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Agenda
Post Office Board Agenda (CCRC meeting)
Thursday 24 June 2021 15:00 — 17:00 hrs Microsoft Teams
Meeting/ Finsbury Dials
© Tim Parker * Zarin Patel (NED) Ben Foat (General Counsel) * Richard Taylor (Group Corporate
(Chairman) Affairs and Communications
Director)
© Tom Cooper (NED) I © CarlaStent(NED) I * Rodric Williams (Head of Legal _I ¢ Veronica Branton (Company
— Dispute Resolution & Brand) Secretary)
Lisa Harrington © Ken McCall (SID) I ¢ Alan Watts (Herbert Smith * Declan Salter (Historical Matters
(NED) Freehills) Director)
© Elliot Jacobs (NED) I¢ AlCameron(CFO) I Nick Vamos (Peters & Peters I ¢ Lucie Lambert (General Counsel,
(15:00 - 16:00) Solicitors LLP) UKG!)
© Simon Baker QC (2 Bedford * Jac Carey (2 Bedford Row)
Row)
© Peter Staniland (Paralegal, * Zoe Johnson QC (QEB Hollis
Peters & Peters Solicitors LLP) Whiteman)
Apologies: Nick Read (CEO), Al Cameron (CFO) (16:00 onwards), Saf Ismail (NED)
ft Teams Meeting
United Kingdom, London (Toll)
1. Welcome and Conflicts of Interest Noting Chairman
2. Minutes and Matters arising Approval Chairman
Minutes from 17" June 2021
3. CACD cases Approval Nick Vamos
4. HSS cases for the Independent Advisory Panel Approval Alan Watts
5. ‘Settlement paper for the Independent Advisory Panel ‘Approval Alan Watts
6. Surpluses paper for the Independent Advisory Panel Approval Alan Watts
7. Any Other Business Noting All
Historical Matters; Historical Shortfall Scheme; Options
Paper
STRICTLY CONFIDENTIAL
CCRC Meeting - 24 June 2021-24/06/21 1 of 299
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POST OFFICE LIMITED BOARD MEETING
Strictly Confidential and Subject to Legal Privilege - DO NOT FORWARD
MINUTES OF A CCRC MEETING OF THE BOARD OF DIRECTORS OF POST OFFICE LIMITED HELD ON THURSDAY 17
JUNE 2021 AT 20 FINSBURY STREET, LONDON EC2Y 9AQ BY CONFERENCE CALL AT 15.00 HRS?
Present:
Tim Parker
Ken McCall
Tom Cooper
Carla Stent
Zarin Patel
Lisa Harrington
Saf Ismail
Alisdair Cameron
Nick Read
In attendance:
Veronica Branton
Ben Foat
Rodric Williams
Lucie Lambert
Alan Watts
Nick Vamos
Simon Baker QC
Jac Carey
Peter Staniland
Apologies: Elliot Jacobs (NED)
Agenda Item
Chairman (TP)
Senior Independent Director (KM)
Non-Executive Director (TC)
Non-Executive Director (CS)
Non-Executive Director (ZP)
Non-Executive Director (LH)
Non-Executive Director (SI)
Group Chief Finance Officer (AC)
Group Chief Executive (NR)
Company Secretary (VB)
Group General Counsel (BF)
Head of Legal — Historical Matters Legal (RW)
General Counsel — UKGI (LL) (for AOB)
Herbert Smith Freehills (AW)
Peters & Peters Solicitors LLP (NV)
2 Bedford Row (SB)
2 Bedford Row (JC)
Paralegal, Peters & Peters Solicitors LLP (PS)
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 Board APPROVED the minutes of the Board meeting to discuss the CCRC cases held on
10" June 2021.
The Board NOTED the action log.
3. Court of Appeal (Criminal Division) Cases
Tim Parker checked that Board Directors had read the case summaries and counsel's advice
and were content to proceed on this basis which all directors confirmed.
3:1. Cases for which insufficient information was available
+ Participation in the meeting was entirely via Microsoft Teams from participants’ personal addresses. In such circumstances
the Company's Articles of Association (Article 64) require that the location of the meeting be deemed as the chairman's
location. However, it was not deemed appropriate to record personal addresses on the Company record. As such, the
Registered Office is recorded as the meeting location.
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POST OFFICE LIMITED BOARD MEETING
Strictly Confidential and Subject to Legal Privilege - DO NOT FORWARD
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POST OFFICE LIMITED BOARD MEETING
Strictly Confidential and Subject to Legal Privilege - DO NOT FORWARD
ction: VB
‘0 do: AW
‘odo: AW
Chairman Date
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Post Office Limited Board CCRC Actions as at 23.06.2021
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REFERENCE
8. Potential claims against Fujitsu
ACTION OWNER
DUE DATE
Alan Watts
Board (CCRC) Meeting 18 March 2021
OPEN/CLOSED I
update on 40 new appeals and
Hecision on extension for service of
Respondent's Notices
Board (CCRC) Meeting 06 May 2021
8. Improvement Delivery Group (IDG)
Update and preparation for the
Inquiry
-1 Historical Shortfall Scheme:
Decision-making
Declan Salter/ Alan
Watts
Strictly Confidential Page 1 of 3
July Board meeting
Alan Watts Will come back to Board in 2-3 weeks’ time.) Open and
Ongoing
Board (CCRC) Meeting 29 April 2021 I
5. Potential Future Appellants (PFAs): Ben Foat Open
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Post Office Limited Board CCRC Actions as at 23.06.2021
REFERENCE ACTION ACTION OWNER DUE DATE STATUS OPEN/CLOSED —
I
a) e
8.1 Historical Shortfall Scheme: ITC asked how we demonstrated the financial I Declan Salter IA paper is being drafted for the Boardto I Open
Decision-making Klifference in settlement offers depending on eview the approach to investigation
b) hich level of investigation was carried out. DS procedures.
ould provide more information and analysis
jor the Board on the “L123” proposals and
hhoted that this was not a one-off decision for
he Board.
3.1 Historical Shortfall Scheme: Alan Watts Open
Decision-making
4)
8.2 William Michael Penney Alan Watts Open
8.6 Asif Latif Alan Watts Open
p)
8.6 Asif Latif Alan Watts Open
b)
Strictly Confidential Page 2 of 3
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24th June 2021
he minutes of this discussion would be re-
circulated to the Board.
june 2021.
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Post Office Limited Board CCRC Actions as at 23.06.2021
REFERENCE ACTION ACTION OWNER DUE DATE STATUS OPEN/CLOSED
Board (CCRC) Meeting 10 June 2021
8.3 Standstill agreement Alan Watts Open
44. Tranche 2 and Tranche 3 Test cases Alan Watts July 2021 [Draft paper being discussed internally and I Open
hould be shared with the Board for the
jmeeting on 1* July 2021.
Board (CCRC) Meeting 17 June 2021
3.3 Planning for Board meeting on _Iit was agreed that the Wendy Cousins case and \Veronica Branton jreulated to the Board on 17% and 18% I To Close
Appendices:
A copy of the letter we send to HSS out-of-time application requests and a proposed comms about potentially not providing compensation to certain cases of
overturned convictions.
Strictly Confidential
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Tab 2.2 Action Log
2.2
Historical Shortfall Scheme: Wording for ‘Hard Stop’ Late Applications
Proposed wording:
Dear
Thank you for your email/letter* (delete as appropriate) about the Historical Shortfall
Scheme. We are sorry it has taken some time to provide a response but would like to
assure you that your enquiry has been considered carefully.
The Scheme was open for 3 months and closed on 14 August 2020. In addition, we did
allow 15 more weeks for Postmasters with exceptional circumstances to apply. However,
this ‘grace period’ passed quite some time ago and in order to ensure that we are able to
progress those applications within the scheme in a fair and timely manner, we are
unable to accept any further applications into the Scheme.
We do recognise that this will likely be disappointing news for you but hope that you
understand the reason for our decision and wish you all the best.
Kind regards,
Declan Salter
Director - Historical Shortfall Scheme
Previously agreed wording for info
Thank you for your email/letter (delete as appropriate) about the Historical Shortfall
Scheme. We are sorry to advise you that we are unable to progress your
enquiry/application (delete as appropriate) further as it was submitted after the closing
date of 14 August 2020. While we allowed 15 more weeks for Postmasters with
exceptional circumstances, this ‘grace period’ has passed too.
The Scheme website and public communications all gave the closing date and you were
welcome to contact us if you were having difficulties meeting this date. The Post Office is
committed to processing all claims as quickly and fairly as possible which is partly why
we needed to set a final end date for applications.
We recognise you may be disappointed about this although we hope you understand the
reason for our decision, and we wish you all the best.
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2.2
Draft reactive lines re no interim payment in some cases
The Government has made funds available to Post Office to enable us to begin the process of making
interim payments to affected individuals, as we continue to discuss the arrangements for full and
final settlements. These interim payments do not affect people’s rights to future compensation.
As we have said before, we are in no doubt about the human cost of past failures and want fair
compensation for people affected that reflects what has happened. Post Office does not have the
financial resources for this and we are therefore continuing to work with Government to ensure that
arrangements are made for full, appropriate compensation in current and future cases as quickly as
possible.
We never discuss individual cases.
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Tab 8.1 Historical Shortfall Scheme: Options Paper
POST OFFICE LIMITED
BOARD REPORT
Historical Shortfall Scheme - Options
Title: Pamer Meeting Date: I 24th june 2021
Author: — [Declan Salter, Historical Matters Sponsor: Nick Read, Group CEO
Director
June 2020
Input Sought:
To Review options for accelerating the Historical Shortfall Scheme.
To agree which options should be progressed
Executive Summary
The HSS is becoming clogged-up in process and it is imperative to unlock this such that the scheme remains alive to
provide necessary redress for Postmasters; fairly and in a timely manner. As was agreed last week POL will have to
balance timescales with sensible compromises such that we can be fair to Postmasters overall (as per the JR
Judgment). sour of these decisions will reduce workload (and simultaneously reduce costs) and some will require
additional or esources {which might increase costs). Meanwhile the run-rate of administration and interest
is currently!
the current review of costs and budget will report separately).
Within the current process the scheme is forecast to have at best 95% of offers made in 2022; HM has been challenged
to achieve this in this financial year. The Board is asked to consider adopting a reasonable approach to investigation
(determined case-by-case) to support the PMs claim (to complete more cases in a shorter period of time); to allow
HSF to use additional resources in London; and to consider raising the De Minimis level (including incidental items as
well as Shortfalls).
In reality the Board needs to determine if the purpose of the Historical Shortfall Scheme is to resolve all claims as made
(and further clarified where necessary by RFI and other means) or whether it is to determine every possible shortfall
throughout the entire tenure of the Postmaster, whether claimed or not.
The Board is asked to agree:
1. An approach to investigation is followed that ensures an appropriate investigation is completed in order to
complete more investigations in a shorter period of time;
2. The using additional HSF resource and/or HSF London (rather than HSF Belfast) to complete Legal Case
‘Assessments in a shorter period — est! IF
3. To raise the de minimis level toi: ‘0 enable at least an additional estimated 80 cases to be dealt with under
de minimis, accepting the associated risks.
N.B. The Board will still have to return the issue surrounding the Removal of the Panel’s cap to allow D&! Payments
to be offered.
The main risk to the scheme remains the time delay in making offers to claimants with increased focus upon this
issue both for POL in the media (and schemes generally) and the age-cohort of claimants seeking remediation.
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Tab 8.1 Historical Shortfall Scheme: Options Paper
@
Background
Approach to Investigation
The Board previously decided on 13" May 2021 (at Board CCRC meeting) that all shortfall losses should be investigated
‘fully’, but then did not take a decision 25" May 2021 on whether to lift the cap placed upon the Independent Panel
to be able to offer above an amount claimed. Without removal of the cap there is no value to investigating the claims
beyond that claimed in their application. Carrying out a ‘full’ investigation has been interpreted as meaning looking
at every single available data sources covering all periods within the PM tenure in order to identify all evidence that
may contribute to decision-making. As this process takes much longer to complete than previously, the impact is a
delay to completing investigations.
De Minimis Level
The principles for the Di Minimis level were previously agreed by Board 8" October 2020, taken through BEIS and
Panel and 421 offers have been made to date, with a 96% accept rate. As more information has now emerged on the
increased cost of processing claims through Scheme, along with delays offers being made, there is a commercial
consideration to be made on a value-for-money basis to now increase the di minimis level to save money and to
additional accelerate more offers being made, particularly during the summer period, when no offers will otherwise
be made due to test case principles being finalised by Panel.
Challenge
In discussions with CFO, the 18 month timeline to end Dec 2022 to make 95% of HSS offers was highlighted as an issue
due to the long delay PMs will experience in receiving offers. Options were sought which would reduce the timeline
to 9 months, achieving 95% instead by end March 2022
The primary options to accelerate timelines by the greatest amount fall into two categories:
Cases that go through the standard process: ensuring that each step of the process (Investigations, Legal Case
Assessment) has capacity to progress more cases in a shorter timescale;
Cases that go through the de minimis process: increasing the de minimis level to enable a greater volume of cases are
processed quickly and cheaply, rather than being put through the full process. In addition the De Minimis principle
could be extended to include additional claimed amounts where the sum involved is less than the cost of investigation.
Accelerating cases that go through the standard process
Approach to investigations
HM had previously recommended (& commenced) investigating claims using a Level 1, 2 or 3 basis as follows:
L1: analysing the PMs account to see what repayments have been made (this identifies most of the claimed shortfalls);
L2: extends L1 to look then at all Transaction Corrections applied to the branch which should allow a further
understanding of all adjustments to the branch;
L3: further using POL’s NRQ data (and in extreme cases even requesting all ARQ data from Fujitsu and involves
analysing all transactions in the branch to see if it is possible to determine anything further than L1 and L2.
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Tab 8.1 Historical Shortfall Scheme: Options Paper
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After the decision was taken to investigate all claims right through L1, L2 & L3, HM has invested by recruiting more
people into the team but forecasts still indicates that this will double the scheme timeline and completion of initial
offers to 95% of all applicants is unlikely before end December 2022, at very best.
Options to accelerate investigations
(N.B. Any option would have to be agreed by the Independent Advisory Panel)
The Board is asked to agree which one of the below approaches to investigation is acceptable (they are listed in
time-impact order, with reverting to L123 being the fastest option and the only one that has to opportunity to
complete all first offers by Spring next year).
1, Revert to the previously-applied position of L123 investigation to accelerate offers in order to be fair to the
overall claimant group;
a. This would ensure an investigation that is focused on the shortfall applied for was investigated up to
the level at which evidence to support it was found;
b. It would mean that if there were other shortfalls that the claimant has not claimed for, these may not
be found and would therefore not be considered in the claim.
2. Determining on a case-by-case basis what is a reasonable level of investigation (HSF to work with POL to
determine guidelines), both in terms of data sources to consult and the time periods the investigation should
cover, which are then agreed with Panel. This approach is predicated on refining investigations by ‘searching
for the shortfall applied for’, rather than ‘searching for all shortfalls at any point in tenure’:
a. This would enable ‘tailoring’ of investigation to what could reasonably be expected and in line with
Panel expectations;
b. N.B. This would expedite some offers, but is likely not to expedite as much as L123, as investigation
would continue through all data source/periods deemed ‘reasonable’, rather than stopping when an
amount claimed was found.
3. Maintain the previously-agreed decision to do a ‘Full’ investigation approach, searching through all available
data sources covering all periods during the PM tenures, regardless of which period a claim may specifically
relate to
a. This would not offer an opportunity to accelerate offers and would therefore cause delay to PMs
receiving offers
b. Due to the extended time to make offers, compensatory interest paid out across the claims would
increase by c. £400k per month’s delay (declining each month as claims are settled) [~£2m in total].
c. The result of the analysis of what further has been discovered through the full investigation
undertaken to date is due to be available shortly and a pre-arranged meeting with UKGI is scheduled
for St July
d. For the full investigations to continue the Board will need the Panel to lift the cap on shortfall claims.
Option to accelerate Legal Case Assessment
To enable Legal Case Assessment to keep pace with an increased speed of Investigations, (assuming a change to the
investigations approach, above) it is necessary for HSF capacity to be increased. As capacity at HSF Belfast peaks, it will
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Tab 8.1 Historic
fall Scheme: Options Paper
@
be necessary to use HSF London resource to progress more complex Legal Case Assessments. This will increase cost
betweeni_.
J, depending on case numbers.
The Board is asked to agree the processing of more claims via HSF London and the increased cost of
this would be more than offset by the savings in interest payments).
Option to increase De Minimis:
The current de minimis level was set at /---i, based on an initial view of the commercial advantage of settling these
lower-value claims, rather than putting them through the full process.
he de minimis level was agreed with Panel and reviewed with
UKGI/BEIS.
Of the 421 offers made to date, 96% have been accepted by Postmasters, representing c.18% of claims that have
now been successfully closed.
If the de minimis level was increased to [am it is estimated an additional 80 cases could be progressed quickly,
efficiently and at a cost saving — ensuring offers are made to a further c.4% of claimants. As each Shortfall-only claim
a costs an extra [ ‘o administer there would be a cost-saving of
believes there is unlikely to be any significant saving in the claim award from investigation of such cases
The existing risk that was called out when Board agreed the previous de minimis level was that of paying out
settlements that may be higher than investigation would evidence — but as the cost above would offset the value of
this risk. As the principle of setting a de minimis level was previously agreed by Board (date), this would mean
extending the same principle to these additional claims
Additional risks of increasing the level of de minimis are that it would be necessary for Panel to agree the new level
and that changing the level may be seen as weakening the justification for the original level.
This approach is recommended as the financial benefit considerably exceeds the risk meanwhile satisfying more
Postmasters and maintaining some momentum in the scheme, particularly during the period when test cases are being
progressed during July/August
(N.B. A small number of cases have already had RFls sent out, and/or investigation has commenced, so these have
been excluded from the above numbers and will be addressed on a case-by-case basis as to whether they should be
included in future or not). HIM’s proposal is that any further information obtained (by RFI or otherwise) be assessed and included
if itis to the PMs advantage and all claimants in this group would receive their offer without deduction to the claimed amount,
thus being fair to the entire cohort.
The Board is asked to agree the increase in the HSS Shortfall-Only di minimis level to £20k to enable offers to be
accelerated.
N.N. In addition, HM has instructed HSF to review and re-classify incidental items claimed alongside quantified
shortfalls where these are small in relation to the SF and less than the cost to investigate; such that these could be
considered for future a DM cohort, again saving time and money with no detriment to PMs. (See below, Further Steps).
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Tab 8.1 Historical Shortfall Scheme: Options Paper
As above approaches will reduce the time by which offers will be made to claimants, there will be a consequential
reduction in compensatory interest payments. The quantum of this cost saving would depend on the extent of the
acceleration — for example, it is expected that for a six-month acceleration, this could be in excess of a £1m cost saving.
Factors offsetting above costs
The time and cost savings are all our current best estimates and we will aim to continue to manage the scheme in the
best interests of all Postmasters. It has not been possible to determine any significant trend from the current “full
investigation” (as opposed to the previous L123) that would in general improve the validity of the claim made for
Postmasters; in contrast the further investigation raises more questions than it answers.
Legal Advice
HSF has provided advice to the Board directly (to maintain privilege) which will be uploaded to Diligent.
Further Steps
The above primary options will make the most significant impact on reducing scheme timescales, but a number of
other options (examples below) are being developed which could also contribute. As test cases progress through
Panel, the greater clarity on how different elements of claims may be treated and enable validation of the below
approaches, or highlight other opportunities and these will be reviewed with Board/Panel/BEIS/UKGI as appropriate:
1. Extending de minimis to include low-value consequential loss claims (e.g. those where consequential losses
amount to less than 30% of Shortfalls claimed)
2. Reviewing categorisation of consequential loss Head of Loss, which may result in additional simple de minimis
cases being identified that can be processed
3. Identifying low-value Shortfalls claims with a simple Distress & Inconvenience Head of Loss and asking Panel
to adjudicate primarily on the D&! elements (requires Board approval).
4. Developing a principle of ‘Commercial Concedes’ where other factors may justify conceding claims on
commercial grounds, rather than spending time and cost to process fully.
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