KO HON YUE v. LIU CHING LEUNG AND OTHERS

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BETWEEN

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J U D G M E N T

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Introduction

1.  Between September 1990 and August 2001, the plaintiff was employed to teach at Fung Kai No.1 Secondary School (“the School”), and later at Fung Kai Liu Man Shek Tong Secondary School (“FK-LMST School”).  He brings the present action for damages for wrongful termination of his employment contract and for breach of what is pleaded as an implied term of good faith.

The parties

2.  The plaintiff was born in 1957.  He was educated in Hong Kong up to Form 5.  In 1975, he went to England. In 1982, he graduated from University of East Anglia with a LLB degree.  In 1987, he received the Postgraduate Certificate in Education from the University of Hong Kong. After his return to Hong Kong from England in January 1983, the plaintiff worked briefly as a primary school supply teacher.  Between February and August 1984, he was employed by the Correctional Services Department.  In October 1984, he became a full time teacher in a secondary school.

3.  In September 1990, the plaintiff began his teaching employment at the School.  By agreement reached between him and the sponsoring body of the School and of FK-LMST School, the plaintiff was transferred to teach at FK-LMST School in the 2000-2001 school year.  Since September 1983, the plaintiff also taught English on a part-time basis for the adult education evening courses operated by the government at Queen Elizabeth School.  This he continued to do after he became a teacher of the School with the consent of the school authority.

4.  The School is a government aided school.  Its sponsoring body is Fung Kai Public School (“FKPS”), which was incorporated in 1961 under the Companies Ordinance 1950 with limited liability.  FKPS also owns the land on which the School is built.  Apart from the School, FKPS is also the sponsoring body of several other primary and secondary schools.  Among them is FK-LMST School, which was founded in 1996.  It is also a government aided school.

5.  In the course of this action, the School was joined as the 2^nd  defendant.  On 8 October 2007, I ordered that it ceased to be a party with the costs reserved to the conclusion of this trial.

6.  The 1^st defendants are sued in their capacity as registered managers of the School and as members of the management committee (“SMC”) of the School in 2001.  Since August 2005, the School has an incorporated management committee, consequential upon amendments to the Education Ordinance, with which this case is not concerned.

7.  At all material times, the 1^st named 1^st defendants, Mr Liu Ching Leung, (“the Supervisor”) was the supervisor of the school.  He was also the Chairman of the SMC.  The 2^nd named 1^st defendants, Mr Liu Poon Keung, (“the Principal”) was the principal of the School from 1989 to August 2005, when he retired from the school.  He has since emigrated to Australia.

The facts

8. As the relationship between the plaintiff and the School goes back a long way to 1990, there are quite a lot of factual matters covered in this action.  The parties have also adduced voluminous documents, some of which were only available at the commencement of the trial as a result of subpoenas served on the Education Department.   I do not consider it necessary to cover in this Judgment all the facts and documents that had been canvassed, for this will add unnecessarily to the length of this already rather lengthy Judgment.  As far as the facts that are directly relevant to the understanding and determination of this action, they are summarised below.  Some of the factual aspects will be further elaborated when dealing with the issues to which they relate.

9. The plaintiff commenced teaching in the School on 3 September 1990.  This was evidenced by a Letter Offering Appointment – Teachers in Aided School (“Letter Offering Appointment”) dated 20 June 1990 issued by the Supervisor and a Letter of Acceptance dated 21 June 1990 signed by the plaintiff.  Attached to the Letter Offering Appointment were two copies of a document called “Conditions of Service – Teachers in Fung Kai No.1 Secondary School” (“Conditions of Service”), which the plaintiff was required to sign and return one copy to the Supervisor.

10. Thereafter until 1999, the plaintiff was issued with a Letter Offering Appointment from the Supervisor every year in about May.  Each time the plaintiff signed and returned to the School a Letter of Acceptance together with a copy of Conditions of Service duly signed by him.  These Letters Offering Appointment and Letters of Acceptance are very similar in contents.  Over the years, there were some changes to the Conditions of Service.

11. The plaintiff mainly taught English in the School.  He also taught Economics and Public Affairs (EPA) to Form 1 to Form 3 students.  At the same time, he also took up disciplinary duties under the supervision of Mr Yip Kee Churck (葉其芍),who was the Disciplinary Master.  Mr Yip had taught in the School since 1965.  The Principal was one of his students.  When the plaintiff was with the School, Mr Yip was a Principal Assistant Master (PAM) and later became the Vice-Principal.  It was common ground that he subsequently became unwell and he retired in 1996.

12. In March 1994, the School invited applications from the teachers for promotion to, inter alia, to Senior Graduate Master (SGM).  It was understood that the successful candidate for the SGM post would take up the disciplinary duties of Mr Yip.  In April 1994, the plaintiff, who was a Graduate Master (GM) made an application to the Principal for promotion to the post of SGM.   Apart from the plaintiff, there was one other applicant, who also carried out disciplinary duties under the supervision of Mr Yip.  

13. In support of his promotion application, the plaintiff had requested and obtained several letters of support from past and present teachers and students.  Mr Yip also wrote in support of his application. These letters, which were written in June and July 1995, were produced by the plaintiff in this action as demonstration of recognitions of his ability and competence as a teacher.  The plaintiff’s promotion application was eventually unsuccessful.  According to the plaintiff, he became aware of the outcome in early 1996.

14. Although the plaintiff denies he was keen about the promotion and strongly refutes any connection between his unsuccessful application and his conduct and performance in the School that form the subject matter in this action, the evidence shows that it was around the same time of his promotion application that he began to get into difficulties with the School, notably the Principal.

15. Between 1995 and 1999, the plaintiff had received four formal warnings arising out of four sets of incident (“the 1^st to 4^th Incidents”).  The first two warnings were verbal warnings administered by the Principal on 14 December 1995 and 4 March 1998.  Being formal warnings, they were recorded in writing.  The other two were written warnings issued by the Supervisor on 10 February and 1 June 1999.

16. I shall deal with the details of these four incidents and warnings in the latter part of this judgment.  It is sufficient to indicate at this stage that they turn on aspects of school administration and the plaintiff’s conduct in relation to them.

17. In connection with the warnings and other incidents of school administration, including the election of teachers’ representative, the plaintiff had made a number of complaints to various organizations outside the School, including the Education Department, the Hong Kong Professional Teachers Union (“hkptu”) and the Council on Professional Conduct in Education (“CPCE”).  The plaintiff had also made requests for access of personal data to the Principal and the Education Department.  The HKPTU had taken up his complaints with the Education Department.   In February 2000, the plaintiff was elected as the deputy secretary for the Complaints Unit of the HKPTU.  At the same time, the CPCE conducted case studies on the incidents giving rise to the warnings and published reports and conclusions adverse to the Principal and the School.

18. Plainly, the plaintiff was invoking the assistance of these external organizations to overturn the decisions of the School and to revoke the warnings against him.  The plaintiff said his primary objective was to preserve his employment in the School.  Indeed, the CPCE had recommended to the Education Department that the warnings should be freezed.  It should, however, be mentioned that during these years, despite the warnings and the plaintiff’s many complaints, the plaintiff continued to be issued with Letters Offering Appointment on an annual basis and he had accepted each one of them.  The turning point only came when there were complaints about his teaching performance.

19. On 29 March and 14 April 2000, the School received two separate complaints from a group of six Form 5B and another group of 23 Form 6A students concerning the plaintiff’s teaching performance and behaviour during lessons.  The Principal appointed a committee consisting of five teachers to look into the complaints.  The committee administered questionnaires on the students in the two classes.  The responses of the questionnaires indicated support for the complaints.  When asked by the Principal to explain, the plaintiff refused, commenting that it was nonsense and further asked the Principal for evidence by invoking the Personal Data (Privacy) Ordinance.  The plaintiff was of the view that the School acted unfairly in handling the complaints.  It is said that the questionnaires were set in a leading and biased manner and the investigation was conducted behind his back.

20. In fact in April 2000, before receiving the complaints from Form 6A students, the Supervisor and the Education Department were discussing the possibility of transferring the plaintiff to teach in FK-LMST School in light of the difficulties he exhibited after the unsuccessful promotion and the multiple complaints he made to external organizations.  This cumulated in a letter dated 29 May 2000 from Mr Law Kwung Hung (羅君雄) of the Education Department setting out the transfer arrangement, which was copied to the plaintiff.  The letter mentioned that the School agreed to cancel all previous warnings issued to the plaintiff effective from 1 May 2000.  The Supervisor wrote on 13 June 2000, disputing the agreement.  He pointed out that the School had received complaints from students about the plaintiff, thus the warnings could not be cancelled.  Mr Law replied by letter dated 21 June 2000, maintaining there was an oral agreement to cancel the warnings and further stated that the previous letter was issued after obtaining the Supervisor’s approval.  It should be noted that the plaintiff did not receive copies of these two letters and therefore did not have knowledge of them until much later on.  Nevertheless, discussions on the transfer arrangement came to a halt because of the students’ complaints.

21. At a meeting on 4 July 2000, the SMC members present resolved unanimously to terminate the service of the plaintiff.

22. By letter dated 22 July 2000 (“1^st Letter of Termination”) the SMC through its solicitors informed the plaintiff of its decision not to renew his employment upon the expiration of his current contract on 31 August 2000.  The letter referred to the incidents giving rise to the four warnings and the complaints about his teaching performance, and went on to state that although the plaintiff had committed a grave breach of duty and was liable to be summarily dismissed, the SMC would pay him one month’s salary in lieu of the full notice of three months.

23. Consequent upon intervention and mediation by the Education Department, at a meeting on 8 August 2000 attended by the plaintiff, the representatives from the Education Department, the Chief Executive of FKPS, the Vice-Principal of the School and the Principal of FK-LMST School, it was agreed that the plaintiff would be transferred to teach in FK-LMST School for one year commencing September 2000 and he would during the one year period remain to be employed on the School’s establishment.  It was also agreed that if the plaintiff’s performance at FK-LMST School was up to expectations and if there was vacancy, FK-LMS School would give priority to appointing him as a teacher on its establishment.

24.  The position of the School on this transfer agreement was and is that it operated to temporarily suspend the decision not to renew the plaintiff’s employment.  The Chief Executive of FKPS had made this point plain at the 8 August 2000 meeting, which was recorded in the minutes.  The plaintiff disagreed to this.  He wanted the suspension or cancellation of his previous warnings.  As a result of his disagreement, the plaintiff refused to sign on the minutes of the meeting.

25.  In September 2000, the plaintiff commenced teaching in FK-LMST School.  He taught English and EPA.  At first, his relationship with the principal, Mr Chan Wing Ping, and other colleagues were amicable.  Matters began to take a sharp turn after the book inspections in December 2000.  The first one was a routine inspection that took place on 1 December 2000.  Owing to unsatisfactory findings in the inspection, a second and full book inspection was carried out on 20 December 2000. The plaintiff’s teaching progress and performance was considered to be inadequate and below the expected standard.

26.  On 4 January 2001, the plaintiff had a meeting with the relevant Form co-ordinators and the English Panel Chairperson, Ms Lau Shui Chun (Mrs Lui), followed by another meeting involving the principal and other teachers, to discuss the findings on his work and performance.  The plaintiff did not accept the criticisms made about his work and performance.  Not surprisingly, the meetings were unpleasant encounter, with the plaintiff accusing Mrs Lui of being hostile and aggressive towards him whereas Mrs Lui said the plaintiff was argumentative and not receptive to comments and suggestions.    

27.   Thereafter, the relationship between the plaintiff and the principal and other teachers deteriorated substantially.  The plaintiff felt he was victimised and he attributed this to the Supervisor working his influence on the principal and teachers of FK-LMST School.  In May 2001, there were class observations and further assessments of the plaintiff’s teaching.  In the report on the plaintiff’s work for the second term, it concluded that despite there were improvements, the plaintiff’s work was behind schedule and not satisfactory. 

28.   At the same time, the plaintiff also ran into difficulties with the students in the new school over disciplinary and teaching matters.  There were complaints from students and parents.  Specifically, there were two occasions that the plaintiff said he was humiliated and harassed by the students.  The first happened after the school Christmas party when some students sprayed man-made snowflakes on him outside the school entrance and laughed about it.  The second happened some days later when he ran into several female students in a shopping arcade. When he refused the students’ request to treat them to food, the students were said to use bad languages, follow him around and try to prevent him from leaving.  The plaintiff said he felt threatened.  He complained about this to the teacher in charge of discipline.  He was dissatisfied with the school’s handling of his complaint and eventually reported the incidents to the police, resulting in the arrests of the students.         

29.  The principal and the management committee of FK-LMST School took the view that the plaintiff’s work performance did not meet the requirements of the school and he was further unable to share the school’s culture and philosophy on education and student discipline.  By letter dated 23 May 2001, the principal of FK-LMST School informed the Education Department that the school would terminate the transfer agreement at the end of the school year.  The Education Department replied on 16 July 2001 that they had no objection to it.  By another letter dated 16 June 2001, FK-LMST School informed the SMC of the School of the decision to terminate the transfer arrangement. 

30.  By letter dated 13 July 2001 (“the 2^nd Termination Letter”), the SMC of the School, through solicitors, gave notice to the plaintiff to terminate his employment with the School.  The letter pointed out that had it not been for the transfer agreement, the plaintiff’s employment should have ended in 2000.  However, there was no satisfactory improvement when the plaintiff taught in FK-LMST School and the management committee of FK-LMST School had resolved that his service was no longer required.  The letter concluded by saying that in the circumstances, the SMC had no alternative but to terminate his employment with the School with immediate effect.  A cheque for one month’s salary as payment in lieu of notice was enclosed in the letter.   

31.  The plaintiff instructed solicitors and wrote to the SMC’s solicitors on 30 August 2001, contending that the termination of his employment was wrongful and indicated he would report for duty on 1 September 2001.  The SMC’s solicitors replied, disputing the contention and stated that an injunction would be sought against the plaintiff if he were to insist on coming to the School.

32.  In the meantime, the plaintiff had complained to HKPTU and CPCE about the termination of employment.  He also complained against the Education Department to the Ombudsman.  In addition, he made complaints to CPCE against the FK-LMST School and its principal, including a complaint of forgery on account of alterations to a student’s school report.  CPCE found the complaint substantiated and the matter was referred to the police.  The police, however, concluded there was no case for prosecution.  Despite this and despite protests from FK-LMST School, CPCE has yet to accede to the school’s request to withdraw or rectify its adverse finding and conclusion. 

33.  As for the plaintiff’s complaint on the termination of his employment, neither the HKPTU nor the CPCE was prepared to take it up.   According to the plaintiff, the HKPTU instead persuaded him to settle the dispute and had on his behalf tried to mediate a settlement with the School through the Education Department.

34.  As part of the settlement attempt, the plaintiff wrote a letter dated 25 October 2001 to the Supervisor (copied to the Education Department and the Chairman of HKPTU), in which he stated that he would resign for personal reasons with effect from 1 September 2001.  The Supervisor wrote to the Director of Education on 5 November 2001 stating there was no objection to let the plaintiff resign on his own accord.  According to the plaintiff, however, the Supervisor’s reply was never related to him by the Education Department.  And on the further request of HKPTU, he wrote another letter dated 26 November 2001 to the Director of Education to say that he would not take legal action in relation to the matters that happened in July 2001.   The plaintiff said because he did not hear any response from the School, he imposed a deadline for acceptance of his resignation in a letter to the Director of Education dated 4 December 2001. Since he still heard nothing, his offer to resign lapsed automatically on 7 December 2001. 

35.  Then on 7 September 2002, the plaintiff instituted proceedings in the Labour Tribunal against the School (Claim no. LBTC8797/2002), claiming salary from 13 July to 31 August 2002.  At the third hearing, on 13 December 1002, the School agreed to pay the amount claimed.  On the same day, the Tribunal issued an award for the amount claimed as full and final settlement for all claims.  On 19 December 2002, the School paid the amount into the Tribunal.

36.   Some six months later on 30 June 2003, the plaintiff commenced a second claim in the Labour Tribunal against the School and the SMC for a total sum of $14,024,190.90.  On 4 September 2003, the Presiding Officer transferred the action to the High Court.  This became the present claim.

The plaintiff’s claim

36.   The plaintiff’s claim in the present action is for damages for:

(1)     Wrongful termination of the employment contract and constructive dismissal; and

(2)     Breach of an implied term of good faith.

37. The plaintiff’s case is that he was employed by the 1^st defendants under a continuous contract that should have lasted until he reaches retirement at the age of 60 and was not subject to annual renewal.  According to the plaintiff, the contract of employment could only be terminated:

(1)  For cause:

(a) if the SMC considered on good and sufficient reasons that his service was unsatisfactory; 

(b) on giving three months’ notice; and

(c) Upon strict compliance with the procedures laid down in section 56(g) and Appendix 17 of the Code of Aid for Secondary Schools (“the Code of Aid”), which the plaintiff says had been incorporated into his contract of employment by express term.

(2)  Alternatively, on summary dismissal if the SMC considered there was a grave breach of duties or if he was convicted of a criminal offence.

38.  It is the plaintiff’s case that neither the 1^st nor the 2^nd Letter of Termination constitutes valid termination of his employment.  In both cases, the decision to terminate was not made by a majority of the SMC and did not comply with the contractual conditions for bringing about a termination in that the SMC did not give three months’ notice and there was no good and sufficient ground for termination.  Specifically, for the 1^st Letter of Termination, it is said that the SMC wrongly took into account the four warnings when they were estopped from so doing by the agreement at the 8 August 2000 meeting, and that there was no prior warning before the incident of complaint on his teaching performance.  In the case of the 2^nd Letter of Termination, it is said that the reasons given by FK-LMST School for not continuing with the transfer agreement were not bona fide and were instigated by the Supervisor.  It is also said that it was not preceded by verbal or written warnings insofar as the termination was based on the events in FK-LMST School.

39.   As for the claim in breach of implied term, the plaintiff relies on:

(1)  The four incidents and warnings;

(2)  The Supervisor’s letter dated 13 June 2000 to Mr Law of the Education Department disputing an agreement to cancel or revoke all the warnings;

(3)  The handling of the complaints from students of Form 5B and Form 6A;

(4)  The events in FK-LMST School; and

(5)  The 1^st and 2^nd Letters of Termination.

40. For the claim in wrongful termination and constructive dismissal, the plaintiff claims loss and damages represented by:

(1)     The prospect of earning basic salary up to the age of 60 (i.e. 16 years of salary);

(2)     The loss of monthly provident fund contribution by the government at 15% for 16 years;

(3)     The loss of dividend at no less than 5% p.a. of the accumulated provident fund payable by the government for 16 years; and

(3)  Three-month salary as wages in lieu of notice together with the provident fund contribution.

The plaintiff agrees to give credit for payments that he had received from the School.

41.  On the claim in breach of implied term, the plaintiff claims damages for damage to reputation occasioned by his being terminated in the middle of an academic year.  It is said that he has been unable to find compatible full-time teaching post at established education institution.  The financial loss is said to equal to the salary and benefits he would receive as a government aided school teacher less the income he had thus far earned as a part-time or substitute teacher.

42.  At the trial, the plaintiff’s claim is revised to about $6.9 million, less than half of what was initially claimed.

The defence

43.  A number of defences are raised by the defendants.  First, it is pleaded that the School is not a legal entity capable of being sued.  As for the 1^st defendants, they were merely agents for the School, similar to the directors of a limited company, so that no cause of action lies against them.  It is also pleaded that the plaintiff’s employment contract was not made with the SMC.

44.   As to the employment contract, the defendants’ case is that the Code of Aid does not form part of the contract.  It is denied that the plaintiff’s contract was for continuous employment up to the retirement age.  The defendants aver that the plaintiff’s contract was for the fixed term of one school year and was renewed annually.  As such, the contract would come to an end upon expiration and no notice of termination is required.  Otherwise, under the Conditions of Service, the contract could be terminated by the SMC giving three months’ notice or by way of summary dismissal.

45.   The defendants do not accept there is a proper legal basis for the implied term of good faith pleaded by the plaintiff.  Further, the defendants say that as a matter of law, any implied obligation of trust and confidence cannot apply to the manner of terminating the employment.

46.   Relying on the letter of resignation dated 25 October 2001, the defendants plead that the plaintiff has waived his right to damages or salary in lieu of notice. 

47.   The defendants further say that the claims in the present action could, and should, have been put forward in the first Labour Tribunal action and that the bringing of the present action amounts to an abuse of the court process.

48.   Finally, in respect of the quantum of damages, the defendants challenge the plaintiff’s contention that he has not been able to find alternative full-time employment and say that the plaintiff had failed to mitigate his loss.

The plaintiff’s reply

49.  By way of reply, the plaintiff pleads that the SMC was the plaintiff’s employer.  Alternatively, it is said that the 1^st defendants are estopped from alleging they were agents of any legal person to the employment contract and/or from denying they were a party to the employment contract.

50.   The plaintiff denies that the resignation letter amounts to a waiver, contending that the agreement to resign was aborted by reason of the 1^st defendants’ refusal to respond to the resignation letter.  This issue of waiver based on the letter of resignation was not pursued in the closing submissions for the 1^st defendants.   

51.   As for the first action in the Labour Tribunal, the plaintiff says there was no settlement and that judgment on admission should have been entered against the School.  The plaintiff denies that the bringing of the present action constitutes an abuse of court process.

The issues

52. Accordingly, the broad issues that require determination are:

(1) Whether the present action amounts to an abuse of court process.

(2)  Whether the 1^st defendants are correctly sued in this action.

(3)  Whether the Code of Aid formed part of the employment contract.

(4)  Whether the employment contract was continuous until the plaintiff’s retirement.

(5)  Whether the termination of the plaintiff’s employment was wrongful and whether there was constructive dismissal.

(6)  Whether the implied term as pleaded by the plaintiff exists in law and whether there was any breach of it.

(7)  If the plaintiff succeeds in his claim, what is the quantum of damages.

(8)  What is the appropriate costs order consequent upon the order that the 2^nd defendant ceased to be a party to the action.

Is the present action an abuse of process?

53. The first issue to be decided is whether the present action constitutes an abuse of process. It is accepted by both sides that if the issue is decided against the plaintiff, it will be the end of the plaintiff’s claim.

54.  The 1^st defendants’ submission on this issue is that the plaintiff could and should have put forward the present claim against the 1^st defendant in his first Labour Tribunal action and that in all the circumstances of the case, the plaintiff’s failure to do so amounts to an abuse of process.

55.  The facts that are relevant to this issue are not really in dispute. On 7 September 2002, the plaintiff issued the first action in the Labour Tribunal against the School (claim no. LBTC 8797/2002). The claim was stated to be for arrears of wages for the period from 13 July to 31 August 2001 and in the amount of HK$76,758 (at $47,590 per month).  In the Statement by Claimant, the plaintiff stated that the termination of his employment was in breach of the Conditions of Service, the Code of Aid and the Education Regulations and that the effective date of termination was not in accordance with the decision of the SMC and the stance taken by the Education Department. 

56.  The case went through three call-over hearings before it was finally disposed of. The transcripts of the hearings are in evidence in this trial. The first call-over hearing took place on 12 October 2002. The Vice Principal of the School, Mr Lui Wing Chuen, appeared on behalf of the defendant (i.e. the School). From what was said to the Presiding Officer, the dispute between the parties was whether the 2^nd Letter of Termination was issued before or after the commencement of the summer vacation. It was common ground that if the plaintiff’s employment was terminated with due notice during the summer vacation, then under the Conditions of Service, the plaintiff would be entitled to receive salary up to 31 August 2001. The 2^nd Letter of Termination is dated 13 July 2001, which the plaintiff said he only received on 16 July 2001. What happened was according to the school calendar of the School, summer vacation only began after 20 July 2001 whereas for FK-LMST School, summer vacation started on 14 July 2001. Hence the issue became which school calendar should be used for determining whether the termination took place before or during the summer vacation.   

57.  The Presiding Officer pointed out to Mr Lui that as the 2^nd Letter of Termination enclosed a cheque for payment of one-month salary in lieu of notice, this might have a bearing on when the termination of the plaintiff’s employment took place. He adjourned the claim with the direction that the School should take legal advice on whether the termination took place on the date of the 2^nd Letter of Termination (i.e. 13 July 2001) or one month afterwards (i.e. 13 July 2001).

58.  The case went before another Presiding Officer on the adjourned call-over hearing on 11 November 2002. The School was again represented by Mr Lui. The transcript shows that the Principal was also present. The Presiding Officer was keen to ascertain the basis for the School giving one-month as opposed to three-month notice as this was relevant to whether the termination was “with due notice” as stipulated in the Conditions of Service. In the course of the hearing, Mr Lui raised with the Presiding Officer that the plaintiff’s claim was not for insufficient notice whereupon the Presiding Officer pointed out that it was open to the plaintiff to amend his claim. In the end, the Presiding Officer adjourned the case for mention and requested the School to obtain a written legal opinion on whether by giving one-month salary in lieu of notice, the plaintiff’s employment was terminated with due notice.

59.  The adjourned hearing took place before the same Presiding Officer on 13 December 2002. The Principal was also present although Mr Lui was the School’s authorized representative.  Mr Lui first clarified whether the plaintiff only demanded the salary up to 31 August 2001. He then informed the Presiding Officer that on the basis of the plaintiff’s letter of resignation dated 25 October 2001 and the School had informed the Education Department that they would accept this, their lawyers had advised them to pay the claim for the salary up to 31 August 2001 with a view to alleviating the need to be entangled in what had happened between the parties (唔希望糾纏到點樣之前呀,又點樣後嗰啲嘢, … ).  The Presiding Officer then confirmed with the plaintiff his agreement to it and directed that the payment be made through the Tribunal within seven days.

60.  Afterwards, the Labour Tribunal issued an award dated 13 December 2002, stating that: (1) By consent, the defendant pays the claimant the sum of $76,758, in full and final settlement of all the claims; and (2) The payment shall be made within seven days. The School had made the payment to the plaintiff through the Tribunal.

61.  On 16 December 2002, the plaintiff wrote to the Presiding Officer of the Labour Tribunal. The material part of the letter read:

“        Thank you very much for your painstaking patience in facilitating a settlement in my case. However, I could not consider the settlement made on 13^th December a complete one, since the following elements have not been included expressly into the said agreement:

i)        Provident Fund Contribution

ii)       Certificate of Service

iii)     Interest accrued 

…

         I have to admit, due to my naivety and inexperience, those points were not raised at the Tribunal, and I wish you could give your careful consideration to these points.

Further, since I intend to take a new civil action in a law court, I would like to have a written record of the proceeding in this case. Please grant me permission to have such a record.

…”

62. Then on 3 January 2003, the plaintiff wrote again to the Presiding Officer. The letter was headed “Settlement”.  After referring to his previous letter and the permission to obtain the transcripts of the hearings, the plaintiff went on in the second paragraph to state:

“However, your direction on the other issues raised in that letter has not been given. Thus I would like to request your permission to include these issues, which are: provident fund contribution, certificate of service and interest accrued, into the ‘settlement’.”

63. The trial bundles do not contain the replies of the Labour Tribunal to the plaintiff’s letters. But from the subsequent development of the events, the inference must be that the plaintiff’s requests to include other heads of claim in the award, which effectively amount to an attempt to re-open his Labour Tribunal claim, had not met with success. 

64.  In the meantime on 8 January 2003, the Principal wrote to the plaintiff referring to his letter of resignation dated 25 October 2001 and enclosed a certificate of service in which the cause of leaving service was stated to be resignation.  The Supervisor in another letter dated 13 January 2003 to the plaintiff also indicated that the School accepted the plaintiff’s resignation.  However, by letter dated 24 January 2003 to the Secretary of Education and Manpower, the plaintiff sought to clarify that the settlement he reached with the School in the Labour Tribunal was only for the salary for the summer vacation. He stated that he reserved his right to claim against the School and the EMB in connection with his unlawful dismissal.  The plaintiff related the same message to the Supervisor in his letter dated 27 January 2003.

65.  Six months later on 30 June 2003, the plaintiff commenced another action in the Labour Tribunal (claim no. LBTC 5616/2003). Two defendants were named in the claim: the School and the Management Committee of Fung Kai No.1 Secondary School. The claim was for 16 yeas of unearned salary, loss of provident fund and loss of mortgage interests totalling in excess of HK$14 million. Pursuant to the Order of the Labour Tribunal made on 4 September 2003, the claim was transferred to the Court of First Instance and became the present action.       

66.  In the Court of First Instance, the plaintiff only proceeded against the present 1^st defendants.  The School was later added as the 2^nd defendant, but was by the Order made on 8 October 2007, ceased to be a party. This will be discussed in details in the latter part of the Judgment.  

67.  The applicable law is well settled and there is no disagreement between counsel. The rule which has its origin in the dictum of Wigram V-C in Henderson v. Henderson (1843) 3 Hare 100 at 114 is that:

“… where a given matter becomes the subject of litigation in, and of adjudication by, a court of competent jurisdiction, the court requires the parties to that litigation to bring forward their whole case, and will not (except under special circumstances) permit the same parties to open the same subject of litigation in respect of matter which might have been brought forward as part of the subject in contest, but which was not brought forward, only because they have, from negligence, inadvertence, or even accident, omitted part of their case.”   

68.  The rule is seen either as an extension of the doctrine of res judicata: Henderson v. Henderson, supra, at 115, Yat Tung Investment Co Ltd v. Dao Hang Bank Ltd [1975] AC 581, or as a rule of public policy: Barrow v. Bankside Agency Ltd [1996] 1 WLR 257, 260. 

69.  A recent statement of the law is contained in the judgment of Lord Bingham in Johnson v. Gore Wood & Co [2002] 1 AC 1, 31:

“The underlying public interest is the same: that there should be finality in litigation and that a party should not be twice vexed in the same matter.  This public interest is reinforced by the current emphasis on efficiency and economy in the conduct of litigation, in the interests of the parties and the public as a whole.  The bringing of a claim or the raising of a defence in later proceedings may, without more, amount to abuse if the court is satisfied (the onus being on the party alleging abuse) that the claim or defence should have been raised in the earlier proceedings if it was to be raised at all.  I would not accept that it is necessary, before abuse may be found, to identify any additional element such as a collateral attack on a previous decision or some dishonesty, but where those elements are present the later proceedings will be much more obviously abusive, and there will rarely be a finding of abuse unless the later proceeding involves what the court regards as unjust harassment of a party.”

70.  Mere re-litigation does not necessarily render the new proceeding an abuse of process. It is not the case that the maintenance of a second claim that could have been part of an earlier claim per se would automatically amount to an abuse of process: Johnson v. Gore Wood Co, supra, 31& 59.  Every case has to be judged according to its facts and circumstances.  The court’s approach is to make “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.”: Johnson v. Gore Wood Co, supra, 31.  The burden is on the defendant to establish abuse.  It has been said that it is a burden of some weight: Harvest Good Development Ltd v. Secretary for Justice & Others (unreported) HCAL32/2006, 16.7.2007 at para.104.

71.  In the present case, I have no difficulty concluding that the claims in the present action could have been included in, and brought together with, the first Labour Tribunal action.  The claims in both actions all arose out of the plaintiff’s employment and the same set of facts.  They are both claims for breach of employment contract.  Although the first action was confined to arrears of wages, it is by its nature a claim based on breach of the plaintiff’s employment contract. As for the present action, it is a claim for damages for breach of employment contract in connection with the termination of the employment and the implied term of trust and confidence.  The plaintiff had in the first claim made references to the Conditions of Service, the Code of Aid and the Education Regulations, all of which also feature significantly in this action. In fact, the present action is an extension of the first action.  Indeed, I do not understand the plaintiff or Mr Chiu to be saying that the claims in the present action could not have been brought in the first action.

72.  What Mr Chiu had argued is that the plaintiff was justified in not putting forward the present claims in the first Labour Tribunal action for a number of reasons. The first is that the present claims for damages are unliquidated claims for damages.  As such, he said, there was in 2002 some uncertainty as to whether the claims were properly within the jurisdiction of the Labour Tribunal.  He argued that there was a real chance that the Labour Tribunal might not have accepted the claim.

73.  I do not agree that the Labour Tribunal jurisdiction affords a proper explanation or justification for splitting the claims into two actions. First, although the court had in early years considered that the jurisdiction of the Labour Tribunal did not extend to a claim for unliquidated damages: National Ebauch Ltd v. Rishi Kaumar Bhatnagar [1981] HKLR 114 and Hung Sang Engineering Works Ltd v. Yu Wing Fat [1975] HKLR 394 at 400, the court had in a number of subsequent decisions in the 1980s and 1990s consistently held that the Labour Tribunal has jurisdiction to deal with claims for damages that are unliquidated in law but quantifiable in practice: Panalpina (Hong Kong) Ltd v. Ulrich Haldemann [1983] HKLR 275, 277-8, Ying Cheong Shoe Mfy  v. Tam Yuk Bing & Another [1987] 2 HKC 310, David Ireland v. Canton Fitzgerald (HK) Ltd (unreported) HCA 2115/1988 and De Nicolas Nenita Cientos v. Lee Fung Lan (unreported) HCLA 15/1997.  There is no real controversy on the jurisdiction of the Labour Tribunal to deal with the present claims for damages.  Second, had the plaintiff included the present claims for damages, and if the Labour Tribunal were indeed of the view that this part of the claim was outside its jurisdiction, it could have transferred the plaintiff’s claim to the High Court.  There is no question of the plaintiff’s claim not being able to be brought in or accepted by the Labour Tribunal.  Third and more fundamentally, it is not the plaintiff’s evidence that it was due to a concern over the Tribunal’s jurisdiction that he did not include the present claims for damages in his first action.

74.  Mr Chiu also argued that the issues in the present action do not relate to those in the first action.  It is true that different issues are engaged in the two actions. But that is because the plaintiff had split his claims into two sets of proceedings.  The first action was founded on a single premise of wages for the summer vacation.  The School’s response could only have concentrated on the plaintiff’s entitlement to this.  Had the plaintiff also claimed in the first action damages for breach of the implied term of trust and confidence and for wrongful termination, then surely the School would have put forward the defences that are raised in this action. It is a circular argument to say that because the issues in the two actions are different that it cannot be said that the present action could or should have been included in the earlier action.

75.  Attempts were also made to justify the bringing of two actions on the basis that the plaintiff was unrepresented in the Labour Tribunal.  I see no merit in this argument.   As a matter of fact, it is not the case that the plaintiff did not have the benefit of legal advice.  He had after receipt of the 2^nd Letter of Termination consulted lawyers and his solicitors had in August 2001 written to the School on his behalf.  Further, the plaintiff himself is a law graduate.  In any event, in the circumstances of this case, lack of legal advice or ignorance or misunderstanding of the legal position does not mean that the plaintiff could not have brought all the claims in one action.

76.  It is quite clear from the transcripts in the first Labour Tribunal claim that the plaintiff was adamant that the termination of his employment was improper and wrongful.  He had in fact already raised a number of complaints in connection with his termination.  It is also apparent that at the last hearing before the Tribunal, he was contemplating further claims against the School in connection with his termination.  This can be seen from the fact that after Mr Lui indicated the School was willing to pay up, 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. The letters that he wrote to the Presiding Officer shortly after the first claim was settled are also demonstrative of his intention to pursue more claims.  All these point to the fact that at the material time, the plaintiff was well aware of and did appreciate there were other potential claims in connection with his termination.  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.  Plainly, not only could the plaintiff have included the present claims in the first Labour Tribunal action, he should have done so. 

77.  The suggestion that he was not legally advised or was not adequately advised when he brought the first action is therefore irrelevant. Likewise, the suggestion that the plaintiff was unaware of the rule in Henderson v. Henderson, supra, and that he had not been warned by the Presiding Officer on the legal implications or restrictions on splitting his claims is not a relevant consideration.

78.  Another argument articulated on behalf of the plaintiff is that the present claims involve complicated facts and law and that the plaintiff had to invoke the Personal Data (Privacy) Ordinance to obtain the relevant documents and records from the School and other parties.  It is said that because many facts were only discovered from the documents and records thus disclosed, it would be unreasonable to say that the plaintiff should have brought the present claims in the first action.

79.  As a start, it should be noted that by the time he brought the first action in the Labour Tribunal, the plaintiff had already made several requests to the School and other parties for documents and records under the Personal Data (Privacy) Ordinance for disclosure of documents and records.  And admittedly, he already had with him some of the relevant documents and records.  That said, in advancing this argument, Mr Chiu is effectively saying that the plaintiff was not ready to bring the present action in 2002 and this justified him going ahead with the claim for wages first.  However, as Hartmann J said in the Harvest Good Development Limited case, supra, at para.113, a litigant cannot “drip feed” his case in this way.  The plaintiff has not suggested there was any urgency or necessity to bring action in September 2002.  If indeed he did not have all the necessary documents or information, he could, and he should, have waited until he was in a position to bring his whole claim.  It should be noted that there was only a nine-month gap between the two actions. 

80.  It is also argued that as the plaintiff has a complex claim, he is right to cut out the claim for wages and have it dealt with first and then to spend time working out the rest of his claims.  I find this argument most surprising.  While such a strategy may suit the convenience of the plaintiff, it works most unfairly on his opponents, particularly when he never disclosed that he was to come back after the conclusion of the first action. Such an approach to litigation is directly at odds with the public interest underlying the rule in Henderson v. Henderson that there should be finality in litigation.  It is tantamount to saying that because the plaintiff’s claim is complex, it is legitimate for him to vex his opponents twice or more. This cannot be right.

81.  In my view, it is both objectionable and oppressive for the plaintiff to bring his first action for a narrow part of his claim and after it was concluded by consent, to bring another action for the other parts of his claim with much wider relief sought.  It is clear from what Mr Lui told the Presiding Officer that, in offering the payment, the school authority was hoping to put an end to the disputes between the plaintiff and the School. Yet, six months later, it was landed with another litigation claiming huge sums of damages.

82.  The oppression is not removed or made less by the fact that the present action is against the individual members of the SMC whereas the first action was against the School.  As a matter of law, the rule is capable of application where the parties to the second action are different from those in earlier action.  As explained by Auld LJ in Bradford & Bingley Building Society v. Seddon Hancock & Others [1999] 1 WLR 1482, 2261: “… it is inherent in Sir James Wigram V-C’s reasoning that, a general rule, all persons who are to be sued should be sued at the same time and in the same proceedings where such a course is reasonably practicable, and whenever it is so and is not taken then, in an appropriate case the rule may be invoked so as to render the second action an abuse.”

83.  When the second action was brought in the Labour Tribunal, the defendants named were the School and the SMC. It was only upon transfer to the High Court that the individual members of the SMC were named as the 1^st defendants.  Mr Chiu made the point that in the first action, Mr Lui represented the School in the three hearings in the Labour Tribunal, but Mr Lui is not among the 1^st defendants in this action, hence there is no oppression or repeated vexing of the same party.  This submission overlooks the fact the Principal, who is the 2^nd named 1^st defendants herein, was present at the last two hearings in the first action.  More fundamentally, the School, which all parties accept, is managed by the SMC.  Both the Supervisor and the Principal were members of the SMC. When the School was sued, the SMC would have to deal with it.  It therefore makes no practical difference that it was the School who was named as the defendant in the first action whereas it was the individual members of the SMC who were sued in the present action.  The same group of people had been vexed twice.  On the contrary, the fact that after dealing with and concluding an action in discharge of their duties as school managers, they were then faced with a huge claim against them personally only adds to the oppression.

84.  The plaintiff has been at pain to point out that the award dated 13 December 2002 was erroneous in describing the payment as full and final settlement of all claims. It is said that there was in truth no settlement and that the payment was only in respect of the claim for wages. Having carefully considered the transcript of the hearing, I do not agree with the plaintiff that the Presiding Officer should have entered judgment by admission instead of recording a settlement. The offer of Mr Lui, made on behalf of the School, to pay the amount claimed was without admission of liability.  He expressly said the lawyers had advised them to make the payment with a view to avoid being entangled in the events that had happened and emphasized that the payment was offered in light of the plaintiff’s earlier letter of resignation.  Objectively speaking, there can be no question that it was a settlement because the action was compromised and disposed of with the consent of the parties, short of adjudication on the merits by the Tribunal.  Subjectively speaking, the plaintiff himself had referred to this as a settlement when corresponding with the Tribunal and the Secretary for Education and Manpower.  The Principal’s subsequent conduct of issuing a certificate of service on account of the plaintiff’s letter of resignation dated 25 October 2001 is also consistent with the School considering a settlement had been made.

85.  In the final analysis, it makes no difference whether the first action was concluded by way of an award or by settlement. The important fact to note is that the litigation was resolved by an agreement between the parties and that when the plaintiff agreed to the School’s offer of payment, the plaintiff did not disclose that he had no intention to let the dispute and claim rest there and then.  As the evidence shows, within days of the conclusion of the first action, he wrote and requested the Tribunal to re-open the award or settlement to include other items of payments. Apparently, this was not entertained by the Tribunal. To this extent, it may be said that the second action was a collateral attack of the Tribunal’s decision on the original award.

86.  In all the circumstances of this case, the 1^st defendants have demonstrated that, as against them, the present action constitutes an abuse of process.  On this ground alone, the plaintiff’s claim herein must fail.

Are the 1^st defendants the proper party to be sued?

87.  The next issue is whether the 1^st defendants are correctly joined and sued in this action.  Again, if this issue is determined in the 1^st defendant’s favour, then the plaintiff’s claim will also fail, irrespective of the determination on the other issues.

88.   It is useful to begin by recalling the procedural history of this action.  When the action was first brought in the Labour Tribunal on 30 June 2003, the defendants named are:

(1)  Fung Kai No. 1 Secondary School; and

(2)  Managing Committee of Fung Kai No. 1 Secondary School.

After it was transferred to the Court of First Instance, the plaintiff obtained leave on 20 November 2003 to substitute the present 1^st defendants as the defendants to the action.

89.  Subsequently by the Re-Amended Statement of Claim filed on 9 March 2005, the plaintiff added the School as the 2^nd defendant.  Mr Chiu said this was due to the averment in the Re-Amended Defence filed on 29 March 2005 that the employment contract was entered into between the School and the plaintiff.

90.  Notwithstanding the re-joinder of the School, the plaintiff pleaded that his primary position is that the School is not a legal entity.  The defendants share the same view.  In the Re-Amended Defence, it was specifically averred that the School is not a legal entity and that the 1^st defendants are taking over the defence of the School.

91.  The parties are undoubtedly correct in their view that the School is not legally capable of being sued.  The School is an education establishment run by its sponsoring body, FKPS.  Its position is no different from a business operated by a body corporate or partnership or individual.  In case of legal dispute, the business cannot sue or be sued, but the body corporate or partnership or proprietor operating it can.

92.  Since it is agreed that the School is not a legal entity capable of being sued, I ordered at the pre-trial review on 8 October 2007 that the School ceased to be a party in the action with the costs being reserved to the conclusion of this trial.

93.  Turning to the position of the SMC, section 32 of the Education Ordinance, Cap. 279, provides that every school shall be managed by a management committee.  Section 33 further makes the management committee responsible for ensuring, inter alia, the School is managed satisfactorily and the education of the pupils is promoted in a proper manner.  Thus, the SMC is under a statutory duty to manage the School.  Accordingly, the Education Ordinance and its subsidiary legislations contain a number of provisions relating to the power and responsibilities of a management committee in connection with the school administration and management.

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.

99.  Pausing here, it is convenient to deal with several points raised by Mr Chiu in relation to the capacity of the SMC.  The first point he made was that a managing committee could not be acting in a representative capacity because a school is made up of a fluctuating body of people.  Mr Chiu made this submission in the context of Yeung JA’s judgment in Chan Chi Loi v. Cheng For & Ors (unreported), CACV243/2003, paras. 88–91.  In that case, Yeung JA commented that the plaintiff, who was also a teacher in an aided school, could and should only make a claim of breach of employment contract against the School and not the school management committee.  His Lordship considered there was no possible cause of action against the management committee and no basis to render the management committee personally liable for the claim.  The appeal in that case, however, did not turn on whether the plaintiff had sued the correct party.  The observations of Yeung JA are therefore obiter.  Mr Chiu’s point is that the observations cannot be reconciled with the fact that school is not a legal entity.  Hence, the school management committee, being a body of fluctuating individuals could not have represented the school, which is also made up of a fluctuating body of people, viz. teachers, students and general staff. 

100.  For my part, I have no difficulty with the proposition that a school management committee acts on behalf of the school because although a school is not a legal entity, it is run by a sponsoring body.  When it is said that the management committee is an agent, or acts in a representative capacity when managing a school, one is really talking about the management committee acting on behalf of the sponsoring body.  It would not be a case of the managing committee managing the school as the representative of the students and staff in the school.

101.  Therefore, the legal vacuum or havoc that is said to be caused by the changing membership of a management committee will not arise.  I also have reservations whether the creation of incorporated management committee by the 2004 amendments to the Education Ordinance was to fill in the legal vacuum by creating a perpetual legal entity so that it can enter contracts on behalf of the school, sue and be sued.

102.  Another submission that Mr Chiu made, following from his submission that a school management committee cannot act on behalf of a school, is that the court should imply into the Education Ordinance, a provision to the effect that “managers of a school are liable for, and entitled to the benefits of, the acts or omissions of the preceding managers of the school as if those were their acts or omissions.”

103.  In my view, there is neither necessity nor proper justification for implying such a provision into the Education Ordinance.  As said above, a school is run or operated by its sponsoring body with the day-to-day management and administration being carried out by the Principal, the Supervisor or the managing committee.  There is no problem over continuity of contract or succession of contractual rights and obligations.

104.  Mr Chiu further made the point that in reality all the financial obligations of school managers as employer under contracts they enter into are borne by the government.  Hence, it was argued that there can be no objection to making the SMC personally liable under the employment contract of the plaintiff.  I do not agree that this is a relevant consideration.

105.  Returning to the core question of whether parties to the contract intended that the SMC and its members to incur personal liability for the plaintiff’s employment contract, a relevant and important fact is that the plaintiff was well aware of the existence of the School having a sponsoring body and that he did appreciate the difference between FKPS and the SMC.  A vivid example is the letter dated 3 March 1996 that the plaintiff wrote to the Chairman of the Education Unit (教育小組) of FKPS, Mr Liu Yuk Wah (廖煜華).  The plaintiff claimed it was in connection with one of the warning letters he received.  However, it is plain from the contents that it was written as a result of his unsuccessful application for promotion.  The letter indicated that the plaintiff had gone to see Mr Liu as well.  It would appear from the letter that the plaintiff was asking FKPS through Mr Liu to review or intervene with the decision made against him.  The fact that the plaintiff saw fit to approach the sponsoring body on matters relating to his employment and promotion is very revealing.  Not only did it show he understood the SMC to be under the supervision of the sponsoring body, but it also demonstrated that he regarded the sponsoring body to be his employer and to be the one making final decisions on matters relating to his employment.

106.  Also of importance is the meeting on 8 August 2000 to finalize the transfer of the plaintiff to teach in FK-LMST.  This is an important meeting because but for the transfer agreement confirmed at the meeting, the plaintiff’s employment would have come to an end in 2000.  None of the member of the SMC attended the meeting, not even the Supervisor or the Principal.  Instead, the Chief Executive of FKPS, Mr Tsui Sau Woo (徐守滬) was present and spoke on the matter, including the question of temporarily suspending the non-renewal of the plaintiff ‘s employment.  Mr Tsui had signed the minutes of the meeting to confirm this.

107.  Several points emerge from this meeting that are pertinent to the issue under consideration.  First, the plaintiff did not question the absence of SMC members and/or the presence of Mr Tsui at this meeting.  Second, the plaintiff was ready to and did agree with Mr Tsui (who represented FKPS) on the transfer arrangement and the continuation of his employment with the School in the interim period.  Third, in relation to the arrangement for the 2000-2001 school year, the agreement was in fact made between the plaintiff and FKPS acting by Mr Tsui.  The 8 August 2000 meeting therefore highlights objectively who was the relevant party to the plaintiff’s employment contract and whom the plaintiff subjectively understood to be the contracting party to his employment contract.  It goes directly to negative any suggestion that the plaintiff had always regarded the SMC as his employer and/or was a party liable under his employment contract.  The meeting is also relevant to the plaintiff’s arguments on estoppel, to which I now turn.

Estoppel by conduct and/or representation

108.  The plaintiff relies on estoppel by conduct and/or representation, estoppel by silence or acquiescence and estoppel by convention to attach personal liability to the 1^st defendants.  Insofar as estoppel by conduct and/or representations is concerned, the plaintiff relies on both the conduct of the 1^st defendants and that of the previous differently constituted SMC.  A number of conduct or representations were pleaded by the plaintiff and I shall deal with them in turns.

109.  The first group of conduct or representation is based on the Letters Offering Appointment, the Conditions of Service and also the Code of Aid (on the assumption that it is incorporated into the employment contract).  It is said that the Letters Offering Appointment stated that the SMC offered the plaintiff an appointment as a teacher while the latter two documents contain provisions consistent with the SMC being the employer, such as provisions on the power to terminate the employment.  However, these provisions concern the management of the School and are equally consistent with the SMC’s statutory responsibility to ensure the proper management of the School.  They do not amount to representations that the SMC were the employer or party to the contract.

110.  The second conduct or representation is premised on the fact that the plaintiff’s salaries were paid out of account kept and managed by the Supervisor on behalf of the SMC.  The evidence at the trial, however, shows that the plaintiff’s salary was paid by the government.

111.  The third group of conduct or representation came from the warning letter dated 1 June 1999 from the Supervisor to the plaintiff and the 1^st and 2^nd Letters of Termination.  In the warning letter, the Supervisor pointed out that if the plaintiff had complaints, he should have directed them to the SMC and not to his colleagues.  The letter further stated that if the plaintiff misconducted again, he would make recommendation to the SMC to terminate his employment.  As for the 1^st and 2^nd Letters of Termination, they referred to the plaintiff being employed by the SMC and the Letters Offering Appointment as being entered into between the plaintiff and the SMC, and also stated that the SMC was terminating the plaintiff’s employment.

112.  Again what were stated in these letters are equally consistent with the SMC having the statutory responsibility of managing the School, including the appointment and termination of teachers.

113.  The next group of conduct or representation is several letters to the plaintiff and the HKPTU and also the Education Department in connection with the letter of resignation issued by the plaintiff.  It was said that they were made out in a manner only consistent with the SMC being a party to the employment contract.

114.  However, the letter dated 5 November 2001 to the Education Department was written by the Supervisor, in which no mention was made of the SMC nor was there any indication that the Supervisor was writing on behalf of the SMC.  Further, it is the plaintiff’s case that he never received and read this letter.  As such, it cannot amount to a representation to the plaintiff.

115.  As to the other letter dated 31 January 2002 written by the Education Department, although it seems to be relating a message from the School or the SMC, there is no evidence before the court showing that the passage in question did originate from the SMC.  Mr Chiu accepts this.

116.  The final group of conduct or representation came from the defendants’ pleadings, which pleaded that the employment contract was between the School and the plaintiff and that the 1^st defendants acted as agents for the School.  The plaintiff’s argument on this is that since the School is not a legal person, the 1^st defendants could only be handling these proceedings as a party to the employment contract.  I am unable to accept this.  Apart from the obvious fact that the 1^st defendants are themselves party to this action, the SMC in discharging their duties to manage the School, will no doubt have to handle litigation involving the School.  Their involvement in and handling of these proceedings on behalf of the School is entirely consistent with their being agents for the sponsoring body.

117.  The plaintiff says that the 1^st defendants knew or ought to have known that such conduct and representations had induced the plaintiff into believing that the defendants were his employer and the party to be sued in this action and that it will not be just to allow the defendants to deny they were the employers.  Specifically, it is pointed out that any cause of action against the sponsoring body is by now time-barred. 

118.  The main obstacle faced by the plaintiff in mounting an estoppel by conduct and/or representation is his own knowledge.  Whereas the plaintiff points to the Letters Offering Appointment, the Conditions of Service and even the Code of Aid as making references to the SMC, there are at the same time other documents indicating that the School was the employer, which are within the plaintiff’s knowledge.  For instance, the name of the employer appearing on the Employer’s Return of Remuneration and Pensions has always been the School.  As analysed above, the plaintiff clearly knew of the existence of FKPS and its role and power in relation to his employment and promotion.  The 3 March 1996 letter and the 8 August 2000 meeting.  Most importantly show that the plaintiff was not misled or induced by the Letters Offering Appointment and the 1^st and 2^nd Letters of Termination into believing the SMC was his employer.  When he brought the first action in the Labour Tribunal, he did not name the SMC as his employer.  Even when he brought this second action in the Labour Tribunal, he continued to name the School as a defendant jointly with the SMC.  It should also be remembered that the plaintiff has a law degree.  In addition, after this action was commenced, the 1^st defendants had duly disclosed the Certificate of Incorporation of FKPS in their 1^st List of Documents filed on 29 March 2004.

119.  Given the plaintiff’s knowledge about FKPS and the discovery made by the 1^st defendants, the plaintiff cannot complain that the 1^st defendants did not in their pleading go further to say that they were agents for the School as operated by FKPS.

120.  Even if the matters relied upon by the plaintiff could amount to representations for the purpose of feeding an estoppel, the plaintiff must have knowledge, actual and presumed, that the representation was incorrect.  To say the least, the plaintiff would have been put upon enquiry and that by taking reasonable steps, he would have realised that the SMC was not a party to the contract of employment and did not incur personal liability on it.  I also agree with Mr Mak’s submission that the fact that any claim the plaintiff may have against the sponsoring body has in the meantime become time-barred cannot constitute a detriment for the purpose of founding an estoppel; it is the consequence of the plaintiff’s failure to make proper investigation.  Among other matters, the plaintiff accepted in his cross-examination that at least by the time he brought the second action in the Labour Tribunal, he already knew the School was operated by FKPS.

Estoppel by silence or acquiescence

121.  As to estoppel by silence or acquiescence, there must be a duty to speak or to act in a particular way, owed to the person prejudiced: The Indian Endurance (No. 2) Republic of India & Anor v. Indian Steamship Co. Ltd [1998] 1 AC 878, 892H.  The plaintiff’s case is that there was a legal relationship between the SMC and him by reason of the fact that he was bound to accept the management of the SMC over school affairs.  As such, it is said that he could reasonably expect that the SMC would act honestly and responsibly to disclose to him that they were agents for another legal person, and also the identity of the legal person.  It is further said that the 1^st defendants knew or ought to have known that the plaintiff was acting under the belief that they were the party to the employment contract.

122.  The plaintiff placed reliance on Pacol Ltd v. Trade Lines Ltd (The ‘Henrik’ Sif) [1982] 1 Lloyd’s Rep. 456, 465 in which Webster J held that an estoppel by silence or acquiescence arises where a reasonable man would expect the person, against whom the estoppel is raised, acting honestly and reasonably to bring the true facts to the attention of the other known by him to be under a mistake to either party’s respective rights and obligations.  This aspect of the Pacol Ltd case was doubted in Petromec Inc. v. Petroleo Brasileiro Sa Petrobras & Ors [2004] EWHC 127 (Comm) because it had the effect of creating rights and obligations which did not otherwise exist between the parties.  I respectfully agree.

123.  Putting it in the context of the present case, the 1^st defendants cannot be said to be under a duty to speak when they are sued by the plaintiff.  As Clark J said in The Stolt Loyalty [1993] 2 Lloyd’s Rep. 281, 290:

“…there can be no general duty upon one’s party to litigation or potential litigation to point out the mistakes of another party or his legal advisers.  The law sometimes impose a burden on solicitors and counsel to help their opponent’s case, but the burden should only be imposed when it is truly necessary, as otherwise, …the client will be tempted to ask : ‘Whose side are you on?’ ”

No estoppel by silence or acquiescence arises between the plaintiff and the 1^st defendants when they are litigating or contemplating litigations.

Estoppel by convention

124.  Turning then to estoppel by convention, the law requires the parties to have entered into some legal relationship on the bases of an assumption that is shared by or common to them both: Unrush v. Seeberger [2001] 2 HKLRD 414.

125.  The common assumption relied upon by the plaintiff in this case is that the 1^st defendants or the SMC were the employer of the plaintiff since 1990.  However, when the plaintiff brought the first action in the Labour Tribunal, he did not name the SMC or the 1^st defendants as the defendant.  This goes against the existence of a common assumption that the 1^st defendants or the SMC were the plaintiff’s employer.  It is argued that, in so doing, the plaintiff was only following the practice of suing the School and he did not have legal advice.  However, there is no evidence of the alleged practice.  Further the lack of legal advice is irrelevant to the question of common assumption, which is factual.  And even if there was such an assumption, this was terminated by the first action in the Labour Tribunal in that the plaintiff would be seen as resiling from the common assumption: PW & Co. v. Milton Gate Investments Ltd [2004] Ch 142, 195.  

126.  Alternatively, Mr Chiu argued that the substance of the common assumption was that the plaintiff was employed by the School and that to him, the SMC and the School is one and the same.  If indeed there were this common assumption, then the bringing of the second action in the Labour Tribunal against both the School and the SMC would amount to resiling from the common assumption.  In short, there is just no proper foundation for an estoppel by convention. 

127.  The final point to deal with under this issue is the submission that if the SMC were agents of the School and since the School not being a legal person, the 1^st defendants would be agents for a non-existing principal and would thereby incur personal liability under the principle in Kelner v. Baxter (1866) 2 LRCP 174.  As the analysis above shows, neither the SMC nor the 1^st defendants acted for a non-existent principal.  It is also not a case of agent for an undisclosed principal, given the plaintiff’s knowledge of the existence of FKPS and its relationship and position vis-à-vis the SMC, as discussed above. 

128.  Before leaving this issue on the proper party to the action, it has to be noted that the 11^th and 13^th named defendants, Liu Tim Wan (廖添穩) and Lee Tak Ching (李德貞), were on the evidence before the court not managers of the School from 1 January to 31 December 2000.  To this extent, the two of them were wrongly named as party to this action.

129.  In sum, the 1^st defendants were wrongly sued in this action and the claim against them therefore fails on this basis as well. 

Construction of the employment contract

130.  The determination of the first two issues would have disposed of the plaintiff’s claim in its entirety.  However for completeness sake, I will also deal with the other issues raised on the pleadings.

131.  The first is the issue of the construction of the plaintiff’s contract of employment.  The main contentions under this issue are: (1) whether the contract of employment was a continuous contract not subject to annual renewal or whether it was a fixed term contract for one year; and (2) what is the manner in which the contract of employment may be properly brought to an end.  These issues will in turn impact upon whether the plaintiff’s claim on wrongful termination and constructive dismissal can be sustained.

Was the Code of Aid a part of the plaintiff’s employment contract?

132.  Of pivotal importance to these questions is the issue of whether the provisions in the Code of Aid on the duration and the termination of a teacher’s employment contract formed part of the plaintiff’s contract of employment. 

133.  The position of the Code of Aid and how it may bear on the employment contracts in aided schools were first considered in Lau Chi Fai & Anor v. Secretary for Justice & Anor [1999] 2 HKLRD 494.  In that case, the plaintiffs applied for declaratory relief that section 57 of the Code of Aid on retirement age did not apply, or was unenforceable against, principals of aided secondary schools.  Keith JA found for the plaintiffs and held that as a matter of privity of contract, the undertaking given by the school management committee in terms of section 57 of the Code of Aid did not become a binding obligation in the principal’s contract of employment.  The nature and background of the Code of Aid was described as follows (at 496J to 497B):

“… 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 1st 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.”

134. In Chan Chi Loi v. Cheng For & Ors, supra, the plaintiff, who was employed as a teacher in an aided secondary school on a yearly contract, sued the members of the school management committee for breach of employment contract.  It was part of his case that the Code of Aid formed part of his contract with the school and that the non-renewal of his employment was in breach of sections 54 to 56 of the Code of Aid, a position similar to that held by the present plaintiff.  In the Court of First Instance, the judge rejected the plaintiff’s argument that the Code of Aid had to be implied into the contract as a matter of necessary implication.  The appeal was unanimously dismissed.  The majority of the Court of Appeal (Yeung and Yuen JJA held that the Code of Aid was not incorporated into the plaintiff’s employment contract.  Yeung JA stated (at paras.48 to 52):

“48.   There is no contractual obligation on the part of the School to renew the Plaintiff’s contract of employment every year.  The School is entitled to terminate the contract of employment in accordance with the employment conditions. 

49.    Clause 54(b) of the Code stipulates that ‘the contract of service or letter of appointment shall not be subject to annual renewal’, and clause 55 also provides that ‘after which (the probationary period of two years) 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.’

50.    As an aided school, the School is, of course, bound to follow instructions from the Government as set out in the Code; otherwise, it may not continue to receive subsidies from the Government.  However, the Plaintiff was not privy to the arrangement between the School and the Government. 

51.    The fact that the Plaintiff must observe the Code did not mean there was also a contractual obligation vis-à-vis the Plaintiff for the School to follow the Code. 

52.    The Plaintiff must observe the Code because he had a contractual obligation to do so, whereas the obligation on the part of the School to observe the Code arose out of its arrangement with the Government to which the Plaintiff was not a party.”

135.  In the present case, the plaintiff says that the Code of Aid was incorporated into his contract of employment by express provision, namely, the “Other Conditions” clause in the Conditions of Service.  It is further said that the present case is therefore very different from Chan Chi Loi and that the Court of Appeal’s reasoning on the Code of Aid forming no part of the contract was only obiter.

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.”

138. Reading these documents together, it is quite clear that the appointment of the plaintiff as a teacher in the School was offered and accepted on the basis that he would abide by the conditions in the attached Conditions of Service.  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.  As stipulated in the Letter Offering Acceptance, the plaintiff would sign on the Conditions of Service to signify his acceptance of the conditions expressly set out therein and those set out in, inter alia, the Code of Aid. 

139.  Thus viewed, the present case is not materially different from Chan Chi Loi.  The reasoning of Yeung JA on the status of the Code of Aid, which was shared by Yuen JA, is no different from that adopted by Keith JA in Lau Chi Fai.  It is founded on the doctrine of privity of contract.  The reasoning applies with full force to the present case. 

140.   The plaintiff’s witness, Mr Poon Tin Chi, who is the chairman of CPCE, had given evidence on the background to the enactment of the Code of Aid and how it was perceived by people in the education field in 1990 when it was revised.  I agree with Mr Mak’s submission that no weight can be attached to Mr Poon’s evidence on the Code of Aid as it is simply not relevant to the construction of the Code of Aid: Lord Energy Ltd v. Paul Chen [1998] 2 HKLRD 751, 758.  

141.   There is also no need to resort to the rule of contra proferentum as there is no ambiguity in the contractual documents. 

142.   For the reasons set out above, I am of the view that, other than the plaintiff was obliged to comply with the teacher’s obligations under the Code of Aid, there was no incorporation of the Code of Aid into the plaintiff’s contract of employment. 

Was the plaintiff’s employment contract continuous until retirement or for a fixed term?

143.  The next question of construction of the plaintiff’s employment is the duration of his employment.  The plaintiff’s case is that after the initial probation period, his employment was continuous up to his age of retirement at 60 and the employment contract was not subject to annual renewal.  The 1^st defendants’ case, however, is that the plaintiff’s employment contract was annual and expired on 31 August, which was the end of the school year.

144.   It is common ground that the plaintiff went through a two-year probation in 1990 and 1991.  He accepted in evidence that thereafter between 1992 and 1999, he had to sign Letters of Acceptance every year.  According to him, this was unlike the practice in other schools.  And over the years, there were some changes to the provisions in the Conditions of Service.  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.

145.   Since 1996, the Conditions of Service contained a “Period of Employment” clause, specifying that the employment was for a one-year period from 1 September to 31 August of the following year.  

146.   On these facts, the conclusion must be that after the completion of the two-year probation in August 1992, the plaintiff’s employment was on annual renewable basis.  The employment contracts were for a fixed term of one year, ending on 31 August, being the end of the school year.  The last in the series of annual contracts was the one made in 1999, which was evidenced by or contained in the 1999 Letter Offering Appointment and Letter of Acceptance and the 1999 Conditions of Service.  The plaintiff’s primary case of a continuous contract was premised on the Code of Aid, which stated that the employment should not be subject to annual renewal.  However, I have held that the Code of Aid did not form part of the plaintiff’s contract.  As the plaintiff’s employment contracts were fixed term contracts, they would lapse on the expiry date if there were no renewal.  No notice of termination was required to bring about this. 

Plaintiff’s employment in the school year 2000-2001

147.  In the normal course of event, the 1999 contract of employment would have expired on 31 August 1999.  The position was not altered by the 1^st Letter of Termination save that it made it clear to the plaintiff that his employment would not be renewed.

148.   I pause here to deal with the plaintiff’s complaint that the decision of the SMC on 4 July 2000 did not comply with Regulation 76 of the Education Regulations, which requires the dismissal of teachers to be decided by a majority vote of the management committee.  The evidence before the court shows the School only had 13 registered managers for the year 2000-2001.  Accordingly, the unanimous vote of the seven registered managers who were present at the SMC meeting was a majority vote. I do not accept the submission that there was no voting within the meaning of the Regulation.  Whatever may have been the recollection of the Principal on this, the minutes of the meeting shows that the motion was unanimously carried. 

149.   It is common ground that notwithstanding the decision not to renew the employment, the plaintiff remained to be employed as a result of the 8 August 2000 meeting.  The question that falls to be answered is: What were the terms of the plaintiff’s employment in the 2000-2001 school year?

150.   The minutes of the 8 August 2000 meeting recorded an agreement in the following terms:

(a)      The plaintiff would be transferred to teach in FK-LMST School in the school year beginning September 2000.

(b)     The plaintiff’s performance at FK-LMST School would be monitored by the new school and the Education Department.

(c)     The plaintiff undertook to perform to the satisfaction of FK-LMST School.

(d)     The School agreed to temporarily suspend its decision not to renew the plaintiff’s employment contract whereas the demands that the plaintiff made of the School should also come to an end. (鳳溪第一中學同意暫時擱置校方過往對高翰儒先生所作的不予續約的決定，而高先生以往對校方的各項要求也應告一段落。)

151.  Except for the last term, the plaintiff agrees that these terms were agreed at the meeting.  It is also not in dispute that there was an agreement or understanding that if the plaintiff’s performance met the requirements of FK-LMST School and if there was a vacancy, FK-LMST School would give priority consideration to appointing the plaintiff as a teacher on its establishment. 

152.   In my view, the 8 August 2000 meeting has the legal effect of renewing the plaintiff’s employment contract for one year, which would be on the same terms and conditions as the 1999 contract and subject to the terms agreed at the 8 August 2000 meeting.  In other words, the 1999 Conditions of Service continued to govern the contractual relationship, but subject to the variations brought about by the matters agreed at the 8 August 2000 meeting.

153.   One of the consequences is that the plaintiff continued to be employed under a fixed term contract for the 2000-2001 school year.  Although it was agreed that it was for one year, this was subject to the provision in section 5(2) of the Employment Ordinance, Cap. 57.  The subsection reads:

“Notwithstanding that it is proved that a contract of employment is for a period in excess of 1 month such contract shall be deemed to be a contract for 1 month renewable from month to month unless the contract is evidenced in writing signed by each of the parties thereto.”

154. Although the agreement that was reached in the 8 August 2000 meeting was evidenced in writing by the minutes prepared by the Education Department, the minutes were not signed by all each of the parties to the contract because the plaintiff had refused to sign.   Accordingly section 5(2) applies and deems the plaintiff’s employment contract to be a monthly contract renewable from month to month.  This in turn has a bearing on the manner in which the plaintiff’s contract of employment after August 2000 may be terminated. 

Termination of the contract

155. Under section 6(2) of the Employment Ordinance, it is provided that:

“(2) The length of notice required to terminate a contract of employment shall be:

(a)   in the case of a contract which is deemed by virtue of the provisions of s. 5 to be a contract for 1 month renewable from month to month and which does not make provision for the length of notice required to terminate the contract, not less than 1 month;

(b)   in the case of a contract which is deemed by virtue of the provisions of s. 5 to be a contract for 1 month renewable from month to month and which makes provision for the length of notice required to terminate the contract, the agreed period, but not less than 7 days;

(c)   in every other case, the agreed period, but not less than 7 days in the case of a continuous contract.”

156. In the 1999 Conditions for Service, which continued to apply to the plaintiff’s employment after August 2000, the “Termination of Appointment and Period of Notice” clause provides for termination by the SMC 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.”

157.  On the plaintiff’s construction, this clause only conferred a power to terminate by notice when the SMC considered the plaintiff’s service was unsatisfactory.  The 1^st defendants, on the other hand, say that after probation, the right to terminate by giving three months’ notice was not restricted to a case of unsatisfactory service.  Plainly, this clause was not happily drafted.  However, reading it in context, the sentence “Subsequently, three months’ notice shall be given to the teacher after the completion of the probationary period” must follow from the previous sentence dealing with termination on account of unsatisfactory service within the probation period.  I am therefore in agreement with the plaintiff’s construction that the SMC’s power to terminate by notice can only be exercised in a case of unsatisfactory service.  Other than this, the 1999 Conditions of Service does not contain any other provision for termination by notice by the SMC. 

158.  That being the position, section 6(2)(a) of the Employment Ordinance applies and the plaintiff’s employment after August could be terminated without cause on the giving of one month’s notice: see Law Shiu Kai v. Dynasty International Hotel Corp & Others [2004] 2 HKLRD 524, 541-543 at paras.66-69. 

159.  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. 

160.   The plaintiff argues that the 2^nd Letter of Termination was invalid because there was no evidence of a SMC meeting in which a majority decision to terminate the employment was made.  It is correct that under the then version of Regulation 76 of the Education Regulations, the dismissal of a teacher is required to be determined by a majority vote of all the members of the SMC.  This was a statutory obligation imposed on the SMC.  However, the absence of a majority decision, hence the non-compliance of Regulation 76, does not as a matter of law render the termination of the plaintiff’s employment invalid.  Breach of Regulation 76 is not the same as breach of the Employment Ordinance.  Further, as against the plaintiff, non-compliance of Regulation 76 would not make the decision to terminate his employment a nullity.

161.   In short, even if the plaintiff is able to maintain the present action against the 1^st defendants, the claim in wrongful termination and constructive dismissal cannot stand. 

The claim in breach of implied term

162.  The other claim of the plaintiff in this action is in breach of an implied term of good faith.  Two sub-issues are involved under this claim.  They are: (1) Whether the implied term as pleaded by the plaintiff exists in our common law; and (2) Whether the evidence and facts supports a case of breach of an implied term.

The law on the implied term of confidence and trust

163.  Paragraph 9A of the Re-Re-Amended Statement of Claim stated that:

“Further it is a term implied in law to the Employment Contract that the management committee and/or the School, through itself or its servants 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”).

164.  The 1^st defendants’ position is that the implied term of good faith as pleaded by the plaintiff does not exist in law.  Specifically, it is said that there is no sound legal basis for implying the term in the context of the non-renewal or termination of the plaintiff’s employment contract.

165.  In Malik  v. Bank of Credit and Commerce International SA (In liquidation) [1998] AC 20, two former employees of the collapsed BCCI sought to prove in the liquidation damages for being associated with the bank, which had placed them at a serious disadvantage in finding new jobs.  The parties were in agreement that in each of the employees’ contracts of employment was an implied term to the effect that the bank would not without reasonable and proper cause, conduct itself in a manner likely to destroy or seriously damage the relationship of confidence and trust between employer and employee.  Lord Steyn, with whom the other members of the House agreed, affirmed that the implied term was well established in law.  The House of Lords proceeded to hold that as one aspect of the implied term, the bank had an implied obligation to its employees not to conduct a dishonest or corrupt business.  The House further held that if it could be shown that it was reasonably foreseeable that in consequence of his corruption there was a serious possibility that an employee’s future employment prospects were handicapped, damages were recoverable for any such continuing financial losses sustained.

166.  In the subsequent case of Johnson v. Unisys Ltd [2003] 1 AC 518, the House of Lord (except Lord Steyn) distinguished the Malik case and held that although it was possible to conceive of an implied term to allow an employee to recover damages for loss arising from the manner of his dismissal, it would be an improper exercise of the judicial function to do so in light of the elaborate statutory provisions on unfair dismissal, including the restrictions on the application and extent of the remedy.        

167.  Several points arise from the speeches of Lord Hoffmann and Lord Millett that are relevant to the present discussions:

(1)   For the implied term of confidence and trust to apply, it must not contradict the express term of the contract and must be consistent with legislative policy as expressed in statutes.  Lord Hoffmann considered that the express contractual provision that the employment may be terminated on four weeks’ notice without reason made it difficult to imply a term that the employer should not do so except for some good cause and after giving him a reasonable opportunity to demonstrate that no such cause existed.

(2)   Despite the elaborated provisions on unfair dismissal in Part X of the Employment Rights Act 1996, the Parliament had not legislated to create a statutory implied term that the power of dismissal should be exercised fairly or in good faith.  It would therefore go contrary to the evident intention of the Parliament to construct a general common law remedy for unfair circumstances attending dismissal.

(3)   Since the implied term of confidence and trust is concerned with preserving the continuing relationship which should subsist between employer and employee, it does not seem appropriate for the implied term to be used in connection with the way that relationship is terminated.

(4)   Even though it would be jurisprudentially possible to develop the common law to imply a duty to exercise the power of dismissal in good faith, and even if the courts were free of legislative constraint, it would not be wise to do so.   There are potential problems of causation with regard to the loss and damage that flows from the breach as well as with the open-ended nature of liability.   

(5)   The implied term of confidence and trust cannot sensibly be used to extend the relationship of confidence and trust beyond its agreed duration. Manipulating the implied term for such a purpose would be unrealistic. An employer who summarily dismisses an employee usually does so because, rightly or wrongly, he no longer has any trust or confidence in him, and the real issue is: whose fault is this?

168.  In Eastwood & Anor v. Magnox Electric plc [2004] 3 WLR 322, the House of Lords held that where an employee had acquired a common law cause of action in respect of the employer’s failure to act fairly towards him such that it could be said to exist independently of his subsequent dismissal, and financial loss had flowed directly from that failure, he could, subject to the rule against double recovery, bring an action for that loss, notwithstanding the availability of a claim under the unfair dismissal legislation.  However, the House acknowledged that the practical consequences of the boundary between the common law and the statutory rights and remedies are difficult.

169.  That is the common law position of the implied term of confidence and trust in the UK.  In Hong Kong, in Semana Bachicha v. Poon Shiu Man [2000] 2 HKLRD 833, a domestic helper who was badly treated by her employer and forced to leave her employment. The Court of Appeal held that the conduct of the employer amounted to both constructive dismissal and breach of the implied term of confidence and trust.  It was further held that apart from damages for wrongful dismissal measured by one month’s salary in lieu of notice, she was also entitled to damages for breach of the implied term to the extent that she had suffered additional pecuniary loss that was not too remote as a result of the defendant’s breach of the implied trust and confidence term.  The claimant was awarded loss of a chance of earnings for a period in which she did not have the permission of the Immigration Department to seek alternative employment.  

170.  The Bachicha, which is a binding case authority, was decided before the House of Lords’ decision in Johnson v.Unisys Ltd.  Only the Court of Appeal’s decision in Johnson v. Unisys Ltd had been considered by Ribeiro JA (as he then was), who delivered the judgment of the Court.  There was no discussion or deliberation on whether the common law could or should be extended to imply a duty to act in good faith when exercising the power to dismiss an employee or terminate an employment. The issue did not arise from the facts in that case.  What Ribeiro JA recognized was that a given set of facts might constitute both wrongful or constructive dismissal and breach of the implied confidence and trust term giving rise to separate entitlements to damages, but subject to the avoidance of double recovery.

171.  The legal principles to be drawn from the authorities are these:

(1)   The common law does recognize the existence of an implied term of confidence and trust in the context of employment contract.  The implied term is as formulated in Malik v. BCCI, as applied in the Bachicha case.

(2)   The authorities do not establish an implied duty on an employer to act in good faith towards his employee when exercising the power of dismissal or termination of the employment.  Although the viability of developing the common law in that direction is accepted by the House of Lords cases, there are serious reservations as to the desirability of so doing. 

(3)   In Hong Kong, the protection against wrongful dismissal or termination is contained in the Employment Ordinance.  The extent of the statutory protection is limited, as it is concerned only with the giving of due and proper notice for termination.  There is no provision for awarding damages for the period after dismissal, except for any notice period that is required.  As such the legislative intent is not to confer remedies for loss flowing from the unfair manner in which an employee is dismissed.  In my view, it will not be appropriate for the courts to develop the common law to provide remedy for unfair circumstances attending dismissal.     

(4)   It is possible that an employee may have before his employment was terminated, acquired an independent cause of action for breach of the implied term of confidence and trust, from which pecuniary loss flow directly.  In such a case, subject to the rule against double recovery, the employee may bring a claim for the loss.  

172.  Applying these principles to the present case, the implied term as pleaded in paragraph 9A of the Re-Re-Amended Statement of Claim is flawed.  The reference to the SMC or the School under an implied obligation to act in good faith towards the plaintiff is not part of the law.

173.  Secondly, to the extent that the plaintiff’s claim is founded on the implied term of confidence and trust, it is not permissible to rely on the non-renewal or termination of his employment as instances of breach.  Apart from the reasons set out above, given that the plaintiff was employed before September 2000 under fixed term contracts that would expire byeffluxion of time and after August 2000 under a contract that could be terminated on notice without cause, there is simply no room for implying an obligation of good faith when deciding not to renew or terminate the employment.

174.  On the basis that the plaintiff’s claim for breach of implied term is founded on the implied term of confidence and trust, the remaining issue is whether independent from the non-renewal or termination of his employment, the plaintiff has a cause of action for breach of the implied term of confidence and trust.  This turns on whether the four warnings, the handling of the complaints from the students of Form 5B and Form 6A as well as the events in FK-LMST School amount to instances of breach.          

The 1^st warning

175.  The plaintiff is in the habit of making personal records and notes of meetings and of events that he considered important.  He had also throughout the years written many letters of complaints in which he set out the relevant facts.  Hence, many of the details surrounding the 1^st to 4^th incidents can be gleaned from the personal notes and records and letters taken by the plaintiff.  In contrast, owing to the long lapse of time and the fact that he had retired for some years, the Principal does not have recollection of the details of the events.  Much of the facts leading to the administration of the four warnings are therefore not in dispute.

176.  The 1^st warning was for the circulation of an “unofficial minutes” of the General Staff Meeting held on 29 November 1995.  It started with a General Staff Meeting held on 26 April 1995 in which the plaintiff raised some concerns, including the process for teacher promotion and also class arrangements.  After receiving the draft minutes of the meeting, the plaintiff wrote on 7 May 1995 to the Principal proposing amendments to the minutes.  Later on 15 May 1995, he went to see the Principal to discuss the proposed amendments.  According to the plaintiff, the Principal agreed to make the corrections in the next meeting. 

177.  However, at the General Staff Meeting held on the following day, the Principal made no mention of it.  On the next day, the plaintiff went to see him to ask about it.  According to the plaintiff’s notes, the Principal said it was a busy time and asked to defer it to September.  This, however, did not come about.

178.  Then at the General Staff Meeting held on 18 October 1995, another teacher pointed out that the previous minutes did not accurately record what he said.  The plaintiff suggested that the minutes should record in full the speech of a teacher, if he so requested.  The Principal disagreed.  The plaintiff also spoke about the importance of accurate minutes and requested to add confirmation of minutes as an item to the agenda.  The Principal eventually agreed that the matter could be raised in the next meeting. 

179.  At the next General Staff Meeting held on 29 November 1995, the plaintiff reiterated his demands for corrections of the previous minutes and to include confirmation of minutes in the agenda.  He was given 20 minutes to speak on this.  In the end, the Principal did not agree to his demands. 

180.  It is the plaintiff’s case that in these General Staff Meetings, the Principal was visibly angry and reacted in a high-handed manner.

181.  After the 29 November 1995 meeting, the plaintiff wrote out a minutes of the meeting, which was referred to as the “unofficial minutes”.  It is of interest to note that the first matter noted in this “unofficial minutes” was the re-opening of the application for promotion to SGM.  The other matter recorded was the plaintiff’s speech in connection with his demands for amendments and confirmation of previous minutes and the way in which the meetings were held.  

182.  The plaintiff showed and circulated the “unofficial minutes” to other teachers for comments and additions. He also collected the teachers’ signatures to it.  On 6 December 1995, the plaintiff delivered the “unofficial minutes” with the teachers’ signatures to the Principal (which was copied to the teachers’ representatives) and requested to have them incorporated in the official minutes. 

183.  On 14 December 1995, the Principal in the presence of the Vice-Principal, Mr Lui, administered a verbal warning on the plaintiff.  The recorded reason for issuing the warning was that the circulation of the “unofficial minutes” would seriously affect school administration and operation.  At the plaintiff’s request, a teachers’ representative was also present and had taken a record of the process.  Thereafter the plaintiff sent a copy of the record to the Principal and the Education Department.  The plaintiff stated on the record that he reserved all his rights on the verbal warning.

184.  The plaintiff’s argument on the 1^st warning is that it is entirely groundless and is an abuse of power by the Principal that undermined the plaintiff’s confidence and trust in the school authority.  It is said that the plaintiff’s requests in relation to amendment and confirmation of minutes are legitimate requests and the circulation of the “unofficial minutes” is a harmless act.  The 1^st warning is a reflection of the Principal’s “directive” and rigid style of management.

185.  In his evidence, the Principal pointed out that there were teachers, including the Vice-Principal, assigned to take minutes of the meetings and to have confirmation of minutes as an agenda would lead to more arguments and prolong the already rather lengthy meetings.  He considered it unacceptable that the plaintiff used the “unofficial minutes” to influence the views of other teachers and that in delivering the “unofficial minutes” to him before the official minutes was out, the plaintiff had over-stepped the line of authority.   

186.  It is not necessary for the court to pass judgment on the merits or lack of it of the plaintiff’s demands regarding the amendment and confirmation of minutes.  The question that the court has to decide is whether, objectively viewed, the issue of the 1^st warning on account of the plaintiff’s acts of circulating an unofficial minutes to canvass the teachers’ views and collect their signatures and delivering the signed minutes to the Principal, destroys or damages the relationship of confidence and trust between employer and employee.

187.  When the plaintiff showed the” unofficial minutes” to his colleagues, the draft official minutes of the meeting was not yet ready. The purpose of the “unofficial minutes” and the circulation of it would have nothing to do with the accuracy of the official minutes which was being prepared or the plaintiff’s demand to have the official minutes confirmed at the subsequent meeting.  If the plaintiff’s purpose was to promote the accuracy of the official minutes, he could and should have given the “unofficial minutes” to the Vice-Principal and teachers responsible for taking and compiling the official minutes, or wait until the draft official minutes were circulated before handing his minutes to the Principal. 

188.  Evidently, what the plaintiff was doing was to rally the support of his colleagues and to demonstrate his strength and thereby exert pressure on the Principal.  Mr Chiu in his final submissions accepted that the plaintiff’s purpose was to impress upon the Principal that he had the support of a substantial number of teachers.  In this regard, I do not accept the plaintiff’s testimony that he merely showed the “unofficial minutes” to teachers whom he was lunching with.  This is inherently incompatible with the uncontroverted fact that he obtained some 10 to 20 teachers to sign on his minutes. 

189.  In my view, it is not unreasonable for the Principal to find this exhibition of strength unacceptable and out of order.  It is not a matter of democratic administration, as the plaintiff would have it, but has all to do with due respect between principal and teachers and good discipline in a school setting.  It cannot be seriously denied that the Principal, in managing the School, did have authority over the teachers and students.  The plaintiff’s acts, including the handing of the “unofficial minutes” with the signatures to the Principal with a demand that it be made part of the official minutes, did have the effect of undermining the Principal’s authority and in turn the effective administration and operation of the School.  The implied obligation of confidence and trust in an employment situation is a mutual obligation.  As subsequent events unfold, the manner in which the plaintiff went about to achieve his objective had not been conducive to maintaining confidence and trust between him and the Principal.        

The 2^nd warning

190.  The second warning was for an incorrect statement made by the plaintiff at the Teachers Consultative Meeting (教師諮議會) in connection with the Teachers Commendation Scheme organised by the Committee on Respect Our Teachers Campaign and his refusal to explain or clarify to the Principal.  What happened was in October 1997, the School circulated among the teachers a memo on the selection of teachers’ representative for the Scheme.  At the time, the selection procedure adopted by the School was that teachers who were interested would nominate themselves and the Executive Committee, comprising the Principal, the Vice-Principals and a PAM, would make the final decision.   At the General Staff Meeting held on 3 December 1997, the Principal announced that one teacher had nominated himself as the teachers’ representative for the Scheme.

191.  At the Teachers Consultative Meeting held on 20 January 1998, the plaintiff moved a motion to change the selection procedure for the Scheme by having students and teachers to vote on the teacher to be selected as representative instead of being determined by the Executive Committee.  When speaking on the reasons for proposing the motion, the plaintiff stated that the school authority did not announce the nomination and selection procedure for the Scheme.  It was immediately pointed out to him by other teacher(s) that the School had circulated a memo on the Scheme.

192.  The Principal was not present at the meeting as the Teachers Consultative Meeting was attended by teachers only.  The incident was however brought to his attention.  On 23 January 1998, the Principal interviewed the plaintiff on the matter.  The plaintiff admitted he had made the statement, but when the Principal asked him whether he had said something incorrect at the meeting, he refused to explain or clarify.  According to the plaintiff’s personal notes, he told the Principal that the discussion between them should stop there and then, that the Teachers Consultative Meeting was independent and the Principal should not be discussing the matter with him.  He also said he felt being pressurized.    

193.  As a result of the incident, the Principal administered a verbal warning on the plaintiff on 4 March 1998.  The reason for it was that the plaintiff had made factually incorrect statement, deliberately aroused misunderstandings among the teachers on school administration and adversely affected the reputation of the school authority.  

194.  On 16 March 1998, the plaintiff made his first formal complaint to the Education Department, requesting that the 2^nd warning be cancelled.  The letter was copied to the Director of Education and the Chairman of HKPTU.   The Education Department conducted investigation and by letter dated 17 June 1998 informed the plaintiff that his complaint was unsubstantiated.  Through the HKPTU, the plaintiff continued to press his complaint.

195.  At the same time, the plaintiff wrote on 26 June 1998 to the Supervisor asking for a “sensible and satisfactory” conclusion by 6 July 1998, failing which he would seek advice from HKPTU.  By letter dated 20 July 1998, the Supervisor refused to intervene, pointing out that the Education Department had already investigated the matter and that the   plaintiff and the Principal should co-operate with each other in the interest of the students.

196.  In the meantime, the plaintiff was issued with the Letter Offering Appointment for the 1998-1999 school year, which he accepted.

197.  In relation to the plaintiff’s complaint, the Education Department maintained the view that the plaintiff did make an incorrect statement that could adversely affect the integrity and reputation of the school authority and refused to intervene with the issue of the 2^nd warning.  At the same time, however, it tried to mediate between the plaintiff and the School.  By letter dated 1 September 1998, the Education Department informed the plaintiff that the Principal had guaranteed that the warnings were not made to set the dismissal procedure in motion.

198.  The plaintiff’s position on the 2^nd Incident is that what he said at the Teachers Consultative Meeting was an inadvertent mistake.  His evidence is that it was a momentary failure of memory. As it was clarified by other teacher(s) on the spot, his misstatement could not have misled those present at the meeting.  In Mr Chiu’s submission, the Principal’s purpose of interviewing the plaintiff was to humble him. When the plaintiff refused to submit, the Principal retaliated by issuing the 2^nd warning.  

199.  Plainly, the Principal did not accept it was an inadvertent mistake.  He also found the plaintiff’s attitude and response at their meeting objectionable.

200.  The pivotal point in assessing the incident is whether it was unreasonable for the Principal to take the view that the plaintiff deliberately made the incorrect statement.  Look at the matter in context, it is not an unreasonable view.  The school memo on the Scheme was issued not long ago.  The plaintiff was speaking in support of his own motion to change the selection procedure.  The statement was uttered in the course of explaining the reason for the motion.  Being a meticulous person, as shown by his habit of taking notes and records of major events, it would be surprising if he did not properly prepare himself for his motion, including finding out what had been done in connection with the latest round of selection.  And if he had, there would be no room for a genuine mistake.   If it was not a genuine mistake, the Principal was entitled to be concerned.

201.  The matter was compounded by the plaintiff’s response to the Principal’s question(s), which was far from genuine.   As the Principal said, he could have simply admitted that he was wrong.  Instead, he dodged the question and used the independence of the Consultative Meeting as a means to silence the Principal.  As it was, his confrontational approach only served to heighten the Principal’s suspicion and widen the rift between them.

202.  As in the case of the 1^st Incident, the crux of the problem is the plaintiff’s approach and attitude in dealing with the Principal.  It has nothing to do with freedom of speech.  The suggestion that because the Teachers Consultative Meeting was designed to open discussions and collect views of teachers without the presence of the Principal, there must be freedom of speech, which includes freedom to make mistakes, is misplaced.      

Two events in the 1998-1999 school year

203.  Before moving to the 3^rd warning, I should mention two events that happened in the early months of the 1998-1999 school year.  These events set the scene for the 3^rd and 4^th incidents.  However, it must be borne in mind that they are not pleaded as incidents constituting breach of the implied term. 

204.  The first event happened in October 1998 when the plaintiff and another teacher were told to step down from the duty of managing school prefects.  The plaintiff first went to the Vice-Principal to seek an explanation.  Later on the same day, he went to see the Principal to ask for a written explanation.  Thereafter the plaintiff demanded a reinstatement as a settlement of the matter.  At the request of the plaintiff, the Supervisor and the Vice-Chairman of FKPS met with him on 21 October 1998 during which he complained of being unfairly treated by the Principal.  The plaintiff further wrote to the Supervisor on 16 November 1998, complaining of unfair treatment by the Principal in the past two years. The Principal’s evidence is that the appointment of the plaintiff and the other teacher to manage the school prefects was made before there was proper and thorough discussions and he considered the appointments inappropriate.  It also appeared that the Supervisor had spoken to him about the plaintiff’s complaints.

205.  The second event relates to the election of teachers’ representative.  At the General Staff Meeting on 27 November 1998, the Executive Committee, of which the Principal was a member, put forward a set of rules for the election of teachers’ representative to the Parents -Teachers Association (“PTA”).  The bulk of the rules were drafted by a teacher at the Principal’s request.  The Executive Committee had added one clause, which was to the effect that a teacher who had received formal warning by the Principal or Supervisor would not be eligible to be a candidate in the following three years.  The plaintiff took objection to this.  He had in the past three years served as a teacher representative and he considered the new rules was to prevent him from continuing to act as a teachers’ representative.  He requested the voting to be conducted by secret ballot, but it was refused.  The rules were duly passed.

206.  In connection with these two events, the plaintiff had through HKPTU, complained to the Education Department.  The Education Department declined to intervene.  Upon the plaintiff’s complaint, the CPCE found against the Principal on the second event.  The evidence suggests that after the plaintiff left the School, the rule disqualifying teachers who had received warnings from being elected as teachers’ representative was removed at the advice of the Education Department.

The 3^rd warning

207.  The events leading to the 3^rd warning happened in between the two events mentioned above.  It was for marking on three school circulars without authority.  As early as 18 October 1995, it was made known at the General Staff Meeting that staff should not make unauthorized alterations or markings to school circulars.

208.  On 25 November 1998, the plaintiff was handed with a circular on PTA Committee meeting notice by a general staff.  After signing on it, the plaintiff wrote on the circular “清楚未?” (meaning “Was it clear?”).  According to the plaintiff, he was responding to the query of the staff who handed him the circular and it was intended to be a joke.

209.  Then on 30 November 1998, the plaintiff underlined certain words on a circular on the rules for election of teachers’ representative to the PTA.  The words underlined were “過去五年曾任教師委員者可申請豁免成為候選人” (meaning “Those who acted as teachers’ representative in the past five years could apply to be exempted as a candidate.”).  This happened shortly after the General Staff Meeting on 27 November 1998. 

210.  The plaintiff said he did this for the purpose of highlighting the message for the benefits of everyone.  On the same day he did this, he wrote to the Supervisor requesting for an urgent meeting in connection with the 2^nd Incident and the election rules.  On 2 December 1998, the Supervisor replied that it was not an appropriate time.

211.  On the following day (viz. 1 December 1998), the plaintiff wrote on a circular concerning the extension of time for applying to be exempted as a candidate for teachers’ representative to the PTA. The words he wrote are: “我是否已被取消資格？請儘快答覆！” (meaning “Am I being disqualified? Please reply soonest!”).  The plaintiff said he wrote this to seek clarification from the School on his eligibility to be elected as a teachers’ representative election.

212.  Three days later at the General Staff Meeting on 4 December 1998, the Principal pointed out that unauthorized alteration or marking of school circular was a serious matter.  On 5 January 1999, the plaintiff wrote to the Principal apologizing for the unauthorized markings of the circulars and assuring him that he would not do this again. 

213.  By letter dated 10 February 1999, the Supervisor issued to the plaintiff a written warning in relation to his unauthorized marking of the three circulars.  The reason given was that his acts amounted to serious breach of discipline.  In accordance with the required procedure, the School gave notice of the warning to the Director of Education.

214.  Shortly after this, the plaintiff made personal data requests to the Education Department.  Afterwards, the plaintiff wrote two letters to the Director of Education (copied to HKPTU) demanding investigation into the three warnings and warned that he might bring judicial review application.  He also lodged complaints with the CPCE.

215.  The plaintiff’s contention on the 3^rd Incident is that it was a minor incident that should only have attracted a verbal warning at the most.  It is also said that the Supervisor was biased against him.

216.    It is evident that the plaintiff was at fault.  He admitted this in his letter of apology.  He had consciously failed to observe the instruction not to make unauthorized markings to school circulars on three occasions and within a week.  In these circumstances, the Supervisor cannot be criticized for regarding his conduct as a serious breach of discipline.  Further, given that the plaintiff had had two verbal warnings, the Supervisor cannot be said to be too harsh or acting disproportionately in issuing a written warning.   Still less can it be said that the 3^rd warning is an instance of breach of the implied obligation of confidence and trust.

The 4^th warning

217.  As for the 4^th warning, it was for interfering with the process of the teachers’ representative election held on 11 December 1998.  As mentioned above, the plaintiff took objection to the new election rules that had the effect of disqualifying him as a candidate for teachers’ representative.  On the day of election, he approached the two teachers who acted as the returning officers.  They were about to draw lots to determine who would be the representative.  The plaintiff requested to be entered as a candidate and when being refused, he tried to argue with the teachers, pointing out that he was “appealing” against the warnings.  When the teachers tried to carry on with their work at another table, the plaintiff followed them around and continued to pester them and argue.  When they later decided to move to the geography room to continue with the work, the plaintiff also followed them until he was stopped from entering the room.  Shortly after the event, the two returning officers wrote a complaint report to the Principal.

218.  On 26 January 1999, the Principal met with the plaintiff.  This was followed by a letter dated 28 January 1999 requesting a written explanation on the incident.  On 8 February 1999, the plaintiff gave his written response, which was copied to the Supervisor, the Director of Education and HKPTU.  In what his counsel acknowledged to be a strongly worded letter, the plaintiff complained against the returning officers’ refusal to accept him as a candidate, contending that the new election rules should not have retrospective effect.  The Principal was further asked to give a written explanation.

219.  Two days later on 10 February 1999, the plaintiff received the 3^rd warning from the Supervisor.  Mr Chiu submitted that this was not coincidental and that the Supervisor deliberately used the 3^rd warning to rein in the plaintiff.  What has been overlooked is that in a subsequent meeting with the plaintiff, the Supervisor indicated that there was initially a much more strongly worded draft for the 3^rd warning, but it was toned down by others.  This suggests that the issue of the 3^rd warning had been discussed in the SMC and this probably accounts for the time taken to issue the 3^rd warning.

220.  By letter dated 1 June 1999, the Supervisor issued a written warning on the disruption of the election process.  The letter pointed out that if the plaintiff had complaints to make, he should direct them to the SMC and not to his colleagues.  It concluded by stating that if there were further breach of discipline, the Supervisor would consider recommending to the SMC to terminate the employment.  A copy of the warning letter was sent to the Education Department for record.

221.  It should be noted that before the issue of the 4^th warning, the plaintiff had been issued with a Letter Offering Appointment for the 1999-2000 school year, which he accepted on the same day he got the 4^th warning.  When he was asked about this in cross-examination, the plaintiff accepted that the School had been lenient in this regard and said that it was out of his expectation.  

222.  On 12 June 1999, the plaintiff had a meeting with the Supervisor and the Vice-Chairman of FKPS.  According to the plaintiff’s notes of the meeting, he told them he had stopped making noises in the past months, but as to complaints that he had made, they could not be retracted.  As Mr Mak put to him in cross-examination, the truth is: during all this time, he was pressing on with his complaints to HKPTU and CPCE while at the same time also making new complaints against the Principal and the School.

223.  Then on 20 March 2000, the plaintiff wrote a letter to the Principal making a formal demand to have all his warnings revoked and to reinstate his right to be elected as a teachers’ representative with immediate effect.  The letter also made references to the adverse findings of CPCE against the Principal and stated that the Principal’s professional integrity was tarnished.  It was copied to many people, including the Supervisor, Chairman of the PTA, Chairman of Alumni Association, the Education Department and Chairman of HKPTU.  The plaintiff explained that he did this because he was desperate.  He was very worried that he would lose his job because he knew that the School could have dismissed him on account of the four warnings.     

224.  It was shortly after the plaintiff sent out this letter that the Supervisor entered into discussions with the Education Department about transferring him to teach in another school operated by the sponsoring body.    

225.  The plaintiff’s position on the 4^th warning is that his conduct on 11 December 1999 had to be considered against the unfair treatment by the Principal in depriving him of the opportunity to become the teachers’ representative.  It is said that he should have the right to protest.  It was also pointed out that the obstruction he caused to the two returning officers was neither excessive nor serious.  It was all verbal and no physical obstruction was involved.  There was only some loss of time.  All in all, it was argued that there was a lack of bona fide on the part of the Principal and also the Supervisor.

226.  Objectively speaking, by December 1999, the relationship between the plaintiff and the Principal was far from being good.  On the one hand, the plaintiff was no doubt upset about the first two warnings and the school prefect incident.  It is also not difficult to understand his anger and frustration over the new election rules.  It is demonstrably clear from his evidence that he was proud to have been elected as a teachers’ representative in three successive years.  On the other hand, the Principal was unlikely to view the plaintiff with favour having regard to his conduct in the 1^st and 2^nd Incidents and the many complaints he made to the various outside organizations naturally.  Realistically, the amount of mutual confidence and trust between the plaintiff and the Principal was probably very little.    

227.  That said, however, I do not agree that the plaintiff was justified in what he did on the day of election.   As the Supervisor stated in the warning letter, if he wished to air his grievance or assert his rights, he should have directed it to the school authority and not to the returning officers or other colleagues.  The fact that he was disappointed with the responses of the SMC or the Supervisor does not justify him taking his protest to the returning officers.  It cannot be disputed that he had caused obstructions to the work of the returning officers.  Whether it was only verbal and was not serious is irrelevant.  The returning officers should be able to discharge their duties without having to be disturbed or harassed.  There is no doubt that the plaintiff had misconducted himself.  The issue of a written warning is not disproportionate. 

228.  In short, the four warnings, whether taken individually or collectively, do not constitute a breach of the implied term.  

229.  Before moving away from the four warnings, it is necessary to deal briefly with the report of the CPCE on the several complaints made by the plaintiff against the Principal and the Supervisor’s letter to Mr Law of Education Department dated 13 June 2000. 

230.  The CPCE’s report was published in 19 July 1999. It recommended to the Education Department that the Principal be warned and that the School freeze the four warnings issued to the plaintiff.  It does not appear from the evidence that the recommendation to warn he Principal had been adopted.  The findings and opinions expressed by the CPCE on the propriety of the Principal’s conduct are not binding on this court.  What has to be appreciated is that the CPCE approached the incidents complained of and the four warnings from what they regarded as the best or desired practice for school management as set out in its Code of Professional Conduct whereas the court’s task is to ascertain whether they provide factual support for the plaintiff’s claim in breach of the implied term of confidence and trust.

231.  As to CPCE’s recommendation to freeze the four warnings, it would appear that the Education Department had endeavoured to mediate between the plaintiff and the School.  This had paved way for the discussions on the possibility of transferring the plaintiff to teach in another school operated by FKPS that led eventually to a series of correspondence between the Supervisor and Mr Law of the Department.  In his letter dated 13 June 2000, the Supervisor took issue with Mr Law’s letter dated 29 May 2000, which said that the school had agreed to cancel the four warnings.   Mr Law replied, maintaining that the Supervisor had agreed to it.  The plaintiff says that the Supervisor did not act bona fide in trying to renege from the agreement to cancel the warnings.  I do not consider that the Supervisor’s letter of 13 June 2000 can advance the plaintiff’s case on breach of the implied term.  Apart from Mr Law’s letter dated 29 May 2000, the plaintiff did not come to read the other letters exchanged between the Supervisor and Mr Law on the transfer arrangement until much later on.  At any rate, by June 2000 there was practically very little mutual confidence and trust between the plaintiff and the school management authority.  

The complaints from the students of Form 5B and Form 6A

(The 5^th Incident)

232.  On 29 March and 14 April 2000, six Form 5B students and 23 Form 6A students wrote to the Principal complaining about the plaintiff’s teaching performance and behaviour during lessons.  The Principal appointed the Vice-Principal, the English Panel Chairman and three other teachers to look into the matter.  They prepared two sets of questionnaires, one for each class, to get the views of all the students in the two classes.  The questionnaires were issued to the two classes on 10 April and 7 June 2000.  All the students in the two classes who were present in school (40 out of 45 in Form 5B and 28 out of 30 in Form 6B) had completed the questionnaires.  The answers were analyzed and two separate reports were compiled. 

233.  The results of the survey tend to confirm the complaints made by the students and show that the majority of the students considered the plaintiff’s teaching inadequate and did not meet their expectations.   The complaints mainly fell into three areas: (1) Making criticisms of the school during lessons; (2) Making criticisms of other teachers during lessons; and (3) The teaching performance of the plaintiff and his behaviour during lessons. 

234.  By letters dated 31 May and 23 June 2000, the Principal gave a summary of the complaints of Form 5B and Form 5A and asked the plaintiff for explanations.  The plaintiff wrote on 27 June 2000 asking for the complete sets of materials concerning the complaints.  The Principal replied on 29 June 2000 to the effect that the complaints would be referred to the Supervisor. 

235.  The plaintiff says that the Principal acted with personal spite against him in handling the students’ complaints and that he deliberately held back the relevant materials and conducted the survey behind his back.  He also complains that the questions in the questionnaires were leading and suggestive.

236.  It is no part of this court’s function to find on the general competency of the plaintiff as an English teacher.  This is not an issue that needs to be resolved in this action.   What I have to resolve is whether the School did have cause to be concerned with the plaintiff’s performance in the 1999-2000 School year and whether the conduct of the School in this incident had in any way breached the implied term of confidence and trust.  For this reason, the various statements made by the plaintiff’s former students and also teachers in the School regarding his general competency and ability are irrelevant and in any event carry no weight.  

237.  In my view, the plaintiff’s complaints on the administration of the questionnaires and the contents of the questionnaires are misplaced.  What is plain and obvious and cannot be overlooked is that: Firstly, there is no suggestion or evidence that these complaints were solicited or incited by the School.  Secondly, there were a significant number of students making the complaints.  In the case of Form 6A, it was 23 out of a class of 30 students.  Thirdly, the response to the questionnaires showed a large majority of students were dissatisfied with the plaintiff’s teaching.  Fourthly, the questionnaires did contain open ended questions.  The majority of the answers expressed discontents or adverse comments.  Although some of them were expressions of opinion, some facts had been cited in the answers.  Fifthly, there were at the same time some favourable comments, which show that the students did exercise independent thinking and were not really misled by the way the questions were formulated. 

238.  The importance of the questionnaires is that they support and give credence to the complaints made to the Principal.   Collectively, the students’ complaints and the results of the questionnaires demonstrate that a significant number of students in these two classes were dissatisfied with and had genuine concerns about the plaintiff’s teaching performance.  They did find the use of Chinese during lessons and the plaintiff’s so-called “issues- based” teaching a cause for concern.

239.  As to the criticism that the School failed to investigate the complaints, the administration of questionnaires on all the students in the two classes would be a most direct way of investigating.  The manner of carrying the surveys cannot really be faulted.  One must note the delicacy of the situation from the management’s point of view.  The School had to balance the interest of the students and that of the plaintiff when deciding when and how to alert the plaintiff of the complaints.  

240.  The plaintiff had called a student of Form 5B, Miss Sin Yuen, to testify.  Mr Chiu submitted that the purpose was to show that the answers given by the students merit further investigations.  Miss Sin had written favourable comments in her questionnaire and she disagreed with the criticisms and comments made by her fellow classmates.  In my view, her evidence did not add much.  It is evident from the questionnaires that while the majority of students were dissatisfied with the plaintiff’s teaching, there were a few who did not think there was a problem.

241.  The plaintiff also sought to rely on the witness statement of a student of Class 6A, Miss Chuk Kit Yue, for the same purpose of showing that the answers in the questionnaires of her class should not be accepted without further investigation.  Miss Chuk had been subpoenaed, but she refused to attend court.  Similar to that of Miss Sin, very little weight can be attached to Miss Chuk’s statement.  At the most, she could only speak for herself.   It is further worth noting that from the plaintiff’s evidence in court, it would appear that some students in Form 6A had given feedbacks to him on his teaching and he was aware that they had concerns about the progress of their English learning.

242.  Mr Chiu also criticised the School for not trying to help the plaintiff with respect to the students’ complaints.  But given the plaintiff’s response when being informed of the complaints, there was not much that the Principal or the School could do.  It may well be that the plaintiff really felt aggrieved by the incident.  However objectively viewed, the plaintiff’s response was a total refusal to co-operate with the School to deal with the complaints.  There was no possibility of the School offering counselling or help to him to improve on his teaching.    

243.  In all the circumstances of the case, the Principal or the school authority cannot be said to have conducted unreasonably in this incident of the students’ complaints.  In this regard, the fact that there was hitherto no complaint against the plaintiff does not mean that the Principal and the School should not take the students who complained seriously.    
 

244.  Finally on this topic is the two experts called by either side with regard to the plaintiff’s teaching performance and methodology.   I am satisfied that both witnesses have an amount of expertise in English teaching in Hong Kong.   However in the case of the plaintiff’s expert, Miss Li Yee Lin, it was apparent that she was only provided with a limited amount of materials when she prepared her report.   It also appears that she was misinformed on some of the facts.  It is, for instance, not the case that the plaintiff was expected to complete ten units of listening practices within the month of May or up to May, as suggested in paragraph 17 of her report.   There is also no evidential basis for the criticism of students’ books and exercises being retained for seven weeks for the purpose of book inspections, as stated in paragraph 18 of her report.

245.  The focus of Miss Li’s expertise and a major part of her evidence is the issues-based language teaching in the sixth form.  But the crux of the dispute is not the value and the method of this teaching, but whether the plaintiff had properly understood the method of teaching and had applied it faithfully.  That is a matter that Miss Li could not provide an answer because she had no personal experience of how the plaintiff taught the sixth form in the School in 1999-2000.  Likewise, her reference to Mr Stephen Krashen’s theory in the context of using Chinese to teach English is misplaced.  The last few paragraphs of her report, especially the criticisms leveled against the School and FK-LMST School are clearly inappropriate for an expert.

246.  As for the 1^st defendants’ expert, Dr Pauline KL Lee, it is evident that she is well familiar with the requirements for teaching English at Secondary School level, including the use of teaching medium and the proper application of the “issues-based” teaching approach in the context of English teaching.  The reliability and force of her evidence is unaffected by the small error in the last part of her report in assuming that the plaintiff had read the survey findings when he gave his response in July 2001.  Dr Lee’s evidence further lends credence to the concerns expressed by the students in the complaint letters and the answers to the questionnaires and show that the School did have cause to be concerned.       

The events in FK-LMST School

247.  Turning to the events that happened between the plaintiff and the principal and teachers in FK-LMST School, the fundamental point to note is that despite the plaintiff’s accusation, there is no actual evidence that the Supervisor or the SMC had exercised improper influence on the principal and teachers of FK-LMST School and/or in any way brought about what happened between the plaintiff and FK-LMST School.  The plaintiff’s case on this point is based upon the witness statement of Yip Sze Wing, who was a former teacher in the FK-LMST School.  He was one of the Form Coordinators who had prepared reports on the plaintiff and was also present at the meeting on 4 January 2001.

248.  The thrust of Mr Sit’s evidence is that he and the other teachers were told by Mr Chan, the principal of FK-LMST School, that:  The plaintiff was unpopular with the School and the SMC because he always complained against them.  However, the SMC had no reasonable avenues to dismiss him, it had to comply with the Education Department’s direction and transfer him to FK-LMST School.   According to the plaintiff, Mr Sit approached him on his own initiative in 2005 and offered to help him with this action.  The witness statement dated 28 June 2005 was made by Mr Sit independently.  However, subsequently, the plaintiff was unable to contact him.  Then during a telephone conversation on 18 September 2007, Mr Sit told the plaintiff that he was unable to help him.  Despite being served a subpoena, he did not turn up.

249.  Mr Chiu asked that the witness statement of Mr Sit be admitted as hearsay evidence and to be given full weight.  This was opposed.  There is no doubt that Mr Sit’s evidence is relevant. But I am of the view that it should not be admitted and even if admitted, no weight can be attached to.  There are several reasons for this.  First, Mr Sit is clearly an unwilling witness.  His unwillingness is however not explained.  There has apparently been a sharp change in his attitude, from being very eager and forthcoming to total disinterest and reluctant.  The change in attitude is also unexplained.  Second, he is a person who is prepared to ignore and defy a court order to attend court.  In the absence of cogent explanations, there must be grave doubts as to his the credibility and reliability of what he said in his statement.  Third, the part of his evidence, which is set out above, involves multiple hearsay.  Fourth, the part of his witness statement that the plaintiff seeks to rely is heavily disputed.  Fifthly, given the importance the plaintiff attaches to Mr Sit’s witness statement and the quality of his evidence, it will be unfair to admit his statement when there is no opportunity for the 1^st defendants to cross-examine him.  Additionally, what he said about the instruction from the SMC to beware of the plaintiff is inconsistent with the undisputed fact that the plaintiff was on good and amicable terms with everyone in FK-LMST School for at least the first two months.  Indeed Mr Chan would have heard at the 8 August 2000 meeting that the SMC had decided not to renew his employment and would also have sensed that there was problem between the plaintiff and the School.  Hence, if there was instruction from the SMC to make life difficult for the plaintiff, it would not be that the problems only began to emerge in December 2000.     

250.  I am therefore not satisfied that the plaintiff has been able to make out a case that the 1^st defendants should be held liable on the basis of events that happened in FK-LMST School.  This being the case, the events in FK-LMST School are strictly speaking irrelevant to the claim of breach of implied term.

251.  It only leaves me to make several observations under this head.  First, while acknowledging that he found the comments on his teaching and work performance harsh and unfair, there were parts of the reports on his performance in the 1^st and 2^nd term that are undoubtedly true.  For example, he had not followed the teaching schedule and could not complete the teaching in time.  Contrary to what the plaintiff seems to think, this is not a minor or trivial matter because the School, through the Subject Panel Chair, in ensuring proper education for the students, has to ensure that students in the same Form, albeit in different classes, are taught the same things and progress at the same pace. 

252.  Second, as to the 17 statements made by the students, although some of them contain rather immature personal remarks about the plaintiff, the bulk of the contents show that the students did find problems with his teaching, attitude and handling of disciplinary issues.  There are at the same time complaints from parents.  There was, to say the least, a prima facie case for the school to be concerned. 

253.  Third, while the plaintiff might not have expected the detailed scrutiny made of his performance and work and might have even found the 4 January 2001 meetings and the comments made him embarrassing, his written responses demonstrated the argumentative and confrontational approach he had taken.  There was a clear lack of objectivity in his reactions. 

254.  Fourth, with regard to the complaint that the amount of resources that were deployed for the compilation of the subsequent reports on him and Follow-up Suggestions was unprecedented (cynically described as “Rolls-Royce treatment”), the plaintiff has failed to have regard to how he had reacted to the 4 January 2001.  His meticulous and unyielding responses would no doubt cause people to be extra cautious in dealing with his work appraisals.   In any case, Mrs Lui was then attending a full-time course.  She could only deal with the reports in the evenings.  There is no basis for a conspiracy suggestion.   

255.  In this connection, I do not agree that Mrs Lui and Mr Chan are not witnesses of truth.  I do not see in Mrs Lui’s evidence that she held personal grudge against the plaintiff.  There is no objectively convincing reason for her to put herself and other colleagues to the extent of troubles they had undergone, for the purpose of “framing up” the plaintiff, just because the SMC or the School wanted to get rid of him.   In the case of Mr Chan, he was demonstrable more eager and assertive as a principal, when compared to the Principal.  That might have to do with the fact that FK-LMST School was in 2000 a relatively new school and had to establish itself.  He was clearly taking a very firm line on the plaintiff.  But that does not mean that he had a secret agenda to get rid of the plaintiff.  There is also no evidence that he acted with improper motive.     

256.  Fifth, viewing the events that happened between the plaintiff and FK-LMST School, the principal and the management committee of FK-LMST School were justified in concluding that the plaintiff did not fit into their school whether in terms of meeting the teaching requirements or identifying himself with the culture and education philosophies.  His decision to report the students to the police does put him in rather dim light, both in terms of his relationship with FK-LMST School and his ability to handle students and discipline matters.  Quite apart from the issue of proportionality of response, there was no need to take leave during school hours to make the report.  There was after all no urgency.  

257.  For the above reasons, even if the plaintiff could have maintained the present action against the 1^st defendants, the claim for breach of implied term would have failed.

Quantum of damages

258.  Given my conclusion above that the plaintiff’s action cannot succeed, it is not necessary to deal with the issue of quantum of damages. I need only make a few basic observations.

259.  First, I find it very hard to accept that as a GM teaching English with some 16 years of experience, the plaintiff was unable to find alternative employment and has no prospect of doing so in the future.  There is no evidence in this action to show that the prospects for teaching had been very poor or is projected to be unpromising.  It is also the plaintiff’s own evidence that the termination of his employment had not attracted any publicity within the education circle. 

260.  Admittedly, he had only looked for employments with government aided schools.  I had said I do not find his explanation for not attempting employments with private or direct subsidized schools genuine or convincing.  As to the suggestion that the initial certificate of service issued by the School would have aroused the suspicion and distrust of potential employers, I find the plaintiff’s reason and logic for not using the subsequent certificate of service that shows he resigned from the School extraordinary.  He said it would contravene the Theft Ordinance and amount to the offence of obtaining pecuniary advantage by false pretence.     

261.  In my view, the plaintiff has not been completely forthcoming with the reasons why he was not re-employed as a full-time teacher.  It will appear that it is more to do with his personal circumstances and choice or preference for employment rather than the termination of his employment with the School and the circumstances attending to it.  As Mr Mak put to him in cross-examination, he did not pass meet the Language Proficiency Assessment for Teachers (LPAT) until 2005.  That naturally would undermine his competitiveness as an English teacher in the market. 

262.  The second observation that I would make is that there is no evidence of a loss of reputation. The mere fact that the plaintiff had not been employed for full-time teaching since the termination of his employment in the School is insufficient to show that the termination had damaged his reputation.

263.  Third, as far as the claim for damages associated with the provident fund contributions and benefits is concerned, the evidence is patchy and confusing.  Quite apart from the fact that the quantifications and calculations were only produced at the trial, the documents that were put in are incomplete and do not altogether tally.  While I appreciate these are the documents that are currently in the plaintiff’s possession and counsel had used his best endeavour and exercised great diligence to make something out of them, they fall far short of the standard required to substantiate the claim and the calculations.  If the plaintiff were indeed minded to seek these heads of the damages, it would be incumbent upon him to make proper preparations.   

Costs consequential upon the School ceasing to be a party

264.  It is common ground that the School is not a proper party to this action, since it is not a legal person. The 1^st defendants ask for costs of the mis-joinder in that they had incurred costs to take over the defence of the School.  As indicated above, it is consistent with their duties to manage the School that the SMC took over the defence of the School and incurred costs to defend the plaintiff’s claim.

265.  The plaintiff, however, argued that the 1^st defendants should bear the costs because they had misled him by pleading that they were agents of the School when the School was not a legal person.  In substance, the plaintiff is complaining that the defendants have not been completely forthcoming in telling him the School is run by FKPS, thus they were agents of FKPS, until the claim against FKPS became time-barred.  I have in the earlier part of this Judgment held that as a matter of law, the defendants have no duty to speak or to assist the plaintiff when they are in litigation or contemplating litigation.  I have also for reasons given considered that the plaintiff well knew the School is run by FKPS and further appreciated the relationship between the sponsoring body and the SMC, especially on matters relating to his employment.

266.  Having regard to all the circumstances of the case, I am of the view that there is no justification to depart from the normal rule of costs follow event. The plaintiff having improperly joined the School as the 2^nd defendant must bear the costs.  There is an order that the plaintiff pays the costs incurred by the 1^st defendant in connection with the defence of the 2^nd defendant.  

Conclusion

267.  For the reasons above, the plaintiff’s claim against the 1^st defendants is dismissed. Applying the normal rule of costs follow event, there is an order nisi that the plaintiff pays the 1^st defendants the costs of this action, including all costs reserved, to be taxed if not agreed.