Present obligation vs Possible obligation

Hey Ken! Hope you’re having a good one.

I was going through the BPP kit and came across this question

On 17 March 20X7, Newthorpe’s managing director was dismissed for gross misconduct. It was decided that the managing director’s salary should stop from that date, and that no redundancy or compensation payments should be made.

The managing director has claimed unfair dismissal and is taking legal action against the company to obtain compensation for loss of his employment. The managing director says he has a service contract with the company which would entitle him to two years’ salary at the date of dismissal. The directors believe that there is a 35% chance of the managing director succeeding in his claim.

The financial statements for the year ended 30 April 20X7 record the resignation of the director. However, they do not mention his dismissal and no provision for any damages has been included in the financial statements.

Which of the following options correctly summarises the correct accounting treatment for the legal claim
made by the managing director?

The first part is obvious that there is no provision but rather a disclosure as a contingent liability.
The second part is what confuses me.

The reason they have stated is “A present obligation exists, but the outflow of
economic resources is not probable”

The other option which I chose was “A possible obligation exists, depending on whether or not some uncertain future event occurs”

My question is, how is this not a possible obligation? Doesent this obligation depend on a future event? i.e the court decision.

Could you kindly clarify the difference between the two?

Thanks for your help and I hope to make you proud. I’m aiming for a 70 which will ensure that I qualify for the first class degree for the oxford brookes program.