Judgments
Khatri v Rabobank
23/04/10
Khatri v Rabobank [2010] EWCA Civ 397 (summary judgment on bonus claim)
James Goudie QC, instructed by Alex Kleanthous of Gannons, appeared for Mr Saleem Khatri in his successful summary judgment claim for bonus. There were three issues, the approach for summary judgment, the construction of the employment contract, and whether Mr Khatri had consented to a variation to displace the contractual term under which he made his claim.
As regards summary judgment, the Court of Appeal said that, notwithstanding that the factual matrix is key to understanding what the parties must have intended by the words they used, it far from follows that the need to know what that matrix was requires a full trial with discovery, evidence and cross-examination of witnesses. If there is no actual conflict of evidence on a relevant point of background matrix, it is only when there really are reasonable grounds for supposing that a fuller investigation of the facts as to the background might make a difference to construction that the Court should decline to construe the contract on a summary judgment (including strike out) application. The Court should not be over-astute to decline to deal with construction of a contract summarily merely on the basis that something relevant to the matrix might turn up if there were a full trial. Most disputes as to “pure” construction of a contract will be suitable for summary determination because the factual matrix necessary for its construction will itself be determinable on that application.
As regards the construction of the contract, the Court concluded that the contract did confer on Mr Khatri a right to a bonus according to a formula. Jacob LJ said that if Banks decide to reward their employees by means of purely discretionary bonuses then they should say so openly and not seek to dress up such a bonus with the language of entitlement qualified by a slight phrase which does not make it absolutely clear that there is in fact no entitlement at all. “If you are to give with one hand and taken away with the other, you must make that clear.”
As regards variation of the contract, the Court held that none of the acts of either party “unequivocally” showed acceptance by Mr Khatri of new terms. There was no “clear unequivocal act” from which one could infer that he was accepting the new terms or implying acceptance. The Court of Appeal applied the decisions of the House of Lords in Rigby v Ferodo [1988] ICR 29 and of Elias J, as he then was, in Solectron Scotland v Roper (2004) IRLR 4 (an “only referable” test).
