Bank of Credit and Commerce International SA v Ali (No 2)

A claimant seeking substantial damages for breach of the implied term of trust and confidence in an employment contract must prove, on the balance of probabilities, that the breach caused financial loss. Employment stigma and prolonged unemployment create no presumption of causation. A trial judge may draw common-sense inferences, examine individual applications and assess the evidence as a whole. Evidence from prospective employers is not legally essential. Loss of a chance is a tool for cases where consequences are difficult to reconstruct. It does not replace proof of causation, and percentage assessment generally concerns quantum after causation is established. The appellants failed to prove that stigma caused their losses.

Former employees of BCCI appealed against Lightman J’s dismissal of their claims for stigma damages. The claims alleged that BCCI’s dishonest and corrupt business had breached the implied trust and confidence term in their employment contracts and damaged their prospects of future employment.

The appeals concerned the correct causation test, whether loss could be inferred from unemployment and failed applications, whether Mr Zafar’s dismissal by AIBL was caused by stigma, and whether anecdotal evidence from other former employees should have been admitted. The Court of Appeal also considered whether the judge’s factual findings and guidance in the managed litigation should be disturbed.

Appeals dismissed unanimously. Pill LJ gave the leading judgment, with Parker LJ agreeing and Walker LJ agreeing in the result while adding observations on loss of a chance.

1. Proof of causation. A claimant must prove on the balance of probabilities that the breach caused financial loss. Unemployment, publicity concerning the employer and alleged stigma do not create a general inference or presumption of loss. The trial judge was entitled to require proof of the causal link and to examine applications individually while considering the evidence as a whole.
2. Loss of a chance. Loss of a chance is a useful method of applying ordinary causation principles where the consequences of a breach are difficult to reconstruct. It is not mandatory where the effect of the alleged stigma can be analysed from the evidence. Causation must first be established; percentage assessment then concerns the value of the resulting loss. Walker LJ added that the essential question in third-party cases is what the third party would have done without the breach. Parker LJ emphasised that causation cannot be proved by a percentage calculation alone.
3. Evidence and findings. It was not legally necessary to call or approach prospective employers, although reliable evidence from them would often be powerful. The judge was entitled to find that stigma had not caused either appellant’s unemployment or Mr Zafar’s dismissal by AIBL, and the Court found no basis to disturb those findings.
4. Anecdotal evidence. Evidence from other former employees could logically assist an inference, but the judge was entitled to exclude it in the interests of justice because proper testing would have required extensive additional inquiries, disproportionate cost and time, and the evidence had only marginal bearing on the test cases.

The respondents were awarded the costs of the appeals and related costs orders were made concerning the managed litigation.

• Court of Appeal (Civil Division) — The appeals were dismissed on 31 January 2002. [2002] EWCA Civ 82
• High Court (Chancery Division) — Lightman J dismissed the test-case stigma claims on 25 June 1999. No citation for that judgment was stated.