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LOSSES AT SPSO’s
GUIDELINES ON RESPONSIBILITITES AND RECOVERY
ARRANGEMENTS
INTRODUCTION
1.
The purpose of these guidelines is to up-date and bring together
previous advice and instructions that has been issued over a very long
period and in the main have stood the test of time in dealing with the
recovery of losses in whole or part involving Subpostmasters and their
Assistants. Such information has been given in:
Personnel Manual INS 3 PII
PHQ Circular 90/76 Appendix A
SPSO Discipline Paper No 1A (Jan 1984)
MDCs Guidance to District Managers 9Aug 86)
Postal Instructions N5 A
Postal Instructions L5 Boo23
CONTRACTUAL POSITION
2.
In strict legal terms a SubPostmaster is responsible for all losses caused
through his own:
Negligence, Carelessness or Error
and for losses of all kinds caused by their Assistants.
In practice the full contractual right to recover the total loss is not
always exercised where losses occur, and relief, in full or part, is often
given even where negligence has facilitated a loss. However, there is
a need to try and ensure, as far as possible, that SPSO loss cases are
dealt with uniformly and fairly throughout by POC Ltd.
BASIC APPROACH
3.
Before any consideration can be given to the recovery of a loss, the
degree of responsibility has to be considered. Whether the loss was
caused by:
Theft, Burglary, Fraud or Accounting Errors.
The circumstances surrounding the loss must be taken into account
and weighted carefully, such as:
Violence used or Threatened
Lapse of Security
Disregard to Rules or Previous Advice
Failure to spot obvious Fraud
Non-observance of Transaction Procedures
Incompetence
Negligence etc.
and then a decision made as to the amount the SubPostmaster will be
asked to make good, taken with the full knowledge of the
Subpostmaster’s
Age
Record
Experience
and
Any other Extenuating Circumstances.
CONTRIBUTION ASPECT
4.
If the cause of the loss warrants it, the contribution by the
SubPostmaster should be sufficient for it to be meaningful (i.e., the
SubPostmaster feels the effect financially) but not such that this would
cause severe hardship.
Contributions based on a percentage of the loss incurred are not
generally considered a satisfactory method of assessment. For
example, if such a calculation was applied in two separate cases where
the losses were appreciably different then the contributions sought in
each would vary considerably even though the degree of negligence
may be very similar.
Where Post Office 25L and W77 time controlled burglar alarms are
fitted together with a time over lock it is left to the SubPostmaster to
decide where to keep the re-set key (B). The fact that the key is kept
outside the safe should not be considered contributory negligence in
the event of a criminal gaining possession of it provided reasonable
precautions for its safety are applied.
Where value stock/or paid vouchers are involved in a loss FC4.3
RG/ID Chesterfield (in Scotland Scottish Accounting office AD1)
should if necessary be asked to determine the amount of the possible
loss to Post office Funds before the amount of contribution is decided
upon.
RECOVERY OF LOSSES FOLLOWING ATTACKS ON SPSO’s
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8.1
8.2
8.3
If a SubPostmaster is negligent in running his Office and facilitates a
successful raid, it seems right for him to contribute for the loss, but if
he is attacked during a raid, is injured, or shows a commendable
resourcefulness and bravery, then the finest of judgements is required
in deciding the level of contribution. If one is to be sought the
following guidance should be followed:
Where the SubPostmaster has received a bravery award in connection
with the same incident, or has been or is likely to be nominated for
one, full relief should normally be allowed. If it is proposed to call for
a contribution in such a case, HS/PIRC1 should be consulted first.
Where the circumstances of the case are insufficient to merit an award,
but commendable action has been shown or injury suffered, this
should be sympathetically weighed against any negligence when
assessing the contribution towards the loss.
The degree of negligence and therefore the level of contribution will
depend on the specific circumstances of the incident and each case will
need to be judged on its merits. The blatant disregard of security
procedures which led directly to a robbery taking place and to
avoidable losses being incurred will be a critical factor in assessing
negligence. (NB If a history of security lapses is to be invoked asa
factor, it is essential that any previous warnings should be clearly
and carefully documented both within our files and with the
SubPostmaster). On the other hand, acts of bravery or
resourcefulness, and evidence of duress whether the threat of violence
directly or against hostages or severe risk of injury should be taken
into account as countervailing factors.
DNS FRAUD
9.
91
9.2
This is a particularly sensitive area as DNS and the Counters Business
lose large amounts of money each year due to fraudulent payments
from National Savings Bank Accounts, Any loss recovered from a
SubPostmaster will lead to a reduction in the amount of money paid
by the Counters Business to DNS.
The occasions where DNS will seek recovery are where.
The loss took place less than 2 years previously.
The SubPostmaster had been assessed to be to blame for the loss, i.e.
he could reasonably have been expected to spot a fraud that was taken
place.
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9.3. The blame has been assessed to be gross or serious. This covers the
following categories of fraud:
- Book on stop list
- Sex code differences
- Bogus entries
- Alterations/ erasures of genuine balance/ entries
- Missing pages
- Withdrawal over £50 - book not impounded.
There is a need to tighten up the recovery of losses, but the degree of
responsibility and the contribution, if any, rests with the Area Manager
within the guidelines laid down and full weight must be given to them
when making a decision.
TREATMENT OF LOSSES
10. COUNTER LOSSES NOT INVOLVING THEFT OR FRAUD
a. Incurred by Postal Officer substituting for SPSO Assistant.
Full relief providing conditions stated in para 5 of Form R9 are
fulfilled. (Conditions covering the loan of Crown Office Staff).
b. Incurred in first 6 weeks of Appointment.
Normally full relief.
CG Other cases.
SPM to be liable for full amount of the loss, but District
Manager has discretion to give relief on application by the SPM,
factors to be taken into account are the experience of the SPM,
his remuneration and record, and any other extenuating
circumstances such are exceptional pressure or the introduction
of new services or a change of rates.
10.1 SPM sick or otherwise absent with permission and substitute, not
appointed by POC Ltd., left in charge.
As 10c
10.2 SPM sick or otherwise absent with permission and Postal Officer in
charge.
Full relief.
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LOSSES CAUSED BY FRAUD
11.
SPM “in attendance”, i.e., not sick or not otherwise absent with
permission:
a.
Fraud by outsider.
The SPM is technically responsible for the full amount of the
loss but relief to be given. This should amount to full relief
where the circumstances of the case indicate that the loss did
not arise from any negligence on his part or that of his
assistants. Where there is evidence of negligence, the amount
payable to be determined in relation to the degree of negligence,
the SPMs net earnings, length of service, accounting record and
financial circumstances generally. The amount should not be
such as to cause hardship.
Fraud by Assistant.
The SPM to be technically responsible for the full amount of the
loss but relief to be given in cases in which the SPM is in
effective control of the Office and where he can show that
recovery from the assistant is unlikely. This should amount to
full relief (less amount of any restitution order) where the
circumstances of the case indicate that the loss did not arise
from any negligence on the part of the SPM. Where there is
evidence of negligence the amount payable to be determined as
in (a) above.
SPM sick or otherwise absent with permission and substitute not
appointed by POC Ltd., left in charge.
a.
Fraud by outsider
As 11.a
Fraud by assistant
As 11.b
SPM sick or otherwise absent with permission and Postal Officer in
charge.
a.
Fraud by outsider
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b.
Full relief
Fraud by assistant
Full relief
LOSSES CAUSED BY THEFT (NOT INVOLVING FRAUD)
12.
13.
14.
SPM “in attendance”, i.e., not sick or not otherwise absent with
permission.
a.
Theft by outsider
As 1la
Theft by assistant
Normally no relief, but see 12c
Theft by assistant during period of investigation.
Where the SPM had suggested and sought and taken advice
from his Area Manager, full relief to be allowed for any losses
from the theft by the assistant incurred subsequent to the
notification to the District Manager.
SPM sick or other wise absent with permission and substitute, not
appointed by POC Ltd, left in charge:
a.
Theft by outsider
As 1la
Theft by assistant
No relief
SPM sick or otherwise absent with permission and Postal Officer in
charge:
a.
Theft by outsider
Full relief where loss takes place in Office opening hours.
Otherwise, the SPM is technically responsible for the full
amount of the loss but relief to be given, and this should
amount to full relief where the circumstances of the case
indicate that the loss did not arise from any negligence on his
part to ensure the security of the premises and the protection of
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cash and stock. Where there is evidence of such negligence the
amount payable to be determined as in 10a.
b. Theft by assistant.
Full relief.
REPAYMENT OF SHORTAGS BY SUBPOSTMSTERS IN
INSTALMENTS
15. Although a SubPostmaster is liable to make good a deficiency as it
occurs, or the amount outstanding where partial relief has been
granted, there may be instances where to do so would cause undue
hardship. In such circumstances a SubPostmaster may request
permission to repay a large deficiency by instalments. Such
permission should be authorised within the limits determined by the
District Manager.
15.1 Before permission is given, the following conditions must be met:
15.1.1 The sub-office accounts must be checked in order to establish the true
amount.
15.1.2 Instalments may only be paid by deduction from pay and a signed
agreement permitting such deductions must be obtained from the
SubPostmaster. Any such agreement should contain a provision that
any default in payment by instalments will result in the whole sum
outstanding then becoming payable.
15.1.3 Repayments must be reasonable and fixed in relation to the
Subpostmaster’s earnings from all sources and financial commitments.
15.1.4 Repayments should usually be sufficient to clear the amount within 12
months.
15.1.5 Any surplus resulting from a claim error notice relating to the
deficiency for which repayment by instalments has been allowed,
should not be withdrawn by the SubPostmaster, but should make good
immediately any further shortages resulting from charge error notices
which relate to the cash account week (s) for which permission has
been given for reported shortages to be repaid by instalments.
15.1.6 If a SubPostmaster incurs a further large shortage whilst still repaying
a previous shortage by instalments he should be instructed to clear the
second discrepancy in one lump sum payment. Permission should not
be given for concurrent instalment repayments.
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15.1.7 Granting permission for repayment by instalments must not be
allowed to develop into a “rubber-stamping” exercise. Where a
SubPostmaster seems to be making excessive use of the instalment
method of repayment (e.g. 3 cases in 3 years) the facility should be
withdrawn and the office should be subject to an audit. If appropriate
the outcome should be reported to POID.
15.1.8 When the arrangements for repayment by instalments have been
completed, FC4.1 Cash Accounts Group, Reconciliation Sub-group,
Chesterfield (in Scotland Scottish Accounting Office, AD2) must be
advised of the details by forwarding the papers (including the actual
authority) and requested to issue accounting instructions (Authority
voucher Form PGB 19).
15.1.9 Where repayment is over a full 12 month period and audit of the sub-
office accounts should be undertaken after 6 months. Where
exceptionally, repayment is over a longer period than 12 months audits
should be undertaken at approximately 6 monthly intervals. Shortly
after completion of any repayment by instalments an audit of the sub-
office accounts must be undertaken to establish the accounts are in
order.
15.1.10 Local Managers must guard against retaining a SubPostmaster in
office for purely operational reasons when a large unadjusted shortage
persists in the accounts and a firm offer for making good the sum is
not forthcoming. A large unadjusted shortage is a matter of degree
depending upon the remuneration and other financial circumstances,
but warning signs must be apparent when a shortage reaches such
proportions as to be clearly beyond early settlement by the
SubPostmaster either immediately or by a minimum number of
instalments. Retaining the SubPostmaster in office merely postpones
the day when his services have to be terminated, at which point there
is usually an increased shortage which proves irrecoverable and results
in a Post Office cash loss, to which can be added the costs already
incurred in extra administration and audits of the sub-office accounts.
REPAYMENT DURING SUSPENSION OF CONTRACT
16. I Where repayment of a deficiency is received from a SubPostmaster
whose contract is under suspension, it should be accepted without
prejudice to any action the Post Office may decide to take. Repayment
does not normally affect our legal rights in pursuing prosecution;
however, it is long established practice not to prosecute a
SubPostmaster who uses official funds for a private purpose, provided
that it has been made good before summonses have been obtained, the
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amount involved is not large, that he has shown by making good the
deficiency promptly that he did not intend permanently to deprive the
Post Office of the money, and that there are no discreditable features.
It is emphasised, however, that this guidance in no way precludes the
District Manager from pursuing prosecution in any case where it is
considered such a course is justified.
(Care should be taken, if in exceptional circumstances the decision to
prosecute is deferred because repayment is anticipated on sale of the
business, private house, etc. that the delay is not such as might
prejudice the case of the post Office should prosecution be decided
upon).
SO Assistant Prosecution - Compensation/ Restitution
17. Under the terms of PI N5 A0900 5, a SubPostmaster is responsible ‘for
all losses arising from his own negligence, carelessness or error AND
FOR ALL LOSSES INCURRED BY HIS ASSISTANTS’ (SO Assistants
are the employees of the SubPostmaster and, accordingly, cannot be
held contractually liable to the Post Office for losses which may arise
as a result of their actions). Whilst there can be no diminution of the
Subpostmaster’s responsibilities to make good losses without delay,
the Post Office has agreed with NFSP that in cases where an Assistant
is to be prosecuted by the Post Office, consideration will be given to
the advisability of seeking from the Criminal Court a Restitution or
Compensation Order in the Subpostmaster’s favour in respect of losses
suffered at the hands of the offender. If it is considered that such an
order would be likely to be the Subpostmaster’s advantage, then
Solicitor’s Office advice should be sought on that point when the
papers are forwarded to that Office with the prosecution authority:
however, the SubPostmaster should be asked beforehand whether he
would wish a Compensation or Restitution Order to be sought on his
behalf considering that such action might require him to attend the
Court hearing. The instances where Compensation and restitution
Orders may be used to practical advantage are limited, not least by the
fact that it is unusual for the Assistant to have sufficient assets to
ensure that an order for any large amount is complies with; in addition
the criminal charges and any offences taken into consideration against
the Assistant which determine the extent of compensation may involve
sums which form only a fraction of the overall deficiency. A
SubPostmaster can, of course, seek to recover his losses through Civil
Counts.
RECOVERY OF DEFICIENCES FOLLOWING TERMINATION OF
CONTRACT
18. ‘Initial Action
is
18.1 Where it its decided to terminate a Subpostmaster’s contract and a
18.2
18.3
18.4
deficiency exists in the office ‘Late Account’, the opportunity
should be taken in the letter informing him of his loss of office to
make an initial approach regarding repayment. He should be
reminded of his contractual responsibility as set out in PI N5
A0900 para 5 to make good all losses incurred during his period
of office. It is advisable to incorporate an updated statement in
the letter listing any credits due which offset against the
deficiency. As it may prove necessary to institute civil action to
recover the deficiency, the District manager should at this stage
be asked to check that form P931 (acknowledgement of
Appointment as SubPostmaster) is signed by the SubPostmaster
on hand at District Office.
Similar action to the above should be taken where a deficiency
exists, or is revealed later, in the account of a subpostmaster who
has resigned.
In ‘Late Account’ cases where sums of under £150 are involved,
the circumstances of the case will indicate whether the
administrative time likely to be employed in collecting the
moneys outstanding would be justifies. Balanced against
consideration to write off the debt is of course the possibility that
further debit errors may come to light substantially increasing the
deficiency; PFD’S comments on the accounting record of the
SubPostmaster can act as a useful guide in this respect.
The remuneration or other payments due to a SubPostmaster can
be withheld to off-set a deficiency in his accounts. The situation
that “In the absence of any expense rule forbidding a right of set-
off, the general rule is that a party to a contract can set off against
sums which he owes under that contract, sums which are owed to
him under that contract”/ A different situation might apply
however where the SubPostmaster is adjudicated bankrupt.
Should legal action be threatened or taken against POC Ltd in
respect of remuneration or there payments withheld to off set a
deficiency, the papers should immediately be referred to
Solicitors Office (via CBHQ/PIRC1).
Response to letter from District Manager
19. If the Financial circumstances of the ex-SubPostmaster leave him unable
to repay the loss as a lump sum and he makes an offer of repayment by
instalments, it is recommended that any offer which is accepted is, as far
as is possible, to the guidelines set out in para 15. As well as to periodic
review to see whether the levels of repayments might be increased, and
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also to the condition that should repayments fall into arrears, the whole
amount outstanding becomes due for repayment.
19.1
19.2
19.3
If the ex SubPostmaster refers the letter to a firm of solicitors, it
may be considered advisable to forward the case with a summary
of the developments to date, to the Solicitor’s Office via
CBQH/PIRC1 for advise.
The debtor may refuse repayments on the grounds that he is not
satisfied that the deficiency quoted reflects the true state of the SO
Accounts and in such circumstances he might be invited to
inspect the accounts and documentary evidence supporting the
deficiency at the District Office.
If no reply is received to the letter, it is recommended that a
second be sent in stronger terms by recorded delivery; if this
approach proves unsuccessful, the papers should be referred to
the Solicitor’s Office, via CBQH/PIRC1 for advise on what legal
action can be taken to recover the deficiency . The
subpostmaster’s appointment papers should be associated with
the file and details given of what discreet enquiry has discovered
locally _ of his financial position.
LEGAL PROCEEDINGS
20. Once instructions have been received, the Solicitor’s Office may
commence proceedings as long as not more than 6 years has elapsed since
the cause of action arose. These proceedings will be taken either in the
appropriate County Court or in the High Court, depending on the
amount on money outstanding.
20.1
20.2
There will be a period of time between issue of proceedings and
obtaining Judgement even in undefended cases. If there is reason
to suppose that the ex-SubPostmaster may dissipate his assets in
that time, the Court may grant an interim or Interlocutory
Injunction restraining him from disposing of such assets, other
than those required for his normal living and business expenses.
The Solicitor’s Office should be advised of any such possibilities
when the papers are submitted. The fact that the ex-
SubPostmaster is being prosecuted does not prevent and indeed
encourage the Court to make such an Order. In the event of
prosecution, mention should be made in the instructing minute to
POID of any relevant facts to support such an application.
Before or after Judgement is obtained, the ex-SubPostmaster may
seek to repay by instalments. In County Court cases, payments
are usually made through the Court Office. In high Court cases,
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such payments are made direct to the Plaintiff's solicitors, in this
case the Post Office Solicitor. Once proceedings have been
commenced, no legal correspondence should be entered into with
the ex-SubPostmaster and any monies received locally or
alteration in the sum due must be notified to the Solicitor’s Office
quoting the CLD reference number.
20.3 If no acceptable payment is forthcoming, Judgement will then
have to be enforced by the Solicitor’s Office. It is important that
as much information as possible concerning the financial status of
the debtor is made available to the Solicitor’s Office. Enforcement
may be through such methods as a Charging Order on land,
Attachment of Earnings in the case of an employed person, a
Warrant of Execution whereby the Bailiff or Sheriff seizes goods
and/or money, and realisation of the value of investments. A
bankruptcy Order may have to be sought.
INSOLVENCY OF SUBPOSTMASTERS
21. The Official Receiver will normally notify the District Manager when a
receiving order in bankruptcy has been made in respect of a SPMR. The
Official Receiver will inform the District Manager as to when he will be
attending the SPMR’s premises to collect the assets of the individual.
22. For the purpose of recovering cash, stock and property of Post Office
Counters Ltd the District Manager should arrange to attend the SPSO
premises at the same time as the Official Receiver. The period of notice
given to the District Manager by the Official Receiver will invariably be
of very short duration. To assist the Official Receiver in identifying items
of PO equipment, i.e. scales, datestamps, alarms etc. a copy of form P931
and any other document on which the SPMR has acknowledged _ receipt
of particular items of PO property should be taken to the office by the
District Manager representative as proof of ownership. In the absence of
a representative from the District Office at the SPSO the Official Reciever
will collect and place all PO property in sealed bags and retain them at
his office pending a claim from District Manager.
23. As soon as the District Manager is made aware that a receiving order in
bankruptcy had been made in respect of a SPMR, consideration should
be given to his suspension. The length of the period of suspension will
depend on the SPMR’s ability to satisfy the District Manager:-
a) That there are no discreditable features in the bankruptcy or insolvency:
b) As to the continued safety of the PO and stock entrusted to his care:
c) As to his capability of continuing to run the office from the existing
premises:
d) That no less of PO money has occurred.
If the District Manager is satisfies as to the above the SPMR may be
allowed to resume office. Where resumption is allowed the District
Manager should exercise special supervision, and pending settlement of
the bankruptcy proceedings, the SPSO accounts should be checked not
less frequently than once a month. If the District Manager is dissatisfied
as a result of his enquiries he should terminate the SPMR’s contract,
summarily, where the SPMR is in clear breach of the terms of his contract
e.g. Inability to continue to provide premises, otherwise by giving 3
months notice.
24, Where a deficiency is found in the SPSO accounts early action should be
taken to approach the Official Receiver to find out the date and number
of the receiving Order or Winding Up Order as the case may be, which
should be quoted in all subsequent correspondence, and position of
affairs.
Before the proof of debt is lodged the amount of the deficiency should
first be agreed by FC4.3 Reconciliation Group, Chesterfield.
For Scotland, Scottish Accounting Office AD2.
25. The Official Receiver should be told of any remuneration arrears or any
other amounts due to be paid to the SPMR in order that he may construct
as to their disposal.
26. Postal Instruction NI 10015 refers.
TREATMENT OF CASES WHERE AN EX-SUBPOSTMASTER IS
IMPRISONED BUT HAS NOT FILED A BANKRUPTCY PETITION OR
ENTERED INTO A DEED ARRANGEMENT
27. Where no action has been taken to recover a deficiency under Legal
Preceeding para 18.2 and it considered that the debtor is likely to remain
in prison for more than a year, a letter sent through the prison governor
about six months later the conviction reminding the ex-SubPostmaster of
his responsibility to repay the late account deficiency often services to
remove any false assumption that on release he will be freed from all
obligations in
connection with his Post office service.
DEATH OF A SUBPOSTMASTER
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28. Where on the death of a SubPostmaster a deficiency exists in the SO
accounts, a statement giving details of the shortage should be sent to the
solicitor or member of the family engaged in the administration of the estate.
In such circumstances the intention would not be to exert immediately any
pressure in seeking repayment but merely to register our claim. The debt
should not, however, be permitted to be outstanding for more than a period
of six months before pressure is applied to seek repayment. If deficiency is
disputed, in all but the most straightforward cases the advise of the Solicitor’s
Office should be sought. (para 19. Also refers).