POL00006754
POL00006754
Subject to legal privilege — do not forward
Post Office Limited
Postmaster Litigation Subcommittee
MINUTES OF A MEETING OF THE POSTMASTER LITGATION SUBCOMMITEE OF
POST OFFICE LIMITED (THE “COMPANY” OR “POL”) ON TUESDAY 15 MAY 2018
AT 11.30 AM AT 20 FINSBURY SREET, LONDON EC2Y 9AQ
Present: Tim Parker Chairman (TP)
Paula Vennells Group Chief Executive (CEO)
Alisdair Cameron Chief Financial and Operations Officer (CFOO)
In Attendance: Anthony de Garr (AdGR)
Robinson,QC
David Cavendar, QC (DC)
Andrew Parsons Partner, Womble Bond Dickinson (AP
Jane MacLeod General Counsel & Company Secretary (JM)
Tom Cooper UKGI (TC)
Veronica Branton Minute Secretary (VB)
Patrick Bourke Corporate Affairs Director (PB)
Rod Williams Head of Legal: DR & Brands (RW)
Mark Underwood Head of Portfolio: Legal, Risk & Governance (MU)
Apologies: Ken McCall Senior Independent Non-Executive Director (KM)
These minutes contain legally privileged information which was ACTION
discussed with both internal and external counsel in
attendance.
General Update on Litigation Strategy
The Chairman welcomed David Kavanagh, QC, and Anthony De Garr Robinson, QC, to
the meeting.
David Kavanagh explained his thoughts on the interim opinion on the Merits Case
Overview of litigation
561 claims, existing and previous PMs . Damages for loss of office and in assoc with
other businesses they ran at PO. 23 contractual issues in Nov phase 1 phase 2 Horizon
phase 3 — breach, causation and loss to apply to a range of the specific cases sometime
in 2019 (breach and causation will look and limitation and settlement). Judge has
strong views on where he wants to go with this
Work out in common issues trail what the contract means. Phase 2 work out how the
computer sustye worked. Phase 3 — apply the finding s of the 1* trail to the cases
brought
Cl trial — what king of relationship those docs in the round constitute . We say business
to business but could be interpreted differently. Not straightforward because of the
drafting og the contracts esp the older ones.
Idea of good faith into contracts, esp relational contracts (emg long ter arrangements).
New law. Unclear what a general duty of good faith would mean.
The way these claims are running isn’t particularly normal. They may re-jig their case to
make it better. Overall view is that the PO has the better of args in most 23 args. Don’t
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POL00006754
POL00006754
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Post Office Limited
Postmaster Litigation Subcommittee
think it likely that the good faith claim will be upheld but is material there for him to do
so (bit of a one sided contract. Etc) but in that case would advise PO to appeal.
1. Stirling & Maitland — says you can do nothing to impede performance by the
other party. May impact on the duty to give training and assist PMs in
understanding shortfalls.
2. Necessary cooperation
Common opinions — earliest judgement date likely to be January
Duty to account — claim is that it’s for the PO to show reasons for shortfalls. PO says
only PMs ran the branch and the burden is on them to show reasons for shortfall.
Standarf requirements for an agent. PMs say they acting under duress when signing
their trading accounts (but not a common issue would come out in phase 3). Adequacy
and training would come out in the breach trial.
Right to suspend and terminate — natural justice arg. 3 month/ 6 month termination
right not seen as reasonable should be 12 months. Expressed term of a business to
business contract is our argument. Suspension must be based on reasonable grounds.
Not generally difficult to fulfil that requirement. But may be cases where there weren’t
reasonable ground for suspension
3 months a short period for termination of a contract of this type. Vulnerable may be
hard to defend. Sometimes the contract was not signed or had no chance to read
before signing.
Does court take into account that they’re dealing in cash. Yes, that would be a factor
that the court would take into account.
Might say that in no circumstances is there scope for us to be malicious in
termination??
Not many cases where you would want to suspend somebody without having
reasonable grounds.
Going to future preparing for first two trials.
Has there been a loss for which they’re making a claim?
Ist two stages, stages to the final trail. Judge was keen to hive off the horizon trail. If
we can show it’s a generally dependable system it strengthens our case in the third trail
putting a requirement on claimant to show how the computer system didn’t work.
Preps for common issues trail in Nov. Don’t see there’s anything to settle at the
moment. But always need to consider the option of settlement (other side keen on
this). Ordered mediation. At some point may be an issue with the funder.
Into second trail in March. Little scope to make useful connection between the two
trials given the timescales. Ordered mediation will overlap with preparation of the
Horizon trial.
Herd mentality with group funding. Once you start to pick people off there will be splits
within the group.
Mediation would normally be at a high level but your would normally be able to
identify categories of cases. There will be good and bads cases in the mix. Have v little
information about the individual claims which makes it difficult to break them into
different categories. V resistant to giving us this information. We might get better
infor in the mediation than we have been able to in the proceedings.
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Postmaster Litigation Subcommittee
In relation to PMs who were terminated the claims on terrible consequences of this (eg
bankruptcy) there is a cap based on the period of six months of whatever the
termination period is. They’re not disagreeing with this. Cap to the amounts they can
claim. Not facing massive loss of an uncapped sum.
Al—cap we continue to impose conditions on current PMs if we lose the case in court?
Wouldn’t have to do something the next day but would be taking a risk if you didn’t
take steps to do something materially different if that is what the judge is proposing.
Should we be thinking about changes in advance of the judgement? Would that affect
the case? Think that could be managed though the other side would try and make use
of it. Wouldn’t be helpful to the legal argument but could be helpful commercially.
Could keep the existing terms but decide not to apply them?
Issue more where we’ve terminated for cause and we don’t have a cause. Swings and
roundabouts because if we give six months we’d be expecting six months’ notice in
return.
Contracts entered into between businesses. But significant upfront investment from
the PO which they only recoup over a significant period of time. But how many people
does this apply to (ie termination on 3 months’ notice at an early stage).
Al more concerned about the requirement for us to account for the losses. If we lose
on that then can we keep giving money to PMs?
The clause in the contract could be redrafted to make clear that the requirement
extends to paper losses. IT would be tricky if Horizon to has shown to have inserted to
put fictitious figures into branch accounts which weren’t then picked up by our
reconciliations process this could be v difficult.
Tim — think we should be proceeding on the basis that our position is right. Sequential
trials and issues, continue to receive updates and advice. From our perspective there
are no decisions we are being asked to take now? Will come back to us before the trial.
One of the bigh milestones will be when they decide to serve their evidence. Once
we've seen this we'll have a much clearer idea of where they’re seeking to go and
we've plugging in our feedback on this provisionally for September 2018.
Not within our power to stop these two trial phases going ahead.
Two cards to play — contract isn’t what it claims to be. Card 2 — Horizon flawed and
causes rouge figuries to go into branch accounts. Knockout blows because they apply
across the board. Things like training have to be proved on a more case by case basis
with variations across both time and area. Looking in detail at 561 cases costly and less
attractive to a funder.
Don’t think the court’s IT expert has got to grips with Horizon yet.
Tom — why is Horizon a killer blow? Aren’t things like training/ failure to provide
adequate training as problematic.
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Postmaster Litigation Subcommittee
Any view on how many of the 23 claims they’re likely to win? 5 or 6 significant issues
where it’s not straightforward (go away and provide a summary?) Need to manage the
comms angle and work out the implication.
Do a piece of work on impact of losing any of the 23 terms. Aiming to bring this back in
about July. Looking at mitigations and what we could do now in addition to wait we do
if we did lose. Interesting to hear QCs views on most contentious of the 23 issues.
Not more business to be conducted at this point.
Unsettleable at the moment. Would pay off actually settle the case. Would probably
end up with new litigants.
With rather be PO than the claimant. But will be some difficult issues and reasonable
claims. Eg contracts not signed, guidance and support imperfect. But don’t have a
sense of an avalanche of valid claims coming our way.
Will need to take a view of things that may not be costly in financial terms but are in PR
terms
Tactical issue to be wrestled with in the next few months. Stirling & Maitland. They will
be asking fo a totally different model of the world to us (ie not business to business).
Judge will have to identify a point in the spectrum. Args about a vulnerable group of
people and judge may wish to concede some points. Normally would arg to give way
on your weakest points but may wish to leave some for the judge to give way on. Need
to be mindful of how much of this is just to general line about big business oppressing
the little man and how much more significant.
Have to take advice and offer up things are required. Need to be aware if they are
playing the comms in a particular way. Need to be willing to stand up and not give way
just because there is bad publicity
Don’t know how much they are funded up to. Don’t think original funding was enough
and this is being renegotiated currently. The funding id held offshore. Remember this
for our comms.
ARA about to be signed. Discloses fact of the litigation but doesn’t but in any provision
for this but we are expecting some cases to go against us. Should we be providing for it
now. Impossibel to value it at the moment.
Protocol — sharing info with UKGI. Drafts have been going backwards and forwards.
Rod having a meeting this pm. Getting close to having something we’re happy with.
Sequence of meetings eg board has to be briefed in advance of the shareholder. Being
flexible about how those briefing occur.
Have conversation about the scope of the briefing required we believe it’s v imp to
maintain privilege and that we should prepare the briefings. Potential issue that could
arise out of this? Issue potential loss of privilege depending on how the information is
shared / dealt with.
Briefing to ministers which are transmitted onwards/ FolAs etc.
Tom - Main issue is to build confidence with ministers and stiffen their backs for loss on
some of the points.
Strictly Confidential
3.4
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Briefings won’t cover the detail but will help it to be understood better.
Paula happy to go and talk to the main people at BEIS. Face to face briefing sharing the
colour the most helpful thing.
Protocol
Opinion on the Common Issues
Next Steps, including Contingency Planning
UKGI Protocol
Minutes
Any Other Business
Application for security for costs
The proposed application for security for costs was noted. Mr Parsons
advised that an application for security for costs was not unusual and
that based on the ongoing discussions, he believed that a consensual
agreement could be reached without the requirement for a court order.
Protocol for engagement with UKGI
The request from UKGI for regular briefings on the progress and status
of the litigation was discussed and it was noted that UKGI and Post
Office were discussing a draft protocol to enable such information to be
shared. The Committee noted that such briefings could involve legally
privileged information and that it was important for such privilege to be
maintained.
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POL00006754
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Post Office Limited
Postmaster Litigation Subcommittee
Contingency planning
The Committee requested work to be undertaken on contingency plans
should the outcome of either or both of the two trials be adverse to Post
Office Limited.
It was reported that A VDB was leading on this work and that the
Committee would receive regular updates.
CCRC
It was noted that 33 former Postmasters had applied to the Criminal
Cases Review Commission (‘CCRC’) to review the terms of their
convictions. Mr Williams noted that Post Office was cooperating fully
with the CCRC and we believed that they were nearing the end of their
investigations. Nevertheless, Post Office considered it unlikely that a
decision would be made public before the conclusion of the Horizon trial.
The Committee noted that the outcome of the CCRC work could be that
cases were referred to the Court of Appeal.
AOB
Next meeting.
It was noted that at the next meeting on 15 May 2018, Post Office’s
appointed QCs would attend to discuss the progress of the case.
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