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POST OFFICE BOARD SUBCOMMITTEE PAGE 1 of 6
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Author: Ben Foat/Rodric Williams Sponsor: Ben Foat Meeting date: 13 November 2019
Executive Summary
Context
Post Office is awaiting decisions from the courts on the Horizon Issues trial (which is
now imminent), and on Post Office’s application for permission to appeal the March
2019 Common Issues judgment (which should be delivered on or shortly after the oral
hearing on the application on 12 November 2019).
The issue raised on 3 October 2019 concerning the disclosure of potentially relevant
documents for the Horizon Issues trial (previous versions of Fujitsu’s Horizon “Known
Error Log”/“KEL” entries) has been resolved with the Court and the Claimants. It
should not impact the trial or delivery of the trial judgment.
On 25 October 2019 we received the Claimants’ individual Particulars of Claim (
“IPOCs”) for the third, Further Issues trial scheduled for March 2020. That trial will
determine whether the types of loss claimed are recoverable in principle and, if so,
how they should be quantified. Post Office’s Defences replying to the IPOCs must be
filed by 25 November 2019.
Mediation to explore settlement with the Claimant Group remains scheduled for 27-28
November 2019. On 29 October 2019 the Post Office Board authorised the Group
Litigation Subcommittee to delegate to the General Counsel authority to make
settlement offers at mediation, on terms determined by the Subcommittee. Advice on
the financial range within which the General Counsel should be so authorised, and on
the approach that could be taken to Claimants with criminal convictions, is being
provided by Herbert Smith Freehills in separate briefing notes for the Subcommittee’s
consideration on 13 November 2019.
Questions addressed in this report
1. What is the update on the Group Litigation (Horizon judgment; Common Issues
trial; Further Issues trial)?
2. What approach is Post Office taking in its Defences to the Claimants’ “Particulars of
Claim” filed for the third, “Further Issues” trial?
3. What are the next steps in the Group Litigation?
Conclusion
1. The Horizon judgment is now imminent, and should not be delayed by the “KEL
Disclosure” issue. The Court’s decision on whether to grant Post Office permission
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to appeal the Common Issues judgment should be delivered on or very shortly
after the Court of Appeal hearing on 12 November 2019. The Claimants filed
“Particulars of Claim” for the March 2020 “Further Issues” trial on 25 October
2019, which Post Office must reply to by 25 November 2019.
2. The Further Issues Defences are being drafted so as to accept in principle the
Claimants’ uncontroversial claims for compensation, but to oppose the unorthodox
or potentially significant claims for loss of earnings to retirement and litigation
funding. The Defences will also minimise the scope for factual disputes which
could lead the Judge to make adverse factual findings on incomplete, assumed
facts.
3. The next key steps are attending to the Horizon judgment once received, attending
the Court of Appeal hearing on 12 November 2019 and mediation on 27-28
November 2019, and filing by 25 November 2019 Post Office’s Defences to the
Claimants’ claims in the Further Issues trial.
Input Sought Input Received
The Subcommittee is asked to NOTE: This paper has been prepared with
1. the updates in this paper; the assistance of external legal
2. the approach being taken in the counsel.
Defences being drafted for the Further
Issues Trial; and
3. the next steps to be taken in the
litigation.
The Board is reminded to exercise caution when communicating about potential levels
of settlement. Communications about settlement should therefore only be held orally,
but if that is not possible, advice should be sought from Post Office’s lawyers.
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Litigation Update
Horizon Judgment
We have still not received the draft Judgment on the Horizon Issues trial, which is now
imminent. On 6 November 2019 the Managing Judge emailed the parties advising
that “intended dates for distribution of the draft will be circulated in due course”.
The Claimants may seek to postpone the mediation scheduled for 27-28 November
2019 if they do not feel they have sufficient time to consider the judgment ahead of
the mediation. However they have not yet asked for this.
KEL Disclosure Issue
In October 2019 we reported that an issue had come to light which suggested we may
not have given proper disclosure of the Horizon “Known Error Logs” (KELs) for the
Horizon trial.
This issue has now been resolved:
- the Claimants have informed us and the Court that they do not want to review
any further KELs or make further submissions to the Court on this issue; and
- the audit we commissioned on the completeness of Fujitsu's KEL disclosure
has not identified any further KELs which need to be disclosed to the
Claimants or require Post Office to change the submissions we made about
Horizon during the trial.?
The KEL issue should not therefore have any direct impact on the Horizon trial or
delay delivery of the judgment.
Common Issues Appeal
The oral hearing of Post Office’s application for permission to appeal the Common
Issues Judgment handed down in March 2019 will take place on Tuesday 12
November 2019. Helen Davies QC will be representing Post Office at that hearing.
We should receive the Court of Appeal’s decision at the end of that hearing or very
shortly after.
Third / Further Issues Trial
On 25 October 2019 we received from the Claimants individual particulars of claim
(IPOCs) for four test cases (Abdulla, Bates, Stubbs and Stockdale, each a “Lead
Claimant” in the Common Issues trial).
The IPOCs set out the types of loss each Claimant is claiming for the purposes of the
March 2020 Further Issues trial, which will determine whether those losses are
recoverable in principle and, if so, how they should be quantified. The IPOCs have not
put any values on these claims.
Post Office has until 25 November 2019 to file Defences to the IPOCs, with Helen
Davies QC and Tony Robinson QC retained to lead this work. The approach which
Leading Counsel is recommending is discussed in “Further Issues Trial - Defences”
below.
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Future Trials
As part of the ongoing review of all 555 individual cases, we are continuing to identify
criteria for selecting “Test Claimants”, whose cases could be used as representative of
the wider claimant group in a (unscheduled) future trial on breach (i.e. whether Post
Office acted wrongly), causation (i.e. did that breach cause the Claimant’s harm), and
limitation (i.e. is a Claimant’s claim time-barred).
No date has yet been set for the selection of test claimants. The parties have agreed
to write to the Court proposing to exchange proposed selection criteria on 12
December 2019, which would enable the outcome of Post Office’s application for
permission to appeal the Common Issues judgment to be factored into the selection
criteria, and for a further CMC to be set for January 2020 in this respect.
Further Issues Trial - Defences
Approach to Facts
The Further Issues trial is proceeding on the basis of assumed facts with no witness
evidence being called. The Court will therefore assume that the claims made in the
IPOCs are factually correct (e.g. that Post Office was in breach of contract), and that
it will not need to make findings to resolve disputed issues of fact (e.g. as to whether
a specific event happened or not).
The trial has been structured this way so that the Court can make findings now on the
types and scale of losses that are recoverable in principle by the Claimants, without
first needing to hear evidence on whether Post Office has acted unlawfully (which
would significantly increase the trial’s preparation time, hearing time and cost). The
question of whether Post Office has, in fact, acted in breach of contract will be
addressed at a later trial.
Consistent with the approach being taken to assumed facts, the IPOCs acknowledge
that nothing Post Office says in its Defences will be taken as an admission of any of
the assumed facts or allegations of breach and causation contained in the IPOCs.
Content of the IPOC
The assumed facts underpinning the Claimants’ IPOCs build on those advanced in the
Common Issues trial (Some are similar and some are new e.g. the claim in relation to
funding). For example:
- Post Office made them pay for shortfalls for which they were not liable;
- their retail businesses were disrupted by having to deal with shortfalls;
- their postmaster contracts were unlawfully suspended and terminated;
- their reputations were damaged as a result; and
they could not afford to fund legal action against Post Office because of the
financial harm they had suffered.
These assumed facts provide the foundation for the very wide range of loss and
damage the Claimants are claiming, which include:
recovery of wrongly repaid shortfalls;
- lost remuneration and profit (from the Post Office and independent retail
business), during suspension and after termination;
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- loss of capital investment / diminution in branch value;
- the costs of the Claimants’ litigation funding;
- reputational/stigma damage leading to disadvantage in the labour market;
- compensation for distress, anxiety and inconvenience;
- “aggravated damages” to punish conduct which is not just unlawful but
reprehensible; and
- consequential losses, such as wasted staff time, staff redundancy costs,
overdraft fees etc.
Post Office’s Defences
The legal principles behind many of the claims are not contentious, although the way
which they claimants seek to apply them can be. The two claims we see as being
most contentious are:
post-termination losses, which on the Claimant's claim are worth c. £148m if
payable up to the date of retirement (the Claimants’ best case); and
litigation funding costs, which on Herbert Smith Freehills’ analysis could be
worth c. £72m (as at May 2020, assuming a 4x multiplier is applied to their
incurred legal costs).
Given that the Further Issues trial will proceed on the assumption that Post Office is in
breach, Post Office does not need to dispute any of the factual claims put forward by
the Claimants. Leading Counsel is therefore recommending that we only challenge
the Claimants' case and put forward Post Office's own case where absolutely
necessary to determine whether a loss is recoverable in principle.”
This approach will mean that for the most part, only the Claimants’ view of events will
be before the Court, not Post Office’s. Post Office will however still be able to
challenge this later in the litigation (when it can put its full evidence before the Court),
and the approach will minimise the potential for factual disputes (which the Further
Issues trial has been designed to avoid), thereby limiting the opportunity for the
Judge to make findings to resolve any factual dispute (which could be adverse and
binding on Post Office at later stages of the litigation).
This approach will also help keep the Court focused on determining the legal principles
surrounding recoverability of losses rather than the history of the four lead cases.
Findings about the scope of those losses (particularly loss of earnings and litigation
funding) are important to clarifying Post Office's potential exposure and for creating
common ground on settlement.
The Defences are currently being drafted in line with this approach, which the
Subcommittee is asked to note, ahead of the 25 November 2019 filing deadline.
Next Steps
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An overview of the main court and settlement-related activity in the Group Litigation
through to October 2020 is set out in the “Group Litigation Timetable” at Appendix 1.
Between now and early December 2019 we are preparing to:
receive the Horizon judgment (now imminent);
attend the Court of Appeal on 12 November 2019 for the hearing on
permission to appeal the Common Issues Judgment;
file Defences to the Further Issues trial IPOC by 25 November 2019; and
attend mediation on 27-28 November 2019;
complete the individual claimant case reviews and draw up a criteria for
selecting test cases for later trials.
A timeline of the key milestones to early December 2019 is set out at Appendix 2.
Operational responses to the Common Issues Judgment and Contingency Planning for
the Horizon Judgment are being reported separately.
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Appendices
1. Group Litigation Timetable
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41. I Imminent Horizon: judgment expected to be handed down on or after this date
2. I 12 November Common Issues: Oral hearing of Permission to Appeal application
3. I 13 November Post Office Board GLO Sub-Committee on or after this date
4. I 18 November Further Issues Trial: Internal deadline for legal team to draft Defences and provide to Post Office for sign off.
5. I 25 November Further Issues Trial: Deadline for Post Office to serve individual Defences
6. 26 November Post Office Board Meeting
7 27 November Parties to serve and file their proposed Selection Criteria for Test Claimants
8. I 27-28 November Mediation. UKGI/BEIS authority to be obtained if required.
9 3 December Parties to set out assumed facts and issues to be decided at Further Issues Trial
10. I 4 December care Management: Case Management Conference to resolve any disputes about issues to be dealt with at
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