Friday 18 January 2019

Minister for Postal Affairs states government position on Bates v Post Office

In a reply to West Tyrone MP Órfhlaith Begley's query on behalf of a constituent, Kelly Tolhurst, the Minister for Postal Affairs at the Department for Business, Energy & Industrial Strategy states the government's position on the ongoing Bates and others v Post Office group litigation.

The letter is dated 11 Jan 2019. The letter reads as follows (you can see the original here or embedded below)

"Dear Órfhlaith

Thank you for your letter 11 December 2018 to the Rt Hon Greg Clark MP about Group
Litigation vs Post Office Limited. I am replying as this matter falls within my Ministerial

Firstly, I should explain that while the Post Office is publicly owned, it is a commercial business
operating across a range of competitive markets. The Government sets the strategic direction
for the Post Office - to maintain a national network accessible to all and to do so more
sustainably for the taxpayer - and allows the company the commercial freedom to deliver this
strategy as an independent business. This approach has resulted in a more commercially
sustainable business with decreasing reliance on taxpayer subsidy and a post office branch
network that is at its most stable and accessible in decades at 11,500 branches and with
99.7% of customers living within 3 miles of their nearest branch.

The claim Alan Bates and Others v Post Office Limited is currently being conducted in the
High Court pursuant to a Group Litigation Order, with the first trial having concluded on 6
December 2018 and a second trial being due to commence on 11 March 2019. The legal
defence of this litigation and the costs involved in doing so are being handled by Post Office
Ltd and I would refer you to the notes to the accounts in Post Office Ltd’s Annual Report for
2017/18 which state:

“On 11 April 2016, a High Court claim was issued on behalf of a number of postmasters
against Post Office in relation to various legal, technical and operational matters, many of
which have been the subject of significant external focus for a number of years. Post Office is
robustly defending the claim, believes it lacks merit, but welcomes the opportunity to have
these matters resolved through the Court-managed Group Litigation Order. The Court has
ordered two trials to be heard in 2018/19 to determine a subset of the preliminary issues in
dispute between the parties. The Court has not yet ordered a process for determining any
issues of liability or quantum. To date, the Claimants have not asserted the aggregate value of
their claims in any of the Particulars of Claim filed in the litigation. While the Directors
recognise that an adverse outcome could be material, they are currently unable to determine
whether the outcome of these proceedings would have a material adverse impact on the
consolidated position of the Group, and are unlikely to be able to do so until the Court has
made further determinations and the Claimants have provided the necessary information
about the value of their claims. The Directors continue to keep this under close review. In
2017/18 the costs of £3 million included in operating exceptional items relate to Post Office
defending the Post Office Group Litigation. These have been disclosed as operating
exceptional items because we expect costs to be more significant in 2018/19 and 2019/20.”

The outcome of this litigation is a matter for the court to decide and the Government is unable
to comment further on any matters relating to this litigation.

The Post Office’s Articles of Association state under Article 11.1(0) that one of the matters
requiring the consent of the Special Shareholder (the Secretary of State) is

“the entry into or implementation of a relevant transaction by any member of the group which involves or is likely to involve (either individually or when taken together with all other related relevant transactions (other than any related relevant transaction previously approved under this article 11.1(0) entered into or implemented in the previous 12 months)) the incurrence of a
commitment or liability, or the payment of a sum, by any member of the group which is an
amount in excess of £50,000,000”

As the sole Shareholder, the Government expects Post Office Limited to ensure value for
money principles in its use of resources at all times. Therefore, any requests for consent under
Article 11.1(0), for whatever purpose, are considered in the light of these value for money

Minister for Small Business, Consumers & Corporate Responsibility"