Mr Walker signs the contract
81 On Friday, 16 January 1998, Mr Walker countersigned the third letter of offer and telephoned Ms Lancaster to tell her that he would be sending the signed document to her. Ms Lancaster said that, in a telephone conversation with Mr Thomas, he had congratulated her, saying, "Well done Oonagh, a fantastic hire" and that they were "thrilled" with Mr Walker's appointment. Mr Thomas said that he recalled her telephoning him with the news that Mr Walker had signed the third letter of offer but he could not recall the terms of the conversation.)
82 The respondents' counsel put to Ms Lancaster that her recollection of the relevant events was hazy. Ms Lancaster responded:
No. It is not hazy. I can remember certain things very vividly. I remember the meetings. I organised them. I remember the contract, I remember the agreement, to where the contract would be kept, the signature. I remember the conversation with Rob Thomas saying, "Well done and what a fantastic hire." I remember all those things. I might be - I might have - with some of the points, when you say - I can't - I have been honest with you saying that I can't recollect every single point. The points that I am 100 per cent certain of is I put forward Mr Walker who had a very high profile in the market; I was not acting as his agent, I was working for [Natwest], the way I always did my job, I worked on their brief; they didn't give me an exclusive. That was the way I always did it. I never had anything in writing or any of my previous briefs. I recollect the conversations I had with Rob Thomas concerning him starting off discussing his profile, his candidature. I recollect my conversations with Mr Walker at the initial interview, the letter I sent out, the CV, business conditions. I recollect the reason why I didn't discuss it with Mr Fulton in case there was a slight conflict. I did not know Mr Fulton as well as I knew Mr Thomas. I had met Mr Fulton, I think it was the previous year when I went and found a senior economist … who is still working for [Natwest].
…
But I am 100 per cent - it's indelibly printed in my mind - when I received the contract, the changes that were made; the fax that I sent off …; the fact that I received the signed contract; the fact that the meetings were held in my office, in the boardroom; and the fact that it was a signed, sealed, delivered contract and the start date was not in issue. What it was was, "Welcome, we're glad you're starting. We're happy to wait." 15 March was to be the latest date … . If we could facilitate it further, yes. Both Mr Thomas and Mr Fulton had been - had agreed that it would be financial suicide - they're my words - for Mr Walker to walk away from his bonus.
As already noted, Ms Lancaster was, in my estimation, an honest witness. I accept her evidence in large measure.
83 On Monday, 19 January 1998, Mr Walker sent the third letter of offer, signed by him, to Ms Lancaster. She deposed that she received the document on 20 January 1998. Her evidence was that she subsequently telephoned Mr Fulton to tell him that she "had the contract and would hold it as agreed pending the termination of Mr Walker's employment with abn amro". She further deposed that "Mr Fulton expressed his delight at Mr Walker's signed acceptance". She maintained this position in cross-examination, saying that she definitely spoke to Mr Fulton around the time she received the signed letter of offer, although she could not recall the exact date.
84 Mr Fulton denied that he spoke to Ms Lancaster on 16 and 20 January 1998, saying that he was on holidays from 19 January to 26 January 1998. He recollected discussions with her in February 1998. His affidavit evidence was that, on his return from holidays, he had a number of conversations with Ms Lancaster and Mr Walker during which he asked Mr Walker to confirm his starting date, which he would not do. Mr Fulton said that, in a conversation in late January, Mr Walker referred, for the first time, to his efforts to "sort out a redundancy payment", saying it might speed up his "getting out" of abn amro.
85 In cross-examination, Mr Fulton conceded that he knew, by mid-February 1998, that Mr Walker was looking for voluntary redundancy and, in so doing, Mr Walker clearly signified to abn amro that he was intending to quit its employ. Also in cross-examination, Mr Fulton said that he spoke to Ms Lancaster around 16 or 17 February 1998 in order to arrange a meeting and, in the course of a conversation at this time, Ms Lancaster told him that she had the signed letter of offer. Mr Fulton also said:
On about 17 February during conversations, that late, when we were trying to set up a meeting to discuss the whole situation with Mr Walker, [Mr Walker] did say it was possible he could start on 2 March.
Mr Fulton added that he wanted to have a meeting "to discuss the whole thing" and was very keen to have Mr Walker as an employee up until mid-February 1998, when he received "more strident" "negative feedback from the market".
86 Mr Thomas said that he could not recall Ms Lancaster telling him that she had the signed letter of offer in her possession, although he thought that Mr Fulton had informed him of this by late January 1998. He recalled that he knew in late February (prior to 20 February 1998 meeting) that Mr Walker was seeking voluntary redundancy, although he did not recall that this was in order that he might start with NatWest more quickly than 15 March 1998.
87 I find that, after Mr Walker signed the third letter of offer on 16 January 1998 and telephoned Ms Lancaster, she spoke to Mr Thomas, who congratulated her on the hire. I also find that, after she received the signed document, Ms Lancaster telephoned Mr Fulton to inform him of the receipt. I am satisfied that she spoke with him around 20 January 1998, probably in the following week. I reject Mr Fulton's evidence to the contrary. It is implausible that Ms Lancaster failed to inform Mr Fulton until mid-February 1998 that Mr Walker had signed and returned the third letter of offer to her, or that Mr Fulton knew nothing of Mr Walker's attempts to secure his redundancy before mid-February 1998. As already indicated, I also reject Mr Fulton's evidence concerning Mr Walker's alleged failure to give a starting date.
Severing ties with abn amro
88 Because Mr Walker had signed the third letter of offer, he determined not to attend meetings in Melbourne concerning the new abn amro; andhe did not apply for a position in the new organisation when invited to do so. On 3 February 1998, he had a brief conversation with the person responsible for integrating research in the new organisation (Alan Hargreaves) about his future at abn amro and confirmed that he was not intending to stay. His evidence was that:
There were a number of meetings held in early January, mid-January. There was a particular meeting with Mr Alan Hargreaves, who was the head of my particular division in abn amro, which I did attend … . That ended up being the entire formal process that I went through to move or to not move into the new merged firm. The point I would make … is that at this time it was fairly clear from my non-attendance - my voluntary non attendance at meetings - that I was not going through into the new business.
89 Some time in early February 1998, Mr Walker sought details of abn amro's redundancy policy. The company did not provided these details before 17 February 1998. In an e-mail of that date, the company notified its staff that all requests for voluntary redundancy were to be lodged by Friday, 20 February 1998.
90 On 6 February 1998, another man was appointed to the position of Head of Resources (Research) at abn amro in Mr Walker's stead. In cross-examination, counsel for the respondents asked Mr Walker about his complaint, in an internal abn amro memorandum dated 6 February 1998, concerning his "lack of inclusion in the selection process for the new mining team" and his statement that he "had every expectation of continuing in [his] role beyond the end of the month". Mr Walker responded that he had in fact expected to remain at abn amro until mid-March 1998, because that would have been the effect of a termination notice given by him in mid-February 1998. Whilst this explanation may have an air of unreality, I accept thatthis complaint was part of Mr Walker's attempts at the time to negotiate an earlier end to his employment with abn amro.
91 There was other evidence of these attempts. On 16 February 1998, the day after Mr Walker finally received his 1997 bonus, his solicitors wrote to abn amro, alleging his constructive dismissal. In connection with this letter, Mr Walker said, in cross-examination, that:
The purpose of the letter of 16 February … was a tactic to be put to abn amro to effect my earlier release than the giving of one month's notice and serving out that one month. It was done on the instruction and with the express agreement of Mr Fulton. It was done to effect an earlier exit from abn amro. It proved to work.
As already stated, I accept Mr Walker's evidence that, with the knowledge and support of Mr Fulton, Mr Walker sought to negotiate a voluntary redundancy from abn amaro. By taking steps to leave abn amro, he acted to his disadvantage.
Marketplace rumours about Mr Walker's new employment
92 On 5 February 1998, the abn amro Head of Dealing in Melbourne spoke to Mr Walker about his new position at NatWest, saying that he had heard the details of Mr Walker's contract "from a dealer at the AMP who had heard it from an analyst at Salomon Smith Barney in New York" and stating that the information had reached all the dealers on abn amro'sMelbourne and Sydney dealing desks. Later that day, two institutional analysts separately told him that they had heard that he had joined NatWest. Mr Walker telephoned Ms Lancaster to express his concern that this information had been disclosed. Ms Lancaster spoke to Mr Fulton about the matter. She said that she subsequently telephoned Mr Walker to pass on Mr Fulton's apologies about the information "getting out".
93 Ms Lancaster and Mr Fulton also said that at this time they too heard of rumours in the market about Mr Walker's employment at NatWest. Mr Fulton denied, however, that the rumours originated with NatWest and suggested that they derived from Mr Walker's referees.
94 I accept that, as Mr Walker's counsel submitted, Mr Fulton knew by early February 1998 that Mr Walker's prospects of continuing employment with abn amro had been significantly prejudiced, both by his request for a redundancy package and by the rumours in the marketplace that he was to join NatWest.
A new starting date is agreed
95 On 10 February 1998, the financial press reported that the second respondent had purchased NatWest; that Mr Thomas had been appointed Managing Director of the Equities Division; and Mr Fulton had been appointed Head of Research. (The second respondent completed its acquisition of shares in NatWest on 31 March 1998.)
96 Mr Walker spoke with Mr Fulton on 13 February 1998, asking him, amongst other things, whether the sale affected his contract with NatWest. Mr Walker's evidence was that Mr Fulton told him that the contract was:
... fine and in full force, would not have to be altered, and [was] similar to all other NatWest employee contracts for Research staff which were held by NatWest Markets. He said that the contract was for employment under the new owner as previously agreed. He said the contract would be transferred to the new holding company along with all other staff contracts by completion on 31 March, 1998.
97 For the reasons already stated, I accept Mr Walker's evidence in this regard.
98 Mr Fulton said that he had told Mr Walker merely that the sale of NatWest would not affect NatWest's offer of employment. In his affidavit, Mr Fulton deposed:
In my conversations with David Walker at around this time, he told me that he did not know when his employment would be terminated and he could not give me a definite starting date.
For the reason already stated, I reject Mr Fulton's evidence.
99 In the evening of 15 February 1998, Ms Lancaster received a telephone call from Mr Fulton. She deposed:
On Sunday 15 February, 1998 at approximately 10:30 p.m. I received a telephone call at home from Mr Fulton. Mr Fulton was in an extremely agitated state … . Mr Fulton said words to the effect that NatWest had not made a "bad hire" in the past. I referred to the contract that Mr Walker and Mr Thomas had signed, told him that it was a binding contract and that I would be bringing it across within a few days. I challenged Mr Fulton over the comments he made about Mr Walker's ability. …. I do recall that he was extremely agitated, and it seemed to me that he was almost hysterical.
100 Ms Lancaster's evidence was that, in this evening conversation, Mr Fulton had stated that "his job was on the line" over Mr Walker's appointment and that he had "negative feedback from the market". According to Ms Lancaster, the call lasted for over an hour.
101 In cross-examination, the respondents' counsel asked Ms Lancaster whether she and Mr Walker discussed delivering the contract to NatWest at this time. She said:
In stockbroking offices it is very easy for word to go around - connection with hires. Confidentiality is extremely important. The agreement had been made that I would hold the contract. Why would we change it? Both sides had been happy with that agreement. I had - Mr Thomas, when I told him that the contract was signed, said, 'Well done, [Oonagh], fantastic hire.' I held Mr Thomas in very high esteem ... and I remember the word because I thought there were - I felt really happy, it was wonderful praise.
Having regard to the facts as I have found them to be, I accept Ms Lancaster's evidence in this regard. In this connection, Ms Lancaster also said that she understood that Mr Walker's concern was that his attempt to obtain a voluntary redundancy would be jeopardised if his engagement to NatWest were not kept confidential.
102 On 16 February 1998, Ms Lancaster received further calls from Mr Fulton. In one telephone discussion, he "indicated that Mr Walker had a bad reputation in the marketplace". Ms Lancaster said that:
When I asked him where he had heard these comments he avoided giving a straight answer. I then stated that he had a binding signed contract with Mr Walker. He then became abusive and hysterical and threatened me "You open your mouth and discuss this with anyone and I will make sure you will never work in this town again".
103 In cross-examination, in connection with this conversation, she said further:
On 16 or 17 February my recollection is that Mr Fulton was on the phone to me and highly abusive. He said that he heard a lot of bad rumours concerning Mr Walker's standing in the market. I put it to him, where had he heard these rumours? I then asked him if he had spoken to another head hunter and I named a particular one and he said, "Yes". I then said to Mr Fulton, "You have breached confidentiality. It is express terms of my business conditions that there is to be strict confidence outside your company concerning that". Mr Fulton said, "You open your mouth that I have spoken to John Coles and you will never work in this industry again. You will never work in this town again", those were the words. I was so shocked, so amazed and I was trembling at that, because he was so angry on the phone and I was so - I just could not believe that a director of the firm could discuss someone's career with another head hunter, because surely it is a conflict of interest. If he had heard negative rumours concerning Mr Walker's standing in the market from another head hunter, obviously he had a vested interest in putting forward a different candidate.
Mr Coles was a personnel consultant in the same field as Ms Lancaster (see below).
104 When the respondents' counsel asked why she made no mention of Mr Coles in her affidavit, she answered:
Because I had intended putting it in a second affidavit. I did not put it in this affidavit because I thought I would like to say it in court. I had nothing to be gained by bad-mouthing anybody else in the industry, but I was incredibly upset and shocked, and I think it was disgraceful, disreputable behaviour.
105 In another telephone conversation on 16 February 1998, Mr Fulton told Mr Walker that he wanted him to start earlier than 15 March 1998. According to Mr Walker, he told Mr Fulton that this was contrary to the agreement reached the month before, on 15 January 1998. Mr Walker subsequently telephoned Ms Lancaster for an explanation. Mr Walker said, in cross-examination:
The phone calls being received from Mr Fulton at this time were not for a firm starting date, they were for an earlier starting date. We were being inundated with phone calls from Mr Fulton sometimes three or four a day, sometimes after 10 o'clock at night, sometimes Sunday afternoons in the middle of barbecues is one I remember which caused some concern. Mr Fulton was seeking urgently to bring the starting date forward. He was not seeking a starting date because he already had one. He was seeking to bring it forward.
…
At this time, the middle of February, I probably had 20, 30 or 40 telephone conversations with Mr Fulton who was pressing for an earlier starting date. In a number of those conversations I told him, "Our agreement says". In a number of conversations - a couple of conversations, I said, "Perhaps we should simply stick to the agreement and not try and modify it the way you're trying to do". I made it very clear to him that I would use my best endeavours and in his interests I would try and exit abn amro earlier than 15 March, and he kept pressing for an earlier starting date, sometimes in a very animated form and sometimes coolly asking me, "How can we arrange an earlier starting date than the 15th".
106 On 17 February 1998, Mr Fulton again telephoned Mr Walker, saying he was under pressure from his management group to confirm an earlier starting date than 15 March 1998. Mr Walker reiterated that he was likely to be "separated" from abn amro within the next few days. After some further discussion, Mr Walker deposed:
After [Mr Fulton] further insisting on an immediate decision I reluctantly agreed to a stating date of 2 March, 1998 whether or not I was clear of abn amro, although this would risk the financial arrangements of my separation. I reiterated our agreement on complete confidentiality until I was out of abn amro.
According to Mr Walker, Mr Fulton said that he was comfortable with this situation. Shortly thereafter, Mr Walker telephoned Ms Lancaster, confirming that he had agreed upon a 2 March 1998 starting date.
107 Later on 17 February 1998, Mr Walker received information from an abn amro dealer in Sydney that NatWest dealers were transmitting information about his employment by NatWest to Mr Walker's institutional clients. He subsequently confirmed by telephone calls to his clients that they had this information. He also telephoned Ms Lancaster about the disclosure of this information within the market.
108 Whilst Mr Fulton said that he had conversations with Ms Lancaster and Mr Walker on and around 15, 16 and 17 February 1998, he denied that they were to the effect described by them. He said that he told Ms Lancaster that he was "uncomfortable" with the information that had emerged from the market and that she had not picked this up herself. He acknowledged that their conversations became heated but denied that he was "almost hysterical". In his conversations with Ms Lancaster, he reiterated that Mr Walker declined to give him a firm starting date. Amongst other things, he deposed:
During that conversation I did say words to the effect that in view of her failure to conduct due diligence into David Walker I might not use her services again.
109 Mr Fulton specifically denied that he had a conversation with Mr Walker in the terms described by Mr Walker on 17 February 1998. In particular, he said there was no discussion about a starting date of 15 March 1998 and he did not reach agreement with Mr Walker that Mr Walker would start no later than 2 March 1998. Mr Fulton deposed:
Whilst he had indicated that 2 March 1998 might be a possible starting date, I did not take this seriously given his delay up to that point.
Mr Thomas gave evidence that Mr Fulton never told him about the 2 March 1998 start date.
110 I accept the evidence of Mr Walker and Ms Lancaster concerning their telephone calls with Mr Fulton between 15 and 17 February 1998. Mr Walker's evidence was consistent with Ms Lancaster's on the nature of these calls. I also accept that Mr Fulton did not inform Mr Thomas of the actual position. I find that Mr Fulton was fabricating his evidence to suit the respondents' case and to justify his own actions at the time.
111 Mr Fulton admitted that he had conversations with Mr Coles around this time, including on 9 February 1998, during the course of which he discussed Mr Walker's prospective employment. Mr Fulton also admitted that Mr Coles put forward a rival candidate to Mr Walker in February 1998. (Mr Thomas (whose evidence I accept on this point) said that he knew nothing of this.) Mr Fulton did not deny that Mr Coles's candidate began at NatWest as an oil and gas analyst some time in the first half of 1998.
112 Mr Walker's counsel questioned Mr Fulton about his breach of confidence. I set out part of the exchange.
Counsel: You discussed Mr Walker's candidature for your firm with Mr Coles, didn't you?
Mr Fulton: I have a recollection of a telephone conversation with Mr Coles somewhere in February before - I thought it was somewhere around the 16th, 17th or the 13th, around that time, where because of the negative feedback we were getting, in confidence I asked Mr Coles if he would have any comment on this.
Counsel: So your answer is yes, you did discuss Mr Walker's candidature?
Mr Fulton: Yes.
Counsel: For a position ‑ ‑ ‑?
Mr Fulton: Yes, I did.
Counsel: - - - with Salomon Smith Barney in February 1998?
Mr Fulton: Mid-February, I believe.
Counsel: With Mr Coles, the head-hunter?
Mr Fulton: Correct, I did, yes.
Counsel: It was particularly in the context of, as you say, negative rumours about Mr Walker?
Mr Fulton: Correct.
Counsel: So you took negative rumours, negative statements about Mr Walker, and put them to Mr Coles for comment?
Mr Fulton: Not specific statements, no. I put to Mr Coles that we were involved in talking to Mr Walker in confidence - many times did I refer in my conversation, as I can remember, that this was a confidential question to him - and whether he would be able to give me any comment, and he could not, actually. He did not give me any specific feedback on David Walker.
Counsel: Mr Fulton, Mr Walker's candidature was confidential, wasn't it?
Mr Fulton: At that stage the market was talking back to us a lot about him.
Counsel: In the context of knowing that he was about to take up a position with you?
Mr Fulton: It appears the market had found that out, yes.
… .
Counsel: You breached his and Ms Lancaster's confidence, didn't you?
Mr Fulton: I asked him to keep it in confidence.
Counsel: Mr Fulton, answer my question, please. You breached Mr Walker's confidence?
Mr Fulton: I don't believe so. I don't see - what is the confidence I breached? I mean in a sense I was asking, in confidence, someone I trusted if he could shed any light on the situation, that's how I saw it.
… .
Counsel: What on earth gave you the right to discuss with another head-hunter Mr Walker's candidature with your firm?
Mr Fulton: I believed it would shed some light on the situation and it would allow us to make a better judgment of what was going on.
113 I accept that the disclosure by Mr Fulton of Mr Walker's prospective employment with NatWest was a patent breach of confidence and was, in the circumstances known to Mr Fulton, likely to work adversely to Mr Walker's interests. Furthermore, Mr Fulton knew at the time that Mr Walker was anxious that his involvement with NatWest be kept strictly confidential until he had left abn amro.
114 Mr Fulton said, in cross-examination, that there were a number of reviewers that published their ranking of brokers and that to be ranked well was "a very positive thing". Mr Coles's firm was one such reviewer. Mr Fulton denied that "the reason why [NatWest] rocketed to number one with [this firm] in 1999 was because [he] gave preferment to [Mr Coles's] headhunting firm" and that he "got rid of Mr Walker to make room for Mr Coles' candidate" in order that he might increase his rating in Mr Coles's survey. Mr Fulton said:
[The Natwest] research department was rated extremely highly all the way through the late 80s through to the mid-90s. There was a drop-off in the ratings in the mid-90s before I assumed control of the research department.
He conceded, however, that NatWest's research department had rated "quite poorly" with Mr Coles in 1996-1998, but went to number 1 in Mr Coles's survey in October 1999-2002. Further, he did not deny that, in 1999, Reuters ranked his department only number 6 and that the financial press commented about the discrepancy.
115 Having regard to the matters I am about to discuss, I find, that, for reasons that did not clearly appear in the evidence, in mid-February 1998, Mr Fulton decided that he would attempt to prevent Mr Walker joining NatWest if he could. On the balance of probabilities, the evidence does not establish whether his reasons included matters arising from his conversations with Mr Coles.
116 Mr Fulton admitted that, in mid-February 1998, he became less enthusiastic than before about Mr Walker. He claimed that this was on account of the "negative feedback" he received from the market and because Mr Walker would not commit to a starting date. In his first affidavit, Mr Fulton said that, on or about 16 February 1998, one of NatWest's Specialist Resources salespersons (Chris McElroy) gave him some adverse comments about Mr Walker.
117 Mr Walker's counsel questioned Mr Fulton about the claimed negative feedback about Mr Walker. Mr Fulton said that he received some negative feedback in early February 1998, although he could not recall from whom. He principally recalled feedback from Mr McElroy sometime between 13 to 16 February. According to Mr Fulton, Mr McElroy came to him on 16 February, saying:
… in general terms that the market was saying to us that they didn't know if David Walker would be suitable for this particular position that they assumed he was taking. So it was just sort of out there in our resources team and this was what was coming back.
Mr Fulton said that Mr McElroy prepared a note, which had since been lost, containing a list of some 5 to 10 clients, none of whom Mr Fulton could recall at trial, reportedly making comments about Mr Walker, the specific substance of which he could not remember. He denied that he was fabricating this evidence.
118 Mr Fulton said he discussed these comments and his frustration at the lack of a definite starting date for Mr Walker with Mr Thomas. Mr Thomas confirmed that Mr Fulton told him as much and that they decided to seek legal advice. On the instructions they received, NatWest's solicitors advised Messrs Thomas and Fulton that it was open to NatWest to withdraw its offer of employment to Mr Walker, but that he should be given an opportunity to accept the offer before NatWest withdrew it. The solicitors conveyed this advice in a telephone conversation with Mr Fulton on 20 February 1998. A note made by Mr Fulton read as follows:
Phone calls Peter Arthur Thurs/Fri
19/20 February
1. Key point is whether Walker has returned contract to us signed
2. Can he do it now - ask
3. If not, contract has lapsed.
4. We can send him letter after meeting explaining this
5. He can reapply to work in corporate, new starting point, no guarantees
119 I accept that Messrs Fulton and Malcolm Sinclair (Managing Director and Deputy Head of Equities of NatWest) received some negative feedback about Mr Walker, although precisely what this was does not appear. Although I accept that someone prepared a note containing adverse comments about Mr Walker and that Mr Sinclair showed this note to Mr Walker at the meeting on 20 February 1998 (see below), I am not satisfied that it was prepared by Mr McElroy, as Mr Fulton claims. Nor am I satisfied that the note contained adverse remarks of any significance from institutional clients. I accept, however, that Mr Fulton told Mr Thomas that he had received negative feedback about Mr Walker and that he had not yet agreed to a firm starting date. Mr Fulton knew that the last-mentioned matter was incorrect.
The 20 February 1998 meeting
120 On 20 February 1998, Mr Walker attended a meeting at the Sydney offices of NatWest with Messrs Fulton and Sinclair. At the meeting (which, according to Mr Walker, was about an hour long) Mr Fulton mainly spoke for NatWest.
121 In his first affidavit, Mr Walker deposed:
Mr Fulton appeared anxious and uncomfortable and spoke as if he had rehearsed what he was going to say. Mr Fulton fidgeted around and did not make eye contact. At the outset, Mr Fulton made the following points:
(a) the equity research position was no longer available;
(b) I lacked standing in the market, lacked technical ability and was highly litigious and this was the reason for their action;
(c) he had been advised to tell me that the contract was not binding and that it had lapsed;
(d) but I should not get "too hung up" on the loss of the equity position, because there were positions available in the Corporate Finance area and a position would likely be offered to me because of my expertise and experience;
(e) Salomon would no longer offer contracts of this nature to any employees, reverting to lower base salaries and definitely no guaranteed bonus;
(f) but the Corporate Finance position would have a similar base salary, therefore fulfilling one term of the contract.
122 Mr Walker said that he told Mr Fulton that he believed that he had a binding contract and that he reserved his rights in this connection. He said that he was "staggered that after 6 months of negotiation and 1 month after I had signed the contract and after I had left abn amro at their request a firm such as Salomon/NatWest could then decide to not honour the contract". In his first affidavit, he added:
I said … that I would in good faith consider an alternative position in the Corporate Finance Department instead of the Equity position providing it was a real position. In response to [Mr Fulton's] comment that I lacked standing in the market, lacked technical ability and was highly litigious, I asked Mr Fulton about his earlier canvassing of referees and the positive responses he had previously acknowledged receiving. Mr Fulton acknowledged that he had received positive responses but did not explain how he concluded that I was not qualified for the position.
123 In cross-examination, Mr Walker agreed that Mr Fulton may well have asked him whether he had tendered his resignation to abn amro and that he would have answered that he was still negotiating his "redundancy exit". Mr Walker agreed that he was shown a document recording adverse comments about him, although he added:
… it was a [small] piece of paper … it was torn on two sides …. It had five or six black marks on it like that which were supposed to be blacked out names of people. Then it had comments next to it which I was - this piece of paper this size had been screwed up as well, it was creased, perhaps it had been in the bin. This piece of paper is supposed to be the evidence against me in this position coming from a firm of this standing. I thought it was a joke.
124 In connection with the Corporate Finance position, Mr Walker said:
But we're not talking about whether I'm going to go and have interviews with people. What we're talking about is whether I have a contract and whether they're going to transfer this contract into corporate finance on ostensibly the same terms and conditions, that was the gravity of that discussion. Mr Fulton made specific mention, "At least we can offer you a base salary that's the same as this contract, thereby satisfying one of the conditions of the contract". He made that specific point.
125 Mr Fulton's account of this meeting differed from that of Mr Walker. He deposed that he asked Mr Walker whether he was "still employed by abn amro"; whether he had "tendered his resignation yet"; and whether he was "in a position to resign today", "execute the letter of offer now" and "give us a definite starting date". According to Mr Fulton, Mr Walker stated that he had not tendered his resignation but was still negotiating his redundancy payment; that he wanted the NatWest offer to remain confidential; that he was not able to resign from abn amro and execute the letter of offer, which he had lodged with Ms Lancaster; and that he could not give a definite starting date. Mr Fulton said that he advised Mr Walker that:
In that case, I have to inform you that the offer has lapsed and the position is no longer available.
126 Mr Fulton also said that Mr Sinclair showed Mr Walker a copy of a note recording the adverse comments NatWest had received about him and that Mr Walker had said that these might be "due to his recent focus on corporate work". Mr Fulton deposed that he raised the corporate finance role, saying:
You will have to start from scratch with the interview process.
127 In cross-examination, Mr Fulton denied that he was anxious and uncomfortable. He said, "I was keen to set out to Mr Walker the situation and ask him what to do". He denied that he told Mr Walker that he "lacked standing in the market" or that he was known to be "litigious". He conceded, however, that he had raised Mr Walker's litigiousness with Ms Lancaster and that Mr Walker may have said to him that he had him confused with a former colleague of his. Mr Fulton said that he had been told to tell Mr Walker that "the letter of offer had lapsed" because "he wouldn't execute it in the way I asked at the meeting". He recalled saying that:
… we would like to interview him for a corporate finance role now that this letter of offer had lapsed and that we would like to start from that from fresh. There were no guarantees - you know, it was not a rollover of the offer in any way, but that we'd really like him to do that.
128 Counsel for Mr Walker asked Mr Fulton whether he recalled saying that his company no longer offered contracts with a guaranteed bonus. Mr Fulton replied that:
I recall saying to Mr Walker that in the corporate finance position that he could not expect necessarily or most likely to get an offer of this nature, but he'd have to negotiate with them directly.
Counsel also asked Mr Fulton about the signed third letter of offer, which he knew had been lodged with Ms Lancaster:
Counsel: Why didn't you send somebody over to [Oonagh] Lancaster's office to get it?
Mr Fulton: Because I don't think that's my job, to do that. It was Mr Walker's and Ms Lancaster's job to do that.
Counsel: Her office is just round the corner, about 100 metres away from yours, at that time, wasn't it?
Mr Fulton: Yes. That's why it struck me as strange that no-one actually just brought it over to us - very good point.
Counsel: Because it was there for confidentiality purposes, wasn't it?
Mr Fulton: Yes, they said that.
Counsel: That had been said back in January?
Mr Fulton: Yes.
Counsel: And you'd agreed to that being done?
Mr Fulton: Yes, but at this point we asked for the letter to be executed.
Counsel: But the need for confidentiality was not yet over, as you well knew?
Mr Fulton: That had to be Mr Walker's call at that point of time. We simply asked for our letter to be returned and accepted.
129 Mr Fulton conceded that, from Mr Walker's perspective, as at 20 February 1998 the need for confidentiality remained, admitting that was "why he didn't give it [the signed contract] to us, but we had asked for it." Mr Fulton also conceded that NatWest was prepared to ignore the negative feedback about Mr Walker "if he executed a legally binding contract" on this day. He also admitted that he knew, by mid-February 1998 at the latest, that Mr Walker had signed the third letter of offer and had given it to Ms Lancaster. He said that, if Mr Walker had signed the letter presented to him on 20 February 1998, then he would have become a NatWest employee.
130 In his affidavit, in connection with the 20 February 1998 meeting, Mr Sinclair deposed that both he and Mr Fulton told Mr Walker of the negative market feedback about him; and Mr Fulton asked him:
… whether he was prepared to sign the contract. David Walker said that he couldn't because he was still trying to work out some arrangements with abn amro. I recall there was some discussion about the fact that David Walker said that he had given a signed copy of our letter of offer of employment to Oonagh Lancaster but she couldn't give it to us until he had sorted out his payments from abn amro. Mark Fulton then said to David Walker that as he was not willing to give us the signed letter of offer, the offer was withdrawn.
Mr Sinclair denied that Mr Walker said that he had a binding contract and that he was "staggered" at NatWest's conduct.
131 In cross-examination, Mr Sinclair said:
I remember distinctly David [Walker] said, "I cannot - I have given a signed letter of offer to [Oonagh] but I cannot release that until I complete my discussion with abn amro". I'm not privy to what those discussions were.
Mr Sinclair reiterated that he knew nothing of the detail of these arrangements, although he had previously attended a meeting with Messrs Fulton and Thomas where they had discussed the legal advice received from NatWest's solicitors and determined to withdraw Mr Walker's offer if he did not respond as Mr Fulton was to request.
132 Although Mr Walker thought that he spoke by telephone to Ms Lancaster after the meeting and could not recall going with Mr Fulton to see her, I accept, as Ms Lancaster and Mr Fulton said, that all three met at Ms Lancaster's office after the meeting. When the respondents' counsel asked her about the position in Corporate Finance, she maintained that:
I regarded the deal as done, Mr Walker regarded that he had a firm contract. I thought it was just a matter of deciding where he would work, that they had changed their minds slightly about the department, not about the fact that he was not going to work for [Natwest].
133 On the return flight to Melbourne, Mr Walker made a note in his diary, which is consistent with his account of the meeting. The note, which was plainly not exhaustive, reads:
Summary: M Fulton
· employment contract lapsed
· contract not binding - had legal advice
· BHP equity research position no longer available
· lacked standing in the market - reason
· did not acknowledge that contract was valid
· no response on his announcement of my joining County
· offered position in Corp Finance instead
· more suited to my skills
· $250k base salary, no guaranteed bonus - would have to compete - no employees have base salary
· contract salary term would be fulfilled
· will arrange Corp Fin meetings ASAP - next week
· Salomon moving to $100-$150K base salaries, more emphasis on bonus
My response
· I had a binding contract
· reserved my rights
· questioned Fulton over good references from [certain institutions] - no reply
· would pursue Corp Fin job
134 I substantially accept Mr Walker's account of the 20 February 1998 meeting, which was consistent with the note he made on his return flight to Melbourne. I accept that, in accordance with the legal advice that NatWest received, Mr Fulton asked Mr Walker whether he was still employed by abm amro and whether he was in a position to resign. I also accept that there was some discussion about the third letter of offer and that Mr Walker reiterated that, as arranged, he had returned the signed document to Ms Lancaster, who was to hold it until he left abn amro. It was apparent from the evidence that Mr Fulton pursued a course designed to give NatWest a legal entitlement to renege on its arrangements with Mr Walker, without real regard to the actual circumstances. According to Mr Fulton, Mr Walker only needed to "give us a signed copy of the letter" to ensure that he had a contract. He disregarded the fact (which he knew) that, in the interests of confidentiality, Ms Lancaster held a signed copy of the contract and he placed no reliance on the alleged absence of a starting date. Further, Mr Fulton's assertions that Mr Walker was unsuitable for a research position was contradicted by Mr Fulton's acknowledgement at trial that he knew Mr Walker to be well qualified. Mr Fulton's position was untenable.
135 Mr Walker was a credible witness and Mr Fulton was not. Although Mr Sinclair's evidence contradicted Mr Walker's evidence in part, it must be borne in mind that he not only knew little of the detail of events since August 1997, but also, before he attended the meeting, he did not know that Mr Walker had already signed the third letter of offer. His perception of events on 20 February 1998 cannot be regarded as reliable.
The letter of termination
136 On 22 February 1998, Mr Walker received, by courier, a letter dated 20 February 1998 from NatWest, purporting to withdraw its offer of employment. NatWest solicitors had drafted the letter, on Mr Fulton's instructions. The letter read in its material parts:
On 12 January 1998, after a considerable period of negotiation, NatWest Markets executed an agreement to employ you as a Senior Research Analyst.
We are unaware of whether or not you have in turn executed this agreement. The arrangement was that Lancaster & Associates [sic] would send to us a copy of the agreement executed by you only when you were in a position to accept our offer ie. once you had ceased to be employed by ABN Amro.
Well over a month later you are still an employee of ABN Amro and there has been no firm indication of when you would be able to commence with NatWest Markets.
Accordingly NatWest Markets withdraws the offer of employment made on 12 January 1998.
This offer has probably lapsed in any event, since it was intended by both parties that you would be in a position to commence with NatWest Markets by early February; and as you know, fundamental changes have occurred here since that time.
This does not mean, however, that NatWest Markets does not wish to offer you employment. We would like to continue to discuss with you the position that you could occupy with NatWest Markets and the terms and conditions on which you could accept employment with us.
… .
137 Although Mr Sinclair signed the letter, he was not involved in its drafting. NatWest's solicitors drafted the letter on the instructions of Mr Fulton. The letter was plainly incorrect or misleading in a number of particulars. It was not correct to say, as the letter did, that NatWest did not know whether Mr Walker had executed the agreement. Both Messrs Thomas and Fulton well knew that Mr Walker had signed the letter by this stage. Mr Fulton asserted that "executed" in this context meant signed and delivered to Mr Thomas, but this must be rejected. The reference to "early February" as a starting date was, as Mr Fulton conceded, wrong. Mr Fulton also conceded that the reference to "fundamental change" at NatWest could only have been a reference to the sale of NatWest (and its acquisition by the second respondent). Mr Fulton admitted, in cross-examination, that this was not a relevant matter. Mr Fulton's evidence was that the sale did not affect staff employment. He had, in any case, assured Mr Walker that the sale would not affect his employment. The letter did not refer to any "negative feedback", being one of the matters Mr Fulton claimed at trial affected his change of heart. The letter did, however, acknowledge that there was an agreement between NatWest's representatives and Mr Walker that Ms Lancaster would hold the letter of offer, signed by all parties and returned by Mr Walker to her, until he ceased to be employed by abn amro. Until this point, however, no-one had suggested that Mr Walker was unable to "accept" the offer until he ceased his previous employment. Mr Walker's stated concern was confidentiality, a fact accepted by Mr Fulton.
138 Only Mr Thomas suggested (in cross-examination) that:
My understanding was that he wouldn't be in a position to accept the offer until he had received his bonus.
Apart from this statement and the respondents' assertion in the letter of 20 February 1998, there was no evidence for this claim, which I reject.
Other meetings
139 On the next day, 23 February 1998, Mr Walker met with representatives of abn amro, who gave him a redundancy offer, which he accepted. Mr Walker deposed that "[b]y this time there was no possibility of continuing with abn amro". He ceased his employment with abn amro that day. Later that day, Ms Lancaster telephoned Mr Walker, saying that she had spoken to Mr Fulton and that he was organising a series of meetings with the Corporate Finance division in Sydney. Ms Lancaster deposed that, by this stage, she was "unhappy and concerned with the actions" of NatWest.
140 On 24 February 1998, Mr Walker met Mr Fulton (who, according to Mr Walker, was in "a very nervous state") at the Sydney offices of NatWest before attending a number of meetings with NatWest staff. Between about 10.30 and 11.30 am, he met the joint Managing Directors - Corporate Finance (David Hancock and Malcolm McComas) to discuss a senior position in the Corporate Finance department in Melbourne. Later on, he met the Chairman of Salomon Australia (Trevor Rowe) and the Head of Natural Resources of Salomon from Hong Kong (Doug Reynolds). These discussions were general in nature. Mr Walker did not refer to any starting date in these conversations.
141 Finally, he had a short meeting with Messrs Thomas and Fulton in Mr Thomas's offices. In his first affidavit, Mr Walker deposed:
Mr Fulton remarked that I was "being good about this" and being prepared to look at the Corporate Finance position which had been offered. Mr Thomas questioned me about the possibility of legal action. I answered that there was no intention on my part to commence action against Salomon over the equity research position at this point because of the offsetting offer of an appropriate position in the Corporate Finance division. After this Mr Thomas appeared to be more relaxed and shook hands as we parted.
142 Mr Walker reiterated this evidence in cross-examination, remarking that:
My impression of Mr Thomas was at that time that he was an extremely unhappy person. He didn't want me there in his office, he didn't want to talk to me. Until Mr Fulton said those words, Mr Thomas hardly opened his mouth. He was very, very concerned for the situation. Once Mr Fulton said that, then Mr Thomas - we had some conversation.
He denied the suggestion that Mr Fulton had not been present, although he said that he might have left the room at some stage. He also denied that Mr Thomas had said that NatWest believed that it had been misled about his research experience.
143 In his affidavit, Mr Thomas deposed that he told Mr Walker that NatWest could not "look at a job" for him if he was intending legal action, and that Mr Walker said that this was not his intention. He added that he told Mr Walker that "we felt that he had misled us to some extent as he had not been involved in research in recent years", but that he would "do what [he] could to see if there was a position available for him in the Corporate Finance department".
144 Both Messrs Walker and Thomas gave similar accounts of their recollection of their conversation on 24 February 1998. To the extent that they differed, I prefer the evidence of Mr Walker. Some of Mr Thomas's evidence was, so it seemed to me, the product of unconscious reconstruction, rather independent recollection. Mr Thomas had a memory that was appreciably better in connection with details favouring the respondents' interests than in connection with other matters.
145 Following his meeting with Mr Thomas, Messrs Fulton and Walker had lunch together, after which they met Ms Lancaster at her offices. In his first affidavit, Mr Walker deposed:
In the course of this meeting with Mr Fulton, Mr Fulton spoke of being relieved that I would consider the Corporate Finance position offered and that he had been under pressure to "get out" of my contract and that his job was "on the line" over the contract. Mr Fulton said that Salomon would not contemplate guaranteed minimum bonus contracts and that Salomon would not have accepted my contract structure. Mr Fulton warned me that Mr Thomas had plenty of previous legal experience and that I should not contemplate taking any legal action over the rescinded contact. Mr Fulton described BHP research as being a "no brainer" over the next two years … . Mr Fulton asked me whether the abn amro 1997 bonus had been paid. On my telling him that it had he said - "Thank goodness for that, at least you got something". During the course of my discussion with Mr Fulton I repeated my view that I had a binding contract … . I told Mr Fulton I did not accept his comments about my lack of standing in the market … . I asked Mr Fulton about the alleged negative comments from referees but Mr Fulton refused to respond. I reiterated my position that I would seriously consider the position in the Corporate Finance Department provided the offer was genuine. Mr Fulton confirmed that the offer was genuine, and "that's what you are here for".
146 Referring to his conversation over lunch with Mr Fulton, Mr Walker said, in cross-examination, that:
… at this time I was acting in good faith with people I still believed were going to be my employer shortly coming. I believed their representations to me that there was a real position for me in corporate finance, the equity position now clearly having disappeared. I was not going to get into a serious fight with these people at this point in time. In hindsight, I don't believe that they were genuine in this at all, at any point.
147 Mr Fulton denied that he had a conversation with Mr Walker in the terms described by Mr Walker. He deposed that the lunch was relatively short and "our discussion was confined to a general discussion about the interview process and why in my view he was more suited to a corporate role at that stage of his career". In cross-examination, Mr Fulton maintained that he did not tell Walker that he was under "pressure to get out" of the contract with him; that his "job was on the line" over the contract; or that the new owner of NatWest had a policy of no guaranteed bonuses. He denied that he "dangled a corporate finance job in front of him that in fact never existed".
148 For the reasons already stated, I accept that Mr Walker gave an honest account of his recollection of his conversation with Mr Fulton over lunch on 24 February 1998.
149 On 26 February 1998, according to Mr Walker, Ms Lancaster telephoned him to say that she had heard "derogatory comments about him in the market concerning [his] ability and standing". According to Mr Walker, she told him that his name was "now mud" in the industry. Ms Lancaster deposed that she recollected this conversation and the general substance of it. Mr Walker heard nothing further from NatWest until he telephoned Trevor Jones, whom Mr Thomas had nominated as the contact within Corporate Finance. Mr Jones advised him that there would be no offer of a position for some time.
150 Mr Fulton deposed (and Mr Walker denied in cross-examination) that he had a telephone conversation with Mr Walker in early March 1998 in which Mr Walker told him that he had received his payout from abn amro; that he was going to South Africa for a few weeks to pursue business interests; that he (Mr Fulton) would like Mr Walker to "have every chance of an interview" with the Corporate Finance department; and that Mr Walker asked him not to "push too hard" since he only wanted a position "if it is really there and suits everybody".
151 From about 20 March 1998, Mr Walker was actively seeking employment with other employers. On 30 March 1998, Mr Walker wrote a letter to Mr Thomas, setting out his view of events. On 2 April 1998, he again telephoned Mr Jones, who reiterated that there would be no offer until the division was reorganised. Mr Walker spoke to Ms Lancaster on 8 April 1998, saying that he did not believe that NatWest genuinely had a position for him. He unsuccessfully sought to contact Mr Jones by telephone on 22 and 24 April 1998. He wrote to Mr Thomas again on 27 April 1998, saying, amongst other things, that:
Prior to your letter dated 20 February, 1998 there were several discussions between myself, Mr Mark Fulton and Mrs Oonagh Lancaster concerning a starting date. It was agreed that I would commence employment, at the latest, on 2 March, 1998.
On reaching agreement on a starting date, the obligations contained in my contract of employment became operative and binding on myself and the company.
Mr Walker conceded that he was in error in the second paragraph.
152 Two days' later, Mr Thomas telephoned him, telling him to speak to Mike Chester (because Mr Jones had left the firm). Mr Walker telephoned Mr Chester on 1 May 1998, only to learn that a decision on staffing would not be forthcoming for a further two weeks. Ultimately, on 19 May 1998, he received a letter from NatWest signed by Ms Cocks, advising that NatWest had no position for him and denying contractual liability.