Thursday 8 November 2018

Common Issues trial transcript: Day 2

This is the unperfected transcript of second day of the Common Issues trial in the Bates and others v Post Office group litigation. The hearing below took place on Thu 8 November 2018 in court 26 of the High Court Rolls Building. The claimants' QC is Mr Patrick Green and the defendant's QC is Mr David Cavender. The managing judge is Mr Justice Fraser.


Lead Claimant 1: Alan Bates - founder of the Justice for Subpostmasters' Alliance.
Lead Claimant 2: Pam Stubbs - former Subpostmaster, Barkham branch (near Wokingham, Berkshire).

Alan Bates' written witness statement.
Pam Stubbs' witness statement.

For my write-up of the day, click here.

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 12 transcript - Mon 3 December - Claimants' closing argument: Patrick Green QC - part 1
Day 13 transcript - Tue 4 December - Claimants' closing argument: Patrick Green QC - part 2
Day 14 transcript - Wed 5 December - Post Office closing argument: David Cavender QC - part 1
Day 2 full transcript:

                                      Thursday, 8 November 2018
   (10.30 am)
   MR JUSTICE FRASER:  Just before we start, both leading
       counsel should have got a forwarded email last night
       through my clerk about something to do with the press.
       It is simply in terms of supply to them of documents,
       et cetera.  Is that something that needs to be dealt
   MR GREEN:  My Lord, no.  We have agreed to provide them with
       addresses redacted.
   MR JUSTICE FRASER:  That brings me on to the second point
       but that is exactly what I was going to suggest.
   MR GREEN:  I am most grateful.
   MR JUSTICE FRASER:  And there is no current issue in that
       respect that we need to deal with now?
   MR GREEN:  My Lord, not at all.  The agreement is that once
       the witness has been sworn, the evidence is then
       available to the press.
   MR JUSTICE FRASER:  There is authority that that is the
   MR GREEN:  Precisely.
   MR JUSTICE FRASER:  I assume what you have just said is you
       are going to give them the witness statements with the
       address redacted.
   MR GREEN:  Exactly.
   MR JUSTICE FRASER:  And the correct way I think to deal with
       it in-chief is just to ask them their name and, rather
       than get them to read out their address, just confirm
       that it is the one in the witness statement.
   MR GREEN:  I am most grateful.
   MR JUSTICE FRASER:  Final point.  I see you have a hard copy
       of the witness statements for the witnesses.
   MR GREEN:  We have, indeed.  I think my learned friend
       Mr Cohen also kindly offered one as well, so I think
       both parties had the same idea.
   MR GREEN:  My Lord, if there is a little bit of toing and
       froing here, it is just because my Opus isn't working.
       The main one is but ...
   MR JUSTICE FRASER:  All right.
   MR GREEN:  May I call Mr Bates.
                     MR ALAN BATES (affirmed)
                 Examination-in-chief by MR GREEN
   MR JUSTICE FRASER:  Have a seat, Mr Bates.
   MR GREEN:  Mr Bates, in front of you open on the desk should
       be a witness statement with your name on.
   A.  It is.
   Q.  And is the address stated there your correct address?
   A.  It is correct.
   Q.  You have indicated that there are a couple of minor
       corrections you wish to make.  Please look at
       paragraph 91 {C1/1/20}.  If you look at paragraph 91, it
       says at the end of the first line:
           "As detailed at paragraph 57 above ..."
           And that refers to a reference to personal service
       on page {C1/1/13}.
   MR JUSTICE FRASER:  You don't need to worry about
       the screen, Mr Bates.  You have it in front of you,
       I can see.
   MR GREEN:  If you wish to just look at the screen ...
   MR JUSTICE FRASER:  Mr Bates is looking at other people's
       witness statements I think is the problem.
           Mr Bates, you are being asked about your witness
   A.  That is my witness statement, yes.
   MR JUSTICE FRASER:  You're being asked to turn back within
       your witness statement to paragraph 57 of your own
       witness statement.
   MR GREEN:  I am just calling out the references so that it
       is on the transcript.  So just go back to page 13 of
       your witness statement, paragraph 57.  {C1/1/13}
           And there is no rush.  If I am going too fast, if it
       is not clear, that is entirely my fault.
           Paragraph 57, you are referring there to documents
       that you were provided with and you refer to a two-page
       document, this is in the spring of 1988, and you say
       that document:
           "... largely repeated the conditions that were
       listed in the three-page document.  But an additional
       term was included ...
           "'It is expected that you will render personal
       service at the Post Office in order to ensure a high
       professional and accurate standard of POCL work and to
       focus on initiatives to grow volume."
           Have a look at paragraph 83, please, if you move
       forward in the same witness statement, {C1/1/19}.
   A.  Yes.
   Q.  You have indicated that you would like paragraph 91 and
       the reference in paragraph 91 to paragraph 57 -- to
       refer to 57 and 83.  Is that right?
   A.  That is correct.
   Q.  Secondly, could you please look at paragraph 20 of your
       witness statement {C1/1/4}.  Paragraph 20.  There you
       refer to your enquiries of the previous subpostmaster
       and how you used a Capture system -- a computer program
       called Capture.  This was prior to the introduction of
   A.  Yes.
   Q.  Could you now be shown on Opus, please, {B5.1/2/12}.
       This is paragraph 39 of your individual
       Particulars of Claim.  And in the third line you are
       referring to the system as Capture, and you say in your
       individual Particulars of Claim:
           "... which was independent from the defendant and
       was privately purchased by the former subpostmaster."
           Is there anything about that that you would like to
       clarify or correct in any way?
   A.  Yes, I think I should clarify something, really that
       I later discovered that Capture was actually
       a Post Office system, though it was an independent
       system which was purchased privately.
   MR JUSTICE FRASER:  Understood.  Which Mr Savage had bought.
   A.  He had.
   MR GREEN:  Could you go back very kindly now and look in
       your own witness statement, please, at paragraph 143 on
       {C1/1/30}.  You deal there with the spreadsheet that has
       been disclosed by Post Office Helpline calls, although
       you say you weren't provided with a copy and are unable
       to confirm its accuracy.
           Just so we can see how that works, could we please
       have on Opus --
   MR JUSTICE FRASER:  Mr Green, is there a correction to the
   MR GREEN:  My Lord, there is one clarification about how he
       reached the conclusion he has made, that's all.  I'm not
       going to go through the whole thing.  This is my last
   MR JUSTICE FRASER:  You just said there a phrase which makes
       my blood run cold, which is please could we just see how
       that works.
   MR GREEN:  I am sorry, I shouldn't have used that --
   MR JUSTICE FRASER:  But there is a correction coming, is
   MR GREEN:  There is a clarification.
   MR JUSTICE FRASER:  To paragraph 143.
   MR GREEN:  To paragraph 143, exactly.
   MR JUSTICE FRASER:  Does Mr Bates want to tell me what it
           Mr Bates, do you want to tell me what the
       clarification is?
   MR GREEN:  My Lord, it's a clarification that he has not
       volunteered, it is a clarification I am seeking from
       him.  So perhaps I should say subject to those
       matters --
   MR JUSTICE FRASER:  You want to show him something -- go
       ahead and show him that then.  I thought it was
       a clarification to his evidence-in-chief from the
   MR GREEN:  It is a clarification to his evidence-in-chief
       but one which I am requesting from him.
   MR JUSTICE FRASER:  Let's see where we go.
   MR GREEN:  Could you please look at 143 on {E1/43/1}, and
       look at paragraph 143.6 in your witness statement on
       page {C1/1/31}.  At 143.6, three lines up from the
       bottom, you say:
           "Often Helpline operators appeared to read from
       a script as Post Office's call logs appear to indicate
           I would just like you to be shown {E1/43/1}, please.
       Can we look, please, at row 120 in that spreadsheet,
       which is 26 March 2001, which cross-refers to the date
       at the bottom of paragraph 143.6.  And can we go across
       to the right, please.  Pause there.  What was it in that
       box which led you to say in your witness statement:
           "... as Post Office's call logs appear to indicate
   A.  Could you clarify that for me?
   Q.  Certainly.  You have said in 143.6 of your witness
       statement, bottom three lines:
           "Often Helpline operators appeared to read from
       a script ..."
           Then you say:
           "... as Post Office's call logs appear to indicate
           And I am just asking you about that last phrase, "as
       Post Office call logs appear to indicate", and you say:
           "... (I refer, for example, to the entry made in
       respect of my call on 26 March ...)."
           If we look back at the entry on {E1/43/1} at row 120
       in column I, there is text that begins with 985597198?
   MR JUSTICE FRASER:  Hold on a second, I am just going to
           Mr Bates, do you see the text box which has been
       highlighted in grey?
   A.  I do, my Lord.
   MR JUSTICE FRASER:  Is that magnified sufficiently for you
       to be able to read it?
   A.  That is fine.
   MR JUSTICE FRASER:  Just read it to yourself, and what
       Mr Green is asking you is which part of that are you
       referring to when you made the comment that you did in
       your witness statement.  (Pause)
   A.  It seemed like very much a generalisation, the response
       I was getting, like it had been read off a script, off
       a screen, as simple as that.  It didn't particularly
       relate to my circumstances at the time.
   MR JUSTICE FRASER:  Thank you very much.
   MR GREEN:  I am grateful.  Mr Bates --
   MR JUSTICE FRASER:  Any more clarifications?
   MR GREEN:  No, my Lord, that was the last one.
           Mr Bates, could you turn to page {C1/1/41}.
   MR JUSTICE FRASER:  Which is paragraph --
   MR GREEN:  Page 41, it's the back page of your witness
       statement.  Subject to the points you have covered, do
       you believe the contents of your witness statement to be
   A.  I do.
   MR GREEN:  And that is your signature?
   A.  That is my signature, yes.
   MR GREEN:  I am most grateful.
   MR JUSTICE FRASER:  Thank you very much.
                 Cross-examination by MR CAVENDER
   MR CAVENDER:  Good morning, Mr Bates.
   A.  Good morning.
   Q.  A few introductory things, if I may, just to warm you
       up.  Uncontroversial, I hope.
           You started working for Post Office on 7 May 1998,
       is that right?
   A.  That is correct.
   Q.  And you stopped working for them on 5 November 2003?
   A.  That is correct.
   Q.  So you worked for them in total roughly for
       five and a half years?
   A.  Correct.
   Q.  Does that sound right?
   A.  Yes.
   Q.  You stopped working for them some 15 years ago now?
   A.  Correct.
   Q.  The questions I will be asking you today are all about
       events occurring mainly in 1998, leading up to your
       contracting with the Post Office, some twenty years ago
       now.  Those events -- receiving documents, entering into
       this contract, things of that kind -- I think you would
       agree are normal everyday events, would you agree with
   A.  They were the events that affected me at the time, yes.
   Q.  But they weren't particularly memorable.  It wasn't like
       a car crash or anything that particularly would stick
       out in your mind.  These are normal events?
   A.  They were events which were of concern to me, so they
       very much stuck in my mind at the time.
   Q.  But it is fair to say that the details of those
       events -- you are now thinking twenty years back, and
       you are human, I am human, I know if I think twenty
       years back I would struggle about whether I received
       this or that document, and you are in the same position,
       aren't you?  It is very difficult to remember, is that
   A.  It is fair to say there are a number of points that
       I probably won't remember the finer detail, but there
       were many that I do remember that I recorded at the
   Q.  It is also the case, and I make no criticism of you for
       this, that you have campaigned about these disputed
       matters for nearly 15 years now, is that fair?
   A.  Yes.
   Q.  In fact, you are involved with the campaign called
       Justice for Subpostmasters Alliance since about 2009,
       does that sound right?
   A.  Yes.
   Q.  And I think you started your campaign almost at the time
       you were terminated, really?
   A.  Correct.
   Q.  Have you had any meaningful employment since your
       contract with Post Office was terminated?
   A.  Yes.
   Q.  What have you been doing?
   A.  First off, we had the other side of our business, when
       the Post Office went, so we had that.  When we had
       eventually sold that I then returned to college
       full-time, and I also was working part-time for local
       government for the library service as well.
   Q.  How long did you do that for?
   A.  I am still doing it.
   Q.  Part-time.  So how many hours a week are you doing that?
   A.  I have reduced it at the moment and I am now doing --
       I'm doing six days a month.
   Q.  I see.  The rest of your time, do you spend a good deal
       of the rest of your time devoted to the campaigning side
       against Post Office, is that fair?
   A.  I have spent considerable time, yes, involved with
       Post Office.
   Q.  I will go through your evidence in detail but let me ask
       you this general question: would you accept there is
       a risk of you confusing your role as a campaigner on the
       one hand and that of a witness of fact in this trial on
       the other?
   A.  I have made every effort to separate them out, but I do
       have to be careful about it, understandably.
   Q.  Your complaints overall, as far as I can see, firstly
       there was an unexplained deficit at your Post Office
       in December 2000 of £1,182.21 written off by Post Office
       eventually in February 2002, so you had no claim for
       that because it was written off, am I right?
   A.  Well, it's the circumstances about how it had arisen.
   Q.  In terms of a claim for it, that has been written off,
       so you have no claim for a sum of money?
   A.  That is correct.
   Q.  You were terminated in 2003 on three months' notice and
       your complaint about that is that that was too short
       a term of written notice, am I right?
   A.  And that I had lost my investment.
   Q.  If we go to, just so I understand the nature of your
       claim, {B5.1/1/12} please, which is your schedule of
       information, do you see that on the screen?
   A.  Yes.
   Q.  And it is box 8.5 on that page.  You have a loss of
       earnings claim there for £892,000-odd, do you see that?
   A.  Yes, I do.
   Q.  What is the basis of claiming £892,000?  Because you are
       claiming for a period of notice that was too short, it
       was three months, and I think your case here, as far as
       articulated, is a maximum of 12 months.  So normally you
       would then claim 12 months' loss of earnings.  What
       periods of loss of earnings is represented by £892,000,
       do you know?
   A.  We had made a long term investment in the property, in
       the business, and we had planned to stay there through
       until retirement age.  So I would imagine, without
       calculating it, that it is probably that level of loss
       of earnings that we are looking at.
   Q.  Because this was done -- it's an amendment by the looks
       of it.  This was until retirement age, what, of 75 or
       something, was it?
   A.  65.
   Q.  65?
   A.  Yes.
   MR JUSTICE FRASER:  I'm not sure anyone has a retirement age
       of 75, anymore.  I might be wrong.
   MR CAVENDER:  You might be, my Lord.  I am happy to take
       that from you.
           Anyway, that is the basis of it, is it?
   A.  Yes.
   Q.  Thank you.  Have you heard of something called the
       Limitation Act?
   A.  I have.
   Q.  And you understand the claims have to be brought within
       certain periods of time, normally within six years of
       the relevant claim?
   A.  Unless there are certain circumstances surrounding --
       circumstances which dismiss the statute of limitations.
   Q.  I see.  And that is what you rely on, is it?
   A.  It is certainly a factor.
   MR GREEN:  My Lord, I am a little bit concerned that my
       learned friend has been very vocal in not wanting
       evidence to come into the Common Issues trial which goes
       to breach.
   MR JUSTICE FRASER:  I know, but if it is in the witness
       statement he is allowed to ask questions about it.
       I don't anticipate he is going to debate any finer
       points of the Limitation Act with the witness.
   MR CAVENDER:  My Lord, I --
   MR JUSTICE FRASER:  I imagined you probably weren't.
   MR CAVENDER:  The background, Mr Bates, you say prior to
       being engaged in 1998 you had already had twelve years'
       experience of project management, is that right?
   A.  Correct.
   Q.  And that is at paragraph 7 of your witness statement
       {C1/1/2}.  You had said also you had overseen projects
       with complex commercial agreements, you say it at
       paragraph 63 of your witness statement.  Is that true?
   MR JUSTICE FRASER:  You might just want to slow down
       a second.  {C1/1/15}
   MR CAVENDER:  So paragraph 7, do you have that?  {C1/1/2}
   MR JUSTICE FRASER:  When you are given a paragraph,
       Mr Bates, I wouldn't bother looking at the screen, I'd
       just look at the document, it is probably easier, if it
       is your witness statement.
   MR CAVENDER:  So paragraph 7, Mr Bates, do you have that?
   A.  I do.
   Q.  You talk about:
           "... heritage and leisure sector ... gained twelve
       years' professional experience in project management."
   A.  That is correct.
   Q.  Go to paragraph 63 in your witness statement {C1/1/15}.
       Last line:
           "In my career to that point, I had overseen projects
       in which detailed commercial contracts were entered
           Do you see that?
   A.  I do.
   Q.  That is also true, yes?
   A.  That is correct.
   Q.  So looking at your purchase through that prism of the
       business of Mr Savage and applying to the Post Office,
       it would be right to say you were a reasonably
       sophisticated purchaser and contractor, would that be
       fair, given your prior experience?
   A.  To a point, yes.
   Q.  You weren't commercially naive, were you?
   A.  No.
   Q.  It's fair to say this was a financial commitment to you,
       I think roughly including, with loans, some £175,000-odd
       buying the property and such like, does that sound about
   A.  The purchase was £175,000.
   Q.  In terms of due diligence you were doing, if I may say,
       looking at your evidence as a whole and the documents
       created, you are quite a careful man, is that fair?
   A.  I try to be, yes.
   Q.  You are a details man?
   A.  Yes.
   Q.  And you wouldn't have carried on with this purchase
       without doing some pretty serious due diligence into the
       transaction, and by the transaction I mean both
       obviously the purchase of the commercial business and
       the entering into the contract with Post Office,
       am I right?
   A.  Yes, we did consider it in detail, yes.
   Q.  And you would get all the information you possibly could
       get, publicly available or from Mr Savage, that you
       could get to try and work out whether this is a good
       deal or a bad deal for you?
   A.  I did obtain all the information that was available to
       me at the time, yes.
   Q.  Standing back, in terms of timing here, you first
       started looking for a post office in mid-1997, does that
       sound about right?
   A.  Correct.
   Q.  And you entered into a conditional agreement with
       Mr Savage on 15 December 1997, so you had some six
       months of due diligence, does that sound about right?
   A.  That is correct.  But it wasn't just for that one
       office.  We were looking at properties all around the
       country there at that time.
   Q.  But during that time looking for properties --
       Post Office properties?
   A.  Assorted properties including post offices, yes.
   Q.  But at this time you were looking to be a postmaster,
       weren't you, during that six-month period?
   A.  It was one of the options we were considering.
   Q.  It was the prime option you were considering?
   A.  It was a more favourable option, yes, I would agree.
   MR JUSTICE FRASER:  More favourable than ...
   A.  A pub or a restaurant or something of that nature.
   MR CAVENDER:  At paragraph 15 of your witness statement you
       talk about this {C1/1/3}, and you refer to being sent
       an information sheet.  Do you see that?  You will find
       that information sheet, it's called ARS 44, at {E1/3/1}.
       Page 1.
   A.  Correct.
   Q.  You got this during that six month due diligence period?
   A.  I -- towards the end of it, yes.
   Q.  And when you got it you would have been quite interested
       in what it had to say?
   A.  Yes.
   Q.  You would have read it?
   A.  Yes.
   Q.  Indeed you would have studied it?
   A.  Yes.
   Q.  And you would have thought about its contents?
   A.  Yes.
   Q.  Let's look at it.  So at the top it says "Subpostmasters
       Information Sheet":
           "A subpostmaster is an agent of Post Office Counters
       Limited ..."
           That would have been something of interest to you,
       the legal relationship that was being set up, is that
       fair, you would have been an agent?
   A.  Yes.
   Q.  You understood what that meant at the time, that you
       would have to account to your principal effectively for
       what you did, would that be fair generally?
   A.  In a general -- in a general way, yes.
   Q.  And you knew you were going to regulated by a contract
       if you were going to take the position?
   A.  Oh yes, yes.
   Q.  And you were clear you were not going to be an employee?
   A.  I was not aware I was going to be an employee.
   Q.  No, you were aware you were not going to be an employee?
       It says:
           "He is not an employee."
   A.  Correct, it does, yes.
   Q.  So you would be an agent and you would have a contract?
   A.  Yes.
   Q.  They were the things you learned from that paragraph, am
       I right?
   A.  Yes.
   Q.  Looking over the page, please, you can scan the rest of
       the information, I am sure you are familiar with it.  Go
       to the top of {E1/3/3}, at the top "Accounts".  You
       would have studied this because it is obviously
       an important paragraph, isn't it, the financial side of
   A.  Yes, I would.
   Q.  So:
           "An account is prepared weekly after close of
       business on each Wednesday.  The subpostmaster is
       personally responsible for all losses or gains incurred
       to Post Office cash or stock."
           Pausing there, that is something that would have
       grabbed your attention?
   A.  Yes.
   Q.  You would have recognised, wouldn't you, that the amount
       of those losses, whether they are large or small, would
       depend on how well you or your staff run the office?
       That would be apparent to you, wouldn't it?
   A.  Yes.
   Q.  And also how honest or dishonest, potentially, your
       staff may be?
   A.  Yes.
   Q.  So there is no limit to the losses, it just depends how
       the office is run, is that fair?
   A.  Yes.
   Q.  Then it says:
           "Losses must normally be made good immediately they
       are discovered.  Gains are normally retained by the
           So you were aware that if losses were incurred they
       would normally have to be made good immediately, ie pay
       them back?
   A.  Yes.
   Q.  Vis-a-vis assistants, going down the page, it was clear
       that it was the subpostmaster's responsibility to
       provide and train any assistants that he may require.
       So it was clear from that, was it not, that you didn't
       have to have assistants, but if you wanted to have
       assistants you could, is that fair?
   A.  Yes.
   Q.  And that if you had them you would train them, is that
   A.  Yes.
   Q.  You say at paragraph 16 of your witness statement
       {C1/1/4} that you visited the branch, Mr Savage's branch
       I think, on a number of occasions, you say about two
           "Each visit lasted around an hour or two ..."
   A.  Yes.
   Q.  And the object was to see whether it was a viable
       business opportunity?
   A.  That is correct.
   Q.  You would have had the document I have just taken you
       to, the ARS 44, and presumably you would have used that,
       amongst other things, as a template to ask questions
       during your two-hour meeting of Mr Savage, is that fair?
   A.  I did discuss those details with Mr Savage.
   Q.  Did you discuss with him the fact that you were going to
       be an agent and what that meant?
   A.  No.
   Q.  How can you be so sure?  This is 20 years ago.
   A.  I can't be sure, but --
   Q.  So you might have done?
   A.  I may have done, but I don't recall as such discussing
       the point about being an agent.
   Q.  It is one of the main points, isn't it, your status to
       understand, so isn't it likely it is something you might
       have mentioned to him?
   A.  I might have discussed with him about being
       a subpostmaster, but whether it had got into the detail
       of: you are an actually an agent, at this point, because
       we were looking for other businesses at that time so we
       weren't spending a ridiculous amount of time at any
       particular property or --
   Q.  But when we are talking about paragraph 16, you have
       honed down, at this point, Mr Savage, haven't you?  This
       is towards the end of the six-month period, am I right?
   A.  Yes, we'd honed down to perhaps a couple of offices,
   Q.  You have a couple of meetings of two hours each, you say
       in your witness statement.
   A.  Two hours each?
   Q.  That is what you say:
           "... around an hour or two ..."
   A.  Yes, but it wasn't purely talking about the Post Office.
       We talked about the business as a whole, we talked about
       the property, the building, the whole of the business
       that we were purchasing.  The Post Office was one
       element of it, and to some degree Mr Savage didn't have
       that much control over it because it was down to
       Post Office who they appointed.
   Q.  No, I'm not talking about the appointment.  In terms of
       the nature of the appointment and his experience of it,
       surely you wanted to know, you say, to satisfy yourself
       it was a viable business opportunity.  To do that, don't
       you have to have some understanding of what that
       involved for him on the ground?
   A.  Yes, I was concerned about his turnover, his business,
       the earnings that he managed to obtain from it.  So,
       yes, I was --
   Q.  What about the accounting side?  If you are responsible
       for losses and gains and you have to make them good
       immediately, isn't that something you would discuss with
   A.  Yes, but it didn't seem to be a major issue.  In point
       of fact it was one of the issues that did stick in my
       mind because of something unusual I discovered at the
       time when I was there, and that was to do with -- he
       mentioned that they had a shorts and over tin which they
       kept in a safe, and I found that somewhat unusual for
       a large corporate business to keep shorts and overs in
       a tin and not actually to account for them on their
       system.  So it is one of those things that did stick in
       my mind at the time.  So we did discuss shortages and
       losses but there didn't seem to be anything major that
       was mentioned at the time.
   Q.  But you must have realised from that conversation and
       from the document, the ARS 44 I showed you, that this
       was a potential area where you could potentially lose
       some money if your losses were high, if you didn't take
   A.  It was never -- I was never informed by Mr Savage that
       shortage or losses were a major factor in the business.
       It seemed quite straightforward, the business.  He
       didn't seem to suffer from anything major, it always
       seemed to be nominal amounts that were involved.  But
       this was at a time when it was manual weekly balancing,
       so it was perhaps easier to keep track of what was
       occurring in the office.
   Q.  But although you say for him the impression you formed
       was that it wasn't a problem, that would depend on him
       running the business very tightly, and if you didn't
       then the result for you might be different.  You must
       have realised that?
   A.  I was going to have to rely upon a number of his
       full-time staff or part-time staff they had there
       because I knew it was going to be very different for me.
       But the impression I got was it was a very efficient
       business that was operating on that side, on the
       Post Office side, and the staff were quite competent in
       what they produced.  It never seemed to be a major
   Q.  You were produced accounts, weren't you?  You got
       accounts for the business and if we can look at those.
   A.  Further on, yes.
   Q.  You attach them to your business plan.  They are
       {E1/2/44}.  Page 44 is Mr Savage's accounts for the
       1993/1994 year, do you see that?
   A.  Yes.
   Q.  If you look in the left-hand column under "Less
       Expenses", there is a whole range of things in the
       middle: postage, telephone, and something called
       Post Office shortages, do you see that?
   A.  I do.
   Q.  You see that in 1993 there was £208 worth of shortages?
   A.  Correct.
   Q.  And you would have known that at the time?
   A.  I would have known it, as I also knew that there wasn't
       anything showing for the previous or for the year after.
   Q.  In terms of -- one moment.  (Pause)  Could you go to
       page {E1/2/26}, please.  This is within the same
       document, your business plan.  Towards the bottom of
       that the question is:
           "What do you expect to take out of the business as
       personal income ..."
           And you are only taking out some £500 income, is
       that right?  That was the expectation?
   A.  Yes, at the end of the year possibly.
   Q.  So if you withdrew the £208 deduction, that is going
       towards not quite a half, just under a half of your
       yearly drawings.  Have I got that right?
   A.  I am not sure.  Isn't that a monthly figure?
   Q.  Is it monthly?
   A.  It's not an annual figure.
   Q.  That is why I asked.  Yes.  But anyway, it's a sizeable
       sum certainly back then and even now.  It's not
       something you could, £208, sort of ignore, is it?
   A.  Over a twelve-month period for --
   Q.  Yes, it's half your monthly, just under half your
       monthly --
   MR JUSTICE FRASER:  Hold on one second.  I don't think you
       are comparing apple and apples, and to be fair I think
       you need to go back to the previous document which is
       the accounts at {E1/2/44}.  Because by going forward to
       the monthly figure in the business plan I think you are
       not comparing like-with-like.  By all means question and
       pursue the £208 as a percentage or as a sizeable or
       insignificant component of the overall profit.
   MR CAVENDER:  That is all I am doing.
           You can see the point I am making, Mr Bates, you
       have £208 in a given year, in 1993, yes, of a short?
       All I am doing is saying how important that was to you
       given the monthly drawings you are expecting?
   A.  £208, yes, I agree it is £208.  But over a twelve-month
       period in a busy office it is possibly something I could
       write off against tax, I don't know, as a loss in there.
       But it only happened on one of three years, it might
       have been something specific.  I wasn't aware of the
       detail of that loss.
   Q.  Did you ask?
   A.  Possibly not.  Because I probably felt it was quite
       a small amount in there for a busy office and a busy
   Q.  Because you say at paragraph 37 of your witness
       statement {C1/1/8} that:
           "I certainly did not think that I would be taking on
       open-ended responsibility for all and any losses
       including those for which I was not responsible, still
       less of significant sums."
           So let's take out that "those for which I was not
       responsible", leave that out.  But you seem to be
       saying, is this right, that you didn't think you had
       a responsibility for significant sums, that somehow
       there would be some cap on your liability for shorts?
       Is that what you are saying in this sentence or have
       I misunderstood that?
   A.  I think I am talking about losses where they are
       unexplained.  And I think we are probably talking
       about -- this type of correspondence was when Horizon
       was installed and figures started to shoot up to quite
       huge amounts, losses, where we hadn't been suffering
       from any major or large losses when we had had the paper
       weekly balancing system in place.  It was when they
       changed the game, if you like.
   Q.  If we move away -- I'd like to deal with it in theory
       for a moment.  If a dishonest assistant takes £100
       a week of cash out of the till that would be
       unexplained, wouldn't it?  It would be very difficult
       for you to track that down?
   A.  It would be hard.
   Q.  Yes.  Now, they can either take a lot of money or
       a little money, do you agree?
   A.  Or regular amounts.
   Q.  Or, I was about to say, for a short period of time or
       over a long period of time?
   A.  Correct, yes.
   Q.  And that would result in an unexplained loss?
   A.  It could be one reason for an unexplained loss.
   Q.  Nonetheless, you understood from your due diligence that
       you would be responsible for that loss however large it
   A.  At the time -- at the time when we took over the
       Post Office, at the time I was looking to become
       a subpostmaster, losses weren't a major concern because
       they seemed minimal in the business.  It was only at
       a later stage that I was concerned that large figures
       would start to appear.
   MR JUSTICE FRASER:  Understood.
   MR CAVENDER:  Moving on then to the purchase agreement.  You
       obtained legal advice, did you not, on the purchase of
       the branch and the business from solicitors called
       DC Williams?
   A.  That is correct.
   Q.  Who was it there that gave you legal advice?  What was
       the name of the gentleman or lady, do you know?
   A.  I do, if I can remember.  I think it was a gentleman by
       the name of Holland, was it?  Anthony Holland, a
       solicitor there.  I could be wrong about that but that
       is the best I can recall.
   Q.  Did you meet with him?
   A.  I spoke with -- I spoke with him on a number of
       occasions.  I didn't actually meet with him because they
       were Chester based, we were living in Hebden Bridge, the
       property we were purchasing was in North Wales.
   Q.  And you could have obtained advice from him on any
       aspect of the purchase at any stage you wanted, am
       I right?
   A.  Yes, that is correct.
   Q.  That is the purchase of the business or the relationship
       you were going to be entering into with the Post Office?
   A.  That is correct.
   Q.  I think you paid fees to him of some £2,738, does that
       sound about right?  I get that from, it doesn't matter,
       but it's {E1/2/23}.
           If we could go, though, to a copy of the memorandum
       of your agreement.  It's bundle {E1/2/36}, please.  Do
       you see that?
   A.  I do.
   Q.  You are obviously familiar with this, I am sure.
       Can I ask you to draw your attention to paragraph 7(c)
       on page {E1/2/37}.  If you start at the top of 7:
           "This contract is conditional upon and may be
       rescinded by either party by written notice if either
           Do you see that?
   A.  Yes, I do.
   Q.  And there are a number of conditions.  Look at (c) and
       the bit on the second half of (c), this is a condition:
           "... to be subpostmaster except on terms which are
       materially different from the terms on which the vendors
       hold the appointment and are such that a reasonable
       purchaser would be unwilling to purchase."
           Do you see that?
   A.  I do, yes.
   Q.  So what that does, is it not, and what you must have
       understood at the time that it did, is give you an out,
       ie a condition, that wouldn't be satisfied if
       Post Office either didn't appoint you or appointed you
       on terms different to Mr Savage, materially different to
       Mr Savage?
   A.  That is correct.
   Q.  You were committing to spend some £175,000 to take over
       this business on the basis of this contract, yes?
   A.  Yes.
   Q.  You are someone who, we have established, has experience
       in contractual matters, commercial matters, things of
       that kind, yes?  Commercial agreements?
   A.  Yes.
   Q.  So surely in order to see whether or not you wanted to
       sign this agreement, wouldn't you want to see the
       contract of Mr Savage which was an essential part of
       this condition?
   A.  The subpostmaster side of it was very much to be
       negotiated with Post Office.  I find it odd that I would
       ask Mr Savage for the terms that he had been employed
       under because they could have been very different to the
       ones I was going to be taken on board --
   Q.  That is true.  But in order to understand what you were
       signing up to here, surely -- and Mr Savage's contract
       is a central part, wouldn't you have wanted to know what
       the effect of that condition was upon you and your
   A.  I can see what you are asking, but my concern was
       under -- was what were the terms I was going to be
       employed by Post Office, rather than those that have
       been agreed with Mr Savage and Post Office.
   Q.  Do you know whether your solicitors asked or were
       provided with a copy of Mr Savage's contract?
   A.  I am not aware whether they were.
   Q.  Is it possible that you did see his contract but you
       have now forgotten because it wasn't something of
       importance to you?
   A.  No, I don't recall ever discussing his contract with
   MR JUSTICE FRASER:  Do you remember how long he had been the
       subpostmaster there?
   A.  I have a feeling it was something in the region of about
       19 years, 20 years, something of that sort.
   MR CAVENDER:  So the effect of this would be if Mr Savage's
       terms were terrible then you would still have -- and the
       Post Office offered you such terms which you also
       thought were terrible, you wouldn't be able to get out
       of this contract because they were no worse than
       Mr Savage was operating under.  Do you see the point?
   A.  All I was concerned about was the terms that I was going
       to be employed under with Post Office.
   Q.  Is that right?  You are a commercial contracts man, you
       are signing this contract, the only precondition we are
       talking about at the moment to get out of it, so you
       don't have to buy the property, is if the terms are at
       least as good as Mr Savage has got, and you are showing
       no interest in Mr Savage's terms.  That doesn't seem
       very commercial to me.
   A.  But it was -- sorry, I will repeat this again.  It was
       the terms that I was going to be employed under which
       were of concern to me, rather than Mr Savage's.
   Q.  Your solicitors, did they give you any advice as to the
       meaning or effect of this term?
   A.  My solicitors did see this document and they were quite
       happy for me to sign it.
   Q.  Did they give you any advice as to the effect or meaning
       of this particular term?
   A.  Not that I can recall.
   Q.  Moving on then to your interview.  You made
       an application then to Post Office I think on
       15 January 1998, were asked to interview in March 1998.
       In advance of that you were given an information sheet,
       were you not?  Go to {E1/3/6}.  I said information
       sheet, what I meant was job description.  Do you have
   A.  I have that.
   Q.  "ARS 43.  Job Description for a Subpostmaster".
   A.  Can you remind me where that is in my witness statement,
   Q.  Don't worry where it is in your witness statement.  Do
       you accept you were provided this, as most people are
       before they attend an interview?
   A.  I was provided with it at some point, but without
       checking in my statement I'm really not quite exactly
       sure when --
   MR JUSTICE FRASER:  I think the witness is allowed to remind
       himself of what he says in his --
   MR CAVENDER:  By all means.
           I think you deal with this at paragraph 39 {C1/1/9}.
       You say your broad recollection is you received this job
       description on 8 May:
           "However, I cannot exclude the possibility that this
       document, which is general in nature, was sent to me
       before that."
           Can you improve on that?
   A.  No.
   Q.  What I suggest to you is that, as is normal with jobs,
       you are sent a job description in advance of the
       interview in order for you to discuss at the interview
       the role, and for you to know the role -- description of
       the role for which you are being interviewed.  Do you
       accept that as a general proposition?
   A.  Generally, yes.
   Q.  And given that, isn't it more likely than not, obviously
       it is a long time ago, you would have been provided
       ARS 43 in advance of the interview?
   A.  I can't clearly recall when it was delivered to me but
       I thought it was later than that.
   MR JUSTICE FRASER:  Understood.
   MR CAVENDER:  Let's look at it and see what you would have
       learned from it.  Go to the first page, page 6 {E1/3/6},
       your duties are set out there, manager of a Post Office
       outlet, and we can see on the last line that you will be
       contractually obliged to undertake certain tasks and
       procedures.  So you knew there was going to be
       a contract coming, yes?
   A.  Yes.
   Q.  We see under "Responsibilities":
           "The subpostmaster must accept full responsibility
       for the running of the sub-office and the efficient
       provision of service, even if he does not attend the
       sub-office personally."
           So what they were saying to you, was it not, there
       was no requirement for you to offer any personal service
       but nonetheless you were going to have full
       responsibility.  You understood that at the time,
       am I right?
   A.  I understood it at the time I received the document,
   Q.  Then when we go over the page to {E1/3/7} under
       "Money/Materials" we can see the various roles there:
           "Effective cash and stock management."
           And going down to the bottom of those bullet points:
           "Accounting for financial losses ..."
           So this was -- this would feed into your discussion
       with Mr Savage and the accounts you had seen about overs
       and unders, yes?
   A.  Correct.
   Q.  So this is them saying to you: look, this is a real
       thing and you need to be aware of this.  Is that fair?
   A.  It is fair and I would fully expect to do so.
   Q.  And you are financially responsible for losses even
       after you relinquish your appointment.
           Over the page {E1/3/8}, please.  Under the heading
       "Possible Rewards and Difficulties":
           "Possible Difficulties: No entitlement to paid sick
       or annual leave, pension, or compensation for loss of
           Do you see that?
   A.  I do see that.
   Q.  And you would have read that at the time?
   A.  I would have read it at a time, correct.
   Q.  You would have understood what that meant, that when
       your contract was terminated you had no right to
       compensation for having lost your office, yes?
   A.  According to that, yes.  But it doesn't really give
       a lot of detail, does it, about it?
   Q.  Then "Possible Rewards", and you see there:
           "As self-employed agents, subpostmasters enjoy
       greater freedom ..."
           So again agency is being put forward as the nature
       of the relationship, do you see that?
   A.  I do.
   Q.  Prior to the interview then, I suggest you had this
       document and the other two documents that we have been
       looking at, the ARS 43 we have just looked at and the
       ARS 44 we looked at before.
           Did you prepare for your interview?
   A.  As well as I could, yes.
   Q.  That would have involved looking at these two documents
       ARS 43 and ARS 44 again, would it not?
   A.  I would have looked at the documents I had at the time.
       Obviously the main concern I had about the interview was
       whether we had a viable proposition that Post Office
       would appreciate and that would support my position for
       the application, so that ...
   Q.  You were interviewed by Mr Jones?
   A.  That is correct, he was one of the two --
   Q.  And if you had had any problems with the matters I have
       read out from ARS 43 or ARS 44 you would have raised
       them with him, wouldn't you?
   A.  I may have if I had been aware of them.  But the purpose
       of the interview was not so much for me to interview
       Post Office, it was for me to be interviewed by
       Post Office about what I was proposing to do as
       a subpostmaster and --
   Q.  If you had had any problem with what was being set out
       as the nature of relationship, you could have raised it
       at that interview?
   A.  If I had had any queries I would have raised them at
       that --
   Q.  You would have raised them.  You didn't because you
       accepted the nature of the relationship was as set out
       in those documents, that is what you were willing to
       enter into?
   A.  I am not convinced I had these documents at that time.
   Q.  What, either of them now?
   A.  No --
   Q.  You're now saying, are you, for the first time --
   A.  -- the one I referred to.
   MR JUSTICE FRASER:  Mr Cavender, three times you have
       overspoken the witness while he is trying to answer your
   A.  It is the one I referred to earlier, yes.
   MR CAVENDER:  So you definitely had one of them, yes?  The
       first one.  You say in your witness statement you did.
   A.  Yes.
   Q.  The point you are making, as I understand it, is that
       you didn't or may not have had ARS 43, yes?
   A.  Yes, that is correct, because in my witness statement
       I actually felt that the document, I received it around
       the 8 May which was after the interview.
   Q.  What was explained to you in the interview, I suggest,
       and I am going to take you to the individual pleading by
       way of an aid for this.  Please take up bundle
       {B5.1/3/7}.  Paragraph 18 there.  If you skim that,
       three subparagraphs, this is what I suggest to you was
       the kind of information that would have been given to
           Look at them one by one.  Paragraph (1):
           "Mr Jones would have given [you] further information
       regarding the relationship ... and the processes that
       you would be required to follow."
           Do you accept that a debate of that kind,
       information given to you, would have happened?
   A.  There would have been some discussion, I do agree, yes.
   Q.  If you had had any problems with the nature of the
       relationship or your responsibility for shortfalls, that
       is when you would have raised it?
   A.  What I understood at that time I would have raised it,
   Q.  But you didn't, did you?  You said before you didn't
       raise --
   A.  I didn't have any concerns about things of that nature
       at the time.
   Q.  Then (2), you would have been provided information that:
           "... subpostmasters were not employees but were
       agents who were responsible for the operations ... and
       staff ..."
           Would that have been something you think might have
       been mentioned to you?  (Pause)
   A.  I'm not sure if all that detail was gone through at the
       interview.  I really don't.
   Q.  I will break it into bits.  So do you think it is likely
       there was a discussion about the fact of your status,
       you were agent and not an employee?
   A.  As you mentioned earlier, it is a long time ago, and
       trying to remember finer details of it is very hard.
       But the one clear recollection I have of that interview
       is the majority of the time was spent going through my
       business plan and we took that apart.  So for the couple
       of hours I was there, that was where the majority of
       time was spent.
   Q.  A couple of hours is a long time, Mr Bates, as we will
       find out this morning.  You can get a lot of information
       during that time.  The normal processes of Post Office,
       I put to you, are to provide this sort of information.
       Are you able to say to me that they didn't do so in your
       case?  Are you able to say that to me?
   A.  I can't be clear either way, I am sorry.
   Q.  I suggest they did provide the information in (2).  And
       as to (3), you would have told Mr Jones that you
       intended to spend at least 18 hours a week running your
       new business?
   A.  Yes, that is fair.  That is a fair point, yes.
   Q.  He didn't say you had to, did he?
   A.  I can't recall that, but it would have been quite clear
       from my business plan that I was going to be spending
       a considerable amount of time there, far more than
       18 hours a day -- sorry, a week, working at the branch.
       Because I was looking at developing it, and I had to
       learn the business to start with before I could actually
       put together any sort of --
   Q.  One specific point is you realised, as I showed you in
       the earlier document, that the training of assistants
       was to be your responsibility.  That is something you
       had taken on board and understood, am I right?
   A.  Whilst the manual system was in place, yes.
   Q.  In terms of your business plan, I can take you to it if
       you like, but you put in your business plan about your
       plans for training assistants?
   A.  Can we look at that, please.
   Q.  Yes, {E1/2/20}.  If we look in the middle of that page
       there are various things you -- or promises of things
       you are going to do:
           "Provide staff with customer care and Post Office
       product training?"
           You say "Yes".  And you say:
           "It is important to ensure all staff are not only
       adequately trained but also that they have the support
       they need to enable them to carry out their jobs
           I read that as saying you had taken on board the
       need for you to train your assistants and you were going
       to do so, am I right?
   A.  Yes, and also to make sure they attended any Post Office
       training courses that they provided.
   Q.  And that is a general obligation you had, not just for
       manual accounting, it was whatever was required going
       forwards.  You had a duty, they were your employees and
       you had to train them?
   A.  As I understood matters at that time, yes, that is
   Q.  Moving forward then, appointment.  Your appointment
       letter we find in {D1.1/1/1}.  We can see 30 March:
           "... delighted to inform you that your application
       ... has been successful."
           Talking about a convenient date for transfer,
       et cetera.
           What then -- well, firstly, you must have been
       pleased that you had been accepted, is that fair?
   A.  Yes.
   Q.  We can see from the fourth paragraph of the letter it
           "Please find enclosed with this letter two copies of
       a list of the main conditions attached to your
           Do you see that?
   A.  Yes, I do.
   Q.  "Would you kindly confirm your acceptance of these
       conditions by signing one copy and returning it in the
       envelope ..."
           Do you see that?
   A.  Yes, I do.
   Q.  So these were referred to as the main conditions, yes?
   A.  Yes.
   Q.  If we turn the page to {D1.1/1/4}, we can see at the
       bottom your signature on 31 March 1998, do you see that?
   A.  Yes, I do.
   Q.  And above that we see:
           "I fully understand and accept these conditions and
       agree to avail myself of the pre-appointment
       introductory training."
           Do you see that?
   A.  I do.
   Q.  You referred in later correspondence to these terms as
       your "office specific" terms of appointment.  Is that
       fair?  That is how you saw them?
   A.  They were, as far as I was concerned.
   Q.  "Office specific".  We can take up bundle {E1/50/77},
       that is how you describe them.  That is a fair
       characterisation, is it not?
   A.  Sorry, what am I looking at?
   Q.  Third paragraph.
   A.  I am looking at a letter about the National Lottery
       terminal, is that correct?
   Q.  Yes.  It's the third paragraph, three lines down,
           "In the office specific terms of appointment ..."
           I am just seeing how you viewed these terms.  That's
       a fair --
   A.  Yes, that is fair --
   Q.  That is the only point I am making.
           Going back, if you would, to the letter of
       appointment and the attachment {D1.1/1/4}, immediately
       above your signature and above the declaration,
       paragraph 6 you see there says:
           "You will be bound by the terms of the standard
       subpostmasters contract for services at scale payment
       offices, a copy of which is enclosed."
           Do you see that?
   A.  Yes, I do.
   MR JUSTICE FRASER:  Where are you looking, sorry?
   MR CAVENDER:  Paragraph 6, my Lord.  {D1.1/1/4} above the
       signature and the declaration.  Paragraph 6.
   MR JUSTICE FRASER:  The one on my screen doesn't have
       a paragraph 6.
   MR CAVENDER:  Are you in --
   MR JUSTICE FRASER:  I'm looking at the one on the common
       screen.  Oh, I see, sorry, 4.12 (6).  I was looking at
       the large numbers against the headings.
   MR CAVENDER:  So we are all there.  So it's paragraph 6 of
       the document:
           "You will be bound by ... the standard terms ...
       a condition of which is enclosed."
           The letter of appointment says, does it not, that it
       is enclosing two copies of the main conditions?  We saw
       that before.  And the main conditions say that they are
       attaching a standard subpostmasters contract, yes?  So
       you are expecting to get three things, aren't you, two
       copies of your -- the main conditions, yes?
   A.  Yes.
   Q.  And those main conditions say they are attaching
       a standard subpostmasters contract, yes?
   A.  And there was another document in there, yes.
   Q.  No.  So you are meant to be getting three documents: two
       copies of the main conditions?
   A.  Yes.
   MR JUSTICE FRASER:  Mr Cavender, this is why I asked you
       about paragraph 6 because it is quite confusing.
           When you said paragraph 6 of the document, the one
       on the common screen, I questioned whether it was
       paragraph 6.
   MR CAVENDER:  I see.  It is 4.12 (6) --
   MR JUSTICE FRASER:  No, no, it is because there is
       a paragraph 6 on the next page which is headed "Weekly
       Accounting", that is why I was getting confused.
   MR CAVENDER:  My Lord, I am looking at {D1.1/1/4}.
   MR JUSTICE FRASER:  I know where you are looking.  And you
       are referring to a document which had been sent with
       this four-page document which is referred to in it,
       "a copy of which is enclosed".  That is right, isn't it?
   MR CAVENDER:  Yes.  What I was saying was if you go back to
       {D1.1/1/1}, ie the letter.
   MR CAVENDER:  You will see in the fourth paragraph:
           "Please find enclosed with this letter two copies of
       the list of main conditions ..."
           Yes?  And the main conditions are the document
       starting at {D1.1/1/2}.
   MR CAVENDER:  And the point I am making to you, Mr Bates, is
       that that says in terms that that document is enclosing
       some other document called the standard subpostmasters
       contract, yes?  Do you understand what I am saying,
       Mr Bates?
   A.  I understand what you are saying, yes.
   Q.  So on that basis you are expecting to receive three
   A.  But I did receive three documents.
   Q.  What three documents did you receive?
   A.  Two copies of the previous document, the ones I signed,
       and this third document here, which is conditions of
       appointment for Craig-y-Don sub-post office.
   Q.  The first point about this is that the standard -- the
       subpostmasters contract standard terms, yes, referred to
       in this paragraph is referring to something other than
       the conditions of appointment, yes?  It is referring to
       some other document, can we agree that?
   A.  It sounds like it does, yes.
   Q.  Yes.  Another document and some standard terms --
   A.  But, sorry, you say that, but the third document to me
       at that time was this document saying conditions of
       appointment for Craig-y-Don sub-post office.
   Q.  We will come to that.  The document that you are
       anticipating would contain standard terms, yes,
       applicable to all branches?  That is what you are
   A.  I didn't anticipate anything.  I didn't know what I was
       getting until it turned up in the post.
   Q.  It says in what I call paragraph 6 "the standard
       subpostmasters contract".  What I am suggesting to you
       is that what you would expect, if you were looking for
       it, were some standard terms.  Am I right or am I wrong?
   A.  I think you are wrong for at the time there.  Because
       I presumed that was the package -- the package
       I received was what I thought there was at the time.
       Obviously nowadays I am well aware there is another
       document.  12 months later I did discover there was
       a separate 114-page subpostmaster document which was not
       included in the pack I received, which I did not know
       about, which had never been discussed with me prior to
       that.  But I think that is what is being alluded to that
       I should have known about.
   MR JUSTICE FRASER:  Let's not worry about allusions.  We're
       going to be quite precise about all of this.  The --
   A.  Alright, that is what is being suggested at the moment.
   MR JUSTICE FRASER:  Just wait for me to finish what I am
       saying, if you didn't mind.  I would like us to be quite
       precise about terminology.  The 114-page document you
       have just referred to is the one everyone is calling the
   A.  That is correct.
   MR JUSTICE FRASER:  I think Mr Cavender in due course will
       formally put to you whatever points he wants to put to
       you on when you got that, including with this letter.
           But, Mr Cavender, by simply referring to them
       globally as "standard terms" is probably not helpful
       because in a sense they're all standard terms.
   MR CAVENDER:  My Lord, it is helpful for this reason: in
       distinction to what this is, which is specific
       conditions applying to this branch.  That is the point
       I am making.
   MR JUSTICE FRASER:  Let me express myself rather
       differently.  I don't find questions to this witness
       using the term "standard terms" to be particularly
       helpful in eliciting what in fact happened vis-a-vis the
       different documents.  So if you would like to now
       continue, that is fine, but please be precise about
   MR CAVENDER:  When we look at the two-page document, as we
       call it, yes?  Which is at page 5 and page 6, yes?
       Headed "Craig-y-Don - Conditions of Appointment".  I am
       going to call that the two-page document, yes?
   A.  Yes.
   Q.  When we are looking at that, you can't have thought that
       that contained all the terms, the standard terms, that
       regulated the relationship, can you?
   A.  I did, yes, I am sorry, I --
   Q.  But it doesn't -- sorry.
   A.  I did, but I presumed the two documents I received were
       the full amount of documents that were involved with me
       being appointed for the subpostmaster and that related
       to me.  I was not aware of any other documentation.
   Q.  The problem with that is that when you look at the
       content of the two-page document, it doesn't deal with
       any of the major terms and conditions referred to in the
       ARS 43 or 44 that you have been alerted to about the
       relationship, about liability for losses and things of
       that kind.  None of those things are there.  So
       you can't possibly have thought that this two-page
       document was the SPMC, as the judge has rightly
       indicated, can you?
   A.  I am sorry, I do believe -- this was all the
       documentation I had, this is what I believed I was
       working from.  It was as simple as that.
   Q.  Let's look at the two-page document, as you would have
       done at the time, and compare it to the three-page
       document.  So when we compare the two-page document at
       {D1.1/1/5} to the three-page document we can see, can
       we not, that from 4.1 onwards at {D1.1/1/3}, starting
       with the heading "Posters and Advertising", all the way
       through "Quality of Service", "Signage", "Trading
       Hours", et cetera, all way to the end, "Counters Club",
       and we compare the two-page document starting on
       {D1.1/1/5}, it is exactly the same, by which I mean
       exactly the same word-for-word, save for the two-page
       document has a paragraph 13 dealing with personal
       service.  Yes?  {D1.1/1/6}
   A.  Correct, yes.
   Q.  And you would have noticed that at the time, wouldn't
   A.  I did.
   Q.  You did?
   A.  I did notice it at the time.
   Q.  So how could you have thought that the two-page document
       was in fact the document referred to at what I call
       paragraph 6, the SPMC, when it was exactly the same bar
       one clause as the three-page document?
   A.  But it was different.  It did have an extra clause in
       there.  Sorry, I -- I can't be clearer than: that is all
       I thought the documentation was at that time.  I was not
       aware of any other documentation.
   Q.  Mr Bates, let's get this straight.  So you are really
       saying, are you, that you spotted at the time that the
       two-page document was almost precisely the same as the
       three-page document, save for the one clause?
   A.  Yes.
   Q.  And yet you are still maintaining that you thought that
       in that condition with that extra clause, that that was
       what clause 6 refers to as:
           "... the terms of the standard subpostmasters
       contract for services at scale ... a copy of which is
           Are you really saying that?
   A.  Yes.
   Q.  I suggest to you that is pretty unlikely, particularly
       given the kind of details man and commercial man that
       you are.
   A.  I'm sorry, that is all I was made aware of at the time.
       Any other contracts, any other documentation had not
       been discussed with me.
   Q.  Let's look at the two-page document that you think is
       standard terms.  We know it is exactly the same as the
       three-page document.  Let's look at it and see whether
       you reasonably did think, or even could have thought, it
       was the standard terms, the SPMC.
           Looking at the top we see not standard terms of
       subpostmasters contract, we see "Craig-y-Don -
       Conditions of Appointment".  Do you see that?
   A.  Yes.
   Q.  Obviously specific to your branch.  Not standard at all,
       is it?
   A.  It might have been standard for my branch, as far as
       I know.
   Q.  Are there any parties identified in this document as to
       who it is to apply to?
   A.  Craig-y-Don.
   Q.  If we look at paragraph 6, "Weekly Accounting", it talks
           "The outlet currently utilises a computerised system
           That is specifically dealing, is it not, with this
       branch, the computer system at this branch?  It is not
       a standard term at all, is it?
   A.  It might be a -- as far as I was concerned, it was
       a standard term for that branch.  It was standard for
       the branch.
   Q.  Paragraph 8, "Welsh Language Act", last line:
           "I will provide you with a copy of the PO scheme
       under separate cover."
           That is not, again, the language of standard terms,
       is it?  It is specific to you.  Would you agree with
   A.  It was, yes.  It did go directly to me, correct, yes.
   Q.  But it is not consistent, is it, with what you find in
       standard terms?
   A.  But it was standard terms for operating at the
       Post Office, at Craig-y-Don Post Office.  That is what
       I presumed it to mean.
   Q.  But what you are looking for, remember, is a copy of the
       standard subpostmasters contract for services at scale
       payment offices, not the terms that apply to your
       particular office?
   A.  No, I wasn't.
   Q.  If we go to clause 12, "Counters Club", it actually
       talks about the retail offering at Craig-y-Don itself,
       do you see that?  (Pause)
           What I suggest to you is in fact that you did get
       the subpostmasters contract at this time, and if you had
       not have done so, and you hadn't reviewed it, you would
       not have signed saying:
           "I fully understand and accept these conditions and
       agree to avail myself of the pre-appointment
       introductory training."
           Which contained the phrase:
           "You will be bound by the terms of the SPMC."
           You would not have done that, Mr Bates, because you
       are a details man.  You would not have missed this.
   A.  I did not receive the large 114-page subpostmaster
       booklet with the documents I received at that time.
       I was not aware of the existence of that booklet at that
       time.  If I had received it, it would certainly have
       gone to my solicitors and I certainly wouldn't have
       signed what I thought was a very straightforward
       document and returned it almost the same day.
   MR CAVENDER:  My Lord, I see the time.  Is that a convenient
   MR JUSTICE FRASER:  I think it is, yes.
           Mr Bates, this isn't specific to you, I say this to
       all witnesses so please don't worry.  You are now in
       the middle of giving your evidence, that means you can't
       talk to anyone about the case.  On the basis your
       evidence will hopefully be finished today, the best
       thing is just don't talk to anyone at all.  But please
       don't feel you have to stay in the witness box, it is
       a good idea to go outside and stretch your legs.
           We will have a ten-minute break and come back in at
       12.02 pm by that clock.
   (11.55 am)
                         (A short break)
   (12.04 pm)
   MR CAVENDER:  Mr Bates, can I ask you to turn to {E1/28/1}.
       It's a letter you sent to Post Office in September 2001
       about a missing item of stock, do you see that?
           "The missing item is a single mini sheet of flags
       and ensigns, value £1.08, only 49 were delivered and not
       the 50 sheets as stated on the advice note."
           Do you see that?
   A.  I do.
   Q.  So if people don't send you things that they are meant
       to send you, you notice, don't you?
   A.  Yes, we try to.
   Q.  And I suggest the same is the case in relation to the
       standard terms, if that document had not been included,
       you would have noticed and you would have asked for it?
   A.  I can only let you know what I received and I did not
       receive the contract, nor was I aware of it at the time,
       that other document.
   Q.  The evidence of Paul Williams that we will hear,
       {C2/9/5} at paragraph 24, is that from late 1995 the
       practice had been to send out the copy of SPMC with the
       appointment letter.  Have you read that evidence?
   A.  I have read that evidence, yes.
   Q.  So I suggest to you (a) that is right, and (b) by March
       1998, the time we are talking about here, the practice
       of sending out a contract had become well developed and
       so it was likely you did get it.
   A.  All I can tell you is I did not receive it.
   Q.  We'll leave that there for the moment.
   MR JUSTICE FRASER:  Just before we do.  Mr Cavender,
       I expressly asked you not to put questions using the
       term "standard terms" because of the possibility of
       either misunderstanding or confusion.
           So can we just clarify, when Mr Cavender says to you
       "standard terms", we are talking about the SPMC.
   A.  SPMC.
   MR JUSTICE FRASER:  Is that your understanding of the
   A.  It is.
   MR JUSTICE FRASER:  All right.
   MR CAVENDER:  Moving forward in time, the next thing that
       happened chronologically after this was you had off site
       training, is that right?  You deal with that at
       paragraph 68 in your witness statement {C1/1/16}.  And
       you accept that you probably got the training booklet at
       that time, is that right?  You agree it is quite likely?
   A.  It is likely.  I can't be certain but it is likely.
   Q.  If we turn that up at {E1/12/1}, we will find that
       document there.  The page I want to refer you to, if
       I may, is {E1/12/10}, under the heading "Contract":
           "As a new subpostmaster, you have entered into
       a contract with POCL which states what we as a business
       expect from you ... You will have received the full
       contract (on the day of your appointment ...)."
           When you read that, what did you think that was
       referring to?
   A.  The documents I had been sent which we --
   Q.  What, the two-page document?
   A.  The two- and three-page documents and --
   Q.  They were the same.
   A.  -- the appointment letter.
   Q.  So you thought the full contract was the two-page
       document enclosed in the three-page document, is that
   A.  I presumed all those documents I had been sent were the
   Q.  I see.  And I think you say at paragraph 129 in relation
       to the training you received that it was satisfactory,
       I think.  At {C1/1/28} you say:
           "Though this had shortcomings, I was able to run the
       branch effectively and prepare and submit branch
       accounts on the basis of that training using the manual
       method shown to me."
           So would my characterisation that you begrudgingly
       accept the training was satisfactory, would you agree
       with that?
   A.  I would accept it was adequate to run the branch with
       the five experienced staff I already had at that time.
   Q.  Moving forward to the branch transfer now, if I can.  I
       think the audit took place on 6 May 1998, the closing
       audit, and at paragraph 71 I think you say you weren't
       present on that day.  The first day you were operating
       the branch was 7 May, is that right?
           Go to paragraph 71 {C1/1/16} and remind yourself of
       what you say.
   A.  As far as I can recollect that is correct, yes.
   Q.  In terms of documents, there is of course the
       acknowledgement of appointment.  Can I take you to that
       at {D1.1/2/1} where it says:
           "I accept the appointment as subpostmaster at
       Craig-y-Don and agree to be bound by the terms of my
       contract ..."
           What it is referring to was the SPMC, wasn't it,
       when it said "my contract"?
   A.  It was referring -- well, I interpret that, "my
       contract", as the documentation I had received when
       I signed all the documents on -- was it 31 March?
   Q.  And in terms of the Book of Rules, instructions, you
       knew that was referring to the manual and other
       documents you signed on the same day, is that right?
   A.  Presumably it was part of the package of all the
       documentation that was in the Post Office.
   Q.  If we go to bundle {E1/5/1}, we find a document called
       an ARS 110 that you signed on this day, yes?
   A.  Correct.
   Q.  And it says at the top "List of rules, postal
       instructions and forms issued", is that right?
   A.  Yes.
   Q.  It lists a number of things that are there, including
       the counters operations manual volumes 1 to 4, is that
   A.  Yes.  Yes, it does.
   Q.  You have signed this and dated it, and you have done
       that to acknowledge you have received those documents,
       am I right?
   A.  I have acknowledged I have signed it, yes.
   Q.  And received the documents that it refers to?
   A.  Yes.  This was one of a bundle of documents I was
       provided on that day to sign off.
   Q.  So why do you say in relation to bundle -- in
       acknowledgement of appointment at {D1.1/2/1} that when
       it says:
           "... the rules contained in the Book of Rules and
       the instructions contained in those postal instructions
           It is pretty obvious, isn't it, to you at the time,
       they are referring to the documents listed in the
       ARS 110?
   A.  It doesn't actually say that.  It was -- it was just
       general documentation to run the business.
   Q.  Yes.  And you had signed the ARS 110 listing that
       documentation.  What I am putting to you is you must
       have understood at the time that the acknowledgement of
       appointment was referring to those documents? (Pause)
   A.  I say yes, but you have to appreciate what it's like on
       the day you are taking over a new Post Office when that
       Post Office is in operation, you have a trainer in
       there.  The amount of documentation that you find behind
       a post office counter is phenomenal in there.  You are
       very much relying on the Post Office trainer there who
       is there to support you and take you through it.  So
       when he -- and he does go through and he checks things
       as best as you know, because you have no idea what there
       is there.
           So you do very much rely on the fact that he has
       presented you with all these things and says, yes, they
       are all fine, these are the documents we have to finish
       off and sign off.
           So yes, from that point of view I did sign it.  But
       if you actually asked me, did I examine every one of
       these documents beforehand?  I would have to say no.
       I had to rely on the Post Office trainer for checking
   Q.  But you knew the acknowledgement of the appointment, the
       words in it referring to Book of Rules and rules, must
       have been referring to the documents listed in
       the ARS 110 that you signed, yes?
   A.  I wouldn't know exactly what it referred to other than
       that it was part of the documentation.
   Q.  It would at least include those, wouldn't it?
   A.  I would imagine so, yes.
   Q.  Go to your witness statement, please, paragraph 77
       {C1/1/18}.  Can we agree the second sentence, second
       part of the --
   A.  Sorry, what paragraph?
   Q.  Paragraph 77.  Can we agree that you have gone too far
       in the second sentence, second part of it, when you say:
           "... and I have no idea what those references were
       intended to encompass."
           That is in fact overstating your position, isn't it?
       You did have some idea, you just told me.
   A.  Well, I have said that I was relying on the trainer to
       agree that those were all the documents that I needed.
       But there was no such booklet called the Book of Rules
       that I have ever seen.
   Q.  The other documents you signed on this day, if you go to
       bundle {E1/9/1}, please, we see a document called
       "Serv 135".  Do you see that?
   A.  I do.
   Q.  If you go to the second page {E1/9/2}, you will see at
       the bottom:
           "I, Mr Alan Bates, hereby acknowledge I have read
       and understood these extracts."
           And you have signed it?
   A.  Correct, I have.
   Q.  You signed it because you had read and understood those
       extracts, am I right?
   A.  I had signed it in -- at the same time as I signed
       a whole batch of documents which I have just explained
       that were --
   Q.  But you are a man of detail.  You notice if one book of
       flags are not there, worth £1.09, remember.
   A.  But that wasn't on the day I was taking over
       a post office, that was later on.
   Q.  You are a man with experience of commercial contracts.
       So you knew how important it was to in fact read and
       understand what is a two-page document before signing
       it, didn't you?
   A.  The two pages were one -- were two of many pages that
       were provided at that time for me to sign.
   Q.  You are a details man.  You had time to read this and
       in fact you would have taken that time, Mr Bates,
       wouldn't you?
   A.  I took a certain amount of time.  I did query with the
       trainer what each of the documents related to, I do
       recall that.  But we didn't spend time going through
       every one because we were also serving people on the
       counter at the same time.  There was an awful lot going
       on at the time this took place.
   Q.  Is the declaration you made there true or untrue?
   A.  It is true I signed that document, yes.
   Q.  Let's look at what it contains then:
           "Dear subpostmaster ..."
           Et cetera.
           "... I would like to draw your attention to the
       following extracts from your Contract."
           With a capital C.  Yes?  So to your mind, your
       evidence so far, this would be a reference to the
       two-page document, am I right?
   A.  It would have been, yes.
   Q.  And as we will see, this is -- none of these clauses or
       anything dealing with these matters is contained in
       the two-page contract, as you call it.  Am I right about
   A.  They are not.  You are quite right, yes.
   Q.  Is there a section 12, looking at the first one, in the
       two-page document?
   A.  No.
   Q.  No.  Is there a heading called "Cash Balance" in bold
       and in capitals in the two-page document?
   A.  Not that I can recall.
   Q.  No.  So we have the cash balance item there.  Is there
       a heading with "Accounts" on it in the two-page
   A.  Not that I can recall.
   Q.  No.  What you have here, is it not, in, say, "Accounts",
       are some detailed provisions about the form in which
       accounts must be kept?  You would get that from reading
       paragraph 4, am I right?
   A.  Yes, it does.  It says that, yes.
   Q.  According to you, this is the first time you have seen
   A.  That is correct.
   Q.  On your account?
   A.  Yes, that is very true.
   Q.  And this is said to form part of your contract at the
       top.  "Losses".
   A.  Yes --
   Q.  Paragraph 12:
           "Subpostmaster is responsible for all losses caused
       through his own negligence, carelessness or error and
       losses of all kinds caused by his assistants."
           That would have grabbed your attention, I imagine,
       when reading this?
   A.  I would -- yes, yes, it would have, but I think I was
       already aware of that anyway.
   Q.  What about section 19, "Suspension Enquiries"?  You
       weren't aware about any of this, dishonesty, et cetera.
       That is not something that had been mentioned to before,
       is it?
   A.  No, it hadn't.  But it probably would have made sense.
       There must have been something to cover that.
   Q.  But there wasn't, though.  If the contract was the
       two-page document, that didn't have a section 19 dealing
       with suspension, did it?
   A.  The problem was that with Post Office you didn't get one
       set of documents to read a month before you took on the
       Post Office or applied to it.  You got things
       willy-nilly all over the place and they dropped on you
       at the most inconvenient times.  It felt like you were
       ticking someone else's box that they had done their job
       when you were seeing them.
           It is just part of a package of documents that were
       provided whilst I was serving on a counter, whilst I was
       being trained about all Post Office -- you take
       National Insurance, just one of the 170-odd or whatever
       product lines we were doing.  There was something like
       30-odd different forms you found in a drawer in the
       Post Office, you were going through all of those --
   Q.  Mr Bates, I apologise for interrupting.  We are
       concentrating on this document and the declaration you
       have made --
   A.  That is fine, I probably did sign it, yes.  Did I read
       it in detail and did I take it away and study it?  No,
       I didn't.  But I signed it there and then when I was
       requested to do --
   Q.  You could have taken as much time as you wanted to sign
       this document and read it, couldn't you?
   A.  No, that was not the impression I received.
   Q.  You didn't ask for any extra time, did you?
   A.  I was just told it was a basic procedure.  It was just
       a matter of signing a batch of documents, as simple
       as --
   Q.  Mr Bates, you are not commercially naive.  You are asked
       here to sign a serious declaration and you've read and
       understood these extracts.
   A.  Yes, and I did query them, and I was told, oh, it's
       simply a matter of -- these documents are simply
       a matter of how we deal with things.  It is quite
       straightforward.  That is -- I was relying very much on
       the trainer who was there at the time when I did all
   Q.  But you are not some naive person blowing in the wind,
       you are an experienced man in commercial contracts, you
       say, yes?  And this says at the beginning:
           "These are the terms ... extracts from your
           And your evidence, you didn't have this contract at
       this stage.
   A.  I didn't have these documents before this stage, that is
       quite right.
   Q.  What about over the page on page {E1/9/2}, "Suspension
       from Office".  That is quite a bold (inaudible), to be
       suspended from your office.  Had you seen that
   A.  I can understand it being there.  It seemed a -- yes, if
       there is someone, if there is a theft involved or
       something of that sort, it didn't seem unreasonable.
   Q.  What I suggest to you is if you hadn't received your
       SPMC, as I suggest you did, on being referred to
       section 12, section 19, section 4, you would have said
       "What is all this about?  Section 12 of what?
       I don't have a contract".
   A.  But I presumed this was section 4.
   Q.  Well, it is saying:
           "... the following extracts from your Contract."
           It is pretty clear that is referring, isn't it, to
       a larger document and this is extracts from it?  Do you
       disagree with that?
   A.  I do.  I just -- it was a stand-alone document in my own
       right, and these were particular clauses of -- relating
       to these issues.
   Q.  If we go to paragraph 184 of your witness statement
       {C1/1/39}, you say:
           "I was not aware of section 12(12) at the time of
       accepting my appointment and only came to learn of it
       later ..."
   A.  Yes.
   Q.  Ie, when you got the contract.  That isn't correct, is
       it?  We can see here that you were -- on your
       appointment you were given Serv 135 which includes
       section 12(12), do you accept that?
   A.  Sorry, where are you saying that I have accepted that?
   Q.  184 says you were not aware of section 12(12) of the
       SPMC at the time of accepting your appointment?
   A.  Correct, yes.
   Q.  What I am pointing out to you is that section 12(12) is
       in fact included in the Serv 135 document I have just
       shown you.
   A.  The Serv 135 document which I signed on 8 May, is that
   Q.  Yes.
   A.  That was after I had signed my contract, as far as I was
       concerned, which was on the 31st or 30th March and it
       wasn't included in there.
   Q.  But what you are saying as I read 184, and I may be
       wrong, I don't think so though, you are saying you
       weren't aware of section 12(12) until you had the
       substitution allowance debate much later on in August
       1999, yes?  Paragraph 185.
   A.  185.
   Q.  At the bottom of {C1/1/23}:
           "... human resources department ... July/August 1999
       to discuss claiming holiday substitution allowance."
           That is 105.
   A.  105?  Sorry, I am on the wrong page.
   Q.  You go on then to tell a story about what happened.
       Going back to 184.  You are saying you weren't aware of
       section 12(12) until that much later time?
   A.  Sorry, 105 ...
   MR JUSTICE FRASER:  I think the best way of dealing with
       this, Mr Bates, is if you look at paragraph 184.
   A.  184.
   MR JUSTICE FRASER:  What time are you referring to when you
       use the expression "at the time of accepting my
   A.  I'm -- "accepting my appointment" is when I signed the
       document 31 March.  It was the letter I returned.  That
       is ...
   MR JUSTICE FRASER:  What Mr Cavender is putting to you is
       that certainly no later than signing that extract
       document you would have been aware of section 12(12),
       because it is included in the extract.
   A.  It is in included in there.  It may have been included
       in there but I may not have -- it may not have struck
       home with me if it had been included as part of that.
   MR CAVENDER:  Paragraph 189 of your witness statement
           "Post Office never drew my attention to
       section 12(12) ..."
           We have just seen it is part of Serv 135 and they
       have specifically drawn your attention to it.
   A.  Post Office itself hadn't.  It had formed part of
       a document, as you have just explained, but I hadn't had
       it explained to me, we hadn't gone through it, it hadn't
       appeared as part of the discussions we had had at
       interview or anything of that nature.  No.
   Q.  That is not what you are saying in your evidence, is it:
           "Post Office never drew my attention to
       section 12(12)."
           Pausing there, look at Serv 135, {E1/9/1}:
           "... I would like to draw your attention to the
       following extracts, from your Contract."
           They have expressly brought section 12(12) to your
       attention.  Why are you saying in two places in your
       witness statement they have not?
   A.  Sorry, I can't see the other document.
   Q.  Which document?
   A.  The one you just referred to.
   Q.  Serv 135, that's {E1/9/1}.
   A.  And the particular point you are referring to ...
   Q.  The top paragraph:
           "... I would like draw your attention to the
       following extracts from your Contract."
           One of which is, if you scan down, section 12(12).
   A.  I see section 12.
   Q.  Yes.
   A.  I don't see section 12(12).
   MR JUSTICE FRASER:  It is just number 12 under the heading
   A.  Under "Losses" ...
   MR CAVENDER:  (inaudible) losses et cetera.
   A.  Right, okay.  As I say, it may have appeared in there
       separated out like that.  But as I say, it was part of
       a whole batch of documents received on the day, and to
       go through them all was just -- it was just a ridiculous
       expectation to have all this piled on you on the day
       once you are actually starting a business.
   MR JUSTICE FRASER:  Understood.
   MR CAVENDER:  Why are you putting things in your witness
       statement that are obviously not right?  Did you draft
   A.  Yes, I did.  I did write my ... I have written many
       documents on this.  But yes, it is not incorrect, but it
       is as I recalled at the time, is all I can say.
   MR JUSTICE FRASER:  Mr Bates, just to give me a ballpark
       figure, can you remember how many things you had to
       signed on 8 May when you took over, roughly?
   A.  There was a whole bundle.  There would have been,
       I don't know, 20, 30, 40.  But it's at the same time as
       everything else --
   MR JUSTICE FRASER:  I do understand that point, it was just
       to give me an idea.  You mention in your witness
       statement the scale of the exercise and I just wanted
       a ballpark impression.
   A.  It was a lot.
   MR CAVENDER:  Isn't it also the case you received another
       copy of the SPMC on appointment as part of the transfer
       pack you were given?  That is what Mr Williams says at
       paragraph 29 of his statement {C2/9/6}.  You don't need
       to turn it up, I am just putting that to you.
   MR JUSTICE FRASER:  I think we do want to turn that up.
   MR CAVENDER:  Okay, let's turn it up.  Paragraph 29.  If you
       go to page 5 of the witness statement you will see that,
       where Mr Williams says:
           "I am aware from my recollection and from refreshing
       my memory from disclosed documents that the transfer
       pack contained a standard set of documents, which
       included amongst other documents ..."
           And then he lists them.  We have the Serv 135, 29.1,
       ARS 110, both of which we have been through, and the
       subpostmasters contract.  So he seems to --
   MR GREEN:  My Lord, can I just -- your Lordship picked up
       the point I think.  There is a difference between
       Mr Williams saying "would have" and Mr Williams
       saying --
   MR JUSTICE FRASER:  I am aware.
   MR GREEN:  I am sorry.
   MR JUSTICE FRASER:  I am just waiting for Mr Cavender to put
       the question to Mr Bates.
   MR CAVENDER:  I suggest to you that in accordance with that
       practice, a part of the transfer pack you were given the
       SPMC as well.
   A.  No, I was not, my Lord.
   Q.  Sticking with this theme and going to your witness
       statement, if we go to paragraph 106/7 {C1/1/24}.  Read
       106 and 107 to yourself first before I ask you questions
       to remind yourself what you have said.  (Pause)
           In fact to 109 as well.  Read down to 109.  (Pause)
           Perhaps finishing at 110, just to remind yourself
       how it finishes off:
           "It was the first time I was given the SPMC terms."
           Is this right: the first time you got sight of the
       SPMC was at the end of August 1999 as a result of
       a query you raised about holiday entitlement?
   A.  Yes, that is correct.
   Q.  Can I take you, please, to bundle {E1/17/1}.  This is
       written a month or so before, at the beginning of
       August.  Particularly I want you, if you would, to read
       the fourth paragraph.  (Pause)
           This is a month or so before you say you got your
       contract.  What you are saying is you consulted your
       contract and section 4 of it, absence on holiday,
       holiday substitution allowance, and you say:
           "Unless it is hidden away somewhere else in
       the contract, there is no mention at all of any
       outstanding holiday being lost of not taken within the
       holiday cycle.  The whole section on holidays is not
       only very wordy but is extremely vague in its content."
           Do you see that?
   A.  I do.
   Q.  What I suggest to you, you could not have written this
       letter some month or so before you say you got your
       contract without having your contract in front of you?
   A.  We have already seen some sections out of that, what was
       later known as the SPMC.  It was in one of the previous
       documents we have looked at.
   Q.  Let's look at the contract, shall we {D2.1/3/20}, the
       section called "Absence on Holiday".
   A.  That is not what I am referring to.
   Q.  Can we look at it, please.  Page 20.  There are eight
       clauses there.  Do you see that?  Dealing with absence
       on holiday under section 4.  Can you agree with me that
       that is quite a wordy clause?
   A.  Yes.
   Q.  You say that in paragraph 106 of your witness statement
       {C1/1/24} you were given a summary of how to apply for
       absence and that is what started this enquiry.  106.
   MR JUSTICE FRASER:  Just before you go on to that, though,
       the witness said in answer to your penultimate question
       that that document you just showed him wasn't the one he
       was referring it in his letter.
           Which document were you referring to?
   A.  It was one we were looking at earlier, my Lord.  It
       was -- sorry, I don't have the reference.
   MR JUSTICE FRASER:  You can't be expected to have the
       reference.  Just tell me what the document was.
   A.  It was -- it was one of those which I think I signed on
       8 May, one of the ones we were looking at previously.
       It had -- I think it also had in the point about
       section 12(12) --
   MR JUSTICE FRASER:  Was it the extracts document?
   A.  It might have been the extracts document.
   MR JUSTICE FRASER:  Well, either counsel will pursue that in
       due course but I just wanted to know which document you
       were referring to.
           Mr Cavender, back to you.
   MR CAVENDER:  So if I understand this right, Mr Bates, you
       are saying that the document is the Serv 135 document.
       Let's go back to that then {E1/9/2}.  That is where --
       the place it is mentioned, yes?
   A.  Yes, it is.  Correct.
   Q.  I suggest you couldn't have got the reference in your
       letter to it being "wordy" from that small extract.
       That is the only place we find it in the documents we
       have been through so far.  What I suggest to you is that
       doesn't begin to explain the comments in your letter
       that you consulted your contract and the whole section
       on holidays:
           "... and the whole section on holidays is not only
       wordy but extremely vague."
           I suggest to you that you could only use those words
       in describing this obligation if you had the contract in
       front of you, not just the extract on page {E1/9/2}.
       Would you like to comment on that?
   A.  I have no comment.  This is what I used.  It was
       section 4 which I used for the basis of that letter.
   Q.  Why do you say, looking at the letter {E1/17/1} --
       return to that, please.
   A.  Because it was confusing.
   Q.  Look, please, at your letter again.  You also say:
           "... and unless it is hidden away elsewhere in
       the contract ..."
           Again which suggests you are looking at a longer
       document, not a two-page Serv 135.  Does that help you
       remember that you must have had the contract when
       writing this letter?
   A.  I did not have the contract at the time of writing the
       letter.  Why I thought it was wordy, I have no idea at
       this time.
   Q.  So where else in the two-page Serv 135 may it have been
       hidden, to your way of thinking according to your
   A.  But there were more documents I had and it may well have
       been in any of the other documents.
   Q.  Are you now saying you thought the Serv 135 was your
       contract, not the two-page document?  Is that where you
       are getting to?
   A.  I thought there was an original document, the original
       contract, and then I thought there were loads of extra,
       if you like, supplementary additions to the contract or
       ways of working or ways we were expected to work, which
       were basically contractual in that sense.
   Q.  Because if we look at the two-page document which you
       say is your contract, we see no reference, do we, to the
       detail of that term at all?
   A.  Sorry.
   Q.  The two-page document which you say is your contract
       doesn't mention the detail of section 4 "Absence on
       Holiday", does it?
   A.  No.
   Q.  No.  So when you refer to "elsewhere in the contract",
       what document are you referring to?
   A.  It is probably just a general remark to cover all
       documents that I had.
   Q.  In your witness statement at paragraph 81 you say you
       regarded the Serv 135 document as instructions
           "While I see that it refers to 'extracts' from a
       contract, and refers to what are described as
       'sections', I did not take this at the time to be
       anything other than yet another document containing
       Post Office instructions."
           So you are now saying when you wrote your letter you
       regarded this as the contract, are you?
   A.  Yes, I -- I did, I mean, I can understand from any
       organisation there is a contract and then there are ways
       of operating and procedures and documents that support
       all that, and I just thought it was additional documents
       that were in support of it.  It was all very disjointed.
       All the time there were documents left, right and centre
   Q.  Looking backwards then, in terms of how you regarded
       your contract, can we go to {E1/39/1}, a letter from you
       on 15 May 2003.  You have been referred in the second
       paragraph to section 12 of the contract.  In the fifth
       paragraph you say:
           "As we are talking about matters contractual,
       I would also draw attention to item 4.5 and reference is
       also made in 4.4 of the Conditions of Appointment ..."
           You don't say anywhere there: well, by the way
       I didn't get this contract for some 18 months after
       I was appointed, do you?
   A.  I didn't realise I had to.  I had received it by then.
       I had received a photocopy of it.
   Q.  Yes, but you don't see anywhere there anything saying:
       by the way also -- because at this stage the gloves are
       off, I suggest.  And in fact I think at the --
   A.  My contract hadn't been terminated at this point.  I was
       just trying to -- as a small businessman, I was trying
       to protect my position.
   Q.  At the end of that letter we see you actually mean to
       make a claim against Post Office.  If, in fact, you had
       been operating without a contract and you said you
       weren't governed by a contract, which is what you now
       say, isn't this something we would see in this letter?
   A.  I don't know, is the answer.
   Q.  In the second paragraph you say -- refer to section 12
       et cetera.  You rightly point out:
           "I agreed these terms and I can confirm I will
       gladly make good any losses ..."
           You are not saying: I didn't agree them and I didn't
       have it, which is what you are saying now.  You are
       actually saying you did agree them.  What I am saying to
       you is it is rather odd if it is true you didn't have it
       and therefore it wasn't your contract, you didn't
       mention it.
   A.  I am sorry, could you -- what are you asking me?
   Q.  Why in what is quite a hostile position at this stage,
       the gloves are off, you are threatening the claimants
       letter, if you hadn't received your contract, so it
       wasn't part of the contractual arrangement with
       Post Office, when they refer to "contractual terms" in
       this, which they do, why don't you say: what are you
       talking about?  I was never given this contract.  It has
       no relevance to me.
   A.  This letter is about something different.  This letter
       is about liability for losses and this is about -- this
       was the problems we were having with Horizon and this
       was the way I was saying that, if I owed them
       £1 million, you would ask me to pay it the following
       day.  Full stop.
   Q.  Read the first paragraph to yourself.
   MR JUSTICE FRASER:  I tell you what, Mr Bates, take a couple
       of minutes and actually just read the whole letter.
   A.  Can I see their letter dated 22 May 2003?
   MR JUSTICE FRASER:  Yes, but just take a couple of minutes
       and just read your own letter.  (Pause).
   A.  Thank you.
   MR JUSTICE FRASER:  Now we will call up the letter of 2 May.
   MR CAVENDER:  That is {E1/37/1}.  It is chasing you about
       losses.  (Pause).
   MR JUSTICE FRASER:  All right.
   A.  Thank you.
   MR JUSTICE FRASER:  Just do remember, Mr Bates -- and I know
       it is a perfectly understandable natural reaction when
       you have been involved as long as you have -- that you
       are here just to answer Mr Cavender's questions.
   A.  Thank you, my Lord.
   MR JUSTICE FRASER:  Mr Cavender.
   MR CAVENDER:  In light of the letter of 2 May, it is getting
       contractual and it is getting contentious now, isn't it,
       between you and Post Office?  Is that fair?
   A.  It is becoming a concern, yes.
   Q.  And they are referring to terms and conditions, the
       SPMC, and instead of you saying: well, actually they are
       no part of my agreement with you because I only got them
       some 18 months after I was appointed, what you do
       in fact is correct a typographical error.  First
       paragraph, yes?  That you acknowledged them on
       31 March 1998 and "not 31 March 2003 as stated in your
       letter", do you see that?  {E1/39/1}.  Yes?  The top
       paragraph.  Post Office are putting forward
       section 12(12) to you --
   A.  Yes, I can see that, yes.
   Q.  What you are saying is correcting their typographical
       saying, no, no:
           "... I presume the Terms and Conditions of my
       Contract of Service that you refer to are those
       I acknowledged on 31st  March 1998 and not 31st March
       2003 ..."
           Pausing there, if in fact you hadn't received your
       SPMC until 18 months after you had taken up your
       appointment, which is your case --
   A.  Yes.
   Q.  -- why didn't you mention that here or anywhere in this
       letter?  Because that would be your first point; what
       are you talking about clause 12(12)?  It doesn't bind
   A.  No, I think I had gone beyond that point by then.
       I knew about the contract at that point, the SPMC
       contract, and I knew Post Office were holding me liable
       under it, with everything they were chasing me, all the
       documentation and things like that.  So I didn't --
       I couldn't see any reason for doing that at the time.
   Q.  There may have been a very good reason, the reason you
       are trying to do so now; you were here trying to contest
       the liability.  If you really thought that you hadn't
       received your contract, it wasn't part of your contract
       and agreement that you acknowledged on 31st March 1998,
       you wouldn't correct their typo, you would?  You would
       say: well, I assume you are referring to that document
       I signed but, by way there, was no SPMC with it.
   A.  No, I mean, I -- I wasn't preparing documents to come to
       court today.  I was writing letters at the time to deal
       with issues at that time, and what was important at that
       time was trying to correct the problems we had with
       Post Office.  I suppose the management issues between
       ourselves, so we could just get on.  I didn't know they
       were going to terminate my contract.
   Q.  If you look at the letter, 2 May letter.  {E1/37/1}.  It
       is pretty clear, isn't it, that your contract was at
       risk?  You say as much in the last paragraph.  Things
       were getting serious at this stage.
   A.  Yes, but we were also having discussions with --
       I think -- was this written by Mike Wakley -- the second
       page is missing -- who was my retail network manager at
       the time.  Yes, it was.  We were still having
       discussions, and it was still about how to correct it
       all.  They were still wanting me to put money in and to
       address the whole situation.  I was just really holding
       out on that, hoping I didn't need to because it didn't
       seem reasonable.
   MR JUSTICE FRASER:  Understood.  I think we have gone about
       as far as necessary ...
   MR CAVENDER:  My Lord, yes, I am about to move on.  On
       a similar point though, at paragraph 61 of your witness
       statement {C1/1/14}, you give some hearsay evidence here
       about your recollection of the participation in the
       Complaint Review and Mediation Scheme.  It is just not
       right to say, is it, that something approaching half of
       those participating in the scheme didn't receive a full
       copy of the SPMC prior to appointment?  That just isn't
       right is it?
   A.  It is right, yes.
   Q.  Isn't this another example of a campaigning approach?
       This is what you would like to put forward?
   A.  Those figures that -- that figure or that proportion
       that I mention here, as part of the initial mediation
       scheme, one of the things that was produced by the
       independent investigators was a weekly or fortnightly
       chart on the cases, an update for the whole of the
       working group, which I sat on.  Under that there were
       a number of headings for the types of issues that
       claimants were alluding to in their statements, and
       there was a column for those that hadn't received
       contracts yet, the full SPMC contract book in there.
       Off the top of my head, at the end of the scheme of when
       there were about 139 or 137, of that order, something in
       the order of 62 had stated they hadn't received
       subpostmaster contracts at the time.  The 114 -- so,
       yes --
   Q.  I don't accept that.  But in terms of the way you acted
       in terms of -- from August 1999, when you say you got
       the contract.  Yes?  The photocopy?
   A.  Yes.
   Q.  Until you were terminated in November 2003?
   A.  Yes.
   Q.  So four years or so?
   A.  Yes.
   Q.  Would I be right to think that, even on your case, you
       operated under the terms of the SPMC?  You adopted it
       and you considered yourself to be governed by it and for
       Post Office to be governed by it, is that right?
   A.  I felt I was already committed then.  I didn't really
       feel I was in a position to challenge it.
   Q.  But we see in your letter at {E1/17/1} you rely on
       certain clauses of that contract.  You have seen that
       letter already?
   A.  Yes.
   Q.  So would it be right to think -- I can show you
       others -- that you adopted it by conduct at the very
       least from August 1999?
   A.  From that point onwards I presumed I was bound by it.
       Whether or not I was, I suppose is to be decided but --
   Q.  Yes.  Go to {E1/41/1} --
   A.  But it was very one-sided, that.
   Q.  Can we just finish this point?  {E1/41/1}.  4 June 2003:
           "Unlike Post Office Limited, I am fully compliant
       with the terms of my contract ..."
           And you will gladly make good any losses in the
       manner specified in section 12(12).  So it seems you
       considered yourself to be governed by and were quoting
       terms of SPMC.  Is that fair?
   A.  I was quoting them in there and also the fact that they
       weren't abiding by those terms that they had stated were
       in the contract.
   Q.  Moving forward then.  Horizon variation.  I think it is
       your case there was a variation, presumably of the SPMC,
       is that right?  When Horizon was introduced to your
       branch in October 2000.
   A.  Sorry?
   Q.  Your case is that the introduction of Horizon effected
       a variation to your contractual arrangement.
   A.  Yes.
   Q.  Horizon was introduced I think on 2 October 2000 into
       your branch?
   A.  Yes.
   Q.  Does it follow, therefore, that that was a variation, on
       your case, to the SPMC?
   A.  It ...
   MR JUSTICE FRASER:  Are you asking the witness as a matter
       of law?
   MR CAVENDER:  No, in terms of his understanding of what was
       going on at the time.
           Mr Bates, you are saying it was varied at that time.
   A.  I probably didn't give it a great deal of thought.  All
       I know is they were bringing in an IT system without
       doing anything to redress or bring in a new contract to
       cover it.
   Q.  As I think you know, Post Office doesn't accept this was
       a variation of your contract.  But on the hypothesis
       that it was a variation, yes?  On the basis it was, I'm
       going to ask you a couple of questions.  Do you accept
       that a reasonable person in your position would have
       expected that Horizon would be a reasonably reliable IT
       system?  Is that a fair thing that the reasonable person
       would have expected?
   A.  I would go further than and I would say it would have
       hoped it was and I would have looked forward to having
       a good comprehensive IT system in there.
   Q.  And the reasonable person in your position would have
       expected to be provided with such training that was
       necessary on that system?  Is that fair?
   A.  I certainly would have hoped we would have received
   Q.  And similarly that a reasonable helpline would be
       provided in the event of difficulty; that would be the
       expectation of a reasonable person too, is that fair?
   A.  Yes.
   MR CAVENDER:  We are going on to termination, my Lord.
       I don't know if you want to finish early and start
   MR JUSTICE FRASER:  I think we will do that.  I think that
       is a good idea.  Just one point.  Mr Bates, you have
       a slightly longer break because we are coming back at
       1.55 pm.  The same rules apply as they did in the short
           Just one admin point for both counsel; this witness
       referred in today's transcript at {Day2/87:20} and the
       following ten lines to some sort of a summary sheet
       arising out of -- from where he got his figures.  It
       might not be on Magnum.  If it is, can I have
       a reference by the end of the day where it is.  If it
       isn't, then maybe just give me a copy of it on Monday.
       If it is enormous, I am only interested in the part that
       has the summary columns.
           Thank you all very much.  We will say 1.55 pm.
   (12.55 pm)
                     (The short adjournment)
   (1.55 pm)
   MR CAVENDER:  Good afternoon, Mr Bates.  Before the short
       adjournment you were giving some evidence -- before
       I move on to termination, about your recollection of
       Second Sight and how many people received contracts.  Do
       you remember?
   A.  Correct, yes.
   Q.  We have done some research over the break.  The position
       is, and we will produce a spreadsheet that shows this,
       that I think it was some 62 of the 150 applicants to the
       scheme ticked a box called "Issues with Contract".
   A.  I know it is 150 that originally applied for the scheme
       but I think it was only 130-something that progressed
       through the scheme.
   Q.  You may be right, there were various stages.  I'm just
       dealing with order of magnitude at the moment.  So there
       are 62 or, rather, 63, I think you said, that had issues
       with contract.
           My Lord, we will add this spreadsheet to the bundle.
       It is in column AA when you get there.
           We do have, though, the narrative of Second Sight as
       to what issues with contract, what issues that covered,
       and we find that in bundle G, tab 36, 12. {G/36/12}
           If you look at the top of the that page,
       paragraph 6.1.  So this is the narrative of Second Sight
       to what those 62 were involved in:
           "The contract between Post Office and its
       subpostmasters lies at the heart of many of the issues
       this ... This section deals with two separate issues.
       First, the potential impact on subpostmasters of some of
       the terms and conditions set out in the contract and,
       secondly, issues relating to the notification to
       subpostmasters of the terms ..."
           What I suggest to you is pretty clear from that, of
       the 62, some would have had both of the issues, some
       would have had one of those issues.  So it is not quite
       so simple as to say all 62 said they didn't receive the
       contract.  Do you see the point?
   A.  I see the point you are trying to make, but I can only
       recall it as I recall it.  It may be accurate or not.
   Q.  I will leave that there.
           I am going forward to termination now.  You were
       terminated on three months' notice for failing to
       account properly, is that broadly right?
   A.  I was terminated under a clause which I would have to
       look up.  It was -- I was rolling over the account,
       which they wanted me to stop doing, which caused
       a problem from my perspective as I didn't know what
       shortages were being incurred weekly or were rolling
   Q.  Can we just -- before we enter the detail of this.
       Rolling over, you have a choice, don't you, either to
       pay any loss at the stage of the balancing at the end of
       the week?
   A.  Right, yes.
   Q.  That is a possibility.  And the other is to get
       authority to put it in the suspense account.
   A.  At that time you could, yes.
   Q.  So they were the two options you had?
   A.  Correct.
   Q.  In terms of the chronology, can we go to bundle
       {E1/32/1}.  We see a letter of 13 February 2002.  We see
       there -- are you familiar with this letter?
   A.  Yes, I am.
   Q.  So Post Office have asked you to reset the office total
       to zero after each week's balance, and then what you do
       is outline various issues you have about security of
       data and other things and about keeping a record.
           At the end of the third paragraph:
           "Although at one point the information does appear
       on the screen, that information is lost --"
   MR JUSTICE FRASER:  Where are you reading from?
   MR CAVENDER:  Third paragraph.
   MR JUSTICE FRASER:  The one beginning:
           "However, I am concerned ..."
   MR CAVENDER:  Correct, the sentence:
           "Although at one point ..."
   MR JUSTICE FRASER:  "Although at one point the information
       does appear on the screen [it] is lost the moment we
       'roll over'."
   MR CAVENDER:  And then you deal with error notices.  At the
       bottom you say:
           "Referring back to your original request ..."
           Ie, putting it to zero.
           "... I will gladly conform to your requirement."
           But you make your position clear about derived
       figures and report writer.
           So what you are being told here is: can you account
       properly, please.  Namely, put it to zero, follow the
       manual which says if you want to put it in suspense and
       get authority you can do that, can't you, and what they
       are saying is: can you please do that?  And you said:
       yes, I will conform to your requirements, but you have
       issues more generally.  Is that a fair summary?
   A.  Yes.
   Q.  In terms of the -- just so we are clear in terms of what
       the manual said at this time, for the court as much as
       anything really, it's {F4/5/1}.  This is a "Balancing
       with Horizon" document with which you are familiar, I am
       guessing.  Am I right?
   A.  Yes, I would say, possibly.
   Q.  Two pages.  Go to page 75 of that, please {F4/5/75}.
       Heading, "Dealing with Losses - Other Offices".  Two
       paragraphs down:
           "If a loss is discovered on balancing a stock unit,
       it should be made good directly after rollover to the
       next CAP.  If the loss is the result of a known error,
       for which an error notice will be issued, the amount can
       be moved to the suspense ..."
           Et cetera.
           And then going over the page, if you would,
       {F4/5/76} at the bottom, "Obtaining authority to hold
       a loss in suspense", do you see that?
   A.  Yes, I see it.
   Q.  "If a loss is moved to the suspense account, the retail
       network manager must be contacted ...  The day after the
       balance has taken place to seek permission to hold the
       amount.  Your retail network manager will provide you
       with written authority to hold the loss ..."
           Do you see that?
   A.  Yes.
   Q.  So that was the scheme you were operating under --
   MR JUSTICE FRASER:  Can you just read to the end of that
       paragraph.  It then says:
           "If a compensating error has not been revealed by
       the end of the authority period, the amount must be
       removed from the suspense account and the loss made
           Does that mean paying money in?
   A.  It would do, yes.
   MR JUSTICE FRASER:  And would it be the same -- would the
       authority period be the same in all cases or would it
       depend on what authority the retail network manager gave
       you as to how long the authority period would be?
   A.  I don't know.
   MR JUSTICE FRASER:  You don't know.
   MR CAVENDER:  Because in reality, in answer to my Lord's
       question, and we will see it in a moment, you held
       losses in the suspense account for quite a long period,
       is that right?
   A.  That is correct.
   Q.  For a period of -- we'll go through it -- and eventually
       it was written off?
   A.  Yes.
   Q.  So you have every opportunity to dispute it, is the
       point, don't you, before you have to pay it?
   A.  I did dispute it.
   MR JUSTICE FRASER:  The point that is being put is you had
       every opportunity.
   A.  Yes, I did.  I took it, yes.
   MR CAVENDER:  An example of that is at {E1/30/1} where we
       see a letter from you, 7 January, to Post Office:
           "As you are aware the cash account for this office
       is still showing an amount of £1041.86 in the suspense
       account.  This cumulative figure was placed in
       the suspense account towards the end of 2000 ..."
           So that had been in the suspense account for a long
   A.  Yes, it had.
   Q.  You had authority to do that and you were disputing it
       in the meantime?
   A.  Yes, and I have been asking to clear it up for a couple
       of years.
   Q.  What happened too, when that was in the suspense
       account, was that there were checks -- the Post Office
       tried to help you, didn't they, work out what had
       happened.  They came to your branch.  Go to {E1/26/1},
       second paragraph:
           "Unfortunately, neither the visits from Selwyn Berry
       and Ki Barnes nor the pension allowance checks carried
       out ... revealed specific reasons ..."
           So the Post Office were trying to help you work out
       how that loss had occurred?
   A.  Yes.
   Q.  Ultimately -- going to the end of the story -- we see
       from {E1/33/1} that the amount was written off.  Page 1.
       That is how that loss was dealt with, am I right?
   A.  Yes, it was.  Yes.
   Q.  I suggest to you that you knew how the system worked,
       ie if you had a shortfall that you wanted to dispute and
       didn't want to pay you put it in the suspense account,
       but you required the authority of the Post Office to do
       that.  You then had your debate about it and tried to
       resolve it.  That was the system.  That was the system
       you had operated in relation to this amount of money, is
       that fair?
   A.  Yes.
   Q.  Yes.  Then if we go to {E1/36/1}, so forward in time.
       We have a letter of 16 April 2003, a letter from you
           "... confirming our conversation ... losses and
       gains at our office which have always been rolled over
       since the installation of Horizon."
           Just pausing there, that doesn't really fit, does
       it, with the letter of a year before at tab 32, page 1
       {E1/32/1} where you said you would gladly conform to the
       requirements of Post Office, yes?
   A.  It all stems from my original letter dated
       19 December 2000 and the fact that those issues had
       never been resolved, nor had I had directions at that
       time when I had requested them.
   Q.  But my point is a simpler one.  Can you concentrate on
       my question, which is that here you are saying in
       the first paragraph that:
           "... losses and gains ... always rolled over since
       installation of Horizon ... may not be aware of this
       practice ..."
           I am struggling to fit that into the letter of
       a year earlier, 13 February 2002, tab 32, where you are
       agreeing to set the balance to zero, yes?  And either
       pay it or put it in the suspense account with authority?
   A.  Can I see that letter again, please?
   Q.  Yes, it's at {E1/32/1}.  The bottom paragraph.
   A.  Yes, as you state:
           "... I will gladly conform to your requirement ..."
           Which is -- which I would gladly do so.  But I must
       make it clear that my position with regard to
       Horizon-derived figures has not and will not change
       until such time as I have access to the data and report
       writer package with adequate training being provided.
   Q.  What I am suggesting to you is the debate here -- what
       Post Office was saying was: we want you to account
       properly, which means follow the system in the manual,
       which means you balance to zero at the week end of
       period, and if you have a disputed amount you put it
       into the suspense account, but you need the authority,
       we saw in the manual, of Post Office to do that.  Yes?
   A.  Yes.
   Q.  That was the debate between you.  And what the letter on
       16 April {E1/36/1} seems to be saying is you are
       no longer going to do that, you are simply going to roll
       them over without seeking authority of Post Office.  Do
       you see what I am saying?
   A.  I do.  But I had serious concerns over the accuracy of
       those figures.
   Q.  But if they are going in the suspense with authority,
       that is the accounting system, your concern could be
       expressed about the figures whilst they are in
       the suspense account, couldn't it?
   A.  But the suspense account needs -- two things.  The
       suspense account needs addressing, it cannot sit there
       forever, and they -- my experience was that Post Office
       never seemed to investigate these things, they just used
       to let them sit there until such time as you had to pay
   Q.  Actually, your experience we have just seen in relation
       to the £1,300, they did sit there for a while, you
       disputed it for a while, Post Office came to
       investigate, eventually it was written off.
   A.  But they never found the source of the problem.
   Q.  No.  But in terms of accounting -- I'm not looking at
       the causes of the loss here, I'm concentrating on the
       accounting treatment and your duties as an agent.  That
       is what I am focusing on.
           You knew what those duties were, which was to set to
       zero at week end.  Any discrepancy you didn't want to
       settle immediately you would transfer into suspense with
       the authority of Post Office.  You would then have your
           And what I am suggesting is what you are saying in
       your 16 April 2003 letter {E1/36/1} is you are not going
       to do that, you are just going to roll them over.
   A.  Because it was more accurate from my position to do so.
   Q.  Accurate.  You had a set of instructions, yes?  Which
       I have just shown you as to what you were required to do
       from an accounting point of view.  Yes?  I'm not talking
       about paying, I am talking accounting for them by
       putting them in suspense and getting the authority of
       Post Office.
   A.  There was a system.  Post Office had a system to deal
       with these, yes.
   Q.  And what your letter of 16 April 2003 is doing,
       I suggest {E1/36/1}, is saying: I'm not going to do
       that, I am just going to roll them over.  I am entitled
       to roll them over.  I'm not going to comply with your
       accounting system.
           Am I misreading that letter?  That is how I read it.
   A.  No, that is quite right, I am refusing to do so, but
       I am refusing to do so two and a half years after
       a problem which Post Office won't address.
   Q.  In terms of the system, it worked okay for you before
       because you had put this amount of £1,300 into the
       suspense account with authority, you had debated it,
       Post Office had investigated it, and they couldn't find
       the cause so they wrote it off.  Why not follow the same
       procedure going forwards?
   A.  That was one single issue that we were dealing with at
       that time from a far bigger problem that had resulted on
       that balance where that figure had actually came from.
   Q.  Because you knew, didn't you, that Post Office needed to
       know about a shortfall as soon as possible in order to
       be able to investigate it, is that right?
   A.  Yes, but every time I raised a shortfall they weren't
       investigating them.
   Q.  But the position is if you had raised a shortfall with
       the Post Office to seek authority to put it in the
       suspense account, they would then become aware of it,
       wouldn't they?
   A.  They were well aware of the position of what was going
       on and the problems that were being experienced and they
       were ignoring them.
   Q.  If you had followed the correct accounting procedure of
       putting a disputed amount into the suspense account and
       seeking Post Office authority to keep it there,
       Post Office would thereby be aware of (a) the fact there
       was an amount of money you disputed and would thereby be
       able to investigate what was going on, wouldn't they?
   A.  But I did not know that figure was accurate, and that
       was what I was asking for, accurate figures, or at least
       a way of at least exploring whether those figures were
   Q.  By not accounting in accordance with your contract, what
       you were doing was depriving Post Office of the
       opportunity of investigating those shortfalls.
   A.  Post Office had every opportunity to investigate all the
       shortfalls and all the problems that we had but they
       never did.
   Q.  Because you must realise the longer the shortfall goes
       on, and it is not one amount of money, it is
       incremental, isn't it?  After week one you might have
       £50, week two £200, week three and so on, am I right?
   A.  It can vary.  It could go up, it could go down.
   Q.  The longer you leave it and the more cumulative it is,
       the more difficult it is for anybody retrospectively to
       unparcel it all in order to identify cause, am I right
       about that?
   A.  If people were actually investigating I would say yes.
   MR JUSTICE FRASER:  Let me just -- Mr Cavender is putting
       this to you in the context of the example he has given
       you of one particular amount that was eventually written
       off.  What was your general experience of how the
       suspense account worked?  Just talk me through it on
       a notional basis.
   A.  It's a long time ago, but --
   MR JUSTICE FRASER:  Obviously.
   A.  I think at that time it was probably easier to use the
       suspense account than I heard it later became.  So there
       was more flexibility in it.  But just adding something
       to the suspense account didn't resolve any problems or
       issues going forward and you didn't know if it was
       a genuine figure.
   MR JUSTICE FRASER:  Understood.  So your choice, I think, if
       I understand your evidence, your choice when a shortfall
       occurs is you either roll it over to the next week
       which, let's assume it is a negative, that means you
       have to put some money in the system, or it goes in
       the suspense account.
   A.  Yes.
   MR JUSTICE FRASER:  If it goes in the suspense account you
       are saying it was more or less ignored.  Or, if it
       wasn't, the issues behind why it occurred were never
   A.  That is correct.
   MR JUSTICE FRASER:  Mr Cavender has put to you an example
       where one were written off.  If it weren't written off,
       eventually you would then, what, have to pay it?
   A.  Yes.  In fact they actually, even with that figure we
       are talking about now, I think that went on for a couple
       of years at least, chasing that.  It was me that was
       chasing them to try and resolve it, it wasn't them
       chasing me.  At one point in one of the letters actually
       from Post Office it said -- I think it was one we have
       looked at, it said that two people had been to help and
       couldn't find anything and they wanted to know how I was
       going to pay it or resolve it.  That wasn't an answer to
       me really.
   MR JUSTICE FRASER:  All right.
   MR CAVENDER:  Can I ask you one question arising out of
       my Lord's question, just to get it right, because I
       think on the transcript the question from my Lord may
       have been inaccurate in one respect.
           If you pay the amount, yes, at the end of
       the current period you don't roll it over then, do you?
   A.  No, you would accept it as --
   MR JUSTICE FRASER:  Did I say that?
   MR CAVENDER:  My Lord, yes.
   MR JUSTICE FRASER:  Whereabouts?
   MR CAVENDER:  At {Day2/105:20} and after.  (Pause)
   MR JUSTICE FRASER:  Well, that is certainly not my
   MR CAVENDER:  Anyway, we have confirmed it, my Lord, now, in
   MR JUSTICE FRASER:  So if you put money into the system you
       are not rolling it over.
   A.  You are not rolling -- correct, my Lord.
   MR JUSTICE FRASER:  Or you roll it over and it just
       becomes --
   A.  A rolling figure.
   MR JUSTICE FRASER:  -- a rolling negative or a rolling
   A.  Correct.
   MR JUSTICE FRASER:  Or it goes in the suspense account.
   A.  Correct.
   MR JUSTICE FRASER:  If it goes into the suspense account it
       will either be written off, that is one option, or it
       comes to the end of the accounting authority period and
       what happens then?
   A.  You have to pay it.
   MR JUSTICE FRASER:  Right.  Have I missed off any
   MR CAVENDER:  My Lord, you have created one that doesn't
       exist, I think.
   MR JUSTICE FRASER:  That is entirely possible.
   MR CAVENDER:  So when you roll it over, in your language,
       you are putting it in a suspense account, aren't you?
   A.  No, I'm not putting it in the suspense account.  I am
       rolling it over at the office.  The figure.
   MR JUSTICE FRASER:  It is different from the suspense
   A.  It is not the suspense account.
   MR CAVENDER:  Sorry, so explain to me what rolling over does
       then.  I thought we had agreed there are two things you
       do: you pay it in terms of the manual, yes?  The manual
       says either you pay it or you put it in the suspense
       account with authority, yes?  That is what the manual
       says, I have shown you that.
   A.  Yes.
   Q.  So explain to me, please -- sorry, my Lord, it's my
       mistake, obviously I didn't realise there was a third
       way.  You're rolling it over.  So what are you actually
       doing in accounting terms?
   A.  You're just ignoring the figure really and moving on to
       the next week.  So you are accepting the figure there
       that it is going through --
   Q.  The wrong figure?
   A.  You're accepting but you're not adjusting it.  You are
       not dealing with it, as such.  You just accept it as
       that is the figure, and then you're starting from there
       the following week with that as a starting --
   Q.  So let's look at an example.  Let's say there is
       a deficit of £500 cash --
   A.  Okay.
   Q.  -- at the week end.  You have said in the letter we have
       seen that you were going to balance to zero, and you
       said you will follow the requirements --
   MR JUSTICE FRASER:  Let's go to the letter actually.
       I think the one of 13 February 2002 is at {E1/32/1}.
   MR CAVENDER:  Exactly.  So it's the first line really,
       Mr Bates:
           "Given your recent request for the office total to
       be reset to zero after each week's balance ..."
   MR JUSTICE FRASER:  Hold on a second, Mr Cavender, because
       that is also dealt with at the beginning of paragraph 3
       which uses the same words, "by paying money in or taking
       money out".  You use the expression "zeroing the
       system".  My understanding is that isn't rolling it over
       but maybe I am wrong.
           Just take a moment and read the letter.
           I'm not trying to confuse you, I would just like to
       be sure everyone is using the same words for the same
           You have read the letter, Mr Bates?
   A.  Yes.
   MR JUSTICE FRASER:  Mr Cavender is now going to explore it
       with you in sequence.
   MR CAVENDER:  So what you had been doing, it seems, in
       advance of this letter, or Post Office's concern was
       that you weren't resetting to zero after each week, yes?
   A.  That is correct.
   Q.  You said at the end of the letter you would gladly
       conform to this requirement?
   A.  I did.
   Q.  In terms of the manual, what you are meant to be doing,
       yes?  You are meant to be resetting to zero at the end
       of the week, yes?  If you have any concerns with any
       amount by reason of reducing it to zero, so you have
       a balance, you put it in the suspense account and you
       get authority to keep it there and you dispute it, yes?
       So far so good?
   A.  That was an option, yes.
   Q.  What you did, is this right, is did something else
       called rolling it over?
   A.  Yes.
   Q.  Can you tell me what that was where, for instance, at
       the end of the balancing period you have a deficit of
       £500 cash, so how would you roll that over?  You are
       meant to set it to zero but you have a deficit of 500.
       How are you going to roll it over?
   A.  First off, it is a long time ago so I am struggling to
       recall that.  It was all well and good when I wrote
       these letters, it was quite fresh in my mind --
   MR JUSTICE FRASER:  I have got that point.
   A.  Thank you, my Lord.
           I think what I was concerned about was if I put
       money in -- if, as you say, it was £500 short -- well,
       to start with, if it was £500 short I probably wouldn't
       accept it.  If our cash account balance had shown
       £500 short I would seriously want to know where that had
       come from.  But if it was, say, £60 or £100 short at the
       end of the week I would roll that figure through,
       basically I would take -- accept that as being short or
       over £100 for that week.
   Q.  Pausing there.  Would you put that money in by cash or
   A.  No, I would not.  I would not put that money in.
   Q.  Pausing there.  You would be making a declaration to
       Post Office, would you, that was inaccurate?  You would
       inflate your cash by £100 --
   A.  No, no.  I would not change the figures, I would show
       accurate figures of what the system had produced.
   Q.  Right, okay.  I'm --
   A.  I'm not saying the figures themselves were accurate but
       I wouldn't change them.  Then the following week, the
       following cash account week, it might be up or down £50,
       £30, £100 or whatever, and that would then be added or
       subtracted away from that £100 of the previous week.
   Q.  Let's assume it was £500 week one, £500 week two, £500
       week three and so on.  So at the end of week four it
       would be £2,000 you would have done this to, is that
   A.  If you are starting to talk about a 2,000 figure then
       there are serious problems and you'd need to be looking
       at other things there.
           I wouldn't really carry on rolling huge amounts
       through.  These are nominal amounts that were appearing
       in there within a few -- some of them used to come back
       as transaction corrections after a while or something of
       that nature.  What I was concerned about doing was
       signing off or agreeing or -- that there was a shortage
       over that period by putting money in.  Because I felt
       that was actually -- I was legally accepting that that
       was a shortage of £500.
   Q.  But you weren't, though, were you, because your
       experience was in relation to the first £1,300 we have
       been through and what the manual said, you simply put it
       in suspense and get authority.  You have not accepted
       anything.  It is up for grabs as it was in relation to
       the £1,300?
   A.  The reality of being a subpostmaster is very, very
       different to that, I can assure you.  It wouldn't be so
       bad if people actually dealt with the problems as they
       occurred, but they were left time after time after time
       and you couldn't rely on people to do it.
   MR JUSTICE FRASER:  I now understand, I did anyway.  And
       I have re-read quickly, while you have been explaining,
       the letters you wrote from 9 December onwards and I'm
       fully confident that I understand the process, so it's
       back to you.
   MR CAVENDER:  Moving forward with that process.  You said
       you were going to, in your  earlier letter, put the
       account to zero, but in fact you -- in the process you
       describe in rolling over, you hadn't done that?
   A.  I hadn't done that, correct.
   Q.  So you had gone against that which you had promised to
   A.  No, I said I would do it on the understanding that the
       figures were correct.
   Q.  Moving forward then, but keeping this debate in mind.
       Can we run forward to the audit at the end of your
       tenure, so this is bundle {E1/53/8}.  This is the final
       cash account of your branch, yes?
   A.  Yes.  I didn't agree with it.
   Q.  And there is a deficiency found of £1,227-odd, do you
       see that?
   A.  I see the figure.
   Q.  At this point you were weekly accounting, weren't you?
   A.  That is correct, yes.
   Q.  So am I right in thinking that for a number of weeks
       before this final account, this audit, you had been
       carrying losses, rolling over losses?
   A.  There was -- I had -- there was a rolled over loss
       showing at the office.
   Q.  When was the first time, the loss that makes up the
       £1,227, when was the first time that any pound of that
       was identified by you as a shortfall, something you
       weren't willing to accept?
   A.  I don't accept that figure.  I -- the sort of figure
       I felt the office was running at that time was somewhere
       in the region of £200 to £400.  Deficit.
   Q.  We will come to that in a moment.  When do you say, of
       the £1,200, you started to identify in your weekly
       accounting deficits that eventually formed part of this
       sum or any sum of part of the sum you accept?
   A.  It had been a rolled through figure right from early on.
   Q.  So since your letter when you said you weren't going to
       do it, immediately after you start doing it, is that
       what I am hearing?
   A.  It was around -- it would have been in the December 2000
       period, I suppose, when Horizon first came in, when we
       first had the main problems.  Because I couldn't get
       clarification from the retail network manager of what he
       wanted me to do with it, so I just -- I did inform him I
       was just going to roll it forward.
   Q.  Can we go back, because I don't understand that answer,
       in light of {E1/32/1}, the 13 February 2002 letter,
       where you said you would reset to zero and conform with
       the requirement.  Are you saying, despite writing that
       letter, at no time did you actually do that?
   A.  In that letter of 13 February 2002 the full meaning of
       that sentence is that I would conform with their
       requirement and roll over, but when I had access to the
       data that I and my staff had input and also had a report
       writer and a system that I could interrogate it and find
       out where it had come from --
   Q.  But you were under a contractual obligation to, if you
       had a problem with an amount, put it in the suspense
       account and get authority?
   A.  I had a problem with the system.  I couldn't establish
       in my own mind that the figures were accurate.
   Q.  Putting it in the suspense account wouldn't mean you had
       to pay it.  It would allow you to dispute it, wouldn't
   A.  For a period, yes.
   Q.  Well, for a couple of years, I think, in relation to the
   A.  That was an exception.  I think you will find that is an
       exception to the rule.  I think Post Office's standard
       rule was something about four or eight weeks or
       something in suspense before you had to pay it.
   Q.  So of the loss of the £1,227 in the final cash account
       at {E1/53/8}, when did you first inform Post Office
       about any amount of that shortfall?
   A.  I don't accept the £1,227.61 as --
   Q.  When did you inform them of any part of that amount
       which you do accept?
   A.  There would have been a shortfall showing on my
       accounts, trading accounts, that were submitted every
       week.  So they would have had them.
   Q.  If you had followed the manual that you are
       contractually required to follow and put it in suspense
       and got authority, then Post Office would have been
       aware, wouldn't they, of the shortfall you were
   A.  There were aware of the large shortfall I was carrying.
       I'm not denying that.
   Q.  But they weren't aware of the £1,227.  Ah, this is
       a different figure, isn't it, to the earlier one.  The
       earlier one was waived and -- this is -- the £1,227 is
       a new figure?
   A.  The £1,227 I don't accept.  I see it on there as a final
       cash account audit.  I wasn't present at that audit.
   MR JUSTICE FRASER:  But it is always going to be a different
       figure, anyway, isn't it, from December 2000 onwards,
       Mr Bates?  Is that right or not?
   A.  Yes, I would have thought so, my Lord.
   MR CAVENDER:  Sorry, I don't understand the question you
       have been asked.
   MR JUSTICE FRASER:  Mr Cavender, let's pull up the letter of
       19 December 2000 at {E1/23/1}.  That is the origin,
       I understand, of you notifying them, it's a letter you
       deal with in your witness statement where you explain
       your approach to this matter.
   A.  That is correct, my Lord.
   MR JUSTICE FRASER:  Mr Cavender is putting a figure to you
       of 1,227 and says when did you first notify the
       Post Office of any part of that 1,227.
           Am I right in my understanding, he says he doesn't
       understand but I am pretty sure I understand, that as
       you were operating the Post Office month by month
       between December 2000 and whenever it was closed,
       shortfalls would lead to the figure changing from time
       to time?
   A.  Correct.  Probably weekly.
   MR JUSTICE FRASER:  Thank you.
   MR CAVENDER:  But it was set to zero again once the £1,300
       figure had been written off, yes?  Because when this was
       written off, at that stage it went back to zero.  Am
       I wrong about that?
   A.  You may be.  At that point, which was probably, what,
       two years after -- whatever date that was, when the
       token came through or the authority to write off that
       figure, there may well have been a rolling shortfall
       figure anyway.
   Q.  Oh I see.  That was going in parallel.
   A.  Yes, that is right, yes, and the £1,100 was probably in
       the suspense account and it probably just balanced
       against that.
   Q.  I see.  So it is not precise, we can't be precise.
           But I'm going back to the original question really
       which is you hadn't told Post Office, when you get to
       the final account figure at 53 {E1/53/1}, no amount
       of that had you specifically told Post Office about or
       put in the suspense account.  I think we can perhaps
       agree that?  None of the 1,227.61?
   A.  First off, I don't agree it's 1,227 --
   Q.  I know.
   A.  But ignoring that fact, there would have been a roll
       through figure that had accumulated over the period and
       which would have been showing on my cash accounts.
   Q.  Why do you say you are expecting a shortfall of around
   A.  Because that is what I seem to recall it being at that
       time.  Obviously that was quite some time ago.
       Obviously at that time it was like my final cash
       account, as such, and it did sort of stick in my mind at
       around that figure.
   Q.  I think you say 200 in your witness statement --
   A.  200 to 400.  I know it was a few hundreds --
   Q.  Second Sight, what was that -- when did that first arise
       in your mind?
   A.  It would have been a rolled through figure that had been
       going on for ... however long.  Probably since
       December 2000.
   Q.  Again, you hadn't put any of that in the suspense
       account or got authority in relation to that?
   A.  No, I hadn't, no.
   Q.  Why not?
   A.  Because I was still asking -- in the first instance,
       I was still asking them to resolve the £1,000 and
       whatever it was that was in the suspense account that
       had been sat there forever.  Secondly, I was still
       trying to get them to resolve issues over Horizon itself
       and provide me with the equipment I needed and the
       access to the data I put so that I could try and explore
       and find out what was at the root cause of all of these
       and whether I actually was responsible for that figure.
   Q.  Because the revelation from the 16 April letter
       {E1/36/1} that I have shown you, the response of
       Post Office is at {E1/37/1}, is to refer you to your
       contract and asking you to comply.
   A.  But that is part of a chain of correspondence at that
   Q.  Which also included you adhering to the proper
       procedures.  Because what Post Office was saying was not
       necessarily pay it now, of course they'd much prefer you
       to pay it, but they're asking you to follow the proper
       procedures which we have been through and which you
       knew, isn't that right?
   A.  I did not have any problem with adhering to
       Post Office's terms and conditions and the way of
       operating as long as I knew I was actually liable for
       anything that I may have to repay along the way.  All
       I was asking for were the tools to investigate any
       shortages that I might have so as to establish in my own
       mind that I clearly did owe them and it wasn't due to
       some other reason which Post Office might have to
   Q.  Could you have done all those things while the amount
       stayed in the suspense account or could you not do all
       the things you just mentioned?
   A.  I don't know.  It depends what tools I had been provided
   Q.  But whilst it was in the suspense account you could do
       all things you have just said.
   A.  No, I couldn't.
   Q.  Why not?
   A.  Because there wasn't the facility in the system to do
   Q.  There was to dispute it, et cetera, and, like in
       the previous example, have visits from Post Office.
       There was no reason why you couldn't put it in the
       suspense account and have all the debates you wanted to
       have, Mr Bates, is there?
   A.  I was having the debate at the time when I was rolling
       it through.  I just couldn't get any clear guidance from
       Post Office or actually someone to deal with it and to
       try and address some of the concerns I had about the
   Q.  We are going to {E1/40/1}, carrying on the
       correspondence where Post Office are asking you to
       comply with your contract again, giving you a final
           Particularly over the page {E1/40/2}:
           "You must clearly understand that unless you comply
       with these terms and make the losses good immediately
       and cease the practice of rolling over losses and gains
           So what they were --
   MR JUSTICE FRASER:  Sorry, we are not getting the letter you
       are reading from.  Please go back to the letter at
   MR CAVENDER:  {E1/40/1} is the first page of it.
   MR JUSTICE FRASER:  Yes.  Maybe you could just me a chance
       to read it. (Pause)
           Then on to page 2, please.  {E1/40/2} (Pause)
           Thank you very much.
   MR CAVENDER:  What you could have said in response to this
       letter, couldn't you, Mr Bates, if you wanted, was:
       I hear what you say.  I will in future transfer all
       amounts of shortfalls into the suspense account and seek
       your approval under the manual.
           You could easily have done that.  And you wouldn't
       have had to pay the amount, you could still have
       disputed it, and carried on as you had in relation to
       the first amount.  Am I not right?
   A.  You are not right.
   Q.  Why not?
   A.  Because I didn't know those were actually my losses.
       I didn't know they had been caused by my office, by
       myself or my staff.  I didn't know whether it had come
       out of my data at all or not.
   Q.  What it is saying is:
           "... cease the practice of rolling over losses and
           So don't just roll it over in the way you did,
       comply with the right procedure.  That is what is being
   A.  But the whole point is I would have been accepting it,
       because once it goes into suspense you eventually finish
       up picking up the suspense account, if you like.
   Q.  That isn't true.  Because in relation to the 1,300 you
       said you didn't do that.
   A.  Yes, in that particular case, and that was a one-off
       case.  In the majority of cases --
   Q.  But it was your only experience thus far of that.  The
       one experience you had had, you had viewed the suspense
       account, you'd got authority, you disputed it, you
       disputed it well, and Post Office said: okay, the next
       time it happens --
   MR JUSTICE FRASER:  Just pausing there, let's do it in
           It is being put to you that that was your only
       experience and it was written off.  Is that correct or
   A.  Yes, it was, to the best of my knowledge.  There may
       well have been one or two others in there.
           And Mr Cavender, you are putting this letter to the
       witness by concentrating on ceasing the practice of
       rolling over losses and gains.
   MR CAVENDER:  Correct.
   MR JUSTICE FRASER:  And ignoring the first part of the same
       sentence, and the first sentence on the previous page
       which requires him to repay the money.
   MR CAVENDER:  My Lord, yes, certainly --
   MR JUSTICE FRASER:  You need to deal with that point as
   MR CAVENDER:  Yes.  That would have been -- obviously
       Post Office was saying: we want you to pay it, that is
       our primary position.
   A.  Yes.
   Q.  But you knew from the previous correspondence I have
       taken you to that the real beef they had was you rolling
       over the losses and not complying with your obligations
       to comply with the suspense account and the procedure.
   A.  What you are suggesting is that every week I would put
       a varying amount into a suspense account, week after
       week after week, without knowing how it had occurred.
       Is that right?
   Q.  If needs be, yes.  That is what the system allowed.
       That is precisely what the system --
   A.  Which, at the end of a four- or eight-week period,
       I would probably automatically have finished up paying,
       because that is what Post Office wanted you to do if
       they couldn't resolve it.
   Q.  Of course they wanted you to.  But your only experience
       to that time was that you had actually put it in
       a suspense account for two years, you had used every
       method you could to dispute it, Post Office had come to
       have a look and they had written it off.
   A.  You have to remember the environment in which I was
       working, with lots of other subpostmasters, I was
       meeting many other people.  I heard many problems from
       other people on similar grounds and similar occurrences
       and I knew perfectly well the sort of liability I would
       be letting myself in for if I started doing things of
       that nature.  Once I had started to accept those amounts
       then I would be backing myself into a corner.
           And I did advise them at the time when I first
       started rolling over that this is what I'd be doing and
       all I asked was the tools actually to investigate it so
       I could do it on a weekly basis without things building
       up.  It was as simple as that.
   Q.  Moving on then, you were given notice to terminate your
       contract.  Then carrying on in the chronology to
       September 2003, you wrote a letter I think to the
       National Federation of Subpostmasters, is that right?
       We see that at bundle E1.
   A.  I wrote to many people at that time.
   Q.  {E1/42.1/1}.  It's the last paragraph I want you to
       read, please.  (Pause)
           Have you read that?
   A.  I have.
   Q.  Why were you trying to persuade the Federation not to
       allow anyone to take over the operation of your office?
       Why were you doing that?
   A.  Why?  For support?
   Q.  Support?
   A.  Yes.  At that time -- at that time there were an awful
       lot of members who were very unhappy with the way
       Post Office were treating people with regard to Horizon
       that I used to meet at Federation meetings in the past
       and we were looking for some solidarity from others in
   Q.  It wasn't because you feared that if someone went into
       your branch using your same Horizon kit and it all
       worked fine, that it would be in fact you and your staff
       and your operation that would be shown to be wanting,
       not your completely convinced view that it was all down
       to Horizon.  It was because you didn't want someone to
       go in and have a good experience?
   A.  That is the very first time I have even thought of that.
       Sorry, that was not a consideration in the slightest.
   Q.  Going forward to other subjects in your witness
       statement briefly.  The cause of deficits in your
       branch -- so we have dealt with the accounting, I'm now
       going to the causes but only briefly.  You deal with
       this at paragraph 144 of your witness statement and
       following.  Essentially you say these deficits were
       caused by Horizon, that is basically your position, am
       I right?  {C1/1/32}
   A.  144?
   Q.  It's that and afterwards that you deal with Horizon and
       deficits, et cetera.  If you just cast your eye from 144
       through to 149/150 I will ask you a few questions about
       that area.
           Can you really be sure that these faults weren't
       caused by deficiencies in your staff, or even you and
       your staff?  I say that because at paragraph 92.1 of
       your witness statement {C1/1/21}, you say you employed
       numerous assistants to work in the branch and I think
       you say you employed up to five people at a time.
   A.  Did you want me to read 144 through to 149?
   Q.  No, no, I was giving you context of the area I was
       asking you about, now I am going to ask you detailed
           My first is: in terms of the causes of losses, I was
       pointing out that you employed up to five assistants to
       work in the branch, is that right?
   A.  Correct.
   Q.  As we know, people are good, bad and indifferent.  Is it
       not perfectly possible that some of those assistants had
       made mistakes that caused some of these losses?
   A.  May or may not.  Yes.
   Q.  And it is true at paragraph 22 of your witness statement
       you record that you had a three-position Post Office
   A.  Correct.
   Q.  So three people would be working at any one time?
   A.  If it was very busy, yes.
   Q.  And you wouldn't always necessarily be there?
   A.  Not every minute, no.
   Q.  So there would be occasions where just the three
       assistants would operate the Post Office?
   A.  There could be, yes.
   Q.  So your supervision at that stage would be non-existent?
   A.  Yes.
   Q.  Now, dealing with the original deficit of £1,182 which
       you deal with at paragraph 149 {C1/1/33}, you first say
       you think that ... you say that part of the shortfall
       was due to Giro items becoming wrongly duplicated, do
       you see that?
   A.  Yes.
   Q.  That is a staff error, isn't it?  That's someone
       entering things on a duplicate basis?
   A.  No, that was definitely Horizon from my point of view,
       without the shadow of a doubt.
   Q.  I suggest that is not right.  That could only have been
       a problem with your staff.
           You also say in paragraph 149:
           "At the time, I believed that a majority of the
       remaining alleged shortfall, being £1,182, was also
       attributable to Giro."
           Do you see that?
   A.  Yes.
   Q.  So what investigation -- I have not seen any notes of
       investigations you conducted or interviews with staff or
       any kind of investigation you did into this matter as to
       what the cause would be.  Are there any such notes or --
       can you tell me what you did?
   A.  Yes, I think if you look at my letter dated -- is
       it December 2000, the one to Gerry Hayes, I itemise the
       stages that I took.
   MR JUSTICE FRASER:  The one at {E2/23/1}, 19 December?
   A.  I think so, my Lord.
   MR JUSTICE FRASER:  Let's just call it up.  Is that the one
       you are talking about?
   A.  That is correct.
   MR CAVENDER:  That's a sort of narrative, I think.  It
       doesn't contain much, if any, detail about what
       investigations you carried out into this sum.
   A.  The investigations I took was by means of the limited
       reports that I was able to print out.  And once
       I started finding errors in those reports or
       duplications then I continued with it, and that is where
       I managed to find the majority of money.
   Q.  Did you speak to any of the five assistants as to
       whether they had any explanation as to how a deficit of
       £1,100-odd had been run up?
   A.  All the assistants were concerned at that time because
       this figure came out of the blue and they were all
       trying to assist finding it out.
           Giro transactions were some of the easier ones to
       undertake.  Many of them were just bar-coded, so they
       just were scanned.  So the chances of such a large
       amount suddenly appearing from a counter error within
       a matter of a few days is very, very slim.  Very slim.
   MR JUSTICE FRASER:  This is people cashing in a Giro cheque?
   A.  Yes, and also paying bills by Giro transactions as well.
   MR CAVENDER:  But presumably, depending on the size of those
       transactions, it wouldn't take that many transactions
       going wrong to soon reach the sum of £1,100, would it?
   A.  But we were talking of around £6,000, the shortages,
       which was far more noticeable.
   Q.  But of the deficit that was left, I mean.
   A.  Oh yes, but the way -- the way I actually tracked these
       down eventually was by running reports off and they were
       quite limited in the way that you could do them.  You
       could put types -- you could select a type of
       transaction, like a Giro, for example, you could put in
       a figure of for transactions above £100 or £1,000 like
       that and ask for all those transactions to come out on
       there.  So that was the type of thing I was doing.  And
       then when you had had a list of those you could then go
       through and look for duplications in them.
           So if you were setting the bar on that one at
       £1,000, there weren't that many to check.  When you
       start setting it at £100, there are a heck of a lot more
       to check.  And if you are setting it at £20, there can
       be absolutely stacks and stacks.  So it was harder to
       identify the smaller amounts than the larger amounts.
   Q.  But there was a system, I think you refer to it in your
       witness statement, of report writing where you could do
       the checks you just described?
   A.  A nominal amount, yes.  But I had to print them all out
       on a little strip of paper about that wide (indicating)
       and it was incredibly long by the time --
   Q.  You can actually see them on the screen, can't you?
   A.  I don't recall that.  But don't forget I was running
       a comparison between them.  You may have at a later
       stage with Horizon, but in the stage I think I was using
       we had to --
   Q.  But in terms of -- if someone had, for instance, stolen
       money, taken £100 here or £200 there, again that
       wouldn't be something you would be able to identify from
       your checks that you are talking about, is it?
   A.  No, I don't think I would.
   Q.  No.  And it is also right that there might be more than
       one cause for a given loss.  There might be multiple
       causes for different amounts, is that fair?
   A.  In a total amount, yes.  It could be --
   Q.  Did you look in your parallel business?  I have not seen
       the accounts of your parallel business.
   A.  They were kept separate.
   Q.  Is it possible someone could have made a mistake and put
       money in that till?
   A.  They were totally -- there were in different parts of
       the building.  No, it wouldn't -- no, not to that sort
       of extent, no.
   Q.  Because I have not seen -- I don't think you have
       disclosed your business accounts, so -- but you dismiss
       that entirely as a possibility, do you?
   A.  The only -- we did sell postcards, we did sell
       postcards, and because we were a post office people
       would sometimes take a postcard off the rack, take it to
       the post office counter, buy a stamp and pay for their
           So we did have is a very small tin behind there for
       the odd coppers for postcards that would go in and that
       is about the extent of shop purchases that used to go
       through it.  Otherwise everything went separately
       through a totally separate till system.
   Q.  Because there were errors in this branch.  This was not
       an error-free branch, was it?
   A.  We all make mistakes, don't we?
   Q.  Yes.  So for example, just to make that point good, go
       to {E1/48/1}.  We can see here I think the other errors.
   A.  This is a closing account, isn't it?  This is when the
       branch had been closed.  Because it is dated 24 November
       of that -- of the following year.
   MR JUSTICE FRASER:  That is where the £1,227.61 from the
       voucher on the final cash account has gone into the top,
       hasn't it?  It's the same date, 5 November.
   MR CAVENDER:  Exactly.  But I am looking, just making the
       general point which I'm sure you accept, that there were
   A.  Occasionally.
   Q.  So it is not a sort of outlandish thing to think, that
       part of the losses you're talking about were caused by
       errors.  Because Horizon is only as good as the
       information you or your staff put in, you accept that?
   A.  To the extent that we can access it, yes.
   Q.  And I think you have accepted that data is accessible
       for some 30 days and you can also get data centrally for
       longer periods, can't you?
   A.  Occasionally.
   Q.  I think your letter of 13 February 2002 {E1/32/1} speaks
       to that.  The second to last paragraph:
           "... accessible 30 days ... notice of transactions
       10 weeks ..."
           And if it is more than that you ask or can get
       further data for transaction correction?
   A.  You can request it, yes.
   Q.  And you get it?  You normally get it?
   A.  I don't recall whether we did on every occasion.
   Q.  What I suggest, and you say at paragraph 151 of your
       witness statement {C1/1/33}:
           "... clear to me from this point there were problems
       with the Horizon system."
           Essentially you just closed your mind to any other
       possibility.  You got it in your mind that it was
       Horizon, and for evermore it has been Horizon?
   A.  My experience on that particular occasion, after there
       had been a software update on the system, was that these
       duplicated transactions had come out of thin air.  They
       hadn't been there.  We were only balancing weekly in
       these days so it was relatively easy to keep track of
       accounts and things like that.  But it jumped out, these
       errors jumped out in there, and it could only have been
       the cause of Horizon.  There couldn't have been anything
           All I was asking for, even having resolved those
       sums, because I was quite positive about IT, I think it
       is the best way forward, all I was asking was for proper
       tools to actually investigate the data that I and my
       other staff had put in.  All I wanted was a real report
       writer package in there so I would be able to put in my
       own searches --
   Q.  But there were report writing functions --
   A.  They were very basic.
   Q.  I suggest to you they were not basic, they were good and
       useful and all you required necessarily to investigate
       your losses.
   A.  Sorry, I was the subpostmaster, and to be quite honest
       they weren't.  They weren't good enough for the job.
   Q.  The Horizon manual is {F4/3/1} if you want to look at
       that.  Is that familiar to you, the heading and the --
   A.  I don't recall it but it does seem familiar in the sense
       of there were many manuals like this.
   Q.  It's a huge document with a lot of detailed information
       in which was available to you.  You had reached this
       conclusion that it was Horizon.  Even on your theory,
       you thought it was an overnight software update I think
       you said at paragraph 150?
   A.  I did, yes.
   Q.  So it wasn't a general problem, you think it was
       a problem caused by an overnight software update, that
       is your potted theory, is it?
   A.  That was my thought at the time, yes.
   Q.  But the reality is you hadn't really investigated
       properly any other possibilities, had you?  Not really.
       You'd had a sniff around but not had a proper
       investigation into --
   A.  But where I did investigate was where I found the
       problems which was on the Horizon system.
   Q.  Okay.  I put to you generally that the overwhelming
       likelihood is that these deficits were most likely
       caused by error or wrongdoing in your branch by you or
       your staff.  That is the Post Office case.
   MR JUSTICE FRASER:  That is being put to you so you can tell
       me what the answer is.
   A.  No, my Lord.  No, it isn't.
   MR CAVENDER:  My Lord, I don't know if that is a convenient
       moment?  I have very little left actually with this
       witness.  So if we were to carry on and finish him and
       then have a break that might be more convenient.
   MR JUSTICE FRASER:  By all means keep going.
   MR CAVENDER:  So training on Horizon, paragraph 129 and
       following of your witness statement.  The basic position
       is you think it wasn't sufficient -- wasn't any good, is
       that right?
   A.  It was lacking.  Yes, I do.  I didn't think it was very
   Q.  I suggest to you your classroom training of
       one and a half days clearly included, I think you say
       this at paragraph 135 of your witness statement
       {C1/1/28}, an explanation of how to balance and cash
       stock weekly using Horizon?
   A.  Yes.  But I also go on to say I didn't recall any
       explanation how to identify the cause of alleged
       discrepancies or how to dispute them.
   Q.  If you go to {C2/1/31}, this is an extract from Angela
       van den Bogerd's statement who will give evidence later
       on in this trial.  She summarises at paragraph 104 the
       kind of things that would have been in your initial
           Look at 104 and tell me if you agree or disagree
       that 104, 1 to 5, were included within your training
   A.  I don't recall.  I can't recall.
   Q.  But do you agree it is likely that they were?
   A.  Yes, but they would have formed part of it, I would have
       thought.  Because we were also -- it was a new computer
       system and we had also been shown how to put new till
       rolls in and how to connect the pieces together and
       replacing -- and how to replace the ribbon in
       the printer.  So, yes, it would have possibly formed
       part of it, but to what depth I couldn't say.
   Q.  If we look at the training manual {F4/3/1}, we can see
       at {F4/3/18} "Balancing".  Under B for Balancing.  It's
       on the left-hand side at the bottom, and then over.
       There's quite a lot of information there about
       balancing.  And the same point on reports in the same
       document, {F4/3/27}, we can see from the index there all
       the reports that you could generate with Horizon.
           Does that look familiar to you?  Do you accept that
       that is broadly what the functionality of Horizon was --
   A.  I don't recall that document in its own right but there
       were many documents like that at the time and it could
       well have been part and parcel of it.
   Q.  And {F4/5/1} is a document you were given in 2002 called
       "Balancing with Horizon".
   A.  Again there are lots of similar documents like that.
   Q.  Did you find the training function on Horizon itself
       a useful one, where you could use Horizon off-line
       effectively?  There was a training function within it,
       wasn't there?
   A.  Yes, there was a training function within it and you
       could use it off-line but it was very awkward to try and
       do it, because most of the time you are trying to serve
       staff.  You had to have -- you had to have a dedicated
       terminal set for training -- in the training mode and
       you couldn't mix and match serving people and the
       training manual.
           Plus -- but the other side to that as well was it is
       also not just yourself but also for your staff as well,
       it was slightly restrictive allowing them to come in and
       spend time on it because it was expensive to pay them to
       come in and you weren't getting money back for that
       training for them.
           So I think, yes, I suppose we did try it in the
       first --
   Q.  There was nothing stopping you, though, was there, after
       hours, yourself brushing up and deciding what training
       you needed or for your staff, was there?
   A.  I did ask for extra training and was refused it.
   Q.  No, I am talking about the training function of Horizon.
       You could have, after hours, done any training yourself
       you wanted, am I right?
   A.  To a point.
   Q.  And you could have trained your staff to any extent you
       thought was necessary, am I right?
   A.  But I wouldn't know if the training I was giving was
       right.  It was really -- when Horizon came in, it was
       really down to Post Office to train their system when it
   Q.  And you had five days of support in the branch at the
       outset --
   A.  That was with the manual system, that is correct.  That
       was when I first began.
   Q.  I see.  So, anyway, I put to you formally that you were
       given all the necessary training on Horizon that you
       required.  I also say that is demonstrated by the fact
       that although you did have these two particular problems
       they were of limited compass, would that be fair?
   A.  They were ongoing because -- there are a couple of
       things.  It was obviously a concern because you didn't
       know the system was sound or whether there were problems
       in there, and you did get a lot of other errors coming
       through that the system went down or had other problems
       in there.  But also it took away one area of operating
       the business, for example, your staff, and there was --
       when you had a large figure, like we did in the sense of
       the money that was hanging over us that was in the
       account for a couple of years, you -- it was -- there
       was a certain unsettlement with the staff, whether you
       can trust them or not trust them or whether it was down
       to them or not down to them.  And it was very
       uncomfortable, that sort of thing.
           If you had been able to fully interrogate Horizon
       and to be able to clear that out of the way as being
       a potential problem, then it would have been easier to
       manage the business and to resolve these sorts of issues
       with Post Office.
   Q.  Finally, Helpline.  You deal with this at paragraph 129,
       page {C1/1/28}, and you criticise the quality of
       Helpline.  I formally put to you that Helpline did give
       you reasonable help and assistance with problems you may
       have suffered?
   A.  You only have to look at my letter of December 2000
       where I had been stuck on the phone with them for
       an hour without getting any sort of response.  Basically
       they were reading off screens: have you tried this, have
       you tried that?  Well, you know, when you have run to
       the end of that then there's not a lot more --
   Q.  You said a moment ago to me that you had asked for extra
       training and not got it.  Is that contained in your
       witness statement anywhere?  Because I don't recall it
   A.  Yes, I think it is somewhere.
   Q.  I am sure that can be dealt with.  I certainly didn't
       spot it.
   A.  I think it ... I think it is actually the -- there is
       something on one of the spreadsheets as well, the
       Helpline spreadsheets, where they acknowledge it, that
       I had asked for extra training and been refused it.
   MR GREEN:  It's paragraph 143.3 on {C1/1/30}.
   MR CAVENDER:  Thank you very much.  I have no further
       questions, my Lord.
   MR JUSTICE FRASER:  Thank you very much, Mr Cavender.
           Are you going to be very long in re-examination, Mr
   MR GREEN:  My Lord, no.  It may be better to take a break.
       I have five points.
   MR JUSTICE FRASER:  Mr Bates, we will take a ten-minute
       break for the shorthand writers now.  If everyone could
       come back at 3.18 pm, please.
           Generally in a time limited trial, as you will both
       be aware, re-examination needs to be kept within
       an extremely narrow compass.
           So ten minutes.  Thank you very much.
   (3.10 pm)
                         (A short break)
   (3.18 pm)
                    Re-examination by MR GREEN
   MR JUSTICE FRASER:  I'm sorry if it all got a bit warm in
       this room earlier on.  For some reason the control was
       turned round to maximum heat and that is two days in
       a row that has happened.  There is obviously someone who
       feels the cold here very early in the morning.  It has
       been turned down.
   MR GREEN:  Mr Bates, could you please look at paragraph 73.2
       in your witness statement at {C1/1/17}.  This is
       referring to the transfer day and documents that you
       got.  This is 8 May, yes?
   A.  Correct, yes.
   Q.  Can I just ask you, when do you think you contracted
       with the Post Office?
   A.  I thought it was on -- is it 31 March, was it March,
       when I signed the contract.
   Q.  One of the documents -- you obviously signed a lot of
       documents, the court has heard that, on the transfer
   A.  Correct.
   Q.  One of the documents we see at 73.2 is the induction
       booklet.  Could you be shown to that at {E1/12/1},
       please.  Because you were asked about your expectations
       in relation to support and training.
   A.  Yes.
   Q.  This document obviously you get on the transfer day and
       that is at a stage prior to the introduction of Horizon?
   A.  Correct.
   Q.  Can you go to {E1/12/3}, please.  There is
       an introduction there.  Top paragraph, end of that
           "It is important that you quickly feel part of
       Post Office Counters Limited."
           It goes on at the third bullet point to explain:
           "The purpose of this booklet is to ... provide
       information on the support that you can expect ... give
       you general information on the training you will
           And at the bottom of that page:
           "Please do not hesitate to make use of the support
       and expertise on offer."
           I am just going to show you two other parts of the
       document and then ask you a question about it.
           On {E1/12/5}:
           "We care for all our employees, subpostmasters and
       other agents and we cherish our place in every
           Do you see that?
   A.  I do, yes.
   Q.  The training on page {E1/12/10}, there is a section
       there which explains at the top paragraph:
           "The duration and content varies from office to
       office to meet your particular needs."
           Then "On Site Training":
           "... a full range of transactions, accounting
       procedures ..."
           Then "Ongoing Training":
           "... at timely intervals as necessary."
           As assessed by your RNM.
           And then on {E1/12/11}, further details of training
       and complementing with workbooks.
           And then on what would be internal page 19, on that
       page of the bundle, "Other Training Issues":
           "In addition to transaction processing your training
       will fully cover ..."
           And then managing cash and stock and dealing with
           In terms of what you expected when Horizon was
       introduced, how did your expectations when Horizon was
       introduced compare with what Post Office had sent you in
       this booklet?
   A.  It was sadly lacking in a major way.  This --
   Q.  May I interrupt, Mr Bates.  I'm not asking about what
       they did --
   MR JUSTICE FRASER:  No, can I just interrupt.  This doesn't
       arise out of cross-examination.
   MR GREEN:  He was asked, my Lord, about what expectations he
       had as to level of training and the level of support.
   MR JUSTICE FRASER:  He has just answered that question by
       saying it was sadly lacking.  And I think you are now
       about to try and develop a theme or put further
       questions on the same subject.  Am I wrong?
   MR GREEN:  I think it might be a misunderstanding, my Lord.
       I was asking him about: this is what he was sent when he
       first started.
   MR JUSTICE FRASER:  Yes, I got that point.
   MR GREEN:  And I was asking him what his expectations were
       as to the training he would receive when Horizon was
       introduced.  But he answered a different question, what
       he had got, and that is why I stopped him.
   MR JUSTICE FRASER:  You said:
           "How did your expectations, when Horizon was
       introduced, compare with what Post Office had offered
       you in this booklet?"
           And he said:
           "It was sadly lacking in a major way."
   MR GREEN:  Yes.  I was trying to ask about how his
       expectations compared rather than how his experience
   MR JUSTICE FRASER:  I think that is dancing on the head of
       a pin, Mr Green.  I have all of his evidence --
   MR GREEN:  I am grateful.
   MR JUSTICE FRASER:  -- about his practical experience, and
       also re-examination has got to arise out of
   MR GREEN:  My Lord, I will deal with the matter in
   MR GREEN:  And also in relation to the support provisions in
       the same document.
           Final question, Mr Bates, is as to your business
       plan.  Could you please be shown page {E1/2/43}.  It
       says there "Appendix B.  Copies of Previous 3 Years
       Accounts".  Why did you include three previous years of
       accounts?  Can you remember?
   A.  I think they were asked for as part of the business
   Q.  Okay.  Look at, finally, {E1/2/46}.  Look at the top of
       that page, "Trading and Profit and Loss Account for Year
       Ended 31 July 1996".  Do you see that?
   A.  Yes.
   Q.  Were those the most recent accounts you had available,
       as far as you can remember?
   A.  As far as I can remember, yes.
   MR GREEN:  I am most grateful.  My Lord, no further
   MR JUSTICE FRASER:  Thank you very much.
                 Questions from MR JUSTICE FRASER
   MR JUSTICE FRASER:  Mr Bates, I have a couple of questions.
           Cast your mind right back to this morning when you
       were first asked by Mr Cavender about your experience.
       I think you said when you had stopped running the
       Post Office you went back to college full-time?
   A.  I did.
   MR JUSTICE FRASER:  How many years was that for?
   A.  I did four years' IT.
   A.  In IT, yes.
   MR JUSTICE FRASER:  And then I think you said that you were
       working in the local authority sector part-time now and
       you had recently -- well, you didn't say recently, you
       had reduced it to six days a month.  Can you tell me
       what you did when you finished your college education at
       the end of these four years?
   A.  I think -- whilst I had been at college I had been doing
       a similar sort of six days, I think, a month, and
       I think at the time when I had finished the course the
       other person I was undertaking the role with, who was
       part-time, had decided to leave, so I just carried on
       with that, so I doubled up to twelve days a month.
   MR JUSTICE FRASER:  Twelve days.
           Final question, can you tell me what year you were
   A.  1954.
   MR JUSTICE FRASER:  Thank you very much.
           I cannot imagine there is any questioning from
       either of you about those questions.
           Thank you very much for coming.  You are now free to
       leave the witness box.  Thank you very much.
                      (The witness withdrew)
   MR GREEN:  My Lord, may I call Pam Stubbs.
                  MRS PAMELA JOAN STUBBS (sworn)
                 Examination-in-chief by MR GREEN
   MR JUSTICE FRASER:  Do have a seat, Mrs Stubbs.
   MR GREEN:  Mrs Stubbs, I see you have trouble with your arm.
   A.  Yes.
   Q.  If you need any extra time ...
   A.  I just might be a bit slow turning pages, that's all.
   Q.  Could you look at tab 2 in that bundle, I think.
       {C1/2/1}  There should be a document with witness
       statements with your name on.
   A.  That's it, yes.
   Q.  Is the address that is stated on that document your
       correct address?
   A.  It is.
   Q.  If you turn to the back of that document {C1/2/33} --
       and you will see it's also going to be shown on screen.
       When someone refers to a document you will also be able
       to see it on screen so you will be able to see both.
       But looking at that document, is that your signature?
   A.  It is indeed.
   Q.  Are the contents of that statement true to the best of
       your knowledge and belief?
   A.  They are.
   MR GREEN:  I am grateful.
   MR JUSTICE FRASER:  Mr Cavender.
                 Cross-examination by MR CAVENDER
   MR CAVENDER:  Good afternoon, Mrs Stubbs.
   A.  Good afternoon.
   Q.  Just a few introductory questions.  I think it is right
       you were postmistress between 3 August 1999 for some
       11 years.  Is that right?
   A.  No.  I took over when my husband died on 3 August --
   Q.  No, quite.  I was about to say you were an assistant for
       some twelve years prior to that?
   A.  Yes, thereabouts.
   Q.  And you stopped working as the postmistress on
       13 August 2010, just over eight years ago?
   A.  No.  I stopped working as postmistress on 8 June 2010
       when I was suspended.
   Q.  I see, yes.  I took the date of termination.  But about
       eight years ago?
   A.  Yes.
   Q.  You tendered your resignation I think on 12 May 2010
       giving three months' notice under your contract?
   A.  I did, only because I had been told that in order to
       place my Post Office up for sale I had to have given
       notice before I did it.
   Q.  The questions I am going to ask you about mainly today
       are events occurring in around 1999.
   A.  Yes.
   Q.  So some 19-odd years ago.  It is fair to say your memory
       of the details of those events is probably pretty vague,
       is that fair?
   A.  No, I don't think so.
   Q.  In terms of -- these are everyday events.  They're
       not -- in terms of receiving this document, that
       document.  They are not particularly stunning events,
       are they, like a car crash or something of that kind
       that would particularly attach it to your memory, is
       that fair?
   A.  If you are talking about August 1999 then, yes, they are
       very similar to a car crash.
   Q.  You are talking about your husband's death.
   A.  Yes.
   Q.  Yes, I accept that.
   A.  And everything that happened after that.
   Q.  I see.  I was thinking more about whether you received
       a particular document or which one you particularly
       signed.  19 years on, you can't be absolutely clear
       about that, I suspect.  Is that fair?
   A.  Some documents, yes.  Tell me which ones you mean and
       I will be able to tell you.
   Q.  Okay, we will go to them obviously.  I was trying to get
       an outline.
           So prior to your resignation, is this right, you
       paid two deficits, one of £388-odd in November 2009?
   A.  Yes.
   Q.  And one of £2,500-odd in December 2009?
   A.  Yes.
   Q.  Deficits I think at the moment are outstanding of some
       £33,000-odd that you haven't paid, does that sound about
   A.  I thought they had actually come down to about 26, but
       yes, it's in the region of that amount, yes.
   Q.  You resigned on three months' notice on 12 May so that
       you could sell your Post Office to a purchaser you had
       found, is that right?
   A.  I actually had at the time three purchasers but
       Post Office wouldn't do anything, they wouldn't
       advertise it online, they wouldn't do anything about it
       until I had handed in my notice.  That is what I was
       told anyway.  In the event, they only contacted one of
       my purchasers.
   Q.  But you did that of your own free will?  You decided to
       resign --
   A.  After the eight months I had had, yes, I didn't feel
       I could carry on.
   Q.  You say that in August 1999 when you were appointed as
       a subpostmistress you had had twelve years of assisting
       in running a Post Office, yes?
   A.  Yes.
   Q.  And for the last year of that, so between September 1998
       to August 1999, when sadly your late husband was
       hospitalised, you ran in effect the branch and did all
       the balances, submitted the accounts yourself?
   A.  Yes, I did, with the help of one assistant.
   Q.  So in the ordinary way you were really running the
       branch at that point for all intents and purposes?
   A.  Yes, I was.
   Q.  So in terms of how you managed that, presumably there
       must have been an operations manual in the branch which
       you consulted from time to time to facilitate carrying
       out the balancing and submission of accounts?
   A.  Not necessarily.  As I said, I had worked with my
       husband for ten to twelve years, I learned an awful lot
       from being with him.  Even when I wasn't working in the
       Post Office I would be standing watching what he was
       doing.  He understood the Post Office very well and was
       able to help me and ... I knew what to expect, I knew
       what had to be done, and I knew how the Post Office was
       running.  So I -- I don't think I actually relied on
       manuals to any great extent at that point.
   Q.  Your husband must have had an operations manual he
       referred to?
   A.  He might very well have done.  I don't know.
   Q.  Because running this kind of thing, it is the sort of
       thing as you say you can pick up from experience, as you
       indicate.  But if something happens that is not
       necessarily everyday, or a particular transaction you
       want help with, isn't it something -- you would refer to
       a manual in those kinds of cases?
   A.  I think on the few occasions we actually needed help or
       advice in what I call the paper days, the Helpline was
       really helpful.  You could ring them up, ask them
       a question, and you would get an answer which was very
       helpful.  But we didn't need to ask that many questions.
       It was a much simpler time.
   Q.  So you used the Helpline as your manual, is what you are
       saying, is that fair?
   A.  If we needed help then, yes, the Helpline was there.
   Q.  Do you know if your late husband had copies of his
       contract in the branch that perhaps you saw?
   A.  I never saw a copy of his contract.  In fact, I think
       I have since discovered from documents that have come
       through that Post Office also has no record of my
       husband having been appointed to that branch.
   Q.  It was a long time ago, wasn't it?
   A.  It was 1987.
   Q.  Quite.  So your appointment now, if we may move to that.
       Your understanding was that you were being appointed
       essentially on the same terms as your husband had
       operated under, you were standing in his shoes, is that
   A.  Yes.
   Q.  And you must have known that he was operating under
       a contract, you may not have seen it, but you must have
       realised he was operating under a contract with
       Post Office, is that fair?
   A.  Yes.
   Q.  Are you saying that issues never came up requiring him,
       or you seeing him, checking his contract for allowances
       or things of that kind, the various allowances you were
       allowed and ...?
   A.  We had a fairly -- not a divided marriage, we each had
       our own jobs to do.  His was primarily Post Office, he
       dealt with money and people issues in the business.
       Mine was more mundane in that I dealt with stock, moving
       shelves, building displays and ordering.  And it was
       once we had basically, if you like, got on top of the
       shop business that I gravitated to actually first
       watching and then asking questions and gradually being
       allowed into the Post Office to do, first, simple things
       and then pretty much everything.
   Q.  So dealing with the latter end of that period, certainly
       when you were running the Post Office branch almost
       single-handedly, albeit with your assistant, when your
       husband was hospitalised, at that stage you knew how to
       run it, you knew how it was run, and you knew the basis
       that it was run, is that fair?
   A.  Yes, that is fair.
   Q.  For your Lordship's note, really, more than anything,
       for the purpose of the Common Issues trial, and also
       I think, Mrs Stubbs, you must realise this, you accept
       you were regulated by the SPMC.  And that is {B5.2/2/3}.
       So in terms of your position in this process, you accept
       you were regulated by the terms of the SPMC?  Just
       for -- that is the assumption upon which you are
       proceeding in terms of your individual Particulars of
       Claim --
   A.  I assumed that I would be taking over the branch, since
       I had run it for the best part of a year, I assumed
       I would be taking over the branch on the same terms that
       my husband had run the branch.
   Q.  Right.
   A.  However that was.  I don't recall -- if that is
       the subpostmasters contract you are talking about,
       I don't recall having seen one at that time.
   Q.  Okay.  So going to the interview, 4 August 1999, which
       is a date that must be very much in your mind, it's the
       day following your husband's death.
   A.  Yes.
   Q.  Someone from the Post Office came to speak to you at
       your branch?
   A.  Yes, Colin Woodbridge --
   Q.  Yes.
   A.  -- came to visit.  We had a fair few visitors that day
       and the few days following.
   Q.  And the Post Office were very supportive, presumably, to
   A.  Colin was very supportive.
   Q.  I think you said you were keen to continue running the
       branch as you had done for the prior year, effectively,
       is that fair?
   A.  Yes.
   Q.  And Colin did all he could to try and facilitate that
       for you, is that fair?
   A.  I don't -- for me, running the branch for that year, I'm
       not at all sure that anybody actually -- nobody seemed
       to facilitate it.  I obviously informed the Post Office
       that he was ill and that he wouldn't always be there --
   Q.  Sorry, you misunderstand my question.  My question was
       much more directed to on 4 August, when he came to see
       you, and you expressed the desire to carry on running
       it, the (inaudible) Post Office was helpful to
       facilitate you doing that, at that stage, going
   A.  Yes, he agreed.  We talked about various matters
       which -- some of which we -- most of which we agreed,
       one or two we had a sharing of ideas and came to
       an agreement in the end.
   Q.  Do you have any memory of roughly how long the meeting
   A.  Not a clue, I am afraid.  No idea.
   Q.  An hour, two hours, a day, five minutes?
   A.  Not all day, no.  It would have been probably a couple
       of hours.
   Q.  During that time he explained to you, didn't he, which
       is the general policy of Post Office, firstly that you
       are an agent of the Post Office -- do you remember him
       having a discussion or mentioning that at all?
   A.  No.
   Q.  You being an agent, not an employee?
   A.  No, not at all.
   Q.  Is it possible that he did?
   A.  Many things are possible.  I -- that is not something
       I remember being discussed.
   Q.  Did he remind you that you had a responsibility to
       account to the Post Office in respect of their cash and
   A.  I knew that anyway.
   Q.  You knew that anyway.
   A.  Yes.
   Q.  Okay.  That you would be, as postmistress, responsible
       for the operations of your branch including any of your
   A.  Again that was something that we had accepted when he
       first took over the branch, and that had been our -- the
       way we ran it all the way through.
   Q.  And that you would have to run it in accordance with the
       manuals such as you had, and any other instructions
       received from Post Office?
   A.  Yes.
   Q.  You understood that.  You understood, as the
       postmistress, you in this position would be responsible
       for losses and gains going forward?
   A.  Yes, we had always known that and had paid for losses
       which had not been caused by us, as when we used
       a holiday relief who at the end of the two weeks
       announced that we were £600 short.  It was obviously our
       responsibility, or my husband's responsibility, which we
       had to bear, and it was just £600 that was added to our
       holiday costs.  So yes, we knew that.
   Q.  Pausing there.  Do you know how that £600 -- was that
       just hand in the till when the relief left?
   A.  I have no idea.  It wasn't something that we were
       prepared to fight about at the end of a holiday when we
       had just come back.  We took it on the chin, if you
       like, and vowed that we would never use that particular
       man again and passed the message around to all the
       subpostmasters about the way we had been treated, local
   Q.  Although you might hope that -- I don't know if you
       regard that as a large or a small loss, £600 seems quite
       a lot as an extra cost to your holiday, as you say.  But
       do you accept that logically these unders and overs, as
       sometimes people call them, can be large or small
       depending on how negligent staff are potentially, or in
       your example how dishonest.  There is no limiting level
       to it, it just depends on those two factors.  Do you
       generally agree with that?
   A.  I generally agree.  But in -- at that time there was
       enough control over what happened in the Post Office
       that if there was a shortage or a surplus it was
       relatively simple to pull out all the paperwork relating
       to the work that had been done that week, to check that
       against the totals that we had to find out where the
       discrepancy lay, and in actual fact one of them was mine
       when I -- fairly soon after I started, and by checking
       all the paperwork he was able to lay the blame at my
       door because I had forgotten to put a piece of paper in.
           So, yes, it was relatively easy to keep control of
       it, and my husband was a former banker, and when he
       worked in the bank it was the tradition, if you like,
       that if anybody in the banking hall was more than
       a penny out at the end of a day the entire banking hall
       stayed until they found it.  So, yes, he didn't often
       have shortages.
   Q.  You say that it is relatively easy under the paper
       system to find losses.  You weren't able to use that to
       find the £600 loss that the relief walked off with, were
   A.  Because we had no idea what this gentleman had done and
       it probably wouldn't have served any purpose because
       even if we had found where the loss was, I don't think
       there was any chance that he was going to suddenly say,
       "Oh yes, I am sorry, I will give it back to you".
           As I say, we took it as one of the things that you
       have to accept when you use a person that you don't
       actually know.  We never did it again, and from that
       time on we had actually trained one of our own staff to
       be able to take over and do the balance after that.
   Q.  That feature you describe, together with -- ie being
       responsible for employees or reliefs, and furthermore
       generally being responsible for unders and overs, must
       have made you realise that that is inconsistent, those
       two features, with this being an employment
       relationship.  You must have realised this was -- you
       were some kind of agent accounting to Post Office based
       on some kind of contract?
   A.  No, because we -- we had the same frame of mind when it
       came to the retail business as well.  We had to oversee
       our staff and keep an eye on what they were doing to
       make sure that there were no unacceptable losses on the
       retail side.  So as far as we were concerned it was
       something that we did.
   Q.  Mrs Stubbs, what I am trying to get you to concentrate
       on is you accepted and knew that there were
       responsibilities for unders and overs, yes?
   A.  Uh-huh.
   Q.  What I am saying is that is inconsistent with it being
       any kind of employment relationship, because an
       employment relationship, as you know, I am sure,
       employees wouldn't normally have a liability for unders
       and overs.  You might get sacked --
   A.  Employers, did you say?
   Q.  An employee would not normally be responsible to an
       employer for things of that kind.  What I am suggesting
       is that feature must have registered with you to
       recognise this wasn't an employment relationship or
       anything like it?
   A.  I have to say it didn't -- it might have resonated with
       him, it didn't with me.  And I still find it difficult
       to work out the actual difference between an employee
       and an agent, although I was told when I took over
       eventually that I was an agent, although for the first
       18 months that I was in post, Post Office paid me as
       an employee and deducted income tax at emergency rate
       when my salary should have been nil tax, and it took
       some considerable time --
   Q.  At what stage are you speaking of now?
   A.  When I took over as subpostmistress.
   MR JUSTICE FRASER:  So for 18 months you were effectively on
       PAYE, were you?
   A.  Yes, and it took some negotiation to actually persuade
       the HR department that I was nil tax and that I was, as
       you say, an agent and not an employee.
   MR CAVENDER:  Right.  Isn't that something to do with how it
       is taxed and whether you are regarded as a worker or
   A.  Nil tax on my Post Office salary meant that no tax was
       deducted from my salary at source.  My salary was then
       put into the shop and Post Office accounts, and that was
       then aggregated and accountants did their things, and I
       ended up paying a bill at the end of the year which
       included income tax for the business.
   Q.  Can we move on then to the documents you were given.
       You have discussed this, you said there was this
   A.  Yes.
   Q.  You had a discussion about various things, some of which
       you knew, some of which you might have been told, and
       you were given various documents.  In paragraphs 32 of
       your witness statement --
   A.  Paragraph 32, sorry?
   Q.  At {C1/2/7}.
   A.  Thank you, that is better.
           No, I actually didn't receive ... when
       Colin Woodbridge came I recall signing something.  In my
       ignorance, whatever, at this precise moment I couldn't
       tell you what it was I signed.  I assume that something
       must have been relative to my bank account, because
       I did receive a salary, but paragraph 32 says that I --
       Post Office says they would have -- I would have
       received a chunk of documents from them, which I didn't.
   Q.  So if we take a few of them up, just to make sure --
       {E1/3/1} is something called the "Subpostmasters
       Information Sheet".
   A.  No, never got that one.  Never recall seeing that until
       very recently when it came in my documents for this
   Q.  You are sure about that?
   A.  Absolutely sure.
   Q.  If we go to {E1/3/6} which is something called "ARS 43.
       Job Description"?
   A.  That one also.  I didn't see that one.
   Q.  And what about the document behind tab 9 {E1/9/1},
       "Serv 135"?
   A.  Nope.
   MR JUSTICE FRASER:  E1, tab 9?
   MR CAVENDER:  Yes, page 1.
           If you go over the page to {E1/9/2}, this is --
   A.  That is not my signature.
   Q.  I understand.  I am just using it -- it's Mr Bates',
       obviously -- because you were around at the same time.
       It was kind of -- it had been in this form.  You said
       you signed a document and I am trying to identify with
       you which one it might have been.  The Serv 135 is
       a candidate because the other two I have just shown you,
       you don't have to sign, whereas this one does require
       a signature.
           So have another look at Serv 135.  I am trying to
       narrow down which document it might have been you
       signed.  Are you still pretty sure you didn't --
   A.  I am pretty sure I didn't, because I think if he had
       given me that he would have asked me to read it, and
       I don't recall any of that text at all.
   Q.  Presumably though you weren't necessarily, because of
       the events of the day before, perhaps your normal self,
       is that fair?
   A.  It is probably fair, yes.
   Q.  So is it possible he put this in front of you and said:
       look, these are the terms, please sign here as
       a formality, or something, I require your signature?
   A.  It is possible.  But as I say, I don't recall any of the
       text on that and there are two pages of it.  I think
       I might have remembered some of it.
   Q.  So the other candidate then for you to sign is {E1/5/1},
       something called "ARS 110".  That is a document that
       effectively deals with "Lists of rules, postal
       instructions and forms issued".  At the bottom you see
       there is a signature.  Again, it is conceivable, is it,
       that you could have signed such a document?  Or are you
       fairly clear you don't think it was that?
   A.  I have no recollection of that at all.
   Q.  Is it possible it was or it's not possible?
   A.  Anything is possible, but I don't recall that document
       at all.
   MR JUSTICE FRASER:  I think this is the document you deal
       with in 32.1 of your witness statement.  Paragraph 32.1.
       {C1/2/7}  Is that the ARS 110?
   A.  Yes, that is the ARS 110.
           No, as I say, I don't recall these at all, no.
   MR CAVENDER:  Those are the only candidates I think that you
       were shown on the day.  You say you remember signing
       subsequently --
   A.  I signed something.
   Q.  No, subsequently you say you did, it was sent later,
       don't you?
   A.  Sorry, say that again?
   Q.  You say you were sent something subsequent to the
       transfer day?
   A.  No, I didn't say that at all.  I said that when Colin
       came I signed -- I remember sitting at the table where
       we were talking and I remember signing something.  I am
       assuming that now because I have -- I got some money
       from the Post Office, I got a wage, that it had details
       of my bank account on it.  But I don't recall signing
       these documents that you have shown me at all.  I don't
       even recall seeing them.  And I think the -- certainly
       the ARS ones are particularly outstanding because they
       have "ARS" in big capital letters on the front.
   Q.  I understand.  But if you look at paragraph 24 of your
       witness statement {C1/2/5}:
           "I recall that I signed something at the informal
       meeting ..."
           You don't know quite what that was.
   A.  Yes, I -- it is as I have said, I recall signing
       a document.
   Q.  And you say you surmise it was something to do with the
       bank account?
   A.  I assume I signed something that had something to do
       with the bank account.
   Q.  If you go to {D1.2/1/1}.
   A.  Yes.
   Q.  This is a couple of months later, isn't it?
   A.  I think -- yes, it is actually nearly two months later.
       But no, I didn't get this at all.
   Q.  You didn't get this letter?
   A.  No, I didn't get this letter.  I wasn't aware that I had
       applied for the post of subpostmastership.
   Q.  Because this is the document that obviously it follows
       and was given to you at the time that has your bank
       account and other information on it.  We see that at
       {D1.2/1/5}, do you see that?
           "Remuneration bank credit.  Please complete and
   A.  I had already done that.  I had been working for
       Post Office for two months and had received a salary.
       So they obviously had that before this letter came out
       to me on 23 September.
   Q.  I thought you said a moment ago you didn't receive this
       letter, or are you saying perhaps now --
   A.  No, I am saying I didn't receive it.  I don't recall
       receiving that as a letter with the front page that you
       have given me and, by 23 September, even if I had seen
       it, it would have been redundant because I had already
       received two months' salary from the Post Office.
   MR JUSTICE FRASER:  So you believe you signed something
       connected with your bank account actually on the day
       after your husband died?
   A.  Yes.  Yes, which given, as you said, the state I was
       probably in at that point, I very likely signed it
       without even thinking about it.  But certainly
       I received nothing on 23 September.
   MR CAVENDER:  Is it possible you signed the document at
       {D1.2/1/3} which is headed if you see -- it says "Your
       Copy: Conditions of Appointment for Barkham Sub
       Post Office", which attaches as page 5 internally, it is
       part of the same document, if you see, your account
       information.  Is it possible that this is the document
       that you signed on the appointment day?
   A.  As possible as anything else.  I am sorry, I know
       I signed something and, by deduction, I believe it is
       something to do with my bank account because I received
       a salary but I didn't receive anything in September.
   Q.  Moving on then.  Horizon.  Horizon was introduced in
       your branch in 2001, I think you say in your witness
       statement.  Does that sound about right?
   A.  Thereabouts, yes.
   Q.  I think you rely upon that as a variation of your
       contract, your existing contract.  It may not mean much
       to you but --
   A.  I think it should be, yes.
   Q.  Yes.  Do you say you hadn't received a copy of the SPMC
       by this stage?  This is some two years on now since you
       have been operating on your own in your own right.
       Would you have seen a copy of the SPMC by this stage?
   A.  I don't know actually.  I obviously at some point
       re-sorted all of the stuff in the post office.
       I don't recall coming across that.  I did see one at
       a later date that belonged to somebody else, so I know
       roughly what it looks like but I don't recall getting
       a copy of that.
   Q.  But it's possible you did?
   A.  Possible.
   Q.  Dealing with the Horizon variation, I think you
       probably realise Post Office doesn't accept this is
       a variation of the contract but, assuming that it is for
       that purpose, would you accept from me that an objective
       person in your position would -- their expectation would
       be that the Horizon computer system you were required to
       use would, firstly, be reasonably reliable?  Would that
       be what an objective person in your position would
   A.  I think, yes.  As a working subpostmaster expecting to
       be able to work efficiently, I would expect it, not just
       to be reasonably efficient, I would expect it to be
   Q.  And you would expect that you would get the necessary
       training on it; training that was necessary for you
       to --
   A.  I would, yes.
   Q.  And you would expect to have access to a reasonable
       Helpline to assist if there were problems?
   A.  Yes.
   Q.  Things started to go wrong with your relationship with
       Post Office when you moved into the portacabin in 2009,
       is that fair?
   A.  Yes, I think so.
   Q.  If we go to {E2/28/1}, this was an ongoing conversation
       you were having with Post Office.
   A.  Yes.
   Q.  It had been going obviously before this, but the
       background was, under "Background" on page 1, is that
       you had plans to demolish your existing domestic and
       business premise, is this right, and replace it with
       a purpose-built shop, post office and three apartments?
   A.  That was flexible.  I had been -- yes, the plan was to
       demolish the building that the post office -- and the
       building in which I lived.  It was within months of
       falling down and I had various plans to replace the
       post office and add certainly a dwelling for me to live
       in and at some point there might have been other
       accommodations there.  But that all changed many times
       and, in the end, it was built as a shop with post office
       and a three bedroom semi-detached house attached to it,
       and that was because I had promised my residents, all
       the people that lived in the village, that I would do my
       level best to keep the post office alive.  They had been
       very upset when there was talk of closing it under the
       transformation project and, as it is the only
       post office for two to three miles in any direction,
       they were desperate for it to stay there, and I said
       I would make sure that the post office was rebuilt and
       there would be a shop there, and that is where we went
       from there.
   Q.  So this was very much your endeavour and the house would
       obviously be valuable and be your asset that you could
       sell on in due course.  This was very much your project,
       wasn't it?  It wasn't something Post Office were
       requiring you to do?
   A.  No, I didn't expect Post Office to suggest that
       I rebuild my house.
   Q.  It is fair to say they were supportive and this letter
       is evidence of that, and there are discussions about
       moving into a portacabin and the costs associated with
       it, is that fair?
   A.  My costs associated with it.
   Q.  Yes.  The costs.  They were going to -- that it was
       going to cost to you.  If we go to {E2/28/5}, I think
       Post Office was contributing some sum, particularly in
       relation to the alarm by the looks of it.  But these
       essentially were what they were going to charge you to
       alter and temporarily set up in a portacabin and the
       alarm and things of that kind, yes?
   A.  Yes.
   Q.  It was going to be a big disruption, on any view?
   A.  It was a tremendous disruption.
   Q.  Yes.  Moving then forward to your suspension following
       the audit on 8 June.  Go to {E2/81/1}.
   A.  Yes.
   Q.  That was, as you know, following the £18,000-odd deficit
       found on the audit the day before.  Were you surprised
       once they had found that deficit that they suspended
   A.  Yes, I think I can say I was staggered that I was
       suspended; absolutely staggered.  Because for more than
       six months I had been asking Post Office to help me find
       the source of these alleged shortfalls.  I will not
       accept that this was money that was removed from my
   Q.  We will come to that in a separate section, if I may.
       I am just trying to focus at the moment -- because what
       is said in this letter at {E2/81/1} is:
           "This suspension is made under section 19(4) of your
       Subpostmaster Contract."
           I'm assuming when you received such a letter, which
       is you say shocking, you would have gone away and looked
       at your contract and found that term.  Is that what you
       would have done?
   A.  There actually seemed to be little point because I had
       already been suspended by that stage.  This was on
       9 June.  They had closed my office and effectively
       locked me out of, at that stage, half of the portacabin.
       There is no question of any conversation.  We had had
       that conversation the night before.
   Q.  I understand.  Do you say at this stage you think you
       still didn't have a copy of the SPMC which contains this
       right?  Because you say you were surprised they could do
       it.  A lot of people might think: well, I've received
       this letter, let's look at my contract, let's look at
       section 19, paragraph (4) and see whether they are
       entitled to.  Do you think you did that?
   A.  I couldn't do that.  That was all locked up.  I wasn't
       allowed to see that.  I had no entry to my post office
       from the day they did the closing audit.  They took the
       keys away, locked them up and I was allowed nothing.
   Q.  I understand.  But I don't see a letter in reply to this
       saying: section 19(4) of what?  Where is that?  Can you
       please show me in the contract?  I don't see anything of
       that kind.  What do I infer from that?  That you did
       know what they were talking about and didn't need to
       ask?  Or ...?
   A.  I assumed I was being suspended because there were
       shortages and, yes, I didn't understand what section 19,
       paragraph (4) was but ... I'm not quite sure how to say
       this, I found it very difficult to actually speak,
       firstly, to the auditor who came to do the audit.
       I think he had almost completed the audit before I even
       said hello to him.  I was probably as angry and upset as
       I have ever been in my life, because I felt it was
       unwarranted.  I think that is all I can say.  I didn't
       feel -- having had a great many letters to and from
       Nigel Allen, none of which was even remotely helpful,
       I felt that there was no point whatsoever in writing
       back to him at all.  I did write, however, to several
       senior members of the Post Office executive -- I got
       a reply from one -- telling them exactly how I felt.
       And I am afraid I was told by Post Office that I was
       basically a non-person; I didn't exist and I had no
       right, no right whatsoever, to communicate in any way
       with anybody at Post Office.
   Q.  But you could in fact have written to anyone you wanted,
       couldn't you?
   A.  I could have ... sorry?
   Q.  No one can physically stop you writing to anyone you
       like, can they, in fact?
   A.  Nobody could stop me writing to anybody, and I wrote to
       the people that I thought might have some influence
       explaining that I had been promised investigations,
       I had been promised help, I had been promised all sorts
       of things for the best part of six months and had got
       absolutely nothing.  I was at a loss as to where to go
       from there.
   Q.  I will come on in a moment to the cause of the deficits.
       I am trying to focus on the contractual things at the
       moment.  Can I refer you to paragraph 21 of your witness
       statement.  {C1/2/5}.  At the top:
           "My understanding was that the only situation in
       which Post Office could compel me to leave was if I had
       done something fundamentally wrong."
           Do you see that?
   A.  Yes.
   Q.  You surely must have realised this was
       a business-to-business relationship and there must
       inevitably be an ability to terminate such a thing on
       notice.  Isn't that fair?  It doesn't go on forever
       unless someone does something fundamentally wrong.  This
       was an agreement -- even employment contracts have terms
       in -- not that this is an employment contract, but have
       terms of notice in.  Most commercial agreements for
       phones or -- virtually anything have a notice period,
       don't they?  Why are you saying here you thought that it
       was only if you had done something fundamentally wrong
       that the contract could be brought to an end?
   A.  Because I was suspended.  I wasn't terminated.  I was
       suspended and you suspend somebody if they have done
       something that is wrong.
   Q.  Paragraph 21.  I have moved on.  It is talking about
       leaving; ie compelling you to leave, terminating you,
       essentially.  What you seem to be saying is you thought
       you could only be terminated if you had done something
       fundamentally wrong.  What I am suggesting to you is you
       must have realised, like in any contract actually, there
       is normally a provision that it can be terminated on
       notice.  Are you saying you didn't realise that?
   A.  No, I didn't realise that actually.  It was because
       I owned the building.  I owned the post office building
       inside.  Yes, I didn't own the money, I didn't own the
       stock, but the majority of stuff connected with the
       post office I owned and I felt that, yes, I couldn't be
       terminated; just told to pick up and go away.
   Q.  Could you go to paragraph 121 of your witness statement
       {C1/2/28}.  Paragraph 121 at the top:
           "I tendered my resignation on 12 May giving three
       months' notice, which I had understood I was entitled to
       pursuant to my agreement with Post Office."
           It seems you did in fact know you had the ability to
       give three months' notice to terminate.  Did you not
       realise that Post Office had a reciprocal right to give
       three months' notice too?
   A.  I beg your pardon but Post Office didn't give me three
       months' notice.  I was terminated without notice.  I was
       suspended without notice.
   Q.  If you concentrate on 121, you said earlier in relation
       to an earlier paragraph I put to you that you thought
       that the relationship would go on forever until such
       time as you had done something seriously wrong
       effectively, and yet here at 121 you are saying you gave
       notice, three months' notice, pursuant to your
       agreement, pursuant to your understanding of the
       agreement.  Where do you say you got that understanding
   A.  I rang the Helpline querying the procedure for selling.
       I was told that Post Office would not advertise my
       branch until I had handed in my notice with regard to
       selling the branch.  I understood, and I know from
       buying a house or whatever, that there is very likely
       not a prayer that you would be able to sell a property
       and to complete within three months.  But I followed the
       directive I was given.  I handed in my notice.
       I actually assumed that the three months' notice would,
       if you like, kick in when I had exchanged contracts,
       which seemed logical to me.  Obviously I was wrong.
   Q.  But my question is where did you get the idea that you
       could give three months' notice from?  Where did you get
       that idea from?
   A.  Helpline.
   Q.  Are you sure you didn't have your copy of your contract
       by this stage?  You have given me various answers during
       the course of this cross-examination.  Paragraph 27 of
       your witness statement {C1/2/6} says the first time you
       read the SPMC is when you attended a Citizens Advice
       Bureau after termination.  Do you see that?
   A.  Yes.
   MR JUSTICE FRASER:  But you were asking the witness
       about May 2010 though, weren't you?
   MR CAVENDER:  I was, yes, but I was just trying to check in
       light of those answers whether the witness sticks to
       paragraph 27.
   MR CAVENDER:  Are you able to stick firmly to paragraph 27
       and the Citizens Advice Bureau or might you in fact have
       seen it at an earlier stage?
   A.  No, as far as I recall that was when I first saw
       a portion of it which I think actually related to
       a subpostmaster must repay any losses due to their --
       where it says if it is our fault, if it is due to our
       error, et cetera, or to any of our assistants, that was
       the time I was enquiring about that.  I enquired of
       Helpline: why are my buyers, the people who wanted to
       buy my shop, not being able to access the Post Office
       website, because it should be there, and I was told
       that, as far as Post Office was concerned, I had to hand
       in my notice first.
   Q.  But going back to the source of this question is you
       saying that you didn't think the contract could be
       terminated other than for very bad behaviour.  You must
       have been quite surprised -- you must have assumed that
       was reciprocal, that obligation?  That neither side
       could terminate this relationship.  Is that really what
       you thought?
   A.  Why would that be?
   Q.  Your evidence appears to be that you didn't --
   A.  I assumed that, if I was doing my job correctly, if
       I was running my office correctly, that I would --
       I suppose I had thought that they would give me warning
       because I had all of these shortages.  I thought that
       they might give me a warning.  I did actually hope that
       Post Office would help me find the source of the losses.
   MR CAVENDER:  Can I move on then to the source of the losses
       and some other subjects in your witness statement.
           I see the time, my Lord.
   MR JUSTICE FRASER:  I assume you have a reasonable amount
       left to go.
   MR CAVENDER:  Certainly beyond 4.30 pm.
   MR JUSTICE FRASER:  Beyond 4.40 pm?  Don't feel under any
       pressure about it, Mr Cavender, because it was intended
       that Mrs Stubbs would go over into Monday.
   MR CAVENDER:  It would be very convenient if we could not
       make her come back though, my Lord.
   MR JUSTICE FRASER:  I am in your hands as to timing.  If it
       is going to be more than about another ten or fifteen
       minutes then ...
   MR CAVENDER:  Then we have re-examination potentially.
   MR JUSTICE FRASER:  I wouldn't worry about Mr Green's
       re-examination because I think he realises he is on
       a short leash.
   MR CAVENDER:  My Lord, I think we are getting into the
       question of if I get a lot of answers --
   MR JUSTICE FRASER:  That might well be right.  I think now
       probably is a good time.
           Mrs Stubbs, I apologise for the fact that I am going
       to ask you to come back on Monday.
   A.  I was expecting that.
   MR JUSTICE FRASER:  When I spoke to Mr Bates and said it is
       best not to speak to anybody, actually the rule is you
       are not allowed to speak to anyone about the case.  You
       are in a rather different situation than Mr Bates
       because it was quite easy for him to spend ten minutes
       this morning and lunchtime not speaking to anyone.  It
       would be artificial to expect you not to speak to anyone
       until Monday.  So the rule is: please don't talk to
       anyone about the case until Monday morning.
   A.  I understand.
   MR JUSTICE FRASER:  I know you will take that into account
       and I will see you on Monday morning at 10.30 am,
   A.  Thank you very much.
   MR JUSTICE FRASER:  Is there any --
   MR CAVENDER:  Timing.  Providing I finish Mr Sabir on
       Monday, as well as obviously Mrs Stubbs, then we are
       still on track.
   MR CAVENDER:  I think I was just questioning whether
       I should be able to do that -- not saying we start early
       or go half an hour later --
   MR JUSTICE FRASER:  We can always go a little bit later.
   MR CAVENDER:  I am obliged.
   MR JUSTICE FRASER:  My impression of the pace is we are
       probably broadly on track.
   MR CAVENDER:  My Lord, yes.  I need to finish Mr Sabir on
   MR JUSTICE FRASER:  Understood.
           A couple of minor points and one slightly more major
       point.  Opus are going to give me an external keyboard
       for this machine I think on Monday.
           In terms of any supplementary evidence-in-chief,
       Mr Green, I think it is a good idea, if it is just to
       correct typo-type corrections and clarifications,
       probably just get them put in a document.  It helps
       focus the mind on what they are, it means Mr Cavender
       has advance notice and it is easier for the witness.
           We are not going to do anything about it now, but
       I need you both, please, to address your minds to the
       following point, which we will probably deal with again
       at the end of the claimants' evidence, if not, maybe on
       a Friday between now and the end of trial, which is
       round three.  I already made certain comments to you
       about round three when you were in front of me
       in September.  I know you said certain things to me then
       about not wanting round three in the summer.
       I expressed considerable doubt as to whether it was
       sensible to put it off much to later in 2019.  We will
       be debating round three at some point in the next week
       or so.  So it was just to remind you it needs to be on
       your radar.
   MR CAVENDER:  Did you want to fix a time so we are
       prepared for that, or are we just going to fit it in ...
   MR JUSTICE FRASER:  I'm not going to be making any order
       until the actual end of the trial.  If by the end of
       next week there hasn't been a convenient 30-minute slot,
       I will give you advance notice, and I will give you
       plenty of notice.  Because at the moment you are in the
       middle of cross-examining and I know that is going to be
       your main focus.  But it was just to mention round three
       to all of you.
           Anything else?  No?  Thank you all very much.
       Monday morning at 10.30 am.
   (4.25 pm)
         (The court adjourned until 10.30 am on Monday,
                        12 November 2018)

   MR ALAN BATES (affirmed) .............................2
       Examination-in-chief by MR GREEN .................2
       Cross-examination by MR CAVENDER .................9
       Re-examination by MR GREEN .....................143
       Questions from MR JUSTICE FRASER ...............148
   MRS PAMELA JOAN STUBBS (sworn) .....................150
       Examination-in-chief by MR GREEN ...............150
       Cross-examination by MR CAVENDER ...............151

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