IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION

The Royal Courts of Justice
Strand
London
Date: Monday, 9th April 2001

Before:
HIS HONOUR JUDGE HEGARTY Q.C.
(Sitting as a Judge of the High Court)
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B E T W E E N:

ARAGONA
(Claimants)

‑ and ‑

ALITALIA LINEE AEREE ITALIANE S.p.A.
(Defendants)

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Transcribed from a tape recording by
Harry Counsell & Company
(Incorporating Cliffords Inn Conference Centre)
Cliffords Inn, Fetter Lane, London EC4A 1LD
Telephone: 020 7269 0370
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Mr Alan Newman Q.C. and Mr Philip Norman (instructed by South & Co., Solicitors) appeared on behalf of the Claimants

Mr Iain Milligan Q.C. and Ms Jane McNeill (instructed by  Middleton Potts, Solicitors) appeared on behalf of the  Defendants
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J U D G M E N T

JUDGE HEGARTY:  The defendant (which I shall refer to simply
 	as "Alitalia") is a company incorporated in the Republic of Italy which carries on business as an airline operator.  Italy is the geographical focus of its operations and the large majority of its work force is based in Italy.  However, it also employs staff in other countries.  In 1996 virtually all its pilots and cabin staff were based in Italy, together with most of its ground staff.  Only about 2,000 of its 12,000 ground staff were based abroad.  Though the match is not perfect owing to the temporary secondment of staff, the contracts of employment of the individual employees were normally subject to the law of the country in which they were based.  Most were therefore governed by Italian law.
    	The present action is brought by some 200 of Alitalia's full-time permanent staff who were based in the United Kingdom at the material time and whose contracts of employment were governed by English law.  By their re-amended particulars of claim they seek damages against their employer for breach of contract or, alternatively, a restitutionary remedy arising out of the failure and refusal of Alitalia to allocate shares to those of its employees who were employed under a contract which was not governed by Italian law, notwithstanding that such an allocation was made to those employees of equivalent status whose contracts were subject to Italian law.
    	It is to be noted that the case as originally pleaded included a claim based on discrimination on the grounds of nationality or race, but this claim was abandoned before the commencement of the trial so it is unnecessary for me to consider it further.  It is also to be noted that by order of 9th March 2001 it was directed that the issue of quantum in relation to the restitutionary claim should be tried separately from the other issues.  Subject to that direction, this is the trial of all issues in respect of each claimant.  Since this is not some form of representative action, the burden therefore lies upon each individual claimant to establish his or her case save in respect of the quantum of any restitutionary claim.
    	In the years leading up to 1996 Alitalia faced serious economic difficulties.  Despite significant reductions in its work force and various changes of senior management, losses continued to mount during the early 1990s and by 1996 it was laden with debt and on the brink of insolvency.  Labour unrest in Italy had been a major contributory factor to this unhappy situation.  This is to be contrasted with the position in the United Kingdom where industrial relations had always been good and there had been few, if any, strikes or other forms of industrial action.  Alitalia seems to have been fortunate in having a loyal British work force.
    	In this situation of crisis a new senior management team was installed headed by Mr Cempella.  In consultation with the Italian government the new management conceived a series of strategic initiatives with a view to rescuing the company.  These initiatives were embodied in a document known as the Alitalia Plan 1996-2000 dated 15th May 1996, at least in the version to which I have been referred, and to which I shall refer simply as "the plan".  Whilst this was not in any sense a secret or confidential document, it was compiled primarily for management purposes and was not, for example, distributed to individual employees.   Its main outlines are most conveniently summarised in a decision of the European Commission dated 15th July 1997.  The plan had been notified to the Commission since it involved or was considered likely to involve the provision of Italian state aid.
    	The plan was to be implemented in two interrelated phases over a period of five years.  The restructuring phase was to occupy the first two years of the plan.  This emphasised a programme of reducing costs and increasing productivity.  In large measure this was to be achieved by major changes in both the contracts of employment and working practices of the Italian work force.  By way of example, a new company, Team Alitalia, was to be set up to employ cabin staff on less costly terms.  There was also to be a significant reduction in ground staff over the period 1996 to 1998.  
    	This initial phase was to be followed by a development phase.  This involved the development of a new hub airport at Malpensa, near Milan, accompanied by a restructuring of Alitalia's network and the introduction of new routes.  It was obviously hoped and expected that Alitalia would then be able to increase its market share during this phase and transform itself into a profitable company.  
    	The plan also envisaged a substantial injection of capital by the Italian state authorities and, as I have already stated, it was this which led to the notification of the plan to the Commission and its eventual approval, subject to certain undertakings and modifications with which I am not directly concerned.  For present purposes what is much more material is the fact that the plan would require the agreement and support of the various Italian trades unions who represented Alitalia's Italian employees.  Without their co-operation it would not have been practicable for Alitalia to have achieved the reduction in costs and flexibility which it was hoped would flow from the changes in the terms of employment and working practices.
    	It was in this particular context that the plan envisaged the allocation of shares to its employees.  It was hoped that this would encourage a culture of participation rather than one of confrontation.  The plan put it in these words at section 8.1 under the general heading of "Personnel Policies":
    	"The human resources policies will be focused primarily on defining and adopting structural solutions in order to reduce labour costs as a proportion of the airline's total costs;  managing the process of repositioning the corporate organisational model;  creating a model for developing the resources based on the values of competence and professionalism;  stimulating the evolution of personnel relations toward a model centred on effective participation.
    	"Flight personnel.  The industrial and organisational model in question will require the adoption of specific contractual schemes containing the elements of stable competitiveness on which to base the implementation of the highly competitive carriers controlled.  On the employment front the substantial stability of resources for cabin crew will entail a really significant need to recruit in the HCCs, balanced by an equally major need to cope with over-capacity in Alitalia's core, to be achieved also through transfers of resources.  The total extent of the phenomenon will require an assessment to be made of the use of progressively more effective measures.  For flight engineers, the development of business within the Plan period will result in an increase in the resources used, arising from the balance between a significant high level of recruitment and turnover.
    	"Ground staff.  Major integration measures and efficiencies will be required if this category is to [be] kept within the central organisational body of the company, in a system strongly focused on the business areas.  At the same time there will have to be a continual emphasis on optimising and producing productivity savings in the operating functions as well.  In this sense it will be essential to revise the contractual regulations in terms of reducing operating costs, also as the key to the possible opening up to the market.  The personnel rationalisation measures will take place primarily through 700 early retirements and a policy of voluntary redundancy.  The introduction of highly innovative measures and discontinuity within the industrial plan will require;  collective relations to be redirected along an effective participatory route the most advanced factor of which can only be an employee shareholding scheme;  a corresponding significant culture investment."
    	The plan had a little more to say about the employee shareholding scheme referred to in the last passage which I have just read.  In section 9, which dealt with Alitalia capital operations and employee shareholding scheme, it said this:
    	"Up to 10 per cent of shares will be reserved to employees in a manner to be defined to finance two types of operations:  (a) voluntary subscription with warrants, (b) subscription concomitant with collective employment agreements."
    	The plan did not impose any specific limitations on the categories of employees who might benefit from the allocation of shares, but I have no real doubt on the evidence which I have heard that the senior management of Alitalia regarded an employee share scheme primarily as an essential ingredient in the bargaining process with the Italian trades unions the successful outcome of which was critical for the implementation of the plan.  Indeed, the injection of capital by the state authorities was apparently conditional on the agreement of unions to the plan.  Furthermore, most of Alitalia's labour costs related to its Italian work force which was by far the largest in numbers and it was there that the necessary savings could most obviously be found.
    	Negotiations then took place between Alitalia and most of the Italian unions in May and June 1996.  Substantial changes to collective agreements were proposed in respect of each of the categories of employees in question.  An agreement in principle was eventually reached between Alitalia and eight of the unions on 19th June 1996.  The minute of agreement between the parties recited the need for decisive action to turn the company around.  It recorded that the parties had agreed that the implementation of the plan constituted an essential condition for the recovery and development of Alitalia.  It recognised the need for the adoption of new contractual arrangements and acknowledged that there would have to be changes for all categories of employees.  
    	For the pilots there was to be a revision of contractual arrangements with Alitalia.  In the case of cabin staff there was to be a process of transfer to and recruitment by a new company which was eventually formed and became known as Alitalia Team, and there would also be changes in the working practices of ground staff to be determined on an individual basis with the relevant unions, accompanied by a significant reduction in numbers.  It was also recognised that there should be greater employee involvement in the company and that the acquisition of shares by the employees was an essential measure to achieve this.
    	The share participation scheme itself was annexed to this minute of agreement.  It envisaged a subscription by each eligible employee for ordinary shares at par value once the issue had been approved by the shareholders in general meeting.  Each such employee would be paid a sum which, after deduction of taxes and the like, would be equivalent to the par value of the shares allotted to him and this would then be used to acquire the shares.  The precise number of shares to which each individual employee would be entitled was not specified at that stage, though the total amount of the payments to be made by Alitalia was stated and reflected anticipated costs savings from the changes in working practices agreed with the unions.
    	Paragraph 1 of the annex setting out these proposals places an important limitation on the allotment of shares.  It reads as follows:
    "In view of Alitalia's restructuring and its effects on Alitalia's employees as a whole and on each of them taken as an individual, the parties agree to grant employees serving Alitalia under an open end labour contract governed by Italian law, in consideration of the actions envisaged for achieving the goals set [out] in the restructuring plan and on an una tantum basis, a sum to be applied exclusively to purchase Alitalia shares at par value for an overall amount equivalent to cost savings for IL520 billion;  once fully carried out, these cost savings will translate into an equity investment equivalent to no less than 20% of ordinary shares."
    	It seems fairly plain that the issue of shares to the Italian based employees was regarded by both sides as involving a degree of recompense for the agreement to implement these specific changes.  The Commission decision of 15th July 1997 refers to the agreement in these terms:
    	"The reduction of costs in particular includes productivity improvements and wage freezes for flying personnel.  In this respect the agreement reached between the company and the trade union representatives on 19th June 1996 will save costs, during the five year period from 1996 to the year 2000, of more than IL1,000 billion.  In return for this cost reduction, employees will receive a net total of IL310 billion (IL520 billion with tax and social charges), equivalent to the annual saving made in terms of labour costs, to put solely towards the purchasing of Alitalia's shares.  This agreement is the first of its kind for a quoted Italian company.  It assumes that the productivity increases and labour cost reductions will be achieved by reducing allowances, abolishing various benefits and increasing flexibility for existing staff and by setting up a self contained company fully controlled by Alitalia which will take on new cabin personnel on less costly terms.  This new company, Alitalia Team, was set up on 23rd July 1996.  Existing flying personnel will be able to move to this new company voluntarily thanks to the offer of career incentives, e.g. promotion to higher levels of responsibility."
 	It then goes on to deal with non flying personnel.
    	In the light of this agreement the Italian state authorities agreed to make available the necessary capital injection and a version of the plan was sent to the Commission and was received by it on 30th July 1996.  The Commission then sought clarification of certain aspects of the plan.  One of the matters on which clarification was sought was employee participation.  The inquiry was to this effect:  
    	"The figures contained in the plan are not sufficient to clarify the position.  Please provide a timetable regarding the issue of shares earmarked for employees.  Please describe their value on an annual basis and the portion of capital that they represent."
    	The reply referred specifically to the agreement with the Italian trades unions.  It was in these words:
    	"The agreement document between Alitalia and trade unions included in the plan sent to the Commission contains the guidelines for employee participation in share capital.  At the moment further details have not been defined regarding the ways in which the agreement is to be implemented.  In brief, the portion offered to employees will be equal to IL310 billion.  This portion shall not be less than 20% of the ordinary shares.  The increase in capital reserved to employees is linked to the annual labour cost saving envisaged by the trade union agreements of 19th June 1996, IL520 billion.   The timetable has not yet been discussed but the financial forecasts have assumed an initial subscription of 50% in 1997 and two subscriptions of 25% in the next two years."
	As I have already said, the plan was eventually approved by the Commission subject to undertakings and modifications on, I think, 15th July 1997.
    	During the course of 1997 and 1998 there was a series of further collective agreements between Alitalia and various of the Italian unions which, amongst other things, provided for a greater degree of flexibility in working practices.   On 15th January 1998 an extraordinary general meeting of Alitalia's shareholders approved the necessary increase in share capital for the purposes of issuing shares in accordance with the agreement reached with the Italian unions.  On 26th February 1998 a further agreement was reached and most of the Italian unions confirmed their commitment to the plan.  It was noted that there remained a need for rationalisation of the existing contractual structure. 
    	At this stage there was still no agreement as to how shares were to be allotted to individual employees.  This was eventually agreed between Alitalia and the Italian unions on 3rd June 1998.  This agreement recited the earlier agreements of 19th June 1996 and 26th February 1998 and it dealt with the question of allocation in this way:  
    	"Those in receipt of shares are the employees of Alitalia, Alitalia Team, Alitalia Express and Atitech belonging to the contractual categories of ground staff, pilots, flight technicians and flight assistants.  The shares will be allotted to the employees indicated above who express their wish to take part in the shareholding programme bearing in mind the procedures and timing set out in point C of this agreement.  The shares are allotted to employees employed under an Italian contract of indefinite term including Italian personnel transferred abroad.  The beneficiaries of the distribution of shares will also include employees taken on under a training and work contract.  Pilots who have already retired from companies in the Alitalia group and have been re-employed for an indefinite period with the same functions are excluded.  Persons on leave of absence or on maternity leave are entitled to their full amount.  For part time personnel the total of the allotment is in proportion to their reduced working hours."
    	Though the eligible categories of employees extended to those engaged under a training contract the essential limitation to those employed under an Italian contract of employment was retained as had been envisaged by the original agreement with the unions of 19th June 1996.  The precise number of shares to be allotted to employees in each category was set out in annex A.  It is unnecessary to refer to it in detail, though it is to be noted that the par value of the shares in each case are the equivalent of some thousands of pounds sterling.
    	The agreement also set up collective machinery for the management of the shares allotted to employees and for the exercise of voting rights on behalf of the participating employees.  Finally, it required the acceptance by individual shareholders by the return of a standard form no later than 19th June 1998.  
    	Of course the plan contained various elements which were relevant to Alitalia's activities as a whole, but I am satisfied that throughout the period from its inception to the final agreement with the unions on 3rd June 1998 senior management regarded the negotiations with the Italian unions as the key to reducing costs and increasing productivity.  These negotiations resulted in collective agreements which were intended to make major changes to the working practices of its Italian based employees and to produce more harmonious labour relations.
    	This was the particular context in which the allocation of shares to employees was intended to be introduced.  I accept the evidence of Dr Schiavone that it was never intended to distribute shares to employees who were based abroad.  
	But of course the position in the United Kingdom was very different from the position in Italy.  Alitalia recognised the Transport & General Workers Union (the TGWU) and entered into negotiations with it from time to time, particularly in relation to wages.  In view of the serious financial difficulties faced by Alitalia a temporary wage freeze was agreed in February 1994 and in the latter part of that year a two year wage deal was agreed which involved no increase for 1994 and only a very modest increase for 1995.  There were also changes to the wage structure for new recruits.  I have little doubt that in general, as I have already said, labour relations in the United Kingdom were good and that negotiations were carried out in good faith and in a constructive atmosphere.
    	When the plan was drawn up in May 1996 there was therefore no need for any radical reform of contractual arrangements and working practices in the United Kingdom of the kind which had been found necessary in Italy and there was no attempt on the part of senior management or indeed local management to engage in any negotiations with the TGWU in relation to such matters.   
    	What happened was that Mr Wulff, the area manager for the United Kingdom and Ireland, was called to Rome for a presentation by the managing director, Mr Cempella.  Subsequently, when he attended a meeting with representatives of the TGWU on 17th July 1996 he in his turn delivered a "pep talk" to his listeners.  This was of course subsequent to the agreement with the Italian unions of 19th June 1996, and he referred to this specifically, as the minutes of the meeting show.  They read as follows:
    	"Mr Wulff expressed his concern about the future of Alitalia which lay in the success of the two phase plan recently agreed by Mr Cempella with the unions.  The first phase of the plan covers the period 1996 to 1998 and contains restrictions in expenditure and sacrifice at all levels which are deemed necessary in order for us to stay in line with our competitors.  The second phase will run from 1998 to 2000 with increased levels of development, high investment and the introduction of Malpensa as a second hub in Italy.  Mr Wulff then stressed that this time a few weeks ago nobody knew whether we would even have a job to go to the following day.  In summary, Mr Wulff concluded that in order to ensure Alitalia's survival and to remain an active competitor in the market place each employee would need to work to their maximum potential with maximum efficiency."
    	This final sentence appears to show what Alitalia expected of its UK work force but this approach was quite different from that which had perforce to be adopted in Italy.  The extent to which the working conditions of Alitalia's employees in the UK were in fact affected by the company's financial crisis and the manner in which it was addressed through the plan is a matter to which I shall return in due course, but the fact remains that there was never any collective agreement in the United Kingdom of a similar nature to those involving the Italian unions under which Alitalia had agreed to allocate shares to its Italian work force.
    	How, then, is it contended that Alitalia was contractually bound to issue shares to its United Kingdom employees?  Mr Newman QC, for the claimants, submitted that an offer had been made by Alitalia to allocate shares to all its employees, not merely to those with a contract governed by Italian law, and that this offer had been accepted by conduct.  The offer, it was submitted, was to be found in the plan itself and in various ancillary documents which were subsequently published by Alitalia.  The offer was accepted, it was said, when each of the claimants undertook an increasing burden of work in order to implement the plan.  That increased burden also, it was said, constituted the consideration for the promise of shares.
    	There is, as it seems to me, an obvious evidential problem facing the claimants in seeking to establish this case and, for that matter, their restitutionary claim.  I heard from only three of the claimants, though a witness statement was also put in from Ms Helene Hancocks, who is also a claimant.  The witness statement of another witness, Mr O'Keeffe, an official of the TGWU, was also put in, though he was not a claimant.  There is, therefore, no direct evidence from the vast majority of the claimants and there is no suggestion that any of those from whom I heard was acting in any way as some sort of agent on their behalf.  
    	In those circumstances Mr Newman invited me to draw inferences as to what the position of the other claimants was in the light of the limited evidence which I heard.  But I do not readily see how I can make appropriate inferences in relation to any particular employee on various important issues, for example whether in any individual case a claimant did in fact undertake additional burdens in response to the proposal for the issue of shares.  
    	The three employees from whom I heard were Mr Aragona, who was the union convener and chairman of the shop stewards committee at the time;  Mr Norman, another shop steward and senior sales executive (leisure), now retired;  and Mr Jackson, the passenger reservations and distribution manager UK, now also retired.  Mr Aragona and Mr Jackson were both excellent witnesses who gave a fair and reliable account of the events in which they were involved.  I have some reservations, however, about Mr Norman, whose commitment to the claimants' cause made him reluctant at times to accept points put to him which seemed unhelpful to that cause.  
    	The first document on which reliance was placed was the plan itself.  As I have said, it was not distributed to UK employees but Mr Aragona obtained a copy from one of his union colleagues in Europe and Mr Norman also obtained a copy.  But there was nothing to suggest that Mr Jackson had a copy and even if he had it is unlikely that he would himself have made much of it as he did not speak Italian.  There is no evidence about any other employees.  
    	But Mr Newman placed greater emphasis on a different type of document.  Alitalia attempted to keep its employees informed about the company's affairs by various forms of newsletter.  The principal document of this kind was known as the Cronache.  On 22nd May 1996 Cronache 563 was published.  It was not delivered to each employee individually but it was deposited in various places from which it could be picked up by anyone who wished to read it.  This particular issue in effect incorporated an outline of the plan.  Mr Newman relied particularly on a paragraph of which the following is a translation.  It is headed "Areas of intervention" and reads as follows:
    	"Interventions not in line with the past must be undertaken in order to achieve the goals set by the plan, thus introducing a new organisational model into the company able to render it competitive at cost level, currently 15% over that of its European rivals.  The most significant interventions other than that on the capital to restore its financial and asset equilibrium involve setting up two HCC (highly competitive carrier) companies to which short, medium haul and long haul planes will gradually be transferred.  Said companies will operate with those crews employed with competitive contracts to replace those leaving Alitalia.  In fact it will only be possible on the one hand to reduce our costs and render them competitive compared to the competition and on the other lay the foundations for company development that bears in mind the logic of the market by rapidly changing our personnel.  Staff rationalisation will mainly take place with 700 early retirements and a golden handshake policy.  Moreover, the highly innovative elements of the Industrial Plan will require that collective relationships be in a participative key, its most advanced factor being that of an employee shareholding with significant cultural investment."
    	Mr Newman submitted that neither the plan itself nor the Cronache of 22nd May 1996 referred to any restrictions on the categories of employees who might expect to receive shares.  The unrestricted nature of the proposal was reinforced, it was submitted, by various other publications of a similar kind.  On the same day as the agreement with the Italian unions of 19th June 1996 the senior management of Alitalia issued a press release which was authorised for publication in London and, no doubt, in other places where Alitalia operated.  The relevant parts of the press release read as follows in translation:
    	"After long and drawn out negotiations that started yesterday, 18th June, at 1500 hours, the company professional associations and union organisations reached a preliminary agreement on the reorganisation plan this morning at 8.45.  A particularly significant element of the plan consists in employees holding an important share of the company's capital.  This is an absolute first in our country both from a quality and methodological point of view made possible by the contribution and level of maturity of union organisations and professional associations.  In fact this agreement includes an employee shareholding of not less than 26% of the ordinary capital shared amongst the various categories according to their contribution in terms of savings in labour costs.  Moreover, this agreement reserves three posts within the board of directors and one within the board of auditors to employee shareholders.  The fact that all components present within the company share the industrial plan objectives and relative enforcement projects is a positive guidance and useful reference for other service divisions in developing an industrial relations system of a participative nature.  The positive outcome of negotiations has highlighted the degree of team spirit within the company and common awareness of the need for structural interventions realistically accepting the cost saving objectives set out in the plan that require an important commitment in the short term to achieve future opportunities to relaunch and develop the company."
    	Mr Newman emphasised that once again this document did not refer to any limitations on the categories of employees who were to receive shares.  He stressed the wording of one of the paragraphs which I have cited where reference is made to "all components present within the company" and to "other service divisions".  I am bound to say that the precise meaning of those phrases remains somewhat obscure.  But of course, as would have been apparent to any office holder of the TGWU who read it, there had been no agreement with any union representing United Kingdom employees.  The agreement referred to in this press release was that with the Italian unions which, as has been seen, specifically stated that shares would be allotted only to employees with open ended labour contracts governed by Italian law.
    	Next, Mr Newman referred me to an issue of Alitalia News dated 12th December 1996 which included a message from the managing director Mr Cempella.  Whilst this included an expression of gratitude to all staff the introduction to this message referred once again to the restructuring plan drawn up by the company's top management and agreed to by the company unions and professional organisations.  That once again can only be seen as a reference to the agreement with the Italian unions.  This was shortly afterwards followed by a letter dated 16th December 1996 from Mr Cempella addressed to all his fellow employees.  Reliance was placed on one paragraph in particular which reads as follows:
    "I would like to recall to your attention that last March Alitalia was virtually a dying company, crushed by finances and patrimony.  Today we have a way out, a credible and approved plan for which our main state shareholder has taken up the commitment to grant a consistent recapitalisation currently under review by the European Union.  Despite organisational problems and processes still to be resolved with consequent effects on the company's climate, some signs of improvement, although weak, can be already seen, especially in terms of quality and continuity of service offered.  Customers seem to be regaining trust in Alitalia.  We have started important recovery processes in which Alitalia Team represents a turning point towards a new company model.  The agreement reached for employee shareholding which will come about at the end of the recapitalisation process outlines a new important relationship based on participation with all company human resources."
    	As Mr Newman pointed out in cross-examination, the United Kingdom employees were manifestly part of the company's human resources.  He submitted that the reference to the agreement reached for employee shareholding was general in its terms and was not on its face restricted to the Italian work force.  But once again it must plainly have been intended as a reference to the agreement of 19th June 1996.
    	On 15th July 1997 Mr Cempella wrote another letter to all his fellow employees.  This constitutes in effect a progress report on the implementation of the plan.  It included this passage:
    	"However, what were the main factors of success?  The creation of Alitalia Team;  there was also a strong sign of cultural change;  the launch of a more aggressive and flexible commercial policy;  reduction in fleet operated in strictly industrial logic of making the best use of our production plants;  the planes;  the strategy of concentrating on core business;  renewed union peace, fruit of a historical agreement that has also opened the way to the innovative instrument of an employee shareholding within the context of a responsible and mature involvement of all professional resources in the company's future destiny."
    	Mr Newman again emphasised the reference to "all professional resources" but that was, of course, in the context of the "historical agreement" with the Italian unions which made provision for share participation for the Italian work force.  
    	Then on 28th November 1997 a further edition of the Cronache reported the approval of the recapitalisation proposal by the board of directors and the decision to submit it to an extraordinary general meeting on 15th January 1998.  It included the following passage under the heading "Participation":
    	"The first half of 1998 will see the assignment of the shares to employees of all categories who at that moment will be better able to appreciate the effects of what has been done in this last year and a half, receiving a package of shares with a market value probably three times greater than their nominal value."  Once again Mr Newman emphasised the reference to "employees of all categories".
    	I can very well see that the cumulative impression that these documents might make upon a reader in the United Kingdom who was not fully apprised of the agreement with the Italian unions of 19th June 1996 would be that the senior management was proposing to issue shares to all its employees or at least to do so without discriminating between those based in different countries.  Furthermore, I think it is quite likely that many of Alitalia's United Kingdom employees gained such an impression.  But, for reasons which I have already mentioned, I am quite unable to make any positive finding to that effect in relation to any of the individual claimants who did not give evidence.  
    	In Mr Aragona's case he had obtained a copy of the agreement of 19th June 1996 from the same source and at the same time as he had obtained a copy of the plan itself.  He accepted that he would have read it and that if he had read it with care he would have realised the limitations on the proposed share issue.  Mr Norman obtained an English translation in about October 1996 and he saw that the allocation was limited to those employees with Italian law contracts.  Mr Jackson's position was unclear, though I accept that he believed that Alitalia intended to issue shares to all its employees to compensate them for the addition work which would be required of them by the plan.  But whatever may have been believed by the United Kingdom employees during 1996 and 1997, there was a development in January 1998 which Mr Newman described as "a bombshell".
    	On 22nd January 1998 Mr Cempella issued a press release which made it plain that the shares were to be issued to employees with Italian law contracts only.  One of the bullet points on the first page of this document refers to certain important and decisive events with which the new year had started including the distribution of shareholding to employees with an Italian working contract.  
    	Mr Aragona certainly understood it in this way.  Mr Norman was somewhat more reluctant to accept this was what it meant, but even he accepted that it raised concerns and doubts as to whether it was intended to issue shares to employees located abroad.  I should add that if it were appropriate to infer that other individual claimants had come to know of the possibility of an allocation of shares through the plan or the other documents relied upon by Mr Newman, it would seem equally appropriate to infer that they would also have become aware of these doubts as to whether it would extend to United Kingdom employees.
    	Up until this point there had been no attempt either by the TGWU or by any individual employees to enter into any discussions or negotiations with the management of Alitalia in relation to the issue of shares.  It is probable that there were no more than one or two informal enquiries by Mr Norman to the local management as to when they might expect shares.  But the January press release changed the situation.  It seems plain that there was considerable discontent within the United Kingdom work force about the position seemingly adopted by senior management in Rome as to the allocation of shares.  
    	This grievance was not handled well by senior management.  On 5th February 1998 Mr Aragona wrote directly to Mr Cempella in Rome in these terms:
    	"Dear Sir,
    	"Redistribution of Alitalia shares to the employees.
    	"With reference to the above I would like to advise you on behalf of all the employees of Alitalia in the UK and Ireland that there is a feeling of discontent with the policy the company has adopted by not extending the issuance of its shares to the employees abroad.  Such feelings are inevitable when we consider that we, as our colleagues in Italy, work for Alitalia and have equally contributed towards the strengthening of the company, especially under the extreme conditions imposed due to its difficult times.  It is therefore felt that the company should reconsider this discriminatory policy as it would be unethical not to recognise and rectify this situation.  I look forward to reading your reply."
    	Amongst other things, of course, that does seem to show quite plainly, if it were not otherwise evident, that Mr Aragona himself appreciated the effect of the press release of January 1998;  and he spoke or at least took it upon himself to speak on behalf of all the employees of Alitalia in the United Kingdom and Ireland.  That, I hasten to add, is not a criticism.
    	But there was no reply to that letter.  Thereafter, Mr Norman in particular began to ask Mr Rotunno more persistently when United Kingdom employees might expect shares.  On 7th May 1998 at a meeting in London he raised the matter specifically with Mr Pompei, the international human resources manager who was based in Rome, and gained the impression, from what I imagine was a fairly noncommittal reply, that matters were in hand.  
    	However, on 20th May 1998 there was a meeting in Paris between various representatives from the United Kingdom and other countries, including Mr Aragona, and Mr Pompei and Mr D'Angelo on behalf of Alitalia.  Though there is some uncertainty as to the precise words in which it was couched, I am satisfied that Mr Pompei and Mr D'Angelo made it plain that it would not be possible to extend the share scheme to overseas employees.  It is also reasonably clear, however, from an internal memorandum prepared by Mr Pompei on 29th May 1998, that Alitalia indicated that it might be willing to enter into local negotiations for improving flexibility and productivity on the basis that staff might participate in any economic benefits achieved.
    	It will be recalled that the final agreement with the Italian unions was made on 3rd June 1998.  On 4th June 1998 this was publicised in issue 603 of the Cronache.  According to Mr Aragona, this only served to exacerbate the discontent felt within the United Kingdom work force and led to calls for industrial action.  On 25th June 1998 Mr Aragona wrote to Dr Carli, the personnel manager in Rome, enclosing a number of application forms completed by United Kingdom employees.  As he recognised, this was inevitably something of a token gesture;  in any event the deadline for such applications had passed.  Once again there was no response.
    	Mr Aragona then sought help from more senior officers of the TGWU.  Mr Ryde of that union wrote to Mr Cempella on 14th August 1998 and yet again his letter was ignored.  The local management within the United Kingdom was also concerned about the deterioration in relations with the work force.  On 7th July 1998 Mr Rotunno. the United Kingdom personnel and administration manager, and Ms Bronsetti, the general manager, wrote to Mr Cempella.  That was a step which, as Mr Rotunno acknowledged, was virtually unprecedented.  The letter reads as follows, under the heading "Alitalia Group employee share programme":
    	"We are writing on behalf of the management group with local contract in London and would like to take a little of your time to express the group's opinion on the subject in question.  This initiative that has proved a great success in Italy has created a strong sense of exclusion amongst personnel giving rise to a certain amount of conflict unseen before.  The fact that our personnel and Italian SULTA union members have begun talking is indicative.  The idea of completing an application form symbolising the intention of not being excluded from the fate of a company no longer passive but able to offer potential advantages to its shareholders came out of this meeting.  Despite this climate of tension, we have succeeded up to now in preventing this protest from spoiling the performance of a team we are particularly proud of thanks to the relationship we have built up with our staff based on mutual respect of roles and those sacrifices requested and shared between 1994 and 1996.  We also thought it was up to us to explain the company's decision to exclude foreign personnel from the shareholding to local unions.  
    	"Having said this, we are convinced that including even foreign personnel could be a unique opportunity for strengthening relations between all employees of the group as well as a way of showing that your appreciation and recognition is not based on the type of contract signed with the company.  We are aware that there may be technical difficulties in this.  However, we are sure that with our combined efforts we will find a way.
    	"Thanking you for your time and assuring you of our continued support in your courageous company recovery and reorganisation process, we remain ..."
 	And then it was subscribed by the two managers to whom I have referred.
    	This did in fact elicit a response from senior management. A letter was prepared and was considered in draft by Dr Schiavone and was then signed by three senior members of the management team in Rome.  It clearly states that it would be virtually impossible now to develop a similar share programme for employees in other countries.   It continues in very general terms and amounts to little more than an assertion that Rome would look favourably on local initiatives intended to encourage the involvement of staff in the company's future.  But nothing specific seems to have come of this.  On 18th December 1998 Mr Ryde yet again wrote to Mr Cempella and yet again he received no reply.  
    	Finally, on 27th January 1999, at a meeting in London, Mr Ryde tackled Mr Wulff on the question directly.  Mr Wulff spoke off the record in fairly general terms in which he stated that the whole question was under consideration and that a response could be expected shortly;  but there does not appear to have been any response.
    	I have considerable sympathy for the claimants in this case.  The wording of the plan and the Cronache of 22nd May 1996 may well have engendered a hope or even an expectation of shares amongst those who saw these documents or heard of them.  It must have seemed scant reward for their loyalty and good industrial relations to find that shares were only going to be given to the Italian work force whose behaviour had been very different.  Furthermore, as I have said, once this became known, the discontent of the United Kingdom work force was not handled well by the senior management of Alitalia.  But I have to determine whether the claimants have any redress in law.  
    	For my part, even having regard to the fact that relationships between employer and employee can often be conducted in a highly informal fashion, I find it quite impossible to discern a binding contract between Alitalia and the claimants for the issue of shares.  The plan itself cannot, in my judgment, constitute an offer by Alitalia to its United Kingdom employees.  It was never published or communicated directly to any of them, though Mr Aragona and Mr Norman were able to obtain copies.  Whilst I can see that it may have given rise to hopes or even expectations that shares would be forthcoming, it is far too vague and uncertain as to which categories of employees would receive shares, how many they would receive, on what terms the shares would be issued and what the employees would have to do in return.  
    	The first questions which any employee would ask if he heard it would surely have been, "Am I going to get any?  If so, how many, and what do I have to do to get them?"  It is obvious that questions such as these would have to be resolved by further discussions and negotiations.  As was suggested by the wording of the plan itself and was accepted by Mr Aragona and, with rather greater reluctance, Mr Norman, it was always likely that this would have to be done by a process of collective bargaining if it was to be done at all.  In fact, of course, no such process was ever put in train in relation to the United Kingdom employees and none of the Italian unions had any authority to act on their behalf.
    	The Cronache of 22nd May 1996 was of course intended to be read by the individual employees.  It would nonetheless, I think, be unusual to find an offer capable of maturing into a binding contract in what was no more than a newsletter and I do not think that it was understood as such by the recipients on the evidence which I have heard.  But in any event it seems to me that it is largely if not entirely a summary of the plan itself and suffers from the same problem of uncertainty which could only be resolved by a process of further discussion and negotiation.
    	Mr Newman recognised these difficulties.  He sought to address them by contending that it was implicit in these documents that Alitalia was offering not to discriminate between different categories of employees so that once the agreement with the Italian unions had been reached on 19th June 1996 the documents were to be treated as embodying an offer to treat all employees, including of course ones based in the United Kingdom, in precisely the same way.  An alternative proposition to the same effect was put forward by the lay witnesses, Mr Aragona and Mr Norman, namely that the agreement with the Italian unions was a "template" for similar agreements with the unions in other countries.
    	Leaving aside any question as to whether this is in effect an attempt to resuscitate the abandoned discrimination claim, I am unable to accept it.  Once the agreement with the Italian unions had been reached and publicised, any employee becoming aware of it would or should have appreciated the need to find out what had been agreed.  In fact, as I have said, both Mr Aragona and Mr Norman obtained copies of the agreement.  
    	If this had been read and assimilated it would or should have become apparent that the Italian workers represented by the participating unions had agreed in principle to a radical reform of their working practices and that the share issue was to be restricted to the Italian work force.  There was simply no real parallel between the position in Italy and the position in the United Kingdom.  The total amount earmarked to fund the share issue was directly related to the savings envisaged as a result of the agreement with the Italian unions.  It is fairly obvious that the allocation of shares to Italian employees was, as the Commission decision stated, in return for the changes in working practices embraced by the Italian unions.  
    	But of course, even under this agreement of 19th June 1996, the precise categories of employees in Italy and the precise number of shares they would receive still had to be resolved.  Even in Italy, there would have to be further negotiations.  Even if the Italian agreement was to be regarded as being in some way a "template", it could only have been seen as the basis for possible negotiations within the United Kingdom.  Nor do I think that the various subsequent references to the work force in general terms made in the later documents relied upon by Mr Newman really advance this case, even though they may have continued to foster a belief that something similar might possibly be achieved for non Italian staff.
    	Mr Newman's final position, I think, was that the offer constituted by the documents he relied upon must have involved an implied commitment on the part of Alitalia to grant shares to United Kingdom employees on a similar basis to that ultimately agreed with the Italian unions on 3rd June 1998, but I simply cannot see how this could be regarded as making any real commercial sense.  Not only had United Kingdom employees not been asked to make the specific and extensive changes accepted by the Italian unions but I have no reason to suppose that the wage and benefit levels and structures are the same in the United Kingdom and in Italy or that the contractual obligations of the employees to their employer are the same.  Certainly there was no evidence on these matters.
    	In any event, of course, any offer which may be said to have been embodied in any of these documents must have been regarded as being no longer open for acceptance after the "bombshell" press release of 22nd January 1998, or at least from the date of the meeting in Paris with Mr Pompei and Mr D'Angelo on 20th May 1998.  
	But even if these documents singly or cumulatively were, contrary to my findings, to be regarded as embodying an offer, it is difficult to see how and when and in what manner they were accepted.  
    	As I have said, Mr Newman relied on acceptance by conduct.  Initially it seemed that his case was advanced on the basis that the contract upon which the claimants rely was to be implied from conduct.  But Mr Milligan QC, for Alitalia, reminded me of the fairly strict test for contracts of this kind laid down by the Court of Appeal in "The Aramis" [1989] 1 Lloyd's Rep. 213.  I refer to the passage in the judgment of Bingham, L.J., as he then was, at page 224 where, after referring to certain authorities, he said this:
 		"These case may be said to decide no more than that whether a contract is to be implied is a question of fact and that a contract will only be implied where it is necessary to do so.  But the cases certainly show that there is evidence from which a contract may be inferred where a shipowner who has a lien on cargo for unpaid freight or demurrage or other charges makes or agrees to make delivery of the cargo to the holder of a bill of lading who presents it and seeks to obtain delivery and pays outstanding dues or agrees to pay them or is to be taken to agree to pay them.  The parties may also, as in Allen v Coltart, show an intention to adopt and perform the bill of lading contract in other ways.  There does not, however, appear to have been a case in which a contract has been implied from mere facts (a) that an endorsee entitled as holder of the bill of lading to demand delivery, does so, and (b) that the shipowner, bound by contract with his shipper (and perhaps his charterer) to deliver goods to any party presenting the bill of lading, duly makes such delivery.  Whether on such facts (without more) a contract may be implied must be considered in the light of ordinary contractual principles.

    		"Most contracts are, of course, made expressly, whether orally or in writing.  But here, on the evidence, nothing was said, nothing was written.  So regard must be paid to the conduct of the parties alone.  The questions to be answered are, I think, twofold:  (1) Whether the conduct of the bill of lading holder in presenting the bill of lading to the ship's agent would be reasonably understood by the agents (or the shipowner) as an offer to enter into a contract on the bill of lading terms;  (2) Whether the conduct of the ship's agent in accepting the bill or the conduct of the master in agreeing to give delivery or in giving delivery would be reasonably understood by the bill of lading holder as an acceptance of his offer.

     	"I do not think it is enough for the party seeking the implication of a contract to obtain, 'It might,' as an answer to these questions, for it would, in my view, be contrary to principle to countenance the implication of a contract from conduct if the conduct relied upon is no more consistent with an intention to contract than with an intention not to contract.  It must, surely, be necessary to identify conduct referable to the contract contended for or, at the very least, conduct inconsistent with there being no contract between the parties to the effect contended for.  Put another way, I think it must be fatal for the implication of a contract if the parties would or might have acted exactly as they did in the absence of contract."
    	Of course the present case is somewhat different from that of a pure contract by implication, if I may use that expression, since it is Mr Newman's case that the offer was made expressly, subject to certain additional implications for which he contended, though of course the acceptance is said to have been by conduct.
    	In the present case, however, it was submitted by Mr Milligan that it was simply not necessary to imply a contract of the kind contended for by the claimants and that there was nothing in the contract of the United Kingdom employees which was referable to the contract contended for.  On the contrary, it was submitted that the evidence showed that they would or might have acted exactly as they did in the absence of such a contract.   
    	In his closing submissions Mr Newman also advanced a slightly different proposition.  He submitted that this might be regarded as a unilateral contract by which Alitalia expressly or by implication waived any right to communication of acceptance by the individual employees, whether that communication was by word or by deed.  But I see nothing in the documents relied upon which amounts to such a waiver or necessarily implies it.  On the contrary, I would have thought that the obvious need for further negotiations negated this particular proposition.  But assuming nonetheless for present purposes that there was an offer which could be accepted by conduct, what is that conduct and how far is it referable to the contract alleged?  
    	There is one immediate difficulty in addressing this question.  I know very little about the terms on which the various United Kingdom staff were employed.  I know that there was provision for overtime for hourly paid workers.  Despite some evidence to that effect I am not persuaded that overtime which was earned was not paid.  Managerial staff were in a different position.  They might receive bonuses in certain limited circumstances.  Though Mr Norman was rather scathing about this system, which he clearly regarded as largely illusory, Mr Jackson said that he had received about half a dozen such bonuses in his career.  He also received what was termed a shift allowance for working on a Saturday.  But, whatever the grade of staff, it seems to me that in the absence of contrary evidence it is appropriate to infer that they were paid for the work they did, though the pressure of work would obviously vary from time to time.  Indeed it is fairly obvious that, given the desperate financial position of Alitalia during the 1990s, some degree of belt tightening and hard work were likely to be required of Alitalia's employees if the company was to be saved and jobs preserved.
    	It seems to me that I must focus on the period up to early 1998 when it must have become apparent that, at the least, it was no longer obvious and could no longer be assumed that Alitalia was prepared to offer shares to its United Kingdom employees.  I refer of course to the "bombshell" of January 1998 ond the clear indication which was given by Mr Pompei in May 1998.  It was suggested that the share offer had some effect on pay bargaining, but it seems fairly clear from the evidence that these two were kept quite separate and that the union negotiators sought the best pay deal that they could get in the circumstances.   It was also suggested that there may have been a greater degree of forbearance from industrial action.  This suggestion was vague in the extreme and it was accepted by Mr Aragona that this would not have been in any event evident to management.
    	During this period, furthermore, there is no evidence of any significant reduction in staff, though there was a movement towards the recruitment of temporary staff and the outsourcing of particular functions.  I accept that the former at least might well have increased the pressure on more experienced permanent staff.  There was undoubtedly an increase in the number of flights from United Kingdom airports.  An extra slot at Heathrow became available and was taken in 1997.  It was an opportunity which would probably not have been missed in any event.  Further flights were made out of Gatwick but this was in accordance with a programme of expansion which predated the plan.  The further expansion of flights from Stansted and London City Airport was a subsequent development.
    	I have little doubt that some of the claimants worked harder during this period.  Mr Jackson undoubtedly did.  He was responsible for dealing with customer enquiries and complaints and for collecting and organising statistical data.  The additional flights imposed an additional burden upon him and his small staff.  Though the number of telephone enquiries and complaints did not increase in absolute numbers, their duration did, and I accept his evidence that in general there was a greater degree of aggravation arising from those telephone calls.  He regularly worked late and at the weekend, particularly if it was a bank holiday weekend.  
    	The opening of the Malpensa hub, though it did not begin to operate until 1998, imposed further work upon his staff well before its opening.  Once it opened it further added to his work load.  At the beginning of 1998 he lost an experienced supervisor who was not, I think, replaced.  Eventually, however, most of this work was outsourced to a call centre.  
    	But Mr Jackson took on this challenge.  He did not do so specifically because of the prospect of shares, though he occasionally thought about it and it no doubt added to his motivation.  Mr Norman also had to work somewhat harder.  But I am not persuaded that any of this can clearly be regarded as referable to the prospect of shares rather than to the trading position of the company, nor am I persuaded that they would have acted any differently if there had been no prospect of the issue of shares, nor am I persuaded that it would have been apparent to management that they were acting in a way which showed that they were doing so by way of acceptance of the alleged offer.  Even if, therefore, it had been possible to interpret the plan and subsequent documents as constituting or embodying an offer, I am unable to find any conduct which can properly be regarded as the acceptance of that offer.  In my judgment, therefore, the contract claim fails.
    	I must turn, therefore, to the restitution claim.  It was not easy to discern the precise basis of this claim and I was referred to comparatively little in the way of authority.  Mr Newman relied primarily on certain passages in chapter 26 of Goff & Jones on the Law of Restitution, 5th edition, 1998.  This deals with restitutionary claims under contracts which fail to materialise.  A recent example of such a claim is to be found in the decision of Robert Goff, J., as he then was, in the well known case of British Steel Corporation v Cleveland Bridge & Engineering Co Ltd [1984] 1 All E.R. 504.  That was a case in which there was a mutual expectation between the negotiating parties that a contract would come into existence.  However, it failed to do so as there was no agreement on certain essential terms, but the defendants had carried out certain work for the benefit of the claimant and the claimant therefore sought to recover a reasonable sum in respect of that work.  At page 511 the judge summarised the law in these terms:
		"In my judgment, the true analysis of the situation is simply this.  Both parties confidently expected a formal contract to eventuate.  In these circumstances, to expedite performance under that anticipated contract, one requested the other to commence the contract work, and the other complied with that request.  If thereafter, as anticipated, a contract was entered into, the work done as requested will be treated as having been performed under that contract; if, contrary to their expectation, no contract was entered into, then the performance of the work is not referable to any contract, the terms of which can be ascertained, and the law simply imposes an obligation on the party who made the request to pay a reasonable sum for such work as had been done pursuant to that request, such an obligation sounding in quasi contract or, as we now say, in restitution.  Consistently with that solution, the party making the request may find himself liable to pay for work which he would not have had to pay for as such, if the anticipated contract had come into existence, eg preparatory work which will, if the contract is made, be allowed for in the price of the finished work (cf William Lacey (Hounslow) Ltd v Davis [1957] 2 All ER 712, [1957] 1 WLR 932). This solution moreover accords with authority: see the decision in Lacey v Davies, the decision of the Court of Appeal in Sanders & Forster Ltd v A Monk & Co Ltd [1980] CA Transcript 35, though that decision rested in part on a concession, and the crisp dictum of Parker J in OTM Ltd v Hydranautics [1981] 2 Lloyd's Rep 211 at 214, when he said of a letter of intent that 'its only effect would be to enable the defendants to recover on a quantum meruit for work done pursuant to the direction' contained in the letter.  I only wish to add to this part of my judgment the footnote that, even if I had concluded that in the circumstances of this case there was a contract between the parties and that that contract was of the kind I have described as an 'if' contract, then I would still have concluded that there was no obligation under that contract on the part of BSC to continue with or complete the contract work, and therefore no obligation on their part to complete the work within a reasonable time.  However, my conclusion in the present case is that the parties never entered into any contract at all".
	I was also referred to William Lacey (Hounslow) Ltd v Davis [1957] 1 WLR 932 which had, of course, been cited to by Robert Goff J in the British Steel Corporation case.  That again was a case in which no contract was eventually entered into between the owner of premises and the claimant firm of builders, but the claimant firm was led to believe that there would ultimately be a contract.  It, therefore, did further work beyond that which would normally be performed gratuitously in relation to a tender.  At page 939 Barry J summarised his view of the law in this way:
		"I am unable to see any valid distinction between work done which was to be paid for under the terms of a contract erroneously believed to be in existence, and work done which was to be paid for out of the proceeds of a contract which both parties erroneously believed was about to be made.  In neither case was the work to be done gratuitously, and in both cases the party from whom payment was sought requested the work and obtained the benefit of it.  In neither case did the parties actually intend to pay for the work otherwise than under the supposed contract, or as part of the total price which would become payable when the expected contract was made.  In both cases, when the beliefs of the parties were falsified, the law implied an obligation - and, in this case, I think the law should imply an obligation - to pay a reasonable price for the services which had been obtained.  I am, of course, fully aware that in different circumstances it might be held that work was done gratuitously merely in the hope that the building scheme would be carried out and that the person who did the work would obtain the contract.  That, I am satisfied, is not the position here.  In my judgment, the proper inference from the facts proved in this case is not that the work was done in the hope that this building might possibly be reconstructed and that the plaintiff company might obtain the contract, but that it was done under a mutual belief and understanding that this building was being reconstructed and that the plaintiff company was obtaining the contract."
	That case has been criticised, but it seems reasonably clear that the defendant obtained some benefit from the work carried out by the builder in his negotiations for compensation with the War Damage Commission.  But, in the light of the British Steel Corporation case, it seems to me that it is the law that, if parties negotiate in good faith in circumstances where they both anticipate that a binding contract will come into being and one party requests services from the other in anticipation of that contract from which he obtains a benefit, he will be liable to reimburse the other party if the contract never materialises.  
	In accordance with general principles, this may extend to a case where there was no specific request, but a benefit was freely accepted by one party in similar circumstances. The limits of this principle are far from clear.  It should not, for example, extend to a case where the services in question were rendered on the footing that the party rendering them took the risk that a contract might not come into being.  
	The learned authors of Goff & Jones suggest that the key factor in determining whether a restitutionary remedy should be granted in such circumstances is the question of fault.  They cite an Australian case Sabemo Pty Ltd v North Sydney Municipal Council in which Sheppard J concluded that the key to isolating the "unjust factor" was the concept of fault.   Part of the judgment is cited in these terms.
		"'[the plaintiff] will be entitled to compensation or restitution if the other party unilaterally decides to abandon the project, not for any reason associated with bona fide disagreement concerning the terms of the contract to be entered into, but for reasons which, however valid, pertain only to his own position and do not relate at all to that of the other party.'"
	The learned authors continue as follows:
		"Restitution will then be denied if it was the plaintiff's 'fault' that the negotiations collapsed. 'Fault' is a shadowy sign-post which may point in more than one direction.  English courts are more ready to accept that it would be:

		' unconscionable for a party to be permitted to deny that which, knowingly or unknowingly, he has allowed or encouraged another to assume to his detriment'.

		"This is the basis of the equitable doctrines of promissory and proprietary estoppel, which are united, in the view of distinguished judges, by this 'one general principle shorn of limitations'.  In our view, it is a doctrine which happily reconciles two conflicting policies: a party to contractual negotiations should be free to withdraw from those negotiations at any time if it is in his best interests to do so; but, if the defendant's conduct during these negotiations has encouraged the other party to believe that a contract will be concluded and, in that belief, he renders services which have benefited the defendant, then the court will 'look at the circumstances in each case to decide in what way [the plaintiff's] equity can be satisfied'.  

		"The equitable doctrines of promissory and proprietary estoppel have distinct histories.  It is said that equitable promissory estoppel is a shield and not a sword.  But the 'sword-shield' metaphor is a dangerous half truth.  As Brandon LJ said: 

		'while a party cannot in terms found a cause of action on an estoppel, he may, as a result of being able to rely on an estoppel, succeed on a cause of action on which, without being able to rely on the estoppel, he would necessarily have failed'."
	That is a citation from a case on estoppel by convention, namely Amalgamated Investment & Property Company Limited v Texas Commerce International Bank Limited [1982] QB 84.
	Mr Newman took me to that case.  For my part I interpret the observations of Brandon LJ as simply intended to demonstrate that a particular ingredient in the claimant's cause of action may be supplied by way of an estoppel which prevents the defendant from denying the existence of that particular ingredient.
	Now, it is unclear to me from this passage in Goff & Jones whether the proposition advanced is simply by way of analogy with estoppel or is a development of it.  On the following page, reference is made to the Australian case of Waltons Stores (Interstate) Limited v Maher, which seems to suggest that the doctrine does involve some form of promissory estoppel.  The passage cited from that decision is in these terms.  
		
		"[The doctrine of equitable estoppel] extends to the enforcement of voluntary promises on the footing that a departure from the basic assumptions underlying the transaction ... must be unconscionable.  As failure to fulfil a promise does not itself amount to unconscionable conduct, mere reliance on an executory promise to do something, resulting in the promisee changing his position or suffering detriment, does not bring promissory estoppel into play.  Something more will be required.  Humphreys Estate suggests that this may be found, if at all, in the creation or encouragement by the party estopped in the other party of an assumption that a contract will come into existence or a promise will be performed and that other party relied on that assumption to his detriment to the knowledge of the first party.  Humphreys Estate referred in terms to an assumption that the plaintiff would not exercise an existing legal right or liberty, the right or liberty to withdraw from negotiations, but as a matter of substance such an assumption is indistinguishable from an assumption that a binding contract would eventuate."
	The reference to Humphreys Estate is a reference to a decision of the Privy Council [1987] AC 114.  
	This seems to indicate that the learned authors are considering the proposition that circumstances may arise by which a party may be estopped in some way from exercising the right or liberty to withdraw from negotiations.  The learned authors continue in these terms at page 673:
	"But not all voluntary promises will found an estoppel."
	And they give the example of a promise which was obviously intended to be a gift.  They go on:
		"If a defendant was estopped from denying that a plaintiff has a claim even though the parties have not contracted, then the remedies which a court may grant are diverse ..."

	And they refer to the different ways in which the equity

	might be satisfied.  They conclude in these words:

		"For these reasons, it is our view that a unified doctrine of estoppel, unified by the concept of unconscionability, will balance sensitively the competing interests of parties who enter into contractual negotiations".
	I am bound to say that that seems to me to express the authors' view of what the law ought to be rather than wat it is.  Since I have not had the advantage of a detailed examination of the case law and the principles underlying a claim of this kind, I approach it by asking the following questions.
	First, was this a case where both parties anticipated that there would ultimately be a binding contract for the issue of shares or, at least, a case where Alitalia induced a belief on the part of its United Kingdom employees that there would be such a contract?
	Secondly, did Alitalia request or freely accept a benefit from the claimants on the basis that such a binding contract would come into existence?
	Thirdly, would it be unconscionable for Alitalia to take this benefit without reimbursing the claimants in respect of it?
	Now, for reasons which I have already stated, I do not think for one moment that Alitalia intended to enter into any form of contract or series of contracts with its United Kingdom employees for the allocation of shares.  While some, perhaps many, of those employees hoped and expected that shares would be issued to them, it must have been apparent that there would have to be further negotiations to that end and no such negotiations were ever embarked upon.  In any event, since the agreement of 19th June 1996 was published and available, it must or ought to have been apparent that at that stage Alitalia had not agreed to give any shares to employees other than those with Italian service contracts.  
	Despite the occasional subsequent general references to the workforce as a whole, I do not see how it can fairly be said in those circumstances that Alitalia induced a continuing belief on the part of its United Kingdom employees (to the extent that such a belief existed) that there would be a share allocation to those employees.  
	I also have difficulty in identifying any benefit conferred on Alitalia on the assumption that there would be a binding contract.  Whilst it clearly did have the advantage of a loyal and, no doubt, hardworking labour force, on the evidence before me I cannot clearly identify any benefits which are obviously referable to the prospect of shares or which would have been recognised as such by the management of Alitalia.  Indeed, it is not possible on the basis of the evidence before me to point specifically to anything which the claimants did beyond that which they were obliged to do by their contracts of employment and for which they received remuneration.  To the extent that they did individually work harder, that is no more than is likely to have been required of them in any event, given Alitalia's parlous financial position.
	In those circumstances, it is difficult to see how it could be said to be unconscionable for Alitalia not to make recompense to the claimants for their work.  The mere fact that the subsequent grievances were not handled well by senior management is in my judgment nothing in point.
	I have come to the conclusion, therefore, that the restitutionary claim also fails and it follows that the action must be dismissed.
MS McNEILL:  My lord, I would seek judgment for the 
	defendant with costs, including the costs reserved by Master Foster on 9th March, on the standard basis, subject to detailed assessment if not agreed.

MR NEWMAN:  My lord, I cannot resist that.

JUDGE HEGARTY:  Very well, costs as asked.

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