FACT: LEGAL EXPENSES
- The GSIS Association has incurred substantial legal costs in connection with its efforts to amend its Articles of Association over the past three years
- Most of these costs would not have been incurred if a minority of our members had not opposed the removal of the German Fluency Constraint from our Articles
- In early 2017, the Board agreed to remove the German Fluency Constraint from our Articles 47.2, 63 and 68. These amendments would be completed in time for the AGM in 2018. Unfortunately, after many years of drafting, negotiating with the German Consulate and the ZfA and an EGM which narrowly failed to pass agreed amendments, our Articles remain unchanged.
- The continued presence of the German Fluency Constraint and conflicting opinions on its validity have led some members as well as the Consulates of Germany and Switzerland to question the legality of having non-German speakers on the Board. Various members have threatened lawsuits against GSIS, the Board and individual Board members.
- During its 2018/19 and the 2019/20 reporting years, the GSIS Association has incurred substantial legal costs associated with:
- its efforts to amend its Articles, including costs related to the drafting of Articles and organizing EGMs to vote on amendments to our Articles
- obtaining legal opinions on the validity and interpretation of certain articles
- handling a complaint made to the Equal Opportunities Commission by a Member about the discriminatory effect of Articles 47.2, 63 and 68
- responding to legal threats made by certain parents who wish to see the discriminatory provision in our Articles enforced
- applying to the High Court of Hong Kong for a ruling on the validity of Articles 47.2, 63 and 68 and of the election and appointment of the 15 directors on the Board.
Below is a preliminary summary of our legal expenses related to amendments and interpretation of our Articles, prepared by our Finance Director:
|Opinions on Articles||0.6||0.5|
|Members’ Legal Threats||0.3|
|High Court||1.0 (est.)|
- This summary does not include other costs of organizing general meetings, such as the fees to Tricor for company secretary and scrutineer services. The total costs for the EGM demanded by the Requisitionists will likely exceed HK$400,000. We do not think this is a good use of the GSIS Association’s funds.
- If, as was agreed by the Board in early 2017, the German Fluency Constraint had simply been removed from our Articles that year, GSIS would have incurred only a fraction of the legal expenses summarized above. However, the opposition from a minority of our members to removing the discriminatory provisions has drawn out a process that was supposed to take only a few months to more than three years, without results.
- It is regrettable that some of the same individuals that led the opposition to remove these discriminatory provisions are now among and behind the Requisitionists complaining about the legal costs that GSIS has incurred as a result of their opposition. Similarly, some of the parents who have threatened the GSIS Association and its Board with legal action over the past year are among the Requisitionists.
- Most of the legal costs in the table above are directly related to the question as to whether the German Fluency Constraint in Art. 47.2 is legal under Hong Kong law. This uncertainty was the basis for the complaint to the Equal Opportunities Commission and for the threats of legal action from parents who think the constraint should be enforced. If this uncertainty were removed, we would only be arguing about what rules we think are best for GSIS and lawyers would not be much involved. If this uncertainty remains, we could spend many more years running up legal bills related to the German fluency constraint without achieving anything.
- In order to solve at least this part of our problem, on May 6 the GSIS Association applied to Hong Kong’s High Court for declaratory relief on:
- The validity of the German Fluency Constraint in our Articles; and
- The valid election and appointment of the 15 directors currently on the Board.
- A ruling by the High Court will not change our Articles for us, but it would take a major point of contention out of the debate and should better position our community to agree on new Articles. At a minimum, it would save legal costs in the future. In hindsight, GSIS should have gone to the High Court three years ago and it would have saved a lot of costs and agony.
- No one is happy about spending money on legal advice and everyone agrees that, if possible, it would be better spent on our School or left in our parents’ pockets. For all the parents and alumni who volunteer their time for free, including the Board directors, the Committee members and the KPRs, it is disheartening to see any money wasted at GSIS. This wastage is not limited to legal expenses, but also includes inefficiencies, previous overspending on the renovations of our Peak campus and the underuse of our classroom capacity. Improving efficiencies at GSIS is one of the Board’s main priorities.
- Legal expenses incurred beyond our budget and not in the course of the School’s regular operations do not directly or immediately impact tuition fees. They are funded out of our reserves. Of course, if material extraordinary legal expenses are sustained over a longer period of time, it may eventually have an impact on future tuition fees.