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Wednesday, November 7, 2018

Day 1 write-up: Bates and others v Post Office finally begins

L-R Nigel  Knight (husband of Sue Knight), Jo Hamilton (claimant - criminal conviction), Sue Knight (claimant - prosecuted for false accounting), Tracey Merritt (claimant - accused of theft), Jasvinder Barang (claimant - former Subpostmaster), Scott Darlington (claimant - criminal conviction) , Karen Wilson (widow of Julian Wilson - former Subpostmaster)
It's very difficult to try to even understand, let alone explain what sort of day this must have been for the former Subpostmasters who turned up to court today. Some are pictured above. I reckon twelve made it in total.

Nigel and Sue (above) left their home at half past midnight, driving from the Lizard in Cornwall to Basingstoke, arriving at 6am, having breakfast and then getting the train into London so they could be in court for the start of the case. Karen Wilson (also above) came wearing her late husband's scarf under her jacket, with his ashes in her bag. He was one of the JFSA's leading lights in the early days. He succumbed to cancer two years ago.

"I don't want him to be a victim." Karen said to me today. "I don't want people to think the Post Office killed him. But what they did contributed to his death. He should have been enjoying his retirement..."

This court case, for many hundreds of people, is a Big Deal. To the legal teams who are fighting it out - it's just business. And it is my job to report the business of this trial.

This is the first of at least two (the second confirmed trial - the Horizon Issues trial will take place in March next year).

It is called the Common Issues trial, and it is based on 23 common issues identified by the 560-odd claimants which are pertinent to their situations. (I must get an agreed final total of the number of claimants - the judge recently said "around 600", Freeths gave out 561 as their final number a while back, and today the Post Office QC said it was 557).

I have a list of those Common Issues which I will upload as soon as I can.

This morning was given over to the JFSA's dashing QC Patrick Green, who is best known for his unobtrusive role in the court case which led to a ruling which ensured Brexit would get a final parliamentary vote. He held forth for the entire 2.5 hour session, punctuated by interjections from the judge (the Honourable Mr Justice Fraser) and a brief break to aid the fingers of the stenographers.

Mr Green's theme appeared to be that the relationship between the Post Office and individual Subpostmaster had such a massive imbalance of power that the Subpostmaster (SPMR) contract was unfair in law, partly because of the way it was written, partly because so few SPMRs understood its import (or indeed ever saw it) and partly because of the way it was implemented.

He was seeking to make the point that the imbalance of power didn't just exist in terms of the contract, but in terms of access to information, access to the Horizon IT accounting system and on a practical level in terms of what the Post Office could do to an SPMR set against what the SPMR could ever do to an SPMR.

His speech was particularly interesting when it brought to light two pieces of evidence, both internal Post Office memos. These had only come to light as a result of the disclosure rules which govern civil trials. The first memo was written by a Post Office manager who visited one of the lead claimants, Pam Stubbs, whilst she was having terrible, inexplicable trouble with her Horizon IT system at her Barkham Post Office in Berkshire. Pam was being held liable for losses which ran into the thousands. Losses which had only started when she moved into a temporary cabin in her Post Office's car park whilst her branch was being refurbished.

The Post Office manager notes Mrs Stubbs' problems with Horizon, mentioning she had to reboot it 25 times one morning. He makes it absolutely clear in the memo that Horizon was the source of the problems she was having. Yet she was never told this, and she was held liable for the discrepancies which came up on her Horizon screen.

This, said Patrick Green, directly contradicts the Post Office's assertion (made in its generic defence to the claim) that no claimant had suffered problems in their branch as a result of Horizon.

The second piece of evidence was a document about a system-wide Horizon error in 2012 which was causing losses in branches. This was discussed on internal email by a group of Post Office employees. The author of the email provides three option for dealing with the error, which included getting Fujitsu to go into individual Subpostmaster branches and changing the accounts without their knowledge. It was discussed as a matter of fact, not conjecture (all three options were given impact and risk assessments) and the email makes it quite plain the Post Office had the power to pretty much do what it liked to individual branch accounts, should it choose to do so.

The afternoon session was given over to the extremely capable David Cavender QC who took us through his skeleton argument from 2pm to 4.30pm - again punctuated by queries from the judge and a short break for the stenographers' fingers.

The Post Office's point appears to be that it has a contractual obligation under the terms of the Subpostmasters Contract (SPMC) and it has always stuck to that obligation. To the letter. Inventing implied terms of obligation and responsibility to a contract, just because the claimants fancy it to have some, is, at best, fanciful. Postmasters are agents, the Post Office is the principal, and both go into a business relationship with their eyes open - the basis of which is the SPMC.

Very early on he made the point: "What the claimants are trying to do is water down the agency/principle relationship (almost to vanishing point) to say it is basically marginal."

There were some interesting parts to his argument. One was that the JFSA are essentially trying to rewrite the responsibilities set out in the contract to an extent that would make the proper functioning of the Post Office business untenable. According to Section 12.12 of the SPMC:

"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."

Mr Cavender said it has to be the case that the SPMR is responsible for all the Post Office's cash and stock in their branches - noting: “If it were right that Post Office had to prove how losses of cash or stock had occurred in a branch in order to recover in respect of the resulting shortfalls, this would have a very serious impact on Post Office and its ability to control its network throughout the UK.”

ie if something went missing in a branch and the SPMR had the right to go "not my problem, guv" - the whole business model would fall apart.

Another argument was the subject of a considerable amount of debate with the judge. Mr Cavender said that at no stage would the Post Office ever hold an SPMR responsible for a discrepancy caused by the Horizon IT system. He said S12.12 of the SPMR contract is only interested in the SPMRs' "own negligence, carelessness or error". A Horizon error was not an SPMR error, so the SPMR would never be pursued for a Horizon error under S12.12.

Are you with me so far? Good - because here is the kicker.

Mr Cavender told the judge that based on Horizon's general reliability, if Horizon reported a branch dispcrepancy, it was perfectly reasonable to infer that the accounting discrepancy existed, because of Horizon's general reliability.

Essentially any Horizon discrepancy became fact by Horizon's reporting of it, based on its general reliability.

Not only did it become fact, it became the SPMR's problem to deal with, because the way in which it was presented to the SPMR, who was forced to accept it as a debt to the Post Office. It was then down to the SPMR to prove it wasn't their error or negligence which caused it.

Unsurprisingly the judge had questions. He wanted to get a hypothetical principle understood, which was that if "Horizon says x, x being a shortfall, then there is a shortfall."

Mr Cavender concurred. This hung in the air for a bit. The judge asked another way round it from a contractual perspective:

"your ‘gateway’ [to creating a burden of proof on the SPMR to identify the source of the loss] is a step that’s reached after you reach an inference that Horizon is reliable."

Again Mr Cavender concurred. There was some discussion about the point at which and how Horizon produces "evidence" that there is no computer error and the fact of a discrepancy.

From my notes:

Judge: "If what you've explained is correct - are you saying in order to decide if something goes through the gateway stage [to make it to 12.12 on the contract], the burden is on the Post Office or the SPMR?”

After consulting his colleagues on the benches behind him Mr Cavender says the burden is on the Post Office.

The judge then invites Mr Cavender to read transcript of what just happened in court carefully later as he’s not sure it makes a lot of sense.

Mr Cavender: "If my Lord reads my opening submission…."
Judge Fraser: "There is no need to use the conditional. I’ve read it twice. And I will read it again."

The argument then moved on to discussions as to whether the contract between SPMRs and the Post Office was "relational" or just a standard business contract. This is important as a relational contract is something "whose effect is based upon a relationship of trust between the parties to which it pertains. The explicit terms of the contract are just an outline as there are implicit terms and understandings which determine the behaviour of the parties."

The Post Office seems to be very keen to make sure no one thinks the SPMC is a relational contract and that even if it is, a relational contract has very narrow terms. There was some push back from the judge on this.

He felt a relational contract might imply general terms of good faith. This led to a discussion during which both Mr Cavender and the judge entered a lengthy discussion based on what the Yam Seng ruling about relational contracts first said, and then meant.

Mr Cavender the returned to his theme about the JFSA's lack of a decent case noting:

“the Claimants' case is all at sea as to what they are alleging at any given time.” and “This is an extraordinary case... in that we don’t know what the other side is saying."

and then it became a discussion of logistics, the upshot of which the cross-examinations of Lead Claimants promises to be lively. We have finally been told who all the Lead Claimants are, by the way. They are: Alan Bates, Pamela Stubbs, Mohammad Sabir, Naushad Abdulla, Elizabeth Stockdale and Louise Dar.

This is Alan Bates, founder of the Justice for Subpostmasters Alliance:



He will be standing up in court at 10.30am tomorrow.

Just by-the-by, before proceedings started today I saw a man on his own who clearly had something to do with the case, but who didn't appear to know anybody. I approached him at lunchtime and established he was a claimant Subpostmaster.

After the day was over I introduced myself properly and asked if I could take his details.

He didn't want his real name published, so let's call him Parvinder. He seemed like a quiet, measured and intelligent man. He's also got quite a strong South East London accent, as befits a former Subpostmaster from that part of the world.

This is Parvinder's tale from memory, as he tells it. I have no documentation to back up what he says. I took it at face value.

Parvinder ran a successful Post Office for 10 years from 1990. His family helped out and he trusted them. In 2001, after the roll-out of Horizon, Parvinder's Post Office was found to have a £27,700 discrepancy. He was suspended and investigated. He agreed he would pay the Post Office £27,700. He borrowed the money from his family and handed over a cheque.

For some reason, the Post Office decided to prosecute him for theft. On computer evidence and legal advice, he pleaded guilty and was sent to prison. He became a shell of the man he was. He had to wear a tag after he left prison, which stopped him from leaving the house before a certain time - yet he was used to getting up to be at his Post Office to deal with the papers at 5am.

His family picked up the running of the branch, and he helped out. In 2005 he became a cab driver for Addison Lee. Nowadays he does voluntary and social work. Parvinder's career started as a bank teller at Nat West. He handled money all his life. He worked and saved to get himself into a position to own his own Post Office. He knew nothing about the JFSA or the fact other Subpostmasters appeared to be having similar problems to him. He put it behind him until he saw the BBC's Panorama programme on the subject in 2015.

After watching it, he wrote to Paula Vennells, the Chief Executive of the Post Office, saying that what happened to him must have been as a result of a Horizon error. He could see no other reason for it. He sent her all the evidence he had, but did not demand she re-open or review his case. He only asked for an apology for what the Post Office put him through.

It didn't happen.

Parvinder had missed the mediation scheme and the parliamentary debates and all the hoo-ha about this story until a Subpostmaster friend of his mentioned there was a class action starting against the Post Office. He signed up.

I watched him in court today, evidently reliving certain memories which had been buried for while.

Afterwards I asked him if he felt pressured into pleading guilty to theft in order to reduce his likely sentence. He said he did. I asked him if he would plead guilty again, knowing what he does now. He said he wouldn't. I asked him if he felt the legal profession was negliegent or culpable as the Post Office might have been in terms of how he was treated and what happened to him. He nodded. These m'lud, might be leading questions, but they are the conclusions I've heard many other claimant Subpostmasters come to, unprompted, many times before.

Parvinder's coming back tomorrow. He seems like a good bloke. I have no idea what all this means to him. No idea.

Day 1 - live tweets

Here are my tweets from Day 1 of the Bates v Post Office common issues trial, tidied up for legibility and formatting. Please do follow me on twitter if you can @nickwallis. Read the originals here.

SPMC = Subpostmasters' Contract
SPMR = Subpostmaster
PO = Post Office
QC = Queen's Counsel (ie a pretty decent and/or experienced barrister)
TC = Transaction Correction

#postofficetrial - Patrick Green QC opens for the claimants. Judge interrupts to note there has been an application from PA to get hold of the opening arguments. Judge suggests it should not be a problem for the media to see them. Nods in agreement from claimants and defence.

If this is all new to you, please have a look at www.postofficetrial.com - backgrounder to a case in which 560-odd SPMRs are suing the @PostOffice for a lot of money.

Green talking around the procedures for raising and dealing with an accounting discrepancy on the Horizon system and the changes that were brought in in the 00s.
“POs internal document about TCs notes the SPMR has no choice but to accept a TC at the end of a branch trading period.”

“The TC shows up on the screen at the end of a trading period and they can either defer dealing with it, pay it in in cash, or settle centrally… there is NO option to dispute a discrepancy on the Horizon system as the defendant admits in its defence."

Green says the SPMR might then find themselves signing off an account with which they disagree.

Green says this appears to be a unique system - that SPMRs effectively sign off a disputed account in order to keep trading which then creates a debt they are liable for. #postofficetrial

This is all a little arcane, but it goes to the heart of the problems many SPMRs had with POL. To keep trading they felt they had to settle or accept a debt (sometimes tens of thousands of pounds) in order to keep trading.

From what I have read so far, the Post Office will likely disagree with this characterisation of the way the system should work.

The basic point that Green seems making is that the Post Office is control of the Horizon IT accounting system, including the terminals in the branch. Not the SPMR. And that the limited information the SPMR gets about accounting and cashflow is narrower to the PO's.

Green has started referring in court to the story of Pam Stubbs, a Berkshire SPMR who I filmed for BBC Inside Out South in 2014 (?). Pam had huge sudden accounting discrepancies when she moved her PO (and Horizon) in to a temp cabin whilst her branch was being renovated.

Pam had a discrepancy of more than £5000. She called the helpline who told her to check again. Pam wanted to put it into dispute. Pam tried to find the source of her discrepancy through her own paperwork and terminal. She couldn’t. The PO told her to pay it.

Green is pointing out that mechanically - even whilst raising a dispute about a sum with the helpline - mechanically the SPMR has to agree a TC on their Horizon terminal, which then creates a debt.
Pam stubbs then receives a letter from the PO demanding the repayment of the “outstanding debt”, despite the fact she is disputing it.

Letter also told Pam “since you are contractually obliged to make good any losses” (omitting contractual reference to error in the first few circs), she must pay up...

Pam requested direct access to Fujitsu (who run Horizon). PO said they would contact them themselves. PO came back saying Fujitsu told them there was no problem with Horizon.

PS’s witness statement refers to another apparent shortfall of £26K which happened when the PO’s cash centre failed to record a large cash remittance from PS’s branch….

he draws the parallel between that and the mysterious earlier problem. If the PO could easily miss £26K, why wasn’t it likely the £5K discrepancy was their problem. Not hers, especially when they couldn’t tell her how it was her debt.

Green is explaining the devil’s bind so many SPMRs have explained in the past.
Judge: “That’s what this case is about.”
Green “It is my lord”
Judge: “I had grasped this point some months ago.”
Green: “I’m grateful."

Green: “The manner in which many SPMRs was informed about such “losses” was not consistent or particularly clear… some received no notice of the liability clause. PS says she only thought she would be liable if it was her fault. She ws not provided with a copy of the standard...
Subpostmasters’ Contract (SPMC), after her husband died.”

Now discussing clause 12:12 in the SPMC "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."

Green pointing out this clause was written before the rollout of Horizon which “completely changed everyone’s way of working” yet the contractual relationship remained the same.

Just had a 10 minute break to help the stenographers' hands recover.

We are back to Pam Stubbs case. Green reveals an internal email only uncovered through disclosure in this trial in which a PO manager states baldly, having visited the branch that the problem she is having is definitely a Horizon problem. Green says PO denies Horizon has caused..

... a problem for any SPMR claimant. He now points out this document shows a) how hard it is for SPMRs to prove any problem with Horizon and b) that a PO manager is stating quite clearly Horizon caused the problems in her branch.

Green now talking about another Horizon system-wide error referred to a PO internal memo dated 17 Oct 2012 in which branches could be put out of pocket by the error. Worried this error could cause loss of confidence in branch.

(And there ended the morning session)

Back for the afternoon at court 26 Rolls Bldgs for High Court

Post Office QC dives in with main point:
"What the claimaints are trying to do is water down the agency principle relationship almost to vanishing point to say it is basically marginal."

Interesting line from PO QC - "the Lead Claimants are not test cases…. We could have had 10 notional cases. You must be very careful of what regard you have of their experience being relative to others - because they’re not." That is a Bold Claim.

Might be true in law. But their experience, in my experience of hearing other experiences is that they do sound similar to other experiences. #postofficetrial

PO QC makes it quite clear that PO would never go after losses caused by Horizon under the terms of S12.12 of the contract (see previous in thread). Because a Horizon fault, is de facto not an SPMR error.

He also appears to be saying the Post Office is entitled to show a loss to an SPMR on Horizon as a loss because it can infer there is no Horizon fault due its general reliability.
Judge points out that that means if Horizon says x, x being a shortfall, then there is a shortfall. 

This is accepted by the PO QC.

So it is now accepted by the PO that it is reasonable for Horizon to throw up a loss, and because it is generally reliable, it becomes a real loss, which as we found out this morning has to be accepted by the SPMR even if they put it in dispute.

And that the burden of proof on discovering the source of the loss, under terms of 12.12 of the contract is on the SPMR.

Judge really pushing back on this: "your ‘gateway’ [to creating a burden of proof on the SPMR to identify the source of the loss] is a step that’s reached after you reach an inference that Horizon is reliable."

Judge: "If what you've explained is correct - are you saying in order to decide if something goes through the gateway stage [to make it to 12.12 on the contract], the burden is on the PO or the SPMR?” 

QC says it’s on the PO. 

Judge invites QC to read transcript of what just happened in court carefully later as he’s not sure it makes a lot of sense.
QC says if my Lord reads my opening submission….
Judge interrupts to say no need to use the conditional. I’ve read it twice. And I will read it again.
They move on.

Interestingly the judge has the capacity in this court to pause the proceedings and go back over the transcript of the last few minutes to refer to precisely what was said in court on his screen. Whilst having the discussion about the transcript transcribed.

We’re now talking about the implied terms of the SPMC. PO QC notes that just because they have accepted there are some specific implied terms in the SPMC, it doesn’t mean there can be others. Or that the contract was badly drafted.

Particularly pushes back on JFSA QC’s invitation to accept JFSA's implied terms on the SPMC and then have the PO tell the JFSA what they mean.

PO QC discussing whether or not SPMC is a “relational” contract. in their generic defence the PO very keen to say it was definitely NOT a relational contract, as this would put certain obligations on the PO. #postofficetrial

PO QC says SPMC is not a relational contract because it is not a long term contract which is a pre-requisite of a relational contract and SPMRs can be given 3 or 6 months notice.
PO QC says therefore JFSA’s relational argument doesn’t get out of the gate.

Very technical argument here about whether calling a contract relational infers that there should be any sort of good faith implied in that contract. PO QC accepts that relational conracts exist, but he appears to be seeking to narrow the actual amount of good faith implied...

… and indeed whether or not the SPMC is relational anyway. The argument I think is that it isn’t, because a) there are things which define a relational contract which the SPMC does not have and b) even if it were, then the “doctrine of good faith” is not general, but v narrow.

Judge and PO QC currently looking at Yam Seng which is the authority on good faith in contract law. Here is a summary: https://en.wikipedia.org/wiki/Yam_Seng_Pte_Ltd_v_International_Trade_Corp_Ltd

Only four more weeks of this. #postofficetrial

This is only the first trial, too. Actually I’m being flippant - this is fascinating. And frankly whilst they’ve got the heads in case law it’s a chance to take a break. #postofficetrial

Judge says relational and definitions of relational contracts “is an area of some debate”.

PO QC pushing again on definition of a relational contract.
Judge: "My understanding of the term relational contract is that it has an element of good faith. That might be right or wrong."

PO QC “I think it might be wrong."

PO QC suggests we are descending into semantics.

Judge says no actually it is important because he has to decide on the common issues in this trial, including cooperation and good faith.

The wider q being: if the Post Office has a wider obligation to its SPMRs than that explicitly stated in the SPMC, would the PO be liable for the way it acted towards some claimants, if it stuck to a its understanding of the explicit wording of the SPMC? #postofficetrial

We’re now onto the likely evidence of the Lead Claimants.
PO QC: "the Lead Claimants are asking for their recollection of policies of PO and the quality of their recollections and even their credibility will have to be tested...

… When they swear in their evidence all goes in - so I need to challenge that as well.”
Judge: "I would have thought I ‘d made it clear to you again as I have done at least a dozen times and in my written ruling - you are not having a jury trial...

… It was the subject matter of your strike out application and I made a ruling on it.”

PO QC accepts that but also says he will want to challenge the evidence of the Lead Claimants.

PO QC asking how evidence which comes forth from cross examination will be treated.
Judge says that is probably best dealt with in closing.

PO QC is wanting to know how Lead Claimaint evidence will be used because it could have material bearing on this and other trials. Starting to finish up now.

PO QC “we don’t know what the claimants' case is”
Judge “I’ve heard that so many times.”

PO QC “This is an extraordinary case... in that we don’t know what the other side is saying."

A bit more discussion about timings and logistics and then we are done for the day. Alan Bates, founder of the Justice For Subpostmasters Alliance gives evidence tomorrow and will be cross-examined.

(Day 1 ends)

----------------




Trial Day 1 - morning session

This is going to be a very quick post as we have 31 minutes to be back in court for the afternoon session.

The morning was given over to the JFSA's QC Patrick Green who took the judge through the key parts of the JFSA's skeleton arguments (which I now have and will write up later).

The morning was interesting for two pieces of evidence, both internal Post Office memos, both of which only came from disclosure through this trial - one by a manager which clearly states that one of the lead claimants, Pam Stubbs, was having problems in her branch and Horizon was clearly the source of her problems. This, the QC said, directly contradicts the Post Office's assertion (made in its generic defence to the claim) that no claimant had suffered problems in their branch as a result of Horizon.

The second was an explosive document about a system-wide Horizon error in 2012 which was causing losses in branches. This was discussed on internal email by a group of PO people. Three options were discussed for dealing with the error, which included getting Fujitsu to go into individual Subpostmaster branches and changing the accounts without their knowledge. It was discussed as a matter of fact, not conjecture (all three options were given impact and risk assessments) and makes it quite plain that a decent number of people at the Post Office had more control of individual branch accounts than it likes to admit.

The main thrust of Green's argument appears to be that the Post Office has a massive power imbalance when it comes to the relationship between Post Office and individual Subpostmasters - not just in terms of scale, but as Green said - in terms of information, contract, and "mechanical and practical". He is using examples, such as the internal memos above to illustrate his point. They not only contradict the statements the Post Office has been making publicly and to its Subpostmasters (which is what is of interest to me as a journalist), but how that affects the implied terms of the contractual relationship between Subpostmasters and the Post Office.

It doesn't matter, though, if what happened to the claimants was unfair, it matters if it was unlawful. The grey area is that the law requires certain aspects of certain relationships to be fair by what is implied in any contract. I think.

Anyway all back in for the afternoon session. The Post Office's QC David Cavender is making his argument. The thrust being:

"What the claimaints are trying to do is water down the agency/principle relationship, almost to vanishing point, to say it is basically marginal."

A fuller post tonight!