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Confidential and legally privileged advice
Do not disclose, forward, scan or copy WOMB LE
BOND
DICKINSON
Bates & others v Post Office Limited
Recusal Note
Introduction
Post Office is actively investigating its legal options for responding to the Common Issues trial judgment
(CIT Judgment). The orthodox response to an adverse judgment is an appeal on legal and / or
procedural grounds. It is recommend that Post Office pursues both these appeal routes.
A more immediate and potent option is to consider whether Mr Justice Fraser's findings are so unfair as
to warrant recusing him on grounds of bias. We set out below the grounds for, and effect of, a recusal.
Advice has also been sought from the Rt Hon Lord Neuberger, who was until 2017 the President of the
Supreme Court, being the most senior Judge in the UK. His advice is summarised below. We have
also instructed Lord Grabiner QC who would appear in any application for recusal, and he has reviewed
this paper [to be done & confirmed] and will be available to discuss the proposed recusal application with
the Board on the call at 5.15 pm onIMonday 18" Maren!
Why would Post Office seek a recusal?
The Post Office legal team (including Counsel) are concerned that Mr Justice Fraser’s judgement
demonstrates bias against both Post Office and its witnesses such that there is a real risk that Post
Office will not receive a fair trial — particularly in the current Horizon trial, and possibly in the subsequent
3 and 4" trials to be held later this year and in early 2020.
Most critically, if the Judge is prejudiced against Post Office and remains the Judge presiding over the
proceedings then there is a real risk that Post Office will not get a fair hearing on the issues arising in
the trial process from now on.
The Judge has heavily criticised several of Post Office's witnesses in the CIT as being unreliable. He
has developed a theory that Post Office is secretive and only interested in self-preservation, which then
drives the way its witnesses give evidence. It is a major concern that the Judge will carry across this
thinking into subsequent trials and no matter who gives evidence for Post Office they will not get a fair
chance. Of particular concern is that Angela Van Den Bogerd is a key witness for Post Office. She was
heavily (and in our view, unfairly) criticised in the CIT and is giving evidence again in the Horizon Issues
trial on Monday, 18 March 2019 — which puts the presentation of the case on Horizon immediately on
the back-foot.
There must be a real risk that unless the opportunity is taken to remove the Judge, he will continue, and
Post Office will be stuck in an unfair trial process. It can then expect adverse findings on key issues
going forward in future trials including the ongoing trial about Horizon and the third and fourth trials
scheduled for Autumn 2019 and March 2020. Moreover, future trials will be focused on factual findings
rather than legal findings. Pure factual findings are much more difficult to appeal, even if unfair and
plainly wrong, and rarely overturned by the Court of Appeal. If Post Office does not seek to recuse the
Judge now, it is very unlikely to have the opportunity again and may not even be able to appeal later
adverse factual findings on orthodox appeal grounds.
As we have already seen with the CIT Judgment, adverse findings are likely to have a profound, impact
on Post Office.
* There may be findings that would (unnecessarily) severely constrain Post Office's ability to
operate and develop its business and / or cause Post Office to incur significant costs of
operational change. For example, an adverse finding in relation to Horizon could make
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recovering losses in branches very difficult and force Post Office into spending significant sums
re-designing the system.
« Post Office could be exposed to significant compensation claims dating back 20 years which will
clearly be material. Before the CIT Judgment radically altered the landscape, Post Office was
content that there were well-established legal principles that would have substantially limited
compensation claims to a lower level.
e The brand damage for Post Office could be severe and irreparable.
In the words of Lord Neuberger, Post Office's concern is that "the Judge made findings of fact [...] in
such a way as to betray a prejudice against the PO which justify the PO objecting to his continuing to
hear these proceedings". Set out in Appendix "A", are some examples of the statements and language
which give rise to these concerns.
A recusal application is also consistent with, and lends support to, any wider appeal that Post Office may
wish to make. In considering whether to appeal the judgement (which will be the subject of the a
separate Board discussion at the scheduled Board meeting on Monday 25 March 2019), Post Office will
need to consider:
« Whether the Judge has correctly applied the law in relation to contractual interpretation when
considering the meaning of the Postmaster contracts; and
e Whether in his conduct of the trial there has been an "procedural unfairness". The CIT
Judgment was meant to be about contractual interpretation. In law, what occurs after a contract
is formed cannot be relevant to an enquiry as to what the contract means. Yet Mr Justice
Fraser makes wide findings of fact on post-contractual matters which then influence his findings
as to the meaning and effect of the contract.
If Post Office is to forcefully assert procedural unfairness, it would be inconsistent to not apply for
recusal too as the prejudicial findings of fact and adverse comments of the Judge are evidence (Post
Office says) of both bias and procedural unfairness. To make one application without the other would be
inconsistent and weakens each position.
What is the test for recusal?
The test for recusal is ‘whether the fair-minded and informed observer, having considered the facts,
would conclude there is a real possibility that the [Judge] was biased’.
Applications for recusal are not frequent. They usually turn on conflicts of interest such as a judi
member of his family have a financial interest (such as shares) in one of the parties. There
ication being hung I comment, I
exampl uusal appli judi In 2015 ter Smith was.
Effect of recusal
If successful, and depending on timing, the application for recusal would remove Mr Justice Fraser from
hearing the remainder of Horizon trial, as Managing Judge in charge of the GLO proceedings, and from
hearing the third and fourth trials. He would be replaced with a new Judge who had overall conduct of
the Post Office Group Litigation.
We anticipate that the CIT Judgment would remain binding until considered by the Court of Appeal, who.
should be able to make their own determination on the issues. A full re-trial of the CIT is unlikely. What
the Court should have done at the CIT is to determine issues of law (i.e. interpretation of the contracts
and determining any terms to be implied) and the Court of Appeal is in as good a position as the trial
Judge to do this.
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Depending on when the recusal application is heard, it may also cause the ongoing Horizon Issues trial
to be suspended and / or re-tried by a new Judge.
Prospects of success
Post Office was represented at the CIT by David Cavender QC who has been engaged for over a year.
Mr Cavender's view is that it is difficult to see how the litigation can be proceeded to a sensible (and fair)
conclusion before this Judge. He has behaved in a manner which can only fairly be described as biased
against Post Office. See example comments made by the Judge in Appendix "A". A Judge's role is to
oversee an adversarial process where each party is required to (a) make their own case, and (b)
challenge the case of the other party, against a framework of agreed facts and issues. The Judge has
adopted a much more inquisitorial style and is allowing and, in some cases, directing evidence on
matters outside this agreed scope, and is then making findings of fact and drawing conclusions without
having allowed Post Office to put its case on these issues.
Given the seriousness of a recusal application, Post Office has sought a further opinion from an
independent lawyer, Lord Neuberger. His Lordship is well placed to advise on these matters having
been President of the Supreme Court Judge. Having been briefed by Mr Cavender and read the CIT
Judgment, Lord Neuberger's view is that:
"I consider that there are reasonable grounds for PO to bring an application to recuse the Judge
in these proceedings."
In his advice, he also offered a cursory and impressionistic view of the wider matters that could be
appealed and commented that:
“...at least some of them raise quite significant points on which the PO has a reasonable case,
and at least on the face of it, some points on which the PO has a pretty strong case.”
Post Office has also briefed a further senior silk, Lord Grabiner QC. Post Office has taken such a step
as Lord Grabiner can appear as an advocate for Post Office at any appeal / recusal application whereas
Lord Neuberger, being an ex-Judge, cannot. Lord'Grabiner has reviewed the releVvant/papers and Will
be able to discuss the proposal and his view of it at the Board.
Impact on appeal strategy
Importantly, part of any appeal of the CIT Judgment would be for "procedural unfairness". The CIT
Judgment was meant to be about contractual interpretation. In law, what occurs after a contract is
formed cannot be relevant to an enquiry as to what the contract means. Yet Mr Justice Fraser makes
wide findings of fact on post-contractual matters and this seems a fundamental flaw in his judgment. If
Post Office is to forcefully assert procedural unfairness, it would be inconsistent to not apply for recusal
too as the prejudicial findings of fact and adverse comments of the Judge are evidence (Post Office
says) of both bias and procedural unfairness. To make one application without the other being made is
inconsistent and weakens each position.
Lord Neuberger also notes in his advice that if Post Office wishes to rely on the ground of procedural
unfairness at an appeal with the hope that the Court of Appeal might direct a different Judge to conduct
future trials, then "PO has little option but to seek to get the Judge to recuse himself at this stage”.
Aside from the above legal points, we would also note that several of Post Office's witnesses, many of
whom are long serving employees, were good enough to give evidence in Court for Post Office and
have now had their reputations tarnished.
Risks of a recusal application
There are legal and reputational risks with making a recusal application.
The principal legal risk is that the recusal application is unsuccessful (at first request and in the Court of
Appeal) and then Mr Justice Fraser becomes emboldened and openly hostile to Post Office. This
increases the risk of further adverse findings.
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It should however be noted that even making the recusal application may have the opposite effect — it
may make the Judge more cautious and receptive to Post Office's arguments, because he will be under
greater scrutiny and this is likely to be the case whatever the outcome of that application.
If the recusal application is unsuccessful, any consequential costs incurred by the Claimants would need
to be paid by Post Office. These could be significant if the Horizon Issues trial is delayed (we estimate
up to £2m). However, the more likely scenario is that the Horizon Issues trial is not delayed and the
Judge presses on regardless despite the recusal application being made to the Court of Appeal. That
would leave there being an urgent application to the Court of Appeal to either recuse him or confirm him
in place. Also, any re-trial ordered (an unlikely outcome) will inevitably cause double trial costs to be
incurred and if Post Office were to lose the re-tried matters, then the adverse costs against Post Office
could be sizeable. As we note above, a re-trial of the CIT is an unlikely outcome and not one that is
necessary. In the event that the Judge is recused a re-trial of such parts of the Horizon Issues trial that
have taken place is likely, but the wasted costs will likely be costs in the action generally.
Outside of Court, making a recusal application is likely to attract significant media attention and is likely
to be portrayed as reinforcing the Judge's comments that Post Office is "arrogant". We would note
however that there is no guarantee that staying quiet now will protect Post Office's brand from repeat
attacks in later judgments.
Process & timing
An application for recusal needs to be made to Mr Justice Fraser himself. He may hear the application
or ask another Judge to hear it — the latter is unlikely. It is highly unlikely the Judge will recuse himself
on the first application, so Post Office should not proceed with this course of action unless it is prepared
to appeal the refusal to the Court of Appeal immediately.
Post Office should make the decision on recusal urgently - preferably not later than Monday with a view
to setting the wheels in motion with both the Court and the Claimants’ solicitors early in the week. The
urgency is driven by the unfortunate trial sequencing ordered by the Judge and the fact he handed down
the draft CIT Judgment on the Friday before the Horizon Issues trial commenced on the Monday. A
delay in making the application could undermine its prospects of success, because it would be
inconsistent to continue with the Horizon Issues trial if Post Office believes the Judge to be acting
unfairly.
Once the application is made, the actual steps in any recusal process are harder to predict as it depends
how the Judge decides to deal with the matter and, indeed, how the Court of Appeal decides to
approach the issue too.
A recusal application might however encourage the Court of Appeal to move quicker on the main
appeal. These issues are all interconnected and the Court of Appeal is unlikely to want to leave a
recusal application hanging over the litigation for an extended period. This is not certain, as the Court of
Appeal may choose to run the recusal and orthodox appeal separately. An expedited appeal would
have many advantages, including that it would help limit the amount of operational change Post Office
needs to implement in the short term to comply with the CIT Judgement, which may be wasted cost if
the judgment is overturned on appeal.
Recommendation
Although a recusal application is difficult and comes with substantial risks, for the reasons stated above,
both Mr Cavender and Womble Bond Dickinson recommend that the application is made as soon as
possible.
WOMBLE BOND DICKINSON
[16 March 2019]
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Appendix A
Suggestions that Post Office has treated SPMs badly
There seems to be a culture of secrecy and excessive confidentiality generally within the
Post Office, but particularly focused on Horizon.
The Post Office appears, at least at times, to conduct itself as though it is answerable
only to itself.
These are examples, in my judgment, of a culture of excessive secrecy at the Post
Office about the whole subject matter of this litigation. They are directly contrary to how
the Post Office should be conducting itself. I do not consider that they can be a sensible
or rational explanation for any of them.
There is no doubt that the Post Office is in an extraordinarily powerful position compared
to each and every one of its SPMs. It appears to wield that power with a degree of
impunity.
The Post Office describes itself on its own website as “the nation’s most trusted brand”
(at http://corporate.postoffice.co.uk/our-heritage). So far as these claimants, and the
subject matter of this Group Litigation, are concerned, this might be thought to be wholly
wishful thinking. Trust is an element of an obligation of good faith, a concept which I find
is to be implied into the contracts between the Post Office and the SPMs because they
are relational contracts. The Post Office asserts that its brand is trusted by the nation,
but the SPMs who are claimants do not trust it very far, based on their individual and
collective experience of Horizon.
Post Office knowledge of problems
What Post Office knew about any problems in Horizon will be important at future breach trials (including,
in particular the trial focused on limitation and associated issues of breach which is currently scheduled
for November 2019).
a number of contemporaneous documents internal to the Post Office show that there
was, at least to some degree, an awareness of Horizon problems within the Post Office
itself over a number of years
These internal Post Office entries make it clear that, notwithstanding the tenor of the
Post Office evidence before me, behind the scenes there were at least a number of
people within the Post Office who realised that there were difficulties with the Horizon
system.
I find that in some instances, there was discussion internally at the Post Office about the
altering of branch transaction data directly, and also of the Post Office and/or Fujitsu
carrying out changes to Horizon and/or transaction data which could affect branch
accounts.
Harassment/ malicious prosecution
The Claimants claim that Post Office breached its obligations by improperly sending them letters
demanding payment, and by threatening and maliciously bringing proceedings (civil as well as criminal)
against them.
There can be no excuse, in my judgment, for an entity such as the Post Office, to mis-
State, in such clearly wrong terms, in letters that threaten legal action, the extent of the
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contractual obligation upon a SPMC for losses. The only reason for doing so, in my
judgment, must have been to lead the recipients to believe that they had absolutely no
option but to pay the sums demanded. It is oppressive behaviour.
Yet during this period the Post Office was, acting as it did with Mrs Stockdale, shutting
her branch and stating she was considered to have committed a criminal offence. It also
expressly stated to her that it was taking into account that she had not contacted the
NSBC or asked the Post Office for assistance. The documents available in this litigation
show that this was simply not true, and she had expressly done both of these things.
Post Office’s default position regarding their SPMs. This is that shortfalls and
discrepancies are not caused by the Horizon system, therefore those that do occur can
only be the responsibility of SPMs. This conclusion means that the Post Office fraud
prevention and debt recovery procedures will be used against SPMs in this position,
unless an SPM can show that the shortfall or discrepancy was not their fault.
even putting it at its best for the Post Office, such conduct towards Mrs Stockdale during
this early stage of the litigation could potentially be construed as threatening, oppressive,
and potentially discouraging to other potential claimants to become involved in the
litigation, whether by accident or design. I can think of no reason why such an approach
was taken unilaterally by the Post Office in such a way, without the Post Office's
solicitors giving advance notice to her solicitors, so that a less confrontational and
aggressive path was adopted, given her role as a claimant in the litigation. However,
even once it was done and she was suspended, the Post Office continued to act in a
highly regrettable fashion.
For the reasons I have expressed above, I have considerable misgivings about the Post
Office's motivation for the treatment of Mrs Stockdale during this litigation, and for the
treatment itself in terms of refusal to provide obviously relevant documents.
Horizon Issues
The Judge also made the following findings relevant to the ongoing Horizon Issues trial:
Claimants were themselves unable to carry out effective investigations into disputed
amounts because of the limitations on their inability to obtain the necessary information
from Horizon.
it is clear that Fujitsu were able to obtain greater information about a particular branch's
transactions than either the Post Office or the SPM.
Training
The adequacy of training will be an issue at future breach trials.
nowhere in the training (or the interview, or anywhere else) is there any recognition of
how to deal with a shortage, discrepancy or disputed TC of the order of magnitude of
these six Lead Claimants, and if the steps instructed on these laminated instructions
were followed, there would be shortages in the cash accounts of branches where these
occurred.
One feature which seemed to me to be wholly absent from the training courses run by
the Post Office for the Lead Claimants was any sort of assessment or test of
competence at the end of the training. Every case will of course be wholly different, but
whereas one individual might, after four days, be wholly competent to use the Horizon
system unsupervised, another might need longer than that. If they are all given four days
of training regardless, and there is no assessment at the end of that four days, then
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some incoming SPMs might not be conversant with all the features of the system. This
situation is in no-one’s interests, and in my judgment I would go further and say it is
contrary to business logic.
Shortfalls
At the breach trials there will be important issues as to the cause of shortfalls, and how SPMs dealt with
them.
Her experience was not a happy one. Unexplained shortfalls would appear on Horizon
when she was completing a weekly balance or submitting a trading statement. There
were no explanations for these, and there was no way available for her to get to the
bottom of them either. She found it very difficult to obtain any details from the Post
Office, and did everything she could think of to keep the most detailed records within the
branch itself.
All Mrs Van Den Bogerd was prepared to accept about this complaint by Mrs Stockdale
was that there was “some truth” in it, but it was “not entirely true” because the
information was there, but sometimes took too long to find. This answer is inconsistent
with the documents she had drafted internally.
Investigations
There will be issues in future breach trials as to the quality of the investigations which Post Office
conducted into shortfalls.
“It might be thought that if there were any proper investigation which actually reported on
this, it could and should have been put to Mrs Stubbs, but if what was put to Mrs Stubbs
in this trial is said by the Post Office to amount to such an investigation, then it is telling.
The “investigation” appears, on the material deployed in this Common Issues trial, to
have consisted of no more than Fujitsu asserting that there was “nothing wrong with the
kit’. That is not, in my judgment, an investigation under any normal understanding or
meaning of that word in society generally. The Post Office’s way of dealing with this
wholly ignores the provision in the SPMC and a SPM's liability for losses in that
document (which on the Post Office’s case is what applied). There was simply a blanket
assertion by the Post Office that she had to pay these sums.”
Helpline
The Claimants will say, at breach trials, that operators of the Helpline (a) provided an inadequate
service, and (b) made misrepresentations to them.
The Lead Claimants’ evidence made it clear that just getting through to the Helpline was
an achievement in itself, and when this was finally accomplished, the experience would
be variable at best, and does not seem to have come close to resolving any of the
disputes. Some operators would assist with getting Horizon to permit rollover into the
next trading period by suggesting “work arounds”. These “work arounds” did not resolve
disputed items. No particular investigation appears, in the case of any of the six Lead
Claimants, to have been initiated by reporting a dispute to the Helpline. An item “settled
centrally” would be subject to debt recovery processes by the Post Office regardless of
what the particular Lead Claimant did regarding the Helpline.
It is therefore the case that, on the evidence before me, the Helpline did not operate for
the Lead Claimants in the manner that the Post Office contended for. What was
presented to the court by the Post Office in respect of disputes notified to the Helpline
show that, for the most part, initially the SPM was told they would have to pay the
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shortfall. Even when persistent, all that would happen is the sum would be “settled
centrally” and after a period of a few weeks the SPM would be chased for the Post
Office for that sum as though it were a debt. Detailed findings of fact as to this must
however wait for a later trial.
Reasonableness of suspensions/ terminations
A large part of the Claimants’ case at the breach trials will be that the process by which they were
suspended/ terminated involved breaches of duty by Post Office.
Some sub-postmasters had their contracts with the defendant terminated, sometimes
very abruptly. In Mr Bates’ case, this was done whilst he was expressly challenging the
accuracy of Horizon and he believes this was expressly done because he was so
challenging this. In Mrs Stubbs’ case, notwithstanding her 27 years’ experience, service
and prior record (both as assistant to her husband, who was originally the sub-
postmaster, and as sub-postmistress herself after he died), she found herself suspended
and locked out of her Post Office.
! do not know why risks to the Post Office’s reputation should be a relevant factor in
such an appeal, or why a SPM’s entitlement to be heard on appeal would differ from
case to case. Also, the Post Office’s reputation might be significantly affected if it were
found to have suspended a SPM on grounds that were wholly unjustified. Unjustified
suspension ought to be a factor in favour of an appeal succeeding, on any sensible
view. The Appeal Managers are senior Post Office managers who are said to have had
training to hear appeals. The reputation of the Post Office would best be served by
appeals that were justified succeeding, and those that were not failing. It should not
have formed any part of the criteria.
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