Attrill and Others v Dresdner Kleinwort Ltd

JurisdictionEngland & Wales
JudgeThe Chancellor,Lady Justice Smith,Lady Justice Black
Judgment Date08 March 2011
Neutral Citation[2011] EWCA Civ 229
CourtCourt of Appeal (Civil Division)
Docket NumberClaim Nos: HQ09X04007 & HQ09X05230
Date08 March 2011

[2011] EWCA Civ 229

[2010] EWHC 1249 (QB)



Royal Courts of Justice

Strand, London, WC2A 2LL

The Hon Mr Justice Simon

Before : the Chancellor of the High Court

Lady Justice Smith


Lady Justice Black

Claim Nos: HQ09X04007 & HQ09X05230

Appeal Refs: A2/2010/1599, A2/2010/1612 & A2/2010/1613

Attrill and Others
(1) Dresdner Kleinwort Ltd
(2) Commerzbank AG
Fahmi Anar & Others
(1) Dresdner Kleinwort Ltd
(2) Commerzbank AG

Nigel Tozzi QC and Kate Livesey (instructed by Stewarts Law LLP) for the Claimants

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

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

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


Hearing dates: 16th and 17th February 2011

The Chancellor



1. In early 2008 Dresdner Bank AG (“DBAG”) was a wholly owned subsidiary of Allianz SE until its sale to the second defendant Commerzbank AG announced on 31st August 2008 and completed on 12th January 2009. A division of its business, called Dresdner Kleinwort or DKIB (“DK”) carried on business as a global investment bank. The first defendant, Dresdner Kleinwort Ltd (“DKL”) was a wholly owned subsidiary of DBAG and carried on business as a service company for the other companies in the group. Those who worked in DK were employed by or seconded to DKL. Each of the claimants is such a person. It was the established practice of DK to allocate a bonus pool and individual bonuses in November each year, communicate the allocation to its employees in December and pay the cash element of any such bonus in January the next year provided that the employee was then still employed by DKL and not under notice to leave.


2. At a board meeting of DBAG held on 12th August 2008 Dr Jentzsch, the chief executive of DK, explained the need to define a 2008 bonus pool for DK to ensure employee stability. The minimum pool of €400m, to be announced the following week, should be guaranteed and allocated on a discretionary basis. On 18th August 2008 there was what was known in DK as a ‘Town Hall’ meeting. This was a pre-arranged meeting of employees in each of the offices of DK in London, Moscow, Frankfurt and New York which was addressed by the Chief Executive or others by means of a conference call or video-link. This meeting was addressed by Dr Jentzsch. He informed those employed in DK that there would be a guaranteed minimum bonus pool of €400m to be allocated to individuals on a discretionary basis according to individual performance. The decision to set up a minimum bonus pool of €400m for those employed in DK was confirmed on a number of occasions including in answers to ‘frequently asked questions' posted on DBAG's intranet between 18th August and 12th September 2008.


3. On 19th December 2008 there was sent to each employee in DK by the Human Resource department of DKL a letter (“the bonus letter”) in the following form:

“Dear []

A discretionary bonus for 2008 under the arrangements given below has been provisionally awarded at

? [€]

The provisional bonus award stated above is subject to review in the event that additional material deviations in Dresdner Kleinwort's revenue and earnings, as against the forecast for the months of November and December 2008, are identified during the preparation of the annual financial statements for 2008 i.e. that Dresdner Kleinwort's earnings position does not deteriorate materially in this period. This will be reviewed in January 2009 by Stefan Jentzsch. In the event that such additional material deviations are identified, the Company reserves the right to review the provisional award and, if necessary, to reduce the provisional award.”


4. On the same day there was a further Town Hall meeting during which Dr Jentzsch reassured those working in DK that it was very unlikely that DBAG would seek to rely on the proviso relating to material deviations, known as the material adverse change clause (“MAC clause”), and that if there was a further review it would be done by him or under his leadership. On 12th January 2009, on completion of the sale of DBAG by Allianz SE to Commerzbank AG, Dr Jentzsch was replaced by Mr Michael Reuther as chief executive of DK. On 18th February 2009 Mr Reuther sent an email to all employees in DK informing them that:

“bonus awards for all front and middle office employees who received a letter in December stating their provisional award, which was subject to Dresdner Kleinwort's financial performance targets, will be cut by 90% pro rata to the stated provisional amount.”


In the event the guaranteed bonus pool €400m was applied in payment of €152.2m to those with guaranteed bonuses, €120.4m, approximately €25m, being 10% of the allocation made in December, to those eligible for discretionary bonuses and the balance of €222.8m was retained by DBAG.


5. On 8th September and 27th November 2009 the proceedings to which these appeals relate were commenced. There are 104 claimants. Each of them was employed in the front or middle offices of DK. Each of them received a bonus letter dated 19th December 2008 in the form set out in paragraph 3 above. They claim from DKL the unpaid 90% of the bonuses there specified in the aggregate sum of €51,855,474 and interest from the 29th January 2009 and from Commerzbank AG the like sum as damages for inducing such breaches of contract. Defences were duly served on 3rd November 2009 and 19th January 2010.


6. On 28th January 2010 DKL and Commerzbank AG issued applications seeking orders under CPR Rule 24.2 summarily dismissing the actions against them on the grounds that the claimants have no real prospect of success and there is no other reason why the claims should be disposed of at a trial. The applications were heard by Simon J on 4th and 5th May 2010. By his order made on 28th May 2010, for the reasons given in his judgment handed down the same day, Simon J summarily dismissed any part of the claims which relied on the announcement made on 18th August 2008 on the ground that it did not create any enforceable contractual rights on which the claimants could rely but concluded that the claims based on the bonus letters raised issues of fact which should go to trial. Both sides now appeal with the permission of Elias LJ. Accordingly these appeals fall into two parts, the first relating to the announcement of 18th August 2008 and the second relating to the bonus letters. In due course I will deal with those issues in that order but first it is necessary to set out the facts in a good deal more detail and to note the principles to be applied in applications such as these.


The Facts


7. The contracts of employment between DKL and each of the claimants include a formal letter of appointment and the parts of the Dresdner Kleinwort Employment Handbook incorporated therein. Though the form of letter varied, each of them stated that the employee would be eligible for consideration by the employer for such discretionary awards as in the employer's absolute discretion it saw fit to award. Sections 1 to 20 of the Handbook were incorporated in the contracts of employment. Section 1.4 provides:

“The Company reserves the right to vary the terms and conditions described in this handbook and the terms and conditions of your employment generally. Such changes can only be made by a member of the Human Resource Department and must be communicated to you in writing. When the change affects a group of employees, notification may be by display on notice boards or Company Intranet.”


Section 15.1 provides that in the absence of any specific provision to the contrary the notice period for any employee below the level of director is not less than one week's notice for each year of continuous service subject to a minimum of one calendar month and maximum of 12 weeks. Sections 21 to 38 give details of benefits or facilities provided by DKL for its employees.


8. Section 33 deals with “Discretionary Bonus Awards”. So far as relevant it provides:

“33.1 You may be eligible to be considered for the payment of an annual discretionary award if, but only if, on the day bonus awards are actually paid (which is usually in the first quarter of the calendar year), you are both employed by the Company and not within a period of notice of termination of your employment.

33.2 Whether an award is made and the amount of such award, if any, is at the absolute discretion of the Company.

33.3 Many factors influence the Company's decision to make a discretionary award and, if awarded, the amount paid to an individual employee. There is no formula for calculating the level of awards which may be paid in any given year. The Company makes awards to support its commercial objectives at the given time and is likely to take into account many different and competing factors. These are likely to include but are not limited to:

• the financial performance of the Company and its associated companies

• …

• the aggregate sum made available for discretionary awards by management

• the need perceived by management to incentivise employees to achieve superior and preferably market-leading performance and to recognise such performance when it occurs

• …

• the particular need to retain key individuals regardless of their relative achievements during a period.

• market trends and conditions

• the strategic needs and relative priorities of the business and its various constituent activities

• ….

Many of these...

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