “disturbed” behaviour?  In other words, was the apparent act of disobedience merely a manifestation of his mental illness?

67.  In the present action, the crux of the claimant’s pleaded case is that he had been suffering from mental illness and “disturbed” behaviour, and that the respondent knew about it and took steps to try to expel him from service.  The steps included the institution of the first disciplinary proceedings.  That amounted to disability discrimination.

68.  It is clear that in order to rule on the claim in the [consolidated] action, the court will have to arrive at factual findings on the matters set out in para 66(b) and (c) above.  In respect of the former, no doubt, whether the claimant had suffered from a disability would be key to his claim in the present discrimination action.  In respect of the latter, where the physical act was attributable to the claimant’s mental state and the respondent knew about it, this would go to support the allegation of discrimination. 

69.  In sum, the same factual issues, as identified above, fall to be resolved in both the second disciplinary proceedings and the [consolidated] action.  ...’ 

3.4  The Judge then considered the two sets of parallel proceedings should be managed by staying one of them.  She held that the second disciplinary proceedings were brought within the framework laid down in the FSO and the Director was charged with its conduct.  As such, the Court did not have any case management power over how it was to be conducted, including ordering a stay of those proceedings on the ground that there was a parallel civil action in the District Court.  The Judge went on to say :

‘ 72. If I had that power, however, it might be desirable to stay the second disciplinary proceedings pending the conclusion of the present action. This is because the present action is a “larger” action in the sense that its scope is much wider than the second disciplinary proceedings. The resolution of the present action would likely resolve most, if not all, the disputes in the 10 charges. But neither party has suggested that we should (or could) go down that route. Hence, the only realistic options before me are either to stay the present action pending the conclusion of the second disciplinary proceedings, which the respondent asks for, or to allow the two actions to move on in parallel, which the claimant suggests.’

3)  Res Judicata/Estoppel Issue

3.5  The Judge identified this material question :

‘ 75. ... would factual findings made in disciplinary proceedings conducted under the FSO against a fireman give rise to issue estoppel in a civil action between the fireman and the Director?

    76.  If the answer is yes, it would be a very strong, if not decisive, factor in favour of a stay.  This is because to allow the two proceedings to run in parallel, time, efforts and costs will unnecessarily be incurred twice on the overlapping issues.’

3.6  The Judge then referred to the general principles (which were not in dispute) on what constitutes res judicata :

‘ 78. A res judicata is a decision pronounced by a judicial or other tribunal with jurisdiction over the cause of action and the parties, which disposes once and for all of the fundamental matters decided, so that, except on appeal, they cannot be re-litigated between persons bound by the judgment: Spencer Bower and Handley, Res Judicata (4^th ed) at para 1.01.

79.  There is a requirement that it is a decision on the merits, pronounced by a tribunal which is judicial in the relevant sense: Spencer Bower at para 2.01.’

3.7  The Judge referred to the House of Lords decision in Thrasyvoulou v Secretary of State for the Environment [1990] 2 AC 273 where Lord Bridge of Harwich held :

‘ ... In relation to adjudications subject to a comprehensive self-contained statutory code, the presumption, in my opinion, must be that where the statute has created a specific jurisdiction for the determination of any issue which establishes the existence of a legal right, the principle of res judicata applies to give finality to that determination unless an intention to exclude that principle can properly be inferred as a matter of construction of the relevant statutory provisions.’ (289C-D)

3.8  The Judge examined the statutory framework of the FSO and concluded that a factual finding made by the Director in disciplinary proceedings conducted within the framework under the FSO was capable of giving rise to issue estoppel in a subsequent court action.  This is because, as a matter of statutory interpretation, his decision is judicial in the relevant sense.  It is the end product of an adjudication which finally determines the legal rights of the person subject to the disciplinary proceedings, subject to the right of appeal.

   4)   Case management/Discretion Issue

3.9  The Judge recognized that the claimant commenced the consolidated action as of right and for the Court to stay the consolidated action, there must be a very good reason.  However, she held that,

‘ 167. Here, in light of the common factual issues, it is undesirable, if not unworkable, for it to go ahead when the second disciplinary proceedings are under way.

168.   In the event that the latter is concluded first (which is likely in my view given the scope of the issues involved), the court will very likely be bound by the factual findings made there on the common issues.  The time and costs spent on those common issues in the present action will therefore be wasted.  In the event that the court action is concluded first, equally, the time and costs spent on the common issues in the second disciplinary proceedings up to that point would be wasted.  Furthermore, the court should be proactive in the case management of the present action so as to avoid any potential situation where conflicting decisions are made in the two sets of proceedings.  All these factors point strongly to a stay.’

3.10  The Judge went on to consider the prejudice to the claimant if the consolidated action is stayed :

‘ 170. As regards the complaint that the Director has re-commenced the disciplinary proceedings in disregard of the claimant’s mental condition, I am inclined to share Ms Seto’s view that the claimant seems to be selective about the proceedings he would like to carry on. On the one hand, he complains about the effect of the disciplinary proceedings on him. On the other hand, however, he seems to have no problem carrying on with the present court action, which can be expected to induce at least the same stress and anguish.

171.   The claimant has also deposed to the effect that he is at present suffering from financial hardship, which will no doubt be lengthened if a stay is granted. This factor should not be lightly dismissed.  However, this only applies if the claimant eventually succeeds in the present action and is awarded damages and where that is the case, he will likely be awarded interest which would in some way compensate him for the period in which he is being kept out of the damages.’

3.11  The Judge held :

‘ 172. Overall speaking, the balance comes down in favour of a stay of the present action. In the circumstances, that would better serve the ends of justice as between the parties and the administration of justice in general.’

IV.   The claimant’s grounds of appeal

4.  Mr Leung for the claimant argued before us, as he had done below, that the Judge was wrong on her view that the findings in the second disciplinary proceedings would give rise to issue estoppel in a subsequent court action.  He argued that the decision by the Director does not amount to adjudication.  Mr Leung further argued that the Judge’s exercise of discretion was faulted because of her view on the judicial nature of the disciplinary proceedings.

V.   The respondent’s stance

5.  The respondent supported the reasonings of the Judge and opposed the appeal.

VI.     Our view

6.1  The Judge near the end of the judgment at [166] under the heading Discretion held that :

‘ … the claimant commenced the [consolidated] action as of right. For the court to stay the action, there must be a very good reason.’

6.2  Ms Seto for the respondent submitted that the application to stay the consolidated action is analogous to a stay application based on forum non conveniens. The Court of Final Appeal observed in SPH v SA (2014) 17 HKCFAR 364 at [51] that the principles pronounced in Spiliada Maritime Corp v Cansulex Ltd (The Spiliada) [1987] AC 466 are to be adopted in such an application.  The relevant part of the principles for the purpose of this appeal is :

‘ 1. The single question to be decided is whether there is some other available forum, having competent jurisdiction, which is the appropriate forum for the trial of an action ie in which the action may be tried more suitably for the interests of all the parties and the ends of justice?

2.  In order to answer this question, the applicant for the stay has to establish that first, Hong Kong is not the natural or appropriate forum (‘appropriate’ in this context means the forum has the most real and substantial connection with the action) and second, there is another available forum which is clearly or distinctly more appropriate than Hong Kong.  Failure by the applicant to establish these two matters at this stage is fatal.’

6.3  The Court of Final Appeal then dealt with the situation where a party had commenced proceedings in a forum as of right :

‘ 52.  ... Where jurisdiction is founded in the Hong Kong court as of right (as in divorce proceedings like the present case), the party seeking the stay has to establish that there is another available forum which is clearly or distinctly more appropriate than the Hong Kong forum.  This derives from what Lord Goff said in Spiliada (at 477), which has been regularly applied in Hong Kong: eg The Kapitan Shvetsov [1997] HKLRD 374, 377; The Peng Yan [2009] 1 HKLRD 144, [22].’

6.4  Proceeding on the basis that the above principles are to be applied by analogy to this case, as the claimant had commenced the consolidated action in the District Court as of right in the sense that he was entitled to invoke its jurisdiction and did not need permission to do so, the Judge in order to stay that case must be satisfied that the second disciplinary proceedings were clearly or distinctly more appropriate than the District Court consolidated action.  Unfortunately this point had not been properly brought forward in the Court below and as a result the issue was not properly focused.  The Judge had addressed in length the application of res judicata and issue estoppel by the findings of the second disciplinary proceedings.  But irrespective of whether the findings in the second disciplinary proceedings would constitute res judicata and issue estoppel in the consolidated action, the stark fact is that the findings of the District Court in the consolidated action would clearly have such an effect in the second disciplinary proceedings as well bearing in mind the over‑lapping issues that the Judge herself had identified.  The Judge had referred in her judgment to William Henry Cowie v The Attorney General, HCA No 336 of 1947 (unreported, 2 September 1948) and held that :

‘ 122. Where the conditions for an issue estoppel are satisfied, as a matter of analysis, there is no apparent reason why it should not operate merely because the subsequent proceedings take place in a different forum from the first. Mr Leung had not suggested any. The doctrine of res judicata is ultimately to work justice. It is a recognition of the public interest that there should be finality to litigation. Further, as between parties, neither one of them should have to endure the hardship or oppression of being vexed twice by the one and same cause. There is no reason why these policy reasons should not apply with equal force in a cross-forum scenario.’

6.5  As the findings of each of these two forums would constitute res judicata and issue estoppel in the other forum, the Judge must be satisfied first that the second disciplinary proceedings was clearly or distinctly more appropriate than the consolidated action.  The Judge was concerned with the undesirability of parallel proceedings.  This was a legitimate concern.  One of the relevant factors in this regard was the stage reached in each of these proceedings.  At the time of the hearing before the Judge, Notice of Claim and Notice of Response in the consolidated action had already been filed and served.  Subject to discovery, the matter would then be set down for hearing. The estimate was that the trial would take place in late 2020.  On the other hand, it was said that the second disciplinary proceedings would take twelve to fourteen months to conclude, i.e. including and up to the conclusion of any appeal against the decision.  This estimate was arrived at on the assumption that the claimant, the prosecuting officer and the presiding officer would each be legally represented.  The process up to when the presiding officer delivers his judgment would take six months.  If the charges are proved and if there is an appeal, the process would be carried on for another six months.  Two months are added as a buffer in the estimate.  It was estimated that the hearing of the second disciplinary proceedings would be concluded in mid 2020 and the appeal would be concluded in late 2020.

6.6  As it turned out, at the time of the commencement of this appeal in July 2020, the second disciplinary proceedings had not yet commenced.  The respondent laid the blame for the delay on the claimant.  It is not necessary for us to go into the issue of blame as neither party had applied for new evidence on this issue to be adduced.

6.7  Apart from the progress of the case, what was equally important is the nature of the consolidated action and the second disciplinary proceedings.  The former comprises of, among other things, the issue of disability discrimination.  The claimant claimed that he suffered from mental illness which affected his outward behaviour.  He described that as ‘disturbed’ or ‘distorted’ behaviour. He claimed in his Notice of Claim that his disabilities and distorted behaviour gave the appearance of him being disobedient, undisciplined, being impolite and arrogant towards his superiors, emotionally out of control, lack of objectivity and lack of sound judgment.  The claimant said that the bringing of the ten disciplinary charges amounts to a discriminatory act on the part of the Director :

‘ 9. In March 2015, the Claimant was warned of and eventually charged with 10 disciplinary offences which related entirely to his distorted behaviour, such as trivial matters of handling his own uniform, failure to attend training at times when he did not feel fit and well, personal clashes with his superiors, use of foul language and/or his excessive writing to other government departments to ventilate his grievances and complaints about his superiors.

10.  The Director discriminated against the Claimant in view that the charges were laid because of his personal clashes between the Claimant and his superiors, and not in view of his disobedience of established disciplines.’

6.8  In respect of the breach of employment contract and negligence claim the claimant claimed that the Director owed him a duty of care not to do anything which would or would tend to worsen, aggravate or trigger his psychiatric illness or provoke his disturbed behaviour further and that the Director was in breach of such duty.

6.9  The Director denied that there was any discrimination against the claimant.  He denied that the FSD knew of the mental illness of the claimant.  The ten charges were laid in connection with the claimant’s disobedience and undisciplined acts on the ten occasions.

6.10  One can see immediately that the ambit of the consolidated action is far wider than the second disciplinary proceedings and the issues are far more nuanced. Considering the claimant’s case that his mental illness affected his behaviour which might be perceived to be acts of disobedience and refusal to follow discipline, the benefit of having the matter adjudicated by a judicial tribunal headed by a District Court Judge and assisted by lawyers representing the parties cannot be over stated.  Such a finding would only not assist the task of the presiding officer of the second disciplinary proceedings but would also effectively resolve the dispute in the second disciplinary proceedings.  This was recognized by the Judge at [72] but somehow was sidetracked when she said ‘But neither party has suggested that we should (or could) go down that route’. This is unfortunate because the Judge was being asked to stay the consolidated action and that was the path that she had to tread and this issue must be a relevant consideration in the balancing exercise.  She was sidetracked by the approach of the parties who seemed to have pitched their case wholly on the binding effect of the second disciplinary proceedings on the consolidated action.  As a result this important consideration was not properly taken into account by the Judge and in our view this faulted the exercise of her discretion in staying the consolidated action.

6.11  In our view the decision to stay was plainly wrong.  This entitles us to exercise the discretion afresh.  It is not shown that the second disciplinary proceedings is clearly or distinctly more appropriate than the consolidated action.  In the circumstances the discretion has to be exercised against the stay of the consolidated action. 

VII.   Conclusion

7.  Accordingly, we will allow the appeal and set aside the orders below.

VIII.    Costs

8.  There will be an order nisi that the claimant is to have the costs of the appeal and below.  The claimant’s own costs to be taxed according to the Legal Aid Regulations.