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Post Office Horizon IT Inquiry
On behalf of Core Participants
Tracy Felstead, Seema Misra, and Janet Skinner
Further Submissions on Compensation
Introduction
1. Since sending our Submissions on Compensation on 22 June and the Annex on
24 June 2022, there have been two significant developments:
a. Herbert Smith Freehills (HSF) have instructed Lord Dyson to lead a process
of early neutral evaluation to help determine non-pecuniary loss for
Category B claimants (which includes the CPs we represent). This has led to
the understandable question: should the Inquiry leave the parties to find
their own way forward for compensating Category B claimants (expressed
more directly as “should the Inquiry butt out”)?
b. There have been a number of communications regarding compensation for
Category C claimants, which indicate that BEIS began discussions with
Freeths to establish a scheme, but have now opened out those discussions
to other lawyers representing GLO claimants. In an email dated 9 July, BEIS
envisages establishing an independent panel to determine claims.
2. These Submissions respond to those developments, and endorse the oral
submission of Sam Stein QC on behalf of Howe & Co, in which he urged an
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Interim Report to deal with the issue of compensation. We set out what we
would invite the Report to say at the end of these Submissions, from paragraph
16 onwards. In answer to the question ‘should the Inquiry butt out?’, we say
emphatically, ‘no’.
3. In brief, we urge the Inquiry to recommend that the scheme which is now being
discussed for Category C claimants should be open to Category B claimants, at
their choice. Those who wish to continue their negotiations with POL should,
of course, be free to continue with them. However, those Category B claimants
who have no trust in POL, and who would prefer to seek compensation
through a transparent scheme which opens up all possible heads of loss, should
be free to apply to such a scheme.
4. Wealso ask the Inquiry to recommend that the new scheme be given tight and
finite times to turnaround preliminary claims, but to leave open the possibility
of further awards for punitive damages once the Inquiry’s final Report is
available.
Why the present situation must not continue
5. The arrangements which are springing up in response to the Inquiry’s
invitation to make submissions on compensation are ad hoc at best, chaotic at
worst. There is no proper rationale for the two different compensation
structures to apply to Category B and Category C claimants, except for the
historic quirk that HSF and Freeths put them into different groups during the
settlement negotiations. Questions of principle and process should be the same
for both groups. The fact that some managed to avoid conviction while others
did not is exactly the sort of distinction that can be accommodated within one
scheme, in which the potential heads of loss are the same.
6. Category B claimants naturally have the deepest mistrust of POL. While some
may nonetheless choose to negotiate with POL, it would be a further wrong
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inflicted on them if they were obliged to do so because they have been locked
out of a parallel scheme being set up for Category C claimants which could
easily accommodate them. The compensation funds are all ultimately coming
from BEIS.
. Opposition to a scheme for Category B claimants sits very ill in the mouth of
POL. When asked whether POL is to be the final arbiter of Category B claims,
the response is that claimants are free to seek ADR, arbitration or ultimately
litigation. This speaks volumes. POL says this in the wake of the way it
conducted the Group Litigation, to a group of people who simply should not
have to fight any more. If some of them would prefer to engage with a public,
transparent process in which POL’s only role is to pay the compensation, it
behoves POL to agree, not to argue for the right to negotiate or fight in the usual
way. This is not business as usual. POL has wrung Category B claimants out,
so they have no reserves left for taking further action, and POL now wants to
be free to use that to strengthen their negotiating position.
. POL’s right to negotiate or fight has been further undermined by their own
failure to engage fairly with all Category B claimants. HSF’s instructions to
Lord Dyson appear to have been drafted with the involvement or at least the
agreement of Hudgells, but Paul Marshall, who acts for the CPs we represent,
was not even aware that Lord Dyson had been instructed until after the event.
. Of course we would not wish to inhibit Lord Dyson’s work from assisting with
the determination of non-pecuniary losses, but by definition, his work will not
resolve:
a. principles for paying pecuniary loss, which means that Mr Marshall’s
submissions on delay/fraud and the effect on remoteness, will not be
addressed. Incidentally, Mr Marshall's submissions did not seek to suggest
that the Inquiry should make any findings as to fraud at this stage, which
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would clearly be premature. His submissions as to fraud went to the
principle of general recovery that proceeds from a substantiated claim. Ms
Gallafent QC’s submissions did not appear to appreciate this distinction.
The very real possibility that the Inquiry (in due course) may make findings
as to fraud is beside the point. The vital consideration is that it would be
wrong to allow compensation to be circumscribed and finalised without
accommodating such an outcome. Mr Marshall’s suggestion, therefore, was
that pecuniary loss should be assessed as if the case involved fraud.
b. process — this means that issues which have arisen during the HSS, with
regard to how claimants are to prove their losses are likely to arise again.
The problems with the HSS indicate that process is vital for ensuring that
claimants get full and fair compensation.
c. punitive (aggravated/exemplary) damages - without any input from anyone
other than POL / HSF, we do not see how this aspect of non-pecuniary loss
can be satisfactorily dealt with through instructing Lord Dyson.
10. Meanwhile, BEIS and Freeths entered into discussions regarding Category C
complainants in a similarly ad hoc fashion. Again, Mr Marshall, who acts for
some Category C complainants, only become aware of the discussions after
they had begun, and after Freeths had already written to his clients suggesting
that they “re-instruct” Freeths. Freeths have also written to Category B
complainants in similar terms to Category C complainants, attaching “FAQs”
which include the following sentence:
“Please note that you are not obliged to re-instruct Freeths. If you do not instruct us this
means that we will not be able to represent you in Stage 1 and we will not be able to pay your
interim payment to you.”
11. Given that Category B complainants are presently excluded from the envisaged
Stage 1, and many are already being represented by other lawyers, this is a very
unfortunate communication.
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12. This procedural chaos does not bode well for just outcomes.
The locus of the Inquiry to intervene
D: Assess whether the commitments made by Post Office Ltd within the
mediation settlement — including the historical shortfall scheme — have been
properly delivered.
13. This Term of Reference must be seen in light of the unsatisfactory nature of the
mediation settlement, and Terms C and F, which ask the Inquiry to assess
POL’s cultural and governance turnaround. The question under Term D is not
literally whether the mediation settlement has been carried out, but whether
POL has provided full and fair compensation to all. An Interim Report is the
best available mechanism for improving the prospects of a positive outcome,
because at present, POL is not on the right path.
14. The problem, which cannot be perfectly solved, is how to ensure compensation
is both just and swift. So far, the mediation settlement has assisted with neither
of those aims. Mr Stein has warned that the HSS has the makings of a “scandal
within a scandal”. As for the GLO claimants, the mediation settlement was
already clearly part of the scandal, as the Government has acknowledged, at
least as far as Category C claimants are concerned.
15. The above developments risk creating a further travesty, particularly for
Category B claimants. As set out in our earlier Submissions at paragraphs 10
and 11, it would be a grotesque paradox if Category B claimants were unable
to claim under heads of loss which are open to other wronged subpostmasters.
Yet it now appears that representatives for Category C claimants will be
negotiating a new scheme, with heads of loss completely open for discussion,
but from which Category B claimants are to be excluded. Their “without
prejudice negotiations” are apparently to remain confined to settling their
extant malicious prosecution claims.
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Suggested recommendations for inclusion in an Interim Report
16. BEIS should expand the scope of the scheme currently under discussion with
Freeths and others, so that Category B claimants can engage, should they
choose to do so.
17. BEIS should ensure that all GLO claimants be notified of the discussions, and
that all legal representatives of GLO claimants be treated equally in those
discussions.
18. Claimants’ reasonable professional expenses should be paid.
19. Category B claimants should be free to choose whether they continue to pursue
without prejudice negotiations, or whether they end such negotiations by
making an application to the scheme, with their choice to remain open until
such time as they make a claim to the scheme.
20. The scheme should have transparent principles for calculating compensation,
and transparent procedures that take account of the many difficulties which
claimants face in providing records.
21. The scheme should, of course, make use of any published guidance arising
from HSF instructing Lord Dyson.
22. Payments for pecuniary loss should be made on the basis that all losses caused
by POL’s actions are payable. Remoteness/foreseeability should not be
permitted to limit claims, given the fact that POL’s actions have blighted lives
over a very long period of time, and caused “unreasonable” delay in righting
wrongs (see para 9 of our original Submissions and Mr Marshall’s
submissions).
23.The scheme should pay preliminary claims within a tight and specified
timetable from the point of claim to the point of making a preliminary award.
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24. The preliminary award should make final payments on all heads of loss except
for aggravated/exemplary damages. On that head, the award should be
preliminary until the conclusion of the Inquiry, but there should be no right to
claw back.
25. Applications to the scheme should remain open until at least the conclusion of
the Inquiry.
Edward Henry QC
Mountford Chambers
Flora Page
23 ES Chambers
Hodge Jones & Allen
12 July 2022
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