POL00069298
POL00069298
10/64 ' ROWECOHEN Qooa
1
IN THE HIGH COURT OF JUSTICE Claim No. HQ05X02706
QUEEN’S BENCH DIVISION
BETWEEN:
POST OFFICE LIMITED
Claimanv’
Part 20 Defendant
-and-
LEE CASTLETON
Defendant’
Part 20 Claimant
FURTHER INFORMATION OF THE DEFENCE AND PART 20 CLAIM
Request
L In paragraph 5 of the Defence, of the words “The Defendant avers that any apparent
shortfall is entirely the product of problems with the Horizon computer and accounting
system used by the Claimant” please state precisely:
1.1. the full nature and extent of the problems that the Defendant alleges he
encountered with the Horizon system and on what occasions he encountered
them.
12 how and why each of the alleged problems with the Horizon system meant that
‘the losses in question were allegedly theoretical rather than real.
! 13 Between cash weeks 42 and 49 whether the Defendant admits:
i
;
' (a) ordering approximately £305,000 cash from the Claimant (and if not,
what sum the Defendant ordered over this period);
(b) retuming only approximately £20,000 of that cash to the Claimant (and if
not, how much was returned);
4
\
7
95% P.@3
4G-APR-2886 14:46
POL00069298
POL00069298
10/04 ‘08 14:47! GRO i ROWECOHEN Boos -
(c) that the Marine Drive branch never ran out of cash (i.¢. it always had
sufficient cash to service its transactions).
Ll The problems that the Defendant encountered with the Horizon system and the
occasions on which he encountered them were as follows:
i) Not communicating properly. The Horizon system, as installed at the
Marine Drive branch, included 2 computer terminals with touch screens
and keyboards, together with bespoke software developed and
maintained on behalf of the Claimant by Horizon Systems. One of the
terminals was known as the base unit, which the Defendant believes had
a small amount of internal memory, and had an ISDN, (subsequently
broadband), connection off-site to a central monitorng and/or data
storage and/or controlling station, which was maintained on behalf of the
Claimant by Fujitsu Services. The other terminal was known as node
unit, which the Defendant believes had no separate internal memory, was
connected to the base unit and communicated to it such data as might be
input to it. The Defendant believes that periodically, several times
throughout a day’s trading, the base unit would then transmit data input
both to it and through the node unit, onwards to the central station. On
occasions too numerous to recall during the period in question, the
Defendant told the Claimant that he considered that the 2 units were not
communicating with each other properly.
ii) Screen freezing. The display of one or other or both of the tenninals
I would ‘freeze’, i.e. lock up and fail to respond, either to commands
I attempted to be entered through the terminal’s keyboard or commands
I attempted to be entered by hand through the touch screen function of the
terminal’s display, requiring the system to be re-booted. This problem
7 was a regular occurrence and happened approximately weekly during the
period in question.
1@-APR-2086 14:47
10/04 ‘06 1d:
1@-APR-2026
iii)
iv)
¥)
mi)
Blank screen. The display of one or other or both of the terminals would
suddenly go blank before returning to the sales screen. This problem
occurred approximately monthly during the period in question.
Card swipe not reading. The electronic card swipe of one or other or
both of the terminals, used to read a customer’s payment card, would fail
{o read the card properly. This problem was a very regular occurrence
and happened approximately daily during the period in question.
Rolling over cash figures. The Defendant believes that the Horizon
system ‘rolled over’ cash figures in the weekly cashflow figure (a report
that can be produced, also known by the Claimant as On Hand Cash
Handling, or ONCH) giving a figure that was 4-5 times as big as the
actual cash declaration for that day. The Defendant first became aware
that this information was available to be printed out during cash week 48,
the week ending 25 February 2004, when it was printed out by one of the
Claimant’s business support workers (although he subsequently became
aware that his assistant, Christine Train, had been aware of it since in or
around week 43, and had periodically run off cashflow reports). The
Defendant looked at this figure several times each week from that time
onwards until his suspension by the Claimant on 23 March 2004. On
average, the figure given by the system was incorrect on at least one
occasion each week (although previously, prior to the Defendant being
aware of the facility to print the figures, Ms Train had noted that the
figure was incorrect more frequently, often several times each week).
Lost transactions. The Horizon system would ‘lose’, i.e. fail to record,
transactions which the Defendant knew he had entered onto the system.
By way of example only, a cheque which the Defendant knew he had
entered into the system as being a cheque, would not appear identified as
a cheque. This problem would occur at least weekly during the period in
question, sometimes as frequently as twice a day but then not for about 4
days.
95%
POL00069298
POL00069298
ROWECOHEN 005
P.@S
POL00069298
POL00069298
GRO : ROWECOHEN Boos
10/04 '06 14:48
1.2 How and why each of the problems experienced by the Defendant with the
Horizon system means that the alleged losses in question were theoretical rather
than real, is an issue that will require disclosure from the Claimant for the period
in question, in particular as to the correct operation of the Honzon Systems’
software, (including any modifications or upgrades), and the correct operation of
the hardware maintained by Fujitsu Services, (including any replacement
equipment), together with expert evidence, both in the field of Information
Technology and Accountancy. Without prejudice thereto the Defendant replies as
follows:
‘i) If the Horizon system missed a transactional piece of information it
would alter the balance recorded on it. If it failed to record a payment
out, there would be less actual cash at the branch than the amount of cash
recorded on the system. As more cash tends to go out from a Sub Post
Office than comes in, such a discrepancy would tend to operate so that
the balance showing in the system was greater than the actual balance
held at the branch,
ii) By way of example only, if a cheque paid in is input to the Horizon
system and the system sends that data off-site but the system loses that
information locally, when it is time to ‘cut off’, i.e. print a cheque report
to send with a bundle of cheques to be sent away, the report will not
correspond to the number of cheques present and it is necessary to re~
input, manually, the additional cheque, so the report matches. However,
a further amount may have been added to the balance recorded centrally
by the amount of' the lost cheque, although possibly as cash. Thus the
Sub Post Office appears to have more money than it does.
‘The Defendant reserves the right toamend this reply following disclosure and
expert evidence.
13 Between cash weeks 42 and 49, the Defendant:
1{Q-APR-DADe «14:47
16/04 '06 14
Request
(a) denies ordering approximately £305,000 cash from the Claimant. The
Defendant ordered approximately £288,850. The relevant figures are
shown in ‘Table 6 Remittances from ADC’ line 14 in the documents
headed ‘Cash Account (Final)’ for this period.
(b) denies retuming approximately £20,000 to the Claimant. The Defendant
retumed approximately £34,891.28 to the Claimant. The relevant figures
are shown in ‘Table 9 Remittances to ADC’ line 1 in the documents
referred to in the answer to (a) above.
(c) admits that the Marine Drive branch did not run out of cash.
2. In paragraph 6 of the words “upon disclosure by the Claimant of the daily balance
snapshot documents” please state:
2.1
2.2.
23
24
2.5
q
1@-APR-2885 14:48
What the Defendant believes is the purpose and functionality of a balance
snapshot and the basis of his belief.
Whether the Defendant admits that a balance snapshot is a running total printout
showing a balance of what cash a branch should have, not necessarily what cash
it actually does have. If the Defendant does not admit this, please state why not.
'Whether the Defendant maintains that a balance snapshot is able to (and should)
jshow the actual transfer of cash from a Cash Account into a suspense account.
‘How and why the Defendant believes that a balance snapshot is capable (i.e. has
ithe functionality) of conclusively demonstrating that the shortfalls were only
accounting errors rather than genuine shortfalls.
Whether the Defendant relies upon any other receipts apart from balance
snapshots to be able to demonstrate that the shortfalls are nothing more than
95%
POL00069298
POL00069298
ROWECOHEN @oo7
10/04
"06 ld:
2.1
2.2
ROWECOHEN
jalleged accounting errors and if so, specify which documents and categories of
‘documents are those upon which the Defendant seeks to rely.
The Defendant believes that the purpose and functionality of a balance snapshot
is to give a picture of what the Horizon system believes to be the level of cash
and stock held and receipts and payments made at a given point during the
current balance period but it is not a real time picture. (cf the Claimant’s Horizon
System User Guide Navigation Booklet ~ Ref: HSUG 14/1 — at page 17 line 8) It
is not possible to be sure when it is printed that everything is up to date. The data
that comprises a balance snapshot is held off site. A request for a balance
snapshot may not include the last ‘packet’ of data yet to go from the base unit in
the Sub Post Office and it is not possible to check whether it has gone or not, so
the balance snapshot may not be fully up to date. It will also be subject to any
errors that have occurred in the operation of the system (as to which see the
Defendant’s answer to request 2.2 below). The Defendant’s belief is based on
speaking to Post Office staff such as Ms Oglesby, engineers, Horizon Systems
helpdesk staff, Network Business Support Centre staff and the Horizon system
manual.
The Defendant admits that a balance snapshot is a running total printout which
may show the balance of what cash a branch may have but equally it may not for
a number of reasons:
i) all data ‘packets’ may not have been sent from the base unit;
3) some data may have been lost or additional data input;
iii) wrong amounts may have becn input;
'
i”) an amount may have failed to be input.
95%
POL00069298
POL00069298
Qos
10/04
"06 14:49
23
24
2.5
‘Ef all of these aspects have been performed correctly, a balance snapshot should
show a balance of what cash a branch should have but often it does not. A
balance snapshot will also show individual transactions successfully entered onto
and recorded in the Horizon system.
The Defendant maintains that a balance snapshot is able to and should show the
actual transfer of cash from the cash account into the suspense account to the
extent that it will show the transactional aspect of that transfer and how it affects
the rest of the balancing procedure. It is a notional transfer and it is recorded on 2
“balance snapshot as a payment. However, it is necessary to be able to interpret
the information recorded on a balance snapshot to understand that it is a transfer
to the suspense account as it will tend to be described, (below a heading
“OTHER PAYMENTS"), as “Loss a 2a in”.
How and why a balance snapshot is capable of demonstrating that the alleged
‘shortfalls were only accounting errors rather than genuine shortfalls will be @
“matter for expert evidence in the field of Accountancy. Without prejudice
thereto, the Defendant believes that by comparing the actual balance snapshots
swhich he took daily after the close of each day's trading over the period in
question, with the final balance produced by the Horizon system at the end of
each week's trading, the daily cash declarations, and final weekly cash
declaration, (both compiled manually), it should be possible to demonstrate that
‘the alleged shortfalls were only accounting errors rather than genuine shortfalls.
\The daily balance snapshots should (but may not, for the reasons set out in reply
2.2 above) equal the daily cash declared. The daily balance snapshots should (but
may not, for the reasons set out in reply 2.2 above) produce the final weekly
balance (transactionally). The daily cash declarations should produce the final
, weekly cash declaration. A comparison between all 4 sources of data should be
sable to show where error has arisen.
The Defendant does not rely upon any other receipts apart from balance
‘snapshots but considers that it will be necessary to reconstruct all transactions
carried out at the Marine Drive branch for the period in question. In order to do
95%
POL00069298
POL00069298
ROWECOHEN ooo
P.@9
10/04 1068 14:49!
Ae ene.
Gas
POL00069298
POL00069298
ROWECOHEN 010
‘so, the documents or categories of document upon which the Defendant will seek
‘to rely will include the following reports as may be necessary:
Daily Reports
i) Balance Snapshots;
ii) Daily Cash Declaration;
iii) Cheque Listing Report,
iv) National Savings and Investments Bank deposits and withdrawals;
y) Personal Banking;
vi) Alliance & Leicester deposits and withdrawals;
wii) APS Transaction Report;
vill) TV Licensing Report;
Weekly Reports
i) Green Giro Report;
ii) P+A Report;
iii) PO Paid Report (7490);
iv) Redeemed Stamps Summary;
vy) Miscellaneous Transactions;
vi) P+A Report (P2311MA, P+A P2311MA(6));
vii) Milk Token Summary (P3890);
viii) PO Paid Report (P492MA/P2037MA);
x) Suspense Account Report;
x) Cash Account;
xi) Final Balance.
‘In addition there were weekly cash/stock ordering ¢-mails received and faxes
sent. Further, the Defendant believes that an audit trail or transactional log of
‘transactions carried out at the Marine Drive branch was kept by the Claimant.
‘The Defendant will seek to rely on these documents following disclosure. The
purpose of so doing is in order to be able to cross-reference as many different
‘sources of data as are necessary in order to identify where the discrepancies have
‘arisen.
8
34% P.18
10/04 '06 14 ROWECOHEN
i
I
Request
3. In paragraph 9 of the Part 20 Claim of the words “wrongfully terminated the Defendant's
Contract as a Sub-Postmaster following his suspension ” please state:
3.1
3.2
3.3
Reply
3.1
be
show allegedly was the Claimant at fault in wrongfully terminating the
‘Defendant's Contract as Sub-Postmaster. In other words please identify whether
‘the Defendant relies upon an alleged procedural irregularity or wrongful
ground(s) for termination or both and in what respect?
show allegedly should the Claimant have dealt with the shortfall that forms the
basis of the claim given the right to determine the Defendant's Contract on 3
months notice without cause?
show allegedly should the process of termination have taken place that did not
otherwise take place?
The Defendant relies upon both procedural irregularity and/or wrongful grounds
for termination in the following respects:
-Procedural Irregularities:
i The Claimant held meetings that lead to the Defendant’s suspension and
termination without having first called in one of its vestigation teams.
The Defendant believes that it was the Claimant’s practice to call in such
a team within a period of 3 weeks. The Defendant had been asking the
Claimant to call in an investigation team since the discrepancies between
the Horizon system and the actual cash position had first come to light, a
period of approximately 12 weeks by the time of his suspension, but the
Claimant failed to do so. Likewise, the Defendant asked for the Police to
become involved but the Claimant declined to involve them.
35y
POL00069298
POL00069298
Boi
1oso4_"
ii)
sii)
iv)
v)
v)
‘y)
vi)
Information that the Defendant had requested prior to the meeting that
lead to his termination, as set out in his letter dated 28 April 2004 was
not provided to him.
The Claimant would not allow tape recording, either of the meeting that
lead to his termination or of the appeal hearing against his termination.
The Claimant’s notes of the meetings are not accurate,
There had been no on site investigation of the Defendant’s complaints by
either Horizon Systems or Fujitsu Services.
The Claimant had not checked the events on the software system before
1 March 2004, when the apparent discrepancies experienced by the
Defendant had started to occur in cash week 42, the week ending 14
January 2004.
The note taker in the appeal,
been involved in the matter as she was the Personal Assistant to Mr
David Mellows-Facer, the Claimant’s Head of Area, with whom the
Defendant had been speaking and corresponding. The Defendant had
also previously discussed the situation wit [ GRO. when Mr
Mellows-Facer would not retum his calls.
At or following both the termination and the appeal meetings, the
Defendant was given no opportunity to address what issues would be put
by Ms Oglesby or Mr Jones to others, namely Elizabeth Morgan and Mr
Davlynn Cumberland and Ms Anita Turner for their consideration., nor,
subsequently, to address the conclusions reached by them.
Wrongful grounds
i)
The Defendant did not have several large unexplained losses, whether
totalling £25,758.75 or at all, although there was an apparent discrepancy
_ 10
95%
POL00069298
POL00069298
Qo
POL00069298
POL00069298
ROWECOHEN @o13
between the amount of cash recorded in the Horizon system and the
actual cash held by the Defendant at the Marine Drive branch.
ii) ‘The Defendant was not unable to make the losses good as alleged as
there were no such ‘losses’ to be ‘made good’.
iii) Had such alleged losses in fact existed, the Defendant would not have
_ been unable to make them good but wished to be satisfied that they did
So exist.
ii) The Defendant did not fail to manage the Marine Drive branch or
perform his work properly satisfactorily. No dissatisfaction had
previously been expressed by the Claimant with the Defendant's
management of the Marine Drive branch or his performance of his work,
whether by way of formal or informal, written or verbal warning.
3.2 ‘How the Claimant might have chosen to deal with the alleged shortfall which
forms the basis of its claim, given its alleged right to determine the Defendant's
‘Contract on 3 months notice without cause is a matter within the Claimant's own
Imowledge and in any event it is not a matter that is presently in dispute in these
Proceedings. Accordingly, this is not a request coming within CPR Part 18.1(1).
3.3. IThe Claimant should have acted or refrained from acting in the opposite manner
to that set out in the replies to requests 3.1 and 3.2 above.
Request
4. In paragraph 9 thereof of the words “the true cause of the apparent shortfall in the
accounts of Marine Drive Post Office is the Claimant's own computer system not any
misconduct or negligence on the part of the Defendant or his assistant”:
4.1 ‘please provide full particulars of the evidence that the Defendant relies upon to
“show and/or demonstrate this.
41
ee es swore:
POL00069298
POL00069298
ROWECOHEN @o1s
42 ‘please provide copies of all documents not otherwise disclosed so far and relied
‘upon to evidence the allegations relating to the Claimant’s computer syste.
Reply
41 Please see the Defendant’s replies to requests 1 and 2 above. The Defendant will
‘provide such evidence following disclosure on exchange of witness statements
,and expert evidence in accordance with the timetable that has been agreed
‘between the parties and ordered by the court.
42 The Defendant will provide such documents on disclosure in accordance with the
i timetable that has been agreed between the parties and ordered by the court.
i iMoreover, the Defendant believes that many of the documents relevant to this
issue are within the possession custody or control of the Claimant, in particular,
at its Network Business Support Centre and/or Horizon Systems and/or Fujitsu
Services.
i Request
5. Jn paragraph 10 thereof and sub paragraphs (a), (b) and (c) the Defendant alleges that he
' has suffered various losses by reference to his wrongful termination. Please state:
'
I S51 :given that the Defendant’s position could have been determined without cause on
i
‘three months notice, what losses beyond this period, if at all, does the Claimant
‘claim and on what basis?
5.2 please provide copies of all documents relied upon to evidence the alleged
I : diminution in capital value of the Defendant’s premises.
1
I
5.3 :Please provide copies of all' documents relied upon to evidence the '/alleged]
loss of profits from the Post Office...as a result of the removal by the Claimant of
I ‘the Post Office franchise from the premises.”
12
18-APR-2008 14:49 95% Pid
POL00069298
POL00069298
10/04 ‘06 14 ROWECOHEN ols
—_ i
I
I
{
I
\
I
'
I Reply
5.1 ‘Whether the Claimant could or would have sought to terminate the Defendant's
position without cause on 3 month’s notice is not a matter that is presently in
dispute in these proceedings. Accordingly, this is not a request coming within
\CPR Part 18.1(1).
5.2 ‘The Defendant will provide such documents on disclosure in accordance with the
timetable that has been agreed between the parties and ordered by the court.
5.3 The Defendant will provide such documents on disclosure in accordance with the
timetable that has been agreed between the parties and ordered by the court.
ALEXANDER GOOLD
. [believe that the contents of this statement of case are true
SIGNED:
I
DATE: i. ceseccesseessseeseessuceeeesenene
I Served by Rowe Cohen of Quay House, Quay Street, Manchester M3 3JE (Ref: MDT.1 13969)
I Solicitors for the Defendant/Part 20 Claimant
ki
I
1
\
I
13
1@-APR-2886 14:58 95% P.1s
Reply
SA
Toelieve that
SIGNED:
DATE:
ROWECOHEN
ROWECOWRN
Whether the Claimant could or would have sought to terminate the Defendant's
position without cause on 3 month's notice is not a moter that is presently in
dispute in these proceedings. Accordingly, this is not @ request coming wathin
CPR Pacis 1).
{
The Defendant will pronde such documents on disclosure in accordance with the
timetable thet has been egreed betweeu the parlivs und ordered by the court.
I
The Defendan: will provide such documents on disclosure in accordance with the
Umerable chat hes been agreed benween the parties and ordeved by the court.
ALEXANDER GUOLD
eo ate We
h
Served by Howe Coben of Quey House, Quay Street, Manchester M3 3/E (Ref: MDT.113969)
Solisilors for the DefendanyPart 20 Claimeat
POL00069298
POL00069298
Bors
@oor-001
BIIET 90-FB-GT
P.16