Murphy v Westpac Banking Corporation

[2014] FCA 1104

FEDERAL COURT OF AUSTRALIA

Murphy v Westpac Banking Corporation [2014] FCA 1104

Citation:

Murphy v Westpac Banking Corporation [2014] FCA 1104

Parties:

LOUISE MURPHY v WESTPAC BANKING CORPORATION
STUART MOORE v WESTPAC BANKING CORPORATION
DANIELLE LAVARS v WESTPAC BANKING CORPORATION
COREY WITTENBERG v WESTPAC BANKING CORPORATION
WILLIAM LAWSON v WESTPAC BANKING CORPORATION
LUCKY POULOS v WESTPAC BANKING CORPORATION
PAUL SMITH v WESTPAC BANKING CORPORATION

File number(s):

NSD 1157 of 2009, NSD 384 of 2010, NSD 31 of 2010, NSD 90 of 2010, NSD 690 of 2010, NSD 1980 of 2011, NSD 1839 of 2011

Judge:

GRIFFITHS J

Date of judgment:

14 October 2014

Catchwords:

CONTRACTS – contracts of employment – misleading or deceptive conduct – ss 52 and 53B of Trade Practices Act 1974 (Cth) – retention incentive scheme – whether employer disclosed true nature of scheme to employees – whether alleged non-disclosure of scheme amounted to deceit or negligence on part of employer – whether employee enjoyed contractual rights to bonus or incentive – relevance of discretion to award bonus or incentive – whether implied term that such discretion cannot be exercised capriciously, arbitrarily or unreasonably – whether withholding of incentives from employees a discretion so exercised – whether implied term of mutual trust and confidence – application of Commonwealth Bank of Australia v Barker [2014] HCA 32; (2014) 88 ALJR 84 – whether scheme induced employees not to seek alternative employment – whether incentives available to employees upon retrenchment

CONTRACTS – contracts of employment – seconded employees – application and interpretation of secondment policy – whether seconded employees in temporary or permanent position

CONTRACTS – contracts of employment – termination – whether reasonable notice given – meaning of “reasonable notice” – whether change in employee duties over time effects contractual variation of notice provisions – application of Quinn v Jack Chia (1991) 1 VR 567

CONTRACTS – contracts of employment – wrongful dismissal claims – whether employer redundancy policy forms part of terms and conditions of contract of employment – construction and interpretation of redundancy policy – whether application of policy varies over time – whether employee secondment affects application of redundancy policy – whether payment in lieu of notice acceptable

DAMAGES – measure of damages – breach of contract of employment – damages in respect of contractual bonuses – quantification of the value of a lost opportunity

TORTS – negligence – whether representatives of employer owed duty of care to employees – whether employer acted with reasonable care – quantification of loss on the part of employee

Legislation:

Evidence Act 1995 (Cth) s 128(1)(a)
Federal Court of Australia Act 1976 (Cth) s 51A
Trade Practices Act 1974 (Cth) ss 52, 53B

Cases cited:

Agricultural and Rural Finance Pty Ltd v Gardiner [2008] HCA 57; (2008) 238 CLR 570
Banditt v The Queen [2005] HCA 80; (2005) 224 CLR 262
Barker v Commonwealth Bank of Australia [2012] FCA 942; (2012) 229 IR 249
Buckingham v Pan Laboratories (Australia) Pty Ltd(in liq) [2004] FCA 102; (2004) 136 FCR 102
Clark v Nomura International Plc [2000] IRLR 766
Coloca v BP Australia Ltd  (1992) 2 VR 441
Commercial Union Assurance Company of Australia Ltd v Ferrcom Pty Ltd (1991) 22 NSWLR 389
Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64
Commonwealth v Murray [1988] Aust Torts Reports 80-207
Commonwealth Bank of Australia v Barker [2013] FCAFC 83; (2013) 214 FCR 450
Commonwealth Bank of Australia v Barker [2014] HCA 32; (2014) 88 ALJR 84
Concrete Constructions (NSW) Pty Ltd v Nelson (1990) 169 CLR 594
Derry v Peek (1889) 14 App Cas 337
Eshuys v St Barbara Ltd [2011] VSC 125; (2011) 205 IR 302
Fryar v System Services Pty Ltd [1996] IRCA 209; (1996) 137 ALR 321
Goldman Sachs JBWere Services Pty Ltd v Nikolich [2007] FCAFC 120; (2007) 163 FCR 62
Hawkins v Clayton (1988) 164 CLR 539
Horkulak v Cantor Fitzgerald International [2005] ICR 402
Howard Smith Co Ltd v Varawa (1907) 5 CLR 68
Jones v Dunkel (1959) 101 CLR 298
Krakowski v Eurolynx Properties (1995) 183 CLR 563
Maggbury Pty Ltd v Hafele Australia Pty Ltd [2010] HCA 70; (2001) 210 CLR 181
Martin v Tasmania Development and Resources [1999] FCA 71; (1999) 163 ALR 79
Nocton v Lord Ashburton [1914] AC 932
Quinn v Jack Chia (1991) 1 VR 567
Re Galaxy Media Pty Ltd [2001] NSWSC 917; (2001) 167 FLR 149
Reynolds v Southcorp Wines Pty Ltd [2002] FCA 712; (2002) 122 FCR 301
Riverwood International Australia Pty Ltd v McCormick [2000] FCA 889
Rogangardiner v Woolworths Ltd [2012] WASCA 31; (2012) 218 IR 417
Silverbrook Research Pty Ltd v Lindley [2010] NSWCA 357
Tan v Benkowic [2000] NSWCA 295; (2000) 51 NSWLR 292
Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52; (2004) 219 CLR 165
Trend Management Limited v Borg (1996) 40 NSWLR 500
Yousif v Commonwealth Bank of Australia [2010] FCAFC 8; (2010) 193 IR 212
Walker v Andrew [2002] NSWCA 214; (2002) 166 IR 380
Walker v Citigroup Global Markets Pty Ltd [2005] FCA 1678; (2005) 226 ALR 114
Walker v Salomon Smith Barney Securities Pty Ltd [2003] FCA 1099; (2003) 140 IR 433

Macken, The Law of Employment (7^th ed)
Trindade, Cane and Lunney, The Law of Torts in Australia (4^th ed, Oxford University Press)

Dates of hearing:

27, 28 and 29 August 2012, 3, 4, 5, 6, 10, 11, 12, 13, 17, 18, 19, 20, 21, 25 and 27 September 2012, 20, 21 and 22 February 2013

Date of last submissions:

8 March 2013

Place:

Sydney

Division:

GENERAL DIVISION

Category:

Catchwords

Number of paragraphs:

1297

Counsel for the Applicants:

Mr AJ Sullivan QC, Mr J Gleeson SC and Mr I Neil SC with Mr D O'Dowd and Mr Y Shariff

Solicitor for the Applicants:

Gillis Delaney

Counsel for the Respondent:

Mr N Hutley SC with Mr M Steele and Ms J Seymour

Solicitor for the Respondent:

Allens

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION	NSD 1157 of 2009

BETWEEN:	LOUISE MURPHY Applicant
AND:	WESTPAC BANKING CORPORATION Respondent

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION	NSD 384 of 2010

BETWEEN:	Stuart Moore Applicant
AND:	WESTPAC BANKING CORPORATION Respondent

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION	NSD 31 of 2010

BETWEEN:	Danielle Lavars Applicant
AND:	WESTPAC BANKING CORPORATION Respondent

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION	NSD 90 of 2010

BETWEEN:	Corey Wittenberg Applicant
AND:	WESTPAC BANKING CORPORATION Respondent

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION	NSD 690 of 2010

BETWEEN:	William Lawson Applicant
AND:	WESTPAC BANKING CORPORATION Respondent

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION	NSD 1980 of 2011

BETWEEN:	Lucky Poulos Applicant
AND:	WESTPAC BANKING CORPORATION Respondent

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION	NSD 1839 of 2011

BETWEEN:	Paul Smith Applicant
AND:	WESTPAC BANKING CORPORATION Respondent

JUDGE:	GRIFFITHS J
DATE OF ORDER:	14 OCTOBER 2014
WHERE MADE:	SYDNEY

THE COURT ORDERS THAT:

1.The parties are to seek to agree proposed short minutes of order which give effect to these reasons for judgment and also deal with costs by 11 November 2014.

2.If agreement cannot be reached, the parties should file and serve by 11 November 2014 their respective proposed short minutes of order together with an outline of written submissions in support, which are to be in normal font and format and must not exceed 20 pages. 

3.The parties should indicate in their outline of written submissions whether or not they request a further oral hearing before final orders are made. 

4.Liberty to apply on the giving of 48 hours’ notice.   

Note:Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION	NSD 1157 of 2009

BETWEEN:	LOUISE MURPHY Applicant
AND:	WESTPAC BANKING CORPORATION Respondent

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION	NSD 31 of 2010

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION	NSD 384 of 2010

BETWEEN:	Stuart Moore Applicant
AND:	WESTPAC BANKING CORPORATION Respondent

BETWEEN:	Danielle Lavars Applicant
AND:	WESTPAC BANKING CORPORATION Respondent

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION	NSD 90 of 2010

BETWEEN:	Corey Wittenberg Applicant
AND:	WESTPAC BANKING CORPORATION Respondent

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION	NSD 690 of 2010

BETWEEN:	William Lawson Applicant
AND:	WESTPAC BANKING CORPORATION Respondent

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION	NSD 1980 of 2011

BETWEEN:	Lucky Poulos Applicant
AND:	WESTPAC BANKING CORPORATION Respondent

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION	NSD 1839 of 2011

BETWEEN:	Paul Smith Applicant
AND:	WESTPAC BANKING CORPORATION Respondent

JUDGE:	GRIFFITHS J
DATE:	14 OCTOBER 2014
PLACE:	SYDNEY

REASONS FOR JUDGMENT

PART 1: Introduction

1. These proceedings involve claims by seven former employees of St George Bank (SGB) against Westpac Banking Corporation (Westpac), which formally merged with SGB on 1 March 2010.  The proposed merger was announced in May 2008.  As will emerge below, it set in train a series of events over the ensuing two years which give rise to the applicants’ complaints relating to their employment with SGB. 

2. Although there are important factual differences between the individual circumstances of each of the applicants, there is a considerable overlap in some of their claims, which are all employment-related. The claims arise under various causes of action, including in contract, the torts of deceit and negligence, as well as misleading or deceptive conduct under the Trade Practices Act 1974 (Cth) (the TPA).  The proceedings were all heard together.  It is convenient to publish reasons for judgment which cover all seven applications. 

3. In broad terms, and putting to one side for the moment the fact that not every applicant makes the same claims, the following primary allegations are made:

   (a)Westpac is liable to pay damages, including exemplary damages, because by letters dated 18 June 2008 which were sent to all the applicants (together with other SGB employees who were identified as SGB’s most valuable employees), misrepresentations were made concerning the true target for the payment of a retention incentive. It is claimed that the misrepresentations created an inducement for each of the relevant applicants to remain in SGB’s employ throughout the merger process, with the result that, when each of their employment relationship with SGB ultimately ceased (for one reason or another), they had missed the opportunity for alternative employment which had earlier been available to them. The relevant applicants rely on causes of action in contract, deceit, negligence and misleading or deceptive conduct in respect of the retention incentive.  For convenience, these claims will be referred to as “the retention incentive scheme claims”;

   (b)SGB breached the individual contracts of employment of some of the applicants by:

   (i)failing to pay those applicants bonuses under various SGB bonus schemes which were known as the Treasury Incentive Plan (the TIP), the Medium Term Treasury Incentive Plan (the MTIP), the Divisional Incentive Plan (the DIP) (which applied to Mr Poulos alone) and the Short Term Incentive Annual Opportunity (the STIA) (which applied to Ms Murphy alone);

   (ii)not giving some of the applicants reasonable notice of the termination of their contracts of employment with SGB (the wrongful dismissal claim(s)); and

   (iii)failing to calculate and pay some of the applicants the correct severance payment to which they were entitled when they were made redundant.

4. With one exception, Westpac defends all these causes of action.  The exception relates to the claims in contract concerning non-payment of the retention incentive.  Although these claims were initially denied by Westpac in its filed defence, the claims were conceded by it before the hearing started.  The Court was informed that Ms Lavars and Messrs Moore and Poulos already have verdicts on their contract claims in the amounts of the sums individually promised to them under the retention incentive scheme, but costs are reserved.  Ms Murphy and Messrs Lawson, Smith and Wittenberg seek a verdict to the same amount in respect of their contract claims.  All the applicants say that the Bank’s belated concession should attract costs consequences and they seek to be heard on that matter.  They have foreshadowed that they will seek indemnity costs. 

5. The trial was conducted over a period of approximately seven weeks.  The parties tendered approximately 1500 pages of documents.  Twenty-six lay witnesses gave evidence (and most were cross-examined).  Three expert witnesses gave evidence and participated in a concurrent evidence session.  The applicants’ closing written submissions (including their written reply) totalled 374 pages.  Westpac’s closing written submissions totalled 489 pages.  The parties handed up supplementary notes and/or submissions which totalled almost 200 pages.  There were 2,057 pages of transcript. 

6. It is convenient to now outline in more detail the lay evidence and claims made by the seven individual applicants, then outline Westpac’s lay evidence before summarising the expert evidence.  I will then describe the key issues and summarise the parties’ respective submissions before setting out my consideration and determination of all relevant matters. 

7. Accordingly, these reasons for judgment are structured as follows.

PART 1: Introduction........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........	[1]
PART 2: William Lawson........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ..	[8]
Mr Lawson’s promotion in 2006........ ........ ........ ........ ........ ........ ........ ........ ........ .....	[13]
The merger announcement and its effect on Mr Lawson........ ........ ........ ........ .....	[19]
Mr Janschek’s evidence concerning alternative employment opportunities for Mr Lawson........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........	[22]
Mr Lawson is invited to participate in SGB’s retention incentive scheme........ .	[25]
Mr Lawson’s secondment to Westpac........ ........ ........ ........ ........ ........ ........ ........ ....	[29]
The application of SGB’s redundancy policies to Mr Lawson........ ........ ........ ....	[30]
Cross-examination of Mr Lawson........ ........ ........ ........ ........ ........ ........ ........ ........ ..	[44]
PART 3: Danielle Lavars........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .	[53]
Ms Lavars’ work at Westpac........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .	[64]
Ms Lavars’ desire to return to SGB after 12 months at Westpac........ ........ .......	[79]
Termination of Ms Lavars’ employment........ ........ ........ ........ ........ ........ ........ .......	[85]
Ms Lavars’ understanding about SGB bonuses........ ........ ........ ........ ........ ........ ...	[86]
Cross-examination of Ms Lavars........ ........ ........ ........ ........ ........ ........ ........ ........ ..	[88]
Broad outline of Ms Lavars’ claims........ ........ ........ ........ ........ ........ ........ ........ .......	[93]
PART 4: Stuart Moore........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .......	[95]
Mr Moore’s secondment to Westpac........ ........ ........ ........ ........ ........ ........ ........ ......	[103]
The exchange of letters dated 24 December 2009........ ........ ........ ........ ........ ........ .	[121]
Performance management counselling of Mr Moore from late 2009 onwards..	[125]
Termination of Mr Moore’s employment........ ........ ........ ........ ........ ........ ........ ......	[126]
Mr Moore’s understanding of SGB’s bonus system........ ........ ........ ........ ........ .....	[129]
Cross-examination of Mr Moore........ ........ ........ ........ ........ ........ ........ ........ ........ ....	[137]
Re-examination of Mr Moore........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .	[145]
Broad outline of Mr Moore’s claims........ ........ ........ ........ ........ ........ ........ ........ ......	[146]
PART 5: Louise Murphy........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ......	[150]
Ms Murphy’s work after SGB........ ........ ........ ........ ........ ........ ........ ........ ........ ........	[171]
Retention Incentive Scheme........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ....	[178]
Cross-examination of Ms Murphy........ ........ ........ ........ ........ ........ ........ ........ ........ ..	[185]
Broad outline of Ms Murphy’s claims........ ........ ........ ........ ........ ........ ........ ........ ....	[202]
PART 6: Lucky Poulos........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........	[204]
Cross-examination of Mr Poulos........ ........ ........ ........ ........ ........ ........ ........ ........ ....	[228]
Broad outline of Mr Poulos’ claims........ ........ ........ ........ ........ ........ ........ ........ ........	[234]
PART 7: Paul Smith........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ......	[235]
Mr Smith’s oral evidence in chief........ ........ ........ ........ ........ ........ ........ ........ ........ ...	[242]
Mr Smith’s secondment to Westpac........ ........ ........ ........ ........ ........ ........ ........ .......	[256]
Cross-examination of Mr Smith........ ........ ........ ........ ........ ........ ........ ........ ........ .....	[264]
Broad outline of Mr Smith’s claims........ ........ ........ ........ ........ ........ ........ ........ .......	[266]
PART 8: Corey Wittenberg........ ........ ........ ........ ........ ........ ........ ........ ........ ....	[268]
Mr Wittenberg’s oral evidence in chief........ ........ ........ ........ ........ ........ ........ ........ ..	[308]
Cross-examination of Mr Wittenberg........ ........ ........ ........ ........ ........ ........ ........ ....	[324]
Re-examination of Mr Wittenberg........ ........ ........ ........ ........ ........ ........ ........ ........ .	[349]
Broad outline of Mr Wittenberg’s claims........ ........ ........ ........ ........ ........ ........ ......	[354]
PART 9: Applicants’ OTHER LAY Witnesses........ ........ ........ ........ ........ ....	[356]
A. Peter Fitzgerald........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ...	[357]
Cross-examination of Mr Fitzgerald........ ........ ........ ........ ........ ........ ........ ........ ......	[368]
Mr Fitzgerald’s involvement in the recruitment of some of the applicants........ ...	[377]
Re-examination of Mr Fitzgerald........ ........ ........ ........ ........ ........ ........ ........ ........ ...	[391]
B. Ian Hamilton........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........	[393]
Cross-examination of Mr Hamilton........ ........ ........ ........ ........ ........ ........ ........ .......	[417]
C. Scott Wilson........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .	[427]
Cross-examination of Mr Wilson........ ........ ........ ........ ........ ........ ........ ........ ........ ...	[433]
D. Matthew Barron........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ..	[436]
E. Elvio Bechelli........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........	[439]
Cross-examination of Bechelli........ ........ ........ ........ ........ ........ ........ ........ ........ .......	[441]
F. Barbara Wittenberg........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ....	[442]
G. Simon Ling........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ...	[444]
PART 10: Westpac’s lay Witnesses........ ........ ........ ........ ........ ........ ........ .....	[449]
A. Sarah Elliott........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .	[450]
Cross-examination of Ms Elliott........ ........ ........ ........ ........ ........ ........ ........ ........ ....	[462]
B. Susan Gilbert-Davies (nee Hayes)........ ........ ........ ........ ........ ........ ........ ........ ......	[499]
Cross-examination of Ms Gilbert-Davies........ ........ ........ ........ ........ ........ ........ ......	[502]
C. Paul Fegan........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ....	[505]
Cross-examination of Mr Fegan........ ........ ........ ........ ........ ........ ........ ........ ........ ....	[517]
D. Brendan Doyle........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .....	[526]
Cross-examination of Mr Doyle........ ........ ........ ........ ........ ........ ........ ........ ........ .....	[536]
E. Julie Silvera........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ..	[559]
Cross-examination of Ms Silvera........ ........ ........ ........ ........ ........ ........ ........ ........ ...	[566]
F. Graeme Edie........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .	[576]
Cross-examination of Mr Edie........ ........ ........ ........ ........ ........ ........ ........ ........ .......	[585]
G. Michael Barbour........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .	[591]
Cross-examination of Mr Barbour........ ........ ........ ........ ........ ........ ........ ........ ........ .	[595]
H. Alison Burgess........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .....	[599]
I. Igor Boulaevski........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .....	[603]
J. John Eggins........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ...	[605]
K. Donna Ward........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........	[607]
PART 11: EXPERT EVIDENCE........ ........ ........ ........ ........ ........ ........ ........ ........ .......	[610]
Challenge to Mr Fisher’s qualifications........ ........ ........ ........ ........ ........ ........ ........ .	[613]
A. Mr Gaston........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ....	[617]
B. Ms Andersen........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........	[621]
C. Ms Mackie........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ....	[627]
D. Joint Report........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .	[633]
(i) Mr Lawson and Mr Smith........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ..	[651]
(ii) Mr Wittenberg........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ..	[661]
Cross-examination of the experts........ ........ ........ ........ ........ ........ ........ ........ ........ .......	[677]
Conclusions on the Expert Evidence........ ........ ........ ........ ........ ........ ........ ........ ......	[686]
PART 12: OUTLINE OF THE KEY ISSUES AND THE parties’ submissions........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .....	[688]
Summary of key issues and submissions of the applicants...	[690]
A. The Retention Incentive Scheme........ ........ ........ ........ ........ ........ ........ ........ ........	[690]
(i) The TPA claim........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ...	[695]
(ii) The claim in deceit........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ...	[707]
(iii) Exemplary Damages........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .......	[720]
(iv) The claim in negligence........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ...	[723]
B. Treasury Incentive Plan........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ......	[724]
C. The Medium Term Investment Plan........ ........ ........ ........ ........ ........ ........ ........ .	[736]
D. The Short Term Incentive Annual Opportunity........ ........ ........ ........ ........ ......	[746]
E. The Divisional Incentive Plan........ ........ ........ ........ ........ ........ ........ ........ ........ .....	[747]
F. Wrongful Dismissal and Reasonable Notice of Termination of Employment	[750]
(i) Mr Lawson’s particular circumstances........ ........ ........ ........ ........ ........ ........ .....	[752]
(ii) Mr Moore’s particular circumstances........ ........ ........ ........ ........ ........ ........ .....	[757]
(iii) Mr Wittenberg’s particular circumstances........ ........ ........ ........ ........ ........ .....	[758]
(iv) Mr Poulos’ particular circumstances........ ........ ........ ........ ........ ........ ........ ......	[759]
(v) Ms Lavars’ particular circumstances........ ........ ........ ........ ........ ........ ........ .......	[760]
(vi) Ms Murphy’s particular circumstances........ ........ ........ ........ ........ ........ ........ ...	[761]
G. Secondment of Ms Lavars and Mr Moore........ ........ ........ ........ ........ ........ ........	[764]
H. Severance claims, including the meaning of “pay” in the HR Express Redundancy Policy........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ...	[772]
Summary of key issues and submissions of ........ ........ ........ ........ ........ ........ ........ ...	[781]
A. The Retention Incentive Scheme........ ........ ........ ........ ........ ........ ........ ........ ........	[781]
(i) The TPA claim........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ...	[782]
(ii) The claim in deceit........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ...	[792]
(iii) The claim negligence........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .......	[797]
B. Treasury Incentive Plan........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ......	[801]
C. The Medium Term Investment Plan........ ........ ........ ........ ........ ........ ........ ........ .	[809]
D. The Short Term Incentive Annual Opportunity........ ........ ........ ........ ........ ......	[811]
E. The Divisional Incentive Plan........ ........ ........ ........ ........ ........ ........ ........ ........ .....	[812]
F. Wrongful Dismissal and Reasonable Notice of Termination of Employment	[814]
G. Secondment of Ms Lavars and Mr Moore........ ........ ........ ........ ........ ........ ........	[817]
(i) Ms Lavars........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ..	[818]
(ii) Mr Moore........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .	[825]
H. Severance claims, including the meaning of “pay” in the HR Express Redundancy Policy........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ...	[829]
PART 13: CONSIDERATION........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ...	[831]
A. The Retention Incentive Scheme........ ........ ........ ........ ........ ........ ........ ........ ........	[831]
Genesis of the retention incentive scheme........ ........ ........ ........ ........ ........ ........ .....	[832]
Preparation and dissemination of the 18 June 2008 letters........ ........ ........ ........ ..	[846]
(i) The TPA........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .....	[896]
(ii) Deceit........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........	[907]
(a) There was an awareness of the risk that the recipients of the letters would be misled in respect of a critical or key matter........ ........ ........ ........ ........ ........ .....	[909]
(b) There was a preparedness to take that risk because of the balancing exercise between SGB’s interest in preserving confidentiality and the interests of the recipients of the letter........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ....	[912]
(c) In fact, no instructions were given to Ms Gilbert-Davies to send out the scripts and/or no steps were taken to finalise the draft scripts........ ........ ........ ....	[917]
(d) There was a failure to check or ensure that the scripts had been sent out...	[922]
(e) The proposed face to face or “love-in” meetings between Mr Fegan and the recipients were cancelled........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ......	[923]
(f) The failure to enquire as to whether the steps of the implementation plan had been carried out, such as whether the face to face meetings with GEMs had occurred........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ..	[925]
(g) There was a failure to enquire as to whether the oral correction process had been undertaken after Mr Bechelli inquired as to the true target figure........ ....	[930]
(h) There was a failure to make enquiries after complaints were made to the Bank in November 2008........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........	[933]
(i) Ms Elliott’s response to Mr Curtis’ enquiries in November 2008........ ........ ..	[935]
(j) Ms Elliott’s unreasonable belief that employees who did not know the true target would make enquiries as invited in the last paragraph of the 18 June 2008 letters........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .....	[940]
(k) It was unreasonable to believe that the delivery of the 18 June 2008 letters was a reliable way of recording that the true target had been communicated as planned........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ...	[943]
(l) Ms Elliott’s unreasonable belief that her communication plan would be implemented without any follow-up by her, when she was new to SGB and had little knowledge of the reliability and capability of those to whom she was entrusting the task........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .	[946]
(m) Ms Elliott’s evidence was implausible as to the reasons why she did not follow-up to check whether the implementation plan had been followed........ ...	[948]
(iii) Negligence........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ......	[953]
B. The Treasury Incentive Plan........ ........ ........ ........ ........ ........ ........ ........ ........ ......	[961]
(i) Is there substance in the Bank’s pleading objection?........ ........ ........ ........ .....	[963]
(ii) Did the TIP have contractual force and effect?........ ........ ........ ........ ........ .....	[967]
(i) Corey Wittenberg........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ......	[988]
(ii) Paul Smith........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .......	[1006]
(iii) William Lawson........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ......	[1017]
(iv) Stuart Moore........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ...	[1032]
(v) Danielle Lavars........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........	[1039]
(c) Did the Bank breach any express or implied terms relating to the TIP?......	[1044]
(i) Corey Wittenberg........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ......	[1049]
(ii) Paul Smith........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .......	[1059]
(iii) William Lawson........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ......	[1067]
(iv) Stuart Moore........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ...	[1074]
(v) Danielle Lavars........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........	[1079]
(iv) Damages for breach of contract........ ........ ........ ........ ........ ........ ........ ........ .....	[1084]
C. The Medium Term Incentive Plan........ ........ ........ ........ ........ ........ ........ ........ .....	[1086]
(a) Unvested shares 2007/2008........ ........ ........ ........ ........ ........ ........ ........ ........ .....	[1090]
(b) MTIP 2008/2009........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ......	[1105]
(c) MTIP 2009/2010........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ......	[1109]
D. Ms Murphy’s Claims Concerning the STIA........ ........ ........ ........ ........ ........ .....	[1110]
E. Mr Poulos’ Claims Concerning the DIP........ ........ ........ ........ ........ ........ ........ ....	[1115]
(a) Which version of the DIP Rules applied in 2008/2009 and did the Rules have contractual force and effect?........ ........ ........ ........ ........ ........ ........ ........ .......	[1117]
(b) Were the DIP rules for 2008/2009 varied by statements made to Mr Poulos?........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........	[1129]
(c) Did Mr Barbour’s assessment of Mr Poulos comply with the DIP rules?....	[1134]
(d) Calculation of any damages for breach of contract........ ........ ........ ........ .......	[1144]
F. Wrongful Dismissal and Reasonable Notice of Termination of Employment	[1145]
(i) Mr Lawson, Mr Poulos and Ms Murphy........ ........ ........ ........ ........ ........ ........ ...	[1146]
(ii) Mr Wittenberg........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ..	[1158]
(iii) Ms Lavars........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........	[1171]
(iv) Mr Moore........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .	[1177]
G. Secondment of Ms Lavars and Mr Moore to Westpac........ ........ ........ ........ ....	[1190]
Ms Lavars’ Secondment to Westpac........ ........ ........ ........ ........ ........ ........ ........ .....	[1191]
(a) Was the Secondment Policy incorporated into Ms Lavars’ contract of employment?........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ..	[1192]
(b) What is the relevance, if any, of the October 2009 amendments to the Secondment Policy?........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ......	[1206]
(c) Did the 2008 Secondment Policy apply to the position to which Ms Lavars was appointed at Westpac in December 2008?........ ........ ........ ........ ........ ........ ....	[1214]
(d) Did SGB breach Ms Lavars’ contract of employment when it refused to end her secondment after she had worked at Westpac for 12 months?........ ........ .....	[1228]
(e) Is Ms Lavars entitled to an award of damages and, in what amount?........ ..	[1229]
Mr Moore’s secondment to Westpac........ ........ ........ ........ ........ ........ ........ ........ .....	[1247]
(a) Was the Secondment Policy incorporated into Mr Moore’s contract of employment?........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ......

(b) What is the relevance, if any, of the October 2009 amendments to the Secondment Policy?........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ......	[1267]
(c) Did the 2008 Secondment Policy apply to the position to which Mr Moore was appointed at Westpac in November 2008?........ ........ ........ ........ ........ ........ ....	[1269]
(d) Did SGB breach Mr Moore’s contract of employment when it refused to end his secondment after he had worked at Westpac for 12 months?........ ........	[1270]
(e) Is Mr Moore entitled to an award of damages and, if so, in what amount?.	[1273]
H. Severance Claims, Including the Meaning of “Pay” in the HR Redundancy Policy........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .	[1275]
PART 14: SUMMARY OF PRIMARY CONCLUSIONS........ ........ ........ ........ .......	[1285]

PART 2: William Lawson

1. Mr Lawson is aged 46, is married and has two young children.  He swore four affidavits and also gave lengthy oral evidence in chief after large parts of his affidavits were ruled inadmissible. 

2. Mr Lawson began work as a fixed income trader in Melbourne in December 1990, when he was employed by Potter Warburg.  In August 1992, he started work with SBC Dominguez Barry trading semi-government bonds.  He subsequently worked for the National Australia Bank (NAB) in Melbourne from 1995-1998, after which he took up an appointment in Sydney with Credit Suisse First Boston (Credit Suisse) trading and market making in government bonds.  His position was made redundant at Credit Suisse in January 2005 when its trading business was relocated to Hong Kong. 

3. Mr Lawson commenced employment with SGB in July 2005 as Executive Manager, Non-Credit Trading.  He received a total salary of $175,000 per annum.  He joined SGB after being approached in April 2005 by Mr Ian Hamilton (Chief Manager, Financial Markets), whom he had known for approximately 15 years.  He was interviewed by two senior SGB executives, Mr Peter Fitzgerald (General Manager, Institutional and Financial Markets) and Mr Hamilton. 

4. Mr Lawson’s original written contract of employment was set out in a letter dated 22 July 2005.  It contained provisions dealing with annual performance reviews and the SGB Employee Reward Share Plan.  The letter also dealt with the termination of his employment.  That could occur by either Mr Lawson or SGB giving written notice.  In particular, the letter stated that:

   (a)his employment could be terminated by SGB giving him four weeks’ written notice;

   (b)at its discretion, SGB could make a payment of the equivalent amount in lieu of notice; and

   (c)if Mr Lawson was over 45 years of age and had accumulated two years’ continuous service when his employment was terminated, he would be entitled to an additional one weeks’ notice. 

5. The letter also stated that, by signing it, Mr Lawson agreed “to abide by the policies and procedures of St George as may be amended from time to time”.  This has important implications for the question whether various policies regarding redundancy and secondment developed by SGB either at or after his work commencement applied to him. 

   Mr Lawson’s promotion in 2006

6. Mr Lawson’s employment position with SGB subsequently changed.  In September/October 2006 he was promoted to the more senior position of Head of Non-Credit Trading and his salary increased.  As will be further developed below, his duties and responsibilities expanded with this promotion.  Mr Lawson also received an increased base salary and other entitlements in the following Bank financial year, such that his total remuneration had doubled in two years.  The nature and extent of these changes is relevant to a significant issue in the proceeding, namely whether his duties and status changed to such an extent that his original contract of employment was varied with the consequence that the original provisions dealing with such matters as notice of termination changed to reflect his new role. 

7. Mr Lawson also contends that it was a term of his employment that he would be paid not only an annual or base salary, but also an annual bonus.  Mr Lawson gave evidence that he was never provided with any written rules or terms relating to the annual bonus.  He claims that this alleged term of his employment was conveyed to him prior to his recruitment by Messrs Fitzgerald and Hamilton.  Mr Lawson contends that he was told and understood that the express purpose of the annual bonus was to provide him with a remuneration which, together with his base salary, was commensurate with market rates. 

8. Mr Lawson gave evidence that in his performance review in September-October 2006, he was told by Mr Hamilton that he had been promoted to Head of Non-Credit Trading at SGB, for which his base salary increased from $175,000 to $240,000.  In October 2007, his salary was further increased to $250,000 and his bonus for the Bank’s financial year ending 30 September 2007 was $180,500 under the bonus scheme known as the IP. 

9. By a letter dated 17 December 2007, Mr Lawson was invited to participate in another SGB bonus scheme, the MTIP.  The MTIP was offered to the more senior executives of SGB and provided them with an opportunity to be allocated SGB shares.  In Mr Lawson’s case he was offered the opportunity to take up two equal tranches of shares up to a maximum value of $50,000, with the first tranche to be exercisable on or after 30 September 2009 and the second tranche to be exercisable on or after 30 September 2010.  The MTIP operated to increase Mr Lawson’s annual remuneration in a way which avoided any conflict with SGB’s base salary increase restrictions.  It was also intended to encourage participants to remain with the Bank.  It might be interpolated here that in his written reply submissions, Mr Lawson accepted that he only received 90 per cent of his MTIP opportunity in 2007/2008, which reflected the fact that SGB did not achieve the 10 per cent EPS growth and as such the Group component of 20 per cent was reduced by half. 

10. Mr Lawson worked in the Treasury Division of SGB’s Institutional and Banking Division.  He received annual bonuses under the TIP.  The terms of the TIP were apparently not reduced to writing (save in respect of one year which affected Mr Wittenberg).  Annual bonuses distributed under the TIP were derived from a bonus pool calculated by reference to Treasury’s financial performance.  If employment was terminated before a full year had been worked, a pro rata annual bonus would be paid.  According to Mr Lawson, the annual bonus and awards under the TIP were both “regular and consistent” and were paid annually irrespective of performance, propositions which Westpac strongly denies.  By a letter dated 31 October 2008, which was signed by Mr Bartlett, Mr Lawson was informed that his TIP bonus for the year ending 30 September 2008 was $250,000.  He was informed that he would receive a payment of $250,000 under the TIP (payable in two equal tranches on May 2009 and November 2009 as long as he remained at SGB on those dates).  He was also given information as to his MTIP entitlements as part of the 2007/2008 annual review and also for 2008/2009.  His “MTIP opportunity” was stated to be $50,000.  The letter also contained the following information on Mr Lawson’s “Total Reward Opportunity”:

    Your Total Reward Opportunity for 2008/2009 will be as follows pending the outcome of the proposed merger with Westpac:

Total Employment Cost (TEC) (includes fixed salary and compulsory superannuation)	$257,500
Medium Term Incentive Opportunity	$50,000
Total Reward Opportunity (excluding Treasury Incentive plan)	$307,500

You will continue to be eligible to participate in the Treasury Incentive Plan for 2008/2009.

Please be aware that your Total Reward Opportunity is an estimate only and the final amount depends on a number of factors including your individual performance and continued employment with the St. George Group.  Your leave and all other entitlements are calculated on the basis of your Total Employment Cost.

1. Finally, Mr Lawson was informed that, because the Bank’s EPS outcome was below 90 per cent of the target, the Board had determined that no additional incentive would be paid to anyone at SGB.  The letter also dealt with the possibility of pro rata payments being made in the event of certain contingencies.  These included the possibility that if, for example, the merger was implemented but Mr Lawson was not appointed to a permanent role with Westpac and left the organisation within six months, Westpac would make an ex-gratia payment calculated as a pro rata percentage of his MTIP target. 

   The merger announcement and its effect on Mr Lawson

2. As noted above, in May 2008, SGB announced its intention to merge with Westpac.  Mr Lawson became very concerned about his job security and he gave evidence that he raised the matter with both Mr Hamilton and with Mr Fitzgerald.  He gave evidence that Mr Fitzgerald assured him that a retention incentive scheme would be devised to reward key SGB executives.  He said that Mr Fitzgerald told him that key staff were essential to the Bank whether or not the merger was finalised and that he and two other members of his team had been identified as key members for SGB’s operations. 

3. At around this time, Mr Lawson says that he was approached by senior employees at JPMorgan, who expressed interest in recruiting Mr Lawson and his team (including Mr Paul Smith and Mr Stuart Moore, who are also applicants in the proceedings).  Mr Lawson says that he discussed this possibility with representatives of JPMorgan on behalf of himself, as well as his team at SGB.  This evidence is relevant to the issue of alternative employment for these three applicants.  Mr Lawson said that the JPMorgan representatives with whom he met were Messrs Mark Stephens (Director, Fixed Income Sales), Adrian Janschek (Vice-President of Fixed Income Sales) and David Ioannidis.  The discussions took place after Mr Stephens had contacted Mr Lawson to inquire whether he and Messrs Smith and Moore would be interested in opportunities outside SGB given the proposed merger between Westpac and SGB. 

4. Mr Lawson said that he attended a lunchtime meeting in early June 2008 with Messrs Stephens and Ioannidis, which was also attended by Mr Moore.  At the end of the lunch, Mr Lawson was invited to pursue further discussions with JPMorgan and it was left to him to follow that up.  Mr Lawson said that within a week of the luncheon meeting he had a further conversation with Mr Janschek.  Mr Lawson said that Mr Janschek told him that he had been approached by Mr Ioannidis and another JPMorgan employee (Mr Jeff Herbert-Smith) to provide a reference check for Mr Lawson.  Mr Janschek told Mr Lawson that he had recommended that JPMorgan employ Mr Lawson in its fixed income business.  Mr Lawson also gave evidence that around this time he had a separate conversation with Mr Stephens, who informed him that he had given “a glowing reference” for Mr Lawson to Messrs Ioannidis and Herbert-Smith. 

   Mr Janschek’s evidence concerning alternative employment opportunities for Mr Lawson

5. It is convenient at this point to summarise Mr Janschek’s evidence, who was called as a witness by Mr Lawson.  Mr Janschek said that he and Mr Lawson had worked together at Credit Suisse for four years up to January 2005.  He confirmed that JPMorgan had approached Mr Lawson in circumstances where JPMorgan was hiring fixed income traders. He said that he had been approached in mid-June 2008 by Mr Ioannidis and Mr Herbert-Smith (with whom Mr Janschek had also worked), who inquired about Mr Lawson’s abilities and suitability.  Mr Janschek deposed that, while he did not recall the exact words he used, he had conveyed to them that Mr Lawson had made money at Credit Suisse and that he considered that he would bring significant advantages to JPMorgan’s trading team.  Mr Janschek also recalled Mr Lawson telling him in late June 2008 that he had decided to stay at SGB and not pursue the opportunity at JPMorgan.  I accept this evidence.

6. Mr Janschek gave evidence, which I also accept, that JPMorgan was building up a new business division in the first half of 2008 and that he had been engaged by JPMorgan in May 2008 for that purpose in the position of Vice President, Fixed Income Sales and that other people were recruited by JPMorgan at that time as part of its expansion plans. 

7. In cross-examination, Mr Janschek gave evidence that redundancies commenced at JPMorgan in December 2008, which were related to the global financial crisis (GFC).  He said that the redundancies were “meaningful” and resulted in 20 per cent of his particular section within JPMorgan being made redundant.  The redundancies continued in 2009.  Mr Janschek also gave evidence that he played no role in the hiring or firing of employees at JPMorgan in 2008.  I accept that evidence. 

   Mr Lawson is invited to participate in SGB’s retention incentive scheme

8. Mr Lawson gave evidence that his interest in possibly taking another job changed in mid-June 2008 when he was advised by SGB in a letter dated 18 June 2008 that he had been selected as a key executive within SGB to whom a retention incentive would apply in order to encourage him to stay with SGB during the implementation of the merger with Westpac.  The letter was signed by the Managing Director and Chief Executive Officer of SGB, Mr Paul Fegan.  In view of the importance of the letter, not only to Mr Lawson’s case, but also to other applicants who received similar letters, it is convenient to set out the full text of the letter:

9. Mr Lawson and some of the other applicants contend that the letter was deliberately misleading and untrue in its references to achievement of SGB’s “earnings per share target” insofar as the 2007-2008 financial year is concerned.  The EPS growth target which was published to the market and to staff generally was originally said to be 10 per cent, but that was then later revised to a range of 8-10 per cent.  Mr Lawson, and the other relevant applicants complain that, unbeknownst to them, the SGB Board had set a different EPS growth rate for the purposes of the retention incentive scheme at a level of 10.1 per cent.  They complain that this was never disclosed to them at the relevant time and was known only to the SGB Board (which included Mr Fegan) and to four of the most senior SGB executives. 

10. In his affidavit dated 29 October 2010, Mr Lawson deposed that he relied upon the retention incentive letter and the discussion he had with Mr Fitzgerald when the letter was handed to him in deciding to terminate his discussions with JPMorgan on behalf of both himself and his team.  He said that if he had known the true position, he would not have remained with SGB during the merger process and rather would have pursued the opportunity with JPMorgan.  Mr Lawson said that he accepted the truth of Mr Fitzgerald’s statement that he had been identified as a key person for a role in the merged organisation and he added that this fact, together with the financial incentive, persuaded him to cease looking outside SGB for an alternative role.  He also said that if he had known that the EPS target was 10.1 per cent and not 8-10 per cent, he would have discounted the incentive as being “effectively worthless”.  Mr Lawson gave evidence that he only became aware of the 10.1 per cent figure after the proceedings were commenced and he added that, if he had known that the true target was 10.1 per cent, he would have regarded the retention incentive “to be practically unachievable and therefore of no real value”.  As will shortly emerge, Mr Lawson was closely cross-examined on this and other parts of his evidence. 

11. Mr Lawson also deposed that he was approached by senior executives of ING Investment Management around August 2008, who expressed an interest in recruiting him.  He said that he did not pursue that opportunity for the same reasons as he gave for terminating his discussions with JPMorgan. 

    Mr Lawson’s secondment to Westpac

12. Around 28 November 2008, Mr Lawson was informed by a letter written on SGB letterhead but signed by Ms Cathy Graycon (Managing Director – People, Westpac Institutional Bank) that he would be seconded to Westpac to occupy the position of Portfolio Manager – Strategic Risk.  The letter included the following paragraphs:

    In your role of Portfolio Manager – Strategic Risk you will be required to assist with work for the broader Westpac Group.  As such, while you remain employed by your current employer, you will be seconded for the portion of the work that you do for the Westpac Group.  The secondment arrangement is a requirement of our corporate structure following the merger. 

    During the secondment the employment policies of your employer would continue to apply to you.  Some additional policies may also apply, for example, compliance policies related to the portion of work that you do on secondment.  All other terms and conditions of your employment continue to apply, as varied by this letter.

    The application of SGB’s redundancy policies to Mr Lawson

13. An important issue in Mr Lawson’s case is the SGB policies which applied to him.  He claims that he was subject to the following policies:

    (a)a redundancy policy entitled “St George Bank Limited Redundancy Policy” (“the 2001 Redundancy Policy”) which provided that, upon termination through retrenchment, an employee would be paid a special lump sum severance payment in full settlement of all claims calculated as six weeks’ salary in lieu of notice, seven weeks’ for the first full year of service and three weeks’ salary for each subsequent year or part year of continuous service.  It further stated that the maximum payment would be 65 weeks’ salary;

    (b)a further redundancy policy which was published on SGB’s intranet website (the HR Express Redundancy Policy) (note that Mr Lawson claims that he had been told by Mr Hamilton that this latter policy did not affect his entitlement to notice under the 2001 Redundancy Policy). Under that document, redundancy payments in respect of staff employed under the SGB Enterprise Agreement were described as comprising six weeks’ pay in lieu of notice, seven weeks’ pay for the first completed year of service, four weeks’ pay for each subsequent year from two to ten completed years of service, three weeks’ pay for each subsequent year from 11 to 16 completed years of service and two weeks’ pay for each subsequent year to a maximum of 25 completed years of service, including the first year.  In addition, such staff would receive one weeks’ pay for each year over 45 years of age and pro rata pay for each completed month of work to a maximum of 85 weeks’ pay (90 weeks for staff over 45 years old), including the six weeks’ notice period; and

    (c)a secondment policy (the Secondment Policy), which contained the following statements:

    A secondment is a temporary transfer or promotion to another role for a minimum period of 6 weeks and a maximum period of 12 months.  No extensions beyond 12 months are possible.  Only permanent staff can be seconded to another role. 

14. The Secondment Policy further stated that as a term and condition of any secondment, the seconded employee “must return to your original position, salary and conditions when the period of the secondment ends, unless you are appointed to the role to which you were seconded, or you are moved to another role”.

15. Mr Lawson contends that it was an express term of the 2001 Redundancy Policy that, if his employment was terminated for redundancy, he would be paid a lump sum severance payment of up to a maximum of 18 months’ salary, including a notice period.  He says further that SGB’s Managing Director and Chief Executive Officer, Mr Fegan, had a discretion to increase that notice period to reflect the applicable period of “reasonable notice”, having regard to such matters as age, seniority, length of service and specialisation. 

1. Mr Lawson also contends that it was an express term of the HR Express Redundancy Policy that he would receive a severance payment up to a maximum of 90 weeks’ “pay”, but without affecting his entitlement to reasonable notice under the 2001 Redundancy Policy and/or his common law entitlements to reasonable notice.  Mr Lawson places particular emphasis on the use of the term “pay” instead of “salary” in the HR Express Redundancy Policy.  He contends that the term “pay” described his total remuneration, which included not only his base salary but also his bonus entitlements. 

2. On 1 March 2010 (which was after Mr Lawson’s employment with SGB had been terminated by way of redundancy and retrenchment), the terms of the policy relating to retrenchment entitlements for those employees who were employed by SGB prior to the Bank ceasing to exist on 1 March 2010 were varied.  The policy was varied so as to define “severance pay” as: “your fixed pay only and does not include any bonuses, incentives, commissions, overtime, superannuation or any other separately identified entitlement”.  Mr Lawson draws attention to these changes, which he contends did not reflect the earlier position when his employment with SGB was terminated.

3. Mr Lawson’s secondment with Westpac commenced on 1 December 2008.  He contends that his seconded position was different from his SGB position in that:

   (a)his budget at Westpac represented a substantial additional burden to that which he had at SGB (his budget at Westpac was $3.3 million compared with a budget of $1.5 million which had been set for him at SGB around October 2008);

   (b)his trading limits and reporting requirements differed;

   (c)he no longer had any managerial responsibilities; and

   (d)the bonuses were not comparable with those available to him at SGB. 

4. Mr Lawson gave evidence of a telephone conversation which he had in early 2009 with Mr Harvey from SGB Human Resources in which he says he told Mr Harvey that he was concerned about his employment arrangements.  He explained that that was because although he had been told that he was on secondment, he felt that he was being treated like a Westpac employee, having been allocated a Westpac budget, Westpac trading limits and Westpac reporting requirements.  He said that he also told Mr Harvey that he had been advised that he would be remunerated under the Westpac bonus scheme and not the SGB bonus scheme.  He said that Mr Harvey told him that he was working on the matter with Westpac.  Mr Lawson gave further evidence that Mr Harvey subsequently told him in around April or May 2009 that he was involved in the process of selecting employees who would be employed by Westpac but that he was unable to tell him anything more about the topic. 

5. Mr Lawson also gave evidence that from at least February 2009 onwards, he regularly made inquiries with a view to clarifying the employment status at Westpac of both himself and Messrs Moore and Smith.  He said that he did not get any response to those inquiries. 

6. Mr Lawson gave evidence of bonus payments he received while he was working at Westpac.  By a letter dated 3 December 2009, which was written on SGB letterhead and signed by Mr James Land from Westpac, Mr Lawson was told that given the results of his 2009 remuneration review, he would receive a $60,000 bonus for the three months that he had worked at SGB and zero bonus for the period he was seconded to Westpac.  Mr Lawson also gave evidence of a discussion he had with Mr Land in late October or early November 2009 regarding his performance review.  He said that Mr Land told him that he had been rated as an employee who needed development because he did not meet his Westpac budget.  Mr Lawson added that Mr Land was unable to tell him whether that would have any impact to his entitlement under SGB’s MTIP. 

7. Mr Lawson gave evidence of another conversation he had with Mr Land in early December 2009 in which he was told by Mr Land that he would not be receiving any payment or entitlement under the MTIP because he had been rated as an employee who needed development under the Westpac Performance Review Scheme.  Mr Lawson complained to Mr Land that he considered that he was entitled to receive the MTIP because his SGB budget for the year was $1.5 million and that he had achieved that budget for the period that he was working at SGB.  He said that Mr Land responded by saying that he would not receive any MTIP, that he had been taken off the MTIP scheme and that he would not be given an equivalent plan at Westpac. 

8. Mr Lawson gave further evidence which responded to an affidavit sworn by Mr Doyle on behalf of Westpac.  Mr Doyle worked at Westpac.  Mr Lawson denied that Mr Doyle ever told him that the percentage based bonus system for the Strategic Risk Group (SRG) at Westpac was “discretionary”.  He also denied ever being told by Mr Doyle that there was no incentive scheme for the SRG for 2008/2009, or that bonuses for that year would be paid at Westpac’s discretion. 

9. Mr Lawson contends that the duties relating to his secondment position at Westpac amounted to a substantial and radical change to his terms and conditions of employment.  As noted above, this issue bears upon the question whether the terms of his original contract of employment, including the notice period to which he was entitled, were replaced or varied to reflect his changed employment role. 

10. On 14 December 2009, Mr Lawson was advised both by letter and orally by Mr Doyle that Westpac would close its SRG and, consequently, that his seconded position was redundant.  He was also told that he would start a period of redeployment in which other employment opportunities within Westpac would be explored, taking into account his skills, experience and interests.  He was advised that the redeployment period was expected to be six weeks starting on 15 December 2009 and concluding no later than 29 January 2010.  By a further letter dated 28 January 2010, Mr Doyle informed Mr Lawson that his redeployment period would be extended by a further week until 5 February 2010, during which time other employment opportunities would be sought for him. 

11. Mr Lawson’s employment was ultimately terminated by way of retrenchment on 5 February 2010.  Mr Lawson received a redundancy payment of $93,903, representing 19 weeks at the rate of his base salary only.  He also received a further payment on account of notice of $107,083 (representing five months’ notice and, again, calculated only by reference to his base salary and not his annual bonuses). 

    Cross-examination of Mr Lawson

12. Mr Lawson was subjected to a lengthy cross-examination.  One of the prominent issues in that cross-examination was his claim that he had been told that his annual bonuses would be “regular and consistent”.  I found his evidence on this topic at times to be inconsistent and uncertain.  Mr Lawson initially said that he had been told that he would receive 100 per cent of his base salary as an annual bonus.  He later modified that to say that he had been told that he would receive “around” 100 per cent.  Initially, he created the impression that he had received repeated assurances about his receiving an annual bonus both before and after he took up his employment with SGB.  Ultimately, however, when pressed during cross-examination, he accepted that he had only ever been told that in his pre-employment discussions with Mr Hamilton.  I accept that evidence. 

13. Another topic on which he was closely cross-examined concerned the proposition that the payment of the annual bonus depended upon a range of factors, which included an individual employee’s own performance as well as SGB’s overall performance.  Initially, Mr Lawson seemed reluctant to accept that proposition.  He was then taken to [3] of his statement of claim and to the reference there to the “engagement conversations” he had with Mr Hamilton and to the claim there that his remuneration would be made up of a base salary and variable annual bonuses.  It was put to him that the use of the word “variable” must mean that his annual bonus could fluctuate according to various performance criteria.  Initially, Mr Lawson resisted that obvious proposition.  His response  was that all he had to do to get his annual bonus was to receive a competency rating, which he explained simply meant achieving a level of base competency.  Mr Lawson had some difficulty recollecting the different ratings which were apparently attributed to SGB employees, including himself, as part of the annual performance reviews.  He was taken to the review which he had completed in respect of Mr Stuart Moore, who was a member of his team at SGB.  Mr Lawson accepted that he had had responsibility for filling out the manager’s comments in that review, although Mr Hamilton also had some involvement.  Mr Lawson acknowledged that he had rated Mr Moore as exceptional, which was the highest grade.  When it was pointed out that Mr Moore had received a 120 per cent bonus that year (against his base salary), Mr Lawson acknowledged that it was because Mr Moore had had a “stupendous” year.  This confirmed that which Mr Lawson seemed reluctant to acknowledge, namely that an employee’s personal performance had an important bearing on the quantum of any bonus he or she received. 

14. Mr Lawson was also asked a series of questions in cross-examination relating to the fact that in his first year at SGB, he had received an annual bonus which represented only 60 per cent of his base salary.  He was asked why he did not complain that he had not received around 100 per cent given his earlier evidence to the effect that that is what he had been told.  Mr Lawson responded by saying that he did not complain and that he was happy with the bonus he received.

15. Mr Lawson was then asked to comment on the fact that, in the following year, he received an annual bonus which represented only 75 per cent of his base salary.  He was asked to comment on the proposition that this indicated the variability of his annual bonus and that he had obviously performed better personally in the second year, thereby receiving an increase of approximately 15 per cent in his annual bonus.  Mr Lawson was reluctant to respond directly to that proposition.  He simply repeated that he was grateful to receive any bonus and that he was happy with it.  I found this part of his evidence to be unconvincing and difficult to reconcile with his central claim concerning the assurances he said he was given about the level of the annual bonus which he could expect to receive.  I also consider that the evidence demonstrated that annual bonuses were not guaranteed as claimed by Mr Lawson.  In my view, his resistance to the proposition that annual bonuses were tied to individual performance and were variable did not reflect well on his credibility. 

16. Other aspects of Mr Lawson’s evidence cast further doubts about his credibility.  One such area concerns the cross-examination in respect of a letter dated 22 November 2007 which he received from Mr Bartlett at SGB.  That letter informed him that he had received an annual bonus of $180,500.  It also confirmed that he was invited to participate in the MTIP.  A condition of such participation was that he would need to enter into a service agreement, a copy of which would be sent to him shortly.  He had no recollection of ever receiving or executing any such service agreement.  The letter foreshadowed that Mr Lawson would be entitled to three months’ notice under that service agreement, which is a period significantly less than his claim to be entitled to receive a period of notice of at least 15 months.  When confronted with that letter, Mr Lawson rather unconvincingly said that he did not pay close attention to the details of the letter and simply focused on the numbers.  This arose in the context of Mr Lawson saying that he did not appreciate the qualifications expressed in that letter which explicitly stated that payment of the bonus was subject to achievement of certain conditions, including performance and that there was no guarantee involved.  In my view, it is difficult to accept that Mr Lawson would not have shown close interest in the detail of these matters, impacting as they did directly on his personal remuneration, which must have been a matter of particular concern to him. 

17. Another topic on which Mr Lawson was closely cross-examined related to the nature of the discussions he had had with representatives of JPMorgan.  Mr Lawson confirmed that during the two-hour luncheon in early June 2008, there was no discussion at all of conditions of employment or salary if Mr Lawson left SGB and joined JPMorgan. 

18. During further cross-examination, Mr Lawson was asked various questions about how his conduct would have changed if he had been aware at the relevant time that the EPS target for the incentive program was 10.1 per cent.  He said had he known that he would have looked for jobs elsewhere.  He was asked repeatedly to explain why that was so in circumstances where he never raised any written or oral complaint about the fact that he was told by letter on 31 October 2008 that no additional incentive would be paid to anyone at the Bank.  When he was pressed he said that the reason why he would have looked elsewhere was because he would not have had confidence in his future at SGB.  I found his answers on this topic to be unconvincing and insufficient by themselves to demonstrate that he would not have remained with SGB save for the retention incentive scheme described in the letter dated 18 June 2008 which he had received. 

19. Mr Lawson was also asked a series of questions regarding the Westpac bonus system and whether or not he was told that the previous bonus system at SGB would not apply to his time at Westpac.  Mr Lawson’s evidence was to the effect that he had been told by various Westpac executives, including Messrs Land, Doyle and Wilson, that his bonus when at Westpac would be 12.5 per cent of revenue up to a figure of $5 million and then 15 per cent above that.  He said that he was told by Mr Land that the Group hurdle was $2 million and that those figures would apply.  Mr Lawson was then cross-examined on an email he had received from Mr Wilson where he told that there was no contractual arrangement in place concerning bonuses.  When shown that document, Mr Lawson agreed that he never challenged that proposition but said that whatever might have been recorded in writing was overtaken by what he had been told orally.  It might also be noted that Mr Lawson received another letter, which was to similar effect and indicated that there was no contractual commitment to receive a bonus and that all that was offered was on the basis of “best endeavours”. 

20. As indicated above, I have some reservations concerning Mr Lawson’s credibility.  They highlight the need to view his evidence carefully.  In the absence of objective corroborating evidence, I am reluctant to accept Mr Lawson’s evidence at face value. 

    PART 3: Danielle Lavars

21. Ms Lavars swore two affidavits dated 4 November 2010 and 20 February 2012 respectively.  She also gave oral evidence in chief after large parts of her affidavits were ruled to be inadmissible.  Ms Lavars was cross-examined.

22. Ms Lavars commenced employment with SGB around September 1998, after she was approached by an executive search firm.  She was employed in the position as an Account Manager in the margin lending area of SGB and was employed pursuant to a letter of offer dated 10 August 1998.  The letter made express reference to her being covered by the policies and procedures of SGB as set out in the Bank’s Corporate Manual.  Her “total employment cost” (TEC) was stated to be $45,000.  She was informed that TECs were generally reviewed annually, with adjustments effective from 1 October each year and with an annual performance review.  The letter also stated that Ms Lavars’ employment could be terminated on the giving of four weeks’ notice (or payment in lieu of notice). 

23. Although Ms Lavars was initially appointed to the position of Account Manager, her position changed several times thereafter as follows (noting also that she was never provided with a replacement written contract of employment):

    (a)in early 2000, she was promoted to the position of Manager, Institutional Sales in SGB’s Treasury Division, and she received a bonus each year in which she was employed within Treasury;

    (b)in 2002, she took on the additional position of Cash Dealer;

    (c)in 2004 she took on a new position assisting in developing the Financial Institutions Group of SGB, which consisted of establishing relationships with contacts and other banks;

    (d)in 2005-2006 she returned to the position as a Senior Manager in the Institutional Sales Section of the Treasury Division, at which time she reported to Mr Hamilton.  She also became more active in the marketing of SGB funding programs and was responsible for the day-to-day distribution of relationships for particular programs in which the Bank was a panel member; and

    (e)from 2006, she reported to Mr Wittenberg and, while she continued to perform her institutional sales functions, she also assisted Mr Wittenberg in expanding the origination capabilities of the Bank.  Her client list was expanded to include financial borrowers. 

24. Ms Lavars deposed in her first affidavit that, during the course of her pre-employment interview with Ms Michelle Davies, she was told that at SGB she would receive a base salary and a bonus which would be payable at the end of each year.  She recalled receiving a bonus of $2000 to $3000 at the end of her first year with SGB. 

25. Ms Lavars also gave evidence of the circumstances surrounding her transfer to the dealing room.  She said that she had a meeting with Messrs Fitzgerald and Hamilton about the possibility of her transferring to that area and that, during the course of the meeting, Mr Hamilton told her that she would be remunerated by way of a base salary together with an annual bonus.  She said that he explained to her that because Treasury could not match the big base salaries paid by other investment banks and that because there was also a cap on base salary increases, the bonus was used “to ensure that you are kept up to the market for the role that you perform within Treasury”. 

26. Ms Lavars gave evidence as to what she was told regarding her base salary and annual bonus under the TIP.  She said that she attended annual reviews and annual meetings with either Mr Fitzgerald or Mr Hamilton and she was told on these occasions that she would be paid a bonus to keep her position at market remuneration levels and that the amount of the bonus she would receive took into account not only her individual performance but also the performance of the dealing room.  She gave evidence that she was told that annual bonuses were allocated from a bonus pool, calculated by reference to the financial performance of the Treasury Division and that the levels of bonuses were determined by Messrs Hamilton and Fitzgerald. 

27. Ms Lavars says that her annual bonuses were regular and substantial and that she received an annual bonus each year of her employment. 

28. Ms Lavars also gave evidence of a meeting which she had with Mr Fitzgerald on 18 June 2008, during which he handed her a copy of the 18 June 2008 letter offering her the incentive retention scheme.  She said that he told her that the Bank was offering incentives to key people to have them stay with the Bank during the merger and due diligence period. 

29. Ms Lavars also gave evidence that she was aware from market announcements that the earnings per share growth target for SGB for 2007/2008 was 8-10 per cent.  She said that she had to know that figure in order to provide investor updates on SGB’s performance.  She said that she understood from the terms of the 18 June 2008 letter that the retention incentive would be paid to her if SGB met its earnings per share growth target of 8-10 per cent. 

1. Ms Lavars said that she was told by Mr Jim Fingleton on or around 13 November 2008 that she would not receive a retention incentive.  It was only after the proceedings were commenced that she learned that the target for the retention incentive scheme was in fact 10.1 per cent. 

2. On 31 October 2008, i.e. several months after the proposed merger was announced, Ms Lavars received a letter which informed her that she would continue to be eligible to participate in the TIP for 2008-2009. 

   Ms Lavars’ work at Westpac

3. Ms Lavars also gave evidence of various meetings she had with Mr Fitzgerald from around October 2008 regarding the prospects for SGB employees arising from the proposed merger.  She said that he told her that the merged organisation would provide a greater opportunity for her than was currently available at SGB.  She said that Mr Fitzgerald also told her that there would be “contestable positions” if an employee’s role at SGB was repeated at Westpac and that she would be notified if she was to contest one of those positions.  She gave further evidence that Mr Fitzgerald told her in mid-November 2008 that there was a contestable position in the merged organisation in rate sales.  She said that she told Mr Fitzgerald that she did not like her chances because she was working in credit sales but that he said that it was the only contestable position available to her. 

4. Ms Lavars said that she was unsuccessful in obtaining a position in rate sales.

5. Ms Lavars also gave evidence of a job interview which she had with Mr Simon Ling for a role in the originations area of the Debt Capital Markets section (DCM) of Westpac.  Mr Ling held the position of Executive Director, DCM – Debt and Hybrid Securities.  Ms Lavars said that she was advised by Mr Ling on 28 November 2008 that her application for the position was successful.  Ms Lavars received a letter dated 1 December 2008, written on SGB’s letterhead by Ms Graycon (Managing Director, WIB-People) appointing her to the position of Manager, DCM-Debt & Hybrid Securities at Westpac, but stating that she would continue to be employed by SGB.  Her secondment letter, which was in similar terms to secondment letters received by other relevant applicants, contained the following paragraphs:

   In your role of Manager, DCM-Debt & Hybrid Securities you will be required to assist with work for the broader Westpac Group.  As such, while you remain employed by your current employer, you will be seconded for the portion of the work that you do for the Westpac Group.  The secondment arrangement is a requirement of our corporate structure following the merger.

   During the secondment the employment policies of your employer would continue to apply to you.  Some additional policies may also apply, for example, compliance policies related to the portion of work that you do on secondment.

   All other terms and conditions of your employment continue to apply, as varied by this letter.

   (Emphasis added).

6. Ms Lavars gave evidence, which I accept, that shortly after she received this secondment letter, she reviewed the Secondment Policy which was on the HR Express intranet site.  She observed that the maximum period for any secondment was 12 months.  The policy also stated that no extensions beyond 12 months were possible. 

7. The relevant terms of the Secondment Policy as at this time were as follows.

   Secondment

   A secondment is a temporary transfer or promotion to another role for a minimum period of 6 weeks and a maximum period of 12 months.  No extensions beyond 12 months are possible.  Only permanent staff can be seconded to another role.

   Secondments can be advertised or negotiated directly with individual staff members.

   If you are seconded to another position you must be informed of and agree to the terms and conditions of the secondment in a secondment letter of offer.

   Secondment terms and conditions

   ·You are expected to work the hours and work pattern that apply to the secondment role.

   ·You are paid the minimum salary (non-package staff) or TEC/TR (package staff) for the grade of the position you are seconded to and are automatically paid the appropriate rate from the start date of the secondment.

   ·Any additional allowances that apply to the secondment role are paid from the start date of the secondment and any allowances from your original role from the start date of the secondment.

   ·You must return to your original position, salary and conditions when the period of the secondment ends, unless you are appointed to the role to which you were seconded or you are moved to another role.

   ·St George can vary secondment end dates within the agreed timeframe for any reason by giving you one week’s notice, or by setting a new end date by mutual agreement.

8. It is to be noted that the Secondment Policy refers in its terms only to a secondment for a temporary period – it does not contemplate a secondment for a permanent period.  As will emerge below, this issue assumes some importance in Ms Lavars’ case because in October 2009 the Secondment Policy was amended by SGB by the addition of the following paragraph immediately before the heading “Secondment terms and conditions”:

   Clarification of Scopy (sic) of Policy – St George / Westpac merger

   This policy does not apply to employees who are employed in a permanent position following the St George/Westpac merger and who, as part of that permanent position, undertake some or all of their duties for another Westpac Group company.  This is the case even if the duties which the employee provides for another Westpac Group company have been described as a “secondment”.  This is because this policy is limited to “secondments” under which an employee is not undertaking duties as part of their permanent work, but rather is seconded to another role on a temporary basis.

9. In her oral evidence in chief, Ms Lavars said that she discussed the secondment letter with Mr Fitzgerald and he told her that, because of the speed of the merger between Westpac and SGB, they were not able to offer her a contract and a secondment was the only way forward, but that she might expect to negotiate a contract later.  Ms Lavars recollected Mr Fitzgerald saying that she had a “foot in the door”.  I accept that evidence. 

10. Ms Lavars commenced her secondment with Westpac on 2 December 2008 in her new role.  She said that from that point onwards she only performed duties for Westpac and marketed products under the Westpac banner and brand.  She said that she was provided with a business card bearing the name and logo of Westpac and that her email signature also indicated Westpac and not SGB.  She said that, although her remuneration continued to be paid by SGB, she did not do any work for SGB.  As far as she was aware, all wholesale funding operations of the Treasury Division of SGB had ceased to operate from 1 December 2008.  From and after 2 December 2008 all her work functions were performed at Westpac’s premises in Kent Street, Sydney.  She said that her duties at Westpac were exclusively concerned with originations and that she performed none of the sales functions that had been a major part of her work at SGB.  Instead of liaising directly with investors, as she had done at SGB, her work in originations involved liaising with issuers, i.e. the other banking institutions who sought to raise money.  The bonuses she was to earn were less attractive than at SGB and she says that she would not have accepted the secondment if she had been told about the substantial changes to her bonus entitlements.  I accept that evidence. 

11. In her oral evidence in chief, Ms Lavars said that while she worked at Westpac she reported to Mr Ling.  She gave evidence of a discussion about her remuneration which she had with Mr Ling in November 2009 after he asked her what her pay and bonus had been the previous year at SGB.  She told him $250,000 and $150,000 respectively.  She said that Mr Ling told her that he did not think that she would be paid those amounts at Westpac.  She said that she responded by saying that she was still employed by SGB and not Westpac.  I accept that evidence.

12. Ms Lavars also gave oral evidence in chief concerning another conversation she had with Mr Ling a few weeks later relating to her bonus.  Her evidence was to the effect that Mr Ling told her that she had got a reasonably high bonus relatively speaking and that he had tried to get her $100,000, but his management capped her bonus at $80,000.  Ms Lavars said that she was very disappointed about that because she had performed well at Westpac and she believed that she would have done better under the SGB bonus scheme.  Ms Lavars said that she was accepted into the Westpac incentive plan around November 2009.  I accept that evidence.

13. Ms Lavars also gave evidence of a conversation she had with Ms Renee Bissett around February 2009.  Ms Bissett worked in Human Resources at Westpac.  Ms Bissett told Ms Lavars that she had to remain an SGB employee on secondment to Westpac until Westpac was able to give her a new contract, but that could not happen at that stage and had to await the surrender of the SGB banking licence.  She also gave evidence that she was given similar information by other Westpac employees at a focus group meeting held on 28 April 2009.  She said that at that meeting, Ms Kellie Penridge from Westpac said that Westpac would not be offering full time contracts to SGB staff members before the full merger had gone through and the SGB banking licence had been surrendered.  She said that Ms Penridge explained that this situation arose because if Westpac offered contracts of employment to SGB staff at that time, Westpac would have to pay stamp duty on the transfer of the staff as they were classified as assets, and that would cost the Bank a substantial amount of money.  I accept that Ms Lavars was told these things. 

14. Ms Lavars gave evidence, which I also accept, of several conversations she had with Mr Ling about her dissatisfaction arising from the fact that she remained on secondment and was uncertain about her future because she did not know when she would receive a written contract of employment with Westpac.  In an email dated 12 August 2009, Mr Ling told Ms Lavars that, despite her secondment to Westpac “it would seem that you are seconded to Westpac with no time limit although I am sure we will sort that out over time” (emphasis added).  He attached another email from Ms Bissett which stated that Ms Lavars was not working with Westpac on a temporary secondment basis.  Ms Bissett added in her email that the SGB Secondment Policy had no application to Ms Lavars because Ms Lavars had not been “temporarily moved or promoted to another role, she had been directly appointed to the role of Manager, DCM – Debt & Hybrid Securities” at Westpac. 

15. Ms Lavars also gave evidence concerning a letter which she received from Mr Bartlett on or around 31 October 2008 which informed her of her bonus for 2007/2008.  The letter was written on SGB’s letterhead.  She was advised that she would receive a TIP payment of $150,000, payable in two tranches on May 2009 and November 2009, and conditional on her remaining employed by SGB.  She was advised that her total employment cost (including fixed salary and superannuation) was $205,000 and that she would continue to be eligible to participate in the TIP for 2008/2009. 

16. By a later letter dated 3 December 2009, which was also written on SGB letterhead, Ms Lavars was informed of the results of her 2009 remuneration review.  She was told that her total employment cost remained at $205,000.  She was further advised that she had been awarded a total amount of $80,000 under the TIP, which amount would be payable in two equal tranches in May and November 2010 respectively.  She was told that those payments were subject to her “continuous employment” with the Westpac Group.  Finally, it was confirmed that, for the performance year beginning 1 October 2010, “you will move from your current St George variable reward scheme to the WIB Reward framework” and that further information on that framework could be found on the WIB intranet page. 

17. Ms Lavars gave evidence that she never agreed to the change in her employment contract which had the effect of removing her from the SGB bonus scheme and that she would not have accepted the position set out in the letter dated 1 December 2008 if it amounted to employment with Westpac but without a written contract setting out the terms and conditions of her employment with Westpac.  I accept that evidence.

    Ms Lavars’ desire to return to SGB after 12 months at Westpac

18. Ms Lavars gave evidence that, in accordance with her understanding of the terms and conditions of the Secondment Policy, she was to return to SGB and to her original position after 12 months on secondment.  She said that as she did not wish to continue to work in the DCM Originations position at Westpac, she gave notice to Mr Ling by letter dated 26 November 2009 that she would report to SGB on 2 December 2009, which was the day after the 12 months secondment period ended.  In her letter, she also stated that because the Treasury Division within SGB was no longer active, it would be necessary for SGB to provide her with comparable and appropriate alternative employment. 

19. By letter dated 27 November 2009, which was written on SGB letterhead, Ms Lavars was advised by Mr Ganesh Chandrasekkar (Acting Managing Director WIB – People), that her employment with SGB was ongoing and that there would be no change as at 1 December 2009 to the role to which she had been appointed by the letter dated 28 November 2008 (sic).  (There was no such letter adduced in evidence: the only relevant letter is that dated 1 December 2008).  She was further advised that her employment “will continue to be subject to your existing St George terms and conditions of employment” and that she should continue to report to the same office where she had been working for the previous 12 months. 

20. Ms Lavars gave evidence that she had a meeting on 27 November 2009 with Ms Amanda Matehaere (who worked in Westpac’s Human Resources area), during the course of which she was told by Ms Matehaere that her position was on going, that she was not on secondment and that she was required to continue in the role to which she had been appointed.  Ms Lavars said that she pointed out that her letter of appointment had said that she was on secondment and that the terms of her employment at SGB would not change.  She also drew attention to the fact that she had been taken off the SGB TIP and moved over to the Westpac incentive bonus scheme, something to which she never agreed and which had resulted in a reduction of $70,000 in her remuneration.  She said that Ms Matehaere directed her to attend work in her existing role at Westpac and that, if she declined to do so, Westpac would terminate her employment.  I accept that this is what Ms Lavars was told.

21. Ms Lavars also gave evidence, which I accept, of another meeting which she attended with Ms Karen Silk (another Westpac human resources employee) and Ms Bissett on 1 December 2009, during which Ms Silk told her that the Secondment Policy was inapplicable to the position she was performing at Westpac.  Ms Silk said that this was a permanent position and that if Ms Lavars did not report to work after 1 December 2009 her employment would be terminated.  Ms Lavars said that she responded by saying that that was inconsistent with what was set out in the letter dated 28 November 2008 (sic). 

22. Ms Lavars said that on 2 December 2009 she reported for work at the SGB office at 55 Market Street, Sydney, where she had previously worked.  She had a conversation with an employee in the SGB Human Resources area and was told that SGB did not want to be involved in a dispute about the nature of her employment and that it was being handled by Westpac.  I accept that evidence.

23. Ms Lavars received a letter dated 3 December 2009, which was written on SGB letterhead and signed by Mr Chandrasekkar.  The letter rehearsed the history of the matter, including the secondment letter dated 1 December 2008.  It noted that Ms Lavars had not attended work the previous day and had provided no valid reason for her absence.  She was again directed to report to the Westpac offices at 275 Kent Street and to continue working in the position as Associate Director, DCM-Debt & Hybrid Securities and that if she failed to do so, SGB would regard her non-attendance as providing a basis for summary termination.  She was told that if her employment was terminated in this way, she would receive no payment in respect of notice and that she would be ineligible to receive any 2009 variable reward because she would no longer remain employed by SGB.  All she would receive was her unpaid salary and accrued leave entitlements. 

    Termination of Ms Lavars’ employment

24. By a letter dated 8 December 2009, also written on SGB letterhead, Mr Chandrasekkar advised Ms Lavars that her employment with SGB had been summarily terminated, effective 10 am on 4 December 2009 and that, in view of “the seriousness” of her conduct, she would not be paid salary in lieu of notice for the termination of her employment, but that all other entitlements would be processed through the usual payroll systems.  Ms Lavars gave evidence that she was not paid any redundancy or termination payments by SGB, however, she did receive her annual and long service leave entitlements.  I accept that evidence.

    Ms Lavars’ understanding about SGB bonuses

25. In her further oral evidence in chief, Ms Lavars described her understanding of the pool from which SGB bonuses were paid.  She gave evidence of conversations she had had with Mr Fitzgerald and Mr Hamilton on that topic.  Ms Lavars could not recall the timing of those conversations but she thought they were in the context of her annual reviews.  She said that Mr Fitzgerald told her that the pool was there from year to year and flowed over so as to pay “consistent bonuses”. 

26. When she was asked to explain her understanding of what she had to do in order to qualify for a bonus, Ms Lavars said she understood that she needed to perform her job to a competency level.  She said the source of that information was Messrs Fitzgerald and Hamilton.  Ms Lavars said that she had been told by Mr Fitzgerald that the annual bonus was paid to ensure that SGB met market value in terms of overall remuneration.  She says that she was told that she had to be competent and also remain employed at SGB in order to get the bonus.  Ms Lavars also explained that she understood that the bonus was drawn from the pool but she did not know the ins and outs of its operation.  I accept her evidence.

    Cross-examination of Ms Lavars

27. In cross-examination, Ms Lavars was asked a series of questions on the topic of whether she was angling to get a redundancy from around mid-2008.  She was taken to an email dated 25 June 2008 which she sent to a friend in which she made reference to redundancy.  Ms Lavars said that at the time she was ebbing and flowing on whether she wanted redundancy and that it was a volatile time for everyone because of the uncertainty.  Ms Lavars also said that she had been at SGB for ten years and ended up getting no redundancy payment. 

28. Ms Lavars was taken to a letter dated 10 July 2008 in which she was given a guaranteed bonus for 2007/2008 of $150,000.  That was a considerable improvement on her earlier bonuses for previous financial years, which were $85,000 for 2006 and $95,000 for 2007.  She received the $150,000 in two tranches, the second payment being in November 2009.  Ms Lavars said that she understood that she was an important employee because she was in the funding wing of SGB at a difficult time and was successful in attracting funds to the bank.  I understood this to be a reference to a risk that she may have been “poached” by a rival business.  She also said that at this time she moved into a “slightly different role” and her salary had increased by $25,000.  I accept that evidence. 

1. Ms Lavars contends that she is entitled to an award of damages in respect of both of the following matters:

   (a)her wrongful dismissal – she contends that she is entitled to an award of damages that reflects the bank’s failure to give her reasonable notice; and

   (b)since her previous position with SGB was redundant, she is contractually entitled to a retrenchment payment in accordance with the HR Express Redundancy Policy (Ms Lavars’ claims relating to the TIP are dealt with separately).

2. It is well settled that the measure of damages for breach of contract is what is required to put the applicant in the position he or she would have been in if the contract had been performed (see Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64 at [80], [98], [134] and [148]). In assessing damages, it should also be assumed that the Bank would have given effect to its contractual obligations in the way most beneficial to it (Amann Aviation at [92]).

3. With those principles in mind, the Bank contends that the contract would have been performed in either of the following ways.  First, Ms Lavars would have been appointed to the role at Westpac to which she had been seconded, with the consequence that all she lost as a result of her employment being terminated on 8 December 2009 was seven weeks’ wages.

4. Secondly, the Bank contends that it could have dealt with Ms Lavars on the basis that her previous position at SGB was redundant.  In those circumstances, given that SGB was a subsidiary of Westpac, and consistently with the HR Express Redundancy Policy, she could have been offered redeployment to another position in Westpac.  Alternatively, it says that because the Bank wanted to retain her in her seconded position, most probably she would have been offered redeployment to that position on the basis that it was directly comparable with her pre-existing position at SGB.

5. The Bank says that in neither of those scenarios would Ms Lavars have been given notice or a redundancy payment and thus her damage is limited to seven weeks’ wages calculated by reference to her base salary. 

6. As to the Bank’s submission that Ms Lavars would have been appointed to the role she was performing under secondment, I accept Ms Lavars’ evidence that she did not wish to continue working in her role at Westpac.  In my view, there was no prospect of her being appointed to that role against her will. 

7. It might be noted that the Bank also made alternative submissions which addressed the possibility that the Court found that Ms Lavars was entitled to a retrenchment payment and/or reasonable notice, matters which are dealt with separately. 

8. For the following reasons, I do not accept the Bank’s submission that the two relevant positions were “directly comparable” within the meaning of the HR Express Redundancy Policy.

9. As noted above, there were four redeployment options identified in that Policy.  The only option which the Bank says is relevant is option 1, which deals with a secondee moving to “a directly comparable position” at the end of their secondment.  The expression “a directly comparable position” is then defined in the Redundancy Policy by reference to the following criteria:

   ·     is at the same level (i.e. grade) as your current position,

   ·     doesn’t change what you currently do in a way that is significant enough to be unreasonable given your skills and abilities, and

   ·     is located where you currently work or within a reasonable commuting distance.

10. After identifying the relevant criteria, the Redundancy Policy then states:

    You’re moved immediately to a directly comparable position.  If you don’t move, your employment is terminated and you aren’t entitled to a retrenchment payment.  If there are no directly comparable positions available your manager could off an indirectly comparable position.

11. For the following reasons, and while noting Ms Lavars’ candid submission that the evidence as to whether her Westpac role was directly comparable with her previous role at SGB was “scant”, I do not regard the positions to be directly comparable.  The first point of significant differentiation relates to the different levels of bonus incentive available to Ms Lavars at SGB when compared with Westpac.  In particular:

    (a)in November 2009, Ms Lavars was informed by Mr Ling that she would receive an annual bonus for her work at Westpac in the amount of $80,000 which she described as very disappointing in circumstances where she had received a bonus of $150,000 at SGB the previous year; and

    (b)she had been told that she was to be moving from SGB’s TIP to Westpac’s incentive plan which, based on what is set out immediately above, was less generous.

12. It is evident from Ms Lavars’ cross-examination that the $150,000 bonus she received for 2007/2008 was in the nature of a one-off payment and was guaranteed.  It was higher than the SGB TIP payment which she received in the two previous years ($95,000 for 2006/2007 and $85,000 for 2005/2006).  Ms Lavars explained that she understood that she was offered the guaranteed bonus of $150,000 because staff in her area were being approached by other banks regarding potential job opportunities and that she had also “moved into a slightly different role” at SGB.  I accept that evidence. 

13. While Ms Lavars was working at SGB, her TIP payments increased consistently from an amount of $40,000 in 2001/2002 to $150,000 in 2007/2008.  She received a TIP award of $80,000 in 2003/2004, which is the same amount as that which she received some five years later while working on secondment at Westpac.  The significant differences in the bonus amount Ms Lavars received at Westpac compared with her incentive awards at SGB suggest that her position at Westpac was not directly comparable. 

14. Secondly, and perhaps more importantly, I consider that the duties which Ms Lavars performed at Westpac were not directly comparable with those she performed at SGB.  As noted above, from 2006, Ms Lavars reported to Mr Wittenberg and worked mainly in relation to originations while continuing to perform her institutional sales functions at SGB.  Her role then expanded to include marketing and the origination/distribution capabilities of SGB.  That is to be contrasted with the position she occupied at Westpac from December 2008, which focused exclusively on originations in Debt Capital Markets.  Indeed, Ms Lavars’ performance review at SGB for 2007/2008 reveals that her origination role there comprised 50 per cent of her performance criteria while the other 50 per cent related to customer and strategy and projects criteria.  It is difficult to see how, in those circumstances, the two relevant roles can accurately be described as “directly comparable” when 100 per cent of her work at Westpac was in originating debt market transactions.  Ms Lavars gave evidence, which I accept, that at Westpac she performed none of the sales functions of:

    …my role at St George.  My duties at Westpac were exclusively concerned with originations.  The sales function involves liaising with investors directly.  I no longer undertook this role.  Instead, my work in originations involved liaising with the issuers, the other banking institutions who sought to raise money. 

15. Having regard to these matters, and while recognising that Ms Lavars’ salary remained the same while she worked at Westpac (apart from incentives), I find that the roles were not “directly comparable” within the meaning of the relevant criteria set out in the HR Express Redundancy Policy. 

16. The Bank also submitted that it was unlikely that Ms Lavars would have refused to be redeployed to the position at Westpac and that, if she did, she would forfeit her entitlement to a retrenchment payment under the terms of the HR Express Redundancy Policy.  This submission has at least two fundamental difficulties.  First, that provision in the Policy applies only in respect of “a directly comparable position”.  For reasons given above, I do not consider that Ms Lavars’ position at Westpac fitted that description.  Secondly, and in any event as found above, I accept Ms Lavars’ evidence that she would not have agreed to a permanent role in that position at Westpac.

17. For these reasons, I reject the Bank’s alternative scenarios as to what is likely to have happened if it had performed Ms Lavars’ contract.  Accordingly, Ms Lavars is entitled to receive a retrenchment payment in accordance with the HR Express Redundancy Policy.  She claims an amount totalling $320,865, comprising 47 weeks of her total salary package at $355,000 (made up by her base salary of $205,000 and her TIP at $150,000). 

18. For reasons which are given in section H below, I consider that, for the purposes of the Redundancy Policy, Ms Lavars’ “pay” for the purposes of the Policy is limited to her base salary, i.e. $205,000.  It might also be noted that the $150,000 figure relied on by her in respect of the TIP reflects a one-off payment and I would not be willing to use it in any event.  But that issue does not arise because I consider her TIP entitlements to be irrelevant to this matter.  Having succeeded in her claim regarding retrenchment, Ms Lavars is entitled to an amount of damages comprising 47 weeks of her base salary ($205,000), which I believe amounts to $185,288.45, plus interest.

    Mr Moore’s secondment to Westpac

19. The relevant issues concerning this aspect of Mr Moore’s case appear to be as follows:

    (a)was the SGB Secondment Policy incorporated into his contract of employment with SGB;

    (b)did the Secondment Policy apply to the position to which Mr Moore was appointed at Westpac pursuant to a letter dated 28 November 2008;

    (c)what is the relevance, if any, to him of the amendments made in October 2009 to the Secondment Policy;

    (d)did SGB repudiate the terms of his contract by failing to return to him to employment as SGB after he had been seconded to Westpac for 12 months;

    (e)did he accept that repudiation, thereby bringing his contract with SGB to an end or did he elect to affirm that contract; and

    (f)is Mr Moore entitled to damages on the basis that if his contract of employment had been performed by SGB, he would have been entitled to;

    (i)reasonable notice of termination, which he contends is 18 months; and

    (ii)a retrenchment payment under the HR Express Redundancy Policy, which he contends is 58 weeks’ pay and should also reflect both his base salary and incentives?

    (a) Was the Secondment Policy incorporated into Mr Moore’s contract of employment?

20. This issue was dealt with above in respect of Ms Lavars.  Although there are some factual differences between her case and that of Mr Moore, I consider that the Secondment Policy was incorporated into both their contracts of employment. 

21. As noted above, Mr Moore commenced employment with SGB in 1994 pursuant to a letter dated 1 September 1994.  Unlike the position with Ms Lavars, Mr Moore’s letter was silent on the application of policies and procedures.  However, the letter dated 28 November 2008, which notified him of his appointment to the new role at Westpac as a Proprietary Trader, expressly stated that during his secondment “the employment policies of your employer would continue to apply to you”. 

22. It is convenient to set out relevant extracts from the 28 November 2008 letter from Ms Graycon to Mr Moore, noting the repeated references to him being seconded:

    Following the merger between Westpac and St George, I confirm your direct appointment to your new role of Proprietary Trader with the following details:

    ·     Your role will report to Graeme Edie – Executive Director, FX Derivatives & Risk

    ·     Your role will be part of Foreign Exchange & Commodities, Carbon & Energy

    ·     You will continue to be employed by St George.

    In your role of Proprietary Trader you will be required to assist with work for the broader Westpac Group.  As such, while you remain employed by your current employer, you will be seconded for the portion of the work that you do for the Westpac Group.  The secondment arrangement is a requirement of our corporate structure following the merger.

    During the secondment the employment policies of your employer would continue to apply to you.  Some additional policies may also apply, for example, compliance policies related to the portion of work that you do on secondment.  All other terms and conditions of your employment continue to apply, as varied by this letter.  (Emphasis added). 

    …

23. The reference in the penultimate paragraph of this extract to “the employment policies” of SGB applying during his secondment is important.  For similar reasons to those given above in respect of Ms Lavars, I consider that a reasonable person reviewing that sentence in the context of the 28 November 2008 letter overall would conclude that the Secondment Policy was incorporated into Mr Moore’s contract of employment.  It is undisputed that the Secondment Policy was in existence and was available on the Bank’s intranet at this time. 

24. I do not accept the Bank’s submission that the relevant statement in the 28 November 2008 letter failed to give rise to a contractual obligation because a reasonable person would not conclude that the statement was so intended (citing Toll at [179]). In circumstances where the relevant statement appears in a letter which had the very purpose of informing Mr Moore that he was being seconded to Westpac, I do not doubt that a reasonable person reading the relevant sentence would conclude that the reference to the employment policies of SGB which continued to apply to Mr Moore included the Secondment Policy.

25. I accept, however, that, properly construed, the sentence should be read as referring to the employment policies of SGB as those policies were expressed from time to time, which would include lawful variations made thereto (see [1208]-[1209] above).

26. The Bank emphasises that Mr Moore was repeatedly told that his was an ongoing position at Westpac and that it was not temporary.  I accept that Mr Moore was told by Mr Edie several times, including in meetings which they had on both 19 June 2009 and 16 October 2009, that his position at Westpac was ongoing and not temporary.  I also accept that the same points was made to him in a letter dated 18 November 2009, which Ms Silvera sent to Mr Moore in response to Mr Moore’s request to be provided with a letter confirming the status of his employment and some clarification of the reference to “secondment” in the letter dated 28 November 2008 (see [117] above).  Similar points are recorded in the file note prepared by Ms Silvera after her meeting with Mr Moore on 18 November 2009, in which her letter bearing the same date was discussed. 

27. In support of its submission that Mr Moore accepted the Bank’s repeated stance regarding the status of his employment, the Bank also relies on the fact that, on 7 October 2009, Mr Moore accessed the SGB intranet website and reviewed the recent amendments to the Secondment Policy.  It submits that Mr Moore was aware from that time that the Secondment Policy had been revised to include a specific and explicit clarification to the effect that it did not apply to someone in his position.  It adds that Mr Moore nevertheless continued to work at Westpac on that basis and did so without protest or reservation. 

28. The relevant issues appear to be:

    (a)viewed objectively, was the position to which Mr Moore was seconded permanent or temporary; and

    (b)in any event, did Mr Moore ultimately accept Westpac’s position that his role was permanent and did not attract the Secondment Policy?

29. As to the first matter, I consider that, having regard to the express terms of his letter of secondment, the position to which Mr Moore was seconded at Westpac was temporary because, under the terms of the Secondment Policy, all secondments were temporary in the sense that they were subject to a non-extendable cap of 12 months.  I consider that Mr Moore was entitled to read that letter in the way that he did and to proceed on the basis that his seconded position was subject to the Secondment Policy and was temporary, not permanent.  In my view, the subjective views of Westpac’s representatives cannot alter the objective meaning of that letter. 

30. The second issue is more complex but, for reasons which I will now give, I accept the Bank’s submission that Mr Moore’s conduct in late 2009 and then in 2010 up until his employment was terminated is consistent with him having elected to affirm his SGB contract and continue with it, rather than accept what he described as SGB’s repudiation of the contract and bring about its termination.  I consider that Mr Moore’s conduct places him in a different position to Ms Lavars. 

31. The Bank relies upon Mr Moore’s conduct after receipt of the Bank’s letter dated 30 November 2009 up until 24 December 2009, during which he:

    ·continued to turn up for work as before;

    ·did not respond to the Bank’s letter of 30 November 2009;

    ·accepted payment from SGB for the work he continued to do;

    ·engaged in discussions as to the basis on which his SGB employment might be terminated by resignation; and

    ·embarked upon performance counselling pursuant to SGB’s performance counselling policy. 

32. I accept that each of these matters, apart from the second, supports the Bank’s submission.  As to the second matter, I consider that it overstates things to say that Mr Moore did not respond to the Bank’s letter of 30 November 2009.  It is evident that, during this period, Mr Moore was waiting to be told whether or not SGB would grant him redundancy and it was not until mid-December 2009 that he received a without prejudice offer on that subject, which he then rejected.  Moreover, it was only shortly thereafter that Mr Moore sent his letter dated 24 December 2009 in which here affirmed his position.  The terms of that letter are set out above. 

33. As noted above, Mr Moore and the Bank exchanged letters dated 24 December 2009 in which they formally recorded their respective positions regarding his employment status.  Neither side had shifted from its previously stated positon.  Mr Moore purported to accept the termination of his employment by SGB by way of redundancy and then stated that he would comply with the direction for him to work at Westpac.  He recorded his assumption that this direction was given on behalf of Westpac and was for him to work as a Westpac employee.  The Bank immediately responded and emphasised that SGB, he would not be offering him redundancy, he was still employed by SGB and would not receive a new contract of employment from Westpac and that he should attend for work on 11 January 2010 as usual at Westpac’s premises. 

34. In further support of its submission that Mr Moore elected to affirm his SGB contract of employment by his conduct post 24 December 2009, the Bank points to the following additional matters:

    ·Mr Moore did not respond to the letter dated 24 December 2009;

    ·rather, he turned up for work at Westpac on and after 11 January 2010 as previously;

    ·he accepted payment of his wages from SGB; and

    ·he continued to participate in performance counselling pursuant to SGB’s policy up until his employment was terminated on 11 May 2010. 

35. In my view, by his conduct as described in [1259] above (subject to the qualification in [1260]), in [1261] and also Mr Moore’s further conduct after his employment with SGB was terminated (see [1262] above), Mr Moore elected to affirm his SGB contract of employment.  All this conduct is inconsistent with the assertion in his 24 December 2009 letter that he accepted the Bank’s repudiatory conduct. 

36. I consider that there is also considerable force in the Bank’s submission that, in its terms, Mr Moore’s letter of 24 December 2009 did not amount to an acceptance of any alleged repudiation of his contract by SGB, but rather purported to accept an alleged offer of termination of his employment contract with SGB by way of redundancy.  In any event, the Bank further contends that, by continuing to attend for work after 11 January 2010 and accepting his salary from SGB on the express basis that he was doing so as a SGB employee on his existing terms and conditions of employment with that Bank, Mr Moore accepted the position and cannot now resile from it. 

1. In further support of that submission, the Bank points to the fact that, after 11 January 2010, Mr Moore positively asserted the existence of his employment contract with SGB by:

   (a)commencing these proceedings on 12 April 2010 on the pleaded basis that he was employed by SGB, from 12 September 1994 under the terms of a single employment contract; and

   (b)subsequently amending his pleadings to sue for damages based on breaches of his employment contract with SGB which were alleged to have occurred after January 2010.

2. I accept those submissions.  In my view Mr Moore cannot succeed in relation to his claims regarding the events which occurred in late 2009 because his conduct is consistent with him having elected to affirm that contract of employment with SGB up until it was terminated on 11 May 2010.  It is relevant to note in this context that, after 1 March 2010 when the two banks became a single ADI, Westpac succeeded to SGB’s rights and obligations under Mr Moore’s contract of employment  by operation of law. 

   (b) What is the relevance, if any, of the October 2009 amendments to the Secondment Policy?

3. For completeness, having regard to my finding above, this issue does not strictly arise but in case that finding is wrong, I will express my views on it.  The Bank submits that Mr Moore never pleaded that the letter of 28 November 2008 gave rise to a contractual obligation on the Bank’s part to apply its policies to his employment.  It complains that there is therefore no pleading going to the issue of what type of “employment policies” were being referred to in the relevant sentence of the letter dated 28 November 2008.  It says that Mr Moore pleaded a different case which was to the effect that the Secondment Policy was incorporated into his contract of employment because it was published on the SGB intranet, Mr Moore accepted that it was intended to be binding on both parties and he continued to perform his duties accordingly.

4. In my view, the pleading point has no substance.  The issue was adequately pleaded in paragraph 3 of Mr Moore’s further amended statement of claim, where it is stated that his original contract of employment dated 12 September 1994 was subsequently varied several times, including by the letter dated 28 November 2008 and also by the Secondment Policy. The Bank did not contend that it was caught by surprise or otherwise prejudiced by the way in which this aspect of Mr Moore’s case was presented.

   (c) Did the 2008 Secondment Policy apply to the position to which Mr Moore was appointed at Westpac in November 2008?

5. As is apparent from the findings I have made above, this question should be answered affirmatively.

   (d) Did SGB breach Mr Moore’s contract of employment when it refused to end his secondment after he had worked at Westpac for 12 months?

6. Having regard to the findings I have made above, I consider that SGB breached the terms of Mr Moore’s contact of employment with SGB by failing to carry out the obligations imposed on it under the Secondment Policy.  That conduct amounted to a repudiation of its contract of employment.  But for reasons given above, I find that Mr Moore did not in fact accept that repudiation, but rather, elected to affirm his SGB contract of employment. 

7. I do not accept the Bank’s submission that there was no breach because the Secondment Policy contemplated that Mr Moore could be “appointed to the role to which you were seconded”.  There is no contest that the Secondment Policy contained such a provision.  It is equally plain, however, that the provision was not in fact relied upon by SGB, as is reflected in the terms of the letter dated 24 December 2009 which Mr Chandrasekkar sent to Mr Moore.  That letter asserted that Mr Moore was still employed by SGB and, therefore, Westpac would not be providing him with a new contract of employment.  That assertion was presumably made because SGB was still insisting upon maintaining its erroneous stance that Mr Moore had not been seconded to Westpac on a temporary basis, but had been appointed to an ongoing and permanent role. 

8. I would also reject the Bank’s alternative submission that, regardless of the terms of the Secondment Policy, it was always open to SGB to direct Mr Moore to perform any role of the same general character, consistent with his skills and experience.  For similar reasons to those given above in relation to Ms Lavars in respect of a similar contention advanced by the Bank, I do not consider that SGB had any such contractual power.  Such a power is inconsistent with the express terms of the Secondment Policy.  In any event, I do not consider that the role which Mr Moore performed at Westpac after 30 November 2009 or, indeed, from 11 January 2010 until his employment was terminated in May 2010, was of the same general character as that which he performed previously at SGB. 

   (e) Is Mr Moore entitled to an award of damages and, if so, in what amount?

9. In view of my finding above that Mr Moore elected to affirm his SGB contract of employment I do not consider that he is entitled to an award of damages in respect of his secondment to Westpac. 

10. I have dealt separately with Mr Moore’s claims for damages in respect of his TIP, MTIP and reasonable notice. 

    H. Severance Claims, Including the Meaning of “Pay” in the HR Redundancy Policy

11. It is common ground that the Redundancy Policy was incorporated into the contracts of employment of at least some of the relevant applicants.

12. For the following reasons, I consider that, properly construed, the reference to “pay” in the Policy is a reference to base salary alone and does not import any consideration of any bonus or incentive which any of the relevant applicants claim they were entitled to receive. 

13. First, in my view, that is the ordinary meaning of the term.  The relevant meaning is to be found in the Macquarie  Dictionary, (5^th ed), and is as follows:

    18. wages, salary, or stipend

14. Secondly, the interchangeable meaning of the terms “pay” and “salary” is further reinforced by other parts of the Policy.  It is notable, for example, that in the following section of the Policy “which appears on the final page”, those terms are used interchangeably.

    What happens to your salary?

    If you transfer to a lower-position, your salary is maintained on a slowly decreasing scale over a period of no more than 12 months;

    ·3 months @ 100% maintenance

    ·3 months @ 75% maintenance

    ·3 months @ 50% maintenance

    ·3 months @ 25% maintenance

    If you transfer to a part-time position, your pay isn’t reduced during the trial period, but your working hours are gradually replaced by no more than 2 hours per week six weeks until you reach your new hours.  After the trial period your pay is also reduced on the same basis – no more than 2 hours per week every six weeks.

    (Emphasis in original).

15. Thirdly, if the term had the broader meaning as contended by the relevant applicants, it would reasonably be expected that the Policy would have indicated which particular period was relevant in terms of receiving a bonus or incentive in order to calculate the employees’ severance payment entitlement.  Absent such an indication, there is considerable uncertainty as to which period will be relevant: is it the immediately preceding Bank financial year or the current Bank financial year?  What scope, if any, is there for a pro rata arrangement to apply vis-a-vis any relevant bonus or incentive during the appropriate period?  In my view, the absence of any provision in the Policy dealing with these matters that supports the conclusion that “pay” does not include any bonus or incentive.

16. Fourthly, the relevant applicants’ preferred construction is incompatible with, and fails to accommodate, important features of the various incentive schemes.  As noted above, it is a condition of each of them that the relevant employee continues to be employed with SGB when the incentive payment becomes due in two separate tranches which post-date the determination of the employees’ eligibility to receive incentive.  The assessment of an employee’s severance or retrenchment payment at the time of retrenchment takes place when it will be unknown whether, absent the retrenchment, the employee would have remained in SGB’s employment when the incentive payment vested.  This is another practical reason why the relevant applicants’ preferred construction must be rejected.

17. Fifthly, while it may be accepted as a matter of principle that there is a distinction between notice and severance, as is reflected in cases such as Fryar and Reynolds, I do not consider that this distinction assists in determining the central issue of construction here.  The Policy provides that a retrenchment payment is to be calculated by reference inter alia to an amount of six weeks’ pay in lieu of notice.  That component applies equally to all SGB employees to whom the Policy is relevant, irrespective of what specific period of notice a particular employee is entitled to receive under his/her contract of employment.  The period of notice might be greater or lesser than the six weeks stipulated in the Policy.  However, the point is that the Policy is only enlivened when an employee is retrenched, as opposed to terminated by the giving of notice.  The Policy simply provides that, in the case of severance or retrenchment, the payment to which an affected employee is entitled includes a component which comprises a monetary amount which is calculated by reference to a fixed period of notice of six weeks. 

18. Sixthly, I attach no significance to the fact that the Policy was subsequently amended on 1 March 2010 so as to make it explicit that bonus or other entitlements are excluded from redundancy payments.  That subsequent amendment is simply irrelevant to the task of construction which, the High Court has held,  involves (emphasis added):

    …the ascertainment of the meaning which the document would convey to a reasonable person having all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract.

    (Maggbury Pty Ltd v Hafele Australia Pty Ltd [2001] HCA 70; (2001) 210 CLR 181; (2001) 185 ALR 152 at [11] per Gleeson CJ, Gummow and Hayne JJ, citing Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 WLR 896 at 912 (per Lord Hoffmann), and see also Agricultural and Rural Finance Pty Ltd v Gardiner [2008] HCA 67, (2008) 238 CLR 570 at 583 per Gummow, Hayne and Kiefel JJ).

19. The position might be different if the issue was whether there was a contract at all (see Howard Smith Co Ltd v Varawa (1907) 5 CLR 68 at [78] per Griffith CJ).

20. Finally, even if (contrary to the above), the subsequent amendments were relevant to the issue of construction, I do not consider that they support the relevant applicants’ preferred construction .  That is because the amendments can be viewed as doing no more than putting beyond doubt and clarifying what was the ordinary meaning of “pay” in the Policy prior to the amendments.  I see no reason why the amendments should necessarily be seen as changing the previous meaning.  In other words, I consider the amendments to be neutral on the central issue of construction.

    PART 14: SUMMARY OF PRIMARY CONCLUSIONS

21. It is desirable if I summarise my primary conclusions. First, the retention incentive scheme claims should all be rejected (apart from the claims in contract which have been conceded by the Bank). I am not satisfied that any of the claims under the TPA or the torts of deceit and negligence were made good.

22. Secondly, I accept that the TIP had contractual force and effect in respect of Messrs Lawson, Wittenberg, Smith and Moore and Ms Lavars and that SGB breached its contractual obligations to them in respect of the TIP, but for reasons which are given above I consider that only Mr Wittenberg is entitled to recover damages in respect of the TIP for only 2008/2009 and on a pro rata basis.  None of the relevant applicants (including Mr Wittenberg) is entitled to damages in respect of the TIP for 2009/2010. 

23. Thirdly, I consider that the MTIP also had contractual force and effect.  But Mr Lawson and Mr Moore are not entitled to raise any issue regarding unvested shares in the MTIP for 2007/2008 because the issue was not adequately pleaded by them.  Nor are they entitled to damages in respect of the MTIP for 2008/2009 because both were assessed as ineligible to receive an MTIP award in that year.  Furthermore, they suffered no loss because, even if the persons who carried out their performance assessments for that year lacked authority or applied the wrong criteria, I am not satisfied that a different outcome would have resulted if their performance reviews had been carried out by SGB managers and by reference to the MTIP Rules for 2008/2009.  I also reject their claims in respect of the MTIP for 2009/2010 because neither was eligible to participate in the scheme in that year.  Indeed, the MTIP had by then ceased to exist. 

24. Fourthly, I do not accept Ms Murphy’s claims concerning the STIA and, more particularly, that any award of damages in her favour for wrongful termination should include an amount in respect of that scheme for 2008/2009.  The issue does not arise because I do not accept that Ms Murphy was wrongfully terminated when she was made redundant.  In accordance with the HR Express Redundancy Policy, as properly construed, she was only entitled to receive six weeks’ base salary in lieu of notice.  In fact, Ms Murphy received more than that in her retrenchment payment. 

25. Fifthly, while I accept that the DIP had contractual force and effect in respect of Mr Poulos, I am not satisfied that Mr Poulos has established any breach of his contractual entitlements in respect of the DIP for 2008/2009. 

26. Sixthly, apart from Mr Wittenberg and Ms Lavars, I reject the other relevant applicants’ claims that they were wrongfully dismissed because they were not given reasonable notice of termination of their employment.  I reject their contentions that the HR Express Redundancy Policy, which expressly provided that a retrenchment payment had to include an amount of six weeks’ pay in lieu of notice, did not displace any separate entitlement to notice (including under the Quinn principles). 

27. Seventhly, I consider that Mr Wittenberg is in a different position, because he was employed under a service agreement, to which the retrenchment provisions in the HR Redundancy Policy expressly did not apply.  I consider that Mr Wittenberg’s contract of employment was wrongfully terminated because he was not given reasonable notice to which he was entitled in accordance with the Quinn principles.  I have concluded that Mr Wittenberg was entitled to nine months’ notice and that he is entitled to an award of damages in respect of the Bank’s breach of his contractual entitlement. 

28. Eighthly, as to Ms Lavars, she was not retrenched, but was summarily dismissed.  I have found that her summary dismissal was wrongful.  At the end of her 12 month secondment period, Ms Lavars had a contractual entitlement to be retrenched.  She is entitled to an appropriate award of damages in respect of SGB’s breach of her contractual entitlement under the HR Express Redundancy Policy.  I also consider that this Policy displaces any entitlement which Ms Lavars might otherwise have had to reasonable notice of termination of her employment. 

29. Ninthly, I do not consider that Mr Moore is entitled to an award of damages in respect of what I have found to be a wrongful termination of his contract of employment, because he elected to affirm SGB’s repudiatory conduct.  For similar reasons, Mr Moore is not entitled to an award of damages in respect of the bank’s conduct which I find was in breach of Mr Moore’s contractual entitlements under the Secondment Policy.  However, Mr Moore is entitled to an award of damages in respect of SGB’s failure to give him reasonable notice on the termination of his employment.  The measure of his damages is four months’ pay (base salary) less the four weeks’ salary which he was paid in lieu of notice, plus interest. 

30. Finally, on the disputed issue as to the proper meaning of the word “pay” in the HR Redundancy Policy, I find that this is a reference to base salary alone and does not import any consideration of any bonus or other incentive to which the relevant applicants claim they were entitled to receive. 

31. It is appropriate if the parties now have an opportunity to consider these reasons for judgment and to propose short minutes of order which give effect to them, including calculating the relevant amounts of damages and interest under s 51A of the Federal Court of Australia Act 1976 (Cth). The parties have sought an opportunity to be heard on costs.

32. Within the next four weeks, the parties should seek to agree proposed short minutes of order which give effect to these reasons of judgment and which also deal with costs.  If they are unable to reach agreement, they should file and serve within that period their respective proposed short minutes of order, together with an outline of supporting written submissions which are not to exceed 20 pages in length and in normal format.  It is to be hoped that the proceedings can then be finalised without the need for a further oral hearing but the parties may indicate in their outline of written submissions whether they request an oral hearing.

33. Orders will be made accordingly. 

I certify that the preceding one thousand two hundred and ninety-seven (1297) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Griffiths.

Associate:

Dated:       14 October 2014