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Minutes of a meeting of the Postmaster Litigation Subcommittee held on 12 June 2019
Present: In attendance:
Tim Parker (Chairman) (by telephone) Kirsten Massey (Herbert Smith Freehills)
Ken McCall (by telephone) Ben Foat (General Counsel)
Tom Cooper Rodric Williams (Head of Legal)
Alisdair Cameron Veronica Branton (Head of Secretariat)
Andrew Griffin (Deloitte) (Item 5.)
James Drummond (Deloitte) (Item 5.)
1. Horizon Trial Update Action
Ben Foat provided an update on the Horizon Trial which had resumed on.4 June 2019 and
was hearing expert evidence. There were important areas of agreement between the
experts, including that the Horizon system was relatively robust and that the range of bugs
identified in the system was between 12 and 29.
Last week our QC had been cross examining the claimants’ expert witness. This had
established that remote access of the system had happened rarely and that the actual
number of bugs the expert could identify in the system was not clear.
Our expert had begun to be examined the previous day. The claimants’ QC was seeking to
challenge his credibility and had criticised his statistical analysis for lacking precision,
The claimants’ QC continued to criticise Post Office Limited for inadequate disclosure and
insufficient access to documents. New documents were being put in front of witnesses
which allowed them to be entered into evidence.
The Trial would end on 2™ July 2019 and the Judge would determine which expert witness
he preferred on the basis of fact. While it was unlikely that the Judgment would be
published until the Autumn we were planning for the possibility of it being published in July
2019.
2. Common Issues Appeal
Kirsten Massey provided an update on the Common Issues Appeal, the papers on which had
been circulated to the Subcommittee on 7 June 2019.
The grounds to be submitted on appeal had reduced from 55 pages to 8 pages. Helen Davies’
QC (HD) had made a number of recommendations, including that we did not appeal any of
the Judge's factual findings or raise points of procedural unfairness which could retrace the
grounds of the recusal application. Relational contract and procedural fairness points would
be the focus of our appeal. HD had also suggested that we remove the ground relating to the
training of assistants and the ground on reasonableness terms as well as the procedural
unfairness ground relating to onerous and unusual clauses because POL would not be able to
prove that all NCT Sub postmasters had signed their contracts.
Anumber of points were raised, including:
«that we should be clear that we were not seeking to defend any clauses within the
contract that we did not think defensible, even if we agreed that they were not onerous
or unusual provisions. It was noted that the main issue would be whether or not the Executive
clauses had been enforced. TC requested an analysis of the enforcement, in practice, of
contract clauses that it had been argued could be viewed as “onerous or unusual” and
where Sub postmasters might not have seen their contracts
© whether there were any case precedents we could look to in relation to onerous clauses.
It was reported that there were other relevant cases but that our focus would be on
enforcement of contract clauses in practice.
The Subcommittee APPROVED the submission of the grounds of appeal on the more limited
basis discussed at the meeting.
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3, _ Kelly Tolhurst meeting and Litigation Strategy
Al Cameron provided an overview of the primary objectives for the discussion with the
Minister on 24 June 2019:
* we would acknowledge that our approach to the litigation had been flawed, that we had
changed our approach and that this was evidenced by our revised approach to the
appeal on the Common Issues Judgment and our new legal Counsel. We were looking at
settlement options
© Government would like to see information on costings for settlement. This would be
discussed at the meeting including thoughts on the potential range for settlement, while
noting the inherent uncertainty in the absence of a figure in relation to quantum from
the claimants’ solicitors.
The information received to date on potential costs was discussed. It was reported that
individual claimants had provided a schedule of information in which they had set out their
estimated losses, which Womble Bond Dickinson (WBD) held. Previously, the Subcommittee
had only been aware that we held information for the 140 cases which had already gone
through mediation. Previous discussions at ARC around disclosure of figures in the Annual
Report and Accounts (ARA) for 2017/18 and in prior years were raised and it was AGREED
that WBD should be asked to explain the position to the Subcommittee. It was noted we had
not held information on the probable economic output from the litigation because there had
been no crystallisation of the liability or quantum of figures received from the claimants’
solicitors. The position would be different for 2018/19 because of the Common Issues
Judgment and points on which we had lost which meant that the claims were not without
merit.
RW to
advise WBD
The disclosures on the litigation and inclusion of a provision in the ARA for 2018/19 were
discussed, including whether we should include a provision figure if We were planning to go
into settlement negotiations. Inclusion of a modest figure could signal our willingness to
seek to settle where we had been at fault but also indicate that we would be testing the
legitimacy of each of the cases. It was felt that we needed to be very careful about including
a provision and the basis for this given that we were in an appeal process and that the
claimants’ QC would refer to the provision as an acknowledgement of liability. It was noted
that the figure of £90m in relation to a potential settlement was in the public domain. It was
AGREED that AC would come back to the Subcommittee with more detail on the range of AC
potential settlement figures and the criteria for including cases for consideration for
settlement. RW noted that it was important that we segregate the criminal justice system
and civil litigation case streams.
It was noted that the ARA was likely to be signed towards the end of July 2019.
4. Operational Work stream Update
Ben Foat reported that in parallel with the litigation work operational transformation work
was taking place. We were reviewing whether all of our processes were fair and reasonable,
including those for losses and suspension. Processes were being mapped end to end and
policies were being reviewed.
A table was being produced for the July Board meeting which set out the processes that had
been in place, the processes that would be implemented (where changed), how changes had
addressed the trial points and the communications surrounding this. Changes proposed may
not have been implemented by July 2018 as a programme of training, implementation and
monitoring would be required.
Anumber of points were raised, including:
© whether the table would include a commentary on losses, processes for dealing with
losses and which elements Postmasters were responsible for and which elements PO
Limited? It was reported that this information would be included
* a quarterly update for ARC and/ or Board was requested on how the transformation Executive
work was being implemented and how it was working in practice.
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5. Horizon Contingency Update & Plan
AC described the context for the Horizon Contingency planning work and the focus on
providing reassurance to Postmasters. From late July 2019, a two to three month
programme of work would be taking place to address the chief concerns of Postmasters,
including remuneration. We would be reversing reductions in remuneration that were
associated with the simplification programme and would be implementing improvements to
Horizon, including enabling the same till to be used for Horizon transactions and retail
transactions, and rolling out Branch Hub.
Committee Members raised the importance of real connections and conversations with
people. It was agreed that this was vital and would be supported by the new field network
and the Communications Team would be making sure that everyone had the 10 or so central
messages we wished to communicate to assist those one-to-one conversations.
Andrew Griffin and James Drummond from Deloitte joined the meeting and provided an
update on the Horizon contingency planning work. The Deloitte team was supporting POL’s
operational readiness to respond to the impact of an adverse Horizon trial. This included
looking at what our response needed to be in the coming weeks; the impact of the worst
case scenario and the strategic response to this; the “new normal” position and the day one
readiness response. Potential business impacts and what could be done to mitigate these
ahead of time was a particular focus. The range of impacts from a reputational, political,
regulatory and business perspective were all being considered.
It was noted that how we handled complaints and the processes we had in place was critical.
There was danger that the Managing Judge would find that our processes or our accounting
system were not fit for purpose which was more likely than finding that the Horizon system
was unfit for purpose give the Views of the expert witnesses,
6. Date of next meeting
A date would be sought for the next Subcommittee meeting.
Chairman.. Date...
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