POL00290368 - Postmaster Litigation Subcommittee - Minutes of meeting Tuesday 10th December 2019

Evidence on official site

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POL00290368

Postmaster Litigation Subcommittee &
Board

Strictly Confidential and subject to legal privilege

MINUTES OF A MEETING OF THE POSTMASTER LITIGATION SUBCOMMITTEE OF POST OFFICE LIMITED HELD
ON TUESDAY 10 DECEMBER 2019 AT 20 FINSBURY STREET, LONDON EC2Y 9AQ AT 11:00 AM

Present: Tim Parker Chairman (TP)
Ken McCall Senior Independent Director (KM) (by phone)
In attendance: Veronica Branton Company Secretary (VB)
Nick Read Group Chief Executive Officer (NR)
Alisdair Cameron Group Chief Financial Officer (AC)
Ben Foat General Counsel (BF)
Andrew Parsons Womble Bond Dickinson (AP)
Catherine Emanuel Herbert Smith Freehills (CE)
Rodric Williams Head of Legal — Dispute Resolution & Brand (RW)
Apologies:
Tom Cooper Non-Executive Director
Agenda Item Action

1. Welcome and Conflicts of Interest

A quorum being present, the Chairman opened the meeting. The Directors declared that they
had no conflicts of interest in the matters to be considered at the meeting in accordance with
the requirements of section 177 of the Companies Act 2006 and the Company’s Articles of
Association.

2. Minutes and Matters Arising

The Postmaster Litigation Subcommittee APPROVED the minutes of the meeting held on 13
November 2019.

3. Group Litigation Order

3.1 Ben Foat provided an update on the mediation. The previous evening the parties had agreed
a financial settlement of £57.7m in principle. This was a global settlement and included the
£5.5m in costs which the Managing Judge had already ordered Post Office Limited to pay.
This sum was within the settlement range approved by the Postmaster Litigation
Subcommittee and the Shareholder. We now needed to agree the settlement deed itself but
were close to finalising.

The next steps were to:

© Continue to negotiate the settlement deed and then agree a joint statement

© Seek the written approval of the POL Chairman and Group CEO to the settlement

Seek Shareholder consent to the settlement through Tom Cooper and Richard Watson at
UKGI

e Agree the internal and external communications.

Anumber of points were raised, including:

- What would the timing of the public announcement be? It was reported that this could
be as early as late afternoon today and that we were trying to reach a consensus on the
outstanding points with the other party

- Did the settlement include all the claimants? It was confirmed that it covered all the
claimants for the civil case. What could not be covered was the potential claims for
malicious prosecution in the event of any of the convicted claimants having their claims
overturned. The convicted claimants could still take a claim through the Criminal Cases
Review Commission (CCRC)

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Postmaster Litigation Subcommittee
Board

Strictly Confidential and subject to legal privilege

- Did we know how much of the settlement would go to the funders and how much to the
claimants? It was reported that we would make no allocation between claimants. We did
not know how much of the settlement the funders would receive. We had justified the
settlement under the appropriate heads of damages and had not included litigation costs
within this

- When was the most recent criminal prosecution brought by POL against a Sub-

postmaster? It was reported that this was around 6 years’ ago. We had instructed Brian

Altman QC to assist us with the outcome of the Horizon Issues Trial judgment and how

that should influence how we dealt with the convicted claimants’ cases

What was the position in relation to Fujitsu following the Horizon Issues trial judgment? Hi

The parties’ joint statement and wider communications were discussed. The joint statement Action:
would be circulated to the Subcommittee once the wording under discussion had been BF
resolved. The draft statement acknowledged the good faith demonstrated by both parties
through the mediation process and commended POL’s willingness to make changes.

Discussions were taking place with how the joint statement would work with the

confidentiality clauses. The claimants were keen for there to be no restrictions on what they

could say about POL but this would undermine the purpose of a joint statement and we

needed to be clear about the purpose of that statement. The draft joint statement had been
shared with BEIS and we would be making sure that BEIS, Cabinet Office and No 10 Downing

Street had an agreed set of statements to use if responding to press and other enquiries. Nick
Read would talk directly with Alex Chisholm.

POL’s response to criticisms of the cost associated with reaching a settlement was discussed.
It was noted that the principal emphasis would be on having reached a new settlement which
enabled us to re-set the relationship with Sub-postmasters and move forward positively with
anew CEO leading these changes. It was noted that we might face a new Select Committee
hearing in due course and it would be sensible to prepare for and the questions that might be
asked.

The Chairman thanked all those involved in helping to secure a positive outcome. The
sustained effort involved in reaching this point was much appreciated.

Operational activity

Ben Foat reported that settlement would not bring to a close the operational activity required
to respond to the judgments. The Common Issues judgment was now law and we had to
implement its rulings. A meeting had taken place last week to discuss Sub-postmaster
contracts? and the processes that would also need to be reviewed”. We were considering
how best to deal with contracts. We were likely to look at all 11,000 plus contracts and
reissue these. If we used the unilateral right to vary the contract we would need to show that
we had been reasonable in doing so. The decision on the approach was likely to be made in

1 This included elements such as the basis of the contract, length, terms, suspension arrangements, recovery of
losses.
? For example, the branch trading statement.

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3.3

3.4

Postmaster Litigation Subcommittee

Board
Strictly Confidential and subject to legal privilege

January 2020, followed by a programme of implementation. A number of commercial
decisions also had to be taken as the approach we took to contracts was not only linked to the
Group Litigation®. There was a risk that some Sub-postmasters would not sign the new
contract.

A number of points were raised, including:

- Were there anything significant changes that needed to be made now? It was reported
that the critical element was how we enforced the current contract, for example, we did
not suspend Sub-postmasters without pay and we investigated the cause of a shortfall
before taking action. It was noted that we would need to bring back the end-to-end view
of the changes required and how this would be tested to provide sufficient assurance and
independent perspective

- That there would be additional costs associated with implementing the Common Issues
judgment and the Horizon Issues judgment. We would need to flag our additional costs in
our funding discussions with Government.

Horizon Issues trial judgment

Ben Foat provided an update on work flowing from receipt of the embargoed Horizon Issues

judgment:

- I We were working through the process for convicted claimants and would follow the
advice of an independent QC who specialised in criminal cases. If some claimants had
their claims overturned this would provide scope for malicious prosecution claims to be
brought against POL. The findings within the judgment on the legacy Horizon system
created a risk but more than this would be required to overturn a case. We would
follow the QC’s advice in each case. The claimants supported this approach.

- We would need to set up a process to deal with new claims brought in connection with
the Horizon system in operation prior to 2018. Mediation and arbitration would be
pursued rather court being the first step. We would need to discuss further whether or
not we made a provision for these potential claims at this juncture.

Decisions

The Postmaster Litigation Subcommittee RESOLVED to APPROVE that in the event of failing to
settle the mediation Post Office Limited would agree to pay the claimants’ costs of £3.4 m.

The QC’s advice was that we should not seek to appeal the Horizon Issues judgment. This had
been a technical trial drawing on expert witness evidence. The Postmaster Litigation
Subcommittee RESOLVED to APPROVE not to seek to appeal the Horizon Issues trial
judgment.

The Postmaster Litigation Subcommittee RESOLVED to APPROVE that Brian Altman QC be
approached to act as Post Office Limited’s QC in relation to the Criminal Case Review
Commission cases.

Date of next meeting:
22 January 2020

3 For example, we needed to take into account Starling (workers’ rights case).
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