From: Tom Beezer
To: Rodric Williams <
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. “>, Jane MacLeod
>, Andrew Parsons <
Ce: GRO
>, Amy Prime
"Ben.Foat@ GRO
nd GRO b
Subject: RE: Update from the Board call - [WBDUK-AC.FID26896945]
Date: Tue, 19 Mar 2019 12:52:31 +0000
Importance: Normal
Inline-Images: image02597a.PNG; image7f4d0c.PNG; image01ff2a.PNG; image001.png
Jane
I have added some comments on top of Rod's comments.
I'll keep thinking.
When you have visibility of timings for Board call tomorrow and what is possible and whether AGQC timings can be
accommodated, please let me know and I'll seek to finalise that appointment.
Tom Beezer
Partner
Womble Bond Dickinson (UK) LLP
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From: Rodric Williams [mailt¢
Sent: 19 March 2019 08:41
To: Jane MacLeod; Tom Beezer; Andrew Parsons
Cc: Mark Underwood1; Amy Prime
Subject: RE: Update from the Board call -
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Thanks Jane — I’ve embedded a couple of extra thoughts in red below.
Rod
From: Jane MacLeod
Sent: 18 March 2019 19:
To: Tom Beezer <
Williams {7 GRO f
Ce: Mark Underwood! = __GRO
Subject: Update from the Board call -
All
Many thanks for your help in sorting out DNQC attendance at the call. He was very balanced in his
approach, but confirmed that he thinks we have a good case on recusal. The Board asked a number of
questions and my sense was that they were ‘calmed’ by his discussion. However they haven’t yet made a
decision. There is a further board call on Wednesday at 12.30 and they have requested whether Lord
Grabiner would be available in person at the time — ideally at FD if that’s possible? Having said that they
recognise that he will almost certainly say the same things as DNQC.
So please pass on our thanks to DNQC.
There is significant pressure to be able to say how we are going to treat those claimants who establish they
have a case, and all those outside the scheme who may have a similar fact pattern. So what they have asked
for is a pro forma model of what the various outcomes could be — that is, what is the financial impact such
that taking a step like recusal is ‘worth it’.
It would be helpful to receive your thoughts on this but I think the following factors should be taken into
account:
Original Expectations (and, assuming appeal on law was successful too, what a recusal would help us
get back to ....)
© contract would stand in all material respects, and ideally improved in some areas applying lessons learned
(e.g. simplifying and delineating obligations from operational instrutions).
o Horizon would be found to be robust (no systemic issues; bugs may cause losses but these can be
identified and we would have a process to ensure that we didn’t attribute losses where the cause was
Horizon or a PO controlled factor)
o Limitation would apply (reduces group by 50%)
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o Normal basis of assessment of damages (contractual notice period 3/6 months, no compensation for loss
of office, other?)
o Would then look on a case by case basis — potentially repayment of amounts required to be made good,
maybe interest? other ‘reasonably foreseeable’ loss?
These principles would inform a settlement, and would also apply to all others (outside the GLO) who
sought relief
Post Common Issues (assuming no recusal or appeal):
More likely that:
e Horizon trial — high risk of adverse findings re Horizon increases risk of breach findings in Trial 3 (and
later Trial 4), which must similarly be seen as very high risk.
e — we will be in breach of a contract due to implied terms: failure to investigate, proving actual loss, and
‘burden of proof’ will be most material.
e — The finding that the contracts are “relational”, and the implication of additional terms (whether as
“incidents” of a relational contract or for “necessity”) invites the implication of yet further terms, e.g. to
cure with hindsight perceived breaches not covered by the already expanded contract.
e can’t rely on branch trading statement in the event of disputed losses — so must wear impact of in branch
losses both historically and going forward if any form of challenge is raised. Currently c£5m pa and
growing. CIT findings place burden of proof for disputed shortfalls on Post Office and it is hard to see
how Post Office can prove shortfalls were the responsibility of the Sub-Postmaster as it has no minute by
minute visibility or control at an "in—branch" level.
¢ greater damages due to longer notice period implied, and greater exposure to requirement to repay those
losses that we recovered (wrongly) from claimants (and others). Issues around historic wrongful
prosecutions may come to be prominent both in terms of damages and as a hindrance to settlement. See
comment below.
e Wider scope of recoverable damages, e.g. breaching obligations of good faith may make more
foreseeable/less remote some losses, e.g. those connected to the postmasters’ branch premises. [[Query
whether this Judge would go even further and consider punitivie and/or exemplary damages typically not
awarded in this jurisdiction]]
¢ Bias and ‘conspiracy theory re withholding evidence’ — will impact Limitation arguments; may also
impact the Judge’s assessment of our expert’s opinions in the Horizon Issues trial (e.g. if he finds -
wrongly — that the experts did not have equal access to information).
e Therefore greater numbers of postmasters within group and externally who could bring claim and
greater quantum of damages — whether through litigation or settlement
Additional factors — other than Recusal and appeal, costs of trials should not vary. If recusal is sort, the
Horizon trial may be (and we say should be) stayed in the interim. This will have a costs impact but on the
assumption the Court of Appeal quickly deals with any refusal to recuse by the Judge himself (a likely
outcome) then the period of any stay (if agreed to or imposed) should be limited.
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On a settlement (say over the summer) the fact (or not) of recusal and the Horizon outcomes will be key to
our negotiating strength. Note there is a set of scheduled mediations in June. As it stands today, we would be
in a worse position. In the absence of a recusal application and successful appeal the negotiating position of
Post Office seems weak. It is necessary to appreciate that the Claimants are backed by litigation funders who
will sense victory from the CIT Judgment. In the absence of risk to the Claimants case (or important
elements of it) the funders are likely to insist on recovering the maximum fee they are contractually able to
extract from the Claimants and this will erode the "pot" available to the Claimants and thereby drive any
settlement number required from Post Office up.
Also on the topic of settlement it is necessary to remember that 30 out of the 557 Claimants have been convicted for
shortfalls. Those 30 are relevant to the process currently underway at the CCRC. Post Office cannot therefore
currently simply settle with the entire Claimant group as that would throw serious doubt on safety of those 30
convictions
As ever, thoughts on the back of a postcard .....
Thanks
Jane
e Jane MacLeod
Group Director of Legal, Risk & Governance
Ground Floor
20 Finsbury Street
LONDON
EC2Y 9AQ
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