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Message
From: Matthew Fielden
on behalf of I Matthew Fielden
Sent: 07/08/2014 07:4
To: Parsons, Andrew:
Subject: RE: Project Sparrow [BD-4A.FID20472253]
Andy,
Thanks, I have scanned the draft letter and Linklaters points off mobile and read Part 2 and associated
emails in detail yesterday. Happy to support drafting and proofing etc.
I agree with an initial holding response today flagging methodological and content concerns followed by
further more detailed response.
Matthew
sent from my Windows Phone
From: Parsons, Andrew!
Sent: 06/08/2014 22:0.
Belinda
Please find attached my working draft of the response to Part 2. I've incorporated the key points from
Linklaters in the covering letter
You'll see there are few issues where we need more information and I need to incorporate a number of the
points that POL have fired through in the last day or so. (It also needs a good check for typos but my
eyes are getting weary!)
Happy to chat through tomorrow.
Kind regards
Andy
Andrew Parsons
Senior Associate
for and on behalf of Bond Dickinson LLP
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From: Belinda Crowe} GRO
Sent: 06 August 2014-exrv18~
To: Chris Aujard; Angela Van-Den-Bogerd; Parsons, Andrew
Cc: Belinda Crowe
Subject: Fwd: Project Sparrow
Please see below from Linklaters. My aim would be to write to SS tomorrow making as many of these points
as are relevant as a placeholder for a more detailed response later.
I would also want to make the point that ss have been engaged continuously by Post Office since 2012 and
we would have expected that over that time they would have had sufficient opportunity to provide a more
substantive analysis than contained in the report.
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I would also want to make the point that the challenge over lack of facts/evidence/context is one we have
made a number of times. It is taking up considerable time and resource within Post Office to comment on
and provide input into products we are paying SS to deliver
Andy, would we be able to sit down tomorrow to draft this together?
chris, I understand you may be picking up some emails and if so many have a view on approach.
Best wishes
Belinda
Belinda Crowe
fRodric williams
“Band, Christa”
subj 2 Proj ry
Dear Belinda and Rodric
We have considered Second sight’s draft thematic report - part two (the final version Belinda sent us
yesterday). As discussed with Belinda, we set out some general, preliminary observations about the
report and Post Office’s relationship with Second Sight. We also set out some more detailed preliminary
comments on the report’s content, focussing, as requested, in particular on the section concerning the
Subpostmaste r contract.
We note at the outset that the report illustrates a broader concern about Second Sight’s role
within the Scheme and its relationship with Post Office. Pursuant to the engagement letter dated 1 July
2014 (the “Engagement Terms”), Second Sight are engaged by Post Office and are paid by Post Office to
provide services to the Working Group and Post Office in respect of the Scheme. Ideally, therefore,
they would only perform work when and as required and directed by Post Office or the Working Group.
Given how poor the standard of the report is (as discussed below), and Second sight’s track record in
this regard, we think now might be an appropriate time to take as much control over Second Sight’s role
within the Scheme as possible. For example, ordinarily, it would not be for Second Sight to dictate the
timeframes in which responses to their reports should be received. Indeed, in the ordinary course, in
our view, the work generated by Second sight to date, and even just this report alone, would justify the
termination of their engagement. But we appreciate that there are other considerations in this case -
such as pressure on and from the Working Group not to be seen to delay the complaint assessment process
any longer and public commitments given to persist with Second Sight - which mean Post Office does not
feel it has the flexibility it perhaps should to direct Second Sight or to take more serious steps. We
think, however, that Post Office should now seriously consider taking whatever further steps it sensibly
can to “rein” them in.
In the same vein, we also suggest_re-approaching the Chairman of the Working Group to seek his support to
help control Second sight, or at least letting him know what Post Office intends to do so that he is kept
abreast of its position and a mature dialogue with him can be established on this issue. Again, we
appreciate this may be difficult to achieve in practice given the position the Chairman has taken to
date, but suggest it may well be worth another attempt, in light of the quality of this report, the harm
it might cause to Post Office’s position if published to Applicants in its current form and the prospect
of the present difficulties with Second Sight persisting in future.
The report is well below the standard we would expect of a firm of “ “experienced accountants”
engaged to prepare an independent, evidence-based report. As with Second Sight’s previous work-product
the report largely fails to draw Conclusions from any of the issues which it identifies and seeks to
explore, and those conclusions it does draw do not appear to be based on any facts or evidence available
to Second Sight. It also opines on issues and facts on which Second Sight_are not qualified to opine, or
are not reasonably within their remit i.e. because they are not sufficiently connected with Horizon
Plainly, the report does not serve Post Office’s interests. From a wider perspective and perhaps more
importantly, the report does nothing to advance the Applicants’ positions either or assist the
satisfactory operation of the Scheme. It will create even more unrealistic expectations and make
settlement or other resolution of claims even harder. This point should be made clear to the working
Group, and the Chairman in particular, in order to ensure that to those whose opinions matter, if and to
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the extent it is not finalised in an acceptable form, the report reflects much more poorly on Second
Sight than it does on Post Office
. we think that in replying to Second Sight initially, the Post Office should stress that the
report should not be sent to any Applicant unless and until the Post office has approved it. we
understand that nonetheless, the Working Group may allow the report to be sent to each Applicant as part
of the package of documents they receive after Second Sight assess their case. In that case, it goes
without saying that Post Office should make every effort to have the report sufficiently amended such
that it is in a more acceptable form. If the report is not finalised in a form acceptable to Post
office, we understand Post Office intends to prepare a document responding in detail to the report which
will be sent to Applicants at the same time as the report. We agree with that approach
In order to respond properly to the report, we suggest Post Office first deal with points in
the report which are based more soundly in fact and which appear (at least on their face and even if
outside the scope of Second Sight’s engagement) to be the more reasonable areas of complaint - e.g. the
operation of ATMs or sale of lottery tickets after hours. We suggest if a reasonable explanation cannot
be given for these points in the first instance, Post Office should volunteer to do more work itself to
determine the facts behind these issues.
Section 2 of the report - the Subpostmasters’ contract
To give context to Second Sight’s commentary on the Subpostmasters’ contract (the “Contract”), and the
report generally, we have identified the following key provisions of the Engagement Terms.
Clause I 2.1 - the Scheme has been set up to resolve Subpostmasters’ concerns about “Horizon and associated
issues”
Clause 2.2 - Second Sight is a member of the Working Group whose role it is to oversee the Scheme and
assist investigating individual complaints.
Clause 2.3 - Post office has engaged Second sight to provide Services to the working Group in relation to
the scheme.
Para 1 of Sch 1 (Scope of Services) - this defines the Services Second Sight are engaged to provide.
These are: serving as a Member of the Working Group, advising, as requested by Post Office or the Working
Group, on the format style and content of documents submitted by Post Office and/or Subpostmasters during
the Scheme, investigating specific complaints raised by each Subpostmaster and assisting with reasonable
requests made by the working Group or Post Office.
Para 2 of Sch 1 - Second Sight must conduct the Services in furtherance of the objectives of the Scheme
as set out by the Working Group.
Para 4 of sch 1 ~ Second sight is to act independently in providing the services and assessments or
opinions it gives shall be without bias and based on the facts and evidence available
Para 5.1 of Sch 1 - in providing the services, Second Sight shall act with the skill and care of
qualified experienced accountants and it is acknowledged that matters relating to criminal law and
procedure are outside $S’s scope of expertise and accordingly SS shall not be required to give an opinion
in relation to such matters
As a general comment, we do not think that Post Office should be overly defensive about the contract.
There are several good reasons why it is reasonable and, indeed, typical of contracts of its kind and why
concerns raised by Second Sight as to its “fairness” are groundless. In particular, the following could
be said in response to what Second Sight say in section 2
1 Second sight, as a firm of accountants, are not qualified to opine on legal matters, including
issues concerning the “fairness” of the Contract or any criminal matters. Nor have they been engaged
under the Engagement Terms to do so, especially as such matters are not reasonably related (or related at
all) to issues “concerning Horizon and any associated issues”. Accordingly, any assertions they make or
conclusions they draw on this issue necessarily carry little or no weight.
2 The Contract is essentially an arms-length, commercial transaction. The concept of freedom of
contract means that Subpostmasters can, ultimately, choose whether or not to enter the Contract if they
are not happy with its terms. Post Office should confirm whether it is aware of any instances of
Subpostmasters somehow being prevented from seeking legal advice before becoming Subpostmasters. No
doubt this is unlikely and if true, a rare exception.
3 We understand that a body representing Subpostmasters, the NFSP, negotiated the terms of the
Contract on behalf of Subpostmasters. Indeed, in a network of several thousand Subpostmasters, it is
reasonable to expect the contract to have been negotiated in that way. It would be impractical and
potentially unfair to certain Subpostmasters for the Contract to be negotiated on an individual basis by
each Subpostmaster before he becomes a Subpostmaster
4 The risk allocation under the Contract is typical of and reasonably expected in contractual
arrangements of this kind. It is a contract of agency. Agents (Subpostmasters), by definition, have
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custody and/or control over the principal's (Post Office’s) assets and interests and are engaged by the
Principal in order to protect, safeguard and further the principal’s interests on his behalf. In this
case, Subpostmasters are necessarily responsible for ensuring the safe-keeping and proper accounting for
the revenue generated for Post Office throughout the Subpostmaster network. Accordingly, the risk
allocation in the Contract properly reflects the role the Subpostmaster plays, including the level of his
control and responsibility for and trust placed in him by Post office with respect to Post Office’s
assets. That allocation is in any event reflected in the general law e.g. in the form of the equitable
duty of an agent to account to his principal.
Thousands (and the vast majority) of Subpostmasters have not complained about the allocation
Of risk under the Contract and have been signing up to it for two decades. The issues raised by Second
Sight represent the views of a very small, self-selecting proportion of Subpostmasters, if they represent
the views of any at all.
6 unless Second Sight can substantiate any instance in which an Applicant’s entry into the
Contract was the subject of any undue influence, unconscionable conduct on the part of Post Office or any
other “unfair” circumstances, then the concepts of fairness or bias are legally meaningless in this
context. Further, Second Sight should be asked to explain what they mean by “bias” in this context, or
for that matter, what they mean when they say that appropriate risk mitigation measures may not have been
implemented by the Subpostmasters. It is not clear to us what they mean by these things.
7 The “fairness” or otherwise of the risk allocation under the contract is, we assume, not the
subject of any specific complaint within the Scheme. If that is the case, it is not a matter which falls
for consideration in the Scheme or in any work-product Second sight should be preparing
8 Post Office should investigate Second Sight’s allegations as to the terms of the Contract not
being brought to the attention of Subpostmasters adequately or at all. Second Sight refer to an
“acknowledgment of Appointment” letter. Post office should confirm the process for signing up
Subpostmasters to the Contract and where possible refer and explain in their response to Second Sight al
steps that are taken, including the acknowledgement letter, to bring the terms to their attention before
they commence their role.
The report generally
As discussed with Belinda, we suggest that a detailed response to the report should be prepared in due
course after full consideration and investigation of the relevant factual issues it seeks to raise. Wwe
are not able in the time available to set out a comprehensive commentary on the report, nor do we have
access to the facts to do so, but make these brief observations at this juncture. We do not suggest
these points be shared with Second Sight at this stage, i.e. while they are unallied to substantive
responses to the factual points Second Sight raise
a) The report in several instances refers to “Subpostmasters” generally rather than “Applicants”. It
fails to draw conclusions in many places, thus leaving unhelpful ambiguous and speculative assertions on
which readers are then left to draw their own conclusions. It lacks examples or statistics to
substantiate the largely speculative conclusions it does draw. These matters suggest to us and would
suggest to any reasonable reader, that the report is not intended to reflect only the specific subject
matter of complaints made in the Scheme and that Second sight have a wider agenda. They also suggest the
report is largely not or not adequately based in fact and the available evidence, as the Engagement Terms
require.
b) As mentioned, the report refers to several matters outside the expertise of “qualified experienced
accountants” or matters which are expressly out of scope. See e.g. section 2, references to high street
banks’ usage of ATMs (3.5), opinion as to “system design error” with respect to automatic transaction
reversals in Horizon (10.3), criminal issues such as sections 13 (Pensions and Allowances) and 22 (Post
office investigations).
c) The report refers to matters that have little or nothing to do with the subject matter of the Scheme —
j.e. Applicants’ concerns with the functioning of Horizon and associated issues. See e.g. the contract
commentary in section 2, ATMs (section 3), Motor Vehicle Licences and the misprinting of bar codes
(section 4), cash and stock remittances (section 11), Post Office's data retention policy (section 14)
cash withdrawals accidentally processed as deposits and other counter errors (section 16)
We are happy to comment on and otherwise assist Post Office with the preparation of the proposed detailed
response to the report. Please do let us know how we can help or if you have any questions or comments
about the points above
Kind regards
Jonathan
From: Rodric williams +
Sent: 01 August 2014 177177"
To: swil, Jonathan
Cc: Belinda Crowe; David Oliver:
Subject: Project Sparrow
Jonathan,
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We have not yet received Second Sight’s “Part Two” report, but will forward this to you as soon as it
comes jn.
I do however attach an email containing a pdf of the first draft of this report, Section 2 of which sets
out SS’s “commentary” (for want of a better word) on the standard subpostmaster contract.
As we discussed yesterday, could you please help us prepare a form of challenge to SS’s commentary on
Section 2, which ideally would compel ss to either remove or neutralise that section from the Report, or
failing that, provide a response to the commentary which could be read alongside it
In case it assists, I also attach an email with the Engagement Letter we have with ss. Para 5.1 of the
Schedule may provide a bit of a hook ~- if Ss are required to “act with the skill and care expected of
qualified and experienced accountants”, to me that means they have agreed not to stray into other areas
of expertise, e.g. contract law
with thanks for your assistance,
Rodric
Rodric williams I Litigation Lawyer
148 Old Street, LONDON, EC1V 9HQ
Post office stories<http://ww.postofficestories.co.uk/>
@postoffi cenews<http: //www. twitter. com/postofficenews>
¥
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