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Agenda
Post Office Limited
Postmaster Litigation Subcommittee Agenda
13 November 2019 16.00 — 17.00 hrs BEIS Offices (1 Victori
Street London, SW1H OET)
Nick Read
(Group Chief Executive Officer)
¢ Ben Foat
(General Counsel)
¢ Andrew Parsons
(Womble Bond Dickinson)
Alasdair Cameron
(Group Chief Financial Officer)
© Veronica Branton
(Company Secretary)
* Rodric Williams
(Head of Legal — Dispute
Resolution & Brand)
Alan Watts (by phone)
(Herbert Smith Freehills)
© Tim Parker © Tom Cooper
(Chairman) (Non-Executive Director)
Ken McCall
(Senior Independent Director)
* Catherine Emanuel
(Herbert Smith Freehills)
e Richard Watson
(General Counsel - UKGI)
» Welcome and Conflicts of Interest Noting Chairman 16.00 —
16.05 hrs
2. Minutes and Matters Arising ‘Approval Chairman
3. Settlement Authority for Mediation Approval Catherine 16.05 —
in crcl Emanuel, Alan 16.40 hrs
3.1. Financial range ‘Watts
3.2 Settlement approach for Convicted
Claimants
4. Further Issues Trial Noting Catherine 16.40 —
Emanuel, Alan 16.50 hrs
4.1 A h to Defi "
pproach to Defences Watts
5. Common Issues Judgment/Permission to Discussion Ben Foat/Rodric I 16.50—
Appeal Hearing (time permitting) Williams 16.55 hrs
- Verbal Update
6. Any Other Business Noting Chairman 16.55 —
17.00 hrs
7. Date of Next Meeting: Noting Chairman
10 December 2019.
Strictly Confidential
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MINUTES OF A MEETING OF THE POSTMASTER LITIGATION SUBCOMMITTEE OF POST OFFICE LIMITED HELD ON
TUESDAY 22 OCTOBER 2019 AT 20 FINSBURY STREET, LONDON EC2Y 9AQ AT 11.30 HRS
Present:
Tim Parker Chairman (TP)
Ken McCall Senior Independent Director (KM) (Items 1. - 3.)
Tom Cooper Non-Executive Director (TC)
In attendance:
Nick Read Group Chief Executive (NR)
Ben Foat General Counsel (BF)
Veronica Branton Company Secretary (VB)
Rodric Williams Head of Legal — Dispute Resolution & Brand (RW)
Catherine Emanuel Herbert Smith Freehills (CE)
Andrew Parsons Womble Bond Dickinson (AP)
Alan Watts Herbert Smith Freehills (AW)
Julie Thomas Operations Director (JP) (Item 5.)
‘Amanda Jones Network Director (AJ) (Item 5.)
Angela Van Den Bogerd Business Improvement Director (AVdB) (Item 5.)
Action
1. Welcome and Conflicts of Interest
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 minutes of the Postmaster Litigation Subcommittee held on 17 September 2019 were
APPROVED and AUTHORISED for signature by the Chairman.
3. Updates on Court Activity
Alan Watts provided an update on the litigation. We were still awaiting the Horizon Issues Trial
judgment and were anticipating further news on when it would be issued this week. The
permission application to appeal the Common Issues Trial judgment was taking place on 12
November 2019. Mr Justice Fancourt had recently ruled on the Sheffield United case and had
disagreed with Mr Justice Fraser’s views on relational contracts in the Common Issues Trial
judgment; this could be helpful for our application on leave to appeal.
A pleading on the Further Issues trial was due from Freeths on 25 October 2019. They had
raised the issue of their funding and were seeking to bring a damages case for their funding
costs. It was probable that they had fixed their funding for the case at the outset but had
exceeded their budget. If POL was successful in its application for leave to appeal this would
extend the timeline for the trials and the associated costs which will probably be a matter of
concern for the Claimants. Freeths wanted to argue that liability for harassment claims should
be part of the Further Issues Trial however, any harassment claim would have to be fact specific
and considered case-by-case. Counsel's view and our view was that we should resist liability
issues arising from harassment claims being part of this trial. As there are not many issues of
legal principle between the parties on the correct measure of loss the Further Issues Trial
should be limited in scope.
It was reported that we had undertaken a review of the non-disclosed Known Error Logs (KELS)
and those that had been relied upon at trial. 94 had been identified as having significant
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changes. Counsel was reviewing all of these and of the 78 KELs reviewed so far 75% were felt
not to have had a significant impact on what happened at trial. The other 25% were being
reviewed in more depth.
We had offered the claimants access to all 14,000 non-disclosed KELs. The claimants’ solicitors
had argued that POL should pay for them to review the non-disclosed KELs. We were likely to
resist this proposal but the Judge could take a different view. We had already provided the
claimants’ solicitors with red lined copies of the KELs which had been important at trial.
We wanted to be certain that Fujitsu had provided all versions of the KELs to us. We were
considering whether there should be an audit to test how the KELs worked and the complexity
of working with a live system from which the information had to be extracted. The approach to
the audit and the scope of the audit was discussed and it was thought that we should seek the
help of a third party for an audit. The scope of the audit should be limited to a review of the KE
extraction process and contain the timescales for completion.
Operational and GLO contingency planning
Julie Thomas introduced the paper.
A number of points were raised, including:
© howwere we tracking progress with implementing operational changes? It would be
helpful to understand this and see statistics in the Board pack. It was reported that we
were trying to build a high level scorecard, including measures such as completion rates on
disputes, weekly reconciliations, branch closures
© howwere we changing our interactions with postmasters? Amanda Jones reported that
there were good turnout rates from postmasters at engagement events. Feedback
suggested that postmasters thought the relationship was improving. There was a clear
expectation of improvements in remuneration. We would be running an advocacy survey
inaa
« — did we allow postmasters to feed back on the call centre service? It was reported that we
would be introducing a quick feedback survey at the end of calls next month. We were
also considering whether to run a base lining survey with postmasters. It was noted that
some of the changes we were making were about tone. We had reviewed all the
documentation, letters etc. All calls into NBSC were recorded. A telephone number was
included on the end of letters so that postmasters could call us. We had checking
processes to monitor the quality of calls
© what plans were there to improve management information to postmasters? It was
reported that we were progressing some “quick wins” with Horizon to change the way the
screen looked and how reports were run. Tim Perkins was leading a piece of work on the
end-to-end process for stock to help us understand what we should manage within the
Horizon system. This was not a simple piece of work.
Any other business
Convicted Cases
Tom Cooper reported that he had met with Alan Watts and the team to go through the
settlement numbers, including those for convicted cases. The treatment of these cases was
discussed and it was felt that we needed to understand more about the status of the cases and
analyse the figures. It was noted that Counsel’s advice was that a monetary settlement should
not be offered to convicted claimants at mediation because this risked undermining their
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convictions. Counsel would read through the 61 convicted claimants’ cases after the Horizon
Issues Trial judgment had been issued to see if this ought to affect our approach. A number of
the convicted claimants had reported that they had been unable to resolve their problems with
the Horizon system and had only been able to continue trading by entering a false account into
the system to balance the books.
Herbert Smith Freehills - Fees
Ben Foat reported that under the engagement letter with HSF they had a 15% quality measure
and if we were satisfied that this measure had been met we did not need to impose a reduction
in their fees. BF had found HSF to be an excellent team, managing a complex litigation.
It was noted that HSF had been engaged at short notice to provide support to the Board. There
had not been much time to negotiate the fee. HSF would have expected the fee tobe reduced Todo:
after October 2019. BF would discuss the position with Al Cameron but the Subcommittee BF
thought that a modest reduction of perhaps 5% would be appropriate and did not indicate
dissatisfaction with performance.
Date of next meeting:
November date to be confirmed?. [Post-meeting note: the meeting has been scheduled for 16.00 - 17.00
hrs, 13 November 2019.}
1 The date originally scheduled now clashes with the Court of Appeal hearing for permission to appeal the Common
Issues Judgment.
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BATES AND ANR -v- POST OFFICE
GROUP LITIGATION
draft / ADVICE ON SETTLEMENT
Executive summary
1. The purpose of this note is to provide an overview of the Post Office Group Litigation
and to summarise our recommended settlement strategy for an upcoming mediation
scheduled for 27-28 November 2019.
2. This is a complex dispute where there are a number of material unknowns. Settlement
at this stage of the proceedings therefore will necessarily involve a risk-based judgment
in light of provisional assessments of liability and quantum. In our view, the position can
be summarised as follows:
a. Post Office is likely to be unsuccessful in its defence of most of the claims.
Although Coulson LJ's judgment is awaited, we consider it unlikely that Post
Office will be given permission to appeal on most of the implied good faith terms.
The true battleground in the case is likely to be quantum.
b. Weconsider that settlement at a level between £40m and £65m would be a good
result for Post Office. Those numbers are based on a robust analysis of the most
significant heads of loss across the 555 claims and take into account a premium
for risk, reputational considerations and the anticipated high burn-rate on costs
going forward.
c. Achieving a settlement will not be a straightforward matter:
i. The claims are funded by litigation funders, Therium. Given the level
costs invested to date, the funding return - which the Claimants will want
covered as part of any settlement - is likely to be disproportionate (we
estimate of the order of £75m - £90m and growing). There is therefore
likely to be a significant gap between the parties.
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ii. The Claimants include 61 individuals who were prosecuted by Post
Office in the criminal courts. Compromising these claims before the
criminal courts have adjudicated on any appeals creates difficulties: it
would be unprincipled and also has potentially significant knock-on
effects. However, if Post Office were to exclude this highly activist cohort
from the settlement process, that is likely to jeopardise the entire
mediation.
d. In view of these issues, there is a strong chance that the upcoming mediation
will be unsuccessful. Post Office therefore needs to adopt a negotiating strategy
which preserves its prospects of achieving a reasonable settlement later down
the line if the November mediation fails. Key elements of the strategy will include:
e. Resolving this litigation would be of significant benefit to Post Office. Not only
would it bring an end to the ongoing cost, diversion of management time and
reputational damage, it would allow Post Office to move forward, with the benefit
of lessons learned, and focus on its commercial objectives for the future.
Background
3. In around 1999/2000, Post Office introduced a computerised electronic point of sale and
accounting system called Horizon (the "Horizon System"), which sub-postmasters
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("SPMs") were required to use in their branches. The Horizon System requires SPMs
to account for stock, sales and takings and, as part of the balancing process, identifies
shortfalls or discrepancies. Under the terms of their contracts, SPMs are required to
make good any shortfalls out of their own funds.
4. Some Claimants repaid their shortfalls; others hid them by through false accounting so
as not to be held accountable for funds they could not, or wished not to, repay.
5. Post Office implemented robust audit and collections procedures to minimise losses
from the SPM network. Many offenders had their SPM contracts terminated, some
summarily for breach and others on notice. Up until 2013, Post Office in appropriate
cases also exercised its powers as prosecutor to convict SPMs of criminal offences -
principally theft, fraud and false accounting. Many convicted SPMs pleaded guilty,
although it is now said those pleas were motivated by ignorance or pragmatism (i.e. to
avoid more serious charges of fraud or theft), rather than true guilt.
The Claims
6. The Claimants are a group of 555 individuals who allege that Post Office's policy of
seeking recovery of shortfalls was wrongful because shortfalls were generated by
"bugs" in the Horizon System. They also allege that Post Office failed in its "good faith"
duties to provide proper training on the use of the Horizon System, to assist with queries
or complaints, to disclose the existence of known bugs in the system, to conduct
adequate investigations into the cause of disputed shortfalls and to allow suspended
SPMs access to records to enable them to challenge Post Office's assumption that
unexplained shortfalls were the result of theft or error.
7. As a result of these breaches, they claim damages for the wrongful recovery of
shortfalls, the wrongful suspension and termination of their contracts and associated
wrongs including harassment, stress related illness and stigma. A breakdown of the
claims is attached as Appendix 1.
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The current position in the litigation
8. The litigation is structured as a GLO. Fraser J, the managing judge, has ordered that it
be heard as a series of trials on issues of relevance to the claims brought by the
Claimant class as a whole.
9. The first trial (the "Common Issues Trial") concerned the meaning and effect of the
contracts between Post Office and the SPMs. The judgment, handed down in March
2019, was resoundingly favourable to the Claimants. In his judgment, Fraser J found
that the SPM contracts were "relational" contracts and as a consequence implied a
series of onerous “good faith" terms which undermine, in material respects, the
contractual framework which Post Office believed it had in place. Fraser J was critical
of Post Office, finding that some of its key witnesses had deliberately misled the Court
and described it as having "a culture of secrecy". Post Office has sought permission to
appeal the judgment (the "Common Issues Appeal"). Following the oral permission
hearing which took place on 12 November 2019, it seems likely that the majority of the
good faith terms will remain in place.
10. The second trial focussed on whether Post Office's Horizon System was, in principle,
robust (the "Horizon Trial"). The trial concluded in July 2019 and judgment is awaited,
although we expect it to be handed down imminently. The trial was dogged with
complaints around the adequacy of Post Office's disclosure’ and allegations that the
true extent of problems with Horizon was being concealed in the litigation.* Although the
expert evidence on the robustness of the system was relatively compelling, the
Claimants will be able to establish that there was a risk (even if small) of bugs causing
accounting discrepancies. Leading Counsel for Post Office (Tony de Garr Robinson QC)
considers it highly unlikely that Fraser J will give the Horizon system a clean bill of
health.
.A third trial has been scheduled for March 2020. It will deal with the correct measure of
damages if the Claimants are able to establish liability in principle? and will be conducted
1 Many of the "suspicious" non-disclosures are in all probability red herrings but have been deployed
effectively by the Claimants to create a "concealment" narrative.
2 The decision not to call Fujitsu's Dr Jenkins (who stated, incorrectly, in some of the criminal trials that
Horizon had no bugs) is likely to result in adverse inferences being drawn.
3 This is a peculiar issue to have tried at this stage, before matters of breach. The original order made
provision for a trial about both limitation and measure of loss. The limitation issues would have been
centred on the Claimants’ deliberate concealment defence under section 32 of the Limitation Act 1980.
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on assumed facts, without any evidence. Its scope has yet to be decided. Key points
of legal principle that are likely to arise are (a) Post Office's liability for lost earnings
claims for extended periods of time (i.e. remuneration until retirement); and (b) a novel
claim for the recovery of the Claimants' litigation funding costs as damages.
12. Neither the first nor second trials were concerned with Post Office's liability in respect
of the individual Claimants’ claims. The impact of bugs and the alleged breaches of good
faith duties in individual cases will be left over for future trials, probably involving test
Claimants.
13. In parallel with the court timetable, Post Office has agreed with the Claimants to engage
in mediation on 27-28 November 2019 with Charles Flint QC officiating as mediator.
Li ty Issues
14. Post Office's exposure on liability will likely turn on a consideration of:
a. Whether Post Office was entitled to hold the Claimants accountable for
shortfalls;
b. Whether Post Office was entitled to suspend SPMs without pay;
c. Whether Post Office was entitled to terminate the Claimants’ contracts with or
without notice;
d. Whether Post Office was in breach of its "good faith" duties and, if so, whether
that has a bearing on (a), (b) and (c) or otherwise caused the Claimants any
loss.
15. There are distinct issues raised by fact patterns both in the individual claims and by
certain categories of Claimants, in particular (a) Claimants convicted of criminal
charges; (b) Claimants who have previously settled with Post Office, either under the
Mediation Scheme or Network Transformation; and (c) Claimants who were not SPMs
(e.g. assistants to SPMs) who had no contractual relationship with Post Office.
Issues raised on the facts of Individual Cases
In view of Fraser J's approach on Common Issues (that Post Office operated a "culture of secrecy") and
the obvious sympathy he showed to the lead Claimants whose cases would have formed the foundation
of the limitation trial, we took the view that confining the trial to measure of loss issues was the least-
worst solution.
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16. The fact patterns of the individual claims raise a variety of issues:
a. In some cases there is compelling evidence, unrelated to the Horizon system,
which explains why shortfalls arose (e.g. confessions from Claimants that cash
was misappropriated or lost). Outside of the cohort of the convicted Claimants,
these are relatively few.*
b. There are other cases where it might be inferred that shortfalls were the result
of lax business management or poor accounting practices.>
c. Inthe majority of cases, however, the cause of the shortfalls remains unknown.
It is inherently difficult for Post Office to prove that shortfalls were caused by
SPM error because, apart from the Horizon accounting system, Post Office has
no visibility over the operations of the branches. Further, there is a paucity of
solid documentary evidence, particularly on older cases.®
d. Many Claimants’ contracts were terminated because they were submitting false
trading balances so that shortfalls did not come to light.”
e. There some cases where the Claimants have found themselves in unfortunate
personal circumstances, which is likely to attract the sympathy of the Court.®
17. It is clear from the Common Issues judgment that Fraser J is sympathetic to the
Claimants' core complaints. In implying the extensive good faith duties he did, he has
given the Claimants a legal mechanism for challenging Post Office's approach to the
4 For example, Mr Kutianawala (Claimant 106) admitted during an audit that he inadvertently left
numerous cash pouches (containing £100,000) out of the safe which were erroneously taken from the
branch in a mail bag. He has since denied this and suggested he fabricated the story under pressure.
5 For instance, Ms Connolly (Claimant 45) admitted that she never physically counted the money in one
office cash supply for a four year period, passwords were not confidential and branch trading statements
were not signed when completed. Ms Connolly was summarily terminated due to evidence of cash
inflations and false declarations in accounts submitted.
6 For example, on the case of David Gilbert (Claimant 63) there are no documents available to confirm or
deny the Claimant's claims concerning shortfalls.
tT For instance, Darren King (Claimant 99) admitted that both he and one of his employees inflated cash
reserves in order to conceal discrepancies and issues with balancing. Mr King also admitted he did not
account for prize : Sy .
8 For example,! . GRO i
Ssion and Suicidal thoughis resulting from Post Gtfice action
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recovery of shortfalls, suspensions and terminations. Seen in the round, apart from
those few cases where Post Office can point to clear documentary evidence of theft or
culpable error on the part of individual SPMs, Post Office's prospects of success on
liability are not encouraging.
18. At the risk of some oversimplification:
a. On bug issues, if the findings made in the Horizon Issues judgment are to the
effect that Post Office cannot rely on Horizon data as compelling evidence that
shortfalls were genuine’, there is limited further evidence that Post Office will be
able to rely on in support of its case that it was entitled to demand repayment.
Post Office did not typically conduct extensive investigations into the cause of
shortfalls. Unexplained shortfalls were effectively assumed to be the result of
SPM theft or error.
b. The extensive good faith terms implied by Fraser J operate, at least arguably,
as a fetter on Post Office's ability to exercise its express contractual entitlements.
Post Office will be constrained to accept that it acted in breach of many of those
terms because its working procedures were simply not designed with the good
faith terms in mind. (For example, Post Office believed that it was entitled to rely
on Horizon System data; it also believed it was entitled to terminate on notice as
of right and did not typically turn its mind to the question of what period of notice
might, in all the circumstances, be "fair".)
c. One area of controversy we foresee emerging is whether Claimants who have
falsely accounted for cash or stock in order to “cover up" shortfalls can be said
to be in material breach simply because they falsely declared their trading
balances. On its face, a failure to follow prescribed accounting procedures might
qualify as a material breach justifying summary termination - particularly if it was
deliberate. Here, however, the Claimants are likely to blame breaches of Post
Office's good faith obligations - for example (a) that errors were made as a result
of poor training and inadequate helpline support; or (b) that deliberate false
° It would be unwise to speculate what the judgment will say; however if its effect is that Post Office bears the
burden of proving that shortfalls were genuine and it cannot rely on Horizon data as compelling evidence
of that fact, it will struggle for want of proof. There are few cases where Post Office can in fact
demonstrate how or why cash or stock went missing.
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accounting was justified in light of Post Office's policies of demanding repayment
and/or terminating summarily without proper investigation or process. There are
legal questions around how the good faith duties interact with Post Office's
contractual entitlements in these types of scenarios but we can see ample scope
for Fraser J treating accounting failures as non-material, either because they
were a consequence of breaches by Post Office of its good faith duties or, quite
apart from the Common Issues Judgment, because they were not repudiatory in
nature. That assessment is borne out by Fraser J's sympathy for Mr Abdulla in
the Common Issues Trial notwithstanding an undisclosed shortfall of £4,398.32
discovered on audit, a practice of keeping an undated cheque in the amount of
£2,500 in his till and the overstatement of mutilated notes.
d. Finally, and of obvious practical significance, the findings made about the
credibility of Post Office's witnesses mean that, in the absence of solid
documentary evidence, factual disputes are likely to be resolved in favour of the
Claimants.
Distinct Issues raised by Categories of Claimant
19. There are also distinct issues raised by certain categories of Claimant.
Convicted Claimants
20. There are 61 convicted Claimants. These Claimants face a threshold issue in that the
claims made will, for the most part, involve a collateral attack on the judgments of the
criminal courts and such claims are liable to fail as an abuse of process. As such, the
convicted Claimants would have a civil remedy only if they succeed in having their
convictions overturned in the criminal courts.'°
2
. Subject to the outcome of the Horizon Trial judgment, Brian Altman QC's view is that
the convicted Claimants are unlikely to succeed in their criminal appeals because they
face two substantial hurdles: (a) those who pleaded guilty will need to establish a basis
for withdrawing their guilty pleas (for example by alleging incompetent legal
2 Unless, potentially, they can identify causes of action unrelated to the matters in respect of which they
were convicted.
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representation); and (b) they will then need to persuade the appeal court that they were
wrongfully convicted. Brian Altman QC acknowledges, however, that his assessment
might change in light of findings made in the Horizon Issues judgment. The Criminal
Case Review Commission (“CCRC”), which has been asked to review 34 of the criminal
cases, is also awaiting the outcome of the Horizon Trial judgment.
22. It would be unwise to speculate how matters might unfold in the criminal courts. For
present purposes, we observe simply that the criminal cases do not on their face appear
to be of equal merit. In some cases, the Claimants made detailed confessions as to how
and why they (or family members) misappropriated funds.'' In other cases, Claimants
allege that they pleaded guilty to false accounting only to avoid the more serious
charges of fraud or theft and the associated risk of custodial sentences." On its face,
the former category of cases appears to pose less risk than the latter, but this is a
specialist question of criminal law.
23. From a technical legal perspective, the correct course for the convicted Claimants is to
pursue their grievances through the CCRC and/or the criminal appeals courts, not the
GLO, until such time as their criminal convictions have been overturned.
24. According to Brian Altman QC, the only proactive duty Post Office has is to ensure that
the appropriate disclosures are made to each convicted individual. It may be that
findings are made in the Horizon judgment which require Post Office to make fresh
disclosures which convicted parties might then be able to rely upon to found criminal
appeals. Brian Altman QC has advised that, if fresh disclosures are required, an
individual case-by-case review will need to be conducted to determine the appropriate
approach in each case.
25. Against this background, settlement with the convicted Claimants raises particular
challenges:
1! See, for example, the case of Ms Rudkin (Claimant 444) who admitted in interview that she had inflated
cash figures and falsified branch trading statements; that she had "borrowed" Post Office funds and was
unable to repay the funds; and she had taken cash from Post Office to pay it into her business account -
the money was used to pay for shop, wage and household bills.
1 See, for example, Mr Clark's (Claimant 248) case where the charge of theft (1 count) was not pursued
following a guilty plea to false accounting (7 offences). Similarly, the charge of theft against Ms Thomson
(claimant 178) was not pursued following a guilty plea to false accounting (3 offences).
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26. In light of these complications, Post Office must take a strategic decision as to whether
to exclude convicted Claimants from the settlement discussions or take a non-legal
approach and seek to settle with these Claimants notwithstanding the risks. There is
no wholly satisfactory solution. Having given the matter careful consideration, we
consider the best approach is not to make any settlement offers to convicted Claimants.
bch Acc ROAD cca A ll
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That would not, however, preclude Post Office from making a global settlement offer to
the cohort of non-convicted Claimants. If the wider Claimant group then agreed to
apportion that lump sum amongst themselves, that would be a matter for them.
Assistants
27. There are 28 Claimants who are Assistants (rather than SPMs). Assistants fall into a
distinct category because, under the Common Issues judgment, they have no third-party
contractual rights and therefore no claims against Post Office for breach of contract (for
example, for lost earnings). Such claims might be brought through SPMs but, in a
number of cases, the Assistant's SPM is not a claimant in the GLO.
28. Assistants would not be precluded from claiming in restitution (for shortfalls repaid) or
in tort (for harassment, personal injury and so forth). Several assistants were convicted
and, if their convictions are overturned, they may have some prospects of succeeding.
For those that were not, however, these claims appear speculative.
Settled Claimants
29. Approximately 150 Claimants settled with Post Office either under the Mediation
Scheme or under one of the Network Transformation restructuring programs and
entered into full and final settlement agreements. A sympathetic judge may be
persuaded to unwind those settlements on misrepresentation grounds. However, even
in that event, Post Office has a good argument that credit should be given for sums that
it has already paid.'* Network Transformation Leavers were, for example, paid relatively
substantial sums, roughly equivalent to 26 months' earnings.
Summary
30. In summary, therefore, while we can identify some weak claims or categories of claims
within the Claimant cohort, this is not a case where we consider there are likely to be
strong arguments on liability across the board. Post Office's position may improve’? if
There is a partial exception for Claimants who converted under the Network Transformation programme
whose settlement releases do not cover claims in respect of Post Office activities going forward.
18 Even if the judgment is overtumed, there is still a strong probability that claims will fail on the facts,
particularly if the Horizon judgment is unfavourable.
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the Common Issues Judgment is overturned, but our present assessment is that Post
Office is unlikely to get permission to appeal on many (if any) of the good faith terms
which go to liability issues and the hearing of any appeal is unlikely to take place until
mid or late next year. Further, although many of the claims are old, we are not optimistic
about a limitation defence given the likely availability of a deliberate concealment
argument.
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Funding Cost Claim
39. The new claim advanced for the recovery of the premium payable by the Claimants to
their litigation funder is also likely to be very substantial. We do not, however, consider
that it is likely to succeed. The law is clear that funding costs are irrecoverable as costs
and it would be extremely surprising if the Claimants were permitted to circumvent that
tule by re-framing the claim as one for damages. It is also contrary to the public policy
on litigation funding that was recently examined in the context of the Jackson reforms.
IL
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Recommended Settlement Range
56. Seen in the round, we consider that a settlement of £40m - £65m would be a good price
to pay for the settlement of this litigation with the non-convicted cohort. We say so for
the following reasons:
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f. Allowance should also be made for the likelihood that the Claimants put forward
improved or increased claims as the litigation progresses.
57. A helpful sense check as to whether these numbers are in the right ball-park could be
to consider the average value of a Post Office business. The average SPM
remuneration across the Post Office network (i.e. not limited to Claimants in the GLO)
stands at circa £38,000 per annum. We note that leavers under Network Transformation
were offered 26 months’ earnings by way of an exit payment. If that is taken as a proxy
for the value of a the loss of an average Post Office businesses, that would suggest the
average value of a branch business would be of the order of £82,333, or a total of
£45.7m across the 555 Claimants.
Settlement Strategy
58. The Claimants’ settlement expectations are unlikely to be driven by strict legal analysis.
As a practical matter, we anticipate that the Claimants will want to recover their full
funding costs (typically a multiple of costs invested) and a top-up payment which allows
each Claimant to receive a meaningful (albeit proportionately reduced) recovery on top.
59. We have no visibility as to the Claimant Group's funding arrangements but estimate that
they may look to recover £75.9m - £90.9m for their legal costs and expenses at a
settlement in November 2019.” Given the burn rate on costs, this would likely increase
to £90.9m - £109.9m at a settlement in May 2020. If each Claimant were also to recover
between £10,000 and £50,000 in addition, those numbers would increase to £81.4m -
£118.7m as at November 2019 and £96.4m - £136.7m as at May 2020.7"
60. If our estimates are accurate, there will be a gap between the parties with the result that
settlement is unlikely to be achievable given the weak negotiating position Post Office
is presently in. Post Office therefore needs a clear strategy which preserves its
20 This is calculated as 3 ~ 4 x estimated costs incurred to date, assumes that Freeths is on a 100% CFA and
assumes an ATE premium of circa £6m was paid.
21 Post Office's Board has quite properly observed that, given our assessment of the likely recoverable
quantum, it is unclear why the funders agreed to invest in the claim. That is a pertinent question. It
seems to us the most likely answer is that the Claimants have exceeded their original budget — possibly
by some considerable margin — because they did not anticipate that Fraser J would order quite so many
trials and that quite so many contentious issues would arise. It may also be that allowance was made for
recovery by all 61 the convicted Claimants and/or for interest at higher rates.
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prospects of achieving a reasonable settlement later down the line if the November
mediation fails. Our recommendations are that:
a. It would be inadvisable to negotiate around Post Office's top numbers at the
November mediation unless doing so would close a deal. If the mediation fails,
Post Office's best offer will set the floor for future negotiations in which event
Post Office risks being driven to negotiate at unmanageable levels further down
the line, making the litigation potentially unsettleable.
c. Going forward, Post Office will also need to maximise pressure on the Claimants
by re-focussing the litigation on points where the Claimants are more vulnerable,
including careful selection of test cases which would enable Post Office's best
points to be brought to the fore.
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Herbert Smith Freehills LLP
12 November 2019
2 Under section 32 of the Limitation Act (1980), time will start to run again once the Claimant "has
discovered the fraud, concealment or mistake (as the case may be) or could with reasonable diligence
have done so”.
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POST OFFICE LIMITED
THE POST OFFICE GROUP LITIGATION
CRIMINAL CASES
Is EXECUTIVE SUMMARY
The 61 GLO claimants with criminal convictions for fraud, theft and/or false accounting ("Convicted
Claimants") present significant challenges in the litigation, in particular for the settlement efforts.
Whether the Convicted Claimants’ claims have any value depends on whether the Claimants in
question are successful in their criminal appeals. If they are unsuccessful, the claims will likely be
worth nothing. If, however, all the criminal convictions are overturned, the Convicted Claimants’
claims will be substantial - our estimate the total realistic exposure to be between £10.4m and
£44.6m. These numbers could be understated as the Court is bound to have sympathy with a
claimant who is found to have been wrongfully convicted, particularly in cases involving custodial
sentences.
There is no clear solution to the problem of how to approach settlement with the Convicted Claimants;
all the options carry risk. This paper aims to articulate the options and advantages and
disadvantages of each. The right approach is not simply a legal matter but our recommendation
would be to approach settlement at the mediation by making global offers to the Claimant Group
which make no allowance for Convicted Claimants’ claims. There would then be nothing to stop the
Claimants from apportioning the global sum between the members of the wider Claimant Group as
they consider fit.
The Board Subcommittee is asked to note the contents of this paper and approve the strategy for
the Convicted Claimants ahead of the forthcoming mediation.
2. BACKGROUND/CONTEXT
24 Settlement with the Convicted Claimants raises particular challenges. The Convicted
Claimants, who are Post Office's most vocal critics, are likely to form a core component of
the Claimant committee at the mediation. If Post Office were to take an inflexible position
that their claims cannot be considered as part of the mediation process, there is a high risk
that the mediation will not get off the ground. Post Office is also likely to be subject to
trenchant external criticism, as happened at the time of the original mediation scheme in
2013.
2.2 However, settling with the Convicted Claimants is problematic:
2.2.1 Itis not a principled way of proceeding. If a Claimant has been properly convicted,
itis in the interests of justice that the conviction stands. From our review, it appears
that a number of the Convicted Claimants admitted that they (or family members)
stole (or "borrowed") money from Post Office.
2.2.2 Any settlement could be portrayed as admission of failures on the part of Post
Office in the exercise of its prosecutorial powers, which is a serious matter, with
potentially very significant consequences.
2.2.3 Brian Altman QC's advice is that offering the Convicted Claimants anything at all
would enhance the prospects of the claimants succeeding in their appeals
(confidentiality over the settlements could not be maintained)
2.24 It also risks unravelling the numerous other prosecutions where Post Office acted
as prosecutor.
2.3 The Board has previously received advice from HSF dated 13 September 2019 on the
proposed strategy for the upcoming mediation on 27 and 28 November 2019. Given the
particular sensitivities around the Convicted Claimants and Brian Altman QC's recent advice,
we have been asked to provide the Board further advice specifically covering:
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2.3.1 A global quantum view that incorporates the Convicted Claimants; and
2.3.2 Further advice on strategy, including an assessment of the advantages and
disadvantages of commissioning an internal "non-legal" review of the convictions
to identify cases which Post Office may not have prosecuted today and offering
such claimants appropriate compensation.
GLOBAL QUANTUM VIEW
Subject to the outcome of the Horizon Issues judgment, Brian Altman QC's view is that the
Convicted Claimants are unlikely to succeed in their criminal appeals because they face two
substantial hurdles: (a) those who pleaded guilty will need to establish a basis for withdrawing
their guilty pleas (for example by alleging incompetent legal representation); and (b) they will
then need to persuade the appeal court that they were wrongfully convicted.
Brian Altman QC acknowledges, however, that his assessment might change in light of
findings made in the Horizon Issues judgment. The Criminal Case Review Commission (the
"CCRC"), which has been asked to review 34 of the 61 criminal cases, has also suggested
that the Horizon Issues judgment is likely to be material to how it proceeds.
In light of that background, there are a wide variety of potential quantum outcomes to the
Convicted Claimants’ claims:
3.3.1 If, ultimately, the convictions stand, the Convicted Claimants’ claims are likely to
be worth little or nothing. That is because the claims made will, for the most part,
involve a collateral attack on the judgments of the criminal courts and such claims
are liable to fail as an abuse of process.
32.2 If, however, particular convictions are overturned, the affected claimants will likely
have significant claims. Such claimants would likely have enhanced prospects of
recovering stigma damages (assessed as a multiple of earnings for the duration of
the period that the Claimant's earning capacity was diminished as a result of having
a criminal conviction) and be entitled to enhanced damages for distress-related
personal injuries and harassment. Claims for malicious prosecution may also lie if
the Claimants are able to establish malice.
3.3.3 The cumulative value of such claims will depend on the number of claimants who
successfully overturn their convictions. The fact-patterns across the criminal cases
are different so it may not be the case that all the Convicted Claimants will stand
or fall together.
3.3.4 If one assumes that all the Convicted Claimants’ claims were to succeed, we
estimate that their total claim value could range between £10.4 million’ and £44.6
million? (as set out in detail in the Appendix). This would increase our estimate of
the total value recoverable across the class from £21m — £42.6m to £31.4m —
£87.2m (excluding interest and recoverable costs incurred after November 2019).3
Interest on these figures will depend on the rate used (the Claimants claim 8%) but
the potential scenarios are as follows:*
This figure is based on information as verified by Post Office and excludes any damages for post-
termination losses (save for notice pay losses), personal injury, harassment, malicious prosecution and
stigma damages.
This figure excludes any damages for personal injury, harassment, malicious prosecution and/or stigma
damages but includes post-termination losses as stated by the Convicted Claimants in their Statements
of Information schedules.
This figure includes recoverable costs to date (£15m less £5m costs order paid).
The interest calculations are merely indicative. They are calculated based on the average number of
days from the mid-point between the Claimant's First Date of Service and Last Date of Service (where
this information is available) to 30 November 2019.
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1% + LIBOR 3% 5% 8%
£31.4m £3.7m £11m £18.1m £29.1m
£87.2m £10.2m £30.3 £50.5m £80.8m
3.3.5 These figures could be understated as a claimant who can establish that their life
has been ruined as a result of a wrongful criminal conviction is bound to attract the
sympathy of the Court.
POST OFFICE'S LEGAL OBLIGATIONS
41 From a technical legal perspective the correct course for the Convicted Claimants is to
pursue their grievances through the CCRC and/or the criminal appeals courts, not the GLO,
until such time as their criminal convictions have been overturned
4.2 The only proactive duty Post Office has is to ensure that the appropriate disclosures are
made to each convicted individual. In that regard, it may well be that, as a result of the
Horizon Issues judgment, findings are made that require Post Office to make fresh
disclosures which convicted parties might then be able to rely upon to found a criminal
appeal. Brian Altman QC has advised that, if fresh disclosures are required, an individual
case-by-case review will need to be conducted to determine the appropriate approach in
each case. Steps are being taken now to prepare for such a review.
STRATEGIC APPROACH
5.1 In light of the complications which the Convicted Claimants raise for mediation, Post Office
will need to take a strategic decision as to whether to take a strict legal approach to these
cases or offer something more. None of the options offer a wholly satisfactory solution. The
advantages and disadvantages are summarised below:
5.1.1 Exclude Convicted Claimants from the _mediation/settlement__discussions
altogether:
(A) Legally sound approach;
(B) Risks derailing the mediation process from the outset and making
settlement impossible to achieve;
(C) Will generate adverse publicity.
5.1.2 Offer to fund criminal appeals:
(A) Brian Altman QC advises that any gesture of this type will jeopardise the
safety of the conviction and also, potentially, that of Post Office's other
historic convictions.
5.1.3 Make a global settlement offer to the entire Claimant group — Although it would
need to be specified that no amount in the lump sum settlement amount has been
attributed to the Convicted Claimants, it would be a matter for the Claimant group
to apportion that sum between themselves:
(A) Would give the Convicted Claimants a prospect of recovering something
from their co-claimants as a result of the mediation process;
(B) If settlement can be achieved, those Convicted Claimants who are satisfied
with their financial outcomes may be less inclined to pursue matters
through the CCRC or criminal appeals process;
(C) _ Risks splintering the Claimant group by putting the onus on them to resolve
the issue themselves, which may make obtaining a full and final settlement
overall harder to achieve;
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(D) Notwithstanding careful positioning, the Claimants may present the
position as Post Office having made offers to the Convicted Claimants.
Commission an internal, non-legal review of the Convicted Claimant prosecution
files in light of Post Office's current approach to prosecutions and compensating in
appropriate _cases: This could enable the reviewer to identify particularly
problematic cases, instances where Post Office could have acted unreasonably
when viewed through the lens of its current approach to prosecutions, where there
were significant extraneous circumstances involved, or where Post Office took a
decision it would not take now when faced with the same circumstances. This
approach:
(A) Would show Post Office taking a "human" approach to resolving the issues
which have arisen, painting Post Office in a positive light;
(B) Would demonstrate to the wider SPM population that Post Office cares;
(C) It would, however, be very extremely difficult to draw the line between
deserving and undeserving cases, or to do so consistently, especially after
the passage of time.
(D) Those Convicted Claimants who fall on the wrong side of the line would
be aggrieved, exposing Post Office to criticism and potential legal
challenge around its neutrality and decision-making; confidentiality could
not be maintained;
(E) Other convicted SPMs (both in the GLO and outside it) are likely to rely on
the actions taken as an implicit admission that Post Office it has exercised
its prosecutorial powers wrongly or oppressively in the past, with the
associated risks of further adverse publicity, additional challenges to past
prosecutions and increased claims for compensation.
5.2 The appropriate way forward is a matter for the Board but our view is that the approach
outlined at 5.1.3 offers the least-worst option. The position should, however, be kept under
review in light of the findings.
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Tab 3.3 CFO confirmation letter
® Post Office Limited
Finsbury Dials
20 Finsbury Street
London
EC2Y 9AQ
Alex Chisholm
Permanent Under-Secretary of State
Department for Business, Energy and Industrial Strategy
1 Victoria Street
London SW1H OET
13 November 2019] .
Dear [Alex],
Re: Alan Bates & Ors v Post Office Limited - Group Litigation
The purpose of this letter is to confirm that:
1. On the basis of its current forecasts, Post Office Limited believes it will be able to fund the
value recommended by HSF in their note dated [13 November 2019] (a copy of which is
appended to this letter). It is important to put that into context as we do not yet have plans
beyond March 2021 agreed with the Board or with BEIS as shareholder. In addition,
forecasting outcomes is complex and volatile for a number of reasons:
* Product flows are changing rapidly and decisions we will make may create further,
material change.
* Branches are moving from net withdrawal to deposit which changes operational cash
flows.
© We have no funding agreed after March 2021. We are assuming in making this statement
that the RC Facility will continue.
The Bank of England is reviewing the operation of the NCS scheme, our second source of
funding and we expect changes next year.
© The timing of the outflow is not known.
© We have not yet completed the prioritisation work and do not therefore have an
approvable Five Year Plan or clarity over the nature and timing of investments including
next year.
2. The current forecasts suggest that we can fund such a payment through our annual cash
profit. That may result in Post Office Limited needing to utilise its existing facilities to fund
future investment. Our forecasts assume a continued network subsidy after March 2021, so
that unprofitable branches do not also have to be supported by the annual cash profit.
Please feel free to contact me if any further details are required.
Yours sincerely,
Alisdair Cameron,
Chief Financial Officer, Post Office Limited
Post Office Limited is registered in England and Wales. Registered No. 2154540. _
Registered Office Finsbury Dials, 20 Finsbury Street, London. EC2Y 9AQ PostOffice.co.uk
Post Office and the Post Office logo are registered trade marks of Post Office Limited
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POST OFFICE BOARD SUBCOMMITTEE PAGE 1 of 6
PRIVILEGED & CONFIDENTIAL - DO NOT FORWARD OR SHARE
Group Litigation Update
Author: Ben Foat/Rodric Williams Sponsor: Ben Foat Meeting date: 13 November 2019
Executive Summary
Context
Post Office is awaiting decisions from the courts on the Horizon Issues trial (which is
now imminent), and on Post Office’s application for permission to appeal the March
2019 Common Issues judgment (which should be delivered on or shortly after the oral
hearing on the application on 12 November 2019).
The issue raised on 3 October 2019 concerning the disclosure of potentially relevant
documents for the Horizon Issues trial (previous versions of Fujitsu’s Horizon “Known
Error Log”/“KEL” entries) has been resolved with the Court and the Claimants. It should
not impact the trial or delivery of the trial judgment.
On 25 October 2019 we received the Claimants’ individual Particulars of Claim (“IPOCs”)
for the third, Further Issues trial scheduled for March 2020. That trial will determine
whether the types of loss claimed are recoverable in principle and, if so, how they should
be quantified. Post Office’s Defences replying to the IPOCs must be filed by 25
November 2019.
Mediation to explore settlement with the Claimant Group remains scheduled for 27-28
November 2019. On 29 October 2019 the Post Office Board authorised the Group
Litigation Subcommittee to delegate to the General Counsel authority to make
settlement offers at mediation, on terms determined by the Subcommittee. Advice on
the financial range within which the General Counsel should be so authorised, and on
the approach that could be taken to Claimants with criminal convictions, is being
provided by Herbert Smith Freehills in separate briefing notes for the Subcommittee’s
consideration on 13 November 2019.
Questions addressed in this report
1. What is the update on the Group Litigation (Horizon judgment; Common Issues trial;
Further Issues trial)?
2. What approach is Post Office taking in its Defences to the Claimants’ “Particulars of
Claim” filed for the third, “Further Issues” trial?
3. What are the next steps in the Group Litigation?
Conclusion
1. The Horizon judgment is now imminent, and should not be delayed by the “KEL
Disclosure” issue. The Court’s decision on whether to grant Post Office permission
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to appeal the Common Issues judgment should be delivered on or very shortly after
the Court of Appeal hearing on 12 November 2019. The Claimants filed “Particulars
of Claim” for the March 2020 “Further Issues” trial on 25 October 2019, which Post
Office must reply to by 25 November 2019.
2. The Further Issues Defences are being drafted so as to accept in principle the
Claimants’ uncontroversial claims for compensation, but to oppose the unorthodox
or potentially significant claims for loss of earnings to retirement and litigation
funding. The Defences will also minimise the scope for factual disputes which could
lead the Judge to make adverse factual findings on incomplete, assumed facts.
3. The next key steps are attending to the Horizon judgment once received, attending
the Court of Appeal hearing on 12 November 2019 and mediation on 27-28
November 2019, and filing by 25 November 2019 Post Office’s Defences to the
Claimants’ claims in the Further Issues trial.
Input Sought Input Received
The Subcommittee is asked to NOTE: This paper has been prepared with
1. the updates in this paper; the assistance of external legal
2. the approach being taken in the counsel.
Defences being drafted for the Further
Issues Trial; and
3. the next steps to be taken in the
litigation.
The Board is reminded to exercise caution when communicating about potential levels
of settlement. Communications about settlement should therefore only be held orally,
but if that is not possible, advice should be sought from Post Office’s lawyers.
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Litigation Update
Horizon Judgment
We have still not received the draft Judgment on the Horizon Issues trial, which is now
imminent. On 6 November 2019 the Managing Judge emailed the parties advising that
“intended dates for distribution of the draft will be circulated in due course”.
The Claimants may seek to postpone the mediation scheduled for 27-28 November
2019 if they do not feel they have sufficient time to consider the judgment ahead of the
mediation. However they have not yet asked for this.
KEL Disclosure Issue
In October 2019 we reported that an issue had come to light which suggested we may
not have given proper disclosure of the Horizon “Known Error Logs” (KELs) for the
Horizon trial.
This issue has now been resolved:
the Claimants have informed us and the Court that they do not want to review
any further KELs or make further submissions to the Court on this issue; and
the audit we commissioned on the completeness of Fujitsu's KEL disclosure has
not identified any further KELs which need to be disclosed to the Claimants or
require Post Office to change the submissions we made about Horizon during
the trial.?
The KEL issue should not therefore have any direct impact on the Horizon trial or delay
delivery of the judgment.
Common Issues Appeal
The oral hearing of Post Office’s application for permission to appeal the Common Issues
Judgment handed down in March 2019 will take place on Tuesday 12 November 2019.
Helen Davies QC will be representing Post Office at that hearing.
We should receive the Court of Appeal’s decision at the end of that hearing or very
shortly after.
Third / Further Issues Trial
On 25 October 2019 we received from the Claimants individual particulars of claim
(IPOCs) for four test cases (Abdulla, Bates, Stubbs and Stockdale, each a “Lead
Claimant” in the Common Issues trial).
The IPOCs set out the types of loss each Claimant is claiming for the purposes of the
March 2020 Further Issues trial, which will determine whether those losses are
recoverable in principle and, if so, how they should be quantified. The IPOCs have not
put any values on these claims.
Post Office has until 25 November 2019 to file Defences to the IPOCs, with Helen Davies
QC and Tony Robinson QC retained to lead this work. The approach which Leading
Counsel is recommending is discussed in “Further Issues Trial - Defences” below.
he written report on the audit is due to be delivered during the week commencing 11 November 2019.
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Future Trials
As part of the ongoing review of all 555 individual cases, we are continuing to identify
criteria for selecting “Test Claimants”, whose cases could be used as representative of
the wider claimant group in a (unscheduled) future trial on breach (i.e. whether Post
Office acted wrongly), causation (i.e. did that breach cause the Claimant’s harm), and
limitation (i.e. is a Claimant’s claim time-barred).
No date has yet been set for the selection of test claimants. The parties have agreed
to write to the Court proposing to exchange proposed selection criteria on 12 December
2019, which would enable the outcome of Post Office’s application for permission to
appeal the Common Issues judgment to be factored into the selection criteria, and for
a Case Management Conference to be set for January 2020 to finalise the criteria.
Further Issues Trial - Defences
Approach to Facts
The Further Issues trial is proceeding on the basis of assumed facts with no witness
evidence being called. The Court will therefore assume that the claims made in the
IPOCs are factually correct (e.g. that Post Office was in breach of contract), and that it
will not need to make findings to resolve disputed issues of fact (e.g. as to whether a
specific event happened or not).
The trial has been structured this way so that the Court can make findings now on the
types and scale of losses that are recoverable in principle by the Claimants, without first
needing to hear evidence on whether Post Office has acted unlawfully (which would
significantly increase the trial’s preparation time, hearing time and cost). The question
of whether Post Office has, in fact, acted in breach of contract will be addressed at a
later trial.
Consistent with the approach being taken to assumed facts, the IPOCs acknowledge
that nothing Post Office says in its Defences will be taken as an admission of any of the
assumed facts or allegations of breach and causation contained in the IPOCs.
Content of the IPOC
The assumed facts underpinning the Claimants’ IPOCs build on those advanced in the
Common Issues trial:
Post Office made them pay for shortfalls for which they were not liable;
their retail businesses were disrupted by having to deal with shortfalls;
their postmaster contracts were unlawfully suspended and terminated;
their reputations were damaged as a result; and
a new allegation that they could not afford to fund legal action against Post
Office because of the financial harm they had suffered.
These assumed facts provide the foundation for the very wide range of loss and damage
the Claimants are claiming, which include:
recovery of wrongly repaid shortfalls;
lost remuneration and profit (from the Post Office and independent retail
business), during suspension and after termination;
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loss of capital investment / diminution in branch value;
the costs of the Claimants’ litigation funding;
reputational/stigma damage leading to disadvantage in the labour market;
compensation for distress, anxiety and inconvenience;
“aggravated damages” to punish conduct which is not just unlawful but
reprehensible; and
consequential losses, such as wasted staff time, staff redundancy costs,
overdraft fees etc.
Post Office’s Defences
The legal principles behind many of the claims are not contentious, although the way
which the Claimants seek to apply them can be. The two claims we see as being most
contentious are:
post-termination losses, which on the Claimant's claim are worth c. £148m if
payable up to the date of retirement (the Claimants’ best case); and
litigation funding costs, which on Herbert Smith Freehills’ analysis could be
worth c. £72m (as at May 2020, assuming a 4x multiplier is applied to their
incurred legal costs).
Given that the Further Issues trial will proceed on the assumption that Post Office is in
breach, Post Office does not need to dispute any of the factual claims put forward by
the Claimants. Leading Counsel is therefore recommending that we only challenge the
Claimants’ case and put forward Post Office's own case where absolutely necessary to
determine whether a loss is recoverable in principle.”
This approach will mean that for the most part, only the Claimants’ view of events will
be before the Court, not Post Office’s. Post Office will however still be able to challenge
this later in the litigation (when it can put its full evidence before the Court), and the
approach will minimise the potential for factual disputes (which the Further Issues trial
has been designed to avoid), thereby limiting the opportunity for the Judge to make
findings to resolve any factual dispute (which could be adverse and binding on Post
Office at later stages of the litigation).
This approach will also help keep the Court focused on determining the legal principles
surrounding recoverability of losses rather than the history of the four lead cases.
Findings about the scope of those losses (particularly loss of earnings and litigation
funding) are important to clarifying Post Office's potential exposure and for creating
common ground on settlement.
The Defences are currently being drafted in line with this approach, which the
Subcommittee is asked to note, ahead of the 25 November 2019 filing deadline.
Next Steps
ange aster contract
t the
claiming.
The Court will then
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An overview of the main court and settlement-related activity in the Group Litigation
through to October 2020 is set out in the “Group Litigation Timetable” at Appendix 1.
Between now and early December 2019 we are preparing to:
¢ receive the Horizon judgment (now imminent);
¢ attend the Court of Appeal on 12 November 2019 for the hearing on permission
to appeal the Common Issues Judgment;
e file Defences to the Further Issues trial IPOC by 25 November 2019; and
e attend mediation on 27-28 November 2019;
* complete the individual claimant case reviews and draw up a criteria for
selecting test cases for later trials.
A timeline of the key milestones to early December 2019 is set out at Appendix 2.
Operational responses to the Common Issues Judgment and Contingency Planning for
the Horizon Judgment are being reported separately.
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Appendices
1. Group Litigation Timetable
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Date Milestone
41. I Imminent Horizon: judgment expected to be handed down on or after this date
2. 12 November Common Issues: Oral hearing of Permission to Appeal application
3. I 13 November Post Office Board GLO Sub-Committee on or after this date
4, 18 November Further Issues Trial: Internal deadline for legal team to draft Defences and provide to Post Office for sign off.
5. I 25 November Further Issues Trial: Deadline for Post Office to serve individual Defences
6. I 26 November Post Office Board Meeting
7. I 27 November Parties to serve and file their proposed Selection Criteria for Test Claimants
8. I 27-28 November Mediation. UKGI/BEIS authority to be obtained if required.
9, I 3 December Parties to set out assumed facts and issues to be decided at Further Issues Trial
10. I 4 December Case Management: Case Management Conference to resolve any disputes about issues to be dealt with at FIT
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