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Author: Ben Foat/Rodric Williams Sponsor: Ben Foat Meeting date: 10 December 2019
Executive Summary
Context
Post Office has received the court’s decision on the Horizon Issues trial (Trial 2), and
on the application for Permission to Appeal the March 2019 Common Issues judgment
(Trial 1).
Mediation with the Claimant group commenced on 27 November 2019 and is continuing
given the progress the parties have made towards settlement.
Post Office has filed its Defence for the “Further Issues” trial (Trial 3) scheduled to
commence on 2 March 2020, which will determine the types of financial loss the
Claimants can recover in principle and how those losses should be quantified.
Questions addressed in this report
1. What is the status of the mediation/settlement discussions?
2. What is the status of the litigation?
3. How is Post Office responding to the Horizon Issues judgment and the refusal of
Permission to Appeal the Common Issues judgment (Operations, Communcations,
and with respect to convicted postmasters)?
4. What are the next steps in the Group Litigation?
Conclusion
1. Settlement negotiations (via the mediators) are continuing in the week commencing
9 December 2019. The parties will either reach a settlement at this stage, or
conclude the mediation such that the litigation will continue.
2. The Horizon Issues judgment has been received in draft and will be made public at
2pm on 16 December 2019. Permission to Appeal the Common Issues judgment
was refused on 22 November 2019. The “Further Issues” trial will commence on 2
March 2020.
3. The operational changes implemented after the Common Issues judgment are being
reviewed following the refusal of Permission to Appeal. That review will now also
incorporate any operational changes necessitated by the Horizon Issues judgment.
Extensive external and internal communication material has been prepared to
respond to the Horizon Issues judgment once it becomes public. Leading criminal
law barrister Brian Altman QC has advised Post Office to liaise and ideally agree with
the Criminal Cases Review Commission (“CCRC”) the steps it takes in light of the
Horizon Issues judgment.
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4. The next steps in the litigation are: (1) the “handing down” of the Horizon Issues
judgment on 16 December 2019 and the reaction to it once made public; (2) agree
the assumed facts for the “Further Issues” trial; (3) identify criteria for selecting test
claimants for subsequent trials; and (4) prepare for the court’s Pre-Trial Review and
Case Management Conference in late January 2020.
Input Sought
The Subcommittee is asked to NOTE the
updates in this paper and the next steps to
be taken in the litigation.
The Subcommittee is also asked to APPROVE
liaising with the CCRC over the steps to take
in light of the Horizon Issues judgment.
Input Received
This paper has been prepared with
the assistance of external legal
counsel.
The Board is reminded to exercise caution when communicating about potential levels
of settlement. Communications about settlement should therefore only be held orally,
but if that is not possible, advice should be sought from Post Office’s lawyers.
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Mediation / Settlement
Mediation with the Claimant group began on 27 November 2019 and settlement talks
have continued into the week commencing 9 December 2019. A verbal update on the
mediation and the progress made towards settlement will be provided to the
Subcommittee at its meeting on 10 December 2019.
Litigation Update
Horizon Issues Judgment
On 28 November 2019 Post Office received Mr Justice Fraser's draft judgment on the
Horizon Issues trial (the “HIJ”). The HIJ will be made public at 2pm on 16 December
2019. The judgment is subject to an “embargo”, meaning the content of the
judgment (including the information in this report) is strictly confidential and
nt iscl n “ni know’ i P fi
employees, executives and advisers unti is handed down. Failure to adhere
to this is a criminal offence.
On the core issue of whether Horizon is a “robust system”, the Court found:
- the Horizon system in use today (HNG-A) is "relatively robust" (a helpful finding
which substantially mitigates the immediate operational risks to the network);
BUT
- the robustness of previous versions of Horizon was “questionable, and did not
justify the confidence placed in it by Post Office in terms of its accuracy" (Horizon
Online/HNG-X; 2010 to 2018), and "not robust" (Legacy Horizon; 2000 to 2010).
Appendix [4] has a summary of the answers to each of the 15 Horizon Issues, The
key findings, in addition to the above, are:
- In relation to Legacy Horizon and HNG-X, there was a "material risk" that bugs
in Horizon could be the cause of shortfalls in branches.
- Fujitsu (but not Post Office) has wide abilities to edit branch data using remote
access (Post Office accepted this pre-trial) but those abilities were subject to
"inadequate" controls.
- Post Office could inject transactions into a branch's accounts if physically present
in a branch, but could not do this remotely (Post Office accepted this pre-trial).
It appears that the tone of the HIJ is generally better than the Common Issues
Judgment (“CIJ”), but there is repeated and, in places stringent, criticism of Post Office
and Fujitsu for not properly and diligently investigating possible IT problems and being
too quick to assume that fault rested with the postmaster. This echoes Fraser J’s
comments in the CIJ about a lack of investigative support and transparency from Post
Office.
Post Office is obtaining advice from leading Counsel on the prospects of appealing the
HIJ. Advice is also being obtained on the costs consequences that flow from the
judgment. A verbal update on these issues will be provided to the Subcommittee at its
meeting on 10 December 2019.
HIJ Impact on Criminal Convictions
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Brian Altman QC has been instructed to advise Post Office on the impact the HIJ may
have on postmasters convicted in connection with branch losses, and the steps Post
Office should now take with respect to those convictions in light of the judgment.
Brian’s preliminary views are that:
- the HIJ may not provide convicted postmasters or the CCRC with immediate
grounds to appeal a conviction because it largely deals with the potential for
branch accounts to be affected by Horizon errors generally, rather than whether
Horizon had any actual effect on an individual’s specific case;
- In the absence of specific findings on individual cases, the important question
is likely to be whether there was any material non-disclosure which makes the
convictions unsafe. That would require a complete review of each case on its
facts in light of the alleged material non-disclosure, including the impact any
bug, error or defect or alleged remote access actually had on the facts on which
the conviction was based; and
- Post Office may (as a prosecutor) need to give disclosure to convicted
postmasters on the existence of bugs and errors in Horizon, the reliability of a
Branch Trading Statement, and/or Post Office and Fujitsu’s ability to access
remotely a branch’s accounts;
- However Post Office should liaise and ideally agree with the CCRC the approach
to take to the disclosure issue so that any action best assists their reviews and
is taken with their sanction.
Common Issues Appeal
On 22 November 2019, Lord Justice Coulson in the Court of Appeal refused Post Office's
application for Permission to Appeal the CIJ. The key points to note are:
- Coulson LJ considered that Fraser J's conclusions were too difficult to
disentangle from the findings of fact he made at trial (which findings should not
be the subject of an appeal);
- He also considered that some points taken on the application could and should
have been taken at trial;
- He emphasised that the good faith duty is not a demanding obligation, and only
requires the parties to “refrain from conduct which in the relevant context would
be regarded as commercially unacceptable by reasonable and honest people”;
and
- There is again some criticism of Post Office, but not about the way the
permission application was pursued.
The effect of this decision is that the findings made in the CIJ will govern Post Office’s
relationship with postmasters (discussed further below). Post Office has been advised
that it has no prospect of successfully reopening this decision.
Further Issues Trial
On 25 November 2019 Post Office filed its Defence for the March 2020 Further Issues
trial, which will determine whether the losses the Claimants are claiming are recoverable
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in principle and, if so, how they should be quantified. The Claimants can file a Reply to
the Defence by 16 December 2019. Post Office can then file a Rejoinder by 10 January
2020 if so advised.
The parties will now produce a list of the assumed facts against which the Claimants’
claims can be assessed by 16 January 2020. There will then be a court Pre-Trial Review
with Fraser J on 23 January 2020 to address any outstanding issues which need to be
resolved before the trial on 2 March 2020.
Future Trials
The parties have also asked the Court to convene a Case Management Conference on
23 January 2020 (the same date as the Further Issues Pre-Trial Review) or shortly after
to agree the further procedural steps and timetable for the Group Litigation.
If the litigation is not settled, the most effective way to conclude it comprehensively will
be through a further trial of all the issues raised in around 5-15 test cases, the findings
of which can be extrapolated across the Claimant group to resolve the cases individually.
We also consider that putting the full story of the Claimants' cases, including some of
their improper conduct, before Fraser J] may be the only way to change his perception
of Post Office. This would result in a trial in possibly late 2020, but more likely 2021.
The Claimants may however argue (and the Court may prefer) to continue to break the
litigation down into phases.
The parties are required to file on 23 January 2020 their criteria for selecting test cases,
which are to be representative of cases in the wider Claimant group. Significant
preparatory work has been undertaken to identify the high-level features of the claims
which should be reflected in the test cases. Post Office’s proposed criteria will allow it
to select Claimants most favourable to its case.
Costs
As presented to the Board on 30 April 2019, £8m was initially included in the 19/20
Budget for the cost of the litigation. Since then, and as included in the October 2019
Quarterly Delivery Board Paper, this allocation in the 19/20 Budget has been increased
to £15m and as at P7, £7.7m has been spent. P8 figures are to be confirmed but a
revised forecast for the rest of 19/20 will be provided at the January 2020 Board.
By the January 2020 Board meeting, the first mediation will have concluded and
assuming settlement has not been reached, Post Office may have directions from the
Court for the next phase of the litigation which will determine the costs to be incurred
in 20/21. For example, if the litigation is to continue through small trials on discrete
issues (e.g. limitation), then the costs should be substantially less than for a full trial of
5-15 test cases (the preliminary forecasts for which could be as high as c£20m).
Operational Impacts
Horizon Issues Judgment
As a result of our contingency planning, we are ready to identify and respond to the
anticipated reactions (of postmasters, customers and clients) to the HIJ and any
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subsequent operational impacts. Our external and internal communication material is
extensive and able to be tailored quickly to suit the need (see further below).
Having assessed the HIJ, we expect the network to continue to operate normally.
However, some postmasters may raise some of the findings in the HIJ, turn to Post
Office for confirmation that the system they are using is fit for purpose, and then
question the validity of previously settled discrepancies and TCs whilst using older
versions of Horizon (pre-HNG-A).
We therefore anticipate ‘historic claims’ to flow from the HIJ once handed down on 16
December 2019. We expect these claims will come either in a piecemeal fashion, or as
part of a secondary group, from current and former postmasters who have repaid/are
repaying shortfalls, were suspended without remuneration, and/or question whether
they received adequate notice of contract termination.
The agreed view across Legal and Operations is that we apply the same distinction to
resolving historic claims that Fraser ] has made between the Horizon systems, and
distinguish claims that arise out of events post HNG-A going live in a branch ("new
claims") from those that arise out of truly "historic" events.
New claims will be assessed through the recently introduced Operations investigation
processes, and historic claims will be resolved by the Post Office’s Case Review Team
within LCG. We are currently developing the scope and design of the ‘historic claims’
approach with the aim of including this in our public response to the HIJ, and as part of
any agreement to settle the litigation as a whole.
Horizon Issues Communications
The overarching communications approach to the HIJ is to:
- note the length and complexity of the judgment which will take time to
understand in detail;
- accept and absorb criticism for past behaviours;
- apologise for falling short of standards we expect and to those affected;
- draw a very clear line between the past and the present, pointing to the findings
relating to process and systems no longer in use and to improvements we have
and continue to make in our relationship with postmasters;
- stress that the current system has been found to be robust; and
- drive confidence in the network to limit operational disruption.
If the matter settles prior to the judgment’s release on 16 December, we will further
underscore the change in mindset and approach to the litigation which made this
possible, which should go some way to attenuate the criticism we can expect.
We are hopeful that, as part of the settlement agreement, some positive recognition of
Post Office’s new approach will be made by the Claimants. Should that be achieved, this
will clearly hold much greater sway than anything we can generate ourselves. Self-
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evidently, no matter how many lengths we go to in seeking to mitigate against negative
comment, we will not be 100% successful.
We should also acknowledge to ourselves that, bluntly, there is also a measure of
criticism which is legitimate and we should avoid inadvertently giving the story greater
prominence or currency by feeling pressured to say more than we need.
Common Issues Judgment / No Permission to Appeal
The Court of Appeal’s refusal to grant Post Office Permission to Appeal the CIJ means
that Post Office’s legal relationships with postmasters must be managed in accordance
with the findings made in that judgment.
Since the CIJ was handed down, a number of operational changes have been introduced
to reflect its findings. An overview of the revised Operational position is set out at
Appendix 3.
In light of the refusal, and the HIJ, Legal and Operations are revisiting Post Office’s
policies, processes and ways of working to discharge its legal obligations consistently
with the court’s findings. The intention is to have one plan that addresses both
judgments. Internal and external assurance will be built into this plan.
Central to this plan will be revising Post Office’s standard postmaster contracts to
address the two judgments. A preliminary legal workshop was held on 4 December
2019 to identify contract reform objectives and strategy options, the contractual
amendments that could be made, and the means by which any variations could be
implemented. The discussion paper prepared for this workshop has been placed in the
Reading Room.
Next Steps
An overview of the main court and settlement-related activity in the Group Litigation
through to October 2020 is set out in the “Group Litigation Timetable” at Appendix 1.
Between now and January 2020 Post Office will:
¢ continue to mediate and pursue settlement discussions with the Claimant
Group;
e attend to the HIJ “handing down” on 16 December 2019, the reaction the
judgment receives once made public, and operationalising the outcomes of the
HIJ and refusal of permission to appeal the CIJ decisions; and
¢ continue to prepare for future trials, including agreeing the assumed facts to be
used for the March 2020 Further Issues Trial, identifying criteria for test claimant
selection for subsequent trials, and preparing for the court’s PreTrial Review and
Case Management Conference in late January 2020.
A timeline of the key milestones through January 2020 is set out at Appendix 2.
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Appendices
1. Group Litigation Timetable
Oct Nov Dec Jan Feb March April May June July ‘Aug Sept Oct
2019 2019 2019 2020 2020 2020 2020 2020 2020 2020 2020 2020 2020
Horizon Issues Horizon Issues
handed down (
Trial 4 7
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2. Group Litigation Timetable
1. I 27-28 November 2019
Mediation (ongoing): UKGI/BEIS authority to be obtained if required.
2. 10 December 2019
Post Office Board Subcommittee Meeting
3. 16 December 2019 Horizon Issues Trial: Handing down of trial judgment (2pm)
4. 16 December 2019 Further Issues Trial: Deadline for Claimants to serve Replies to Post Office's Defences
5. 10 January 2020 Further Issues Trial: Deadline for Post Office to serve Rejoinders to Claimants’ Replies (if advised)
6. 16 January 2020 Further Issues: Parties to set out assumed facts and issues to be decided at Further Issues Trial
7. 22 January 2020 Post Office Board Subcommittee Meeting
8. 23 January 2020 Further Issues Trial: PreTrial Review
9. 23 January 2020
Further Issues: Proposed date for parties to serve and file their proposed Selection Criteria for Test Claimants
10. I 23 January 2020
Overall GLO: Case Management Conference (first available date on or after 23 January 2020)
11, I 28 January 2020
Post Office Board Meeting
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3. Operations planning post appeal outcome
Authors: Tim Perkins, Julie Thomas Business Sponsors: Julie Thomas, Amanda Jones
Summary
The refusal of permission means that the Common Issues Judgment (CIJ) has radically
reshaped the relationship with SPMs. It will now be more difficult to make commercial
decisions about the network without legal challenge, recover shortfalls and suspend or
terminate SPMs where there is improper conduct. Beyond the legal issues, the CIJ calls
for a new relationship with SPMs grounded in good faith, trust and confidence and
transparency. In light of the CIJ, many operational changes have already been
implemented and further changes will be required.
Operational changes to date
Changes have been made to the Branch Support model applying the requirements of
the CIJ:
1. Transaction Correction wording changed and under strict quality control to ensure
these are plain English and correct
2. Transaction Correction Disputes Team mobilised to help SPMs if they do not
agree with a Transaction Correction
3. Tier 2 Branch Support implemented with dedicated Case Handlers helping
Postmasters by investigating discrepancies if Tier 1 call is unable to identify the
cause (this is currently running at 99% success rate)
4. Horizon Knowledge Based Faults (KBFs) formerly known as KELs - joint work
with IT and Fujitsu completed to separate known faults from Knowledge Based
Articles (KBA) and Knowledge Based Information (KBI)
5. KBF Process - the process for identifying faults has been formalised and the
(current) 11 known faults have been documented and uploaded to Dynamics and
the Branch Insights Tool for reference by the Branch Support, Loss Prevention and
Area Manager teams if a Postmaster reports a discrepancy
6. Branch Insight Tool - developed and launched to all Area Managers and branch
support teams and is designed to be shared with SPMs to give detailed Operational
performance information to enable supportive discussions around Operations
conformance.
Changes have also been made to the approach to losses, suspensions, terminations
applying requirements of the CIJ:
7. New Loss Prevention function has been established to minimise loss whilst
supporting branches against the threat of internal and external losses
8. End to end process review - all data, decisions, letters, processes involved in
supporting branches, identifying losses, supporting recovery of discrepancies,
moving into loss dispute, recovery, suspensions and terminations have been
reviewed and adjusted to address the requirements of the CIJ
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9. Loss Prevention Case Workers - new team mobilised to administer the end to
end audit process ensuring accurate, consolidated information is maintained at an
individual case level
10. Audit Rationale Document - produced for every audit and shared with the branch
operator at the start of each audit to improve the transparency of the rationale for
the audit
11. Audit opening and closing scripts — have been produced to ensure a consistent
conversations the branch operator at the start and end of each audit
12. Audit attendance - all audits now have a minimum of two auditors to ensure
consistency and cross check
13.New telephone quality assurance process to gain feedback from branch
operators on their audit experience
14. Weekly management of suspension cases introduced to improve visibility and
speed of resolutions
15. Contract management restructured to create one point of decision making for all
suspension, termination and reinstatement decisions to improve consistency and
speed.
16. Correspondence review and amended ensuring legal compliance, but supportive
tone of voice (including remedy letters sent by Contract Advisors and discrepancy
letters sent by Loss Recovery)
17.Loss Recovery call monitoring introduced to ensure quality and consistency of
telephone calls
18.PACE interviews - no longer carried out by Security given that prosecution
processes are on hold
19. Increased support and Operation Torch visits - are being carried out by the
Security teams to focus on helping operators prevent their exposure to increasing
retail crime and to drive security compliance
20. Culpability reviews — processes for operator culpability (e.g. sleight of hand) have
been reviewed to ensure consistency and a focus on support for the branch operator
Next Steps
In light of the refusal of permission, some key Operational issues require further review
and amendment. Work is underway between Legal and Operations to review and focus
on the four areas outlined below to ensure Post Office has fully embedded the outcomes
of the CI):
21. Loss recovery and Branch Trading Statement (Grounds of Appeal 21-24):
The BTS is a high level end-of-month summary showing cash and stock movements
over the period. It shows whether there was a net surplus or shortfall at the end of
the month. Currently, Post Office relied on an undisputed BTS as a basis to recover
shortfalls from Postmasters on the basis of it being a "stated account" as a matter
of agency law. The CIJ questioned whether the BTS could ever be a "stated
account", pointing to the lack of a mechanism to dispute entries in the branch
accounts within Horizon and the BTS not showing that sums may be
disputed. Consequently, Post Office can no longer rely solely on an undisputed BTS
to recover shortfalls. The possibility of delivering improvements to the BTS should
now be considered to improve the clarity of the information shown on the BTS. This
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22.
23.
24,
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will increase the evidential weight of the document, as part of a new loss recovery
framework.
Establishing losses: The current processes for establishing losses cannot always
distinguish between the total level of loss and level of loss caused by ‘negligence,
carelessness or error’ of the agent or their assistants. (Grounds of Appeal 25-26).
This impacts all investigations into disputed losses as losses are currently considered
on the balance of probability to be caused by ‘negligence, carelessness or error’
where other potential causes have been ruled out, rather than through positive
establishment of a direct cause. Losses can be proven via a Tier 2 investigation
(implemented after the CIJ), and this will show specifically where the error occurred
if there was one. Where losses are disputed, e.g. where the Tier 2 investigation
outcome is inconclusive, it is unclear how a direct cause can be established unless
there is an admission by the agent or their assistant.
Suspension: Suspension periods are currently used for investigation purposes,
where the CIJ states that Post Office needs to have first complied with all its other
implied duties (which would include investigation of a discrepancy) prior to
suspension (Grounds of Appeal 11-13). This is currently not possible in all cases and
in the most extreme circumstance where Post Office believes there are significant
sums at risk, or where there is a clear breach of contract (akin to Gross Misconduct).
Post Office is currently suspending on full remuneration in line with the requirements
of the CIJ.
Repudiatory breach: Operationally, there is not currently an exhaustive list of what
constitutes a repudiatory breach of contract. This is required to ensure compliance
for terminations (Grounds of Appeal 8, 14-20). This accelerates the need to re-write
SPMs contracts and work is underway to confirm approach.
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4. Horizon Issues Outcomes
Issue (1): To what extent was it possible or likely for bugs to have the
potential (a) to cause shortfalls in Subpostmasters’ branch accounts or
transactions, or (b) undermine the reliability of Horizon accurately to process
and record transactions?
It was possible for bugs to have the potential both (a) to cause shortfalls in to
Subpostmasters’ branch accounts or transactions, and also (b) to undermine the
reliability of Horizon accurately to process and record transactions. There was a
significant and material risk of branch accounts being affected by bugs in Horizon.
The sheer scale of the number of TCs issued by the Post Office each year - which is
over one hundred thousand for many of the years the subject of the group litigation -
supports the conclusion that there was a significant and material risk of inaccuracy in
branch accounts as a result of bugs in the Horizon System (both Legacy Horizon and
HNG-X).
Issue (2): Did the Horizon IT system itself alert Subpostmasters of such bugs,
errors or defects as described in (1) above and if so how?
The Horizon system did not alert SPMs to bugs. Although the experts were agreed that
the extent to which any IT system can automatically alert its users to bugs within the
system itself is necessarily limited, and although Horizon has automated checks which
would detect certain bugs, they were also agreed that there are types of bugs which
would not be detected by such checks. Indeed, the evidence showed that some bugs
lay undiscovered in the Horizon system for years.
Issue (3): To what extent and in what respects is the Horizon System “robust”
and extremely unlikely to be the cause of shortfalls in branches?
Legacy Horizon was not remotely robust.
HNG-X, the first iteration of Horizon Online, was slightly more robust than Legacy
Horizon.
HNG-A is far more robust than either of the previous two iterations of the system.
There was a material risk that a shortfall in a branch’s accounts was caused by the
Horizon system during the years when both Legacy Horizon and HNG-X were in use,
which is 2000 to 2010 and 2010 to 2017 respectively.
Issue (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?
There was a material risk for errors in data recorded within Horizon to arise in (a) data
entry, (b) transfer or (c) processing of data in Horizon in both the Legacy Horizon and
HNG-X forms.
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Issue (5): How, if at all, does the Horizon system itself compare transaction
data recorded by Horizon against transaction data from sources outside of
Horizon?
The comparison of data is largely automated. The Judge does not go into detail as to
how this is done. The evidence did not deal in a comprehensive way with each such
method for every one of the Post Office’s many hundreds of clients. Nor did the Judge
consider that such evidence was required properly to answer this issue.
Issue (6): To what extent did measures and/or controls existed in Horizon to
prevent, detect, identify, report or reduce to an extremely low level of risk of
data and software errors?
The measures and/or controls that existed on Legacy Horizon and HNG-X did not
prevent, detect, identify, report or reduce to an extremely low level the risk of data or
software errors. The experts were agreed that there were many measures and controls
within Horizon that existed to prevent, detect, identify report or reduce the risk of
varying errors. However, the experts were also agreed that whilst Horizon contains
measures and controls for detecting system integrity concerns, these automatic
mechanisms have been shown to have failed in the past.
Issue (7): Were Post Office and/or Fujitsu able to access transaction data
recorded by Horizon remotely (i.e. not from within a branch)?
This answer was substantially agreed by the parties. Both Post Office and Fujitsu could
read data remotely. Fujitsu could access and edit all transaction data recorded by
Horizon.
Issue (8): What transaction data and reporting functions were available
through Horizon to Post Office for identifying shortfalls, including whether
they were caused by bugs, errors and/or defects in the Horizon system?
This issue was substantially agreed by the parties. The Judgment lists out a series of
systems and data sources available to Post Office that are not controversial. The Judge
also notes that Post Office had access to data and systems that were not available to
SPMs (again this is not controversial).
Issue (9): At all material times, what transaction data and reporting functions
(if any) were available through Horizon to Subpostmasters for (a) identifying
shortfalls and their causes; and (b) accessing and identifying transactions
recorded on Horizon?
This issue was substantially agreed by the parties. The experts agreed that the causes
of some types of shortfalls may be identified from reports or transaction data available
to SPMs. Other causes of shortfalls may be more difficult, or impossible, to identify from
reports or transaction data available to the SPMs, because of their limited knowledge of
the complex back-end systems.
The Judge also found that because the reports and data available to SPMs were so
limited, their ability to investigate was itself similarly limited. He went on to find that
SPMs simply could not identify discrepancies and shortfalls, nor their causes, nor access
or properly identify transactions recorded on Horizon, without cooperation from Post
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Office. This finding was not however required as there was no question to this effect
asked by any of the Horizon Issues and the Judge has gone out of scope here.
Issue (10): Whether the Defendant and/or Fujitsu have had the ability to
remotely access and change branch data without the knowledge or consent of
SPMs.
Fujitsu had many facilities for doing this and some of these could have been done
without the knowledge or consent of SPMs (as accepted by Post Office before trial, but
only following Fujitsu initially giving incorrect evidence on this point).
Post Office could only change branch data utilising its Global User role. This permitted
Post Office to inject transactions without the knowledge or consent of the SPM.
However, it could only be done by someone who was physically present in a branch, as
that is the only way Global User could be used by the Post Office. This would therefore
be likely to mean that a SPM or their assistant would at least know someone was in
their branch doing something in terms of access to their branch accounts.
Issue (11): Did the Horizon system have any permission controls around
remote access and did the system maintain a log of such actions and such
permission controls?
There were permission controls, but the remote access facilities were very wide and
they were not effectively controlled. The permission controls and logs were
"inadequate" and "deficient.
Issue (12): If the Defendant and/or Fujitsu did have such ability, how often
was that used, if at all?
Due to Fujitsu’s poor record keeping, the experts could not provide any confident
evidence on this subject of frequency. On the evidence from the two experts, the
answer should be in approximate terms only and would be about once a day over the
whole life of the system.
Issue (13): To what extent did use of any such facility have the potential to
affect the reliability of the Branches’ accounting positions?
The remote access facilities were very wide. These facilities therefore had the potential
to affect the reliability of a SPM’s branch accounts to a material extent.
Further, the evidence shows clearly that there were instances when this in fact occurred,
which goes wider than the issue posed (which asks about potential) but which the Judge
held was also relevant to the Horizon Issues as a whole.
Issue (14): How (if at all) does the Horizon system allow a SPM to render
accounts and dispute shortfalls?
This was substantially agreed by the experts. The Horizon system can compare cash
and stock figures, but it has no facility to record a dispute. The comparison is done by
the system comparing its electronic records of what cash and stock is held in a branch,
with the corresponding figures inputted by the SPM at the end of a trading period.
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Note: Without naming Post Office but clearly aiming the comment at Post Office, the
Judge criticises the parties for raising this as point of dispute when the answer was clear
from the Common Issues. However, Post Office has never claimed that Horizon had
the ability to record a dispute. Post Office's case was that disputes are raised through
the helpline. This dispute method is acknowledged by the Judge at the end of his
answer
Issue (15): How did Horizon process and/or record Transaction Corrections?
This was substantially agreed by the parties. TCs are largely created and processed
outside of Horizon through manual actions, save for when a SPM accepts the TC in
branch on the Horizon terminal. Disputes to TCs are done by the SPM contacting the
Helpline and again this is outside the Horizon system, which does not record that
dispute. If the dispute is upheld (as in, the original TC is accepted by the Post Office
as having been wrongly issued) then another TC will be issued to correct it. That
subsequent TC will correct the effect of the first TC in the branch accounts when it is
accepted by the SPM. The issuing of the subsequent TC is also done outside the
Horizon system.
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