Official hearing page

13 July 2022

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(10.30 am)

Sir Wyn Williams: Before we start to hear the submissions, as I think I said when we were together last Wednesday there has been further activity so I just want to check that all the Core Participants have what I have, apart from two things which I will mention at the end.

So in no particular order, there is a letter dated 12 July 2022 from BEIS, or the treasury solicitor acting on behalf of BEIS, together with an email in support. There is a letter of 27 June addressed to Mr Brightwell of BEIS from Howe+Co. There is a sample letter from the Insolvency Service, a letter from Howe+Co dated 7 July addressed to me, and there is also an email dated 9 July from Mr Brightwell of BEIS addressed to various firms of solicitors. I hope that those documents have all reached the Core Participants.

If not, we can take a short break while that’s repaired so that everybody has those documents right from the start. I think that would be preferable to people listening in the dark, so to speak.

I should also say that I have had two emails addressed to me personally – which have not been distributed because I don’t think there is any need to do so – but I alert the Inquiry to the fact that two of the individual Core Participants, loosely under the heading subpostmasters, have written to me personally to say that, far from butting out of compensation issues, I should involve myself very much in those issues.

If there is anyone who doesn’t have a relevant document, I think Ms Page was indicating she may not but she may now have it, and since you are going last will it inconvenience you greatly if we make a start, Ms Page?

Fine. Jolly good.

When Mr Chapman is ready, I think we’ll be ready for him.

Submissions by Mr Chapman

Mr Chapman: I make these submissions on behalf of the Department for Business, Energy and Industrial Strategy, which I shall refer to as “the Department”. This is the first time that the Department has made oral submissions in this Inquiry and it is therefore right that it records at the outset its thanks to you, sir, and to the entire Inquiry team for undertaking this essentially important work.

The Horizon scandal is truly the most serious affront to decency and justice, all the worse because the Post Office is government-owned and exists to provide public service. It has caused appalling devastation to many good people’s lives, damaged communities and undermined a national institution. It should never have happened and, indeed, should never have been possible.

The Government set up this Public Inquiry in order independently to establish the facts, to identify fault and make recommendations. As the Department has already stated publicly on several occasions, not least when announcing this Inquiry, it is essential that the necessary lessons are learnt so that nothing like this can ever happen again. The Department is, of course, fully supportive of the work of the Inquiry and looks forward to receiving its conclusions and recommendations in due course.

At the same time, the Department is all too well aware that affected subpostmasters continue to feel the consequences to this day. The lessons for the future that will no doubt emerge from this Inquiry will not make good the devastation caused to them and their loved ones nor help them pay the bills lying on their doormats.

One of the Department’s central objectives is therefore to make sure that they are promptly, fully and fairly compensated for their financial losses, distress and the hardship they have experienced over many years and it realises that for many subpostmasters the issue of compensation is absolutely key.

It is for that reason that the Government framed the Inquiry’s Terms of Reference to require it independently to assess whether the commitments made by Post Office Limited within the mediation settlement, including the Historical Shortfall Scheme, have been properly delivered.

But further than that, the Department does not shy away from the fact that fair compensation to all of the affected subpostmasters has taken longer to deliver than anyone would have wanted and in a context where some of these injustices date back over two decades; that is unacceptable.

It has also noted with concern the issues raised by some Core Participants prior to and during these hearings and recognises the need for the Inquiry to examine the operation of the compensation arrangements. The Department, therefore welcomes your decision, sir, to hold these hearings at this stage.

Can I make clear, sir, the Department’s objective in these compensation issues hearings, and indeed generally throughout this Inquiry, is twofold: first, to assist the Inquiry in whatever way it can; and, second, to listen and to learn with a view to making whatever improvements are necessary. The Department wants to do the right thing on compensation, within the legal and practical constraints in which it operates and, whilst it is actively and urgently working towards the goal of ensuring subpostmasters are fully and fairly compensated as quickly as possible, it does not claim to have all of the information or all of the answers.

For that reason, it will continue to listen carefully not only to any interim conclusions and recommendations that the Inquiry should express following these hearings but also to the representatives of the other Core Participants and especially those representing the affected subpostmasters.

But the point about legal and practical constraints is an important one that’s worth dwelling on briefly. It is important to recognise that the Department and Post Office Limited are not one indivisible entity. The relationship between POL, UKGI and the Department will be explored in phase 6 of the Inquiry but it suffices at this stage to note that, for good reason, operational matters within Post Office are for the Post Office board and not for the Department to decide.

The Department Secretary of State is POL’s ultimate shareholder, with his company law rights as ultimate shareholder exercised on his behalf by UKGI, UK Government Investments Limited, itself a company owned by HM Treasury.

The Department of course seeks to fulfil policy objectives through its ultimate ownership of POL, principally to ensure that the Post Office can viably continue to provide an essential public service at reasonable cost to the taxpayer. But its involvement is at a strategic and not operational level. The Post Office is operationally independent of Government for reasons that have been considered compelling by successive administrations of different political stripes and its relationship with government is underpinned by primary legislation in the form of the Postal Services Acts 2000 and 2011.

However, whilst the responsibility for compensating victims of the Horizon scandal falls on POL itself, the Department has always recognised that it has an essential role to play in overseeing the process and by proactively using the mechanisms available to it to ensure that POL compensates affected subpostmasters fully and fairly and quickly and effectively as possible.

As explained in the Government’s response to the Business, Energy and Industrial Strategy Committee Interim Report, it has taken on a much more proactive hands-on role than is usual in the relationship, in order to make sure POL fulfils the clear objectives that have been set for it.

Perhaps we can briefly go to page 266 of the hearing bundle where the extent of the role the Department has taken on for itself is spelt out under the heading “Government’s Role” and there it says:

“The Government has responsibility for providing the funding for settlement payments, agreeing significant decisions in relation to the settlement strategy, and monitoring Post Office’s progress towards reaching final settlements.

BEIS supported by UKGI has been involved in the design of the compensation programme and holds regular monitoring, decision-making and working group meetings both internally and with the Post Office. This includes signing off on processes, principles and oversight on initial cases. This is to ensure that negotiations are advancing in line with the Government’s desire to see timely and fair compensation delivered to postmasters.”

This is also manifest in the increased resourcing within BEIS’s Post Office policy team. Ordinarily, BEIS has around three officials supported by a slightly larger team at UKGI, allocated to working on its policy direction for Post Office. It now has eight officials focusing on these compensation issues, supported by a slightly smaller group than that within UKGI and on 11 January 2022 Minister Scully stated to the BEIS Select Committee that the issue of compensation, specifically in relation to the GLO Claimants was to quote:

“… by far and away the most pressing issue in my list of responsibilities as a minister.”

All of that is to say that the Department has taken and continues to take the issue of compensation extremely seriously and is investing significant resources to ensure that postmasters receive what they are entitled to. But can I please make absolutely clear that I am not here to defend the Department or suggest that it’s got everything right. Indeed, the Department is clear that it could have done some things better. The Department’s position is one of genuine and open engagement with the goal of doing whatever it reasonably can now and in the future to ensure POL delivers full and fair compensation as quickly as possible.

So having made those observations by way of preamble, I turn to the substance of my submissions. The Inquiry has, of course, seen the Department’s written submissions on these compensation issues, which are publicly available to read on the Inquiry’s website. I certainly don’t seek to repeat what’s set out there. But the focus of my submissions today is on providing relevant updates on engaging with some of the issues raised by other Core Participants in their written and oral submissions, in the hope that that will assist the Inquiry.

I’ll address those points under three headings relating to the three broad categories of compensation being considered: first the Historical Shortfall Scheme, HSS; second, final compensation for subpostmasters with quashed convictions; and, third, fair compensation for the GLO Claimants.

So I start with the Post Office’s Historical Shortfall Scheme (or HSS). The Department seriously regrets the initial delays within the HSS. It is, it recognises, essential that affected subpostmasters who have already waited far too long for justice and redress obtain fair compensation quickly. Any delay is unacceptable.

One key driver for the initial delays was that POL had planned and put in place resources on the underlying assumption that applications to the HSS would be numbered in the hundreds. If that had been the case, compensation under the scheme could have been met by POL itself without any additional taxpayer funding. BEIS’s role at the stage of the settlement of the Group Litigation, and establishment of the HSS, was a relatively limited one through its role as shareholder supported by UKGI.

In fact, over 2,500 applications were received, meaning that POL could not fund the scheme itself and, therefore, the scheme required a substantial input of taxpayer money.

When the Department was informed of the problem in the autumn of 2020, it worked to obtain Treasury approval for the necessary additional maximum budget cover, £233 million, as quickly as it could, eventually securing it in February 2021, and this funding was announced in March 2021. It is important to note here that the £233 million figure is the maximum estimated required budget cover and POL’s most recent best estimate of the total scheme cost is £150 million, as published in its 2021 annual accounts. Both BEIS and POL are contributing to payment of the settlement amounts.

Whilst POL, UKGI and the Department believed at the start that POL would be able to deliver the scheme from its own resources, the Department now considers that it should have done more to test the risk around POL’s assumptions and plan for the contingency that they were wrong. It apologises for its role in contributing to the delays which resulted.

As noted in our written submissions, the independent advisory panel, as originally constituted, also did not have sufficient capacity to process the number of applications actually received. Further members had to be appointed to improve capacity.

As well as much higher numbers of applications and the need to secure budget to fund the scheme, it also took time to set up the processes to ensure consistency of decision-making on applications.

In establishing the HSS, an initial round of test cases was used as the basis for the creation of the case assessment principles. Those principles were approved by the Independent Advisory Panel and by BEIS’s steering committee and set out the underlying legal principles which were then applied to claims within the scheme to ensure consistency of approach.

After those initial delays and as a result of the additional Government funding and improved resourcing, the HSS is now operating at a reasonably good pace. As of 6 July 2022, 70 per cent of eligible Claimants in the HSS had received an offer. That is 1,659 subpostmasters. The total amount of compensation offered is now nearly £37 million, an average of a little over £22,000 per claim.

The Department recognises that the HSS is administered by POL and it notes that, in these hearings, POL has indicated that it is on course to make offers in 95 per cent of cases by the end of this year.

The Department has set POL the aim of making 100 per cent of applicants an offer by the end of this year and it has been putting pressure on POL to meet that goal. The Department’s view is that all possible steps should continue to be taken to make fair offers of compensation to all applicants by the end of this year.

Can I turn to the question of legal support. The HSS has been arranged so that the more straightforward claims were considered first. As you’ve heard, sir, the intention was for the scheme to be easy to access without legal advice or representation and the appointment of legal experts to the Independent Advisory Panel was intended to obviate the need for legal representation in most cases. The Department has heard the submissions made by some of the Core Participants in these hearings that proper claims for consequential losses have regularly not been made and the suggestion that this may be as a consequence of the legal funding arrangements.

At the same time the Department notes that the published HSS consequential loss principles and guidance states in terms that consequential losses – that is to say any losses other than shortfall losses – can be claimed under the scheme and gives examples in layman’s terms of what the losses might be: loss of earnings, loss of profits, loss of property, loss of opportunity or chance, penalties and costs of financing, bankruptcy or insolvency, legal and professional fees, stigma and damage to reputation, and personal injury or harassment.

This guidance was sent to all applicants in October 2020 and has been published and signposted on the front page of the HSS website since September 2020.

The application form itself, of course –

Sir Wyn Williams: Just so I don’t mislead myself, does that mean that it hadn’t been signposted in the way that you are suggesting during the initial period of the scheme?

Mr Chapman: Correct. It was first sent to – the guidance was first sent to applicants in October 2020 and published on the website in September 2020, not before then.

Sir Wyn Williams: So I’m not saying this in any kind of critical way, it is purely neutral, but the plain fact is that those people who did apply by August 2020 were not sent the guidance before they applied?

Mr Chapman: Correct.

Turning to the application form itself, that did ask applicants whether they had:

“… experienced any other losses that directly related to the alleged shortfalls in respect of which you would like to claim.”

True it is that the term “consequential losses” is not used there but the Department believes that what was being asked was reasonably clear and that the use of legal terminology, the expression “consequential losses”, on the form itself would have been more likely to confuse than assist. But the Department has listened to the concerns raised and going forward, as more complex and larger claims are now being looked at with greater potential for dispute, the Department recognises that it is right to reconsider whether the levels of legal funding remain appropriate.

The Department has been in discussion with the Post Office with a view to increasing the provision of legal support costs and expects a decision on this within the next few weeks.

Finally on this topic, the HSS, I turn to the question of late applications. The Department welcomes the Post Office’s confirmation that it is committed to considering those applications. The Department has held initial discussions with Post Office on this issue and is expecting to receive a formal proposal shortly. It is determined to ensure that the process adopted is a fair one.

I turn –

Sir Wyn Williams: So that my note is correct on this, so far as a decision upon increasing the level of legal funding, that can be expected within – I think I wrote “some weeks” but did you say a few weeks?

Mr Chapman: The next few weeks.

Sir Wyn Williams: What’s the timescale for a determination of late applications?

Mr Chapman: The Department’s held initial discussion with the Post Office on that topic and it expects to receive a formal proposal shortly. I can’t be more specific than that. But the point is that those discussions have happened and a decision is in train.

Sir Wyn Williams: Now I am not being entirely neutral. This does seem to be hanging around for a long time, Mr Chapman.

Mr Chapman: Well, sir, I’m not here to persuade you otherwise.

Sir Wyn Williams: Fine, thanks.

Mr Chapman: I turn, if I may, to the second of my three headings: compensation for subpostmasters with quashed convictions. For the avoidance of doubt, this category also includes non-GLO subpostmasters who were wrongly prosecuted but not actually convicted, either because the prosecution was withdrawn or because they were acquitted.

I’ll keep my submissions brief on this topic. I deal with the issue of disclosure first. The Department was recently made aware of problems concerning timely disclosure to applicants of documents held by Post Office. BEIS is encouraging POL in its efforts to resolve this issue. If there are any continuing problems in relation to the issue, the Department is keen to hear about them as soon as possible so they can be resolved.

I next address briefly bankruptcy and insolvency issues. We have received early this morning the letter from the Insolvency Service to an individual whose details are redacted. The Department is not presently in a position to address that letter and would be very grateful if this and any other specific issues relating to bankruptcy or insolvency are brought to its attention. It emphasises that it takes these issues very seriously and I underline the point already made that its objective is to ensure full and fair and prompt compensation.

The next issue is the potential for claw-back, where interim payments are greater than for final awards. The Department understands that POL has removed the claw-back clause from all future offer letters and has informed those who have already had offers that payments will not be clawed back. The Department welcomes this.

Interim payments: the vast majority of what have been called Category B cases have had convictions quashed on the ground that they were unsafe. A small number of cases, three we know of to date, are different in that they were quashed on public interest grounds. Interim payments are made –

Sir Wyn Williams: I think, again, they were quashed but POL did not oppose their quashing on public interest grounds.

Mr Chapman: That is right.

Sir Wyn Williams: I don’t think we should assume that the judge was being asked to approve that, in any sense.

Mr Chapman: I accept that.

Interim payments in this category are made as a down-payment on the final compensation that will ultimately be paid. In the public interest cases, due to their distinct facts, it is difficult to assess what level of compensation may be due until a full claim is received. For that reason, they have not been eligible to receive an interim payment which is based on a simplified assessment of the likely value of the full claim and, of course, interim payments are ex gratia, good faith payments.

These Claimants can, of course, submit a claim for full compensation and that claim will be considered on its merits. The Department would encourage them to submit their claims so these can be properly considered. Again, the Department emphasises that POL is not the final arbiter of interim payments. If individuals are aggrieved by a decision not to make a payment in their case, legal remedies are available to them.

In terms of final payments, at the time of our written submissions, dated 31 May of this year, POL had received only two full claims. As of today, a further three largely quantified claims have been received, as well as further information from one additional postmaster. This brings the total of largely quantified claims to six.

The Department continues to encourage the Post Office to work at pace with the Claimants’ legal representatives to reach a fair settlement as quickly as possible and, as part of that, to make payments of agreed elements of claims, such as loss of earnings, as soon as they were agreed which refer possible, rather than waiting for all heads of loss to be resolved.

Again, the Department would invite the representatives of all affected subpostmasters to raise any issues with this process.

Turning to the issue of non-pecuniary damages, for the avoidance of doubt, the Department records its agreement with other Core Participants that these claims must be valued according to ordinary principles applicable to the recovery of damages for malicious prosecution, including by reference to aggravated and exemplary damages where appropriate. The Department welcomes the system of early neutral evaluation of such claims and the agreed appointment of Lord Dyson as neutral evaluator.

It stands ready to support the delivery of the early neutral evaluation process and is keen to ensure that the outcomes of this process enable fair and swift compensation.

Finally and briefly, I address the suggestion made by some Core Participants that individuals with quashed convictions should be able to opt into the Government’s scheme to give ex gratia top-up compensation to the GLO Claimants. The Department is considering the overall point being made but it is important to emphasise that the GLO Claimants are in a uniquely difficult position. As a result of the settlement of the Group Litigation, they have no legal right to further compensation, meaning there is a very specific need for bespoke arrangements to be put in place to ensure they are fully and fairly compensated.

The same is not true for the Category B group, as it has been called, who continue to have recourse to all legal remedies.

My third and final heading is fair compensation for the GLO Claimants. It is the Government’s settled position that it is only right and proper that GLO Claimants should receive further compensation, in addition to that which they agreed when settling the litigation against POL, to give them compensation similar to that available to other subpostmasters who did not participate in the GLO. This was announced by the Minister for Postal Affairs on 22 March of this year and reaffirmed in the Department’s written submissions of 31 May. The Minister was clear that it was necessary to find a way to deliver this additional compensation, but the Department cannot just allocate tens of millions of pounds of taxpayer money [Zoom distortion] unilateral force of will.

As I’ve already explained, it may only act within the parameters of the law and here there was no clear statutory basis for providing the money to POL that was necessary for this purpose. The Department’s power to subsidise the Post Office is limited by statute to assisting in the provision of post offices or Post Office services and there was no legal liability to pay the additional compensation because the GLO settlement was expressly full and final.

The Department tried, and tried in vain, to find an existing legal basis to enable it to fund the scheme. It reluctantly came to the considered conclusion that no such legal basis existed and, in normal circumstances, that would have meant that its only choice would have been to seek to pass primary legislation to create a bespoke legal basis for this additional funding and the establishment of a scheme.

After considerable exploration, the Department, with the help of the Treasury, identified a way through, in line with the rather arcane Public Accounts Committee Concordat of 1932, which allows expenditure of an emergency or non-continuing character to be made under the sole authority of the Annual Appropriation Act. Approval of this highly exceptional legal basis reflects the importance which ministers attach to providing further compensation to the GLO group.

The other challenge which the Department faced related to Therium, the firm which had funded the GLO Claimants’ litigation and which had therefore received the lion’s share of the compensation paid by Post Office, pursuant to the settlement. Therium had a possible legal entitlement to a share of any further compensation paid. The Department had to and did negotiate this issue with Therium and was grateful for their agreement to waive any further entitlement.

That having been done, as the Minister informed Parliament in a written statement on 30 June this year, the first few major steps have now been taken to implement these arrangements, in particular, first, interim payments to members of the Group Litigation not covered by other schemes. A total of £19.5 million has been allocated to these interim payments.

When this is added to the share of the settlement obtained in the Group Litigation in 2019, which was distributed to the Claimants after costs, the GLO Claimants will have received approximately £30 million. Although the Department does not consider this to be fair, final compensation, it hopes that it goes some way to helping subpostmasters facing immediate hardship.

Second, with the aim of quickly putting in place a scheme for final compensation for the GLO Claimants, the Department has engaged Freeths, who represented the GLO Claimants in the Group Litigation, in order to access the data and methodology that they, Freeths, developed to distribute the 2019 settlement. This will help BEIS to put in place a system for calculating final awards of compensation for each of the GLO Claimants.

Third, finally, all members of the GLO group will be able to claim reasonable legal fees that they incur as part of participating in the final compensation scheme.

Can I please be absolutely clear here about two things, and they are related. First, the Department has been saying since March that it will consult informally with both individual subpostmasters and their lawyers. That consultation must, of course, include all GLO Claimants and their representatives, not just those who choose to be represented by Freeths in relation to the final compensation arrangements.

Second, no-one will be cut out of the final compensation under these arrangements by choosing to be represented by a firm other than Freeths or indeed choosing not to be represented at all.

The Department hopes that this allays somebody of the concerns expressed during these hearings about the involvement of Freeths.

Sir Wyn Williams: Before you reach your conclusion, just so that I am clear, I think you just said orally which the data which Freeths hold will be used – this my word not yours – to calculate final awards of compensation to the GLO Claimants. In the letter that was sent yesterday, unless I’ve misunderstood it, it was also being suggested, or it was being suggested, that this data would be used to distribute the interim payment sum of 19.5 million. Have I got both right?

Mr Chapman: Yes. Yes, thank you, sir.

Sir Wyn Williams: Thank you.

Mr Chapman: Turning to my conclusion, sir, the Department looks forward, sir, to any update on these issues that the Inquiry should choose to give and it continues to stand ready to assist the Inquiry, however it can. Thank you for the opportunity of addressing you today.

Sir Wyn Williams: Thank you. That’s fine. Thank you very much.

Ready, Mr Moloney, or do you want a short break?

Submissions by Mr Moloney

Mr Moloney: Sir, as you know, I make submissions on behalf of the Hudgell Core Participants and there are three issues upon which you have invited submissions. I won’t repeat them, sir. They have been set out many times. You have heard substantive submissions from Counsel to the Inquiry, Post Office, Howe+Co and BEIS.

In order to avoid repetition of the general submissions that you have heard, sir, we will aim to provide practical context to the general issues that we hope will be of assistance and, in that vein, sir, it was of course us who provided the letter from the Insolvency Service this morning. We will try to provide practical examples to you, sir, which we hope will help.

Taking each in turn, then first the Historical Shortfall Scheme. Hudgell Solicitors represent a great many people in Category A, persons who have made applications to the HSS, if you will forgive me using that acronym, sir. We raised concerns in our written submissions about the operation of the HSS and those concerns remain, sir, despite reassurances given on behalf of Post Office last week.

We have seven points to raise with you in respect of the HSS scheme, sir. Firstly, the availability of expert evidence to Claimants under the HSS; secondly, limitation; third, bankruptcy; fourth, the terms of the outcome letter if you will forgive that shorthand, sir; fifth, interim payments under the HSS; sixth, areas for further decision by POL; and, finally, the operational independence of the HSS panels.

Firstly, sir, then the availability of expert evidence for Claimants under the HSS. One of our primary concerns, sir, is in respect of the issue of harm caused to the Claimants in the form of mental health and associated issues which flow from that. We’ll return to this when we address the issues under Category B, sir, but Hudgell Solicitors have commissioned medical reports for each of the 63 Core Participants that we represent whose convictions have been quashed, Category B.

You won’t be surprised to hear I’m sure, sir, that a number of them have severe, enduring psychiatric issues following their experiences at the hands of Post Office Limited and a number have developed long-term physical problems stemming from those psychiatric problems.

It’s a serious and widespread problem, sir, and we have profound concerns about the approach to it within the HSS scheme.

Ms Gallifant, Queen’s Counsel, said last week that there’s no necessity for expert evidence for a variety of reasons. Firstly she said 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 and, therefore, there’s already a very significant degree of expertise built into the process, and that’s last week’s transcript, sir, at page 43, line 12.

She also observed that the panel has obtained generic advice on matters such cardiac and mental health in order to assist it in approaching claims, generally. She then went on to say, sir, if she will forgive me, that the panel’s Terms of Reference also provide – and 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.”

She said that 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.”

Post Office Limited was also conscious that an applicant may wish to avoid the inconvenience and potential distress of obtaining a report which may be of particularly acute and sensitive concern in cases involving mental health issues, but the panel has the power nevertheless, in the absence of such evidence, to recommend an offer which it considers to be fair.

So, in essence, so far as this issue of expert evidence on matters such as mental health is concerned, Post Office contends that there is sufficient expertise on the panels so that the Claimants don’t require expert assistance; second, that the panel has received generic advice to assist it with health matters; and, third, the panel can make a fairness award when there is insufficient evidence prevented by the Claimant.

We make the following points in respect of these remarks, sir. Firstly, none of the experts on the panel, according to what has been said, have expertise in matters of mental health and/or personal injury. This – I don’t mean to be flippant – but is not a retail issue and it is not a forensic accountancy issue, the issue of mental health. It is a specialist area and not an area where guesswork is desirable when assessing the appropriate award of damages.

To have any basis for an accurate assessment of the impact on an individual’s health, an expert view of the evidence available must be necessary. Forgive me, sir, if I say now something that you already know, that there are guidelines for the award of personal injury damages issued by the judicial college. They provide ranges of appropriate damages according to the severity of the personal injury suffered by a claimant.

There is really, sir, a quite considerable range of appropriate damages within the categories of injury that people have suffered through mental health problems, according to whether the impacts are severe, moderate and less severe, and the level of recovery can vary dramatically according to the evidence on the extent, severity and duration of the impacts.

When the injuries are considered severe and where the prognosis is poor, just to give two examples, sir, the range of recovery is between £54,830 to £115,730. It is essentially 55 to 116.

By contrast, a less severe injury, the low end of the scale, might recover something between £1,540 to £5,860. So there’s really quite a range, sir, of awards that might be made and I point out, sir, that those sums relate only to the pain, suffering and loss of amenity connected with the injury and not any loss consequential to the subpostmaster becoming unwell, such as loss of earnings.

So the severity of the personal injury may on its own make a big difference to damages and the consequential losses may make even more difference. We say, sir, that matters of this nature need to be rigorously dealt with, with reliable expert evidence obtained, to inform the panel’s consideration of harm, causation and the recovery of consequential losses, such as lost earnings, which could be very considerable.

Failure to explore that harm caused to a subpostmaster’s health by the failings of Horizon could create an entirely distorted and diminished picture of their true loss.

Secondly, the reliance on section 35, we say, may lead to unfairness in some circumstances, and not fairness. We say that if there’s a variable psychiatric or other medical issue, the panel should not make a fairness decision if other evidence which would enable an objective decision to be made were able to be secured.

We provide one example, sir, from the experience of Hudgell Solicitors. A case where £15,000 was offered, where the person had suffered from a stress-related illness, resulting from shortfalls and had, in turn, contracted a diagnosed physical condition connected to stress. There’s limited information we can provide while these claims remain without prejudice, sir, but the person had to have three years off work, the medical condition in question was diagnosed by a consultant, it’s a very painful one which affects the whole body and develops after stress. The panel gave £15,000 in total because the panel did not consider that the available evidence established that Horizon shortfalls were the dominant cause of the medical issues.

It may be, sir, that in circumstances such as that, the panel should have called for a medical report and not dismissed the specific claim and it’s hard to see, we say, how any kind of fairness results from failing to seek an expert assessment in circumstances such as that.

There is a concern, sir, perhaps, that – and perhaps the clue is in the name – that the scheme is about shortfalls and is set up for the assessment of pecuniary damages for which a forensic accountant and a retail expert are very well qualified but not, perhaps, so finely-tuned to dealing with non-pecuniary damages which result from the problems experienced by subpostmasters.

We also, sir, refute the suggestion by Ms Gallifant 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. Sir, there’s no evidence at all that subpostmasters would seek to avoid a report. In fact, that runs really contrary to our experience. But there is plenty of reason to believe that they wouldn’t be able to afford it because of what Post Office has done to them.

We say, sir, that Post Office’s concern would be better directed at ensuring that applicants have the opportunity to secure such a report in circumstances where most simply couldn’t afford it.

Secondly, sir, limitation – limitation within HSS. Ms Gallifant said last week that Post Office has agreed not to take any limitation defence in relation to claims brought under the scheme, and that is at page 72, line 24, of last week’s transcript should it need to be looked at, sir.

Sir, we say that that’s not at all clear and if we could please, sir, take you to page 287 of the bundle, which is the Terms of Reference of the Independent Appeals Panel and to paragraph 31 of that. So that’s tab 15, paragraph 31. That reads in fact, sir, that:

“Many eligible claims will relate to shortfall losses and consequential losses suffered a significant number of years ago. In order to draw a line under the issues caused by previous versions of Horizon and treat postmasters who have been affected fairly, the scheme, including the panel, will not apply the laws of limitation in its assessment of shortfall losses or consequential losses but shall deal with each claim on the basis that it is not barred by the expiry of any relevant limitation period.”

So far so good, sir, but it goes on:

“Post Office’s rights to rely on limitation defences outside the scheme (including in any subsequent litigation or arbitration proceedings commenced under the dispute resolution process) are strictly reserved.”

It continues:

“Given the large number of applicants to the scheme, claims may take some time to investigate and assess. Post Office is therefore willing to agree in respect of each applicant that time will not run for limitation purposes from the date the applicant joined the scheme to the date on which the applicant receives their offer letter.”

Now, sir, if that term means that the ordinary limitation period or six years, three years, whatever, will only start to run once the applicant has pulled out of the scheme, then all well and good. But we suspect that that’s not what it means, sir, and if it means that an applicant who is way out of time is fine to join the scheme and Post Office won’t bother about limitation but if they pull out and proceed to litigation or other forms of alternative dispute resolution, then Post Office may use a knock-out limitation defence, then we say, sir, that that would be very wrong.

For those subject to limitation concerns, it could produce real pressure to settle in this process. It may have significant impact on the position of subpostmasters during the earlier stages of dispute resolution, especially, sir, as we, certainly as Hudgell Solicitors, we suspect we are coming to the now more complex claims being resolved within this HSS.

If I may turn to bankruptcy, sir, now, as the third point, Post Office have recognised the differences with bankruptcy cases and this is not just an administrative problem. May we refer you to the letter, sir, that we provided.

Sir Wyn Williams: Yes, please.

Mr Moloney: Sir, it reads at the first main paragraph:

“As a result of the bankruptcy order made against you [and we’ve redacted the date from this to hide the identity of the person receiving the letter, sir] I have to inform you that your right to make a claim for compensation under the scheme is something which forms part of your bankruptcy estate because the errors happened prior to the bankruptcy order being made. Where a claim is an asset in a bankruptcy your trustee, the Official Receiver, has to consider how best to take the action forward.

“The Official Receiver has confirmed to the Post Office that he wishes to continue with the claim and asked for details of the compensation being offered under the scheme. Some of the compensation award will be paid to you where an award is made. You will receive all payments in respect of the time you have spent dealing with the Horizon shortfall issues and any compensation for health issues, damage to your reputation or distress. But the parts of the claim that relate to financial losses will be paid into the bankruptcy estate and this may represent the majority of your claim.

“The Post Office will contact you at the Official Receiver’s request to provide any information they require in support of the claim. Please provide this information as the claim cannot proceed if you refuse to co-operate and no compensation be paid unless you fully and truthfully answer all the questions the Post Office ask of you.”

Sir, two points on that to begin with. First, given that, on the face of things, the only damages that are going to be allowed to stay with the Claimants in the HSS when bankrupt are non-pecuniary damages, this position provides all the more reason for proper attention to be paid during the HSS considerations, whether that be by HSS or by the panel, as to loss of reputation, personal injury, including psychiatric injury; essentially, sir, to place a greater emphasis on non-pecuniary damages rather than pecuniary damages.

Secondly, sir, there would appear to be no consideration of the fact, in this letter at least, that it was more often than not Post Office’s actions that made the person bankrupt in the first place. In a vicious circle, all pecuniary losses they endured will be swallowed up by a bankruptcy that was caused by the pecuniary losses they endured. The letter continues over the page, sir:

“The money paid to the Official Receiver will be used to pay your bankruptcy debts, other than any claim by the Post Office which was based on the Horizon shortfall errors. It may be possible for your bankruptcy to be annulled, (cancelled) so I have enclosed information on the steps you would need to take if you wanted to apply for an annulment.

“If you have any queries about the content of this letter, please do not hesitate to contact me.”

Sir, we say first of all that, without legal advice, it’s very difficult to imagine that many subpostmasters will know where to start with a letter of this nature. There is guidance, sir, guidance comes with the letter and it is appended to the letter, but we do say that to attempt to navigate an annulment of bankruptcy when unrepresented might be quite difficult, to say the least, and there is no provision for subpostmasters to have legal funding for this purpose.

Just looking at the guidance, sir, which is on the third and fourth page of this document, it says at the very outset “You do not have to employ a solicitor or get independent advice, for example, from the Citizens Advice Bureau to apply for an annulment but you might find it helpful to do so. You must ensure all relevant information is given to the court and the proper procedure is followed.”

This is sent to bankrupt subpostmasters with all the lack of resources that that status entails. Then the procedure for the annulment is explained, sir, in the body of the first page.

Then at the bottom, sir:

“Paying your debts in full

“The Official Receiver will use the money they receive from the Post Office to make a payment to your creditors. This may not be enough to pay all the debts and costs of your bankruptcy in full. If your application is made because you intend to pay your debts in full you will need to make the additional payments yourself.

“You must allow time before the hearing for payment to be confirmed. You need to allow at least three working days before the hearing. You will also need confirmation from the creditors that they don’t intend to claim interest on the debts between the date of your bankruptcy order and the date they are paid in full and if your debts are not paid before the hearing but you have made arrangements to have money available to pay them, for example via a guarantee from a third party or a solicitor, they must attend the hearing with you to explain how the debts will be paid.

“If the bankruptcy order is annulled before the compensation claim under the Historical Shortfall Scheme is settled, the claim in full will be transferred back to you.”

Sir, we say there needs to be real fairness for bankrupt subpostmasters. They need help and the Inquiry may – as Mr Chapman has just said that they are not able to address this letter at this stage but the Inquiry may wish to raise questions with the Post Office and the insolvency services as to how real fairness can be achieved for bankrupt postmasters.

Finally, sir, in respect of bankruptcy, our experience is that none of the claims from people who have suffered bankruptcy have reached the stage of an offer letter. Ms Gallifant expected that some would be dealt with in the next few weeks but it is now nearly two years since the scheme closed, sir – or closed for the first time, slightly longer to when it closed for the second time.

These people, we say, sir, are people who are likely to be in real financial trouble and we say, we observe, at this stage, sir, that this perhaps very much reflects the overall impression, right or wrong, that, so far as the HSS scheme is concerned – the Historical Shortfall Scheme is concerned – that the low hanging fruit has been picked by Post Office so far in dealing with these claims and the more complex claims are to come.

It is, sir, Post Office which determines the order in which claims are dealt with and come before the panel.

Next, the outcome letter, sir. It was said last week that the outcome letter lists the all the 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 and that 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.

Now, sir, we say about that that the purpose of the outcome letter is to enable the applicant to consider the offer. If it is to assist the applicant’s consideration of the offer, we say it would plainly be much better if the evidence, the Post Office report, the HSF assessment and the panel assessment and recommendation were sent at the same time as the outcome letter, so that the applicant can make a fully informed consideration of the offer.

For cash-strapped applicants with enormous financial pressures, after waiting so long for a payment, they may not wish to take the extra step of seeking the explanation for the offer and many may decide just to take the offer in order to ease the pain of their current circumstances.

Provision of the information with the letter would mean that any lawyer they go to would also be much more able to assess the merits of the offer and the merits of any challenge to the offer, without engaging in more correspondence with the Post Office before they can do anything of substance. We say, sir, there is no reason not to send all the information in order to assist the applicants.

Next, interim payments and the HSS. In our written submissions, sir, we raised the limited provision for interim payments in the HSS including where individuals had agreed offers made by the Post Office in part and remained in dispute over other, heads of loss. There are a number of reasons given by Post Office as to why a change of approach, so far as interim payments, was not necessary.

Firstly, that interim payments would be paid in circumstances of hardship. We say, sir, that there’s little transparency over when hardship will be sufficiently severe for Post Office to countenance such a payment and we ask for clarity as to that. Whatever the test being applied by the Post Office, it is not one which has been publicised or otherwise drawn to the attention of subpostmasters.

Secondly, sir, you pressed Post Office as to why it is that no interim payments are countenanced when there’s agreements on some losses and dispute over others, and that was concern we expressed within our submissions, sir.

The answer – and I hope I do justice to the answer – is that the approach under the scheme is to reach an overall offer, rather than breakdown the offer by individual heads of loss and that offers are made in the round so there might be able to be agreement in principle and say, “Well, we accept this or that”, but it wouldn’t follow that then there was able to be agreement overall and the applicant would actually obtain through civil litigation a sum anything like the amount that is being offered based on the applicant-friendly principles.

We say, sir, if the panel is agreed that they will pay, let’s say, £200,000 to an HSS applicant, we say there’s no reason why the applicant can’t be given a proportion of that £200,000, recognising the financial and other hardships the applicants are likely to be facing whilst they consider their options, just to help them along the way, in the same way that all other Claimants are helped: those in the GLO in the new scheme will receive interim payments; the Core Participants in Category B received interim payments.

We do ask, sir, why not even identified shortfall, surely that can be something which could be paid and there could not be any dispute about that in the future if the panel has identified that shortfall.

We have concerns, sir, that the premise of our written submission and the worst fears of some of our clients may be right, that the reality of requiring a global agreement on an offer, before any payment will be made, whether rightly or wrongly, creates an incentive to settle rather than continue the dispute over the heads of loss.

Just two matters remain, sir, in respect of the HSS scheme. Firstly, areas for further decision by Post Office. There were two areas on which we heard that Post Office’s thinking about whether more can be done and, in fact, we’ve heard from BEIS in the same way this morning: firstly, what to do on the question of the small number of additional claims made after the close of the shortfall scheme; and, secondly, on the matters of additional legal costs in the dispute resolution process.

Firstly, sir, on those who have applied to the scheme after the close, you have heard during the impact hearings, sir, of continuing distress of those excluded from HSS applications. The scheme has been closed for almost two years now, sir, and the Post Office is still thinking about how to accommodate claims that are out of time.

We have one client, sir, whose husband was subpostmaster in 2004. Her husband was arrested and interviewed by the police after shortfalls were discovered at his Post Office. He was released under investigation and attempted suicide. He became seriously mentally ill. He was not prosecuted because of his medical state but was dismissed and required to repay the shortfall. When left on his own for a day for the first time, he took his own life and it was only after hearing the impact evidence in this case, sir, that his wife felt able to revisit what was terrible trauma. She submitted a claim to the HSS, obviously out of time and, in May of this year, she was informed that her case would be looked into but she’s not heard anything since.

Again, sir, the feeling on the part of many applicants is that the simple cases are being dealt with but cases which pose difficulty are less of a priority and this is something which is a concern when considering the delay faced by HSS Claimants who have suffered bankruptcy as well.

As to legal costs, we repeat our written submissions: only 45 cases where costs of legal representation have been paid. On the basis of the experience of Hudgell Solicitors the high number of settlements agreed so far does not necessarily mean that those claims have resulted in full and fair compensation for those subpostmasters.

Post Office accepts that cases now progressing to offer are more complex and more likely to lead to dispute but the limited funds made available for subpostmasters to seek legal advice are wholly inadequate, we say, sir. Post Office has spent £16 million setting up and administering the scheme, and less than £50,000 has been spent on legal advice for applicants. Without access to advice and representation through the dispute resolution process, there’s a real risk, sir, that further unfairness will result.

Finally, sir, the operational independence of the panel. Hudgell Solicitors is concerned that there ought to be transparency and greater clarity around the practical working of the relationship between the panel and Post Office and HSF. The system in place is one where Post Office carries out an internal investigation and prepares a report, and then HSF Herbert Smith Freehills, sir, makes a recommendation to the panel.

With the best will in the world, sir, there is a danger in a process like that, that the panel becomes familiar with the reports prepared by Herbert Smith Freehills and makes decisions that are closely aligned to the HSF recommendations. That may be, sir, because they are uniformly right, of course, but it may also be because of other reasons.

What Post Office suggests, that the panel is not awarded less than the recommendation made by HSF on any occasion, and whilst that is to be commended, we say it cannot mean much on its own. There are no figures available, sir, as to how often the panel recommendation has been the same as the HSF recommendation and no figures on how often or when the panel challenges the lack of information or points out that heads of loss are missed.

We say, sir, that the Inquiry might be assisted by examining the decisions that have been made so far, to look at the Post Office recommendation, the HSF recommendation, and assessing the extent to which the panel decisions differ from HSF recommendations in terms of heads of claim and the quantum allowed for the claim, and we may then see, sir, the extent to which there is, as it were, an independent action by the panel, and hopefully put the concerns of subpostmasters to bed.

Sir Wyn Williams: There’s a practical difficulty, is there not, in undertaking an exercise of that sort and trying to produce either an interim report or an update, as the case may be, within weeks rather than months?

Mr Moloney: Entirely, sir. I’ll come on to what we say, sir, about the way forward. I’ll come back to this but we don’t ask you to butt out, sir. We do not ask you to butt out but we think, sir, that everybody would benefit, and I will come back to why, by you keeping a very close eye on the developments in these issues of compensation for subpostmasters.

Sir, just finally on the panel, Hudgell Solicitors have now been involved in good faith meetings and it’s been asserted that heads of loss which have been missed are subsequently identified. Sir, Hudgell Solicitors have notes sent to them by Post Office in relation to good faith meetings where it’s asserted – and these are Post Office notes not Hudgell notes of the meetings – which says that Post Office will only take a new head of loss into consideration at this stage in exceptional circumstances and they queried whether there are any reasons why it had not been raised previously.

Now, sir, you have already made the observation this morning that for those who completed their application under the HSS scheme by August 2020, the original closing date for the scheme, then the guidance as to consequential loss was not available. Cases going to good faith meetings at this stage may well be the ones that were the early submissions. We don’t know but that, sir, would be a very concerning position if only those heads that had been identified in the form were to be considered and only heads of loss that were not – heads of loss that were not in the form would only be considered in exceptional circumstances.

In another good faith meeting, sir, a client was told that it was understood that there was no provision for obtaining expert reports in the HSS. That at least suggests, sir, that things may be different on the ground to what is thought to be happening and reflected in our written submissions.

That’s it, sir, in respect of the Historical Shortfall Scheme.

Sir Wyn Williams: Thank you.

Mr Moloney: You will be relieved to know, sir, that I believe our submissions in respect of the rest are much briefer.

Sir Wyn Williams: We appear to have a substantial part of the day left, Mr Moloney. I am not encouraging you to spin it out, as they say, but, equally, you must take your time to explain your point of view sensibly to me.

Mr Moloney: Thank you, sir.

Sir, Category B: final compensation for subpostmasters with quashed convictions. Hudgell Solicitors represents 63 of the total 73 Category B subpostmasters, that is to say those who have had their convictions quashed either by the Court of Appeal (Criminal Division) or in the Crown Court at Southwark.

There are a further five appellants represented by Hudgell Solicitors whose appeal against conviction will not be opposed by Post Office on 25 July.

Sir Wyn Williams: Then do you think I need to attend, even remotely? I was going to ask you, actually, if you knew anything about it because the Court of Appeal alerts the Inquiry when these things are happening, so we knew of the date. But if it’s going to be 10 minutes or 20 minutes or whatever, where the facts are briefly explained and then the convictions quashed, it may be that I should spend my time writing not watching.

Mr Moloney: Sir, I will confirm the position for you but I believe ten minutes is about right for 25 July. But I will confirm that.


(11.50 am)

(A short break)

(12.04 pm)

Mr Moloney: Sir, I’d just introduced Category B and tried to save you some time and, whilst it’s obviously – we anticipate that, of course, there will now be on 25 July, if the Court of Appeal accedes to our grounds of appeal, then there will be a further five which, will be 68 represented by Hudgell Solicitors.

As we understand it, and we will be corrected if we’re wrong, of those ten not represented by Hudgell Solicitors, then Howe+Co represent three Category B SPMs. I’m not sure if its Hodge Jones & Allen or Mr Marshall who represents three, and then each of the other four solicitors named at paragraph 48 of POL’s supplementary submissions, Aliant Law, Clarke Kiernan, John Donkin Solicitors and Brewer Harding & Rowe Solicitors, represent one subpostmaster each.

Before we update you, sir, as to the progress of those cases, may we make just one clarification in respect of the submissions of Post Office and BEIS in their written submissions and oral submissions. Sir, it was said that one of the reasons why no scheme was ever proposed in relation to Category B Claimants was that Hudgell Solicitors had said in correspondence that they would not take part in a scheme. We asked for the basis of that assertion to be provided and it’s based on one line from an email to Post Office Limited from my instructing solicitor on 7 January 2021.

Sir, just to have that, as it were, fixed in the chronology, the appeals were heard in March 2021, the decision in Hamilton and Others was handed down in April 2021. This is 7 January 2021, when my instructing solicitor was touching base, as it were, as to the potential for actions for malicious prosecution. He said:

“For completeness, I would stress none of my clients will participate in any sort of Post Office scheme.”

Hudgell Solicitors stand by that position, sir. The prior history of Post Office schemes, the mediation scheme, was unfortunate, we say at the least, but there’s never been any further dialogue, no offer of an alternative scheme, an independent scheme. That was it: 7 January. There has been no further discussions around that.

As you may be aware, sir, now turning to the update and just putting that particular submission from POL and BEIS in context, funding is not available for these cases but Hudgell Solicitors have, nonetheless, been taking all necessary steps to ensure that the Claimants receive the fair compensation they are entitled to, and Hudgell Solicitors have made the commitment that the Claimants will not have to pay them one penny piece of the damages they receive.

So in that vein, sir, Hudgell Solicitors have engaged the services of expert accountants to analyse the financial position of each subpostmaster, in order to best understand the pecuniary losses they have suffered, and all 63 subpostmasters have had the benefit of those accountancy services.

Sir Wyn Williams: I’m sorry, before we leave that, I thought that, in respect of final payments of compensation to convicted persons who have had their convictions quashed, that the Minister had said they would pay reasonable fees.

Mr Moloney: Indeed, sir, but there’s no funding upfront.

Sir Wyn Williams: I’m with you. Sorry, I was just misinterpreting –

Ultimately, there will be reasonable reimbursement of fees and disbursements but not upfront?

Mr Moloney: Not upfront, sir, absolutely. But that goes – specialist accountancy services have been secured in relation to all 63.

As Ms Gallifant pointed out last week and as we have shown through the HSS correspondence submitted to the Inquiry, bankruptcy is a complicating feature of these claims as well, not just the HSS. In fact, it’s a significant factor in claims amongst this category. 20 per cent, sir, one in five, of the Category B Claimants represented by Hudgell Solicitors became bankrupt, and that’s just one symptom of the havoc wreaked in people’s lives by the unreliability of Horizon.

So, therefore, expert assistance has been commissioned to establish the best way to deal with bankruptcy issues in these cases. The same goes for the tax position of these Claimants. Sir, you can imagine there’s very little point in getting damages to put a person back in the position they would have been in but for the actions of Post Office, only then to find a very large percentage of it swallowed back up by the very department which is responsible for authorising the payments in the first place. So Hudgell Solicitors have commissioned expert assistance on the tax implications of the compensation payments, in order to secure the best position.

As well as taking statements from all the Core Participants and their families, Hudgell Solicitors have also arranged medical reports for each of the Claimants, and we have established, sir, although it is often said, we have now established it to be the case that many subpostmasters have suffered serious, long-term psychiatric damage through what they experienced and that has led to significant consequential losses.

Exemplary damages are available in this area, sir. Ms Gallifant was quite right to point out that exemplary damages may ordinarily be available for actions in contract but they are available for actions in malicious prosecution and the experiences of Claimants and their families, and the effects upon them, medical or otherwise, are ultimately highly relevant to that category of damages, as well, of course, as aggravated and general damages which are compensatory damages not punitive damages.

There has been a great deal of work to get us where we are now, sir. Much of what has gone on is confidential and without prejudice because the parties need to trust that their discussions are confidential, in order that they are able to negotiate. But we consider there has been so far been positive dialogue towards a resolution. We can’t go into great detail in respect of the negotiations between our clients and Post Office Limited but we are able to say with their agreement that, firstly, the parties have concentrated on two lead cases.

In one we’ve almost resolved all the heads of pecuniary loss. In the other, we’ve resolved most of the heads and the remaining heads will go to mediation in September. In both cases the Claimant will receive another payment on account and we hope, sir, that dealing with those two lead cases in that way will lead to an established process so that the remaining 60-odd cases can be resolved between now and the end of the year.

Sir Wyn Williams: It’s in the context of this category of Claimants that the notion of me butting in or butting out, whichever way you like to put it, first raised its head, although I accept entirely that it can raise its head in all kinds of other different scenarios.

But I am conscious, and you are confirming it, that there appear to be meaningful discussions taking place between those instructing you and POL’s lawyers and, therefore, it is a matter of some concern to me to get it right, the extent to which I can assist of what might be a delicate moment, particularly because, although you represent the bulk of the people in these categories, there are, in fact, a number of other people who are represented by other solicitors, which may or may not make it easier or more difficult. I don’t know where much about these things, in the sense that I don’t know what is going on behind the scenes.

So it is a situation in which, to use a more judicial type of phrase, I wish to tread carefully.

Mr Moloney: Sir, can we, in that vein, tell you the remainder of what is going on, so that you can assess how to tread carefully, so that your decision as to the tread is fully informed and so, sir, as I said, we hope that that – dealing with the pecuniary losses in relation to two cases will mean that the other 60-odd Claimants – that will provide a framework for dealing with the pecuniary losses in relation to the other 60-odd that we represent.

Sir, litigation in the courts is seen as the option of last resort but it must always remain open to protect the position of our clients.

Now, we have instituted the early neutral evaluation process, in order to try to resolve issues around the appropriate levels of non-pecuniary damages. Just to make clear, sir, if we may, there are further submissions by Hodge Jones & Allen last night that we received, which at paragraph 1(a) say that Herbert Smith Freehills (HSF) have instructed Lord Dyson to lead a process of early neutral evaluation to help determine non-pecuniary loss for Category B Claimants which includes the CPs we represent.

I don’t know if you have – they are not in the core bundle.

Sir Wyn Williams: No, but I have read them.

Mr Moloney: Sir, it’s repeated at paragraph 21 that the scheme should, of course, make use of any published guidance arising from HSF instructing Lord Dyson. Sir, that is absolutely not the case. The process is an early neutral evaluation and, in that process, the parties consider between them various options as to the appointment of the evaluator and then they agree upon the evaluator to give an indication as to what they consider would be the appropriate damages after trial.

HSF have not instructed Lord Dyson; the parties have instructed Lord Dyson.

Sir Wyn Williams: So that I’m under no misapprehension, how do you define the parties there, Mr Moloney?

Mr Moloney: It’s essentially Post Office Limited and the clients that we represent.

Sir Wyn Williams: So it’s the Hudgell Core Participants –

Mr Moloney: Yes.

Sir Wyn Williams: – and POL?

Mr Moloney: Indeed, sir, yes. Sir, in that vein, we return, if we may, to paragraph 1(a) where Hodge Jones & Allen assert that Herbert Smith – HSF have instructed Lord Dyson to lead a process of early neutral evaluation to help determine non-pecuniary loss for Category B Claimants, which includes the CPs we represent. It’s not for all Category B Claimants. It’s a stage that has been reached between the Core Participants in Category B represented by Hudgell Solicitors and the Post Office, with the claims that we have.

We hope, sir, that the general principles of evaluation by Lord Dyson will be able to be applied to the remainder of our 68 clients and facilitate assessment of non-pecuniary damages across the board for our clients. We hope that that will be possible.

It may assist the remaining ten persons, variously represented by other solicitors, but it’s a matter for them, sir, as to whether or not they are assisted by it. Neither party is bound by the evaluation of Lord Dyson, certainly none of the other Category B Claimants are bound by the evaluation of Lord Dyson. This is not for all Category B Claimants, sir.

At paragraph 8 of the Hodge Jones & Allen submissions, it reads:

“HSF’s instructions to Lord Dyson appear to have been drafted with the involvement or at least the agreement of Hudgells but Paul Marshall, who acts for the CPs we represent, is not even aware that Lord Dyson had been instructed until after the event.”

Now, we’re not really sure, sir, what instructions are being spoken about there and what is meant by the involvement or at least the agreement of Hudgells. We don’t know where that comes from, sir. This is not meant to be a process for all Category B subpostmasters but we have reached the stage, sir, in our dealings, the preparation of these cases, where we have all our necessary evidence in place, we’re ready for this stage, we have made good progress on pecuniary damages, and there are no heads of loss which are excluded in this process, we make clear.

But we are concerned about this, sir, because our clients have suffered enough worry over the past many years and they don’t need further worry about Herbert Smith Freehills having instructed the neutral evaluator and it not being an agreed and decided position when there is absolutely no foundation to that suggestion.

It’s Wednesday, sir. The hearing is on Monday. I ought to say, in that vein, sir, as well, that Mr Stein asked you last week if the evaluation of Lord Dyson might be made available. Well, sir, the parties formally agreed weeks ago that the evaluation would be made available to you if you requested it, with that in mind, sir.

That’s how things are progressing, sir, and also there have been some positive developments in the run-up to your hearings over these two days in July, sir. As Mr Chapman acknowledged, there have been difficulties in disclosure, so far as these cases are concerned. We have been pursuing discovery – we are happy to say that we received letters last night which have moved things forward significantly.

But you will also have seen in our submissions, sir, that we explain that many of our clients were worried about Post Office clawing back the interim payments they have received. They have been reluctant to rely on those funds as being secure and, for many, that has meant continuing financial hardship in the absence of any reassurance from the Post Office on their claims.

At paragraph 41 of our further submissions to the Inquiry, which is at page 84 of the bundle, we say that it would of course be open to the Post Office to make any such concession or give such reassurance to the Claimants because Hudgell Solicitors raised the question of claw-back nine months ago and had chased it since.

On 5 July, sir, we’re happy to say, as Ms Gallifant reported last week and confirmed by Mr Chapman this morning for BEIS, that we’ve received an assurance that there would be no claw-back of interim payments.

Now, that provides some comfort to the subpostmasters, sir, but it isn’t the end of the matter. Many of these subpostmasters have been in significant debt for very long periods of their lives and it’s what we say would rightly be described, sir, without hyperbole, as crippling debt. £100,000 sounds like a lot of money, it is a lot of money, but the debts of subpostmasters were usually well in excess of £100,000, and the interim payments have often been used to settle some of those debts and are now gone.

In fact, some of the interim payment was said to recompense interim legal costs incurred by the solicitors but such is the position of these subpostmasters that Hudgell Solicitors represent, then they did not take anything from the interim payments to cover any of the funds they’ve expended.

The position genuinely, sir, of many of the Claimants is really bad and you can perhaps imagine that it would be case after 15 years of being a criminal, a bankrupt and unemployed or employed in very low-paid jobs. With £100,000 they haven’t won the lottery, sir, it’s just one step towards putting them back into the position they would have been but for the actions of Post Office.

It’s a feature of these cases, sir, that many of the people who were convicted and many in the wider GLO group were in middle age when they took over their branch at the Post Office. Given how long the injustice they suffered was sustained for, the vast majority of them are now either approaching retirement age or past retirement age but they just can’t retire. They can’t afford to retire. The last third of their earning life was blighted by this scandal and so any earnings potential over that time was destroyed and they are not in a good enough financial position to retire.

This is Jo Hamilton, who’s here today, and I hope she will forgive me if I say that she continues to work as a cleaner and a dog walker and her husband is 75 years old and is still working.

So leaving aside the awful reality, and it is a reality, that some of these Claimants’ parents died while they were still convicted and the terrible potential that some of them may die before compensation – and I won’t dwell on the details of that, sir, but one of the Claimants represented by Hudgell Solicitors has inoperable brain cancer and counsel for Howe+Co Core Participants mentioned the circumstances of another two of Hudgells clients last week, so I don’t propose to drag it up for their families again but, essentially, these Claimants deserve to enjoy their retirement as much as possible after enduring what they did.

Sir, in practical terms what that means is they need now to be able to have good experiences with their children and grandchildren and other family and friends to try and replace the terrible memories that they have had since they suffered injustice at the hands of Post Office, caused by the unreliability of Horizon. So we say, sir, there needs to be expedition with these claims so that the Claimants can start to regain the lives that were wrongly taken from them for such a long period of time.

Not shortcuts, this is a really important process and the Claimants have to get what they are entitled to in law with a willingness, on the part of all involved, for these claims to be resolved as soon as realistically possible. The time for adversarial aggressive litigation, we say, is long gone and what happens from now on should be geared to finding solutions with the interests of the subpostmasters at the heart of everything that is done and not the interests of Post Office or BEIS or UKGI, or firms of solicitors or counsel.

So far from asking you to butt out, sir, we have never wanted you to butt out, we would ask you to continue to watch both the situation with these claims and the HSS scheme because we believe that, for a variety of reasons, those who hold the purse strings don’t want you to think badly of them, sir.

Anything you say on these things, sir, will be very, very important to them. So we ask, sir, that you return to the position on compensation during the autumn when we resume the hearings, and return at convenient times as the Inquiry proceeds, in order to see how the Claimants in these cases are being compensated. It’s not a position we say, sir, where you can make firm conclusions that will apply right the way across the board at this stage.

May we please say something, sir, about the three Claimants in this category who have not received an interim payment after making a request. As you know, sir, these three Claimants had their convictions referred by the Criminal Cases Review Commission to the Crown Court at Southwark, on the basis that there was a real possibility that their convictions would be quashed. That’s the statutory basis for the referral by the Criminal Cases Review Commission, whether to the Court of Appeal or to the Crown Court, and they all went to Southwark Crown Court.

There were matters to be resolved in the cases of the complainants, which were important to the determination of the appeal. The Post Office decided to offer no evidence in their cases, in the interests of justice and, as a result, sir, not guilty verdicts were entered. They were all found not guilty and the matters to be resolved as identified by the CCRC were not resolved. Now, the Claimants had no say in that process, nor indeed did the court, but the Post Office now refuses to pay compensation to them. In effect, they say “Sue us in the Civil courts”.

They say to these people who were wrongly convicted by the Post Office, because they are not guilty of the allegations they were wrongly convicted of, they say to these people who were part of the GLO Litigation where Post Office fought tooth and nail to the defend the indefensible, they say to these three people who are ineligible for the HSS and ineligible for the BEIS GLO scheme in contemplation, they say that they will not pay them.

The time for litigation, sir, was at Southwark Crown Court where the court was seized of the issues which were central to the determination of whether Horizon data was essential for their prosecution and Post Office would have had to prove their guilt to the criminal standard. The Post Office had the opportunity at that point to contest their appeals and unilaterally chose not to. In those circumstances, we say, sir, it would be wrong to ask them to go right back to the start.

Finally, under this section, sir, of the Claimants who have had their convictions quashed, may we deal with the position of persons who were prosecuted but not convicted. Anybody who was prosecuted but not convicted may have an action in malicious prosecution, just the same as anybody who was convicted. As they were not convicted, they don’t automatically come within the group of Category B people. Now, in those cases, sir, in the Category B cases Post Office is not relying on limitation. We say the natural position for these people who are prosecuted but not convicted is in Category B because the same issues arise.

Sir Wyn Williams: As things stand, and I want to clear my thoughts upon this, there’s the further complication of, I think, the people involved, so far as I’m aware, being GLO Claimants, yes?

Mr Moloney: No, sir. So there are people who were part of the GLO who were prosecuted but not convicted. They will stay in the GLO scheme. They are in there but there are others, sir, who were not part of the GLO scheme but were prosecuted and not convicted. Now, they don’t fall into the GLO because they weren’t part of the GLO but they may have a cause in malicious prosecution.

Sir Wyn Williams: Absolutely, but my point was I’m, as a matter of fact, not aware of any such person. I’m aware of people who were within the GLO who fall into this category but I am not actually aware of any people who were not within the GLO but who yet were prosecuted but acquitted.

Mr Moloney: Sir, there are five people that Hudgells represent.

Sir Wyn Williams: I’m sure that in due course I will be made aware of them, if they exist, but I’m just putting that out because that’s the state of my knowledge and if it’s because I’ve missed a detail in the papers I apologise. But that is the state of my knowledge.

Mr Moloney: Sir, you haven’t missed any detail but there are a number, and Hudgell Solicitors represent five of them –

Sir Wyn Williams: Right.

Mr Moloney: – who were not part of the GLO but were prosecuted and were not convicted. They have actions in malicious prosecution but they are not part of Category B.

Sir Wyn Williams: I’ve caught up now, Mr Moloney. So they have no rights under the GLO scheme that’s about to flower?

Mr Moloney: That’s it.

Sir Wyn Williams: So, at the moment, they are a genuine lacuna?

Mr Moloney: They are, sir, and we simply ask, sir, that –

Sir Wyn Williams: Except for – sorry, to be articulating this as we’re going along – but have not BEIS said that, in respect non-GLO people of this category, although the Minister used the shorthand “convicted people” in his announcement of December 2021, in fact he always intended that people that you were now talking about should fall within this category. Have I got that right, Mr Chapman?

Mr Chapman: Quite, sir, yes.

Mr Moloney: Thank you, sir. We ask that the same concession be extended in terms of limitation to those people as it is to the people in terms of Category B. That’s what we ask.

Sir Wyn Williams: So that in my head before today, and I want to throw this out in case I’ve not got this right, one way or another every category of person now falls within a scheme.

Mr Moloney: Sir, yes.

Sir Wyn Williams: Right, fine.

Mr Moloney: Sir –

Sir Wyn Williams: So that there’s no doubt about it, the HSS clearly is the HSS. The interim/final compensation scheme, if I can put it in that way, now catches and always was intended to catch people who were acquitted, who are not part of the GLO and those who were acquitted but were part of the GLO are now in the scheme that will be developed over the next coming months.

Mr Moloney: That’s it, sir. Thank you.

Sir Wyn Williams: Fine.

Mr Moloney: We’re grateful for that, sir.

Sir, final fair compensation for GLO Claimants. Sir, at the weekend Hudgell Solicitors, along with a number of other firms, were invited to take part in discussions with Secretary of State for BEIS over how best to approach scheme to fairly compensate members of the GLO and they will do whatever they can to assist. A number of the Hudgell Core Participants were members of the GLO and leading members of the GLO, who have been active in the JFSA campaign for many years and what the GLO members achieved with that litigation was extraordinary by any standards.

The members of the GLO supported each other and will continue to support each other and the Core Participants represented by Hudgell Solicitors will help in supporting in whatever ways they can.

We say that, clearly, sir, there should be parity of outcome for all of these people who have worked together in this way, recognising the common and case-specific harms that they have suffered.

Finally, sir, just to conclude, we focused our submission on addressing points raised by others in providing a practical context to our written submissions but the importance of this issue can’t be over-estimated. We’re very grateful to the Inquiry and to you, sir, for recognising that there can be no more delay and, in opening these hearings, Mr Beer began with a chronology of the issue of compensation, which highlighted the start of the GLO Litigation in 2017, but before that came the failed mediation scheme, terminated in 2015. Before that, for many Core Participants, came years of campaigning for redress.

What our Core Participants can’t forget and which they ask you, sir, to recall in considering the points made to you, is that for many of them these losses stretch back over two decades and for every SPM, every subpostmaster in each of the categories, their losses start with money taken from them by the Post Office for shortfalls to which, really, they had no legitimate claim and which led to the loss of businesses and incomes, the collapse of health and well-being and the loss of relationships and reputation, for some the loss of liberty and we ask, sir, that compensation is full and fair and quick in these cases.

Sir Wyn Williams: There’s just one point of detail I’d like to raise with you –

Mr Moloney: Sir.

Sir Wyn Williams: – relating to one of the three persons who had not been paid an interim compensation payment, notwithstanding the quashing of their conviction.

Mr Moloney: Sir.

Sir Wyn Williams: You said, I think, in your written submissions, that that one person was also the subject of a confiscation order –

Mr Moloney: Yes.

Sir Wyn Williams: – and that hasn’t been repaid?

Mr Moloney: No.

Sir Wyn Williams: I’m using you now as a kind of letter box, so to speak, but my understanding is that – if I’m wrong, I’m wrong, but I don’t think I am – but a Crown Court can only make a confiscation order against a convicted person.

Mr Moloney: Yes, sir.

Sir Wyn Williams: So once the conviction is quashed, the confiscation order, in effect, has no effect.

Mr Moloney: Yes, sir.

Sir Wyn Williams: So how can it be that the money’s not repaid, I ask both rhetorically and otherwise, and I leave that for people to ponder.

Mr Moloney: Certainly, sir, and it’s something we have been pondering. Thank you.

Sir Wyn Williams: Now then, Ms Page, it is 12.40 by this fine clock that I have put in front of me. I’m in your hands. If you are going to make submissions which would conclude by, say, 1.30, then my preference would be to hear them and then we can all adjourn for the day, so to speak.

Mr Beer, I see you are about to intercept me before I make any such ruling.

Mr Beer: Sorry to intervene unexpectedly. Whilst you have been sitting, there has been a request from the Howe+Co Core Participants to make some short supplemental submissions, in particular in the light of the BEIS letter that was distributed this morning. So Mr Stein has applied by email, which you won’t have read, to make those submissions. That might have a modest impact on timing. That’s the only reason for the intervention.

Sir Wyn Williams: First of all, Ms Page, how long do you think you are likely to be? I am not going to hold you to minutes.

Ms Page: I certainly imagine being finished by 1.30 if I were the next one to –

Sir Wyn Williams: Short, I take it, means no more than 15 minutes, does it, Mr Stein?

Mr Stein: Sir, if I can assist, it will be no more than five.

Sir Wyn Williams: So are we still okay then to proceed and then finish once I have allowed Mr Stein his five minutes? Is everyone happy with that?

Good, well then, over to you, Ms Page.

Submissions by Ms Page

Ms Page: I speak for the three Post Office victims represented by Hodge Jones & Allen, and we are, on their behalf, dealing with the fallout from the most widespread devastating miscarriage of justice in legal history, where hundreds of honest hardworking people were hounded by a state-owned entity and all because of unreliable documentary hearsay from a faulty IT system.

That led to the golden thread of our criminal justice system, that is the duty of the Prosecution to prove guilt, being broken. People were told, in effect, that they must prove their innocence and when they tried to do so, as we know from Seema Misra’s case, the Post Office hid the evidence that might have enabled them to do so.

The devastation that that inflicted on people’s lives is immeasurable. The dignity of those who gave evidence at the human impact hearings was as impressive as their stories were heart-breaking. That is what it means to be a Category B Claimant.

The three Core Participants I represent are all amongst those who had their wrongful convictions overturned but were also part of the 555, the GLO Claimants. We are here to try to find a way to make some amends but there is no sum of money that will give them back their lives.

It is for this reason that we argue, in the strongest possible terms, that compensation must not be ruled by narrow legalistic argument about heads of loss but by the need to ensure that compensation is fair and swift and, if some legal hurdles need to be surmounted or ignored to achieve those aims, then so be it, and it may do something to redress the balance, because the Core Participants I represent have spent years fighting and yet fair compensation still seems a long way off, partly because they have no reason to trust the law or lawyers.

The lawyers have continued to be paid, even while they have been unable to get the compensation that they desperately need and rightly deserve. The Post Office continues to employ many lawyers. That, in itself, caused Mrs Misra to raise an eyebrow last Wednesday when she saw the rows of desks set aside for the Post Office.

In answer to the question posed to the Post Office – should they be the final arbiter of compensation offered to Category B Claimants – the Post Office says that if they don’t like the settlements they are offered, they can always seek ADR, arbitration or litigation. That is rich indeed.

They say this to three women whose lives were destroyed by the Post Office, three women who showed the resource and courage necessary to join the 555 when the Post Office fought them tooth and nail, and three women who also stood out on their own at the Court of Appeal because the Post Office would not accept ground 2 abuse and, again, fought them tooth and nail.

Now, the Post Office says “Well, if you don’t like what we offer you, we should be allowed to fight you tooth and nail again”. Once again, the answer is the lawyers will get paid while the Post Office resists doing the right thing.

There is, we say, a simple way out of this: the Post Office can stop resisting doing the right thing. We have heard repeatedly that the Post Office has changed. We are told that the “historic” failings are a matter of great regret but there is little evidence of it.

Take the issue of disgorgement just raised, sir. Of those sums which were wrongly taken from my clients by way of post conviction confiscation or compensation, as you said, sir, only possible to be taken because of their convictions. They were sums that were fictional Horizon losses and they took the money from those convicted in any way they could.

In the case of Mrs Misra, her flat in London was seized and sold. In the case of Ms Felstead, her family hoped that if they gave the Post Office the money she would be spared jail; she was not but she paid her family back anyway by remortgaging her home. In Ms Skinner’s case after she had already lost her home and the Post Office had hounded her for sums of money she didn’t know they were trying to take from her they still succeeded in taking the little she had left, and there is simply no justification in the Post Office keeping these sums.

It has been well over a year since the convictions were overturned and the Post Office has made no moves of its own initiative to give these sums back.

The one small sum which has very recently been returned to Ms Skinner was due to the intervention of the Court Service. Where is the proactive desire to right wrongs, to rectify the damage, to make sure that full and fair compensation is paid?

We’ve heard of course about the Historic Shortfall Scheme, another opportunity for the Post Office to demonstrate how they have changed, and I will not repeat the submissions of others which elucidate clearly how the Post Office has failed to take that opportunity. So I say very little evidence of the much vaunted change at the Post Office, little evidence that the failings are indeed historic.

So it’s against that backdrop that we absolutely urge you, sir, not to butt out of the compensation arrangements as they affect Category B Claimants.

The Core Participants I represent have no reason to trust that the negotiations currently taking place will produce full, fair compensation and they do not want to have to fight the Post Office again if those negotiations fail. They want the reassurance of being able to turn at their option to an open, transparent scheme run independently of the Post Office.

It now transpires that such a scheme is being established in any event, albeit for Category C Claimants. But we say there can be no valid distinction between the two categories. It is right that Category B Claimants have the distinct right to pursue claims in malicious prosecution but, in other respects, their contractual rights were negotiated away in the settlement deed in just the same way as Category C Claimants. The same potential heads of loss will apply to both sets of Claimants, the same issues of process apply to both sets of Claimants, the money to pay the compensation ultimately comes from the same place. It is all taxpayers’ money.

We are told that BEIS has found an ingenious way, we are told this morning, to fund the compensation for the Category C Claimants. There is no substantive reason why that scheme could not be open to Category B Claimants at their option. Of course, Category B Claimants should not be able to claim twice. No doubt, if the negotiations fail, they would be turning to the scheme as an alternative and if the negotiations succeed, no doubt that will resolve all their issues. But where is the sense or justice in requiring them to invoke a separate process of ADR, arbitration or litigation if those negotiations do fail?

The main point is this: Category B Claimants of all the subpostmasters have borne the brunt of this scandal the most severely, not only were their lives blighted by the wrongful convictions but they also had the courage to join that very pioneering, and no doubt very stressful, Group Litigation which broke the scandal. And yet the current course is set to see them parcelled off from the rest of the 555 and left to sink or swim in their negotiations with Post Office. Worse still, the settlement deed took away all their rights, except their malicious prosecution claims; so the Post Office would be potentially legally entitled to limit their settlements without any further consideration of their contractual positions.

For each and every one of the three Core Participants I represent, the settlement from the Group Litigation was woefully inadequate. The reports of the 555 are to have that settlement reopened and their contractual rights will not be circumscribed when considering compensation. It must be right that Category B Claimants deserve to be empowered in the same way. They deserve to be able to seek full and fair compensation from the Post Office and if they don’t believe they have got it directly, we ask that they should have another realistic course of action open to them which will still deliver, one would hope, a just and swift result.

I’d like to respond directly to the Post Office’s submissions in respect of Mr Marshall’s submissions because they called into question whether Mr Marshall’s submissions were within the terms of this Inquiry. We find that a disappointing but not a surprising response. The terms of the Inquiry make it plain that the a key aim is to find out not only what went wrong but whether the Post Office’s learning lessons and making the necessary changes. Are Marshall’s submissions should be seen by the Post Office as an opportunity to think about whether they are learning the lessons and making the changes. Instead the reaction is to stop up their ears and seek to deflect those submissions as outside the terms of the Inquiry.

I’m afraid this is typical of how the Post Office has behaved “historically” and it is a shame that they do not appear yet to be changing. As we’ve said in writing, term D of the Terms of Reference, taken together with C and F, make it plain that this Inquiry is fully empowered to consider the issue of whether full and fair compensation has been paid and that is what Mr Marshall’s submissions were directed towards.

Again, as we’ve already said in writing, it was a mis-characterisation of those submissions to suggest that there was an invitation to make a finding of fraud at this stage. Of course that would be premature. But the point is it would be also premature and quite wrong to allow finalised payments to be made on the assumption that nothing more untoward than breach of contract has occurred. Given what we know already in the unreasonable delays that have been occasioned by Post Office’s actions, it would be right and proper to ensure that issues of remoteness and foreseeability are dealt with generously as if the claims were in fraud.

If I may also respond to submissions from BEIS this morning, it is good to hear that they are listening and that they do not seek to defend themselves but rather to assist the Inquiry. It would be good if the Post Office were to take the same stance.

It seems from what has been said very recently in communications and here today that the Department acknowledges and seeks to make it clear that BEIS will not have a special relationship with Freeths setting up the scheme and that other lawyers will be feeding into that fully. That is as it should be. It is not as if all of the 555 were happy with the outcome of the settlement negotiated by Freeths and, whatever the rights and wrongs of that, and I don’t trespass into that area, it was extremely unfortunate that GLO Claimants were led to believe that if they wanted to have any say in the BEIS scheme, they needed to reinstruct the very firm who negotiated that settlement. That was particularly unfortunate in the context of this case when the subpostmasters have so many reasons to mistrust the law and lawyers.

As we said in writing, it was also regrettable that Freeths wrote to Category B Claimants as if they had not been excluded from the first phase of this scheme. We endorse Mr Stein’s submissions from last Wednesday. BEIS should not be conducting their interactions with the GLO Claimants and this Inquiry through press release, and if more thought had been given to communicating properly for the GLO Claimants, the unfortunate communications from Freeths might have been prevented.

BEIS says it is listening and it says today, and we welcome, that it is giving consideration to our submission that Category B Claimants should be given an opt-in to their scheme and so we ask you, sir, to help them to reach a positive decision on that.

If I may respond then to Hudgells and I’m very grateful to Mr Moloney for clarifying the situation with respect to the instructions which did not come solely from HSF to Lord Dyson, but from Hudgells as well as HSF. That’s very helpful and apologies for any – well, indeed for the misapprehension and the mis-communication on my part – our part.

What we would say is that it is a delicate situation – of course it is a delicate situation – and it is hard to make sure that everybody gets what they want but what we would suggest is that the submissions that we make on behalf of our Core Participants need not stand in the way of the actions that are being taken on behalf of those Core Participants who are represented by Hudgells. It is an opt-in that we advocate for and there would be no reason why anyone should opt in if they don’t with to.

Sir Wyn Williams: If I’ve understood you correctly, your position is that there should be an option for both your clients, but for that matter any other Category B clients, to become part of the scheme that will be developed with the GLO Claimants.

Ms Page: Exactly.

Sir Wyn Williams: That doesn’t preclude people reaching their own settlement if that suits them.

Ms Page: Exactly.

Sir Wyn Williams: I’ve got it, yes.

Ms Page: That would simply make the BEIS scheme open to all the 555 which is, in fact, a figure that BEIS has often used when talking about proper compensation for the SPMs but, of course, once the Category B Claimants are taken out of the picture, it is no longer the 555.

As part of the recommendation that we suggest, we say that through that scheme the best approach to aggravated and exemplary damages would be to resolve a preliminary payment on that head but to leave that head open until the conclusion of the Inquiry. We suggest that that would be the best way to ensure that on the one hand there is a swift resolution but on the other hand there is a full and fair resolution.

We accept, of course, that everyone wants a swift solution and indeed no doubt departmental budgets make it difficult to leave that head of damage open for what may be a relatively long period of time. But we suggest that if all payments on the head of aggravated and exemplary damages have been finalised, the findings of the Inquiry might not have the impact that they could. Therefore, we ask that the desire to close off and tidy up should not prevent relatively late additions to that head of damage. In the same vein, we would ask that the scheme be left open for as long as it takes for the 555 to make any claims they may wish to but at least until the end of this Inquiry. It is a finite group and once principles and process are in place, it should not be hard to make provision for late claims.

Those are the submissions that I would like to make. I would like to conclude, however, by offering apologies for Mr Henry, who I know has written directly and apologises that he is unable to be here today.

Sir Wyn Williams: That’s fine. I’m very glad he’s busy. Right, thank you. That concludes those submissions.

So I think, as he always anticipated he would, Mr Stein will have the last word.

Submissions by Mr Stein

Mr Stein: May I thank you for the opportunity to make these short further submissions.

It perhaps was useful that there was a break this morning which allowed my instructing solicitor, Mr Enright, and Mr Brightwell from BEIS to have a discussion in Paternoster Square. Whether I can call that “Paternoster Square Protocol” as yet, I’m not sure.

It serves, though, to provide the basis for an update. So you are aware of the correspondence, sir, that we had yesterday from BEIS and you will see the various matters that are set out there insofar as they touch upon the interim compensation scheme, how that might be rolled out and how that would affect the GLO Claimants.

Sir, the way ahead appears to be this. Now, this is aspirational because this relates to a discussion today and it therefore requires firming up, but it does provide some light at the end of the tunnel to secure those interim payments for the GLO Claimants.

Freeths will provide a schedule of GLO Claimants to BEIS setting out the using the Freeths distribution methodology the amount payable to that group as being the first step. Next, BEIS will then pay Freeths the sum of money that is required within, they hope and they believe, a week. Thirdly, within a similar timetable Freeths will then pay the interim compensation monies to the individual GLO Claimants, as I repeat, hopefully within a week.

So the sort of timetable that we are talking about that may assist you in understanding what we are looking at when people refer to “a few weeks” or “as soon as possible” or similar remarks, it provides a way of accessing the possibility that is in discussion today of getting money to people that urgently require it within very few weeks. It is possible within something like three weeks.

May I just also refer to the question of the Freeths methodology. As you are aware, BEIS has confirmed in their correspondence that that methodology, which was adopted for the distribution of monies as a result of the settlement of the GLO litigation, that is being supplied to BEIS. Our concern is, as you have discussed today, that there is a need to make sure that all matters are dealt with transparently, openly, and so we put a marker done, if I can put it that way, for disclosure to those representatives of individuals before this Inquiry of that methodology when it’s available to BEIS. We do that because, sir, you’re aware having been addressed last week on the basis that there have been already some concerns raised as to how that was dealt with originally in evidence.

Lastly, if I am approaching the end of my five minutes, I will use my last few seconds to just say this. Sir, you have been addressed on the basis today and last week that you should keep yourself involved in discussions and keep an eye on what is going on. Various ways have been looked at as to how that should be done, either butting in or not as regards discussions and progress being made. Our primary submission was made that you should, if you would accept it, issue an interim report.

Having considered all the matters said on the last occasion and today, and if, sir, you are willing to retain the oversight job to make sure that compensation is delivered in a timely fashion, may we tentatively suggest that you plan for a third day. The reason for that would be to have a date in the future that in a fairly traditional legal way that could be vacated if it was unnecessary by agreement from all parties, but it would provide perhaps a work-towards date that may assist.

That also might assist you, sir, in resolving the issue of whether an interim report is, in fact, required because if you came to the conclusion that good progress is being made in a timely fashion given all of the delays, you might come to the conclusion that a third day would either be necessary to resolve any final matters or it could be vacated if required or it might resolve the issue as to how to deal with overall the position that you are left with in looking at the compensation issues in the round.

Sir, those are our submissions. We also do represent an individual who fits within that other category of people, and so there are of course for Hudgell Solicitors, Howe+Co and I’m sure for Hodge Jones & Allen individuals we represent that fit within all aspects of the different A, B and C categories that you, sir, have identified.

Can I assist any further?

Sir Wyn Williams: No. Thank you very much, Mr Stein.

Well, my thanks to all the advocates who have spoken this morning. Clearly we’ve made very good progress today because we’ve now reached the end of the intended submissions.

As I said in my short written note which preceded the first hearing, I intend to reduce to writing – I am choosing my words very carefully – my thought processes as a consequence of the submissions that I have heard. I will not announce now whether it will be a progress update or an interim report but what I will say is, so that people have some expectation of a timescale, that if it is an interim report I have in mind that Parliament will resume after the summer vacation on 5 September, so that would appear to be a time when any such report, or shortly thereafter, could be laid before Parliament; obviously in terms of a progress update, that legal step is not a requirement but I expect that I would be working to much the same sort of timetable. So that’s what we have in mind, ladies and gentlemen. I hate to make predictions about the pace of my own work but I will do my best to adhere to what I have just said.

So thank you all very much. Please feel free to leave because I’m just going to stand up and walk out and then everybody can do the same.

(1.07 pm)

(The hearing concluded)