Russo v Westpac Banking Corporation

Giulio Russo (the applicant) commenced proceedings in the Federal Circuit Court of Australia against Westpac Banking Corporation (the respondent). The applicant sought relief under the Competition and Consumer Act 2010 (Cth) and also claimed breach of contract, alleging that the respondent had failed to pay him a bonus for the financial year 2010/2011. The applicant contended that the respondent had breached express and implied contractual terms regarding his bonus entitlement, or alternatively, had engaged in misleading or deceptive conduct in relation to those entitlements. The respondent argued that the bonus payment was a discretionary ex gratia payment under a non-contractual policy and that its decision not to pay the bonus did not breach any contractual obligation.

The court was required to determine whether the respondent had breached the applicant's contract of employment by failing to pay the bonus. This involved considering whether the various documents governing the employment relationship, including incentive plans and redundancy policies, formed part of the contract and whether the respondent's discretion to withhold the bonus had been exercised in a manner that was capricious, arbitrary, or unreasonable. A further issue was whether the respondent had engaged in misleading or deceptive conduct in contravention of the Australian Consumer Law. The court also had to consider the impact of the High Court's decision in *Commonwealth Bank of Australia v Barker* on the availability of implied terms of mutual trust and confidence in employment contracts.

The court found that while the respondent's employee, Daniel Musson, had admitted to breaching applicable policies and that his discretion had miscarried, leading to a likely higher bonus entitlement for the applicant, the applicant's claim for breach of contract failed. This was because the relevant incentive payment scheme was expressly stated to be non-contractual and subject to the absolute discretion of Westpac. The court noted that the applicant's employment had been terminated due to redundancy before the payment date, rendering him ineligible under the primary incentive plan. While the redundancy policy allowed for consideration of an ex gratia payment, this was also discretionary and subject to the manager's decision. The court concluded that the applicant had not established a contractual entitlement to the bonus. However, the court ordered the respondent to pay the applicant $70,000, representing the amount of his bonus from the previous financial year, on the basis that the respondent had failed to properly exercise its discretion under the Redundancy Policy.

The court ordered that the respondent pay the applicant the sum of AUD$70,000 within 28 days, and the respondent pay the applicant's costs and disbursements. The application was otherwise dismissed.