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IN THE HIGH COURT OF JUSTICE Claim No. HO16XO1238
QUEEN’S BENCH DIVISION
BETWEEN:
ALAN BATES & OTHERS
Claimants
-and-
POST OFFICE LIMITED
Defendants
AMENDED GENERIC PARTICULARS OF CLAIM
L The purpose of these Generic Particulars of Claim is to set out allegations common to
each of the Claimants or groups of them, and to identify indicative breaches of duty
by the Defendant.
2 The Claimants will each serve a Schedule of Information containing details specific to
their individual claims, including identifying the causes of action and indicative
breaches on which they rely. Standard form contracts are served herewith marked
Appendix A to D. It is anticipated that individuals selected as Lead Claimants will
further provide individual Particulars of Claim.
3. These particulars are provided subject to the information likely to be obtained on
disclosure and the obtaining (and exchange) of expert evidence, and in the context of
the stark asymmetry of information between the Claimants and the Defendant, the
Defendant's refusal to allow the Claimants to discuss its Letter of Response with
Second Sight (without their solicitors entering into a contract with the Defendant),
and the fact that the Defendant has not provided documents requested by the
Claimants.
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The Parties
Defendant
The Defendant operates and exercises control over a network of around 11,600 Post
Office branches throughout the UK. The Defendant offers products and services to
the public via this network of branches including postal services, financial services,
branch banking, bill payments, National Lottery, and foreign currency exchange.
In each branch it is the Defendant which determines the products and services which
must be made available. Over time, the Defendant has increased the number and
complexity of the products and services which it has required to be provided through
its branch network.
Types of Branch
The vast majority of Post Office branches are known as Subpostoffices. In these
branches the Defendant appoints a Subpostmaster to run the branch on behalf of the
Defendant.
There are some branches which are operated in a similar way but subject to franchise
agreements between the Defendant and a limited company (usually set up by an
individual for the express purpose of contracting with the Defendant). There are also
a small number of branches (around 315) which are directly managed by the
Defendant as Crown Office branches, and individuals working in these branches are
employed by the Defendant subject to express contracts of employment.
Subpostmaster Claimants and Contracts
The vast majority of Claimants are or were Subpostmasters.
The Defendant contracts with Subpostrasters on standard form contracts which,
although they are expressed not to be contracts of employment, reserve to the
Defendant a high degree of power, discretion and control.
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As to the Defendant's standard form contracts with Subpostmasters:
10.1
10.2.
10.3.
10.4.
The majority of Claimant Subpostmasters were engaged by the Defendant on
Subpostmaster Contracts (“SPMCs”) dated 1994, and as subsequently
amended (a copy of which is served herewith, marked Appendix A).
A small number of Claimants were engaged on Temporary Subpostmaster
Contracts (“Temporary SPMCs”), which was a shorter, modified form of the
SPMC (a copy of which is served herewith, marked Appendix B). This
purported to require these Claimants to comply with almost all of the same
obligations as a permanent Subpostmaster.
In pre-action correspondence the Defendant has claimed that a small number
of Claimant Subpostmasters were engaged on a further modified version of
the SPMC, called the Community Subpostmaster Agreement, which is
described by the Defendant as being similar to the SPMC but offered to
postmasters of part-time rural Post Office branches, and providing for a
higher proportion of fixed remuneration than in the SPMC, as opposed to
variable remuneration, to account for the lower footfall. The Claimants do
not have a copy of a contract entitled Community Subpostmaster Agreement
and the Defendant has not provided a copy. Pending disclosure, the
Claimants proceed on the basis that if any Claimant was in fact engaged on
any Community Subpostmaster Agreement the terms were in all material
respects the same as those of the SPMC.
According to the Defendant's pre-action correspondence, since 2010 the
Defendant has introduced Network Transformation Contracts (herein,
“NTCs”), as a replacement for the SPMC, in respect of which there are two
branch models: the “Main branch” model (with a dedicated Post Office
counter) and the “Local branch” model (where Post Office services can be
transacted from the retail counter). References in these Particulars of Claim to
clauses of the NTC are to clauses of the local branch model NTC (a copy of
which is served herewith, marked Appendix C). The Claimants do not have
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a copy of any main branch model NTC and the Defendant has not provided a
copy. Pending disclosure, the Claimants proceed on the basis that if any
Claimant was in fact engaged on any main branch model NTC, the terms
were in all material respects the same as the local branch model NTC.
10.5. Any Claimants who may have been engaged by the Defendant on any other
variation of Subpostmaster contract will identify the same in his or her
Schedule of Information,
Other Claimants
A small number of Claimants were engaged in one of the following ways:
11.
Crown Office employees: These Claimants were employees in Crown Office
branches, subject to an express contract of employment between the Claimant
and the Defendant. The Claimants do not have a copy of a Crown Office
employment contract, and the Defendant has not provided a copy;
Managers or Assistants: These Claimants were managers or assistants of
Subpostmasters, ie. engaged by a Subpostmaster to work within one of the
Defendant's branches; or
Directors and Guarantors: These Claimants were directors or guarantors of
limited companies which contracted with the Defendant as franchisees, under
a standard form Franchise Agreement, as subsequently amended (a copy of
which is served herewith, marked Appendix D)
Horizon
Horizon is an electronic point of sale and accounting system introduced by the
Defendant in Post Office branches in or around 1999/2000, and thereafter amended
from time to time, including an amendment in 2010 known as Horizon Online.
All Claimants were users of the Horizon system.
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4.
15.
16.
17.
As particularised further below, the introduction and imposition of Horizon in
1999/2000:
14.1. _ significantly changed how Claimants were required and able to work in their
branches from the position previously and, in particular, the position which
prevailed at the date the terms of the 1994 SPMC were introduced;
14.2. limited Claimants’ ability to access, identify, obtain and reconcile transaction
records; and
14.3, _ limited Claimants’ ability to investigate apparent shortfalls, particularly as to
the underlying cause thereof,
Further or alternatively, subsequent changes to it and/or changes to products and
services which the Defendant required to be offered had the aforesaid effects on the
Claimants.
Horizon comprised computer system hardware and software, communications
equipment in branch, and central data centres where records of transactions made in
branch were processed, recorded and retained. (For the purposes of these Particulars
of Claim the term “Horizon” is not used to include training, here treated distinctly —
although that is how the term has previously been used e.g. by Second Sight, which
carried out a review of “Horizon” by reference to this wider meaning.)
Horizon operated such that transactions entered by Claimants or others onto
terminals in branches were transmitted to the Defendant's central data centre where
they were processed, recorded, reconciled and retained. Claimants were
subsequently able to access transaction data, as recorded on the system, for a limited
period (42, and after the introduction of Horizon Online, 60 days) and in limited
report form by requesting reports to be generated by Horizon. These reports were
gerterated from transaction records held by the central data centre.
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18.
19.
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From the data generated by Horizon, the Defendant required Claimants to accept
changes to records of branch transactions, (“transaction corrections” issued by the
Defendant), unless the Claimant was effectively able to prove that the transaction
correction was not correct. The Defendant sometimes issued transaction corrections
after the end of the branch trading period in which the transaction had taken place,
and/or after the 42 / 60 day period during which Claimants could generate (limited)
reports using Horizon.
The importance of the accuracy of Horizon was accentuated by the following.
19.1, Branch Trading Statement: The Defendant required Claimants to ‘balance
and complete a Branch Trading Statement’ at the end of each branch trading
period (as stated in the Operations Manual at §9.3). Initially this was
required on a weekly basis, but the Defendant subsequently changed this to a
4 or 5 weekly cycle (as notified to individual branches by the Defendant).
Completion of branch trading statements required balancing of physical cash
and stock in hand with a trial balance produced by Horizon. Claimants were
required to check and confirm that the cash and stock shown in the accounts
matched the cash and stock held in the branch in order for the branch to enter
anew trading period and to continue trading the following day.
19.2. Making good: When there were discrepancies between trial balances
generated by Horizon and the physical cash and stock in hand which
appeared to show less cash or stock in hand than shown on Horizon (“an
apparent shortfall” or an “alleged shortfall”) the Defendant required
Claimants to make good the amount at the time of balancing, unless ‘other
arrangements are agreed’. The Defendant required the Claimants to make the
amount good, either:
a, directly (by adding cash or a cheque from his or her personal funds
directly to the branch account), or
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20.
21.
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b. centrally, (‘to settle the amount centrally’), by agreeing the amount as a
debt to the Defendant repayable either as a single payment or by way of
deductions from monthly remuneration from the Defendant.
19.3. Disputing ‘shortfalls’: Claimants seeking to dispute apparent shortfalls did
not have an option within Horizon to do so, and were required to contact the
Helpline to seek assistance (see paragraph 29 below). Claimants who
contacted the Helpline were in any event required to settle any disputed
amounts centrally, albeit collection was in some cases suspended, apparently
pending an investigation by the Defendant. Claimants were themselves
unable to carry out effective investigations into disputed amounts because of
the limitations on their ability to access, identify and reconcile transactions
recorded on Horizon and the lack of any or adequate report-writing features
in Horizon (as repeatedly raised by Mr Bates). There were no provisions, nor
was there any or sufficient guidance in the Operations Manual as to the
Procedure or process for disputing discrepancies or apparent or alleged
shortfalls. The Defendant failed to carry out any, or any fair or adequate
investigations into disputed amounts.
Fujitsu
The Defendant entered into a contract with Fujitsu Service Limited on 28 July 1999 for
the provision of IT services relating to Horizon. The Claimants are unable to
particularise details of the arrangement between the Defendant and Fujitsu in
circumstances where the only version of the contract which has been disclosed to the
Claimants is partial, redacted, does not include other agreements incorporated by
reference, and is in any event only the current version as in force since 31 March 2016.
The Defendant has declined to disclose any other details of its contract with Fujitsu.
Pending full disclosure, the Claimants understand that Fujitsu’s role included:
21,1. providing the data transfer service by which transactional data was
transferred between branches and the central data centres;
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22.
24.
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21.2, providing a data transfer service between the central data centres and clients
of the Defendant e.g. British Gas, Camelot (i.e. the National Lottery), and
managing the interface between Horizon and those other systems;
21.3. managing coding errors, bugs, and fixes so as to prevent, manage or seek to
correct apparent discrepancies in the data (including between the said
systems), in a manner which would potentially affect the reliability of
accounting balances, statements or other reports produced by Horizon; and
21.4. providing a telephone advice service, for and on behalf of the Defendant (or
by agreement with the Defendant) as a point of contact in relation to technical
problems with the Horizon system or equipment.
Prior to disclosure and expert evidence, the Claimants are unable to provide detailed
particulars of bugs, errors or defects which were or may have been the cause of any
discrepancies or alleged shortfalls attributed to them by the Defendant, but will be
able to plead further thereto following disclosure or the provision of information
relating thereto by the Defendant. The Defendant has declined to provide obviously
relevant disclosure in relation to these matters.
However, the Claimants aver that there were a large number of software coding
errors, bugs or defects which required fixes to be developed and implemented. There
were also data or data packet errors. There was a frequent need for Fujitsu to rebuild
branch transaction data from backups, giving rise to the further risk of error being
introduced into the branch transaction records. The Claimants understand that
Fujitsu maintained a ‘Known Error Log’ relating to some or all of these issues which
was provided to the Defendant but which has not been disclosed.
Further, the Claimants aver and rely upon the following:
24.1. Insuff ent prevention,
lency in the system {including su
ction, identification and reporting of e
ala entry level
and at the data packet or
ing data processing. effecting
and ciling transactions, and recording the same);
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25.
26.
27.
28.
24.2.
24.3.
24.4.
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bugs and/or errors and/or defects in Horizon and any data or data packet
errors had the potential to produce apparent shortfalls which did not
represent a real loss to the Defendant;
Horizon is imperfect and has the potential for creating errors (as the
Defendant has admitted in pre-action correspondence, in the Letter of
Response, dated 28 July 2016, at paragraph 1.3);
bugs and/or errors have on some occasions produced discrepancies and/or
apparent shortfalls (as the Defendant has admitted in pre-action
correspondence, in the Letter of Response, Schedule 6) and such shortfalls
may also have arisen from data or data packet errors; and, further
the Defendant sought and/or recovered such alleged shortfalls from
Subpostmasters (as is presently understood to be admitted by the Defendant
in the Letter of Response, Schedule 6, paragraphs 4.1 to 4.5).
Further, the Defendant was, by itself and/or via its agent Fujitsu, able to alter branch
transaction data directly and carry out changes to Horizon and/or transaction data
which could affect branch accounts.
However, the Defendant has made public statements in the following terms:
26.1.
26.2.
“Horizon does not have functionality that allows Post Office or Fujitsu to edit or
delete the transactions as recorded by branches” (Defendant's published reply to
Second Sight’s Briefing Report Part Two, concerning a review of the Horizon
system); and
“Transactions as they are recorded by branches cannot be edited” (Defendant's
published reply to the BBC Panorama documentary in relation to Horizon).
These statements were untrue, as the Defendant now admits.
The Claimants will rely upon these previous untrue denials in support of inferences
that (i) the Defendant took insufficient care as to the truth of representations as to the
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29.
30.
accuracy and/or reliability of Horizon, (ii) that, in context, the Defendant made the
above statements recklessly as to their truth, and (iii) the Defendant has not
approached the issue of the cause of apparent shortfalls with an open mind, fairly or
with adequate enquiry.
Helpline
The Defendant operated the Network Business Support Helpline (“the Helpline”)
which it provided and recommended to Claimants as a primary source of advice and
assistance in relation to Horizon, transactions, errors and issues relating to their
trading statements and accounts.
The Helpline failed to provide the necessary assistance and support to Claimants and
in some cases it was positively unhelpful, for some or all of the following reasons:
30.1. the Helpline was often unavailable to Subpostmasters, either because of its
operating hours (e.g. from 8.15am to 6pm on weekdays and 8.30am to 4pm on
Saturday, for the greater part of the period covered by applications to the
Mediation Scheme) or because it was difficult to get through or reach an
operator (the Defendant having admitted that “there have been periods where the
NBSC was more difficult to contact than in other periods” on page 30 of the Letter
of Response);
30.2. when Claimants did get through they were often advised that they would
receive a call back, but did not;
30.3. Helpline advisors adopted script based responses and failed to give adequate
support or assistance which was specific to the problem at hand and/or did
not effectively resolve the particular problem or enable the Claimants to do
$0;
30.4. Helpline advisors sometimes gave advice which, when followed, resulted in
an increase in apparent shortfalls;
30.5. Helpline advisors also sometimes:
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SL.
30.7.
gave misleading information as to the possibility of an error in Horizon
being the source of an apparent shortfall,
gave misleading information as to the extent to which other individuals
were experiencing difficulties with Horizon and/or experienced
unexplained apparent shortfalls;
advised Claimants not to worry about discrepancies or apparent
shortfalls and suggested that they would sort themselves out; and/or
encouraged Claimants to sign-off cash branch trading statements
without resolving the source of a discrepancy and/or in circumstances
where the Claimants could not be satisfied that the trial balance or
branch statement produced was accurate.
Many Subpostmasters who contacted the Helpline were expressly told or
impliedly led to believe that they were the only one experiencing such
difficulties;
The Defendant did not disclose the matters at paragraphs 23, 24, or 25, or the
true position as to the experience of other users, to Claimants who contacted
the Helpline or otherwise.
Investigations
Further, in relation to investigations, audits or similar enquiry by the Defendant in
respect of incorrect Branch Trading Statements, discrepancies, and apparent or
alleged shortfalls:
31.1,
31.2.
Investigators were not instructed or notified as to each or any of the errors
and related matters in paragraphs 23 and 24, above;
Investigators were not instructed that transactions, entries and/or underlying
data in the Horizon system could be remotely altered (as at paragraph 25 or
at all);
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32.
33.
31.3,
31.4,
31.5.
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Investigators were not instructed, notified and/or informed as to the
experience of other users and/or provided access to information about the
same;
Investigators were not instructed to seek out the true cause thereof, and in
practice proceeded on the basis that Claimants were liable for any apparent
or alleged shortfall, unless the Claimant could prove otherwise; and/or
Investigators were instructed to disregard possible problems with Horizon as
a possible cause of apparent or alleged shortfalls and/or it was the
organisational culture or practice to do so and/or investis
Terminations
The Defendant suspended and/or terminated the appointments of Claimants:
32.1.
32.2,
32.3,
32.4,
who did not or could not “make good” apparent or alleged shortfalls;
who challenged whether apparent or alleged shortfalls actually represented
any true shortfall at all or real loss to the Defendant;
who raised the inadequacies of the Horizon system and the difficulties facing
Claimants in interrogating the underlying transactions and data; and/or
who, in the circumstances set out below, completed or approved Branch
Trading Statements (generated by Horizon) that were not, on their face,
consistent with the stock and cash held by the branch (‘incorrect Branch
Trading Statements’).
In each case in which the Defendant relies upon any other reason, the Claimants will
put the Defendant to strict proof.
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34,
35.
Context & Effect on Claimants
In all the circumstances, some Claimants reasonably felt that they had no effective
choice but to proceed, either:
34.1.
by making good the apparent or alleged shortfall (if they were able to do so)
or
34.2. _ by signing off incorrect Branch Trading Statements.
The said circumstances included that:
35.1.
35.4.
35.5.
35.6.
the express terms of the standard form contracts were replete with power and
discretion in the hands of the Defendant, as particularised below;
the Defendant's system required Claimants to sign off branch accounts in
order to be permitted to enter a new trading period, the next day;
Claimants were contractually required to offer the services of the Defendant
using the Horizon system, which required them to enter a new trading period
on that system;
Claimants faced alleged shortfalls which they could not effectively dispute,
investigate, or trace the cause of, as set out in paragraph 19.3 above;
the Defendant's position was to require repayment as a condition of their
continuing appointment and as set out at Section A.6 above;
many Claimants hoped (and/or were in some cases advised or encouraged to
believe) that discrepancies may subsequently be resolved, by pending
transactions, transaction corrections or otherwise;
many Claimants had only modest incomes and/or savings and could not
afford to pay (or keep paying) the Defendant the amounts of the apparent
shortfalls and/or and the only other alternative was termination of their
appointment with consequent financial losses;
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36.
37.
AB
38.
39,
40.
35.8, _ there was an acute relational imbalance between the parties.
Further or alternatively, when individual Claimants did sign off incorrect Branch
Trading Statements, the Defendant's approach was to presume dishonesty, on the
basis that the only reason an individual would do so was to cover up his/or her own
theft. This is approach is admitted and averred by the Defendant at paragraph 5.79.2
of its Letter of Response: “it is a sound and logical inference that one would only submit
false accounts to cover up their own theft’. This presumption was unfair, flawed and/or
irrational in the circumstances set out above and in breach of the implied terms and
tortious duties below.
In the circumstances above, the Claimants acted under unfair and/or illegitimate
pressure from the Defendant and/or had no realistic practical alternative but to act as
they did. They therefore acted under economic duress and/or due to (or in response
to) unconscionable dealing by the Defendant. Further or alternatively, they so acted
in circumstances in which the Defendant was in material breach of contract to the
Claimants and/or had wrongfully failed to disclose material facts to the Claimant, as
set out herein.
The Defendant's Suspense Accounts
The Defendant operated one or more suspense accounts in which it held unattributed
surpluses including those generated from branch accounts. After a period of 3 years,
such unattributed surpluses were credited to the Defendant's profits and reflected in
its profit and loss accounts.
The Defendant thereby stood to benefit and/or did benefit from apparent shortfalls
wrongly attributed to the Claimants which did not represent real losses to the
Defendant.
CONTRACT TERMS ~ SUBPOSTMASTERS
The Claimants will refer to their respective contracts with the Defendant as properly
construed for their full terms and true effect, subject to the matters set out below.
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41.
42.
44,
45.
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Factual Matrix
The Subpostmaster Contract and all variations of it were standard form contacts
drafted by the Defendant, the terms of which were not open to negotiation by
individual Claimants.
There was an inequality of bargaining position between individual Subpostmaster
Claimants and the Defendant amounting to a serious relational imbalance.
Claimants taking up appointment as Subpostmasters were required to make long
term and expensive commitments in respect of their relationship with the Defendant,
typically by:
43.1. purchasing the goodwill of the business from the previous Subpostmaster;
43.2. entering into a contract to purchase or lease premises from which to operate
the branch, with associated borrowing from banks or other lenders;
43.3, taking up residential accommodation on those premises or in linked
premises;
43.4. entering into employment contracts with assistants;
43.5. investing in the training of those assistants;
43.6. (at least as at 1998) being subject to a 25% deduction by the Defendant from
their first year’s remuneration; and/or
43.7. incurring refurbishment, fit out and/or decorating costs.
The operation of the contractual relationship between individual Subpostmaster
Claimants and the Defendant required a high degree of communication, co-operation
and predictable performance, based on mutual trust and confidence.
Although the Subpostmaster Contract and all variations of it stated that the
Subpostmaster is not an employee of the Defendant (SPMC Section 1, paragraph 1;
Temporary SPMC paragraph 2.1; NTC Part 2 paragraph 1.2), and in these
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47.
48.
49.
proceedings the Subpostmaster Claimants do not claim to have been employees,
many aspects of the written contractual terms reflect a contract of employment,
including:
45.1. the high degree of discretion, power and control to the Defendant (see section
B.2, below);
45.2, the SPMC included express provision for holiday substitution allowance
(SPMC, Section 4), and sick absence substitution allowance (SPMC 7); and
45.3, the SPMC required personal service in relation to the provision and
notification of any substitute (SPMC Section 3, and Section 4, Paragraph 8),
evidence of incapacity for work (SPMC Section 10, paragraph 10) and the
recruitment of assistants (SPMC Section 15).
The Claimants will rely on these and other aspects of the factual matrix as
particularised elsewhere in these Generic Particulars of Claim and as may further be
established as relevant in individual cases.
Writien Terms
Overview
The written terms of the Defendant's contracts with Subpostmasters purported to
reserve a high degree of discretion, power and control to the Defendant, with very
few express obligations on the Defendant.
The Defendant did not provide all the Claimants with a copy of the full terms of the
relevant written contract at the date of their appointment or thereafter and/or did not
draw their attention to onerous or unusual terms therein.
The Claimants will contend that the written terms between the Defendant and
Claimants fall to be construed:
49.1. asa whole and in the factual matrix at B.1 above;
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50.
51.
49.2. contra proferentem, against the Defendant, whose standard terms they were;
49.3, as a relational contract and/or in the context of the implied terms, as pleaded
in Section B.3 below, or such other implied terms as the Court may find;
49.4. subject to the unenforceability of those terms not brought fairly and
reasonably to the Claimant's attention, as set out in Section B.4 below; and/or
49.5. subject to the provisions of the terms of Unfair Contract Terms Act 1977, as
set out in Section B.5 below.
Further or in the alternative, the express written terms did not represent the true
agreement between the parties, in that the terms as to termination without cause did
not represent the true agreement between the parties as set out in Section B.6 below:
Autoclenz v Belcher [2011] UKSC 41.
Rules, Instructions and Standards
The written terms of the Defendant's contracts with Subpostmasters purported to
require Subpostmasters and their Assistants to comply with an extensive and poorly
defined list of changeable rules, instructions and standards, with performance judged
according to the discretionary satisfaction of the Defendant:
51.1. In the SPMC:
a. Section 1, paragraph 13: “SECTIONS 1-23 contain the general terms of a
Subpostmaster's appointment. [The Defendant] issues the Subpostmaster
with rules and Postal Instructions which deal with the various classes of Post
Office Business to be transacted at his sub-office.”
b. Section 1, paragraph 5: ”...Retention of the appointment as Subpostmaster is
dependent on the sub-office being well managed and the work performed
properly to the satisfaction of [the Defendant}.”
c. Section 1, paragraph 14: “The rules provided for the instruction and guidance
of the Subpostmaster must be kept up to date. They must be carefully studied
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51.2,
51.3.
and applied. No breach of the rules will be excused on the grounds of
ignorance.”
Section 1, paragraph 18: “Changes in conditions of service and operational
instructions, including those which are agreed with the National Federation of
Sub-Postmasters, will appear from time to time in Counter News or by
amendment to the Contract. Such changes and instructions are deemed to form
part of the Subpostmaster’s contract.”
Section 1, paragraph 19: “All instructions received from the Regional General
Manager should be carried out as promptly as possible.”
In the Temporary SPMC:
a.
Clause 2.7: “The Temporary Subpostmaster ... is required ... to accept full
responsibility for the proper running of the Branch and the efficient performance
of the Services in accordance with any standards required by [the Defendant]
and notified to him from time to time.”
Clause 6.6: “The Temporary Subpostmaster must comply with any
instructions issued by [the Defendant] from time to time, including without
limitation those contained in the Counter Operations manual with regard to the
running of the Branch, the performance of the Services, etc.”
In the NTC:
Part 1, paragraph 1.1 “The Operator agrees to operate the Branch on behalf of
[the Defendant] in accordance with the express terms of the Agreement
(including for the avoidance of doubt the Manual)”, and the definition of
Manual at Part 5 paragraph 1.1 as follows:
The following list includes the manuals, guidelines and instructions which
currently come under the definition of “Manual”:
- Local Post Office Opevations Manual
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- Horizon online administration and equipment operations manual
National lottery operations manual (where branch offers this product)
- Ordering stock and operations manual (where branch offers this product)
- Post Office outreach services operations manual (where applicable)
- Post Office paystation operations manual
- Security operations manual
- Horizon system user guide (online)
- Horizon online help (online)
- Branch Focus
- Post Office branch standards
- Post Office Ltd’s Accessibility Guide
- Branch Conformance Standards
~ Post Office cash and secure stock remittance services manual (online)
- FOS project operations manual
- FOS project training workbook (x2)
- Mailwork specification (where applicable)
- Any other instructions to operators or updates to such instructions
issued by [the Defendant] from time to time”
Part 5, paragraph 1.3: “[the Defendant] may amend the list of documents set
out in this Part 5 and may amend the contents of any manual or documents on
that list by giving written notification (which may be by electronic means) to
the Operator. In the Agreement, unless otherwise specified, a reference to the
Manual is a reference to it as amended, consolidated or extended by [the
Defendant] from time to time.”
Part 5, paragraph 1.5: “In addition to the Manual, [the Defendant} may
issue to the Operator instructions which deal with various classes of Products
and Services to be transacted at the Branch and the design and operational
standards required to run the Branch.”
Part 5, paragraph 1.6: “All such instructions must be complied with
immediately (unless otherwise notified by [the Defendant]) and must be kept
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52.
up to date by incorporation of updates issued by [the Defendant]. They must
be carefully studied by the Operator, its Manager and Assistants. No breach of
instructions will be excused on the grounds of ignorance.”
e. Part 2, paragraph 3.2.1, 3.2.2: “The Operator shall...” “maintain the highest
standards in all matters connected with the Branch and Branch Premises,
including implementing and maintaining the standards specified in the
Manual” and “comply with all instructions given to it by [the Defendant]
with regard to standards and quality in the operation of the Branch”;
Classes of Business
The written terms of the Defendant's contracts with Subpostmasters purported to
provide a discretion for the Defendant to unilaterally change the required classes of
business to be undertaken at the branch, with no or minimal notice to the
Subpostmaster:
52.1. In the SPMC:
a. Section 1, paragraph 6: "The Subpostmaster is informed at the time of his
appointment of the classes of business he is required to provide. He must also
undertake, if called upon to do so later, any other class of business not required
at the time of his appointment but which (the Defendant] may subsequently
and reasonably require him to do, except that {the Defendant] may not require
him to undertake Mailwork where the Subpostmaster did not undertake to do so
as part of the terms of his appointment.”;
Pi appt
b. Section 1, paragraph 7: “If [the Defendant] alters the services to be provided
or withdraws a service the Subpostmaster has no claim to compensation for any
disappointment which may result from the change.”
52.2. In the Temporary SPMC:
a. Clause 2.3: “...[The Defendant] shall in its absolute discretion decide which
of the products and services listed above are to be made available by the
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53.
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Temporary Subpostmaster from time to time at the Branch and will notify the
Temporary Subpostmaster accordingly through the configuration of the
Horizon terminal at the Branch.”
Clause 3.2: “If it is deemed necessary at anytime to alter the Services, to
withdraw any part of the business conducted at the Branch, or to introduce an
alternative method of payment, the Temporary Subpostmaster has no claim to
compensation for any disappointment that may result from the change.”
52.3. In the NTC:
Agency
Part 2, paragraph 1.7: “[The Defendant] has the right to enter into contracts
or arrangements with Clients for the handling of Products or the supply of
Services by the Network (including the Branch) on such terms as [the
Defendant] considers fit. [The Defendant] retains the discretion as to where
within the Network particular products and services are offered”
The written terms of the Defendant's contracts with Subpostmasters purported to
appoint Subpostmasters as agents of the Defendant, as follows:
53.1. In the SPMC: Section 1, paragraph 1 “The contract is a contract for services and
consequently the Subpostmaster is an agent and not an employee of [the
Defendant].”
53.2. In the Temporary SPMC: Clause 2.1; “This Contract is a temporary contract for
services between [the Defendant] and the Temporary Subpostmaster and
consequently, the Temporary Subpostmaster is an agent and not an employee of [the
Defendant}”.
53.3. In the NTC: Part 2, paragraph 1.2: “The Agreement is a contract ‘for services and
the Operator is an agent and not an employee of (the Defendant]. The Operator
acknowledges that no relationship of employer and employee exists between [the
Defendant] and the Operator, or between [the Defendant] and any Assistant.”
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Accounts and Liability for Loss
The written terms of the Defendant's contracts with Subpostmasters included terms
which the Defendant (wrongly) applied and operated so as to hold Subpostmasters
strictly liable for all cash and stock and apparent or alleged shortfalls, and with wide
ranging responsibility for losses:
54.1. In the SPMC:
a.
Section 12, paragraph 4: “The Subpostmaster must ensure that accounts of all
stock and cash entrusted to him by [the Defendant] are kept in the form
prescribed by [the Defendant]...”
Section 12, paragraph 12: "The Subpostmaster is responsible for all losses
caused through his own negligence, carelessness or error, and also for losses of
all kinds caused by his Assistants. Deficiencies due to such losses must be made
good without delay.”
Section 12, paragraph 13: "The financial responsibility of the Subpostmaster
does not cease when he relinquishes his appointment and he will be required to
make good any losses incurred during his term of office which may subsequently
come to light.”
54.2. In the temporary SPMC:
Clause 6.1: “The Temporary Subpostmaster is strictly responsible for the safe
custody of all [the Defendant's} property, including (but not limited to) cash,
stock of all kinds and papers and documents, whether held by himself or by his
assistants. He is expressly forbidden to make use of the cash balance due to [the
Defendant] for any purpose other than the requirements of the Services and he
must on no account apply to his own private use, for however short a period,
any portion of the official funds entrusted to him.”
Clause 6.2: “Deficiencies due to any losses of cash or stock must be made good
by the Temporary Subpostmaster without delay.”
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c. Clause 6.5: “The responsibility of the Temporary Subpostmaster for cash and
stock will continue after termination of this Contract in respect of losses, gains,
errors, acts or omissions occurring during his appointment.”
54.3, In the NTC:
a. Part 2, paragraph 3.6.6: “The Operator shall: account for and remit to [the
Defendant] all monies collected from Customers in connection with
Transactions in accordance with the Manual. Any cash which [the
Defendant] provides to the Operator or which the Operator collects as a result
of Transactions does not belong to the Operator and shall be held by the
Operator (at the Operator's risk) on behalf of, and in trust for, [the Defendant]
and the Clients. Any such cash shall not form part of the assets of the Operator.
‘The Operator acknowledges that it is expressly forbidden from making use of
any such amount due to [the Defendant] for any purpose other than the
operation of the Branch and it must on no account apply to its owt private use,
for however short a period, any portion of funds belonging to {the Defendant]
entrusted to it. Any breach of this clause 3.6.6 and/or any misuse of {the
Defendant's] cash by the Operator or its Personnel shall be deemed to be a
material breach of the Agreement which cannot be remedied and may render the
offender liable to prosecution.”
b. Part 2, paragraph 4.1: “The Operator shall be fully liable for any loss of or
damage to, any Post Office Cash and Stock (however this occurs and whether it
occurs as a result of any negligence by the Operator, its Personnel or otherwise,
or as a result of any breach of the Agreement by the Operator) except for losses
arising from the criminal act of a third party (other than Personnel) which the
Operator could not have prevented or mitigated by following [the Defendant's]
security procedures or by taking reasonable care. Any deficiencies in stocks of
Products and/or any resulting shortfall in the money payable to [the
Defendant] must be made good by the Operator without delay so. that, in the
case of any shortfall, [the Defendant] is paid the full amount when due in
accordance with the Manual”;
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55.
c. Part 2, paragraph 4.2: “The Operator's responsibility for such items shall
begin from the time at which the Post Office Cash and Stock are received by the
Operator and shall end when the Post Office Cash and Stock are given to
Customers in the proper conduct of the Branch or are returned to [the
Defendant] or, in the case of cash or financial instruments are collected bya
cash in transit provider or are paid into a bank, Whilst the Post Office Cash
and Stock are in the Operator's possession, it shall keep them in a place of
security.”
d. Part 2, paragraph 4.3: “The Operator shall retain financial responsibility (in
accordance with the Agreement) following the termination of the Agreement,
and it will be required to make good any losses (including losses arising from
Transaction corrections and stock losses) incurred during its operation of the
Branch which may subsequently come to light.”
e, Part 2, paragraph 13.1: “The Operator shall reimburse [the Defendant] in
full on demand for all losses, claims, demands, proceedings, liabilities, costs and
expenses (including reasonable legal costs and expenses) incurred by [the
Defendant] as a result of: (13.1.1) any negligence or breach of the Agreement
by the Operator or its Personnel; (13.1.2) any misuse or infringement of any
Intellectual Property of any third party by the Operator or its Personnel; and/or
(13.1.3) any claim brought under the EA andlor its regulations in respect of the
Branch”.
For the avoidance of doubt, on a proper construction of section 12, paragraph 12 of
the SPMC (and similar clauses said to impose such liability), the Subpostmaster is not
so strictly liable and is only liable for actual losses caused by the negligence,
carelessness. or error of the Subpostmaster, or his assistant, as to which the
contractual burden of proof was on the Defendant. Thus, for example, the
Subpostmaster would not be liable for an apparent shortfall in branch accounts:
55.1. which did not represent a real loss to the Defendant;
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55.2,
55.3.
55.4,
Assistants
which was not established by the Defendant, after due enquiry, to be such a
real loss;
in circumstances where the loss was caused or contributed to by the
Defendant's own breach of duty;
where it was not established to be due to the Subpostmaster’s own
negligence, carelessness or error or that of his Assistants.
The written terms of the Defendant's contracts with Subpostmasters purported to
make the Subpostmaster liable for the acts of his or her Assistants, but provided no,
or minimal obligations on the Defendant in relation to training of Assistants:
56.1.
In the SPMC (1994 to 2006):-
Section 15, paragraph 2: “Assistants are employees of the Subpostmaster, A
Subpostmaster will be held wholly responsible for any failure, on the part of his
Assistants, to apply Post Office rules, or to provide a proper standard of service
to the public. He will also be required to make good any deficiency, of cash or
stock, which may result from his assistants’ actions.”
in Section 7 of the Operations Manual (incorporated by reference):
“Training of operators and assistants. A trainer from the Post Office National
Training team will complete initial training of the Operator or the first
Manager and a certain number of Assistants. This will include transactional
training for key products and services, FSA and Mails compliance and any
Equipment used on a daily basis.”
express provision for Post Office to provide training in relation to
Mailwork, as set out at paragraph 65.1 below.
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56.2.
In the SPMC as amended in July 2006:-
Section 15, paragraph 2: “Assistants are employees of the Subpostmaster, and
the Subpostmaster will consequently be held wholly responsible for any failure
on the part of his Assistants to: (2.1) apply Post Office ® rules or instructions
as required by [the Defendant]; (2.2) complete any training necessary in order
to properly provide Post Office ® Services; and (2.3) comply with the
obligations set out below. The Subpostmaster will also be required to make good
any deficiency of cash or stock which may result from his Assistants’ actions or
inactions.”
Section 15, paragraphs 7.1: “[The Defendant] will: (7.1.1) provide the
Subpostmaster with relevant training materials and processes to carry out the
required training of his Assistants on the Post Office ® Products and Services;
(7.1.2) inform the Subpostmaster as soon as possible where new or revised
training will be necessary as a result of changes in either the law or Post Office
© Products and Services; and (7.1.3) where appropriate ... update the training
materials (or processes) or provide new training materials {or processes) to the
Subpostmaster. However, it is the Subpostmaster’s responsibility to ensure the
proper deployment within his Post Office © branch of any materials and
processed provided by [the Defendant] and to ensure that his Assistants
receive all the training which is necessary in order to be able to properly provide
the Post Office ® Products and Services and to perform any other tasks required
in connection with the operation of the Post Office ® branch.”
Section 15, paragraph 7.2: “Where [the Defendant] has obligations to third
parties in relation to certain Post Office ® Products and Services (including,
but not limited to, financial transactions (such as bureau de change, and sales of
insurance) and communications products, and provision of mail services), the
Subpostmaster undertakes to use his best endeavours to ensure that his
Assistants will not cause [the Defendant] to be in breach of such obligations.”
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Section 15, paragraph 7.3: “[The Defendant] may request from time to time
that where it has obligations as described above the Subpostmaster should
conduct specific training (whether through written/distance learning that may
require confirmation of completion or via presentations) in relation to certain
Post Office ® Services (such as, but not limited to, money laundering). Failure
by the Subpostmaster to arrange for such training to be properly applied will be
deemed to be a breach of this Contract by him.”
Section 15, paragraph 7.4: “(7.4.1) The Subpostmaster must formulate a
training policy for all his Assistants, in order to fulfil his obligations in relation
to the safekeeping of any Postal Packets. (7.4.2) This training policy should
include the following elements: the levels of training required to fulfil the
obligations referred to above at 7.4.1; the levels of training required according to
the differing responsibilities of, and work undertaken by, the Assistants, in
relation to Postal Packets; details of the minimum level of training required; an
explanation of how the training is provided; the frequency with which training
is provided; and details of how training is given, recorded and monitored.
(7.4.3) The Policy must also ensure compliance with all other regulatory and
legislative requirements. (7.4.4) The Subpostmaster must regularly monitor the
implementation of and compliance with the training policy in his Post Office ®
branch.”
56.3. In the Temporary SPMC:-
a.
Clause 5.1: “The Temporary Subpostmaster must provide and train at his own
expense, suitable assistants needed to provide the Services and must comply
with all statutory obligations placed on an employer.”
Clause 5.2: “The Temporary Subpostmaster must comply with the provisions
of Appendix 1 to this Contract in relation to assistants and Prospective
assistants ...“, and at Appendix 1, Section 2: “Assistants are employees of
the Subpostmaster, and the Subpostmaster will consequently be held wholly
responsible for any failure, on the part of his Assistants, to: (a) apply Post
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56.4.
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Office® rules or instructions as required by [the Defendant]; (b) complete any
training necessary in order to properly provide Post Office® Services; and (c)
comply with the obligations set out below. The Subpostmaster will also be
required to make good any deficiency of cash or stock which may result from his
Assistants’ actions or inactions,”
c. There was no express obligation on the Defendant to provide training or
training materials to Subpostmasters under the Temporary SPMC.
In the NTC:-
a. Part 2, paragraph 2.3: “Where [the Defendant] considers it necessary, it shall
initially train the first Manager and such number of Assistants as [the
Defendant] shall determine, in the operation of the System at the Branch.”
b. Part 2, paragraph 2.4: “The Operator shall ensure that the first Manager
cascades the training to all other Assistants and to any replacement Manager in
order to ensure that all subsequent Managers and all other Assistants receive
sufficient initial training from properly trained Managers.”
c. Part 2, paragraph 2.5: “[the Defendant] may require the Manager and/or the
Assistants to undertake further training at any reasonable location and time
during the Term if [the Defendant] (2.5.1) reasonably considers such training
to be essential; or (2.5.2) wishes to train them in new and improved techniques
which have been devised and which the Operator will be required to use in
operating the System.”
a. Part 2, paragraph 2.6: “The Operator shall ensure that Mangers and
Assistants attend the training provided by [the Defendant] under clauses 2.3
and 2.5.”
e Part 2, paragraph 2.7: “Any failure by the Operator to comply with its
obligations pursuant to this clause 2 shall be deemed to be a material breach of
the Agreement ...”,
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f£ Part 2, paragraph 2.8: “The Operator shall be responsible for the costs of the
Manager andlor Assistants attending the training referred to in clauses 2.3 and
2.5 (including, as appropriate, salary, travel accommodation and subsistence),
but the cost of delivering the training shall be met by {the Defendant].”
Helpline
57. The NTC included an obligation on the Post Office, at paragraph 1.6.1, as follows:
“{The Defendant] shall provide a helpline to enable the Operator to consult with
[the Defendant] about running the Branch (details of the helpline are contained
within the Manual)”.
58. I The SPMC and Temporary SPMC did not include any similar express provision.
Access to Branch Accounts and Records
59. The written terms of the Defendant's contracts with Subpostmasters provided the
Defendant with the express power to access branch accounts and records:
59.1. In the SPMC:
a. Section 12, paragraph 4: "The Subpostmaster ... must immediately produce
these accounts, and the whole of his sub-office cash and stock for inspection
whenever so requested by a person duly authorised by the Regional General
Manager.”
59.2. In the Temporary SPMC:
a. Clause 4.5: “The Temporary Subpostmaster must allow representatives of {the
Defendant] access to the Branch at all times, on production of correct
identification.”
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60.
59.3, In the NTC:
a, Part 2, paragraph 2.1: “... but this shall not restrict any access by [the
Defendant] and/or its authorised representatives to the Branch and [the
Defendant's] information systems,”
Suspension
The written terms of the Defendant's contracts with Subpostmasters (but not
temporary Subpostmasters) included a purported right to suspend the
Subpostmaster on bases including any “irregularities” as follows:
60.1,
60.2.
60.3.
In the SPMC:
a.
Section 19, paragraph 4: "A Subpostmaster may be suspended from office at
any time if that course is considered desirable in the interests of [the
Defendant] in consequence of his: (a) being arrested, (b) having civil or
criminal proceedings brought against him, (c) where irregularities or
misconduct at the office(s) where he holds appointment(s) have been established
to the satisfaction of [the Defendant], or are admitted, or are suspected and are
being investigated.”
Section 19, paragraphs 5 and 6: "Where a Subpostmaster is suspended his
remuneration in respect of any period of suspension will be withheld so long as:
such suspension continues”; "On the termination of the period of suspension
whether by termination of contract or reinstatement, the Subpostmaster’s
remuneration in respect of the period may, after consideration of the whole of the
circumstances of the case, be forfeited wholly or in part...”.
There was no contractual right to suspend in the Temporary SPMC;
In the NTC:
a
Part 2, paragraph 15.1: “[The Defendant] may suspend the Operator from
operating the Branch (andlor, acting reasonably, require the Operator to
suspend all or any of its Assistants engaged in the Branch from working in the
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Branch), where [the Defendant] considers this to be necessary in the interests
of [the Defendant] as a result of: (15.1.1) the Operator and/or any Assistant
being arrested, charged or investigated by the police or [the Defendant] in
connection with any offence or alleged offence; (15.1.2) civil proceedings being
brought against the Operator and/or any Assistant; or (15.13) there being
grounds to suspect that the Operator is insolvent, to suspect that the Operator
has committed any material or persistent breach of the Agreement, or to suspect
any irregularities or misconduct in the operation of the Branch, the Basic
Business or any Post Office® branches with which the Operator and/or any
Assistant is connected (including any financial irregularities or misconduct).”
Part 2, paragraph 15.2: “During the period of any suspension, whether under
clause 15.1 or otherwise, [the Defendant] may: (15.2.1) suspend payment of
all sums due to the Operator under the Agreement; (15.2.2) with the agreement
of the Operator appoint a temporary substitute for the Operator to operate the
Branch from the Branch Premises, in which case any Fees in relation to
Transactions carried out at the Branch will be paid by [the Defendant] direct
to such temporary substitute; and (15.2.3) to the extent such costs have been
agreed with the Operator, deduct its costs incurred in appointing a temporary
substitute together with other costs and expenses incurred by {the Defendant]
as a result of the suspension from any payments due to the Operator under the
Agreement. [The Defendant] shall initially meet the cost of appointing the
temporary substitute but shall be entitled to recoup some or all of such cost ‘from
the Operator in accordance with clause 15.2.3 or otherwise. Following the end
of the period suspension, (the Defendant] may, in its discretion taking into
account the relevant circumstances, agree to pay the Operator all or part of such
sums as have been suspended in accordance with clause 15.2.1.”
Part 2, paragraph 15.3: “Following the Operator's suspensiou, whether under
clause 15.1 or otherwise, the Operator shall at its own cost and expense
promptly take all reasonable steps to enable [the Defendant] to maintain access
for Customers during the period of suspension to Products and Services.”
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61.
Termination - Notice
The written terms of the Defendant's contracts with Subpostmasters purported to
permit the Defendant to terminate without notice, for a variety of reasons:
61.1. Inthe SPMC:
a. Section 1, paragraph 10: “... The Agreement may be determined by [the
Defendant] at any time in case of Breach of Condition by [the
Subpostmaster], or non-performance of his obligation or non-provision of Post
Office Services, but otherwise may be determined by [the Defendant] on not
less than three months notice.”
61.2. In the Temporary SPMC:
a. Clause 2.4: “This Contract will commence on [date] and will continue
thereafter until the expiry of not less than 7 days’ written notice to terminate,
which may be given by either party to the other at any time, subject to [the
Defendant's] rights of summary termination as set out in clause 2.5 below.”
b. Clause 2.5: “[The Defendant] may terminate this Contract immediately on
giving the Temporary Subpostmaster written notice in the event that the
Temporary Subpostmaster commits any breach of this Contact or commits an
act of bankruptcy or in the event that, as a result of any security checks carried
out by [the Defendant], or any references taken up by [the Defendant}, it is
not satisfied that the Temporary Subpostmaster meets the standards required of
a subpostmaster.”
61.3. Inthe NTC:
a, Part 2, paragraph 16.1: “Following the Commencement Date the Agreement
will continue until: (16.1.1) either Party gives to the other not less than 6
months’ written notice (unless otherwise agreed between the Parties in writing),
which cannot be given so as to expire before the first anniversary of the Start
Date; or (16.1.2) it is terminated at any time in accordance with its terms.”
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b. Part 2, paragraph 16.2: “In addition to any other rights of termination
contained in other Parts, [the Defendant] may terminate the Agreement
immediately on giving written notice to the Operator if the Operator:
16.2.1 commits any material breach of the provisions of the Agreement or
any other contract or arrangement between the Parties and fails to remedy
the breach (if capable of remedy) within 14 days of a written notice from [the
Defendant] specifying the breach and requiring the same to be remedied.
Any references in these Standard Conditions to a breach of a particular
obligation by the Operator being deemed to be material and/or irremediable
are not intended to be exhaustive and shall not prevent [the Defendant]
from exercising its rights under this clause in respect of any other breach of
the Agreement which is material and/or irremediable;
16.2.2 fails to provide the Products or Services to the standards required by
[the Defendant] as set out in the Manual and fails to remedy the failure (if
capable of remedy) within 14 days of a written notice from [the Defendant]
specifying the failure and requiring the same to be remedied; ...
16.2.16 fails to pay any sum due to [the Defendant] under the Agreement
by the due date”.
Termination — Compensation for loss of office
The written terms of the Defendant's contracts with Claimants purported to provide
that Subpostmasters had no right to any compensation for loss of office, irrespective
of whether loss of office and damage suffered thereby was due to breach or other
unlawful act by the Defendant:
62.1. In the SPMC: Section 1, paragraph 8: “The terms of the appointment of
Subpostmaster do not entitle the holder to be paid ... compensation for loss of office.”
62.2. In the Temporary SPMC: Clause 2.6: “The Temporary Subpostmaster is not
entitled to any of the following from [the Defendant}: compensation for loss of office;
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62.3,
In the NTC: Part 2, paragraph 17.11: “The Operator acknowledges that he shall
not be entitled to receive any compensation or other sums in the event of the
termination or suspension of the Agreement.”
Termination - Subsequent appointments
62.4,
62.5,
62.7.
The written terms of the Defendant's contracts with Claimants purported to
reserve to the Defendant an absolute and unfettered discretion as to the
appointment of prospective purchasers of the Claimants’ businesses as
Subpostmasters:
In the SPMC: Section 1, paragraph 9: “If on resignation of his appointment the
Subpostmaster disposes of his private business andlor premises in which the sub-
office is situated, the person acquiring the private business andlor the premises or
exchanging contracts in connection with the purchase of the private business and/or
premises will not be entitled to preferential consideration for appointment as
Subpostmaster.”
In the Temporary SPMC: Section 9: “In the event of termination of this Contract:
(1) any successor to the private business and/or Premises will have no claim to the
post of subpostmaster ...”;
In the NTC: Part 2, paragraph 19: “...On termination of the Agreement, the
appointment of any New Operator shall be entirely at the discretion of [the
Defendant]. [The Defendant] may, but shall not be obliged to, consider any
application for the operation of a Post Office branch at the Branch Premises made bya
genuine prospective purchaser of the Basic Business and the property interest at the
Branch Premises, but any such prospective purchaser shall not be given preferential
treatment in the application or appointment process.”
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Relational Contract and Implied Terms
Relational Contract
By reason of matters aforesaid, in particular the matters pleaded at 43 and 44 above,
the relationship between Claimants and the Defendant was properly characterised as
a “relational contract” (per Leggatt J in Yam Seng Pte Ltd v International Trade Corpn
[2013] EWHC 111), and as such, the Defendant was subject to a duty of good faith,
and obligations of fair dealing, transparency, co-operation, and trust and confidence,
governing the Defendant's exercise of all powers and discretions under the contract
and relating to the relationship arising thereby between the parties.
Implied Terms
vf its busine
Further or alternatively, in the context of the factual matrix and the proper operation
of the contracts, there were implied duties arising (i) by reason of the contract being a
relational contract, and/or (ii) by reason of business necessity and/or obviousness,
requiring the Defendant:
64.1. to provide adequate training and support (particularly if and when the
Defendant imposed new working practices or systems or required the
provision of new services);
64.1A_to provide hich, was, reasonably fit for purpose, including any or
aph 24
64.2. properly and accurately to effect, record, maintain and keep records of alll
transactions effected using Horizon;
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64.3.
64.5.
64.6,
64.8.
64.10.
64.11.
64.12,
properly and accurately to produce all relevant records and/or to explain all
relevant transactions and/or any alleged or apparent shortfalls attributed to
Claimants;
to co-operate in seeking to identify the possible or likely causes of any
apparent or alleged shortfalls and/or whether or not there was indeed any
shortfall at all;
to seek to identify such causes itself, in any event;
to disclose possible causes of apparent or alleged shortfalls (and the cause
thereof) to Claimants candidly, fully and frankly;
to make reasonable enquiry, undertake reasonable analysis and even-handed
investigation, and give fair consideration to the facts and information
available as to the possible causes of the appearance of alleged or apparent
shortfalls (and the cause thereof);
to communicate, alternatively, not to conceal known problems, bugs or errors
in or generated by Horizon that might have financial (and other resulting)
implications for Claimants;
to communicate, alternatively, not to conceal the extent to which other
Subpostmasters were experiencing relating to Horizon and the generation of
discrepancies and alleged shortfalls;
not to conceal from Claimants the Defendant's ability to alter remotely data or
transactions upon which the calculation of the branch accounts (and any
discrepancy, or alleged shortfalls) depended;
properly, fully and fairly to investigate any alleged or apparent shortfalls;
not to seek recovery from Claimants unless and until:
a. the Defendant had complied with its duties above (or some of them);
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64.13.
64.14.
64.15.
64.16.
64.17.
64.18,
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b. the Defendant has established that the alleged shortfall represented a
genuine loss to the Defendant; and
c. the Defendant had carried out a reasonable and fair investigation as to
the cause and reason for the alleged shortfall and whether it was
properly attributed to the Claimant under the terms of the
Subpostmaster contract (construed as aforesaid);
not to suspend Claimants:
a. _ arbitrarily, irrationally or capriciously;
b. _ without reasonable and proper cause; and/or
¢. in circumstances where the Defendant was itself in material breach of
duty;
not to terminate Claimants’ contracts:
a. arbitrarily, irrationally or capriciously;
b. without reasonable and proper cause; and/or
c. in circumstances where the Defendant was itself in material breach of
duty;
not to take steps which would undermine the relationship of trust and
confidence between Claimants and the Defendant;
to exercise any contractual, or other power, honestly and in good faith for the
purpose for which it was conferred;
not to exercise any discretion arbitrarily, capriciously or unreasonably;
to exercise any such discretion in accordance with the obligations of good
faith, fair dealing, transparency, co-operation, and trust and confidence;
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66.
64.19. to take reasonable care in performing its functions and/or exercising its
functions within the relationship, particularly those which could affect the
accounts (and therefore liability to alleged shortfalls), business, health and
reputation of Claimants.
The Claimants will rely on the following facts as indicative of the business necessity
and/or obviousness of terms required for the Defendant to provide adequate training
and support to Subpostmasters in essential elements of their role:
65.1. The SPMC included the following express terms in respect of training and
support to Subpostmasters in respect of Mailwork, at Section 24, paragraph 5:
5. [The Defendant] for its part will provide for:
51 Training in all aspects of Mailwork to include not only new entrant
training [but] also on-going training.
5.3 Sufficient levels of operational and administrative support to allow
the Subpostmaster to fulfil his obligations under the terms of the contract.
65.2. The Franchise Agreement also included the express terms set out at clauses 4
and 5 of the Franchise Agreement, pleaded at paragraphs 76 and 77 below.
Onerous and Unusual Terms
Further or alternatively, each of the terms set out at section B.2 above, with the
exception of those concerning Agency, Helpline and Access to Branch and Records,
were onerous or unusual terms and were unenforceable by the Defendant, unless the
Defendant can show that those terms were brought fairly and reasonably to the
Claimant's attention (Interfoto Picture Library Limited_v Stiletto Visual Programmes
Limited [1989] QB 433), as to which the Defendant is put to strict proof. The
Claimants will plead further, in response to any terms relied upon by the Defendant
in its Defence, in the Claimants’ Reply.
38
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BS
67.
68.
Bo
69.
70.
Unfair Contract Terms
Where terms are relied on by the Defendant as purportedly entitling the Defendant
(i) to render a contractual performance substantially different from that which was
reasonably expected of it, in respect of the whole or any part of its contractual
obligations, or (ii) to render no performance at all, the said terms are unenforceable
except in so far as each such term satisfies the requirement of reasonableness (Unfair
Contract Terms Act 1977 s3(2) and s17).
The Claimant will contend that the provisions identified as onerous and unusual
(above) are such terms. The Claimants will plead further, in response to any terms
relied upon by the Defendant in its Defence, in the Claimants’ Reply.
The True Agreement
There was an acute imbalance in the relative bargaining power of the Defendant and
the Claimants, and the written terms of the SPMC (and variations of it) did not
represent in truth what was agreed (applying the dicta of Lord Clark SCJ in Autoclenz
» Belcher [2011] UKSC 41, at paragraph 35).
In reality, and in the circumstances set out at paragraph 43 above, neither party
intended that the Claimants’ investments in goodwill or otherwise in the business
should or would be forfeited on 3 months’ notice:
70.1. without substantial cause or reason, established after a fair investigation and
consideration;
70.2. _ if the Defendant was itself in material breach of contract;
70.3. _ vindictively, capriciously or arbitrarily; or
70.4. in response to reasonable correspondence about (i) any apparent breach by
the Defendant, or (ii) alleged shortfalls and the difficulties faced by
Subpostmasters in investigating alleged shortfalls (such as in the case of Alan
39
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71.
Cl
72.
73.
734A.
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Bates and his letters dated 19 December 2000, 18 July 2001, 7 January 2002,
and 13 February 2002).
In the premises, the true agreement was that:
71.1. the Defendant would not terminate as set out in paragraph 70 above; and/or
71.2, the Defendant would not so terminate without giving such notice as the
court may hold to be reasonable (which the Claimants will contend was, on
any view, never to be less than 12 months).
CONTRACTUAL TERMS - OTHERS
ro} fice Employees
Implied Terms
All Claimants who were Crown Office employees contracted directly with the
Defendant, and the following were implied terms of those contracts
72.1. amutual duty of trust and confidence;
72.2. a duty on the Defendant to exercise any discretion honestly and in good faith
for the purpose for which it was conferred, and not arbitrarily, capriciously or
unreasonably.
These implied contractual duties encompassed the provision of training in relation to
Horizon, the provision of support in relation to Horizon, identifying and
investigating alleged shortfalls, any decision to suspend, the investigation of alleged
shortfalls, any decision to terminate and any decision to proceed to prosecute her (if
decided upon during the employment relationship).
The Defendan 1 Crown off
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74,
C3
75.
76.
Managers and Assistants
Rights of Third Parties
Claimants who were managers or assistants (in that they were employed by a
Subpostmaster to work within one of the Defendant's branches) rely on s1(b) of the
Contracts (Rights of Third Parties) Act 1999, in respect of the following terms in the
relevant Subpostmaster Contracts (as may be applicable), purporting to confer a
benefit upon them in relation to training:
a. Subpostmaster Section 15, paragraph 7.1, as set out at paragraph
2 above;
b. NTC Part 2, paragraphs 2.3 and 2.5, as set out at paragraphs 56.4.a and
56.4.c above; and/or
c, the implied terms (including, those arising under a relational contract)
pleaded herein;
d. any further similar or other terms as may apply in their individual case.
Franchise Agreements
The Defendant required individuals to establish companies for the purposes of
entering into Franchise Agreements, and required individuals to guarantee the
obligations of those companies. Otherwise in material respects, the factual
circumstances (including the financial investments made) were the same as, or
similar to, those set out at paragraphs 41 to 44 above, in respect of Subpostmasters.
Express Obligations of the Defendant
The Franchise Agreement included express initial obligations on the Defendant,
including at clause 4E: “Consultation (including consultation with the designated officers
and general management of the Franchisor) and advise with a view to enabling the Franchisee
to commence the Said Business including advice and consultation with regard to ... the
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77.
78.
he Defendant owed the
selection, training and supervision of staff, cash handling, security, accounting, book keeping,
advertising and the day to day operation of the Said Business.”
Further, at all times during the subsistence of the Agreement the Defendant was
subject to express continuing obligations including:
77.1. Clause 5B: “Provide the Franchisee with reasonable facilities for consultation with
the designated officers of the Franchisor in relation to the conduct of the Said
Business with a view to assisting and enabling the Franchisee to maintain the
operation of the System;”
77.2. Clause 5C: “Provide the Franchisee with advice, know-how and guidance in such
areas as management, cash handling, security, finance, promotion and methods of
operation to be employed in or about the conduct of the Said Business;”
77.3. Clause 5D: “Provide the Franchisee with a continuing service which, subject to the
provision by the Franchisee to the Franchisor of such information as the Franchisor
may reasonably require, will enable the Franchisor to monitor the performance of the
Said Business and to offer guidance to assist in the achievement and maintenance by
the Franchisee of standards of operation, service and product;”
Relational Contracts.
The relationship between the Defendant and Franchisees was properly characterised
as a “relational contract” (per Leggatt J in Yam Seng Pte Ltd v International Trade Corpn
[2013] EWHC 111), and as such, the Defendant was subject to a duty of good faith,
and obligations of fair dealing, transparency, co-operation, and trust and confidence,
governing the Defendant's exercise of all powers and discretions under the contract
and relating to the relationship arising thereby between the parties.
Implied Terms
aded at paragraph 634
above.
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80.
Further or alternatively, in the context of the true factual matrix and the proper
operation of the Franchise Agreement, the duties arsing by reason of the contract
being a relational contract and/or by reason of business necessity and/or obviousness,
the terms set out at paragraph ()°/ above were implied terms of the Franchise
Agreement (save to the extent such terms were already expressly provided).
CONCURRENT DUTY IN TORT
Further or alternatively, by reason of the facts and matters set out above, the
Defendant assumed a responsibility towards each of the Claimants giving rise to
tortious duties as follows:
80.1.
80.2.
80.3.
80.4,
Subpostmaster Claimants: the tortious duties owed by the Defendant to
these Claimants were concurrent with its contractual duties, as particularised
above at section B.
Crown Office Employees: the tortious duties owed by the Defendant to these
Claimants were concurrent with its contractual duties, as particularised above
at section ©.) C=!
Managers and Assistants: despite the absence of a written contract between
the Defendant and these Claimants, the Defendant in any event owed a direct
duty of care to them in tort, to exercise reasonable care and skill in the
provision of training and/or training materials and/or guidance in relation to
the use of Horizon and/or in relation to any acts imposing or seeking to
impose actual or potential liability for apparent or alleged shortfalls upon
them, or exposing them to the risk of the same.
‘These Claimants and the Defendant were in a proximate relationship and the
Defendant was aware that the failure to provide adequate training and/or
training materials and/or guidance in relation to the use of Horizon was liable
to expose these Claimants to the risk of suspension and/or termination and/or
claims for civil recovery and/or prosecution. This category of persons was
closed and identifiable and was in the Defendant's direct contemplation of
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81.
80.5.
AGEN
persons likely to be so closely and directly affected by the Defendant's acts
and omissions that the Defendant could reasonably foresee that these
Claimants were likely to be injured by the Defendant's acts or omissions. In
all of the circumstances, it is fair just and reasonable that the law should
impose such a duty of such scope upon the Defendant for the benefit of these
Claimants.
Directors or Guarantors of Franchise Companies: despite the absence of a
direct contractual duty between the Defendant and these Claimants, the
Defendant owed a direct duty of care to them in tort, to exercise reasonable
care and skill in the provision of training and/or training materials and/or
guidance in relation to the use of Horizon and/or in relation to any acts
imposing or seeking to impose actual or potential liability for apparent or
alleged shortfalls upon them, or exposing them to the risk of the same. These
Claimants and the Defendant were in a proximate relationship and the
Defendant was aware that the failure to provide adequate training and/or
training materials and/or guidance in relation to the use of Horizon was liable
to expose these Claimants to financial liabilities for or on behalf of the
Franchisee and/or other financial losses and/or claims for civil recovery
and/or prosecution. This category of persons was closed and identifiable and
was in the Defendant's direct contemplation of persons likely to be so closely
and directly affected by the Defendant’s acts and omissions that the
Defendant could reasonably foresee that these Claimants were likely to be
injured by the Defendant's acts or omissions. In all of the circumstances, it is
fair just and reasonable that the law should impose such a duty of such scope
upon the Defendant for the benefit of these Claimants.
The Defendant:
81.1.
effected, recorded and managed the reconciliation of transactions effected by
the Claimants;
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82.
84.
81.2.
81.3.
81.4.
815,
possessed and/or controlled the underlying transaction data in relation to
such transactions;
required Claimants to comply with contractual obligations in relation to the
keeping and production of branch accounts;
had the power to seek recovery from Claimants for losses relating to branch
accounts (as particularised at paragraphs 52.1 above); and/or
in fact sought recovery from the Claimants for apparent shortfalls.
Whereas the Claimants were agents of the Defendant for the purposes of dealings
with third parties, such as members of the public, the Defendant was the Claimants’
agent for the purpose of rendering and making available accounts and/or was under
an equitable duty to render accounts.
Further or alternatively, for the specific purpose of effecting, reconciling and
recording transactions initiated by the Claimants, the Defendant acted for itself and,
simultaneously, for the Claimants, as their agent.
The Defendant was thereby required:
84.1.
properly and accurately to effect, execute, record, and/or maintain and keep
records of all transactions which the Claimants initiated using Horizon or for
which the Claimants were potentially responsible;
to render and make available to the Claimant accounts (in accordance with
paragraph 84.1);
further or alternatively, where the Defendant alleged shortfalls to be
attributed to the Claimants, to comply with the duties averred at Paragraphs
64.3 to 64.11 above.
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86.
87.
88.
89.
90.
91.
FIDUCIARY DUTIES
The Defendant undertook to provide and manage the accounting system on behalf of
Claimants, in circumstances giving rise to a relationship of trust and confidence.
Further or alternatively, the Defendant undertook to provide information in respect
of transactions initiated by the Claimants to the Claimants:
86.1. upon which the Claimants relied or would foreseeably rely;
86.2. in which the Claimants, in all the circumstances, reposed confidence or had
no choice but to repose confidence.
Further or alternatively, the Defendant was the Claimants’ agent for the specific
purposes set out in Section E above.
Further or alternatively, the relationship between the Claimants and the Defendant
was one in which the Defendant had discretion and/or power; the Defendant was
able unilaterally to exercise that discretion and/or power to affect the Claimants’ legal
or practical interests; and the Claimants were vulnerable to the Defendant's exercise
of the same. The Claimants identify as particular examples of such discretion and/or
power the written terms set out at paragraph 51, 52, 54 and 62 above.
In all the circumstances, the Defendant owed the Claimants fiduciary duties as set out
in paragraph 84, in good faith and candour.
GENERIC BREACHES OF CONTRACT / TORT / FIDUCIARY DUTY
The Defendant breached its contractual and/or tortious and/or fiduciary duties to the
Claimants.
The breaches of duty particularised below are indicative breaches which are common
to all or some of the Claimants.
‘The Defendant failed to provide adequate training to Claimants in that it:
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93.
94,
92.1,
92.2.
92.3.
92.4,
92.5.
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failed to provide adequate training when Horizon was introduced;
failed to provide adequate training when new or different services were
introduced;
provided training which was primarily sales focused, and failed to provide
adequate training specific to:
a. balancing accounts using Horizon;
b. resolving apparent shortfalls;
c. — identifying the root causes of recurring problems; and/or
d. transaction corrections;
failed to provide adequate training in relation to the detailed content of
Operating Manuals (and/or updates to the same) issued by the Defendant;
and/or
failed to provide adequate training materials and resources for Claimants to
provide adequate training to staff employed or engaged by them.
The Defendant failed to provide adequate support to Claimants for the reasons set
out at paragraph 30 above.
The Defendant failed to make available transactional information via Horizon or
otherwise for a period and/or in a format which enabled Claimants to detect and
resolve errors, including understanding and challenging transaction corrections
issued by the Defendant in that:
94.1,
94.2.
individual transaction data was. not available to the Claimants for some
transaction types at any time (including on the day of the transaction);
transaction data which was available to the Claimants was only available in
branch for a period of 42 days (60. days after the introduction of Horizon
Online};
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94.3. transaction data outside the 42 (or 60) day period was not routinely provided,
even when requested or required in order to respond to a transaction
correction;
94.4, the Defendant failed promptly to make transactional records available to
Claimants where a discrepancy or apparent shortfall was identified; and/or
94.5. Claimants who were suspended were not able to access Horizon or any of the
electronic transaction data and/or were denied access to personal records held
at their branch.
ndant
95.
96.
ny.or edequat
By reason of bugs and/or errors or otherwise, the Defendant failed properly to
execute and reconcile all transactions which the Claimants initiated or effected
and/or to record and maintain accurate transactional records in relation to such
transactions.
Further in relation to the attribution of apparent or alleged shortfalls, the
Defendant:
96.1. failed properly to account for, record and explain all transactions and any
alleged shortfalls which were attributed to the Claimants;
96.2. failed to co-operate with Claimants in seeking to identify the possible or likely
causes of any such shortfalls and/or whether or not there was any shortfall at
all;
96.3, failed to disclose possible causes of the appearance of alleged shortfalls (and
the cause thereof) to the Claimants candidly, fully and frankly; and/or
96.4. failed to make reasonable investigation and fair consideration to whether the
apparent shortfalls represented real loss to the Defendant, and if so the cause
and/or reason such loss had arisen.
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97.
98.
99.
The Defendant further demanded payment in relation to such apparent or alleged
shortfalls before the Defendant had complied with the duties above.
The Defendant failed properly and fairly to investigate alleged shortfalls before
attributing them to the Claimants and/or seeking recovery from the Claimants and/or
suspending or terminating the Claimants’ engagement for a reason relating to alleged
shortfalls (including signed branch trading statements).
The Defendant suspended and/or terminated and/or subjected the Claimants to
pressure to resign in circumstances where:
99.1.
99.2.
99.3.
99.4,
99.6.
the Defendant was itself in material breach of duty for one or more of the
reasons set out above;
before the existence of a real loss to the Defendant, and if so the cause and
reason for such loss, had been established after reasonable enquiry and
analysis or at all;
without investigating and/or giving reasonable consideration to the
circumstances giving rise to the same;
the Defendant's approach (wrongly) put the burden of proof upon the
Subpostmasters - a burden which they were frequently unable to discharge
in all the circumstances;
without establishing causative fault by the Subpostmaster concerned and/or
the Defendant's contractual entitlement to recover alleged shortfalls; and/or
on the flawed and unreasonable basis that Claimants would only submit false
accounts to cover up their own theft (paragraph A.7 above) and/or without
taking into account the matters set out in section H below, practical pressures
and difficulties generated by the Defendant's own systems and requirements
and/or the practical realities faced by individual Claimants (paragraph 35.2
above).
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100.
101.
102,
103.
104,
105.
The Defendant pursued civil and/or criminal proceedings in relation to alleged
shortfalls in circumstances as set out at paragraph 99 above.
The Defendant impeded and/or unreasonably refused to consent to the subsequent
appointment of a new Subpostmasters or potential purchaser of branch premises.
The Defendant concealed from the Claimants the matters at paragraphs 23 to 25
above.
The Defendant (by its Helpline operators or otherwise) told or led individual
Claimants to believe that they were the only ones experiencing difficulties with
Horizon and/or discrepancies or apparent shortfalls and/or otherwise concealed the
extent to which others were in fact experiencing such difficulties.
By reason of matters aforesaid and/or otherwise by its acts or omissions the
Defendant:
104.1. acted in breach of the implied duty of good faith;
104.2. exercised powers and/or discretion affecting the Claimants arbitrarily,
capriciously or unreasonably;
104.3, acted in breach of the implied duty of trust and confidence;
104.4. failed to take reasonable care and skill; and/or
104.5. otherwise breached one or more of its specific duties in contract, tort and/or
equitable or fiduciary duties as particularised above.
Further or alternatively, the misstatements and/or misrepresentations (particularised
in Section H, below) are relied upon free-standing breaches of the Yam Seng duties set
out above, the duty of co-operation and/or the duty of trust and confidence (as the
context may admit).
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H.
106,
107.
Hl
108,
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ACTIONABLE MISREPRESENTATION & DECEIT
Some or all of the Claimants pursue claims against the Defendant for deceit negligent
misstatement, misrepresentation under section 2 of the Misrepresentation Act 1967
and/or deceit.
The representations, falsity and reliance pleaded below are indicative of the
representations and reliance which are common to all or some of the Claimants
pursuing such claims.
Representations
The Defendant, by its officers, Helpline operators, other employees, servants or
agents, expressly or impliedly, by words and/or conduct, made representations:
108.1.
108.2.
108.3.
that there were, in fact, shortfalls in the branch accounts and/or that they
represented real losses to the Defendant (when there were not any such
shortfalls or any shortfall that did exist was materially overstated);
that, in respect of those alleged shortfalls, the Defendant had investigated,
analysed and/or properly satisfied itself, alternatively had reliably
established:
a. _ that there were in fact such shortfalls; and
b. _ that they represented real losses. to the Defendant;
c. _ that they were attributable to the branch in question
(when the Defendant had not so investigated, analysed, established and/or
properly satisfied itself of the same);
that, pursuant to the contractual provisions between the parties, it was for
Claimants to disprove that any alleged shortfall was due to their own
negligence, carelessness or error, or that of their assistants {when the
contractual burden of proof in fact lay on the Defendant);
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109.
H2
110,
H3
li.
108.4.
108.5.
108.6.
108.7.
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that individual Claimants were, in each case, the only ones experiencing
difficulties with Horizon and/or discrepancies or apparent shortfalls (when
this was untrue, as aforesaid, and large numbers of people contacted or were
trying to contact the Helpline);
that defects, bugs or errors in Horizon were not a possible cause of apparent
shortfalls (when in fact they were, as now admitted by the Defendant);
that investigations which were carried out by or on behalf of the Defendant
were carried out fairly and properly, and/or had not excluded defects, bugs
or errors in Horizon as a possible cause of apparent shortfalls (when they
were not so carried out and had excluded the said problems with Horizon);
and/or
that there was no ability remotely to alter transactions in branch accounts
(which the Defendant now accepts to have been untrue).
The Claimants relied on those representations, as set out hereafter, as the Defendant
knew or ought to have known they would.
Ealsity
For the reasons set out above in parentheses and, further, above at paragraphs 23 to
27, 31 and/or 55 to above, the representations were false.
Lack of due care
The Defendant failed to take due care, or any or sufficient care, in making the said
representations. In particular, the Defendant:
W441.
11.2,
failed to take any or any proper account of the volume of calls being made to
its Helpline by Subpostmasters in relation to issues with Horizon and the
appearance of unexplained shortfalls;
failed to take any or any proper account of the possibility of Horizon causing
errors (that the Defendant now admits);
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4
122.
111.3.
111.4.
111.5.
111.6.
11L7.
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failed to take any or any proper account of problems and/or defects and/or
bugs previously detected within Horizon which had caused the erroneous
appearance of shortfalls in Post Office branches;
failed to instruct its Security Team investigators to have regard to possibilities
of bugs and/or problems with the Horizon system as being a potential cause
of otherwise unexplained shortfalls;
failed to instruct its auditors and/or contracts managers (or others) carrying
out investigations to have regard to possibilities of bugs and/or problems
with the Horizon system (including training deficiencies and hardware errors
or flaws) as being a potential cause of unexplained shortfalls;
approached and/or instructed its officers, investigators, servants or agents to
approach unexplained shortfalls on the basis that the Claimants had caused
them and/or were responsible for them, unless the Claimants could prove
otherwise; and/or
failed to exercise sufficient care and/or the necessary standard of care, in all
the circumstances, in particular: the relationship between the parties, their
proximity, the advantages of the Defendant in resources and access to
information, the dependence of the Claimants upon the discretionary exercise
of contractual power by the Defendant (subject to the matters pleaded above)
and the implications and potential seriousness of a finding of an alleged
shortfall for the Subpostmaster concerned.
Negligent misstatement
For the purpose of the claims for negligent misstatement, by reason of the nature and
proximity of the special relationship between the Defendant and the respective
Claimants, the Defendant owed the Claimants a duty of care, in making the
representations at Section H.1, yet made them carelessly and in breach of that duty,
owed by the Defendant to the Claimants to take reasonable care that the
representations were accurate and/or true.
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113.
HS.
114,
Hs.
115.
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In all the circumstances, it was reasonable for the Defendant to have appreciated that
the Claimants would rely:
113.1. upon the Defendant's ability to make careful inquiry or upon its particular
knowledge of the matters as to which the said representations were made;
and
113.2. upon the said representations for the purposes of (i) agreeing to accept the
existence of (alleged) shortfalls or responsibility for their having arisen, (ii)
agreeing to pay or otherwise satisfy the Defendant's demands in respect of
the same, (iii) recording the state of account of the branch and/or stating the
same to the Defendant, and/or agreeing the same; or (iv) entering into
compromise/settlement agreements with the Defendant
Misrepresentation Act 1967
For the purpose of the claims under section 2 of the Misrepresentation Act 1967,
Claimants entered into contracts constituted by (i) to (iv) in paragraph j-
6
2
above, after the said misrepresentations had been made by the Defendant and in
reliance upon and induced by the same. Accordingly, the Defendant is liable to the
Claimants for losses suffered as a result thereof, as if the Defendant had made the
said misrepresentations fraudulently, unless the Defendant proves that it had
reasonable grounds to believe and did believe up to the time the contract was made
the facts represented were true, as to which the Claimants put the Defendant to strict
proof. The Claimants are entitled to and claim rescission and/or damages pursuant
to section 2 of the Misrepresentation Act 1967 and claim the same.
Deceit
The Defendant made the said representations: (i) recklessly as to their truth or falsity,
{ii) having turned a blind eye to whether they were true or false and/or (iii) without
an honest belief in their truth; alternatively, the Defendant made the said
representations knowing that they were false.
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115.1,
115.2.
115.3.
115.4.
115.5.
PARTICULARS OF KNOWLEDGE
By reason of the Defendant's knowledge of the flaws in the Horizon system
particularised herein and the ability remotely to alter transactions (and/or
related underlying data), the Defendant knew or was reckless as to whether
apparent shortfalls were (i) not shortfalls, (ii) not necessarily shortfalls, (iii)
were not accurately or reliably recorded in their amount, (iv) were not
properly, alternatively reliably, attributable to the branch accounts and/or (v)
were not truly the responsibility of the Claimants;
The Defendant knew or was reckless as to whether the extent to which it had
(or had not) investigated, analysed and/or properly satisfied itself that there
were indeed such shortfalls and whether these represented real losses to the
Defendant attributable to the branch in question and (where such the
representations made as to this were false, as aforesaid) the Defendant was
thereby reckless as to, or aware of, the same;
The Defendant knew of (or was reckless as to) the terms and effect of the
contracts which it had imposed upon the Claimants, in standard terms
(which the Claimants had no opportunity to negotiate), which the Claimants
will invite the court to infer the Defendant carefully considered, and the
Defendant knew or should have known that the contractual burden was
upon the Defendant;
The Defendant knew or was reckless as to whether individual Claimants
were, in truth, the only ones experiencing difficulties with Horizon (of the
category or specific type being encountered by those individual Claimants)
and/or discrepancies or apparent shortfalls (when this was untrue, as
aforesaid);
The Defendant knew that, or was reckless as to whether, defects, bugs or
errors in Horizon were a possible cause of apparent shortfalls (as now
admitted by the Defendant);
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HL?
116.
117.
118.
119.
115.6. The Defendant knew that the said investigations were not carried out even-
handedly, fairly and/or properly, and/or the Defendant was reckless as to the
same;
115.7. The Defendant knew that the Defendant and its investigators had effectively
excluded defects, bugs or errors in Horizon as a possible cause of apparent
shortfalls and/or the Defendant was reckless as to the same; and/or
115.8. The Defendant knew that there was an ability remotely to alter transactions
in branch accounts (including the underlying data) and/or the Defendant was
reckless as to the same.
Reliance
The Claimants relied on the aforesaid misrepresentations and/or misstatements (and
were induced thereby) in: (i) accepting transaction corrections; (ii) paying, or
agreeing to pay, alleged shortfalls in circumstances; (iii) entering into
compromise/settlements. with the Defendant and/or (iv) otherwise taking action or
agreeing to take action to their detriment in respect of their engagement with the
Defendant and/or in the course of defending civil or criminal proceedings.
HARRASSMENT
Some or all of the Claimants further or alternatively pursue claims under section 3 of
the Protection from Harassment Act 1997, on the grounds that the Defendant
pursued a course of conduct, on more than one occasion, which amounted to
harassment and which it knew or ought to have known amounted to harassment.
The matters particularised below as constituting the course of conduct relied upon
are indicative acts which are common to all or some of the Claimants pursuing a
claim for harassment.
The Defendant's course of conduct consisted of:
119.1. demands for payment in relation to alleged shortfalls;
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120.
121.
119.2,
119.3,
119.4.
pressure to accept transaction corrections and/or to accept responsibility for
alleged shortfalls and/or to repay the same;
threatened or actual civil and/or criminal proceedings in relation to such
alleged shortfalls; and/or
steps taken in the course of such civil and/or criminal proceedings in relation
to the same.
DURESS & UNCONSCIONABLE DEALING
Some or all of the Claimants will (in the circumstances set out in Section A.7 above)
contend that they acted under economic duress and/or the Defendant dealt with
them unconscionably,
For the avoidance of doubt, the Claimants will contend that:
121.1.
121.2.
121.3.
121.4.
121.5.
there was an acute imbalance in the relationship between the Claimants and
the Defendant;
the Defendant could prima facie rely and did so rely, upon its standard
express terms of its contractual agreements which were replete with
provisions conferring power and discretion upon the Defendant and were so
operated by the Defendant;
further, the Defendant's practice was to construe the contracts such that the
burden of proof was on the Claimants, as aforesaid;
the foregoing put the Claimants at a serious or special situational
disadvantage and some of those who became increasingly desperate were
also under a constitutional serious or special disadvantage;
at all material times, the Claimants were in ignorance of the errors and bugs
in the Horizon system, as well as of the information (or some of it) from
which the underlying causes of alleged shortfalls could be identified;
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122.
123,
124,
125.
126.
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121.6. in reality, they were pressured to accept and pay to the Defendant sums
alleged to be shortfalls and to accept responsibility for the same;
121.7. in the premises, the Defendant acted unconscionably in taking advantage of
the situation as aforesaid;
121.8. further or alternatively, the Claimants found themselves in a position of
serious need or distress, in which the Defendant took advantage of the
weakness of their position;
121.9. in the premises, the Claimants acted under economic duress and/or the
Defendant dealt with them unconscionably.
The Claimants are entitled to and claim rescission of the above transactions and/or
damages and/or restitution.
MALICIOUS PROSECUTION
Some or all of the Claimants against whom the Defendant brought civil and/or
criminal proceedings further or alternatively pursue claims against the Defendant in
malicious prosecution.
The Claimants do not plead particulars of these claims pending the outcome of the
Criminal Case Review Commission review which is currently ongoing in relation to
the convictions of (currently) over 30 of the Claimants. The result thereof will inform
the pleading of claims on behalf of those Claimants, as well as others in a materially
similar position.
INJUST ENRICHMENT
Some or all of the Claimants who made payments to the Defendant of alleged
shortfalls further or alternatively pursue a claim for unjust enrichment against the
Defendant.
As to these Claimants:
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127.
128,
129.
M1
130.
131.
126.1.
126.2.
126.3.
126.4.
126.5.
In the premises, it is unjust and/or unconscionable for the Defendant retain sums
which it has obtained from the Claimants in these circumstances and, in any event,
that is so where the Defendant cannot establish that the alleged shortfall amounted to
they mistakenly believed they had an obligation to repay the alleged
shortfalls under the terms of their contracts with the Defendant;
the Defendant made misrepresentations to the Claimants as to their
contractual obligation to repay and/or one or more of the representations
particularised above;
the Defendant had not established their obligation to repay as required by the
contract;
the Claimants acted under economic duress; and/or
the Defendant dealt with the Claimants unconscionably as aforesaid.
a real loss to it.
LOSS AND DAMAGE
By reason of the matters aforesaid the Claimants have suffered loss and damage.
The following are indicative of the types of loss and damage claimed. Further details
in each individual case will be set out Schedules of Information.
Financial losses
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The Claimants have typically sustained financial losses arising from payment to the
Defendant of alleged shortfalls from their own resources and losses consequential
thereon.
Claimants whose appointments were terminated have suffered loss of their business
investments and consequential losses including reduced profit to linked retail
premises.
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132,
133.
134,
135.
137.
Claimants who were suspended or were terminated without notice have lost the
income they would have received during the suspension or notice period.
Claimants who lived in residential premises which were linked to their branch
suffered further losses consequent on termination of their engagements.
Stigma and/or reputational damage
Claimants who have been accused of dishonesty and/or excluded from their branch
or subject to similar treatment by the Defendant have suffered stigma and/or
reputational damage.
The Defendant's conduct in characterising the Claimants as dishonest or suspending
them or excluding them from the branch so as to create an impression of such
dishonesty, caused stigma and foreseeable financial loss in the form of loss of trade,
including to related retail premises, and/or caused prejudice to future employment or
business prospects.
Distress and related ill-health
Many Claimants suffered distress and some of them ill-health as a result of the
conduct of the Defendant, with some attempting to commit suicide.
Bankruptcy
Claimants who were made bankrupt or entered into IVAs on the basis of or as a
result of alleged shortfalls, were caused particular financial loss such as
disadvantageous assets, trustee's costs, distress and reputational damage.
Prosecution:
Claimants who were prosecuted suffered particular losses, including withdrawal of
credit, legal costs and loss of employment and eaming capacity.
Some also suffered community or custodial sentences, many of which are now
subject to the review by the CCRC as aforesaid.
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M6
140.
141.
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Exemplary Damages
Further and/or alternatively the Defendant has acted in deliberate and cynical
disregard of the Claimants’ rights and the Claimants seek exemplary damages.
Interest
The Claimants claim interest in accordance with s.35A of the Senior Courts Act 1981
on such sum in damages as the Court shall award at such rate and for such period as
it shall see fit to award. The Claimants claim compound interest in respect of their
claim for unjust enrichment.
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AND THE CLAIMANTS CLAIM:
(1) Declaratory relief as to the terms and/or nature of the legal relationship between the
Claimants and the Defendant.
(2) Damages, including aggravated or exemplary damages.
(3) Restitution and/or payment of money had and received.
(4) Orders for the taking of accounts and payment of sums found due on the taking of
such accounts.
(5) Rescission and/or damages and/or declaratory relief in relation to any agreements to
repay or other agreements relating to shortfalls which any of the Claimants entered
into.
(6) Further or other relief as the Court may think fit.
(7) Interest.
(8) Costs.
PATRICK GREEN QC
KATHLEEN DONNELLY
OGNJEN MILETIC
és Hartley, Freeths LLP
Dated: 23-March- 20376 fuly 2017
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IN THE HIGH COURT OF JUSTICE Claim No. HO16X01238
QUEEN’S BENCH DIVISION
BETWEEN:
ALAN BATES & OTHERS
Claimants
-and~-
POST OFFICE LIMITED
Defendants
AMENDED GENERIC PARTICULARS OF CLAIM
Henderson Chambers
2 Harcourt Buildings, Temple, London EC4Y 9DB
DX 1039 CHANCERY LANE
Freeths LLP,
1 Vine Street, Mayfair, London WI} OAH.
DX 37209 Piccadilly
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