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POST OFFICE LIMITED BOARD MEETING
Strictly Confidential and Subject to Legal Privilege -DO NOT FORWARD
MINUTES OF A CALL OF THE BOARD OF DIRECTORS OF POST OFFICE LIMITED HELD ON 18 MARCH
2019 AT 17.15 HRs
Present: Other attendees:
Tim Parker (Chairman) Lord Neuberger, QC (from item 3.)
Ken McCall (Chairman for the meeting) Jane MacLeod (Group Director Legal, Risk and Governance
and Company Secretary)
Tom Cooper Veronica Branton (Head of Secretariat)
Tim Franklin
Shirine Khoury-Haq
Carla Stent
Alisdair Cameron
Apologies: I
Paula Vennells
1. Conflicts of interest Actions
A conflict of interest was noted in relation to Tim Parker in his role as Chairman of
the HM Courts and Tribunal Service.
A conflict of interest was noted in relation to Tom Cooper in his role as UKGI
Director, which as an executive part of government, should not be involved in a
decision which related to the judiciary.
Article 82 of PO Limited’s Articles of Association permitted the Board to authorise
a director in relation to any matter the subject of a conflict. The Board determined
that Tim Parker and Tom Cooper should be involved in the Board discussions but
they would not be party to the decision on whether or not to seek the Judge’s
recusal. I
2. Context
241 Appeal and recusal
Jane MacLeod explained that the discussion would focus on appeal and recusal
issues.
She noted that we had received a written opinion from Lord Neuberger which had
been issued on 14 March 2019 and which suggested that Post Office had grounds
for appeal and for recusal. She noted that Lord Neuberger would be joining the
call so the Board had the opportunity to ask him questions about his opinion on I
the case.
She noted that Lord Neuberger would not be able to represent Post Office in Court
because of his previous role as President of the Supreme Court and therefore it
was proposed that Lord Grabiner QC would represent Post Office on any recusal
application.
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JM noted that she had met with Lord Grabiner earlier in the day and the Board
would also have the opportunity to ask him questions on a subsequent call. Lord
Grabiner was a very experienced QC who had appeared in a number of high profile
cases. His strong advice was that PO Limited should bring a case for appeal and
for recusal; he was confident in the recommendations he was making and was very
critical of the Judgment and its legal underpinning.
It was noted that the Shareholder had previously requested that it be consulted
on any proposed appeal, although there was sensitivity in relation to a recusal
application. It was noted that a recusal application needed to be lodged as soon as
possible.
An application to appeal would normally be lodged within 21 days of the Judgment
being published but we thought that the Judge might extend this deadline given
that the Horizon trail was underway.
Horizon Trial
The Horizon Trial had started on 11 March 2019 and there were a number of
comments which suggested that the Judge’s views of Post Office (as contained in
the Common Issues Judgment) had not changed, including his continued suspicion
that Post Office was withholding evidence in relation to Horizon.
Lord Neuberger’s overview
Lord Neuberger joined the call and was introduced to the Board. He set out the
main courses of action that PO Limited could consider at this juncture:
1. Accept the Judgment
2. Take an orthodox defensive position and seek to appeal. This was an entirely
justifiable approach and a number of the Judge’s decisions were open to attack
and appealable from a preliminary reading of the Judgment
3. Seek recusal: the most aggressive approach.
The arguments for not accepting the Judgment as it stood included that the Judge
had accepted evidence that was not relevant to the case, having previously stated
that only relevant evidence should be allowed. He had included commentary on
witnesses which were not relevant to the Judgment and were quasi Judgments.
He was meant to be resolving a number of issues in relation to the contract, but
had not done this, and had taken into account how the contract had been
performed which was not a matter on which findings should have been made.
Lod Neuberger noted that Post Office could argue that the Judgment was such that
the Judge could not fairly continue with the other hearings (including the Horizon
trial) and that justice would not be seen to be done if he did so. The Court of
Appeal (CoA) could be expected to give a judge a certain amount of latitude in how
they tried a case, However, we had a good prospect of convincing the CoA to
require the Judge to stand down although it was not inconceivable that the case
would fail. If we did not seek recusal the Judge could continue with the hearings
without any challenge being raised in relation to fairness or potential bias and that
would make it harder to argue this point subsequently. Losing the recusal case
could alienate the Judge further but equally could make the Judge more careful in
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POST OFFICE LIMITED BOARD MEETING
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his approach. Lord Neuberger thought that not taking the aggressive course
carried more risk than taking it from a legal perspective but recognised that this
was a difficult decision for an organisation like PO Limited which was publicly
owned.
Questions
Directors then had the opportunity to ask questions of Lord Neuberger, including:
The arguments for recusal and appeal were clear and there was a strong case for
the former but we also had to consider the communications and stakeholder
arguments. What could the impact of not seeking recusal be on subsequent
appeals processes? Was there only one chance to seek recusal? For example,
what would happen if in our view the bias of the Judge continued or increased
during subsequent trials? Whilst it might seem attractive to go down the legal
route as it seemed like the right thing to do, was this a really strong case?
Lord Neuberger:
1. If we did not apply for recusal could this reduce the chance of the success of a
subsequent appeal? It was reported that appeal concerned matters of law only
and was not impacted by recusal which concerned issues such as admission of
evidence. These were free standing matters
2. Would this be our last chance on recusal? \f we did not seek recusal now our
chances of obtaining a recusal subsequently would depend entirely on how the
Judge acted in the future. Any subsequent application for recusal could not
refer to the first Judgment. If we did not act now the argument would be that
we had been happy for the Judge to continue hearing the Horizon trial and for
the claimants to continue spending money pursuing the case. A decision on
recusal needed to be taken this week. The usual process was to go to the Judge
to say that you were seeking to recuse him. If he did not agree to recuse
himself the application would then be made to the CoA
3. Prospects of success. Lord Neuberger reported that he did not yet know Lord
Grabiner’s view of the case; he thought we had a strong case but was slightly
diffident because he had not yet seen all of the evidence from the other side.
It was entirely possible that CoA would not accept our case but having looked
at the case did not think it possible that the PO would receive a fair trial if heard
by the current Judge.
The case had just started for the Horizon Trial. The Judge had commented
adversely on the PO Witnesses and some of these were appearing in the second
trial. Did these witnesses have a fair chance of being heard in the second case
given that the Judge had questioned their credibility? This was a concern and
illustrated the unfairness of the Judgment.
Would a charge of unfairness issue form part of the appeal? A charge of unfairness
was more bound into an application for recusal than appeal because if it were
flagged in appeal the CoA would not be clear what action it could take. Unfairness
was not really linked to the interpretation of the law which was flagged in appeal.
However the unfairness and legal interpretation arguments were connected
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because some of the Judge’s findings were not relevant to the case and the
inclusion of irrelevant findings would form part of the appeal case.
It had been assumed we could run the unfairness argument as part of the appeal
or go for recusal at a later stage. Not being able to do so presented a stark choice.
The board had to weigh up risks from a PR perspective. To what extent was recusal
an unusual occurrence and how was it usually treated? It was reported that
applications for recusal were not common but not rare either and were generally
linked with an appeal. Being recused could be seen as a bit of a “black mark” fora
judge but it could be determined that a case needed to go to a re-trial because the
judge had got the law wrong.
What would the timings for appeal and recusal be and how quickly did the
applications need to be made? Did an application for recusal pause the clock on
the trial underway? An orthodox approach would be to inform the Judge that we
were going to appeal partly on prejudicial findings and as such were asking the
Judge to recuse himself now. This was a perfectly proper application to make. If
we were successful the current trial would be a waste of time. At this point the
Judge was likely to ask the claimants for their view as to whether to carry on with
the trial. If the parties requested an adjournment and the Judge proceeded with
the trial that would not be viewed favourably by the judicial establishment.
How long did the Judge have to decide whether to recuse himself? There were 3
options: 1) The Judge could recuse himself immediately; 2) The Judge could
adjourn the trial and request a different judge to hear the recusal application, or
3) The Judge could continue with the trial. In each case the Judge was likely to
seek the claimants’ views and would want to understand the grounds for recusal.
The Judge was likely to consider the application for recusal overnight or over a few
days but could not delay taking a decision for a long period of time. If we sought
recusal at the end of week the matter was likely to be resolved by the end of the
following week [post meeting note: the Court will not be sitting in the week
beginning 25 March 2019 so a decision could take longer].
Could the CoA say that the second and subsequent cases should not be heard by
the same judge even if a recusal application had not been lodged? \t would be odd
to go the CoA alleging unfairness without seeking recusal. In other circumstances
it might be decided not to apply for recusal however as the second trial had already
started, these circumstances were different. PO Limited’s concerns about publicity
surrounding a recusal application were however understandable.
If you were advising the claimants having received a request for appeal and recusal
how would you advise them? Lord Neuberger would advise them to look at their
position very carefully. He would want to understand their QC’s rationale for
including all the evidence he had. The Judge’s findings had been made in very
strong terms and he would be worried about the chances of the recusal being
successful. He would want to understand if there was anything that was not
obvious that could support the approach taken. It was hard to see what findings
of fact could apply to the contract at its inception.
Ken McCall thanked Lord Neuberger for joining the call.
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Follow-up discussion
It was noted that these were not easy decisions to take and one element of those
decisions was understanding the costs of taking an appeal and recusal action. It
was reported that costs had not yet been provided but a range of £100-200k was
likely for recusal. This entailed 1~2 weeks’ work and some work had already been
undertaken.
JM provided an overview of the issues posed for us by the Common Issues
Judgment and the process for reaching a decision.
The Board would need to have the chance to talk to Lord Grabiner to ensure that
it had received a range of expert advice.
The purpose of the Common Issues Trial was to establish the true nature of the
contract. Any additional terms applied through the Judgment could be appealed.
It had been ruled that the contract was a relational contract and therefore
additional terms could be implied.
Other finding and observations had been based on the evidence from the
claimants but not from PO Limited. The Judge’s finding that NFSP was not
independent was a good example of making a finding based on partial evidence.
If we did not challenge those findings of fact they would stay on the record.
Decision making process and conclusion
A decision on recusal should ideally be taken at the Board call on 20 March 2019.
An application to the Court would need to be supported by witness statements
and evidence and would be heard by our Judge within 24 hours. The timetable
was then in the hands of the Judge. If he decided immediately that he would not
recuse himself we would need to be prepared to go the CoA.
A number of points were raised:
e we might disagree with how the Judge has reached his conclusions but
needed to test whether the heart of his findings were correct, for example,
we funded the NFSP which could have affected their independence. It was
noted, however, that whatever the merits or otherwise of particular findings
where these had been based on partial evidence they could not be regarded
as fair
© appeal on the contractual findings had merit from a legal perspective but we
must be clear that we were not being defensive. We were committed to
making operational changes and improvements
© the Horizon trial ought not to have been a dramatic trial because both expert
witnesses had found the system to be reasonably robust. However, if the
views of a small number of claimants were extrapolated and represented as
symptomatic of the entire system, then that posed a threat to this view.
Finding that system errors might have occurred in certain instances was
radically different to finding that the system was not reliable. This trial was
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focussed on findings of fact rather than interpretations of the law and would
be very difficult to appeal
© the ongoing costs to the business of needing to prove that money had been
taken had major implications for the operation of the business and the scope
for others to seek compensation if these cases were found against us I
*® we needed a process for checking whether anybody had been treated unfairly I
even if our case was ultimately successful. We also needed to be sure that
we were set up to be fair in the future. It was reported that we were working
through all the contractual issues. We were focussed particularly on the
transparency of processes. These were two of the most urgent issues to be
resolved
e the Board still needed a greater understanding of the “big picture” and
financial implications. The Board wanted to be confident that irrespective of
legal process, there was an understanding of whether claimants (and others)
had not been treated appropriately over the period of time in consideration. I
° If was noted that if Post Office lost the case overall that would have
significant financial and operational outcomes, however at this point there
wasn’t a clear understanding of the potential scenarios at the conclusion of
the trials. This would help shape the overall view of whether we should seek i
to appeal and/ or apply for recusal. It was AGREED that Jane MacLeod and jm/ AC I
Al Cameron would set out their best view of the possible scenarios and this
would be circulated in advance of the Board call on 20 March 2019.
. .
Chairman Date
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