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CENTRE for EFFECTIVE DISPUTE RESOLUTION °
70 Fleet Street
London EC4Y 1EU
Tel:
Fax’
email: adi
www.cedi
Mr Patrick Bourke
Programme Director
Post Office Limited
148 Old Street
London
EC1V 9HQ
Friday 31% July 2015
Dear Mr Bourke
POST Office Mediation Complaint Review Scheme — Review 2
In accordance with the requirements of the contract to provide the mediation service element of the Post
Office Mediation Complaint Review Scheme I have conducted my second review of the process having
first conducted a review in late February 2015. At the outset of our involvement in the Scheme we, along
with the other stakeholders, felt that it was important to monitor and record the ongoing scheme so I
have prepared this second review and we are content for Post Office to distribute copies of this review to
other interested parties.
CEDR’s role has not changed throughout the mediation phase of the Scheme, it remains to provide a
panel of independent mediators who can mediate cases brought by applicants to the Scheme. We have
not and do not review the applications nor do we take a view on the eligibility or otherwise of individual
applications.
I have set out below some updated information to reflect all the mediations that have been undertaken
by CEDR since the mediation phase began in July 2014; a brief explanation of mediation as a process (for
readers unfamiliar with this form of Alternative Dispute Resolution); and some specific observations of
our experience of the Scheme as reported by our case handlers and mediation panel members. I have
also provided some anonymous feedback that has been taken from the confidential post mediation
reports that the CEDR mediators’ have submitted to CEDR. Finally, to provide some context I have also
reviewed and restated some feedback on how our experience with this Scheme compares with the wider
commercial and employment related mediation’s that CEDR conducts.
Centre for Effective Dispute Resolution Ltd
Registered in England no. 2422813
Registered Charity no. 1060369
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Mediation Statistics
Since July 2014, CEDR has been referred 81 cases for mediation under the scheme. So far 20 mediations,
using eight different mediators, have taken place with a further 3 mediations expected to take place in
the next 8-weeks and another 34 awaiting confirmation of the mediation date.
Outcomes
Focusing on the 20 cases that have been mediated the outcomes are as follows:
Resolved: 8 I 40%
Progressed: I 5 I 25%
Unresolved: I 7 I 35%
By way of explanation the term progressed refers to a mediation where the parties have not reached a
resolution but progress has been made in crystallising the position of the respective parties. Having
looked at the mediator’s reports on the mediations classified as progressed (by the mediator) it would
appear that both sides left the mediation with a much better understanding of each other's position but
it is also fair to say that resolution was not reached.
The number of mediations is still a relatively small sample of cases on which to make any firm
conclusions so one can only speculate on how the outcomes will measure up once a larger number of
cases have been undertaken. However, based on the cases so far the settlement rate of around 40% is
somewhat lower than the average settlement rate that we see across all the mediations that CEDR
conducts. In an average year our settlement rate tends to range between 65% and 75% with a further
10% to 15% of cases resulting in some progression towards final resolution.
Process Observations
It may be helpful in the context of a scheme review like this, to explain briefly how the mediation process
works, its purpose and outcomes. Mediation is a process generally conducted by parties in dispute with
assistance of an independent skilled neutral, with the aim of reaching a negotiated binding resolution of
a dispute, if terms of settlement can be found that are acceptable to the parties to the dispute.
Acceptability will turn on what each party thinks are their interests, and in the context of a potential legal
case will also turn on parties’ perceptions of their rights, as well as their sense of the other process and
outcome options available if no settlement can be reached. Entry to the process can be on an ad hoc
individual basis, by court direction, by contract, or under the terms of an industry or group scheme as in
this Scheme. Most mediations take place within a day, after summaries of the case have been submitted
in advance to the independent mediator. CEDR’s general caseload covers a wide range of civil and
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commercial disputes from commercial contractual claims through to administering the Court of Appeal
mediation scheme. On average, some 65% to 75% of such mediations settle on the day, in any given
year, even when the parties have been deadlocked before entering the process.
Mediation differs from arbitration or adjudication in that the mediator works with parties to help them
find an acceptable agreement. The neutral does not make an award based on the arguments and
evidence provided. Mediation can be more flexible than binding determination methods, both in how
the process is run, and in terms of the remedies that may be available by agreement as against awards
made under principles of law or evidence. (It is important here to note, that in situations of contested
evidence such as exists in relation to the Scheme, adjudication or arbitration of individual cases may not
be particularly consistent across cases nor satisfactory to at least one of the parties.)
The Scheme
I have given some thought as to what may be of some assistance in reporting on experience with this
particular Scheme, without breaking the confidential nature of the mediation process for individual
matters. There are a number of observations I can share as follows:
Subpostmasters’ Expectations
On a number of the mediations that have taken place so far the subpostmaster has not fully
comprehended the nature of mediation as a process and they have also been influenced by the wider
campaign asserting the failings of the Horizon system. They have, therefore, sometimes attended with
the expectation that they are going into a compensation process rather than a facilitated dialogue with
the Post Office in which claims made by either party do require some prior notification, explanation and
evidential validation. It would appear that some applicants and/or their representatives consider the
approval for mediation has indicated an acceptance of liability by the Post Office, but this is not the case.
It has been noted that where a continuing contractual relationship is still in place between
subpostmasters and the Post Office, and where both parties would like it to continue, the mediation
process has been more effective.
Mediator report extracts:
° ‘I felt the claimants came thinking they were in a compensation scheme (.e. a no fault scheme)
whereas the POL on both cases took a legalistic stance, as they were entitled to, to say they will
only pay compensation if they think there is a legal right to it.’
¢ ‘POL at considerable effort and expense attended a full day's mediation and made a reasonable
settlement offer in the circumstances. [The subpostmasters] requests were not realistic and [the
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applicant] continued to believe ........ was not guilty of false accounting, despite the weight of
evidence’
¢ ‘[The subpostmasters] expectations set by the mediation scheme steering committee were that
the mediation scheme was a compensation scheme’
e ‘Mr... had highly unrealistic expectations of compensation ... this was largely created by his
adviser’
* ‘The Post Office should make clear that there is no guarantee that negotiations will arise or an
offer will be made at the Mediation’
Clarity of Issues
Mediator reports have indicated that on at least two occasions the subpostmaster and/or their
representatives raised claims that had not been disclosed before the mediation. Having spoken to all of
the mediators used so far there is a consensus that perhaps some of the cases referred to mediation
under the Scheme would not have made it to that stage within a litigation process given the uncertainty
over the issues and lack of evidence available. It is, of course, understood that this Scheme has been set
up to address specific commercial circumstances.
Mediator report extracts:
* ‘Claim appeared to relate to alleged losses but on the day the termination of an agency
agreement was apparently the key issue and this did not appear to have been articulated
before.’
¢ ‘The basis and amount of ... claim was not clear. .. had not adduced any evidence in support of
... claim."
CEDR’s experience in more ‘routine’ mediation work is that the parties have usually established the scope
of their differences and their legal risks before the mediation day is fixed; both parties have clearly set
out the issues between them; and both parties have been prepared for what to expect at the mediation.
In our experience new or previously unarticulated claims or positions aired at the mediation for the first
time invariably lead to a more difficult mediation, and less likelihood of success. Mediator reports in this
Scheme suggest that subpostmaster expectations of entering a compensation dialogue are frequently at
variance with the Post Office representatives’ approach of seeking credible evidence to justify claims
before seeing a need to make negotiation offers. In cases where this applies, the Scheme still leaves open
the opportunity to use the process for airing of grievances, for explanation of procedures, and for non
monetary proposals of apology or acknowledgment of difficulties. However the mismatch of
expectations in some cases can lead to some degree of disappointment amongst subpostmasters
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entering the scheme which may ultimately influence negatively perceptions of the effectiveness of the
Scheme.
Pre-mediation
In our first review we recommended that more information be provided to the subpostmaster prior to
the mediation day in order assist them with understanding the nature of the mediation stage, and to set
out the understanding that the Post Office will be only likely to respond to substantive evidence of claims
or special personal circumstances. Since that report CEDR has updated the mediation procedure
document that is provided to applicants.
Representation
In the early stages of the Scheme, one subpostmaster was not represented at mediation and several
others elected to have a non-lawyer as representation. There are some indications that legal
representation provides better support. On a number of mediations it would appear that the
professionals engaged to represent the subpostmaster who are not themselves legally qualified have not
fully understood the mediation process, nor are able to deal so well with some key legal principles being
argued.
Mediator report extracts:
e ‘The claimants had [non-lawyers] assisting them. It would have been massively helpful if they had
had expert legal advice instead to have set expectations and advised them on strengths and
weaknesses.’
¢ ‘Part of the [non-legal] advisors presentation involved... voicing opinions on POL's business
practices. It was not clear if POL was meant to respond to this’
e ‘The inability of the [non-legal representation] to argue legal principle meant the POL would not
change their view regarding compensation.’
e ‘The mediation was characterised throughout by a good working relationship between the
Parties and the Legal Representatives.’
e ‘... was very well represented by ...... Solicitor.’
° ‘The key turning point .... [making the lawyers] realise that compensation would not be payable
and that [The subpostmaster’s claim] had too many legal hurdles.’
e ‘from the outset the Parties [both legal represented] each sought to cooperate towards a
mutually acceptable outcome’
In the vast majority of mediations that CEDR administer both parties have legal representation and the
ground work for setting the clients expectations has already been done before the mediation occurs. It is
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true that there are cases where individuals represent themselves, or are represented by, people from
outside the legal profession who conduct themselves in mediation effectively but that is not always the
case.
We feel that the experience of unrepresented subpostmasters may have implications for the reputation of
the process should they choose to feedback their experience to others. It is a formidable experience to
face without support. Equally it is important for applicants to be aware in advance of the requirements
being set by the Post Office for applicants to come with substantive evidence of issues faced by use of
the Horizon system or in other respects where problems under the subpostmaster contracts have arisen.
Recommendation: We recommend that all applicants are strongly urged to seek/take legal advice
and if at all possible legal representation at the mediations. Where
subpostmasters choose not to have representation a cooling off period could be
implemented for them to determine if they wished to confirm a provisional
resolution. This should assist the applicant in understanding the reality of the
legal position, crystallise realistic expectations and give them the opportunity to
consider any offer without the pressure of a mediation day timeline which can be
very stressful.
CEDR’s experience is that we often find that identifying a date that all concerned (including the
mediator) can do is the most time consuming part of the mediation process so it is no surprise that some
cases have taken a while to arrange. Only six cases, however, have experienced delays of note and for a
variety of reasons. Considering the limited pool of individuals concerned this is not a cause for concern in
my opinion.
Co-operation with Post Office
In my opinion the Post Office has been consistently responsive to CEDR’s requests for dates and access to
the case material via the Huddle platform and we have no complaints. In terms of the mediations
themselves it is clear from the reports that the Post Office has a willingness to explore the options,
express empathy and have constructive dialogue with the subpostmasters. However, the Post Office have
also made clear that their approach to mediation requires applicants to bring ‘credible’ specific claims or
information of special personal circumstances justifying a negotiated resolution, rather than negotiations
premised on alleged general problems of the Horizon system or of the Post Office contractual
arrangement as such.
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Overall Conclusions
Mediation remains a useful process within which individuals can engage with the Post Office in
confidential discussions concerning a sensitive and controversial set of circumstances, and it has led to
practical agreed outcomes in almost half of the cases so far conducted. I have noted the importance of
managing expectations of subpostmasters entering the scheme. It is clear that more should be done to
assist subpostmasters to understand the nature of the process in this regard before proceeding to
mediate. It is especially important to make applicants aware that mediated negotiations under the
scheme are focused on claims around specific personal circumstances and not set up to offer
compensation for general allegations of perceived Post Office failures. Equally, our mediator reports
suggest that it does appear likely that legal representation does greatly assist the subpostmaster in
individual cases, and we support this element of the Scheme.
I remain willing and able to discuss any of these issues in greater depth as appropriate, and as greater
experience arises from further case referrals.
Yours sincerely
John Munton
Director of Dispute Resolution Services