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From: Ben Foatf.
Sent: Tue 11/06/2019 3:
To: andrew.parsonsI Rodric
Williams§~
Ce: Tom Beezer[f F
Subject: RE: Group Litigation - Annual Report and Accounts - Disclosure [WBDUK-AC.F1D26896945]
Andy
Thanks for your email.
It does leave Post Office in a difficult position. I remain surprised that no overall assessment on merit has been
undertaken when we are two trials in. I do think we need to have a view as I don’t think the Board Sub-committee
will just accept a “wait and see” approach particularly given the outcomes to date, the shareholders increasing
interest and against the backdrop of settlement/mediations discussions.
The auditors will need to discuss what the view is as we have to consider our approach to the Annual Report and
Accounts and in particular our legal financial reporting requirements. Can you please ensure that this meeting
happens soon. Happy to join.
We need to be careful about statements generally going forward as I think an impression has been formed that there
were prospects of success. Clearly, there was on the common issues judgment and recusal. That should be discussed
with PWC as it would form part (presumably of the overall prospect of success in terms of liability). I would have
thought Helen Davies QC would now be suitably placed on the common issues appeal though would be something to
discuss with HSF.
I should also point out that Al was particularly disappointed on learning that the Claimants had in fact provided a
Schedule of Information in relation to quantum. Like him, I had heard numerous people advise that the claimants had
not provided anything on quantum whereas they had but it was that we didn’t think it was appropriately
particularised or valid (at least for some heads of damage). Although we don’t agree with their assessment or
approach that isn’t the same thing as not having provided anything. Consequently, he will be raising with Board
tomorrow as he believes that may have formed part of the approach for the ARA last year.
Going forward, we will need to set up another workstream to consider settlement (and the operational impact as well
as future claims). Can both of you start to consider and pull a straw man / pathway together.
Kind regards
Ben
Ben Foat
General Counsel
Ground Floor
20 Finsbury Street
LONDON
EC2Y 9AQ
Highly Commended for ‘Excellence In-house’ at the Law Society
Excellence Awards 2018
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From: Andrew Parsons [mailt
Rodric Williams ¢. GRO
Subject: RE: Group Litigation - Annual Report and Accounts - Disclosure [WBDUK-AC.FID26896945]
Ben
The concern at the outset was that any early settlement would be seen as conceding the Cs arguments on the SPM
contracts and Horizon. This would then possibly open the floodgates to more claims. So the plan was for Post Office
to try to secure some positive decisions in its favour before broaching the topic of settlement.
The strategy was to contest the Common Issues trial, because based on the advice from Counsel, Post Office should
win on most points. With the Common Issues expected to be resolved in PO's favour, either the Cs funding would
collapse or they might walk away for a modest settlement that, when viewed against a positive Common Issues
judgment, would not set a dangerous precedent. With this in mind, before the Cl judgment was handed down we had
already agreed a mediator with Freeths and had begun planning for settlement discussions.
Further, Post Office had Deloitte review the Horizon system out the outset of the litigation and they advised that
Horizon was robust and extremely unlikely to be the cause of shortfalls in branches. This therefore gave us a back-up
plan in case a resolution didn't come immediately in the wake of the Common Issues judgment. Deloitte gave us a
degree of confidence in winning the Horizon trial, and that might then cause the Cs funding to collapse or a modest
settlement would be possible,
If this didn't work, then the next step was to "thin the heard". By this we meant identifying sub-groups of Claimants
whose claims could be defeated on a technicality or legal point. For example, trying to strike out all the time-barred
claims. By "thinning the herd" you undermine the economics of the group. Less Claimants means less damages
which makes the funder's return on investment lower to the point where they would prefer to settle rather than invest
more money.
The strategy was never to seek an outright win through the Court process, for that would mean ultimately defending
500+ individual claims in 500+ separate trials (because the cases turn on their own facts and the utility of dealing with
them as a group gradually erodes as more "group issues" are resolved and you are left with individual issues). Even if
Post Office's legal case was perfect, securing a full resolution through the Courts would take years and be massively
disproportionately expensive. Hence, the above plan to build leverage and air cover through the Court process to
force a settlement or a collapse of the litigation.
I hope this helps explain why there hasn't been an overall opinion on the merits of the litigation in general. My
availability is patchy this week, but if you would like to discuss, drop me a note and I'll call you as soon as I can.
Kind regards
Andy
Andrew Parsons
Partner
Womble Bond Dickinson (UK) LLP
d: +44 2380 20 8115
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From: Ben Foat +
Sent: 08 June 2019 21:01
To: Andrew Parsons! ; Rodric Williams {
Subject: RE: Group Litigation - Annual Report and Accounts - Disclosure [WBDUK-AC.FID26896945]
This maybe controversial — why are we going to trial if we don’t have an opinion on the likely outcome (that would be
favourable to us). One would not usually go to trial without advice that we were going to be successful.
In any event, can you please reach out to Chris and Lucy at PWC. As the external lawyers, they need your confirmation
on the approach. They want to discuss the matter with you.
Kind regards
Ben
Ben Foat
General Counsel
Post Office Limited
Sent: Thursday, June 6, 2019 6:56:09 AM
To: Ben Foat; Rodric Williams; ‘Watts, Alan’; kirsten. massey: 3, Henderson, Tom; Mark Underwood1
Subject: RE: Group Litigation - Annual Report and Accounts - Disclosure [WBDUK-AC.FID26896945]
Ben
For last year's audit, we provided the attached letter that expressed our view that it was reasonable for Post Office to
state that it was currently unable to estimate the amounts of the ultimate liabilities which might be incurred. However,
to be clear neither WBD nor Counsel have ever given an opinion that Post Office would or ought to be successful in
the outcome of the litigation overall, which I think is the view sought in your email and PWC's email. We are not ina
position to give such an opinion as that would turn on the outcome of 555 cases, and we would need to review and
assess each individual case. Thus far, Counsel have produced a written opinion on the likely outcome of the Common
Issues and have verbally briefed the board Sub-committee, and more latterly HSF, on the likely outcome of the
Horizon Issues. But the opinions do not go further than that.
With the few small changes attached, I'm happy with the draft ARA wording. Also, save for adding a reference to the
recent costs orders, I stand by the view in the attached letter and would (subject to clearing WBD's internal compliance
checks) be prepared to issue this letter again this year.
Happy to discuss.
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Kind regards
Andy
Andrew Parsons
Partner
Womble Bond Dickinson (UK) LLP
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From: Ben Foa
Sent: 05 June 2019 22:19
To: Rodric Williams GRO _} ‘Watts,
Alan'! " ; Mark
Underwood
Subject: Group Litigation - Annual Report and Accounts - Disclosure
All
See below. This relates to the Post Office 18/19 Annual Report and Accounts and specifically whether a provision
needs to be made (ie if its more probable than not that an economic outflow will occur which essentially means that
‘on balance we will like pay money in relation to this matter). The legal advice to date is that on balance Post Office
believes that it would be successful given the legal analysis and that there has been no liability in respect of the claim
to date and won’t know until the judgment of at least the third if not fourth trials. Consequently, it is not more
probable than not and as such no provision needs to be made but as a contingent liability a disclosure statement is
required. I have circulated the draft disclosure wording for the ARA but PWC will need to speak to WBD specifically
(with HSF) to confirm the view. They also need to get an understanding of costs.
Kind regards
Ben
Ben Foat
General Counsel
Ground Floor
20 Finsbury Street
LONDON
EC2Y 9AQ
Highly Commended for ‘Excellence In-house’ at the Law Society Mobile :
Excellence Awards 2018
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From: lucy.h.mason{”
Sent: 05 June 2019 20:02
To: Ben Foat I”
Ce: Chris Neale (UK - Assurance) ¢
Woodhouse ¢
Subject: Follow up to our call this afternoon
GRO Tom
. } Tom Lee ¢_.
Andrew Paynter (UK - Assurance)
Hi all,
Thank you for your time today - it was most useful. As discussed, I've just dropped the follow-up actions into an email
so we all know what the next steps are for both parties.
Post Office
* Ben to chase the arrangement of the external counsel calls/meetings with PwC for WBD and HS. These will
be key and our partner, Andrew should be involved on the calls (Our expectation is that external counsel will
provide written confirmation subsequent to the meetings that an economic outflow is not probable as POL
ought to be successful based on current law).
* POL to provide an overview of expected costs per trial, to which financial year they relate for PwC
completeness review (to ensure we're comfortable with what you are and what you are not providing for and
the reasons why)
* Management to provide a paper as audit evidence which summarises the position on the GLO and the stance
to be taken on disclosure in the ARA
* Management to start to draft disclosure for inclusion in ARA - including the fact pattern and what has
happened in the case and POL's position at point of signing. Disclosure to be explicit about probability versus
possibility (i.e. why it is not probable in light of what has happened over the course of the last year).
PwC
* PwC to consult internally as to the implications of what ‘considering settlements options' in terms of every
eventuality scenario planning means from a possibility / probability argument - to feedback to POL on this
© PwC to draft legal confirmation for Ben to review prior to issuing them to WBD and HS after the meetings
have occured.
Please let me know if I have missed anything out.
In terms of timeframes, I think the next couple of weeks will be fairly critical in shaping the above, we are obviously
cognisant of the fact that this is a moving picture however there will be a lot of interest in the disclosure from
stakeholders on both sides of the audit, so would be good to get things moving fairly quickly.
Thanks in advance,
Lucy
Lucy Mason (UK - Assurance)PwC I Senior ManagerMobile: 4 Email:
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