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IN THE POST OFFICE HORIZON IT INQUIRY
SUBMISSIONS ON BEHALF OF THOSE REPRESENTED BY HOWE & CO
FOR THE COMPENSATION HEARING ON 27 APRIL 2023
INTRODUCTION.
1. We have been asked by the Chair to address the following issues:
(i) Bankruptcy issues,
(ii) Taxation issues
(iii) Factual progress update on the Historical Shortfall Scheme and Overturned
Historical Convictions Scheme
(iv) Factual progress update on implementation and administration of the Group
Litigation Scheme
2. We have taken the view that the Chair seeks a factual progress update on the three
schemes primarily from DBT (formerly BEIS). However, a number of issues have
arisen in individual compensations claims which are being dealt with by solicitors
within Howe & Co. We have raised these issues towards the end of this document.
3. We would wish to respond, on behalf of our clients, to any updates provided from
DBT/ POL at the hearing on 27 April 2023 and propose to do so at the oral hearing
on 27 April 2023.
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4. The focus of these submissions is on the GLO Scheme. This is for 2 reasons. Firstly,
the majority of our clients were members of the Group Litigation. Secondly, our
previous submissions as to the GLO Scheme have been necessarily limited due to
the fact that no such scheme had been devised at the dates of the previous
compensation hearings.
The GLO Scheme
5. On 14 March 2023 Howe & Co received a late draft BEIS/ DBT revised Principles
and Guidance, an application form and a claimant Q&A.; albeit that BEIS had
provided an incomplete and provisional draft for the purposes of the Inquiry on 7
December 2022.
6. We have taken instructions upon and considered this documentation. However,
we should note that, whilst there was consultation at earlier stages as to the type
of scheme that should be put forward?, the GLO Compensation Scheme Guide and
Principles (‘GLO Scheme’) (which was published on 23 March 2023) was not
prepared in consultation with Howe & Co, nor, to the best of our knowledge, with
other solicitors representing Core Participants in the Inquiry.
7. Had Howe & Co had any meaningful input into the design of the Scheme, we would
have sought provisions to facilitate resolution of claims within a short timeframe
and also had input on a range of issues including the ‘banding’ in relation to heads
of claim.
8. Our clients have also noted that the timing of the publication of the GLO Scheme
represents, in their view, yet another example of tangible progress being made as
a result of the Inquiry continuing to monitor the issue of compensation through
holding regular hearings.
* Howe & Co responded to an initial consultation letter of 2 September 2022 by way of representations dated
28 September 2022.
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9. The issue of fair compensation is urgent, not least because SPM claimants are
continuing to die without being compensated. We ask on behalf of our clients that
the Inquiry continues to conduct hearings and that the Chair continues to publish
progress updates.
BANKRUPTCY ISSUES
10. The underlying principle behind any scheme for compensation is that the claimant
should be placed back in the position that they would have been had the conduct
for which compensation is to be provided not taken place.
11. There are a number of reasons why the GLO Scheme, as currently drafted, fails to
meet those objectives. In particular, the Scheme imposes unnecessarily onerous
procedural and evidential hurdles and fails to incorporate any timetable. Neither
does it take account of relatives of SPMs, who were affected by the scandal.
12. For the purposes of the hearing on 27 April 2023 we maintain that the GLO Scheme
fails to afford sufficient protection to those who were made bankrupt inter alia
through the facilitation of applications for annulment or recission. Neither is
adequate provision made for those who have been required to enter into IVAs.
13. The GLO Scheme, as recently published, deals with bankruptcy as follows:
5.7. Bankruptcy/insolvency
5.7.1. Losses suffered if you underwent bankruptcy or insolvency proceedings
as a result of a Horizon Shortfall may be claimed as a Consequential Loss.
5.7.2. For such a claim to be successful you will have to provide evidence that
you were bankrupted/declared insolvent (as appropriate), the value of the loss
claimed and that the bankruptcy/insolvency was due to the Horizon Shortfall
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(rather than other intervening events/general financial hardship/other
factors.)
5.7.3. The types of documents that you should provide with your claim if
possible include the following:
* copy of bankruptcy order or IVA documentation;
* copy of notice of bankruptcy in appropriate newspaper;
* financial/accounting evidence to demonstrate that the Horizon Shortfall was
the reason for the bankruptcy/insolvency e.g.: - bank statements;
- accounts;
- cash flows (historical and forecast);
- business plans (historical and forecast);
- management information (historical and forecast);
. details of all creditors at the time of bankruptcy/insolvency; and
. if the bankruptcy/insolvency process has concluded, details of
payments made to creditors.
6.7.4. If you were made bankrupt as a result of the Horizon Shortfall, you may
be able to claim for:
© Diminution in value to your estate or assets because of the bankruptcy.
* Other consequential pecuniary loss, e.g. if you suffered a financial loss as a
result of harm to your credit and reputation by reason of bankruptcy.
© General damages (anticipated to be in the range of £20,000 to £60,000.)
* The expenses of the bankruptcy (including annulment costs already incurred.)
* The statutory interest payable to your creditors.
6.7.5. Where Post Office was the original petitioning creditor in your
bankruptcy, aggravated damages may also be claimed. These are anticipated
to be in the range of £10,000 to £25,000.
6.7.6. You should provide a calculation showing how the amount being claimed
has been quantified.
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6.7.7. If you would like to seek an annulment, the Scheme will cover the
reasonable legal fees associated with you doing so, e.g. court fees. This request
should be facilitated by your legal advisor. You can provide an estimate of the
costs in your application form, or if after the submission of your application
form, by emailing glo.compensation
14. Anumber of issues arise from this section of the scheme, and we have noted below
that the scheme imposes an unduly heavy evidential burden upon applicants.
Delay in producing the GLO Scheme
15. The Chair will recall addressing Counsel at the hearing on 8 March 2023 in
connection with the sad news that one of our clients, Isabella Wall, had died.
Counsel informed the Chair that Ms Wall had died before any final payment had
been made under the ex gratia scheme, let alone final compensation.
16. The case of Isabella Wall highlights why the continuing delays by DBT are so
harmful to many of our clients. More SPMs may not live to enjoy the compensation
which the scheme is intended to deliver unless matters proceed with urgency. The
Inquiry will be aware from our earlier submissions that many of our clients are
elderly and/or suffer with health issues.
17. Our clients do not understand why this scheme was not prepared sooner. The
Inquiry will note, from submissions that we made on 2 December 2022, that Howe
& Co has been calling for a compensation scheme since February 2021. In fact,
Howe & Co assisted many SPMs in seeking compensation over a decade ago in the
failed Post Office mediation.
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18. Indeed, on 22 October 2021 Howe & Co wrote to the Chief Executive of Post Office
Limited and asked for confirmation that POL would start work immediately to
establish a reparation scheme for SPMs and other persons affected by the Horizon
IT Scandal. The letter clarified that any future holistic scheme should not exclude
claimants in the Group Litigation.
19. Eighteen months have passed since the writing of that letter. Unfortunately, the
development of the GLO Scheme has stretched out over many months. The Chair
cautioned against exactly this kind of delay in August 2022 in the Chair’s Progress
Update on Issues relating to Compensation, paragraph 166 of which stated: (our
emphasis)
166. It is anticipated that the Scheme for delivering compensation to eligible
Claimants in the Group Litigation will emerge following proper discussions and
negotiations between the Claimants’ representatives and officials of BEIS. Those
discussions and negotiations should be undertaken within weeks and should
not stretch over many months. The announcement that further compensation
would be paid to Claimants in the Group Litigation was made nearly 5 months
ago.
20. The Chair will recall from submissions of 2 December 20222 that it has been the
position of DBT and POL that those who were made bankrupt as a consequence of
the Horizon IT scandal were more complex than other claims and would take more
time to resolve.
21. We strongly objected to this stance because our bankrupt clients felt that they
were being ‘held at the back of the queue’, notwithstanding that their financial
situations were in many cases extremely serious. After the initial delays in
providing interim payments had resolved, our clients still received unfair
outcomes. We understand from Peter Wall that approximately 40% of Isabella
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Wall’s interim payment was taken by her Trustee in Bankruptcy and had not been
restored to her at the time of her death.
7 August 2024 - expiry period of financial payments
22. It should be uncontentious that delays in the GLO Scheme could result in the
scheme failing to compensate large numbers of SPMs. This is because of the
limited timeframe under which the Scheme must operate. Paragraph 39 of the
Chair’s Statement on Issues relating to Compensation, January 2023 states:
39.First, all claims under the scheme must be resolved by 7 August 2024. The
funding for payments under the scheme has been obtained by the
Government in reliance upon statutory provisions which dictate that the
funds must be used for their allocated purpose by that date. That means that
approximately 550 claims will have to be considered in the course of the next
20 months. The experiences gained in administering the HSS and OHCS
demonstrate how challenging this will be.
23. We wish to highlight that the delay by DBT in establishing the scheme has created
avery real concern for our bankrupt clients and those who are subject to IVAs.
24. Essentially, there is now significant time pressure for bankrupt and IVA affected
clients to progress through the newly formed scheme to final payment within 16
months. We ask that the Chair considers whether a timetable should be imposed
on DBT to ensure that the clock will not run down in relation to this very important
Scheme.
Delays in obtaining disclosure
25. The reason why it is now necessary that there be some sort of time management
structure, is that bankrupt/ IVA affected SPMs are required to discharge a more
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26.
27.
28.
29.
30.
onerous evidential burden than applicants who are not burdened with trustees or
officeholders.
Indeed, one of the key principles of the GLO Scheme is that the onus will be placed
on applicants to produce evidence that claimed losses were incurred and that the
cause of the loss was Horizon. Applicants who have been subject to bankruptcy
must include details documentation to support their claims and are additionally
required to demonstrate that the bankruptcy/ insolvency was due to the Horizon
Shortfall, rather than other intervening factors.
We have noted in our earlier submissions that it is not reasonable that the very
institutions which were responsible for the scandal (and DBT remains the owner
of POL), should seek to place burdens on the victims of the scandal.
However, it should be clear that where POL was the petitioning creditor, liability
will be relatively straightforward. Disclosure of documents remains an important
issue for this type of case. Many applicants to the Scheme may no longer have
access to all of the documents that they need and will need to rely on disclosure
from POL to establish their claims.
There will be other cases where POL may not have been the petitioning creditor,
but where individual applicants will maintain that but for their having to repay POL
upon demands made as a result of Horizon shortfalls, they would not have become
bankrupt or insolvent.
In all these cases disclosure will be particularly important. The Inquiry will recall
that very many SPMs have given unchallenged evidence to the effect that they
were denied access to their documents and records, upon having been suspended
following an audit.
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32 weeks for disclosure
31. In view of this urgency, we are concerned to note that BEIS/DBT informed us by
email dated 8 March 2023 that ‘POL explained the constraints that mean the full
set of disclosures will take 32 weeks.’
32. Essentially, our clients now understand that POL will take 7-8 months to complete
the disclosure process in respect of each individual claim. This delay is potentially
very serious given the hard stop of 7 August 2024 of the GLO Scheme. Whilst we
have obtained disclosure on behalf of our clients through the making of subject
access requests under the Freedom of Information Act, it is likely that many SPMs
who are subject to bankruptcy and IVAs will be unable to access the documents
that they need from POL to effectively access the GLO Scheme. This is a major
deficiency of the Scheme.
33. We therefore ask that DBT/POL takes the following steps:
(i) POL expedites the disclosure process through allocating sufficient further
resources to do so; and/or
(ii) DBT confirms that it will take steps to ensure that funding for the scheme will
be available beyond 7 August 2024.
Proposed Timetable
34. In the Claimant Q&A, DBT states:
We hope that most cases can be resolved before the end of 2023. All payments
will be made by August 2024 at the latest.
The time taken to investigate and assess each claim will be heavily dependant
on the facts of that claim and the volume of documentation involved. While it
is difficult to provide an accurate estimate at this stage, we envisage it could
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take several months for individual case outcomes to be reached and
communicated. We will progress all claims as quickly and efficiently as possible.
You will receive regular updates regarding you claim vis the claims facilitators.
35. It appears that DBT is uncertain as to how long the process will take. We suggest
that DBT provides an indicative timetable, and that BEIS agrees to provide monthly
updates to the Inquiry.
36. Our clients are understandably anxious that a degree of certainty is provided as to
how DBT will utilise the limited time that is available to ensure that payments
under the scheme are made by August 2024.
37. The above provides a powerful rationale for the Chair to continue to hold regular
review hearings on the progress of compensation matters.
The Opi
ion of Catherine Addy KC
38. We have read the opinion of Ms Addy KC, which sets out a comprehensive and
very helpful summary of the relevant law in relation to bankruptcy and IVA issues.
Our clients are grateful to the Chair for seeking advice on these matters.
Causes of action which only relate to personal losses.
39. We understand from Ms Addy KC’s opinion that where an SPM wishes to bring a
claim for loss and damage arising from the POL scandal, damages relating to ‘pain
felt by the bankrupt in respect of his body, mind and character and without
immediate reference to his rights of property’ do not vest in a trustee. This appears
to be the effect of Heath v Tang and another [1993] 1 WLR 1421 (see Opinion at
12 (v)(c)).
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40. However, this principle will only apply where there is a distinct cause of action
which only gives rise to damages that are purely personal in nature. It cannot apply
where the cause of action arises from financial and personal losses combined (Ord
v Upton [2000] Ch 352).
41. Notwithstanding the principles set out in Ord v Upton, Ms Addy KC confirms at
paragraph 36 of her opinion that it is possible that claims could be advanced with
multiple causes of actions, which had arisen on different dates. Hence, it is also
possible that some causes of action may have vested in the officeholder and others
in the individual SPM.
42. It seems from Ms Addy KC’s opinion that there will be a narrow category of cases
where an SPM makes a claim for personal injuries and reputational losses which
arose before bankruptcy. This might apply in cases where the bankruptcy was
attributable to other factors. Individual SPMs without representation might not be
aware of this matter.
Multiple causes of action
43. Furthermore, there is another narrow band of applicant identified at paragraph 36
of the Opinion, who would be able to bring claims based on multiple causes of
action, some of which would not lead to recoverability by the officeholder.
44. We note that Ms Addy KC has advised that POL must not do anything to assist in
any breach of trust where POL knows that an SPM may bring a claim for damages
that are personal to the bankrupt, it should seek to ensure that it does not do
anything which might assist in bringing about a breach of trust by the officeholder.
45. In light of the above, we take the view that DBT should prepare a schedule of
potential cases or situations where an officeholder will not be entitled to damages
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and seek to obtain agreement with Trustees as to the extent of the rights of
trustees in the various applications that will be made under the Scheme.
46. It would be regrettable if, notwithstanding the clarification provided by leading
counsel, SPMs were detrimentally affected by the relevant aspects of the opinion
not being communicate to trustees.
The position of officeholders in relation to theex gratia scheme
47. Significantly, paragraph 62 of Ms Addy KC’s opinion contains confirmation of
leading counsel’s view that SPMs who might in the future benefit from the ex
gratia GLO Scheme would receive payments which would not constitute property
which would automatically form part of the estate in bankruptcy.? Two caveats are
applicable in cases where a bankruptcy may have been discharged on terms which
entitled an officeholder to a future payment.
48. However, Ms Addy KC notes that an individual insolvency practitioner has asserted
acontrary position. If a dispute arises in this context, then Ms Addy KC states that
such issues can be resolved by reference to Section 303 of the 1986 Act and an
application for directions from the court.
49. A question arises as to who should pay for any necessary application to resolve the
issue, should the need to do so arise.
50. We suggest that DBT should consent to being joined in any action as an interested
party and should agree to meet the costs of any SPM, who is required to take
action under section 303 of the 1986 Act.
51. Alternatively, it should be incumbent on DBT to commence proceedings under
section 303 to ensure that the matter can be resolved prior to the expiry of the
August 2024 deadline.
2 RE a Bankrupt (No 145 of 1995) as cited by Ms Addy KC
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52. This is an important issue which DBT should be asked to address at the hearing on
27 April 2023.
The posi Scotland
53. At paragraph 4 of her opinion, Ms Addy KC confirms that she is not qualified to
advise in relation to Scottish insolvency law. She notes that POL has identified six
cases of bankruptcy (sequestration) in Scotland.
54. We consider that it would assist the Inquiry to understand in equal detail the
position in relation to Scotland and we respectfully suggest that the Inquiry might
give consideration to obtaining an opinion from an appropriate Scottish barrister
in relation to how the issues raised by Ms Addy KC would operate in Scotland.
55. It might also be appropriate, for completeness, for the Inquiry to seek advice as to
the position in Northern Ireland. Indeed, the position of SPMs facing entering into
an IVA is starkly illustrated later in these submissions in relation to Fiona Elliott,
who is from Northern Ireland.
Annulment
56. We note from the GLO Scheme that DBT will support applications for annulment
of bankruptcies through payment of the costs in relation to those applications.
57. Annulment is obtained under Section 282 of the Insolvency Act 1986 on the basis
that (a) on the grounds existing at the time the order was made, the order ought
not to have been made or (b) the bankruptcy debts and expenses have all, since
the making of the order, been paid or satisfied. The fact that a bankrupt has been
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discharged will not preclude the court from making an annulment order if such an
order is appropriate.?
Where POL was the petitioning creditor
58. Ms Addy KC states at paragraph 22 of her opinion that if POL was a petitioning
creditor and the bankruptcy order should not have been made because the debts
claimed were not due and owed by the SPM, the court will very likely require the
petitioning creditor to bear all of the costs of the trustee.
59. This scenario would indeed place many bankrupted SPMs in the position that they
would have been in but for the scandal. An annulment on these terms may, in
some cases, almost amount to a ‘clean slate’ in relation to a large part of the
financial aspects of a claim.
60. It is therefore important that affected Core Participants are able to apply for
annulment within a reasonable timeframe.
61. To this end, we ask that POL provides (i) a list of all of the cases in which it secured
bankruptcies of SPMs as petitioning creditor and (ii) witness statements in those
cases confirming that the orders should not have been made.
62. This exercise will not be unduly onerous and would enable solicitors firms, such as
Howe & Co, to apply for annulments on a relatively sure footing without attendant
risk of costs and delay.
63. We maintain that this action is entirely appropriate in the context of a scandal, for
which POL bears responsibility.
3 § 282 (3) - See Opinion of Ms Addy KC at para 19.
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Where POL was not the petitioning creditor
64.We anticipate that there will be some SPMs who applied for their own
bankruptcies or in respect of whom other organisations (such as banks) were
petitioning creditors. In those cases, payment of costs will be more discretionary
on annulment.
65. We ask that POL (i) provides a list of those cases where this situation might arise
and (ii) that POL/BEIS confirm to the Inquiry that the Scheme will pay the costs of
the bankruptcy where the SPM applied for their own bankruptcy or the application
was made by another party, but where the Horizon shortfall or actions of POL
materially contributed to the SPM or the other party making the application.
66. This action would assist in resolving what might become lengthy and costly
disputes in a number of cases in the circumstances whereby all payments under
the Scheme must be made by August 2024.
Recission
67. We understand from paragraph 34 of Ms Addy KC’s opinion that rescission of
bankruptcy may be brought about pursuant to Section 375 of the 1986 Act, under
which the court will exercise a discretionary power.
68. The courts have emphasised that recission is not to be used as a “backdoor” to
annulment under Section 282. Recission will be relevant to the position of SPMs
because there will be cases where it would not be possible to argue that ‘on any
grounds existing at the time the order was made, the order ought not to have been
made’. Yet, the court would be able to view the situation with hindsight and
determine that the order ought to be rescinded. Ms Addy KC provides an example
at paragraph 24 of her opinion, where a judgment debt has been set aside on its
merits.
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69. We submit that it is arguable that recission might apply where the judgment debt
that led to bankruptcy arose as a consequence of the Horizon scandal. In the event
that any SPM applies for recission on this basis, we would suggest that POL agrees
to cover the cost of that application.
70.We note that there is no reference to applications for recission in the GLO
Compensation Scheme Guidance and Principles. The Scheme is deficient in this
respect and we submit that the scheme should be amended to cover this
eventuality.
71. Annulment and recission are particularly important for SPMs because generally
these remedies would enable any claim by an SPM to vest in the SPM.
Furthermore, as Ms Addy KC notes at paragraph 50, any order for annulment or
recission would go some way to mitigating ongoing stigma and adverse credit
ratings.
72. It is therefore important that POL/BEIS modify their scheme to provide the funds
for SPMs to receive legal advice on these matters and facilitate the making of such
applications for annulment and recission where appropriate.
Malicious Prosecution of bankruptcy
73. Ms Addy KC refers at paragraph 27 of her opinion to the potential for an SPM to
bring a tortious claim for malicious prosecution of bankruptcy proceedings. Ms
Addy states that this potential would depend on the individual case.
74. We accept that such cases would be rare, fact specific, and would relate to
situations where bankruptcy proceedings had been determined in a bankrupt’s
favour. However, it would be open to SPMs to bring such an action in certain
circumstances.
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75. We ask that the Scheme is amended to make provision for the making of such a
claim in appropriate circumstances.
VAs
76. Ms Addy KC states in her opinion that an IVA (entered into under Part VIII of the
Insolvency Act 1986) can only be undone in limited circumstances. Ms Addy KC
states that it is not possible to generalise as to what assets will or will not be caught
by IVAs. This is because the scope for making applications to the court will be
limited because all IVAs are governed by their individual terms.
77. However, there may be circumstances under which an SPM might be able to seek
to set aside an IVA. We therefore ask that the Scheme is amended to include a
scenario in which, upon an SPM seeking to make such an application, DBT would
pay costs of (a) the provision of expert advice as to whether an SPM who is the
subject of an IVA may make an application to the court and (b) the costs of any
such application to the court in the event of positive advice having been received.
78. Ms Addy KC’s view is that as IVAs operate on their individual terms, it is not
possible to generalise in relation to what assets will or will not be caught by them.
However, whilst the potential for applications by SPMs remains present; that
matter should be reflected in the Scheme through the incorporation of an
appropriate degree of flexibility or discretion on the questions of IVAs.
75. In particular, cases involving those who are subject to IVAs (or those at risk of
having to enter into such an agreement) must be considered by specialists as
individual cases.
76. Thisissue is especially urgent for one of our clients, Fiona Elliott, who is facing the
prospect of having to enter into an IVA, and who requires advice on how to
proceed with her compensation claim.
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Certainty in relation to payments of forensic accountants’ fees under the Scheme
79.
80.
81.
82.
Section 5.8 of the GLO Scheme states that legal and professional fees will
recoverable.
Paragraph 6.7.6 states that applicants must provide ‘a calculation showing how
the amount being claimed has been quantified’.
This anticipates the use of forensic accountants as it will be necessary for
applicants to demonstrate how the claims have been quantified. We have
considered DBT’s Tariff of Reasonable Legal Costs dated February 2023, to which
reference is made at paragraph 30 of the GLO Compensation Scheme Application
Form. The Tariff confirms that claimant’s lawyers will be authorised to commit
costs of up to £7000 for advice from a forensic accountant and £3000 for advice
from a medical expert. These amounts may increase in complex cases, which
include where a Claimant became bankrupt or subject to an IVA.
We take the view that the Scheme should expressly state that claims for
accountancy professionals’ fees bankrupt clients will be accepted as recoverable
without any need for solicitors to provide further justification.
The positions of our clients who have been made bankrupt
83.
At the time of writing we have not been able to obtain authorisation to disclose
the details of clients who have been made bankrupt and subject to VAs, and who
will be affected by the GLO Schemes.
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84. As our instructions stand, we are ina position to note that two clients whose claims
under the ex gratia Scheme might be adversely affected due to their having been
made bankrupt in the past as a consequence of the Horizon scandal.
85. Our clients’ cases are somewhat complicated and we do not have full instructions
from them. We will endeavour to address our clients’ cases in more detail either
in a supplementary note or at the hearing on 27 April 2027.
TAXATION
86. The GLO Scheme materially states as follows:
4.2. Taxation
4.2.1. Payments made under this scheme are exempt from Income Tax, Capital
Gains Tax and National Insurance Contributions.
4.2.2. Your claimed losses should be quantified net, i.e. after the deduction of the
tax which would have been due at the time. This is to put you back into the same
after-tax position you would have been in had there been no breach. If you are
unable to work out the net calculation in your application form, you should state
that your claim has been made gross of tax and DBT will make the relevant after-
tax deductions.
4.2.3. If you would like a tax expert to help you with the calculations, the
Scheme will cover the reasonable legal cost of up to £1,000. This request
should be facilitated through your legal advisor.
4.2.4, Interest applied to claims will not be subject to any tax deductions.
4.2.5. HM Revenue and Customs will not collect any tax that may have been due
on payments made already by way of interim payment under the Scheme as well
as on future payments.
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4.2.6. Please note separate guidance will be issued shortly for company
claimants.
Insufficient funding for tax consultant/ expert
87. Paragraph 4.2.3 (highlighted above) raises a significant concern for our clients. We
do not see how a sum of £1000 would suffice to enable solicitors acting for SPMs
to instruct a tax consultant deal with matters of a complex historical nature, where
there may very well be an insufficiency of documents.
88. The Inquiry may recall that POL sought unreasonably to limit the fees for solicitors
in the HSS Scheme. That decision was overturned after the matter had been raised
with the Inquiry. The sum of £1000 for taxation advice is derisory and places an
unreasonable burden on applicant to the GLO Scheme, who may be affected by
taxation issues.
89. We suggest that the Scheme is amended to provide for the provision of reasonable
costs.
Indemnification of tax liability
90. There is a significant possibility that the impact of taxation on settlement sums will
not place SPMs back in the position that they would have been in, had the scandal
not taken place. In such circumstances, we submit that POL/ DBT should indemnify
affected SPMs against tax liability.
PROGRESS UPDATES
91. We have indicated at the outset of these submissions that we consider that the
Chair has sought updates from DBT and POL and that we will respond to those
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updates in due course. However, as indicated at the outset of this document, there
are some matters which we would wish to bring to the attention of the Chair.
The GLO Scheme
92. Firstly, we have identified a fundamental problem with the scheme insofar as if an
applicant is dissatisfied with an offer, he or she will not be entitled to a review as
of right. Rather, the scheme operates a filtering process, whereby a facilitator can
choose whether to admit or refuse an applicant who wishes to refer an offer of
compensation to the panel.
93. We do not accept that facilitators should act as conduits to enable an applicant to
access an appeal hearing. Neither do we accept that it is appropriate for DBT to
impose additional layers of bureaucracy into the Scheme where there are already
significant time constraints.
94. Furthermore, we maintain that the Scheme fails to provide a right to request an
oral hearing.
95. It is inherent in the nature of all three compensation schemes that some cases
might be particularly complex and that a panel would need to ask questions or
receive particular responses from representatives.
96. Such cases are better suited to hearings than determination on the basis of written
submissions. Indeed, where large sums of money are involved cases will often
become sufficiently complex to warrant oral hearings. Howe & Co would have
requested this facility, as a matter of fair procedure, had Core Participant
representatives been involved in the design of the GLO Scheme.
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The Historic Shortfall Scheme
Delays in obtaining expert evidence
97. Howe & Co act for ten Claimants, who are making applications under the Historical
Shortfall Scheme (HSS). The operation of the scheme has resulted in delays, which
are causing our clients significant anxiety.
98. Delays in the scheme have arisen from the obstacles in obtaining expert evidence.
When instructing a psychiatrist or forensic accountant; we have been required to
make a request and send the medical notes (where a medical expert is requested).
HSS has proceeded to assess the request and issue a decision in due course. The
process is unnecessarily time consuming.
99. The HSS Dispute Resolution Team advised Howe & Co, by email of 13 April 2023
(the date of these submissions), that, “The Historical Shortfall Scheme legal fees
process is currently under review, this also includes forensic and medical expert
fees. We will revert to you in due course with further information.”
100. Furthermore, the delays in obtaining authorisation for experts have caused
difficulties elsewhere within the Scheme. For example, solicitors are frequently
asked to arrange Good Faith Meetings (GFM), but without the benefit of expert
evidence, such meetings are premature. The lack of expert evidence has
prejudiced the ability of representatives to properly address how the HSS should
assess loss of earnings and loss of retail. This is a significant issue for our clients.
Applicability of Network Transformation Scheme Payments — dicta in Common
Issues judgment
101. Acommon statement set out in offer letters from the HSS is as follows:
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‘A fair approach to losses arising from termination is to take into account the
sums Post Office paid historically to postmasters who received a Leavers
Payment under the Network Transformation Scheme (also referred to by Mr
Justice Fraser in the Common issues judgment) and other similar schemes;
namely, the equivalent of three months remuneration for the notice period plus
26 months’ remuneration.’
102. Our understanding is that that Fraser J did not consider causation issues and
therefore the reliance by HSS on the ‘Network Transformation Scheme’ as a
settled conclusion on causation for the assessment of loss of earnings is
misplaced. We note that the guidelines from DBT on the new GLO scheme also
refer to 26 months.
103. We acknowledge that a multiplier/ multiplicand approach will often be adopted
in assessment of quantum for future losses. However, it is important that POL
appreciates that 26 months does not represent any kind of definitive or accepted
ceiling.
Loss of earnings claims
104. We consider that some of our clients’ cases, on their individual facts and
medical evidence, will involve losses of earnings well beyond the 26 months
period of assessment, upon which HSS appears to rely. This is because many of
our clients suffered from psychiatric injuries. Furthermore, some of our clients
became so immersed in debt it took several years to get back to the position that
there were in but for the termination of their contract with Post Office.
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Procedural delays - The case of Fiona Elliott
105. We wish to draw to the attention of the Inquiry case of Fiona Elliott, which
demonstrates that the HSS does not operate in an efficient or applicant focussed
manner. A good faith meeting was in Ms Elliott’s case for 15** November 2022.
Subsequent evidence was lodged with HSS on 7" December 2022. On the 3
January 2023 a request from HSS was made for an additional document, which
was provided on 6'* January 2023. We understood that the matter was to be
considered by the panel again on the 11" January 2023.
106. However, it transpired that the meeting arranged for 11‘ January 2023 was
actually a consideration of the case by members of the HSS team rather than the
panel. We were informed by email dated 18 January 2023 that our client’s case
would go back before the panel. HSS informed us as follows:
We don’t have any dates for when this will happen and will update you on the
progress of this case w/c 27" February if not earlier.
107. Our client was subsequently informed by HSS that her case would be put back
before the panel in the week commencing the 27* March 2023. As at 13 April 2023
we have not received any revised offer following the panel’s assessment. The delay
has impacted on our client financially, and she is particularly concerned at the level
of delay in her case because she is facing bankruptcy or being forced to enter into
an IVA.
108. Howe & Co were not provided with any good reason why our clients’ case was
not put before a panel in January 2023.
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109. Inrelation to the HSS, we ask that the Chair seeks clarity from POL as to how the
panels are set up, why delays relating to panel assessments have occurred and why
HSS requires solicitors to seek authority on the instruction of experts. These are all
matters which are impacting significantly on the resolution of our clients’ HSS
claims within a reasonable timeframe.
The Overturned Convictions Scheme
Non-pecuniary losses
110. Regrettably there have been delays in processing our clients’ overturned
conviction cases, notwithstanding the evaluation which has been provided by Lord
Dyson, which has been of considerable assistance.
111. Howe & Co act for 5 clients in relation to the overturned convictions scheme. On
19* October 2022 HSF requested evidence in respect of the non-pecuniary aspect
of each claimant.
112. A further request was made for receipt of our clients’ statements by 1 December
2022 dealing with five heads of loss, as follows:
(a) Mental distress and damage to reputation;
(b) Loss of liberty;
(c) Loss of congenial employment;
(d) Aggravated damages;
(e) Exemplary damages;
113. The head of loss of personal injury could not be considered by the deadline as it
was necessary to instruct a psychiatrist. On 23 December 2022 we received three
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offers (excluding personal injuries). Early in January 2023; we received similar
offers in the remaining two cases.
114. I The major problem that has arisen is that POL and HSF have indicated by letter
dated 24 February 2023 that their client’s understanding is that the GLO
settlement sum should be deducted at the final settlement stage.
115. We maintain that the purpose of the 2019 Settlement Agreement specifically
excluded claims relating to malicious prosecution. Our primary position is that
there should be no scope for such deductions in the claims for malicious
prosecution, which are reflected by the Overturned Convictions Scheme.
116. The relevant clauses in the 2019 Settlement Agreement are as follows:
7. Convicted Claimants
7.1 The Parties acknowledge that:
7.1.1 amongst the Claimants are some individuals who have been
convicted of criminal offences (the ‘Convicted Claimants’) of which
approximately 32 have referred their cases to the Criminal Complaints
Review Commission (the ‘CCRC’);
7.1.2 the Convicted Claimants cannot proceed with their claims in the
Action for Malicious Prosecution, or with claims which would be barred by
res judicata by reason of their conviction, unless those convictions are
overturned.;
7.1.3 as part of the settlement set out in this Deed, the Defendant has
not made, or agreed to make, any payment to or for the benefit of any
Convicted Claimant; and
7.1.4 if, for reasons of expediency and to facilitate the settlement of
the Action as a whole, those Claimants who are not Convicted Claimants
elect to share any part of the Cash Settlement Sum to which they may be
entitled with any Convicted Claimant, though not giving either express or
implicit approval to such a course, the Defendant acknowledges it is unable
to prevent it.
117. Our secondary point on this potential dispute is that there is a lack of clarity
particularly in respect of the schedules to the 2019 Compromise.
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118. We accept that the Inquiry will consider the conduct of the group litigation
within Phase 5, commencing in autumn 2023, and that the Settlement Agreement
will be considered during that phase. However, it is important to note that there
appears to be a dispute between the parties as to the scope of the settlement
agreement and whether any compensation paid to litigants related to malicious
prosecution.
119. Weask that the Inquiry considers this discrete matter within Phase 5, as it has
a direct bearing on compensation issues which arise in relation to the Overturned
Convictions Scheme.
120. In the meantime, we have written to POL’s legal representatives, Herbert Smith
Freehills and suggested that once we have received our clients’ files from their
former representatives Freeths LLP, that this issue should form the subject of
mediation.
Pecuniary Losses
121.There have also been delays regarding the assessment of pecuniary losses. After a
conference call on the draft principles and processes around pecuniary losses on
224 November 2022, we received an email from HSF on 1 December 2022 setting
out (on a without prejudice basis) the likely heads of loss. On 5 April 2023 HSF
agreed a basis upon which Howe & Co may inform the Inquiry of these matters:
122. Accordingly, we can inform the Inquiry as follows:
1. Draft principles and a draft process has been shared by POL with Claimant
representatives;
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2. The process includes a suggestion of an independent assessment procedure
where agreement cannot otherwise be reached;
3. The hope is that there will be discussions between POL and those representing
the Claimants over the coming weeks to see where agreement can be reached
in respect of both the principles and the process;
4. In the meantime POL is continuing to process both Non-pecuniary and
Pecuniary claims as they receive them.
123.It is regrettable that the basis for assessment of pecuniary loss is still at a relatively
early stage. We are currently working with our clients in order to collate the
necessary evidence to progress their claims. Inevitably some claims will be easier
to process than others. The delay in obtaining the guidelines from POL has been
frustrating for our clients.
The GLO Scheme
124. On15 March 2023 Howe & Co wrote to DBT, seeking clarification and guidance
on the GLO Scheme. We raised timetabling issues and problems concerning
disclosure of evidence to SPMs.
125.We also raised concerns in relation to the lack of and mechanism for an applicant
to refer his or her case to the panel, and the role of claims facilitators in such
referrals and the lack of any provision for oral hearings.
126. The letter materially stated as follows:
The reason for seeking this clarity, and why this matter is very important, is
because a claimant can only proceed to an exceptional review by an
independent reviewer if there is an error or irregularity in the Panel’s final
assessment. If no final assessment takes place, there can never be an
independent exceptional review. Therefore, what is the procedure (assuming
that the claims facilitator controls the process of access to the final Panel) if a
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claims facilitator refuses to allow a claimant to proceed from ‘first assessment’
to ‘final assessment’ before the Panel?
We put on record that we and our clients are unhappy with the present wording
in the various guidance, which seems to exclude the ability of any claimant,
independent of the claims facilitator, to obtain a final review by the Panel and
for that matter, even a first review by the Panel is something that seems to
have been left solely in the control of the claims facilitator. There must be a
right for any claimant who is unhappy with an offer made at first offer, to
trigger in his or her own right a final assessment by the Panel.
Furthermore, your most recent guidance seems to suggest a potential
disadvantage to a claimant who is legally represented, as opposed to a
claimant who is not legally represented. The GLO Compensation Scheme
Principles and Guidance from February 2023 states, at paragraph 3.5.14, that
the claims facilitator “will refer” a non-legally represented claimant’s award to
the Panel before it is accepted. It seems that automatic rights of access to the
Panel are open to some claimants but not others, and this inherent unfairness
is not received well amongst all the victims of the scandal.
Restorative Justice - General point in relation to family members
127. The Inquiry may be aware the Infected Blood Inquiry has determined that
compensation should be open to family members of those affected by that
scandal.
128. Furthermore, on 11 April 2023 a significant settlement package was announced in
relation to over 900 bereaved family members, survivors and local people affected
by the Grenfell fire. The settlement includes a restorative justice based package,
which is intended to be for the benefit of, not just the victims and survivors of the
Grenfell fire, but also the community and family members of those affected.
129. We see these developments as an appropriate measure in accordance with
principles of restorative justice, upon which we have addressed the Inquiry in our
December 2022 submissions. Our concerns included, our clients being able to
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access suitable treatment for significant mental health diagnoses that are being
made, particularly where access to treatment has been problematic due to the
impact on services arising from Covid 19.
130. We invite the Chair to consider whether the compensation schemes relating to the
Horizon scandal should incorporate similar measures. The Inquiry will recall
evidence in Phase 1, for example, to the effect that many children of SPMs suffered
adverse mental health and financial impacts as a consequence of the actions of
the Post Office.
131. Our letter of 15 March 2023 set out the issue as follows:
We are aware from clients that spouses (many of whom worked with the
claimant in the relevant post office) and children of the family suffered and
continue to suffer from for example depression/anxiety and obsessive
compulsion disorder symptoms as a result of the impact of the horizon scandal
on their family’s financial well-being and their mental health. Those mental
health difficulties arise from the termination of parents’ and/or partners’
contracts with the Post Office. Furthermore, if such loss is assessed on behalf of
the family member, are those damages held on trust by the claimant or can
other family members make a separate application to you for their losses
arising from the impact on the family business? Will any damages be paid to
the We make a further point about the impact and need to compensate close
family members impacted by the Post Office Horizon scandal.
132. We consider that restorative justice forms an important part of the process of
compensating SPMs for the many ways in which they have suffered as a
consequence of the actions of POL in this scandal. We rely on our earlier
submissions of 2 December 2022 on this issue which, for ease of reference we
repeat herein:
We call upon the Post Office and their owners, the Department of Business,
establish and implement a full restorative justice process.
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We submit that such a process should not be limited to meetings so that
harms visited on subpostmasters can be acknowledged and apologies
tendered - but that the process should additionally include the establishment
of a restorative justice fund established, separate from compensation
payments, that will provide for matters including:
® ongoing psychiatric and counselling support for subpostmasters and
their families;
bursaries to assist with the retraining of subpostmasters and for the
education of their children whose education was disrupted by this
scandal;
= a tangible memorial scheme to mark this largest miscarriage of
justice in British legal history; that sympathetically records the
experiences of subpostmasters and how profoundly they and their
communities were failed by this scandal;
e restitution and restoration of reputation: In many cases
subpostmasters’ reputations were traduced in their local
communities and regionally. Subpostmasters’ reputations must also
be restored within their own local communities through engagement
with those communities and the local press; and
© anentrepreneurial fund.
Subpostmasters, the victims of this scandal, were important small
businesspeople and entrepreneurs in communities throughout the United
Kingdom. They not only provided vital services to those communities but also
employment for others. They also generated profits for their own benefit and
the benefit of their families and, via taxation, for the public purse.
Many, with the right support, would once again embark upon business,
creating employment for themselves, their families and for others in their
communities, providing services in communities across the country and
contributing to the public purse via taxation from the profits generated from
their hard work.
We submit that restorative justice must also be tangible and ongoing. This
scandal cries out for a restorative justice process, and we urge Post Office
Limited and BEIS to volunteer to engage in its creation, or, in the alternative
for the Inquiry to recommend such a process and fund.
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CONCLUSIONS
133. We take the view that bankruptcy cases should be fast tracked by DBT and that
the department should provide an indicative timetable.
134. Furthermore, the Scheme is deficient for a number of reasons, inter alia, it fails to
deal with rescission applications, it imposes an unrealistic limit on the provision of
taxation advice and it fails to enable annulment/ recission applications to be made
in a reasonable timeframe. We consider that the suggestions that we have made
in the paragraphs above may resolve a number of these matters. However, the
most urgent matter is the delay and the realistic possibility that the Scheme will
not have concluded before the 7 August 2024 deadline.
135. We have addressed a number of further issues relating to the lack of effective
operation of the three schemes, by way of a progress update.
136. We will make oral submissions through Counsel on these points and matters raised
in other Core Participants’ written submissions at the hearing on 27 April 2023.
13 April 2023
SAM STEIN KC
CHRISTOPHER JACOBS
HOWE & CO
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