Sunday 30 December 2018

A claimant writes: "I felt a fool for trusting them"

Janet Bradbury, in that London
Posted below is the first substantive entry on Janet Bradbury's new blog which you can find here.

Janet is one of the 550+ claimants in Bates v Post Office.

It is a straightforward tale of how a good person's life appears to have been needlessly trashed by the actions of a government-owned corporation.

I have asked the Post Office for a response.

Janet writes:

"In 2003 after 30 years as a school caretaker at a large inner city comprehensive my husband wanted a change from cleaning off graffiti most of the day. I worked part time in the finance office. 

We had a little girl of 5 and started looking for a home in the country with a nice village school. We had plenty of equity in our house to buy a little business. 

We trawled Daltons Weekly month after month and finally drove to Shropshire one bleak February morning to view a tearoom in Clun with a little one-man post office in the corner. 

The scenery was idyllic and the small village was in an area of outstanding natural beauty. We couldn’t believe our luck. The school was small, the village was friendly and visitors to the tearoom had a large car park opposite. 

I couldn’t believe the possibilities. The village had just one shop, pub, newsagent and us. I was more interested in the tearoom than the post office but as it was the main source of the villagers access to cash we decided I should run it and my hubby ran the tearoom. 

We were really excited and couldn’t wait to move. As the summer school holidays approached we rented a caravan just outside the village to live in while my husband converted the upstairs of this large old building from a craft area to self contained living accommodation. 

I went off to Leicester for 3 days of Post office training. We revamped the tearoom and opened for business in August 2003. We were so excited and looking forward to serving the village and the lots of tourists that visited. 

On my first day behind the post office counter my area manager was there to support me along with a lovely lad called Mark who was my trainer for a week. I was surprised how busy the office was that day as the outgoing postmistress had assured me there would be lots of spare time to help my husband. 

I since learned later from villagers that she had financial worries and was desperate to go and live in Spain at her sisters. At the end of that first day my area manager advised me to open a separate account away from the business as sometimes the balancing of post offfice money’s would show up credits or debits! 

I questioned this but was assured it would all work itself out eventually to balance correctly. Having worked in finance most of my life I was not happy with putting post office money into an account in my name so decided to just leave it in the safe if in credit. 

The Post Office fitted an ATM inside my tearoom in December that same year and from then on things went terribly wrong. On balance day of the first month the ATM was in place we were £2000 short but was assured by the hell line that once it was made good by us a TC [transaction correction] would come back to counteract the loss. 

It never did, so I presumed I’d made a mistake, then it kept happening with smaller amounts. I asked for more training as I was convinced it was something I was doing wrong and just got referred to these awful long-winded manuals that the they were continually sending, I spent hours poring over those which just did not help. 

The tearoom was getting busy the following summer so I just kept putting our money in for shortfalls whilst waiting and hoping for TC’s to come in my favour. I kept putting it to the back of my mind as I was really enjoying helping all my customers convert from the old pension books to the post office card account. 

We used to hold open days on a Tuesday in the tearoom with free drinks and me helping them with the application. I was gradually building the post office services up and really enjoyed it and was very proud when I opened the first bureau de change in my office for miles around. I was still concerned about shortfalls but was assured it was all being investigated and I believed them. 

When the second £2000 disappeared from the accounts I would not be fobbed off again by the helpline. Whenever they told me to reverse transactions to balance it doubled up the loss. I seemed to be insisting on new hard drives every month as I knew by then it was definitely not my mistake. It helped having a new hard drive for a while but problems always reappeared a few months later. 

We were now running out of savings and my husband had to cash in part of his pension just because of the post office. We were still loving our new found life though and my salary from the Post Office had steadily increased. I couldn’t stop the nagging doubts about the computer system though, something just wasn’t right. It started to have an impact on our lives as I was always worried. 

They sent a Mr Jones from head office in Cardiff to have a look at my paperwork and he clearly said to me that the shortfalls seem to double up when trying to resolve it. He agreed to report this back but I never did hear any more from him. 

My husband and I came to the conclusion (wrongly) that at least having a steady salary from the Post Office would help in the winter when the tearoom was quiet, so I kept at it. 

Coincidentally my husband had been asked by my daughter's primary school if he was interested in part-time work through the winter so we decided it was a good idea just to see us through until it became obvious what the problem with the post office computer was. 

I trusted what the Post Office were telling me - that TC’s would eventually come back to make good the books. I really believed them that it was just a glitch. 

The village had regular power cuts and the WiFi signals were on and off so I presumed it may have something to do with that and trusted they would sort it out. I even managed to get BT to change the telegraph pole outside our building! Imagine trying that today! 

Anyway we plodded on and managed on our earnings. The next summer my husband was still working at the school as we needed his wage. I was run ragged, the tearoom was busy and now I’m getting threatening letters to deduct any shortfalls from my salary as I was refusing to put any more of our money into the post office. 

That month they took £300 out of my wages and said they would continue to do so. I resigned the day after this first deduction still owing, according to them, £8952. They weren’t having another penny! 

The following day a Fujitsu engineer arrived to replace yet another hard drive, he told me there was a fault but I couldn’t quote him as he was on his last day with them and needed the reference. He said they’ve known all along. I was so angry! I felt a fool for trusting them. How dare they take my savings knowing full well there was a fault in their system from the start. 

My marriage was struggling because we were in debt, my livelihood was going down the drain and both my parents were very ill back in my home town. I managed to convince the local convenience store to take on the post office for a pound - yes just one pound - as he didn’t really want the hassle of all the security costs, but eventually agreed as he intended to sell his business within a year so it would add value. 

It was important to me that at least I could walk away knowing the friends I’d made in the village would still have access to a post office which was vital in a remote rural area with hardly any buses. 

We managed to sell the building at a loss but paid off some of our debts. I was desperate to leave the village and go home and try to forget my failure. My husband stayed in the area, so one morning in 2009 I packed my personal belongings into the car and left the village with my daughter who by then was 11 years old. 

I rented a bungalow with help from my old friends near to my daughter's new school back home, and I cared for mum and dad as best I could. They passed away within 16 days of each other after 55 years of married life. Within the space of 3 months I’d lost my marriage, my home, my business and my parents. Life was difficult as I was still getting demanding letters from the Post Office solicitors asking for £8952. 

I was working part-time in the care sector and after speaking to Citizens Advice I sent back copies of all the paperwork I could muster to do with my shortfalls. I also mentioned the Fujitsu engineer in my letter to them. After 6 months I’d heard nothing from Post Office solicitors so rang to check it had all been received ok. 

Much to my surprise I was informed by them that it was not in the public interest to pursue this any longer. I asked for this in writing but it never came. 

About 6 months later I saw James Arbthunot MP on breakfast tv talking about other Subpostmasters, only then did I realise that I was not the only one who's been through this.

Yet after hearing about all those poor Subpostmasters who were prosecuted and made bankrupt, I feel I’m one of the lucky ones. 

Even though I now live in a small bedsit and sometimes rely on food banks I still have to be positive and trust again, this time in our justice system."

My thanks to Janet for allowing me to re-post her story.

I have come across so many people now telling so many similar tales, I do start to wonder how Paula Vennells, the Chief Executive of the Post Office, sleeps at night. 

I suspect she has done the standard (if morally reprehensible) thing of keeping all this at arm's length and not reading about any disaffected Subpostmasters' situations so she doesn't have to do anything about them. 

I'm not sure this position is defensible given Ms Vennells makes a big thing of her status as an ordained minister - explicitly bringing morality into business and vice versa

And of course she is also now the recipient of a CBE - a national endorsement of the work she has done as the head of the Post Office. 

It's hard to see how Ms Vennells can square her public piety (and her whacking great pay rise earlier this year, when Subpostmasters saw their pay fall) with the actions that are alleged to have been carried out by the organisation she runs.

If you know Ms Vennells and want to bring this to her attention, please do. Perhaps print out Janet's story, or one of the posts below and hand them to parishioners outside the churches she preaches at.

It is entirely possible all the people suing the Post Office are lying, but the more likely scenario is that a good number are telling the truth. And if that's the case, something has gone really, horribly wrong. 

At the very least, the Group Chief Executive of the Post Office should acknowledge she's heard theses stories told by her former Subpostmasters, and then tell us she thinks they are lying, or just brought it on themselves.

More stories of human misery and computer glitches, all alleged to have been caused by the Post Office:

Paula Vennells' CBE

Paula Vennells, Chief Executive of the Post Office, has been given a CBE in the New Year's Honours List.

According to the Post Office "she is being recognised for her work on diversity and inclusion at Post Office, her commitment to the social purpose at the heart of the business and her dedication in putting the customer first."

No mention of her presiding over a regime which has seen dozens of her Subpostmasters "summarily terminated", prosecuted or criminalised.

Paula Vennells' CBE might be an explicit mark of approval from the government or it might not. A lot of timeservers get honours simply for hanging around long enough. But the amount of private anger this award appears to have generated is illuminating.

Publicly - save a few tweets from the CWU and its reps - nothing.

If you don't want someone to be given a CBE because, they have, in your view, done a bad thing, you need to campaign very hard to let people know what that bad thing is, so that giving them an award would seem politically toxic.

Then, if they do get an award, you issue a press release to MPs and all relevant news organisations letting them know exactly why you think it is a bad idea this person has got an award and listing the bad things they are supposed to have done. And then make yourself available for interview, just in case a bored news editor thinks your hot take might be more interesting than the usual parade of worthies and celebrities.

At the very least the award is an opportunity to remind influential people what the story behind the group litigation is, why it is still a live issue and why this honour more than say, John Redwood's, might be a controversial one.

It might also mean that news editors, when the judgment on the first Bates v Post Office trial comes round, think: "hang on - didn't Paula Vennells get a gong recently?"

I can only assume Paula Vennells' CBE has been welcomed by the NFSP, the JFSA, its members, Freeths and its litigants. After all, if  they had a problem with it, they would have said, wouldn't they?


UPDATE 31st Jan - The JFSA very much does have a problem with Paula Vennells' CBE. They have issued this statement:
"The JFSA is stunned at how inappropriate it was to award a CBE to Paula Vennells, CEO of Post Office Limited, an organization she leads which has brought so much suffering to many Subpostmasters, their families and communities.  How the destruction and financial ruin of so many lives entitles someone in total denial of the failures of her company, to an award usually reserved for those who have made a positive distinguished or notable contribution, is beyond understanding.  Surely they have made a mistake?"

Monday 24 December 2018

Accounts 1: Talking turkey

I said I would account for what I had "earned" from the Kickstarter campaign and PayPal tip jar on the website.

It looks like this...


Kickstarter = £8397
Paypal tip jar = £2245.52

Total income: £10642.52


18 days work at £250 per day = £4500

Net surplus = £6142.52

I worked all 15 days of the trial plus two days of prep beforehand and one admin day during. The odd figures in the kickstarter and PayPal tip jar are down to the fees that both Kickstarter and Paypal take for themselves before passing on the cash.

The £250 day rate pays for my time, tax, travel, phone/data bills, food and caffeinated beverages. As my clients in journalism and the corporate world will attest, it is significantly less than I charge them. I am worried about giving them ideas, but hey...

It is my intention to work (on the same rate) at least three days on the trial in January - the day before the judgment, the Day of Judgment and the CMC [Case Management Conference] on 31 Jan.

This still leaves more than enough to cover the Horizon trial.

If I do three days in Jan and eighteen around the Horizon trial that's 21 days at £5250, leaving me three days to deal with the Horizon trial judgment (in April/May) and any further case management hoo-ha thereafter.

This, of course, raises the grisly spectre of the supposed "Breach" trial in October, which I may come a-rattling for next spring or summer, but we can worry about that when we have a date from his Lordship.

I cannot begin to thank everyone who has donated in any way to this project. You have created an environment in which I am able to do some hopefully half-decent journalism. The unexpected side-effect is that the path through which many people have donated money has become a channel of incredibly valuable information. I am grateful.

Any further donations will be spent clearing down a few days to do some research, make a few phone calls and write a few blog posts, but to be honest I can probably do that in my own time, so please don't give me any money if you already have.

If you are independently wealthy or you've never been here before and want to chuck a few quid in the tip jar, thank you - you'd be most welcome. I will account for it and promise it will be put to good use. 

Sunday 23 December 2018

CCRC delays decision till after first High Court judgment

Further to my post on 1 Decabout the Criminal Cases Review Commission. They've sent letters to the 30-odd former Subpostmasters whose cases they are reviewing telling them they will not be making any decision about their cases at least until after the first judgment in the Bates and others v Post Office litigation.

Miles Trent, Case Review Manager writes:

"I can now confirm the Commissioners have met to discuss the cases and have decided the CCRC must wait for the first judgment of the High Court in the Group Litigation (the judgment in the 'Common Issues' trial) before issuing any decisions in the CCRC cases under review. Once the CCRC has obtained and considered that judgment  - which is expected in January 2019 - the CCRC will take a view on whether it must also wait for the second High Court judgment (regarding the 'Horizon' trial) before it can issue any decisions in these cases."
A decision will be made on that latter point at the end of February 2019.

The former Subpostmasters cases were taken on by the CCRC in Spring 2015. If the CCRC decides they should go to appeal, their cases will be heard at the Appeal Court. Whether they will be heard together, individually, or indeed whether the CCRC will only allow some cases to go forward is still not known.

There is a lot riding on this for this group of former Subpostmasters. As well as losing their livelihoods and investments they were given criminal convictions and some were thrown in prison. Many of them started the fight to clear their names nine years ago.

Let's see what 2019 brings.

Speaking of which, could I wish everyone reading this (of whatever faith) this a very Happy Christmas and prosperous New Year. I hope you have a relaxing and enjoyable break. I'll keep the blog posts coming as the first judgment approaches.

Friday 21 December 2018

A serving Subpostmaster writes: "They have no concern for the postmasters whose lives they have ruined"

I mentioned I was keen to keep this blog moving between trials and asked for anyone with an interesting take on this litigation to get in touch.

Chris (pictured left) did just that. He is a serving Postmaster. He has asked me not to name his post office, but he is happy for me to print his name and the other details.

"I am a subpostmaster from South West England having taken on a Post Office together with a Royal Mail Sorting Office for seven postmen in 2003.

During the last fifteen years I have also added three outreach locations where I take a portable Horizon kit to a few village halls or shops.

I have been fortunate not to encounter some of the problems that the claimants have experienced. However whilst I enjoy serving our customers, my heart is no longer in this job.

In 2015 my wife and I tried to leave under the Network Transformation scheme but surprise, nobody wanted to take the job on.  In 2016 the Post Office basically said that if we wanted any compensation monies we needed to transfer to the new contract before the Government funding ceased.

So having completed a business plan, which I had to keep changing until they were happy with the figures (so much so it was nothing like what the actual plan would be), we transferred in Nov 2016.

Having previously worked for NatWest (with my wife) we had to take our pensions early to make up for the loss of income. We basically pay ourselves about £4 per hour because that is all the business can afford. We paid £100,000 for the lease in 2003. If we could find a buyer for the business now, we would probably be lucky to get £5,000.

Whilst I have not experienced the terrible situations of the claimants, I too feel that I have been stitched up by the Post Office. I have been resigned to the fact that I will probably be the last  postmaster in the town and it is only a matter of time before I close the office.

A former PO Contracts Manager came into my office today and I asked her if she was following the trial. She replied that she had lost track of it, but was concerned that some of the former postmasters who HAD defrauded the Post Office may jump on the bandwagon. I thought after she had gone, that her statement typifies the Post Office. They have no concern for the postmasters whose lives they have ruined.

Is it any surprise I want to leave a job which up to recently I enjoyed?"

A WHSmith Post Office manager writes: "they finally admit to a 'glitch' in the system"

I mentioned I was keen to keep this blog moving between trials and asked for anyone with an interesting take on this litigation to get in touch.

This little vignette is the recent experience of a manager who works at WHSmith in an embedded Post Office branch somewhere north of Manchester. Let's call this manager "Dave".

Dave is understandably keen to remain anonymous as he doesn't want to get sacked. He has been working with Horizon for more than 10 years. I have verified Dave's identity and am satisfied he works where he says he does.

"This happened three weeks ago after rolling a stock unit into a balancing period at 11.31am on the Wednesday.

At the end of day the stocks cash was declared. 63p short with holdings of £2955.55.

The cash was declared again on the Thursday.

No transactions were done on it.

Cash holdings remained the same at £2955.55.

Shortage of £149.54!

All the transactions from the rollover at 11.31am have disappeared.

It's now 3 weeks later and after 12 calls to the helpline and IT department they finally admit to a 'glitch' in the system.

I am still waiting on this being resolved.

My worry is I'm very experienced with Horizon and I am good at explaining what happened.  Can you imagine this happening to a less experienced SPMR????"

Wednesday 12 December 2018

A former Subpostmaster writes: "This was systematic abuse... I lost my business and lost my family"

Bal's Post Office in 2003
What follows is cribbed (with permission) from the blog of Balvinder Gill. You can read the original post here. Bal is a claimant in the group litigation.

Bal's story is shocking. Every time I think I am inured to the personal experience of people who are claimants in this case, I come across something which stops me short.

Bal has an HND in Maths and Computer Science and before he took on a Post Office helped run his father's convenience store as a teenager and into his twenties. Bal also worked for Cahoot bank in Coventry before he moved to Oxford. He took over the Cowley Road Post Office on 3 Dec 2003.

This is Bal's tale, as told on his blog:

"I am currently entangled in a longstanding dispute with The UK Post Office (Post Office Ltd) as part of a group litigation with 500 odd other sub-postmasters who have all suffered the same or similar plight.

This chapter was the biggest contributing factor to my breakdowns and decade of mental instability.

It was only through knowing more about the litigation and learning of the many cases of others who had suffered a similar peril that I can now rationalise what happened.

My memories of what happened were quite blurred as this all occurred in 2003 when I was 24 and had just got married and moved to Oxford. As part of my recovery from mental illness, I think the subconscious may have also intentionally suppressed this as “You don’t need this right now!” kind of action. There has certainly been a lot of accepting and letting go as part of my recovery so this could have also been released without too much thought, hence the difficulty revisiting it initially.

The trial has however, brought everything back. I have a good memory now and certainly in a quiet moment of stillness can picture things quite vividly.

My family ran a convenience store in Coventry. We suffered hardship before (when Sainsbury’s opened near our corner shop we lost about 50% of our business), but we adjusted and then grew the business considerably after a period of consolidation.

In the Summer of 2003, I sat with my father most evenings in our flat above the shop browsing through Dalton’s Weekly looking for a new business venture.

'An unrecoverable disaster'

It was the run up to my wedding, and having worked with him on developing the retail businesses since I was a child he was more than happy to support me and fund a new venture that would help set my new life up in Oxford.

I was desperate to leave Coventry at this time as we lived in a rough council estate and I think my time there had just passed.

So we had found a Post Office in Oxford which was advertised with an attractive remuneration (a salary!) of £50k. I made some enquiries as it was on my dad’s business bucket list to run a Post Office. It seemed like a symbol of some status for a first generation immigrant Asian shopkeeper and we proceeded to explore the opportunity in more detail.

I had a reasonably good academic record and was good with maths, business and computers generally. The business plan was a doddle as it was simply projecting the remuneration over the 12 months adding the nominal retail business sales and taking out the fixed costs. There would have been and were no wages required for staff as we planned to keep it family run. The interview was promptly organised and we were treated very well. We had substantial money to invest and both sides were happy with the arrangement.
Bal's Post Office in 2004 after his parents' investment

What happened next is nothing short of an unrecoverable disaster for us. The postmaster who was running the Post Office was frantically calling saying “I need to get out sooner rather than later and if you don’t complete sooner then the deal is off.”

The alarm bells should have rang but the Post Office asked us to save the day and take over during the busy Christmas period which we were told would normally never happen. With a quick fire 1.5 days of stamp and coin counting training we were in!

We opened and similarly to the stories I have heard from other claimants everything was very rush rush…. It was sign this, now do this and then this and we just kind of followed through. It was ridiculously busy, queues around the corner on the street everyday and we did not know where to look or what to do.

There was a trainer with us for a few days from opening but they always left around mid afternoon. I rang the area manager numerous times for support and he sent somebody the week after Xmas (OMG!!) and there were errors upon errors upon errors and things which I knew just could not be right.

'Walking round like a zombie'

The trainer came and made some adjustments on his laptop, called someone and then said you are £100k in surplus we are going to move that into a suspense account. This is after trading for only 20 days approximately.

Did that mean transactions had not been put through as I never had any customers come back and say there was an issue and was dealing with large amounts for banking or had someone just decided to be really charitable?

I was mind boggled but accepted as I really did need the help and he managed to zero the balance that night and I felt like everything had been resolved. I think we were a few pence over by his reckoning.

He left us again and I vividly remember two power outages, including one where I had to close for the rest of the day. There were issues with screens crashing on Horizon where I would start on one terminal and have to move to the other. Also the system would fail when doing the dreaded Wednesday balance and get stuck on the roll over screen.

Over the next few months I constantly called the helpline and area manager to say that I just cannot get this right it does not make any sense. At one point, I shut down all other tills ignored the queues and just worked of on my own of one terminal for a whole week and very slowly to check each transaction to make sure that there can be no errors. Still this week ending balance made no sense at all!

The area manager during his phone calls asked me if I was interested in taking on a second Post Office. We were still in the honeymoon period and I expected that they would assist me to get this right and must have confidence in me to be offering me a second post office. There were errors but there was no issue and I did not think for a second that they were going to turn on me in a given moment. I was also offered a third post office for which in both cases I just copied and pasted over the business plan and sent it to them and they set everything up.

I was getting more and more stressed each week working all the hours possible and hoping the numbers would start coming correct… they never did! I was receiving transaction corrections at an alarming rate on a weekly basis and I remember walking round like a zombie for months with all the life drained out of me thinking "when is this going to end? Why can this not be right as I am doing everything I possibly can!?"

'This has never happened to anyone else'

On 13 May 2004 (I will never forget this day!), I turned up in the morning and was met by auditors who told me I cannot enter the office and they need to check everything. I called the area manager and he said there is a debt. Then he told me: “Get your dad to pay it as he has plenty of money.”

What happened that day was the destruction of my family and the beginning of an internal war which broke us for more than a decade.

I was told that there was a £60k shortfall and that I cannot enter the Post Office and they were calling investigators. I was then taken to the back of the office and interrogated by them under some kind of pseudo-police interview.

I was alone and they made a tape recording and repeatedly asked “did you take the money?”

I was in an exhausted state of shock and could hardly stand up. I just kept saying that I did not take any money from here as I know I did not.

I then returned home and broke down. But my family said "you must have done something wrong - how has this happened?!"

The argument that then followed broke our family up. I left the house the same day with my wife. I needed answers as I could not understand how considering I had been open and honest about problems that I was having that they could suddenly just turn on me. I did not talk to my parents again for the next 12 months and amongst the wider family and local community I was labelled as a fraudster who had failed his family.

I waited frantically to know what had happened and hoped that maybe the £100k surplus which was put into a suspense account would be some how connected and they would let me know that everything is now OK and you can resume, we have put everything right.
Balvinder Gill

I never at that time suspected Horizon could produce losses as I was told very specifically that it does not make mistakes and that this has never happened to anyone else. I felt like a complete failure and my whole life fell apart around me. I was 24 and this was a lot to take onto my shoulders.

I then received a statement saying I had been terminated and with no reason and no criminal charges. The bill had increased and I was now facing £108,000 with no way of disputing or questioning these transactions as I was now on the outside. I was told I am not allowed near the Post Office which I had purchased for £67,000 and that I need to make good this amount as soon as possible.

There was a temporary subpostmaster in charge who had been appointed by Post Office and he took all the profits to keep the Post Office open. I was penniless and broke and could not work out - was I criminal? Incompetent? Or been somehow bled out?

The next couple of years were very difficult as I was earning £13k – £16k a year at minimum wage and was told I need to pay around £500 each month against the debt. If I did not then they would take action, meaning prosecution and debt recovery. I took payday loans, racked up more debt and when my first child was born they were taking 40% of my income and I remember not having enough money to even fuel my car to get to work.

At one point the fuel ran out and I just left the car there and walked the remaining 6 miles. This was one of the hardest periods of my life.

Within less than 6 months I had the pain of £108,000 debt, lost my business and lost my family in addition to the damage to my reputation. I do attribute this trauma to be an overbearing contributor to my mental health battles since.

My father had still been given the Post Office back despite all that had happened and had made a match funding agreement with them and felt he was doing a duty to recover the business from the damage his son had caused, the failed businessman!

These issues had divided my family, we no longer were a family. Later he and my mother received a similar fate and my mother was actually criminally prosecuted. They sold everything to fund a legal case and she was spared jail, literally with the judge's last word.

This was systematic abuse and there are many stories that have now surfaced of suicide, false imprisonment and of people that have suffered much more than me. My mother being one of them… that is another story I will share some time soon.

This trial does not get the coverage it deserves in the UK and if any of my followers are still around as I have not wrote for over a year I would be really grateful if you could share the stories so people across the world know how badly a UK government-subsidised business have treated people here."

After being "terminated" by the Post Office Bal's marriage broke up and he has been sectioned twice. Bal says he was pursued by the Post Office for the £60K discrepancy for a decade after he was sacked. He was declared bankrupt in 2014.

I am delighted to say that Bal is recovering well, working as an entrepreneur and is extremely open about mental health and how it can affect people. Please do read his blog "Fighting My Demons" for more.

Bal says some very nice things about my reporting of the group litigation in his original blog post which I have excised from the text above, but I am grateful to him for his kind words, and for allowing me to repost his recollections.


If you experienced something similar to Bal please contact me using the message form which is in the right hand nav bar of this website. Alternatively, if your experience of dealing with the Post Office is entirely benign and you want to tell me about that, please get in touch. I am also after guest blog posts from any political, legal or forensic accountant types who may have a view on this group litigation. Please message me.

I have asked the Post Office for a response to Bal's story. They told me it wouldn’t be right to comment on individual cases outside of court hearings.

Tuesday 11 December 2018

A former Subpostmaster writes: "The Post Office has lost already"

As the first Post Office Trial (round one: common issues) was drawing to a close earlier this month, I asked people with a professional interest to get in touch with a view to publishing their thoughts and/or stories.*
Tim McCormack
The following guest post is from Tim McCormack, who ran two different Post Offices over 12 years between 2004 and 2016 in Loch Ness and then Duns in the Scottish Borders. I think it is fair to call him a trenchant critic of the Post Office.

Before becoming a Subpostmaster, Tim was a computer programmer who became a Senior Business Analyst in the City of London, advising investment banks on credit risk technology. He finished his City career working for Citibank where he was in charge of credit risk technology for 22 countries in Central and Eastern Europe, Middle East and Africa. 

He currently owns a small newsagents in the Borders town of Coldstream and runs a blog called Problems with POL. This is what Tim has to say on the conclusion of the common issues trial:

"The closing submissions have been put to the court and in January,  Mr Justice Fraser will issue his decision on the claims put before him in this the Common Issues trial.

There are three possible outcomes:

a) Mr Green QC for the claimants wins all his points.
b) Mr Cavender QC for the defendants scores a complete victory.
c) Both parties have some of their claims decided in their favour.

Perhaps the most likely outcome is the latter and no-one but the judge has any idea of which points will be settled in whose favour.  We will know soon enough, and on decision day conclusions can be drawn. 

In the meantime though, it is my opinion, that one of the major consequences of this trial, regardless of Mr Justice Fraser’s decision, can be highlighted.

Much of this trial has revolved around the contract that binds the subpostmaster to the Post Office.  The claimants propose that there are multiple inferred clauses in this contract - ie. they are not specifically written into the contract but they can be inferred from the wording and in some respects the type of relationship that is thought to exist between Post Office Ltd [POL] and the Subpostmaster. 

The Post Office in reply, rejects these claims in total, saying that the contract as it stands is correct and not open to the interpretation of the claimants.

As a layman, I first became interested in contract law in the late 70s early 80s as a result of a TV Series known as The Paper Chase which followed the fortunes of a young contract law student at Harvard University.  It is an intriguing subject and covers many different areas but the most widely known and discussed are contractual disputes that end up in court, riveting courtroom drama backdrops for multiple movies and TV Series such as Suits.   

Interpretation and inference of the written word (and sometimes spoken) is the name of the game as two parties disagree fundamentally over what was implied at the time of signing.

No contract is perfect.  No matter how detailed, it can never possibly cover all eventualities and the law accepts this to be the case.

A contract is a written agreement which encompasses the oral and written negotiations and agreements of the parties. Provided that the necessary factors, such as offer and acceptance, consideration and intention to be contractually bound, are all present, a contract will be formed.

Whilst the words, whether written or spoken, which the parties use in formulating the agreement are the express terms of the contract, it is important to bear in mind that these may not constitute the whole agreement. The parties to a contract cannot possibly contemplate every contingency and eventuality that may arise over the course of a contractual relationship. 

The result is that gaps are inevitably left in the express contractual terms. For this reason, the Courts are prepared to imply terms into a contract, either as a matter of custom, by statute or by common law.  Read more about that here.


The decision of the judge, after all the trials are over, will of course have consequences for both sides.  I could not speculate on those consequences should the judge decide partly in favour of both parties involved.  However the consequence of the claimants winning all their points has already been noted by Mr Cavender QC representing Post Office Ltd.

He said in his opening submission:
“If Cs [the claimants] were right in the broad thrust of their case, this would represent an existential threat to Post Office’s ability to continue to carry on its business throughout the UK in the way it presently does.”
That conclusion, while probably correct, has no bearing on the decision making process of the court.
What Cavender QC perhaps does not appreciate, nor Post Office Ltd for that matter, is the consequences of their case being completely successful. I would submit for the reasons below, that outcome also represents an existential threat to Post Office’s ability to continue to carry on its business throughout the UK in the way it presently does.

Mr Cavender has already argued the point that commercially astute business men and women that seek to operate a Post Office would, in the normal course of events, scrutinise the contract offered and perhaps seek legal advice on whether or not to accept the terms and conditions it contains.  

The way the Post Office operates at present, incorporates the fact that every year subpostmasters come and go, selling on their business, retire or as is becoming more and more common just handing the keys back because they have had enough of dealing with Post Office Ltd.   

This is referred to as ‘Network Churn’ and about 800 offices change hands each year.  This means that 800 aspiring commercially astute business men and women are sought every year by Post Office Ltd to take on the contract at the centre of this trial. If they were so astute then I am sure they would also consider the arguments put forward by Mr Cavender on POL’s behalf during the course of this trial in order that win all the issues at hand.

The outcome of this trial is the decision made by the Judge and that becomes case law against which future similar cases may be compared.  If POL win the day then there is unlikely to be any similar cases brought against them given their chance of success would be limited.  

I would also add that changes to the way Post Office Ltd operate will certainly result from what has been said in court already.  Contracts will be delivered to aspiring subpostmasters BEFORE they take office and these will be signed and accepted.   

Not only that but POL representatives will have to draw the attention of all new subpostmasters to the relevant clauses regarding losses and they will have to distinguish between Horizon errors and Branch losses.   According to Mr Cavender they will also have to accept that the onus is on them to prove that the loss was not caused by themselves or their assistants before POL acknowledge that perhaps Horizon was to blame.  

Recommend a friend

Already we are seeing the impact of this trial.  A new team has been set up to investigate discrepancies where the subpostmaster refuses to accept responsibility but in saying that POL still revert to suspending the subpostmaster while these investigations are carried out.  In POL land you are guilty until proven innocent.  Hardly the way to encourage new subpostmasters to join the network and I would consider anybody providing advice and encouragement to these candidates to sign the contract to be well aware of the problems that they may face in the future.  Who would recommend a post office contract to a friend these days?

And therein lies the rub.  Win or lose, business as normal for Post Office Ltd will be a thing of the past.  Losing may in a way be the preferred option, as from the ashes rises the Phoenix that will be the new Post Office network that places a higher premium on the service of its subpostmasters that it does at present.  Win and Post Office Ltd would have to be extremely careful of accepting anybody who then applies to run a Post Office knowing what has been revealed in this trial.

Should POL win hands down, should they then be allowed to change all that is wrong in the way they do business at present without recognizing that this has only come about as a result of the trial and ultimately the rejection of the claims by the JFSA?  I think not. Any changes that are made must be a recognition of bad practice in the past and those responsible should be held accountable and certainly not left in charge to correct their own mistakes.

I contend that win or lose, Post Office Ltd has lost already.  The cost of fighting the claims of the JFSA group can no longer be expressed solely in financial terms. 

Finally, the possibility that POL will win all the points is implausible.  We will have to wait for the decision of the Judge to find out but it is worth pointing out that no matter his personal feelings about how Post Office Ltd operates with regard to the treatment of SPMRs his decision(s) are bound by the legal interpretation of the facts presented to him in court.  As a layman I cannot express any opinion on the outcome only hope that justice is on the side of the claimants."

If you want to read more of Tim's work, go to Problems with POL.

*Please note: These comment/opinion pieces are being sought to stimulate debate. The views articulated will not necessarily be held by me. They may express views I completely disagree with. Also, I cannot check every detail of every submission is true, though I will take reasonable steps to satisfy myself the words written represent the honestly held opinion of the contributor.

If you would like to make a contribution to this blog, just send me a message using the message form which is in the right hand nav bar of every page of this website. You don't need to run a blog (or a Post Office) in order to be considered. It could be the first time you have contacted a journalist. If you are worried about recriminations, you can remain anonymous.


Thursday 6 December 2018

Day 15 write up: Not even the end of the beginning

Part of my route to work for the last five week, Inner Temple, Lawyerland
Fifteen days doesn't sound like much, but I feel like I've been through the wringer. Trying to synthesise and process the volumes of information which have come out of this trial is going to take weeks. I will give you a quick summary of what happened today and then take you to the next stage, which in many ways is more interesting.

Day 15 was, like day 14; the methodical demolishing of the edifice which the JFSA, Freeths and Patrick Green QC have built up over the past month or so. Mr Cavender QC cut a knowledgeable, urbane and assured presence. I sensed he was in his comfort zone - delighted to take the court step by step through the apparent flaws in the JFSA's claim, but equally happy to think on his feet and spar with the judge as the situation required. He was convincing as he pursued the same argument as yesterday. Which is:

The Post Office has the right to do as its contract suggests. There is nothing in the contract which is obscure, hidden or designed to spring traps on Subpostmasters. It is all there in black and white. If you didn't get that contract or didn't ask for it or didn't read it before lumping your life savings/nest egg/pension fund into that deal, well...

... who goes into business, who risks almost everything without asking for their contract or taking legal advice or both?

You can complain after the event to the high heavens, but in business-to-business agent/principal situations you look at everything before you put pen to paper.

The law assumes you are going to do due diligence and the law assumes due diligence involves reading the contract.

Event Horizon 

This is where thing get weird, though, because if you run the above sentiment alongside the position stated yesterday - that the Post Office is entitled to believe that Horizon's figures are correct because it is generally reliable - you have a recipe for disaster.

A possible unexpected side effect of the Post Office's hardball position on the contract is the warning signals it sends out to existing Subpostmasters. If, contractually, you and your business and your entire family's livelihood are at the whim of a computer system you have no control over, you're f***ed.

Having seen the performances of the procession of employees called to the witness box on behalf of the Post Office there is no way I would let them near my business in a million years. Yet they are authorised to take life-changing decisions with no implications for them, even if they get those decisions catastrophically wrong.

I said in a previous piece: if you are a Subpostmaster and you read the factual information that now exists on the record about the NFSP and you still believe they are looking out for your interests, you are fool (they unfortunately refused to advance a counter argument to that, but I am all ears if there is one).

To the above I would add: if you consider taking on a branch Post Office, and read the factual information that now exists in the public domain about the risks of doing so - you are taking one hell of a gamble, with very little obvious upside. Apart from, er... what was it.... oh yes - footfall, of course.

Respect my Authorities

So how do we get to a judgment? From what I have been able to ascertain, each QC delivers a binder of case law (called the Authorities) to the judge, directing his Lordship to the specific passages in the judgments which each party thinks has a bearing on the law with regard to this case.

Contract law is a well-developed area and there are lots of judgments covering many different business relationships at the Court of Appeal and the Supreme Court which are binding on the High Court.

The judge then asks which judgments the QCs want him to consider at and how they want him to interpret them. The judge may also have his own view on what he thinks important, and he will occasionally mention this - or more likely challenge the QCs on their interpretation of the case law he is presented with. In this way, the judge is not only given the measure of the case, but what both parties say are the parameters in which he should make his judgment.

This trial has generated vast tranches of data. Off the top of my head:

Claim and particulars of claim
Generic Defence
Common Issues and pleadings
Opening statements x 2
Witness statements x 20
Documentation put to witnesses (thousands of pages)
Daily transcripts (ie oral evidence and cross-examination) x15
Closing submissions x 2
Claimant statements 500+
The Authorities

The closing submissions alone are 200+ pages each. The Authorities can be between 20 and 200 pages, the claimant witness statements are vast. Some of the documentation are Post Office manuals which are more than 100 pages long.

The judge doesn't necessarily have to go through every word on every document, but he certainly has to take note of the important ones, and I would say that's probably at least 2000 pages of relevant technical data, spoken and written personal testimony and nuanced legal argument, much of which he will have to read more than once.

His job is to funnel all that information into his decisions on the 23 Common Issues. It is a big task. I have already uploaded a version of the Common Issues which has a lot of pleading references attached. The judge asked for a clean version. He got that last week. I was issued with it on Monday. Have a read. This afternoon he rather sensibly asked the QCs to give him two more versions of the Common Issues in which each QC states the judgment they wish him to make on each issue.

What next?

At the end of the trial there was quite a bit of what Mr Cavender called "housekeeping". Various documents and bits and bobs were requested and/or ordered. The Post Office found its own encryption of Liz Stockdale's interview impossible to crack, which is great for them as it might have corroborated her witness statement in the same way Louise Dar's lately-discovered interview transcript corroborated hers. The judge has ordered a witness statement from the Post Office on why it has not proved possible to crack their own encryption keys. The judge also asked for a proper flow chart on the process of dealing with a) a Transaction Correction and b) a shortfall when submitting branch accounts.

All this takes us up to Christmas. The judge has ordered a Case Management Conference [CMC] on 31 January 2019 for the third trial and put the parties on notice they can expect a draft judgment under embargo from 14 January 2019 onwards, which gives us a two week window during which the public judgment will be handed down.

The CMC is to decide the date, terms of reference, agree a quantam expert (likely a forensic accountant) and number of claimants to be tried in what will most likely become known as the breach trial.

The judge has a duty to expedite proceedings, but the lawyers obviously want things to last as long as possible as it means more money for them. At one point the judge lost his patience and said he didn't wish to be abrupt or look like he was trying to steamroller the parties, but if it was not possible to try the cases of all six of the Lead Claimants in October 2019 he would schedule a trial for every judicial period thereafter in order to get to a resolution in the case starting in Spring 2020.

On hearing this I (temporarily, m'lud) lost patience with the judicial process. If the only way to steamroller the parties into doing something positive is promise them five weeks in court three times a year until one of them folds then you have a problem.

So - we'll get our first judgment in this epic saga in six or seven weeks, then we'll get a confirmed date and structure of the third trial, then on 11 March 2019 the second Horizon trial starts.

I personally think someone needs to take this process by the scruff of the neck and boot it into the world of politics, media and public affairs or the legal action will continue ad infinitum until one party runs out of money, and I suspect that party will be the JFSA.


This is the last post I am contractually obligated to write by the terms of the Kickstarter I set up way back in August but I did continue to raise money in the hope I would be able to cover this group litigation on an ongoing basis.

I am delighted to tell you that thanks to the continuing generosity of everyone who pushed the Kickstarter way beyond my wildest expectations and the remarkable success of the paypal tip jar experiment on the website, I have enough money to cover most of the upcoming Horizon trial, next month's judgment and the case management conference on 31 Jan.

I will continue to work in my own time to develop this website as a resource. There is a lot of indexing and general tidying up to do. I am also very much in the market for guest bloggers. If you have a professional or personal interest in this trial and you want to write something about it please do get in touch. You can be anonymous if you are worried about recriminations! I am particularly keen to get the Post Office and NFSP view (they have both refused formal requests to write something) and I'd also like to hear from serving Subpostmasters.

Secret emailers will continue to get occasional emails and anyone who makes a contribution during this quiet period will be added to the list. Don't forget you can also sign up for free emails on the website (which get you whatever i post on the blog automatically) and read through this blog and the documentation it links to whenever you want!

Thanks again for your support. 

Common Issues Trial Transcript: Day 15

This is the transcript of the 15th and final day of the Common Issues trial in the Bates and others v Post Office group litigation. It is not the perfected transcript, but the one received by both parties at the end of the day. 

Day 15 features the second day of closing submissions from the Post Office's QC David Cavender, and should be read alongside Mr Cavender's written closing submission, which you can read on Scrib'd via this link or embedded on this blog here

I thoroughly recommend reading Mr Cavender's closing arguments on Day 14 and Day 15. They completely and cogently set out the Post Office's defence for acting in the way that it has. To summarise 70-odd thousand words:

1. It was legal to do so.
2. The claimants case has no basis in law.
3. Because Horizon is generally robust, the Post Office is entitled, in law, to assume it always works correctly.

It's a long read, but an easy one, and you can also scroll to the bottom and enjoy the little vignettes played out between the judge, Mr Cavender and the claimants' QC, Patrick Green. 

This is the menu for the other transcripts and the Common Issues Trial Menu which has links to my write-ups and more documents:

Day 1 transcript - Wed 7 November - Opening arguments
Day 2 transcript - Thu 8 November - Claimants: Alan Bates, Pam Stubbs part 1
Day 3 transcript - Mon 12 November - Pam Stubbs part 2, Mohammad Sabir
Day 4 transcript - Tue 13 November - Naushad Abdulla, Liz Stockdale
Day 5 transcript - Wed 14 November - Louise Dar
Day 6 transcript - Thu 15 November - Post Office: Nick Beal, Paul Williams
Day 7 transcript - Mon 19 November - Sarah Rimmer, John Breeden, AvdB part 1
Day 8 transcript - Tue 20 November - AvdB part 2
Day 9 transcript - Wed 21 November - AvdB part 3, Timothy Dance, Helen Dickinson, Michael Shields part 1
Day 10 transcript - Thu 22 November - Michael Shields part 2, Elaine Ridge, David Longbottom, Michael Webb
Day 11 transcript - Mon 26 November - Michael Haworth, Andrew Carpenter, Brian Trotter
Day 14 transcriot - Wed 5 December - Post Office closing argument: David Cavender QC - part 1

Day 15 transcript follows. Read Day 14 first:

                                      Thursday, 6 December 2018
   (10.00 am)
          Closing submissions by MR CAVENDER (continued)
   MR CAVENDER:  Good morning, my Lord.
   MR JUSTICE FRASER:  Good morning.
   MR CAVENDER:  In terms of the timetabling, your Lordship
       kindly said that you were willing to sit until 5 o'clock
   MR JUSTICE FRASER:  If necessary.
   MR CAVENDER:  If necessary.  I am going to finish by
       4.340 pm whatever to allow some questions from
       your Lordship, and my learned friend in case he might
       want ten minutes in reply, which of course is fine.  So
       that is the timetabling.
           In terms of the subject matter --
   MR JUSTICE FRASER:  I'm not sure I am logged on.  Yes, it
       has just appeared.  Go ahead, Mr Cavender.
   MR CAVENDER:  In terms of subject matter, I was just
       finishing off if you remember the agreed implied terms
       as a route into relational contract, so I will deal with
       that first, then deal with the implied terms separately
       that arise out of that and more generally, then deal
       with the question of agency and the disputed issues on
       that.  I hope to do all that this morning.  Then this
       afternoon, rather more briefly, incorporation contract,
       suspension, termination, true agreement and UCTA.  Those
       last matters will be rather truncated and by reference
       to identifying parts of the closings, just to try and
       bring those to life.
           So, my Lord, that is the menu for today.
           Starting with that then, last night we were dealing
       with the agreed implied terms and we were at
       paragraph 257 of our closing {A/8/97}.  I had gone
       through the various examples we'd set out of where the
       agreed implied terms would or wouldn't react, and we set
       that out, and I had taken you through paragraph 255
       {A/8/96}.  And we say in 256 there would be a degree of
       overlap but they are different obligations.
           Then this at 257, which is an important point of
       principle {A/8/97}, when you stand back from this area
       in the dispute, ie do you have these protean agreed
       terms or do you go for these -- try and go for these
       very specific terms which are unilateral?  In that world
       we say it would be extremely difficult for the claimants
       to show:
           "... the parties must have intended the far more
       specific implied terms ..."
           And in brackets:
           "... (and precisely the alleged terms rather than
       [any] other terms that might have been chosen) to deal
       with factual situations/perceived difficulties."
           Obviously at the time of contracting looking
       forwards, not with hindsight.
           We say:
           "Cs cannot, as a matter of law, rely on anything
       a reasonable person in their position did not and could
       not have anticipated at the date of contract ..."
           But which they say arose in practice by reference to
       what is clearly inadmissible post-contractual evidence,
       and that is of course Marks & Spencer.  That is just
       a necessary feature of the Marks & Spencer test and the
       way terms are implied.  Nothing about this case, that is
       just how the law works in this area.
           So we say that and then we make the point we have
       made a number of times, that that is to say nothing of
       the difficulty of saying, or my learned friend
       persuading your Lordship to imply this raft of
       individual terms notwithstanding the existence of the
       agreed implied terms.
           My Lord, you will note my learned friend has been
       very critical more generally about trying to suggest we
       hadn't been helpful in relation to our case on this, and
       I have said to you that we have, and we clearly have,
       and I have just shown you examples where we set out the
           There have been two requests for information, both
       of which have been answered.  I don't want to take you
       there, but for your note on 13 September 2017,
       {B4/2/24}, request 61 and its response, and then on
       29 December 2007, {B4/3/1}, you will recall you were
       shown a table, my learned friend showed you briefly,
       where we --
   MR JUSTICE FRASER:  Is this the punchline table?
   MR CAVENDER:  My Lord, yes.  This one has the punch in it
       which is {H/19/1}, and there has been a lot of
       correspondence between solicitors about this, which you
       will find if you could ever think it necessary to read
       it, at {H/7/1} to {H/21/1}.
   MR JUSTICE FRASER:  It would be surprising at this stage of
       an action such as this that it would be necessary to go
       to the solicitors' correspondence, I imagine, unless you
       are specifically urging me to do so.
   MR CAVENDER:  All I am trying to do is counteract the
       impression my learned friend tries to give that we have
       somehow been playing games with this.  We have not.
   MR JUSTICE FRASER:  There is a degree of criticism flowing
       in both directions about the way in which a case has
       either been presented or there were gaps in it,
       et cetera, but by this stage of closing submissions it
       probably is unsatisfactory for the trial judge to need
       to go back as far as the solicitors' correspondence.
   MR CAVENDER:  My Lord, that's exactly why I said somewhat
       sarcastically if you felt the need to do it, I am not
       suggest you would.
           But the simple point is if the claimants wanted more
       information in relation to this case, granular detailed
       information, they could have pleaded what they said
       these terms meant.  They could have said "As to your
       allegation of necessary co-operation, we say this covers
       this, this, this.  In these notional circumstances we
       had this result".  And then ask us to plead to it.  And
       of course we would have had to and your Lordship would
       have made us.
           So it was in their grasp if they wanted to have more
       granular detail they could have got it, but they never
       did that.  Anyway, that is all history.
           So that is all I want to say about the agreed
       implied terms as a route into the main debate here which
       is relational contract.
           We have dealt with this in closing at paragraph 259
       to 325 {A/8/98}, which is obviously a massive section of
       our closing because of course it is an important point.
       But I am going to take you now to Yam Seng and look at
       it in some detail.
           You know the basic story now and you have been taken
       through it by my learned friend, but what I hope to do
       is try and tease out firstly what is being said here as
       a matter of general principle and what the ratio of case
       is, because in my submission they are very different
       things.  And the ratio of the case is important because
       that informs, when you look back at the earlier section
       where the learned judge is setting out a very
       interesting and learned discussion about the historical
       involvement really of this area of the law, and it puts
       it in context.
           If we go to the case, which is in the opening
       authorities bundle behind tab 2 {A1.1/43/1}.
           The first thing to pick up is at paragraph 26
       {A1.1/43/10}.  This was obviously a distribution
       agreement and you know the details about the nature of
       that, I don't need to go into that, but you can see it
       is a short document prepared without the assistants of
       lawyers and consists of eight clauses.  So that is
       the first point to note: this is a homemade agreement,
       very short, and prepared without the benefit of lawyers.
           We also know that this is a contract with a period
       of 2.5 years, assuming that Yam Seng hits the targets.
       In fact the parties later removed the requirement for
       targets so it became 2.5 years irrespective of targets
       and we get that from paragraph 37 {A1.1/43/13}.
           So that is the background.
           Then in terms of the passages relied upon, we can
       start at paragraph 131 {A1.1/43/30}.  What the judge is
       doing here is dealing with terms implied by law.  And as
       my learned friend correctly submits on the basis of Geys
       in the Supreme Court, there are two types of implied
       term: those implied by law, that means they are implied
       in any contract of the variety of which they are to be
       implied.  It doesn't depend on the facts.
           So examples are an employment contract.  In every
       employment contract, irrespective of the terms, there is
       an implied term of trust and faith.  Mutual trust.  That
       arises out of BCCI v Ali, employees there, who had
       stigma claims as a result of the disastrous performance
       of that bank, and it went to the House of Lords and that
       term is recognised at that level for the first time.
           That is implied in every employment contract
       whatever the terms of the contract.  Implied by law.
       And that is what Baroness Hale says in Geys.
           That is what Mr Justice Leggatt is dealing with
           "Under English law a duty of good faith is implied
       by law as an incident of certain categories of contract,
       for example contracts of employment and contracts
       between partners or others whose relationship is
       characterised as a fiduciary one. I doubt that English
       law has reached the stage, however, where it is ready to
       recognise a requirement of good faith as a duty implied
       by law, even as a default rule, into all commercial
       contracts. Nevertheless, there seems to me to be no
       difficulty, following the established methodology of
       English law for the implication of terms in fact, in
       implying such a duty in any ordinary commercial contract
       based on the presumed intention of the parties."
           Everything after this we therefore know.  His
       implied terms imply in fact.  We also know of course
       that this is pre-M&S.
           He then goes through the passage my learned friend
       took you through starting really at 134, and at 135 he
       deals with the paradigm case of expectation of honesty,
       135. {A1.1/43/31}
           Then at 137 he goes down:
           "As a matter of construction, it is hard to envisage
       any contract which would not reasonably be understood as
       requiring honesty in its performance."
           So still dealing with honesty there.
           And then at 138 he expands it to say not all bad
       faith conduct would necessarily be described as
       dishonest.  And he then uses a few other words to
       describe other behaviour: improper, commercially
       unacceptable, unconscionable.  And then at 139
       {A1.1/43/32} he uses the term "fidelity to the parties'
           Then he says at 140:
           "The two aspects of good faith which I have just
       identified ..."
           I'm not quite sure what he is referring to there.
       I must say I thought he was talking about honesty on the
       one hand and fidelity and these other -- commercially
       acceptable on the other.  I know my learned friend said
       he thought that the two were the ones immediately above
       even though there are three or four.
   MR JUSTICE FRASER:  What do you say the two are?
   MR CAVENDER:  If you look at it in context, I think he was
       going back to the start of the debate at 135
       {A1.1/43/31}.  So honesty on the one hand, and then
       these other terms which are more vague: commercially
       unacceptable, unconscionable, fidelity as the other.  It
       may not matter.
           139 {A1.1/43/32} starts with "Another aspect", so
       maybe that is a hint to where he is getting the two
   MR JUSTICE FRASER:  So 139 could be the second one.
   MR CAVENDER:  Indeed.
   MR JUSTICE FRASER:  He says "Another aspect ... which
       overlaps with the first", so maybe he is talking about
       two aspects that overlap.  The first is honesty and the
       second is the one at 139.
   MR CAVENDER:  Quite.
   MR JUSTICE FRASER:  But whatever it is ...
   MR CAVENDER:  Quite.  And then 141:
           "What good faith requires is sensitive to context.
       That includes the core value of honesty."
           So he is going back to honesty again here.
           "... intending rely on it while knowing the
       statement to be untrue.  Frequently, however, the
       requirements of honesty go further."
           And that is the information known to be -- rely on
       and then later becomes untrue, those kinds of things.
           142 is dealing with deliberate omissions to
       disclose.  Then we have:
           "Arguably at least that dichotomy is too
           So on the one hand you have fiduciary obligations,
       partnership, trustee on the one hand, and some other
       animal he is trying now to describe.  And he says
       "arguably" so it's discursive.
           Then he gets into the part where he talks about
       relational contracts, the elements of which are it goes
       beyond a simple exchange and there is a longer term
       contract he is talking about here.  High degree of
       co-operation, predictable performance.  And he gives
       examples over the page {A1.1/43/33}, some joint venture
       agreements, franchise agreements and long-term
       distributorship agreements.
           Then going over to 149 --
   MR JUSTICE FRASER:  Are we passing over 144? {A1.1/43/33}
   MR CAVENDER:  I think my learned friend read that to you.
       I don't particularly want to pass over it, I'm not going
       to read every paragraph.
   MR JUSTICE FRASER:  I am not suggesting you should read
       every paragraph.  But the last sentence of 144
       encapsulates, doesn't it --
   MR CAVENDER:  It's objective.  It's not talking about what
       people might have --
   MR JUSTICE FRASER:  Exactly.  And we had an exchange about
       that yesterday in relation to a possible difference so
       far as the NTC and the SPMC are concerned but not in
       this context.  But it is objective, it is reasonable
       people in the situation of these contracting parties.
   MR CAVENDER:  My Lord, yes.  All that is reflecting is the
       test in Marks & Spencer, this is pre-Marks & Spencer,
       but that is an echo back to -- or an echo forward
   MR JUSTICE FRASER:  So over to --
   MR CAVENDER:  149, my Lord, yes {A1.1/43/34}:
           "Third, a further consequence of the fact that the
       duty is based on the parties' presumed intention is that
       it is open to the parties to modify the scope of the
       duty by the express terms of their contract and, in
       principle at least, to exclude it altogether. I say 'in
       principle at least' because in practice it is hardly
       conceivable that contracting parties would attempt
       expressly to exclude the core requirement to act
           Pausing there, that is replete with the possibility
       that the express terms of the contract may in fact
       prevent the implication of a wide term of good faith.
       But what he saying is, well, in principle you could, but
       it is hard to see how such a contract term could even
       prevent the dishonesty element.
           So what that is in my submission is a heavy signal
       that even when he is talking about relational contracts,
       they don't all necessarily by reason of that label
       become contracts in which you imply the good faith term,
       whichever one that is, and there is a smorgasbord of
       variety, as you can see in the earlier part I've shown
       you, namely, the various iterations of commercially
       unacceptable, unconscionable, fidelity to the bargain.
           What he seems to be saying is he can imagine a world
       in which those are excluded but he can't imagine a world
       where it would be very easy at least for the contract
       term to exclude the core duty of honesty.
           That in my submission is a powerful point in support
       of my construction which is the proper approach should
       be to identify whether you are dealing with a relational
       contract in principle, then have regard to what implied
       terms of a good faith variety, or any variety, honesty
       variety, see if they pass the test in Marks & Spencer if
       necessary, and then proceed in that way.
           If I was wrong then that paragraph wouldn't make any
           Yes, my learned junior -- 147, the first sentence,
       is also supportive of that:
           "First, because the content of the duty is heavily
       dependent on context and is established through a
       process of construction of the contract ..."
           Indeed we will go to Globe later.  Lord Justice
       Beatson in the Court of Appeal says very much the same
       thing.  So in my submission there is an established
       authority, not absolutely clear but clear enough that
       that is in my submission the proper approach.
           We get at 150 at the end, which is obvious, that
       good faith is used in different senses and you have to
       be clear as to which sense it is being used in.
           154 then:
           "I have emphasised in this discussion the extent to
       which the content of duty to perform a contract in good
       faith is dependent on context.  It was Mr Salter's
       submission [he was obviously counsel in this case] that
       the relevant content of the duty in this case was
       captured by two more specific terms which Yam Seng
       contends are to be implied into the agreement.
       I therefore turn to consider these."
           Pausing here.  In a case where there is a debate
       about what the judge is saying is the content of the
       duty, to see what he in fact did in this case is in my
       submission illuminating.  And we will see what he did,
       because what he did was say to Mr Salter, "No, your
       terms that you want to imply in this contract are too
       wide, they are unilateral, they are too onerous, and
       neither of them has the good faith element in them of
       either knowledge or dishonesty".
           So let's look at paragraph 155 and 156 carefully
       {A1.1/43/35}.  Because what the judge is saying is he is
       dealing here now with -- he is buying the argument there
       should be some form of good faith implied term, we are
       in that territory, he is saying, and this is how
       in fact -- he is not saying "I am implying a term of
       good faith, the (inaudible) of good faith to another",
       he is saying "I am in that area and I am going to imply
       these two terms", and let's see what he does:
           "The first more specific term said by Yam Seng to be
       implied in the agreement is a term that ‘insofar as
       [ITC] instructed or encouraged [Yam Seng] to incur
       marketing expenses it would not do so for products which
       it was unable or unwilling to supply ..."
           Pausing there, that is the first one.
           And then the second one is:
           "... nor offer false information on which Yam Seng
       was likely to rely to its detriment."
           They are the two.
           The judge says:
           "As I see it, the essential difficulty with this
       formulation is it does not distinguish between
       encouraging expenditure in the expectation that products
       would be supplied or providing false information
       dishonestly ..."
           So doing it of itself would not be a breach of the
       good faith term, you have to do it dishonestly.
           To carry on:
           "... or providing false information dishonestly and
       doing so innocently.  In my view, such a distinction is
           Pausing there, asking rhetorically why is he saying
       that?  He is saying that because he sees this -- the
       good faith term that he is looking at here having
       honesty and good faith and knowledge at its core.
       Because if he didn't, he would have been quite happy
       with Mr Salter's term which is otherwise
           If you compare it to my learned friend's terms that
       he wants to imply, only one of them has any element of
       knowledge or good faith about it.  I will take you to
       them in due course.  They are all vanilla unilateral
       terms imposing an obligation on Post Office to do
       certain things, not knowing things and then having to do
       them, and not doing things dishonestly.  They are
       vanilla unilateral onerous terms.  And under Yam Seng
       Mr Justice Leggatt would not have accepted them.
           "To take the first limb of the alleged implied term,
       insofar as ITC led Yam Seng to expect the products were
       going to be supplied, believing it would be able to
       supply them and intending to do so, there would be no
       lack of good faith on the part of ITC.  The position
       would be different if ITC wilfully led Yam Seng to
       expect that products would be supplied in circumstances
       where ITC did not in fact intend to supply them or knew
       that it would be unable to do so."
           Again triggering a good faith obligation.
           "Conduct of the latter kind would be clearly
       contrary to standards of commercial dealing which the
       parties would reasonably have taken for granted; but I
       can see no basis for implying any more onerous
           So he is saying it is tethered in knowledge and
       dishonesty.  So that is the first implied term.
           Then he goes on:
           "The same distinction need to be drawn in relation
       to the second limb of the alleged implied term."
           Looking above at 155, that is "nor offer false
       information on which Yam Seng was likely to rely to its
           Carrying on:
           "I can see no justification for implying an
       unqualified obligation not to provide false information
       equivalent to a warranty that any information given by
       ITC on which Yam Seng was likely to rely would be true.
       By contrast, it was clearly implied that ITC would not
       knowingly [in italics] provide false information on
       which Yam Seng was likely to rely."
           My Lord, in my submission, that is the ratio of this
       case.  It comes out of the earlier interesting
       discussion, but that was the basis on which the judge
       was willing to imply terms in this case.  That is how he
       used -- however he describes it earlier in a discursive
       and helpful way, because obviously this is a new area,
       the ratio of this case is that the implication of
       anything based on Yam Seng of good faith has to have
       knowing or honesty in it, and if you put forward implied
       terms that don't have those requirements in them the
       court will reject it.
   MR JUSTICE FRASER:  That is not correct.  You need to look
       at paragraph 159, please {A1.1/43/36}.  The ratio of
       this case is that on the specific facts, the term that
       was found is the one at 159 and 164.  Effectively that
       ITC would not authorise the sale of any product in
       the domestic market of any territory covered by the
       agreement at a lower retail price than the duty free
       retail price specified in the agreement with Yam Seng.
       That is the ratio because that is defining what the term
           You are right, he gets to that by doing what you
       have explained, but it is 159 to 164 that demonstrates
       his application of his earlier principle to the finding
       in that case.
   MR CAVENDER:  My Lord, I am not sure that is right.
   MR JUSTICE FRASER:  Mr Cavender, I am pretty sure it is
       right.  Because the putative implied term he is
       expressing in 159 --
   MR CAVENDER:  It is a different one, my Lord.  There are two
       sets of implied terms.  One is what he is dealing with
       at 155.  The 159 is a completely different term.
   MR JUSTICE FRASER:  I know, but it doesn't involve honesty.
   MR CAVENDER:  Exactly --
   MR JUSTICE FRASER:  And it doesn't involve what you told me
       was the ratio, I think at page 16 of today's transcript
       at line 16 {Day15/17:22}, that the implication of
       anything based on Yam Seng of good faith has to have
       knowing or honesty in it.  159 to 164 doesn't have
       honesty in it at all.
   MR CAVENDER:  It doesn't, my Lord.  But there was a special
       case, I think I said in opening -- let's see what he
       says.  This is different term entirely.
   MR CAVENDER:  So what I have said so far in relation to 156,
       in relation to those two terms is correct.  They are
       different and separate and distinct from the implied
       term he is dealing with at 159.  Completely different.
           160 says {A1.1/43/36}:
           "In ordinary circumstances I would see no
       justification for implying such a term. The reasonable
       commercial expectation would be that ITC was free to
       sell its products to others on such terms as it chose
       unless it had expressly agreed otherwise with Yam Seng.
       Three particular contextual features of this case,
       however, lead me to conclude that there was in fact such
       an implied term of the agreement."
           Then he goes through "it is skeletal", 162:
           "... significant that ... duty free retail price for
       each product.  Yam Seng was thus constrained by the
       agreement from selling or authorising the sale ..."
           And then at 163 and 164:
           "The third and in my view decisive contextual
       feature is that, as was common ground, the background to
       the agreement included an industry assumption that
       retail prices in domestic markets will be higher than
       the corresponding duty-free retail prices at airports or
       on board aeroplanes. The parties would reasonably have
       understood and expected that their obligations would
       reflect this assumption without needing to spell this
           "164.  In my view these matters, taken together,
       lead to the necessary implication that ITC would not
       authorise the sale of any product in the domestic market
       of any territory covered by the agreement at a lower
       retail price than the duty-free retail price for the
       product which had been specified in the agreement with
       Yam Seng."
           That is a distinct and different implied term,
       completely, from that being considered at 155.
   MR JUSTICE FRASER:  But that is the term that he concludes
       the duty or the function of the relational contract
       imposes on these parties albeit that was not something
       which was expressly included within the agreement.
   MR CAVENDER:  My Lord, 159 in my submission is classic
       Marks & Spencer.
   MR JUSTICE FRASER:  You say he would have got to the
       conclusion at 164 with Marks & Spencer.
   MR CAVENDER:  Indeed.
   MR JUSTICE FRASER:  All right.
   MR CAVENDER:  And 155 is the good faith term, that is good
       faith, and he is saying "By the way, also I normally
       I wouldn't imply the term at 159", and he says as much,
       in ordinary circumstances, but then he explains why it
       was necessary in this case to do so.  You don't see any
       hint of him relying on his good faith speech and
       reasoning in that.  This is free-standing, bog-standard
       implied term.
           My Lord, that is Yam Seng.  In my submission, people
       rely on it for -- in a much more broad sense than the
       words of the decision and the ratio of the decision
           If we then go to Al Nehyan, which is the opening
       authorities in the same bundle at tab 8.  {A1.1/72/1}
           Of course this is a rather different case.  You
       might have called it back in the day a quasi-partnership
       type thing, and the judge here talks about it
       potentially being a JV if you want to call it that.  But
       there of course was no written agreement here.  It was
       a classic example of two friends, one of whom was richer
       than the other and using his money to try and assist in
       the creation of this travel business.
           If we go to 140 to make that good. {A1.1/72/37}
   MR JUSTICE FRASER:  The nature of the relationship.
   MR CAVENDER:  Exactly.
           "Mr Kent’s pleaded case is that, from 2008 onwards,
       he and Sheikh Tahnoon were in a partnership together, or
       alternatively in another form of joint venture in which
       they owed each other fiduciary duties."
           And he set out the case there, says there is no
       fiduciary duties owed.
           142 {A1.1/72/38} is worth dealing with in passing.
       Two points to note here dealing with the background to
       the relationship:
           "First, what the parties have contractually agreed
       may determine whether their relationship is o f a
       fiduciary nature – for example, whether they have
       entered into a partnership or whether one has agreed to
       act as agent for the other.  Second, where the parties
       are in a fiduciary relationship the scope and content of
       the fiduciary duties owed by one to the other will be
       shaped and may be circumscribed by the terms of the
       contract between them."
   MR JUSTICE FRASER:  Here you rely I think on -- they might
       be two sides of the same coin or they might be different
       aspects of it, but you say the SPMs are agents.
   MR CAVENDER:  Indeed.
   MR JUSTICE FRASER:  And they are fiduciaries.
   MR CAVENDER:  Indeed.
   MR JUSTICE FRASER:  But their fiduciary is the fiduciary
       status only as a function of them being agent, or is it
       also as a function of the fact they are dealing with
       money et cetera, et cetera?
   MR CAVENDER:  No, it's a function of them dealing with money
       as agent.  They have a fiduciary duty to account and
       faithfully serve their principal in that regard.
           The important point here, my Lord, and why he is
       saying this, is because that fills the space.  When you
       are saying "I am going to impose some other relationship
       in here", namely, this relational contract relationship,
       that is a heavy hint, in my submission, that where you
       have a pre-existing relationship of agent and fiduciary
       relationship then that is not going to be easy.  He
       doesn't say it expressly but it is implicit, in my
       submission, in the way he is setting this out.
           He then goes on to dealing with joint ventures at
       153 {A1.1/72/41} and he cites the case of Ross River at
       153.  That was a joint venture case where there was
       a written agreement --
   MR JUSTICE FRASER:  In a joint venture I think --
   MR CAVENDER:  Indeed.
   MR JUSTICE FRASER:  -- there are often fiduciary duties owed
       in both directions.
   MR CAVENDER:  Quite.
   MR JUSTICE FRASER:  You are not -- you don't say that you
       owed fiduciary duties to the subpostmasters.
   MR JUSTICE FRASER:  So this is a unilateral fiduciary
   MR CAVENDER:  What, where we are?  Yes, in this case,
       my Lord, yes.
   MR JUSTICE FRASER:  Yes, the instant one.
   MR CAVENDER:  Also in Ross River as it happens it was the
       same.  But the reason I take you to it is simply what
       the judge is going through and, as your Lordship knows,
       joint ventures may or may not have fiduciary
       relationships in them, either express or implication.
       But everyone knows what a joint venture is potentially.
       It's similar to a relational contract in the fact that
       there are certain ingredients of it that lead you to
       believe it falls within that recognised status of
       contract.  What terms are implied into it or not depend
       on the terms of that contract and all the circumstances,
       and Ross River shows you that in the JV context.
           Then go to 166, please {A1.1/72/45}.  That is
       the conclusion here the judge reaches that for the
       reason he sets up at 165 and before:
           "... the relationship between Mr Kent and Sheikh
       Tahnoon in the present case did not give rise to any
       legitimate expectation on the part of Mr Kent that
       Sheikh Tahnoon would put aside his own self- interest
       and consider only what was in the best interests of the
       companies or of Mr Kent in making decisions about
       whether to increase or liquidate his investment.
       Accordingly, while I accept that Mr Kent and Sheikh
       Tahnoon can be described as participants in a joint
       venture, I think it clear that Sheikh Tahnoon did not
       owe any fiduciary duties to Mr Kent."
           So that is the context.  He goes through all that,
       he goes through the fact you can have a relationship of
       agency and other things.  He then goes through you can
       have a joint venture with the implied term of good
       faith, but there is none of that here.  So he is saying,
       well, what can you have?  That in my submission is
       a strong indication.  If you have agency relationship
       with fiduciary duties that he mentions before then you
       have dealt with the space.  You can't then impose some
       lesser form of relationship upon that.
           So let's see what he says about the duty of good
           "It does not follow from the conclusion that he did
       not owe any fiduciary duties to Mr Kent that the
       Sheikh’s entitlement to pursue his own self- interest
       was untrammelled."
           And then he goes to Yam Seng.
   MR JUSTICE FRASER:  Which paragraph are we in?
   MR CAVENDER:  167, my Lord.  He is saying you can't treat
       all other contracts as if they are alike:
           "In particular, I drew attention to a category of
       contract in which the parties are committed to
       collaborating with each other, typically on a long term
       basis, in ways which respect the spirit and objectives
       of their venture but which they have not tried to
       specify, and which it may be impossible to specify ..."
           Pausing there.  Post Office here has done, it has
       got a full professional contract.  It has within that
       a whole myriad of express terms including as to
       accounting.  It does have within that the express
       appointment of an agent and a fiduciary.  So we are
       a million miles from the kind of territory the judge has
       in mind here which is in this case no contract at all,
       in Yam Seng a homemade contract of I think of eight
       terms.  Very different territory.  And what he is saying
       is notwithstanding that, the court can say this is a
       relational contract, and then look at it in that light
       to see what kind of terms may be appropriate, depending
       on the facts and the terms of any contract there are, to
       see what it is going to do.  But you will notice he is
       talking about a long-term contract, a long-term
           And then in 170 {A1.1/72/46} he deals a couple of
       cases post-Yam Seng.  In fact you will see from our
       written closing there has been a whole range of cases
       that haven't followed, or his more discursive parts of
       his judgment have not fallen on fertile ground at all in
       terms of the wider -- the wider way in which the
       discursive part of the judgment goes.
           What Lord Justice Leggatt, as he then was by this
       stage, recalls -- I will go to Globe Motors in a moment
       in 170:
           "Beatson LJ in the Court of Appeal endorsed the view
       that, in certain categories of long-term contract of the
       kind mentioned in the Yam Seng case, courts may be more
       willing to imply a duty of good faith - which he
       characterised essentially as a duty to cooperate."
           That is quite interesting because there is obviously
       confusion there as to quite what Lord Justice Leggatt is
       talking about and what he is saying Lord Justice Beatson
       is talking about in Globe.  We will go to that.  But you
       can see the merging of these two ideas.
           In 173 {A1.1/72/47} what the judge does is identify,
       173 and 174, the key paragraphs where the judge
       identifies lacuna in this situation.  So he sets out:
           "I have held that Sheikh Tahnoon did not agree to
       provide funding on an open-ended basis and did not owe
       any fiduciary duties to Mr Kent.  But I think it clear
       that the nature of their relationship was one in which
       they naturally and legitimately expected of each other
       greater candour and cooperation and greater regard for
       each other's interests than ordinary commercial parties
       dealing with each other at arm’s length."
           So the judge has identified a gap, and now he is
       working to fill it, but there must be a gap.
   MR JUSTICE FRASER:  Where were you just reading from?  The
       middle of 173?
   MR CAVENDER:  The top four or five lines, my Lord.
   MR CAVENDER:  He then goes in the middle about
       the collaboration based on personal friendship, greater
       trust than is inherent in ordinary contractual bargain.
           He then says at the bottom:
           "The pursuit of the venture therefore required
       a high degree of co-operation between two participants."
           Then he says at 174, as a result of all that, that
       this is an instance of a classic relational contract:
           "In my view, the implication of a duty of good faith
       is essential to give effect to the parties' reasonable
       expectations ..."
           And he says complying with the Marks & Spencer test.
       So that is really -- that is the ratio, essentially.
           The last bit of 173 is important:
           "They did not attempt to formalise the basis of
       their co-operation in any written contract ..."
           Unlike the present case.
   MR JUSTICE FRASER:  I don't think that is particularly
       important because Yam Seng has shown that the presence
       of a written contract or the -- this case shows the
       absence of a written contract.  They are factual aspects
       you take into account but they are not essential one way
       or the other.  They are not determinative.
   MR CAVENDER:  Not determinative, my Lord, no.  But it is
       relevant that in this particular case he outlines, if
       you like, 173, why he is willing to do it.  One of the
       reasons is there is no written contract, firstly, and no
       written contract which formalises the basis of the
       co-operation.  In our case we have a written contract
       which contains the basis of co-operation, namely, the
       express terms and agency.
   MR JUSTICE FRASER:  I understand that.  The first two
       sentences of paragraph 174 show that at least so far as
       this judgment is concerned, this judge is treating
       a relational contract as being one that leads to
       an implication of a duty of good faith.
   MR CAVENDER:  He certainly -- he doesn't break it down.  He
       jumps, you are quite right --
   MR JUSTICE FRASER:  I wouldn't say he jumps.  He is using
       them as interchangeable, you are saying one is a subset
       of the other.  Because you say you can have a relational
       contract that doesn't have a duty of good faith.
   MR CAVENDER:  Correct.
   MR JUSTICE FRASER:  So that is a subset of being relational.
   MR CAVENDER:  And I think in the bit of Yam Seng I showed
       you, about it depends on the contract and all the rest
       of it, that Mr Justice Leggatt, as he then was,
       anticipates that too.  But you are quite right, my Lord,
       here he uses the term in this judgment as if relational
       contract means his implied term goes in.
   MR JUSTICE FRASER:  And if, because obviously that is
       a point for me to decide, if the term "relational
       contract" means a duty of good faith is imported, you
       say this isn't a relational contract.  In fact you say
       it is not a relational contract anyway, regardless of
       what that term means.
   MR CAVENDER:  I do in fact, yes.
   MR JUSTICE FRASER:  Yes.  Understood.
   MR CAVENDER:  But your Lordship is quite right, here he
       doesn't break it down in that way.  But that is not to
       say it is necessarily right that he didn't --
   MR JUSTICE FRASER:  It is only persuasive anyway because it
       is first instance.  It is highly persuasive but it is
       first instance.
   MR CAVENDER:  The second point here that I need to draw to
       your attention where I say the judge went wrong is
       the -- because the first part of 174 is fine, he implies
       it on -- as a question of fact.  He then goes on, when
       I would reach the same conclusion, by applying the test
       for the implication of a term in law.
   MR CAVENDER:  "... on the basis that the nature of contract
       as a relational contract implicitly requires treating it
       as involving an obligation of good faith."
           In my submission he goes wrong there.
   MR JUSTICE FRASER:  He goes wrong.
   MR CAVENDER:  Yes, he goes too far.  I think it is obiter
       but he goes too far.  Because as is clear if you go to
       Yam Seng itself, back to that, at paragraph 131
       {A1.1/43/30}.  This is the passage I took you to
       earlier.  It is very clear in Yam Seng he is not
       implying this term by law, he is implying it in fact.
       But in Al Nehyan he says he also would get to the same
       result by applying it in law.
           As I said earlier on today, if you apply a term in
       law you imply it whatever the terms of the contract.  It
       goes in as of right.  It doesn't matter what the terms
       of the employment contract are, it goes in.  So on that
       basis, and sticking with this point, we will go to Globe
       again in a moment, if we go to Globe Motors and what
       Lord Justice Beatson says.
   MR JUSTICE FRASER:  So are we going to Globe now?
   MR CAVENDER:  If we can, my Lord, yes, behind tab 7
   MR CAVENDER:  It's really paragraph 65 {A1.1/62/19},
       starting with 65, talking about long-term contracts,
       et cetera.  64 getting into 65.  And he says at the end:
           "There are no special rules of interpretation
       applicable to long-term contracts of the type that are
       sometimes called relational contracts.  But in an
       appropriate case ..."
           The court will do so, effectively.
           And then if we go to 67 {A1.1/62/20}:
           "One manifestation of a flexible approach referred
       to by Professor McKendrick and Lord Steyn is that in
       certain categories of long-term contract ..."
           I emphasise those words.
           "... the court may be more willing ..."
           "May be", not will, "may be more willing".
           " ... to imply a duty to co-operate, or, in the
       language used by Leggatt J in Yam Seng, a duty of good
           So not in every case, they "may be more willing".
       That in my submission supports the approach I urge the
       court to take:
           "Leggatt J had in mind contracts between those whose
       relationship is characterised as a fiduciary one and
       those involving a longer-term relationship between
       parties who make a substantial commitment. The contracts
       in question involved a high degree of communication,
       co-operation and predictable performance based on mutual
       trust and confidence ..."
           And then opposite F he gave as examples franchise
       agreements and long-term distribution agreements, so he
       gave examples, he's talking about here, of relational
       contracts.  And Lord Justice Beatson says this:
           "Even in the case of such agreements, however, the
       position will depend on the terms of the particular
           So it depends.  Not that they go in as of right.  He
       uses the word "may" in the third line of 67, and here he
       says it depends on the terms of the contract.
           Then he deals with Carewatch --
   MR JUSTICE FRASER:  Are you talking about 68 now?
   MR CAVENDER:  Yes.  And at the end of 68 {A1.1/62/20}:
           "The second is that, as seen from the Carewatch Care
       Services case, an implication of a duty of good faith
       will only be possible where the language of the contract
       viewed against its context, permits it."
           So again it depends on the contract whether or not
       a relational contract, otherwise so-called, can have
       such a term implied.
           "It is thus not a reflection of a special rule of
       interpretation for this category of contract."
   MR JUSTICE FRASER:  He makes that -- that is the second of
       his observations flowing on from the first sentence of
       paragraph 68 which explains why in this judgment the
       court is not considering the potential for implied
       duties of good faith and English law because in that
       case the question is one of interpretation or
       construction, and not one of implication, and they are
       two different approaches.
   MR CAVENDER:  My Lord, he says that, but then goes on and
       are does so a bit.  He is saying this isn't the time to
       write ten pages on it.  But his comments are obviously
       addressed to that question.
   MR JUSTICE FRASER:  His comments are then addressed on the
       fact that this is a construing of the terms or
       interpretation case, not an implication case, isn't it?
   MR CAVENDER:  It is obiter, certainly, but he is dealing
       with the same subject matter --
   MR JUSTICE FRASER:  Obviously he is dealing with the same --
       what I am saying is the sentence you have just read out,
       which starts at the bottom of page 620, is the second of
       his two observations against h:
           "It suffices to make two observations ..."
           Which follow on from him saying in this case we, the
       court, are dealing with interpretation or construction
       of terms, we are not dealing with implication, and
       implication is done differently because of what
       Lord Neuberger has said, and then he quotes I think
       Lord Bingham in Philips Electronique.
   MR CAVENDER:  My Lord, yes.  But when he says --
   MR JUSTICE FRASER:  It is a more ambitious undertaking to
       get into implying contract terms rather than construing
       the terms themselves.
   MR CAVENDER:  My Lord, yes.  But when you read the last line
       of 68, when he is talking about "this category of
       contract" he is talking about relational contract.
   MR JUSTICE FRASER:  Obviously.
   MR CAVENDER:  And the important point is this, my Lord, in
       connection with whether Lord Justice Leggatt has gone
       slightly too far and is obiter in Al Nehyan is that if
       you imply it as a matter of law, it doesn't matter what
       the terms of the contract say.  So if Lord Justice
       Beatson is saying, as in my submission he is clearly
       here, and indeed as Mr Justice Leggatt, as he was in
       Yam Seng, says, it depends on the terms of the contract,
       then that is not fertile ground to imply a term as
       a matter of law.
   MR CAVENDER:  That is a very strong indication that ... And
       the other thing, my Lord, of course, is that to do so
       you, would need to be very clear what qualifies as
       a relational contract and what term you are actually
       going to apply, ie you have to be further down the road
       than we are at the moment with what a relational
       contract really is and what the term of good faith
       really is.
           Yam Seng tells us that the content of that duty will
       depend and differ -- the contract in Yam Seng in the
       term that I focused on of course there was a knowledge
       and knowing dishonesty requirement, in other cases it
       may be framed in a different way, but it is very
       difficult in those circumstances to say, well --
   MR JUSTICE FRASER:  Mr Cavender, you ignored the term that
       he found in Yam Seng.
   MR CAVENDER:  My Lord, I didn't.  What I concentrated on is
       the one that in my submission is and remains the
       relevant one for the purposes of this argument.  He then
       implied a term on a standard necessary basis based on
       pricing.  That was not part of the good faith analysis.
   MR JUSTICE FRASER:  I have your submissions on that.
   MR CAVENDER:  My Lord, yes, you do.
   MR JUSTICE FRASER:  It is clear it is done on a case by
       case -- it is clear that the scope of the duty of good
       faith is fact-specific.
   MR CAVENDER:  And whether to imply it as well is
       fact-specific.  Whether you are able to do so, as
       Lord Justice Beatson says, depends on the terms of the
       contract.  And as Lord Justice Leggatt says in
       Al Nehyan, if you have an existing relationship -- or he
       says it implicitly, I say, in the earlier part of that
       judgment.  If you have fiduciary duties or agency or
       partnership or other relationships, then that is an
       indication -- there is no space, there is no lacuna to
       put in some other type of relationship the parties
       hadn't contracted for.
           In relation to this point on implication in law, if
       I can take you to Sir Kim Lewison's book Interpretation
       of Contracts.  You will find that in volume 2, tab 50,
       the sixth edition.
   MR JUSTICE FRASER:  Have we finished with Globe?
   MR CAVENDER:  I was going to take you to that separately.
   MR JUSTICE FRASER:  Right.  So we're going to Lewison.
       Which tab?
   MR CAVENDER:  Volume 2, my Lord, tab 50.  If you go to
       page 303 of the extract you will see at the bottom of
       the page a citation, Societe Generale.  Lady Hale
       effectively in Geys, we have seen that, reflected what
       Dyson, Lord Justice, had said in an earlier case.
   MR JUSTICE FRASER:  So where are we on 303?
   MR CAVENDER:  At the bottom, Societe Generale.  My learned
       friend showed you that, if you remember, the dichotomy
       that Lady Hale identified.  So we are dealing here with
       implications of fact or law.  Then if we go over to 305,
       the second main paragraph, where Sir Kim Lewison writing
       extrajudicially says:
           "It must be recognised, however, that the
       relationship giving rise to the implication of a term as
       an incident of that relationship must be defined with
   MR JUSTICE FRASER:  "Sometimes the description is a general
   MR CAVENDER:  Exactly.  So if you have an employer/employee
       then of course that is well-known, and so on.
           Then at the bottom of this page:
           "There has been some debate whether the approach to
       standardised implied terms ..."
           That is shorthand for terms implied by law.
   MR JUSTICE FRASER:  Where are we?
   MR CAVENDER:  At the bottom of 305:
           "There has been some debate ... that is in terms
       implied in law."
           And then he refers to Yam Seng.
   MR JUSTICE FRASER:  "... enables the court ..."
   MR CAVENDER:  Then at the bottom of that page:
           "However, in TSG ...(Reading to the words)...
       commercial contracts."
   MR JUSTICE FRASER:  Yam Seng says it is not all commercial
   MR CAVENDER:  Exactly.
           At footnote 86 the author agrees:
           "Leggatt J's general analysis has not been
       enthusiastically received.  Look at Compass Group UK,
       Mid Essex, Carewatch ..."
           And a number of other cases.
           Then over the page the author says at the top of
           "It is not considered that at least English law
       recognises a general indication of the term of good
           So my Lord, the important point here I was getting
       at was the point as to whether the judge was right,
       Lord Justice Leggatt in Al Nehyan was right obiter to
       say although I have implied it in fact, I would have
       done it in law as well.  In my submission he went too
       far in that respect, not that it makes any difference to
       the result of that.
           Supporting that point as well, can I take you to
       Monde Petroleum.
   MR JUSTICE FRASER:  Shall I put Lewison away?
   MR CAVENDER:  Yes, thank you.
           Volume 2, tab 41, please.  {A1.1/69/1}  The decision
       of Richard Salter QC sitting as a deputy.  I dare say he
       may have been the same Mr Salter.
   MR JUSTICE FRASER:  I think he is.  Mr Draper says he isn't.
       I'm not sure about that, Mr Draper.
   MR CAVENDER:  It may not matter, my Lord.
   MR JUSTICE FRASER:  It almost certainly doesn't matter.
   MR CAVENDER:  For the points I wanted to --
   MR JUSTICE FRASER:  This Mr Salter is sitting as a deputy in
       Monde Petroleum.
   MR CAVENDER:  Indeed.  It is really at 247 and following --
   MR JUSTICE FRASER:  I think Mr Draper is right, it is
       in fact a different Mr Salter, I hope.
   MR CAVENDER:  As your Lordship says, it doesn't really
       matter.  It was an aside.
   MR JUSTICE FRASER:  It was to wake everyone up, except you
       and I because obviously we are awake anyway.
   MR CAVENDER:  So 247 and following {A1.1/69/70}, "Analysis".
           "There is no general doctrine of ‘good faith’ in
       English contract law.  A duty of good faith is implied
       by law as an incident of certain categories of contract
       (for example, contracts of employment and contracts
       between partners or others whose relationship is
       characterised as a fiduciary one)."
   MR JUSTICE FRASER:  Where are we looking, sorry?
   MR CAVENDER:  Paragraph 249:
           "However, in all other categories of contract --
       including the CSA -- such a duty will only be implied
       where the contract would lack commercial or practical
       coherence without it and where all the other
       requirements for implication are met.  By reference to
       Baroness Hale’s classification of implied terms in Geys,
       such a term falls into the first category, not the
   MR JUSTICE FRASER:  What is the first category there?
   MR CAVENDER:  Implied by fact.  I will take you to Geys --
   MR JUSTICE FRASER:  No, I thought he was talking about
       an identification of the categories in this paragraph.
       He is talking about her categories.
   MR CAVENDER:  Indeed.  Do you remember, the first was fact,
       the second was law.  I will take you to it.
           Then the judge deals with Yam Seng.  And it is
       really the passage at the top of the following page
           "... and in which the implication of the term
       requiring the parties to perform their obligations of
       good faith might therefore sometimes be justified.
       However, it is clear the mere fact a contract is a
       long-term or relational one is not of itself sufficient
       to justify such an implication.  As Beatson LJ recently
       noted in Globe '... an implication of a duty of good
       faith will only be possible where the language of the
       contract viewed against the context permits it.  It is
       thus not a reflection of the special rule of
       interpretation for this category of contract ...'"
           In my submission, paragraphs 249 and 250 accurately
       reflect the law as at the present moment and I recommend
       them to you --
   MR JUSTICE FRASER:  What do, sorry?
   MR CAVENDER:  249 and 250 represent a summary --
   MR JUSTICE FRASER:  I think it is a bit more complicated
       than those two paragraphs.
   MR CAVENDER:  It is, but if one wanted a summary then in my
       submission that contains the basic elements of it.
   MR JUSTICE FRASER:  There is appellate authority that this
       is a contentious area.
   MR CAVENDER:  Can I take you to Geys?
   MR JUSTICE FRASER:  I think between you, I started keeping
       a tally this week of how many times each of you had told
       me you were in fact involved in a case and when I got to
       double figures I decided I would stop keeping count.
       But just remind me how one pronounces it.
   MR CAVENDER:  "Gees", my Lord.  My learned friend was saying
       "Gaze".  He's a Belgian national.  {A1.1/42/1}
           The important passage of course is where -- and
       of course you understand the context of this.  There is
       a dispute about a merchant banker and a bonus and being
       terminated, and terminated in quite a vicious way
       because his bonus is too big and they want to terminate
       before year-end.  He's given three months' notice: out
       the door, pack your stuff.  And that is relevant to
       later submissions about termination.  My learned friend
       says there should be some cog on the right.  This is
       almost similar to an employment contract, he says, the
       Post Office situation.  Of course I don't accept that.
       But even if it was, Geys is a good example where three
       months' notice is given for good bad or other reason,
       and the Supreme Court of course had nothing --
   MR JUSTICE FRASER:  Just remind me where we were looking at
       this.  I have currently got four volumes on the go.
   MR CAVENDER:  My Lord, you can put them all away apart from
       this one.
   MR JUSTICE FRASER:  Which is "this one"?
   MR CAVENDER:  Which is behind tab 31 in Geys.
   MR JUSTICE FRASER:  This is what we were calling V1,
       I think.
   MR CAVENDER:  The relevant paragraph you were shown was 55
       by my learned friend.  {A1.1/42/25}  Having dealt with
       the facts of the case and Mr Geys and the two
       submissions, what I said at 51 and what Mr Jeans said at
       53, the judge said:
           "In this connection, it is important to distinguish
       between two different kinds of implied terms. First,
       there are those terms which are implied into a
       particular contract because, on its proper construction,
       the parties must have intended to include them: see
       Attorney General of Belize v Belize ..."
           This of course was before Marks & Spencer.
           "Such terms are only implied where it is necessary
       to give business efficacy to the particular contract in
           So those terms are implied in fact.
           "Second, there are those terms which are implied
       into a class of contractual relationship, such as that
       between landlord and tenant or between employer and
       employee, where the parties may have left a good deal
       unsaid, but the courts have implied the term as a
       necessary incident of the relationship ..."
           So that is where the dichotomy at Supreme Court
       level has been confirmed.  My learned friend said
       really, well, that is Supreme Court authority.  Well, it
       is of course for the dichotomy, but not for the fact as
       to whether in a relational contract you have an implied
       term of fact or of law.  But what it does do is identify
       there are two categories.
   MR JUSTICE FRASER:  Yes, and in Al Nehyan the judge there
       said he would reach the same route in both categories
       you and you say he is wrong on the second one.
   MR CAVENDER:  Exactly.  He went too far, it is obiter and he
       didn't need to.  And it is contrary to what he said in
       Yam Seng, it is contrary to what Lord Justice Beatson
       says in Globe, it is contrary to what Sir Kim Lewison
       says in Interpretation of Contracts, and it is contrary
       to principle in a situation where again Mr Justice
       Leggatt says in Yam Seng it depends on the terms of the
           The whole point of a term implied in law, what Lady
       Hale says are standardised terms, is they are
       standardised.  It doesn't matter what the contract says,
       they are in.
           So then in terms of what Court of Appeal authority
       there is, could we go to Mid Essex Hospital, which was
       the case cited by Sir Kim Lewison in his book.
       Volume 1, tab 33, please. {A1.1/44/1}  I think if we go
       straight to paragraph 82 {A1.1/44/21} you will see there
       the citation of the Geys decision I have just taken you
   MR JUSTICE FRASER:  What does "intrinsic" mean?  Fact or
   MR CAVENDER:  I'm not sure the way Lord Justice Jackson is
       using that term here.
   MR JUSTICE FRASER:  I am not either but I can work it out.
       Because that could potentially apply to either, but then
       the second sentence makes it clear that he is dealing
       with commercial coherence.
   MR CAVENDER:  It is clear by 82, isn't it, the last
           "By reference to Baroness Hale's classification ..."
   MR JUSTICE FRASER:  Yes.  Am I to interpret the word
       "intrinsic" as meaning the first category?
   MR CAVENDER:  Indeed, yes.
   MR JUSTICE FRASER:  You think so.
   MR CAVENDER:  That is what the whole paragraph --
   MR JUSTICE FRASER:  No, I mean generally.  I don't mean in
       the sense of that paragraph, I mean generally.
       "Intrinsic" could apply to either --
   MR CAVENDER:  It is an unhelpful word, I think.
   MR JUSTICE FRASER:  All right.  So that is fact.  Her first
       category is fact, isn't it?
   MR CAVENDER:  Indeed.  This was a case of course where there
       was an express term of good faith, if you recall, and
       what the Court of Appeal says in passing is in 105 about
       Yam Seng {A1.1/44/24}:
           "... I start by reminding myself that there is no
       general doctrine of 'good faith' in English contract
       law, although a duty of good faith is implied by law as
       an incident of certain categories of contract ..."
           He seems to misunderstand I think Yam Seng because
       he says {A1.1/44/25}:
           "If the parties wish to impose such a duty they must
       do so expressly."
   MR JUSTICE FRASER:  I think he is talking about all
       contracts.  And even Mr Justice Leggatt didn't say it
       applied to all, he said it just applied to relational.
   MR CAVENDER:  Indeed.  And in passing at 112 {A1.1/44/26} it
       is quite interesting what meaning he gives to an express
       term of good faith.  He says:
           "The parties have worked together honestly
       endeavouring to achieve the two stated purposes."
           That is what he says good faith means.  So there is
           If we go then to MSC Mediterranean, in the same
       volume, tab 21.  Another Court of Appeal authority
       bearing on this issue.  {A1.1/63/1}
           This is the Court of Appeal's decision appealing
       against the decision of Mr Justice Leggatt at first
   MR JUSTICE FRASER:  Is this V1/21?
   MR CAVENDER:  It is indeed, my Lord.  It was about delivery
       and bills of lading and particularly demurrage and a
       payment for containers.  One sees that from the
       headnote.  One of the grounds of repudiation Mr Justice
       Leggatt had found below was a breach of duty of some
       kind of good faith, so that is how it comes up in this
       case.  You see that at paragraph 29 {A1.1/63/14} where
       he says:
           "The judge rightly recognised [this is Lord Justice
       Moore-Bick] that a repudiatory breach of contract does
       not automatically discharge the parties from further
       performance ..."
           And he refers to White & Carter and referring to
       what the judge, he referred to what he described as:
           "An increasing recognition in common law world of
       the need for good faith and contractual dealings, he
       reached the following conclusion ..."
           And it is set out there.  So that is the context of
       the debate.
           You can see reference at 36 to 37 {A1.1/63/16} about
       the repudiation argument, which Geys also dealt with,
       and you see that at 36 to 37 so that is that context.
           Then we come to good faith itself at 45
           "The judge drew support for his conclusion from what
       he described as an increasing recognition in the common
       law world of the need for good faith in contractual
       dealings ... a significant step in the development of
       our law of contract with potentially far-reaching
       consequences and I do not think it is necessary or
       desirable to resort to it in order to decide the outcome
       of the present case. It is interesting to note that in
       the case to which the judge referred as providing
       support for his view, Bhasin v Hrynew, the Supreme Court
       of Canada recognised that in Mid Essex Hospital Services
       NHS Trust v Compass Group this court had recently
       reiterated that English law does not recognise any
       general duty of good faith in matters of contract."
           And he refers then to Interfoto and "piecemeal
       solutions".  Then the judge says:
           "In my view the better course is for the law to
       develop along established lines rather than to encourage
       judges to look for what the judge in this case called
       some ‘general organising principle’ drawn from cases of
       disparate kinds. For example, I do not think that
       decisions on the exercise of options under contracts of
       different kinds, on which he also relied, shed any real
       light on the kind of problem that arises in this case.
       There is in my view a real danger that if a general
       principle of good faith were established it would be
       invoked as often to undermine as to support the terms in
       which the parties have reached agreement. The danger is
       not dissimilar to that posed by too liberal an approach
       to construction ..."
           So that is fairly clear, a clear warning against the
       more general debate in Yam Seng that there is some
       organising principle.  That is not to say you can't say,
       in Globe of course, the fact of a relational contract is
       now a thing.  The question is what kind of thing and
       that is still developing.  And simply because one thinks
       in an organising principle that it is a relational
       contract doesn't -- misusing one of my learned friend's
       favourite subjects, all roads lead to Rome.  They may or
       may not.  You have to decide where the road leads and
       what map you have got.  And that warning from Lord
       Justice Moore-Bick, in my submission, is timely.
           Lord Justice Tomlinson and Mr Justice Keehan agree,
       see paragraphs 52 and 65 respectively.
           So that is Court of Appeal authority saying --
       disapproving, effectively, I think one can say, of the
       more general aspects of Yam Seng.  I am not saying
       Yam Seng is wrong, it was decided on its facts perfectly
       properly on the basis of Marks & Spencer and necessary
           And that applies, my Lord, that submission, both to
       the implied terms I was dealing with in ... the first
       one I dealt with as well as the one your Lordship then
       took me to.
           If one goes back to Yam Seng to make sure
       your Lordship has the point, it applies both to the term
       at 155 and 156 as it does to the term starting at 159.
           And Globe Motors, I don't think I need to take you
       to that again as I took you to the main parts of that.
           So we have three Court of Appeal decisions:
       Mid Essex, Lord Justice Jackson; MSC, Lord Justice
       Moore-Bick; and Globe, Lord Justice Beatson, who either
       are disapproving of, or at the very least not approving
       of, the more general approach of implying good faith
       into a species of contract as a category.  In my
       submission when you stand back, the proper approach is
       that set out by Mr Salter in Monde Petroleum, and that
       proper approach is to look through the prism of
       Marks & Spencer.  That post-dates Yam Seng, and as
       Lord Justice Beatson says, is the ultimate arbiter in
       Globe.  That is the Supreme Court authority.
           And just because the implied term is coming in
       through the relational contract route doesn't make it
       any less of an implied term.  It doesn't make
       Marks & Spencer any less applicable.  The fact that it
       is potentially or may be a relational contract just
       emphasises to the court that there may be features of
       such contracts where an implied term might be able to be
       implied depending on the circumstance, depending on the
       terms of the contract, but not necessarily so.  In the
       same way as a JV, you can say there is potentially --
       I call it a joint venture, and therefore I might look to
       see whether on the express terms and circumstances of
       that it is possible to imply a term into that, like good
       faith, see Ross River.
           In terms of application of that principle, if we can
       go to Carewatch which is in the opening submissions
       bundle at tab 3, a decision of Mr Justice Henderson as
       he then was {A1.1/53/1}.
           The key part of the judgment for our purposes is
       paragraph 151 and following.  The thing about this case
       is it is the nearest you get to the kind of job that is
       being done in our case, namely, to rewrite the contract
       by a whole list of implied terms, and you will see those
       set out at paragraph 101.  {A1.1/53/31}
           Here the claimants are doing what my learned friend
       is trying to do here which is to completely re-order the
       relationship by importing a whole range of implied terms
       and it is instructive to see what the court did.
           Again this is another long-term contract.  What the
       judge does, having set out the implied terms, is he sets
       out the arguments at 102 {A1.1/53/32}, Carewatch is
       saying the alleged terms implied are far from clear,
       multifaceted purpose, and not really implied terms at
           What then the judge does in 103 is he says
       effectively there is force in both those points.  He
       then goes, 104, to Attorney General of Belize v Belize.
       This was pre-M&S.
           And then at 106 {A1.1/53/33} reference to Mr Justice
       Dyson, as he then was, in Bedfordshire County Council:
           "The court should be in any event be very slow to
       imply into a contract a term, especially one couched in
       rather general terms where the contract contains
       numerous detailed express terms such as the contract in
       this case."
           In my submission, the same could be said in our
           Then 107 {A1.1/53/33} referring to His Honour
       Judge Coulson QC, as he then was, in Jani-King:
           "The term which it was sought to imply into the
       franchise agreement in that case was that the franchisor
       would not act so as to destroy or seriously damage the
       relationship of trust and confidence ..."
           The same as here is being done.
           "'I am in no doubt that, as a matter of common
       sense, and on the authorities, the relationship is much
       closer to an ordinary commercial relationship, than one
       between employer and employee.'
           "I respectfully agree."
           In this case we have a commercial relationship,
       business-to-business, and to say it is more like
       something or something else isn't really the point.  To
       say there are certain elements of it which you could say
       have an employment feel to them doesn't really get you
       very far because you have to stand back and look at the
       whole relationship, it is clearly business-to-business,
       and we know from BCCI v Ali that it is only employment
       contracts in which such an implied term of mutual trust
       and confidence goes, not that or contracts like it.
       That would be a huge step.
           Then the judge over the page deals with Yam Seng at
       paragraph 108 {A1.1/53/34}, so after:
           "I respectfully agree."
           108 refers to Mr Justice Norris in Hamsard where he
       interprets Yam Seng and says effectively that he did not
       read Yam Seng as authority for the proposition that in
       commercial contracts:
           "'... it may be taken to be the presumed intention
       of the parties that there is a general obligation of
       good faith. I readily accept that there will generally
       be an implied term not to do anything to frustrate the
       purpose of the contract.'"
           That is obviously the Stirling v Maitland term.
           "'But I do not accept that there is to be routinely
       implied some positive obligation upon a contracting
       party to subordinate its own commercial interests to
       those of the other contracting party boots was not
       obliged as a matter of good faith to order from Hamsard
       goods that it did not want …'
           "Again, I respectfully agree."
           Mr Justice Henderson says.
           109 really is the critical paragraph:
           "In the light of these principles, the first point
       to make about the Norwich agreement is that --"
   MR JUSTICE FRASER:  Where are you reading from?
   MR CAVENDER:  109, my Lord:
           "... dealing with all aspects of the franchised
       business from its inception to termination.  The
       agreement is for a commercial relationship from which
       both parties hoped to profit, and where both sides had
       interests of their own to protect."
           Pausing there.  Exactly the same as our case.
       Precisely so.
           "I can find no clear lacuna in the detailed
       provisions of the agreement which has to be filled if
       the agreement is to work commercially, let alone by
       terms framed in such wide and imprecise language as
       those which are pleaded."
           My Lord, again in my submission that reflects
       properly the law and what I invite your Lordship to
       apply in this case.
   MR JUSTICE FRASER:  The sentence in the middle:
           "... commercial relationship from which both parties
       hoped to profit and where both sides have interests of
       their own to protect."
           Which you say is exactly the same here.
   MR CAVENDER:  My Lord, yes.
   MR JUSTICE FRASER:  What the are interests of the
       subpostmasters to protect?
   MR CAVENDER:  The footfall in their branch and the growing
       of their business.
           Paragraph 285 of our closing, please {A/8/106}.
       What we do there is summarise the other first instance
   MR JUSTICE FRASER:  285, yes.  Which I think you have gone
   MR CAVENDER:  I think I have.
   MR JUSTICE FRASER:  Not Myres v Kestrel but that's not.
   MR CAVENDER:  No.  And Greenclose v National at the top,
       Mr Justice Andrews.  Monde Petroleum I have been
       through.  We summarise really at 287 and following
       {A/8/109} the three points that emerge from the
           "First, the categorisation of an agreement as
       a relational contract does not, without more, result in
       the implication of a term ..."
           See Globe, Carewatch and Monde.
           "Second, whether or not a term as to good faith may
       be appropriate depends on the particular terms of the
       contract and whether the language of the contract,
       viewed against..."
   MR JUSTICE FRASER:  I don't think these are all the first
   MR CAVENDER:  No, it is not meant to be compendious,
       I think.
           "Third, a term as to good faith should only
       ultimately be implied if it satisfies ...
       Marks & Spencer ..."
           The characteristics of what is truly to be seen as
       a relational contract itself is open to debate.  We say
       at paragraph 300 and following {A/8/112} there are two
       essential ingredients of a relational contract.  One is
       that it requires co-operation and collaboration rather
       than being a mere and simple exchange, and second that
       the agreement is long-term.
           As to the first, of course these contracts did
       require collaboration and co-operation, however here the
       extent of that is not large.  It is set out in very
       detailed contractual provisions and manuals.  So
       although of course the contract did require
       collaboration, it is not a simple exchange, it is a case
       where that has in fact been provided for in huge detail.
       And I think when Mr Justice Leggatt is saying it
       requires co-operation and things of that kind, go to
       Yam Seng and Al Nehyan, there is no contract in one of
       them, and the other one has a homemade ten clause
       agreement we have seen.  So that is important to bear in
           The second characteristic, this agreement is
       long-term, is not present here.  The question of whether
       or not an agreement is relational, ie whether or not
       terms are to be implied, is to be decided at the time of
       contracting at the beginning of the relationship.  At
       the beginning of the relationship the parties and the
       objective person know the terms of the contract and they
       know the notice provisions in that contract.
   MR JUSTICE FRASER:  I am aware that you say the presence of
       those notice provisions means it doesn't qualify on the
       temporal requirement for relational contract.
   MR CAVENDER:  Indeed.
   MR JUSTICE FRASER:  But absent those notice provisions,
       I don't think they are term contracts at all, are they?
   MR CAVENDER:  No, quite.
   MR JUSTICE FRASER:  There is no term, and you say you rely
       on the short notice provisions to say that by definition
       it can't be a long-term contract.
   MR CAVENDER:  Exactly.  There is not an obligation -- it's
       the point my Lord made in argument -- there is no
       obligation to stick within the relationship formed by
       the contract for a long-term, unlike virtually all the
       other cases, and certainly the Court of Appeal case
       your Lordship alighted on, the 25-year, the PFI one, it
       is central to an understanding of why the
       Court of Appeal said that at the end.  It is quite
       illuminating really.  They say in a contract of that
       length, with that degree of co-operation required, then
       that may be relational, or it is relational.
   MR JUSTICE FRASER:  It says it is relational.  But it also
       says it is a very contentious area.
   MR CAVENDER:  My Lord, yes.  I don't think they had argument
       in that case on that --
   MR JUSTICE FRASER:  The reason for mentioning that to both
       sides is I wasn't necessarily sure either of you knew
       about it.  It is Court of Appeal authority for saying
       there is such a specie of contract and also it is very
   MR CAVENDER:  Yes.  And you can see I have taken you through
       Court of Appeal authorities that have mentioned it.
   MR JUSTICE FRASER:  Four including that.
   MR CAVENDER:  Four including that, yes.  But the important
       point, my Lord, is your point, but no one has
       articulated it, and it is this: the reason for this
       being a thing, a requirement of a relational contract,
       is because you are tied in, and if you are tied in and
       you have to have this constant co-operation and
       closeness and all the rest of it, and you can't get out
       of it, then the court says, well, in that situation then
       maybe we will come to your aid with a slightly different
       approach to try and see whether we can imply a term if
       it is necessary by reason of that fact.  "That fact"
       meaning you can't get out of it.
           Let's assume a change because of Brexit or something
       in relation to a contract.  It completely changes the
       nature of the contractual expectations.  If it operates
       badly on one party, they can give notice and say "I am
       out because things have changed and I don't want to do
       this any more.  It doesn't work commercially".  If you
       are tied into a long-term contract and the other party
       uses the term cynically to make it uncommercial for you,
       then it is that kind of situation you can't leave, you
       are in for a term and that is the engine of this
       requirement, in my submission, as a relational contract.
           And indeed if you recall in the Court of Appeal
       cases you referred us to, the Court of Appeal said that,
       that they would expect in a long-term contract --
   MR JUSTICE FRASER:  It is intended to run for 25 years, it
       is said, but it is PFI contract, and PFI contracts
       usually have very detailed provisions in terms of
       notice, deductions for service, value points, et cetera.
       Mid Essex is probably --
   MR CAVENDER:  My Lord, yes.  On the longer term thing --
   MR JUSTICE FRASER:  I think Mid Essex is effectively
       a long-term contract with notice provisions, isn't it?
       I might be wrong.
   MR CAVENDER:  I don't think so.
   MR JUSTICE FRASER:  It is a four-year contract with
       an option to extend for three years in Mid Essex.
   MR CAVENDER:  Exactly.
   MR JUSTICE FRASER:  But you are saying the reason for it or
       the rationale is a contract of a particular duration
       where a party doesn't have the ability to extract itself
       in changing circumstances.
   MR CAVENDER:  Correct.  And the long-term part of that
       of course is the longer you are in a contract, the more
       likely in the way of the world things change over time.
   MR CAVENDER:  No one has actually said this, but in my
       submission it is implicit in what people have said.
   MR JUSTICE FRASER:  No one has said ...
   MR CAVENDER:  The rationale, no one has explained that
       rationale in that way.  Because there must be
       a justification for it, otherwise you are just
       identifying different features of a contract that
       requires one to look carefully about implication of
       a term.
           We have set out at 304 the notice provisions in the
       various cases that are referred to, including those
       referred to by Mr Justice Leggatt, if you go 304(a)
       through (f).  {A/8/113}
   MR JUSTICE FRASER:  Yes.  Understood.  So is that -- have we
       reached the end of the relational contract chapter of
   MR CAVENDER:  My Lord, yes, subject to the point --
       I don't know if you are at all interested in the point
       about HIH.  My learned friend tried to draw a line
       between HIH and Mr Justice Bingham through to
       Lord Bingham.  I don't know if you know about HIH but it
       is not really to the point, good faith.  It's talking
       about insurance contract and exclusion.  I don't know if
       you want me to take you to that.
   MR JUSTICE FRASER:  It is entirely up to you if you want to.
       I know about it and I have read it, it is mentioned in
       the submissions, but I'm not sure -- it is up to you how
       you craft the time available.
   MR CAVENDER:  If you want to read it in 136 and following,
       Yam Seng, where the court deals with the reality of it,
       and compare that to what my learned friend says at
       Day 12, page 40, line 1 {Day12/40:1} to page 41, line
       15, where he seems to use it as a building block
       somewhere to say that good faith in performance of
       contracts has anything to do with HIH which is about the
       interpretation of an exclusion, and whether the
       exclusion excludes fraud or not.  So the two are really
       miles away.
           My Lord.  I think that is probably time for a break
       if that is convenient.
   MR JUSTICE FRASER:  I just have one question on relational
   MR CAVENDER:  My Lord, yes.
   MR JUSTICE FRASER:  It is obviously a developing field.
       I drew both of your attentions to the Amey v Birmingham
       City Council case simply because as part of reading for
       this trial it crossed my radar.
           In paragraph 92, it mentions what I believe to be
       an Australian article, I'm not sure if either of you has
       read it or if it will be of any assistance to you to
       read it, but what I was going to suggest is that you
       tell me whether you think I ought to read it, whether
       you object to me reading it, or whether you think
       I should read it but you would like the opportunity to
       just maybe put in some written submissions and say there
       are parts of it you want to draw my attention to or
       parts of it I should ignore.  It is mentioned in
       a Court of Appeal authority.
   MR CAVENDER:  My Lord, obviously I wouldn't want you not to
       read anything.  Read anything you want to.  I think
       perhaps if we could reserve the right to put a note in
       to identify certain passages.
   MR JUSTICE FRASER:  If you are going to put a note in,
       I think I will give both sides the opportunity to do it,
       you can have 14 days to do it, and keep it to two pages
       of A4, if you would.  It just didn't seem to me
       necessarily fair to be planning to read it without
       bringing it to your attention.
           We will break until 11.45 am.
   (11.37 am)
                         (A short break)
   (11.47 am)
   MR CAVENDER:  My Lord, before I move on to the terms that
       are sought to be implied under the Yam Seng umbrella,
       could I take you back to Yam Seng to make one further
       point based on your Lordship's observation.  So we are
       in the opening bundle, tab 2, and go to paragraph 155
       again {A1.1/43/35} in light of what your Lordship put to
       me and having read it again.
   MR JUSTICE FRASER:  Which paragraph?  155?
   MR CAVENDER:  Indeed, my Lord.  155 was the paragraph, the
       implied term, a duty not to give false information that
       was split into two, and the one your Lordship put to me
       is at 157, the duty not to undercut duty-free prices.
           Another way to look at the latter, a duty not to
       undercut duty-free prices, is that this too has
       knowledge elements based in it when you look carefully.
   MR JUSTICE FRASER:  There is no doubt it has knowledge
       elements but it doesn't have honesty.  That was the
   MR CAVENDER:  True.
   MR JUSTICE FRASER:  The reason for my observation to you was
       how I interpreted your submission about what the ratio
       was of case.
   MR CAVENDER:  But it is knowingly, my Lord.  It reflects if
       you like what the learned judge says at the end of 156
       about knowingly provide false information in relation to
       the duty not to give false information test.
           Let's see the way the judge describes it in relation
       to a duty not to undercut duty-free prices.  He says at
           "The second more specific terms ...(Reading to the
       words)... than Yam Seng ... offer."
           And then the judge at 158 outlines various
           Then at 159:
           "The highest the putative implied term could
       therefore be put is an obligation not to approve ..."
           Obviously "approve" contains knowledge.
   MR JUSTICE FRASER:  I agree.  In fact the conclusion is at
   MR CAVENDER:  Indeed.  So it says authorise.  So, my Lord,
       that is another way of looking at this implied term.
   MR JUSTICE FRASER:  Yes, because the issue in that case was
       not some sort of a warranty from ITC that nobody would,
       it is that ITC themselves would not be involved in
       a situation where the price that was available from
       other people selling it could or would undercut the
       price that their partner could sell it at, or not
       partner but contracting party.
   MR CAVENDER:  My Lord, yes.  And the first stage is they
       know about it, so knowingly --
   MR JUSTICE FRASER:  I understand.  I don't think it is any
       part of that case that they were doing it unaware that
       they were doing it.
   MR CAVENDER:  And it is that knowing which is -- or
       dishonesty in the first one which is the engine of the
       principle.  So when we go to the implied terms now as we
       will, my learned friend's implied terms, we will
       contrast whether and to what extent any of his implied
       terms have that quality about them or whether they go
       much further and are much more what Mr Justice Leggatt
       said, went too far when he was dealing with 155 and 156
       where he says:
           "I see no basis for implying a more onerous
       obligation ..."
   MR JUSTICE FRASER:  A different way of making the same point
       is could a party breach a duty to act in good faith
       without knowing it was doing so?
   MR CAVENDER:  Quite, indeed.  And the answer is no based on
       that case, my Lord.
   MR JUSTICE FRASER:  So are we putting the authorities away?
   MR CAVENDER:  We are, my Lord.  I am going to go to the
       implied terms which is in bundle B1 at B3, particularly
       at {B3/1/35}.  My Lord probably has it in hard copy.
           So as we have seen at 63, my learned friend, what he
       does is plead all sorts of versions of the duty of good
       faithful.  Pausing there, by way of reflection on
       a different point, is that if you are going to imply
       something by law it has to be clear, and so if one --
       how do you know what you are going to imply if there is
       a smorgasbord of different duties which are in this area
       being used?  The answer is you can't.
           But at 63 you can recognise some of the words from
       the cases.  And then what my learned friend does is then
       list 21 implied terms, cast your eye through them.  None
       of them I think are based on knowledge, dishonesty,
       turning your face one way whilst thinking the other,
       apart from perhaps 64.8 has that quality in it, namely,
       you knowing something and decide to conceal it.  That
       one does have that quality in it.  But the rest of
       them --
   MR JUSTICE FRASER:  64.9 says not to conceal as
       an alternative {B3/1/36}.  But I have your general --
       I have the thrust of your point.  You are saying the
       majority if not all of them don't have those necessary
       ingredients of what in fact a duty such as that would
   MR CAVENDER:  Indeed.  They are much wider, they are much
       more utilitarian, and just place an absolute obligation
       in the same way that the ones in Yam Seng did in
       the first of the two terms we dealt with.  It has to be
       knowing or dishonest and in the second one, as we have
       seen, effectively knowing.  Whereas these are -- so
           "... seek to identify such causes itself, in any
       event ..."
           It goes on and on. 64.11:
           "... fully and fairly to investigate any alleged or
       apparent shortfalls ..."
           They are of a different species and they are not
       justified.  My learned friend has not taken you to
       a single case where any term of this variety has been
       implied under the authority of Yam Seng.  I have
       taken -- we have both taken you to Yam Seng and we have
       seen the terms there that were asked for and those that
       were provided.  In both cases either knowledge or
       dishonesty was a necessary part of the term the judge
       accepted.  These do not qualify.
           So even if there is a relational contract here, even
       if there is an element of good faith here, whatever that
       might mean in this context, these implied terms are not
       the kind of terms that can be implied on that basis.
           That is to say nothing of the M&S filter that then
       would apply.  Whether you apply that in the relational
       contracts sense or whether you are looking at the
       free-standing sense, and my learned friend pleads the
       alternative, the same result will ensue, particularly in
       a case where you have to show they are necessary despite
       the existence of both the express terms of the
       agreement, the agency relationship and the fiduciary
       duty associated with it, and the agreed implied terms.
           To show that these 21 implied terms are nonetheless
       necessary to imply in those circumstances in my
       submission is hopeless.  Nothing in Yam Seng --
   MR CAVENDER:  Or the developing jurisprudence on relational
       contract in my submission alters that submission.
           Furthermore, as I said yesterday, if you are minded
       to imply any of these terms, of course you need to
       justify it term by term, or at least group them together
       saying, well, I am considering implying these terms on
       whatever your Lordship thinks, based on whatever
       evidence you think is relevant.  And having done that,
       and you then look at another group of the 21, you have
       to apply the test again to say, well, I have plugged
       a given gap or lacuna with these, do I still go on and
       think that there is a requirement, it is necessary, to
       imply yet further terms or do I not?
           My learned friend has given you no roadmap as to
       that at all.  He has effectively just said, "Well, here
       they are", rather unhelpfully.  But your Lordship will
       have to do your best with that, obviously.
           I don't really have a case to tilt at really
       specifically as to particular implied terms or groups of
       them in various sort of forms of priority.  What we do
       in our written submissions, if you go to paragraph 326
       of our closing {A/8/121}, if we keep the implied terms
       out for the moment, we set out there the many implied
       terms by topic area but five of those alleged relate to
       the nature and content of the contractual relationship
       and can be taken together, they are 64.15 to 19, and
       there we set them out and make submissions on those in
           These are the more general ones if we look at
       {B3/1/37}, these are the ones at the end about
       undermining the relationship, things of that kind.
   MR JUSTICE FRASER:  Acting capriciously ... those ones?
   MR CAVENDER:  Indeed the four or five at the end.
   MR CAVENDER:  In our written opening at paragraph 370 we
       deal with --
   MR JUSTICE FRASER:  Written closing?
   MR CAVENDER:  Closing, yes, sorry, my Lord, we deal with
       specific implied terms {A/8/136} and we go through
       carefully in relation to each why it is that the said
       implied term should not be implied, and of course
       your Lordship has read that and I don't intend to go
       through those specifically.  If you go through them, you
       will see for instance at paragraph 394, maintenance of
       accounts, going through the accounting terms, implied
       terms at 64.2 and 64.3, obligations to communicate,
       training and support, shortfall investigation.
           We go through them all and there is not a lot I can
       really say I think usefully in addition to that in
       the time I have.  And there is no particular case being
       put other than, well, these are all there and we want
       them all in, as we say of course you shouldn't for the
       reasons we identify.  {A/8/144}
           When we come to suspension and termination there are
       specific implied terms there that I will deal with
       separately, because there are particular points to be
       made about them and I will make them under that heading.
           So, my Lord, that is what I was going to say about
       implied terms generally based on both the free-standing,
       the Marks & Spencer basis and of course on the
       relational contract basis.
           Which then takes us into agency and accounting.
       My Lord, the first point here and we had a debate about
       this yesterday, is to identify what the true nature of
       the debate is between the parties within the four
       corners of the issue.  We say it is in terms of issues
       12 and 13, they are primarily issues of law.  It's at
       {B1/2/1} in terms of the agreed list of issues.
   MR JUSTICE FRASER:  12 and 13. {B1/2/13}
   MR CAVENDER:  12 is on one page and 13 is on the following
           What I want to do is track through, because as
       your Lordship said in this version of course the parties
       have put the pleading references in as to what they say
       the relevant issues are.  So for Common Issue 12 the
       Defence paragraphs there are 90 to 91.  So if we can
       turn those up and trace through the various provisions.
       The paragraphs are in the pleading.
   MR JUSTICE FRASER:  So we are going to the Generic Defence,
   MR CAVENDER:  Indeed.  It's paragraph 90 of the Generic
       Defence {B3/2/41}.  You will see there as to
       paragraph 53 those terms are the terms appointing SPMs
       as agents, and 91 admits:
           "The terms of the SPMC temporary SPMC and NTC are
       admitted and averred.  Terms are ..."
           "In accordance with those terms, Post Office
       appoints subpostmasters and subpostmistresses...(Reading
       to the words)... that of principal and agent."
           You will remember, my Lord, my learned friend
       accepted in submissions, he has to of course, that with
       that goes a fiduciary relationship.
           Paragraph 91.1 then pleads the consequences of the
       appointment of agents:
           "Agents ... subpostmasters owe fiduciary duties."
           We plead the fiduciary duties and none of that is in
       dispute, but they are in law and follow as a result of
       the appointment.  For your Lordship's note we make that
       point good at paragraph 99 to 100 of our written
       closing. {A/8/41}
           91(2) then pleads what results from that, which
       I think again is common ground that there is a duty to
       account to Post Office.
           The reply.  In terms of going back to the issue, the
       reply paragraphs noted there on the issue are
       paragraphs 59 to 60.  The reply we will see behind tab 3
       of this bundle.  {B3/3/1}.
   MR JUSTICE FRASER:  Which paragraph in the reply?
   MR CAVENDER:  59 to 60, my Lord.
   MR JUSTICE FRASER:  Section B5.
   MR CAVENDER:  Indeed.  If cast your eye over 59 and 60, 59
       is really argument, 60 doesn't really respond in terms
       to paragraph 90 or 91 but sets out what it says makes
       the relationship different, arguing the usual agency
       principles do not apply.  I'm not sure if that is
       persisted in given they obviously accept they are
       fiduciaries.  61(a) is an assertion as to what normally
       happens in an old-fashioned agency relationship, (b) is
       a characterisation of the Horizon system and (c) is
       a conclusion based on the argument that precedes it and
       (d) simply relies on -- it is part of an argument on
       admissions and Generic Defence.
           So the only part that seems to raise any factual
       issue on its face is paragraph 60.2.  But that paragraph
       is not about what the lead claimants or any other SPM
       did in terms of their accounting, it is about
       representations Post Office is alleged to have made and
       they are not of course matters for issue in this trial.
       So this paragraph too doesn't give rise to any factual
       issue as to SPMs actually account to the Post Office and
       it provides no justification, in my submission, for
       leading evidence as to what happened in practice or what
       Post Office's internal procedures were.  What one sees
       in this issue, as I said yesterday, is essentially our
       contention you are agents, there are certain rules that
       apply to that and unsurprisingly they apply here.
           Importantly, my Lord, there is nothing in my learned
       friend's case that says the terms of the contract alters
       the normal accounting principles.  That is where it
       would have to come.  Not in what happened in fact but in
       terms of the contract.  So that is Common Issue 12.
       Common Issue 13, the references are to the defence at
       69(3).  If we go back to the defence and go to 69(3).
       {B3/2/33} you will see there --
   MR CAVENDER:  69(3) of the defence.  These are the two
       references under Common Issue 13.  69(3) and 183.  So
       I am going to 69.3 first:
           "As indicated in paragraphs 184 and 185 Post Office
       may hold subpostmasters who sign branch trading
       statements ...(Reading to the words)... true state of
       the account in the relevant branch, the court should
       make all presumptions of fact against them."
           That is again a principle of law, the second one.
   MR JUSTICE FRASER:  It is a principle of law that
       Post Office may hold subpostmasters who sign branch
       trading statements to the accounts they signed off.  Is
       that what you mean?
   MR CAVENDER:  That, but also the second part, my Lord.
       Focusing particularly that if --
   MR JUSTICE FRASER:  The making of the presumptions of fact.
   MR CAVENDER:  Exactly.
   MR JUSTICE FRASER:  This might be a minor point and it is
       just something that occurred to me when I was re-reading
       my notes last night, branch trading statements are
       identified in your pleading in various places.  They are
       identified in terms in Common Issue 13.  I don't think
       I have ever seen one yet, have I?
   MR CAVENDER:  I think you might have seen one in passing.
       They are quite small type documents -- I think we saw
       one or two.  We will check.
   MR JUSTICE FRASER:  It would just be helpful, and not now,
       because I don't want to knock you off your course, but
       if one per lead claimant, an actual one, or were we
       using a pro forma?
   MR CAVENDER:  No, we have actual ones for Mrs Stubs.  I know
       that, for a couple of months --
   MR JUSTICE FRASER:  Because the format of them may have
       change over time.
   MR CAVENDER:  We can give you certainly a Mrs Dar one and
       a Mrs Stubbs one.  Dar and Stubbs we have.  Just
   MR JUSTICE FRASER:  So is it the case there aren't any for
       the others?
   MR CAVENDER:  There are, but there has been no disclosure --
   MR JUSTICE FRASER:  Whether there has been disclosure or
       not, Mr Cavender, it is expressly mentioned in the
       Common Issue --
   MR CAVENDER:  No, quite.  But the reason it hasn't been is
       not because we have been careless -- I will give you
       them now, my Lord.  Mrs Dar is {E5/229.1/1}, Stockdale
   MR JUSTICE FRASER:  Sorry, can you give me the Dar one
   MR CAVENDER:  {E5/229.1/1}.  Stockdale {E6/176/1} and Stubbs
       is {E2/36/1}.
   MR JUSTICE FRASER:  Those ones aren't signed, are they?  Or
       are they?
   MR CAVENDER:  The second page.  Some were and some weren't,
       I think.
   MR JUSTICE FRASER:  The reason it occurred to me is last
       night I went through both your pleading and Mr Green's
       pleading again on these two specific issues, so I did
       this exercise that you are doing, and it just occurred
       to me, and I quickly checked back through my custom
       bundles and I couldn't find one -- the reason I started
       with Mr Bates was just because he was the first person
       and then I started to doubt whether I had seen any of
   MR CAVENDER:  I think they were referred to in passing.
       There is no particular point made on them.  But you can
       see what they do unsurprisingly.  At rollover you have
       a snapshot of what has been going on in that trading
   MR JUSTICE FRASER:  In that period.  Because it seemed to me
       that, certainly in later periods, they weren't actually
       signed, they were just returned.  Is that right?  The
       Common Issue uses "signed and/or returned".
   MR CAVENDER:  I think that is right.  If you want a signed
       one {E5/229.1/1}, page 2 of the Mrs Dar one is signed.
   MR JUSTICE FRASER:  {E5/229.1/2}.
   MR CAVENDER:  Indeed.  The requirement is to sign them
       and keep them in branch.  But you are right, my Lord,
       certainly in the later period.  In the later period they
       are submitted --
   MR JUSTICE FRASER:  My intention, Mr Cavender, was not to
       knock you wildly off course or lead to a flurry of
       activity behind and next to you.
   MR CAVENDER:  One never knows when that is going to happen.
   MR JUSTICE FRASER:  That is undoubtedly true.  Thank you
       very much.  So I have got some of them but we don't have
       them for three of the claimants?
   MR CAVENDER:  No.  So going back to Common Issue 13,
       paragraph 69 of the pleading, and paragraph 69.3, this
       is all about false accounting, this part of the
       pleading.  And you will recall I asked for no findings
       about false accounting in this trial, but what this
       paragraph does is it sets out our arguments that we may
       make and the reference to legal principles we will make,
       and bear in mind at this early stage setting out as
       comprehensive a case as possible in light of the
       generality of the pleading of the general Particulars of
       Claim covers all bases.
           We have seen one of the principles at 69(3), the
       first sentence, reference to ordinary principle, that an
       account stated is presumptively binding.  The second
       sentence invokes the principle:
           "The court will make presumptions of fact against
       those who destroy or falsify evidence."
           So that is 69(3).  Then paragraph 183, this is the
       second item on the list cited and that is short and
           "If and insofar as claimants are alleging the branch
       accounts they have rendered to Post Office are
       incorrect, they bear the burden of proving ..."
           So that is simply the result of the legal principle.
   MR JUSTICE FRASER:  183 was that?
   MR CAVENDER:  My Lord, yes.  The reply, staying on this
       point, if we go to the reply, our paragraphs 64 and 92;
       64 just challenges the contention on burden of proof and
       92 similarly.  It is just the general defence and
           So what one sees, my Lord, standing back from issues
       12 and 13 is not a dispute about the facts but a dispute
       about the law.  In essence, they are agents, they owe
       fiduciary duties.  There are certain consequences from
       that.  They apply to them as they do to any other agent
       and so what in fact happened doesn't strictly matter
       because, insofar as it complies with those obligations,
       it is fine.  Insofar as it doesn't, there is a breach of
       contract.  My learned friend has no case that the
       contract altered the normal accounting principles.
       There is no such case.
           So all the evidence that goes into the accounting
       relationship in fact, what happened, what you had to do
       et cetera, is strictly irrelevant.  Of course, I am not
       trying to blind the court, the court has had regard to
       it and you have seen it.  Indeed my learned friend and
       I have agreed overnight -- can I hand it up -- the page
       of the relevant manual about accepting TCs.  Can I hand
       that up now.  (Handed).  You will see that, as
       your Lordship will appreciate, does the very thing you
       outlined and I agreed yesterday.  You have the "accept
       now" button and for certain items the "seek evidence"
       button on the right.  Then you settle by cash, by cheque
       or settle centrally.
   MR JUSTICE FRASER:  Are they both December 2006 or is the
       first one older and the second one is December 2006?
   MR CAVENDER:  You say "the second", my Lord?
   MR JUSTICE FRASER:  They have two different references.  The
       first page is {F4/135/11} which doesn't have a date on
       it and the second one is {F4/21/11} that
       says December 2006.
   MR CAVENDER:  I think it is from the same manual -- no, it's
       not.  It is not from the same manual.  I think one point
       that my learned friend will probably want to draw your
       attention to is on the second page:
           "Please note not all transaction corrections will
       have the 'seek evidence' option at the time they are
           I think that came in later and also not in relation
       to every type of product.  My learned friend wants to
   MR JUSTICE FRASER:  Just before you do, let me just check
       what it is you have just given me.  These are two pages
       taken from the contemporaneous documents potentially at
       different times, which we will come on to in a moment,
       out of the Horizon manual about how a subpostmaster
       should deal with or their options for dealing with a TC.
   MR CAVENDER:  A standard TC.
   MR JUSTICE FRASER:  A standard TC, which it is agreed
       represents the flowchart which I said yesterday I would
       find helpful for what the options are.
   MR CAVENDER:  Exactly.  There is no dispute about it.
   MR JUSTICE FRASER:  That is why I am just checking what it
       is.  But it looks like it is two pages of two different
       documents.  I will hear from Mr Green.
   MR GREEN:  My Lord, it is only one point.  We thought this
       was the most helpful way of doing it.
   MR JUSTICE FRASER:  If you decided to do something different
       to what I asked you to do, that is fine.  It is not
       actually what I asked you to do, but that is fine.
   MR GREEN:  Because there was already a flowchart there, we
       thought it might be useful to use --
   MR JUSTICE FRASER:  Tell me what date the --
   MR GREEN:  This is one is 2013.
   MR JUSTICE FRASER:  Page 1 is 2013?
   MR GREEN:  Page 1 is 2013.
   MR JUSTICE FRASER:  Yes, and page 2 is 2006.
   MR GREEN:  Page 2 is 2006, but it is referring back to the
       same boxes and process.
   MR JUSTICE FRASER:  Sorry, what is referring back to the
       same process?
   MR GREEN:  Does your Lordship see "(F3) seek evidence" on
       the first page, top right?  The "seek evidence" button
       is F3.  So your Lordship sees the explanation for the
       "seek evidence" button we can find at "seek evidence
       (F3)" on the second page in the 2006 version.  It is the
       same button.
   MR GREEN:  So your Lordship has a picture over at least
       seven years.
   MR JUSTICE FRASER:  I am not sure I do to be honest.  The
       2013 document shows me the options available in terms of
       pressing whichever button in 2013, yes?
   MR GREEN:  Indeed.
   MR JUSTICE FRASER:  Prior to 2013, where do I get what
       I asked for yesterday from this?
   MR GREEN:  My Lord, we believe this fairly sets out the
       first page in 2013 --
   MR JUSTICE FRASER:  No, I have seen that --
   MR GREEN:  Consistently sets out -- the reason we provided
       it is because we have agreed it fairly sets out the
       options that were available over the period.
   MR JUSTICE FRASER:  Over the period?  Right, that makes
       a big difference.
   MR GREEN:  That is why we thought --
   MR JUSTICE FRASER:  So the fact it is 2013 I can safely put
       stage right because these are the options.
   MR GREEN:  Indeed --
   MR CAVENDER:  My Lord, the other reason we do it, there is
       actually a mistake in the bundling.  That date has been
       put on manually I think by my learned friend's side.  It
       is actually the wrong date.  It is actually,
       I understand, a 2005/6 document.
   MR JUSTICE FRASER:  Right.  But if it is agreed it
       represents the period that I am concerned with from
       Horizon onwards ...
   MR GREEN:  My Lord, yes.  There is only one wrinkle; that
       there was a slightly different arrangement in relation
       to suspense accounts, which your Lordship has heard
       evidence about, prior to 2005, prior to the first
       version of this document.  Subject to that wrinkle,
       about which your Lordship has heard evidence, the basic
       principle remains the same and the 2006 document on
       page 2 explains, just underneath "Transaction Correction
           "Alongside details of each transaction correction
       are a range of options depending on the type of branch
       involved, as described below ..."
           There are different provisions for multiples and
       directly managed branches, neither of which
       your Lordship is concerned with here.  Then:
           "The text supplied with the transaction correction
       may explain the way in which you need to accept each
       particular correction, so you should take special care
       to read any instructions that are provided."
           Your Lordship has heard evidence about
       the construction of some of those TCs.
   MR JUSTICE FRASER:  I wasn't so much interested in
       references to the evidence, Mr Green, what I wanted was
       an agreement between the parties about what the options
       were for a subpostmaster or subpostmistress when they
       received a transaction correction in terms of the
       flowchart of buttons that they were able to press on the
       Horizon terminal in the branch, and it looks to me like
       that is page 1.
   MR GREEN:  It is, with the rider that, on the second page at
       the bottom, which I was just about to come to -- I am
       sorry for going too slowly --
   MR JUSTICE FRASER:  But not all TCs have "seek evidence".
   MR GREEN:  Indeed, and also when a new TC comes having
       sought evidence --
   MR JUSTICE FRASER:  I can read it.  I don't need you to read
       it out to me.  But that is amplification of the "seek
       evidence" function.
   MR GREEN:  Precisely, and no more.
   MR JUSTICE FRASER:  Right.  Thank you very much.
   MR CAVENDER:  My Lord, we have been through the pleadings
       then to identify the nature of the issues the parties
       agree are under the accounting issues 12 and 13 and, in
       my submission, they are issues of law arising out of the
       particular principle of agency that applies here and the
       legal consequences of that.  As I said, the important
       point is my learned friend has no case that as a matter
       of interpretation or anything else that the normal
       accounting principles do not apply.
           Perhaps I can go back to Al Nehyan {A1.1/72/47} to
       remind you of a bit in this connection.  So that is
       the opening authorities bundle, tab 8, paragraph 142 in
       the judgment of Lord Justice Leggatt.  It's really the
       second part of 142 where he says -- my Lord, authorities
       bundle for opening, tab 8.
   MR CAVENDER:  At paragraph 142.  I referred you to this
       earlier in a different connection.  So talking about:
           "There are two important points to notice here.
       First, what the parties have contractually agreed may
       determine ...(Reading to the words)... where the parties
       are in a fiduciary relationship, the scope and content
       of the fiduciary duties owed by one to another will be
       shaped and may be circumscribed by the terms of the
       contract between them."
           So what that is telling my Lord is that the agency
       here and the terms of it are circumscribed by the terms
       of the contract between them.
           In terms of this issue, as I say, you don't need in
       my submission -- can't properly have regard to the acres
       of evidence we have had on accounting, and nor do you
       need to, because your Lordship to decide the issue is
       really being asked: do the normal accounting principles
       apply as a matter of law to these agents?  We know what
       the agency accounting principles are, they are
       incorporated by contract.  What are they really?
           My learned friend runs no case worthy of the name
       that they don't apply.  But the one concession I have
       made, just a sensible one really based on the evidence
       we have heard, is to make the obvious point -- not
       really a concession, an obvious point that the accounts
       stated, the principle I am relying upon, does not apply
       to parts of the account that aren't stated ie those
       parts that are contemporaneously disputed.  That again
       is a basic principle that the principle can only apply
       by definition to that part that the agent is confirming.
       And where you have a system, as is in place here, it is
       accepted that you can dispute amounts in the account and
       you do so, then of course they are not saying and you
       are not bound by that element of the account.
           In terms of the importance or otherwise of this
       issue, you remember yesterday when I went through 12(12)
       in particular, my two examples with and without the
       accounting stated imprimatur, the only real difference
       on analysis is that, in a case where there is an account
       stated, there is an initial burden on the postmaster to
       identify by evidence or argument the mistake.  That its
       effect in our debate.
           If the claimants want in any case to apply under the
       normal common law principles of duress or all these
       other things, to set the account aside or things of that
       nature, of course they can seek to do that.  The law
       allows them to do it in an individual case.  Nothing
       your Lordship is deciding prevents the normal law
       applying in that way.
           My learned friend says at paragraph 339.1 that --
       his case on this is that somehow this isn't a real
       agency, something called a "hollowed out" agency.
       I haven't come across that as a legal term of art; you
       are an agent or you are not unless and until the
       contract which you have agreed to hollows it out
       ie limits it in some way, in which case it would have to
       do so expressly.  And, again, there is no case we have
       heard that that happens here either.
           It is quite an extreme and rather contrary case to
       say it is a hollowed out agency but also accepting you
       owe fiduciary duties to account in relation to cash and
       stock.  I don't myself understand how you can say those
       two things simultaneously.  And, of course, it is not
       a hollowed out agency because we know from the express
       terms of the accounting obligations, which are fiduciary
       obligations to account under 12(12) in the SPMC and 4.1
       of the NTC, that they need to account.  Otherwise you
       might ask the question: on what basis are they holding
       the cash and stock?  As bailey or something?  Are they
       just holding it with more residual kind of obligations
       of that kind?  Of course they are not.
   MR JUSTICE FRASER:  But this flowchart that you and Mr Green
       have handed up, it is agreed that that is the sequence
       that would be followed by a subpostmaster or
       postmistress to reach the branch trading statement
       stage, is that right?
   MR CAVENDER:  When you say "reach it", that is a TC.
   MR CAVENDER:  That is for a TC.
   MR CAVENDER:  And then, as you know, at branch trading stage
       you can't have outstanding TCs, so you have a time
       before then to decide what to do, seek more evidence or
       whatever, at that stage it becomes part of your account
       and you can dispute it in the normal way.
   MR JUSTICE FRASER:  At the end of the trading period.
   MR CAVENDER:  Indeed.
   MR JUSTICE FRASER:  And then when you say "in the normal
       way" ...
   MR CAVENDER:  It becomes part -- if it is a negative TC and
       it results in a deficit, that would be reflected in your
       trading account and you can dispute it.
   MR JUSTICE FRASER:  But you see this is why we keep going
       round in circles.  The disputing of a TC has, as
       I understand it, the system, not the evidence, the
       system occurred before the end of the branch trading
       period in a notional example.  Is that right?
   MR CAVENDER:  You can do.  That can be done.
   MR JUSTICE FRASER:  I am not at the moment exploring
       a scenario where a subpostmaster or postmistress accepts
       a TC, decides that they are going to make good for cash
       or they are going to ask for time to pay it, reaches the
       end of their trading period but then goes into the next
       trading period and then decides to dispute their TC from
       six weeks earlier, I am talking about a contemporaneous
       dispute for a TC.
   MR CAVENDER:  My Lord, in relation to that then what we have
       is there is a period, and what tends to happen in
       practice is you have a TC and it is open and you can do
       something about it within the period, ask for more
       evidence or whatever.  When it comes to the end of the
       trading period you have to make a decision, because you
       can't roll over with an outstanding TC.
   MR JUSTICE FRASER:  That is rather the point.
   MR CAVENDER:  It then becomes part of any -- you accept and
       settle centrally, subject to a dispute, and that is part
       of normally what you do on rollover with that and any
       other --
   MR JUSTICE FRASER:  The "subject to the dispute" in that
       analysis is by phoning the Helpline.
   MR CAVENDER:  Indeed.
   MR JUSTICE FRASER:  Because that is the method by which one
       raises a dispute.
   MR CAVENDER:  Indeed.
   MR JUSTICE FRASER:  And the branch trading statement is
       created or signed or returned to Post Office as at the
       end of the branch trading period.
   MR CAVENDER:  Correct, and that can be subject to other
       deficits, other problems, not in relation to TCs at all
       or possibly --
   MR JUSTICE FRASER:  Of course.
   MR CAVENDER:  -- and you can dispute that.
   MR JUSTICE FRASER:  When you say "you can dispute that",
       some of the evidence that has been heard by the court
       involves somebody thinking they have disputed it or
       purporting to dispute it, but that dispute resulting
       in -- how should I put it -- instigation of the debt
       recovery process without the "dispute" necessarily being
   MR CAVENDER:  Then that would be a breach of contract.
       Obviously that wouldn't be permitted.
   MR JUSTICE FRASER:  But in accounting terms that disputed TC
       which you acknowledge would be a breach of contract
       would still form part, wouldn't it, of the branch
       trading statement?
   MR CAVENDER:  My Lord, no.
   MR JUSTICE FRASER:  You say no.
   MR CAVENDER:  What it does -- the idea on rollover is to
       return the branch trading statement to zero for the new
       period.  That is the whole purpose of it.  So if you
       have disputed items, they are then taken out of your
       branch trading effectively, put to one side and either
       they are disputed or they are not.  If they are not, if
       you agree to repay, they are still outside because you
       want to return the branch trading statement to zero for
       the following day.
   MR JUSTICE FRASER:  When you say "they are still outside",
       do you mean they form no part of the branch trading
   MR CAVENDER:  Well --
   MR JUSTICE FRASER:  But they do form part of the branch
       trading statement.
   MR CAVENDER:  Yes, the one you are closing.  The one you are
       closing they do, but the object is to get them out of
       the branch trading period which is going to commence the
       following day.  So they are put on one side.  Whether
       you are going to repay them or dispute them, they are
       put to one side.  And, as we have heard, they may or may
       not be subject to repayment agreement.  They may be
       subject to dispute.
   MR JUSTICE FRASER:  Right.  Thank you.  I don't need to
       explore that any further with you.  However, I do still
       want a flowchart, please, from you both agreed, which is
       not simply a reproduction of a contemporaneous document,
       that sets out what the actual steps are agreed by both
       parties in terms of options.  If you are not agreed on
       any of the particular components, then the document will
       have to go into two and show what you say, Mr Green, is
       the case and, Mr Cavender, you can explain what you have
       just done orally in pictorial form.
   MR CAVENDER:  My Lord, do you want that to be limited to
       transaction corrections or go into -- because the debate
       I have had with you put that in context then of
       shortfalls and how those two come together.  You
       probably want that, do you?
   MR JUSTICE FRASER:  I think that would probably be more
   MR CAVENDER:  Because TCs is only one very --
   MR JUSTICE FRASER:  I know it is.  I know it is.  So I would
       like one for TCs and one for shortfalls, and it might be
       that you can in fact agree the full content of both
       those documents, but it might be that you can't.
   MR CAVENDER:  I would have thought we could.
   MR JUSTICE FRASER:  I would like to think you could, but who
       knows.  I have been wrong before.
   MR CAVENDER:  We will endeavour to do that.  Going back to
       what you are doing under 12 and 13, as I say, they can
       rely on the normal rules, the common law rule of agent
       not bound by his account if under duress or individual
       circumstances, he can try and invoke equity to set it
       aside.  This is just the normal law.  That is all
       obviously at large.  As I say, he can if he wants, if he
       can show evidence and argument, he can in relation to
       a particular account say it is mistaken in a particular
       regard.  He is able to do that.  You can't just say:
       well, my whole account, well, £8,000 ... what you have
       to do is particularise and say, in relation to this
       transaction or -- you do have to go into some
       particulars of that.  You couldn't just -- it is not
       a global thing saying, well, it is mistaken.  It is not
       as simple as that.  But there is a method of doing that.
           So, in my submission, the Common Issue is limited
       really to the question of the application of these
       contracts as a matter of interpretation to the standard
       duties of an agent when accounting to his principal.  In
       my submission, those duties apply with their full terms
       and effect subject to the point that obviously matters
       that the subpostmaster has registered contemporaneously
       as being disputed are not subject to that principle.
           There is nothing again new -- my learned friend is
       quite fond in his submissions of saying everything I say
       is new.  If you look at the pleading, {B3/2/14} although
       perhaps it could be clearer, it is the premise of our
       pleading in relation to these matters that such matters
       who obviously not be covered by the principle.  If we go
       to paragraph 39(6) in relation to TCs, you see what we
       say at 39(6).  The whole basis of our pleading is that
       it comes out and is subject to dispute while the dispute
       is resolved.  It is no part of our case that meantime
       that is part of an account stated.  Similarly the
       shortfalls at 44(3).
   MR CAVENDER:  That is the wrong reference.  43(3) I think.
   MR JUSTICE FRASER:  Are you sure it is not 46?  46(3).
       Disputing ... no.
   MR CAVENDER:  I think it is 43(3).  {B3/2/17}.
   MR CAVENDER:  "... raising a dispute causes a block to be
       placed on the value of the shortfall ... personal
       account with Post Office.  The block value is not
       treated as a debt due to Post Office."
           If the evidence shows Post Office has -- its system
       has failed in some regard and it has gone chasing
       people, it shouldn't do.  It is not allowed to and it is
       regrettable that they did in those cases, but that
       doesn't alter the terms of the contract, it doesn't
       alter the accounting principles but it is of course
       a matter of regret that that happened.
   MR CAVENDER:  What we also say is that this approach to
       agency and really approach to accounting is what also
       this court did in Castleton, if we can briefly go to
       that.  {A1.1/30/1}.  It is obviously not the most recent
       case but it is a case involving --
   MR JUSTICE FRASER:  This is the 2007 one, is it?
   MR CAVENDER:  Indeed, but in relation to the SPMC.  It is
       tab 1 of the opening authorities.
       His Honour Judge Havery QC.  What he does here --
       I don't know if your Lordship has read it recently.  He
       goes through in huge detail to all the transactions.  He
       actually takes the accounts home, I think he says, and
       goes through over a relatively short period for all the
       transactions --
   MR JUSTICE FRASER:  You are talking about the judge or the
   MR CAVENDER:  The judge, my Lord.
   MR JUSTICE FRASER:  He did rather like accounts.
   MR CAVENDER:  He liked these and went through them all
   MR JUSTICE FRASER:  I'm not sure he necessarily needed to
       tell everyone he had taken them home.  This is the one
       where the defendant was acting in person?
   MR CAVENDER:  I think it is.  Obviously my Lord has read it.
       But it is really at 39 {A1.1/30/1}.  It recites the
       relevant clause.
   MR JUSTICE FRASER:  Which paragraph are we in?
   MR CAVENDER:  Paragraph 39, my Lord.  That is where he gets
       into the contract, et cetera.  I'm not taking you to it
       but all the paragraphs before that set out in huge
       detail -- go for instance to paragraph 32, about what --
       it was open for a certain day and what happened to
       £176 et cetera.  It goes into huge detail.  But then 39
       is when he takes stock and looks at the contract.  Then
       at 40 really:
           "I am satisfied substantially unexplained
       deficiencies occurred in weeks 42 to 51 ...(Reading to
       the words)... was not properly managed at the material
           So what he is saying is there are deficiencies
       there.  This was under the management effectively of the
       postmaster and he therefore infers really that therefore
       it wasn't properly managed and these were things for
       which the postmaster was responsible under 12(12).
           My Lord, one of the authorities --
   MR JUSTICE FRASER:  Am I invited to read the whole of this
       authority in terms of its fact and its findings?
   MR CAVENDER:  My Lord, only as an exemplar of what would be
       required -- not really, no.
   MR JUSTICE FRASER:  I'm not only going to read part of it
       though, am I?  To put 39 and 40 in context, I have to
       read what actually happened, haven't I?  Because
       I don't think the burden of proof was in issue in that
   MR CAVENDER:  It is in issue in every case.  But you are
       right, it was a litigant in person.  So it wasn't
       expressly --
   MR JUSTICE FRASER:  No, the identity of which of the two
       parties had the burden of proof was not in issue.
       Because the judge says that in one of the paragraphs,
       I think.  Let me just find it.
   MR CAVENDER:  I think in paragraph 1:
           "It follows from being an accounting party ..."
   MR JUSTICE FRASER:  At the end of paragraph 2:
           "In the event, the identity of the party on whom
       lies the burden of proof is not important."
           So actually you are right.  It is not correct to say
       it wasn't in issue but the judge considered it was not
   MR CAVENDER:  If you look at paragraph 1 then, my Lord,
       where he says in the second line:
           "Accordingly, the burden of proof lies on
       Mr Castleton to show the account is wrong.  On that
       point the law is clear."
   MR JUSTICE FRASER:  Yes, but that is the finding that you
       are inviting me to make in this case.
   MR CAVENDER:  Indeed.
   MR JUSTICE FRASER:  And Mr Green is inviting a contrary
   MR CAVENDER:  Indeed.  So that is an example.  My learned
       friend says, well, he can rely on evidence as to agency,
       et cetera, and he relies on Garnac Grain.  So can we go
       to Garnac Grain in the House of Lords and see what it
       actually says.  {A2/14/8}.  That is in volume 1, tab 4.
       Because in the present case there is no dispute that the
       postmasters are agents.  That is admitted in this case.
       What the contentions of the parties are about are the
       legal consequences of that.  What Garnac Grain deals
       with is the issue as to whether someone is
       an undisclosed principal.  One gets that if one looks at
       the holding on page 1132 opposite C.  So we are in V1,
       tab 4 at page 1132.  In Garnac Grain, the second holding
       where they say:
           "There is insufficient evidence to support the
       appellant's claim that Allied either expressly or
       impliedly had appointed the first respondents to act as
       their agents to enter into the contract with the
       appellants on their behalf as undisclosed principals."
           So what this case is about is whether or not someone
       was an agent or not.  One gets that also from page 1136
       opposite D:
           "The second ground was that in making a contract
       ...(Reading to the words)... Garnac were induced to
       enter the contract by fraudulent misrepresentation."
           It is in that context the "whether", the passage my
       learned friend relies upon at 1137 is to be placed.
       Where he just above C says:
           "The relation of the principal and agent can only be
       established by the consent of principal and agent
       ...(Reading to the words)... profess to disclaim it."
   MR JUSTICE FRASER:  Where are you reading from now?
   MR CAVENDER:  Below C on page 1137.  This is the extract my
       learned friend is fond of:
           "... but the consent must have been given by each of
       them either expressly or by implication from their words
       and conduct.  Primarily one looks to what they said and
       did at the time of the alleged creation of the
           What we are talking about here is an oral or
       implicit application of the undisclosed principal
       principle.  In the same way if you have an oral contract
       or a contract from conduct, of course you look at the
       whole of the conduct.  But here we are nowhere near this
       kind of area.  We have an express contract of
       appointment of agency and so, like any other contract,
       it is interpreted in accordance with the rules of
       contractual interpretation.  You don't have regard to
       how the relationship in fact happened in the same way
       you don't have regard to, in a contractual case, how the
       contract worked out in fact.  In both cases it is
       obviously impermissible.
           So, my Lord, unless you have any questions on that
       that is what I was going to say about agency and 12 and
           The next subject, my Lord, moving on, is to the
       question of incorporation, that is obviously
       incorporation of the terms of the contract into the
       contract.  If we can turn to paragraph 538 of our
       closing {A/8/190} to see what terms we are talking about
       here first of all.  Because normally in arguments of
       this type there is a particular onerous clause on the
       back of a ticket or tucked away somewhere in small
       print, as my Lord knows, it is that area, or terms have
       particular effects.  If one goes here to 538, what we do
       is outline the terms there that are subject to this
       allegation or argument.  So rules and standards, classes
       of business, accounts and liability, assistants,
       suspension, termination and not providing compensation
       for loss.  The first question is: are any of those so
       onerous and unusual as to be unenforceable, and,
       secondly, if so, what steps was Post Office required to
       take to draw those specifically to the attention of the
   MR JUSTICE FRASER:  Are the answers going to be the same in
       respect of both the SPMC and NTC or do they ...
   MR CAVENDER:  They are different contracts, my Lord.
   MR JUSTICE FRASER:  I was going to say it is potentially at
       least, isn't it, that some of them are and some of them
   MR CAVENDER:  Indeed, but the case is put just globally --
   MR JUSTICE FRASER:  I know that is the way the case is put.
       But I explored this with you yesterday and, certainly so
       far as the losses clause is concerned, they are quite
   MR CAVENDER:  They are different, yes.  We say at 529 that
       the relevant threshold is not close to being crossed.
       These are ordinarily commercial clauses.  They don't
       need to be drawn specifically to Cs' attention in any
       event.  Cs had ample opportunity to consider the
       clauses.  If any special drawing of attention had been
       required that would have been satisfied.  In summary,
       the clauses in question set out the core duties of the
       SPM, maintain the highest standards in all matters
       connected with branch and branch premises, and:
           "... ensure the accounts of Post Office and stock
       are kept in prescribed form, hold Post Office cash on
       trust ... and not to make any private use of the said
       cash on pain of possibility of prosecution."
           Just standing back from those examples, how can
       anyone sensibly say that they are onerous or unusual.
       And yet that is said here.  In (b):
           "Set out some of the core potential liabilities of
       SPMs such as liability for losses of cash and stock ..."
           We know about those:
           "Set out circumstances in which the agreement can be
       suspended or terminated ... forfeit remuneration ..."
           Et cetera.  We will come to those separately in due
           "Make provision for further rules or
       instructions ..."
           In my submission, none of these begin to fit the
       rubric of onerous or unusual.  That test is set out in
       Interfoto.  I think my learned friend took you to that.
       And we refer to the extract from Chitty at 543:
           "Although the party receiving the document knows it
       contains conditions ... (Reading to the words) ... the
       disputed clause is not unusual or onerous."
           And we give the extract from Lawson there.  Then
       O'Brien v MGN.  Hale LJ said:
           "The words 'onerous' and 'unusual' are not terms of
       art.  They are simply one way ...(Reading to the
       words)... more is required in relation to certain terms
       than others depending on their effect."
           The bar is high:
           "Woodeson v Credit Suisse in the Court of Appeal
       characterised it as requiring a clause which is onerous
       in the Interfoto sense of almost being a penalty."
           I can take you to Woodeson if your Lordship likes.
       If I did, that is the part I would take you to.  So that
       is the bar; it is almost a penalty but not quite.  That
       is the degree of onerous and unusualness one needs to
       get to even get this argument off the ground.
   MR JUSTICE FRASER:  The penalty would be unenforceable
       anyway, wouldn't it?
   MR CAVENDER:  Quite right.  It is one remove from penalty,
       but it is that degree of unusualness or harshness before
       this principle is being invoked.  At 548 we deal with
       Carewatch {A/8/193}.  Mr Justice Henderson deals with
       the same point:
           "The relevant principle of law is it may in certain
       circumstances be unfair or unreasonable to hold a person
       bound ...(Reading to the words)... The issue may,
       however, arise in other types of contract although it is
       always necessary to have full regard to the context in
       the respective bargaining positions."
           So we say, against that background, the argument
       these terms or at least some of them were too onerous to
       be incorporated is hopeless.  These are standard
       commercial terms and a business-to-business
       relationship.  The parties are given these terms in
       advance.  Certainly in case of the NTC, that is the case
       and, in the case of the SPMC, summaries of the terms
       were given in advance.  Remember the Serv 135 document.
       There is every opportunity -- it is not a ticket case
       where you are going through the barrier and you have it
       on the back and it is some awful term in print and it's
       raining and you've got no money and you have to say
       "yes".  We have all been there.  It is not that.  This
       is very much a case where it is a commercial agreement,
       and the parties were making a serious choice and they
       knew they were.
   MR JUSTICE FRASER:  Yes, but that doesn't get round the
       "onerous and unusual" part because even Chitty says: you
       know you are getting a document with conditions in, the
       question is the onerous and unusual ones have to be
       drawn to your attention.
   MR CAVENDER:  Yes, those that are akin to a penalty.
   MR JUSTICE FRASER:  No, I understand, but the fact that they
       were making a choice and they knew they were contracting
       on some terms doesn't answer it.
   MR CAVENDER:  No, I accept that.  I accept that.  The next
       issue then, if you go down this route, is adequate
       notice and that is paragraph 560 {A/8/196}.  We don't
       have of course a clause-by-clause examination of any of
       these, we just get a general core of the case, the
       commercial reality.  We see that at paragraphs 358.5 and
       358.7 of the closing.
           So we then come to Woodeson:
           "Where the term at issue was contained in
       a contractual document signed by the SPM incorporation
       will follow almost inevitably (see Woodeson)."
           And paragraph 46 says:
           "When the contractual documentation is signed the
       Interfoto principle has no or extremely limited
       application.  Signature shows the relevant SPM was aware
       or could easily have made himself aware of the relevant
       clauses and made a commercial choice to sign the
           We rely there on Amiri Flight where
       Lord Justice Mance, as he then was, says this and this
       is important.  We rely on it:
           "Normally in the absence of any misrepresentation
       the signature of a contractual document must operate as
       an incorporation and acceptance of all its terms ...
       (Reading to the words) ... I find it difficult to see
       the relevance of the principle of Interfoto in
       the present case."
           Then we see:
           "Even the absence of signature, providing the
       relevant clauses and giving the SPM good time to read
       them ... (Reading to the words) ... if he did not know
       its terms, he could and should have done."
           So if you know you are in possession of terms of
       this type, then you have to read them, you can't just
       not read them and be in a better position:
           "The key is not even possession.  Cs would have
       known their contracts were likely to include, if not
       these terms, then similar ones."
           Dealing with their liability for losses, dealing
       with their conduct.  And:
           "If the contracting party is in general terms aware
       of a term or knew that it contains or it is likely to
       contain terms of the type complained of ..."
           That would be sufficient, and we rely on Allen
       Fabrications for that principle.  As we say:
           "It is worth stepping back to consider the purpose
       of Interfoto ... (Reading to the words) ... buried away
       in the middle of a raft of small print."
           It is in those situations where the principle might
       apply, and even the Cs here, for all the points they do
       make, even they don't suggest that this is what happened
       here.  We say these terms are not onerous and unusual,
       nor have they been sprung upon the Cs as a surprise.
       They are precisely the sort of terms one who expect in
       the context of this kind of contractual relationship and
       not hidden away.
           So we say, summarising:
           "A signed document leaves no or virtually no room
       for Cs' arguments (see Woodeson).  If there any extreme
       circumstance in which a document is signed, it could
       still leave room for Interfoto argument ...(Reading to
       the words)... and being asked to sign a ticket handed to
       him or a tourist required to sign a long print document
       to hire a car at the airport.  We say this case bears no
       resemblance to those situations.  It is a serious
       business relationship entered into not on a whim after
       an exhaustive application process with every opportunity
       to obtain legal advice."
   MR JUSTICE FRASER:  Those submissions are more aimed at the
       process for the NTC than the SPMC, aren't they?
   MR CAVENDER:  They are aimed at both.  I was about to say,
       in relation to the NTC, that is certainly the case and
       some legal advice -- you will recall the instruction
       booklet said "you are strongly advised" to take --
   MR JUSTICE FRASER:  That is for the NTC.
   MR CAVENDER:  Indeed.  Absolutely.
   MR JUSTICE FRASER:  And they also signed the NTC and had to
       send it back and it said that it was an offer and it
       would be accepted on Post Office signing it and sending
       it back.
   MR CAVENDER:  Exactly right.  So on those I don't see the
       argument applying at all.  In relation to the SPMC
       nonetheless --
   MR JUSTICE FRASER:  That was slightly more haphazard.
   MR CAVENDER:  I'm not sure that is entirely fair.  It wasn't
       as apple pie as the NTC but remember both in the SPMC
       cases they sign a document agreeing to be bound by the
       SPMC.  So they sign a contractual document.
   MR JUSTICE FRASER:  I'm not sure that is exactly what it
       says, but I know your case is that that is the effect --
   MR CAVENDER:  The import of it, yes.  So they sign
       a document saying they agree to and have read and
       understood the terms of the SPMC.  That is the legal
   MR JUSTICE FRASER:  I know that is what your case is but
       that is not what document actually says.
   MR CAVENDER:  My Lord, no.  We both know what it says
       precisely, but we say that is its legal effect.
   MR JUSTICE FRASER:  Understood.
   MR CAVENDER:  We then apply those principles to these leads.
       We say it is not in dispute that every lead, with the
       probable exception of Mrs Stubbs, signed their agreement
       to be bound by the terms of the relevant contract.  We
       say for such leads that is the end of the analysis.
       That is if your Lordship accepts what I say about
       signing the SPMC appointment document.  And certainly in
       relation to the NTC that is the case.  And (b) we then
       deal with Mrs Stockdale and Mrs Dar:
           "Post Office further intends that the four lead Cs
       who deny receiving copies in any event had or could
       easily have obtained access to copies ...(Reading to the
       words)... In each case the court accepts they either
       received or had access to a copy of the relevant
           There, my Lord, as you know -- and I cross-examined
       about it boringly in terms of time -- each of them knew
       there was something called the standard terms and the
       SPMC which they were signing up to.  And we say they got
       it.  We also say, if it wasn't there, they would
       certainly have asked for it.  But even if they didn't,
       they knew they were signing up to a document and, if you
       recall in cross-examination, they accepted broadly that
       the kinds of terms -- they would expect terms to include
       accounting for cash and stock and things of that kind.
       So it wasn't as if the anticipation was them to enter
       a contract about apples and in fact they were, when
       signing and incorporating the standard terms, even
       assuming they hadn't seen it, was in relation to pears,
       it wasn't.  This was a process over a period of months.
       They did their own research.  Part of my learned
       friend's case involves the notion these people sort of
       walked off the street as if they were going to buy some
       sweets or something in a sweet shop and they just decide
       to.  These people were all serious business people who
       decided to change careers in many cases, do their own
       research, visit other post offices.  So the notion that
       they should be treated like the person going to the car
       park, which is really my learned friend's case, and
       being jumped by some sort of terms on the back of the
       ticket doesn't really, in my submission, bear serious
           My Lord, is that a convenient moment?  I am now
       going through the individual lead claimants.
   MR JUSTICE FRASER:  2 o'clock.
   (1.00 pm)
                     (The short adjournment)
   (2.00 pm)
   MR CAVENDER:  Good afternoon, my Lord.  Before the lunch
       break I was making submissions about the NTC contract
       and the SPMC in relation to corporation, and I was
       debating with your Lordship the differences between the
       NTC and the SPMC and I was making the point that
       Post Office's case as a matter of construction is that
       both in the SPMC and the NTC there is incorporation.
           Can I take you to the SPMC ones to see what my
       submissions are on that.  We need to go to bundle D1,
       tab 1.  I am using Mr Bates as the example here.  This
       is the first one.  The other SPMCs are the same.
           What you see behind {D1.1/1/2} is the letter of
       appointment.  This will obviously be familiar to
       my Lord.  This is the three-page document.  "Your Copy,
       "Mr Alan Bates.  Conditions of Appointment for
       Craig-y-Don".  You are familiar with the terms.  The
       relevant ones of course, going across the page to page 4
       of this document, is (6) {D1.1/1/4}:
           "You will be bound by the terms of the standard
       subpostmasters contract for services at scale payment
       offices, a copy of which is enclosed."
   MR JUSTICE FRASER:  Where are you looking?
   MR CAVENDER:  4.12(6).  So that's saying:
           "You will be bound by the terms of the standard
       subpostmasters contract service at scale payment
       offices, a copy of which is enclosed."
           Two things are said within that.  One is you are
       bound by the standard subpostmasters contract, and
       secondly it is enclosed.  You could also say it is
       available to you.  At the very least we say it was
   MR JUSTICE FRASER:  And he says it wasn't.
   MR CAVENDER:  Yes, and I will come to the evidence on that
       in a moment.
           What he then says underneath that to the
       Post Office, to the agency recruitment manager, is:
           "I fully understand and accept these conditions and
       agree to avail myself of the pre-appointment
       introductory training."
           Those conditions of course contain all the
       conditions including condition 6.  So in my submission,
       reasonably clearly that is an incorporation,
       a signature, of him agreeing to those terms and
   MR JUSTICE FRASER:  Your case is it doesn't matter whether
       they were in the envelope or not.
   MR CAVENDER:  Quite.
   MR JUSTICE FRASER:  I know that.
   MR CAVENDER:  But in terms --
   MR JUSTICE FRASER:  If they weren't in the envelope,
       Mr Green's case is rather different, that he never got
       them, or rather Mr Bates' case as explained by Mr Green.
   MR CAVENDER:  Indeed.  But I say as a matter of law that is
       not determinative --
   MR CAVENDER:  And furthermore, particularly given they are
       said to be enclosed.  And if -- Mr Bates, if you accept
       he didn't in fact get them and he didn't in fact ask for
       them, that also of course would be relevant because they
       are clearly available.  So there is that point, if you
       like, of construction as to the meaning and effect of
       that document.
           Then of course if you go to tab 2 to complete this
       point you have the acknowledgement of appointment where
       he agrees to be "bound by the terms of my contract".
   MR JUSTICE FRASER:  That is rather different wording than
       the other one.
   MR CAVENDER:  But you have to look at the two together and
       that is confirmatory, if any confirmation is needed, in
       my submission it is not, that contractually --
   MR JUSTICE FRASER:  I'm not sure that necessarily takes you
       anywhere that the previous document doesn't because the
       previous document is 31 March 1998, and that is the date
       as I understand it that it is agreed he became bound.
   MR CAVENDER:  That is true.
   MR JUSTICE FRASER:  So what he signs in May, that is
       I suppose at its highest, for you, evidential support --
   MR CAVENDER:  Exactly.
   MR JUSTICE FRASER:  -- for what you say --
   MR CAVENDER:  He knew back on the 31st, exactly so.
   MR JUSTICE FRASER:  But the terms of that particular
       document are not quite so clear because they just say
       "my contract".
   MR CAVENDER:  My Lord, yes.  I do rely on it in the way you
       anticipate, that that reflects his knowledge on the
   MR JUSTICE FRASER:  I know that.
   MR CAVENDER:  That he has a contract, firstly, the contract
       referred to in the earlier document, he has signed it
       and has agreed to it.  And as you know, that was the
       method in which the SPMC was introduced into the
   MR JUSTICE FRASER:  Sorry, when you say that, do you mean so
       far as Mr Bates is concerned?
   MR CAVENDER:  And in relation to --
   MR JUSTICE FRASER:  As I understand Post Office's practice,
       it generally was, and I might be wrong, that the copy
       would be kept in the branch or should be kept in
       the branch, an incoming incumbent or intended incumbent
       could or would or should be expected to familiarise
       themselves with its contents as part of their, to use
       your phrase, due diligence.
   MR CAVENDER:  Indeed.
   MR JUSTICE FRASER:  But at some point it was supposed to go
       into an envelope and be posted to the person after they
       have been approved at interview.
   MR CAVENDER:  My Lord, yes --
   MR JUSTICE FRASER:  Is that an adequate summary?
   MR CAVENDER:  At the very least, as part of the appointment
       procedure, they will get a copy in the envelope with
       that letter, and that was the practice we have seen from
       the evidence from quite early on.
   MR JUSTICE FRASER:  Yes.  But depending on one's view of the
       evidence, it was either the evidence that it was
       invariably done, or the evidence that it was sometimes
       done, or a specific example, some of the evidence, not
       Post Office's evidence, is that it wasn't done.
   MR CAVENDER:  My Lord, yes.
   MR JUSTICE FRASER:  But that was the general approach.
   MR CAVENDER:  Indeed.
   MR JUSTICE FRASER:  That if you wanted to open a post office
       and you were interested in or sought to examine in
       detail your terms, it was up to you, or you had the
       opportunity with the outgoing postmaster, to have a look
       at their contract because that is where it would be
   MR CAVENDER:  That is the first time, and there are other
       times down the road.  And 31 March here is the final
       time when it is enclosed with the letter.
   MR JUSTICE FRASER:  Yes.  But prior to that when do you say
       Mr Bates would have had it?  You say that is the final
   MR CAVENDER:  He would have had opportunity --
   MR JUSTICE FRASER:  Exactly, which I was attempting to
       summarise, possibly inadequately.
   MR CAVENDER:  That is quite right.  Going to Mr Bates, then,
       and his particular position.  His evidence was as we
       summarise, going now to our closing submission at
       paragraph 571 {A/8/199}.
   MR JUSTICE FRASER:  We're going back to where we were just
       before 1 o'clock?
   MR CAVENDER:  Indeed.  If we can keep out the documents,
       though.  I am going to make some forensic points on them
       to test Mr Bates' evidence very briefly.
           We summarise very pithily at paragraph 571 and
       following in relation to Mr Bates.  There are really two
       points, two critical points on the question whether he
       did or didn't receive the standard terms on the 31st.
       There are really three points.  One, we heard evidence
       from the person in charge of the ladies in this area.
       He said they were reliable and invariably, to his
       knowledge, never had any complaints.  Evidence that
       in fact the envelope of course is much thicker with it
       in and it would be a difficult mistake to make.  So
       there is that by way of background.
           You then have the fact of Mr Bates and his demeanour
       and expertise and experience.  He is the man who noticed
       one flag was missing from an envelope of 20, and then
       writes back to ask for a discount for the one he didn't
       get.  No complaint about that but it does show, and my
       learned friend laughs when I say this, he was a details
       man.  He is that sort of man who would notice and say
       something if, as here, paragraph (6) says, "a copy of
       which is enclosed" of the standard form contract, and he
       wouldn't ask for it.  {D1.1/1/4}
           In my submission, my Lord, you should be -- you
       should not accept that evidence.  That is very unlikely,
       having seen Mr Bates give evidence, having seen how he
       interacted with Post Office, given his experience that
       you have heard about, that in itself is unlikely.
   MR JUSTICE FRASER:  That is ignoring, though, I think the
       presence of other documents which went with the same
   MR CAVENDER:  Which I am now coming to.  His explanation for
       that is, in my submission, incredible.
   MR JUSTICE FRASER:  Incredible?
   MR CAVENDER:  Incredible, namely that the two-page
       document -- that is why I kept it open -- at
       paragraphs 1 to 13, which in every respect is exactly
       the same as the contractual document from paragraph 4.1
       and following, exactly the same.
   MR JUSTICE FRASER:  Which document is this?
   MR CAVENDER:  So when you compare the so called two-page
       document --
   MR JUSTICE FRASER:  At the moment all the common screen is
       showing is your closing.
   MR CAVENDER:  You have got the hard copy?
   MR JUSTICE FRASER:  I do have a hard copy, but I am just
       wanting to make sure I am looking at exactly the same
       documents because some of them are quite similar.
   MR CAVENDER:  I see.  So can we go to {D1.1/1/5}.
   MR JUSTICE FRASER:  Yes.  Conditions of appointment.
   MR CAVENDER:  This is the two-page document put in in error
       for some reason, I don't know how Mr Bates got it,
       but --
   MR JUSTICE FRASER:  You don't know how Mr Bates got it?
   MR CAVENDER:  No.  That was the evidence, if you remember.
   MR JUSTICE FRASER:  Well, it has definitely come from the
       Post Office at some point.
   MR CAVENDER:  Of course, it is not suggested that -- but he
       says this came with it and he thought this was the
       standard subpostmasters contract.
   MR CAVENDER:  Testing that, if you look at paragraph 1 of
       this two-page document headed "Posters and Advertising",
       then "Quality of Service", "Signage", et cetera, over
       the page {D1.1/1/6}, down to "Queueing Area", "Counters
       Club".  All of that, apart from "Personal Service" at
       the bottom, I'm not including that.  All of that is
       precisely the same as -- can we go to, please
       {D1.1/1/3} --
   MR JUSTICE FRASER:  It is not precisely the same because it
       has different numbers.  But the heading and the wording
       is the same.
   MR CAVENDER:  My Lord, yes, precisely so.  The content is
       the same.  The only difference is the personal service
           Now, Mr Bates said in evidence he spotted that at
       the time.  He knew that at the time that they were
       completely the same.  That in my submission makes it
       very unlikely indeed, to the point of incredibility,
       that he thought that in fact the same document, with the
       addition simply of "Personal Service" at the bottom, was
       in fact -- at paragraph 6, "the standard subpostmasters
       contract for service at scale payment offices, a copy of
       which is enclosed".  He can't rationally have thought
   MR JUSTICE FRASER:  I know that is your case and that is a
       point I have to resolve.
   MR CAVENDER:  Indeed.
   MR JUSTICE FRASER:  But whether it were enclosed or not, so
       far as Mr Bates is concerned, as you observed yesterday,
       there will be some who did get it.
   MR CAVENDER:  Quite.
   MR JUSTICE FRASER:  And there may be others who didn't.  It
       is therefore sensible, and I think you are inviting me
       to, and I would intend to do this anyway, to address
       each alternative, regardless of any specific finding on
       Mr Bates, to say what would flow if it were in and what
       would flow if it were out.  Otherwise that is going to
       be the greatest utility in the group litigation.
   MR CAVENDER:  I couldn't agree more and we have said that
       from the beginning.  My Lord is right.  But I am dealing
       with Mr Bates here.
   MR JUSTICE FRASER:  I know that, but that is effectively
       a point that I have to decide, a point of fact in his
       specific case.
   MR CAVENDER:  Correct.
   MR JUSTICE FRASER:  If it were not in the envelope, if my
       finding is that it were not in the envelope, what do you
       say the consequences of that would be?
   MR CAVENDER:  That he would still be bound because he had
       signed to say he understands and accepts these
       conditions and agrees to them.  He knows there is
       an existence, something called the standard
       subpostmasters contract that has been identified as
       a particular document.  It is in existence.  He is able
       to get access do it, indeed he has been offered a copy
       so the writer thinks.  On his Lordship's presumption he
       hasn't fulfilled it and it is not in the envelope, but
       that would be nonetheless legally binding.
           The second point on Mr Bates himself personally is
       the account he gives as to when he got it, because
       my Lord, if you say it wasn't at this stage you have to
       make a finding when he got it and in what circumstances.
       In my case he got it here.  What is his case when he got
       it?  Well, it is incredible for the reasons I outlined
       in cross-examination.  And he has constructed that case,
       it's been constructed, and he has overreached himself
       because clearly to write that letter saying that the
       terms are voluminous and complex and there might be
       other things hidden away in the document, he must
       logically, and I think my learned friend probably half
       accepts this, he must have had the SPMC when he wrote
       that letter.
   MR JUSTICE FRASER:  "That letter" being -- just remind me?
   MR CAVENDER:  If one goes to 577B, the letter is the
       4 August 1999 letter at {E1/17/1}.  This is 4 August.
       This is before Mr Bates --
   MR CAVENDER:  Indeed.  He says he didn't get the SPMC until
       later that month.  We can see from the content of this
       in the fourth paragraph:
           "Somewhat anxious I may have lost almost one years
       holiday entitlement.  I have consulted my contract,
       section 4, absence on holiday substitution allowance,
       and unless it is hidden away elsewhere in the contract
       then there is no mention at all about outstanding
       holiday being lost if not taken within the holiday
       cycle.  The whole of the section on holidays is not only
       very wordy but it is extremely vague in its content and
       would certainly not win any awards with the Plain
       English Campaign."
           So what is absolutely clear, in my respectful
       submission, from that, the writer of that paragraph must
       have had possession of the SPMC.  Because when you go
       to -- and I'm sure your Lordship has looked at this in
       terms of the SPMC, the holiday entitlement section is
       two or three pages and could be described as wordy.  The
       only notification this witness had at the time on his
       case was the Serv 135 document, two pages long, it's
       just three --
   MR JUSTICE FRASER:  Which has section 4, absence on holiday,
       and I think is at {E1/9/1}.  Is that right?
   MR CAVENDER:  Yes, that is right, my Lord.  So you see there
       that is the extent of -- and that can't be described as
       long or wordy, it can't be described as "in a document
       where there are other things hidden away in other parts
       of the document".
           So in my submission, that is --
   MR JUSTICE FRASER:  That doesn't necessarily mean he had it
       as of 31 March the year before.
   MR CAVENDER:  It doesn't.  But what it does show he has
       constructed a case --
   MR JUSTICE FRASER:  I know that is what you say.
   MR CAVENDER:  -- around that.  The question is why has he
       done that?  He has also done it in relation to
       the two-page document and the three, in my submission --
   MR JUSTICE FRASER:  I know.  But that is where one then gets
       into a difficult area, which was explored yesterday,
       which is you are inviting me not to make any findings --
   MR CAVENDER:  My Lord, no.  No findings on --
   MR JUSTICE FRASER:  The credibility of the witnesses.
   MR CAVENDER:  No, I didn't say that, my Lord.  I said you
       could make findings in relation to credibility arising
       out of the contractual formation, et cetera.  I was
       talking about the falsification of accounts and things
       like that.  If Mr Bates had falsification of accounts in
       the front of the case I would be saying you can't have
       regard to that.  But this is straightforward.  This
       isn't going to prejudice -- say Mr Bates was a lead
       claimant --
   MR JUSTICE FRASER:  He is a lead claimant.
   MR CAVENDER:  -- in the third trial, in the breach trial.
       Let's assume that.  Nothing you say about him here about
       whether or not he did or didn't accept -- didn't receive
       certain papers has any bearing on that.
   MR JUSTICE FRASER:  I imagine you would accept what I am
       about to suggest or ask you that there is nothing in
       relation to any of the witnesses on either side that --
       there is nothing in the nature of the issues that I am
       considering now that means I would not be able to try
       the third trial.
   MR CAVENDER:  This is the sensitive point, my Lord, I think
       I have been --
   MR JUSTICE FRASER:  Is what you just said a one-way
       submission, I can about the claimants but I can't about
       Post Office witnesses?  Because that will take me out of
       the ball game for the third trial.
   MR CAVENDER:  Quite the reverse.  I was very careful
       yesterday to say I am seeking no findings on what we
       would say was disreputable and dishonest conduct on
       certain of the lead claimants.  I'm not asking you to
       make any findings or make any comments about it.  That
       doesn't mean to say you cannot make findings of
       credibility relating to whether someone received
       a contract or not without relying upon evidence -- let's
       say Mr Bates was a case where there as clear
       falsification of accounts and there was a debate about
       receiving the contract.  What I am saying is you should
       hold back and not make any findings on credibility on
       the falsification point as support of points on whether
       he received the contract.  It's contracting issues on
       the one hand and breach issues on the other.
   MR JUSTICE FRASER:  Rather than hold you to oral submissions
       on what might prove to be quite a careful distinction,
       after this afternoon I would like you to frame, please,
       in careful and as precise terms as you wish to, how you
       say I should draw the line in terms of credibility of
       witnesses generally.  Because it is not a secret that
       regardless of what happens in this trial, there is going
       to be another trial and probably two more trials, and
       a lot of the same witnesses are going to appear in those
       later trials.
   MR CAVENDER:  Correct.
   MR JUSTICE FRASER:  It is a very unusual situation to be
       asking a judge to draw some sort of a distinction on
       credibility when credibility is in issue on some of the
       matters I have to decide on the Common Issues.
   MR CAVENDER:  Yes, it is very odd.  And it is because,
       without trying to rub salt in any particular wound in
       any particular direction, this is a result of having all
       this breach evidence in.  We had to test it to try and
       ensure that the court wasn't given a misleading
       impression, but I am now saying, I said all along right
       from the beginning, that you are not in a position to
       make findings on, say, falsification of accounts because
       that is not what this trial is about.  We have not had
       full disclosure on it.  It would be unfair.
           Of course half of me on this point would say, yes,
       of course I want you to make findings on that.
       Mr Abdulla did this, and the cheque in the till and all
       the rest of it.  But my Lord --
   MR JUSTICE FRASER:  I understand the point exactly.  I would
       just like you to frame it in a single submission or two
       or three sentences.
   MR JUSTICE FRASER:  So that I have something against which
       I can measure my approach.
   MR CAVENDER:  My Lord, yes.  It is quite subtle and it is
       not easy.  Do you remember yesterday when I said this,
       or maybe the day before, it amounts to not taking the
       witness evidence of the lead claimants at face value.
       There is another story.  Without making findings --
   MR JUSTICE FRASER:  That is a different point, though.
   MR CAVENDER:  I'm not sure it is, because that is as far as
       I think you can take the other evidence.  Because you
       can't make findings on it, in my submission.  I'm not
       sure if you are accepting that or not.  And if you do,
       you do, with whatever consequences flow from that.  But
       in my submission you don't need to for the purposes of
       this trial, but if you did it would have an implication
       on credibility for these kinds of issues: did you or did
       you not receive the contract?
           I'm saying you don't need to, I'm not asking you to,
       but that doesn't mean to say I don't want you to
       decide, in my submission, Mr Bates is not telling the
       full story or the true story about what he received in
       the envelope.
   MR JUSTICE FRASER:  In a way Mr Bates -- each of them falls
       to be considered differently because there are different
       factual issues on the contract formation with each of
   MR CAVENDER:  Indeed.
   MR JUSTICE FRASER:  All right.
   MR CAVENDER:  So what I say is he is clearly -- obviously
       Mr Bates is a very nice man and he no doubt believes --
       he probably believes what he is saying is true.  I say
       that in my closing.  He has been involved in this case
       for so long that he has created this narrative and I'm
       sure he subjectively believes it to be true, but it is
       not true in my submission.
           If you also remember the correspondence when he
       started getting into difficulties with the Post Office
       and started writing letters, almost like a letter of
       claim, he didn't mention he hadn't got his contract.  It
       comes on very late in the day once he gets into the
       group litigation, the lawyers and everything else.  That
       is when this point is born, and then we get this story
       as to how it is you explain he didn't get the contract.
           He over-reaches himself in two distinct ways: one is
       by pretending the two-page document, he thought -- an
       intelligent man, a details man -- in fact it was the
       standard Post Office contract and so didn't ask for
       a copy.  That is incredible.  And then he says he
       received it not, then but at the end of August, and he
       received it as a result of the inquiry he made in that
       letter of 4 August when it is obvious from the wording
       of that letter he must have had the contract at that
       time.  Question: if he didn't get it on 31 March when
       did he get it?  There is no evidence to that, there is
       no case as to if it wasn't 31 March when was it.
           You will also recall Yam Seng, paragraph 8, about
       witness testimony.  Mr Justice Leggatt, another of his
       particular things he is keen on.
   MR JUSTICE FRASER:  I'm not sure I need Yam Seng to direct
       me towards the fact that memory can be very subjective.
   MR CAVENDER:  Indeed.  And unreliable.  Mr Justice Leggatt
       in that case, and also in the Mike Ashley case as well,
       there is a whole passage of it --
   MR JUSTICE FRASER:  It is probably -- the Mike Ashley case
       is complete free rein to the judge's views on memory.
   MR CAVENDER:  Indeed.  Quite.  I'm not allowed to mention
       that case and I haven't done so.
   MR JUSTICE FRASER:  Oh, were you in that one as well?
   MR CAVENDER:  I can't remember.
   MR JUSTICE FRASER:  I read that at the time and it is very
       interesting, but it doesn't say anything that almost all
       judges know, that just because a witness believes
       something to be the case it doesn't mean it is the case.
       Whether that applies in Mr Bates' case or not is
       something I am going to have to come to a view on.
   MR CAVENDER:  Indeed.  So that is Mr Bates.
           Mrs Stubbs.  We deal with her at 578, she can be
       dealt with more briefly.  Obviously that was a very
       particular odd and sad situation which doesn't really
       have any parallels.  You can see what we say about that,
       particularly about the 23 September notification.
       I think that is the only one where there is a dispute
       between the parties as to when they say the contract was
       entered into because that is the date we select, and my
       learned friend has the date of takeover, I think.
   MR JUSTICE FRASER:  Remind me at the end about dates of
       contract formation because that is something for the
       little shopping list.
   MR CAVENDER:  I can do that now --
   MR JUSTICE FRASER:  No, we will do it for all six of them at
       the end, because on some there is an issue, on others
       there isn't.
   MR CAVENDER:  Mrs Stubbs.  I don't say much more about that.
           Mr Sabir, 584.  He was -- the SPMC, he had the same
       routine as Mr Bates in terms of contractual position.
       Recall of course, as we say in 584(a) {A/8/205}, he was
       sent a summary of the terms that would apply.  So here
       we have telling them the terms that would apply in
       advance, and you then have written acceptance of the
       subpostmasters contract, and then the words:
           "You will be bound by the terms of the standard
       subpostmasters contract for services at scale payment
       offices ..."
           And the letter also stated that his employment pack
       included a copy of the SPMC and asked him to give it is
       "utmost attention".
           Then on 19 July we say:
           "... Mr Sabir signed the conditions of appointment.
       His signature to confirm that 'I, Mohammad Sabir, fully
       understand these terms and conditions'."
           He also signed the acknowledgement of appointment in
       the same form you have seen before.
   MR CAVENDER:  In terms of his evidence of whether he did or
       did not, 587 summarises the evidence on this {A/8/208}:
           "His evidence, in the end, was that he simply could
       not remember whether any number of things had happened
       or not:
           (a) As a general matter, he stated that he could not
       remember events at this distance in time: 'how can I
       remember twelve years things? I can’t remember
           "(b) He could not remember whether he received the
       summary of contractual terms (despite having admitted
       receiving them in his witness statement).
           "(c) He could not remember whether he was taken
       through the extracts from his contract.
           "(d) He could not remember whether he received a
       copy of the contract, either for Cottingley or for
           Of course in this case you would have to believe he
       didn't get it either time because there were two
       processes gone through in close succession, Crossflatts
       and Cottingley.
           You will remember, 588, Mr Haworth's evidence that
       he would have emphasised that it was a contract for
       services.  He said he ran through a summary of the
       contract, including termination, obligation to account
       and things of that kind.
           We say at 589 {A/8/209}:
           "Moreover, even Mr Sabir's evidence that it was
       possible he had not received a copy of the contract did
       not stand up."
           We make the point here about his oral English and it
       is -- you heard him give evidence and it did seem that
       sometimes, particularly early on, his language wasn't
       particularly good when I used particular words, but then
       other times when I was putting thing to him, his command
       of the English language seemed to improve somewhat.
   MR JUSTICE FRASER:  It might have been the different
       language you were using.
           Where you say in brackets "notable for its
       variability", are you inviting me he was relying on
       a claimed weak grasp of English, or are you just
       pointing out that from time to time he seemed to
       understand some questions better than others.  Because
       one is to impugn him and the other is not.
   MR CAVENDER:  My Lord, yes, that is certainly the impression
       I think the court should reach.
   MR JUSTICE FRASER:  Which one?
   MR CAVENDER:  That he was in fact able to speak English
       reasonably well and on occasions decided, for whatever
       reason, not to do so.
           Then Mr Abdulla at paragraph 590.
   MR CAVENDER:  Again, same story on the contract, in terms of
       the contractual documents, ie signature of conditions of
       appointment, see paragraph (c) of 590 and then the
       acknowledgement of appointment at (d) {A/8/210}.
           We say in relation to Mr Abdulla, his credibility is
       not so nuanced that he did clearly lie, and lie
       brazenly.  You recall when I put to him various letters,
       and we say this at 592, we have the references there, he
       claimed he had read the first and second paragraphs of
       the letter and that is all he had read.  Then I took him
       through the contents of that letter.  So, yes, maybe
       three, maybe four, and when I turned over the other side
       he was clearly engaging in a process of deciding not to
       remember things that were contrary to his interest.
           As we say at the end of 592:
           "He first claimed not to have read any of the
       transfer day documents and then he did admit he had read
       the key documents."
           All these references are to these points I am
       reading from 592.  He was the gentleman who said it was
       definitely true that Christine Adams and
       Christine Stevens were the same person and he said it
       was not possible they were two different people, and you
       know the end of that investigation.
           I think the next sentence is very much on the
       borderline in terms of he doesn't believe it was wrong
       to have told Post Office he had cash in the branch when
       he did not and put an undated cheque in the till in case
       he was caught --
   MR JUSTICE FRASER:  That is on your borderline really.  That
       is why I was exploring it with you.
   MR CAVENDER:  Exactly, I agree.  I think it was probably the
       wrong side of the line.
   MR JUSTICE FRASER:  So do you want me to cross that out?
   MR CAVENDER:  Let me put it in my document.  That is a good
       testing ground because that really is right in the
       middle of that particular debate.
   MR JUSTICE FRASER:  So the part -- yes.
   MR CAVENDER:  Then we say he claimed to have called the
       Helpline frequently, but when the logs were put to him
       he said he gave up and stopped calling.  That is
       the right side of the line, for instance.
           So we say Mr Abdulla's evidence on whether he
       received the contract should be viewed in that context.
       He knew the relationship would be governed by a written
       contract, he accepted he was looking for that contract
       to be provided at some point.  In those circumstances,
       we say obviously he would have asked for a copy if he
       hadn't received one:
           "He tried to answer this by saying he did not need
       a contract because everything was 'perfect' and
       inconsistently claimed he did ask why he had not
       received the contract (which was new and obviously
           Then we set out in 594 and 595 the other things
       about the interview process.
           Then we say at 596:
           "In this context, the submission that Mr Abdulla's
       contract was not fully incorporated lacks reality."
           And we make the point about the version of the SPMC
       that I can leave.
           Then we come to Mrs Stockdale and Mrs Dar.  You
       recall these were both on NTC {A/8/213} where of course
       there is advice that people are strongly advised to take
       legal advice and the whole contractual set up in
       relation to NTC is much clearer, much fuller and much
       less able for anyone to suggest, in my submission, that
       the relevant contracts were not incorporated.
   MR JUSTICE FRASER:  That might have been a result of
       a policy decision or acceptance by the Post Office that
       the way in which the SPMC had been dealt with was
       unsatisfactory, because there were some internal
       documents that suggested some of the subpostmasters were
       unaware of some of the terms of the SPMC.  It seems to
       have been a reform.
   MR CAVENDER:  My Lord, yes, but remember -- I don't think
       that is quite right, maybe in the background there were
       rumblings, but remember this was a whole new roll out of
       a new process and as part of that the NTC -- that is
       what it was in terms of network transformation, so it
       wasn't --
   MR JUSTICE FRASER:  The mechanism of forming the contract
       was changed as well.
   MR CAVENDER:  Everything was changed.  It was a completely
       blank bit of paper and they started again, really, and
       they obviously, as we know, offered certain people the
       chance to join the new -- and others they didn't.  It
       was a whole reformation of the Post Office and how it
       was operating.
   MR JUSTICE FRASER:  I know.  But I am talking about
       contractual formation.
   MR CAVENDER:  As part of it, you are right.  It was much
       more developed, formalised and improved.  There is
       no doubt about that.  But that doesn't mean to say --
       just because you improve something it doesn't mean to
       say what was left before was non-contractual or
   MR JUSTICE FRASER:  I am aware of that.
   MR CAVENDER:  The other thing about these particular
       individuals of course is that they weren't
       unsophisticated.  They were in varying degrees -- had
       experience, and I went through it in detail with them,
       of commerce, of -- in some cases, Mr Bates' case,
       contracts, other people it was running businesses or
       being involved in businesses.  They weren't people who
       were straight out of school or naive.  I constantly put
       that in my submission and the court should so hold.
       They did have availability for legal advice.  They did
       have to take legal advice, most of them, on the purchase
       of a subsidiary business.  Just pause for that thought,
       these people were buying an independent business with
       all that goes with that, so they are those sort of
           And in terms of knowledge of particularly the
       deficits, the unders and overs, three of them I have
       notes of particularly accepted they had some knowledge
       of what were called unders and overs colloquially.
       Mr Bates in his witness statement at paragraph 21,
       Mr Sabir at Day 3, page 85, lines 17 {Day3/85:17} to
       page 86, line 1, and Mrs Stubbs Day 2, page 163 lines 11
       to 14 {Day2/163:11-14}, Mrs Stubbs in her case through
       her experience of a post office.  So that is
       the background to the incorporation argument on the
           My Lord, unless you have any questions on
       incorporation I was then going to move to the question
       of suspension which is Common Issue 14.  In terms of our
       closing, it is at page 148, {A/8/148}.  It's a quicker
       way of getting these points.  At page 148 you will see
       the issues on suspension.
   MR JUSTICE FRASER:  Where are we going?
   MR CAVENDER:  My closing.
   MR JUSTICE FRASER:  Can you give me the paragraph number?
   MR CAVENDER:  Paragraph 421, just above 421 {A/8/152}.
   MR CAVENDER:  You will see there are two issues on
       suspension.  One is an issue on construction, 14:
           "On a proper construction of the SPMC and NTC, in
       what circumstances and/or on what basis was Post Office
       entitled to suspend ..."
           Then two clauses of the SPMC and NTC respectively.
           64.13, that is obviously a reference to the relevant
       implied term.  That is why I am going to deal with the
       implied terms in relation to subject matter as I said
       I would this morning, and this is my learned friend's
       implied term which he says should be incorporated:
           "Not to suspend Claimants: a. arbitrarily,
       irrationally or capriciously; b. without reasonable and
       proper cause; and/or c. in circumstances where the
       Defendant was itself in material breach of duty."
           They are the three elements of the implied term he
       asked to be incorporated.
           It doesn't stop there, however, because at 421 we
       outline that in addition to that implied term ...
       alleges based on the Individual Particulars of Claim
       that the express contractual terms were limited
       additionally in the following ways:
           "(1) Post Office could not suspend on a 'knee jerk'
       basis, and (2) Post Office could not suspend without
       first giving 'fair consideration to all relevant
       circumstances and to whether or not to suspend the
       claimant even if the threshold for doing so was
           Does my Lord see that?
   MR CAVENDER:  So those are the basket of issues on
       suspension based on the express term first, and then
       coupled with the implied terms at 64.3, and those also
       on the same subject arising from the IPOC.
   MR JUSTICE FRASER:  The IPOC one isn't separately identified
       in the Common Issues, though, is it?
   MR CAVENDER:  My Lord, no.
   MR JUSTICE FRASER:  There is no knee-jerk one in the Common
   MR CAVENDER:  No, quite.  This is an addition.
   MR JUSTICE FRASER:  But the fair consideration of all
       relevant circumstances may just be a different way of
       saying not capriciously, arbitrarily or irrationally.
   MR CAVENDER:  Who knows.  The IPOC one, to be fair, is said
       to be a matter of construction as we say here.  But
       whether you could actually get there by way of
       construction is another matter.
   MR JUSTICE FRASER:  I know that.  But insofar as -- I am
       taking the Common Issues as an agenda for questions to
       be answered in this trial.
   MR CAVENDER:  Quite.
   MR JUSTICE FRASER:  And all of the different ones dealing
       with suspension are identified in Common Issue
       effectively 2 and 14 together, probably.
   MR CAVENDER:  Exactly.  It's 64.13 one, yes.  We say that
       actually the terms of the contract rule unsurprisingly
       at 423, section 19, clause 4:
           "... may be suspended if that course is considered
       desirable in the interests of the Post Office Limited,
       consequence of ..."
           And then we set out the grounds, (a) being arrested,
       (b) having proceedings, (c) irregularity or misconduct
       where he holds appointment, et cetera:
           "... are admitted or are suspected and are being
           In relation to that, we indicate at paragraph 429 in
       this closing {A/8/154} that it might at most be implied,
       if your Lordship felt it appropriate, that --
   MR JUSTICE FRASER:  It is difficult to see that the
       Post Office would be arguing that it was positively
       entitled to exercise a suspension irrationally.
   MR CAVENDER:  My Lord, yes.  But that is not of course --
       forensically that is how my learned friend put it.
   MR JUSTICE FRASER:  I know.  But you can appreciate my
       point, I think.
   MR CAVENDER:  Of course.  And that is why, as we say in
       paragraph 429, we suggest at most you might, given that
       kind of point my Lord makes, is that the decision to
       suspend should be reasonably based on one of the three
       grounds I have just outlined.  That would be permissible
       and something I would not argue against if your Lordship
       were minded to do it.
           Then 424, the NTC, you can see the relevant wording
           "... to be necessary in the interests of Post Office
       as a result of ..."
           There being a whole list of grounds and this one
       being, 15.1.3 being the relevant one here:
           "... insolvent ... suspect the operator ...(Reading
       to the words)... including any financial irregularities
       or misconduct."
           Cs' case on this makes no attempt to look at those
       words as a matter of construction and say what they
       should mean.  It really proceeds on the basis there are
       no words and incorporates and states how the right to
       suspend should in fact operate.  Not by saying you ought
       to include a word here or a word there or -- their
       starting point is not one of construction.
           So for instance when in 426, and these are the
       construction ones:
           "... knee-jerk ... fair consideration of all
       relevant circumstances (where relevance is [not]
       defined, only in negative terms) ..."
           That is not a process of construction.  These are in
       truth, although it says it is, further implied terms, if
       they are anything.
           There is nothing in the contractual words to suggest
       Post Office would have to give fair consideration.  On
       the contrary, the words used indicate in the SPMC that
       the Post Office has to reach a view if suspension is
       desirable in its interests and necessary under the NTC
       for one of the stated reasons.
           And reading from 427, we say {A/8/154}:
           "It would be commercially absurd for Post Office
       ...(Reading to the words)... Cs contend was required."
           So if you take the example of someone going on
       an audit, £8,000 is missing, postmaster can give no
       credible or other explanation as to why that is.
       You can't fully investigate at that stage obviously, but
       you must be entitled to suspend because you are
       preventing further leakage in the word or theft of cash
       in a case where there is dishonesty.
           Similarly if there is rank incompetence, they don't
       know what they are doing and they are losing cash by
       reason of that, you have to protect yourselves from that
       too, from that side of the -- you can't allow that state
       of affairs to continue.  You certainly can't have
       a construction or implied term that prevents you doing
       so.  And the Post Office must in those circumstances, in
       my submission, have the right, because that would be
       desirable under the SPMC or necessary under the NTC.
       And whilst I accept that under the SPMC the desirability
       in terms -- sorry, the decision should be reasonably
       based on one of those grounds, and hence not arbitrary,
       irrational, capricious or without reasonable cause, and
       obviously properly related to one of those grounds,
       given that there is no need in my submission for any
       further tinkering with that clause.
   MR JUSTICE FRASER:  What is meant by the phrase "in
       the interests of Post Office"?  Does that mean
       commercial interests?  Does that mean reputational
       interests?  Does it mean any type of conceivable
   MR CAVENDER:  Yes, legitimate.  It wouldn't be -- it's in
       their legitimate interests as a business.
   MR JUSTICE FRASER:  Legitimate interests as a business.
   MR CAVENDER:  The other point, my Lord, we say at 430, again
       it's very much up to your Lordship but I won't argue
       strongly against it, is if, as we say, we might argue
       with some force the power to suspend the subpostmaster's
       remuneration during the period of suspension, and we
       would accept there is a strong argument there to say
       that that should be -- should not exercise that power
       dishonestly or in arbitrary, capricious or irrational
       manner.  If you remember the evidence from the
       Post Office, the witness said he would never do that,
       and if there was no good reason for the suspension, as
       it turned out, that he would be minded to repay.  Again,
       I won't argue against, if your Lordship felt it
       appropriate, a cog of that type on that particular
           We then deal in the following part attacking the
       idea of -- put forward by the claimants about you can't
       operate this if Post Office's conduct, you were in
       material breach.  You can imagine a case where you might
       be in material breach in a particular way, for instance
       say you had not paid fees for some reason.  That doesn't
       mean to say if you then go in and find there is theft or
       whatever you couldn't suspend the Post Office.  You
       would be in material breach of contract because you
       hadn't paid for whatever reason, there might be some
       dispute as to something.  But quite why the fact that
       Post Office might be in material breach would prevent
       you exercising the right to suspend is beyond me.
           432.  Basically the case put forward by my learned
       friend again is on employment grounds.  He observes that
       employment contracts, employers' right to suspend
       employees should not be based on reasonable grounds and
       he has some cases for that.  We say it is wrong for
       a number of reasons.  First, you can't just extrapolate
       at will from employment law to these contracts.  This is
       a business-to-business relationship, at least in very
       large part, even in my learned friend's case.
           The businesses which Post Office contracts with are
       sometimes individuals, sometimes they are small business
       people.  On the other hand there are thousands of
       branches run by large corporates or who run multiples
       branches.  And 433, you see the reference there,
           So you can't sensibly in my submission, and my
       learned friend runs away from this point, but assuming
       the contract means the same for everyone more or less,
       then you can't proceed upon the basis of the lowest
       common denominator.  Some of these people are
       companies -- sorry, some of the contracting parties are
       companies, others are multiples, and others are
       obviously businesspersons.
           Then we say:
           "Second, even in employment contracts ...(Reading to
       the words)... should be implied."
           That is from McClory v Post Office where David
       Neuberger QC, as he then was, at the top of 152
           "There is no general obligation on an employer to
       act reasonably ...(Reading to the words)... lack of
       clarity in wording of the terms."
           There is no actual lack of clarity in these terms,
       and even if there were, that wouldn't be a warrant to
       rewrite the clauses.
           Thirdly, they seek to rely upon the implied term of
       trust and confidence in Gogay v Hertfordshire.  But
       of course this is in the employment context where the
       implied term of trust and confidence reigns.  It doesn't
       reign here, in my submission.  The Lord Justice said:
           "The question is whether ...(Reading to the
       words)... such as to destroy or seriously damage the
       relationship." {A/8/157}
   MR JUSTICE FRASER:  I think the word "required" should be
       "did not permit".  The implied term didn't require
       conduct such as to destroy.  It was to prohibit or not
   MR CAVENDER:  My Lord, you are quite right.  That was a case
       of course about suspension and allegation of sexual
       abuse, and recorded an allegation of that where you have
       other factors when you are recording as fact something
       as a ground for them.  It's misbehaviour of that kind.
           So we say for the reasons set out above there is no
       generally implied term of trust and confidence here so
       the employment context is neither here nor there.
           We say also it is worth emphasising C's case is not
       merely the power to suspend must be exercised
       reasonably, they in fact argue for a multiheaded term
       which includes both unwarranted specific provisos, ie
       material breach thing, and unwarranted (inaudible)
       thresholds, whether or not the relevant threshold for
       doing was established.  I don't know what that means,
       I don't know how as a matter of contract you could
       possibly imply a term on that basis, saying there is
       a threshold for it, but even if you are going to
       exercise that somehow, there are some other relevant
       considerations that are not in the contract, I'm not
       telling you what they are, but must have regard to them.
       None of it makes sense at all.
           There is no shred of support for a term of that kind
       in any authority you have been shown and in my
       submission it is completely unprincipled.
           Even in McClory and Post Office, top of 153 now
       {A/8/157}, the judge emphasised:
           "... in rejecting an attempt to imply a term that
       the employer should give full reasons for the
       suspension ...(Reading to the words)... that is more
       than even the judicial process would demand and cannot
       be achieved by implying terms."
           That is what we say about suspension.
   MR CAVENDER:  Termination.  On the same page we set out
       there the various contentions in this area.  So 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?"
           And 16:
           "On what basis are you entitled to terminate on
       notice without cause?"
           And 64.14 is the suggested implied term:
           "Not to terminate arbitrarily ...(Reading to the
       words)... material breach of duty."
           So it's very much a re-run of the suspension
       arguments.  As you will know, summary termination, 438,
       section 1, clause 10:
           "The agreement may be determined at any time in case
       of breach of condition or non-performance of obligation
           And 16.2 of the NTC {A/8/158}:
           "... may terminate ... immediately on giving notice
       to the operator ..."
           And 16.2.1 to 16.2.16, there are four grounds of
       those set out here.  The relevant one here:
           "Commits any material breach of the provisions of
       the agreement or any other contract arrangement ...
           These terms expressly permit termination for cause,
       subject only to the express limitations in them.
           "Cs position ...(Reading to the words)... on a knee
       jerk basis."
           So that comes in as well.  This should be rejected,
       we say, for much of the same reasons on suspension.
           In relation to section 1, clause 10, the short
       answer to C's argument is that a clause which entitles a
       party to terminate a contract (inaudible) in material
       breach is generally interpreted to mean material breach,
       ie repudiatory breach, see Lewison clause 17,
       paragraph 17.16.  We say that is supported here by the
       use of the phrase "breach of condition".  That is
       repudiatory breach, that is an objective test, and there
       is, we say, therefore, no basis for interpreting the
       clause in the way suggested by the claimants.  Nor is
       there any necessity to subject it to the implied terms
       to the same effect.  It's a bog-standard, well-known
       provision in the contract for termination or
       repudiation.  Nothing more, nothing less.  Unvarnished.
       And there is no reason for this court to even touch it.
           443, we do the same for the NTC.  It is exactly the
       same reasons.
           As we see at 446, we extract from McClory v
       Post Office {A/8/159}:
           "An employer does not have to act reasonably when
       exercising his express or implied right to determine
       a contract of employment."
           So that is 15.
           Going to 16, termination on notice {A/8/160}.
       Earlier on I took you to the case of Geys which was
       a case of termination on notice, three months' notice,
       in circumstances where pejoratively you could say he
       didn't deserve it and it was done cynically in order for
       the bank employer to obtain a benefit, windfall, namely,
       the last slug of his £2 or £3 million in bonus he
       wouldn't get because he wasn't employed at year-end.
       That is how the clause went.  Not so much as a wrinkle
       on the face of the Supreme Court that the bank could do
       that, providing they followed the right procedure.
       There is nothing inherent within exercising a notice
       that there is any good faith or reasonable or other
   MR JUSTICE FRASER:  It all depends on the terms of the
   MR CAVENDER:  Of course.  But it is a contractual right.
       What my learned friend, remember, here, is doing, he is
       not saying it depends on the terms of the contract, he
       advances the case that you should imply certain cogs on
       that right, and he says the contract should be construed
       in a way, in my submission, that it doesn't really -- it
       can't possibly bear.
           At 448 we set out the provision of six months'
           As we say in 449 {A/8/160}:
           "In addition to the implied terms alleged at 64.14
       and the alleged provision on knee-jerk, Cs contend ..."
           There's an additional further one here:
           "... termination could not be given without
       Post Office applying conscientious consideration to
       whether to terminate and what period of notice to
       give ..."
           You can see we set out what they say.  We say quite
       simply, as a matter of contract, there is no basis for
       any of this.  The words of the contract are clear.
       There is no ambiguity in the language.  This is a common
       provision in a contract for termination on notice.
           To take a capability type situation.  Say you have
       someone who is not dishonest, so you can't say that they
       have repudiated the contract, but they turn out to be
       useless.  You try and retrain them, try and help them,
       but they are absolutely useless and you want to get rid
       of them, quite reasonably.  You give them three months'
       notice and that must be an entitlement in the commercial
       contract to do that and not for it to be hedged around
       with all these cogs and obligations.
           The other point to remember here, my Lord, is the
       right to terminate in both these contracts is mutual.
       Both the postmaster and the Post Office can terminate on
       three or six months' notice, and it is Mr Sabir I think,
       if you remember, quite early doors on, whether it is
       Crossflatts or -- did give notice to terminate.  He
       didn't make enough money, he accepted in evidence, if
       you recall.
           What is good for the goose must be good for the
       gander here.  My learned friend doesn't deal with that
       side of the coin as to if there are any cogs on these
       rights, they must be mutual.  Once you realise that, the
       whole thing becomes fanciful.
   MR CAVENDER:  Then we -- at 453 {A/8/161} we say:
           "If the court were to read ...(Reading to the
       words)... many other contracts which use the same
           Going back to Richard Salter QC, the deputy judge in
       Monde, where he says:
           "The purpose of the contractual right to terminate
       is to give the party on whom ...(Reading to the
       words)... to consult anyone's interests but its own."
           It may be that the Post Office, if it sees fit, may
       decide not to fully enforce a right in a contract, as
       in fact turned out to be the case in some cases.  That
       does not alter the terms of that right.  It may be that
       to preserve goodwill or whatever, both the postmaster
       and the Post Office will agree for the postmaster to
       stay in post until someone suitable has been identified
       by the postmaster or by Post Office.  That doesn't alter
       the legal rights.  The fact that the goodwill wants to
       be maintained is not a surprise, and my learned friend
       says, well, how -- it's one of his grounds for trying to
       attack these terms.
           But the goodwill and the investments my learned
       friend relies on so heavily, they are not wasted.  The
       whole idea of the replacement SPM in times of difficulty
       is to maintain the goodwill for the benefit of the
       postmaster as well as obviously the Post Office, and
       they can then pass that on and sell that business to
       another postmaster in the way that they bought it.  So
       this idea that there are huge investments and that is
       inconsistent with the express terms of the contract in
       my submission is significantly overblown, and in fact it
       is a question of -- Mr Sabir himself, he -- you couldn't
       say Mr Sabir had fully earned out whatever it was he had
       invested at the time he gave notice.  It was very early
       doors.  He had decided to get out and he must be
       entitled to do that, otherwise, to ask Mr Green
       rhetorically, how does he say these rights work against
       Mr Sabir?  Can he not give a notice to terminate?
       Because that must be the logical impact of what he says
       but he never, in my submission, faces that.
           Then we at 455 focus on the idea that the
       termination should not follow reasonable correspondence.
       Again I don't know what that means.
           We deal with the capability issue over the top of
       158 {A/8/162}, and then we make the point by reference
       to Geys at 457.
           So what my learned friend is doing here in this
       respect is going even further than the employment
       contract.  He is very fond of saying it is an employment
       context when he fancies it.  In this respect he doesn't
       fancy it because if you look at something like Geys,
       where there is a three-month notice provision and they
       make it and no one suggests there is any kind of cog on
       that, and as I say there, what he is trying to do,
       although silently and perhaps not intellectually
       honestly, is introduce a concept by way of common law
       that you can't have an unfair termination of contract.
       It's a bit like statute through the Employment
       Rights Act 1996, of course it has a right not to be
       unfairly dismissed.  There is no such common law right
       not to have a contract unfairly terminated.  That is not
       the law of England.  And there is no other grounds to
       seek to import it now.
           My Lord, I see the time.  Is that an appropriate
       moment for a break?
   MR JUSTICE FRASER:  Yes, I think it is.  Until 3.15 pm.
   (3.06 pm)
                         (A short break)
   (3.21 pm)
   MR CAVENDER:  My Lord, there are three points outstanding.
       There's the true agreement Autoclenz point, then the
       Unfair Contract Terms Act point briefly, and then
       finally the Post Office's agent point.  So they are the
       three points I am going to deal with in the remaining
       time, and I won't take all the remaining time.
           Autoclenz then.  If we can go to paragraph 458 of
       the closing is where we summarise the argument.
       {A/8/164}.  Common Issues 17 and 18.
           17 reads:
           "Do the express written terms of the SPMC and NTC
       between Post Office and subpostmaster represent the true
       agreement between the parties as to termination ..."
           And Autoclenz is relied upon.
           If not, was the true agreement between parties as
       alleged by the claimants at paragraph 71.
           So if they lose on construction/implied terms, this
       is their fallback position in relation to the term as to
       notice, and it's limited to that.
           They also seek to deploy this agreement, we say in
       459, as an additional purpose, to contend Post Office
       cannot terminate without giving notice such as the court
       may hold reasonable.  So they're trying to use it for
       that purpose too and they say not less than 12 months in
       that connection.
           So the Cs are arguing when you stand back there's a
       clear gap up rectification not bridgeable by the
       ordinary processes of construction or the implication of
       terms (or indeed rectification), and the contract as
       agreed was not the true agreement between the parties
       in fact.  We say this is a highly unorthodox submission,
       and the court really shouldn't look beyond the written
       terms of the parties to find the true agreement, and we
       rely there on what Lord Neuberger says in Secret Hotels2
       v HMRC at paragraph 31 where you will see he outlines:
           "Where parties have entered into a written agreement
       ...(Reading to the words)... parties' respective rights
       unless it is established it constitutes a sham."
           My Lord of course knows what a sham is.  And 426,
       Chitty helpfully explains what that is and we have the
       bits highlighted in the middle:
           "... an agreement may take effect ...(Reading to the
       words)... and not an employee." {A/8/165}
           That of course is the example of Autoclenz itself.
       Can we go to Autoclenz which is in volume 1, behind
       tab 27.  I think my learned friend took you to that very
       briefly, the bit that ... The judgment of Lord Clarke in
       particular at paragraph 32 merits study. {A1.1/39/1}
   MR CAVENDER:  Paragraph 32, yes, where he is quoting from
       Lord Justice Aikens {A1.1/39/11}:
           "... stressed ... the importance of identifying what
       were the actual legal obligations of the parties.  He
       expressly agreed ...(Reading to the words)... intentions
       or true expectations of the parties because of the risk
       of construing too much from what were the private
       intentions of the parties."
           My Lord, that in my submission is really the
       important focus here.  Once you realise that this is
       a sham principle and the Supreme Court here is saying
       you don't look at the subjective true intentions of the
       parties, then the point becomes very easy.  My learned
       friend hasn't even put forward what the sham contract
       was and what it was meant to be, and it is very odd to
       say it is a sham in relation to one aspect only.  In
       Autoclenz, the whole thing was about whether they were
       employees or --
   MR JUSTICE FRASER:  They were described as subcontractors
       but they were actually -- well, in law they turned out
       to be employees.
   MR CAVENDER:  Exactly.  But here my learned friend is just
       identifying one aspect of it, just one term, which is in
       itself odd conceptually.  Everything else was fine and
       agreed and true but in this one respect it wasn't, so
       that already is really beyond the pale.
           And secondly, there is no suggestion that
       Post Office didn't think it had the right, and
       occasionally did use the right, to terminate on three or
       six months' notice.  In fact that is the very complaint
       made by Mr Bates, for instance, that that is exactly
       what they did.
           So normally a sham is where the contract says one
       thing, and no one intends that to be how it should be,
       there is some other intention hidden, often for a tax
       reason, and that is the true arrangement or contract.
           That just doesn't fit with this point, the way it is
       put in this case.  It is put because they don't like the
       three or the six months, but there is no sham here.  It
       is just that they don't like it and they think it
       operates in a way that is contrary to their interests.
           We outline this at 467 of the closing.  We say at
       468 {A/8/168}:
           "The court's role is to determine to what was
           And we say the first and normally last port of call
       would be the four corners of the contract, but in either
       case we say the purpose of the exercise to identify the
       actual legal obligations as agreed, not to displace them
       by reference to what one party would like the agreement
       to mean or what the usual practice of the parties may
       have turned out to be.  It is much more of that kind of
       case.  In fact, Post Office didn't always hold to three
       or six months, and nor did the postmaster.  Sometimes he
       gave notice and stayed on longer.  Why?  Not because he
       was obliged to do so but because his commercial
       interests suited him to wait until such time as he got
       someone else to take over the business.  All perfectly
       reasonable.  It doesn't make the agreement a sham.  It's
       behaviour that's perfectly explicable by reference to
       the respective commercial interests.  It doesn't alter
       the meaning of the contract.
           The fact that one party doesn't always enforce
       a contract in a particular way doesn't mean to say it
       reserves the right to do so, and there are legitimate
       grounds for doing so, say on notice, and I gave the
       example of the capability.  So it is not as if it is
       a sham.  It is not having a right or, in Autoclenz,
       a status which isn't real.  You may hope not to
       terminate on notice very often.  You may hope not to
       have use that very often.  You have the right to and
       sometimes you will, but that doesn't alter the content
       of the contract, it doesn't make it a sham.  And
       Autoclenz, in my submission, is really limited to, and
       you've seen Chitty and the other works on this, it is
       really relating to status.  And if you look at what
       Lord Clarke says, that this isn't going to be rolled
       out, this principle, into other contracts.
           Then we say at 470 more specifically it's very odd
       for them to argue termination provisions only.  Cs have
       not identified any conduct on the part of Post Office
       from which it could be sensibly inferred what the true
       agreement was as they allege.  As I say, they just
       suggest it was termination consistent with the terms set
       out in written agreements rather than inconsistent with
       the terms they now allege.  Obviously there is no
       analogy with the stark contrast between Autoclenz and
       the written terms and the facts on the ground.
           As we say in (c):
           "Even if Cs were to plead and prove that Post Office
       did not enforce the termination provisions as drafted,
       this fact would also be consistent with the Post Office
       adopting a practice more in favour of the SPMs."
           And we see by analogy the Pimlico case.
           "The fact that one party acted more ...(Reading to
       the words)... not part of the true agreement."
           At 471 we track the language of Lord Clarke in
       Autoclenz {A/8/169}, and we say the SPMC and NTC are
       ordinary contracts or commercial contracts, they are not
       in the special species of contract of employment
       contracts and relationship.  My Lord will know, if you
       have done much employment law in the past, the question
       of status of employees from ready mix concrete onwards
       about the control tests and the various elements of it
       has been hotly contested for many years.  Autoclenz is
       if you like in that line of authority, showing that if
       you pretend it is one thing and in fact it is another
       then the law won't recognise that.  It is really no more
       or less than that.  It has nothing to do with this case
       and in my submission the point really goes nowhere.
   MR CAVENDER:  That is true agreement, my Lord.  Now unfair
       contract terms.  That is at paragraph 601.  {A/8/214}
       The points here are slightly more fundamental and they
       are in my submission reasonably clear.
           So 601, page 209, were any or all of the terms
       identified in Common Issue 5 unenforceable pursuant to
       the Unfair Contract Terms Act 1977.  The first point to
       note in passing is that is a whole swathe of clauses.
       It is the main operative clauses in the agreement.  So
       it is not identifying any particular one saying this is
       unfair, they are saying they are all unfair for common
       purposes, ie the main ones we have been dealing with.
           We say both of those -- the contention they are is
       without merit at all.  We set out section 3 of UCTA
       at 603, and at 604 we say they must satisfy two
       threshold requirements.  That, first, they were dealing
       with Post Office written standard terms of business, and
           "The clauses complained of purport to entitle
       Post Office ...(Reading to the words)... or no
       performance at all."
           We say they don't satisfy either of those.  We say
       true it is these are standard terms.  That is true.  But
       they are not standard terms of the Post Office's
       business, because that requires you to establish what
       the Post Office business is.  The Post Office business
       is the selling of stamps, postal orders if they still do
       it, financial services and things of that kind.  Whilst
       they do that through the agency of postmasters, that is
       not their business, and so these are not the standard
       terms of their business, and there is authority in Court
       of Appeal in Commerzbank v Keen and some other
       authorities that support that contention.
           It is quite interesting here because Commerzbank v
       Keen is actually an employment case involving bankers,
       and here my learned friend says but that is an
       employment case so somehow the principle is different
       when you have agents.  In my submission, when you look
       at the reasoning in that decision it applies here.  You
       have to identify what the business of Post Office is,
       and it is -- if you ask someone in the street what is
       the business of Post Office, the reasonable man, he
       would say, "Well, it is where I buy my currency for
       holidays, take my post, et cetera."  He wouldn't say the
       business of Post Office is employing postmasters.
           So we then deal with Commerzbank v Keen: volume 1,
       tab 20.  {A1.1/29/1}.
   MR JUSTICE FRASER:  Where are we going in here?
   MR CAVENDER:  Volume 1, tab 20, decision of
       the Court of Appeal.
   MR JUSTICE FRASER:  Yes, Commerzbank.
   MR CAVENDER:  Exactly.  We'll start probably at ...
   MR CAVENDER:  From the conclusion alone, I think we can,
       my Lord, yes {A1.1/29/18}:
           "I do not see how it can be argued with any real
       prospect of success that under such a term for
       remuneration Mr Keen 'deals as consumer' with the Bank.
       As a matter of principle and of construction of section
       3 I have been assisted in reaching this conclusion by
       the analysis of Professor Mark Freedland in the 2nd
       edition of his work The Personal Contract of Employment.
       I agree with his general conclusion that:
           "'This body of regulation is of marginal application
       to personal work or employment contracts ...'"
           Et cetera.  And he sets out the fairness of that.
           But in 103:
           "For similar reasons I have reached the same
       conclusion on the issue whether Mr Keen contracted on
       the Bank’s ‘written standard terms of business’ in
       relation to the provision in the discretionary bonus
       scheme requiring him to be in the employment of the Bank
       at the date of payment of the bonus.
           "104. As Morland J pointed out in Brigden the
       relevant business in that case, as in this case, is the
       business of banking. The terms as to the payment of
       discretionary bonuses were not the standard terms of the
       business of banking. They were the terms of the
       remuneration of certain employees of the Bank, such as
       Mr Keen, who were employed in part of the Bank’s
           So too, my Lord, in my submission here, namely, the
       subpostmasters were retained as agents as part of the
       postmasters' business of supplying postal services,
       post office services, foreign currency and the like to
       members of the public.
           So the first requirement in section 3 of the Unfair
       Contract Terms Act is not satisfied.  Secondly, if you
       go to paragraph 617 of our closing, the second threshold
       requirement {A/8/216} is that there is an entitlement to
       render substantially different contractual performance
       in relation to the impugned terms than that contracted
       for.  As we say, when we look at those contractual terms
       they do not entitle Post Office to render contractual
       performance different from that which is reasonably
       expected on those terms or render no performance.
       A number of those terms are not focused on Post Office
       at all.  The contractual provisions in question place
       obligations and liabilities on SPMs.  A number of the
       terms listed entitle Post Office to update amended rules
       and instructions.
           And then Paragon Finance v Nash says:
           "There is no relevant obligation on the claimant and
       therefore nothing that can quality as a contractual
       performance for the purposes of section ...(Reading to
       the words)... expected of the party who relies on the
       term, the key word is 'performance'."
           So we say exactly the same reasoning applies here.
       Updating the rules applicable to SPMs does not change
       Post Office performance obligations, it changes the
       SPM's obligations.  The final set of relevant terms deal
       with the Post Office's ability to suspend and terminate
       contractual relations with SPMs.  These are terms which
       delineate the duration of contractual obligations rather
       than a stripping or neutering of Post Office
       obligations.  So take in particular the six or three
       month termination for these purposes, and we cite Chitty
           "It seems unlikely that a contract term ...(Reading
       to the words)... would fall within paragraph (b) or, if
       it did, would be adjudged not to satisfy the requirement
       of reasonableness."
           That was a passage approved by Lord Justice Dyson in
       Paragon.  We also then refer to other case law that
       agrees with this.
           I think my learned friend took you to the
       Sir Thomas Bingham quote.  At 625, quoting
       Mr Justice Morland in Brigden {A/8/218}:
           "... it is not a contract term excluding or
       restricting liability of the defendants in respect of
       breach of contract ...(Reading to the words)... no
       performance in respect of any part of their contractual
       obligation (emphasis added)."
           So you can see the argument, he is trying to
       characterise a three month or six month notice provision
       as one which -- under which Post Office in this example
       is deciding to render no or substantially different
       performance when in fact it is -- the effect of it is
       which the subpostmaster no longer has to provide
       performance.  This is not an area, in my submission,
       where the Unfair Contract Terms Act on the authorities
       attaches.  They don't fall within 3(2).
           We then at 628 rely on Barclays Bank v Marsh where
       Lord Justice Dyson rejected, at paragraph 21, an
       argument on 3(2)(b) {A/8/219}:
           "In my view, that is directed at
       contracts ...(Reading to the words)... does not require
       any contractual performance from Barclays Mercantile at
           Cs set out the category of terms, 629.  They say:
           "... enabled Post Office to render a contractual
       performance substantially different ..."
           And we set out at 629(a) through to 630 why that is
       wrong.  We also say at 631, when you look at this and
       stand back from it, 3(2) is designed to catch terms,
       reliance on which contradicts one party's contractual
       expectations.  Those expectations will be usually
       grounded in other terms of the contract.  The examples
       given in Chitty are a travel agent who sells a cruise on
       a vessel then relies on a clause to change the vessel, a
       force majeure clause.
           So that is an obvious example where the performance
       is on vessel 1 but there is a clause allowing you to go
       on vessel 2.  That is a clear example of entitling one
       party, if there is term that allows it, to render
       substantially different performance, particularly if
       vessel 2 is not as nice as vessel 1, and a force majeure
       clause entitling one party clause entitling one party
       not to provide the contractual performance which would
       otherwise be expected of him. In those cases, the terms
       of the contract generally would entitle you to expect a
       certain level of performance which the impugned term
       departs from dramatically.
           We say my learned friend's case gets nowhere near
       that.  They say that their expectation grounded in what
       was said them before the contract was entered into.  And
       they authority for the proposition that exceptionally it
       can be a pre-contractual representation or promise that
       creates the contractual expectation.  That is true.  To
       take an example: Post Office said before the contract
       was agreed, don't worry about this clause saying you can
       be dismissed summarily, you can't.  That might answer
       this point.
           But C's evidence taken at its highest comes nowhere
       near saying that.  Their assertions about
       pre-contractual discussions and mood music was
       comforting, that post Office hoped each relationship
       would be (inaudible) and work profitably.  As became
       clear, this is what the lead claimants meant when they
       referred to next page of the partnership, working
       together, things of that kind.
           They are not on any view in my submission
       pre-contractual contradicting the precise contractual
       terms they are complaining about.  They are really
       saying a mismatch between what they hoped and thought
       the contract would say and what it actually says.  As we
       say, that is not a legitimate argument.
           In support of this proposition is Hodges.  We
       outline there the facts of that.  And really the bullet
       point at the end, they had not claimed to be entitled to
       render a contractual performance substantially different
       from that reasonably expected of it.  We say exactly the
       same is true here.
           Finally at we 642 {A/8/222} rely on JP Morgan and
       Mrs Justice Gloster, as she then was:
           "Terms which simply define the basis upon which
       services will be rendered and confirm the basis upon
       which the parties are transacting business are not
       subject to section 2 ... otherwise every contract which
       contains contractual terms defining the extent of each
       party's obligation would have to satisfy the requirement
       of reasonableness."
           We say termination provisions and these other
       provisions dealt with fall within that category as well.
           If we are wrong about all that we set out at 644 and
       following why these terms are reasonable.  My learned
       friend hasn't set out in relation to each term whether
       the threshold has been fulfilled, the two thresholds, or
       reasonableness, so I am not going through reasonableness
       in detail on them all.  You can see what we say and you
       can see these are terms in a commercial contract that
       are not out of kilter or out of expectation though they
       are not unreasonable.  These are commercial people who
       have entered into these agreements, the opportunity to
       take legal advice if they wish to do so, and as we said
       at (inaudible) they are unexceptional.  There is no
       inducement by the postmasters to enter into this.  If
       they didn't want to, they wouldn't have to enter the
           And as we say at 651 {A/8/224}:
           "The court assesses the issue of reasonable at the
       time the contract is made and not by reference to what
       has happened during the course of the contract with the
       benefit of hindsight."
           That was Mr Justice Flaux in Shared Network.  So we
       rely on that too.
           Finally, my Lord, Post Office as agent, issues 10
       and 11.  Post Office is not the agent of subpostmasters,
       the postmasters are its agent, there is not an agency
       going the other way, nor could there be.  Firstly, the
       premise is a false one because the agency tries to get
       into the area in which the postmasters aren't concerned,
       namely, the client relationship.  Commercially they are
       not involved in that.  They have no liability in
       relation to that as I recite in opening and
       Angela Van Den Bogerd says in her witness statement --
           The high water point, and maybe the only point at
       this point, finds its way into Angela Van Den Bogerd's
       witness statement.  If we can turn that up.
   MR JUSTICE FRASER:  Whether a witness says they are or
       aren't an agent doesn't really much matter, does it?
   MR CAVENDER:  That is what occurred to me.  But what
       occurred to me also, if you read the rest of that
       paragraph, which is why I was going to take you to it.
   MR JUSTICE FRASER:  Let's go there but I'm not sure it adds
       to the sum of human knowledge.
   MR CAVENDER:  Bundle C, C2, tab 1, paragraph 80.2.  My
       learned friend's favourite.  What he reads out, this is
       {C2/1/24}, is that Post Office handles this on behalf of
       the subpostmaster, and he goes "Ha ha, therefore you
       must be an agent.  That is what you are saying, isn't
           If you read on two paragraphs down, 80.4:
           "It would be contrary to the overall scheme of the
       subpostmaster relationship.  Nobody at Post Office who
       say that it effects customer transactions on behalf of
       subpostmasters or that Post Office acts as the agent of
       subpostmasters in recording and processing
   MR JUSTICE FRASER:  What I mean is whether nobody at
       Post Office would say that or whether everybody would
       say that.  It doesn't make much difference, does it?
   MR CAVENDER:  I agree.
   MR JUSTICE FRASER:  It is the construction of the agreement
       and the relationship if there is anything outside the
   MR CAVENDER:  My Lord, that is exactly right.  But that
       seems to be the foundation for it, which in my
       submission is also flawed.
           My Lord, I think there are various bits of
       housekeeping I think now.  That is the end of my
       submissions.  Perhaps you will hear from my learned
       friend or ask me questions now.
   MR JUSTICE FRASER:  I have a couple of questions but I just
       need to check whether any of them are other than
       housekeeping, if they are I will deal with all the
       housekeeping together.  (Pause)
           This goes to notice really.  It might be you haven't
       got anything to say on it more than you have said
       already.  But Mr Green made the point that so far as
       notice was concerned, the evidence demonstrated that, as
       he put it, I might be paraphrasing, this might not be
       the exact words, an outgoing subpostmaster could be or
       was forced to stay in post longer than they wanted until
       the Post Office was ready to effect the transfer, was
       the exact phrase he used.  Is there anything you want to
       say particularly about that?
   MR CAVENDER:  In my submission, the evidence didn't show
       that.  What it showed was, where there were those
       examples, was that the postmaster, in order to maximise
       and maintain his goodwill, was arranging commercial
       arrangements with Post Office as to timing.  You can
       describe that as being kept in position if you like.
       But of course it doesn't -- the legal rights of the
       postmaster to give three months' notice or six months'
       notice and walk, there is no doubt about that, we have
       evidence had no heard that isn't the case.  We have had
       evidence that in practice both sides sometimes decided
       that wasn't in their commercial interests.  So
       I don't think it helps in terms of -- to really take the
       argument any further.
           There is no suggestion there is some variation of
       contract or some -- there is no case along those lines
       that somehow there was a change to the contractual
       rights.  There is some evidence that in practice to
       maintain goodwill that the postmaster stayed in
       position.  He didn't have to.
   MR JUSTICE FRASER:  Didn't have to but, notwithstanding
       unhappiness about it, would be co-operative about the
       transfer date.
   MR CAVENDER:  In order to main his goodwill, I surmise.
   MR JUSTICE FRASER:  All right.  The only other point is a
       rather more wide-ranging point and this might be putting
       an obvious point.  It is part of the reason I asked for
       these six.  It seems to me on the evidence that
       the amount of material that was presented for the first
       time, even on the Post Office's case, to the incoming
       subpostmaster on branch transfer day couldn't possibly
       be read in a day.  I make that observation simply
       because I know how long it would take me to read those
       six files in a day.
           Am I being unfair if I come to that conclusion?
       I appreciate your submission would be on the contract it
       doesn't much matter.
   MR CAVENDER:  That, and also do you have enough time to know
       what the documents are, the nature and quality of what
       is behind the index or spine.  For instance the manual,
       or when we look at them, there are all sorts of oddities
       there.  But it is clear from the face of the document
       often what it deals with.  True it is you wouldn't, and
       wouldn't want to, frankly, read every line in those
       documents.  They are I suppose one can say reference
       documents that are there that are incorporated, but for
       you to read the detail as and when if you want to, or
       need to, to check on certain detailed matters.  I very
       much doubt down the road in terms of contractual
           So it doesn't matter, in my submission, whether you
       reach that conclusion or not.  It depends how I suppose
       you approach it.  In terms of, say, the Serv 135
       document we have seen, that emphasised in advance
       certain specific terms.  The IRS 110 for instance is
       almost a receipt type document for the lever-arch files
       of documents, the contents you have.  But I'm not sure
       contractual, my Lord, that one gets very much from --
       and here the allegations aren't of breach of
       paragraph 14 of the foreign currency, or whatever it
       might be in the bundle you are talking about, or -- that
       isn't in issue.
   MR JUSTICE FRASER:  But it still comes down to the mechanism
       of contractual formation.
   MR CAVENDER:  It is part of it, yes.  But in many contracts
       you have reference to very large amounts of documents,
       it doesn't mean to say the contract isn't properly
       formed, and which is why you have I suppose the
       principle that if there are any important terms within
       such a situation you couldn't rely on some document
       tucked away somewhere for some significant term.
       Serv 135 is an example where that wasn't done.
           And in fact when you look at the subpostmasters
       contract in the NTC, they are relatively straightforward
       documents.  The terms we talk about, clause 12(12), and
       the termination provision, clause 4.1 and the
       termination from that, they are all -- they are the main
       terms we are talking about, really.  There are two terms
       in each and they are not hidden away anywhere.
       Relatively obvious.
           And so it is not a case, in my submission, where
       people have been made to sign things and import
       obligations in a way that is unfair or doesn't
       incorporate them or give them due notice.  The fact
       there might be other detail and instructions in the
       background in my submission is neither here nor there.
   MR JUSTICE FRASER:  The importing of obligations is
       a separate point.  But so far as the evidence on branch
       transfer day, quite a lot of the evidence was they were
       effectively made to sign things in the sense that
       certain documents were presented to them in a rush
       referring to other documents, which, in this instance,
       are obviously quite lengthy, which they couldn't
       possibly be expected to read on that occasion.
   MR CAVENDER:  My Lord, no, I accept that.  And I think the
       evidence was there were I think six or seven, but there
       were --
   MR JUSTICE FRASER:  Six or seven documents.
   MR CAVENDER:  Had to be signed.
   MR JUSTICE FRASER:  I think one of the witnesses said 12 but
       some were duplicates but six or seven were the number of
       different documents.
   MR CAVENDER:  We know what two or three of those are.  ARS
       10 single page, the appointment page single page.  And
       although some of them gave evidence that it was rushed,
       some of it wasn't rushed.  They had a whole afternoon
       and it wasn't until the following morning the thing was
       going to open.  So it was a varied picture.
           At the end of the day I'm not quite sure where this
       takes you because if I am right on the SPMC and the
       signature of that document, the appointment document,
       the terms and conditions, that is what we are disputing
       in this trial.  If we were disputing or someone was
       disputing some obligation in appendix 15 of one of
       the manuals, then I could see your Lordship's point.
       But here, given this isn't a public inquiry into the
       whole of the contract and all the details, in my
       submission it doesn't seem of first relevance but -- and
       the other point of course is that all this is
       post-contract on the claimants' case.  And on our case
       indeed.  Both parties say that the contract was formed
       at the signing of the terms of appointment.  All that is
       before the takeover of the branch which is often --
       sometimes a week or two after, sometimes a month or two
       from memory.
           So again I am not entirely sure what contractual
       relevance it has --
   MR JUSTICE FRASER:  It is part of the picture of how the
       incoming subpostmaster takes control of the branch.
   MR CAVENDER:  That is true.
   MR JUSTICE FRASER:  There is undoubtedly the involvement of
       the Post Office on that day.
   MR CAVENDER:  Indeed.
   MR JUSTICE FRASER:  And there are a number of documents and
       formalities that are completed on that day.
   MR CAVENDER:  That is true.
   MR JUSTICE FRASER:  It would be rather artificial completely
       to ignore it.  You are right, it might not necessarily
       feed into any of the points on construction on the
       actual terms for these Common Issues, but if one is
       dealing with contract formation it would be odd
       completely to ignore it.
   MR CAVENDER:  My Lord, yes.
   MR JUSTICE FRASER:  And I note that the Post Office seemed
       to have, as you put it, improved or reformed its
       procedures generally anyway between the SPMC and the
           Right, unless there is anything else you would like
       to say about that.
   MR CAVENDER:  There are some other housekeeping points
       I will report to you on but I think my learned friend
       wants to reply.
   MR JUSTICE FRASER:  The final point to you, which is not for
       an answer now but is yet again something I need, I am
       afraid, and I know for some of the claimants it is the
       same, the same date, but the two of you will have to
       liaise.  I would like on a single piece of paper,
       please, in respect of each of the six lead claimants,
       just the date on which each side contends the contract
       was in fact formed.  That is just to save me tracking
       through the hundreds of pages to work out the date
       myself.  So no submissions, literally just calendar
   MR CAVENDER:  I think it is all agreed apart from
       Mrs Stubbs.
   MR JUSTICE FRASER:  I think it is as well but I would just
       like it in black and white in one place as a ready
       reckoner.  Monday by 4.30 pm would be fine.
   MR CAVENDER:  Did you want primary and alternative --
   MR JUSTICE FRASER:  If you have primary and alternatively
       cases put them in.  If you want, you can put a reference
       to the paragraph in your closing where I need to go to
       to look for more detail but I want a ready reckoner page
       with the dates.
           Thank you, Mr Cavender.  Mr Green.
                  Reply submissions by MR GREEN
   MR GREEN:  My Lord, I won't detain you long.  Just in
       relation to the point your Lordship raised with my
       learned friend just now about the branch transfer day,
       we respectfully say it does have quite an important
       bearing on the Common Issues.  Because my learned friend
       has submitted that the contract made no contractual
       alteration of the accounting obligations of the
       subpostmasters.  That is not correct.  Both the SPMC at
       section 12, clause 4 and the NTC at 3.6.1 both imposed
       an obligation on a subpostmaster to account, in
       the latter case as the Post Office may require in
       accordance with the manual, SPMC, I can't remember the
       exact words but broadly similar terms.
           Neither of those documents when received would
       reveal to the subpostmaster how they were in fact going
       to account in the way about which your Lordship has
       heard evidence.  So that question can only be determined
       by your Lordship working out what the reality of that
       accounting obligation was under that term, as
       Post Office on the facts require it to be, and that is
       why it is factually relevant.  But it is also
       significant that that in fact does turn it into a car
       park case where you learn what the reality of that
       obligation is after you are not just committed to going
       into the car park, but parked.
   MR JUSTICE FRASER:  I'm not sure I really need to decide
       whether it is or isn't a car park case but I realise you
       are using that as shorthand.
   MR GREEN:  I am grateful.
   MR JUSTICE FRASER:  Certainly Mrs Stubbs and Mr Bates and
       the other claimants would probably express a degree of
       lay surprise that it either was or wasn't a car park
   MR GREEN:  I understand the point.  I was referring to the
       Shoe Lane point.
           Your Lordship will note that 3.6.1 in the NTC and
       3.6.3 in the NTC at {E5/137/38} made provisions first as
       Post Office may require, and then in the case of 3.6.3:
           "In accordance with the provisions contained in
       the Manual ..."
           Capital M.  And your Lordship has the definition of
       the manual to which we have gone before on page 64 of
       that document.  With a capital M it is very wide.
   MR JUSTICE FRASER:  This is the same point you just made.
   MR GREEN:  That's just a point of detail on that point.
           My Lord, then in relation to the evidence that
       your Lordship asked my learned friend about just now,
       about the position of outgoing SPMs, if your Lordship
       could look at page {A/6/89} or internal page 85 of our
       closing submissions, we have dealt with this point at
       paragraph 195.  My learned friend asked what would
       Mr Sabir say rhetorically, when he was making his
       submissions earlier on.
           We know what he would have said rhetorically because
       he took care to set out his evidence in his witness
       statement that he was told, so we see:
           "However ..."
           Halfway down in the right margin:
           "... Post Office told me I had to stay in post at
           And that evidence was not challenged at all.  And
       thereafter we set out the other evidence in relation to
       that point.
           So that is that one.
           There is a point of correction in relation to
       Autoclenz -- two short points of correction.  In
       Autoclenz they weren't employees, all they were -- it's
       perhaps quite an important point.  They weren't
       employees, they were limb B workers who fell within the
       limb B definition because they rendered person service
       and because of mutually of obligation.  So they weren't
       actually employees, that is quite important to note.
           Secondly, Lord Clarke actually expressly rejected
       the submission made on behalf of Autoclenz that the
       classic sham doctrine was the right approach.
   MR GREEN:  Then in relation to UCTA, two short points.  One
       is my learned friend conflates the business of operating
       the network of sub-post offices with the serving of
       customers.  It doesn't cease to be Post Office's
       business to operate the network when Post Office itself
       operates some Crown branches itself.  Similar to
       Burger King operating franchises but possibly operating
       a few itself as well.
           The second point in relation to UCTA.  My learned
       friend said the claimants' case at its highest didn't
       reveal any conduct about rendering a different
       performance.  One only needs to look at the example of
       the National Lottery terminal, it wasn't a promise or
       a representation pre-contractually, it was an actual
       obligation contractually imposed upon Mr Bates that he
       have a terminal in a prominent position which, after he
       had then built that up, was taken away from him.
   MR GREEN:  My Lord, the only other points we have from
       earlier, we put in a list as your Lordship suggested.
       Can I hand up a copy of that with the three pieces of
       homework we were set which we have uploaded to Opus.
   MR JUSTICE FRASER:  Thank you very much.
   MR GREEN:  Your Lordship should have there --
   MR JUSTICE FRASER:  I have four documents, is that right?
   MR GREEN:  That is correct.  So one should be the SPMC and
       claimant companies.  Your Lordship has probably
       appreciated they are not multiples like WH Smith.
       I think that phrase was just used casually by my learned
       friend but they are not multiples.  And it looks as if
       there aren't any SPMC companies.
   MR GREEN:  Then there is --
   MR JUSTICE FRASER:  Just give me one second.  Where am I to
       put these?  (Pause)  You have spirally bound all yours?
   MR GREEN:  We did.
   MR GREEN:  That is the first one.  The second one was just
       to identify the Elizabeth Stockdale disclosure
       correspondence which your Lordship asked for.
   MR GREEN:  And the third one was to make a list of documents
       referred by claimants --
   MR JUSTICE FRASER:  Internal documents about Horizon.
   MR GREEN:  Yes.  We have limited it only to the ones that
       were actually directly referred to in the transcript.
   MR GREEN:  Then the reply points your Lordship will see we
       have set out briefly.  I don't want to go to any of
   MR JUSTICE FRASER:  I wouldn't let you.
   MR GREEN:  I am grateful.
   MR JUSTICE FRASER:  I will read them.
   MR GREEN:  There is only one other point which I wanted to
       explain, a phrase my learned friend found difficult to
       understand which was the hollowed out agency point.
       My Lord, that is a reference to the lack of choice the
       agent would have about the content of the account to be
       rendered, taken together with the admitted functions
       that we have referred to in our opening and closing
       submissions.  So if that phrase is not clear, that is
       all it means.
           Unless I can help your Lordship further ...
   MR JUSTICE FRASER:  No.  You are going to do a document
       between the two of you about dates.
   MR GREEN:  Indeed.
   MR JUSTICE FRASER:  I just want to make it clear to
       everyone, not to you two because I know you will know
       this, just because I know lots of the personnel and the
       claimants are in court.  The resolution of this case is
       not going to depend on who has the last word, as I have
       said before.  So no one should be anxious that the fact
       that their side has been the one that spoke last makes
       any sort of difference at all because it doesn't.
           Mr Cavender.
   MR CAVENDER:  My Lord, despite what you just said, can I say
   MR CAVENDER:  The homework that my learned friend gave you,
       the SPMC and claimant companies, fine.  In relation to
       the correspondence, what he has done is sought to
       extract various parts of those letters but unfortunately
       he has quoted selectively.  So for instance bundle
       {H.2/8/1} misses the following paragraph which says:
           "We note the information in the documents should be
       largely known to your client through operation of the
           So although he has tried to be helpful,
       unfortunately he has cut off relevant parts.
   MR JUSTICE FRASER:  There are only seven I think.  I think
       the H.2 reference is an Opus reference, is that right?
   MR JUSTICE FRASER:  Well, there is an Opus reference for
       each.  I will read the full letter in each case that has
       been referred to.
   MR CAVENDER:  I'm obliged.  And in relation to
       the documents, similarly he was just meant to be
       producing just a list, again no doubt trying to be
   MR JUSTICE FRASER:  Which documents are we talking about
   MR CAVENDER:  The next bit of homework.  He has extracted
       certain parts of the document but not all of them.
   MR JUSTICE FRASER:  When you say not all of them, you mean
       not the whole contents?
   MR CAVENDER:  Exactly, and not all the relevant ones.  If
       you look for instance at {G/7/3}, the quote misses the
       beginning of the paragraph which says:
           "Discrepancies in branch are typical as a result of
       cash error over the counter."
           He has obviously not done this on purpose --
   MR JUSTICE FRASER:  I did actually ask him to extract
       a quotation.
   MR CAVENDER:  Did you, my Lord?
   MR JUSTICE FRASER:  But there are 23 of those and I will
       read them all.  They all have Opus references.
   MR CAVENDER:  I am obliged.  In terms of housekeeping on our
       side, I think today although (inaudible) report to you
       the results of the attempted break into that, we haven't
       been able to.
   MR JUSTICE FRASER:  I don't think you have to report to me.
       I think I ordered that if you couldn't get into it,
       I should just have a witness statement.
   MR CAVENDER:  That's by Monday, my Lord, and we will do
       that.  Just so you know we have tried --
   MR JUSTICE FRASER:  I will just have the witness statement.
   MR CAVENDER:  I am obliged.
           In terms of homework on my side, so I am clear, we
       are going to provide a short note in no more than two
       pages in relation to the Australian law article.
   MR JUSTICE FRASER:  If you want to.  It might be you don't
       want to.
   MR CAVENDER:  I am sure we will want to.
   MR JUSTICE FRASER:  I read it at the time in respect of
       something else.  I'm likely to read it again.  If you
       have any particular observations, you have --
   MR CAVENDER:  So there is that.  Also we can provide a one
       paragraph on where we say the line is on evidence of
   MR CAVENDER:  And particular focus on that one line in
       the witness statement, that kind of trust --
   MR JUSTICE FRASER:  I just want a clarified, finalised
       version of what you say I should be doing, or not be
   MR CAVENDER:  There is the one page my learned friend and
       I can produce which is the list of dates.
   MR CAVENDER:  There is also the document my learned friend
       and I can produce outlining the processes for TCs and --
   MR JUSTICE FRASER:  Flowchart.
   MR CAVENDER:  Flowchart.
   MR JUSTICE FRASER:  Yes.  You think that is it.
   MR CAVENDER:  That is it.
   MR JUSTICE FRASER:  I would also like, I haven't asked
       either of you for this although it is scattered in each
       your submissions in a variety of places, literally
       Common Issues numbered, not reproduced, just with the
       stark answer that you say should be given to each of
       them.  You have given me the answers in a variety of
       places but I just want a ready reckoner.
   MR CAVENDER:  In terms of timing for any and all of that?
   MR JUSTICE FRASER:  When would you like?
   MR CAVENDER:  I think of those probably the document that we
       agree in relation to TCs and -- is likely to be the most
       burdensome, the rest are fairly --
   MR JUSTICE FRASER:  Just tell me how long you would like.
   MR CAVENDER:  Two weeks, my Lord?  I think you suggested two
       weeks for something.
   MR JUSTICE FRASER:  I might have done --
   MR CAVENDER:  I think you said --
   MR JUSTICE FRASER:  What day is it today?
   MR CAVENDER:  Thursday, my Lord.
   MR JUSTICE FRASER:  A week on Monday is the 17th.  So
       4 o'clock on the 17th, that is slightly less than two
       weeks.  It is a mechanical exercise only, it shouldn't
       be very difficult.
   MR CAVENDER:  I am obliged.
   MR JUSTICE FRASER:  If I were you I would do it this evening
       but that is up to you.
           That then brings me on to my next point, which is
       the only outstanding point, and I'm not trying to be
       funny.  I am obviously going to reserve judgment.
       I will produce this as quickly as I can but it is quite
       a lengthy job.  It is likely to be at some stage
       in January.
           I also, as an outstanding point, had to give you
       a date for a CMC for round three.  I have not given you
       a date yet but I said it would be in January.  It is
       going to be 31 January.
           I also said that you would have to address your mind
       to a single joint expert for round three, I thought it
       was likely to be a forensic accountant but it is going
       to be a single joint -- I am going to be approaching
       this from the basis of, in the first instance, ordering
       a single joint expert on matters of quantum.  You will
       have to, before 31 January, address your minds (a) to
       who that is going to be, and (b) any relevant directions
       that you are seeking in January.
   MR CAVENDER:  What about the prior point, my Lord, that we
       have debated.  I'm not sure you have ruled on as to when
       the third trial is going to be and what it is going to
       be of.
   MR JUSTICE FRASER:  I have ruled on when it is going to be.
       I gave a date, and this is in an order already, or if it
       isn't, it should be.  There is a date in October --
   MR CAVENDER:  I don't believe -- we discussed it twice
       I believe.  I may be wrong.  I haven't seen an order
       with that in.  We had two discussions --
   MR JUSTICE FRASER:  I am sure I gave you dates because I had
       an inquiry from one of your clerks saying was it
       a fixture or was it a window.
   MR CAVENDER:  I am looking blank because I am blank.
   MR GREEN:  I don't recall your Lordship giving us a date but
       we definitely knew it is going to be in the autumn
       rather than the summer.  I'm not sure we actually had
       an actual date.
   MR JUSTICE FRASER:  I am pretty sure you did.
   MR GREEN:  It may be that none of us have realised that that
       was the date if a date was mentioned.  It may be our
   MR CAVENDER:  I think you may have gone so far to say when
       you are available, and there was a mention of it, but --
   MR JUSTICE FRASER:  I did order a date, I am pretty sure.
   MR CAVENDER:  I am pretty sure you didn't actually order it,
       but anyway --
   MR JUSTICE FRASER:  I will have to go and check what it is
       because it is actually in the court diary, and at least
       one counsel's clerk contacted -- from memory, I think it
       was the 10 October, but it might have been a week or two
       after that.  At least one counsel's clerk if not two
       different sets of counsels' clerks contacted my clerk
       about two weeks ago and said is it a fixture or is it
       a window and how many weeks was it?
   MR CAVENDER:  It might have been my clerk if some other
       inquiry came in and I said you had indicated you were
       going to list it in October.
   MR JUSTICE FRASER:  Okay.  The answer that went back out
       from my clerk, because she showed it to me before she
       sent it out, was: it is a fixture, and that is the date.
       So there is a date, but I will check what it is and
       I will get it redistributed.
   MR CAVENDER:  The next question, my Lord, is what it is
       going to be a trial of.  We have debated but you haven't
       ordered that, I don't think, as to how many people,
       which people, and how we are going to arrive at that
   MR JUSTICE FRASER:  You told me last time if I was going to
       do round three in 2019 it could only be some or possibly
       all of these six.
   MR CAVENDER:  Correct.
   MR JUSTICE FRASER:  Then you can -- and it is to resolve
       them completely, all the outstanding issues.
   MR JUSTICE FRASER:  So you therefore need to address your
       minds between now and 31 January as to whether it is
       going to be all six or, if not, which number fewer than
       six and which of the six.
   MR CAVENDER:  My Lord, yes.  That raises the point that
       between the end of January and October is eight months
       which isn't very long.
           One of the points we have written -- can I hand up
       a letter that we have sent I think today, it deals with
       the question of limitation.  (Handed).  All we are
       saying is limitation in some of these cases arises.
       There is nothing really exciting about it other than to
       raise the issue and say this would need to be dealt with
       quite early on, because my learned friend's pleaded case
       is concealment or fraud to extend the limitation period,
       and obviously normally in the way of pleadings that is
       put in reply.
           If we don't have a CMC end of January and pleadings
       whenever, we are not even going to have a pleading on --
   MR JUSTICE FRASER:  I thought there were Individual
       Particulars of Claim already for these six.
   MR CAVENDER:  No.  You are right there are, but there is no
       proper pleading worthy of the name on breach issues,
       they just tell a story very broadly.  There are no
       pleadings worthy of the name that could be taken to
       trial and have disclosure given on them and things of
       that kind.  The first thing to be done is the case
       properly pleaded by whichever leads your Lordship
       choose.  This letter seeks to outline where we are on
       the pleadings and to say can work be done quite early by
       the claimants identifying what their case is on
           One way of doing that, of course, is to put it in
       the Particulars of Claim, because obviously they have
       got the Individual Particulars of Claim, they have the
       generic pleadings.  But if, as is normal, this is put in
       the reply, and say we have the CMC end of January, they
       are ordered to provide detailed pleadings within, say,
       four or six weeks, similar for defences.  And then the
       reply they take the limitation point that it is --
       because in the defence obviously we will take the
       limitation point, and in the reply they will say no
       under 32.1(c), fraud, mistake, things of that kind, and
       we will need to start preparing, looking at that
       evidence, which will be quite difficult in a very short
       period of time.
           So what I am suggesting really, I don't know what
       the letter says in detail, is they should put their plea
       of limitation --
   MR JUSTICE FRASER:  Or relief from the primary limitation
       time bar.
   MR CAVENDER:  Exactly, put the particulars in the
       Particulars of Claim so we can then deal with that
       defence early doors and know what precisely is said.
   MR JUSTICE FRASER:  The actual steps for round three are
       what?  And I'm not going to tolerate a war of attrition
       bogging everyone down into umpteen rounds of pleadings
       because October 2019, as you have pointed out, is not
       that far away.
           So it is going to be rounds of pleadings, it is
       going to be appointment and report of a single joint
       expert on quantum.
   MR CAVENDER:  Disclosure before that.
   MR JUSTICE FRASER:  Let's put disclosure --
   MR CAVENDER:  There is quite a lot of disclosure --
   MR JUSTICE FRASER:  I am putting disclosure off-stage right
       at the moment.
           Pleadings.  Appointment and report of single joint
       expert.  Evidence of fact.  Those are the three headline
       point really, aren't they?
   MR CAVENDER:  There is only one exception or addition, and
       obviously the Horizon trial isn't here yet and I don't
       know what is going to be happening or what the
       judgment --
   MR JUSTICE FRASER:  I don't think anyone does yet.
   MR CAVENDER:  My Lord, no.  But in terms of planning to
       cater for it, you can imagine a case in which you would
       want a mini expert report on certain lead claims as to
       how those Horizon issues in fact applied to the
       individual claimants being tested.  Maybe that is going
       to be done par excellence in the Horizon trial or it may
       not be, I don't know.
   MR JUSTICE FRASER:  You have already both got Horizon
       experts, haven't you, IT experts?
   MR CAVENDER:  We have, but it depends how granular that is
       in terms of --
   MR JUSTICE FRASER:  When are those expert reports being --
   MR CAVENDER:  The first round are in.  But what I am talking
       about more, my Lord, is that has been done across the
   MR JUSTICE FRASER:  But only for these six.
   MR CAVENDER:  Yes, but it is generic, as I understand it,
       that trial.
   MR CAVENDER:  So there is a gap between whatever is said in
       those reports and your Lordship's findings and saying an
       individual case --
   MR JUSTICE FRASER:  But insofar as there were such a gap,
       that would be need to be addressed by the experts who
       are already engaged for Horizon.
   MR CAVENDER:  Correct.
   MR JUSTICE FRASER:  So it is effectively a supplementary
       report that would be round three specific.
   MR CAVENDER:  Exactly so.
   MR JUSTICE FRASER:  I don't think, looking at the outline of
       that, that is going to be impossible to achieve for next
       autumn.  I know you have said disclosure is a
       substantial exercise.
   MR CAVENDER:  My Lord, yes, it is tight, but it is do-able
       for a couple, I'm not sure it is do-able for six.
   MR JUSTICE FRASER:  That is the main question which you
       between the two of you, together with your teams, have
       to decide between now and January.
   MR CAVENDER:  My Lord, ultimately it may be for the court
       because --
   MR JUSTICE FRASER:  If you can't agree it will be.
   MR CAVENDER:  Particularly because the whole investment of
       this is for the benefit of the 557.  It is not for
       people to choose their favourite case, especially as we
       know a bit about them now.  They need to be the most
       useful cases.  So it may be if we can't agree we will
       have to justify, if you like, our choices by reference
       to coverage and the kind of issues that will be
       determined within them, rather than my favourite or
       something of that kind.  It's not often you get that in
       group litigation.  The court will identify the criteria
       that it wants to cover, and you have the population of
       claims, and you then put forward your best one or two to
       cover that and the court says "I agree with this one
       because it has this and that requirement and the other
       one doesn't, or there are no documents on that one for
       some reason".
           And the court chooses why because it is a group
       litigation, it is the court's process, and it can't be
       just what the claimants or defendants decide are the
       best claims.  Because both are investing in the whole
       and you have to get --
   MR JUSTICE FRASER:  That is why usually one would agree.
       These parties generally or collectively in this case, so
       far as I am concerned having seen it for a long time,
       can't really agree on very much.
   MR CAVENDER:  I'm not sure that is entirely fair.  We
       certainly agreed the population of the issues, we agreed
       from the population of claims, 557, it was pared down.
   MR JUSTICE FRASER:  Mr Cavender, the agreement of the
       issues, as in the Common Issues, which I think was
       a process started by me before you were involved, took
       quite a lot of effort and a very, very considerable
       degree of push back from the Post Office about doing it
       at all.  In fact, the Post Office didn't want a trial at
       all this year.
           So when I say they can't really agree, it is not
       a specific point aimed at you, it is just in terms of
       group litigation there are two different approaches.
       There is a constructive co-operative approach where the
       parties generally collectively agree the most helpful
       and cost-effective way forward, and there is a more
       attritional approach.  I am hoping that the former of
       those two will apply for round three but I obviously
       have to cater for the fact it might not.
   MR CAVENDER:  Certainly from my perspective, and I think my
       learned friend would agree, we have tried to do that.
       It is a complex case and we don't agree on everything.
       But certainly from my involvement I found it to be
       co-operative, and I have been involved in a huge amount
       of group litigation and this has been no different, and
       I will continue to do that, obviously.
   MR JUSTICE FRASER:  What, therefore, is probably helpful for
       you to know is whichever of the lead claimants you
       decide between you or present to me as options to be
       decided in January, it is going to be how many and, if
       it is fewer than six, which number fewer than six.  In
       an ideal world you would agree that but if you can't
       I will decide that on the 31st.
           Round four is going to be at some point in the early
       part of 2020 and this is going to be a rolling process
       every term.
   MR CAVENDER:  Just so we have some idea, my Lord, it is
       always nice to know.  What is round four going to be?
   MR JUSTICE FRASER:  If you decide fewer than six for
       round three, it will be the remainder up to six will be
       round four.  If you decide all six as round three then
       you will have to come up with something else that is
       going to be suitable for round four, or I will do it.
   MR CAVENDER:  I am obliged.  We will try and agree.
           Does your Lordship have any view to help us as to
       what the optimum number from a management point of view
       and -- have you listed this for four weeks, the trial
   MR JUSTICE FRASER:  I am sure I have.
   MR CAVENDER:  Talking to my learned friend, we think it will
       take rather longer than your Lordship seems to think in
       terms of debate earlier, earlier on in the trial.  So
       from my own perspective I think I don't think six would
       be possible in that time.
   MR JUSTICE FRASER:  How many do you think would be possible
       in four weeks?
   MR CAVENDER:  I would have thought two or three.  Maximum of
       four.  Obviously we have the NTC and the SPMC to cover.
       We need to cover --
   MR JUSTICE FRASER:  There is no point doing fewer than two,
       and you need one SPMC and one NTC.
   MR CAVENDER:  Minimum of two, maximum of four probably.
   MR JUSTICE FRASER:  All right, two to four.
   MR CAVENDER:  What does my learned friend think about this?
   MR JUSTICE FRASER:  I think he is still worrying that he has
       to do something by a week on Monday.  It is not a big
       job, actually, and I did ask you to do it last week.
           Right, Mr Green.
   MR GREEN:  My Lord, we didn't express a view about it being
       these six lead claimants.  That was my learned friend's
       observation.  For our part we think for it to be most
       useful in resolving the group as a whole it should be as
       large a number as possible, as we can possibly do.
       Obviously the largest number we can do is six but we do
       share some concern about whether we can get through six
       full cases.
   MR JUSTICE FRASER:  Choose a number smaller than six then.
       I don't want to come across as abrupt or unhelpful but
       it is a major piece of litigation, I am tasked with
       resolving it.
   MR GREEN:  We are aware of that.
   MR JUSTICE FRASER:  And I know it might come across as a bit
       of steamroller but that is what I am going to do.  So if
       you were concerned six is too many, choose a number
       smaller than that.
   MR GREEN:  I understand the parameters, my Lord, I am just
       explaining where we were.  I thought your Lordship was
       asking where we were --
   MR JUSTICE FRASER:  No, Mr Cavender was inviting you to
       contribute your initial view --
   MR GREEN:  It will be more rather than less, subject to what
       we can actually get done.
   MR JUSTICE FRASER:  You mean greater rather than fewer.  So
       you mean some number greater than two and up to if
       possible six.
   MR GREEN:  Indeed.
   MR JUSTICE FRASER:  Mr Cavender says two to four and you are
       saying possibly three to six.
   MR GREEN:  Something like that.
   MR JUSTICE FRASER:  It doesn't take Einstein to see there is
       a degree of overlap between those numbers.  I would have
       thought three or four is possible but who knows.  Maybe
       it will only be two.  You seem both agreed six is
       probably too ambitious.
   MR GREEN:  We would like to consider it because
       your Lordship has asked us to give an answer in January
       and consider it before then.  We would like to do that.
   MR JUSTICE FRASER:  My regret is that that CMC is going to
       be on 31 January, not earlier.  But the reason for that
       is I'm going to try and get -- I want to get the actual
       judgment out as soon as possible.  If I put it in on
       14 January it will blow a hole in a window which, at
       some cost, I have managed to carve out for myself which
       I am not anxious.  Although I am devoting it to the
       Bates case, I would rather use it on the Bates judgment
       than the Bates CMC.
   MR GREEN:  We completely understand that.
   MR JUSTICE FRASER:  Is there anything else now?
   MR CAVENDER:  My Lord, no.  That is everything.
   MR JUSTICE FRASER:  Thank you everyone, and I mean everyone,
       not just counsel but solicitors as well for all their
       help and their work.  Thank you very much to the people
       who have been providing the electronic trial bundle and
       to the transcribers.
           I will produce this as soon as I can.  If it is
       before 31 January, in draft, there is the possibility
       I think of -- or the necessity for some discussion on
       terms of embargo, given the group action nature.  If
       that arises you will get an email from my clerk and
       I will just be inviting observations, but obviously the
       embargo is going to be rigorously enforced, and insofar
       as it is necessary to change it at all to make sure that
       that is in fact the case then that is what I am going to
           Anything else?  Thank you all very much.  I hope
       everyone has a very nice Christmas.
   (4.30 pm)
                     (The Hearing Concluded)