Bank Of Credit & Commerce International SA v Husain & Anor

Permission to appeal should be granted where the proposed appeal has a realistic prospect of success on a point of law and that point may materially affect the outcome. In test-case litigation, the court should also consider the need to resolve common legal issues efficiently for the wider group of cases.

In stigma claims arising from employment, it was reasonably arguable that financial loss might be assessed by evaluating a measurable handicap or lost chance in the labour market, rather than only by examining individual job applications and their outcomes. It was also arguable that causation could be assessed by evaluating the chance of loss and that statistical and other circumstantial evidence could support an inference of loss.

Former employees of Bank of Credit & Commerce International SA brought stigma claims following the bank’s collapse. Lightman J held that the employees had suffered no recoverable loss and dismissed their claims, while finding in favour of Mr Zafar on breach of contract on a preliminary basis.

The applicants sought permission to appeal on the proper approach to causation and damages, the admissibility and use of statistical and anecdotal evidence, and the factual conclusion concerning the reason for Mr Zafar’s later dismissal. The central question was whether those issues had a realistic prospect of success and could materially affect the outcome.

1. Permission granted in limited terms. The Court of Appeal applied the Practice Direction test: permission should be refused only where the appeal had no real prospect of success, and a point of law had to be capable of materially affecting the result. The fact that these were selected test cases strengthened the case for resolving common legal questions.
2. There was a substantial and reasonably arguable question whether stigma damages should be assessed by the judge’s job-application-history approach, by assessing a measurable handicap in the labour market and applying it to expected earnings, or by a combination of those approaches.
3. It was also arguable that, where future loss depended on the actions of independent third parties, causation could be assessed by evaluating the chance of loss. The judge’s requirement that an employee show that stigma caused a particular failed application, or that there was no realistic prospect of success, might therefore have imposed too high a standard.
4. The judge’s rejection of the statistical evidence and exclusion of the anecdotal evidence were arguable errors. It was reasonably arguable that the cumulative evidence could support an inference that stigma had diminished employment prospects, and that the excluded evidence was logically probative and relevant.
5. Mr Zafar had a separate reasonably arguable challenge to the finding that his later dismissal was unrelated to his association with BCCI. If the default judgment against him was not set aside, the liquidators could apply to discharge the permission granted to him.
6. The appeals were limited to the identified issues, with directions for a further notice of appeal and for written submissions by the non-test claimants. The judgment granted permission only and expressed no view on the likelihood of success at the substantive appeal.

• Court of Appeal (Civil Division): permission to appeal granted on limited legal and related factual issues.
• High Court, Chancery Division: Lightman J’s order dated 4 November 1999 dismissed the applicants’ stigma claims for failure to establish loss; the judgment was reported at [2000] ICLR 1354.