6 July 2022
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(10.30am)
Sir Wyn Williams: Good morning, everyone. By the reaction of one or two people so far in the distance that I can hardly see them, I guess you can hear me. Is that correct? Good. Thank you very much.
We’re going to embark today on the first of two days of hearings, dealing with various compensation issues.
There’s been some misreporting about the extent of what’s going on in the next two days. So can I be clear that there are two days devoted to discussions about compensation issues, and I use the word discussions, because essentially what we’re going to have are oral submissions from lawyers about those issues. We won’t be hearing oral evidence.
With that introduction, I should just also explain why the two days are split apart. As you’d imagine, to get so many lawyers into the same room at the same time is not an easy business. So to facilitate all the lawyers who needed to be here over these hearings I agreed that we would schedule them on a day when their advocate of choice could come to present their submissions, so that’s why we’re having a hearing this week and a hearing next week. The short delay between the hearings won’t impede the Inquiry’s work in any way.
With that introduction, I’m about to hand over to Mr Beer QC who will open the proceedings.
I do have one announcement. I was told in no uncertain terms that I should not make any cricketing analogies. In fact, I can’t avoid it. Because this evening there is a cricket match starting at the Oval and that may begin in terms of its preparation at around about 3.30 to 4 o’clock. I am hopeful – I am not saying I am confident – I am hopeful that by that time the submissions will be more or less complete. But if they are not, we will have to compete with various things going on around the cricket ground. Now, I’m sorry I had to raise the word cricket but I do not think I can be criticised for so doing in all the circumstances.
Mr Beer?
Submission by Mr Beer
Mr Beer: Thanks very much, sir. As you said, this is the hearing of submissions by all participants on the issues arising from the payment or non-payment of compensation to subpostmasters at their families.
I appear as counsel along with Mr Blake today. You will hear oral submissions later today in accordance with the timetable that you have published from Ms Gallafent QC on behalf of Post Office Ltd, from Mr Mertens on behalf of UK Government Investments and from Mr Stein QC on behalf of those core participants represented by Howe & Co solicitors.
Your terms of reference, sir, require you, amongst other things, to assess whether the commitments made by Post Office Ltd within the mediation settlement, including the Historical Shortfall Scheme, have been properly delivered. The reference there to the mediation settlement is a reference to the settlement deed of 10 December 2019.
You had originally planned to address this issue in phase 5 of your Inquiry, which is concerned with, amongst other things, redress, access to justice, the complaint review and mediation scheme, responding to the scandal and compensation schemes.
In our concluded list of issues, we had isolated the following issues in particular for consideration within phase 5 of the Inquiry: issue 182, to what extent, if at all, has Post Office Ltd properly delivered upon the commitments which it made in the mediation settlement to make improvements in its relationships with subpostmasters and to bring finality to all outstanding issues in respect of historic shortfalls via the Historic Shortfall Scheme.
183, to what extent, if at all, has the creation and implementation of the Historic Shortfall Scheme and the interim compensation scheme provided an adequate means for affected subpostmasters, managers, and assistants to obtain financial redress for wrongs which they have suffered.
However, phase 5 of the Inquiry is presently scheduled to occur in February and March of next year. In the course of your human impact hearings in London between 14 and 25 February, in Cardiff on 1 and 2 March, in Leeds on 9 and 10 March, in Glasgow on 11 and 12 May, and in Belfast on 18, 19 May, you heard from a number of subpostmasters and members of their families about the devastating financial consequences that the operation of the Horizon IT system had and is having on them, the financial consequences that civil proceedings brought against them by the Post Office had and is having on them, and the financial consequences that wrongful conviction for criminal offences (including in some cases resulting in imprisonment) had and is having on them. This included significant accounts of penury, precarious financial arrangements, bankruptcies, debt management plans, loss of credit ratings, loans for significant sums of money, and second mortgages, many of which continue to this day.
The evidence also touched upon the operation, effectiveness and speed of past and present compensation schemes offered by the Post Office.
In the light of that evidence, you decided that you ought not to wait until early spring of next year to hear the evidence about past and present compensation schemes. As you put it in a public announcement, some of these issues, “needed to be addressed sooner rather than later”. So accordingly, on 9 May, you announced that you would be conducting these hearings and thereafter gave directions for the making of written submissions and a timetable for delivering oral submissions from the recognised legal representatives of core participants.
In terms of the factual background, although you, sir, know the steps in the long and tortuous chronology which brings us to this point in mid-2022, addressing issues about the payment of compensation, to wronged subpostmasters, there may be those listening or watching the proceedings that do not. Therefore with your permission I should like to spend a little time detailing some of the background which brings us to that point today.
For present purposes it is sufficient to begin with the litigation that commenced in 2017 between Mr Alan Bates and 554 other claimants against Post Office Ltd, which is known as the group litigation. That is because it proceeded under a group litigation or a GLO.
In this litigation the claimants brought claims for compensation for alleged losses consequent on breaches of contract and other wrongful acts arising out of decisions made by the Post Office in reliance upon information generated by the Horizon IT system.
Those proceedings were brought to an end by a deed of settlement dated 10 December 2019. During the course of the litigation the managing judge handed down six judgments, two of those judgments, the common issues judgment and the Horizon issues judgment, were it is reasonable to suppose critical to the decision made by the Post Office subsequently to offer terms of settlement of the litigation.
The deed of settlement contains terms that are relevant to the issues that arise today, including by clause 2.1 the Post Office agreed to make settlement payments are they as called which in aggregate amounted to £57.75 million. Of that sum £15 million was earmarked for the legal costs of the solicitors and barristers who acted for the claimants in the group litigation, 42 million was paid over by way of damages, litigation funding, ATE costs and other costs or other relief claimed in the action. That was called the settlement payment.
By clause 3 it was provided that none of the terms of the Settlement Deed were to be construed as an admission of liability on the part of the Post Office in respect of any of the various claims made by the claimants which were the subject of the litigation.
Clause 4.1 provided that the terms of the settlement set out in the deed were to be in full and final settlement of all claims made by the claimants, save for the claims brought for malicious prosecution which were defined as being brought by “convicted claimants”.
Clause 9.4 and schedule 6 of the deed laid the foundation for the establishment of what is now known as the Historical Shortfall Scheme or the HSS.
Approximately £10.5 million of the £42 million set aside as the settlement payment were shared between the GLO claimants as compensation for the losses which they claimed in the litigation, a very substantial proportion of the settlement payment was therefore swallowed up in litigation funding and other costs.
Accordingly, most if not all of the claimants received a sum by way of compensation which was substantially less than the alleged losses which they had claimed in the group litigation.
Pursuant to the deed the Historical Shortfall Scheme was established in 2020. It is a remediation scheme. Under its terms none of the claimants who had been party to the Group litigation were eligible to seek compensation under the scheme. The HSS was and is intended to benefit all of those subpostmasters who suffered loss as a consequence of Horizon but who were not a part to the group litigation.
The scheme secondly identifies a number of principles upon which compensation under it must be assessed.
Thirdly, the scheme includes detailed provisions, dispute resolution procedures for resolving how claims should be determined in the event that an applicant and the Post Office cannot agree upon the compensation which should be awarded.
The scheme finally closed on 20 November 2020.
If you turn up in your bundle sir, tab 17, there will be an update to these in a moment, you should see figures published on 7 June 2020.
Sir Wyn Williams: Sorry, Mr Beer. Is that occasional banging disturbing you? Because if so I will try to get something done about it.
Mr Beer: Moderately.
Sir Wyn Williams: Somebody is going to try and suggest that they should bang when we’re having a break.
Mr Beer: Thank you very much. I see somebody leaving from the back. Very kind of you, sir.
You will see that at the foot of page 302 as at 7 June there were of the applications which had been made 2,368 assessed to be eligible, 155 assessed to be non-eligible. Which means that by 7 June if one adds those two figures together, some 2,523 applications had been made, so the scheme closed 27 November 2020, by June 2022, 2,523 applications made.
On 21 July 2021 the Secretary of State for Business, Energy, and Industrial Strategy announced that funds would be made available to the Post Office so that interim payments of compensation of up to £100,000 per person could be paid to subpostmasters whose convictions for dishonesty offences had been quashed. That announcement was made in a statement in Parliament.
The announcement was followed up by a press release the next day, which we have in your tab 8A of the bundle. You will see it is dated 22 July 2021 and is a press release on behalf of BEIS. It is the second page of that, page 217, to which I should draw attention under the heading “Additional information”, and it reads:
“For final compensation the Post Office is proposing alternative dispute resolution arrangements which aim to facilitate the swift quantification and resolution of compensation claims. However, interim payments announced today do not prevent people from bringing civil claims through the courts.”
So the HSS had been set up. Then in July 2021 an announcement of the payment of up to £100,000 per person for each postmaster by way of interim payments, and a proposal by the Post Office it was said to set up alternative dispute resolution arrangements for compensation to be paid finally to those whose convictions had been overturned.
As we understand it, in fact, no formal remediation scheme was constituted thereafter, and alternative dispute resolution has not occurred in relation to those whose convictions have been quashed. In practice, those whose convictions have been quashed have applied to the Post Office for an interim payment and, in the main, the Post Office has made such a payment within a very short time, i.e., promptly, often within weeks of the application being made. And the information that the Inquiry has received suggests that that interim scheme has operated well and effectively.
There remains the issue of final appointments for those whose convictions were quashed. On 14 December 2021, the Minister, Paul Scully MP, made a further statement which is relevant to the payment of compensation to subpostmasters whose convictions had by then been quashed or would after then be quashed, and we have that behind tab 8B, the statement of 14 December 2021.
The relevant parts are the last two paragraphs on page 219 where the Minister said:
“I am pleased to confirm that today the Government is making funding available to facilitate Post Office to make final compensation payments to postmasters whose convictions have been overturned. We are working with Post Office to finalise the arrangements that will enable the final settlement negotiations to begin as soon as possible. By providing this funding, Government is helping Post Office deliver the fair compensation postmasters deserve. With the Secretary of State’s status as sole shareholder in the Post Office my department continues to engage actively with Post Office Ltd on this and will maintain strong oversight of the compensation process.”
On 21 March 2022 you requested core participants to respond to the Inquiry with written submissions on the availability of compensation for three discrete subcategories of postmasters. I’m not going to outline them as matters have moved on more broadly since then.
The next day, 22 March 2022, the Minister, Paul Scully MP, made a further announcement in Parliament which we have in our tab 8C, the relevant part of which is in the second paragraph, where he said:
“The Government has long considered unfair the unequal treatment received by members of the GLO and their non-GLO peers, I am therefore pleased to announce that the Chancellor will make additional funding available to give those in the GLO group compensation similar to that which is available to their non-GLO peers.”
You received submissions in response to your request from the core participants represented by Howe & Co and Hudgell solicitors and on 9 May 2022 you issued a preliminary view in relation to compensation schemes for subpostmasters.
On 30 June 20202, so seven days ago, the Minister, Mr Scully, made a further statement to the House and you have that behind your tab 8D. I’m not going to read it all out. The main elements of it were, firstly, in relation to the GLO claimants. He said, firstly, that the Government intended to make interim payments of compensation to eligible members of the GLO cohort who were not already covered by another scheme totalling £19.5 million.
Secondly, he said that the Government was working towards delivering a final compensation scheme for the GLO claimants and would be appointing Freeths Solicitors to assess the data and methodology that they had developed in relation to the 2019 settlement.
Third, that members of the GLO group would be able also to claim reasonable legal fees as part of their participation in the final compensation scheme.
Then, secondly, in relation to those who convictions had been quashed, the Minister announced that a number of subpostmasters had agreed to refer the issues of non-pecuniary damages to a process of early neutral evaluation to be conducted by Lord Dyson.
So your request to core participants invited submissions on 12 issues and they are set out in tab 2 of your bundle, which I would invite you to turn up. They are broadly divided into three categories: issues arising from the existing Historical Shortfall Scheme; issues concerning the compensation to be paid to those subpostmasters whose convictions have been quashed; and issues relating to the payment of fair compensation to the Group litigation claimants.
I would propose to identify by reference to those three categories the issues that we have identified as your counsel team as arising in the light of all of the written material that has been lodged by the core participants. I should state in that regard that we as your counsel team will not be making positive submissions as to outcome on any of those issues.
So category 1 or category A, issues arising under the Historical Shortfall Scheme. You have in front of you, sir, the core material in relation to the operation by design of the Historical Shortfall Scheme. So in tab 14 you have the Terms of Reference of the HSS; in tab 15 you have the Terms of Reference for the Independent Advisory Panel to the Historical Shortfall Scheme; in tab 16 you have the eligibility criteria for the Historical Shortfall Scheme; in tab 17 you have a document called “Consequential loss principles and guidance for the Historical Shortfall Scheme”; in tab 18 you have a questions and answers document published by the Post Office as to the operation of the Historical Shortfall Scheme.
Then going back to tab 7A, please, you have two versions of application forms under the Historical Shortfall Scheme, and so from page 188 to 194 you have the version that was extant from May 2020, and then from 195 to 202 you have the version that was extant from June 2020. So that’s the underlying material.
It seems to us that the four issues which you had previously identified in your document asking for submissions remain fit for consideration by you along with an additional issue identified by core participants. I will describe the four issues previously identified and fill them out a little by reference to the submissions and then turn to the additional issue, and do the same.
Issue 1 is the heads of loss which are recoverable under the HSS and the reasons for any exclusions. That on its face raises two separate issues, the heads of recoverable loss and reasons for exclusions from the scheme.
Dealing with heads of recoverable loss first, you will have seen that despite its name which suggests that the focus of attention is shortfalls, the HSS in fact allows in principle the payment by the Post Office of much wider classes of compensation than the simple repayment of sums of money wrongfully taken by the Post Office from subpostmasters, or wrongly paid by subpostmasters to the Post Office, or sums of money wrongly treated by the Post Office as owing by subpostmasters. That it includes, in principle, the payment of much wider classes of compensation is not clear from the Terms of Reference of the scheme at tab 14, which only refer to shortfalls, or the eligibility criteria at tab 16, which again only refer to shortfalls.
However, it is clear from the Terms of Reference of the HSS Independent Advisory Panel at tab 15 that the scheme does permit the payment of consequential losses, and if I could invite you to turn that up please, tab 15 at page 285.
If one looks at paragraph 4A of the Terms of Reference for the Independent Advisory Panel consequential losses are defined to mean financial or non-financial losses that are not shortfall losses, shortfall losses being defined by paragraph 4D.
Then perhaps more significantly, it’s also clear from the consequential loss principles and guidance at tab 17 that such consequential losses are in principle recoverable. One can see that from paragraph 1.3 but more significantly, from paragraphs 5.1 to 5.10 between pages 291 to 295, one can just scan the headings there which include claims for loss of earnings, loss of profit, loss of property, loss of opportunity or loss of chance, penalties, and increased costs of financing, bankruptcy and insolvency, legal and professional fees, stigma and damage to reputation, and personal injury or harassment. That a wide range, a very broad spectrum of losses are in principle recoverable, providing that they have been caused as a direct consequence of the Horizon shortfall loss that is claimed.
So it seems from those documents that the issues which may arise are not ones of principle or theory, or drafting in relation to the terms of the HSS, but at a more practical level, as to whether the operation of the scheme on the ground is such that subpostmasters are put in the best position possible to recover such consequential losses under the HSS.
Aside from the provision of legal assistance, to make and pursue claims under the HSS, an issue that I will address in a moment, the other issues which appear to arise include the following: both Howe & Co and Hudgell Solicitors who represent the vast majority of subpostmasters in this Inquiry, state in their submissions that in their experience when applications have been made under the HSS by subpostmasters themselves, heads of loss, especially these consequential losses, have been routinely missed from the applications, often meaning that significant sums of money to which the subpostmasters are in principle entitled have been left out.
If that is right, you may wish to consider what it is about the way in which the scheme is operated that has caused such a result.
Sir Wyn Williams: When you say it is missed out, if that’s the phrase you used, you mean it was never included in the application form?
Mr Beer: Yes.
Sir Wyn Williams: Fine.
Mr Beer: One point that is made, firstly, is whether the application form itself was designed in a way which actively encouraged subpostmasters to pursue these claims for consequential losses or whether, like the Terms of Reference and the eligibility criteria, the focus is too on shortfalls.
The Post Office say in their submissions at tab 7 at page 172 to 173, it’s the last line on 172:
“The HSS application form accordingly invited postmasters to identify any such shortfall that the applicant has repaid or is regarded by Post Office as still owing [shortfall losses] as well as ‘any other losses claimed by Horizon shortfall’, namely consequential losses”, and a cross-reference in footnote 7 is given to the consequential loss principles and guidance document.
It is said, continuing, consequential loss is defined to mean financial or non-financial loss that is not a shortfall loss, which we have seen is obviously correct by looking at the consequential loss and guidance document – sorry, consequential loss principles and guidance document.
If we turn up the application form, which is the next tab, using the May 2020 version, there is no material difference between the May and the June version in this regard, you will see from page 190 a series of boxes for an applicant to complete, and on the second page, on page 191, under the heading “Shortfalls”, the applicant is presented with the following statement:
“For each shortfall in respect of which you are applying please specify”, and then there are six subparagraphs setting out the information that is to be given in relation to the shortfall.
Then question 19 – sorry, question 20, also relates to shortfalls. Question 21 is about whether there had been an audit into the relevant branch. Question 22 concerns whether there was any other investigation into the shortfall. Question 23 is whether action was taken by the Post Office as a result of the alleged shortfall. Then question 24 does ask the broad question:
“Have you experienced any other losses that are directly related to the alleged shortfalls in respect of which you would like to claim. If yes, please provide the following details for each alleged loss: the nature of the alleged loss, the dates of the alleged loss, how the loss arose as a direct result of the alleged shortfall, and the value/size of the loss.”
Then there is a little box for a person to include that information.
You may wish to consider whether that single question, not mentioning consequential losses, not mentioning the consequential loss principles and guidance, has led to the issue that both Howe & Co and Hudgell Solicitors have raised. And, if so, what is to be done about it?
The second issue is whether the facility within the scheme for a payment to a subpostmaster in the interests of fairness, even though they cannot discharge the burden of proving on the balance of probabilities that they have suffered a loss, is in fact operating in practice as a sufficient mechanism to ensure that subpostmasters are properly compensated.
We can see the operation of that facility, the fairness principle, written into the scheme in a number of places. Can I invite you to turn up tab 17 please, which is the consequential loss principles and guidance document.
Under paragraph 3.1 at the foot of page 289 under the heading “Key principles”, paragraph 3.1 is headed “Burden of proof in relation to consequential losses”, and reads:
“3.1.1 The burden of proof is on the postmaster to provide sufficient evidence in support of their claim to demonstrate that on the balance of probabilities, i.e. a greater than 50 per cent likelihood, (a) such losses have been suffered, and (b) as a consequence of a Horizon shortfall as such are found in the common issues judgment or the Horizon issues judgment. This means evidencing the fact that a loss was incurred, the amount of that loss, and that the cause of the loss was due to Horizon shortfall.
“3.1.2 where the subpostmaster is unable to satisfy the burden of proof in relation to their claim, their claim may nonetheless be accepted in whole or in part if the scheme considers it to be fair in all the circumstances.”
Then under 3.2.3, which is under a cross heading of “Evidence”, the guidance document states:
“The need to provide evidence is particularly important where a postmaster’s claim relates to matters which are known only to the postmaster. While the burden is on postmasters to provide sufficient evidence to demonstrate their claim for consequential loss, the scheme will also consider any relevant evidence Post Office holds when assessing the claim. Any key supporting documentation relied upon will be shared with postmasters when they receive the outcome of their claims to enable them to consider whether they wish to accept the offers made to them.”
I will come back to that in a moment.
The second place in which we can see the fairness principle described is in tab 15, of your bundle which is the terms of reference for the Independent Advisory Panel to the HSS. It is at page 287 and clause 30, this reads:
“In formulating its recommended offer the Panel may recommend the making of an offer to the postmaster if, guided by broad considerations of fairness, the Panel considers that doing so would produce a fair result in all the circumstances of the particular case. For the avoidance of doubt, in doing so the Panel’s discretion will not be confined solely to the specific heads of consequential loss claimed by the postmaster but will take into account at any facts and matters which the Panel considers will produce a fair result on the facts of a particular case.”
So in those two places one can see that the scheme and, in particular, the Panel are to be guided by broad considerations of fairness, that the Panel’s discretion is not confined solely to heads of loss claimed, and that the Panel may take into account any facts and matters which it considers will produce a fair result in the circumstances of a particular case.
In terms of the operation of the scheme in practice, there is no information that we have seen as the Inquiry, no data in particular, and no explanation as to the approach that’s been taken, as to the frequency with which this facility has been used, i.e. the fairness principle applied even though a subpostmaster on evidence grounds has fallen short of proving a loss on the balance of probabilities, nor whether there are any examples of the initiative in fact having come from the Panel to award a sum outside a class of loss, a consequential loss claimed by the subpostmaster, i.e. where the Panel has taken the initiative and suggested to a subpostmaster it appears on the facts that you have presented that there is a category of loss or there are broader categories of loss that you ought to have claimed. You should do so. Or examples of where the Panel has made an award on the basis of a broad consideration of what is fair, rather than the application of the legal principles of remoteness, causation, mitigation, and quantum.
So the question which arises is whether this fairness facility is operating in practice in circumstances where for the reasons described by the subpostmasters it’s very likely that a high number of them have not retained records from a decade or two decades ago that are necessary to prove to the relevant standard the losses that they have suffered. That’s an issue that you may wish to explore in particular with the Post Office.
Turning then to the reasons for exclusion. The reasons for exclusion of certain classes of applicant have been broadly explained in all of the submissions of the core participants and I’m not going to rehearse them. But an outstanding issue is the exclusion of applicants who did not apply within the relatively short window during which the scheme was open for applications, which relatively short window was at the height of the pandemic, and the approach that the Post Office has taken after that closure of the window to applications made out of time.
You will see in tab 7, at page 176, at paragraph 23, this is the Post Office submissions, the Post Office say:
“The scheme was initially open to applications from 1 May to 14 August 2020. This deadline was subsequently extended by 15 weeks until 27 November 2020 in order to enable further applicants to apply following an amendment to the scheme’s eligibility criteria, as well as to accommodate difficulties in making applications due to the Covid 19 pandemic.”
Then this:
“Since closure of the scheme to applications, Post Office has received in excess of 170 applications to date, all of which Post Office is actively considering how best to address”, so you may wish to consider the approach that the Post Office is taking to applications made out of time and whether that statement, which is “We’re still thinking about it”, is adequate in the circumstances.
Issue 2, sir, under this first category is whether there has been delay and, if so, the causes of delay in processing applications under the HSS. As we said, after the 15-week extension period to 27 November 2020 the scheme was closed.
In terms of the number of applications made and the awards made, if we can go back to tab 19, please, which we looked at earlier, this time look at the second page, page 303. Again, these are figures to 7 June this year, so these are figures 19 months after the closure of the scheme, it shows that settlement offers of the eligible claims have been made in 1,483 cases, i.e. 63 per cent, and payments have been made in 1,135 cases, i.e. 48 per cent, so less than half.
Last night the Post Office filed some additional submissions to update these figures amongst other things. The 63 per cent has gone up to 65 per cent, i.e. the number of eligible claims in which offers made, and payments have been made in – sorry, that’s 67 per cent, not 65. Payments have been made in 52 per cent of eligible cases as opposed to the previous figure of 48 per cent. So still at around the half figure, and we’re 19 months after the closure of the scheme.
Now, those numbers, those figures, obscure perhaps the human stories that sit behind them. You may recall Mr Baljit Sethi who I asked questions of in the human impact hearings. He told you, sir, that although he had received standard form acknowledgements from the Post Office after he had made the claim, he waited for just under two years before he received any substantive reply. That was a couple of days before he gave evidence to you.
There were other accounts of delays in any contact at all from the Post Office in the HSS. So, sir, the issue that may arise for your consideration is what is the cause of the delay that 19 months on only 50 per cent of eligible claimants have had payments made to them.
Sir, issue 3 is the provision which has been made for applicants to obtain independent legal advice in respect of their claims under the HSS and whether it has been adequate. Sir, you know that the scheme makes provision for the payment of a figure of either £400 or £1,200 in respect of legal fees. That figure is dependent on whether the Post Office offers to pay the claim in full, in which case the former figure is paid, or whether it does not, in which case the latter figure may be paid.
The scheme makes no provision for any other forms of assistance, for example, fees for medical evidence to be obtained to support a claim for consequential losses, or forensic accountancy services, again, to prove on the balance of probabilities that losses which are consequential on a shortfall have been suffered.
You may wish to consider whether this approach is adequate in circumstances where, firstly, the nature of the consequential losses claimed are in many instances likely to be complex; where the scheme, secondly, requires losses to be evidenced by a range of contemporaneous and other documentary material, material which a lay person may not be used to collecting, organizing and presenting; where, thirdly, the scheme self evidently applies legal concepts such as remoteness, causation, mitigation, and quantum that may be unfamiliar to people; where, fourthly, further difficult issues may arise in claims that arise following bankruptcy, where the trustee-in-bankruptcy must be involved and the consequential losses that are properly recoverable may be complex; where, fifthly, tax advice it’s likely to be necessary in relation to different elements of payments made under the scheme.
No provision is made for the payment of legal costs when the dispute resolution procedure within the scheme is triggered, including where a good faith meeting is required or if the case goes to mediation. The point has been made by the subpostmasters that by contrast the Post Office has appointed a law firm to operate the scheme on its behalf and to prepare the analysis which is then passed to the Independent Advisory Panel, i.e. which appears to form the basis of the material on which the Independent Advisory Panel makes its decisions.
In its submissions of last night, the Post Office stated that it has contributed to the legal costs of 45 applicants. If that is correct that means that it has made a contribution in 45 out of 1,242 cases in which the payments have been made, a tiny proportion. It follows that no appointments have been made in some 1,100 or so of the cases – sorry, 1,200 of the cases in which compensation payments have been made.
In the same submissions the Post Office says that it’s currently considering whether contributions to legal fees or other professional costs can be made available and that it will update the inquiry in due course.
You may wish to consider whether that is satisfactory in circumstances where the scheme has been operating for 2 years and according to the Post Office figures, half of the eligible applicants have already been paid a sum of money and only 45 of them have had their legal fees paid.
Issue 4, is the provision which has been made for interim payments pending completion of the procedures under the HSS. You will have seen that Hudgell & Co suggest that the Post Office has refused to make interim payments under the HSS in respect of losses which are agreed whilst other species of loss are investigated, and that Howe & Co have suggested that the making of an interim payment under the scheme, such as the HSS ought not to be seen as controversial or novel, but instead the norm.
You may wish to consider whether this approach of generally not making interim payments under the HSS has placed pressure on subpostmasters to accept early payments at undervalues or instead hold out for the possibility of a higher payment.
If we go to tab 7 again, the Post Office submissions, at page 182, at the foot 182 and on to 183, it is said, as noted in some previous submissions, payments have been made on an interim basis prior to a final offer of compensation, so those applicants to the HSS whom Post Office understood to be in difficult circumstances, who could be irredeemably impacted by the time necessary fully to assess their claim and make a fair offer. To date Post Office has made payments on an interim basis to 25 applicants, including of circumstances of severe financial hardship, terminal illness, risk of personal hardship and old age.
So interim payments made in 25 cases, and you will recall that as of 7 June 1,482 offers of settlement have been made, so interim payments in about 1.6/1.7 per cent of cases. There appears to be a difference of desire or of approach here. You may wish to consider whether interim payments ought to be made irrespective of showing for example, a terminal illness or old age, but instead where some losses have been agreed and payment of that sum should be effected, whilst argument continues over other losses.
Sir, those are the four issues that arise under the first category.
Howe & Co have raised an additional issue over the operation of paragraph 3.2 of the consequential loss and principles guidance. That is tab 17 at page 290. I mentioned it to you earlier. Tab 17, page 290, and it’s 3.2.3 which I read out earlier. The point made on behalf of Howe & Co is that subpostmasters are provided under this scheme with the evidence that the Post Office possesses at the stage and only at the stage when “they received the outcome of their claim”, i.e. they received evidence from the Post Office after they had formulated a claim and after receipt of an offer.
So the burden is on the postmaster to prove his or her claim without the material that the Post Office itself possesses. It’s suggested by Howe & Co that such material as to the Post Office possesses as is relevant to the claim that is made, ought to be disclosed at the outset or at least in the course of the process and not at its end.
Can I turn more briefly to consider categories 2 and 3 or B and C. Category 2, back to tab 2, sir, final compensation for subpostmasters with quashed convictions. Issue 5 was the principles which are being applied to the calculation of final compensation schemes – sorry, final compensation payments; issue 6, the mechanism which by which final compensation payments are being calculated; issue 7, the provision, if any, which is made for applicants to obtain independent legal advise in relation to their claims; issue 8, the procedures which are being adopted to resolve the disputes about the value of compensation payments. These are all about subpostmasters who have had their convictions quashed.
These issues do not address the question of interim payments and that’s deliberately so. That’s because, as I mentioned already, the payment of sums of money to subpostmasters in this category of claim appear on the information received by the Inquiry largely to have worked well, with such payments generally being made promptly.
In their May submissions the Post Office noted that of the 73 men and women whose convictions have been quashed, 69 had applied for interim payments and such payments had been made by the Post Office in 66 of them. The questions that we have instead raised relate to final payments. That’s what questions five to eight relate to.
The collective answer to all of those questions is that there is no formal mechanism or scheme to value claims or to administer claims. Instead, the claims are being pursued through pre-action correspondence in the hope that they will be resolved without recourse to yet further litigation.
It’s been said in the submissions both by BEIS and the Post Office that the absence of a formal mechanism or scheme was at the express request of the subpostmasters themselves. Certainly in the submissions of Hudgell & Co there is no request for such a scheme to be set up. Instead, the Hudgell & Co submissions to you focus on the merits of their clients’ claims for certain losses, a matter which I anticipate you will not wish to address, the individual substantive merits of the claims made.
However, there has been a further development in that a number of subpostmasters represented by Hudgell & Co have agreed that the issue of non-pecuniary losses, which it is said was causing a particularly difficulty to assess and to agree, should be referred to early neutral evaluation, a process which by a valuer who is respected expresses a non-binding conclusion, non-binding view, on the likely outcome were the matter before him or her to proceed to court, and it is has been announced by the Minister, Mr Scully, and in the BEIS submissions of last night that Lord Dyson has agreed to act as the evaluator.
So rather than looking individually at issues –
Sir Wyn Williams: Sorry, Mr Beer. Did you say BEIS submissions of last night?
Mr Beer: No, I meant Post Office of submissions of last night.
Sir Wyn Williams: I thought you were in advance of me that’s all.
Mr Beer: No, the Post Office submissions of 8.59pm last night.
Sir Wyn Williams: I know we all work late but I was thinking when could they have come.
Mr Beer: Yes. So the issue rather than individually looking at points 5, 6, 7 and 8 that you may wish to explore, in particular with counsel for the Hudgell & Co core participants, who represent it seems 62 of these claimants, i.e. the vast majority of them, is whether they are content for the current approach to continue.
That’s a polite way of saying whether they, in fact, ask you to butt out. Whether they wish you to stand back and not interfere in arrangements that are proceeding satisfactorily.
Can I turn then to category 3, fair compensation for the group litigation claimants. This raises issues 9 to 12 on your list, sir. These issues have been overtaken by events. In particular, the announcement by the Minister seven days ago about the payments by way of interim payments to the GLO claimants with a fund of £19.5 million set aside for that purpose and his announcement that a new scheme for the payment of final compensation was being developed. There are no details yet available as to that scheme for the payment of final compensation to the Group litigation claimants.
It seems to us that the issues which may arise include whether the voice of all of the GLO claimants is being heard and fairly represented in the development of a scheme to administer payments, both interim and final, for the group litigation claimants.
You will have seen that the Minister announced seven days ago that the Government had engaged Freeths Solicitors in the way that I have described and they were of course the firm that represented the 555 GLO claimants in the group litigation. It’s fair to say that the papers that the inquiry has received and some of the evidence that it has seen, raise some issues as to the extent to which all of the 555 GLO claimants knew and understood in the course of and at the conclusion of the litigation the extent to which any sums paid by the Post Office would be lost in legal and other professional fees, and issues as to the extent to which their interests were represented in a structured and transparent way by the JFSA.
The inquiry has not of course been a party to and knows nothing about the negotiations which it seems have taken place between BEIS on the one hand, the JFSA on the other, and Freeths on the third part as to the sums of money to be paid by BEIS, the scheme by which such payments will be made on an interim and on a final basis, or the principles that will apply under that scheme to ensure fair and reasonable compensation for all of the 555 GLO claimants.
In that regard, I would end by asking you look at a letter written by Freeths Solicitors, which is in tab 3 at page 21, a letter to the solicitor to the Inquiry. It’s the final paragraph about half way through, where Freeths say:
“On behalf of individual GLO claimants who choose to instruct us, we are consulting with BEIS and JFSA in order to collaborate on developing a scheme and associated arrangements that work in the interests of those of the GLO claimants who will instruct us, so naturally Freeths Solicitors will only be acting in the interests of those of the GLO claimants who instruct us.”
It is apparent that a number of the GLO claimants are represented in the Inquiry by Howe & Co and so the issue that you may wish to consider with representatives of both BEIS and the Howe & Co core participants is what mechanisms have been put in place to ensure that the arrangements work in the interests of all of the GLO claimants and not those simply represented by Freeths in circumstances where issues have arisen in the past as to the openness, transparency and organisation of decision making in the group litigation itself.
In short, this scheme, it is presumed, is designed to put right what went wrong at the conclusion of the Group litigation. It will be unfortunate putting it mildly if something similar was to happen again.
Sir Wyn Williams: Can I say now, Mr Beer, so that there is no misunderstanding about what’s in my mind, that that sentence that you just focused on “on behalf of individual GLO claimants who chose to instruct us [past tense]. We are consulting with BEIS and JFSA in order to collaborate on developing a scheme and associated arrangements that work in the interests of those of the GLO claimants who will instruct us.”
I’m not quite sure how the past and the present fits together there.
Mr Beer: Yes, in particular where the –
Sir Wyn Williams: I am not asking you to answer. I am throwing it out so that that puzzle in my mind can be pondered on by those who may know the answer.
Mr Beer: That’s why I focused on that sentence in particular, sir. Because, as I said, putting it mildly, it may cause concerns that the issues that unfolded in December 2019 have the potential to repeat themselves once again.
Sir, those are the only points that I raise for your consideration.
Sir Wyn Williams: Thank you very much.
Ms Gallafent, I think you are next up but I take it we’d all like a morning break so is this a convenient moment to have it?
Ms Gallafent: In your hands, sir.
Sir Wyn Williams: All right then, 10 minutes and then we will start again.
(11.42 am)
(A short break)
(11.56 am)
Sir Wyn Williams: Before I ask Ms Gallafent to make her submissions, I appreciate that there is a large number of people here and when we have our break it’s very tempting to have a chat with people. Let me tell you a story about a crusty old judge who used to walk into court dead on the appointed time regardless of who was there. On one occasion I wasn’t there and got a rocket. So from now on, if you want to have a chat outside please do but I’m going carry on without you. All right.
Ms Gallafent.
Submission by Ms Gallafent
Ms Gallafent: Sir, thank you. I would like to state at the outset that Post Office is grateful for the opportunity to make both written and oral submissions on the issues you identified in your invitation of 10 May as well as oral submissions on the matters set out in your provisional view on compensation issues relating to prosecuted subpostmasters of 9 May of this year.
We are conscious that so far as your invitation of 10 May is concerned, these hearings are only intended to cover points that you consider should be addressed sooner rather than later and are not intended as a substitute for the full hearing on the issues of financial and other sorts of redress which fall within phase 5 of the Inquiry’s work currently scheduled to take place next spring. In these circumstances in particular we have not treated today’s hearing as the appropriate point for Post Office to make its opening statement generally, which we look forward to making at the beginning of phase 2 in September.
So far as the content of our submissions today are concerned could I make three preliminary points. First, in line with the position adopted in our written submissions we will primarily be focusing on the specific questions asked by you rather than other issues which may be raised in due course.
Secondly, in line with the indication in your statement of 30 June of this year, we will be taking the opportunity to highlight the aspects of the written submissions made on behalf of other organisations and persons with which we agree or disagree, and seeking to explain the reasons for any disagreement.
Thirdly as, sir, we expect you will have anticipated from our own written submissions, we intend to focus on sections of A and B of your invitation and that is questions 1 to 8 and leave section C to the Secretary of State for BEIS to address in due course.
Can I start then with section A and Historical Shortfall Scheme. Before I address the particular questions, can I just make clear that we had not ourselves understood or anticipated that the first question concerning heads of loss, and which were recoverable or not recoverable, would be read and regarded as covering the rather wider question of the functioning and application of the fairness principle under the scheme and, in particular, the use of the provisions under the Terms of Reference of the Independent Advisory Panel when it comes to its recommendations. We make no criticism in this respect but we emphasise that is why, sir, you haven’t to date received data or analysis on the use of that fairness principle.
Now, I can confirm that it is used regularly, and we are happy to assist the Inquiry by providing some data and analysis on that issue should it be of assistance. But that is why we haven’t done it so far because we hadn’t interpreted that issue in the way that Mr Beer has indicated it may be read this morning.
Can I move on to then the particular question which is asked about recoverable heads of loss. We’re grateful to Mr Beer for introducing in particular the Terms of Reference of the Independent Advisory Panel and the definition of shortfall loss and consequential loss, consequential loss being there defined as financial or non-financial loss that is not a shortfall loss.
Mr Beer also took you to, sir, the consequential loss principles and guidance and went through at section 5 the non-exhaustive list of the types of loss that can be claimed, assuming they meet the applicable legal tests and noting there they must be linked clearly back to Horizon shortfall.
It is suggested by Mr Beer that effectively the question as to what is or is not recoverable by way of a consequential head of loss is pretty much settled, that nothing is ruled out. At the risk of perhaps raising questions that no longer arise can I just address a couple of points that are made in the written submissions of other core participants.
The first one is in relation to expert advice, and it is suggested by Howe & Co that the heads of loss under the guidance are deficient in that there is no provision to obtain expert guidance to support or quantify claims under the heads set out in the guidance. We’d make four points in response. This is a point raised in relation to heads of loss.
The first is that the guidance itself, and we say rightly, expressly delineates – sir, for your note that’s paragraph 5.8.1, of course, the guidance itself is tab 17, I do not suggest you need to turn it up – but it delineates between a claim for legal or professional fees incurred in relation to dealing with a Horizon shortfall at the time which may be recoverable as loss under the terms of the scheme, and any legal and professional fees incurred by a postmaster in bringing an application to the scheme. We say that simply reflects the position in line with civil proceedings generally, which is that the costs associated with the bringing or making of an application or claim are treated separately to actual losses flowing from a relevant breach of contract or breach of duty that’s relied upon on which the claim is founded.
The second point we make in this context in relation to expert advice, is that every case will be assessed by three members of the Independent Advisory Panel, comprising one legal specialist, one forensic accounting specialist, and one retail specialist. There is therefore a very significant degree of expertise already built into the process.
Thirdly, where a panel considers that it requires expert assistance in order to make a recommendation, it may recommend to Post Office that such assistance be obtained at Post Office’s cost. That’s paragraph 27 of the Independent Advisory Panel’s terms of reference. That’s, sir, for your note page 286 in the bundle for today. So it’s open to any applicant to raise the question of expert assistance being required and if the Panel agrees then it can recommend it’s obtained at no cost to the applicant. So it would be unnecessary for such an applicant in those circumstances themselves to bring any claim or seek any reimbursement of any such expenses. It would be Post Office who would be footing the bill in that case.
Sir, you might like to note that the Panel in the past has asked Post Office to obtain expert evidence on generic issues, including cardiac and mental health issues to assist it in adopting an approach to claims generally.
The fourth point I make in this context is that the Panel’s Terms of Reference also provide and, sir, you have already been taken to this provision at Section 35, in relation to personal injury claims, where insufficient evidence has been provided for a claim to succeed, without further medical and/or expert evidence, the Panel may nevertheless recommend the making of an offer to the postmaster which the Panel considers fair.
Now, this provision is designed to be advantageous to an applicant. It enables an applicant who is not potentially able to obtain expert evidence to prove and support their claim, nevertheless to obtain a recommendation from the Panel on the basis of fairness.
We’re conscious also that an applicant may wish to avoid the inconvenience and potential distress of obtaining a report which may be a particularly acute and sensitive concern in cases involving mental health issues, but that the Panel has the power nevertheless in the absence of such evidence to recommend an offer which it considers to be fair.
In these circumstances we wouldn’t agree that there is any deficiency in the Historical Shortfall Scheme in this respect.
The second head of loss that’s flagged up again by Howe & Co as potentially not being recoverable under this scheme, is the question of aggravated and exemplary damages, and what is said is that no reference to them or provision for them in the guidance and the heads of loss are therefore deficient.
Now, Post Office’s response so far as aggravated damages are concerned is that where an applicant has identified aggravation or stress that Post Office caused when having to deal with shortfall issues, however that claim is described by the postmaster, that is something that would be fully taken into account when assessing, recommending and making offers in that particular case.
Compensation for aggravation would be taken into account in the round rather than being characterised or identified as such on the face of any decision as aggravated damages. It would most likely be taken into account when the Panel considers the issue of distress and inconvenience.
The Panel’s role of course is with a view to recommending an offer which is fair overall, hence why it isn’t specifically identified as such necessarily.
So although applicants may not have expressly characterised their claim as including a claim for aggravated damages, a number of offers have included an element reflecting just such a claim where it is justified on the facts of the case.
The position for exemplary damages is potentially slightly different in principle. Were any claim to be made it would be carefully considered along with all the other claims that have been made. That said, POL’s initial view is that as a legal matter a claim for exemplary damages does not naturally sit within the scheme. It can’t, strictly speaking, be said to be a loss incurred by an applicant, or a type of damage that’s typically available for a breach of contract claim. However, the Panel can and does consider overall fairness when recommending offers to applicants and, as I have said, any such claim would be carefully considered. We therefore do not agree there is a deficiency in respect of the question of aggravated or exemplary damages either.
Sir Wyn Williams: Well, Ms Gallafent, you put it very elegantly but I think the reality is that you take a great deal of persuading, POL I mean, not you personally of course, that a claim for exemplary damages should be entertained.
Ms Gallafent: Under the –
Sir Wyn Williams: Because you say there is a problem with the legal principles which underpin the award of exemplary damages.
Ms Gallifant: We wouldn’t say it’s a problem with the legal principles. We’d say they are the legal principles that apply. That is what the Terms of Reference provide for but of course we would carefully consider it were it to be made. But I emphasised that the vast majority of claims brought under the HSS by far are brought on the basis of contractual obligations, so the question may arise but not necessarily in claims that have been brought so far.
Sir Wyn Williams: So is this a fair representation of what you are telling me: that if, as a matter of principle, legal principle, a particular claim was made in which an award of exemplary damages was possible as a matter of legal principle, it would be carefully considered. But if a particular claim was made in which, as a matter of legal principle, exemplary damages was not to be awarded, it wouldn’t be carefully considered. It would be rejected.
Ms Gallafent: Well, the claim itself would be carefully considered in either of those events to work out whether, as a matter of legal principle, it was recoverable or not. So that’s my starting point. It wouldn’t be rejected out of hand at all.
Of course, were then the Panel to reach a conclusion and a recommendation based on saying, well, exemplary damages are not recoverable in the circumstances of this particular case, then of course that could be a matter which is taken further in dispute resolution process. I’m not seeking to rule out the award of those damages, but I’m simply flagging up what we perceive to be the potential issues going forward, and perhaps just to anticipate we do not take the view that, as it were, exemplary damages have been missed in previous cases because we do note that those are primarily brought on a basis of a contractual obligation and exemplary damages are not generally available for a breach of contact.
Sir Wyn Williams: And I should make clear, lest people misunderstand what I am doing, I am simply seeking to understand what you are saying. I recognise the limits of my Terms of Reference. Everyone should understand that.
Ms Gallafent: Thank you. Thank you, sir.
Sir, can I move on to another category of loss which it is suggested is not covered, which is third party losses. Again, Howe & Co have suggested that the heads of loss should reflect suffering caused to children and family members and others in caring roles.
Can I emphasise that the Panel has throughout sort to take an applicant-friendly approach to compensation, including for this issue. Whilst a family member’s distress and inconvenience is not technically recoverable from Post Office for a breach of contact claim, such as in the scheme, in a number of cases the Panel has nevertheless taken distress and inconvenience of family members or others into account by considering and having regard to the indirect impact of that on the applicant when they are making recommendations. In other words, when they feel it is fair to do so, so practically speaking it will be taken into account where it is justified to do so, despite the fact that our position is it is not technically recoverable.
For completeness, I would note that the Panel has also made recommendations for compensation for distress and inconvenience or personal injury for corporate entities that are stress and inconvenience or personal injury suffered by directors or shareholders.
Going back to my point which we do not consider it to be technically recoverable, I will emphasise again that it does not follow from the fact that claims may not fall directly within the scheme that a claimant is precluded from bringing a claim because of course it remains open to a potential claimant to bring proceedings in which the legal basis for any such claim could be fully considered. Again, we therefore wouldn’t agree that there is a deficiency in the scheme in this respect.
Those three points are, in our view, as it were, the core points raised by other core participants on the question of heads of loss themselves and what is or is not recoverable. We do recognise that the submissions from other core participants went rather more widely than that and, in particular, the question of the application form and question 24.
It’s common ground that what was asked was, of an applicant, whether they had experienced any losses that were directly related to the alleged shortfalls in respect of which they would like to claim and asked for details of each such loss to be provided if so.
Mr Beer noted that it doesn’t there refer to consequential losses. Indeed it doesn’t, and we say that the reason for that is simply because this form was designed and anticipated to be completed by lay persons rather than having to require explanation or advice from a lawyer in order to understand the meaning of consequential losses. So the description of losses directly related to the alleged shortfalls we say is adequate in all the circumstances.
A suggestion is made by Hudgells that this question was, as they put it, potentially misleading because it didn’t signpost applicants to any of the examples set out in the guidance. We do not accept the form was misleading on this or any basis. It was designed to strike a balance between being comprehensive and being capable of being used by lay persons.
Now, the guidance was introduced on 1 October 2020 at which point Post Office wrote to all applicants to the scheme at that stage to communicate that update and the availability of the guidance. Post Office also published a press release about the guidance. And published it on the scheme website so any applicants who hadn’t applied by that point would be made aware of it from the website itself.
So we do not say there is any fault or deficiency in not sign posting the guidance in the application form. Sir, as you have heard from Mr Beer, the application forms, of course, predate the guidance. But POL took all reasonable and appropriate steps to flag up the existence of the guidance to applicants and potential applicants.
Moreover, of course, and you have been taken to this part of the terms of the reference of the Panel as well, they provide that the discretion of the Panel making a recommendation is not confined solely to specific heads of consequential loss claimed by the postmaster but will take into account any facts and matters which the Panel considers will produce a fair result on the facts of a particular case. That’s paragraph 30. Sir, you have it that tab 15, page 287.
Sir Wyn Williams: I just wanted to check that I had marked it. I had.
Ms Gallafent: I am grateful, thank you. We’ve already set out in our submissions that we put in in May for the purpose of these hearings the proactive approach that is being taken to assessing consequential loss. That includes not just a proactive approach by the Panel, but a proactive approach by those, as it were, the case managers by virtue of the very detailed bespoke process for requesting further information.
We emphasise that the bespoke request for further information is designed to identify and ask further questions of an applicant only when they arise from the key facts of the individual case, provided on the application form, so the case manager will be prompted by the application form to identify potential further questions and those questions will be asked, and sometimes there will be number of them asked. But that is all aimed to elicit information which may assist with a claim for consequential loss.
Now, were such questions to have been asked as a matter of course on the application form, which seems to us the logical consequence of what’s being suggested, then inevitably many of them would have been irrelevant to any particular applicant for asking, for example, saying do you think there are any stigma damages, do you have any personal injury, and so forth.
Far from being of assistance we say that to have effectively built in guidance or something akin to it into the application form itself would have been perceived as overly burdensome and a barrier to making an application. We repeat, the guidance was available and flagged up to applicants and potential applicants, the form itself is not deficient in this respect.
We also note that where an applicant having received an offer credibly says they did not appreciate that they needed provide information earlier, which would include matters of consequential loss, this would be taken into account in the post offer process. So the door is not closed in those circumstances to raising a matter of consequential loss even after the offer has been made.
Another point that is raised, this time by Hudgell, is that the guidance itself, the consequential guidance, should be supplemented to ensure greater clarity and consistency in decision making. We don’t accept that’s necessary, not least as it’s very clear that every case will turn on its own facts, but it might help to assuage concerns for me to address directly the three examples given by Hudgell who obviously represent a large number of the applicants that is suggested to give rise to inconsistent decision making.
First, its alleged that there is a difference between the level of reduction applied to shortfall losses where there is an absence of paperwork. Hudgell identify that as being between 10 and 30 per cent. We don’t say that reflects something requiring greater guidance. The fact that is that a change or a difference of the level of reduction simply reflects on the particular facts of that case the Panel feels are relevant and a higher or lower reduction is appropriate. That’s likely to depend on its view of there being a greater or lesser degree of uncertainty on the question of a particular element of consequential loss.
We say it is not just unnecessary but it would be inappropriate to constrain the Panel’s discretion in this context, i.e. to say you must only ever reduce shortfall losses by 10 per cent rather than 20 or 30 per cent, or whatever it might be. That would inevitably lead to unfair outcomes in some cases and overly complex rules, we say, to attempt to deal with every potential permutations of circumstances.
The second suggestion made is that credit has been given in some cases for heads of loss which haven’t been claimed, such at the time taken to deal with Horizon shortfalls. I would again emphasise that the Panel does not seek to hold applicants to and strict legal pleading requirement. It will recommend an offer where it feels it is fair to do so and in those cases where credit has been given, that is because, on those cases, the Panel feel on the facts its appropriate to do so, even though it hasn’t been claimed.
There is also, finally, a suggestion that there is an absence of a consistent explanation as to how loss for distress and inconvenience is quantified. The answer to that is each offer letter explains the factors taken into account, for distress and inconvenience. There is not a separate loss to be quantified but it’s a matter that goes into fairness of the offer overall. So, again, we say so far as the suggestion that greater guidance is required, we say that that is not the case and there is not a deficiency in that respect.
Can I move to other points that are not directly linked to the first question but are raised in this context. The first, and Mr Beer lagged flagged it up, is in relation to late applications to the scheme. That is after the closing date from November 2020.
In our May submissions we noted that the Post Office was actively considering how best to address those applications. At the time in 2020 the Post Office went to very considerable lengths to bring the deadline to the attention of all potentially eligible postmasters. It extended the initial 10-week period for applications by a further 15 weeks, which took it to November 2020, to take into account both the numbers of applications that had already been made and the Covid 19 situation pertaining at the time.
Nevertheless it is common ground that, for whatever reason, a number of postmasters didn’t apply at the time and I can confirm that Post Office has now received as at today’s date a total of 186 applications made after the deadline passed.
Post Office remains keen to ensure and wishes to ensure that compensation is delivered to everyone affected and it is sympathetic to those who could not, for justifiable reasons, apply to the scheme in time. It remains the case that it is considering how best to deal with such applications.
Sir Wyn Williams: You can see that I’m pondering that, Ms Gallafent.
Ms Gallafent: I can indeed, sir.
Sir, may it assist if I put it in this context: in our May submissions we made very clear that we do not act alone, that Post Office is part of a wider mechanism of governance and one of the reasons for the delay in relation to the HSS scheme itself more generally are questions of funding, so we cannot act unilaterally, if I can put it that like. So the position remains that we are carefully considering the position and remain committed to ensuring that compensation is delivered to everyone affected.
Sir Wyn Williams: Well, there are two aspects to that that I’ll just float my thoughts about. One, the governance aspect. It surprises me that an issue of this kind would take quite so long.
The second is should POL be the final arbiter of this in any event? In effect, it’s akin to a limitation provision, though I accept that there are differences, I am not going to press that. But in most scenarios in which a time limit is applied in one way or another, it might surprise someone to hear that the alleged wrongdoer is the final arbiter of whether a time limit should apply.
Ms Gallafent: Could I put it like this, sir: the terms of reference for the scheme provided for a deadline which was, of course, subsequently extended. That principle was one of the principles that had been discussed and agreed as part of the deed of settlement with representatives of postmasters. So in principle the provision of a deadline was common ground.
We are not acting unilaterally in saying we will not take in to account late applications. We are considering and continue to consider how to ensure that compensation is delivered to everyone affected.
It is not that we have shut the door on those late applicants. Can I assure you, sir, of that. We continue to aim to ensure that those applicants are treated fairly.
Sir Wyn Williams: Well, I think we can leave this with my observation that the door is moving either to open or close at a pretty slow pace.
Ms Gallafent: Sir, I hear what you say.
Can I pick up then, before I move off from question 1, can I pick up three further points not directly related but relevant we say.
The first is an issue raised by Hudgell in relation to independent legal advice. That is whether it be more appropriate for the Independent Advisory Panel to have its own independent legal advice rather than offers being made on the basis of legal advice and analysis prepared by Herbert Smith Freehills.
Post Office doesn’t consider this would be necessary. There are five Queen’s Counsel on the Panel. The Panel is free to accept or reject the analysis and advice given by Herbert Smith Freehills. As we previously indicated in the May submissions, there have been no cases where Post Office has offered an applicant less than the Panel has recommended. That remains the position to date.
Moreover, were the Panel itself to consider that it wished to take independent legal advice, then it would be open to it, to recommend to Post Office that such advice be obtained at Post Office’s cost. Just as it is under section or paragraph 27 of the Panel’s terms of reference in relation to any other expert assistance.
For the same reason we reject the suggestion that the current scheme is not independent in the light of the clear independence of the Panel and the procedure followed thereafter, and I emphasise again no recommendation has been rejected by the Panel and a lower offer made, and some offers have been higher.
The second of the indirectly related issues to question 1 is the evidential question. The way it was put in the written submission of Howe & Co was that it’s unreasonable for the scheme to require contemporaneous evidence of events from up to 20 years ago, particularly in circumstances where postmasters may have been deprived of access to their records at the point of suspension and they may have been destroyed by Post Office.
But we emphasise and, sir, as you have seen and been taken to, the guidance on consequential loss makes it clear that contemporaneous evidence is not required, it is not a bar not to have it, but greater weight may be placed on it as well as the factual evidence that is undisputed or verifiable. That’s what the guidance says. Of course, where an application is concerned about the Panel’s approach to an alleged lack of contemporaneous evidence, that’s a matter that can be raised as part of a dispute process.
That point is connected to the third point, which is the sharing of supporting information held by Post Office. This was an issue flagged up by Mr Beer as well.
Howe & Co have suggested that a procedural flaw in the scheme is that the sharing of supporting information held by Post Office won’t be until the point of receiving the offer. They say that’s a substantial procedural flaw.
Can I just highlight first, the terms of reference that you have for the scheme at tab 14. I don’t believe, sir, you were taken this particular element of it, at paragraph 6, so it’s page 283 internally, paragraph 6 provides:
“Once an application has been made either party may write to the other to request relevant information. The parties shall cooperate with each other in providing any other information which the other party may reasonably request. Information obtained and provided in relation to each application should be proportionate to the circumstances of that application.”
So there is express anticipation that an applicant saying to Post Office, “I need this. Please provide me with this”, and Post Office can equally say of an applicant, “Could you please provide the following maters and documents”, so that’s the starting point.
The second point is that number of postmasters have made data subject access requests prior to or during the course of making an application and, of course, there they will be provided with all data that falls within that access request.
Turning then to the outcome letter, the outcome letter lists all contemporaneous evidence which the Panel assessed to make the recommendation and it expressly explains that the applicant can request a copy of any or all of those documents and pieces of evidence. Applicants can also request a copy of the Post Office investigation report, the Herbert Smith Freehills legal case assessment, and a record of the Panel assessment and recommendation.
All of this data is provided in order to support the applicant’s consideration of the offer and, of course, having considered it the applicant is free to accept or reject the offer, following which a good faith meeting can be held and, if necessary, disputes can be escalated thereafter.
Sir Wyn Williams: Sorry, this is my fault, but this information about the documentation which an applicant can obtain.
Ms Gallafent: Is set out in the outcome letter.
Sir Wyn Williams: It in the outcome letter.
Ms Gallafent: Yes.
Sir Wyn Williams: It is not in any prior guidance.
Ms Gallifant: No.
Sir Wyn Williams: So it’s at that point.
Ms Gallafent: Exactly, so taking different stages, at the point of the application paragraph 6 of the terms of reference emphasises the opportunity for the parties to ask for information from each other. Then you get to the point of the outcome letter and that is where the applicant is expressly told – there is a list of all the contemporaneous evidence that Panel assessed and it’s told that it can – the applicant is told what they can ask for and obtain.
Sir Wyn Williams: Right.
Ms Gallafent: Yes.
Sir Wyn Williams: Right. I am with you.
Ms Gallafent: Thank you. We say there is not any prejudice to an applicant as a result of disclosure not necessarily having been made earlier, if it has not been requested. Again, if the applicant feels that the material has been misunderstood or is incomplete that can be raised at the good faith meeting.
Can I leave, subject of course to any indication, sir, from you that you would like to us to do a little bit of analysis and data collection on the question of –
Sir Wyn Williams: Well, I think I will say now that rather than going along trying to listen to you and formulate, in inverted commas, rules and requests at the same time, what may happen – and I stress may – is that if there is any data that I require from any party before I make a written report in whatever form it is following these hearings I will do it in writing after the hearings rather than trying to do it as we are going along.
Ms Gallafent: I certainly wasn’t suggesting that, sir. If you were to indicate that you would be open to the provision of such data then we will crack on with that and get that ready. But I’m certainly not anticipating that you need to, as it were, tell me precisely what you would like at this stage. It might be more helpful, frankly, for us to provide you with an indication and then it might assist you in understanding what more or less you would want from us.
Sir Wyn Williams: Well, as you know, Ms Gallafent, people write to me at all times of the day or night in this Inquiry providing me with information. Far be it for me to stop you from doing the same.
Ms Gallafent: We shall endeavour to do it perhaps a little earlier in the day on the next occasion, sir. Thank you for your patience with us.
Can I move then to the second of the questions posed, sir, in relation to delay. I’m not going to seek to repeat the explanation set out in the May submissions about the process between setting up the scheme and the position reached by the time of those submissions.
You have our submissions on delay and I’m again conscious, sir, of your indication in the note of 30 June that you have those well in mind and don’t require us to go through them again.
I do though want to flag up the continuing progress being made since those submissions which demonstrates, we say, a clear and continuing positive trajectory towards resolving all current applications. Now, we provided an update in the late night note, as it may become referred to, yesterday but in fact as of midnight yesterday I can confirm that further letters have been sent out during the course of yesterday, which take the number of eligible applicants who have been sent offer letters up to 1,659 out of 2,370, which takes us to us a 70 per cent rate of offers from applications.
Sir Wyn Williams: So I’m trying to make a note on the relevant pages of my bundle, so this all starts on page 302 and then goes over to page 303. That was as at 7 June I think it was. Then Mr Beer gave me further figures based upon what your statement said last night.
Ms Gallafent: Yes, that was at the end of June.
Sir Wyn Williams: Now we’re getting up to midnight on July 5 or 6, whichever you prefer. Is that it?
Ms Gallafent: That’s exactly it.
Sir Wyn Williams: Fine, right, so if you tell me that I will make a note on this document.
Ms Gallafent: 1,659, which takes the percentage of offers to eligible applicants to come to 70 per cent.
Sir Wyn Williams: All right.
The figure that Mr Beer gave me, obviously, for payments made is the same today as it was last night, so I don’t need to worry about that.
Ms Gallafent: Yes.
Sir Wyn Williams: Right.
Ms Gallafent: They would have been very speedy indeed if they’d accepted it. Exactly.
You may note, just going back to page 302, of course the information on progress and the anticipated rate of progress to get us to 95 per cent by December 2022 provides that the target was to reach 70 per cent by the end of July. We have actually reached it on 5 July which is why I emphasise a clear and continuing positive trajectory, and Post Office remains on course to provide at least 95 per cent of eligible applicants with offer letters by the end of this calendar year. You will see that again on page 302.
To date 115 applicants have formally engaged the dispute resolution process. 31 of those, 27 per cent, have now reached agreement on the amount of compensation. Good faith meetings have taken place with 47 applicants, escalation meetings with seven applicants, are there are a further 11 good faith meetings scheduled for the coming weeks.
On delay there are a couple of particular points raised by other core participants. The first is raised by the National Federation of Subpostmasters who have suggested it would be justifiable, sir, for you to ask whether the non-renewal of a contract of the previous head of historical matters resulted in there being a significant period of time during which no individual was responsible for driving the scheme forward.
The position is that the fixed term contract for the previous head of historical matters ended on 23 July 2021. Prior to that, in May 2021, the Government had announced that this Inquiry would be moved on to a statutory footing. As a result, the Chief Executive Officer of Post Office, Mr Read, revised the structure of the then existing historical matters team to ensure that Post Office was appropriately set up to assist the Inquiry. That then resulted in Mr Racaldin(?) becoming Historical Matters Director in January 2022.
However, in that period during which there was no longer a head of historical matters before Mr Recaldin took up his post the historical matters team continued throughout to focus on matters arising from the group litigation including the Historical Scheme.
We wouldn’t accept that any delay arose as a result of the reinstructing of Historical Matters Scheme which was considered necessary and appropriate to anticipate the needs of this Inquiry.
As I say, we’ve set out the reasons for the delay in our May submissions and I don’t repeat them here.
Hudgell also flags up the issue of bankruptcy cases. We recognise and agree that bankruptcy cases are extremely complicated and may well take longer to resolve. We are actively working to resolve the challenges posed by such cases, including the issue of the costs of the Official Receiver or Trustee-in-Bankruptcy. In the meantime, Post Office expects that the first offer will be made to an applicant in a bankruptcy case in the coming weeks.
Finally, Howe & Co have raised the case, and it was identified by Mr Beer in his opening submissions, of Mr Sethi who of course was the first witness to give evidence before you, sir, in the human impact hearings. If the Inquiry were to consider it helpful and if Mr Sethi were to consent we would be happy to provide the Inquiry with a full timeline of the processing of his application. But for today it may suffice for me just to note that his application is one of the particularly complex ones which has raised a number of procedural issues in terms of representation.
So far as the request for information that he received shortly before he gave evidence is concerned, for the avoidance of any doubt, the timing of that request was in no way connected with the fact of his giving evidence. Rather, it reflected that his application had reached the request for further information, that is the proactive request for information designed to elicit further information, particularly in relation to consequential losses stage of the process.
Mr Sethi helpfully responded at the end of March and his responses are currently being considered under the scheme in the usual way.
Finally, there is a question of tax implications. It is not raised again in relation to the delay. But in this context we have been asked to confirm what provisions we have made for dealing with tax implications on certain pecuniary heads of loss. That’s a request by Hudgell that it made in relation to question 2.
It’s common ground that shortfall compensation does not attract tax, but Post Office is obliged to deduct tax for the other heads of compensation. It does so at the basic rate of 20% in accordance with the Income Tax Act 2007 section 874, which as is explained in outcome letters may result in POL, in Post Office, deducting less or more tax than the applicant is actually liable to pay.
Post Office notes that it’s the applicant’s responsibility to ensure the correct amount of tax is paid and that they may want to seek independent tax advice, and the letter also points applicants towards resources they might look to for further information on this particular issue. In these circumstances, Post Office does not consider it necessary or appropriate to offer any indemnity for scheme applications.
The third issue, if I may move on to the third question, sir, in relation to independent legal advice. It’s availability. The Inquiry is obviously well aware the scheme provides for a contribution currently of £1,200 towards the cost of legal advice for the purpose of enabling an applicant to consider an offer made to them, or £400 where the offer is to pay the applicant’s claim in full or largely in full. So far as we are aware no request for a contribution for legal advice has ever been refused. So the figures that you have seen of the number of contributions made we say reflects the number of request received.
We do not consider that the absence of any contribution to legal fees towards the making of the application is itself unfair or inadequate. That’s suggested by Howe & Co.
This scheme has been designed to be simple and user friendly, to avoid the need to incur such costs, as set out in our May submissions. That’s paragraph 39 for your note.
In short, guidance is available to postmasters to assist them in preparing an application. Sir, you have seen a number of elements, key elements, of that guidance.
Secondly, there is a presumption that a shortfall was caused by a previous version of Horizon or a breach of duty by Post Office in the absence of evidence to the contrary.
Thirdly, Post Office has agreed not to take any limitation defence in relation to claims brought under the scheme.
Fourthly, as I have already identified the Panel and case assessors act proactively to obtain further information from applicants where appropriate.
Again, sir, as you are also well aware, the Panel has a full discretion take into account any facts and matters which it considers will produce a fair result on the facts of each particular case, including but not limited to applicable legal principles.
As we set out in our further note and as Mr Beer emphasised as well as paying applicants the contribution towards legal fees at the offer stage, it has also paid contributions towards costs incurred by applicants prior to them receiving a compensation offer in two cases, for example, in relation to the costs of providing medical records in support of a claim for personal injury.
So far as the Post Office phase is concerned, Post Office does recognise that there may be some cases in which the current provision may be insufficient to support an individual applicant to resolve their claim. It is currently considering whether contributions towards further legal or other professional costs can be made available to applicants to help resolve their claims. We will obviously update the Inquiry as soon as a decision has been reached on this issue.
Sir Wyn Williams: I mean, the impression I get and I do not want to say this in any flippant sense, but many of the offers which have been made and accepted are comparatively easy to resolve. One is now getting to the stage where there are likely to be much more significant difficulties in resolving the applications.
Ms Gallafent: Yes, and for the reasons we set out in the May submissions that was because of the approach adopted to the scheme by dealing with what we would characterise as low value claims, and those were the ones that were dealt with first. So the low value claim is a claim for a shortfall up to £8,000, in some cases a claim for distress and inconvenience, but not all, but not for any other form of consequential loss.
So those block of cases were, I would entirely agree, sir, they were on their face simpler to resolve because of the presumption in relation to shortfall and because of there being no issue in relation to consequential loss apart from distress and inconvenience.
It may assist, sir, if I then deal perhaps with the statistics, because Howe & Co also suggested that we should provide you, sir, with the percentage of applicants who were and were not represented at the time of the application, and the same percentages in relation to accepting offers under the scheme. It is suggested it is instructive to examine the level of offer or award made to unrepresented applicants as opposed to represented applicants.
The position as at midnight yesterday is 1,300 applicants have accepted settlement offers. Of those, two applicants had legal representation. 92 applicants have rejected settlement offers and of those 13 applicants had legal representation. Can I put some context on those statistics by virtue of the question of low value claims, sir, that I was just alluding to.
Of the 1,300 accepted offers, just over half of them, 678 for precision, were claims for shortfalls up to £8,000 and no consequential loss, so potentially for distress and inconvenience.
Of the 92 rejected offers ten of them were those types of claims, what we have characterised as lower value claims. So, sir, you anticipate entirely correctly, which is there are more as it were rejected offers where it is not a lower value claim proportionately but there are roughly half and half when it comes to acceptance of offers.
Sir Wyn Williams: Sorry, can you repeat that? Of the 92 rejected, on the [draft] transcript in front of me, the number has not come up after that.
Ms Gallafent: Ten of them were lower value claims. That’s my lack of articulacy, I apologise. I’m standing too far away from the microphone, ten.
Sir Wyn Williams: I’m busily writing a note, even though I have a contemporaneous transcript. It’s the habit of a lifetime.
Ms Gallifant: It is, it is. I’m grateful, thank you.
I hope that provides some context in which the otherwise quite bald figures of representatives being on record and contributions being made, as to why perhaps those figures are not quite so straightforwardly an indication there has been any form of inadequacy when it comes to legal costs at the point of offer.
Can I move to question 4, which is interim payments. It’s been suggested by Howe & Co that the scheme should make provision for interim payments in all cases, and it’s unacceptable for Post Office to be able to decide to whom such payments should be made. It is not clear whether that suggestion is made in the context of pre offer interim payments or post offer payments. Can I address each of those in turn.
As Mr Beer indicated, payments have been made on an interim basis, prior to an offer being made, to those applicants to the scheme who Post Office understood to be in difficult circumstances who could be irremediably impacted by the time necessary to fully assess their claim and make a fair offer. To date, 28 such payments have been made, that includes circumstances of severe financial hardship, terminal illness, risk of personal hardship, and old age, where concerns have been raised about the impact of the speed of progress on the applicant. Some of those concerns have been raised by the applicant. Others have been raised within Post Office and a proposal for an interim payment made on Post Office’s recommendation.
Where such appointments are made, it is expressly explained to the applicants that they would not need to repay any of the interim payment in the event that the final offer is made for less, or that accepting an interim payment would in anyway adversely impact their claim. It wouldn’t.
So far as the position post offer is concerned, other than potential hardship interim payments, Post Office’s priority is to seek to resolve applicants claims in a manner which is fair in all the circumstances of the case.
That will we say typically be achieved by reaching full and final settlements with the applicants rather than on a piecemeal basis through interim and part payments. As I have indicated at this stage offers have been made to over two-thirds of applicants and of those accepted by 80 per cent of those applicants.
There is a structured and clear plan to work through the dispute resolution process with those who formally engaged it and to provide, as I’ve indicated, at least 95 per cent of applicants with offer letters by the end of this year.
Our position is it would be an unhelpful divergence of resource and cost to set up some form of sub-scheme within the Historical Shortfall Scheme by which applicants could then apply for and interim offers be made to them other than on hardship grounds.
An additional factor for not making interim offers is that the approach under the scheme is to reach an overall offer, as you have heard me say on a number of occasions, rather than break down the offer by individual heads of loss. As already indicated it’s made on a number of applicant-friendly presumptions, such as the presumption that a shortfall loss was caused by Horizon. These presumptions would not apply were it not possible to resolve the claim without the applicant going to court. In that situation, it’s entirely possible in principle that a postmaster would not obtain compensation in the same sum as the offer, which offer of course is built on those applicant-friendly principles, and therefore potentially not in the same sum as any interim payment which might have been made.
So we say that the position under the scheme is significantly different from the approach to interim payments in relation to postmasters whose convictions have been overturned when its considered by Post Office and BEIS that all such persons were likely to receive greater sums than the up to £100,000 in due course for their claims.
As for the suggestion that it should not be Post Office which decides when an interim payment should be made, were an independent body such as the Panel to determine such requests, there would inevitably be some further delay in the process for applicants generally, in order to accommodate such cases going to the Panel not once but twice. In those circumstances, we do not accept that the absence of an express provision for interim payments under the scheme is unfair or inappropriate.
Sir, I’m going to move now to section B dealing with final compensation for postmasters with quashed convictions. I note the time. I am very happy to press on with section B then I have very little to say on C and a couple of other points, but if you would prefer me to break now and come back –
Sir Wyn Williams: I think my view is simply this, Ms Gallafent, if you were to complete your submissions within say 25 minutes that might be preferable, but if that’s not possible we’ll have a break whenever it suits you.
Ms Gallafent: No, I’m confident I can do that.
Sir Wyn Williams: Let’s carry on until the end then.
Before we do, just a variation on the theme of interim payments, which I don’t think you touched on. The suggestion – and this might become more a possibility as the more complicated cases are dealt with – that interim payments may be made about agreed sums, not whether they need them, just if agreed, let’s get it over with and only discuss what’s not agreed. Have you got anything to say about that?
Ms Gallafent: I do because that’s goes back to the factor I mentioned in relation to the applicant-friendly premise of the offer. So when it’s an agreed offer, it will be made on the basis that, you know, the shortfall of (unclear) Horizon, no limitation, et cetera. So again it’s a slightly different position to the position under the final scheme or the interim or final scheme for postmasters with quashed convictions, because there’s no such presumption. The approach under section B, which I will come on to, is simply that the ordinary principles apply to compensation. Here the ordinary principles do not apply, so that’s why you might be able to agree in principle a particular element of the offer, say the shortfall or some element but I emphasise again, offers are made in the round, so you might be able to agree in principle and say, well, we accept this or that, but it wouldn’t follow that then were there to be no agreement overall, that the applicant would actually obtain through civil litigation a sum anything like the amount that’s been offered based on the applicant-friendly principles. So I do say it raises very different and difficult questions that simply are not there in the scheme in relation to – sorry, the mechanism used in relation to postmasters with quashed convictions.
Sir Wyn Williams: All right. I will think about that.
Ms Gallafent: I thought you might.
Section B then, final compensation for postmasters with quashed convictions. Mr Beer also emphasised and we say it is important to emphasise as well. There is no formal remediation scheme such as that established by the Historical Shortfall Scheme for the payment of compensation to such persons. All claims are being dealt with through without prejudice negotiations. We say that is an important distinction, because a number of the submissions made by other core participants are predicated on a scheme approach.
It’s also important to emphasise that as at 3 July, Post Office has only received a total of six largely fully quantified claims. So that’s where we are in terms of final compensation.
So far as the principles to be applied to the calculation of final compensation payments are concerned, some of those representing postmasters have suggested that BEIS and/or ourselves should be invited to clarify the approach to the general principles in play in assessing liability and quantum.
I can confirm that Post Office agrees with Hudgell Solicitors that the value of any individual claim must be calculated applying the ordinary principles applicable to the recovery of civil damages for malicious prosecution. We also agree that such damages may include aggravated and exemplary damages.
Mr Beer has already alluded to it but in applying those principles it’s the issue of non-pecuniary damages that’s proved particularly damaging in the negotiations to date. There is case law in this area which indicates what likely awards may look like but the current circumstances of the particular postmasters involved are unique, we say.
It is in order to find a way thorough that issue that we agreed with a number of former postmasters represented by Hudgell Solicitors that the issue of non-pecuniary damages should be referred an early neutral valuation. That of course is an expression of a view on the likely outcome if the matter were to go to court.
We emphasise that the fact that the process is without prejudice and is confidential allows a more open and less formal process in that respect. We’re very grateful that the very eminent senior judge Lord Dyson has agreed to act as the evaluator for that process. It is anticipated that the evaluation will be concluded by the end of this month.
The outcome is not of course binding on the parties. But it is hoped that it will allow these issues to be resolved quickly.
We are also and separate to the early neutral evaluation continuing to progress without prejudice negotiations in relation to the first of two fully quantified claims from the total of six that we have largely quantified. Good progress has been made on pecuniary loss claims to date. We anticipate that the early neutral evaluation process to be conducted by Lord Dyson will provide guidance that will facilitate the parties reaching an agreed resolution on the non-pecuniary aspects of those claims and we hope that that guidance may also be of wider use.
In this context it’s also important for me to emphasise that in no circumstances will Post Office be the final arbiter of individual claims. That’s a suggestion made by Hodge Jones & Allen. If the parties cannot resolve the claims themselves, whether with the involvement of early evaluation, mediation, or some other process, then the final arbiter of individual claims will be the court. But would I would like to emphasise that Post Office remains wholly committed to seeking a negotiated outcome to all claims to avoid that outcome if at all possible.
We also note the suggestion made by Hodge Jones & Allen that the settlement deed is flawed, insofar as it limits GLO claimants to claims of malicious prosecution. It should be amended.
Paul Marshall goes further. He argues and says there are prima facie grounds for the view that Post Office secured the settlement deed as a result of misleading the claimants and the court. On that basis he and Hodge Jones & Allen seek to argue the approach to the calculation of direct and consequential loss should be carried out by reference to the approach to claims in fraud.
I note Mr Beer didn’t reference to this in his opening, and I anticipate that’s for the same reasons that we say is simply isn’t open to you, sir, to consider it at this point. It goes way beyond the issue identified in your invitation, which is the principles that are being applied to the calculation of final compensation payments, rather than the principles which some of those representing postmasters suggest should be.
It also doesn’t appear to fall within the scope of the Inquiry’s Terms of Reference, but even were the Terms of Reference to be amended in some way, it is obvious that any such argument could be not be fairly considered far less in some way any view given on it at this point of Inquiry, prior to the Inquiry having heard or considered any of the evidence in relation to the conduct of the group litigation. That’s a matter also due to be heard next spring.
For the avoidance of any doubt, Post Office would emphatically refute any suggestion that it behaved in a fraudulent way or misled the GLO claimants or the court in resolving those proceedings. The terms of the settlement deed were negotiated and agreed in good faith. But we do emphasise we say at this stage that one simply cannot consider or reach any view on those submissions made by Mr Marshall and Hodge Jones & Allen in that context.
On the question of disgorgement which is raised by Mr Marshall and Hodge Jones & Allen again, they have raised the issue of the inclusion of sums received by Post Office by way of compensation or confiscation post conviction as being included as direct and consequential losses. I can confirm that claimants can claim any sum Post Office received through post conviction orders for compensation or confiscation as losses directly connected to their wrongly conviction, so that is claimable.
Moving to the mechanisms by which final compensation payments are being calculated, to an extent our response here overlaps with the question as to the principles being applied, but three discrete issues have been raised in this context.
First, Howe & Co have suggested that BEIS should undertake – will undertake – sorry, that BEIS should undertake, that it will undertake not to seek to claw back any interim payment made to a postmaster. This is a subject on which Post Office has been very closely engaged with HMRC and we confirmed in our late night note from yesterday that as of yesterday we had received confirmation from HMRC that the removal of the claw back provisions will not affect the tax status on which the payments are made. We wrote yesterday to all claimants to communicate the position of HMRC in this regard, so that concern has been assuaged.
Secondly, it is suggested that any disputes should be referred to independent arbitration within an appropriate arbitration scheme. That’s also Howe & Co.
If particular representatives wish to raise that option with Post Office they are obviously free to do so and Post Office can assess with those claimants the best way to resolve the cases. For example, arbitration or early neutral valuation or mediation or even litigation potentially were it to be regarded as being relevant for precedential value.
Thirdly, Mr Marshall has suggested that Post Office should make available to claimants data that it holds on employees’ pay bands over time. I can confirm Post Office already proactively offers and provides, subject to the provision of necessary data protection consents, the remuneration data that it holds to claimants with quashed convictions.
Question 7 is the provision for applicants to obtain independent legal advice. As we indicated in our May submissions, Post Office will consider the payment of a postmaster’s reasonable costs as part of the negotiations.
Question 8 is about procedures adopted to resolve disputes about the valuation of final compensation payment. I have already highlighted in particular the early neural evaluation process. But Post Office remains open and supportive to the use of further such processes or other alternative dispute mechanisms to resolve other disputes in due course.
Sir Wyn Williams: Ms Gallafent, when Mr Beer was addressing me, he suggested that I might wish to probe with the representatives of this category of claimants to what extent I should involve myself at all. He put it rather more elegantly, I should butt out of it perhaps.
Ms Gallafent: He did.
Sir Wyn Williams: What’s the Post Office view about that?
Ms Gallafent: Sir, in response to the questions that you have raised, our position is that there is no need for you to intervene on those points. There is nothing that would give you concern from what we have told you about the concerns that have been raised by the other core participants, so that’s our position.
Sir Wyn Williams: Fine, all right.
Ms Gallafent: The other position though that’s – the other issue is the role of Post Office and this again it is not a point flagged up by Mr Beer in his opening therefore I anticipate it may not be a point that you deal with directly, it’s the role of Post Office in the resolution of these claims.
In their initial submissions Hodge Jones & Allen submitted that what was required was a transparent process operated by BEIS working with Herbert Smith Freehills. In an annex they now argue that Post Office should terminate its continuing retainer of Herbert Smith Freehills and they say Herbert Smith Freehills should be retained by BEIS with a consequential set of agreements about duties of confidence and the like owed to Post Office. So they say that Herbert Smith Freehills would be retained by BEIS for both final and further compensation claims. Further, by which I mean you have identified in category C fair compensation claimants.
This argument again goes well beyond the questions, sir, set out in your invitation and, arguably, again beyond the Terms of Reference of the Inquiry, but without prejudice to the position can I make it clear the Post Office immediate view is there is no justification at all for any such recommendation.
So far as final compensation for postmasters with quashed convictions is concerned, it is clear we say from the information updates provided, that Post Office, represented by Herbert Smith Freehills, is acting promptly and reasonably in its approach negotiating settlements with those that have brought fully quantified claims and there is no reason to doubt that it will continue to do so.
Certainly, we’d submit that the inherent and obvious complications with any such rearrangement in terms on legal representation and the entity with whom negotiations take place, would very considerably outweigh any perceived benefit, particularly in terms of the speed of resolution of the claims.
Finally, can I just deal then with final compensation, in that context where its suggested that Post Office shouldn’t be involved, Post Office has made it clear that it has not been asked by Government to deliver this type of compensation. This is, sorry, the further or fair compensation. But it will of course cooperate to the fullest extent possible with any scheme or mechanism set up for that purpose and any request for support from Government in that matter. So we say it’s wholly premature to raise any issue as to Post Office involvement in any further or final compensation scheme or mechanism.
As for that scheme or mechanism, as I indicated at the outset, we leave it to BEIS to address the Inquiry on those matters but, of course, if there is any issue arising following BEIS’s submissions next week on which the Inquiry would like to hear from us then we’re very happy to do that in writing after the hearing next week.
Of course, more generally we’re very keen to ensure that we listen carefully to the points to be made by other core participants who follow us later today and next week and we will seek to pick up any further matters which we consider we haven’t already adequately addressed so we can offer clarification or assistance as soon as possible thereafter.
Finally, and very briefly, can I deal shortly with your provisional view on compensation issues relating prosecuted subpostmasters. Just for the avoidance of any doubt we can confirm, as set out in your document on compensation issue dated 9 May, we agree with your provisional views, subject to two points. The first is we do not seek to make any submissions on BEIS’s position that persons in categories 1 and 2 were eligible for claims for compensation under the December announcement, that is predating the subsequent March announcement. We have seen what BEIS says on the subject. We don’t say anything about that.
Secondly, so far as persons falling within category 3 are concerned, so those are as it were the public interest quashed convictions, paragraph 28 of your provisional view, you indicated that fairness demands that Post Office should not be the final arbiter of whether an interim or a final payment should be made to those postmasters.
Neither announcement by the Minister, neither the December announcement nor the July announcement on interim compensation, neither of those resulted in the establishment of a remediation scheme such as HSS, so ultimately the question of whether or not compensation is payable falls to go to the court.
I confirm in the event of any dispute over payment of compensation, whether on an interim or final basis, POL, as with the scheme more generally, remains willing to engage in mediation, arbitration, other forms of alternative dispute resolution, to avoid if possible any applicant having to bring civil proceedings.
I can also confirm that Post Office legal representatives continue to liaise with the representatives of the three named potential category 3 claimants set out in your provisional view on the subject of whether they are or are not entitled to compensation. Sir, we say that in no circumstances would we be the final at arbiter.
I am going to glance over just to check that those sitting behind me and behind me behind me, as it were, have nothing further to add.
I am very grateful. Those are our submissions. As I said, we stand ready to assist in any other way we can on these subjects.
Sir Wyn Williams: Thank you, Ms Gallafent.
All right. It’s time for another break. Can I ask just ask Mr Mertens because I think you are next, some kind of rough time estimate?
Mr Mertens: Very short, it will be five or ten minutes.
Sir Wyn Williams: Right. Well, Mr Stein, Mr Enright predicted you wouldn’t need a full two hours and I will say no more than that.
Mr Stein: Thank you, sir.
Sir Wyn Williams: Because of the likely timings this afternoon it is now 1.08, according to this wonderful machine I have in front of me, so I think we’ll start at 2.05 and then we should finish comfortably before the cricket begins. Thank you.
(1.10 pm)
(Luncheon adjournment)
(2.07 pm)
Sir Wyn Williams: Yes, Mr Mertens.
Submission by Mr Mertens
Mr Mertens: Good afternoon. May I first of all thank the Inquiry for having been given the opportunity to provide written submissions in relation to today’s issues and also for being given the opportunity to address you briefly today. I make these submissions on behalf of UK Government Investments who I will refer to as UKGI.
As indicated in its written submissions, UKGI is very grateful to the Inquiry for being able to attend and participate in these hearings concerning issues of compensation to subpostmasters and others. It recognises that the issues that you have identified are very important issues for the Inquiry to examine now, and it’s ready to work with the Inquiry to assist in anyway that it can.
UKGI’s role in relation to these issues is, as described in our submissions, one of assisting BEIS with its oversight of various of the arrangements that have been put in place and providing challenge to POL on its delivery of those arrangements, both at official level and through the attendance of the shareholder non-executive director on the Post Office board and relevant subcommittee. It seeks to fulfil those functions in light of the clear objective of achieving full and fair compensation delivered as promptly and as effectively as possible.
Since the hearings began on 14 February, UKGI has followed the Human Impact Hearings and Focus Groups closely. It’s been concerned to hear in many of the accounts that have been given, which are now reflected in some of the submissions that the Inquiry has received for these hearings, that compensation is not being delivered effectively.
UKGI wants to ensure that it has as full an understanding of these issues as it can so that it can fulfil its functions most effectively. UKGI has therefore referred each of the written submissions for these hearings with care. It now attends these hearings today and next week for the principal purpose of listening, listening so as to hear clearly the submissions made on behalf of all Core Participants, including the responses that POL gives to the issues that have been raised by others. In that way, the views expressed by all concerned can be taken into account in UKGI’s delivery of its function of supporting BEIS, both in terms of oversight and of challenge.
As indicated in UKGI’s written submissions, additional detail concerning its involvement in the compensation issues and arrangements have been set out in the Government’s response to the BEIS Committee’s report on Post Office compensation, which appears in the bundle for today at tab 13.
UKGI’s role in supporting BEIS is also reflected in BEIS’s written submissions for these hearings and, to the extent that they bear on UKGI’s role, it notes and endorses their submissions.
UKGI, nevertheless, recognises that there is an urgent and ongoing need to examine rigorously the operation of the compensation arrangements in light of the submissions of some of the Core Participants that have been received, and of any interim conclusions which the Inquiry may now decide to express in a report or any other update following these hearings. Thank you for the opportunity to address you.
Sir Wyn Williams: Thank you, Mr Mertens. For those who may not be as familiar as others with the aim and object of these hearings, can I say in respect of UKGI that I’m grateful for their explanation of their role and, for present purposes, that is sufficient for me. But when it comes to phase 5, I think it is, when there will be a more detailed examination, including evidence, then I would expect that UKGI would have a significantly greater role.
Mr Mertens: Yes, of course.
Sir Wyn Williams: Thank you.
Mr Mertens: Thank you very much.
Sir Wyn Williams: The floor is yours. Mr Stein.
Submission by Mr Stein, QC
Mr Stein: Sir, good afternoon. Sir, as you know, I appear with Mr Jacobs instructed by Howe & Co Solicitors. Together we represent 153 subpostmaster, subpostmistresses and Post Office manager Core Participants involved in this Inquiry.
All of our clients have had lives devastated by this scandal. All of our clients have had lives that have been badly affected by the scandal. Within our client group, we represent GLO litigants and I’ll just explain that, so that we all understand what I mean. If I refer to “GLO litigants” that means the individuals that were part of the group litigation that took this matter and broke this scandal by taking that action at the High Court.
We also represent those threatened with criminal action, those who were wrongly convicted, those who were cautioned, those threatened with civil cases, and those who are hounded by the Post Office to pay sums of money for which subpostmasters were not at fault.
So you will recall through the evidence that has been heard through the Human Impact Hearings that each one of our client families have been affected, their partners affected, their children’s lives affected, and generally the family life of those individuals derailed by the actions of the Post Office, Fujitsu and BEIS.
So we have considered your statement of 30 June of this year where you have stated that once you have heard oral submissions, you will make a determination as to whether to proceed to an interim report pursuant to section 24(3) of the Inquiries Act 2005 or provide a non-statutory progress update.
Can we strongly request that you issue an interim report. It is our submission that it will be important you, sir, as the Chair of this Inquiry, having heard the evidence from those people that have given evidence before you within the Human Impact Hearings, having seen all of the written representations that have been made by the various bodies and institutions, to make findings as to the position reached in relation to compensation.
But the other value of an interim report will be that within that report you can set out your recommendations, recommendations which you will then be able to consider and review during the lifetime of the Inquiry.
Now, we know the background to this. In relation to the GLO litigants, it is that they played a crucial role in exposing the Post Office Horizon scandal. We also know that in 2019 much of the monies paid over as part of the settlement were swallowed in legal costs, and we also know that the settlement described in its terms a reference to “litigation funders”. So it is very clear that the Post Office has known for some time that a lot of the money that would otherwise have been paid over in a settlement was never going to go to the GLO litigants. One of the points that we make, therefore, in relation to this is the delay that has taken place.
We have heard obviously on 22 March the Minister announcing that additional funding would be made available to give those in the GLO Compensation Group compensation that is similar to that which is available to non-GLO group members. One of the findings that we would ask you to make, though, is this, that since March of this year not one GLO group member has received any compensation.
We do say that there has been obfuscation and delay in dealing with these matters as should have been appropriate by essentially what is a public body: the Post Office. We know it is privatised but it is owned by the Government. Therefore, an interim report setting out recommendations would provide a target list for the Government and for the Post Office to then follow.
We ask for the following points to be made if you would consider them, please, in such part of your recommendations as you would be prepared to consider.
Sir Wyn Williams: Mr Stein, will you give me those in slightly slower fashion because, for whatever reason, I’m not getting a simultaneous transcript now. I want to make a careful note of what you are saying.
Mr Stein: Sir, not only will I do that but we will also undertake to provide it in writing so that you have those set out.
There are six individual points that we ask you to consider making. Firstly, that significant interim payments are made immediately to all of those subpostmasters who are outstanding.
Point 2, that as regards the recent press release from BEIS that they are making available 19.5 million as an interim payment fund, that you, sir, are provided with the principles to be used for the distribution of these funds amongst the GLO litigants. Sir, that would allow you to consider the fairness of payments amongst the litigants and make any recommendations as may be required.
Point 3, that fairness demands that the Post Office should not be the final arbiter of whether an interim or final payment should be made in compensation claims made by any individual in categories in A, B or C.
Point 4, that BEIS should make provision for reasonable legal costs all in stages of compensation applications in all three categories that you have identified, and that claimants are provided with proper access to disclosure at all stages.
Point 5, that of the principles that you have sought to discover for all compensation schemes, or proposed schemes, there needs to be transparent and disclosed settled precedents and comparables, allowing for legal advice to be given to the Post Office’s victims at their individual category of claim and expected financial outcome.
Finally, at point 6, a timetable be set out for the establishment of the GLO Compensation Scheme capable of being monitored and followed by all those involved.
Sir Wyn Williams: Can I just be clear with you, Mr Stein. That last point, point 6, is clearly related solely to I will call them the GLO claimants. You call them GLO. Point 1 to 5 apply to all categories, so that I’m clear, A, B and C.
Mr Stein: Sir, yes.
Sir Wyn Williams: A, B and C, 1 to 5, 6 is specific to GLO.
Mr Stein: Sir, yes.
Sir Wyn Williams: Okay.
Mr Stein: Sir, we recognise, as has already been made in passing comment this morning, this is not a court. This is not the High Court. Your powers are limited to making statements, recommendations, and putting forward findings. It is, though, nevertheless possible for you to set out what you would regard as being within the range of reasonable responses that could be made by setting out a timetable and, of course, that can then be reconsidered if there is any attempt, if you like, or any suspicion that such a timetable is not being followed. It would be an indication, in other words.
The reason why we say that such recommendations are required is because, in our submission, the approach of the Post Office and BEIS to compensation replicates past behaviour. We suggest that what is happening is that the Post Office is continuing to attempt, and actually succeeding, in siloing subpostmasters, keeping them ignorant of what is happening in relation to compensation claims as regards to one to another. There is a limitation being provided on access to full legal advice. The onus of proof point has been made already, but the onus of proof point is that despite the fact that many Post Office business papers and accounts were removed, or over the years have gone, that the burden of proof is nevertheless placed upon the applicants within these schemes. We say that the collection of those issues is causing the same problem that you have heard through the Human Impact Hearings, that each one of the subpostmasters in their individual post offices was left in ignorance of what going on elsewhere without information that would have assisted them in dealing with the Post Office.
Now if, sir, you are able to follow that request and put forward an interim report, it would assist in providing us with a way forward because one of the things that has been apparent this week, and indeed up until today, is that the sands have been moving in the background. We have heard very submissions coming in late. The submission that you referred to as the one last night, in fact, I think my instructing solicitors received it at 8.30 this morning, as it was passed on by the Inquiry – we’re grateful for that – and so we didn’t even have it at the 9.50 last night that it otherwise might have been available. We know that what has been happening is behind the scenes letters have been sent to many of the people that we represent and, therefore, there is a problem that exists which is a shifting sands of position that is hard to grasp, which is why, sir, an interim report setting out what you would regard as being the way forward would be of real assistance.
The interim report that we ask you, sir, to make does not relate to recent events. The Post Office and its sole shareholder (the Department for Business, Energy and Industrial Strategy, BEIS) which monitors the performance of the Post Office through UK Government Investments, has been firmly aware of the failings of the Horizon system for many years.
There were the two judgments by Mr Justice Fraser in 2019 that demonstrated that the Post Office had failed to ensure that its operating system, Horizon, was fit and reliable for the purposes of its systems and as a basis for any type of legal case. Nevertheless, the Post Office throughout those proceedings fought the case tooth and nail thorough the High Court, even seeking at one stage to remove from Mr Justice Fraser from the case.
Not one of the Horizon system. The Horizon system is not a sentient being. The Horizon system did not pick its victims. The Horizon system did not decide which of the Post Office offices individual balances it would disturb and infect with its bugs. The Horizon system is a product of the negligence and lack of care of the people who operated and owned it. In fact, we suspect, as the Inquiry progresses we’re going to find that all post offices had some problems. The question is: to what degree?
The Post Office should never have thought to preserve its reputation at all costs by fighting the High Court case. But what it did do, by doing so, was at the cost of further harm to the lives, financial health, and mental wellbeing of those we represent. The Post Office is in, in effect, a public organisation and should have immediately told the truth to its Post Office workers. Instead, what has happened in relation to compensation it has set about putting in place complicated schemes run by corporate lawyers to provide access to some compensation for some its victims.
Sir, on 8 November last year I addressed you at the first hearing of this Public Inquiry after it had been put on a statutory basis. I set out then that many ex-subpostmasters face imminent financial ruin and that people will lose their homes unless something is done urgently to assist them. I added then that some may not survive the lifetime of the Inquiry due to stress-related illnesses. Indeed, since the Inquiry has started hearings in February of this year, I am sad to say that I have been informed that another of those affected by the Post Office in this scandal has died. We don’t, of course, forget such individuals as Marian Holmes’ husband Peter, a proud and distinguished ex-police officer who went to his grave with a wholly undeserved conviction recorded against his name.
The obfuscation and denial that I have referred to has continued since the time of the High Court hearings. On 1 December 2021, BEIS wrote to two of our clients and told them a full and final settlement was reached between the claimants in the GLO and the Post Office. There is nothing further the Department can do at this time.
On 6 December last year, Mr Enright, partner at Howe & Co Solicitors, wrote to Mr Scully and stated that:
“Neither you nor your Government’s hands are tied by the settlement in the Group Litigation. It is entirely open to your department and your Government to acknowledge the widely accepted fact that claimants in the Group Litigation performed a vital public service.”
Without their action, for which they paid a very high price, the greatest miscarriage of justice in British legal history would never have been uncovered.
In November, I asked you, sir, as Chair, to use your wide powers to require the production of evidence that the Inquiry believes is relevant to the terms of its reference and issues to compel the Post Office and BEIS to disclose an up-to-date clarification on compensation.
Of course, all of our clients have asked me to convey their gratitude to you and your team at this Inquiry for acknowledging and prioritising this important issue through conducting these hearings today and next week. But it may assist you to know that many of our clients have found it helpful to give evidence in the Human Impact Hearings, finding the experience cathartic and giving them a degree of closure.
But the harm which the Post Office has caused to our clients is ongoing and is made manifest in the their desperate financial consequences. Let me give you some examples of what has been said. Marion Drydale says:
“I have sold my jewellery, used my inheritance, cashed in my pension. Every day is filled with uncertainty, a dread of more bills I cannot pay.”
Peter Worsfold says that he has still not been able to repay his 94-year-old mother for bailing him out when the Post Office demanded money for shortfalls in 2002. He visits the supermarket at 4 p.m. when they have put short-dated items out at reduced prices.
Faisal Aziz is on the verge of declaring bankruptcy. He worries that he will not be able to feed his five children.
Susan Hazzleton, who you will recall as you asked questions in relation to her particular circumstance. She says that she is 69 years old in December and she still works four days a week as she can’t afford to retire, and she has just had to put her house on the market.
Geoffrey Pound says.
“Our house and business were repossessed back in 2008. At 74, I would need to live until about 150 years old to repay in full.”
Shazia Siddiq:
“The ounce of dignity I thought was remaining is being eroded daily. I am so tired. At the age of 38, I feel like a pensioner. The effect of Post Office Limited actions have destroyed me.”
All these Core Participants are GLO litigants and there are obviously many other examples that we could provide. These are the very people who risked everything to expose the scandal. Some you heard from. Some, like Gareth Etheridge, received sums as little as £1,800 from the Group Litigation, which is why we go back to the point we’re making in relation to recommendations.
Sir, you’ve asked for the principles to be expressed in relation to groups A, B and C. We need to know, looking forward, what are the principles that are going to be used in relation to the setting out of compensation in the future for the GLO group.
Now, sir, we have had comment today about the responses made in the institutions to this Inquiry. Can we set out our disappointment at the responses from the Post Office Limited and BEIS to the questions that you have asked, particularly, may we say, sir, in relation to the issue of fair compensation for the Group Litigation claimants. You called, sir, for specific answers at questions 1 to 12 on 10 May of this year, nearly two months ago. Your direction was this, this is on 9 May:
“Although the Minister’s announcement of 22 March 2022 was no doubt very welcome to the claimants in the Group Litigation, it is extremely important that effect is given to the announcement as expeditiously as possible. No doubt these two issues will be the subject of detailed submissions at the hearing which I have decided to convene.”
On 10 May, you set out with considerable clarity the questions you invited answers to as regards the GLO litigants, setting them out of at paragraphs 9 to 10, fair compensation for the Group Litigant claimants. The principles which we apply to the calculation of further compensation payments.
The mechanism or mechanisms by which further compensation payments will be calculated.
The provision, if any, which will be made for applicants to obtain independent legal advice in relation to their claims.
The procedure or procedures which will be adopted to resolve disputes about the value of further compensation payments.
Yet the Post Office responded in six lines at paragraph 58 of its written submissions to say that:
“Until further information is released by Government, Post Office is unable to assist the Chair further in relation to issues 9 to 12.”
Well, BEIS went one better and responded in two paragraphs. At paragraphs 38 and subsequently 39 of their submissions dated 31 May, they have said that they convened a working group, that decisions have been made, and, whilst the Department has a strong desire to begin payments as soon as possible, the Department hopes to be able to provide a further update to the Inquiry at the hearing in July.
So we are at a loss to understand why BEIS has failed to answer your questions. They were simple questions, setting out the need for simple answers, targeted at what is required by the Group Litigation individuals.
Our clients do not wish to wait to hear BEIS proposals such as they may be on the next occasion that we meet in relation to this Inquiry.
May I make a note now that, because of the timetabling (of which I make no complaint whatsoever), that we would ask if points arise that we need to deal with that we may need to then return to make some submissions in response after hearing from BEIS on the next occasion.
Sir, what is more concerning is that on 30 June, instead of complying with your requests for information, BEIS decided to issue a press statement on its website entitled:
“New Story 19.5 million interim compensation package for subpostmasters who helped uncover Horizon scandal.”
This is a terrible and heartrending scandal. It should not be an opportunity for a Government department to seek to score public relations points through the Media. Nor should BEIS seek to disregard the Inquiry process and embark on a frolic of its own, particularly when directed by the Chair to answer particular questions.
The view that our clients takes is that BEIS has to be dragged kicking and screaming by my instructing solicitors Howe & Co and this Inquiry into finally agreeing to at least move in the right direction. Is it actually possible to believe that the Post Office and BEIS are so incapable of understanding, even now, that they have victimised their own staff?
So what does this mean? Our clients are now aware, and this is all it means to them, that the Government announcement means that they may be receiving some interim compensation. Now, of course, this position should have been reached a very long time ago and we still have no clear time-frame for a matter that is urgent. This is not a gift. The people we represent are not a charity. They deserve adequate immediate compensation, as we have said many times, for their huge actual and reputational losses.
The BEIS news story says that Ministers are to provide a 19.5 million interim compensation package to the postmasters who played a crucial role in exposing the Horizon scandal. The news story contains next to no detail. There is nothing setting out the date by which that will be set out. My clients do not know who will be eligible, what the application process is, and the basis upon which the funds will be apportioned. These matters need to be clarified so that the representatives of the Core Participants and my instructing solicitors and others can consider them and comment upon them, if necessary, on the next occasion.
May I also add at this point that the lack of trust between my client group and the Post Office, Fujitsu and BEIS is so extreme that they doubt the reality of the interim compensation package and, given the track record of the Post Office and BEIS, who can blame them? Put it this way: there are not many ex-subpostmasters who are holding their breath.
Sir, as you know from the hearings, some people who are before you and before this Inquiry, are facing ruin, absolute ruin, right now staving off people coming to their door demanding money. So we do ask for a commitment from BEIS to making immediate – looking this up to make sure we know what it means. It mean do at once, instantly, get this done, hardship payments to those SPMs who are facing hardship as a consequence of the scandal.
We’ve heard Ms Gallafent today speak about hardship payments in relation to the Group A group or class A group. But what we would respectfully invite you to accept, sir, is that this appears to have been done at the will of the Post Office when it feels that it should do so in particular circumstances that it’s notified of. No system, no settled way ahead, no application process.
Now, aside from our criticisms of the delay and the BEIS failure to follow your directions, the announcement of 30 June may represent some progress but it needs to be made reality now, not at some later stage. We need a timetable and we need that now.
May I set out then and move on to the particular positions in relation to the points that you have asked. Sir, you have made it very clear that you have read all the written submissions and that indeed we interpret, in fact, the need of this Inquiry for these particular hearing purposes as being more directed towards the institutions to see what they are saying about it as well as the points that we make on their submissions.
Sir, can we set out our concerns with the HSS. I wonder who came up with that title? Our first point is this in relation to the burden of proving losses: Post Office Limited and BEIS as responsible for this scandal. They should not be treating the issue of compensating victims as anything akin to litigation or, indeed, what appears to be adversarial litigation. The HSS scheme requires that SPMs, subpostmasters, establish causation and prove each and every loss, preferably with contemporaneous evidence.
Many people we represent, and I’m sure many people who have suffered at the hands of the Post Office, endure victim fatigue and some may well be suffering from undiagnosed PTSD. This system that is put forward is a system in which people who are already finding it difficult to manage their lives and look after their families then have to go through this rather difficult process. You will remember that the evidence is that in many, if not most, cases the Post Office seized the paperwork of subpostmasters and their records when suspending them.
The Post Office now seeks to place the burden on subpostmasters to produce the very records that POL (the Post Office) took from them. This is wrong-headed and badly thought out and we’ll look at the details been moment.
Ms Linnell (Kay Linnell will be, we suspect, an important witness in the later phases of this Inquiry) tells us that during the mediation scheme a senior Post Office official told Sir Anthony Hooper during the mediation scheme that Post Office Limited destroys all records after six years. If that is right, then Post Office Limited requires HSS applicants, and presumably all applicants for compensation, to bear a burden of producing documents which Post Office Limited have seized and destroyed, in effect directing hurdles that no horse could jump.
It is no answer, we suggest, to our concerns for Post Office Limited BEIS to rely on the statements in the guidance to the effect that where the postmaster is unable to satisfy the burden of proof in relation to their claim, their claim may nonetheless be accepted in whole or in part if the scheme considers it to be fair in all the circumstances. What does that mean? What are the principles being used for such a determination?
Essentially, this has been, and remains, an enormous and far-reaching public scandal. Our clients should not have to go cap in hand to the perpetrators of that scandal when applying for compensation to ask for indulgences or some form of largesse.
The heads of loss within the HSS scheme. Whilst the heads of loss in the HSS are non-exhaustive and generic, it is problematic that they do not reflect the full range of harm caused by the Post Office in this scandal.
Now, Post Office Limited states at paragraph 11 of its written submissions that there is no form of loss that cannot be taken into account. This approach is wrong. The scheme should be tailored to reflect the consequences of Post Office’s actions and include: suffering to children and family members; the roles that family members have played in caring for traumatised subpostmasters; and the fact that many subpostmasters have been required to work long into what would otherwise have been a planned retirement, and, sir, you have heard evidence that relates to such matters.
Well, the administration of the compensation scheme has been described by Post Office Limited. They say it’s designed to be simple and user-friendly to avoid the need to incur costs of legal representation. Well, we suggest that the scheme is neither simple nor user-friendly. It’s beset with problems. You will recall the evidence of Mr Sethi, the Inquiry’s first witness, who received a request from the HSS for answers to 68 questions which included a number of sub-accounts, which brought the total to approximately 100 questions. Mr Sethi expressed considerable frustration while giving evidence that he has being asked to consider questions in relation to matters that had occurred some 20 years previously, in respect of which much of information was still being held by the Post Office.
Nor, we suggest, is the scheme necessarily being administered fairly. Subpostmasters have said that they received offered from the HSS that have been derisory. Fiona Elliott gave evidence on 19 May 2022. Ms Elliott said that she had lost just over a £1 million but had been offered instead £24,000. BEIS’s assertion at paragraph 21 of their written submissions is that – sorry, the Post Office Limited is on track to issue at least 95 per cent of offers by the end of this year.
It seems to us, and even having listened to carefully to what Ms Gallafent has said today, that given the difficulties and the restrictions in application process, that there may well be a number of people who have already had offers, and in fact accepted them, through settlements, that could well have put forward further matters that relation to consequential losses. It’s a matter of grave concern, we suggest that at paragraph 25 of the Post Office Limited’s written submissions that they are saying that the vast mortality of offers have been accepted. We say that those offers may well have been made within a scheme where applicants are not able to receive legal advice or disclosure in relation to their possible claims. It is quite likely, we say, that there will be many subpostmasters who received offers in a similar derisory way to that received by Ms Elliott and who, in the absence of legal advice, have accepted those offers.
There’s a danger, we suggest, of there being a scandal within a scandal about the compensation and the way it is being handled by the Post Office.
Sir, you have questioned already the sign or the lack of sign of independence in the running of the scheme. At paragraph 31 of the submissions filed on behalf of Post Office Limited, it is stated that HSS claims will be first assessed an assessor from Herbert Smith Freehills and then by a team of reviewers at Post Office. The assessment is then reviewed again by the case assessor before being looked at by a so-called Independent Advisory Panel. Ultimately, it is the Post Office which decides the outcome with the benefit of the Panel’s assessment and recommendation.
We suggest, and we agree with the provisional view that you have set out, that fairness demands that the Post Office Limited should not be the final arbiter of whether an interim or final payment of compensation should be made in accordance with the Minister’s announcements in July and December last year, and that any disputes should be determined therefore by an independent person. In particular, it would be inappropriate for Post Office Limited to play any part in the determination of aggravated or exemplary damages which will be claimed by subpostmasters. We are not aware of any previous scheme where an abuser institution awards punitive damages against itself.
The further disturbing feature of the HSS scheme you’ve already dealt with today in discussion with Ms Gallafent and Mr Beer, Queen’s Counsel, is that there is a denial before an application is made of access to documents disclosed by Post Office Limited at those initial stages. We have submitted in our written submissions that there is therefore a substantial procedural flaw in the HSS scheme. We say that that is wholly unacceptable.
Now, as to legal representation during the compensation process, we saw in the BEIS news story of 30 June a comment that is made there which says, “Postmasters will be able to claim reasonable legal fees as part of participating in the final compensation scheme.” Well, we hope that the wording of the Ministerial Statement reflects acceptance by POL and by BEIS that postmasters simply cannot be expected to embark upon a complex procedure involving detailed and historic claims without legal representation and access to experts, if necessary.
It is important to highlight (although the data is still not, we suggest, entirely clear) that it appears that when we were drafting these oral submissions we worked it out as being 4 per cent of applicants to the HSS scheme were legally represented. In fact, having looked at the documentation again and considered what has been said for us this morning, it looks as though it’s 3 per cent of those applying to HSS have had some type of legal representation.
Now, it may be therefore useful to briefly go to the application form itself. Sir, can I take you to the bundle, please. At page 192 – you have been directed to already by Mr Beer – sir, this is a form that we learn from Ms Gallafent – and I hope I quote her correctly, just after midday today – this is designed not to refer to the consequential losses and that is done to help lay persons who are making an application.
Well, therefore it seems we’re being told that it was quite deliberate that this form didn’t have a reference to consequential losses. You’ve been directed to paragraph, I think, 24 by Mr Beer. Can I take you to paragraph 193. Sorry, page 193 which is paragraph 29. In the bundle, page 193 and it’s paragraph 29 of the form. Let’s see what it says here.
“Please provide an explanation as to why you believe you have not been treated fairly by the Post Office. In doing so, you should set out what you would like the Post Office to do to remedy the situation and why.”
Well, there are a number of answers to that I’m sure that many of my clients would like to give in relation to what the Post Office can do with itself. But otherwise, why is the Post Office setting out there a suggestion of what has happened as a result of the unfair treatment but it is not dealing in any way with the consequential losses and the effect upon and the stigma of having been dealt with by the Post Office in a particular way or regarding people’s character or what has happened to them by way of their own experiences, their mental health or their medical health.
We have also been directed to the guidance that is set out at page 303 as being guidance that might assist. It doesn’t take but a moment to look at the pages that have been referred to already to realise that these are complex matters, dealing with heads of loss, in terms of loss of earnings, loss of profits, loss of property, loss of opportunity, loss of chance (these are legal terms), penalties, general or increased costs of financing, bankruptcy, insolvency, and so on.
We listened carefully to Ms Gallafent who did her very best in, we would suggest, rather difficult circumstances to defend the Post Office’s actions. This form is wholly inadequate. It is not that it doesn’t make much by way of reference to consequential losses: it makes no reference to it.
We take away our legal qualifications and put ourselves in the position of the distressed subpostmaster who is trying to deal with such a form in awkward circumstances such as this thinking about, no doubt, the time that they’ve got to get it in otherwise that door is going to be closed. What we say is, in effect, a form that appears to be designed not to help lay people make the application but, in fact, to avoid particular types of losses.
You will have seen, sir, that the HSS scheme only provides for contribution of 1200 or 400, depending on the scope of the dispute, taken in relation to an offer in relation to legal costs or legal expenses. And POL (Post Office Limited) states in its written submissions that it’s made payments of legal expenses in 35 cases where requested to. This should have been built into the scheme. People that are making such applications that really have to be told, as we learned today from Ms Gallafent, that what they should do is look at this application form and look at guidance, make sure that they put in a separate document setting out their answer to these heads of damages in relation to consequential damages. The Post Office is essentially asking for individuals to perform with, one would hope, the facility of a trained lawyer and that, we suggest, is continuing unfairness.
Now, it is quite clear that Post Office Limited views the compensation process as litigious. I mention Ms Elliott again, Fiona Elliott. She applied to the HSS and on 26 June Ms Elliott attended a good faith meeting, accompanied by Mr Enright, a partner at Howe & Co who is handling these matters, and that was because she had rejected an offer that had been made to her. Now, attending at that meeting, which was conducted by a barrister instructed or employed by Herbert Smith Freehills, it was pure good fortune that Mr Enright was present. At the start of the meeting, it was explained to Ms Elliot that the meeting was to be conducted on a without prejudice basis. Well, it seemed to us, on her behalf, that a good faith but without prejudice meeting is absurd and this, yet again, has all the trappings of litigation.
We hope that Post Office Limited and BEIS accept that the provision in the HSS scheme, which probably is going to be asked for or attempted to be replicated in the other schemes, for legal assistance of perhaps three hours work and only after an offer has been made is wrong, it is untenable, it is unfair, and designed to disadvantage subpostmasters.
Now, we understand that Post Office Limited and the Department of Business are considering using Freeths Solicitors to assist eligible subpostmasters in relation to compensation claims that were brought in the Group litigation. Now, we can provide some further update in relation to that as being contact to clients of ours by Freeths in a letter that’s essentially called Freeths facts. Again, going back to the fast-moving pace of matters, this is yesterday. Freeths write to subpostmasters:
“Please note that you are not obliged to reinstruct Freeths. If you do not instruct us, this means that we will not be able to represent you in stage 1 of the process and we will not be able to pay your interim payment to you.”
Freeths, therefore, have already acknowledged – and, sir, you’ve considered the wording of their communication to the Inquiry already – that not all individuals will necessarily be wishing to instruct them within this process.
Now, Mr Enright of Howe & Co Solicitors recently had a meeting with BEIS and it has been accepted by BEIS that other representatives of subpostmasters before this Inquiry will be included in the further discussions about how the scheme for the GLO litigants will be put together and its terms. So moving forwards, it seems as though there is acceptance by BEIS that Howe & Co, and no doubt other firms of solicitors, will be involved in that process.
Now, we welcome that. It will enable discussions about funds being distributed to be discussed openly and transparently and that will be capable of being shared with the Inquiry as the Inquiry makes it progress.
Nevertheless, the work that will need to be done within those discussions and in making the applications in the future must be properly funded to put those applicants within the GLO litigation on the same basis as the Post Office in terms of legal representation.
Can I then deal with interim patients themselves. This is interim payments for those who underwent prosecutions, not convicted. We have submitted that there should be no distinction between those who are entitled to interim payments having had their convictions overturned and to those who are prosecuted and acquitted at trial or where prosecutions were discontinued or cautions accepted.
We understand that BEIS’s position as stated in their written submissions is that any subpostmaster who was acquitted or otherwise prosecuted and cautioned or not convicted can apply through the HSS scheme. Presumably BEIS will say that any subpostmaster who was acquitted and who was a member of the GLO can apply under the new, but as yet unparticularised, scheme.
Our position is that those subpostmasters who were acquitted fall between the mechanisms and should be transferred into the category B cohort of cases and should have the facility to receive up to £100,000 in interim compensation in accordance with that process. This would remove the unacceptable position reflected in the evidence of Ms Hamilton and Ms Palmer, that those who are convicted are at least eligible for conviction whereas those who were acquitted were not.
We hope that the announcement of 30 June that Ministers are to provide a 19.5 million compensation package for all GLO litigants will assist in practical terms. But the distinction should be made. However, basic mathematics suggest that acquitted subpostmasters will still receive substantially less in interim relief than those who were convicted.
Can we deal with the compensation questions that relate to subpostmasters with quashed convictions. The subpostmasters with overturned convictions who we represent would wish that BEIS clarify their position in relation to how it will proceed in this category of cases in these hearings.
Can I deal immediately with a point that’s already been subject to some discussion. We know that there are discussions ongoing that include a reference to Lord Dyson who, as we understand, has agreed to come in and consider these particular category of cases. We go back to our primary submission which is that you, sir, should have answers to what are the principles being employed in relation to such determinations. We were pleased to hear the possibility set out today that the comparables or the precedents or the determinations made by Lord Dyson may well be available so that people can see what has happened one to another with such applications.
We do not wish to make any further submissions on this particular point because we would like to consider what has have be said so far between now and the next hearing, but our main consideration being that principles need to be open, need to be transparent, need to be capable of being examined by subpostmasters and our representatives remain in relation to all of those, including those individuals who otherwise might go through what may be described as the alternative scheme employing the good services of Lord Dyson. But the principles upon which decisions should be made should be open and clear to others.
Sir Wyn Williams: Mr Stein, you probably heard Mr Beer suggest that I might want to enquire of the affected Core Participants to what extent I should butt out or in in relation to this particular issue. I asked Ms Gallafent what she thought and she answered me. Am I butting in or out or somewhere in between on what you say?
Mr Stein: Well, sir, naturally of course, we are asking you to stay somewhat in the doorway.
The position that we are asking you to adopt is this: that it is important that the principles for compensation are established, are known, are transparent and accessible. We also don’t wish to interfere in anyway with any current application or anything that we put forward delay compensation being provided. So on that basis, and subject to further thought between now and the next occasion in this rather rapidly moving situation, we suggest that the way forward will be for your to stand in that doorway and say that the process needs to have some level of oversight and needs to be transparent and to request, if all parties agree, that the Lord Tyson principles, can I put it that way, be made available. That would seem to us to be, respectfully, a halfway house that would be acceptable at this time.
Sir Wyn Williams: I mean, I’m looking at this from a practical point of view as well. You invited me in the strongest terms to provide an interim report. In the very nature of this things that would probably mean a greater length of time between these hearings elapsing than if I were to just provide a progress update because, as you will appreciate, an interim report has to be laid before Parliament and all the rest of it.
Mr Stein: Yes.
Sir Wyn Williams: If it happened to be the case that Lord Dyson’s work was – I think someone suggested that he may complete part of his work by the end of July, who knows what then might follow from that. So I think the probability is that instead of us talking to each other sideways about doors open and shut, I should just – the very great likelihood is that Lord Dyson might pronounce before I certainly provide and interim report and my interim report, if that’s what it is, will then no doubt take great account of what transpires. Does that sound reasonable?
Mr Stein: Sir, yes. It does seem to us to be a practical way forward. Being blunt, it may well be that Lord Dyson will hear of this hearing, may well pay attention to it, and may want to consider contact with the Inquiry and in such contact, the Inquiry may be prepare, I know not, to accept that he would be prepared to set out the general nature of his considerations.
We don’t, in any event wish, to put anything forward that delays any compensation going to anyone. There have been enough delays and enough obfuscation and that that cannot be done. So we accept the problem and we accept also, therefore, the solution.
Now, we understand that as regards the claw-back position that this is one of the matters that has changed. For us, we learnt about this this morning. We’re told in the correspondence that was received last night, that we saw I think at 8.30 this morning, that there would be no attempt now to claw that back. That is progress at least in relation to those payments.
We note that Post Office Limited has made that concession in relation to paragraph 43, we think, of its written submissions. BEIS has now confirmed, it seems, that it agrees with that position.
Now, I turn then to paragraph 33 of the written submissions from BEIS which states this:
“One reason for the Department providing funding to Post Office Limited to enable claimants to receive an interim payment of up to 100,000 was to make ensure that they could secure independent legal advice to assist them in making claims.”
It also stated that the Department was concerned to avoid a situation whereby postmasters were forced to engage expensive litigation funders and end up with their compensation reduced as a result, as happened of course with the Group Litigation.
The need for interim payment is such that that is required to allow people to get their heads above water, not for such luxuries as legal costs. Legal costs should be paid for by BEIS and we suggest that there still is a failure of understanding by BEIS and the Post Office that the subpostmasters were, and are, their victims. They have created this problem. They have created the need for subpostmasters to have legal assistance at all.
Now, there appears to be some conflict with submissions made by the Post Office at paragraph 56 of its written submissions, that as part of the negotiations Post Office will consider the postmasters’ reasonable legal costs. So it seems that BEIS will need to reconsider its position based upon the way that the Post Office has set matters out.
Effectively, BEIS is saying that they don’t want legal costs to eat into subpostmasters’ final compensation awards, so those costs should be taken from the postmasters at source and deducted from interim payments at the outset.
The money is needed right now to solve people’s immediate problems, to get them out of the financial hole created by the Post Office. What are those individuals to do? To receive an interim payment, put some rather unspecified sum of money aside which they can’t touch to use for legal costs. At the heart of this suggestion, it is badly wrong that those individuals are being deprived of the ability to properly have fully funded legal assistance.
BEIS will know that the aim of compensation is to try to place postmasters back in the position where they would have been but for the scandal. Costs are a separate issue.
Of course, BEIS may pay the reasonable legal costs associated with making claims under the scheme. It appears to have agreed to do so in relation to category C, the GLO litigants. It cannot, we suggest, reasonably fail to do likewise in respect of HSS applicants and it should not try to short change those who are convicted unlawfully as a result of Post Office’s abusive prosecutions. It is obvious that Post Office or BEIS never has to worry about the cost of its own legal representatives: Government is paying for that.
Our clients are very grateful, sir, that these hearings have been convened in what we all know is an early stage of the inquiry process. But sadly it seems that it is only by repeated correspondence from my instructing solicitors and others, and by this Inquiry taking upon itself the need to have these hearings, that BEIS and the Post Office are having their feet held to the fire in order to make them pay up.
There is still a very, very long way to go. A large number of subpostmasters remain in highly precarious situations. The HSS scheme itself is riven with problems. No doubt for those people that have made applications already and we suggest that it’s very likely that many people, if they are prepared to listen to the representations we have made and others, will be wanting to go back to the Post Office and say, “Well, we didn’t realise the consequential losses could be claimed”.
It would also be helpful to have it confirmed for all of those people out there that might be in a position, who having heard what is being said by Ms Gallafent regarding the potential for there being an open door to making a claim within the HSS scheme, for that door to be made clear that it is open and that the application system is still present. It needs more than counsel on behalf of the Post Office that says that that is being considered. It needs to be said that the door is open and applications can be made.
Let’s compare briefly y the evidence that you have heard, what’s happened in the past to what is happening now. Sinead Rainey’s evidence heard in Belfast in the Human Impact Hearings, transcript 18 May (just for your note) at page 43, lines 12 onwards. You will remember that she spoke of an audit which take place on 1 May 2019 and she had just dropped her children off at school – small children. Sinead said that when the auditors had finished tallying up, they came to her and they called her into the office and they said, “Sinead, have you got any more money belong beginning to the Post Office?” The auditors explained, “There’s a discrepancy here of £63,000”. The auditor said, “Sinead, you’ve got an hour to get as much money into that safe. I’ll be locking that safe in an hour and you’ve got an hour to get as much money in there as you possibly can. Whatever money you can put in there will be deducted off the total discrepancy”.
So Sinead says this:
“Well, I got into the car. I drove home and I lifted a bucket in my house and I emptied my wee’uns moneyboxes into them and I emptied my own purse and any money that I had in the house, tuppences, 5ps, everything went into the bucket.”
She explained that her mummy and daddy arrived. She didn’t know it until that point but Darren, her husband, had phoned them and they went to Ballymena and withdrew as much money as they could out of their own bank accounts but they couldn’t get enough. So they rang two of the uncles and they did the same.
“My sister, when she was on the way to her shop to lodge her own takings, she gave me her takings. So I don’t know the exact figure because I never got a receive but somewhere in the region of £42,000 was in that bucket.”
Counsel to the Inquiry asked Sinead:
“Where did that bucket go?”
Sinead said:
“I couldn’t drive at that stage. So I got my sister to drive me down to the shop and I carried that bucket in and the auditors made me stand there and watch them count it. And they tutted, made me feel so lousy for bringing them all these pennies but I brought them whatever I could.”
I mentioned Fiona Elliott. She gave evidence on 19 May. Two auditors arrived at the office. The auditors told Fiona, “There’s a shortfall here of £6,000 showing in the system. We need to get that £6,000 now or you’ll have a criminal offence.” Well, she said, “Where did that £6,000 come?” She said, “I’m constantly putting money here all the time, hundreds of pounds a week and never showed up that huge amount. What will I do now?” They said, “You’ll have to pay it”. She hadn’t got it in the shop. “So I ended up by saying can I go to the bank?” The bank was closed. They said no. “So I couldn’t leave and go that far. They wouldn’t wait on until the bank was going to open in the afternoon. She tried to offer the Post Office official a cheque. They wouldn’t accept that.
And Ms Elliott said to you, Fiona said to you,sir:
“Then I went and my brother owned a car business in the village as well and I asked him would he have any cash on him and he said, ‘Aye, there’s cash there’. So I got the cash off him and gave it to the Post Office. I never got a receipt for it.”
These are just two examples but you have heard scores of witnesses when the Post Office wanted their money, they wanted it there and then under threat of criminal prosecution. However, when we see the failings of the Horizon system and the Post Office’s conduct is uncovered repeatedly and starkly, and they are called upon to properly compensate the victims, we suggest there has been delay, obfuscation and basically these issues being kicked into the long grass. They make statements to Parliament, they issue press releases, they do everything but pay up promptly.
I go back to where I started. Our clients simply asks that compensation schemes are drawn up in such a manner that indications are given as to the amounts they are likely to receive by way of final compensation. That requires precedence, it requires comparables, it requires a way of accessing what it is that they might be able to receive by way of the application. Schemes should be transparent. They should provide indications of likely quantum in a banding format. This would assist in removing the unfortunate litigious elements that the schemes currently contain and provide a measure of certainty and facilitate targeted representations.
Our clients, for very good reason, do not trust the Post Office nor BEIS, the department of Government which owns the Post Office. On 22 March, the Minister made an announcement in Parliament accepting that the Government has long considered unfair the unequal treatment received by members of the GLO litigation group and their non-GLO litigation peers. The Minister said:
“I’m therefore pleased to announce that the Chancellor will make additional funding available to give those in the GLO group compensation similar to that which is available to their non-GLO peers.”
And accepting that, because they had signed a full and final settlement of the court case in 2019, postmasters in the group were ineligible to apply to the Historical Shortfall Scheme.
“So despite winning the case [the Minister went on to say] the group was left worse off than other affected postmasters for whom they had blazed the trail.”
In your announcements on 9 May, you refer to the fact that in their written submissions both Post Office Limited and BEIS suggest that claimants in the group litigation falling within categories 1 and 2 will be eligible to claim compensation for malicious prosecution by virtue of the Minister’s announcement of 22 March.
You go on to say this:
“It is also [your] provisional view, however, that Post Office Limited and BEIS are correct to suggest that claimants in the Group Litigation who fall within categories 1 and 2 can claim compensation for malicious prosecution in reliance upon the Minister’s announcement.”
So it is for these reasons that I have set out today that we invite you to set out your view on the current compensation schemes and what little is known about the GLO compensation proposals and that we ask you do that within the format of an interim report.
Sir, those are our submissions this afternoon. I hope I have dealt with them reasonably so that if cricket is about to start that people might start to turn out to the windows to their side and watch that.
I finish with this: it is troubling that in order to get BEIS and the Post Office to come to arrangements that relate or explanations that relate to the HSS scheme or to answer questions that you have set out, that all of the expense that is required to set up such hearing has been done. It is troubling that the Post Office does not seem to have been able to understand that individuals that have been affected by the Post Office’s actions, Post Office being wholly owned by BEIS, need support and need assistance. It is troubling that all of those matters have been behind the scenes to a large extent and that, right up until the day of this hearing, including today (and I am quite sure whilst I have been on my feet), that further changes have been taking place.
So I ask, sir, that you indulge us if need be on the next occasion by the ability, if required, to make further short submissions in relation to what happens between now and then and after having had a little bit more and more time to think of some of the submissions that have been made today. I will make a promise that it will be a short series of submissions targeted at only those issues itself, and no more than that, and obviously after hearing from others that set out their submissions on that day.
Sir Wyn Williams: Thank you, Mr Stein. I think that I would be remiss in not making some reference to what might happen on the next occasion and so I’ll do it.
In the notice which I published on 30 June, I anticipated that these hearings would produce a flurry of activity. I didn’t use those words but that was what was in my mind and I’m not disappointed. I am quite sure that between now and 13 July there may be further activity, in which case I will give people an appropriate opportunity to deal with what occurs. What is appropriate will depend on what occurs. So I’m not going to promise anyone that they can make any further submissions (although I don’t rule it out) and, as I say, an appropriate opportunity will be available to everyone to respond to this shifting process.
Thank you all very much for the economy with which you’ve addressed me and for accepting my invitation to deal with things which were controversial rather than to major on what you thought were your good points.
I look forward to seeing many, if not all, of you again next week.
(3.22 pm)
(The hearing adjourned until Wednesday, 13 July at 10.30 am)