Duncan Lewis

Residential Property

Commercial Property

A case law on informally guaranteed contractual obligation

Date: (31 May 2012)    |    

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In the case of:
(1) Attrill & Ors; (2) Anar & Ors v (1) Dresdner Kleinwort Ltd; (2) Commerzbank (2012) EWHC 1189 (QB). Owen J. 9 May 2012
The claimants were the employees and former employees of Dresdner Kleinwort, who sought payment of bonuses which they maintained, were outstanding to them.
Dresdner Kleinwort was a service company in the global investment banking division of the Dresdner Bank Group.
On 18 August 2008, pending a takeover by the second defendant Commerzbank, the workforce was told that a “guaranteed” performance based minimum bonus pool would be allocated to individuals in the usual way.
In December 2008, a letter to each employee confirmed that a discretionary bonus for 2008 had been provisionally awarded at a specified sum, subject to a “material adverse change clause”, the ‘MAC clause’. That day, employees were reassured at a further staff meeting that the MAC clause was unlikely to be invoked.
But in January 2009, after the acquisition of Dresdner Bank Group by Commerzbank, the MAC clause was invoked and the claimants were told that their bonus awards were to be cut by 90 per cent.
The issues were whether the term “guaranteed” used at the 18 August meeting; or any other subsequent statements made on behalf of Dresdner Kleinwort gave rise to a contractual obligation; whether the MAC clause had been introduced in breach of
The court had observed that where an employer who in order to retain staff, made a clear and explicit oral promise, in a general non mandatory employee meeting to pay guaranteed performance based bonuses he had created a contractual obligation. Even though the announcement being of a collective nature, the venue was informal and there was no express acceptance by the employees of the announcement, there still was a contractual obligation the court ruled.
On the evidence, the overwhelming probability was that the announcement to the claimants on 18 August had simply been that of a guaranteed minimum bonus pool rather than an announcement that the pool had been securely funded.
The announcement indicated that the pool would remain “no matter what” and particular reference had been made to the transfer of ownership to Commerzbank.
The announcement had been in clear and unequivocal terms so as to be capable of giving rise to a legally binding obligation.