Punted after forged email scandal: tight contract and professional investigation underpins summary dismissal of bank senior executive
A tight employment contract and a highly professional forensic investigation have enabled a bank to uphold the sacking of a senior executive it believed had forged an email leaked to the media.
The NSW Supreme Court found the bank did not need to prove that an executive leaked a doctored email to the media before sacking him without notice, only that it had formed the "opinion" that he had.
The executive was the NSW director of a bank division and one of ten employees who received an email from the unit's head in June 2012 advising that the bank needed to tighten up its lending requirements.
Eight days later, a Brisbane-based Australian Financial Review journalist received a doctored version of the email in the post from Sydney. Among the "additions" to the original email, in larger font, was the instruction that there be "No more new lending. We are closed for business. Do not tell the market or our clients".
After the journalist advised the bank about the leak, it kicked off an investigation spearheaded by its group investigations head, a former senior Victorian police officer. All roads pointed to the executive among the ten recipients of the email, including that:
• he was based in Sydney;
• he was the only one who knew the journalist and that he worked in Brisbane;
• his handwriting matched that on the envelope the journalist received;
• he would suffer financially from the proposal to tighten lending; and
• he was flustered in his investigation interview and initially reluctant to sign a statutory declaration that he was not the leaker without obtaining legal advice first.
Alleged motive is unknown, although the bank claimed during proceedings that the former executive was bitter after being passed over for promotion and the prospect that tightened lending policies could affect his bonus.
The relationship banking head dismissed the executive in August 2012 after receiving reports from the investigation team and an independent handwriting expert. The executive sued the bank for breach of contract, claiming $9m in lost wages and bonuses on the basis that he would have been employed for at least 10 more years.
His contract said the bank could dismiss him without notice if, "in the opinion” of the bank, he engaged in serious misconduct.
The executive argued that the bank had to prove that he was actually guilty of misconduct, or at the very least that there was an implied term in the contract that its "opinion" was reasonable, correct, formed in good faith and in compliance with the bank's performance policy and "neither capricious, arbitrary nor unreasonable".
But the Judge agreed with the bank that it only needed to prove that at the time of the dismissal it held the opinion that the executive was guilty of serious misconduct.
"In my view, the words 'in the opinion of' are not gratuitous," she said.
She said the bank's opinion was the determining matter, not the "underlying fact", and that this was an "important distinction".
The judge did however concede that whether the bank's opinion had to be reasonable, formed in good faith and neither arbitrary nor capricious was "a more difficult question".
"Whether contractual powers and discretions may be limited by good faith and rationality requirements adopted and adapted from public law is not settled.”.
The judge said that even if the executive's interpretation of the contract had been correct, the bank had proved that he had sent the email on the balance of probabilities, or had met the implied term in forming its opinion. The judge also said that had he been successful, she would have only awarded him four months’ pay in line with the termination "for any reason" provision in the contract.
iHR believes a well-crafted employment contract executed at the time of employment will prevent major time and expense if workplace problems arise later on. When things do go wrong, professional and thoroughly conducted workplace investigations are recommended.