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THE POST OFFICE GROUP LITIGATION

Claim No. HQ16X01238, HQ17X02637 & HQ17X04248

IN THE HIGH COURT OF JUSTICE

QUEEN’S BENCH DIVISION
Before The Hon. Mr Justice Fraser
B E T W E E N:-

ALAN BATES & OTHERS
Claimants
– and –

POST OFFICE LIMITED
Defendant

CLAIMANTS’ WRITTEN CLOSING
FOR TRIAL OF COMMON ISSUES

The structure of this Written Closing is as set out overleaf.

The Claimants adopt the same abbreviations and form of references as used in the Claimants’ Written

Opening, and additionally use “SPM” to refer to Subpostmasters and/or Subpostmistresses.

PATRICK GREEN QC
KATHLEEN DONNELLY
HENRY WARWICK
OGNJEN MILETIC
REANNE MACKENZIE
Henderson Chambers
2 Harcourt Buildings
Temple
London EC4Y 9DB

Freeths LLP
Floor 3, 100 Wellington Street
Leeds LS1 4LT
DX: 310016, Leeds Park Square
CONTENTS

Contents

INTRODUCTION .................................................................................................................................1

Preliminary Observations on the Evidence ................................................................................ 1
The Defendant’s Evidence ............................................................................................................ 2
Developments at trial .................................................................................................................... 4
The Debt Trap ................................................................................................................................. 5
Disputes ........................................................................................................................................... 6
Agency of SPMs ............................................................................................................................. 7
Agency of Post Office .................................................................................................................... 8
Resolution of the Common Issues ............................................................................................. 10

A(1) GENERIC EVIDENCE ..............................................................................................................13

Branch Accounts and Horizon ................................................................................................... 13
Training and Support .................................................................................................................. 35
Standard Contracts (SPMC and NTC) ...................................................................................... 49
Business Plans............................................................................................................................... 58
Notice of Contractual Terms ...................................................................................................... 63
Relationship between Post Office and SPMs............................................................................ 78
Suspension and Termination ...................................................................................................... 91

A(2) LEAD CLAIMANT SPECIFIC EVIDENCE..........................................................................113

Mr Bates ....................................................................................................................................... 114
Mrs Stubbs .................................................................................................................................. 118
Mr Sabir ....................................................................................................................................... 121
Mr Abdulla.................................................................................................................................. 125
Mrs Stockdale ............................................................................................................................. 129
Mrs Dar ........................................................................................................................................ 131

B COMMON ISSUES .......................................................................................................................135

Issue 1: Relational Contract ..................................................................................................... 135
Issues 2 and 3: Implied Terms ................................................................................................. 145
Issue 4: Supply of Goods and Services Act 1982................................................................... 161
Issues 5 and 6: Onerous and Unusual Terms ......................................................................... 165
Issue 7: Unfair Contract Terms................................................................................................ 179
Issues 8 and 9: Liability for Alleged Losses ........................................................................... 185
Issues 10 and 11: Post Office as Agent ................................................................................... 201
Issues 12 and 13: Subpostmasters as Agents ......................................................................... 207
Issues 14 to 16: Suspension And Termination ....................................................................... 223
Issues 17 and 18: True Agreement ........................................................................................... 239

–2–
CONTENTS

Issues 19 and 20: Compensation For Loss Of Office ............................................................. 245
Issue 21: Subsequent Appointments ....................................................................................... 249
Issues 22 and 23: Assistants ..................................................................................................... 251

SCHEDULE: DEFENDANT’S EVIDENCE ...................................................................................255

Overview of Defendant’s evidence ......................................................................................... 255
Witness statements .................................................................................................................... 256
Oral evidence .............................................................................................................................. 262
Reality on the ground in comparison to legal edifice ........................................................... 269

–3–
–4–
INTRODUCTION
Preliminary Observations on the Evidence

INTRODUCTION

Preliminary Observations on the Evidence

1. The trial has been revealing.

2. The Defendant’s evidential edifice has collapsed. The generic picture presented by the

Defendant has been shown to be generally unreliable and in parts positively misleading.

3. The Court and the Claimants have had to devote considerable resources to ensure that

the Court could consider the Common Issues on a fairer and truer footing.

4. The picture presented by the Defendant’s evidence required a level of scrutiny, by both

the Court and the Claimants, which would have been difficult had the Defendant’s

application to strike-out much of the Claimants’ evidence been successful.

5. By contrast, such challenges as were actually made to the evidence of the individual

Lead Claimants were generally weak. Furthermore, much of their evidence was later

put into context by evidence from the Defendant’s witnesses: see, for example, Mr

Abdulla’s concerns about National Lottery ‘errors’ of £1092; and the basis of Mrs Ridge’s

decision to terminate Mr Abdulla’s appointment. 1

6. For the purposes of this trial, whatever minor inroads the Defendant may claim to have

made into the evidence of the Lead Claimants, the effect of their evidence together is

compelling. As foreshadowed in the Claimants’ Written Opening (at paragraph 60 on

p.20 {A/1/24}):

“60. One final point as to the differing prior experience of the Lead Claimants
emerges from considering their evidence as a whole. With their different
backgrounds, skills and experience, all six of them struggled with alleged
shortfalls shown on Horizon. Although their difficulties with Horizon and
coping strategies differed, their evidence, considered together, speaks with an
eloquence beyond any one individual account.”

1 e.g. re the Excel spreadsheet {Day10/89:12} – {Day10/93:20}, {Day10/109:19} – {Day10/114:19}; but
even her central premise was flawed {Day10/115:10-25}, as Mr Abudulla said he was expecting
another later TC {E4/79/17}.

–1–
INTRODUCTION
The Defendant’s Evidence

The Defendant’s Evidence

7. The Lead Claimants’ evidence represented a genuine and conscientious attempt to

provide the Court with a detailed account of the relevant facts, identifying the

documents relied upon both in the body of their witness statements and by exhibiting

the documents to which they refer. They sought to identify the source of information, as

required by CPR PD32, paragraph 18.2.

8. By contrast, the Defendant’s evidence took a different approach (as to which the

Claimants observations are amplified in the SCHEDULE: DEFENDANT’S

EVIDENCE at p. 255, at the back of these Closing Submissions):

8.1 Generic evidence was given at a very high level of abstraction and scarcely any

of the relevant policy or operational documents were identified, still less

exhibited. This left the Claimants to try to find relevant source documents in the

largely unstructured disclosure given by the Defendant.

8.2 One example was Mrs Angela Van Den Bogerd mentioning the Branch Support

Programme in one line in her witness statement, without condescending to even

the most general level of detail as to its purpose, content and (obvious)

relevance. Similarly, nowhere did she refer to any underlying training material

or her own co-authored papers in which she detailed user experience with

Horizon. As to why it was left to the Claimants have to find all these documents

to correct the impression in her witness statement, her answer begins at

{Day8/77:4}: “I don't ... I suppose the length of my witness statement, it is what

information went in there…” When asked by the Court whether it was her

understanding that there was a restriction on the length of her witness statement,

Mrs van den Bogerd replied at {Day9/67:23-25}: “It was -- the witness statement is

quite lengthy in itself anyway and I suppose it was just myself, just how much actually

went into that statement in itself” but then confirmed that it was her judgment as

to what to include {Day9/68:2-3}: “Yes, what information was relevant to go in there

or not.”

–2–
INTRODUCTION
The Defendant’s Evidence

8.3 Some witnesses had simply not even seen the primary documents about which

they were purporting to give ‘would have’ evidence.

8.4 Others had seen key documents but simply not referred to them: Mr Webb had

been shown Mr Sabir’s transfer documents while preparing his witness

statement but had not referred to them in the statement {Day10/164:18}.

8.5 Witnesses were surprisingly unfamiliar with documents that their statements

suggested they knew or would be likely to understand.

8.6 Some witnesses could not explain why certain matters had even been included in

their witness statement (e.g. Mr Haworth’s reference to an interview at

Sandsacre, when they were always carried out in Leeds).

8.7 No conscientious consideration had been given to correcting witness statements,

even when the witness had pointed out the error a week earlier; and despite a

direction from the Court that corrections should be provided in writing in

advance of a witness being sworn:

a. Mr Shields unexpectedly corrected his witness statement orally;

b. Mr Haworth did not correct the location of the interview, despite having

realised it was wrong before he gave evidence {Day11/78:3} – {Day11/79:9}.

c. Mr Trotter completely reversed his evidence, without warning – after he

had made his witness statement, explaining the structure that he “always”

followed, someone had realised that the recording of the interview proved

that he had not gone through the checklist. Mr Trotter’s reversal was

introduced orally by reference to “the format of the structure that you

normally ran through in interviews” {Day11/135:17} and {C2/13/2}.

8.8 The relationship between policy and reality on the ground was often tenuous at

best; see e.g. the ‘would have’ evidence of Sarah Rimmer {Day7/14:6–11}:

Q. So there is a difference, isn't it, there between what should happen in the
policy and real life, what happened on the ground?
A. Yes.
Q. And that is fairly common in work life, isn't it?

–3–
INTRODUCTION
Developments at trial

A. Yes.

9. The Defendant did not make the same conscientious attempt to fairly to explain the

facts.

Developments at trial

10. The following became clear during the trial:

(1) Express Terms: Despite delivery of 6 lever arch files, the boundaries of the

universe of express terms remain to some extent at large.

(2) Drafting: The Defendant’s contractual documents were disorganised,

confusing and unsatisfactory; drafting was poor, complicated and often

unclear. The presentation of contractual documents was no less confusing.

Amendments piled up in 40 or more pages at the beginning of standard

agreements. Even on what would have appeared to be the simplest and

most important document, the Acknowledgment of Appointment, 2

prominent words and phrases remained for decades after they had lost any

clear meaning. The “Book of Rules” was one example; and “book of rules”

was no clearer {Day6/161:3-9}. “Postal Instructions” was another. Despite

thousands of SPMs relying on standard form agreements, the Defendant did

not even bother make any meaningful effort to bring clarity to the

contractual relationship. On top of all this, the Defendant’s witnesses who

obtained signatures from SPMs on Branch Transfer had no idea what they

meant (e.g. {Day10/170:16-23}).

(3) Burden of Proof: The Defendant is running a new unpleaded case on this,

involving a “gateway” and a (possibly shifting) “persuasive burden”.

(4) Specific Implied Terms: Given the Defendant’s reticence to countenance

any specific implied terms, it was surprising to hear the Defendant put the

premise for some of them directly to Lead Claimants. 3

2 e.g. Bates {D1.1/2}; Sabir {D1.3/4}; Dar {D1.5/3}; Stockdale {D1.6/5}
3 e.g. {Day2/172:9-15} and {Day4/84:7-25}

–4–
INTRODUCTION
The Debt Trap

(5) Account: SPMs did not render their account to the Defendant; instead, they

were forced to carry out a procedure by which a record was created of the

state of account, which the Defendant well knew:

(a) might include imaginary transactions which had not occurred; and

(b) might be a record with which the SPM strongly disagreed.

The Debt Trap

11. The forced acceptance of ‘debts’ lies at the heart of this case. The Defendant has

approached this with Nelsonian blindness, in dealing with SPMs and at trial.

12. SPMs were effectively forced to ‘accept’ liabilities which they did not agree with, as

noted above. The Defendant well knew that “Branch Trading forces the acceptance of the

TC on the Horizon system to enable the kit to roll over” {F3/68/3}. Even if, sometimes, SPMs

anticipated receiving a corresponding Transaction Correction (‘TC’) cancelling out the

liability, they never had any real choice, as the Defendant’s note above recognised. It

effectively trapped SPMs into ‘debt’. The Defendant had all the power. It could deduct

from remuneration

13. There never was an option to dispute a discrepancy or a TC on Horizon itself: GDef

§46(1) {B3/2/18}. When introducing a ‘Dispute’ button was expressly raised, it was

rejected {F3/72/2}. It can fairly be said to be deliberate. This distorted the relationship

and the so-called ‘account’ recorded on the Horizon system.

14. The Defendant also recognised the unreliability of the overall system accurately to

reflect the true state of account at a given moment, in other ways: by issuing

compensating TCs, in the express promise of such TCs and in Helpline telling SPMs to

use workarounds. 4

15. Nonetheless, ‘debts’ were collected by misleading letters from the Debt Recovery Team. 5

4 e.g. as suggested to Ms Dar {Day5/65:11-19} – {Day5/} and {Day5/82:3} – {Day5/83:17}
5 {Day7/189:1-9} Misstating the effect of Clause 12 {D2.1/3/53} Cf. for example letter to Pam Stubbs
of 3.3.2010 {E2/46/1}; 11.3.2010 {E2/47/1} – nor did they mention relief under Clause 17 {D2.1/3/54},
explained in the internal Losses & Gains Policy e.g. at {F3/8/14}

–5–
INTRODUCTION
Disputes

16. When SPMs could not pay these debts, the Defendant might agree to take regular

instalments from their remuneration over a period, on condition that all further losses

must be made good immediately. 6 This created an impossible situation. 7

Disputes

17. “Settle Centrally” notionally allowed a SPM to dispute the liability. The Defendant

operated on the basis that it signified acceptance of a loss within a branch unless the

dispute process was instigated: see e.g. {F4/73/2} and {G/35/16} at §3.5.

18. Unfortunately, the dispute process was also flawed, particularly by placing the burden

to investigate on the SPM and by requiring precise details including the time, date and

cause of the loss, effectively as a pre-condition to raising a dispute. In those cases

(typified in this litigation) in which the SPM was unable to identify the cause of the loss,

it was inapplicable, ineffectual or ineffective. What disputing meant in practice was

opaque.

19. The Defendant’s policy first placed the responsibility to investigate discrepancies on

SPMs, which effectively placed the burden to investigate all disputed TCs on them: e.g.

{G/35/16} at §3.4.2. The SPM could then (and only then) contact the Helpline, with

specific details, who were then supposed to report that on to FSC so that debt recovery

would be put on hold. Unless the SPM could identify the cause or specific details

required on calling the Helpline within 7 days, they would receive a (misleading) letter

from the Debt Recovery Team.

20. A SPM without the funds to meet the ‘debt’ might face the option of committing a

criminal offence by writing a cheque, well knowing that they could not honour it –

6 Instalments were “exceptional” {G/41/5}. As the 1998 Losses and Gains Policy recites {F3/8/63}:
“This [discretionary action] must conform to the following commitments:- […] “during the repayment
period, further losses must be made good immediately” – e.g. Stubbs, in 2000 {E2/9/1}; no instalment
agreement in 2010 {E2/52/2}; Stockdale for a year after repayment, in 2014 {E6/128.1}
7 {E6/151/1} “…[I] cannot settle another loss centrally, so what was I supposed to do???”

–6–
INTRODUCTION
Agency of SPMs

especially in a case where they had been allowed to pay a previous discrepancy by

instalments, on condition that they had to make good all further losses immediately. 8

21. SPMs had no idea of the debt trap or disputes process – nor could they have ever

expected the contract would operate in that way. They certainly were not told.

22. The construction and fairness of terms as to accounts and liabilities (and whether they

were onerous and unusual) fall to be considered against that background.

Agency of SPMs

23. The Defendant has emphasised agency. At paragraphs 21 and 22 of the Defendant’s

Written Opening, the Defendant explains how both contractual construction and the

implication of terms are dependent on the existence of an agency relationship between

SPMs and the Defendant:

“21. […] The express and implied terms of the SPMC and the NTC need to be
viewed through the prism of an expressly created agency relationship, and so the
express contractual terms sit atop the body of law regulating the duties of agents to
their principals. The common law principles of agency are important background to
the contracts.25 And any implied terms need to be considered (and shown to be
necessary) against that agency background.

22. As such, SPMs are obliged to account to Post Office as its agent. They are acting
on Post Office’s behalf, and Post Office relies on them to do so. SPMs are fiduciaries;
Post Office is “entitled to [their] single-minded loyalty”.26 This core fact suffuses the
contractual relationship.”

24. However, it is trite that declaring that one party is the agent of the other is far from the

end of the enquiry or analysis: Garnac Grain. 9 The following principles are clear:

(1) To determine the existence of any agency relationship, the question is
whether the parties have agreed to what amounts in law to such a
relationship, even if they do not recognise it themselves and even if they
have professed to disclaim it, as in Ex parte Delhasse: at 1137C.

8 Note, by way of example, that Mrs Stockdale agreed to repay in instalments while the dispute
which she had raised was still being investigated and without having received any response.
9 Garnac Grain Co Inc v HMF Faure & Fairclough Ltd [1968] AC 1130, HL – Appendix p.61

–7–
INTRODUCTION
Agency of Post Office

(2) Later words and conduct may have some bearing, though likely to be less
important than words and conduct when the relationship arose: at 1137D.

(3) To determine the content of an agency relationship, the question to be asked
is: “What is it that the supposed agent is alleged to have done on behalf of the
supposed principal?”: at 1137E.

25. From (1) and (2), it follows that post-contractual conduct would (on the Defendant’s

analysis) be relevant, and possibly important, to contractual construction.

26. From (3), it follows that a SPM will be the Defendant’s agent for the particular purpose

of entering into transactions with the public on its behalf; not for other purposes.

Agency of Post Office

27. Applying the principles from Garnac Grain above:

(1) As Angela Van Den Bogerd makes clear at §80.2 of her witness statement
{C2/1/24}, in relation to transactions and transaction data, “Post Office handles
this on behalf of the Subpostmaster”. It is no bar to Defendant’s agency for that
purpose, that in another aspect of the relationship the parties have both
declared and established a different agency relationship.

(2) Looking at how it operated in practice (as the Court is undoubtedly entitled
to do) it is plain that her evidence is correct: Post Office handles this on
behalf of the SPM and can be taken to have agreed to do so, just as the SPM
can be taken to agree that Post Office should do so. That was plainly how it
worked in practice, and the evidence on that is clear.

(3) Angela Van Den Bogerd’s evidence at least partly answers the question
“What is it that the supposed agent is alleged to have done on behalf of the supposed
principal?”. As explained in the Claimants’ Written Opening at §331 (p.123)
{A/1/127} the Defendant’s Admitted Functions answer this question more
fully, including the following: “Post Office recorded the transaction data entered
on Horizon by Claimants and so far as possible sought to reconcile that transaction
data with other data is (sic) possessed.” 10

10 GDef at §123(1) {B3/2/53}

–8–
INTRODUCTION
Agency of Post Office

28. There can be no doubt that, once the Defendant insists that SPMs are not its employees

and are in business on their own account, it is clearly carrying out the Admitted

Functions, including recording and reconciling transaction data on behalf of SPMs (even

if also on its own behalf). Any doubt which the Defendant might seek to conjure up

evaporates on reading Angela Van Den Bogerd’s own evidence.

29. Of course, the Defendant’s agency is a limited and confined one, but agency it is. And

the Defendant is under a duty to provide full information to a SPM in relation to any

transaction which the Defendant has “handled on behalf of the Subpostmaster”.

30. In the present case, agency is far from a one-way street for the Defendant.

–9–
INTRODUCTION
Resolution of the Common Issues

Resolution of the Common Issues

31. Although there are a large number of Common Issues, their resolution may be more

straightforward than the Defendant’s references to the kitchen sink might suggest.

32. As the Claimants have made clear, the real target of their case on these Common Issues

is the extreme construction advanced by the Defendant in almost every aspect of the

relationship with SPMs.

33. The Court is respectfully referred to the Claimants’ Opening Submissions, under

Sequencing of Issues (pp.4-7) {A/1/8}, which propose the identification and construction

of the express terms first, in line with contractual orthodoxy.

34. That said, however the express terms are identified and construed, these contracts

between the Defendant and SPMs are relational contracts (as understood in Yam Seng

and the Defendant was subject to duties of good faith, fair dealing, transparency,

cooperation, and trust and confidence.

35. The short point is that the relationship has three salient facets:

(1) The aspects of the relationship which appear more commercial reflect an

expectation of a long-term framework relationship of the type described in

Yam Seng.

(2) It is nonetheless in many respects very close to an employment relationship

– so much so that the Defendant goes out of its way to stress that it is not

and to finesse the thorny issue of personal service.

(3) But it is wrong to equate it merely with an employment relationship, since it

is not usual for employees to buy the premises from which their employer’s

business will operate or to make substantial investments into the business.

36. Whether one approaches the question on the basis of shared norms of behaviour or the

value judgment to be made as to commercial and practical coherence, 11 all roads lead to

Rome. It is not clear what an organisation such as the Defendant ought properly have to

fear from the implication of essentially uncontroversial norms of commercial behaviour.

11 Marks & Spencer at §24 – Appendix p.19, at p.20

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INTRODUCTION
Resolution of the Common Issues

37. The construction of the clauses providing for liability for losses should be relatively

straightforward, not least since the core principles remained the same in the NTC

contracts.

38. Section 12 Clause 12 of the SPMC is straightforward. It does not require the re-writing

reflected in the Generic Defence. It plainly concerns cash and stock (as the heading of

Section 21 makes clear). There can be little doubt that the legal burden of proof is

properly a matter of construction of the clause; that burden (to show a loss of cash or

stock caused by the fault of a Subpostmaster or assistant) is on the Defendant.

39. The NTC provisions should be construe in the same way, despite (or perhaps because

of) the ambiguity of their drafting.

40. Capturing the vice of the debt trap within the loss provisions in the contracts would be

likely to render those clauses (or the related accounting provisions) ‘onerous and

unusual’ and/or unfair – so the Defendant must elect in its arguments, between the

difficulties which these issues present. Those difficulties arise because no reasonable

notional party would ever expect the forced acceptance (as debts) of disputed sums, in

the way that the Court has heard in evidence. Subpostmasters were never told of this

and could never have anticipated that it would work in this way – particularly with

large sums whose root cause it was impossible for Subpostmasters to trace.

41. Finally, it is necessary to make the contract work. That must involve the implication of

sensible obligations which are necessary to give the contract commercial and practical

coherence.

42. There are of course alternatives. These can be explored orally. Some terms may be

incidents of terms implied at a higher level of abstraction (or effectively, the specific

content of such a term, as regards a particular feature of the relationship).

43. The Claimants are entirely agnostic as to whether the terms contended for are terms in

themselves or part of the content, or incidents, of other terms. It makes no difference.

– 11 –
INTRODUCTION
Resolution of the Common Issues

44. What does matter is whether the Defendant’s extreme position as to the parties legal

relationship (only qualified by two high level terms whose application is said to be fact

specific in every case) should stand.

– 12 –
A(1) GENERIC EVIDENCE
Branch Accounts and Horizon

A(1) GENERIC EVIDENCE

Branch Accounts and Horizon

Introduction

45. Prior to the introduction of Horizon, SPMs used a paper based system to keep their

accounts. Some, including Mr Bates and Mrs Stubbs, also used an accounting

programme called “Capture”. The SPM manually entered accounting figures into

Capture to generate an electronic copy of the Branch’s weekly returns which were then

manually submitted. The accounts which the SPM submitted to Post Office were their

own figures and there was no electronic interface between the branch accounts and Post

Office data. There was a process by which Post Office could send to SPMs error notices –

these were paper notices which the SPM could manually transfer into the branch

accounts.

46. Post Office introduced Horizon in 1999/2000. This was a major change for SPMs who

had previously been using the paper-based system, with no interface between their

accounts and Post Office’s accounts. Post Office required SPMs to use Horizon – it was

a mandatory change imposed by Post Office on all SPMs.

47. From the date of introduction of Horizon, SPMs were required by Post Office to enter all

transactions onto Horizon, to perform balancing with Horizon, and to submit accounts

at the end of each trading period to Post Office using Horizon.

48. Post Office required SPMs to produce branch accounts, initially weekly, and then, from

2005, at the end of each Post Office specified “Branch Trading Period”, being a 4 or 5

week period (GDEF §43(1) {B3/2/16}).

49. Horizon significantly changed the process by which the branch accounts were generated

and SPM control over those accounts. As described by Mrs Van Den Bogerd in her

witness statement §93 {C2/1/28}, Horizon “automatically generates the branch accounts”.

50. Other aspects of the branch’s accounting were also automated, significantly, in relation

to TCs (addressed in detail below) which concerned the reconciliation of branch data

– 13 –
A(1) GENERIC EVIDENCE
Branch Accounts and Horizon

with the data streams in respect of approximately 130 Post Office clients (Mrs Van Den

Bogerd {Day 8/54:20} - {Day 8/55:4}) but also e.g. where cash was received by a branch it

was required to be scanned in using a barcode, which automatically introduced the Post

Office cash figure into the branch accounts (Mrs Van Den Bogerd {Day8/25:20} –

{Day8/26:4}). A SPM who realised that the cash amount was short was required to call

the Helpline and raise a dispute (Mrs Van Den Bogerd {Day8/26:10-20}), ultimately in

the hope that a credit TC would be issued.

51. SPMs were able to use a branch suspense account on Horizon during the currency of

each trading period. Initially it was possible for SPMs who had received authority from

their Retail Network Manager to hold a loss or a gain in the suspense account and still

“roll over” i.e. enter the next trading period and be able to trade the following day (e.g.

see 2002 Horizon User Guide {F4/5/71}) – this reflected the pre-Horizon position (e.g.

Bates {Day2/94:4-8}). However, in 2005 this process changed, such that all suspense

accounts had to be cleared at the end of each trading period in order for the SPM to roll

over (e.g. see 2006 Branch Trading Operations Manual {F4/21/30} “Please remember:

Unresolved discrepancies in Local Suspense must be cleared before your branch can roll over into

the next Branch Trading Period. The Horizon system will display a ‘Cannot Roll Over’ screen if

outstanding Local Suspense values have not been cleared when you attempt to roll over the last

stock unit.”) By reference to this 2006 document, Mrs Van Den Bogerd stated in re-

examination “in 2006 when this was issued it was – we’d just moved from the old system where

they could hold things and they were forced in 2005 to settle at the end of the month”

({Day9/50:6-9}). The Claimants adopt Mrs Van Den Bogerd’s characterisation of this

change.

52. As admitted in the Defendant’s Generic Defence, GDEF § 46(1) {B3/2/18} “there is “no

option within Horizon” to dispute a shortfall, in the sense that the process of raising and

resolving a dispute requires the dispute to be lodged by calling the Helpline”.

Transaction Corrections (TCs)

53. Post Office issued TCs to branches by electronic notice. These notices appeared on

screen on the Horizon terminal(s) in branch.

– 14 –
A(1) GENERIC EVIDENCE
Branch Accounts and Horizon

54. As with other apparent shortfalls, the only way a SPM could dispute a TC was to call

the Helpline and specifically say that they wished to raise a dispute (noting here the

evidence of Pam Stubbs, where she had not specifically said the word “dispute” so had

been treated as not having disputed a TC for £9,033 {Day3/15:24} – {Day3/16:12}).

55. Post Office had considered introducing a dispute button in 2008 but had rejected it on

the basis that “The use of a dispute button simply provides a delaying mechanism and requires

P&BA to resupply the evidence” {F3/72/2}. The introduction of a dispute button would

have allowed SPMs not to accept TCs which they believed to be incorrect (as put to Mrs

Van Den Bogerd, which she initially conceded “possibly” and when pressed agreed “I

take the point” {Day9/41:20} – {Day9/42:15}).

56. Horizon operated such that all outstanding TCs had to be accepted by the SPM to

permit the branch to roll over into the next trading period. See e.g. the 2006 Branch

Trading Operations Manual {F4/21/9}, emphasis added:

“Branches that make these types of errors will receive a pair of Transaction Corrections
to amend them. Transaction Corrections are basically electronic Error Notices,
informing you of transactions that have been carried out incorrectly on the Horizon
system and not been corrected. Accepting Transaction Corrections in these
circumstances will have no financial effect on your branch.

Anyone in your branch with Manager or Supervisor access on the Horizon system is
warned when they log on if any Transaction corrections are still outstanding, waiting
to be processed. For this reason, individuals with Manager or Supervisor access should
log on to Horizon every working day to check for and process Transaction Corrections.

They can be dealt with at log on or left until a more convenient time later, but they
must be processed before the last stock unit in a branch balances, otherwise Branch
Trading Period rollover cannot take place.”

57. See also the July 2006 Balance Procedure guide {F4/18/1} which records “Outstanding

Transaction Corrections must be resolved before the end of the Trading Period.”

58. Post Office’s position in the GDEF at §39(4) {B3/2/14} that “A Transaction Correction

notification sent by Post Office to a branch is a proposal, not an instruction” is wholly false

given the way in which Horizon operated as above, and described further below.

59. To “process” a TC, a SPM was required to press “Accept Now” and then select either

“Make Good – Cash”, “Make Good – Cheque”, or (if the TC was for over £150) “Settle

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Centrally”. See for example the table describing these options in the 2006 Branch

Trading Operations Manual {F4/21/12}. The “✓Accept Now” button is shown in the

2013 Branch Trading Quick Reference Guide {F4/135/11}. Contrary to GDEF 39(5)

{B3/2/14}, settling centrally is not an alternative to accepting the amount. All options,

including settle centrally, required the SPM to click to “Accept” the amount.

60. It was a theme amongst Post Office’s witnesses that they did not know about the actual

Horizon screen layout as available to SPMs: Mrs Van Den Bogerd {Day8/31:8-10} “Q. Is

there an “Accept now” button on the screen – A. Not that I can recall but I would need to see the

screenshot.” See also Mr Haworth, who, despite him having been trained himself on

Horizon and having been engaged in the roll out programme of Horizon {Day11/50:20}

– {Day11/51:9}, was not familiar with the layout of the Horizon screen or what buttons a

SPM had to press {Day11/50:13-19}. Mrs Dickinson – despite the scope of her role and

involvement in criminal cases - was unaware of the fact there was no dispute button

{Day9/152:5-9} {Day9/152:20} – {Day9/154:1}.

61. Selecting “Settle Centrally” transferred the amount to the SPM’s account, where it was

treated by Post Office as a debt, unless the debt recovery process was suspended by Post

Office (Mrs Van Den Bogerd {Day9/71:4-9}), and see also Mr Breeden {Day 7/79:22} -

{Day 7/80:13}:

MR JUSTICE FRASER: So far as your evidence is concerned then, does it make
a difference to how Post Office pursues what it perceives to be a debt whether
an amount is settled centrally or not?
A. I think in settling the debt centrally we then know what the amount is.
There is a record then at -- as in this case, as at 9 January, that there is a debt of
£9,033.78. And that would be at that point in time. So that then -- they can do
the investigation into that amount and then subsequent amounts.
MR JUSTICE FRASER: I am not necessarily sure I understand that so I will just
ask you the question again. Is there a difference to how Post Office pursues
what it perceives to be a debt whether the amount is settled centrally or not?
A. No.
MR JUSTICE FRASER: Thank you. That is what I thought.

62. The effect of the system as introduced by Post Office as explained further below, is that

SPMs were “forced to accept debts they do not agree with at branch trading” – a point

recorded in the internal Post Office memo, TC/Debt recovery review dated 14

November 2009 {F3/72/1}.

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63. Post Office exercised a discretion to permit amounts settled centrally to be repaid by

deductions from remuneration, but it was Post Office policy to require losses to be made

good immediately if the SPM was within an existing repayment period. See for example

the Losses and Gains Policy 1998 {F3/8/63} (emphasis added):

“Agents should make losses good, however they arise, as they occur. This requirement
is highlighted by their contractual obligation detailed in Section 12 paragraph 12 of the
subpostmaster’s contract or Section 9 paragraph 12 of the modified subpostmaster’s
contract.

However, should the agent be unable to make good the amount immediately because
such action would cause severe financial hardship, the RNM may allow the loss to be
made good by instalments. This is a discretionary action that must conform to the
following commitments:-

• losses are made good by deduction from remuneration

• the repayment period is up to a maximum of 12 months

• during the repayment period, further losses must be made good immediately

• …

• no more than 2 repayment cases for the same agent have previously been
allowed in the past two years”

64. And see the email sent to Mrs Stockdale dated 5 November 2014 {E6/128.1/1}:

“…I am happy to arrange deductions over 8 months*, i.e. £455.00 per month. *On the
understanding that you’re not allowed to settle any further losses until a year after this
has been repaid.”

65. Mrs Van Den Bogerd ultimately accepted this was Post Office’s policy {Day 8/14:5-16}:

MR JUSTICE FRASER: Yes. But Mrs Van Den Bogerd, that is rather gliding off
the point. The point at the moment is about the policy if they are in a
repayment period, that is what Mr Green is asking you, and in fact that is what
I meant to, I hope, save time by just putting it as a simple point. Was it Post
Office policy that if an agent was within a repayment period, further losses had
to be made good immediately?
A. Yes. They should only have one --
MR JUSTICE FRASER: That was the policy.
A. Yes.

66. The dispute process in relation to TCs required the SPM to contact the person who had

issued the TC, and if the dispute was not accepted at that stage, there was an appeal

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process by making a written submission to the Relationship Manager – see extract from

Horizon Online Help v1.0 March 2011, Disputing a Transaction Correction {F4/73/3}

“The debt recovery process, if Settled Centrally, will be suspended pending a written response”.

67. This process gave Post Office the ultimate control over any disputed TC, akin to an

employer / employee grievance policy, as per the exchange with Mrs Van Den Bogerd

{Day8/185:5-17}:

Q. …. Then there is an appeal process. It is a little bit like a grievance policy,
isn't it?
A. Yes.
Q. The employer in the employment situation, or in this case perhaps Post
Office as the principal, as you have pointed out, has the power to decide this?
Yes?
A. Yes. This process is the relationship manager looks into it to see --
Q. Yes, but it is rather like you and I have an agreement and I agree that, if
there is a problem between us, you will be the judge.
A. Yes. But -- yes. Taking the evidence into account, yes.

68. The Claimants note that the effect of the evidence, taken together with the operation of

Horizon as described above, is completely contrary to PO’s Generic Defence §40(1)

{B3/2/14} “Post Office does not require that a Transaction Correction be accepted unless proven

by the Subpostmaster not to be correct”. That is simply untrue.

Issues Relating to TCs

69. As explored in cross examination with Mrs Van Den Bogerd, there are clearly a large

number of issues affecting TCs issued by Post Office, which illustrate the comparative

control Post Office has over the process of issuing and resolving TCs, the scope for error

on the part of Post Office in respect of TCs, and the effect of erroneously issued TCs on

branch accounts.

70. TCs may be issued in error – and these may be very high value or aged TCs:

70.1 In 2009, Post Office introduced a policy for high value TCs {F3/79}, and part

of reason for that policy was “to ensure that branches are not hit by a large value

transaction correction which is subsequently found to not be proper to that branch”

{F3/87/8}.

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70.2 The Working Agreement (version dates 2009 to 2012, date provided on

disclosure 10 March 2015), recognises aged, high volume and high value TCs

as an issue and proposes at §3.1.11 {G/35/11} “FSC will not issue aged / high

volume / high value Transaction Corrections on the Monday / Tuesday prior to

Branch Trading without prior branch agreement. If a Transaction Correction does

arrive on Branch Trading day, the branch has to action it before they can roll their

branch trading period. The branch however, can still dispute in line with section

3.6.”

70.3 Internal Post Office emails dated 28 August 2014 relating to a SPM Fiona

Whybro {F4/140}, evidencing that the SPM had been sent a lottery TC, which

she disputed before branch trading, had been promised a compensating TC

which had not arrived before branch trading (meaning she had to accept the

debit TC and sign off accounts she and Post Office knew were wrong). Mrs

Van Den Bogerd accepted that this shouldn’t have happened, and that there

is clearly room for human error in the production of TCs. Mrs Van Den

Bogerd also accepted the other reasons for TCs could include client data

integrity issues, Horizon errors and reconciliation errors {Day8/38/3-20}.

70.4 The fact that Mr Abdulla was sent a TC for £1,033 on 14 May 2008 which

was described as a credit, but on the face of Post Office’s transaction

correction report at {E4/92/1} (row 56) in fact took effect as a debit - accepted

by Mrs Van Den Bogerd on the face of the document {Day8/48:11-14} and

{Day8/49:3-10}. This was identified by Mr Abdulla in his witness statement

(§93 {C1/4/18}), having seen the report as part of Post Office’s disclosure, not

something he had previously seen (witness statement §90 {C1/4/17},

including at his final termination interview, as addressed below. He was not

challenged on this evidence or on his evidence in respect of duplicate TCs

identified below (Mr Cavender dismissively referred to “your potted views on

those transaction corrections” {Day4/85:21-25}, but chose not to challenge any

of Mr Abdulla’s evidence on those transactions).

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70.5 The fact that Mr Abdulla was sent three debit TCs for three consecutive

months in the identical amount of £1092, and then one credit in that sum,

apologising “due to an administration error” in respect of the third debit (see

Mr Abdulla’s witness statement §94-97 {C1/4/18-19} and transaction

correction report at {E4/92/1} (rows 57, 61, 63 and 65). The Court is invited

to find on the balance of probabilities that the second debit TC for the sum of

£1,092 was also in error. Mrs Van Den Bogerd accepted that on the fact of it,

it looked as if more than one error had been made {Day8/51:17-21}. Her

suggestion that she did not have sufficient information to comment further

“I have just seen this cold, so I don’t know what is behind it so I cant really comment

further than that, I would need to understand what was actually dispatched”

{Day8/52:7-10} is to be judged in the circumstances as subsequently

established, namely that Mrs Van Den Bogerd had looked at precisely this

document and commented on it for the purposes of her witness statement

signed and served four days earlier (16 November 2018) for the purposes of

the March trial. If there was an explanation for the matters identified by Mr

Abdulla in his witness statement, the Court can expect the Defendant and

Mrs Van Den Bogerd to have put it before the Court.

71. Lottery TCs (which are automatically generated from Camelot data) appear to be a

particular issue, and may be both (1) high in value - e.g. in the amounts arising in Mr

Abdulla’s evidence above, and e.g. the internal Post Office email dated 8 February 2007

relating to a Lottery credit TC for £22,778 being “eaten into” by a Lottery debit TC for

£34,028 {G2/2/1}; and (2) being the subject of specific problems which Post Office has

recognised internally, as follows:

71.1 14 November 2009 “TC/Debt Recovery review” {F3/72/1} under NFSP “Evidence

provided is not meaningful in some cases e.g. Lottery” and under NBSC (i.e. the

Helpline) “The vast majority of calls to NBSC are either appropriate generic queries

around processing TCs or complaining about being able to contact the Lottery team.

There is nothing on the Knowledgebase to deal with a branch who needs more time to

assess a TC.” (The latter apparently a wider point than just lottery).

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71.2 10 February 2010 “Review of the Creation and Management of Transaction

Corrections in POLFS to Correct Accounting Errors in Horizon” at 3.1 {F3/87/8}.

“Camelot uses a process of rolling up or amalgamating all errors incurred by a

branch over a period and issues one Transaction Correction to the branch. They send

a spreadsheet with details of the errors to the branches to help them reconcile with

there paperwork. This is not a popular method and there is a feeling that branches

find it difficult to understand the evidence”, and above table 3.1.1 {F3/87/9}

“Fujitsu send a file containing all the Transaction Corrections sent to Horizon, the

data shows all the information the branch received, this includes the text. Analysis of

the Fujitsu file found c2000 Transaction Correction were found to have no contact

number within the text out of 40K issued between August and October 09 which is

circa 5%. In some cases this is because the branches are instructed to address any

disputes in writing. During the analysis of the long text of the Transaction

Corrections there were many other issues which made the task very difficult. E.g. the

text l field was very inconsistent in teams approach, some use a reference number

some use the name of the product.” One of the examples in the table shown (at

{F3/87/10} is an example for Lottery: “THIS TRANSACTION CORRECTION

HAS BEEN ISSUED FOR THE DIFFERENCEBETWEEN CAMELOT

ACTIVATIONS AND REMS ENTERED INTO

HORIZONFORSCRATCHCARDS.SCRATCHCARDS HAVE BEEN

OVERSTATED BY In Pounds320.00 FROM 04.12.09 TO 09.12.09. THIS

TRANSACTION CORRECTION WILLDECREASE YOUR STOCK OF

SCRATCHCARDS. THANKYOU - TEL 01246 542691 DIFFERENCE

BETWEEN CAMELOT ACTIVATIONS AND HORIZON REM IN FOR

SCRATCHCARDS.”

71.3 In relation to the above, the Claimants note and rely on the 2013/14 table of

TCs {G/29} which shows that whereas 25278 were “caused by branch” there

were only 33 “not caused by branch”, indicating that the prospects of

effectively challenging a lottery TC were very slim (no doubt linked to the

matters above).

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Branch Accounts and Horizon

71.4 The Operations Board Agenda for 17 October 2017 {F3/240/1} (heavily

redacted such that even the author of the presentation in relation to TCs

cannot be seen), which refers to “Camelot data integrity” having led to a hold

on TCs being issued in P6 (the entries for Camelot in the table clearly show

varying volumes of TCs over these periods).

72. Manually created TCs are also evidently prone to error. See {F3/105}, apparently

guidance to PO staff how to create a TC for cash (the disclosure date of the document is

14 October 2010). Mrs Van Den Bogerd accepted that there is clearly room for human

error in the production of TCs {Day8/38:4-10}, and indeed later stated that “whenever

there is a manual input of information there is a risk that people forget to do it or they make an

error” ({Day8/68:4-6}, spoken in the context of SPMs making errors in relation to lottery

and the rationale for introducing PING in 2012). It also became apparent from Mr

Haworth’s evidence that Post Office at times used “casual staff” to “help deal with the

churn” within a particular product area – providing further insight into Post Office’s

process of creating TCs {Day11/52:19} – {Day11/53:19}. (The Court will note that Mr

Cavender in re-examination wrongly characterised the reference to churn as having

been in respect of the staff {Day11/70:17-18}).

73. The unexplained and wildly varying volumes of TCs processed each year is striking,

The table produced by Post Office {G/54} shows that e.g. from 2005 to 2006, the volume

of TCs increases from approximately 12k to 108k; and following the years 2009-14 with

total values of £12m, £11m, £4.5m, -£975k, -£1.5m, and £7.5m. In 2015 the total value was

-£42m (this negative value reflecting £53m of TC credits having been issued that year).

This table was produced pursuant to the third CMC Order ({B7/12/4} paragraph 10) and

was specifically described by covering letter dated 18 May 2018 {G/53/1} to have a

margin of error of “around 2%”, and that “our client believes that the information produced is

broadly reflective of the scale and volume of TCs processed each year, which was the purpose

being paragraph 11 of the Third CMC Order”. By reference to this table, Mrs Van Den

Bogerd accepted the obvious proposition that “Subpostmasters don’t become wildly more

negligent or careless one month to another. There may be slight variations but they don’t

suddenly all become wildly negligent overnight, and then wildly diligent the next morning or the

following month, do they”, “I wouldn’t imagine so” {Day8/64:4-11}, but was unable to

– 22 –
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explain what happened in 2015 to cause the -£42m of TCs to appear that year

{Day8/66:13-15}.

74. The supposed infallibility of Post Office, and TCs being needed only to correct errors

made by SPMs in branch is worthy of note. Whereas Mrs Van Den Bogerd accepted in

cross examination by reference to the Post Office table of TC volumes for 2013/14

({G/29}, above) separated by “caused by branch” and “not caused by branch”, that even on

Post Office’s figures those “not caused by branch” were around 20% of the total

{Day8/24:16-20}, later in re-examination, when she was asked, in simple terms what is

the purpose of a TC, she answered “To correct something that has been transacted

incorrectly in the branch.” {Day9/51:22-23}. This has been a feature of Post Office’s case in

relation to TCs e.g. GDEF §39 {B3/2/13} “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")”.

75. Post Office’s documentation disclosed more generally for the purposes of this litigation

has been awash with errors and mistakes, from which it is reasonable to infer that Post

Office’s processes and procedures were anything but fool proof e.g.:

75.1 Letter sent to Mrs Dar, beginning “Dear Flat 2” {E5/126/1}

75.2 Letter sent to Mr Abdulla dated 7 April 2005 {E4/2/1}, put by Mr Cavender

QC to Mr Abdulla on the basis it was sent in the early part of December 2006

{Day4/59:17-23}.

75.3 Email sent to Mrs Stockdale re induction training {E6/64/1}, stating branch

opening on 8 May, following which there will be on-site support until 6 May.

Product Process and Horizon Design

76. Post Office’s control over the Horizon system included the requirements as described

above in respect of:

76.1 No dispute button for TCs.

76.2 Forcing SPMs to accept TCs in order to roll over.

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76.3 Forcing SPMs to clear suspense account in order to roll over.

77. Post Office further controlled the functionality and layout of the system in relation to the

potential for errors to be made in branch by a SPM or an assistant for which the SPM

would ultimately be held liable. This included e.g. the interface between lottery sales

and Horizon (described by Mrs Van Den Bogerd as “the ping fix” introduced in 2012

{Day8/66:16} – {Day8/67:14}).

78. In 2016 Mrs Van Den Bogerd recognised Post Office’s control of such matters in an

internal document (the focus of which was avoiding losses to Post Office), as follows

{G/44/3} (emphasis added):

“Product and process design: Contractually postmasters are liable for any losses caused
by them or their staff. However we should be avoiding this situation in the first place.
Some products and customer journeys are overly complicated or currently designed in
such a way as to make fraud possible, as acutely demonstrated by the BCV fraud.
Equally, some in-branch processes are more complicated than they could be. This,
coupled with sub-standard Horizon Help, makes it more likely postmasters and their
staff could make mistakes leading to losses.”

79. Importantly, Post Office’s control included potentially introducing measures to prevent

miskeying. In a 2008 IS Review {G/12/1} there was a recommendation for “Double entry

and cross validation free form transactional values at the counter for all financial prods [POCA,

bill payments/personal banking)”; operational impact “May add some time to process at the

counter (minimal)”; system impact “Changes to Horizon required to prompt for double entry

and cross validation – should not be overly complicated or expensive (PL}”; opportunity “-

c80% reduction in disputes and claims …”; action “Assess cost of system changes to Horizon

and time window (IT)”; and under “Other Business Benefits” {G/12/1} inter alia “Major

improvement of point of transaction data integrity”; “Double entry, customer sight and

validation of transaction will minimise balancing issues …”; “Operational efficiency – less

balancing errors, productivity savings, less calls to NBSC and partner banks.” {G/12/2}

80. The fact that Mrs Van Den Bogerd could not say whether those recommendations were

implemented {Day9/2:16-25}, together with the existence of the 2012 Mis-Keyed Project

Feasibility Study {G/97} (to which Mr Haworth contributed), clearly evidence that Post

Office did not introduce the recommendations in the 2008 report. Notably the 2012

– 24 –
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study incudes as at §3.1 Background that “A very large value mis-keyed transaction will put

the viability of a branch in doubt” {G/97/4}.

81. These matters put into context (1) Mrs Van Den Bogerd’s reliance on mis-keying as a

cause of shortfalls in her witness statement §117 {C2/1/33}, (2) her position that Post

Office does not have first hand knowledge of whether a SPM has entered a transaction

correctly on Horizon §126.2 {C2/1/34}, and (3) Mr Cavender putting to Mrs Stubbs in

cross examination that “it is the sort of thing that could easily happen, isn’t it, putting in the

wrong number of noughts” {Day3/22:11-14}. The fact that this could easily happen – and

very significantly do so to the detriment of SPMs - was precisely because Post Office had

chosen not to introduce double entry and cross validation processes to prevent

miskeying.

Bugs & Errors, Remote Access, Implementation of Recommendations

82. It was part of Mrs Van Den Bogerd’s witness statement that:

82.1 Horizon is a “robust” system, and that “No-one truly expects an IT system to be

perfect but they would expect it to be robust and for Post Office to have in place

reasonable processes for detecting and correcting any problems” §98 {C2/1/29}; and

82.2 “Subpostmasters are solely responsible for their branch accounts. There is no

transaction that enters their accounts without their consent (or their consent by

proxy through their assistants)” §142 {C2/1/39}.

83. The Claimants dispute this evidence. For the purposes of this trial the Claimants rely in

particular on the disclosed documents relating to the Receipts / Payments Mismatch

issue at {G/8} and {G/9} and the Local Suspense Problem {G/13}.

84. The Receipts / Payments Mismatch documentation evidences that:

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a. Around 40 branches were impacted by this bug. Post Office had not at the

time of the document (likely October 2010) 12 communicated with affected

branches {G/8/1}.

b. The Branch would not get a prompt from the system to say there is a

Receipts and Payment mismatch, therefore the branch would believe they

had balanced correctly {G/8/2}.

c. Post Office considered that the bug “If widely known could cause a loss of

confidence in the Horizon System by branches” and that it had “Potential impact

upon ongoing legal cases where branches are disputing the integrity of Horizon”

and that “It could provide branches ammunition to blame Horizon for future

discrepancies” {G/8/2}.

d. The issue had begun in May, and Post Office had asked Fujitsu “why it had

taken so long to react and to escalate” it {G/8/3}.

e. There were three proposed solutions {G/8/3}. The first two were as

follows (emphasis added):

“SOLUTION ONE - Alter the Horizon Branch figure at the counter to show
the discrepancy. Fujitsu would have to manually write an entry value to the
local branch account.

IMPACT - When the branch comes to complete next Trading Period they
would have a discrepancy, which they would have to bring to account.

RISK- This has significant data integrity concerns and could lead to questions
of "tampering" with the branch system and could generate questions around
how the discrepancy was caused. This solution could have moral implications
of Post Office changing branch data without informing the branch.

SOLUTION TWO - P&BA will journal values from the discrepancy account
into the Customer Account and recover/refund via normal processes. This will
need to be supported by an approved POL communication. Unlike the branch
"POLSAP" remains in balance albeit with an account (discrepancies) that
should be cleared.

12 {G/8} and {G/9} both have disclosure dates 17 October 2012, but date of document at {G/9} is 29
October 2010, which suggests that {G/8} should have a similar date.

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IMPACT - Post Office will be required to explain the reason for a debt
recovery/ refund even though there is no discrepancy at the branch.

RISK - Could potentially highlight to branches that Horizon can lose data.”

f. The Fujitsu recommended solution was solution Two. The Court will recall

Mr Cavender intervened during Mrs Van Den Bogerd’s cross-examination

to say that solution Two had been chosen {Day8/94:16-21} and {Day8/95:17-

18} –without apparent factual foundation. The Claimants – on the basis of

the evidence – invite the Court to infer that in fact solution One was

adopted. This is because in Post Office’s Letter of Response dated 28 July

2016 §5.16.3 {H/2/25} it was stated that (emphasis added):

“Balancing transactions. Fujitsu (not Post Office) has the capability to
inject a new "transaction" into a branch's accounts. This is called a balancing
transaction. The balancing transaction was principally designed to allow errors
caused by a technical issue in Horizon to be corrected: an accounting or
operational error would typically be corrected by way of a transaction
correction. A balancing transaction can add a transaction to the branch's
accounts but it cannot edit or delete other data in those accounts. Balancing
transactions only exist within Horizon Online (not the old version of Horizon)
and so have only been in use since around 2010. Their use is logged within the
system and is extremely rare. As far as Post Office is currently aware a
balancing transaction has only been used once57 to correct a single branch's
accounts (not being a branch operated by one of the Claimants).”

And at footnote 57

“This was in relation to one of the branches affected by the "Payments
Mismatch" error described in Schedule 6.”

g. The Post Office’s refusal to answer the Claimants’ RFI as to whether and if

so how the SPM operating the branch in question was notified of the

balancing transaction and the reason for it (Request and Response 40

{B4/2/16}), supports the inference that notification was not made. Mrs Van

Den Bogerd’s position when taken to these documents that the branch

“would have” been informed {Day8/98:8-15} and {Day8/99:3-13} should be

given no weight in circumstances where she had no knowledge of the

transaction or branch (and indeed her evidence that “we would always notify

the branch that we were doing that” {Day8/99:5-6} is very difficult to square

with Post Office’s position that it has only happened once).

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85. The Local Suspense problem further undermines Post Office’s position as to the

“robustness” of Horizon. This problem had been identified by Post Office but not

reported to Fujitsu in 2011/12 and Fujitsu was not asked to investigate further - the same

problem then occurred in 2012/2013 and this time one of the branches reported the

problem to Fujitsu on 25 February 2013, it was only following this notification by the

branch that the root cause was identified {G/13/2}. 13 As put to Mrs Van Den Bogerd

{Day8/182:9-16}:

…So the short point is that, if you don't actually bother to investigate,
things can recur again, can't they?
A. Yes.
Q. And that rather supports the evidence you have fairly accepted; that it is
essential to have a robust system to investigate the root causes of problems?
A. Yes.

86. The Court may also take into account when considering Post Office’s position as to the

“robustness” of Horizon for the purposes of this Common Issues trial the failure by Post

Office to act on the recommendations in the “REDACTED Action Summary” dated 12

June 2014 {G/40}. That document recommended:

86.1 The creation of a Horizon Management Council §4.1 {G/40/2-3} “Since

Horizon is a critical business function of the Post Office estate a management

council should be created in order to ensure the ongoing oversight, management and

support of this business critical infrastructure going forward, this is in addition to

the current Information Security Management Forum. … This group should meet

quarterly, as a minimum, or after any significant change or issue.” Mrs Van Den

Bogerd was unaware that any Horizon Management Council had been

created {Day 8/113:3-10}, which, given her position (and involvement in the

Second Sight process and Branch Support Programme) clearly indicates that

it was not.

86.2 The creation of a complete document pack outlining at least a list of defined

items, including a risk register, §4.1.2 {G/40/3}. Mrs Van Den Bogerd could

not recall ever having seen a risk register for Horizon {Day8/114:22-24}.

13 Disclosure date of this document is 14 May 2013.

– 28 –
A(1) GENERIC EVIDENCE
Branch Accounts and Horizon

86.3 And under the heading “Financial Reviews” §4.1.4 (emphasis added)

{G/40/4}:

“Redacted

Redacted. Technical issues and connectivity issues will always be a risk
within any technical environment and it is strongly advised that a program is
put in place to undertake auditable controls, ongoing training, spot checks and
regular reviews from Post Office's Audit department to make sure that errors
in processing are kept to a minimum, and quickly identified.

Recommended remediation: The creation of an audit program by Post Office's
Finance department in order to review samples of data from sub- postmasters.
This would ensure consistency of accounts and enable a higher chance of
detecting errors in accounts due to problems with Horizon.

Reports should be generated after each audit and used to improve the Horizon
product, as well as provide auditable records of assurance; this should feed into
the Horizon Management Council for considered remediation.”

86.4 Mrs Van Den Bogerd’s evidence was that she was not aware that was done

{Day8/115:19} – {Day8/116:3} – again given her position, this is consistent

only with it not having been done.

87. The Court will also note in this June 2014 document that Post Office internally

recognised the possibility and risks of remote privileged access to data, which Mrs Van

Den Bogerd agreed (albeit commenting that she could not see what was being referred

to in the redacted bit {Day8/116:4-19} – of course a problem the Claimants have also had

with this document). The timing of this internal recognition is an important issue as to

Post Office’s statements made about the ability to remotely access and edit branch

accounts, 14 albeit not one directly arising in the Common Issues trial, hence the

Claimants not pursing it further here.

Investigation of Apparent Shortfalls

88. When Horizon was first introduced, transaction data was available to SPMs in branch

for only 42 days. From 2010 (being the date of introduction of Horizon online),

transaction data is available for 60 days (e.g. GDEF §38(2)(a) {B3/2/12}).

14 GPOC §25 – 27 {B3/1/9} re: statements made in August 2014 and April 2015, and GDEF §58 {B3/2/26}.

– 29 –
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Branch Accounts and Horizon

89. The shortcomings of such a short period were expressly identified and considered by

Post Office (in the context of considering Post Office’s own access to data otherwise held

by Fujitsu) in a document with a disclosure date 26 June 2013 entitled “Benefits of

extending life of transaction data”, which included under the heading “business benefits”

(emphasis added):

“The business, in particular the Security and P&BA departments suffer from the
inability to interrogate its data due to the short periods of retention. If we were to keep
data for longer and for that data to be interrogatable the following areas should benefit:

POca Claims and Disputes
Banking
Other product Claims and Disputes
Flag cases
Fraud and Conformance investigations
Proactive fraud identification (obviates the complexity costs of the Detica
project which if goes ahead will need to take inputs from multiple sources
instead of just one single database)
Security investigations
Criminal investigations
SPMR Contract advisors – re non-conformance suspension hearings”

90. A SPM seeking data beyond the period of branch data would need to be provided with

it by Post Office, who in turn would need to request it from Fujitsu. The document

above records that the cost of each request is £450 – giving rise to a commercial incentive

on the part of Post Office not to routinely request this data.

91. It is clearly the case that TCs were issued outside of the 42 and 60 day branch retention

periods, as illustrated by e.g. the provisions in the Working Agreement for e.g. 95% of

stock TCs to be issued within 3 months and 95% of automated payment / personal

banking payments to be issued within 2 years (§3.1.8 and 3.1.9 {G/35/10}), and specific

provisions for TCs issued outside of the timescales in the document where they affect

more than 10% of the network (§3.1.10 {G/35/10}).

92. However, even when in branch data was available for the period which required

consideration, diligent SPMs remained unable to identify the root cause of discrepancies

in their accounts using data available to them in branch. The most striking examples of

this are:

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Branch Accounts and Horizon

92.1 Mr Bates’ experience of having been unable to ascertain the root cause of an

alleged shortfall of £1,182.81, despite having printed all available reports and

carried out all available investigations in branch. Post Office employees

Selwyn Berry and Ki Barnes who attended the branch were also unable to

provide any answers using the information available in branch (Bates WS

§147 - §155, {C1/1/32-34}).

92.2 Mrs Stubbs’ efforts to find the cause of the apparent shortfall for £9,033

(Stubbs WS §92-92 {C1/2/21-22}, and in particular her evidence as to the

attendance by Mr Gihir, a Post Office auditor, on 19 May 2010, who observed

Mrs Stubbs all day, and carried out two cash declarations at 9am and 1pm,

which identified an apparent shortfall of £190 had arisen during that time,

the cause of which he could not identify (Stubbs WS §112 {C1/2/25-26}). Mrs

Stubbs’ further evidence that Mr Gihir returned on 25 May 2010 and

struggled to match the figures produced in his audit report with those on

Horizon, and after attempting to get to the bottom of it for two hours

without any success, he accepted the figures on Horizon (Stubbs WS §113 -

114 {C1/2/26}).

92.3 Mrs Stockdale’s efforts, including establishing parallel manual accounting,

and CCTV (§105-107 {C1/6/22-23}) {Day4/203:106}{Day4/203:6}.

93. The information available to SPMs in branch was less than helpful in relation to TCs.

94. As above, there were issues in relation to the ability of SPMs to understand the TCs sent

to them and the evidence provided, particularly in the case of lottery TCs.

95. There was certainly no facility for SPMs to print a spreadsheet of TCs equivalent to the

TC spreadsheet {E4/92/1} which – when disclosed for this litigation – enabled Mr

Abdulla to find significant issues with the TCs he had been issued in the period prior to

his termination. Post Office could give no explanation as to why such a spreadsheet

was not available to SPMs as a matter of course, Mrs Van Den Bogerd {Day8/52:19} –

{Day8/53:6}:

– 31 –
A(1) GENERIC EVIDENCE
Branch Accounts and Horizon

Q. Why can't you produce spreadsheets like this for subpostmasters in Excel
for them to go through?

A. What we send is the actual transaction correction with the evidence that
supports it. This is the internal account of the log, of what we keep.
Q. Yes, but why can't you send an Excel spreadsheet so people get a chance to
look at the piece as a whole and put it in context? So they have a better chance
of finding out if something is going wrong, haven't they?
A. We have not considered that before. We could look at something like that. It
looks like -- you are referring to something like a monthly statement or even
more than that …

96. The Court will note that this information was not even made available to Mr Abdulla

during his final interview prior to termination – the document(s) he was shown during

that meeting (and notably not before) were not even in date order, and did not contain

the text of the TCs.

97. The ability of SPMs to investigate and resolve discrepancies was further hampered by

the inadequacy of the training and support provided to them in these respects,

addressed further below in the section Training and Support.

Identifying the Account and “Workarounds”

98. The position of Post Office’s witnesses as to the nature of “the account” and its accuracy

is worthy of separate note.

99. Mrs Van Den Bogerd’s evidence was unclear on this issue, her basic position appeared

to be that any issue with the accuracy of accounts submitted on Horizon was resolved

by the ability of SPMs to call the Helpline to raise a dispute (albeit she conceded the

point in relation to the dispute button) ({Day9/37:1} – {Day9/42:15}).

100. Mrs Dickinson, after having repeatedly referred to “accounts” in her witness statement

in the context of alleged fraud and criminal investigations, and in her oral evidence

referring to “declared accounts” {Day9/154:6}, revealed a wholesale lack of understanding

of the fact that SPMs would be forced to accept on Horizon figures with which they

strongly disagreed, subject to calling the Helpline, and an unawareness that the

Helpline sometimes advised “workarounds” (by reference to the evidence of Mrs Dar that

she had been advised a workaround, and as referred to in the 15 October 2013 Detica

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Branch Accounts and Horizon

report “Widespread non-conformance to Post Office policy and processes by branches, with an

institutionalised acceptance that errors, workarounds and non-conformance exists” {G/19/3}).

101. The effect of her evidence was that she considered the information on Horizon to

represent the account (without reference to any dispute raised on the Helpline)

{Day9/163:23} – {Day9/164:21}:

MR JUSTICE FRASER: Can you talk me through, and use an example if you
wish, the mechanism by which you understand a subpostmaster or a
subpostmistress would “render” an account.
A. When I say “render”, that might be a northern term.
MR JUSTICE FRASER: You don’t need to worry about that.
A. Its basically submitting that account. That could be inflating cash, it could
be inflating stock it could be hiding a shortfall in a different method, a
product.
MR JUSTICE FRASER: I understand the ways in which it might be wrong.
What I am interested in is -- you have used the word "submitting" the
account. What physically would the subpostmaster or subpostmistress do, so
far as you know, to submit the account?
A. They would be declaring their cash and stock as a cash declaration on a
daily basis, and then they would be submitting their accounts on a monthly
basis.
MR JUSTICE FRASER: And that is by doing whatever they do at the
terminal.
A. Yes.
MR JUSTICE FRASER: On Horizon.
A. Yes.
MR JUSTICE FRASER: Is that right?
A. Yes, that is right.

102. Linked to the issue of workarounds (above), the Claimants note that in the July 2006

Balance Procedure guide {F4/18/1} under the headings “Amend Stock Discrepancies” To

Reduce Stock Holdings” the guide states “Transactions (F1) - Serve Customer (F1) – then sell

the difference between your figures and the systems figures. (eg: The system thinks you have 225

1st class stamps, you actually have 221 1st class stamps You will then put in Quantity 4 and

touch the F1 1st Class stamp icon. This will alter your system figure to 221)”.

103. Mrs Van Den Bogerd’s evidence was that this was part of standard Post Office standard

training, to put through a fake transaction {Day8/143:9-12}, the effect of which would be

to increase the amount of cash holdings shown on Horizon, even though no transaction

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Branch Accounts and Horizon

had taken place and no money had had been handed over by a customer {Day8/145:2-

20}.

Expectations about Horizon and Relationship

104. Mrs Van Den Bogerd positively asserted in her witness statement that people would

expect an IT system to be robust and to have in place reasonable processes for detecting

and correcting any problems (§98 {C2/1/29}). She further accepted in cross examination

{Day8/180:7} – {Day8/181:4} that:

104.1 people would expect Post Office to have in place a reasonable process for

detecting and correcting any problems;

104.2 where there is a possibility that an error has not been caused by a SPM and

the sums in issue are quite significant, those processes would have to be, not

just reasonable, but careful;

104.3 in trying to identify the root cause of what went wrong and get to the root

cause of something, both Post Office and SPMs are entitled to expect

openness, transparency and cooperation; and,

104.4 a SPM is entitled to expect fair dealing from Post Office and Post Office

would expect to provide fair dealing;

105. She further accepted:

105.1 a robust system necessarily involves trying to investigate the root causes of

errors when they occur, and if you don’t actually bother to investigate,

things can recur again {Day8/181:20} - {Day8/182:12};

105.2 contrary to §142 of her witness statement {C2/1/39} which stated that no

transaction enters a SPMs account without their consent, in Mrs Dar’s case

this had happened by the conduct of Mrs Guthrie during branch set up

{Day5/66:22} – {Day5/67:1}, the payments mismatch data did not accurately

reflect the transactions entered by those SPMs, and in Mr Abdulla’s a TC had

– 34 –
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Training and Support

been accepted by an auditor while he was in Dubai, and {Day8/182:23} –

{Day8/184:4}; and

105.3 the dispute policy for TCs, being like a grievance policy, sharpens the trust

that the SPM has to place in Post Office; that investigations have to be full

and fair, conscientiously considered, in good faith, and affording the SPM

reasonable access to information that they need to make out their side of the

argument {Day8/185:18} - {Day8/186:7}.

Training and Support

Training Content and Adequacy

106. The Claimants’ witness evidence in respect of the classroom training provided by Post

Office was relatively consistent as to its generality and focus on sales, inadequacy of

training as preparation for the reality of opening and running a branch, and that only

very limited (if any) training was provided in respect of balancing or resolving apparent

shortfalls: addressed in the LC’s witness statements. 15

107. There were very limited challenges to this evidence in cross examination, in some

respects amounting to little more than putting the first page of a Post Office powerpoint

slide or handout to witnesses, to the effect that some material relating to balancing was

covered or provided but not actually engaging with the issues the witnesses repeatedly

stated were not covered. The cross examination of Mr Sabir (who received 5 days

classroom training) was covered by Mr Cavender QC from {Day3/126:1} to {Day6/130;7},

during which time Mr Cavender did little more than put the first page of various

documents to Mr Sabir (e.g. {F3/48} and {F3/49}, put on the basis “this just helps us with

the scope” “this would have been the scope of what the trainer was trying to achieve in this one

hour 30 minute segment” {Day3/128:17-19}), in response to which Mr Sabir’s responses

were repeatedly that the training in relation to balancing (either classroom or on site)

15 Bates §130-140 {C1/1/28-29}; Stubbs §61- 68 {C1/2/14}; Sabir § 51-58 {C1/3/9-10}; Abdulla §51-54
{C1/4/10]; Stockdale §71-76 {C1/6/15}; Dar § 83- 86 {C1/5/16-17}.

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Training and Support

was not enough and he and others on the course had difficulties which were not

resolved.

108. Post Office’s evidence in relation to training was provided by Mrs Van Den Bogerd in

her witness statement §99 - 115 {C2/1/29-31} (dealing with training and support

collectively).

109. In fairness to Mrs Van Den Bogerd, she rightly acknowledged in those passages the link

between training and the risk of shortfalls, at §99.1, and, at §100, the need to consider

training together with other Post Office processes and procedures.

110. Her evidence in relation to classroom training essentially comprised at §104 “core

features” that she said “have always been covered in initial training programmes”, including

at §104.4 “how to declare, investigate, make good and dispute shortfalls”; and at §105 – 112, an

overview of the way in which training had been delivered over the years.

111. Notably Mrs Van Den Bogerd’s statement did not reference any of the training

documentation which had been disclosed, nor in any respect acknowledge any

deficiency at any time in the provision of training to SPMs. The Court may consider

both of these matters to be surprising. When asked about the absence of any exhibits,

her evidence was as follows {Day8/127:5-18}:

Q. I am just curious. In writing paragraph 104, you didn't
go back to the underlying training materials, did you?
Otherwise you would have done something a bit more like
in the claimants' witness statements where they identify
the document as the source of each statement?
A. So in terms of -- I didn't go back to every single stage
of that training, no.
Q. Did you go to any of them?
A. Some of them, yes, and some of them -- I have got a very
good knowledge of this anyway from myself being in
the classroom and actually being involved in some of
those training documents over the years.
Q. Since 2002, for example?
A. Since 2002, yes.

112. As to the content of classroom training in 2002:

– 36 –
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Training and Support

112.1 A document written by Sue Richardson (who Mrs Van Den Bogerd

confirmed had a management / oversight role in respect of training), with a

disclosure date of 11 May 2012 {F3/141/1} explained the position she had

found as to 2002 training as follows:

"I have managed to pull together an outline of the training support offered to
new agents around 2002.
 This information has been provided by a number of
people from across the business who have a background in training but don't
necessarily still form part of our team. Detailed here is what I have found to be

consistent across each of those conversations and we have managed to find
some supporting documentation, however I can't substantiate any of this as all
records
for individual agents are only held for 7 years

In 2002 new agents didn’t have any formal classroom training but were invited
in for two days ‘pre transfer training’ to go through some basics. This really
just involved some business awareness, customer care and use of the datestamp
etc. We have no specific details of what was covered

This was followed by on site training for circa two weeks and a follow up
balance…but we cannot find details of what was included

I don’t believe there was a record kept of what was and wasn’t covered –
although I think there were action plans left at the office. – see attached”.

112.2 When asked how Mrs Van Den Bogerd had been able to cover such matters

in her witness statement, it (1) became clear she had not had regard to any

2002 documents, and (2) amounted to Mrs Van Den Bogerd relying on her

alleged but unsourced “experience” and “knowledge” {Day8/129:8-16}:

Q. How were you able to form a view, at the time of writing your
witness statement, about what had been covered back then if she --
A. So the same in terms of my experience of what was in place from my
knowledge, but also talking to other people that were around at that
point. But Sue would be right, there isn't anything -- and that is the
problem
 with going back so far. We don't have any documentation to
say what was in place.

113. In fact, documentation relating to 2002 training had been disclosed. A fair reading of

this documentation supports the Claimants’ case as to deficiencies in training, and the

absence of any training in relation to e.g. resolving problems with balancing or

investigating discrepancies. The Claimants rely on:

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A(1) GENERIC EVIDENCE
Training and Support

113.1 {F3/20/1}, a 30 minute session brief “Introduction to Balancing”, covering basic

points such as “The principle of balancing e.g. receipt of money – receipt go up,

cash goes up; sale of stock – stock goes down cash goes up”. It is extremely basic. 16

113.2 A 93 page “Balancing with Horizon” document {F4/5}, disclosure date 20 June

2002, (to which Mr Cavender had taken multiple LCs). Even if a SPM

reviewed this document fully, it provided no information on how to actually

identify the underlying causes of errors – the information provided is about

how to correct errors that have been found (e.g. {F/4/5/75} and {F4/5/80}, as

put in cross examination and conceded {Day8/32:2} – {Day8/134:6}). 17

114. Training material from 2006 was similarly very basic nature. The Claimants rely on:

114.1 Slides for an “Introduction to Horizon and Helpline” session {F3/49}. The

content of this document included insights such as “The Barcode Reader – we

use this to read and record information from Barcodes”, and “The bar code reader

should never be pointed at a person’s eyes because the light can induce a seizure!”

{F3/49/3}, and a photograph of the back room printer {F3/49/4}.

114.2 Slides for “Stock Balancing” session {F3/51}. The content of this document

was similarly extremely basic, ending with a slide “Objectives Achieved”, “You

now have an understanding of the basic principles of balancing”, “You can now

balance a Stock Unit” {F3/51/5}. (Mrs Van Den Bogerd agreed this was basic,

but stated that SPMs would have had further information given to them on

the balance handout referred to within these slides – this is the document

addressed below).

16 In re-examination Mr Cavender took Mrs Van Den Bogerd to further references in the two week
training schedule to balancing a check stock and balancing a desk stock ({F3/18/1-2} {Day9/54:18}
– {Day9/55:19}), but notably did not identify any document which would make good Mrs Van
Den Bogerd’s evidence in her witness statement that “how to declare, investigate, make good and
dispute shortfalls” was in fact covered in any of these sessions.
17 Re-examination on this document did not identify any aspects of it which actually addressed these
specific issues {Day9/55:20} - {Day9/57:17} (and oddly within this re-examination, {F/4/5/75} and
{F4/5/80} were identified by Mr Cavender QC as if they were new and had not been the very
subject of the earlier cross examination).

– 38 –
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Training and Support

114.3 The “Balance Procedure“ handout {F4/18/1}, a 5 page document which

provided information in relation to transaction corrections including that

they must be resolved before the end of the trading period, and a statement

that when using the balance snapshot the SPM should check all receipt and

payment transaction totals, but does not otherwise provide any explanation

or guidance on how to investigate or dispute errors which can not be

resolved by these checks. (This is the document which contains guidance to

SPMs to amend stock discrepancies by carrying out a fake transaction). As

to the usefulness of this document, it included the note “Please note: All of the

above information is subject to change. Please refer to Operational Focus or

telephone the NBSC for current status” {F4/18/5}.

115. It further became apparent that Post Office as an organisation – and Mrs Van Den

Bogerd personally, had recognised internally inadequacies in training provided to

SPMs, including on this very issue of investigating discrepancies. This was something

which had been omitted from Mrs Van Den Bogerd’s witness statement, and something

she was unwilling to volunteer before being taken to the documents {Day8/159:3-10}:

Q. Can you tell his Lordship whether or not you were aware of inadequacies
in training by 2013?

A. Not generally. There had been some -- from my involvement with the
initial mediation scheme there had been some issues raised, and there would
be some requests for follow-up training from NBSC into the Helpline. But
more broadly I can't recall that there was a wholesale problem with training.

116. The internal documents which the Claimants had been required to piece together

painted a very different picture, and one which led to significant concessions by Mrs

Van Den Bogerd:

116.1 The “Branch Support Programme – Terms of Reference”, dated 19 July 2013

{G/15/1}, which recorded that the Second Sight interim report “did raise

questions about the training and support we have offered some subpostmasters. It

has been acknowledged that this needs to be investigated further and improvements

need to be made” and the scope of the Programme to include (emphasis

added, for purposes of training):

– 39 –
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Training and Support

• “Post Office’s attitude to subpostmasters which is often defensive and
unsympathetic, with a focus to recover assets rather than to identify the root
cause of the problem. There is a lack of a subpostmaster “voice” or
opportunities for them to raise their concerns.

• Inadequate Helpdesk support with responses that are script based, coupled
with a decrease in overall branch support

• Lack of timely, accurate and complete information provided to
subpostmasters to support them in resolving issues

• Inexperienced trainers and gaps in training coverage

• Lack of centralised data or files specific to each branch which hinders a
quality investigation from taking place. “

Mrs Van Den Bogerd was the Branch Support Programme lead {G/15/2}.

116.2 A document headed “Operation Board Action – Training Approaches into the

Network” {F3/173} with a disclosure date 7 August 2013, stated that “the

quality and quantity of training materials being launched in the network is an issue

currently” {F3/173/2} and recommended “A new sign off board to be established

to ensure quality and user friendliness going forward without risking the

reputational brand of the Post Office”. Mrs Van Den Bogerd stated she did not

believe such a board was established (although suggested some of the

training teams had been amalgamated into a more central team) {Day8/162:7-

11}. The Court may reasonably infer from her position and involvement in

the Branch Support Programme that the recommended sign off board was

not established.

116.3 A document headed “Camelot losses” with a disclosure date 20 August 2014

{F3/195} recorded that whereas 78% of new offices scored Camelot training

on the lottery to be good and only 0.8% saying they required further

training, 65.87% of new offices stated that they needed more training on

Horizon and only 15.38% scored the training they received on Horizon as

good.

– 40 –
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Training and Support

116.4 The Second Sight report (Part Two) dated 9 April 2015 recorded that

concerns relating to training and support were raised by over 130 of the 150

applicants (§4.4 {G/36/10}) and at (§11.2 {G/36/25}):

"We have been told by most applicants that whilst their basic training was
probably adequate in regard to general 'business as usual' transaction
processing, it was predominantly sales focused and weak in regard to end of
day, end of week and in particular end of trading period balancing. We have
been advised by most applicants that there was little or no coverage of how to
deal is with discrepancies (both surpluses and shortfalls); how to identify the
root causes of recurring problems; or how to deal with transaction corrections.”

116.5 Post Office did apparently produce some further guidance, noting the draft

guidance “A Quick Guide to Balancing – reconciling your cash and stock within

Horizon” {F3/213}, with a disclosure date 8 December 2014, which still does

not give any detailed guidance on getting to the root cause of a discrepancy

(implicitly accepted by Mrs Van Den Bogerd {Day8/171:2-8}. At this point,

following the presentation of these documents, Mrs Van Den Bogerd

conceded the position in relation to training as follows {Day8/171:10-16}:

Q. …I have tried to give you a fair sweep of the
documents we have been able to identify. The picture
emerges there if individual subpostmasters said they had
difficulties with applying the training they were given
to sort out the problems we are concerned with, you can
understand how that might have happened, is that fair?
A. Yes.

116.6 The Group Executive Agenda {G/33} for a meeting to be held on 12 February

2015 recorded Mrs Van Den Bogerd’s update on the improvements made to

the support offered to SPMs as a result of the branch support programme,

including as follows {G/33/35}:

“The content of the classroom training provided to new postmasters has been
refreshed with more focus on:

• balancing and how to look for discrepancies when they occur within branch.

• contractual obligation regarding discrepancies that do occur and how to
process discrepancies correctly

– 41 –
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Training and Support

• explanation of False Accounting and the potential consequences i.e. criminal
offence

2.2. A revised balancing guide has been introduced to help new postmasters
balance their accounts correctly; this is a hand-out from the initial training
provided to new postmasters and assistants where appropriate. A further best
practice guide to identify discrepancies in branch has been introduced. This is a
hand-out at on-site training for new postmasters and follow-up visits where
branches are experiencing balancing difficulties.”

At this point Mrs Van Den Bogerd conceded further {Day8/169:9-13}:

Q. The reality was these were things that were recognised as being
inadequate in the previous training and which you were seeking to put
right, is that fair?
A. Yes. And it was at this stage particularly around the induction
training, the new training. Yes.

117. The Claimants further rely on the fact that to the extent training covered losses, the

indicative amounts given were consistent with the pounds and pennies that the LCs say

in their evidence represented their understanding and expectations:

117.1 In the Post Office Practical Learning – Jigsaw Balance (Day 3) Training Notes

{F3/221}, disclosure date 26 November 2015 (and therefore presumably the

“refreshed” training referred to above), at {F3/221}:

“NOTE TO TRAINERS:

The final balance will not be exact, expect it to be around £5 either way
(loss/gain) – explain that this is the most common outcome of balancing (small
losses or gains).”

117.2 Mr Beal stated he would not be surprised to hear that in other places a loss

or gain of 10p is given as an example {Day6/125:2-18}. (Not put to Mr Beal,

but the trial bundle reference for this document is an email dated 8 July 2014

{F3/210/1} stating: “All Subpostmaster’s are taught to declare their cash and stock

as it actually is on balance day. This will inevitably give some form of discrepancy in

the cash / stock however minor – for example 10p short.”)

– 42 –
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Training and Support

Helpline and Online Help

Helpline

118. The LCs’ individual evidence as to the problems they encountered when balancing or

seeking to resolve shortfalls, and the absence of effective assistance from the Helpline

was compelling. Their evidence was consistently that the Helpline did not provide

them assistance when it was most needed, and that responses were script based and

unhelpful.

119. Post Office’s position throughout this litigation (and the wider narrative e.g. in

response to Second Sight) has been to the effect that the Helpline is an effective means of

support to SPMs, and that it does not provide script based responses.

120. Mrs Van Den Bogerd’s evidence was that the Helpline is crucial - in the context of the

limitations of the balance procedure handout {F4/18}, {Day8/142:6-15}:

“Q. And it is helpful guidance if, on the face of the transaction documents
themselves, they can find the problem. But beyond that, this in itself doesn't
help, does it?
A. It takes them through the process, and then if they are unable to locate or
rectify then part of the training would be, which is why the help desk is on
the training, that is your obvious port of call for your queries.
Q. So that is crucial?
A. Yes.”

121. The Court is invited to find that contrary to GDEF §62(2) “Helpline operators do not give

script-based responses” {B3/2/28} (and the narrative on this issue consistently adopted

over time e.g. in Post Office’s response to Second Sight §9.8 {G/28/28}) the Helpline

clearly did use scripts. The Claimants’ rely on:

121.1 The LC evidence to that effect, at WS Bates §143.6 {C1/1/31} WS Abdulla §83

{C1/4/16}, and as further explained in oral evidence:

Mr Bates {Day2/8:18-21}

A. It seemed like very much a generalisation, the response I was getting, like
it had been read off a script, off a screen, as simple as that. It didn't
particularly relate to my circumstances at the time.

Mr Abdulla {Day4/130:17-24}

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A(1) GENERIC EVIDENCE
Training and Support

A. There was very limited I could do. I would just have to wait for
transaction corrections to be reversed. There was the Helpline that I
mentioned before was absolutely -- not very helpful. It just seemed like they
were going through a flow diagram or step-by-step guide. And then all the
answers would point to go through your paperwork or just wait for a
transaction correction to come through.

121.2 The fact that Post Office’s position as e.g. explained in the Letter of Response

at §5.47.2 {H/2/30} amounts to a distinction without a difference. Reading

from an article is to all intents and purposes giving a script based response.

(“Script based responses. The allegation that responses from the NBSC were

“script-based” is not correct. NBSC call handlers listen to the question or questions

posed by postmasters and categorise the call on an online system called Dynamics.

This allows them to access articles on the Post Office Knowledge Base – an online

“bible” containing information on how to deal with Horizon queries – relevant to the

precise query raised. The call handler then uses the relevant article or articles to

inform the advice they give to the caller.”)

121.3 The email from Sharon Merryweather (PA to George Thompson, NFSP)

dated 3 May 2012 {G/93/4} refers to scripts (emphasis added) ”Just had another

chat to Sarah Barnett. She did receive a call from a Susan Ellis who did her best, but

her reply was that they were waiting for new scripts to read to people in her

situation who did not register their wish to sell before 1 April, but now want to.”

121.4 Mr Beal’s evidence provided further clarity on this issue: {Day6/122: 6-18}:

Q. That is because scripts were provided to people on the Helpline in order
to give them some standard wording to answer certain enquiries?
A. Scripts were provided in order for them to be able to answer the questions
that were being asked of them. That would be in order to make sure the
answers they were providing were consistent.
MR JUSTICE FRASER: Were they scripts provided by the Post Office --
A. Yes.
MR JUSTICE FRASER: -- to the NFSP Helpline?
A. No, this is the Post Office Helpline we are referring to here.

122. The Court is further invited to find that the quality of assistance provided by the

Helpline was such that it frequently did not provide effective assistance to SPMs to

enable them to resolve problems, including with discrepancies, apparent shortfalls, and

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Training and Support

balancing. The Claimants rely on the extensive LC evidence in their witness statement

to this effect (WS Bates §142, 143.5, 143.6, 143.8, 143.9 {C1/1/30-31}; WS Stubbs §71, §72.1,

72.2, 72.4, 73 {C1/2/16-17}; WS Sabir §111-113 {C1/3/19-20}; WS Abdulla §83-86

{C1/4/16}; WS Stockdale §95, 97 & 97.1, §97.2 {C1/6/20-21}; WS Dar §110 {C1/5/21}, §117,

118, 121, 122 {C1/5/23-24}), and the oral evidence given on these issues when challenged:

122.1 Mr Bates’ {Day2/141:24} - {Day2/142:8}:

Q. Finally, Helpline. You deal with this at paragraph 129, page {C1/1/28},
and you criticise the quality of Helpline. I formally put to you that Helpline
did give you reasonable help and assistance with problems you may have
suffered?
A. You only have to look at my letter of December 2000 where I had been
stuck on the phone with them for an hour without getting any sort of
response. Basically they were reading off screens: have you tried this, have
you tried that? …

122.2 Ms Stubbs’ {Day3/60:8} – {Day3/61:4}

Every so often you would get somebody who actually knew what they were
talking about. But what I am saying is you could ring several times with the
same question, the same query, and get a different answer. And there are an
awful lot of post office queries where there is an answer. You can't have a
selection where you have a tick box and you can sort of tick four boxes and
say that is all right, try any one of those. And certainly it became less useful
at the time when -- I think a lot of subpostmasters needed help on a
Wednesday when we were doing a balance, particularly a trading balance.
And that was the time where the Helpline really wasn't helpful at all because
you could ring, as I used to when I was in the portacabin, and say "Oh my
God, what am I going to do? I have this shortage, I have searched, I have sat
in there until 10 o'clock at night and got absolutely nowhere". So I rang the
Helpline during that time, and in the end all we got, or all I got, was a
message saying "Leave your office code and number. We will get back to
you within 48 hours". Which is less than useful.

122.3 Mr Sabir {Day3/163:15-19}

As we were told at the training, this is best system we have got, we have got
the best Helpline in the world, and we will be always alongside you if you
have any problem. But when you go practically on the ground everything is
the other way round.

122.4 Mr Abdulla {Day4/14:15-18}

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Training and Support

Everything was fine regarding training, classroom training, and so on, but it
is only -- the only problem I have is when you have a problem there is no
support. You have the Helpline which is useless, to be honest.

{Day4/146:10} – {Day4/147:1}

Q. Is it possible you have got that wrong and you didn't call that frequently?
Because it certainly isn't shown by this –
A. I can't see the document. It is very blurry. The problem was with the
Helpline, ringing was one thing and then having someone answer it or
someone being helpful on the other side was another thing. So in the end if
you are getting no help and no answers you don't really phone that much, so
you kind of give up … and you phone the Helpline and they are no use.

{Day4/147:7-10}

Q. I put it to you formally that the Helpline did give you a reasonable level
of help and assistance.
A. I don't know where you are getting that from but it is not true from my
side.

122.5 Mrs Stockdale {Day4/208:19} – {Day4/209:9}:

Q. In relation to the Helpline, I suggest that what was provided was a
reasonable level of service on the Helpline. Do you agree with that?
A. No.

122.6 Mrs Dar {Day5/80:22} – {Day5/81:11}:

Q. But in fact the Helpline was a helpful aid to you, was it not, when you
had issues or problems?
A. No, not particularly. I mean you phone, and I think on several occasions
I did call and ask regarding I was having a problem. They could help you if
you couldn't find a stock code to order something and they could either
order it for you or give you the code, fine. If it was like your stamps or
labels, special delivery labels or whatever. But when it came to the issues
like balancing, you were just told "We can't balance for you. Just recount or
do a full -- go right up to your trial balance", things like that, just in case
there is something. So I did that on several occasions and there were still
discrepancies, so you would just have to find it your own way.

123. The Claimants also rely on the email from Sharon Merryweather (NFSP) dated 30 April

2012 {G/93/4-5} which describes a SPM having “been trying to make contact via the Hell-

line, but has not had a response.” Mr Beal’s evidence that he couldn’t comment, and

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Training and Support

perhaps this was a typo {Day6/121:16-22} was wholly unconvincing, particularly given

the use of the hyphen in the spelling “Hell-line”.

Online Help

124. It is plain from internal Post Office documents that the Horizon Help function was

substandard and that this itself was detrimental to SPMs, including as to causing losses

for which SPMs were held liable:

124.1 The Agent Losses Management paper {G/44/1} (disclosure date 6 November

2016) co-authored by Mrs Van Den Bogerd "Equally, some in-branch processes

are more complicated than they could be. This, coupled with substandard Horizon

help, makes it more likely postmasters and their staff could make mistakes leading to

losses" (emphasis added).

124.2 The Network Development Enhanced User Help & Support paper {G/43},

again co-authored by Mrs Van Den Bogerd (for meeting date 25 October

2016), stated {G/43/1} "Horizon Help (the in-branch operational support tool) has

since its introduction over a decade ago fallen short of delivering the in-branch self-

help functionality that was promised as part of Horizon roll-out and that

postmasters and their assistants desperately need." The proposal was for “an

intuitive search engine that enables the in-branch user to quickly get to the

information they need” and identified benefits including “The ability to publish

information instantly to ensure Help content is correct” and “Help to be owned by

Branch Support team ensuring that the content is correct” {G/43/2-3}. The impact

of delay or rejection was identified as “Continued acceptance of a poor Horizon

user experience and consequently an equally poor customer experience” {G/43/5}.

124.3 Mrs Van Den Bogerd had accepted the above statements represented a

candid and honest recognition of the reality of the situation {Day8/72:13-16}

and {Day8/74:19-24} (albeit she repeatedly and defensively sought to

characterise the issue as one of just not being able to get to the answer

quickly – a position which was not credible and not consistent with the

content of the document above).

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Training and Support

124.4 The Court is invited to note further that despite the strong terms of Mrs Van

Den Bogerd’s paper – now over two years ago - the initiative has still not

been introduced. Apparently “there are no definite dates but it is actually being

looked at again” {Day8/73:9-12}. The theme of recommended initiatives which

would improve SPM’s experiences not being implemented thus continues.

125. The evidence as elicited in relation to substandard Horizon Help revealed the unreality

of the position which Post Office had taken on this issue in its pleaded case:

125.1 Mrs Stockdale’s IPOC had specifically pleaded “the Claimant had access to the

Horizon system user guide and Horizon online help, both online, but these were

difficult to use and often did not provide a resolution to the issue at hand” (§15(c)

{B5.6/2/5}).

125.2 Post Office’s pleaded defence was that: “The wholly unparticularised allegation

at paragraph 15.3(c) as to the Horizon system user guide and Horizon online help

being “difficult to use” and often not providing “a resolution to the issue at hand”,

which appears to be inadmissible and/or irrelevant to the Common Issues, is denied

(to the extent it is understood).” (§17(4) {B5.6/3/6}).

Expectations about Training and Support

126. The Claimants rely on the content of the Induction Booklet {E1/12/1} in respect of

training and support as follows:

“As a newly appointed subpostmaster, it is important that you quickly feel part of
Post Office Counters Limited”; “As Post Office Counters' success depends on your
success, please do not hesitate to make use of the support and expertise on offer.”
{E1/12/3}

“We care for all our employees, subpostmasters and other agents and we cherish our
place in every community.” {E1/12/5}

“On-site training takes place at your office and is undertaken with an agency
trainer. It covers a full range of transactions, accounting procedures, security and
customer-care issues.” {E1/12/10}

“If you feel you need further training, please do not hesitate to contact your Retail
Network Manger in the first instance.” {E1/12/11}

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Standard Contracts (SPMC and NTC)

“In addition to transaction processing your training will fully cover:
• pay, contract and terms of appointment;
• managing cash and stock;
• managing staff;
• all work;
• security;
• dealing with problems.” {E1/12/11}

“In order to help you make your business a success, a wealth of support is available
for subpostmasters”; and “A Helpline exists to enable Post Office Counter to
provide an excellent service at all outlets by:
• Providing speedy, accurate information and support to staff, agents, clients
and the public on all Post Office Counters enquiries and services.
• Handling complaints in an efficient and unbiased manner.”{E1/12/12}

“When contacting the Helpline you should give your name, office and the nature of
your enquiry. On most occasions they will be able to answer your enquiry
immediately, but if they are unable to do so they will be able to connect you to the
relevant department, or forward your enquiry on your behalf.” {E1/12/12}

127. By reference to the Induction Booklet above, Mr Beal accepted that none of these

statements would be very surprising to a SPM, they would be what you would

naturally expect, there was nothing surprising about them at all {Day6/21:18} –

{Day6/22:3}, all of the statements about training are statements of what a SPM might

reasonably expect from Post Office {Day6/24:8-10}; and similarly the statements in

respect of the Helpline {Day6/25:1-12}. Mr Breeden’s evidence was to the same or very

similar effect: {Day7/141:22} - {Day7/144:8}.

Standard Contracts (SPMC and NTC)

Not Negotiable

128. Mr Beal’s evidence both in his witness statement §16 {C2/2/3} and his oral evidence

{Day6/30:4-15} was that there was no scope for negotiation by SPMs of Post Office’s

standard terms. This accorded with the LC’s pleadings and understanding of the

position expressed in their witness statements – they had no choice but to contract on

Post Office’s terms. At least to this extent the contractual position is clear.

– 49 –
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Standard Contracts (SPMC and NTC)

Scope, Complexity and Clarity

129. The Claimants’ position in opening was that “It remains difficult to identify the universe of

express terms in the various documents governing the relationship between the parties as at any

particular date, or to do so with confidence and precision” §2(1) {A/1/5}. A number of the LCs

had raised particular areas of confusion in their IPOCs and witness statements, but Post

Office chose not to provide any explanation of source of express terms or how they were

incorporated in any witness statement (the obvious candidate for this would have been

Mr Beal).

130. The true complexity of the position became starkly apparent as oral evidence on these

matters was elicited in cross examination. The SPMC and NTC both seek to incorporate

a vast number of documents, of uncertain definition and scope:

131. The SPMC uses the phrases “rules and Postal Instructions” and “rules provided for the

instruction and guidance of SPMs” (Section 1 §13 and 14) {D2.1/3/7}.

131.1 PO’s case is that these terms would apparently encompass all manuals made

available at branch transfer and listed on the ARS 110 (e.g. for Mr Abdulla

{E4/54/1}). The Claimants note that when asked to provide copies of these

documents, Post Office was not only unable to identify precisely what those

documents were, but those it did identify came to some 6 lever arch files

(ultimately provided in double sided copy, in 3 large files) {Day7/193:4-15}:

MR DRAPER: … Post Office has done the best it can to identify the
manuals that would have been in force as at that date. It can't be certain
… Post Office has been able to locate 31 documents which amounts to
six lever-arch files. What it has done is, where it can't locate the 2007
version but it has one for shortly after, say 2008 or 2009, it has included
that, and we have those six files available for you, my Lord.”

A review by the Claimants’ solicitors of the list of documents in fact

provided against {E4/54/1} reveals a multitude of problems:, including that:

17 of the 23 titles of the documents do not exactly match the description in

the ARS110, and of those 7 document are so different that it is not actually

clear whether the right document has been provided; 15 of the 23

documents post-date Mr Abdulla’s appointment in January 2007; one of the

– 50 –
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Standard Contracts (SPMC and NTC)

documents ‘Automated Payments’, as provided comprises two booklets

which are totally separate documents (one dated May 2005 and the other

July 2008); and some pages in the documentation are crossed out in pen /

amended by hand, with no explanation.

The picture created is pure chaos – both as to what a SPM would be

provided, and Post Office’s own internal systems, version control, and

record keeping.

131.2 As to the meaning of “Postal Instructions”:

a. Mr Beal did not know whether SPMs were told what these terms meant,

and confirmed that Postal Instructions had been a specific class of

document back when he started Post Office – he maintained this legacy

language now applied to e.g. instructions on Horizon ({Day6/48:14} –

{Day6/49:15}). Mr William’s evidence was that the “postal instructions

model” faded out in around 1992 or 1993 {Day6/162:7-12}.

b. Mr Beal could not give a clear answer whether the letter sent to Mrs Stubbs

on 15 February 2010 {E2/45/1} was a postal instruction {Day6/69:19} –

{Day6/70:4}. His position in relation to the 11 March 2011 letter {E2/47/1}

was that this was equally unclear:

MR JUSTICE FRASER: Is it a postal instruction or not?

A. I would say it was -- I'm sorry, I am not trying to avoid the answer. I
am answering the question. Let me, if I may, explain. It is an instruction
to her to make the payment and it has arisen as a result of the activity
that she undertook in her branch that caused the various debts to occur,
and therefore in the context of -- it's in the context of her contract. I
don't know whether you would call that a postal instruction or not. So I
don't know.”

c. Mr Breeden’s view was apparently that the 15 February 2010 letter {E2/45/1}

was a postal instruction, despite being sent 4 days after Mrs Stubbs had

been told the amount had been put on hold {Day7/67:3} – {Day7/68:8}.

– 51 –
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Standard Contracts (SPMC and NTC)

d. As well as being used in the SPMC, the standard form Acknowledgements

of Appointment, including those under the NTC, also refer to “Postal

Instructions” or “postal instructions” as something to which the SPM agrees

to be bound (Bates {D1.1/2}, Sabir {D1.3/4}, Abdulla {D1.3/3}, Dar {D1.5/3},

Stockdale {D1.6/5}). Mr Webb – a very experienced branch transfer auditor

– would not have been able to tell a SPM if asked what a postal instruction

was – this wasn’t obvious to him {Day10/170:16-25}.

132. In the NTC:

132.1 The Preface is itself comprised of a number of parts (Preface Part A, Preface

B Consultation Condition Precedent, Part C Precondition, Appendix 1 Works

at Branch Premises and Plan (apparently a copy of the scoping report),

Appendix 2 Equipment and Appendix 3 Conditions of Appointment:

{E5/137/3-27}, as addressed in Mrs Dar’s witness statement at paragraph

63(b), and 64 {C1/5/13}.

132.2 As well as the Preface, the “Agreement” was defined to include the Standard

Conditions, “the Manual (as defined in the Standard Conditions)” and “the Fees

Booklet (as defined in the Standard Conditions)” {E5/137/3}.

132.3 At §1.1 of the Standard Conditions Manual is defined as “the manuals and

other documents referred to in Part 5 of these Standard Conditions” {E5/137/30},

then the extensive list itself appears on internal page 36 -37 of the Standard

Conditions {E5/137/63-64}. The list of NTC documents is 18 entries, the last

of which is “Any other instructions to operators or updates to such instructions

issued by Post Office Ltd from time to time”. The list includes for example the

Horizon system user guide (online), which appears on Opus as a 556 page

document {F4/3}. It includes training workbooks. It includes Branch Focus -

a weekly publication which is accessible online {Day6/54:6-9}. The example

Branch Focus at {F4/132} from 17-23 June 2013 is a 20 page document

including e.g. “Summer sizzlers” promotional rates and content such as “To

help your branch be the most competitive on rates please don’t let customers know

– 52 –
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Standard Contracts (SPMC and NTC)

about next week’s offer until it is live in branch next Wednesday. This will stop

competitors in your area becoming aware of the promotion and offering better rates.”

132.4 Mr Beal was unable to identify to say which of the documents listed in the

NTC would be in electronic or hard copy {Day6/52:15-20}. When asked

which sections of Branch Focus would be contractual instructions he said he

“would need to read it” {Day6/55:3-6}. After some consideration he said that

he would consider the extract above about not telling customers about

competitive rates was a contractual instruction and that a SPM telling an old

lady that the next days rates would be lower would be a breach of contract

{Day6/56:10} – {Day6/57:7}, albeit on the particular facts he would not

consider it a material breach giving rise to a right to terminate {Day6/57:8} –

{Day6/59:2}, so as to fall within the self reporting provision (“The Operator

shall promptly notify Post Office Limited in writing of any circumstances which

would give Post Office Ltd a right to suspend or terminate the Agreement” §16.5

{E5/137/51}).

132.5 The effect of Mr Beal’s evidence was to underline the frank impossibility of a

SPM being able to understand and keep abreast of the universe of express

contractual terms.

133. The LC evidence that they were confused and did not clearly understand which

documents comprised their contracts with Post Office or how these documents worked

is wholly unsurprising given the matters above, and as further compounded by the real

doubt in a number of cases as to whether Post Office had sent to them a full copy of

their contract. Indeed this concession was made by Mrs Rimmer {Day7/26:25} –

{Day7/27:8}:

“MR GREEN: Was there any structured way of checking with them? Because
they do sign -- they had signed something, hadn't they? There was a risk that
they might think they have signed their contract.
A. Yes.
Q. So they wouldn't necessarily know that they are missing another document?
A. I think it looks like that in some of the cases that we have been looking at.”

– 53 –
A(1) GENERIC EVIDENCE
Standard Contracts (SPMC and NTC)

Keeping Track of Variations

134. In respect of variations, for the SPMC, Post Office’s practice was as explained in its

solicitors Letter of Response dated 28 July 2016 {H/2/94}:

“Up to 2006, Post Office issued an appointment pack that contained an
acknowledgment of appointment form, a bound copy of the 1994 Subpostmaster
Contract and associated variations (loose, rather than incorporated into the original
agreement). From 2006 onwards Post Office provided the pre-2006 variations at the
front of the 1994 version so they were bound to the original contract. Therefore, new
postmasters appointed from 2006 onwards were provided the 1994 version with the
pre-2006 variations bound to the front and any further post-2006 variations included
as loose documents.”

135. This practice of not actually incorporating the variations within the body of the standard

terms was extraordinarily unhelpful to an incoming SPM. The 2006 Standard SPMC

{D2.1/6} has 39 pages of variations appended to the front, before the contents page on

{D2.1/40}. The 2006 Modified SPMC {D2.1/4} starts after 48 pages at {D2.1/4/49}. No

explanation has been provided for this practice by Post Office - Mrs Rimmer said she

was unaware of any consideration being given to putting all amendments into a single

free-standing document {Day 7/30:16–22}) and the Claimants submit there can be no

good explanation. Mr Webb was completely unaware that this was Post Office’s

practice, and was clear that he would not have been able to explain these variations if

asked {Day10/171:5-21}.

136. The difficulty a SPM would have keeping track of contractual variations was well

illustrated by the fact Mr Beal – the witness giving evidence for Post Office on the very

issue of variations to the contracts – was unable to give a clear account of what

variations there had in fact been.

136.1 §38 of Mr Beal’s witness statement listing variations from 2002 {C2/2/7-8}

very much gave the impression it had been compiled from §2.4 of the Letter

of Response {H/2/93-94} rather than from his knowledge or review of the

actual documents. Mr Beal’s list had a 9 year gap from July 2005 to October

2016, which on its face was surprising.

136.2 Mr Beal’s list of variations missed out a variation in relation to Branch

Standards, which it was possible to discern from reading together a

– 54 –
A(1) GENERIC EVIDENCE
Standard Contracts (SPMC and NTC)

standard form letter with a disclosure date on Opus of 6 May 2010 {F4/64/1},

an enclosed 19 page booklet “branchstandards getting it right every time”

{F4/60}, and a second booklet with the same title “branchstandards getting it

right every time” where it was also written underneath “Conformance with

Branch Standards” {F4/59} which included within it on p3 {F4/59/3} “The

further measures Post Office Limited will introduce for non compliance with these

branch standards”, including an ability for Post Office to require SPMs to pay

Post Office’s reasonable costs and expenses for travel, staff time and

overnight accommodation in particular circumstances.

136.3 Mr Beal had not recalled the introduction of financial penalties prior to being

taken to this amendment in the documentation {Day6/63:14-17}. He was also

unable to explain the meaning of a number of phrases within this booklet,

including the difference between “operational instructions” and ‘Operational

Focus” {F4/59/2} “I don’t know in the context of this… I don’t know what the

reference to operational instructions is in this document.” {Day6/66:22} -

{Day6/67:4}.

Differences Between & Interpretation of Standard Contracts

137. It was a theme of Post Office’s written evidence that differences between standard form

contracts were not explained. It was a theme of Post Office’s oral evidence that these

differences were either not known or understood within Post Office and/or treated as

meaning the same thing in practice. On these issues and more widely, Post Office’s

practice appears to have been to have operated on a basis which was different from the

written contract terms.

138. As to the differences between the Standard and Modified SPMC:

138.1 In his witness statement, Mr Beal stated that “many of the terms of the two

contacts were identical” and “the main difference was in relation remuneration

structure” §22 {C2/2/4}, choosing not to assist the Court any further on this

issue.

– 55 –
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Standard Contracts (SPMC and NTC)

138.2 Mr Beal was unaware of the differences between the Standard SPMC and

Modified SPMC in respect of appeal from 3 months termination {Day6/32:11-

13} {Day 6/34:20-22} (Cf. §18(5) at {D2.1/3/86} and §14M(5) {D2.1/2/45}).

138.3 Post Office’s corrective action policy {F3/14/4} simply provides that there is

no appeal from 3 months notice – making no exception for the case of SPMs

on the Modified SPMC.

138.4 Mr Beal had also not dealt in his statement with the provision for

introductory payments and compensatory payments on termination which

appear only in the Modified SPMC (§19(M) {D2.1/2/55} {Day6/41:1-21}).

139. As to the change from the SPMC to the NTC (including re losses):

139.1 In his witness statement, Mr Beal stated that “Post Office changed the suite of

standard contracts for the purpose of the NT programme. Despite the changes, the

core principles of the agent being responsible for running the branch, employing

assistants, completing the accounts and liability for losses remained the same” §33

{C2/2/6}, again choosing not to provide any explanation of the differences

between the written terms within these documents.

139.2 Mr Beal did not explain in his written evidence that, for example, the

contractual right to an appeal from termination was completely removed

{Day6/46:14-16}. Nor did he explain the introduction of the self reporting

provision in the NTC (§16.5 {E5/137/51}) – when asked about this he did not

know if was new or not, or whether it had been discussed with the NFSP

{Day6/53:12-18}.

139.3 In oral evidence Mr Beal re-emphasised that the intention was not to change

the core principles, and this was the basis on which the new contracts were

discussed with the NFSP {Day6/29:7} – {Day6/30:1}, including as to liability

for losses {Day6/42:23} - {Day6/43:17}.

139.4 Mr Beal explained the position further in relation to liability for losses as

follows {Day6/132:1-16} (emphasis added):

– 56 –
A(1) GENERIC EVIDENCE
Standard Contracts (SPMC and NTC)

MR JUSTICE FRASER: Were you aware before these proceedings
that the actual drafting of the clauses was different?
A. It wasn't something that was front of mind but I would
have seen that because, as I said, I had a general
familiarisation with the SPMC and obviously with the NTC
as well.
MR JUSTICE FRASER: And when you were asked questions about
this by Mr Green you said the core principles remained
the same across the two contracts --
A. Yes.
MR JUSTICE FRASER: -- effectively. How would you express
the core principle in respect of responsibility for
losses?
A. That any losses that were caused by the postmaster or
their assistants through negligence or error, or that
kind of reason, would be their responsibility.

139.5 On a similar theme by reference to the contractual terms giving Post Office a

power to suspend, it was Mr Breeden’s evidence that despite the difference

in written terms in the SPMC and NTC: (§19(4) {D2.1/3/87} and §15

{D1.5/2/44}) there was no material difference between them, the core

principles flow from one to the other {Day7/52:12} – {Day7/54:18}. Mr

Breeden’s position was ultimately that the precise words of the contract were

not particularly important: {Day7/54:22} – {Day7/55:1}.

Q. Is it fair to say Post Office doesn't tend to focus on
the precise words of a contract, you know what your
interpretation is and that is what everyone is working
to?
A. That is the way I would operate, yes.

140. It was notable that in addition to Mr Beal, above, Mr Wiliams also described section 12

§12 as imposing fault based liability, only:

Q. "The subpostmaster is responsible for all losses caused
through his own negligence, carelessness or error and
also for losses of all kinds caused by his assistants."
You heard Mr Beal give his evidence, didn't you?
A. Yes.
Q. About what he understood they were responsible for?
A. Yes.
Q. It's basically losses caused by negligence of them or
their assistants, isn't it? Negligence or error?
A. It says:
"... negligence, carelessness or error, and also for
losses of all kinds caused by his assistants."

– 57 –
A(1) GENERIC EVIDENCE
Business Plans

Yes.
Q. It wasn't your understanding that a loss that was
nothing to do with any fault by the subpostmaster or
their assistant, if it was a Post Office's fault,
for example, that caused a loss, but the assistant
happened to be somehow involved but without any fault,
the subpostmaster would still be responsible, was it?
A. Clearly there is a -- it's logical that if neither -- if
the sub -- if neither the postmaster or his assistant
were at fault, and we were at fault, it would be
an issue that --
Q. Yes, so it's effectively --
MR JUSTICE FRASER: Mr Green, you have just overspoken the
witness as he was finishing.
Go on, Mr Williams.
A. Sorry, I was just trying to say that --
MR JUSTICE FRASER: You said on the transcript:
"... it's logical that if ... neither the postmaster
or his assistant were at fault, and we were at fault, it
would be an issue that ..."
A. We would have to take responsibility for.

141. In contrast, Post Office’s internal documentation referred to SPM’s contractual liability

for losses as being much more expansive. Notably the Losses & Gains policy {F3/8/14},

§3.1 “The subpostmaster is required to make good all losses however they occur (Subpostmaster’s

contract Section 12 paragraph 12).”

Business Plans

142. Mr Dance was a wholly unsatisfactory witness. Despite giving evidence in respect of

business plans and their financial assessment generically, his witness statement dealt

only with the business plans for Mrs Stockdale and Mrs Dar – apparently these having

been provided to him by Post Office’s solicitors (WS Dance §5{C2/5/2}) – although Mr

Dance knew that earlier versions were very different. Mr Dance’s oral evidence was

also confused and contradictory as to whether he had looked at the business plans of

earlier LCs prior to preparing his witness statement. Mr Dance had chosen to give no

meaningful evidence about the financial assessment of business plans (even for Mrs

Stockdale and Mrs Dar) – and the documents he exhibited were all but meaningless

{F1/156/6} and {F1/117/1} - {Day9/127:4} – {Day9/128:22}. Evidence he gave in his

statement about Post Office practices was also flatly contradicted by Post Office’s other

documents and witnesses (cf. Dance WS §28 {C2/5/9} with {F1/157/31}, and Dance WS

– 58 –
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Business Plans

§29 {C2/5/9} with Trotter WS §14 {C2/13/4} and {E5/85/1}). In relation to business plans,

the Claimants therefore rely on the matters set out below, arising from the challenges

made to Mr Dance’s evidence, by reference to documents largely not exhibited, or where

exhibited, not explained.

143. All early versions of Post Office standard form business plans were drafted in a way

which provided guidance to applicants on the most basic of matters, reflecting Post

Office’s recognition that many applicants were inexperienced business persons (or, to

coin a phrase “commercially naïve”).

143.1 Most obviously: (as in the version sent to Mr Bates in 1998 {E1/2/27}, but see

also those sent to Mr Sabir in 2006 for Cottingley {E3/27/26} and Crossflatts

{E3/31/16}):

“Profit budget
What is the purpose of a Profit Budget?
The purpose of a Profit Budget (or Operating Budget) is to show, at the end of a given
trading period, if a profit or loss has been made during that period.

lncome
Income is calculated from:
Sales - this is the figure that you charge your customers.
Cost of Sales - this figure is arrived at by taking the sales figure from above, less the
value of opening stock plus purchases less closing stock.
There may also be some added income to the business. For example, rent from
residential accommodation above the business premises.”

143.2 SPMs were also told to “carefully study” PO’s example of a partially

completed profit budget (e.g. {E1/2/27}) before completing their own.

143.3 Other basic guidance directed to persons with no experience of running a

business included e.g. {E3/27/10}:

“If your business is to succeed, you must retain existing customers and try to attract
new ones. To do this you must have a clear understanding of who your customers
are, what they purchase from you, and, most importantly, why they choose to shop
in your outlet. You need to identify what price your customers are prepared to pay
and the level of service they expect to receive.”

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Business Plans

143.4 Although in later versions this type of guidance was dropped, as Mr Dance

conceded, the type of person applying to become a SPM did not change and

for many this would be their first business {Day9/129:22} - {Day9/130:8}.

144. It is an indicator of the imbalance of power and control between SPMs and Post Office

that:

144.1 Post Office required SPMs to sign a declaration that the information

provided by them in these business plans was true and accurate and had

been prepared with reasonable care (see e.g. {E6/42/5}) - and Mr Dance ‘s

position was providing untrue or inaccurate information would be a

potential breach of contact, and that Post Office included the declaration

“very much” with a view to relying on it as against the applicant {Day9/87:18}

- {Day9/88:7}.

144.2 In contrast. Post Office itself adopted a policy of ever increasing disclaimers

in the standard form business plans it sent to SPMs for them to complete and

– for reasons above – on which they expected them to rely.

144.3 The version of the business plan sent to Mr Sabir for his Crossflatts

application on the one hand expressly described the business plan as “a

monitoring tool for you”, and provided all cosy guidance and basic

explanations, yet on the other, included a disclaimer of liability “for any act or

omission, negligent or otherwise and for any negligent mis-statement, on the part of

itself, its employees or agents in connection with this business plan” {E3/31/3} (and

see {Day 9/116:15-22}).

145. Mr Dance stated that he was unaware of any particular sensitivity around this time

which led to the introduction of a disclaimer by Post Office, but the introduction of such

a disclaimer and its ever increasing evolution (on every page, for every conceivable act

or omission - see versions for Stockdale and Dar at {E6/27/1} and {E5/32}) certainly

indicates a defensiveness on the part of Post Office.

146. A clue to this defensiveness may lie in the fact that, unbeknownst to SPMs, Post Office,

in its own financial assessment of business plans, as a matter of policy included

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Business Plans

provision for £1,500 of “losses“ being incurred in the first year. The degree of secrecy

surrounding this policy, and the work required on the Claimants’ part to reveal it, is

itself significant:

146.1 This policy has never previously been explained by Post Office, and was not

explained in Mr Dance’s witness statement.

146.2 The Claimants only became aware of this as an issue when reviewing the

disclosed financial assessments for Mr Sabir and Mr Abdulla, both of which

on careful review, made provision for “Other Cash Impacts” of £1500 losses

{E3/49/2} and {E4/28/2} – but without explanation in the version of those

documents as disclosed.

146.3 On further detailed review, it became apparent that both of the financial

assessments disclosed for Mr Sabir and Mr Abdulla were in fact missing an

internal p2, which the Claimants were able to track down in order to

discover (by reference to another individual’s financial assessment) Post

Office’s policy that “The provision is based on 5% of first year salary up to a

maximum of £1,500. Discussions with retail network managers indicate that this is

a reasonable allowance in the first year.” {F1/102.1/4}

147. The internal Post Office policy to make provision for losses is to be contrasted with the

content of the standard form business plans in fact provided to SPMs, which:

147.1 In the versions sent to Mr Bates and both versions sent to Mr Sabir, there was

no line for losses in the pro forma versions sent. Their absence is important

given the guidance given to applicants to study the pro formas and e.g. the

inclusion of provision for £4 per month postage, giving the impression that

the items listed are comprehensive in identifying the categories of items to be

considered.

147.2 When asked as to the thinking about whether there should be a line for

losses in the versions sent to Mrs Dar and Mrs Stockdale, Mr Dance took

personal credit for the initiative to include lines for losses and retail

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Business Plans

shrinkage {Day9/130:22} – {Day9/132:11} as they appear in the version sent to

Mrs Stockdale {E6/27/5}:

Q. So what was the thinking as to whether there should be a line for losses
in these plans?
A. Sorry. Basically it is a key part of a business. The thought was that a pro
forma that didn't include losses, it would be useful for an applicant to at least
consider that as a possibility. And it had both losses and also retail
shrinkage was introduced.

Q. So here, as I understand your earlier answer, you thought it was
important to include a line for losses, so that they at least considered that has
a possibility?
A. Yes. In part of running a business, when I came to this I thought,
actually, it is a cash business. In any retail business there is always a risk of
losses of some sort. Not just cash, losses could include losses on disposal, so
if you sell an asset you might lose money. It is something to factor into
managing a business.
MR JUSTICE FRASER: So was it your initiative or idea to include a line for
losses?
A. Losses and retail shrinkage was something I said we should definitely
have going forwards.

147.3 However what Mr Dance could not explain, was why, the later version sent

to Mrs Dar ({Day 9/96:12-20} and {Day9/132:13-24})) the line for losses had

been removed {E5/32/1} {Day9/134:1-16}.

148. The Claimants further rely as to expectations about losses on the fact that:

148.1 None of the LCs in fact made provision for losses in their business plans –

including Mrs Stockdale - Mr Dance’s evidence in respect of this was as

follows {Day9/133:11-25}:

Q. In fact this is Mrs Stockdale's completed plan. She didn’t make any
provision, did she? So she wasn't expecting any losses?
A. That is correct, and quite often that may be blank. It's up to the applicant
whether they think they might make a loss or not in any area of the business.
Q. I don't know if you know, actually she had some feedback on her plan
and made some amendments as a result, but she didn't have any feedback as
to not making provision for losses, is that something you have looked at?
A. I haven't looked at it. As somebody reviewing this, if somebody hadn't
provided for losses that wouldn't overly concern me. I would look at the rest
of the business plan and the risks within the numbers of the business
plan.

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Notice of Contractual Terms

148.2 Post Office at no time provided any guidance to any SPM when completing

the business plan about making provision for losses - Mr Dance’s evidence in

respect of this was as follows {Day 9/135: 4-16}:

A. I have never seen any guidance on losses, no.
Q. Why not? Why is there no guidance about losses?
A. Because it was an example -- in the pro forma it is an example line
for them to consider. As I mentioned earlier, for many they might think
it is not a number they would put in and enter into their business plan.
Q. So many people wouldn't expect to have losses then?
A. It depends on the person and what they think – their view of their
business.
Q. And it depends on the information they have been provided by Post
Office, doesn't it?
A. It could do, yes, in terms of you see a pro forma and whether it is on
there, yes.

Notice of Contractual Terms

No Notice of Terms in Context

149. SPMs were committed to and did contract with Post Office well before they had any

chance to know or understand Post Office’s practices or procedures in relation to branch

accounts, transaction corrections, or ways in which they may be held to be liable for

apparent shortfalls in accounts on Horizon. Although the appointment processes have

changed over time, these elements have remained constant. To the extent SPMs were

informed about contractual clauses re: liability for losses, this notice was in no way

effective in giving notice of what those clauses meant in reality.

150. None of the precontractual information provided to SPMs included information to them

to enable them to understand the content of what they were actually agreeing to in

respect of Post Office’s procedures for balancing and accounts, particularly as to forced

rollover, the absence of a means within Horizon to dispute at TC or an apparent

shortfall, and the restricted options available to a SPM to accept and pay by cash, cheque

or settle centrally. The Claimants rely on the absence of this information from all pre-

contractual documents before the Court, and the evidence of Mrs Rimmer that she was

unaware of any such notice having been given {Day7/30:23}-{Day7/32:7}, {Day7/32:8}-

– 63 –
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Notice of Contractual Terms

{Day7/32:15}; {Day7/32:16} - {Day7/33:3} and her necessary acceptance that absent such

notice, any advice about the significance of those matters in the context of the contacts in

advance of contacting could not have been obtained {Day7/33:15} – {Day7/34:5}.

Written Notice of Contract Terms

151. With the important caveats above, the position in respect of each of the LCs in respect of

notice of written terms was in summary as follows:

151.1 Neither Mr Bates nor Mrs Stubbs received a copy of the SPMC prior to

contracting. Whereas Mr Bates did receive some extracts from the SPMC,

Mrs Stubbs received nothing.

151.2 Mr Sabir and Mr Abdulla were sent a “Brief Summary” of contractual terms

prior to interview, but they were expressly told not to rely on them for any

purpose:

“I also attach a brief summary of the conditions of the Sub postmasters
Contract, for your attention. Please note that the summary does not represent
the complete terms and conditions of the Subpostmasters Contract, and may
not be relied upon, for any purpose, by a subpostmaster.” {E3/53/1}
and {E4/30/2}

“(For use as a guide only; Post Office Ltd will be in no way responsible for any
action taken as a result of this summary)” {E3/53/3} and
{E4/30/5}

151.3 There is doubt whether Mr Sabir and Mr Abdulla were sent copies of the

SPMC, and if so which versions. It is Post Office’s case that these were sent

enclosed with letters confirming success after interview, but Mr Abdulla was

confident that he never received a copy of the modified SPMC (§47

{C1/4/10}) {Day4/12:3-18}, and it was notable that Mr Cavender QC in

challenging this evidence chose not to actually take Mr Abdulla to any copy

of the SPMC which Post Office claims he was sent. The version Mr

Cavender QC would have been required to show Mr Abdulla would of

course have been the 2006 Modified SPMC (i.e. the version with c.40 pages of

variations at the front {D2.1/4}, which the Court may well think would have

been a memorable document to receive. Similarly, whereas Mr Sabir was

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A(1) GENERIC EVIDENCE
Notice of Contractual Terms

uncertain as to whether he ever received a copy of any SPMC {Day3/144:18-

22}, again Mr Cavender QC chose not to actually show him the 2006 SPMC

(this again being a version with c. 40 pages of variations at the front

{D2.1/6}). Post Office chose therefore not to actually put to Mr Sabir or Mr

Abdulla the actual documents on which it relies – given the approach to

cross examination on other documents, it is very unlikely this was

accidental.

151.4 As to Post Office’s case that full copies of the contracts “would have” been

sent to LCs, this is far from a safe assumption, particularly given Post Office

internal records which indicate that SPMs were not consistently provided

with copies of their contracts (e.g. {F3/125/17} “"Most of the time the SPM have

not received contracts and additional papers from HR"), and the content of the

Second Sight report at {G/27/6}, and the evidence of Mr Bates on this issue as

follows:

a. §61 of {C1/1/14-15} “Through my role on the Working Group for the Initial

Complaint Review and Mediation Scheme, to which I refer above, I have since

become aware that in fact a large number of Subpostmasters-to my recollection,

something approaching half of those who participated in the Scheme - said that they

did not receive a copy of the full SPMC prior to or on their appointment, so it

appears that my own experience was far from out of the ordinary in this respect.”

b. {Day2/87:16} - {Day2/88:4} “Those figures that -- that figure or that proportion

that I mention here, as part of the initial mediation scheme, one of the things that

was produced by the independent investigators was a weekly or fortnightly chart on

the cases, an update for the whole of the working group, which I sat on. Under that

there were a number of headings for the types of issues that claimants were alluding

to in their statements, and there was a column for those that hadn't received

contracts yet, the full SPMC contract book in there. Off the top of my head, at the

end of the scheme of when there were about 139 or 137, of that order, something in

the order of 62 had stated they hadn't received subpostmaster contracts at the time.

-“

– 65 –
A(1) GENERIC EVIDENCE
Notice of Contractual Terms

151.5 On the date of branch transfer, Post Office provided Mr Bates {E1/9}, Mr

Sabir {E3/37} {E3/100} and Mr Abdulla {E4/51} with versions of a document

marked SERV 135 expressed in the form of a letter from Mr Williams, in each

case beginning:

“Recent findings by the audit teams have raised doubts in my mind as to how
conversant Subpostmasters are with certain very important Post Office
regulations. As a means of protecting the investment made by yourself and
Post Office Counters Ltd in the business I would like to draw your attention to
the following extracts, from your Contract.”.

Notice given of contractual terms by this means could not possibly be

effective, as each of these Claimants had already contracted with Post Office

by this date and were fully committed to opening the branch the following

day. Further, these documents were presented as a formality with no

explanation of their content or effect by the Post Office auditor (beyond

briefly identifying the document) - addressed further below at Branch

Transfer Day. An unexplained (and seemingly inexplicable) point is why

the versions provided to Mr Bates and Mr Sabir included liability for losses,

but the version provided to Mr Abdulla on the Modified SPMC (marked

SERV135B (MSPO)) {E4/51} did not.

151.6 For the NT LCs Post Office’s processes were markedly different. For Mrs

Stockdale and Mrs Dar, Post Office provided no equivalent of the “Brief

Summary”, and there as no SERV 135 or equivalent on branch opening.

These Claimants were simply sent the Preface and Standard Conditions, and

whereas Mrs Stockdale received the Operations Manual, Mrs Dar believes

she did not §66 {C1/5/13}.

151.7 A further point of distinction from the SPMC LCs, is that in the covering

letter / document headed “Instructions” provided with these documents to

NT LCs, Post Office did recommend that the SPM take legal advice {E6/37}

and {E5/138}. However there was no direction as to any parts of the

Agreement in respect of which legal advice should be taken, no information

– 66 –
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Notice of Contractual Terms

as to the context in which the clauses should be construed (particularly in

relation to the operation of Horizon, as addressed in Branch Accounts and

Horizon, above), and, in the case of Mrs Dar, Mr Trotter had already

indicated to her that such advice was not really necessary, and Mrs Dar had

told him that she would get her dad to look over it (which is what she did).

Oral Notice of Contract Terms

“The Checklist”

152. Four of Post Office’s witnesses provided evidence in their witness statement that during

interview they went through “the checklist” and/or Brief Summaries and/or explained the

contract terms during interview. This evidence as a whole was extremely

unsatisfactory.

153. Mrs Ridge, who interviewed Mr Abdulla in 2006, stated in her witness statement §11

and §12 {C2/13/3-4} (emphasis added):

“11. I would have run through the standard interview checklist at the end of Mr
Abdulla's interview, as I did in every interview I conducted. I have been shown by Post
Office's solicitors two different versions of the interview checklist {POL- 0031456/2}
and Exhibit BAT1/5 which my colleagues at Post Office used at different interviews.
From my recollection, these interview checklists cover the list I would have discussed
during Mr Abdulla's interview and cover the same key areas. Using the checklist
ensured I had covered all of the key areas in that interview. I would use this checklist
whether the applicant was applying for a role under the standard Subpostmasters
Contract or the Modified Subpostmasters Contract.

12. Using the checklist for reference, I would have explained to Mr Abdulla that:…”

154. The drafting of these paragraphs was confusing, if not misleading, in not making clear

that both checklists exhibited were those completed by Mr Trotter in 2013 (7 years later),

and that these checklists did not exist in 2006. Further Mrs Ridge’s oral evidence

significantly changed the position, during which she variously stated she used “a crib

sheet that went with more detail than the checklist” {Day10/56:6-8}, that she “had a different

sheet that I no longer have that gave me points to cover at interview” {Day10/61:19-21}, and

that “I had a standard checklist .. I got it when I first took up the role of interviewing

subpostmasters, one of my colleagues actually had it and gave it to me and that is where the later

one come from” {Day10/73:24} – {Day10/74:4}.

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Notice of Contractual Terms

155. Mr Abdulla’s interview file has certainly not been lost, there are a large number of

internal records of his interview which have been disclosed, which support an inference

that there was no checklist used as part of Mr Abdulla’s interview:

155.1 an internal memo dated 19 October 2006 to Mrs Ridge {E4/29}, including a

list of documents to be completed following the interview, which is signed

by Mrs Ridge on 22 November 2006 {E4/29/2} – there is no mention of a

checklist of contract terms in this document;

155.2 the letter dated 9 November 2006 sent by Mrs Ridge to Mr Abdulla inviting

him to interview {E4/30}, telling him what to expect at interview, asking him

to bring his business plan because that will be discussed, enclosing a brief

summary of conditions but in contra distinction not telling him to bring that

copy or indicating those terms would be discussed.

155.3 Various other related documents indicating record keeping was

comprehensive: {E4/31} letter sent to Mr Sandhu; {E4/32} Office Transfer

Information {E4/33} and {E4/34} Assessment Interview Summary Sheets with

notes of interview – no mention of contact terms; {E4/35} training

requirements; {E4/36} Interviewer Guidance Notes about exploring agents 5

year work history; {E4/37} report on candidate for SPM – recommendation

sheet; {E4/38} further report on candidate for SPM – recommendation sheet;

{E4/40} signed final decision; {D1.4/2/1} Post Office internal record of

Conditions of Appointment; {E4/16} Returned Interview File. Ticklist of

what is in the file – not a checklist of what was said at interview, again no

mention of a checklist of standard contract terms; {E4/52} Final transfer

arrangements document with a list of completed events after the interview.

156. It is clear that in 2006 there was no Post Office policy requiring interviewers to discuss

contract terms at interview (by reference to a checklist, brief summary or otherwise):

156.1 from the documents above, many of which are standard form; and

156.2 by comparison with the ACC policy documents which do exist where there

was a Post Office policy, e.g: {F1/38} ACC 04/2006 “Subject: Subpostmasters

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Interviews - Exploring Applicants Five Year Work History” dated April

2006, and {F1/73} ACC 03/2008, bringing in a requirement for interviews to

be recorded, from March 2008.

157. Mr Haworth was the second Post Office witness to claim that he used a checklist during

interview – he interviewed Mr Sabir for the Cottingley branch in 2006. His witness

statement §10.2 stated {C2/14/2-3} that the standard order of interviews he conducted

included (emphasis added):

“Running through the 'brief summary of certain sections of the Subpostmaster's
contract' (which I detail further below in paragraph 13 of my statement), together with
other areas set out in the interview checklist (this checklist is referenced in more detail
in the witness statements of Elaine Ridge and Brian Trotter)”

158. Thus Mr Haworth’s statement indicated that there was a single checklist, which had

been used by him, Mrs Ridge and Mr Trotter. That evidence obviously could not bear

scrutiny, and Mr Haworth (without advance notice to the Claimants) gave evidence in

chief which completely changed his account {Day11/10:17-25}, stating:

A. I just want to clarify that the checklist I used was my own checklist. It is not
exactly the same as the ones shown to court last week but it did contain the
same key points. Mine pre-dated the time of the electronic version and also the
time when interviews were recorded and it was a version that was kept by
myself and didn't go anywhere.

159. Almost identical points arise as above for Mrs Ridge – there is no disclosure of the

document allegedly used, none of the many documents on Mr Sabir’s Cottingley file

refer to any checklist or contract terms, the letter sent to Mr Sabir pre-interview was in

the same terms as that sent to Mr Abdulla, and the absence of any Post Office policy as

at 2006 equally applies.

160. Mr Haworth’s oral evidence was again confused and confusing. He said he “would

imagine” his checklist was the same as Mrs Ridge’s, although it was established he had

not in fact seen it {Day11/17:5} – {Day11/18:8}. Yes he and Mrs Ridge gave differing

accounts in their witness statements about what they “would have” said. On the issue of

suspension and termination:

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160.1 Mrs Ridge said in her witness statement that “using the checklist for reference”

she “would have” explained §12.9 {C2/12/3} (emphasis added) “That the

contract could be ended at any time by Post Office, and that if there was anything

untoward that happened at the branch, that Post Office could suspend him or end

the contract immediately. I wouldn't have mentioned the 3 month notice period

specifically during the interview.”

160.2 Cf. Mr Haworth who said he “would have” explained “That the 3 month

notice period worked both ways, whether Post Office or the Subpostmaster wanted to

end the relationship. I would give an example such as the Subpostmaster wanting to

solely focus on the retail element of their business. Although it was unpleasant to

talk about at an interview, I would say that if something untoward happened such as

a major breach of contract, Post Office could end the relationship immediately

without giving 3 months' notice” §13.7 {C2/14/4} (no mention of suspension).

161. Mr Carpenter was the third Post Office interviewer to give evidence. He had

interviewed Mrs Stockdale in 2013, by which time there was a standard form interview

checklist – {F1/157/69} – part of the Agency Application File, with a disclosure date 1

July 2012. Mr Carpenter’s statement neither referred to this standard form, nor the

interview checklist he in fact ticked off {E6/175} (disclosed after the date of Mr

Carpenter’s witness statement).

162. There is recording of this interview which Post Office has said is encrypted and they are

unable to decrypt (although following the Court’s Order, further efforts are now

required to be made). As matters stand, the Court cannot be confident that Mr

Carpenter in fact went through the items on the checklist as he ticked off. If he did, the

Court is invited to find that the main part of the interview was Mrs Stockdale’s

presentation, and this took up the majority of the interview {Day11/98:7-9}, and any

discussion of the items on the checklist was likely to have been cursory.

163. The final Post Office interviewer to give evidence was Mr Trotter. He had completed

electronic and hard copy checklists dated 9 December 2013, and had exhibited them

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{E5/73/2} and {E5/35}. As above, these had been referred to by Mrs Ridge and Mr

Haworth.

164. In his witness statement addressed to the content of the 9 December 2013 interview (cf.

§15 {C2/13/4}), Mr Trotter stated that he would have covered the items on the checklist

(§5, §8 and e.g. §8.3.3 {C2/13/1-2}).

165. However a recording of the 9 December 2013 interview (disclosed after the date of Mr

Trotter’s witness statement) revealed that Mr Trotter had not covered any of the items

on the checklists he had ticked off (and indeed signed on the hard copy {E5/73/2}) – see

the transcript {E5/74.2}.

166. Mr Trotter’s witness statement remained unamended until he was invited to “clarify” his

evidence in chief to say that he had not in fact covered the checklist at all (and was led

by Mr Cavender QC to give the explanation he did {Day11/135:15} – {Day11/137:12}. No

notice was provided to the Claimants in advance of this evidence in chief being given

nor was it committed to writing.

167. Mr Trotter had known for a long time, perhaps a couple of months that the recording of

the interview evidenced he did not go through the checklist - Mr Trotter said he had not

wanted to correct the impression in his witness statement that the checklist had been

covered {Day11/152:8-23}.

168. Mr Trotter’s evidence seeking to justify what had happened was evasive and lacking

credibility, in particular seeking to place the completion of the checklist as having been

at the 4 June 2014 meeting rather than the 9 December 2013 meeting, despite (1) his

witness statement as above, (2) there being two complete native files showing he

completed the electronic checklist on both occasions ({E5/15.1} and {E5/91.1}) and (3) it

being Post Office’s positive case that the second meeting was a relaxed occasion when it

was unlikely there was any discussion of legal advice – this was the basis of Mr

Cavender QC’s cross examination of Mrs Dar in relation to what was said about legal

advice {Day 5/31:17-24}.

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What was Discussed?

169. The LCs do have positive recollections of the interviews (noting e.g. Mr Sabir’s response

in cross examination on this {Day3/110:10-24}, including on matters which have been

independently corroborated, e.g. Mrs Dar, who almost perfectly remembered the 9

December 2013 interview, giving the account in her witness statement (including

placing legal advice at the second interview) prior to disclosure of the recording and

creation of the transcript {E5/74.2} addressed further below.

170. In these circumstances, and given the state of Post Office’s evidence as explained above,

the Court is invited to proceed on the basis that, unless an individual LC positively

recalls that an issue was discussed during interview, it was likely not mentioned, or if it

was, it was given so little significance to be meaningless. Post Office’s pleaded “would

have” case in relation to these interviews for each LC (see e.g. Mr Sabir IDEF §16

{B5.3/3/6}) is unsustainable.

Outgoing SPMs as a Source of Information

171. Post Office’s efforts to rely on outgoing SPMs as a source of information about contract

terms or Post Office practices do not stand up to scrutiny.

172. The Claimants rely on the evidence of the LCs in their witness statements on this issue

(WS Bates §22 {C1/1/5}, §126 & 127 {C1/1/27}; WS Stubbs §14, 18 {C1/2/3-4} §58-60

{C1/2/13-14}; WS Sabir §17, 18 {C1/3/4} §107 {C1/3/18}; WS Abdulla §33 & 34 {C1/4/7-8}

and §80 {C1/4/15}; WS Stockdale §27 {C1/6/6}, §90-91 {C1/6/19} and WS Dar §19 {C1/5/4}

& §107 {C1/5/21}), and as further explained in oral evidence, e.g.:

172.1 Mr Bates {Day2/32:14} – {Day2/33:6}:

Q. So surely in order to see whether or not you wanted to sign this agreement,
wouldn't you want to see the contract of Mr Savage which was an essential part
of this condition?

A. The subpostmaster side of it was very much to be negotiated with Post
Office. I find it odd that I would ask Mr Savage for the terms that he had been
employed under because they could have been very different to the ones I was
going to be taken on board –

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Q. That is true. But in order to understand what you were signing up to here,
surely -- and Mr Savage's contract is a central part, wouldn't you have wanted
to know what the effect of that condition was upon you and your obligations?

A. I can see what you are asking, but my concern was under -- was what were
the terms I was going to be employed by Post Office, rather than those that
have been agreed with Mr Savage and Post Office.

172.2 Mr Abdulla {Day4/16:8} – {Day4/17:14} :

Q. We will go through the documents in a minute, if that is all right. Did you
ask Mr Sandhu about his relationship with Post Office and ask for a copy of his
contract when you were chatting with him?

A. Sir, my Lord, discussions with Mr Sandhu, as I said before, were regarding
the lease. Anything regarding the contract I would have assumed to be
personal and I wouldn't have asked for it. No one from the Post Office told me
to ask for a contract from Mr Sandhu, to look through his terms, to look
through anything regarding his contract. And if they had told me, I would
have asked Mr Sandhu. But because they didn't, I did not ask Mr Sandhu for
his contract to have a look at his terms and conditions. And I presume even
now that that would be a personal thing to him, and why would he give that to
me to look at? If you see.

Q. Would it be personal? You would expect the terms to be standard terms,
wouldn't you? A. There would be standard terms and there would be personal
terms to his position.

Q. So there would be no harm in showing you the standard terms, would
there?

A. I am sure it would have been all in one. And as I said, it didn't come up. It
wasn't something that was highlighted by the Post Office to do. And if it was, I
would be concerned as well, because why are they telling me to have a look at
his? Surely there must be -- it's a red flag to me. If they say to me, "Okay, you
need to look at his terms and conditions or his contract", that would say to me
that there is something wrong here and I need to seek legal advice.

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173. Mrs Rimmer was the primary Post Office witness positing outgoing SPMs as a source of

information (§61 -62) {C2/4/13}, including Post Office’s case that this “would include

details of the contractual terms” and “have access, via the outgoing Subpostmaster, to other

information such as operations manuals, and other guides/instructions.” In cross examination,

Mrs Rimmer:

173.1 accepted the obvious proposition that the outgoing Post Office was not

authorised by Post Office to convey information about contractual terms

{Day7/42:1-17};

173.2 accepted that section 1, §16 {D2.1/3/69} entitled “Divulgence of Official

Information, Correspondence and Interviews” states: "The unauthorised disclosure

or use directly of any information or document which has come to the knowledge of a

subpostmaster or sub-office assistant through the work of his sub-office is forbidden"

was unhelpful in Post Office had intended to permit the outgoing SPM to

talk through the details of the contract and how it works day to day

{Day7/41:9-25}; and

173.3 ultimately conceded that, contrary to the assertion in §62 of her witness

statement {C2/4/13} “Examples of the type of information that would be available to

potential Subpostmasters would include details of the contractual terms”, her

expectation was that incoming SPMs would obtain information about branch

figures and accounts from an outgoing SPM, not contractual details

{Day7/42:18} – {Day7/43:18}:

Q. So at paragraph 61 of your witness statement {C2/4/13}, you say: There was a
strong and, I would say, completely reasonable expectation that applicants will
obtain
a significant amount of information from the outgoing subpostmaster ..."
What you are really talking about there is things like figures, that sort of thing?
A. Yes, customer make-up --

Q. Not the sort of things I have been talking about, contractual details, being forced
to roll over, transaction corrections, that sort of thing?

A. Uh-huh.

MR JUSTICE FRASER: And you think that is a completely reasonable expectation,
do you?

A. About the products and services?

Q. MR JUSTICE FRASER: Well, whatever information Mr Green was asking you
about. Should I read paragraph 61 as being restricted to products and services


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A. I think it was more about the outgoing subpostmaster can tell you the specifics
about that particular branch. So
in the network we have all different sizes of
branches, from teeny-tiny things up to ones in WH Smiths. And it
is -- the best
course of feedback about that specific branch would be from the person who is
currently running it.

174. Again, Post Office’s “would have” case on this issue (e.g. Mr Sabir IDEF §14 {B5.3/3/5})

entirely fails.

Branch Transfer Day

175. The LC evidence was consistently to the effect that branch transfer day was rushed and

hectic, and there was no detailed discussion or explanation of any of the documents

presented for signature by the Post Office auditor: Bates, §73-77 {C1/1/17-1:}; Sabir, §95-

97 {C1/3/16-17}; Abdulla, §55-61 {C1/4/11-12}; Stockdale, §81; {C1/6/16}; Dar, §94-97

{C1/5/18}.

176. As further amplified in oral evidence, by e.g. Mrs Dar:

(By reference to the Acknowledgement of Appointment) “Well, at this time it

is not simple whatsoever. There was a huge mess by that auditor, who was the

signature of witness on there, and she had asked me to sign that so she could leave, to

sign things off. It was just a quick "Oh, sign here", behind the counter. And it is not

nearly as simple as that. It was less than simple.” {Day 5/49:12-17}

“And you are in a hurry, you have opened late, you have an auditor who has caused

an absolute shambles -- sorry to speak openly, but for the week before, and to be told

"Just sign this" ... Sorry.” {Day5/50:7-11} – at this point Mrs Dar became

upset.

177. Post Office’s case as to what “would have” been explained could not be supported by

Post Office’s own witnesses.

178. Taking for example Mr Sabir, and the transfer audit conducted by Mr Webb:

178.1 IPOC §16 “On the date of Branch opening, the Defendant required the Claimant to

sign multiple documents, which were not explained to him, including:…” the

Acknowledgement of Appointment, SERV135 and ARS110.

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178.2 IDEF §24(2) {B5.3/3/9} “The allegation that these documents would not have been

explained to him is denied. The transfer paperwork would have been explained by the

Post Office auditor, Michael Webb, …”).

178.3 Mr Webb’s witness statement was that §14 ‘I would briefly explain the

documents to the incoming Subpostmaster” {C2/11/3}.

The reality of this as established in cross examination was essentially that

Mr Webb would do not more than identify the document: {Day10/168:13-

19} and {Day10/169:15} - {Day10/170:4}:

A.…. So this is like a sort of final
acceptance of the position of subpostmaster. That was
what I would explain to the postmaster.
Q. You would say "This is your final acceptance of the
position of --"
A. Yes, this is accepting the acknowledgement of
appointment as subpostmaster, yes.

MS DONNELLY: So as I understand your brief explanation, you are
effectively identifying the document to say: this is
your
[acknowledgement] of appointment, something like
that --
A. Yes. It's very much a formality at this stage, I would say, because this
is the point where the deal is going through. Very often we would
spend quite some time waiting to get confirmation that the cash had
gone through between the solicitors and the banks, and sometimes the
whole thing folded at that point because that didn't happen. So it really
was just a formality at that point.

Q. Yes, and these documents are being presented as a formality?

A. Yes. We have gone a long way to get to this stage.”

178.4 Mr Webb would in fact have been unable to himself provide further useful

explanation. E.g. {{Day10/170:7} – {Day10/171:4}:

Q. In your witness statement at paragraph 15 {C2/11/3} you
say:
"I was not often asked any questions about these
documents on the day of a transfer audit. Having done
several hundred audits, including transfer audits, by
September 2006, I was very familiar with the documents
that needed to be signed and believe I would have been
able to answer most, if not all, questions myself."

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A. Yes.
Q. Could we go, back, please, to {D1.3/4/1}. If asked what
are postal instructions, what would you have said?
A. I would have had to refer that back to either our HR
department or the contract advisor. I was assuming by
this point that the postmaster would have had these,
like the contract, and he was just signing as
an acknowledgement of the appointment, it was referring
to those.
Q. It wasn't obvious to you what --
A. It wasn't really, no. As I say, we were really doing it
because we were the people on site that could witness
the postmaster's signature, plus the fact it was when
the actual deal was going through. That is why we would
be doing this.

178.5 Mr Webb was (as per the Claimant’s case) simply presenting the documents

for signature, as a formality {Day10/171:22} - {Day10/172:21}:

Q. Would you accept that at the point that these -- I think Mr
Longbottom said about 12 or 13 documents are presented to the
incoming subpostmaster, in reality that person has no choice but to sign
them?
A. They are a formality, really. We have come a long way to get to this
point. I have never had anybody dispute it or be in any doubt as to
signing them. I guess the whole thing would fold if they didn't. But
there is no pressure to do so at all.
Q. They have no real choice, though, have they? They have to sign what
is presented to –
A. There is nobody twisting their arms to make them do it, it is really
just a formality, because that is the day
when the whole thing is being
made official on the legal side.
Q. I think you are not presenting these documents and saying "Read
this extremely carefully and decide whether you want to sign it or not"?
A. No.

Q. You are presenting them for signature?

A. Yes. We are explaining what it is about, but they have had sight of
the contract by this point, we are
assuming, and they have come a long
way down the line to get to this stage, so it is very unlikely anybody is

going to want to change their mind.

179. Other evidence by Post Office witnesses was to similar effect:

179.1 By the stage of branch transfer SPMs were already contractually committed,

per Mr Williams {Day6/163:8-19}:

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Q. That is very fair, Mr Williams. The question I wanted
to ask you
about these documents is these are documents signed on branch
transfer day on the date of appointment?
A. Yes, they are.

Q. And by that stage subpostmasters are already committed, aren't
they?

A. They are, yes.
Q. So they are contractually committed and they are opening a branch.
So they pretty much have to sign whatever they are given at that point
for the branch to open?
A. That is not an unfair statement.

179.2 This was agreed by Mr Longbottom {Day10/147:22} – {Day10/148:2}

Q. Can I ask you this. When you present this document at {D1.6/5/1}, Is
it your understanding that the subpostmistress has already contracted
with the
Post Office, or not?
A. My understanding as to that question is that yes, they would have
done.

179.3 Mr Longbottom gave evidence that an incoming SPM would be given

around 7, or with duplicates, 12 or 13 documents to sign {Day10/153:11-15}.

179.4 Mr Shields’s evidence was that he had no working knowledge of the

contracts, and had not ever read it {Day10/151:10-22}:

Q. As far as liability for losses was concerned, was there any material
difference so far as you understood between the contractual provisions
in the two contracts?
A. I wouldn't be aware of that with the postmasters contract.
Q. So if a postmaster asked you about this document on the day of
branch transfer, you wouldn't be able to answer?
A. If it was something that I couldn't read off there and understand, no.
Because I don't issue contracts.
I have never read the contract, I might
have read extracts from it, but I wouldn't want to give a postmaster
what could be termed advice on something that I wasn't completely
conversant with.

Relationship between Post Office and SPMs

Long term and Secure

180. The LCs witness evidence was consistently that they considered the position of SPM

with Post Office to be a long term and secure position, and they trusted Post Office:

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180.1 “A key attraction to working with Post Office was that it would provide secure

employment, based on the fact that it provides a community service and has an

established brand in the community.” (Bates, §11) {C1/1/3}

180.2 “I believed that Post Office would support me during this difficult time of my

husband’s death and I placed a large amount of trust in them.” (Stubbs, §14)

{C1/2/3}

180.3 “Post Office was a well-respected name in the community and I trusted that they

would be a good company to work with.” (Sabir, §9) {C1/1/3}.

180.4 “I perceived Post Office to be a reliable, trustworthy, national institution – a

contrast to the pharmaceutical industry in terms of stability and the way it dealt

with people.” (Abdulla, §9) {C1/4/2}

180.5 “Running a Post Office, together with a retail business, sounded like a safe and

secure option as I would be backed by the help of a large, trusted institution.”

(Stockdale, §13) {C1/6/3}

180.6 “I thought Post Office was a big company with old fashioned values, which was at

the centre of the community. I expected Post Office to be a good company to work

with, and that I would be able to build a food future for my family. Post Office had a

respectable reputation, and throughout the appointment process, Post Office came

across as approachable and supportive. I remember they provided me with glossy

brochures about how they would support and help me and that I could build my

future with them.” (Dar, §8) {C1/5/2}

181. The Post Office standard form business plans indeed reflected the long term nature of

the commitment, by requiring SPMs to give an account of their long-term plans /

projections for the branch. See e.g. the versions sent to Mr Sabir and Abdulla which

required 1, 3 and 5 year objectives to be provided (WS Sabir §28 {C1/3/5-6}; WS Abdulla,

§24 {C1/4/5}); and the version sent to Stockdale required a 1 and 5 year forecast (WS

Stockdale, §31 {C1/6/6-7}).

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Investments and Goodwill

182. As outlined in the Claimants’ Opening (and wholly unchallenged):

182.1 The LCs made significant investments in their relationship with Post Office.

In many cases, prior to branch opening, but also continuing thereafter. The

nature of the investments included purchasing or leasing premises and

goodwill, fixtures, fittings and stock: Bates paid £175k for the freehold,

goodwill and fixtures and fittings, Sabir paid a total of £9,150 in deposits for

the two branches as well as a total purchase price of £55,000 plus stock for

the Cottingley branch, and £36,000 for the goodwill of the Crossflatts branch.

Abdulla paid £80k plus stock, and entered a 12 year term lease at £14.5k per

annum, Stockdale paid £1,309.77 to the former SPM for newspaper round

balances and £900 in relation to the lease assignment. These financial

commitments were financed by either savings (e.g. Bates), family loans (e.g.

Abdulla), and/or in most cases, by long-term bank loans on commercial

terms (e.g. Bates had a 15 year loan with RBS, Sabir had 10 and 8 year loans

with Lloyds, Abdulla had a ten year loan with Barclays Bank).

182.2 All of the LCs operated the branch together with connected retail business –

consistent with the Defendant’s evidence across the network to this effect.

Two of the LCs (Bates and Stubbs) resided in residential accommodation

connected to the branch, a relatively common arrangement as reflected in s13

clause 8 of the SPMC, and e.g. Post Office’s standard form application forms.

182.3 The LCs were in many cases required by Post Office to carry out updating or

more substantial renovation works to the premises before or soon after

branch opening. For the SPMC LCs Sabir and Abdulla, these requirements

were imposed as “Conditions of Appointment”, and consisted of cleaning

and clearing the interior and repainting the exterior of the branch and

refurbishing lighting, ceiling and carpets. For the NTC LCs, Stockdale and

Dar, Post Office required substantial refit works to be carried out, which

were largely paid for by Post Office, but nonetheless with obligations on the

LCs to arrange, undertake and/or pay for parts of those works.

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182.4 The investments made by the Claimants continued during their

appointment, including for Bates, a 25% deduction from his remuneration

made by Post Office during the first 12 months’ of his appointment, for all

LCs, by the employment of assistants, and substantial refurbishment works

to the premises carried out by Bates (in mid-2000) 65 and Stubbs (in 2009).

183. The Claimants also rely on Post Office’s positive assertion in the GDEF §79(2) {B3/2/38}

“Post Office incurred long-term and expensive commitments in respect of the Subpostmaster

relationship, including by providing valuable cash, stock and equipment to Subpostmasters on an

unsecured basis”, admissions in individual LC defences, and the evidence of Mrs Van

Den Bogerd in her witness statement at §65.5 (re provision of equipment and

infrastructure) {C2/1/18-19}, and §100 (high cost of training) {C2/1/30}, and the evidence

of Mr Dance as to investment in NT branches §31-38 {C2/5/10-11}.

184. Further supportive evidence on these issues was provided by Post Office witnesses in

their oral evidence:

184.1 Mr Williams, when asked if the SPM would be looking “long term” when

taking on the role as they had to agree 75% remunerations for the first 12

months, responded this was “not unfair” {Day 6/143:3-9}.

184.2 Mr Williams accepted that all SPMs have to obtain a property interest in the

relevant branch {Day6/169:19-22}.

184.3 He further accepted that SPMs made investments on Post Office’s

instructions, for example Mr Bates’ Conditions of Appointment {D1.1/1/3}

stipulated that Mr Bates had to provide a National Lottery terminal at his

branch. Mr Williams accepted that this was to be provided at Mr Bates’ cost,

who would also expect the potential benefits of the national lottery receipts

{Day6/143:18-25}-{Day6/144:2-11}.

185. Part of a SPMs investment is purchasing the branch (and usually associated retail

business) from the former SPM, which will include the goodwill of the existing branch.

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186. The unchallenged evidence of Mr Bates was that he purchased the goodwill of the

Craig-y-Don Branch and associated retail business, the Wool Post, for the cost of £65,000

which was reached by applying a multiplier of 1.5 to the annual remuneration of the

Craig-y-Don Branch (at §26.1) {C1/1/6}.

187. The evidence of Mrs Van Den Bogerd in her witness statement was defensive on this

issue. Whereas she identified as a benefit to the SPM use of the Post Office brand

without having to build up their own goodwill (at §65.1{C2/1/18}), and identified that a

SPM purchasing an existing Post Office will usually have to pay more for it if there is an

existing Post Office business (at §67.2 {C2/1/20}), she nonetheless sought to contend that

SPMs do not lose the ability to recoup their capital outlay if terminated on the basis that

a branch is not a “saleable” asset {C2/1/20}.

188. This position did not withstand scrutiny. ACC 37/20 {F2/28} expressly records that:

“Post Office Ltd. has long held the view that there is an inherent commercial benefit to a retailer

in operating a Post Office branch” and makes provision for introductory payments to be

made to Post Office where the incoming SPM does not “buy-out” the outgoing SPM

{F2/28/2}. On this basis, Mrs Van Den Bogerd ultimately accepted that this introductory

fee represented a charge for goodwill {Day9/7:9}- {Day9/9:21}:

Q. In the light of considering that document, would you like to reconsider your
answers to his Lordship earlier?
A. This is an old one. I am referring to one that came in after this and we did --
I forget the year it was, but we actually stopped charging introductory fees at
all.
Q. Yes, but what I was asking you about was the practice, historical practice of
charging introductory fees, and I am going to suggest to you now that, in
substance, the introductory fees essentially represented a charge for goodwill.
A. In reading this document, yes, I agree.
Q. You would accept that?
A. Yes.

Expectations re: Termination

189. The significance of these investments and/or commitments by SPMs formed part of their

understanding that SPMs could not simply be terminated on 3 months’ notice or

summarily other than if something very serious had happened. For example:

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189.1 Mrs Stubbs {Day2/178:19}-{Day2/179:7}:

Q. What you seem to be saying is you thought you could only be terminated if
you had done something fundamentally wrong. What I am suggesting to you
is you must have realised , like in any contract actually is normally a provision
that it can be terminated on notice. Are you saying you didn’t realise?
A. No, I didn’t realise that actually. It was because I owned the building.
I owned the building. I owned the post office building inside . Yes, I didn’t own
the money, I didn’t own the stock , but the majority of stuff connected with the
post office I owned and I felt that , yes , I couldn’t be terminated; just told to
pick up and go away.

190. Post Office’s own evidence was indeed that its practice was not to terminate on 3

months notice, unless either (1) something had gone badly wrong or (2) Post Office

made a substantial payment to compensate the SPM’s loss of investment. Mr Breeden

{Day7/126:14} - {Day7/127:7}

“Q. It's right, isn't it, that the broad picture over the years is that Post Office
doesn't actually use the termination provisions, even on three months'
notice, unless something has gone badly wrong at the branch?
A. Yes.
Q. Is that fair?
A. Yes.
Q. And it only compulsorily closes branches under various programmes
which I think you and Angela Van Den Bogerd have described, various
change programmes?
A. Yes.
Q. And in relation to those there have been various agreements in relation to
remuneration to be paid by way of discretionary fund payments to the
affected subpostmasters?
A. Under the change programmes there are terms set out for those who are
leaving the business. I'm not sure whether it links to the discretionary
comment you made there.”

191. Post Office clearly has a long established practice that when it terminates an

appointment by compulsory closure, very substantial payments are made to

compensate for loss of investment – see the various discretionary fund agreements

{G/84}, and Post Office’s letter sent to Mr Bates on 9 April 2002 {E1/34/2} (emphasis

added):

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“Post Office Ltd has reached a provisional agreement in principle …. Outgoing
subpostmasters would receive a payment equivalent to 28 months of their
remuneration.

This amount is intended to help compensate urban Subpostmasters leaving the
network for loss of business and investment, and for any exit costs which they may
incur. Our proposals for the scheme are based upon the long standing arrangements
which have been operated by Post Office limited and the National Federation of
Subpostmasters through the Joint Discretionary Fund.”

192. Again the evidence of Mr Breeden was instructive: {Day7/127: 19-23} and {Day7/130:10-

20}

Q. So that was 26 months at that stage. The purpose of that is in order to
compensate the subpostmaster for really loss of their investment and the
commitments they have made long-term, as it were?
A. Yes, the closing of an office on a permanent basis.”


Q. Just pausing there. The way it works is, as you very fairly pointed out I
think in your answer to an earlier question of mine, there is the earlier
agreements, the long-standing arrangements about the discretionary fund,
and then there are these particular agreements reached in relation to each
programme which may be based on the discretionary fund arrangements but
are actually specific to the particular change programme?
A. Okay, yes.
Q. Is that a fair summary?
A. Yes, I think that is my understanding.

193. See further on these the additional matters set out in Suspension and Termination,

Termination on Notice, below.

194. Mr Cavender QC chose to emphasise in his oral opening the degree of reciprocity

between the notice which Post Office was entitled to give, and notice given by a SPM, in

hyperbolic terms as follows {Day1/97:16} – {Day1/98:9}:

It would be a relationship where neither party could
extricate themselves. It would be utterly exceptional
that where the subpostmasters are our agents, they can't
be terminated on notice in accordance with the terms of
the contract, putting the assets of the Post Office at
risk for still longer period.
It cuts the other way, of course. These terms my
learned friend is implying I am assuming must be mutual
on termination. So if you are going to have, say,

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a year's notice, which I think is his favourite number,
that would be reciprocal. So the postmaster would, on
this score, have to be kept in post for a year even
though he didn't want to.
It's very odd. It's almost akin to those cases on
slavery and things and contracts and not wanting to
perform a service but being made contractually to do so.
It is completely uncommercial to have a term of that
type, of that length, to keep an agent in position when
he wants to go.

195. In fact, the evidence of both LCs and Post Office was to the effect that outgoing SPMs

were forced to stay in post even though they didn’t want to, as they awaited the

appointment of an incoming SPM:

195.1 The unchallenged evidence of Mr Sabir in his witness statement at §127

{C1/3/23} was as follows:

“I gave notice of resignation In respect of Crossflatts on 6 November 2008, as
is recorded in Post Office's letter dated 10 November 2008 [MS1/301-305].
Post Office told me In that letter that my provisional last day of service was 6
February 2009. At this time Mr Ahmed wanted to work full time in
accountancy so I would not have a branch manager, and without him at that
time I thought I would be better focusing on the Cottingley branch. However
Post Office told me that I had to stay in post at Crossflatts until 1 found a
buyer and otherwise my contract would continue, so in fact this resignation
was never effective. This did fit my expectations about contracting with Post
Office. I had spent a huge amount and couldn't leave without finding a buyer,
and never expected Post Office to make me leave without finding a buyer.”

195.2 Other LC evidence was to similar effect:

a. Mrs Stubbs had to provide 3 months’ notice before Post Office would allow

her to market her Branch for sale {Day2/151:18-22}, she was aware that she

would have to stay beyond those 3 months {Day2/180:4-10}.

b. Karen Collinson, the outgoing SPM to Mrs Stockdale also had to stay

beyond the 3 month notice period, despite, as David Longbottom stated,

her having tried to leave the business for some years {Day10/128:9}. David

Longbottom further accepted that there can often be delays which mean the

date of transfer might change so that the outgoing SPM is left in post

{Day10/128:14} – {Day10/129:6}

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c. This was also the experience of Mr Rooney, Mr Sabir’s outgoing SPM

{Day7/132:7-25},{Day7/133:1-25-}-{Day7/134:1-24}.

195.3 Mrs Rimmer accepted that sometimes it takes longer to find an incoming

SPM to take over and, therefore, the outgoing SPM would be waiting to find

out when the transfer date would be {Day7/26:7-10}.

195.4 Mr Trotter later freely volunteered the following {Day11/158:24}-

{Day11/159:6}:

A. I think there was an opportunity for Louise to apply for 23 the post office.
We already had a post office there.
Q. But the postmaster wanted to give it up?
A. Yes, but he could only leave on the condition he found a new agent.
Q. So he couldn’t leave unless he found a new agent?
A. Yes.
Q. So he was stuck running it until a new agent was found?
A. Well , he was running it , yes . I wouldn’t use the word “stuck”.”

Similarity to Employment

196. The Claimants do not contend that SPMs were in an employment relationship with Post

Office, but do say that in a number of respects their relationship to Post Office was akin

to, or very similar to, employment.

197. This degree of similarity is underlined by Post Office’s sensitivity to this issue, notably

Post Office policy guidance that terms such as “employee”, “employment”, “salary”,

“dismiss and “leave” should not be used {F3/14/14}. Noting the evidence of Elaine Ridge

{Day10/77:3-23}:

“Q. MR GREEN: There is quite a lot of sensitivity about personal service
within Post Office, isn't there?
A. Yes.
Q. You have to be terribly careful not to say the word "employee" or ...
A. Yes.
Q. Yes? I saw you laugh there, you have probably been told that lots of
times.
A. Yes.
Q. In the appeal guidance that we saw earlier in the trial there are phrases
not to mention, one of them is ”employee”.
A. Yes.

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Q. And when you were conducting your interviews for applicants , you had
to avoid that word or any similar phrase, didn’t you?
A. Yes, I did. But that is why I would say it is a contract for service .
Q. The reason it was sensitive was because in lots of respects it is quite
similar to employment.
A. Yes. ”

198. It is certainly easy to use terms which signify employment when describing SPMs, as

indeed e.g. Mr Cavender QC on a number of occasions did, e.g. referring to “paying off

an amount by deduction from salary and during the repayment period further loss occurred”

{Day/48:11-17}, referring to the job description “What I suggest to you is that, as is normal

with jobs, you are sent a job description in advance of the interview in order for you to discuss at

the interview the role…” {Day 2/35:22}, and indeed Mr Williams, who referred in his

evidence to the “tools to do the job” {Day 6/164/:13-14}.

199. Post Office in fact did give SPMs the tools to do the job, noting e.g. the long equipment

list at {D1.5/2/18} for Mrs Dar, including signage, safes, electronic scales, alarms, bureau

de change rate board, counter desking, cash funding unit, Horizon, secure counters,

drop bag fittings, Post & Go, Coin Cabinets, A1 point of sale frames, self inking date

stamp etc..

200. SPMs were treated by the Inland Revenue as “employed earners by virtue of being office

holders with emoluments chargeable to tax under Schedule E”, subject to SPMs securing

agreement with the Inland Revenue to having their remuneration and income from

private business amalgamated and assessed for tax annually under Schedule D {F1/143}.

Mrs Stubbs was, for her first 18 months as a SPM, paid PAYE and had her tax and

national insurance deducted at source {Day2/163:21} – {Day2/164:16}:

Q. An employee would not normally be responsible to an employer for
things of that kind. What I am suggesting is that feature must have
registered with you to recognise this wasn't an employment relationship or
anything like it?
A. I have to say it didn't -- it might have resonated with him, it didn't with
me. And I still find it difficult to work out the actual difference between an
employee and an agent, although I was told when I took over eventually that
I was an agent, although for the first 18 months that I was in post, Post Office
paid me as an employee and deducted income tax at emergency rate when
my salary should have been nil tax, and it took some considerable time --

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Q. At what stage are you speaking of now?
A. When I took over as subpostmistress.
MR JUSTICE FRASER: So for 18 months you were effectively on PAYE, were
you?
A. Yes, and it took some negotiation to actually persuade the HR
department that I was nil tax and that I was, as you say, an agent and not an
employee.”

201. Personal service is evidently a point of particular sensitivity for Post Office. It

transpired in the evidence that Post Office had a practice of ascertaining during

interview whether the applicant SPM intended to provide personal service, and then

recording the provision of personal service internally as a Condition of Appointment,

without sending this record to the applicant e.g. {D1.4/2/1}, signed by Mrs Ridge in

relation to Mr Abdulla’s appointment. Mr Williams fairly accepted that this document

“reflected what had been agreed at interview” {Day6/151:13-14}, and Mrs Rimmer accepted

that one of the things Post Office wanted to record during the interview was SPM’s

agreement to personal service and how many hours the SPM would work {Day7/5:13-

18}.

202. The entire document is clearly headed “Conditions of Appointment for the Charlton

Branch” and is signed by the contracts advisor. Strained efforts to construe that

document so as to exclude personal service as a condition of appointment were

apparent in the evidence of Mrs Ridge on this issue by {Day10/76:10} – {Day10/77:1},

including in re-examination {Day10/103:2-22}.

203. The fact that Post Office imposed as a contractual requirement on SPMs a requirement

to notify if absent from the branch for more than 3 consecutive days, and provide the

name of the person who would be substituting (Section 3 {D2.1/3/19} and Mrs Ridge

{Day10/78:20}- {Day10/79:1-12}) signifies that personal service was in fact required.

204. The degree of Post Office control over SPMs is a significant feature of the relationship, in

many ways akin to the degree of control between an employer and employee. An

exemplar is Mrs Van Den Bogerd’s agreement that the TC dispute process was similar

to an employee grievance process {Day8/185:2-7}, in circumstances where Post Office

determines the outcome and hears the appeal. Many other aspects of the relationship

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reflect a similar high degree of power, discretion and control on the part of Post Office,

as otherwise addressed herein.

Role of the NFSP

205. Post Office has repeatedly emphasised the role of the NFSP as an apparently

independent voice for SPMs:

205.1 in respect of contract negotiations, where SPM’s interests have apparently

been represented by the NFSP: WS Beal §36 {C2/2/27} and §40-41 {C2/2/9}, Mr

Beal then emphasising the NFSP’s alleged independence §45 {C2/2/9};

205.2 in respect of Horizon, WS Van Den Bogerd §98 {C2/1/29} “The NFSP has

publicly supported Post Office’s view that Horizon is robust”;

205.3 and in respect of the litigation, Defendants’ written opening 13 {A/2/6}

“Furthermore, it should be noted that the National Federation of Subpostmasters

(“NFSP”), which is the organisation which represents SPMs and their interests

nationwide, does not support this action and does not endorse the factual premises of

the Claims.” (emphasis as original).

206. The true position as established through cross examination of Mr Beal, was very

different. Contrary to Mr Beal’s evidence, the NFSP is not independent of Post Office –

it is financially dependent on it. The Claimants note:

206.1 the 19 April 2004 Purchase Order for £250,000 “Contribution towards NFSP’s

union activities in support of Network Transformation” {G/92/1};

206.2 George Thompson’s email dated 2 August 2013 laying out a framework for

potential agreement in relation to NT leavers together with his proposals for

a 15 year contract as follows (emphasis added):

• Financial agreement

• £500k payment 2013-14

• £1.25m payment 2014-15

• £1.25m payment 2015-16

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• £2.5m payment 2017 onwards to 2028

• This process allows for the drop off of our present membership fee, and
facilitates the change from check off towards POL charging a fee from
all agents which is passed directly to the NFSP.

• Memorandum of Understanding to be worked on with rights and
responsibilities on both sides.

• If necessary, NFSP will drop Union badge to sign contract.

Please note - a signed agreement with the blood of both myself and Paula is necessary
on the future of the NFSP before any agreement is granted on either NT and other
points.

206.3 The 2015 Grant Agreement as ultimately entered into, to a value of £15m,

which includes clawback provisions of its £15m grant if the NFSP engages in

“activities or behaviour the effect of which may be materially detrimental to POL”

(2015 Grant, §5.3.6. {G/72/10}).

207. Given that Post Office has described this litigation as “an existential threat”, it is obvious

that the NFSP is in no position to support the Claimants’ case.

208. It was only possible for the Claimants to establish the above matters by reference to:

208.1 documents which the Claimants obtained via published responses to FOI

requests, which Post Office had at the time resisted providing –evident from

the published correspondence with Mr Baker {G/74} and {G/75} – G/80}; and

208.2 disclosure finally provided from Mr Beal’s email account in response to the

Claimants’ requests – requests which Post Office resisted, delayed and

wrongly sought to mischaracterise as improper (the NFSP disclosure

correspondence at {H.1/1} - {H.1/16} speaks for itself on these issues).

209. Mr Beal’s evidence was evasive in relation to these issues. His initial position when

taken to the FOI emails was to underplay his familiarity with the topic and their

significance “I don’t recall precisely … we get a lot of Freedom of Information requests, so …”

{Day6/101:20-22}, which is to be contrasted with his knowledge of the documentation on

this very issue “If I may, your Lordship, there is a document in my bundle which is the

Memorandum of Understanding between Post Office and the National Federation of

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Subpostmasters… If I could be shown that document, please?” {Day6/109:24} – {Day6/110:2}

clearly illustrating he well knew about these matters and was prepared for this line of

questioning.

210. The Court is specifically invited to reject Mr Beal’s evidence on the issue of Post Office’s

alleged intention to publish the Grant at the time of Mr Baker’s FOI requests over the

period May 2016 to December 2016. Mr Beal’s position was adopted in reliance on the

basis of the 2013 Memorandum of Understanding {G/82}, which had been superceded

by the express terms of the 21 July 2015 Grant {G/72}, and included at {G/72/20} §23.2 an

express clause requiring the parties to keep the contents confidential, subject only to

Post Office’s FOI obligations (which it eventually had to comply with, as above).

Suspension and Termination

LC’s evidence

211. The LCs were, together, consistent and clear on Post Office’s powers, both as to their

pre-contractual understanding of the circumstances in which their contracts could be

suspended or terminated, and as to Post Office’s practices with respect to the same.

Much of their evidence in writing left unchallenged in cross examination. This, in itself

it telling. Post Office has plainly taken the view that there was little that the LCs said on

the matter that could be the subject of serious challenge. Such challenge as was made

was put on the basis that, for example, powers of termination would be exercised where

there was serious wrongdoing or incompetence.

Job Security

212. As addressed above at Long Term and Secure , the LCs were generally attracted to the

position of SPM because of the security of the role, variously describing in their written

evidence, perceiving the role as “a safe option”, being led to believe they could “build a

good future” and that it was a “very secure position and long-term commitment” and that the

role was “stable and secure” and “safe and secure”. 18

18 Bates, §11 {C1/1/3}; Dar, §150 {C1/5/28-29}; Abdulla, §10 {C1/4/2}; Sabir, §9 {C1/3/2}; Stockdale, §13
{C1/6/3}

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213. Their oral evidence further emphasised this:

213.1 Mr Sabir, was asked whether the longevity of the relationship would depend

on whether it was terminated responded “I did buy these both post offices to run

long-term business, long-term business, to establish my business and to establish my

family life.” 19

213.2 Mr Abdulla said his motivation in applying was “want[ing] to make a better

life for myself, a more stable life… I had small children, a mortgage to pay, so I

wanted something more secure, for stable, and something more lucrative, really. I

believed the Post Office was the right position for me.” 20

213.3 Mrs Dar described how she saw becoming a SPM as “incredibly” important

as it was “our family’s future”. 21 She said that the termination notice period

“…wasn’t something we were considering, because we thought this would be

something for life for us.” 22

Circumstances where appointment may be suspended or terminated

214. As addressed above, the LCs did not expect Post Office to suspend or terminate their

appointments, at least not without serious wrongdoing on their part, and prior to

contracting, the Defendant did not inform them of anything otherwise.23 Further to that

evidence:

214.1 Mr Bates’ evidence was that neither he nor his partner “would make a

commitment of that nature if we thought that the investment could be put at risk,

still less undermined entirely, by Post Office terminating my appointment without

cause or compensation for doing so.” 24 At trial he was shown ARS 43. 25 Directed

to the subheading ‘Possible Rewards and Difficulties’ he was asked “You

19 {Day3/93:22-24}
20 {Day4/9:4}
21 {Day5/5:22}
22 {Day5/36:22-24}
23 E.g. Dar, §150 {C1/5/28}; Stubbs, §129 {C1/2/29}; Sabir, §123 {C1/3/22}
24 Bates, §30 {C1/1/7}
25 {E1/3/6}

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would have understood what that meant, that when your contract was terminated

you had no right to compensation for having lost your office, yes?” Mr Bates

responded “According to that, yes. But it doesn’t really give a lot of detail, does it,

about it?" 26

214.2 Mrs Stubbs’s understanding was that the “only situation in which Post Office

could compel me to leave was if I had done something fundamentally wrong.” 27

When asked about that at trial 28 she confirmed she did not realise the

contract could be terminated on notice – because “…I owned the building. I

owned the post office building inside. Yes, I didn't own the money, I didn't own the

stock, but the majority of stuff connected with the post office I owned and I felt that,

yes, I couldn't be terminated; just told to pick up and go away.” 29

214.3 Mr Sabir was the only witness questioned on the circumstances in which

Post Office would exercise these powers, but, not only did he remain

adamant as to his understanding that his contract might only be terminated

in circumstances of serious wrongdoing such as theft but serious

incompetence was the only other ground upon which it was suggested to

him an appointment might be terminated. 30

215. In this, the LCs’ evidence is, in each case, evidence of subjective understanding and

expectations, but taken together it informs the understanding to be attributed to

reasonable persons, and it chimes with that of Post Office’s witnesses both (a) as to the

trust to be reposed in Post Office, being a concept at the heart of its wider brand, and (b)

the circumstances in which suspension or termination would, in reality, be appropriate.

216. For reasons given below, it also reflects the true agreement between the parties as to

suspension and termination, which was at variance to the position contended for by

Post Office on its reading of the SPM contracts.

26 {Day2/38:3-7}
27 Stubbs, §21 {C1/2/5}
28 {Day2/178:19} ff
29 {Day2/178:3-7}
30 {Day3/90:21} - {Day3/92:10}

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217. It was on the foregoing basis that the LCs invested in the expectation of a return: e.g. “It

was a large amount of money, but we were willing to invest it in this way because we were sure

there was a large measure of security in running a Post Office branch, which was, to our mind, a

relatively safe investment upon which we would likely receive a return”. 31

Understanding of period of notice for termination

218. On notice, the LC’s evidence included that addressed above at Expectations re:

Termination, and further:

218.1 Mr Bates confirmed when asked that that he thought a period of 3

months’ notice was too short, especially as he had invested so heavily. 32

218.2 When asked, Mrs Stubbs was clear that she gave notice only because she

was advised to do so by the Helpline on the basis that Post Office would

not take any steps in relation to advertising her position or contact her

buyers until she had done so. 33 As to the practicality of 3 months as a

period of notice, Mrs Stubbs confirmed “…I understood, and I know from
buying a house or whatever, that there is very likely not a prayer that you would be

able to sell a property and to complete within three months.” 34

218.3 Mr Sabir’s could not remember having a right to terminate the agreement,

but recalled that when he wrote to the Post Office offering his resignation

from the Crossflatts branch he “gave resignation and they gave me a specific date

that you will be employed for this period of time”. 35

218.4 Mr Abdulla ‘s unchallenged written evidence was that he “would not have

entered into these commitments if I had expected Post Office to terminate my

appointment without notice, on 3 months' notice, or without compensation for loss

31 Bates, §27 {C1/1/6}
32 {Day2/12:24} - {Day2/13:2}
33 {Day2/180:4-18}
34 {Day2/180:7-10}
35 {Day3/148:1-2}

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of office. I would not have exposed my family to these financial risks and

uncertainty, stress and worry.” 36

218.5 Mrs Dar stated in her witness statement that “Prior to my appointment I had

not expected Post Office to terminate my appointment, either on notice or summarily

(as in fact occurred). I thought this was a long term arrangement, that this would

provide my livelihood for good.” 37 When questioned she confirmed she was

under the impression that the notice period was a year rather than 6 months,

having been informed of the same both by the outgoing SPM and Post

Office’s auditor, Mrs Guthrie, and that even that period was dependent on

the incumbent being able to find a buyer for their business. 38

219. This evidence is significant: it show the commercial practicality, or otherwise, of a short

notice periods where a new SPM would have to (a) apply, interview and be appointed

to the role, (b) purchase the premises and business, and (c) make a significant

investment in it. As forms the subject of submissions in Section B it informs the true

agreement between the parties on this matter.

Post Office’s generic evidence on suspension and termination

Trust in the Post Office Brand

220. Post Office witnesses were consistent in emphasising the importance of trust reposed in

Post Office and the connection between trust and its brand: -

220.1 Mrs Van Den Bogerd’s evidence was that “Post Office is one of the most

recognised brands in the UK and is consistently rated as a trusted and high quality

brand by independent reports.” 39 She accepted that “Subpostmasters are

sometimes well-known to local residents, and problems with a Post Office attract a

higher level of attention in the local press than they would for other local retailers.” 40

36 Abdulla, §50 {C1/4/11}
37 Dar, §150 {C1/5/28}
38 {Day5/36:19-32}; by Margaret Guthrie on transfer day {Day5/37:5-15}; by previous Subpostmaster
{Day5/37:17-23}
39 Van den Bogerd, §38 [C2/1/9]
40 Van den Bogerd, §38 {C2/1/9}

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220.2 Mr Beal agreed, when asked, that Post Office “is a very trusted brand and is

held in high esteem by the public.” 41

220.3 He likewise accepted Post Office was to be expected “to behave well and fairly

with people” 42 and that this “is what other people’s expectations would be too”. 43

Power and decision to suspend

221. None of the Post Office witnesses was prepared to support, in their evidence, the wide

powers of suspension and termination pleaded by Post Office or the purported need for

them. In no instance did a Post Office witness do so when challenged. On the contrary,

their evidence was consistent with an altogether different commercial reality.

222. Ms van den Bogerd’s position in her witness statement was that “outside nationwide

planned closure programmes, Post Office rarely gives notice to terminate a Subpostmaster's

contract because it wishes to close a branch for commercial reasons. If a branch is closing for

other reasons (retirement of the Subpostmaster, termination for breach, etc.) it will generally

consider whether the branch is still needed in its current location and operating model, but a

decision not to re-open a branch in these circumstances is still rare. Generally the pressure is the

other way around: Post Office is keen to maintain the size of the network and keep branches

open.” 44 She said that Post Office would need to be able to take prompt action to stop

improper conduct such as fraud. 45

223. Mr Beal was taken by the Court to a Post Office document requiring that letters

terminating Subpostmaster appointments on notice give no reason for such termination,

rather say only that it was “in accordance with the terms of your contract” 46 and could give

no explanation as to why the guidance would say this. 47

41 {Day 6/16:21-24}
42 {Day 6/19:23-25}
43 {Day 6/20:1-3}
44 Van den Bogerd, §60 {C2/1/16}
45 Van den Bogerd, §41 {C2/1/10}
46 {F3/14/4}
47 {Day6/ 133:15} “No immediate reason springs to mind.”

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224. Mr Breeden’s witness statement, filed and served by Post Office in support of its case on

suspension and termination, 48 sought to convey the impression that “Post Office needs the

suspension power in order to protect its assets and reputation. Subpostmasters hold substantial

amounts of Post Office's cash and stock in their branches. They interact on Post Office's behalf

with members of the public and are, in effect, the 'face' of the Post Office brand.” 49

225. Yet, inconsistently, he confirmed that “the decision to suspend a Subpostmaster is not taken

lightly” and, when questioned, an altogether different picture emerged:

225.1 When it was put to him that suspension is not a neutral act, he accepted that

SPMs could suffer potential stigma in the local community 50 as a result and

that remuneration ceases at the point of suspension; 51

225.2 He accepted, when shown an internal summary of the process, 52 that a series

of factors were taken into consideration when deciding whether to suspend a

SPMs. These included a SPM's ability53 and willingness to make good an

apparent loss, 54 and, currently, any facts ascertained by the Contracts

Adviser at an audit. 55

225.3 Mr Breeden agreed, when it was put to him56 that SPMs would not be

suspended on a whim or to victimise them, that his agreement that Post

Office would not suspend someone lightly reflects the seriousness of the

matter, and that:

48 See Reading Note filed by the Defendant with its Witness Statements on 24 August 2018 {C2/0/1}
49 Breeden, §37 {C2/3/11}
50 {Day 7/57:3-6}
51 {Day 7/57:23-24}
52 Including a candid and revealing summary of the process of suspension and termination
prepared by a Contracts Adviser, Mr Adderley, in 2011, and apparently delivered to an internal
P&BA Fraud Forum in July of that year: {G/4/7}
53 {Day7/88:23-25}
54 {Day7/89:1-2} and, conversely, that unwillingness “wouldn’t help the situation” {Day7/89:3-5}
55 {Day7/90:7-25}
56 {Day7/56:10}

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a. to have the whole picture Post Office would need to investigate; 57 and

b. likewise, it would be necessary for a SPM to try and get the relevant

information to investigate it. 58

Reinstatement following suspension

226. Part of the relevant commercial context was revealed at trial revealed by Post Office’s

own documents 59 as to the numbers of SPMs whose contracts are not in fact summarily

terminated following suspension.

227. In his written evidence Mr Breeden stated: "Over the period April 2013 to June 2018, there

were 626 suspension cases. Out of the 626 contracts suspended, 407 contracts were terminated

and 150 contracts were reinstated. The balance of 69 cases are work in progress as at 23 June

2018." 60. However, the follows figures were put to, and accepted by, Mr Breeden: 61

227.1 In 2010/2011 there were 193 suspensions and, of those, 54 SPMs were

reinstated.

227.2 48 of those suspended SPMs themselves resigned (in the opinion of one

Contracts Adviser, in order to avoid summary termination – though the

basis upon which that view is taken is not clear);

227.3 38 suspended SPMs appealed and 8 appeals were successful. 62

227.4 Thus, on Post Office’s own information (and evidence) only a minority of

those suspended were in fact summarily terminated, and some 25-30% of

them were in fact reinstated.

57 {Day7/ 57:14-18} “Q. And to have the whole picture you would need to investigate, wouldn't you? A. We
would need to investigate. But the suspension is precautionary at that particular point in time based on the
information that is available.”
58 {Day7/ 59:11-15}
59 {G/42.1/1}; {G/4/1}
60 Breeden, §50 {C2/3/13}
61 {Day7/ 93:1-5}
62 {Day7/93:11-16}

– 98 –
A(1) GENERIC EVIDENCE
Suspension and Termination

Appointment of Temporary SPMs

228. It was confirmed in a Reading Note filed with its Witness Statements that Mr Shields

was to give evidence for the Defendant on the appointment of Temporary SPMs. 63

229. However, when questioned, Mr Shields confirmed that he had no familiarity

whatsoever with the SPMC. 64 Indeed, he was not aware that the SPMC is silent as to

this. 65 He confirmed he was familiar with the NTC 66 but was unfamiliar with its

terminology and (in large part) provisions in relation to Temporary SPMs 67 or the limits

to the Defendant’s rights of access to branch premises. 68

230. In his evidence, Mr Shields confirmed:

230.1 that he is under considerable time pressure to install a Temp, from receipt of

an initial instruction to do so, 69 being subject to (and appraised by reference

to) Post Office’ five working day target; 70

230.2 it is his role to lower the expectations of the incumbent SPM as to the

financial contribution he /she might receive from a Temp. 71

230.3 He warns the incumbent SPM that their branch will remain shut unless they

are able to reach a deal with the Temporary SPM. 72

230.4 He doesn’t see the point in wasting time and energy of other people where

there is clearly one suitable Temp (from his own and the Defendant’s

63 {C2/0/4}: to include “appointment process for Temporary Subpostmasters; Process for interviewing and
appointing Temporary Subpostmasters; and Number of Temporary Subpostmasters”
64 {Day9/176:23-24}; {Day9/178:12-13}; {Day9/179:15}
65 {Day9/178:14-17}
66 {Day9/179:19}
67 {Day9/181:10-13}
68 {Day9/183:10}
69 {Day10/6:14}
70 {Day10/6:21} and {Day10/7:9}
71 {Day10/10:10}
72 {Day10/11:6}

– 99 –
A(1) GENERIC EVIDENCE
Suspension and Termination

perspective) in seeking to put forward three candidates – as the Defendant’s

policy generally requires, 73 thought he does “in an ideal world”. 74

230.5 there is a degree of informality to the way Temporary SPMs are identified

and approached. 75 A list of prospective Temps is maintained by Post Office

and, since at least 2011, it has included the same three dominant supplier

companies. 76

230.6 The Defendant believed it could effectively decide to shut down the branch if

the cost of supplemental payments to a Temp was too great, even where the

incumbent SPM wishes it to remain open. 77

230.7 he could be tipped off by a Contracts Advisor, pre-audit and (indeed) pre-

suspension, of a potential suspension - whereupon. he would speak to

prospective Temps before the audit has even taken place 78 (a concession at

variance to the impression of a fixed and fair process the Defendant sought

to convey by his written evidence, given when Mr Shields was shown

documentation 79 relating to Lead Claimant Mrs Stubbs’ suspension).

231. It is abundantly clear from this evidence that the power lies with Post Office in relation

to whether a Temporary SPM is appointment to a branch or whether it will be shut, to

the SPMs’ significant economic detriment. It was put to Mr Shields that this was a

negotiation in which the SPM had “no meaningful choice”. 80

Remuneration during suspension and compensation for loss of office

232. The Defendant’s generic case 81 is that its written terms include (a) in the SPMC, a right

to forfeit remuneration, in whole or part, after consideration of the whole of the

73 {Day10/9:9-17}
74 {Day10/25:12}
75 {Day10/18:5-11}
76 {Day10/21:14-19}
77 {Day10/24:8-16}
78 {Day10/37:16}
79 {E2/75/1}
80 {Day10/32:7-9}
81 {B3/2/45}

– 100 –
A(1) GENERIC EVIDENCE
Suspension and Termination

circumstances of the case and (b) in the NTC, discretion to agree to pay the SPM all or

part (and by implication none) of the sums suspended taking into account the relevant

circumstances.

233. As the Court heard at trial its policy on this power dating from 2013, 82 suggests (at

variance event to the Defendant’s own case as to those terms) that:

1. Any [re]payment is at the absolute discretion of Post Office Ltd.

2. Payment will not be made in respect of product pay i.e. TRP/STP.

3. Payment should only be considered where, on the basis of facts known at the time,

Post Office Ltd had acted unreasonably in making the suspension.

234. When questioned, Post Office witnesses accepted that this did not reflect either the

terms of the SPM contracts, or the reality on the ground – as to the discretion:

234.1 Mr Breeden accepted that he would look favourably upon a SPM in respect

of any wrong decision to precautionarily suspend; 83 he conceded suspension

could be for a long period, 84 and accepted when asked about his exercise of

discretion: “you should be fair minded about it”. 85

234.2 Mr Breeden further accepted that his manner of exercising discretion is fairer

than what is stated in the Guidance (above); 86 and (when pressed by the

Court) confirmed that he would remunerate SPMs on the “more reasonable

basis” that he explained orally. 87

234.3 Further, when taken to the concession made by Post Office in Moeze Lalji v

Post Office Limited 88 that that the power must not be exercised capriciously,

82 Guiding Principles for Payment of Remuneration (undated, but, when disclosed, said to be dated
18 February 2013) {F3/161/1} – put both to Mr Breeden {Day7/101:5-25} and Mr Shields
{Day10/17:21-25}
83 {Day7/ 96:9-14}
84 {Day7/98:8-25}
85 {Day7/99:15}
86 {Day7/101:5-25}
87 {Day7/107:2-7}
88 [2003] EWCA (Civ) 1873 {A1.1/22/1-5}

– 101 –
A(1) GENERIC EVIDENCE
Suspension and Termination

he accepted that any decision to refund remuneration would have to be

made fairly, fair-mindedly, in accordance with the rules of natural justice

and with “openness, transparency and fair dealing”. 89

234.4 It was suggested to Mr Shields that the Post Office policy was wrong in that

it did not reflect what Post Office’s SPM contracts provide, though he

admitted (despite his obvious connection with the matter, and recent

appointment as a Contracts Adviser) he was unfamiliar with the document. 90

235. The Defendant in reality recognises SPMs’ expectation of security by its practice of

compensating SPMs when closing branches, and the existence of a long-standing

arrangement for compensation to this effect – as pleaded and evidenced for the

Claimants by Mr Bates, 91 and addressed earlier above. 92 Mr Bates’ evidence was not

challenged and Mr Beal confirmed the approach in cross-examination. 93

Defendant and Claimant’s access to information relating to alleged shortfalls

236. Post Office’s witnesses were questioned as to the various resources the Defendant had

to investigate losses and shortfalls.

237. In re-examination, Mr Breeden stated that, if technical reasons for shortfalls were

advanced, he would ask a specialist team to investigate: “There is one area of my own

particular team that I would refer that to, which is the support services resolution team, who are

skilled at interrogating the accounts and identifying any issues.” 94

238. When asked further about this team by the Court, Mr Breeden confirmed that the team

interrogated branch accounts, had access to Fujitsu-provided data and could compare

branch data with data between Post Office and its clients. 95 He said this allowed them to

89 {Day7/111:24}
90 {Day10/17:21-25}; he later confirmed that he was not aware how the process of paying
remuneration to wrongfully suspended Subpostmaster works and, consequently, what if
anything is deducted – despite his written evidence on that matter.
91 Bates/IPOC at §27 and Bates, §94-97 {C1//1/22}
92 And as further evidenced in writing at Beal, §32
93 {Day6/88:2-21}
94 {Day7/148:11-14}
95 {Day7/151:5-152:20}

– 102 –
A(1) GENERIC EVIDENCE
Suspension and Termination

“investigate shortfalls that the subpostmaster or the subpostmistress were maintaining had been

thrown up due to software issues”. 96

239. Mrs Rimmer was asked in cross-examination about Post Office’s investigations,

particularly in relation to recommendations that were made to SPMs to take disciplinary

action against their assistants. She accepted that an employer would want gather “all the

necessary evidence” to reach an “informed view”. 97 She also accepted that it would be fair

that: “If you are about to dismiss someone for something, it might be really important to wait

until everyone is satisfied they have worked out as far as they can what has happened to the

cheques or whatever the problem is. That might take a bit of time.” 98 The restricted access to

information the SPMs had, would have impacted their ability to come to such an

informed view.

240. On the evidence of Mrs Ridge summarised below (under Termination without notice),

however, it is far from clear that the Defendant made use of these resources routinely or

at all when considering whether summarily to terminate SPM contracts.

241. In contrast, SPMs were unable to investigate alleged shortfalls, owing to an obvious and

profound asymmetry of access to information:

241.1 Mr Breeden accepted that SPMs were typically locked out of their premises

by the Defendant upon suspension, and had no access to any records stored

on-site. 99 He confirmed they could only gain access to these records if they

are with somebody from Post Office. 100 He accepted that a suspended SPM

would have no access to the Horizon system. 101

241.2 Mr Breeden suggested that, when remote from the office, Post Office is

unable to see how an error has arisen, but accepted that “if the subpostmaster

96 {Day7/151:24-25-151:1-2}
97 {Day7/10:11}
98 {Day7/11:13–25}
99 {Day7/59:16-21}
100 {Day7/117:19-21}
101 {Day 7/59:22-23}

– 103 –
A(1) GENERIC EVIDENCE
Suspension and Termination

doesn’t know how an error has been made and is asking for an investigation by Post

Office, the subpostmaster or subpostmistress is in the same difficulty you are in”. 102

241.3 Mr Breeden was taken to the Defendant’s response to Second Sight’s Interim

Report in which it was suggested that no Subpostmaster is prejudiced by not

having access to their records. 103 In contrast, he accepted it was in fact the

case that, given Subpostmasters are required to try to explain why they are

not liable for a figure they do not accept, it is even more important that they

are given access to information. 104

241.4 Responding to the Claimant’s question: “You would accept, wouldn't you, that

it would be a basic principle of fairness and natural justice that if you are being

required to try and prove what the actual cause was, you have to have the

information?” he said “I would have thought so, yes.” 105

241.5 Finally, Mr Breeden accepted that, if Horizon logs were provided to a

Subpostmaster, the Subpostmaster could try and find an expert themselves

to help them with investigations. 106 He understood that the records would

therefore be important to investigating a loss, 107 and “personally” did not

think it satisfactory for the Defendant to wait until there is a civil or criminal

case, and for the logs to be requested by lawyers, before making them

available. 108

242. As to access to documentation stored in the branch, Mrs Stubbs’ oral evidence

confirmed the intense difficulty experienced by Subpostmasters trying to investigate the

allegations made against them: “They had closed my office and effectively locked me out of, at

that stage, half of the portacabin. There is no question of any conversation. We had had that

102 {Day7/72:7-14}
103 {G/28/32}
104 {Day7/119:2-13}
105 {Day7/121:10-14}
106 {Day7/122:11-15}
107 {Day7/122:20-22}
108 {Day7/123:12-13}

– 104 –
A(1) GENERIC EVIDENCE
Suspension and Termination

conversation the night before.” 109 When asked why she did not check her contract for the

section that had been cited as the power under which her suspension was made, she

responded: “I couldn’t do that. That was all locked up. I wasn’t allowed to see that. I had no

entry to my post office from the day they did the closing audit. They took the keys away, locked

them up and I was allowed nothing.” 110

Termination on Notice

243. Despite the professed need for wide powers, the Defendant’s principal witness on

suspension and termination, Mr Breeden, confirmed in his witness statement that:

243.1 the Defendant would typically not terminate on notice unless there was a

capability or performance issue and, even then, only after discussions aimed

at improving performance; 111

243.2 the Defendant would not suspend Subpostmaster on a “whim” 112 and that

suspension is not taken “lightly”; 113

243.3 the 3-month notice period in the written SPMC terms was in reality

insufficient for a Subpostmaster to sell the business and premises and find an

incoming Subpostmaster. 114

243.4 corrective action was to be taken rather than terminating a Subpostmaster’s

contract where there were performance issues. 115

243.5 although a Subpostmaster who wanted to sell his / her business could give 3

months’ notice, they were in the Defendant’s hands as to whether they could

109 {Day2/175:16-21}
110 {Day2/176:4-7}
111 Breeden, §60 {C2/3/15}
112 {Day7/56:17}
113 {Day7/56:14}
114 Breeden, §62 {C2/3/16}
115 {Day7/141:3-13}

– 105 –
A(1) GENERIC EVIDENCE
Suspension and Termination

pass on the business in that time as Post Office needed to interview and

organise the documentation; 116

243.6 the Defendant tries to ensure a smooth handover, 117 but where the outgoing

subpostmaster puts forward a candidate it sometimes takes longer than 3

months for that candidate to go through the appointment process and,

sometimes Subpostmaster resign with no such candidate in mind. 118

243.7 in the case of Mrs Stockdale, ““Karen Collinson [was] effectively hanging on

rather unwillingly there in the branch until such time as the branch [could] be

taken over by Mrs Stockdale.” 119

244. As to the effect of termination, Mrs Ridge accepted that the process was “quite serious”

and would have “quite a big effect on the investment they put in”. 120 In addition, she

accepted that the content of a termination interview was “clearly very serious”. 121

Termination without notice

245. The Defendant’s witness, Mrs Ridge conducted Lead Claimant Mr Abdulla’s

termination interview. Her evidence is instructive as to the reality of how the

Defendant’s powers are, in this respect, exercised and the commercial implications of

the terms forming the subject of this trial.

246. Mrs Ridge was shown the documents she had to assist her during Mr Abdulla’s

interview (which comprised two A4 pages of data). 122 She thought it “not unusual” for

significant debit entries not to have accompanying text. 123 Further:

246.1 She accepted, when shown it, that a larger Excel spreadsheet 124 giving some

further explanatory details of transaction corrections issued to Mr Abdulla

116 {Day7/134:20-135:8}
117 {Day7/131:8-11}
118 {Day7/133:25}
119 {Day7/137:14-17}
120 {Day10/97:11-16}
121 {Day10/98:13-15}
122 {E4/65/1}; {E4/66/1}
123 {Day10/89:5}

– 106 –
A(1) GENERIC EVIDENCE
Suspension and Termination

was “much more helpful” than what she had been provided with. 125 She

agreed it would have been useful to have a copy, but confessed “I don’t know

where that would have come from.” 126

246.2 Ultimately, Mrs Ridge accepted (despite conducting the interview giving rise

to summary termination of Mr Abdulla’s appointment) that, with the

information she had, she was unable to investigate matters “in any depth”. 127

246.3 She confirmed that requesting the ARQ information from Fujitsu was

“something I wouldn’t have done.” 128

247. Mr Abdulla’s evidence (as contemporary record of the interview shows) was that he

was expecting a further transaction correction, such that the National Lottery entries in

his accounts cannot have been right. 129 Mrs Ridge twice attempted in her oral evidence

to raise doubts about Mr Abdulla’s statements, claiming he had said that the transaction

correction in question had come in after the last balance and, for that reason, it should

have been visible on the papers that she had. 130 Her recollection is not in line with the

interview transcript and, combined with the obvious paucity of information she had, is

highly suggestive of the level of care with which such interviews were conducted.

248. The Defendant’s severe approach to terminating Subpostmaster contracts was put to

Mrs Ridge. She confirmed that lawyers were not permitted to attend the termination

interviews (an edict that had come “from our solicitors that is what we were told”) 131 despite

false accounting being raised at them. 132 Mrs Ridge accepted that a Subpostmaster

124 {E4/92/1}
125 {Day10/90:6}
126 {Day10/114:18}
127 {Day10/91:17}
128 {Day10/96:6}
129 {E4/79/17}
130 {Day10/109:14}; {Day10/115:21}
131 {Day10/97:23}
132 Mrs Ridge confirmed she knew false accounting to be a criminal offence {Day10/98:8}

– 107 –
A(1) GENERIC EVIDENCE
Suspension and Termination

might lose their investment upon termination and that therefore the process was

“serious”. 133

249. In relation to the care with which Mr Abdulla’s appeal was handled, she was shown a

letter dated 29 May 2009 from Mr Mylchreest 134 confirming that the investigation had

been completed, careful consideration has been given to the papers in the appeal, but

upholding the decision terminate. The letter predated the appeal hearing. Mrs Ridge

was not able to think of a reason for this. 135

250. In his witness statement, Mr Carpenter confined his evidence to Mrs Stockdale’s

application interview. However, he was also the Post Office employee responsible for

the termination of her contract and her termination interview.

251. Mrs Stockdale’s termination process, although without notice, was long: she was

suspended on 13 May 2016 and her contract was terminated on 16 September 2016.

251.1 Mrs Stockdale regularly emailed Mr Carpenter throughout her suspension.

Her email of 6 June 2016 at 17:33 read: “I was told by the Post Office that while

you are paying back ’monies owed’ you can’t settle another loss centrally, so what

was I supposed to do???” 136

251.2 She received two identical, standard form letters from Alison Bolsover dated

3 November 2014 137 and 3 May 2016 138. These attached statements of amounts

allegedly owing to Post Office and set out repayment options, including by

monthly deductions under a repayment plan. Neither said that repayment

plans prevent a Subpostmaster from settling centrally on Horizon.

133 {Day10/98:11-16}
134 {E4/83.1/1}
135 {Day10/97/7}
136 {E6/151/1}; Mrs Stockdale gave written evidence that “I took this to mean I was not allowed to settle
further unexplained losses centrally at the end of a trading period” {C1/6/22}
137 {E6/127/1-4}
138 {E6/140/1-2}

– 108 –
A(1) GENERIC EVIDENCE
Suspension and Termination

252. Mrs Stockdale emailed Post Office following the 3 November 2014 letter to organise for

repayment in instalments. 139 Paul Kellett of Post Office responded by email.

252.1 In cross-examination, Mr Carpenter said that he had seen an email from Paul

Kellett which dealt with whether a Subpostmaster could settled centrally

whilst on a repayment plan. 140

252.2 Mr Kellett’s email was dated 5 November 2014 at 12:27 and confirmed that

Mr Kellett could arrange for deductions to be taken from Mrs Stockdale’s

monthly fees over 8 months “on the understanding that you’re not allowed to

settle any further losses until a year after this has been paid”. 141

252.3 On that basis it would be 20 months, to July 2016, before she would therefore

be allowed (on her unchallenged understanding in her evidence), to settle

centrally on Horizon. Mrs Stockdale was suspended in May 2016.

252.4 When cross examined as to when he had first seen that email, Mr Carpenter

responded that he did not know, but when pressed if it was for the “purpose

of this litigation” he said “I think probably in the packs for this round” 142 in

2018. 143

253. Efforts to locate the email:

253.1 In a letter of 29 July 2016, Freeths had requested disclosure of “Copies of

"correspondence emails notes... memoranda or other records relating to the branch,

Mrs Stockdale, visits made to the branch or contact with Mrs Stockdale".144 Bond

Dickinson, as it then was, responded to Freeths on 5 August 2016, stating

139 {E6/128/1/1}
140 {Day11/108:7-9}
141 {E6/128.1/1}
142 {Day11/108:10-14}
143 {Day11/108:16}
144 {E6/158/2}

– 109 –
A(1) GENERIC EVIDENCE
Suspension and Termination

that they had provided all requested information and could not see the

relevance of the further requests. 145

253.2 Although he maintained in his evidence a detailed investigation took place

into Mrs Stockdale’s case, 146 it is now clear that Mr Carpenter did not have

sight of this email.

253.3 This was despite Mrs Stockdale directly referring him, in her own email of 6

June, to what she had been told about settling centrally. 147

254. Failure to disclose:

254.1 The email from Paul Kellett was disclosed by the Claimants on 19 January

2018. 148 Mr Carpenter’s witness statement was signed on 23 August 2018.

254.2 None of these matters were covered in Mr Carpenter’s witness statement.

254.3 Mr Kellett’s email has never been disclosed by the Defendant or provided in

correspondence.

Appeals and ‘reasons to urge’

255. Mr Breeden’s evidence was that a Subpostmaster would be sent a letter, colloquially

known as a ‘Reasons to Urge’ letter, following suspension explaining “what went wrong,

what the charges are, what the breaches of the contract are and inviting them into a meeting”. 149

256. He later drew a distinction – having been shown a suspension letter – between the letter

giving notice of suspension and the Reasons to Urge letter and confirmed that it was the

145 {E6/158/2}
146 {Day11/108:25}
147 In oral evidence, Mr Carpenter insisted that he had seen a letter from David Southall to Mrs
Stockdale “which explained she wouldn’t be able to settle any further losses and have a repayment plan
which is a little bit different to how that is worded” {Day11/108:1-4} and he had assumed that this was
what her email referred to. That letter is at {E6/137/1}. In fact, Mr Southall’s letter is neither as Mr
Carpenter summarised nor in line with Mr Kellett’s email. It read as follows “I note that you have
recently had a deduction from remuneration in place and normally we would not allow a further payment
by instalments to be set up within 12 months of the completion of an existing plan however would be
willing to accept repayment over a 12 month period if required.”
148 Disclosure numbers M_0025551 and #77573
149 {Day7/97:3-9}

– 110 –
A(1) GENERIC EVIDENCE
Suspension and Termination

latter that gave the Subpostmaster further information. 150 Yet, when pressed he later

confirmed that under the old contract a reason to urge letter is sent out giving further

detail, whereas under the NTC contract, no such letter is sent. 151

257. Likewise, he was shown an Appeals Handbook dating from 2001. 152 Taken to the section

reminding Appeal Managers that the rules of natural justice should apply, Mr Breeden

conceded that there was nothing controversial about applying the same to both the

original termination process and the appeals stage. 153

258. In oral evidence, Mr Breeden confirmed that there is no appeal process under the NTC

contract. He was not able to comment on why that right had been removed. 154 He

explained that, under the NTC contract, the process is for the Contracts Advisor to make

a recommendation to terminate which is then ratified by their line manager.

259. As to due process, it was suggested to him that it would be essential to try to make sure

that decisions were taken as fairly as possible, or at least that the recommendation is

formulated on the basis of the fairest possible procedure. His response was that the

procedure was fair because the Contracts Advisor “could have had conversations” with the

Subpostmaster. 155 But when asked by the Court to clarify, he spoke of interaction during

the period of suspension but was unable to point to anything more definite or suggest

that any formal call or discussion was required. 156

150 {Day7/104:15-18}
151 {Day7/108:9-19}
152 {F3/165/13}
153 {Day7/110:1-6}
154 {Day7/138/4-9}
155 {Day7/140:10-19}
156 {Day10/140:23-25}

– 111 –
A(1) GENERIC EVIDENCE
Suspension and Termination

– 112 –
A(2) LEAD CLAIMANT SPECIFIC EVIDENCE
Suspension and Termination

A(2) LEAD CLAIMANT SPECIFIC EVIDENCE

260. Each of the LCs gave a conscientious account in their witness statements of the evidence

relevant to the common issues arising in their cases, which (in contradistinction to the

Post Office witnesses), clearly identified and explained the sources of their information

and belief, and the extent to which they were sure or could not precisely recall particular

matters.

261. Many important aspects of the individual LCs‘ evidence is identified within Section

A(1) above, and in many respects the pleaded case of the individual LCs is supported by

the evidence of other LCs and the generic evidence more widely, on which each of them

rely.

262. The evidence of the individual Lead Claimants is addressed below on the following

pages:-

Mr Bates ............................................................................. 114

Mrs Stubbs.......................................................................... 118

Mr Sabir.............................................................................. 121

Mr Abdulla ......................................................................... 125

Mrs Stockdale..................................................................... 129

Mrs Dar .............................................................................. 131

– 113 –
A(2) LEAD CLAIMANT SPECIFIC EVIDENCE
Mr Bates

Mr Bates

263. The Court is invited to accept the evidence of Mr Bates as set out in his witness

statement and amplified in his oral evidence. His evidence supports the factual

propositions in section A of his IPOC {B5.1/2}, which the Court is invited to find as facts.

264. The Claimants say that Mr Bates’ contract was formed on 31 March 1998, which is the

date Mr Bates signed the appointment letter {D1.1/1/1}. He had not received a full copy

of the SPMC by this date, and in fact did not receive it until after branch transfer. Mr

Bates’ contract was varied with the introduction of Horizon in October 2000.

265. Mr Bates has been a long time campaigner to obtain justice for SPMs, but as expressed in

his evidence, and clear from his answers, he had taken care to keep his personal

recollection of events separate from his campaigning.

266. There were limited challenges to Mr Bates’ evidence, to which Mr Bates

comprehensively responded. To the extent it may assist the Court to deal with some of

those particular challenges here:

266.1 Mr Bates was pressed on the date of receipt of the ARS 43 “Job Description”

{Day2/35:5-7}. His (very fairly expressed) broad recollection was that he had

received it on 8 May 1998, and when pressed that he “would have” received it

before his interview said he believed it was later than that {Day2/36:7-8}.

And further {Day2/40:8-12}. The Court is invited to accept this evidence.

266.2 Mr Bates was cross examined as to the information he would have obtained

from the previous SPM, Mr Savage, to the effect that he would have wanted

to see Mr Savage’s contract with Post Office. Mr Bates persuasively

explained that this would have been odd, the terms could have been very

different, Mr Savage had been in position for around 19 or 20 years, and his

concern was the terms that Post Office was offering him {Day 2/32:14} -

{Day2/34:11}.

– 114 –
A(2) LEAD CLAIMANT SPECIFIC EVIDENCE
Mr Bates

266.3 Mr Bates’ very fair position was that he could not be clear either way about

specific matters which were put to him “would have” been said to him in

interview, but that the majority of his interview was spent going through his

business plan {Day2/41:22-25}- {Day2/42:1-3}. The Court is invited to reject

Post Office’s “would have” case in this interview in circumstances where there

is no Post Office evidence as to the position as at 1998.

266.4 Mr Bates’ could not have been clearer that he did not receive a copy of the

SPMC with the 30 March 1998 letter {D1.1/1}. He received the three page

document {D1.1/1/2-4} and the two page document {D1.1/1/5-6} and no more

{Day2/49:20} – {Day2/50:3},{Day2/51:17-20}, {Day2/52:5-7}, {Day2/53:6-9}. He

was not aware of the existence of a 114 page contract and if he had received

it he would certainty have gone to his solicitors and would not have signed

what he thought was a very straightforward document the same day

{Day2/56:11-18} (an observation entirely in keeping with Mr Cavender’s

characterisation of Mr Bates as a “details man”). The evidence of Mr

Williams that Mr Bates “would have” been sent a full copy with the offer of

appointment was undermined by the contents of the Induction Booklet

{E1/12/1}, his concession that Mr Williams was not the person tasked with

actually sending it to him, and his position essentially boiling down to the

fact that because people didn’t contact him to say they had not received the

SPMC, the SPMC was consistently sent out {Day 6/158:11} – {Day6/160:24}.

The Court is invited to prefer Mr Bates’ evidence.

266.5 Consistent with the above, when Mr Bates signed the Acknowledgement of

Appointment {D1.1/2} he believed the reference to “contract” to be the

documents he received with the letter dated 30 March 1998 {Day2/61:2-4},

above. On this document Mr Bates was cross examined on the basis that it

was “pretty obvious” that the “Book of Rules” and “Postal Instructions”

referred to the documents listed in the ARS 110 {Day2/62:2-10}, to which Mr

Bates comprehensively explained why he did not agree {Day2/62:11} –

{Day2/53:18}. Post Office’s case as to obviousness of these terms should in

any event be rejected for reasons set out above – it is e.g. impossible to

– 115 –
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Mr Bates

reconcile with Mr Webb’s evidence that he would be unable to explain what

“postal instructions” meant.

266.6 Mr Bates evidence more broadly about branch transfer day included the

following: “you have to appreciate what it's like on the day you are taking over a

new Post Office when that Post Office is in operation, you have a trainer in there.

The amount of documentation that you find behind a post office counter is

phenomenal in there. You are very much relying on the Post Office trainer there who

is there to support you and take you through it. So when he -- and he does go

through and he checks things as best as you know, because you have no idea what

there is there. So you do very much rely on the fact that he has presented you with all

these things and says, yes, they are all fine, these are the documents we have to finish

off and sign off. So yes, from that point of view I did sign it. But if you actually asked

me, did I examine every one of these documents beforehand? I would have to say no.

I had to rely on the Post Office trainer for checking those.” {.” {Day 2/62:17}-

{Day2/63:10}. He was presented with about 20-30 documents he was

presented with, some of which he was required to sign, and there was no

opportunity for any proper discussion and/or explanation {Day2/74:5-23}.

266.7 When challenged on the basis that a deficit of £1,182 was “a staff error, isn’t

it”, and asked what investigations he had carried out, Mr Bates fully

explained the difficulties he had had in carrying out an investigation by

reference to reports available to him in the branch, why it was unlikely to be

a staff error, and his view that this was a Horizon error {Day2/129:6} –

{Day2/132:11}. Further that what he was asking for was the proper tools to

investigate the data, and when challenged that the report writing functions

“were not basic, they were good and useful” responded “Sorry, I was the

subpostmaster, and to be quite honest they went. They weren’t good enough for the

job” {Day2/135:12} – {Day2/136:9}. The Court is invited to accept this

evidence.

266.8 In respect of training (Mr Bates had 1.5 days training at a hotel with 150

others (§132) {C1/1/28}), Mr Bates maintained that this training was lacking,

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Mr Bates

it wasn’t very good {Day 2/137:21-22} and that he “didn’t recall any

explanation how to identify the cause of alleged discrepancies or how to dispute

them” {Day 2/138:3}.

266.9 Mr Bates was left unchallenged on his evidence both in his witness statement

and repeated orally that he asked for further training and was refused:

§143.3 {C1/1/30}, {Day2/140:10} and {Day2/142:10-21}.

266.10 In respect of the Helpline, Mr Cavender QC did no more than “formally put”

“that the Helpline did give you reasonable help and assistance with problems you

may have suffered”, which unsurprisingly Mr Bates rejected {Day2/141:24} –

{Day2/142:23}.

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A(2) LEAD CLAIMANT SPECIFIC EVIDENCE
Mrs Stubbs

Mrs Stubbs

267. The Court is invited to accept the evidence of Mrs Stubbs as set out in her witness

statement and amplified in her oral evidence. Her evidence supports the factual

propositions in section A of her IPOC {B5.2/2}, which the Court is invited to find as facts.

268. The Claimants say that Mrs Stubbs contract was formed on 4 August 1999, which is the

day after her husband died, and the day the Area Manager Mr Woodbridge visited her

at home and she agreed to take over the role of SPM. Mrs Stubbs was not provided

with a full copy of the SPMC or any other contractual documentation prior to this date.

Mrs Stubbs’ contract was varied with the introduction of Horizon in around 2000.

269. The Defendants’ pleaded case is that Mrs Stubbs was under a contractual obligation to

train her assistants from July 2006 (IDEF §30(3) {B5.2/3/16} and see Reply §24.5

{B5.2/4/13}). It was not put to Mrs Stubbs that she had been given notice of the July 2006

contract variation in respect of assistants, which in her witness statement she said was

not explained to her and she was not aware of (§67 {C1/2/15}), and the Court is invited to

find that absent notice, there was no such variation in her case.

270. There were limited challenges to Mrs Stubbs’ evidence, to which Mrs Stubbs

comprehensively responded. To the extent it may assist the Court to summarise the

position in relation to some of those challenges:

270.1 When challenged that she must have known it was “not an employment

relationship or anything like it”, Mrs Stubbs explained she had been unclear of

her initial status and whether she was an employee, and had had her “salary”

taxed at source on PAYE during the first 18 months {Day2/164:1-16}.

270.2 Various documents were presented to Mrs Stubbs as possible documents she

may have signed, but Mrs Stubbs thought each unlikely / did not recognise

their content, and Mr Cavender QC did not make a positive case on any of

them {Day2/165:20} – {Day2/167:22}.

270.3 The position was similar in respect of the letter dated 23 September 1999

{D1.2/1-8} which it is Post Office’s case she was sent (despite much of the

content being obviously not applicable to her). Mrs Stubbs was clear that she

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A(2) LEAD CLAIMANT SPECIFIC EVIDENCE
Mrs Stubbs

didn’t receive this letter and this was not what she signed to receive her

salary, as she had already received that by the date of this letter {Day2/169:8}

– {Day2/170:25}.

270.4 Mrs Stubbs was “staggered” that she had been suspended, “Because for more

than six months I had been asking Post Office to help me find the source of these

alleged shortfalls. I will not accept that this was money that was removed from my

branch” {Day 2/175:1-6}. She was locked out of her branch, and when asked

why she did not check her contract for the provision that was being cited as

the basis of her suspension explained: “I couldn’t do that. That was all locked

up. I wasn’t allowed to see that. I had no entry to my post office from the day they

did the closing audit. They took the keys away, locked them up and I was allowed

nothing” {Day 2/176: 4-7}. She explained: “… I did write, however, to several

senior members of the Post Office executive -- I got a reply from one -- telling them

exactly how I felt. And I am afraid I was told by Post Office that I was basically a

non-person; I didn't exist and I had no right, no right whatsoever, to communicate

in any way with anybody at Post Office” {Day 2/177:1-7}.

270.5 Challenged that she must have realised there would be provisions to

terminate “even employment contracts have terms in – not that this is an

employment contract, but have terms of notice in” Mrs Stubbs explained : “No, I

didn't realise that actually. It was because I owned the building. I owned the post

office building inside. Yes, I didn't own the money, I didn't own the stock, but the

majority of stuff connected with the post office I owned and I felt that, yes, I couldn't

be terminated; just told to pick up and go away” {Day 2/179:2-7}. “ Further I

assumed that, if I was doing my job correctly, that I would – I suppose I thought

they would give me warning because I had all of these shortages. I thought they

might give me a warning. I did actually hope that Post Office would help me to find

the source of the losses.” {Day 2/182:5-10}.

270.6 Mrs Stubbs resigned on 12 May 2010, when put that this was of her own “free

will”, Mrs Stubbs responded “After the eight months I had had, yes, I didn’t feel I

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Mrs Stubbs

could carry on” {Day 2/153:19-22}, clearly expressing that the resignation was

forced.

270.7 Mrs Stubbs had explained in her witness statement that she had experienced

shortfalls over a period 2000-2001 during which time an electrical fault

caused power outages at her branch up to 36 times a day. No challenge was

made to this evidence by Mr Cavender QC. This was the period during

which the infernal email dated 1 November 2000 “It is Horizon related”

{E2/10/2} was sent.

270.8 In respect of the period when the branch was moved to a portacabin in 2009-

2010, it was in this context that Mrs Stubbs called the Helpline said “I have

got this shortage, I don’t think its right, what can I do about it”, but apparently

because she did not say the specific words that she wanted to raise a

dispute, it was not treated as such {Day3/15:19} – Day3/16:12}.

270.9 Challenged as to what investigations she undertook, Mrs Stubbs gave a

thorough account of her checks and investigations, including following the

guidance of the Helpline to look for extra noughts, stating that “It never

happened, I never found it, and I never saw anything that looked the least bit

suspicious. And to pay out £9,000 too much in a matter of two and a half weeks I

think would have involved every single customer being given too much money”

{Day3/20:18-21}. She considered that the only realistic causes of these

alleged shortfalls was Horizon: “Horizon was a hidden partner in our accounts. I

had no idea what Horizon was doing” {Day3/25:2-3}.

270.10 After various challenges and possibilities having been suggested as to

potential causes of shortfalls, it was put to her that there was nothing wrong

with Horizon, it was operation by the branch, by her and her staff that

caused the losses, which she entirely disputed {Day3/55:17-23}. Post Office

case to this effect is wholly at odds with Mrs Stubbs history of having

operated the branch without problems for many years previously (with the

notable exception of the power outages), and the evident care and control

with which she continued to do so.

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Mr Sabir

Mr Sabir

271. The Court is invited to accept the evidence of Mr Sabir as set out in his witness

statement and amplified in her oral evidence. His evidence supports the factual

propositions in section A of his IPOC {B5.3/2}, which the Court is invited to find as facts.

272. The Claimants say Mr Sabir’s contract was formed in respect of Cottingley branch on 19

July 2006 (when he signed and returned Appendix 1 in respect of Cottingley), and 19

August 2006 (as before, in respect of Crossflatts).

273. Cross examination of Mr Sabir at times failed to have regard to the fact that English is

not Mr Sabir’s first language, most memorably {Day3/79:12-23} and {Day3/95:6-16}:

Q. Do you accept from me that being involved over a period
of years as an assistant accountant means that I can
consider you as not commercially naive? You are not
commercially naive, are you, Mr Sabir, at the time when
you applied to Post Office in 2006. Do you accept that?
A. I did not understand your question, please.
MR JUSTICE FRASER: Rephrase it.
MR CAVENDER: As at the time you applied to Post Office in
2006, at that time, yes?
A. Yes.
Q. You were not commercially naive, were you?
A. Can you explain?

Q. What this suggests -- I am going to put to you -- is not
someone who is commercially naive, but someone who has
thought about the business and put forward a perfectly
sensible business plan. Is that fair?
A. My Lord, English is not my first language. Can you
please ask counsel to ask the question in a simple
language, please.
MR JUSTICE FRASER: Yes.
I think it was the phrase "commercially naive" that
we had problems with about ten minutes ago. So would
you like to rephrase it.

274. Where questions were clearly put and understood, Mr Sabir was well able to respond

and give a detailed account of the matters addressed in his witness statement.

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A(2) LEAD CLAIMANT SPECIFIC EVIDENCE
Mr Sabir

275. To the extent it may assist the Court to summarise some of Mr Sabir’s oral evidence and

the challenges made to it:

275.1 Mr Sabir was cross examined in relation to notice, by reference to his

position as an assistant accountant “Was that terminable on notice” Could they

give you notice to end the contract”, to which he said yes, but when put “So

wouldn’t it be the same, you wold expect, such a provision, in relation to your

contract you would enter into with Post Office”, he responded “How can this be

the same? I was employed by them and I have not invested a penny in that business,

and in Post Office I invested £82,000. How can both things be the same?”

{Day3/92:20} – Day3/93:6}.

275.2 Mr Sabir very reasonably said that he could not remember if he received the

brief summary of conditions apparently enclosed with the 30 June 2016

letter, which led to lengthy challenges on an unusual basis (he was asked if

his memory was improving in the witness box), to which Mr Sabir fairly and

simply stated that “I did not say I did not receive it. I said I don’t remember it.

This is my simple answer” {Day3/103:1-2}.

275.3 In respect of the interview for the Cottingley branch on 10 July 2006, Mr

Sabir was cross examined by reference to what Mr Haworth said he “would

have” said (although the questions were not initially clearly put on that

basis). The Claimants’ position as to Mr Haworth’s evidence is addressed

above under the heading “The Checklist”. Mr Sabir could not recall the

contractual matters allegedly covered during the interview but when asked

(on a fairly combative basis) “What can you remember”, gave a measured and

clear account of his recollection: “I went for the interview, he asked me: can you

give me example of previously you have been in -- dealing with a person and you

have sorted that matter out? And I gave example for that one. And I also can

remember I said the customer is always right. The words which -- I can't remember

if those are the words. And then he asked: how you are going to run this when

everything -- I told that first six months we will look into the business and then we

will do. There was much space for expansion and we will increase the retail side, and

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A(2) LEAD CLAIMANT SPECIFIC EVIDENCE
Mr Sabir

that is why other sales will be creased. These are the things I can remember. Apart

from that, these are too old things. So I can't remember what we discussed, and I

can't lie in front of you, my Lord” {Day3/110:10-24}.

275.4 Mr Sabir was interviewed for the Crossflatts branch on 15 August 2006. Mr

Sabir maintained that this was very short as he was already running the

Cottingley branch at this point {Day 3/143:12-19}.

275.5 As addressed above, although Mr Sabir could not recall a contract having

been include with the 13 July 2006 letter, and this being the subject of some

lengthy questioning by Mr Cavender QC, he chose not to actually take Mr

Sabir to a copy of the 2006 SPMC which it is apparently Post Office’s case

“would have” been enclosed.

275.6 Mr Sabir had received 5 days of classroom of training in Burnley for the

Cottingley branch. He accepted that this training was “useful” {Day3/127:7-8}

but maintained it was “not enough” once it came to being in branch

{Day3/127:11-15}. I respect of balancing: “I explained that at the end of five

days, most of us were working, our balance was not right. We did not understand

100 per cent how the procedure works because there is a difference between working

on ground and getting training in the classroom” {Day 3/129:20-24}. He

described the on-site training he received as “ helpful but for the new person it

is not enough” {Day 3/127:23}. The evidence in his witness statement that he

was not given any training in relation to the Crossflatts despite having

requested it was not challenged.

275.7 In respect of branch transfer for the Cottingley branch on 8 September 2006,

Mr Sabir fair position was that “I can’t remember everything but I remember

most of the things” {Day3/130:16-17}, in regards to branch transfer day. Mr

Webb’s account of what he “would have” done was put to him, including that

he would have given Mr Sabir time to read the documents carefully, Mr

Sabir disagreed, and explained further “When the auditors come on site to

transfer the branch they only let the new subpostmaster do very little things. They

deal with the old postmaster, and they assume that the new postmaster also think

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Mr Sabir

that these are the people on my side and they also act like this, and most leave

balancing, and everything is done by the auditors. They don't -- they just ask

sometimes to count a little bit of cash or some stamps, not more than this.

Everything is done by the auditors who come on site. I think this is the practice, I

don't know about now, but at that time they were -- because I had been transferred

to Cottingley Post Office, they did the same thing. And when the Crossflatts Post

Office was transferred they also did the same thing”{Day3/ 131:13}, and further

“When they are working like you, how can you ask them to give you some more

time? They assume they are on your side, and they are working for yourself. When

the audit is finished they ask you to sign the paperwork and then they say, "Yes,

okay, open the branch tomorrow then" {Day 3/132: 15-19}.

275.8 In respect of the matters prior to the audit on 10 August 2009 which led to

his suspension and termination from both Cottingley and Crossflats, Mr

Sabir gave an articulate account of the problems which he had experienced

in relation to lottery scratchcards, how he had discovered the issue, and how

he had sought advice using the Helpline how to resolve it, how he had

showed the auditor his Helpline reference number, and that he had the cash

in the safe {Day3/152:8} – {Day3/154:17}. When put to Mr Sabir that all he

had to do was count how many he was short and put that in Horizon, he

explained “I requested the Helpline before the auditors came. If auditors came

before, and if they have found that I have not done anything, then this was my

mistake. But I have already requested Helpline, "Please ask lottery people to ring

me. I can resolve this problem". Realistically, I was doing sometimes Wednesday

two/three hours off in the afternoon, and since I made this complaint, I used to go

straightaway back to office and I advised my staff, "If anybody ring from lottery

section from Post Office, please call me straight away, I want to -- because I want to

get rid from this problem I have" {Day3/164:1-12}. Mr Sabir’s account was

patently truthful and there was no effective challenge to it.

– 124 –
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Mr Abdulla

Mr Abdulla

276. The Court is invited to accept the evidence of Mr Abdulla as set out in his witness

statement and amplified in his oral evidence. His evidence supports the factual

propositions in section A of his IPOC {B5.4/2}, which the Court is invited to find as facts.

277. The Claimants say that Mr Abdulla’s contract was formed on 11 December 2006, which

is the date he signed Appendix 1 {E4/45}.

278. Post Office mounted a direct challenge to Mr Abdulla’s integrity, which the Claimants

invite the Court to reject, both on the basis of Mr Abdulla’s own responses, but also

importantly in the context of the evidence as it subsequently emerged in relation to

repeated and erroneous TCs having been issued to Mr Abdulla. Mr Cavender QC

chose not to challenge Mr Abdulla about the detail of any of those TCs in cross

examination (referring in passing to them as “potted views” {Day4/85:24}), but the force of

Mr Abdulla’s reasoning subsequently becoming very clear when his documents were

put to Post Office’s own witnesses, including Mrs Van Den Bogerd and Mrs Ridge. The

Court is invited to find that Mr Abdulla did receive erroneous TCs which were

mistakenly accepted, and that this was understandable given the way in which the

information was presented to him, and further that these erroneous TCs accounted for

most if not all of the amount which was found at audit and Mr Abdulla was encouraged

to repay, and did repay, prior to his appointment being terminated.

279. In respect of some other aspects of Mr Abdulla’s oral evidence:

279.1 Mr Cavender QC put his “details man” and “not commercially naïve” refrain to

Mr Abdulla, in response to which Mr Abdulla made clear he had never

owned a business before and his background was in sales {Day4/9:19}

{Day4/10:5}. This was consistent with Mr Abdulla’s evidence that when he

received the letter inviting him to interview {E4/30} he skipped to the section

regarding remuneration {Day4/21:5}.

279.2 Mr Abdulla had discussions with the outgoing SPM, Mr Sandhu, which

were primarily in regard to the lease, including Mr Abdulla’s concern that it

was only for 12 years {Day4/10:14-25}. Asked whether he had asked for a

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A(2) LEAD CLAIMANT SPECIFIC EVIDENCE
Mr Abdulla

copy of Mr Sandhu’s contract Mr Abdulla persuasively explained that he

would not have asked for it, no one from Post Office told him to ask for it,

and he thought that was a personal matter for Mr Sandhu {Day 4/16:13-25}.

279.3 Mr Abdulla believed he skimmed over the Brief summary he was sent,

noting “obviously I didn't pay too much attention because if it says it is not to be

relied upon, so I don't know if it is -- those conditions are going to be in the actual

contract or not. So there is no point in really studying those points really.” {Day

4/27:17-24}

279.4 In respect of the interview on 22 November 2006, Mr Cavender QC cross

examined Mr Abdulla by reference to the items that Mrs Ridge said she

“would have” covered as set out in her witness statement. Mr Abdulla gave a

fair and considered account as to what he could and could not recall e.g. he

could recall branch accounts had been mentioned, but said she had definitely

not mentioned any figures, and agreed training had been discussed because

he had enquired about this. He was certain that neither suspension nor

termination had been mentioned: these would have been a “red flag”, “really

worrying” and he would have had to go away and do more research {Day

4/38:5-25}. He was emphatic that she had not recommended professional

advice: “Definitely not, sorry. No way. That is no way suggested, about taking

professional advice. She never mentioned anything about professional advice and I

categorically and specifically state that no mention of seeking professional advice was

mentioned by her. If I knew at the time of what I know now, I would have definitely

sought professional advice. But at the time she didn't mention anything. No one

mentioned anything about professional advice. In fact, going to interviews, even

from suspension and termination, it was stated not to have legal advice. You cannot

bring a lawyer, you cannot bring someone who is a solicitor or someone from -- so

this is definitely not mentioned.” {Day 4/39:6-19}. Mr Abdulla’s account was

plainly truthful and the Court is invited to accept it.

279.5 It was put to Mr Abdulla that he had used the term “partnership” in the

colloquial sense (which is entirely consistent with his case), which he agreed

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A(2) LEAD CLAIMANT SPECIFIC EVIDENCE
Mr Abdulla

“I was referring to the fact that you're working together, so you're working together

to make money, and that was both the Post Office's and my primarily -- primary

goal, was to make money. Increase sales and make money” {Day 4/53:2}.

279.6 Mr Abdulla having been shown a copy of the 2006 Modified SPMC prior to

giving his evidence gave compelling evidence that he had never previously

received it, explaining that if he had, he would have taken legal advice about

it {Day4/12:3-18}, {Day4/65:5-9}.

279.7 In respect of branch transfer day, Mr Abdulla explained he signed a lot of

documents and there was no time to read or go through them all {Day

4/75:7-8}, he was given pages and told where to sign {Day 4/78:18-22}. In

relation to the documents listed on the ARS 110 {Day4/81:7} he said: “Okay,

let me explain. The volumes were in a big – a lever-arch file, maybe one or two

depending on the size of the volumes. So it wasn't like you could go through each

individual manual and, you know, check that there. So what would have happened

was they would have just looked to make sure that they were in that file and then I

would have signed it. So it is not something that you would go through individually

and go through each one, that is how it looks like, but it is not like that. Because

obviously you are just having -- just operating on Horizon how to sell a postal order,

fishing licences and so on and so on. So again, as I said, there is no time to go

through all that. You are just signing and carrying on with the next document.”

This evidence is to be construed by reference to the scale and complexity of

the documentation subsequently provided by Post Office by reference to Mr

Abdulla’s ARS 110, addressed at above at Scope, Complexity and Clarity.

279.8 In respect of the 10 days classroom training Mr Abdulla received in January

2007, Mr Abdulla very fairly accepted this was helpful {Day4/140:14-19}, but

that it was largely focused on sales. Training on the dummy Horizon system

did not however replicate balancing in real life {Day4/141:17-25}. Post Office

now accept that Mr Abdulla would have expected all the necessary training

on Horizon to be provided {Day4/84:18}.

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Mr Abdulla

279.9 Mr Abdulla explained the way in which Horizon operated to force

acceptance of TCs “A. No, you -- I just explained it to you. You have to accept it

whether you like it or not. Whether you – it is still in dispute if you have disputed it.

Whether you agree with it or not, you have to accept it. It is not that you have a

choice. On transfer rollover period you have to accept it.” {Day4/93:9-14}.

279.10 The cross examination of Mr Abdulla on the basis that he kept an undated

personal cheque of £2,500 in the till falls to be construed in the context of (1)

Mr Abdulla’s evidence that he had been told the previous SPM had done

this, and his NFSP representative informing Mrs Ridge that this was indeed

common practice {E4/79/13} (2) the fact that TCs had been erroneously issued

to Mr Abdulla – addressed above, and that he was anticipating

compensating TCs would follow (as he also stated to Mrs Ridge, in

interview). Mr Abdulla was limited in what he could do as he was largely

waiting for TCs, he called the Helpline but they were not helpful; “they were

going through a flow diagram or step-by-step guide”, he was mainly told to go

through paperwork or just wait for TCs. {Day 4/130:17-24}. He clearly

explained his belief that “the losses were not actual losses, they were just

transaction corrections and they were going to be corrected” {Day4/116:16-25}.

280. The subsequent evidence of Mrs Ridge in relation to the limited information available to

her and as provided to Mr Abdulla prior to the decision being made to terminate his

appointment requires no further comment.

– 128 –
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Mrs Stockdale

Mrs Stockdale

281. The Court is invited to accept the evidence of Mrs Stockdale as set out in her witness

statement and amplified in her oral evidence. Her evidence supports the factual

propositions in section A of her IPOC {B5.6/2}, which the Court is invited to find as facts.

282. The Claimants say that Mrs Stockdale’s contract was formed on 17 February 2014, being

the date she signed the NT Agreement.

283. As to Mrs Stockdale’s oral evidence, to the extent it may assist the Court:

283.1 Mrs Stockdale explained that the main focus of her interview had been on

the presentation of her business plan {Day 4/165:5-11}. The extent of Mr

Cavender QC’s “not commercially naïve” narrative became clear as it was put

to Mrs Stockdale that including content in her business plan at {E6/16/13-16}

such as remembering to “smile” and “listen”, and offering training courses to

staff showed she was “not commercially naïve” and in fact was “reasonably

sophisticated”.

283.2 Asked whether Mr Carpenter would have run through the key sections of

the contract at interview, she responded “I can honestly say I don’t actually

think he did” {Day4/166:13-15}, and in other respects disputed Mr Carpenter’s

account of what he “would have” done. Pending decryption of the interview

file, the Claimants’ position is as previously set out as to Mr Carpenter’s

evidence as to his alleged practice, and, in light of the position as it

transpired with Mr Trotter, certainly say no weight can be attached to a

checklist having been ticked by Mr Carpenter.

283.3 As to material sent to her post interview, including the NTC, Mrs Stockdale

was cross examined on the basis that “You had legal advice, presumably, on the

purchase of the lease? The lease was purchased by you by a lawyer, I suspect?”

which she confirmed was in fact incorrect {Day4/175:15-23}. When asked

about the Operations Manual she said she probably would have flicked

through it but couldn’t say she would have digested it {Day4/178:5-6}.

Questions were then put to her (without reference to the actual documents)

– 129 –
A(2) LEAD CLAIMANT SPECIFIC EVIDENCE
Mrs Stockdale

which she accepted that “Q. But you obviously had the contract by that stage

which itself had a termination provision in it, referred to here, of six months' notice.

Presumably you would have read that by this stage as well? A. Yes, I would have

thought so. Q. And you would have recognised that that was a reciprocal right: you

could give six months' notice, or the Post Office could --A. Yes” The Court will

consider the weight to be given to those answers given the complexity of the

NTC and the witnesses earlier answers.

283.4 Mrs Stockdale explained the position she quickly found herself in after she

began to suffer alleged shortfalls almost as soon as she took over the branch.

Some of these she paid off but she explained how she quickly got into a

difficult situation because she was not allowed to settle centrally any further

losses when she was in a repayment period {Day 4/201:5-21} “Because of all

the shortages that I have been -- had have been having in the past, I was on a scheme

with the Post Office to pay back X amount of the monies through my remuneration.

They were taking 500 and something pounds out of my remuneration every month.

And I had been told in writing and by a member of the Post Office staff that you

can't enter into more than one of these arrangements within a year of each other. So

obviously I was already paying back the previous amount, so I feel that, when all

these things were still going wrong with the Horizon system, I had no other choice.

Because what else could I do? I had to carry on trading and this was the only way

that I could carry on trading. Because I felt, after everything that had happened with

myself and -- in my point of view, the Post Office weren't doing anything to help

me. I had no other choice but to do this.” This evidence from Mrs Stockdale

plainly falls to be considered in the context of the Generic Evidence set out

above. The email Mrs Stockdale referred to was that at {E6/128.1}.

283.5 Mrs Stockdale explained the lengths she had gone to set up her own paper

trail and install CCTV (addressed in her witness statement §99 – 113) but that

the shortfalls kept appearing {Day4/203:106}. It was clear Mrs Stockdale did

not know what else she could do {Day 4/205:4-6}: “I just felt at the time that I

had no other choice because of everything else that was going on with the money I

was already paying back”.

– 130 –
A(2) LEAD CLAIMANT SPECIFIC EVIDENCE
Mrs Dar

Mrs Dar

284. The Court is invited to accept the evidence of Mrs Dar as set out in her witness

statement and amplified in her oral evidence. Her evidence supports the factual

propositions in section A of her IPOC {B5.1/5}, which the Court is invited to find as facts.

285. The Claimants say that Mrs Dar’s contract was formed on 2 July 2014, being the date she

signed the NT Agreement.

286. Mrs Dar was a compelling witness with exacting standards and excellent recollection of

events, as demonstrated by her ability to recall to a very near degree of accuracy what

had been said at the interview with Mr Trotter on 9 December 2013, as later established

by the disclosure of the recording of that interview.

287. As to particular aspects of Mrs Dar’s oral evidence which it may be helpful to address:

287.1 Mrs Dar did not believe she had received any draft contract prior to

interview, this was an extremely busy time {Day 5/14:13-24}. She dealt

courteously here and on other occasions with being cross examined on the

basis she would have shown every document to her husband and father “I

don’t show every email to my dad and my husband. When it is an email from one

person to another, generally I will deal with most of these things. My husband dealt

with the shop very well” {Day5/15:2-7}.

287.2 The cross examination of Mrs Dar by reference to the 9 December 2013

interview record was on its own terms ineffective, as when given the time to

review the interview transcript she found all references to the material she

had been challenged about, with the exception of the reference to legal

advice not really being necessary, which she had in fact already placed in her

witness statement (before the interview transcript was available) at the 4

June 2013 meeting §58 {C1/54/11}, in terms as follows:

“Mr Trotter said that I would receive a contract and mentioned the possibility
of obtaining legal advice, but he very much conveyed to me that this wasn’t
necessary and that I could trust his word. He indicated that there was nothing
too detailed or complex in there. I trusted Mr Trotter, as he had been very

– 131 –
A(2) LEAD CLAIMANT SPECIFIC EVIDENCE
Mrs Dar

helpful to me throughout the process. I told him that I would get my dad to
read over the contract when I received it, which is in fact what I later did.”

287.3 Mrs Dar was cross examined about her evidence on this topic on the basis

that “There was only one interview, wasn’t there” {Day5/26:7}, despite this being

a position directly contrary to the IDEF §18(2) “There was a second interview,

which occurred on 4 June 2014” {B5.5/3/7}, and indeed contrary to the position

later taken by Mr Trotter, who sought to contend in his oral evidence that he

completed the interview checklist on this second occasion {Day11/145:7-8}

(this was wholly unconvincing, never put to Mrs Dar, and should be

rejected). The Claimants contend that Mrs Dar’s evidence about the second

interview is likely to be as accurate as her recollection of the first, and note

that in fact Mr Trotter to a large degree corroborated her account on this

issue, when he stated “…I know she was taking a lot of advice from her father , she

did mention that. That was the only …conversation that came up, that she was

speaking to her father who had already run previous businesses and that sort of thing

, so she was taking advice from him” {Day11/162:3-9}.

287.4 Mr Cavender QC concluded his cross examination of Mrs Dar by putting

Post Office’s position as follows {Day5/89:25} – {Day5/90:7}:

What I suggest, Mrs Dar, is that at the time when you wrote your
witness statement, it wasn't known there was an existing tape-recording
of this interview. It got misfiled in disclosure and it came out later. So
you were able to say pretty much what you liked about what happened
at the interview and then you have been caught out by the fact that a
tape-recording and a transcript has later been provided.

To describe that position as ill judged - given the evidence as later followed

from Mr Trotter and his fictional checklists - would be something of an

understatement.

287.5 Mrs Dar agreed she had read clause 4.1 of the NTC on responsibility for

losses, in context as follows {Day 5/36:8-14}: “I read that, yes. Of course being

subpostmaster, yes, you would have to accept that, yes, you -- I would have the

confidence that we could resolve any issues. We had never had any issues previously

before in previous jobs dealing with cash or dealing with figures or anything of these

– 132 –
A(2) LEAD CLAIMANT SPECIFIC EVIDENCE
Mrs Dar

things. There is always a way to identify issues, investigate them and resolve them.”

Similarly in relation to termination: “Yes, I would have read that. It wouldn't

have been something that we would have been focusing on. I am sure at that point

we were actually told we had to leave a year's notice as long as you do get somebody

to stand in in your place. But that wasn't something we were considering, because

we thought this would be something for life for us.” {Day 5/36:8-14}.

287.6 Mrs Dar rejected the characterisation of the contacts as very straightforward,

in a characteristically straightforward manner: “Q … But I suggest to you it

was actually very straightforward? A. What part of the Post Office is very

straightforward? Q. The signing of this agreement and its structure? A. The

structure is not straightforward whatsoever. You get document after document after

document referring to things you probably need to cross-reference. I just wouldn't

think it is user friendly whatsoever.” {Day5/45:15-22}

287.7 Mrs Dar received 3 days of classroom training in November 2014, which she

explained was Post “far from sufficient” {Day5/75:19}. She did not recall

training by reference to any jigsaw, which she was sure she would

remember. She agreed she was given Horizon manuals (by Mrs Guthrie):

“Yes, I was given wee folders and told "Just put those in your desk", she set up the

desk for me, showed me where to put the labels and things, and just said, it's kind of

normal, "It's your bedtime reading, I will leave that there for you". So yes, there

were some documents there.” {Day5/79:5-10}

287.8 Mrs Dar remembered signing the Acknowledgment of Appointment

{Day5/49:4}, but rejected Mr Cavender QC’s suggestion “it is pretty clear from

this what agreement it is referring to” {Day5/49:9-10}. Her responses were

instructive: “Well, at this time it is not simple whatsoever. There was a huge mess

by that auditor, who was the signature of witness on there, and she had asked me to

sign that so she could leave, to sign things off. It was just a quick "Oh, sign here",

behind the counter. And it is not nearly as simple as that. It was less than simple.”

{Day5/49/:12-17}. “And you are in a hurry, you have opened late, you have an

auditor who has caused an absolute shambles -- sorry to speak openly, but for the

– 133 –
A(2) LEAD CLAIMANT SPECIFIC EVIDENCE
Mrs Dar

week before, and to be told "Just sign this" ... Sorry.”… {Day5/50: 7-11} And it

was a case of Margaret was just wanting to get away because she was going to

Kilsyth Post Office, she was going to the next one, she had a timeline to follow. She

didn't really care how she got there as long as it was signed off and she was away. It

was a shambles from day one, from the day she walked in.” {Day 5/p.53/lines 1-

11}. Mr Cavender QC at this point stated “None of that is in your witness

statement.” {Day 5/53:12} – the Court will note that the mess caused by Mrs

Guthrie and her inability to resolve it is dealt with at §110 – 113 of her

witness statement {C1/5/21-22}. This evidence in fact went unchallenged.

287.9 Mrs Dar took the management of the branch very seriously, and was

concerned to try to get to the bottom of unexplained apparent shortfalls: “It

is a serious matter from the beginning. It is something I did take seriously. I would

take the -- keeping note of everything, of my finding the right time in the day to do

my cash declarations, all of these things. Of course, it is the most -- one of the most

important aspects of having a post office. It is not something I take lightly.”

{Day5/54:6-12}. Her requests for help following the audit on 17 May 2016

were not met: “MR CAVENDER: My Lord, yes. You had no explanation for that

shortage, did you? A. No, it just didn't make sense whatsoever. And that is why at

that point I did ask the auditor, John Fraser at that time, I said we can't go on like

this, I need – it is going to destroy us entirely. It was even at that point. But I was

told it was self-audit. I said "Could somebody come in and help me, just watch what

I am doing, make sure I'm not doing anything wrong". And I was just told no.”

287.10 The challenge made to Mrs Dar’s evidence that the Helpline provided her

with a workaround was ineffective, Mrs Dar giving a very clear account of

what she was told and why she remembers it, and categorically that was the

case {Day5/82:8-25}.

287.11 To the extent it was intended to seriously challenge Mrs Dar’s honesty

{Day5/72:8-13}, that challenge should be roundly rejected.

– 134 –
B COMMON ISSUES
Issue 1: Relational Contract

B COMMON ISSUES

Issue 1: Relational Contract

Issue 1: Was the contractual relationship between Post Office and Subpostmasters a
relational contract such that Post Office was subject to duties of good faith, fair dealing,
transparency, cooperation, and trust and confidence (in this regard, the Claimants rely on
the judgment of Leggatt J in Yam Seng Pte v International Trade Corp [2013] EWHC 111)?

Relevant principles

288. The principles relevant to this Issue are set out in:

288.1 Annex II to the Claimants’ Written Opening {A/1/177} – {A/1/192}; and

288.2 The propositions set out in the Appendix to these Written Closing

Submissions, under ‘Relational Contract’.

Findings sought

289. In the Claimants’ Written Opening, the Court was invited to make the following

findings as to the characterisation of the SPMC and NTC as relational contracts: 157

289.1 these contracts are of a long-term nature and involved a high degree of

commitment, cooperation and predictable performance; and

289.2 the mutual trust and confidence upon which those requirements are based are

plainly not legislated for in the express terms of those contracts.

290. The Claimants also invited the Court to make the following findings as to the

obligations arising under these relational contracts: 158

290.1 good faith, which for present purposes extends to:

a. acting honestly and with fidelity to the bargain; and

157 Claimants’ Written Opening, §112 {A/1/48}
158 Claimants’ Written Opening, §138 to 143 {A/1/57}

– 135 –
B COMMON ISSUES
Issue 1: Relational Contract

b. not acting dishonestly and not acting to undermine the bargain entered or

the substance of the contractual benefit bargained for;

290.2 fair dealing, transparency, cooperation and trust and confidence. 159

Submissions

291. Written opening submissions: in support of the findings above, the Claimants refer the

Court to, and rely upon, the detailed submissions made on this issue in their Written

Opening Submissions (Section B: Relational Contract) 160 and the written evidence of the

Lead Claimants and the Defendant witnesses referred to in that opening.

292. The Court is invited, having heard the evidence at trial, to make the findings above in

the light of those submissions, and in the light of the following further points.

Long-term nature of the relationship

293. There can be no doubt that the contractual relationship between Subpostmasters and the

Defendant were long-term in nature.

294. Investments: The Defendant has already accepted in its Generic Defence that it “incurred

long-term and expensive commitments in respect of the Subpostmaster relationship, including by

providing valuable cash, stock and equipment to Subpostmasters on an unsecured basis”. 161 This

is not challenged by the Claimants; indeed, it is relied upon by the Claimants. 162

295. The Lead Claimants’ have set out extensively in their witness statements the

investments which they made upon entering into their contracts with the Defendant. 163

These have not been challenged by the Defendant, either by way of its generic evidence

or in cross-examination.

296. On the contrary, the Defendant’s evidence tended to support the Claimants’ case:-

159 Terms such as “fair dealing” are readily understandable and applicable.
160 §94 to 143 of the Claimants’ Written Opening {A/1/43} – {A/1/58}
161 GDef at §79(2) {B3/2/38}
162 GReply at §55 {B3/3/31}
163 See Claimants’ Written Openings at §116 {A/1/49}

– 136 –
B COMMON ISSUES
Issue 1: Relational Contract

296.1 Ms van den Bogerd (ultimately) accepted that the historical practice of

charging introductory fees essentially represented, in substance, a charge for

goodwill. 164

296.2 Mr Williams accepted that the previous contractual condition of

Subpostmasters only receiving 75% of their remuneration effectively reduced

the viability of the first year of appointment, 165 and when asked if this meant

that Subpostmasters would have to be looking a little more long-term in order

to recover their costs and investment, Mr Williams replied: “That is not

unfair.” 166

297. Expectations re termination: One of the Defendant’s key arguments in attempting to

rebut the notion that these contracts are long-term in nature is to focus on the

termination provisions available in both the SPMC and NTC. It is the first point relied

upon by the Defendant, and Mr Cavender QC summarised the position in his opening

submissions as follows: “So just taking those points cumulatively, a contract terminable on

short notice is a non-starter. Here one contract was terminable on three months' notice, the other

on six months' notice. Based on that one principle alone, these are not relational contracts.” 167

298. With respect, this approach is misguided:-

298.1 Nowhere in the case law is it stated or even intimated that the existence of

termination provisions is anathema to a finding that a contract involves a

“longer term relationship between the parties”. 168 There is a distinction between

provision for a contingency and an expected outcome. The analysis is of the

nature of the expected relationship – as to which the contractual terms form

only one part of that analysis.

298.2 The SPMC and NTC are unbounded as to their duration. Indeed, it is clear

that they often lasted for many years.

164 {Day9/9:14-21}
165 {Day6/143:3-5}
166 {Day6/143:9}
167 {Day1/136:2}
168 Per the wording of Leggatt J in Yam Seng at §143 {A1.1/43/33}

– 137 –
B COMMON ISSUES
Issue 1: Relational Contract

298.3 This is to be contrasted with the timeframes that are involved in the cases in

which a relational contract has been found. Yam Seng 169 involved a

distributorship agreement in which the ‘Contract Period’ was defined as

commencing on 12 May 2009 and expiring on 30 April 2010 (i.e. around one

year), with a provision for extension to 31 December 2011 (i.e. around two-

and-a-half years), subject to mutually agreed targets being met. 170 Bristol

Groundschool 171 specified a minimum duration of five years, and D&G Cars

Ltd 172 involved a contract awarded for a five year period, with an option to

extend for one year. The Claimant is quite wrong to focus on termination

provisions, so as to conflate the expected term of the relationship with the

termination provisions themselves.

298.4 The six Lead Claimants were all engaged by the Defendant for periods

measured in years as opposed to months: (i) Mrs Stubbs was a

Subpostmistress for eleven years; (ii) Mr Bates was a Subpostmaster for over

five years; (iii) Mr Sabir was a Subpostmaster for over three years; and (iv) Mr

Abdulla, Mrs Dar and Mrs Stockdale were all engaged by the Defendant for

over two years. Had events not unfolded as they did, doubtless they would all

have been Subpostmasters for many years more.

299. §134 of Yam Seng makes clear that the relevant background includes shared norms and

behaviours, some which may be specific to a trade or commercial activity, and others

which may be more specific still, and arise from features of the particular contractual

relationship. 173

300. The relevant contractual expectations at the time of contracting and the very nature of

the contractual relationship sing with one voice: the contract would not be terminated

on three / six months’ notice barring significant wrongdoing by a Subpostmaster. That

was the history and experience. It was Post Office’s practice. Furthermore:-

169 Yam Seng v International Trade Corp [2013] EWHC 111 (QB) {A1.1/43/1}
170 Yam Seng at §26 {A1.1/43/10}
171 Bristol Groundschool Ltd v Intelligent Data Capture Ltd [2014] EWHC 2145 (Ch) {A1.1/52/1}
172 D&G Cars Ltd v Essex Police Authority [2015] EWHC 226 (QB) {A1.1/56/1}
173 {A1.1/43/31}

– 138 –
B COMMON ISSUES
Issue 1: Relational Contract

300.1 The Lead Claimants were consistent on this point. For example, in Mr Sabir’s

cross-examination, it was put to him that he must have realised the contract

was terminable on short notice given his experience with termination

provisions in previous employment contracts. Mr Sabir replied: “How can this be

the same? I was employed by them and I have not invested a penny in that business,

and in Post Office I invested £82,000. How both things can be the same?” 174

300.2 At no point did the Defendant’s witnesses speak to an ability or a need to

terminate on short notice for no reason. Indeed, when Mr Beal was asked by

the Judge if he could think of any reason why the Defendant’s internal

guidance 175 would tell staff to give no reason for termination other than just to

say it is in “in accordance with the terms of your contract”, Mr Beal responded that

“No immediate reason springs to mind”. 176 Further:

a. Mr Breeden confirmed that the broad picture over the years is that the

Defendant does not actually use the termination provisions in the

Subpostmaster contracts, even on three months’ notice, unless something

has gone badly wrong in the branch. 177 Mr Breeden also confirmed that

corrective action measures are normally more appropriate as a course for

dealing with Subpostmasters who are failing to meet performance

standards than termination. 178

b. Separately, the Defendant may on occasion need to close certain branches

permanently. In those instances there are various agreements in place (such

as the Discretionary Fund Agreement {G/84/1}), the purpose of which, as

confirmed by Mr Breeden, is to compensate the Subpostmaster for the loss

of their investments and their long-term commitment in the business. 179

174 {Day3/93:3-6}. See also the evidence of Mrs Stubbs at {Day2/179:2}.
175 {F3/14/4}
176 {Day6/133:15}
177 {Day7/126:14-20}
178 {Day7/141:3-13}
179 {Day7/127:19-23}

– 139 –
B COMMON ISSUES
Issue 1: Relational Contract

c. Although questions were put to Lead Claimants in cross-examination as to

the purported reciprocal need for Subpostmasters to be able to give short

notice periods, it was clear from the Defendant’s witness evidence that the

norms of the contractual relationship are such that Subpostmasters are

often required to stay in branch long after their three or six months’ notice

has expired due to the need to wait for a new Subpostmaster to be

appointed. 180

d. Even the Defendant’s Written Opening frames the Defendant’s ability to

terminate the contract “on notice (or otherwise) when things go wrong.” 181

[Emphasis added] Even the express provisions of the SPMC speak to such

a construction, by the provision for an appeals process in relation to

allegations of wrongdoing, which would be meaningless if the true

agreement was that the Defendant could terminate in any event without

regard to such provisions.

High degree of commitment, cooperation and predictable performance required

301. This feature of the analysis, similarly, cannot be disputed. The Defendant has already

admitted that “the operation of the relationship between a Subpostmaster required

communication and cooperation”. 182 In light of the evidence heard by the Court in relation

to daily operations, branch processes and accounting, it is obvious that communication,

cooperation and predictable performance was required to a high degree.

Mutual trust and confidence are required (not legislated for in express terms)

302. Based on the evidence heard by the Court, this requirement is also satisfied:

180 For example, Mr Breeden accepted that Mrs Stockdale’s predecessor, Karen Collinson, was
“effectively hanging on rather unwillingly there in the branch” until such time as Mrs Stockdale could
take over the branch {Day7/137:14-17}. Mr Longbottom similarly stated: “I believe Karen Collinson
had been trying to leave the business for quite some years” {Day10/128:9} and that there are “many,
many reasons” why, in his experience, the planned opening date for a branch may be moved
{Day10/131:3}
181 §3 {A/2/3}
182 GDef at §80 {B3/2/38}

– 140 –
B COMMON ISSUES
Issue 1: Relational Contract

302.1 The Claimants rely on the matters set out at §119 of its Written Opening. 183

302.2 The Subpostmaster contracts do not contain any express terms in relation to

trust and confidence.

302.3 The Lead Claimants have spoken with one voice as to the trust that they

necessarily reposed on the Defendant. 184 The Claimants further rely upon the

many ways in which the contractual relationship between the parties was akin

to employment, as set out above, and in general the Defendant’s level of

control.

302.4 The Defendant too accepts that it “is a very trusted brand and is held in high

esteem by the public” 185. Further, the Defendant has consistently and

emphatically impressed upon the Court its need to repose trust in

Subpostmaster. 186

303. Beyond these particular points, the overall nature of the relationship is central to its

proper characterisation and consideration of the relevance of the shared norms of

behaviour which notional parties would have in mind in entering into such a

relationship. The Claimants would respectfully repeat paragraphs 106 and 107 of the

Claimants’ Written Opening:

106. Relational contracts are a developing area of the law. It is salient in the present
case to note that these contracts bear many of the hallmarks of employment
contracts, yet the liabilities centrally in issue in this case are not commonly found
in the employment context.

107. These hybrid characteristics mark them out as unusual contracts, at the nexus of
two (usually distinct) classes of contractual relationship. It is interesting to note,
however, that the duty of trust and confidence contended for by the Claimants is
one which is automatically implied in employment relationships. To the extent that
this context relied upon by the Claimants bears upon whether the Subpostmaster

183 {A/1/50}
184 See, for example, the evidence of Mr Abdulla at {Day4/67:7} and Mr Sabir at {Day3/141:2-3}
185 See the evidence of Mr Beal at {Day6/16:21-24}.
186 See, for example, the Defendant’s opening submissions at {Day1/79:12}. See also Ms van den
Bogerd’s witness statement at §41, which states that: “It is important that Subpostmasters act in a
way that supports the brand.” {C2/1/10}

– 141 –
B COMMON ISSUES
Issue 1: Relational Contract

contracts are to be characterised as relational contracts, it tends to support such a
characterisation – on one view, strongly.

304. The implied terms contended for flow from the nature of the contract, the shared

expectations of the parties, and, furthermore, as a result of necessity, by reference to

commercial or practical coherence. 187

305. In particular, the Claimants rely upon the following matters as exemplifying the

necessity (in the sense of commercial and practical coherence) for duties of good faith,

fair dealing, transparency, cooperation and trust and confidence:-

305.1 Investment: As set out above, both parties have invested significantly in the

contractual relationship.

305.2 Defendant control: The Defendant is afforded a striking degree of control in its

relationship with Subpostmasters.

305.3 Causes of shortfalls: The Defendant has accepted that there are several

potential causes of shortfalls which may arise outside of the branch, without

fault on the part of the Subpostmaster and without the Subpostmaster’s

knowledge. These include manual errors in relation to reconciliation and TCs,

client data integrity issues and Horizon errors. 188 Indeed, the Payments /

Mismatch document 189 demonstrates the very real possibility of such errors

and the Defendant’s ability to monitor, access and alter branch accounts

without the knowledge of Subpostmasters.

305.4 Investigations: Ms van den Bogerd accepting that investigations should be full

and fair, conscientiously considered by the Defendant, with the Subpostmaster

being afforded access to information that they need to make out their side of

the argument. 190

187 Marks & Spencer plc v BNP Paribas Security Services Trust Co [2015] UKSC 7, [2016] AC 742, at
§21 (per Lord Neuberger) {A1.1/61/13}
188 Accepted by Ms van den Bogerd at {Day8/38:4-19}.
189 {G/8/1}
190 {Day8/185:23} – {Day8/186:7}

– 142 –
B COMMON ISSUES
Issue 1: Relational Contract

305.5 Discretion to amend the contract: Mr Beal accepted that any changes made to a

contract or operational procedures, regardless of whether it is with the

agreement of the NFSP or not, should not be made dishonestly or in an

arbitrary, capricious or irrational manner. 191

305.6 Discretion relating to remuneration withheld during suspension: Mr Breeden

accepts discretion on any such decision should be exercised in accordance with

natural justice, fair-mindedly, and with openness, transparency and fair

dealing. 192

The Defendant’s arguments

306. The Defendant attempts to run four main arguments in response to the Claimants’ case

on this issue:- 193

306.1 Long-term nature and termination: That the agreements cannot be

characterised as long-term given their termination provisions. This is

misguided and has already been addressed above.

306.2 No clear lacuna: In contrast to other relational contract cases, there is no gap in

the contracts, given their detailed and comprehensive provisions. This

argument, however, ignores:

a. The Defendant’s own admission that implied terms are necessary as

matters such as cooperation are not accommodated for in the express terms

of the contract. The Defendant has conceded further implied terms relating

to the exercise of its discretion in relation to, at the very least, changes made

to the contract without the express agreement of the NFSP. 194

b. The contracts lack clarity in several material respects. This has become

glaringly obvious throughout the course of oral evidence and is addressed

fully above.

191 {Day6/78:24}
192 {Day7/112:2-13}
193 Set out in opening submissions at {Day1/132:18} – {Day7/133:6}
194 See, e.g. Bates/IDef at §65(2) {B5.1/3/38}

– 143 –
B COMMON ISSUES
Issue 1: Relational Contract

c. The contracts are, on their face, a live, working document that is in a

constant state of flux given the number of variations made and further

instructions given over time.

306.3 Necessity satisfied by Defendant’s implied terms: The Defendant’s argument

that there is no need to imply further terms as their proposed Necessary

Cooperation and Stirling v Maitland terms, collectively, “fills any gap it is

necessary to fill” 195 is of no practical utility to the parties or the Court. This is

addressed in further detail below in relation to Common Issues 2 and 3.

Suffice it to say, for present purposes, if there is a necessity to imply the terms

sought, they are to be implied. It has already been set out above how necessity

to the relevant degree is established in this case. The fact that the Defendant’s

proposed implied terms are sufficiently high-level so as to encompass almost

anything that is deemed necessary raises an issue of semantics, not substance.

It is also, as a matter of common sense and practicality, impossible to discern

the reach of the Defendant’s implied terms without breaking down what they

actually do. The Defendant has failed to carry out such an exercise.

306.4 Terms contrary to express terms of the contract: While the Defendant’s Written

Opening sets out the express terms of the contracts that various of the

Claimants’ proposed implied terms are said to contradict, the same exercise is

not carried out in relation to Issue 1 more generally. To the extent that

termination provisions are relied upon, this has already been addressed above.

Otherwise, the Claimants repeat §137 of its Written Opening: 196 the basis on

which it is said that the implied duties contended for would traverse other

express terms on the contract remains entirely elusive and cannot be

discerned.

Conclusion

307. The Subpostmaster Contracts are paradigm relational contracts, into which duties of
good faith, fair dealing, transparency, cooperation and trust and confidence are implied.

195 {Day1/149:6-7}
196 {A/1/57}

– 144 –
B COMMON ISSUES
Issues 2 and 3: Implied Terms

Issues 2 and 3: Implied Terms

Issue 2: Which, if any, of the terms in the paragraphs listed below were implied terms (or
incidents of such implied terms) of the contracts between Post Office and Subpostmasters?

Issue 3: If the terms alleged at GPOC, paras 64.16, 64.17, 64.18 and / or 64.19 are to be
implied, to what contractual powers, discretions and / or functions in the SPMC and NTC
do such terms apply?

Overview

308. As the evidence made clear, this was a relationship which could not sensibly work

without the implied terms contended for or higher level implied terms of which these

obligations were clearly incidents.

309. Furthermore, many of them spring directly from express contractual provisions 197 or

admitted functions undertaken by the Defendant on behalf of Subpostmasters –

without which the contract could not work at all, let alone have commercial and

practical coherence.

Relevant principles

310. The principles relevant to this Issue are set out in:

310.1 Annex II to the Claimants’ Written Opening {A/1/193} – {A/1/202}; and

310.2 The propositions set out in the Appendix to these Written Closing

Submissions, under ‘Implied Terms’.

311. The Claimants respectfully direct the Court’s attention to the meaning and approach to

‘necessity’ (or indeed ‘obviousness’) in Marks & Spencer at paragraph 21 (at 755C):

Necessity for business efficacy involves a value judgment. The test is not one of
“absolute necessity”, not least because the necessity is judged by reference to
business efficacy. A more helpful way of putting this is that a term can only be
implied if, without the term, the contract would lack commercial or practical
coherence.

197 See, for example, the contractual appeal provisions which would be meaningless without proper
investigation and provision of information to Subpostmasters: SPMC Section 18 {D2.1/3/85}.

– 145 –
B COMMON ISSUES
Issues 2 and 3: Implied Terms

312. The value judgment which the Court is called upon to make, is to be based upon the

facts found on the evidence as to commercial and practical realities – without which the

Court cannot reach an informed view as to “commercial or practical coherence”.

313. The context is therefore essential important to the value judgment which the Court is

required to make.

Findings sought

314. In the Claimants’ Written Opening, the Court was invited to make the following

findings on these Common Issues: 198

314.1 On Common Issue (2), all (or substantially all) of the implied terms pleaded by

the Claimants were implied terms (or incidents of the implied terms) of the

relevant Subpostmaster contracts.

314.2 On Common Issue (3), the implied terms referred to at GPOC, §§64.16, 64.17,

64.18 and / or 64.19 apply to all of the Defendant’s contractual powers,

discretions and / or functions under the terms of the SPMC and NTC contracts.

315. As amplified below, it was obviously necessary to imply sensible obligations on the

Defendant in relation to the following:

315.1 Training and support: without which Subpostmasters could not sensibly

attempt to discharge their duties – a point which Lead Claimants were

positively invited to agree by the Defendant in cross-examination.

315.2 Horizon and recording transactions: without which a central function, which

the Defendant positive asserts it “handles this on behalf of the Subpostmaster”. 199

315.3 Investigations and shortfalls: where the commercial and practical coherence of

the original bargain would otherwise be fundamentally undermined –

198 Claimants’ Written Opening, §216 {A/1/86}
199 Angela Van Den Bogerd’s evidence makes this clear at §80.2 of her witness statement {C2/1/24}

– 146 –
B COMMON ISSUES
Issues 2 and 3: Implied Terms

including by Subpostmasters effectively being forced to accept disputed debts

and effectively provide working capital for the business 200;

315.4 Exercising of powers and discretions: where there is no reason to take these

contracts outside the run of contracts into such terms are routinely implied –

and every reason to imply these terms ; and

315.5 Reasonable care: which is totally consonant with the professions by the

Defendant, for example, in the Induction Booklet {E1/12}, referred to below

(which also supported the other implied terms above).

Submissions

316. Written opening submissions: in support of the findings above, the Claimants refer the

Court to, and rely upon, the detailed submissions made on this issue in their Written

Opening Submissions (Section B: Implied Terms) 201 and the written evidence of the

Lead Claimants and the Defendant witnesses referred to in that opening.

317. The Court is invited, having heard the evidence at trial, to make the findings above in

the light of those submissions, and in the light of the following further points.

Requirement of necessity

318. No automatic implication: There is no general rule for the implication of a term of

cooperation or a term prohibiting one party from “preventing” the performance of

another (i.e. the Stirling v Maitland Term contended for by the Defendant). 202 The

Defendant therefore overlooks the significance of its concession that such a term is to be

implied.

319. It is far from automatic and therefore, the Defendant’s concession recognises a

significant lacuna in the contracts. Given their drafting (commented upon elsewhere),

this is perhaps unsurprising. It is an important starting point that the parties are agreed

that there is a need to imply further terms into these contracts.

200 see: Angela van den Bogerd’s evidence accepting this {Day7/173:14} and esp. {Day7/178:1-8})
201 §94 to 143 of the Claimants’ Written Opening {A/1/59} – {A/1/86}
202 As held by Gloster LJ in Ukraine v The Law Debenture Trust Corporation Plc [2018] EWCA Civ
2026, at §207 {A1.1/74/60}

– 147 –
B COMMON ISSUES
Issues 2 and 3: Implied Terms

320. Implication dependent on necessity and context of the contract: The implication of

terms, and, perhaps more importantly, their scope and content, will always depend on

the contract under consideration, and in particular its express terms. 203 The difference in

approach between the parties, as to the utility of the Common Issues trial in clarifying

the implied obligations between the parties, was extensively canvassed in the

Claimants’ Written Opening (p.3) {A/1/7} and (p.65) {A/1/69}. Having heard the

Defendant put the premise for specific implied obligations to Lead Claimants in cross-

examination, it may now be that the Defendant is prepared to adopt a more realistic

approach.

321. ‘Necessity’ involves a value judgment: As foreshadowed above, necessity does not

mean ‘absolute necessity’, in the sense that the contract could not actually work without

the implication of a particular term – at times, the Defendant has appeared to suggest

such an extreme test. Rather, as the touchstone is business efficacy, implication involves

a value judgment such that a term will be implied only if, without that term, the contract

would lack commercial or practical coherence. 204 That is the value judgment which the

Court is called upon to make on the facts and in the light of the express contractual

terms.

322. The above propositions are particularly important in the present case:

322.1 The Defendant has admitted that there is a necessity to imply terms. This is a

concession which accepts that there is a lacuna or gap in the express terms of

the contract. It also accepts that this necessity extends across several of the

same “matters” as those to which the Claimants’ proposed implied terms

relate. 205

322.2 The Defendant goes on to effectively uses its admitted implied terms

(Necessary Cooperation and Stirling v Maitland) as a shield against which to

203 ibid
204 Marks & Spencer plc v BNP Paribas Security Services Trust Co [2015] UKSC 7, [2016] AC 742, at
§21 (per Lord Neuberger) {A1.1/61/13}
205 GDef at §106(2) pleads that “many” of the Claimants’ pleaded implied terms “address matters that
are already governed by the terms of the said contacts (including the Stirling v Maitland Term and the
Necessary Cooperation Term)” {B3/2/48}

– 148 –
B COMMON ISSUES
Issues 2 and 3: Implied Terms

ward off the implication of any further terms. 206 It argues that any necessity to

imply more specific implied terms in relation to a particular subject-matter is

met by the Defendant’s implied terms, however: (i) the Defendant denies that

this means the resulting obligations would be the same; and (ii) refuses to be

drawn on the specific incidents of its implied terms on the basis that they are

fact-sensitive and can only be assessed on a case-by-case basis. 207

322.3 Pursuant to Marks & Spencer plc {A1.1/61/13} and Ukraine v The Law

Debenture Trust Corporation Plc {A1.1/74/60}, the Defendant’s approach is

misconceived. In particular, the Court is required to look at the scope of the

implied terms for which the Defendant contends, in the context of the

contractual relationship. The Defendant cannot refuse to identify the ‘gap’

that its very general terms fill as a way of avoiding with any precision what

the need is that the terms are to be implied to meet. This will involve breaking

down what they actually do. Of course, this is common sense, as otherwise

the implied terms are pitched at such a high level of abstraction that their

utility, and their necessity, is questionable.

322.4 Underscoring this point further is use of the phrase “(or incidents of such

terms)” in the wording of Common Issue (2). 208 The Claimants, and the Court,

are concerned with legal effects, not the practical effects of these implied terms

to a given set of factual circumstances. For example, in Yam Seng the parties

and the Court were perfectly well able to consider implied terms at more and

less specific levels of generality. In particular, at paragraph 154, Leggatt J

considers whether the incidents or “content” of the good faith obligation was

captured by two more specific implied terms. Equally, when it has suited the

Defendant, it has found no problem in formulating specific implied terms: see,

for example, the concession before the Court of Appeal in Lalji (at §27)

206 See, for example, Mr Cavender’s response to the Judge’s understanding that the Defendant’s case
is that its implied terms effectively do the same job as those contended for by the Claimants by
virtue of the contract being relational: “It doesn’t do the same job, my Lord. It – it fills any gap that it
is necessary it fill. Because “necessary” is the game we are in here…” {Day1/149:6-8}
207 See the Defendant’s Written Opening at §180(b)-(c) {A/2/53}
208 {B/1/1}

– 149 –
B COMMON ISSUES
Issues 2 and 3: Implied Terms

{A1.1/22/5} and in writing to Alan Bates in relation to access to his branch

{Day1/79:1-14} and {E1/42.2/2}. Therefore, the basis upon which the Defendant

resists any discussion of implied terms (or incidents or content thereof) which

might bring clarity to this case is wholly flawed: it depends upon a false

dichotomy between implied terms at the highest level of generality and the

practical consequences of those terms on the facts of particular cases. The

Defendant’s approach to this is demonstrably wrong and would undermine

the utility of this trial. The Claimants respectfully invite the Court to reject it.

Claimants’ implied terms

323. Grouping of Claimants’ implied terms: As noted above, the Claimants’ Written

Opening 209 categorised the implied terms contended for by the Claimants by reference

to the following five subject-matters:

323.1 Training and support;

323.2 Horizon and recording transactions;

323.3 Investigations and shortfalls;

323.4 Exercising of powers and discretions; and

323.5 Reasonable care.

324. Taking each of these subject-matters in turn.

Training and support

325. The Claimants contend for an implied term that the Defendant was required “to provide

adequate training and support (particularly if and when the Defendant imposed new working

practices or required the provision of new services)”. 210

326. The background to the Defendant’s evasiveness on what its case is in relation to implied

terms and training and support is detailed in the Claimants’ Written Opening, and it is

209 See the Claimants’ Written Opening at §150 {A/1/60}
210 GPOC §64.1 {B3/1/35}

– 150 –
B COMMON ISSUES
Issues 2 and 3: Implied Terms

not necessary to repeat that content here. The Defendant only shed some light on its case

in its Written Opening, where it confirmed that:

326.1 In relation to initial training: “Post Office accepts that, for new SPMs, it could be

required, by the Necessary Cooperation Term, to provide reasonable initial training.”

[Emphasis added] 211

326.2 In relation to further training: “Where the SPM requested further training or

support and such training or support was necessary to the proper discharge of his

obligations under the contract, the Necessary Cooperation Term would require Post

Office to cooperate in providing (or helping the SPM to procure) reasonable further

training or support. This may, for example, be the case where a new product or service

or technology was introduced…” [Emphasis added] 212

326.3 In relation to support: “The same analysis applies to assistance provided through the

Helpline.” 213

327. The example given for further training is in similar terms to that provided in GPOC

§64.1 (i.e. following the imposition of new working practices or services). Putting to one

side the noncommittal use of ‘could’ in relation to initial training, the only difference, in

practice, between the parties, appears to be between “reasonable” training and support

and “adequate” training and support. Reasonable and adequate are sufficiently close 214

(for the purposes of this case) for the Defendant to have conceded one or the other.

Indeed, ‘adequate’ could be seen as setting a lower threshold, as it connotes sufficiency

or appropriateness, while reasonable connotes a measurement to a standard that is fair

or moderate. If something is reasonable, it is likely to also be adequate, but the reverse

may not always be true.

328. Semantics aside, the key focus for the Court is whether there is any practical difference.

One sees from the Defendant’s Written Opening that the answer appears to be no. The

Defendant draws the line with one hypothetical example at §182(d), in which the

211 Defendant’s Written Opening at §182(a) {A/2/54}
212 Defendant’s Written Opening at §182(b) {A/2/54}
213 Defendant’s Written Opening at §182(c) {A/2/54}
214 {Day4/180:9-13}

– 151 –
B COMMON ISSUES
Issues 2 and 3: Implied Terms

Defendant is required to monitor and assess a Subpostmaster’s training and support

needs from time-to-time; it is said that the Subpostmaster is better placed to identify any

obstacles and explain why cooperation is needed. 215 This is a red herring. No such

suggestion is made by the Claimants. The implied term contended for at GPOC §64.1

specifies the circumstances in which further training would be required from the

Defendant; clearly, if a Subpostmaster identified a need for further training and

explained the obstacles they faced in performing their obligations under the contract,

then this too would be caught by GPOC §64.1 – but it seems the parties are ad idem on

this point.

329. Turning to the evidence before the Court:

329.1 Mr Cavender QC put the following (or similar) to Lead Claimants:

a. On training: “someone in your position at the time you formed the contractual

relationship, a reasonable person in your position would have, as part of the

background, thought that necessary training on Horizon would be provided to

you?” 216

b. On support: “Similarly, such a person would also have thought that there would

be a reasonable Helpline to assist you with any difficulties going forwards?” 217

329.2 This appeared to endorse, rather than to challenge, the Claimants’ case. No

distinction was drawn at all between expectations of ‘necessary’ training

versus ‘adequate’ training or a ‘reasonable’ Helpline versus ‘adequate’

support.

329.3 In any event, the Claimants rely on the content of the Induction Booklet

{E1/12/1}, a Defendant document provided to Mr Bates on the date of his

branch transfer. It includes the following sections:

215 Defendant’s Written Opening at §182(d) {A/2/54}
216 e.g. at {Day4/84:18}
217 e.g. at {Day4/84:22}

– 152 –
B COMMON ISSUES
Issues 2 and 3: Implied Terms

a. “The duration and content of the training varies from office to office to meet your

particular needs.” {E1/12/10}

b. “On-site training takes place at your office and is undertaken with an agency

trainer. It covers a full range of transactions, accounting procedures, security and

customer-care issues. The duration of the training varies from office to office, and

is tailored to individual requirements.” {E1/12/10}

c. “Further training is provided at timely intervals as necessary. This will be assessed

by your Retail Network Manager.” {E1/12/10}

d. “In addition to transaction processing your training will fully cover… dealing with

problems.” {E1/12/11}

e. “As Post Office Counters’ success depends on your success, please do not hesitate

to make use of the support and expertise on offer.” {E1/12/3}

329.4 The Defendant’s witnesses effectively accepted that the expressions used the

Induction Booklet are perfectly reasonable statements which matched both

parties’ reasonable expectations. 218

329.5 The provision of adequate training and support is not only so obvious as to go

without saying (and aligns with the expectations of reasonable notional

parties), it is clearly necessary in order to provide commercial and practical

coherence to the Subpostmaster contracts, not least because mistakes made

due to inadequate training and support potentially have negative financial

implications for both parties.

Horizon and recording transactions 219

330. The Claimants continue to rely on the Defendant’s own pleaded description of Horizon

and the functions that it performed, (as set out in the GDef at §§33, 38, 40, and 53 to 54),

and its admitted role at §123 of the GDef, by which it largely admits GPOC §81. 220

218 See, e.g. the evidence of Mr Williams {Day6/178:23} and Mr Breeden {Day7/142:1} – {Day7/143:10}
219 Relevant implied terms set out in the Claimants’ Written Opening at §150.2 {A/1/61}

– 153 –
B COMMON ISSUES
Issues 2 and 3: Implied Terms

331. The oral evidence of Ms van den Bogerd was also instructive:-

331.1 Ms van den Bogerd accepted that, practically, the way in which

Subpostmasters accounted to the Defendant in branch was through Horizon. 221

331.2 Ms van den Bogerd accepted that when Subpostmasters do the branch trading

system at the end of the month, that is also information which is in the

Horizon system. 222

331.3 Ms van den Bogerd accepted people would expect the Defendant to have in

place a reasonable process for detecting and correcting any problems 223

331.4 Ms van den Bogerd stated that the Defendant has around 130 clients and she

accepted the point put to her in cross-examination that “you have all these data

streams coming in which have to be reconciled and processed”. 224

331.5 As noted above, Ms van den Bogerd accepted that there are several potential

causes of shortfalls which may arise outside of the branch, without fault on the

part of the Subpostmaster and without the Subpostmaster’s knowledge (e.g.

manual errors in relation to reconciliation and TCs, client data integrity issues

and Horizon errors 225). True it is that if one ignores all of these possibilities

(and the Payments/Mismatch document 226) a diligent Subpostmaster be better

placed to identify the root cause of discrepancies or shorftalls (Cf. Angela van

den Bogerd’s evidence, e.g. §135 {C2/1/37}). However, on the evidence which

the Court heard and even on that which the Defendant’s witnesses accepted,

this is not the proper footing upon which to decide the Common Issues.

332. On any analysis, the proposed terms under this heading satisfy the test for implication.

By reference to commercial or practical coherence, Subpostmasters cannot carry out

220 See the Claimants’ Written Opening at §201.2 {A/1/80}
221 {Day9/37:1-6}
222 {Day9/37:7-10}
223 {Day8/180:7-11}
224 {Day8/55:1-4}
225 Accepted by Ms van den Bogerd at {Day8/38:4-19}.
226 {G/8/1}

– 154 –
B COMMON ISSUES
Issues 2 and 3: Implied Terms

their obligations under the contract, particularly as they relate to using Horizon for

branch transactions and in order to account to the Defendant, without: (i) the system

through which they are being made to account being fit for purpose and including

adequate error repellency; and (ii) the Defendant properly and accurately effecting,

recording, maintaining and keeping records of all transactions effected by that system.

333. For similar reasons, the Claimants’ implied terms are so obvious as to go without

saying.

Investigations and shortfalls 227

334. The Defendant’s own witness evidence supports the implication of the terms under this

heading:-

334.1 Causes of shortfalls: See Ms van den Bogerd concessions referred to above (at

paragraph 331.5). 228

334.2 Investigating root causes of errors: Ms van den Bogerd accepted that a robust

system necessarily involves trying to investigate the root causes of errors when

they occur. 229 Mr Breeden similarly accepted that if a Subpostmaster raised a

dispute, then everyone would expect for the right approach to be that the

matter would be investigated. 230

334.3 Full and fair investigations: Ms van den Bogerd accepting that investigations

should be full and fair, conscientiously considered by the Defendant, with the

Subpostmaster being afforded access to information that they need to make

out their side of the argument. 231

335. Again, in light of the contractual obligation for Subpostmasters to produce and submit

branch accounts, it is clearly necessary for business efficacy that terms of the nature

227 Relevant implied terms set out in the Claimants’ Written Opening at §150.3 {A/1/61}
228 These include manual errors in relation to reconciliation and TCs, client data integrity issues and
Horizon errors {Day8/38:4-19}.
229 {Day8/181:20-23}
230 {Day7/66:14} – {Day7/67:2}
231 {Day8/185:23} – {Day8/186:7}

– 155 –
B COMMON ISSUES
Issues 2 and 3: Implied Terms

pleaded by the Claimants be implied so as to enable the true cause of discrepancies in

branch accounts to be ascertained. This need is further underscored by the terms of the

contract in relation to liability for losses.

336. In the Defendant’s Written Opening, implied terms in relation to investigation of

disputed shortfalls is said to be “necessarily highly fact-specific”. 232 The unreality of the

Defendant’s position (noted above) is demonstrated, once again, by the examples it has

chosen to give which are said to fall on either side of the line. In what it calls the ‘second

category’ of cases (in respect of which, the Defendant’s implied terms would not require

any action on its part), the Defendant cites an example of where a Subpostmaster has

made investigation impossible by virtue of their false accounting and / or their refusal to

cooperate. 233

Exercising of powers and discretions 234

337. The case for the necessity of such implied obligations (in the absence of very clear

language in the contract to the contrary) is clear: without such implied terms there

would be nothing to constrain exercise of otherwise unfettered contractual discretion

whose effect would be contrary to the very purpose of the contract and contrary to the

norms to be expected, both in a commercial context and in a relational contract of this

nature.

338. Further, the terms contended for are so obvious to notional reasonable persons in the

position of the parties as to go without saying. Although the following represent

subjective views of the Defendant’s witnesses, they are nonetheless informative as to

what notional reasonable persons in the position of the Defendant might expect:

338.1 Discretion to amend the contract: Mr Beal accepted that any changes made to a

contract or operational procedures, regardless of whether it is with the

232 Defendant’s Written Opening at §184(a) {A/2/55}
233 Defendant’s Written Opening at §184(c) {A/2/56}
234 Relevant implied terms set out in the Claimants’ Written Opening at §150.4 {A/1/62}

– 156 –
B COMMON ISSUES
Issues 2 and 3: Implied Terms

agreement of the NFSP or not, should not be made dishonestly or in an

arbitrary, capricious or irrational manner. 235

338.2 Discretion relating to remuneration withheld during suspension: Mr Breeden

accepts discretion on any such decision should be exercised in accordance with

natural justice, fair-mindedly, and with openness, transparency and fair

dealing. 236

338.3 Appeals: The Defendant’s internal Appeals Handbook reminds Appeal

Managers of the requirements of natural justice {F3/165/13}. Mr Breeden

accepted that there was nothing controversial about this in either the appeals

stage or, indeed, at the original stage when the decision is made. 237

Reasonable care 238

339. The Defendant raises three objections to the implication of such an implied term:

339.1 Agent relationship: The Defendant states that the Claimants’ implied term

would “hollow out and replace the parties’ expressly chosen relationship with

something less specific, less structured and very different.” 239 This misstates the

position:

a. As explained below, the express contractual terms relating to the Claimants’

status and role as an agent are, in the first instance, relatively hollow,

unspecified and unstructured.

b. The implication of a term of reasonable care in no way cuts across that

limited role of the Claimants’ agency. This is a contractual relationship in

which there are a plethora of obligations on both sides in relation to a

multitude of different matters. It is not a one-way relationship in which one

party is providing the entirety of a service and has all the relevant tools and

235 {Day6/78:24}
236 {Day7/112:2-13}
237 {Day7/110:1-6}
238 Relevant implied terms set out in the Claimants’ Written Opening at §150.5 {A/1/63}
239 Defendant’s Written Opening at §251 {A/2/73}

– 157 –
B COMMON ISSUES
Issues 2 and 3: Implied Terms

information at their disposal to carry out their duties. Further, such an

implied term would be consistent with the relational nature of these

contracts.

339.2 Responsibility for health and reputation: The Defendant objects to this term on

the basis that there is no pleaded case on such a responsibility for the

Claimants’ health and reputation arising under the express or implied terms of

the contracts. 240 The implied term is clearly pleaded in the GPOC at §64.19 241

and there are claims for stigma and / or reputational damages as well as

distress and ill-health. 242 Further, the Defendant’s reliance, again, on the

“business-to-business relationship” ignores the relational nature of the contract,

as set out above.

339.3 Cutting across the Defendant’s entitlement to have regard to its own

commercial interests: The Defendant claims it is unrealistic to contend that it

must necessarily have undertaken some duty to protect a Subpostmasters’

business. 243 This, however, is overstating the implied term. It does not require

the Defendant to protect Subpostmaster’s business at all costs, and to always

prefer the interests of the Subpostmaster to its own; what is required is

reasonable care in carrying out those functions which could affect a

Subpostmaster’s business. Without such a term it subverts the bargain of the

contract which, as set out above, is long-term in nature and involves a great

deal of investment by Subpostmasters. Such a term would also accord with

the commercial norms to be expected of relational contracts in general and the

specific norms of this particular contractual relationship.

Conclusion

340. The Claimants’ invite the Court to exercise the value judgment that it is required to

make and find:

240 Defendant’s Written Opening at §252 {A/2/73}
241 {B3/1/38}
242 {B3/1/60}
243 Defendant’s Written Opening at §253 {A/2/73}

– 158 –
B COMMON ISSUES
Issues 2 and 3: Implied Terms

340.1 On Common Issue (2), all (or substantially all) of the implied terms pleaded by

the Claimants were implied terms (or incidents of the implied terms) of the

relevant Subpostmaster contracts.

340.2 On Common Issue (3), the implied terms referred to at GPOC, §§64.16, 64.17,

64.18 and / or 64.19 apply to all of the Defendant’s contractual powers,

discretions and / or functions under the terms of the SPMC and NTC contracts.

– 159 –
B COMMON ISSUES
Issues 2 and 3: Implied Terms

– 160 –
B COMMON ISSUES
Issue 4: Supply of Goods and Services Act 1982

Issue 4: Supply of Goods and Services Act 1982

Issue 4: Did Post Office supply Horizon, the Helpline and / or training / materials to
Subpostmasters (i) as services under “relevant contracts for the supply of services” and (ii)
in the course of its business, such that there was an implied term requiring Post Office to
carry out any such services with reasonable care and skill, pursuant to section 13 of the
Supply of Goods and Services Act 1982?

Relevant Principles

341. The Claimants rely upon the principles set out in:

341.1 Annex IV to its Written Opening Submissions (Annex IV: Issue 4 – Supply of

Goods and Services Act); 244 and

341.2 The propositions set out in the Appendix to these Written Closing

Submissions, specifically those under (4) Supply of Goods and Services.

Findings sought

342. Depending on the Court’s decision as to the implied terms (above) this issue may be

unnecessary. Indeed, aspects of this issue may be moot because of Post Office’s own

admissions as to its obligations (as identified in the Claimants’ Written Opening

Submissions, under Issue 4: Supply of Goods and Services Act). 245

343. The Claimants respectfully request that the Court find that Post Office agreed to supply

the following services to the Claimants in the course of its business (together the

“Services”) pursuant to ‘a relevant contract for the supply of services’ within the meaning

in Section 12(1) of the 1982 Act:

343.1 Horizon;

343.2 the Helpline;

343.3 training and / or materials provided in relation to the foregoing; and

244 {A/1/203-206}
245 {A/1/87-92}

– 161 –
B COMMON ISSUES
Issue 4: Supply of Goods and Services Act 1982

as a result, the term requiring exercise of reasonable skill and care is to be implied

under Section 13 of the 1982 Act with respect to the provision of those Services.

Submissions

344. The Claimants rely upon the submissions made in support of those findings in their

Written Opening Submissions, under Issue 4: Supply of Goods and Services. 246 For

ease of reference, those submissions addressed:

344.1 the admissions made by Post Office (that it was contractually bound to

provide training and support in accordance with both express and implied

terms, 247 including express stipulations under the NTC 248);

344.2 Post Office’s practice of requiring SPMs to agree to avail themselves of

training;

344.3 the absence of material distinction between provision of the Helpline and

support and between training and materials for such training;

344.4 provision of the Services by Post Office in the course of its business 249 and as

‘services’ within the meaning of the 1982 Act;

344.5 provision of the Services to SPMs was not a right that Post Office elected to

exercise in its own interest and for its own protection; 250

344.6 they are essential to the operation of the contract; and

344.7 specific circumstances of the provision of each, that indicate they were provided

as services.

246 {A/1/87-92}
247 By letter dated 27 June 2018, {H/10}
248 See, e.g., Stockdale/IPOC at §6.4 and §83.2 {B5.6/2/2} {B5.6/2/18}
249 “Business” is widely defined in 1982 Act at s.18(1) as: “includes a profession and the activities of any
government department or local or public authority”. This would capture an entity such as Post
Office, wholly owned by the state.
250 Such as, for example, the right to close out a client Forex position considered in Marex Financial
Limited v. Creative Finance Limited & another [2013] EWHC 2155 (Comm), per Field J at §71
{A1.1/45/22}

– 162 –
B COMMON ISSUES
Issue 4: Supply of Goods and Services Act 1982

345. The main factual focus of the trial was elsewhere from the issues arising under this

Common Issue. The Claimants rely primarily upon the submissions made in opening,

but add the following as evidence of provision of the Services to SPMs as services:

345.1 when giving her evidence orally, Post Office’s principal witness, Mrs van den

Bogerd, stood by her evidence in writing as to ‘key benefits’ in joining the Post

Office Network (which, in §65 of her statement include provision of Horizon

and the IT infrastructure). 251

345.2 Mrs van den Bogerd was also taken to252 training documentation 253 about both

Horizon and Helpline, from which it is apparent Post Office believed it was

providing Horizon to SPMs nationwide and helping them to make use of the

system.

345.3 the Introduction Booklet sent to SPMs made specific claims about training to

be provided and offered further training to SPMs should they want it. 254 It

made further assertions advertising the “wealth of support is available for

subpostmasters” and the Helpline which “…exists to enable Post Office Counter to

provide an excellent service at all outlets” consistent with provision of these as

services to SPMs; Post Office’s witnesses consistently confirmed these were

not surprising assertions 255 and /or that they were what a SPM might

reasonably expect from Post Office. 256

345.4 Further evidence was heard as to the nature and quality of the training

provided to SPMs and support, including via Helpline – and, as relevant to

this Issue, the reliance of SPMs upon it. As to this, the Court is referred to

251 Mrs Van Den Bogerd, §65 {C2/1/18}
252 {Day8/134/20}
253 Introduction to Horizon and Helpline, at {F3/49/2}
254 “If you feel you need further training, please do not hesitate to contact your Retail Network Manager in
the first instance.” {E1/12/11}
255 Evidence of Mr Beal {Day6/21:18} – {Day6/22:3}
256 Evidence of Mr Beal {Day6/24:8-10}, as to Helpline {Day6/25:1-12}; evidence of Mr Breeden (to
similar effect) {Day7/141:22} - {Day7/144:8}

– 163 –
B COMMON ISSUES
Issue 4: Supply of Goods and Services Act 1982

Section A above, under Training and Support – in which Mrs van den

Bogerd accepted the Helpline, for example, was “crucial”. 257

345.5 The fact that SPMs were required to agree to avail themselves of training –

which is itself (without limitation – quite apart from the essential nature of its

provision to the agreement reached) sufficient to be taken as consideration for

the provision of the same.

346. For the reasons set out, or referred to, above, it is respectfully submitted that the answer

to the question posed by Common Issue 4 is ‘Yes’.

257 {Day8/142:6-15}

– 164 –
B COMMON ISSUES
Issues 5 and 6: Onerous and Unusual Terms

Issues 5 and 6: Onerous and Unusual Terms

Issue 5: Were any or all of the express terms in the GPOC paragraphs listed below onerous
and unusual, so as to be unenforceable unless Post Office brought them fairly and
reasonably to the Subpostmasters’ attention?

para 51.1 and 51.3 (rules, instructions and standards)
para 52.1 and 52.3 (classes of business)
para 54.1 and 54.3 (accounts and liability for loss)
para 56.1.a and 56.2.a (assistants)
para 60.1 and 60.3 (suspension)
para 61.1 and 61.3 (termination)
para 62.1 and 62.3 (no compensation for loss of office)

Issue 6: If so, what, if any, steps was Post Office required to take to draw such terms to the
attention of the Subpostmaster?

Issue 5: whether terms onerous and unusual so as to be unenforceable unless brought fairly
and reasonably to Subpostmasters’ attention

The relevant terms

348. The relevant terms are set out in the agreed Consolidated Common Issues document,

produced to the Court by the parties on 27 November 2018. 258 Due to their length, they

are not reproduced here.

349. Rather, for convenience in these submissions (as they were for the purposes of the

Claimants’ Written Opening Submissions) they are grouped as follows:

349.1 Rules, instructions and standards: (clauses at GPOC, §51.1 and §51.3);

349.2 Classes of business: (clauses at GPOC, §52.1 and §52.3);

349.3 Accounts, liability and loss: (clauses at GPOC, §54.1 and §54.3);

349.4 Assistants: (clauses at GPOC, §56.1.a and §56.2.a);

349.5 Suspension: (clauses at GPOC, §60.1 and §60.3);

349.6 Termination: (clauses at GPOC, §61.1 and §61.3); and

258 {B1/3/4-12}

– 165 –
B COMMON ISSUES
Issues 5 and 6: Onerous and Unusual Terms

349.7 Compensation for loss of office: (clauses at GPOC, §62.1 and §62.3).

Relevant principles

350. The Claimants rely upon the following relevant principles:

350.1 Those set out in Annex V to the Claimants’ Written Opening Submissions

(Annex V: Onerous and Unusual Terms); 259 and

350.2 The propositions set out in the relevant authorities identified in the Appendix

to these Written Closing Submissions (specifically, those identified under

Onerous and Unusual Terms).

Findings sought

351. The Claimants invite the Court to find, on the evidence heard at trial, and on the basis

set out in these submissions and in opening that, whether taken individually or in

combination, the express terms were:

351.1 onerous and unusual (the nature and effect of the terms issue); so as to be

351.2 unenforceable unless Post Office brought them fairly and reasonably to the

SPMs’ attention (the Interfoto issue).

Submissions
352. The Claimants rely in closing upon the detailed submissions made upon these Common

Issues in their Written Opening Submissions, under Section B: Onerous and Unusual

Terms, 260 which are adopted here (but not repeated), and to which the Court is referred.

353. The Claimants rely in support upon the generic evidence set out in the detailed review

of the evidence set out above, and, in particular, the following:

353.1 As to the contract terms themselves: the evidential matters set out under

Section A under Standard Contracts (SPMC and NTC); 261

259 {A/1/215-224}
260 {A/1/93-100}
261 In particular under the subheadings: Scope, Complexity and Clarity; and Keeping track of
Variations

– 166 –
B COMMON ISSUES
Issues 5 and 6: Onerous and Unusual Terms

353.2 As to their onerous and unusual nature, in commercial context:

a. the evidence set out in Section A, under each of the headings identified

below with respect to the categories of terms (see below); and

b. as to the Lead Claimants, their evidence summarised in Section A.

354. In the light of that evidence, the Claimants will make the following further submissions

in support of the findings sought.

355. As to the Interfoto issue:

355.1 First, for the reasons given in Annex V: Onerous and Unusual Terms 262 and

on the propositions set out in the Appendix, the principle in Interfoto is to be

applied to the documents said to be contractual documents in this case.

355.2 The authorities referred to in support of its application here include not only

the judgment of Bingham (then) J in Interfoto, but also a line of judicial

commentary, including at Court of Appeal level, supporting (albeit, in the case

of the Court of Appeal, not deciding) application of the principle to

contractual obligations set out in signed written documents in appropriate

circumstances.

355.3 These include, by way of example:

a. The observations of Bingham LJ in Interfoto at [1989] 1 QB 433, at 439H that

the relevant question was “whether it would be fair and (or reasonable) to hold a

party bound by any conditions or by a particular condition of an unusual and

stringent nature”; 263

b. The obiter remarks of Mance LJ (with whom Rix and Potter LJJ agreed) in

Amiri Flight Authority (at [2004] 1 All ER 385, §15) (noting the doubts

previously expressed by Rix LJ in HIH v New Hampshire [2001] 2 Lloyd’s

262 {A/1/215-204}
263 {A1.1/7/7}

– 167 –
B COMMON ISSUES
Issues 5 and 6: Onerous and Unusual Terms

Rep. 161 264) that the Interfoto principle could also apply in such a case –

noting that Bingham LJ had addressed in Interfoto “…a question which also

involved broad considerations of fairness and reasonableness, having regard to the

nature and effect of the clause and the circumstances relied upon as constituting

notice”; 265

c. Subsequent application of the principle in the first instance decisions

referred to in Annex V: Onerous and Unusual Terms. 266

355.4 Despite those judicial observations, Post Office submits that the “contention is

plainly wrong”. The Claimants reasonably infer that this suggestion is made in

order to lay claim (as Post Office sought to before) 267 to apparent orthodoxy in

its approach, rather than with regard to the developing law in this area and

observations of the Court of Appeal.

355.5 Second, there arises, on the body of evidence heard at trial, a real and

significant doubt as to whether it would be correct to regard the (still) scarcely

identifiable mass of contractual documents forming the subject of this case as a

‘signed document’ to be treated in the manner classically described in, for

example, L’Estrange 268 – particularly having regard to the wider

considerations of fairness and reasonableness forming the basis of Bingham

LJ’s decision in Interfoto.

355.6 As to Post Office’s contractual documents, what emerged in the disclosure, in

written evidence, and wat became abundantly clear at trial is the position as

summarised in Section A above, under the heading Standard Contracts

(SPMC and NTC) and subheadings Scope, Complexity and Clarity, and

Keeping Track of Variations in particular. The attention of the Court is

drawn to the following, in particular:

264 {A2/29/1-42}
265 {A1.1/24/8}
266 {A/1/212-213}
267 In support of Post Office’s failed application to strike out large parts of the Claimants’ evidence
heard on 10 October 2018.
268 As to which, see L’Estrange v Graucob [1934] 2 KB, at 401 {A2/8/8} and 403 {A2/8/10}

– 168 –
B COMMON ISSUES
Issues 5 and 6: Onerous and Unusual Terms

a. that it (still) remains difficult to identify the universe of express terms in the

various documents purporting to govern the relationship – even for Post

Office, its witnesses and legal team at trial;

b. the SPMC uses phrases like “rules and Postal Instructions” and “rules provided

for the instruction guidance of SPMs” (terms that on Post Office’s evidence

phased out in 1992 or 1993) purporting to encompass all manuals available

at branch transfer, some of which Post Office was only able to produce,

with real difficulty, in 6 lever arch files during the Course of the trial itself.

Only an appendix to the document is signed.

c. Post Office witnesses could not confirm what and was not a ‘postal

instruction’; it was clear one Post Office witness who was an experienced

branch transfer agent would have been unable to explain them SPMs.

d. The NTC is a long and highly complex document; it is comprised of

multiple parts, only one of which (a preface) was in fact signed – those parts

include a ‘Manual’, whose definition eluded any clear, still less precise,

explanation at trial and was thought to extend to instructions (what was

and was not such an instruction being apparently unclear to Post Office’s

main witness) given in weekly circulars such as Branch Focus. At trial, Post

Office’s witnesses could not explain which parts would or would not have

been in hard or soft copy.

e. The SPMC was varied considerably over time; Post Office’s practice was not

to incorporate such variations into the text, such that 2006 Standard and

Modified versions had 39 and 48 pages of diverse and, to a lay person,

largely incomprehensible variations on the front, before the contents page.

It became obvious these could not be explained to a SPM at interview by

Post Office personnel. Post Office’s witness evidence as to these variations

was doubtful and – as suggested in questioning – closely matched the text

of its solicitors’ pre-action correspondence.

– 169 –
B COMMON ISSUES
Issues 5 and 6: Onerous and Unusual Terms

355.7 In these circumstances, and given the evidence heard from the Lead Claimants

as to the circumstances in which such documents (or some of them) were

presented to them at Branch transfer, or with later NTC contracts, beforehand,

it is clear that fairness and reasonableness dictate that the principle in Interfoto

be applied in respect of onerous terms found in these contractual documents.

356. As to the onerous and unusual nature of these terms, the Claimants add the following

to the detailed submissions made in opening, on the basis of the evidence heard at trial.

357. Common ground: first, it now appears to be common ground that assessment as to

whether the impugned terms are onerous and unusual for these purposes is “necessarily

fact-specific” 269, not confined to a consumer context, and with regard to the relative

bargaining position of the parties. 270

358. The Groups of terms themselves – and evidence as to their operation and effects:

358.1 Rules, instructions and standards – it is clear on the evidence heard at trial

that these terms had precisely the effects described by the Claimants in

opening. The Claimants refer to and rely upon, in particular, the evidence as

to the documents in which such rules and instructions could (with some

diligence) be found and the manner of their issue to SPMs.

358.2 It is clear on the evidence that Post Office purported to reserve to itself the

right to (and did) issue all manner of instructions of purported contractual

effect relating the running of SPMs’ businesses. It was conceded, for example,

that even trivial instructions (such as relating to informing customers of new

deals) could have contractual consequences.

358.3 Their onerous nature is thus compounded by obvious difficulty in ascertaining

the extent and nature of those rules and standards from the mass of material

sent to SPMs.

269 Post Office’s Written Opening Submissions, §380 {A/2/108}
270 As to the latter propositions, Post Office itself relies upon the observations to that effect of
Henderson J in Carewatch [2014] EWHC 2313 (Ch) at §84 {A1.1/53/26}

– 170 –
B COMMON ISSUES
Issues 5 and 6: Onerous and Unusual Terms

358.4 Classes of business: terms permitting unilateral variation of these likewise

could be, and were, onerous – such variations could, for example, be made by

the issue of instructions in the manner described above; evidence before the

Court as to withdrawal of National Lottery services in Mr Bates’ case (being a

unilateral variation of his Conditions of Appointment) illustrates the direct

and detrimental economic effects such terms could have. 271

358.5 Accounts, liability and loss (and liability in respect of Assistants) – the

particularly draconian nature of these terms (upon Post Office’s interpretation,

and as applied by it) formed the basis of much of the evidence heard at trial

and is central to the disputed matters in issue in this litigation. On this, the

Court is referred to the commercial reality of the capacity the Lead Claimants

had to conduct any meaningful investigation into the cause of unexplained

alleged shortfalls, in particular, the evidence set out in:

a. Section A under Lead Claimant Specific Evidence – as to the difficulties

experienced by the Lead Claimants themselves, and poor standard of

training and support received; and

b. Section A under Branch Accounts and Horizon, for example -

i. Limited data available in branch: evidence heard that SPMs had

restricted access to data in their branch for limited periods and of an

insufficient nature to identify the root cause of discrepancies in

accounts. 272

ii. The absence of any option to dispute a TC in Horizon: evidence

that there was no system by which SPMs could dispute shortfalls

within Horizon (a proposal for this in 2008 being rejected on the

basis it would be a “delaying mechanism”). 273

271 See Section A: evidence of Lead Claimant Alan Bates, above
272 For example, Mr Bates’ evidence that he was unable to ascertain the root cause of an alleged
shortfall of £1,182.81, despite access to all available reports (Post Office employees Selwyn Berry
and Ki Barnes also being unable to do so): Bates, §147-§155, {C1/1/32-34}
273 {F3/72/2}

– 171 –
B COMMON ISSUES
Issues 5 and 6: Onerous and Unusual Terms

iii. Need to roll over to continue trading: evidence heard as to the need

to roll over into a new trading period on Horizon (and thereby

balance unexplained shortfalls or accept TCs) to continue trading, 274

even where SPMs wished to investigate or dispute them.

c. Section A under Training, including, for example, Mrs van den Bogerd’s

written evidence as to the effects of training upon shortfalls, and admission

in cross-examination that a 30 minute session given during classroom

training, which included handing out a 93 page document entitled

‘Balancing with Horizon’ 275, would have been insufficiently long to ensure

SPMs understood its contents. 276

358.6 Suspension and Termination – evidence as to the draconian nature of the

powers to suspend and to withhold remuneration during suspension that Post

Office purports to reserve itself set out under Section A Suspension and

Termination above.

358.7 On this, the Court is referred to the submissions (supported by references to

the evidence) set out under Section B Suspension and Termination below.

The Claimants wish to avoid repetition, but highlight the highly onerous

nature (and to that extent unnecessary and gratuitous, unusual and/or

unexpected in a contract of this kind) of the following:

a. Post Office’s apparent practice of “if in doubt, suspend and investigate later”

which came to light at trial in purported reliance upon the terms impugned

under this Common Issue;

b. Post Office’s apparent reservation of the right to refuse to reimburse aspects

of withheld remuneration in all instances – despite the suggestion fairly

274 Mr Abdulla’s evidence, for example, that “You accept it [a transaction correction] straightaway or you
accept it centrally, and then you have to accept it in the end -- when it's a branch trading period you have
to accept it anyway because you can't roll over to the next period, you cannot open your office until that
has been rolled over. So the next day you would not be able to open the office if it is not rolled over”
{Day4/86:16-22}; as made clear in Post Office internal documents, Horizon “forced” SPMs to
accept TCs in order to do so.
275 {F4/5/1-93}
276 {Day8/131:12-15}

– 172 –
B COMMON ISSUES
Issues 5 and 6: Onerous and Unusual Terms

made by Mr Breeden that he would look to reimburse SPMs wrongly

suspended in full – the apparent reservation of that right and failure to

support it in his evidence;

c. The potential stigma that may be suffered by SPMs in their community

upon operation of the impugned suspension terms 277 and that remuneration

ceases at the point of suspension, 278 such that suspension is not to be

regarded (in this context, as elsewhere) as a neutral act.

d. The practices employed by Post Office in cases of suspension in purported

reliance upon the impugned terms, which included shutting them out from

and/or otherwise denying SPMs access to their branch, lowering

expectations as to the bargain to be achieved with a Temporary

Subpostmaster, withholding from them that Post Office itself may pay for

use of the branch during suspension (and other aspects of its policies).

e. The absence of a meaningful choice and/or power on the part of SPMs to

negotiate appropriate terms of access to their branch premises during

Suspension.

f. The lack of fairness in the inability of SPMs to investigate allegations

forming the basis of summary termination – which includes being denied

access to Horizon and any records kept in their branch and other draconian

practices – and obvious inadequacies – in the internal investigation

processes and the handling of termination by Post Office (including the

paucity of data upon which decisions were taken) again in purported

reliance upon the impugned terms.

g. Compensation for loss of office: the evidence of Lead Claimants as to the

circumstances of their suspension and / or the termination of their contracts

and the forfeiting of remuneration during suspension and economic

detriment suffered by reason of termination.

277 Evidence of Mr Breeden {Day7/57:3-6}; evidence of Mr Shields as to the “detrimental public
perception of them being responsible for the closure…” {Day10/11:14-21}
278 {Day 7/57:23-24}

– 173 –
B COMMON ISSUES
Issues 5 and 6: Onerous and Unusual Terms

359. Again, as introduced in opening, the particularly onerous nature of these terms may be

seen when viewed in the context of the contract as a whole and the character and

position of the parties to it. As to this the Claimants refer to and rely upon: -

359.1 the largely unchallenged evidence of the Lead Claimants referred to in Section

A of these Written Closing Submissions as to the long term investments made

by them;

359.2 the generic evidence in Section A of these Written Closing Submissions under

Relationship and in particular as to the long term investments made, and the

high degree of discretion and control reserved to itself by Post Office in the

relationship, examples of which include:

a. the fixed remuneration at 75% during the first year of trading, which Post

Office’s witness accepted required SPMs to look to the longer term. 279

b. the control exercised by Post Office over employment of assistants, which

Mrs Rimmer admitted was “effectively a veto” 280 and which in one case gave

rise to the disciplining of an assistant at the behest of Post Office.

360. Finally – the Claimants respectfully submit that the onerous nature of the impugned

terms is to be considered not only by reference to the impugned terms individually, but

also cumulatively – so to this the Court is referred to submissions under Issue 7.

Issue 6 – Steps to be taken

361. On the evidence heard a trial, the Claimants respectfully request that the Court find

that these terms needed to be brought fairly and reasonably to the attention of SPMs by

Post Office taking the following steps:- 281

279 Paul Williams accepted that this reduced the viability of the first year and when asked “So that
meant that the incoming SPM would have to be looking a little bit more long-term, wouldn’t they, to
recover their costs and investment?” agreed “That is not unfair” {Day6/143:3-9}
280 {Day7/12:15–19}
281 See, for example Sabir/IPOC at §74 {B5.3/2/19}

– 174 –
B COMMON ISSUES
Issues 5 and 6: Onerous and Unusual Terms

361.1 Clearly identifying each of the terms to the SPM and explaining to the SPM how

Post Office would operate those terms in practice (including, specifically, in

relation to ‘accounts and liability for loss’).

361.2 Clearly explaining to the SPM the potential consequences of Post Office relying

on those terms and / or advising the SPM to seek independent legal advice as to

such consequences.

361.3 As to ‘rules, instructions and standards’, in fact providing copies to the SPM of

all of the rules, instructions and standards, 282 explaining to the SPM their

intended relationship and contractual effect, and permitting the SPM time to read

and understand them.

362. It is not for the Claimants to gainsay the specific administrative processes by which

these steps should have been taken – save to submit that for such explanations to be

meaningful sufficient opportunity would need to have been afforded to SPMs to

consider them before contracting.

Observations on Post Office’s case

363. Application of Interfoto: Post Office denies that the approach in Interfoto applies here,

where some of the contractual documents were signed by some of the Lead Claimants.

As noted above, Post Office’s case on this is misguided and at variance to the

developing law in the area – and indeed the authorities cited by Post Office itself in

opening, such as, for example, Carewatch (above).

364. Commercial context: Post Office provides no explanation as to why in a commercial

context (in which the background is said to include the observation made in Carewatch,

that the issue may arise in types of contract other than consumer contracts) is

“hopeless”. 283

282 There was no online resource where all the relevant provisions on a particular topic were to be
found together. The presentation of the Modified SPMC (with 48 pages of amendments, attached
to the front of an earlier version) is a totemic illustration of Post Office’s approach.
283 Post Office’s Written Opening, §385 {A/2/109}

– 175 –
B COMMON ISSUES
Issues 5 and 6: Onerous and Unusual Terms

365. Whether onerous and unusual: following trial, Post Office’s case is that the relevant

terms are not onerous and unusual can no longer be sustained. The evidence heard,

summarised above, demonstrates the profound unfairness, both procedural and

substantive, that could arise from the unconstrained operation of the impugned terms,

and from the obvious relational imbalance between the parties.

366. The evidence relied upon by Post Office in opening (in support of the suggestion made

that the impugned terms are in fact “normal and near-inevitable” 284) that “Subpostmasters

are solely responsible for their branch accounts. There is no transaction that enters their

accounts without their consent (or their consent by proxy through their assistants)” 285 is

impossible to reconcile with what was heard at trial as to the process for the issue and

forced acceptance of TCs, and, for example, cash remittances. Likewise as to control

over who to employ at the branch.

367. Sufficiency of notice: likewise, Post Office’s case as to the sufficiency of notice, said, in

fact 286, to have been provided is not supported by the evidence. As to this:

367.1 Sufficient notice was said to be (i) providing a copy of the contract; (ii)

alternatively, if no contract was provided and the Claimant was not aware of

its terms, “on the other facts pleaded above, adequate notice was still provided” 287 and

(iii) notice was not required beyond a document confirming that the Claimant

was bound by the terms, and the contract being available to the Claimant at

the time an acknowledgment of appointment was signed.

367.2 Yet at trial, the chaotic and haphazardly applied nature of Post Office’s

documentary processes was exposed such that there can be no proper basis to

conclude that those processes were sufficient to ensure adequate notice was

given.

367.3 As to this, the Claimants refer to and rely upon:

284 Post Office’s Written Opening, §386-7 {A/2/109}
285 Ms van den Bogerd’s written evidence, at §142 {C2/1/39}
286 Not, in itself, a question for this Common Issues Trial
287 See, e.g. Sabir/IDef at §76(2) {B5.3/3/36}

– 176 –
B COMMON ISSUES
Issues 5 and 6: Onerous and Unusual Terms

a. the evidence of the Lead Claimants as to their own experience of the

appointment process (Section A above), and

b. the generic evidence heard at trial relating to Post Office’s appointment

processes (Section A above).

368. A summary of the documents in fact received by the Lead Claimants and in what form

(as opposed, on Post Office’s evidence at its highest would have, had its now discredited

procedures been followed) is set out in the note, filed with these Submissions, produced

at the request of the Court on 22 November 2018.

– 177 –
B COMMON ISSUES
Issues 5 and 6: Onerous and Unusual Terms

– 178 –
B COMMON ISSUES
Issue 7: Unfair Contract Terms

Issue 7: Unfair Contract Terms

Issue 7: Were any or all of the contract terms at [Issue 5] unenforceable pursuant to the
Unfair Contract Terms Act 1977?

Relevant principles

370. As to the requirements and effect of Section 3 of the Unfair Contract Terms Act 1977

(“UCTA”) the Claimants refer to and rely upon:

370.1 The detailed overview provided in Annex VI to the Claimants Written

Opening Submissions; 288 and

370.2 The principles set out in the Appendix to these Written Closing Submissions

(under Unfair Contract Terms).

Findings sought

371. On the evidence that it has heard, the Claimants respectfully invite the Court to find: 289

371.1 that the relevant contracts were contracts on Post Office’s “written standard

terms of business” under Section 3(1) UCTA;

371.2 that the impugned terms (considered in the context of the contract as a whole

and/or individually or cumulatively) purported to entitle Post Office:

a. to restrict liability when in breach of contract; and/or

b. to render a contractual performance substantially different from that which

was reasonably expected of it; and/or render no performance at all;

371.3 that, in the premises, the terms failed to comply with the requirement of

reasonableness under Section 3(2) UCTA; and

371.4 the impugned were therefore unenforceable by Post Office.

288 {A/1/215-224}
289 See, paragraphs of Claimants’ generic pleadings identified at the outset of this part of Section B,
and, for example, Bates/IReply at §87 [B5.1/4/36]

– 179 –
B COMMON ISSUES
Issue 7: Unfair Contract Terms

Submissions

372. The Claimants have set out their submissions in support of the findings sought in some

detail in their Written Opening Submissions, under Issue 7: Unfair Contract Terms,

dealing in particular with: -

372.1 Why the impugned terms are to be regarded as contract terms 290 in forming

part of Post Office’s “written standard terms of business”. 291

372.2 The need to consider the terms in the context of the contract as a whole and

with regard to their combined effect;

372.3 How construed individually or cumulatively, the terms in question purport to

entitle Post Office to render a contractual performance substantially different

from that which was reasonably expected of it and/or render no performance

at all; 292 and

372.4 Why those terms do not satisfy the requirement of reasonableness.

373. In closing, the Claimants primarily rely upon, and invite the Court to refer, to those

submissions. In addition, and in the light of the evidence heard at trial, the Claimants

add the following further points.

373.1 Written Standard Terms: that Post Office’s terms were not negotiable - as set

out in Section A under Standard Contract (SPMC and NTC) – is now

apparently common ground, and was admitted by Post Office’s principal

witness in relation to its contracts. 293

373.2 Combined effect: the terms fall to be considered in the context of the contract

as a whole and with regard to their combined effect (and not as Post Office’s

290 Section 3(2); and see, for example as to termination provisions, Timeload Ltd v British
Telecommunications Plc [1995] E.M.L.R. 459, at 468 {A1.1/9/10} per Sir Thomas Bingham MR: “If a
customer reasonably expects a service to continue until BT has substantial reason to terminate it, it seems
to me at least arguable that a clause purporting to authorise BT to terminate without reason purports to
permit partial or different performance from that which the customer expected.”
291 Section 3(1) UCTA
292 See, for example Bates/IReply at §87 {B5.1/4/36}
293 Beal, §16 {C2/2/3} and {Day6/30:4-15}

– 180 –
B COMMON ISSUES
Issue 7: Unfair Contract Terms

case appears to suggest, in isolation) – as to which effects, the Court heard

considerable evidence – a summary of which is set out in Section B under

Onerous and Unusual Terms, above;

373.3 Expectations as to performance: the evidence of the Lead Claimants was

consistent and clear that they did not expect Post Office to suspend or

terminate performance without serious wrongdoing on their part and,

likewise, of the Post Office witnesses on the circumstances in which it was

expected that Post Office may suspend or terminate, as to which, see

a. the evidence summarised in Section A under Suspension and

Termination); and

b. the summary given of that evidence under Issues 5 and 6 above (and again,

under Issues 14 to 16, below).

373.4 It is now clear from this that both parties expected Post Office’s performance to

continue absent serious wrongdoing on the part of SPMs, or grounds sufficient

to justify termination under Post Office’s own corrective action policies where

there was a performance issue.

373.5 Reasonableness: the Claimants further rely upon the concession made that

the terms were not negotiable, as well as the following:

a. the evidence and submissions set out above as to why the impugned terms

are, individually, and collectively, onerous and unusual (under Issues 5

and 6) above – from which it is abundantly clear that the impugned terms

are unreasonable and, given the tenor of the evidence of Post Office’s

witnesses, contain extravagant powers that normal commercial practice

would not require in this context;

b. the evidence heard at trial and observations made on that evidence as to the

relative positions of the parties (as informs their relative bargaining power)

in Section A above, under Relationship;

– 181 –
B COMMON ISSUES
Issue 7: Unfair Contract Terms

c. likewise, as to the same matter, and SPMs’ capacity to ascertain the terms

applicable to them and understand their effects, the evidence and

observations in Section A; and

d. as to the position of the parties, Section A above, under Business Plans –

in particular, for these purposes, the observations made on the cross

examination of Mr Dance, from which it became clear (i) that Post Office’s

proforma business plans were not pitched at experienced businesspeople –

rather, to those who may be commercially naïve or have very limited

understanding of accounting fundamentals (and, for example, limited

understanding of basic terminology such as “Operating Budget” and

“Income” requiring guidance on this), and (ii) a further imbalance of power

arises from basis upon which business plans were completed and

(internally) assessed as to their viability by Post Office (by reference to an at

one time internal working figure of £1,500 for branch losses of which SPMs

were not made aware).

e. As is clear from the foregoing, and as stressed in the Claimants’ Written

Opening Submissions, the relational imbalance was, for the purposes of the

reasonableness test, both obvious and profound.

374. For the avoidance of doubt, the Claimants do not rely upon evidence of the Lead

Claimants of events post-dating their entry into a contract of appointment for the

purposes of establishing unreasonableness upon the statutory test in their particular

individual cases, as opposed to the Claimants’ case on the generic issues.

375. Rather, such evidence is relied upon to establish relevant factual background as what

was reasonably to be expected of Post Office’s performance.

Observations on Post Office’s case

376. Post Office’s case is that Section 3 UCTA does not apply to the SPMC and NTC

contracts at issue in these proceedings. In opening, Post Office made the doubtful claim

that the Claimants case is “utterly without any basis in reasonable argument”.

– 182 –
B COMMON ISSUES
Issue 7: Unfair Contract Terms

377. As to the two principal points taken by Post Office.

377.1 Written standard terms: in support of its case that “Post Office’s business was

not the appointment of Subpostmasters” 294 Post Office relies upon two authorities

relating to the engagement of bankers pursuant to contracts of employment.

Post Office disavows, at every turn, any suggestion that SPMs were

employees. Indeed it is a central premise of its case on the Common Issues

(including as to UCTA reasonableness) that the SPM Contracts are commercial

business to business contracts.

377.2 Contrary to what is suggested, Post Office is clearly (at least in part) in the

business of contracting with SPMs. What constitutes this is not precisely

defined and was left up to the Court on the facts. 295 Post Office operates a

business to which an agency network of 11,500 branches is integral, being part

of its statutory monopoly. These are said to be independent business owners

who were “open minded, informed businesspeople, with complete freedom of choice”.

The business model is, on Post Office’s own case, far removed from the

situation of employees of a bank.

377.3 Contractual performance: Post Office’s suggestion that none of the terms in

question would entitle Post Office to render a contractual performance

substantially different from that which was reasonably expected of it, or to

render no performance 296 is difficult to reconcile with the authorities. It is

uncontroversial that the contract term must be one which has an effect on

contractual performance reasonably to be expected.

377.4 As identified in opening, (a) the impugned terms cannot be considered in

isolation as opposed to considering them both in context and as to their

combined effects – and insofar as Post Office’s case depends upon looking at

each term in isolation, that is wrong, (b) The terms in question purport to

294 See, for example, Bates/IDef at §78(1) {B5.1/3/43}
295 Law Commission Report No. 69, at §157: referred to at {A/1/216}
296 GDef at §109 {B3/2/49}

– 183 –
B COMMON ISSUES
Issue 7: Unfair Contract Terms

confer upon Post Office largely unfettered rights to vary almost every aspect

of the relationship between the parties, including performance by Post Office.

377.5 The impugned terms purport to permit Post Office, in exercise of wide

powers, to provide something other than that defined by the principal terms of

the contract – in circumstances where it was expected its performance would

continue until there was a substantial reason to terminate it so as to subject the

clauses purporting to allow the party to terminate without such reasons to the

requirement of reasonableness. 297 Its powers of termination are the ultimate

example – but further such examples include the powers to withdraw

products and services for which scale remuneration was due.

377.6 Its further case on reasonableness: was addressed by the Claimants both in

Opening, and is addressed on the further points identified above. As should

be clear from the foregoing, there can be no sensible basis for the suggestion

made by Post Office in opening that SPMs’ bargaining power (in respect of

non-negotiable terms) might have been weak or strong, but should be taken

for the purposes of the reasonableness test to be “independent-minded, informed

businesspeople, with complete freedom of choice” in respect of whom authorities

relating to “experienced businessmen representing substantial companies of equal

bargaining power… [who] should… be taken to be the best judges of fairness” should

apply by analogy. 298

378. It is further important to note that Post Office expressly relies upon the provision in its

standard written terms giving a right to terminate on 3 months’ notice without cause as

amounting to a limitation of liability clause, capping any compensation that SPMs might

recover. Such a clause falls within Section 1(2)(a) of UCTA, so as to be subject to the

requirement of reasonableness.

297 Timeload Ltd v British Telecommunications Plc [1995] E.M.L.R. 459 {A1.1/9/1-13}: see {A/1/221} –
Post Office’s protestations to the contrary are based upon certain doubts as to the extent to which
the section may apply to termination clauses found in the judgment of Thomas Bingham MR in
that case (– referred to in subsequent cases and in Chitty on contracts – but not on any definitive
principle or rule excluding such application.
298 As Post Office seeks to, citing the observations of the Court of Appeal on that matter, quoted
above, in Watford Electronics v Sanderson CFL [2001] EWCA Civ 317, in its Written Opening at
§422-§423 {A/2/116}

– 184 –
B COMMON ISSUES
Issues 8 and 9: Liability for Alleged Losses

Issues 8 and 9: Liability for Alleged Losses

Issue 8: What is the proper construction of section 12, Clause 12 of the SPMC?

Issue 9: What is the proper construction of Part 2, paragraph 4.1 of the NTC?

Relevant Terms

379. The relevant terms to be construed are as follows:

(1) SPMC – Section 12, Clause 12:

"The Subpostmaster is responsible for all losses caused through his own

negligence, carelessness or error, and also for losses of all kinds caused by his

Assistants. Deficiencies due to such losses must be made good without delay."

(2) NTC – Part 2, paragraph 4.1:

“The Operator shall be fully liable for any loss of or damage to, any Post Office

Cash and Stock (however this occurs and whether it occurs as a result of any

negligence by the Operator, its Personnel or otherwise, or as a result of any

breach of the Agreement by the Operator) except for losses arising from the

criminal act of a third party (other than Personnel) which the Operator could

not have prevented or mitigated by following [the Defendant’s] security

procedures or by taking reasonable care. Any deficiencies in stocks of

Products and/or any resulting shortfall in the money payable to [the

Defendant] must be made good by the Operator without delay so that, in the

case of any shortfall, [the Defendant] is paid the full amount when due in

accordance with the Manual”.

Relevant principles

380. The Claimants rely upon the following principles that pertain to the construction of

those terms:

– 185 –
B COMMON ISSUES
Issues 8 and 9: Liability for Alleged Losses

380.1 The principles set out in Annex I to their Written Opening Submissions

(Annex I: Contractual Construction); 299 and

380.2 The propositions set out in the Appendix to these Written Closing

Submissions, specifically, those set out under the heading (1) Contractual

Construction (where the key propositions arising from the leading authorities

ICS, Rainey Sky, and Wood are set out, and referenced).

381. For ease of reference in these Written Closing Submissions, the Claimants will rely on

the overall approach commended to the Court which can be taken from the authorities,

in the light of the express words (including headings) in the contracts, as outlined in the

Claimants’ Written Opening, under Section B: Issues 8 and 9 – Liability for Alleged

Shortfalls, at §297: 300

(1) The Court should look for the meaning of the provisions not just the

meaning of the words.

(2) The correct approach is to start (and finish) by looking for and adopting the

interpretation that most accords with commercial common sense. 301

(3) Interpretation is the ascertainment of the objective meaning in the light of

the parties’ background knowledge at the time of the contract.

(4) This iterative process involves checking the rival meanings against other

provisions of the document and investigating the commercial

consequences. 302

(5) It does not matter whether the more detailed analysis commences with the

factual background and the implications of rival constructions or a close

examination of the relevant language in the contract, so long as the Court

balances the indications given by each. 303

299 {A/1/171-175}
300 {A/1/116}
301 Rainy Sky SA v Kookmin, per Lord Neuberger, at §21 to 30 {A1.1/37/9-12}
302 Rainy Sky at §28 {A1.1/37/12}
303 Lord Hodge, at §12 {A1.1/37/7}

– 186 –
B COMMON ISSUES
Issues 8 and 9: Liability for Alleged Losses

(6) The Court must have regard to “the quality of drafting of the clause” striking

that balance. 304

(7) To the extent of any ambiguity in the meaning of the terms, those terms are

to be construed contra proferentem:

(a) so as to remove (and therefore not create) doubt or ambiguity, and

(b) as an aid to construction where the matter cannot otherwise be resolved

by the application of prior principles of construction. 305

Findings sought on Common Issues 8 and 9

382. Applying the relevant principles, and on the evidence heard at trial, the Claimants

invite the Court to find 306 that, on a proper construction of these terms in their

contractual context, SPMs are not strictly liable for all alleged losses.

383. Rather, SPMs are only liable for:

383.1 actual losses (c.f. Post Office’s case that no economic detriment is required for

there to be a loss); 307

383.2 caused by the negligence, carelessness or error, of the SPM, or their Assistants;

and

383.3 the contractual burden of proof as to which was on the Defendant.

384. Thus on the Claimants’ construction of either of the above terms, SPMs would not be

liable for an alleged shortfall in branch accounts:

384.1 which did not represent a real loss to Post Office; or which was not established

by Post Office, after due enquiry, to be a real loss;

304 Lord Hodge, at §11 {A1.1/37/6}
305 For the purposes of these opening submissions, the Claimants refer to the helpful summary of
the principle of construction contra proferentem in Chitty on Contracts (32nd Ed.) at 13-086
{A1.3/2/10}
306 As pleaded: GPOC at §55 {B3/1/24}; NB it should be noted that §55 pleads to the “proper
construction of section 12, paragraph 12 of the SPMC (and similar clauses said to impose such liability)”
[Emphasis added] - this captures Part 2, clause 4.1 of the NTC, contrary to the position adopted
by Post Office in the Individual Lead Claims (see, e.g., Stockdale/IDef at §74(1) {B5.6/3/37}
307 Post Office contends at GDef §94(4) that “in Section 12, Clause 12, the concept of a ‘loss’ is not tied to
or dependent upon economic detriment to Post Office.” {B3/2/43}

– 187 –
B COMMON ISSUES
Issues 8 and 9: Liability for Alleged Losses

384.2 in circumstances where the loss was caused or contributed to by Post Office’s

own breach of duty;

384.3 where it was not established to be due to the SPM’s own negligence,

carelessness or error, or that of his/her assistants.

Submissions in the light of the evidence heard at trial

The position as it was prior to trial

385. The Claimants rely in support of those findings upon the detailed submissions (made on

the basis of the pleadings, admissions by Post Office, documentary disclosure, and the

written evidence of the witnesses) set out in their Written Opening Submissions, under

Section B: Issues 8 and 9 – Liability for Alleged Losses). 308

386. For ease of reference those submissions addressed the following:

386.1 The position before and following the introduction of Horizon as to the

functional identity between the role and responsibility of Subpostmasters;

386.2 The control (as a matter of common ground) 309 exercised by Post Office over

branch data, and its reconciliation with other sources of data, 310 as well as the

SPMs’ access to relevant data and the interface through Horizon.

386.3 The sources from which alleged shortfalls were derived, including automatic

detection arising from discrepancies between multiple data sources, or

considered by the Defendant’s staff; 311

386.4 Reliance upon the agreed Statement of Facts, 312 Factual Matrix 313 and the Lead

Claimants’ own witness statements;

308 {A/1/111-128}
309 Paragraph 331.1, on p.122 {A/1/127} and paragraph 367, on p.135 {A/1/140} of the Claimants
Written Opening, as to the Admitted Functions of the Defendant.
310 GDef at §39(1) {B3/2/13} “Post Office checks Horizon transaction data (i.e. data as keyed into branch
terminals by branch staff) against data taken from separate sources”
311 GDef at §39(2) {B3/2/13} as to whether or not “the branch staff have probably made an error that
requires correction”
312 {B6/2}

– 188 –
B COMMON ISSUES
Issues 8 and 9: Liability for Alleged Losses

386.5 Post Office’s case 314 that under the SPMC the SPMs bear the burden of proving

that such losses were not caused by the matters identified in S.12(12) where

“loss” is not dependant upon economic detriment to Post Office, and under the

NTC that SPMs are liable in respect of all losses caused by themselves or their

Assistants, save for certain losses including those that he / she could not have

prevented or mitigated by following Post Office’s procedures or using

reasonable care. 315

386.6 The factual premises of Post Office’s case (see below) (in particular the

suggestion losses do not arise in the ordinary course, their cause being

peculiarly within the knowledge of Subspostmasters – as to which Post Office

is said to be reliant upon them);

386.7 The literal language used in the express terms and their contractual context –

including wording used (being compensatory in nature, based upon fault) and

its inconsistency with what would amount to grant of an indemnity (absent

“clear and unambiguous language” 316 supporting that interpretation);

386.8 What, on the documents and written evidence was to be taken as the relevant

commercial context – including the difficulty faced by SPMs in identifying if,

how, when and why a shortfall had occurred, reliance upon Post Office in this

respect and allocation of functions following introduction of Horizon; and

313 {B6/1}
314 See GDef at §94 {B3/2/43}
315 See, e.g. Stockdale/IDef at §74(2) {B5.6/3/37}
316 See, e.g., Lewison on The Interpretation of Contracts (6th Ed.) at 12.15 {A1.3/3/1} (“in order to be
effective, particularly in relation to loss caused by the negligence of the party indemnified, clear and
unambiguous language must be used”) and the authorities referred to therein. In particular, in the
case of Smith v South Wales Switchgear Ltd [1978] 1 WLR 165 at 168D {A1.1/6/4}: (i) “when
considering the meaning of such a clause one must, I think, regard it as even more inherently improbable
that one party should agree to discharge the liability of the other party for acts for which he is responsible”
(per Viscount Dilhorne); and, (in referring to the guidelines laid down in Canada Steamship
Lines Ltd v R [1952] AC 192 {A2/11}) at 178D {A1.1/6/14} (ii) “While they apply to the construction
both of a clause relied on as exempting from certain liabilities a party who has undertaken to carry out
contractual work and of a clause whereby such a party has agreed to indemnify the other party against
liabilities which would ordinarily fall on him, they apply a fortiori in the latter case, since it represents a
less usual and more extreme situation” (per Lord Keith).

– 189 –
B COMMON ISSUES
Issues 8 and 9: Liability for Alleged Losses

387. Further, at that time prior to trial – and again for ease of reference – the following

aspects of the functioning of Horizon and Post Office and/or Fujitsu’s access to it, which

was then known to be common ground:

387.1 since 2010, transactions have been effected through real time exchanges of data

from branches to a central Post Office data centre; 317

387.2 Post Office and/or Fujitsu had access to 318 the Known Error Log and/or other

similar logs or records of system bugs and errors; 319

387.3 all such data and reports which were available to the Claimants on Horizon 320

were, in any event, similarly also available to Post Office;

387.4 Post Office and/or Fujitsu could investigate apparent shortfalls; 321

387.5 “more extensive transaction data was provided, and further data was provided outside

[the 42 or 60 day] periods, where this was necessary”; 322

387.6 “Fujitsu provided a telephone advice service to Post Office in relation to technical

problems with the Horizon system or equipment”; 323

387.7 the Defendant had a process for the escalation of disputes including a “team

responsible for investigating branch matters’ which ‘undertakes a further

investigation into the disputed amount, seeks to identify the reason for it arising and

communicates with the Subpostmaster concerned”; 324

317 GDef at §33 {B3/2/11}
318 Noting that it is the Claimants case, further to this admission, that Post Office and/or Fujitsu had
access to all transaction data, including a detailed stream of transaction data (XML data) and all
transactions affecting the accounts of individual branches, including transactions linked to
individual users, system generated transactions, and those initiated by Post Office and/or Fujitsu:
GReply at §9.1 {B3/3/4}
319 GDef at §50(4) {B3/2/22}
320 As pleaded in the GDef at §38(2) and (3) {B3/2/12-13}
321 GDef at §46(4) and 54(5) {B3/2/19-22}
322 GDef at §136(2) {B3/2/56}
323 GDef at §48(4) {B3/2/20}
324 GDef at §46(4)(b) {B3/2/19}

– 190 –
B COMMON ISSUES
Issues 8 and 9: Liability for Alleged Losses

387.8 ‘for many transaction types’, Post Office is able to compare its own transaction

records to the corresponding record held by its clients; 325

387.9 Fujitsu has had the ability to inject transactions into branch accounts since at

least 2010 (though initially falsely denied in a public statement, now admitted

and described as “Balancing Transactions”); 326

387.10 Post Office had access to Helpline records 327 (relating to particular

individuals, and collectively, identifying common issues/concerns);

387.11 Post Office had access to historic information both for a particular branch and

across multiple branches and was able to carry out audits; 328 and

387.12 The admissions made 329 and the points of agreement (in their first Joint

Statement) of the parties’ Horizon trial IT experts as to the extent to which

Horizon was susceptible to bugs and errors. 330

Post Office’s change of case, and the position in the light of the evidence

388. In the light of the significant developments, and what came out in evidence, at trial, the

Claimants add the following.

389. First, Post Office has changed its case.

390. In its written, and oral, opening submissions, Post Office substantially shifted the basis

of its case on liability for alleged losses onto new ground.

325 GDef at §54(1) {B3/2/23-24}
326 GDef at §57(3) {B3/2/26}; noting that Claimants do not accept that Fujitsu alone had this
capability, nor that this capability did not exist before 2010; the extent of the Defendant’s ability
to carry out Balancing Transactions, without the consent or even knowledge of the SPM, falls to
be determined as part of the Horizon Issues Trial.
327 The Claimants rely on Post Office’s admission at Responses 19A and 19B to the Claimants’ RFI
dated 31 July 2017 {B4/2/9}
328 GDef at §64(2)(a) to (b) {B3/2/29-30} “to check the level of cash and stock in a branch” and enquiries
“For a wide variety of purposes … Post Office can make a wide variety of enquiries into a branch’s
operations without undertaking an audit”
329 GDef at §56(1) {B3/2/24}
330 First Joint Statement of the parties IT experts, {G/61}; noting that this agreed position is subject
to differing views as to the extent to which they caused apparent discrepancies

– 191 –
B COMMON ISSUES
Issues 8 and 9: Liability for Alleged Losses

390.1 Its pleaded case (GDef, §76, §85 and §93 to §94) 331 is that it is unable to monitor

transactions in branches and is reliant on accurate reporting, and:

a. “it is appropriate to infer and/or presume that the shortfall arose from losses for

which [the SPM] was responsible” because “losses do not arise in the ordinary

course of things without fault or error on the part of Subpostmasters or their

Assistants”, and

b. SPMs bear the legal burden of proof because “(1) the truth of the matter lies

peculiarly within the knowledge of Subpostmasters as the persons with

responsibility for branch operations and the conduct of transactions in branches, (2)

it would be unjust for Post Office to be required to prove allegations relating to

matters that fall peculiarly within the knowledge of Subpostmasters...”

390.2 However, in opening, Post Office:

a. conceded that the relevant terms “should be considered against the factual

background of how accounting works in practice” – this is now common

ground, thoughts that background goes well beyond the position described

by Post Office’s own witness, Mrs van den Bogerd in her witness statement

(as suggested by Post Office in opening); 332

b. conceded that SPMC, S.12(12) “does not, on its proper construction, extend to

mere apparent shortfalls that are shown on Horizon and result from bugs or errors

in the system.” (nowhere is this found in its pleaded case); 333

c. suggested, rather, that on the plain and ordinary meaning of the wording

“there is no “deficiency” where Horizon shows only an apparent shortfall,

331 {B3/2/36}, {B3/2/39-41}, and {B3/2/42-43}; noting that By its IDefs, Post Office expressly refers back
to and relies upon §94 of the GDef (which, in turn, imports §93 above) – see for example
Bates/IDef at §93(1) {B5.1/3/52}
332 Defendant’s Written Opening, §85 {A/2/25}
333 {A/2/26-27} at §87-§88

– 192 –
B COMMON ISSUES
Issues 8 and 9: Liability for Alleged Losses

attributable to a bug or error in the system. There is only a liability where there is

in fact a shortfall.” 334

d. contrary to its pleaded case suggested that the burden of proof is not a

matter of construction (being, it is said, outside the scope of Issue 8), but

importantly that

“Post Office accepts that it bears the burden of showing a “deficiency” and a “loss”

for the purpose of clause 12. A “deficiency” or shortfall that was generated by

Horizon could not be used to prove the existence of a “loss” under the clause.”

[Emphasis added], and

“…the words of clause 12 cannot legitimately be read as imposing a “contractual

burden” of proof on Post Office to identify the specific losses underlying the

shortfall and show them to have resulted from the SPM’s negligence, carelessness

or error (or that of an assistant). There is no express contractual allocation of the

burden of proof on these matters.” 335

390.3 now seeks to distinguish between two “important concepts” not explored in

their generic pleadings – a “deficiency” and a “loss”. The former is said to be a

difference (or shortfall) between cash and stock declared by a SPM as being in

the branch, and what should be there based on transactions (and not whatever

is presented on Horizon). 336

390.4 now says the clause requires SPMs to make good deficiencies that are due to

losses for which he or she is responsible and Post Office bears the cost of any

other deficiencies. 337

390.5 accepts that as the party who asserts, it has the burden of proving a

“deficiency” and will ordinarily seek to do so by reference to branch accounts.

334 {A/2/27} at §89(b) – emphasised in oral opening “Let me say very clearly: that is not and has never
been our case.” {Day1/103:18}
335 {A/2/26} at §89(c); the latter point made again in oral opening submissions at {Day1/107:8-12}
336 {A/2/27} at §90-§91
337 {A/2/27} at §92

– 193 –
B COMMON ISSUES
Issues 8 and 9: Liability for Alleged Losses

Where a SPM has signed off on the relevant account, it will be for him or her to

show a mistake in it.

391. In oral opening submissions, Leading Counsel for Post Office sought to explain this new

and highly strained interpretation of the meaning of the terms in issue.

391.1 A distinction is drawn between “Horizon-generated losses, if there is such a

beast…” for the one part and other losses for which SPMs are liable under the

terms in issue. The former category is conveniently cast (by reference to the

GDef) as “a shortfall that is attributable to errors and / or bugs in Horizon” 338 so as

to exclude from the analysis Post Office’s own role in reconciling data on

Horizon, issuing TCs and inputting, for example, transactions by reason of

cash remittances.

391.2 In respect of ‘Horizon-generated losses’, its case is that because these are not

caused by negligence or error of SPMs or by an Assistant they do not “fit within

clause 12, it doesn't even get into the gateway” and are not therefore losses for

which SPMs may be liable. 339

391.3 While Post Office has a “persuasive burden” as to the cause of losses, it will seek

to discharge that persuasive burden by relying on signed accounts or evidence

derived from audit or Horizon – as evidence. 340 As to that it relies upon an

inference as to the general reliability of Horizon. 341

391.4 There is a now said to be 342 a “prior stage” or “gateway” before you get into the

caveat or proviso in S.12(12) (negligence or error) which is Post Office’s own

discharge of the “persuasive burden” of showing that a loss has arisen, which it

is said to be discharged by the inference of the general reliability of Horizon: 343

338 GDef, §41(6) {B3/2/16}
339 {Day1/96:3-7}, see also {Day1/103:20} to {Day1/104:12}
340 {Day1/107:18-22}: “once a shortfall or loss has been shown by Post Office, it is then for the postmaster to
show he doesn't have to pay it. And that is when you get into the clause proper.”
341 {Day1/111:4-7}; see also Defendant’s Written Opening at §122(b) {A/2/36}
342 {Day1/111:24} to {Day1/112:5}
343 {Day1/113:4-13}

– 194 –
B COMMON ISSUES
Issues 8 and 9: Liability for Alleged Losses

“What it comes down to is we say Horizon is reliable and when Horizon says there is a

shortfall, there is a shortfall.” 344

392. This was a construction that Post Office struggled to explain in clear terms. It represents

a significant departure from the plain and ordinary meaning of the words used in SPMC

Section 12, clause 12. Without seeking or obtaining permission to amend its pleadings,

Post Office now commends to the Court an interpretation of the clause at variance to

that it has hitherto advanced.

393. As to this case, the Claimant’s position is simple:

393.1 First, the construction now contended for is so opaque as to be all but

incomprehensible to those well versed in this case and familiar with the clause

– still less, it is to be inferred, SPMs or Post Office staff.

393.2 The construction contended for – with gateway requirements and a shifting

evidential burden – are nowhere found in the clear language used. Nor could

it possibly be how they would have been understood to notional person with

the background knowledge of the parties.

393.3 Indeed, Post Office’s case on the clause appears to be an attempt to re-write

the clause largely to suit its case on agency, but with the apparent collateral

purpose of linking the allocation of the burden of proof under the clause to

issues to be determined at the Horizon Issues trial. 345

393.4 It is a case that cuts across not only the words used, but also contractual

purpose of the clause, apparent from Section 12 as a whole, which (as its

heading and other provisions make clear) is the allocation of

“RESPONSIBILITY FOR POST OFFICE STOCK AND CASH”;

393.5 The construction now relied upon further disavows the “legal burden” said,

on Post Office’s pleadings, to have arisen under the clause, and replaced it

with a persuasive burden.

344 {Day1/114:23-25}
345 {Day1/113:10-13} and {Day1/117:12} to { Day1/118:3}

– 195 –
B COMMON ISSUES
Issues 8 and 9: Liability for Alleged Losses

393.6 That discharge of such a persuasive burden could give rise to a further burden

upon the SPM to prove that losses come within the proviso is not found in the

clause and is irreconcilable with the principle that he who asserts must prove,

to which Post Office concedes it is subject.

393.7 Finally, Post Office’s case is reliant upon an inference premised on the

suggestion that only the reliability of Horizon is at stake. That premise is

flawed and obviously so. It purposefully ignores the multiple functions it is

admitted, and the Court has heard on the evidence, are performed with

respect to Horizon, the sources data in it and their vulnerability to error for

reasons that have nothing to do with SPMs.

393.8 At a minimum, the Court heard evidence at trial of the following sources of

possible errors in Horizon data:

a. Client data from, for example, Camelot and Bank of Ireland – Post Office’s

evidence was that data streams were received from approximately 130 Post

Office clients; 346

b. Reconciliation of Post Office data with client data – as to which, Post

Office’s key witness (i) admitted “there is human error in Post Office

reconciling data, potentially” 347 and (ii) agreed that staff performing the task

were “no more perfect than Subpostmasters” 348 when it came to human error;

c. Transaction Corrections issued manually, likewise by Post Office staff,

which (i) not uncommonly have to be corrected, 349 where wrongly issued,

by the further issue of TCs and (ii) could only be disputed by calling the

Helpline and specifically raising a dispute; 350

346 Mrs Van Den Bogerd {Day 8/54:20} - {Day 8/55:4}
347 {Day7/114:3-5}
348 {Day7/114:6-8}
349 Evidence seen by the Court, for example, with respect to Mr Abdulla – which Mrs van den
Bogerd accepted on the face of it looked like more than one such error {Day8/51:17-20}
350 Evidence of Mrs Stubbs, where she had not specifically said the word “dispute” so had been
treated as not having disputed a TC for £9,033 {Day3/15:24} – {Day3/16:12}

– 196 –
B COMMON ISSUES
Issues 8 and 9: Liability for Alleged Losses

d. Functions performed by Post Office’s Cash Centre when cash remittances

are made: it was clear from the evidence of Post Office’s key witness that

cash remittances could be incorrect (a circumstance requiring SPMs to call

the Helpline to raise a dispute with the purpose ultimately of a credit TC

being issued). 351

394. Second, imposition of a legal burden upon SPMs would be wholly uncommercial.

395. It is far from clear whether Post Office still maintains the factual premises of its pleaded

case on the construction of these clauses. But it is clear, either way, that the imposition

of any legal burden of proof upon SPMs would be wholly uncommercial and unrealistic.

That cannot have been understood to be the meaning conveyed by those terms to

notional reasonable persons – and cannot be squared with the extensive evidence that

the Court has heard at trial.

396. Losses arising in the ordinary course: First, on the evidence and documentation before

the Court, the suggestion that losses do not arise in the ordinary course without fault or

error on the part of SPMs cannot be sustained. As set out above, it is clear that the

Horizon system – and how it was interfaced with – inherently involved multiple, often

manual, processes which were prone to error on the part of others.

397. The principal points are summarised above – but the Court is referred in particular to

the detailed review of the evidence and observations made upon it, in Section A,

Branch Accounts and Horizon, above, and under that, in particular Transaction

Corrections and Issues Relating to TCs, which shows:

397.1 The significant proportion (c.20% in one year) of TCs “not caused by branch”

identified in internal documents.

397.2 the need to introduce policies for the authorisation of ‘high value’ TCs ““to

ensure that branches are not hit by large value transaction correction which is

351 Mrs van den Bogerd {Day8/26:10-20}

– 197 –
B COMMON ISSUES
Issues 8 and 9: Liability for Alleged Losses

subsequently found not to be proper to that branch” 352 and against issue of TCs

shortly branch trading period end, to allow for disputes. 353

397.3 the obvious problems with TCs relating to National Lottery transactions which

internal documents show to have been a significant cause for concern to Post

Office, including as to the ‘integrity’ of Camelot data. 354

397.4 the use of casual staff for TC processing, and the unexplained, and wildly

varying, volumes of TCs processed each year – shown in internal Post Office

documents considered at trial.

397.5 Further, the Court is referred to the commentary above, under Bugs & Errors,

Remote Access, Implementation of Recommendations, which contains a

summary, in particular, of the Receipts / Payments Mismatch error, identified

by Fujitsu in 2010, 355 and the Local Suspense problem. 356

398. Investigating transactions: Second, it was difficult, if not in many cases impossible, for

SPMs to investigate, let alone establish or verify, the cause of apparent shortfalls with

the information made available to them. On that matter, the evidence before the Court

at trial is too extensive to be the subject of exhaustive citation here. However the

Claimants draw the attention of the Court to the following by way of example in

Section A:

398.1 under Branch Accounts and Horizon, the evidence summarised under

Investigation of Apparent Shortfalls – including, in particular, the two

examples of Lead Claimants Mr Bates, and Mrs Stubbs (apparent shortfalls

that even Post Office’s own auditors could not ascertain the cause of from

352 {F3/87/8} confirmed as needed by Mrs van den Bogerd {Day8/30:12-15}
353 {G/35/11}
354 {F3/240/65}
355 See documents at {G/8} and {G/9}
356 See document at {G/13}

– 198 –
B COMMON ISSUES
Issues 8 and 9: Liability for Alleged Losses

information in the branch), and the lack of access to detailed information

explaining TCs contained in spreadsheets not provided to SPMs. 357

398.2 under Training and Support – the evidence from which a clear picture

emerges of inadequate training that left Subpostmasters unable effectively to

investigate, which was only basic as to balancing, and did not apparently in

fact extend to explanations being given on how to declare, investigate, make

good or dispute shortfalls as initially suggested by Mrs van den Bogerd in her

witness statement; 358 The training materials, including as to balancing

materials were basic, and internal documents show recognition of the

inadequacies of training.

398.3 The evidence summarised under Helpline and Online Help which makes

clear the obvious shortcomings of the Helpline in providing meaningful

support to SPMs in investigating shortfalls of which the Claimants complain

and which made investigation ineffective.

398.4 under Suspension and Termination, the evidence as to the inability of

Subpostmasters to investigate the cause of shortfalls following suspension,

when denied access to Horizon, branch records within the branch itself.

399. Cause of losses not within SPMs’ knowledge: Third, as should be clear from the

foregoing it cannot be said that the cause of losses was obviously not a matter that was

“peculiarly within the knowledge” of SPMs. While it is uncontroversial that SPMs had first-

hand knowledge, unavailable to Post Office, as to the handling of customers and stock

and cash at the branch – they cannot on any commercially realistic analysis be taken to

have had knowledge of what takes place beyond those parameters, and, in particular

with respect to branch data. Their role was but one part of that system.

400. In the premises, the Claimants invite the Court to find the relevant clauses forming the

subject of these Common Issues to be interpreted as they contend – on their plain and

357 In the case of Mr Abdulla – see evidence of Mrs van den Bogerd {Day8/53:3} – the spreadsheet
being found at {E4/92/1}
358 Evidence of Mrs van den Bogerd {Day8/130:20-23}

– 199 –
B COMMON ISSUES
Issues 8 and 9: Liability for Alleged Losses

ordinary meaning and so as to accord with the commercial reality the evidence speaks

to.

– 200 –
B COMMON ISSUES
Issues 10 and 11: Post Office as Agent

Issues 10 and 11: Post Office as Agent

Issue 10: Was Post Office the agent of Subpostmasters for the limited purposes at GPOC
paragraphs 82 and 83?

Issue 11: If so, was the Defendant thereby required to comply any or all of the obligations
at GPOC paragraph 84?

Relevant principles

401. The principles relevant to this Issue are set out in:

401.1 Annex VII to the Claimants’ Written Opening {A/1/225} – {A/1/231}; and

401.2 The propositions set out in the Appendix to these Written Closing

Submissions, under ‘Post Office as Agent’.

Findings sought

402. In the Claimants’ Written Opening, the Court was invited to make the following

findings on these Common Issues: 359

402.1 that it is to be implied from the relevant facts that the Defendant acted as an

agent for Subpostmasters:

a. for the purpose of rendering and making available accounts and / or was

under an equitable duty to render accounts; and, further or alternatively;

b. for the specific purpose of effecting, reconciling and recording transactions

initiated by the Claimants;

402.2 that the limited agency contended for gave rise to the specific correlative

obligations upon the Defendant, described in GPOC, §84. 360

359 Claimants’ Written Opening, §352 {A/1/134}
360 {B3/1/45}: The Defendant was thereby required: (i) properly to effect, execute, record and / or
maintain and keep records of all transactions which the Claimants initiated using Horizon or for
which the Claimants were potentially responsible; (ii) to render and make available to the
Claimants accounts (in accordance with (i)); further or alternatively, where the Defendant alleged
shortfalls to be attributed to the Claimants, to comply with the duties averred at GPOC, §64.3 to
64.11.

– 201 –
B COMMON ISSUES
Issues 10 and 11: Post Office as Agent

Submissions

403. Written opening submissions: in support of the findings above, the Claimants refer the

Court to, and rely upon, the detailed submissions made on this issue in their Written

Opening Submissions (Section B: Post Office as Agent) 361 and the written evidence of

the Lead Claimants and the Defendant witnesses referred to in that Opening.

404. The Court is invited, having heard the evidence at trial, to make the findings above in

the light of those submissions, and in the light of the following further points.

The Defendant’s case

405. In its Opening, the Defendant’s objections to the “extravagant” suggestion that it is an

agent of Subpostmasters in the limited capacity set out above fell into three categories:

405.1 No agreement: The Defendant has not agreed to act as an agent for

Subpostmasters. There is a reliance on the fact that the Subpostmaster

Contracts specify that Subpostmasters are the agent of the Defendant, and it is

said that implying an agency in the opposite direction would contradict the

express terms of the contracts. 362

405.2 The Defendant did not undertake any of the characteristic functions of an

agent: In particular, it is said that the Defendant did not effect transactions on

behalf of Subpostmasters, but rather it was for the purposes of conducting its

own business – these are the Defendant’s clients, the Defendant’s contracts

and the Defendant’s money at stake, with commercial risk on the transaction

being borne by the Defendant. 363 It cannot be said that the Defendant agreed

to subordinate its own interests to those of Subpostmasters. 364

405.3 The matters relied upon by the Claimants cannot establish an agency

relationship: It is reiterated that the Defendant performed transactions and

reconciled data on its own account and in relation to its own business. It is

361 §331 to 352 of the Claimants’ Written Opening {A/1/127} – {A/1/134}
362 Defendant’s Written Opening, §355 {A/2/100}
363 Defendant’s Written Opening, §358 {A/2/101}
364 Defendant’s Written Opening, §359 {A/2/102}

– 202 –
B COMMON ISSUES
Issues 10 and 11: Post Office as Agent

also said that Subpostmasters reposing trust and faith in the Defendant to

perform its functions properly is not sufficient to establish a relationship of

agent / principal or to impose a fiduciary duty. 365

No agreement

406. The relevant touchstone is consent, which can be implied by conduct: As set out in the

Claimants’ Written Opening, and referred to during the course of the Admissibility

Application, the relevant House of Lords authorities establish that:

406.1 the relationship of principal and agent can only be established by the consent

of the parties;

406.2 that must consent may be given expressly or by implication from words and

conduct;

406.3 even later words and conduct, after the time of the alleged creation of the

agency, may have some bearing; and

406.4 the parties will have been taken to have consented to the relationship of

principal / agent even if they have professed to disclaim it. 366

407. It is striking that the Defendant claims, on multiple occasions, in its Opening that: (i) it

does not effect transactions on behalf of Subpostmasters; 367 and (ii) to imply an agency in

the Subpostmasters’ favour would “contradict the express terms of the contracts”. 368 The

Defendant’s own evidence states:

407.1 there is a separation between the Subpostmasters’ branch accounts and the

Defendant’s client accounts, albeit there is a connection back to the branch

accounts in the form of TCs; 369 and

365 Defendant’s Written Opening, §§361 to 362 {A/2/102}
366 Garnac Grain Co Inc v HMF Faure & Fairclough Ltd [1968] AC 1130 {A2/14/1} and Branwhite v
Worcester Works Finance Ltd {A1.1/5/1}, discussed in the Claimants’ Written Opening in Annex
VII at §6 {A/2/226}
367 See, e.g., Defendant’s Written Opening, §58 {A/2/101}
368 See, e.g., Defendant’s Written Opening, §355 {A/2/100}
369 Witness statement of Ms van den Bogerd at §79 {C2/1/24}

– 203 –
B COMMON ISSUES
Issues 10 and 11: Post Office as Agent

407.2 the argument that the Defendant has to effect all customer transactions for the

branch accounts to be accurate, and then provide Subpostmasters with access

to client data, “would undermine one of the key benefits of the Subpostmaster

relationship – that Post Office handles this on behalf of the Subpostmaster.” 370

[Emphasis added]

407.3 Another of the “key benefits” of Subpostmasters joining the Defendant’s

network is that it provides the IT equipment and “back-end IT infrastructure that

connects each branch with Post Office’s clients”, an infrastructure that a small

business owner is otherwise unlikely to be able to put in place on their own. 371

408. This suggests that the functions in respect of which the Claimants argue the Defendant

acts as its agent, are provided by the Defendant on their behalf, and that it is not contrary

to the contractual relationship as it aligns with what is said by the Defendant to be a

‘key benefit’ to it.

409. In cross-examination, Ms van den Bogerd was taken to this section of her evidence and

she confirmed that she stands by that evidence. 372

Characteristic functions of an agent

410. The Admitted Functions: The Claimants rely upon the functions admitted by the

Defendant in GDef §123(1) {B3/2/53} (responding to GPOC, §81 {B3/1/44}) 373 and the

evidence of the Defendant set out above.

411. Legal position of Agent: Article 1 of Bowstead &Reynolds confirms that a person “may

have the same fiduciary relationship with a principal where he acts on behalf of that principal but

has no authority to affect the principal’s relations with third parties.” 374 [Emphasis added]

412. A well-established example of such an agent is the intermediary who makes no

contracts and disposes of no property, but introduces parties desirous of contracting

370 Witness statement of Ms van den Bogerd at §80.2 {C2/1/24}
371 Witness statement of Ms van den Bogerd at §65.5 {C2/1/18}
372 {Day9/43:11-16}
373 Set out in the Claimants’ Written Opening at §335 {A/1/128}
374 At 1-001 {A1.3/1/2}

– 204 –
B COMMON ISSUES
Issues 10 and 11: Post Office as Agent

and leaves them to contract between themselves. 375 The intermediary is clearly acting

on behalf of his principal(s) in carrying out his functions, notwithstanding the fact that

he is also carrying out his functions in the course of his business, and therefore for his

own benefit, as he receives remuneration in the form of commission.

413. As pointed out by the editors of Bowstead & Reynolds, the formulation of Article 1 is

that “selects the internal relationship between principal and agent as a distinguishing feature of

agency”; 376 it, therefore, encompasses a broader category of agent than if the focus was

solely on external powers and the authority to bind a principal into relations with third

parties.

414. Third party relations and commercial risk: Whilst it is not, strictly speaking, necessary

for the principal to have authority to affect the principal’s relations with third parties,

there is a risk of such an affect indirectly in the present case:

414.1 Through carrying out the Admitted Functions, in respect of which

Subpostmasters consent, the reconciliation of client data, in particular, has the

potential to result in losses to either the client or the Subpostmaster.

414.2 By way of example, as set out above in relation to lottery TCs, there is the

scope for significant problems to be experienced in relation to the effecting of

Subpostmasters’ transactions and the reconciliation of a client’s data. The

result was a huge cost being passed on largely to Subpostmasters in the form

of debiting TCs.

414.3 In this regard, it is wrong for the Defendant to suggest that only it “bears the

commercial risk on the transactions”. 377

414.4 It is self-evident that the carrying out of the Defendant’s Admitted Functions

gives rise to the risk of changing Subpostmasters’ legal positions.

375 Bowstead & Reynolds on Agency (21st Ed) at 1-020
376 ibid.
377 Defendant’s Written Opening, §358(c) {A/2/101}

– 205 –
B COMMON ISSUES
Issues 10 and 11: Post Office as Agent

Matters relied upon by the Claimants cannot establish an agency relationship

415. Repetitive: This objection by the Defendant largely repeats the above arguments and,

therefore, it is denied for the same reasons.

416. Trust and faith: The Claimants agree that the reposing of trust and faith in the

Defendant is not, in and of itself, sufficient to establish an agency relationship. It is,

however, a useful and powerful indicator of the nature of the relationship between the

parties. The example referred to in Re Goldcorp Exchange Ltd, 378 of a company not

being a fiduciary to its trusting and totally dependent customers in relation to the safe

custody of gold bullion, is not analogous. The trust and faith in the present case arises

in the context of:

416.1 a long-term contract requiring a high degree of cooperation and predictable

performance;

416.2 a system of accounting in which there are two distinct functional

responsibilities;

416.3 the Defendant consistently impresses upon the need for it to repose trust in

Subpostmasters in respect of their functional responsibilities; and

416.4 Subpostmasters are exposed to the risk of debiting TCs and accounting

discrepancies which are treated as debts unless successfully disputed.

417. The Claimants invite the Court to find that the Defendant is an agent of Subpostmasters

for the limited purposes stated in GPOC §82 to 84 {B3/1/45}.

378 Referred to in §164 of Al Nehayan {A1.1/72/44} and in the Defendant’s Written Opening, §362
{A/2/102}

– 206 –
B COMMON ISSUES
Issues 12 and 13: Subpostmasters as Agents

Issues 12 and 13: Subpostmasters as Agents

Issue 12: Was the extent and effect of the agency of Subpostmasters to Post Office such that
the principles of agency alleged at Defence 91 and 93(2) and (3) applied as Post Office
contends?

Issue 13: Did Subpostmasters bear the burden of proving that any Branch Trading
Statement account they signed and / or returned to Post Office was incorrect?

Relevant principles

418. The principles relevant to this Issue are set out in:

418.1 Annex VIII to the Claimants’ Written Opening {A/1/233} – {A/1/236}; and

418.2 The propositions set out in the Appendix to these Written Closing

Submissions, under ‘Subpostmasters as Agents’.

Findings sought

419. In the Claimants’ Written Opening, the Court was invited to make the following

findings on these Common Issues: 379

419.1 As to the functions each party performed with respect to branch accounts and

the data forming the basis of the Branch Trading Statements, that:

a. Subpostmasters would initiate transactions for the Defendant;

b. transactions would be effected (i.e. executed), by a system imposed,

provided and managed by the Defendant;

c. Subpostmasters had no control over the efficacy and accuracy of the same;

d. as the Defendant admits, it reconciled data with data in its own possession

(and, as above, it performed the Admitted Functions);

e. the Defendant presented figures to Subpostmasters through Horizon and

made representations to them as to the existence of shortfalls which they

were unable to investigate but required by the Defendant to disprove.

379 Claimants’ Written Opening, §376 {A/1/144}

– 207 –
B COMMON ISSUES
Issues 12 and 13: Subpostmasters as Agents

419.2 As to the agency relationship, that Subpostmasters are agents only for the

purposes of effecting transactions on its behalf with third parties, such as

members of the public, and initiating those transactions on Horizon.

419.3 Application of agency principles: Subpostmasters may be held to the account

presented in Branch Trading Statements only to the limited extent they

initiated the aforesaid transactions.

419.4 Settled accounts: in the particular circumstances of this relationship,

Subpostmasters did not bear the burden of proving that any Branch Trading

Statement account they signed and / or returned to the Defendant was

incorrect.

Submissions

420. Written opening submissions: in support of the findings above, the Claimants refer the

Court to, and rely upon, the detailed submissions made on this issue in their Written

Opening Submissions (Section B: Subpostmasters as Agents) 380 and the written

evidence of the Lead Claimants and the Defendant witnesses referred to in that

Opening.

421. The Court is invited, having heard the evidence at trial, to make the findings above in

the light of those submissions, and in the light of the following further points.

The Defendant’s case

422. Burden: The Defendant is positing that Subpostmasters owed certain fiduciary

obligations and that it is bound by Branch Trading Statements. The burden, therefore,

in relation to these Common Issues rests squarely on the Defendant.

423. Extent and effect of agency relationship: It is clear from the Defendant’s Opening that

it relies, principally, on two points:

423.1 the express terms of the Subpostmaster Contracts reference that

Subpostmasters are the agent of the Defendant; and

380 §353 to 377 of the Claimants’ Written Opening {A/1/135} – {A/1/44}

– 208 –
B COMMON ISSUES
Issues 12 and 13: Subpostmasters as Agents

423.2 by reference to an extract from Chitty on Contracts (33rd Ed.), 381 such express

reference imports the whole panoply of common law principles and

obligations associated with agency relationships. 382

424. It is the Claimants’ case that this misstates both the context of the contract and the

reality of the relationship between the parties, as well as the applicable legal principles.

The test as to extent of agency

425. The Chitty extract: Mr Cavender argued in Openings that: “The simple point is a matter of

law, because where parties agree as an express term, or at least in the case of an express term and

otherwise, the agreement of agent and principal brings with it a whole lot of common law by

definition, just by saying you are an agent.” He then took the Court to an extract from

Chitty.

426. The Editors of Chitty do not go as far as the Defendant contends. It states: “On the

orthodox and accepted common law analysis, the full paradigm relationship of principal and

agent arises where one party, the principal, consents that another party, the agent, shall act on

his behalf, and the agent consents so to act.” [Emphasis added] 383

427. Consent, based on all the circumstances: Two House of Lords authorities have made

clear that both the existence and extent of an agency agreement is dependent upon the

consent of the parties, and this is determined by examining the relevant context, of

which any express terms form only a part of the analysis:-

427.1 In Garnac Grain Co Inc v HMF Faure & Fairclough Ltd [1968] AC 1130, Lord

Pearson held at 1137C:

“The relationship of principal and agent can only be established by the consent of the

principal and agent. They will be held to have consented if they have agreed to what

amounts in law to such a relationship, even if they do not recognise it themselves

and even if they have professed to disclaim it, as in Ex parte Delhasse. But the

consent must be given by each of them, either expressly or by implication from their

381 At 31-006 {A1.3/2/24}
382 {Day1/86:3-25}
383 At 31-006 {A1.3/2/24}

– 209 –
B COMMON ISSUES
Issues 12 and 13: Subpostmasters as Agents

words and conduct. Primarily one looks at what they said and did at the time of the

alleged creation of the agency. Earlier words and conduct may afford evidence of a

course of dealing in existence at that time and may be taken into account more

generally as historical background. Later words and conduct may have some bearing,

though likely to be less important. As to the content of the relationship, the question

to be asked is: “What is it that the supposed agent is alleged to have done on behalf of

the supposed principal?” [Emphasis added] 384

427.2 The House of Lords reaffirmed the position subsequently in Branwhite v

Worcester Works Finance Ltd [1969] 1 AC 552, with Lord Wilberforce citing

the foregoing passage with approval and stating at 587E:

“The significant words, for the present purposes, are “if they have agreed to what

amounts in law to such a relationship.” These I understand as pointing to the fact

that, while agency must ultimately derive from consent, the consent need not

necessarily be to the relationship of principal and agent itself (indeed the existence of

it may be denied) but may be to a state of fact upon which the law imposes the

consequences which result from agency. It is con-sensual, not contractual.” 385

428. Indeed, to the extent that it is relevant, even Chitty on Contracts demonstrates the need

to view the terms of the contract in context before making any determinations as to the

nature and extent of the relationship between the parties: “A contract describing the parties

respectively as principal and agent may nevertheless in law have the effect, not of constituting

agency, but of establishing a relationship between the parties as principals. On the other hand,

the relationship of agency may be created by an express agreement although the agreement

nowhere actually describes the parties as principal and agent.” 386

Express terms

429. Mr Cavender QC stated in Openings: “So the starting point is these parties have chosen a

specific type of legal relationship called agency known to the law. They have then expressed how

384 {A2/14/8}
385 {A1.1/5/36}
386 Chitty on Contracts (33rd Ed.) at 31-022

– 210 –
B COMMON ISSUES
Issues 12 and 13: Subpostmasters as Agents

that is to operate by the express terms of a contract.” 387 In order to test this statement, it is

necessary, and indeed the authorities require, an analysis of those express terms by

looking at: (i) the wording of those terms; (ii) the context in which they appear; and (iii)

whether there are any other terms in the contract which give an insight as to their

extent.

430. SPMC: So far as the SPMC is concerned:

430.1 Section 1, Clause 1 {D2.1/3/5} provides: “The contract is a contract for services and

consequently the Subpostmaster is an agent and not an employee of Post Office

Counters Ltd.”

430.2 Other than this one term, there is no other relevant reference to agency in the

SPMC.

430.3 The Defendant does rely on Section 12, Clause 4 {D2.1/3/51} which states that,

in relation to accounting: “The Subpostmaster must ensure that accounts of all stock

and cash entrusted to him by Post Office Counters Ltd are kept in the form prescribed.

He must immediately produce these accounts, and the whole of his sub-office cash and

stock for inspection whenever so requested by a person duly authorised by the Regional

General Manager.”

431. NTC: So far as the NTC is concerned:

431.1 Part 2, Paragraph 1.2 {D1.6/3/6}, not unlike its SPMC counterpart, simply

provides: “The Agreement is a contract for services and the Operator is an agent and

not an employee of Post Office Ltd. The Operator acknowledges that no relationship of

employer and employee exists between Post Office Ltd and the Operator, or between

Post Office Ltd and any Assistant.”

431.2 Part 2, Paragraph 3.3.3 {D1.6/3/10} should also be noted, as it states:

“3.3 The Operator shall not:

[…]

387 {Day1/87:21}

– 211 –
B COMMON ISSUES
Issues 12 and 13: Subpostmasters as Agents

3.3.3 other than as required to provide the Products and Services, represent
himself as being an agent of Post Office Ltd or permit any person connected
with the Operator to represent the Operator in such a way that others
dealing with the Operator may regard him as authorised to act on behalf of
Post Office Ltd or Post Office Group” [Emphasis added]

431.3 Part 7, Paragraph 1.8 {D1.6/3/48} also confirms, in the context of branch

premises and carrying out fit-out works: “Where the Operator engages contractors

it shall do so as principal and not as agent for Post Office Ltd.”

431.4 As it relates to accounts, Part 2, Paragraph 3.6.6 {D1.6/3/10} states that the

Subpostmaster shall: “account for and remit to Post Office Ltd all monies collected

from Customers in connection with Transactions in accordance with the Manual. Any

cash which Post Office Ltd provides to the Operator or which the Operator collects as a

result of Transactions does not belong to the Operator and shall be held by the

Operator (at the Operator's risk) on behalf of, and in trust for, Post Office Ltd and the

Clients. Any such cash shall not form part of the assets of the Operator. The Operator

acknowledges that it is expressly forbidden from making use of any such amount due

to Post Office Ltd for any purpose other than the operation of the Branch and it must

on no account apply to its own private use, for however short a period, any portion of

funds belonging to Post Office Ltd entrusted to it. Any breach of this clause 3.6.6

and/or any misuse of Post Office Ltd cash by the Operator or its Personnel shall be

deemed to be a material breach of the Agreement which cannot be remedied and may

render the offender liable to prosecution.”

432. This reflects the extent of any express terms in the SPMC and NTC relating to agency,

and it also sweeps up the contractual obligations in relation to account upon which the

Defendant relies. 388 This is certainly not expressing an all-encompassing application of

an agency relationship to all aspects of operation. To that end, it is noted that:-

432.1 The reference to Subpostmaster being an agent of the Defendant appears only

at the beginning of each contract, and it is being used in the context of

providing a contradistinction to employee status.

388 Defendant’s Written Opening, footnote 51 {A/2/21}

– 212 –
B COMMON ISSUES
Issues 12 and 13: Subpostmasters as Agents

432.2 There are no other terms in the Subpostmaster contracts which refer to the

application of agency principles to any operational duties, barring the sole

reference in the NTC to Subpostmasters only being authorised to hold

themselves out as agents of the Defendant when providing products and

services under the contract to customers.

432.3 Indeed, even the contractual duties to account are limited to ensuring that cash

and stock (per the SPMC) / all monies collected from customers (NTC) are

accounted for in the manner prescribed by the Defendant.

433. In line with the express terms of the Subpostmaster Contracts in relation to agency,

(having regard to the context in which they appear), the Claimants accept that they were

the agents of the Defendant for the purposes of dealings with third parties, such as

members of the public. 389 The Claimants’ Written Opening confirmed that the agency

relationship extended to effecting transactions with those third parties on the

Defendant’s behalf, and initiating the same on Horizon. 390

Further relevant conduct and context

434. In terms of the application of any further agency principles in relation to accounting, the

Court is required to understand the system through which Subpostmasters are

contractually obligated to account.

435. The Defendant’s case that the account is what is input in Horizon and the figures that

Horizon shows, is flawed: The Defendant’s witnesses have accepted that accounting

takes place on and through Horizon:

435.1 Ms van den Bogerd was asked how, practically, Subpostmasters accounted to

the Defendant for the transactions that they are initiating in branch. She

accepted that this is through the Horizon system, and stated that it is both on a

daily basis and monthly when Branch Trading Statements are completed. 391

389 GPOC §82 {B3/1/45}
390 Claimants’ Written Opening, §376.2 {A/1/144}
391 {Day9/37:1-6}

– 213 –
B COMMON ISSUES
Issues 12 and 13: Subpostmasters as Agents

With regards the latter, Ms van den Bogerd accepted that the Branch Trading

Statement is also “information which is in the Horizon system”. 392

435.2 Ms Dickinson confirmed her understanding of the same point in the following

exchange with the Judge:

“MR JUSTICE FRASER: I understand the ways in which it might be wrong.
What I am interested in is -- you have used the word "submitting" the
account. What physically would the subpostmaster or subpostmistress do, so
far as you know, to submit the account?
A. They would be declaring their cash and stock as a cash declaration on a
daily basis, and then they would be submitting their accounts on a monthly
basis.
MR JUSTICE FRASER: And that is by doing whatever they do at the
terminal.
A. Yes.
MR JUSTICE FRASER: On Horizon.
A. Yes.
MR JUSTICE FRASER: Is that right?
A. Yes, that is right.” 393

436. Horizon communication with third party clients: The Defendant processes client data

and reconciles this with the Subpostmaster’s data. Ms van den Bogerd stated that the

Defendant has around 130 clients and she accepted that the Defendant has all of those

data streams coming in which then have to be reconciled and processed by the

Defendant. 394 Mr Beal also confirmed that communication takes place between the

branch IT system and the Defendant’s clients’ IT systems. 395 Subpostmasters have no

involvement in the communication, processing or reconciliation of this data.

437. No way for Subpostmasters to raise dispute within the accounting system: The fact

that there was no option for Subpostmasters to raise a dispute within Horizon has been

dealt with above. This has been accepted by the Defendant’s witnesses, for example in

the following exchange with Ms van den Bogerd: 396

392 {Day9/37:7-10}
393 {Day9/164:7-21}
394 {Day8/55:1-4}
395 {Day6/15:20-24}
396 {Day9/40:6-19}

– 214 –
B COMMON ISSUES
Issues 12 and 13: Subpostmasters as Agents

“Q. So in terms of the information recorded on Horizon, they are compelled to make a
record on Horizon with which they may very strongly and fundamentally disagree?
A. In accepting, yes, they can -- the choices are, yes, make good or dispute and -- sorry,
settle and then dispute.
Q. So that there is no doubt about it, you accept that the system forces them to make a
record on Horizon with which they may fundamentally disagree?
A. No, because that is the first step of the process so I don't accept that.
Q. Within Horizon that is true, isn't it?
A. There isn't a dispute function on Horizon, no, there is not.” [Emphasis added]

438. Further, as with everything else associated with the Horizon system, this aspect of

manner in which Subpostmasters are to account was controlled by the Defendant. 397

439. Forced rollover on the system: This aspect of Horizon and the system put in place by

the Defendant is set out above. It requires Subpostmasters to sign off declarations

which they may know to be wrong, otherwise they are incapable of trading the next

day. Mr Sabir gave the following evidence on this point:-

439.1 In response to Mr Cavender’s statement that he was inaccurately accounting,

Mr Sabir said at {Day3/154:2-10}: “I have already raised this complaint before

signing the accounts, and if we don't sign the accounts and don't roll over you can't

clear the next day. And when the auditors came on the spot he rang somewhere, I

don't know, he rang on his mobile and he came to know in five minutes how many

scratch cards are short. And we, as subpostmaster, we should have got some sort of

help if we are struggling, we contact the Post Office and they resolve our problem.

This was my concern.”

439.2 When pressed as to why Mr Sabir signed off declarations he knew to be

wrong, he explained again at {Day3/164:6-7}: “We can’t roll over unless – we can’t

run the branch unless we roll over the previous trading period”.

440. Settling centrally still involved acceptance of the position as shown by Horizon, even

if Subpostmasters disputed its accuracy: The process of settling centrally has been set

out above. The net result is that the accounts must still be signed off by the

Subpostmaster, and settling centrally any apparent shortfall or TC means an acceptance

397 The Defendant considered, and rejected, the idea of including a “dispute” button on Horizon
{F3/72/2}.

– 215 –
B COMMON ISSUES
Issues 12 and 13: Subpostmasters as Agents

of that position on the Horizon system, with a separate process for raising a dispute

through the Helpline.

441. TCs: TCs are an extremely important feature of this accounting system, and are dealt

with above. TCs arise as a result of a process of manual reconciliation by the Defendant,

to which the Subpostmaster is not privy, and they may be issued several months or even

years after an account is submitted. For example, a Working Agreement document

{G/35/1} from 2015 states that at the time 95% of Stock Transaction Corrections will be

issued within 3 months of the date of a surplus or shortfall being reported. 398

Meanwhile, Automated Payment Overpayment and Personal Banking Overpayment

TCs will only be issued “if the Client and customer agree” and 95% of those TCs are issued

within 2 years. 399

442. Subpostmasters are trained to input false transactions: A document disclosed by the

Defendant confirms that standard training included a recommendation to alter stock in

order to balance the account on Horizon, despite there being no corresponding sale (i.e.

entering a false transaction) {F4/18/1}.

443. Causes of discrepancies and shortfalls: It was accepted by Ms van den Bogerd that

there were several different possible causes of shortfalls appearing on the Horizon

system which would arise by virtue of nothing that was done in the branch, and

completely outside the knowledge of Subpostmasters. These include manual errors in

relation to reconciliation and TCs, client data integrity issues and Horizon errors. 400

Indeed, the Payments / Mismatch document 401 demonstrates the very real possibility of

such errors and the Defendant’s ability (through Fujitsu) to monitor, access and alter

branch accounts without the knowledge of Subpostmasters.

444. Asymmetry of information: The above demonstrates the difficulties faced by

Subpostmasters in interrogating their accounts and being in a position to confirm or

challenge the same on a fully informed basis. Indeed, the position was summarised by

398 Paragraph 3.1.8 {G/35/10}
399 Paragraph 3.1.9 {G/35/10}
400 Accepted by Ms van den Bogerd at {Day8/38:4-19}
401 {G/8/1}

– 216 –
B COMMON ISSUES
Issues 12 and 13: Subpostmasters as Agents

Mrs Stubbs when she was asked by Mr Cavender what other possibilities she had

considered in relation to shortfalls: “I couldn't consider anything else at all, except that as far

as I was concerned, Horizon was a hidden partner in our accounts. I had no idea what Horizon

was doing.” [Emphasis added] 402

445. Summary on extent and effect of agency: It follows from the above that, in the absence

of clear and express wording to the contrary, a Subpostmaster’s obligations as an agent

simply cannot extend beyond the initiating and effecting of transactions in branch on

Horizon. That is the extent of any control they have and it is not arguable to suggest

that the parties consented to anything beyond that limited function.

Whether Subpostmasters are bound by their Branch Trading Statements – Common Issue 13

446. The above context of the ‘accounting’ system provides a crucial backdrop to Common

Issue 13.

447. Branch Trading Statements are not an ‘account’: There is no ‘account’ in the sense

contended for by the Defendant. It is a fallacy to isolate Branch Trading Statements and

separate them from the wider processes both inside and outside 403 of Horizon as they

pertain to the system of accounting put in place by the Defendant, not least because:-

447.1 The accounting system (which the Defendant states takes place through

Horizon) is designed by the Defendant in such a way that Subpostmasters

must accept figures on the system regardless of whether they agree with them

or not. There is no way to dispute those figures on the system.

447.2 The Defendant carries out a function of manual reconciliation which takes

place outside of the system, but directly impacts upon the figures which the

Horizon system produces and which feeds into Branch Trading Statements.

447.3 Subpostmasters are trained to input false transactions on occasion in order to

artificially make the system balance.

402 {Day3/25:2}
403 Such as the Helpline and its role in the raising of disputes.

– 217 –
B COMMON ISSUES
Issues 12 and 13: Subpostmasters as Agents

448. There is no ‘settled’ account: It is fanciful to suggest that, to the extent Branch Trading

Statements are accounts rendered by Subpostmasters, that they are ever ‘settled’:-

448.1 As to the binding nature of stated accounts, Bowstead & Reynolds sets out: 404

“If an account is agreed, the principal can sue on an account stated. This
may be a mere acknowledgment of a debt, and in that case the agent may
show that no such debt in fact existed; or it may be an account containing
debts on both sides in which the parties have agreed that the debts of one
should be set against the debts of the other and only the balance paid. In the
latter case the agent may only dispute the account where there are items
which, if paid, would be recoverable by him on the basis of a total failure of
consideration. This second form of account stated is also called a settled
account. It is not always clear when an account will be held a settled account.
There must be mutual debts, since if all the accounting has to be done by one
party, there cannot be a settling of accounts. Once the principal has
approved the accounts, they are settled, and if the principal enters the
account as agreed in his books and either pays the balance or recognises in
some other way that the account is correct, there is also a settled account. It
has been held that a principal who received an account and kept it for two
years without objection could not later maintain it was not a settled account.
But there will not be a settled account where a principal allows part of his
agent’s claim but is silent as to the rest.” [Emphasis added]

448.2 There is a need, therefore, for the account to be agreed, and treated as such, by

both parties in order for there to be a ‘settled’ account. The Branch Trading

Statement contains the following statement by the Subpostmaster: “I confirm

that the content of this balancing and trading statement is an accurate reflection of the

cash and stock on hand at this branch.” 405 In light of all of the factors set out

above in relation to the context of the Horizon system and relevant accounting

processes, Subpostmasters often simply will not be in a position to agree with

the content of the statement, and the Defendant is aware of the factual matrix

within which this statement is made. Subpostmasters cannot be said to be

bound by having submitted a statement in circumstances where they are

forced to make it and cannot effectively dispute it. The Defendant has relied a

great deal on the two-step process with settling centrally, which involves

accepting the figure on the system (in terms of accounting) but then separately

404 At 6-098 {A1.3/1/16}
405 GDef, §43(5) {B3/2/17}

– 218 –
B COMMON ISSUES
Issues 12 and 13: Subpostmasters as Agents

raising a dispute with the Helpline. But this is a step outside of the accounting

process and the Branch Trading Statements make no reference to Helpline

disputes. Nor are the statements qualified in any way to take into account the

complexities and nuances of this particular system of accounting.

448.3 It is also evident that the Defendant does not treat Branch Trading Statements

as settled accounts. It cannot be said to have ‘approved’ the accounts, nor is

there any evidence that it has entered the account as agreed in its books. The

reality is that TCs are frequently issued months, and potentially years, after

Branch Trading Statements are completed. There is no evidence to suggest

that there is a time limit for when TCs may be issued.

448.4 The notion that either party treats or may treat a Branch Trading Statement as

a settled account was dispelled by Ms van den Bogerd in her oral evidence.

Ms van den Bogerd was given the following example: if the account showed a

gain, which the Subpostmaster did not believe was correct, would it be wrong

for them to take money out of the till? Ms van den Bogerd’s answer at

{Day9/39:1-11}: “No, because they have generated -- so what that would be doing is

they have generated a surplus in an account, and the same principle is whether they

generated a surplus or loss. The point of disputing a discrepancy is that I don't believe

that either the evidence supports it or I don't believe that that is proper to my office for

whatever reason. So that isn't wrong in terms of taking the money out at that point.

Because when they take it out, then it's on the understanding that if another error

notice comes in to counter that gain that they would then make that good.”

[Emphasis added]

448.5 It is clear from the Defendant’s own witness evidence that it does not treat

Branch Trading Statements as settled and the Subpostmaster is not entitled to

either. They may rely on the account either to their detriment or benefit at the

point of submitting those statements, but they remain in limbo and at the

mercy of the Defendant as to the possibility of a TC being issued at some

indeterminate point in the future which reverses the position.

– 219 –
B COMMON ISSUES
Issues 12 and 13: Subpostmasters as Agents

449. In reality, the position is that there is a running account with bilateral functional

responsibilities: The Claimants have consistently stated that it is clear the

Subpostmasters’ relationship with the Defendant is far removed from a traditional

accounting relationship, in which one party keeps the books for a principal who is

divorced from the process of effecting transactions and the production of accounts.

450. In the circumstances, there is, therefore, no need for Subpostmasters to re-open

accounts. Subpostmasters do not bear the burden of proving that any Branch Trading

Statement that they signed and / or returned to the Defendant was incorrect.

451. Re-opening accounts: In the alternative, if the Court were to find that Branch Trading

Statements constitute ‘settled accounts’, the Claimants submit that they would have a

right to re-open those accounts, having regard to the specific context of this accounting

relationship and applicable legal principles. As to those legal principles, these are set

out in Annex VIII of the Claimants’ Written Opening at §11 {A/1/235} and the cases

referred to therein (in particular, the case of Watson v Rodwell (1879) 11 Ch.D. 150

{A1.1/3/1}). In light of the context set out above, the following is true in respect of all

Subpostmasters submitting Branch Trading Statements:-

451.1 Relative situation of the parties: The balance is in favour of the Defendant

under the peculiar circumstances of this relationship, not least because of the

requirement of forced rollover, the inability to dispute within the system and

the asymmetry of information between the parties.

451.2 The manner in which settlement took place: For the same reasons, the

circumstances give the Defendant a commanding power and influence over

Subpostmasters.

451.3 Whether the party settling the accounts had the fullest information available

to it: It is evident that Subpostmasters often did not have the fullest

information available.

– 220 –
B COMMON ISSUES
Issues 12 and 13: Subpostmasters as Agents

Conclusion

452. On the basis of the foregoing, the Claimants invite the Court to answer both Issues 12

and 13 in the negative.

– 221 –
B COMMON ISSUES
Issues 12 and 13: Subpostmasters as Agents

Issues 14 to 21: Suspension, Termination, etc.

454. As identified in opening, Issues (14) to (21) concern related topics, namely the parties’

relationship as regards suspension and termination of a SPM’s engagement with Post

Office and certain consequential matters.

455. It is subdivided into four sections:-

455.1 Issues 14 to 16: the proper construction of the SPMC and NTC’s terms relating

to suspension and termination rights.

455.2 Issues 17 and 18: whether the express terms of the SPMC and NTC represent

the ‘true agreement’ between the parties as to termination.

455.3 Issues 19 and 20: the circumstances, if any, in which SPMs are entitled to

compensation for loss of office.

455.4 Issue 21: what restrictions, if any, there were on Post Office’s discretion as to

whether or not to appoint as a SPM the prospective purchaser of an incumbent

SPM’s business.

– 222 –
B COMMON ISSUES
Issues 14 to 16: Suspension And Termination

Issues 14 to 16: Suspension And Termination

Issue 14: On a proper construction of the SPMC and NTC, in what circumstances and / or
on what basis was Post Office entitled to suspend pursuant to SPMC Section 19, clause 4
and Part 2, paragraph 15.1 NTC?

Issue 15: On a proper construction of the SPMC and NTC, in what circumstances and / or
on what basis was Post Office entitled summarily to terminate?

Issue 16: On a proper construction of the SPMC and NTC, in what circumstances and / or
on what basis was Post Office entitled to terminate on notice, without cause?

Relevant principles

456. As these Common Issues call for construction of express terms, the Claimants rely upon

the principles of construction set out in:

456.1 Annex I of their Written Opening Submissions (Annex I: Contractual

Construction); 406

456.2 Annex III of their Written Opening Submissions (Annex III: Issues 2 and 3 –

Implied Terms), under Implied restriction on contractual discretion 407 and

Implied terms in relation to powers of suspension; 408 and

456.3 the propositions set out in the Appendix to the Claimants’ Closing

Submissions, under Contractual Construction.

Relevant terms

457. For ease of reference, the terms forming the subject matter of Issues 14 to 16 are:-

457.1 Suspension:

a. SPMC – Section 19, Clause 4: 409

406 {A/1/171-175}
407 {A/1/197-200}
408 {A/1/200-201}
409 {D2.1/3/87}

– 223 –
B COMMON ISSUES
Issues 14 to 16: Suspension And Termination

"A Subpostmaster may be suspended from office at any time if that course is
considered desirable in the interests of [Post Office in consequence of his: (a)
being arrested, (b) having civil or criminal proceedings brought against him,
(c) where irregularities or misconduct at the office(s) where he holds
appointment(s) have been established to the satisfaction of [Post Office], or are
admitted, or are suspected and are being investigated."

b. NTC – Part 2, paragraph 15.1: 410

“[Post Office] may suspend the Operator from operating the Branch (and/or,
acting reasonably, require the Operator to suspend all or any of its Assistants
engaged in the Branch from working in the Branch), where [Post Office]
considers this to be necessary in the interests of [Post Office] as a result of:
(15.1.1) the Operator and/or any Assistant being arrested, charged or
investigated by the police or [Post Office] in connection with any offence or
alleged offence; (15.1.2) civil proceedings being brought against the Operator
and/or any Assistant; or (15.1.3) there being grounds to suspect that the
Operator is insolvent, to suspect that the Operator has committed any material
or persistent breach of the Agreement, or to suspect any irregularities or
misconduct in the operation of the Branch, the Basic Business or any Post
Office® branches with which the Operator and/or any Assistant is connected
(including any financial irregularities or misconduct).”

457.2 Summary termination:

a. SPMC – Section 1, clause 10: 411

“… The Agreement may be determined by [Post Office] at any time in case of
Breach of Condition by [the SPM], or non-performance of his obligation or
non-provision of Post Office Services, but otherwise may be determined by
[Post Office] on not less than three months’ notice.”

b. NTC – Part 2, paragraph 16.2: 412

“In addition to any other rights of termination contained in other Parts, [Post

Office] may terminate the Agreement immediately on giving written notice to

the Operator if the Operator:

410 {D1.6/3/24-25}
411 {D2.1/3/6}
412 {D1.6/3/25-26}

– 224 –
B COMMON ISSUES
Issues 14 to 16: Suspension And Termination

16.2.1 commits any material breach of the provisions of the
Agreement or any other contract or arrangement between the
Parties and fails to remedy the breach (if capable of remedy)
within 14 days of a written notice from [Post Office] specifying
the breach and requiring the same to be remedied. Any
references in these Standard Conditions to a breach of a
particular obligation by the Operator being deemed to be
material and/or irremediable are not intended to be exhaustive
and shall not prevent [Post Office] from exercising its rights
under this clause in respect of any other breach of the Agreement
which is material and/or irremediable;
16.2.2 fails to provide the Products or Services to the standards
required by [the Defendant] as set out in the Manual and fails to
remedy the failure (if capable of remedy) within 14 days of a
written notice from [Post Office] specifying the failure and
requiring the same to be remedied; …
16.2.16 fails to pay any sum due to [Post Office] under the Agreement
by the due date”.

457.3 Termination on notice:

a. SPMC – Section 1, clause 10 (as above). 413

b. NTC – Part 2, paragraph 16.1: 414

“Following the Commencement Date the Agreement will continue until:
(16.1.1) either Party gives to the other not less than 6 months’ written notice
(unless otherwise agreed between the Parties in writing), which cannot be
given so as to expire before the first anniversary of the Start Date; or (16.1.2) it
is terminated at any time in accordance with its terms.”

Issue 14: Suspension – findings in the light of the evidence

Findings sought by the Claimants

458. The Claimants invite the Court to find that the foregoing provisions relating to

suspension should be construed in accordance with commercial common sense, and so

as to give expression to the common expectations of the parties when the contract was

made (by reference to the relevant factual matrix) and contra proferentem:

458.1 so as to render the implied term at GPOC §64.13 415 unnecessary (which the

Claimants contend ought to be uncontroversial), and/or:

413 {D2.1/3/6}
414 {D1.6/3/25}

– 225 –
B COMMON ISSUES
Issues 14 to 16: Suspension And Termination

458.2 such that the phrases “considered desirable”, “established to the satisfaction of the

Defendant” and “suspected” (under the SPMC), and “considers this to be

necessary”, “suspect” and “irregularities” (under the NTC) would import the

effect of the said implied term being not to suspend Claimants:

a. arbitrarily, irrationally or capriciously;

b. without reasonable and proper cause; and / or

c. where Post Office was itself in material breach of duty; and

458.3 so as to require Post Office to give fair consideration to all the relevant

circumstances and as to whether or not to suspend the SPM even if the

threshold for doing so was established.416

Submissions

459. Written opening submissions: in support of the findings above, the Claimants refer the

Court to, and rely upon, the detailed submissions made on this issue in their Written

Opening Submissions 417 and the written evidence of the Lead Claimants and Post Office

witnesses referred to in that opening.

460. The Court is invited, having heard the evidence at trial, to make the findings above in

the light of those submissions, and in the light of the following further points.

461. Contractual context:

461.1 the full contractual context of these provisions supports the interpretation

contended for, particularly in view of the contractual consequences in relation

to remuneration during (and after) a period of suspension and the evidence

heard at trial as to the draconian policies Post Office was at all times aware

415 i.e. not to suspend Claimants: (i) arbitrarily, irrationally or capriciously; (ii) without reasonable
and proper cause; and / or; (iii) in circumstances where Post Office was itself in material breach
of duty.
416 See, e.g. Bates/IPOC at §109 {B5.1/2/30}
417 Claimant’s Written Opening Submissions, §382-§386 {A/1/148-150}

– 226 –
B COMMON ISSUES
Issues 14 to 16: Suspension And Termination

that it applied in exercise of that power and which were at no stage drawn to

the Lead Claimants’ attention.

461.2 Section 18 of the SPMC {D2.1/3/85} contains a contractual right (and associated

process) to challenge Post Office decisions on allegations of non-compliance or

non-observance of rules, akin to a grievance procedure. On an orthodox

approach to contractual interpretation, any power of suspension in section 19

of the SPMC must be interpreted in the light of Section 18, such that the power

of suspension arising under it is consistent with the existence of the express

rights set out in Section 18.

462. Ambiguity: the lack of clarity in the wording of the terms is (contrary to what Post

Office suggests) 418 obvious: use of the words and phrases identified above (“desirable”,

“established to the satisfaction…” etc.) which are ambiguous leaves the question of the

standard to be applied by Post Office in exercise of draconian contractual powers

unclear.

463. Generic evidence as a whole: the Claimants rely upon the generic evidence heard at

trial that is set out above in Section A: Generic Evidence, under the heading

Suspension, as to the relevant commercial context and, in particular, the commercial

implications of competing meanings of the relevant terms contended for by the parties.

463.1 The implications of Post Office’s extreme interpretation are obvious and

offensive to the business common sense of making long terms investments in

the purchase of a branch and in the working relationship. It is an

interpretation, even on Post Office’s own evidence (summarised below), that is

not supported by any real commercial imperative or need on the part of Post

Office.

463.2 The Claimants’ interpretation accords with commercial common sense in that

it affords a meaning to what the contracts fail to state with clarity and gives

effect to requirements of fairness found to be implicit in the exercise of

contractual discretions in like contexts (as to which, see the Appendix to these

418 See, e.g. Bates/IDef at §103(1) [B5.1/3/56]

– 227 –
B COMMON ISSUES
Issues 14 to 16: Suspension And Termination

Closing Submissions and, in particular the principles established in

Branganza, and Gogay as cited therein).

464. Particular evidential matters: without limitation to the full evidential case set out

above, the Claimants also invite the Court to have particular regard to the following:

464.1 Proportion reinstated: the commercial reality as to the proportion of

suspended SPMs reinstated annually (on evidence from Post Office’s own

documents 419 and that of its witness Mr Breeden), 420 the minority of suspended

SPMs whose appointments are terminated summarily and, in consequence, the

acute need for fair limits that arise upon the Claimants’ interpretation upon

the exercise of any discretion to suspend.

464.2 Agreement of Post Office’s witnesses: that

a. Suspension is a “very serious matter” to both parties; 421

b. SPMs would not be suspended by Post Office lightly (as reflects the

seriousness of the matter), on a whim or to victimise them; 422

c. SPMs could suffer potential stigma in their community 423 and remuneration

ceases at the point of suspension, 424 such that suspension is not to be

regarded (in this context, as elsewhere) as a neutral act;

d. Post Office is trusted and would always be expected “to behave well and fairly

with people” 425 and this “is what other people’s expectations would be too”. 426

419 {G/42.1/1} and {G/4/1}
420 Breeden §50 {C2/3/13}: "Over the period April 2013 to June 2018, there were 626 suspension cases. Out
of the 626 contracts suspended, 407 contracts were terminated and 150 contracts were reinstated. The
balance of 69 cases are work in progress as at 23 June 2018." In questioning, Mr Breeden was shown
figures (above) indicating that a significant proportion of terminations do not arise from a
decision to terminate summarily: {Day7/ 93:1-5}
421 Mr Breeden {Day 7/ 56:10-14}
422 Mr Breeden {Day7/56:10}
423 Mr Breeden {Day7/57:3-6}; evidence of Mr Shields as to the “detrimental public perception of them
being responsible for the closure…” {Day10/11:14-16}
424 {Day 7/57:23-24}
425 {Day 6/19:23-25}

– 228 –
B COMMON ISSUES
Issues 14 to 16: Suspension And Termination

464.3 Denial of access to information / inability to investigate: the near

impossibility faced by SPMs of conducting any meaningful investigation into

the cause of apparent shortfalls giving rise to suspension, given that they are,

on Post Office’s own evidence, denied access to Horizon (and all transaction

data and accounts on it relating to their branch) and any other branch records.

As the Court heard, often they are shut out of their branch entirely and not

informed in writing of the factual basis of the charges made against them.

464.4 The further draconian commercial consequences: on the terms of the

contract, and as those terms are applied as a matter of policy by Post Office,

the commercial reality for SPMs was, upon suspension, that:

a. should they wish to obtain any rent/contribution for use of their branch,

footfall for the continued operation of their retail business, or avoid losing

goodwill or “detrimental public perception”, they would need to agree to the

appointment of a Temporary SPM by Post Office; 427

b. this is apparently the only available course for the continued operation of

their business (in some form) where access to their branch is denied to them

by Post Office entirely, as was the case for two Lead Claimants;

c. the terms upon which (and process by which) the Temporary SPM would

be appointed were manifestly disadvantageous to the incumbent SPM, who

has little option but to accept minimal rental payments in the face of Post

Office heavy persuasion 428 and in circumstances where their branch is likely

to shut if they refuse to agree. Post Office does not inform SPMs of its

policies on this practice, which include the (thereby concealed) possibility

that it may itself be willing to pay for use of the branch.429 In these

426 {Day 6/20:1-3}
427 As follows from Post Office’s own evidence on this: see Shields, §12-§13 {C2/7/3}
428 Mr Shields described this as a process of lowering expectations in circumstances where he was
subject to a Post Office imposed 5-day target to appoint a Temp: see Shields, §12 {C2/7/3}, §27
{C2/7/6} and when questioned on this {Day10/32:7-19} his response was to suggest only that “I
suppose in the case where they get to speak to three potential temps, sometimes maybe even possibly more,
there might be something more that is offered by one temp rather than another”
429 Mr Shields {Day10/30:2-3}

– 229 –
B COMMON ISSUES
Issues 14 to 16: Suspension And Termination

circumstances, Mrs Stubbs, for example, received £30 per week for the rent

of her Post Office.

464.5 Wide powers not supported by Post Office witnesses: the fact that none of

the Post Office witnesses was prepared to defend or support, in their evidence,

the need for wide powers of suspension of the kind it had initially been said in

written evidence filed on Post Office’s behalf, were necessary to protect its

assets and reputation. 430

Observations on Post Office’s case

465. For the first time in opening (no such concession or qualification being pleaded

generically by Post Office, 431 and only a partial concession being made in Individual

Defences 432), Post Office conceded that decisions:

465.1 to suspend should be “reasonably based” on one of the grounds set out in the

SPM contracts (“and hence not be arbitrary, irrational, capricious or without

reasonable and proper cause”); 433 and

465.2 to withhold remuneration should (“it might be argued with some force”) “…not be

exercised dishonestly or in an arbitrary, capricious or irrational manner”. 434

466. It is thus common ground that the powers in question are subject to these limitations,

and no longer open to Post Office to suggest that the terms in question are

comprehensively drafted such that the implication of terms would fail the test of

necessity. This is a major concession, and one that undermines the balance of Post

Office’s case as to how those provisions should be interpreted.

467. Contrary to what is suggested, 435 the Claimants seek to make sense of the contractual

words used. Their interpretation does not ‘overwrite’ the terms any more that Post

430 Breeden, §37 {C2/3/11}
431 See GDef, §99 {B3/2/45};
432 See, for example, Bates IDef, §84(3) {B5.1/3/48} and §102(1) at {B5.1/3/55} – in the latter, it was
conceded that a power to suspend was engaged where Post Office held a “genuine belief” that
suspension was in its interests “genuinely in consequence of the factual grounds that were present.”
433 Defendant’s Written Opening, §313 {A/2/89}
434 Defendant’s Written Opening, §314 {A/2/89}

– 230 –
B COMMON ISSUES
Issues 14 to 16: Suspension And Termination

Office’s. It is uncontroversial that terms purport to set out certain grounds. But they do

not deal comprehensively with the manner in which they should be exercised which, as

accepted by both parties, is subject to limits.

468. Those contended for by the Claimants are the minimum required to achieve commercial

coherence in this context and, in particular, to give effect and meaning to the right to

challenge Post Office decisions found elsewhere in the SPMC, for example (see below).

469. Thus, there is nothing uncommercial (still less “absurd”) in the example given by Post

Office of it being unable to suspend a SPM it suspected of stealing or mishandling cash

or stock as it had not yet been able to investigate and consider the matter. 436 Such

investigation and consideration would be the bare minimum required for Post Office to

have “reasonable grounds” for that suspicion that Post Office concedes (in its own

example) are required. A decision may also be challenged under Section 18 SPMC, for

example.

470. Post Office’s suggestion that (in effect) the contractual provisions are comprehensive,

studiously ignores provisions found elsewhere in section 18 SPMC {D2.1/3/85} which

contains an express, contractual right to take issue with allegations of contractual breach

and, for example, to take controversies to a Regional General Manager. For the reasons

above Section 19 must be read in the light of those provisions.

471. To read other sections in isolation is to ignore important aspects of the contract read as a

whole and artificially divorce the provisions in question from their proper context.

Issue 15 and 16: Termination – findings sought

Findings sought by the Claimants

472. As with the contractual terms on suspension, the Claimants invite the Court to find that

by reference to commercial common sense, the relevant factual matrix, and the principle

435 Defendant’s Written Opening, §309-§310 {A/2/88}
436 Defendant’s Written Opening, §311 {A/2/89}

– 231 –
B COMMON ISSUES
Issues 14 to 16: Suspension And Termination

of contra proferentem, the contractual terms on termination should be construed as per

GPOC §64.14, 437 so as to prohibit ‘knee jerk’ termination, and / or:

472.1 such that the phrase “may be determined” (under the SPMC) and “may

terminate” (under the NTC) imported the foregoing, so as to require Post Office

conscientiously to consider whether or not to do so; and

472.2 the phrase “not less than three months’ notice” (under the SPMC) and “not less

than 6 months’ notice” (under the NTC) required to Post Office conscientiously

to consider what period of notice to give. 438

Submissions

473. Written opening submissions: in support of the findings above, the Claimants refer the

Court to, and rely upon, the detailed submissions made on this issue in their Written

Opening Submissions 439 and the written evidence of the Lead Claimants and Post Office

witnesses referred to in that opening.

474. The Court is invited, having heard the evidence at trial, to make the findings above in

the light of the submissions set out above in support of their case on Issue 14

(Suspension) above, to which they add the following.

475. As to termination in general:

475.1 Evidence of the Lead Claimants: the Lead Claimant’s evidence summarised

above, is of one voice as to the significant investments made by them in their

relationship with Post Office over the long term and in their branches and

associated retail businesses, which, it is common ground, are highly reliant

upon footfall from Post Office business.

437 i.e. not to terminate Claimants: (i) arbitrarily, irrationally or capriciously; (ii) without reasonable
and proper cause; and / or; (iii) in circumstances where Post Office was itself in material breach
of duty.
438 See, e.g. Bates/IPOC at §110 to 111 {B5.1/2/30-31}
439 Claimant’s Written Opening Submissions, §382-§386 {A/1/148-150}

– 232 –
B COMMON ISSUES
Issues 14 to 16: Suspension And Termination

475.2 Acceptance by Post Office witnesses: that goodwill that they had acquired on

purchase of the business, would or could be lost by termination of the

appointment see above Section A under Long Term and Secure. 440

476. As to summary termination: without limitation to the full evidential case set out above,

the Claimants draw the attention of the Court to the following, in particular:

476.1 the Agreement of Post Office’s witnesses: that

a. to have the whole picture (in respect of a suspected breach), Post Office

would need to investigate 441 grounds for summary termination, and

likewise, it would be necessary for a SPM to try and get the relevant

information to investigate; 442

b. only very limited information was made available to Post Office

management responsible for taking the decision summarily to terminate

and appointment for an apparent breach – and, for example, no Fujitsu data

was obtained, 443 nor were spreadsheets providing useful basic information

as to the basis upon which transaction corrections were issued provided; 444

476.2 Denial of access to information / inability to investigate: as above, it was all

but impossible for SPMs to conduct any meaningful investigation into the

cause of apparent shortfalls for the purposes of furnishing Post Office with

relevant explanations or any response to the allegations forming the basis of

any decision to terminate.

476.3 Refusal of right to be accompanied by a lawyer: despite allegations of false

accounting being raised at such termination interviews (where Post Office

440 For example, evidence of Mr Shields that incumbent SPMs have an incentive to agree to the
continued operation of their branch (by a temporary SPM) in order not to lose goodwill: see
Shields, §13 {C2/7/3}
441 {Day7/ 57:14-18} “Q. And to have the whole picture you would need to investigate, wouldn't you? A. We
would need to investigate. But the suspension is precautionary at that particular point in time based on the
information that is available.”
442 {Day7/ 59:11-15}
443 Mrs Ridge {Day10/96:6}
444 Mrs Ridge {Day10/114:18}

– 233 –
B COMMON ISSUES
Issues 14 to 16: Suspension And Termination

could later rely upon a SPM’s response to the same) Post Office did not permit

SPMs to be accompanied by a solicitor. 445

477. As to termination on notice: without limitation to the full evidential case set out above,

the Claimants draw the Court’s attention to the following particular matters:

477.1 Post Office’s own evidence: that

a. “Outside nationwide planned closure programmes, Post Office rarely gives notice

to terminate a Subpostmaster's contract because it wishes to close a branch for

commercial reasons. If a branch is closing for other reasons (retirement of the

Subpostmaster, termination for breach, etc.) it will generally consider whether the

branch is still needed in its current location and operating model, but a decision not

to re-open a branch in these circumstances is still rare. Generally the pressure is the

other way around: Post Office is keen to maintain the size of the network and keep

branches open.” 446 thus, wide powers to terminate on notice were not, on the

evidence of Post Office’s most senior witness, an operational need outside

of nationwide planned closure programmes.

b. Post Office would typically not terminate on notice unless there was a

capability or performance issue, and even then only after discussions aimed

at improving performance; 447

c. it was a requirement that Post Office management follow corrective action

policies in place prior to termination. 448

d. the 3-month notice period in the written SPMC terms was in reality

insufficient for a SPM to sell the business and premises and find an

incoming SPM. 449

445 Mrs Ridge {Day10/97:17-25} though Post Office practice was for a separate team to conduct
interviews where SPMs were to be prosecuted, it was conceded that allegations of false
accounting may be raised at termination interviews.
446 Van den Bogerd, §60 {C2/1/16}
447 Breeden, §60 {C2/3/15}
448 Mr Breeden {Day7/141:3-13}
449 Breeden, §62 {C2/3/16}

– 234 –
B COMMON ISSUES
Issues 14 to 16: Suspension And Termination

477.2 Post Office’s own payment of compensation to SPMs, when closing branches,

under nationwide closure schemes, of up to 28 months’ remuneration

pursuant to long standing agreements between Post Office and the NFSP. The

minimum such compensation (on a scale payment basis) was around 12

months.

Final observations on Post Office’s case

478. Post Office’s case as to termination and termination on notice gives rise to a competing

interpretation of the relevant provisions. Post Office’s interpretation is one by which its

powers to terminate are:

478.1 in the case of summary termination450 under the SPMC fettered only by a

requirement for repudiatory breach that is not found in the wording of the

contract and under NTC, by the purportedly ‘exhaustive’ circumstances set

out in clause itself; and

478.2 in the case of termination on notice, 451 in any circumstances on three (SPMC)

or six (NTC) months’ notice.

479. Post Office’s case is flawed and obviously so. Both circumstances are said to be covered

by “detailed contractual provisions” but they are not. As detailed above, the clauses in

question are unclear and give rise to ambiguities that are apparent in the way that Post

Office has, itself, put its case.

480. With respect to summary termination:

480.1 the terms of the SPMC are sparse and refer not only to “Breach of Condition”

but also to “non-performance of [a SPM’s] obligation or non-provision of Post Office

450 Put shortly, that Post Office had a right to terminate without notice (see Post Office’s Written
Opening, §316-§322 {A/2/90-91}) when it had cause to do so under the terms of the SPMC (said to
be limited to repudiatory breach: see e.g. Bates/IDef at §102(2) {B5.1/3/55}) and NTC (if one of
more of the factual grounds under Part 2, paragraph 16.2 was established; see e.g. Stockdale/IDef
at §83(2) {B5.6/3/40})
451 Put shortly, Post Office’s case on termination without notice (see Post Office’s Written Opening,
§323-§333 {A/2/91-94}) is that it had a right to terminate for any reason whatsoever on either 3
months’ notice (per the SPMC: see, e.g. Bates/IDef at §102(3) {B5.1/3/55}) or 6 months’ notice (per
the NTC: see, e.g. Stockdale/IDef at §83(3) {B5.6/3/40})

– 235 –
B COMMON ISSUES
Issues 14 to 16: Suspension And Termination

Services…”. Post Office commends a narrow interpretation of the clause but

nonetheless one that required the obvious ambiguity to be resolved by taking

the wording as a whole to be a reference only to repudiatory breaches only.

This ignores the difficulty arising from the clauses’ apparent reference to

circumstances other than repudiatory breach.

480.2 The NTC is likewise unclear and open-ended in its demarcation of conduct

sufficient to justify summary termination. It makes reference not only to

‘material breaches’, but also to failures to adhere to standards set out in the

‘Manual’ which is a very substantial and ill-defined collation of documents,

updated weekly by reference to, for example, Counter News, whose very

definition eluded any clear explanation at trial – the principal Post Office

witness on contracts being unable to identify with any precision what

published instructions were and were not of contractual effect. 452 Despite

being asked by the Court for copies of such manuals (which it is presumed

contain those standards) – Post Office was itself unable to provide a definitive

volume of the same as at a given date, admitting to difficulties. 453

481. With respect to termination on notice – as identified above – Post Office’s

interpretation fails to accords with the view of any of its witnesses, including those

whose evidence was filed and served in support of its case on suspension and

termination. That aside:

481.1 The notice periods bear no sensible scrutiny as a matter of commercial

common sense. As noted above, Post Office itself has conceded, in both

written and oral evidence, that three months is insufficient for Post Office to

find, interview and appoint replacement SPMs; 454

452 Mr Beal {Day6/55:18} ff
453 {Day7/193:4-23}: as the Court was informed: “Post Office has done the best it can to identify the
manuals that would have been in force… what it has done is, where it can’t locate the 2007 version, but it
has one for shortly after, say 2008 or 2009, it has included that and we have those six files available for
you.”
454 Breeden, §62 {C2/3/15}: the notice period was extended for this reason – further, “in short longer
periods for both parties seemed to make more sense in light of the timescales involved in replacing a
Subpostmaster.”

– 236 –
B COMMON ISSUES
Issues 14 to 16: Suspension And Termination

481.2 The practice followed (also touched upon in Post Office’s written evidence) 455

– a matter forming part of the basis of the Claimants’ case as to the true

agreement between the parties, below – was for SPMs to be required to

continue to operate their branch until a replacement was found: often many

months after the notice they had given had expired. 456

481.3 Again, as identified above, Post Office’s practice was to compensate SPMs

whose branches were to be closed (in certain circumstances) under nationwide

closure schemes by reference to time periods substantially in excess of the

purported contractual notice periods.

481.4 The suggestions made 457 that Post Office was not required to identify

substantial cause or reason, was not required to have regard to any interests

other than its own (as to which it prays in aid a first instance decision about

detailed termination provisions pertaining commercial contracts of a kind very

obviously far removed from the present circumstances) 458 and that a

requirement to give the matter conscientious consideration “would be both

vague and potentially onerous to Post Office” are made in the face of Post Office’s

own documentary disclosure and evidence. Its disclosure included, for

example, long and detailed policies of its own making on corrective actions to

be taken, and factors relevant to termination, in substance requiring that such

cause be identified and due consideration be given.

482. In reality, and by reference to the full commercial implications of the competing

interpretations and on a value judgment as to that matter by the Court, it is respectfully

suggested that the provisions should be interpreted as submitted by the Claimants.

455 Breeden, §62 {C2/3/15}:
456 See, for example, the position with respect to Ms Karen Collinson (predecessor to Lead Claimant
Mrs Stockdale) and Mr Rooney (predecessor to Lead Claimant Mr Sabir) summarised above.
457 Post Office’s Written Opening, §328-§331 {A/2/92-93}
458 Monde Petroleum SA v Westernzagros Ltd [2016] EWHC 1472 (Comm) {A1.1/69/1-94} which
concerned termination provisions in oil exploration consultancy agreements far removed from
the present circumstances

– 237 –
B COMMON ISSUES
Issues 14 to 16: Suspension And Termination

– 238 –
B COMMON ISSUES
Issues 17 and 18: True Agreement

Issues 17 and 18: True Agreement

Issue 17: Do the express written terms of the SPMC and NTC between Post Office and
Subpostmasters represent the true agreement between the parties, as to termination (in this
regard, the Claimants rely on Autoclenz v Belcher [2011] UKSC 41?

Issue 18: If not, was the “true agreement” between the parties as alleged at GPOC, para 71?

Issue 17 – The terms of the SPMC and NTC did not represent the true agreement between
the parties as to termination

Relevant principles

484. The relevant principles upon which the Claimants rely are set out in:

484.1 Annex IX of their Written Opening Submissions (Annex IX: True

Agreement); 459 and

484.2 the propositions set out in the Appendix to the Claimants’ Closing

Submissions, under ‘True Agreement’.

Finding sought

485. Further or alternatively to the Claimants’ case on Issues 15 to 16,460 the Claimants invite

the Court to find, in accordance with the principles in Autoclenz v Belcher [2011] UKSC

41 (“Autoclenz”), the written agreement as to termination did not reflect the true

agreement between the parties.

486. Neither party intended that the Claimants’ contracts were terminable on 3 months’

(SPMC) or 6 months’ (NTC) notice such as to forfeit the Claimants’ substantial long-

term investments:

486.1 without substantial cause or reason, established after a fair investigation and

consideration;

486.2 if Post Office was itself in material breach of contract;

459 {A/1/237-240}
460 That, on a proper construction of the SPMC and NTC terms, Post Office did not have an
unfettered right to terminate on will or on the short notice periods provided for in those contracts

– 239 –
B COMMON ISSUES
Issues 17 and 18: True Agreement

486.3 vindictively, capriciously or arbitrarily; or

486.4 in response to reasonable correspondence about (i) any apparent breach by

Post Office, or (ii) alleged shortfalls and the difficulties faced by SPMs in

investigating alleged shortfalls. 461

Submissions

487. Written opening submissions: in support of the findings above, the Claimants refer the

Court to, and rely upon, the detailed submissions made on this issue in their Written

Opening Submissions (Section B: True Agreement) 462 and the written evidence of the

Lead Claimants and Post Office witnesses referred to in that opening.

488. The Court is invited, having heard the evidence at trial, to make the findings above in

the light of those submissions, and in the light of the following further points.

489. The Claimants rely further upon:

489.1 Generic evidence: the substantial body of evidence as to this generic issue set

out in Section A: Generic Evidence to these Written Closing Submissions,

above particularly Similarity to Employment, with reference to which the

Claimant relies on all facts and matter set out above.

489.2 The submissions set out above in support of their case on Issues 14 to 16,

Suspension and Termination – and evidence referred to.

490. Further points: without limitation to the summary of that evidence given above, the

Claimants will draw the Court’s attention to the following, in particular:

490.1 The evidence of the Lead Claimants, summarised above as to their long-term

investments and commitments to the relationship and the high degree of

discretion and control exercised by the Defendant;

490.2 Post Office’s own written policies: as to corrective action which are entirely

inconsistent with an agreement terminable on notice without substantial cause

461 See Bates/IPOC at §§62, 67, 69 and 72 {B5.1/2/17-19}
462 {A/1/152-155}

– 240 –
B COMMON ISSUES
Issues 17 and 18: True Agreement

or reason, fair investigation or consideration – which Post Office’s own

internal policies require and SPMs expected.

490.3 Post Office’s own evidence (as above – see Issues 14 to 16) that

a. it would typically not terminate on notice unless there was a capability or

performance issue and even then only after discussions aimed at improving

performance; 463

b. Post Office management were required follow the above corrective action

policies in place prior to termination. 464

c. as identified above, outside of nationwide planned closure programmes,

Post Office rarely gives notice to terminate because it wishes to close a

branch for commercial reasons (a circumstance said to be “rare”) 465

d. the 3 month notice period in the written SPMC terms was in reality

insufficient for a SPM to sell the business and premises and find an

incoming SPM, 466

e. that 12 months’ notice “would be necessary” in the case of a ‘Mains Contract’

and that “[i]n short, longer notice periods for both parties seemed to make more

sense in light of the timescales involved in replacing a Subpostmaster.” 467

490.4 Outgoing SPMs were required to remain in post long after expiry of the

notice they had given while Post Office approved new incoming SPMs or

oversaw the conversion of premises into, for example, Post Office Local

branches under the NT scheme.

490.5 The express terms of The Discretionary Payments Agreement dated 1 April

1989 468 made by the NFSP (on behalf of all SPMs) and Post Office, being a

463 Breeden, §60 {C2/3/16}
464 Mr Breeden {Day7/141:3-13}
465 Mrs Van den Bogerd, §60 {C2/1/16}
466 Breeden, §62 {C2/3/16}
467 Breeden, §62 {C2/3/16}

– 241 –
B COMMON ISSUES
Issues 17 and 18: True Agreement

long-standing agreement on the compensation to be paid to SPMs upon the

termination in certain circumstances, which applies a multiplier of 28 (or 26)

months of the gross remuneration as of their last day of appointment upon

which the Claimants rely as to the mutual expectations of the parties of the

value of the SPMs’ goodwill and period over which that should be amortised.

490.6 While not expressed to be contracts of employment, the indicia of such

contracts the SPMC and NTC have469 including detailed personnel provisions

and reserving to Post Office a high degree of discretion and control, 470 the

requirement, where agreed to, that personal service be provided (recorded in

Post Office internal documents and interview recordings), and the

requirement that Post Office be notified of periods of absence in excess of 3

days.

What was the ‘true agreement’? (Issue 18)

491. In all the circumstances, the Claimants will invite the Court to find on the evidence that

the ‘true agreement’ as to termination was, as pleaded, namely that:

491.1 SPMs’ contracts would not be terminated in the manner contended for by Post

Office;

491.2 Post Office would not terminate such contracts without giving such notice as

the court may hold to be reasonable; and

491.3 such notice was, on any view (and as consistent with Post Office’s evidence –

as above), never to be less than 12 months. 471

Observations on Post Office’s case

492. Post Office denies the application of Autoclenz principles on the grounds these are not

employment contracts 472 and cannot be used to circumvent normal principles of

468 [G/84/1-8]; and all variations and supplemental agreements thereto
469 GPOC at §9, §45, §50 and §69 {B3/1/2} {B3/1/15-17} B3/1/39}
470 GPOC at §45 {B3/1/15-16}
471 GPOC at §71 [B3/1/40]

– 242 –
B COMMON ISSUES
Issues 17 and 18: True Agreement

construction. It further denies that the terms in question were inserted for reasons of

form. 473

493. The suggestion made, aimed apparently at disparaging rather than addressing the

Claimants’ case, that the Claimant’s approach is “unorthodox” cannot be reconciled with

the judgment in Autoclenz itself, or with the commentary upon it cited by Post Office

itself in its written opening, which identifies the principles relied upon by the

Claimants, suggests them to be an instance or variant of the sham doctrine, and

observes that they apply “especially” (though not exclusively) to employment

contracts. 474

494. As observed in opening, contrary to what is maintained by Post Office:

494.1 Autoclenz addressed the anterior question of whether terms in a contract

purporting to provide for self-employment were not reflected by the true

agreement consistent with employment.

494.2 The distinction between contracts of employment (or those potentially

construed as such) and commercial contracts was based upon the relative

bargaining positions of the parties 475 – it is far from the bright line distinction

that Post Office seeks to rely upon in this case.

494.3 The application of Autoclenz principles depends on a considered analysis of

the overall character of the relationship, not upon whether it is, or is not, an

employment contract. If that were not so, cases such as Autoclenz would be

impossible to decide.

472 The Court should be aware that there is presently a group Employment Tribunal claim, on behalf
of 123 SPMs, seeking to establish worker status, pending before London Central ET
473 Post Office also takes a pleading point on the suggested absence of particulars of a true
agreement that SPMs may terminate on 12 months’ notice.
474 Post Office’s Written Opening, §338-§339 {A/2/95}, citing Chitty at 2-170
475 Specifically, “…the relative bargaining power of the parties must be taken into account in deciding
whether the terms of any written agreement in truth represent what was agreed” Autoclenz at §35
{A1.1/39/12}

– 243 –
B COMMON ISSUES
Issues 17 and 18: True Agreement

495. For the reasons given above, the straightforward position is that the true agreement

between the parties was far from that found in the wording of the termination

provisions of the contracts and was as identified above.

– 244 –
B COMMON ISSUES
Issues 19 and 20: Compensation For Loss Of Office

Issues 19 and 20: Compensation For Loss Of Office

Issue 19: On a proper construction of the SPMC and NTC, where Post Office lawfully and
validly terminated a Subpostmaster’s engagement, on notice or without notice for cause,
was the Subpostmaster entitled to any compensation for loss of office or wrongful
termination?

Issue 20: On a proper construction of the SPMC and NTC, in what, if any, circumstances are
Subpostmaster’s breach of contract claims for loss business, loss of profit and
consequential losses (including reduced profit from linked retail premises) limited to such
losses as would not have been suffered in Post Office had given the notice of termination
provided for in those contracts?

Common Issues 19 and 20 – proper construction and circumstances

496. The Claimant’s case on these provisions is confined to their enforceability as Onerous

and Unusual Terms and/or under UCTA.

Relevant principles

497. The principles relevant to these Issues are set out in:

497.1 Annexes V and VI to the Claimants’ Written Opening Submissions

497.2 The propositions set out in the Appendix to these Written Closing

Submissions (specifically – those set out under (5) and (6) Onerous and

Unusual Terms).

Relevant terms

498. The written terms of Post Office’s contracts with Claimants purported (on Post Office’s

construction) to provide that SPMs had no right to any compensation for loss of office,

irrespective of whether loss of office and damage suffered thereby was due to breach or

other unlawful act by Post Office, as follows:

498.1 SPMC – Section 1, clause 8: “The terms of the appointment of Subpostmaster do

not entitle the holder to be paid … compensation for loss of office."

– 245 –
B COMMON ISSUES
Issues 19 and 20: Compensation For Loss Of Office

498.2 NTC – Part 2, paragraph 17.11: “The Operator acknowledges that he shall not be

entitled to receive any compensation or other sums in the event of the termination or

suspension of the Agreement.”

Findings sought

499. The Claimants invite the Court to find that these terms, in their contractual context, are

very one-sided and make acutely asymmetric provision for the parties’ respective

liabilities, given Post Office’s reservation of right to pursue SPMs for unlimited sums in

relation to alleged losses after suspension or termination.

500. The Claimants further invite the Court to find that:

500.1 the terms are onerous and unusual, such that they are not enforceable unless

Post Office has provided sufficient notice of them to SPMs; alternatively

500.2 the terms were unenforceable as failing to comply with the requirement of

reasonableness under Section 3(2) UCTA. 476

Submissions

501. The issues to be determined with respect to these terms, and the case relied upon by the

Claimants are as set out above under Issues 5 to 7.

502. The Claimants submissions made in respect of those issues, and the evidence heard at

trial referred to and relied upon in support, above, are repeated.

503. Without prejudice to the generality of those submissions, the Claimants draw the

Court’s attention, in particular, to:

503.1 Need to act fairly (etc.): the evidence heard at trial as to the circumstances in

which remuneration would be repaid following a wrong decision to

precautionarily suspend; 477 and as to accepted need to “be fair minded about

476 See, e.g. Bates/IPOC at §114 [B5.1/2/31]
477 {Day7/ 96:9-14}

– 246 –
B COMMON ISSUES
Issues 19 and 20: Compensation For Loss Of Office

it” 478 and to exercise that discretion in accordance with the rules of natural

justice and with “openness, transparency and fair dealing”. 479

503.2 Concession in other proceedings: the concession made by Post Office in

Moeze Lalji v Post Office Limited [2003] EWCA (Civ) 1873 480 that that the

power to forfeit remuneration must not be exercised capriciously.

503.3 The numbers of suspended and reinstated SPMs: the evidence from Post

Office’s own documents 481 (and accepted by Post Office’s main witness on the

matter) 482 as to the numbers of SPMs whose contracts are not in fact summarily

terminated following suspension.

503.4 As to the capacity of Subpostmasters to train their Assistants (and the

construction the Claimants contend for under Common Issue 23), the

Claimants were adamant under cross examination that they had, in practical

terms no greater capacity to train assistants than the training they themselves

allowed them – and training in a branch setting was difficult. 483 Mr Abdulla

went further and did not accept responsibility as he was not computer savvy

and did not agree that training could simply be cascaded down. 484

Summary
504. As to Issue 22, in all the relevant circumstances, the terms in question are onerous and

unusual and unreasonable on the application of the statutory test, and obviously so.

The consequences identified under Issues 5 to 7 follow.

505. As to Issue 23, the Court is asked to address the question as set out in the Claimants’

Written Opening at §426 to §429. 485

478 {Day7/99:15}
479 {Day7/111:24}
480 {A1.1/22/1-5}
481 {G/42.1/1} and {G/4/1}
482 {Day7/ 93:1-5}
483 See, for example, evidence of Mr Bates {Day2/140:17} that he would not know the training was
right.
484 Mr Abdulla {Day4/53:7-23} – albeit it admitted as practical matter that he did relay training
485 {A/1/167-168}

– 247 –
B COMMON ISSUES
Issues 19 and 20: Compensation For Loss Of Office

– 248 –
B COMMON ISSUES
Issue 21: Subsequent Appointments

Issue 21: Subsequent Appointments

Issue 21: On a proper construction of the SPMC and NTC, what if any restrictions were
there on Post Office’s discretion as to whether or not to appoint as a Subpostmaster the
prospective purchaser of a Subpostmasters’ business?

The relevant terms

506. The relevant terms are the following:

506.1 SPMC – Section 1, Clause 9: “If on resignation of his appointment the

Subpostmaster disposes of his private business and/or premises in which the sub-office

is situated, the person acquiring the private business and/or the premises or

exchanging contracts in connection with the purchase of the private business and/or

premises will not be entitled to preferential consideration for appointment as

Subpostmaster.”

506.2 NTC – Part 2, paragraph 19: “…On termination of the Agreement, the appointment

of any New Operator shall be entirely at the discretion of [Post Office]. [Post Office]

may, but shall not be obliged to, consider any application for the operation of a Post

Office branch at the Branch Premises made by a genuine prospective purchaser of the

Basic Business and the property interest at the Branch Premises, but any such

prospective purchaser shall not be given preferential treatment in the application or

appointment process.”

Findings sought

507. The Claimants invite the Court to find that: 486

507.1 the terms, properly construed, afforded Post Office a ‘discretion’ as to

subsequent appointments (involving a value judgment), as opposed to simply

a right of ‘veto’. 487

507.2 the exercise of a discretion of this nature is subject to the implied duties in Yam

Seng and/or the terms set out in GPOC §64.15 to 64.19. 488

486 See. e.g. Bates/IPOC at §115 to 116 {B5.1/2/31} and the Bates/IReply at §110 {B5.1/4/48}
487 As to this, the Claimants rely upon the decision in Watson v Watchfinder.co.uk Ltd [2017]
EWHC 1275 (Comm) {A1.1/65/1}

– 249 –
B COMMON ISSUES
Issue 21: Subsequent Appointments

Submissions

508. The Claimants rely upon the submissions set out in their Written Opening Submissions

under Section B: Subsequent Appointments, 489 which are adopted here and to which

the Court is referred.

509. The Claimants further rely upon the evidence of the Lead Claimants and the generic

evidence heard at trial summarised under Section A: Suspension and Termination– in

particular with respect to:

510. The Claimant’s construction is to be preferred, in any event, and particularly in light of

the following:-

510.1 the long-term commitment and financial investment made by the Lead

Claimants – which is inconsistent with a right of veto and by reason of which

the implication of terms is necessary to give effect to the purposes of the

agreement and the investments made pursuant to it; and

510.2 the commercial context in which incumbent SPMs were held in post long after

their notice had expired pending recruitment of a replacement SPM.

511. In short, the clauses case go no further than stating that a prospective purchaser of a

SPM’s branch will not be given preferential treatment and thus did not afford to Post

Office a right of veto; rather, the terms give rise to a discretion, the exercise of which is

subject to the implied terms contended for by the Claimants. 490

512. That construction does not impede Post Office’s commercial freedom 491 to act, in this, in

accordance with well-established principles on the exercise of contractual discretions.

Rather, the principled limitations contended for by the Claimants are needed to give (on

the evidence heard at trial) commercial coherence to those terms.

488 In essence, an obligation not to exercise such discretion arbitrarily, capriciously or unreasonably,
but rather in accordance with the obligations of good faith, fair dealing, transparency,
cooperation, and trust and confidence
489 Claimants’ Written Opening, §409-§420 {A/1/159-162}
490 As above, and the duties in Braganza (see the Appendix to these Written Closing Submissions)
491 See, e.g. Bates/IDef at §109(3) {B5.1/3/60}

– 250 –
B COMMON ISSUES
Issues 22 and 23: Assistants

Issues 22 and 23: Assistants

Issue 22: Did SPMC Section 15, clause 7.1; NTC, Part 2, clauses 2.3 and 2.5 and / or any of
the implied terms contended for by the parties and found by the Court purport to confer a
benefit on Assistants for the purposes of section 1 of the Contracts (Rights of Third Parties)
Act, and if so which of these terms did so?

Issue 23: What was the responsibility of Subpostmasters under the SPMC and the NTC for
the training of their Assistants?

Relevant terms

513. The relevant terms are the following:-

513.1 SPMC – Section 15, clause 7.1:

“[The Defendant] will: (7.1.1) provide the Subpostmaster with relevant training

materials and processes to carry out the required training of his Assistants on the

Post Office ® Products and Services; (7.1.2) inform the Subpostmaster as soon as

possible where new or revised training will be necessary as a result of changes in

either the law or Post Office ® Products and Services; and (7.1.3) where appropriate

… update the training materials (or processes) or provide new training materials (or

processes) to the Subpostmaster. However, it is the Subpostmaster’s responsibility to

ensure the proper deployment within his Post Office ® branch of any materials and

processed provided by [Post Office] and to ensure that his Assistants receive all the

training which is necessary in order to be able to properly provide the Post Office ®

Products and Services and to perform any other tasks required in connection with

the operation of the Post Office ® branch.”

513.2 NTC – Part 2, paragraphs 2.3: “Where [the Defendant] considers it necessary, it

shall initially train the first Manager and such number of Assistants as [Post Office]

shall determine, in the operation of the System at the Branch.”

513.3 NTC – Part 2, paragraphs 2.5: “[Post Office] may require the Manager and/or the

Assistants to undertake further training at any reasonable location and time during

the Term if [Post Office] (2.5.1) reasonably considers such training to be essential; or

– 251 –
B COMMON ISSUES
Issues 22 and 23: Assistants

(2.5.2) wishes to train them in new and improved techniques which have been devised

and which the Operator will be required to use in operating the System.”

Relevant principles

514. The relevant principles relied upon by the Claimants are:

514.1 set out in Annex X to their Written Opening Submissions (Annex X: Issues 22

and 23 – Assistants); 492 and

514.2 set out in the Appendix to these Written Closing Submissions.

Finding sought by the Claimants

515. The Claimants ask the Court to find that that Assistants employed by a SPM to work in

a branch are conferred benefits pursuant to those terms for the purposes of section

1(1)(b) 1999 Act, such that they may in their own right enforce them.

Submissions

516. The Claimants’ submissions made in support of the foregoing were set out in detail in

their Written Opening Submissions, under Issues 22 and 23: Assistants. 493 The

Claimants refer to and rely upon those submissions.

517. In response to the case made by Post Office in opening (but only insofar as it is not

addressed by the Claimants’ Written Opening Submissions, referred to above), the

Claimants make the following further points.

517.1 Implied terms: the relevant implied term, on this Issue, is confined to the

implied obligation that training (above) provided to Assistants would be

adequate.

517.2 Evidence: evidence heard at trial shows the extent of SPMs’ dependency upon

assistants; 494 and Post Office awareness and encouragement of the same. 495

492 {A/1/241-244}
493 {A/1/165-168}
494 {Day2/60:6-10}; {Day4/116:16-25}
495 {Day7/9:7-13}

– 252 –
B COMMON ISSUES
Issues 22 and 23: Assistants

Post Office admits that the purpose of the training provision is to ensure that

the branch is run effectively, including through the use of competent

assistants. They were integral to the agency business model; this shared

understanding tends to support an intention that Assistants should benefit

from training necessary to perform that function.

517.3 Clauses not within section 1(2): the clauses in question do not, as Post Office

suggests show intentions at variance to the conferral of a benefit. This is not

apparent from their wording and, as made clear Nisshin Shipping 496 “…if the

contract is neutral on this question [of the intention of the parties], sub-s (2) does

not disapply sub-s 1(b). Whether the contract does express a mutual intention that the

third party should not be entitled to enforce the benefit conferred on him or is merely

neutral is a matter of construction having regard to all relevant circumstances.”

Silence on the point of intention does not serve to disapply section 1(1)(b).

518. In summary, the Claimants invite the Court to answer the questions posed by Common

Issue 22 in the affirmative (with respect to the terms identified above).

PATRICK GREEN QC
KATHLEEN DONNELLY
HENRY WARWICK
OGNJEN MILETIC
REANNE MACKENZIE

30 November 2018

Henderson Chambers
2 Harcourt Buildings
Temple
London EC4Y 9DB

496 [2003] EWHC 2602 (Comm), per Colman J at §[23] {A1.1/23/7}

– 253 –
B COMMON ISSUES
Issues 22 and 23: Assistants

– 254 –
SCHEDULE: DEFENDANT’S EVIDENCE
Overview of Defendant’s evidence

SCHEDULE: DEFENDANT’S EVIDENCE

Overview of Defendant’s evidence

519. As noted in the Introduction (at p.2, above), there are a number of respects in which the

Defendant’s evidence for the Common Issues Trial has proven to be unsatisfactory.

520. In summary:-

520.1 The Defendant had refused to clarify its pleaded case in the Defendant’s

Individual Defences as to what “would have happened”, based on the

Defendant’s “practices and procedures at the relevant time and/or on inferences from

contemporaneous documents and/or matters of which it is aware.” 497 As explained

below (at paragraph 525, on p.257), it refused to answer a Part 18 RFI and

promised to set out “all relevant evidence” in its witness statements.

520.2 Meanwhile, the Defendant disclosed an amorphous universe of documents,

from which it was impossible to discern which policies or procedures it was

referring to or how they fitted together. This documentation spans over two

decades, but no attempt was made to organise the disclosure by reference to

any criteria (such as time, document type or theme). Several documents are

undated, or contain no information as to their origin or purpose. There

appears to be no version control. No explanation has been provided by the

Defendant as to how, for example, various policies fit together and developed

over time. The chaos in the disclosure (and the task to which the Claimants

were put) is exemplified by the two documents which Ms Ridge is said to have

had at the time of her meeting with Mr Abdulla in relation to his suspension. 498

During her oral evidence, Ms Ridge suggested that these two documents were

likely part of one composite document, and Leading Counsel for the

Defendant agreed with the Court that it may have been that they were part of

an A3 document which printed out as two separate A4 documents. What this

497 See, e.g., Dar/IDef at §6 {B5.5/3/3}
498 {E4/65/1} and {E4/66/1}

– 255 –
SCHEDULE: DEFENDANT’S EVIDENCE
Witness statements

does not explain, however, is why these documents are three disclosure

numbers apart. 499

520.3 The Defendant’s witness statements did not provide the evidence promised; in

fact they exacerbated the problem. They were pitched at an extremely high-

level, often failing to cite sources of information and containing minimal

exhibits. For example, on training and support, the Defendant’s evidence is

provided by Ms van den Bogerd, who explores the issue across 16 paragraphs

without reference to a single document. This is notwithstanding disclosure of

numerous training documents which show significant concerns and / or

developments in training over time.

520.4 The oral evidence of the Defendant’s witnesses exacerbated the problem

further still. Several important ‘clarifications’ to evidence were made in

examination-in-chief with no notice to the Claimants. It became abundantly

clear that several witnesses were unfamiliar with important contractual

documents and branch processes and, indeed, several witnesses accepted they

were unfamiliar with even the provisions of the SPMC and NTC.

Witness statements

Sources of information

521. The CPR at Practice Direction 32, paragraph 18.2 sets out the following requirements for

witness statements:

“18.2 A witness statement must indicate:

(1) which of the statements in it are made from the witness’s own knowledge and
which are matters of information or belief; and

(2) the source for any matters of information or belief.” [Emphasis added]

522. This paragraph was interpreted by Aitkens LJ in Consolidated Contractors

International Company SAL and Others v Munib Masri [2011] EWCA Civ 21, at §32:

499 POL-0029746 and POL-0029749

– 256 –
SCHEDULE: DEFENDANT’S EVIDENCE
Witness statements

“… Therefore, in my view the aim of that paragraph of the Practice Direction is to
ensure that a person against whom serious allegations are being made can identify the
source of any information or belief that is not within the deponent’s own knowledge
so that the facts deposed to on the basis of information or belief can be investigated.
That is only fair to the person against whom the evidence in the affidavit is directed.
Therefore, I would interpret the phrase “… must indicate … the source for any matters of
information or belief” as meaning that, save in exceptional cases, the deponent must
identify the source of the relevant information or belief. If the source is a person, that
person must, save in exceptional cases, be identified with sufficient certainty to enable
the person against whom the affidavit is directed to investigate the information or
belief in accordance with the rules of court or other relevant legal principles.”
[Emphasis added]

523. Contrary to the guidance set out above, the Defendant’s witness evidence is replete with

examples of statement in which the source of the witness’s information or belief is not

specified. One such example in relation to a specific factual matter can be found in the

witness evidence of Mr Williams at §48 {C2/9/9}, where he says:

“It is my belief that the Two Page Document was not prepared by Kim or my team and
so did not form part of the Offer of Appointment she produced, sent to his RNM, Mr
Jones, and which was issued to Mr Bates. My team knew that Subpostmasters were not
required to provide personal service and wording of the type in the Two Page
Document would not have been permitted. I can only speculate as to how or when it
might have been produced and passed to Mr Bates and became appended to the
signed GOA. It might perhaps be possible that the Two Page Document was drafted
as a set of possible conditions by Mr Jones, shared with my team and then the personal
service wording struck out in line with my instructions in the final version sent to Mr
Bates. Mr Jones may then have accidentally given the Two Page Document to Mr Bates
or the draft document perhaps sat on Mr Bates' file and was later scanned in together
with the GOA by accident and then disclosed to Mr Bates.” [Emphasis added]

524. In the above extract, Mr Williams states a belief, the basis of which is unspecified. He

then concedes that he “can only speculate” as to what might have happened, and he

proceeds to do so.

525. Further examples, in relation to broader issues which the Court is required to consider

and make findings on, are set out immediately below. As a preliminary point, it should

be noted that the Defendant’s Individual Defences were pleaded by reference to what

“would have happened”, based on the Defendant’s “practices and procedures at the relevant

– 257 –
SCHEDULE: DEFENDANT’S EVIDENCE
Witness statements

time and/or on inferences from contemporaneous documents and/or matters of which it is

aware.” 500 Following this:

525.1 The Claimants’ made a Part 18 Request asking for particulars as to the alleged

practices or procedures or contemporaneous documents relied upon. 501

525.2 The Defendant’s response, in a letter dated 20 July 2018, stated that “[t]his is an

archetypal example of what a request for further information should not be” and that

“[i]n any event, all relevant evidence will shortly be provided in the form of witness

statements.” 502

526. Properly identifying the source and basis of the facts set out in at witness statement also

performs the important function of providing the Court with information necessary to

its assessment of hearsay evidence under section 4 of the Civil Evidence Act 1995, which

identifies the considerations relevant to weighing of hearsay evidence, as follows:

(1) In estimating the weight (if any) to be given to hearsay evidence in civil
proceedings the court shall have regard to any circumstances from which any
inference can reasonably be drawn as to the reliability or otherwise of the evidence.

(2) Regard may be had, in particular, to the following –

(a) whether it would have been reasonable and practicable for the party by whom
the evidence was adduced to have produced the maker of the original statement as
a witness;…

(c) whether the evidence involves multiple hearsay;

(d) whether any person involved had any motive to conceal or misrepresent
matters;…

(f) whether the circumstances in which the evidence is adduced as hearsay are
such as to suggest an attempt to prevent proper evaluation of its weight.”

527. It is difficult for the Court to assess hearsay evidence without the required information.

500 See, e.g., Dar/IDef at §6 {B5.5/3/3}
501 {B4/7/1}
502 {B4/7.1/1}

– 258 –
SCHEDULE: DEFENDANT’S EVIDENCE
Witness statements

High-level evidence without reference to documents

528. The Lead Claimants’ witness statements make clear the matters which are based on their

own memory of events and those which are gleaned from documents in the disclosure

(with the latter being carefully cross-referenced and exhibited throughout).

529. This approach should be contrasted with the Defendant’s witness statements. The

Defendant has chosen to serve evidence from 14 witnesses dealing with both broad and

discrete matters relating to contracts and branch processes, covering a period of around

20 years. The Defendant’s witness evidence is pitched at such a high level of generality

that it is of limited or no utility, and there is no effort to provide the Claimants or the

Court with a route map so to navigate through the thousands of pages of disclosure

relating to the Common Issues.

530. Perhaps the best example of this approach is the manner in which training and support

is dealt with by Ms van den Bogerd. Ms van den Bogerd deals with the training and

support provided to Subpostmasters during the relevant period at §99 to 115 of her

witness statement. In particular, Ms van den Bogerd sets out at §104 {C2/1/31} what she

says are the “core features that have always been covered in initial training programmes”. The

basis of this information is not set out, nor is there reference to a single document so as

to substantiate her assertions. This is particularly troubling in light of:-

530.1 Ms van den Bogerd was asked in relation to this paragraph, whether she had

gone back to the documents at all. Her response at {Day8/127:13-16}:“Some of

them, yes, and some of them -- I have got a very good knowledge of this anyway from

myself being in the classroom and actually being involved in some of those training

documents over the years.”

530.2 Ms van den Bogerd was taken to a document at {F3/141/1} authored by Sue

Richardson. In that document, Ms Richardson states, for example, that in 2002

there are “no specific details of what was covered in classroom training” and she

“cannot find details of what was included” in on-site training. Notwithstanding

the fact that Ms van den Bogerd concedes that Ms Richardson was "nearer to

– 259 –
SCHEDULE: DEFENDANT’S EVIDENCE
Witness statements

training” than she was, 503 Ms van den Bogerd refused to accept that it was

difficult for her to say with confidence that detailed training in relation to

discrepancies, shortfalls and how to trace their true cause was provided at that

time. 504

530.3 Ms van den Bogerd was taken to several documents which set out specific

feedback on the inadequacies of training, but she claimed to not have been

aware of any general inadequacies in training in by 2013. 505 Ms van den

Bogerd was also shown a document from August 2014 which showed that

65.87% of new offices surveyed stated that they needed more training on

Horizon, and only 15.38% scored the training as good. 506 Ms van den Bogerd

claimed not to have seen these figures, and began her answer to the question

on whether she remembered that this was not very satisfactory by saying: “I

think -- my recollection, and I don't recall an awful lot, if I am honest…” 507

530.4 It was drawn to Ms van den Bogerd’s attention that a number of the

paragraphs in her witness statement on training mirrored those in the

Defendant’s response to the Second Sight Report back in 2015. 508 When Ms

van den Bogerd was asked what thought had been given to updating theses

passages, the response was: “I would have -- if I thought I had given incorrect

information previously I would have updated but I don't recollect that there has been

changes, or if there have I have missed them. This is my recollection of the information

that I pulled together then.” 509

530.5 After taking Ms van den Bogerd through various documents, the following

was put to her in cross-examination:

503 {Day8/128:7-9}
504 {Day8/129:25}
505 {Day8/159:3-10}
506 {F3/195/1}
507 {Day8/165:5}
508 NB – this document is undated, and this is the assumed date taken from the metadata available.
509 {Day8/179:19-23}

– 260 –
SCHEDULE: DEFENDANT’S EVIDENCE
Witness statements

“Q. Why don't you mention any of these difficulties in your witness
statement? Why have we had to find all these documents and put them to
you to correct the impression in your witness statement?

A. I don't ... I suppose the length of my witness statement, it is what
information went in there…” 510

530.6 When Ms van den Bogerd was asked to clarify by the Judge whether she was

under the impression that there was a restriction on the length of her witness

statement, Ms van den Bogerd confirmed it was her judgment call as to “what

information was relevant to go in there or not”. 511

Limited number of exhibits

531. Linked to the above deficiency in the Defendant’s witness statements are the minimal

number of documents which they exhibit. For example:

531.1 Mr Beal: Mr Beal is said to provide an “overview of Post Office’s contracts with

Subpostmasters” and the role of the NFSP. 512 Mr Beal exhibits no documents to

his statement. 513

531.2 Mr Breeden: Mr Breeden is said to give evidence on the selection and

appointment of Subpostmasters and the circumstances in which their contracts

may be suspended or terminated. 514 His witness statement exhibits no

documents, and references only two documents disclosed by the Defendant.

531.3 Ms Dickinson: Ms Dickinson is said to give evidence on fraud and dishonesty

in branches. 515 Her witness statement exhibits no documents. It contains only

510 {Day8/76:25}
511 {Day9/67:23}
512 See the Defendant’s Reading Note for its witness statements {C2/0/2}
513 He does footnote a website address in support of his contention that a Copy of the Grant
Agreement between the Defendant and the NFSP is available on the NFSP website - Footnote 2
{C2/2/10}. However, as has subsequently emerged, a screenshot of the NFSP website as at 12
October 2018 did not reference the Grant Agreement ({G/81/1}) (although as at today’s date, that
has changed).
514 See the Defendant’s Reading Note for its witness statements {C2/0/3}
515 See the Defendant’s Reading Note for its witness statements {C2/0/2}

– 261 –
SCHEDULE: DEFENDANT’S EVIDENCE
Oral evidence

two references: one to a website page setting out ‘The Fraud Triangle’ 516 and

another to a 2017 website article referencing the conviction of a former (non-

Claimant) Subpostmaster who was found to have staged a robbery. 517

531.4 Mr Shields: Mr Shields is said to provide evidence on Temporary

Subpostmasters. 518 His witness statement exhibits no documents, and only

gives one reference to a document in the trial bundle.

531.5 Ms van den Bogerd: On any analysis, Ms van den Bogerd’s witness statement

covers the most ground of any of the Defendant’s evidence. It is said to

provide a general overview of the Defendant’s business and also of

Subpostmasters and their branches, with the latter encompassing: operating a

branch, assistants, Horizon, training and support, causes of shortfalls, the

Defendant’s reliance on Subpostmasters and responsibility for shortfalls. 519

This document contains no exhibited documents. Instead, it references a total

of 14 documents, all of which are cited by reference to the website address

where they can be located.

531.6 Claimant-specific Defendant witnesses: Mr Trotter exhibits two documents to

his witness statement. Mr Longbottom and Mr Webb each exhibit one

document. Mr Carpenter and Ms Ridge exhibit no documents to their witness

statements. 520

Oral evidence

Examination-in-chief

532. On day two of the trial, a clear judicial indication was given as to how examination-

chief-should be approached: “In terms of any supplementary evidence-in-chief, Mr Green, I

516 {G/88/1}
517 https://www.bbc.co.uk/news/uk-scotland-glasgow-west-42051620
518 See the Defendant’s Reading Note for its witness statements {C2/0/4}
519 See the Defendant’s Reading Note for its witness statements {C2/0/2}
520 Although Ms Ridge does make reference to being shown Mr Trotter’s exhibit (interview
checklist) at §11 of her witness statement {C2/12/2}.

– 262 –
SCHEDULE: DEFENDANT’S EVIDENCE
Oral evidence

think it is a good idea, if it is just to correct typo-type corrections and clarifications, probably just

get them put in a document. It helps focus the mind on what they are, it means Mr Cavender has

advance notice and it is easier for the witness.” 521

533. In accordance with this direction, subsequent examination-in-chief of the Lead

Claimants was limited to minor typo clarifications. It was understood that anything

beyond such minor clarifications should be recorded in a new statement.

534. Contrary to the Judge’s indication, the Defendant elicited fundamental changes to the

witness evidence while examining-in-chief:-

534.1 Mr Trotter: Under the guise of providing a ‘clarification’ to §8 of Mr Trotter’s

witness statement as to what he would have said to Ms Dar at her first

interview, Leading Counsel for the Defendant took Mr Trotter to the transcript

of that interview (which emerged after the date of the witness statement) to

elicit that a vital component of what was allegedly said, and missing from the

first interview transcript, was in fact said in the second interview. 522 The

‘clarification’ was made in examination-in-chief even though Mr Trotter thinks

that he may have realised his mistake “a couple of months ago”. 523

534.2 Mr Haworth: §10.2 of Mr Haworth’s witness statement refers to “the interview

checklist” which it is said “is referenced in more detail in the witness statements of

Elaine Ridge and Brian Trotter”. 524 The clear impression given is that Mr

Haworth went through the same standard checklist as Ms Ridge and Mr

Trotter. By way of ‘clarification’ of this paragraph, it was elicited in

521 {Day2/184:18-23}
522 {Day11/135:15} – {Day11/137:11}. NB – the Defendant’s Leading Counsel began examination-in-
chief by summarising §8 of Mr Trotter’s statement as setting out “a format of the structure that you
normally ran through in interviews”; the actual paragraph begins by saying “I always followed a
structured format for interviews. I ran through an Interview Checklist…” [Emphasis added] {C2/13/2}
523 {Day11/152:13-17}
524 {C2/14/2}

– 263 –
SCHEDULE: DEFENDANT’S EVIDENCE
Oral evidence

examination-in-chief that Mr Haworth had a separate checklist which was not

the same as Mr Trotter’s. 525

534.3 Mr Shields: ‘Clarifications’ were made in respect of the content of four

paragraphs of Mr Shields’ witness statement. This was notwithstanding the

fact that Mr Shields realised that it was necessary to make those changes

around seven days before he gave his oral evidence. 526

Misleading impressions

535. Throughout the course of the Defendant’s evidence, several misleading impressions

were conveyed to the Court which include:-

535.1 Ms van den Bogerd evidence on training and support: This is addressed above

at §530.

535.2 Ms van den Bogerd ‘cold’ on the evidence pertaining to Mr Abdulla: Ms van

den Bogerd was shown a spreadsheet in respect of TCs issued to Mr

Abdulla. 527 After various questions on its substance, and the paragraphs of Mr

Abdulla’s witness statement relating to the same, Ms van den Bogerd stated

that

“I have just seen this cold, so I don't know what is behind it so I can't really comment

further than that. I would need to understand what was actually dispatched.” 528 It

transpired that Ms van den Bogerd had signed and filed a witness statement

four days previously dealing with these very matters. 529 Ms van den Bogerd

accepts that stating she was coming to this document “cold” was a mistake. 530

535.3 Ms van den Bogerd on the cause of TCs: Ms van den Bogerd gave evidence

that TCs arise because of an error in the branch by Subpostmasters or their

525 {Day11/10:19}
526 {Day9/70:24} – {Day9/171:16}
527 {E4/92/1}
528 {Day8/52:3-10}
529 {Day8/60:4-12}
530 {Day8/110:1-3}

– 264 –
SCHEDULE: DEFENDANT’S EVIDENCE
Oral evidence

assistants. 531 Ms van den Bogerd was taken to a spreadsheet which showed

that a sizeable proportion of issued TCs were not caused by a matter that

occurred in the branch. 532 Notwithstanding this evidence, when Ms van den

Bogerd was asked in re-examination to state in simple terms what was the

purpose of a TC, she replied: “To correct something that has been transacted

incorrectly in the branch.” 533

535.4 Mr Beal and the independence of the NFSP: Mr Beal’s witness statement

conveys the impression that the NFSP is an independent organisation which

was “broadly supportive of the NT contracts and the new NT contracts” 534 and

which is consulted by the Defendant “on all proposed contractual changes”. 535 Mr

Beal references the 15-year grant agreement by which the Defendant funds the

NFSP, but does not exhibit the same, 536 and at no point does he address the

specific provisions of that grant which include: (i) a prohibition on engaging in

any activities or behaviours the effect of which may be materially detrimental

to the Defendant; 537 (ii) a requirement that the NFSP is not to take any action or

engage in any commercial activities which brings, or is likely to bring, the

Defendant’s name or reputation in disrepute; 538 (iii) clawback of funding in the

event of breach of the agreement; 539 (iv) a self-reporting obligation in respect of

531 {Day7/179:12-18}
532 {G/29/1} – The number of TCs issued that were not caused by the branch in 2013/14 was 19,044.
On the Defendant’s own figures, this accounted for 20% of the total number of TCs issued.
533 {Day9/51:22}
534 §36 {C2/2/7}
535 §41 {C2/2/9}
536 He does footnote a website address in support of his contention that a Copy of the Grant
Agreement between the Defendant and the NFSP is available on the NFSP website - Footnote 2
{C2/2/10}. However, as has subsequently emerged, a screenshot of the NFSP website as at 12
October 2018 did not reference the Grant Agreement ({G/81/1}) (although as at today’s date, that
has changed).
537 Clause 5.3.6 {G/72/10}
538 Clause 5.7.2 {G/72/11}
539 Clause 17.2 {G/72/17}

– 265 –
SCHEDULE: DEFENDANT’S EVIDENCE
Oral evidence

a clawback event; 540 and (v) a requirement to keep the contents of the

agreement confidential. 541

535.5 Mr Trotter and his checklist: As set out above at §534.1, the clear impression

conveyed by Mr Trotter’s witness statement, absent the ‘clarification’ provided

in examination-in-chief, was that he would have gone through all items on his

checklist in the first interview with Mrs Dar, as he always went through his

checklist in the same way for interviews. When asked in cross-examination

“Did you not want to correct the impression in your witness statement that you had

gone through [the checklist] because you always did?” the answer was a blunt

“No.” 542

Knowledge of contracts and processes

536. It became apparent during the course of oral evidence that many of the Defendant’s

witnesses, in a trial largely concerning the contractual relationship between

Subpostmasters and the Defendant, were unfamiliar with the relevant contracts and / or

branch processes. For example:

536.1 Mr Shields: Mr Shields was a Temporary Subpostmaster Advisor, and is now a

Contracts Advisor. He confirmed, however, he was unfamiliar with SPMCs, 543

and had never ever seen a Modified SPMC. 544 Further, although he claims to

be familiar with the NTC Local, as to the relevant provisions on suspension, he

caveats his response with “I’m sure I probably have seen this at some point, yes.” 545

He then confirmed that he never consulted this document in order to check the

position in his role as Temporary Subpostmaster Advisor, 546 and he was not

540 Clause 17.3 {G/72/17}
541 Clause 23.2 {G/72/20}
542 {Day11/152:18-21}
543 {Day9/176:23}
544 {Day9/179:15}
545 {Day9/180:11}
546 {Day9/180:21}

– 266 –
SCHEDULE: DEFENDANT’S EVIDENCE
Oral evidence

familiar with an important section on the provision of access contained

therein. 547

536.2 Mr Webb: Mr Webb conducts transfer audits and in his witness statement he

claims, at §14, that he would “briefly explain” the contractual documentation

provided to incoming Subpostmasters. He confirmed in his oral evidence,

however, that he has never read the contract subsisting at the relevant time as

it “is not really part of our job”. 548

536.3 Mr Longbottom: Mr Longbottom is a Training and Audit Advisor. He

confirmed in oral evidence: “I have never read the contract, I might have read

extracts from it, but I wouldn’t want to give a postmaster what could be termed advice

on something that I wasn’t completely conversant with.” 549

536.4 Ms Dickinson: Ms Dickinson is the Defendant’s key witness on supposed

fraud and dishonesty in branches. She accepted in oral evidence, however,

that she was unfamiliar with several fundamental and basic matters revolving

around the realities of working in a branch and the manner in which accounts

are submitted. Despite receiving the same basic training as that provided to

Subpostmasters, 550 she did not know, for example:

a. whether there was a dispute button on Horizon; 551

b. that settling centrally is something that, subject to raising a dispute, is

treated by the Defendant as a debt that has been accepted; 552

c. that workarounds have been suggested by the Helpline to ensure that

accounts balance in spite of an apparent discrepancy; or 553

547 {Day9/183:10}
548 {Day10/171:21}
549 {Day10/151:18}
550 {Day9/165:2}
551 {Day9/152:9}
552 {Day9/155:7}
553 {Day9/156:23}

– 267 –
SCHEDULE: DEFENDANT’S EVIDENCE
Oral evidence

d. that a Detica Report investigation {G/19/3} which found that there is

“widespread non-conformance to Post Office policy and processes by branches with

an institutionalised acceptance that errors, workarounds and non-conformance

exists.” 554

Evasive answers

537. There are several examples of the Defendant’s witnesses providing evasive answers to

direct questions, which often needed to be repeated by either the Claimants’ counsel or

the Judge. It is not necessary to list each such instance, but notable examples include:

537.1 Mr Trotter on whether he ‘encouraged’ Mrs Dar to reapply: Mr Trotter initially

disagreed with the proposition that he ‘encouraged’ Mrs Dar to reapply for the

position of Subpostmaster with a revised Business Plan, suggesting this was “a

strong word”. 555 Mr Trotter used the word “suggested” instead, 556 but when

asked whether “suggested” was a fair description of what happened, he

answered: “It may have been, yes.” 557 Following 17 further pages of transcript,

Mr Trotter eventually accepts that he “encouraged” Mrs Dar to reapply. 558

537.2 Ms van den Bogerd on the difference between ‘scripts’ and ‘articles’: Despite

being taken to evidence which references the use of ‘scripts’ by the Helpline,

Ms van den Bogerd maintained the unreal distinction between scripts and

articles. When asked by the Judge whether reading out the information in an

article is any different to reading a script, Ms van den Bogerd replied: “So the

article would -- I suppose the article would have more information in. A script -- for

me if I hear a script it means you stick to certain words. That isn't quite what happens

on the Helpline. So there might be -- if you ask a certain question there might be just

554 {Day9/158:18}
555 {Day11/143:1}
556 {Day11/142:19}
557 {Day11/143:23}
558 {Day11/160:24-25}

– 268 –
SCHEDULE: DEFENDANT’S EVIDENCE
Reality on the ground in comparison to legal edifice

an absolute answer, but as that conversation expands there might be more information

that will be given, so that isn't a script then.” 559

537.3 Mr Beal on ‘postal instructions’: Mr Beal was referred to letters asking Mrs

Stubbs to make payment in respect of alleged shortfalls. He was asked

whether it constituted a ‘postal instruction’. He initially answered: “Well, I

think it is something she has to comply with because it is a consequence of action she's

-- you know a debt that has been caused as a result of her running her post office. I

don't know how, obviously. I can't tell that from this document. So it is -- it is an

instruction to her in the context of her contractual liability.” 560 Mr Beal was then

taken to further similar letters and asked whether these were postal

instructions, which led to the following exchange: 561

“A. It is a further request for payment.

MR JUSTICE FRASER: Is it a postal instruction or not?

A. I would say it was -- I'm sorry, I am not trying to avoid the answer. I am
answering the question. Let me, if I may, explain. It is an instruction to her to
make the payment and it has arisen as a result of the activity that she
undertook in her branch that caused the various debts to occur, and
therefore in the context of -- it's in the context of her contract. I don't know
whether you would call that a postal instruction or not. So I don't know.”

Reality on the ground in comparison to legal edifice

538. What also clearly emerged during the course of the Defendant’s oral evidence is that the

reality of operations on the ground, and the expectations of the Defendant itself

(through its employees involved in all facets of its operations), exposes the unreality of

the legal edifice upon which the Defendant is advancing its case. Examples of this are

set out below.

559 {Day8/173:21}
560 {Day6/69:23}
561 Beginning at {Day6/71:9}

– 269 –
SCHEDULE: DEFENDANT’S EVIDENCE
Reality on the ground in comparison to legal edifice

Cause of losses and peculiarly within the knowledge

539. The Defendant’s pleaded case on this point did not survive scrutiny (as originally

pleaded or with the amendment which the Defendant purported to effect by the

voluntary provision of further information in late September 2018, in advance of the

hearing of the Defendant’s strike-out application).

540. GDef §93 to 94 {B3/2/42-43} was the subject of much discussion in the months leading up

to the Common Issues Trial. It states that “losses do not arise in the ordinary course of things

without fault or error on the part of Subpostmasters or their Assistants” and that “the truth of

the matter lies peculiarly within the knowledge of Subpostmasters as the persons with

responsibility for branch operations and the conduct of transactions in branches”. This is a key

tenet of the Defendant’s case on the interpretation of Section 12, Clause 12 of the SPMC

and on whom the burden of proof should lie in proving the cause of losses.

541. There can be no doubt now that this aspect of the Defendant’s pleading is without merit.

As referenced above at §535.3, a spreadsheet disclosed by the Defendant shows that a

sizeable proportion of TCs issued by the Defendant arose by virtue of matters that were

not caused by the branch. 562 On the Defendant’s own figures, such TCs accounted for

20% of the total number of TCs issued.

542. Further, Ms van den Bogerd accepted in cross-examination the possibility of various

other causes of losses which would: (i) have nothing to do with an error by a

Subpostmaster or their Assistant; and (ii) be outside the knowledge of Subpostmasters:

“Q. And there is clearly room for human error in the production of TCs?
A. Yes.
Q. That is one of a number of reasons why TCs or discrepancies may occur in accounts,
in branch accounts, isn't it?
A. Yes, it is.
Q. And those include client data integrity issues?
A. Yes.
Q. If there is a Horizon error that affects branch accounts that would be a source?
A. Yes.

562 {G/29/1} – The number of TCs issued that were not caused by the branch in 2013/14 was 19,044.
On the Defendant’s own figures, this accounted for 20% of the total number of TCs issued.

– 270 –
SCHEDULE: DEFENDANT’S EVIDENCE
Reality on the ground in comparison to legal edifice

Q. And reconciliation errors insofar as they are different from any error that we have
already covered in relation to issuing a TC? Maybe that is the same thing.
A. It's the same thing.” 563

543. The disclosure of the Payments / Mismatch document {G/8/1} further underscores the

very real possibility that losses are capable of arising without fault or knowledge of the

Subpostmaster. Indeed, such losses would be peculiarly within the mind of the

Defendant.

The exercise of discretion and the role of the NFSP

544. The Defendant has drawn a distinction between cases in which it exercises the power to

change the contract and its operational instructions with the agreement of the NFSP and

without the agreement of the NFSP. The Defendant avers that it is only in the latter

scenario that the contract contains an implied term that it will not exercise such power

dishonestly or in an arbitrary, capricious or irrational manner. 564 There is no reality in

drawing such a distinction, and this was underscored by the following exchange with

Mr Beal which took place after he was shown an example of this pleading: 565

“Q. I am just -- you have pointed out, let's be very precise here, you have pointed out
that some changes are made with their agreement?
A. Yes.
Q. And some changes are made without their agreement?
A. Yes, that is correct.
Q. And I am asking you specifically -- in case I have not been clear, I am asking you
specifically: changes made to a contract or operational procedures without the NFSP's
agreement, you wouldn't expect to make those changes dishonestly, would you?
A. Without their agreement? That is what the clause is -- that is what the admitted
liability is.
Q. So you agree with that?
A. Yes, I agree.
Q. What about with their agreement?
A. I would not expect to make changes of any of the nature you described, dishonest,
capricious, et cetera.
Q. The distinction is irrelevant.
A. I think the distinction is technical, would be my view.
Q. Yes, it is not realistic about what people expect, is it?

563 {Day8/38:4-19}
564 See, e.g. Bates/IDef at §65(2) {B5.1/3/38}
565 {Day7/56:10}

– 271 –
SCHEDULE: DEFENDANT’S EVIDENCE
Reality on the ground in comparison to legal edifice

A. It is not realistic about what we do, no.
Q. But my question is quite specific --
A. About what people expect? No, it is not realistic.
Q. Post Office wouldn't expect it?
A. I agree.
Q. And the subpostmasters would be expect it? You are nodding?
A. I agree, yes.”

Having documents explained on branch transfer day

545. A common thread in the Individual Defences is in doubt as to the meaning of terms

such as “the rules contained in the book of rules” and “postal instructions issued to me”, then

such documents could be explained on branch transfer day by the transfer auditor. As

will be expanded upon further below, this is a fallacy, with the Defendant’s witnesses

accepting that by this stage: (i) the Subpostmaster is already committed and has no

choice but to sign the documents put before him; and (ii) that the transfer auditor is

there simply to obtain signatures rather than substantively explain documents. 566

546. Specifically, Sabir/Idef at §25(1) {B5.3/3/11} pleads that: “Had [Mr Sabir] been in any real

doubt about these matters, he could and would have asked Mr Webb.” Mr Webb accepted that

the extent of his ability to explain the Acknowledgment of Appointment was to identify

the document and say “this is your acknowledgment of appointment, something like that” 567.

and that if he was asked “what are postal instructions” he would have referred the matter

to someone else as it was not obvious to him what that meant.568 This is consistent with

Mr Webb’s further evidence that he has not read the contract as it “is not really part of our

job”. 569

Helpline and the use of scripts

547. A document disclosed by the Defendant appears to suggest that, consistent with the

Claimants’ Generic and Individual cases, the Helpline frequently provided script-based

566 See, for example, the evidence of Mr Webb at {Day10/170:16}
567 {Day10/169:15-19}
568 {Day10/170:24-25}
569 {Day10/171:21}

– 272 –
SCHEDULE: DEFENDANT’S EVIDENCE
Reality on the ground in comparison to legal edifice

responses to Subpostmasters. 570 It was accepted by Mr Beal that scripts were provided

to the Helpline “in order for them to be able to answer the questions that were being asked of

them. That would be in order to make sure the answers they were providing were consistent.” 571

548. This dispels the line taken in GDef §61(1) and, in particular, §62(2), which states that

“Helpline operators do not give script-based responses.” 572

570 See the email at {G/93/4} which references “waiting for new scripts to read to people in her situation”.
571 See exchange at {Day6/122:6-18}
572 {B3/2/28}. This position was also strongly adopted in the Letter of Response at 5.47.2 {H/2/30}
and, indeed, even before then, in the Defendant’s response to the Second Sight Report at §9.8
{G/28/28}

– 273 –