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Common Issues Trial Briefing
Paper forPOL Witnesses
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Table of Contents
1. Executive Summary
2. Background to the Litigation
3. Key issues at Trial in November
Annex A: Common Issues
Annex B: Background to the 6 Lead Claimants
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1.
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Executive Summary
What is the case about?
1.1
1.2
The case represents the culmination of a series of campaigns by disaffected
postmasters and others (including a number of MPs on both sides) who
believe that Post Office wrongly attributed branch losses to those postmasters
and that as a result, they suffered financial and reputational harm. A theme
of these campaigns is that flaws in Horizon (the in-branch point-of-sale
system) were the cause of these losses.
The Managing Judge has determined that the case will be heard in a series of
trials. The first, which is to be heard in November, will address a series of
‘Common Issues’ - essentially, to determine as a matter of legal construction,
the proper meaning of the contract between Post Office and its agents, and
whether certain additional terms should be implied into the contract.
What will be the impact of the decision?
1.3
Neither the Common Issues trial in November 2018 nor the Horizon Issues
trial in March 2019 will address questions of breach, causation and loss - there
will not therefore be any award of damages as a result of either of these
trials.
How much attention will it attract?
1.4
1.5
While we do not expect there to.be any material ‘new news’ to emanate from
the trial, there are some reporters and media outlets who have been covering
these issues over a long period, and significant interest from the group of 561
claimants.
Nevertheless, and consistent with the management of media around the
Panorama programme in 2015, and the BIS Parliamentary Select Committee
enquiry in 2015,’ Post Office believes that with an effective communications
strategy this media interest will be short lived; and that our planned response
should materially defuse any adverse impact.
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2. Background to the Litigation
2.1 Transactions at Post Office counters are undertaken on the Horizon system.
Post Office estimates that c50,000 people use the system each day across
the network and that around half a million employees, agents or employees
of agents have performed transactions on it since it was introduced in 1999.
2.2 In 2012 a small number of (mostly former) postmasters, under the banner
of the “Justice for Subpostmasters Alliance” (JFSA) and with support from
some MPs led by then MP (now Lord) James Arbuthnot, claimed Post
Office’s Horizon IT system had caused losses (shortfalls in physical cash
against cash holdings recorded on Horizon) which they had had to make
good. In some cases they had been prosecuted for these losses (usually for
false accounting, theft or both) while, in other cases, they claim that it led
to their contracts with Post Office being terminated causing them financial
loss and other personal harm including bankruptcy; divorce and emotional
distress including suicide.
2.3 In response to these assertions, Post Office appointed independent forensic
accountants Second Sight to perform a ‘top'down’ examination of Horizon.
Second Sight issued a report in July 2013 which concluded there was no
evidence of system-wide (systemic) problems with the Horizon software but
identified some areas where Post: Office could have done more to support
individual postmasters.
2.4 Asa result Post Office set up-a Branch Support Programme which led to the
introduction of importantsnew measures in areas such as branch operation
practices, processes and support. Further, in the autumn of 2013 Post
Office established the ‘Complaint Review and Mediation Scheme’ as an
avenue for postmasters and counter clerks (both former and serving) to
raise individual.concerns. The scheme was set up in consultation with MPs,
the JFSA and Second Sight and was overseen by a working group, chaired
by a former Court of Appeal Judge.
2.5 From 150 applicants, 136 were accepted into the scheme. Many cases were
based on allegations which were vague and or not supported by the
evidence and no evidence of systemic flaws in the system was found; rather
the investigations (by both Second Sight and Post Office) found that the
main reason for losses in the majority of cases was “errors made at the
counter” by the postmaster and or their staff.
2.6 The process of resolving cases became challenging in an environment
increasingly driven by JFSA campaigning for large financial settlements
which were not justified by investigation findings, and or for the scheme to
be used as a platform for overturning postmasters’ criminal convictions,
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2.7
2.8
2.9
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which is something only the criminal courts could deliver (37 cases in the
scheme involved criminal convictions).
Post Office has never publicly discussed the detail of the individual cases
that were put forward (we promised confidentiality) and were therefore
constrained in its ability to fully counter some of the media and
Parliamentary criticisms generated by the JFSA’s campaigning, which
centred on some undoubtedly sad, but highly selective, histories of a small
number of cases.
In the spring of 2015, following completion of all of our investigations, Post
Office took the decision to offer mediation for all cases which remained in
the scheme except those that had been subject to a previous court ruling.
This accelerated the scheme and also ensured that the commitments made
to applicants at the outset were met.
The JFSA encouraged applicants not to take part~in mediation but
nevertheless 50% of cases where a mediation took.place were resolved.
Mediations were overseen by the Centre for Effective Dispute Resolution
(CEDR).
2.10 Although a total of 41 applicants to the scheme were able to resolve their
complaints, the JFSA was not satisfied with the outcome and continued its
campaign against Post Office.
2.11 In recent years, the focus of the complaints by postmasters has expanded
from issues with the Horizon IT,.system, to the alleged “unfairness” of the
contract between Post Office-and postmasters. Despite significant lobbying
by the JFSA of Parliament.and through the media, Post Office’s position has
not altered, and considers that these disputes are now best resolved
through the Courts,
2.12 In February 2016-it was reported that a group of postmasters had secured
funding for group legal action and in April 2016, a High Court claim was
issued against Post Office.
2.13 In March 2017, following a preliminary public High Court hearing, a Group
Litigation Order was made, following which statements of case were filed by
the claimants and Post Office setting out their “generic” cases (i.e. as apply
to the entire group of claimants). At a subsequent Case Management
Conference (‘CMC’) in October 2017, the Managing Judge appointed to
oversee the Group Litigation, Mr Justice Peter Fraser, determined that the
litigation would proceed in at least three stages:
(i) a 20 day ‘Common Issues’ trial starting on 5 November 2018, the
purpose of which is to determine issues common to all the claimants,
focussing on the legal relationship between Post Office and
postmasters, the proper interpretation of certain terms in the standard
contracts Post Office enters into with postmasters, and whether further
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terms proposed by the claimants should be implied into those
contracts;
(ii) a second 20 day trial starting on 11 March 2019 on 15 “Horizon
Issues” concerning technical aspects of the Horizon accounting system
used in Post Office branches, which will be determined primarily on
expert evidence (as opposed to individual users’ experiences); and
(iii) one or more further trials which would address issues of causation,
loss and damages. On 27 September 2018 Mr Justice Fraser
suggested that hearing time would be made available in May 2019 for
such a further trial, the scope of and timetable for is currently under
consideration and has not yet been agreed.
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3. Key Issues at the Common Issues Trial
3.1 The Common Issues trial will not address issues of breach, causation or
loss. Instead, the trial will determine the correct legal relationship
between Post Office and its agents:
“It has been set down for the express purpose of
determining a list of 23 Common Issues in the context of
Group Litigation, involving 561 Claimants who contracted
with Post Office over a period of many years. The trial is
to be conducted by means of Lead Claims. Six have been
selected. But the Common Issues are not directed to
determining the specific cases of the Lead Claimants
alone. Rather, the Common Issues were defined by the
Court, with the agreement of the parties, as generic
issues “relating to the legal relationship. between the
parties” being Post Office and wider.group of 561
Claimants, whose engagements spanned around 20
years.”*
3.2 The claimants have sought to have implied into the contract a further 21
terms (see appendix A) and which would imply a range of additional
duties including - most importantly, a duty to investigate branch losses
and determine their cause before requiring an agent to repay them.
3.3. The most important Common Issues concern the liability of agents for
"losses". The claimants argue that Post Office needs to show that a
postmaster’s actions have caused Post Office to suffer a net economic
detriment, not just that a branch's accounts ostensibly show a shortfall.
Post Office’s position is that if a shortfall is shown in the branch's
accounts then, absent any cogent evidence to the contrary, the
postmasteris liable for that shortfall given they are responsible for
conducting the transactions recorded in those accounts, and for the Post
Office ‘cash and other assets used.
3.4 Post Office has accepted that two additional terms are implied into the
postmaster contracts which are necessary for their operation, but which
obviate the need to imply the 21 terms sought by the claimants. Post
Office’s additional terms are that each party would:
(i) refrain from taking steps that would inhibit or prevent the other
party from complying with its obligations under or by virtue of the
contract; and
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(ii) provide the other party with such reasonable cooperation as was
necessary to the performance of that other's obligations under or by
virtue of the contract.
3.5. Witness evidence at the Common Issues trial will refer to Post Office’s
standard practices for contracting with new postmasters, and the
circumstances of 6 ‘Lead Claimants’. This evidence should address what
the parties understood about the contract and running a Post Office
branch prior to entering into the contract. Witness statements’ will not
be read out in Court, and the Judge has stipulated a maximum of half a
day for cross examination of each witness. There are 6 witnesses for the
claimants, and 14 for Post Office.
3.6 To date, the claimants have only generically stated the remedies they are
seeking from the Group Litigation, and in particular-have not quantified
the level of the financial damages they are seeking:from Post Office.
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Appendix A: Common Issues (including terms to be
implied in to the contract by the Claimants)
Agreed pursuant to §2 of the First CMC Order
References to Subpostmasters in this Schedule are to Subpostmasters who were
subject to either (1) the Subpostmaster Contract (“the SPMC”), or (2) the Network
Transformation Contract (local branch or main branch types) (“the NTC”).
Relational Contr:
(1) I Was the contractual relationship between Post Office and Subpostmasters a
relational contract such that Post Office was subject to duties of good faith,
fair dealing, transparency, co-operation, and trust and confidence (in this
regard, the Claimants rely on the judgment of Leggatt-J in Yam Seng Pte v
International Trade Corp [2013] EWHC 111)?
[GPOC 63, Defence 103]
Implied terms
(2) Which, if any, of the terms in the paragraphs listed below were implied terms
(or incidents of such implied terms) of the contracts between Post Office and
Subpostmasters?
Post Office is required:
(1) to provide adequate training and support (particularly if and when the
Defendant imposed new working practices or systems or required the
provision of new services);
(2) properly and accurately to effect, record, maintain and keep records of
all transactions effected using Horizon;
(3) properly and accurately to produce all relevant records and/or to
explain all relevant transactions and/or any alleged or apparent shortfalls
attributed to Claimants;
(4) to co-operate in seeking to identify the possible or likely causes of any
apparent or alleged shortfalls and/or whether or not there was indeed any
shortfall at all;
(5) to seek to identify such causes itself, in any event;
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(6) to disclose possible causes of apparent or alleged shortfalls (and the
cause thereof) to Claimants candidly, fully and frankly;
(7) to make reasonable enquiry, undertake reasonable analysis and even-
handed investigation, and give fair consideration to the facts and
information available as to the possible causes of the appearance of
alleged or apparent shortfalls (and the cause thereof);
(8) to communicate, alternatively, not to conceal known problems, bugs or
errors in or generated by Horizon that might have financial (and other
resulting) implications for Claimants;
(9) to communicate, alternatively, not to conceal the extent to which other
Subpostmasters were experiencing relating to Horizon and the generation
of discrepancies and alleged shortfalls;
(10) not to conceal from Claimants the Defendant's ability to alter
remotely data or transactions upon which the~calculation of the branch
accounts (and any discrepancy, or alleged shortfalls) depended;
(11) properly, fully and fairly to investigate any alleged or apparent
shortfalls;
(12) not to seek recovery from,Claimants unless and until:
a. the Defendant _had complied with its duties above (or some of
them);
b. the Defendant has established that the alleged shortfall
representedsa genuine loss to the Defendant; and
c. the Defendant had carried out a reasonable and fair investigation
as tothe cause and reason for the alleged shortfall and whether it
was~properly attributed to the Claimant under the terms of the
Subpostmaster contract (construed as aforesaid);
(13) not to suspend Claimants:
a. arbitrarily, irrationally or capriciously;
b. without reasonable and proper cause; and/or
c. in circumstances where the Defendant was itself in material breach
of duty;
(14) not to terminate Claimants’ contracts:
a. arbitrarily, irrationally or capriciously;
b. without reasonable and proper cause; and/or
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c. in circumstances where the Defendant was itself in material breach
of duty;
(15) not to take steps which would undermine the relationship of trust and
confidence between Claimants and the Defendant;
(16) to exercise any contractual, or other power, honestly and in good
faith for the purpose for which it was conferred;
(17) not to exercise any discretion arbitrarily, capriciously or
unreasonably;
(18) to exercise any such discretion in accordance with the obligations of
good faith, fair dealing, transparency, co-operation, and trust and
confidence;
(19) to take reasonable care in performing its functions and/or exercising
its functions within the relationship, particularly those which could affect
the accounts (and therefore liability to alleged shortfalls), business, health
and reputation of Claimants;
[GPOC, para 64; Denied at Defence, paras.104-106]
(20) to recover and/or seek to recover any alleged shortfalls within a
reasonable time of discovery or the date by which, with reasonable
diligence, Post Office could have made such a discovery.
[Reply, para. 96.1]
(The implied terms admitted at Defence para 105 are agreed)
If the terms alleged at GPOC, paras 64.16, 64.17, 64.18 and/or 64.19
(i.e. (16), (17), (18)<and/or (19) above) are to be implied, to what contractual
powers, discretions and/or functions in the SPMC and NTC do such terms apply?
Supply of Goods and Services Act 1982
Did Post Office supply Horizon, the Helpline and/or training/materials to
Subpostmasters (i) as services under “relevant contracts for the supply of services”
and (ii) in the course of its business, such that there was an implied term requiring
Post Office to carry out any such services with reasonable care and skill, pursuant to
section 13 of the Supply of Goods and Services Act 1982?
[GPOC para 63A, Defence, para. 104]
ner run 1 term:
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Were any or all of the express terms in the GPOC paragraphs listed below
onerous and unusual, so as to be unenforceable unless Post Office brought them fairly
and reasonably to the Subpostmasters’ attention?
para 51.1 and 51.3 (rules, instructions and standards);
para 52.1 and 52.3 (classes of business);
para 54.1 and 54.3 (accounts and liability for loss);
para 56.1.a. and 56.2.a (assistants);
para 60.1 and 60.3 (suspension);
para 61.1 and 61.3 (termination).
Para 62.1 and 62.3 (no compensation for loss of office)
[GPOC, para 66; Defence, para. 108]
If so, what, if any, steps was Post Office required to take to draw such
terms to the attention of the Subpostmaster?
[GPOC, para. 66; Defence, para. 108(2)]
infair Contr. Term
Were any or all of the terms at paragraph (5) above unenforceable pursuant to
the Unfair Contract Terms Act 1977?
[GPOC, paras. 67-68; Defence, para. 109; Reply, para. 49]
Liability for Alleged Losses
What is the proper construction of section 12, clause 12 of the SPMC?
What is the proper.construction of Part 2, paragraph 4.1 of the NTC?
[GPOC paragraph 49 and 55; Defence, paras 93-94]
Agency and Accounts
Post Office as agent
Was Post Office the agent of Subpostmasters for the limited purposes at GPOC
Paragraphs 82 and 83?
[Defence, paras 124-125]
If so, was the Defendant thereby required to comply any or all of the obligations
at GPOC paragraph 84?
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[Defence, para 126]
Subpostmasters as agents
Was the extent and effect of the agency of Subpostmasters to Post Office such
that the principles of agency alleged at Defence 91 and 93(2) and (3) applied as Post
Office contends?
[Defence paras 90-91; Reply, paras 59-60]
Did Subpostmasters bear the burden of proving that any Branch Trading
Statement account they signed and/or returned to Post Office was incorrect?
[Defence, paras 69(3) 183; Reply, paras 64 and 92]
Suspension and Termination
Suspension
(14) On a proper construction of the SPMC and NTC, in what circumstances
and/or on what basis was Post Office entitled to suspend pursuant to SPMC
Section 19, clause 4 and Part 2, paragraph 15.1 NTC?
[GPOC, paras 32-3, 49, 60, 64.13 and 99; Defence, paras 66-72, 99
and 142]
Summary Termination
(15) On a proper construction of the SPMC and NTC, in what circumstances
and/or on what-basis was Post Office entitled summarily to terminate?
[GPOC, paras 34-37, 61, 64 and 99; Defence, paras 66-72, 100,104-
106 and 142]
Termination on Notice
(16) On a proper construction of the SPMC and NTC, in what circumstances
and/or on what basis was Post Office entitled to terminate on notice, without
cause?
[GPoC, paras 49, 61 and 64, Defence para. 100]
True Agreement
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(17) Do the express written terms of the SPMC and NTC between Post Office and
Subpostmasters represent the true agreement between the parties, as to
termination (in this regard, the Claimants rely on Autoclenz v Belcher [2011]
UKSC 41)?
[GPOC, paras 50, 69-71; Defence, paras 86, 110-112]
(18) If not, was the “true agreement” between the parties as alleged at GPOC,
para. 71?
[GPOC, para. 71; Defence, para. 112]
Compensation for Loss of Office
(19) On a proper construction of the SPMC and NTC, where«Post Office lawfully
and validly terminated a Subpostmaster’s engagement, on notice or without
notice for cause, was the Subpostmaster entitled.to any compensation for
loss of office or wrongful termination?
[See GPOC, para. 62; Defence, para. 101]
(20) On a proper construction of the SPMC and NTC, in what, if any,
circumstances are Subpostmaster’s, breach of contract claims for loss of
business, loss of profit and consequential losses (including reduced profit
from linked retail premises) limited to such losses as would not have been
suffered if Post Office had.given the notice of termination provided for in
those contracts?
[GPOC, para. 131; Defence, para. 171; Reply, paras 81-82]
Subsequent appointments
(21) Ona proper construction of the SPMC and NTC, what if any restrictions were
there on Post Office’s discretion as to whether or not to appoint as a
Subpostmaster the prospective purchaser of a Subpostmasters’ business?
[GPOC, para. 62; Defence, para 102]
Assistants
(22) Did SPMC section 15, clause 7.1; NTC, Part 2, clauses 2.3 and 2.5 and/or
any of the implied terms contended for by the parties and found by the Court
purport to confer a benefit on Assistants for the purposes of section 1 of the
Contracts (Rights of Third Parties) Act, and if so which of these terms did so?
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[See GPOC, para. 74; Defence, para. 116; Reply, para. 92]
(23) What was the responsibility of Subpostmasters under the SPMC and the NTC
for the training of their Assistants?
[See GPOC, para. 56; Defence, para. 95(4); Reply, para. 92]
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Appendix B: Background to the 6 lead claimants
Alan Bates
Branch: Craig-y-don Post Office® Branch, 21 Queens Road, Craig-y- don, Llandudno,
LL30 1AZ
Dates of service: 7 May 1998 to 5 November 2003
Loss claimed: At least £1,140,000 for loss of investment and earnings until
retirement
Contract model: Standard Subpostmasters Contract 1994
Background:
Alan Bates took over the Craig-y-don branch on 7 May 1998. The Horizon system was
introduced to the branch in October 2000 as part of its roll out across the Post Office
network. Mr Bates claims that he experienced discrepancies fairly regularly following
the introduction of Horizon, and that he was unable to find the cause. Some small
amounts were written off by Post Office. Mr Bates did not make good any shortfalls.
He began rolling over discrepancies at the end of each week instead of making good
the shortfalls and resetting the branch to zero as instructed. In April 2003 a Post
Office network manager became aware of this. He told Mr Bates to cease this
practice and to make good the outstanding loss but Mr Bates did not do so. Post
Office warned Mr Bates that failure to keep the accounts as required and not making
good losses put his contract at‘risk. By August 2003 the position had not changed. On
5 August 2003 Post Officeterminated Mr Bates' contract by giving him 3 months'
notice in accordance withyits terms. Mr Bates' final day of service was 5 November
2003. Mr Bates never:repaid the loss (£1,000).
Key allegations made:
Mr Bates claims, in addition to the generic complaints made by all Claimants, that:
e When Horizon was introduced it limited his ability to investigate and remedy
shortfalls. He claims transaction corrections directly affected his branch
accounts.
« He alleges that Post Office knew Horizon was causing errors not just in his
branch but elsewhere across the network.
« Post Office refused his requests to provide additional Post Office and non-Post
Office services in his branch.
Reason for termination:
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e Mr Bates was liable for the discrepancies in his accounts and instead of settling
his liabilities and resetting the balance in his branch to zero every week he
rolled the discrepancies into the following week's accounts in breach of
operating procedures. He also failed to make good any losses.
« Post Office became aware of this around April 2003 and instructed the Claimant
to desist but he refused to do so. Post Office warned Mr Bates that his practice
put his contract at risk.
Naushad Abdulla
Branch: Charlton Post Office Branch®, 10-12 Charlton Church Lane, SE7 7AF
Dates of service: 24 January 2007 to 8 May 2009
Loss claimed: At least £285,000 for (wrongly) repaid shortfalls, loss of investment
and earnings during suspension and post termination and.consequential losses (such
as sale of his house due to unemployment)
Contract model: Modified Subpostmasters' Contract
Background:
Mr Abdulla's parents ran a Post Officebranch during the early to mid-1990s. The
Branch opened on 25 January 2007.~ On 6 April 2009 an audit, conducted in Mr
Abdulla's absence on holiday, identified a shortfall of £4,905.19. The audit revealed
that he had an undated personal cheque for £2,500 and mutilated notes which were
overstated by the same amount. Mr Abdulla was immediately suspended as the
auditors suspected false accounting.
Mr Abdulla has admitted in his claim that he adopted a practice of keeping an undated
cheque in the till to’cover any shortfalls. However, he had indicated in his accounts
that the relevant amount was held within the branch in the form of cash. This meant
that until the false accounting was discovered, Mr Abdulla had free use of this money
that ought to have been paid to Post Office.
Key allegations made:
Mr Abdulla claims, in addition to the generic complaints made by all Claimants, that:
« Due to shortfalls occurring regularly, he adopted a practice of keeping an
undated cheque in the till to cover the amount of shortfalls. He claims that this
was a common practice adopted by the previous Branch postmaster and staff.
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e In his post suspension interview, he was told that if he made good the shortfall,
which had reduced to £3,926.31, then he would be reinstated as postmaster.
This did not happen.
Reason for termination:
« Post Office wrote to Mr Abdulla on 14 April 2009 identifying the breaches of his
contract and stating that he had misused funds and falsely accounted.
« A post suspension meeting was held on 30 April 2009. Mr Abdulla admitted to
falsifying accounts and failing to make good shortfalls that had occurred
previously.
e On 8 May 2009 Mr Abdulla was summarily terminated due to misuse of funds
and false accounting.
Mr Abdulla appealed the decision at a hearing on 23 June 2009 but:the decision was
upheld.
Louise Dar
Branch: Lenzie Post Office Branch®, 118 Kirklintilloch Road, Lenzie, Glasgow
Dates of service: 19 November 2014 to 27.March 2017
Loss claimed: Roughly £3,709,000 for;repayment of shortfalls, loss of investment,
loss of earnings during suspension and post termination impact on business revenue
Contract model: Network Transformation Contract
Background:
Ms Dar opened the Branch in her existing business premises on 19 November 2014.
On 15 July 2015 an audit was conducted and found shortfalls of £10,423.96 relating
to amounts of cash, cheques and foreign currency. Ms Dar was suspended. Post
Office informed Ms Dar that during investigation they had found deliberate falsification
of the accounts by the user of the Horizon ID of Ms Sohi. Ms Dar dismissed Ms Sohi,
her assistant. She later confirmed that the discrepancy with the foreign currency was
unexplained and she was responsible for it. She alleged that she must have
misplaced the money. Post Office reinstated Ms Dar and the branch reopened on 28
August 2015, on the basis that Ms Dar repaid the shortfalls and adhered to some
specified Post Office procedures. Monthly deductions were taken from Ms Dar's
remuneration for the shortfall sum of £7,302.52.
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On 17 May 2016 another shortfall of £2,252.84 was identified. Post Office's auditor
thought the cause was irregular accounting procedures. Ms Dar repaid the shortfall.
On 3 February 2017 a shortfall of £6,870.85 was identified at audit. Ms Dar had not
carried out a cash and stock check for around 2 weeks, and was suspended with
immediate effect.
Key allegations made:
Ms Dar claims, in addition to the generic complaints made by all Claimants, that:
e She relied on Post Office's investigation which suggested the discrepancies
found in July 2015 were due to deliberate falsification and inflation of accounts
by her assistant, Ms Sohi, for which she was held responsible for.
e She had no access to Horizon during her periods of suspension in July 2015 and
May 2016 so could not look into what happened and why‘there was a shortfall.
e« From her experience with systems similar to Horizon, the programme was basic
and based on older technology than she expected.
Reason for termination:
« A meeting with Ms Dar took place on 3: March 2017 in which she could not
explain (or pay for) the shortfall of £6,870.85. This fact, combined with the fact
that there had been two other substantial shortfalls within 18 months, led Post
Office to believe that Ms Dar was-not operating her branch properly.
« Post Office terminated her appointment on 27 March 2017 in view of her
repeated failures to properly account for Post Office cash and stock, and her
failure to be able to explain or make good the last shortfall.
Elizabeth Stockdale
Branch: Sandsacre Post Office® Branch, Wheatley Drive, Bridlington, East
Yorkshire, YO16 6TN
Dates of service: 8 May 2014 to 16 September 2016
Loss claimed: At least £65,000 for (wrongly) repaid shortfalls and loss of investment
/ earnings
Contract model: Network Transformation Contract (Local Post Office@® Branch, On
Site Variant, Post Office Limited Cash)
Background:
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Ms Stockdale operated the Sandsacre Post Office Branch from 8 May 2014. She
alleges that the first shortfall she suffered took place shortly after opening while a
Post Office trainer was providing support in branch. Post Office's position is that this is
incorrect. Mrs Stockdale subsequently declared (and partly repaid) further shortfalls
during the period October 2014 to August 2015. She then continued to experience
shortfalls after this date but did not declare them to Post Office.
Eight months later, on 27 April 2016, Ms Stockdale declared the further shortfalls,
totalling at that point £18,891.47. The growing shortfalls in the Branch prompted
Post Office to audit the Branch. An audit was carried out on 13 May 2016 and
identified an undeclared shortfall of cash and stock in the sum of £7,917.09, in
addition to the sums that were already outstanding before the audit. In total,
including sums declared on 27 April 2016, the further shortfall found at audit, and
sums outstanding before these events, there was a total shortfall of £28,693.84.
Ms Stockdale was suspended by Post Office on the day of the audit. After an
investigation, her contract was terminated by Post Office for\breach of contract on 16
September 2016.
Key allegations made:
Ms Stockdale claims, in addition to the generic complaints made by all Claimants,
that:
« She had no confidence that Post.Office would assist her to discover the reason
for apparent shortfalls so she.stopped declaring them and kept paper records
instead.
« She was never able tovidentify the cause of the shortfalls. Although she
requested help from Post Office numerous times, this was never forthcoming.
« Post Office staff Cvisited her branch numerous times following shortfall
declarations however they could never identify the cause of the shortfall.
Reason for termination:
« The undeclared loss found at the audit indicated that Ms Stockdale had been
falsifying her accounts to conceal the loss. Ms Stockdale admitted false
accounting in meetings and calls with Post Office, and at a formal interview on
19 August 2016.
« Ms Stockdale's contract was terminated on 16 September 2016 due to
falsification of her accounts, failing to act honestly, and failing to pay sums due
to Post Office by the due date, in breach of her contract.
Pamela Stubbs
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Branch: Barkham Post Office Branch®, 50 Bearwood Road, Wokingham, RG41 4SY
Dates of service: 23 September 1999 to 12 August 2010
Loss claimed: Roughly £67,000 for payments of shortfalls, loss of earnings post
termination, and loss of investment
Contract model: Standard Subpostmasters Contract 1994
Background:
Mrs Stubbs took over as postmaster in September 1999 when her husband, the
previous postmaster, passed away. Mrs Stubbs has been an assistant at the Branch
since 1987.
In 2000 to 2001, Mrs Stubbs had problems with power outages at the Branch which
caused the Horizon system to crash and reboot. There were discrepancies in the
Branch accounts which Mrs Stubbs believed were due.to the power outages over this
period of time equating to around £1,000. These shortfalls were made good by her.
Following the power supply issue there were no.major issues with shortfalls until late
2009 when the Horizon equipment was, relocated to a portacabin due to
redevelopment works at the branch premises. A significant number of shortfalls
occurred and payment of these was «requested. In the spring of 2010, Mrs Stubbs
wanted to advertise the Branch forsale and had a prospective purchaser. On 12 May
2010 Mrs Stubbs sent in her letter’of resignation. One final audit was conducted on 8
June 2010 following Mrs Stubbs’resignation which found a shortfall of £4,837.87. Mrs
Stubbs was suspended the-same day and remained suspended until her resignation
took effect.
Key allegations made:
Mrs Stubbs claims, in addition to the generic complaints made by all Claimants, that:
e There was no appointment process and that she never received a copy of the
Standard Subpostmasters Contract.
e She was unable to identify the cause of apparent shortfalls from the information
she had access to using Horizon.
e The discrepancies in the branch accounts in 2000/2001 were due to power
outages which caused the Horizon terminal to crash and reboot.
e The Horizon terminal was relocated to a porta cabin during Branch
refurbishment in 2009. Following this move she experienced shortfalls in her
Branch accounts so there must be some correlation between the two.
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Reason for resignation:
e On 12 May 2010 Mrs Stubbs sent a letter of resignation to Post Office noting
she had two individuals whom were interested in purchasing the Branch.
* Post Office believed that Mrs Stubbs or her assistants were the cause of the
losses in her branch; those losses being exacerbated by the move to the porta
cabin whose unfamiliar surroundings created an increased risk of manual error
when conducting transactions.
Mohammad Sabir
Branches: Cottingley Post Office® Branch, 4 The Parade, Cottingley, BD16 1RP;
Crossflatts Post Office® Branch, 33A Keighley Road, Bingley
Dates of service: 9 September 2006 to 2 October 2009 (Cottingley)
11 October 2006 to 2 October 2009 (Crossflatts)
Loss claimed: At least £95,000 for (wrongly). repaid shortfalls and loss of
investment/ earnings
Contract model: Standard Subpostmasters Contract 1994
Background:
Mr Sabir became postmaster of Cottingley on 9 September 2006 and Crossflatts on 11
October 2006. Mr Sabir claims that from 2008 he experienced discrepancies in the
accounts for Cottingley which created an apparent surplus when a Lottery scratchcard
was sold. An audit of Cottingley conducted by Post Office branch on 10 August 2009
revealed a shortfall of £4,878.36 which primarily related to scratchcards. The number
of lottery scratch cards recorded as being in stock was greater than the number of
actual stock. Due to the shortfall at Cottingley, an audit of Crossflatts was carried out
the following day, revealing a small (immaterial) surplus. Mr Sabir was suspended
from both branches and, after an investigation, both his contracts were terminated.
Key allegations made:
Mr Sabir claims, in addition to the generic complaints made by all Claimants, that:
e He requested further training on the Horizon system but Post Office told him
they could not spare the resources. He alleges that the training he was
provided with was inadequate.
« From 2008 he claims that a surplus of cash was created when scratch cards
were sold and that he removed this surplus and placed it in the branch safe.
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When the audit uncovered a shortfall he presented the cash immediately and
wrote a cheque for the remaining outstanding amount. He therefore tries to
claim that there was no real shortfall.
Reason for termination:
e« The shortfall of £4,878.36 discovered at audit on 10 August 2009 had been
disguised by inflating the figure for declared Lottery scratchcards in the branch
accounts.
e At interview on 1 October 2009, Mr Sabir admitted that he had knowingly been
overstating figures in his accounts to conceal losses.
« Post Office summarily terminated Mr Sabir's contracts of both branches on 2
October 2009 due to ‘falsification of the branch trading account by inflating the
declared lottery scratch cards on hand figure and failure to make good of losses
without delay
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