ALBERT E. SNELLING v. DATA GENERAL HONG KONG LTD AND OTHERS

BETWEEN

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J U D G M E N T

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Clough, J.A.:

1. This is an appeal by the plaintiff against the order of Jones J. made on the 26th April 1989 striking out, under Order 18 rule 19 and the inherent jurisdiction of the court, those parts of the amended writ and amended statement of claim in this action which refer to the first and second defendants and dismissing the action against them. The order is in fact expressed to have "struck out" the action as against the first and second defendants. However I have no doubt that the intention and the effect was to dismiss it. The order was made on appeal by the first and second defendants from the dismissal by Master O'Donnell on the 21st March 1989 of their application to him for such an order.

2. The plaintiff's claim arises from his allegedly wrongful dismissal from his employment as the Area Manager for Far East Marketing of a group of companies engaged in the manufacture and distribution of computers. The first and second defendants are two Hong Kong companies who are the wholly owned and managed subsidiaries of the third defendant, a company incorporated in the State of Delaware in the U.S.A. The plaintiff's amended writ and amended statement of claim claims relief against all three defendants.

3. The contention of the first and second defendants below, which the judge accepted, was that the amended statement of claim disclosed no reasonable cause of action against either of them. The substance of their case was that whilst the indorsement of the amended writ included a claim for damages for breach of a contract made between the plaintiff and all three defendants or one or more of them, the amended statement of claim did not plead any contract of employment as between the plaintiff and the first and second defendants.

4. We indicated in the course of the submissions of Mr Graham, counsel for the plaintiff, in support of the appeal that we were against him on his main argument on the appeal to the effect that the judge had erred in accepting the contentions of the first and second defendant below. It seemed to us that there had indeed been a failure to plead a contract of employment or any contract at all between the plaintiff and the first and second defendants or either of them, as alleged in the amended writ, and that the judge had been right to conclude that the amended statement of claim disclosed no reasonable cause of action against those defendants.

5. Accordingly Mr Graham felt constrained (after being granted an adjournment to consider his position) to fall back on his last ground of appeal, which was that the judge had failed to give the plaintiff the opportunity to re-amend the amended statement of claim before striking out his action as against the first and second defendants. In conjunction with this ground Mr Graham submitted certain draft amendments intended to cure any deficiencies in the amended statement of claim.

6. The granting of leave to amend is an alternative at the judge's discretion, to striking out under Order 18 rule 19(1). Where there is reason to suppose that the case can be improved by amendment the court will generally give leave to amend, even after striking out a pleading as disclosing no cause of action, rather than giving judgment against the party whose pleading is defective: see the notes in the Supreme Court Practice, Vol. I, at para 18/19/5 and 7, particularly Griffiths v. London and St. Katherine Docks Co. (1884) 13 QBD 259 (C.A.) and Hubbuck v. Wilkinson [1899] 1 QB 86 (C.A.) per Sir Nathaniel Lindley M.R. at p. 94.

7. Furthermore in Griffiths' case a strong English Court of Appeal gave leave to amend after dismissing an appeal against the dismissal of a claim which disclosed no cause of action. The court dismissed an appeal from the decision of a divisional court giving judgment for the defendants in a negligence action on the ground that the statement of claim showed no cause of action. A note at the foot of page 261 of the report of that case indicates that although the appeal was dismissed the court gave leave to the plaintiff to amend his statement of claim on the usual terms. This latter order seems to me to be explicable only on the footing that in the event the appeal was dismissed only on the issues argued under the strike out rule of the day and that the court considered it had jurisdiction to grant leave to amend even at that late stage if it considered it just to do so on appropriates terms.

8. For my part I am satisfied that, in principle, even where, as in the present case, a plaintiff has adhered to his pleadings and his counsel has not sought, as a matter of last resort if his arguments were to fail, to amend his statement of claim below, this court should not shut him out from consideration of properly formulated amendments. In my view this court has jurisdiction under Order 59 rule 10(1) and (4) to permit such amendments notwithstanding that the exercise of discretion by the judge below in dismissing the action is not to be faulted. I apprehend that Mr Huggins did not feel able to contend the contrary on behalf of the first and second defendants.

9. I would entertain Mr Graham's application to re-amend the amended statement of claim, but I am wholly persuaded that the proposed amendments relating to the first and second defendants are fundamentally lacking in material averments of fact and embarrassing and that they do nothing to fill the voids in the pleading that was struck out.

10. The principal, but by no means only, deficiency in the amended statement of claim was its failure to allege in any reasonably identifiable manner the existence of any contract of employment between the plaintiff and the first and second defendants or either of them. The proposed amendments do nothing to remedy the situation and they introduce additional embarrassing features.

11. Mr Huggins has taken us through the proposed amendments in detail. I propose to mention the salient matters which suffice to satisfy me that the amendments should not be allowed.

12. So far as is material to this appeal the endorsement an the plaintiff's amended writ claimed:

(1) damages for breach of a contract made between the plaintiff and all three defendants or one or other or more of them;

(2) damages for breach of a collateral contract made between the plaintiff and the third defendant by virtue of certain representation and warranties concerning the status and security of tenure of the post to be taken up by the plaintiff; and

(3) damages against the third defendant for reckless or negligent statement as to the effect of the representations and warranties mentioned at (2) above.

13. The scheme of the original amended statement of claim was to allege categorically, in paragraphs 1 to 11, that the plaintiff had been employed by the third defendant (described as a Delaware corporation which wholly owned the first and second defendants which were its Hong Kong subsidiaries) on or about the 24th April 1986 after being approached by and negotiations with the third defendant's senior executives. In paragraphs 12, 13 and 14 representations and warranties of security of tenure and grade of employment allegedly made and given by individuals on behalf of the third defendant were pleaded The contractual nexus between the plaintiff and the third defendant was emphasised by paragraph 15 which pleaded that the third defendant had assigned the plaintiff to the first and second defendants which were corporate vehicles for the conduct of the third defendant's business in Hong Kong and elsewhere in Asia. That paragraph went on to allege that "At all material times the plaintiff was an employee of the third defendant subject to the directions of the directors and corporate executives of the third defendant."

14. Paragraph 16 pleaded the assumption of his duties by the plaintiff on the 1st July 1986. Paragraph 17 set out the alleged contractual benefit of the plaintiff's contract of employment with the third defendant. Paragraph 18 alleged inter alia that "it was agreed and understood" that any business expenses reasonable incurred in the interests of any of the three defendants would be reimbursed to the plaintiff. This was followed by the pleading that "in the premises" it was "the direct contractual obligation of the third defendant to ensure that the Plaintiff received (inter alia) the contractual benefits set out in paragraph 17 whether through the agency of the 1st or 2nd Defendants or otherwise."

15. In paragraphs 20 to 23 it was alleged that the plaintiff incurred various relocation and business expenses, including, in paragraph 22, certain business expenses in Hong Kong "to be met by the 1st, 2nd or 3rd Defendant".

16. In paragraph 24 the plaintiff pleaded that on the 3rd August 1987 in Massachusetts he had received a letter dated the 31st July 1987 signed on behalf of the second defendant invoking a term of a Foreign Assignment Agreement, terminating his post and his assignment and informing him that he would receive three months pay in lieu of notice with "certain other benefits". The plaintiff pleaded in paragraph 25 that he had received no notice terminating or purporting to terminate his employment with the third defendant and that he had refused to sign an agreement releasing the third defendant from its liabilities. In paragraph 26 he pleaded that he was not a signatory to or bound by any Foreign Assignment Agreement and in paragraph 27 he set out the payment received by him after his receipt of the letter dated the 31st July 1987.

17. There follows a plea in paragraph 28 of acceptance by the plaintiff of repudiatory preach of contract on the part of the third defendant, with an alternative plea of breach by that defendant of the collateral agreement pleaded in paragraph 14. In the further alternatives wrongful dismissal by the third defendant alleged in paragraph 29 and in paragraph 30 reckless or negligent misstatement by the third defendant regarding the status and tenure of his post is pleaded.

18. Paregraph 32 catalogues items of loss and damage sustained by the plaintiff and paragraph 33 deals with future loss and damage. Paragraphs 34 to 48 (which appear under a rubric which includes a statement that the claims are made against the third defendant (OR ALTERNATIVELY 1st or 2nd DEFENDANTS) ") claim numerous other items of loss or damage. Paragraphs 44 to 48 relate to the joss of a stock option claim and the opportunity to derive earnings from another employer as a result of the third defendant's breach of contract.

19. It is significant that whilst the prayer contains, consistently with the indorsement on the writ, explicit claims for damages against the third defendant for (1) breach of the contract of employment made with the plaintiff (2) breach of the collateral agreement and (3) reckless or negligent misstatement, the claim against the first and second defendants is confined to:

"(5) further damages or relief as may be appropriately awarded against the 1st and 2nd Defendants;" and further or other relief.

20. Having rightly abandoned his attempt on appeal to sustain this pleading as adequate to disclose a reasonable cause of action against the first and second defendants, counsel for the plaintiff now puts forward proposed further amendments which, in my judgment, do nothing to improve the existing pleading. Paragraphs 1 to 8 of the amended statement of claim which lead up to the alleged contract of employment and involve only the third defendant and its executives in relation to the negotiations and proposals which preceded the contract, remain unaltered. All of a sudden the first and second defendants are inserted in paragraph 9 (which pleads the plaintiff's acceptance of employment) together with the third defendant without any underlying averment of fact to explain the basis for alleging employment of the plaintiff by the first and second defendant or either of them. The same thing happens in paragraph 11 which is a pleading beginning with "In the premises" - which remain unaltered except in paragraph 9.

21. The next amendment is the introduction of the following two new paragraphs:

"14A For the avoidance of any doubt all the conversations, offers, promises, representations, warrantees pleaded in paragraphs 4, 5, 6, 7, 8, 9, 10, 11, 12, 13 and 14 above were also made on behalf of and became binding on and 1st  2nd Defendants.

14B. The contract pleaded herein is the same or relies on the same or substantially similar facts to those pleaded in the Indorsement and Amended Indorsement of Claim."

22. Mr Huggins rightly asked rhetorically, where was the factual basis for either of these pleadings. There seems to me to be none. Furthermore paragraph 14A, which alleges inter alia promises, misrepresentations and warranties by the first and second defendants, is inconsistent with and goes outside the ambit of the writ and indeed the prayer of the pleading itself which only claims damages for breach of collateral contract and reckless or negligent misrepresentation against the third defendant.

23. It would be wearisome to prolong this judgment with further detailed examination of the amendments. The pattern is a consistent one of mere interpolation of references to the first and second defendants without altering the substance of the original pleading or introducing any material averments of fact upon which reliance is placed for alleged contractual or other obligations of the first and second defendants. At the end of it all, so far as this appeal is concerned, the only relief sought against the first and second defendants is in paragraph (5) of the prayer (i.e. "further damages or relief as may be appropriately awarded") and further or other relief.

24. Mr Graham relied on the proposition that the precedent books show that a bare pleading of a contract of employment will suffice. That may well be so in many cases, but in this case it is highly material that the pleader has chosen to build up to the alleged contract in about 14 paragraphs which all emphasise only contractual nexus between the plaintiff and the third defendant only.

25. In my judgment these proposed re-amended pleadings are, so far as they relate to the first and second defendants, writ in water and would never survive a strike out application. I would therefore disallow them and dismiss the appeal.

Hon. Yang, C.J.:

26. I too would dismiss the appeal for the reasons advanced by my Lord Clough. There is nothing that I wish to add.

Power, J.A.:

27. I also concur with what has fallen from my Lord Clough.