06 August 2014 20:00
Swil, Jonathan; Rodric Williams
David OliverixiBand, Christa; Belinda Crowe
Subject: Re: Project Sparrow
Ce
Many thanks jonathan. I will consider this overnight but my aim would be to weave much of it into a letter to.
Second Sight. I will get back to you in the morning.
Best wishes
Belinda
GRO
From: Swil, Jonathan [mailto,
Sent: Wednesday, August 06,
To: Belinda Crowe; Rodric Williams.
Ce: David Oliveri} Band, Christa
Dear Belinda and Rodric
WITN10370187
WITN10370187
We have considered Second Sight's draft thematic report - part two (the final version Belinda sent us yesterday). As
discussed with Belinda, we set out some general, preliminary observations about the report and Post Office's
relationship with Second Sight. We also set out some more detailed preliminary comments on the repor''s content,
focussing, as requested, in particular on the section concerning the Subpostmaster contract.
* We note at the outset that the report illustrates a broader concern about Second Sight's role within the
Scheme and its relationship with Post Office. Pursuant to the engagement letter dated 1 July 2014 (the
“Engagement Terms"), Second Sight are engaged by Post Office and are paid by Post Office to provide
services to the Working Group and Post Office in respect of the Scheme. Ideally, therefore, they would only
perform work when and as required and directed by Post Office or the Working Group. Given how poor the
standard of the report is (as discussed below), and Second Sight's track record in this regard, we think now
might be an appropriate time to take as much control over Second Sight's role within the Scheme as
possible. For example, ordinarily, it would not be for Second Sight to dictate the timeframes in which
responses to their reports should be received. Indeed, in the ordinary course, in our view, the work generated
by Second Sight to date, and even just this report alone, would justify the termination of their
engagement. But we appreciate that there are other considerations in this case - such as pressure on and
from the Working Group not to be seen to delay the complaint assessment process any longer and public
commitments given to persist with Second Sight - which mean Post Office does not feel it has the flexibility it
perhaps should to direct Second Sight or to take more serious steps. We think, however, that Post Office
should now seriously consider taking whatever further steps it sensibly can to "rein" them in.
In the same vein, we also suggest re-approaching the Chairman of the Working Group to seek his support to
help control Second Sight, or at least letting him know what Post Office intends to do so that he is kept
abreast of its position and a mature dialogue with him can be established on this issue. Again, we appreciate
this may be difficult to achieve in practice given the position the Chairman has taken to date, but suggest it
may well be worth another attempt, in light of the quality of this report, the harm it might cause to Post Office's
position if published to Applicants in its current form and the prospect of the present difficulties with Second
Sight persisting in future.
«The report is well below the standard we would expect of a firm of “experienced accountants" engaged to
prepare an independent, evidence-based report. As with Second Sight's previous work-product, the report
largely fails to draw conclusions from any of the issues which it identifies and seeks to explore, and those
conclusions it does draw do not appear to be based on any facts or evidence available to Second Sight.
It
also opines on issues and facts on which Second Sight are not qualified to opine, or are not reasonably within
their remit i.e. because they are not sufficiently connected with Horizon, Plainly, the report does not serve
Post Office's interests. From a wider perspective and perhaps more importantly, the report does nothing to
advance the Applicants’ positions either or assist the satisfactory operation of the Scheme. It will create even
more unrealistic expectations and make settlement or other resolution of claims even harder. This point
1
WITN10370187
WITN10370187
should be made clear to the Working Group, and the Chairman in particular, in order to ensure that to those
whose opinions matter, if and to the extent it is not finalised in an acceptable form, the report reflects much
more poorly on Second Sight than it does on Post Office.
«We think that in replying to Second Sight initially, the Post Office should stress that the report should not be
sent to any Applicant unless and until the Post Office has approved it. We understand that nonetheless, the
Working Group may allow the report to be sent to each Applicant as part of the package of documents they
receive after Second Sight assess their case. In that case, it goes without saying that Post Office should
make every effort to have the report sufficiently amended such that it is in a more acceptable form. If the
report is not finalised in a form acceptable to Post Office, we understand Post Office intends to prepare a
document responding in detail to the report which will be sent to Applicants at the same time as the
report. We agree with that approach.
* — Inorder to respond properly to the report, we suggest Post Office first deal with points in the report which are
based more soundly in fact and which appear (at least on their face and even if outside the scope of Second
Sight's engagement) to be the more reasonable areas of complaint - e.g. the operation of ATMs or sale of
lottery tickets after hours. We suggest if a reasonable explanation cannot be given for these points in the
first instance, Post Office should volunteer to do more work itself to determine the facts behind these issues.
Section 2 of the report - the Subpostmasters' contract
To give context to Second Sight's commentary on the Subpostmasters' contract (the "Contract"), and the report
generally, we have identified the following key provisions of the Engagement Terms.
Clause 2.1 - the Scheme has been set up to resolve Subpostmasters' concerns about "Horizon and associated
issues"
Clause 2.2 - Second Sight is a member of the Working Group whose role it is to oversee the Scheme and assist
investigating individual complaints
Clause 2.3 - Post Office has engaged Second Sight to provide Services to the Working Group in relation to the
Scheme.
Para 1 of Sch 1 (Scope of Services) - this defines the Services Second Sight are engaged to provide. These are:
serving as a Member of the Working Group, advising, as requested by Post Office or the Working Group, on the
format style and content of documents submitted by Post Office and/or Subpostmasters during the Scheme,
investigating specific complaints raised by each Subpostmaster and assisting with reasonable requests made by the
Working Group or Post Office.
Para 2 of Sch 1 - Second Sight must conduct the Services in furtherance of the objectives of the Scheme as set out
by the Working Group.
Para 4 of Sch 1 - Second Sight is to act independently in providing the Services and assessments or opinions it gives
shall be without bias and based on the facts and evidence available.
Para 5.1 of Sch 4 - in providing the Services, Second Sight shall act with the skill and care of qualified experienced
accountants and it is acknowledged that matters relating to criminal law and procedure are outside SS's scope of
expertise and accordingly SS shall not be required to give an opinion in relation to such matters.
As a general comment, we do not think that Post Office should be overly defensive about the contract. There are
several good reasons why it is reasonable and, indeed, typical of contracts of its kind and why concerns raised by
Second Sight as to its "fairness" are groundless. In particular, the following could be said in response to what Second
Sight say in section 2
1 Second Sight, as a firm of accountants, are not qualified to opine on legal matters, including issues
concerning the “fairness” of the Contract or any criminal matters. Nor have they been engaged under the
Engagement Terms to do so, especially as such matters are not reasonably related (or related at all) to
issues "concerning Horizon and any-associated issues". Accordingly, any assertions they make or
conclusions they draw on this issue necessarily carry little or no weight
2 The Contract is essentially an arms-length, commercial transaction. The concept of freedom of contract
means that Subpostmasters can, ultimately, choose whether or not to enter the Contract if they are not happy
with its terms. Post Office should confirm whether it is aware of any instances of Subpostmasters somehow.
being prevented from seeking legal advice before becoming Subpostmasters. No doubt this is unlikely and if
true, a rare exception.
WITN10370187
WITN10370187
3 We understand that-a body representing Subpostmasters, the NFSP, negotiated the terms of the Contract on
behalf of Subpostmasters. Indeed, in a network of several thousand Subpostmasters, it is reasonable to
expect the contract to have been negotiated in that way. It would be impractical and potentially unfair to
certain Subpostmasters for the Contract to be negotiated on an individual basis by each Subpostmaster
before he becomes a Subpostmaster.
4 The risk allocation under the Contract is typical of and reasonably expected in contractual arrangements of
this kind. It is a contract of agency. Agents (Subpostmasters), by definition, have custody and/or control over
the principal's (Post Office's) assets and interests and are engaged by the Principal in order to protect,
safeguard and further the principal's interests on his behalf. In this case, Subpostmasters are necessarily
responsible for ensuring the safe-keeping and proper accounting for the revenue generated for Post Office
throughout the Subpostmaster network. Accordingly, the risk allocation in the Contract properly reflects the
role the Subpostmaster plays, including the level of his control and responsibility for and trust placed in him by
Post Office with respect to Post Office's assets. That allocation is in any event reflected in the general law
e.g. in the form of the equitable duty of an agent to account to his principal.
5 Thousands (and the vast majority) of Subpostmasters have not complained about the allocation of risk under
the Contract and have been signing up to it for two decades. The issues raised by Second Sight represent
the views of a very small, self-selecting proportion of Subpostmasters, if they represent the views of any at all
6 Unless Second Sight can substantiate any instance in which an Applicant's entry into the Contract was the
subject of any undue influence, unconscionable conduct on the part of Post Office or any other "unfair"
circumstances, then the concepts of fairness or bias are legally meaningless in this context. Further, Second
Sight should be asked to explain what they mean by "bias" in this context, or for that matter, what they mean
when they say that appropriate risk mitigation measures may not have been implemented by the
Subpostmasters. It is not clear to us what they mean by these things.
7 The "fairness" or otherwise of the risk allocation under the contract is, we assume, not the subject of any
specific complaint within the Scheme. If that is the case, it is not a matter which falls for consideration in the
Scheme or in any work-product Second Sight should be preparing.
8 Post Office should investigate Second Sight's allegations as to the terms of the Contract not being brought to
the attention of Subpostmasters adequately or at all. Second Sight refer to an “Acknowledgment of
Appointment" letter. Post Office should confirm the process for signing up Subpostmasters to the Contract
and where possible refer and explain in their response to Second Sight all steps that are taken, including the
acknowledgement letter, to bring the terms to their attention before they commence their role.
The report generally
As discussed with Belinda, we suggest that a detailed response to the report should be prepared in due course after
full consideration and investigation of the relevant factual issues it seeks to raise. We are not able in the time
available to set out a comprehensive commentary on the report, nor do we have access to the facts to do so, but
make these brief observations at this juncture. We do not suggest these points be shared with Second Sight at this
stage, i.e. while they are unallied to substantive responses to the factual points Second Sight raise.
a) The report in several instances refers to “Subpostmasters" generally rather than "Applicants". It fails to draw
conclusions in many places, thus leaving unhelpful ambiguous and speculative assertions on which readers are then
left to draw their own conclusions. It lacks examples or statistics to substantiate the largely speculative conclusions it
does draw. These matters suggest to us and would suggest to any reasonable reader, that the report is not intended
to reflect only the specific subject matter of complaints made in the Scheme and that Second Sight have a wider
agenda. They also suggest the report is largely not or not adequately based in fact and the available evidence, as the
Engagement Terms require.
b) As mentioned, the report refers to several matters outside the expertise of "qualified experienced accountants" or
matters which are expressly out of scope, See e.g. section 2, references to high street banks' usage of ATMs (3.5),
opinion as to “system design error” with respect to automatic transaction reversals in Horizon (10.3). criminal issues
such as sections 13 (Pensions and Allowances) and 22 (Post Office investigations).
c) The report refers to matters that have little or nothing to do with the subject matter of the Scheme -i.e. Applicants’
concerns with the functioning of Horizon and associated issues. See e.g. the contract commentary in section 2, ATMs
(section 3), Motor Vehicle Licences and the misprinting of bar codes (section 4), cash and stock remittances (section
11), Post Office's data retention policy (section 14), cash withdrawals accidentally processed as deposits and other
counter errors (section 16).
WITN10370187
WITN10370187
We are happy to comment on and otherwise assist Post Office with the preparation of the proposed detailed response
tothe report. Please do let us know how we can help or if you have any questions or comments about the points
above.
Kind regards
Jonathan
From: Rodric Williams [mailto
Sent: 01 August 2014 17:17
wil, Jonathan
Ce: Belinda Crowe; David Olivert-
Subject: Project Sparrow
Jonathan,
We have not yet received Second Sight's "Part Two" report, but will forward this to you as soon as it comes in.
1 do however attach an email containing a pdf of the first draft of this report, Section 2 of which sets out SS's
"commentary" (for want of a better word) on the standard subpostmaster contract.
As we discussed yesterday, could you please help us prepare a form of challenge to SS's commentary on Section 2,
which ideally would compel SS to either remove or neutralise that section from the Report, or failing that, provide a
response to the commentary which could be read alongside it.
In case it assists, I also attach an email with the Engagement Letter we have with SS. Para 5.1 of the Schedule may
provide a bit of a hook - if SS are required to "act with the skill and care expected of qualified and experienced
accountants", to me that means they have agreed not to stray into other areas of expertise, e.g. contract law.
With thanks for your assistance,
Rodric
Rodric Williams I Litigation Lawyer
148 Old Street, LONDON, ECLV HQ
® @postotticenews
This email and any attachments are confidential and intended for the addressee only. If you are not the named
recipient, you must not use, disclose, reproduce, copy or distribute the contents of this communication. If you have
received this in error, please contact the sender by reply email and then delete this email from your system. Any
views or opinions expressed within this email are solely those of the sender, unless otherwise specifically stated.
POST OFFICE LIMITED is registered in England and Wales no 2154540. Registered Office: 148 OLD STREET,
LONDON EC1V 9HQ.
WITN10370187
WITN10370187
Any business communication, sent by or on behalf of Linklaters LLP or one of its affiliated firms or
other entities (together "Linklaters"), is confidential and may be privileged or otherwise protected. If
you receive it in error please inform us and then delete it immediately from your system. You should
not copy it or disclose its contents to anyone. Please be aware that messages sent to and from
Linklaters may be monitored for reasons of security, to protect our business, and to ensure
compliance with legal and regulatory obligations and our internal policies. Emails are not a secure
method of communication, can be intercepted and cannot be guaranteed to be error free. Anyone
who communicates with us by email is taken to understand and accept the above.
Linklaters LLP is a limited liability partnership registered in England and Wales with registered
number 0C326345. It is a law firm authorised and regulated by the Solicitors Regulation Authority
(www.sra.org.uk). The term partner in relation to Linklaters LLP is used to refer to a member of
Linklaters LLP or an employee or consultant of Linklaters LLP or any of its affiliated firms or entities
with equivalent standing and qualifications. Please refer to www.linklaters.com/regulation for
important information on our regulatory position. A list of Linklaters LLP members together with a list
of those non-members who are designated as partners and their professional qualifications, may be
inspected at our registered office, One Silk Street, London EC2Y 8HQ and such persons are either
solicitors, registered foreign lawyers or European lawyers.
This email and any attachments are confidential and intended for the addressee only. If you are not the named
recipient, you must not use, disclose, reproduce, copy or distribute the contents of this communication. If you have
received this in error, please contact the sender by reply email and then delete this email from your system. Any
views or opinions expressed within this email are solely those of the sender, unless otherwise specifically stated
POST OFFICE LIMITED is registered in England and Wales no 2154540. Registered Office: 148 OLD STREET,
LONDON EC‘1V 9HQ.