Westpac wins with a points decision in employment case

John Kavanagh
Former employees of St George Bank have had mixed success in claims against Westpac arising from Westpac's takeover of St George in 2008. While the Federal Court found that Westpac and St George had breached employment conditions in some instances, it was not satisfied that any of the claims under the Trade Practices Act or the torts of deceit and negligence were made good.

Seven former staff made claims arising under various causes of action, including deceit and negligence, and misleading and deceptive conduct. The Federal Court's ruling on the case, Murphy v Westpac Banking Corporation, was handed down on October 14.

The central claim was that Westpac was liable to pay damages because letters sent to the claimants in June 2008 (one month after the merger of the two banks was announced) contained misrepresentations concerning the true target for the payment of a retention incentive.

The claim was that the misrepresentation created an inducement for each of the relevant applicants to remain in St George employ throughout the merger process. The result was that, when their employment relationships ultimately ceased, they had missed opportunities for alternative employment which had been available to them.

Various other contract breaches were alleged, including failure to pay bonuses under bonus scheme arrangements, not giving reasonable notice and failure to pay the correct severance pay.

The case was a complex one because, even though the claims were heard together, the individual circumstances of each applicant varied.

During the course of the proceedings Westpac conceded to claims relating to retention incentives but on most other matters the court found for the bank.

One of the applicants, William Lawson, joined St George in 2005 as an executive manager in the financial markets team. A year later he was promoted to head of non-credit trading. In 2006 and 2007 he was invited to participate in various bonus schemes.

Following the announcement of the merger, Lawson was approached by JP Morgan with a job offer. However, in June 2008 Lawson was informed that he had been selected as a key executive at St George and would be eligible for a retention incentive.

Lawson said he relied on this communication, which he claimed was misleading, to terminate his discussions with JP Morgan.

Towards the end of 2008 Lawson was seconded to Westpac, where he worked until he was made redundant in 2010.

Lawson's problem, common to the other applicants, was that this secondment created uncertainty about his employment arrangements and ultimately led to the claims of deceit, negligence and misleading conduct.

The court did find that two of the applicants were wrongfully dismissed.

It also found that some of the incentive plans that Westpac denied had contractual force. However, in most cases the applicants were not entitled to recover damages relating to these matters.