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NOTE OF CONFERENCE WITH RICHARD MORGAN QC
MAITLAND CHAMBERS
26 OCTOBER 2011
IN THE MATTER OF POTENTIAL CLAIMS BY SCOTT DARLINGTON & OTHERS AGAINST
POST OFFICE LIMITED
In attendance
Richard Morgan QC (RMQC) - Maitland Chambers
Rebekah Mantle (RM) - Royal Mail Legal Services
Emily Springford (ES) - Royal Mail Legal Services
Sabrina Jethwa (SJ) - Post Office Legal Services
Anna Maxwell (AM) - Bond Pearce LLP
Helen Watson (HW) - Bond Pearce LLP
Initial considerations
POL's appetite to defend these claims is great. POL has Horizon audited regularly and is confident in its
integrity. As a result, there is little desire to get involved in WP negotiations, with the preference being to
keep all correspondence open. POL needs to convince Shoosmiths that it will fight these cases to the end,
and that it is not sufficient for them simply to claim that “Horizon is wrong”.
RMQC explained that Castieton had been dealt with in a very fact-specific way, and these cases would
need to be treated similarly: the various rules and policies governing SPMs change frequently (e.g. the
Horizon User Guide and branch trading policies), and would therefore undoubtedly vary in respect of the
different SPMs’ claims. A Group Litigation Order (GLO) or test case was unlikely to be appropriate, as it
would be difficult to define the issue to be fought on a group litigation basis.
The key risks for POL in fighting these cases were agreed to be: (i) the PR implications, and the fact that
the media will always favour the luddite “underdog”; (ii) the costs of fighting each case one at a time; (iii)
proving that certain of the losses were the result of keying errors; and (iv) that if several claims were
pursued in different County Courts, the quality of the judges would be unpredictable making it more likely
that one or two cases might be lost.
Proving loss
RMQC was concerned to learn that the branch accounting processes have changed since Castleton, so that
there is now limited paper evidence for transactions carried out at the branch. ES and HW explained that
they were meeting the Product and Branch Accounting (P&BA) team next week to go through with them
in detail the process of reconciling transactions carried out at the counter with the details recorded on
Horizon. Gareth Jenkins from Fujitsu would be attending the meeting and he would be asked to set out
an end-to-end transaction. The P&BA team would be asked to explain, for each type of transaction
(including internet banking), how the reconciliation process works.
RMQC advocated a high-level approach to the allegations around branch losses: taking the figures set out
in the most recent branch trading statement (which POL is entitled to rely on following Shaw v. Picton
(1825) as clarified further in Cast/eton), plus all transactions carried out since the date of that statement,
and comparing that to the cash in the tills at audit. This figure will be POL’s loss.
Expert evidence
RMQC advised that the SPMs would not be able to prove their claim without expert evidence to show that
the Horizon system generates errors. In order to minimise costs at this stage and manage the PR angle,
RMQC suggested that POL request, in an open letter, that the SPMs appoint an expert at this early stage
to investigate and report on Horizon. POL would need to check that it is possible to access the older
versions of Horizon and obtain Fujitsu’s agreement to this. The report would need to be confidential as
between Shoosmiths and a defined list of SPM claimants (those where there has not been a conviction -
see further below), but it may be necessary to waive that confidentiality in respect of additional SPM
claimants that come forward later
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Agreed strategy
SPMs' claims
RMQC advocated a hard line in respect of those SPMs who had been convicted of false accounting (i.e.
Darlington and Wilson), and that POL should not respond in any detail to their letters of claim, at least in
the first instance. POL’s position should be that their convictions put them in repudiatory breach of their
contracts with POL, and, as such, they have no claim for wrongful termination. As far as
Somaskandarajah is concerned, POL should wait until her claim becomes statute-barred at the end of
November 2011, and then write to Shoosmiths explaining that she is out of time.
In relation to Walters, and any subsequent claims where there is no conviction or limitation issue, an
aggressive stance would still be adopted, so that POL would challenge Shoosmiths’ document requests,
request better particularised allegations, and demand repayment of any debt owed to POL. In addition,
RMQC advised inviting Shoosmiths, in open correspondence, to appoint an expert to investigate the
Horizon system, as set out above, before responding to each of the allegations made.
It was agreed that the PR implications of the above, more aggressive strategy were no more negative
than if POL were to respond at the outset and in full to each of the allegations.
POL as claimant
In view of the significant risks inherent in defending a number of claims in different County Courts,
Counsel recommended that attempts should be made to identify a large debt claim which POL might itself
bring - ideally in the Central London County Court - in order to take control of the litigation process and
seek transfers of Shoosmiths’ claims against POL (if any are issued) to that Court. POL would need to be
confident that it had sound evidence to support any such claim, however.
Security for costs
RMQC noted ES’s concerns about Shoosmiths’ attempts to run this litigation on a very low budget, and the
fact that there did not appear to be any “after the event” insurance in place, but advised that it would not
be possible to apply for security for costs, as impecuniosity in an individual (as opposed to a company)
was not a basis on which the court would make such an order.
Mrs Lynne Prosser
After discussion, it was decided that the risk to POL of not agreeing to the stay was that POL could end up
defending a claim it currently knows nothing about and finding itself in Court within the next 6 months.
However, it was recognised that Shoosmiths had behaved very unreasonably. It was agreed that we
would write to Shoosmiths explaining that POL would agree to a 6-month stay, but only if the claim form
and particulars were served on POL within the time prescribed by the Civil Procedure Rules.
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