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

CAMP 429/2022 , [2023] HKCA 1017

On Appeal From [2022] HKDC 308

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO 429 OF 2022

(ON AN INTENDED APPEAL FROM DCCJ NO 3296 OF 2020)

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J U D G M E N T

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

1.  This is an application by the plaintiff for leave to appeal the Judgment of HH Judge H. Au-Yeung (“the Judge”)  given on 12 April 2022 (“the Judgment”)¹ dismissing the plaintiff’s claims arising from her summary dismissal as principal of an aided school by the defendant, the school’s Incorporated Management Committee (“IMC”). 

2.  Had it not been for her summary dismissal, the plaintiff would have been due for retirement on 31 August 2014.  Her claims are for the salary payable between the date of summary dismissal (28 July 2013)  and the original date of retirement (31 August 2014)  in the sum of about $790,000, and the balance of provident fund from 1 September 1996 to 27 July 2013 including the dividend thereon.

3.  The case had originally commenced in the High Court as HCA1523/2013.  In 2020, it was transferred to the District Court. 

4.  The case threw up a number of factual and legal issues. The trial took 9 days between October and December 2021.  The Judgment was 296 pages long. 

5.  1.  On 17 June 2022, the plaintiff issued a summons in the District Court for leave to appeal.  On 10 October 2022, the Judge refused leave. 

5.2.  On 18 October 2022, the plaintiff issued a summons in this Court for leave to appeal.  Written submissions were filed by both parties, which we have considered.

Background

6.  The plaintiff had been appointed principal of the school in 2009 under a contract which incorporated the provisions of the Employment Ordinance Cap.57 (“EO”), the Education Ordinance Cap. 279 (“EdO”)  and the Code(s)  of Aid.

The EdO scheme

7.  1.  There is a specific part of the EdO which governs the appointment and tenure of principals only (ss.53 to 58AA).  As we understand it, the governing scheme may be summarized as follows (where relevant to this case²):

(1)  the IMC³ shall⁴ recommend to the Permanent Secretary (“PS”)  of the Education Bureau (“EdB”)  a teacher of the school as candidate for the office of the first principal [s.53(1)];

(2)  pending the PS’ decision⁵, the candidate may perform the functions of a principal [s.58AA];

(3)  if the PS is not satisfied that the candidate is a fit and proper person, the PS may refuse to approve the candidate [s.54(1)];

(4)  if the PS gives approval, the principal shall hold office until: [s.55]

(a)  the principal ceases to be registered as a teacher [s.55(a)];

(b)  the principal resigns [s.55(b)];

(c)  the PS withdraws approval of that principal [s.55(c)]

-  which the PS may do if it appears to the PS that

(i)  the principal is no longer a fit and proper person [s.56(1)(a)], or

(ii)  the principal is not performing his duties satisfactorily [s.56(1)(b)], or

(iii)  the principal has ceased to perform his duties [s.56(1)(c)], or

(iv)  the principal is no longer acceptable as such to the majority of the managers of the school [s.56(1)(d)]; or

(d)  the PS approves another teacher of the school as subsequent principal [s.55(d)] in the following situation, which comprises a number of steps (I to VI below).

If:  

(I)  (i)  the PS refuses to approve the IMC’s original recommended candidate [s.57(1)(a)], or

(ii)  the principal ceased under section 55 to hold office [s.57(1)(b)], or

(iii)  the principal ceases to perform his duties [s.57(1)(c)], or

(iv)  the principal is no longer acceptable as such to the majority of the managers of the school [s.57(1)(d)],

then:

(II)  the IMC shall appoint a principal selection committee (“PSC”)  [s.57A(2)];

(III)  the IMC or sponsoring body of the school would nominate candidates in an “open, fair and transparent manner” [s.57A(4)];

(IV)  the PSC shall select in an “open, fair and transparent manner” a suitable person from those candidates [s.57A(4)];

(V)  the IMC shall recommend to the PS the candidate selected by the PSC [s.57A(5)] within 1 month of (I)  [s.57(1)];

(VI)  the PS shall approve the recommended candidate, although the PS may refuse approval if she is not satisfied that the candidate is a fit and proper person [s.57(2)].

7.2.  Pausing there, it would appear from the language of s.55 that the principal “shall hold office until” either⁶:

(1)  the PS takes it upon herself to withdraw approval of the principal which she may do if it appears to her that any of the situations in §7.1(4)(c)(i)  to (iv)  above has occurred; or

(2)  if any of the situations in §7.1(4)(d)(I)  has occurred, theIMChas followed steps II to V, and the PS has approved the duly selected and recommended candidate as per step VI.

The Judge’s findings

8.  1.  The IMC had given 15 reminders and warnings to the plaintiff, and after going through each, the Judge found that 7 were justified [§655, Judgment].

8.2.  The Judge then said:

“656. The next question which the court has to decide is whether the plaintiff had committed a grave breach of duty which justified her being summarily [dismissed] pursuant to section 57(g)  of the Code of Aid”.

This section of the Code of Aid provided:

“The [IMC] shall only dismiss a teacher for good and sufficient reasons. ... A teacher shall be liable to summary dismissal if it appears to the [IMC] that he has been convicted of a criminal offence or has committed a grave breach of duty”.

8.3.  The Judge found that 2 acts of misconduct were “very serious”⁷, viz. the renting out of 6/F classrooms to an arts association (Warning No.8)  and the failure to follow procurement procedures for classes paid for by the Community Care Fund Scheme (Warning No.12).  He also held that “even if the above two matters, considered together, did not amount to grave breach of duty or gross misconduct, I have little doubt that the overall effect of all seven misconducts would be adequate”⁸.

8.4.  He found that “the plaintiff did commit grave breach of duty and gross misconduct, and therefore the IMC had rightly summarily dismissed her”⁹.

9.  The following events then occurred.

9.1.  On 31 July 2013, the IMC reported the dismissal of the plaintiff to the PS¹⁰.

9.2.  On 20 August 2013, the plaintiff commenced HCA1523/2013.

9.3.  On 21 August 2013, the IMC applied to the PS to appoint Wong Kam On as “acting principal” for half a year (retroactively from 28 July 2013 to 27 January 2014), acknowledging in the letter that the PSC process (steps II to IV above)  had not been undertaken¹¹.

9.4.  On 3 October 2013, Chung J gave an interlocutory injunction to the plaintiff to restrain the IMC from acting on its purported summary dismissal of the plaintiff until the PS had either withdrawn her approval under (c)  above or appointed a subsequent principal under (d)  above¹².

9.5.  On 5 October 2013, the IMC chased the PS to approve the appointment of the “acting principal”¹³.

9.6.  On 16 October 2013, the PS sent two letters to the IMC. 

(a)  The English letter¹⁴ stated that “approval is given for Mr WONG Kam On to be appointed as the acting principal” (emphasis added)  from the date of the letter to 27 January 2014 inclusive “for administrative convenience”; as for the period between 21 August 2013 to the day preceding the date of the letter, s.58AA (i.e. a candidate who has been recommended may perform a principal’s functions pending the PS’ decision on the recommendation)  was set out, although the letter also reminded the IMC to conduct “an open recruitment to identify a suitable principal as soon as possible” , apparently recognizing that no recommendation had yet been made by the IMC.

(b)  The Chinese letter¹⁵ reminded the IMC of the need to comply with s.57A(2), i.e. step II above.

9.7.  On 21 October 2013, the IMC’s solicitors wrote to the PS asking the PS to clarify if the PS had approved Mr Wong under s.55(d)¹⁶; this, despite the fact that apparently no PSC selection had been done under step II above, as the PS had reminded the IMC in the Chinese letter.

9.8.  On 22 October 2013, the PS wrote to the IMC’s solicitors, stating:

“With regard to your request for clarification, please note that the [PS] has exercised her power under section 57(2) of the [EdO] in approving Mr WONG Kam-on as the principal of [the school] in her English letter issued to Mr CHU Tak-wing, the school supervisor, on 16 October 2013. The exercise of this power triggers the application of section 55(d). Pursuant to the approval, Mr WONG is the approved principal of the [school] for the purposes of sections 55(d)  and 57(2), notwithstanding that he is referred to as ‘acting principal’ in the correspondence” (emphasis added).

Pausing there, it was not explained in the letter how step VI was reached when in her 16 October 2013 letter, the PS had reminded the IMC that it had not yet taken the earlier steps.

9.9.  On 28 January 2014, the PS approved another person Mr Chow to be the principal on an “acting” basis with effect from that date¹⁷; Mr Chow’s appointment as principal with effect from 11 November 2014 was confirmed on 29 December 2014¹⁸.  

The Judge’s Judgment

10.  The Judge set out the issues as follows¹⁹:

(1)  Was the IMC justified in summarily dismissing the plaintiff?

(2)  Does the plaintiff have an actionable claim against the IMC for the alleged contravention of sections 55-57 of the EdO and/or section 57(g)  of the Code of Aid²⁰?

(3)  If the answer to issue (1)  is “No” and/or the answer to issue (2)  is “yes”, what are the heads and quantum of damages to which the plaintiff is entitled?

(4)  If the answer to issue (1)  is “Yes”, is the plaintiff liable to pay damages to the IMC for her breach of duties in managing the School?

11.  As mentioned above, the Judge found that the IMC “rightly summarily dismissed” the plaintiff.  He also held:

(a)  on the plaintiff’s claim for breach of statutory duty, that the legislature did not intend to confer a private law cause of action by virtue of sections 55-57 EdO, because²¹:

(1)  Chu J (as she then was)  had held in Ko Hon Yue v Liu Ching Leung[2] that the EdO prescribes a regulatory system for the promotion of education, which was for the benefit and protection of the public at large.  The Judge held that it was not a piece of legislation enacted for the “protection of principals”;

(2)  principals are adequately protected by employment law, and there was no reason why the legislature would intend to give them extra protection by way of the EdO;

(3)  the failure of the IMC to recommend a subsequent principal for the PS’ approval is a matter between them, and it would be “bizarre” if the plaintiff could sue the IMC for failing to make that recommendation;

(4)  even if sections 55-57 EdO gave school principals security of tenure, the purpose was to protect the school and students, rather than the principals;

(b)  on the plaintiff’s claim for breach of contract, that there was no contractual duty owed by the IMC to the plaintiff to comply with ss.55-57 EdO, because²³:

(1)  the purpose of the EdO was not for the protection of school principals;

(2)  ss.55-57 were regulatory in nature, for the purpose of governing the cessation and succession of the office of principal;

(3)  in particular, the IMC did not owe any duty to the plaintiff under s.57, as the process of recommendation would only start after the original principal had already ceased to hold office under s.55;

(4)  it would be inconsistent with other provisions also incorporated into the contract eg s.9 EO which provides for summary dismissal of an employee (its inherent nature being the employer’s ability to terminate the employment relationship immediately²⁴), s.57(g)  of the Code of Aid²⁵, and s.13.5(c)  of the Code of Aid for Aided Schools which provides for summary dismissal by reason of serious misconduct.

12.  The Judge tested the plaintiff’s case by postulating a scenario where a principal has been convicted of a criminal offence relating to children, by reference to the time taken by the PS to withdraw approval²⁶. 

13.  The Judge also held that “when the plaintiff was summarily dismissed by the IMC, the [PS] must be regarded as having withdrawn her approval of the plaintiff” (emphasis added)  on all the bases under s.56(1) EdO²⁷.

14.  The Judge dismissed the plaintiff’s claims and the IMC’s counterclaims.

Proposed grounds of appeal

15.  The main proposed grounds of appeal may be categorized as follows:

(1)  regarding the claim under breach of statutory duty, Ko Hon Yue should be distinguished as that case involved only teachers, whereas ss.55-56 recognised the special status of principals and specifically afforded them security of tenure; security of tenure was afforded in that the effect of the EdO (s.55)  “is to underpin the position of school principals by imposing restrictions on the freedom of their employers, the management committees of their schools, to remove them from office” (Lau Chi Fai & another v Secretary for Justice & Another²⁸);

(2)  regarding the claim under breach of contract, the parties to an employment contract may prescribe the procedure to be followed before the power to dismiss may be exercised²⁹.  Having incorporated the EdO in the contract, the IMC was contractually obliged to follow the procedure of procuring either (c)  the PS’ withdrawal of approval, or (d)  the PS’ approval of a subsequent principal, before terminating the tenure of the original principal.  Put another way, the IMC’s right to terminate the plaintiff’s employment for cause may only be exercised after it has complied with ss.55-57 EdO.  Hence ss.55-57 EdO were not inconsistent with s.9 EO, or the provisions in the Code(s)  of Aid. There was thus a breach of contract by the IMC in summarily dismissing the office-holder in disregard of the procedure in ss.55-57 EdO.

Discussion

16.  We are satisfied that the intended appeal has a reasonable prospect of success. 

17.  First, in relation to the claim for breach of statutory duty, there is a reasonable prospect of success in the arguments regarding §11(a)  above, in respect of:

-  (1)  and (4):  the purpose of the EdO vis-a-vis teachers (such as Ko) is different from that vis-a-vis principals, who are the subject of a specific section (s.55)  stipulating the period for which they would hold office which does not exist for teachers;

-  (2):  the holding that the EO would afford principals “adequate protection” is a “boot-strap” argument in the analysis that the legislature did not intend to give them any private rights under the EdO; and

-  (3):  the issue is whether the plaintiff’s office as principal has been vacated in accordance with the procedure set out in ss.55-57A EdO, not whether the principal can sue the IMC for what the PS had or had not yet done. 

18.  As for the claim for breach of contract, there is a reasonable prospect of success in the arguments regarding §11(b)  above, in respect of:

-  (1):  the purpose of the EdO does not detract from the fact that it has been incorporated into the contract, and it is therefore necessary for the court to see how it affects the rights and obligations of the parties thereto;

-  (2):  it is precisely because s.55 EdO regulates the cessation of the office of principal that an office-holder (the plaintiff)  has an interest in the IMC’s compliance with that (and associated)  sections in the statutory scheme;

-  (3):  as under s.55, the principal “shall hold office” until (in the present case)  s.55(c)  or (d)  EdO occurred, the question is when either occurred.

-  It would appear from the Judgment that there was no evidence that the PS herself withdrew approval under s.55(c) EdO, which would have required the PS herself to determine that one or more of the 4 grounds thereunder has occurred.  The application bundle contains no contemporaneous documents stating any such withdrawal by the PS at all, and the PS did not give evidence (by herself or a representative)  at the hearing.  As such, it is reasonably arguable that the Judge’s inference (in §692 of the Judgment)  of such withdrawal of approval under s.55(c)  EdO was not warranted.

-  As for s.55(d) EdO, it is reasonably arguable that the PS did not approve anyone as principal until 11 November 2014.  As noted above, on 16 October 2013, the PS sent two letters to the IMC.  The English letter³⁰ stated that “approval is given for Mr WONG Kam On to be appointed as the acting principal” (emphasis added)  from the date of the letter.  Although the PS said in her letter dated 22 October 2013 that “pursuant to the approval, Mr WONG is the approved principal of the [school] for the purposes of sections 55(d)  and 57(2), notwithstanding that he is referred to as ‘acting principal’ in the correspondence” (emphasis added), it was not explained in the letter how step VI was reached when in its 16 October 2013 letter, the PS had reminded the IMC that it had not yet taken the earlier steps.  As for the later appointment, on 28 January 2014, the PS approved Mr Chow to be the principal again on an “acting” basis, until his appointment as principal took effect from 11 November 2014, after the plaintiff’s original retirement date; 

-  (4):  as for the Judge’s view that summary dismissal without reference to the statutory scheme was necessary to cater for an extreme situation because the well-being of students would be at risk (eg a principal being convicted of an offence relating to children), s.56(1)(a)  EdO enables the PS to withdraw approval of a principal at any time on the basis that he was no longer a fit and proper person to be the principal.  It is reasonably arguable that the construction of the statutory scheme cannot be affected by how much or how little time the PS might take to exercise her statutory powers.  Further, it is reasonably arguable that compliance with a contractual procedure does not mean that an employer ceases to have a right to summary dismissal. 

Order

19.  For the above reasons, we would give leave to the plaintiff to appeal.  Costs of this application shall be costs in the cause of the appeal.

Mr Erik Shum and Ms Yvonne Leung, instructed by Ho Tse Wai & Partners, for the plaintiff

Mr Harrison Miao, instructed by Zhong Lun Law Firm LLP, for the defendant