Filed on behaif of the:
Witness:
Statement:
Exhibits:
Date made:
IN THE HIGH COURT OF JUSTICE Claim No: HQO5X02706
QUEENS BENCH DIVISION
BETWEEN:-
POST OFFICE LIMITED
Claimant/Part 20 Defendant
-and-
LEE CASTLETON
Defendant/Part 20 Claimant
SECOND WITNESS STATEMENT OF CATHERINE OGLESBY
I, CATHERINE OGLESBY of Darlington Area Office, Crown Street, Darlington, DLL
1AN WILL SAY AS FOLLOWS:
1.
Since April 2005, I have been a Sales Account Manager for the Post Office Limited
(the Post Office) with responsibility for ensuring that 24 directly managed post
office branches achieve their sales targets. Before that, I was a Retail Line
Manager (RLM) for approximately 8 years. As an RLM, I was responsible for
ensuring that subpostmasters in 85 sub post offices properly carried out their
duties to maintain service standards (for example, in relation to waiting times and
office appearance) and reach sales targets. I have worked for the Post office for
23 years.
I make this witness statement from facts within my own knowledge unless
otherwise stated. I have had the benefit of reading through my correspondence
and papers. References to page numbers in this witness statement are to page
numbers of Exhibit CO2 to this witness statement.
Post Office branch at 14 South Marine Drive, Bridlington YO15 3DB
3. Thave been asked to give a brief overview of the layout of I
(the Marine Drive branch) and describe how the business
works, for the benefit of the Court. At pages 1 to 3 are office copy entries which
show that Mr Lee Castleton and Mrs Lisa Marie Castleton have been the registered
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Claimant/Part 2
Defendant
COGLESBY
2
co2
17/10/2006
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6
proprietors of the freehold since 17 October 2003 and that they bought the
freehold on 18 July 2003. At page 4 is a rough plan I have drawn from memory
of the interior of the Marine Drive branch. The ground floor of the freehold
contains a rectangular shaped shop and from the entranceway, the Post Office
counter is in the far left hand corner of the shop. The shop counter and National
Lottery till are on the right as you enter the shop. There is living accommodation
above the shop for Mr Castleton and his wife.
4. From 18 July 2003 to 23 March 2004 Mr Castleton was subpostmaster of the
Marine Drive branch. His contract for services was in the standard format used for
subpostmasters at the time and a copy of that contract together with the signed
page is at pages 5-129 (the Contact).
5. Section 1, paragraph 3 of the Contract provides that the subpostmaster must
provide and maintain at his own expense, reasonable office accommodation
required by the Post Officer and pay, also at his own expense, any assistants he
may need to carry on Post Office business. At the material time, Mr Castleton
retained Christine Train as his assistant to work behind the Post Office counter and
I believe that she had worked at the Marine Drive branch for many years. I
cannot now recall whether at the material time, anyone else worked behind the
Post Office counter. Mrs Castleton’s wife, Lisa, worked in the shop.
6. There are 2 Post Office counter positions at the Marine Drive branch, each with its
own computer terminal, barcode scanner and printer. Before the opening of
business each day, the subpostmaster and any assistant logs on to their
computer. They must record all transactions they perform on their computers.
They can record transactions either by using their touch sensitive screen or
keyboard. The computer system in the branches is called Horizon. Horizon is in
effect, a sophisticated computerised calculator.
7. So far as I recall, every transaction recorded by the subpostmaster and his
assistant on to their computer has one or sometimes more corresponding
physical documents, apart from stock transactions. For example, when a
customer pays their TV license, the subpostmaster will retain the TV licence
counter foil. If that customer paid for their licence by cheque, the subpostmaster
will also have the cheque.
8. As far as I remember, at the end of each day, the subpostmaster prints from their
computer various reports. The procedure is slightly different for different
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products, but broadly speaking, they then compare these reports against the
physical documents they have (such as cheques or licence counterfoils) to ensure
they match. If they do not match, I think that they may be able to reverse
certain transactions whose details they had entered on the system erroneously.
They then send the reports and accompanying documents off to be processed.
When these are processed, if the covering report printed out from the branch's
computer does not match the accompanying physical documents, an error notice
is generated. An error notice is a correction statement. Its creation would help
explain whether there was any legitimate reason for an error having been made
(for example, because subpostmaster or his assistant made an incorrect entry
into the computer when recording a transaction).
9, At the material time, the subpostmaster also had to balance the physical cash and
stock against the cash and stock shown on the computers on a weekly basis and
produce a Cash Account. The Cash Account contained information such as cash
and stock in hand at the end of that week, receipts, payments, the balance due to
the Post Office and whether there were any discrepancies such as a surplus or
shortfall. The subpostmaster had to sign the Cash Account and of course should
not have done so unless it was accurate.
December 2003
10. Between approximately Christmas 2003 and the New Year, I was contacted by
telephone by Mr Castleton who told me that on week 39 (the week ending 23
December 2003), he had been £1,100 short in his Cash Account. We discussed
what might be a usual explanation for this, for example the Giro Bank error or
cheque deposits going through as cash. I suggested that he contact Giro Bank and
National Savings to see if there were any problems. I also asked him to make
good the sum of £1,100, because a Giro Bank error notice may take up to 8 weeks
to arrive. Mr Castleton said that he could make the amount good and we left
things at that.
1
. This had been the first time since Mr Castleton took over the Post Office in July
2003 that he had any major problems in balancing the physical cash and stock
against the cash and stock shown on the computers. Copies of the Cash Accounts
signed by Mr Castleton for the weeks ending 23 December 2003 (Cash Account
week 39), 30 December 2003 (Cash Account week 40), 7 January 2004 (Cash
o
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Account week 41) and 14 January 2004 (Cash Account week 42) are at pages 197-
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235. qB4 pesse- 2603
Shortfalls in January 2004
12. In accordance with my normal visiting plan, I visited the Marine Drive branch on
Friday 16 January 2004. At the time, no reason had come to light to explain the
loss of £1,100. The previous 3 weeks’ balances seemed to be fine.
3B, plwo-2@Hy
13. Referring back to the summary of events that I prepared at the time (pages 130-
134), 1 am reminded that on or around 21 January 2004 (Cash Account week 43)
Mr Castleton contacted me because his balance of the physical cash and stock
against the cash and stock shown on their computers was over £4,000 short. A
copy of the Cash Account he signed for week 43 ib BP Lages 28et0 245a. I again
asked him to contact Giro Bank and National Savings to see whether there were
any problems. I also asked him whether the cash was kept secure and who had
access to it.. Mr Castleton did not believe that any of his staff could have taken the
money. He stated that on this occasion, he was unable to make good the shortfall.
1 advised him to contact the helpline to get a hardship form. (A subpostmaster is
contractually obliged to make good any shortfalls without delay. However if a
subpostmaster cannot immediately make goods the shortfalls, he may complete
and submit a hardship form setting out details of his earnings and other relevant
information to seek the Post Office’s permission to make good the shortfalls by
instalment payments rather than immediately).
14. We also discussed at length ways for him to double check all of the paperwork
leaving the Marine Drive branch (for example, the giro paying in slips, pension and
allowance dockets and certain types of cheques) and to perform a balance
snapshot each evening to check the cash. (Effectively, a balance snapshot is just
a facility to allow the subpostmaster to quickly check transactions through the
week, It is a report that contains what the computer records should be the total
cash in stock figure, not what cash the branch actually does have. It looks at the
previous week’s declared cash in stock and adjusts items as they are sold thereby
showing the amount the branch would need to achieve a perfect balance.
However, if for example someone forgets to enter an item that a customer has
purchased, then the balance snapshot figure will be inaccurate, by showing less
cash than is actually in the till. If on the other hand, the customer is given too
much change or is overpaid (for example, a pension), the balance snapshot will
show more money than is actually present in the till). If the figures in the
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paperwork leaving the branch did not come close to the balance snapshot, this
ought to alert the subpostmaster that something was wrong.
15.1 contacted Mr Castleton by telephone on or around 28 January 2004 (Cash
Account week 44), After he said he was a further £2,500 short, again, we had a
lengthy discussion to discuss all the daily workings. A copy of the Cash Account
for that week signed by Mr Castleton is at pagés 246-255. ‘I brought up in the
conversation the possibility that somebody might be taking the cash, but Mr
Castleton discounted that possibility. I suggested that he carry out individual
stock unit balancing. Small post offices such as the Marine Drive branch which has
2 cashier positions run a shared stock system: All the cash and stock is contained
on 1 balance sheet. However, with individual stock balancing, each computer has
its own separate stock and cash balance. Mr Castleton did not wish to do this, as
he felt that Marine Drive branch did not lend itself to doing this sort of balancing. I
was surprised that Mr Castleton did not take up my suggestion because although
there is some work involved setting up individual stock balancing, it would have
enabled us to identify whether the losses were caused by any individual cashier.
Shortfalls in February 2004
16. The next week ended 5 February 2005, (Cash Account week 45) the Marine Drive
branch was £25 over. (A copy of the Cash Account signed by Mr Castleton is pages
256-267). However, the week after ending 11 February 2004 (Cash Account week
46) the Marine Drive branch was £1,500 short (A copy of the Cash Account signed
by Mr Castleton is at pages 268-279). ‘By now, after just 4 weeks, the Marine
Drive branch was a total of £8,243.10 short, not counting the sum of £1,100 that
Mr Castleton had made good to start with. I visited the Marine Drive branch
around this time at which time I would have looked at the latest Cash Accounts.
asked Mr Castleton whether he had obtained a Hardship Form. He said that he
hadn‘t and I told him to get one. I understand that he did, and he made @ book
entry which transferred the sum of £8,243.10 into the Suspense Account.
Subpostmasters are contractually obliged to make good all losses without delay
and Mr Castleton should not have been rolling them over each week. The purpose
of having a Suspense Account was simply so that a shortfall that a subpostmaster
does not immediately made good could be temporarily moved to the Suspense
Account rather than being left in the Cash Account. By this time, I was very
concerned and contacted the investigations team. The investigations team
investigate cases of fraud where dishonesty has been involved. Given that Mr
Castleton had kept me informed of the losses, this was not a case which they
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would investigate. I also completed an audit request so that the audit team would
carry out an audit.
17. In Cash Account week 48 (the week ending 25 February 2004) the short fall for
that week alone was £3,50' 18. (A copy of the Cash Account signed by Mr
Castleton is at pages 292-304). Mr Castleton informed me that he and his
assistant Mrs Christine Train spent many hours double checking the transaction
logs to try to prove that it was the computer equipment that was changing the
figures. I asked him if he had found anything, but he had not. However, he was
convinced that since he had a processor changed about the time the losses started
occurring that it was the processor that was causing the losses. I asked Mr
Castleton to contact Fujitsu services (who were responsible for designing,
implementing and operating the Horizon system) to obtain a system check. He did
this and the system check came back fine. I asked Mr Castleton to contact the
Horizon system helpline (HSH) which he did and I understand that he sent Cash
Accounts to the National Business Support Centre (NBSC) to review. I also asked
Mr Castleton to contact the Post Office's Transaction Processing section to see
whether there were any error notices pending. So far as I was aware, there was
nothing untoward with the computer system.
18. On 27 February 2004, I again visited the Marine Drive branch. Again we discussed
the losses shown in the various Cash Account figures. Mr Castleton became
distressed and angry and Mrs Train was also upset. I asked them what else I
could do to help, given that we had previously discussed all the usual ways that a
subpostmaster could incur shortfalls. Mr Castleton and Mrs Train repeated that
they had not taken the money and that it must be the Horizon system. Mr
Castleton stated that HSH had confirmed that the Horizon system was working
correctly, but he was not sure precisely what HSH had checked
19. Mr Castleton thought that the 2 computer processors were not communicating
with each other. 1 advised that if the 2 computer processors were not
communicating, then work done on the second machine would not show up on the
summary sheets. However, all the Pensions and Allowances reports and the Giro
Bank receipts agreed with the information from the computer, which to me
suggested that there was no computer error.
20. Mr Castleton also thought that when he “remmed in” the stock, the Horizon system
altered the figures. (When stock or cash (“a remittance”) is delivered to a branch,
the subpostmaster is obliged to physically check that the stock and cash matches
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the accompanying list of stock which the Post Office say is being delivered. The
subpostmaster enters the details of the remittance into the branch‘s computer,
which is called “remming in”). To prove whether or not the Horizon system had
changed anything, I suggested that at the end of the day after close of business
he:
a firstly print out an end of day snapshot;
b. remmed in; and then
c print out a second snapshot.
Shortfalls in March 2004
21. At some point in or around March 2004 I looked at the Cash Accounts for that
month and noted that:
(a) Ih the week ending 3 March 2004 (Cash Account week 49), Mr Castleton
transferred the previous weeks balance to the Suspense Account. The
Suspense Account then totalled £11,752.78. In addition, the Marine Drive
branch signed Cash Account showed a further shortage of £3,512.26 (pages
305-316). Mr Castleton did not make good this amount. 74,9 pene 2714
(b) In the week ending 10 March 2004 (Cash Account week 50) the previous
week’s shortage of £3,512.26 was rolled over and the shortage in the signed
Cash Account increased to £10,653.11 (pages 317-328). 78S p27! - 2736
WAG. P2749 - ITY
(c) In the week ending 17 March 2004 (Cash Account week 51), the Marine Drive
branch showed a shortage in the Cash Account of £11,210.56 plus the
shortage in the Suspense Account of £11,752.78 (pages 329-344).
Audit on 23 March 2004
22. On 23 March 2004, Helen Rose (nee Hollingworth) of the Post Office carried out an
audit of the Marine Drive branch together with Chris Taylor. This was the first date
that the audit could take place due to the other work commitments of the audit
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team. The audit concluded that there was a total unauthorised shortfall at that
stage of £25,758.75 (page 135).
23. I arrived at the Marine Drive branch in the afternoon of 23 March 2004 and took
Mr Castleton into the back room to speak to him. I told him that as a
precautionary measure, and with his permission, I would like to remove him and
his staff from the Marine Drive branch and to operate the branch with a temporary
subpostmaster to see how it would balance. I wanted the temporary
subpostmaster to retain the same Horizon system that Mr Castleton and his team
had been working with to try and keep everything the same. Mr Castleton and his
assistant Mrs Train were both angry. Mr Castleton said that he could not wait until!
the temporary subpostmaster was “thousands short next week” and that “heads
will roll” for the distress that he had suffered.
24. On the same day, Lesley Joyce (the Post Office's contract manager) wrote to Mr
Castleton to confirm that he was suspended as a precautionary measure pending
further investigations (page 137).
Events following Mr Castleton‘s suspension
25.1 asked a very experienced post master, Mrs Ruth Simpson, from the First Lane
Post Office in Hull if she would run the Marine Drive branch on a temporary basis.
Mrs Simpson agreed, but was only able to run the Marine Drive branch for a few
weeks as she had other commitments. She opened the Marine Drive branch on
the morning of Wednesday 24 March 2004 and balanced £2.14 short on that night.
(A copy of the Cash Account dated 24 March 2004 at pages 345 to 350). She
brought with her a part time assistant to help out on Mondays. On the close of
business on the first Monday (the week ending 31 March 2004), she was £100
short and explained that she thought that this was because her assistant had left
something in the stack and erroneously paid this amount twice. (The stack is an
‘on screen list of transactions for the individual customer that is being served at the
time. Each time a new customer is served, the stack should be cleared so that it
starts from zero). A copy of the Cash Account for that week is at pages 351-356.
26. I telephoned Mr Castleton to see what his reaction would be. He stated that Mrs
Simpson was only using 1 computer rather than 2 as he had done, so it was not a
true reflection of how he ran the Marine Drive branch. He also stated that Mrs
Simpson had misbalanced (i.e there was a shortfall of £100). I said that 1 would
speak with Mrs Simpson regarding his concerns. I contacted her and asked her to
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27.
28.
29.
30.
use both machines. She stated that on a Monday she had 2 people working all
day, so 2 machines were used. The rest of the week she was on her own, but
logged on to the system with 2 usernames and had 2 machines running, she was
serving customers from both machines, remming in on both and putting the lottery
cash on both.
On the week ending 7 April 2004 (Cash Account week 02), Mrs Simpson was
£19.38 over (pages 357-362). We discussed how she was getting on every other
day and she would text me to confirm that she was okay. On her next balance for
the week ending 14 April 2004 (Cash Account week 03) she was £10.76 short
(pages 363-368).
On 16 April 2004, I visited the Marine Drive branch and spoke to Mr Castleton
away from the counter, since the retail shop and the Post Office counter were still
open. He was distressed. We discussed Mrs Simpson’s balancing results. Mrs
Train wanted to know where the £100 shortage had gone in Mrs Simpson’s first
fult week and I explained what she had thought. Mrs Train became aggressive and
threatening. I said that I felt the balance reflected any normal Sub-Post Office. Mr
Castleton again stated that it was the computer that was making the losses. I told
Mr Castleton that Mrs Simpson would be finishing on Wednesday 21 April 2004
due to other commitments and said that I wanted more time and more balance
results and wanted another temporary subpostmaster to take over. Mr Castleton
said that he did not wish to go back on the counter as things stood anyway.
On the week ending Wednesday 21 April 2004, (Cash Account week 04) there was
a surplus for the week of £0.02 (pages 369-374). Mr Greg Booth took over as
temporary Sub-Postmaster on the same day. He completed his first week on
Wednesday 28 April 2004 and declared a gain of £14.76 (pages 375-380).
On 23 April, Mr Franks (Mr Castleton's father-in-law) contacted me by telephone
to discuss the way in which Mr and Mrs Castleton had been treated. I explained
the situation and told him that the suspension was a precaution and that I was
hoping that by having a temporary Sub-Postmaster in the office, that if there were
any problems with the computer equipment, this would come to light. Mr Franks
demanded that Mr Castleton be reinstated immediately. I referred him to the Post
Office Head of Area, David Mellows-Facer and told him that I could not agree to
reinstate Mr Castleton at the time. I understand that Mr Franks spoke with David
Mellows-Facer and asked for a speedy conclusion to the situation. David Meliows-
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31.
32.
33.
Facer spoke to me and asked me whether Mr Castleton could be interviewed as
soon as possible.
On 26 April 2004, 1 wrote to Mr Castleton and stated I was considering the
summary termination of the Contract on the grounds that the audit of the Marine
Drive branch on 23 March 2005 showed that there was a total shortage of
£25,758.75 (pages 138-139). I said that Mr Castleton had reported large,
unexplained losses over the preceding 12 weeks. I stated that he was unable to
make good the losses and therefore the decision was made to suspend him due to
the obvious risk to Post Office funds. 1 explained that there are a number of
obligations set out within the Contract, one of which is that the appointment is
dependant upon the branch being well managed and the work performed to the
satisfaction of the Post Office (section 1, paragraph 5). I also referred him to
section 12, paragraph 12 of the Contract (page 60). This provides that:
“the Subpostmaster is responsible for all losses caused by his own
negligence, carelessness or error and also for fosses of all kinds caused by
his Assistants. Deficiencies due to such losses must be made good without
delay.”
1 also explained that Section 1, paragraph 10 of the Contract (page 21) provides
that it can be determined at any time in case of a breach of condition by the
subpostmaster or non-performance of his obligation, or non-provision of Post
Office services. 1 asked him to explain the reasons why his contract should not be
terminated summarily and that he could do this by requesting a personal interview
or submitting a response to the charge(s).
On 28 April 2004, Mr Castleton replied and queried whether the losses existed or
whether they were “a figment of a computer's imagination”. He asked me to send
to him various documents and information (pages 140-143).
I contacted the Transactions Processing Department again on 29 April 2004 to see
whether there were any outstanding error notices. There was an error for the
National Lottery that had yet to be investigated for £125. There had also been an
error for cheques that later cleared and did not generate an error notice. There
was also an error for an Easy Access Account that had been processed incorrectly.
I contacted Giro bank to see whether there were any errors outstanding with
them. I asked them to look back to week 43. They looked back as far as week 43
and came forward to week 02. There was a small Giro bank error of £1.43, but
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that would not be reported because it was such a small error. Everything cise was
fine.
34. Mr Castleton telephoned me on 4 May 2004 and stated that he had found £15,000
of the losses. I assumed he had done this by going back over the hard copies of
the accounts that he had. I asked him where he had found the cash. He stated
that the Suspense Account had doubled the figures. When he had put the cash
into the Suspense Account, although the amount was showing in the Suspense
Account, it was also still showing as a loss in the Cash Account again the next
week. Mr Castleton asked for the Suspense Account software to be checked. I
again contacted the NBSC to request this.
35. To test whether the Suspense Account was having any effect on the balance, I
contacted the temporary Sub-Postmaster, Greg Booth on or around 5 May 2004. I
asked him how he was balancing that week on his snapshots. He told me that he
had a few pounds over. I told Mr Booth what Mr Castleton had said about the
Suspense Account. I asked Mr Booth to put £100 into the shortages line on the
Suspense Account. First he ran an office snapshot ‘tpsaés 387- 388), then he
placed the £100 into the account, then he ran a second snapshot (pages 389-390)
and a Suspense Account report (pages 391-392). During this time, the same
Horizon kit was still being used by the assistant. The £100 was in the correct place
and the cash figure on the snapshot had changed by £100. This demonstrated that
the system worked correctly. I asked Mr Booth to balance with those amounts still
in the account. He should balance £100 over. I would then call into the Marine
Drive branch on 7 May 2004 and we would take the amount out, to see if the
opposite occurred. Mr Booth left me a message on my telephone later that
evening to state that he had balanced over, just as we had expected.
36. For the week ending 5 May 2004 (Cash Account week 06), the Marine Drive
branch declared a small gain of £103.11 (pages 381-386).
37. On 6 May 2004, a letter was written on my behalf to Mr Castleton and sent to him
a copy of an email from Fujitsu and logs of calls to the NBSC and HSH (pages 144-
154). [ also sent to him a copy of the Horizon System User Guide, System Failure
Sub-Sections 12 and 13 and a copy of the Audit Report (pages 155-171). The
email from Andrew Price at the NBSC dated 20 April 2004 to me stated:
“The PM sent Cash Account information to NBSC and it was looked at by
Andrew Wise, he was unable to find any errors. The only amount questioned
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was a large amount on the cheques to processing centre which Andrew was
able to confirm was a cheque for the purchase of Premium Bonds. The PM
was advised there was nothing more we could do and we suggested that he
works on a manual system at the side of Horizon to see if any problems
were highlighted. Also, when doing the REMS the PM should take a snapshot
before and after to see if any problems were occurring when doing a
remittance. Andrew Wise and I both feel that the Horizon system is working
properly and we are unable to help the PM any further.”
38. The email from Julie Welsh, Service Delivery Manager HSH Fujitsu Services stated:
“There is no evidence whatsoever of any system problem... please tell the PM
that we have investigated and the discrepancies are caused by the
difference between the transactions they have recorded on the system and
the cash they have declared, and are not being caused by the software or
hardware.” (page 176).
39. On 6 May 2004, I also contacted the Transaction Processing Department at
Chesterfield again to check whether there were any outstanding errors. Only the
easy access error was stil! showing. I also contacted Mr Castleton by telephone
and informed him that I had received his letter and was doing all I could to get
him the information he had requested. I said that I would probably not be able to
obtain everything that he had asked for.
40. On 7 May 2004, I visited Greg Booth at the Marine drive branch, as arranged.
First he ran an office snapshot (pages 393-394), then he removed the £100 from
the Suspense Account and ran a second snapshot (pages 395-396) and a
Suspense Account report (397-398). Again, the cash figure in the snapshot and
the Suspense Account had changed by £100 which demonstrated that the system
worked correctly.
Interview with Mr Castleton on 10 May 2004
41. On 10 May 2004, I interviewed Mr Castleton. Ms Lesley Joyce (Contract Manager)
and Mrs Train were also present. A copy of the Minutes of the interview meeting
are at pages 177-179. At the interview, I explained that it was his opportunity to
give any explanation as to why his contract for services should not be terminated
I summarised the events which lead to his suspension on 23 March 2004 due to an
unexplained shortage at that time of £25,758.75. During the 12 weeks prior to
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42.
43
44,
45.
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this audit, the Marine Drive branch had several large unexplained losses. The
figure for cash on the system was not the same as the physical amount of cash at
the Marine Drive branch. Mr Castleton stated that the Horizon system was to
blame.
I informed Mr Castleton that since he had been suspended, the same Horizon
system had remained in place and that there had not been any further complaints
about it from the Marine Drive branch and that the Cash Account showed no large
losses. The Horizon system did crash whilst Mrs Simpson was running the branch,
but when she rebooted it, this did not effect the balance. When Mrs Simpson had
finished, Mr Booth was appointed as a temporary subpostmaster, and again, he
had no problems.
Mr Castleton stated that he had not taken any money and that he trusted his staff
not to have taken anything. Mr Castleton said that he had asked for 10 pieces of
information and I explained that J had only received his letter 2 working days prior
to the interview and that I was working on obtaining this.
I checked that Mr Castleton understood how the Cash Account worked with
regards to balances and losses and gains and he confirmed he understood it. I
then went into detail with balances, error notices, losses etc and the evidence I
had with the snapshots and declared cash. I provided all of this information to Mr
Castleton, together with a list of the results of the balance.
At the end of each day the subpostmaster is supposed to count their cash, type
the details into their computer stating the quantity of each denomination they
have and then print a cash declaration to declare the quantity of cash in the tills
overnight. (This is called the overnight cash declaration or ONCH). I referred Mr
Castleton to some of the cash declarations which had been manually altered or
written on. Specifically I referred him to week 47 (the week ending 18 February
2004) and also the declaration on 13 February 2004 which had a figure of
approximately £7,000 written onto the bottom of the cash declaration. Mr
Castleton thought it was Mrs Train’s writing, but she was not sure. I said this was
very important because although the Cash Account for week 46 (the week ending
11 February 2004) showed a loss of £8,243.10, the snapshots and declared cash
immediately following week 46 did not match. For example:
(a) The balance snapshot timed at 5.27p.m on 13 February 2004 (page 187)
showed that the Marine Drive branch should have needed £92,095.36 cash in
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46,
47.
its till to achieve a perfect balance. However, the cash declaration timed at
5.30pm that day shows that the branch had cash of £99,128.40 (page 191),
being £7,033.44 more than Horizon thought it had. 4g. /- (269 5
(b) The balance snapshot timed at 11.59am 14 February 2004 showed that the
Marine Drive branch shoul have needed £95,896,59 in its till to achieve a
perfect balance fpage 89 Fiat the cash declaration timed at 12.00pm that
day showed that it actually had £102,706.10 (page 191), being £6,809.51
more than Horizon thought it had.
9 mag 2699
(c) The balance snapshot timed at 5.37pm of Monday 16 Februasy, 7004 showed
that the Marine Drive branch should have needed I£7)%986-28" In its till to
achieve a perfect balance (page 192), but the cash declaration timed at
5.36pm that day showed that it had £84,909.54 (page 196), being £6,951.26
more than Horizon thought it had. MG f 2676
(a) The balance snapshot timed at 5.29pm dated Tuesday 17 February 2004
showed that the Marine Drive branch needed £68,163.08 to achieve a perfect
yew ier oas -
balance (page!194), but the cash declaration also timed at 5.29pm that day
showed that it actually had £74,939.85 (page 196), being £6,776.77 more
than Horizon thought it had.
3 “BG 02645
In other words, according to the cash declarations, the Marine Drive branch had
more cash than it required to balance.
Crucially, the Cash Account on Wednesday 18 February 2004 showed that the
cash is an exact match for the cash required on the balance. I asked Mr Castleton
where the surplus had gone. He had no explanation and stated that it was
something to do with Horizon. I gave Mr Castleton other examples where there
were shortages in subsequent weeks and that they did not match the snapshot in
the cash declaration.
I explained to Mr Castleton that the Horizon system is a double entry accounting
system and that everything I had checked worked through. The evidence does not
support Mr Castleton’s theory that the Horizon system went wrong when he
entered the stock remittances on to the system.
1A_1107486_7 14
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361
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Post interview
48. After the interview, I sent copies of the cash and Suspense Accounts to Elizabeth
Morgan and Daviyn Cumberland in Leeds who were two people very experienced
in dealing with the Suspense Accounts. Neither of them could see anything wrong
with the way that the computers were working.
49. On 14 May 2004, I wrote to Mr Castleton to clarify the entries at the top of the
final balance that he had queried and to explain why the 2 final balances he had
mentioned did not look similar (page 180). 1 also sent him a copy of the
interview notes.
Mr Castleton’s dismissal
50. Mr Castleton did not provide any evidence of a computer problem. All the entries
in his Cash Accounts were double checked. The figure declared for cash on the
system did not match the physical amount of cash he had in his office. This
showed that there was an actual loss, rather than a computer problem. The audit
had revealed that the Marine Drive branch was short of £25,758.75 cash, which,
coupled with a lottery charge error that occurred on 23 March 2006 for £176 that
has not been repaid and a lottery claim error (a credit) that occurred in the cash
account week ended 24 March 2004 for £75.80, made a total deficiency of
£25,858.95.
51. Mr Castleton denied taking the cash, but he would not take my advice to try
individual balancing, or listen to my suggestion that a member of his staff might
be taking the money.
52. The Transaction Processing Department at Chesterfield and Girobank have stated
that they had no outstanding error notices to issue. Fujitsu Services had checked
the software and could not find any problems.
53. Since Mr Castleton had been suspended, the temporary subpostmasters had
worked with exactly the same Horizon kit and the balance had continued to be
fine each day within expected parameters. Mr Castleton had not given any
credible explanation for the unauthorised shortfalls. In the circumstances, I
decided to terminate summarily Mr Castleton’s Contract. I wrote to Mr Castleton
on 17 May 2004 to confirm that I had decided to terminate summarily the
-
1a_1107406.7 1s - 362
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Contract effective from 23 March 2004, the date of his suspension (pages 181-
182).
Events following Mr Castleton’s dismissal
54. On 23 May 2004, Mr Castleton wrote to me to confirm that he wished to appeal
against my decision (page 183). He also stated that he was seeking further
information relating to the computer fault. On 1 June 2004 he wrote directly to
David Mellows-Facer for this information (page 184). On 2 June 2004, David
Mellows-Facer replied to Mr Castleton (page 185-186). Mr Castleton‘s appeal was
dealt with by Mr John Jones, Area Development Manager, which upheld my
decision.
55. In the circumstances, I believed (and still believe) that my decision to dismiss Mr
Castleton was entirely justified.
I believe that the facts stated in this Witness Statement are true.
GRO
a
Fr
IERINE OGLESB)
Dated A lO 2006
ck
ta 11074867 16 - 363
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Filed on behalf of the: Claimant/Part 20
Defendant
Witness: COGLESBY
Statement 2
Exhibits: coz
Date made: 17/10/2006
Claim No. HQO5X02706
IN THE HIGH COURT OF JUSTICE
QUEENS BENCH DIVISION
BETWEEN:
POST OFFICE LIMITED Claimant/ Part 20
Defendant
-and-
LEE CASTLETON Defendant/ Part 20
Claimant
SECOND WITNESS STATEMENT OF
CATHERINE OGLESBY
BOND PEARCE LLP
Ballard House
West Hoe Road
Ref: SID3.348035.134
Solicitors for the Claimant/Part 20
Defendant
sa.ar07486.7 17 364
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Filed on behalf of the: Claimant/Part 20
Defendant
Witness: C OGLESBY
Statement: 2
Exhibits: co 2
Date made: 17/10/2006
IN THE HIGH COURT OF JUSTICE Claim No: HQ05X02706
QUEENS BENCH DIVISION
BETWEEN:-
POST OFFICE LIMITED
Claimant/Part 20 Defendant
-and-
LEE CASTLETON
Defendant/Part 20 Claimant
SECOND WITNESS STATEMENT OF CATHERINE OGLESBY
This is the Exhibit CO2 referred to in the Second witness statement of Catherine
Oglesby dated (4 October 2006.
vA.1107486.7 18 365
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OFFICIAL COPY OF REGISTER ENTRIES
This official copy shows the entries subsisting on the register on 23 March 2006 at 10:31:23.
Th. ‘date must be quoted as the ’search from date’ in any official search application
based on this copy.
Under s.67 of the Land Registration Act 2002, this copy is admissible in evidence to the
same extent as the original.
Issued on 23 March 2006.
This title is dealt with by Land Ri
Land Registry
Title Number :
Edition Date: 17 October 2003
A: Property Register
This register describes the land and estate comprised in the title.
EAST RIDING OF YORKSHIRE
1. (13.03.1985) The Freehold land shown edged with red on the plan of the
nd being Marine Post Office
2. The land has the benefit of the following rights granted by a Conveyance
of the land in this title dated 22 February 1985 made between (1)
Lawrence Prince and Ada Kathleen Prince and (2) James Frank Evamy and
Barbara Janet Evamy: -
“TOGETHER with all rights of road or way drainage and other appurtenances
thereto belonging as now used enjoyed therewith.
B: Proprietorship Register
This register specifies the class of title and identifies the owner. It contains any entries that affect the
right of disposal.
Title Absolute
1. (17.10.2003) PROPRIETOR: LEE CASTLETON and LISA-MARIE CASTLETON
GRO 3
2. (17.10.2003) The price stated to have been paid on 18 July 2003 was
£218,000.
3. (17.10.2003) The Transfer to the proprietor contains a covenant to . 3 6 6
observe and perform the covenants referred to in the Charges Register and
of indemnity in respect thereof.
FSET Continued overteaf { Page 4
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Title Number
B: Proprietorship Register continued
4. (17.10.2003) RESTRICTION: No disposition of the registered estate by
the proprietor of the registered estate is to be registered without a
written consent signed by the proprietor for the time being of the Charge
dated 18 July 2003 in favour of The Royal Bank Of Scotland PLC referred
to in the Charges Register.
C: Charges Register
This register contains any charges and other matters that affect the land.
1. The land in this title together with other land is subject to the payment
of three perpetual yearly rentcharges of 5s payable to Joliffe Esq.,
£7.6s.8d. to the Church Wardens of the Parish of Kirby Misperton and
£3.14s.8d. to Thomas Grimston Esquire mentioned in a Deed dated 19
December 1871 made between (1) George Townshend Hudson and Sir James
Hudson (2) Godfrey Rhodes in which it is stated that the land in this
title is indemified from the said rentcharges by a Deed dated 27 October
1963 made between (1) Harrington Hudson (2) George Townshend Hudson and
Six James Hudson No other particulars of the rentcharges or of the said
indemnification were supplied on first registration.
2. A Conveyance of the land in this title and other land dated 15 March 1989
made between (1) Benjamin Stocks and James Staniland Stocks (2) Whitaker
Brothers Limited (3) The Reverend Joseph Bawden Allen and (4) Frederick
Walker and others contains stipulations details of which are set out in
the schedule of restrictive covenants hereto.
NOTE:- No copy of the covenant to observe the said stipulations was
supplied on first registration.
3. (17.10.2003) REGISTERED CHARGE dated 18 July 2003.
4 (17.10.2003) PROPRIETOR: THE ROYAL BANK OF SCOTLAND PLC
(Co.Regn.No.) of 19 Huntriss Row, Scarborough, North Yorkshire, YO11 2ED
FEO III IO GOI
Schedule of Restrictive Covenants
1. The following are details of the covenants contained in the Conveyance
dated 15 March 1989 referred to in the Charges Register: -
And that no building other than a fence or wall shall be erected on the
said plot of land between the building line shewn on the said plan and
the roads to which the said plot of land has a frontage And will not dig
ox remove or permit to be dug or removed on or from the said plot of land
any turf stone or soil except what may be necessary in excavating the
foundations of any buildings which may be erected thereon or in levelling
the site for a garden and will not quarry any stone thereon except for
use in building upon the said plot of land and will not sell off any such
stone so quarried And that the said plot of land shall not be used for
any purpose other than garden ground meadow land plant nursery or orchard
or for the purpose of erecting a temporary Mission Chapel or Schoolroom
as hereinafter mentioned until built upon nor shall any Deed or thing be 367
done on the said plot of land or in or upon any building thereon which 907
may be or grow to be an annoyance nuisance damage or disturbance to the
Continued on next page 2 Page 2
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Title Number
iSchedule of Restrictive Covenants continued
Vendors their successors or assigns or the owner or tenant of any
adjoining land but nevertheless the said buildings and erections or any
of them or any part of the said plot of land may be at all times
hereafter used for the purposes of a Church Chapel or place of religious
worship and also for Schools and Class rooms but such Schools and Class
Rooms shall only be carried on in connection with the said Church or
Chapel or Mission Chapel and shall not at any time be used as public
Elementary Schools under the Elementary Education Act And will permit
the Vendors their Successors or assigns so long only as the said plot
shall remain unfenced to take sell departure or otherwise deal with any
grass or similar crops from time to time growing upon the said plot of
land and to permit golf to be played thereon......And will not erect or
allow to be erected upon the said plot of land at any time hereafter any
Beer Shop Public house or Hotel for the sale of Malt or Spirituous
liquors and that no noxious or offensive trade or business shall be
carried on upon the said plot of land And will not for a period of five
years from the thirty first day of December One thousand eight hundred
and ninety eight erect upon the said plot of land any building other than
a Church Chapel or place for religious worship and also for Schools and
Class Rooms in connection therewith as hereinbefore provided but after
the expiration of that time should they for any cause wish to discontinue
the said Church Chapel or place for religious worship or school or Class
rooms then any houses or shops which may be erected on the said plot of
land shall not be of a less rateable value than Thirty five pounds per
year.
NOTE:-The building line referred to is the existing line of building.
END OF REGISTER
NOTE: The date at the beginning of an entry is the date on which the entry was made in the Register.
368
CA 3 Page 3
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Marine Drive Post Office Summary of events.
Between Christmas and New Year 2003 approx. I was contacted by the Postmaster
Mr Lee Castleton.He told me that on week 39 he had been £1,100.00 short in his cash
account.We discussed all the usual explanations i.e. Girobank errors, cheque deposits
going through as cash .I told him to contact Girobank and National savings to see if
there were any problems.I also asked him if he was able to make the amount good , as
a Girobank error notice may take up to eight weeks to arrive.He said that he could
make the amount good , and we left things at that. This had been the first time since
taking over the office in the previous July that he had any major problems balancing.
I visited the office on Friday 16" January 2004, in my normal visiting plan.Nothing
had yet come to light for the loss. The previous three weeks balances seemed fine.
Mr Castleton then contacted me after his next balance he was over £4k short. I said to
him to repeat the process as before and contact Savings bank and Girobank.I asked if
the cash was kept secure and who has access to it, Mr Castleton would not hear of any
of his staff taking the money.On this occasion he said that he was unable to make the
amount good.I told him to contact the helpline in order to get a hardship form.We
discussed at length ways to double check all the work leaving the office and to
perform a snap shot each evening and check the cash.
I contacted him after the next balance he said he was a further £2500 short.Again we
had a long discussion on the telephone as to how to check all the daily work.Again I
brought up in conversation the possibility of someone taking the cash.Lee discounted
that in rather strong terms.I suggested individual stock unit balancing, and if he
needed help setting this up I could help him.He didn’t want to do this as he felt the
office didn’t lend itself to doing this.
The next week he was only £25 short so things seemed to have settled down. Until he
balanced the week after and was £1500 short.By now after just four weeks he was
£ 8243.10 short, not counting the £1,100 he had made good to start with.
J asked him if he had got a hardship form yet.He said no , so I said he must ring and
get one.
He did , and the amount of £8243.10 was put into the suspense account.
At this point I was very concerned and contacted the Investigation team.They told me
that as he had kept me fully informed of the loss then they would not be able to prove
dishonesty.
I completed an audit request.
The week after he was £3509.18 short.
Lee told me that himself and Chrissie his assistant had spent hours and hours checking
and double-checking transaction logs and work to try and prove that it was the
computer equipment that was changing the figures . I asked him if he had found
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anything. He hadn’t. He is convinced that since he had a processor changed around
about the time that the losses started it is that that is causing the losses.
Tasked him to contact Horizon and get a system check.This was done and came back
fine.
I asked him to contact the helpline, which he did and he sent off some cash accounts
to look at.
Lasked him to contact TP to see if there were any error notices pending.
I visited the office on Friday 27" February 2004. We went over everything again Lee
was very distressed and angry, Chrissie his assistant was very worked up, upset and
angry. They felt that they hadn’t received any help and had been left to try and prove
that the computer was changing the cash figures. At times they looked close to tears
and said that they weren’t sleeping. On top of all this Lees son needed an operation
and was going into hospital. The stress levels in the office were high......
Lasked them what else I could do to help. We had covered ail the usual possibilities.
Lee and Chrissie kept on that they had not taken the money and that it must be the
Horizon kit. Lee said that the Horizon system helpline had said that the checks had
been ok, but what had they checked?
I told him to ring them back and ask.He said that they just told him everything was
ok.
Lee said that he thought that the two processors were not communicating with each
other and when he remmed in stock the system through the figures way out. I said
why not do your end of day snap shot , then rem in , then call a second snap shot, this
would then prove whether or not the system had changed anything.! said if the two
processors were not communicating then work done on the second machine would not
show up on the summary sheets.But all the P&A sheets and Girobank work was
agreeing.
The next week , Lee transferred the previous balance into the suspense account.That
figure was now at £11,752.78.He then showed a further shortage of £3512.26 on his
balance of 4.3.2004.This amount was not made good and the week after this rolled
amount escalated to £10,653.11.That would have been a true figure for the week of
£7140.85 short.
The following Wednesday the amount ( rolled again ) was £11,210.56, a true figure of
£557.45 short.
He was now showing £11,752.78 shortage in the suspense account and £ 11,210.56 on
the account for week 51 ( 18.3.2004 ).
The audit was planned for the following Tuesday 23.3.2004.After the audit the total to
late account was £25,758.75.He had lost a further £ 2795.41 in that week.
I took Lee into the back office to speak to him.I told him that I couldn’t let him go on
any more and as a precautionary measure was suspending him.I talked to him about
what I would like to do with his permission. That was remove him and his staff from
the Post office and operate the office with a temp Pmr , to see how it would balance .I
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wanted to keep all the Horizon kit that they had been working with to try to keep
everything else the same.
Although Lee was distressed and Chrissie was very angry, they both wanted to be
proved that it was the computer. Lee even said he couldn’t wait until the person was
thousands short next week .He said then” heads will roll” for the distress that they
have suffered.
I asked a very experienced Postmaster if she would run the office on a temp. basis.
This was Mrs Ruth Simpson from First lane Post Office in Hull. Ruth agreed , but
was only able to run the branch for a few weeks as she had commitments of her own.
I explained the situation and she came and took over at the audit. She opened for
business on the Wednesday morning and balanced £2.14 short on the night. She
brought with her a part time member of staff to help out on a Monday. At close of
business that first Monday she was £100 short. Her explanation was that the part timer
had left something in the stack and paid out this amount twice. Ruth did say that the
girl had done that in the past at her office.
I telephoned Lee to get any reaction from him. He said that there were queues out of
the door, customers were unhappy. He said that Ruth was only using one computer
not two as they had done , so it was not a true reflection of how they ran the office. He
said that she had mis-balanced as well.
T said I would speak to Ruth regarding his concerns. I contacted Ruth. [ asked her to
use both machines and we discussed the queues. She said that on a Monday she had
two people working all day, so two machines were used. For the rest of the week she
was on her own, but logged on to the system with two user names and had two
machines running. She was serving from both machines, remming in on both , putting
the lottery cash through on both.
The next Wednesday she was £19.38 over. We talked every other day. She would
text me and let me know she was ok.
The next balance she was £10.76 short.
I visited the office on Friday 16" April 2004. I spoke to Lee away from the counter. I
asked him how things were going. He was again distressed. He wanted to know what
was happening. We discussed Ruths balancing results. Chrissie came into the room ,
Lee was happy for her to stay. She wanted to know where the£100 shortage had gone
on Ruths first full week. I explained what Ruth had thought. Chrissie made a
comment , like Ruth couldn’t balance either. Her manner was very aggressive and
threatening. I said that I felt the balancing reflected any normal office. Again Lee and
Chrissie went on about the computer and that it was making the losses.
After about 30 mins of going round in circles I told Lee that Ruth would be finishing
on Wednesday 21 April due to her own commitments.! said that I was not going to
let him back in there as I wanted more time and more balance results.Lee said that he
didn’t want to go in there as thing were anyway. We discussed another temp.
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I spoke to Paul Whitaker from the investigations team again .He said that they didn’t
wish to take on the case or interview the Pmr as he had kept me fully informed of the
situation on a weekly basis. Again he said that they needed to prove dishonesty and
being able to prove this looked unlikely.
Mr Greg Booth took over as temp on Wednesday 21" April.
His first complete week ended on Wednesday 28" April , he declared a gain of
£14.00.
I contacted Chesterfield again on the 29" April to see if there were any outstanding
error notices.There was an error for lottery that had yet to be investigated for
£125.00.An error for cheques that later cleared and did not generate an error
notice. There was also an error for an Easy access account that had been processed
incorrectly.
I contacted Girobank to see if there were any errors outstanding.I asked them to look
back to week 43, He looked back to week 43 and came forward to week 02.There
‘was a small error of £1.43 , but that would not be reported.Everything else was fine.
Mr Franks ( Lees father in law ) contacted me on Friday 23 April , to discussed the
way in which Lee and his daughter Lisa had been treated.I explained the situation and
what I was trying to do.I told him that the suspension was a precaution and I was
hoping that by having a temp Pmr in the office any problems with the computer
equipment would come to light .Mr Franks demanded that Lee be reinstated
immediately, he was very irate and wanted to take this higher.I gave him the HOA
name , David Mellows-Facer, and told him that I would not be reinstating Lee at that
time.
Mr Franks spoke with David Mellows-Facer and asked for a speedy conclusion to this
situation.
David spoke to me and asked if Lee could be brought to interview ASAP.I explained
to David that I would like to get a few more weeks of clear balancing at the office and
to ensure that there were no errors yet to come out of the system. David’s thoughts
were that we had had five good balances and to get him in.
I sent out an RTU letter to Lee inviting him to an interview on Monday 10" May 04.
He sent me a letter asking for information from Horizon and NBSC.I have made
every attempt to get this for him. I have used the staff in the area office and the
contracts manager to help me. The case was taken on by Richard Benton, problem
manager. —
Lee then contacted me via the helpline on Tuesday 4" May 2004, to say that he had
found £15k of the losses .I phoned him at the office to see where he had found the
cash.He said that the suspense account had doubled the figures. When he had put the
amounts into the suspense account , although the amount was showing in the suspense
account it was also still showing as a loss again the next week.Lee asked for the
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suspense account software to be checked.! again contacted the NBSC to request
this. The request was forwarded to Richard in the problem management section.
To see if the suspense account was having any effect on the balance I contacted my
temp , Greg Booth.I asked him how he was balancing that week on his snap shots.He
told me that he was a few pounds over.It was now Wednesday 5 th May, balance
day.I told Greg what Lee had said about the suspense account.I asked Greg to put
£100 into the shortages line on the suspense account.First he ran a snap shot, then he
placed the £100 into the account, then he ran a second snap shot and a suspense
account report.During this time the second Horizon kit was still being used by the
assistant. The £100 was in the correct place and the cash figure on the snap shot had
changed by £100.All was ok.I asked Greg to balance with those amounts still in the
account.He should balance £100 over.I would then call on Friday and we would take
the amount out , to see if the opposite occurred.
Greg left me a message on my phone later that evening to say that he had balanced
over as we had expected.
Thursday 6" May.Contacted Chesterfield again to check any outstanding errors.Only
the easy access error still showing.
Lee was sent a letter from the area office giving him the call log from NBSC, the e-
mail between Richard and Julie , the audit report .
I contacted him by phone on 6" May , to let him know that I had received his letter
and I was doing all I could to get him the information that he had requested.But I did
tell him that I probably would not be able to get all that he was asking for.
The NBSC contacted me to say that the request to look into the suspense account
software had been sent to the problem management team.I contacted Richard Benton,
he said that the requests had been sent to Fujitsu, but that it could take several weeks
before they would come back with an answer.
Monday 10" May 2004.RTU interview ( see notes ).
At the interview Lee could only give one explanation for the losses at his office and
that was computer software problems. He did not provide any instances where the
figures on his cash accounts were incorrect, it was always the cash figure that didn’t
match.He asked me to explain the discrepancies at the top of his final balances.
I sent copies to Liz Morgan and Davlynn Cumberland in Leeds, two very experienced
suspense account people. They helped me with the wording for my explanation. I sent
a letter to Lee on Friday 14" May , plus the interview notes.
Both Liz and Davlynn could not see anything wrong with the way the computers were
working.
I discussed the whole case with my HOA throughout.
My decision is to summary terminate Lee Castletons contract for services.
(3
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To: From: cc:
Helen Hollingworth
Inspector
23
Date: 25" March 2004
Audit of Post Office ® Marine Drive branch, FAD 213337
23
An audit took place at Marine Drive Post Office on the 28" March 2004.
Helen Hollingworth led the audit and in attendance was Chris Taylor. The audit
commenced at 8.00am and on our arrival the sub postmaster was very pleased to
see us. He explained problems he had been having at the office regarding
balancing. His problems with balancing started in week 43 with a mis-balance of
-4230.97. He was adamant that no members of staff could be committing theft
and felt that the mis-balances were due to a computer problem. He had been in
contact with the Retail Line Manager Cath Oglesby and the Horizon help line
regularly since the problems began. The following table gives further weeks
balance declarations on the cash account.
48 ~3509.18
46 = -8243.10
45 = -6730.01
44 = -6754.09
43 -4230.97
48 ~-3509.18 This amount put into suspense week 49
46 -8243.10 This amount put into suspense week 47
45 = 6730.01 Rolled loss
44 = 6754.09
43 -4230.97
In week 47 £8243.10 was put into suspense. Although horizon had been
contacted and the Retail Line was aware of this figure, this was not authorised. In
week 49 £3509.68 was added to make the amount carried in the suspense
account total £11752.78. This was also not authorised.
week 51 balance -£11210.56
suspense account ~£11752.78
expected audit result ~ £22563.34
difference at audit - £2795.41 (-£1769.00 lottery -£1026.41 cash)
audit result ~ £25758.75
On the completion of the audit the Retail Line Manager Cath Oglesby was
contacted, along with the Investigation team and the Audit Line Manager. The
sub postmaster was suspended pending enquiries and an interim postmaster was
put in charge at the office.
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To : From : icc:
Head of Area
Date :
Audit of Marine Drive
The following control gaps were identified at the audit of the above named
branch on 23.03.2003
Personal cheques on hand incorrectly treated
Misuse of monies
Cash and stock not secured during lunchtime if not on premises
Safe left open
Safe keys left in safe door and not secured
Unauthorised amounts held in suspense account (>£1000>8 weeks)
Cash not listed accurately over £500
Travellers cheques not kept in safe
Foreign currency not held securely
Procedures for adjusting losses and gains were not adhered to
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Ss
Mr L Castleton
Post Office® Marine Drive branch
23.03.04
Dear Mr Castleton
Re: SUSPENSION
This is to confirm that your contract for services as Subpostmaster at
Post Office® Marine Drive branch has been suspended with effect
from 23 March 2004.
The suspension is precautionary pending further investigations and
your remuneration will cease from this date. Any outstanding
temuneration will also be withheld for the period of the suspension and
the question of payment of remuneration to you for this period will be
determined in-accordance with Section 19 paragraph 6 of your
Contract For Services on the termination of the period of suspension.
I will contact you again about this matter as soon as possible.
Yours sincerely
GRO
Lesley J Joyce
Contract Manager
Post Office Ltd
Darlington Area Office
Crown Street
Darlington
DL11AN
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PERSONAL AND IN CONFIDENCE
Mr Lee Castleton
Post Office® Marine Drive branch
26.04.04
Dear Mr Castleton
Re: SUSPENSION OF CONTRACT FOR SERVICES
I wrote to you on 23 March 2004 confirming the suspension of your
contract for services as subpostmaster of Post Office® Marine Drive
Branch.
I! am now considering the summary termination of your contract for
services on the grounds that the audit at your office on 23 March 2004
resulted in a total shortage of £25,758.75. You had reported to me large,
unexplained losses over the preceding period of 12 weeks. You were
unable to make good the losses and therefore the decision was made to
suspend you from your contract for services due to the obvious risk to
Post Office Ltd funds. There are a number of obligations set out within
the Subpostmasters contract for services, one of which being retention of
the appointment is dependant on the branch being well managed and the
work performed properly to the satisfaction of Post Office Ltd, the
Subpostmasters contract section 1, paragraph 5 and section 12,
paragraph 12 refers. This is in accordance with Section 1, paragraph 10,
of your Contract For Services, which provides that the Agreement may be
determined at any time in case of breach of conditions by you, or non-
performance of your obligations or non-provision of Post Office services.
! would now like to give you the opportunity to put forward any reasons
why I should not pursue this course of action. You can do this by
requesting a personal interview or submitting a response to the charge(s).
In either case you should inform me of your intentions, in writing by 5 May
2004.
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Re: SUSPENSION OF CONTRACT FOR SERVICES
! have provisionally set aside the morning of Monday 10 May 2004, at the
Area Managers Office in Darlington, should you choose a personal
interview. If this date is inconvenient we will of course re-arrange.
Should you choose a personal interview, you may be accompanied at the
interview by a friend, who must be a fellow subpostmaster, or a registered
Sub Office Assistant or a Consignia employee or an official/
representative of the National Federation of Subpostmasters. You also
have the right to request and receive all information relating to the
aforementioned charge.
Yours sincerely
Cath Oglesby
Retail Line Manager
Post Office Ltd
Operations
Darlington Area Office
Crown Street
Darlington DL1 1AN
To: Cath Oglesby
Retail Line Manager
*I wish to attend for interview
*I wish to submit written representation
* Delete as appropriate
Signed:
Date:
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PERSONAL AND IN CONFIDENCE
Mr Lee Castleton
Post Office® Marine Drive branch
14 South Marine Drive
Bridlington
YO15 3DB
06.05.04
Dear Lee
Please find enclosed the following:
e Copy of — Suspension letter — dated 23.03.04
e Copy of - Reasons to urge letter — dated 26.04.04
e Copy of e-mail from Fujitsu and logs of calls to Network Business
Support Centre and HSH
e Copy of e-mail from Andrew Price
e Copy of Horizon System User Guide, Office Administration,
System failure Subsections 12 and 13
© Copy of Audit report
Yours sincerely
Cath Oglesby
Retail Line Manager
Post Office Ltd
Operations
Darlington Area Office
Crown Street
Darlington DL1 1AN
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Page 2 of 2
Re: SUSPENSION OF CONTRACT FOR SERVICES
PERSONAL AND IN CONFIDENCE
Mr Lee Castleton
Post Office® Marine Drive branch
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Cath Oglesby To: Jean Sokeli/e/POSTOFFICEL..
cc:
05/05/2004 15:59 Subject: Marine Drive
Jean,
Please print.
~~~ Forwarded by Cath Oglesby/e/POSTOFFICE on 05/05/2004 15:58 ---—
w Andrew Price To: Cath Oglesby/e/POSTOFFICE:
20/04/2004 11:57 4
co:
Fema) Subject: Marine Drive
Cath,
i have asked both Sarah Pennington and Andrew Wise to provide a form of words and actions taken
whilst dealing with the PM at the above branch-:
When I spoke to the PM at Marine Drive he was unsure what was causing these errors. He told me
that he has been using the slave machine for his rems and I assured him that wouldn't cause a
problem as long as he was attached to the correct stock unit.
The PM thought there would be some errors relating to National Lottery, I phoned the Lottery team at
Transaction Processing who confirmed that there were some errors relating to Lottery, but for every
charge error there was a corresponding claim error, this was due to the lottery figures been entered on
Horizon in the wrong CAP.
PM was also concerned that when entering the lottery figures, it was as though the terminals were not
communicating, but if that was the case the PM would have large number of errors on every report
and product.
The PM sent cash account information to NBSC and it was looked at by Andrew Wise, he was unable
to find any errors. The only amount questioned was a large amount on the cheques to processing
centre which Andrew was able to confirm was a cheque payment for the purchase of Premium Bonds.
The PM was advised there was nothing more we could do and we suggested he works a manual
system at the side of Horizon to see if any problems were highlighted.
Aiso when doing the rems the PM should take a snapshot before and after to see if any problems
were occurring when doing a remittance.
Andrew Wise and I both feel that the Horizon system is working properly and we are unable to heip the
PM any further.
I hope this information helps, please contact me if you want to clarify anything.
Regards
Andrew
Service Support Team Leader
Network Business Support Centre
Cortonwood Business Park
BARNSLEY
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Richard,
I have had a chat with Anne, she used the message store viewing to
investigate this. If you want copies of extracts for the particular
incorrect declarations please submit an ad hoc request requesting this
information. Hope this helps, see below
NO TRANSACTION DATE AND TIME WAS PROVIDED FOR THIS ACTION USING CURRENT
DATE
AND TIME By Anne Chambers at 26-feb-2004 15:16:00 Category 94 - Advice and
guidance given I have checked various things on the system. All the
internal
reconciliation checks are ok. Cheques are being handled correctly (except
for 10th Feb when the clerk forgot to cut off the report - but this didn't
cause a discrepancy). Cash declarations look ok, they usually use drawer id
11. Occasionally they have used a different drawer id, this can lead to
amounts apparently doubling on the cash flow report, and should be avoided.
But again it will not cause a discrepancy. Checking the cash transactions
on
the system against the declarations shows that they are not working
particularly accurately (i.e. at the end of the day the cash they declare
in
the drawer is tens, hundreds or thousands of pounds astray from what has
been recorded on the system). It is possible that they are not accurately
recording all transactions on the system. There is no evidence whatsoever
of
any system problem. I've mentioned this outlet to Julie Welsh (Customer
Services) who will try to get POL to follow it up, but in the meantime
please tell the PM that we have investigated and the discrepancies are
caused by the difference between the transactions they have recorded on the
system and the cash they have declared, and are not being caused by the
software or hardware.
Julie Welsh
Service Delivery Manager HSH
Business Service Management, Post Office Account
FUJITSU SERVICES
Lovelace Road
Bracknell
Berks
RGi2 8SN
Tel:
Mob
Fax:
E-mail: julie. welshl”
Web: <http: //services. fuj
Please note il address with effect from lst April 2004 to:
julie.welshli
Fujitsu Services Limited, Registered in England no 96056, Registered Office
26, Finsbury Square, London, EC2A 1SL
This e-mail is only for the use of its intended recipient. Its contents
are
subject to a duty of confidence and may be privileged. Fujitsu Services
does not guarantee that this e-mail has not been intercepted and amended or
that it is virus-free.
- 390
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4
MARINE DRIVE INTERVIEW 10 MAY 04
Attendees: Mr Lee Castleton Subpostmaster
Mrs Chrissie Train Post Office assistant
Cath Oglesby RLM
Lesley J Joyce CM
Cath opened the interview by introducing everyone, explained the reasons for
the interview, the roles of those in attendance, read out the charge and said it
was LC’s opportunity to give any explanations or reasons as to why his contract
for services should not be terminated. (LC asked to tape the interview but was
informed he could not but could take notes and be copied these notes)
CO then went on to give a sunimary of events which led to the suspension of LC
on 23 March 04 due to an unexplained shortage of £25,758.75.
During the 12 weeks prior to audit LC had several large unexplained losses. LC
was suspended as a precautionary measure to try and investigate where the
losses were occurring. CO asked LC if he would allow his premises to be used to
conduct PO services and he agreed.
LC’s thoughts have always been that the Horizon system was to blame for the
shortages so the only thing that was changed in the office was the ‘people’. All
the current staff came out of the office and a temporary Postmaster, Ruth
Simpson, was allowed to run the branch, during the 4 weeks that RS was in place
the cash accounts showed no large losses.
The system did crash on her and was re-booted but this did not affect the
balance. She had problems with the AP card reader but was not allowed to
change the kit under the circumstances. No problems occurred while remming in
or with Lottery.
When RS finished Greg was appointed as temp Postmaster, again no problems
with balances or with any of the above.
CO Went on to discuss actions she had taken:-
Horizon-Asked for a system check twice
1-During the time of large losses. everything okay
2-During RS time “
3-Asked what upgrades had there been since week 39, the HSH said upgrades
happened all the time, to different offices and they were unable look at
individual offices.
4-All the events on the software system checked back to 1 March 04, no
abnormalities.
Chesterfield
1-Contacted them on a number of occasions regarding any outstanding error
notices
APS-None up to week 3
Lottery smail error on prizes
Girobank
Checked all the weeks up to week 02-no issues
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LC Agreed with all of the above. He asked CO what she considered was an acceptable
amount for cash account losses.
CO Said it varied for different office’s but £20 per week was reasonable. CO
opened the discussion to LC to give reasons for the losses.
LC Said that he had not taken any money and that he trusted his staff 100% not to
have taken anything. He said that he had asked for 10 bits of information in the letter
he sent but only received 1 item. He had asked Fujitzu for help and the NBSC and no
one had got back to him, they were not prepared to help. He had spent hours each
night with CT looking at the balances. He said that a remote test would not turn up on
a software check, he understood there were a lot of problems with Horizon and the
system, he had a lot of problems at the office with re-boots etc, so why did this
happen if nothing was wrong with the system. No one would tell him what tests were
done, I don’t know what ‘clear desk top’ means. I have had a lot of e-mails from
Postmasters who have problems with Horizon.
CO Replied that she had only received his letter on the night of wed 5" May
which was only 2 working days prior to the interview and she was working on
getting him the information he requested. She had suggested several things for
him to do in the office such as individual balances and the idea that staff could be
responsible but he would not take any measures or listen to this point of view.
CO then said it would be helpful to go through the individual balances, week by
week methodically and look at the suspense accounts. CO clarified LC
understanding of how the cash account worked with regards to balances and
losses and gains. LC Confirmed he understood.
CO Then goes into detail with balances, error notices, losses etc and the evidence
she has with snapshots and declared cash. (Copies of all this information is
provided with a list of all the results of the balance)
CO Asked LC to clarify if he made the error notices good but he could not
remember. She clarified when the shortages were first put in the c/a. CO stated
that not all the information such as snapshots were provided and LC said they
were probably in the box.
CO refers LC to some of the cash declarations which have been manually altered
or written on, specifically to week 47 and the declaration on 12 Feb 04 which had
a figure of aprox £7000 written on the bottom of the cash declaration. Both LC
and CT looked but although LC said he thought it was CT writing she was not
certain. CO said this was very important as although the c/a for week 46 showed
a loss of £8243.10 the following snapshots and declared cash did not evidence
this. She explains:-
Snapshot at 17.27 on Fri 13 Feb shows you need £92095.36, cash declaration
shows you have £99128.40, a gain of £7033.44.
Sat 14 Feb shows you need £95896.59, cash declaration shows you have
£102706.10, a gain of £6809.51.
Mon 16 Feb snapshot shows you need £77958.28, cash declarations show you
have £84909.54, a gain of £6951.26
Tuesday 17 Feb snapshot shows you need £68163.08, cash declaration shows you
have £84909.54, a gain of £6776.77
HOWEVER The c/a on wed shows the cash is an exact match for the cash
required on the balance-Where has this surplus gone?
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LC Has no explanation and says it must be something to do with Horizon.
CO Goes on to give other examples where shortages in subsequent weeks do not
then match the snapshot and declaration. (Evidence provided)
CO and LC then have a long discussion about the discrepancies shown on the
snapshot and CO says she will clarify after interview.
CO asks again where the gains which are evident and which are hand written on
the cash declaration could have gone.
LC says he does not know but he has not taken the money.
CO Says that the Horizon system works as a double entry system and everything
she has looked at works through. Originally LC had said that the system was
doing something when the rems were put through but the evidence does not
shows this. She had asked LC to run a snapshot after close of business, input the
rem and then run another snapshot to see if figures were altered and asks LC if
he had done this.
LC Says that he did not have time to do this, it had been a nightmare, he feels it is a
computer problem and no-one has helped him. 5 months is a long time to try and
remember what happened and what went on. He mentions other offices that have told
him about problems with cheque listings and P&A dockets. He said that no-one had
visited from Horizon to look at his problems and balances.
CO Explained that Horizon would not attend his office due to poor balances,
they would need evidence of a problem which he was unable to provide, she also
mentioned that she had given him advice and spent hours and hours on this case
and his cash accounts. She asked LC if he could show her a figure that the
Horizon system had changed which did not make sense or could prove his
allegations.
LC Said no but he did know an office where it had changed a figure on Girobank
although the office did receive corresponding error notices.
CO asked LC to confirm he had not taken the money
LC No. He asks to see the c/a’s for weeks 1,2,3,4 which CO provides to him and says
he can have copies.
CO asks if there is anything else he wants to add.
LC says he would like the explanation on the discrepancies, which CO agrees to
provide.
CO told LC that she was still waiting for a response from Horizon regarding the
checks on the software.As soon as they were available she would let him know
the out come.
CO Ends the interview by thanking those in attendance.
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PERSONAL AND IN CONFIDENCE
Mr Lee Castleton
14.05.04
Dear Lee
Re: Entries at top of Final Balance
I am writing to clarify the entries at the top of the final balance. The final
balance shows the discrepancies in that balance period. During the week,
if snap shots are taken then the NET discrepancy is brought forward from
the previous week. If you look back to when the office was balancing you
will see that the NET loss or gain flows through into the next week, until a
final balance is produced. The final balance shows the discrepancies for
that cash account week.
Transferring an amount into table 2a in the suspense account means that
the system then puts the loss to one side and you continue with a straight
balance.
On the first week that you transferred the loss into the suspense account,
the previous weeks Net loss flowed through, as would be seen if
snapshots were taken. Then when a final balance is produced the
discrepancies are shown for that week. You produced a perfect balance
e.g. no loss or gain, therefore the net discrepancy was nil.
On the week that you transferred the second amount into the suspense
account, you had a further loss so the net discrepancy was this further
loss. That is why the two final balances don’t look similar.
Please also find enclosed a copy of the interview notes.
Yours sincerely
Cath Oglesby
Retail Line Manager
Post Office Ltd
Operations
Darlington Area Office
Crown Street
Darlington DL1 1AN
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12
PERSONAL AND IN CONFIDENCE
Mr Lee Castleton
Post Office® Marine Drive branch
17.05.04
Dear Lee fe
I am writing following our meeting on Monday 10 May 2004, in which you
put forward reasons why your contract for services should not be
summarily terminated.
I have reviewed the papers relating to this case very carefully and have
taken into account the points you have put forward.
After consideration I have decided to summarily terminate your contract for
services as Subpostmaster of Post Office® Marine Drive branch from the
date of your suspension, 23 March 2004, on the grounds that you have
had several large unexplained losses at your office totalling £25,758.75.
You were unable to make the losses good, which is in breach of your
Contract For Services. There are a number of obligations set out within the
Subpostmasters contract for services, one of which is that the branch is
well managed and the work performed to the satisfaction of Post Office
Ltd. I do not feel that you have achieved your obligations.
Please refer to your contract for services section 1, paragraphs 5 and 10
and section 12, paragraph 12.
You may, if you wish, appeal against my decision. If it is your intention to
appeal, you should notify me, in writing by 31 May 2004. The format of the
appeal can either be a personal interview or written submission. Should
you wish to progress this avenue, I will arrange for the appeal to be heard
by a member of Post Office Ltd Appeals Authority.
Post Office Ltd
Post Gifioe Ltt Registered in England and Wales number 2154540
Darlington Area Office Registered Office: 80-86 Old Street
London ECIV 9NN
Crown Street
The Post Office and the Post Office sumbol are
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Please sign and return one copy of this letter immediately in the envelope
provided. A second copy is enclosed for your retention.
Yours sincerely
GRO —
Retail Line Manager “—~
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To: Cath Oglesby
Retail Line Manager
! have noted the content of this letter.
If I decide to apbedl against your deci ion, I will let-yeu know separately.
GRO
Signed:
Date:
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In Strictest Confidence
Mr L Castleton
Dear Lee
I am in receipt of your letter dated 24" May 2004 and the fax you sent
yesterday. I was not avoiding talking to you, I just had nothing to add to our
previous conversation.
Also, I was attempting to draw together information to reply to your letter.
lam aware that the majority of your points were discussed prior to, or at
interview. I will reply to your requests in the order that you put them in.
1. There have been numerous downloads to all branches since January
2004. The details of these are not available from the Horizon helpdesk.
2. You have already been given a copy of the call logs.
3. This information is not available because of Data Protection regulations.
4. This information is not available because of Data Protection regulations.
5. The Retail Line Manager has to protect Post Office Ltd assets. The
decision to suspend a Subpostmaster as a precautionary measure is taken
after advice on the issue in question has been given.
6. Horizon’s remit is primarily as a helpdesk and source of information. They
are not there to visit if a branch misbalances. Balances since your
suspension have been within acceptable limits.
7. You mentioned ‘clear desktop’ at interview, but did not elaborate on what
you meant. I am unclear on its relevance.
8. Horizon will not provide this information.
9. You will need to get this information yourself from BT.
10. You were given this information at interview.
I am told that you have been sent a copy of the notes of the interview. All
information we are able to give you, you now have. You have appealed
against the decision to terminate your contract. This appeal will now be
arranged as soon as possible.
Yours sincerely
David Mellows-Facer
Head of Area
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WBONO0000095
WBON0000095
Post Office Ltd
Darlington Area Office
Crown Street
Darlington
DL1 1AN
cc: Cath Oglesby, Retail Line Manager
Lesley Joyce, Contracts Manager
400