NG AI KHENG JASMINE v. MASTER M. YUEN & ANOTHER

HCAL 46 of 2003

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTITUTIONAL AND ADMINISTRATIVE LAW

LIST NO. 46 OF 2003

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JUDGMENT

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1. This is the applicant's application to judicial review:

(1) The decisions of the Director of Legal Aid ("the Director") made on 3 June 2002 and 25 November 2002, refusing the applicant's application for legal aid; and

(2) The decision of Master M Yuen made on 26 March 2003, dismissing the applicant's appeal against the Director's above decisions.

Background

2. The applicant was formerly employed by the Open Learning Institute of Hong Kong, later renamed The Open University of Hong Kong ("OU"). She was first appointed on 11 January 1995 as a lecturer on a two years fixed term contract. On 4 July 1996, she was re-appointed on superannuation term with effect from 11 January 1997. On 16 June 1997, consequent upon the renaming of OU, she was offered to convert to assistant professor and to continue serving on superannuation term with effect from 1 August 1997.

3. By a letter dated 1 June 2000, OU informed the applicant of its decision to terminate her employment with immediate effect and to pay her, inter alia, three months' wages in lieu of notice. Thereafter on the same day, the applicant wrote to OU indicating that she had decided to resign with immediate effect. The resignation was accepted by OU. An ex gratia payment representing three months' wages was paid by OU to the applicant.

4. Subsequently, the applicant commenced proceedings in the High Court under HCA 8901 of 2000 ("the OU Claim"), claiming against OU damages for breach of contract and for loss of personal properties. The proceedings are still pending.

5. In August 2001, the applicant made her first application for legal aid in connection with the OU Claim. It was refused by the Director for lack of merits. Her appeal against the refusal was dismissed by a Master of the High Court on 29 August 2001.

6. In March 2002, the applicant made her second legal aid application. On her request, the assessment of her means was deferred after a consideration of the merits of the OU Claim. The Director refused her application on the ground that she lacked reasonable grounds for continuing the proceedings. The decision was communicated to the applicant by a Notice of Refusal of Legal Aid dated 14 May 2002. The Director's detailed reasons for refusal were contained in a Reasons for Refusal dated 3 June 2002.

7. The applicant appealed against the refusal. At the first hearing on 26 June 2002, the appeal was adjourned upon the Master's direction to call for a counsel advice under section 9 of the Legal Aid Ordinance. At the resumed hearing on 4 October 2002, the appeal was further adjourned for investigation and assessment of the applicant's means. The applicant's means was assessed by the Director to be over the prescribed statutory limit. By a Notice dated 25 November 2002, the Director gave notice that the applicant was not eligible for legal aid and reiterated that she lacked merits to continue the OU Claim. At the resumed hearing on 4 December 2002, the applicant was represented by counsel. On 26 March 2003, Master M Yuen handed down her decision dismissing the applicant's appeal.

The application for judicial review

8. On 7 May 2003, the applicant commenced these proceedings for judicial review. On 2 July 2003 and after an ex parte hearing, the applicant was granted leave to judicial review against the decisions of the Director and Master M Yuen on grounds limited to the following:

(1) The Director's decision that the applicant's financial resources exceed the statutory limit is erroneous in law and/or Wednesbury unreasonable;

(2) The Director's decision that the applicant does not have merits the OU Claim is erroneous in law and/or Wednesbury unreasonable;

(3) Master M Yuen's decision affirming the Director's decision that the applicant's financial resources exceed the statutory limit is erroneous in law and/or Wednesbury unreasonable for the reasons set out in Reasons 3, 5, 14 and 15 of the applicant's affidavit and supplemental affidavit;

(4) Master M Yuen's decision affirming the Director's decision that the applicant does not have merits in the OU Claim is erroneous in law and/or Wednesbury unreasonable for the reasons set out in Reasons 7 to 10 of the applicant's affidavit and supplemental affidavit.

9. The applicant was refused leave to judicial review the other Master's decision of 4 October 2002 adjourning the appeal and directing for a means test be administered.

10. On 16 July 2003, the applicant filed her Notice of Motion in which she sought an order of certiorari and damages. The applicant subsequently confirmed in writing to the Department of Justice that she did not pursue her claim for damages, whereupon the Department of Justice, on behalf of Master M Yuen, gave notice of no intention to appear at the hearing of the judicial review. The applicant also requested in her Notice of Motion to amend her affidavit and supplemental affidavit. On the same day, the applicant filed her revised affidavit and revised supplemental affidavit. Apart from re-labelling "Reasons" as "Grounds" and deleting some of the Reasons/Grounds for which leave to argue them had been refused, the revisions also involve expansions and additions of the Reasons/Grounds. This is improper. Order 53 rule 6(1) of Rules of the High Court prescribes that only the grounds included in the application for leave may be argued at the substantive hearing for judicial review. No leave had been given for arguing the modified and/or additional grounds. At any rate, it is only in exceptional circumstances and for good cause that an applicant would be allowed to judicial review on grounds that are different from those on which leave to judicial review was granted.

The decisions on the applicant's financial resources

11. The Director had assessed the applicant's financial resources at HK$866,026.70, which is significantly above the statutory limit of $169,700. The calculations adopted by the Director are as follows:

12. The bone of contention between the applicant and the Director relates to the properties jointly owned by the applicant and her husband, which are set out under "other sources" in the part relating to capital ("the 2 Properties"). In respect of the first property at Pacific Palisades, its estimated market value as at 23 October 2002, the date of assessment, was $4,140,000. It was mortgaged to Wing Lung Bank Limited and the outstanding indebtedness was $5,750,725.40 as at the date of assessment. As for the second property at Taikooshing, its estimated value was $4,830,000. It was mortgaged to bank of China (Hong Kong), and the outstanding indebtedness was $7,444,213.33. Apart from the two properties, the applicant and her spouse also owned a third property at Pacific Palisades. It was used as their residence and had therefore been excluded from the calculation of the applicant's disposable capital. No issue turns on this third property.

13. Evidently, the outstanding indebtedness of the 2 Properties exceeds their respective estimated market value by $1,610,725.40 and $2,614,213.33, producing a net negative equity, or what is commonly called a "negative value". In calculating the disposable capital of the applicant, the Director had adopted a zero value for each of the 2 Properties. The applicant's argument is that the Director should have included the "negative value" of the 2 Properties in the calculation, in which case, her financial resources would be reduced by $3,641,326.80 and would be well below the prescribed statutory limit. The applicant relies on the decision of the Legal Aid Review Committee in Leung Kwai Lin Cindy v. Director of Legal Aid [2000] 4 HKC 516 and my decision in Shem Yin Fun v. Director of Legal Aid (unreported) HCAL 183 of 2002 in support of her contention.

14. In affirming the Director's decision on the assessment of the applicant's financial resources, Master Yuen took the view that the properties formed an investment portfolio of the applicant. Since the applicant had chosen to hold on to her investment and not to capitalize her loss, the 2 Properties should be valued by reference to their borrowing capacity. She considered the position to be analogous to Rules 5 and 8(2) of the Legal Aid (Assessment of Resources and Contributions) Regulations, cap. 91B.

The statutory framework on determination of financial resources

15. Under sections 5(1) and 10(1) of the legal Aid Ordinance ("the Ordinance'), legal aid may be granted for civil proceedings specified in Part I of Schedule 2 of the Ordinance to a person who satisfies the Director that his financial resources do not exceed $169,700.

16. Section 2 of the Ordinance provides that "financial resources", "disposable income" and "disposable capital" are to be determined as prescribed by the Legal Aid (Assessment of Resources and Contributions) Regulations ("the Regulation").

17. Regulation 2A of the Regulation provides that "the financial resources of an aided person shall be assessed by multiplying that person's monthly disposable income by 12 and adding his disposable capital to that sum". Regulation 4(b) further provides, inter alia, that the disposable capital of a legal aid applicant shall be determined in accordance with Schedule 2, which sets out the rules for computing disposable capital.

18. The material part of Schedule 2 of the Regulation that are relevant to these proceedings provide as follows:

"Rule 1		Subject to the provisions of these regulations or rules, there shall be included in the computation of the amount of the capital of the person concerned the amount or value of every resource of a capital nature ascertained as on the date of the application ...
Rule 2		So far as any resource does not consist of money, the amount or value thereof shall be taken to be the amount which that resource would realize if sold in the open market ...
Rule 8(1)		The value of any interest in the only or main dwelling in which the person concerned resides shall be disregarded in computing the amount of his capital.
(2)		Where the person concerned resides in more than one dwelling in which he has an interest, the Director shall take into account in respect of the value to him of any interest in a dwelling which is not the main dwelling any sum which might be obtained by borrowing money on the security thereof."

19. As noted in Shem Yin Fun at para.23, since the method of calculation or assessment is prescribed by the legislations, the Director does not have a general discretion in determining the financial resources of a legal aid applicant. Neither does he have a general power to include or exclude any item of income or capital, outgoing or liability.

20. The core issue that arises for determination under the challenges made to the decisions on the applicant's financial resources is: what is the figure to be put to a property that has a market value less than the amount of indebtedness secured on it when the Director assesses the financial resources of the applicant who owns the property, whether solely or jointly.

21. Given that the method of determining financial resources is statutorily prescribed, the issue must be approached as a matter of statutory construction. Generally speaking, in relation to a real property, the rules of computation under Rules 2, 6 and 8(2) may be relevant. Rule 8(2) is directly relevant if the property is the secondary dwelling of an applicant. It has no relevance to the present application since there is no suggestion that the 2 Properties were used as the applicant's secondary dwellings. Likewise, Rule 6 is irrelevant to the present purpose. The only rule that is directly relevant and falls to be construed is Rule 2.

Rule 2 of Schedule 2 of the Regulation

22. Under Rule 2, the amount or value of a property is taken to be the amount that the property would realize if sold in the open market. It is therefore referring to the amount that the owner would obtain upon a sale of the property. Prima facie, the amount to be realized when a property is sold is the net proceeds of sale. Thus, where a property is subject to an encumbrance, the amount to be obtained on its sale is the sale price less the sum required to discharge the encumbrance. It follows that in relation to a mortgaged property, the amount that the owner stands to get would be the balance of the sale price, after deducting the outstanding indebtedness under the mortgage. Where the sale price is insufficient to discharge the outstanding indebtedness, the owner would obtain nothing from the sale of the property. Thus analyzed, for a property that has a market value less than the indebtedness secured by the property, its amount or value when computed under Rule 2 would be zero.

23. This construction is reinforced when one has regard to the object and design of the Ordinance and the Regulation. As indicated by its long title, the object of the Ordinance is, inter alia, "to make provision for the granting of legal aid in civil actions to persons of limited means". The purpose of the Regulation is to prescribe the method of ascertaining whether a legal aid applicant is of limited means within the contemplation of the legislation. The concern of the legislations must be to assess the amount of finance that an applicant can raise, if required, to fund his litigation. It would not be the concern of the legislations to establish the net financial worth of an applicant.

24. The point becomes apparent upon an examination of the Rules for computation in Schedule 2. Rule 3 refers to the value of money owed to an applicant. Rule 5 looks at the amount a business owner or partner can withdraw from the assets of his business or can borrow against the security of the business. Rule 6 takes into account the value of an applicant's interest in reversion or remainder of any real or personal property or in a trust or other fund. Rule 8(2) takes the value of an applicant's secondary dwelling to be the amount that could be borrowed against the security of the property. Similarly, Rule 10 looks at the amount that could be borrowed against the security of any life insurance or endowment policy. Under Rules 7 and 8(1), the personal and household effects, tools of trade and the value of the main dwelling are excluded from the computation. Rules 9, 12 and 13 further provide for certain payments, compensation and financial assistance to be disregarded in the computation.

25. It is of significance that the Regulation has made no provision for giving consideration to any debt owed by an applicant. Similarly, the Regulation does not enable any liability or encumbrance attached to a capital resource to be included in the computation of disposable capital.

26. The foregoing examination demonstrates that the emphasis of the legislations is on the resources an applicant may resort to in order to finance his litigation.

27. It is also evident from the rules of computation that the Director is not empowered to have regard to an applicant's debt or financial liability or obligation under a capital asset unless such item can properly fall within the prescribed rules of computation. This point is important when one considers the nature of the so-called "negative value" of a property. Essentially, the negative value is represented by the difference between the secured indebtedness and the market value of the property. That is in substance a liability owed by the property owner and/or the borrower to the lender. It is no different in nature from any debt or liability that a person may owe to a bank or financial institute under a bank loan or an overdraft, or to an individual under a borrowing. The Regulation does not enable such liability or debt to be taken into account. As Mr Westbrook SC points out, the liability may only be brought into computation if an applicant actually sells the property and utilizes his other capital resources to pay off the outstanding balance of the secured indebtedness. In such a way, the value of his capital resources becomes reduced, resulting in a corresponding reduction in the amount of his disposable capital.

The decision in Leung Kwai Lin Cindy

28. In Leung Kwai Lin Cindy, the appellant appealed against the refusal of legal aid for pursuing an appeal before the Court of Final Appeal. One of the issues that the Legal Aid Review Committee, appointed under section 26A of the Ordinance, had to deal with was whether the negative value of the property owned by the appellant's spouse could be taken into account in assessing the financial resources of the appellant. Mr Registrar Chan, the Chairman of the Committee, disagreed with the submission of the Director that when a property becomes a liability, it should be given a zero value when assessing the financial resources of an applicant. He referred to Rules 1 and 6 of Schedule 2 of the Regulation and concluded that the extent of the liability (i.e. the negative value of the property) should be taken into account in computing the financial resources. Mr Merry, a member of the Committee, was of the view that the financial burdens of an applicant should also be taken into account when ascertaining his financial means and resources. He rejected the submission that "value" means positive value as being unrealistic and contrary to statutory intendment.

29. The first point to note is that the Legal Aid Review Committee is an administrative committee. Its decision is not binding on Masters hearing legal aid appeals. Nor does it bind this Court. As noted in Shem Yin Fun, a failure or refusal by a Master to follow a decision of the Legal Aid Review Committee per se does not amount to an error of law.

30. As far as the decision in Leung Kwai Lin Cindy is concerned, it would appear that the argument was focused on whether "value" of a property can only mean positive value. It does not appear from the report that the Review Committee had been addressed on the plain wordings of Rule 2, or the objects of the statute and the statutory scheme for computing disposable capital under Schedule 2 of the Regulation. In my view, the issue is not about whether "value" or "resource" means or connotes positive value. This is because although it is often said that the property has a negative value, what is in issue is not so much the value or worth of the property. Rather it is the financial liability owed by the property owner to his lender that an applicant is asking the Director to take into account when determining the financial resources. The issue at stake is therefore whether, and to what extent, the financial liability and burdens of an applicant can be taken into account when determining his financial resources. Given that the method of determination is prescribed by statute, this has to be approached as a matter of statutory construction. An examination of the language, the intention and the scheme of the legislation is also necessary.

31. To the extent that it is argued that the exclusion of the negative value of a property or the financial burdens of an applicant is unfair and unrealistic, it is apt to recall the judgment of Lord Diplock in Duport Steels Ltd v. Sirs [1980] 1 WLR 142 at 157E-158C that even if a statute in actual operation produces injurious consequences not anticipated by the legislature, the court must still give effect to the plain meaning of the statute as appeared from its language. It is for the legislature and not the judiciary to remedy any perceived unfairness or vacuum in the present rules for computing financial resources of legal aid applicants.

32. For my part, I am unable to agree with the view of the Review Committee that "value" in Rule 2 of Schedule 2 should be construed as including a notional negative value and its conclusion that the negative value of a property can be taken into account in computing the disposable capital of a legal aid applicant. In my view, Rule 2 does not permit such construction. The Rules in Schedule 2 also do not permit the negative value of a property, being in its true nature a financial liability, to be included in the computation of disposable capital. The amount to be attached to such a property is zero.

The Director's alternative submission

33. Mr Westbrook SC has advanced an alternative submission. He argues that by providing in Regulation 2A that the financial resources shall be assessed by multiplying the monthly disposable income by 12 and adding the disposable capital, the legislature does not contemplate a deduction of the disposable income by a disposable capital that carries a negative figure. Since I have concluded that a zero value should be put to a property with a market value less than the indebtedness secured on it, it is not necessary to decide on this alternative submission. It suffices to say that there is some force in the argument.

The 2 Properties

34. In the present case, the 1st and 2nd properties are resources of a capital nature. Under Rule 2 of the Regulations, their value is to be determined by reference to what would be realized on a sale in the open market. Given that their estimated market values were less than the sums due under the respective mortgages, there would be no surplus if they were sold in the open market. The applicant and her spouse would receive no money from the sale of the properties. The Director was thus correct to put a zero value to the two properties in computing the disposable capital of the applicant.

Legitimate expectation

35. The applicant refers to her first legal aid application and says that the Director had taken the negative value of the 2 Properties into account when assessing her means. Relying on Ng Siu Tung & Others v. Director of Immigration [2002] 5HKCFAR 1, she argues that she has a legitimate expectation that she would pass the means test on her second legal aid application.

36. As acknowledged by the applicant, legitimate expectation is not among the initial grounds relied on by the applicant and no leave has been given to argue this ground. It is therefore not open to the applicant to argue legitimate expectation in this application.

37. In any event, the applicant's argument on legitimate expectation is untenable. Firstly, The issue of what value to be put to a property with a market value less than the indebtedness secured on it involves a question of law. It does not involve an exercise of discretion on the part of the Director. Secondly, assuming that there had been an error in assessing the applicant's means in her first legal aid application, she cannot legitimately expect that the Director will adhere to the error and/or will not apply the correct principles of law in the future assessment of her means. As the Court of Final Appeal held in Ng Siu Tung, " to the extent that an expectation of a benefit which cannot legally be accorded, it is not a legitimate expectation": para.102 at p.44.

The decisions on the applicant's financial resources

38. In my judgment, the Director has not acted erroneously in law or unreasonably in the public law sense in his decision that the applicant's financial resources exceeded the statutory limit at the time of her application. The challenges against the Director's decision refusing legal aid to the applicant on account of means therefore fail.

39. As for Master Yuen's decision dismissing the appeal against the Director's decision on the applicant's financial resources, Mr Westbrook SC does not seek to support the part of it that draws analogy with Rules 5 and 8(2) of Schedule 2. He however argues that the decision is a proper one given that the Director's calculations and assessment are in accordance with the correct legal principles.

40. I accept that the facts of this case do not require a consideration of Rules 5 and 8(2) of Schedule 2. Nevertheless, the Master's ultimate decision in dismissing the appeal against the assessment of financial resources is a correct one. In addition, it serves no useful purpose to quash the Master's decision when the Director's decision on financial resources is correct and is to be upheld. Judicial review is an exceptional remedy and the grant of a remedy is in the discretion of the court. In the circumstances, the judicial review of the Master's decision ought not to be granted.

The OU Claim

41. It appears from the Amended Statement of Claim filed on 4 June 2003 that the applicant's claim against OU is based on (1) wrongful dismissal; and (2) breach of duty of custody to take good care of the applicant's properties left at OU within the period between 1 and 7 June 2000.

42. In respect of the claim of wrongful dismissal, the applicant's case is that she was employed under the terms and conditions as set out in OU's letter dated 16 June 1997 ("the Employment Letter") and a document called "The Open University of Hong Kong - Terms and Conditions of Service' ("Terms and Conditions"). Under the Employment Letter, she was employed on superannuation term. Clause 27B(iv) of the Terms and Conditions prescribes the disciplinary procedure applicable to a staff on the salary scale as that of the applicant. The applicant contends that OU had acted in breach of the employment contract in that OU had dismissed her without giving any good cause or going through all disciplinary procedures.

43. As for the claim in breach of duty of custody, the applicant's case is that, in accordance with OU's request, she had on 5 and 7 June 2000 by prior appointments handed over the office properties to OU. However, she was refused access to her office to clear her properties on 8 June 2000. On 9 June 2000, she was told all her properties had been discarded. Before the Master and in these proceedings, the applicant says that her unpublished research work saved in her office computer had been deleted, resulting in a loss of approximately $329,000, representing some 720 hours of her work.

44. The applicant claims damages for (1) distress, grief, discomfort, loss of reputation, job prospect, career opportunities and social status; (2) loss of outstanding pension benefit covering the three months' notice period and the outstanding leave period; (3) loss of income including Composite Cash Allowance; (4) loss of 30% of the pension fund as a result of early termination of her employment; (5) loss of medical and dental benefits under the employment contract; and (6) loss of personal properties. All these are to be assessed by the court.

45. As appeared from the Defence filed, OU defends the claim for wrongful dismissal on three bases. Firstly, it says that the employment was terminated by the applicant giving notice by letter dated 1 June 2000, in accordance with clause 8 of the Terms and Conditions and section 6 of the Employment Ordinance. The termination was accepted by OU while waiving the three months' notice required. Secondly and by way of alternative, OU pleads that the employment was terminated by OU giving to the applicant written notice with three months' wages in lieu of notice, in accordance with clause 8 of the Terms and Conditions and section 7 of the Employment Ordinance. Further or in the third alternative, OU says the applicant was dismissed for cause, pursuant to clause 8 of the Terms and Conditions and section 9 of the Employment Ordinance. Particulars of the matters relied on for the dismissal had been pleaded in the Defence. The averments are disputed by the applicant.

46. In relation to the claim for loss of personal properties, the defence, in short, is that the applicant had by prior appointment had access to her office on 5 and 7 June 2000 to remove her belongings. It is pleaded that the applicant had been given ample time and opportunity to remove her belongings, before OU proceeded to clear her office and dispose of items left behind after the 7 days' period.

47. As directed by a Master of the High Court, the Director had sought counsel advice on the merits of the OU Claim and had considered a section 9 opinion dated 20 August 2002. The applicant herself had also secured a counsel advice dated 2 October 2002. This was provided to the counsel retained by the Director and a further advice dated 27 November 2002 commenting on the applicant's counsel advice was prepared for the Director's consideration.

The merits of the OU Claim

47. Having regard to my conclusion that the applicant fails in her application to judicial review the decisions relating to her financial means, it would not have been necessary to deal with the merits of the OU Claim, since the applicant will not be eligible for legal aid. However, given that the applicant has made considerable submissions on the merits of her claim, I will deal with this part of the judicial review application briefly.

48. So far as the approach towards assessing the merits of an applicant's claim, there are no disagreement between the parties. The relevant test has been set out by Keith JA (sitting as an additional Judge of the Court of First Instance) in Nguyen Trong Son v. Director of Legal Aid (unreported) LAA No. 20 of 1999 as follows:

"I do not believe that I have to be satisfied that it is more probable than not that the issue of fact will be decided in the Appellant's favour. But I do have to be satisfied, I think, that the Appellant has shown that there is a reasonable as opposed to a fanciful, chance of the court at trial deciding that issue of fact in his favour."

The same standard will apply where the case involves points of law. It must be shown that the issue of law is one that is reasonable to submit to the court for adjudication.

49. In dealing with this part of the judicial review application, two matters are of importance. Firstly, it is inappropriate, and certainly not in the applicant's best interest, to embark upon detailed discussions of the merits and the prospect of success of the OU Claim in this judgment. This is because the OU Claim is still in progress and is awaiting adjudication. Likewise, it would not be appropriate to dwell into the various counsel advice in this Judgment.

50. Secondly, it is essential to bear in mind that this is a judicial review application. It is not an appeal from either the Director's or the Master's Decision. The court in a judicial review is concerned with legality and not with merits. In the present case, relief will only be granted if the applicant can demonstrate that the Director has committed an error of law or has acted Wednesbury unreasonably in arriving at the conclusion on the prospect of the OU Claim. In dealing with this part of the judicial review application, I will focus on the complaints the applicant has against the decisions of the Director and the Master.

51. In concluding that the applicant has no reasonable ground for continuing the OU Claim, the Director has noted that the OU Claim involves disputes of facts, which need to be resolved at trial. At the heart of the Director's consideration, however, is the entitlement of OU in law to terminate the employment on 3 months' notice or wages in lieu, and the amount of damages likely to be awarded. These points are not dependent on the credibility of the parties and the findings on the facts.

52. As I understand it, the applicant's answer to OU's case on termination of the employment contract is this: According to the Employment Letter, she was employed on superannuation term. In the Staff Handbook issued by OU in October 1999 ("the Handbook"), it states that employment on superannuation terms means that the employee's service is required on a long-term basis. In another document called "Guidelines on Contract Renewal, Crossing of Efficiency Bar and Upgrade for Academic and Administrative Staff" circulated by OU in February 1998 ('the Guidelines"), it refers to superannuation as a long-term commitment, and the quality of the staff member concerned must be ascertained beyond reasonable doubt. The applicant's argument is that employee employed on superannuation term can only be terminated for cause, and clause 8 of the Terms and Conditions providing for termination by notice or wages in lieu of notice has no application to her employment. Further, insofar as she is being dismissed for cause, OU is obliged to comply with the disciplinary procedures set out in clause 27B of the Terms and Conditions.

53. The complaints that the applicant has against the decisions of the Director and the Master are that:

(1) In concluding that an employment under superannuation term can be terminated by notice, the Director and the Master had failed to have regard to the Handbook and the Guidelines;

(2) They had failed to consider that the Employment Letter should prevail where there is a discrepancy between the Employment Letter and the Terms and Conditions in relation to termination;

(3) They had failed to look at the whole or full context of the employment contract and to have regard to OU's failure to follow the disciplinary procedure under clause 27 of the Terms and Conditions; and

(4) The Master erred in her approach to the claim for loss of personal properties in concluding that there was no explanation why the applicant did not collect all her belongings before 8 June 2000.

54. The first two complaints can be taken together. They relate to the applicant's argument that the superannuation term stated in the Employment Letter prevents the termination provision in clause 8 of the Terms of Condition from being applicable to her. The basic tenets of this argument are that superannuation means a long-term service and commitment, and this meaning is derived from the Handbook and the Guidelines. What the Director and the Master had taken into consideration is that the Handbook and the Guidelines do not form part of the employment contract between the applicant and OU. Specifically, they considered that it was unlikely that the Handbook had been incorporated into the employment contract in that it was expressly stated in the Handbook that it was not intended to serve any contractual purposes.

55. It is trite law that in construing the terms of a contract, reference to documents or evidence other than the contractual document itself is only permitted on limited exceptional grounds. In the present case, while it is correct that the term "superannuation" is part of the Employment Letter, the meaning that the applicant seeks to attribute to it is not. The applicant is seeking to make reference to the Handbook and Guidelines. It is therefore necessary to ascertain the legal basis for looking to the Handbook and the Guidelines in explaining the term "superannuation". Whether the Handbook and the Guidelines had been incorporated and become a part of the employment contract, and whether they are intended to serve contractual purposes are material considerations. These are legitimate and necessary questions to be asked by the Director and the Master.

56. Furthermore, the Director and the Master concluded that there is no proper legal basis for referring to the Handbook and the Guidelines, they being extrinsic materials. The applicant challenges the conclusions relying on a passage in Deakin & Morris, Labour Law (2001) p.262 on what is called a "bridging term". It becomes apparent upon a reading of the extract that the passage is a discussion on how collective agreements (which are extrinsic to an individual's employment agreement) may be incorporated into an employment contract. Properly understood, the passage is about how a term may be incorporated by express reference or implied as a matter of trade custom or practice or by operation of the law. None of these common law techniques of incorporation has application to this case.

57. Similarly, the case of Marley v. Forward Trust Group Ltd [1986] ICR 891 cited by the applicant is a case on incorporation of the terms of a collective agreement. The English Court of Appeal held that although it was a term of an unenforceable collective agreement, it became enforceable upon being incorporated into an employment contract. The necessary prerequisite is that the term must have become apart of the contract by incorporation. The case therefore reinforces the views of the Director and the Master that it must be shown that the Handbook and the Guidelines have been incorporated into the applicant's employment contract before reference can be made to them in construing the term "superannuation".

58. It is correct that the Employment Letter provides that it should prevail where there is a discrepancy between its contents and the Terms and Conditions. It is only necessary to apply this provision when there is a discrepancy between the two documents. The Employment Letter contains no provision on termination. The crux of the issue is whether superannuation term necessarily excludes termination by notice so that clause 8 of the Terms and Conditions is incompatible with the Employment Letter. The applicant's argument is that under a superannuation term, termination can only be for good cause. This is in my view a circular argument because it does not explain why, as matter of contractual construction or principle, an appointment on superannuation term can never be terminated on notice.

59. The applicant relies on the judgment of Lord Evershed in McClelland v. Northern Ireland General Health Services Board [1957] 1WLR 594 at 612. In that case, the employment contract is expressed to be "permanent and pensionable" and it only provides for termination by dismissal on account of the grounds stated therein. There is no provision for other forms of termination. The House of Lord held, as a matter of construction of contract, that the power to dismiss was comprehensive and exhaustive and no further power could be inferred. The part of Lord Evershed's judgment when he said: "so long as she did not render herself liable to dismissal on one or other of the grounds expressly stated in her contract and was willing and able to serve the board, the appellant was entitled to continue in her employment for her life" has to be read and understood in the context of the facts of the case. The case does not establish, as a matter of general principle, that a pensionable or superannuation employment cannot be terminated other than for cause. In the present case, both the Employment Letter and the Terms and Conditions are part of the employment contract. The employment contract not only provides for termination by dismissal, but also provides for termination on notice. The case of McClelland v. Northern Ireland General Health Services Board therefore has no application. It does not demonstrate that clause 8 of the Terms and Conditions is incompatible with the superannuation terms stipulated in the Employment Letter. The need to resolve a discrepancy between the two documents does not arise.

60. As for the third complaint relating to OU's failure to use the disciplinary procedure under clause 27, the applicant relies heavily on the English case of Malik v. Bank of Credit and Commerce International SA (In Liquidation) [1998] AC 20, and argues that OU had acted in breach of the implied term of mutual trust and confidence in not making appropriate use of the disciplinary procedure before coming to a decision on termination. The authorities decided after Malik shows that the implied term of mutual trust and confidence cannot contradict an express term providing for dismissal without cause: Johnson v. Unisys Ltd [2001] 2 WLR 1076.

61. Clause 27 therefore does not have the effect of limiting or extinguishing the right to termination by notice under clause 8. It follows that it would not be necessary to consider termination for misconduct and/or the non-use of clause 27 if OU can terminate by giving notice. The complaint that the Director and the Master erred in not referring to OU's failure to use the disciplinary procedure in clause 27 must fail.

62. As for section 32A of the Employment Ordinance and the decisions in Thomas Vincent v. South China Morning Post Publishers Ltd (unreported) HCA 6233 of 1999 and Bachicha v. Henry Poon [2000] 3HKC 452, the applicant has not been able to demonstrate that the discussions on them by the Master and the Director and the counsel giving the section 9 opinion are erroneous or unreasonable in the public law sense.

63. Turning to the last ground of complaint, it is relevant to note OU's letter dated 1 June 2000 requires the applicant to return within one week from the date of the letter, the properties of OU including "...computer software and hardware ...". Insofar as she is claiming for the loss of data saved in the office computer, it must be a proper exercise to ask why the data was not retrieved within the time allotted and before the handover of office properties. The Master did not err or act unreasonably when she said that there was no explanation as to why the applicant did not and could not remove the computer data on the occasions she attended OU.

64. The applicant has therefore failed to show that the Director and/or the Master had committed errors of law or had acted Wednesbury unreasonably in arriving at their conclusions on the merits of the OU Claim.

Conclusion

65. For the reasons stated above, the applicant's application for judicial review is dismissed. There is no reason why the ordinary principle of costs follow event should not apply. I make an order nisi that the applicant pays the costs of the 2nd respondent to be taxed if not agreed.