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RE: THE POST OFFICE GROUP LITIGATION
ADVICE ON THE COMMON ISSUES TRIAL JUDGMENT
Introduction
1am instructed by the Post Office Ltd (‘POL’) to review the Common Issues Trial
judgment, including the Appendices, handed down by Mr Justice Fraser on 15 March
2019 in order to advise on to what extent the judgment could undermine the basis of
historic criminal convictions of subpostmasters (‘SPMs’) by POL.
Tam informed that a particular area of interest for POL is that as a result of the judgment
POL is no longer able to rely on disputed Branch Trading Statements as a settled
statement of account. However, POL would welcome wider comments or concerns on
the impact of this judgment on historic convictions.
The second trial — the Horizon Issues Trial — has commenced before the same judge as
part of the group litigation. I have been sent material from Days 7 and 8 of the Horizon
Issues Trial (20 and 21 March 2019) consisting of extracts from the transcripts of the
evidence of Andy Dunks and Torstein Godeseth (both Fujitsu witnesses), as well as Mr
Godeseth’s witness statements dated 27 September 2018 and 16 November 2018, the
witness statement of Gareth Jenkins dated 8 July 2010, the witness statement of
Penelope Thomas dated 4 February 2010 and a PEAK log from August 2011 relating
to a Missing Reversal Indicator in ARQ Returns (PEAK PC021 1833).
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4. An application that was made for Mr Justice Fraser to recuse himself during the Horizon
Issues Trial based on comments he made in the Common Issues Trial judgment was
refused on 9 April 2019. As I understand it, the Horizon Issues Trial is continuing
pending an appeal to the Court of Appeal. A third trial will examine the issues of
limitation and breach of contract but not causation and loss.
5. For the purposes of this Advice, I have reviewed in full all of my past Reviews and
Advices as well as other miscellaneous material in order to refresh my memory.
6. Iam taking the term ‘historic convictions’ simply to mean past convictions. The issue
I believe I am being asked to consider is, in essence, the safety of past convictions in
light of the Common Issues Trial judgment.
7. T have been told that 61 of the claimants to the group action are SPMs who have either
been convicted of, or have pleaded guilty to, offences prosecuted by POL. I have
checked through my past Reviews and Advices to see which of those claimants’ case
files or case reviews I have seen before. In the course of my Review of 15 October
2013,! I was provided the cases files of Khayyam Ishaq and Lynctte Hutchings (albeit
I do not have any detailed note of my review of their cases). Lynette Hutchings is one
of the 61 claimants; Mr Ishaq is not. During that Review, I also read 31 Cartwright
King reviews of other cases (not all past prosecutions), whose names I did not list in
my Review; some of them may be among the 61 claimants. Della Robinson, who is one
of the 61 claimants, was one of the Cartwright King reviews I saw and read in 2013.
8. The names of Stanley Fell and Tracy Felstead are familiar to me. I am familiar also
with the name Grant Allen because, in my Review of 15 October 2013, I referred to
Gareth Jenkins’ witness statement in the case of Grant Allen where Mr Jenkins
conceded there had been an unusual ‘non-polling event’ at Winsford Post Office over
a 12-day period.”
‘ Paras 52, 108, 168-169.
? Para 156.
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10.
12.
3 Para 3.
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1am also familiar with the Timothy Burgess case because I had access to a Second
Sight Case Review report about it, dated 8 February 2015, to which I referred in my
Advice on Theft & False Accounting of 8 March 2015.3
Finally, in this regard, Jonathan Swift QC and Christopher Knight were asked by Tim
Parker (POL Chairman) to conduct a Review to consider whether there was any further
action that might reasonably be taken by POL to address a series of complaints raised
by SPMs about their alleged treatment by POL.
As a result of one part of their written Review of February 2016, in July that same year
I was asked to consider the case files of Alison Hall, Josephine Hamilton, Alison
Henderson, Peter Holmes, Jacqueline McDonald, Seema Misra, Margery Williams and
Julian Wilson, all of whom are among the claimants to the group litigation. I shall
return to them below.
Disputed Branch Trading Statements
The judge's findings
In the course of his Common Issues Trial judgment, Mr Justice Fraser dealt with the
issue of disputed Branch Trading Statements, their content and effect, and how disputes
about Branch Trading Statements were dealt with.
He observed that the parties had been unable to agree how Branch Trading Statements
were produced.‘ The partics had drawn up a list of facts for agreement known as the
Factual Matrix which was subdivided into categories. POL had challenged Category 2
of it ‘Claimants’ facts in issue and/or relevance disputed’), in particular as relevant to
this Advice, Category 2 paragraphs 32 and 36:5
* Para 35.
5 Para 51.
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“32. Claimants seeking to dispute apparent shortfalls did not have an option
within Horizon to do so, and were required to contact the Helpline to seek
assistance.
36. A branch cannot enter (or “roll over” into) a new trading period without
the Subpostmaster declaring to Post Office the completion of the Branch
Trading Statement.”
14. These issues were relevant to Common Issues 12(c) and 13. These were two of a
number of widely drawn contractual issues. Under the heading ‘Subpostmasters as
agents’, they were:®
“12. Was the extent and effect of the agency of Subpostmasters to Post Office
such that:
(c) Where an agent deliberately renders a false account to his or her principal,
in relation to the matters covered by the account the Court should make all
presumptions of fact against that Subpostmaster as are consistent with the other
facts as proven or admitted.
13. Did Subpostmasters bear the burden of proving that any Branch Trading
Statement account they signed and/or returned to the Post Office was incorrect?”
15. In dealing with the evidence of one POL witness, Andrew Carpenter, the judge said
that POL’s approach was to regard a Branch Trading Statement as though it were an
agreed and settled account between agent and principal. But he said it was not an agreed
and settled account because by design the Branch Trading Statement did not identify
within them disputed entries, it overlooked how they were treated by POL as evidencing
undisputed debts and how discrepancies were pursued by POL, and a SPM who
believed there was a shortfall or a discrepancy caused by Horizon could not show the
mistake in the account because they could not identify the mistake.”
® Paras 44 and 51.
7 Para 525.
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16. Later, the judge came to deal with the Helpline. He said that calling the Helpline was
presented by POL in the evidence at the trial as a means by which a dispute could be
registered by a SPM at, before, or no later than the end of the branch trading period. He
referred to a POL document of 14 November 2008 ‘TC/Debt Recovery Review’ which
stated that when a SPM ‘settled centrally’ that signified acceptance of debt liability
(which unlike paying by cash or cheque gave a SPM time to pay). The judge found as
a fact that SPMs were forced ‘to accept debts’ with which they did not agree at the end
of the branch trading period within the Branch Trading Statement for that period.
“Settled centrally’, he said, simply initiated debt recovery procedures.*
17. The judge said that the Helpline was the only route for a SPM to challenge items with
which they did not agree such as shortfalls, discrepancies or transaction corrections in
the figures generated by Horizon. However, on the evidence he had heard, the Helpline
did not operate that way, in that, even if the SPM got through, the dispute would not be
resolved; workarounds might be suggested but no investigation (at least in the case of
the six lead claimants) appeared to have been initiated; the sum would be settled
centrally and after a few weeks chased as a debt.?
18. The dispute around how a Branch Trading Statement worked was in fact resolved at
the end of the trial by the production of Appendix 3 and 4 but the judge found significant
facts about them.
19. The judge found as facts, among others, facts 32 and 36 (which had been disputed by
POL) against POL but with slight tweaks. He held:!°
“32. Claimants seeking to dispute apparent shortfalls, or shortfalls,
discrepancies or TCs with which they did not agree, did not have an option
within Horizon to do so, and were required to contact the Helpline to seek
assistance. Given the reliance placed by the Post Office on the Branch
Trading Statement, this is plainly of the utmost relevance.
§ Paras 438, 550-553.
° Paras 555-558.
1 Para 569.
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36. A branch cannot enter (or "roll over" into) a new trading period without
the Subpostmaster declaring to Post Office the completion of the Branch
Trading Statement. That would include disputed amounts.”
20. Ihave deliberately selected and set out below other factual findings made by the judge
from the Factual Matrix which seem to me to be the most relevant significant findings
he made for the purposes of this Advice (albeit, as revised by him):
“37. The Post Office operated the Helpline which it provided and
recommended to Claimants as a primary source of advice and assistance in
relation to Horizon, transactions, errors and issues relating to their trading
statements and accounts.
38. The Post Office required Claimants to comply with contractual
obligations in relation to the keeping and production of branch accounts.
39. The Defendant had the power to seek recovery from Claimants for losses
relating to branch accounts.
40. The Defendant in fact sought recovery from the Claimants for apparent
shortfalls. I would also add that on the evidence the Post Office did this
regardless of whether disputes had been reported to the Helpline or not. This
was accepted by all the Post Office witnesses, and occurred whether the
SPM in question was appointed under the SPMC or the NTC, even though
the terms of those contracts were different. It was also done regardless of
any analysis of any causative fault on the part of SPMs. It was also done
when the SPM in question had been told that no action would be taken in
respect of a disputed shortfall.
41. It is a matter for the Horizon Issues trial whether it would be right to
infer or presume that a shortfall and loss was caused instead by a bug or
error in Horizon.
42. The Post Office required Claimants to accept changes to records of
branch transactions, (“Transaction Corrections” or “TCs” issued by the Post
Office), unless the Claimant was effectively able to prove that the
Transaction Correction was not correct.
60. There is no evidence available to demonstrate that any SPM has, to date,
ever been able to establish to the Post Office’s satisfaction that an alleged
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shortfall was the result of a Horizon bug or error. There is however evidence
that the Post Office has, on occasion, “written off’? sums which it had
initially claimed were due to it. This happened in Mr Bates’ case. However,
there is no explanation available for why that was done.
61. The Post Office has on occasion detected that Horizon generated errors
caused the appearance of shortfalls and errors which the Claimants
themselves had not been able to identify as the cause of those apparent
shortfalls. Whether the individual Claimants had been forced to make these
good from their own funds, or when recovery was sought from them had
refused to pay, must depend on the resolution of individual cases in later
trials.
70. On the evidence of the six Lead Claimants, even when further training
was specifically requested it was not provided, and in some cases the SPM
was told there was no entitlement to it, even though it was specifically
requested.
75. The Post Office does rely on the accurate and regular reporting by
Subpostmasters of accounts, transactions and the cash and stock held at a
branch. The evidence makes clear that the Branch Trading Statement is not
an accurate report if and in so far as disputes have been reported to the
Helpline. It is only when those disputed items are taken into account,
properly investigated, and resolved that those results, together with the
Branch Trading Statement, would constitute an accurate picture of the cash
and stock held at the branch. This is because the Branch Trading Statement
includes disputed items.
78. The truth (as to the cause of shortfalls arising in a branch) does not lie
peculiarly within the knowledge of Subpostmasters as the persons with
responsibility for branch operations and the conduct of transactions in
branches. Where there is a dispute, “the truth” and whether such a shortfall
“arises in a branch” can only be determined after a proper investigation.
Further findings must await the Horizon Issues trial.
79. Whether losses in branches arise in the ordinary course of things without
fault or error on the part of Subpostmasters or their assistants can only be
determined after the Horizon Issues trial. This is dependent upon the
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22.
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answers to the Horizon Issues, as the Horizon system is used by SPMs in
“the ordinary course of things”.
80. The final “fact” that the Post Office seeks in Category 3 is “If SPMs
submit false accounts to the Post Office, that can lead to concealing losses
from it, sometimes for many months or even years”. There is no doubt that
the submission of false accounts is a serious matter, and the Theft Act 1968
specifically identifies false accounting as a separate criminal offence.
However, this final entry in the Factual Matrix by the Post Office, the
relevance of which to the Common Issues is disputed, is so general that it
serves no purpose. I therefore propose to deal with this point as follows.
False accounting is a criminal offence, and although concealment of losses
is not an element of that offence, in many instances concealment will be
involved. Concealment of losses by someone committing fraud might be
discovered after many months, and on occasion even years, dependent upon
the individual circumstances of a particular fraud or frauds.”
Thus, the judge underlined more than once that the Horizon Issues Trial was when any
findings regarding the cause underlying shortfalls or losses would be made. The
significant findings for my purposes are that there was no evidence to show that any
SPM had to date been able to establish to POL’s satisfaction that any alleged shortfall
was the result of a Horizon defect (which was as much a comment about the burden
placed on SPMs as anything else); that POL had occasionally detected that Horizon-
generated errors caused the appearance of shortfalls and errors which the claimants had
not been able to identify as the cause of those apparent shortfalls; that the Branch
Trading Statement was not an accurate report if and insofar as disputes had been
reported to the Helpline, and it was only when those disputed items were taken into
account, properly investigated and resolved that the results, together with the Branch
Trading Statement, would constitute an accurate picture of the cash and stock held at
the branch.
When dealing with the SPMC and the issue who bore the ‘contractual burden’ of
proving the cause underlying any shortfall or discrepancy, the judge pointed to the fact
that POL is responsible for compiling evidence for prosecutions for offences of false
accounting and theft by SPMs, and, as such, bears the burden of proof of demonstrating
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to the criminal standard that conduct by SPMs is dishonest and so it must have the
ability to show how a loss was caused.'! The point he was making is that POL had the
burden in criminal cases of proving the case against a SPM, including dishonesty and
loss, so it was not onerous for POL to bear the contractual burden of proving the
correctness of the Branch Trading Statement.
23. As to the effect on a Branch Trading Statement of a SPM contacting the Helpline, he
later said:!?
“T consider that if and insofar as, during or at the end of any branch trading
period, any SPM contacted the Helpline in relation to any shortfall, discrepancy
or disputed TC, the Branch Trading Statement for that period cannot be treated
as an account rendered by an agent to the principal which can only be opened
up if the SPM can demonstrate a mistake. I also consider that this conclusion
applies regardless of whether the matter is approached (correctly) through the
contractual obligation upon a SPM in either the SPMC or the NTC, or whether
the Post Office’s approach relying upon common law principles were applied
(although I do not consider this to be the correct approach).”
24. The judge added:!3
1 Para 656.
» Para 820.
“.. I do not consider the Branch Trading Statements for the periods I have
identified — namely those in which, or at the end of which, the SPMs notified
the Helpline of disputed items — have the status of settled accounts. The Post
Office plainly does not treat them as such, given the evidence in the Common
Issues trial of TCs being issued a lengthy period after the end of branch trading
periods to which those TCs relate. This is made clear by fact 42 in [569] above.
Further, I do not consider that it is necessary for the Claimants to rely upon the
principle of re-opening settled accounts in any of these cases in order for the
SPMs in this Group Litigation to be entitled to avoid the consequence sought by
the Post Office, namely to keep the SPMs to the Branch Trading Statements for
3 Paras 841-842, 853.
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the periods in question (which in almost all cases contained disputed items and
unexplained shortfalls and discrepancies). For the avoidance of doubt, I do not
consider that the Post Office can hold the SPMs to their Branch Trading
Statements as though they were settled accounts in the way the Post Office
contends.
Returning therefore to the issue of whether the SPMs bear the burden of proving
that any Branch Trading Statement account they signed and/or returned to the
Post Office was incorrect, if 1 am incorrect in my finding above, and they do
bear such a burden, this can be satisfied as follows. That burden would be
discharged by their showing (either by reference to Helpline call logs, or by the
evidence of individual SPMs, or otherwise) that they contacted the Helpline in
respect of shortfalls, discrepancies and/or TCs, in any particular branch trading
period.”
25. Inhis conclusions and summary, the judge said:'*
“Horizon was introduced in 2000, and from then onwards unexplained
discrepancies and losses began to be reported by SPMs. Internal documents
obtained in this litigation show that some personnel within the Post Office
believed at the time that at least some of these were caused by Horizon. Some
of these are identified at [542] above.'> The first document in that paragraph of
this judgment dates from November 2000. At [41] I deal with part of an internal
Post Office report from as recently as June 2014 — other parts have been redacted
— that make it clear that steps had to be taken within the Post Office to “ensure
consistency of accounts and enable a higher chance of detecting errors in
accounts due to problems with Horizon”. The Post Office’s position in this
litigation remains that Horizon is what is called “robust” and that none of the
Claimants experienced shortfalls or discrepancies in their branch accounts due
to problems caused by Horizon. Further consideration of this will occur in
subsequent judgments and after the Horizon Issues trial.
Paras 1115-1116.
'S This was a reference to internal POL documents the judge had read.
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Under Horizon, the way in which a SPM was required to compile Branch
Trading Statements each trading period (usually every four weeks) meant that
they had no choice but to accept into that statement disputed amounts with
which they expressly disagreed, and Transaction Corrections that they either did
not understand, or disputed. The Post Office treated disputed amounts as debts
which they were entitled to claim under debt recovery procedures from SPMs.
There was no mechanism adopted by the Post Office to resolve such disputes.
The Post Office accepted during the trial that amounts that were “settled
centrally” were treated by it as being legally due and owing to the Post Office,
even if they were disputed by SPMs. I find that the Post Office is not therefore
entitled to rely upon the Branch Trading Statements, for any period in respect
of which a SPM notified a dispute to the Helpline, as a settled account between
agent and principal. Nor do SPMs bear the burden of demonstrating that the
Branch Trading Statement is wrong for such a period.”
26. In his answers to the Common Issues, in particular, 12(c) and 13, he therefore held:'¢
“12. SPMs were under an express contractual duty to account to the Post Office
in the manner required or prescribed by the Post Office. This was by using
the Horizon system. This required a Branch Trading Statement, which is
not subject to the same common law principles that would apply as though
it were an agreed or settled account. The Branch Trading Statement
required a SPM to “accept now” in respect of items that were disputed or
not agreed. The common law principles at Common Issue 12(b) and (c) do
not apply to the Branch Trading Statement.
13. No, SPMs bear no such burden.”
Discussion
27. As the judge said at the beginning of the Common Issues Trial judgment, the contracts
between SPMs and POL were what was relevant to the Common Issues Trial.!7 Thus,
% Para 1122.
7 Para 3.
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the focus of the trial was towards resolving the contractual dispute between the parties,
with six lead claimants chosen by the parties themselves whose experiences covered
different time periods, and the SPMC (and modified SPMC) and NTC contracts. !8
28. The judge acknowledged that for the group litigation to achieve and resolve anything,
it had to resolve issues affecting all the many hundreds of claimants (of which there are
around 550), as well as fully resolving some of the claimants’ individual claims. !°
29. Significantly, by way of introduction, the judge said:?°
18 Para 46.
Para 9.
Para 10.
“T have said in each of my written judgments in this case before, and ina number
of interlocutory hearings as well, that this is bitterly contested litigation. The
parties are poles apart in their approach to the issues, and in their approach to
the litigation generally. When shortfalls occurred, the Post Office demanded
(and I use that word advisedly) that each individual sub-postmaster pay the sums
in question. This stance was consistent with what remains the Post Office’s
general position, which is that if Horizon shows a shortfall of X pounds, that
shortfall of X pounds must have been caused by the sub-postmaster, either
through mistake or dishonesty. Some shortfalls started in the hundreds of
pounds, and moved into the thousands, and then tens of thousands, of pounds
over a few months. Some Claimants paid these amounts to the Post Office out
of their own resources, even though they did not believe or accept that there was
anything deficient in their accounting. Some of the shortfalls were only for
modest sums. Some Claimants were lucky enough to find accounting
irregularities in their favour. Others were convicted in the criminal courts of
false accounting, fraud, theft or other offences, and some were imprisoned. The
Post Office’s position in this litigation is not quite that it is impossible for
Horizon ever to generate any errors, but rather that the system is what is called
“robust” and can be relied upon. Further consideration of that will occur in the
Horizon Issues trial. It should be noted that the Post Office itself is the
prosecuting authority for prosecutions of sub-postmasters. These Claimants
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claim malicious prosecution against the Defendant, and also claim that there
was a “cover up” at the Post Office over the shortcomings in Horizon. Some
Claimants were made bankrupt. There are claims for damages for financial loss,
personal injury, deceit, duress, unconscionable dealing, harassment and unjust
enrichment brought against the Post Office. There is currently a Criminal Cases
Review Commission (“CCRC”) review underway in respect of the convictions
of a significant number of the Claimants. These are being dealt with together by
the CCRC and are, effectively, awaiting the outcome of the technical aspects of
this litigation. This is a High Court civil action and has no jurisdiction or
involvement in such criminal matters.”
30. Thus, significantly, the judge acknowledged that the High Court civil action has no
bearing on the criminal matters being reviewed by the CCRC which is awaiting “the
outcome of the technical aspects of the litigation”. I have taken that to be a reference to
the Horizon Issues Trial. I am told that the claimants (who can only be those claimants
who were prosecuted) are bringing claims for malicious prosecution, but no directions
have yet been set for the hearing of those claims.
31. At the time of my 2013 Review, I was unaware of any appeal proceedings relating to
Horizon,” and I remain unaware of any existing appeals or applications for permission
to appeal against conviction; I assume there has been none.
32. What is the relevant test the Court of Appeal applies? The Court of Appeal will allow
an appeal if they think the conviction is unsafe.?? The circumstances in which the Court
of Appeal will find a conviction unsafe are many and varied. The list is not definitive,
and it is impossible to draw up a list of circumstances in which the Court will find a
conviction unsafe.
33. As I advised in the October 2013 Review,” material non-disclosure can render a
conviction unsafe, and in this regard, the Court of Appeal will ask itself ‘whether there
is a real possibility that the jury would have arrived at a different verdict had the
2! Para 126.
% Section 2(1) of the Criminal Appeal Act 1968.
% Para 154.
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34,
35.
36.
37.
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necessary disclosure been made.’*4 Non-disclosure can lead to the quashing of a
conviction even where there has been a plea of guilty.?>
Any individual appeal would almost certainly have to proceed on the basis of an
application to adduce fresh evidence before the Court of Appeal.¢ In deciding whether
to receive any fresh evidence the Court of Appeal will decide whether the new evidence
is capable of belief, whether it appears that the evidence may afford any ground for
allowing the appeal, whether the evidence would have been admissible in the
proceedings from which the appeal lies on an issue which is the subject of the appeal,
and whether there is a reasonable explanation for the failure to adduce the evidence in
those proceedings.
As for the CCRC, the criteria I mentioned in my October 2013 Review have to be met
before the CCRC can make a reference to the Court of Appeal,’ so the test the CCRC
will apply before considering making a reference is whether they consider that there is
a ‘real possibility’ that the conviction would not be upheld on account of some
argument or evidence not raised in the proceedings which led to it. There must also
have been an appeal, or an application for permission to appeal, which has been refused.
But, failing these criteria, the CCRC may still make a reference if there appear to be
“exceptional circumstances’ for so doing.?*
In practical terms, although it remains open to an individual to appeal their conviction
out of time with reasons,”? my strong suspicion is that anyone (claimant in the group
litigation or otherwise) who thinks their conviction might be affected by the case is
likely to be advised to await the outcome of all the substantive trials in the litigation, as
well as the CCRC’s review, rather than to proceed precipitately.
Here, the focus is on Mr Justice Fraser’s analysis of Branch Trading Statements and his
finding that POL’s reliance on them as a settled statement of account at the end of a
particular branch trading period cannot be supported where the SPM sought help from
% McInnes (Paul) v HM Advocate [2010] HRLR 17 SC.
> R vy Smith [2004] EWCA Crim 1626.
% Section 23(1)(c) and 23(2) of the Criminal Appeal Act 1968.
27 Paras 158-159, 165.
Section 13 of the Criminal Appeal Act 1995,
® Section 18(3) of the Criminal Appeal Act 1968 and CrimPR 36.4.
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38.
39.
40.
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the Helpline (or NBSC). Despite the unlikelihood of POL being confronted by
applications to appeal out of time at present, the theoretical impact of the judge’s
findings on any past convictions needs to be considered. If his analysis applies to past
criminal convictions, then that could in theory raise an issue regarding the safety of any
conviction based wholly or mainly on the correctness of a disputed Branch Trading
Statement in any branch trading period.
Clearly, Mr Justice Fraser’s findings were findings of fact based on his interpretation
and application of the law of contract. He made clear from the outset that the focus of
the Common Issues Trial was the contracts between POL and SPMs. The contractual
relationship between POL and SPMs was defined by the express and implied terms of
the contracts. For that reason, Mr Justice Fraser’s findings are not binding on the Court
of Appeal or even persuasive authority. This he acknowledged when he said, “This is a
High Court civil action and has no jurisdiction or involvement in such criminal
matters.”5°
Moreover, what the judge finds as facts does not constitute fresh evidence for the
purposes of any appeal, but the facts underlying those findings could amount to fresh
evidence. If, for instance, relevant and admissible evidence heard in the course of the
group litigation suggested previously unknown Horizon defects caused or might have
caused shortfalls explaining the losses in branch, that could in theory be relied upon as
fresh evidence in an appeal.
However, the circumstances of any individual appeal (or even a CCRC reference based
on the circumstances of individual cases) would be far from straightforward, and likely
to be complicated if, for example, it were claimed that POL had known about certain
Horizon defects but had failed to disclose them during the trial process. Such a scenario
would be complicated further where a SPM had admitted inflating their figures and
falsifying the Branch Trading Statement, and had gone on to plead guilty to offences
such as false accounting on the basis of their admissions but now argued that alleged
non-disclosure affected the advice they were given to plead guilty.
8 See para 29 above.
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41. The point I am trying to make (which is borne out by my analysis of the case files I
reviewed in 2016 (for which see below)) is there is unlikely to be any one-size-fits-all
or any thematic approach the CCRC can adopt towards these cases as a whole; appeals
on conviction tend not to operate in the same way as group litigation, not least because
the Court of Appeal has to look at the safety of each conviction. Any appeal case has
to be looked at on its own facts, and, unless there was reliable evidence to demonstrate
that every case was affected in the same way (for example) by the same Horizon defect
such as to lead to the conclusion that the conviction in each case was unsafe for the
same reason, then the same conclusion could not be reached in each case.
42. I have considered whether POL should open a review of cases to examine any case
potentially impacted by the judge’s factual findings on the effect of Branch Trading
Statements. It would only have any use if POL felt there was material it was aware of
that might impact on the safety of convictions. However, unlike the reviews began by
Cartwright King in 2013 which were targeted at disclosure of the Second Sight Interim
Report and the Helen Rose Report in suitable cases, the group litigation has thrown
wide open the many relevant issues between POL and SPMs, there has been full
discovery in the litigation, the litigation has been highly publicised in the media, the
Common Issues Trial judgment is open to the public, as are the trial hearings
themselves, the CCRC is watching the proceedings, 61 of the claimants are former
SPMs who were convicted of, or pleaded guilty to, criminal offences against POL, and
Alan Bates, the lead claimant in the litigation, is or was involved in the JFSA which
has a keen interest in the outcome of the proceedings.
43. Indeed, as the judge said in the judgment:*!
“Because the subject matter of this litigation is so controversial, there has been
a great amount of public interest in it. Over the years, and prior to the issue of
proceedings by the Claimants there was an action group formed, called Justice
For Sub Postmasters Alliance (“JFSA”). Mr Bates was centrally involved in this.
Encouraged by some Members of Parliament, an independent inquiry was set
up by the Defendant using a specialist company called Second Sight Services
+! Para 22.
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44.
45.
46.
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Ltd (“Second Sight”) that ran from 2012 until 2015, when it was terminated by
the Post Office for reasons that are currently unclear. Evidence was given to a
Parliamentary Select Committee by the Chief Executive of the Post Office in
February 2015. This was in relation to the Mediation Scheme funded by the Post
Office that had run for a while jointly under the auspices of the Post Office,
Second Sight and JFSA. That publicly funded scheme ended without resolving
the issues between the Post Office and sub-postmasters involved, and was
roundly criticised in an adjournment debate in the House of Commons. There
have been various reports and documentaries in the media, including a BBC
Panorama documentary entitled “Trouble at the Post Office” in August 2015.”
There is in my opinion therefore no point or utility in POL commencing any new review
in light of the openness of the proceedings, the parties to it and the CCRC’s interest in
it.
In February 2016, in their written Review Messrs Swift and Knight advised
consideration of the question (1) whether the decision to charge a SPM with theft and
false accounting could undermine the safety of any conviction for false accounting
where (a) the conviction was on the basis of a guilty plea, following which and/or in
return for which the theft charge was dropped, and (b) there had not been a sufficient
evidential basis to bring the theft charge; and recommended (2) if such a conviction
could be undermined in those circumstances, that counsel review the prosecution file
in such cases to establish whether, applying the facts and law applicable at the relevant
time, there was a sufficient evidential basis to conclude that a conviction was a realistic
prospect such that the charge was properly brought.
I was therefore asked to review all such potentially affected cases for which I was sent
the case files. As I have said before, those were the cases of Hall,?? Hamilton,
Henderson, Holmes, McDonald, Misra, Williams and Wilson, all of whom are among
the 61 claimants in the group action, and who were convicted of, or pleaded guilty to,
offences against POL.
* In fact, I was unable to review Hall’s case, as there was little documentary material to enable me to do so.
17
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47.
48.
49.
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Although that review was for an entirely different purpose, some of the cases serve to
illustrate the prosecution of SPMs for false Branch Trading Statements, and the
interplay with the repayment of shortfalls by SPMs according to what was understood
to be the contractual obligation. They also demonstrate how the judge’s findings about
the contractual relationship (particularly the findings on disputed Branch Trading
Statements) between POL and SPMs are immaterial to the safety of the convictions.
Indeed, the judge’s findings of fact about disputed Branch Trading Statements can have
no relevance to the case of a SPM charged with a criminal offence against POL who
admits dishonestly falsifying the account as reflected by the Branch Trading Statement
(or was proved to have done so) and/or stole the sums covered up by the falsification.
It is important not to confuse the findings about disputed Branch Trading Statements in
the context of the relational contracts between POL and the SPM (which was the focus
of the judge’s findings and which may or may not later lead to a finding of breach,
causation and loss) and the admitted or proven deliberate and dishonest falsification of
a Branch Trading Statement by an offender in the course of a criminal trial to conceal
a shortfall and/or the theft of monies by a SPM.
Where POL successfully prosecutes a SPM based wholly or mainly on the correctness
of the Branch Trading Statement, it will have done so according to the burden of proof
and the criminal standard of proof cast on POL as a private prosecutor. What that
means, is unlike the judge’s findings on the contractual burden between POL and SPM
as regards Branch Trading Statements, POL always has the legal burden of proving that
the SPM is guilty of the offence or offences charged to the criminal standard of proof,
and to the extent its case relies on the correctness of the Branch Trading Statement, it
also has at least an evidential burden of proving the statement to be accurate. Likewise,
to the extent that a SPM challenges the functionality and fallibility of Horizon, POL
has at least an evidential burden of proving the data to be accurate and was not produced
by reason of some bug or error. Where a SPM has admitted guilt, then in the absence
of evidence the SPM did not plead guilty freely, or was ill-advised by his
representatives, then the conviction based on that admission will be difficult if not
impossible to overturn.
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50.
SI.
52.
53.
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Naturally, each of the cases I reviewed in 2016 (to which I now come) is fact-specific;
there are no paradigm cases. These summaries should be read in conjunction with my
original Advice where I set out the facts far more fully. Footnote references are to
paragraphs in my Review.
Josephine Hamilton was a Legacy Horizon case. Analysis of Branch Trading
Statements for two consecutive periods indicated a cash deficit of over £36,000 and/or
the falsification of the cash figure in the Branch Trading Statement for the first period.
Mrs Hamilton had called the Helpline, but none of the calls related to, or could account
for, such a deficit. The prosecution case was that she had inflated the cash on hand
figure over several months in order to disguise her thefts of the cash. In due course, Mrs
Hamilton pleaded guilty to several counts of false accounting and the count of theft
representing the loss was left on the file on condition Mrs Hamilton repay the shortfall,
which she did.
Another case file I considered as part of this exercise was Seema Misra.** This too was
a Legacy Horizon case, albeit the case was not finally tried until 2010. Mrs Misra
explained to investigators that she had hidden shortages by falsifying the cash on hand
figure, and also by falsely declaring cash in pouches or currencies awaiting despatch.
She conceded this had been dishonest, but said she wanted to save her business. She
added she had been repaying money into the account. She confirmed that she was the
only person who had completed the Branch Trading Statements at the sub-post office
since 2007.
Mrs Misra had first said she was guilty of false accounting but not guilty of theft,
claiming that employees working at the post office had been guilty of stealing it.
Initially, she made no allegations about Horizon defects, or (so far as I can find) about
any lack of support. The first trial in 2009 had to be aborted because Mrs Misra
belatedly alleged Horizon reliability issues. Following her changing her solicitors, Mrs
Misra then changed her defence, resiling in part from the allegation that her employees
had stolen from her, but now asserting that her training had been deficient, and Horizon
* Paras 57-108.
Paras 109-137.
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was responsible for the losses. Mrs Misra’s new solicitors had also written to POL to
say that the possible theft by Mrs Misra’s other employees remained a live issue.
54. At or before her new trial in 2010, Mrs Misra pleaded guilty to false accounting but not
guilty to theft. POL chose nonetheless to try her on the theft allegation, and she was
convicted. It is clear that Mrs Misra had first admitted the offences of false accounting
to investigators, and subsequently formally pleaded guilty to counts of false accounting.
At the time of the first trial, her case was there had been a theft of the monies, which
she had tried covering up, and, by the time of her second trial, her case had remained
so, albeit running in parallel with claims about Horizon fallibility and her training.
Indeed, the transcript of the judge’s summing-up at trial shows the trial judge
summarised her defence in this way: * “There was a shortfall apparent on (sic) the tills
at the time of the audit ... but the cause of that was not her taking the money. She thinks
it was staff theft, problems with the computer system and general (sic) just problems of
coping with the demands of running the post office leading to disorganisation and
incompetence. That is what the defence case is.” Mrs Misra had also rung the police to
allege her employees had stolen relatively small sums.
55. Julian Wilson faced several fraud counts alleging that he had “dishonestly and intending
thereby to make a gain for himself or another abused his position as sub-postmaster of
Astwood Bank Post Office in which he was expected to safeguard the financial interests
of Post Office Limited by enabling a substantial deficiency to rise, by failing to make
good that deficiency whilst pretending that he had done so and by falsifying entries in
Final Branch Trading statements in breach of section 4 of the Fraud Act 2006.”
56. Mr Wilson pleaded guilty to two counts of fraud on the basis that he had failed to make
good losses, which accumulated in 2007 and 2008. Thus, this too is a Legacy case. Of
note, Mr Wilson said he had falsified entries in the final Branch Trading Statements,
and in so doing had avoided repayment, as had been his contractual obligation. He said
the losses had occurred as a result of staff or systemic errors, he did not believe any of
the money was stolen, he had not stolen the money, and he had made no financial gain.
3% Page SOD-E.
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57. Margery Williams was another case I reviewed.*° An audit revealed a shortage of over
£14,000, representing the difference in cash, stock, postage and foreign currency.
58. Mrs Williams was interviewed under caution in June 2011. She explained that she had
been having trouble with balancing from the end of February to the beginning of March
2011. She was unable to explain the shortfall in the cash on hand figures but implied
the losses might have been linked to Horizon. She said she had first noticed a
discrepancy in the accounts around February/March 2011. She admitted producing a
false Branch Trading Statement by inflating the cash on hand figures; she had done this
by inflating the cash figures of one denomination rather than across all denominations.
She confirmed knowing it was wrong to do this. She admitted inflating the cash for a
period of about three months but she denied theft. She admitted inflating the number of
stamp books on hand which were out by bundles of 50, explaining that in April 2011
the stamp books had changed and in the following balances they were out. She had
concluded that she must have ‘remmed’ them wrongly into the Horizon system.
59. Mrs Williams was charged on indictment with four counts of fraud by false
representation covering the three-month period between 2 March 2011 and 2 June 2011.
She later pleaded guilty to the four counts on the indictment.
60. The pre-sentence report said “Mrs Williams ... stated that she had deliberately ‘cooked
the books’ from February onwards ...” and “Mrs Williams was unable to fully give an
account of her reasons for taking the money, only stating that she had used some of it
to support her shop which was underperforming ...” The author of the report noted “...
she was not open with regard to what had happened to (all of) the money”.
61. Thus, this was a clear case where on her own admission Mrs Williams had defrauded
POL and had in fact taken the money for her own use.
% Paras 170-182.
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62. Finally, Alison Henderson.*” An audit at branch had revealed a cash on hand deficit of
£11,957.78. During interview, she denied stealing the money herself and denied
falsifying Branch Trading Statements but offered to repay the money.
63. Subsequently, Mrs Henderson accepted that £11,957.78 appeared to be missing; she
had no explanation for the discrepancy but said she believed that Horizon may have
malfunctioned. She categorically denied theft, but accepted she was contractually
bound to repay the money and would do so. In due course, she repaid the money and
pleaded guilty to false accounting on the basis she had dishonestly covered up the
discrepancy by entering false figures in the branch accounts but continued to maintain
her denial of theft.
64. I Whether or not the judge’s findings lead to the conclusion that the SPMs in these
examples were not contractually bound to repay POL the shortfall has nothing to do
with the criminal acts they either accepted committing or were proved to have
committed. On the judge’s findings which included the qualification of calling the
Helpline to dispute the Branch Trading Statement, except in the case of Mrs Hamilton
(where she had called the Helpline, but none of the calls related to, or accounted for,
the deficit) none of the other cases I summarised in my 2016 Review appear to involve
any of the other SPMs logging disputes about Branch Trading Statements with the
Helpline.
65. If my summary of these sample cases is accurate and complete,** then Mr Justice
Fraser’s finding that POL is not entitled to rely upon Branch Trading Statements for
any period in respect of which a SPM notified a dispute to the Helpline as a settled
account between agent and principal has no relevance anyhow. Even if (contrary to my
view) the judge’s findings could be argued to apply to past convictions, given the
qualification that the SPM had to have called the Helpline to log a dispute about the
relevant Branch Trading Statement to render it unreliable, where a given SPM had
never called the Helpline, POL would by the terms of his finding be fully entitled to
rely upon it, which appears to be the case in all the sample case files I reviewed in 2016.
5’ Paras 183-202.
38 I am being deliberately cautious because my review of these select cases was for a different purpose, so
there is a possibility that in the cases other than Hamilton’s I omitted any references to calls to the Helpline
if they did not appear to be germane to the issue I was asked to consider.
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66. Thus, I see no issues regarding the safety of individual convictions based on Mr Justice
Fraser’s analysis of the contracts between POL and SPMs. Each case has to be looked
at on its own facts, and where POL has placed reliance on the Branch Trading Statement
to prosecute a case to the criminal standard, or where its falsity was admitted, findings
on contractual law and where the contractual burden lies cannot operate to displace
criminal convictions simpliciter.
67. As regards the CCRC, I cannot see that anything the judge has said on the topic of
Branch Trading Statements in the Common Issues Judgment is likely to lead it to
determine the test it must apply is satisfied or, if it did, to render any SPM’s conviction
unsafe on that ground for the reasons outlined above.
der implications for past convictions
Judicial criticisms
68. In the course of his judgment, the judge made a number of comments criticising POL
and Horizon, albeit he repeatedly stated that he was not making findings about the
functionality of Horizon which would have to await the Horizon Issues Trial.*? There
were also a number of general comments the judge made as a result of which POL.
sought his recusal in April 2019. I note in particular his observations about “a culture
of secrecy and excessive confidentiality generally within the Post Office, but
particularly focused on Horizon”.””
69. The judge returned to this theme elsewhere.“! Under the heading “The Post Office
approach to documents”,*? among other observations, the judge commented,
“Disclosure of plainly relevant documents has been resisted by the Post Office in this
litigation, which led to interlocutory hearings and eventually orders by me in relation
to disclosure. Again, I have also dealt above with the situation concerning Mrs
® See e.g. para 21.
* Para 36.
*! Paras 42 and 120,
® Paras 559-560.
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70.
71.
72.
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Stockdale, whose credit was directly attacked as a result of an audit, yet the documents
sought by her advisers relating to the initiation of that audit were not disclosed.”
He added, “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
(sic) can be a sensible or rational explanation for any of them.”?
Even though the judge was directing his remarks at his perception of POL’s alleged
conduct in the civil litigation, they might be thought by some to imply that POL’s
alleged culture of secrecy extends to its prosecutorial function. These judicial criticisms
could lead to a further diminution in trust as to POL’s approach to its prosecution
function, in general, and to its disclosure duties, in particular. The CCRC will doubtless
also have noted these comments.
The judge also made reference to extracts from 14 internal POL documents in which
he said there had been an awareness of Horizon problems within POL over the years. I
reproduce them in full because of their significance:*+
“1. On 1 November 2000 in internal e mails from Frank Manning to Sue Locke,
at 14:39: “We talked about this case when I was in St. Albans last month & it is
still on-going. I visited there today & was too scared to accept a cup of tea in
case the Horizon system crashed cos the electricity supply is still a live (excuse
the pun) issue. The balances are a mess (in pre Horizon times - the Postmistress
virtually achieved a clean balance every week) & I've got the RNM going in
there next Wednesday to see what actually happens on the ground but I worry
that something like 25 re-boots in one day is having an effect overall. Need your
best offices to get this case to a proper solution - she keeps getting promises of
attention - but nothing is actually being done now to clear up the problem. It is
Horizon related - the problems have only arisen since install & the postmistress
is now barking & rightly so in my view. Help please.”
*® Para 561.
* Paras 541-542.
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(the bold emphasis “It is Horizon related” is present in the original, the
underlining has been added in this judgment)
2. Sue Locke sent an answer back to Frank Manning on 2 November 2000 at
09:24 which was copied to Sanjay Patel. This asked “Frank - As discussed when
you visited, can you confirm that the office have had an independent electrician
visit it and that the problems are due to the electrics input by Horizon?”
The answer to this was very clear from Mr Manning, in an e mail of 12:58 on
the same day, again copied to Sanjay Patel.
“Answer is YES to both points.”
(again, the use of block capitals was present in the original)
3. In the next email in this sequence, from Sue Locke to Kevin Cox, on 2
November 2000 at 14:05 she said: “Frank came to see me about this office and
we discussed it with Sanjay and said that she [ic Mrs Stubbs] needed to prove
that it was Horizon that was causing all these power failures in the office (I
think Remedy records this). Can you tell us please how we can now get this
resolved as it appears now it is a direct consequence of the installation and not
anything that has happened in steady state.
(emphasis added by me)
4. On8 February 2007, in an e mail in relation to recovery of a disputed amount,
Jacqueline Whitham stated:
“Tin the debt recovery section of P & BA and so could only report to you TCs
that have already been issued. However part of my duty includes the deduction
from remuneration process and so I do have a little knowledge of the office. I
can confirm that a TC relating to Lottery has been issued and settled centrally
for a credit of £22,778.40. Unfortunately, this credit was eaten into by a Lottery
debit TC for £34,028.00.”
5. On 14 November 2008 in a document called a “TC/Debt Recovery Review”
the following was noted about SPMs generally:
“Key Feedback Issues
NFSP.
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They are forced to accept debts they do not agree with at Branch Trading.
7 days is a reasonable period of time to investigate a transaction correction
before being forced to accept. Evidence provided is not meaningful in some
cases e.g. Lottery Transaction Correction instructions are not clear.”
Network
.... Processes are not understood.
Communications to branches and network needs to be improved. What does
settle centrally mean?
Costs of non-conformance — can this be passed on?
Legal
“Settle Centrally” signifies acceptance of debt liability.
Forcing TC acceptance on the same day as receipt through branch trading
requirements would probably be regarded as unreasonable by a court of law
and cause a related claim to fail.
NBSC.
The vast majority of calls to NBSC are either appropriate generic queries
around processing TCs or complaining about being able to contact the Lottery
team. There is nothing on the Knowledgebase to deal with a branch who needs
ss a TC.
1) Reinforcement of existing processes
more time to ass
> Defined product ID on TCs...
> Define Settle Centrally
4) Rejected Proposals
Dispute button on transaction corrections — TCs are issued with evidence. The
use of a dispute button simply provides a delaying mechanism and requires
P&BA to resupply the evidence.
5) Further Investigation
Maintained error analysis — are_any branches repeatedly getting amounts
written off: Link to worst branch analysis.
Can we consolidate and issue ~ debits and credits? Do we keep it a secret?”
(emphasis added)
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The phrase which jumps out particularly in this latter passage is the question
posed “do we keep it a secret?”
6. On 10 February 2010 in a Post Office policy document entitled “Review of
the Creation and Management of Transaction Corrections in POLFS to correct
accounting errors in Horizon”:
“2.2.6 High Value Transaction Correction Authorisation Signature
Requirement
As part of the Transaction Correction creation process a high value
authorisation series of signatures has been introduced. This is a form that goes
with the evidence and is signed by the level of manager dictated by the value.
Between £10k and £29.99K the team leaders’ signature, £30K to £49.99K Senior
managers signature and over £5OK requires the head of P&BA to sign. These
forms are then filed with the paperwork. The reason for creating this extra check
step was two fold, firstly to prevent large credit Transaction Corrections being
issued, then a long period for the debit to be issued, which then might get
disputed and blocked. The second reason being to ensure that branches are not
hit by a large value Transaction Correction which is subsequently found to not
be proper to that branch."
"Camelot uses a process of rolling up or amalgamating all errors incurred by a
branch over a period and issues one transaction correction to the branch. They
send a spreadsheet with details of the errors to the branches to help them
reconcile with their paperwork. This is not a popular method and there is a
feeling that branches find it difficult to understand that evidence.
The reason for using this method is because there are too many errors to handle
on an individual basis without doubling the resource requirement or getting into
a backlog situation.”
“Fujitsu send a file containing all the Transaction Corrections sent to Horizon,
the data shows all the information the branch received, this includes the text.
Analysis of the Fujitsu file found c2000 Transaction Correction were found to
have no contact number within the text out of 40K issued between August and
October 09 which is
irca 5%. In some cases this is because the branches are
instructed to address any disputes in writing.
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During the analysis of the long text of the Transaction Corrections there were
many other issues which made the task very difficult. E.g. the text I field was
very inconsistent in teams approach, some use a reference number some use the
name of the product.”
(emphasis added)
7. On 26 May 2010 in an internal ¢ mail about Mrs Stubbs from Rajinder Gihir
to Nigel Allen:
“However when I put the audit figures in the Horizon it would not match the
figures on my audit spreadsheet. I tried that for two hours without any success,
so finally accepted the Horizon figures which came to overall shortage of the
office £3218.36 a difference of £374.48 from my above figure. (2843.88). Pam
was quite happy to accept the new figure maintaining that when she puts her
figures for everyday work they also do not match with the Horizon.”
8. On 28 July 2010 in an email from N Allen to POL duty manger, M Dinsdale
and J Owen dated 28/07/2010 re what are called ARQ Requests, which is
something raised with Fujitsu but which SPMs could not action, they had to be
raised by the Post Office:
“Nigel. No probs with requesting data from Fujitsu but it will take around three
weeks. Has Jason agreed to take this case on, because we don't hand over
Horizon logs to_an spmr. It needs an expert to understand what it says and
usually this requires one of the investigators”
I will give Jason a call in the morning then I will raise an ARQ from Fujitsu. Is
this for our benefit, as there is a cost attached to ARQ requests, we do get a
supply free of charge as part of the contract but we usually don’t enough,
therefore we usually charge the defence lawyers.”
(emphasis added)
The reference to “defence lawyers” could mean either those instructed to defend
civil claims for outstanding amounts, or lawyers acting for those SPMs who
were being or had been prosecuted by the Post Office.
9. On 7 September 2012 ina Post Office Branch Audit Trend Analysis YTD Q1
2012/2013:
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“A couple of existing agents have claimed that their discrepancies are as a result
of the Horizon system. Action taken — the process we follow to investigate claims
from agents that the Horizon system is generating discrepancies has been
reviewed.
The refreshed process is detailed at appendix 2.”
This document is at {G/7/6} of the electronic trial bundle, and is Appendix 5 to
this judgment. It is a complex flowchart, but whatever is done, eventually the
central question is reached “Can agent provide specific day and timeframe for
alleged fault?” If the answer to this is No, then the SPM will be told that the
Post Office response is to “Advise unable to progress further until can do so”.
10. On 17 October 2012, at a meeting which 4 Fujitsu personnel attended as
well as numerous Post Office personnel, entitled “Receipts-Payments Mismatch
issue notes”:
“What is the issue?
Discrepancies showing at the Horizon counter disappear when the branch
follows certain process steps, but will still show within the back end branch
account. This is currently impacting circa 40 Branches since migration onto
Horizon Online, with an overall cash value of circa £20k loss. This issue will
only occur if'a branch cancels the completion of the trading period, but within
the same session continued to roll into a new balance period.
At this time we have not communicated with branches affected and we do not
believe they are exploiting this bug intentionally. The problem occurs as part of
the process when moving discrepancies on the Horizon System into Local
Suspense.
Note the Branch will not get a prompt from the system to say there is Receipts
and Payment mismatch, therefore the branch will believe they have balanced
correctly. Impact
+ The branch has appeared to have balanced, whereas in fact they could have a
or a gain.
+ Our accounting systems will be out of sync with what is recorded at the branch
+ If widely known could cause a loss of confidence in the Horizon System by
branches
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+ Potential impact upon ongoing legal cases where branches are disputing the
integrity of Horizon Data
+ It could provide branches ammunition to blame Horizon_for future
discrepancies.
The Receipts and Payment mismatch will result in an error code being
generated which will allow Fujitsu to isolate branches affected this by this
problem, although this is not seen by the branches. We have asked Fujitsu why
it has taken so long to react to and escalate an issue which began in May. They
will provide feedback in due course.
Fujitsu are writing a code fix which stop the discrepancy disappearing from
Horizon in the future. They are aiming to deliver this into test week commencing
4th October. With live proving at the model office week commencing 11th
October. With full roll out to the network completed by the 21st of October. We
have explored moving this forward and this is the earliest it can be released into
live.
The code fix will on stop the issue occurring in the future, but it will not fix any
current mismatch at branch.
Proposal for affected Branches
There are three potential solutions to apply to the impacted branches, the
groups recommendation is that solution two should be progressed.
SOLUTION ONE - Alter the Horizon Branch figure at the counter to show the
discrepancy. Fujitsu would have to manually write an entry value to the local
branch account.
IMPACT - When the branch comes to complete next Trading Period they would
have a discrepancy, which they would have to bring to account.
RISK- This has significant data integrity concerns and could lead to questions
of "tampering" with the branch system and could generate questions around
how the discrepancy was caused. This solution could have moral implications
of Post Office’ changing branch data without informing the branch.
SOLUTION TWO - P&BA will journal values from the discrepancy account into
the Customer Account and recover/refund via normal processes. This will need
to be supported by an approved POL communication. Unlike the branch
30
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"POLSAP" remains in balance albeit with an account (discrepancies) that
should be cleared.
IMPACT - Post Office will be required to explain the reason for a debt recovery/
refund even though there is no discrepancy at the branch.
RISK - Could potentially highlight to branches that Horizon can lose data.
SOLUTION THREE
Post Office would prefer to write off the "lost"
IMPACT - Post office must absorb circa £20K loss
It is decided not to correct the data in the branches (ie
RISK - Huge moral implications to the integrity of the business, as there are
agents that were potentially due a cash gain on their system”
(emphasis in bold present in original; emphasis by underlining added)
11. On 14 May 2013 in a document entitled “Local Suspense Problem”:
“The purpose of this note is to provide a management level summary of the
“Local Suspense” problem that was identified earlier this year and was seen
to impact 14 of the current Horizon Branches. This issue occurred on
Horizon Online and due to the different architecture of the old Horizon
system, such an issue could not have occurred on the old Horizon system.
.. This problem was not reported to Fujitsu in 2011/12 and only affected a
small number of branches and only for a single Trading Period. However,
it was reported to Post Office Ltd who could see the impact of the problem
in their back end system and wrote off the loss for the branch but did not ask
Fujitsu to investigate further.”
“At the same trading period 2012/13 the problem reoccurred and this time
one of the affected branches reported the problem to Fujitsu on 25"
February 2013 (Peak 223870) resulting in a detailed analysis of this issue
and finding the orphaned BTS records. The root cause was determined by
28" February 2013 and a preliminary report was sent to Post Office Ltd. A
further update was sent on 14" March 2013 with a full analysis of the issue
and all affected branches.”
(emphasis added)
31
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12. On 26 June 2013 in an internal document “Benefits of extending the life
of business transaction data”:
4 iness benefits
The business, in particular the Security and P&BA departments suffer from
the inability to interrogate its data due to the short periods of retention. If
we were to keep data for longer and for that data to be interrogatable the
following areas should benefit:
POCA Claims and Disputes
Banking
Other product Claims and Disputes
Flag cases
Fraud and Conformance investigations
Proactive fraud identification (obviates the complexity costs of the Detica
project which if goes ahead will need to take inputs from multiple sources
instead of just one single database)
Security investigations
Criminal investigations
SPMR Contract advisors — re non-conformance suspension hearings”
Financial benefits
Paying Detica for proactive fraud project probably way too much due to
complexity of taking from multiple sources ARQ (Audit retrieval process)
costs at least £384k recurring annually. This is subsumed without
breakdown in the Fujitsu Security Management costs. 720 requests @ £450
unit cost”
13. On 24 October 2016 in what is called in the trial bundle Index “Business
Case Paper”, but the actual title on the document is “Network Development
Enhanced User Help & Support”:
“1. Horizon Help (the in-branch operational support tool) has since its
introduction over a decade ago fallen short of delivering the in-branch self-
help functionality that was promised as part of Horizon roll-out and that
postmasters and their assistants desperately need. This has resulted in a
sub-optimum level of service to customers when branches are unclear on a
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product detail and need to seek help from the Branch Helpline (NBSC).
NBSC currently handles 30,000 calls per month and costs c£1.5m pa.”
The proposal in the document, which was to provide “Enhanced user help
and support” on Horizon was described as a “Key change”. It involved "an
intuitive search engine that enables the in-branch user to quickly get to the
information they need, therefore building the trust of branches in the content
and encouraging self-service." Under consideration of the question “what
would the impact be of delaying or rejecting the decision to progress”
(which was obviously going to incur a cost) the following was stated:
“Delay or rejection would result in:
a. Continued acceptance of a poor Horizon user experience and
consequently an equally poor customer experience.
14. Finally, on 17 October 2017 in the Operations Board the following is
stated. “Client” is another name for a company with whom the Post Office
does business, such as Camelot for the National Lottery:
“Camelot:
Data integrity from client has led to a hold on TC issued in P6. The increase
in P6 following clearing back logs which is expected to take until P7 to
clear.
Ops simplification for the fix on Lottery is coming back at £0.2m and is
unjustified. The solution is not to prioritise this on HNGT (next autumn) to
redesign the product.”
(emphasis added)”
The judge said that these documents showed that behind the scenes a number of people
at POL realised that there were difficulties with the Horizon system which ran counter
to POL’s case in the litigation that Horizon was a robust system and that none of the
claimants experienced shortfalls or discrepancies in their branch accounts due to
problems caused by Horizon.
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74. While the judge made clear that the correct position was to be resolved in the Horizon
Issues Trial,*> the implicit suggestion is that Horizon was a defective system POL knew
about. This coupled with the charge that POL operated a culture of excessive secrecy
invites the risk of further scrutiny of POL and its prosecution function.
75. 1 know about the two defects that Gareth Jenkins revealed to Second Sight as revealed
in their July 2013 Interim Report, and I referred to them in my 2013 Review. Second
Sight reported them in the Interim Report in the following terms:*°
*® Para 543.
% Paras 38-39.
“6.4. In the course of our extensive discussions with POL over the last 12
months, POL has disclosed to Second Sight that, in 2011 and 2012, it had
discovered "defects" in Horizon online that had impacted 76 branches.
6.5. The first defect, referred to as the "Receipts and Payments Mismatch
Problem", impacted 62 branches. It was discovered in September 2010 as a
result of Fujitsu's monitoring of system events (although there were subsequent
calls from branches). The aggregate of the discrepancies arising from this
system defect was £9,029, the largest shortfall being £777 and the largest
surplus £7,044. POL has informed us that all shortages were addressed at no
loss to any SPMR.
6.6. The second defect, referred to as the "Local Suspense Account Problem",
affected 14 branches, and generated discrepancies totalling £4,486, including a
temporary shortfall of £9,800 at one branch and a surplus of £3,200 at another
(the remaining 12 branches were all impacted by amounts of less than £161).
6.7. POL was unaware of this second defect until, a year after its first occurrence
in 2011, it re-occurred and an unexplained shortfall was reported by an SPMR.
6.8. POL’s initial investigations in 2012 failed to reveal the system defect and,
because the cause could not be identified, the amount was written off. Fujitsu
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76.
77.
78.
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looked into the matter early in 2013 and discovered, and then corrected, the
defect.
6.9. It seems however, that the shortfalls (and surpluses) that occurred at the first
occurrence (in 2011) resulted in branches being asked to make good incorrect
amounts.”
Number 10 referred to by the judge in the judgment equates to the receipts and
payments mismatch issue reported by Second Sight (at §6.5), although Second Sight
reported it impacting 62 rather than about 40 branches, and number 11 referred to by
the judge equates to the local suspense issue impacting 14 branches, which was reported
by Second Sight (at §6.6). The sum of 62 and 14 branches amounts to the 76 branches
they reported the two defects impacted (at §6.4).
Therefore, even though the judge sought to highlight POL’s awareness of issues around
Horizon, the two particular defects he chose to highlight have been known about for a
very long time.
Beyond those, Helen Rose reported the Lepton sub-post office reversal issue in June
2013, as I mentioned in my 2013 Review,*” and the Callendar Square, Falkirk, issue
from 2005 (also mentioned in my 2013 Review)** was raised in the Misra trial, whereby
information recorded on one terminal was not correctly passed to another terminal
within the branch, creating a receipts and payments mismatch.’ Neither of these issues
appears to have been mentioned in the Common Issues Judgment but they have raised
their heads in the material I have been sent from the Horizon Issues Trial to which I
now turn.
Horizon Issues Trial
47 Paras 48-50.
“8 Para 130.
Misra Transcript of 14 October 2010 at pages 46G-53A.
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79.
80.
81.
82.
83.
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The second witness statement of Torstein Godeseth (Fujitsu) deals with the claims
made by Prof McLachlan in the Misra trial,*° including the Callendar Square issue
which apparently affected 30 branches.*' Mr Godeseth also dealt with three other bugs
and their resolution:*? (1) the receipts and payments mismatch in September 2010
(which equates to the judge’s item 10 and §6.5 of Second Sight’s Interim Report); (2)
the local suspense issue (which equates to the judge’s item 11 and §6.6 of Second
Sight’s Interim Report); and (3) an issue that occurred at Dalmellington branch in
October 2015, which is new to me as it post-dates by some margin my 2013 Review.
The 21 March 2019 cross-examination of Mr Godeseth in the current trial, in which he
was asked about the fact that Prof McLachlan had asked for information that was not
obtainable because, according to Mr Goeseth, it had not been viable to keep a Legacy
Horizon system running simply to attempt to replicate errors, might be designed to
suggest that anyone seeking to challenge a Legacy Horizon issue is unfairly hampered
by the fact the issue can no longer be back-engineered.
On 20 March 2019, Mr Godeseth was asked whether he was aware that there had been
instances of duplicate JSNs being committed to the database, and that in the Misra case
a duplication of data had been identified in the ARQ figures. He said he had been
unaware of it.
In his evidence on 20 March 2019, Andy Dunks (Fujitsu) was also asked about the
duplications and what Gareth Jenkins had said about it in his witness statement of 8
July 2010. It related to ARQ 447 which recorded transactions between 1 November
2007 and 30 November 2007 and contained some duplication of audited records. In his
witness statemen, Gareth Jenkins had emphasised that it did not affect actual physical
transactions on any counter of any outlet.
Andy Dunks was also asked about Penelope Thomas’s witness statement of 4 February
2010. Mr Dunks was questioned about the fact her statement did not refer to ARQ 447
containing duplicates. Mr Dunks made clear that Fujitsu’s function was to extract the
* Paras 7-11.
>! Paras 11-16.
* Paras 34-61.
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84.
85.
86.
87.
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data and it was not their concern what was in it. I do not know if the point being made
was that there was something underhand in Ms Thomas not mentioning the duplicates
in her witness statement, but if it is, clearly Mr Jenkins had mentioned it in his statement
and assuming both statements were served or disclosed in the Misra case the issue was
clearly disclosed to the defence.
Mr Dunks was also cross-examined about PEAK PC0211833. The summary given for
this event is ‘Audit Retrieval for ARQ Returns Missing Reversal Indicator’. The log
for the event shows the incident occurred between 5 August 2011 and 24 August 2011
when the issue was resolved. A Technical Summary of 5 August 2011 bears the
following notes: “Spreadsheets supplied by the prosecution team miss out an indication
as to whether a transaction is a reversal”; “The prosecution team are well aware of the
problems: we hope to have a release out in a few days; a KEL is therefore not required”;
and “Risks (of releasing and not releasing proposed fix): there are a few risks with this
fix. It must be got out or prosecution evidence is incomplete.”
My observations about this are: first of all, there is nothing in the cross-examination to
indicate that this issue was related to any particular claimant’s case, let alone any of the
61 group action claimants who have been convicted, or pleaded guilty to, criminal
offences committed against POL. Secondly, the issue was chalked up as an issue for
the prosecution team to be aware of, and, according to the log, were “well aware” of it.
Thirdly, the fix had to be got out because without it “the evidence was incomplete”,
rather than inaccurate or misleading which are words that might have been used had
that been the case. There is nothing to suggest that the issue might or did cause a
shortfall or discrepancy in branch as to mean the inaccuracy or substantial inaccuracy
of any Branch Trading Statement.
My sense from the cross-examination, although it is difficult to judge as I was not there,
is counsel for the claimants was seeking to undermine through the Fujitsu witnesses
POL’s case that Horizon is robust and that none of the claimants experienced shortfalls
or discrepancies in their branch accounts due to problems caused by Horizon.
I should record the fact that this is the first time I have become aware of this particular
issue and its potential connection with POL’s prosecution of cases. The PEAK log itself
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88.
89.
90.
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does not itself appear to make mention of any specific case and the parameters for the
event appear to be a three-week period in August 2011 affecting Horizon Online which
was fixed.
I would hope and assume that POL’s prosecution team inhouse were made aware of the
issue as the log suggests, and would also hope and assume that if there were live or past
prosecutions the issue affected, and Cartwright King were prosecuting them, or had
done so, they too were made aware of it (as the log indicates) in order to review it and
to make disclosure about it if necessary. In light of the explicit reference to the events
and POL prosecutions, I advise that POL investigates the issue with Cartwright King
in order to establish if PEAK PC0211833 was notified to the prosecution in August
2011, what, if any, cases were affected; if they were, how they were managed, and what
the outcomes were.
As these extracts from the evidence heard at the Horizon Issues Trial suggest, the
outcome of the second trial will be likely to have more relevance to the view to be taken
of the safety of past convictions where Horizon functionality and fallibility was at issue,
and possibly where they were not. In saying this, I should emphasise I am not saying
that adverse findings about Horizon will of themselves spell disaster for past
convictions; but examination of the underlying evidence which led to any such adverse
findings will be crucial.
Conclusions
The judge’s factual findings about disputed Branch Trading Statements do not in my
view impact on the safety of past convictions, because (1) they are based on his
application and interpretation of the law of contract to the contracts that exist between
POL and SPMs; (2) the judgment and his factual findings are not binding on the Court
of Appeal Criminal Division or even persuasive authority, and so they do not impact
on criminal matters, as the judge observed himself; (3) each past conviction was
founded on facts specific to that case, and in any future appeal or reference made by
the CCRC the safety test will have to be applied according to issues, and the evidence
heard in, each case and any fresh evidence the Court of Appeal permits to be adduced
before it.
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91.
92,
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The critical observations the judge made in the course of the Common Issues judgment
suggesting that POL has a culture of secrecy and regarding its approach to documents
do risk provoking SPMs, the CCRC and the public to believe that POL will have
adopted such a culture towards its duties of disclosure during the prosecution process
and possibly to the review process begun in 2013. However, those criticisms are not
grounds on which any individual can launch an appeal and they are not very likely to
move the CCRC to make a reference on that basis alone, but they risk moulding, if not
changing, attitudes towards POL.
I do advise that POL investigates the issue set out in paragraphs 84-88 above with
Cartwright King to see if PEAK PC0211833 was notified to the prosecution in August
2011, what, if any, cases were affected; if they were, how they were managed, and what
the outcomes were.
Brian Altman QC
2 Bedford Row
London WC1R 4BU
14 April 2019
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