SACKED senior law lecturer Mrs Jill Spruce must pay millions of dollars in legal costs incurred by her former employer, Hongkong University, after she unsuccessfully challenged all the way up to the Privy Council the university's decision to dismiss her. In their judgement, the Law Lords dismissed Mrs Spruce's appeal against her sacking after she engaged in private practice at the Bar without permission. They allowed the university's cross-appeal for costs. Mrs Spruce argued that the university's regulations on outside practice did not apply to her. That was rejected by the trial judge, Mr Justice Jones, but accepted by the Court of Appeal, which held that she had therefore not breached her contract. The Court of Appeal still dismissed the appeal because of the breakdown in the relationship between the parties. But it ordered the university to pay Mrs Spruce's costs. In London, Mr Michael Beloff QC, for Mrs Spruce, argued that the Court of Appeal was right in holding that the regulations did not form part of Mrs Spruce's contract as they were contained in a staff manual which stated that the information was not part of contracts. But the Law Lords found that Mrs Spruce's contract required outside practice to be conducted in accordance with regulations. She was therefore bound by the regulations, and the introductory words in the staff manual could not downgrade a contractual term. The university did not make an error of law when deciding to end Mrs Spruce's employment, the Law Lords held. As the Court of Appeal must have based its costs order on the wrong view that there was an error of law, that order could not stand, the Privy Council held. It also rejected arguments that the university breached natural justice by not giving Mrs Spruce a chance to make submissions before terminating her employment. The Law Lords agreed with the trial judge that the university had bent over backwards to ensure Mrs Spruce was treated fairly. Mrs Spruce was given a chance to write any mitigation and the rules of natural justice did not require an oral hearing, they said. The university was represented by Mr Sidney Kentridge QC and Mr Denis Chang QC.