Parmar v HSBC Private Bank (UK) Ltd

Clear and unambiguous exclusion clauses are given their ordinary effect. They may exclude claims concerning discretionary remuneration, but do not ordinarily protect conduct involving bad faith or its equivalent, such as discrimination or perversity. On summary judgment, the court may decide short points of construction or law, while avoiding a mini-trial, where the claimant has no realistic prospect of success. A discretionary remuneration decision is lawful where it is made fairly, on relevant material, and with proper regard to business-unit responsibility, risk management and reputational damage. Bringing an unsuccessful claim does not, without more, create a damages claim for breach of an exclusion clause.

The claimant, formerly head of the defendant bank’s Global South Asian Diaspora Department, sought deferred cash and unvested share benefits after the bank’s Remuneration Committee awarded no discretionary variable pay and applied 100 per cent malus to the unvested awards. The bank applied for summary judgment on the claim, relying on exclusion clauses in the employment documentation, the HSBC Share Plan and a settlement agreement. It also sought summary judgment on a counterclaim for damages based on the bringing of the claim. The central issues were whether the exclusion clauses barred the claims, whether the claimant had a realistic prospect of proving bad faith or equivalent conduct, whether the remuneration decision was irrational or procedurally defective, and whether the counterclaim disclosed a viable cause of action.

1. Summary judgment principles. The court applied the requirement that the claimant must show a realistic, rather than fanciful or merely arguable, prospect of success. Summary judgment must not become a mini-trial, although readily resolvable disputes and short points of construction or law may be determined summarily. The court also considered the available and reasonably anticipatable evidence and the overriding objective.
2. Exclusion clauses. The relevant clauses were sufficiently broad and unambiguous, read individually and together, to cover the claims concerning discretionary remuneration. Clear contractual language should not receive a strained or artificial meaning to avoid an exclusion of liability. The clauses did not, however, exclude liability for bad faith or something akin to it, including discrimination or perversity. The court therefore approached the issue cautiously because such matters might require a trial if there were a realistic prospect of proving them.
3. Merits. The bank was entitled to take account of the breadth of its discretion, team and business-unit responsibility, risk assessment, reputational damage and the regulatory context. The material showed a bona fide investigation, a fair opportunity for the claimant to respond, and reasoned findings by the Remuneration Committee. There was no evidence of inconsistency, predetermination, procedural defect, bad faith, perversity or discrimination. The claimant consequently had no realistic prospect of success and no realistic prospect of defeating the exclusion clauses.
4. Counterclaim. The court declined summary judgment on the counterclaim. It was not persuaded that merely bringing a claim which ultimately lacked merit, even if contrary to exclusion clauses, generated a damages claim absent fraud or malice. Summary judgment was granted to the defendant on the claim but refused on the counterclaim.