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POST OFFICE PAGE 1 OF 4
GROUP EXECUTIVE
Postmaster Litigation
Author: Jane MacLeod / Rodric Williams Sponsor: Jane MacLeod Meeting date: 13 July 2017
Executive Summary
Bates & 198 Others v. Post Office Limited
1. Post Office is due to serve and file its defence to the claim brought by 198 former
and current postmasters on 18 July 2017. A copy of the draft defence has been
included with this paper. The Board is being asked to give its approval to the
defence.
Purpose of a Defence
2. The Defence is a Court document and Post Office's formal response to the
Claimants’ Particulars of Claim. It must state which allegations are admitted and
which are denied (giving reasons for the denial). It is the foundation for Post
Office's legal arguments and the key document in the litigation process.
3. Due to the number of Claimants and therefore the complicated factual background,
the Claimants were given permission by the Court to serve Generic Particulars of
Claim, without going into details of the Claimants’ individual cases. As such, Post
Office's Defence is also called a "Generic Defence" and it will not seek to respond to
the facts of the individual cases at this stage.
4. The Defence has to be signed under a Statement of Truth. Knowingly making
incorrect statements in a Defence is a contempt of Court and a criminal offence.
5. The Defence is a "public" document and the Court may disclose it to members of
the public, although it is not automatically posted to any public websites.
Preparation of the Defence
6. The Defence has been drafted by Tony Robinson QC, instructed by Post Office's
external solicitors, Bond Dickinson. Bond Dickinson is familiar with the case having
advised since allegations of problems with Horizon arose in 2012, and has
continued to act throughout Project Sparrow.
7. In preparing the Defence, the team has been mindful that every statement made
in the Defence should, to the best of our knowledge, be wholly true and not
misleading. The process followed to achieve this is as follows:
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1.1 The Claim was reviewed for gaps in current knowledge and enquiries made to subject matter
experts in the business for missing information. Briefing notes have been prepared on key areas
where detailed information has been required.
1.2 In higher risk areas (see below), Deloitte were instructed to undertake forensic investigations.
1.3 Workshops have been held between Counsel and Post Office staff, Fujitsu and Deloitte.
1.4 Drafts of the Defence have been reviewed by relevant Post Office staff, Fujitsu and Deloitte.
1.5 The whole Defence has been reviewed and approved by Rodric Williams, Post Office's Head of
Litigation.
Key Legal Issues and Risks
8. This claim involves only a very small percentage of postmasters, and an even
smaller percentage of those who have used Horizon. However, any decision made
by the Court in relation to these claims will be binding on Post Office (and the
Claimants) and may have implications for its current operations, as well as
potentially giving rise to other postmasters bringing claims based on the Court's
findings.
9. Integrity of Horizon data. The principal claim is that Horizon is defective and thus
the cause of losses in branches, The approach taken in the Defence is that no IT
system is perfect, and Horizon is no exception. However, it has robust systems in
place to prevent and remediate any defects, and Post Office is not aware of any
Horizon error which has generated any loss for a Claimant. The Defence therefore
proceeds from the footing that one can have a high degree of confidence in the
integrity of Horizon.
10. Fujitsu and Deloitte support the above view. In due course, Post Office will
need to submit evidence to support this position and will likely need to allow the
Claimants' IT experts to directly inspect Horizon.
11. This is a critical issue in this case. If doubt is thrown on Horizon's ability to
accurately record customer transactions and branch accounts, the fundamental
basis on which Subpostmasters are held liable for losses is undermined. This
would likely make it very difficult to defend the claims. Outside the litigation, it
may make it more difficult to recover losses from Subpostmasters.
12. Contracts. The Particulars of Claim seek to attack Post Office's contracts with its
postmasters by:
1.6 implying terms into those contracts which are inconsistent with the express written terms; and
1.7 alleging that the contracts contained unfair terms which are unenforceable.
13. These attacks on the standard Subpostmaster's Contract are seeking to make it
significantly more difficult for Post Office to recover losses from Subpostmasters
and to restrict Post Office's ability to appoint and terminate Subpostmasters.
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14. These allegations are robustly denied in the Defence which explains why the
express terms form the complete contract, why the terms are fair and enforceable,
and why Post Office has not breached the contracts.
15. If any of the contractual terms used by Post Office are found to be
unenforceable, or if terms are implied into the contract, this will have an impact on
Post Office's contractual position with other postmasters not involved in the claim.
16. Allegations of deceit. The Particulars of Claim state that Post Office is guilty of
deceitfulness. Examples include leading Claimants to believe that: they were
responsible for losses when they were not, and that Post Office had carried out
proper investigations when it had not. These claims are denied in full.
17. However, there are a small number of statements that have been made by Post
Office historically that, following detailed investigations by Deloitte, have been
found to be not true. These statements relate to the ability of Fujitsu to "remotely
access" Horizon and change transaction data. It has been determined that this
could theoretically happen, albeit in a highly technical and unlikely way.
18. The Defence therefore admits that Post Office has made untrue statements, but
denies deceit on the ground that it believed its statements to be true when they
were made.
19. There are obvious reputational issues to consider when admitting that Post
Office made untrue statements. However, the very strong advice of Tony
Robinson QC is that these admissions must be made; to deny them would be to try
to defend the indefensible, thereby undermining Post Office's credibility with the
Court.
Media and Communications
20. Strictly speaking, the Defence should only be used for the purposes of the Court
proceedings. In reality, it is expected that the Defence will be leaked by the
Claimants to their favoured media outlets.
21. In large part the Defence says no more than Post Office has already stated in
correspondence with the Claimant's lawyers, including the admissions as to untrue
statements. Nevertheless, the symbolic nature of a Defence presents an
opportunity for the Claimants to re-cycle old material into new media briefings.
22. Post Office's communications team is preparing to receive requests from the
media in relation to the case. It is proposed that Post Office adopt the strategy of
responding to queries put to it (where it considers it appropriate to do so) rather
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than adopting a proactive strategy of issuing a press release regarding its defence
being filed.
Next Steps
23. The Claimants have the opportunity to respond to Post Office's Defence in a
formal document called a Reply. This is due to be served on Post Office and filed
with the Court on 20 September 2017. It is not mandatory for the Claimants to
serve a Reply but given the complexity and importance of this case it is expected
that they would do so.
24. A further Court hearing, called a Case Management Conference, will take place
on 19 October 2017. This hearing, and the preparation for it, will provide an
opportunity for Post Office and the Claimants to agree further steps leading up to
trial, including selection of those postmasters' cases which the parties wish to put
forward as lead cases; disclosure of documents; witness evidence and expert
evidence. The Lead Cases will then be examined in greater detail by the Court at
mini-trials with the aim of using those cases to determine points of principle or fact
that apply broadly to many cases. To be able to do this, the parties will need to set
out their positions in relation to these Lead Cases in further, case-specific
Particulars of Claim, Defences and Replies.
25. In order to prepare for the selection of lead cases, Post Office has commenced
a review of all of the cases of those Claimants that have not previously been
reviewed as part of Project Sparrow. The Claimants were ordered to provide Post
Office with schedules of basic information about each existing Claimant by 20 June
2017, and for any new Claimants by 6 September 2017. The case review involves
obtaining copies of relevant documents and files from Post Office's archives,
systems and other sources, reviewing those documents and drafting reports on
findings. The purpose of this is to enable us to better understand the Claimants'
cases, and whether they would be suitable as lead cases.
26. It is not yet possible to predict the Court process beyond 19 October 2017,
however it is unlikely that there will be a trial of substantive issues or Lead cases
before mid-2018 and after that there will be numerous follow-up issues and further
hearings that will likely run until 2019/2020.
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