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OVERTURNED CONVICTIONS
POL / DBT OC OPERATIONS AGREEMENT
Purpose
1. This operations agreement sets out the governance framework between Post Office
Limited (POL) and the Department for Business and Trade (DBT) and is concerned with
structure and processes for decision making and accountability regarding the delivery of
compensation to postmasters with Overturned Convictions (OC).
Background
2. The overturned convictions remediation scheme (“OC”) was established by Post Office
Limited ("POL”) with funds committed by the Department for Business and Trade (
“DBT”) to compensate postmasters, branch managers and/or assistants (each referred
to as a “postmaster” and collectively as “‘postmasters”) who:
(a) were convicted of offences connected to the Horizon IT system (“Horizon”) and,
following the “Common Issues” and “Horizon Issues” judgements issued in the
POL group litigation and / or Hamilton & Ors. v. Post Office Limited judgement
issued by the Court of Appeal (Criminal Division), whose convictions were
overturned:
(i) due to unreliable evidence obtained from Horizon; or
(ii) but not opposed by POL on public interest grounds; OR
(b) although not convicted, were prosecuted by or on behalf of POL for offences
connected to Horizon and suffered detriment because of POL’s actions.
3. The shared objective of POL and DBT is to see that affected postmasters receive swift
and fair compensation for credible claims against POL.
Roles of POL and DBT
4. POL’s CEO is POL’s Accountable Officer’. As such, POL’s CEO is responsible for
observing the principles set out by HM Treasury in Managing Public Money regarding
*https://assets.publishing. service. gov.uk/government/uploads/system/uploads/attachment_data/file/874283
post-office-limited-shareholder-relationship-framework-part-1.pdf
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any settlements agreed and ensuring that those settlements represent Value for Money
(‘VfM") to the taxpayer, and meets the requirements of fairness, consistency, and
minimising litigation costs for POL and postmasters, on both an individual and
programme-wide basis.
5. Each of POL and DBT recognise that it is a priority for postmasters to receive
compensation for OCs without engaging in further litigation with POL where possible.
As such, POL and DBT, will agree and implement a resolution strategy which ensures
that this objective is met. POL and DBT may amend or replace the agreed such
strategy as needed to improve the efficiency of the compensation process, and to
ensure that the above objective continues to be met.
6. POL and DBT shall work collaboratively to resolve issues raised by the Horizon Inquiry
quickly, to ensure affected postmasters receive fair and timely compensation.
7. In delivering compensation to postmasters who have OCs:
(a) POL is responsible for the design and implementation of the compensation
scheme. The resolution strategy will be an agreed, principles-based approach
to ensure a fair and consistent method is applied to the settlement of individual
claims;
(b) DBT is responsible for funding the compensation sums, agreeing key decisions
in relation to POL’s resolution strategy, and monitoring POL’s progress. DBT
has, with HM Treasury's approval, committed up to £780m towards the
compensation of postmasters with OCs; and
(c) POL and DBT agree to work collaboratively to progress claims expeditiously
and avoid undue delay.
Resolution Strategy: The Agreed Process
Interim payments
8. Interim payments of up to £163,000 are available to each postmaster with an
overturned conviction. To receive an interim payment, the postmaster must have:
(a) had their criminal conviction(s) overturned; or
(b) suffered detriment following prosecution for offences connected to Horizon
even though not convicted.
9. As soon as reasonably practicable after a postmaster’s conviction has been overturned,
POL shall assess a postmaster’s eligibility for an interim payment, determine the
amount payable, and approve the payment of such amount to the postmaster. POL
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may also, on a case-by-case basis, make more than one interim payment to a
postmaster due to ill health, where an offer is partially or fully disputed, where it
considers such payment necessary to prevent further hardship on the postmaster,
where they have presented a full pecuniary claim, and/or in any other situation where
POL and DBT agree.
10. DBT has delegated to POL the power to decide and approve initial interim payment
offers at the point when a conviction is overturned.
Settlement offers
11.On assessing a postmaster’s claim, POL shall make a without prejudice offer of
compensation, and shall where applicable, give its reasons for rejecting any elements
of the claim. If the postmaster:
(a) accepts the offer of compensation, POL shall pay the postmaster the
compensation amount no later than 28 days from the acceptance date;
(b) rejects the offer of compensation, the postmaster may require POL to
reconsider the rejected elements of their claim and provide further information
and/or evidence in support of their position. If appropriate, having considered
any arguments and further information and/or evidence provided by the
postmaster, alongside its duty to ensure that each offer of compensation
achieves value for money, POL may make a revised compensation offer to the
postmaster.
12. POL may, with support from DBT, process the non-pecuniary and pecuniary elements
of OC claims separately, if claimants wish.
Non-pecuniary Claims
Principles
13. POL will process non-pecuniary claims in line with the non-pecuniary principles and
ranges set out in Part 1 of the Principles (Annex 4). Decisions on non-exceptional non-
pecuniary cases are delegated to POL with executive summaries to be shared with DBT
for noting. Exceptional cases are defined by the criteria in Part 1 of the Principles
(Annex 4) and require DBT’s approval. DBT retains the right to view any claims
wherever requested. Where treatment outside the non-pecuniary principles is required,
POL shall engage DBT early to agree on strategy.
Exceptional cases: process
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14. POL shall share its full assessment of an exceptional case with DBT. DBT shall raise
with POL any comments or challenges to the case with reference to the Principles
and/or consistency with other OC non-pecuniary claims. POL shall then reflect any DBT
comments in its assessment, progress the claim through its internal governance for
approval, and submit the final decision to DBT for ratification.
Pecuniary Claims
Principles
15. POL has established pecuniary principles for OCs (set out in Part 2 of the Principles in
Annex 4) with which to assess, quantify, and make settlement recommendations on OC
claims. The pecuniary principles shall be assured by an independent assessor; and any
amendments to the pecuniary principles shall be agreed between POL and DBT. The
Principles and methodologies will be kept under review and may be amended in the
light of relevant court judgments, independent determinations by the Independent
Pecuniary Compensation Assessment Panel (the “Panel”) and/or to reflect outcomes
from specific claim negotiations and settlements.
16.The pecuniary principles shall be used in discussion with claimants’ legal
representatives, and to ensure that the assessment of each case is, as far as
practicable, standardised.
17.POL shall continue to engage with claimants’ representatives on any proposed
operational changes, so long as remain involved in putting forward their clients’ claims.
SAR
18.POL shall prepare a settlement advice and recommendation note (“SAR”) on each
selected claim based on the Principles, setting out its assessment of the postmasters
claims and taking any information / evidence provided by the postmaster into account.
The SAR will provide:
(a) a rational and principled assessment of the claim by head of loss based on the
evidence the claimant has provided and/or could reasonably be expected to
provide (including in claimant testimony), applying lessons learned from
previous OC cases and/or the Horizon Shortfall Scheme where appropriate; and
(b) a recommended settlement offer based on that assessment, broken down by
head of loss.
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19.DBT shall scrutinise the Initial Cases (as defined below) closely to test how the
Principles are proposed to apply to, and the assessments in the SARs are to be made
in, live cases, to build confidence in those assessments, recommendations and
outcomes. DBT has the right to access and review all SARs subject to the provisions of
the Data Sharing Agreement (“DSA”) between POL, UKGI and DBT in respect of OC
claims.
20. DBT will not be asked to approve the fact-specific recommendations made in the SARs.
Instead, DBT will need to be suitably assured that claims have been assessed by
subject matter experts who have made their recommendations by reference to the
appropriate considerations (i.e., the Principles and wider ADR objectives), and that
based on the information provided to DBT by POL, claimants have been treated fairly.
Approval rights
21. DBT shall scrutinise and retain full approval rights over an initial tranche of selected
cases (the number of which shall be agreed with POL) (the “Initial Cases”) to ensure a
shared understanding of the practical application of the Principles to individual cases.
As part of this process, POL shall present DBT with SARs for the Initial Cases setting
out how its recommendations have been reached in each case.
22. The Initial Cases shall be of a number sufficient to provide DBT with a benchmark
against which future cases will be assessed. POL and DBT will establish a review point
for the Initial Cases when the agreed number of such cases have been settled in line
with the pecuniary principles. At the review point, DBT shall determine whether
sufficient confidence has been reached in POL’s application of the pecuniary principles
as to delegate to POL the authority for processing subsequent non-exceptional cases.
23. POL and DBT shall agree the criteria for assessing exceptional cases when DBT shall
have delegated to POL the authority for processing non-exceptional cases. DBT shall
require POL to present additional Initial Cases if the information obtained from the
previously agreed number of Initial Cases is insufficient basis for defining the
appropriate criteria for processing subsequent exceptional cases, in respect of which
DBT may wish to delegate its authority to POL.
Exceptional cases: process
24. After POL has received information from a claimant and determines that the claimant's
case is an exceptional one based on exceptional case criteria agreed by POL and DBT,
POL will, if required, engage DBT in a ‘sightings meeting’ to discuss the proposed
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handling of the case, at which meeting DBT will provide its early views on the case.
POL shall produce a SAR for the case, taking DBT’s early views into account. DBT shall
raise with POL any comments or challenges to the case with reference to the Principles
and/or consistency with other OC pecuniary claims. POL shall then reflect any DBT
comments in its assessment, progress the claim through its internal governance for
approval, and submit the final decision to DBT for ratification.
Disputed settlement amounts: independent assessor
25. If for any reason POL and a postmaster cannot agree on a part of or the entire
compensation amount (e.g., where a reasonable concession cannot be found because
the amounts proposed by each party as compensation for a head(s) of loss are too far
apart), either party may make a written request for an independent assessment of the
disputed amount(s).
26. A request for an independent assessment of a disputed amount regarding a pecuniary
claim shall be made to the Panel tasked with facilitating the resolution of such disputes.
The Panel shall be comprised of members independent of POL and selected in
consultation with a cohort of postmasters and/or their representatives. The Panel
chairperson shall determine whether the referred dispute ought to be considered by a
single independent assessor, a combination of, or all the independent assessors on the
Panel. Further details on the Panel's role and composition and the referral process are
as set out in the terms of reference contained in Part 3 of Annex 4.
27.A request for an independent assessment of a disputed amount regarding a non-
pecuniary claim shall be made to an independent third party or body as agreed by POL
and DBT tasked with facilitating the resolution of such disputes.
28.At the end of the referral process, the independent assessor(s) shall make a non-
binding written recommendation to the parties, and the postmaster’s reasonable costs
for participating in the referral will be paid by POL. The parties shall attempt to reach a
settlement based on those recommendations, failing which the postmaster may opt to
prove their claim for a higher amount in court.
Upfront settlement
29. As an alternative to having their case assessed specifically and going through the
various stages of the compensation process, an eligible postmaster may opt instead to
receive a lump sum payment of £600,000 in full and final settlement of their claims (the
“Upfront Settlement’). For the avoidance of doubt, if the postmaster has received
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some amount in compensation before opting for the Upfront Settlement (an “advance
payment’), such advance payments will count towards the settlement sum such that
only the difference will be paid. In this clause, an advance payment shall not be
construed as including any sums received by a postmaster from the settlement agreed
on 10 December 2019 with the claimants in the group litigation proceedings against
POL.
30. If a postmaster opts for the Upfront Settlement, POL will seek DBT’s approval before
making the required payment, until otherwise delegated to POL.
Postmasters’ legal and professional fees
31. Postmasters shall be entitled to recover in addition to their compensation, reasonable
legal and professional fees incurred in the process of getting their convictions
overturned. Such fees shall only be considered reasonable, and thus reimbursable, if
so, determined by a costs assessor in line with the set thresholds and applicable costs
principles contained in Part 2 of Annex 4.
32. POL shall establish controls on the level of spend on legal advisers for OC claims to
ensure that the costs incurred in connection with cases are reasonable and
proportionate
General oversight arrangements
33.POL shall, subject to the Data Sharing Agreement dated May 2022 between POL,
UKGI and DBT (the "DSA"), share with DBT a SAR on each selected claim setting out
its assessment of the postmasters claims and the recommended settlements by heads
of loss, taking the Principles and any information / evidence provided by the
postmasters into account. The SARs shall also contain a VfM analysis at both an
individual and programme wide level, considering costs (including potential litigation
costs), the successful delivery of remediation objectives, and the merits of proceeding
with the settlement as proposed against any alternatives that might the available to
each individual claim.
34, DBT may ask for UKGI’s support with reviewing SARs data, subject to the provisions of
the DSA . To facilitate this:
(a) UKGI/DBT shall provide POL with a list of individuals who need to view the
relevant SAR;
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(b) POL shall share the SAR to the nominated UKGI/DBT individuals by email or
some other secure system, marked “legally privileged and confidential” and “this
document contains personal data”;
(c) other than legal advisers, UKGI/DBT shall obtain POL’s prior consent to share
the SAR more widely with individuals not on the nominated list. If POL
consents, UKGI/DBT may share the SAR to such individuals who shall be
subject to the same obligations in the DSA, including but not limited to the duty
of confidentiality;
(da) UKGI/DBT shall keep copies of the relevant SAR on file for up to 7 years from
the date of each settlement agreement to allow it to defend itself against any
legal challenge. Following such retention period, the relevant SAR and all
associated data shall be destroyed and securely disposed of by deleting the
relevant files, folders and sites manually and / or automatically including
deleting same from recycle or other locations from where the deleted items
could be restored.
35. POL will provide sufficient information to enable DBT to monitor POL’s management
information and the findings of POL’s assurance work to help develop and plan DBT’s
assurance requirements. DBT will coordinate its assurance plans with POL and will
agree the requirements for POL’s three lines of defence (such agreement not to be
unreasonably withheld or delayed). POL will provide access to POL’s internal audit
team or other providers of assurance as necessary.
36.To the extent permitted under the DSA, DBT reserves the right to undertake an
independent audit from time to time of OC settlement offers to ensure that the
Principles are being applied fairly and consistently, for example if DBT is required to do
so by the Government Internal Audit Agency or National Audit Office.
Monitoring Arrangements
Monthly Monitoring
37. POL shall provide regular updates on progress in negotiating and settling the claims by
including case progress and settlement information into the management information (
“MI”) packs for the existing monthly interim payments monitoring meetings. The
contents of the extended MI pack will be agreed between POL and DBT. Monitoring
information shall be reviewed and may change from time to time as POL’s resolution
strategy develops.
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Quarterly Monitoring
38. POL shall meet with DBT’s senior board on a quarterly basis, including the DBT Senior
Responsible Officer, to provide an update on OC progress and outlook for expected
cashflows and costs.
Funding and Cost Sharing Arrangements
39. Funding and cost sharing arrangements regarding the delivery of compensation for
postmasters with OCs, including interim payments, will be set out in the relevant
Funding Commitment Letter.
40. The process relating to DBT’s reimbursement of full and final settlement payments is
set out in the DBT Reimbursement Process diagram found in Part 4 of Annex 4.
Review Points
41.The operation of the “Resolution Strategy: Agreed Process” and “Monitoring
Arrangements’ will be reviewed every quarter (i.e., every four months) by the DBT
Senior Responsible Officer (on advice from officials) and thereafter as reasonably
required by DBT.
Other
1. This agreement is considered a ‘live’ document that shall, unless otherwise agreed, be
updated @Véry Six Months by POL and DBT, provided that POL and DBT may agree to
an ad hoc update if a substantive change occurs before the agreement is due for an
update, with each party taking turns to run the updating process as contained in the
table in Annex 1. Any amendments to this agreement shall be approved by both POL
and DBT and recorded in writing.
Department for
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Annex 1: Revisions and Updates
Document Version
Date of Document / I Approvals
Revision
Original draft I 20 December 2021 I Date and Signatures
(version 1)
For DBT For POL
Version 2 Date and Signatures
For DBT For POL
Annex 2: Record of Changes
Version 2
Updates to previous version
Name change from ‘Overturned Historical Convictions’ to
‘Overturned Convictions’
Expands the scope of postmasters eligible for compensation to
include postmasters whose convictions were overturned but not
opposed by POL on public interest grounds. This segment of
postmasters who previously were ineligible, are now to be treated
in the same way as all other postmasters with overturned
convictions.
Move from ‘ADR Strategy’ (which proved less feasible and
efficient in practice) and related provisions to a new resolution
strategy based on experience and in response to feedback from
the Inquiry
Increased postmaster interim payments from £100,000 to
10
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£163,000
Added option for further interim payments to postmasters where
necessary
Included new references to pecuniary and non-pecuniary
principles
Removed the OHC Principles
Removed goal of determining the better outcome as between the
proposed settlement and the outcome of litigation or other
dispute resolution mechanism considering factors like POL’s
reputation and the claimants’ faith in the resolution process
Added ‘Sightings Meetings’
Removed requirement for regular updates consolidating the
progress of cases with financial impact against an agreed model
for OHC cash forecasting
Removed section on unsuccessful mediation / settlement
discussions
Added new fixed sum offer of £600,000 per postmaster and
eligibility criteria
Removed assurance section noting the practical difficulties and
inefficiencies created by requiring the opinion of a King’s
Counsel or similar legal professional for all claims
Removed BEIS option to pause funding if value for money
cannot be established
Removed Annex B — extract of governance and control section
from the Interim Payments Funding Commitment Letter
Annex 3: Record of Approvals and DBT Delegated Authority
Date Subject Matter Delegations
October Increased postmaster interim payments from £100,000 to I POL
2022 £163,000
November POL
2022 All non-exceptional non-pecuniary claims
November Non-pecuniary counteroffers where i) no increase is being I POL
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2022 made but further evidence is being requested; ii) POL is
going to the top of PI Counsel's range
December Resolution Strategy POL
2022 POL Board approved the move away from the ADR
strategy in v.1 of the agreement to a remediation model in
response to feedback received from the Horizon Inquiry.
DBT supported the change.
April 2023 All proactive offers of prosecution monies POL
April 2023 Decisions to pay non-pecuniary offers gross (not POL
deducting IP)
September DBT approved the alternative settlement process under POL
2023 which eligible postmasters with OCs may opt to receive
the sum of £600,000 in final settlement of their claims
without going through the established case by case /
staged compensation process
October DBT
2023 Counteroffers on non-pecuniary claims if the revised offer I Working
is based on non-exceptional principles Group
October Paying non-pecuniary claims in full with Pl as an interim DBT
2023 payment if the PI acceptance is subject to further medical I Working
evidence or treatment Group
January DBT
2024 Working
Future interim payments less than £50k Group
November Exceptional non-pecuniary offers unless precedent- SRO
2022 setting
April 2023 Increases to pecuniary offers which do not set precedents I SRO
at 1% of the offer/capped at £1000
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Annex 4: Principles
Part 1: Non-Pecuniary Principles
Part 2: Pecuniary Principles
Part 3: Independent Pecuniary Compensation Assessment Panel (Terms of
Reference)
Part 4: Reimbursement Process Diagram
[Part 5: Process Assurance (from Adam Tolley QC, Jonathan Kinnear QC, Lord Dyson,
and Sir Hickinbottom)]
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