Claim No. HQ16X01238
IN THE HIGH COURT OF JUSTICE
QUEEN’S BENCH DIVISION
IN GROUP LITIGATION BETWEEN:
A.
Ad
ALAN BATES & OTHERS
Claimants
i
POST OFFICE LIMITED
Defendant
‘draft/ GENERIC DEFENCE
GPoC INTRODUCTION & KEY FACTS
The Parties
Defendant
As to paragraph 4, it is admitted and averred (1) that Post Office operates its business
through a network of around 11,600 branches in the UK, (2) that it offers produets and
services to the public via this network, including the services referred to, and (3) that it
specifies procedures and standards governing how branches are to operate its business on its
behalf, Where those branches are managed by Post Office itself (“Crown Office
branches”), they are directly managed by Post Office and so are under its control.
However, where those branches are operated by Subpostmasters or Franchisees (“agency
branches” and “franchise branches” respectively), they are under the control of the
relevant Subpostmasters or Franchisees.
As to paragraph 5:
(1) Post Office's products and services include produets and services provided by other
business and organisations (known as "Post Office clients"). For example, Post
Office provides the physical location at which a person may deposit cash into a bank
account but it does not provide the underlying banking service (this would be
provided by a bank).
2 Asone would expect, Post Office determines the products and services which it
offers to the public though this is sometimes driven by other factors, such as
regulatory changes and the requirements of Post Office clients. Post Office requires
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©)
some minimum products and services to be offered by its branches. However, it
does not require or indeed permit all Post Office branches to offer all its products
and services.
Some new produets or services, such as ATMs and National Lottery terminals, were
introduced in agency and franchise branches only where the relevant Subpostmasters
and Franchisees specifically consented to their introduction.
No admissions are made as to the “increased ... complexity” of any particular
product or service. Post Office notes that the GPoC does not allege that any such
increased complexity is material to any Claimant's case. Post Office reserves the
right to address these matters further in the event that the Claimants plead that they
are material in some wa
y, which would involve the Claimants identifying the product
or service concerned, the nature of the complexity relied on, the claims affected and
how they are affected.
Save as aforesaid, paragraph 5 is admitted.
Types of branch
Paragraph 6 is admitted. These branches are also called agency branches and
Subpostmasters invariably operate their own retail businesses from the same premises. In
their conduct of Post Offic
's business, Subpostmasters act as Post Office’s agent, which
involves doing the following things on its behalf:
i)
ic)
®)
@
entering into transactions with Post Office customers;
effecting and /or processing transactions with Post Office clients such as Royal Mail
(postal services), various UK government departments (various services such as
benefit payments and passports), and various financial institutions (banking services
and insurance products;
operating equipment belonging to Post Office, ranging from IT equipment (e.g. a
Lottery terminal used to sell Camelot lottery products) to basic equipment such as
scales for weighing mail and safes in which cash is stored;
holding and dealing [48 /Bail€82] with stock (including cheques, vouchers and other
items) belonging to Post Office; and
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6)
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holding and dealing [aS ERISA] with cash belonging to Post Office.
As to paragraph 7:
@
@
()
@
Franchisees are not always (and are not required to be) limited companies.
Post Office is unable to admit or deny whether most of the limited companies that
are parties to Franchise Agreements were set up for the purpose of contracting with
Post Office. Many were not (e.g. WH Smith, McColls, the Co-operative Group, and
Lakemore.
Not all individuals working in Crown Office branches are employed by Post Office:
for example, some are agency staff.
Save as aforesaid, paragraph 7 is admitted.
Subpostmaster Claimants and Contracts
Paragraph 8 is admitted as regards the Claimants (i. the claimants in action No.
HQ16X01238).
As to paragraph 9:
(a
2
8
@
Post Office contracts with Subpostmasters on standard form contracts.
As well as being expressed not to be contracts of employment, these contracts are
not contracts of employment, as the Claimants themselves admit.
‘The contracts are contracts of agency. As one would expect with contracts
governing the conduct by an agent of the principal’s business, they reserve to Post
Office the right to control certain aspects of its business (e.g. the products and
services Subpostmasters may offer on Post Office’s behalf and the procedures and
standards in accordance with which Subpostmasters are to conduct Post Office’s
business and to account to Post Office for the transactions and for the cash and
stock they have dealt with on its behalf). In relation to matters such as these, Post
Office has the power to give instructions that Subpostmasters are obliged to follow.
However, Post Office would not characterise its contracts with Subpostmasters as
“reserve[ing] to the Defendant a high degree of power, discretion and control”. Post
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Office is unsure what is meant by this vague expression, and it does not know what
particular powers, discretions and controls the Claimants have in mind.
() Save as aforesaid, paragraph 9 is admitted,
As to the contracts pleaded in paragraph 10 (“the Subpostmaster Contracts”):
(1) SPMC: Paragraph 10.1 is admitted. Like the GPoC, this Generic Defence refers
only to the version of the SPMC served with the GPoC. Post Office believes that
130. Claimants were engaged on the terms of the SPMC.
(2) Temporary SPMC:
fave that the word “purported” is inapposite, paragraph 10.2 is
admitted.
(3) Community Subpostmaster Agreement:
@
(b)
©
‘The first sentence of paragraph 10.3 is admitted. Post Office believes that 6
Claimants were engaged on the terms of Community Subpostmaster
Agreement.
As to the second sentence, Post Office believes that all or at least some of the
Claimants who were engaged on the terms of these agreements have retained a
copy of their contracts. Further, in their Response to a Request for Further
Information dated 16 May 2017 (“Part 18 Response”), the Claimants state
that it is not their case that none of them (i) has or (ii) has ever had a copy of
the Community Sub-Postmaster Agreement, from which Post Office infers
that at least some of these Claimants in fact have a copy of that agreement. In
any event, Post Office provided a copy to the
imants on 10 April 2017.
As to the third sentence, the Claimants should not proceed on an assumption
as to the material content of any contract on which they intend to rely but
must plead a positive case.
() NTC:
@
‘The first sentence of paragraph 10.4 is admitted. Post Office believes that 32
Claimants were engaged on the terms of main branch NTC, and that 19
Claimants were engaged on the terms of the local branch NTC.
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6)
(b) The second sentence is noted
(©) Asto the third sentence, Post Office believes that all or at least some of the
Claimants who were engaged on the terms of these agreements have retained a
copy of their contracts. Further, in their Part 18 Response, Post Office infers
that at least some of these Claimants in fact have a copy of that contract. In
any event, Post Office provided a copy to the Claimants on 10 April 2017
(@ _ Asto the fourth sentence, the Claimants should not proceed on an assumption
as to the material content of any contract on which they intend to rely but
must plead a positive ease.
Paragraph 10.5 is noted. Post Office will respond to any claim based on any other
contract if and when such a claim is properly pleaded.
For the avoidance of doubt, Post Office pleads back in relation to the SPMC, the
‘Temporary SPMC, the NTC and the Franchise Agreement attached to the GPoC without
prejudice to its right to rely in individual cases on the terms of such agreements as they
stood at the time(s) relevant to the particular claims made by particular Claimants.
As to paragraph 11:
@
8)
Regarding paragraph 11.1, Post Office believes that 2. Claimants were employed in
Crown Office branches and that both or one of them will have retained a copy of
their employment contract. Further, from their Part 18 Response, Post Office infers
that at least one of these Claimants in fact has a copy of that contract.
Regarding paragraph 11.2, Post Office believes that 5 Claimants assert that they
employed by Subpostmasters as their Assistants (a term which in this Generic
Defence includes persons whom Subpostmasters employed to manage their
branches). Post Office notes that it had no contractual or other relationship with
these individuals and that the Claimants have not disclosed the basis or terms upon.
which they were employed by the relevant Subpostmasters.
Regarding paragraph 11.3, Post Office believes that Claimants assert that they were
directors of Franchisees and that were guarantors of Franchisees. ‘The relevant
Franchisees contracted with Post Office on the terms of the Franchise Agreements.
Post Office notes that Post Office had no contractual or other relationship with the
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AQ
20.
21.
22.
Claimants who are merely alleged to have been directors and that the Claimants have
not disclosed the basis or terms upon which they acted as directors of the relevant
Franchisees.
(4) Save as aforesaid, Post Office is unable to admit or deny paragraph 11.
Horizon
Paragraph 12 is admitted. Until 2010, Horizon was a distributed system in which
transactions were undertaken within branches, whose terminals transmitted transaction
data to a central Post Office data centre and also to Post Office clients. Once Horizon
Online was introduced in 2010, transactions were effected through real time exchanges of
data from branches to a central Post Office data centre, and transaction data was also
transmitted to Post Office clients. Save where otherwise indicated, Post Office uses the
term “Horizon” to refer both to the pre-2010 version of Horizon and to Horizon Online
as the context may require, without prejudice to its ability to plead more fully as to
Horizon’s features and operations as may be relevant to any individual claim (should such a
claim raise any specific issues in that regard).
As to paragraph 13, the vast majority of Subpostmasters and their Assistants who have
worked in agency branches since the introduction of Horizon in those branches would
have been users of Horizon. Save as aforesaid, paragraph 13 is not admitted.
As to paragraph 14 (which appears to relate simply to Claimants who were
Subpostmasters):
(1) Itis admitted that, if and to the extent that any Claimant Subpostmasters worked in a
Post Office branch prior to the introduction of Horizon to that branch and
continued working in that branch thereafter, the introduction significantly changed
how they were required to work in that branch. Save as aforesaid, paragraph 14.1 is
denied.
2) Paragraphs 14.2 and 14.3 fail to identify any of the limitations apparently relied on.
However, the introduction of Horizon increased, rather than limited, the ability of
Subpostmasters to access, identify, obtain and reconcile transaction records and to
investigate shortfalls, [Before the introduction Of Horizon, Subpostmasters had
access to several separate hand-written ledgers to particular products or services.
‘These ledgers had various limitations, including that it was not possible to know how
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23.
24,
25.
26.
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much cash should be in the branch without first reconciling all the ledgers together,
‘was a time-consuming process. After the introduction of Horizon, Subpostmasters
had the ability at any time to obtain a "Balance Snapshot” that showed them how
much cash should be in a branch, making it much easier to identify any shortfalls,
Subpostmasters also had the ability to obtain an extensive range of other reports and
information from Horizon, as pleaded further in paragraph [XX] below].
Paragraph 15 is embarrassing for lack of particularity. In the absence of any indication as
to the actual changes the Claimants intend to rely on and as to the effect(s) each such
change is alleged to have had, Post Office cannot plead to this paragraph.
Post Office notes that, on the Claimants’ pleaded case, any changes in the Claimants’ ability
to access records and investigate shortfalls caused by the introduction of Horizon or by
subsequent changes to Horizon or to products and services offered has no apparent
relevance to any of the breach of contract or other claims advanced in the GPoC. As
regards such changes, paragraph [XXJ(3) above is repeated, mutatis mutandis.
‘The first sentence of paragraph 16 is admitted. As to the second sentence, Post Office’s
use of the terms “Horizon” and “Horizon Online” similarly does not include training.
The operation of Horizon
As to paragraph 17:
(1) Save for the “others” referred to, whom the Claimants do not identify, the first
sentence is admitted, ‘The process for transferring transaction data from branch to
Post Office's central data centre, and the controls that ensure the accuracy of that
data transfer, are described at paragraph [XX240] below.
@ Regarding the second sentence:
(@)_ WOULD IT HELP TO GIVE AN INDICATION OF THE SORTS OF
HARD COPY DOCUMENTS AVAILABLE IN BRANCHES? (Commented [ALP14]: Bond Dickinson reviewing his
(6) On the introduction of Horizon, transaction data was freely available to
Subpostmasters for 42 days from the date of the relevant transaction, Since
the introduction of Horizon Online, such data has been freely available for 62
days.
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27.
(© While such transaction data is available, Subpostmasters can search for,
identify, organise and analyse data by means of wide range of reports, including
a transaction log report which identifies each and every transaction undertaken
in the relevant branch in the entire period. ‘This report can be focused in a
variety of ways if desired, including by reference to date ranges, transaction
types, stock items, value ranges and even particular users or terminals
(@) Thus, fin addition to the paper records available in branches} [SEE
COMMENT ON SUB-PARA (1) ABOVE), Horizon provides
Subpostmasters with powerful tools for searching, checking and reviewing all
aspects of the transactions undertaken in the branches for which they were
responsible.
‘Transaction Corrections
Paragraph 18 refers to transaction corrections, One of the safeguards against errors by
Subpostmasters (or their staff) is a process by which Post Office proposes corrections to a
branch's accounts (“Transaction Corrections”). These are typically generated in the
following way:
i)
@
(}
Post Office checks Horizon transaction data (ie. data as keyed into branch terminals)
against data taken from separate sources, For example, Post Office client banks
provide their own records of transactions carried out in Post Office branches
(transmitted directly from the chip and pin devices used in branches), allowing Post
Office to compare these to the transaction data on Horizon,
Where there is a discrepancy between the two sets of data, Post Office reviews the
available data with a view to determining whether the branch staff have probably
made an error that requires correction (and it may contact the Subpostmaster for
further information to assist in that determination). Where this is the case, Post
Office will generate a Transaction Correction notification which is sent to the
relevant branch via Horizon. For example, where a cheque deposit into a bank
account is keyed in on Horizon as a £100 credit but the true amount of the cheque is
£90, a
ansaction Correction with a value of £10 debit is generated.
A Transaction Correction notification includes (i) a description of the transaction to
be corrected, (ii) the contact details of an employee of Post Office who will provide
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farther detail if required,
i) typically, the outline reason for or nature of the
correction, and (iv) sometimes, evidence justifying the proposed correction.
(A Transaction Correction notification sent by Post Office to a branch is a proposal,
not an instruction, and it does not take effect unless and until accepted by the
Subpostmaster concerned. On receiving a ‘Transaction Correction notification, the
Subpostmaster can either accept the correction or dispute it.
(3) On the Horizon screen, there are two ways for a Subpostmaster to accept a
‘Transaction Correction. He or she may “accept” the Transaction Correction: this,
immediately increases or decreases the cash or stock position (as appropriate) in the
branch's accounts as recorded on Horizon, Alternatively, he or she may “settle
centrally” the Transaction Correction: this causes the value of the Transaction
Correction to be transferred to his or her personal account with Post Office. Unless
a dispute is lodged with Post Office (see below), Post Office assumes that the
Subpostmaster accepts the validity of the Transaction Correction that has been
settled centrally and will in due course pay or collect any money due to or from the
Subpostmaster. This process is addressed in [page fel] of the operating manual (Commented [ALP12}: Bond Dickinson reviewing this J
entitled “Branch Trading: balancing and dispatch of documents” (“The Branch
Trading Manual”).
(6) _ If the Subpostmaster wishes to query or dispute the Transaction Correction, he or she
should contact the person identified in the Transaction Correction notification. ‘This
s identified in (page Fef] of the Branch Trading Manual. If, having discussed (Commented [ALP13}: Bond Dickinson reviewing this )
proces
the matter and reviewed any further information provided by the person identified,
the Subpostmaster wishes to dispute the proposed Transaction Correction, he or she
will settle it centrally and lodge a dispute with the Post Office by contacting the
Helpline. This process transfers the value of the Transaction Correction to the
Subpostmaster’s personal account with Post Office and causes a block to be placed
of the value transferred to the personal account whilst the dispute is resolved (see
paragraph [XX=34()] below).
28. As to paragraph 18:
(1) The first sentence is denied. Post Office does not require that the Transaction
Correction be accepted unless proven by the Subpostmaster not to be correct.
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29,
2
Save for the reference to “limited” reports (as to which see paragraph [XX] above),
the second sentence is admitted. Howev:
(@) every Transaction Correction comes with contact details for a person at Post
Office who can provide more information and a Subpostmaster can in any
event contact the Helpline referred to below to obtain more information;
() depending on the subject matter of the Transaction Correction, the
Subpostmaster may hold corresponding paper records in his or her branch
which he or she can and should check; and
(© notall Transaction Corrections require further information (for example, a
‘Transaction Correction could be generated for a missing cheque and the
cheque might be found in the branch).
In paragraph 19, the Claimants combine many allegations together. Post Office separates
out and addresses those allegations in paragraphs [XX] below. In the interests of clarity
and consistency, in this Generic Defence Post Office uses the following defined terms:
(a
@
A “discrepancy” refers to any difference between (j) the actual cash and stock
position of a branch and (i) the cash and stock position shown on Horizon as
derived from transactions input via the branch’s terminals,
A “gain” refers to an event that causes a positive discrepancy (Le. the situation
where the branch has more cash and/or stock than the derived figures for cash
and/or stock on Horizon). For example, a Subpostmaster carrying out a bank
account withdrawal of £100 for a customer, entering that withdrawal into Horizon
but providing only £90 in cash to the customer would generate a gain of £10.
A “loss” refers to an event that causes a negative discrepancy (ie. the situation
where the branch has less cash and/or stock than the derived figures for cash and/or
stock on Horizon). For example, a Subpostmaster carrying out a bank account
withdrawal of £100 for a customer, entering that withdrawal into Horizon but
providing £110 in cash to the customer would generate a loss of £10.
A “shortfall” refers to negative net discrepancy at the end of a trading pe
d (ie.
the amount by which losses (if any) exceed gains (if any) in the period).
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(©) A “net gain” refers to positive net discrepancy at the end of a trading period
the amount by which gains (if any) exceed losses (if any) in the period).
(© A “Horizon-generated shortfall” refers to a shortfall that is attributable to errors
and/or bugs in Horizon.
Branch Trading Statements, making good and disputing shortfalls
As to the first sentence of paragraph 19, itis denied that the matters addressed in
paragraphs 19.1 to 19.3 “accentuated the importance of the accuracy of Horizon”.
Paragraph 19 addresses requirements whose purpose is to ensure the proper discharge of
the Subpostmaster’s contractual and common law duties to account to Post Office for the
transactions they entered into on its behalf and for the cash and stock it has entrusted to
their care. Such requirements are to the mutual benefit of Subpostmasters and Post Office
in that (amongst other things) they ensure the early identification and correction of any
errors and defaults relating to the transactions carried out and/or to the cash and stock
held in the branches for which the Subpostmasters are responsible.
‘These requirements are as follows:
(1) Subpostmasters are required to perform a regular “balancing process”, which
involves counting all stock and cash at their branches, comparing it with the cash and
stock indicated on Horizon and producing (and confirming) an account of the
transactions undertaken since the last balancing process and of the cash and stock
held. Initially, Subpostmasters were required to do this weekly, but since 2005, they
have been required to do so at the end of each “Branch Trading Period” (Post
Office-specified periods of 4 or 5 weeks, of which there are 12 in the year and which,
for convenience, are referred to herein as “trading periods”).
2) Where this process discloses a shortfall and the Subpostmaster accepts liability for
the shortfall, he or she is required to make it good (1) by adding cash or a cheque
from his or her own personal funds to the branch or (2) by settling it centrally. This
election is made on the Horizon terminal in branch, By "settling centrally", an entry
is added to the branch accounts which offsets the value of the shortfall, thereby
bringing the derived cash figure on Horizon in line with the actual cash on hand
figure. The value of the shortfall is transferred to the Subpostmaster's personal
account with Post Office. Arrangements can then be made to pay off the shortfall.
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32.
@
©
©
Where the Subpostmaster disputes liability for the shortfall, he or she is required to
settle the shortfall centrally (thereby bringing the branch accounts into balance) and
to raise a dispute by calling the Helpline. Raising a dispute causes a block to be
placed on the value of the shortfall that has been transferred to the Subpostmaster’s
personal account with Post Office. The blocked value is not (and is not treated as) a
debt due to Post Office.
‘These processes are addressed in [page ff] of the Branch Trading Manual (CHECK
AMEND THIS WORDING). Equivalent processes are followed where the
Subpostmaster accepts or disputes a net gain, with the relevant transactions being the
removal of cash from the branch or the creation of a credit on the Subpostmaster's?
personal account with Post Office.
Having followed these processes, Subpostmasters are required to produce and sign a
statement setting out the quantities and values of the various receipt and payment
transactions that have been carried out in the branch during the relevant period and
the cash and stock held in the branch at the end of the trading period (called a “Cash
Account” until 2005 and a “Branch Trading Statement” from 2005). Branch
‘Trading Statements contain the following statement by the Subpostmaster: “I confirm
that the content of this balancing and trading statement isan accurate reflection of th cash and stock.
on band at this branch”.
A branch cannot enter (or “toll over” into) a new Branch Trading Period without
the Subpostmaster declaring to Post Office the completion of the Branch Trading
Statement as aforesaid, However, although Subpostmasters are required to produce
Branch Trading Statements at the end of each trading period, if they do not do this,
their branches can continue to trade within the previous trading period. However,
Post Office does not allow branches to do this indefinitely.
Branch Trading Statements
As to paragraph 19.1, subject as set out in paragraphs [XX] above:
@
@
‘The first and second sentences are admitted.
‘The third and fourth sentences are denied. Paragraphs [XX] above are repeated as
regards the comparison between the derived figures for cash and stock shown on
n
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(Commented [ALP15]: Bond Dickinson reviewing this, )
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33.
34.
Horizon and the actual cash and stock as counted by the Subpostmaster; paragraph
[XX] above is repeated as regards bringing Horizon’s figures into balance with the
cash and stock as counted; and paragraph [XX] above is repeated as regards the
ability to continue trading without entering a new trading period.
Making good
Paragraph 19.2 appears to be intended to allege that, whenever there is a shortfall between
Horizon’s figures and the cash and stock counted by the Subpostmaster: (1) unless some
special arrangement is made, the Subpostmaster is required to make good the difference;
and (2) if he or she does so by settling centrally, the amount of the shortfall is treated as a
debt due to Post Office. ‘These allegations are specifically denied. As explained in
paragraph [XX] above (and in particular paragraph [XX]), Post Office’s procedures provide
Subpostmasters with the opportunity to dispute liability for shortfalls.
Disputing shortfalls
As to paragraph 19.3:
(1) Itis admitted that there is no “option within Horizon” to dispute a shortfall, in the
sense that the process of raising and resolving a dispute does not take place through
the Hori em. ‘The process for disputing a shortfall requires the dispute to be
lodged by calling the Helpline.
(2) _Itis specifically denied that Subpostmasters are unable to carry out effective
investigations into the disputed amounts. So is the allegation that there were
unspecified “limitations” on Subpostmasters’ ability to access, identify and reconcile
transactions in Horizon and that Horizon had no “adequate report-writing feature”,
as to which paragraph [XX] above is repeated. As indicated in that paragraph,
Horizon provides Subpostmasters with powerful tools for searching, checking and
reviewing the transactions undertaken in the branches for which they are responsible.
(3) There are provisions in Post Office’s Operating Manual as to the process for
disputing discrepancies (see, for example, [page fef] of the Branch Trading Manual)
and it is denied that these pro.
ions give insufficient guidance regarding that
process. In any event, the process involves calling the Helpline and, if further
guidance is needed, it is available directly from the Helpline.
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@
As to the last sentence of paragraph 19.3, it is denied that Post Office fails to carry
out any, or any fair or adequate investigations into disputed amounts. Where a
shortfall is disputed then the Claimants’ first point of contact would be with the
Helpline. In the case of a Transaction Correction, the dispute would first be raised
with the individual within Post Office who issued the Transaction Correction and
then (if necessary) with the Helpline, Disputes are generally resolved at this stage, by
Post Office and Subpostmaster reaching a common understanding of the position.
However, if this does not happen, the
wute can be escalated. ‘The steps in the
escalation process, and the Post Office teams involved, have changed over time and
the specific escalation route can differ depending on the nature of each issue raised.
broad terms.
However,
(@) After it is raised with the Helpline, the issue is generally escalated to more
experienced and senior personnel within the Helpline staff (or the team issuing
the disputed Transaction Correction) for further investigation.
(b) Following this, the matter would be referred to a senior person responsible for
investigating branch matters, a member of what is currently called the Support
Service Resolution Team. This team undertakes a further investigation into the
disputed amount, seeks to identify the reason for it arising and communicates
with the Subpostmaster concerned.
(© _ If following the above investigation Post Office believes that the
Subpostmaster is liable for the shortfall or Transaction Correction but the
Subpostmaster does not accept that liability, the matter would be raised with
his or her line manager. This would then be dealt with as a contractual
‘management issue, and discussions would be held with the Subpostmaster
about why he or she was not mei
ing what Post Office believes to be his or
her contractual ob
jons to make good a shortfall (or accept the Transaction
Correction). This role is currently undertaken by Post Office staff known as
Contract Advisors.
(@)__ Following these discussions, Post Office can sometimes decide to terminate
the
subpostmaster’s contract in accordance with its terms. In such cases, the
Subpostmaster is provided with the opportunity to seek further investigations
into the disputed amount via an appeal mechanism (for example, see section 18
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©
ofthe SPMC [WHAT ABOUT THE NTC AND THE TEMPORARY
SPMCz). I
If the appeal mechanism is not followed or if the Subpostmaster is dissatisfied
with the outcome of their appeal, he or she is able to r
any concerns with
Post Office's senior management team,
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A4 Helpline
49.
50.
Paragraph 29 is admitted. Calls to the Helpline are handled in accordance with the
following processes:
(a
2)
@
@
©
Helpline operators categorise the caller’s query using an online system (now called
“Dynamics”, previously called “Remedy”) and then provide advice by reference to
the Post Office “Knowledge Base”, an online resource which contains numerous
articles and other guidance documents on various matters (but is not scripted).
If the Knowledge Base does not contain sufficient information to allow the operator
to address the query, the next step is for the query to be escalated to a second tier of
more experienced staff.
If the second-tier adviser cannot respond in a satisfactory way to the query, he or she
will seck assistance from the relevant Post Office product team. For example, if an
issue relates to a lottery product, assistance would be sought from the team at Post
Office who manage the operational processes for that product. For issues relating to
the technical operation of Horizon (eg. a broken printer), the matter could be
referred to Post Office's IT support partner, which was originally Fujitsu and is now
a company called Atos.
If, after these steps, a satisfactory response has not been given, Post Office will
consider whether to organise a visit to the branch and/or further training for the
Subpostmaster and/or Assistant(s) concerned.
Post Office is willing and able to provide further assistance to Subpostmasters whose
problems are not addressed adequately through the Helpline. Itis for any Claimant
who asserts that inadequate assistance was provided to identify, amongst other
things, the steps that he or she took to obtain further advice, assistance and/or
training.
Paragraph 30 makes allegations to which Post Office cannot meaningfully respond at the
pleaded level of general
y. Post Office will respond to properly particularised claims if and
when they are made by particular Claimants, but the general thrust of the allegations is
denied. Further:
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‘The Helpline’s hours of operation have changed over time to meet demand and
there have been periods where the Helpline was more difficult to contact than in
other periods. It currently operates from 8am to 8pm on weekdays other than
‘Wednesdays (the usual day for branch balancing processes), 8am to 9pm on
‘Wednesdays, 8am to 6pm on Saturdays and Yam to 5pm on Sundays and most bank
holidays.
Helpline operators do not give script-based responses.
Helpline operators are not instructed to provide misleading information or advice
and they would have had no reason to do so.
Whether it is appropriate to advise a Subpostmaster that a discrepancy should sort
itself out depends on the context. For example, the branch could be awaiting a
‘Transaction Correction that should correct an issue.
Helpline operators are not instructed to encourage a Subpostmaster to produce and
confirm a Branch Trading Statement which the Subpostmaster did not believe to be
true and Post Office cannot conceive of a situation in which they would do so.
Helpline operators are not instructed (and are not in a position) to review and advise
callers as to the experience of and the incidence of particular problems suffered by all
users of Horizon or of the Helpline or as to the incidence of such problems suffered
by all such users. Post Office cannot conceive of a situation in which Helpline
operators would do these things, or would have the knowledge to be able to make
such statements.
Post Office notes that, in the GPoC, the Claimants have not indicated whether and,
if so, how each of the matters alleged in paragraphs 30.1 to 30.7 is alleged to have
caused any Claimants any loss.
Investigations
Post Office cannot meaningfully respond to the allegations in paragraph 31 for the
following reasons:
@
‘The paragraph makes allegations said to apply generally across “inv
tigations, audits
or similar enquiry” in circumstances where investigations are fundamentally different
processes (involving different Post Office personnel, procedures and guidance) from
fa
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audits and where the use of the term “similar enquiry” is embarrassing for vagueness
and (depending on what itis intended to mean) may be misleading.
“The reference to “investigators” is misplaced and/or so ambiguous as to make the
allegations incapable of meaningful response.
‘The information and instructions that are alleged to have been provided to
“investigators” are expressed at such a high a level of generality that it is impossible
to assert a generic case as to what “investigators” were told and/or otherwise knew
in any potentially relevant period.
Post Office will, as appropriate, respond to any particularised allegations as to
specific enquiries, audits and investigations if and when such allegations are made by
particular Claimants.
Without prejudice to the foregoing:
a
2
The people undertaking Post Office’s various audits, enquiries and investigations are
experienced individuals with a good knowledge of the operation of Horizon and of
the experience of Horizon users.
‘The nature of their instructions varies depending on whether they are undertaking an
audit, enquiry or investigation and the reasons why they are doing so. For example:
(@) — Anauditis a process conducted by the field support team within Post Office.
‘The people undertaking audits are not called investigators. An audit is typically
ordered where Post Office is concerned that a branch is failing properly to
account to Post Office. ‘The purpose of an audit is principally to check the
level of cash and stock in a branch; it is generally not to determine the root
cause of any shortfalls,
(6) Fora wide variety of purposes (including the purposes referred to in paragraph
[XX234] above, Post Office can make a wide variety of enquiries into a
branch’s operations without undertaking an audit. ‘The people undertaking
such enquiries are not called investigators.
(© Post Office has a security team whose main role is to investigate (and/or to
assist the police to investigate) suspected criminal offences. Persons in the
security team sent to branches to carry out such investigations are often called
Is
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investigators. In many instances, their enquiries focus on suspected criminal
offences by Subpostmasters and Assistants (such as rendering false accounts),
which may or may not require them to determine the root cause of a shortfall.
(3) None of these "investigators" were instructed to disregard possible problems with
Horizon as a possible cause of shortfalls, nor was information withheld from them
about bugs or errors in Horizon or the alleged remote alteration of data.
(4) The alleged “organisational culture or practice” is specifically denied.
(5) Save as aforesaid, the general thrust of paragraph 31 is denied.
Terminations
Paragraph 32 makes allegations to which Post Office cannot meaningfully respond at the
pleaded k
of generality. For example, the paragraph overlooks the critical distinctions
between summary termination of appointments, termination of appointments on notice
and suspension of appointments. However:
(1) Post Office has terminated Subpostmasters’ appointments summarily where it was of
the view that they have acted dishonestly in relation to their functions (e.g, by falsely
accounting to Post Office with a view to concealing a shortfall from it) and where it
was of the view that they were otherwise in material, irremediable and/or repudiatory
breach of their obligations;
(2) Post Office has suspended Subpostmasters when it has suspected them of acting as
set out in sub-paragraph [(1)] above; and
continue
(3) Post Office has terminated Subpostmasters on notice where it did not
its relationship of principal and agent with them; but
(4) Post Office has not terminated Subpostmasters summarily or suspended them
in the
merely because they have challenged shortfalls or have alleged inadequaci
Horizon system or difficulties in interrogating data.
Regarding the importance of dishonesty in the conduct of its business, Post Office notes
that:
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(1) Clause 19.1 of the SPMC provides that dishonesty is viewed most seriously and any
Subpostmaster involved in an act of dishonesty against Post Office Ltd renders
himself liable to summary termination of his contract.
(2) Clause 3.1.2 of the NTC provides that: “The Operator shall ... act honestly at all times in
the operation of the Branch. Any failure by the Operator to comply with this clause 3.1.2 shall be
deemed to be a material breach of the Agreement which cannot be remedied”
As to paragraph 33, Post Office will respond to properly particularised claims of wrongful
termination or suspension if and when they are made.
Context and Effect on Claimants
In Section A.7 of the GPoC, the Claimants set out what they contend to be relevant
contextual matters, and these are addressed in paragraphs [XX] below. However, they
overlook the importance of false accounting to and its effect on Post Office.
Subpostmasters are obliged (a) each working day to count the cash in their branches and
make “cash declarations” to Post Office and (b) at the end of each trading period to
make Branch Trading Statements to Post Office confirming the transactions undertaken
and cash and stock held in their branches. Unless it undertakes an audit, these accounts are
Post Office's only information about the amount of cash and stock actually held in the
branch. In all cases in which a Claimant Subpostmaster makes a false cash declaration or a
false Branch Trading Statement (ie. a cash declaration or Branch ‘Trading Statement he or
she does not believe to be true):
(1) Where a shortfall is subsequently uncovered at a branch, the fact of this false
accounting invariably makes it impossible or alternatively excessively difficult for
Post Office to identify or assist in the identification of the likely cause(s) of the
shortfall. Post Office is unable to place reliance on the declarations and the branch’s
accounts in seeking to identify the date(s) on which the discrepancy (or
discrepancies) giving rise to the shortfall are likely to have arisen or the cause(s) of
the shortfall.
2) As regards any enquiries it might make into the cause(s) of a shortfall, Post Office
cannot reasonably be expected and is not obliged to devote significant resources to
investigating factual circumstances that were, as a result of false accounting,
impossible or excessively difficult properly to investigate.
Et)
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() Asis noted above, false accounting or other similar conduct by a Subpostmaster
represents a material, irremediable and repudiatory breach of his or her contractual
obligations entitling Post Office to terminate the Subpostmaster’s appointment
summarily. Further, whe
c Post Office suspects that a Subpostmaster is guilty of
such conduct, it is contractually entitled to suspend the Subpostmaster’s
appointment.
(4 Inrelation to any issue arising in these proceedings as to the true state of account in
the relevant branch, the Court should make all presumptions of fact against that
Subpostmaster as are consistent with the other facts as proven or admitted.
Paragraph 34 appears to address a situation where a balancing process has been undertaken
at the end of a trading period and this process has disclosed a shortfall in the cash or stock
held at the branch which is disputed by the relevant Subpostmaster. It appears to be the
Claimants’ case that, in this situation, some Claimants felt that they had no choice but (a) to
sign off Branch Trading Statements disclosing the shortfall, to accept liability for the
shortfall and to make it good by paying or crediting the relevant amount to Post Office or
(b) to sign off incorrect Branch Trading Statements which misrepresented the cash and
stock held at the branch and thereby concealed the shortfall from Post Office. Post Office
will respond to properly particularised allegations of that sort if and when they are made by
particular Claimants, However:
(1) _Itis denied that Subpostmasters had no choice but to proceed by in this way or that
it was reasonable for them to feel that they had no such choice. As indicated in
paragraphs [XX] above, Post Office’s procedures provided Subpostmasters with the
opportunity to dispute liability for shortfalls and render accurate accounts whilst any
disputed shortfall was resolved.
2) Itwould never have be:
reasonable for a Subpostmaster sign off a Branch Trading
Statement ~ and thus to confirm to Post Office that the cash and stock recorded by
Horizon as being held at his or her branch it was correct ~ in circumstances where he
or she did not believe that it was true. Amongst other things, in that situation the
Subpostmaster would have:
(a) deceived Post Office as to the true level of cash and/or stock at his or her
branch, as to the true transactions undertaken at the branch in the relevant
trading period, and to the true state of his or her branch account;
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(b) made it impossible or at least extremely difficult for anyone to identify when or
how the shortfall arose; and
(© committed (i) a material, irremediable and repudiatory breach of the contract
pursuant to which the Subpostmaster was appointed (including, amongst other
things, section 12.3 of the SPMC and/or clause 3.6 of the NTC and/or clause
12 of the Franchi
Agreement), and (ji) a fundamental breach of the fiduciary
duties the Subpostmaster owed Post Office as its agent.
Asis pleaded further in paragraphs [XX] below, all Subpostmasters who signed
Branch Trading Statements in that situation may not reopen the accounts that they
signed off. Alternatively, they may not now challenge, seek to avoid or seek any
relief in relation to the payment(s) made to Post Office in accordance with those
accounts (including in making good shortfalls), without pleading and proving such
accounts to be mistaken.
‘The principles referred to in sub-paragraphs [XX] applies to false cash declarations
made by the Subpostmaster to Post Office, mutatis mutandis.
2
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