LEE KWOK HUNG v. DIRECTOR OF WATER SUPPLIES AND ANOTHER

HCAL 131/2002

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTITUTIONAL AND ADMINISTRATIVE PROCEEDINGS

NO. 131 OF 2002

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J U D G M E N T

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Introduction

1. This is an application for judicial review. Leave to do so was given on 18 October 2002. The decisions under challenge are:-

(a) the 1st respondent's decision to compulsorily retire the applicant with deferred benefits. The said decision is evidenced by a letter dated 12 July 2001;

(b) the 2nd respondent's decision to dismiss the applicant's appeal against the said compulsory retirement decision. The said decision is evidenced by a letter dated 6 December 2001.

Background Facts

2. The background facts leading to this application can be summarised as follows.

3. The applicant joined the Water Supplies Department ("WSD") as a Labourer in March 1979. Thereafter, various matters which may reflect on him took place:-

(a) in May 1982, he was warned for having contravened the Acceptance of Advantages (Governor's Permission) Notice 1981 and for having deliberately omitted outstanding debts when he applied for assistance from the Civil Servants Finance Advisory Office;

(b) in August 1983, he was found by the ICAC to have borrowed money with interest from an ex-employee of WSD and to have assisted a colleague to remove 2 spare parts of WSD without permission. The spare parts were exchanged for 2 water pipe pliers at a metal shop;

(c) in September 1984, he was charged for the offence of aiding and abetting the carrying on of the business of a money lender without licence. He was acquitted of the charge because the prosecution offered no evidence against him. For these matters, the applicant was warned in a letter dated 29 March 1985 as follows:-

"... any future disciplinary offence will most likely lead to the termination of your service".

(d) on 25 March 1997, he was verbally warned for (1) being absent without permission, (2) signing on the attendance book on a day on which he was absent and (3) failing to sign out;

(e) the ICAC also informed WSD on about 20 March 1997 the applicant was arrested on suspicion of accepting advantages.

(f) he was later charged for forgery and was acquitted of the charges on 11 November 1997 after the trial magistrate ruled that there was no case for him to answer.

4. The events which resulted in the applicant's compulsory retirement with deferred benefits were as follows. The ICAC also informed WSD that he had engaged in unauthorised outside work, namely:-

(a) engaging in plumbing work projects for an engineering company in 1996 for remuneration without permission;

(b) engaging in a number of plumbing works with a licensed plumber in the 1980's for remuneration without permission.

This was admitted by the applicant.

5. Disciplinary action was commenced against him for the above pursuant to s. 9, Public Service (Administration) Order ("PSO"). After a disciplinary hearing on 27 January 1999, the investigation officer opined that his misconduct was supported by the evidence produced and his own plea of guilty. In short, the sentence passed by WSD on 17 May 1999, after consulting the Public Service Commission ("the Commission"), was severe reprimand with a salary reduction of 1 pay point for 6 months and warning for removal from service in the event of future misconduct. WSD also interviewed the applicant and impressed upon him that it was his last chance and that action including those under s. 12, PSO may be taken against him if his conduct and performance still fail to measure up to standard.

6. Several months later, in a letter dated 1 November 1999, WSD notified the applicant that it noticed that in June 1995, without prior approval, he received an interest bearing loan of $20,000. This contravened reg. 482(1), Civil Service Regulation ("CSR"). He was also informed an investigation was contemplated pursuant to s. 10, PSO and he was asked to submit an explanation.

7. Disciplinary proceedings were in fact commenced against the applicant and he appeared before the inquiry committee appointed under reg. 6, the Public Service (Disciplinary) Regulation ("the Regulation") on 21 November 2000. He admitted the charge before the inquiry committee which then made a report on 4 December 2000 as follows:-

(a) in 1996, the law enforcement agencies raided a loan shark syndicate operating in WSD. With the assistance of 11 WSD staff, the syndicate was successfully prosecuted in 1998;

(b) WSD examined the witness statements of the said staff (which included the applicant) and found that they had borrowed money from the syndicate. Disciplinary proceedings were commenced against them;

(c) the applicant stated in his police statement he had borrowed an interest bearing loan of $20,000 from the syndicate in June 1995;

(d) in mitigation, the applicant said:-

(1) his income became less after his promotion due to the lack of overtime pay. On the other hand, his household expenses increased because his son was studying in the UK and schools fees were expensive. He also lost $11,000 when he gambled in the WSD canteen. He could not get any loan from the banks and so was forced to borrow from the syndicate;

(2) the syndicate had operated in WSD since the 1980's and WSD did not intervene. Staff were used to borrowing from the syndicate without realising this contravened CSR;

(3) the applicant agreed to be a prosecution witness when asked to do so in 1997. The police promised him the matter would not be reported to WSD. He felt aggrieved that, while many more had borrowed money, only the 11 staff who agreed to be witnesses were disciplined. The syndicate intimidated him in October 1999. The applicant applied for voluntary retirement to avoid further trouble;

(4) he purchased a flat in April 1999 under the Home Ownership Scheme more than a year after the criminal proceedings, under the impression that the matter was over. Had he known of the possibility of disciplinary proceedings, he would not have purchased the flat;

(5) he was the main income-earner of the family;

(6) he asked to be given a chance to join the voluntary retirement scheme so he could use the pension to pay off the outstanding mortgage.

8. The inquiry committee stated in its report:-

"... [from] the unapproved borrowing of money in 1995 ... until the prosecution of the syndicate in 1998, a total of three years have elapsed but [WSD] has not taken action against [the applicant]. This gave him an impression that the matter was all over, and hence he made the decision to give up the public housing so as to purchase a flat under the Home Ownership Scheme. If his service is really terminated by the Department, the Committee believes that he and his family will fall into financial difficulties."

9. WSD apparently accepted the above statement of the inquiry committee. In its memo dated 2 March 2001 to the Secretariat on Civil Service Discipline ("the Secretariat"), WSD recommended that the applicant be severely reprimanded with a caution of removal from service in the event of future misconduct. The reasons given were:-

(a) the unauthorised borrowing took place (in 1995) prior to the applicant was being severely punished in 1999 with a sentence of caution for removal from service in the event of future misconduct;

(b) the misconduct was not of such gravity to warrant removal from service;

(c) the misconduct was not duty-related;

(d) the amount of loan was not huge and the applicant had not made use of his office to obtain it;

(e) the applicant had 21 years of service with the Government and his performance was not affected.

The Secretariat agreed with the above. I pause to note that, at least to a certain extent, sub-para. (b) above overlaps with sub-para. (c) and (d) above.

10. However, the Commission disagreed, and in a memo dated 22 March 2001, it recommended to WSD that the applicant should be retired. WSD agreed. Without going into the details, by a letter dated 12 July 2001, the 1st respondent informed the applicant of the first decision under challenge in this application.

11. The applicant appealed to the Chief Executive against the said decision. By a letter dated 6 December 2001, the 2nd respondent informed him of the second decision under challenge in this application.

Grounds of Application

12. The following grounds are raised in the Form 86A (which was amended with leave given on 9 June 2004):-

(a) the power delegated by the Chief Executive to the 1st respondent (under s. 10, PSO) was unlawfully sub-delegated by him to the Commission by allowing the Commission to decide the applicant's punishment;

(b) the 1st respondent failed to consider if the applicant could leave the public service through the voluntary retirement scheme (which the applicant applied for on 15 July 2000);

(c) the Commission has pre-determined the applicant's punishment;

(d) the punishment imposed on the applicant is manifestly excessive and unreasonable;

(e) the Commission acted ultra vires in that it went beyond its jurisdiction under s. 18, PSO when it recommended a punishment more severe than that determined by the 1st respondent.

However, by the hearing of this application, the parties confined their arguments only as regards sub-para. (a) and (e) above. Further, the applicant expressly accepts that voluntary retirement is not an option open to him.

13. From the court's ruling made at the end of the application for leave to apply for judicial review, it is understandable why the parties so confined their arguments. The respondents point to the following passages in the ruling of 18 October 2002:-

"... when the matter of punishment was considered, it appears - on the papers - that no account was given of the fact that the applicant had made this application [to go into retirement earlier], and that he could, perhaps coupled with a severe reprimand, voluntarily retire from the service.

...

While I have provisional concerns, it seems to me that [the applicant] has demonstrated that on the present material there are matters which might demonstrate at least an arguable case at a substantive hearing.

...

[The applicant] argues that it appears that one, or both, of two things may have occurred.

First, that the decision to compulsorily retire the applicant was not made by [the 1st respondent] himself acting under delegated authority from the Chief Executive but was made by his subordinates. ... or it appears that it was [the Commission] which made the decision. And that decision was simply 'rubber stamped' by the Director acting under his delegated authority. ...

[The applicant] has suggested that if I am to grant leave, which I propose to do in respect of the first matter to which I have referred, that clearly, this second set of issues deserves at least to be investigated. I agree with him. ... (per Hartmann J)".

14. The ground set out in sub-para. (e) was added by way of amendment to the Form 86A. As stated above (at para. 12), leave to amend was given by me at the end of the hearing on 9 June 2004.

15. The grounds set out in sub-para. (a) and (e) above will be dealt with below.

Sub-delegation of Power

16. S. 10, PSO provides:-

"(1) If it is represented to the Chief Executive that an officer has been guilty of misconduct, and the Chief Executive is of the opinion that the misconduct alleged may be serious enough to warrant the dismissal or compulsory retirement of the officer, he may cause an inquiry to be made into the officer's conduct in such manner as may be prescribed by regulations made by the Chief Executive under section 21(2).

(2) If after such inquiry the Chief Executive is of the opinion that the officer has been guilty of misconduct, he may inflict such punishment upon the officer as may seem to him to be just."

17. The Chief Executive is empowered by s. 19, PSO to delegate the above power. Thus, s. 19 provides:-

"(1) Subject to subsection (2), the Chief Executive may delegate to any public servant or any other public officer any powers or duties conferred or imposed on him by sections ... 18."

It is common ground that the power under s. 18 has been delegated to the 1st respondent in relation to the staff of WSD.

18. The legal principle that a power which has been delegated should not be sub-delegated is undisputed by the parties. The issue is whether the evidence adduced in this application shows that there has been sub-delegation of power.

19. The applicant places emphasis on the 1st respondent's change of stance after he consulted the Commission: see para. 8 to 10 above. S. 18, PSO reads:-

"Except as may be provided by regulations made by the Chief Executive under section 21(2) and except in the case of an officer who is one of the officers designated in section 6(2) of the Public Service Commission Ordinance (Cap. 93), the Chief Executive shall not inflict any punishment upon an officer under [section 10] or require an officer to retire under section 12 without first consulting [the Commission]".

None of the exceptions is applicable to this application. The applicant accepts that it is open to the 1st respondent to consult the Commission. However, he contends that the 1st respondent has gone beyond that and effectively allowed the Commission to decide the matter for him.

20. When the Commission was consulted by WSD (through the Secretariat), it said in a memo dated 22 March 2001:-

"Having examined the submission and [the applicant's] track record, [the chairman] considers that the staff borders on removal from service, and suggests that you [referring to the Secretariat] invite [the 1st respondent] to consider whether [the applicant] could be retired under S. 10 ... " (emphasis supplied).

The following reasons were then given in support of the above suggestion:

"He had been cautioned, at least twice, that he was given the last chance to remain in service to prove his worth but his performance and the "further misconduct unveiled" suggest that he does not deserve a third "final chance". The current misconduct took place before the caution in 1999 and after the one in 1985. Actually timing is not the most significant part but his any further misconduct unveiled should lead to serious consideration on his overall suitability to remain in service, regardless of when the misconduct took place.

As regards "accepting unauthorized loan", this is his third contravention. The first two counts took place in 1982 and 1985. This, coupled with his other discipline record and consistently moderate performance and the management's need to post him to jobs without direct contact with supplier and contractor, should lead to serious doubts on whether he is still suitable to remain in service".

21. The applicant contends that the contemporaneous documents show that the senior officers of WSD, and the 1st respondent, regarded the suggestion as a "revised punishment" and felt obliged to adopt it.

22. The Commission's memo was followed by a line of correspondence (some of which was internal correspondence), which included the following:-

"[The Commission] ... considers that the blemished disciplinary records of [the applicant] had led to serious doubts on his suitability to remain in service ... We are therefore invited to consider the punishment of compulsory retirement ...

In the light of [the Commission's] advice, you may wish to consider the revised punishment as suggested ... " (emphasis supplied) (internal minutes dated 9 April 2001).

"... Having regard to the views of [the Commission], we agree to punish [the applicant] by compulsory retirement instead" (emphasis supplied) (memo from the 1st respondent to the Secretariat dated 11 April 2001);

"I've slight hesitation on the proposed removal of [the applicant] from service in view of the fact that the amount of loan is not substantial, the misconduct is not duty related and there was no abuse of official position. We could of course justify the recommendation with reference to ... The proposed removal is slightly on the high side ..." (internal minutes dated 12 April 2001);

"After critically reviewed the recommended punishment for [the applicant] taking into account the views of [the Commission], we have no objection to revise the punishment to compulsory retirement as suggested by [the Commission] ... " (emphasis supplied) (memo from the 1st respondent to the Secretariat dated 3 May 2001);

"Having regard to the advice of [the Commission], [the 1st respondent] has agreed that [the applicant] should be compulsorily retired ... " (emphasis supplied) (memo from the Secretariat to the Commission dated 9 May 2001);

"The Commission advises that the recommendation to compulsorily retire [the applicant] ... should be approved" (emphasis supplied) (memo from the Commission to the Secretariat dated 5 July 2001)".

23. The above cumulated in the 1st respondent making the first decision under challenge and informing the applicant of the same on 12 July 2001. That letter says:-

"... 水務署署長在考慮過你所犯的不當行為 ... 以及所有可能引致從輕處分的因素 ... 現行使行政長官所轉授的權力，並參照公務員敍用委員會的意見，下令 ... 迫令你退休。當局將 ... 向你發放延付退休金".

24. In the letter of 12 July 2001, the 1st respondent has correctly stated that he was exercising the power delegated to him by the Chief Executive. No evidence of sub-delegation can be found therein. The applicant relies rather on the correspondence passing between the 1st respondent, the Secretariat and the Commission before that date (see the correspondence quoted above) as evidence of sub-delegation. It is to be noted that at the hearing, the applicant no longer contended that the power has been sub-delegated to the 1st respondent's subordinates: see the applicant's skeleton arguments.

25. The respondents disagree and invite me to conclude from the whole line of correspondence that there has not been any sub-delegation of power at all. One of the contemporaneous documents relied on by the respondents is an internal minutes of WSD dated 9 April 2001 (the memo was quoted above: the first item, para. 22). The 1st respondent indorsed thereon the following remark by hand:-

"Revised punishment agree".

The date of indorsement appears to be 11 April 2001.

26. In short, I agree with the respondents and disagree with the applicant. The correspondence prior to 11 April 2001 invariably stated that the Commission suggested the 1st respondent be invited to re-consider the question of punishment. There is no proper basis to conclude that the 1st respondent has sub-delegated his power at that time. By about 11 April 2001, the above-mentioned internal memo (see para. 25 above) shows that the 1st respondent has decided he agreed with the punishment suggested by the Commission. This is clear evidence that the decision was made by the 1st respondent himself.

27. The correspondence since 11 April 2001 does not show that the 1st respondent has sub-delegated his power either. The use of the words "should be approved" by the Commission in its memo of 5 July 2001 (the 7th item, para. 22 above) is unfortunate. However, it did not originate from (or was adopted by) the 1st respondent. For this reason, I do not consider it can provide evidence in support of this part of the application. Further, there was an internal minutes dated 18 April 2001 indicating further consultation within WSD regarding the question of punishment but this does not show sub-delegation of power by the 1st respondent.

Exceeding Jurisdiction

28. The applicant contends here that s. 18, PSO does not empower the Commission to recommend a punishment which is higher than that decided by the 1st respondent. S. 18, PSO has already been set out above (at para. 19). The material part is set out here for ease of reference:-

" ... the Chief Executive [in this application, this should refer to the 1st respondent] shall not inflict any punishment upon an officer under [section 10] or require an officer to retire under section 12 without first consulting [the Commission]".

29. In his supplemental skeleton arguments, the applicant advances various points in support of the above contention, including references to s. 6(1), Public Service Commission Ordinance (Cap. 93), reg. 3 and 4, Public Service Commission Regulations (Cap. 93 Reg.) and s. 3(2), PSO. In brief, those references are intended to support the argument that unlike those provisions, s. 18, PSO only obliges the Chief Executive (and hence the 1st respondent) to consult the Commission in certain circumstances. With respect, while the difference may exist, I do not consider that can support this part of the application.

30. The applicant also says that two matters militate against construing s. 18, PSO as not having any jurisdictional limit on the part of the Commission. First, to adopt such construction, the Commission would in effect be made the real "disciplinary body". Further, s. 10, Cap. 93 provides:-

"Any report, statement or other communication which the Commission may in the exercise of its functions or the discharge of its duties hereunder make to the Government of Hong Kong or to the Chief Executive or to the Chief Secretary for Administration or to the head of a department of Government shall be privileged in that its production may not be compelled in any legal proceedings ... ".

The applicant submits that if s. 18, PSO empowers the Commission to recommend a heavier punishment than that determined by the Chief Executive (or his delegated officers), by virtue of s. 10, Cap. 93, the officer affected by the sentence would not be able to know of the basis for the heavier sentence.

31. On the other hand, the respondents submit that:-

(a) s. 18, PSO is merely a procedural provision. It only prescribes that the Chief Executive must consult the Commission under certain circumstances;

(b) there is nothing specific in s. 18, PSO (or any part of PSO) which supports this part of the application;

(c) in fact, s. 6, Cap. 93 shows that the jurisdiction of the Commission is wide and general. S. 6(1) provides:-

"The Commission shall advise the Chief Executive regarding-

(a) the filling of such vacancies in the public service as may be prescribed;

(b) the promotion of an officer from such grades and classes of the public service to another grade and class as may be prescribed;

(c) such representations from an officer as may be referred to it by the Chief Executive or made to the Commission in accordance with government regulations; (Replaced 27 of 1974 s. 5)

(d) any matter affecting the public service which may be prescribed by regulation made hereunder or which the Chief Executive may refer to the Commission;

(e) any matter affecting the conduct and discipline of public officers on which the Chief Executive is required by Public Service (Administration) Order to consult the Commission";

(d) the purpose of s. 18, PSO is to promote objectivity, fairness and service-wide consistency regarding punishment to be imposed against public officers.

32. In short, I agree with the respondents. In particular, I disagree with the applicant that, if s. 18, PSO was not limited in scope (in the manner he contends for), the Commission would be made the real "disciplinary body". There is no necessary link between the two. As regards s. 10, Cap. 93, if the legislature sees fit to confer privilege from disclosure on the documents concerned, it must have intended that related common law rights should be abrogated as well.

Other Grounds in the Form 86A

33. The other grounds set out in the Form 86A are not pursued at the hearing of this application. Insofar as it may be necessary to do so, I agree with the respondents' submissions: see para. 10 to 21 and 27 to 33, respondents' skeleton submissions.

Conclusion

34. The validity of the second decision under challenge is dependent on that of the first decision under challenge: para. 4, the applicant's skeleton arguments. As stated above, I find no valid basis for challenging the first decision. Accordingly, the same conclusion is reached in respect of the second decision.

35. To conclude, this application is dismissed.

Costs Order Nisi

36. There is no apparent reason to depart from the usual rule that costs should follow the event. There will accordingly be a costs order nisi pursuant to Ord 42 r 5B(6) that the costs of this application (including any reserved costs) be paid by the applicant to the respondents to be taxed if not agreed. The applicant's own costs are to be taxed in accordance with the Legal Aid Regulations.