England and Wales Court of Appeal (Civil Division) Decisions

IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE QUEEN'S BENCH DIVISION
(Sir Oliver Popplewell)

		The Royal Courts of Justice The Strand London WC2A Wednesday 18 July 2001

Wednesday 18 July 2001

1. LORD JUSTICE SIMON BROWN: Captain Brian Leonard Friend appeals with the permission of Brooke LJ against the order of Sir Oliver Popplewell, sitting as a Deputy High Court Judge on 21 December 2000, striking out two actions (which I shall call respectively the 1996 action and the 1997 action) brought again the Civil Aviation Authority ("the CAA") and, in the case of the 1996 action, also against a number of their senior employees, following upon Captain Friend's employment by the CAA between April 1987 and March 1993. The 1996 action, which is for malicious falsehood, conspiracy, breach of contract and inducing breach of contract, was struck out on the ground that it was barred by issue estoppel following upon a 1994 industrial tribunal ("IT") decision on the appellant's complaint of unfair dismissal. The 1997 action, a claim for defamation, was struck out on the ground of absolute privilege, alternatively as an abuse of process.
2. The appellant is represented by counsel, Mr Paul Garlick QC and Mr Tavares, in the 1996 action but not in the 1997 action.
3. Although the papers in the case are voluminous (the dispute between the parties having ranged far and wide over many years and involved several other actions), the background to the present appeal can be briefly stated. The CAA is a statutory corporation created by the Civil Aviation Act 1971 which, by reason of section 3 of the Civil Aviation Act 1982, is concerned with the regulation and safety of air transport. The appellant is a former Royal Navy and airline pilot, whose initial employment with the CAA was as a Flight Operations Inspector ("FOI") but who was then transferred to a different group, the Operating Standards Appraisal Programme ("OSAP"). In this latter capacity he was required to take part in helicopter inspections to ensure compliance with safety standards. He strongly objected to this on the ground that the inspection team did not include a helicopter pilot, which he maintained was essential for reasons of safety.
4. Sir Oliver Popplewell spoke of the appellant's "unswerving view. . . that to require him who was a fixed-wing pilot to monitor the safety of helicopters was an unsafe practice, resulting in a large number of fatalities". This vehemently and repeatedly expressed view was not shared by his senior officers at the CAA and was the source of acute and growing friction between them. Such was the strength of Captain Friend's expression of his views that a formal complaint was laid before the CAA's internal disciplinary panel, contending that his conduct in the course of his employment had disrupted his working relationship with his colleagues. After a four-day hearing, ending on 1 October 1992, the panel recommended that the complaint be dismissed. They held that, while good relations between the appellant and his managers had broken down, the fault was not clearly attributable to one side and they recommended that he and another senior manager should work together on a rehabilitation programme. The panel's recommendations were rejected by the head of the Operating Standards Division, Mr Saull, and in the result the appellant was dismissed by letter dated 1 December 1992.
5. Having failed in two internal appeals brought under the CAA's disciplinary procedure, the appellant then complained to an Industrial Tribunal (as I shall continue call it, although of course it is now renamed an Employment Tribunal). The complaint was one of unfair dismissal and was based solely on allegations of procedural unfairness. Following a six-day hearing in May 1994 the Tribunal by their decision, dated 22 June 1994, upheld the appellant's contention that he had been unfairly dismissed due to a number of procedural shortcomings, but went on to hold that he had contributed 100 per cent to his dismissal. They said that it was clear from the evidence and the documents which the Tribunal had seen that he had pursued his grievance as to the constitution and the procedures of inspection teams in a way and to an extent that inevitably led to the situation whereby he could no longer continue to be employed by the CAA. The IT also noted that he himself had accepted in evidence that trust had broken down irretrievably. As a result, applying section 74(6) of the Employment Protection (Consolidation) Act 1978, they concluded that it would not be appropriate to make any award of compensation.
6. The appellant appealed to the Employment Appeal Tribunal ("the EAT") and sought before it to pursue his complaint about the safety aspects of the inspection procedures. In reply to the CAA's pleaded case before the IT that he had contributed to his own dismissal, the appellant had put in a 76-page document making his detailed case on the safety issue and further contending that the CAA had embarked on a deliberate campaign of harassment and victimisation against him for refusing to put helicopter safety in jeopardy, and had sought to coerce him into complying with their unreasonable and unlawful instructions. That case, however, ("the safety case", as it came to be called) had not been heard by the IT and this it was that decided the EAT to refuse to allow it to be advanced on appeal.
7. In giving the judgment of the EAT on 24 July 1995, my Lord, Mr Justice Tuckey, as he then was, said this:

"In his IT1 [his claim form to the Industrial Tribunal] Captain Friend only complained of procedural unfairness. He has told us that in subsequent correspondence he made it clear to the Tribunal that he was contending (among other things) that the instructions that he had been given by the CAA were unlawful because it was necessary, as a matter of law, for helicopters to be inspected in the way that he was saying they should be. This is what has been called the safety case. Captain Friend also told us that in the run-up to the hearing he attempted to obtain witness orders from the Tribunal which were directed to proving that the instructions he had received were unlawful. But at the hearing before the Industrial Tribunal where he was represented by Counsel and Solicitors Captain Friend's case was expressly limited to one of procedural unfairness. So the Tribunal were not concerned with the safety case and it is apparent from the reasons which they gave for their decision that they did not address that issue.

The Respondents object to the 'safety case' being resurrected before us on the well known grounds set out in Kumchyk v Derby City Council [1978] ICR 1116. The passage often cited in decisions of this Tribunal is to be found at pages 1123 and 1124.

Usually, this Appeal Tribunal will not hear new points. It will certainly not hear new points which would require further findings of fact to be made if they are to be resolved. Here the Respondents say that this is a new point; that it is a point which requires much further evidence before it could be resolved and therefore, it is not open to Captain Friend to raise the safety case before us on appeal.

We agree."

8. In seeking permission to appeal from that decision to the Court of Appeal the appellant again sought to pursue the safety issue but again was refused permission to do so. In dismissing the application on 22 February 1996 Waite LJ, with whom Millett LJ agreed, said this:

"Turning finally to the proposed main ground of appeal, the sole basis for it is Captain Friend's frequently repeated complaint that he was not allowed to bring onto the stage of the Industrial Tribunal hearing the merits of the helicopter safety issue. It is obviously a topic on which he feels strongly. I have not the least doubt myself, having listened to all he has had to say to us and having read all that is relevant in the substantial body of documents he has laid before us for the purpose of these applications, that he sincerely holds the opinion that if this issue had been allowed to have been investigated his own views would have emerged as fully vindicated, and that the views of others would have been found to be lax and ill-informed. The question for the Industrial Tribunal, however, was not whether he was right or wrong, reasonable or unreasonable, in the views he expressed; but whether his way of expressing them, and the steps he took, or omitted to take, as a means of emphasising them, amounted to action which caused or contributed to his dismissal for the purposes of section 74(6) of the Employment Protection (Consolidation) Act 1978. The Industrial Tribunal had every justification, in my view, for adopting the attitude that for the purpose of answering that question it was unnecessary to enlarge the ambit of an already long hearing by going into the rights and wrongs of the controversy engendered by the helicopter safety issue."

9. The 1996 action followed. Deploying a variety of causes of action, the appellant is striving finally to have the safety issue adjudicated on and (if he succeeds upon it) to recover substantial damages, claimed at up to £1m, for the loss of his employment by the CAA. It is this case, however, which the respondents contend and the judge below held is now barred on the ground of issue estoppel as a result of the IT's determination. Having concluded as they did that the cause of the appellant's dismissal was entirely his own conduct, it follows, submits Mr Moloney QC for the respondent, that no conduct on behalf of the CAA or its employees caused or contributed to that dismissal, and consequently that all damages resulting from the dismissal resulted not from anything done by the CAA or its employees but, on the contrary, was entirely caused by the appellant's own behaviour.
10. This argument, which was accepted below, was effective to dispose of the 1996 action in all its various manifestations. It defeated all the claims in tort, advanced variously by way of conspiracy, inducing breach of contract and malicious falsehood, because damage is an essential element of each, and damage was the one thing that the IT had decided the appellant could not prove to have been caused other than by his own conduct. True, section 3 of the Defamation Act 1952 provides that:

"(1) In an action for. . . malicious falsehood, it shall not be necessary to allege or prove special damage -

(a) if the words upon which the action is founded are calculated to cause pecuniary damage to the plaintiff and are published in writing or other permanent form. . . "

11. But, the judge held, the claim for malicious prosecution amounts effectively to a claim for damages arising from the appellant's dismissal and, this issue having been determined by the IT in favour of the CAA, the published words were not calculated (that is, likely) to cause the appellant pecuniary damage, so that section 3 could not in the event avail him.
12. As for the claims made in the 1996 action against the personal defendants, albeit strictly the plea of issue estoppel could not arise since they were not themselves directly party to the IT proceedings (although three of them gave evidence to the IT), these claims clearly involved a collateral attack on the IT's decision and thus on the authorities constituted a plain abuse of process.
13. For my part I have not the least doubt that the judge was correct in all these conclusions, provided only and always that he was right to accept that the IT had, as the judge put it in paragraph 38 of his judgment, "clearly concluded that the cause of the dismissal was entirely the claimant's fault and that no responsibility in any shape or form lies on the CAA." That then is the crucial issue on this appeal: is this truly a case of issue estoppel? Mr Moloney submits that it is. Indeed he describes it as "a pure, classic substantive issue estoppel." The IT, he argues, decided as between the same parties, Captain Friend and the CAA, precisely the same issue as the appellant now seeks to have litigated afresh in his 1996 action; the issue as to who caused the appellant's dismissal and his consequential loss and, more particularly, as to whether the employers' conduct played any part in it. The IT's decision, he submits, is fatal to the appellant's proposed civil claim on the issue of causation. Only by seeking to impeach the IT's conclusion that the appellant contributed 100 per cent to his own dismissal can the appellant hope to succeed in his 1996 action, and that he is not allowed to do. Mr Moloney characterises the argument as one of "brutal simplicity but irresistible logic". This was the argument that came to be accepted below.
14. Sir Oliver Popplewell noted the appellant's submission that the proceedings before the IT had been "simply confined to procedural matters" but rejected it: "This I fear is wholly to misunderstand the nature of the proceedings before the Industrial Tribunal." In paragraph 26 of the judgment, he said:

"The issues which this industrial tribunal had to consider were firstly whether there had been a dismissal and that was plainly not in dispute and secondly whether it was fair and thirdly, if it were unfair, whether the amount of compensation should be affected by the conduct of the claimant."

15. The judge then set out sections 73(7) and 74(1) and (6) of the Employment Protection (Consolidation) Act 1978, which I do not propose to repeat. He continued:

"Thus a finding of unfair dismissal by a tribunal does not bring the proceedings to an end. The other part of the equation is to consider compensation either as a basic award or compensatory award, which is subject to a reduction, having regard to the claimant's conduct. The burden is on the CAA to show that the dismissal was fair and they were entitled to say and were saying (as many other employers said) that even if the procedure was unfair it 'would have made no difference'. The 'would have made no difference' argument was a regular one and necessarily required the Tribunal to look at all the circumstances relating to the conduct of the employee."

16. A little later he said:

"[The IT] were not concerned with the safety issue, which it was impossible for them to resolve. They were, however, plainly concerned with the conduct of the claimant. It had been raised by the CAA, it was a necessary enquiry into the reason for dismissal and before making any deduction in the award, it was necessary for them to hear evidence and effectively to make findings. Six working days in a case as comparatively simple as this, showed that the Tribunal had investigated the relevant issues in very considerable detail.

To make a finding of 100% contribution against a claimant was, in my experience [Sir Oliver Popplewell was a past President of the EAT], a very rare occurrence and this view was expressed in a number of authorities."

17. The judge then considered the authorities, both as to the nature of the conduct on the part of an employee apt to justify a reduction in his compensation (including, one may note, "bloody-mindedness") and as to what is required to support a finding of 100 per cent contribution. Such a finding, said Browne-Wilkinson J, as the then President of the EAT in Gibson v British Transport Docks Board [1982] IRLR 228 at paragraph 30, could not in that case be justified since the complainant's conduct was not "the sole cause of the dismissal". Logically, runs the respondent's argument, it must follow that the determination of 100 per cent contribution carries with it a finding that the employee's conduct is the sole effective cause of dismissal.
18. Ably though the argument was advanced, and persuasively though at first blush the judgment reads, to my mind it just cannot be right. One central difficulty it faces is how to reconcile, on the one hand, the judge's conclusion that the appellant's contention that the IT had been purely concerned with procedural matters was wholly to misunderstand the nature of IT proceedings with, on the other hand, the EAT's reasoning, supported by the Court of Appeal, that the IT hearing had indeed been expressly limited to procedural unfairness and the Tribunal had simply not been concerned with the safety issue. In this regard Waite LJ's words are worth repeating:

"The question for the Industrial Tribunal, however, was not whether he was right or wrong, reasonable or unreasonable, in the views he expressed; but whether his way of expressing them, and the steps he took, or omitted to take, as a means of emphasising them amounted to action which caused or contributed to his dismissal for the purposes of section 74(6) of the Employment Protection (Consolidation) Act 1978."

19. The Court of Appeal in the unfair dismissal proceedings took the view that it was unnecessary to decide who was right on the safety issue and whether, therefore, the CAA were acting unlawfully in requiring the appellant to participate in what he strongly maintained were unsafe inspection procedures. This view to my mind necessarily postulates that in applying the contribution/reduction provisions of the 1978 Act, the IT was concerned only with the complainant's conduct immediately precipitating the dismissal, and not at all with the employer's conduct, quite possibly itself tortious or in breach of contract, which may have led the complainant to act as he did. Certainly it would seem to me quite impossible to say of any court that comes to hear the 1996 action, as Waite LJ was saying of the IT, that it would be irrelevant for it to address the question whether the appellant was right or wrong, reasonable or unreasonable in the view he held and expressed on the helicopter safety issue. Rather this issue would lie at the very heart of the claim for wrongful, as opposed to unfair, dismissal. If the appellant could prove in his civil action that he was being unlawfully instructed to carry out unsafe procedures, that must inevitably affect the court's reaction to his attitude and behaviour whilst refusing to be coerced into such action, for example his bloody-mindedness. It is one thing to say that the appellant's conduct contributed 100 per cent to the dismissal, in so far as his complaint is merely that it was unfairly effected - that is, procedurally unfair. It is quite another thing to say that this conclusion applies equally to the appellant's substantive complaint that it was his employer's breach of contract in requiring him to work unlawfully which in reality underlay the breakdown of their relationship and ultimately made his dismissal, whether it be viewed as actual or constructive, inevitable. True, as the IT's determination noted, "The appellant himself accepted that trust had broken down irretrievably". That, however, said nothing as to where the blame for that lay.
20. It is plain beyond argument that the IT never did consider the safety issue, including therefore whether the appellant was being required to follow unsafe procedures. If this issue was not considered, by definition it cannot have been decided. If it was not litigated and decided, then it cannot properly be the subject of issue estoppel strictly so called. The highest the respondents' case could then be put would be that the issue should have been pursued before the IT but was not. Some hint of that indeed is to be found in paragraph 42 of the judgment below:

"It necessarily follows in my judgment from the finding of 100 per cent contribution, that the allegations of victimisation etc, if raised before the Industrial Tribunal, had been rejected by them or if not afford the claimant no assistance see Henderson v Henderson 1843 3 HARE 100 at 114 per Sir James Wigram VC."

21. To my mind, however, the Henderson v Henderson form of estoppel could not possibly run in the circumstances of the present case. The words already quoted from Waite LJ's judgment in the Court of Appeal sufficiently indicate that the appellant and/or his then advisers cannot properly be criticised for failing to urge yet more strongly that they be allowed to canvas the safety issue before the IT. The recent decision of the House of Lords in Johnson v Gore Wood [2001] 2 WLR 72 cautions against too ready an application of the Henderson v Henderson principle to stifle legitimate claims on abuse of process grounds. I have no doubt that to prevent the appellant yet again from ventilating his case on the safety issue, including the contention that it was his justifiable stance upon this which ultimately led to his dismissal, would work injustice rather than justice, and cannot therefore be permitted.
22. None of this, of course, is to say that the appellant will in the end succeed in his 1996 action. He may or he may not. The respondents accept neither the sincerity nor the merits of his objections to the OSAP system. They suggest that his real objection to his transfer to OSAP duties was that it severely disrupted his existing domestic arrangements, and they contend that his stated objections to the system are based on a wilful misunderstanding of the different roles of OSAP and FOI inspections in achieving safety. None of that, however, is for decision on this appeal. For the purposes of the present strike out proceedings the appellant must be assumed to have a worthwhile case on the merits.
23. Having indicated at the conclusion of the argument on the 1996 action that we proposed to allow that part of the appeal, we suggested that in those circumstances Captain Friend might think it unprofitable to pursue his appeal with regard to the subsequent 1997 libel action, an action which in any event appeared to us to face very real difficulties. The appellant readily, and, as I think, wisely, indicated that (subject only to further appeal by the respondent) he no longer sought the reinstatement of that separate action. I need accordingly say no more about it.
24. In the event I would allow the appeal to the extent of reinstating the 1996 action.
25. LORD JUSTICE CHADWICK: The issue on this appeal is whether the statement of claim in proceedings brought by the appellant, Captain Brian Friend, against the Civil Aviation Authority and others should be struck out, and the action dismissed, on the ground that the claim has no reasonable prospects of success.
26. The basis for the contention that the claim is bound to fail is that the claimant cannot be permitted to attempt to establish an issue which is essential to his cause of action in these proceedings – namely that the defendants' conduct of which he complains was the cause of the loss which he seeks to recover. It is said that that issue has already been decided against him in earlier proceedings before an Industrial Tribunal.
27. The principle relied upon by the defendants is that described by Diplock LJ, in Thoday v Thoday [1964] P 181 at 198, as "issue estoppel". In Arnold v National Westminster Bank Plc [1991] 2 AC 93, Lord Keith of Kinkel put the point in these terms:

"Issue estoppel may arise where a particular issue forming a necessary ingredient in a cause of action has been litigated and decided and in subsequent proceedings between the same parties involving a different cause of action to which the same issue is relevant, one of the parties seeks to re-open that issue.

The starting point, as it seems to me, is to identify the issue in the present proceedings in relation to which there is said to be an estoppel.

These proceedings were commenced by the issue of a writ on 2 July 1996 under the reference 1996 F 428. A statement of claim, first served on 10 January 1997, was amended and re-served on 31 March 1999. At this stage of the proceedings it is to the amended statement of claim that the court must look in order to identify the issues which the claimant must establish in order to succeed in his action.

In paragraph 2 of the amended statement of claim, the claimant asserts that he was employed by the Civil Aviation Authority from April 1987 until 1 March 1993 as a fixed wing Flight Operations Inspector. That is not in dispute. He goes on to set out certain of the terms of his employment contract - in particular those relating to disciplinary procedure. Paragraph 2A of the amended statement of claim contains an assertion that his contract of employment contained an implied term that the employer would not, without reasonable and proper cause, conduct itself in a manner calculated and likely to destroy or seriously damage the relationship of confidence and trust between itself and the claimant as its employee. It may be assumed that that allegation is based on the decision of the House of Lords in Malik v Bank of Credit and Commerce International SA [1998] AC 20 - see, in particular, the speech of Lord Nicholls of Birkenhead at pages 33H and 34A.

In paragraphs 4 and 5 of the amended statement of claim the claimant alleges that, with effect from April 1990, he was required by his employer to carry out safety inspections of helicopters, in relation to which he had no experience or expertise; and that he objected to that. In paragraph 6 he asserts that he was correct to refuse, on safety grounds, to comply with his employer's instructions to inspect helicopters; and that, in persisting in its instructions the CAA was in disregard of its statutory duties. As a result of his stance, as he says, complaints were made against him by his line managers. Disciplinary proceedings were instituted, which led to his dismissal on three months' notice, by letter dated 1 December 1992 - see paragraphs 8 to 13 of the amended statement of claim. Paragraph 14 refers to subsequent proceedings before the Industrial Tribunal in which his dismissal was found to be unfair, on procedural grounds. No compensatory award was made to him on the grounds, as found by the Tribunal, that his own contribution to his dismissal should be assessed at 100 per cent. Paragraph 15 of the amended statement of claim contains specific complaints of bias against the sixth defendant, Mr John Saull, who had taken the decision to dismiss the defendant notwithstanding a recommendation to the contrary by the internal disciplinary panel of the CAA, and against the seventh defendant, Mr Russell Williams, who had made an adverse report about him. Paragraph 16 is in these terms:

"It is averred that the conspiracy, malicious falsehoods, breaches of contract and attempts to induce breaches of contract caused the Plaintiff's dismissal and the Industrial Tribunal's finding of 100% contribution to dismissal. In making its said finding the Industrial Tribunal did not engage in any determination of the existence of any conspiracy or the cause or motivation behind it."

28. Paragraphs 17 and 18 set out, in some detail, particulars of the malicious falsehoods which are alleged to have been published by, amongst others, the sixth and seventh defendants. Paragraph 19 contains an allegation of malice; paragraph 20, an allegation that the representations made were calculated to cause the claimant pecuniary loss; and paragraph 21, allegations of harassment and discrimination. Paragraph 22 is in these terms, so far as material:

"The Defendants in making the above representations and acting as referred to in paragraphs 15 and 21 above were in breach of their contract terms. . . in that such representations/actions had an adverse effect on their relationship with the Plaintiff, was not maintaining a good relationship with the Plaintiff and not an acceptable standard of conduct. Those actions/representations induced the First Defendant's breach of contract with the Plaintiff referred to in paragraph 15 above the Defendants all knowing of the Plaintiff's contractual terms referred to above and acting as described deliberately to breach those terms."

29. Paragraph 22A of the amended statement of claim contains an allegation that, further or in the alternative, the CAA was in breach of the implied term of trust and confidence pleaded in paragraph 2A and that, by their actions, the sixth and seventh defendants procured or induced that breach. In paragraph 23 it is alleged that, "By reason of the matters aforesaid the Plaintiff has suffered loss and damage". The particulars of loss alleged include loss of future income, loss of pension, loss of reputation and a position of disadvantage on the labour market.
30. The issue on which it is said that an estoppel arises by reason of the finding by the Industrial Tribunal in the proceedings mentioned in paragraph 14 of the amended statement of claim was identified by Mr Moloney QC, counsel for the respondents to this appeal, in these terms: "What caused the claimant's dismissal and consequent pecuniary loss?" The point had been put in much the same terms at the hearing in the High Court before Sir Oliver Popplewell. It is said that the effect of the Industrial Tribunal's decision to refuse a compensatory award is that that issue has been decided against the claimant; in the sense that the Industrial Tribunal has decided that his own conduct was the sole cause of his dismissal. That submission was accepted by the judge.
31. Before examining the decision of the Industrial Tribunal, it is convenient to refer to the legislative framework within which that decision was reached. The statute in force at the relevant time was the Employment Protection (Consolidation) Act 1978. That Act has now been replaced by the Employment Rights Act 1996, but the relevant provisions are substantially unchanged. Section 54 of the 1978 Act conferred on an employee a statutory right not to be unfairly dismissed by his employer. Section 57 set out the basis upon which the question whether or not dismissal was unfair should be determined. It was for the employer to show what was the reason for the dismissal; and to show either that that was a reason which fell within section 57(2) or that it was some other reason justifying dismissal of an employee holding the position which the employee himself held. But that did not, of itself, resolve the question whether the dismissal was unfair. The Tribunal had to determine that matter in accordance with section 57(3) of the 1978 Act. Those provisions are now contained in section 98(4) of the 1996 Act:

"Where the employer has fulfilled the requirements of subsection (1), the determination of the question whether the dismissal is fair or unfair (having regard to the reasons shown by the employer) -

(a) depends on whether in the circumstances including the size and administrative resources of the employer's undertaking, the employer acted reasonably or unreasonably in treating it as a sufficient reason for dismissing the employee, and

(b) shall be determined in accordance with equity and the substantial merits of the case."

32. "Equity", in that context, is not used in any technical sense. It is plain, therefore, that the question whether or not a dismissal is unfair is not determined by a decision that the dismissal was not in breach of contract or otherwise wrongful. A dismissal which involves no breach of contract by the employer may still be unfair.
33. Where the Tribunal finds that a complaint of unfair dismissal is well founded, it is required either to make an order for reinstatement or re-employment or (if it does not make such an order) to make an award of compensation for unfair dismissal – see section 68 of the 1978 Act, now re-enacted as section 112 of the 1996 Act. An amount of compensation for unfair dismissal is to consist of a basic award and a compensatory award – see section 72 of the 1978 Act, now section 118 of the 1996 Act. The compensatory award is to be calculated in accordance with section 74 of the 1978 Act, now section 123 of the 1996 Act. Section 74(1) of the 1978 Act was in these terms:

"Subject to sections 75 and 76, the amount of the compensatory award shall be such amount as the Tribunal considers just and equitable in all the circumstances having regard to the loss sustained by the complainant in consequence of the dismissal in so far as that loss is attributable to action taken by the employer."

34. Section 75 imposes a financial limit on the amount of compensation which can be awarded to a claimant, including the amount by way of compensatory award. Section 76 contains provisions where the compensation falls to be awarded in respect of an act which would attract compensation, also, under the Sex Discrimination Act 1975 or the Race Relations Act 1976. Those statutes are not relevant in this context.
35. Section 74(1) of the 1978 Act required the Tribunal to identify what loss had been sustained by the complainant in consequence of the dismissal and whether any of that loss (and if so, what part of that loss) was attributable to action by the employer. It must be kept in mind that the exercise in which a tribunal is engaged under section 74 is the calculation of one element ("the compensatory award") in an award of compensation for unfair dismissal – see section 72 of the 1978 Act. It is, to my mind, plain that it is only if some part of the loss sustained in consequence of the dismissal - which, in this context, means the dismissal which has been found to be unfair - is attributable to action taken by the employer, that any amount can be awarded by way of compensatory award under section 74(1). If no part of the loss which the complainant has sustained in consequence of the dismissal is attributable to action taken by the employer, then section 74 is not engaged and the complainant is limited to the basic award, calculated under section 73.
36. If the Tribunal is satisfied that, prima facie, some amount is to be awarded by way of compensatory award under section 74(1) of the Act, then it is required to go on to consider whether the dismissal was, to any extent, caused or contributed to by any action of the complainant. It is required to do that by the provisions of section 74(6) of the 1978 Act, now re-enacted in section 123(6) of the 1996 Act. The subsection is in these terms:

"Where the Tribunal finds that the dismissal was to any extent caused or contributed to by any action of the complainant it shall reduce the amount of the compensatory award by such proportion as it considers just and equitable having regard to that finding."

37. That subsection requires the Tribunal to address the questions (i) whether or not the dismissal was to any extent caused or contributed to by any action of the complainant; and if so, (ii) to what extent (if any) it is just and equitable to reduce the amount of the compensatory award in the light of that finding. For the reasons that I have already sought to explain, it seems to me that the Tribunal is not required to - and should not - embark on a consideration of the questions posed by section 74(6), unless it has satisfied itself, under section 74(1), that some part of the loss sustained by the complainant in consequence of the dismissal is attributable to action taken by the employer. It is for that reason - if for no other - that a decision that the reduction under section 74(6) should be 100 per cent can be appropriate only in exceptional circumstances. Such a decision requires the Tribunal to satisfy itself that, although some part of the loss sustained is attributable to action taken by the employer, nevertheless the complainant's contribution to the dismissal makes it just and equitable that he should receive no compensatory award.
38. In the present case, the Tribunal addressed the questions posed by section 74(6) of the 1978 Act, in a short passage which appears in paragraph 11 of its reasons and to which my Lord, Lord Justice Simon Brown has already referred. The Tribunal said this:

"Having invited submissions from Counsel on the issue of contribution, we find that the Applicant contributed to his dismissal and assess that contribution as being 100 per cent."

39. They went on to say that it was clear from the evidence and the documents that the applicant had pursued the matter in a way, and to an extent, which must inevitably have led to the situation where he could no longer continue to be employed by the respondents.
40. In the circumstances set out in the statement of claim, it is a matter of no surprise that the Tribunal should come to the conclusion that the applicant had pursued the matter in a way which must inevitably have led to a situation in which he could no longer continue to be employed by the respondents. An employee, who takes the view, for reasons sincerely held, that what his employer is requiring him to do is unsafe and unlawful, and who raises that contention with the employer in forceful terms, makes it impossible – unless the employer accepts the employee's contention – for the employment relationship to continue. If the employer does not accept the employee's contention, then the employment relationship is inevitably doomed. The employee cannot continue in an employment under which he refuses to comply with his employer's instructions; nor can it be expected that he will comply with instructions which he believes are unlawful and will lead to unsafe results. That implies no judgment on the lawfulness or otherwise of the instructions. It does no more than recognise that, if the employee sincerely believes that the instructions are unlawful, the employment will, inevitably, come to an end either by resignation or by dismissal.
41. Set in its statutory framework, a decision under section 74(6) of the 1978 Act, that the complainant's conduct contributed to his dismissal, and that it would be just and equitable to reduce the amount of the compensatory award by 100 per cent cannot be regarded as a decision that the loss about which the claimant complains in these proceedings was not caused by any of the actions on the part of the CAA, or of its employees, of which complaint is made in the statement of claim.
42. As has been said in earlier authority, the concept of "issue estoppel" is a useful tool, to which the court can have recourse in order to prevent issues being relitigated in circumstances in which to relitigate them would be abusive. But it is a tool which must be used with caution. It is essential that, before a claimant is prevented from bringing his claim before the court on the ground of issue estoppel, the court must be satisfied after careful examination of all the circumstances that the issue on which he has to succeed in the claim which he seeks to bring is indeed the same issue as that which has been considered and decided in earlier proceedings.
43. For the reasons given by my Lord, Lord Justice Simon Brown – and for the reasons which I have sought to set out - I am satisfied that that test is not met in this case. The question whether or not the actions by the defendants of which Captain Friend complains in this action led to the loss which he asserts, in these proceedings, that he has suffered is not one which has already been determined against him. I too would allow this appeal.
44. LORD JUSTICE TUCKEY: I agree for the reasons given in both judgments that the appeal in the 1996 action should be allowed.
ORDER: The appeal in the 1996 action to be allowed. The 1997 action is withdrawn. Minute of order to be prepared by counsel. Permission to appeal to the House of Lords refused. (Order not part of approved judgment)