England and Wales High Court (Chancery Division) Decisions

IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION

		25 June 1999

INTRODUCTION

1. The rise and fall of the Bank of Credit and Commerce International SA ("the Bank") was the greatest scandal in the history of banking. The Bank had a short but eventful life. It was hopelessly insolvent from at least 1986. If this had become known outside the Bank, the Bank would have been closed down immediately. The paramount concern of the Bank thereafter was to survive, whatever the price to be paid, and the price was recourse to fraud and wrongdoing on a massive scale. The Bank was at least in part sustained by its successful policy of pressurising its employees to procure friends, family and associates to place deposits with the Bank. The house of cards (as was inevitable) collapsed with the direst consequences not merely for depositors with the Bank, but equally for the innocent and loyal employees of the Bank. This is one of a series of actions brought by a group of former employees led by the BCCI Staff Campaign Committee to obtain redress. The particular concern of this action is with the trust and confidence term ("the T&C Term") implied into the employees' contracts of employment. The House of Lords in Malik and Mahmud v. BCCI [1998] AC 240 ("Malik") opened the door to a possible claim by former employees that the wrongdoing of the Bank constituted a breach of the T&C Term and (if it does) for damages if they can establish that the publicity given to the wrongdoing blighted their prospects of obtaining fresh employment. I have to decide (in turn) whether the wrongdoing did constitute a breach of the T&C Term; (if so) whether the breach occasioned such damage; and (if so) what (if any) damages are recoverable. It is not possible to approach a case such as the present without a degree of sympathy for the former employees of the Bank who have lost in the collapse of the Bank what they were led to believe were jobs for life and who have failed to find or have experienced difficulty in finding fresh employment. A job is much more than a source of income. As Broussard J said in Foley v. Interactive Data (1988) Cal Rptr 211:

"a man or woman usually does not enter into employment solely for the money: a job is status, reputation, a way of defining one's self-worth, and worth in the community. It is also essential to financial security, offering assurance of future income needed to repay present debts and meet future obligations ... in short, 'in a modern industrialised economy, employment is central to one's existence and dignity' (Gould [1986] BYUL Rev 885, 892)."

But I have to decide this case on the basis not of sympathy, but whether the claimants' have satisfied the necessary legal requirements for an award in their favour.

2. The Bank started business in the UK in 1972. In 1980 the Bank became a licensed deposit taker under the Banking Act 1979 and later an authorised institution under the Banking Act 1987 and accordingly regulated by the Bank of England. At the beginning of 1990 it had 2,300 employees. In 1990 the Bank was reorganised and in the course of such restructuring some 900 staff in England were made redundant. The High Court in England on the petition of the Bank of England made orders on the 5th July 1991 for the appointment in England and Wales of Mr Morris, Mr Lyle and Mr Richards as provisional liquidators of the Bank ("the Provisional Liquidators"). The business of the Bank was immediately closed, and the employees were placed on "gardening leave" pending a final decision as to the future of the Bank. The petition was subsequently adjourned on the application of the majority shareholders, the Government of Abu Dhabi, in order to obtain the necessary time to investigate the possibility of a rescue operation. The adjournment was granted on terms that the Government of Abu Dhabi funded payment of £1.2 million each fortnight in respect of the employees' salaries for the period during which this possibility was investigated. The rescue did not materialise and in October 1991 1,200 employees remained on the staff of the Bank in England. Of these, some 900 were made redundant, some 100 were transferred to Abu Dhabi, around 100 resigned and a further 100 or so were retained by the Liquidators. The same month the Provisional Liquidators of the Bank instructed Coutts Careers Consultants Limited ("Coutts") to provide outplacement support services to all redundant Bank employees, and these services remained so available until the 6th March 1992. The help of Coutts was needed because the mass compulsory redundancy took place in the middle of the most severe and durable recession of the post war period. On the 14th January 1992 an order was made for the compulsory winding up of the Bank and for the appointment of the Provisional Liquidators and Mr Akers as liquidators ("the Liquidators"). (Mr Lyle resigned on the 22nd August 1996 and was replaced on the 6th February 1998 by Mr Preece). The grounds for winding up were that it was just and equitable to make such an Order because the Bank had been the victim of substantial frauds perpetrated by one or more of its officers and because it was insolvent. The Provisional Liquidators in 1992 and the Liquidators in 1993 and 1996 made public statements to the media ("the Liquidators' Statements") that fraud permeated the Bank from top to bottom. These statements were false and hurtful to the former employees of the Bank. It is important to set the record straight, for the Liquidators have never made a public statement withdrawing or correcting this statement. They have however, in answer to a request from me, confirmed that the vast majority of employees were totally innocent of involvement and that only a small body was responsible for the wrongdoing, though they reserved the right to consider on an individual basis the possible involvement of any employee who makes a claim in the liquidation or who brings a counterclaim. Following the winding up order, some 112 staff were re-employed by the Liquidators of whom now only 10 remain in the Liquidators' employment. The Liquidators have the conduct of these proceedings on behalf of the Bank.
3. The redundancy of the employees and the glare of publicity which has accompanied the liquidation of the Bank have occasioned a variety of claims against the Bank by a large number of its former employees. Some of the former employees have brought proceedings against the Bank; some in proceedings by the Bank against them have brought counterclaims; and some have sought to prove in the liquidation. In an effort to secure the most efficient and economic form of resolution of the disputes between the Bank and its former employees, I have been appointed the assigned judge to determine all such claims. I have given directions for the trial of the various issues between the Bank and its former employees in a series of test actions between selected employees and the Bank, on the basis that the decisions in such actions will be binding in respect of all other claims so far as the issues of law and fact are common.
4. I directed that four issues should be heard first and that the trial of these issues should begin before me on the 30th November 1998. These issues have been referred to as (1) the ACAS COT 3 issue; (2) the Consumer Credit Act issue; (3) the Construction issue; and (4) the Stigma Claims. Cases were selected as test cases on each of these four issues. The ACAS COT 3 issue concerned the validity of agreements made in 1990 between some 116 redundant employees and the Bank under which the employees gave up all claims against the Bank in return for a payment. On the 18th December 1998 I gave judgment (reported [1999] 2 All ER 1005) upholding the validity of this agreement. The Consumer Credit Act issue concerned the question whether certain loan agreements made between the Bank and a number of its employees constituted regulated agreements under the Consumer Credit Act. In another judgment given on the 18th December 1998 I held that the agreements were not so regulated. The Construction issue related to the construction of certain loan documents entered into between the Bank and certain employees. The employees subsequently submitted to judgment being entered by consent in favour of the Bank. The Stigma Claims are the claims now before me and the subject of this judgment.
5. The essence of the Stigma Claims is that the highly publicised dishonest conduct of its business by the Bank set forth in an agreed document (which I shall refer to as the "Agreed Misconduct") has placed a cloud over or a stigma on, the Bank's former employees which has been a serious hindrance to their subsequently obtaining further gainful employment; that such conduct on the part of the Bank constituted a breach by the Bank of the T&C Term; and that the breach so far as it occasioned financial loss to the employees has given rise to a claim in damages. Some 369 former employees are currently maintaining such a claim against the Bank. The parties after negotiation have selected the cases of five claimants as test cases. The selection has been made on the basis that each of them illustrate characteristics of claims by other claimants. The first Mr M.Q. Khan ("Mr Khan") was a clerk who worked originally as a swift key operator and later as a test key authenticator. The second Mr S.B.N. Husain ("Mr Husain") was a payroll officer in the personnel department and accordingly was not employed in mainstream banking. They have both remained unemployed since their dismissals. The third Mr I.S. Mayet ("Mr Mayet") was a supervisor at one of the Bank's branches. The fourth Mr G.J. Quraishi ("Mr Quraishi") was a stationery clerk who had health problems. They both after their dismissals obtained jobs, in the case of Mr Mayet between August 1992 and April 1996, and in the case of Mr Quraishi between July 1993 and August 1994. The fifth Mr I. Zafar ("Mr Zafar") was regional manager of the Bank's Southern African Region and accordingly a relatively senior officer. He was one of the employees dismissed by the Bank in 1990. He obtained a job in June 1991 from which he was dismissed in August 1991. Whether stigma was a cause of this dismissal and whether he later obtained another job are issues special to his case. I shall refer to these five as "the Employees". During the hearing on the 30th November 1998, the parties decided that they were not ready for a trial of the Stigma Claims and accordingly the trial of the Stigma Claims was adjourned until the 8th February 1999. Certain witnesses called at the trial of the ACAS COT 3 issue were able to give evidence relevant to the issues on that trial and to the issues relevant on this trial, and it was agreed that they should give their full evidence at that trial, and that the evidence which they gave which was relevant to the issues on this trial should stand as such at this trial. At this trial each of the Employees gave evidence and was extensively cross-examined about the effect of their previous employment by the Bank on their subsequent employment history. Witnesses of fact were called by both sides to corroborate and refute their evidence. Both sides also called expert witnesses to inform me as to the conditions in the labour market during the period between the date of the collapse of the Bank and today and as to the likely impact of any stigma and other factors on their prospects of obtaining fresh employment.
6. In this judgment, whilst I must primarily concentrate on the merits of the claims of the Employees, I bear in mind that these are test cases and accordingly I shall go beyond this limited objective and seek, where and to the extent that I can, to provide guidance which will assist in the resolution of the other Stigma Claims. For the purposes of all the proceedings between the Bank and the Employees, very sensibly the parties have agreed a number of facts, some of which they have agreed for the purpose only of the trial of the Stigma Claims. These include the Agreed Misconduct, that (for the purpose of these proceedings only) the Agreed Misconduct is attributable to the Bank as employer for the purposes of considering breach of the T&C Term in the employees' contracts of employment under English law and that the Agreed Misconduct became widely known. (I do not think that I can or should infer any further misconduct beyond that which is necessarily to be implied from that which is agreed). It is also agreed that certain bundles of documents may be looked at, not to supplement the Agreed Misconduct, but (if necessary) to clarify and flesh out the summary descriptions. I shall proceed on the basis of these agreements, but it must be made clear that, where the agreements are for the limited purpose of the trial of the Stigma Claims, both parties have reserved to themselves freedom to reopen those issues for other purposes notwithstanding this judgment. I should make mention of one further reservation expressly agreed between the parties in the course of the trial. The Employees sue (as they must) as persons who during their employment were innocent of any knowing participation in, or condonation of, any wrongdoing by the Bank: they believed that the Bank was carrying on its business entirely regularly and had no reason to believe that any transaction (and in particular any transaction with which they had any involvement in the course of their duties) was infected with any impropriety. The Bank accept that they were so innocent, but subject to one reservation. In the course of the cross-examination of Mr Zafar, the Bank informed me that documentation had come to its attention which showed that this was not so in the case of Mr Zafar. Mr Zafar strongly denied that the documentation established anything of the sort. In the circumstances both parties sensibly agreed that the trial should proceed on the assumption that Mr Zafar was innocent, but without prejudice to the outcome of a trial of this issue in separate proceedings.
7. The issues in this case may be identified as follows:

(1) whether the dishonest conduct of the Bank was such as to constitute a breach of the T&C Term by the Bank. The Bank acknowledge that significant wrongdoing took place within the Bank but deny that it was of sufficient gravity for this purpose;

if the answer to (1) above is in the affirmative;

(2) what (if any) loss did the Employees suffer as a result of such breach and whether such loss is compensatable in damages;

(3) whether (if such loss is established) the Employees have failed to take all reasonable steps to mitigate their loss;

(4) whether the Employees can claim as damages any difference between the interest payable on outstanding loans to them from the Bank and the interest which would have been payable on loans obtainable from a new employer or on the market if they had obtained fresh employment.

It was agreed that at this stage in the proceedings I would not seek to quantify any award of damages, but would merely state the relevant principles and give such guidance as is practicable at this stage. It is hoped that in the light of what I say the parties may be able to carry out any necessary quantification process by agreement and only in default of such agreement need to refer that exercise back to the Court.

8. The course I propose to follow in this judgment is to consider the topics which arise in the following order:

(1) whether there was a breach of the T&C Term. Under this head I shall consider (a) the history of the Bank; (b) the Agreed Misconduct by the Bank; (c) the decision of the House of Lords in Malik and the criteria there laid down for determining whether the Agreed Misconduct constitutes a breach of the T&C Term; and finally (d) the application of the criteria to the facts of this case;

(2) whether such breach (if established) occasioned loss to the Employees, and for this purpose; (a) the relevant legal principles; and (b) the relevant facts as agreed or established, and in particular the publicity given to the wrongdoing; the employment culture of the Bank; the expert evidence as to the employment market since the redundancies in 1990, as to employment procedures and practices generally and as to the impact of stigma on prospective employers (this will include the evidence of the three expert witnesses, and the staff of Coutts and a number of employers and recruitment agencies); and the cases and evidence of each of the Employees.

and

(3) a summary of my conclusions and the guidance which they provide for the resolution of other Stigma Claims.

BREACH OF CONTRACT

A. History of Bank and Group

9. The Bank was incorporated in Luxembourg in September 1972 and received a banking licence from the Luxembourg authorities. BCCI Holdings (Luxembourg) SA ("Holdings") was incorporated in Luxembourg on the 13th December 1974 as a non-bank holding company. From September 1976 the Bank was a wholly-owned subsidiary of Holdings. Bank of Credit and Commercial International (Overseas) Limited ("Overseas") was incorporated on the 25th November 1975 in the Cayman Islands and was at all times a wholly owned subsidiary of Holdings. From February 1979 Overseas was licensed to carry on business under the Cayman Islands Banks and Trust Companies Law. The Bank and Overseas were the two principal operating subsidiaries of Holdings. Their businesses and operations were managed as if they were the businesses and operations of a single bank notwithstanding the incorporation of separate entities. I shall refer to Holdings and its 30 or so subsidiaries and affiliates as "the Group". The Group grew rapidly during the 1980s offering a wide range of international banking services. By the end of 1982, the Group had 280 branches or offices in 57 countries. Between 1982 and 1988 the Group added a further 137 branches and offices in 16 countries so that it had 417 branches in 73 countries and employed 14,000 persons world-wide. As at the 5th July 1991, the Group operated in some 69 countries and employed some 12,000 persons in its operations world-wide. Of these the Bank had 47 branches in 13 countries; Overseas had 63 branches in 28 countries; and other subsidiaries and affiliates had 260 entities in 30 countries. The Group through the entities and branches offered a wide range of banking services.
10. In November 1972 the Bank established an office and started a banking business in the UK. In June 1976 Overseas opened its first branch in the UK. Overseas subsequently transferred all its UK branches to the Bank. This process was completed by the 1st January 1979. By the 1st January 1979 the Bank had 45 branch and representative offices in the UK through which it carried on business as a banker and deposit-taker offering a range of banking services to members of the public and employed some 1,000 persons. Its principal place of business was at 100 Leadenhall Street in the City of London ("Leadenhall"). On the 1st October 1979, the Bank applied for recognition as a bank in the UK under the Banking Act 1979. The Bank of England rejected that application but granted the Bank a full licence as a licensed deposit-taker. Recognition as a bank under the 1979 Act was never granted. Neither the licence nor the subsequent automatic authorisation under the Banking Act 1987 was ever revoked. By the end of 1982 the Bank had 81 branches in some 13 countries, 45 of which were located in the UK and employed over 2,300 persons (local cadre) on the UK payroll. Retrenchment was called for in 1990 and (besides the 900 redundancies) branches and offices were closed. At the date of closure of the Bank in July 1991, the Bank had 24 branches in the UK and some 1,200 employees on the UK payroll.
11. The Bank, particularly via its branch network in the UK region, entered into and carried out transactions with its customers and employees (who were parties innocent of any wrongdoing) in the ordinary course of its banking business. From the outset the branch network in the UK region provided normal banking services to its customers (personal and business), including current account, overdraft, loan and letter of credit facilities. The Bank provided (as well as personal banking) the following services to a wide range of customers:

Treasury Services International Trade Corporate Lending Islamic Banking Merchant Bank Travellers Cheques Master Card and Visa Card Travel Agency Property Management/Customer Services Bank Note Sale and Purchase Correspondent Banking Bureau de Change

Each UK branch reported to and would act on instructions of the UK General Manager who reported to and would act on the instructions of Mr S.M.S. Naqvi ("Mr Naqvi") who in turn reported to Mr A.H. Abedi ("Mr Abedi"). The Liquidators are not in a position to assert a positive case that no part of the transactions relating to the Agreed Misconduct ever had any connections with any UK branches, but their investigations to date indicate that these transactions were principally carried out outside the UK branches.

12. As at the 28th June 1991 there were (a) 34,504 current accounts with aggregate balances (in various currencies) equivalent to amounts in the region of £350 million (debit balances) and £250 million (credit balances); (b) 28,592 savings accounts, with aggregate balances (in various accounts) equivalent to an amount in the region of $47 million; and (c) 19,470 term deposit accounts with aggregate balances (in various currencies) equivalent to an amount in the region of £1.4 billion; and (d) some 2,811 high interest savings accounts with aggregate balances (in various currencies) equivalent to an amount in the region of £20 million.
13. Claims to an aggregate value of some US$2.48 billion have been received by, or processed through, the English liquidation in respect of some 37,715 of these accounts. A number of the accounts had nil balances, and balances on other accounts have been set off against loans. In respect of a number of accounts, no claim has been received. As at October 1988, claims to an aggregate value of some US$2.075 billion in respect of 34,657 of these accounts had been admitted for dividend purposes in the liquidation of the Bank. Further claims to an aggregate value of some US$91 million in respect of 810 of these accounts had been agreed for admission for dividend purposes. Other claims remain under review.
14. The most valuable asset recorded in the books of the Bank as at the 5th July 1991 was the English branch loan book, with a gross book value before set-off of US$1,724.5 million. The English branch loan book comprised 8,000 commercial, private and employee loan accounts (secured and unsecured). The English branches of the Bank made loans both within the UK and internationally, often in conjunction with Overseas. As at the 5th July 1991 approximately 40% by number of the 8,000 loan accounts represented loans totalling approximately US$85.5 million to staff or former staff. 1% by number of the accounts in the English branch loan book represented 60% of the value of the loan book. 50% of the accounts individually had debit balances of less than US$8,000. Up to the 15th January 1998 US$603 million of principal debt had been recovered by the Liquidators' loan recovery teams. Contractual interest has also been recovered where possible. The value still to be realised from the English branch loan book was conservatively estimated as at the 15th January 1998 to be US$186 million, giving a total estimated recovery of US$789 million. The difference between the initial book value and the total estimated recovery is attributable to a number of factors, principally set-off, inadequate security and corporate and personal insolvency of debtors.
15. The Bank had a separate Islamic Banking Unit ("IBU") based at Leadenhall. Its purpose was to accept funds from Islamic customers for investment in a manner acceptable under Sharia law. IBU dealt with between 20 to 30 Islamic customers, predominantly Islamic banks. Dealings by IBU have given rise to liabilities totalling approximately US$255 million in the English liquidation, of which part have been settled and the balance of US$175 million has been admitted for divided purposes.
16. The Bank ran a credit card operation based at Haywards Heath in England. The majority of the credit cards were issued to persons in the UK. On the 5th July 1991 there were some 63,798 active credit card accounts in issue. 291 of these accounts were in credit whilst 1,070 showed a nil balance. The remaining 62,437 accounts were in debit with some £33 million shown as due on the 5th July 1991, rising to some £35.5 million when further debits cleared through the system. The majority of the credit cards were cleared through the Mastercard network, with the remaining small portion being cleared through the Visa network. On the 5th July 1991 there were some 9.400 active debit card accounts in issue with approximately £1 million showing as owing, rising to approximately £1.7 million when further debits cleared through the system. As at the 15th October 1998 some £25 million of principal debt as at the 5th July 1991 had been collected together with some £6.2 million of interest.
17. The Bank operated a major international Travellers Cheque operation under the Visa mark. The operation was managed by the Bank, but owned by Overseas. Travellers cheques were issued in US Dollars, UK Sterling, Spanish Pesetas, Indian Rupees and Pakistan Rupees. The annual amounts of US Dollar and UK Sterling travellers cheques issues world-wide during the period 1987-1991 were:

1987 US$364,190,000 Sterling £746,000

1988 US$541,638,000 Sterling £890,000

1989 US$514,600,000 Sterling £707,000

1990 US$417,450,000 Sterling £859,000

to 5 July 1991 US$180,587,000 Sterling £248,600

At the 5th July 1991, approximately US$770 million of travellers cheques were held as stock, either with the printers, in transit, or with selling agents. An estimated US$77 million travellers cheques had been sold but not encashed, and up to US$12 million was owed by selling agents.

18. As at close of business on the 5th July 1991 the Bank UK Treasury investment portfolio amounted to £798.7m. Other banks did use the Bank as a correspondent bank. As at the 5th July 1991 the Bank had 530 Vostro accounts. (A Vostro account is another bank's current account held with the relevant Banking entity). Of those 325 were held for foreign banks and 175 for affiliates. The remaining 30 were branch accounts. Taking an arbitrary three day period in June 1991, the average daily credit turnover on the four largest US dollar Nostro accounts amounted to some US$171.9 million comprising some 197 transactions, and on the two largest sterling Nostro accounts amounted to some £75.4 million comprising some 136 transactions. Comparative figures for the average daily debit turnover are US$87.6 million comprising some 128 transactions and £74.8 million comprising some 46 transactions.
19. As at the 5th July 1991 there were 536 outstanding guarantees issued by the Bank given for 329 parties totalling the Sterling equivalent of approximately £104.5 million. These included trade related performance bonds, advance payment guarantees, bail bonds, tender guarantees and bank guarantees for facilities elsewhere.
20. A significant proportion of the business of the Bank's UK operation consisted of trade finance, including both import and export letters of credit and bills for collection. Some 120 UK based employees were engaged full time in trade finance matters in London. Trade finance business also constituted a significant part of the business of the Bank's UK branches. On closure on the 5th July 1991 there were in excess of 5,000 live files in varying stages of completion which required attention. The largest group for which documents were held by the Bank was UK exporters for whom the Bank had been collecting funds in its capacity as correspondent banker. 217 sets of export documents were held as at the 5th July 1991 for 154 customers with a value of some £5.6 million. 164 sets of import documents were held at the 5th July 1991 for 76 customers, with a value of some £33.9 million. There were 1,229 bills of exchange in the hands of the UK branches that were unpaid as at the 5th July 1991 totalling some £24.4 million. These were bills sent to the UK for collection by overseas banks, and would usually have involved the release of the documents of title, e.g. bills of lading, against acceptance. The Bank had sent 627 bills of exchange overseas totalling some £24.6 million which were outstanding as at the 5th July 1991. These would have related to exports by the Bank's customers. 500 foreign bills for 57 commercial customers (74 parties if Group entities are included) had been purchased totalling some £35 million. There were some 456 accepted bills drawn under import letters of credit totalling some £12.7 million due for payment post 5 July 1991 involving 98 customers.
21. Balances due to the Bank and Overseas from correspondent banks, non-banking financial institutions and Certificates of Deposit on the 5th July 1991 amounted to approximately US$2,244m. These related to operations in 41 countries.
22. Since the closure of the Bank, a number of branches and subsidiaries have been disposed of by the relevant officers appointed by the Luxembourg or Cayman Courts or taken over by local regulators or central banks. Indeed according to Mr Zafar, the subsidiaries in Zambia, Botswana, Swaziland and Zimbabwe were sold as going concerns and are operating under new names.
23. In the region of US$7.3 billion of essentially banking business related claims have been admitted within the Luxembourg liquidation of Holdings, the Luxembourg and English liquidations of the Bank, and the Cayman liquidation of Overseas for the purposes of the second dividend. The deficiency in assets as at 5 July 1991 (i) as regards creditors of the Bank was estimated to have been $5.9 billion and (ii) as regards creditors of Overseas was estimated to have been $4.6 billion. (1 billion = a thousand million (1,000,000,000)). The deficiency in assets as at 5 July 1991 as regards creditors of the Bank and of Overseas has since fallen by reason of inter alia $1.375 billion of recoveries and the processing of claims in the liquidations and a further $1.3769 billion from global funds including the Ruler of Abu Dhabi, the US assets and other litigation. To date a combined first and second dividend of 46% has been paid. When calculating the second dividend (which was declared in June 1998) there were in the region of a further US$2 billion of claims within the same estates which had yet to be admitted, rejected, or withdrawn. Further claims against the Group will have been admitted in, and dividends paid from, other entities and estates independently of the liquidations in Luxembourg, the UK and the Caymans.
24. The principal causes of the Group's insolvency were inter alia losses incurred by the Group as a consequence of loans being or becoming non-performing loans; losses incurred in treasury operations of the Group; the lack of available new capital; the artificial inflation of the Group's capital by the acquisition of its own shares through nominees; losses incurred following the concealed acquisition of other banking businesses; the artificial inflation of profits and/or other irregular or imprudent conduct of the business of the Group, including fictitious and non-recourse loans.
25. In summary, the Bank during its life carried on a very substantial banking business internationally and within the United Kingdom and provided to its customers the normal banking services. Hopelessly insolvent since at least 1986, it continued trading and built up a deficiency as regards creditors amounting on the 5th July 1991 to close to US$6 billion. Recoveries have enabled creditors to receive 46p in the Pound.

B. The Agreed Misconduct

26. The Parties Responsible

A schedule has been agreed specifying the individuals responsible for the Agreed Misconduct. The principals were: (1) Mr Abedi, the Founder/President 1972 to 1990 and a director at all times of Holdings, the Bank and Overseas; (2) Mr Naqvi the Executive in Charge of the Central Support Organisation ("CSO") February 1977-March 1988; Acting Chief Executive Officer March 1988-March 1990, and a director of Holdings, the Bank and Overseas from March 1988- September 1990; and (3) 9 named senior managers and executives working under their direction (many of them executives and officers in the CSO) and also some 30 other named officers all of whom were aware that what they were doing was wrong. It is to be noted that only a very limited number of employees of the Bank were involved: this did not extend even to all members of the CSO. But it did include as the principal protagonists the directing minds of the Bank, Mr Abedi and Mr Naqvi. It is to be inferred for the purpose of these proceedings that (save and unless information comes to light in the course of proceedings between a former employee and the Bank implicating that employee) all the other employees at all times believed that they were occupied during their employment by the Bank exclusively in the carrying out of legitimate transactions in the ordinary course of banking business on behalf of the Bank. The principal media for the perpetration of the Agreed Misconduct were three units namely the Group's Central Support Organisation ("the CSO"), the Affiliate Co-ordination Unit ("the ACU") and the Central Treasury.

27. The CSO was the brains and central management of the Bank and Overseas, located until 1990 at Leadenhall and thereafter in Abu Dhabi. The CSO controlled and directed the Agreed Misconduct although "the transactions" were recorded principally in the Cayman Islands and other off-shore locations.
28. The ACU, (known colloquially as "the Cayman Desk"), also located at Leadenhall, was a sub-division of CSO. The functions of the ACU were to look after accounts booked predominantly by CSO with Overseas and other Bank entities in Grand Cayman where it was appropriate for a designated account officer resident in London to handle the accounts and booking of transactions between companies within the Group, including the Bank. The Executive in Charge of the ACU reported to Mr Naqvi. At the direction of Mr Naqvi the ACU carried out certain of the Agreed Misconduct.
29. The Central Treasury operations of the Group at Leadenhall were until 1986 controlled and directed by Mr S.Z.A. Akbar ("Mr Akbar") who reported to Mr Naqvi. Thereafter, the Central Treasury operations were moved to Abu Dhabi and until March 1990 were controlled and directed by Mr S. Jamil who reported to Mr Naqvi. The results of the Group's operations were inaccurately and/or falsely recorded in its accounting records, and the assets and share capital were substantially overstated and liabilities were substantially understated.
30. The Purpose

The Agreed Misconduct was designed to conceal and/or disguise the Group's true financial position from its auditors, regulators, depositors, creditors and/or other persons, to create fictitious income and to deceive US regulators to facilitate the acquisition of other banking businesses. Although the Agreed Misconduct was recorded principally in the Cayman Islands and other off-shore locations, these activities were in fact controlled and directed from the Group's Central Support Organisation ("CSO") at Leadenhall until 1990 and thereafter in Abu Dhabi. It was carried out over a long period. Some frauds were committed in the 1970s and others in the 1980s. The Liquidators are unable to determine the number and scale of the transactions involved so as to be able to give full particulars thereof. The Liquidators accept that the amounts involved are in aggregate billions of dollars and that these were the types of transactions relied on by the Bank of England in petitioning for the winding-up of the Bank in the UK.

31. The Particulars

The parties have agreed 11 categories of Agreed Misconduct of which only the first 10 categories are relevant. They may be précised as follows:

32. Categories 1 and 2

Irregular or fictitious transactions (involving millions and totalling billions of dollars) for improper purposes (at times in collusion with other parties), the overall purpose being to attempt to conceal the true financial position of the Group and its insolvency or doubtful insolvency, including (a) (from at least the mid 1970s), routing of funds transfers within the Group and using external vehicles to facilitate transactions; loan parking (i.e. recording loans by one company in the books of another) within the Group to facilitate transactions and the granting of non-recourse loans to borrowers or nominee borrowers, on terms that the borrower or nominee borrower was under no legal obligation to repay the loan; (b) (from at least the late 1970s) the creation of fictitious loan accounts to conceal liabilities and disguise use of funds; (c) (from at least the early 1980s) the failure to record and/or misrecording of funds derived from external sources (deposits, borrowings from other banks, in some cases secured by deposits placed with the same banks) and the use of unrecorded/misrecorded funds to facilitate transactions; falsification of non-performing loan accounts and/or falsely inflated loan account balances to indicate servicing of such loans, in particular at or about relevant audit dates; undertaking transactions with or nominally on behalf of customers that falsely generated profits and/or avoided losses; the provision of false authorisations and audit confirmations to give an appearance of validity to unauthorised or fictitious transactions; transactions with related and/or connected parties not on an arm's length basis and without commercial substance; (d) (from the early 1970s) the use of nominee arrangements to conceal dealings in its own shares, to disguise use of funds, and to create fictitious income; (e) (from at least the mid 1970s) the use of nominee arrangements to conceal acquisitions on the part of the Group; and (f) (from at least the early 1980s) the facilitation of transactions by the making of payments to third parties with no legitimate commercial purpose.

33. Category 3

(a) (From at least the early 1980s) the misuse of depositors' funds and/or investment portfolios (recorded and unrecorded) for improper purposes, the overall purpose being to attempt to conceal the true financial position of the Group and its insolvency:

(i) to conceal losses made by Treasury;

(ii) to conceal losses made on non-performing loan accounts by routing funds through another account to indicate servicing of such loan, in particular at or about relevant audit dates;

(iii) to fund the repayment of major customers' liabilities to the Group to show that the loans were performing;

(iv) to fund the repayment of another customer's deposit.

(b) (From at least the 1970s), the recording of fictitious loans to conceal liabilities and to disguise use of funds;

(c) (From at least the 1980s) the misuse of deposits/portfolios (recorded and unrecorded), to create interest income from the fictitious loans, or for repayment of other loans and liabilities, in particular at or about relevant audit dates. (I ignore the last mentioned item in this category, namely the theft of £700,000 by the Oxford Street branch manager, for this was a fraud on the Bank by an individual employee acting on his own and not in any sense a fraud by the Bank).

34. Category 4

Failure to disclose the true extent of the substantial treasury losses incurred by and hidden within the treasury operations between 1984 and 1986 resulting from the concealment of expenditure and from Treasury trading losses together with artificial transactions falsely to increase profits. The aggregate losses incurred over a period going beyond that referred to above and hidden within the treasury operations exceeded $800 million. This included payments to Mr S.Z.A. Akbar ("Mr S Akbar") (who left in 1986) totalling $32 million to induce him not to disclose the true nature of the activities of Treasury. In September 1993 Mr S Akbar was convicted of 16 counts of false accounting contrary to Section 17(1)(a) Theft Act 1968 involving $755.6 million.

35. Category 5

(a) (From at least the mid 1980s) improper payments to Group employees to facilitate the carrying out of the Agreed Misconduct and/or to induce them not to disclose the true nature of such conduct. This included (as well as the payment to Mr S Akbar) payments to Mohammed Hashim Sheikh in November 1989 totalling $1.7m and payments to A. Jamil Khan totalling some $300,000.

(b) (From at least the mid 1980s) improper payments made to others and in particular bribes and kickbacks to obtain deposits from other banking and financial institutions to agents/employees of other banking and financial institutions including 2 senior officers of the Central Reserve Bank of Peru. Improper payments to Group employees and others as described above totalled in excess of US$ 100 million.

36. Categories 6 and 10

Illegal indirect acquisition of shares in a US bank holding company, Financial General Bankshares, later First American Bank, involving the making of, and causing to be made, false statements or material omissions to US authorities in breach of SEC rules.

37. Category 7

In October 1988, 7 Group employees were arrested in Tampa, Florida, USA, on money laundering charges. 3 further Group employees were arrested in London. Charges were also laid against the Bank, Overseas and Holdings. In February 1990 the Bank and Overseas entered into a plea agreement under US law in relation to charges of money laundering brought in Tampa, Florida, USA, and forfeited the sum of $14m. Charges against Holdings were dismissed. During 1990 Group employees were convicted of the laundering of drugs money. To increase deposits, they improperly encouraged placements of funds from the proceeds of drug sales in conscious disregard of the currency regulations, tax laws and anti-drugs laws of the United States and of other nations and knowingly offered services to drug importers, suppliers and money launderers. They conducted financial transactions with drug proceeds with the intent to conceal and disguise the nature, location, source and ownership of these drug proceeds. The charges involved principally the Miami branch. Only one person, a Mr Chinoy, was a member of the CSO and then for 1 year only (1984-5). The episode became widely known during the period 1988-90.

38. Category 8

Abu Nidhal (under other names) held accounts at the Sloane Street branch in London.

39. Category 9

The Bank (as well as breaching US currency regulations as set out under Category 7), was found guilty of breach of exchange control regulations in Kenya, Colombia and India.

40. Summary of Agreed Misconduct

I would summarise the Agreed Misconduct as follows:

41. The Bank was not established to conduct an illegal business, in contrast with enterprises established e.g. to supply drugs or launder proceeds of crime. It was established as a bank. Its normal banking business was real: it comprised (in the words of Mr Sheldon, Counsel for the Bank) "the goods in the window": it was not mere "window-dressing". Whilst its banking activities continued throughout its life, there was however a darker side of ever increasing magnitude and importance on which the Bank depended to survive and which the conduct of its normal banking business enabled it to shroud from view. The wrongdoing developed incrementally in response to the need to boost actual and apparent profits and conceal the insolvency of the Group from its regulators and auditors.
42. The Bank had two faces. There was a small body of directors and employees (generally speaking confined to those at the highest level of the Bank) and a small body of customers who (from the mid 1970s over a period of some 15 years and in ever increasing scale as the web of deceit took a tighter hold) engaged in massive fraud and other wrongdoing world-wide; and there was the general body of staff who loyally and honestly served the Bank providing the conventional banking services to the public never knowingly coming into contact with the wrongdoing and helping supply the Bank with its lifeblood in the form of deposits obtained from friends, relatives, associates and others. The latter unwittingly provided a façade of legitimacy behind which the former were enabled to shelter their iniquitous activities.
43. The purpose of the Agreed Misconduct was to conceal and disguise the Group's financial position (and in particular its insolvency or doubtful solvency) and accordingly conceal its previous frauds from its auditors, regulators, depositors, creditors and other persons, to create fictitious income and to deceive US Regulators so as to facilitate the acquisition of other banking business. The deception enabled the Bank to continue to operate when to do so was unlawful and constituted fraudulent trading and to maintain the façade of a well conducted and thriving banking institution.
44. It is agreed that the Bank was hopelessly insolvent from at least 1986, and the proper inference must be that it was insolvent (or at least of doubtful solvency) from the mid 1970s, for it is agreed that the wrongdoing during the period from the mid 1970s on was designed to conceal the true financial position of the Group and its insolvency or doubtful solvency.
45. The fraudulent activities were not isolated, but systematic over a very long period of years. They took on a life of their own. They formed, or related to, part of the Bank's banking activities. The wrongdoing included payments of bribes and kickbacks (to employees of the Bank, officers of other banks and public officials), the preparation of false records (including the recording of sham and fictitious transactions) and the creation of fictitious (i.e. forged) documentation; the unlawful purchase of its own shares; money laundering (including the laundering of drug money); defalcations; and the preparation and filing of false annual accounts vastly overstating assets and understating liabilities. Even today the Liquidators cannot say what is the full extent of the frauds. The sums involved in the frauds were massive running into billions of dollars. Such was the Bank's wrongdoing that, when the house of cards collapsed, the insolvency of the Bank ran into billions of pounds causing huge losses to customers. The fraudulent activities were recorded principally in the Cayman Islands and in other off-shore locations, but were orchestrated, and sometimes conducted, from London.
46. The Employees were the innocent victims of a vicious and cruel deception and exploitation lulled into believing that they had a job for life with a respectable solvent bank and subjected to a constant pressure to persuade family, friends, associates and others to deposit money with that bank when (contrary to all that they were led to believe) the Bank was hopelessly insolvent and bound to collapse. The Bank in a very real sense traded on their loyalty and integrity. The collapse was bound to cause loss to depositors, the loss by the employees of their jobs and a public scandal.
47. The body of persons responsible for and orchestrating the wrongdoing was or included those who were the directing minds of the Bank. It was the Bank itself (as opposed to some individual employees) which was the wrongdoer. This conclusion is not altered by the fact that the persons responsible were acting in breach of their fiduciary duties and that the Bank (and its creditors) were the victims suffering the loss occasioned by the wrongdoing.
48. The wrongdoing and consequent collapse were likely to be (as they were) the greatest banking scandal ever and to cast a cloud (in the eyes of the public) on those of the employees of the Bank who were perceived to be involved in or party to the wrongdoing; and to place at risk the relationship between employees and those whom they induced to make deposits with the Bank.

C. Malik

49. The Decision

The legal bounds of a claim for stigma damages are to be found in the speeches in the House of Lords of Lord Nicholls and Lord Steyn in Malik. Mr Malik and Mr Mahmud ("the Applicants") were two senior employees of the Bank. They were respectively managers of the Leadenhall and Brompton Road branches of the Bank. Their proofs in the liquidation for "stigma damages" were rejected by the Liquidators. On appeal against those rejections, Evans-Lombe J. had to determine as a preliminary issue whether on the assumption that the facts alleged by the Applicants (but not admitted by the Liquidators) were correct, the Applicants had an arguable cause of action. The assumed facts ("the Assumed Facts") were formulated in the following terms:

'The facts and matters upon which the Applicants rely are as follows:

(a) the Applicants were employees of the Bank;

(b) the Bank operated in a corrupt and/or dishonest manner;

(c) the Applicants were innocent of any involvement in the Bank's

corruption and/or dishonesty;

(d) following the collapse of the Bank, its corruption and/or dishonesty has become widely known;

(e) in consequence the Applicants are now at a handicap on the labour market because they are stigmatised by reason of their previous employment by the Bank;

(f) the Applicants have suffered a loss [i.e. financial loss] in consequence of (e) above."

50. The preliminary issue in Malik raised two questions:

(1) whether an implied term in the contract of employment of those senior employees could be breached if the Bank had conducted a dishonest and corrupt business;

(2) whether, if so, financial loss through handicap on the labour market suffered in consequence of the breach was a type of damage which was in principle irrecoverable.

51. The Bank succeeded before Evans-Lombe J. on issue (1), and in the Court of Appeal on issue (2). The House of Lords however held:

(a) that where an employer conducted a dishonest or corrupt business, this was capable of amounting to a breach of the implied term not without reasonable and proper cause to conduct itself in a manner likely to destroy or seriously damage the relationship of confidence and trust between employer and employee (i.e. the T&C Term);

(b) that financial loss consequent on damage to reputation was not in principle irrecoverable. If, therefore, it could be proved that the Applicants had suffered such loss in consequence of a proven breach of the T&C Term, then damages would be recoverable if not too remote and subject to the principles of mitigation.

52. Principles Stated

There were only two speeches in the House of Lords, one by Lord Nicholls and the other by Lord Steyn. All three of the other law lords agreed with Lord Steyn, and two of the three agreed with Lord Nicholls. The two speeches must obviously be read (so far as is practicable) as in harmony with each other, in particular since no other reading is compatible with the two of the law lords sensibly agreeing with both speeches. If however there is a conflict, the view expressed by Lord Steyn must prevail. (This accords with the approach adopted by the Court of Appeal in Johnson v. Unisys Ltd [1999] 1 All ER 849 at 860). The principles to be deduced from their speeches may be stated as follows:

(a) the T&C Term to be implied into a contract of employment is that the employer will not without reasonable and proper cause conduct himself in a manner likely to destroy or seriously damage the relationship of trust and confidence required if the employment relationship is to continue in the manner in which the employment contract implicitly envisaged. The Court must respect and maintain the balance between the interest of the employer to manage his business as he sees fit and the interest of the employee not to be unfairly or improperly exploited: see Lord Steyn at p.46D. This relationship can be undermined in many different ways: see Lord Nicholls at p.35B; the T&C Term may be broken by carrying on a dishonest or corrupt business: see Lord Nicholls at p.33G and Lord Steyn at p.43B and 43G. It will not be broken merely by the fact that the employee is engaged in a business or department within the business, that is unsuccessful or run with gross incompetence: see Lord Nicholls at p.42 C-D;.

(b) there is no need or room for implying any alternative or more specific obligation on the part of the employer not to damage his employee's future employment prospects (and thereby cause him financial loss) by carrying on a corrupt or dishonest business: see Lord Steyn at p.49G. But breach of the implied term referred to in (a) above may give rise to a claim for financial loss if it does damage future employment prospects. This must be what Lord Nicholls had in mind when in the context of remedies for breach (albeit using the language of obligation) he said (at p.38A):

"... Employers must take care not to damage their employees' future employment prospects by harsh and oppressive behaviour or by any other form of conduct which is unacceptable today as falling below the standards set by the implied trust and confidence term."

(c) it must be the employer, and not merely rogue employees of the employer, who are carrying on the corrupt or dishonest business:

"On the assumed facts, this was not a case where one or two individuals, however senior, were behaving dishonestly [which is insufficient]. Matters had gone beyond this. They had reached the point where the bank itself could properly be identified with the dishonesty. This was a dishonest business, a corrupt business." see Lord Nicholls at p.34D;

(It is for this reason that I ignore the theft of £700,000 by the rogue Oxford Street branch manager which is included in Category 3 of the Agreed Misconduct);

(d) the T&C Term is a fundamental term of the contract, breach of which will amount to a repudiation entitling the employee to terminate the contract forthwith;

(e) the conduct, in order to constitute a breach, though it is perhaps usually directed at a particular employee or group of employees, need not always be so;

(f) in assessing whether there has been a breach what is significant is the impact of the employer's behaviour on the employee: see Lord Steyn at p.47B. The conduct must impinge on the relationship of employer and employee in the sense that, looked at objectively, it is likely to destroy or seriously damage the degree of trust and confidence the employee is reasonably entitled to have in his employer. Proof of subjective loss of confidence is not an essential element of the breach. The employee need not even know of the conduct amounting to the breach during the period of his employment: see Lord Nicholls at p.47 B-C and Lord Steyn at p.35 F-G;

(g) the damages for breach of the T&C Term are strictly financial in nature. They include compensation for financial loss suffered by reason of a breach of contract and flowing from damage to reputation, not compensation for injury to reputation itself: see Lord Nicholls at p.40H and Lord Steyn at p.52C-H. It is for this reason that they refer to "loss of employment prospects" and "handicap on the labour market";

(h) if an employee's handicap in the labour market as a result of the breach of the T&C Term is reasonably foreseeable by the employer as a serious possibility and loss is sustained as a consequence of the breach, in principle damages in respect of that loss are recoverable: see Lord Nicholls at p.37C;

53. The Cautionary Note

Whilst the House of Lords held that the claims should proceed to trial, they were anxious to emphasise the very limited nature of their decision. In particular, it was stressed that:

(as regards proof of breach)

(1) the assumed facts were assumed for the purposes of the preliminary issue only and were not accepted by the Liquidators (as they had made clear at every stage): see Lord Nicholls at p.33 F-H;

(2) the assumed fact that the Bank operated in a corrupt and/or dishonest manner was fundamental to the conclusion that there was an arguable case as to breach of contract: see Lord Nicholls at pp.34D, 35D and p.42D and Lord Steyn at 43B;

(3) acts of dishonesty by individuals, however senior, would not constitute a breach of the T&C Term; what was required was that the business itself was dishonest and corrupt: see Lord Nicholls at p.34 D; or that the Bank carried out corrupt and dishonest dealings: see Lord Steyn at p.49C;

54. And (as regards proof of damage)

(1) "... even if the employee can establish a breach of this obligation, it does not follow that he will be able to recover damages for injury to his employment prospects. ... loss of reputation is inherently difficult to prove ... It is therefore improbable that many employees would be able to prove 'stigma compensation'. The limiting principles of causation, remoteness and mitigation present formidable practical obstacles to such claims succeeding": see Lord Steyn at p.53C;

(2) Lord Nicholls stressed that the proof of handicap in the labour market may well be much more difficult for some classes of employees than others. He went on (at p.42E):

"An employer seeking to employ a messenger, for instance, might be wholly unconcerned by an applicant's former employment in a dishonest business, whereas he might take a different view if he were seeking a senior executive";

(3) Lord Steyn (at p.47C) plainly envisaged that, even in the case of branch managers such as Mr Mahmud and Mr Malik, proof of handicap on the labour market might be difficult:

"these relatively senior bank employees may be able to establish as a matter of fact that the corruption associated in the public mind, and in the minds of prospective employers, with the bank may have undermined their employment prospects. They may conceivably be able to prove that in the financial services industry they were regarded as potentially tarnished and therefore undesirable employees to recruit. In that way these particular employees may be able to sustain their assertions of fact that they have suffered financial loss".

He also later adverted to the possible different positions of senior employees and e.g. cleaning and clerical staff: see p.49B.

55. Supplement

The principles stated by the House of Lords may, I think, be expanded as follows:

(1) the misconduct on the part of the employer amounting to a breach must be serious indeed, since it must amount to constructive dismissal and as such entitles the employee to leave immediately without any notice on discovering it. The test is whether the employer's conduct is such that the employee cannot reasonably be expected to tolerate it a moment longer after he has discovered it and to walk out of his job without prior notice;

(2) whilst the conduct need not be directed at the employee in question, plainly the question whether the conduct is directed at the employee may be a significant factor. The Courts have on a number of occasions held conduct directed at an employee is a breach of the T&C Term, e.g. failure to treat allegations of sexual harassment sufficiently seriously (see Bracebridge Engineering Ltd v. Darby [1990] 1 RLR 3) or persistent attempts to vary the employee's conditions of employment (see Woods v. WCM Car Services (Peterborough) Ltd [1981] ICR 347) or the unilateral attempt to vary the terms of his interest free loan (see French v. Barclays Bank [1998] 1 RLR 646). No case has been cited to me where conduct not directed at the employee or employees generally has been held to amount to a repudiatory breach of the T&C Term. It may be anticipated that, in view of the far-reaching impact of a breach and potential damage to the employer (and the employer's creditors) if a breach triggers the wholesale repudiation of employees' contracts (and consequent loss of what frequently is the most valuable asset of his business), a high threshold is required to establish a breach and accordingly in such a case the trust-destroying conduct may be required to be grave;

(3) cumulative actions of an employer can be taken into account and may together constitute a breach: Lewis v. Motorworld Garages Ltd [1986] ICR 157.

(4) the required conduct must be "likely" to "destroy or seriously damage" the relationship of trust and confidence with the claimant employee. The term "likely" requires a higher degree of certainty than a reasonable prospect or indeed a 51% probability ("not unlikely") and reflects what might colloquially be termed "a pretty good chance": consider Taplin v. C Shippam [1978] ICR 1068 at 1074 A-G. A mere possibility of destruction or serious damage may not be sufficient, as may not the likelihood of any lesser adverse impact;

(5) whilst carrying on business in a corrupt and dishonest manner is an example of the breach of the term, carrying on an insolvent business would not be enough for this purpose nor would fraudulent trading necessarily suffice. The character of the fraudulent trading would require analysis and consideration.

56. Issues of law raised

Two issues have been raised which it was unnecessary for the House of Lords to answer, namely (i) what is sufficient to constitute carrying on an unlawful business so as to amount to a breach of the T&C Term; and (ii) whether the same level of misconduct is required to constitute a fundamental breach of the contracts of all employees or whether the levels may vary according to the effect it has on the employees affected and accordingly the same misconduct may constitute a fundamental breach of the contracts of some, but not all, employees. In answering both these questions, it is necessary to bear in the forefront of the mind the protection which the T&C Term is designed to provide for the employee, namely to prevent his unfair or improper exploitation.

57. There is a sliding scale in respect of the seriousness of dishonesty by an employer. Three different situations have been postulated. In the first the employer may under an innocent façade be carrying on an illegal business, e.g. under the façade of a chemist be engaged in the illegal supply of drugs or under the façade of a dating agency be carrying on an illegal business in prostitution. The lawful business in such a case is mere window dressing, and it is not difficult to see that the carrying on of the real illegal business seriously compromises all the employees and will constitute a breach of the T&C Term of all their contracts. In the second the employer may be carrying on a genuine and legal business but is carrying it out in a manner or for a purpose which is essentially dishonest e.g. inviting the public to place money with the employer for investment (prima facie a legitimate activity) but misapplying those monies to line the pockets of those controlling the employer. I do not have difficulty in finding that the manner of conduct of such a business may likewise involve a breach. The third situation is where the employer carries on a substantial lawful business but in the course of doing so through the medium of a pocket of senior employees carries on dishonest operations. The lawful business is not mere window-dressing but comprises "the goods in the shop". The impact of the conduct of dishonest operations on the contracts of employees must depend on their frequency and seriousness. Single or isolated acts may have very serious implications only for particular employees e.g. if they work for or in the department controlled by the wrongdoer and may accordingly constitute breaches of the implied terms of their contracts alone. But where the acts amount to systematic dishonesty, they may constitute fundamental breaches of all employees' contracts. This is, I think, apparent from the speeches in Malik. For they make clear the T&C Term may equally be broken by the employer carrying on an illegal or corrupt business or by carrying on a lawful business in an unlawful or corrupt manner, or in the course of or as part of the same business, by carrying out (certainly systematically) corrupt or dishonest operations. Lord Nicholls uses interchangeably the formulations "carrying on a corrupt and unlawful business" (see e.g. pp.34D, 37B and 42C) and "carrying on business in a corrupt and dishonest manner" (see e.g. pp. 33G and 34C); and Lord Steyn speaks interchangeably of "operating in a corrupt and dishonest manner" (see e.g. p.43B) and of "carrying on corrupt and dishonest operations on a vast scale" (see e.g. p.48A). The Assumed Facts spoke only of the Bank operating in a corrupt and/or dishonest manner, a point picked up in Johnson v. Unisys Ltd [1999] 1 All ER 854 at 859G. Accordingly it is not necessary that the employer's business or operations are (as contended by the Bank) exclusively, essentially or even predominantly fraudulent or dishonest. It is no bar to a finding of a breach of the T&C Term that the employer is (at the same time as he is carrying on his nefarious activities) also carrying on what to all the world appears to be a substantial and respectable business and in the course of such business carries on perfectly legitimate and conventional trading activities, relevant though these facts are. The litmus test is to look at the degree of dishonesty, the size and number of dishonest transactions, the level of employees involved and the importance and prevalence of the wrongdoing in the context of the employer's business as a whole, and to form a view whether the wrongdoing is so serious, substantial and systematic that (despite the existence of areas of its activities which are free from infection) the employer's business as a whole may fairly be characterised as tainted and whether it amounts to unfair or improper exploitation of the employees generally (who are entitled to be engaged in and work for a honest business) to require them to continue to be employed in such business. In such a situation, as was the intuitive (and I think also the considered) response of Lord Nicholls to the wrongdoing assumed on the preliminary issue in that case (see 34E-F), the misconduct is a breach of the T&C Term in the contracts of all employees irrespective of their individual status. The relevant passage in the speech of Lord Steyn at p.49 A-D is not entirely clear on this question, but in the light of the passage in the speech of Lord Nicholls concurred in by two lords who concurred with Lord Steyn I think that I can and should read it as according with it, but as stressing the importance of seniority of the employee to the question of proof of damage by stigma.

D. Resolution of Issue

58. In determining whether the Agreed Misconduct was of sufficient seriousness to constitute a breach of the T&C Term in the contracts of all employees of the Bank I must have regard as to the backdrop to the wrongdoing to the world-wide banking operations of the Bank. Nonetheless I agree with Mr Hossain, Counsel for the Employees, that the wrongdoing constituted a breach. There was unfair and improper exploitation of all employees of the Bank in two respects:

(1) generally by carrying on corrupt and dishonest operations on a vast scale. For this purpose it is necessary only to refer to:

(a) the number and complexity of the wrongful transactions. They were not a mere series of isolated wrongs, but a sustained series in pursuance of a centrally co-ordinated and continuing policy required to remain in play to sustain the Bank over a lengthy period;

(b) the period of time over which the misconduct occurred and over which the Bank wrongfully and deliberately shrouded it from view, a period of more than five years;

(c) the scale of the transactions involved. The sums of money run in some cases to billions of US dollars;

(d) the types of misconduct involved. The misconduct is not limited to financial irregularity, but extends to money laundering and bribery. The wrongdoing was not venal, but of exceptional gravity;

(e) the geographic breadth of the misconduct, which was not confined to the United Kingdom, but extended to the USA, Columbia, Kenya, India and Peru;

(f) the hopeless insolvency, the consequent fraudulent trading and deception as to this insolvency of regulators and those who worked for or had dealings with the Bank. This includes depositors and employees who procured others to make deposits with the Bank;

(g) the nature of the employer which carried out this type of activity, namely a licensed deposit taker regulated under the Banking Acts, which would reasonably be expected by its employees to conduct its affairs with a high degree of probity;

(h) the status within the Bank of the wrongdoers who were not mere rogue employees, but were or included the central management.

Looking at the whole picture, the wrongdoing of the Bank was such that the Bank can and should fairly be described as carrying on a corrupt and dishonest business and as operating in a corrupt and dishonest manner. This is so notwithstanding the fact that, buoyed by the profits of the Agreed Misconduct, the Bank was enabled at the same time (though forbidden by law to do so by reason of its insolvency) to carry on what was to all appearances a conventional banking business. The Bank's conduct clearly did impact on the employees, for it was likely not merely seriously to damage, but to destroy the trust and confidence which the Employees were reasonably entitled to have in the Bank as their employer;

(2) specifically by the maintenance of the callous policy of placing pressure on the employees (who were led to see their futures secure in lifelong employment with the Bank) to use their best endeavours and contacts to secure deposits for a bank which (unknown to the employees but well known to the Bank) was hopelessly insolvent and whose collapse was only a matter of time. Such trust destroying conduct directed at the employees generally was likewise likely to destroy the relationship of trust and confidence between them and the Bank.

59. I am in nowise deterred from making this finding by the dire warnings of the consequences of the creation of such a precedent for employers generally, their shareholders and creditors. The facts of this case are (I hope) quite exceptional, and the finding should not be cause for concern, but rather be a reminder of the duties of employers to their employees and a deterrent to improper exploitation.

PROOF OF LOSS AND LAW

A. Introduction

60. The Employees have accordingly overcome the first hurdle to their claim in that they have established a breach of the T&C Term of their contracts of employment by the Bank . That opens the door to the award in their favour of any legally recoverable loss occasioned by that breach. The second hurdle facing the Employees is to establish the existence of such a loss. The Employees' case on this part of the case raises a number of legal and factual issues. Put broadly the Employees' case focuses on the "stigma in the market place" which they allege the breach has created and they variously claim damages (1) for this stigma; (2) for the financial loss which they say (without the need to focus on the Employees' actual job applications) must inevitably have been occasioned to them by such stigma (this claim has been referred to as the "a priori claim"); and (3) for the loss which they say (focusing on their actual job applications) the stigma in fact inflicted on them. They seek to maintain that the alternative explanations for the Employees' lengthy unemployment must either be their unemployability or stigma, and that since they were not unemployable the explanation must be the existence of the stigma. They do not accept (as maintained by the Bank) that there can have been any other independent explanation. This dispute has led to each side adducing expert evidence as to the state of the labour market since the date of the collapse of the Bank, as to the hiring practices of employers and recruitment agencies and as to the relevance in their decision-making whether to employ an applicant for a job of the fact that the applicant had previously been employed by the Bank. The adjudication upon the Employees' claims requires first of all an analysis of the legal principles governing the award of damages for breach of the T&C Term (and in particular damages for "stigma in the market place"); secondly the consideration whether the evidence justifies the a priori claim; and thirdly whether on an examination of the Employees' efforts to get a job the Employees have established that stigma occasioned any recoverable loss to them.

B. Legal principles

(1) Recoverable Loss

61. The first step to be taken is to identify the loss which is recoverable for breach of the T&C Term. As Lord Hoffmann said in Banque Bruxelles SA v. Eagle Star [1997] AC 191 at 211:

"Before one can consider the principle on which one should calculate the damages to which a plaintiff is entitled as compensation for loss, it is necessary to decide for what kind of loss he is entitled to compensation."

Malik makes clear that damages are recoverable, not for loss of reputation, but for financial loss.

"I agree that the cause of action known to the law in respect of injury to reputation is the tort of defamation... If as the result of injury to his reputation the plaintiff does in fact suffer financial loss, this may be recoverable in a defamation action as special damages ... It by no means follows however that financial loss which may be recoverable as special damages in a defamation action is irrecoverable as damages for breach of contract. If a breach of contract gives rise to financial loss which on ordinary principles would be recoverable as damages for breach of contract, those damages do not cease to be recoverable because they might also be recoverable in a defamation action... An award of damages for breach of contract has a different objective: compensation for financial loss suffered by a breach of contract, not compensation for injury to reputation": see Lord Nicholls in Malik at p.40C.

62. The Employees can accordingly recover financial loss suffered by reason of stigma occasioned by the breach of contract, but they cannot recover damages for the stigma itself. To establish the stigma without establishing consequent loss avails the Employees nothing. The Employees argued that they were entitled to recover damages for "stigma in the market place". But damages can only be recoverable if the "stigma in the market place" results in financial loss. If the stigma results in an Employee being under a handicap in the labour market and if (and only if) this has occasioned or will occasion loss, will damages in respect of that loss be recoverable. If the handicap cannot be shown to have occasioned loss or to be likely to occasion loss in the future, there can be no remedy: compensation cannot be claimed where the Employees cannot establish causation of loss. The requirement of proving causation of loss cannot be relaxed merely because it may be very difficult to establish such causation. Looking to the past, the approach must be to look at the individual histories of each of the Employees following the date of their redundancies and see whether (having due regard to any evidence of the impact of stigma on the market generally) stigma was a cause of loss to them individually.
63. In view of a submission on behalf of the Employees, it needs to be stressed that the only loss recoverable is actual as opposed to hypothetical loss. A large part of the case presented by the Employees has focused on what has been called "the hypothetical job" approach. Mr Langman, the Employees' expert, has undertaken a statistical exercise based on median durations of unemployment in the London area and a comparison of those durations with the periods of unemployment of the Employees. In that exercise he postulates dates on which in his view (in the absence of stigma) each of the Employees could have obtained a specified job (whether in fact he ever applied for it or not) and on this edifice he constructs a claim (as the loss caused by the breach of contract) consisting of the remuneration for this job from the postulated date to today. For reasons which I shall elaborate when I consider the expert evidence, I find the exercise undertaken by Mr Langman (like much of his evidence) both fundamentally flawed and unhelpful. All I need say at this stage is that, for a past loss to be recoverable, it must be an actual loss, not imaginary, however subtle the imagination.

(2) Job Specific Loss

64. In respect of losses to date, these were prospective at the date of breach of contract and at the date of the Employees' dismissal. With the benefit of hindsight reviewing the Employees' experiences over the 8 years since the closure of the Bank, the Court now can and must determine whether each Employee has in fact personally suffered actual loss. The second step is to decide the question raised by the Bank, namely whether, in respect of such past loss, the loss has to be job-specific, that is to say a loss incurred in respect of a particular job or job application. I agree with Miss Booth, Counsel for the Employees, that there is no such legal requirement. An former employee is entitled to recover whatever he establishes his financial loss to be: there is no requirement that he shows that the loss is related to any specific job application. The circumstances may be such that financial loss can be established without the need to establish any such application. The evidence may establish that the stigma is such as to preclude any realistic prospect of success of any or any particular job application, or that the stigma created a barrier to particular job applicants; that a particular industry or employer ruled out applications by those affected by the stigma; or that, having regard to the attitude to the stigma of particular employers, applications to those employers by persons affected by the stigma were doomed to failure. In such cases it must be unnecessary for the former employee to go through the barren exercise of even applying for such jobs, and compensation may be available for loss of the chance to obtain such jobs. But whilst there is no such legal requirement, in the absence of evidence of special circumstances such as I have just referred to (and there is no such evidence in this case), the primary guide to the existence of past loss must be the examination of each Employee's subsequent job applications, their outcome and the reasons for that outcome; such examination should reveal whether any (and if so, what) financial loss has been suffered.

(3) Loss of Job or Loss of Chance of Job

65. The third step to be taken is to determine what the Employees have to prove to establish loss. The Employees claim that by reason of the stigma they have failed to retain or obtain gainful employment and in the future will be handicapped in their efforts to obtain a job. The critical factor is the effect of stigma on the attitude of prospective employers to their job applications in the past and in the future. The law draws a distinction in the loss which a claimant has to prove to establish a claim for damages between cases where the loss claimed is in respect of the outcome of past applications and cases where the loss claimed is in respect of the likelihood of outcome of future or hypothetical applications. The general rule is stated by Lord Diplock in Mallet v. McMonagle [1970] AC 166 at 176:

"The role of the court in making an assessment of damages which depends upon its view as to what will be and what would have been is to be contrasted with its ordinary function in civil actions of determining what was. In determining what did happen in the past the court decides upon a balance of probabilities. Anything that is more probable than not it treats as certain. But in assessing damages which depend upon its view as to what will happen in the future or would have happened in the future if something had not happened in the past, the court must make an estimate as to what are the chances that a particular thing will or would have happened and reflect those chances, whether they are more or less than even, in the amount of damages which it awards."

66. The relevant legal principles were elaborated in the case of Allied Maples Group Ltd v. Simmons & Simmons [1995] 1 WLR 1602 ("Allied"). In that case the defendants had acted as solicitors for the plaintiffs on the sale of certain property to a third party. The draft sale agreement had included an indemnity to be given by the third party to the plaintiffs. The indemnity as drafted contained a lacuna. The defendants negligently failed to draw the plaintiffs' attention to this lacuna, and the plaintiffs entered into the sale agreement without any steps being taken to try to persuade the third party to agree an amendment in whole or part filling that lacuna. The Court of Appeal held by a majority (Stuart-Smith and Hobhouse LJJ, Millett LJ dissenting) that the defendants' negligence had deprived the plaintiffs of a substantial or measurable (and not merely a speculative) chance of persuading the third party to add a protective provision in the plaintiffs' favour and the plaintiffs were entitled to damages for the loss of that chance. The law is fully analysed in the judgment of Stuart-Smith LJ with which Hobhouse LJ totally agreed. Millett LJ agreed with the analysis of the law by Stuart-Smith LJ, but took the view that on the facts the plaintiffs had only a speculative chance of persuading the third party and that in respect of the loss of such a chance no award of damages could made. The disagreement on the facts does not however reflect any disagreement as to the relevant principles of law.
67. Stuart-Smith LJ in his judgment said as follows (at pp. 169H - 1611C):

"... where the plaintiffs' loss depends upon the actions of an independent third party, it is necessary to consider as a matter of law what it is necessary to establish as a matter of causation, and where causation ends and quantification of damage begins.

(1) What has to be proved to establish a causal link between the negligence of the defendants and the loss sustained by the plaintiffs depends in the first instance on whether the negligence consists of some positive act or misfeasance, or an omission or non-feasance. In the former case, the question of causation is one of historical fact. The court has to determine on the balance of probability whether the defendant's act, for example the careless driving, caused the plaintiff's loss consisting of his broken leg. Once established on balance of probability, that fact is taken as true and the plaintiff recovers his damage in full. There is no discount because the judge considers that the balance is only just tipped in favour of the plaintiff; and the plaintiff gets nothing if he fails to establish that it is more likely than not that the accident resulted in the injury.

Questions of quantification of the plaintiff's loss, however, may depend upon future uncertain events. For example, whether and to what extent he will suffer osteoarthritis, whether he will continue to earn at the same rate until retirement, whether, but for the accident, he might have been promoted. It is trite law that these questions are not decided on a balance of probability, but rather on the court's assessment, often expressed in percentage terms, of the risk eventuating or the prospect of promotion, which it should be noted depends in part at least on the hypothetical acts of a third party, namely the plaintiff's employer.

(2) If the defendant's negligence consists of an omission, for example to provide proper equipment, given proper instructions or advice, causation depends, not upon a question of historical fact, but on the answer to the hypothetical question, what would the plaintiff have done if the equipment had been provided or the instruction or advice given? This can only be a matter of inference to be determined from all the circumstances.

...

Although the question is a hypothetical one, it is well established that the plaintiff must prove on balance of probability that he would have taken action to obtain the benefit or avoid the risk. But again, if he does establish that, there is no discount because the balance is only just tipped in his favour.

...

(3) In many cases the plaintiff's loss depends on the hypothetical action of a third party, either in addition to action by the plaintiff, as in this case, or independently of it. In such a case, does the plaintiff have to prove on balance of probability, ... that the third party would have acted so as to confer the benefit or avoid the risk to the plaintiff, or can the plaintiff succeed provided he shows that he had a substantial chance rather than a speculative one, the evaluation of the substantial chance being a question of quantification of damages?

...

I have no doubt that ... the second alternative is correct.

...

In Spring v. Guardian Assurance Plc. [1995] 2 AC 296 the House of Lords held that an employer who negligently gave a bad reference for the plaintiff, their former employee, might be liable to him in damages. The case was remitted to the Court of Appeal for the assessment of damages, the plaintiff's case being in essence that he failed to obtain employment with a third party because of the adverse reference. The defendant's case was that the third party would not have employed him anyway. Lord Lowry expressed the opinion obiter, at p.327:

'Once the duty of care is held to exist and the defendants' negligence is proved, the plaintiff only has to show that by reason of that negligence he has lost a reasonable chance of employment (which would have to be evaluated) and has thereby sustained loss: McGregor on Damages, 14th ed. (1980), pp. 198-202, paras. 276-278 and Chaplin v. Hicks [1911] 2 KB 786. He does not have to prove that, but for the negligent reference, Scottish Amicable would have employed him.'

I respectfully agree with that statement of the law

...

But, in my judgment, the plaintiff must prove as a matter of causation that he has a real or substantial chance as opposed to a speculative one. If he succeeds in doing so, the evaluation of the chance is part of the assessment of the quantum of damage, the range lying somewhere between something that just qualifies as real or substantial on the one hand and near certainty on the other."

68. Allied clearly lays down that in the case of applications for jobs to be made in the future after the date of the trial, the Court must adopt the "loss of the chance" approach and decide whether stigma will deprive the employees of a real chance of success on future applications for employment. More difficulty exists as to what approach is required in the case of past adverse decisions by prospective employers. The two alternatives are: (1) to consider the hypothetical situation of each of such applications having proceeded in the absence of stigma, and decide whether such applications had a real prospect of success and (if so) whether stigma deprived the applications of that prospect of success; or (2) to examine the historical facts in respect of those applications and determine whether stigma was in fact a cause of the adverse decision. I have found this question difficult and (whether I answer the question correctly or not) must record my debt to Mr Jeans, Counsel for the Bank, for his valuable assistance,
69. The guide to answering this question must be in the rationale for adopting the loss of the chance principle. The starting point must be the statement of principle by Lord Reid in Davies v. Taylor [1974] AC 207 at 213:

"You can prove that a past event happened, but you cannot prove that a future event will happen and I do not think that the law is so foolish as to suppose that you can. All that you can do is evaluate the chance. Sometimes it is virtually 100 per cent: some times virtually nil. But often it is somewhere in between."

The matter was taken further in Nestle v. National Westminster Bank plc [1994] 1 All ER 118. The Court of Appeal in that case dismissed an appeal by a beneficiary against a judgment rejecting his claim against a trustee for compensation for breach of the duty to diversify investments on the ground that she had established no loss. Dillon LJ said (at p.127d):

"The crucial question is whether the onus remains on Miss Nestle to prove loss for which fair compensation should be paid or whether it is enough for her to claim compensation for loss of a chance (as in Chaplin v. Hicks [1911] 2 KB 786) that she would have been better off if the equities had been properly diversified.

The starting point must, in my judgment, be that, as Miss Nestle is claiming compensation, the onus is on her to prove that she has suffered loss because between 1922 and 1960 the equities in the annuity fund were not diversified ... In some cases it is sufficient to prove loss of a chance because in such cases, as in Chaplin v. Hicks, the outcome, if the plaintiff had not lost the chance, can never be proved. But in the present case, if the annuity fund had been invested wholly in fixed interest securities, it would have been relatively easy to prove, even though the event never happened, that the annuity fund would have been worth more if a substantial part had been invested in equities. Consequently, fair compensation could have been assessed. Equally it would have been possible, even though much more difficult and expensive, to prove, if it be the fact, that the equities in the annuity fund would have performed even better if diversified than they did as concentrated in bank and in insurance shares. But Miss Nestle has not provided any such proof ...."

70. Leggatt LJ said (at p.141f):

"In my judgment, either there was a loss in the present case or there was not. Unless there was a loss, there was no cause of action. It was for the appellant to prove on balance of probabilities that there was or must have been a loss. If proved, the court would then have had to assess the amount of it and for the purpose of doing so might have had recourse to presumptions against [wrongdoing trustees]. In short, if it were shown that a loss was caused by breach of trust, such a presumption might avail the appellant in quantifying the loss. The appellant's difficulty is in reaching that stage."

71. As a matter of principle the litmus test must be: is it possible for the Court to decide whether as a matter of historical fact the claimant would have obtained the advantage or avoided the detriment in question in the absence of the wrongdoing of the defendant? Two situations may arise.

(1) The wrongdoing may be such that this exercise is impossible. The anticipated advantage or loss may have depended on the outcome of a decision on the merits by the third party which the wrongful act precluded from ever being made e.g. the judgment on the plaintiff's charms in a beauty contest from which she was wrongfully excluded (as in Chaplin v. Hicks supra) or the trial by the Court of the merits of a claim in damages which cannot take place because the claim has become statute barred by reason of the negligence of solicitors (as in Kitchen v. Royal Air Force Association supra). To meet that special situation the law allows the claimant to prove loss in the form of the deprivation of a real chance of success in the hypothetical situation that such a decision on the merits had been made.

(2) The wrongdoing may be such that, whilst the relevant decision-making process was completed and a decision made on the merits, by reason of the wrongdoing the decision-maker may have taken into account matters which (but for the wrongdoing) he would not have done. In that case it is possible (albeit it may be difficult) to investigate as a matter of historical fact what, if any, part the matters in question played in the decision-making. Where this is the situation the claimant must prove that the matters in question were a cause of the absence of a decision in his favour.

72. It is now necessary to consider how far this statement of principle accords with the authorities. The first and obvious example of a case falling within the first category is Allied, where because of the negligence of the solicitors the prospective purchaser never gave any consideration to any request to extend the protection in favour of the plaintiff. The issue was therefore whether the negligence deprived the plaintiff of a real prospect of the successful negotiation of some further protection. (The reference by Stuart-Smith LJ in the passage which I have quoted to a decision depending on the "hypothetical action of a third party" is apt to cover this category of case rather than the category where it is possible to undertake the historical exercise of determining the role, if any, of the matter in question in the third party's actual decision). Another recent example is Stovold v. Barlowes [1996] 1 PNLR 91 where the plaintiff's chance of an advantageous sale was lost because of the defendant solicitor's negligent delay in providing documents to the prospective purchase. Stuart-Smith LJ at p.98 D said:

"I turn then to the question of causation. The judge approached this aspect of the case on the basis that the plaintiff had to satisfy the court on the balance of probability that if the documents had arrived at the latest on Monday, September 18, [the prospective purchaser] would have bought [the plaintiff's property] and not [another property]. If the plaintiff succeeded, he would recover his full loss; if he did not, he got nothing. In my judgment that is the wrong approach to the question of causation when the loss depends on the action of an independent third party in circumstances which ex hypothesi did not arise. The proper approach is to evaluate the loss of the plaintiff's chance that, if the documents had arrived, the sale would have gone ahead.".

73. In that case the purchaser had made no final decision whether to purchase if the documents arrived in time; what decision he would have made in such a situation was purely hypothetical.
74. An example of a case falling within the second category is the decision of the New Zealand Court of Appeal in the case of Balfour v. Attorney General [1991] NZLR 519 ("Balfour"). A teacher sued the Department of Education for negligence and breach of statutory duty in including in his personal file a memorandum signed by a school inspector making unfounded allegations against him which led to his not being selected for a training course. There had been 66 applicants for 20 places on the course. There were a number of factors favouring the other candidates, and the Court held that in view of these other factors the teacher had failed to establish on the balance of probabilities that he would have been selected for the course in the absence of those allegations and that the allegations were a cause of his not being selected. Balfour was referred to in Spring on the ambit of the tort of negligence (see Lord Keith at p.313C, Lord Goff at p.324B, Lord Slynn at p.331G). Lord Goff commented that the claim in that case "appears to have failed primarily on the issue of causation".
75. The question has been raised whether it is possible to reconcile the statement of principle with the passage in the speech of Lord Lowry in Spring quoted with approval by Stuart-Smith LJ in Allied. In Spring, the issue raised was whether an former employer (the defendant) was liable for the financial loss occasioned to its former employee (the plaintiff) Mr Spring by a negligent reference. Mr Spring had applied to Scottish Amicable and two other financial institutions for appointment as an insurance representative. Under the relevant Lautro rules, Scottish Amicable had to seek a reference from the defendant as Mr Spring's former employer and the defendant was likewise required to provide it. The reference stated that Mr Spring was dishonest, and the effect of this reference was, (as the trial judge held), the kiss of death to Mr Spring's career in insurance. Scottish Amicable and the two other institutions (as again the trial judge held) rejected him virtually out of hand. The trial judge held that the former employer owed to the Mr Spring a duty of care in the preparation of the reference, that the former employer was in breach of that duty, and that Mr Spring would probably have obtained the positions he sought if he had received a proper reference, and he directed an assessment of damages (see [1993] ICR 412 at 427A). The defendant appealed on the issues of duty of care and causation. The Court of Appeal held that there was no duty of care and went on to say that it was accordingly unnecessary to decide the question raised on causation, but commented that it would have been reluctant to disagree with the judge. The House of Lords (reversing the Court of Appeal) upheld the trial judge's finding that the defendant was liable for the financial loss occasioned by the negligent reference. Lords Goff, Slynn and Woolf expressed no view on causation and agreed that the appeal on causation should be remitted to the Court of Appeal since the Court of Appeal had not considered the appeal on that issue. Lord Lowry dissented on the form of order, favouring remission of the case to the trial judge to award damages, so that any appeal on causation and damages could be heard together.
76. The dictum of Lord Lowry in Spring and a further passage in his speech at p.328G make clear that he favoured the loss of the chance approach in that case and the evaluation of the plaintiff's prospects of success if the reference supplied had been a proper one; that the proper approach was to consider, not whether the reference was an effective cause of the decisions of the prospective employers on the subsequent applications, but whether, if there had been no such reference, the former employee had a realistic prospect of success which had been lost by reason of the reference. After anxious consideration (and not without some doubt and hesitation) I have reached the conclusion that his observations must be premised on the view taken by him that the reference given in that case, as "the kiss of death" to the applications, ruled out Mr Spring from consideration on the merits of his applications by those to whom he applied. On this analysis, (and whether his view is correct is irrelevant for this purpose) Spring clearly falls within the first category.
77. Applying these principles, in the case of any past application which a prospective employer refused to consider on the merits because of stigma, the correct approach is to decide whether stigma thereby caused the Employee to lose a real or measurable chance of his application being successful. But in the case of all past applications which were considered on their merits (albeit these merits may have included stigma) and were not excluded from consideration by reason of stigma, the correct approach is to decide whether stigma was an effective (sole or concurrent) cause of the application not succeeding. In the same way in the case of Mr Zafar's dismissal by Albaraka, if before or instead of any decision on the merits of his dismissal his claim to continue in employment was rejected out of hand because of stigma, the loss of the chance approach would be appropriate; but if the decision was on the merits (albeit stigma was one of those merits), Mr Zafar must establish that stigma was a cause of the decision to dismiss. I should add two further observations at this stage. First (jumping ahead) I should say that on the evidence before me I am not satisfied that stigma operated to prevent consideration on its merits of any of the applications of the Employees or of Mr Zafar's claims to continue his employment by Albaraka. Accordingly in respect of all these past events the Employees have the burden of proof that stigma was a cause of the adverse decision. Secondly, in case I may be wrong I shall also consider whether stigma may have caused the loss to the Employees of a chance of employment or (in the case of Mr Zafar) of continued employment by Albaraka.

(4) Meaning of Chance

78. In respect of future job applications and if and so far as the loss of a chance approach is applicable in respect of past unsuccessful job applications, the difficult question arises whether, and if so in what circumstances, an application for a job gives rise to a real (as opposed to a speculative) chance of employment. Spring (and in particular the speech of Lord Lowry) does not afford much guidance on this question. It merely exemplifies the fact that the evidence in any particular case may establish that an applicant has a real chance. Spring was not a case of filling a vacancy or of a competitive application requiring consideration of other candidates and comparisons of what they had to offer. Mr Spring was offering an additional outlet for sales by setting up his own business to market the products of the three organisations which he approached (see Glidewell LJ in the Court of Appeal at [1993] ICR 412 at 417 D-E and Lord Keith in the House of Lords at [1995] 2 AC 296 at 306 C-D). He had the relevant experience and there was no evidence that anything could have stood in the way of his appointment except an error which he made in his previous position. The trial judge concluded (as I have previously stated) that he would have been appointed if the reference had been fair about this.
79. In seeking to answer the question it is, I think, necessary to elicit and apply the principles stated in Allied. In Allied, the trial judge held that there had been a real (and not merely speculative) chance that the plaintiffs would have successfully re-negotiated with the third party to obtain proper protection. The majority of the Court of Appeal were not persuaded that the trial judge made any error. Hobhouse LJ said (at p.1620F):

"Negotiations may depend on the will of the parties and neither party was under any obligation at that stage to agree anything. But it is unrealistic to treat the outcome of further negotiation between commercial parties as arbitrary and wholly unpredictable. Those with experience of commercial negotiation are able, with a reasonable degree of accuracy, to form a view of what can be achieved by such negotiation. The present was such a case. It is possible to make an informed judgment of what the chances were of achieving certain results. The situation is certainly less speculative than that in Chaplin v. Hicks [1911] 2 KB 786 (the beauty competition case) or Dunbar v. A&B Painters Ltd [1986] 2 Lloyd's Rep 38 (the underwriter's waiver case).

On the evidence before him the judge ... was entitled to find that, if the plaintiffs had negotiated further, they had a measurable chance of negotiating better terms which would have given them at least some protection against liability."

80. Millett LJ dissented on the question whether on the evidence before it the Court could make an informed decision as to the outcome of the (hypothetical) commercial negotiations, but his judgment contains a valuable survey of the authorities on what is a real and what is a speculative chance. Millett LJ in his judgment said as follows (at pp. 1623H-1625G):

"The reported cases on the loss of a chance may be grouped into three categories. There are first those cases where the outcome is not dependent on the unrestricted volition of a third party, since his decision must be justifiable by objective criteria. Into this category fall the cases of the loss of the right to be a finalist in a competition (Chaplin v. Hicks [1911] 2 KB 786) or to bring legal proceedings (Kitchen v. Royal Air Force Association [1958] 1 WLR 563). In these cases the plaintiff has clearly lost something of value and its value must be assessed however difficult the task may be. The prospects of ultimate success (or, in the case of litigation, of receiving an offer of settlement) may be less than 50 per cent, but they are nevertheless capable of objective evaluation.

Secondly, there are those cases where the outcome depends upon whether a third party who had been properly advised would have acted in accordance with his own best interests.... In these cases there is obviously a very strong probability that the third party would have acted in his own interests. and accordingly the plaintiff is likely to be awarded the full amount of his damages less a discount to allow for the possibility that something might have occurred to prevent his doing so.

Thirdly, there are cases where the outcome appears to depend on the unrestricted volition of a third party but there are objective considerations which make it possible to predicate how he would have acted. Into this category fall Hall v. Meyrick [1957] 2 QB 455 (where the outcome depended on whether a man who had already made a will in favour of his fiancee would have made a fresh will in her favour after his marriage to her if advised that this had had the effect of revoking it-clearly a strong likelihood and such as to make the case virtually indistinguishable from the second category): Dunbar v. A & B Painters Ltd [1986] 2 Lloyd's Rep 38 (where the outcome depended on whether an insurance company would act against its commercial interests; again unlikely and virtually indistinguishable from the second category); and Richardson v. Mellish (1824) 2 Bing. 229 (where evidence of the third party's customary practice was available). Spring v. Guardian Assurance Plc. [1995] 2 AC 296 probably falls into this category.

...

The 'chance' of which the plaintiffs claim to have been deprived is the chance that they might have negotiated better terms from their vendors. In the absence of evidence from Gillow, what would have been the outcome of such negotiations is a matter of pure speculation. No case has gone so far as to allow damages in such a situation, and in my view it would be wrong to do so. The nearest is Davies v. Taylor [1974] AC 207, where the outcome depended on whether a married couple who had separated would have had a reconciliation; it was held that this was too speculative to sound in damages. I call to mind the words of Vaughan Williams LJ in Chaplin v. Hicks '[1911] 2 KB 786, 792-793:

'There are cases, no doubt, where the loss is so dependent on the mere unrestricted volition of another that it is impossible to say that there is any assessable loss resulting from the breach';

In my judgment this is just such a case."

81. I should say a word about Chaplin v. Hicks. The decision in that case does not offer a free pass to claims that the loss of practically any chance will be sufficient to found a claim to recoverable loss. It may be noted that in that case the only question before the Court of Appeal was whether the award of the jury of damages for the loss of the chance should be set aside. Vaughan Williams LJ ( pp. 791-2) took the view that the law of averages could be applied (no doubt on the basis that it was a lottery which competitors' charms appealed most to the judge); and that accordingly as one of the fifty finalists for 12 prizes, she had a 25% chance of winning. Fletcher Moulton LJ (at p.795) and Farwell LJ (at pp. 798-9) placed emphasis on the fact that the plaintiff had been selected as one of 50 finalists from an initial 6,000 candidates with the highest number of votes of the candidates for her district (which was 1 of the 10 into which the United Kingdom had been divided). Millett LJ in Allied explained the decision on the basis that the chance of success depended on objective criteria, but it is difficult to see how her chances judged by objective criteria could be measured without either a glimpse at her competitors or (in the absence of such a glimpse) some evidence as to the actual charms of her competitors. (That is unless the doctrine of judicial notice or the presumed knowledge of a jury can extend this far).
82. I do not think that an applicant for a job can be said to have in respect of every and any application which he makes a real or measurable chance (or more than a speculative chance) of obtaining the job applied for. There may be exceptional cases where it is clear that the best interests of the employer require a particular decision. There are some cases where objective criteria are laid down (e.g. Civil Service Entrance Examinations) but it is difficult to see how the chance of a candidate can be measured without a view (possibly based on expert evidence) as to the quality of the likely competition. In many (if not the majority of) cases the decision is likely to depend on the unrestricted volition of the prospective employer (or unrestricted save in so far as the law prohibits discrimination on specified grounds). In these cases much more needs to be known to substantiate the existence of a real prospect of success. The stage reached in the appointment process must be significant and in particular whether the applicant is rejected at the application sifting stage or after he has obtained an interview. In all cases relevant material must include the character of the employee, the job, indications as to the criteria for appointment and the competition. The person best (if not often alone) equipped to provide much (if not most) of this information is the employer himself: he can say whether the candidate did in fact in his eyes have a real chance (and at the same time whether that chance was lost by reason of stigma or for some other reason). Without much of such information it may be impossible to make any informed view or measure any chance of success. This poses the most serious problems for the Employees, for they (save in a few exceptional cases) have failed (for whatever reason) to call as witnesses the prospective employers and in the exceptional cases where they have called them i.e. Mr Butt and Mr Notay (as I must later recount) the evidence of these prospective employers is concocted. Speaking generally, I can say with confidence that (on the facts and evidence in this case) none of the Employees can claim a measurable chance in respect of any past application rejected prior to the interview stage. There is no reliable evidence on which any chance in those cases can be measured. The prospects may well be considered to be higher and more measurable in cases where the prospective employer has gone further and invited the Employees to interviews. But even in those cases, the evidence is generally speaking (though not invariably) deficient as to the required material for any proper measuring exercise (e.g. the number and quality of the competition). Again in case I am wrong, I shall however consider whether any of the applications (assuming that they all constituted real chances) were lost because of stigma.

(5) Causation

83. The parties are agreed that (for the purposes of these proceedings) the same test for causation applies in the case of this claim for breach of contract as in a claim for tort. It is necessary for the Employees to establish that the stigma was an effective cause of the loss alleged. It must not be merely the occasion for the loss. For this purpose it may be a sole cause or one of two or more causes materially contributing to the loss. It is a matter for the application of the Court's common-sense when deciding whether the stigma constituted such a cause. Where there are a number of possible competing causes, the onus is on the Employees to prove that the stigma did have this effect. The position is not altered by the fact that the Bank by reason of its breach of contract exposed the Employees to the risk of loss caused by stigma: see Wiltshire v. Essex Area Health Authority [1988] 1 AC 1074 at 1091. Proof that the breach of the T&C Term exposed the Employees to the risk that a prospective employer might reject his job application on stigma grounds does not establish causation of loss: it is essential to establish on the balance of probabilities that the risk materialised and that the job application was rejected or the chance of the job was lost on this ground. Proof of causation of a chance of a loss is quite distinct from proof of causation of the loss of a chance. Where there is an alternative explanation to that proffered by the Employees (namely stigma), failure by the Bank to prove that this was the cause is a factor to be taken into account in deciding whether the Employees have established the cause they allege, but no more than that: see Pickford v. ICI [1998] 1 WLR 1189 at 1201. It is not accordingly for the Bank to explain the Employees' periods of unemployment or the rejection of their applications for jobs: the onus is upon the Employees to prove that a cause was stigma.

(6) Burden of Proof

84. The burden of proof is upon the Employees to establish as a matter of fact on the balance of probabilities a causal link between the breach of the T&C Term by the Bank and the loss to them, and accordingly that the breach created a stigma affecting them which was a cause of a job application not succeeding or the loss of the opportunity of obtaining a job or of the loss of a job or a particular level of remuneration. The connecting factor relied on between the breach and the stigma was the publicity given to the wrongdoing. Such publicity could reasonably be expected once the breach came to light: indeed it was inevitable. Accordingly so far as the publicised Agreed Misconduct created a stigma and the stigma caused loss, (subject only to what I say later on remoteness) the necessary nexus is established to entitle the Employees to recovery.
85. There are however two particular problems in the way of discharging this onus. The first is (as Lord Steyn said in Malik) that loss of reputation is inherently difficult to prove. The second is that the prospective employer is unlikely at the time of his rejection of the Employees' application to be informative as to the reasons for his decision: a rejection letter is normally expressed in neutral terms and any reasons given may well not give the full and true reasons. The obvious and most reliable method of proving that stigma was a reason in the case of any specific failed application is to call the prospective employer: but that is a course which (as I have already said) no doubt for good reason the Employees have not generally followed at this trial.
86. The Employees have referred me to the problem faced in the employment field where an allegation is made of unlawful discrimination by an employer on grounds of race or sex and sought recourse to the solution adopted to that problem. The applicable principles and guidance in such cases has been authoritatively stated as follows:

"(1) It is for the applicant who complains of racial discrimination to make out his or her case. Thus if the applicant does not prove the case on the balance of probabilities he or she will fail.

(2) It is important to bear in mind that it is unusual to find direct evidence of racial discrimination. Few employers will be prepared to admit such discrimination even to themselves ...

(3) The outcome of the case will therefore usually depend on what inferences it is proper to draw from the primary facts found by a Tribunal. These inferences can include, in appropriate cases, any inferences that it is just and equitable to draw in accordance with s.65(2)(b) of the 1976 Act from an evasive or equivocal reply to a questionnaire.

(4) Though there will be some cases where, for example, the non-selection of the applicant for a post or for promotion is clearly not on racial grounds, a finding of discrimination and a finding of a difference in race will often point to the possibility of racial discrimination. In such circumstances the Tribunal will look to the employer for an explanation. If no explanation is then put forward or if the Tribunal considers the explanation to be inadequate or unsatisfactory it will be legitimate for the tribunal to infer that the discrimination was on racial grounds. This is not a matter of law but, as May LJ put it in Noone, 'almost common-sense'.

(5) It is unnecessary and unhelpful to introduce the concept of a shifting evidential burden of proof. At the conclusion of all the evidence the Tribunal should make findings as to the primary facts and draw such inferences as they consider proper from those facts. They should then reach a conclusion on the balance of probabilities, bearing in mind both the difficulties which face a person who complains of unlawful discrimination and the fact that it is for the complainant to prove his or her case."

see King v. The Great Britain - China Centre [1992] ICR 516 at 528 per Neill LJ ("King") approved in Zafar v. Glasgow City Council [1998] ICR 129.

87. There is however one critical difference between cases such as the present and cases such as King. In cases such as King the proceedings are brought by the alleged victim of racial discrimination against the alleged perpetrator of such discrimination and the alleged perpetrator has the fullest opportunity and every incentive to explain his conduct and refute any inference of such discrimination. The absence or inadequacy or unsatisfactory character of any explanation itself may be a legitimate ground for inferring such discrimination. But in cases such as the present, the discrimination on grounds of stigma which is in issue is not discrimination by a party to the action, but by a third party, and that third party may have no incentive to assist the parties or the Court and the parties may for any of a number of reasons be unable or unwilling to call him as a witness. In such a situation it is not so simple to draw adverse inferences from the absence or inadequacy or unsatisfactory character of the explanation of the third party: whether an inference is to be drawn and what that inference is must depend on the full facts of the case and what are the various potential explanations for the decision in question.
88. The correct approach, as it seems to me, in this case is to look at full evidence before the Court in respect of each decision in question and any relevant guidance provided by the expert evidence and after carefully considering the various possible explanations for the decision in question, to decide whether the Employees have established on the balance of probabilities that stigma played a material part in that decision. This exercise does require, in particular in cases where the only direct evidence relating to the decision is that of the Employee, the most anxious consideration of his evidence and his credibility.

(7) Remoteness of Damage

89. I do not understand that any serious question of remoteness of damage arises in this case save perhaps one. Lord Nicholls in Malik (at p.37 C-D) summarised the position as follows:

"In my view, if it was reasonably foreseeable that a particular type of loss of this character was a serious possibility, and loss of this type is sustained in consequence of a breach, then in principle damages in respect of the loss should be recoverable."

It is unnecessary for the Employees to establish that the Bank ought to have contemplated the precise detail of the damage or the precise manner of its happening. It is enough that the Bank should have contemplated that damage of that kind was not unlikely: Christopher Hill :Ltd v. Ashington Piggeries Ltd [1969] 3 All ER 1496. The one question which I should consider is whether the Bank is liable for loss where this is occasioned by the irrational or vindictive reaction to knowledge of the former employment of one of the employees by the Bank. It is I think clear that the labour market is not entirely rational and that not all prospective employers are reasonable or fair-minded and I think that the Bank should have foreseen at the date that the various contracts of employment were entered into that there was a serious possibility that a breach of contract of the character now established might not merely place a cloud over its employees in the employment market but also might trigger irrational responses and resentment and expose its employees to irrational forces. That is not to say that there is no limit to the degree of irrationality in any adverse response for the consequences of which the Bank is liable. I incline to the view that the Bank is not liable where the prospective employer's decision to refuse a job application has been prompted by vindictiveness, but I need to express no considered view as to where foreseeable irrationality ends and unforeseeable vindictiveness begins, for (though the allegation has been freely made) the credible evidence does not establish that any prospective employer, the Middle East business community or the Asian community in this country has sought to exact revenge on former Bank employees by rejecting their job applications.

(8). Assessment of Damages

90. The Employees have raised one issue in respect of the assessment of damages. The Employees submitted that, notwithstanding the failure of the Employees to establish any financial loss, the Court could and should award the Employees a lump sum to compensate the Employees in general terms for the past handicap in the labour market by reference to the principles stated in Smith v. Manchester Corporation[1974] 17 KIRI ("Smith"). I have already made clear my view that to succeed in respect of the past the Employees have to establish financial loss, and the submission must accordingly fail on this ground. But I should add a word on Smith. In that case and others which have followed it, the Court has addressed a problem peculiar to certain personal injury cases. The plaintiff in those cases has through the wrongdoing of the defendant suffered a personal injury which has yet to impair earning capacity but may do so in the future. The Court in making an award in respect of the damage caused to the plaintiff (the personal injury) has to make as best an assessment as it can of the possible future implications of the present injury. The situation is quite different here. In viewing the Employees' allegation of past handicap, the Court has to look back, and not forward, and ensure that any award of damages it considers making is the best estimate of the loss occasioned. With this one exception there is no dispute that the conventional rules apply for assessment of damages. Past losses are to be calculated by determining the net salary and benefits from any "lost job", but subtracting any remuneration and benefits in fact received during the relevant period and applying a discount to reflect the possibility of the job subsequently being lost. Future losses are to be calculated in the same way, but with a further discount to reflect the contingencies of life including the possibility of obtaining employment in the future.

(9) Mitigation

91. It is first of all important to demarcate the respective ambits of application of the principles governing liability for loss and of the principles governing mitigation, for this appears sometimes to have been forgotten in this case. The duty to mitigate only comes into play after there is established a breach of contract and a causation of loss. The reasonableness or otherwise of the efforts made by the Employees to find employment may be relevant as a matter of evidence to the question whether the failure to find employment calls for some explanation and invites the explanation that stigma was a cause. It is not however a legal requirement for establishing recoverable loss nor does the reasonableness establish recoverable loss. On the other hand, the reasonableness is the measure of the obligation of the Employee to mitigate loss once causation of loss is established.
92. The starting point and focus of any inquiry as to mitigation must be the causation of loss and aftermath of the causation of loss. One of the great difficulties in this case has been the diffused and wide-ranging character of the allegations of causation of loss and this has led to the diffuse and wide-ranging character of the allegations of failure to mitigate loss. Close and carefully particularised pleaded allegations of loss are called for if like pleaded allegations of failure to mitigate can fairly be expected. In these circumstances, I do not think that I can usefully or should examine (certainly in any depth) possible breaches of the duty to mitigate in respect of any rejected claim of causation of loss.
93. The basic relevant principles of the law of mitigation are authoritatively stated by Professor Beatson in Anson's Law of Contract (27th ed) pp.582-3:

"A person who has suffered loss from a breach of contract must take any reasonable steps which are available to mitigate the extent of the damage caused by the breach. The innocent party cannot claim to be compensated by the party in default for loss which is really due not to the breach but to its own failure to behave reasonably after the breach .... The underlying policy is the desirability of avoiding waste, in this context a loss which could have been avoided by reasonable action.

Thus an employee who is wrongfully dismissed must make reasonable efforts to obtain, and must accept an offer of, suitable alternative employment ... it is a question of fact in each case whether the plaintiff has acted as a reasonable person might have been expected to act .... In cases of wrongful dismissal, an employee is not compelled to accept re-employment if it involves lower status ... or if it is likely to be less permanent than alternatives" (citing Yetton v. Eastwood Froy Ltd [1967] 1 WLR 104).

94. Essentially it is the duty of a victim of a breach of the T&C Term who has by reason of such breach lost the offer of a job (as it is the duty of a wrongfully dismissed employee), to take reasonable steps to market himself as an employee to prospective employers. It should be remembered however that the starting point for the wrongfully dismissed employee is the post he held when he was dismissed: for the victims of the breach of the T&C Term, it is the post of which by reason of stigma he has been disappointed. The number of job applications he should make may depend on whether he is seeking employment e.g. as a senior chief executive whose job opportunities lie within a narrow market, where pushing too hard may damage his image in the market (see Clark v. BET plc [1997] IRLR 28); or e.g. as a middle or low range executive whose prospects cannot seriously be affected by a more intense job search.
95. Reasonable marketing allows the claimant initially to seek alternative employment at a salary comparable to that which he previously enjoyed or would have enjoyed but for stigma, but it also requires him (if he cannot sell himself at this price) in time to drop his sights. The immediate salary is not necessarily alone to be regarded. Marketing should have regard to the value of being employed (whole-time or part-time) and accordingly of obtaining a "foot-hold" in the job market. The flexible criterion of reasonableness allows consideration to be given to the reduced ability of a claimant to sustain family life and a home on a low salary obtainable compared with the ability to do so on state benefits received whilst unemployed. But the observations of May J. (giving the judgment of the Employment Appeals Tribunal) in Daley v. AE Dorsett Ltd (1982) 1 CR 1 at 5 must be borne in mind:

"... we think that industrial tribunals should be very slow indeed in finding reasonable a decision of a dismissed employee not to accept subsequent employment because thereunder he would be receiving less than the unemployment benefit or any other benefit that he might be obtaining from the state. There are many cases, and it may be the majority of cases, in which it is better not only for the individual himself, but also for society at large, that a man has a job, albeit at a lower salary than he would wish or at a lower salary than he might be able to obtain from other sources. Particularly in days of high unemployment possession of a job is, in itself, a very valuable asset."

96. If the job search is unreasonably limited in any way the Court may hold that the claimant by a proper search could have obtained employment within a defined period and confine the award of damages to that period: see e.g. Pearce v. Enderton Ltd [1979] ICR 804.

(10) Loan Interest Differential

97. I am asked to determine a question of principle which has arisen between the Employees and the Bank. The facts can be stated in broad terms. Staff loans granted by the Bank to the Employees made provision for repayment by instalments and for payment of low fixed rates of interest during employment, and on termination of employment for repayment of the balance either immediately or within a fixed period and (unless and until repayment was made) payment of a higher rate of interest. I am to assume that the Employees could not make repayment because they could not obtain new jobs which entitled job holders to preferential loans from their employers or enabled loans to be obtained from building societies or others on lower interest terms than were charged by the Bank. The question raised is whether, if the Employees can establish that stigma prevented them obtaining jobs, they can recover by way of damages the difference between the interest rate charged by the Bank and the interest rate that would have been obtainable in case the new employment had been obtained.
98. I have already pointed out that, if the Employees can establish that stigma caused them to lose the offer of a job, they can in principle recover by way of damages the loss of net salary and the value of lost benefits. These include (if this was a benefit that went with the job) the value of any preferential loan terms available and to which the Employee would have availed himself. The award of damages for loss of the benefit of the preferential loan in respect of the period of the lost job opportunity may as a matter of fact in part or in whole be the equivalent of the shortfall between the Bank rate of interest and the preferential rate. To that extent it may be said (speaking very broadly) that the answer to the question raised is in the affirmative. But subject to that, the answer to the question raised is clearly in the negative. No award of damages can be made in respect of the accrued liability to the Bank. That liability arose and is totally unaffected by the breach of the T&C Term. The breach of the T&C Term may make discharge of that liability more difficult, and with the default in capital repayment the interest liability has increased. But the remedy for breach of the T&C Term is confined to the value of job opportunities lost because of the breach.

FACTUAL BACKGROUND

A number of matters have arisen which require consideration and can conveniently be considered at this stage.

(a) History of Litigation

99. Counsel for the Employees told me (and this is unchallenged) that the possibility of a stigma claim by former employees of the Bank became generally known to such employees on or about the 30th March 1992. Directions for the hearing of the preliminary issue in Malik were given in October 1993. There was then a gap of almost 4 years before the House of Lords gave its decision on the 12th June 1997. The employees generally (no doubt wisely) deferred collecting their evidence in support of their claims until after this date, and this trial now is taking place in many cases several years after the relevant incidents. This lapse of time is likely to have led to the loss of some documentary evidence and the clouding of recollections of witnesses. This makes more difficult the tasks in this litigation of the parties and of the Court.

(b) References

100. The files currently available of requests for references to, and of references supplied by, the Liquidators for former employees are unlikely to be complete. It is clear that not all former employees who sought and who obtained employment applied to the Liquidators for references: some applied directly to their former superiors at the Bank or others capable of providing a reference e.g. Mr Orriss and Mr Bennett. I do not think that any inference can be drawn as to the impact of stigma on employment prospects by attaching significance to the information currently available as to the number of applications for references to, and references given by, the Liquidators in any given year. The references given by the Liquidators, since the Liquidators had no personal knowledge, were based (as they had to be) on the contents of the employees' personnel files. These references were generally informative and helpful confirming the employees' trustworthiness and good work record. On one occasion where the request was made for confirmation that a particular former employee had not been involved in the wrongdoing leading to the collapse of the Bank, the Liquidators stated that they were unable to provide such confirmation; on another occasion the Liquidators stated that they could not confirm that a particular former employee was sufficiently trustworthy to undertake a particular role at an airport; and on a third the Liquidators stated that they could not provide a reference because the personnel file was missing. These were exceptions and the circumstances and reasons for the attitude taken on the first two of them are not known. The general attitude of the Liquidators was helpful. It has been suggested in the final speeches on behalf of the Employees that the references might be discounted by prospective employers by reason of the fact that the files on which they were based were those of the Bank, but I do not think that this is likely in the case of personnel files: there is no suggestion (let alone evidence) that personnel files were not properly maintained by the Bank and there is no evidence that prospective employers adopted this approach.

(c) Anecdotal Evidence

101. On some four occasions (on three occasions before the commencement of the trial) I refused applications by the Employees to adduce anecdotal evidence as to the effect of stigma on the efforts of other employees to find employment. Counsel for the Employees tried to raise the issue again in the course of her final speech, and I must therefore say something on this topic. On each of the four occasions, I refused the applications for two reasons. The first was because such evidence does not satisfy the test of admissible similar fact evidence: it was not logically probative of the Employees' case: the fact (if established) that another person was refused work by one prospective employer because of stigma was no evidence that the Employees were likewise refused work on this ground by the prospective employers whom they approached. The second was that, even if such evidence could have some probative value, in my discretion it would be unjust to allow such evidence, for it would be the occasion for a disproportionate increase in the length of trial and costs. The evidence of witnesses alleging that they have been refused employment on grounds of stigma (like the evidence of the Employees in this case) requires the most careful examination, and can only properly be evaluated in the light of discovery and investigation of the incidents in question (and this includes contact with, and often evidence by, the prospective employer in question). To undertake this exercise in respect of each anecdotal incident would heap trial upon trial and would involve a disproportionate expenditure of time and cost for (at best) a marginal return. What however I did hold was that I would allow all the anecdotal evidence to be supplied to Mr Langman (the Employees' expert) and for Mr Langman to include this in his corpus of expert knowledge when he gave his expert report. Such a course is provided for in the decision in English Exporters v. Eldonwall [1973] Ch 415. Mr Langman made no reference to the 14 witness statements amongst the documents listed in his First Report ("the First Report") as received or considered during its preparation. The only anecdotal evidence referred to in the report consisted of some two letters and a reference to the experience of some 8 employees of another bank. After the date of the First Report, I commented on its undue length, and Mr Langman proceeded to prepare an abridged version ("the Abridged Report"). The Abridged Report included the 14 witness statements amongst the documents received during its preparation. In the course of his cross-examination, Mr Langman told me that he did not see the 14 statements when he prepared the First Report; that the Abridged Report was merely an abridgement of the First Report; and that the views expressed did not take account of any additional material (and accordingly the 14 statements). In re-examination Mr Langman made clear that he was confused about what he had read and when he read it. I am satisfied that the views expressed in his reports are in nowise based on the statements and that therefore the statements can and should be ignored.

(d) Character of Bank as Employer

102. I heard a good deal of evidence as to the employment culture and practices of the Bank. The witnesses included Mr Munn (the Assistant Personnel Manager of the Bank until July 1991); Mr Bennett (the Pensions Manager and Assistant Manager, Human Resources of the Bank from 1985 until liquidation); and Mr Orriss (the Personnel Human Resources Manager of the Bank between December 1978 and the 5th July 1991). They did not all speak with one voice. I need say no more about these witnesses individually beyond that I found Mr Munn somewhat partisan in favour of the Employees; Mr Bennett a witness whose evidence and opinions (e.g. as to the quality of the staff) were not always convincing; and Mr Orriss a most careful and impressive witness. Mr Orriss was obviously a most caring and able manager and he spoke with a clear and deep knowledge of the subject. I found his evidence generally convincing. I prefer his evidence where it is in conflict with the other witnesses on this subject, as indeed on other topics I prefer it to the evidence of Mr Zafar and Mr Husain.
103. The Bank had two categories of staff. There was an international cadre made up to the most part of experienced people recruited from other banks. The other was the local cadre. That is the category with which I am concerned in this case. The Bank was an unconventional bank in regard to its general philosophy and its attitude to its personnel. It was an "Asian Bank" catering for Asian clients and some 70% of its employees were of Asian extraction. English was not the first language of these employees and fluency in spoken or written English was not required of its staff. The proficiency of the employees in English was variable, though most of them had a reasonably good proficiency in spoken and written English. Some had sufficient proficiency to be employed by an English bank, but many did not. The quality of the staff generally was below that of English clearing banks, but perhaps of a level with some international banks. The competence of staff was generally adequate for the roles assigned to them, but these were often more limited than those assumed by employees of clearing banks. Recruitment standards were good, but some employees came in "by the back door". Constant pressure was placed on employees (whether or not working in the mainstream banking business) to market the Bank and by these means obtain deposits. What was particularly highly valued in staff, commended in their assessments and taken into account in any case when a decision had to be made whether to dispense with their services, was their ability through their connections to obtain deposits with the Bank. Deposits were the life blood of the Bank. The Bank placed a premium on providing training to develop the employees' personal skills (and prominent among which was marketing the Bank). One objective in setting up the UK Human Resources Division was to improve training practices. For the purpose of training employees the Bank operated training academies in London and other locations.
104. The culture of the Bank was caring, tolerant and "paternalistic" to its staff: it was committed to "family values" and staff were encouraged to feel "members of a family" who in the ordinary way would have jobs for life though they might be found wanting. For this reason the 1990 redundancies constituted a traumatic change in the culture of the Bank; and the 1991 redundancies were both a shock and viewed as a betrayal. Staff were employed and retained when their lack of fluency in English and general competence, attitudes and performance levels would have occasioned dismissal in the case of other financial institutions in this country. Dismissals did occasionally occur, primarily for non-attendance and occasionally incompetence, but the occasions were relatively rare. Pay levels and seniority were on many occasions above those which Bank employees could attain elsewhere. The practical result was (as is clear to me) that employment by the Bank gave rise in many employees to expectations of lifetime employment (and benefits), generous earnings and status in and as an employee of an international bank which (after the collapse of the Bank) life in the real world (outside the Bank) and in the outside labour market had no prospect of fulfilling.

(e) Publicity

(1) Extent of Publicity

105. It is common ground that any conduct constituting a breach of the T&C Term could only cause the Employees damage if it became widely known in the UK: no unpublicised, still less any as yet undiscovered, fraud could result in stigma. The parties have agreed that citation of Agreed Misconduct in a newspaper article sufficiently establishes such knowledge for the purpose of these proceedings. Citation of alleged misconduct in a newspaper article does not of course establish the existence of such misconduct: the only misconduct I am concerned with is the Agreed Misconduct. The parties agreed bundles of articles and also the following propositions regarding the publicity:

"Immediately following the closure of the Bank on the 5th July 1991, reports about the Bank appeared on an almost daily basis in newspapers available in the UK (initially, the major UK TV networks also covered the closure). These reports (or the vast majority of them):

a. reported the closure of the Bank on the 5th July 1991;

b. described in detail the allegations of fraudulent activities and wrongdoing involving billions of dollars carried out over a long period of time;

c. continued on a regular basis until about the end of 1991;

d. referred to the concealment of the fraudulent activities and wrongdoing from the regulators and auditors for such a long period of time;

e. amongst other sources, drew on the contents of a draft report prepared by Price Waterhouse for the Bank of England under Section 41 of the Banking Act 1987 and on parliamentary debates and hearings of the Select Committee about the closure of the Bank.

The large majority of the July - end 1991 reports:

a. did not assert that the UK operations were clean;

b. did not distinguish between the UK operations and the rest of the bank's operations;

c. did not state that the fraudulent acts and wrongdoing at the Bank were confined to an inner circle of top people;

d. were silent as to the levels and numbers of employees implicated in the fraudulent activities and wrongdoing of the Bank;

e. were silent as to the levels and numbers of employees aware of the fraudulent activities and wrongdoing of the Bank;

f. did not state that the majority of the employees were ignorant of the fraudulent activities and corruption within the Bank;

g. were silent as to whether the general body of employees were honest, hardworking and uninvolved in the fraudulent acts;

h. were silent as to the issue of which individuals were responsible for the frauds with the Bank prior to closure.

a. The small minority of July - end 1991 reports which sought to identify the perpetrators of the fraudulent activities and wrongdoing described Mr Abedi and Mr Naqvi and their 'inner circle' of senior employees as having been responsible for frauds within the Bank prior to closure and as having taken care to keep their activities secret;

b. a small number of the July - end 1991 reports mentioned the general body of employees, describing them as innocent victims of the closure of the Bank, who were shocked by the closure and who had been 'hardworking', 'honest' and 'oblivious' to the fraudulent activities of Mr Abedi, Mr Naqvi and their 'inner circle' of senior employees;

c. a few reports referred to evidence of unrecorded deposits passing through the London branches and referred to accounts held for Abu Nidhal at a London branch. A very small number of reports referred to the UK branches having been largely untouched by the frauds.

Following the liquidation of the Bank on the 14th January 1991:

a. during an interview broadcast on Sky News [at 3.00 pm] on [Tuesday] the 14th January 1992, in the context of discussion about former employees' demands to be retained to sit and work with the liquidators, Mr Morris, one of the Provisional Liquidators, said "that fraud was manifest from top to bottom in the bank. For that reason it was impossible to use many of the staff except on very mundane tasks".

[This statement was immediately countered by Mr Malik who stated that it was only a select few right at the top of the Bank who were involved in the criminal activity, not the ordinary tea ladies, cashiers, officers or ordinary staff].

"b. on the 23rd May 1993 The Guardian reported that Mr Morris (then one of the Liquidators) had apologised for the distress caused to the Bank's UK staff who were sacked abruptly when the Bank closed, and had said that he had had no alternative, because fraud had existed at every level of the Bank;

c. on the 14th December 1996 The Guardian reported that Mr Akers, another of the Liquidators, had said 'The bank had got some 1,200 employees. Because of the scale of the accusations we didn't know who we could rely on among the staff. We couldn't take that risk. We had to replace them with our people or from the clearing banks.'"

[As I have already stated, I refer to these three statements as "the Liquidators' Statements"].

106. Following the liquidation of the Bank on the 14th January 1992, newspapers available in the UK have continued to publish reports about the Bank;

"a. reports were published on a frequent, but not daily, basis during 1992 (there was also some coverage by the major UK TV networks);

b. after 1992 the numbers reduced in comparison to 1992;

c. by the end of 1994, the number of reports had fallen even further.

The Post Liquidation Reports:

a. initially reported the winding up order made on the 14th January 1992; and/or

b. describe aspects of the liquidation such as:

i. civil proceedings brought by the Liquidators against the Bank's former auditors (commenced March 1992, settled late 1998);

ii. civil proceedings brought by the Liquidators against the Bank of England (commenced May 1993 and continuing);

iii. the negotiations leading to a settlement with the Abu Dhabi government resulting in increased assets available for distribution to creditors;

iv. creditors' meetings, liquidation expenses and payment of dividends (1996 and 1998);

c. describe the publication in the US in early October of Senator Kerry's report and the publication in the UK on the 22nd October 1992 by HMSO of The Inquiry into the Supervision of the Bank of Credit and Commerce International ("the Bingham Report"); and/or

d. describe parliamentary debates and Select Committee hearings and reports about the closure of the Bank, about losses of depositors and about the role of the Bank of England as regulator; and/or

e. report on criminal trials against certain individuals (former Bank senior employees and others). For example:

i. the trial of SZA Akbar (former employee in charge of Central Treasury operations on a day to day basis until 1986) and his guilty plea to 16 charges of false accounting in September 1993 and the subsequent unsuccessful proceedings in 1996 for his extradition to the US;

ii. the trial and conviction of Mr Gokal (not a former employee) in 1996;

iii. the trial and conviction of 12 former executives in Abu Dhabi in 1994;

iv. the trial and conviction of Mr Virani (not a former employee) in 1994; and/or

v. the indictment and trial of Mr Khalid bin Mahfouz in 1992.

f. many of the post liquidation reports refer in general terms to the fraudulent activities and wrongdoing prior to closure. The large majority of these reports:

i. did not assert that the UK operations were clean;

ii. did not distinguish between the UK operations and the rest of the Bank's operations;

iii. did not state that the fraudulent acts and wrongdoing at the Bank were confined to an inner circle of top people;

iv. were silent as to the levels and numbers of employees implicated in the fraudulent activities and wrongdoing of the Bank;

v. were silent as to the levels and numbers of employees aware of the fraudulent activities and wrongdoing of the Bank;

vi. did not state that the majority of the employees were ignorant of the fraudulent activities and corruption within the Bank;

vii. were silent as to whether the general body of employees were honest, hardworking and uninvolved in the fraudulent acts;

viii. were silent as to the issue of which individuals were responsible for the frauds within the Bank prior to closure.

g. the small minority of the post liquidation reports which sought to identify the perpetrators of the fraudulent activities and wrongdoing described Abedi and Naqvi and their "inner circle" of senior employees as having been responsible for frauds within the Bank prior to closure and as having taken care to keep their activities secret.

In addition, in the years following the winding up on the 14th January 1992, a number of reports in newspapers available in the UK about matters other than the Bank (for example, appointment of Bank of England Governors, Maxwell, Barings) have mentioned the closure of the Bank. In some instances, the mention of the Bank includes a reference in general terms to the fraudulent activities and wrongdoing prior to closure."

(2) Summary and Relevance of Publicity

107. This action is brought to recover damages, not for the lowering of the reputation of the former employees of the Bank by reason of the publicised Agreed Misconduct, but for the financial loss suffered by reason of the publicised Agreed Misconduct in respect of future employment. Publicity is accordingly relevant only in so far as it has had in the past, or is likely to have in the future, an impact on actual or prospective employers. The scandal surrounding the collapse of the Bank received very extensive publicity at the time of the collapse and in the aftermath and there have been newspaper articles and media reports referring to it ever since. The articles looked at as a whole and the agreed propositions neither expressly implicated the employees generally nor expressly exculpated all save Mr Abedi, Mr Naqvi and their inner circle. Great emphasis has naturally been placed by the Employees on the Liquidators' Statements (that fraud was manifest from top to bottom) and the negative attitude which they adopted to employment of former employees of the Bank. But these statements and this conduct must be viewed in context. The role of the Liquidators required them to focus single-mindedly on wrongdoing at the Bank. Their attitude as to the appropriate personnel to be employed on the sensitive tasks on which they were engaged at the Bank are not readily to be assumed to be characteristic of the attitudes of other prospective employers. To the opposite effect to the Liquidators' Statements (as the agreed propositions state) there was a small body of reports which confined responsibility for the wrongdoing to Mr Naqvi, Mr Abedi and their inner circle. Beyond assuming that prospective employers would have heard of the collapse of the Bank, it is not possible from a mere reading of the publicity material and the agreed propositions about publicity to make any assumption as to what individual prospective employers read or heard at the time, what impact this had on them or whether this impact was lasting. This can only be ascertained (after a consideration of the expert evidence) by examining the relevant conduct of the individual employer and (if this is available) the evidence of such employer. The evidence called before me disclosed the wide variations in reading about and interest in the scandal and (I may add) the absence of any general predisposition of employers by reason of the impact of the publicity on them to view former employees of the Bank as under a cloud or in any wise different from or less acceptable than other applicants for jobs.

EXPERT EVIDENCE

108. The parties have been anxious to assist the Court by adducing the best available evidence to explain why the Employees and indeed other former employees have failed to find or retain employment over the period since the collapse of the Bank. The Employees for this purpose have produced as their expert on the labour market, Mr Langman, and the Bank has produced two experts Professor Rajan and Mr Davies. In addition to the evidence of these experts (whom I shall refer to as "the Three Experts") both sides have called witnesses of fact who also have varying degrees of expertise in the labour market, and both sides in their witness statements and in their cross-examinations of the other sides' witnesses have given and elicited evidence of conditions in the market which the experience of these witnesses qualified them to give. I have in mind amongst the witnesses called by the Bank the four witnesses from Coutts and the various representatives of prospective employers and recruitment agencies; and amongst the witnesses called by the Employees Mr Young, a programme leader at Instant Muscle Limited ("IML"). (For reasons which will subsequently appear no reliance can be placed on the evidence of the three prospective employers adduced on behalf of the Employees, Mr Notay, Mr Butt and Mr Assaggaf). In these circumstances (as I intimated to Counsel in the course of the hearing that I would do in the absence of objection, and there was none) I intend to treat the relevant evidence of these witnesses as admissible expert evidence, but will bear in mind the relative expertise of each such witness in determining the weight to be given to his or her evidence.

(1) The Three Experts

109. Mr Langman, Professor Rajan and Mr Davies, after the exchange of their reports, met and agreed a joint report in which there were set out the various propositions made by each side's experts and the response to such propositions by the other side's experts. To a large extent the three experts were in agreement and a number of the apparent differences of view in their reports were eliminated in the joint report and in the course of their cross-examinations. I should set out a few words about each of the experts. But before I do so I must say something on an issue which arose during the trial. Section 17 of Mr Langman's First Report began as follows:

"Individual Case Histories

117. The following histories are based on Witness Statements in addition to information provided at interview with the individuals concerned. It is considered that an interview was worthwhile because it assisted the conclusions as to whether an employee had personal qualities rendering him or her suitable or unsuitable for employment."

Mr Langman had in his possession detailed attendance notes of these interviews. Mr Jeans (for the Bank) applied for their production. Miss Booth (for the Employees) strenuously resisted this application claiming solicitor and client privilege. Before any ruling was called for, and to obviate the need for a ruling, I made it clear to her that insisting on the claimed privilege would undermine Mr Langman's evidence and affect the weight to be given to it, for the notes formed part of the factual premise on which the report was based. Miss Booth thereupon made the notes available. I should however make it quite clear that in my considered judgment there never was any such privilege as was claimed. There can be no privilege in information furnished to an expert for the purpose of the preparation of his report. The expert should state in his report the information supplied to him or obtained by him for the purpose of his report. In a case such as the present, he should annexe his notes of interviews to his report. If he does not do so, the party whose expert he is should volunteer such notes to the other party as soon as practicable. The opposing party is entitled (as is the Court) to know the factual premise on which an expert's report is based. The requirement could not have been greater in this case, for (1) Mr Langman's reports were expressly based on the contents of the attendance notes; and (2) repeatedly in the course of their evidence (and without objection) the Employees were asked what they had told Mr Langman and to explain discrepancies between their own evidence as to what they had told him and what Mr Langman recorded in his reports. The notes when produced were a valuable aid in resolving that dispute as well as in evaluating Mr Langman's expert evidence.

(b) I should now express my views on each of the Three Experts:

110. Professor Rajan has behind him a most distinguished career as an economic and social researcher and consultant with particular specialisation in employment matters. His evidence focused primarily on employment trends in the financial and other sectors of the economy during the period 1984 to date. His reports and his evidence were measured, carefully considered and authoritative. I found him a most impressive witness.
111. Mr Davies spent his career in banking, and as a senior banker specialised increasingly in human resources within the banking industry, but his experience and expertise extended to the financial sector generally. His evidence focused primarily on general employment trends in the financial services sector during the relevant period and recruitment practices in the banking sector during the same period. He also made pertinent comments on the particular circumstances of each of the Employees. He was both thoughtful and knowledgeable and an expert whose views merit (as I shall afford them) great weight.
112. Mr Langman has extensive qualifications and experience in the field of employment with a speciality on issues of occupational disadvantage. In 1989 he set up his own human resources company, and he prepared his reports with the support of two assistants. His reports and evidence have in my view serious shortcomings. His reports had to be prepared in a rush (he had too little time and too many other commitments): this is apparent from, and the explanation he gave for, a number of errors and omissions in them. I think that in this case unfortunately he perceived his role to be that of, and assumed the role of, establishing the claim of the Employees as to the existence of the stigma and its adverse impact on the Employees. Examples of this stance permeate his reports. I instance paragraphs 106, 108, 111 and 112 of his First Report; the slanted letter to 35 recruitment consultants dated the 14th September 1998 written by his assistants on, and reflecting, his instructions to them; his quotation in paragraph 19 of his First Report of an off-the-cuff observation of the Assistant General Secretary of BIFU (in the course of an interview about employment practices in the banking industry) as to the good reputation of the Bank prior to July 1991 as a considered view meriting weight and recording in his report; his failure to note in his First Report that, in response to a questionnaire sent to 250 former employees with regard to their post redundancy employment experience, 15 of the 24 who replied had found employment; his reliance in his First Report on median figures but his unaccountable failure on this basis to take into account the Coutts' figures (to which I shall refer), his use of the loaded expression "the issue of BCCI" in paragraph 125 of his First Report to describe at Mr Husain's interview questions as to his work experience at the Bank; and his selection and interpretation of data, e.g. his inclusion in his second report at pages 20 and 35 of tables of data to which (as he must have known) no significance could possibly be attached. When in re-examination he was referred to what he had said in chief affirming the contents of his reports and (somewhat remarkably) was invited by the Employees' Counsel to confirm and repeat that evidence, he gladly accepted the invitation, oblivious of the retractions from, and qualifications to that evidence, which he had made in cross-examination. I should make certain further comments on his evidence:

(i) two matters which figured large in his First Report (as it became clear, and indeed as he conceded, during his cross-examination) were not of any significance. (1) The first was median figures for long term unemployment. Such figures are of no assistance in considering the cases of the five Employees and in any case could only assist if the job situation of the other redundant Bank employees were known (which it is not) as well as any special circumstances which may affect the figures. It is not valid or appropriate to conclude from such statistics that specific individuals should not have been unemployed for longer than the statistical median: the actual length of unemployment of particular individuals can be determined by a host of complex factors. Mr Langman under cross-examination agreed (as I think he had to) with Professor Rajan and Mr Davies that a detailed analysis of the factual circumstances of each of the Employees was more likely to assist in explaining their experiences. (2) The second was anecdotal evidence in respect of other Bank employees. Such evidence may or may not indicate replication of the experiences of the Employees and is not helpful. If there is one lesson to be learnt from this litigation, it is the need to check and scrutinise with care the evidence of those who claim to be victims of stigma: it is not appropriate to accept such claims without question.

(ii) in evaluating the employment prospects, employment history, the motivation and character of the Employees, Mr Langman relied on interviews lasting 1 to 1¼ hour interviews with them. He accepted at face value and unquestioningly what they said: they were anxious to make a good and positive impression on him; and he did not see it as his task to disabuse himself of such impression, to cross-examine or investigate deeper. He told me that he was very favourably impressed by them at these interviews. The favourable view extended to their motivation in seeking fresh employment. It is quite clear that he only obtained a very partial and superficial picture: critical material was withheld from him. He did not and could not form a balanced view on this limited exposure to them. For this reason I cannot attach any significant weight to his views as to their employment prospects over the period in question and the impact of stigma upon them.

In short I feel able to place only limited reliance on the evidence of Mr Langman, and where it is in conflict with that of Professor Rajan or Mr Davies, I incline to prefer the evidence of the latter.

(c) Propositions of the Three Experts

113. I shall set out the various propositions reflecting the areas of their agreement and my resolution of the surviving differences (where appropriate in the light of other relevant evidence). The term "financial sector" used in the Report of Professor Rajan and in this judgment includes banking, specialist institutions (including building societies and other institutions granting credit and institutions specialising in investment securities), securities dealing, insurance, accountants and management consultancy.

(d) The Employment Market

(i) Generally

114. From 1991 to 1993 job vacancies were diminishing across the whole of the British economy. From February 1991 the number of vacancies in banking, finance and insurance diminished. There were redundancies (often voluntary) which threw on the market good quality competitors for jobs. From April 1993 such vacancies started to increase, but the vacancies were not for the same jobs. These changes significantly reduced the prospects of former employees of the Bank obtaining alternative employment in the financial services sector during the 1990s

(ii) Financial Services

115. Employment in the finance sector grew rapidly between 1984 and 1990. Employment in the finance sector fell from 1990 to 1993, as a shake-out took place as never before in that market but equivalent to that which occurred in manufacturing during the 1980s. This was principally as a result of the severe recession of 1990-1993, pressure to reduce costs caused by increased competition arising from the single market in financial services across Europe and the continued growth in the use of information technology. The number of jobs in all sectors of the finance industry decreased between 1990 and 1993 both in London and nationally. The largest job losses were in banking (particularly retail banking) and insurance sectors. Overseas banks were also affected, but not on the same scale.
116. The introduction of advanced information technology in the financial services industry contributed to a significant decrease in the number of traditional clerking and supervisory jobs in banking during the 1990s. During the 1990s the number of specialised and more highly skilled jobs in the financial services industry increased at the expense of the general clerking and supervisory jobs.
117. Between 1994 and 1998 the finance sector taken as a whole went through a period of "jobless growth". Areas such as retail banking (dominated by the UK clearing banks) and general insurance continued to shed employees as a result of structural and technological changes. Other areas increased their employment numbers.
118. Between 1990 and 1997 there was a shift in the make up of the work force in the finance sector away from the lower-skill clerical and secretarial jobs and towards higher skill knowledge-based occupations (in particular towards professionals and treasury and investment specialities). However, the increase in direct telephone banking services has resulted in some increase in demand for clerical staff, although the call centres providing such services are generally located outside London.

118 From their peak in 1990, employment levels in the banking and insurance sectors declined overall both in London and nationally, with a large contraction in retail banking (dominated by the UK clearing banks) being partially off-set by a growth in investment banking.

119. The decline in banking (dominated by the UK clearing banks) and insurance in the period 1990 to 1997 was accompanied by growth in specialist institutions, securities dealing and fund management, accountancy and management consultancy. This trend was apparent both in London and nationally.

(iii) Banking

120. The UK economy was in recession in the early 1990s. This put pressure on banks to reduce costs which in turn led to reduction of staffing levels, particularly amongst the UK clearing banks through redundancy programmes.
121. The number and size of branches of clearing banks decreased significantly during the 1990s.
122. Much of the work previously carried out in branches of the clearing banks was transferred to call centres and service centred located outside London and the South East during the 1990s.
123. There was a disproportionately large decrease in the number of banking jobs in London and the South East during the 1990s.
124. The use of part time (largely female) and temporary staff by the clearing banks increased during the 1990s.
125. The clearing banks sought to deploy existing staff into new jobs created during the early 1990s whenever possible (with the exception of graduate recruits and specialised employees) and there was a sharp decline in external recruitment.
126. The clearing banks dominated the banking market, constituting some 75-80% of it. The clearing banks offered limited openings to and were not natural homes for the redundant Bank employees: speaking generally the redundant Bank employees were not on level terms with the redundant clearing bank employees seeking jobs with such banks. Indian and Middle Eastern banks did not offer a more natural home for the former employees of the Bank and in particular the Employees (save perhaps for Mr Zafar): whilst the number of employees of these banks remained largely the same over the period 1991-1998, the number was small and the number of vacancies at such banks must have been even smaller.

(d) Long Term Unemployment

127 Long term unemployment is variously defined as unemployment for 6 months or 12 months. For the purpose of these proceedings it has been defined as unemployment for 5 years.

127. A period of unemployment (even as short as 6-12 months) is a factor that itself may lead to long term unemployment. This will be aggravated if during the period (or in the finance sector in 1990) there is a significant change in the skills required. Employment places an employee in a better position to obtain access to retraining - access which may not be available to the long term unemployed. If an employee is out of work for a period, there is a risk that his skill will become outdated and accordingly he will find it increasingly difficult to get a job. The 1990-93 period of recession and technical change created the circumstances calculated to give rise to long term unemployment. The adverse impact on a prospective employer of a lengthy unemployment by an applicant may be mitigated by proof of worthwhile (albeit unpaid) activities rather than idleness during the period.
128. An employee made compulsorily redundant is at a disadvantage in obtaining employment compared with a person made voluntarily redundant. The person made voluntarily redundant is more likely to have the time to apply for a new job whilst still employed and to prepare himself for the job search.
129. The Employees were made redundant at an exceptionally difficult time for a person so made redundant.
130. It was perhaps not particularly surprising that any of the Employees' might become long term unemployed and in particular:

(i) Mr Khan did not seek a job as a swift key operator, which was the field where his expertise lay, a job which merely involved carrying out instructions and, though it required competence and honesty, required no great skill and was not particularly responsible;

(ii) Mr Husain had to face contraction in the payroll industry in particular with increasing outplacing of this function; and at an interview his problem of lack of commitment could come out; his application forms and CVs revealed his problems with the command of written English and at an interview likewise he would reveal his lack of command of spoken English, and this alone could make it unlikely that he would get the job;

(iii) Mr Mayet was disadvantaged in that he had no job linked qualification and had not by vocational training acquired new skills. His written applications likewise gave a bad impression. Jobs such as documentary credit managers were contracting. His low paid job at Chartfactor did not enhance his CV;

(iv) Mr Zafar had the disadvantage that his role in the Bank was regional managerial. There was a diminishing role for such managers in 1990. His knowledge of banking was unlikely to be as deep as that of other applicants. An experienced interviewer would detect his character defects;

(v) Mr Quraishi was handicapped by low level basic skills and ill-health.

(e) Recruitment Practices

131. In addition to job vacancies advertised by employers or employment agencies, job vacancies are often identified by employees making use of their professional and/or social contacts (e.g. within the Asian community). Up to 75% of vacancies are filled in this way.
132. Employers as a generality want only employees whom they can trust. If the question of trust does arise, the depth of the inquiry undertaken and the degree of satisfaction required on this question is likely to depend on the responsibility of the post in question and the nature of the business of the employer. Thus trust may be of particular importance if the employer carries on business in the fields of banking or the provision of financial services. One function of an interview is to assess trustworthiness.
133. An applicant seeking employment would normally be required to:

(i) complete an application form giving details of age, qualifications, experience and previous employers;

(ii) attend for an interview if called to do so;

(iii) offer the name of a referee.

(iv) A well presented application form and CV is extremely important in particular in a competitive labour market. If the forms are untidy or contain misspellings, there is a higher prospect of rejection. Weakness in this direction invites a closer attention to other possible weaknesses in the applicant.

(v) Lack of fluency in written or spoken English is a disadvantage in most jobs and a substantial disadvantage in cases where the job requires speaking directly to clients in person or on the telephone or any writing. This is so even after making full allowance for the provisions of the Equal Opportunities Commission Code of Practice of 1985 ("the 1985 Code") relating to the setting and application of selection criteria.

(vi) A prospective employer is likely to assess the merits of a prospective employee by reference to:

(a) Qualifications.

(b) Experience.

(c) Skills.

(d) Age.

(e) Health.

(f) References.

Subject to satisfaction on the issue of trust, in the case of most employers considerations of skills and experience are paramount. But the workplace is increasingly team orientated and accordingly ability to perform as a member of a team is increasingly valued.

(vii) Qualifications are particularly important when a person first enters the job market. Generally speaking their importance during early stages of a career is progressively replaced by emphasis on what has been achieved in the work place and work place experience. Specific qualifications for specific roles may however retain their importance. Employers tend to discount the value of foreign degrees.

(viii) A prospective employer would normally formulate a short-list of candidates on the basis of the written applications and would then invite those on the short-list for interview.

(ix) An applicant who is not short-listed for interview is likely to receive a letter of rejection.

(x) At the application sifting stage, a preliminary assessment is made of the candidates qualifications, skills, experience, age and health. At interview the prospective employer will explore candidates' personal skills and experience further and assess the candidate's personal qualities (including his trustworthiness).

(xi) Age may be a factor if a person is out of work for a couple of years when he reaches 30. It may progressively become a problem and is likely to be so after 45 unless the candidate has compensating features.

(xii) At a well conducted interview (certainly at an interview for a job with a large organisation), the interviewer should be able to test the accuracy of the CV in relevant particulars relating to skills and experience, to obtain a picture of the character of the applicant e.g. his trustworthiness, whether he is arrogant, able to get on with colleagues (including senior and junior staff) and will make a good member of a team. If a lie is detected in an application or CV, it is likely to result in the rejection of the applicant.

(xiii) References generally are given after the interview stage. References given by a liquidator of a company in liquidation may be informative and helpful in particular in establishing the trustworthiness of an former employee. The general run of references given by the Liquidators of the Bank were more informative and helpful than those ordinarily given by a bank for a former employee.

(xiv) Letters of rejection are normally expressed in neutral terms and may not give the full or true reasons. The employer may wish to avoid causing unnecessary offence or articulating a reason which may be considered insufficient or objectionable. Accordingly (depending on the circumstances and the viewpoint of the particular employer) the fact that stigma is not given as a reason does not necessarily mean that it was not a reason and the fact that stigma is given as a reason does not necessarily mean that it was.

(f) Impact of Stigma

134. It may be accepted for the purpose of these proceedings as the general rule that no employer will knowingly employ a person who has been involved in or tolerated fraud.
135. Large scale publicity as to the fraudulent business conduct of an applicant's former employer may raise questions and anxieties in the mind of the prospective employer which require answering and allaying - a hurdle not in the way of other applicants.
136. Large organisations have sophisticated selection practices and interview procedures which are calculated to enable a view to be formed as to the trustworthiness of an applicant under a cloud because of his previous employment, but these procedures may not be operative in the case of small organisations.
137. The fact that a prospective employer in receipt of a CV disclosing previous employment by the Bank invites the former employee to attend an interview is an indication that he is prepared to consider the applicant on his merits notwithstanding the possible existence of stigma and is not intending to waste his and the applicant's time with a pointless interview.
138. The impact of the publicity on any prospective employee may depend upon the relevance to his field of interest and whether he has had the opportunity to form his own perspective e.g. as in the case of Mr Reed by having a friend who had been employed by the Bank.
139. At times of high unemployment or when the supply of jobs is insufficient to meet the demand, employers will be more selective. Employers generally try to be fair and focus on the individual applicant. But if the CV of one of a number of applicants shows previous employment by an employer whose reputation is such as in the mind of the individual employer to throw doubt on the integrity of its staff, that may operate to the disadvantage of the applicant, in particular if he cannot e.g. by means of a reference prove his innocence and show that he is free from any such stain. The degree of importance attached to such stigma may depend on seniority and whilst it may affect and be a handicap for senior management, is unlikely to affect more junior staff (e.g. clerical) for whom the criterion is how good he is at a particular job. (A practical example of the irrelevance of the publicity in the case of an employee with a routine job is afforded by total discount of this factor by Mr Reed and Mr Fox on the application by Mr Husain for the position of sub-postmaster). During the late 1980s recruitment practices amongst the clearing banks were designed to eliminate the impact of extraneous factors unrelated to the skills required for the job (such as any alleged "stigma" related to the collapse of the Bank) from selection processes. In the case of smaller employers which have less sophisticated systems (e.g. multiple interviews) the employee is more at risk of disadvantage. 80% of businesses employ less than 20 persons.
140. As Professor Rajan told me, statistics provide no assistance in determining the significance of stigma in the case of the Employees. The sample is too small to be representative and no statistically significant association can be drawn from them. It is necessary to look at each individual case separately and the particular job search technique.

(g) Racial Discrimination

141. There is an increasing presence of ethnic minorities in the City's work-force by reason of the widening recruitment needed to fill vacancies and the higher qualifications of ethnic minorities and their growing interest in careers in the City rather than in being self-employed.
142. In general ethnicity is just one factor amongst many which may or may not contribute to long term employment.
143. There is an association between emigrants from Pakistan and Bangladesh and length of unemployment and this extends to those possessing degrees.
144. Professor Rajan stated his agreement with a passage in the work "Ethnic Minorities in Britain" by the Policy Studies Institute:

"ETHNIC PENALTIES

Racial disadvantage, then, continues to be a fact, even if it does not apply to all ethnic minority groups. Moreover, this disadvantage is attributable partly to discrimination in employment. Controlled tests, whereby white and ethnic minority persons respond to advertised vacancies for which they are equally suitable, have been conducted since the 1960s and tend to reproduce the result that at least one third of private employers discriminated against Caribbean applicants, Asian applicants or both ... Discrimination is found not just in face-to-face encounters, or in telephone calls, but also in tests using written applications where it is clear from the applicant's name or biographical details that they are or are not white. ..."

Prejudice against Asians is the highest of any ethnic, racial or religious group and Asians believe that the prejudice against them is primarily a prejudice against Muslims. In the employment world prejudice and discrimination on ethnic grounds and in particular against Asian job applicants (especially Pakistanis) is a reality but there is no statistical technique to test or evaluate their existence or prevalence. Mr Langman accepted this. He said:

"I also recognise that and accept that there is discrimination in the labour market, but I think it is extremely difficult to decide in any one specific case as to whether or not a person has been discriminated against."

Such prejudice and discrimination should not prove a problem in the case of Asians seeking employment by Asian employers.

Summary

145. I would summarise the evidence of the Three Experts as to the effect that in the difficult labour market to which the Employees were exposed, there were a multitude of factors affecting their prospects. Stigma was a potential handicap if they chanced to apply for a job to a prospective employer who took the view that their previous employment by the Bank placed a cloud over the former employees of the Bank which could not be dispelled by the Liquidators references, but such an attitude on the part of prospective employers is not to be assumed.

(2) Coutts

146. Coutts is a specialist consultancy engaged by employers to assist individual groups of individuals who are being or have been made redundant in finding other employment. Over time it developed a rapport with prospective employers who responded to its requests for lists of vacancies. It is more than a Jobclub since it is proactive in procuring job opportunities in the form of vacancies with employers to whom the prospective employees might apply. It is not an employment agency: it is paid, not by the prospective employer or employee, but by (or on behalf of) the employer shedding employees as a service to such employees; and it accordingly does not recommend any applicant to a prospective employer. On the 2nd October 1991 the Bank (through the Liquidators and at the cost of the Government of Abu Dhabi) engaged Coutts for a period of sixteen weeks from the 7th October 1991 to the 24th January 1992 to act as outplacement consultants. Their role was to assist the 1,100 employees of the Bank who had been on "gardening leave" since the appointment of the Provisional Liquidators on the 5th July 1991 and to whom notice was given on the 3rd October 1991. The period of the consultancy was later extended until the 6th March 1992 to allow employees kept on by the Liquidators to benefit once they left the Bank, and indeed Coutts continued to provide help to some former employees even after that period had expired. (I shall in this section refer to the former employees of the Bank who used the services of Coutts as "the clients"). The Bank called four witnesses from Coutts. They were: (1) Mr Paul Charlesworth ("Mr Charlesworth") who in 1991 was General Manager of Group Programmes. He was the Account Manager who was responsible for liaising with and reporting to the Government of Abu Dhabi through their solicitors Messrs Simmons and Simmons; (2) Mrs Margaret Docker ("Mrs Docker") who in 1991 was the Operations Manager who was responsible for making the physical arrangements and engaging the counsellors. She also had the task of overseeing operations. She appointed Ms Susan Osman ("Ms Osman") as Project Manager to run the Counselling Centre; (3) Ms Dorothea Tsoflias ("Ms Tsoflias) was one of Ms Osman's team of self-employed counsellors. She was concerned with junior and middle level clients who had been on salaries up to £30,000 p.a.; and (4) Mr Trevor Parker ("Mr Parker") who joined Coutts in September 1990 and remained there as one of three senior counsellors. He was primarily concerned with senior level clients who had been on salaries of £40,000 or over. All four were impressive witnesses knowledgeable and experienced in the employment field and in particular in outplacement and counselling.
147. Within a week Coutts set up an office dedicated to the project in part of their building at 5-7 New Street London EC2 M 4TP. Coutts prepared a standard letter which the Liquidators distributed individually to the 1,100 employees dismissed on the 3rd October 1991. The centre was very well used: from the date it opened on Monday the 7th October 1991, 618 of the 1,100 former employees rang in, gave their names and made appointments to come in and register. Coutts at all times took a positive attitude towards their clients' employment prospects and encouraged their clients to take the same. Coutts told the clients (as Mr Parker said in his evidence) that the average length of time to secure a job was 4-4½ months, though this depended on market conditions.
148. As was standard Coutts practice three separate programmes were set up. Two (which were run separately from the third) were individual programmes, one for senior managers with salaries of £40,000 or above called "the Executive Redeployment Programme" ("the ERP"), one for middle managers called the "Management Self Marketing Programme" ("the MSMP") and one for junior managers and other staff which included "the Self Marketing Workshop" ("the SMW"). The first step on each of the programmes was a consultation with a counsellor at which a registration form was completed setting basic information about the client, his past experience, his skills and what he wanted to do. This form was (together with later reports and relevant information) kept in that client's file. (All the files in accordance with Coutts' practice were destroyed after two years). On the ERP and MSMP each client was assigned to a specific individual counsellor; in contrast on the SMW clients saw any of the counsellors available at the time of their appointments, unless they specifically requested to see the counsellor who had advised them previously.

(a) ERP

149. Some 50 or 60 people were dealt with on the ERP, half by Mr Parker and half by another Coutts' counsellor. They had individual arranged appointments at least once a week which were followed up on the telephone. After an initial meeting of about 1½ hours to establish the basic facts and identify ways of assisting the individual client to find new work, a further meeting took place for the purpose of skills analysis and helping the client develop a "self marketing" plan. This included drafting a CV, identifying the most appropriate consulting firms, drawing up a list of contacts to be pursued and assisting with letter writing. It was then for the client to make his own job application: he could take advantage of the list of job vacancies at the centre, but only a very small proportion of these was suitable for him. The counsellor remained in touch with his clients so long as the clients could be helped. At least two of Mr Parker's clients to his knowledge obtained permanent posts (one in mainstream banking): he is unable to say how matters turned out for the rest;

(b) MSP

150. The MSMP provided an individual appointment for counselling, assisting with finalising career aims and objectives and preparation of a CV. The client was given support, direction and motivation, trained in how to reply to advertisements and offered full secretarial support and research facilities.

(c) SMW

151. On the SMW programme the completion of the registration form and the information obtained at the first consultation (which lasted 20-30 minutes) enabled the counsellor to advise on job search activities and the type of workshop most appropriate to the particular client. Each counsellor saw between ten and twenty clients each day until immediately before Christmas when there may have been a slight tailing off. Since the clients were not assigned to specific counsellors, each counsellor would meet a large proportion of the clients who registered and were of the level assigned to him.
152. Coutts approached 1,300 employers in the financial sector including retail industry and the public sector in and around London. An initial letter was sent explaining that Coutts acted for the Bank and including a list setting out the skills of the clients seeking employment. This was followed up by a telephone call from Ms Osman or a member of her team. The response was the notification of 1,139 vacancies in all areas of business including banks, building societies, insurance, the retail industry and the public sector. The response from employers was (in the opinion of Coutts) no different to that one would expect from an outplacement exercise of this sort in respect of any other group of redundant employees. None of the Coutts witnesses is aware of any response, or heard directly from any employer any suggestion, that an individual would not be considered just because of previous employment by the Bank. But employees were undoubtedly anxious on this score and a few did tell counsellors that they felt that they had been rejected on this ground.
153. Available positions were displayed within the centre. The counsellors were able to assist former employees with the skills required for a successful job application, research, skills analysis and coping with change. The clients were offered the opportunity to take part in workshops (e.g. interview workshops) to receive financial advice and advice on alternative career options. During the course of counselling and workshops, actual or perceived barriers to finding new employment, (which included age, race and the market view of the Bank) were addressed. After the expiration of the extended period of the scheme, there was a follow up period of six months when contact was made with the remaining clients to see how they got on. The feedback from clients was generally favourable.
154. The statistics show that of the 618 employees who registered with Coutts, as at the end of March 1992 455 (i.e. 73%) had resettled. That meant "ceased to require their services" for one of a number of reasons. Just under one half had obtained what I think was permanent (full or part-time) employment. The conclusions of Coutts expressed in their Final Report were as follows:

(1) very few clients applied for jobs during the period between July and October 1991 as they felt that the Bank would be reopened: those who applied during this period felt that they had been rejected on the basis of being connected with the Bank;

(2) there was a strong element of negative perception amongst clients: many believed that they would be unemployable because they had worked for the Bank without basing their belief on any actual experience in the market place and because of their Asian background. They were only encouraged when other colleagues were seen to achieve interviews and be offered positions. They required much time of the counsellors motivating them to apply for jobs;

(3) a number of clients in relatively junior positions within the Bank were on salaries considerably higher than those paid for similar grades in other organisations. This resulted in some clients not applying for jobs with lower salaries or not accepting job offers because of the lower remuneration.

(4) there was a recession and it was not a favourable employment environment in most areas of the financial sector at the time;

(5) many financial institutions were in the process of reducing significantly levels of clerical and administrative staff from 1990 to 1997.

I find the comments were well justified, and on the basis of the evidence of the Coutts' witnesses I find the following further facts:

a. the employees of the Bank generally were relatively well paid, many towards the top end of the market rates at the time prior to their loss of jobs and on their merits would have had difficulty obtaining another job at a comparable salary;

b. many clients, no doubt on account of life-styles and expectations based on their status and incomes at the Bank, were unwilling to apply for lower status or lower paid jobs, and in particular for jobs at salaries which did not enable them to meet their existing mortgage and other outgoings;

c. the majority of the clients were Asian and (as Mr Husain fairly put it in cross-examination) "we all know that racism exists". Racial discrimination was (as the clients apprehended) a serious obstacle to employment by a number of employers (most particularly in the City of London). Likewise there was discrimination on grounds of age (in particular if the applicant for the job was over 50);

d. in any case where a prospective employer perceived a cloud over the head of an applicant for a job, that was not a help and (all other things being equal) favoured selection of a candidate not subject to a cloud. The cloud if perceived could likewise impede or deter the willingness of contacts to use their efforts to secure employment.

155. The Coutts witnesses (most particularly Mr Charlesworth) rejected the evidence (1) of Mr Husain that Coutts advised him during a self marketing workshop to give the Bank a low profile on his CV and that he should not highlight his experience at the Bank; and (2) of Mr Khan that Coutts advised him that he would not get a job which involved money transfers as employers would not trust him and that he should not put the Bank on his CV until he got an interview. They did so on the basis that this was not be the approach which Coutts adopted. Mr Charlesworth also helpfully pointed out that anxious clients may mishear and misunderstand what they are told. They also rejected the evidence of Mr Mayet that a friend could have (sensibly) told him that Coutts success rate was only 10%: on any view, it was substantially higher. I also reject this evidence of Mr Husain, Mr Khan and Mr Mayet.
156. I turn to each of the Coutts witnesses in turn:

(1) Mrs Docker

157. Mrs Docker was plainly a totally honest and reliable witness. She was not herself involved in the workshops or counselling and her direct knowledge of what was said and done was acquired from her practice on a number of occasions during the project of meeting and discussing their progress with individual clients attending the centre and her meetings with the counsellors. She was able to state quite firmly that it would not have been in accord with Coutts' practice or policy to advise a clients to omit reference to the Bank in his CV. She told me that the adverse publicity regarding the Bank would have aggravated the natural anxiety of the clients who had lost their jobs; that employers are careful as to giving reasons for refusing employment and are more likely to give a neutral reason than acknowledge discrimination on grounds of age, race, sex or the reputation of their former employer (e.g. the Bank). She acknowledged that the fact that the clients by reason of stigma might be passed over by an employer in favour of another equally qualified applicant who was untarnished. She told me that Coutts recommended that "cold calling" by telephone or letter can produce results; and that a badly written or mediocre letter if sent at the right time to the right place supporting an application by a person with the right skills for the right job may lead to a job - but a better written letter improves the prospect of success.

(2) Ms Tsoflias

158. Ms Tsoflias was the witness whose evidence I found to be of the greatest value, weight and assistance. She is a freelance human resources consultant, and in September 1991 joined Coutts on a freelance basis and from mid-October 1991 (some weeks after the project commenced) participated in its outplacement project for the Bank's former employees until Christmas of the same year when she had to leave because of a commitment elsewhere. She worked full time 5 days a week. Her activities were limited to consulting: she did not participate in workshops or seminars. She was very busy; indeed at times she was overwhelmed by the sheer number of clients. She said in her evidence that:

(a) as is typical with employees who lose their jobs, the clients were suffering from self doubt and depression about their future job prospects, and she spent much of her time offering encouragement;

(b) those clients who remained positive and determined in their job searches often managed to find jobs with a relatively short period. But negative expectations became for others a self fulfilling prophecy;

(c) Coutts sent mailshots to some 1,300 prospective employers about job vacancies specifically for former employees of the Bank. One of her jobs was to contact employers to whom mailshots were sent to follow up the mailshots. She never received any indication whatsoever from these employers that they regarded former employees of the Bank in a less favourable light than any other potential employees as a result of the circumstances surrounding the Bank's collapse, and in her frequent discussions with her colleagues they never mentioned any such indication. If there had been any such indication, there would have been a huge problem apparent to everyone;

(d) the clients were not markedly different from any other group of employees save for (i) the predominance of Asian employees whose spoken English was generally good, but some 20% of whose written English was not so good: (ii) there was a slightly higher proportion of clients engaged in clerical work; (iii) many were reluctant to look for jobs outside the banking sector, because the fringe benefits in the banking sector at that time (e.g. subsidised mortgages) added some £4,000 to the normal salary and some indicated that they needed a higher salary in future to compensate for the need to meet the liabilities on the unsubsidised money obtainable elsewhere; (iv) though a number of clients were worried that the publicity surrounding the collapse might harm their efforts seeking work, few indicated that they had faced any actual difficulty; (v) a minority allowed their resentment and bitterness at their redundancy to impede the adoption of a constructive attitude; (vi) the stigma might prevent clients approaching those who have previously invested in the Bank and most particularly those who had invested at their suggestion;(e) she was not aware of any occasion when publicity harmed a client's efforts: a recession and slump in recruitment (particularly in the banking sector) and stiff competition for jobs impeded the search for employment in the early 1990s;

(f) she was quite satisfied that clients at the level with which she was concerned were not implicated in the wrongdoing and that there was no cloud over them;

(g) there was discrimination on grounds of age against those over 50. This turned on supply and demand;

(h) there were variations in transferable skills. Clients who were positive and determined often within a relatively short period of time found jobs;

(i) if a prospective employer perceived by reason of stigma a blot on a client's character, that would make the client's task more difficult.

(3) Mr Parker

159. Mr Parker was an impressive witness. His evidence was based on his personal knowledge and experience acquired on the Bank and other projects:

(a) during cross-examination he was taken through the media publicity about the Bank (and in particular the Liquidators' Statement), and said that this was not helpful to the clients but did not make them unemployable. But he stressed the distinction is to be made between imputations on the Bank and imputations on the general body of employees. The primary question for any prospective employers is the transferable skills of the applicant, but in the unusual situation when all else is equal, the existence of the stigma perceived by the prospective employer would weigh against the client and he would not be selected for interview. If however the employer has a doubt on the personal integrity of an applicant, that might well prove conclusive;

(b) the absence of specific job titles at the Bank created difficulties;

(c) the clients he dealt with were in his view probably overpaid at the Bank in comparison to the banking market generally and somewhat older than might have been expected taking into account their apparent levels of responsibility. These factors reduced their employment prospects;

(d) some clients (as they had been overpaid at the Bank), would not now accept less, often on the ground that they had outgoings e.g. mortgages. They were reluctant to take short-term or part time employment;

(e) there was in the job market discrimination on grounds of age (in the City the age was 50);

(f) the written English of some clients was a problem;

(g) the layout and appearance of a CV was important and it could make a critical difference;

(h) image, appearance and grooming at an interview were very important: a decision is often made on first impressions;

(i) questions of obtaining a reference did not arise until just before the stage of making an offer. It was unusual to require it earlier as to obtain it might prove unnecessary, time consuming and expensive.

(4) Mr Charlesworth

160. Mr Charlesworth has had many years experience in outplacement. He is now the Managing Director of Coutts PDC Ltd. Whilst his role in the Bank project was as Accounts Manager, he also met and talked informally with several of the clients when they came to Coutts' office for their service, he visited the centre on a number of occasions during the project and he met and talked to clients and he obtained reports from counsellors to obtain feedback on its progress. On the basis of his obvious expertise and this limited exposure to the "coal face" he told me that:

(a) the distinguishing feature of this project was the predominance of three features, namely that the clients were Asian, were in the banking sector and were based in London;

(b) he was aware of no response or communication from prospective employers that clients would not be considered just because of previous employment by the Bank;

(c) the skills of most of those who took advantage of the programme were of a general clerical or supervisory nature;

(d) whilst no survey was undertaken of salary rates, the experienced counsellors obtained a good view of levels of pay and were able to make judgments in this regard. The clients had been relatively well paid at the Bank (payment being towards the top end of market rates for the job at the time). They would have had difficulty in obtaining a comparable job at a comparable salary and some did not want to take a lower paid job even though the job description may have been similar;

(e) the salary levels of the more senior people were surprisingly high and it would have been very difficult for senior former employees to get a similar job at a similar salary in another retail bank;

(f) he did not believe that the clients were involved in any wrongdoing: if he had, he would not have undertaken the project and endangered the reputation of Coutts by placing criminals. He expected others to take the same rational view;

(g) there was amongst the clients a fair degree of bitterness in relation to the Bank and a strong element of negative perception, and many clients thought that they would be unemployable because they had worked for the Bank though this was not based on actual experience. Many also thought that there was a directive of the Bank of England to this effect, (though there is no evidence to this effect);

(h) he was not aware of any evidence that the circumstances surrounding the collapse were thought in the market to reflect badly on former employees in general. But he was prepared to concede that stigma was a real but limited disadvantage: it was not of a magnitude which prevented obtaining a job. Only if all else was equal between candidates would it affect the balance (in particular where integrity was called for) and this was a situation which was equally applicable in the case of other prejudices. He believed at the time that the majority within a limited time would get work and indeed that the majority did;

(i) the clients were predominantly Asian. Some organisations may not have wished to employ individuals from ethnic minorities, and accordingly some clients may have suffered from racial prejudice but this prejudice was far from universal; Asian, Indian subcontinent and African banks might constitute the first home for such clients, but the opportunities were small since they formed only a small part of the financial sector and generally had small complements of 8-9 staff;

(j) there was a recession and it was not a favourable employment environment in most areas of the financial sector at the time. Further many financial institutions were in any event in the process of reducing significant levels of clerical and administrative staff from 1990 to 1997;

(k) the statistics shown in the Final Report were not designed to measure the impact of stigma but to show to show the Government of Abu Dhabi the extent to which there remained a demand for the services of Coutts. The figure of just under one half for "full time employment" included permanent part time employment and employment for a fixed term extending beyond the length of Coutts engagement. He was not involved in putting together the information contained in the final report, but a resettlement figure (of those no longer requiring the services of Coutts) above 70% in the 1992 current economic conditions was in his view very satisfactory;

(l) a recommendation to take a lower qualified job may be appropriate to get a client a better opportunity to obtain a better post later. But an application for a lower qualified job can lead in the long term to problems of overqualification;

(m) the significance of factors as obstacles, such as age, depended on supply and demand in the market. On occasion age might be a positive rather than a negative factor;

(n) candid explanations e.g. as to stigma were not to be expected from employers when refusing job applications or interviews: the normal practice is to give a neutral explanation, though honest feedback may be given if requested.

Summary

161. I can summarise the Coutts evidence by saying that the prospects of obtaining fresh employment very much depended on the attitude of the individual client; past employment by the Bank though a cause of anxiety on the part of clients and a possible ground for a prospective employer preferring another candidate with equal skills, did not deter prospective employers approaching Coutts to fill their vacancies and was not seen or experienced by Coutts to be a problem or at any rate a substantial problem. A prejudice against former employees on the ground of stigma was very much the exception to the general rule. There were other more pressing problems for the clients e.g. problems with English, age, market conditions and unrealistic expectations and demands.

(3) Employers and Recruitment Agencies

162. Some guidance as to the attitude of prospective employers and recruitment agencies is furnished by the evidence of Ms Shirley Carpenter, (Head of Human Resources at Credit Agricole Indosuez). Mr Akbar Shah, (a former vice president of the United Bank of Switzerland), Mr Geoffrey Walker, (a middle east specialist in the financial sector at MSL Search and Selection), Mr David Reynolds, (a specialist in the financial sector with Sheffield Howarth) and Mr Colin Reed and Mr Richard Fox (of Post Office Counter Service Limited). Their evidence is primarily directed at meeting allegations of the Employees as to the attitudes displayed to stigma by their banks or agencies, but in so doing incidentally they provide some indication as to the existence and significance of stigma in the areas in which they operate. The evidence of these witnesses is set out later in the judgment as each of the Employees' allegations is considered. It is sufficient to say here that the picture they draw is very much in accord with that provided by the Coutts' witnesses. Recruitment policies have been driven by fair-mindedness and pragmatism, not fear or suspicion. Employers have not generally regarded former employees of the Bank as such as under a cloud or less desirable as employees than others. A prospective employer may however view an former employee of the Bank as under a cloud, and this risk may be greater the more senior the position previously held at the Bank (though this may turn on the area of responsibility); and where a prospective employer does adopt this attitude, he may or may not be capable of being disabused of his pre-conception by the former employee's performance at an interview, a reference or otherwise. Everything turns on the identity, mind-frame and individual perceptions of the particular prospective employer.
163. In short, whilst stigma is capable of attaching to an former employee of the Bank in the eyes of particular prospective employers and (to a greater or less extent) handicapping that former employee vis-à-vis that prospective employer, that can only be tested on a case by case examination of each prospective employer. Stigma (like a multitude of other factors) may come into play to the prejudice of a particular job applicant depending on the identity of the prospective employer: there can be no presumption that it has come into play or will come into play on any particular application.

EMPLOYEES' EVIDENCE AND EMPLOYEES' CASE

A. Background to Employees' Evidence

164. In the light of the expert evidence to which I have referred, when seeking an explanation for the failure of the Employees to obtain a job, it is necessary to have in mind the various factors at work and the various considerations which may have operated on the minds of the prospective employers whom they approached.

(1) Market Factor

165. A number of factors undoubtedly operated against the Employees. They had the multiple disadvantage of (i) being in the early 1990s part of a large-scale compulsory redundancy; (ii) at a time of a severe economic recession which, combined with European-wide competition, had a devastating effect on the employment market generally; and (iii) at a time when structural and technological changes in the finance and other sectors was leading to the disappearance of traditional banking and office jobs, particularly in London and the South East.

(2) Personal Factors

166. For many former employees faced with the trauma of the loss of what they had been led to believe was in effect (if not in law) a job for life, there was an indignity facing them in the job market. For their status, positions and salaries at the Bank were often higher than those which persons of their calibre could reasonably expect elsewhere in the market and a lowering in any (let alone all) these regards could not be accepted with equanimity. There was amongst some of the former employees who required a positive approach if fresh employment was to be obtained, a negative approach revealing itself in negative self perceptions, fear of stigma and lack of motivation.

(3) Considerations for Prospective Employer

167. In selecting the candidate for a job, a prospective employer will have in mind the nature of the job as he sees it and the particular qualities he seeks in an employee. There is likely to be a substantial element of subjective judgment. Some may be prejudiced on grounds which may include, but are not limited to, race, sex or age. There are a multitude of factors which depending on the prospective employer and the job in question may carry weight in favour of rejecting an applicant; e.g.:

(1) the quality of his completed application and of his spoken and written English measured (in all cases where effect is given to the 1985 Code) by the standard needed for the safe and effective performance of his job;

(2) his lack of skills;

(3) his lack of qualifications;

(4) the limitations on his experience;

(5) his poor work records;

(6) his (unappealing) personality;

(7) doubts as to his "team" qualities;

(8) his previous long term unemployment;

(9) doubts as to his honesty (in particular relating to his CV);

(10) his ill health;

(11) his age;

(12) his ethnic origin.

(13) his performance on the day of any interview and how he relates to the interviewer;

(14) the lack of urgency on part of the prospective employer in filling a vacancy;

(15) the number and quality of other competitors.

As I have said, where a reason was given for refusal, that reason is unlikely to be informative or necessarily true.

(4) Status of Stigma as a Consideration

168. The prospective employers may be assumed to have known that the candidate was previously employed by the Bank and have had some recollection of the collapse of the Bank and that there had been fraud at the Bank. But beyond this it is not possible to make any assumption as to the extent of the impact of the media publicity on them or whether this led to their having any preconception as to the integrity of employees of the Bank generally. It would not be fair for a prospective employer to adopt the attitude that previous employment by the Bank placed a candidate under a cloud; something more must be necessary to implicate the candidate. It is not possible to assume that any particular prospective employer took the (unfair) view that all former employees of the Bank were "under a cloud". Some prospective employers may have held this view and for them that stigma may have been a consideration in their thinking when the Employees' job applications were before them, but this would have been exceptional. In every particular case that attitude of the particular employer has to be proved: it cannot be presumed. It is merely one of the possible reasons for an adverse decision. The onus is upon the Employees to prove that it was in fact a reason for an adverse decision in his case. It is important to bear in mind that there are not (as repeatedly maintained on behalf of the Employees) only two alternative explanations for the Employees' unemployment, namely their unemployability and stigma. I have already indicated some of the multitude of other alternative explanations.

B. The Employees' Alternative Cases

169. The Employees approach to the question of causation has three discernible strands. First they put forward the a-priori case. This argument cannot possibly stand in view of the findings I have reached on the expert evidence, but I shall say a few words on this line of argument. Secondly they rely on statistical evidence from their expert Mr Langman which is said to demonstrate that the Employees must have suffered some kind of "stigma effect". I have already made clear when considering Mr Langman as an expert that his statistics are not of any assistance. I need say no more on that topic. Thirdly they rely on what they claim to be direct evidence of loss suffered by each of the Employees due to stigma. That is the real case which calls for detailed consideration.

(1) The A-Priori Case

170. The A-Priori case is based upon eight propositions each of which needs to be considered in turn.

(a) "The closure of the Bank was followed by a substantial volume of publicity in the media which included references to serious and widespread fraud within the Bank."

It is clear that the Bank's misconduct became widely known but the large majority of the reports which followed the Bank's closure were silent as to the levels and number of employees implicated in or aware of the fraudulent activities and wrongdoing of the Bank. The small minority of reports which sought to identify the perpetrators of the fraudulent activities and wrongdoing describe Mr Abedi and Mr Naqvi and their "inner circle" of senior employees as having been responsible and as having taken care to keep their activities secret . A small number of reports mention the general body of employees, describing them as innocent victims of the closure of the Bank who were shocked by the closure and had been hardworking honest and oblivious to the fraudulent activities of Mr Abadi and Mr Naqvi and their inner circle of senior employees. The Liquidators' Statements alone alleged more far reaching fraud. Looking at the media material as a whole the thrust was that the Bank had perpetrated serious and widespread fraud, not that there was serious and widespread fraud within the Bank.

(b) "Prospective Employers would have been aware of the media publicity which followed the Bank's closure".

Prospective employers and recruiters for such employers would have been aware of the Bank's closure and would have had a general impression that this has been caused by large scale frauds but their exposure to the media would have been variable as would any further impression.

(c) "As a result of their awareness of the media publicity prospective employers would have formed a view that fraud was widespread within the Bank"

Only the Liquidators' Statements stated this. Neither the evidence as a whole nor common-sense justifies the supposition that this message was widely received, credited or retained in the memory.

(d) "Prospective employers would have retained a belief that fraud was widespread within the Bank beyond the immediate aftermath of the closure or would have been reminded of their belief by continuing media coverage of the Bank"

Even if (contrary to my view) this message was widely received when communicated, specific recollection of what had been reported earlier must have tended to fade with the diminishing publicity and the diminishing public interest in the affair.

(e) "As a result of this belief prospective employers were unable to ascertain whether any particular employee can have been involved or knowingly tolerated dishonesty within the Bank"

This proposition assumes that prospective employers seriously addressed their minds to the question whether former Bank employees had been involved in wrongdoing whilst employed by the Bank. The assumption is that in the minds of prospective employers former employees of the Bank were regarded as under a cloud in respect of their past involvement in the dishonesty of the Bank. Neither the publicity nor the evidence before me justifies any such assumption.

(f) "Prospective employers would therefore have suspected that any former Bank employee might have been involved in dishonesty"

This proposition is again unjustified and indeed contrary to the evidence. There should be noted the full hearted response of prospective employers to the efforts by Coutts to obtain job opportunities for former Bank employees and the evidence of the Coutts' counsellors and the Employers and Recruitment Agencies as to the rational and responsible attitude taken by prospective employers and the absence of any general experience on their part of the attitude alleged.

(g) "Employers would avoid employing anyone whom they suspected of having been involved in dishonesty"

It is common ground that an employer will generally refuse to employ a person whom he suspects of being a party to dishonesty (whether a perpetrator or a person who covers up dishonesty), but the evidence does not justify the proposition that prospective employers generally would have regarded former Bank employees as involved in dishonesty. In the vast majority of cases (as it seems to me) the trustworthiness of the former employee would not have been an issue.

(h) "Accordingly a prospective employer faced with a choice with a former Bank employee and another candidate with similar skills and experience would choose the candidate without the Bank background"

This proposition is defective for two reasons. First it assumes that "the prospective employer" would view the former employee of the Bank as under a cloud. Some may have done so, but I do not think that this was the usual, let alone universal, attitude. Secondly it is quite clear (as was made clear by Mr Parker and Mr Davies) that it would be quite exceptional to have two candidates with similar skills and experience and of equal merit.

(2) The Cases of Actual Loss

171. Before I turn to each of the Employees in turn, I should make a few general observations.

(a) The primary and best evidence of the reasons for a refusal of a job application by a prospective employer must be the evidence of the employer himself or his agent who made the relevant decision. Such a witness can give direct evidence as to the considerations which affected his decision. There is a dearth of such witnesses called by the Employees. With very few exceptions, the only employers who gave evidence were called by the Bank to refute the account of the rejection of the job application given by the Employees. I am not satisfied that the Employees could not have called at least some of the other employers to explain the reasons for their decisions.

(b) Secondary evidence may be given of facts from which the reasons for the decision may be inferred. Of this character is the expert evidence as to the likely impact of the various factors (including any perceived stigma) on a prospective employer and evidence of the Employee of the course of his conversations or interviews with the employer. There are limitations in respect of evidence of both of these characters. There is no presumption that stigma causes all or any particular adverse decisions: the impact depends on the particular employer on the particular job application and is a question of fact. The expert evidence goes no further than establish (what is really no more than common-sense) that a particular employer may regard stigma (as any of a number of factors) as significant, and the evidence of the Employee depends (for its acceptance) on the credibility of the Employee: he may deliberately or innocently mis-recollect or misconstrue what the employer says or does; and the reason stated by the employer is not necessarily the reason for his decision. The reasons given are generally opaque and a reason may be volunteered (e.g. stigma) because it is less likely to offend than the true reason e.g. the inadequacy of the applicant; and likewise some other reason may be volunteered in place of stigma.

(c) Each of the Employees served Particulars in answer to a request prepared by the Bank designed to extract all relevant information about their efforts to obtain employment. The Particulars and the divergencies from those Particulars in their evidence were informative;

(d) The number of job applications made by the Employees is not necessarily a guide to the seriousness of the efforts made to obtain a job or the reasons for failure to do so. First of all the number must be seen in the context of the period (and in particular the number of weeks and days) covered. Secondly the Employees sent out numbers of common form job applications which had (and were known to have) no realistic prospect of any positive response. There was present the desire to maintain the appearance of continuing efforts to obtain work, mindful of the need to persuade the DSS and this Court that such efforts have been made. Thirdly a plethora of applications is no substitute for a properly focused job search.

(e) The fact that prospective employers questioned the Employees about their previous employment by the Bank is no necessary indication of any concern on grounds of stigma. It is perfectly consistent with a natural and normal interest to find out a job applicant's experience and expertise.

(f) The degrees obtained abroad by the Employees do not necessarily mean the same as those bearing the same description obtained here. Accordingly it is clear e.g. that an "A" level in Pakistan approaches an "O" level here, a BA approaches "A" level here and a Master's degree approaches a BA degree here: see the National Academic Recognition Information Centre for the United Kingdom's International Guide to Qualifications in Education ("the Guide").

(g) In view of the expert evidence (and indeed agreement of Counsel on both sides) as to the existence of racial discrimination in the job market and to the association between ethnic origin and membership of the Muslim faith and the prospects of obtaining employment, it is necessary to set out in each case the ethnic origin of each of the Employees and to say that each of the Employees is a Muslim. The fact that Employees may not have been conscious of any racial discrimination against them does not mean that it has not been practised against them. Likewise in view of the weight placed by Mr Langman in his evidence on what he perceived to be the high educational achievements of the Employees and their importance in respect of their job prospects, these have had to be explored in some depth.

(h) It is necessary for me to form some view of the impression which the Employees have made and in future will make on prospective employers. The scrutiny of them in course of their lengthy cross-examinations is quite unlike the scrutiny at an interview. The concerns, predispositions and value judgments of prospective employers are likely to be variable as are the directions and depths of their questioning. These are considerations I must bear in mind.

(j) Some serious criticism has been made by the Employees that their cross-examination was "hostile". I should make it clear that it was at all times fair and absolutely necessary in order to be able to form a view as to the credibility of each of the Employees, and to evaluate their accounts of critical events, and in particular interviews with prospective employers whom the Employees often failed to identify and practically always failed to call as witnesses. I should add that this exercise to elicit the truth was only possible because of the extensive discovery obtained from the Employees.

C. The Individual Cases of the Employees

(1) Mr Khan

172. Mr Khan made his claim for stigma damages on the 1st July 1996. His claim in these proceedings is that but for stigma he would have got within 1 or 2 weeks a temporary, and within 6 months a permanent, job as a swift key operator. In fact he never applied for any such job.
173. History

Mr Khan was born in Pakistan on the 15th January 1958. He is an ethnic Pakistani. In 1984 he obtained in Pakistan the equivalent of a BA degree in Punjabi literature and worked there for 9 years for the director of Public Relations as a writer of articles. When he arrived in England he did not have a work permit and accordingly he could only obtain work (for which he was not paid) as a part time shop assistant in a fashion business owned by one of his relatives, Mr Jami. He obtained a work permit on the 22nd January 1988. Through contacts he obtained an interview for a job with a Mr Fairfield of the Bank on the 18th February 1988. A record of this interview is to be found in the contemporary note of Mr Fairfield which refers to the facts that Mr Khan was intelligent and a good typist and had no banking experience and (though he conversed freely) his English was sub-standard, and due to his poor command of English it would be difficult to locate him freely within the Bank. It is significant that even at the Bank (which no doubt respected his fluency in Urdu, Punjabi and Hindi and tolerated a relatively low level of fluency in English amongst its employees) his problems with the English language stood out as an obstacle to his placement. He is not even now fluent either in written or spoken English. The job he was interviewed for was a lowly one, namely typist/clerk. In his witness statement he gave a totally misleading account of the high flying future with the Bank which he was promised at the interview. In fact all he was told was that he might win promotion if he did well. He began work in effect on a temporary basis on the 28th March 1988. His initial role was as a swift key operator. In August 1988 after a course he obtained a certificate in the basics of swift key. His initial assessment in September 1988 spoke well of the performance of his clerical duties, recommended that his temporary employment be made permanent and stated that it was too early to say if he had potential for promotion but that he might later be considered for a senior clerical position. His temporary employment was made permanent. In July 1989 his assignment was changed to that of test key authenticator. Both the test and swift key jobs were concerned with the transfer of money around the world. His second appraisal in July 1989 was "good" (not "very good" as he said in his witness statement, a lie he made strenuous, but vain, efforts to explain). His third (and final) appraisal for the period from May 1989 to April 1990 was "above average". Though the position of test key authenticator was considered "an officer's job" within the Bank, he was never promoted. He at all times had a routine job at a clerical level. It required only limited skill and reliability for honesty. It may be noted that in 1990 the Bank and the industry generally were beginning to phase out test key authenticators, replacing them with automated authentication. There was accordingly increasingly limited scope for employment of test key authenticators (one of the only two jobs for which he had experience and training) when Mr Khan was dismissed for redundancy in October 1991. His salary at that date (with local allowances) was £11,957.

174. My Impression

My impression of Mr Khan gained from seeing and hearing him in the witness box was most unfavourable. He is neither an honest nor a reliable witness and he has indeed gone to great lengths to concoct and adduce false evidence to support his claim in this action. I refer subsequently to some of the numerous instances of his dishonesty. This makes it difficult to accept any uncorroborated evidence of his on a contentious issue. His propensity to lie when it suits his purposes is not limited to these proceedings. He felt free to "doctor" his CV inventing jobs to improve his apparent qualifications for senior posts. Thus he included a job between February 1986 and July 1988 working for "Cash and Carry" in his application in March 1997 to London Transport. He likewise set out to mislead by stating that he had a degree in economics (a qualification in the sector of the labour market he was exploring) when it was in fact in Punjabi literature (no such qualification in that market). Turning to his employability, he had limited experience and training and he plainly had difficulties with both spoken and written English. Whilst his CV is well laid out, his written applications for jobs were so written and presented as to invite rejection. His spoken English is likewise poor. He had inflated views of his talents because he had had a job at the Bank and in his efforts (made at intervals) to obtain jobs, he exaggerated his talents, sought jobs beyond his reach and rejected as below him jobs for which he was equipped. His anxiety (aggravated by the demoralisation on his dismissal) may be an explanation for his lack of any sustained effort to obtain a job.

175. Job Search

Dr Barman, a doctor at the medical centre where Mr Khan has been a patient since 1989 and who has personally known Mr Khan since 1995, has told me in a witness statement that since 1991 Mr Khan has had some minor physical or occasional episodes of anxiety related symptoms which could have rendered him unfit for work for short periods of time, but not for a prolonged period, but that she was not aware of anything to suggest that he was substantially ill, physically or mentally, so as to be unfit for employment. On his redundancy Mr Khan made no application for a job as a test key operator or swift key authenticator. The reason was, as he told me, that some unidentified person at Coutts advised him that the stigma of having worked as such at the Bank would preclude any offer of such a high security job. But Coutts was at all times positive in its approach, encouraged a positive approach in the clients and (as Mr Khan himself told me) posted up advertisements for such jobs placed by prospective employers evidently willing to take ex-Bank employees. Clearly past employment by the Bank was no barrier to employment as a test key operator or swift key authenticator and Mr Khan knew this. Mr Khan likewise told me that Coutts told him to take out his period at the Bank from his CV which they helped him prepare: but his CV did nothing of the sort. The witnesses from Coutts stated unequivocally that Coutts would never have given any such advice. I fully accept their evidence and reject Mr Khan's evidence in respect of both alleged items of advice. His decision not to apply for such jobs is explicable only on the basis that he did not want such a job: either he wanted something better for which he was not qualified or no job at all. A job search itself and a job reflecting his limited talents were an indignity.

176. The burden of Mr Khan's job applications in 1991 and 1992 consisted of (i) cold calls on City institutions, insurance companies and professional firms leaving his CV in reception, a primitive, indeed hopeless, way of going about a job search doomed to failure; and (ii) the despatch of unsolicited letters together with his CV to a large number of prospective employers whose names he found in the Yellow Pages. Eighty of these were "returned to sender". He was concerned to make no inquiry why they were returned. This unfocused method of job search, whilst it might be effective for workers in the building industry, was totally unsuited to the jobs he was seeking and was fairly described by Mr Parker as being no more effective than throwing CVs out of a helicopter. It was merely going through the motions of a job search. He registered between October 1991 and March 1992 with Coutts and between March 1992 and May 1992 with three other agencies: all specialised in jobs in the City of London. He says that since March 1992 he has also registered with Adeco, Alfred Marks, Parkside recruitment and Freedom Recruitment. He was a competent typist, but he never registered with any typing or secretarial agency, because he considered himself above such jobs and that such jobs were for women. He likewise considered himself above any (unskilled) factory work or any manual jobs though (having listed "constructing buildings" in a Coutts form as one of his skills and having spent some three months digging and building an extension to a family home) he was clearly capable of it. Between 1994 and 1996 he made no serious effort to find a job. He sought to explain (in a note to his solicitors disclosed to the Bank) the absence of any job application in 1994/5 to his being a full-time student, but in fact he spent only December 1994 to March 1995 as a student. He undertook courses in the sphere of computers, a growth area but also an area which offered opportunities principally to the young and accordingly where his age was a handicap. In 1996 and 1997 in a small number of applications which he made in respect of specific vacancies he was at pains to stress the facts (a) that he had not been applying for jobs because the jobs he could get would prejudice his benefits position; and (b) that he had been stigmatised by his association with the Bank. The explanation for his lack of success was in my view a combination of three factors, namely his poor English, his inflated view of his talents and the sort of job which he was qualified to obtain, and his refusal to consider any job which he considered demeaning and any "low paid" job (including any temporary position) the acceptance of which did not provide enough to maintain repayments on his mortgage: for the DSS made all such repayments so long as he remained unemployed. The minimum figure acceptable to him during 1991-93 was between £9,000 and £10,000.
177. There is a contradiction between what he told Mr Langman ("he could not recollect the number") and what he said in his witness statement (five) as to the number of interviews he had. He had interviews with British Airways, HM Customs & Excise and United Parcel Service. I am not satisfied that any indication was given at any of them that stigma was a matter which would be taken into account. Mr Khan however claims that this was specifically so stated at interviews with small employers outside the financial sector and in subsequent letters (the originals of which he has inexplicably lost) from those employers, and I must consider each of these incidents in some detail.
178. Havitall (DIY) Ltd ("Havitall")

All the evidence in respect of this job application comes from Mr Khan and the witness he called to corroborate his evidence, Mr Notay the director of the prospective employer Havitall. Mr Khan told me in his oral evidence that a friend, Mr Shah, told him at the beginning of December 1991 that Havitall was opening a new shop selling building material and needed a shop manager, and that he only discovered that the opening was for an accounts clerk at the subsequent interview. (In his witness statement he said that Mr Shah told him that the post was as accounts clerk). He then telephoned Mr Notay of Havitall and on the 3rd December 1991 had an interview at the shop with Mr Notay. Mr Khan told me that the interview was conducted entirely in Urdu save for one or two sentences which were in English. Mr Notay said that it was conducted principally in Punjabi and Urdu with some English. Mr Khan told me that he was unclear whether Mr Notay knew before the interview that Mr Khan had worked at the Bank. Mr Khan said that at the outset of the interview he handed him his CV, but he also said that it was only 10 minutes after the interview began that Mr Notay's mood changed on discovering Mr Khan's previous employment by the Bank. Mr Notay told me that he did not think that he was shown the CV at the interview. Mr Khan in his oral evidence told me that Mr Notay made it quite clear that he would not appoint anyone who had worked for the Bank, the reason being that his clients (who had lost money with the Bank) would not tolerate it and indeed that, if he did employ Mr Khan as accounts clerk, Mr Khan would be at risk of violence from them. Mr Notay in contrast told me in his oral evidence that there was no reference to the reaction of clients, still less to any threat of violence by them: and that he made it clear at the interview that the reason why he would not appoint Mr Khan was because he could not trust anyone employed in any job for any length of time by the Bank. (This was so though neither he nor any of his family had lost any money in the collapse of the Bank). It should be pointed out that Mr Notay's oral evidence was a departure from his witness statement where he stated that:

"I thought it would be inappropriate to employ Mr Khan, given the strong feelings about [the Bank] within the community in which I worked."

179. According to both Mr Khan and Mr Notay the interview was followed up shortly after by a letter dated the 10th December 1991 to Mr Khan on Havitall printed notepaper with an address at 184 Garrett Lane Earlsfield London SW18 4ED

"Dear Mr Khan

THE POSITION OF THE ACCOUNTS CLERK:

Thank you for attending the interview concerning the vacancy on Tuesday 3rd December 1991.

After long and careful consideration we are sorry to inform you that we are unable to offer you this position. As we frankly indicated at the interview that your most unfortunate link and background with the notorious Bank of Credit and Commerce (BCCI) may also prevent most employers from offering you a position.

Unfortunately, we have to say that your unfortunate BCCI background has been the sole factor in coming to our decision.

We are very sorry for this most disappointing reply but we believe in being frank and honest in our decision so that you may seek to amend your particulars of employment to secure an employment in future.

Yours sincerely

[signed p.p.]

B. Notay

Director"

(The underlining is added to words in this letter and to similar words in the Settlement Consultants' letter to which I shall shortly refer). The letter is very curious. It was totally unnecessary to inform Mr Khan of the result of the interview: for the evidence of Mr Khan and Mr Notay was to the effect that he was told this and the reasons for it in no uncertain terms at the interview. Mr Notay's explanation of "courtesy" for his writing the letter is not convincing, still less for the formal and stilted language of an amateur legal draftsman. There was no "long and careful consideration": indeed there was no consideration at all after the interview.

180. Again according to the evidence of Mr Khan and Mr Notay, no reference was made at the interview to the effect on other employers of the link with the Bank nor did it apparently ever occur to Mr Notay that Mr Khan should (dishonestly) "amend the particulars of employment to secure an employment in the future": indeed in his evidence he denies that he made any such suggestion.
181. It is quite clear from the accounts of Havitall that that company could not have afforded to employ a senior accounts clerk at the salary of £7,000 per annum which Mr Notay says he had in mind and none was subsequently employed. (At most it is possible, though I do not think that is so, that another applicant held the job of accounts clerk just for a very few days).
182. There was clearly no need for any such employee. As Mr Notay accepted, this was the height of a serious recession which particularly affected his company's line of business (namely home improvements).
183. Havitall was in fact only incorporated on the 17th December 1991 (after the date of the alleged interview and letter) and the headed notepaper was only ordered after incorporation and cannot have been supplied before some date in January 1992.
184. An examination of the contemporary documentation in the course of Mr Notay's evidence revealed that during December 1991 another company owned by Mr Notay and his brother, Modern Homecare Limited, owned 184 Garrett Lane and carried on its business there.
185. Mr Notay was only appointed a director of Havitall on the 6th May 1992.
186. In my view the story about the interview and the letter (on its face from Mr Khan's point of view "too good to be true") are a concoction made up by Mr Khan and Mr Notay to deceive the Court. There never was a job or job offer. Mr Notay's performance as a witness was such (and in particular his contradictions and variations in his evidence were so numerous and serious) that he lacks any credibility. Mr Khan broke down in tears whilst cross-examined on this story when it was suggested to him that he had asked Mr Notay to write the letter in the terms in which it was written: he knew that the suggestion was true and he had been found out.
187. Settlement Consultants ("SC")

The evidence in respect of this job application was that of Mr Khan and Mr Butt, who trades as SC, the witness he called to corroborate his evidence. The divergencies between their evidence were significant as was the fact that throughout this alleged episode Mr Butt had as minimal knowledge about Mr Khan as Mr Khan had about SC. Mr Butt told me something about SC. It appears that it advertises its services of providing professional advice in respect of insurance claims, personal injuries, compensation, employment, education and other matters to the Asian community. This includes providing legal advice and investment advice (though alerted to the provisions of the Financial Services Act Mr Butt prefers to call it guidance) and holding clients' monies. Mr Butt, though he has an LLB degree from the University of Punjab, has no professional qualification or licence to carry on these activities. His principal source of income is the receipt of commission from financial institutions and brokers to whom he sends his clients. He also receives 10% of the gross profits of some 15 "principal consultants" to whom he licences the use of the name "SC" and affords contacts with the financial institutions. He also receives fees from clients for litigation and other services provided. His employed staff was at all material times limited to two persons, a personnel officer (Mr Hayat) and a clerk (Mr Akbar).

188. Mr Khan's account to me of what Mr Butt told him was that SC gave advice on "financial things and how to invest money", and did some immigration work. Mr Khan says that he saw two advertisements for the services of SC in a post office; he made a cold-call by telephone to SC for a job, he said nothing about his employment record, and yet Mr Butt (without his knowing anything about him) said that he had a vacancy for a senior accounts clerk and invited him to an interview. Mr Butt in his evidence said that shortly before this telephone call he had decided to take on a senior accounts clerk who would also have a role in attracting new clients and in financing a number of projects which he wanted to develop (interestingly enough a post never subsequently filled). Mr Butt however (contrary to the evidence of Mr Khan) told me that he did not mention any post in the course of the telephone conversation. The interview was held on the 7th March 1992 at a maisonette in a residential property in an ordinary residential street with no outward sign that any business was carried on. The interview was conducted by a panel (according to Mr Khan) of four persons and (according to Mr Butt) three sitting at a table. They included Mr Butt, Mr A Akbar (a principal consultant) and Mr Shaukat Hayat (the personnel manager). A Mr Mohammed Arshadi was present for part of the time. (It is remarkable that a panel should be assembled after such a "blind" telephone call). There is some confusion about what job was discussed. Mr Khan in his oral evidence first said it was a management job which would lead to his becoming a consultant, but later said that it was a senior accounts job. Mr Butt stated that it involved marketing and raising finance, giving advice to clients and holding monies for them, (though Mr Khan had no relevant experience or qualifications) and that Mr Khan would have later become a consultant. Mr Butt in his first witness statement said that Mr Khan had "good language skills". Mr Butt could not explain why he said this, for there is no reference to this in Mr Khan's CV and both Mr Khan and Mr Butt stated that no reference was made to language skills at the interview. (I do not accept Mr Butt's evidence that Mr Khan handed him a CV not disclosed in these proceedings stating that he spoke Punjabi and Urdu). There is a dispute about whether any reference was made at the interview to Mr Khan's business contacts: Mr Khan says that there was no such reference, but Mr Butt says that there was, though what these contacts were is unknowable. According to Mr Khan, all went well until he was asked to produce his CV which disclosed that he had worked for the Bank: thereupon immediately two of the interviewers other than Mr Butt became very hostile, one saying that he should be shown the exit door; and the interview ended in his rejection before ever the question of salary had been broached and before any opportunity had arisen to refer to his language skills or his business contracts or indeed his qualifications for the job. Mr Butt says that it was not the production of the CV revealing previous employment by the Bank that brought the interview to an end, but the revelation by Mr Khan that he had a special role in transferring money. Mr Butt also said that he was worried about the insurance implications of employing Mr Khan. I am satisfied, after hearing Mr Butt's attempted explanation of these anxieties, that this was pure fabrication. Mr Khan told me that Mr Butt was apologetic as he showed Mr Khan to the door saying that it was not his fault to have worked for the Bank; that after the interview, he reached the conclusion that he had only been invited to the interview to be made fun of and humiliated and that the interviewers were time wasters: indeed he had doubts whether there was a job on offer; and that after the interview he did not want a job with SC. Nonetheless Mr Khan said that he decided to telephone Mr Butt to find out if SC were serious about the job or making fun of him and he asked if he could do voluntary work on Sundays for SC. According to Mr Khan it was to do typing. Mr Butt refused. On the 19th March 1992, (before the telephone conversation according to Mr Khan, but after it according to Mr Butt's witness statement and before and after it according to Mr Butt's oral evidence) unsolicited SC wrote a letter to him in the following terms:

"Thank you for attending the interview on Tuesday 7 March 1992. Unfortunately your application was unsuccessful. Although you proved to be an ideal candidate for the position of the Senior Accounts Clerk we regret that your background and links with the Bank of Credit and Commerce influenced the panels' decision in rejecting your application.

May I also take this opportunity of apologising for the comments made by a member of the interview panel. The comments were unjust but you will no doubt accept that such comments are unfortunately common knowledge world wide and reflect the international publicity expressing the general view of the business community.

You will appreciate that many thousands of depositors who have lost their investments with the notorious BCCI; many of whom could well be our clients; and we cannot risk business opportunities by employing anyone connected to the formerly collapsed and bankrupt bank, BCCI.

This is not a personal comment on your character.

It is also regretted that the only experience of work that you have is with BCCI. You have not worked anywhere else in your financial career. Thank you for showing your interest in this client.

Yours sincerely,

Shaukat Hayat

Personnel Manager

Dictated by Mr Hayat and signed in his absence."

[Underlining added]

The letter is quite remarkable for a number of reasons:

(a) the letter refers to an interview on "Tuesday 7th March 1992". The 7th March 1992 was a Saturday, not a Tuesday;

(b) since both Mr Khan and Mr Butt agree that the outcome of the interview was plain at the interview and that his job application was rejected out of hand, there was no need for any such letter, still less a letter in the terms in which it was written, or for communication of the fact that "unfortunately your application was unsuccessful".

(c) the statement that Mr Khan was an "ideal" candidate (which is perhaps unusual in any rejection letter) is doubly extraordinary since the interview was brought to a close before his talents could be explored and since Mr Khan had (so far as can be seen) no relevant experience or qualifications in respect of SC's business.

(d) the letter and the words underlined remarkably echo the Havitall Letter. The reference to the "world-wide publicity" and "international publicity" and the limit of Mr Khan's experience to the Bank are plainly designed to convey a message to a reader other than Mr Khan.

189. Mr Butt made it clear to me that he did not think that Mr Khan was guilty of anything, but said that though the motto of SC is:

"Human suffering is the first call we must answer"

Mr Khan (so far as he was concerned) was a pariah because of his past employment. To corroborate that this was his deep conviction, he went on to say that he never knowingly would even act for an former employee of the Bank. This was a lie: it was apparent from his own evidence and correspondence between himself and the Liquidators that he acted for a number of them. One client of SC was a Mr Lutfullah Khan, an former employee of the Bank who lives in Pakistan and for whom SC had acted in a dispute with the Liquidators. Mr Lutfullah Khan was a close friend of Mr Khan. I am satisfied that he was the link between Mr Khan and SC. I am also satisfied that the services which Mr Butt and Mr Khan agreed should be provided by SC were the writing of the bogus letter and the giving of false evidence by Mr Butt at this trial in support of his case. Mr Khan broke down again when questioned about the authenticity of the letter and he was unable to continue his evidence, which had to be adjourned. He plainly appreciated that he had again been "found out". Mr Butt is not a credible witness any more than is Mr Khan. There was never either a job or a job application.

190. Further efforts

Mr Khan went on in his evidence to tell me of further applications made and interviews attended. In his witness statement he said:

" ... I constantly receive letters of rejection or letters advising me that I would have been suitable for a position if only I did not have [the Bank] on my curriculum vitae."

In cross-examination he revealed that the only letters of this description which he received were the Havitall and SC letters. The passage in his evidence was a further patent attempt to mislead. I am not satisfied that he was ever rejected on this ground.

191. Contacts

Mr Khan said in his witness statement that he did not approach any of the contacts he had made working at the Bank, as he was embarrassed by the publicity and scandal. No details have been given who these contacts were and I do not accept that there were any untapped contacts who (but for the collapse of the Bank) might have assisted him to get a job or that he has suffered any loss in this regard.

192. Conclusion

The claim made on behalf of Mr Khan that (but for stigma) he would have been able to obtain employment as a swift key operator is hopeless: he never did apply for such a job though applications were invited from ex-Bank employees. He did not want the job, and stigma would have been no barrier in his way. I do not think that Mr Khan has suffered any financial loss by reason of the Bank's breach of the T&C Term or any stigma, nor that there is any real possibility that he will do so in the future. He has not persuaded me that stigma has caused any failure to obtain a job or any loss of a chance to obtain a job (whether through contacts or otherwise) nor that this is in any wise likely in the future. His failure is explicable on other grounds. He is handicapped by his poor English: he has limited talents. The view may fairly be taken that he declined to apply for the job for which he was qualified (as a swift key operator) and he scarcely made serious efforts to obtain another. He preferred to rely on his benefits rather than cope with the indignity of a serious job search. This (and most particularly the paucity of his job applications) may partly be attributable to his bouts of anxiety. It may partly be due to his resentment or failure to come to terms with the loss of his job at the Bank. To make up for the weakness of his case he has fabricated evidence on a grand scale. His case fails on the facts.

(2) Mr Mayet

193. Mr Mayet lodged his proof on the 30th June 1997. He claims that but for stigma "he would have been able to obtain permanent employment as a supervisor, credit administrator within six months of his redundancy". He did not in fact apply specifically for such job during that period. Mr Mayet was born in India on the 23rd December 1944, and educated in Burma and Pakistan. He came to live in the UK. Mr Mayet started work for the Bank in June 1979 as a clerk/cashier. Despite shortcomings in his communication skills, in 1985 he was promoted to supervisor, the job which he held when made redundant in October 1991. Mr Mayet's final salary was £19,266 (including London weighting). Over the course of his career, he was especially effective in introducing customers (including friends and acquaintances) to the Bank. He told me that in all he procured deposits totalling US$12 million and that he was highly valued by the Bank for this service winning two "performer of the month" awards for this achievement. This may have played some part in his promotion. He passed on to these customers assurances as to the Bank's health and well-being given by his superiors at the Bank when in 1990 rumours about the Bank were reported in the press. His annual staff appraisals were initially very good, but later less so. His 1988/89 evaluation reads:

"Good routine worker, attends to the customers satisfactorily. Must improve communications skills."

He chose not to use the services of Coutts. He applied for 20 or more jobs between 1991 and 1992, but only received letters of regret; he also made over 50 telephone calls and approached personal contacts without success. Mr Mayet produced from a prospective employer, Assaggaf Trading Company ("Assaggaf") a letter dated the 13th January 1992 ("the Assaggaf Letter") addressed to Mr Mayet which stated that the adverse publicity surrounding the Bank was the reason why it refused his application for a job. The genuineness of the Assaggaf Letter has figured prominently in the evidence. In February/March 1992 he was offered and accepted the offer of employment made by a Mr Koubani with Chartfactor Limited ("Chartfactor"), a company dealing in agricultural commodities. Whilst so employed he received a salary of £13,200 a year and a payment of £1,200 per annum into a non-contributory pension scheme. His employment continued until April 1996 when the company collapsed. For almost the whole of this time he was the sole director and he held the issued share capital as nominee for Mr Koubani. Since that time Mr Mayet has remained unemployed, though he obtained a temporary part time job with a firm called Oil Gas Industry Services at £4 per hour, working anything up to 4 hours a week. He has made 120 job applications and only been invited to one interview by American Express. He was then questioned about his experience at the Bank. This, as he acknowledged, was necessary to determine his aptitude for the job he was applying for, and the interview was perfectly fair. In his statement he said that he also had a couple of informal interviews with shop owners. He has registered with a number of employment agencies. He received from the Bank a house loan of £43,000 and in 1995 remortgaged his house to the Halifax Building Society. The Bank gave a discount of £4,000. His mortgage instalments are £260 (now £290) per month.

194. I must express my view of him and his evidence and then turn to the salient features of his evidence. Mr Mayet made an unimpressive witness. He showed himself to be neither straightforward nor honest. He is ready to lie whenever it suits his purpose. He deliberately set out to deceive the Court in respect of the Assaggaf Letter. He consistently lied in his job applications: indeed he admitted that in none of them was there a single truthful account of his educational history. English is his fourth language and both his spoken and written English are far from being easy to understand. This did not matter at the Bank which was an environment where fluency in English was not at a premium. His skills are limited. He lacks any formal or specialist banking skills or qualifications and, after he left the Bank, his banking experience became outdated. Whilst at the Bank he took one four day and one five day internal course (on which he obtained a 42% mark) but he took no steps, though advised to do so, to take a course outside the Bank to improve his limited banking knowledge; nor did he ever take any steps to improve his oral or written English. He was valued by the Bank because of the deposits made by his contacts. His completed job applications leave much to be desired and invited rejection without the offer of an interview. He was not well equipped to compete on the labour market in 1991, still less after he left Chartfactor in 1996. At an interview he would make an unimpressive candidate. I would not expect him to find a job with any financial institution, save possibly at a menial level. Mr Mayet since childhood has had Perthes disease (avascular necrosis) in his right hip joint. Dr. Hariharan (a doctor practising at the medical centre where he is registered as a patient) has expressed the view that this condition would not have prevented him from working at a desk job since 1989. But Mr Mayet has told me that since leaving the Bank his hip problem has prevented him doing any lifting, walking more than 100-150 metres or sitting continuously for a long period, all of which limit the range of jobs available and rule out manual work or work as a driver; and his wife's ill-health has prevented him taking a job requiring a late shift ending after 9 p.m. I think that (quite fairly) he told Mr Langman that he could not attribute his current unemployment to stigma.
195. I turn now to specific topics on which he gave evidence:

(i) Academic career and university degree

196. The examination of Mr Mayet's various job applications reveals a series of wholly inconsistent versions of his academic career. The schools and universities he said that he attended, the dates he attended, the subjects in which he obtained his degree and the class of the degree he obtained materially vary in one job application from another. It is apparent that in all his job applications he said whatever he thought best served his interests regardless of the truth. I am not satisfied that Mr Mayet ever obtained the university degree which he claims to have obtained at the University of Rangoon. He has not produced a copy of the degree certificate or any other evidence of the grant of the degree. If, contrary to this finding, Mr Mayet did have such a degree, I do not think that such degree is a meaningful qualification. He obtained his job with the Bank (as he told me) by deliberately lying that he had a degree from the University of Karachi because the Burmese degree was not recognised or not highly regarded. He happily adopted the suggestion in re-examination that he did not repeat this lie after he left the Bank, but later in answer to me acknowledged (as he had to) that this was a lie: the CV he circulated with job applications after 1991 contained the same lie.

(ii) Previous employment

197. On the 6th November 1974 prior to his employment by the Bank (as the letters of appointment reveal) Mr Mayet was employed by Omega, initially as a despatch clerk/packer and for the last 3 weeks of his employment as assistant storekeeper. (He was not, as he told Mr Langman as well as the Midland Bank on his job application to them, from 1977 a telephone sales clerk). On his application for a job on the 5th September 1997 to Hitachi Credit, in answer to a request to supply for reference purposes the names of his last two employers, he omitted mention of Omega and gave the name of a friend's company, Letas Limited, which had never employed him. This was a lie plainly designed to bolster his prospects of obtaining a desk job.

(iii) Ethnic origin

198. In his supplementary statement signed on the 5th February 1999, Mr Mayet stated:

"9. I understand that the Liquidators are now alleging that I was unable to find work, not because of the stigma of my association with [the Bank] but because of my ethnic origin and race. They appear to have labelled me incorrectly as being 'of Pakistani origin ...'.

10. Therefore although I have only lived in India for three years, I consider myself of Indian origin rather than Pakistani or Burmese."

Yet in his job application to the Midland Bank dated the 2nd August 1997, he stated that his ethnic origin was Pakistani and not Indian. His explanation for this abrupt change of mind was a conversation with his solicitor. The true reason was to head off the thrust of expert evidence that Pakistanis have exceptionally high unemployment rates. In truth, as he stated in the job application, fairly and reasonably he considers himself as of Pakistani origin.

(iv) Non use of Coutts

199. Mr Mayet, when he was declared redundant, did not use the services of Coutts. The reasons given in his witness statement were that he simply was depressed and not in the right frame of mind to concentrate on searching for jobs and that in October/November 1992 colleagues told him that Coutts had only a 10% success rate in placing people. The explanation so far as it refers to Coutts' success rate is clearly made up. The success rate of Coutts was much higher than the rate of 10% and would not have been known in October/November. I think that Mr Mayet did not use Coutts (at least in part) because he had plans to set up in business, to which I refer to below. In his Particulars Mr Mayet gave the same explanation for not registering with employment agencies. He told me that this was not true. The reason was that he had no serious intention of obtaining any job after he agreed to accept Chartfactor's offer of employment in February/March 1992.

(v) Job applications

200. Mr Mayet gave contradictory accounts of the efforts to find employment made following his redundancy. As I think he acknowledged, he made no serious efforts before he joined Chartfactor. In his first witness statement he explained that on his redundancy from the Bank he did not feel positive enough to look for work: what he did not reveal was that he set up Kaz International Limited and that he became a director of that company the day he became redundant. Virtually all the applications which he made were hopeless unsolicited applications to banks and financial institutions made at the height of the recession which particularly affected banking. He was offered the job with Chartfactor in February or March 1992 by a friend, a Mr Koubani, who had invested in the Bank, and he saw no point in making any further serious application before his job as director and employee of the export/import company began in August 1992. When there, he saw his future with Chartfactor and had no wish, and made no effort to obtain other employment. I am satisfied that he made no serious effort, to obtain other employment after this employment ceased in April 1996. He was at that date doubly disadvantaged by the facts that he had not obtained any job-linked vocational or professional qualifications and had not since his time at the Bank updated his skills or learnt new skills. From the date in late 1996 when it became clear that the Employees might have a claim for stigma damages, Mr Mayet was anxious to be able to portray himself as having made continuous efforts to obtain a job. He therefore set out to generate a more respectable list of applications. He even attended a job centre on the 15th November 1996, 7 months after he left Chartfactor. (I do not accept his evidence that he attended a job centre on the 16th April - an event not even mentioned to Mr Langman). His job search was little more than a sham: he merely went through the forms. Of the limited number of applications made, many were made by telephone and informal cold calling. He set himself a minimum salary level of some £17-18000 (far in excess of what he received at Chartfactor), reduced (as he told me) to £13-15000 in 1997. This was a level which experience must have told him long ago was well beyond what was achievable by him in the labour market. To mislead the Court as to these endeavours, in the Particulars he included (amongst his list of applications for jobs) applications to two companies, one of which he had been the owner and the other of which he had been the director, well knowing that neither company had ever traded and that no such application had ever been made, and repeat applications to businesses in which he had been told that no vacancy existed.

(vi) The Assaggaf Letter

201. The only evidence adduced by Mr Mayet that stigma played any part in his periods of unemployment is the Assaggaf Letter, which purports to state that employment of him was being refused because of the ill-repute of the Bank. Mr Mayet in his evidence told me that this letter was sent to him on the date which it bears in response to his earlier application for a job (which has not been produced). It reads as follows:

"Dear Mr Mayet

POSITION IN OUR TRADE FINANCE DEPARTMENT

We refer to your recent application for a position in our company and thank you for the interest in our company. While we appreciate your varied experience in Trade Finance which can be useful to our company, we regret to say that your recent employment background and the adverse publicity received by your previous employer will not be helpful in promoting our business.

We trade in a very sensitive market and all our marketing and business promotion is based on personal contacts and relationships developed on individual basis. Although we received excellent references about you from our contacts in the kingdom [sic] but it is with great regret that we have to decline your application.

We wish you best of luck in your future endeavours.

Yours faithfully

[signed]

A.Deia

General Manager"

In considering the genuiness of the letter, the following facts should be noted:

(1) there have been produced to me two slightly different versions of this letter, for which there is no satisfactory explanation;

(2) the letter goes out of its way to praise Mr Mayet's references, but Mr Mayet told me that he had sent no references with his letter of application;

(3) the business of Assaggaf has no connection with the job Mr Mayet apparently thought he was applying for;

(4) the language of the letter is remarkably informative and supportive of Mr Mayet's claim for a simple refusal letter;

(5) the letter has printed on it two registration numbers, namely "CR4030094145" and "JCC43222". The "CR" registration number is the registration number with the Ministry of Commerce and the "JCC" registration number with the Jeddah Chamber of Commerce. It is clear both registrations took place on the 7th March 1993 (and not before) and accordingly the letter paper could not have been printed until after that date or the letter written until after that date;

(6) I directed that the parties should by their representatives interview Mr Assaggaf (the proprietor of the business) and at this interview, when faced with the evidence that the two registrations were only made on the 7th March 1993, Mr Assaggaf conceded that this was correct and that the secretary who typed the letter must have typed 1992 instead of 1993. (This would in fact only post date the letter to the 13th January 1993). Mr Mayet in his evidence made clear that he wrote no such letter in 1993 when he was employed by Chartfactor.

202. Mr Assaggaf himself originally made a statement on behalf of Mr Mayet that he himself had written the letter on the date it bore and that "A Deia, General Manager" was himself. This was despite the fact (as the status report produced on behalf of Mr Mayet revealed) Mr Assaggaf was proprietor and someone else (a Mr Aluday) was shown as general manager. In a letter which he signed to Mr Mayet's solicitors dated the 8th February 1999, Mr Assaggaf appears to confirm that Mr Deia, the General Manager (and not he himself) was the author of the Assaggaf Letter. It is clear that the Assaggaf Letter is bogus, created and used to deceive the Court and that Mr Mayet likewise gave perjured evidence asserting its genuiness.

(vii) Contacts

203. Mr Mayet told me that some of the (unidentified) contacts he introduced to the Bank (all from abroad) suffered heavy losses with the collapse of the Bank and held him responsible for these losses and that this impaired his prospects of obtaining employment through these contacts. But there was nothing but this broadest of allegations. No particulars were given of who these persons were, what loss they occasioned, how they manifested their view that he was responsible, or what jobs they could assist in obtaining and Mr Mayet was interested in accepting. Details are necessary to enable the Bank to test the evidence and to enable the Court to evaluate any loss. I am not satisfied Mr Mayet has established any loss arising from dilution of his contacts and in particular any loss of job opportunities.

(viii) Conclusion

204. I am quite satisfied that stigma has occasioned no financial loss to Mr Mayet. He has failed to establish that the breach of the T&C Term has occasioned any rejection of a job application or any loss of a chance of employment and I can see no real prospect that it will do so in the future. The evidence does not establish that there has been any loss of prospects of employment by contacts disillusioned with him by reason of the Bank's collapse. To fill the vacuum in the evidence, Mr Mayet concocted the Assaggaf Letter but it exploded in his face. There are a variety of possible explanations for his failure to obtain work besides stigma and his ethnic origin. These include his failure to strive to get a job, his weakness in English, his lack of qualifications, his physical disability, the unrealistic job levels and salary levels which were alone acceptable to him, his age of (almost) 47 when dismissed and (as the years passed) his increasing age and the length of his unemployment. These will be the obstacles in the future. Since no loss can be established, no question of mitigation arises, but if it did I would (save in respect of obtaining his employment by Chartfactor) be minded to find a total failure to make a serious effort to obtain employment and accordingly the most serious breach of that duty.

(3) Mr Husain

205. Mr Husain made his claim for stigma damages on the 21st January 1996. He claims in this action that but for stigma he would have been able to obtain permanent employment as a payroll clerk within 6 months of his redundancy. Mr Husain was born on the 28th February 1947 in Northern India. His family migrated to Pakistan when he was aged 5 or 6. His education was in Pakistan and in 1970 he obtained a BA pass degree at the University of Karachi. He came to England in 1972. Both his spoken and written English have always been weak, and he has undertaken no course of study or training to improve either. Mr Husain joined the Bank in May 1980, following a period working as a payroll clerk for a firm of accountants. He worked in the personnel department. He established and ran the salary section of the Bank. He had no qualifications in accountancy or payroll. He failed the first (intermediate) stage of the Chartered Accountants exams and did not re-sit them. He has no specific banking knowledge or qualification and has made no effort to acquire either. His final salary at the Bank was £21,009 plus London weighting (totalling £24,000 per annum). In October 1991, Mr Husain was made redundant. Thereafter he was in receipt of benefit at the annual rate of £6,350.24 until March 1992 when it was increased (reflecting the cost of his mortgage) to the annual rate of £12,131.76. He registered with Coutts and attended various courses. In October 1997 and again in July 1998 he attended 3 month Jobclub courses with IML a preferred provider of employment services and advice to unemployed people. He registered with a number of agencies (including in December 1993 the Employment Service Overseas Unit) and has (he says) made over 500 applications for alternative employment for a very wide variety of jobs, but has only been called for interview on a handful of occasions. In particular, Mr Husain pursued the idea of becoming a sub-postmaster but to no avail. He has never obtained a job. Dr Angela Lewis, his doctor since 1986, states in a witness statement that, so far as she is aware, Mr Husain has been fit for employment since 1991.
206. I should first say a few words on my impression of the witness. Mr Husain took every opportunity to emphasise what a devout Muslim he is. Indeed he could not resist making an offensive and disparaging remark about adherents of other religions. But though he frequently reminded me of his duty as a Muslim to speak the truth, I regret to say that his evidence revealed him to be thoroughly dishonest, untruthful and unreliable. In his evidence (as in his applications for employment), he said whatever he thought best served his purpose. He lied (for example) about his work experience, his position at the Bank, his performance and disciplinary record, his involvement in his charity, the time devoted to his book, his job search and his written applications to POCL. His attitude is demonstrated in an exchange during cross-examination when asked about lies in his application forms:

"Q. 'You do not have to tell the truth if you do not think that lying will harm [the prospective employers]?'

A. 'It depends upon the situation. But it is not a criteria.'"

By reason of the frequency of contradictory statements by him on so many topics, it is often difficult to decide which is true and which is false. His spoken English was not fluent. His difficulties with the English language are apparent on his application forms. Though Mr Young, a programme leader at IML (whom Mr Husain called as a witness) spoke of an improvement in his application forms during his second course there, I could not detect this when I read them.

207. I turn now to specific topics on which Mr Husain was cross-examined.

(i) Academic career and university degree

208. I regret to say that Mr Husain in his job applications (as in his evidence) gave various and inconsistent accounts of his academic career. I cannot accept his explanation for his repeated errors as innocent mistakes. Closer to the truth was his explanation of the existence of "pressure" on him, which I understand to mean his anxiety to improve his prospects of success by saying what his prospective employers wanted to hear. He deliberately made false claims e.g. to "A" level in political science, mathematics and history, even as he made false claims to experience in "Public Relations Management in the Financial Sector" to improve his CV and his chances of a good job. His university pass degree at the University of Karachi, though variously stated to be a three year course, was in fact a two year pass degree, which (according to the Guide) is "generally considered to approach GCE Advanced Standard". This accords with my evaluation of his educational standards and achievements which are modest indeed. Though Mr Husain in his witness statement speaks of it as a degree in economics, in fact economics was only a part of the course (which included advanced Urdu).

(ii) His career at the Bank

209. Mr Husain had a comfortable undemanding clerical job at the Bank which he generally performed well and which fully satisfied his abilities and ambitions and left him ample scope to pursue his interests in writing and the religious charitable foundation which he established, Maktab-E-Rasool, Charity Reg. No. 802441 ("the Charity") of which he is managing trustee. Though encouraged by the Bank, he had no interest in improving himself or widening his experience. He told Mr Orriss at the time that he appreciated that his limited qualifications and absence of banking knowledge might make it difficult for him to establish himself in a new area. He was and is essentially very limited. Mr Husain's personnel file reveals various problems of misconduct and lack of commitment during his employment by the Bank together with mediocre performance appraisals. These criticised his lack of priority for this work for the Bank and included one formal warning. It is fair to say however that as late as 1991 he received commendations for particular tasks undertaken (e.g. a new format for P11D forms) and Mr Orriss gave evidence that he was competent to obtain a job as a payroll clerk. According to Mr Munn he was a "very satisfactory employee". I find this assessment impossible to reconcile with other evidence of Mr Munn which I do accept. For in particular according with the views and experience of Mr Orriss and also according to Mr Munn, Mr Hussain was an example of a number of employees whose unsatisfactory record at the Bank would have led to his dismissal if employed by another bank, but who (because of the culture of the Bank) survived in his post there. Mr Husain falsely told his expert Mr Langman that on his annual assessments he always obtained "A+" or "A". This was totally untrue as he well knew. He said in his own witness statement that in the years 1988-1990 he obtained "B", "C+" and C+".

(iii) His Encyclopaedia and the Charity

210. Mr Husain is, as I have said, a devout Muslim. Whilst employed by the Bank, as well as setting up the Charity, he began writing a religious work. The manuscript text is some 700 pages. The preoccupation with this work and the Charity at the cost of the work which he was paid to do at the Bank was the occasion for dissatisfaction with him at the Bank. The principal activities of the Charity appears to have been trying to prepare for publication and to obtain a publisher for his book and paying for Mr Husain's regular (and often lengthy) trips to Pakistan and Saudi Arabia generally connected with the book. The book proved unpublishable. (The other principal item of expenditure was payment for his brother-in-law to take a course in catering at Merton College). In a number of applications for jobs in 1997 and 1998 he explained the gap in his employment between leaving the Bank and the dates of the job applications as a period expended in writing the book and in his activities for the Charity. I believe that this is essentially true and that this was the priority in his life throughout this period, though Mr Husain tried to explain these statements in his job applications as falsehoods justified by his need to obtain the jobs in question.

(iv) Written job applications

211. His written job applications revealed his difficulties with the English language. They were stilted and ungrammatical, replete with spelling mistakes and the wrong choice of words and wrong word order. As Mr Munn said, his strength was in figures and processing figures, not in writing English. Such applications invited rejection without the need for an interview. As he acknowledged, he was only fitted to apply for a technical or manual job, and there was limited scope for a manual job since (as he told me) he cannot lift any weight.

(v) Efforts to obtain a job

212. Mr Husain (apart from Coutts and the Employment Service) had contact with only three agencies, all of which were accountancy specialists. He was not willing to engage in temporary or part-time work though this can often lead to permanent employment, nor was he willing to do manual or shop-floor work. The reason was, as it seems to me, that such work was considered too lowly. He made 43 applications in January 1992. In the 4½ years between April 1992 and September 1996, he only made 49 applications. Mr Husain attributes this low number to his efforts to obtain a job with the Post Office Counters Limited ("POCL") though only four attempts were made to obtain a job with the POCL between 1991 and 1993. I do not think that this affords any justification or explanation. The applications were in my view hopeless: Mr Husain (as he must have known) did not have the means, the knowledge or the experience required. It is to be noted that the applications were supported by deliberately false statements as to his means and stated or implied (again quite falsely) that he had banking facilities (at the least provisionally agreed) when in fact he had not even approached a bank for such a facility and had no such arrangement at all. (Mr Husain's tentative evidence of a conversation with the manager of a branch of Barclays Bank was totally unconvincing). The number of applications for jobs greatly increased from September 1996 (and again in February 1997) but even the scale, scope and intensity of his job search was very limited. In these applications he set out deliberately to exaggerate (and thereby falsify) his experience and qualifications. For example he described himself as having considerable experience in personnel and public relations when he had none in public relations and his only experience of personnel was his pay roll function. This burst of activity is plainly attributable to his desire to show willingness to take a job in his anticipated claim for stigma damages against the Bank, though I do not think that he seriously intended to take up any of them. By this time he had already been out of work for 5 years and was approaching his 50th birthday. He was already long term unemployed.

(vi) Interviews

(a) With Employers

213. Mr Husain had four interviews on applications for employment. He had an interview with Hyde Housing Association for a position as senior finance officer on the 31st August 1993. By letter dated the 6th September 1993 he was informed that the quality of the short-listed candidates was extremely high and that the panel had considered his application and interview performance very carefully before finally deciding to offer the post to another candidates. On the 3rd January 1997 he attended an interview at 2Care for the position of payroll and credit control assistant. I see no relevant significance that the application form required him to state whether he had been convicted of a criminal offence. His lack of credit control experience was an obvious reason for preferring another candidate. Mr Husain inquired whether there were any vacancies and had an interview on the 25th April 1997 with Tesco Stores Ltd. The posts available were for manual work which was not suitable having regard to Mr Husain's physical health. On the 13th May 1997 Mr Husain had an interview with Surrey Heartlands (NHS) Trust for the position of payroll clerk. He was advised by letter dated the 29th May 1997 that selection had proved difficult and that he should not feel disappointed, a response he accepts was sincere.

(b) With POCL

214. He had two interviews with POCL, one of which alone I need deal with. It is the high point of Mr Husain's case. On the 11th February 1993 he had an interview with two officials of POCL, namely Mr Fox, (the Area Manager) and Mr Reed, (the Network Services Manager). The interview was also attended by Mr Azhar, the Network Manager, (whose role was to make the arrangements for the interview and take notes during it). Mr Husain says that he was asked a number of questions about his employment by the Bank in the course of which a member of the panel suddenly said: "What a pity! How many bad habits have your learned from your time in BCCI?"; when Mr Husain asked the member what he meant, he replied that he was only joking. His evidence is that at the conclusion of the meeting Mr Azhar said to him in Urdu words to the effect that, now that the Bank had been brought up, he did not think that he would get the POCL job. It is remarkable that Mr Husain did not refer to the alleged statement by Mr Azhar in his account of the interview given to Mr Langman or in his answer to the questions on this topic in the Particulars. When I listened to Mr Husain giving in evidence his account of the interview, I did not find his account credible. It is to be noted that Mr Husain had already prior to the interview provided POCL with his CV disclosing his previous employment by the Bank. My doubts about the credibility of his account were fully confirmed by the evidence of Mr Fox, Mr Reed and Mr Azhar (all witnesses of truth) who denied that any such comments about the Bank were ever made. Mr Fox and Mr Reed made clear that in view of the routine job that Mr Husain had at the Bank they had taken the view that his past association with the Bank posed no risk or problem and that it would have been totally unprofessional and out of accord with the approach adopted at interviews to make the references to the Bank alleged by Mr Husain. Mr Azhar was sure that it would have been out of character for Mr Fox or Mr Reed to make the comment alleged, and that he would never have ventured any view (let alone the reasoned view suggested) after the interview: no decision was ever made or disclosed to him until after the interview had taken place. It may be noted that Mr Reed said that, if an applicant in his application made an untrue statement about his bank finances, that would probably be the end of the road for the applicant. It is apparent that Mr Husain's applications did just that.

(vii) Adverse references to the Bank

215. Mr Husain says in his evidence that there were occasions when third parties acquiesced in his suggestion that the stigma of having been employed by the Bank impeded his efforts to find a job. Mr Young gave evidence that Mr Husain raised concerns on this score and on account of his age and ethnic origin. I think that this episode is symptomatic of a somewhat negative attitude on the part of Mr Husain in his job search. I do not think that this view or attitude was encouraged by Mr Young or anyone at Coutts. I find this faintly recollected testimony of Mr Husain of no evidential value. He also claims to recall that an unidentified Coutts counsellor, in response on anxieties expressed by employees in respect of the stigma affecting their employment prospects, advised that the career at the Bank should be given a low profile. Mr Husain certainly did not act on this advice and I do not believe that any such advice was given; it was part of their career history and it was important not to leave an unexplained gap in their CVs. Mr Young expressed surprise that Mr Husain was unable to find employment and ventured to explain this as attributable to stigma arising from his employment at the Bank. He had no previous experience of an former employee of the Bank, his knowledge of Mr Husain was limited and his evaluation of him was uncritical. (I have already referred to his unduly favourable view of the improvement in his applications). I am not surprised that Mr Husain has remained unemployed: there are ample compelling reasons of which stigma is not one.

(viii) Conclusion

216. Mr Husain has not discharged the burden of proof that stigma was a cause of the failure of any job application or the loss of a chance on such an application, or that there is any real possibility that it will be such a cause in the future. I am not satisfied that stigma played any part in Mr Husain's failure to obtain employment. This was at least part attributable to his limited efforts to find a job (on several occasions interrupted by lengthy trips abroad, trips to which no reference was made in his witness statement); in the case of the applications which he did make, he had the handicaps of poor English, the poor quality of his completed application forms, the contraction in the payroll industry and the fact that he had a limited amount to offer prospective employers. Mr Langman himself commented on his weak qualifications and the problem he had with his written English. Age must have increasingly become a handicap. The falsehoods in his applications might well have been exposed at interviews with draconian consequences. By October 1996 he was almost 50 years' old and already long term unemployed, and accordingly any prospect of employment thereafter was extremely limited. Any of these, as well as questions of personality, ethnicity and the quality of the competition may have decided the outcome of his applications. Questions of mitigation accordingly do not arise, but if they did I would have had difficulty holding that he made reasonable effort to mitigate.

(4) Mr Quraishi

217. Mr Quraishi made his first claim for stigma damages on the 1st July 1997. He claims in these proceedings that but for the stigma he would have obtained within 18 months from the date of his dismissal by the Bank on the 3rd October 1991 a job as an accounts clerk. The claim is accordingly limited to the period of 3 months between the expiration of that period and the 19th July 1993 (when he obtained a job) and the eight month period from the date that he lost that job (26th August 1994) until the 6th April 1995, when it is conceded that he became incapable of working.
218. Mr Quraishi is a Muslim of Indian ethnic origin. He was born on the 17th February 1950 in India where he was educated. He obtained a general certificate the equivalent of GCE "O" level. His written and spoken English are far from fluent. He studied for a Bachelor of Commerce qualification, but these studies were cut short in 1976 when he came with his parents to this country. After a short period of employment as a machine operator, in November 1976 he worked at Chatham Dockyard as a stores assistant, first with the Ministry of Defence and from the 29th September 1977 with the Department of Employment. The clerical content of the job was limited: all form-filling was passed to his superior. He joined the Bank on the 19th March 1979 as an accounts clerk in the stationery department and remained such throughout his period there. He was given basic training in respect of operating VDU equipment using the software designed by the Bank specifically for the stationery department. His appraisals were "good", but he never attained an "A" grade. He was never promoted. Since the mid 1980s, Mr Quraishi had a number of serious health problems. In 1984, there was a complaint recorded on his file that recurrently he was sick on the last day of each holiday, and in August 1984 he had an operation on an ulcer. In 1986 he was diagnosed as diabetic. In August 1988 he had acute pancreatitis and was away from work until April 1989. In January 1989 the Bank gave consideration as to whether he should retire early on medical grounds. The philosophy of the Bank however was such that he was allowed to continue his job. In October 1991 he was made redundant, at which time he was earning about £13,800. Since that date (save during the one year that he was employed) he has been in receipt of income support.
219. On his redundancy Mr Quraishi took advantage of the services of Coutts attending training sessions (which he found helpful) and registered with Bond Accounting Recruitment Consultants, an accountancy specialist. (Save for the Job Centre and the Employment Service, he never registered with any other agency). He told me that he spent between half an hour and an hour at a job centre 2 or 3 times a week. (As he told Mr Langman) Mr Quraishi did not make many applications for jobs looking at the period as a whole. The applications were not confined to the financial sector. Indeed some applications were for jobs for which he was not plainly qualified (e.g. pest control officer and psychological counsellor). There was a substantial response by others to the advertisements for employment in which he showed interest, and his efforts failed until he obtained an offer of employment by the DHSS commencing in July 1993. This failure was in nowise surprising:

(a) he was not a well man. Again in December 1991 he fell ill with pancreatitis: he was ill in hospital for 4 days and was affected by depression, and he needed some two months' recuperation before he could actively seek work again;

(b) his handicap in the use of English is apparent in his written application forms for jobs which can scarcely have impressed any prospective employer who received them;

(c) he had limited marketable skills and experience;

(d) he was reluctant to accept a job with a lower status or salary than he had obtained at the Bank. Thus he would not consider manual work or a "woman's" job as a typist or a salary below the minimum he set for himself: he spoke of this sum being between £8,000 and £9,000 p.a. but I am not satisfied that he would have accepted a job where his total income would have been less than the £11,000 in income support and housing allowance he was receiving;

(e) his wife had a job between September 1992 and September 1994, and her receipt of income during the period reduced the economic pressure on him to obtain a job. He also during the period was at least partly occupied looking after their five children.

220. Interviews

During the period until July 1993 he obtained a few interviews. He told me that he could not remember the number that he had, despite the fact that the number was very small, and indeed in cross-examination he was reminded of an interview (with Liz Claiborne in April 1992) which he had forgotten. I shall say a few words on each such interview:

(a) in his witness statement he said that in the winter of 1991 he had an interview for a clerical job at Spitalfields Market; all went well (he says) until the name of the Bank was raised; he was then asked about the fraud and whether he was involved. Under cross-examination he told me that he could not recall the name of the prospective employer or of the interviewer or the address; that the interview (which probably took place in November 1991) was unfriendly from the start; that the interview lasted some thirty minutes of which some 10 to 15 minutes was expended on other questioning after he told the interviewer about his job at the Bank and that he had not been involved in any wrongdoing; that when he had filled in the Particulars relating to his efforts to find work, he had not recalled this interview; that Mr Langman got it wrong where he recorded that the job he was applying for was to sell fruit. Mr Langman, when he later gave evidence, was not asked to reconsider the passage in his report, and I think that it is likely accurately to record what he was told. I accept that the interviewer was unfriendly from the start. I do not accept that the tone changed after the reference to the Bank. I do not accept that he was asked about the fraud or whether he was involved: it is to be remembered that his work was confined to the stationery department. I do not think that stigma is likely to have played any part in the decision: it may be that prejudice on ethnic grounds was the occasion for the hostility;

(b) in April 1992 he had an interview for the post of customer service clerk with Liz Claiborne. The interview was pleasant. He was asked about his work experience at the Bank. There was no hostile questioning. No question of stigma is suggested or arises in respect of this interview;

(c) in January or February 1993 Mr Quraishi applied for the position of clerical officer at Newham Health Authority where he was asked about his previous employment with the Bank and the reasons why he had been made redundant. The atmosphere was pleasant. He was asked about the experience he gained at the Bank. Mr Quraishi told me that he explained that he had not been involved in any fraud. Again I do not believe that this can have a been a real issue as his job had been in the stationery department. The fact that no impression was given to him that stigma was an issue is reinforced by the fact that he made a further application to the same authority in April or May 1993 for the post of pharmacy buying and stock maintenance officer. He was plainly not qualified for this post, and his attempt at persuading the authority that he had some knowledge of medicine because of the medication he had taken for various illnesses was likely to prove counterproductive: it could not constitute relevant experience, but emphasised his health problems;

(d) in May 1993 he applied to Broomleigh Housing Association for a post for which (as he knew) he did not possess the requisite (computer) skills and had an interview. This rejection says nothing;

(e) in July 1992 he applied to the DSS for the post of administrative officer. He was placed on the reserve list. On the 25th March 1993 he was informed of the existence of vacancies. He attended an interview in May. During this interview his employment by the Bank was mentioned, for he needed to tell the DSS the extent and nature of his work experience. This interview (with the benefit of a good reference from the Liquidators based on his appraisals) led to the offer of a job with the Benefits Agency as a local officer 2 grade at a salary of £11,700 p.a. (some £2,500 below what he received at the Bank). He started work on the 19th July 1993. The job was short-lived, however, and he was dismissed on medical grounds with effect on the 26th August 1994. The causes were stress, diabetes and an unstable angina condition. To avoid dismissal and to reduce the stress which his work was occasioning him he requested the DSS to reduce his grade to that of administrative officer, but the DSS declined. During the period of this employment, he made no application for any other job. He was content and fully stretched.

221. From the 6th April 1995, Mr Quraishi received (in addition to his income support of some £150 per week) an incapacity allowance. Mr Quraishi accepts that he was unfit for work from the 6th April 1995, and no claim is made in respect of the period after this date. An issue is however raised whether stigma played any part in his unemployment between August 1994 and 6th April 1995. I am quite satisfied that it did not. His ill health became more acute, and the depression and lack of confidence occasioned by his dismissal by the DSS were the causes. He made no application for a job in September 1994 as he was not well enough to do so, since he was suffering from chest pains due to his angina, and thereafter he only made a limited number of applications and then gave up trying. He made (as his health required) the positive decision not to take any job which would impose any stress on him such as had proved too much when he was employed by the DSS. It is significant that Mr Langman (as he told me) formed the view after his interview with Mr Quarishi that his unemployment after he left the DSS was not attributable to any stigma and that any claim in respect of that period was wholly unjustified. I agree.
222. Conclusion

Mr Quraishi was a sick man when he gave evidence (both as he told me and was apparent as he gave evidence) and the hearing had to be adjourned a number of times to enable him to take a rest. He told me that he does not have a good memory and that his sickness had deleteriously affected his memory: his poor memory was apparent when he gave his evidence e.g. as to when his wife got her job. Making every allowance for his condition I regret that I have to say that he was not a reliable witness. As well as deliberately misrepresenting in his witness statement the equivalence of his general certificate, he gave contradictory evidence as to the date when his CV was prepared and in his CV falsely gave himself "A" grades in Hindi and Book-keeping and included maths and science as two separate subjects in which he obtained passes when (as he well knew) he obtained a pass in them as a joint subject.

223. I am not satisfied that stigma played any part in his work history after he left the Bank or was a cause of the failure of any job application or the loss of a chance of employment and I can see no prospect of stigma causing either of these in the future. There were many other reasons for adverse decisions by prospective employers, including ill-health, a lack of a facility in English and possibly race. His pleaded case is that he could have expected to obtain employment within 18 months of redundancy. In fact he obtained employment within 21 months despite his illness problems and low level of applications. Mr Langman considered this to be a considerable achievement, given Mr Quraishi's health problems, and expressed the view that Mr Quraishi had done "very well". I agree. If it could have been established that Mr Quraishi would have obtained a job or would have had a real chance of a job but for stigma, I would have had to discount substantially any award by reason of the likelihood that the job would have been lost within a short period because of his ill-health.

(5) Mr Zafar

224. By letter dated the 4th November 1993 Mr Zafar complained of the damage occasioned to him by stigma. His first proof of debt for stigma damages was dated the 10th June 1994. In this action he claims that but for stigma he would have retained his employment with Albaraka Bank ("Albaraka") and in the alternative that he would have been able to obtain permanent employment as a general manager within 12 months of his dismissal from Albaraka. No claim is made in respect of the period from October 1990 to August 1991. Mr Zafar was born on the 10th October 1945. He is of Pakistani ethnic origin. He obtained in Pakistan the English equivalent of a pass BA. In 1982, he became a Fellow of the Chartered Institute of Bankers. (Such a fellowship is given to Associates as a reward for services to the Institute: it does not reflect any achievement or distinction). He joined Barclays Bank plc ("Barclays") in 1967 as a trainee and worked in various branches in a junior capacity, rising to be head of securities at a branch when he left Barclays in July 1974. In 1974 Mr Zafar joined the Bank and remained in its employment in a number of positions, latterly as Regional Manager of the Southern Africa Region. Mr Zafar told me that there was no misconduct or suggestion of misconduct in that region and that this is reflected in the fact that the Bank of England had included him on the approved list of former executives of the Bank. (This could at least in part have shielded him from the damaging effect of stigma). His experience throughout was general rather than specialist, and as Regional Manager he had a management function. In common with all other Bank employees he was encouraged to persuade contacts to make deposits and he did obtain some deposits. Once such a deposit was made, he would advise the depositor in respect of the deposit e.g. whether the deposit should be for three or six months or whether the merchant banking division of the Bank should be consulted about investment wider afield. (I consider that he has vastly exaggerated the deposits he obtained). That was the sum total of his private banking and Islamic banking experience. His final salary was £37,263 basic plus £6,900 in allowances.
225. He is distinctive amongst the Employees in two respects: (a) he is the only one of the Employees who was employed in a senior position; (b) he is the only one of the Employees who was dismissed before its closure. He was made redundant on the 31st July 1990, but his employment was continued until the 30th September 1990. Concern about his attitude and behaviour resulted in his being paid without his being permitted to return to the Bank during this period. His resentment at his redundancy led him to write a series of vitriolic letters to the Bank attributing the decision to improper motives and indeed dishonesty on the part of his superior, Mr Rizvi. After he left the Bank he joined Albaraka International Bank Ltd ("AIBL") on the 3rd June 1991 at a basic salary of £70,000 plus other employment benefits. His job title was the cause of conflict. He was dismissed on the 13th August 1991, a date shortly after the closure of the Bank. He asserts that the decision to dismiss him was occasioned by the publicity surrounding the closure. This is in issue. Since his dismissal by AIBL he says that he has been unemployed. He attributes this to stigma. His evidence is to be found in a witness statement ("the Witness Statement"), a supplemental witness statement, a second supplemental witness statement, a first draft witness statement ("the First Draft Statement") and a second draft witness statement ("the Second Draft Statement"). Some part of his cross-examination focused on divergencies between these statements and most particularly divergencies between the Witness Statement and his oral evidence on the one side and the First and Second Draft Statements. It is to be noted that (save in respect of certain incidents which occurred whilst he was employed by the Bank in respect of which he called his former secretary), Mr Zafar called not one witness to corroborate his accounts of stigma affecting him; and where the Bank called witnesses from the prospective employers, their evidence in each case contradicted his story.
226. I shall first state my impression of Mr Zafar.

(i) Neither his spoken or written English is fluent. His lack of fluency in English stands out on his job applications. I have doubts about his knowledge of banking law and practice. The caution which he lodged in November 1997 in respect of his brother's property, 24 Goodman Park, to protect an interest and charge said to arise (without any suggestion of any agreement to create an interest or charge) from a loan made (as he told me) to furnish and extend the property raises questions as to his understanding of what should be elementary to a banker. His statutory declaration in support of the caution, which says (falsely) that the loan was made to purchase the property, is likewise disturbing.

(ii) He has a very inflated opinion of himself and his abilities and is apt to adopt a very critical, indeed jaundiced, view of fellow employees, and he cannot and will not keep such views to himself. He is arrogant and quite unable in a dispute to see or understand the other party's point of view. He sees himself as the model of correctness and sensitivity to others and as a man possessed of excellent man-management skills who always enjoys good relations with those around him. This is a delusion. He is ever ready to hurl unfounded allegations against anyone who says anything or holds any view which does not accord to his liking. In the course of his evidence, when faced with a statement by someone else which did not accord with his story, he did not hesitate to damn that other person: on one such occasion he damned Mr Orriss, a man of total honesty and integrity, as a known liar. (This propensity extended to damning Counsel when faced by Counsel with a suggestion not to his liking). He gave full vent to this response in the case of each of the non-executive directors of AIBL, Lord Denman, Mr Rout and Dr Al-Awadi. The directors of AIBL resident in this country were not well disposed to his original appointment, but his attitude and behaviour, far from winning them over succeeded in totally alienating them.

(iii) He is a totally unreliable witness, unwilling or unable to distinguish falsehood from the truth and who lies whenever it suits his purpose. In his eyes he is always right and he reconstructs events to accord with the way he wants to see them. The examples of his lies are too numerous to set out. A number will be found in later passages in this judgment. Two examples are sufficient at this stage. When he found that the Particulars served on his behalf by his solicitors regarding his efforts to obtain employment were unpalatable to him, he persisted in denying that he had ever approved those answers: his solicitors had proceeded without his authority. His solicitors on the 1st March 1999 wrote to the Bank's solicitors confirming that he had approved the contents before the Particulars were served. He quite deliberately set out to mislead the Court as to the existence of a CV used from the end of 1996 on his job search which included a statement (contrary to the whole thrust of his evidence that he has been unemployed since 1992) that he had worked for First European Credit plc ("FEC") at all times since 1992. According to his own evidence this statement in the CV was a blatant lie, and his repeated prevarications and untruths when asked questions on this topic proved clearly that he finds it beyond him to give a direct (let alone straight) answer on any question when the correct answer does not suit his purpose. Speaking generally I do not think that I can accept his evidence on any controversial issue in the absence of corroboration. As I have already said, he called only one witness to corroborate a minor part of his evidence, and otherwise relied only on the documents before the Court and most particularly the transcripts he made of surreptitiously taped telephone conversations. He is calculating. He secretly recorded telephone conversations to trap those he spoke to into saying something to his advantage. The reason he gave me for doing so was "to obtain clarity": he could give me no reason why this required recording some, but not other, telephone conversations. The reason given is nonsense and I am not satisfied that he did not record other conversations beyond those which he acknowledges recording but which did not reveal anything helpful to his case. In his evidence, when faced with a letter he had written which contradicted his evidence, he had no hesitation in saying that the words in the letter meant, not what they said in plain terms, but what he wanted them to mean.

(iv) Mr Munn in his evidence stated that in his limited contact with him he found Mr Zafar arrogant and difficult: he talked down to Mr Munn and others at the Bank. He was the type of difficult person who was retained by the Bank, but would have been dismissed elsewhere. Based on his dealings with Mr Zafar at the Bank, Mr Orriss gave evidence to like effect. He found Mr Zafar abrasive and possessed of a large ego - a person who always thought that he was right and was always ready to make this obvious. This entirely accords with the impression given in the witness box.

(iv) I should also state my general view as the likely impression of Mr Zafar on prospective employers. At least some part of his character, as I have outlined it, would have come across at interviews. Mr Langman commented that his strong personality came over at his interview with him. His letters of application are the less impressive because of the lack of fluency in English and are strikingly so in the context of the senior posts he was applying for. The letters regularly misrepresent that he currently possessed valuable business contacts when the true position was that he had none since he left the Bank and only had the hope of making fresh ones once he obtained employment; and also exaggerated his experience and expertise in private banking and Islamic banking. Revelation of the true facts at an interview was a serious risk with serious implications. Since he never had in mind obtaining any reference from the Liquidators of the Bank, he lacked any available references. The two prospective referees to whom (as he told me) he intended to refer, namely Mr Darr (his superior between 1989 and 1990 at the Bank) who lives in Pakistan, and the one-time Governor of the Bank of Zambia were not even approached to see if they were willing and able to give a reference. Mr Zafar told me in cross-examination that some three years ago he met Mr Darr in London and Mr Darr agreed to provide a reference if required. No whisper of this is however given in any of his statements and I do not accept this uncorroborated afterthought. In re-examination Mr Zafar was referred to a reference given on his job application to AIBL by Mr Chowdhery who also lives abroad. Mr Zafar said (clearly as a very late afterthought) that Mr Chowdhery would have given a reference if asked. I am not persuaded that he ever had in mind after he left AIBL a reference from Mr Chowdhery. This lack of referees did not prevent Mr Zafar writing to Habib Bank that "I shall provide excellent references."

227. I turn now to a number of issues raised in respect of Mr Zafar:

(i) Record at the Bank

228. Mr Zafar told me that he always had good relations with all the staff. He referred to a letter written by his secretary until 1987, Mrs Cheryl Smith, to the effect that she generally got on well with him, though there was an unfortunate episode in 1983. Mr Zafar called Mrs Smith as a witness. She told me that she had an up and down relationship with Mr Zafar; that on one occasion (when she was pregnant), he reduced her to tears; and (as recorded in her letter to Mr Zafar dated the 10th January 1984) Mr Zafar had involved himself in her personal life, made comments and remarks which went beyond that of an executive to secretary, an intrusion which she had found quite offensive. They subsequently made up and remained on good terms until she left the Bank in 1987 and thereafter. Referring to a complaint in 1990 against him of sexual harassment, Mr Zafar in his evidence said that he had good relations even with the complainant and that in making her complaint she was lying. I find this suggestion of good relations with the complainant and staff generally impossible to accept. Mr Orriss, who had dealings with him over a long period at the Bank, told me that Mr Zafar's peers regarded him as difficult and unpleasant and that on a number of occasions he reduced junior female staff to tears. His attitude to his superiors may have been different: indeed I (like Mr Orriss) suspect that they may have been in awe of him and unwilling or unable to stand up to him, and that this may account for the good appraisals which they gave him. When declared redundant in 1990, he wrote letters to the Bank charging his superior Mr Rizvi with intellectual dishonesty and professional misconduct, stating that he was a snake, that he obtained pleasure in causing pain and that he protected cronies who defrauded the Bank. There was no evidential support for any of these allegations. Yet he told me that he had no personal problem with Mr Rizvi and would have continued to work with him if he had succeeded in getting back his job.

(ii) Period between redundancy and May 1991

229. In support of his evidence that he was a man who, in the absence of the stigma, would never have any difficulty obtaining a high banking job, Mr Zafar in his evidence told me that Mr Chowdhery, who later became chief executive of the Bank, told him in August 1990 that he would be given a job at the Bank after it was restructured, and that in reliance on that assurance (though he was frequently approached) he took no steps to look for another job until May 1991 when he was head-hunted by AIBL. He relied on a passage in a memorandum dated the 19th October 1990 of Mr Orriss in which Mr Orriss notes that Mr Zafar told him that he would be working for the Bank again in January/February 1991. Mr Orriss told me that Mr Zafar at that time gave him the impression that he was then confident that these negotiations would succeed. It is however apparent that Mr Zafar recognised that the position was far from certain and too uncertain to delay efforts to obtain another job. For in a letter dated the 24th August 1990, he wrote to Mr Orriss at the Bank:

"Since being on holiday I have been vigorously seeking alternative employment and have had interviews with prospective employers. Furthermore I have several other interviews lined up in September 1990."

He gave no or no satisfactory explanation in his evidence why (as he now claims) he should lie in this letter: and indeed the letter is consistent with his admitted unsuccessful application to AIBL in October 1990 for a job in marketing. In a letter to Mr Orriss dated the 18th September 1990, he wrote:

"I have no savings and the present employment conditions in UK, are so worse that it is extremely difficult, if not unlikely, for any one to find a suitable job in the immediate future. The meagre redundancy package, as it is, will not last for more than few months. Please donot (sic) ask me to compromise the future of my family and children and forego a very substantial amount for no fault of mine."

The contents of this letter again are difficult to reconcile with the existence of the alleged assurance of Mr Chowdhery on which Mr Zafar says that he was placing confident reliance. An attendance note by Mr Orriss dated the 16th September 1990 includes the following passage:

"On my return from leave there had been a number of communications from Mr Zafar awaiting my attention. They were as follows:

A memorandum dated the 10th of September referring to staff luncheon vouchers. It contained a number of very scurrilous statements about Mr Iqbal Rizvi, who Mr Zafar sees as his persecutor. It did not really deal with the question of what Mr Zafar intended to do about his luncheon vouchers but suggested that Mr Iqbal Rizvi had used his position in the Bank to advance his and his family's situation. Asked what Mr Zafar intended that I should do with this communication he said nothing, only hold it.

The point is that he also is pursuing his claim for unavailed holiday of 65 weeks and will not accept that this is a totally unacceptable basis of claim ....

Finally, Mr Zafar informed me that he is negotiating with Mr Iqbal Zafar [Chowdhery], the newly appointed Chief Executive Officer, for reinstatement. He has given me a copy of a memorandum dated 22nd June 1990 and 26th September 1990, which he has apparently forwarded to Mr Iqbal Zafar, he is making allegations of unfair dismissal against his redundancy and once again blaming Mr Iqbal Rizvi for his situation.

No-one has discussed this situation with me although they are mindful of the fact that he has at this time caused the Bank to be involved in its first sexual harassment case, even though he claims that the applicant, Linda Bradford, is lying. This is a costly, protracted and unwelcome action which even if some of the allegations against him are untrue, mainly comes about because of Mr Zafar's peculiar style of man-management.

...

The one substantiated claim that he makes regarding his own circumstances is the fact that he was in salary review rated outstanding in 1986/87, 1987/88, 1988/90. He claims to have been an effective manager in a heavy profit-making area but it is also appropriate to note that Mr Zafar has a very strong and determined personality of which his Executive in Charge would have been no equal and one wonders whether the assessment was given on the basis of contribution or to avoid confrontation...."

230. Mr Zafar sought to discount the reference to his negotiations on the ground that Mr Orriss was a liar and has a reputation for untruthfulness. I unequivocally accept Mr Orriss' accounts of events, that Mr Zafar told him that he was making representations to secure reinstatement and not that any agreement to this effect had ever or yet been reached. On the 16th January 1991 Mr Orriss noted that from what Mr Zafar then said he appeared to have accepted that he had no job at the Bank: he accepted that his negotiations would get him nowhere. Notwithstanding Mr Zafar's protest that this note was untrue, I find that it correctly records the position. (It may be noted that in paragraph 27 of his Witness Statement Mr Zafar says that he hoped that his new position would be regularised at least by Christmas 1990). I do not think that Mr Zafar's hopes of a return to the Bank in fact delayed his efforts to find a new job and I am satisfied that any such hopes expired with the end of 1990.

(iii) Job with AIBL

231. In October 1990, Mr Zafar applied to AIBL for a marketing position. He was interviewed by the General Manager, Mr Lewis-Jones, and was rejected. On the 16th May 1991 Mr Zafar again wrote to AIBL to arrange an interview for an unspecified position enclosing his CV. He falsely implied in his letter that he had been asked by the Bank to move to Abu Dhabi when the Operational Headquarters of the Bank were moved there, but had to refuse the offer because of family reasons. He had received no such request. This false impression was obviously considered important by Mr Zafar to the success of his application and he may have been right. On the 23rd and 24th May 1991 Mr Zafar met Sheikh Kamel (the Chairman of the Board) and his brother Dr Kamel (the Vice-Chairman) who have been referred to by Mr Zafar as "the majority shareholders in AIBL". In fact Sheikh Kamel owned all the shares in AIBL. I shall refer to the two together as "the Shareholders". It was agreed that Mr Zafar should be appointed Assistant Managing Director as from Saturday the 1st June 1991 and that he should receive a mandate specifying his duties. The mandate was (in short) to expand the business, improve profitability, establish relationships with other financial institutions and maintain and enhance further relationships with the Bank of England and other central financial institutions in Europe. It is clear that the Shareholders had concerns about aspects of the existing management, but I do not accept Mr Zafar's evidence that it was part of his agreement with them that he would replace the existing Managing Director Mr Houssami within six months. There is no documentary support for this claim; it found no place in the contract pleaded and relied on in his subsequent proceedings against AIBL; and it is totally inconsistent with a passage in a transcript made by Mr Zafar of a telephone call of the 20th July 1991 in which Mr Zafar told Dr Kamel: "[Mr Houssami] feels that his position is threatened [by me], which he should not". It is significant that Mr Zafar told Mr Langman that, if his employment had continued, he may have been, and not would have been, promoted. Mr Zafar however felt that he had the full confidence of the Shareholders and that his relationship with the Shareholders gave him a position of authority beyond that attaching to his formal position. On the 25th May 1991, Mr Chowdhery provided a reference for Mr Zafar. There can be no doubt that his appointment by the Shareholders was imposed on the directors resident in the United Kingdom ("the Resident Directors") and that it caused resentment on the part of Mr Houssami (an executive director) and Mr Lewis-Jones and Mr Siddiqi, (the company secretary and internal auditor) and at least one non-executive director (the most influential such director) Lord Denman. In particular Mr Houssami and Mr Lewis-Jones felt threatened. The Shareholders anticipated some opposition to the appointment, but not the degree of opposition and hostility to Mr Zafar which materialised. The resentment from the very beginning led to a concerted campaign of non-cooperation with him designed to frustrate the efforts of the Shareholders. This resentment was most seriously aggravated by Mr Zafar's arrogant and insensitive behaviour. Mr Zafar thought little of the competence of Mr Houssami: Mr Zafar considered himself a professionally qualified banker and Mr Houssami not, and Mr Zafar is not the sort of person who could keep his views to himself. As soon as he found opposition to the role and recognition he sought, Mr Zafar set out on a campaign to undermine the confidence of the Shareholders in each of the Resident Directors in communications behind their backs made with the Shareholders. These included both private letters and telephone conversations. When he gave his evidence Mr Zafar had to acknowledge that, if what he wrote and said became common knowledge, either he or the Resident Directors would have to leave AIBL. If the Shareholders had to choose between them and himself, he was confident that it would be the Resident Directors who would be sacked. This confidence proved ill-founded.
232. On the 26th May 1991 Sheikh Kamel wrote to Mr Houssami notifying him of the appointment of Mr Zafar as Assistant Managing Director and enclosing what has been referred to as a "mandate" specifying the responsibilities assigned to Mr Zafar. Mr Houssami from the start cold shouldered Mr Zafar: he did not (as expected by Dr Kamel) contact Mr Zafar before or even on Monday the 3rd June when Mr Zafar was due to commence work. Mr Zafar had to send a message to him, to which Mr Houssami sent a reply at 4.30 pm that day. Mr Zafar in fact began his employment on the 4th June 1991 on which date Mr Houssami sent a circular to staff informing them of this and expressing confidence that they would all join in welcoming him to AIBL. But neither then or at any time thereafter did Mr Houssami afford to Mr Zafar the recognition, responsibilities or respect due to an Assistant Managing Director and plainly he (together with Mr Lewis-Jones) set out to sabotage the appointment. On the 6th June 1991 Mr Siddiqi sent a memorandum to Mr Houssami stating that the role of Assistantoussami as Managing Director within six months.Mr Managing Director was outside the hierarchy of job titles approved by the board, and that to appoint Mr Zafar above the general manager "does not look normal". Mr Houssami and Mr Lewis-Jones clearly supported this objection to an appointment other than to a position below that of Mr Lewis-Jones and communicated their views to the Shareholders. This obstacle to the appointment of Mr Zafar as Assistant Managing Director encouraged Mr Houssami and Mr Lewis-Jones to delay sending "Form 3" to the Bank of England notifying the Bank of England of his appointment as such and to decline to introduce him to officials of the Bank of England or to Lord Denman. (Broadly speaking under Section 36 of the Banking Act 1987 there was a statutory requirement to notify the Bank of England of the appointment of a director or general manager, but not of an assistant general manager). Faced with this threat, in order to consolidate his claim to the position as Assistant Managing Director, Mr Zafar took the law into his own hands and sent in the Form 3 himself. As he well knew, he had no authority to do this and this act itself became a source of friction. The Shareholders took note of Mr Siddiqi's concern at Mr Zafar's proposed appointment as Assistant Managing Director and, having to choose between the existing officers of AIBL and Mr Zafar on this issue, sided with the existing officers, and decided that Mr Zafar should be appointed Assistant General Manager in place of Assistant Managing Director. Dr Kamel so informed Mr Zafar on the telephone on or about the 19th June 1991 and Mr Zafar agreed to this change. Dr Kamel notified Mr Houssami of this change made "for technical reasons" by letter dated the 19th June 1991. Mr Zafar told me (as he repeatedly told Dr Kamel) that his title did not matter so long as his mandate remained unchanged. Yet no sooner had Mr Zafar reached this agreement with Dr Kamel than he began a persistent series of complaints about the change in title and regularly (and quite improperly) described himself in correspondence using AIBL's notepaper as Assistant Managing Director. His redesignation was a serious affront to his dignity, and this perceived slight figured large in his dismissal and as a ground of complaint in his subsequent proceedings against AIBL.
233. On the 20th June 1991, Mr Zafar caused an unpleasant incident when quite inappropriately (and certainly most insensitively) he complained of a failure on the part of Mr Siddiqi to send him the audit manual. On the 21st June 1991, Mr Zafar had a confrontation with Dr Al-Awadi (a non-executive director) over Mr Zafar's title and role. Mr Zafar complained about his redesignation. Dr Al-Awadi told him that his role was restricted to marketing. Sensitive to the opposition to his appointment as Assistant Managing Director, on the 22nd June 1991 Mr Zafar wrote a vituperative letter to Dr Kamel complaining of conspiracies and manipulation of the non-executive directors (Dr Al-Awadi and Lord Denman) by Mr Houssami, Mr Lewis-Jones and Mr Siddiqi. On the 28th June 1991 Mr Houssami wrote to Mr Zafar confirming the offer he was authorised to make on behalf of AIBL of full-time appointment as Assistant General Manager. On the 1st July 1991 Mr Zafar wrote to Mr Houssami purporting to accept this offer but maintaining that there was no reason for him to accept a change of job title from Assistant Managing Director to Assistant General Manager. He would not accept appointment as Assistant General Manager, and for this reason AIBL's offer was not then or thereafter accepted.
234. The Bank closed on the 5th July 1991. On the 6th July 1991 Dr Kamel telephoned Mr Zafar. There is no evidence to suggest that this had anything to do with the closure. On the 7th July 1991, Mr Zafar wrote to Dr Kamel complaining about the attitude of Dr Al-Awadi shown at the meeting on the 21st June 1991 to his appointment as Assistant Managing Director. He went on to complain of the negative roles in obstructing him carrying out his mandate played by Mr Houssami, Mr Siddiqi and Mr Lewis-Jones and that Dr Al-Awadi and Lord Denman were pursuing their own vested interests adverse to the interest of AIBL rather than acting as "honest brokers" between Mr Zafar and his fellow executives. As he told me in his evidence, the vested interest on the part of Lord Denman was that he had an interest in a deal which he caused AIBL to enter into (a deal highly disadvantageous to AIBL); and the vested interest on the part of Dr Al-Awadi was that he coveted for himself the position of Managing Director. He wrote that the "rot" had set in "to the core". Mr Zafar had no evidence justifying any of these serious allegations against either Dr Al-Awadi or Lord Denman.
235. On the 8th July 1991 at a meeting of the Standing Committee of AIBL directors (which did not include the Shareholders) after referring to Dr Kamel's letter of the 19th June 1991 changing Mr Zafar's job title, the directors determined that the appointment of Mr Zafar as Assistant Managing Director was not in line with Sheikh Kamel's previously expressed view as to the character of the appointment (namely as Marketing Executive) or the hierarchy of job titles earlier approved by the Board. The minutes go on to record as follows:

"It was felt that this appointment (Assistant Managing Director), if at all required, should have first been cleared with the Bank of England as per their requirement, more particularly because of [Mr Zafar's] past association with the [Bank]. The Managing Director informed the committee that Mr Zafar has refused to accept the new designation when conveyed to him in the Letter of Appointment issued by the Managing Director and that he has sent his Form 3 to the Bank of England himself. After considering the matter carefully, the committee decided that a fax be sent to Dr Hassan from [Lord Denman] in order to take such action as is necessary."

236. On the 9th July 1991 Lord Denman sent a fax drafted by Mr Houssami to Dr Kamel. The material terms of this were as follows:

"Dear Dr Hassan,

At a meeting of the Standing Committee on 8.7.91, we reviewed the position of Mr Iqbal Zafar.

Sadly, it seems that the decision to employ him as Assistant General Manager offered in your letter of 19 June 1991 has not been accepted by Mr Zafar. He seems to regard this as a demotion. He has the letter of 26 May 1991 signed by your brother outlining nine itemised responsibilities and he regards this as his brief. He has personally sent his C.V. and Form 3 to the Bank of England. This will appear to the Bank of England that the Board have approved the appointment as Assistant Managing Director.

The very recent suspension of BCCI and the specific mention in Monday's Financial Times (copy attached) of the auditors anxieties in regard to several BCCI operations in Africa with specific mention of Kenya and Nigeria must, in our view, make our Board unable to endorse the appointment of any BCCI personnel, at least for some time.

We now feel in a position of serious embarrassment opposite the Bank of England and the repute of our Bank in the marketplace.

We must recommend and ask for your concurrence that we suspend Mr Zafar from duties so that we can explain our position to the Bank of England and the other enquiries. We feel this should be done forthwith.

We had hoped to resolve this tiresome matter quietly, but believe the BCCI events have overtaken this strategy.

Owen Rout and Hani Houssami are fully aware of this message.

Yours sincerely,

Lord Denman

The "tiresome matter" referred to was the dismissal of Mr Zafar: in his view on any basis Mr Zafar had to go. On the 11th Lord Denman sent a further fax to Dr Hassan. He said that the Bank of England had raised the question of Mr Zafar and the reply had been given that the non-executive directors had the matter under consideration; that the Bank of England was alarmed at the serious charges against the Bank; and that by recommending suspension no final decision was being taken but time would be gained to consider all aspects of "this awkward predicament". This recommendation was not adopted. Mr Zafar was not suspended.

237. On the 18th July 1991 Mr Zafar wrote to Dr Kamel setting out his account of the "Form 3" dispute and accusing his colleagues of manipulation designed to ensure that AIBL did not perform. On the same day there was a confrontation between Mr Zafar and Mr Houssami in the presence of Mr Siddiqi at which Mr Zafar challenged Mr Houssami's competence and also (I think) his trustworthiness.
238. On Friday the 19th July 1991 Mr Houssami purported to suspend Mr Zafar. The purported suspension was without effect. Mr Houssami was away the next week and Mr Zafar ignored the suspension and returned to the office to arrange a trip to Jeddah to see the Shareholders. On the 20th July 1991 Mr Zafar spoke to Dr Kamel on the telephone and secretly recorded the conversation. (I have listened to the tape recording). He did not mention the suspension. Mr Zafar accused Mr Houssami of playing games and refusing to let him function. He insisted that the Bank of England had no problem with Mr Zafar joining Albaraka and indeed was happy with his doing so. Mr Zafar falsely and resolutely denied refusing to take the title of Assistant General Manager and said that Mr Houssami was lying when he told Dr Kamel the contrary. He did however set out truthfully the way he was treated at AIBL by Mr Houssami:

"Houssami has not given me an office. Houssami has not given me a seat to sit. Houssami has not put me on any of the mainstream banking functions. My signatures have not been circulated. I have not been introduced to the directors. I have not been introduced to the Bank of England and he is doing everything possible to see that I just throw my hands and I just go away."

(It may be noted that until Mr Zafar was referred to this passage in the transcript during his cross-examination, he consistently maintained in his evidence that the failure to provide him with a seat or office were matters of no concern to him). Seeing Lord Denman as a foe who refused to meet him, he went on to try to undermine the Shareholders' confidence in Lord Denman by suggesting that he was Jewish. Dr Kamel told Mr Zafar that he had been brought in to assist with improving the performance of the Bank and that it looked as if there was a lobby and strong stand against Mr Zafar by the Resident Directors.

239. On the 22nd July 1991 Mr Zafar wrote to Dr Kamel repeating that there was no problem with the Bank of England (or inferentially his past employment by the Bank) and that the problems lay with AIBL and the "little egos" within it. On the same day Mr Zafar falsely told Mr Siddiqi that Dr Kamel required him to prepare a resolution designed to add the post and title of Assistant Managing Director to the hierarchy and to confirm Mr Zafar's appointment as such. Dr Kamel had given no such instructions.
240. At the end of July 1991 Mr Zafar travelled to Jeddah to see the Shareholders. According to Mr Zafar he was told that they intended to make him managing director forthwith and would come to London to speak to the non-executive directors to this end, and in the meantime Mr Zafar should keep out of the office and spend his time preparing a restructuring plan. In my view all that was agreed was that Mr Zafar should keep away from his colleagues avoiding further unpleasantness until the Shareholders (or one of them) could meet the Resident Directors in London to decide whether, and if so what, future Mr Zafar had with AIBL.
241. On or about the 5th August 1991 Mr Zafar sent restructuring plans to Dr Kamel: he did not provide Mr Houssami with a copy. Dr Kamel came to London, saw Lord Denman and firmly made up his mind that Mr Zafar had to leave. He later met Mr Zafar on the 12th and 13th. At one such meeting Mr Zafar told Dr Kamel that Mr Houssami could not run a fish and chip shop in Lebanon. On the 13th August 1991 Mr Zafar spoke on the telephone to Dr Kamel again secretly recording the conversation. (I have listened to the tape recording). Dr Kamel said that the procedural problem in the appointment as Assistant Managing Director had prevented that intended appointment taking effect, that the Resident Directors did not want him to remain and that he could not force the Resident Directors to do what they had set their mind against doing. He was not prepared to aggravate existing problems by going against the Resident Directors. Mr Zafar insisted that there was no problem with the Bank of England. Dr Kamel appeared to accept that, but still insisted that he wanted to exercise his right to terminate his employment. Mr Zafar put pressure on Dr Kamel to give reasons for the decision, an exercise which Dr Kamel was plainly not anxious to undertake, no doubt because it was personally embarrassing, in particular in the face of insistent questioning by Mr Zafar. There is ample evidence that Mr Zafar had persistently lied to him, and Dr Kamel may well have learnt that this was so. Dr Kamel said that, after the failure to put the procedures in order, "then this problem with BCCI exploded and we find ourselves in this totally disordered situation" and in answer to pressing and leading questions agreed that Mr Zafar's background with the Bank was a problem for professionals like Mr Zafar. It must however be borne in mind in deciding what (if any) weight is to be given to this answer that Dr Kamel was plainly unprepared for Mr Zafar's onslaught and had no reason to believe that this was other than a courtesy call or that his answers might have any significance other than to depersonalise the reasons for Mr Zafar's dismissal. Perhaps the most significant feature of the conversation is that the Resident Directors had decided to dismiss Mr Zafar and whatever their reason Dr Kamel felt impelled to go along with it. Mr Zafar for the first time in his oral evidence, though this was not foreshadowed in his witness statements, told me that in a conversation with him on the 12th or 13th August 1991 prior to this telephone conversation Dr Kamel told him that his employment was to end (and that he should resign) because of stigma. I reject this late recollection, at least in part because it does not accord with the course of the recorded telephone conversation of the 13th August 1991.
242. On the 14th August 1991 there was a Standing Committee Meeting and a Board Meeting. (It is to be noted that the Board, and not the Standing Committee had power to dismiss Mr Zafar). In some notes in the handwriting of Mr Siddiqi headed SC (i.e. Standing Committee) there is a passage:

"OHR [Mr Rout] - IZ's [Zafar's] actions: BCCI contact + Resign - due to BCCI - otherwise you will hear from [solicitors]."

243. The Board Minutes record that the Board resolved that Mr Zafar, having refused to accept the offer of employment as conveyed to him in writing by the managing director, as instructed by the vice chairman, be dismissed with immediate effect. The Board was only prepared to employ Mr Zafar as Assistant General Manager and Mr Zafar was not prepared to accept this post. On the 15th August 1991 Mr Zafar arranged to meet and met with Mr Reeves and Mrs Hilary of the Bank of England. He received, as he told me, the oral assurance that he was on the Bank of England approved list of former employees of the Bank and, though the Bank declined to put this in writing, this assurance and the confidence it inspired in him was in the forefront of his mind and of what he said when (at later dates) prospective employers raised with him questions of stigma. I have no reason to doubt this evidence. On the 16th August 1991 Mr Houssami wrote to Mr Zafar terminating his employment with immediate effect. Mr Zafar replied by letter dated the 18th August 1991 protesting at his dismissal, demanding to be given the reason for it, alleging a conspiracy and stating that he held Mr Houssami personally responsible with his "accomplices" for the "preconceived and planned damage caused to me both financially and otherwise". On the 21st August 1991 Mr Zafar wrote to Mr Reeves of the Bank of England recording the Bank of England's confirmation to him that it did not object to his appointment. Mr Reeves formally replied to this letter on the 9th September 1991.
244. On the 4th September 1991 AIBL paid Mr Zafar £12,716.16 (equal to 3 months' pay) in respect of termination of his contract. On the 4th November 1991 Mr Zafar issued a writ against AIBL claiming as damages for breach of contract payment of 2 years' salary (totalling £140,000) and loss of benefits (totalling £100,000), in all £240,000 (less tax). He showed however a marked lack of enthusiasm in proceeding with the action. He only served his Statement of Claim on the 5th March 1992. On the 13th October 1992 AIBL gave notice of payment into Court of £26,000. On the 16th December 1992 orders for preparations for trial were made on the summons for directions. The action thereafter became dormant. On the 7th August 1997 (having exhausted his available funds) Mr Zafar issued a summons for payment out of the sum of £26,000 paid into Court. On the 28th August 1997 AIBL issued a cross-summons to strike out Mr Zafar's claim for want of prosecution. (It may be mentioned that the issue of the summons and cross-summons did not deter Mr Zafar on the 7th November 1997, when defending proceedings for possession by the mortgagee of one of the properties he owned, from telling the judge that he expected to recover substantially more than £26,000 in the action against AIBL, suppressing the existence of the two summonses). On the 28th November 1997 by consent an order was made whereby the £26,000 paid into Court was to be paid out to Mr Zafar without further order and AIBL was to pay a contribution towards his costs of £10,000 in full and final settlement of all claims. Mr Zafar's costs totalled £58,000 and accordingly he was left out of pocket in the action by £23,000. At later dates after the sacking of Mr Zafar, Mr Houssami and Mr Lewis-Jones left AIBL and AIBL surrendered its banking licence on the 9th July 1993.
245. Generally I am satisfied that Mr Zafar's employment by AIBL was always under threat because of the opposition of the Resident Directors to his appointment and was doomed by reason of his personal incompatibility with them and finally brought to an end by reason of his refusal to sign a contract to accept the position of Assistant General Manager. His previous employment by the Bank was a matter ventilated about the time of his dismissal, but this was not a ground for his dismissal. It was referred to by Lord Denman and by Dr Kamel as a matter which might be taken into account, but I do not think that it was or in any way affected the outcome. The Resident Directors and Shareholders could reach no agreement with Mr Zafar as to the post Mr Zafar should occupy. Despite his protestations to Dr Kamel to the contrary, Mr Zafar insisted on the elevated status of Assistant Managing Director: and that was not acceptable to the Resident Directors or the Shareholders. The Resident Directors had had enough of him for the other reasons I have mentioned, and the Shareholders (as they decided to go along with the Resident Directors on the 19th June 1991 on the question of Mr Zafar's job title) decided to go along with those directors on his dismissal. When it came to the crunch, those directors had the Shareholders' trust more than Mr Zafar did, and the Shareholders did not want a war with the Resident Directors over Mr Zafar. Some insight into the Shareholders' attitude to his former employment by the Bank may be found in Mr Zafar's evidence to the effect that (1) though the lights were flashing regarding the Bank before his appointment, they were no barrier to his original appointment; and (2) after the collapse of the Bank the Shareholders told him they still wanted to appoint him managing director. The Resident Directors had long intended to rid AIBL of him for other reasons. I do not think that stigma played any part in his dismissal or was an effective or contributing cause of it or of the loss of a chance of his remaining with AIBL. I should add that, even if I had held that stigma was a cause, I would have held that it was only a minor contributory cause, that it did not effect the outcome and that if it did have any impact that impact was limited to marginally accelerating the inevitable; and that, since in any event Mr Zafar's employment would have been terminated for the other reasons I have given in a matter of weeks, if not days, and he received substantial compensation for this termination from AIBL no substantial award of damages was appropriate.

(iv) CVS and FEC

246. In some, probably all, his CVs sent to prospective employers from the end of 1996, Mr Zafar showed himself as employed by FEC from 1992 to date. FEC was incorporated on the 16th July 1990 by Mr Zafar and his brother Zaheer Hussain. The directors' report dated the 10th February 1992 states its principal activities to be "Project Financing, Investments, Confirming House/Trade Financing and Portfolio Management". I am satisfied that Mr Zafar alone of his family was capable of managing a company carrying on these activities. After his redundancy Mr Zafar approached the Bank for facilities for FEC. He was a majority share holder and a director until he transferred his shares to one of his brothers on the 21st July 1991 and resigned as a director on the 30th July 1991 (when no doubt the role of director was no longer tenable having regard to his position at AIBL). FEC was at all times owned and managed by members of his family. Mr Zafar in his evidence sought to distance himself from FEC, though he conceded that this company was considered a possible outlet for his energies, at any rate if the job at AIBL had not become available. I am in grave difficulties reaching any conclusion as to his relationship with FEC after he left AIBL because of the contradictory evidence given by Mr Zafar. I am quite satisfied that he told prospective employers that he had a real job at FEC and that FEC carried on a real business (see e.g. the attendance note of his interview with Mr Walker on the 30th September 1997). In his evidence he spoke of giving advice to the company. Yet the whole thrust of his evidence was that his reference to FEC in his CV was a "stop gap" to obtain an interview, i.e. a falsehood designed to cover up the 5 year gap in his employment since August 1992 and thereby improve his prospects of obtaining an interview.
247. On balance I am satisfied that he did not have a real job at FEC and that the entry in his CV was a totally false entry intended to improve his prospects of obtaining a job, and at no time did he intend to disabuse (nor did he ever disabuse) prospective employers of any misplaced belief in the truth of which he said. This is in accord with other deliberate inaccuracies in his CVs, e.g. that he had been Assistant Managing Director (and not Assistant General Manager) of AIBL, that he had been Joint Executive in charge Anglophone region of the Bank and that from 1974-1981 he was head of advances control of the UK region of the Bank.

(v) Interviews

248. Since his dismissal by AIBL Mr Zafar has been unemployed. He received from the DHSS between 1993 and 15th April 1998 some £22,000 p.a., and since that date has received £13,628.46. This includes sums in respect of the two mortgages on his home: one in favour of the Halifax Building Society ("the Halifax") and the other in favour of the Bank: yet since 1991 or 1993 he has not paid any part to the Bank, even after his last payment to the other mortgagee (the Halifax) on the 25th November 1998. Mr Zafar claims that stigma played a large part in the failure of his subsequent efforts to find employment and he particularises some 16 applications for jobs with various banks. To this effect paragraph 10 of the First Draft Statement ("Paragraph 10") reads as follows:

"10. Since losing my employment with AIBL, I have made several hundred applications to prospective employers. The tragedy is that despite being professionally qualified FCIB, I have not been able to secure alternative employment anywhere. I have been told many times on my face that although I have the relevant qualifications, background and experience but I cannot be offered a job due to BCCI's stigma and its reputation in the market place.

To name few, I have been told this on my face by Qatar Islamic Bank, Saudi International Bank DMI Banking Group, American Express, Coutts and Co, Hong Kong Shanghai Bank, Bank of Nova Scotia, Banque Indosuez, Citibank, United Bank of Kuwait plc, Merryl Lynch Bank, Prudential-Bache, Union Bank of Switzerland, Banque National de Paris, Goldman Sachs, etc. and amongst the Employment Agencies by Jonathan Wren, Sheffield-Howarth, Devonshire executive and N.B. Selection Limited, etc."

Mr Zafar's own evidence however in nowise supported this broadest of allegations, and (as will be apparent) I reject the statement in its entirety as pure fabrication. I shall consider each of these applications in turn. I should however make one general comment in respect of these applications. They were all supported by CVs. Mr Zafar attaches weight to the fact that each CV refers to his past work experience with the Bank. But it should also be pointed out that in respect of AIBL the CVs falsely stated that he was Assistant Managing Director, when in fact (if ever he was Assistant Managing Director) he was so only for some 15 days between the 3rd and 19th June 1991 and was thereafter until the 14th August 1991 Assistant General Manager; exaggerated his knowledge and experience of private banking; and in the case of a number (if not all) applications made after December 1996 (if not earlier) contained the deliberate lie that Mr Zafar had since 1992 worked for FEC.

249. I shall consider each of the interviews relied on by Mr Zafar. (I accordingly omit the interviews with Portman, KPMG Search Consultants and with Initial Recruitment both on the 21st July 1998, since no specific reliance was placed on what occurred at those meetings).

(1) Merrill Lynch International Bank Limited ("MLIB")

250. This is one of those applications in respect of which (according to Paragraph 10) at the interview Mr Zafar was told "on his face" that he could not be offered a job due to stigma. This allegation was not maintained in his evidence and his explanation for this was that the way he expressed it in Paragraph 10 was a fair way of saying that MLIB was troubled by the debacle at the Bank. The facts appear to be that in response to an advertisement in The Financial Times in respect of a professional banking position, on the 8th November 1991 Mr Zafar had an interview with Mr Penaherra which lasted half an hour. They discussed a private banking position, as Mr Zafar recorded in his letter to MLIB dated the 23rd December 1991. He was asked about his skills and connections and his banking experience at the Bank. Mr Zafar in his evidence says that 95% of the interview concentrated on the criminal culture at the Bank. This seems scarcely a sensible reason for providing an interview, and is scarcely consistent with MLIB's proposal at the end of the interview for a second interview. It also does not sit comfortably with Mr Zafar's account of the interview in his letter to MLIB of the 23rd December 1991. On the 10th December 1991 Mr Penaherra wrote to Mr Zafar that his profile did not meet MLIB's requirements.

(2) American Express Bank Limited ("AEBL")

251. On the 6th May 1992, Mr Zafar applied to AEBL in response to an advertisement in The Financial Times for a post as relationship manager. He enclosed his CV. On the 3rd June 1991 he was told that, though AEBL were impressed with the quality of his application, he was not selected. On the 11th September 1991, though there was no specific position available at that time, he was invited to an interview with a Mr Yirrell, a senior relationship manager. Mr Zafar says that Mr Yirrell did not have a copy of his CV until he handed it to him at the interview; that he then saw for the first time his connection with the Bank and made faces expressing his disgust; and that because of his apparent unease about the Bank connection, it did not surprise Mr Zafar that he heard nothing further. I do not think that this account is credible. Mr Zafar had already supplied his CV and his connection with the Bank was known before his interview: his banking experience was with the Bank and this must have been the reason for the invitation to the interview. This is confirmed by Mr Zafar's evidence that Mr Yirrell stated that he had an excellent background in the areas where AEBL was operating. It is significant that Mr Zafar had no occasion to say (as he was always primed to say) that he was on the Bank of England approved list or that the areas of his responsibility (Southern Africa) were free of fraud.

(3) Saudi International Bank ("SINB")

252. After writing on the 7th November 1992 to Jonathan Wren International ("Wren") in respect of an advertisement placed in The Financial Times for the position of head of marketing and planning at a major retail bank based in the Middle East, Mr Jarvis of Wren wrote back the following day stating that his experience and background did not match up to his client's requirements. Nevertheless the client SINB invited him to an interview on the 13th November 1992 with a Mr Peers, a member of the corporate finance division of SINB. He attended, and they discussed the position and Mr Zafar's knowledge and "contacts". Mr Peers informed him that he might be required to attend a further interview. On the 11th December 1992, however, he received a letter stating that his skills and experience were not a close enough match to their requirements. Mr Zafar says that he then telephoned Mr Peers "to obtain clarity" and that in this conversation Mr Peers both raised the topic of the Bank background and "reluctantly" informed him that his application was not being considered further because the local directors of SINB objected to taking on someone with a Bank background so soon after its collapse. Mr Zafar could not satisfactorily explain why on this occasion he did not record the call made "to obtain clarity"; and, asked for his explanation why, if this was the reason for refusal in December 1992, he made further applications to SINB two and a half months later on the 1st September 1993 and the 30th November 1994, he said that this was not a crime. In his oral evidence he adorned his story given in his Witness Statement by saying that Mr Jarvis told him that stigma was the reason for his rejection, an incident he had inexplicably failed to mention at any earlier date. I reject his evidence as to his conversations with Mr Peers and Mr Jarvis.

(4) Morgan Stanley ("MS")

253. MS were looking for a person to fill the post of a Middle East marketing specialist. In December 1992 Mr Zafar attended an interview with a manager of MS. Mr Zafar says that he was questioned about his work at the Bank and whether he had had any knowledge of the wrongdoing and was grilled whether he was a fit and proper person. The Second Draft Statement gives a quite different impression of the interview: it recounts that MS described its satisfactory dealings with the Bank and how Mr Zafar could make a meaningful contribution to their organisation. All this is omitted from the Witness Statement. Asked for his explanation, Mr Zafar gave the nonsensical reply that these were merely different ways of saying the same thing: I do not find his account of the interview in the Witness Statement convincing.

(5) National Bank of Bahrain ("NBB")

254. On the 13th July 1993 Mr Zafar had what appeared to him to be a successful interview with Mr Soudah of NBB for a job in Bahrein. On the 7th August, NBB wrote saying that other applicants better fitted the job. Mr Zafar says that he then (no doubt "to seek clarity") telephoned Mr Soudah who told him "off the record" that the executive management objected to him because of his Bank background. Remarkably this call was not recorded. It is to be noted that Mr Zafar did not list NBB in Paragraph 10 amongst those employers who told him "on his face" that the application failed on stigma grounds. I do not accept his account of his conversation with Mr Soudah.

(6) Qatar Islamic Bank SA ("QIB")

255. After an application enclosing his CV in October 1993 Mr Zafar had an interview with the managing director and two fellow directors. The managing director said that he was seriously interested. Mr Zafar was asked to attend an interview in Doha by the Board. By a letter dated the 7th November he was told that he could not be offered the position. There are remarkable differences between Mr Zafar's account of the interview in the Second Draft Statement and the Witness Statement. The Witness Statement contains reference to the hostility of tone and aggressiveness of interviewers and a split in the Board over the Bank which is not to be found in the Second Draft Statement. On the 11th November 1993 (a week after he had asserted his stigma claim) Mr Zafar contrived a telephone conversation with Sheikh Rehman of QIB with the intention of secretly tape-recording it. It is the only one of the telephone calls in respect of these applications which Mr Zafar acknowledges tape-recording. Mr Zafar explained to me this secret tape-recording on the grounds that this was "to obtain clarity" in his mind. There was no greater need "to obtain clarity" in respect of this application than in many others. Plainly this was not the reason: the purpose was to try to elicit evidence which might be of assistance on his stigma claim. Though he had a working knowledge of Arabic (the first language of the Sheikh) he chose to conduct the conversation in English. His manner on the telephone was demanding and bordered on the overbearing. He sought to prompt the answer he wanted by asking "for his own understanding": "Was it BCCI factor?" The Sheikh was no doubt on the backfoot when pressed to explain why Mr Zafar was not appointed. He did not realise that he was being set up and the call was being recorded. He knew that someone else had been appointed to the position and there was no need or reason to give an explanation which might reflect personally on Mr Zafar and might prompt a further unwelcome inquisition and it is very understandable if he sought to give a reason which was neutral as regards Mr Zafar. Yet he did not give a direct answer "Yes". He gave the non-committal reply that the Bank was "a most problematic matter" and then, when invited to do so, added a few not entirely coherent words again to the effect that the Bank was problematic. The Sheikh went on to say that Mr Zafar's background at the Bank was not a bar to employment, but that there was no other position available which could accommodate him with the position having gone to another interviewed candidate. The qualifications, experience, age and personality of the successful candidate are unknown. Mr Zafar told me that about this time the Managing Director of QIB told him that the explanation for the failure of his application was that the Central Bank in Qatar had objected to the appointment of someone with a Bank background. Yet he acknowledged that immediately after this conversation he made an application to the Qatar Central Bank and a further application to that bank at a later stage. This hardly accords with the receipt of the advice from the Managing Director which he alleges he received or that he had been given any reason to believe that his background was a bar.

(7) Coutts & Co

256. On the 13th July 1994 Mr Zafar wrote to the personnel manager of Coutts & Co enclosing his CV. On the 19th August 1994 he had an half hour interview with a Mr Middleton who asked him searching questions about his work when employed by the Bank. Mr Middleton was polite. No offer resulted. He gave no indication to Mr Zafar that his past employment by the Bank was an obstacle in his way. It is remarkable that, whilst Mr Zafar told me that Mr Middleton never said anything to the effect he would not employ him because he had been employed by the Bank, Mr Zafar included Coutts & Co in Paragraph 10 as one of the employers who told him this to his face. His explanation was that for him asking searching questions amounted to saying this to his face. This explanation affords some guidance as to how his evidence as a whole should be approached and interpreted.

(8) Sheffield-Howarth ("SH") and Bank of Nova Scotia ("BNS")

257. After sending his CV to SH, a recruitment consultancy firm, on the 10th April 1995 Mr Zafar attended an interview with a senior consultant, Mr Reynolds, and discussed the possibility of Mr Zafar filling a vacancy with SH's clients BNS. On the 9th March 1995 Mr Reynolds wrote to him stating that his application for the job could not be pursued as a large number of candidates matched BNS's requirements more closely. Mr Zafar says that at the interview Mr Reynolds stated that BNS had negative perceptions of persons who worked at the Bank in the City of London at some time during their banking career; that he wrote to Mr Reynolds on the 11th May 1995 stating that he appreciated his frankness at the interview and natural disappointment that BNS had such negative perceptions and requesting Mr Reynolds to bring to the attention of BNS a number of facts which would dispel any such perception in respect of himself; and that he received no reply. Mr Reynolds was called by the Bank to rebut this evidence. He said in his evidence that, whilst he could not specifically recall his interview with Mr Zafar, he would not have said this at the interview: and that (so far as he was aware) BNS had no such perception nor did any other bank. He told me that he could not recall receiving the letter of the 11th August 1995, but that if he had received it, he would have telephoned Mr Zafar to disabuse him of any such misapprehension. I am troubled by aspects of Mr Reynolds' evidence. He said in paragraph 5 of his witness statement that he did not put forward Mr Zafar for an interview with BNS because a number of other applicants more closely matched the job specification. Yet under a fair but skilled cross-examination by Mr Stafford, Counsel for the Employees, he told me that it was BNS who decided that he should not be interviewed and that he did not know the reason. Plainly he did not take proper care in the preparation and signature of his witness statement, but I think that he was an honest witness. I do not accept Mr Zafar's account of the interview. I cannot think that Mr Reynolds would have wasted his time on the interview if his mind-frame was that suggested by Mr Zafar. I do not think that the letter dated the 11th August 1995 was ever received: indeed I do not think that this letter (any more than the letter to Mr Walker referred to below) was ever sent.

(9) Prudential Bache Securities ("PBS")

258. Having received Mr Zafar's CV, on the 24th March 1995 Mr Leclerc of PBS interviewed Mr Zafar and a second interview followed on the 17th May 1995. No job offer was made. Mr Zafar says that, when his employment by the Bank was discussed, he was only asked the sort of questions you would expect to be asked about your previous employer. He does not in the Witness Statement suggest that any indication was given that any stigma arising from Mr Zafar's previous employment by the Bank was any form of obstacle. Yet it is to be noted that once again in Paragraph 10 Mr Zafar falsely included PBS amongst those employers who "on his face" refused him employment because of stigma.

(10) Union Bank of Switzerland ("UBS")

259. After Mr Zafar had provided them with his CV, UBS gave Mr Zafar an interview for a position with Mr Akbar Shah and Mr Kamitsis on the 6th June 1995. No job offer resulted. Mr Zafar alleges that, after Mr Kamitsis left the meeting, Mr Shah commented to him in Urdu that he was wasting his time as UBS would not take on anyone with the Bank's background. Mr Shah lives in Singapore and did not attend to give evidence at the trial. But in his witness statement he denied that he said any such thing and said that (as far as he was aware) it was not the approach at UBS to refuse to employ individuals previously employed by the Bank adding: "We would not have wasted his or our time interviewing him if this was the case". The reasoning of Mr Shah appears to me convincing. I do not accept Mr Zafar's account.

(11) United Bank of Kuwait ("UBK")

260. On the 10th November 1995, Mr Zafar had an interview with Mr Allen, Head of Private Banking at UBK. Mr Zafar had previously supplied his CV and Mr Allen was interviewing other candidates. On the 24th November 1995 Mr Allen faxed Mr Zafar that he would not be taking the discussions further. According to the Witness Statement at the interview Mr Allen said that he needed to discuss Mr Zafar's connections with the Bank with his superiors in order to take the discussion further. Yet he knew of the Bank connections before he offered the interview and Mr Zafar at no time told him that he was on the Bank of England approved list or that he was not involved in the wrongdoing. The Witness Statement quite remarkably omits a passage in the Second Draft Statement throwing a more positive light on the attitude of UBK to the Bank: the second Draft Statement records Mr Allen saying that he had felt that he was always competing for business with the Bank and that the Bank acquired businesses in which UBK was interested. Mr Zafar says that after receipt of the fax "in order for clarity in my mind" he telephoned Mr Allen and Mr Allen said in confidence that his real problem was the Bank and his superior with whom he discussed his case was very negative about the Bank. He gave me no convincing explanation why the desire for clarity did not lead him to record this telephone conversation. This account of a telephone conversation scarcely accords with Mr Zafar's letter to Mr Allen dated the 4th December 1995 and most particularly the last two sentences which read as follows:

"With [my background in banking] and the fact that my name is on [the] Bank of England's Approved List for the purpose of [the] Banking Act 1987[sic]. I trust that your decision is not in anyway the reflection of the rather unfortunate and damaging negative publicity surrounding BCCI's closure in July 1991 who, as you know, were my employers until 1991.

Your response will certainly bring clarity to my mind."

The letter is raising an open question whether stigma played a part in the decision, and is designed (together with the reply) to constitute self serving evidence in pursuit of Mr Zafar's claim for stigma damages. "Clarity of mind" means (as it means elsewhere in his evidence) evidence supportive of such a claim. I do not accept Mr Zafar's account of the interview or (if it ever occurred) of the telephone conversation.

(12) Bank Hugo Kahn ("BHK")

261. On the 24th January 1996 Mr Zafar had an informal discussion with Mr Jost of the BHK who wanted to establish contacts with banking professionals who as brokers could introduce investment business on a commission basis. This proposition was of no interest to Mr Zafar. This incident is irrelevant.

(13) PSD Recruitment Consultants ("PSD")

262. On the 12th September 1997, having previously supplied his updated CV which included his period at AIBL, Mr Zafar had a 1½ hour interview with Mr Cunninghame of PSD when they discussed a possible job with PSD's client UBK. On the 22nd 1997 Mr Cunninghame wrote that he and Mr Duncan Smith (the Chief Executive of Islamic Banking of UBK) did not think that he was quite right for this position, but would contact him if the situation changed or other opportunities arose. Mr Zafar says that at the interview Mr Cunninghame was impressed with his existing business contacts (he had none) and he (Mr Zafar) expressed concern that his Bank background would be an impediment to working with UBK; and that Mr Cunninghame said that he would speak to Mr Duncan Smith to arrange an interview with him. I am not satisfied that this issue was raised: most certainly no indication was given that it was or might be an obstacle. On the 22nd September 1997 Mr Cunninghame wrote to Mr Zafar saying that Mr Duncan Smith and he did not think that Mr Zafar was quite right for the position, but would contact him if the situation changed or other opportunities arose. On the 3rd October 1997 Mr Zafar wrote to Mr Cunningham about his rejection. He did not simply ask for the reason but said that he trusted that his association with the Bank was not the determining factor. This again suggests that his aim was to obtain evidence in support of this claim.

(14) Emirates Bank International ("EBI")

263. Following an advertisement placed in the Financial Times on the 10th September 1997, Mr Zafar by letter dated the 17th September 1997 forwarded to Mr Walker of MSL Search and Selection a copy of his CV and attended an interview with Mr Walker on the 30th September 1997. At the interview Mr Walker explained that the advertisement related to a position in the UAE with EBI. Mr Zafar says that at this interview Mr Walker commented that "since BCCI was also a UAE owned bank, there may be problems due to the losses they had incurred and the perception of BCCI". Mr Walker notified Mr Zafar that his application was unsuccessful by letter dated the 20th October 1997. In this letter Mr Walker "sugared the pill" by saying that it was after discussing the results of the interviews with the various candidates that this decision was made: in fact there was no discussion, but this formula was standard practice. Mr Zafar says that he replied by letter dated the 21st October 1997 in which he said:

"I trust that my previous employment with BCCI and the unfortunate negative publicity attached to this name was not the determining factor for [the clients] decision."

Mr Walker was called by the Bank. He denied that he made any such comment as Mr Zafar imputed to him and that he (or anyone else at MSL) would have been deterred by the publicity surrounding the Bank's collapse from putting forward a candidate formerly employed by the Bank so long only as he was possessed of the relevant background and experience to meet a stated job criteria and so long as he was not implicated in any wrongdoing: otherwise he would not have invited Mr Zafar to attend the interview. He was quite satisfied that Mr Zafar was not involved in any wrongdoing. He also said that he proposed other candidates for the position at EBI whose experience and expertise more closely matched the job criteria. In particular they had current retail banking experience which Mr Zafar lacked since 1990. Mr Walker said that the letter dated the 21st October 1997 was never received: if it had been, it would have been retained on the file and it was not so filed. EBI in fact did not select any of the candidates he proposed. I fully accept Mr Walker's evidence: he was a witness of truth. It is proper to add that I am satisfied that Mr Zafar never sent the letter dated the 21st October 1997.

(15) Al Rajhi Banking ("ARB")

264. On the 27th May 1998 Mr Zafar applied for a post at ARB. On the 4th June 1998 he sent his CV and said that "he could provide excellent references". On the 9th June 1998 he attended an interview lasting 15 minutes with Mr El Hadj of ARB. According to the Witness Statement, at the interview Mr El Hadj said that he was interviewing other candidates and referred to the loss made by ARB of $25 million due to the collapse of the Bank. Mr Zafar said that Mr El Hadj was more concerned to get off his chest his bitterness about those losses than to consider him on his merits. Quite a different picture is given in the Second Draft Statement where the emphasis is on the deep interest of Mr El Hadj's in the Bank's Islamic Banking Division, and the references to the losses is more a throw-away remark. On the 3rd July 1998 Mr Zafar wrote to Mr El Hadj referring to the "interesting conversation" which they had relating to Islamic Banking. This accords with the account in the Second Draft Statement rather than the Witness Statement, and is the more probable record and the one I accept. The following week Mr El Hadj telephoned Mr Zafar to say that the position for which Mr Zafar had applied had been withdrawn.

(16) Banque Indo-Suez ("BIS")

265. Mr Zafar in his oral evidence (but not the Witness Statement) stated that on an unsolicited application to BIS he was "on his face" told that he was rejected because of his previous employment by the Bank. Mrs Carpenter, who at all material times was head of human resources at BIS, gave evidence that, so far as she was aware, BIS had no concern about previous employment by the Bank of a job applicant (though she could not speak for recruitment consultants engaged by BIS on any job search); that it was quite contrary to the policy followed at BIS for any person in her department or for any general manager to make any such comment; that the standard response to any such unsolicited application was a short and bland rejection; and that she knew of no such exchange alleged by Mr Zafar and would have been likely to have known of it if it had occurred. I fully accept her evidence and reject Mr Zafar's account.

(17) Non Specific Applications

266. Mr Zafar told me during his cross-examination that he had made a number of telephone conversations in which prospective employers told him that his Bank background was a stumbling block to his engagement. But none of these conversations figured in his Witness Statements because (as he told me) the incidents set out in the Witness Statement were sufficient to make his case. I do not think that I can or should lend any weight to these alleged conversations for two reasons: (1) it was far too late to raise them in this case, for the Bank had no opportunity to investigate them or adduce evidence in rebuttal; and (2) I do not believe or accept his evidence.

(vi) Reasons for Unemployment

267. I have given the most anxious consideration to the questions whether Mr Zafar has satisfied me on the balance of probabilities that stigma was an effective cause (whether sole or contributing) of (a) any of the rejections I have considered or (b) the loss of a chance of getting such jobs. I have concluded that the answer is firmly in the negative. His case has been handicapped by the fact that he has called none of those who interviewed and rejected him, compounded by the facts where such witnesses have been called by the Bank they have refuted his evidence and that his own account of interviews lack evidential weight because he is not a credible witness. There were a multitude of potential candidates as causes: though stigma could have played a part, the evidence does not satisfy me that stigma did play a part or was a cause. Factors to which the various employers (or their agents) in rejecting Mr Zafar may have given varying weight include:

(1) Mr Zafar had an exaggerated view of the "catch" that he was to any prospective employer.

(2) his banking skills, and experience were generalist and his knowledge and experience in Islamic banking was limited;

(3) the recession and the diminution in the banking market in the early 1990s (with the shrinking opportunities for generalists) made his job search more onerous, a fact reflected in his inability to find a job before he joined AIBL;

(4) his written English was poor (reflected in his poorly presented applications) and his spoken English was far from fluent, a potential handicap in the senior positions to which he aspired;

(5) his personality was not impressive or immediately attractive and (under pressure) becomes highly unattractive. He is prone to lecture and bully. He is not a person who would create a favourable impression at an interview: he is neither impressive nor straightforward. The character revealed in the course of his cross-examination was of a man who cannot and will not give a direct (let alone truthful) answer to questions and that may be expected to come over to an experienced interviewer;

(6) he was not a good "team member". This would have come across (as Mr Davies said in evidence) surprisingly quickly at an interview;

(7) he does not come over as straightforward. His unwillingness and inability to distinguish truth from falsehood were at risk of revealing itself (e.g. as to his "clients", his CV, his knowledge of Islamic Banking). Prevarication is second nature to him;

(8) his age (45 in October 1990) increasingly made him too senior for posts which were a match for his talents. Age was a serious factor from 1995;

(9) his ethnic group;

(10) the absence of readily available references; and

(11) added to the above with the passage of time after September 1991 was the length of his unemployment and his dependence on benefits.

(vii) Contacts

268. Mr Zafar in his evidence includes a general statement that the collapse of the Bank damaged his relations with the contacts he introduced to the Bank who lost money and for this reason those contacts were no longer available to assist him find alternative jobs. Mr Zafar told Mr Langman that "all the big monies had transferred from [the Bank] when he left the [Bank], although there were private individuals who did not transfer their money and lost amounts in the order of £20,000 to £50,000". Mr Zafar in cross-examination alleged that Mr Langman had got it wrong and not all the "big monies" had transferred. I do not think that Mr Langman did get it wrong. Mr Zafar did not tell me anything about any use of contacts who did not lose money or give any details of who the contacts were or who did lose money or of any rejected approaches to them or of the help they might have afforded. I am not satisfied that Mr Zafar suffered any handicap in his job search by reason of negative attitudes taken by his contacts: certainly there is no credible evidence of either handicap or negative attitudes or financial loss.

CONCLUSION

269. The Employees have established that the Bank was in breach of the T&C Term of their contracts of employment, but they have not established that this breach caused financial loss to any of them. In Malik Lord Steyn gave the clearest warning that because of difficulties of proof it was improbable that many employees would be able to prove their entitlement to stigma compensation. This trial underlines that warning and the critical importance in cases such as this of credible evidence by the prospective employer or his agent of the impact of stigma on his decision to reject the job application in question.
270. The Employees' cases consisted of three elements:

(a) they relied on their long-term failure to obtain employment and they invited the Court to infer that stigma was the likely cause. But stigma was not a likely cause and there were alternative more impelling causes. There is no room for any presumption that stigma played a part in the adverse decisions made on their job applications. (Subject to one proviso) only a small minority of prospective employers are likely to have adopted the view that any stigma attached to job applicants who were former employees of the Bank and that this placed them under a cloud. The proviso is that there was not present any substantial reason to believe that the individual job applicant was personally implicated in the wrongdoing. No such reason could have existed in respect of t he general body of former employees of the Bank. Accordingly there can be no presumption that any particular prospective employer who was approached viewed former employees of the Bank as under a cloud, and the onus was on the Employees to establish that the prospective employers to whom they made job applications held this view and rejected their applications on this ground (whether on this ground alone or on this and other grounds). The Employees were unable to discharge this onus.

(b) The Employees gave evidence that on occasion the prospective employers expressly or impliedly stated that they were rejecting their job applications on grounds of stigma. But if the Court is to accept such evidence the witness must be credible and the evidence must be clearly and reliably recollected; and even if the evidence is accepted, it is not necessarily enough to entitle the Employees to succeed, for the reasons given to an applicant by a prospective employer may be of limited guidance as to his true reasons. The evidence adduced by the Employees generally was not credible and did not establish that stigma had the effect claimed.

(c) The Employees have also adduced evidence from some three prospective employers that stigma prompted their decisions to refuse the Employees' job applications, but their evidence was plainly concocted.

271. The evidential hurdles in the way of success in claims for stigma damages are substantial and any litigation is likely to prove protracted and expensive. Accordingly the greatest caution is called for before any such proceedings are instituted and the continuing viability of such proceedings must be the subject of continuing review. The prospects may be expected rarely to attain the required level to justify proceedings in the absence of reliable and tested evidence of the prospective employer or his agent. In any exceptional case when consideration is given to bringing proceedings without calling the prospective employer or his agent, at the very least the prospective employer and his agent should be approached before any proceedings are commenced to discover their account of events and see what evidence they can and will give; and the prospects of success must be assessed in the light of the response or absence of response by them. This precaution does not appear to have been taken in this case.