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Confidential and privileged legal advice
Do not disclose, forward, scan or copy WOMBLE
BOND
DICKINSON
UPDATED Risk Assessment Table
INTRODUCTION
This document summarises in Counsel's Opinion on the Common Issues. By its very nature, it is simplistic and should not be relied upon in lieu of a careful
reading of Counsel's Opinion. The legal arguments in this case are complex, with often several permutations of outcome. This risk assessment describes the
main rust of each issue and the key risks faced. It does not exhaustively set out every permutation of outcome at the Common Issues Trial.
Where we have offered a view on the impact on Post Office, this an initial view based on our working knowledge of the Post Office business. Our understanding of the
Post Office business is not comprehensive and we have not sought to set out an exhaustive list of impacts. We also note that the Common Issues are not discrete
topics and there will be interplay between them. Success or failure on some points may lead to success or failure in other areas. If multiple common issues are lost,
they may have a compound effect greater than the risks identified below.
In preparing this risk assessment, we have not yet considered any mitigating actions that may be taken.
Issue is in
Post Office is very likely to lose the issue / The proposed term is A significant adverse impact on the business that could threaten
very likely to be implied. its existence.
Post Office is more likely to lose than win the issue / proposed
term will more likely than not be implied.
A major adverse impact on the business that will have
considerable long-term commercial harm.
3 50/50 3 A material impact on the business that will cause some
commercial detriment / increased costs.
Post Office is more likely to win than lose the issue / The Some impact on the business but the additional burdens / costs.
proposed term will likely not be implied. will be manageable.
Post Office is very likely to win the issue / It is very unlikely that Negligible impact on the business.
the proposed term will be implied.
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UPDATE
This Risk Analysis has been updated following the Common Issues Trial to provide the following additional information:
1. THE PREDICTED OUTCOME FROM THE COMMON ISSUES TRIAL
. This reflects the legal team's prediction of what the Judge might do on each Common Issue. It is no more than a prediction and should be
relied on with caution.
. In general the legal team continue to believe that its assessment of the legal position, if determined in accordance with established legal
principles, remains sound. This is reflected in the "Likelihood" column. This column is unchanged from the original risk assessment.
. During trial, the Judge indicated an interest in adopting unconventional approaches to some issues. He also expressed a willingness to adopt
his own alternative outcomes, rather than choosing between the options presented to him by the parties. There is therefore an increased risk
that he may department from established legal principles, which in turn has led to a small increase in risk to Post Office on some issues. This
is shown in the new "Predicted Outcome" column
2. GUIDANCE ON POSSIBLE APPEAL POINTS
. Nearly all the Judge's legal findings on all Common Issues are theoretically capable of being appealed. The Judge will also make some
findings of fact that underpin his decisions on the Common Issues. It is generally difficult to appeal the underlying factual findings.
. Whether an appeal should be lodged depends on a number of interlinked factors including the nature of the finding on each individual issue,
the Judge's reasoning for that finding, the overall balance of findings for and against Post Office across all issues and the strategic advantages
and disadvantages of lodging an appeal in this litigation. We can only provide advice on whether, if so and what, to appeal once we have the
Judgment.
. The new "Appeal" column below indicates which issues are more important and therefore weigh in favour of Post Office lodging an appeal on
that point. We have assessed the appeal importance (i) based on the assumption that the Judge makes a highly adverse finding against Post
Office on that issue and (ii) from the perspective of maximising Post Office's legal position in the litigation. There may be other non-legal
factors (eg. commercial cost, brand risk, etc) they may also weigh for or against appealing a point.
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3. KEY TO NEW ASSSESMENTS
[
Post Office is very likely to lose the issue / The proposed term is An appeal is essential
very likely to be implied.
Post Office is more likely to lose than win the issue / proposed A successful appeal would highly benefit Post Office
term will more likely than not be implied.
3 50/50 3 A successful appeal would materially benefit Post Office but the
merits need considering in the wider context of the litigation.
Post Office is more likely to win than lose the issue / The Appeal only if already lodging an appeal on other points
proposed term will likely not be implied.
Post Office is very likely to win the issue / It is very unlikely that
the proposed term will be implied.
oC Minor issue unlikely to warrant an appeal
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UPDATED RISK ASSESSMENT TABLE
I chan
1 Relational Contract Summary: Counsel is satisfied overall that Post Office The Judge expressed a 3
Was the contractual relationship between is likely to succeed on this issue. high level of interest in the
Post Office and Subpostmasters a Detail: There is some risk on this issue for Post Office evolving area Of law
hoe areal 7
relational contract"? due to: contracts".
If so, this would mean that Post Office was A) This area of law being in a state of development; We think it likely, on
farepureney, eo opotlion. ond tuctant B) The way each party is dependent on the close balance, that the Judge
confidence? i ee i cooperation of the other, which puts a query over how will determine that the
i the Subpostmaster relationship operates in practice; Subpostmaster Contracts
ai were relational contracts
C) An imbalance of bargaining power and level of .
chine but we do not expect him
sophistication between Post Office and the to imply the term as to
Subpostmasters; and ply
* good faith as pleaded by
D) The SPMC and NTC having several characteristics the Claimants, but he may
of relational contracts, and the SPMC in particular not imply a lesser duty
being particularly well drafted. (perhaps requiring nothing
If the court were to find that they were relational more than honesty).
contracts, this does not necessarily mean that a "good
faith term" should be automatically implied. Counsel's
view is that it would be wrong to imply a term as to good
faith into the SPMC and NTC.
There is also a significant question mark over what
good faith actually means. It could be limited to
whether Post Office acts honestly or the meaning
could be taken further to mean putting
Subpostmaster's interests above Post Office's
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interests.
Impact (WBD):
. Post Office will be required to carry out
more checking of its decisions to make
sure they align with the "relational
contract", and will need to ensure its.
process adheres to that standard, which
will require time and have a cost.
. Post Office may need to balance acting in
own best interests against
Subpostmaster's interests. This would
fetter Post Office's ability to run and
evolve the business in the way it sees fit.
Implied terms
Which, if any, of the 21 terms proposed by
the Claimants should be implied into the
contracts between Post Office and
Subpostmasters?
Summary: There is a high threshold for the Claimants
to reach to be able to imply terms into the contracts.
There are some terms which are more risky than others.
Detail: The Claimants are attempting to imply 21 terms
into the contract. They are grouped below in themes
rather than setting out all 21 specific terms.
To dissuade the court that the 21 implied terms need
incorporating into the contracts, Post Office has
admitted two implied terms, which in Counsel's opinion
largely render the additional implied terms unnecessary
(the Stirling v Maitland Term and the Necessary
Cooperation Term).
However, there are no guarantees about how the
Managing Judge will address each and every implied
term.
As matters stand, there are some arguments on the
implied terms which are finely balanced. For example,
the court may think it a small step to agree to a mutual
duty to maintain trust and confidence in a business to
business, agency relationship.
See detailed comments
below on each implied
term.
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If some of the implied terms are accepted, these may
have a practical effect on requiring Post Office to do
things which are not currently required by the
contracts.
Impact: See below.
IMPLIED TERMS
3. Implied term (admitted): Impact (WBD):
Cooperation . These terms apply a low threshold (eg.
: necessary cooperation) to all Post Office's
Post Office and Subpostmasters would not
take steps which would stop the other from activity in all areas that touch postmasters.
complying with the contract. : We would expect Post Office to be
meeting these standards in most areas
Coser Wthihe Giner Ce uel peceesary but we do not have a holistic view of Post
to enable the other to carry out their Office's business to say this with certainty.
Obligations as set out in the contract. . There two terms may have similar effect to
some of the Claimants' implied terms eg.
both will require Post Office to provide
Subpostmasters with some degree of
training.
4, Implied term: Note: This issue has been split into two parts because
Exercige of powers 4 it depends on which express terms are being
Ps considered.
[In relation to (i) contract variations and (ii) P
f ost Office has a high degree of freedom when
hoe oo a ial deciding to (i) vary the Subpostmaster Contracts and (ii)
ig PI ; withhold Subpostmaster remuneration during
Post Office would exercise any power suspension. Counsel has advised that the Court is
(under the contracts or generally) honestly likely to place some restrictions on these discretionary
and only for the purpose the power was powers, namely that these powers should not be used
created to achieve. arbitrarily, capriciously or irrationally.
Post Office will not exercise a power Impact (WBD):
arbitrarily capriciously or irrationally. . Post Office will need to pro-actively
consider and document in every case
whether remuneration should be withheld
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during a period of suspension. This
could lead to significant back-claims for
withheld remuneration where this has not
happened. Going forward this could be
remedied with a process change to
approve and document these decisions.
It is consider unlikely that Post Office
would vary the Subpostmaster Contracts
without careful consideration and so this
implied term should have negligible
impact. More effort may be required to
document these decisions in more detail.
Implied term:
Exercise of powers 2
[All other terms of the contracts]
Post Office would exercise any power
(under the contracts or generally) honestly
and only for the purpose the power was
created to achieve.
Post Office will not exercise a power
arbitrarily capriciously or irrationally.
Counsel is satisfied that Post Office's other powers
under the Subpostmaster Contracts (eg. power to
terminate) are unlikely to be fettered by these implied
terms.
Impact (WBD):
If this implied term does apply to other
powers under the contracts (eg. right to
terminate) this may slow down decisions
and actions (eg. delay suspensions) and
therefore cause losses to increase in
branches.
It would give Subpostmasters wider
grounds on which to challenge many
decisions on Post Office.
Post Office would need to document
decisions better so to prove that they are
not arbitrary or irrational. It should be
noted that the threshold for irrationality is
very high — a decision needs to be
completely perverse for it to be classed
as irrational. The greater risk is that the
decision looks arbitrary or capricious
because Post Office is not able to point
to any audit trail on its decision making.
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Implied term:
6. Impact (WBD): The Judge expressed a
Quality of Horizon . If Horizon meets these standards already, keen interest in the
then this implied term will have minimal operation of Horizon
Post Office would provide a system which impact. P even though Horizon
was reasonably well suited to its ° related matters were
designated purpose, including: . If Horizon does not meet these standards, reserved to a later trial.
Post Office would need to liaise with He may therefore be
‘A) error repellency Fujitsu as to whether changes to Horizon more willing to imply a
B) error prevention are possible and if so, the cost of term requiring Horizon
i i - and / or PO's account
C) error detection/ identification implementing them n § accounting
system to be adequate /
D t rt to the Hori . If changes to Horizon are made, Post fit for purpose.
ey fo report eirars to tne Horizon Office may need to roll out a training °
? programme to Horizon users.
The system should be able to deal with
errors both at the:
1) data entry level; and
2) system level. i
The system should be able to carry out:
i) data processing;
li) carrying out the relevant transaction;
and
iii) reconciling transactions.
The system should also record any error
issues as listed in points A — D above.
7. I Implied ter I Impact (WBD):
Communication of ability to alter : This is probably a one off communication
branch data to Subpostmasters with some new
Post Office would not hide fom zome minor changes today to day
P Se working at Post Office so to ensure that a
A) alter data remotely; consistent message is given about the
or I I functionality of Horizon.
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B) alter transactions which fed into the
calculation of the branch accounts.
8. Implied term: Impact (WBD): 3
Communication of problems in Horizon . This would create an ongoing duty to
. inform Subpostmasters about problems in
Post Office would: Horizon. Potentially this would extend to
A) communicate known problems, bugs or any bug, no matter how small. These
errors in or generated by Horizon; and communications would be onerous to
B) not hide/ fail to tell Subpostmasters of iain taking considerable time and
known problems, bugs or errors in or °
generated by Horizon which might have . Subpostmasters may have a reduced
financial or other implications for level of confidence in Horizon as a result
Subpostmasters of regular updates about issues — this
could lead them to "blame the system".
. Post Office would need to take steps to
understand the system more fully than it
has had to previously. This could require
obtaining technical advice on a frequent
basis from Fujitsu, which would have a
cost.
9. Implied term: Impact (WBD): 3
Communication of problems in + The business would need to consider the
branches structure, the frequency and level of detail of
Post Office would communicate and not the commureation d aller which would require
hide/ fail to tell Subpostmasters the extent .
to which other Subpostmasters were + Communication would have to be balanced
having: I : against data protection and privacy issues
i) issues relating to Horizon; and + Subpostmasters may have a reduced level of
e : A confidence in Horizon as a result of regular
2 a Of discrepancies and updates about issues — this could lead them to
ce "blame the system".
+ — It could increase the amount of time the
business requires to deal with complaints
about Horizon, discrepancies and shortfalls as
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more issues may be questioned.
10. I Implied term: Impact (WBD): 3
Reasonable skill and care + We do not have a holistic view of Post Office's
Post Office would supply its support business to provide an exhaustive comment,
EERBaE IO SB bRosinecee Gy beck but those parts of the business we have
office accounting, the Helpline, training, studied hav eet erally operated with
etc.) with reasonable skill and care. °
Post Office would take reasonable care in: . ees wean improvement would incur
‘A) performing its functions; and/or + At present, any failure to exercise reasonable
B) exercising its functions within the skill and care is a commercial problem only. If
relationship this term is implied, each failure is a breach of
contract that could lead to claims by
especially where the functions could affect Subpostmasters for any losses caused to
a them.
1) accounts
2) business
3) health and
4) reputation of the Subpostmasters.
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41. Implied term: Impact (WBD):
Relationship . Post Office would need more safeguards
would undermine the relationship of trust .
and confidence between it and the . Post Office would have to balance acting
Subpostmasters. in own best interests against
Subpostmasters' interests. This may
fetter Post Office's ability to run and
evolve the business in the way it sees fit.
42. Implied term: Impact (WBD):
Shortfalls : This would reverse the current
: : responsibilities between Post Office and
Post Office would: Subpostmasters in relation to losses.
A) produce, keep and maintain accurate
. . Post Office would need to put processes
fads a ala Garried out in place to enable it to explain all
o ‘( transactions and shortfalls.
uh Hen Seer . This would make recovery of losses in
HONS: branches very difficult if not impossible in
C) use the records to explain any many cases.
eee : This may give rise to significant historic
claims by Subpostmasters to recover
Post Office would co-operate in trying to: money paid to Post Office in respect of
A) identify the possible or likely causes of
any shortfalls without any input from the
Subpostmasters and/or
B) work out whether or not there was any
shortfall by carrying out a formal
investigation
C) prove as a result of the investigation
that the shortfall was properly attributed to
the Subpostmaster under the contract.
Post Office would not seek recovery of any
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shortfalls from the Subpostmasters unless
and until:
A) it had complied with its duties (which
include the duties in the implied terms);
B) it had shown that the shortfall was a
genuine loss to Post Office
13. Implied term: Impact (WBD): 3
Communication of information about + The business would need to consider the
shortfalls structure, the frequency and level of detail of
Post Office would fully and honestly tel drotaue elven the size of the network
Subpostmasters in general about the "
possible causes of shortfalls. * Communication would have to be balanced
against data protection and privacy issues.
+ Subpostmasters may have a reduced level of
confidence in Post Office as a result of
regular updates about issues.
+ It could increase the amount of time the
business requires to deal with complaints
about Horizon, discrepancies and shortfalls
as more issues would be questioned.
14. I Implied term: Impact (WBD):
Training + If Post Office already provides adequate
training and support, these additional terms
seat td da i ee will have minimal impact. It should be noted
1g PRC that the admitted term of "necessary
Post Office would especially provide cooperation” will likely require Post Office to
adequate training and support where: provide adequate training and support.
A) new working practices were introduced; + If more is required from Post Office, this
B ti intieduced: could require more trainers and training
) new systems were introduced; or sessions, a greater amount of more detailed
C) where Subpostmasters were required training material, consideration of the form of
training and a way to track whether the
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to provide new services.
training provided had been properly instilled
into the audience aimed at.
+ The impact would be further increased if this
training was also required for Subpostmaster
assistants.
+ Additional in-house training may be needed
to ensure face to face contacts are giving
Subpostmasters consistent advice.
END OF IMPLIED TERMS
15. I Supply of Goods and Services Act 1982 3 I Summary: The Claimants have failed to identify the 3
: ; relevant provisions in the contracts which show that the
BS fade any Varad bal parties have agreed, in exchange for something else
Sake ostmasters (i) Ue atteae Under (such as a fee), to provide a service to and for the
pean contracts for the supply of benefit of the Subpostmaster. This therefore weakens
services” and (i) in the course of its the Claimants’ position on this point.
business, such that there was an implied Detail: Contracts will only fall within the Supply of
term requiring Post Office to carry out any Goods and Services Act if they involve one party selling
such services with reasonable care and a service to another party.
ee inealy hanna ae Supply The key question is whether Post Office had a
a contractual obligation to provide Horizon, the Helpline
and training as "services".
The Claimants have not identified any specific
contractual provision in which they say Post Office
assumed an obligation to provide a service. However,
there is scope for an argument on this point.
The key concern is with the NTC, in which there is a
possible provision that the Claimants could say means
that Post Office had an obligation to provide the
Helpline.
Impact (WBD):
. Post Office is probably already complying
with the implied term in many areas of its
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business. If Post Office was required to
act beyond its current practice, it would
need to assess the impact of any
decisions regarding the "services" when
making any changes to the provision of
"services" or the content of the services.
. Post Office would face issues if it was
under an obligation to provide the
"services" if there was an outage with
Horizon or if access to the
training/materials or the Helpline was
unavailable due to a glitch, as Post Office
would be liable for making sure
Subpostmasters had access to these
services.
16.
Onerous, unusual or unfair terms
Were any or all of the express terms in the
GPOC paragraphs listed below onerous
and unusual, so they would be deemed
unenforceable unless Post Office brought
them fairly and reasonably to the
Subpostmasters’ attention?
Summary: It is unlikely any clause will be classed as
“unfair” so long as Post Office has provided the
Subpostmaster with a copy of the contract before they
entered into it.
It will be a more difficult argument if the Subpostmaster
did not have chance to consider the terms before
signing.
If the terms are found to be "unusual or onerous", Post
Office will need to show that it brought these terms to
the Subpostmaster's attention, if it wants to rely on
those terms. Some problematic terms include the right
to suspend, to suspend without pay and to terminate on
3 months' notice.
Whether this is an issue for Post Office will mostly be on
a fact specific basis for each Subpostmaster, as
generally the practice seemed to be that contracts were
provided to Subpostmaster before the agreements were
entered into.
Impact (WBD):
. If terms are "unusual or onerous", they
would be unenforceable against
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Subpostmaster. If this applied to business
critical terms such as termination,
suspension and loss recovery then this
would have a critical impact on the
relationship with Subpostmasters, albeit
likely limited to those Subpostmasters who
never saw their full contract terms before
becoming a Subpostmaster.
. Going forward, Post Office needs to
improve its contract origination processes,
with clear evidence of Subpostmasters
being given access to, and time to
understand, their contract terms.
417.
Liability for Losses
What is the proper construction of section 12,
clause 12 of the SPMC?
Clause 12 states "The Subpostmaster is
responsible for all losses caused through
his own negligence, carelessness or error,
and also for losses of all kinds caused by
his Assistants. Deficiencies due to such
losses must be made good without delay.”
What is the proper construction of Part 2,
paragraph 4.1 of the NTC?
Para 4.1 states: "The Operator shall be
fully liable for any loss of or damage to,
any Post Office Cash and Stock
(howsoever this occurs and whether it
occurs as a result of any negligence by the
Operator, its Personnel or otherwise, or as
a result of any breach of the Agreement by
the Operator) except for losses arising
from the criminal act of a third party (other
than Personnel) which the Operator could
not have prevented or mitigated by
following [Post Office’s] security
Summary: Post Office is likely to succeed on the major
issues arising out of the construction of these clauses.
See also the comments above in relation to implied
terms regarding shortfalls.
IT IS STRONGLY RECOMMENDED THAT
COUNSEL'S OPINION IS CAREFULLY REVIEWED
ON THIS TOPIC AS THIS IS THE CRITICAL
QUESTION IN THIS LITIGATION. IT IS COMPLEX,
WITH SEVERAL PERMUTATIONS OF POSSIBLE
OUTCOMES.
The major challenge on these clauses is whether for a
"loss" to be recoverable it needs to be a real financial
loss to Post Office or whether it can be an accounting
loss in a branch accounts. The difficulty with the former
is that Post Office would need to track the loss in a
branch accounts and show how that loss caused it real
financial detriment. This would require a significant
forensic accounting exercise, tracing a loss through all
Post Office's back-office accounting systems.
Impact (WBD):
: Losing this point would make it very difficult
for Post Office to recover losses without
significant effort and detailed investigation
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procedures or by taking reasonable care.
Any deficiencies in stocks of products
and/or resulting shortfall in the money
payable to [Post Office] must be made
good by the Operator without delay so
that, in the case of any shortfall, [Post
Office] is paid the full amount when due in
accordance with the Manual."
into every loss in every branch.
: It also has the effect of shifting the burden
of proof onto Post Office to show the root
cause of the loss. In many cases, this will
be impossible to discharge.
. It may give rise to substantial claims for
repayment of losses to Subpostmasters
dating back many years.
18. I Post Office as Agent Summary: The contracts make it clear that
u Subpostmasters are agents of Post Office, not the other
Post Office as agent
Post Office as agent way around.
oS one acca liposee ek Counsel considers that it will be a steep challenge for
Bose EIaGEDHE Bo and Ae PHP the Claimants to succeed on this Agency issue, as it
Pelagian will be difficult for them to reverse the relationship so
If so, was Post Office required to comply any that the Post Office subordinates its interests to the
or all of the obligations at GPOC paragraph Subpostmasters' interests.
84, which include that Post Office would: Impact (WBD):
a) properly and accurately to effect, execute, Thi
adel . is would reverse the current
record, andlor ebel. and keep fecords ie responsibilities between Post Office and
all transactions which the Claimants initiated Subpostmasters, making recovery of
ued Hetizon OF for which the Claimants losses from Subpostmaster very difficult if
were potentially responsible; not impossible
b) to render and make available to the .
Claimant accounts (in accordance with See other comments above.
paragraph 84 (a); and/or
¢) a where the Defendant alleged shortfalls
to be attributed to the Claimants, to comply
with the duties the Claimants have said they
are owed in relation to Horizon.
19. I Subpostmaster as Agent Summary: Counsel's overall opinion is that Post Office The Judge expressed
is likely to win on this argument, that Subpostmasters deep interest in the
Mie ico aA Selle uals owed duties to Post Office, that they were bound by mechanics of how a
P their accounts and that if they made false accounts, Subpostmaster submits
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principles of agency applied as Post Office
argues?
Did Subpostmasters, as agents, bear the
burden of proving that any Branch Trading
Statement account they signed and/or
returned to Post Office was incorrect?
they are also bound by them.
Detail: It is clear that Subpostmasters are agents of
Post Office. There is more scope for argument about
what agency duties apply to Subpostmasters. Post
Office asserts that the following agency duties apply.
(a) As its agents, Subpostmasters owed fiduciary duties
to Post Office and a duty to account to Post Office;
(b) Where an agent renders an account to his or her
principal, he is bound by that account unless and to the
extent that he discharges the burden of demonstrating
that there are mistakes in the account that he should be
permitted to correct; and
(c) Where an agent deliberately renders a false account
to his or her principal, in relation to the matters covered
by that account the court should make all presumptions
of fact against that Subpostmasters as are consistent
with the other facts as proven or admitted.
Counsel does not consider that the Claimants'
arguments, even if they had any real substance, could
lead to the total exclusion of the principles Post Office
relies on as listed above. It will be more difficult to apply
the general principles on a case specific circumstances
where a Subpostmaster has submitted an account
which he/she has said is in dispute or has sought to
qualify his/her approval in any way.
It may be possible on a case by case basis for a
Subpostmaster to show the accounts were inaccurate
or that he/she was not responsible for the shortfall.
Impact (WBD):
+ Losing this point would make recovery of
losses more difficult as Post Office could no
longer rely on the above assumptions.
+ Post Office would have to prove that Branch
Trading Statements were correct before/ after
they were signed off by a Subpostmaster
their accounts. He may
therefore agree that
Subpostmasters are
agents and bound by
ordinary agency principles
(as submitted by PO) but
caveat that by saying that
the application of those
principles to any particular
case is highly fact specific.
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which would limit Post Office's ability to
recover losses.
+ Anew process may need to be introduced for
signing off the accounts where the outcome of
disputed shortfalls have not been concluded.
20.
Suspension Summary: There is a real risk that the court will find
a ‘ that there is an implied term that Post Office would only
re Ce ee ate ae suspend a Subpostmaster where there was a
ei i reasonable basis for suspension on one of more of the
basis was Post Office entitled to suspend grounds listed in the express clauses
pursuant to SPMC Section 19, clause 4 and .
Part 2, paragraph 15.1 NTC? Detail: The Claimants say these clauses act in a more
. A ASuEy) limited way than the way Post Office has historically
Al the nae ane Seek eo implied applied them. They seek to limit the circumstances in
Im In relation to Suspension. which Post Office can suspend Subpostmaster.
Post Office would not to suspend Claimants For the most part, Counsel thinks the Claimants
A) without reasonable and proper cause; arguments are weak. However, there is a risk that the
and/or — : court could instead decide that although it will not imply
4 . a "reasonable basis" for the suspension, it may instead
one ices alg had breached its duties treat the right to suspend as a discretion which cannot
Cae lien: be exercised arbitrarily, irrationally or capriciously by
Post Office.
Impact (WBD):
: Post Office could still suspend but may
need to take more care before exercising
the right to suspend.
. Ability to make quick decisions could be
hindered.
. Concern for Post Office's reputation if it is
required to keep a questionable
postmasters in their position whilst
investigations are carried out.
. Risk to assets whilst decisions made and
documented.
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21. I Summary Termination Summary: Counsel considers it unlikely that the 3
A Claimants will be able to persuade the court to apply the
me va Galea ago a limitations they propose on Post Office's power to
basis was Post Otfice anttled summarily ti terminate, either by way of an implied term or as a
; Mo matter of construction.
terminate?
4 ce Detail: The Claimants are seeking to limit the
Note: the Claimants also seek an implied “ A
a Pee circumstances in which Post Office can end their
term in relation to summary termination. agreement with a Subpostmaster without giving any
Post Office would not terminate contracts: notice period where the Subpostmaser is in breach.
A) without reasonable and proper cause; Counsel does not think the Claimants are likely to
and/or persuade the court of their version of how this power
B) when Post Office had breached its duties Should, in their view, operate.
to the Subpostmasters. Impact (WBD):
. Post Office could not terminate when it
had committed even a trivial breach of
contract. This would allow many
Subpostmasters to contest the validity of
their terminations.
22. I Termination on Notice Summary: On the face of it there is no legal reason
why the 3 (SPMC) and 6 month (NTC) notice periods
re ieee Wee A ald a should be construed any differently than as they are set
basis was Post Office entitled to terminate out in the contract, as the words are plain and clear.
on notice, without cause? Detail: Counsel does not consider that the court will
read in a requirement, as requested by the Claimants,
that Post Office must "conscientiously consider what
Note: the Claimants also seek an implied period of notice to give".
FETT SIGNED fe cerry naHOn, ary BEHES: However, Counsel is concerned with the 3 month notice
Post Office would not terminate contracts: period in the SPMC, as this is a very short notice period
Ay without ble and ; i for agreements of this kind. The Judge may have some
Hi Ae Fee Or ete BG PORE! Glee) sympathy with the Claimants on this point and may
ance seek to moderate the contract in some way on this point
B) when Post Office had breached its duties. eg. by extending the notice period.
to the Subpostmasters. Counsel is less concerned with the 6 month NTC
notice period.
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Impact (WBD):
. Post Office could not terminate when it
had committed even a trivial breach of
contract. This would allow many
Subpostmasters to contest the validity of
their terminations.
. The Claimant's proposed implied term
would prevent Post Office from
terminating on notice unless a
Subpostmaster was in breach of contract.
This would limit Post Office's ability to
restructure its business by moving on
agents who were no longer financially
viable or in line with future business
requirements.
23. I Termination — Minimum 12 Months’ Notice Summary: This is the Claimants’ alternative formulation
. for its arguments in relation to termination rights. In
ee ie ee ove essence, the Claimants are saying that the standard
Bipnceeee curcccrt & trie Subpostmaster Contracts are a sham and should be
caeoment ae parties, as to ignored. Instead, Post Office should not be able to
termination (in this regard, the Claimants rely terminate on less than 12 months’ notice.
on Autoclenz v Belcher [2011] UKSC 41)? Counsel thinks Post Office will win this point. Counsel's
If not, was the “true agreement” between the eat Post Office is kely to succeed on the true
parties as alleged at GPOC, para. 71? .
a a) the Autoclenz principle is of limited application as the
Paragraph 71 alleges that the “true 4 .
agreement’ was that termination had to be dispute does not focus on employment status;
on reasonable notice (which was never less b) the Subpostmaster contracts are "ordinary" or
than 12 months). “commercial" agreements, made business to business
and so the Autoclenz principle shouldn't apply;
c) the Claimants haven't stated any new express terms
on termination;
d) there is no conduct to suggest that the "true
agreement" is what the Claimants allege;
€) it is difficult to see how the Claimants can argue on
the one hand that the termination provisions do not
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represent the "true agreement", but the rest of the
contract does.
Impact (WBD):
. See comments above in relation to
Summary Termination and Termination on
Notice.
24.
Compensation for loss of office
On a proper construction of the SPMC and
NTC, where Post Office lawfully and validly
terminated a Subpostmaster's engagement,
‘on notice or without notice for cause, was
the Subpostmaster entitled to any
compensation for loss of office or wrongful
termination?
From the latest Individual Particulars of Claim, this
issue no longer arises.
25.
Compensation for loss of office
On a proper construction of the SPMC and
NTC, in what, if any, circumstances are
Subpostmaster's breach of contract claims
for loss of business, loss of profit and
consequential losses (including reduced
profit from linked retail premises) limited to
such losses as would not have been
suffered if Post Office had given the notice
of termination provided for in those
contracts?
From the latest Individual Particulars of Claim, this
issue no longer arises.
n/a
26.
Subsequent appointments
On a proper construction of the SPMC and
NTC, what if any restrictions were there on
Post Office's discretion as to whether or not
to appoint as a Subpostmaster the
prospective purchaser of a Subpostmasters’
business?
There is no construction issue here. Instead the
Claimants will try on rely on the implied terms
addressed above.
na
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27.
Assistants
Did SPMC section 15, clause 7.1; NTC,
Part 2, clauses 2.3 and 2.5 and/or any of
the implied terms contended for by the
parties and found by the Court purport to
confer a benefit on Assistants for the
purposes of section 1 of the Contracts
(Rights of Third Parties) Act, and if so which
of these terms did so?
What was the responsibility of
Subpostmasters under the SPMC and the
NTC for the training of their Assistants?
Summary: There is some risk that assistants may have
directly enforceable rights against Post Office in relation
to training.
Post Office accepts that it was required to provide
Subpostmasters with training materials which allowed
them to train their assistants, but its insists that
assistants are trained by Subpostmasters. It denies
that it had any duty to train assistants or that assistants
could directly enforce such rights against Post Office.
Counsel's view is that Post Office is unlikely to be
required to train assistants and that this duty rests with
the Subpostmaster.
Impact:
Significant additional costs would need to be
incurred to train all assistants in the network.
I The Claimants did not
I responsible for their staff.
I this point.
press this argument at trial
and largely accepted that
Subpostmasters are
We therefore believe that
Post Office's chances of
success have improved on
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