Attrill and Others v Dresdner Kleinwort Ltd

JurisdictionEngland & Wales
JudgeThe Hon Mr Justice Simon
Judgment Date28 May 2010
Neutral Citation[2010] EWHC 1249 (QB)
Docket NumberCase No: HQ09X04007 & HQ09X05230
CourtQueen's Bench Division
Date28 May 2010

[2010] EWHC 1249 (QB)

IN THE HIGH COURT OF JUSTICE

QUEEN'S BENCH DIVISION

Royal Courts of Justice

Strand, London, WC2A 2LL

Before:

The Hon Mr Justice Simon

Case No: HQ09X04007 & HQ09X05230

Between:
The Parties named in Schedule A
Claimants
and
(1) Dresdner Kleinwort Limited
(2) Commerzbank AG
Defendants
and
And between:
Fahmi Anar and others
Claimants
and
(1) Dresdner Kleinwort Limited
(2) Commerzbank AG
Defendants

Mr Nigel Tozzi QC and Ms Kate Livesey (instructed by Stewarts Law LLP) for the Schedule A—Attrill—Claimants.

Mr Andrew Hochhauser QC and Mr David Craig (instructed by Mishcon de Reya) for the Anar Claimants.

Mr Jonathan Sumption QC and Mr Martin Chamberlain (instructed by Linklaters LLP) for the Defendants

Hearing dates: 4–5 May 2010

The Hon Mr Justice Simon

Introduction

1

This is an application by the Defendants for Summary Judgment under Part 24 against two sets of Claimants.

2

The First Defendant ('DKL') is a service company wholly owned by Dresdner Bank AG ('DB'). The Claimants form two groups. It is convenient to refer to the Claimants in the first claim as 'the Attrill Claimants' and in the second claim as 'the Anar Claimants'.

3

At the relevant times, both sets of Claimants were either employed by or seconded to DKL and worked for DB's global investment banking division, which was known as 'Dresdner Kleinwort' or 'DKIB'.

4

DB was formerly owned by Allianz SE, but became a wholly owned subsidiary of the Second Defendant ('Commerzbank') with effect from 12 January 2009; and, as a result of this acquisition, there was a change of personnel at the most senior levels of management at DB and DKL.

5

The two claims are similar. In each action the Claimants seek to recover sums which are said to be due as bonuses for the calendar year 2008 or alternatively damages for breach of contract. In broad terms the Claimants accept that under the terms of their contracts of employment the award of an annual bonus was discretionary. They advance their claim on the basis that two events converted what had been a right to be considered for a bonus into an entitlement to a specific sum.

6

Although it will be necessary to consider these two events in greater detail later in this judgment, it is convenient to summarise them at this stage.

7

The first was an announcement made by the Chief Executive Officer of DKIB (Dr Stefan Jentzsch) at what was referred to as a 'Town Hall meeting' on 18 August 2008. The announcement was that there would be a guaranteed minimum pool of €400 million available for staff bonuses. There were also a number of further references to the continued existence of this 'guaranteed' minimum pool by senior executives of DKIB on a number of subsequent occasions between 18 August and November 2008.

8

The second event was the sending and receipt of letters dated 19 December 2008 to each of the Claimants, informing them of the amount of a bonus which had been 'provisionally awarded' to them. The letter stated that the provisional award was subject to review in the event that there were additional material deviations in DKIB's revenue and earnings, as against the forecast for the months of November and December 2008.

9

The Claimants claim these two events gave rise to legally binding obligations to pay the amount of the bonus specified in the 19 December letter.

10

The Defendants contend that they were only statements of their intention at the relevant time; and that, by the time the bonuses came to be finally determined and paid, the economic background and financial condition of DKL was such that DKL was entitled to change its mind, without infringing the Claimants' legal rights. The Defendants also contend that there is no real prospect of the claims succeeding, even on the factual assumptions contained in the Claimants' pleadings; and that it is just and convenient to dispose of the case summarily.

11

In answer, the Claimants argue that there are important factual issues which need to be investigated at trial, that they have good chances of succeeding with their claims at trial and that, in any event, the Defendants' applications for summary judgment should be dismissed.

The principles to be applied on a Part 24 Application

12

So far as relevant to the present applications, Part 24 of the CPR provides that a Court may give summary judgment where it considers that the Claimant has no real prospect of succeeding in the claim, and there is no other compelling reason why the case should be disposed of at trial.

13

The principles to be applied when considering the first part of this test have been summarised by Lewison J in The Federal Republic of Nigeria v Santolina Investment Corporation [2007] EWHC 437 (Ch) at [3]-[4], by reference to a number of authorities. This summary has been cited with approval by the Court of Appeal in Khatri v Cooperatieve Centrale Raiffeisen [2010] EWCA Civ 397.

14

The relevant principles can be stated as follows:

a. The Court must consider whether the Claimants have a 'realistic' as opposed to a 'fanciful' prospect of success: Swain v Hillman [2001] All ER 91.

b. A realistic claim is one that is more than merely arguable: ED&F Man Liquid Products v Patel [2003] EWCA Civ 472 at [8].

c. In reaching its conclusion the court must not conduct a mini-trial: Swain v Hillman.

d. This does not mean that a court must take at face value everything that a claimant says in statements before the court. In some cases it may be clear that there is no real substance in factual assertions made, particularly if contradicted by contemporaneous documents: ED&F Man Liquid Products v Patel at [10].

e. However, in reaching its conclusion the court must take into account not only the evidence actually placed before it on the application for summary judgment, but the evidence that can reasonably be expected to be available at trial: Royal Brompton Hospital NHS Trust v Hammond (No 5) [2001] EWCA Civ 550.

f. Although a case may turn out at trial not to be really complicated, it does not follow that it should be decided without the fuller investigation into the facts at trial than is possible or permissible on a summary judgment hearing. Thus the court should hesitate about making a final decision without a trial, even when there is no obvious conflict of fact at the time of the application, where reasonable grounds exist for believing that a fuller investigation into the facts of the case would add to or alter the evidence available to a trial judge and so affect the outcome of the case: Doncaster Pharmaceuticals Group Ltd v Bolton Pharmaceutical 100 Ltd [2007] FSR 63.

15

There is perhaps one further point to note in the context of the present application: that it is important to distinguish between facts, argument and questions of law. A large part of the evidence traversed all three categories.

The factual background

16

It is common ground that the Claimants were entitled under their contracts of employment with DKL to be considered each year for the payment of a discretionary bonus as a supplement to their salary; and that in deciding whether to pay the bonus, DKL would not behave arbitrarily, capriciously or inequitably. It would exercise its discretion as to whether to award a bonus, and if so the amount of that award, in good faith and in a manner which was neither irrational nor perverse.

17

There was an established mechanism for fixing individual bonuses. This involved the allocation of a bonus pool and allocations from the pool to individual employees in a process which took place in November. In about mid-December, each employee received a letter from either DKL or DKIB's Human Resources Department confirming the amount of the bonus. The cash element of the bonus was paid with the salary in January of the following year, provided that the employee was still employed on the payment date and had not given or received notice to terminate his or her employment.

A chronology of main events

18

In the first half of 2008 there was considerable uncertainty about the future of the Dresdner Banking group, particularly after the management board of DB had announced in mid-March 2008 that it was separating its retail banking division from the investment banking parts of DB, including DKIB. The announcement led to speculation that the restructuring of DB was a prelude to the sale by Allianz of the investment banking business.

19

The uncertainty about the future of DKIB gave rise to particular concerns among many of DKL's and DB's employees about the security of their positions with DKIB. The senior management recognised the possibility of a widespread departure by DKIB staff. The FSA intervened and placed DKIB's UK regulated bodies on the 'FSA Firm Watchlist'. In its letter to Dr Jentzsch dated 23 May, the FSA having referred to uncertainty of DKIB's uncertain future, stated,

This lack of direction could have a destabilising effect in both the short and medium term, which could exacerbate the challenges faced by the firm during the current market turbulence. In particular (i) the continuing uncertainty among management and staff could lead to a significant number of key individuals leaving or becoming disaffected, which may pose a heightened risk to DK where management acknowledge that resources are already stretched within support function …

20

In the FSA's view significant work needed to be undertaken to address these concerns, and DKIB were required to assess the key risks to its operations 'including the risk of the loss of key staff.'

21

On 11 June the Management Operating Committee of DKIB expressed the view that,

… consideration be given to creating some kind of staff retention scheme to help retain front, middle office and back office staff whose continued presence is judged of importance to (DKIB) at this time

The minutes of the meeting of the DKIB Executive...

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