CONFIDENTIAL AND LEGALLY PRIVILEGED
Working Group for the Initial Complaint Review and Case Mediation Scheme
Attendees
Sir Anthony Hooper (Chair)
Alan Bates (JFSA)
Kay Linnell (JFSA)
Ron Warmington (Second Sight)
Chris Holyoak (Second Sight)
Chris Aujard (Post Office)
Belinda Crowe (Post Office)
Angela Van Den Bogerd (Post Office)
David Oliver (Post Office)
Andy Parsons (Bond Dickinson)
Apologies
lan Henderson (Second Sight)
Agenda
1. M054
2. M127
3. Bankruptcy
AGENDA
16" June 2014
4. Aver’s extension requests from 2 June.
5. Minutes from the last two face-to-face Working Group meetings
6. AOB
e M073
POL00140431
POL00140431
POL00140431
POL00140431
CONFIDENTIAL AND LEGALLY PRIVILEGED
AGENDA ITEM 1: M054
BD briefing on M054:
1
No dispute to resolve. There is no evidence to suggest that the Applicant is not responsible
for the losses in this case. SS agrees with this conclusion in its CRR which concludes "that,
on the balance of probabilities, the Applicant was responsible for at least £9,500.00, and
possibly all, of the total shortfall discrepancy of £11,886.77".
Mediation of limited value. This case does not turn on a specific event or action by the
Applicant — the losses accumulated over a long period. There is therefore no specific point
on which further discussion with the Applicant at mediation may bring greater clarity that may
in turn change Post Office's position above.
Risk to Applicant. The Applicant may incur legal costs in excess of the Post Office
contribution in preparing for mediation. Given that Post Office is not minded to settle this
case, a mediation may only serve to put the Applicant in a worse financial position. Asking
the Applicant to attend a mediation where Post Office is not offering a settlement may also
be emotionally frustrating.
Disproportionate cost. It would be disproportionately expensive to mediate this case given
that Post Office is highly unlikely to offer any settlement. The WG TOR requires the WG to
manage Scheme resources efficiently:
4.6 To manage the administration of the Scheme so as to ensure that the Scheme's
processes and procedures are offering value for money for taxpayers (which for
clarity does not extend to any assessment of the merits / value of any settlement
proposed or reached between Post Office and any SPMR).
Better alternative. It would be more appropriate and cost-effective for Post Office to discuss
the case directly with the Applicant without mediation. The WG TOR expressly allows for
this approach.
3.3 Where appropriate, the Scheme must offer a reasonable forum, by way of
mediation or through direct discussions, for an Applicant and Post Office to seek
a resolution of that Applicant's legitimate concerns.
3.4
Background:
Total loss £11,886.77
PO does not recommend this case for mediation (although this was not explicitly stated in
our response)
PO made no comments on the main body of the SS report but made clear that this should
not be construed as acceptance by Post Office of those points on which we have not
commented
PO asked SS to reconsider its recommendation as to whether this matter is suitable for
mediation
The SS CRR concludes that, on the balance of probabilities, the Applicant was responsible for
at least £9,500.00, and possibly all, of the total shortfall discrepancy of £11,886.77
PO agrees that this is the correct overall conclusion. Given this, PO considers it unlikely to be
an efficient use of time or resources to mediate this case as there is very little to support the
Applicant's complaint
We would however be prepared to consider discussing this case directly with the Applicant
outside of mediation with a view to assisting her to understand the PO position
POL00140431
POL00140431
CONFIDENTIAL AND LEGALLY PRIVILEGED
AGENDA ITEM 2: M127
Background on M127:
Total loss £87,661.86
¢ PO maintains that responsibility for the losses lies principally with the Applicant
© The Applicant has admitted, both to PO during its suspension investigations in 2010 and in
her application to the Scheme, that she did not follow the correct accounting procedures for
the ATM installed at the branch. PO considers that this had a direct bearing on the losses
subsequently incurred by the branch
© PO does not agree that it did not provide adequate training to the Applicant. PO provided
the standard training package to the Applicant upon installation of the ATM, and further
training could and would have been provided had it been requested by the Applicant (which
it was not)
© PO does not accept that it had any duty to proactively recommend additional training to the
Applicant. This is not reflected by any obligation in the Subpostmasters Agreement
* PO does not understand the Applicant’s claim that the losses incurred at the branch were not
“real”. While the detail of Applicant’s position in this regard remains unclear, PO does not
agree with the Applicant’s argument or reasoning, which has not been supported with any
evidence
¢ PO does not believe that this case is suitable for financial settlement
* However, no final decision has been made whether to agree to mediate or not — it is advised
that PO members of the WG gauge the response from other members at the face-to-face
meeting on 16 June and takes a view then
POL00140431
POL00140431
CONFIDENTIAL AND LEGALLY PRIVILEGED
FURTHER INFORMATION: M022
Background on M022:
Total losses £87,202.13
© PO agrees to mediate this case but we are aiming for early settlement
© Angela spoke with the Applicant on 09/06/2014 (there was no agreement on settlement)
and sent a follow-up letter on the same day
© Post Office accepts that it could have in some areas better supported and communicated
with the Applicant regarding the £86k of losses that occurred at his branch
o. Training — In response to the Applicant's request, we could have provided him with
ATM training
© Investigation — The losses at the branch could have been investigated in more detail
at the time of the events in question which may have brought greater clarity to the
issues now raised through the Scheme
© Communication - We could have communicated better with the Applicant about the
need to repay the losses suffered in his branch via the offsetting of his "loss of
office" compensation
* However, PO does not agree with or accept a number of Second Sight's key findings,
including its primary conclusion. Its primary conclusion is that PO was aware that the
Applicant was absent from his branch and engaging the previous subpostmistress to run the
branch without proper controls and supervision in place. SS considers that that state of
affairs was the likely cause of losses in the branch and places responsibility on PO for
allowing that state of affairs to exist. PO disagrees:
co Awareness - Post Office was not aware (before the audit in December 2011 by which
time the losses had already occurred) that the Applicant had decided to have no
involvement at all in the running of his branch
o Duty—The spmr contract sets out each parties' respective duties and clearly places
responsibility for managing activities within a branch on the spmr. Conversely, there
is no duty on Post Office to manage a spmr 's branch or staff
o. Risk - In any event, if a spmr unilaterally wishes to take greater risks in the way he
manages his branch (ie. by fully delegating the management of the branch to
another person without any supervision), it does not follow that PO is then
responsible for the greater consequential risk of losses caused by that decision
POL00140431
POL00140431
CONFIDENTIAL AND LEGALLY PRIVILEGED
AGENDA ITEM 3: BANKRUPTCY
Initial Complaint Review and Mediation Scheme
Bankrupt Applicants
Background
The Scheme was designed to create a foundation for Applicants and Post Office to resolve
their differences through mediation and, where appropriate, remedy any harm suffered by
Applicants.
Around 15 Applicants are bankrupt.
Unless a Trustee in Bankruptcy/Official Receiver assigns the rights in a claim against Post
Office to a bankrupt Applicant, any settlement that is reached with that Applicant will not be
binding.
In the absence of an assignment of the claim rights, the Trustee/OR could attend the
mediation (as the party who has the right and authority to settle). However, a Trustee/OR
will incur fees in doing so and may want its own legal advisor to be present.
It is understood that the OR is resisting attending mediation / allowing the transfer of the
claim rights to Applicants as it does not understand the value/merit of the claims being
considered.
It is proposed that Post Office seeks to agree a non-binding settlement with an Applicant at
mediation which is then later ratified by a Trustee/Official Receiver by way of retrospective
assignment of the claim rights.
Concerns
The proposed way forward would encounter the following challenges:
° If compensation is offered to an Applicant, it is likely that the Trustee/OR will want
to take a large proportion, if not all, of the compensation as they have a legal duty to
do their best to return value to creditors which may leave the Applicant with little /
no value from the settlement.
. Negotiating a settlement at mediation which could then be later refused by a
Trustee / OR could be a significant waste of costs / resources for both sides.
. An Applicant may incur costs in trying to have a Trustee / OR review and accept the
settlement. If the settlement is then rejected, the Applicant could be left in a net
worse position.
POL00140431
POL00140431
CONFIDENTIAL AND LEGALLY PRIVILEGED
Post Office would essentially be negotiating against a party (the Applicant) that was
not the ultimate decision maker (being the Trustee/OR). Similarly, the Applicant
would have no feel for the value of a "good settlement" as the intentions of the
Trustee / OR would be unknown. This would be very unusual for mediation where
one of the core principles is that the parties at mediation must be fully authorised to
reach a binding deal.
. Without the prior assignment of the claim rights or the attendance of the Trustee / OR at
mediation, it is Post Office's view that it will be very difficult enter into any meaningful
mediation as the Applicant's claim cannot be settled in a manner that is satisfactory to either
party.
Approach
. As a result of the above, Post Office is considering take the following approach so to
safeguard its and each bankrupt Applicant's position:
Unless a bankrupt Applicant can provide evidence that their claim has been
assigned, the case should not be mediated so to avoid the risk of the Trustee / OR
taking the lion's share of any settlement.
Where appropriate, Post Office may choose to make a settlement offer in writing to
a bankrupt Applicant. The Applicant could then take that offer to the Trustee / OR.
This allows an offer to be made without either side risking significant wasted time
and cost.
Post Office may meet with a bankrupt Applicant to discuss their case outside of
mediation but this would only be on the clear understanding that Post Office would
not be in a position to offer any settlement at that meeting. This may assist in the
Applicant in subsequent discussions with the OR / Trustee.
POL00140431
POL00140431
CONFIDENTIAL AND LEGALLY PRIVILEGED
AGENDA ITEM 6: AOB - M073
“CK have been liaising with Dickson's lawyers and are fully aware of the matters described in
Dickson's email to Alan Bates yesterday.
In short:
e CK have encouraged Dickson's lawyers to apply to the Crown Court to have the confiscation
order set aside. POL will not oppose that application so long as Dickson agrees to undertake
to pay the outstanding debt direct to POL. In practice, even if Dickson won't agree to the
undertaking, POL will not oppose the application to set aside.
e CK are also working with Dickson's lawyers to present a case to the Magistrates Court (who
are currently managing the confiscation order) that Dickson has done all that is possible to
make payment. This should help avoid him going to jail if the Crown Court application has
not been heard before the next mags hearing.
e CK are confident they have done all that is possible to avoid Dickson going to jail.”