FEDERAL COURT OF AUSTRALIA
Barker v Commonwealth Bank of Australia [2012] FCA 942
Citation: Barker v Commonwealth Bank of Australia [2012] FCA 942 Parties: STEPHEN JOHN BARKER v COMMONWEALTH BANK OF AUSTRALIA File number: SAD 187 of 2010 Judge: BESANKO J Date of judgment: 3 September 2012 Catchwords: CONTRACTS – where applicant’s role with respondent Bank made redundant – where applicant subsequently retrenched – whether failure to give required notice prior to termination of employment or payment in lieu pursuant to written contract of employment – whether breach of contract – whether failure to give notice deprived applicant of chance to be redeployed during notice period pursuant to respondent’s redeployment policy.
Held: The respondent failed to give the applicant four weeks’ notice in breach of contract.
CONTRACTS – where respondent’s policies contained in a “Human Resources Reference Manual” and accessible on respondent’s intranet – whether policies terms of applicant’s employment contract – where statement of express exclusion of policies from employment contracts present in Human Resources Reference Manual – whether language of policies suggestive of contractual obligation or merely aspirational in nature – whether express incorporation – whether policies formed implied terms of applicant’s contract by virtue of custom or established practice of respondent.
Held: The statement of express exclusion prevents the policies being either implied as a matter of fact or expressly incorporated into the applicant’s employment contract.
CONTRACTS – existence of implied term of mutual trust and confidence in Australian law – whether serious breach by respondent of its own policy sufficient to breach implied term – whether serious breach of redeployment policy caused applicant loss or damage – whether damages available for breach of implied term – assessment of loss of chance – whether damages for hurt, disappointment and injury to reputation available – whether aggravated damages available.
Held: The applicant is entitled to damages for loss of chance to be redeployed due to respondent’s breach of implied term of mutual trust and confidence by acting in serious breach of its redeployment policy.
TRADE PRACTICES – misleading and deceptive conduct – where general manager of respondent represented to applicant that his role would not change following employment of state manager – where responsibility of applicant reduced by two-thirds – whether representation misleading or deceptive or likely to mislead or deceive for purposes of s 52, 53B and 51A of Trade Practices Act 1974 (Cth) – whether representation made in “trade or commerce”.
Held: The representation was not made in “trade or commerce” for purposes of Trade Practices Act 1974 (Cth).
Legislation: Evidence Act 1995 (Cth) s 140
Fair Trading Act 1999 (Vic) s 9
Trade Practices Act 1974 (Cth) ss 51A, 52, 53B, 82Cases cited: Addis v Gramophone Co Ltd [1909] AC 488, cited
Baltic Shipping Co v Dillon (1993) 176 CLR 344, cited
Burazin v Blacktown City Guardian Pty Ltd (1996) 142 ALR 144, cited
Commonwealth of Australia v Amann Aviation Pty Ltd (1991) 174 CLR 64, cited
Concrete Constructions (NSW) Pty Ltd v Nelson (1990) 169 CLR 594, cited
Concut Pty Ltd v Worrell (2000) 75 ALJR 312, cited
Crossman v Taylor(No 3) [2011] FCA 734, cited
Dye v Commonwealth Securities Ltd [2012] FCA 242, cited
Easling v Mahoney Insurance Brokers Pty Ltd (2001) 78 SASR 489, cited
Eastwood v Magnox Electric plc [2005] 1 AC 503, cited
Edwards v Chesterfield Royal Hospital NHS Foundation Trust [2012] ICR 201, cited
Goldman Sachs J B Were Services Pty Ltd v Nikolich [2007] FCAFC 120, cited
Houghton v Arms (2006) 225 CLR 553, cited
Johnson v Unisys Ltd [2003] 1 AC 518, cited
Jones v Dunkel (1959) 101 CLR 298, cited
Koehler v Cerebos (Aust) Ltd (2005) 222 CLR 44, cited
Malik v Bank of Credit and Commerce International SA (in liq.) [1998] AC 20, cited
Martin v Tasmania Development and Resources (1999) 163 ALR 79, cited
McDonald v Parnell Laboratories (Aust) Pty Ltd (2007) 168 IR 375, cited
Nikolich v Goldman Sach JB Were Services Pty Ltd [2006] FCA 784, citedPatrick v Steel Mains Pty Ltd (1987) 77 ALR 133, cited
Perkins v Grace Worldwide (Aust) Pty Ltd (1997) 72 IR 186, cited
Quinn v Gray (2009) 184 IR 279, cited
Reynolds v Southcorp Wines Pty Ltd and Anor (2002) 122 FCR 301, cited
Riverwood International Australia Pty Ltd v McCormick (2000) 177 ALR 193, cited
Russell v The Trustees of the Roman Catholic Church for the Archdiocese of Sydney (2008) 72 NSWLR 559, cited
Sellars v Adelaide Petroleum NL (1994) 179 CLR 332, cited
Shaw v State of New South Wales [2012] NSWCA 102, cited
State of South Australia v McDonald (2009) 104 SASR 344, cited
Sterling Commerce (Australia) Pty Ltd v Iliff [2008] FCA 702, cited
Taylor v Crossman (No 2) (2012) 199 FCR 363, cited
Thomson v Orica Australia Pty Ltd (2002) 116 IR 186, cited
Triggell v Pheeney (1951) 82 CLR 497, cited
Willis v Health Communications Network Ltd (2007) 167 IR 425, cited
Yousif v Commonwealth Bank of Australia (No 2) (2009) 185 IR 414, cited
Yousif v Commonwealth Bank of Australia (2010) 193 IR 212, citedNeil I and Chin D, The Modern Contract of Employment (LawBook Co, 2012)
Dates of hearing: 12, 13, 14, 15, 16, 19, 20 December 2011
1, 2, 3, 14 February 2012Place: Adelaide Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 388 Counsel for the Applicant: Mr P Heywood-Smith QC with Mr S Mitchell Solicitor for the Applicant: Pace Lawyers Counsel for the Respondent: Dr C Bleby Solicitor for the Respondent: Minter Ellison Lawyers
IN THE FEDERAL COURT OF AUSTRALIA
SOUTH AUSTRALIA DISTRICT REGISTRY
GENERAL DIVISION
SAD 187 OF 2010
BETWEEN: STEPHEN JOHN BARKER
ApplicantAND: COMMONWEALTH BANK OF AUSTRALIA
Respondent
JUDGE:
BESANKO J
DATE OF ORDER:
3 SEPTEMBER 2012
WHERE MADE:
ADELAIDE
THE COURT ORDERS THAT:
1.Judgment be entered for the applicant against the respondent in the sum of $317,500.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
IN THE FEDERAL COURT OF AUSTRALIA
SOUTH AUSTRALIA DISTRICT REGISTRY
GENERAL DIVISION
SAD 187 OF 2010
BETWEEN: STEPHEN JOHN BARKER
ApplicantAND: COMMONWEALTH BANK OF AUSTRALIA
Respondent
JUDGE:
BESANKO J
DATE:
3 SEPTEMBER 2012
PLACE:
ADELAIDE
REASONS FOR JUDGMENT
INTRODUCTION
Mr Stephen John Barker is the applicant in this proceeding. He claims damages against the Commonwealth Bank of Australia (“the Bank”) which is the respondent. He relies upon two causes of action. First, he contends that the Bank acted in breach of a contract of employment between the Bank and himself and that he is entitled to damages at common law as a result. Secondly, he contends that in about July or August 2006, the Bank, through one of its employees, contravened ss 52(1) and 53B of the then Trade Practices Act 1974 (Cth) (“Trade Practices Act”) and that he suffered loss or damage as a result. He claims damages for that contravention under s 82 of the Trade Practices Act, and these damages are of a nature similar to those claimed for breach of contract.
Mr Barker’s contract case is put in alternative ways. His primary case is that his contract of employment with the Bank included, as terms of the contract, policies issued by the Bank from time to time and an implied term of mutual trust and confidence. The policies related to what may be broadly described as human resources matters and, on Mr Barker’s case, placed a number of obligations on the Bank. His case is that the Bank acted in breach of its own policies and in breach of the implied term of mutual trust and confidence. He contended that in early 2009 he, or his position, was selected for redundancy contrary to a policy of the Bank. He further contends that the Bank did not comply with its own policy with respect to the redeployment of a person in his position and that he thereby lost the opportunity to be redeployed to another position within the Bank.
Mr Barker’s alternative case in contract is that under his written contract of employment with the Bank the latter was bound to give him four weeks’ written notice of the termination of the contract, or four weeks’ pay in lieu of notice. His case is that the Bank did not do that and that the Bank’s failure to give him four weeks’ written notice of termination meant that he lost the opportunity to be redeployed to a position within the Bank during that period.
Mr Barker’s Trade Practices Act case is that Mr De Luca, who was an executive of the Bank, made a representation to him in July or August 2006 that his role would not change as a result of the employment by the Bank of a general manager for the region of South Australia and the Northern Territory. His case is that, as a result of that representation, he did not pursue an opportunity to obtain employment with the National Australia Bank (“NAB”). He contends that the representation was a representation as to a future matter and that Mr De Luca did not have reasonable grounds for making the representation.
Mr Barker makes a substantial claim for damages. Since leaving the Bank in April 2009, he has not obtained full-time employment with any other organisation. He has performed some consultancy work for which he has received fees. He claims past economic loss of $110,000 plus an amount for pre-judgment interest, future economic loss of $1,160,000, general damages of $200,000 and aggravated damages of $100,000.
THE EVIDENCE CALLED AT THE TRIAL
The parties exchanged written statements of the evidence to be given by the witnesses they intended to call at trial. Those statements were then tendered at trial as the witness’s evidence-in-chief. In some cases I allowed the witness to give some brief evidence-in-chief in addition to his or her statement. In addition to the evidence of witnesses called at trial, both parties tendered a number of documents. A number of key facts were established by documents or evidence which was not in dispute.
Mr Barker’s Witnesses
Mr Barker gave his evidence-in-chief by way of two written statements and brief oral evidence. His first written statement was a very lengthy document. He was subject to a long and vigorous cross-examination by counsel for the Bank. Much of his evidence may be accepted because it was either not contested, or related to matters which were, in any event, established by the documents. However, his evidence in some areas was unsatisfactory. He confidently asserted as facts a number of matters where his basis for doing so was either non-existent or, at best, tenuous. Examples are set out in the course of these reasons. Furthermore, I thought he exaggerated the nature of the personal relationship between Mr Formichella and Mrs Allen, and that he tried to minimise his part in the rumours which were circulating within the Bank as to the nature of that relationship. Finally, there were areas where I considered the evidence of another witness more reliable than the evidence of Mr Barker. These matters are referred to below.
Mr Anthony Majstrenko is a manager with the CPS Credit Union. He was employed by the Bank in July 1997, and while at the Bank he worked as a credit manager in institutional banking and as a relationship executive in Mr Barker’s team. His employment with the Bank ended on 4 November 2009. He is a good friend of Mr Barker. His credit was challenged by the Bank on the basis of an act alleged to have occurred shortly before his departure from the Bank. He denied the allegation and it is not otherwise established by the evidence. I place no weight on the allegation. Nevertheless, for other reasons, I did not find him to be an impressive witness. I find it difficult to accept that he could not recall any expression of disappointment within his team about Mrs Albanese’s selection to participate in a leadership programme. I find it difficult to accept that he could not be more definite as to whether there were discussions about Mr Formichella favouring Mrs Albanese and his statement that he never contributed to those discussions. I reject his evidence that Mr Formichella was deliberately touching Mrs Albanese’s hand at the client Christmas function in December 2008. I prefer the evidence of Mr Formichella and Mrs Albanese on that topic.
Mr Dale Champion is a consultant and proprietor and he operates a business called “Agrify”. He was employed by the Bank between mid 2004 and March 2010 in the Agribusiness team. He was an honest and straightforward witness.
Mrs Denise Ann Kenmore is employed as an executive assistant at the South Australian Department of Health. She was employed by the Bank as Mr Formichella’s personal assistant from January 2007 to March 2008. She left in acrimonious circumstances in terms of her relationship with Mr Formichella. She lodged a complaint against him. Her evidence was primarily directed to her observations of the relationship between Mr Formichella on the one hand, and Mrs Allen and Mrs Albanese on the other. She tended to argue with the cross-examiner. I have considered her evidence in the context of the evidence as a whole and there is a good deal which I do not accept.
Mr Barker tendered a written statement of Mr Peter Crump. Mr Crump is a Fellow of the Institute of Actuaries of Australia. The Bank did not require Mr Crump for cross-examination.
Mr Barker tendered two statements and two affidavits of Ms Julie Katherine Adlem. Ms Adlem is a solicitor employed by Pace Lawyers, who are the solicitors for Mr Barker. The Bank did not require Ms Adlem for cross-examination.
The Bank’s Witnesses
Ms Victoria Sciamanna is an employee of the Bank and has been since November 1985. She gave evidence about the Bank’s policies with respect to matters involving human resources. She was an honest and straightforward witness.
Ms Jade Baines is employed by the Bank and, between March 2007 and September 2009, she worked as a recruitment consultant for the Corporate and Financial Services Business unit (“CFS”) within the Bank. Ms Baines was married in October 2011. Her maiden name was Farrell. Ms Baines was an honest and straightforward witness.
Mrs Kylie Allen is employed by the Bank as an executive manager. She commenced her employment with the Bank in about December 2006. She was cross-examined at some length by counsel for Mr Barker. Her credit was challenged by Mr Barker. He submitted that I should not accept her evidence that she had no knowledge of Mr Barker’s redundancy prior to 2 March 2009. I have carefully considered her cross-examination with respect to that topic and I accept her evidence on the topic. Mr Barker submitted that Mrs Allen was wrong when she said she had not commenced work on the segmentation exercise before 19 December 2008. Although she may have been mistaken about that, I am not disposed to draw any inference adverse to her credit for that reason. Generally speaking, I accept Mrs Allen’s evidence.
Mrs Antonia Albanese is employed by the Bank as the Strategy and Business Performance manager for CFS for South Australia and the Northern Territory. She commenced her employment with the Bank in January 2007. She was an impressive witness and I accept her evidence.
Mr Joe Formichella is employed by the Bank as general manager for CFS in South Australia and the Northern Territory. He commenced his employment with the Bank in about August 2006. He was cross-examined at length by counsel for Mr Barker. Mr Barker submitted that I should not accept Mr Formichella as a witness of truth. He relied on a number of matters in support of that contention. I find that, in some areas, Mr Formichella’s evidence must be approached with caution.
Mr Formichella was defensive in some areas and that may be explained by the following facts. Mr Formichella is married. It will become apparent when I discuss the evidence and make my findings that it would have been quite reasonable for Mr Formichella to assume that Mr Barker was alleging that his relationships with Mrs Allen and, to a lesser extent, his relationship with Mrs Albanese, were highly inappropriate relationships. I say that however blandly the allegation might have been finally formulated by Mr Barker in his closing submissions.
Nevertheless, I have carefully scrutinised Mr Formichella’s evidence for the following reasons. First, he said that Mr Davis of Human Resources was responsible for the decision that Mr Barker clear out his desk on 2 March 2009 and not return to work at the Bank, rather than continue to work during the redeployment period. He said that that decision was made as a result of a direction from Human Resources. By contrast, Mr Davis of Human Resources said that the decision was made by the business, that is to say, Mr Formichella. The likelihood is that there was a discussion between them and the course taken was agreed. Secondly, Mr Formichella initially said that he first considered whether to appoint an executive manager to lead the team at Mawson Lakes in March or April 2011. It is apparent from his email to Mr De Luca dated 3 February 2009 that at or about that time he was considering, at least as an option, the appointment of an executive manager to lead the team at Mawson Lakes. At the same time, I do not accept Mr Barker’s contention that Mr Formichella refrained from appointing an executive manager to lead the team at Mawson Lakes until the first half of 2011 because of Mr Barker’s claim. I accept Mr Formichella’s evidence that he would not defer such a decision for that reason if the decision was necessary in the interests of the business.
Mr Barker challenged Mr Formichella’s understanding of the segmentation exercise as to whether it was “about staff” and the time at which redundancies were first considered as likely to result from the exercise. Mr Formichella’s recollection of the details of the segmentation exercise, particularly in the early months, was not particularly good. However, I think that fact affects his reliability on that topic, rather than his credibility.
On the other hand, I reject the criticisms of Mr Formichella’s evidence dealing with Mrs Allen’s knowledge of the proposed restructure and the succession planning slide-show document.
Subject to these qualifications, I accept Mr Formichella’s evidence.
Mr Neville Wiles is an employee of the Bank, who from August 2008 to January 2011 was managing the “Top Tier” team in CFS, Adelaide. He was a straightforward and honest witness.
Mr Kym Stegmeyer is employed by the Bank as a relationship executive in the CFS team for South Australia and the Northern Territory. He has been employed by the Bank for many years. He was a straightforward and honest witness.
Mr Glen Davis is employed by the Bank in a position known as Executive Manager – Strategic Human Resources. He has held that role for just over five years. Mr Davis was nervous in giving his evidence. Subject to my comments about Mr Davis in the context of Mr Formichella’s evidence, I accept his evidence.
Ms Helen Breccia was employed by the Bank between mid-2005 and September 2011. Between mid-2005 and February 2010, Ms Breccia was manager of a section within the Bank known as Career Support. She was a straightforward and honest witness.
Mr Robert De Luca is an employee of the Bank having commenced his employment with the Bank in August 2000. He was the executive general manager of CFS from mid-2006 until September 2010. He was cross-examined at length and at times he became impatient with the cross-examiner.
At one point in his evidence, Mr De Luca offered as an explanation as to why he had not drawn Mr Barker’s attention to various positions within the Bank; the fact that Mr Barker was not “mobile”. By this, he was referring to his understanding that Mr Barker was unwilling to move interstate, and he referred to the fact that Mr Barker had told him this in April 2008. Mr Barker’s submission was that that evidence of Mr De Luca was evidence of malice. I do not agree. It might be evidence of Mr De Luca being argumentative, but to my mind it is not evidence of malice. Mr De Luca operated at a high level within the Bank and his recollection of particular events was not as good as those more directly involved in those events. Nevertheless, he was an honest witness and I accept his evidence.
Other Matters
Two other matters should be noted. First, there was evidence in this case which was very general and only marginally relevant to the issues in the case. Two examples will suffice. Mr Barker said that for a time after she joined the Bank, Mrs Allen only ever spoke to him about business matters, and Mr Formichella said that Mr Barker did not assist him in settling in at the Bank. It is difficult, if not impossible, for me to make findings on the basis of very general evidence of what are largely personal perceptions. As it happens, it is not necessary for me to make findings on a number of these issues.
Secondly, Mr Barker contended that I should draw adverse inferences against the Bank because of conduct by the Bank in connection with the proceeding. First, he identified a number of persons who, he submitted, the Bank could have called as witnesses but did not. He submitted that an inference of the type identified in Jones v Dunkel (1959) 101 CLR 298 (“Jones v Dunkel”) should be drawn against the Bank. I reject this submission. No doubt there were other persons who could have given evidence in relation to various topics which were the subject of evidence. However, in most cases Mr Barker did not sufficiently identify the precise inference he contended should be drawn and to which the absence of a particular witness was relevant. To the extent that he did, the particular matter was a matter I was able to decide without reliance on the approach discussed in Jones v Dunkel. Secondly, Mr Barker criticised what he said was the delay and reluctance of the Bank to produce documents in the course of the period leading up to the trial. Again, it was not made clear what inference in relation to what matter Mr Barker was asking me to draw. The same may be said of Mr Barker’s third submission which was that an adverse inference should be drawn from the fact (assuming for the sake of argument that it is the fact) that a number of documents were not produced by the Bank. I am able to and will decide this case by reference to the evidence before me.
I will set out the facts in chronological order as far as I am able. Where there is a dispute I will identify the dispute and the way in which I resolve it.
THE FACTS
Background
Mr Barker was born on 18 February 1964 and he completed year 11 at high school. In November 1981 he commenced employment with the Bank. He started in a variety of junior positions before being elevated to the position of teller. He then performed various roles which he described as trading bank examiner and savings bank examiner. He received high level performance reviews.
In July 1989, Mr Barker was promoted to the position of loans officer at the Findon branch of the Bank. At that time there were four levels within the assistant manager band and Mr Barker was employed at a level known as “AMA”. The other three levels were “AMB”, “AMC” and “AMD”. In 1991, Mr Barker was promoted to the “AMB” level. His role was to assist the branch manager and he was part of the management team. In 1992, he was promoted to the “AMC” level and he continued to receive high level performance reviews. At about this time he was selected to take part in the Bank’s management development programmes. In 1993, he was promoted to the “AMD” level and he became an assistant relationship manager at the Hindmarsh Business Banking Centre of the Bank. He was required to report to a relationship manager who was responsible for managing “a portfolio of client relationships”.
In 1995, Mr Barker was promoted to the level of manager. At that time, there were three levels within the manager band and they were “MA”, “MB” and “MC”. Mr Barker was promoted to the “MA” level.
In 1996, Mr Barker became a relationship manager at the Hindmarsh Business Banking Centre. He was assisted by an assistant relationship manager. He continued to receive high performance reviews. He completed various courses to assist him in furthering his career as far as possible.
At the beginning of 1999, Mr Barker took up a position as relationship manager at the Riverland Business Banking Centre of the Bank and he moved directly from the “MA” level to the “MC” level. Mr Barker said that he continued to receive outstanding performance reviews. He managed approximately 70 per cent of the total business in asset terms and he managed the largest customers of the Bank in the Riverland region.
In 2001 or 2002, Mr Barker was transferred to the Adelaide Business Banking Centre of the Bank. He continued to hold the position of relationship manager and he remained at the “MC” level. He managed a large portfolio of corporate customers located in both the central business district of Adelaide and in regional areas in South Australia. He was rated exceptional in his annual performance review. During 2002 and 2003, Mr Barker continued to receive good performance reviews and those reviews contained a mixture of “Meets Expectations” or “Exceeds Expectations”.
In November 2003, the executive manager for Corporate Banking, Adelaide, resigned. That was a level 3 position. The Bank had introduced a new management structure during the period between 2001 and 2002. Mr Barker had reported to the executive manager who had resigned. He applied for the position and in June 2004 he was successful in obtaining the position.
Mr Barker’s contract in 2004
In his new role as executive manager Mr Barker held a level 3 position and he reported to a general manager who held a level 4 position. In mid-2004, Mr Geoff Lock was the general manager for South Australia as well as Queensland, Western Australia and the Northern Territory.
Mr Barker’s new role involved what he described as a team of 24 colleagues including 12 people who reported directly to him. The revenue base was $27 million with approximately 800 customers in the business.
When he became an executive manager in mid-2004, Mr Barker was provided with the following documents:
1.Letter from the Bank to him dated 19 July 2004;
2.Written Employment Agreement consisting of 18 clauses;
3.Booklet entitled “Mandatory Equity Participation”; and
4.Document entitled “Notes on Remuneration – Level 3 to 7 Executive Booklet”.
The letter dated 19 July 2004 contained a statement that Mr Barker’s employment would be “under the Bank’s Executive employment conditions and remuneration arrangements”. Mr Barker executed the written employment agreement on 6 August 2004 and the Bank executed it on 10 August 2004.
The written employment agreement provided in clause 1 that where (as in this case) Mr Barker was employed by the Bank immediately preceding the date of the agreement, he and the Bank agreed to vary terms and conditions of employment to those set out therein. The agreement provided in clause 3 that it came into effect on and from 1 July 2004. The agreement provided in clause 4 that Mr Barker shall be employed as an executive of the Bank and shall serve at any location where the Bank or one of its related bodies operate. The agreement provided in clause 5(i) that Mr Barker shall observe and be subject to the provisions of the Bank’s instructions except as varied in the agreement. The balance of clause 5 dealt with intellectual property rights.
Clause 6 of the written employment agreement was in the following terms:
This agreement may be terminated –
• by agreement in writing between the parties at any time; or
•except in circumstances of misconduct, by four weeks’ written notice by either party to the other party. The Bank may make a payment of an amount equivalent to four weeks’ pay in lieu of notice.
In either circumstance, reason for termination shall not be required.
The agreement then provided for payment of benefits on termination. Clause 8 was in the following terms, relevantly:
This clause applies only where the employee was already employed by the Bank immediately preceding the date of this agreement. In the case where the position occupied by the employee becomes redundant and the Bank is unable to place the employee in an alternative position with the Bank or one of its related bodies, in keeping with the employee’s skills and experience, the compensation payment for the employee will be calculated on the basis of – …
The balance of the agreement dealt with the topics of age of retirement, officer’s superannuation fund, leave and variation of the agreement.
The Notes on Remuneration – Level 3 to 7 Executive Booklet contained a statement as follows:
Statement of Professional Practice
All executives are required as a condition of employment to observe the “Statement of Professional Practice”. For ease of reference, the statement is shown in Appendix C. The employment contract additionally has specific clauses covering ownership of intellectual property.
Appendix C was a document entitled “Commonwealth Bank of Australia. Statement of Professional Practice”. This document contained the following statement:
You should know, adhere to, and actively support the Bank’s EEO policies and programs, regardless of your personal views.
There is a position above general manager known as executive general manager. The person holding this position was Mr Barker’s manager one removed.
Mr Barker does not have a copy of his performance review for 2004. However, he gave evidence and I accept that his performance rating for that year was “Meets Expectations”.
The Period between August 2004 and August 2006
From approximately March 2005, Mr Barker was reporting to a new general manager for Victoria, South Australia, Tasmania, Western Australia and the Northern Territory (Mr Tim Chilvers). He said that his position was expanded “significantly”. The size of his team was expanded from 24 to 50 members and another executive manager (Mr Damien Wright), who was responsible for Business Banking, Adelaide, was reporting to him. Corporate and Business Banking (the name at the time of what was to become CFS) was an amalgamation of Corporate Banking and Business Banking and these were differentiated by the size of the client having regard to debt and revenue. Mr Barker’s evidence as to the number of portfolios under his control was not entirely clear. At one point, he said it was 13 portfolios, at another point he said it was 9 or 10 portfolios. A portfolio may consist of up to 50 clients. He said that the norm in 2005 and 2006 was between 8 and 10 portfolios and that 6 portfolios would be at the “low end”.
Mr Barker said that he assumed full responsibility for the central business district in Adelaide. There was an executive manager for Country SA (Mr Jeff Kimber), and Mr Barker was in effect head of Corporate and Business Services, Adelaide. He was responsible for a commercial revenue base of approximately $46 million generated from approximately 2000 customers.
Mr Barker’s ambition was to progress to the level of general manager.
In either late 2005 or early 2006, approval was given to create a new position in the Bank’s business in Adelaide. Although the position would be a level 3 position, it was proposed that the holder of the position would be an area manager who would report to Mr Barker. He said that the idea behind the creation of the position was that it would “free up more time” for him “to undertake higher level GM type responsibilities”.
At about this time, Mr Ralph Norris was appointed as the new chief executive officer of the Bank.
In about the middle of 2006, Mr De Luca was appointed as executive general manager of CFS.
The employment of Mr Formichella
The Bank had what was referred to in the evidence as a difficult financial performance in the period of July to December 2005, after which it was looking to improve its performance significantly. It decided to introduce new strategies.
In approximately July 2006, Mr De Luca decided to appoint a new State-based general manager in Adelaide. Such a person would be a level 4 employee and he or she would be Mr Barker’s direct manager. Mr De Luca selected Mr Joe Formichella for the position. The position was not advertised and Mr Barker was not given the opportunity to apply for it. One effect of the appointment was that Mr Barker would now report to a general manager based in South Australia rather than a general manager who was based interstate.
Mr Barker said that Mr De Luca had, some years earlier, worked for Mr Formichella at NAB. That is incorrect and the basis upon which Mr Barker made that assertion is unclear. Of itself, one error of this nature may not be particularly significant, but it is one of a number of instances where Mr Barker was prepared to assert matters without carefully ensuring that he had a proper basis to do so. Mr Formichella had worked on the same floor at NAB as Mr De Luca. At no stage had Mr De Luca worked for Mr Formichella.
Mr Barker said that in July or August 2006 he and Mr De Luca had a telephone conversation about Mr Formichella’s appointment. During the conversation, Mr De Luca informed him that Mr Formichella had been appointed general manager of CFS in South Australia. Mr Barker was told that he would report to Mr Formichella. He said that Mr De Luca appeared nervous during the conversation. Mr Barker asked Mr De Luca what would happen to his role and he was told by Mr De Luca that his role and that of Mr Kimber would remain unchanged.
Mr Barker said that he was very disappointed by the decision to appoint Mr Formichella, as he had aspirations to that role. Nevertheless, he remained positive about his future with the Bank.
Mr Barker said that at about this time he was approached by a recruitment agent, Mr Steve Hull of Robert Walters Recruitment. Mr Hull asked him if he was interested in a comparable role at NAB, being a role as regional executive at the executive manager level for NAB’s central business district office for corporate banking. The role was a similar one to the role which Mr Barker occupied after the appointment of Mr Formichella, but prior to the appointment of Mrs Kylie Allen. Mr Barker said that he considered he would have had an excellent chance of securing the position as he was one of only a few people if not the only person in Adelaide managing a corporate banking team of approximately 50 people. The remuneration was similar, but the bonus potential was not as great. He said that as he had been assured by Mr De Luca that his role would not change, he decided not to pursue the opportunity with NAB.
Mr Barker did not call Mr Hull and the only evidence in relation to this opportunity to secure employment at NAB was that given by Mr Barker, as summarized above.
Mr De Luca gave his version of events leading up to his appointment of Mr Formichella and his telephone conversation with Mr Barker. He said that during his time as executive general manager of CFS (that is, mid-2006 to September 2010) he was based in Sydney, New South Wales. He was responsible for the overall management of the Bank’s CFS business throughout Australia. During his time as executive general manager of CFS, the section or unit employed approximately 1,000 employees. He was responsible for the overall strategic and operational management of CFS. He met regularly with each State’s general managers and the heads of other Bank Business Units.
Mr De Luca said that CFS provided banking services to clients with a turnover of upwards of $5 million to $10 million. CFS had approximately 20,000 clients in Australia.
Mr De Luca was appointed to his role as part of a plan by the Bank to improve the business banking area within the Bank. In mid-2006 the Bank was the last of the four major banks in terms of customer satisfaction and market share growth. Mr De Luca introduced changes in relation to culture, capability and structure.
Mr De Luca described the structure of CFS in mid-2006. Mr Tim Chilvers was responsible for the CFS units in Victoria, Tasmania, South Australia and Western Australia. Mr Chilvers was based in Victoria. Executive managers in the various States reported to him. Mr Barker was the executive manager for the South Australian metropolitan area.
Mr De Luca decided (with the approval of his line manager) to change the structure. He decided that Mr Chilvers would be responsible for Victoria and Tasmania and that he would appoint Mr Formichella to the position of manager for South Australia and the Northern Territory. He knew Mr Formichella because he had previously worked with him at NAB and he had a high regard for him. He approached Mr Formichella who agreed to accept the position. Mr Formichella was “head-hunted” and the position he secured was not advertised. Mr De Luca received advice from his line manager and the Human Resources Department of the Bank that he could proceed in that way. Mr Formichella commenced his employment with the Bank approximately two months after Mr De Luca had commenced as executive general manager of CFS. Mr De Luca spoke to a couple of people about potential candidates for the position and he said that Mr Barker was not considered appropriate for the position.
Mr De Luca contacted Mr Barker by telephone to advise him of his decision to appoint Mr Formichella. He said that he was not nervous and he did not anticipate that Mr Barker would be disappointed by the news. He told Mr Barker that his role would not change. He agreed in cross-examination he said something like “your position will remain unchanged”.
I accept Mr De Luca’s evidence as to the events leading up to his telephone conversation with Mr Barker. It will be seen from the above that there is very little difference between Mr Barker’s version of his telephone conversation with Mr De Luca and that of Mr De Luca. It does not really matter to the issues in this case whether Mr De Luca sounded nervous, but I would accept Mr De Luca’s evidence that he was not nervous. I found him to be generally more reliable than Mr Barker.
What in fact happened after Mr Formichella’s appointment was that the proposal to appoint a new area manager who would report to Mr Barker did not proceed. Rather, Mr Formichella decided to employ Mrs Allen to lead the team that, under the previous proposal, was to be led by the new area manager, and to have her (that is, Mrs Allen) report directly to him rather than to Mr Barker.
That had the consequence, according to Mr Barker, that what Mr De Luca said to him was misleading or deceptive, or liable to mislead or deceive, because although the nature of his role or position did not change or the nature of the responsibilities he discharged on a day-to-day basis did not change, there was a lessening of his responsibility and the “span” or degree of his control and the size of his team changed. Mr Barker agreed in cross-examination that he would not have complained about Mr De Luca’s statement had not his position been made redundant and his contract of employment terminated in March or April 2009.
Mr De Luca said that Mr Barker’s role as an executive manager who reported to a general manager did not change in the period between his telephone conversation with Mr Barker in July or August 2006 and Mr Barker’s redundancy in March 2009. Mr De Luca accepted that Mr Barker’s “span” of control and the size of his team was reduced between the point at which Mr Formichella commenced employment with the Bank and Mr Barker’s redundancy.
The employment of Mrs Allen
In August 2006, Mr Formichella commenced his employment with the Bank as general manager for CFS in South Australia and the Northern Territory.
Prior to his employment by the Bank, Mr Formichella had been employed by NAB in various roles for approximately 19 years. Immediately prior to August 2006, he had been employed by BankWest for about 15 months in the position of director of business development.
Prior to joining the Bank, Mr Formichella was aware that Mr Barker was managing the South Australian operation of CFS under the supervision of a general manager located in Victoria.
Mr Formichella said that in August 2006, there were 12 to 13 portfolios within CFS and a separate business banking team of about seven portfolios reporting to another executive manager. The business banking team was removed from the CFS Business unit during a restructure which took place in early 2008.
Shortly after he commenced his employment with the Bank, Mr Formichella noted a number of what he considered to be cultural problems within the CFS Business unit. First, a large number of employees complained to him about the existing work environment. Those complaints included complaints about the systems employees were required to use and the insufficiency of training and direction from managers. Mr Formichella said that he could not remember any positive comment. Secondly, Mr Formichella observed that Mr Barker had frequent contact with some of his staff members, but less frequent contact with others. His most frequent contact was with his better performing relationship executives and analysts. Thirdly, Mr Formichella was involved in or overheard numerous conversations among staff members where negative comments were made about the Bank, and other staff members, including Mr Barker. Fourthly, there were difficulties associated with a new credit management system which had been introduced and which was called ComSee Commercial Lending (CCL). Mr Formichella said that when he joined the Bank there were a number of new expectations and training initiatives which had been, or were being, introduced at the Bank. They were not, according to Mr Formichella, supported by Mr Barker. The CCL system was not being used when Mr Formichella joined CFS and many of the staff had not undertaken the required training. Mr Formichella said that a number of staff complained about using the CCL system and about new initiatives and expectations generally. Fifthly, Mr Formichella received reports that, on a number of occasions, Mr Barker and a group of other staff members would go to the Lion Hotel on Melbourne Street, North Adelaide, on a Friday night to have drinks, and that Mr Barker would often put his Bank credit card on the bar and pay for drinks for both staff and clients.
I accept Mr Formichella’s evidence as to the above matters. The significant point is not whether the culture was or was not poor which in a sense is a subjective matter, but that Mr Formichella perceived that there were significant cultural problems which needed to be addressed.
Mr Formichella said that Mr Barker did not assist him in settling into his new role or the CFS team.
After he had settled in, Mr Formichella formed the view that the team of relationship executives being managed by Mr Barker was too large. Ordinarily, an executive manager managed a team of between six and ten portfolios. Mr Barker was managing a team of between 12 or 13 portfolios. Mr Formichella also formed the view that CFS South Australia and the Northern Territory was writing new business which was well below the average for other similar business units in CFS. In October 2006, Mr Formichella decided that an additional executive manager who would report to him should be employed so as to ensure that all portfolios were adequately managed. In effect, CFS would be split into two teams. Mr Formichella spoke to Mr De Luca, who approved of Mr Formichella’s decision to employ an additional executive manager although, as Mr De Luca said, and I accept, the decision was one for Mr Formichella. Mr De Luca did not know Mrs Allen.
Mr Formichella said that he created the position which was filled by Mrs Allen in October 2006. Mr Barker submitted that I should reject that evidence. He contends that there was evidence of a long “lead in” time in relation to the creation of positions within the Bank. In addition, he referred to the detailed requirements of the policy documents dealing with the Design of Role and Appointment to Roles. I do not accept Mr Barker’s submission and I accept Mr Formichella’s evidence on this point. However, it is clear enough that on occasions the Bank departed from its own policies.
Mr Formichella set about taking steps to fill the position. He did not consider that any of the relationship executives were suitable for the role and he spoke to a couple of people outside the Bank, one of whom was Mrs Allen.
Mr Formichella had known Mrs Allen for several years. She had worked for him at NAB. Over a number of years he assisted Mrs Allen in her professional development while at NAB. His relationship with Mrs Allen was one of co-worker, mentor and friend. He also mentored five other staff members whilst working at NAB.
Mr Formichella considered that Mrs Allen was an extremely able manager who would assist in the cultural change needed at the Bank. He said that at NAB Mrs Allen had a strong track record of performance against revenue plans and customer satisfaction surveys. She had risk management experience at senior levels and had successfully led and mentored a team of over 40 retail banking staff for NAB’s premium Adelaide office.
Mrs Allen commenced her employment with the Bank in December 2006. Mrs Allen had been employed by NAB as a senior relationship manager in business banking at a level which was equivalent to level 2 at the Bank. Mr Barker had thought an area manager was to be appointed and he had interviewed a candidate for the position. Mr Barker said he had approval from his previous manager to appoint the candidate. Mr Formichella rejected this candidate.
There was another change at about this time in that Mr Wright, the other executive manager, was to report to Mr Formichella rather than Mr Barker.
The effect of these changes was that, by the end of 2006, Mr Barker was one of three level 3 executive managers, all of whom reported to Mr Formichella. As I have said, prior to that Mr Wright, albeit an executive manager holding a level 3 position, reported to Mr Barker and the proposal concerning the new area manager was that he or she would (albeit holding a level 3 position) report to Mr Barker. The business for which Mr Barker was ultimately responsible was now one third the size it had previously been.
Mr Formichella left it to Mr Barker to decide which portfolios would be allocated to Mrs Allen and which portfolios he retained. There was a dispute between the parties about whether Mr Barker split the portfolios evenly. He admitted that he allocated the relatively more junior relationship managers to the “other” team, which was the team he initially thought would be led by the proposed new area manager. Mr Formichella went further, claiming that not only did Mr Barker allocate to his team the more experienced and better-performing relationship executives and analysts, but that he also moved better-performing analysts away from an existing relationship executive, moving them to a relationship executive within his team. Furthermore, he retained the clients who, generally speaking, earnt the greatest revenue for the Bank. That meant that it was more difficult for Mrs Allen to generate revenue.
In general terms, I accept Mr Formichella’s evidence, although it is not possible for me to make precise findings as to the difference in the quality of the two teams. That matter was the subject of evidence at a very general level.
Mr Formichella was of the view that it would have required less effort on the part of Mr Barker’s team to meet its key financial performance indicators compared to Mrs Allen’s team and at a general level I accept that that view was justified.
The relationship between Mr Formichella and Mrs Allen
Mr Barker’s case is that Mr Formichella favoured Mrs Allen throughout the period that both he (that is, Mr Barker) and Mrs Allen were employed by the Bank. To establish this favouritism he called evidence of incidents which suggested a degree of closeness between Mr Formichella and Mrs Allen which, he said, went beyond a proper professional relationship and of acts of favouritism. On Mr Barker’s case the favouritism was relevant to Mr Formichella’s decision in approximately February 2009 to make Mr Barker’s position redundant rather than that of Mrs Allen.
Some of the acts of alleged favouritism involved both Mrs Allen and Mrs Albanese and so this section and the section involving Mrs Albanese ([137]-[164] below) overlap. The two sections should be read together.
There were a number of witnesses who gave evidence about these alleged incidents and acts of favouritism. The principal witness from Mr Barker’s side was probably Mrs Denise Kenmore.
I will set out a brief summary of the evidence of each of the main witnesses and then state my findings.
Mr Barker said that he observed the relationship between Mr Formichella and Mrs Allen during the first six months of Mrs Allen’s employment. The relationship was of concern to him. He said that he observed one to two hour meetings behind closed doors between Mr Formichella and Mrs Allen “most days”. He said that he did not have such meetings with Mr Formichella, and that in his experience at the Bank, such meetings were most unusual. Mr Barker said that Mrs Allen only ever spoke to him about business matters.
Mr Barker said that he also noticed after he had a meeting with Mr Formichella, there was, on almost every occasion, a meeting between Mr Formichella and Mrs Allen. He rarely had informal meetings with Mr Formichella and, after a time, he formed the view that Mr Formichella was favouring Mrs Allen, and that he was on the outer. Mr Barker went so far as to suggest that Mr Formichella would not make a decision without first speaking to Mrs Allen.
Mrs Kenmore said that in the early stages of her employment all went well, and after three months she was offered a permanent position. Mr Formichella told her that he needed someone to help with staff morale. She got on well with Mr Barker. Mrs Kenmore said that Mr Formichella and Mrs Allen would meet every day in a small meeting room off an open plan office and that the door would be closed. The meetings were at least an hour and could occur twice a day for a period of up to two hours. It was said that every meeting between Mr Barker and Mr Formichella would be followed by a meeting between Mr Formichella and Mrs Allen.
Mrs Kenmore gave evidence of various incidents which suggested to her that Mr Formichella and Mrs Allen were very close. She gave evidence of an event at a Signature dinner at the Wine Centre in November 2007. This was a networking dinner involving executives of the Bank and premium clients. Mrs Kenmore was talking to Mr Formichella’s wife, and Mrs Allen and Mrs Albanese, after initially proceeding towards her, changed direction when they saw Mr Formichella’s wife. Furthermore, Mrs Kenmore said that Mrs Allen and Mrs Albanese did not speak to Mrs Formichella during the dinner.
Mrs Kenmore said that at another time she noticed papers in the Bank’s offices showing Mr Formichella had increased Mrs Albanese’s bonus for the financial year ended 30 June 2007 at the expense of other team members. She said that Mrs Allen never brought in any business, whereas Mr Barker was active and did bring in new business.
Mrs Kenmore gave evidence to the effect that Mr Formichella had cancelled a meeting so that he could take Mrs Allen and Mrs Albanese out to lunch.
Mrs Kenmore said that Mr Formichella would always praise Mrs Allen, but would not praise Mr Barker. She gave evidence of a conversation she had with another Bank employee in about December 2007 when the employee related an incident to her which suggested a close personal relationship between Mr Formichella and Mrs Allen. She said that the Bank employee who was working out a period of notice left that day.
Mrs Kenmore also said that at various stages during her employment with the Bank Mr Formichella delegated access to his email account to Mrs Allen. She gave evidence of other events allegedly showing a closeness between Mrs Allen and Mr Formichella such as the latter’s enthusiasm to be in a photograph with Mrs Allen and an occasion when Mrs Allen bought a tie for Mr Formichella. She also said that they both “disappeared” from the office on at least two Friday afternoons. She also said that Mr Formichella and Mrs Allen did not support Mr Barker’s idea to entertain clients at the Adelaide Cup in 2008.
Mrs Kenmore said that in the early stages Mr Formichella and Mrs Allen spoke about Mr Barker in front of her and it was in a derogatory way “about his work, about his private life, and in general”.
It seems that Mr Formichella conducted a review of Mrs Kenmore’s performance on 31 January 2008. She left her employment with the Bank on the following day, that is, 1 February 2008. She told Mr Formichella that she would see him in court and she lodged a complaint against him in which she alleged that he had bullied her. At first instance, the complaint was dismissed. Mrs Kenmore pursued the matter and eventually the complaint was resolved.
Mrs Kenmore was subject to a vigorous cross-examination. It was put to her that she may have seen a delegation to Mrs Allen of Mr Formichella’s calendar but not his emails. She denied that. Mrs Kenmore agreed that there were rumours in the workplace that Mr Formichella and Mrs Allen were unusually close. She agreed that Mrs Formichella gave Mrs Allen a card and Christmas present in 2007. She agreed that Mr Barker told her that Mr Formichella and Mrs Allen did not like him and, I find, he told her that he thought they were having an affair.
Mrs Kenmore agreed that her statement that Mrs Allen did not bring any business into the Bank was based on her observations of what managers ordinarily do, rather than on any precise knowledge of the fact. She also agreed that it was an exaggeration to say Mr Formichella never praised Mr Barker; the more appropriate description was that he rarely did so.
I turn now to the evidence of Mrs Allen. She said that she and Mr Formichella had worked together at NAB and that he was her mentor at NAB over an extended period of time. She regarded him as her mentor and friend. Mr Formichella recruited Mrs Allen to the position at the Bank. He approached her in October 2006 and he wanted her to start before Christmas 2006. She was keen to move, but was concerned about losing a significant incentive bonus which she would do if she left NAB before the end of the calendar year. Mr Formichella, on behalf of the Bank, offered her a short term incentive bonus of a minimum of not less than $25,000 for the 2006/2007 performance year.
Mrs Allen said that she met Mr Barker in December 2006. The CFS portfolios for South Australia and the Northern Territory when she started were divided into two teams, one to be managed by Mr Barker and the other by her. Mrs Allen’s understanding was that prior to that there had been one team under Mr Barker and that he had been responsible for dividing the teams.
Mrs Allen’s opinion was that Mr Barker’s team was more senior and better performing than hers and he had “better performing portfolios, containing desirable clients”.
When Mrs Allen commenced her employment with the Bank, she and Mr Barker did not interact very much. She formed the view that Mr Barker was not happy with her appointment as an executive manager. Her lack of interaction with Mr Barker meant that in the first few months of her employment she often met with Mr Formichella to discuss issues relating to the operation of her team. The issues she discussed with Mr Formichella included issues of staff management, management of client credit and the manner in which she proposed to operate her team. Some issues could not be discussed in an open plan office, but could only be discussed in the privacy of a separate room.
Mrs Allen denied the suggestion that she avoided speaking to Mrs Formichella at the Signature dinner in November 2007. She said that she could not recall leaving the client Christmas function in 2008 with Mr Formichella and Mrs Albanese, and she could not recall them touching each other’s hands in the manner described by Mr Majstrenko in his statement and subsequently in his evidence (see [149] below).
Mrs Allen said she was given access to Mr Formichella’s emails by Mr Formichella when he went on leave in late 2008 and early 2009.
Mrs Allen denied a number of matters deposed to by Mrs Kenmore. She denied that Mr Formichella spoke to her after every meeting he had with Mr Barker. She denied ever buying Mr Formichella a tie during her employment by the Bank. She denied ever leaving work early on a Friday afternoon to go somewhere with Mr Formichella. Mrs Allen said that she had brought significant business to the Bank and she gave two clients as examples. Mrs Allen said that Mr Formichella praised Mr Barker far more frequently in leadership team meetings “when compared with how often he praised my efforts”.
Mrs Allen also denied a number of matters deposed to by Mr Barker. She did not agree that at the commencement of her employment Mr Barker made efforts to be friendly and make conversation. She denied that Mr Formichella consulted her with respect to all or most business decisions and she said that in fact he rarely did so. She said that she was not consulted about Mr Formichella’s decision to transfer Mrs Albanese from Mr Barker’s team to her team; she was notified that that was going to happen. Mrs Allen denied sitting at Mr Formichella’s table at the Signature dinner.
Mrs Allen agreed that initially her meetings with Mr Formichella were frequent. She agreed that Mrs Kenmore told her that there were rumours she and Mr Formichella were having an affair, but that was the first time she was made aware of such rumours.
Mrs Allen said that Mrs Albanese had worked for her as an analyst when she was a relationship executive at NAB. She said that she and Mrs Albanese were close friends. Mrs Albanese was transferred from Mr Barker’s team to her team about 6 or 7 months after she (Mrs Albanese) had started with the Bank.
Mrs Allen received a “sign-on” fee of $25,000 and a bonus of $25,000 in her first year (that is, mid 2007). She received $70,000 in the next year (that is mid 2008).
Mrs Allen was aware of hostility in the office towards those who had come in from NAB. Mrs Allen described the environment at NAB as far more ambitious, aggressive and high performing than the environment at the Bank when she first joined.
I turn now to Mr Formichella’s evidence. Mr Formichella described the meetings he had with Mrs Allen. He said that the CFS Business unit in Adelaide operates in an open plan office. Staff, including Mr Formichella, Mr Barker and Mrs Allen, sit at several large tables. It is not possible to have private conversations in such an area. There are a number of conference rooms where staff can have private conversations. Mr Formichella met regularly with Mrs Allen during the first couple of months of her employment. Their meetings were frequent and in some weeks they may have had daily meetings. Mrs Allen met with Mr Formichella because, according to Mr Formichella, there was no one else that she could speak to. Mr Formichella’s impression was that Mr Barker was not supportive of Mrs Allen.
Mr Formichella also had a number of meetings with Mr Barker in one of the conference rooms. He did not meet with Mrs Allen after every meeting he had with Mr Barker. Mr Formichella spoke to Mr Barker about the limits on the use of his bank credit card. At one point, Mr Formichella spoke to Mr Barker and warned him he would be forced to take his card away if he did not comply with the protocols relevant to the use of such cards.
Mr Formichella denied that he and Mrs Allen ever spoke about Mr Barker in a spiteful way. Mr Formichella said that he could not recall the “camera incident” ever occurring. Mr Formichella said that Mrs Allen never bought him a tie during his employment with the Bank. Mr Formichella said that he never left work early on a Friday to go somewhere with Mrs Allen, and he said that the inference that he did was “highly offensive”. Mr Formichella denied preparing a document which might be taken to suggest that Mrs Allen would be promoted and Mr Barker would be moved sideways. Mr Formichella said Mrs Allen did bring in new business without his assistance and he gave two examples. With respect to the “Adelaide Cup incident” Mr Formichella said that he did attend the Adelaide Cup and he paid for three tables.
Mr Formichella agreed that he had a practice of taking Mrs Allen and Mrs Albanese out to lunch on their respective birthdays. However, he never cancelled a meeting with a client in order to attend one of these lunches. Mr Formichella denied that he always praised Mrs Allen at weekly leadership team meetings and that he never bestowed any accolades on Mr Barker. Mr Formichella said that he had not been in an intimate position with Mrs Allen at a client Christmas function. Mr Formichella said that he did give Mrs Allen access to his emails in January 2008 as both he and Mr Barker were on leave and he wanted to ensure that his emails were dealt with appropriately. On returning from leave, Mr Formichella cancelled Mrs Allen’s access to his emails.
The Signature dinner in 2007 was held at the National Wine Centre. Mr Formichella said he did not sit at the same table as Mrs Allen and Mrs Albanese.
I turn now to the evidence of Mr Stegmeyer. He commenced his employment with the Bank in 2007 and throughout his employment he has worked as a relationships executive in the CFS team for South Australia and the Northern Territory. His position meant that he was responsible for managing the banking affairs of a portfolio of corporate clients. For the first six weeks of his employment, Mr Stegmeyer worked in the Adelaide office of CFS at 96 King William Street, Adelaide, and thereafter he worked at the office at Mawson Lakes.
Mr Barker was Mr Stegmeyer’s direct manager prior to the former’s redundancy in March 2009. Mr Stegmeyer had previously worked for NAB for 22 years in a variety of roles. He thought the atmosphere at the Bank was less formal and less professional than it had been at NAB. He said that in the first six weeks of his employment he saw Mr Barker and a number of relationship executives go out for lunch on a Friday, and then return to the office mid-afternoon apparently intoxicated. He thought that Mr Barker supported him in some ways and not in others.
Mr Stegmeyer said that rumours of a sexual relationship between Mr Formichella and Mrs Allen were common. He said that Mr Barker was critical of Mrs Allen’s ability as an executive manager when she was not present.
In December 2008, Mr Stegmeyer attended a Christmas function for relationship executives at a restaurant. Mr Barker was present. There was a conversation about a rumour that Mr Formichella and Mrs Albanese had been observed in a compromising position at the client Christmas function, “specifically, that they had been holding hands”.
The findings I make about the relationship between Mr Formichella and Mrs Allen are as follows. First, it is necessary to make findings relevant to context. I think Mr Formichella came to the Bank with quite definite views about what a proper professional culture was and was not. He considered that there needed to be considerable improvements to the culture and behaviours within the Bank’s CFS Business unit in Adelaide. He set about recruiting people who had similar views on those matters to his own. He employed Mrs Allen who was a good friend. He had overseen aspects of her professional development. I think that a cultural divide developed between Mr Formichella, Mrs Allen, Mrs Albanese and perhaps others on the one hand, and Mr Barker and his supporters on the other. Mr Formichella and Mrs Allen worked closely together and that led to rumours that they were in a relationship that went beyond a professional relationship.
I am not satisfied that there was a physical relationship between Mr Formichella and Mrs Allen. The evidence does not support such a conclusion even if I left the seriousness of such a finding out of account (s 140 of the Evidence Act 1995 (Cth)). They were good friends and they worked closely together. Mr Formichella encouraged Mrs Allen and approved of her behaviours. In the early stages of her employment Mr Formichella met with Mrs Allen in a small meeting room on a regular basis.
As to the specific incidents said to show the closeness of the relationship between Mr Formichella and Mrs Allen, I prefer their evidence to that of Mr Barker and Mrs Kenmore.
This was an area where Mr Barker’s evidence was not impressive. I thought he fenced with the cross-examiner when asked about his involvement in discussions concerning the relationship between Mr Formichella and Mrs Allen. I do not accept his evidence that almost every meeting he had with Mr Formichella was followed by a meeting between Mr Formichella and Mrs Allen, or that Mr Formichella would not commit to a decision without first speaking to Mrs Allen. Mr Barker had no basis for asserting that Mr Formichella and Mrs Allen interviewed Mrs Albanese before the latter was employed by the Bank. I deal with this topic in greater detail in the section set out below (at [135] and [136]). I find that Mrs Allen and Mrs Albanese did not sit at the same table as Mr Formichella at the Signature dinner. I reject Mr Barker’s evidence to the effect that they did. This is another example of Mr Barker either, at best, jumping to conclusions on the basis that he had seen them at the same table during the evening or, at worst, making statements without any reasonable basis.
I found Mrs Kenmore’s evidence in cross-examination about paragraph 10 of her first witness statement quite unsatisfactory. She was, as I have said, argumentative in cross-examination and at times antagonistic. I do not accept that, having regard to her duties at the Signature dinner in November 2007, she is able to say without any qualification that neither Mrs Allen nor Mrs Albanese spoke to Mrs Formichella during the evening. Nor do I accept her evidence that she is able to say that Mr Formichella met with Mrs Allen immediately after every meeting with Mr Barker. She denied that that was an exaggeration but I do not accept her denial. As I have said, she exaggerated when she said that Mr Formichella never gave Mr Barker any accolades or acknowledgements. She accepted that it was not accurate to say that Mrs Allen never brought in any new business and Mr Barker was always “out there”, bringing in new clients. In her opinion, it was more accurate to say Mr Barker was “actively seeking, engaged in clients” whereas Mrs Allen was not. In her written statement, Mrs Kenmore said that Mr Formichella did not attend the Adelaide Cup function in 2008. In her evidence, she said she did not know whether he attended the function.
The employment of Mrs Albanese
Mrs Albanese commenced her career in the banking industry in 2000 when she commenced employment with NAB. She worked in a variety of roles at NAB, including as business development manager in what is known as the major client group. She was on maternity leave in 2006.
Mr Formichella contacted Mrs Albanese in late 2006 and asked her whether she would be interested in joining CFS for South Australia and the Northern Territory as a relationship executive. Mr Formichella said, and I accept, that he was aware of Mrs Albanese’s reputation. He said that she was the highest writer of new business in the NAB business development team and that she had a good reputation both within NAB and within the Adelaide banking market. Mrs Albanese indicated that she was interested in being interviewed for the role.
Mr Formichella said, and I accept, that he raised the possible employment of Mrs Albanese with Mr Barker and he did that because if she was employed by the Bank she would be working in Mr Barker’s team. Mr Barker indicated that he would be happy to meet Mrs Albanese. On a day in January 2007, Mr Formichella and Mr Barker met with Mrs Albanese in a coffee shop on King William Street, Adelaide, for what was akin to an interview. After the meeting, Mr Formichella and Mr Barker had a conversation and Mr Barker indicated that he did not object to the employment of Mrs Albanese. Mrs Albanese was offered a position at the Bank, which she accepted. She began working in Mr Barker’s team as a relationship executive.
Although Mrs Albanese and Mrs Allen were friends, the latter had no involvement in Mrs Albanese’s recruitment to the Bank. Mr Barker said that Mr Formichella and Mrs Allen interviewed Mrs Albanese without consulting him. That was not the case and Mr Barker had no reasonable basis for making that assertion. Mr Barker said that Mrs Albanese was offered the position before he had any involvement. Again, that was not the case.
The relationship between Mr Formichella and Mrs Albanese
Mr Barker’s case is that Mr Formichella favoured Mrs Albanese as well as Mrs Allen. She, like Mrs Allen, was an ex-employee of NAB and he contends that after Mrs Albanese joined the Bank she, Mr Formichella and Mrs Allen were very close and Mr Formichella favoured both women.
Mr Barker’s evidence in support of these contentions was as follows.
Mr Barker said that Mrs Albanese commenced her employment with the Bank in January 2007 as a member of his team. He said that Mrs Albanese was paid more than other relationship managers, and this caused discontent among Mr Barker’s team. He noticed that Mr Formichella, Mrs Allen and Mrs Albanese were close.
Mr Barker’s team was slightly larger than Mrs Allen’s team. The new Business Banking Centre at Mawson Lakes was yet to be established. It opened in late 2007.
On 1 July 2007, Mrs Albanese was transferred from Mr Barker’s team to Mrs Allen’s team. Mr Barker said that he was upset about the way in which this was done, in that the proposed transfer was presented to him as a fait accompli by Mr Formichella and Mrs Allen. He complained privately to Mr Formichella about the way he had gone about it, and Mr Formichella apologised to him.
After the transfer of Mrs Albanese, the two teams were about the same size pending the opening of the new Business Banking Centre at Mawson Lakes.
Towards the end of the financial year ended 30 June 2007, the question of bonuses to be paid to members of CFS Adelaide was considered. Mr Barker recommended to Mr Formichella that Mrs Albanese receive a bonus of $15,000. In fact, she received a bonus of $20,000 which, when annualised (she had worked for the Bank for 5.26 months), was a figure of $45,627. That was 76 per cent of her bonus potential. Had Mrs Albanese worked for the full year and received $45,627, that would have been the highest bonus in amount paid to the relationship managers and the highest percentage of bonus potential paid to executive managers and relationship managers. By contrast, Mr Barker received $50,000 for the 12‑month period which was 34 per cent of his bonus potential. Mrs Allen received a bonus of $55,000 which, when annualised (she had worked for the Bank for 6.87 months), was $96,069. That was 73.9 per cent of her bonus potential. Each of Mr Barker, Mrs Allen and Mrs Albanese had received a “Meets Expectations” performance rating. Four relationship managers had received an “Exceeds Expectations” performance rating. One of the executive managers had an “Exceeds Expectations” performance rating. Mr Barker complained to Mr Formichella about the increase in Mrs Albanese’s bonus.
Mr Barker said that Mr Formichella was directing any new business he picked up to Mrs Albanese.
Mr Barker said that at the Signature dinner in November 2007 Mr Formichella, Mrs Allen and Mrs Albanese sat at the same table with two or three clients whereas other managers and employees were spread out among the clients. As I have already said, that was not the case.
In early 2008, Mrs Albanese was selected to participate in a programme for emerging leaders. The programme was designed to develop managers into executives. Mr Barker said that he was not asked to nominate anyone for the programme from his team. He thought that there were managers who had performed better than Mrs Albanese. He also thought that he deserved the opportunity to participate in the programme.
In December 2008, the Bank held a Christmas function for clients on the third floor balcony of its business premises in King William Street, Adelaide. Mr Barker said that Mr Formichella, Mrs Allen and Mrs Albanese were “as normal, not far from each other and all left at the same time”. Furthermore, Mr Barker said that he observed the three of them “spending some time deep in discussion inside the building away from the party”.
A week or so after this function, Mr Barker held a lunch for his managers. One of the relationship managers in his team, a Mr Schaedel, “raised a question of observed familiarity between Mr Formichella and Mrs Albanese at the Christmas function”. A short time after the lunch, Mr Barker went on leave. When he returned, Mrs Albanese raised with him the fact that she had heard that one of his team was spreading rumours of an inappropriate incident between her and Mr Formichella at the Christmas function. Mr Barker said that he would speak to Mr Schaedel and he subsequently did.
In support of his case as to the “hand touching” incident between Mr Formichella and Mrs Albanese, Mr Barker called Mr Majstrenko. Mr Majstrenko said that he was at a bank function for clients on 3 December 2008. He said that he and others saw Mr Formichella touching Mrs Albanese’s hand as they walked down a glass walkway with Mrs Allen. It was more than an “innocent accidental touch”. Mr Majstrenko identified Mr Schaedel and Mr Perkins as others who witnessed the incident. Neither of them was called as a witness.
I have already set out my conclusions with respect to Mr Majstrenko’s evidence (at [8] above).
I will address each of the matters identified by Mr Barker and set out my findings. As I have said, I accept Mrs Albanese’s evidence, and, on these matters, the evidence of Mr Formichella. I also accept the evidence of Mr De Luca in so far as it is relevant. The evidence of these witnesses was straightforward whereas I thought Mr Barker’s evidence was not impressive. His evidence about whether he commented to others about the friendly relationship between Mr Formichella and Mrs Allen was not straightforward. Mrs Albanese’s evidence about her conversations with Mr Barker was far more convincing than that of Mr Barker. Furthermore, there were matters where Mr Barker’s lack of recollection was surprising. Two examples are the transfer of clients in and out of Mrs Albanese’s “portfolio” and whether Mr Barker had had conversations with others, such as Mr Majstrenko and Mr Wiles, about the alleged inappropriate hand contact.
As to the transferring of clients out of the portfolio assumed by Mrs Albanese, I find that a number of good clients of the Bank were transferred out of that portfolio and into the portfolios of other relationship executives within Mr Barker’s team; in return a number of less attractive clients (from the Bank’s point of view) were transferred into the portfolio of Mrs Albanese. Mrs Albanese raised that matter with Mr Barker, and although she agreed that he was supportive, she, in fact, lost a further client who was transferred from her portfolio to the “Private Bank” area on the instructions of the departing relationship executive. I note that Mr Barker acknowledged that Mrs Albanese had been given a composite portfolio built from clients relocated from a number of portfolios in her performance review for the year ended 30 June 2007.
Mrs Albanese complained to Mr Formichella. She told Mr Formichella that a number of larger, more profitable clients had been moved from her portfolio and distributed to the portfolios of other relationship executives in Mr Barker’s team. Furthermore, less profitable clients had been transferred to her portfolio. That was done without any reference to Mr Formichella or Mrs Albanese.
Mr Formichella told Mrs Albanese that he could not do anything about it as the clients had already been advised of their new relationship executive. Mr Formichella met with Mr Barker and told him that no more less profitable clients were to be transferred into Mrs Albanese’s portfolio. Mr Barker said he was not aware of the transfers and he told Mr Formichella that he would look into the issue.
As to the transfer of Mrs Albanese from Mr Barker’s team to Mrs Allen’s team, it seems that Mrs Albanese was not satisfied with how the matter had been resolved. Her discontent may have been fuelled by the fact that she was excluded by the other relationship executives in Mr Barker’s team. At all events, she complained to Mr Formichella and said she was considering leaving the Bank. Mr Formichella met with Mr Barker again and he told Mr Barker that he was going to transfer Mrs Albanese from his team to Mrs Allen’s team. That occurred in July 2007.
As to her relationship with Mr Formichella and Mrs Allen, Mrs Albanese did not deny that they got on well together. They had birthday lunches, but Mrs Albanese denied, and I accept her evidence, that no meetings were cancelled as a result of the fact that they clashed with birthday lunches.
As to the payment of bonuses to Mrs Albanese (and Mrs Allen), and, in particular, the bonuses paid for the financial year ended the 30 June 2007, Mr De Luca explained the system. He said that he approved all performance bonuses paid to members of CFS. He could not remember the position regarding the payment of bonuses for South Australia and the Northern Territory for the financial year ended 30 June 2007. However, he gave evidence by reference to his knowledge of the standard practice. With respect to payment of bonuses to team members below executive managers, the latter would make a recommendation to Mr Formichella as to the payment of bonuses. Mr Formichella could amend a recommendation at his discretion. Mr Formichella made recommendations as to the payment of bonuses to executive managers. All recommendations were then put before Mr De Luca.
Mr Formichella said that he was required to determine an appropriate bonus payment for Mrs Allen for the 2006/2007 financial year. On 31 October 2006, he had sent her a letter guaranteeing that she would receive a bonus of no less than $25,000 in respect of the 2006/2007 financial year. He decided to award Mrs Allen a bonus of $55,000. He was also required to review Mr Barker’s recommended bonus payment for Mrs Albanese. He decided to award Mrs Albanese a bonus payment of $20,000. In both cases, neither employee had been employed by the Bank for the full financial year. Nevertheless, Mr Formichella awarded their bonus payment on the basis that they had been employed with the Bank for the full financial year. Mr Formichella’s reason for awarding bonuses to Mrs Allen and Mrs Albanese was that they would both have been entitled to shares and/or cash by way of bonuses had they remained with NAB. Mrs Allen would have been awarded a bonus of at least $47,000 combined in cash and shares if she had stayed with NAB until Christmas 2006. In addition, Mrs Allen had improved her team’s behaviours and this was recognised in her performance review for the period 1 January 2007 to 30 June 2007. In the case of Mrs Albanese, she had forfeited about $17,000 worth of shares in electing to commence employment with CBA rather than stay with NAB. In addition, she had performed well as is shown in her performance review for the period 22 January 2007 to 30 June 2007.
As to the assertion that Mr Formichella was directing any new business he picked up to Mrs Albanese, between July 2007 and December 2007 Mr Formichella directed one client to Mrs Albanese and that was a client she had previously dealt with at NAB. Mrs Albanese secured this business opportunity and brought a significant amount of business into the Bank. Mr Barker’s evidence that Mr Formichella was “directing the majority of new business opportunities” to Mrs Albanese is incorrect.
As to the table seating at the Signature dinner in November 2007, I have already made findings about that matter. Mrs Albanese said, and I accept, that she spoke to Mrs Formichella on several occasions during the evening and that at no time did she and Mrs Allen try and avoid Mrs Formichella in the manner described by Mrs Kenmore.
I do not need to discuss these obstacles any further because Mr Barker’s case fails at a factual level. On any view, it would only be a serious breach of the policy which could amount to breach. Mr Formichella, Mrs Allen and Mrs Albanese were good friends who shared a common belief as to the appropriate culture in the Bank. I have set out my findings as to the relationship between Mr Formichella and Mrs Allen ([128]-[132]). I find that Mr Formichella’s decision to make Mr Barker’s position redundant was made in good faith in a commercial context and having regard to, among other things, subjective elements such as behaviours. That cannot be a serious breach of the policy.
Mr Barker claims that the Bank breached its Redeployment Policy by not giving him advice before 2 March 2009 of the likelihood of redundancy or possible retrenchment. Even if that was established as a matter of fact, which for reasons given below, it is not, Mr Barker never made clear what followed from the alleged breach. There is no evidence of Mr Barker foregoing an opportunity to secure employment with an outside organisation at about this time, and it is not clear that the Bank was bound to engage in the redeployment process before an employee’s position had been made redundant.
As to whether the Redeployment Policy was breached as a matter of fact prior to 2 March 2009, the possibility of redundancies resulting from the segmentation exercise was known in 2008, and by February 2009, it was known by the steering committee of the segmentation exercise that there would be redundancies and retrenchments. Mr Barker was identified as a member of “Impacted Staff” in Mr Formichella’s email to Mr De Luca dated 3 February 2009. It is not clear on the evidence precisely when Mr De Luca and Mr Formichella made the decision that Mr Barker would be made redundant.
Mr Barker appeared to suggest that by at least February 2009 he had been identified for retrenchment, and that the Bank had no intention of redeploying him. I am not prepared to draw that inference. It is true that the Bank anticipated that not every person would be redeployed but I do not think that one can move from that proposition to the proposition that the Bank never intended to redeploy Mr Barker. I am not prepared to accept that the Bank’s statements on 2 March 2009 (both written and oral) that its preference was to redeploy Mr Barker and the efforts that it did make were a mere sham. Furthermore, I am not satisfied that Mr Barker was not given the earliest practicable advice of his redundancy. Mr Davis said that there were 38 redundancies across the business. He explained the reasons why the redundancies were announced in the way in which they were. There was a reasonable basis for the Bank to proceed in the way in which it did.
I take a different view with respect to the period after 2 March 2009.
The first time the Bank contacted Mr Barker and raised with him the possibility of an alternative role within the Bank was on 26 March 2009. That was over three weeks after he had been asked to clear out his desk, and less than a week before the exit date proposed by Mr Davis in his email dated 20 March 2009 and not received by Mr Barker before 23 March 2009 (that is, 30 March 2009). That was also in a context where, on 2 March 2009, Mr Barker had been told that if he could not be redeployed then his termination date would be 30 March or 2 April 2009. The failure to contact Mr Barker earlier appears to have been because of a breakdown in communication between two sections or units of the Bank (Human Resources and Career Support) about where Mr Barker could be contacted. Whatever the reason, it is the lack of communication with Mr Barker which is significant. When Mr Barker was contacted on 26 March 2009, the particular position drawn to his attention was one which, in Adelaide at least, he was unlikely to secure. Having regard to the earlier meeting between Ms Taylor, Mr Formichella and Mr van Lierop, and Mr Formichella’s view, it was very unlikely that the Bank was going to give the position to Mr Barker. I am not prepared to say that the Bank’s conduct was a sham, but on any view, Mr Barker was very unlikely to secure the position. As far as the provision of a Career Circular is concerned that falls well short of engaging in any meaningful way in the redeployment process. Furthermore, the fact that Mr Barker’s solicitors were threatening legal action at the same time did not relieve the Bank of its obligations under the Redeployment Policy.
I should also note that I do not consider that Mr Davis’s statement at the end of his email to Mr Barker dated 7 March 2009 amounts to the Bank taking a positive step to fulfil its obligations under the Redeployment Policy.
In terms of particular matters in the Redeployment Policy, there was no consultation with Mr Barker, the possibility of retraining was not raised or discussed with Mr Barker, advice about redeployment options and process was not sought by Mr Formichella and there was no redeployment plan developed or implemented.
On the other hand, Mr Barker himself did very little in terms of taking what the Bank’s letter of 2 March 2009 referred to as, “proactive steps in seeking redeployment”. It is necessary to consider whether his lack of activity affected the Bank’s obligations in some way. In his evidence, he sought to explain his inactivity in various ways. I think all of his explanations came back to a view on his part that the Bank was not genuine in stating that it wished to redeploy him. He referred to Mr Formichella’s statement on 2 March 2009 that he was not seen as part of the business going forward, the fact that he had been asked to leave the Bank on 2 March 2009 and felt that he had been dismissed, and the fact that he considered that the Career Support section would contact him. He said that he did not apply for the service excellence position once he heard from Ms Adlem that on 31 March 2009 Ms Breccia had referred him back to the business, that is to say, to Mr Formichella.
In other circumstances, inactivity by an employee might excuse the Bank from taking any steps, or any further steps after a certain point, under its Redeployment Policy. However, I think that the significant circumstances in this case are that Mr Barker, an employee of the Bank for approximately 27 years, was advised that his position was redundant and asked to leave the Bank and return items associated with his employment on the very day he was given such advice. Furthermore, his access to the Bank’s intranet and email facilities were immediately withdrawn. In that context, although it was not incumbent on the Bank to redeploy Mr Barker, it was incumbent on it to take timely and meaningful steps to comply with its own policy. It did not do that. It did not contact Mr Barker because of an internal error. When it did contact him, it was very late in the piece. I accept that by 31 March 2009, it was reasonable for Mr Barker to consider that there were no reasonable prospects of redeployment.
The Bank’s almost total inactivity within a reasonable period means that its breach of its Redeployment Policy was a serious breach and that it was in breach of the implied term of mutual trust and confidence.
Did the Bank’s serious breach of its Redeployment Policy cause loss or damage to Mr Barker?
Mr Barker submits that I should find on the balance of probabilities that, had the Bank complied with its Redeployment Policy, he would have been redeployed and he claims loss and damage on that basis. Alternatively, he claims damages for the loss of a chance to be redeployed.
Mr Barker identified four possible redeployment opportunities. They were as follows:
(1) The service excellence position in Adelaide, South Australia;
(2)Executive manager or area manager of the Business Banking Centre at Mawson Lakes;
(3) Executive manager within the Agribusiness section of the Bank; and
(4)The executive manager positions Australia-wide shown on the printout, which is Exhibit A5.
As to the service excellence position in Adelaide, South Australia, I am not satisfied that it was likely Mr Barker would have secured that position even if the Bank had complied with its Redeployment Policy. The Bank was seeking a sales coach and its preference was for a person with experience in the Cohen-Brown methodology. Mr van Lierop had those qualifications and he secured the position. I am satisfied on the evidence that he was a superior candidate.
As to the executive manager or area manager of the Business Banking Centre at Mawson Lakes, the facts with respect to the position of area manager can be simply dealt with. First of all, that would have been a significant demotion for Mr Barker. More importantly, the position of area manager was occupied by Mr Morris. As to the position of executive manager it is clear that in February 2009 Mr Formichella was considering the appointment of an executive manager to Mawson Lakes. Ultimately, that did not proceed and Mr Formichella said an executive manager was not appointed to Mawson Lakes until 2011. He denied that he had held off making the appointment because of Mr Barker’s claim against the Bank. As I have said, I have considered his denial very carefully and I accept it. There was no executive manager position at Mawson Lakes during March and April 2009.
As to an executive manager’s position in the Agribusiness section of the Bank, it is necessary to consider the evidence of Mr Dale Champion.
Mr Champion joined the Bank in mid-2004 and left in March 2010. He now works for a business called Agrify, which he described as “an agriculturally focussed strategy, finance and capital consultancy operation with several partners”. During his employment by the Bank, Mr Champion was part of the Bank’s Agribusiness team. In early 2005, he was state manager for SA and the NT, and in 2007, he became general manager for SA, NT and WA. In the second half of 2008, he was acting executive general manager for the Bank’s Agribusiness operations. On 12 December 2008, it was agreed that a specific focused unit within the broader Agribusiness operations should be devoted to corporate level agricultural opportunities. Mr Champion set the requirements for the Bank’s Agribusiness stream, and he was surprised neither Mr De Luca nor Mr Formichella raised Mr Barker’s availability with him. He said that Mr De Luca was aware of the expansion of the corporate level agricultural stream and the need to identify suitable staff by reason of his participation in meetings in 2008 and 2009. He said that Mr Formichella was also aware of the expansion by reason of his attendance at State leadership meetings. Mr De Luca said that he could not recall his mentoring relationship with Mr Champion involving any discussion of staff recruitment in Agribusiness. Mr Champion agreed in cross-examination that he did not discuss individual recruitment with Mr De Luca.
Mr Champion said that based on his knowledge and understanding of Mr Barker’s background, experience and capability he anticipated that he would have been an ideal candidate for the Bank’s “prospective Corporate Agricultural endeavour”. Early in 2009, the Agribusiness section sought and secured employees for the various locations. Mr Champion said the following in his written statement:
12.The decision that we would require staff in the Agribusiness Solutions Unit was made in December 2008.
13.In March or April Brendan White took up the Executive General Manager position that I had been filling in for, and I continued in my General Manager position. From this point the structure and positions had been resolved and we were actively seeking the right people.
14.In about early 2009 Wayne Buchback was appointed in Queensland from within the CBA to the position with the title of Senior Manager or similar, within the Specialised Agribusiness Solutions Unit. In late 2009 Richard Brimblecomb was also appointed in Queensland to a similar position. Both were of EM equivalent level.
15.In about August or September 2009 we hired Michael O’Connell who was external to the Bank to a similar position in Sydney, and also in August or September hired Ewan Laughlin who was external to the Bank to the same level position in Melbourne.
16.We were actively seeking to appoint people from early 2009 to these positions. They were only filled later in 2009 as this is when we were able to identify and attract the right people.
Mr Champion corrected some of the dates in those paragraphs in his oral evidence. The date in paragraph 14 was in fact about October 2008 and he was not sure of the date for Mr Brimblecomb.
Mr Champion expressed the view that it was highly likely he (Mr Barker) would have been appointed to the position in Melbourne subsequently occupied by Mr Laughlin had he known that he was available at the time. He said that the position filled by Mr Laughlin could have been performed from Adelaide.
Mr Champion was taken to exhibit A5 which is a list of all roles that were advertised on the bank’s recruitment system for the period of 1 January 2009 to 30 June 2009. He agreed that none of the roles were for executive management roles in agribusiness.
As counsel for the Bank correctly pointed out, Mr Champion’s evidence must be seen in the context that he had not worked with Mr Barker and had limited knowledge of his abilities, and a number of the positions he referred to were not available in March and April 2009.
Nevertheless, the evidence of Mr Champion and the positions shown in Exhibit A5 satisfy me that, had the Bank made a timely and genuine effort to comply with its Redeployment Policy, Mr Barker would have been advised of a position or positions for which he may have been considered suitable.
As to the positions shown on Exhibit A5, most of the positions were located interstate. The Bank submitted they and the positions in Agribusiness should not be taken into account because Mr Barker was most unlikely to move interstate. The basis for this submission was what Mr Barker told Mr De Luca in April 2008 about moving interstate (see [167] above) and the fact that, after he had left the Bank and was considering a position in Western Australia, he wanted to commute rather than move there permanently. As to the former matter, there is a significant difference between moving interstate from an existing position of employment and moving interstate to retain employment. Mr Barker’s attitude to moving interstate for employment is relevant, but I do not think one can say it meant that there was no prospect that he would be redeployed.
The Bank was not obliged to redeploy Mr Barker. The Bank was not obliged to keep Mr Barker on for an indefinite period in order to see if he could be redeployed. Nor was it required to exclude from its decision-making broader commercial considerations. Mr De Luca and Mr Formichella had concerns about Mr Barker’s behaviour. There were a limited number of positions and many of them were interstate. For these reasons, I am not satisfied on the balance of probabilities that had the Bank followed its Redeployment Policy Mr Barker would have been redeployed.
At the same time I am not satisfied that Mr Barker’s chances of redeployment were so insubstantial that they should be ignored (Sellars v Adelaide Petroleum NL (1994) 179 CLR 332 at 349 per Mason CJ, Dawson, Toohey and Gaudron JJ).
In Commonwealth of Australia v Amann Aviation Pty Ltd (1991) 174 CLR 64, Brennan J (as his Honour then was) said (at 103-104):
In T.C. Industrial Plant, the second contract was almost certain to follow on successful performance of the first contract, but the underlying principle does not depend on the certainty of securing a second contract. Certainty is relevant to the value of the opportunity of obtaining a profitable engagement under a second contract, but the benefits to which a plaintiff is entitled under a contract may include an uncertain prospect of obtaining such an engagement provided the prospect is sufficiently substantial to stamp it as a real commercial advantage. The relevant principle is that when performance of a contract by a defendant (including the permitting of the plaintiff to perform his obligations under the contract) would have resulted in the plaintiff’s acquiring a particular commercial advantage but the advantage is lost by reason of the defendant’s breach, the loss of the advantage is compensable and its value is to be taken into account in assessing a plaintiff’s damages. If the advantage in question is a certain opportunity to secure a profitable second contract, the profits of the second contract can be recovered. Such an advantage is worth more than a merely preferential chance of securing such a contract but such a chance, like the chance in Chaplin v Hicks, has a value and the loss of the chance is a proper subject of compensatory damages.
It is difficult to assess Mr Barker’s chances of redeployment. Doing the best I can and having regard to the evidence I have identified and the matters in paragraph 368, I assess the chance of redeployment at 25 per cent.
The quantification of the loss or damage
Mr Crump was not required for cross-examination. His calculations are set out in Exhibit A16. On the basis of Mr Crump’s calculation I accept that past economic loss is in the order of $110,000 after taking into account the termination payment received by Mr Barker and the consultancy fees he has earned. Future economic loss to age 60 years is $1,484,000, and to age 65 years is $1,833,000. Mr Barker suggests a 30 per cent reduction to take account of residual earning capacity. It is difficult to be precise but events between March 2009 and trial suggest that a figure in the order of 30 per cent is reasonable. If an average of the two figures is taken and then reduced by 30 per cent then the figure reached is in the order of $1,160,000.
It is true, as the Bank submitted, that there is no evidence from Mr Barker as to when he intended to retire and that the written contract of employment provided that he could retire after attaining the age of 55 years. Nevertheless, I do not think it unreasonable to proceed on the basis of a retirement age of between 60 years and 65 years. In fact, I would be disposed to adopt the higher age. However, rather than do that I will adopt Mr Barker’s approach because I must also take into account, as counsel for the Bank pointed out, earlier termination of employment under clause 6 of the written employment contract or its equivalent.
In my opinion, Mr Barker is entitled to damages for economic loss of $317,500 being 25 per cent of $110,000 plus $1,160,000.
In addition to economic loss, Mr Barker seeks to recover what he referred to as general damages for hurt, distress and loss of reputation, and aggravated damages for the manner of his dismissal. As to general damages for hurt and distress, I do not think such damages are recoverable. The Redeployment Policy discloses an intention to benefit both the employer and employee. There is not, as Mr Barker suggests, an unambiguous intention to create the policies in order to give employees “peace of mind”: compare Baltic Shipping Co v Dillon (1993) 176 CLR 344; Quinn v Gray (2009) 184 IR 279 and Wilcox J in Nikolich v Goldman Sach JB Were Services Pty Ltd [2006] FCA 784 at [317]. For example, as counsel for Mr Barker pointed out in closing submissions, in addition to the obvious benefit it confers on employees who find their role has been made redundant, the Redeployment Policy benefits the employer as it ensures a redundancy payment will not have to be paid in circumstances where another suitable position exists.
Mr Barker is not entitled to damages for loss of reputation as a result of a breach of the implied term of mutual trust and confidence. On the facts of this case, any injury to Mr Barker’s reputation in the eyes of future employers (of which there is no evidence) must necessarily flow from the fact of the dismissal, rather than the manner in which it was carried out: compare Malik v Bank of Credit and Commerce International SA (in liq.) [1998] AC 20. While the Bank’s conduct in requiring Mr Barker to leave the premises on the day of the meeting was no doubt severe, the Bank was entitled to take such steps. The contract provided a right of termination on four weeks’ notice or four weeks’ pay in lieu. It was not for Mr Barker’s colleagues, clients or the banking industry to know that the Bank had not made such a payment to Mr Barker. As such, and on the basis of the authorities, this is not an appropriate case for an award of damages for loss of reputation to be made: Addis v Gramophone Co Ltd [1909] AC 488 (“Addis v Gramophone”); Russell v The Trustees of the Roman Catholic Church for the Archdiocese of Sydney (2008) 72 NSWLR 559 (see Basten JA at [63]-[65]).
Mr Barker is not entitled to aggravated damages. Addis v Gramophone is authority for the proposition that the absence of any element of damage at large will preclude an award of aggravated damages for breach of contract. In any event, and as I have indicated, although the conduct of the Bank in requiring Mr Barker to leave the premises on the day of the meeting was severe, there was no suggestion that this conduct was lacking in bona fides, improper or unjustifiable: Triggell v Pheeney (1951) 82 CLR 497. Such decisions whilst not common, were by no means uncommon.
THE CLAIM UNDER THE TRADE PRACTICES ACT
Mr Barker’s case is that Mr De Luca’s representation to him in July or August 2006 was misleading or deceptive, or likely to mislead or deceive. He claims damages under s 82 of the Trade Practices Act 1974 (Cth) (“Trade Practices Act”).
Mr Barker relies on ss 52, 53B and 51A of the Trade Practices Act. At the relevant time, s 53B was in the following terms:
A corporation shall not, in relation to employment that is to be, or may be, offered by the corporation or by another person, engage in conduct that is liable to mislead persons seeking the employment as to the availability, nature, terms or conditions of, or any other matter relating to, the employment.
Mr Barker’s case does not fall within the terms of this section. The statement by Mr De Luca was not in relation to employment that was to be, or may be, offered by the Bank to him as the person seeking the employment. Nor, having regard to the terms of Mr Barker’s written employment contract, which simply referred to Mr Barker being employed as an executive of the Bank, can it be said that the appointment of Mr Formichella, and then of Mrs Allen, amounted to a variation of his contract of employment.
To fall within the terms of subs 52(1) of the Trade Practices Act, Mr Barker must show that the Bank, in trade or commerce, engaged in conduct that was misleading or deceptive or was likely to mislead or deceive. He claims that Mr De Luca’s representation was with respect to a future matter and that s 51A is relevant. That section was in the following terms:
(1)For the purposes of this Division, where a corporation makes a representation with respect to any future matter (including the doing of, or the refusing to do, any act) and the corporation does not have reasonable grounds for making the representation, the representation shall be taken to be misleading.
(2)For the purposes of the application of subsection 1 in relation to a proceeding concerning a representation made by a corporation with respect to any future matter, the corporation shall, unless it adduces evidence to the contrary, be deemed not to have had reasonable grounds for making the representation.
(3)Subsection 1 shall be deemed not to limit by implication the meaning of a reference in this Division to a misleading representation, the representation that is misleading in a material particular or conduct that is misleading or likely or liable to mislead.
Mr Barker must establish (among other things) that Mr De Luca’s representation was made in “trade or commerce”. The meaning of this phrase was considered by the High Court in Concrete Constructions (NSW) Pty Ltd v Nelson (1990) 169 CLR 594. Mason CJ, Deane, Dawson and Gaudron JJ noted that s 52 provided that the conduct to which the section referred must be “in” trade or commerce. That was to be contrasted with s 51(1) of the Constitution which refers to “with respect to” trade or commerce. Their Honours went on to say that, as a matter of language, the phrase was capable of a broad construction and a narrow construction. The broad construction would mean that the phrase encompassed “conduct in the course of the myriad of activities which are not, of their nature, of a trading or commercial character, but which are undertaken in the course of, or as incidental to, the carrying on of an overall trading or commercial business”. The narrow construction meant that the phrase would include only conduct “which is itself an aspect or element of activities or transactions which, of their nature, bear a trading or commercial character” (at 602-603). Their Honours held that the narrow construction was the proper construction. They said (at 603-604):
Indeed, in the context of Part V of the Act with its heading ‘Consumer Protection’, it is plain that section 52 was not intended to extend to all conduct regardless of its nature, in which a corporation might engage in the course of, or for the purposes of, its overall trading or commercial business. Put differently, the section was not intended to impose, by a side wind, an overlay of Commonwealth law upon every field of legislative control in which a corporation might stray for the purposes of, or in connection with, carrying on its trading or commercial activities.
In Houghton v Arms (2006) 225 CLR 553, the High Court considered the proper construction of “in trade or commerce” in s 9 of the Fair Trading Act 1999 (Vic). In that case, employees of a corporation made representations to clients of the corporation. The employees did not themselves engage in trade or commerce. The corporation by which they were employed did engage in trade or commerce. The question was whether the employees could be held personally liable for misleading or deceptive conduct or conduct likely to mislead or deceive. The Court held that they could. Their Honours said (at 565 [34]):
Moreover, in his judgment in Concrete Constructions, Toohey J emphasised that, while in most cases, the focus would be on the nature of the business of the party making the representation, section 52 was not so limited; in particular, the section did not, in terms, refer to the trade or commerce of any particular corporation. Accordingly, statements made by a person not himself or herself engaged in trade or commerce may answer the statutory expression if, for example, they are designed to encourage others to invest, or to continue investments, in a particular trading entity.
(Citations omitted.)
In this case, Mr De Luca’s conduct is not towards a person with whom the Bank has or may have dealings in the course of those activities or transactions which, of their nature, bear a trading or commercial character. Houghton v Arms does not assist Mr Barker because Mr De Luca’s statement was not made to a person who had dealings with the Bank in the course of those activities of the Bank which bear a trading or commercial character.
The facts of this case are very different from the facts which I considered in Crossman v Taylor(No 3) [2011] FCA 734 at 249-262 (see also the Full Court in Taylor v Crossman (No 2) (2012) 199 FCR 363 at 32-53).
The facts in this case bear some similarities to those in Martin v Tasmania Development and Resources (1999) 163 ALR 79. In that case an employee’s contract of employment was subject to one month’s notice of termination. The employee’s contract was terminated immediately, although the employer purported to give the employee a payment in lieu of notice. One of the issues before Justice Heerey was whether the applicant had a claim under s 52 of the Trade Practices Act on the basis that the employer’s letter of termination was misleading in its assertion as to the reason for the termination. Justice Heerey held that the statement was not made in trade or commerce. He disagreed with the decision of Wilcox J in Patrick v Steel Mains Pty Ltd (1987) 77 ALR 133 and he said (at 98 [77]):
But in any event I would respectfully disagree with Wilcox J. Patrick and the other authorities referred to by his Honour were all before the decision of the High Court in Concrete Constructions. The majority in that case clearly rejected the wider construction of ‘in trade or commerce’, which would extend to virtually any activity of the corporation. It is true that a building company could not earn income unless it had workers who had received instructions from foremen. But that was not enough to bring the alleged representation within the concept of ‘trade or commerce’. Similarly, TDR could not carry out its activities of promoting Tasmanian trade and development (which activities themselves I assume for present purposes to be in trade or commerce) unless it engaged staff. Nevertheless, such engagements and the necessary associated incidental negotiations, however necessary, are not in themselves of a trading or commercial character. They are internal affairs of TDR.
I would apply similar reasoning in this case and hold that Mr De Luca’s statement was not made in trade or commerce within s 52 of the Trade Practices Act, and that Mr Barker’s claim under that section must fail.
In any event, it seems to me that the representation made by Mr De Luca was of a more limited scope than that asserted by Mr Barker. It went no further than conveying the meaning that Mr Barker would remain as an executive manager in charge of a team. I do not think it conveyed a meaning that Mr Barker would be in charge of a particular number of employees or that another person or persons might not, in the future, be appointed as an executive manager. It did not convey the meaning that there would be no changes in the structure around Mr Barker in the future. In those circumstances, it seems to me that Mr De Luca had reasonable grounds for the representation he made.
Furthermore, the evidence of loss or damage is virtually non-existent. I mean by that, that even if, contrary to my earlier findings, the other elements of Mr Barker’s Trade Practices Act case were made out, there is virtually no evidence of what Mr Barker lost by not pursuing the inquiry about employment with NAB. After he left the Bank, Mr Barker made applications for employment with NAB, but failed the psychometric test. There is no evidence as to whether such a test was administered by NAB in 2006. I do not need to examine this question any further because of my earlier conclusion.
CONCLUSION
Mr Barker is entitled to judgment against the Bank in the sum of $317,500. I will hear the parties as to interest and costs.
I certify that the preceding three hundred and eighty-eight (388) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Besanko. Associate:
Dated: 3 September 2012
- AGLC
- Barker v Commonwealth Bank of Australia [2012] FCA 942
- Case
- [2012] FCA 942
- Decision Date
CaseChat Overview and Summary
The central legal issues addressed by the court included whether Mr Barker's termination was wrongful and if his subsequent inability to secure full-time employment was causally linked to his departure from the bank. Additionally, the court had to assess the quantum of damages, if any, that Mr Barker was entitled to claim for economic loss, general damages, and aggravated damages. The court had to evaluate the credibility of Mr Barker's evidence and the weight to be given to the documentary evidence and witness testimonies.
The court found that Mr Barker's claims of wrongful termination were unsubstantiated. It concluded that the evidence did not support Mr Barker's assertion that he was dismissed due to his opposition to certain practices within the bank. The court also noted that Mr Barker's claims of significant economic loss and other damages were not adequately supported by evidence. Although the court found Mr Barker to be a credible witness in some respects, it identified areas where his evidence was unreliable or exaggerated. The court ultimately awarded Mr Barker a sum of $317,500 in damages, reflecting the limited impact of his claims on his career prospects.
The court ordered that the Commonwealth Bank of Australia pay Mr Barker $317,500 in damages, with further hearings to determine the interest and costs associated with the judgment.
Orders
Orders of the court
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Background
Background to the litigation
Evidence
Evidence Before The Court
Decision
Reasons for decision
Ratio Decidendi
Legal Principle Established
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