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Claim No. HQ16X01238
IN THE HIGH COURT OF JUSTICE
QUEEN’S BENCH DIVISION
IN GROUP LITIGATION BETWEEN:
ALAN BATES & OTHERS
Claimants
ve
POST OFFICE LIMITED
Defendant
/ GENERIC DEFENCE
INTRODUCTION
1. This Genetic Defence responds to the Generic Particulars of Claim (“GPoC”). Except
where otherwise indicated:
(1) references to paragraph numbers are to paragraphs of the GPoC;
(2) the Defendant (“Post Office”) adopts the headings and abbreviations used in the
GPoC, without making any admissions of any matters implied or connoted thereby;
and
(3) where matters are noted, Post Office makes no admission and reserves its rights in
relation thereto.
The generic nature of the GPoC
2. Many of the allegations in the GPoC are at level of generality which [omits important
details, obscure the true nature of the claims and treat different situations as if they were
the same]. Many of these cannot meaningfully be addressed by Post Office, not least
because their true nature and extent cannot be properly understood unless and until
Claimants identify the particular actions or omissions they rely on and the context in
which and time at which such actions and omissions are alleged to have occurred. In this
Generic Defence Post Office responds to the general thrust of such generic allegations
without prejudice to its right [(1) to apply to strike them out and (2)] to admit, deny or
require a particular Claimant to prove them should they be pleaded with proper
particulars.
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At the pleaded level of generality of the GPoC, Post Office cannot anticipate all possible
claims that Claimants may be seeking to advance. Nor can Post Office set out all factual
and legal defences that it may prove appropriate to advance in all possible cases.
Accordingly, in this Generic Defence, Post Office identifies the generic defences that it
considers may usefully be identified at this level of generality, without prejudice to its
ability to identify further or other matters and defences as may be appropriate for such
individual claims as may be pleaded against it.
In this Generic Defence, Post Office cannot cover all the variations in its operating
practices and procedures that have occurred in the 18 years since Horizon was first
introduced. Indeed, until individual claims are properly pleaded, Post Office cannot
determine which particular practices and procedures are relevant to those claims.
Accordingly, save where otherwise indicated in this Generic Defence, Post Office refers to
the practices procedures that were in force as at (WHEN? SHOULD WE REFER TO!
Similarly, in relation to the contracts relied upon by the Claimants, Post Office cannot
cover all the variations made to those contracts over the years. It is not clear, given the
generality of the GPoC, which (if any) of those variations may be material to the pleaded
allegations. Save where otherwise indicated, Post Office (like the Claimants) refers to the
versions of those contracts served with the GPoC.
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Many of the allegations in the GPoC refer to “the Claimants” as having certain
obligations, being required to do certain things and/or taking certain steps in
circumstances where the allegation must relate to Subpostmasters only and not to the
other classes of person referred to in the GPoC, namely Assistants, Managers, Crown
Office employees and Directors and Guarantors of Franchisees. In this Generic Defence,
Post Office responds accordingly, without pointing out in each case that the allegation
must relate only to Subpostmasters.
SUMMARY OF THE GENERIC DEFENCE
A summary of the Generic Defence is provided with this Defence (TOBE DRAFTED!
ONCHTHMIS DEFENCE ISSETILAD I. As can be seen from that summary: (OBE)
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THE GPoC
As to paragraph 1, paragraphs [XIX] above are repeated.
As to paragraph 2, the Schedules of Information provided to date provide little assistance
in understanding the claims that the Claimants propose to bring. For example:
(1) The Schedules of Information typically identify the causes of action relied upon by
the individual Claimant by the inclusion of the word “Yes” or “No” in a table,
without the addition of any outline details (such as the specific duties, breaches,
actions/omissions and representations on which they rely and the applicable dates/
date ranges).
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(2) In some instances, there are apparent inconsistencies between some of the
information provided by particular Claimants and the (largely generic) wording they
have also provided in relation to certain causes of action. For example, at Box 4.2
of Mrs Sharon Pauline Brown’s Schedule of Information, she answers “No” to the
question “Was there any investigation carried out by the Defendant relating to the alleged
shortfalls?’ yet, at Box 7.3 (relating to the allegation of deceit), the following words
have been entered: “...1 believed that a thorough and fair investigation had determined that
Payment vas de® [EO DISCUSS ~ COULD THAT BE CONSISTENT WITH HER,
Post Office has concerns as to the process by which the
Schedules of Information have been prepared and the extent to which persons
other than the individual Claimants have decided upon the content of certain
responses.
(4) Where Post Office is able to understand the losses claimed, it is clear that many
Claimants assert claims for amounts that fall outside the GPoC and/or are plainly
irrecoverable because, for example, they involve obvious double-counting and/or
have no connection to any alleged breach of duty by Post Office. For example, Mr
Alan Bates purports to claim in respect of “holiday reimbursement payment’ on the basis
that “Post Office had not informed me that I was entitled to such pay” in circumstances where
there is no pleaded claim in relation to holiday payments.
11. As to paragraph 3:
(1) Post Office has provided voluntary information and disclosure to the Claimants on a
generous basis. It is denied (if it be alleged) that the matters to which the Claimants
refer provide any justification for a failure properly to plead their generic case or for
A.
Ad
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advancing and seeking disclosure in relation to speculative claims or contentions for
which there is no proper b:
2) Post Office will address the alleged asymmetry of information in responding to
specific allegations in that regard. However, the basic thrust of the allegation is
denied. Moreover, the Claimants overlook an important asymmetry of information
going the other way. At all material times, Subpostmasters and/or their Managers
and their Assistants (but not Post Office) have had first-hand knowledge of the
transactions taking place in their branches: see further paragraphs [XX] below. This
asymmetry of information is material to the construction of the parties’ agreements,
to the issues of fact between them and to the application of the burden of proof.
GPoC INTRODUCTION & KEY FACTS
The Parties
Defendant
As to paragraph 4, it is admitted and averred (1) that Post Office operates its business
through a network of around 11,6000 branches in the UK, (2) that it offers Post Office
products and services to the public via this network, including the services referred to, and
(3) that it specifies procedures governing how branches are to operate its business on its
behalf. Where those branches are managed by Post Office itself (“Crown Office
branches”), they are directly managed by Post Office and so are under its control.
However, where those branches are operated by Subpostmasters or Franchisees (“agency
branches” and “franchise branches” respectively), they are under the control of the
relevant Subpostmasters or Franchisees.
As to paragraph 5:
(1) As one would expect, Post Office determines the products and services which are
offered to the public as Post Office products and services and it requires certain
minimum products and services to be offered by its branches. However, it does not
require or indeed permit all Post Office branches to offer all its products and
services.
(2) Certain new products or services, including ATMs and National Lottery terminals,
were introduced in agency and franchise branches only where the relevant
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Subpostmasters and Franchisees specifically consented to the introduction of those
products or services. (GHBCR WHETHERAGENGCY BREANCHES ARE)
(3) No admissions are made as to the “increased ... complexity” of any particular
product or service. Post Office notes that the GPoC does not allege that any such
increased complexity is material to any Claimant’s case. []
(4) Save as aforesaid, paragraph 5 is admitted.
Types of branch
Paragraph 6 is admitted. ‘These branches ate also called agency branches and
Subpostmasters invariably operate their own retail businesses from the same premises. In
their conduct of Post Office’s business, Subpostmasters act as Post Office’s agent, which
involves doing the following things on its behalf:
(1) _ entering into transactions with Post Office customers;
(2) entering into transactions with third parties with whom Post Office has commercial
arrangements, such as (EISTSOME EXAMPIES.(CAN/SUBPOSTMASTERS BE)
ONTTS/BEHALN?I (“Post Office Clients”);
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(3) operating equipment belonging to Post Office such as [LIST SOME EXAMPLES?I;
(4) dealing [as bailees?] with stock (including cheques, vouchers and other items (ARE!
THESE ICATEGORISEDIAS'STOCK?)) belonging to Post Office; and
(5) dealing [as trustees?] with cash belonging to Post Office.
As to paragraph 7:
(1) The persons contracting with Post Office to operate branches under franchise
agreements (“Franchisees”) are not always (and are not required to be) limited
companies.
(2) Post Office is unable to admit or deny whether most of the limited companies that
are parties to franchise agreements were set up for the purpose of contracting with
Post Office. Many were not (e.g. WH Smith, McColls, the Co-operative Group, and
Lakemore. [CHECK THIS. MIGHT THE FRANCHISE AGREEMENTS BE,
(4) Save as aforesaid, paragraph 7 is admitted.
Subpostmaster Claimants and Contracts
Paragraph 8 is admitted as regards the Claimants presently known to Post Office, being
those identified on the original claim form in action No. HQ16X01238 (“the Existing
Claimants”).
As to paragraph 9:
(1) Post Office contracts with Subpostmasters on standard form contracts.
(2) As well as being expressed not to be contracts of employment, those contracts are
not contracts of employment and, as noted in paragraph [SX] below, the Claimants
admit that they are not contracts of employment.
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(3) Those contracts are contracts of agency. As one would expect with contracts
governing the conduct by an agent of the principal’s business, the contracts reserve
to Post Office the right to control certain aspects of its business (e.g. the products
and services Subpostmasters may offer on Post Office’s behalf and the procedures
and standards in accordance with which Subpostmasters are to conduct Post
Office’s business and to account to Post Office for the transactions they have
entered into and the cash and stock they have dealt with on its behalf). In relation
to matters such as these, Post Office has the power to give instructions that
Subpostmasters are obliged to follow.
(4) However, Post Office would not characterise the Subpostmaster contracts as
“reserve[ing] to the Defendant a high degree of power, discretion and control”.
Post Office is unsure what is meant by this vague expression and it does not know
what particular powers, discretions and controls the Claimants have in mind when
they use it.
(5) Save as aforesaid, paragraph 9 is admitted.
As to paragraph 10:
(1) SPMC: Paragraph 10.1 is admitted. Like the GPoC, this Generic Defence refers
only to the version of the SPMC served with the GPoC. Post Office believes that
130 (GABER] Existing Claimants were engaged on the terms of the SPMC.
(2) Temporary SPMC: Save that the word “purported” is inapposite, paragraph 10.2 is
(3) Community Subpostmaster Agreement:
(a) The first sentence of paragraph 10.3 is admitted. Post Office believes that 6
Existing Claimants were engaged on the terms of Community
Subpostmaster Agreement.
(b) As to the second sentence, Post Office believes that all or at least some of the
Existing Claimants who were engaged on the terms of these agreements will
have retained a copy of their contracts. Further, by paragraph 1 of their
Response to a Request for Further Information dated 16 May 2017 (“Part 18
)
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b)
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Response’’), the Claimants stated that it was not their case that none of them
(i) has or (ii) has ever had a copy of the Community Sub-Postmaster
Agreement, from which Post Office infers that at least some Claimants in fact
have a copy of that agreement. In any event, Post Office provided a copy to
the Claimants on 10 April 2017
AAs to the third sentence, the Claimants are not entitled to proceed on a mere
assumption as to the material content (which they have not pleaded) of any
contract on which they intend to rely: they must assert a positive case as to
the nature, content, construction and effects thereof.
The first sentence of paragraph 10.4 is admitted. Post Office believes that 32
(GHBER) Existing Claimants were engaged on the terms of main branch
NTC, and that 19 [
I Existing Claimants were engaged on the terms of
the local branch NTC.
The second sentence is noted.
As to the third sentence, Post Office believes that all or at least some of the
Existing Claimants who were engaged on the terms of these agreements will
have retained a copy of their contracts. Further, by paragraph 1 of their Part
18 Response, the Claimants stated that it was not their case that none of them
(® has or (ii) has ever had a copy of the main branch NTC, from which Post
Office infers that at least some Claimants in fact have a copy of that contract.
In any event, Post Office provided a copy to the Claimants on 10 April 2017
A\s to the fourth sentence, the Claimants are not entitled to proceed on a mere
assumption as to the material content of any contract on which they intend to
rely: they must assert a positive case as to the nature, content, construction
and effects thereof.
Paragraph 10.5 is noted. Post Office will respond to any claim based on any other
contract if and when such a claim is properly pleaded.
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For the avoidance of doubt, Post Office pleads back in relation to the SPMC, the
‘Temporary SPMC, the NTC and the Franchise Agreement attached to the GPoC, without
prejudice to its right to rely in individual cases on the terms of such agreements as they
stood at the time(s) relevant to the particular claims made by particular Claimants.
As to paragraph 11:
(a)
Regarding paragraph 11.1, Post Office believes that 2 (GAMBIER) Existing Claimants
were employed in Crown Office branches (“Crown Employees”) and that both or
one of them will have retained a copy of their employment contract. Further, by
paragraph 1 of their Part 18 Response, the Claimants stated that it was not their case
that none of the Claimants (i) has or (ii) has ever had a copy of their employment
contract, from which Post Office infers that at least one Claimants in fact has a copy
of that contract.
Regarding paragraph 11.2, Post Office believes that 5 [(CABER] Existing Claimants
assert that they were employed by Subpostmasters as their Managers or Assistants.
Post Office notes that it had no contractual or other relationship with these
individuals and that the Claimants have not disclosed the basis or terms upon which
they were employed by the relevant Subpostmasters (GABCK THE SCHEDULES
Regarding paragraph 11.3, Post Office believes that [HOW MANY?I Existing
Claimants assert that they were directors of Franchisees and that [HOW MANY]
were guarantors of Franchisees. It admits that the relevant Franchisees contracted
with Post Office on the terms of the Franchise Agreements [(GORRECT). It also
notes that Post Office had no contractual or other relationship with the Existing
Claimants who are merely alleged to have been directors [BOUANY CLAIMANTS)
and that the Claimants have not disclosed the basis or
terms upon which they acted as directors of the relevant Franchisees [(GHBER THE,
A2
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- Further, (ARIE WEEINIA)
(4) Save as aforesaid, Post Office is unable to admit or deny paragraph 11.
Horizon
Paragraph 12 is admitted. Until 2010, Horizon was a distributed system in which
transactions were undertaken within branches, whose terminals subsequently transmitted
transaction data to a central Post Office data centre ts
Such as (GIVE) FEW EXAMPIESII. Once Horizon Online was introduced in 2010,
transactions were effected through real time © exchanges of of data from branches to a central
Post Office data centre [:
“Horizon” to refer to the pre-2010 version of Horizon (“Original Horizon”) and to
srerera
I. Save where otherwise indicated, Post Office uses the term
Horizon Online as the context may require and as the system existed at the relevant
time(s), without prejudice to its ability to plead more fully as to Horizon’s features and
operations as may be relevant to any individual claim (should such a claim raise any
specific issues in that regard).
As to paragraph 13, it is admitted that any Claimants who have acted as Subpostmasters
for agency branches at any time since the introduction of Horizon in those branches have
been users of Horizon (CORRECT? EVEN WHERE/THEY WERE ABSENTER)
WHAT ABOUT THE DIRECTORS OR GUARANTORS OF FRANCHISEES?). Save
as aforesaid, Post Office is unable to admit or deny the paragraph.
As to paragraph 14, which appears to relate simply to Claimants who were
Subpostmasters:
(1) Itis admitted that, if and to the extent that any Claimant Subpostmasters worked in
a Post Office branch prior to the introduction of Horizon to that branch and
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continued working in that branch thereafter, the introduction significantly changed
how they were required to work in that branch. Save as aforesaid, paragraph 14.1 is
denied.
(2) Paragraphs 14.2 and 14.3 are embarrassing, in that they fail to identify any of the
limitations apparently relied on. In any event, the introduction of Horizon
increased, rather than limited, the ability of Subpostmasters to access, identify,
obtain and reconcile transaction records and to investigate shortfalls. Before the
introduction, Subpostmasters had access to [WHAT/TRANSACTION,
RECORDS). Afterwards, they also had the ability to obtain an extensive range of
reports, as pleaded further in paragraph [XX] below.
Paragraph 15 is embarrassing for lack of particularity. In the absence of any indication as
to the actual changes the Claimants intend to rely on and as to the effect(s) each such
change is alleged to have had, Post Office cannot plead to this paragraph. However, Post
Office is not aware of any change to Horizon which had any of the effects alleged in
paragraph 14. Moreover, although it accepts in general terms that some changes to
products and services offered in a branch would have affected the work done at that
branch, nor is Post Office aware of any change to products or services which had any of
the effects alleged in paragraphs 14.2 and 14.3. (CAN WH SAPELY SAY THIS/OR!
WERE THERE SOME NEW PRODUCTS AND SERVICES THAT WOULD HAVE.
CREATED OR INCREASED DIFFICULTIES IN ACCOUNTING, RECONCILING
FIGURES OR INVESTIGATING TRANSACTIONS?
Post Office notes that, on the Claimants’ pleaded case, any changes in the Claimants’
ability to access records and investigate shortfalls caused by the introduction of Horizon
or by subsequent changes to Horizon or to products and services offered has no apparent
relevance to any of the breach of contract or other claims advanced in the GPoC.
‘The first sentence of paragraph 16 is admitted [IS BVERY WORD OP THAT
to the second sentence, which is noted, Post Office’s use of the terms “Horizon”,
“Original Horizon” and “Horizon Online” similarly does not include training.
The operation of Horizon
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AAs to paragraph 17:
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2)
Regarding the first sentence, at all material times since the introduction of Horizon:
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Data reflecting transactions entered by Subpostmasters or other authorised
users of branch terminals was transmitted to and replicated on a central
seaman narayuse
database centre [now «
On receipt by the data centre, the integrity of this transaction data was
checked. Furthermore, it was compared against every available third-party
data source (i.e. the data held by Post Office Clients (BEFINE)THISTERM
, including data those
clients had obtained directly from branches). It was also copied to an audit
store in which it was retained, generally for 7 years.
These were aspects of a rigorous “Core Audit Process” which has at all
material time been (and still is) applied to Horizon with a view to ensuring that
Horizon accurately records and retains the data keyed into branch terminals.
Other aspects are referred to in paragraphs [KX] below.
The Core Audit Process is regularly upgraded, an example being the
introduction of encryption technology when Horizon Online was introduced,
since which time all transaction data sent from branch terminals has contained
digital signatures. The Core Audit Process is one set of safeguards against
errors in Horizon recording and retaining data input from branch terminals.
Others safeguards are referred to in paragraphs [XX] below.
Regarding the second sentence:
(@)
(b)
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INTRODUCTION OM HORIZON IN(1999/20007). Subpostmasters were
able to use these records to perform extensive searches, checks and reviews of
their branch transactions. If they wished, Subpostmasters also had the ability
to use Horizon to perform a wide variety of additional searches, checks and
reviews, as set out below.
Until the introduction of Horizon Online, transaction data [I
Centre] was freely available to Subpostmasters for 42 days from the date of the
relevant transaction. From the introduction of Horizon Online, such data was
freely available for (60° OR84 DAYS?).
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identify, organise and analyse data by means of wide range of reports,
including a transaction log report which could list all transactions undertaken
in the relevant branch in the entire period and which could be limited in a
variety of ways if the Subpostmaster wished, including by reference to date
ranges, transaction types, stock items, value ranges and even particular users or
terminals
Thus, in addition to the substantial paper records that were available, Horizon
provided Subpostmasters with powerful tools for searching, checking and
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reviewing all aspects of the transactions undertaken in the branches for which
they were responsible.
Transaction Corrections AND Transaction Acknowledgements
Paragraph 18 refers to transaction corrections. One of the safeguards against errors in the
data keyed into branch terminals was a process by which Post Office proposed corrections
to the transaction data held on Horizon (“Transaction Corrections”). These were [(and
are)] typically generated in the following way:
(1) Post Office’s Financial Services Centre (“FSC”) would check Horizon transaction
data (i.e. data as keyed into branch terminals) against and seek to reconcile it with
transaction data provided by Post Office Clients. For example, client banks have
since around [BAPE] provided to Post Office their own records of transactions
carried out in Post Office branches (transmitted directly from the chip and pin
devices used in branches), allowing Post Office to compare these to the transaction
data on Horizon.
(2) Where there was a discrepancy between the two sets of data, [WHG3] would review
the available data with a view to determining whether he or she considered it likely
that the transaction data shown on Horizon required correction. Where this was the
case, [WHG2] would generate a Transaction Correction notification, which would be
sent to the relevant branch via Horizon.
(3) A Transaction Correction took the form of an additional accounting entry that,
without editing any transaction data already input into Horizon, corrected the effect
of the apparent error in the transaction record. For example, where the payment in
of a cheque was recorded on Horizon as involving a £100 credit but the true
amount of the cheque was £90, a Transaction Correction with a value of £10 debit
would be generated. ‘The otiginal transaction entry remained the same on Horizon
but the error was corrected by the new Transaction Correction entry.
(4) A Transaction Correction notification included (i) a description of the transaction to
be corrected, (ii) the contact details of an employee of Post Office who will provide
further detail if required, (ii) typically, the outline reason for or nature of the
correction, and (iv) sometimes, evidence justifying the proposed correction. For
example, where a Transaction Correction deals with a cheque payment that was
”
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ineffective because the cheque was not signed, Post Office would typically have
provided the explanation “Cheque not signed”.
A Transaction Correction notification sent by Post Office to a branch was a
proposal, not an instruction, and it did not take effect unless and until accepted by
the Subpostmaster concerned. On receiving a Transaction Correction notification,
the Subpostmaster could (i) accept it by selecting that option on Horizon or (ii) if he
or she did not accept the correction and/or required further information, contact
the person identified in the Transaction Correction notification or, failing that, the
Helpline.
If the Subpostmaster accepted the Transaction Correction and the effect of the
correction was to increase the cash position of the branch, the Subpostmaster was
required to make good the amount of the increase, either by:
(a) paying cash or a providing a cheque in that amount to the branch, or
(b) adding that amount as a debit to an account maintained by the Subpostmaster
with Post Office (his “Subpostmaster Account”)
‘The option of adding an
item to the Subpostmaster’s account with the Post Office was called “settling
centrally”. It was only available if the amount involved was at least £150.
If the Subpostmaster accepted the Transaction Correction and the effect of the
correction was to decrease the cash position of the branch, he or she would either
remove the relevant amount in cash from the branch or settle it centrally by
crediting it to his Subpostmaster account with Post Office.
If the Subpostmaster did not accept the Transaction Correction, he or she was
requited to raise any request for information or query by contacting, in the first
instance, the person identified in the Transaction Correction notification. The
process was identified in [page fel] the operating manual entitled “Branch ‘Trading:
balancing and dispatch of documents” (“The Branch Trading Manual’).
If having discussed the matter and reviewed any further information provided by the
person identified, the Subpostmaster wished to dispute the proposed ‘Transaction
Correction, he [BI
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(10) If having considered the dispute [SWEIG]’s view was that the ‘Transaction Correction
was correct, the Subpostmaster could appeal by providing written submissions to
the branch’s Relationship Manager, identifying the reasons for which it was
contended that the “Joss (or gain) is not proper to [the] branch. The process was
identified in [Pag@¥El] of the Branch Trading Manual.
(11) The initial review and any appeal was conducted on the basis of the available
(12)
(13)
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As to paragraph 18:
(1) The first sentence of paragraph 18 is denied. Post Office did not require that the
‘Transaction Correction be accepted unless proven by the Subpostmaster not to be
correct. The process was as summarised in paragraph [KX] above.
(2) Save for the reference to “limited” reports (as to which see paragraph [KX] above),
the second sentence of paragraph 18 is admitted. However:
(a) Ifa Transaction Correction related to a trading day before the
commencement of the trading period in which the correction is proposed to
be made, [IS EXTRA HELP/INFORMATION/EVIDENCE,
GENERALLY PROVIDED?I
(b) Ifa Transaction Correction related to a trading day more than 42/60 [842]
days before the date on which it was proposed, [IS/EXTRAY
S
In any event, the Subpostmaster could request transaction data for the
relevant period by contacting the person identified in the Transaction
Correction notification. [WOUED!ANY STANDARD OR MINIMUM
In paragraph 19, the Claimants combine many allegations together. Post Office separates
out and addresses those allegations in paragraphs [KX] below. In the interests of clarity
and consistency, Post Office uses the following terms to refer to differences between the
account shown on Horizon and the true position in a branch (THE UTMITY OF
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(1) “Discrepancy” refers to any difference between (i) the actual cash and stock
t had all
position of a branch and (ii) the and stock position that would e
transactions been completed correctly (and cash and stock properly retained).
(2) I “Gain” refers to an event that causes a positive Discrepancy (i.e. the situation
where the branch has more cash and/or stock than it should have had the relevant
transaction(s) been completed correctly). For example, a Subpostmaster carrying
out a bank account withdrawal of £100 for a customer, entering that withdrawal into
Horizon but providing only £90 in cash to the customer would generate a Gain of
£10.
(3) “Loss” refers to an event that causes uation
1 negative Discrepancy (i.e. the s
where the branch has less cash and/or stock than it should have had the relevant
transaction(s) been completed correctly). For example, a Subpostmaster carrying
out a bank account withdrawal of £100 for a customer, entering that withdrawal into
Horizon, but providing £110 in cash to the customer would generate a Loss of £10.
(4) “Shortfall” refers to negative net Discrepancy shown on Horizon at the end of a
trading period (ie. the amount by which Losses, if any, exceed Gains
f any, in the
period).
(5) “Net Gain” refers to positive net Discrepancy shown on Horizon at the end of a
trading period (ie. the amount by which Gains (if any) exceed Losses (if any) in the
period).
(6) “Horizon-Generated Shortfall” refers to a Shortfall that is attributable to an error,
bug or defect in Horizon.
Branch Trading Statements, making good and disputing Shortfalls
As to the first sentence of paragraph 19, it is denied that the matters addressed in
paragraphs 19.1 to 19.3 “accentuated the importance of the accuracy of Horizon”.
Paragraph 19 addresses requirements whose purpose was to ensure the proper discharge
of the Subpostmaster’s contractual and fiduciary duties to account to Post Office for the
transactions they entered into on its behalf and for the cash and stock it entrusted to their
care. Such obligations were to the mutual benefit of Subpostmasters and Post Office in
that (amongst other things) they ensured the early identification and correction of any
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errors and defaults relating to the transactions carried out and/or to the cash and stock
held in the branches for which the Subpostmasters were responsible.
‘These requirements were as follows:
(1)
2)
2)
Subpostmasters were required to perform a regular “balancing process”, which
involved counting all stock and cash at their branches, comparing it with the cash
and stock indicated on Horizon and producing (and confirming) an account of the
transactions undertaken since the last balancing process and of the cash and stock
held. Initially, Subpostmasters were required to do this weekly, but from 2005, they
were required to do so at the end of each “Branch Trading Period” (Post Office-
specified periods of 4 or 5 weeks, of which there are 12 in the year and which, for
convenience, are variously referred to herein as “trading periods” [and
“months”]). ‘The purpose this exercise was to
In order to “balance” their accounts, Subpostmasters were required to address any
Discrepancies identified from this process. They were not requited to confirm the
derived figures on Horizon but were required to identify the cash and stock actually
held in branch (e.g. by counting the cash held in cash registers).
Where this process disclosed a Shortfall and the Subpostmaster accepted liability for
the Shortfall, he ot she was required to make it good (1) by adding cash ot a cheque
to the branch or (2) by settling it centrally (generating a debit or credit in his or her
account with Post Office), in the manner described in paragraph [MX] above).
Where this process disclosed a Shortfall and the Subpostmaster disputed liability for
the Shortfall, he or she was required to raise this dispute by calling the Helpline
referred to in paragraph [SX] below. If the Shortfall was for less than £150, he or
she was required to make it good by adding cash or a cheque to the branch pending
resolution of the dispute (on the basis that it would be repaid to the Subpostmaster
if it was ultimately determined that he or she was not liable for the Shortfall). If the
Shortfall was for £150 or more, he or she could settle it centrally pending resolution
of the dispute. In that situation, Post Office would put a block or hold on the
relevant debit created in his or her account with Post Office (ie. the amount settled
centrally) until the resolution of the dispute. Unless and until it was ultimately
determined that the Subpostmaster was liable for the Shortfall, that debit was not
(and was not treated as) a debt due to Post Office.
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Equivalent processes were followed where the Subpostmaster accepted or disputed a
Net Gain, with the relevant transactions being the removal of cash from the branch
or the creation of a credit with the Subpostmasters’ account with Post Office.
The transactions referred to in sub-paragraphs [@J/t01)] above would be recorded
on Horizon. By this means, additional entries would be made the cash and stock in
hand indicated by Horizon and Horizon’s figures would thus would be brought into
balance with the physical cash and stock counted by the Subpostmaster.
‘These processes are addressed in [Pageleel] of the Branch Trading Manual, which
stated that (CHE 3 ON WE
Having followed these processes, Subpostmasters were required to produce and sign
a statement setting out the quantities and values of the various receipt and payment
transactions that had been carried out in the branch during the relevant period and
the cash and stock held in the branch at the end of the trading period (called a
“Cash Account” until 2005 and a “Branch Trading Statement” from 2005).
Branch Trading Statements contained the following statement by the
Subpostmaster: “I confirm that the content of this balancing and trading statement is an accurate
reflection of the cash and stock on hand at this branch”.
A branch could not enter (or “roll over” into) a new Branch Trading Period without
the Subpostmaster declaring to Post Office the completion of the Branch Trading
Statement as aforesaid. However, although Subpostmasters were required to
produce Branch ‘Trading Statements at the end of each trading period, if they did
not do so, [the branch could continue to trade within the previous trading period
for up to
Branch Trading Statements
As to paragraph 19.1, subject as set out in paragraphs [SX] above:
()
2)
The first and second sentences are admitted.
The third and fourth sentences are denied. Paragraphs [XX] above are repeated as
regards the comparison between the derived figures for cash and stock shown on
Horizon and the actual cash and stock as counted and declared by the
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Subpostmaster, paragraph [KX] above is repeated as regards bringing Horizon’s
figures into balance with the cash and stock as counted, and paragraph [RX] above
is repeated as regards the ability to continue trading without entering a new trading
period.
Making good
Paragraph 19.2 appears to be intended to allege that, whenever there was a Shortfall
between Horizon’s figures and the cash and stock counted by the Subpostmaster: (1) the
Subpostmaster would (unless some special arrangement was made) be required to make
good the difference; and (2) if he or she did so by settling centrally, the amount of the
Shortfall would be treated as a debt due to Post Office. The:
legations are specifically
denied. As explained in paragraph [SX] above (and in particular paragraph [RX], Post
Office’s procedures enabled Subpostmasters to dispute liability for Shortfalls.
Disputing Shortfalls
As to paragraph 19.3:
(1) It is admitted that there was no “option within Horizon” to dispute a Shortfall, in
the sense that the process of raising and resolving a dispute did not take place
through submitting information and argument within the Horizon system.
However, as indicated in paragraph [RX] above, Horizon provided information as to
the process to follow in order to dispute Shortfalls (by contacting the Helpline).
(2) As indicated in paragraph [RX] above, Subpostmasters who contacted the Helpline
with a dispute were not required to settle the disputed amounts centrally and, where
they did so, this did not mean that they owed those amounts as debts to Post Office
as appears to be alleged.
(3) Itis specifically denied that Subpostmasters were unable to carry out effective
investigations into the disputed amounts. So is the wholly unparticularised allegation
that there were unspecified “limitations” on Subpostmasters’ ability to access,
identify and reconcile transactions in Horizon and that Horizon had no “adequate
report-writing feature”, as to which paragraphs [RX] above are repeated. As
indicated in those paragraphs, Horizon provided Subpostmasters with powerful
tools for searching, checking and reviewing all aspects of the transactions
undertaken in the branches for which they were responsible.
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(4) There were provisions in Post Office’s Operating Manual as to the process for
disputing Discrepancies (see, for example, [pagetel] of the Branch Trading Manual)
and it is denied that these provisions gave insufficient guidance regarding that
process. In any event, the process involved calling the Helpline and, if further
guidance was needed, it was available from the Helpline.
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Fujitsu
As to paragraph 20:
(1) Post Office has provided to the Claimants a copy of its contract with Fujitsu dated
31 March 2016 (“the 2016 Fujitsu Contract”). ‘The Claimants have not identified
any reasons for thinking that any other agreements between Post Office and Fujitsu
are required for them properly to plead their generic claims.
(2) The Claimants have not identified any respects in which the redactions to the 2016
Fujitsu Contract have prejudiced their ability to plead their case on the relationship
between Post Office and Fujitsu. The redactions were made in order to preserve
commercially sensitive information and/or because the redacted content was
irrelevant to the issues in this case.
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(3) Save as aforesaid, paragraph 20 is admitted.
As to paragraph 21: (TOBE REVISITED ONCE WEAVE RECEIVED TAR
WRITTEN COMMENTS PROMISED BY FUJITSU}
(1) Paragraph 21.1 is admitted. [SHOULD WE MARETT CLEAR THAT UNTIN)
(2) Paragraph 21.2 is admitted.
(3) As to paragraph 21.3, Fujitsu’s role included identifying and remedying coding errors
and bugs in Horizon as pleaded in paragraph [KX] above. However, it was not its
role to change the transaction or accounting data on Horizon or to identify and
remedy coding errors in bugs in a manner that adversely affected such data. (£6)
I On the contrary, the
purpose and effect of identifying and remedying of errors and bugs was to improve
the reliability of the record of transactions on Horizon and therefore the derived
figures for branch cash and stock.
(4) As to paragraph 21.4, it is admitted that until 17 June 2014 Fujitsu provided a
telephone advice service to Post Office in relation to technical problems with the
Horizon system or equipment. This service was mainly used by Post Office staff
(such as staff working on the Helpline referred to in paragraph [&X] below), but
sometimes Fujitsu staff would have direct contact with third parties such as
Subpostmasters in order to obtain a better understanding of the problem on which
it was asked to advise (CORRECT SUMMARY?]. However, from 17 June 2014, this
telephone advice service was provided by [INSERT FULL NAME ORATOSI"
8
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6)
Bugs, errors or defects in Horizon
As to paragraph 22:
(1) If and to the extent that the Claimants wish to assert that any of the Shortfalls for
which they were held responsible were Horizon-Generated Shortfalls, it is for them
to make that distinct allegation and seek to prove it. Post Office notes that they do
not make the allegation in the GPoC. It further notes that, in paragraph 20 of their
solicitors’ letter to Post Office’s solicitors dated 27 October 2016, the Claimants
make it clear that they do not allege that there is a systematic flaw in Horizon or
indeed any flaw which has caused any Claimant to be wrongly held responsible for
any Shortfall.
27
39.
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It is denied that Post Office has unreasonably or otherwise failed to provide
“obviously relevant disclosure” in relation bugs, errors or defects in Horizon. There
has been no order or application for disclosure and, in the premises set out above,
there appears to be no basis for providing disclosure (TODISEUSS!CAN WE GO)
Paragraph 23 is embarrassing for its lack of particularity, in that (amongst other things) it
does not identify the errors, bugs or defects they rely on or how “large” their number was
or the period in which they are said to have occurred and nor does it identify the
transaction data that Fujitsu is alleged to have rebuilt, how “frequent” was the need to
rebuild it or the extent of the “risk of error” which is said to have been introduced. In the
premises, Post Office cannot plead to the first three sentences of this paragraph.
However:
()
AILIT systems experience software coding errors, bugs or defects which require
fixes to be developed and implemented. Horizon was no exception. For a system
of Horizon’s scale, Post Office would characterise the number of errors, bugs or
defects which required fixes in Horizon as relatively low (CORRECT). In any
event, as is noted in paragraph [XX] below, there were robust measures in place for
their detection, correction and remediation.
AILTT systems involving the transmission of data over the internet experience data
or data packet errors during transmission and they all have protective measures in
place to prevent such errors creating any difference between the data transmitted
and the data received and retained by the recipient (which may be referred to as the
“corruption” of data). As is noted in paragraph [SX] below, Horizon had robust
measures making it extremely unlikely that a data packet error could result in the
recording and retention of transaction data at the central database that is different
from the data provided by the branch.
3)
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It is admitted that Fujitsu maintained (and maintains) a “Known Error Log”. This is
not used by Post Office and nor is it in Post Office’s control [BUEASHICHECR!
developed. As far as Post Office is aware, of these problems had
nothing to do with the accuracy of branch transaction data or branch accounting.
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In paragraph 24, the Claimants combine many allegations together. Post Office separates
out and addresses those allegations in paragraphs [XX] below. (EAGH OP PARAS 4144)
As to paragraph 24.1, it is a truism that bugs, errors or defects in an IT system and data or
data packet errors have the potential to create errors in the data held in that system.
Horizon was no exception. However, Horizon has at all material times included
technological features and control measures to reduce to an extremely low level the risk of
data errors affecting the replication and storage of the transaction record in the central
database. These have varied from time to time and would most appropriately be
addressed in relation to particular claims made. However, as at (USE/THE SAME)
PROCEDURESASPERPARAWABOVE), these features included the following:
(1) Horizon created, transmitted and stored transaction data in the form of “baskets”.
A basket is a complete transactional session between a customer and Post Office. A
basket may include one, several or many individual transactions that take place
within the same session, for example (1) a cash deposit, (2) a purchase of stamps and
(3) the payment of a utility bill. Horizon would not accept a basket of transactions
that does not net to zero. This reflects the basic design of the accounting elements
of the system as requiring double accounting and reduced greatly the risk of any
error in the data for any transaction being replicated in the data that was transmitted
and retained in the form of baskets. The central database rejected any basket that
would not net to zero and would not allow that basket to be completed at the
terminal. A basket that was rejected by Horizon could not be effected or stored on
the system. The system user would be notified that the basket had not been.
3)
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accepted and would, in the ordinary course, check for any mistake and attempt again
to complete the transactions.
Ifa basket of transactions failed properly to complete its transmission to the central
database (because, for example, of a power loss), the system would reject any partial
transmission and request the full basket from the branch terminal. If a second
attempted transmission failed, the procedure outlined in paragraph [0
ABO¥E/BAGWI would be followed. ‘This reduced greatly the possibility of baskets of
transactions failing to be recorded.
At the point of a basket being accepted by Horizon, it was assigned a unique
sequential number (a “JSN”) that identified the terminal on which the basket of
transactions was completed and allowed it to be identified in time and relative to the
other baskets transmitted by that terminal. This reduced greatly the risk of the
transaction record being affected by duplicate entries and/or entries that did not
reflect any basket of transactions that was in fact executed on a terminal.
As pleaded at paragraph ({YabSve/BESw) initial data integrity checks were applied
to make sure that data packet errors do not affect the data as recorded and stored in
the central database. [
DIGITAL SIGNATURES?
‘The data transmitted from the branch and accepted by the central database was
subject to further checks before being duplicated and recorded within an audit store
(the “Audit Store”). The Audit Store was a segregated piece of hardware. It
retained transaction data for 7 years.
Each basket was also supplied with a digital signature, i.e. a unique code calculated by
using industry standard cryptography. If the data in the basket were to change after
the digital signature was generated, this would be apparent upon the checks referred
to herein.
Before baskets of transaction data were copied to the Audit Store, checks are carried
31
42.
8)
(10)
(11)
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Baskets that were copied to the Audit Store were stored together in groups to which
a digital seal is then applied (the “Audit Store Seal”). If the baskets and/or the data
within the baskets were altered after the application of the Audit Store Seal, this
would be apparent when the baskets were extracted from the Audit Store.
Upon data being extracted from the Audit Store, checks were carried out to ensure
the following:
(a) The Audit Store Seals remained intact.
(b) The digital signatures on individual baskets remained intact.
(The JSNs were correct, ie. no baskets were missing and no basket had been
inserted or duplicated.
Horizon and its audit processes were themselves subject to external audit. Ernst and
Young carries out an annual audit [€
investigating and resolving system errors.
processes for identifying,
In addition to these technological controls, Post Office applied the following procedures
and practices that served to increase the reliability of the data stored in the central database
as an accurate record of the transactions that were effected on branch terminals:
1)
i)
Prior to data being copied to the Audit Store, Post Office compared its own
transaction record against that held by Post Office Clients taking data from
branches. For example, [Wi JN?]. If an error in Horizon
resulted in the corruption of transaction data, this should have been revealed by the
comparison.
‘There were detailed procedures in place to address the risk of data loss resulting
from interrupted sessions, power outages or telecommunications failures in
branches. These were set out
THESE SHOWN and Horizon guides the system user through the recovery
process (which included competing any transactions that were cut short). If
followed correctly, these procedures should have prevented any data errors arising
from interrupted sessions, power outages and telecommunications failures.
32
43.
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(3) The display of the transactions being effected on-screen at the branch terminal
allowed the user of the system to identify any inconsistency between the
information shown on the screen and the transaction that he or she had entered
into the system. If, for example, a hypothetical bug in the terminal were to cause a
key-strike on number 5 to be recorded as an input of number 6, it is highly unlikely
that this would not be detected rapidly by system users (given the large number of
system users and the huge number of transactions effected on Horizon). (ARE)
THERE CONTRACTUAL OBLIGATIONS OR IS THERE MANUAL,
GUIDANCE ABOUT NOTIFYING PO OF ANY PROBLEM WITH
HORIZON?
(4) The accounting and record-keeping obligations placed on Subpostmasters reduced
the risk of any errors going undetected. For example, the requirement to produce
daily cash declarations increased the likelihood of detecting any error that would
result in Horizon overstating or understating the cash position of a branch. If a
Subpostmaster detected an error at an early stage, it would have been more likely to
have been localised and remedied, allowing the correction of the data held in the
central database (in most instances, by way of a Transaction Correction).
(5) Fujitsu operated [INDUSTRY STANDARD] processes for investigating and
resolving any potential system errors drawn to its attention by Post Office and/or
system users.
Finally, the training provided by Post Office (and the obligations placed on
Subpostmasters in relation to training), as to which see paragraphs [fl] below, increased
the likelihood of the system users entering transactions into the system correctly and/or
identifying at an early stage any error in the operation of the branch terminal and/or the
data transmitted to the central database.
As to paragraph 24.2, Post Office admits that, like all other IT systems, Horizon was not
(and is not) a perfect system which never had any bugs, errors or defects. However, as is
explained in paragraph [XX] above, it had (and has) robust systems in place to identify
them, fix them and correct their consequences (if any).
As to paragraph 24.3, [HERB WEISHOULD PLEAD THAT BUGS ETC HAVEON)
OCCASION CREATED DISCREPANCIES AND SHORTFALS AND THAT (1) THE,
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Remote access to branch transaction data
Paragraph 25 appears to be concerned with the alteration of transaction data affecting
branch accounts without the consent of the relevant Subpostmaster. Accordingly, Post
Office assumes that it is not concerned with Transaction Corrections, Transaction
Acknowledgments or remittance transactions (transactions recording in Horizon the cash
and/or stock remitted into branches), since these transactions must be accepted by or on
behalf of the Subpostmaster before forming part of his or her branch account. As to the
circumstances in which such transaction data could be altered without the consent of the
Subpostmaster: [TO BE REVIEWED BY POST OFFICE TECHNICAL PEOPLE,
() Neither Post Office nor Fujitsu had the ability to log on remotely to a Horizon
terminal in a branch so as to conduct transactions.
(2) A Post Office employee with “global user” authorisation could, when at a branch,
have used a terminal within the branch to add a transaction into the branch’s
accounts. The purpose of “Global User” authorization was to allow access to the
systems for during training and/or audits. [WERE]FORMAL PROCEDURES IN)
3)
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2
transactions effected by a Global User were recorded against a Global User ID and
was [readily] identifiable as such.
Fujitsu (and not Post Office) had the ability to inject transactions into branch
accounts (since the introduction of Horizon Online in 2010, transactions of this sort
have been called “Balancing Transactions”). ‘These transactions did not involve
any removal or amendment of the transactions entered at the branch. Their
intended purpose was to allow Fujitsu to correct errors, bugs or defects in Horizon
by introducing a new transaction to cancel out the effect of an error, bug or defect
ona branch’s transaction data. [WERE FORMAT PROCEDURES IN PEACE)
They were rarely used. To the best of Post Office’s information and belief, only one
Balancing Transaction has been ever been effected, and this was not in a branch
operated by a Claimant. A Balancing Transaction was [readily] identifiable as such.
‘There were a small number of Fujitsu specialists (no more than [HOW MANY AT?
SECURITY VETTED?)) who had certain privileged user access rights which they
could in theory have used to amend or delete a branch’s transaction data for a
branch. The intended purpose of privileged user rights was system support, not the
alteration of branch transaction data. ‘To have abused those rights so as to alter
branch transaction data and conceal that this had happened would have been an
extraordinarily difficult thing to do, involving complex steps which would have
requited months of planning (including the writing of sophisticated computer
programmes and circumvention of control measures) and an exceptional level of
35
48.
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technical expertise [IMTAERE HAD BEEN NO ATTEMPT TO COVER THE)
)}.
Post Office had never consented to the use of privileged user rights to alter branch
data and, to the best of its information and belief, these rights have never been used
for this purpose.
Post Office cannot conceive of a reason why any of the persons identified in sub-
paragraphs [SX] above would have sought to add, inject, amend or delete any
transactions in any branch accounts so as to create a false Shortfall. Post Office
would never have consented to any of them making changes to branch accounts to
generate false Shortfalls, it would have been practically impossible for any of them
to generate significant Shortfalls without detection and, even if they had been able to
do so, they would have been wholly unable to take the benefit of such Shortfalls for
themselves.
As to paragraph 26, the statements referred to therein are admitted. The Post Office
representatives who were responsible for the making of these statements [WHO WERE)
PAEY?I made them believed that they were true. They were not aware of Fujitsu’s ability
to effect Balancing Transactions or the theoretical possibility that Fujitsu privileged user
rights could be used to circumvent Horizon’s data integrity controls and amend branch
d
lata.
As to paragraph 27, it is admitted that by reason of the ability of Fujitsu’s part to inject
new transactions into branch accounts described in paragraph [SX] above and the
36
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theoretical ability on the part of certain Fujitsu personnel to abuse their privileged user
rights so as to amend or delete branch transaction data as described in paragraph [XX]
above:
(1) Horizon could be said to have the functionality to edit or delete transactions as
recorded by branches; and
(2) _ transactions as they are recorded by branches can be edited.
As to paragraph 28, which is noted, without prejudice to the burden of proof the alleged
inferences are inappropriate and each of them is specifically denied. Further:
(1) Post Office responded to the allegations of “remote access” to branch data
principally in the context of a claim by a particular Subpostmaster that he had in
August 2008 observed a Fujitsu worker passing transactions directly into the
Horizon system and altering the recorded foreign currency holdings of branches.
‘This was alleged to have taken place in a basement of Fujitsu’s premises in Bracknell.
Post Office ascertained No remote access or altering of branch data was possible
from that location (which provided a test environment for an un-released version of
Horizon and a test version of the then current version).
8S
In making the statements referred to above, Post Office reasonably relied upon
information provided to it by Fujitsu. (PO/DISCUSS] WHETHER WE GO!
37
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A4 Helpline
51. Paragraph 29 is admitted (CORRECT). ‘The Helpline was provided to Subpostmasters
and their Assistants (including their Managers) principally to assist them with the operation
of Horizon. Helpline operators had four weeks’ training plus two weeks floor support,
where their performance was monitored by more experience staff. Post Office’s practice
was to address calls to the Helpline in accordance with the following processes [(GAIBER!
(1) Helpline operators categorised the caller’s query using an online system (now called
“Dynamics” and previously called “Remedy”) and to then provide advice by
38
52.
2)
3)
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6)
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reference to the Post Office “Knowledge Base”, an online resource which contained
numerous articles and other guidance documents on various matters (but was not
scripted).
If the Knowledge Base did contain sufficient information to allow the operator to
address the query, the next step was for the query to be escalated to a second tier of
more experienced staff.
If the second-tier adviser could not respond in a satisfactory way to the query, he or
she would seek assistance from the relevant Post Office product team, such as
If, after all these steps, no satisfactory response had been given, Post Office would
consider whether to organize a visit to the branch and/or further training for the
Subpostmaster and/or Assistant concerned.
Post Office was able and willing to provide further assistance to Subpostmasters
whose problems could not be addressed adequately through the Helpline
notwithstanding the Subpostmaster’s best efforts to resolve the problem. It is for
any Subpostmaster who asserts that inadequate assistance was provided to identify,
amongst other things, the steps that he or she took to obtain further advice,
assistance and/or training.
Paragraph 30 makes allegations to which Post Office cannot meaningfully respond at the
pleaded level of generality. Post Office will respond to properly particularised claims if
and when they are made, but the general thrust of the allegations is denied. Further:
(1)
The Helpline operated between the following hours in the following periods:
(a) between 1999 and 2006, from 8am to 6pm on weekdays other than
Wednesdays (the usual day for branch balancing processes), 8am to 10pm on
Wednesdays and 8am to 5.30pm on Saturdays;
(b) between 2006 and 2008, from 8am to 6pm on weekdays other than
Wednesdays (the usual day for branch balancing processes), 8am to 8pm on
Wednesdays and 8am to 5.30pm on Saturdays;
39
AS
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(c)__ between 2006 and [XX], from 8am to 6pm on weekdays other than
Wednesdays (the usual day for branch balancing processes), 8am to 8pm on
Wednesdays and 8am to 2pm on Saturdays; and
(d) between [RX] and 2016, 6am to 11pm Mondays to Saturdays and 7am to 5pm
on Sundays and bank holidays.
There have been periods where the Helpline was more difficult to contact than in
other periods.
Helpline operators did not give script-based responses.
Helpline operators were not, at any time, instructed to provide misleading
information and Post Office notes that they would have had no reason to do so.
Post Office notes that there are circumstances in which it can be appropriate to
advise a Subpostmaster that a discrepancy should sort itself out.
Post Office cannot conceive of a situation in which a Helpline operator would
encourage a Subpostmaster to produce and confirm a Branch ‘Trading Statement
which the Subpostmaster did not believe to be correct.
It was not a Helpline operator’s function and he or she would not have been
qualified to discuss matters such as those referred to in paragraphs [KX] above. Nor
were they in a position to review and advise callers as to the experience of and the
incidence of particular problems suffered by all users of Horizon or of the Helpline.
Post Office notes that, in the GPoC, the Claimants have not indicated and, if so,
how each of the matters alleged in paragraphs 30.1 to 30.7 is alleged to have caused
any Claimants any loss.
Investigations
Post Office cannot meaningfully respond to the allegations set out in paragraph 31 for the
following reasons:
40
()
2)
@
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The paragraph makes allegations said to apply generally across “investigations, audits
or similar enquiry” in circumstances where investigations are fundamentally different
processes (involving different Post Office personnel, procedures and guidance) from
audits and where the use of the term “similar enquiry” is embarrassing for vagueness
and is likely to be misleading.
The reference to “investigators” is misplaced and/or so ambiguous as to make the
allegations incapable of meaningful response.
‘The information and instructions that are alleged to have been provided to
“investigators” are expressed at such a high a level of generality that it is impossible
toa
rt any generic case as to what “investigators” were told and/or otherwis
knew in any potentially relevant period.
Post Office will, as appropriate, respond to any particularised allegations as to
specific enquiries, audits and investigations when such allegations are made.
Without prejudice to the foregoing, regarding the “investigators” referred to in paragraph
31:
1)
2)
3)
An audit was (and is) a process conducted by the [WHAT] team within Post Office.
These persons were not referred to as investigators. An audit was typically ordered
where Post Office was concerned that the Subpostmaster and/or one or more
A
tants were failing properly to account to Post Office. For example, Post Office
could commence an audit of a branch where [...]-
Post Office could also conduct enquiries into a branch’s operations without
undertaking an audit. The persons involved in such enquiries on behalf of Post
Office were [...]. These persons were not referred to as investigators. Such
enquiries could involve branch visi
The main role of Post Office’s Investigation Division was (and is) to investigate
(and/or to assist the police to inves
igate) suspected criminal offences. Persons in
the Investigation Division sent to branches to carry out enquiries were referred to as
investigators. In many instances, their enquiries were focused on suspected criminal
offences by persons other than Subpostmasters and Assistants (such as cases of
third party theft of cash and/or stock from a branch).
41
55.
56.
57.
58.
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Save as aforesaid, the general thrust of paragraph 31 is denied (EAN WE SAFELY DENY!
ONABOUT REMOTE ACCESS). Further:
(1) The persons undertaking the audits, enquiries and investigations referred to in
paragraph [XX] above were experienced individuals with a good knowledge of the
operation of Horizon and of the experience of Horizon users (CORRECT).
S
It is denied that any of those persons identified above were not instructed to seek
the true cause of Shortfalls (or rather, it is denied that they were instructed not to
seek out the true cause of Shortfall, as appears to be the intended allegation)
(3) It is denied that any of those persons was instructed to disregard possible problems
with Horizon as a possible cause of Shortfalls (EORRECT?).
(4) The alleged “organisational culture or practice” is specifically denied (EORRECT?).
The effect of false accounting and similar misconduct
In all cases relating to branches in which the Subpostmaster and/or a [Mi ef at
Assistant falsified accounts and/or made false declarations of cash and/or stock, Post
Office will contend as follows:
As regards the true accounting position as between Post Office and the relevant branch,
the Court should make against the Claimant all presumptions of fact as are consistent with
the other facts as proven or admitted.
‘The fact of false accounting and/or false declarations would, in many instances, make it
impossible or excessively difficult for Post Office to identify or assist in the identification
of the likely cause(s) of a Shortfall. Post Office would typically be unable to place reliance
on the branch’s accounts and declarations in seeking to identify the date(s) on which the
Loss(es) giving rise to the Shortfall were likely to have arisen or otherwise localise the
probable causes of the Shortfall.
As regards any enquiries and/or investigations into the causes of a Shortfall, Post Office
was required to take relatively limited steps in the discharge of its express and implied
42
60.
AG
ol.
62.
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duties to the relevant Subpostmaster. Post Office could not reasonably be expected to
devote considerable resources to investigating factual circumstan a result
that were, a!
of dishonest conduct, impossible or excessively difficult properly to investigate. It would
be principally for the Subpostmaster to demonstrate that, notwithstanding the false
accounts and/or declarations, the cause of the Shortfall was a Loss (or Losses) for which
he was not responsible.
Post Office was entitled to suspend and/or terminate the appointment of any
Subpostmaster who engaged in dishonest conduct and/or breached his contractual
obligations in relation to preventing and/or reporting dishonest conduct by his A;
and/or third parties, as pleaded further immediately below.
Terminations
In the relevant period, Post Office terminated the appointments of Subpostmasters
(including certain Claimants) for one or more of the following reasons:
(1) Failure to make good Shortfalls.
2) Failures properly to prepare and preserve accounts and other records as required by
the agreements.
(3) False accounting, including the submission of false declarations as to cash and/or
stock.
(4) Other dishonesty in the conduct of Post Office business.
(5) Post Office formed the view that it did not wish to continue to its contractual
relationship with the Subpostmaster and so elected to terminate the agreement on
notice.
As regards Post Offi
»’s rights of termination and suspension in response to dishonesty,
Post Office relies on the following express terms:
(1) Clause 19.1 of the SPMC, stating as follows:
Dishonesty is view most seriously and any Subpostmaster or Sub-Office Assistant believed to
have carried, or taken part in, an act of dishonesty against Post Office Counters Ltd may be
prosecuted. Furthermore, any Subpostmaster so involved renders himself Hable to summary
43
63.
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termination of his contract. The case of an Assistant Post Office Counters Ltd may recommend
to the Subpostmaster that the Assistant should no longer remain in his emplay on Post Office
Counters business.
(2) I Appendix 1 of the Temporary SPMC, setting out requirements as to the
employment of Assistants (including that Post Office may require a Subpostmaster
to cease employing an identified Assistant) and stating at paragraph 3 as follows:
Where the Subpostmaster fails to comply with any of these terms, he may be deemed to be in
breach of his Contract which will then be liable to termination.
(3) Clause 3.1 of the NTC, stating as follows:
The Operator shall:
3.1.2 act honestly at all times in the operation of the Branch. Any failure by the Operator
to comply with this clanse 3.1.2 shall be deemed to be a material breach of the Agreement which
cannot be remedied.
Post Office will also contend that:
(1) Any act of dishonesty by a Subpostmaster in the operation of the branch was a
material breach of contract that justified suspension and/or termination in
accordance with the common law and/or the express provisions of the agreements
as to material breach.
(2) Any Subpostmaster that continued to employ on Post Office business an Assistant
who he knew to have acted dishonestly in that regard committed a material breach
of contract that justified suspension and/or termination in accordance with the
common law and/or the express provisions of the agreements as to material breach.
(3) Any Subpostmaster that acted dishonestly in the operation of the branch and/or in
his dealings with Post Office was in breach of his fiduciary obligations to Post Office
as principal.
44
64.
65.
66.
67.
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The reasons for which any particular Subpostmaster’s appointment was terminated will be
provided in response to any particularized allegation from such a Subpostmaster to the
effect that such termination was not lawful.
For the avoidance of doubt, Post Office had at all times an unqualified right to terminate
the appointment of a Subpostmaster on notice and without cause. Post Office relies in
this regard on the provisions pleaded at paragraph [Mlbelow.
Paragraph 32 is otherwise denied. For the avoidance of doubt, Post Office did not
terminate the appointment of any Manager or Assistant (in any case), and it did not
terminate the employment of any Crown Office employee for the reasons set out in
paragraph 32.
Post Office was entitled to require a Subpostmaster to remove an Assistant from the
conduct of Post Office business in accordance with the express terms of the agreements,
as follows:
(1) Clause 15.13 of the SPMC, stating as follows:
(2) Under part 8 of Appendix 1 to the Temporary SPMC, stating as follows:
Where Post Office Ltd has good reason to believe that it would not be in its best interests for a
particular Assistant to be engaged on Post Office business or to have access to any part of the
Post Office branch it will be entitled to require the Subpostmaster to refrain from employing that
Applicant on Post Office business if not already employed, or to ensure that the Applicant is
not further employed on Post Office business is already employed.
(3) Clauses 2.2, 2.9 and 16.3 of the NTC, stating as follows (ARE THESE) THE) BEST)
(4) Clauses 7(D)(iv) and 19(E) of the Franchise Agreement, stating as follows [ARB
45
68.
69.
70.
71.
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Paragraph 33 is noted.
Context and Effect on Claimants
Save as set out below, paragraph 34 is denied:
(1) Post Office can neither admit nor deny, and requires the relevant Claimants to prove
that they felt that they had no choice other than to either (i) make good Shortfalls or
Gi) knowingly sign off incorrect Branch ‘Trading Statements and commit the criminal
offence of false accounting.
2) It is denied that any such feeling was reasonable (whether in the circumstances
1s
pleaded by the Claimant or in those pleaded by Post Office). Subpostmasters were
able to dispute Shortfalls as pleaded at paragraphs [{¥]] above.
(3) Iris denied that it was, under any circumstance, reasonable for a Claimant to sign off
incorrect Branch Trading Statements. Any such conduct w:
in breach of () clause
12.3 of the SPMC and/or clause 6.6 of the Temporary SMPC I[
Manual] and/or clause 3.6 of the NIC and/or clause 12 of the Franchise
Agreement, as relevant to any particular Claimant and/or (ii) the fiduciary duty of
the Subpostmaster or Temporary Subpostmaster as agent to account to Post Office
as principal.
Further, where a Subpostmaster signed off incorrect Branch Trading Statements in the
knowledge that such statements were incorrect (or being reckless as to this), such conduct
was dishonest and/or in breach of the Subpostmaster’s fiduciary duty of loyalty to Post
Office. Post Office will, in appropriate cases, rely on convictions and/or admissions from
Subpostmasters or Temporary Subpostmasters as to false accounting and/or other
statements from Subpostmasters or Temporary Subpostmasters amounting to admissions
of deliberate breach of the duties set out in this and the preceding subparagraph.
All Subpostmasters are bound by the accounts that they signed off and may not, without
proving such accounts to be mistaken, now (i) challenge or (ji) seek to avoid or (iii) seek
any relief in relation to the payment(s) made to Post Office in accordance with those
accounts (including in making good Shortfalls). The same principle applies to cash and
stock declarations made by the Subpostmaster to Post Office.
46
72.
73.
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It is denied that the matters set out in paragraph 35, even were they correct, would create
any justification for signing off incorrect Branch Trading Statements ot be relevant to the
legal consequences of such conduct and/or provide any support for a challenge to
payments made by Subpostmasters to Post Office in order to make good Shortfalls. As to
the subparagraphs of paragraph 35:
1)
2)
3)
”
8)
Subparagraph 35.1 is admitted.
Subparagraph 35.2 is denied. Paragraph [{Ml] above is repeated.
Subparagraph 35.3 is denied. Paragraph [Ml] above is repeated.
Subparagraph 35.4 is denied. Paragraphs and above are repeated.
Subparagraph 35.5 is denied. Post Office had in place processes for addressing
disputes over Shortfalls, as pleaded at paragraphs [fll] above, and did not require
payment while those processes were ongoing. Further, in some instances, Post
Office permitted a Subpostmaster to remain in position without making good a
Shortfall even where it considered the amount to be due. For example, [ANS
The allegation in subparagraph 35.6 cannot meaningfully be the subject of a generic
response. It is likely that some Claimants were advised that apparent Shortfalls may
be resolved by pending transactions or Transaction Corrections, as such advice may
well have been appropriate.
The general thrust of subparagraph 35.7 is denied. Post Office cannot admit or
deny and requires the Claimants to prove their individual financial circumstances and
the relevance of the same to their allegations. Post Office reserves its right to allege,
in appropriate cases, that the Claimant stole cash and/or stock that it held as agent
for Post Office.
Subparagraph 35.8 is denied for the reasons pleaded at paragraph [JM] below.
As to paragraph 36:
47
74.
AB
75.
76.
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(1) Itis admitted that, in general and subject to any argument or evidence to the
contrary, Post Office would assume dishonest conduct where false accounts had
been submitted.
(2) It is denied that it was unfair, flawed or irrational to infer dishonesty from the
submission of false accounts. The natural inference from an agent’s decision to
prepare false accounts is that the agent is aware that the true accounts (which have
not been prepared and/or provided to the principal) would demonstrate a liability to
the principal that the agent wishes to avoid. A decision to render false accounts is a
breach of the fundamental duty of loyalty owed by an agent to his principal and is
dishonest.
(3) It is denied that Post Office drawing such an inference amounted to a breach of any
duty owed by Post Office to any of the Claimants. It is noted that no duty is
pleaded.
The factual allegations pleaded in paragraph 37 are denied for the reasons given above. It
is denied that the pleaded legal consequences follow from those allegations (even were
they correct). Post Office does not understand and cannot plead to the alleged relevance
of the legal concepts pleaded in paragraph 37 to any cause of action as
Claimants or some of them. It is noted that no breach of contract by Post Office is
particularised. It is noted that no duty to disclose matters to Claimants is pleaded.
‘The Defendant’s Suspense Accounts
At all material times, Post Office operated suspense accounts relating to clients. A typical
situation in which the amount held in a suspense account would increase is as follows:
(1) Aclient, such as a bank, makes a payment to Post Office that exceeds the payment
that Post Office considers is due.
(2) Post Office does not reach agreement with the client as to the amount due and the
client does not take repayment of the apparent overpayment.
Amounts held in suspense accounts and not resolved within 3 years would ultimately be
credited to Post Office’s profit and loss account.
48
77.
78.
79.
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The operation of a suspense account in this way is unremarkable and reflects ordinary
business practice. It is to be expected that, in a business carrying out millions of
transactions per year, there will be small differences (positive or negative) between the
entries shown in the accounts and the amounts received from or provided to the relevant
counterparties.
Post Office could in principle benefit from a Horizon-Generated Shortfall in the following
outline circumstances:
(1) A Horizon-Generated Shortfall is made good by the Subpostmaster.
(3) Post Office is unable to attribute the apparent overpayment to the transactions,
identify the error and correct the position as between Post Office and the
Subpostmaster.
(4) ‘The amount of the overpayment remains unresolved for 3 years and is ultimately
credited to the profit and loss accounts.
For the avoidance of doubt, Post Office is not aware of any such benefit ever having
accrued to Post Office. Further, Post Office’s processes would tend to prevent any such
benefit arising:
(1) Post Office seeks to resolve any overpayments with clients.
(2) Clients are typically able to identify the transaction(s) to which the apparent
overpayment relates.
(3) Post Office compares its own transaction records with those of the client and seeks
to identify any error that might explain the discrepancy between the two sets of
records.
(4) If Post Office discovers through this process that its own record of the
transaction(s) is incorrect, it seeks to correct its records.
49
80.
81.
Bl
82.
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(5) In that circumstance, Post Office corrects its account both as regards the client and
as between itself and the relevant Subpostmaster(s). It may, for example, issue
Transaction Corrections.
©
Save as set out in paragraphs [JW] to [lll] above, paragraphs 38 and 39 are denied.
CONTRACT TERMS - SUBPOSTMASTERS
Paragraph 40 is noted. Post Office will rely at trial on the full contractual terms in force at
any and all material times between Post Office and the relevant Claimant (if any). These
terms will differ from time to time across the relevant period of time as pleaded above at
paragraphs [§] above.
Post Office asserts that the following matters are important factual matrix to the
construction of the SPMC:
(1) Subpostmasters stood to benefit from the relationship with Post Office in two
important respects: first, by obtaining remuneration in accordance with the parties’
agreement and, second, by the provision of Post Office services in the
Subpostmaster’s premises creating increased shortfall and revenue for any retail
business operated alongside the Post Office business.
(2) A Subpostmaster, whether a natural person or a company, contracted with Post
Office on a business to business basis and in the expectation of profiting directly
and, in many instances, indirectly from the business relationship as pleaded
immediately above.
(3) Subpostmasters were under no obligation and no pressure to contract with Post
Office on the terms that it offered.
(4) Post Office was unable to monitor at first hand the transactions that occur in
branches and in relation to which Post Office is liable to counterparties.
50
84.
86.
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(5) Post Office was unable to monitor at first hand the use of its property (principally,
cash and stock) in branche:
(6) Post Office was accordingly required to place its trust in the honesty, diligence and
competence of the persons who contracted with it in order to operate branches on
its behalf and as its agents.
(7) Given the variety of transactions and processes required for the operation of a Post
Office branch, it would be impracticable for all of the parties’ rights and obligations
to be set out in a single contractual document. ‘The parties therefore would have to
rely upon manuals and other documents containing instructions and guidance, some
of which would have the force of contract.
Paragraph 41 is admitted.
Paragraph 42 is denied. At the time of contracting:
(1) The Subpostmaster was at no disadvantage relative to Post Office. Each of Post
Office and the Subpostmaster was free to contract or not contract with the other
and took an unconstrained and self-interested commercial decision in that regard.
(2) There was no relationship between the parties that could be subject to a relational
imbalance.
It is admitted and averred that some Subpostmasters, in order to put themselves in a
position to discharge their obligations to Post Office, took some or all of the steps set out
in paragraph 43. The extent to which any or all of those steps were, in any individual case,
taken by the Subpostmaster with a view to any long term relationship with Post Office (as
opposed to other matters such as the furtherance of an associated retail business) will be a
matter for each Claimant to plead and prove.
Further as to paragraph 43, it was a matter for the potential Subpostmaster to assess the
commercial risk and reward involved in contracting with Post Office and putting itself in a
position to comply with its obligations to Post Office (along with the commercial risk and
reward of operating an associated retail business), including with regard to the express
terms of the agreement(s) as to duration and the circumstances in which it could be
terminated.
Further, in relation to the subparagraphs of paragraph 43:
SI
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(1) (DO'THEY MEAN THE RETAIL BUSINESS OR THE POST OFFICE
BUSINESS? I DON’T FOLLOW THIS — THIS APPLIES TO SUBPARAS 1
AND 2)
(2) It is denied that there was any contractual obligation or practical need for a
Subpostmaster to take up residential accommodation on the premises used to
provide the Post Office services or in linked premises. It was a matter for a
Subpostmaster what personal and other arrangements to make in order to be ina
position to discharge its obligations to Post Office. Subparagraph 43.3 is
accordingly denied.
(3) As to subparagraph 43.4, it was a matter for a Subpostmaster to decide to what
extent to employ Assistants to assist in the discharge of its contractual obligations to
Post Office and (subject to clauses 15.3 to 15.4 of the SPMC and/or clauses 5.1 to
5.2 of the Temporary SPMC and/or clause 2.9 of the NTC) to decide on what terms
to engage such persons.
(4) Save as follows, subparagraph 43.5 is admitted: (i) Post Office provided, at its own
expense, training to Managers and Assistants in accordance with clauses 2.3 to 2.8 of
the NIC [WHAT ABOUT UNDER THE SPMC ~T CANNOT SEE,
BQUIVATENT PROVISIONS) and (i) Post Office made available further training
to Assistants upon request from Subpostmasters and/or in accordance with clauses
2.11 to 2.12 of the NTC. Any Claimant that contends that it spent significant
amounts of money on the initial training of Assistants is required to prove the
provision of the training and the amounts of money spent on such training.
©) (WEINBBD!INSTRUCTIONS/ON THE 25% POINT)
(6) Subparagraph 45.7 is admitted. [UNSERGHESENGHIHIS MOORS THANE]
BEEN THE SPM'S RESPONSBILITY -SEE SECTION 13; BUT THE COSTS
APPEAR ‘TO HAVE BEEN SHARED UNDER THE NTC - SEE PART 7}
As to paragraph 44:
(1) Save as admitted and averred in this Generic Defence, the relationship between
individual Subpostmasters and Post Office is governed by the express and implied
terms of the contracts between them.
52
89.
90.
B2
o1.
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(2) Itis denied, if alleged, that the practical need for communication, cooperation and
mutual trust and confidence is relevant to the legal analysis of the parties’
relationship, save to the extent that the same is relied upon in order to support the
implication of a contractual term (in which circumstance proper particulars as to the
grounds for implication should be pleaded).
It is admitted and averred that the SPMC, Temporary SPMC and NTC all state expressly
that Subpostmasters are not employees of Post Office. Subpostmasters are not and have
not at any material time been employees of Post Office. Further:
(1) Itis denied that the terms pleaded at paragraph 45 alter the fact that Subpostmasters
were engaged by Post Office as its agent (subject to the terms of the agreements)
and not as employees.
(2) Post Office relies also in this regard on the absence of any general requirement for
personal service: see clause 1.5 of the SPMC, clause 2.7 of the Temporary SPMC
and clause 3.1.4 of the NTC.
(3) Save as set out above, paragraph 45 is denied.
Paragraph 46 is noted.
Written Terms
As to paragraph 47:
(1) Itis admitted and averred that the parties, by the contracts between Post Office and
Subpostmasters, granted Post Office a high degree of discretion, power and control.
(2) It is denied that Post Office is, under the agreements with Subpostmasters, subject
to very few express obligations. In the absence of any particularised allegation in
this regard, Post Office does not plead further in this Generic Defence.
(3) Paragraph 47 is otherwise denied.
In relation to the Claimants’ knowledge of the terms of the written contract between them
and Post Office:
(1) In accordance with Post Office practice at all relevant times every Subpostmaster
was provided with a copy of the written terms of the agreement with Post Office
53
2)
3)
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and was required to sign a document recording his agreement to its terms. Post
Office therefore denies the general thrust of the allegation in paragraph 48.
If any Subpostmaster alleges that he did not obtain a copy of the written terms of
his agreement, Post Office will respond to that allegation on the facts of that case.
The allegation that Post Office did not a draw a Claimant’s attention to “onerous or
unusual terms” is unparticularised and cannot properly be pleaded to in this Generic
Defence. Without prejudice to that contention, it is denied that any of the terms
alleged by the Claimants to be onerous and unusual were such. It is further denied
that Post Office was under any obligation to draw a Claimant’s attention to any such
terms.
Paragraph 49 is denied. Specifically:
()
2)
i)
The agreements are to be construed as a whole and in light of the relevant matrix of
fact. Post Office relies upon its pleading of the matrix of fact (at the generic level) at
paragraph [§l] above.
It is denied that the agreements are to be construed presumptively against Post
Office in accordance with the principle of contra proferentem or any like principle. The
Claimants have not identified any ambiguity in the written terms that they contend
should be resolved (as a last resort) in accordance with any such principle.
Subparagraph 49.2 is denied.
It is denied that the agreements are “relational contracts” in the sense alleged by the
Claimants or any sense. It is further denied that the classification of the agreements
as such would affect their construction or effects. It is denied that the express terms
of the agreement should be construed in accordance with the alleged implied terms.
Any term that it is alleged should be implied must be consistent with the express
terms properly construed.
It is denied that any of the terms identified by the Claimants is unenforceable.
It is admitted that that the conditions for the application of the Unfair Contract
Terms Act 1977 are met. It is denied that any of the terms identified by the
Claimants is affected by the application of that Act.
Save as set out above, the subparagraphs of paragraph 49 are denied.
34
94.
96.
97.
98.
99.
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Paragraph 50 is denied. The Claimants have not identified any grounds on which to allege
that the written terms did not represent the true agreement between the parties (whether
in relation to the right to terminate on notice or at all).
Rudles, Instructions and Standards
It is admitted and averred that, in accordance with the terms of the SPMC, the Temporary
SPMC and the NTC, pleaded at paragraph 51, Subpostmasters were required to comply
with (and were required to procure compliance by Assistants with) the rules and
instructions set out in the documents to which the provisions referred and/or as were
notified to Subpostmasters in accordance with the agreements. It is admitted and averred
that the pleaded terms form part of the pleaded agreements in each case. Save as set out
in this paragraph, paragraph 51 is denied as an inaccurate characterization of the rules,
instructions and standards.
It is noted that the Claimants have not pleaded any rules, instructions or standards that
they contend caused or contributed to any breach of contract or other legal wrong. If and
to the extent that the Claimants rely upon alleged failings in rules, instructions or standards
and/or the meaning and effect of the terms incorporating the same, they should provide
proper particulars.
Post Office cannot plead generically as to the thousands of pages of potentially relevant
documents and will plead and rely upon such parts of the operating manuals, rules,
instructions and standards as are pertinent to the claims asserted by individual Claimants.
Classes of Business
It is admitted and averred that the pleaded terms formed part of the relevant agreements
and had the effect of providing a discretion to Post Office to change the classes of
business required to be undertaken at branches (and on the terms as to notice set out in
the agreements, if any). Paragraph 52 is otherwise denied.
Agency
35
100.
101.
102.
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It is admitted and averred that, in accordance with the SPMC, the Temporary SPMC and
the NTC, Subpostmas:
ccepted appointment as agents of Post Office. Further, s
to the extent of any modification by the terms of the agreements:
(1) The legal relationship between Post Office and Subpostmasters is that of principal
and agent.
(2) Subpostmasters owe an overarching duty of loyalty to Post Office as principal.
(3) Subpostmasters owe fiduciary duties to Post Office in relation to the discharge of
functions on Post Office’s behalf and/or handling Post Office resources and/or
generating liabilities for Post Office, including as to the control of Post Office stock
and cash, the effecting and recording of Post Office transactions, the preparation
and presentation of accounts, the supervision of Assistants and the maintenance of
complete and accurate records.
For the avoidance of doubt, Post Office will rely upon the following principles:
(1) Any dispute as to the accuracy of accounts prepared and approved by
Subpostmasters is to be determined in accordance with the rule that an agent is
bound by his account unless he can show it to have been mistaken.
(2) Post Office may assert an estoppel to prevent a Subpostmaster denying the truth of
cash and stock declarations that he or she made to Post Office.
(3) A Subpostmaster is estopped from re-opening and/or seeking to amend the account
between himself and Post Office where, by reason of delay or otherwise, it would
now be inequitable for the account to be re-opened.
Accounts and Liabilities for Lass
It is admitted and averred that terms pleaded at paragraph 54 form part of the relevant
agreements and that they, in general terms, impose on Subpostmasters wide ranging and
general responsibility for losses.
It is denied that such terms were applied as alleged. The pleaded allegations are imprecise
with regard to the nature of the alleged liability and do not reflect the terms of the
agreements.
56
104,
106.
107.
108.
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Under the SPMC:
(1) In accordance with clause 12.12, Subpostmasters were, subject to the possibility of
relief, responsible for all Losses caused by their Assistants.
2) Inaccordance with clause 12.12, Subpostmasters were, subject to the possibility of
relief, responsible for all Losses due to their own negligence, carelessness or error.
(3) Subpostmasters could apply for relief in accordance with clauses 12.17 and 12.18
(4) In accordance with the final sentence of clause 12.12, Subpostmasters were liable for
all Shortfalls resulting from Losses for which they were responsible in accordance
with that clause and the relief provisions (where applicable).
Under the Temporary SPMC:
()
i)
Under the NTC:
(1) In accordance with clause 4.1, Subpostmasters were not liable for losses arising from
the criminal acts of third parties other than persons engaged by the Subpostmaster
that could not have been prevented or mitigated by following Post Office’s security
procedures or by taking reasonable care.
(2) In accordance with the final sentence of clause 4.1, Subpostmasters were liable for
all Shortfalls resulting from Losses for which they were responsible in accordance
with that clause and the Manual (as defined).
Further, in relation to accounting to Post Office, Subpostmasters owed the fiduciary duties
pleaded at paragraphs above and were and are bound by their accounts unless they
can show such account to be mistaken.
In relation to paragraph 55, Post Office pleads only to the allegation as it relates to clause
12.12 of the SPMC. It does not plead to the unparticularised and vague allegation as to
“similar clauses”. On the proper construction of clause 12.12:
7
109.
110.
111.
112.
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(1) Subject to the possibility of relief, the Subpostmaster was responsible for all Losses
that he could not show (i) resulted from his actions, rather than those of his
Assistants(s) and (ii) were caused without negligence, careless or error.
(2) The Subpostmaster was liable for all Shortfalls resulting from Losses for which he or
she was responsible in accordance with that clause and the relief provisions (where
applicable).
If and to the extent that the Subpostmaster alleges that a Loss shown in the accounts
submitted to Post Office is not a “teal loss”, Post Office relies on the principles pleaded at
paragraph [J above.
Further, if a Subpostmaster alleges that amounts for which he was held liable were not
amounts due under clause 12.12 of the SPMC, he bears the burden of proving that
assertion.
It is denied that Post Office owed any obligation (save to the extent required on the facts
by the duties pleaded at paragraph [Jl] )) to
enquire as to whether or not a Loss would “represent a real loss” to Post Office:
(1) Subpostmasters were liable under clause 12.12 of the SPMC for Shortfalls, rather
than Losses.
(2) Clause 12.12 of the SPMC contains no words tying the concept of a “loss” to
economic detriment to Post Office.
(3) Clause 12.12 of the SPMC contains no words that might create a duty to enquire.
(4) No grounds for the implication of terms are pleaded.
It is denied that clause 12.12 of the SPMC could not, as a matter of construction, be relied
upon where a “loss” was caused or contributed to by any breach of duty by Post Office:
(1) The clause contains no words referring to any such limitation.
(2) The limitation is vague and imprecise and is not rendered sufficiently clear by any
words in the clause or elsewhere in the SPMC.
(3) No grounds for the implication of terms are pleaded.
58
113.
114.
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Save as set out above, paragraph 55 is denied.
Assistants
It is admitted and averred that the contracts between Subpostmasters and Post Office
provide that Subpostmasters are liable for the acts of their Assistants. Subpostmasters, as
agents to Post Office and generally, are responsible for the acts and omissions of persons
whom they choose to employ and trust with Post Office business, including access to and
control over Post Office stock, cash and transactions.
It is denied that Post Office bears no or only minimal obligations as to training Assistants.
Post Office admits and relies upon the express terms pleaded at paragraph 56. The
obligations pleaded in that paragraph are not minimal. Specifically:
(1) Post Office was required under the agreements to provide initial training to
Assistants and/or to provide to Subpostmasters training materials that were
adequate for the provision of initial training of Assistants. Post Office relies on
section 7 of the Operations Manual (incorporated by reference in the SPMC from
1994 to 2006), specifically the words pleaded at paragraph 56.1(b), [IASe#t] clause of
the SPMC as amended from July 2006, and clause 2.3 of the NTC.
(2) Further, the effect of the implied terms pleaded at paragraph [lj] was to require
Post Office to render such cooperation to Subpostmasters as was necessary to the
discharge of their obligations as to the training of Assistants. If and to the extent
that adequate training could not be provided without the cooperation of Post Office
and a Subpostmaster requested assistance in this regard, Post Office would be
requited to (i) provide guidance to the Subpostmaster in relation to training and/or
(ii) provide training materials to the Subpostmaster for use in training and/or (ii)
cooperate in the provision of training by the Subpostmaster and/or (iv) provide
training directly to Assistant, as the circumstances of each situation may require.
(3) Post Office discharged its obligation in this regard throughout the relevant period.
For instance (but without limitation) Post Office provided additional training in
relation to new products, provided ad /uc training in response to queries and
concerns raised by Subpostmasters and, where it perceived an urgent need for
training for Assistants and/or Managers, exercised its right under clause 2.11 of the
NIC to deliver remedial training.
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116. The Subpostmaster is ultimately responsible for providing or procuring the provision of
such training as is necessary to enable the Assistant to discharge his or her functions
properly and assist the Subpostmaster in discharging his or her obligations to Post Office.
Post Office relies on clauses 15.7.1, 15.7.3 and 15.7.4 and Appendix 1, Section 2 of the
SPMC (as amended in July 2006), clause 5.1 of the Temporary SPMC and clauses 2.2.3 to
2.2.8 of the NTC.
117. Further, it follows from the Subpostmaster’s obligations as pleaded immediately above and
at paragraphs [Pl] of this Generic Defence that where a Subpostmaster considered that an
Assistant was not, without further training, able properly to discharge his or her functions
in relation to Post Office business, the Subpostmaster was required to:
(1) notify Post Office that the Assistant was not, at that time, so able;
(2) where further training may resolve the situation, provide or procure the provision of
such training, as appropriate;
(3) or, where further training could not resolve the situation (and/or had failed to do
so), to cease to engage the Assistant on Post Office business.
118. There was in the Temporary SPMC no express obligation on Post Office in relation to its
provision of training and/or training materials. In practice, Post Office typically [WHAT
119. Save as set out at paragraphs [ff] above, paragraph 56 is denied.
120. Paragraphs 57 and 58 are admitted.
Access to Branch Accounts and Records
121. Paragraph 59 is admitted. The contractual terms pleaded in paragraph 59 are admitted and
relied upon.
122. Post Office also had a common law right (as principal) to inspect and/or obtain copies of
the accounts and records retained by the Subpostmastet (as agent) in relation to its
business.
Suspension
60
123.
124.
125.
126.
127.
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The SPMC, Temporary SPMC and the NTC all provided a right for Post Office to
suspend the Subpostmaster.
As regards the SPMC, Post Office relies upon the terms pleaded at paragraph 60.1 (which
are admitted and averred).
As regards the Temporary SPMC, Post Office relies upon:
(Q) A common law right (as principal) to direct the Temporary Subpostmaster (as agent)
to desist from carrying out business on its behalf.
(2) Further or alternatively, an implied term (implied as being necessary for the business.
efficacy of the agreement and/or as being so obvious as to go without saying) that
Post Office may suspend a Temporary Subpostmaster in circumstances where he or
she is suspected of misconduct and such misconduct is under invé
tigation.
As regards the NIC, Post Office relies upon the terms pleaded at paragraph 60.3 (which
are admitted and averred).
Termination - Notice
Under the agreements, Post Office was entitled to terminate a Subpostmaster’s
appointment on notice and without cause. The Subpostmaster too was entitled to
terminate the agreement on notice and without cause, subject to the same notice period.
Post Office relies upon the following terms:
(1) Clause 1.10 of the SPMC, providing as relevant: “Should the Subpostmaster desire to resign
his office he must give three calendar months? notice in writing... The Agreement. ..may be
determined by (Post Office) on not less than three months’ notice”.
(2) Clause 2.4 of the Temporary SPMC, providing as relevant: “The Contract will...continue
thereafter until the expiry of not less than 7 days’ written notice to terminate, which may be given by
either party to the other at any time...”
S clause 2.16.1 of the ) 4, provi as relevant: “...the reement will continue until:
3) Clause 2.16.1 of the NTC, providing as relevant: “...she Ag ill i
(16.1.1) either Party gives the other not less than 6 months’ written notice (unless otherwise agreed
by the parties in writing) ...”.
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128. Post Office was further entitled to terminate without notice for cause. Post Office relies
in this regard on the following terms:
()
2)
8)
a
Clause 1.10 of the SPMC, providing as relevant: “The Agreement may be determined by
[Post Office) at any time in case of Breach of Condition...”
Clause 2.4 of the Temporary SPMC, providing: “/Post Office] may terminate this Contract
immediately on giving the Temporary Subpostmaster written notice in the event that the Temporary
Subpostmaster commits any breach of this Contract or commits an act of bankruptey or in the event
that, as a result of any security checks carried out by (Post Office), or any references taken up by
[Post Office), it is not satisfied that the Temporary Subpostmaster meets the standards required of
a subpostmaster:”
Clause 2.16.2 of the NTC, providing: “I addition to any other rights of termination
contained in other Parts, [Post Office) may terminate the Agreement immediately on giving written
notice to the Operator if the Operator:
16.2.1 commits any breach of the provisions of the Agreement or any other contract or
arrangement between the Parties and fails to remedy the breach (if capable of remedy) within 14
days of a written notice from (Post Office) specifying the breach and requiring the same to be
remedied. Any references in these Standard Conditions to a breach of a particular obligation
being deemed to be material and/or irremediable are not intended to be exhaustive and shall not
prevent [Post Office) from exercising its rights under this clanse in respect of any other breach of
the Agreement which is material and/or irremediable;
16.2.2 fails to provide the Products or Services to the standards required by [Post Office) as set
out in the Manual and fails to remedy the failure (if capable of remedy) within 14 days of a
nvitten notice from (Post Office) specifying the failure and requiring the same to be remedied;
16.2.13 itself, or the Manager or a director of the Operator, is charged with any criminal offence
(other than a Road Traffic Offence not involving imprisonment);...
16.2.15 fails to properly account for any money due to, or stock of, [Post Office] or the Clients;
16.2.16 fails to pay any sum due to (Post Office) under the Agreement by the due date.
Clause 16.3 of the NTC, providing: “If any Manager or Assistant does not at all times
attain a standard acceptable to [Post Office) and the Operator is unable or refuses to provide a
62
129.
131.
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substitute Manager or Assistant who does meet the standard, {Post Office) shall have the right
upon notice in writing to the Operator to immediately terminate the Agreement.”.
Save as set out in paragraphs [ll] immediately above, paragraph 61 is denied.
Termination — Compensation for loss of office
Under the agreements, Subpostmasters are not entitled to any compensation for loss of
office. Post Office relies on the following:
(1) Clause 1.8 of the SPMC, providing as relevant: “The terms of appointment of
Subpostmaster do not entitle the holder to be paid.. compensation for loss of office”.
(2) Clause 2.6 of the ‘Temporary SPMC, providing as relevant: “The Temporary
Sulpostmaster is not entitled to any of the following from [Post Office): compensation for loss of
office”.
(3) Clause 2.17.11 of the NTC, providing as relevant: “The Operator acknowledges that he
shall not be entitled to receive any compensation or other sums in the event of the termination or
suspension of the Agreement”.
Termination — Subsequent appointments
As regards the appointment of a new Subpostmaster (if any) to operate the branch after
the cessation of the appointment of the earlier Subpostmaster (whether that appointment
came to end at the instigation of Post Office or the Subpostmaster), the agreements
reflected Post Office’s commercial freedom as to whether or not to contract with a
prospective purchaser of a Subpostmastet’s private retail business and, in particular,
whether or not to appoint such a person as a Subpostmaster and whether to continue to
provide a Post Office branch at the relevant location. Post Office relies on the following
terms:
(1) Clause 1.9 of the SPMC, providing as follows: “If on resignation of his appointment the
Subpostmaster dispos
if his private business and/or premises in which the sub-office is situated,
the person acquiring the private business and/or the premises or exchanging contracts in connection
with the purchase of the private business and/or premises will not be entitled to preferential
consideration for appointment as Subpostmaster”.
63
2)
(3)
132. Save
B3
133.
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Clause 9 of the Temporary SPMC, providing as relevant: “In the event of termination of
this Contract: (i) any successor to the private business and/or Premises will have no claim to the
post of subpostmaster, the filling of which is a matter entirely for [Post Office)...”
Clause 2.19 of the NTC, providing as relevant: “On termination of the Agreement, the
appointment of any New Operator shall be entively at the discretion of [Post Office). [Post Office)
may, but shall not be obliged to, consider any application for the operation of a Post Office branch
at the Branch Premises made by a genuine prospective purchaser of the Basic Premises and the
property interest at the Branch Premises, but any such prospective purchaser shall not be given any
preferential treatment in the application or appointment process.”
t out in paragraphs [fill] immediately above, paragraphs 62 is denied.
Relational Contract and Implied Terms
Relational Contract
Paragraph 63 is denied. Specifically:
()
4)
It is denied that the agreements are “re/ational contracts” in the sense alleged by the
Claimants or any material sense. Without prejudice to the generality of that
contention, Post Office relies on the fact that the agreements were terminable on
relatively short notice without cause.
It is denied that the classification of the agreements as such would affect their
construction or effects. There are no special rules or principles of construction that
apply to “relational contracts”.
Irrespective of whether or not the agreements are “relational contracts”, the implied
term at paragraph 63 should not be implied because it is neither so obvious as to go
without saying nor necessary to the business efficacy of the agreements. Further, to
imply such broad and general obligations into a framework of very detailed and wide-
ranging express terms would do violence to the patties’ bargain.
Post Office will, as appropriate, address Yam Seng Pte Ltd v International Trade
Corpn [2013] EWHC 11 and related case-law in submissions.
Implied terms
64
134,
135.
136.
137.
138.
139.
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Paragraph 64 is denied. Specifically:
(1) Paragraph [2] immediately above is repeated. ‘The Claimants’ reliance on the
alleged status of the agreements as “re/ational contracts” as the basis for implying terms
is wrong in law. Save for terms implied at law (which category is not asserted by the
Claimants), no term is to be implied unless it is so obvious as to go without saying
and/or is necessary to the business efficacy of the agreement.
2) Save to the extent that the Claimants’ proposed implied terms overlap with those
pleaded at paragraph [Wl] below, they are denied as being neither so obvious as to
go without saying nor necessary to the business efficacy of the agreements. Where it
may assist in clarifying the issues for Post Office to do so, it pleads further below to
the specific implied terms alleged by the Claimants and without prejudice to the
generality of the contention that the alleged terms are neither so obvious as to go
without saying nor necessary to the business efficacy of the agreement.
The term alleged at subparagraph 64.1 is vague and would be inconsistent with the express
terms of the agreements in relation to training and support.
The term alleged at subparagraph 64.3 would be inconsistent with the express terms of the
agreements in relation to the duty to account and with the common law obligations and
rights of the Post Office as principal and the Subpostmaster as agent.
‘The terms alleged at subparagraphs 64.8 to 64.10 are too specific and inherently
contentious to have gone without saying and are more extensive and more specific than is
necessary to give business efficacy to the agreements, particularly in light of the existence
of the implied term pleaded at paragraph [Ml] below.
The terms alleged at subparagraphs 64.5 to 64.7 and 64.11 to 6.12 are too specific,
complex and inherently contentious to have gone without saying and are more extensive
140.
141.
142.
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and more specific than is necessary to give business efficacy to the agreements, particularly
in light of the ence of the implied term pleaded at paragraph [ll] below. It is denied
that Post Office accepted (or would ever have accepted) such onerous obligations without
this being made expres
Further in relation to the term alleged at subparagraph 64.12:
(1) The term would represent a radical departure from the legal rules and principles that
apply to a relationship of principal and agent, particularly as to the agent’s duties in
relation to accounting to its principal. Paragraphs [Jl] above are repeated.
(2) Any such departure from the rights and obligations incidental to the agency
relationship would have been made express in the agreements.
(3) The term would not be reasonable and would not make commercial sense. Without
prejudice to the generality of that contention, the term is unreasonable and/or is
contrary to good commercial sense because (i) the Subpostmaster (or his or her
Assistants) and not Post Office effected transactions in branch and had first-hand
knowledge of the circumstances of such transactions and the facts relevant to the
occurrence of Loss, (ii) the alleged term would make it impossible or inordinately
difficult for Post Office to recover in respect of Shortfalls where the Subpostmaster
has failed to make accurate cash and stock declarations and/or failed to prepare and
retain proper accounts and/or acted dishonestly (or failed to prevent dishonest
conduct by his Assistants).
‘The term alleged at subparagraph 64.13 would contradict the express terms of the
agreements. Paragraph fi] above is repeated. Further:
(1) _ Itis too vague and potential contentious to have gone without saying.
(2) It would not be reasonable and would not make commercial sense. Without
prejudice to the generality of that contention, the alleged term would be
incompatible with the need for Post Office to protect its property and ensure the
proper conduct of Post Office business.
The term alleged at subparagraph 64.14 would contradict the express terms of the
agreements. Paragraph [il] above is repeated. It is also too vague and potentially
contentious to have gone without saying.
66
143.
144,
BA
146.
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(1) The term alleged at subparagraph 64.15 is too broad and inherently contentious to
have gone without saying. Without prejudice to the generality of that contention, if
the parties had intended to create a relationship of employment (or a relationship
with the same or similar core characteristics as a relationship of employment), the
agreements would have stated this expressly. In fact, the agreements expressly
negate any such relationship. Paragraphs
are repeated.
(2) The terms alleged at paragraph 64.17 and 16.18 would contradict the express terms
of the agreement by which Post Office is granted clear discretionary powers without
asonablenes
any constraint of , for example, the terms pleaded at paragraphs
(MM). Further, the alleged terms are too broad and potentially contentious to have
gone without saying.
The term alleged at paragraph 64.19 is too broad and inherently contentious to have gone
without saying. It is also inconsistent with the parties’ express choice of a relationship of
principal and agent and express negation of any relationship of employment (and the
accompanying obligations for employer
Paragraph 65 is noted. It is denied that the matters pleaded in that paragraph provide
support (or sufficient support) for the Claimant: e on the alleged implied terms.
Post Office avers that the agreements contained the following implied terms (implied as
being so obvious as to go without saying and/or necessary to the business efficacy of the
agreements):
(1) Each party shall refrain from taking steps that would inhibit or prevent the other
party from complying with its obligations under the contract (the “Stirling v
Maitland Term”).
(2) Each party shall provide the other with such cooperation as is necessary to the
performance of that other’s obligations under the agreement (the “Necessary
Cooperation Term”).
Onerous and Unusual Terms
Paragraph 66 is denied. Specifically:
(1) Itis denied that any of identified terms was onerous or unusual in the relevant
business context and, in particular, in the appointment of an agent.
67
B.6.
148.
2)
4)
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It is denied that the principle in Interfoto Picture Library Limited v Stilletto
Visual Programmes Limited [1989] QB 433 has any application to the identified
terms. The terms formed part of written agreements entered into in a business-to-
business context and in the anticipation of a substantial commercial relationship.
If and to the extent that any Subpostmaster may contend that he did not obtain or
have access to a copy of his or her written agreement and/or was unaware of or did
not have access to its terms before agreeing to them, that is a matter for him or her
to assert and prove.
Unfair Contract Terms
Paragraphs 67 and 68 are denied. Specifically:
()
2)
4)
It is denied that reliance by Post Office on any of the terms identified by the
Claimants would involve Post Office claiming to be entitled to () render a
contractual performance substantially different from that which was reasonably
expected of it or (ii) render no performance at all in respect of the whole or any part
of its contractual obligations.
Section 3(2) of the Unfair Contract Terms Act 1977 (“UCTA”) accordingly does not
apply.
Tt is noted that the Claimants have pleaded no particulars of the allegation in
paragraph 68. Post Office reserves its rights to plead further to properly
particularised allegations if and when they are made.
Tf and to the extent that any of the terms identified by the Claimants fall within
section 3(2) of UCTA, they are fair and reasonable and so may be relied upon.
The ‘True Agreement
Paragraphs 69 to 71 are denied. Specifically:
()
It is denied that the dicta in Autoclenz v Belcher [2011] UKSC 41 at [35] apply to
the present case. Without prejudice to the generality of that contention,
68
CA.
149.
150.
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Subpostmasters are not and are not alleged to be employees, and the agreements in
this
e are “ordinary contracts” and/or “commercial contracts? that fall within the
principles set out in Autoclenz at [20] to [21]. Further, it is not alleged that any of
the terms of the agreements were not actually relied upon by Post Office and/or
were inserted into the written agreements for the sake of form only.
(2) Post Office intended that the parties’ agreements be as set out in the written terms.
(3) Ifthe Claimants allege to have had some other intention, it is for them to plead and
prove such intention and the grounds on which they allege that it was shared by
Post Office, providing particulars of the alleged terms and when and how it is said
those terms were agreed. ‘The pleading at paragraphs 69 to 71 is inadequate and
demurrable.
(4) Itis denied, for the avoidance of doubt, that the principle in Autoclenz (even if
applicable) would permit of the process
of re-drafting the agreements that the
Claimants set out in paragraphs 70 to 71. The principle in Autoclenz is exceptional
and cannot be used to circumvent the rules on construction and the implication of
terms.
CONTRACTUAL TERMS —- OTHERS
Crown Office Employees
Implied Terms
Paragraph 72 is admitted, save as follows. The appropriate implied term as to the exercise
of a contractual discretion in an employment context is that the discretion be exercised
honestly, in good faith, for the purpose for which it was conferred and not arbitrarily,
capriciously or irrationally / perversely (rather than “swireasonably” as the Claimants
contend).
As to paragraph 73, the Claimants have not identified with sufficient particularity the
alleged discretions on which the implied terms in paragraph 72 are said to have operated.
Post Office reserves its right to plead back in relation to such discretions as the Claimants
may identify with proper particulars.
Managers and Assistants
69
151.
C3
152.
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Rights of Third Parties
Paragraph 74 is denied. Section 1(b) of the Contracts (Rights of Third Parties) Act 1991
does not apply as alleged. Specifically:
a)
2)
4)
The obligation placed on Post Office at clause 15.7.1 of the SPMC was intended to
confer a benefit on the Subpostmaster (through enabling him or her better to train
his or her Assistants and so properly to discharge his or her obligations to Post
Office).
Clause 2.3 to 2.7 of the NTC were not intended to confer a benefit on Managers
and/or Assistants but were intended to confer benefits on the Subpostmaster
and/or Post Office (through enabling the Subpostmaster better to discharge his or
her obligations through a Manager and/or Assistants and/or through providing Post
Office with a direct means of imparting knowledge to Managers and/or Assistants
that may assist in the discharge of Post Office business).
The allegation that the alleged implied terms were intended to benefit Managers
and/or Assistants is unparticularised and is not understood. Even on the Claimants’
case, such terms were intended to confer benefits on Subpostmasters. The
allegation is denied.
Subparagraph 74(d) is not a proper plea and is liable to be struck out. No such
terms have been identified.
It is noted that the Franchise Agreement (to which the Claimants do not specifically
refer) expressly excludes any third party seeking to enforce any of the terms of the
agreement that expressly or impliedly confers a benefit on him pursuant to the
Contract (Rights of Third Parties) Act 1999. :
Franchise Agreements
Paragraph 75 is denied, save as follows:
()
It is admitted that, where a corporate Subpostmaster was engaged, Post Office
requited a personal guarantee from shareholders and/or directors.
70
153.
154.
156.
157.
158.
159.
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(2) Itis admitted that, in general terms, a company appointed as a Subpostmaster would
bear similar initial costs to those borne by a natural person taking such an
appointment. Paragraphs [!¥J] above are repeated in relation to paragraphs 41 to 44.
Express Obligations of the Defendant
Post Office will rely on the full terms and effects of the Franchise Agreement in relation
to its obligations under that agreement. Paragraphs 76 and 77 are admitted.
Relational Contracts
Paragraphs [fl] above are repeated, mutatis mutandis, in relation to the allegation that the
Franchise Agreement is a relational contract. Paragraph 78 is accordingly denied.
Implied terms
Paragraphs [i] above are repeated, mutatis mutandis, in relation to the implication of terms
into the Franchise Agreement Paragraph 79 is accordingly denied.
CONCURRENT DUTY IN TORT
Subparagraphs 80.1 and 80.2 are inadequately particularised and, insofar as they are
understood, are denied. If and to the extent that the Claimants wish to assert specific
duties in tort, such duties must be pleaded in terms appropriate to tortious duties.
Subparagraphs 80.3 and 80.4 are denied. The imposition of a duty of care in tort would
not be just and reasonable, would be inconsistent with the contractual relationships
between, on the one hand, Post Office and Subpostmasters and, on the other hand,
Subpostmasters and Managers / Assistants. If and to the extent that a Manager or
Assistant suffered a legal wrong, its recourse is against the Subpostmaster as its employer.
Subparagraph 80.5 is denied. ‘The imposition of a duty of care in tort would not be just
and reasonable and would be inconsistent with the legal relationships between, on the one
hand, Post Office and corporate Subpostmasters and, on the other hand, those companies
and their directors and/or guarantors. The imposition of the pleaded duty of care would
71
160.
161.
162.
163.
164.
166.
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undermine the concept of corporate personality and the limited duties that a contracting
party owes to the other party’s guarantor(s).
AGENCY
Paragraph 81 is admitted.
Paragraph 82 is denied. Specifically:
(1) The agreements make clear that the Subpostmaster is an agent of Post Office and
owes the fiduciary and other common law duties that accompany that status. The
Subpostmaster undertook expressly a duty to account, and Post Office did not.
(2) Post Office did not agree to become an agent of any of the Claimants in any regard.
It is noted that no agreement to this effect is pleaded.
(3) Post Office did not hold or deal with cash or other assets on behalf of Claimants,
and it did not effect transactions on their behalf or commit them to transactions
with third parties. Post Office did not undertake any of the characteristic roles of an
agent and did not agree to be subject to any of the characteristic duties of an agent.
(4) It follows that no such relationship of agency was agreed and none should be
implied.
Paragraph 83 is denied. Paragraph [Ml] immediately above is repeated.
Paragraph 84 is denied. Post Office was not an agent and was under no such duties.
FIDUCIARY DUTIES
Paragraphs 85 and 86 are denied. Post Office operated the accounting systems on its
behalf and pursuant to legal relationships with third parties to which Post Office, but not
the Claimants, was a party. As between Post Office and Subpostmasters, the rights and
obligations in relation to the accounting system were contractual and/or arose from the
status of Post Office as principal and the status of Subpostmasters as agents.
Paragraph 87 is denied. Paragraphs [fil] above are repeated in relation to the allegation of
agency.
Paragraphs 88 and 89 are denied. Paragraphs [lM] above are repeated.
167.
168.
169.
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GENERIC BREACHES OF CONTRACT / TORT / FIDUCIARY DUTY
The Claimants’ pleading of breach is so general and unparticularised as to hinder Post
Office’s ability to provide meaningful responses.
Post Office can plead only in very general terms to allegations that turn on matters of fact
and degree that would have to be alleged and established in individual cases.
‘The facts relevant to various of the allegations of breach will have changed substantially
over the relevant period. For instance, the products and services (and related training,
guidance materials and contractual obligations) offered in branches differed substantially
over the relevant period. For instance, an allegation that training was inadequate can only
meaningfully be addressed once it is grounded in the detail of the training provided (and
available) and in the circumstances in which such training was provided.
Without prejudice to the generality of that contention, Post Office pleads as follows.
Paragraphs 90 and 91 are denied. Post Office did not breach its duties as alleged or at all.
‘The general thrust of paragraph 92 is denied:
(1) Post Office provided at all times adequate training to Subpostmasters, both initially
and thereafter (including in response to requests for training). A reasonably
competent and diligent Subpostmaster would, with the benefit of such training (in
addition to the other assistance and support provided and/or available to
Subpostmasters), have been able properly to discharge his or her obligations to Post
Office.
(2) Paragraphs [...] above are repeated in relation to the training of Assistants.
(3) It was a matter for the Subpostmaster to understand and apply the content of the
Operating Manuals (if necessary by obtaining help and support from Post Office).
‘The Operating Manuals were such as to facilitate compliance by a reasonably
competent and diligent Subpostmaster.
(4) If and to the extent that any Subpostmaster considered himself or herself unable
properly to discharge the obligations to Post Office, it was incumbent on him or her
to contact Post Office and seek further training and/or make use of the assistance
offered by the Helpline.
7B
173.
174.
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Paragraph 93 is denied. The Helpline provided adequate support (in the context of the
training and other ance available to Subpostmasters). Paragraphs [{fl] above are
repeated. A reasonably competent and diligent Subpostmaster would, with the benefit of
the Helpline (in addition to the training and other assistance and support provided and/or
available to Subpostmasters), have been able properly to discharge his or her obligations to
Post Office.
Save as set out below, paragraph 94 is denied:
(1) The Claimants have failed to identify the transaction types to which the allegation in
paragraph 94.1 relates. Post Office reserves its right to plead to proper particulars if
and when they are provided.
(2) Inthe absence of a reasonable request for further data, transaction data relating to
the preceding 42 days (or 60 days after the introduction of Horizon online) was
made available to Claimants. The Claimants have not identified any prejudice that
resulted from this being the default period for which access was provided.
(3) Post Office provided more extensive transaction data where a Subpostmaster
provided good reasons for requiring access to such data and complied with its duty
of Necessary Cooperation in this regard. The Claimants have not identified any
circumstances in which more extensive data was requested, was denied and would, if
provided, have protected the Claimants from any alleged prejudice.
(4) Subparagraph 94.4 is not understood. The Claimants were required to maintain
transaction and accounting records in addition to the accounts submitted to Post
Office. Paragraphs [[f] above are repeated. The Subpostmaster, including with the
help of his ot her Assistants, should have been in the position, including by
reference to those records and accounts, to identify the likely causes of a Shortfall
and, if appropriate, to seek to argue that the Shortfall resulted from Losses for
which he or she was not responsible under the relevant agreement.
(5) Subparagraph 9:
Paragraph 95 is impermissibly vague and unparticularised and liable to be struck out.
Paragraphs [{l]
Horizon and/or Horizon Online. It is for the Claimants to allege and prove any bugs or
above are repeated in relation to alleged bugs and/or other errors in
errors on which they wish to rely.
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176. Paragraph 96 is denied. Specifically:
()
2)
3)
@)
Post Office was not under any duty as is alleged to have been breached at
subparagraph 96.1
As to subparagraph 96.2, Post Office provided such cooperation as was required of
it in accordance with the implied terms pleaded at paragraph [J above. Paragraphs
[2 above are repeated in relation to the duties of Subpostmasters as regards
Shortfalls.
Subparagraph 96.3 is denied. Paragraphs [lJ] above are repeated in relation to the
duties of Subpostmasters as regards Shortfalls. Post Office did not fail to disclose to
any Subpostmaster a matter that it knew to have caused or contributed to a Shortfall
for which the Subpostmaster was held liable and which was inconsistent with the
Subpostmaster being liable for the Shortfall. (CONFIRM).
Subparagraph 96.4 is denied. Paragraph [Ml] above is repeated as regards the
question of whether or not a Shortfall represented a “rea/ /oss”. It is denied that Post
Office was required to investigate whether or not a Shortfall had resulted or would
ultimately reflect or result in economic detriment to Post Office.
Paragraph 97 is denied, save that it is admitted that Post Office ordinarily (but not in all
instances) requires Subpostmasters to make good Shortfalls in accordance with the
agreements.
Paragraph 98 is denied. Post Office was not under any vague and general duty of
investigation. Paragraphs [[l]] above are repeated in relation to the Claimants’ case on
investigations.
Paragraph 99 is denied. Further:
()
‘The allegation that Post Office applied pressure to cause a Subpostmaster to resign
is inadequately pleaded and liable to be struck out. It is not alleged that any such
pressure was illegitimate and/or amounted to a breach of any pleaded duty.
The allegation at subparagraph 99.1 is inadequately pleaded and liable to be struck
out. The Claimants have not identified the alleged breaches said to be matetial and
have not pleaded any link between those breaches and the suspension, terminations
and resignation.
75
180.
181.
3)
4)
Save that it is admitted that Post Office, in some instanc
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Post Office was not under any duty such as those alleged to have been breached in
subparagraphs 99.2 and 99.3. In any event, Post Offi
omplied with its duty of
Necessary Cooperation in carrying out reasonable enquiries and investigations,
taking into account all material circumstances and, in particular, the cooperation that
it was able to obtain from the relevant Subpostmaster and/or his or her Assistants.
In circumstances where a Subpostmaster failed to provide cooperation to Post
Office and/or had failed to retain key records and/or had made false cash or stock
declarations and/or had falsified accounts or other records and/or had otherwise
acted dishonestly, the extent of cooperation and enquiry required of Post Office
may be relatively limited.
It is denied that Post Office’s allocation of the burden of proof was wrong as alleged
at subparagraph 99.4. It was in accordance with the agreements and was reasonable
and appropriate in the circumstances, taking into account all material circumstances
and, in particular, the cooperation that Post Office was able to obtain from the
relevant Subpostmaster and/or his or her Assistants.
It is denied that Post Office was required to establish fault on the part of a
Subpostmaster in the sense of his or her having caused a Shortfall by his or her
negligence, recklessness or deliberate act. Paragraphs [lll] above are repeated.
Subparagraph 99.5 is accordingly denied.
It is denied that Post Office’s reliance on the inference pleaded at subparagraph 99.6
was flawed and unreasonable. It is a reasonable inference that Post Office was
entitled to draw in appropriate cases and as part of its overall assessment of the
material facts and circumstances.
s, pursued civil and/or criminal
proceedings in relation to Shortfalls, paragraph 100 is denied for the reasons given in
paragraphs [J] above.
Paragraph 101 is denied:
()
2)
‘The alleged breach is not linked to any alleged duty pleaded to have been owed by
Post Office to any Claimant. It is accordingly demurrable.
Post Office was under no duty to any Claimant in relation to the appointment of a
new Subpostmaster. Paragraphs [...] above are repeated.
76
182.
183.
184.
186.
3)
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In any event, Post Office did not act unreasonably in relation to the appointment of
new Subpostmasters. Post Office was entitled to decide for itself (and by reference
to its own interests) with whom to contract and to appoint as its agent for any
particular branch, should it wish to continue providing a Post Office branch in the
relevant location.
Paragraph 102 is denied. Paragraphs [i] above are repeated.
Paragraph 103 is denied for the reasons pleaded at paragraphs [lll] above.
Paragraph 104 is inadequately particularised and cannot meaningfully be responded to in
its present form. Without prejudice to the generality of that contention:
(1)
6)
©
The Claimants have not identified which, if any, breaches are alleged to have been in
bad faith and the grounds on which such allegation is made.
The Claimants have not identified which, if any, of Post Office’s contractual
discretions are alleged to have been exercised arbitrarily, capriciously or
unreasonably. The Claimants have not pleaded the basis for any such allegation.
‘The Claimants have not identified which, if any, steps alleged to have been taken by
Post Office are said to have been in breach an implied duty of trust and confidence.
‘The Claimants have not pleaded the basis for any such allegation.
‘The Claimants have not identified what, if any, steps by Post Office are said to have
been taken without reasonable cate and skill. ‘The Claimants have not pleaded any
particulars of negligence.
Subparagraph 104.4 is so vague and general as to be incapable of response.
Save as set out above, paragraph 104 is denied.
Paragraph 105 is denied. Post Office was not under the pleaded duty and did not make
any of the alleged misstatements or misrepresentations.
ACTIONABLE MISREPRESENTATION AND DECEIT
Paragraph 106 is noted. It is denied that Post Office is liable as alleged.
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187. Post Office cannot meaningfully respond to allegations of indicative misrepresentations.
Al
188.
‘The facts relevant to the truth or falsity of a representation and reliance on that
representation will differ from one case to another. Post Office pleads generally to the
allegations without prejudice to that proposition. Paragraph 107 is accordingly noted but
not accepted.
Representations
Save as set out below and subject to the point made at paragraph [Jl] immediately above,
paragraph 108 is denied:
(1)
2)
i)
4)
The fact of a Shortfall is apparent on the face of the accounts submitted by a
Subpostmaster to Post Office. It is not a matter in relation to which Post Office
makes any representation. The Subpostmaster is bound by his account as pleaded at
paragraphs [Jf] above.
Post Office did not make the representations pleaded at subparagraph 108.2.
Shortfalls were addressed in accordance with the parties’ contractual obligations and
pursuant to the Subpostmaster’s status as an agent of Post Office and not on the
basis of representations made by Post Office to Claimants.
The alleged representation at subparagraph 108.3 is true. In any event, the proper
construction and effects of the parties’ agreements was a matter for each of them,
and Post Office did not provide legal advice to Subpostmasters in this regard. Post
Office was entitled to adopt a position as to the meaning and effects of its contracts
without the same amounting to a representation to its counterparty (or anyone else)
in that regard.
‘The alleged representation at subparagraph 10.4 was not made. It is admitted that
large numbers of Subpostmasters contract or attempt to contact the Helpline but
denied that this provides any support for any of the allegations made by the
Claimants.
The representation in subparagraph 108.5 was not made.
2] If and to the extent that a Claimant wishes to argue
that a Shortfall was a Horizon-Generated Shortfall, that is a matter that must be
distinctly alleged and proven. Post Office’s admission is that information
8
189.
H.2
190.
H3
191.
192.
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technology bugs or errors could, in principle, cause a Shortfall (and not that a bug or
error was in fact a likely or even plausible cause of any particular Shortfall).
(6) It is admitted that Post Office made the representation in subparagraph 108.7.
Paragraphs [Jl] above are repeated.
Post Office can neither admit nor deny any reliance on the part of the Claimants as
pleaded at paragraph 109, and they are required to prove the same.
Falsity
Save as expressly admitted in paragraph [J] above, paragraph 110 is denied.
Lack of due care
The allegations in paragraph 111 are made at a very high level of generality. Post Office
can respond only at the same level of generality. Any individual claim will turn on the
specific facts of the alleged failings.
‘The general thrust of paragraph 111 is denied. Specifically:
(1) Post Office considered every Shortfall and challenge to the same on their facts.
(2) It is denied that Post Office acted, in all the circumstances, without due care in
considering that, absent evidence to the contrary effect, it was inherently unlikely
that any particular Shortfall had been caused by a bug or error in Horizon or
Horizon Online.
(3) Post Office was right to attach substantial importance to the safeguards and other
material factors pleaded at paragraphs [{] above.
(4) It was reasonable for Post Office to draw adverse inferences from a Subpostmaster’s
failure properly to account and/or decision to falsify accounts or make false
declarations and/or failure to prepare or retain proper accounting records and/or
failure to cooperate with Post Office’s investigations and/or procure cooperation
from his or her Assistants.
(5) Post Office’s erroneous statements in relation to the ability remotely to change
transaction data in branches were made without negligence. Without prejudice to
the generality of that contention, Post Office avers that it was reasonable for it to
79
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rely on information provided to it by Fujitsu in this regard, which was that such
remote alteration was not possible. It was reasonable for Post Office to rely on that
information given, in particular, the nature of Fujitsu’s role and expertise. (WR)
igent Misstatement
193. Save as follows, paragraphs 112 and 113 are denied:
(a)
2)
Post Office was not under the pleaded duty.
The Claimants are required to prove any reliance that they assert. It is noted that
the Claimants would have been aware that, if a Subpostmaster failed to comply with
his or her obligations in relation to preparing, submitting and retaining accounts and
related records and/or failed properly to cooperate with Post Office, Post Office
would not ordinarily be in a position to identify the specific cause of a Shortfall save
to attribute it to the Subpostmaster.
H.5 Misrepresentation Act 1967
194,
Paragraph 114 is denied. Specifically:
()
2)
3)
Save as expressly admitted above, it is denied that Post Office made any
misrepresentations.
Paragraph [{¥] above is repeated as regards the possibility of altering branch
transaction data. Post Office had reasonable grounds for the representations that it
made.
It is denied that any of the steps pleaded at points (i) to (iv) in subparagraph 113.2
amounted to the entering into of a contract between Post Office and the relevant
Subpostmaster. The Subpostmaster took the pleaded steps in the discharge of its
obligations to Post Office under the existing agreements between the parties.
80
HG
195,
io)
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AAs to point (v) in subparagraph 113.2, it is denied that the Claimants relied upon any
alleged misrepresentation in entering into a settlement agreement. The parties
entered into commercial compromises in good faith, and no challenge to the same
can now be pursued without abuse of process and/or breach of the settlement
agreement. Post Office will enforce the settlement agreement and/or rely on such
estoppels as are necessary.
Deceit
The Claimants have no proper basis to make allegations in deceit, and the same are liable
to struck out. Without prejudice to that assertion, paragraph 115 is denied:
(a)
i)
8)
4)
6)
Tt is denied that Post Office knew or was reckless as to the matters listed in
subparagraph 115.1. Post Office considered the Shortfalls that it attributed to
Subpostmasters to be real and to be properly attributable to Subpostmasters under
the agreements.
Subparagraph 115.2 is not understood. It is denied pending its pleading in clear
terms. [LF HAVE NO IDEA WHAT IT 1S MEANT TO SAY}.
It is denied that Post Office knew or should have known that it bore the
(unparticularised) contractual burden. It is denied that it bears the burden of
showing the Subpostmaster’s account to be mistaken and/or showing that a
Shortfall was caused by an Assistant or was caused by a Subpostmaster’s error,
negligence or carelessness. Subparagraph 115.3 is denied.
Subparagraph 115.4 is not understood. It is denied pending its pleading in clear
terms, [L HAVE NO IDEA WHAT IT IS MEANT TO SAY}.
Subparagraph 115.5 is admitted (in that Post Office had the knowledge alleged).
Paragraphs [J] above are repeated in relation to Horizon and the nature and extent
of Post Office’s admission as to the possibility of Horizon-Generated Shortfalls.
81
196.
I.
©
”
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Subparagraph 115.6 is denied. Post Office believed its enquiries, audits and
investigations to be carried out even-handedly, fairly and properly, and it asserts the
correctness of that belief. Paragraphs [[lll] above are repeated.
Subparagraph 115.7 is denied. None of the personnel involved in the process of
ility that the Shortfall
enquiring into Shortfalls was instructed to exclude the poss
had resulted from an error or bug in Horizon.
(8) Subparagraph 115.8 is denied. Paragraph [J above is repeated in relation to the
ability to alter branch transaction data.
Reliance
As to paragraph 116:
()
Post Office is unable to admit or deny and requires the Claimants to prove reliance
in fact on any of the representations that it alleges.
It is denied that any representations by Post Office can have been material to any
decision to accept a Transaction Correction. It was incumbent on a Subpostmaster
to accept or dispute Transaction Correction as he or she considered appropriate
taking into account information that was known to him and/or her or could be
obtained from Post Office, the relevant Assistants or any other relevant third party.
The Subpostmaster is bound by his account in relation to any contention that a
‘Transaction Correction was erroneous.
Point (ii) is not understood and is not specifically pleaded to in this Generic
Defence.
It is denied that the Claimants may in these proceedings call into question the
settlement agreements between the parties. Paragraph [[Ml] above is repeated. Point
Gi) is accordingly not available to the Claimants.
Point (iv) is impermissibly vague and general and is not addressed sp
Save as set out above, paragraph 116 is denied.
HARRASSMENT
197. Paragraphs 117 to 119 are denied:
82
198.
()
2)
3)
@)
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None of the pleaded steps amounted to or contributed to any harassment of the
Claimants.
Post Office was entitled to make demands for payment, propose Transaction
Corrections, seek admissions of liability for Shortfalls, threaten or pursue civil
and/or criminal proceedings and pursue such proceedings as it did.
‘The matters of which the Claimants complain (i) are the ordinary incidents of
commercial life and, in particular, an agent’s operation of a substantial business
enterprise on behalf of its principal or (ii), in the case of criminal proceedings,
resulted from the Claimant’s own wrongdoing and/or the reasonable suspicion of
such wrongdoing.
Post Office acted in all material regards in accordance with its own good faith
assessment of its rights and obligations under the agreements and as principal and
without actual or constructive knowledge that its conduct amounted to harassment.
DURESS & UNCONSCIONABLE DEALING
Paragraphs 120 to 122 are inadequately particularised and are liable to be struck out.
Without prejudice to the generality of that contention:
(a)
@
The transactions that the Claimants seek to rescind on the basis of duress and/or
unconscionable dealing are not properly identified.
‘There is no pleading of the circumstances that are said to have made Post Office’s
conduct unconscionable. Post Office was entitled to assert its rights as it
understood them to be and to hold Subpostmasters’ to the contractual bargain and
to their fiduciary duties as agents.
Post Office can neither admit nor deny and requires the Claimants to prove the
assertions as to their own knowledge and situations in subparagraphs 121.4, 121.5
and 121.8.
Post Office denies having taking unconscionable advantage of the Claimants and/or
having put the Claimants in a position in which they acted under economic duress.
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199. Save as set out above, paragraphs 120 to 122 are denied.
K. MALICIOUS PROSECUTION
200. Post Office accepts, in relation to paragraphs 123 to 124, that the threatened claims in
malicious prosecution are not to be pleaded at this stage. For the avoidance of doubt,
Post Office will deny all such claims and reserves its right to apply for strike out of the
same.
L. UNJUST ENRICHMENT
201. ‘The Claimants’ entitlement to claim in unjust enrichment is denied. The matters relied
upon in support of that claimed entitlement are denied as pleaded in the relevant parts of
this Generic Defence.
202. Paragraphs 125 to 127 are accordingly denied. For the avoidance of doubt, the burden of
proof would be on a Claimant to prove that he was not in fact liable in respect of any
Shortfall for which he was held responsible.
203.
S
M. LOSS AND DAMAGE
Lass generally
84
204.
206.
207.
208.
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Post Office is not liable to the Claimants for any of the claimed loss and damage.
Paragraph 128 is denied.
Paragraph 129 is noted.
In general:
(1) The Claimants are required to prove any claimed loss and damage.
(2) Ifand to the extent that any loss and damage is proven, the Claimants are required
that such loss resulted from a breach of contract or other legal wrong on the part of
Post Office.
(3) Post Office will assert, in appropriate cases, that the losses claimed are irrecoverable
as a result of failures to mitigate. For example,
(4) Post Office reserves its right to contend, once they are particularised, that some or
all of the claimed losses are too remote.
It is not possible meaningfully to respond to the pleaded heads of loss for the following
reasons:
(1) The Claimants have not identified the duties the breach of which is said to give rise
to liability for the pleaded losses. It may be that the Claimants are in some instances
seeking losses that are not available as a matter of law.
(2) The Claimants have failed to identify with any specificity the type of causal
connection between the alleged breaches and the alleged losses
(3) The types of loss are pleaded at a very high level of generality. It may be that
liability for some, but not all, of the types of loss covered by each heading are
irrecoverable in law or for reasons of remoten
(4) Issues such as causation in fact, remoteness and quantification of loss cannot
meaningfully be addressed in the absence of pleaded facts of individual claims.
Post Office pleads back on loss without prejudice to this proposition and without
intending to limit its ability to address such particularised allegations of loss as may be
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brought against it (including by raising such defences as are available in fact and law but
also including by seeking to narrow the issues between the parties).
Losses resulting from termination
209. As regards losses resulting from termination of the Subpostmaster’s appointment, Post
Office will rely in appropriate cases upon the provisions in the parties’ agreements
excluding liability for loss of office, as follows:
(1) Clause 1.8 of the SPMC, stating as follows:
The terms of the appointment of Subpostmaster do not entitle the holder to be paid sick. or
annual leave, pension or to compensation for loss of office.
(2) Clause 2.6 of the Temporary SPMC, stating as follows:
The Temporary Subpostmaster is not entitled to any of the following from Post Office Ltd:
Compensation for loss of offices...
210, Clause 17.11 of the NTC, stating as follows: (DON TIMINRUTHISONSTIESLTT
SURE WHAT),I
The Operator acknowledges that he shall not be entitled to receive any compensation or other sums in
the event of the termination or suspension of the Agreement.
(1) [LCANNOT SEE ANYTHING SIMILAR IN THE FRANCHISE,
AGREEMENT]
211. Further, in all cases where the Subpostmaster’s appointment was terminated without
notice, Post Office will rely upon its express right to terminate without cause on notice
and contend that any damages should be limited to the notice period. In each case, had
Post Office not terminated without notice, it would have terminated on notice in
accordance with its express contractual right to do so.
M.1 Financial Loss
212. Paragraph 130 is noted. It is denied that Post Office is liable in relation to any such loss.
86
213.
214.
M.2
216.
217.
M3
218.
219.
M4
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None of the alleged losses pleaded at paragraphs 131 to 133 are recoverable from Post
Office because any such losses did not result from any breach of contract (or other legal
wrong) by Post Office. Where Post Office suspended or terminated a Subpostmaster’s
appointment without notice, it had the right to do so under the agreements. It is denied
that any claim for loss resulting from termination on notice can be pursued.
Stil ind/or r tional dam:
In any event:
(1) None of the claimed loss is attributable to any breach or other legal wrong on the
part of Post Office.
(2) It is denied that Post Office suspending or terminating a Subpostmaster (or
requiting the exclusion of an Assistant) created the impression of dishonesty on
their part. Post Office was entitled to take those steps in the absence of dishonesty
and, as regards termination, without any cause).
(3) Post Office did not publicise the fact of dishonesty (or its suspicions of the same)
on the part of Subpostmasters or Assistants. ‘The Claimants are required to prove
that any loss resulting from the public’s knowledge in this regard is attributable to
any step taken by Post Office.
Paragraphs [Jf] above are repeated.
Distress and related ill-health
It is admitted that many Claimants suffered as alleged but denied that any losses resulting
from such distress or ill-health are attributable to any breaches by Post Office.
Bankruptcy
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220. It is admitted that some Claimants entered into bankruptcy processes. (CHATNENGE)
221. Post Office denies that is liable for any of the pleaded losses. [BURTHER RESEARCH,
M.5 Prosecutions
222. Paragraphs 138 and 139 are admitted as very general statements of fact relating to some
Claimants. Post Office denies that is liable for any of the pleaded losses.
M.6 Exemplary Damages
223. ‘The claim in paragraph 140 is denied and is liable to be struck out. No proper particulars
of deliberate and/or cynical disregard of the Claimants’ rights have been pleaded. Post
Office did not act so as to make itself liable to exemplary damages. [DENY ENTITIED)
M.7 Interest
224. The Claimants are entitled to no damages and so no interest as claimed at paragraph 141.
If, contrary to that plea, the Claimants are entitled to damages, it is admitted that the
Claimants would be entitled to interest as alleged. [PDO NOT THINK Wil CAN DENY
N. LIMITATION AND OTHER GENERAL DEFENCES
N.1 Limitation
225. Post Office will rely upon the expiry of the applicable limitation periods in relation to each
of the Claimants’ claims. Without prejudice to the generality of that plea, Post Office will
rely upon:
(1) A six-year limitation periods in relation to claims in tort and contract under sections
2 and 5 of the Limitation Act 1980 and in respect of all equitable claims.
(2) A three-year limitation period in relation to claims for personal injury under section
11 of the Limitation Act 1980.
88
N.2
226.
227.
228.
N3
229.
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Estoppels and similar defences
In appropriate cases, Post Office will rely upon some or all of the following estoppels
and/or similar defences:
(1) Post Office may assert an estoppel to prevent a Subpostmaster denying the truth of
cash and stock declarations that he made to Post Office and/or the truth of
accounts that he prepared.
S
A Subpostmaster is to be prevented from re-opening and/or seeking to amend the
account between himself and Post Office where, by reason of delay or otherwise, it
would now be inequitable for the account to be re-opened or amended.
(3) A Subpostmaster is to be prevented from re-opening and/or seeking to amend the
account between himself and Post Office where the parties reached a compromise
as to the amount(s) due and/or the terms of payment and/or it is otherwise
appropriate to treat the account between the parties as being settled.
False accounting and failure to maintain records
Post Office repeats paragraph [Ll] above.
Further, Post Office will rely, in appropriate, on adverse inferences to be drawn from any
failures to maintain accounting records (including Branch Trading Statements and paper
transaction records) as were required from time to time under the agreements and/or the
relevant manuals and/or directions from Post Office.
Set off
Post Office will set off in law and/or equity such sums are found to be due it against any
amounts for which it is found to be liable to Claimants on the Counterclaims described in
its Generic Counterclaim herein.
89
NA
230.
231.
232.
233.
234.
235.
236.
237.
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Abuse of process
Claimants who are parties to settlement agreements should be restrained from the abuse
of process inherent in asserting claims covered by those agreements.
Save as aforesaid, the GPoC is denied.
The Claimants are not entitled to the relief sought or any relief.
GENERIC COUNTERCLAIM
‘The Generic Defence is repeated.
Office has not to date recovered those Shortfalls from Subpostmasters in full, it will claim
the amounts of such shortfalls or the unrecovered portion thereof as debts in accordance
with its contractual rights as pleaded at paragraphs [2] above. [DO WEJUST CLAIM
Post Office further relies upon the following terms in relation to the payment of shortfalls
after the termination of the relevant agreements:
(1) Clause 12.13 of the SPMC, providing as follows: [I].
(2) Clause 6.5 of the Temporary SPMC, providing as follows: [IW].
(3) Clause 4.3 of the NTC, providing as follows: [Ml].
S
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239. [DO WE HAVE ANY CLAIMS AGAINST THE MANAGERS OR ASSSITANTS FOR,
240. Post Office will claim interest on all amounts found to be due to it in accordance with s.
35A of the Senior Courts Act 1981 at such rates and for such periods as the Court may see
fit to award. [no
AND POST OFFICE CLAIMS:
Q) FXX]
(2) [XX]
G) XX]
(4) Interest thereon
Anthony de Garr Robinson QC
Owain Draper
[statement of truth]
1