Essex Court Chamber’s Andrew Hochhauser QC and David Craig, instructed as counsel by Mark Levine and Daniel Naftalin, of Mishcon de Reya, representing 21 former Dresdner Kleinwort bankers, have won their battle to force Dresdner Kleinwort to pay out bonuses promised to its investment bankers prior to its takeover by Commerzbank in 2008.
The High Court judgment followed a victory in March 2011 when the Court of Appeal granted permission to challenge Commerzbank in the dispute over bonuses.
The case, which was closely watched by the Banking sector, is regarded as the largest legal dispute ever seen over bankers’ bonuses.
First filed with the High Court in September 2009, the case has seen 104 bankers bring claims against Commerzbank, after it merged with Dresdner Bank in May 2009. Before the takeover, the bankers were told via an announcement made by the then CEO of the investment banking division of Dresdner Bank in August 2008 that a guaranteed minimum €400m (£343m) pot had been set aside to cover bonuses, as a retention pool. However, on the day that bonus awards were announced in December that year, the bank purported to introduce a ‘material adverse change’ clause, giving them the right to vary bonus awards in the event of a material change in its revenue and earnings. Post-merger, the bank purported to rely on the clause and emailed staff saying that bonuses would be reduced by 90% across the board. Commerzbank asserted that the announcement made by the CEO of Dresdner Bank’s investment Banking Division was not contractually binding, that it was entitled to rely on the new clause in reducing bonus awards in the way that they did.
Mr Justice Owen upheld the Claimant’s claim on all issues, determining that “the announcement was to the effect that a guaranteed bonus pool of €400m had been established for those employed in DKIB, i.e. front and middle office staff, for 2008, to be allocated to individuals on a discretionary basis by reference to performance ‘in the usual way’, a pool that would remain ‘no matter what’, and in particular whether or not there had been a change of ownership by the year end.” He rejected the argument that the announcement was insufficiently certain to be capable of giving rise to a binding obligation.
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Before: THE HONOURABLE MR JUSTICE OWEN
Between:
ATTRILL & Others
ANAR & Others
Claimants
– and –
(1) DRESDNER KLEINWORT LIMITED
(2) COMMERZBANK AG
Defendants
Andrew Hochhauser QC and David Craig (instructed by Mishcon de Reya) for the Anar Claimants
Nigel Tozzi QC and Kate Livesey (instructed by Stewarts Law LLP) for the Attrill Claimants
Thomas Linden QC, Martin Chamberlain and Oliver Jones (instructed by Linklaters LLP) for the Defendants
Hearing dates: 25, 26, 27, 30 and 31 January, 1, 2, 3, 6, 7, 8, 9, 10, 13, 20 and 21 February 2012
