CHIK PO YEE v. VOCATIONAL TRAINING COUNCIL AND ANOTHER

CACV 78/2006

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 78 OF 2006

(ON APPEAL FROM HCAL No. 59 OF 2005)

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J U D G M E N T

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Hon Ma CJHC:-

1.  For the reasons contained in the Judgment of Reyes J, I would allow the present appeal and set aside the order of A Cheung J in the Court below.  I also agree with the costs order nisi proposed by Reyes J.  This Court will now hear the parties on any further or consequential direction that may be sought.

Hon Stock JA:-

2.  I agree with the Judgment of Reyes J and with the orders proposed.

Hon Reyes J:-

I.       INTRODUCTION

3.  The immediate issue before this Court is highly technical. It is whether Ms. Chik rightly proceeded by way of judicial review.

4.  For reasons which will become apparent, there is no question that Ms. Chik is entitled to some relief.  Mr. Philip Dykes SC (appearing for the Vocational Council on appeal, but not below) fairly conceded this in answer to a question from the Court at the start of this appeal.

5.  But the Vocational Council says that her present application should be struck out because she followed the wrong procedure.  Instead of applying for the public law remedy of judicial review, she ought (the Council says) to have gone by the private law route of an ordinary writ action.

II.      BACKGROUND

A.      The disciplinary proceedings against Ms. Chik

6.  The Council employed Ms. Chik as a lecturer from 1991 and as a senior lecturer from 1994. 

7.  In November 2004 the Council’s Disciplinary Committee (a panel of four) found Ms. Chik guilty on two charges.  The first involved falsely claiming $27 worth of transportation reimbursement.  The second involved submitting false documents in support of her claims.  The Disciplinary Committee recommended that her employment be terminated as soon as possible but with accrued benefits preserved.

8.  In March 2004 the Council’s Administration Committee (a panel of eight) approved the Disciplinary Committee’s recommendation.

9.  In April 2004 Ms. Chik unsuccessfully appealed to the Council’s Standing Committee (a panel of nine).

10.  By letter dated 28 April 2005 the Council terminated Ms. Chik’s employment with three months’ pay in lieu of notice.  This was done under clause 47 of Ms. Chik’s Conditions of Service which entitled the Council to dismiss her without cause by giving three months’ notice.

11.  The disciplinary proceedings purportedly followed the Council’s Disciplinary Rules set out in a staff circular issued on 2 May 1995.  The circular replaced an earlier version of the rules attached to Ms. Chik’s Conditions of Service as an Appendix D. That Appendix D (including any revisions to the rules therein) formed part of Ms. Chik’s employment contract was made clear by clauses 48 and 52 of her Conditions of Service and clause 7 of Appendix D itself.

B.      Ms. Chik’s judicial review at first instance

12.  On 16 June 2005 Ms. Chik applied for judicial review of the decisions of the Disciplinary, Administration and Standing Committees. 

13.  Ms. Chik contended that the relevant committees had proceeded unfairly.  Ms. Chik complained that the Disciplinary Committee had wrongly refused to allow her to be represented by a lawyer, had wrongly attached significant weight to hearsay evidence, and had applied the wrong standard of proof.  The Disciplinary Committee’s procedure being flawed, the Administration and Standing Committees could not (Ms. Chik said) have validly approved her dismissal.

14.  The complaint of a denial of legal representation related to Ms. Chik’s appearance before the Disciplinary Committee in November 2004. 

15.  Ms. Chik’s lawyers submitted then that she was entitled to be represented throughout the entire proceedings.  But the Committee rejected those submissions on the basis that the hearing was an internal staff matter and none of the Committee’s members had a legal background.  The Committee also believed that Appendix D only permitted Ms. Chik to be assisted by another employee.

16.  Having failed on legal representation, Ms. Chik and her lawyers walked out of the disciplinary hearing.  She took no further part in the hearing.

17.  The complaint in relation to hearsay evidence arose because the Disciplinary Committee only heard evidence from 1 witness, Dr. Lillian Wong.  Dr. Wong was the Acting Head of Ms. Chik’s Department at the Council. 

18.  Dr. Wong had no personal knowledge of the matters of which Ms. Chik stood charged.  Dr. Wong simply told the Committee about discrepancies in documents submitted by Ms. Chik in support of her reimbursement claims.  Ms. Chik had been claiming the cost of transportation to meetings with various bodies.  But the reports of some of those bodies did not record Ms. Chik’s attendance at the meetings alleged.

19.  Having heard Dr. Wong, the Disciplinary Committee proceeded to evaluate the reports of the bodies whose meetings Ms. Chik claimed to have attended.  The Committee did not hear oral evidence from any representatives of those bodies.

20.  The complaint in relation to burden of proof was that the Council failed to apply the standard of “beyond a reasonable doubt”.  

21.  Although the amounts involved were trivial, the charges against Ms. Chik were serious.  The Council’s various committees were determining whether Ms. Chik was guilty of dishonesty and fraud.  Adverse findings would jeopardise Ms. Chik’s career and reputation.  In those premises, it was Ms. Chik’s contention that the Council ought to have (but failed) to apply the criminal law standard of proof.

22.  A Cheung J heard the judicial review application in November 2005. 

23.  This Court’s decision in New World Development Co. Ltd. v. Stock Exchange of Hong Kong Ltd. [2005] 2 HKLRD 612 was then extant, having not yet been over-ruled by the Court of Final Appeal.  Not surprisingly, the argument before A Cheung J therefore concentrated on whether the Council’s committees (when sitting on disciplinary matters) were “courts” within Basic Law article 35. If the committees were “courts”, it followed that Ms. Chik had been denied legal representation in breach of article 35.

24.  Before A Cheung J the parties took it for granted that judicial review was an appropriate procedure.  There was no suggestion that proceedings should have started by way of writ.  Consequently, the authorities now cited before this Court were not cited to A Cheung J.

25.  In December 2005 A Cheung J held that the committees were courts.  He concluded that the Council had breached Ms. Chik’s rights under article 35.  He quashed the decisions of the Disciplinary, Administration and Standing Committees.  He did not think that Ms. Chik’s other grounds of complaint had much merit.

C.      Ms. Chik’s judicial review on appeal

26.  The Council first queried the appropriateness of judicial review in an Amended Notice of Appeal dated 3 July 2006.  By then this Court’s judgment in New World had been over-turned by the Court of Final Appeal (see [2006] 9 HKCFAR 234).

27.  Ms. Chik herself issued a Respondent’s Notice on 8 March 2006.  This was later amended on 2 March 2007.

28.  In addition to relying on arguments similar to the hearsay and burden of proof complaints raised below, Ms. Chik advanced a new ground by her Notice. 

29.  That ground criticised the composition of the Disciplinary, Administration and Standing Committees.  In particular, Ms. Chik complained as follows:-

(1)     One member of the Disciplinary Committee (Mr. Ng Cheung Shing) had been a member of the Standing Committee to which Ms. Chik had appealed.

(2)     Ms. Willis (the Council’s Executive Director) had not only recommended approval of the Disciplinary Committee’s findings to the Administration Committee.  But Ms. Willis had also sat as a member of the Administration and Standing Committees which upheld the Disciplinary Committee’s findings and Ms. Willis’ own recommendation of such findings.

(3)     In addition to Ms. Willis, five members of the Administration Committee (Dr. Ng Tat Lun, Mr. Yeung Kai Yin, Ms. Annie Wu Shuk Ching, Mr. Yeung Kwok Keung and Mr. Edward Yau) had been members of the Standing Committee which rejected Ms. Chik’s appeal.

30.  Ms. Chik’s Notice argued that the cross-memberships in the Disciplinary, Administration and Standing Committee meant that significant numbers of persons were upholding decisions which they themselves had previously approved. 

31.  There was thus (Ms. Chik alleged) apparent bias.  A fair-minded observer would reasonably query whether the Administration and Standing Committees had taken independent perspectives when considering Ms. Chik’s case.

32.  The cross-memberships in the Council’s committees had only come to the attention of Ms. Chik and her legal advisers after the hearing at first instance.  Mr. Kenneth Chan (appearing for Ms. Chik) explained that it had not occurred to anyone until recently that there might be overlapping memberships.  

33.  It was accordingly necessary to amend Ms. Chik’s application for leave to incorporate this new complaint.  Mr. Chan made such an application before us. 

34.  Paradoxically, if Mr. Chan is right that this is a public law matter, the application to amend is well outside of the three month limitation period for judicial review.  On the other hand, if Mr. Dykes is right that this matter should have begun by writ, the proposed amendment would be well within the six year limitation for breach of contract.

D.      An attempt to deal with the real issue

35.  At the start of the appeal hearing, this Court observed that the real issue between the parties was plainly whether Ms. Chik’s disciplinary process had been fair.  It would be of little concern to Ms. Chik whether the findings against her were quashed because they were reached in a manner contrary to natural justice at public law or in breach of contract at private law.

36.  Accordingly, this Court asked Mr. Dykes whether, despite the cross-memberships identified by Ms. Chik in her Respondent’s Notice, it was the Council’s case that there had no apparent bias in the disciplinary process. 

37.  Mr. Dykes fairly replied that, as a matter of private law, given the cross-memberships, he did not think that the disciplinary procedure and findings against Ms. Chik could be upheld.

38.  Mr. Dykes must be right. 

39.  As a matter of contract, at the very least, there would have been an implied term to Ms. Chik’s Conditions of Service that any disciplinary proceedings would follow a fair procedure. Accordingly, such disciplinary proceedings should be conducted without any appearance of bias. 

40.  Further, by affording a right of “appeal”, the Disciplinary Rules appended to Ms. Chik’s Conditions of Service must be taken to have represented that her appeal would be considered by different persons from those who had come to any original decision.  Since that did not happen, it cannot be said that the disciplinary process had been a fair one.

41.  This Court accordingly invited the parties to see whether this matter could be resolved by consent, thereby obviating any need to enter into the arid technicality of whether this was appropriate for judicial review.  The Court had in mind, for example, the possibility of a direction under Order 53 Rule 9(5) converting these proceedings into a writ action.

42.  Such direction might immediately be coupled with a declaration by consent that, by reason of the cross-memberships identified, the disciplinary process had breached an implied term of fairness and was void. 

43.  This proposed approach would have the virtue of resolving the dispute between the parties speedily, with a minimum of additional cost.

44.  Unfortunately, following a brief adjournment, the Court was told that for whatever reason, the parties could not reach any agreement.  In particular, Ms. Chik maintained that the proceedings had been properly brought by way of judicial review. 

45.  Further, Mr. Chan intimated that, if the proceedings were converted into a writ action, he would wish to include a claim for damages.  Since a claim for damages had not been raised before, it would have to be particularised in a pleading.  It would not then be possible for the Court to dispose of this matter speedily by making an immediate declaration of breach based on Mr. Dykes’ concession.

46.  In those circumstances, both counsel invited the Court to deal with the issue of the appropriateness of judicial review.  Mr. Chan’s application to amend Ms. Chik’s judicial review application to seek a declaration of apparent bias and (possibly) to claim damages would be held in abeyance, pending a decision on this solitary issue.

III.     DISCUSSION

A.      The Council

47.  The Council was established under the Vocational Training Council Ordinance (Cap.1130) (VTCO).

48.  VTCO s.5 sets out the Council’s objectives.  These include advising the Chief Executive on measures to improve technical education and industrial training in Hong Kong and developing schemes for training craftsmen and technicians.

49.  VTCO s.6(1) lists the Council’s functions, while s.6(2) authorises the Council to do all things necessary to accomplish its objects and functions.  In particular, s.6(2)(n) enables the Council to “employ staff and remunerate them”.

50.  VTCO s.20 authorises the Council to make rules.  It states:-

“(1)    The Council may make rules not inconsistent with this Ordinance for all or any of the following matters:-

(a)     the regulation of its proceedings and the proceedings of any council committee, training board or general committee;

(b)       ....

(c)       the regulation of the conditions and terms of employment and the discipline on persons employed or engaged under section 6(2);

(d)       ....

(e)       the better carrying out of its objects and exercise of its functions under this Ordinance.

(2)     ....

(3)     Rules made under this section shall not be regarded as subsidiary legislation for the purpose of section 34 of the Interpretation and General Clauses Ordinance (Cap.1).”

51.  Interpretation and General Clause Ordinance (Cap.1) s.34 concerns the placing of subsidiary legislation before LegCo for vetting.

52.  VTCO s.21 provides that the Council “is not the servant or agent of the Government and does not enjoy any status, immunity or privilege of the Government”.

53.  VTCO s.22 provides that the Chief Executive or his delegate may direct the Council on how it should exercise its functions.  The section states that the Council “shall comply with any such direction”.

B.      The law and its application

54.  There is little dispute about the applicable law.  It was succinctly summarised by Sir John Donaldson MR in R v. East Berkshire Health Authority, ex parte Walsh [1985] 1 QB 152 (at 164D-E):-

“Employment by a public authority does not per se inject any element of public law.  Nor does the fact that the employee is in a ‘higher grade’ or is an ‘officer’.  This only makes it more likely that there will be special statutory restrictions upon dismissal, or other underpinning of his employment...  It will be this underpinning and not the seniority which injects the element of public law.”

See also Sit Ka Yin Priscilla v. Equal Opportunities Commission [1998] 1 HKC 278, at 282 (Keith J).

55.  The general approach is therefore to see whether there are any statutory underpinnings to employment by the Council which make such employment a matter of public law.  A possible facet of such examination is to examine whether there are any restrictions in the VTCO upon the Council’s dismissal of an employee such as Ms. Chik.

56.  Mr. Chan suggests that there are two limitations imposed by the VTCO on the way in which the Council may deal with employees. Those limitations (Mr. Chan submits) mean that the contract between the Council and Ms. Chik is not analogous to a private agreement between an ordinary employer and employee, but instead contains a public law element.

57.  According to Mr. Chan the first limitation is VTCO s.20(1). That authorises the Council to make rules to regulate the discipline of employees, but only to the extent “not inconsistent with this Ordinance”.  This means (Mr. Chan submits) that the Council’s disciplinary procedures are restricted by the objectives and functions imposed on the Council by VTCO ss.5 and 6(1).

58.  The second limitation is said to be VTCO s.22.  The Council (Mr. Chan says) is bound to comply with any directions given by the Chief Executive in relation to the employment or dismissal of its staff.  The Council (Mr. Chan reasons) is not free to engage or dismiss employees in accordance with the normal rules of contract.

59.  I disagree with Mr. Chan.  I see nothing in VTCO ss.20(1) or 22 which amount to special restrictions on the employment or dismissal of the Council’s personnel.  In my view, Ms. Chik’s dismissal is purely a private law matter.

60.  The VTCO brings the Council into existence and imbues it with legal personality and powers.

61.  VTCO s.20(1) simply enables the Council to make rules, among other things for the regulation of the conditions of service and dismissal of its employees.  The section is solely an enabling one.  Nothing in the section permits the Council to ignore the law of contract in dealings with its employees.  Nothing in the section provides that the rules made by the Council will override normal principles of contract.

62.  It was suggested by Mr. Chan that, whatever the Council’s standard disciplinary rules in (say) Appendix D, the Council could unilaterally vary them on the strength of VTCO s.20(1)(c). 

63.  But I do not think that is right. 

64.  In the case of Ms. Chik, the Council could vary Appendix D because by clause 52 of her Conditions of Service and clause 7 of Appendix D, Ms. Chik agreed that the Disciplinary Rules could be unilaterally varied by the Council.

65.  It is one thing for the Council to make rules pursuant to the power in VTCO s.20(1).  It is a wholly different matter to say that such rules are binding on employees.  Any new rules would only be contractually binding to the extent that an employee had prospectively or retrospectively agreed to be bound by them.

66.  To hold otherwise would mean that the Council could, by virtue of the first few words of sub-section (c) of VTCO s.20(1) alone, override conditions and terms of service (not just disciplinary rules) previously agreed with employees.  That would be a strange result. 

67.  That would mean that Council employees have no protection in terms of their Conditions of Service, but are subject to every unilateral change of rules made by the Council.  The VTCO would need much clearer wording if that strange result were truly what the Legislature intended.

68.  As for VTCO s.22, all it does is to require the Council to comply with directives from the Chief Executive.  Such a provision is not surprising in a statute giving rise to a body charged with the execution of certain public functions.

69.  On a macro-level, the Chief Executive may wish to direct the Council on how certain objectives should be attained.  That is a far cry from saying that there are statutorily-imposed restrictions on the Council’s ability to hire or dismiss employees.  The Council’s employment and dismissal of staff is a day-to-day administrative matter which is at a distant remove from the policy matters envisaged by VTCO s.22.  It is also in any event difficult to see how that provision would enable contracts made with employees (and terms contained in such contracts) to be unilaterally altered.

70.  Mr. Chan faintly argued the fact that the Disciplinary Rules purportedly authorised the Council to impose an unlimited fine on Ms. Chik indicated that VTCO s.20(1)(c) injected a public law element into her employment.

71.  However, one cannot infer anything about the VTCO by reference to the way in which the rule-making power granted by it to the Council was purportedly exercised.  This is because such exercise may have been misconceived.

72.  Thus, the power in the Disciplinary Rules to impose unlimited fines may have been ultra vires the rule-making power in VTCO s.20(1)(c).  Such fines may be beyond what is reasonably necessary to carry out the Council’s objects and functions. 

73.  But that by itself cannot turn Ms. Chik’s dismissal into a public law matter.  Any disproportionate fine sought to be imposed would simply be unenforceable as a penalty under normal contract law principles.  The position may be different if the power to impose an unlimited fine was expressly set out in the VTCO, but that is not the position here.

74.  In order to apply the test in Walsh, one must look to the VTCO for any underpinning which is said to inject a public law element into the Council’s employment contracts.  I am unable here to find any such underpinning.

75.  At the close of his submissions, Mr. Chan made one further submission which had not been raised heretofore.  That was that this judicial review was effectively a complaint in relation to the Council’s exercise of its power under VTCO s.20(1)(a).

76.  Mr. Chan argued that the way in which the Council had “regulated” the affairs of its various committees was ultra vires its power under VTCO s.20(1)(a).

77.  There is nothing to this last argument.

78.  To begin with, Mr. Chan is hopelessly out of time on such a point.  The current Disciplinary Rules were promulgated in May 1995.  Had Ms. Chik wished to query them, she ought to have done so then, not now.

79.  When asked precisely what “rules” were being challenged, Mr. Chan identified clauses 4.6 and 6.2 of the Disciplinary Rules. 

80.  The former is said to be ultra vires because it did not permit legal representation, no matter how serious the charge against an employee. 

81.  The latter is said to be ultra vires, because it led to the situation where appeals came before persons who had taken part in the decision being appealed against.

82.  In both contentions, Mr. Chan is mistaken. 

83.  There is nothing in the text of clause 4.2 which forbids lawyers from being present at a disciplinary hearing.  The clause simply states that an employee may be assisted at a hearing by a colleague.  The Disciplinary Committee wrongly read into clause 4.2 a limitation on legal representation which was not there.

84.  On the other hand, clause 6.2 has a built-in flexibility. Appeals may be heard by the Standing Committee “or such other body as the Council may from time to time specify for the purpose”.  Nothing in clause 6.2 requires that the same persons sit on appeal from their own decision.  The Council may empower, if necessary ad hoc, a differently constituted panel to hear an appeal.

85.  There is nothing wrong with the rules which Mr. Chan has singled out.  Mr. Chan is merely complaining about how the rules were operated in this particular case.

IV.     CONCLUSION

86.  There is no special restriction or underpinning in the VTCO which injects a public law element into Ms. Chik’s employment with the Council.  It follows that judicial review is not an appropriate procedure and the matter should have begun by writ.  To that extent, the Council’s appeal succeeds.

87.  There remain the questions of the way forward and costs.

88.  On the way forward, the parties agreed that there should be a liberty to apply enabling the parties (if they wished) to argue whether these proceedings should proceed as if begun by writ. 

89.  The parties are accordingly to have liberty to restore this matter for further argument on whether this judicial review should proceed as if begun by writ.  At that time, the question of amendments (if any) to Ms. Chik’s leave application will also be considered.

90.  As to costs, I would make an Order Nisi as follows:-

(1)     There be no order as to the costs before A Cheung J.

(2)     The costs of this appeal up to the date hereof be to the Council to be taxed if not agreed.

91.  On costs before A Cheung J, I bear in mind that the appropriateness of judicial review was not then queried and the Court of Appeal decision in New World was still extant.  Given those circumstances, I doubt that it would be fair to visit the costs below on either party.

92.  On the costs of appeal to date, I think that those costs should follow the event as normal.