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Briefing Paper
Meeting on 17 October 2018
with
Kelly Tolhurst MP, Parliamentary Under-Secretary for the Department for Business,
Energy and Industrial Strategy (BEIS)
and
Alex Chisolm Permanent Secretary for the Department for Business, Energy and
Industrial Strategy (BEIS)
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Table of Contents
Executive Summary
Background to the Litigation
Key issues at Trial in November
Operational Improvements already Underway
Contingency Planning
Communications Strategy
Settlement Options
NOMS WNE
Appendices:
Common Issues (including terms to be implied in to the contract by the Claimants)
Questions to be addressed at the Horizon Trial in March 2019
Contingency Planning - High Likelihood Areas
Contingency Planning - High Impact Areas
Contingency Planning - Key Mitigating Actions
Key Communications Messages
Background to the 6 lead claimants
QOnrmMmoOOWP
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Executive Summary
Context
1.1 Post Office Limited has been requested to provide a briefing to the Parliamentary
Under-Secretary of the Department for Business, Energy and Industrial Strategy
(‘BEIS’) and to the Permanent Secretary for BEIS on the upcoming “Common
Issues” trial in the Post Office Group Litigation, Alan Bates & Others v. Post
Office Limited, in the Queen’s Bench Division of the High Court of Justice of
England and Wales, before Mr Justice Fraser commencing on Monday 5
November 2018.
What is the case about?
1.2 The case represents the culmination of a series of campaigns by disaffected
postmasters and others (including a number of MPs on both sides) who believe
that Post Office wrongly attributed branch losses to those postmasters and that
as a result, they suffered financial and reputational harm. A theme of these
campaigns is that flaws in Horizon (the in-branch point-of-sale system) were
the cause of these losses.
1.3 The Managing Judge has determined that the case will be heard in a series of
trials. The first, which is to be heard in November, will address a series of
‘Common Issues’ - essentially, to determine as a matter of legal construction,
the proper meaning of the contract between Post Office and its agents, and
whether certain additional terms should be implied into the contract.
1.4 Post Office’s external Counsel believe that Post Office has the stronger
arguments on most of the Common Issues, nevertheless they caution that Post
Office is unlikely to be successful on each and every one of the Common Issues,
given the judicial tendency to provide a degree of balance between the parties.
In their view the areas likely to be most problematic for Post Office are the
clauses dealing with suspending and terminating postmaster contracts
(including the length of notice to be provided), withholding remuneration during
periods of suspension, and imposing liability for branch losses - which turns on
the question of whether a shortfall of cash or stock in branch causes an actual
‘loss' to Post Office.
What will be the impact of the decision?
1.5 The Common Issues trial will not address questions of breach, causation and
loss, and there will be no award of damages as a result of this trial.
1.6 Post Office has a continual programme of operational improvement and the
outcome of the case will not affect that approach. In conjunction with our
external legal team, management has assessed the likelihood of adverse
outcomes and the operational and financial impacts of such decisions. While
there are a number of areas which Counsel consider to be more problematic,
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Post Office management believe that the operational impact of an adverse
outcome on these issues is manageable. Those arguments which would have
the greatest adverse impact on Post Office, are assessed by Counsel as being
less likely outcomes.
1.7 Nevertheless, Post Office has developed contingency plans against the possible
outcomes and is currently aligning these with the operational improvement
programmes, and developing other risk based mitigation plans.
How much attention will it attract?
1.8 While we do not expect there to be any material ‘new news’ to emanate from
the trial, there are some reporters and media outlets who have been covering
these issues over a long period, and significant interest from the group of 561
Claimants. We are therefore preparing for significant adverse media attention
during and after the trial.
1.9 Nevertheless, and consistent with the management of media around the
Panorama programme in 2016, and the BIS Parliamentary Select Committee
enquiry in 2015, Post Office believes that with an effective communications
strategy this media interest will be short lived; and that our planned response
should materially defuse any adverse impact.
1.10 We are also taking steps to increase our proactive media campaign to highlight
the wider story of the Post Office’s commercial success and innovative future.
1.11 We are therefore launching brand campaigns in the Midlands and London/SE
during October and November, and we will attempt to generate media interest
in positive stories on the Banking Framework, the acquisition of Payzone which
is expected to complete before the end of October and digital innovation, as well
as the annual Christmas. campaign.
Engagement with Major Stakeholders
1.12 Post Office management has regularly apprised the Post Office Board of
developments in the case since its commencement, and over the last 12 months
has maintained a regular dialogue with UKGI to ensure that the Shareholder
was aware of developments. At this stage Post Office believes that any remedial
actions will be within the authority of the Post Office Board as set out in the
Articles of Association. However it is possible that certain outcomes could
trigger a request for shareholder involvement. These could include settlement
discussions (which Post Office believes are unlikely to be attractive to the
Claimants unless they exceed c£30m), and consequential impacts such as a loss
of confidence in the Post Office such that significant numbers of agents withdrew
from the network, thus impacting the Network size criteria.
Settlement
1.13 The Post Office Board has regularly considered whether settlement options
should be explored. While the financial and operational impact of an adverse
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outcome would be material, settlement prior to the Common Issues and Horizon
trials will not, of itself, resolve the wider issues underlying the trial, and Post
Office would remain open to similar complaints from any current or former
postmaster who we required to make good branch shortfalls; this number would
be material. Further, settlement would not resolve the issues of confidence in
the Horizon system which are now beginning to have an operational and
financial impact on the branch network.
1.14 While we are not expecting sudden changes in the need for support, whether
that be political, financial or otherwise, Post Office has been asked to consider
what, if any, it may need during and subsequent to the upcoming trials. Whilst
we believe that our existing rules of conduct around delegated authorities
coupled with current levels of engagement make are appropriate, we may need
support in escalating conversations as required.
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2. Background to the Litigation
2.1 Transactions at Post Office counters are undertaken on the Horizon system.
Post Office estimates that c50,000 people use the system each day across
the network and that around half a million employees, agents or employees
of agents have performed transactions on it since it was introduced in 1999.
2.2 In 2012 a small number of (mostly former) postmasters, under the banner
of the “Justice for Subpostmasters Alliance” (JFSA) and with support from
some MPs led by then MP (now Lord) James Arbuthnot, claimed Post Office’s
Horizon IT system had caused losses (shortfalls in physical cash against cash
holdings recorded on Horizon) which they had had to make good.. In some
cases they had been prosecuted for these losses (usually for false accounting,
theft or both) while, in other cases, they claim that it led to their contracts
with Post Office being terminated causing them financial loss and other
personal harm including bankruptcy, divorce and emotional distress including
suicide.
2.3 In response to these assertions, Post Office appointed independent forensic
accountants Second Sight to perform a ‘top down’ examination of Horizon.
Second Sight issued a report in July 2013° which concluded there was no
evidence of system-wide (systemic) problems with the Horizon software but
identified some areas where Post Office could have done more to support
individual postmasters.
2.4 Asa result Post Office set up a Branch Support Programme which led to the
introduction of important new measures in areas such as branch operation
practices, processes and support. Further, in the autumn of 2013 Post Office
established the ‘Complaint Review and Mediation Scheme’ as an avenue for
postmasters and-counter clerks (both former and serving) to raise individual
concerns. The scheme was set up in consultation with MPs, the JFSA and
Second Sight.and was overseen by a working group, chaired by a former
Court of Appeal Judge.
2.5 From 150 applicants, 136 were accepted into the scheme. Many cases were
based on allegations which were vague and or not supported by the evidence
and no evidence of systemic flaws in the system was found; rather the
investigations (by both Second Sight and Post Office) found that the main
reason for losses in the majority of cases was “errors made at the counter”
by the postmaster and or their staff.
2.6 The process of resolving cases became challenging in an environment
increasingly driven by JFSA campaigning for large financial settlements which
were not justified by investigation findings, and or for the scheme to be used
as a platform for overturning postmasters’ criminal convictions, which is
something only the criminal courts could deliver (37 cases in the scheme
involved criminal convictions).
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2.7
2.8
2.9
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Post Office has never publicly discussed the detail of the individual cases that
were put forward (we promised confidentiality) and were therefore
constrained in its ability to fully counter some of the media and Parliamentary
criticisms generated by the JFSA’s campaigning, which centred on some
undoubtedly sad, but highly selective, histories of a small number of cases.
In the spring of 2015, following completion of all of our investigations, Post
Office took the decision to offer mediation for all cases which remained in the
scheme except those that had been subject to a previous court ruling.. This
accelerated the scheme and also ensured that the commitments made to
applicants at the outset were met.
The JFSA encouraged applicants not to take part in mediation but
nevertheless 50% of cases where a mediation took place were resolved.
Mediations were overseen by the Centre for Effective Dispute Resolution
(CEDR).
2.10 Although a total of 41 applicants to the scheme were able to resolve their
complaints, the JFSA was not satisfied with the outcome and continued its
campaign against Post Office.
2.11 In recent years, the focus of the complaints by postmasters has expanded
from issues with the Horizon IT system, to the alleged “unfairness” of the
contract between Post Office and postmasters. Despite significant lobbying
by the JFSA of Parliament and through the media, Post Office’s position has
not altered, and considers that these disputes are now best resolved through
the Courts.
2.12 In February 2016 it was reported that a group of postmasters had secured
funding for group legal action and in April 2016, a High Court claim was issued
against Post Office.
2.13 In March 2017, following a preliminary public High Court hearing, a Group
Litigation Order was made, following which statements of case were filed by
the claimants and Post Office setting out their “generic” cases (i.e. as apply
to the entire group of claimants). At a subsequent Case Management
Conference (‘CMC’) in October 2017, the Managing Judge appointed to
oversee the Group Litigation, Mr Justice Peter Fraser, determined that the
litigation would proceed in at least three stages:
(i) a 20 day ‘Common Issues’ trial starting on 5 November 2018, the
purpose of which is to determine issues common to all the claimants,
focussing on the legal relationship between Post Office and postmasters,
the proper interpretation of certain terms in the standard contracts Post
Office enters into with postmasters, and whether further terms proposed
by the claimants should be implied into those contracts. These Common
Issues are set out in Appendix A;
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(ii) a second 20 day trial starting on 11 March 2019 on 15 “Horizon Issues”
concerning technical aspects of the Horizon accounting system used in
Post Office branches, which will be determined primarily on expert
evidence (as opposed to individual users’ experiences). These Horizon
Issues are set out in Appendix B; and
(iii) one or more further trials which would address issues of causation, loss
and damages. On 27 September 2018 Mr Justice Fraser suggested that
hearing time would be made available in May 2019 for such a further
trial, the scope of and timetable for is currently under consideration and
has not yet been agreed.
Criminal Cases Review Commission (CCRC)
2.14
2.15
2.16
The CCRC has advised Post Office that it is nearing its reviews (commenced
in 2015) into 33 Post Office prosecutions of former postmasters (31 of
whom are claimants in the Group Litigation.
However, given that the CCRC’s reviews touch on issues similar to those
in the Postmaster Litigation (in particular with respect to Horizon), delivery
of the CCRC's findings is likely to be delayed by the litigation.
We continue to liaise with the CCRC, respond to its requests for
information, and seek information about the status of its investigations,
mindful always of the need not to interfere with the independence of the
CCRC’s work.
Governance
2.15
2.16
Post Office has provided regular updates to the legal team within BEIS and
UKGI on the procedural aspects of the litigation and therefore these are
not further repeated here.
Governance of the litigation since it commenced in 2016 has included the
following:
(i) An internal ‘steering group’ mandated by the Post Office Group
Executive to oversee the litigation. This has included representatives
from across the business including those responsible for management
of the agency network, the Head of Agents’ Development &
Remuneration, IT (in relation to Horizon issues), Finance,
Communications, as well as internal and external legal counsel.
(ii) Regular briefings being provided to the Post Office Group Executive.
(iii) Regular updates being provided to the Post Office Board, and in
January 2018 the Board established a Board Litigation Subcommittee
to oversee the progress of the litigation. That committee comprises
the Chair, the shareholder appointed director, and the Senior
Independent Director.
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(iv) In addition, the CEO and CFOO have met with Post Office’s external
counsel on several occasions, and external counsel briefed the Board
Litigation Subcommittee in person following the issue of their Interim
Merits Opinion in May 2018.
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3. Key Issues at the Common Issues Trial
3.1. The Common Issues trial will not address issues of breach, causation or
loss. Instead, the trial will determine the correct legal relationship between
Post Office and its agents:
“It has been set down for the express purpose of
determining a list of 23 Common Issues in the context of
Group Litigation, involving 561 Claimants who contracted
with Post Office over a period of many years. The trial is
to be conducted by means of Lead Claims. Six have been
selected. But the Common Issues are not directed to
determining the specific cases of the Lead Claimants alone.
Rather, the Common Issues were defined by the Court,
with the agreement of the parties, as generic issues
“relating to the legal relationship between the parties”
being Post Office and wider group of 561 Claimants, whose
engagements spanned around 20 years.”
3.2 The claimants have sought to have implied into the contract a further 21
terms — details of which are set out in Appendix A, and which would imply
a range of additional duties including - most importantly, a duty to
investigate branch losses and determine their cause before requiring an
agent to repay them.
3.3. The most important Common Issues concern the liability of agents for
"losses". The claimants argue that Post Office needs to show that a
postmaster’s actions have caused Post Office to suffer a net economic
detriment, not just that a branch's accounts ostensibly show a shortfall.
Post Office’s position is that if a shortfall is shown in the branch's accounts
then, absent any cogent evidence to the contrary, the postmaster is liable
for that shortfall given they are responsible for conducting the transactions
recorded in those accounts, and for the Post Office cash and other assets
used,
3.4 Post Office has accepted that two additional terms are implied into the
postmaster contracts which are necessary for their operation, but which
obviate the need to imply the 21 terms sought by the claimants. Post
Office’s additional terms are that each party would:
(i) refrain from taking steps that would inhibit or prevent the other party
from complying with its obligations under or by virtue of the contract;
and
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(ii) provide the other party with such reasonable cooperation as was
necessary to the performance of that other's obligations under or by
virtue of the contract.
3.5 These terms in themselves present risk, given that the litigation covers
events that happened over a significant period, during which a very large
number of agents have worked with Post Office, such that it would be
difficult for Post Office to assert with certainty that it never acted contrary
to (i.e. breached) these terms.
3.6 Post Office’s external Counsel believe that Post Office has the. stronger
arguments on most of the Common Issues. However they. also caution
that the areas likely to be most problematic for Post office are the clauses
dealing with suspending and terminating postmaster contracts (including
the length of notice to be provided), withholding. remuneration during
periods of suspension, and imposing liability for branch losses. Counsel
also note that Post Office is unlikely to be successful on each and every
one of the Common Issues, given the judicial tendency to provide a degree
of balance between the parties.
3.7 Witness evidence at the Common Issues trial will refer to Post Office’s
standard practices for contracting with new postmasters, and the
circumstances of 6 ‘Lead Claimants’ (details of which are set out in
Appendix G). This evidence should address what the parties understood
about the contract and running a Post Office branch prior to entering into
the contract.? Witness statements’ will not be read out in Court, and the
Judge has stipulated a maximum of half a day for cross examination of
each witness. There are 6 witnesses for the claimants, and 14 for Post
Office.
3.8 To date, the claimants have only generically stated the remedies they are
seeking from the Group Litigation, and in particular have not quantified the
level of the financial damages they are seeking from Post Office.
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Operational improvements already underway
Background
4.1
Post Office continually looks at how it can make improvements to the way
its network operates and is managed - to the benefit Post office, its agents
and customers. The following operational improvements are due to be fuly
delivered in the next 12 months:
(i)
(ii)
(iii)
(iv)
Updating and streamlining the Agent Onboarding process to bring
this in line with other Franchisors.
Using the new data and insight from our Contact Centre to better
understand branch issues, so as to better support agents to resolve
issues.
Bring Agent Loss data and activity together to enable early
interventions to prevent an escalation of losses and to resolve
disputed losses sooner.
Introduce an online interactive help facility, Agent Portal, to link
branches to “help” support when they need it.
Agent Onboarding
4.2
This review covers the entire support process from initial application to the
point the agent is ready to run the branch independently. The
improvements are focused on making each stage easier, quicker and using
digital solutions wherever possible.
(i)
(ii)
(iii)
(iv)
Agent application - this will become online process involving an
initial _pre-qualification test (to give more information about
running a branch) and an account manager being assigned to
support the applicant through the rest of the application process,
which includes submission of a business plan.
The account manager will discuss the business plan and arrange
for a property project manager to assess the branch and advise on
the operational aspects of installing a Post Office within their retail
premises.
Assuming the financial, personal vetting and location checks are
satisfactory, the account manager will organise for the contract to
be signed - this will be electronic and designed in a way which
explains each step before the final signature is provided.
Before the ‘go-live’ date, training will be provided to the Agent and
any assistants. This will start with an online induction, covering
the Post Office offer and certain regulatory training. Following this,
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there will be classroom based training and subsequent in branch
training supported by a dedicated trainer. Recent enhancements
have been made to the training to simplify the language and make
it more focussed on practical transaction practice. The training is
followed up by 1, 3 and 6 month reviews at the branch to ensure
all colleagues are operating effectively.
(v) A Local Relationship Manager (LRM) is a recently introduced role,
who will stay in touch with the Agent to ensure they are realising
the full potential of the Post Office within their wider business and
that they are closely achieving their business plan expectations.
(vi) Once the Agent has been in place for 6 months, the LRM will hand
over to business as usual support.
Contact Centre and Field Support
4.3. Branch support for all ad-hoc enquiries, including balancing issues, is
provided by our contact centre who handle c.35,000 calls per period.
(i) The contact centre moved to Microsoft Dynamics call recording
earlier in 2018 and this has enabled us to track and measure the
main causes for calls, thereby allowing projects to be identified to
remove these issues for branches. Examples include cash order
adjustments, which has led to a project to better forecast branch
cash needs which is due'to go live in the new year.
(ii) The data also tracks individual branches and a range of issues
reported might indicate a trainer or performance manager should
be deployed. Only the largest 4,000 branches currently receive
regular visits, but this tool will allow field resource to be directed
to branches depending on their need. This is expected to remove
the frustration felt by branches who would like to see someone
from Post Office to discuss and resolve their issues.
Agent Losses
4.4 Branches often either declare losses because a mistake has been made, or
we notify them of a transaction correction which leads to a loss. We also
monitor branch activity to identify potential fraudulent activity in branches.
(i) The fraud analysis, Horizon investigation, and transaction
correction activities currently take place across 3 functional areas.
These areas have a limited insight into other issues a branch may
be experiencing.
(ii) The plan is to bring these areas together so that each loss or
mistake is not treated in isolation and contact centre or field visit
information is also considered. Bringing these areas together will
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also allow us to identify the loss, identify the cause and engage
with the branch to explain the loss.
(iii) Through this process, losses where the branch is not at fault will
be removed and properly accounted for, whilst at fault losses will
be addressed either contractually and or through recovery.
(iv) Repayment terms are sometimes available, however, the changes
will bring consistency to this process, driving value for the Post
Office, whilst being considerate of an Agent’s business cashflow.
(v) Finally, the Agent Loss levels will be tracked carefully at business
level, so that any worrying trends are spotted quickly and acted
on.
Agent Portal
4.5 The only help currently available to branches is. via the contact centre.
Branches often complain at being kept waiting, particularly when there is
a customer in branch.
(i) Agent Portal will give online help, video tutorials, IT live chat,
provide sales MI, access to training materials, enable cash and
stock order status to be seen or values to be changed.
(ii) A pilot of 300 branches will go live pre-Christmas and will be quickly
rolled out to all branches.
(iii) Access is via a user’s Smart ID log-on - the same as they use for
Horizon - so no. new passwords or registration needed.
(iv) The key design principle is that the Portal is for all branch staff, not
just for the Agent.
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Contingency Planning
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Potential Impacts on the Business of Common Issues/Terms being implied
5.1 To ensure Post Office understands the risks associated with any adverse
finding(s) at the Common Issues trial in November, Counsel’s Merits Opinion
assesses the likelihood of additional terms being implied into the postmaster
contract and Post Office has assessed the business impact should any orvall
of the proposed terms be decided in favour of the claimants.
5.2 From this risk assessment we have determined that an adverse ruling could,
in certain circumstances, have a material impact on Post Office’s current
operating practices. As such, we have developed contingency plans to
ensure Post Office is best placed operationally to respond to any adverse
Judgement.
5.3. The Common Issues fall into 8 groups, the most significant of which concern
the “construction” (i.e. interpretation) of the postmaster contract terms and
whether some 21 terms should be implied into those contracts.
5.4 Those terms considered more likely to be implied by the Court (‘likelihood’
assessment) are in fact those which have a lower business impact (‘impact’
assessment). Conversely those that are less likely to be implied by the Court
have a higher business impact.
Likelihood Assessment
5.5 There are four terms assessed by Counsel as being very likely or more than
likely to being implied: Co-operation; Exercise of Powers (both of which are
services proposed by Post Office); Suspension and Training (set out in
Appendix C). Post Office’s assessment is that whilst these would involve a
change to working practices and increase costs, the business impact would
be manageable.
Impact Assessment
5.6 From our high level business assessment of ‘impact’ against each of the
proposed terms, there are 3 that are of the greatest concern: Shortfalls;
Liability for Losses and Post Office as Agent (set out in Appendix D)
5.7. Whilst the legal assessment is that these terms are less likely to be implied,
the business impact would be material. In particular, the burden of proof
would shift onto Post Office to show the root cause of branch losses.
Asa
result, Post Office would be unable to recover shortfalls in branches unless
it positively proved a postmaster was at fault for those losses. The length of
time for a postmaster to make good the loss would be significantly longer
than it is today, increasing annual operating costs and resulting in additional
business exposure to agent losses and a significant cash flow risk.
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5.8 In the event of an adverse judgement, a retrospective risk will always
exist. Accordingly, the contingency planning explores how Post Office could
mitigate the risk of claims being made in respect of the current/future
situation.
5.9 We have identified the following key mitigating actions to address the
consequences of adverse rulings (set out in full at Appendix E):
(i) Contract Variation - addresses any findings regarding the clarity of
contractual terms. Note: Changes to the contract(s) would only be
made if the Judgement were to go against Post Office.
(iii) Losses Investigation Approach —- proposed as best practice as well as
litigation mitigation. Should the Judgement go against Post Office the
size of the team would need to be increased significantly to investigate
all losses declared by postmasters
(iv) CCTV — in conjunction with the investigation approach, behind the
counter CCTV could provide further mitigation for the implied term.
Note: due to the cost and operational complexity (e.g. storage and
privacy issues), CCTV would only be installed in all post offices if the
Judgement were to go against Post Office
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6. Communications Strategy
Media and Communications Management Pre and During Trial
6.1 While we do not expect there to be any material ‘new news’ to emanate
from the trial, the Postmaster Litigation presents some significant
communications challenges. We expect the claimants to seek to maximise
publicity around the opening of the trial and for its duration. A freelance
journalist, Nick Wallis, who has followed the story for many years and is
close to campaigners, has crowd funded to enable his attendance at every
day of the Common Issues trial, set up a website for his reporting and has
publicised via social media that he has, so far, two national news
organisations interested in his reporting. He has been successful in the
past in securing coverage on various BBC TV and radio programmes, in the
Daily Mail and elsewhere. The issue has also been closely followed by
Computer Weekly magazine and Private Eye. Nick Wallis has also recently
been in touch with Post Office to let us know that he is planning some pre-
trial coverage, most likely featuring ‘case studies’ of some of the claimants.
6.2 We expect significant activity on social. media, broadcast outlets and daily
national and regional newspapers when the trial begins. The amount of
media coverage will depend, in part at least, on how successful Nick Wallis’
continued attempts to secure commissions are, as well as the attempts of
the claimants and their representatives to generate interest in the issue.
The news agenda at the time of the trial will also be a factor but we expect
coverage in any event... The unions are likely to provide public comment
and may connect it to other issues such as the future of the DMB network
and ongoing pay talks. MPs and peers who have previously supported the
claimants, and those with constituency cases, are also likely to comment.
The principal risks in the pre-Christmas period are that substantial media
coverage is triggered, with wider issues drawn in to occasion Post Office
significant reputational challenge. Our communications approach is
designed with this eventuality in mind.
Strategy
6.3. Our media and communication strategy objectives are centred on (1)
underlining how seriously the Post Office, as a responsible business, takes
the issues in the trial and the opportunity to resolve them through the legal
process (2) making clear our robust defence of our position and (3)
ensuring colleagues across the business are able to address questions
during the trial.
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6.4 Our tactics, tone, behaviours and messaging throughout the trial will
reflect these areas as we seek to contain negative publicity from the trial
and minimise reputational damage for Post Office. We are deploying
external expertise through an agency with substantial experience of
handling disputes such as this.
6.5 Whilst we will not provide a ‘running commentary’ for media outside of the
hearing, we will proactively ensure that our position is reflected in external
coverage and be prepared for rapid rebuttal where necessary. A statement
and set of clear lines to take will be in place and kept under continual, daily
review. We will keep our focus on the ‘bigger picture’ to counter balance
negative accusations from the claimants and to provide perspective about
the case. It will not be appropriate for us to proactively directly comment
on issues being heard by the court: this could both cause irritation to the
Judge which would be unhelpful but also ‘fan the flames’ of coverage, as
well as potentially compromising our legal position/ strategy.
6.6 We will engage with our stakeholders and partners in advance of the trial
to raise awareness and set out our position and approach and there will be
comprehensive, proportionate internal communications which ensure
colleagues are informed and equipped with information, including
background facts and ‘Q&As’.
6.7 Throughout, we will monitor and assess coverage across all media channels
and assess customer sentiment through social media and insight channels.
6.8 In addition to managing media and communications directly related to the
trial we will implement a proactive communications plan featuring positive
Post Office developments which give proper context. This will include a
brand campaign which, through newspaper advertising, radio, video on
demand and social media, will reach c12 million people across the
Midlands, London and the South East and drive awareness of the scale of
the Post Office offer to customers - providing some balance to any negative
perceptions that may be caused by media reporting on the Trial. There will
also be a social media campaign highlighting the work of our best branches
and a Christmas trading marketing campaign. A series of positive news
announcements and 121 interviews with selected senior journalists are
being planned, linked to business developments - for example the Payzone
acquisition; a new bank joining the Banking Framework; further
franchising and new branches in the network. We will also work with
credible ‘third parties’ such as the NFSP and individual agents to amplify
particular messages.
Media and Communications Management Post Decision
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6.9 An embargoed Judgement will be provided to the legal team 2-7 days in
advance of it being handed down by the Court. There might be provisions
made by the Judge which limit the embargoed Judgment being shared
beyond the legal team. In preparing communications in advance we will
have to work within the legal parameters that are set which could of course
be very limiting. In addition the Judgement could be complex and will need
careful legal consideration which will take some time. Our communications
stance must reflect this.
6.10 For the purposes of communications planning we are assuming. scenarios
where all or parts of the Judgment (which would not be ‘stayed’ by Appeal)
could mean potential changes to the relationship/contracts with agents.
6.11 Our communications will align with this work and comprehensive plans are
being produced for all scenarios, including any potential settlement
scenarios.
Strategy
6.12 There are essentially two broad phases to post-trial communications: the
immediate aftermath of the Judgment and, later, in support of any
contractual or operational changes that need to be made.
6.13 Post Office is unlikely to be in a position to provide a detailed statement
either externally or internally when the Judgment is handed down because
of the complexity of this legal area and to ensure we preserve our legal
position as the litigation continues.
6.14 We will therefore provide measured, factual information and responses for
our stakeholders, agents and employees, with strong rebuttals of any
misleading / inaccurate media coverage. Our proactive positive news
agenda will continue providing context.
6.15 As we move forward, detailed communications plans and messaging will
be produced for all the business’s mitigations of impacts following the
Judgment.
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Settlement options
7.1 Settlement has been considered at each meeting of the Board Litigation
Subcommittee. However, to date management and the Board have been
of the view that settlement will not satisfactorily address the issues at
stake.
7.2 There are a series of issues which make settlement problematic at present:
(i) The Claimants’ costs are funded by Therium Capital Management
Limited, an off-shore hedge fund which specialises in litigation
funding. Our expectation is that based on the known level of costs
incurred by the Claimants (in excess of £10 million), Therium would
expect to recover a multiple of at least 3 times the costs under any
settlement or award, and that their ‘fee’ would be paid before any
amounts are paid to the Claimants themselves. As the Claimants
have not yet been required to articulate their claim for damages, Post
Office has no clear view of the scale of the amount that might be
acceptable through a settlement. Note that the Court has advised
both parties that it expects the. parties to attempt mediation
subsequent to the Horizon trial in March 2019.
(ii) A settlement is only binding on the parties to the action. While it is
usual that the terms of a settlement are confidential, the fact of a
settlement is unlikely to remain confidential. This is likely to be
construed by media and followers as a capitulation by Post Office, and
is therefore likely to give rise to further claims by other former or
current agents who believe they have been wrongly treated.
(iii) Settlement will not resolve the questions posed by the claimants as
to the correct interpretation of Post Office’s obligations under the
contract or the robustness of Horizon. This would mean that agents
will continue to challenge the veracity of data from Horizon which is
relied on by Post Office in recovering losses, and will at least
perpetuate the current issues Post Office faces whereby branch losses
are increasing significantly. It is unlikely that, absent litigation
funding, any single agent would be able to afford the necessary legal
costs to have the Horizon issues fully determined; whereas the
current group litigation structure and funding allows those issues to
be addressed.
(iv) Post Office currently enjoys the confidence of both customers and
‘clients’ to whom it provides services. An outcome which does not
address the robust operation and resilience of Horizon risks
undermining that public and commercial confidence in Post Office.
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Appendix A: Common Issues (including terms to be implied
in to the contract by the Claimants)
Agreed pursuant to §2 of the First CMC Order
References to Subpostmasters in this Schedule are to Subpostmasters who were subject
to either (1) the Subpostmaster Contract (“the SPMC”), or (2) the Network
Transformation Contract (local branch or main branch types) (“the NTC”).
Relational Contr:
(1) I Was the contractual relationship between Post Office and Subpostmasters a
relational contract such that Post Office was subject to duties of good faith,
fair dealing, transparency, co-operation, and trust and confidence (in this
regard, the Claimants rely on the judgment of Leggatt J in Yam Seng Pte v
[GPOC 63, Defence 103]
Impli, rm.
(2) I Which, if any, of the terms in the paragraphs listed below were implied terms
(or incidents of such implied terms) of the contracts between Post Office and
Subpostmasters?
Post Office is required:
(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);
(2) properly and accurately to effect, record, maintain and keep records of
all transactions effected using Horizon;
(3) 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;
(4) 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;
(5) to seek to identify such causes itself, in any event;
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(6) to disclose possible causes of apparent or alleged shortfalls (and the
cause thereof) to Claimants candidly, fully and frankly;
(7) 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);
(8) 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;
(9) 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;
(10) 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;
(11) properly, fully and fairly to. investigate any alleged or apparent
shortfalls;
(12) not to seek recovery from Claimants unless and until:
a. the Defendant had complied with its duties above (or some of them);
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);
(13) not to suspend Claimants:
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;
(14) not to terminate Claimants' contracts:
a. arbitrarily, irrationally or capriciously;
b. without reasonable and proper cause; and/or
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c. in circumstances where the Defendant was itself in material breach
of duty;
(15) not to take steps which would undermine the relationship of trust and
confidence between Claimants and the Defendant;
(16) to exercise any contractual, or other power, honestly and in good faith
for the purpose for which it was conferred;
(17) not to exercise any discretion arbitrarily, capriciously or unreasonably;
(18) to exercise any such discretion in accordance with the obligations of
good faith, fair dealing, transparency, co-operation, and trust and
confidence;
(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;
[GPOC, para 64; Denied at Defence, paras 104-106]
(20) to recover and/or seek to recover any alleged shortfalls within a
reasonable time of discovery or the date by which, with reasonable
diligence, Post Office could have made such a discovery.
[Reply, para. 96.1]
(The implied terms admitted at Defence para 105 are agreed)
(3) If the terms alleged at GPOC, paras 64.16, 64.17, 64.18 and/or 64.19 (i.e.
(16), (17), (18) and/or (19) above) are to be implied, to what contractual
powers, discretions and/or functions in the SPMC and NTC do such terms
apply?
Supply of Goods and Services Act 1982
(4) Did Post Office supply Horizon, the Helpline and/or training/materials to
Subpostmasters (i) as services under “relevant contracts for the supply of
services” and (ii) in the course of its business, such that there was an implied
term requiring Post Office to carry out any such services with reasonable care
and skill, pursuant to section 13 of the Supply of Goods and Services Act 1982?
[GPOC para 63A, Defence, para. 104]
Onerous or unusual terms
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(5) Were any or all of the express terms in the GPOC paragraphs listed below
onerous and unusual, so as to be unenforceable unless Post Office brought
them fairly and reasonably to the Subpostmasters’ attention?
(i) para 51.1 and 51.3 (rules, instructions and standards);
(ii) para 52.1 and 52.3 (classes of business);
(iii) para 54.1 and 54.3 (accounts and liability for loss);
(iv) para 56.1.a. and 56.2.a (assistants);
(v) para 60.1 and 60.3 (suspension);
(vi) para 61.1 and 61.3 (termination).
(vii) Para 62.1 and 62.3 (no compensation for loss of office)
[GPOC, para 66; Defence, para. 108]
(6) If so, what, if any, steps was Post Office required to take to draw such terms
to the attention of the Subpostmaster?
[GPOC, para. 66; Defence, para. 108(2)]
Unfair Contract Terms
(7) Were any or all of the terms at paragraph (5) above unenforceable pursuant
to the Unfair Contract Terms Act 1977?
[GPOC, paras. 67-68; Defence, para. 109; Reply, para. 49]
Liability for Alleged Losses
(8) I What is the proper construction of section 12, clause 12 of the SPMC?
(9) I What is the proper construction of Part 2, paragraph 4.1 of the NTC?
[GPOC paragraph 49 and 55; Defence, paras 93-94]
Agency and Accounts
Post Office as agent
(10) Was Post Office the agent of Subpostmasters for the limited purposes at GPOC
paragraphs 82 and 83?
[Defence, paras 124-125]
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(11) If so, was the Defendant thereby required to comply any or all of the
obligations at GPOC paragraph 84?
[Defence, para 126]
Subpostmasters as agents
(12) Was the extent and effect of the agency of Subpostmasters to Post Office such
that the principles of agency alleged at Defence 91 and 93(2) and (3) applied
as Post Office contends?
[Defence paras 90-91; Reply, paras 59-60]
(13) Did Subpostmasters bear the burden of proving that any Branch Trading
Statement account they signed and/or returned to Post Office was incorrect?
[Defence, paras 69(3) 183; Reply, paras 64 and 92]
Suspension and Termination
Suspension
(14) Ona proper construction of the SPMC and NTC, in what circumstances and/or
on what basis was Post Office entitled to suspend pursuant to SPMC Section
19, clause 4 and Part 2, paragraph 15.1 NTC?
[GPOC, paras 32-3, 49, 60, 64.13 and 99; Defence, paras 66-72, 99 and
142]
Summary Termination
(15) Ona proper construction of the SPMC and NTC, in what circumstances and/or
on what basis was Post Office entitled summarily to terminate?
[GPOC, paras 34-37, 61, 64 and 99; Defence, paras 66-72, 100,104-106
and 142]
Termination on Notice
(16) Ona proper construction of the SPMC and NTC, in what circumstances and/or
on what basis was Post Office entitled to terminate on notice, without cause?
[GPoC, paras 49, 61 and 64, Defence para. 100]
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True Agreement
(17) Do the express written terms of the SPMC and NTC between Post Office and
Subpostmasters represent the true agreement between the parties, as to
termination (in this regard, the Claimants rely on Autoclenz v Belcher [2011]
UKSC 41)?
[GPOC, paras 50, 69-71; Defence, paras 86, 110-112]
(18) If not, was the “true agreement” between the parties as alleged at GPOC, para.
71?
[GPOC, para. 71; Defence, para. 112]
mpensation for L f Offi:
(19) Ona proper construction of the SPMC and NTC, where Post Office lawfully and
validly terminated a Subpostmaster’s engagement, on notice or without notice
for cause, was the Subpostmaster entitled.to any compensation for loss of
office or wrongful termination?
[See GPOC, para. 62; Defence, para. 101]
(20) Ona proper construction of the SPMC and NTC, in what, if any, circumstances
are Subpostmaster’s breach of contract claims for loss of business, loss of
profit and consequential. losses (including reduced profit from linked retail
premises) limited to-such losses as would not have been suffered if Post Office
had given the notice:of termination provided for in those contracts?
[GPOC, para. 131; Defence, para. 171; Reply, paras 81-82]
Subsequent appointments
(21) On.a proper construction of the SPMC and NTC, what if any restrictions were
there on Post Office’s discretion as to whether or not to appoint as a
Subpostmaster the prospective purchaser of a Subpostmasters’ business?
[GPOC, para. 62; Defence, para 102]
Assistan’
(22) Did SPMC section 15, clause 7.1; NTC, Part 2, clauses 2.3 and 2.5 and/or any
of the implied terms contended for by the parties and found by the Court
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purport to confer a benefit on Assistants for the purposes of section 1 of the
Contracts (Rights of Third Parties) Act, and if so which of these terms did so?
[See GPOC, para. 74; Defence, para. 116; Reply, para. 92]
(23) What was the responsibility of Subpostmasters under the SPMC and the NTC
for the training of their Assistants?
[See GPOC, para. 56; Defence, para. 95(4); Reply, para. 92]
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Appendix B: Questions to be addressed at the Horizon Trial
in March 2019
Agreed pursuant to §4 of the Third CMC Order
The following proposed issues are confined to issues that concern the Horizon system
(as defined here) and which (a) arise on the parties’ generic statements of case, (b)
can be resolved by IT expert evidence, and (c) require limited, if any, evidence of fact.*
DEFINITIONS FOR THE PURPOSE OF THIS LIST OF ISSUES
“the Horizon System” shall for the purposes of this list of issues mean the Horizon
computer system hardware and software, communications equipment in branch and
central data centres where records of transactions made in branch were processed, as
defined in GPOC, at§16 and as admitted by Post Office in its Defence, at §37.
BUGS, ERRORS AND DEFECTS IN HORIZON
Accuracy and integrity of data
(1) To what extent was it possible or likely for bugs, errors or defects of the nature
alleged at §§23 and 24 of the GPOC and referred to in §§ 49 to 56 of the Generic
Defence to have the potential to (a) cause apparent or alleged discrepancies or
shortfalls relating to Subpostmasters’ branch accounts or transactions, or (b)
undermine the reliability of Horizon accurately to process and to record
transactions as alleged at §24.1 GPOC?
(2) Did the Horizon IT system itself alert Subpostmasters of such bugs, errors or
defects as described in (1) above and if so how.
(3) To what extent and in what respects is the Horizon System “robust” and extremely
unlikely to be the cause of shortfalls in branches?
[GPOC §23 and 24; Defence §§49 to 56]
Controls and measures for preventing / fixing bugs and developing the system
(4) To what extent has there been potential for errors in data recorded within Horizon
to arise in (a) data entry, (b) transfer or (c) processing of data in Horizon?
(5) How, if at all, does the Horizon system itself compare transaction data recorded
by Horizon against transaction data from sources outside of Horizon?
+ In accordance with the indications given by the Court at the CMC on 22 February 2018
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(6) To what extent did measures and/or controls that existed in Horizon prevent,
detect, identify, report or reduce to an extremely low level the risk of the following:
a. data entry errors;
b. data packet or system level errors (including data processing, effecting,
and recording the same);
c. a failure to detect, correct and remedy software coding errors or bugs;
d. errors in the transmission, replication and storage of transaction record
data; and
e. the data stored in the central data centre not being an accurate record of
transactions entered on branch terminals?
[GPOC §§5, 14-15, 24.1, 24.1A, 94A, 95; Defence §§35(2), 36, 38(1),
50(1), 52-54; Reply §41]
OPERATION OF HORIZON
Remote Access
(7) Were Post Office and/or Fujitsu able to access transaction data recorded by Horizon
remotely (i.e. not from within a branch)?
[Defence §7; Reply §9]
Availability of Information and Report Writing
(8) What transaction data and reporting functions were available through Horizon to
Post Office for identifying the occurrence of alleged shortfalls and the causes of
alleged shortfalls in branches, including whether they were caused by bugs, errors
and/or defects in the Horizon system?
[Defence §7; Reply §9]
(9) At all material times, what transaction data and reporting functions (if any) were
available through Horizon to Subpostmasters for:
a. identifying apparent or alleged discrepancies and shortfalls and/or the
causes of the same; and
b. accessing and_ identifying transactions recorded on _ Horizon?
[GPOC §§14.2-14.3, 17 and 19.3; Defence §§38(2)(b), 38(3), 46(2); Reply
§15.2-15.3]
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Access to and/or Editing of Transactions and Branch Accounts
(10) Whether the Defendant and/or Fujitsu have had the ability/facility to: (i) insert,
inject, edit or delete transaction data or data in branch accounts; (ii) implement
fixes in Horizon that had the potential to affect transaction data or data in branch
accounts; or (iii) rebuild branch transaction data:
a. atall;
b. without the knowledge of the Subpostmaster in question; and
c. without the consent of the Subpostmaster in question.
(11) If they did, did the Horizon system have any permission controls upon the use of
the above facility, and did the system maintain a log of such actions and such
permission controls?
[GPOC §§21.3, 23, 25; Defence §§48(3), 50, 57]
(12) If the Defendant and/or Fujitsu did have such ability, how often was that used, if
at all?
(13) To what extent did use of any such facility have the potential to affect the reliability
of Branches’ accounting positions?
[GPOC §§21.3, 23, 25; Defence §§48(3)(c), 57]
Branch trading statements, making good and disputing shortfalls
(14) How (if at all) does the Horizon system and its functionality:
a. enable Subpostmasters to compare the stock and cash in a branch against
the stock and cash indicated on Horizon?
b. enable or require Subpostmasters to decide how to deal with, dispute,
accept or make good an alleged discrepancy by (i) providing his or her own
personal funds or (ii) settling centrally?
c.-record and reflect the consequence of raising a dispute on an alleged
discrepancy, on Horizon Branch account data and, in particular:
i. does raising a dispute with the Helpline cause a block to be placed
on the value of an alleged shortfall; and
ii. is that recorded on the Horizon system as a debt due to Post Office?
d. enable Subpostmasters to produce (i) Cash Account before 2005 and (ii)
Branch Trading Statement after 2005?
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e. enable or require Subpostmasters to continue to trade if they did not
complete a Branch Trading Statement; and, if so, on what basis and with
what consequences on the Horizon system?
[Defence §§42-46; Reply §§17.1-17.2, 21]
Transaction Corrections
(15) How did Horizon process and/or record Transaction Corrections?
[Defence §§12, 39-40, 45-46; Reply §21]
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Appendix C: Contingency Planning - High Likelihood Areas
This table details the 4 Common Issues assessed as having a high likelihood of Post Office losing the issue/having the implied
term found against them. It is an extract from the document (9th July 2018) that summarises in Counsel's Opinion on the
Common Issues. By its very nature, it is simplistic and should not be relied upon in lieu of a careful reading of Counsel's Opinion.
The impact on Post Office is the initial view as set out in the 9th July 2018 document version. This document has been updated
with mitigating options identified as part of Post Office contingency planning.
Office losing a Com: Com i
Post Office is very likely to lose the issue / The proposed A significant adverse impact on the business that could
term is very likely to be implied threaten its existence.
A major adverse impact on the business that will have a
‘onsiderable long-term commercial harm.
Post Office is more likely to lose than win the issue /
The proposed term is more likely than not to be implied.
50/50 : a A material impact on the business that will cause some
commercial detriment / increased costs
There will be some impact on the business but the
dditional burdens / costs will be manageable.
Post Office is more likely to win than lose the issue /
The proposed term will likely not be implied.
Post Office is very likely to win the issue / It is very There will be negligible impact on the business
unlikely that the proposed term will be implied.
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POST OFFICE IMPLIED TERMS
Implied term (admitted):
Cooperation
Post Office and Subpostmasters.
would not take steps which would
stop the other from complying
with the contract
Post Office and Subpostmasters
would cooperate with the other as
was necessary to enable the other
to carry out their obligations as set
out in the contract
Impact
that touch postmasters.
certainty.
These terms apply a low threshold (eg. necessary
cooperation) to all Post Office's activity in all areas
The expectation is that Post Office meets these
standards in most areas however a holistic view of
Post Office's business. is required to say this with
CLAIMANTS IMPLIED TERMS
Implied term:
Exercise of powers 1
{In relation to (i) contract
variations and (ii) withholding
Subpostmaster remuneration
during suspension.]
considered.
withhold postmaster remuneration
ikely to place some restrictions on
Note: This issue has been split into two parts
because it depends on which express terms are being
Post Office has a high degree of freedom when
deciding to (i) vary postmaster Contracts and (ii)
during
suspension. Counsel has advised that the Court is
Current contracts state that remuneration
may be withheld during period of
suspension. As best practice, the process
should clearly document the decision
rationale for withholding remuneration. This
rationale should be shared with the
suspended postmaster. Refreshed policy and
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Post Office would exercise any
power (under the contracts or
generally) honestly and only for
the purpose the power was
created to achieve.
Post Office will not exercise a
power arbitrarily capriciously or
irrationally.
iscretionary powers, namely that these powers
hould not be used arbitrarily, capriciously or
rrationally.
impact
Post Office will need to pro-actively consider and
locument in every case whether remuneration
hould be withheld during a period of suspension.
This could lead to significant back-claims for
withheld remuneration. Going forward this could be
emedy with a process change to approve and
locument these decisions.
it is considered unlikely that Post Office would vary
postmaster Contracts without careful consideration.
More effort may be required to document these
process documentation is to be introduced
as best practice from Oct 2018 onwards.
Whether to concede - that the
suspension/repayment of remuneration
during suspension terms of the postmaster
contract should be subject to an implied
term that our discretion will not be used
dishonestly, or in an arbitrary, irrational or
capricious manner - this is subject to
SteerCo decision on 12" Oct
Implied term:
Training
Post Office would provide
adequate training and support.
Post Office would especially
provide adequate training and
support where:
A) new working practices were
introduced;
B) new systems were introduced;
or
Impact
If Post Office already provides adequate training and
support, these additional terms will have minimal
impact. It should be noted that the admitted term
of "necessary cooperation" will likely require Post
Office to provide adequate training and support.
If more is required from Post Office, this could
require more trainers and training sessions, a
greater amount of more detailed training material,
consideration of the form of training and a way to
track whether the training provided had been
properly instilled into the audience aimed at.
A review of the Postmaster training was
initiated in January the purpose of which is
to ensure that:
- the initial training adequately equips
postmasters to successfully run their post
office; - they know how to access ongoing
support and training as required;
- that the training offer for new products
and services is appropriate;
- that all training is reviewed periodically to
ensure that it continues to be fit for
purpose.
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C) where Subpostmasters were
required to provide new services.
The impact would be further increased if this
training was also required for postmaster assistants.
Additional in-house training may be needed to
ensure face to face contacts are giving
Subpostmasters consistent advice.
- New training offer introduced June/July
2018 (includes revised 2 day classroom
training and on-line training for Locals).
Rolling 6 month review of effectiveness of
training now in place.
Training is currently offered to assistants
on transfer of the post office to a new
postmaster. The number of assistants to be
trained is agreed with the postmaster at
interview.
END OF IMPLIED TERMS
Suspension
On a proper construction of the I
SPMC and NTC, in what
circumstances and/or on what basis -
was Post Office entitled to suspend
pursuant to SPMC Section 19, clause I
4 and Part 2, paragraph 15.1 NTC?
Note: the Claimants also seek
an implied term in relation to
Suspension.
Post Office would not to suspend
Claimants:
A) without reasonable and proper I
cause; and/or
B) when Post Office had breached its I
duties to the Subpostmasters.
Summary: There is a real risk that the court will find
hat there is an implied term that Post Office would
nly suspend postmasters where there was a
reasonable basis for suspension on one of more of
he grounds listed in the express clauses.
Detail: The claimants say these clauses act in a more
jimited way than the way Post Office has historically
pplied them. They seek to limit the circumstances in
which Post Office can suspend postmasters.
‘or the most part, Counsel thinks the claimants
rguments are weak. However, there is a risk that
he court could instead decide that although it will not
mply a "reasonable basis" for the suspension, it may
nstead treat the right to suspend as a discretion
which cannot be exercised arbitrarily, irrationally or
Pre-audit investigation approach has been
designed as best practice though the
implementation date is tbc.
This ensures that there is sufficient evidence
to support reasonable grounds for
suspension. The detailed findings of the
investigation will be shared with the
postmaster as part of the suspension
process.
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Post Office could still suspend but may need to take
more care before exercising the right to suspend.
Ability to make quick decisions could be hindered
Concern for Post Office's reputation if it is required
(0 keep a questionable postmasters in their position
whilst investigations are carried out.
Risk to assets whilst decisions made.
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Appendix D: Contingency Planning - High Impact Areas
The following table details the 3 Common Issues assessed as having a significant adverse impact on the business if the issue /
implied term were to go against Post Office. It is an extract from the document of 9 July 2018 which summarises Counsel's
Opinion on the Common Issues. By its very nature, it is simplistic and should not be relied upon in lieu of a careful reading of
Counsel's Opinion.
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The impact on Post Office is the initial view as set out in the 9th July 2018 document version. This document has been updated
with mitigating options identified as part of Post Office contingency planning
n
CLAIMANTS IMPLIED TERM:
is
Implied term:
Shortfalls
Post Office would:
A) produce, keep and maintain accurate
records of all transactions carried out
using Horizon;
B) be able to explain all relevant
transactions;
and
Impact
This would reverse the current
responsibilities between Post Office
and postmasters in relation to losses.
Post Office would need to put
processes in place to enable it to
explain all transactions and shortfalls.
This would make recovery of losses in
branches very difficult if not impossible
in many cases.
A ‘formal investigation’ approach
has been designed ie end to end
from issue/discrepancy being
flagged/identified to findings of
investigation being produced and
shared with postmaster
a. Approach is based on the existing
Support Services Resolution Team
(SSRT) investigation approach
((heavily HORIce based) and is to be
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C) use the records to explain any
shortfalls.
Post Office would co-operate in trying to:
A) identify the possible or likely causes of
any shortfalls without any input from the
Subpostmasters and/or
B) work out whether or not there was any
shortfall by carrying out a _ formal
investigation
C) prove as a result of the investigation
that the shortfall was properly attributed
to the Subpostmaster under the
contract.
Post Office would not seek recovery of
any shortfalls from the Subpostmasters
unless and until:
A) it had complied with its duties (which
include the duties in the implied terms);
B) it had shown that the shortfall was a
genuine loss to Post Office
used as basis. for best practice for
formal losses investigation approach.
b. Best practice involves the branch
flagging an issue with a discrepancy
they couldn’t resolve. Step check to
understand what investigation the
spmr/branch had done before flagging
to Post Office for further investigation.
c. Root cause analysis to be routinely
taken as part of the investigation to not
only identify the cause of the shortfall
but also to identify any improvements
to product, transaction, process or
system that would prevent or mitigate
a repeat scenario.
d. Approach is defined as a Signature
Process ie transparent approach
hardwired into ways of working
The above approach is
implementation ready.
END OF IMPLIED TERMS
Liability for Losses
Summary: Post Office is likely to
succeed on the major issues arising out
of the construction of these clauses.
The losses investigation approach
detailed above will piece together what
has or rather what has not happened in
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What is the proper construction of section
12, clause 12 of the SPMC?
Clause 12 states "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."
What is the proper construction of Part 2,
paragraph 4.1 of the NTC?
Para 4.1 states: "The Operator shall be
fully liable for any loss of or damage to,
any Post Office Cash and Stock
(howsoever 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 [Post Office’s]
security procedures or by taking
reasonable care. Any deficiencies in
stocks of products and/or resulting
shortfall in the money payable to [Post
Office] must be made good by the
Operator without delay so that, in the
case of any shortfall, [Post Office] is paid
See also the comments above in
relation to implied terms regarding
shortfalls.
The major challenge on these clauses,
whether for a "loss" to be recoverable it
needs to be a real financial loss to Post
Office or whether it can be an
accounting loss in a _ postmaster’s
accounts. The difficulty with the former
is that Post Office would need to track
the loss in a branch accounts and show
how that loss caused it real financial
detriment. This would require a
significant forensic accounting exercise,
tracing a loss through all Post Office's
back-office accounting systems.
Impact
Losing this point would make it very
difficult for Post Office to recover losses
without significant effort and details
investigation into every loss in every
branch.
It also has the effect of shifting the
burden of proof onto Post Office to show
the root cause of the loss. In many
cases, this will be impossible to
discharge.
branch in a timely manner with a high
degree of accuracy so Post Office can
establish whether there has been a
shortfall. and in many cases it’s likely root
cause.
By default the length of time for
postmaster to make good the loss will be
significantly longer than it is today which
could have a significant impact on Post
Office cash flow.
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the full amount when due in accordance
with the Manual."
It may give rise to substantial claims for
repayment of losses to postmaster’s
dating back many years.
Post Office as Agent Summary: The contracts make it clear
that postmasters are agents of Post
Post Office as agent -
# Office, not the other way around.
Was Post Office the agent of
Counsel considers that it will be a
steep challenge for the Claimants to
succeed on this Agency issue, as it will
be difficult for them to reserve the
relationship so that the Post Office
subordinates its interests to the
postmasters' interests.
Subpostmasters for the limited purposes at
GPOC paragraphs 82 and 83?
If so, was Post Office required to comply
any or all of the obligations at GPOC
paragraph 84, which include that Post
Office would:
a) 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;
Impact
This would) reverse the current
responsibilities between Post Office
and postmasters, making recovery of
losses from a postmaster very difficult
if not impossible.
b) to render and make available to the
Claimant accounts (in accordance with
paragraph 84 (a); and/or
c) a where the Defendant alleged
shortfalls to be attributed to the
Claimants, to comply with the duties the
Claimants have said they are owed in
relation to Horizon.
Implementing the losses investigation
approach detailed above will determine
whether there has been a loss and in
many cases its likely root cause.
If CCTV installed to cover the complete
movement of cash in and out of the post
office then in conjunction with the
investigation approach the cause of the
loss should be able to be determined.
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Appendix E: Contingency Planning - Key Mitigating Actions
Changes to the Postmaster Contract
Amend the wording of the postmaster contracts (Community/Spso; Local; Main) to
make it explicitly clear that postmasters are responsible for shortfalls in their branch
accounts and are required to make good those shortfalls. The postmaster is also
responsible for investigating the cause of any discrepancies in the first instance and
advising Post Office of any large (to be quantified) unresolved discrepancy. This.could
be achieved through:
1. Unilateral variation - from a process point this would have the shortest
timescale. Assuming no consultation® with NFSP and notification to postmasters
by way of a letter:
e Community branches - 2-4 weeks
e Mains & Locals - 3 months owing to a 3 month notice clause for variations
Trial Dependency: This is one of the terms that the claimants are arguing should
be implied into the contract and therefore is part of the Common Issues trial. If
the judgement goes against Post Office on this point then unilateral variation would
not be option.
2. Variation by agreement - not as expedient as unilateral variation however more
favourable from postmaster engagement perspective:
e NFSP negotiation - 4 weeks.
A financial incentive to agree the variation could help keep the timescale tight. At
best, it is estimated that it would take 8 weeks.
3. Terminate contract and re-contract - if we were unable make the necessary
amendment to the contract by unilateral variation or with Postmaster agreement
then we would need to serve notice to terminate in line with the specified term in
the contracts: 3 months for Spso; 6 months for Local; 12 months for Main.
Trial Dependency: Termination notice is one of the terms that claimants are
arguing should be implied into the contract and therefore is part of the Common
Issues trial.
whilst legally possible, is a contradiction with precedent and comes with other risks
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Post Office’s Approach to Investigations
Develop an end to end investigation process from the point of an issue / discrepancy
being flagged / identified, to the findings of a subsequent investigation being produced
and shared with the postmaster. This would include a full ‘root cause analysis’ being
performed by Post Office, rolling out the approach already adopted by Post Office’s
current Support Services Resolution Team (SSRT) as ‘best practice’ for losses
investigation across Post Office.
Mobilising a specialised team, which is able to piece together all of the necessary
information to be able to understand what has or has not happened ina branch and
thus, the cause of any shortfall, quickly and efficiently will:
e Enable the recovery of losses quicker; and
e Educate Postmasters in terms of what has caused their losses, so that the
same mistakes are not repeated and the appropriate preventative controls
can be put in place in particular branches and, in some circumstances,
across the network - reducing future branch losses, calls to NBSC and the
volume of TCs issued.
CCTV
Install CCTV into all Post Offices to effectively follow the cash in and out of branches
(i.e. from Post Office Supply Chain cash deliveries and cash from customers to Post
Office Supply Chain collections and cash to customers including transactions in and out
of Horizon). This would act as deterrent in terms of theft and fraud, reducing losses but
also enabling their recovery as transaction, keystroke and cash over the counter errors
could be viewed on camera retrospectively.
A risk based approach could be adopted based upon crime data, overnight cash holding,
ATM data, number of positions and branch type to arrive at the risk output e.g.
e 1,200 High Risk branches: 4 camera system, remotely monitored,
cloud recording.
¢ 9,098 Medium Risk branches: 4 camera system, local recording.
e 1,904 Low Risk branches: 2 camera system, local recording, £800 Capex.
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Appendix F: Key Communications Messages
. Post Office is vigorously defending the claim - we have confidence in our network
of 11,500 Post Offices throughout the UK and the systems underpinning it. Millions
of transactions are successfully processed for our customers every day, including
on behalf of the high street banks.
. Post Office values the people working hard at its branches every day for our
millions of customers. We depend on our agents and employees for the services
we bring to the UK’s communities - if they raise concerns we take these very
seriously, it’s in our interests to do so.
. We have gone to great lengths in the past to respond to the allegations and
grievances made by a group of (mainly former) postmasters involved in the
litigation, including extensive investigations and a mediation scheme which
resolved a number of cases at the time.
. We've welcomed the Group Litigation Order (which enables the Court to efficiently
manage litigation affecting multiple parties). We believe it provides the best
opportunity to have the matters in dispute heard and_ resolved.
. The litigation is phased. Neither of the two trials the Court has ordered for 2018/19
are to address or decide liability - the Court has not yet determined a process for
this. The November trial is about contractual matters between Post Office and its
agents. The second trial, scheduled for March 2019, concerns the Post Office’s
computer system, Horizon.
. The number of claimants is a very small percentage of the many thousands of
postmasters we have worked with over the past two decades.
. The vast majority of Post Office branches, large and small, are run on an agency
or franchise basis, alongside local shops and always have been. It’s a successful
way of helping to keep thriving businesses and Post Offices on high streets and at
the heart of communities. Post Office is a successful partner with both large UK-
wide retailers as well as small, independent traders.
. Post Office has continued to successfully adapt and transform its business, working
with our postmasters and employees. We've responded to dramatic changes in
consumer trends and today’s Post Office network provides — for example - for the
collection or return of online shopping, a ‘click and collect’ service for Travel Money
foreign currency and everyday banking for the majority of customers of UK banks.
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Appendix G: Background to the 6 lead claimants
Alan Bates
Branch: Craig-y-don Post Office® Branch, 21 Queens Road, Craig-y- don, Llandudno,
LL30 1AZ
Dates of service: 7 May 1998 to 5 November 2003
Loss claimed: At least £1,140,000 for loss of investment and earnings until retirement
Contract model: Standard Subpostmasters Contract 1994
Background:
Alan Bates took over the Craig-y-don branch on 7 May 1998. The Horizon system was
introduced to the branch in October 2000 as part of its roll out across the Post Office
network. Mr Bates claims that he experienced discrepancies fairly regularly following
the introduction of Horizon, and that he was unable to find the cause. Some small
amounts were written off by Post Office. Mr Bates did not make good any shortfalls. He
began rolling over discrepancies at the end of each week instead of making good the
shortfalls and resetting the branch to zero as instructed. In April 2003 a Post Office
network manager became aware of this: He told Mr Bates to cease this practice and to
make good the outstanding loss but Mr Bates did not do so. Post Office warned Mr Bates
that failure to keep the accounts as required and not making good losses put his contract
at risk. By August 2003 the position had not changed. On 5 August 2003 Post Office
terminated Mr Bates' contract by giving him 3 months' notice in accordance with its
terms. Mr Bates' final day of service was 5 November 2003. Mr Bates never repaid the
loss (£1,000).
Key allegations made:
Mr Bates claims, in addition to the generic complaints made by all Claimants, that:
e When Horizon was introduced it limited his ability to investigate and remedy
shortfalls. He claims transaction corrections directly affected his branch
accounts.
e He alleges that Post Office knew Horizon was causing errors not just in his branch
but elsewhere across the network.
e Post Office refused his requests to provide additional Post Office and non-Post
Office services in his branch.
Reason for termination:
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e Mr Bates was liable for the discrepancies in his accounts and instead of settling
his liabilities and resetting the balance in his branch to zero every week he rolled
the discrepancies into the following week's accounts in breach of operating
procedures. He also failed to make good any losses.
e Post Office became aware of this around April 2003 and instructed the Claimant
to desist but he refused to do so. Post Office warned Mr Bates that his practice
put his contract at risk.
Naushad Abdulla
Branch: Charlton Post Office Branch®, 10-12 Charlton Church Lane, SE7 7AF
Dates of service: 24 January 2007 to 8 May 2009
Loss claimed: At least £285,000 for (wrongly) repaid shortfalls, loss of investment and
earnings during suspension and post termination and consequential losses (such as sale
of his house due to unemployment)
Contract model: Modified Subpostmasters' Contract
Background:
Mr Abdulla's parents ran a Post Office branch during the early to mid-1990s. The Branch
opened on 25 January 2007. On-6 April 2009 an audit, conducted in Mr Abdulla's
absence on holiday, identified a shortfall of £4,905.19. The audit revealed that he had
an undated personal cheque for £2,500 and mutilated notes which were overstated by
the same amount. Mr Abdulla was immediately suspended as the auditors suspected
false accounting.
Mr Abdulla has admitted in his claim that he adopted a practice of keeping an undated
cheque in the till.to cover any shortfalls. However, he had indicated in his accounts
that the relevant amount was held within the branch in the form of cash. This meant
that until the false accounting was discovered, Mr Abdulla had free use of this money
that ought to have been paid to Post Office.
Key allegations made:
Mr Abdulla claims, in addition to the generic complaints made by all Claimants, that:
e Due to shortfalls occurring regularly, he adopted a practice of keeping an undated
cheque in the till to cover the amount of shortfalls. He claims that this was a
common practice adopted by the previous Branch postmaster and staff.
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e In his post suspension interview, he was told that if he made good the shortfall,
which had reduced to £3,926.31, then he would be reinstated as postmaster.
This did not happen.
Reason for termination:
e Post Office wrote to Mr Abdulla on 14 April 2009 identifying the breaches of his
contract and stating that he had misused funds and falsely accounted.
« A post suspension meeting was held on 30 April 2009. Mr Abdulla admitted to
falsifying accounts and failing to make good shortfalls that had occurred
previously.
¢ On 8 May 2009 Mr Abdulla was summarily terminated due to misuse of funds and
false accounting.
Mr Abdulla appealed the decision at a hearing on 23 June 2009 but the decision was
upheld.
Louise Dar
Branch: Lenzie Post Office Branch®, 118 Kirklintilloch Road, Lenzie, Glasgow
Dates of service: 19 November 2014 to 27 March 2017
Loss claimed: Roughly £3,709,000 for repayment of shortfalls, loss of investment, loss
of earnings during suspension and post termination impact on business revenue
Contract model: Network. Transformation Contract
Background:
Ms Dar opened the Branch in her existing business premises on 19 November 2014.
On 15 July 2015 an audit was conducted and found shortfalls of £10,423.96 relating to
amounts of cash, cheques and foreign currency. Ms Dar was suspended. Post Office
informed Ms Dar that during investigation they had found deliberate falsification of the
accounts by the user of the Horizon ID of Ms Sohi. Ms Dar dismissed Ms Sohi, her
assistant. She later confirmed that the discrepancy with the foreign currency was
unexplained and she was responsible for it. She alleged that she must have misplaced
the money. Post Office reinstated Ms Dar and the branch reopened on 28 August 2015,
on the basis that Ms Dar repaid the shortfalls and adhered to some specified Post Office
procedures. Monthly deductions were taken from Ms Dar's remuneration for the
shortfall sum of £7,302.52.
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On 17 May 2016 another shortfall of £2,252.84 was identified. Post Office's auditor
thought the cause was irregular accounting procedures. Ms Dar repaid the shortfall.
On 3 February 2017 a shortfall of £6,870.85 was identified at audit. Ms Dar had not
carried out a cash and stock check for around 2 weeks, and was suspended with
immediate effect.
Key allegations made:
Ms Dar claims, in addition to the generic complaints made by all Claimants, that:
e She relied on Post Office's investigation which suggested the discrepancies found
in July 2015 were due to deliberate falsification and inflation of accounts by her
assistant, Ms Sohi, for which she was held responsible for.
« She had no access to Horizon during her periods of suspension in July 2015 and
May 2016 so could not look into what happened and why there was a shortfall.
e From her experience with systems similar to Horizon, the programme was basic
and based on older technology than she expected.
Reason for termination:
e Ameeting with Ms Dar took place on 3 March 2017 in which she could not explain
(or pay for) the shortfall of £6,870.85. This fact, combined with the fact that
there had been two other substantial shortfalls within 18 months, led Post Office
to believe that Ms Dar was not operating her branch properly.
e Post Office terminated her appointment on 27 March 2017 in view of her repeated
failures to properly account for Post Office cash and stock, and her failure to be
able to explain or make good the last shortfall.
Elizabeth Stockdale
Branch: Sandsacre Post Office® Branch, Wheatley Drive, Bridlington, East Yorkshire,
YO16 6TN
Dates of service: 8 May 2014 to 16 September 2016
Loss claimed: At least £65,000 for (wrongly) repaid shortfalls and loss of investment
/ earnings
Contract model: Network Transformation Contract (Local Post Office® Branch, On Site
Variant, Post Office Limited Cash)
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Background:
Ms Stockdale operated the Sandsacre Post Office Branch from 8 May 2014. She alleges
that the first shortfall she suffered took place shortly after opening while a Post Office
trainer was providing support in branch. Post Office's position is that this is incorrect.
Mrs Stockdale subsequently declared (and partly repaid) further shortfalls during the
period October 2014 to August 2015. She then continued to experience shortfalls after
this date but did not declare them to Post Office.
Eight months later, on 27 April 2016, Ms Stockdale declared the further shortfalls,
totalling at that point £18,891.47. The growing shortfalls in the Branch prompted Post
Office to audit the Branch. An audit was carried out on 13 May 2016 and identified an
undeclared shortfall of cash and stock in the sum of £7,917.09, in addition to the sums
that were already outstanding before the audit. In total, including sums declared on 27
April 2016, the further shortfall found at audit, and sums outstanding before these
events, there was a total shortfall of £28,693.84.
Ms Stockdale was suspended by Post Office on the day of the audit. After an
investigation, her contract was terminated by Post Office for breach of contract on 16
September 2016.
Key allegations made:
Ms Stockdale claims, in addition to the generic complaints made by all Claimants, that:
e She had no confidence that Post Office would assist her to discover the reason
for apparent shortfalls so she stopped declaring them and kept paper records
instead.
e She was never able to identify the cause of the shortfalls. Although she requested
help from Post Office numerous times, this was never forthcoming.
e Post Office staff visited her branch numerous times following shortfall
declarations however they could never identify the cause of the shortfall.
Reason for termination:
«The undeclared loss found at the audit indicated that Ms Stockdale had been
falsifying her accounts to conceal the loss. Ms Stockdale admitted false
accounting in meetings and calls with Post Office, and at a formal interview on
19 August 2016.
e Ms Stockdale's contract was terminated on 16 September 2016 due to
falsification of her accounts, failing to act honestly, and failing to pay sums due
to Post Office by the due date, in breach of her contract.
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Pamela Stubbs
Branch: Barkham Post Office Branch®, 50 Bearwood Road, Wokingham, RG41 4SY
Dates of service: 23 September 1999 to 12 August 2010
Loss claimed: Roughly £67,000 for payments of shortfalls, loss of earnings post
termination, and loss of investment
Contract model: Standard Subpostmasters Contract 1994
Background:
Mrs Stubbs took over as postmaster in September 1999 when her husband, the previous
postmaster, passed away. Mrs Stubbs has been an assistant at the Branch since 1987.
In 2000 to 2001, Mrs Stubbs had problems with power outages at the Branch which
caused the Horizon system to crash and reboot. There were discrepancies in the Branch
accounts which Mrs Stubbs believed were due to the power outages over this period of
time equating to around £1,000. These shortfalls were made good by her.
Following the power supply issue there were no major issues with shortfalls until late
2009 when the Horizon equipment was relocated to a portacabin due to redevelopment
works at the branch premises. A significant number of shortfalls occurred and payment
of these was requested. In the spring of 2010, Mrs Stubbs wanted to advertise the
Branch for sale and had a prospective purchaser. On 12 May 2010 Mrs Stubbs sent in
her letter of resignation. One final audit was conducted on 8 June 2010 following Mrs
Stubbs resignation which found a shortfall of £4,837.87. Mrs Stubbs was suspended
the same day and remained suspended until her resignation took effect.
Key allegations made:
Mrs Stubbs. claims, in addition to the generic complaints made by all Claimants, that:
e There was no appointment process and that she never received a copy of the
Standard Subpostmasters Contract.
e She was unable to identify the cause of apparent shortfalls from the information
she had access to using Horizon.
e The discrepancies in the branch accounts in 2000/2001 were due to power
outages which caused the Horizon terminal to crash and reboot.
e The Horizon terminal was relocated to a porta cabin during Branch refurbishment
in 2009. Following this move she experienced shortfalls in her Branch accounts
so there must be some correlation between the two.
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Reason for resignation:
e On 12 May 2010 Mrs Stubbs sent a letter of resignation to Post Office noting she
had two individuals whom were interested in purchasing the Branch.
¢ Post Office believed that Mrs Stubbs or her assistants were the cause of the losses
in her branch; those losses being exacerbated by the move to the porta cabin
whose unfamiliar surroundings created an increased risk of manual error when
conducting transactions.
Mohammad Sabir
Branches: Cottingley Post Office® Branch, 4 The Parade, Cottingley, BD16 1RP;
Crossflatts Post Office@® Branch, 33A Keighley Road, Bingley
Dates of service: 9 September 2006 to 2 October 2009 (Cottingley)
11 October 2006 to 2 October 2009 (Crossflatts)
Loss claimed: At least £95,000 for (wrongly) repaid shortfalls and loss of investment/
earnings
Contract model: Standard Subpostmasters Contract 1994
Background:
Mr Sabir became postmaster of Cottingley on 9 September 2006 and Crossflatts on 11
October 2006. Mr Sabir claims that from 2008 he experienced discrepancies in the
accounts for Cottingley which created an apparent surplus when a Lottery scratchcard
was sold. An audit of Cottingley conducted by Post Office branch on 10 August 2009
revealed a shortfall of £4,878.36 which primarily related to scratchcards. The number
of lottery scratch cards recorded as being in stock was greater than the number of
actual stock. Due to the shortfall at Cottingley, an audit of Crossflatts was carried out
the following day;.revealing a small (immaterial) surplus. Mr Sabir was suspended from
both branches and, after an investigation, both his contracts were terminated.
Key allegations made:
Mr Sabir claims, in addition to the generic complaints made by all Claimants, that:
e He requested further training on the Horizon system but Post Office told him they
could not spare the resources. He alleges that the training he was provided with
was inadequate.
e From 2008 he claims that a surplus of cash was created when scratch cards were
sold and that he removed this surplus and placed it in the branch safe. When the
audit uncovered a shortfall he presented the cash immediately and wrote a
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cheque for the remaining outstanding amount. He therefore tries to claim that
there was no real shortfall.
Reason for termination:
e The shortfall of £4,878.36 discovered at audit on 10 August 2009 had been
disguised by inflating the figure for declared Lottery scratchcards in the branch
accounts.
e At interview on 1 October 2009, Mr Sabir admitted that he had knowingly been
overstating figures in his accounts to conceal losses.
e Post Office summarily terminated Mr Sabir's contracts of both branches on 2
October 2009 due to ‘falsification of the branch trading account by inflating the
declared lottery scratch cards on hand figure and failure to make good of losses
without delay'.
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