Walker v Citigroup Global Markets Pty Ltd

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FEDERAL COURT OF AUSTRALIA

Walker v Citigroup Global Markets Pty Ltd [2005] FCA 1678

DAMAGES – measure of damages ‑ breach of contract of employment – whether damages limited to one month’s salary – misleading and deceptive conduct – quantification of the value of a lost opportunity

Trade Practices Act 1974 (Cth), s 52, s 82, s 87

Hunter v Chief Constable of West Midlands Police [1982] AC 529 referred to
Williams v Spautz (1992) 107 ALR 635 referred to
Blair v Curran (1939) 62 CLR 464 referred to
Miller v University of New South Wales (2003) 132 FCR 147 referred to
I & L Securities Pty Ltd v HTW Valuers (Brisbane) Pty Ltd (2002) 210 CLR 109 referred to
O’Neill v Medical Benefits Fund of Australia Ltd (2002) 122 FCR 455 discussed
Wardley v Australia Ltd v Western Australia (1992) 175 CLR 514 referred to
Sellars v Adelaide Petroleum NL (1994) 179 CLR 332 referred to
Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31 referred to
National Australia Bank Ltd v Maher (No 2) [1999] 3 VR 583 referred to
Electricity Commission of NSW v Lapthorne (1971) 124 CLR 177 referred to
Burns v Lipman (1975) 132 CLR 157 referred to
Browne v Dunn (1894) 6 R 67 discussed
Jones v Dunkel (1959) 101 CLR 298 discussed
O’Donnell v Reichard [1975] VR 916 referred to
Brandi v Mingot (1976) 12 ALR 551 referred to
Murphy v Overton Investments Pty Ltd (2004) 216 CLR 388 referred to
Pritchard v Racecage Pty Ltd (1997) 72 FCR 203 referred to
Enzed Holdings Ltd v Wynthea Pty Ltd (1984) 57 ALR 167 referred to
Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 referred to
Gates v City Mutual Life Assurance Society Ltd (1986) 160 CLR 1 referred to
Henville v Walker (2001) 206 CLR 459 referred to
Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64 discussed
JLW (Vic) Pty Ltd v Tsiloglou [1994] 1 VR 237 referred to
White Industries (Qld) Pty Ltd v Flower & Hart (1998) 156 ALR 169 followed
Bostik (Australia) Pty Ltd v Gorgevski (No 1) (1992) 36 FCR 20 discussed
Wheeler v Philip Morris Ltd (1989) 97 ALR 282 referred to
Ministry of Defence v Wheeler [1998] 1 WLR 637 cited
Hartle v Laceys [1999] 1 Lloyd’s Rep P.N. 315 cited
Zoneff v Elcom Credit Union Ltd (1990) 94 ALR 445; (1990) 12 ATPR 41-058 referred to
Crystal Auburn Pty Ltd v IL Wöllermann Pty Ltd [2004] FCA 821 referred to
Robinson v Harman (1848) 1 Ex 850 referred to
Hadley v Baxendale (1854) 9 Ex 341 referred to

Finucane v New South Wales Egg Corporation (unreported, Lockhart J, 8 July 1988) discussed
Finucane v New South Wales Egg Corporation (1980) 80 ALR 486 discussed

Abrahams v Herbert Reiach Ltd [1922] 1 KB 477 referred to
Maredelanto Compania Naviera SA v Bergbau-Handel GmbH [1971] 1 QB 164 referred to
Baltic ShippingCompany v Dillon (1993) 176 CLR 344 referred to
Far…

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Details
Case
[2005] FCA 1678
Decision Date

CaseChat Overview and Summary

In the case of Walker v Citigroup Global Markets Pty Ltd, the plaintiff, Mr Walker, sought damages for the breach of an employment contract. Mr Walker, a former equity analyst and head of mining research, was made redundant following the merger of ABN AMRO and BZW. The defendants, the first and second respondents, were involved in the acquisition and subsequent employment arrangements. The primary legal issues before the court were whether the first respondent had breached the contract of employment with Mr Walker by terminating it and whether the second respondent was liable for misrepresentation regarding Mr Walker’s employment.

The court considered whether the first respondent’s actions constituted a breach of contract, particularly since Mr Walker had already accepted a redundancy offer. The court found that the first respondent had indeed breached the employment contract by reneging on the agreed terms after Mr Walker had accepted the redundancy offer. The court also examined whether the second respondent was liable for misrepresentation by suggesting that Mr Walker would be offered a position in its Corporate Finance department, which did not eventuate. The court concluded that the second respondent was liable for misrepresentation, as it had made a clear representation that was not fulfilled.

In reaching its decision, the court relied on the principle that a party to a contract is entitled to have the contract performed as agreed. The court also held that the second respondent’s conduct amounted to a misrepresentation, which induced Mr Walker to act to his detriment. The court awarded damages to Mr Walker for the breach of contract by the first respondent and for the misrepresentation by the second respondent.

The final orders included that the applicant file and serve proposed minutes of orders by a specified date, and that the parties file any submissions on costs or the proposed minute of orders by another specified date.

Orders

Orders of the court

1. The applicant file and serve proposed minutes of orders in accordance with these reasons for judgment on or before 4:30 pm on 28 November 2005.

2. The parties file and serve any submissions on costs and/or the applicant’s proposed minute of orders on or before 4:30 pm on 5 December 2005.

Background

Background to the litigation

The following are my reasons for judgment on the assessment of damages. Save where necessary, I do not repeat the circumstances that led to the institution of these proceedings or findings of fact following the trial on liability: see Walker (No 1). BACKGROUND FACTS In order to understand what follows, it is necessary to refer to some contextual facts. Immediately prior to February 1998, Mr Walker was an equity analyst, head of mining research and an executive director at ABN AMRO Australia Hoare Govett (Securities) Ltd. As head of mining research, he was responsible for a team of about 10 people. In Australia, ABN AMRO and ABM AMRO Australia Hoare Govett (Securities) Ltd (together ABN AMRO) operated investment bank activities separately from the activities of the ABN AMRO Bank. ABN AMRO had an Australian board of directors. The managing director was Peter Young, who also chaired the executive committee. Until the purchase of BZW Australia and BZW New Zealand (“BZW”), this committee comprised the managing director, the deputy managing director and six or seven executive directors. It was responsible for the management and policy of ABN AMRO. The investment bank had three divisions (Corporate Finance, Equity Sales and Trading and Research), which were responsible to the executive committee and Mr Young. Mr Walker was responsible to the head of research, where there was such a position; otherwise, he was responsible to Mr Young through the executive committee. On 22 December 1997, ABN AMRO announced to staff that its parent company was purchasing BZW. At the time ABN AMRO’s parent company acquired BZW’s operations in Australia and New Zealand, BZW was a significantly larger and better established business in Australia than ABN AMRO. ABN AMRO/BZW announced that BZW’s chief executive officer, Mr Steve Crane, would become the chief executive officer of the merged business. Shortly after the announcement on 22 December 1997, there was appointed an integration committee, consisting of senior management representatives from ABN AMRO and BZW, to oversee the merger and identify the employees to be offered ongoing employment. The integration committee ultimately reported to the ABN AMRO managing board. The board had final responsibility for decisions arising from the merger, including those relating to ongoing employment, although the evidence of one witness (Alan Hargreaves) was that, by the time a decision reached board level, it was “pretty much a fait accompli”. On or about 12 January 1998, the staff of ABN AMRO and BZW received a memorandum, which stated:“We are now writing to set out the principles and procedures agreed for merging the various businesses in Australia and New Zealand, and for integrating them into ABN AMRO’s global network.Integration CommitteeThe Integration Committee has been established to set guidelines and oversee the merger and integration of the ABN AMRO and BZW businesses. …The Integration Committee will be supported by divisional subcommittees which will be responsible for planning and implementing the integration process. …The Integration Committee, in conjunction with the global business line representatives, will review and approve the subcommittees’ plans before implementation commences. Membership of the relevant subcommittees will be announced shortly.RedundanciesABN AMRO’s goal is to create a fully integrated Australasian universal bank through combining the best of ABN AMRO Australia, ABN AMRO Hoare Govett and BZW Australasia.Regrettably, redundancies are likely to occur in product lines and support functions in all three organisations. The personnel needs of the merged business will be determined by the integration subcommittees. Where there are overlaps and consequently redundancies are required, we will attempt to find relocation opportunities within ABN AMRO’s global network. There will be no presumption as to which people are most likely to be made redundant – the best people will be selected for positions in the merged business.…In some cases we will consider offering voluntary redundancy. …”

Evidence

Evidence Before The Court

At the trial on damages, Mr Walker relied on three further affidavits sworn by him on 3 May 2004 (“the third affidavit”), 18 August 2004 (“the fourth affidavit”) and 6 September 2004 (“the fifth affidavit”). He also gave oral evidence and was subject to cross-examination. The respondents sought to rely on three affidavits: an affidavit of Peter Quinton affirmed on 4 August 2004; an affidavit of Paul Masi sworn on 6 August 2004; and an affidavit of Alan Hargreaves affirmed on 9 August 2004. Messrs Quinton, Masi and Hargreaves also gave oral evidence and were subject to cross-examination. Nicholas John McAlpine, who was the deputy head of human resources for ABN AMRO Australia, gave evidence on subpoena. He identified the company’s redundancy policy, current at least between 30 July 2001 and 27 August 2004.MR WALKER’S EVIDENCE I accept Mr Walker’s evidence concerning his academic qualifications and his early career. He holds a Masters degree in geology from the University of Oxford. He began his career as an explorations geologist, but, in 1990, joined an investment bank as a resource executive. In 1991, he became a resource analyst for another organisation and, in 1995, he joined ABN AMRO. With each new position, he gained seniority and greater remuneration. He also became a contributor in his area of expertise to various forms of media. The respondents led evidence that Mr Walker’s employment at ABN AMRO was predominantly as a gold analyst. Mr Walker stated, and I accept, that his expertise was not limited to gold. Prior to joining ABN AMRO, he had been a rated analyst in the diversifieds and solid fuels sectors and, at different times, held responsibility for the coverage of diversified resources, coal, aluminium, gold, and diamond equities, and also some commodity analysis. At ABN AMRO, he had at times held responsibility as a resource analyst not only for gold but also for coal, the CRA group, mineral sands and other diversified stocks, as well as for sections of commodity analysis. Mr Walker stated, and I accept, that, at ABN AMRO, he was predominantly employed as an equity analyst, although from the start of his employment with the company he held the title “director”. Further, during his employment at ABN AMRO, he also occupied other positions. Towards the end of 1995, he was appointed an “executive director” and joined the company’s executive committee. He also held the positions of head of corporate finance – resources (although only temporarily) and, from some time in 1997, head of mining research. In this role, he was responsible for coordinating activities of resource analysts covering a variety of areas. He was a contact point for the ABN AMRO Global Mining Group (“the Group”) and manager, co-organiser and, occasionally, chairman of the annual Zurich Gold Conference. He represented ABN AMRO at public and private functions. Mr Walker and Mr Quinton disputed the correct apportionment of Mr Walker’s duties but nothing ultimately turns on this factual detail.

Decision

Reasons for decision

KENNY J

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

Established by: KENNY J

On or about 12 January 1998, the staff of ABN AMRO and BZW received a memorandum, which stated:“We are now writing to set out the principles and procedures agreed for merging the various businesses in Australia and New Zealand, and for integrating them into ABN AMRO’s global network.Integration CommitteeThe Integration Committee has been established to set guidelines and oversee the merger and integration of the ABN AMRO and BZW businesses. …The Integration Committee will be supported by divisional subcommittees which will be responsible for planning and implementing the integration process. …The Integration Committee, in conjunction with the global business line representatives, will review and approve the subcommittees’ plans before implementation commences. Membership of the relevant subcommittees will be announced shortly.RedundanciesABN AMRO’s goal is to create a fully integrated Australasian universal bank through combining the best of ABN AMRO Australia, ABN AMRO Hoare Govett and BZW Australasia.Regrettably, redundancies are likely to occur in product lines and support functions in all three organisations. The personnel needs of the merged business will be determined by the integration subcommittees. Where there are overlaps and consequently redundancies are required, we will attempt to find relocation opportunities within ABN AMRO’s global network. There will be no presumption as to which people are most likely to be made redundant – the best people will be selected for positions in the merged business.…In some cases we will consider offering voluntary redundancy. …” On 16 January 1998, Mr Walker countersigned a letter of offer of employment with the first respondent and subsequently returned the offer, as agreed, to Oonagh Lancaster, who was the personnel consultant involved in his hiring. A contract of employment between Walker and the first respondent came into existence. On 6 February 1998, Mr Walker’s counterpart at BZW - Philip Lewis - was appointed head of resources (research) in the merged organisation. This was equivalent to the position that Mr Walker held prior to the merger. On 23 February 1998, ABN AMRO/BZW made Walker a redundancy offer, which he accepted. He later received a redundancy payment. On 10 February 1998, the financial press reported that the second respondent had purchased the first respondent’s Australian business. On 13 February 1998, the second respondent represented that, after its purchase of the first respondent, it would employ Mr Walker on the same terms and conditions as had been previously agreed with the first respondent. On 20 February 1998, however, the first respondent reneged on its employment contract with Mr Walker. Also on 20 February 1998, the second respondent represented that it was likely that a position would be offered to Mr Walker in its Corporate Finance department. Between 20 February 1998 and 20 March 1998, Mr Walker relied on this representation in seeking employment with the second respondent.