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	United Kingdom Employment Appeal Tribunal
You are here: BAILII >> Databases >> United Kingdom Employment Appeal Tribunal >> Selective Beauty UK Ltd v Hayes [2005] UKEAT 0582_04_0503 (5 March 2005) URL: http://www.bailii.org/uk/cases/UKEAT/2005/0582_04_0503.html Cite as: [2005] UKEAT 582_4_503, [2005] UKEAT 0582_04_0503

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APPEARANCES

 

For the Appellant	MR HUGH PRESTON (Of Counsel) Instructed by: Messrs Lee & Pembertons Solicitors 142 Buckingham Palace Road London SW1W 9TR
For the Respondent	MS SUZANNE McKIE (Of Counsel) Instructed by: Messrs Charles Russell Solicitors 8-10 New Fetter Lane London EC4A 1RS

SUMMARY

Compensation for unfair dismissal. Appeal from Tribunal's decision on A's entitlement to compensation for loss of future opportunity to purchase shares. Correct approach to assessment of loss and relevance of Polkey.


 


THE HONOURABLE MRS JUSTICE COX

1. This the full hearing of an appeal by the Applicant's former employers (the Appellants) against a Decision of the Bristol Employment Tribunal promulgated on 20^th May 2004, following a Remedies Hearing to determine the appropriate sum to be paid by way of compensation for the Applicant's unfair dismissal. The total sum awarded was £54,124.00, following the application of the statutory cap on compensation prescribed by section 124 Employment Rights Act 1996. The appeal is in relation only to one part of the Tribunal's award, namely the sum calculated in respect of the Applicant's claim for loss of the share options to which he maintained he would have been entitled had he remained in his employment. The grounds of appeal criticise the approach adopted by the Tribunal in assessing compensation under this head for what was essentially a future loss of opportunity; and they challenge as perverse the Tribunal's findings of fact as to future share values, relying on fresh evidence from the Vice President of Finance and Operations at the Appellant Company, on which they have been permitted to rely in this appeal.
2. The Relevant Background

The relevant findings of fact by the Employment Tribunal in the Liability Decision, promulgated on 12^th January 2004, are as follows. The Appellant company was incorporated in January 2001 and is a wholly owned subsidiary of a company called Selective Beauty SA, which is incorporated in France. That parent company owns various other subsidiaries, which are referred to as affiliates, in Italy, Germany and Poland. The parent company's business is to negotiate agreements with manufacturers of perfumes and toiletries, known as "brands", whereby the various national affiliates then promote and sell those brands to retail outlets in their respective countries. These retail outlets, or "doors" may be prestigious High Street or West End retailers or retail chains of chemists or sometimes discount stores. This was a relatively new venture and the parent company was largely financed by venture capital or bank borrowing. Representatives of the major investors therefore sat upon what is known as a Conseil de Surveillance, which supervised the company's financial affairs, although day-to-day management of the company was carried out by a management board.

3. The Applicant was recruited with effect from 1^st December 2000 as Managing Director of the Appellant company, which was in the process of being set up as the parent company's UK affiliate. At that point virtually everything had yet to be done, including the recruitment of staff and the finding of suitable premises. The Applicant had significant experience of the market in the UK, having previously held fairly senior positions with a number of major brands. The situation he faced here was somewhat different, however. The parent company had not obtained marketing rights in respect of any of the major market leaders, but its strategy was to concentrate on obtaining rights to market new or less well-known or popular brands, in the hope that success in that area would lead to the attraction of more major brands in due course. When the Appellant company was incorporated the Applicant was formally appointed a Director, but it was accepted that he was also an employee because he had a service agreement.
4. The Tribunal found that once the company began to trade matters did not proceed as smoothly or as profitably as all parties would have wished. An examination of the performance both of the Appellants and the parent company and its affiliates over the two and half years of the Applicant's employment formed part of the agreed facts in the case. They showed that the Appellant company rarely, if ever, met its budget forecasts, even after they had been revised downwards and they always made a loss. By July of 2002 it is clear that there was a level of dissatisfaction with the Applicant within the parent company. At a meeting of the Conseil de Surveillance in July 2002 the members of the Conseil decided that they were unhappy about the Applicant's performance. It was decided not to award him a bonus and the decision was also taken to appoint an additional employee described as "a strong number two", namely Mr. Breuil, who joined the company on 20^th January 2003.
5. Between January and June 2003 problems continued to surface and there were continuing concerns over the poor performance of the company. By June of that year the management committee of the parent company had plainly reached the conclusion that matters could not continue as they were and that the Applicant should be dismissed. Having reached that conclusion they put the matter before the Conseil and the Conseil members agreed. The parent company, as major shareholder in the Appellant company, then took action to effect the formal removal of the Applicant from his position as Director. On 18^th June 2003 the Applicant was told that he had been voted off the Board by resolution of the shareholders, that they no longer had confidence in him to run the company and that he was dismissed.
6. The Tribunal found that the Appellants had proved the reason for the dismissal, which was capability. However, they also found that the Applicant was at no stage warned that the Appellants had it in mind to report their lack of confidence in him to the Conseil; nor did they give the Applicant any clear indication that disagreements, over marketing strategy in particular, were not simply matters of professional disagreement, but areas in which they felt that the Applicant lacked capability and needed to change as an alternative to dismissal. As a result the Tribunal held that the Applicant did not have a proper opportunity to put to anybody a reasoned defence of the tactics which he had adopted and his explanation of the factors to which he attributed the company's poor performance, which lay outside his effective control. Had such discussions taken place and had the Applicant been told unequivocally that the Appellants had doubts about his competence, rather than a disagreement with him upon matters of professional judgement, then the Applicant might have been able either to persuade the relevant individuals that he was right, or alternatively to change his approach in order to fall in line with what the Appellants were recommending. For those reasons, therefore, the Tribunal concluded that the Applicant's dismissal was unfair. There was no appeal from the Tribunal's Decision.
7. At the end of their Liability Decision the Tribunal recorded that the matter would be listed for consideration of remedy on the first available date after promulgation if the parties did not reach agreement on remedies before that date. The Applicant served a schedule of loss and agreement was reached between the parties on the figures under a number of the heads of claim. This however was subject to entitlement to the sums claimed, because a number of issues of principle remained in dispute between them. The remedies hearing therefore proceeded on 21^st April 2004, when both parties were once again represented by counsel who had appeared at the liability hearing. Only the Applicant gave evidence and there is an agreed note before us of his evidence relating to the share options. Both parties made oral submissions to the Tribunal.
8. At that hearing there were three issues of principle to be resolved. Firstly, the Tribunal rejected the Appellants' contention that the Applicant had failed to mitigate his loss. Secondly, on the Appellants' submission that the Applicant had contributed to his dismissal by his conduct, the Tribunal decided by a majority that there was blameworthy conduct by the Applicant and that it was a contributory factor to the decision to dismiss. The majority therefore decided that it would be just and equitable to take account of that conduct and to reduce compensation by a factor of 20 per cent.
9. The third argument advanced, and it is relevant to the issues in this appeal, was based on the well-known decision in Polkey v. AE Dayton Services Limited [1988] AC 142; namely, if the Appellants had conducted a fair procedure, would the Applicant have remained in employment? The Applicant's contention was that he had never been warned that his job was at risk at any stage; and that, if he had had adequate warning of the Appellants' proposal prior to the meeting on 18^th June 2003 when he was dismissed, then he would have been able to marshal sufficient facts and arguments to persuade any fair-minded listeners that matters were improving, in that sales were up, that there were exchange rate difficulties unique to this market and not of his making and that overall there was no reason why he should lose his job. The Appellants' argument was that, even if such a presentation had been made, given the company's performance since its formation, the various concerns expressed about the Applicant and the clear differences of opinion with him over the appropriate marketing strategies, there was no realistic prospect of the Applicant persuading even the fairest and most open-minded of audiences that he should be retained in post. In those circumstances it was argued that there should be no compensatory award. The Tribunal's conclusion on this matter at paragraph 11 was as follows:

"11. As we understood the evidence, the respondent's performance remained poor. Although sales figures were indeed up, the cost of goods was considerably higher than it ought to have been, and the company's losses were running at something approaching double those budgeted for. A fair-minded management board would have had to weigh the arguments of the applicant on the one side and those of Monsieur Cervasel and Monsieur Bertrand on the other, to the effect, in particular, that the exchange rate problems were not matters beyond the applicant's control or a major contributory factor to poor performance and such a committee would have had to weigh up, too, the fact that there was a clear and longstanding divergence of opinion between Monsieur Cervasel and the applicant as to the appropriate marketing strategies which the respondent should adopt. Weighing all those factors together, we unanimously concluded that even when faced by the applicant with all the arguments and facts at his fingertips, a fair-minded management board would have been unlikely to be persuaded that the situation should continue and that the applicant should remain in control. After all, the applicant was not in a subsidiary role but he was the head of the organisation in the United Kingdom with primary responsibility for the respondent's performance. In those circumstances, it seemed to us that even at a generous estimate, there was no more than a 20% chance that the applicant would have been able to persuade a fair-minded management board that he should retain his position, and accordingly compensation must be reduced by 80% to take account of that fact."

10. The Tribunal's Decision

The Tribunal set out their findings under the various heads of claim, namely basic and compensatory awards and claims for future losses. Under the heading "Future Loss" on the Applicant's schedule, item (viii) related to share options; and his claim was expressed as 5,000 shares at 153 Euros per share (?765,000), giving a total sum of £546,428.57. No further particulars were given of the claim. As might be expected this sum represented more than 80 per cent of the total claim advanced for future losses. It is common ground that part of the Applicant's employment package included the grant of a stock option on 24^th September 2001, under the terms of which he was entitled to purchase up to 5,000 shares in the Appellants' parent company (SBSA). Those shares could be purchased at any stage between 1^st January 2005 and 26^th July 2009 at a fixed price of ?17 each, provided that the Applicant remained in employment at the time of purchase. Once purchased, the shares could be sold at any stage, though in practice a ready market would only be available if SBSA had floated.

11. The Tribunal's Decision in relation to share options was as follows:

"Share options

The applicant made a claim for loss of substantial benefit which would accrue to him by virtue of share options. Had he remained in employment until the relevant time he would have had an opportunity of buying 5,000 shares in the respondent at the rate of e.17 per share. It was anticipated that he would have been able to sell those shares at the flotation price of e.170 per share, giving him a net profit of e.765,000, which is equivalent to £546,428.57 at current rate of exchange. The respondent's argument was that this was a highly speculative head of claim as it would be impossible to forecast market conditions with any degree of accuracy and there were many reasons why the applicant might not in any event have been able to benefit from such a concession.

On the one hand we appreciated the point that this was, indeed, speculative to some extent. On the other hand it seemed to us, firstly, that the respondent group as a whole appeared to be prudently managed and that in the circumstances it was more likely than not that there would be a flotation at broadly the share price and at broadly that rate of exchange; and that in any event we had already concluded that there was no more than a 20% chance at best that the applicant would have remained in employment even if a fair procedure had been conducted. In those circumstances, we did not think it just and equitable to make any further deductions on the basis of the speculative nature of the claim; we reduce the amount of that potential profit by 80% to take account of the limited likelihood of the applicant being able to benefit from it in any event, and reduce it by a further figure of 20% to take account of contributory fault. On that basis, the applicant's losses are reduced to £87,428.56 in respect of this head of claim."

Thus the Tribunal assessed compensation by assuming a share value upon flotation of ?170, yielding a profit upon flotation of ?153 per share. The compensation was then calculated by multiplying ?153 by the maximum number of shares that could have been purchased by the Applicant, namely 5,000, giving a total loss of £546,428.57. To this sum the Tribunal applied the "Polkey" deduction of 80 per cent and the contributory fault deduction of 20 per cent, resulting in the award of £87,428.56.

12. Fresh Evidence

Amongst the documents in our appeal bundle was an affidavit from Jean-Luc Bertrand, dated 30^th June 2004, dealing with the actual financial position of the Appellant company, the most likely date of flotation and the anticipated share price. A dispute, unfortunately, arose at the start of the hearing before us as to the precise status of this affidavit and its admissibility as fresh evidence. We heard submissions and gave our ruling with reasons on the point. For convenience and to assist the parties we shall repeat that ruling in this judgment.

13. In his first ground of appeal Mr. Preston, for the Appellants, challenged as perverse the Tribunal's finding that the Appellants' parent company, SBSA, would on the balance of probabilities be floated with a share price of ?170. He set out full particulars for that challenge. At paragraph 8 of the Notice of Appeal he applied "further or alternatively … for an order that fresh evidence be admitted and relied upon for the purposes of this appeal", namely the evidence of M. Bertrand in his affidavit. He then set out with some particularity the pleaded case in relation to that application, having regard to the tests laid down in the case of Ladd v. Marshall [1954] 1 WLR 1489, as follows:

"(1) The evidence could not with reasonable diligence have been obtained at the remedies hearing.

PARTICULARS

i. Until the remedies hearing, the Respondent [Applicant] had adduced no evidence which could properly support any finding as to the likely future share values of SBSA, despite serving a supplementary witness statement specifically for the purposes of adducing evidence relevant to his losses.

ii. The Respondent was permitted, notwithstanding the Appellants' objections, to give oral evidence at the remedies hearing in respect of the anticipated share value of SBSA upon flotation. This evidence took the Appellants by surprise. No other witnesses were present at the remedies hearing to give instructions to the Appellants' legal representatives as to the accuracy or cogency of this fresh evidence and it was not reasonably practicable to adduce any evidence in rebuttal of the Respondent's remarks, the relevant witnesses being in France at the time.

(2) The evidence is relevant and would probably have had an important influence on the hearing. The evidence reflects the actual financial position of SBSA. It is highly probable that the tribunal, faced with such evidence, would have relied upon it in concluding that the most likely date for flotation is mid 2006 and that the anticipated share price at that stage would be 31.3 Euros per share in the event of flotation or no more than 15.65 Euros per share in the event of a takeover.

(3) The evidence is credible. It is adduced by a witness who is closely involved in the financial affairs of SBSA and in a position to give a reliable indication both as to the group's future plans and its probable valuation upon flotation or takeover."

14. When the appeal was considered initially on the papers the EAT (HH Judge Peter Clarke, in chambers) ordered, on 22^nd July 2004, that there should be a Preliminary Hearing of the appeal. That Order contained the following relevant directions:

"1. This appeal be set down for a Preliminary Hearing in accordance with paragraph 9(7) of the Employment Appeal Tribunal Practice Direction at which the Appellants will be heard and at which the Respondent will be at liberty to be heard.

…

3. The Respondent must lodge with the Employment Appeal Tribunal and serve on the Appellants concise written submissions in opposition for consideration at the Preliminary Hearing within 14 days of the seal date of this Order, dedicated to showing that there is no reasonable prospect of success for any appeal.

…

5. The Respondent may within 21 days of the seal date of this Order, lodge an affidavit in response to that of Jean-Luc Bertrand, sworn on 30^th day of June 2004 and will be heard on the Appellants' application to adduce the same in evidence."

15. Before the Preliminary Hearing took place the Applicant and his representatives were therefore aware, as is the customary practice in appeals involving applications to adduce fresh evidence, that the application would be dealt with at the Preliminary Hearing, that he had an opportunity to be heard upon it at that hearing and that he had the opportunity to lodge an affidavit in response to the affidavit served from M. Bertrand. An affidavit in response from the Applicant was filed at the EAT on 21^st August 2004 and both parties filed skeleton arguments addressing the fresh evidence application and the Ladd v. Marshall tests.
16. The Preliminary Hearing was held on 25^th November 2004. Mr. Preston appeared on behalf of the Appellants, but no-one appeared to represent the Applicant. Nor did the Applicant appear himself. Ms. McKie, appearing before us for the Applicant, informed us that a trainee solicitor from the firm representing the Applicant attended only in order to take a note and sat at the back of the court. Mr. Preston told us that he was surprised that no-one had appeared to oppose his fresh evidence application; and that there was some discussion as to whether it could be resolved on that day. However, after considering the documents and hearing submissions from Mr. Preston, the EAT (HH Judge Prophet, presiding) ordered that the appeal should proceed to a full hearing and made the following Order, sealed on 26^th November, which, so far as is relevant, stated as follows:

"3. Permission be given to the Appellant to admit fresh evidence solely for the purposes of the appeal, namely the affidavit of Jean-Luc Bertrand. The Appellant shall lodge with the Employment Appeal Tribunal and serve on the Respondent a copy of such evidence within 14 days of the seal date of this Order.

…

11. Liberty to the parties to apply on paper on notice to the other party to vary or discharge this Order: the Employment Appeal Tribunal itself reserves the right to vary or discharge this Order on prior notice to the parties."

17. Mr. Preston therefore submitted that permission was given at the Preliminary Hearing to the Appellants to rely on the fresh evidence. No application was made subsequently by the Applicant's representatives to vary or set aside that part of the Order and to be heard upon it. Ms. McKie submitted that no such application had been made because the Applicant's representatives had interpreted paragraph 3 of the Order to mean only that the affidavit of M. Bertrand had been allowed in to enable the EAT at the full hearing to have the relevant background so as to understand the issues on appeal. She submitted that the application to call fresh evidence was therefore still at large and that we should determine it at this full hearing.
18. We were however unable to accept Ms. McKie's submissions. We agree with Mr. Preston that the terms of paragraph 3 of the Order of 26^th November were perfectly clear and that permission was given on that date to the Appellants to rely on the affidavit for the purposes of this appeal. The word "solely" in our view serves only to emphasise that last point and adds nothing more. There was no appeal from that Order and no application to vary it. Further, we note that in a letter to the EAT and copied to the Appellants' solicitors dated 10^th December 2004 the Applicant's solicitors applied for permission to adduce "further fresh evidence in the form of financial information relating to the Appellant and its parent company in order to allow our client to respond to M. Bertrand's evidence and to properly defend the Appellants' appeal". It was nowhere suggested in that letter that the application was made without prejudice to the Applicant's contention that the admissibility of M. Bertrand's affidavit as fresh evidence was still to be determined at the full hearing; and the letter in its terms reflects the reality of the situation, namely that the fresh evidence had already been admitted at the Preliminary Hearing for the purposes of this appeal. Further, in their Answer to this part of the Notice of Appeal, they referred only to understanding that a response was not necessary to the paragraphs referring to the application for fresh evidence, in the light of the EAT's Decision at the Preliminary Hearing.
19. Following our ruling on that issue no application was made by Ms. McKie, belatedly, to vary the Order made at the Preliminary Hearing or, following our ruling, to adduce any further fresh evidence. The appeal therefore proceeded on that basis.
20. This Appeal

Mr. Preston's first ground of appeal, which in the circumstances we can now take fairly shortly, relates to the Tribunal's finding of fact as to future share values, namely that the Appellants' group as a whole "appeared to be prudently managed and that in the circumstances it was more likely than not that there would be a flotation at broadly that share price [?170] and at broadly that rate of exchange". The only evidence before the Tribunal relating to this matter came from (a) the document produced by the Appellants in 2001 entitled "All Questions Arising about Stock Options", which the Applicant had described in his Originating Application as a "working example". This demonstrated how profit was to be calculated, taking a notional share value of ?170 and a price of ?17, yielding a profit of ?153; and (b) the Applicant's oral evidence as to discussions he said he had had with some senior individuals in the Appellant company who told him that if they got the flotation right the value of the shares could be double the worked example and that they would only float the company when they could realise this minimum profit. Mr. Preston submits, relying on the evidence from M. Bertrand, that the Tribunal was not justified in finding as they did on the evidence was wrong; that the affidavit now available provides clear and reliable evidence as to the probable share values upon flotation; and that the most that could be said on the Applicant's behalf is that the shares might be saleable within the period 2005 to 26^th July 2009 at a price of between ?16 and ?31, a mid point in the range being ?23.5. He accepted in his oral submissions that the EAT could not properly be asked to make its own finding on this issue and submitted that the appeal should, therefore, be allowed on this ground and the matter be remitted to the Tribunal to make a finding of fact taking into account the fresh evidence.

21. In response Ms. McKie sought valiantly to persuade us that M. Bertrand's statement would not have made any difference to the Tribunal's finding on this issue because it consists only of opinion and would therefore not have been relied upon; and because the Tribunal would still have preferred the Applicant's evidence, so that their finding cannot be categorised as perverse. Having read M. Bertrand's affidavit, however, we unanimously agree that his evidence, which is at present unchallenged, concerning the likely flotation date and probable share values could have had an important influence on the Tribunal's consideration of the evidence and could have led them to arrive at a different conclusion on this issue. We therefore accept Mr. Preston's submissions that we should allow the appeal on this ground and remit the matter to the same Tribunal for re-determination.
22. We turn, therefore, to the remaining grounds of appeal, which deal with the correct approach to be taken by the Tribunal in calculating the loss under this head of claim.
23. The Correct Approach to Calculation

Mr. Preston's second ground of appeal relates to the way in which the Tribunal approached this head of claim, which it is common ground was essentially a claim for compensation to represent his loss of opportunity to obtain the profit potentially to be afforded by the purchase and sale of shares in the future, that is in the period from 1^st January 2005 to 26^th July 2009. He contends that the Tribunal erred in applying a balance of probabilities test, rather than assessing the extent of what was a future uncertainty and taking the various imponderables, advanced by him in submissions, into account in calculating the loss. He relies on the authority of Allied Maples Group v. Simmons and Simmons [1995] 1 WLR 1602, which establishes that where the quantification of a Claimant's loss depends upon future uncertain events it is to be decided on the Court's assessment of the risk materialising. In his judgment at 1610C Stuart Smith LJ, with whom Hobhouse LJ agreed, said as follows:

"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 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."

Whilst this case was not provided to the Tribunal, the principle of assessment contained within it was advanced by Mr. Preston. The Tribunal were asked to approach compensation on this basis and to take the uncertainties into account by applying a percentage figure to the maximum potential loss.

24. The particular uncertainties he relied on were as follows: (a) the likely value of the shares in future if there is a flotation or takeover (now addressed in the fresh evidence); (b) the question whether the Appellants would float at all and, if so, when. The only evidence before the Tribunal on this matter was the Applicant's own evidence to the effect that "… I am still in touch with some people and my understanding is that it will float in 2005. The key people wanted it to float early". (See agreed note of evidence at page 98). It was submitted to the Tribunal that if there never was, in fact, a flotation then there would be no realisable value to any shares purchased by the Applicant; (c) the question whether the Applicant would, in fact, have decided to purchase any or all of the shares. Even if the applicant had remained in employment throughout the period within which shares could have been purchased (2005 – 2009) it was uncertain whether he would, in fact, have purchased any or all of the 5,000 shares available to him. He, in fact, gave no evidence to the effect that he would have purchased them, as is clear from the agreed note of evidence. In their Decision the Tribunal recognised that the claim was "speculative to some extent", but erred in not taking the elements of speculation into account in assessing the loss. He submits that instead they applied a balance of probabilities test and concluded that because the Appellant company "appeared to be prudently managed … it was more likely than not that there would be a flotation at broadly that share price and at broadly that rate of exchange"; and that, given that they had already made deductions for contributory fault and on Polkey grounds, it was not just and equitable to make any additional deductions in relation to what were quite separate, speculative elements in the claim.
25. Mr. Preston's fourth ground of appeal is linked to his second and we shall therefore refer to it out of turn at this point. He complains in addition that the Tribunal failed properly to assess and to take into account the possibility that the Applicant might not have remained in employment long enough to purchase any or all of the shares allotted under the stock option. The Tribunal found that there was only a 20 per cent chance that, if he had been allowed to make representations, the Applicant would have been able to persuade the Appellants to retain him in June 2003. Mr. Preston's case in relation to the share options, however, was that, even if he had been retained in June 2003, given the serious concerns as to his capacity, there was realistically little or no chance of him retaining his employment long enough to enable him to purchase the shares in 2005. The Tribunal, however, he submits, failed to consider and assess separately the chance that the Applicant would not have stayed in employment until 2005. They made only a general reference to the claim being "speculative to some extent" and considered, wrongly, that having regard to the Polkey deduction made already, it was not just and equitable to make any further deduction. Mr. Preston submits in the alternative that the Tribunal failed adequately to explain their reasoning in relation to the share option claim and that the Decision, therefore, fails the "Meek" test, a reference to the well known case of Meek v. Birmingham District Council.
26. In response Ms. McKie submits, firstly, that she does not recall Mr. Preston's submissions to the Tribunal concerning the speculative nature of the claim being as particularised as they have been before us, although she accepts that what he asserts to be the correct approach to assessing compensation for a future loss of opportunity claim was canvassed before the Tribunal. Her submission is essentially that the Tribunal were fully entitled to look at the matter "in the round" in considering the claim under this head; that they acknowledged the speculative nature of the claim and took it into account in considering what compensation it was just and equitable to award; that it was clearly implicit from the schedule of loss and the Applicant's evidence in the agreed note that he would have purchased the shares and it was not put to him in cross-examination that he would not have done, nor that he might have been dismissed for ill-health or on redundancy grounds and might not have remained in employment long enough in order to be entitled to purchase them. Further, no evidence was called by the Appellants to contradict the Applicant's evidence. She submits that the test, in assessing what compensation to award, is what the Tribunal consider is just and equitable in all the circumstances. A Tribunal is not obliged to approach it on the basis Mr. Preston suggests is correct, so long as they demonstrate that they have taken the speculative nature of the claim into account, which this Tribunal did. The Tribunal did the best they could on the basis of the only evidence put before them; and they were entitled to award the sum they did for the reasons they gave.
27. Having considered the parties' submissions, we find those made by Mr. Preston to be the more persuasive; and we regard the approach established in the Allied Maples Group case to be the correct approach to be adopted by the Tribunal when considering a claim which depends upon future uncertain events of the kind in this case. The fact that the Tribunal considered that the Appellant company "appeared to be prudently managed", in our judgment, led them into error in approaching the question of future flotation and share valuation on a balance of probabilities basis, rather than by making an assessment in percentage terms of the event happening, after taking into account the uncertainties which had been advanced before them, and explaining their findings on these uncertainties, for example when flotation would have occurred and whether the Applicant would have exercised his option and, if so, when. Further, whilst it is not entirely clear from their reasoning in the second paragraph under "Share Options", the Tribunal appear to have approached this head of compensation on the basis that they had already made deductions on "Polkey" grounds and for contributory fault and that no further allowance for the future uncertainties was appropriate. We consider that this approach was erroneous and that, notwithstanding the deductions already made, the Tribunal should have considered this future loss of opportunity claim separately, applying the test referred to above.
28. We also agree with Mr. Preston's submission that the Tribunal failed to consider separately, in assessing compensation for this claim, whether the Applicant would have remained in employment long enough to purchase the shares. It seems to us that the conventional "Polkey" approach is not applicable in relation to a claim such as this, where the future opportunity said to have been lost depends on the chances of the Applicant keeping his job for at least some 18 months after the date of dismissal, that is until at least January 2005. A finding that there was a 20 per cent chance of the Applicant keeping his job as at June 2003 does not in our judgment adequately embrace the time which would then elapse before the loss claimed might have materialised. As Mr. Preston pointed out, in a conventional case, Applicants frequently claim recurring future losses which are fairly constant, for example loss of earnings and linked benefits. A Tribunal might reasonably conclude in such a case that, in a claim for such losses over a period of, for example, 12 months, there was a 40 per cent chance of the Applicant remaining in employment for the first six of those months, but only a 20 per cent chance in relation to the following six months. A reasonable approach in such a case might well be for a Tribunal to apply an average Polkey deduction of 30 per cent to all the loss.
29. In this claim, however, the loss of opportunity arising from the share option was not a recurring loss spread over 12 months. On the contrary the loss did not even potentially arise until January 2005 at the earliest, some 18 months after the date of dismissal. In such circumstances, in considering what was just and equitable, the Tribunal should, in our view, have considered expressly the prospects for this Applicant remaining in employment until January 2005, rather than regard those prospects as already sufficiently taken into account by a Polkey deduction arrived at on an entirely different basis.
30. In conclusion, therefore, this being a claim in relation to a future loss of opportunity, we consider that the Tribunal erred in the approach they adopted to compensation and we uphold grounds 2 and 4 of the Appellants' appeal. The matter should therefore be remitted to the same Tribunal for them to re-determine the award of compensation under this head in accordance with the legal principles we have referred to. We shall return to the question of disposal at the conclusion of this judgment.
31. In his third and final ground of appeal Mr. Preston submits that the Tribunal failed to take into account the incidence of capital gains tax and/or other expenses that would have been payable by the Applicant upon purchase and/or sale of the shares. On this ground there is, unfortunately, disagreement between the parties as to whether Mr. Preston took this point below. Ms. McKie says that he did not and relies on Kumchyk v. Derby City Council [1978] ICR 1116, in submitting that it is not open to him now to advance that submission before us. Mr. Preston submits that he did raise this matter and relied on a note to this effect in the notes taken by his solicitor at the hearing. These notes, however, have not been disclosed or agreed and there is no Tribunal note before us to resolve this dispute. Mr. Preston observes that this matter has taken him by surprise and that he was unaware it was in dispute. Further he submits that the Tribunal, on re-determining this claim, might arrive at a figure which is so low as to render the point academic; but he accepts that we cannot currently assume that to be the case.
32. In relation to the dispute between the parties, once this ground of appeal was permitted to proceed to a full hearing and the Applicant was therefore on notice that it was being pursued, we consider that the burden lay upon the Applicant to apply for orders for the agreement of notes relating to the submissions made below, which would enable him to make good his submission that the matter was never raised.
33. However, in our judgment we do not need to resolve this dispute since we take the view that it is axiomatic that compensation awarded under certain heads of claim should be net of tax; and that it is not incumbent upon the parties to refer to this expressly in order for the Tribunal to have regard to it. A similar point arises in relation to Mr. Preston's criticism of the Tribunal's failure to address his submission that allowance should be made for the accelerated receipt by the Applicant of his future losses under this head of claim, the parties once again failing to agree as to whether Mr. Preston raised this point below. To the extent that it is relevant, the Tribunal should therefore consider this issue together with the incidence of tax when re-determining the claim in accordance with this judgment.
34. Disposal

The appeal is therefore allowed and the matter must now be remitted to the same Tribunal in order for them to re-determine the Applicant's claim in respect of share options in accordance with our decision. Mr. Preston sought to persuade us that we should, on remitting this matter, direct the Tribunal to admit M. Bertrand's affidavit to stand as his evidence and to direct that no further oral evidence is required from either party on the issues with which he deals. He submits that the affidavit in response dated 21^st August 2004, served by the Applicant but not considered as part of this appeal, adds nothing to the issues of flotation or share value dealt with by M. Bertrand and that it would therefore not be proportionate to permit oral evidence to be given on these matters. In particular he submits that we should direct that the Applicant should not himself be permitted to be recalled and that there should not be in this sense fresh evidence "through the back door".

35. Having considered the matter, however, we do not regard this as the right course to take. We regard it as inappropriate for us to seek to place restrictions on how the rehearing should proceed below, the question of directions for that hearing being matters for the Employment Tribunal alone to consider. In addition Ms. McKie was unable to tell us at present whether or not, in fact, M. Bertrand's evidence would ultimately be challenged. At present the disclosure her client has so far obtained from the Appellants in relation to the matters he deals with has all been in the French language and there has been insufficient time to translate it and determine to what extent, if at all, M. Bertrand's evidence would be the subject of challenge. She therefore submits that all matters of evidence should now be left to the Tribunal below to determine. We agree. The Tribunal were not assisted on a number of the issues arising on the last occasion by evidence from the Appellants. We regard it as entirely a matter for the Tribunal to decide to what extent they need to hear evidence, or further evidence, including evidence from the Applicant upon recall, in order to re-determine this head of claim in accordance with the approach we have directed. We therefore remit this matter to the Tribunal on that basis.