Tuesday 28 May 2019

EXCLUSIVE: Post Office forces through new contract changes

March 2019's High Court ruling prompted a pledge from the Post Office to "improve communications"* with its Subpostmasters alongside a touchy-feely assertion it had "started to listen, really listen"** to their concerns.

Behind the scenes, however, the Post Office was preparing to force through changes to some Subpostmasters' contracts without consulting them, leaving many people claiming they will be significantly worse off.

There are 11,500 Post Offices in the UK, of which around 450 are post and delivery offices, or SPDOs. The delivery offices attached to the Post Office are the responsibility of the Subpostmaster, but operated by Royal Mail staff. They're the sort of places people like me would go to collect an undelivered parcel.

On 24 April this year, five weeks after the Post Office was condemned by a High Court judge for its "culture of excessive secrecy" and efforts to "conduct itself as though it is answerable only to itself", a letter from Chris Howard, Post Office's "Remuneration Development Manager" landed out of the blue on the doormats of each of SPDO Postmaster.

"I am extremely pleased to advise you" it began, "that Post Office Ltd has come to a revised agreement for the provision of Mailwork Delivery Offices with Royal Mail."

The fait accompli

The letter was dated 15 April, and the "agreement" was, in fact, a contractual change, backdated to 1 April this year. This is the first change to SPDO Subpostmaster remuneration since 1998, yet it came without warning and without the "agreement" of the Subpostmasters it affects.

Don't worry, though. According to the letter, discussions with the Post Office-funded National Federation of Subpostmasters (NFSP) about this pay, er, alteration; "ran alongside Royal Mail discussions to ensure we could obtain the best outcome possible."

[Who is "we" in this instance, I wonder...?]

So what changes are the Post Office attempting to enforce on Subpostmasters? Well, rather than base Subpostmaster remuneration on the number of Royal Mail employees operating out of their adjoining  delivery office, the Post Office are now paying Subpostmasters a flat fee for the existence of the delivery office, no matter how many Royal Mail staff are based there. It is also offering a transaction fee rather than a flat fee based on the number of P739/Mailswap items the SPDO handles on a monthly basis.
A P739 card
P739s are the "Something for you" cards which posties put through your door when you're out, often taken off your hands at an SPDO in exchange for a letter/parcel. Mailswaps are the letters/parcels a postie couldn't deliver to your house and so brings to the SPDO to store whilst they await collection via a P739 card.

Good news for the 85% of SPDOs who will see a net increase in their remuneration, right?

The deflating cushion

Not exactly. According to some Postmasters the estimates for the amount of P739/Mailswap products being routed through the SPDO are wildly optimistic.

One Postmaster did a bit of number-crunching when he saw the Post Office expected his branch to earn £931.84 a month from P739/Mailswaps. He wrote back to the Post Office:
"How on earth can you include this unaudited figure? This amounts to 3328 items at an average of 64 a week? Reality is nowhere near this close."
The new agreement also reduces the amount of money Royal Mail has to pay if it decides to close its delivery office (which you can bet will be happening at some SPDOs very shortly), and confers responsibility on SPDO Subpostmasters for keeping the delivery office clean and safe. This includes fire extinguisher maintenance, cleaning toilets, providing toilet paper and soap for Royal Mail's hard-working posties and paying for their PRS licence so they can listen to music while they work!

In his letter, Mr Howard references the ongoing Bates and others v Post Office group litigation, noting:
"You may have seen recent newspaper and TV reports about a legal judgment against the Post Office. We would like to reassure you this does not affect the products and services we provide to customers and our commitment to support and work with postmasters."
Rats are being smelled left, right and centre. As one correspondent to a Subpostmaster forum notes:
"The entire proposal appears to be a crafty way for Royal Mail to bring Postmen back into central sorting centres without paying you for loss of mailwork as per your contract. The practice of paying you for Postmen that have already been removed back to a central office is to end. This loss of income is most felt by the 15% of losers. But for those of you who look like winners... this seemingly increase to pay I believe will be short lived as I suspect Royal Mail will draw back Postmen into central sorting centres and you will lose the supervisory payment incrementally plus there will be no compensation to you other than for the last Postman to be withdrawn. [The P739/Mailswap remuneration] figure is a forecast and as someone has already pointed out POL's forecasts are somewhat exaggerated. All in all this appears to be the end of the Mailwork type of Post Office branch. These changes are designed as a cushion that will be gradually deflated so as to allow Royal Mail to depart with minimal cost."
Some SPDO Subpostmasters are spitting blood - not just at the contractual changes, which they believe either stiffs them now, or down the line - but at the way these changes have been visited upon them.

All in the best possible faith

One Subpostmaster, who estimates the contractual changes will result in a net loss to his business of £5000 a year, wrote back to the Post Office demanding redress:
"This contract has been served on me without the opportunity for me to pass comment, to seek a variance or indeed to seek advice before its implementation.... I received this revision on 25 April - some twenty four days after its inception.... It was agreed in a "discussion" with a body I am not a member of nor does it hold collective bargaining rights on my behalf."
Another writes:
"I reject totally your suggestion that the NFSP has somehow agreed to your proposals on behalf of myself. This organisation holds no mandate to enter into any such discussions\negotiations as to do so would represent third party inference in my Contract. The NFSP holds no collective bargaining powers or rights. Mr Justice Fraser in his Judgement set out very clearly the role of the NFSP and what they stand for. I resent any suggestion that they can or should act as a representative body for Postmasters. I require your urgent attention to this letter and confirmation that your proposals will NOT be implemented and I wish to place you on notice that I reserve the right to apply for an injunction to halt your actions if you ignore this letter. I will also be writing to Justice Fraser to inform him of your potential contempt for his Judgement."
The Post Office is unmoved. In a letter dated 15 May, Steve Utting, National Mailwork Manager writes:
"The recent judgment of Mr Justice Fraser did not remove Post Office's right to implement changes, nor did it require Post Office to consult with all postmasters before making changes... I would recommend that you obtain independent legal advice before taking any legal action... we consider the Mailwork variation [ie these contractual changes] to be binding on you."
For SPDO Subpostmasters who might go out of business if they lost their adjoining delivery office, the Post Office has had an idea. It might, might, agree to subsidising their branch with "exceptional" funding, but only if the Subpostmaster reworks and present a P&L statement to the Post Office which can then be discussed in their absence by the Post Office and the NFSP. Exactly how this begging bowl process might function is "still being worked through, and it may be some test cases will inform the final procedure."

I wrote to the Post Office to get their perspective on these SPDO contract changes and received the following.
"We negotiated a change with Royal Mail which benefits the vast majority of the postmasters involved through increased payments.  We also consulted with NFSP throughout the process and most of the feedback we’ve received has been positive. 
"The vast majority of postmasters will see increases in their Mailwork payments as a result of the changes. We are monitoring the actual number of ‘Something for you’ cards processed by each Mailwork branch and making transition payments to support any postmasters who do not see an increase in their Mailwork payments under the new structure so everyone receives at least what they received under the previous agreement."
I suspect this statement will not satisfy some of those on the frontline. They have just had their business plans thrown up into the air by the Post Office without warning. The only "consultation" was with the NFSP, an organisation found by a High Court judge to be in the control of the Post Office.

This is unlikely to go away.


* On 15 March 2015, the day the Common Issues trial judgment was handed down, the Post Office chairman, Tim Parker said:

"Our postmasters are the backbone of our business and our first priority will be to consider the points raised about the management of our contractual relationships and how we could improve them... In addition, we will further improve communications with postmasters."

** On 15 March, in a video message directly to Subpostmasters, Debbie Smith, Retail Chief Executive said:

"We are... taking the judge's comments very seriously and they do make us realise we have to be a whole lot better.... I really care about getting things right for Postmasters... we have started to listen, really listen... going forward all of our plans are around how do we make things better for Postmasters... you're the backbone of our business and we really need to get it right.... We're also going to be improving our communication."

If you can, please help keep this crowdfunded public-interest journalism project going by chucking a few quid in the tip jar below. Contributors who give £20 or more will start receiving regular "secret" emails which have all the info and gossip about this litigation as it makes its way through the courts.

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Saturday 25 May 2019

Pete Murray Part 4: "You'd better get yourself a lawyer"

Pete outside his Hope Farm Road branch
This is part four of Pete Murray's story. It brings us up to May 2019. Pete has been Subpostmaster of Grove Road Post Office in Wallasey since 2013 and Hope Farm Road in Great Sutton since 2014. Hope Farm Road's previous incumbent sadly killed himself after being hounded by the Post Office for inexplicable discrepancies which kept appearing at his branch.

Pete was suspended in November 2018 after auditors discovered a £35,000 discrepancy at Hope Farm Road branch. He had been asking for help for the best part of two years leading up to their visit.  Pete's contract manager is Paul Williams, and it was Mr Williams who suspended Pete in November.

Part one of Pete's story was written in Dec 2018 ("The Post Office claim I owe them £35,000, despite never showing or telling me what I have done wrong.")

Part two was written on 29 January 2019 ("What kind of games are you playing with human beings' lives?").

Part three was written on 30 January 2019: ("Post Office Ltd see fit and well to treat me like this, pending an 'investigation' which appears not to be taking place.")

To summarise, when we met him last in part three, Pete was desperate. Suspended without pay for three months, losing retail and counter income over Christmas, the recipient of legal threats from the Post Office's lawyers and an unforgivable lack of communication from the Post Office itself. This is part 4 of Pete's story in his own words:

"After my email to Paul Williams dated 29 Jan demanding to know what was going on, and why things were taking so long, I still didn’t get a meaningful reply, just an acknowledgment from Paula Vennells' office.

But on Friday 15 February, I received a phone call from a man whose name I forget, but I think his first name was Dave. Dave was a Post Office auditor.

He was very pleasant, and completely understanding of the choice words I used about how I had been treated and ignored by Post Office.

Dave told me that he would be coming to Grove Road the following Wednesday 20 Feb to get us open again.

He was also able to tell me that Hope Farm Road would be opened the following week, on Thursday 28 Feb. I was being unsuspended!

On the Mon 18 Feb I received a call out of the blue from Paul Williams.

He seemed all jovial and friendly, and said he was pleased to inform me that I was to be reinstated at both offices, starting at Grove Road this coming Wednesday.

I thanked him for this, and said that I knew this already, as I had already heard from the auditor who was coming to Grove Road last Friday.

He seemed quite put out when he said that he had only just been informed that morning.

I went to see the property manager of the shopping precinct at Hope Farm Road to tell him the good news.

He confided in me that his bosses, the directors of the company that owns the precinct, instructed him to start proceedings to evict me from their property, and that the reason that he did not was because a good friend of his wife is a JFSA [Justice for Subpostmasters' Alliance] member and one of the Postmasters currently embroiled in the legal action against the Post Office. If that has not been the case, I would also have been kicked out and have legal expenses there too.

Wed 20 Feb came around and I spent the day in Grove Road with ‘Dave’ stocking me back in. By the end of the day we were good to go.

Everything went fine after Dave left, except for when I tried to open the Health Lottery function on Horizon. It didn't work. A pop-up notice said to call the helpline. So I did. The helpline told me to contact the Health Lottery. I contacted the Health Lottery, and the guy went on hold for ten minutes.

When he came back he said "all I can find out is that your Health Lottery terminals have been shut down. It says they have been disabled at both your offices".

The famous Post Office Horizon training regime

My wife went back into Grove Road on Thursday 21 Feb and I was preparing to re-open Hope Farm Road.

At my review meeting in January Paul Williams and Mark Baker (the CWU Subpostmasters national organiser) agreed I should receive a week of proper extra training on Horizon before going back into the branch to make up for my initial lack of training.

Shortly after telling me I was to be reinstated, the Post Office informed me that two days training would be enough.

A few days before my training started I got a call from an auditor. Let's call her Sara. It was Sara's job to get me trained up, re-stocked, audited and ready to re-open at Hope Farm Road.

During the call Sara told me on the two days I was booked in for training, she should be on annual leave. She had hair and MOT appointments to deal with - could she come late and go early?

So my week of intense re-training was shortened to just two days by the Post Office and each of those two days shortened to under 4 hours by the auditor.

Sara came, did the training, and on the day we reopened she did a stock count, remming the Christmas Stamps in and out again (we’d received Christmas stock the day before my suspension back in November 2018, so it had never been remmed in).

"You'd better get yourself a lawyer."

Whilst chatting in the branch that morning, a few things came up. I pointed out how the lady from the Post Office who sat in on my review meeting had told me it was Post Office policy not to send people out to help Subpostmasters when they were having problems with Horizon.

Sara said "well, that’s a load of rubbish, it’s what I do every day. I go into branches to help them find problems".

I said "I have been asking for help and it hasn’t come yet in any shape or form."

I didn’t hold back on how I felt about everything, and how I blame the Post Office and Paul Williams for causing me to suffer a stroke.
Not a happy Subpostmaster

Sara put on a sarcastic voice, and said "Well, you’d better get yourself a lawyer then, hadn’t you?"

This irked me just as much as the auditor who closed me down in November, who, when I pointed out that my predecessor had killed himself, snorted and said "Well I hope you don’t do that too!".

A week after Sara did the bagging up of the Christmas stock to send back, being a Wednesday and the first Wednesday since getting back in branch, I made sure to do a proper Balance Period to get my return-to-work back on the right footing. Bear in mind, after four months off without income, and being treated like a numpty by the auditors, my confidence was pretty much in tatters.

I printed off a balance snapshot and noticed that there appeared to be 1000 books of 2nd Class Christmas Stamps on my stock unit. This was just before the price increase in December, so they were worth 1,000 x £6.96 - £40 shy of £7000.

The rem bags were due to leave the next morning, so I reversed them and checked them, and the 1000 books of stamps were in there. If I hadn’t checked, a bag of stock would have gone back to bullion centre with £7000 of stock which the system thought was still part of my branch stock. Thanks Sara.

It was an easy mistake to make, but if a postmaster made it, he would held liable.

But of course, if an auditor makes a mistake, like Sara did here, the Subpostmaster has to hope he or she finds it before the inevitable happens.

I have been reliably informed by that the Christmas returns at bullion centre never get counted, as the volumes are just too great – so if I hadn’t found that stamp foul-up, I would have been a further £7k in the hole. They just don’t do ‘fair’, do they, the Post Office?


Whilst I was away from work, it came to light that despite having administrator rights on Google Maps to my post office locations, someone had managed to edit my Post Office listing at Hope Farm Road on Google Maps as ‘Permanently Closed’, which I fixed.

Then someone changed it back to 'Permanently Closed'. I had to log in and change them back again.

Once I returned to work, I received a call from a Google canvasser. I asked them how someone else could mark my business as permanently closed, but they had no idea.

Worse than that, after I was suspended someone at the Post Office COMPLETELY REMOVED both of my post offices from the Post Office, Royal Mail and Parcel Force websites. It goes without saying that since reopening, both of my businesses are now performing at a fraction of the rate that they did before I was shut down.

My Health Lottery buttons still don't work. I also have no Pay Station. I asked the auditor to supply me with an adaptor to connect it to the Post Office line, since my private phone line for internet, which I had the Pay Station on, had been cut due to non-payment. Pay Station also refused to send out an adaptor, so I have no Pay Station anymore. I am turning away even more customers each day. The business is completely decimated, and I just do not want to be there!

My customers are asking me ‘Why are the Post Office trying to shut you down?” and I have to say it really does look like that.

Road to nowhere

I got new passports for my children at the end of last year. We should have been in Vietnam during the Easter holidays, to visit their grandparents. It would be their first time back since we moved to UK in 2011.

Of course, having your pay removed and your retail business killed, whilst having to pay rent and rates put paid to that trip. They had been telling their friends they were going to Vietnam, and then we didn’t go – not fair to them either, is it?

My wife and I have invested tens of thousands of pounds and work hours into these two businesses. I recently was offered another job, but I couldn't take it because I am saddled with this Post Office. During my review meeting in January, Paul Williams told me that if I were to try to sell or transfer Grove Road Post Office, it would be downgraded from a mains to a local because transactions have fallen below 1000 per week. This would make my branch worthless.

It gets me down, and I really don’t want to come here every morning (well, ever again, actually) but I have no choice as I have to generate income to pay the bills.

The creeping suspicion that Mr Williams may not be very good at his job

Paul Williams has suspended me twice, once when he was an auditor and last November as my contract manager. Both times it has been shown to have been wrong.

The first time, it was overturned by my (then) contract manager when it became clear mistakes I was making with my ATM was down to a lack of training.

This second time my suspension was overturned by someone senior to Mr Williams (I have never been told who) but the Post Office is still withholding my pay, not to mention the fact that we were closed down over Christmas, having already bought Christmas stock to sell in our retail sections, so all that income was denied us too, whilst still paying rent and rates on two properties.

When Justice Fraser announced that the contract the Post Office have with us is illegal and unfair [see exactly which parts of the contract he considers unlawful here], I contacted HR by telephone, asking that all my illegally deducted pay would be now paid to me, since the judge has spoken.

The people there said that this would have to go to Mr Williams. Three weeks passed and finally a letter came from Mr Williams dated 18 April, saying that they were looking into my case and would get back to me, notifying me "no further deductions from fees [ie Pete's pay] will be taken during the investigation".

That was over a month ago and I have heard nothing more since. It seems that the Post Office culture is to just divert blame until it sticks on a postmaster, then go for the jugular.

The Post Office also still say I owe them £35,000. I don't know how that's going to get sorted, but I know who really should be in prison, and it isn’t any Postmaster!"

The Post Office tell me they do not comment on individual cases.

You can read part 1 of Pete's story here: "The Post Office claim I owe them £35,000, despite never showing or telling me what I have done wrong."
You can read part 2 of Pete's story here: "What kind of games are you playing with human beings' lives?"
You can read part 3 of Pete's story here: "Post Office Ltd see fit and well to treat me like this, pending an 'investigation' which appears not to be taking place."

If you can, please help keep this crowdfunded public-interest journalism project going by chucking a few quid in the tip jar below. Contributors who give £20 or more will start receiving regular "secret" emails which have all the info and gossip about this litigation as it makes its way through the courts.

If you want to find out a little bit more about the underlying story, click here.
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"Post Office Ltd see fit and well to treat me like this, pending an 'investigation' which appears not to be taking place."

Pete Murray outside Hope Farm Road Post Office
This is part three of what I am currently calling the Pete Murray trilogy. It takes us up to 30 Jan 2019.

Pete is Subpostmaster of Grove Road Post Office in Wallasey since 2013 and Hope Farm Road in Great Sutton since 2014. He was suspended in November 2018 after a £35,000 cash discrepancy was found at Hope Farm Road. 

Hope Farm Road's previous incumbent sadly killed himself after being hounded by the Post Office for inexplicable discrepancies which kept appearing at his branch.

Part two was written on 29 January 2019 ("What kind of games are you playing with human beings' lives?"). It is an email sent by Pete in desperation. Not just to Mr Williams, but to John Breeden*, the Head of Agency Contracts Deployment (Paul Williams' boss) and the then-Chief Executive of the Post Office, Paula Vennells.

Neither Mr Williams or Mr Breeden troubled themselves to reply, but Pete did get a response from Mrs Vennells' office, the very next day. It read:

"Dear Mr Murray,

Thank you for your email of 29 January to Paula Vennells, Chief Executive, Post Office Limited. I have been asked to reply on Ms Vennells’ behalf.

The issues you have raised are currently receiving our attention and we will be back in touch once those enquiries are completed.

Yours sincerely

Kelly Innes 
Office of the Group Chief Executive"

At last! Something to cling onto. Pete responds immediately: 

"Dear Kelly,

Thank you for your reply. I should be grateful, since it is more than I have ever had from Paul Williams by way of reply in the last 4+ years. I wonder though, how long is this going to take to reach a conclusion? It is grossly unfair, and is affecting my health and family life, not to mention I have landlords to pay rent for two currently closed Post offices, a mortgage and bills to pay for my home, and a wife and three children to feed.

This is surely not a way to find answers for problems in Horizon, after I have come to Post Office to seek help with these discrepancies, been ignored time and again by EVERY department that I have tried to contact in order to try to find the source of the problems, and as a result have been suspended and basically treated like Post Office Ltd believes that I am in some way a criminal.

For example, are you actually aware that I have had letters from the FORMER Agents' Accounting Team, and DAC Beechcroft Solicitors (headed 'Post Office Ltd vs Peter James Murray')? These came BEFORE I even got to have the meeting with Mr Williams, four weeks ago. Furthermore, I am absolutely astounded that a contract manager is allowed to take a holiday when he has several branches closed and the sub-postmasters of those branches not being paid?

This is no way to run a business, and I truly believe that I have tried every possible way to co-operate with Post Office Ltd to get answers to these issues, which, even Mr Williams said in the meeting - have only happened in one of my offices, not both - and it should also be brought to your attention that this is the very same office in which the sub-postmaster took his own life about 6 years ago, after Post Office chased him for similar mystery discrepancies.

I have already had a national newspaper making enquiries for a story - they are all too aware of the former postmaster's suicide - and the longer POL drags out this surely illegal(?) suspension, the more tempted I am feeling towards blowing the whole thing wide open and sharing the truth of this bully-boy method of management. I didn't invest tens of thousands of pounds into a business to be suspended by someone who has shown zero interest in day to day operations ever. I thought I was buying a Post Office to work WITH Post Office Ltd, but your line managers are very clearly operating in a 'them and us' mode, and treat Postmasters like absolute dirt, quite frankly.

The very fact that I have not taken a single penny from Post Office, and the fact that I have asked for help to sort it out, should have alerted Post Office Ltd to answer my cries for help and to co-operate, rather than to completely ignore all contact and demand when I am going to pay it back?

The fact that Mr Williams said some of them missing figures had been spotted on their search in Horizon would indicate, I believe, that there are entry errors, or there are data losses down the phone line, this sort of thing, which would actually indicate that the figure that Horizon is looking for is wrong, and that in turn, would actually mean that there isn't actually missing cash, and certainly not anything near the numbers that POL are demanding back from me, even if there were.

You may be aware that Wirral Conservatives, Angela Eagle, MP for Wallasey, and Justin Madders, MP for Ellesmere Port as well as well over 1000 members of the public who have signed a petition are all aware that this - now 3 month - extended closure of two very important community post offices is a completely unfair and immoral way of dealing with an administration problem.

I have made sure to tell anyone who asks that this is a problem clearly caused by Horizon, but that Post Office Ltd see fit and well to treat me like this, pending an 'investigation' which appears not to be taking place.

I would appreciate your most urgent action to re-open my offices, please, since Mr Williams doesn't seem to be remotely concerned with the urgent need to reopen them - otherwise, he would maybe have done something about it before going on holiday - something I can only dream of, due to the dire situation in which I have been put by him.

Thank you, and kind regards,

Peter Murray"

Did Mr Williams ever get in touch? Has Pete been able to reopen his branches? Are the Post Office still continuing legal action against him? Is this any way to run a business?

Find out in Part 4. Coming soon.

You can read part 2 of Pete's story here: "What kind of games are you playing with human beings' lives?"

The Post Office tell me they do not comment on individual cases.

* Just as an aside, but also as a further insight into Post Office management culture, John Breeden was a witness at the common issues trial at the High Court. His approach was found by the judge to be "PR-driven". The judge added Mr Breeden's evidence "was presented in terms obviously designed to put the best possible gloss for the Post Office on matters, and some of his statements simply did not stand scrutiny."

If you can, please help keep this crowdfunded public-interest journalism project going by chucking a few quid in the tip jar below. Contributors who give £20 or more will start receiving regular "secret" emails which have all the info and gossip about this litigation as it makes its way through the courts.

If you want to find out a little bit more about the underlying story, click here.

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Friday 24 May 2019

Day 13: Common Issues appeal application and costs award transcript

Scene of yesterday's action
This transcript is of a stand-alone hearing rather than being day 13 of the Horizon trial. However the judge previously requested that the two days spent on the recusal application hearing and judgment be folded into the Horizon trial day numbering system and this hearing is following that precedent.

It is important to note that is a redacted transcript. It does not have any of the rulings made by the judge on day 13, of which there are a number.

This is because the rulings have to be properly written up and signed off by the judge before they can be made public. I am advised this will not happen today, but when it does, I'll link to or upload them.

The hearing as transcribed below can be divided into three parts:

Dr Worden Acts Unilaterally
Application to appeal the common issues judgment
Costs wrangling

I've reported all three elements here for your easy reading convenience, but of course you can follow it all in real time below.

Finally, forgive the spoilers but I think this is worth pointing out. The Post Office has spent at least £18.3m on this litigation so far. This is what it has got for its money:

Attempt to have evidence struck out of the common issues trial - lost
Common issues trial - lost
Application to recuse the judge - lost
Application to appeal the recusal decision at the High Court - lost
Application to appeal the recusal decision at the Court of Appeal - lost

As of yesterday, we can now add:

Application to appeal the common issues trial judgment - lost
Application to pay 70% of claimants common issues costs - lost (they will pay 90%)
Attempt to delay paying any costs to claimants re common issues trial - lost
Application to appeal common issues costs order - lost

If the litigation continues in this manner, there might not be much Post Office left by the end of it.

As they did with the recusal application, the Post Office can ask the Court of Appeal for permission to appeal the timing of the payment of the costs order and the common issues trial judgment.

Transcript follows:

                                          Thursday, 23 May 2019
   (10.30 am)
                    Discussion re housekeeping
   MR JUSTICE FRASER:  The agenda has slightly changed.  I'm
       sorry, Mr de Garr Robinson, if I appear to do a double
       take; I can't see Mr Cavender.
   MR DE GARR ROBINSON:  My Lord, he is hiding.
   MR JUSTICE FRASER:  I can see Mr Cavender.
           I assume you are here as a result of the emails
       I sent yesterday.
   MR DE GARR ROBINSON:  My Lord, yes.
   MR JUSTICE FRASER:  What I just want to do then, we will
       start with that first because I imagine that's the only
       point upon which you are going to be present.
   MR JUSTICE FRASER:  Just in the interests of transparency,
       at 15.22 yesterday the court received an email direct
       from Dr Worden sending me a document which was attached
       which was called the "Third Expert Report" and three
       annexes or appendices thereto.  That email was not
       copied to anybody from the claimants but it was copied
       to one of the Post Office's solicitors.
           As the parties know, I sent two emails in pretty
       short succession after receiving that: the first was
       making the point that witnesses, even expert witnesses,
       are not to directly communicate with the court or send
       documents directly; and the second is that all
       communications to the court have to be copied to the
       other side, and that email went both to the claimants
       and also to counsel for the Post Office.
           It then occurred to me a few minutes later that
       I also ought to make it clear, because the status of
       that document was unclear to me and I haven't read that
       document, that there may be privilege issues, which is
       why I issued a direction to the claimants that they
       should neither read it nor deal with it nor distribute
       it, pending explanation of the situation this morning.
   MR DE GARR ROBINSON:  My Lord, yes.
   MR JUSTICE FRASER:  Which I imagine is why you are here to
       explain the situation.
   MR DE GARR ROBINSON:  I'm here at your Lordship's
       invitation, if I may say so.
           My Lord, can I just briefly address on you the two
       points which your Lordship made at the beginning.  First
       of all, the communication should have been copied to the
       claimants' solicitors.  My Lord, actually what happened
       is that Dr Worden sent it to your Lordship's clerk and
       immediately forwarded it to Freeths.  So it is in fact
       the case that the document was provided immediately.
   MR JUSTICE FRASER:  Was that being served on behalf of the
       Post Office to the claimants?
   MR DE GARR ROBINSON:  My Lord, no.  Your Lordship may recall
       from the hearing on 11 April, this comes from Dr Worden.
           Dr Worden, as your Lordship is more than aware, as
       an independent expert, considers it to be his duty to
       assist the court, irrespective of his instructions.
       Pursuant to that duty, which is enshrined in CPR 35.3
       I think, and also pursuant to his duty provided for in
       paragraph 2.5 of the practice direction to CPR 35, he
       conceives it to be his duty, in my submission on proper
       grounds, to inform your Lordship that he has had
       material changes of view.  It is also his view that
       those views, the views that are set out in the report,
       are helpful to your Lordship in resolving the Horizons
       issues, and in my submission there is more than
       an arguable basis for justifying that view.  But those
       are his views.
           My Lord, given that he owes your Lordship a direct
       duty to assist you, given that he is under an obligation
       to inform the parties and the court of a change of view,
       as your Lordship will recall I said on 11 April, this
       puts my client in a difficult position.  None of this
       has been instigated or requested by my client; it is
       what Dr Worden conceives it to be his duty to do.
           My Lord, to deal with your Lordship's second point,
       in my respectful submission it is entirely proper for
       an independent expert to communicate directly with the
       judge.  That underpins CPR 35.14, which your Lordship
       will also be well aware of, the provision which allows
       experts to seek the directions of the court.
   MR JUSTICE FRASER:  Well, whether that's correct or not, in
       the circumstances of this case, the way in which it was
       done and the time at which it was done -- and I went
       back and reread what you had said to me on 11 April --
       two points arise.  I'm not in any way finding or stating
       that it was improper for him to have done that.
   MR DE GARR ROBINSON:  I'm grateful for your Lordship to say
   MR JUSTICE FRASER:  However, it is highly unusual for
       an expert to do that without some sort of prior
       notification that that's happening; and secondly, it was
       not clear on the face of his email whether the claimants
       knew that was happening.
   MR DE GARR ROBINSON:  My Lord, there was prior notification.
   MR DE GARR ROBINSON:  If I can go back to the chronology,
       I'll deal with this very quickly; I hope we don't have
       to go into the correspondence, but there is
       correspondence dealing.
           On 10 April, this is the day before I addressed
       your Lordship, my instructing solicitors wrote a letter
       to Freeths indicating that Dr Worden had these changes
       of views and he wished to produce a short supplemental
           On the 11th, at the hearing, I then told you about
       the awkward position my client found itself in, on the
       basis of the two provisions I have just adverted
       your Lordship to and also the ICI v Merrell case that
       your Lordship decided.  I indicated that Dr Worden would
       be seeking to collaborate with Mr Coyne with a view to
       seeing whether it's possible to have any agreed or
       disagreed position.
           In response to that, your Lordship directed that the
       experts should meet by 3 May, making it clear you
       weren't giving any directions as to what they should
       talk about.
   MR JUSTICE FRASER:  Well, I was going to order them to meet
       anyway.  That direction for a meeting was not as
       a result of the 11th; it was in order usefully to use
       the time that had been created in the trial timetable.
   MR DE GARR ROBINSON:  I see.  I wasn't aware of that.
   MR JUSTICE FRASER:  But that doesn't matter.
   MR DE GARR ROBINSON:  In any event, your Lordship gave that
           The same day, after the hearing, Dr Worden provided
       his workings -- that's the raw data -- to Mr Coyne.
       My Lord, on 16 April there was a relatively brief
       discussion between Dr Worden and Mr Coyne about that raw
       data and Dr Worden's approach.  It's a without-prejudice
       discussion; I don't want to say any more than that.
   MR JUSTICE FRASER:  But the short point is there is
       a detailed chronology which leads, I imagine, at some
       point to notification by your solicitors to Freeths that
       another expert's report is coming.  Is that right?
   MR DE GARR ROBINSON:  Yes.  If I could give you the
       chronology, just to be clear.
           On 25 April, so this is a month ago, a draft of the
       report was provided without prejudice to Mr Coyne, and
       on 29 April I'm instructed the appendices to the draft
       were provided.  The purpose of providing those documents
       was to facilitate a meeting, but a meeting didn't happen
       by 3 May, or indeed a meeting hasn't happened at all,
       although they have had conversations over the telephone.
           My Lord, what then happened was that on 16 May
       Dr Worden provided that report your Lordship has
       received to Mr Coyne on an open basis, the final
       version.  The earlier version was a draft; this was the
       final version.  He provided it to Mr Coyne saying that
       he hoped that they could meet to discuss it, but
       pursuant to his duties to the court, he was intending to
       provide it to your Lordship next Wednesday, which was
   MR JUSTICE FRASER:  That date being chosen for what reason?
   MR DE GARR ROBINSON:  That was chosen by Dr Worden, as
       I understand it.  Oh, that's right, I'm so sorry, it was
       because Mr Coyne was going on holiday on that Wednesday.
   MR JUSTICE FRASER:  As in yesterday?
   MR DE GARR ROBINSON:  As in yesterday, but he was not on
       holiday on Monday or Tuesday.  What Dr Worden was hoping
       was that they would be able to have a discussion in
       those early two days.  When that proved not possible, he
       then sent it to your Lordship.
   MR JUSTICE FRASER:  I'm not sure that necessarily explains
       why Wednesday was chosen, but let's leave it at that.
           Is there anything else that you would like to
   MR DE GARR ROBINSON:  My Lord, if you have any questions
       you'd like me to --
   MR JUSTICE FRASER:  My major concern, Mr de Garr Robinson,
       was that yesterday this arrived with me out of the blue,
       not on its face obviously sent to the claimants, and
       obviously I didn't have any of the --
   MR DE GARR ROBINSON:  Yes.  That was a --
   MR JUSTICE FRASER:  -- I hesitate to use the word
       "backstory", but any of the detailed background.  You
       have explained sufficient to me to make me realise that
       there are no concerns in terms of the claimants now
       having received a document from the court which they
       ought not to have had, because you have explained they
       had it anyway.
   MR DE GARR ROBINSON:  I see.  I now understand your second
   MR JUSTICE FRASER:  If you look at it from the court's point
       of view, the court received a quantity of material
       yesterday unilaterally which it had to provide to the
       other side in the litigation, but which wasn't clear
       either what the status of it was or whether or not the
       Post Office even knew that that was being provided to
       the court --
   MR DE GARR ROBINSON:  I understand.
   MR JUSTICE FRASER:  -- which was what led to the direction
       3 minutes after the first email telling the claimants
       that they were not either to open it or look at it or
       anything until the situation had been cleared up.
           Now the situation has been cleared up, obviously
       that concern doesn't apply and that direction no longer
       applies, in the sense that it had any teeth anyway
       because they had it already.  But I think what I am
       going to ask you to do, and you will please just tell me
       how long you would like to do it, is I think a short
       witness statement setting out that chronology from the
       10 April to now, please, would greatly assist me.
   MR DE GARR ROBINSON:  Very good, my Lord.
   MR JUSTICE FRASER:  I'm not suggesting it is something that
       has to be done in the next day or the next couple of
       days, but I think just a short witness statement from
       whichever of your solicitors is the right person, just
       to explain that background that you've just taken me
       through, please.
   MR DE GARR ROBINSON:  Very good.  My Lord, can I just take
   MR JUSTICE FRASER:  Just take instructions as to when you
       would like that to be.
   MR DE GARR ROBINSON:  My Lord, my instructing solicitors
       suggest the end of next week.
   MR JUSTICE FRASER:  Which would be I think the 31st; is that
       right?  Friday the 31st.
   MR DE GARR ROBINSON:  Yes, it would be.
   MR JUSTICE FRASER:  Noon on Friday the 31st.
   MR DE GARR ROBINSON:  My Lord, yes.
   MR JUSTICE FRASER:  All right.  Thank you very much indeed.
           Unless there is anything else on that particular
       point or dealing with the experts -- I don't know if,
       Mr Green, there's anything that you would like to make
       by way of submissions or not.  I'm not inviting you
       expressly to.
   MR GREEN:  My Lord, there are only two points which I just
       very briefly make.
           One is that just in relation to your Lordship's
       observation about correspondence directly with the
       court, we don't agree with my learned friend's analysis
       at all.  The point is extremely short.  35.14 expressly
       carves out an unusual and separate channel, which is for
       experts to ask the court for directions.
   MR GREEN:  It does not provide or allow experts to do what
       happened yesterday.
   MR GREEN:  It is just not right.  So that is the short point
       on that.
           The other matter, I don't know to what extent, how
       far back the chronology is going to go, but the short
       point underpinning our concerns about how this has
       arisen is that Mr Coyne made a request for information
       in July 2018 for the OCPs, the OCRs and the MSCs, and
       the Post Office list has responded, I think it was
       6th August from memory, saying that those were
       irrelevant, and the new report arising after what should
       have been the conclusion of the Horizon Issues trial is
       based on an analysis, which we're trying to understand,
       of those documents said to be irrelevant in the summer
       of last year.
           So those are the only two points I wanted your
       Lordship to have.
   MR JUSTICE FRASER:  All right.  Insofar as you want to
       explore, examine or pursue any of those points in
       cross-examination, we will cross that bridge when we
       come to it.  I have ordered a witness statement.
       Nothing that I say should be taken as coming to
       a concluded view on whether or not it was correct or
       incorrect for him to have sent his third report direct
       to the court.  However, for today's purposes I think we
       have gone as far as we need to.
           Mr de Garr Robinson, thank you for coming at very
       short notice, and I imagine you are not going to want to
       stay for the rest of the morning.
   MR DE GARR ROBINSON:  I'm going to want not to stay.
   MR JUSTICE FRASER:  All right.  Thank you very much.
       Please --
   MR DE GARR ROBINSON:  I'm grateful to your Lordship.
   MR JUSTICE FRASER:  So turning to the main business of the
       day.  Can I firstly tell you what I think is on the
       agenda and remind you that we are going to need a break
       for the shorthand writers at some point.
           I have read all of the material that everybody has
       submitted.  There are the following issues and
       sub-issues that we have to deal with.  There is
       an application by the Post Office for permission to
       appeal.  There are costs to be dealt with,
       an application in respect of the necessary costs order
       for the Common Issues trial.  It appeared at one point
       as though there were also an application for the release
       of the security, but as I understand it, that's no
       longer live business for today.  Is that correct?
   MR GREEN:  My Lord, yes, not for today; to be reserved.
   MR JUSTICE FRASER:  Not for today.  It also at one point
       appeared to be on today's agenda the proper costs order
       consequent upon the recusal application, but as
       I understand it, that's now gone away as well.  Is that
   MR GREEN:  My Lord, yes.  The only point on that is that the
       order is for payment of a fixed sum of £300,000 up to
       20 April, but with costs occasioned by the making of the
       application, thereafter to be claimants' costs reserved.
   MR GREEN:  So in a sense the immediacy of dealing with it
       has gone, because the first part of it has been agreed,
       but how it all arose is not something that your Lordship
       can put out of your mind, in a sense, because that might
       need to be revisited in due course.
   MR JUSTICE FRASER:  But so far as today -- there was
       a slight difference in wording, and it might be me
       looking at matters in overly technical detail.  But in
       Mr Cavender's skeleton for today, at his paragraphs 3(a)
       and 3(b), there was an extent of agreement in relation
       to the relevant costs order on the recusal application.
       Has that now all been swept up into the consent order?
       Because the wording wasn't necessarily exactly the same.
   MR GREEN:  My Lord, yes.  So it is now just as in the
       concept.  We have a hard copy here signed, if
       your Lordship wants a hard copy.
   MR JUSTICE FRASER:  No, I have that.  That was lodged
   MR GREEN:  My Lord, yes.
   MR JUSTICE FRASER:  So apart from the word "draft" in the
       heading, neither party needs me to do anything with that
       except approve it?
   MR GREEN:  My Lord, that's right.
   MR JUSTICE FRASER:  All right.  And you are going to be paid
       £300,000 by 4 o'clock on 7 June, as per paragraph 1, and
       then paragraph 2 is to reserve the claimants' costs from
       that date onwards.
   MR GREEN:  My Lord, yes.
   MR JUSTICE FRASER:  All right.  I approve that order.
   MR GREEN:  I'm most grateful.
   MR JUSTICE FRASER:  So that removes both the potential
       summary assessment of that order and any argument or
       disagreement about how the costs of adjourning the
       Horizon Issues trial was going to be dealt with.
   MR GREEN:  Precisely.
   MR JUSTICE FRASER:  So we are now, therefore, at permission
       to appeal and then costs of Common Issues.
   MR GREEN:  My Lord, that's right.
   MR JUSTICE FRASER:  Right.  Unless either of you would like
       me to deal with it in a separate order, I will deal with
       the permission to appeal first.
   MR GREEN:  I'm most grateful.
   MR JUSTICE FRASER:  Mr Cavender.
                    Application by MR CAVENDER
   MR CAVENDER:  My Lord, I'm obliged.  You will have seen we
       have put in draft grounds of appeal, which are quite
   MR CAVENDER:  We have also put a skeleton argument in
       in support of those grounds of appeal.
           The grounds, as you will see, are grouped really in
       three areas: one, appeals on points of law arising out
       of the Common Issues; secondly, some limited appeals on
       fact; and thirdly, an appeal based on procedure.  We say
       there is a real prospect of success on each of those
       areas, and we apply on that basis, but also on the
       alternative basis that this is a case where there are
       other compelling reasons why permission should be given.
           Your Lordship is obviously very familiar with the
       test and it's not normal on such applications to go into
       such huge amounts of detail, particularly when you've
       had in advance a skeleton and the grounds of appeal.
       I don't intend to do so.
           The first point really, and we sort of flagged this
       in the skeleton, the underlying criticism we have of the
       whole structure of the court's approach to this of
       course starts with good faith and the implication of
       that term and the relational contract debate.  Of course
       you know well the views in my submissions I have put
       forward; I'm not going to put them all again.
           This area is clearly a developing area of law; it is
       clearly a relatively controversial area of law.
       I wouldn't say lawyers fall into two camps, those that
       are quite keen on the continental views and good faith
       coming in, and those on the other hand who are much
       keener on certainty of law and freedom of contract,
       although you could identify groups of lawyers in those
       relative camps.
           What Mr Justice Leggatt, as he then was, did in
       Yam Seng was to start the firing gun really on debate in
       English law.  You can see the views of Chitty trying to
       make sense of Yam Seng, and making sense of it by
       saying: well, this can only be honesty really.  You can
       only have good faith, the honesty part of that, which
       you can imply in this way.
           But your Lordship has taken a radically different
       view.  In my submission, there must at least be a real
       prospect of success if your Lordship is wrong about
       that, or the Court of Appeal might want to have a look
       at it, because it is a striking development if it is
           To be clear here, this isn't a point based on the
       facts of this case.  It's not a factual matter, it's
       a question of law, for a couple of reasons.  One is
       because on analysis of the court's judgment, you have in
       fact implied the good faith requirement as a matter of
       law, which in my submission is wrong, as opposed to on
       the basis in Geas(?) that it's implied in fact based on
       the circumstances of the contract.
           Secondly, and this is really the crucial point and
       where your Lordship has gone very much further than
       anyone has ever gone, and is truly radical, is the
       extent to which you then go on and use that implication
       of good faith to inject itself into each and every major
       term in the contract.  No one has ever done that before,
       there's no authority or warrant to do it, and in my
       submission it is wrong and at least there is a real
       prospect that it is wrong.
           Let me give you an example.  In relation to the
       termination provisions is where it finds its most
       obvious grounding.  The terms of these contracts said
       that they are terminable on not less than three and six
       months respectively.
           Leaving aside the point that "not less than" is
       a well-known, tried and tested commercial formula for
       many years and doesn't reflect in any way good faith, to
       inject good faith into those provisions, and to do so
       contrary to their express terms, is truly radical.  It
       has never been done before.  It is also contrary to
       a decision of the Court of Appeal in Ilkerler Otomotiv
       where Lord Justice Longmore, with whom
       Lord Justice Briggs, as he then was, agreed, said that
       whatever else you think about Yam Seng, it is talking
       about the performance of the contract, not its
   MR JUSTICE FRASER:  Can you just take me to that part of the
       Common Issues judgment.  I have just been trying to find
       it on Opus and I can't.
   MR CAVENDER:  The part where you deal with ...
   MR JUSTICE FRASER:  The part that you are just using as
       an example.
   MR CAVENDER:  The termination provisions, my Lord, start at
       865.  It is paragraph 865 and following {B7/29/252}.
   MR JUSTICE FRASER:  Yes, I would like to call it up on the
       screen if I could, but I can't seem to find where it is.
       I don't mean within the judgment, I mean where the
       judgment is.
   MR CAVENDER:  Where the judgment is?  I'm sorry, I have
       a hard copy.  I don't know if my learned friend can help
       me or not.
   MR GREEN:  It is {B7/29/1}.  My Lord, there is one in J,
       because the hard-copy bundles mirror the Opus bundles,
       and then there is the original one we had in the trial
       in B.
   MR JUSTICE FRASER:  I don't mind where it is.  All I can say
       is I can't find it on my separate screen.  I can see it
       on the common screen.
   MR CAVENDER:  The reference in the J bundle is {J3.1/7/352}.
   MR GREEN:  Does your Lordship have the Horizon Issues
       environment or the Common Issues?
   MR JUSTICE FRASER:  Well, I had both, but one of them has
       just disappeared, and now it says "no internet".  The
       other one appears to be -- well, it doesn't say whether
       it is Horizon or Common Issues, to be honest, but it
       doesn't have a J.  Just bear with me a minute.  (Pause)
           So the B7 reference, is that the Common Issues trial
   MR GREEN:  It is the Common Issues trial bundle, my Lord.
   MR JUSTICE FRASER:  I think part of my Opus appears just to
       have crashed.  Just bear with me one second.  (Pause)
           I think, Mr Cavender, what I'm going to do is --
       I seem to have lost everything now -- I will just rise
       for five minutes, just so as not to put anyone under
       undue pressure.  I'm sorry about this.  I would have
       brought my hard copy down; I do have one upstairs.  But
       now that everything seems to have gone down, I will just
       rise for five minutes and then I will come back in.
   (11.02 am)
                         (A short break)
   (11.08 am)
   MR CAVENDER:  My Lord, I think you're connected again.  If
       you are, I am not sure what page they have put you on.
       The reference is {B7/29/256}; it should be, hopefully,
       paragraph 888 of the judgment.
   MR JUSTICE FRASER:  Thank you very much.  Which page, sorry,
       of the judgment?
   MR CAVENDER:  So it is paragraph 888.
   MR JUSTICE FRASER:  Yes, which is page 256.
   MR CAVENDER:  Indeed.
   MR JUSTICE FRASER:  Thank you very much.
   MR CAVENDER:  So that's where you start dealing with
   MR CAVENDER:  There are two points.  One is the "not less
       than" point, and you deal with that at paragraphs 893
       and 894.
           Dealing with that first, in my submission that's
       simply wrong.  That is a well-worn formula you find in
       a wide range of commercial contracts.  Why?  To avoid
       the need where you get notice having to be given on
       a date certain, people taking points on whether the day
       of giving the notice or receiving it are included.  So
       that provision is put in, and of course you give more
       notice than the three or six months, and that is
       a standard commercial provision.  It is not intended to
       inject any kind of discretion.  So that's the first
           The second point, and if you go over to 899
       {B7/29/258} --
   MR JUSTICE FRASER:  So you're saying on this application
       that your case is that there was no discretion in
       respect of how the notice provision is exercised by the
       Post Office?
   MR CAVENDER:  Correct.
   MR JUSTICE FRASER:  Is that how you argued it before me at
       the trial?
   MR CAVENDER:  Yes, that the "not less" meant -- the point
       your Lordship made is we took it as if it said three
       months'/six months' notice.
   MR JUSTICE FRASER:  No, that's not the point I made.  I just
       asked you if you were saying there was no discretion in
       the clause at all in the way you argued it before me.
   MR JUSTICE FRASER:  You're saying you argued there was no
   MR CAVENDER:  Correct, and we do so now.
   MR JUSTICE FRASER:  No, I know you say that now.
   MR CAVENDER:  It's as if it is three months' or six months'
           So then you go on to paragraph 899 {B7/29/258},
       where you draw your conclusions.  You say:
           "I consider that in both instances -- termination
       without notice, and termination summarily -- the Post
       Office must take the decision in accordance with the
       obligation of good faith."
           Does your Lordship see that at the top of 899?
   MR CAVENDER:  So you tie the two together.  So there are two
       points: the "not less than"; and furthermore, good faith
       is injected.  That's injected not just to termination on
       notice, but also on the right to terminate for
       repudiatory breach or material breach.
   MR CAVENDER:  That has never been done before, in my
       submission it is wrong in principle, and there is real
       prospect with the Court of Appeal agreeing with that.
           Let me take you to the case of Ilkerler Otomotiv,
       which --
   MR JUSTICE FRASER:  Can you just remind me: what common
       issue was termination?  It was 15 and 16, wasn't it?
   MR CAVENDER:  Termination for cause was 15.
   MR JUSTICE FRASER:  I think termination on notice was 16.
   MR CAVENDER:  Correct.
           Can I refer your Lordship to the authorities bundle
       number 2, tab 24 {J7/24/1}, the decision of the
       Court of Appeal in Ilkerler Otomotiv.
   MR CAVENDER:  Tab 24, my Lord, yes.
           This was a case involving the termination of the
       distribution agreement.  The first thing you will
       notice, just by way of passing, if you go to paragraph 4
       of that {J7/24/2}, you will see the terms of the
       agreement are not dissimilar to our one: they use the
       words "at least six months' prior written notice" in
       paragraph 2.3.
   MR CAVENDER:  What was argued here was based on Yam Seng and
       good faith.  It failed.  What was argued was something
       a little bit similar to what my learned friends tried to
       do, and successfully tried to do, here.
           The point I should refer your Lordship to is
       paragraph 29 {J7/24/6}.  Having quoted Yam Seng, this is
       the Court of Appeal saying:
           "Interesting and informative as these comments are
       they do not support the terms proposed by Mr Sutcliffe
       ... [and] as ... Charles Hollander QC ... pointed out,
       Leggatt J is expressly talking ... [about the]
       requirements in the contract for communication and
       co-operation 'in its performance'.  Requirements for
       communication and co-operation in relation to
       termination would take one into a different realm
           So that was the response of the Court of Appeal to
       the notion that in some way the provision for
       termination could be visited or altered by Yam Seng or
       the good faith, and it's saying: no, it's a different
       thing.  What Yam Seng is talking about is performance,
       not termination.
           So in my submission there must at least be
       a realistic prospect that the Court of Appeal would want
       to look at that, and there is a realistic prospect of
       success on it.
           The same point applies to the repudiatory breach or
       material breach argument.
   MR JUSTICE FRASER:  Just before you move on to that though,
       I've just had a look at your closing submissions on
       Common Issues between paragraphs 447 to 457 {J2/4/160}.
       I don't think you cite this case.
   MR CAVENDER:  My Lord, no, it wasn't cited before you.  We
       came across it subsequently.
   MR JUSTICE FRASER:  That's germane, isn't it, whether you
       should get permission to appeal on a point which wasn't
       argued before me?
   MR CAVENDER:  My Lord, we are not sure it is.  The point was
       argued before you; we just hadn't found this authority
       at that point.  The point that supports our point is
       that good faith does not have anything to say about
       termination and "not less than" does not invoke any kind
       of discretion.
   MR JUSTICE FRASER:  All right.  If you say the authority
       wasn't cited before me, I think we're agreed about that.
       If you have a look at 447 to 457 {J2/4/160}, I'm not
       sure that the point was argued, but it might be that you
       say it was.
           But regardless of that, you're saying that error of
       law on this point, as set out in your grounds, which
       shows there is a reasonable prospect that the
       Court of Appeal will overturn it.
   MR CAVENDER:  There is a real prospect of that, my Lord.
   MR JUSTICE FRASER:  Yes, all right.
   MR CAVENDER:  Also my learned friend has shown no authority
       that good faith has ever been used to curtail rights of
       termination, whether express rights or for termination
       on notice or termination for repudiatory breach.  The
       same point applies there.
           What your Lordship has said is: you can't accept
       a repudiatory breach unless you do so in good faith, nor
       can you do so where you're in breach in relation to the
       matters for which you are seeking to accept repudiatory
       breach.  Good faith has never been used in that way
       before, to alter what is normally an objective standard,
       namely either side can accept a repudiatory breach to
       some degree of subjectivity.  No authority has been
       shown to you for that proposition, and in my submission
       there must be a real prospect --
   MR JUSTICE FRASER:  Where in the judgment, please, can you
       show me that I have said you can't accept repudiatory
       breach unless you do so in good faith?
   MR CAVENDER:  Give me one moment, my Lord.
   MR CAVENDER:  Paragraph 899 {B7/29/258}:
           "... in both instances -- termination without
       notice, and termination summarily ..."
           Which it's talking about in context, termination
       because of repudiatory breach:
           "... must [be] take[n] in accordance with the
       obligation of good faith."
   MR JUSTICE FRASER:  How does that say: accepting
       a repudiatory breach?
   MR CAVENDER:  Because that is what termination summarily
       involves.  There's no other way you can terminate
       summarily, my Lord.  You can terminate a contract
       summarily because one side is in repudiatory breach or
       termination on notice.  That's what this portion of the
       judgment is dealing with.  Again, I say we have a real
       prospect on that point.
           So, my Lord, going back to my skeleton argument, if
       I may.  I'm dealing here with common issue 1 largely, at
       paragraph 9 {J6/2/3}.  Our case was and is that the
       relational contract idea is useful as assistance in
       identifying types of contracts.
           The other complaint we make and made is that at
       (ii), the "long term" point.  Of course at this stage,
       before you're deciding whether it's a relational
       contract and whether to imply a term of good faith,
       you're looking at the express terms at that stage.  And
       the express terms are three months' notice or six
       months' notice.  Whether parties expect or do not expect
       to exercise those rights doesn't turn what is not
       a long-term contract into a long-term contract.
           The third point we make there is about the agreed
       implied terms.  Again, my learned friend, in his
       skeleton for today, seeks to move away from those.  In
       my submission this is a very serious point and really
       wasn't grappled with by the court at all really, apart
       from a single paragraph.
           But these implied terms of "necessary co-operation"
       and Stirling v Maitland, we have submitted and do
       submit, have real power and force, are taken alongside
       the express terms and they need to have meaning and
       effect given to them.  Until they have meaning and
       effect given to them, one doesn't know whether or not
       other terms are necessary.
           So we say there is a reasonable prospect on that
       that the Court of Appeal will take a different view
       about the way the court dealt with those implied terms,
       which was effectively that they had no real effect and
       was essentially a pleading point in the case, when in
       fact it was the cornerstone of the Post Office's case
       that they were akin to express terms once they had been
       accepted by both sides.
           The other major feature here is your Lordship
       implied 17 implied terms or incidents based on the
       imposition of a good faith term.  In my submission one
       can only do that to the extent that the terms that you
       imply or the instants you apply are parasitic upon and
       have good faith at their core, namely that they can be
       breached, and only breached, in the event of bad faith.
       So they are true sons or daughters of the good faith
           When you look at the implied terms your Lordship
       implied, the 17, virtually none of them have that
       characteristic.  They all represent binary, one-way,
       free-standing obligations that can be breached in bad
       faith or in good faith.
           That is contrary, in my submission, to Yam Seng,
       contrary to what Mr Justice Leggatt did in that case.
       You remember I took you through very carefully the two
       terms he implied in that case and how he rejected
       Mr Salter QC's drafting of the terms in that case, and
       he did so because the terms that counsel had put forward
       could be breached without bad faith, without knowledge.
       What Mr Justice Leggatt said: no, it is essential that
       the terms has at its heart an obligation to act in good
       faith in the relevant particular.  That unfortunately
       has not, in this case, been done in relation to these 17
           We deal with this point, my Lord, at paragraph 14
       and following of the skeleton argument {J6/2/5}.
           So good faith is very much at the heart of all those
       submissions, of all those points on both issue 1 and
       common issue 2.  In my submission, if the court is going
       to give permission, they should give permission on both
       issues, not try and cherrypick and say, "Well, this one,
       not that one", because when it gets to the Court of
       Appeal they would be, in my submission, helped by having
       the whole of those issues before them so they could form
       their own view as to the appropriate treatment.
           Going to my skeleton, I don't want to spend too long
       going through all of those.  You will see common
       issues -- this is paragraph 19 of the skeleton {J6/2/7},
       the "agents"/branch trading statement point and the
       agency point.
           The thing about that, we say at paragraph 20, is
       effectively your holding amounted to: the only reason
       the express term in the contract said they were "agents"
       was to distinguish them from employees.  The trouble
       with that is it doesn't give any purpose or content to
       the express appointment as "agents", and it doesn't
       begin to explain on what basis, therefore, postmasters
       hold stock and cash on behalf of the Post Office or
       explain the basis on which they contract with members of
       the public on behalf of Post Office and they are
           So a finding that says, "Well, the express
       appointment as 'agent' merely distinguishes them from
       employees", doesn't give any meaning or effect to the
       reality of what everyone accepts the postmasters were in
       fact doing.  So, again we say there must be a real
       prospect of success, the Court of Appeal wanting to look
       at that.
           Then if we move on in the skeleton, paragraph 25
       {J6/2/8}, section 12, clause 12, this is the whole
       burden of proof point.
           Paragraph 30 of the skeleton {J6/2/9}, your
       understanding is at paragraphs 669 to 675 of the
       judgment {B7/29/209}, where you understood the Post
       Office's case to be that postmasters would be liable for
       losses or deficiencies caused by a bug, when in fact
       that wasn't our case.
           Indeed, when you were dealing with the same point --
       we deal with this at paragraph 31 -- in relation to the
       NTC in clause 4.1, you seem to accept the point that
       such losses wouldn't come within the clause.  So in my
       submission there's no rational reason to treat the two
       clauses in relation to that same loss differently, and
       again that must give a real prospect of success on that
       point as well.
           We have dealt with common issue 16, going to the
       skeleton at 33 {J6/2/10}, termination on notice; common
       issue 15, termination for cause {J6/2/11}.
           Then we have suspension {J6/2/13}; onerous and
       unusual terms {J6/2/16}.  We do seek permission to
       appeal the holding you made in relation to the Bates
       type of contract, and that's paragraph 54 of the
           We outlined at paragraph 54 the two elements of the
       conditions of appointment and the declaration, which we
       say in a case such as Mr Bates would result in
       incorporation by reference.  We say that applies whether
       or not the documents are attached or not.  It's
       incorporated by reference, identifies the existence of
       some standard-term document and that it is incorporated.
           Then we have common issues 7, 19 and 20, Unfair
       Contract Terms Act, at paragraph 57 {J6/2/18};
       responsibility to train assistants, 23 {J6/2/19}.
           We then have the question of inadmissible evidence,
       what we say as a matter of law, evidence of
       post-contractual matters either expressly or implicitly
       being taken into account on points of construction.  We
       summarise that at paragraphs 67 and following {J6/2/20}.
       That includes, at paragraph 68, the matters you
       expressly as part of the relevant factual matrix to
       construction incorporated, and we set them out at
       paragraph 68, the various paragraphs.
   MR JUSTICE FRASER:  Where are we now, sorry?
   MR CAVENDER:  Paragraph 68 of the skeleton, my Lord
       {J6/2/20}.  It cross-refers to paragraph 569 of the
       Common Issues judgment {B7/29/178} and the subparagraphs
       of that paragraph.  It's paragraph 68 of the skeleton,
       my Lord.
   MR JUSTICE FRASER:  No, I have that.  I'm looking in the
   MR CAVENDER:  Where that point is raised in the grounds?
   MR JUSTICE FRASER:  Yes, I'm trying to follow your
       submissions through by reference to the grounds.
   MR CAVENDER:  Oh, I see.
   MR JUSTICE FRASER:  As well as the skeleton.
   MR CAVENDER:  This point in relation to factual matrix is
       paragraph 23 of the grounds {J6/1/7}.
   MR JUSTICE FRASER:  But that's in your introductory section,
       isn't it?  I thought it was parts C, D and E that were
       your actual grounds.
   MR CAVENDER:  My Lord, no.  Common issue 1 is "Relational
       contract", if you are looking at the grounds now.
   MR CAVENDER:  What happens at the end of the first ground,
       paragraph 23 {J6/1/7} is the factual matrix point is
       taken, and then where it applies, it is repeated each
       time in each ground.
   MR JUSTICE FRASER:  I did understand that.
   MR CAVENDER:  So that's the point: that it has been or looks
       as if it's been taken into account in terms of
       interpretation or factual matrix.
           Then the separate point in point D {J6/1/35},
       your Lordship points out quite rightly, is an additional
       point that that information has been introduced into the
       trial process unfairly.  That's a distinct and separate
   MR JUSTICE FRASER:  This is part D, your procedural
       unfairness grounds, isn't it, that second point that you
   MR CAVENDER:  When you say "it", I was referring to the
       admissibility point when we were having this debate.
   MR JUSTICE FRASER:  All right.  Just to help me let's
       slightly rewind it just a little bit.
           How many total grounds do you have altogether that
       are errors of law, separate grounds?
   MR CAVENDER:  They are set out in the grounds, my Lord,
       starting at 14 {J6/1/4}.
   MR JUSTICE FRASER:  I know they are, Mr Cavender, but they
       are not numbered.  I am just trying to make sure I don't
       miss any.  How many are there altogether?  Are they the
       different ones at paragraph 14?
   MR CAVENDER:  My Lord, yes.
   MR JUSTICE FRASER:  Each of those is a separate ground?
   MR CAVENDER:  They are separate common issues, as you can
       see, and within them there are obviously -- it depends
       what you call a "ground".  But there are separate
       grounds of appeal dealing each of those issues listed at
       paragraph 14.
   MR JUSTICE FRASER:  Right.  So how many separate grounds of
       appeal are there on errors of law?  Because I had
       thought there were 12, because I counted through, but
       I'm not sure that I necessarily have them all, which is
       why I'm asking you how many different grounds there are
       which are said to be errors of law.
   MR CAVENDER:  We can count them up, my Lord.
   MR JUSTICE FRASER:  If you can tell me how many there are.
   MR CAVENDER:  That can be done, my Lord.
   MR JUSTICE FRASER:  As I understand it, we are still within
       part C of your grounds of appeal, dealing with errors of
   MR CAVENDER:  We are, my Lord, yes.
   MR JUSTICE FRASER:  We are, right.
   MR CAVENDER:  The skeleton was meant to be a more cursory
       run-through of those points.  In the skeleton I was at
       paragraph 67 {J6/2/20} and was dealing with reliance on
       inadmissible evidence.  I have pointed to you in the
       grounds where that comes in first of all, which is
       paragraph 23 {J6/1/7}.  This is on admissibility.  That
       is an error in law, we say.
           So those are the grounds of appeal on law.  Then if
       we look at the skeleton, paragraph 73 {J6/2/24},
       "Grounds of Appeal -- Error in fact".
   MR JUSTICE FRASER:  How many of those are there?
   MR CAVENDER:  If we go to the -- do you have the grounds of
       appeal there?
   MR CAVENDER:  The errors of fact start at paragraph 147
       {J6/1/42}.  The first is about Mr Bates' receipt of the
       contract and then there are a number of findings about
       the Post Office's behaviour and comments on its
   MR JUSTICE FRASER:  So are there two or are there eight
       altogether, in terms of separate grounds?
   MR CAVENDER:  I think there are eight.  There is the Bates
       one, and then there is (a) to (g) under the second head.
   MR CAVENDER:  So there are eight.
   MR JUSTICE FRASER:  There are eight, all right.
   MR CAVENDER:  You will see them set out in the grounds of
       appeal and I wasn't intending to go through them.
           There are no appeals on the facts, the main facts he
       found, about who said what to who in the interviews and
       things of that kind.
           We then have ground D, procedural unfairness.  This
       links with the inadmissibility point because it's the
       same material.
   MR JUSTICE FRASER:  How many different grounds are there
       under procedural unfairness?
   MR CAVENDER:  That starts at paragraph 128 of the grounds
   MR CAVENDER:  It depends on bit on what you call a "ground",
       because there are obviously subgrounds within them.
   MR JUSTICE FRASER:  Let's put it this way: you are advancing
       in your grounds of appeal grounds that are said to be
       correctly categorised as procedural unfairness.  How
       many different grounds are there?  I had understood
       there to be possibly three, but I might be wrong.
   MR CAVENDER:  My Lord, yes, there are three broad grounds.
   MR JUSTICE FRASER:  Are there three?
   MR CAVENDER:  If you want to take grounds at a high level,
       there are three separate grounds with subgrounds within
       them, is probably the right way to look at it.
   MR JUSTICE FRASER:  All right.  Let's deal with those
       separately, if we may, because I'm interested on what
       the procedural unfairness to said to be.  What was the
       procedural unfairness in respect of the first of those
       three grounds?
   MR CAVENDER:  It is as it's set out in the grounds there:
       that the Common Issues trial that the Post Office
       prepared for and the court gave orders for was limited
       to the effectively preliminary issues on the meaning of
       the NTC and the SPMC and deciding the scope and extent
       of the agency relationship.
           Disclosure and evidence was given on that basis if
       you look at ground 132 {J6/1/36}.  There were contested
       disclosure applications decided expressly on that basis:
       things like helpline, training, things of that kind.
       Disclosure was not given on them and in fact was refused
       by your Lordship on the basis that this was a common
       issues trial that essentially was a preliminary issues
           To therefore go on in such circumstances and make
       comments and/or findings relating to those matters --
   MR JUSTICE FRASER:  But that's the effect of the unfairness.
       I want to know what you say the procedural unfairness
       was.  What was the unfairness in the procedure?
   MR CAVENDER:  To have a trial that went wider than that
       which was ordered and that which the parties reasonably
       expected was going to take place; and moreover, to do so
       in circumstances where there hadn't been disclosure in
       relation to the matters in relation to the extended
       trial, nor had the Post Office put forward witness
       evidence on it because they weren't expecting it.
   MR JUSTICE FRASER:  So what matters did the Post Office not
       put forward witness evidence on which they otherwise
       would have done absent the alleged procedural
   MR CAVENDER:  They would have given disclosure --
   MR JUSTICE FRASER:  No, I'm asking about the evidence.  You
       just made a submission that said the Post Office hadn't
       put forward witness evidence on matters because they
       were not expecting it.  So what were those matters?
   MR CAVENDER:  Training.
   MR JUSTICE FRASER:  Yes, all right.
   MR CAVENDER:  Helpline.
   MR CAVENDER:  The accounting relationship --
   MR CAVENDER:  -- how it worked in fact.  How TCs were dealt
       with.  The intimate accounting relationship between the
       parties.  Suspension and termination, how they were in
       fact operated, those two mechanisms.
   MR JUSTICE FRASER:  Yes.thank you very much.
   MR CAVENDER:  So that's the first head.  Connected to it is
       the second, which is findings on post-contractual and/or
       irrelevant issues.  Those are set out at 137(a) to (g)
           The point about this of course is that the court is
       not in the business of making irrelevant findings along
       the way.  It makes findings and decides what the matrix
       of contracts is because it is relevant to the matters it
       is engaged with; at least one can infer that.
           So what one infers from this is that there are these
       findings or comments and they are being made as part of
       the trial process, as relevant to it, and therefore
       necessarily, given the nature of the exercise in
       a preliminary issues trial, as part and parcel of it.
       That's why this connects back to the error of law about
       taking into account irrelevant evidence, which brings me
       on neatly to the next ground, which is just that.  So
       although these are three grounds, they are obviously
       intimately connected.
           You will see the same points at 143 {J6/1/39},
       extracted from the matrix your Lordship decided was part
       of the matrix of the trial, not just along the way but
       on a contested matter.  Where there was a contest about
       what matrix your Lordship could take into account, you
       ruled that these matters were relevant factual matrix.
       We say that is an error of law, or at least there is
       a real prospect that it is.
           My Lord, those are the grounds of appeal and all
       I wish to say about them.
           So we ask for permission on two bases.  One is that
       there is a real prospect, and that in reality you ought
       to look at this on a high-level basis: that if you think
       there is a real prospect on the good faith elements,
       relational contract elements, that infects or applies to
       large parts of your findings.  In my submission the
       right thing to do in such circumstances is to give
       permission across the board.
           Moreover, we ask for permission on the separate,
       distinct ground that here there are other compelling
       reasons.  Why?  Because we're dealing here with
       11,000-odd contracts, not just the 500-odd claimants in
       this litigation; we're talking about a huge amount of
       money in issue; we're talking about the running and how
       a public service is run, not just in the past but in the
       future, in which there is a real public interest.  So in
       my submission, for those reasons as well, this is a case
       where the court should give permission on that
       alternative ground.
           Moreover, if your Lordship accepts my point that, at
       least arguably, what your Lordship has done is to move
       the common law quite dramatically on good faith in
       a particular direction, that also is another compelling
       reason why that view, my submission about that, should
       be tested in the Court of Appeal.
           So, my Lord, unless you have any questions, those
       are my submissions.
   MR JUSTICE FRASER:  The only question is one which I think
       you or your juniors are endeavouring to answer: I would
       like to know how many different grounds of appeal there
       are on law, please.
   MR CAVENDER:  I'm obliged.  I will ...
   MR JUSTICE FRASER:  Is someone going to give me the number?
   MR CAVENDER:  My Lord, yes.  Can I come back to you in
       a moment about that?
   MR JUSTICE FRASER:  You can, yes.  I would like to know
       before I decide whether I'm going to give you permission
       to appeal or not.
   MR CAVENDER:  No, of course.
   MR JUSTICE FRASER:  What I will do is I will rise for five
       minutes then.  I will rise for ten minutes, because
       yesterday I received an email from the transcribers
       asking if they could always have a ten-minute break
       rather than a five-minute break.
           So I will come back in at 11.50 and then,
       Mr Cavender, I would just like you to tell me how many
       different grounds of appeal you have saying that there
       are errors of law.
   MR CAVENDER:  Of course.
   MR GREEN:  My Lord, can I just ask if your Lordship is
       anticipating a very brief response from me?
   MR JUSTICE FRASER:  No, I'm not going to be calling on you.
   MR GREEN:  I'm most grateful.
   (11.44 am)
                         (A short break)
   (11.54 am)
   MR CAVENDER:  The answer to the question is 37, my Lord.
   MR JUSTICE FRASER:  37 on law.  So it's 37 on law, 3 on
       procedural unfairness and 8 on fact?
   MR CAVENDER:  My Lord, yes.  On the law ones obviously it is
       very difficult because often the point is repeated in
       relation to, say, "onerous", "unusual", and there are
       lots of different terms.  So it depends how you -- but
       that's a fair review of that.
   MR JUSTICE FRASER:  Thank you very much.
   (11.54 am)
              (Ruling awaiting the judge's approval)
   (12.04 pm)
   MR JUSTICE FRASER:  Next item on the agenda?
                     Application by MR GREEN
   MR GREEN:  My Lord, I think it is me: the costs of the
       resolution of Common Issues.
   MR GREEN:  Your Lordship has mentioned that you've had our
       written cost submissions and our skeleton arguments.
   MR JUSTICE FRASER:  I think there were two rounds, weren't
   MR GREEN:  Exactly.  Against the background of that, and the
       fact that much of the content of what arises in relation
       to this application and the issues arising in it has
       been traversed numerous times now, in terms of what
       your Lordship decided in the Common Issues Judgment on
       the various issues and so forth, I'm going to try and
       slim down what I say.  But there are a number of points
       which I need to make and they come under four headings.
           The fact that there should be an order for costs in
       the claimants' favour is number 1 and can be shortly
       disposed of.  The contrary is unarguable and it is
       implicitly recognised by the defendant, by the Post
       Office, in its skeleton argument at paragraph 21 on
   MR CAVENDER:  My Lord, I hate to interrupt my friend, but
       that isn't the case.  In my submission it is probably
       best to deal with that point first because if we're
       right about reserving costs, then the other matters
       don't arise.  If we're wrong about that, then the
       question of basis of assessment, timing of assessment,
       interim payment arise.  But if we're right and the costs
       should be reserved, those points don't arise, subject to
       your Lordship.  But I just make that observation.
   MR JUSTICE FRASER:  As I understand your position,
       Mr Cavender -- do correct me if I'm wrong -- your
       primary position is costs should be reserved.
   MR CAVENDER:  Correct.
   MR JUSTICE FRASER:  If I'm against you on that and I decide
       to deal with the Common Issues costs today, you accept
       I think that there has been broad success, but taking
       into account the other factors you're suggesting a 30%
   MR CAVENDER:  That's absolutely right.
   MR GREEN:  My Lord, I will turn therefore to the making of
       the order now, which is going to be point 2.
   MR JUSTICE FRASER:  What was your point 1, I'm sorry?
   MR GREEN:  Point 1 was that if an order were to be made --
   MR JUSTICE FRASER:  There has to be an order for costs in
       one way or another, even if it's just costs reserved.
   MR GREEN:  Precisely.  Let me take it in a different order:
       shall I deal with whether your Lordship should make
       a costs order now, rather than reserve it?
   MR JUSTICE FRASER:  No, no.  This isn't mere technicalities.
       If I were to order costs reserved, that would be making
       a costs order.
   MR GREEN:  Indeed, my Lord.  I am conflating the two.
   MR JUSTICE FRASER:  What you mean is: deal with the costs
       now, rather than reserve them.
   MR GREEN:  My Lord, yes, exactly.
   MR JUSTICE FRASER:  I understand that.
   MR GREEN:  There are essentially --
   MR JUSTICE FRASER:  You are saying: do it now?
   MR GREEN:  Precisely.
   MR JUSTICE FRASER:  I have that point.
   MR GREEN:  There's one document in the bundle on Opus at
       {J5.2/1/1}, which is the letter of 14 September 2018
       from Post Office solicitors to my instructing solicitors
       and that is the letter to which the claimants' skeleton
       at paragraph 10 on {J5.2/1/5} refers.
           The context of it, my Lord, was this.  Your Lordship
       will remember that there was a difference in the budgets
       and both for the purposes of assessing security and for
       the purpose of cost budgeting, it was said by the
       claimants to be important that the stages of the
       litigation were identified and worked out.  This is, in
       that context, a reference to the litigation being
       conducted in stages with the real possibility of interim
       costs awards.
   MR JUSTICE FRASER:  Where are you looking?
   MR GREEN:  The quote is set out in paragraph 10 of our
       skeleton argument {J1/3/5} and it is at paragraph 4(a)
       {J5.2/1/1}.  If your Lordship looks just below, it's
       paragraph 4.  It's in relation to the QBE deed for
       security.  The complaint was that the deed should
       provide --
   MR JUSTICE FRASER:  I wonder if we could go back, please.
   MR GREEN:  Just go back to the letter, if we can.  You were
       on the right spot.
           The complaint was that it was unsatisfactory from
       the Post Office's perspective as at 14 September 2018
       for the deed being provided by way of security only to
       provide for the resolution of costs "following the
       conclusion of the High Court Number XXXX".  The reason
       they give at 4(a), second line, right-hand side:
           "This litigation is being conducted in stages with
       the real possibility of interim costs awards."
           So before they'd lost, this not only would be
       potentially right in principle for the court to make
       such an order, but it was a direct concern.  Then what
       happens is they lose the Common Issues trial and in
       correspondence then say their position is going to be
       that the costs should be reserved.
   MR JUSTICE FRASER:  I understand.  You're relying on this
       letter though, it seems to me -- and if I'm wrong, do
       tell me -- as showing that there was at least, at some
       stage in 2018, a realisation on the part of those
       advising the Post Office that there might be interim
       costs orders?
   MR GREEN:  They were positively asserting that as a real
       possibility and wanting our deed of their cost to be
       altered, so that if they did get such an order in their
       favour, it would be recoverable.
   MR JUSTICE FRASER:  Understood.  That's effectively
       a separate stand-alone point.
   MR GREEN:  That's stand-alone point 1.
           Stand-alone point 2 is: the Post Office's
       submissions appear to overlook the fact that in the
       bundle at {B3/1/62}, in the amended particulars of
       claim, the very first item of final relief sought by the
       claimants was a declaration in relation to the legal
       relationship between them and the Post Office.
   MR JUSTICE FRASER:  Are we going to call that up on the
   MR GREEN:  That is hopefully coming up.  It is {B3/1/62}.
       There we are.
   MR JUSTICE FRASER:  Yes.  So it is a separate stand-alone --
   MR GREEN:  Free-standing final relief sought, which in
       substance has been achieved for the claimants.
   MR JUSTICE FRASER:  Understood.
   MR GREEN:  The point about that, my Lord, is that that would
       have had to have been determined whoever was in the
       group.  It's a free-standing point; it doesn't depend on
       who is in the group action at all.  And there's no
       recognition of that at all.  That's the second point.
           The third point is a point I will just make in one
       line and come back to for its significance in the
       authorities, which is that these were absolutely central
       generic issues, properly called "common issues" by
       your Lordship.  This is not a peripheral skirmish in --
   MR JUSTICE FRASER:  I don't think anyone is suggesting it
       was a peripheral skirmish, are they?
   MR GREEN:  I'm most grateful.
   MR JUSTICE FRASER:  I don't know, and I'm not obviously
       speaking for how the Post Office might put it.  But at
       whatever point in this litigation, these issues were
       going to have to be dealt with.
   MR GREEN:  Precisely, and they were foreshadowed actually in
       the pre-action correspondence from July 2016 onwards.
   MR JUSTICE FRASER:  All right.  I have that point.
   MR GREEN:  The Post Office's submissions at paragraphs 5 to
       20, on {J1/2/3} to {J1/2/6} of the defendant's skeleton
       argument, begin on {J1/2/3} of the skeleton argument
       rather than the outline submissions.  Paragraph 6 says:
           "The authorities demonstrate that it may be
       appropriate to reserve the costs of a trial of
       preliminary issues, where the outcome ... does not
       determine ultimate success in the litigation or where,
       even though one party may be said to have succeeded in
       that trial, subsequent events could be relevant to the
       incidence of the costs of the earlier trial."
           The short point, my Lord, is that the way this is
       put forward is essentially swimming against the tide of
       the proper approach in litigation of this type when
       issues of this importance are resolved.  I will make the
       point good by reference to the cases in fact relied upon
       by the Post Office themselves.
           If I can start by taking your Lordship to the
       authorities bundle, tab 18 and looking at Beiber
       v Teather and Greenwood {J7/18/1}.
   MR GREEN:  It's tab 18 in the authorities bundle.
   MR JUSTICE FRASER:  Do you want me to go to paragraph 27
   MR GREEN:  Yes.
           If one looks above, it's actually pretty instructive
       to see how this first-instance decision cites from the
       de Jongh Weill case against Mean Fiddler at 26.  So the
       premise of this first-instance decision is what the
       Court of Appeal decided in de Jongh Well, as recited at
       paragraph 26, and that is:
           "'There is much to be said for the view that the
       incidence of costs should be the same whether or not for
       case management reasons there has been an order for
       a split trial and whether or not the order for a split
       trial was made on the initiative of the claimant or the
           It's pretty important, because these are the two
       principal cases advanced at paragraphs 7 and 8 of the
       skeleton {J1/4/3}, to go back to de Jongh Weill, which
       is cited at paragraph 7, and see what is actually said
       in that case.  That's at tab 7 of the authorities bundle
           I don't know if I could respectfully ask
       your Lordship to have handy the hard copy of the
       skeleton alongside --
   MR JUSTICE FRASER:  Hard copy of whose skeleton?
   MR GREEN:  Of my learned friend's skeleton -- and then look
       at the penultimate page of de Jongh Weill {J7/7/10}.
       Your Lordship will see that the quotation in the
       skeleton goes from the beginning of paragraph 33 --
   MR GREEN:  -- and it goes down to:
           "... whether justice to the defendant requires him
       to postpone any decision on costs until the final
       outcome of the action is known."
   MR GREEN:  Pausing there, your Lordship will already have in
       mind these are unitary claims that are relied on by the
       Post Office.  That's a side point which I will come back
       to in a moment.  But even on the basis of what is quoted
       in the skeleton, the question is whether justice to the
       defendant requires the judge to postpone think decision
       on costs until the final outcome is known.
           Pausing there, when your Lordship goes to the
       judgment itself on the screen in the authority
       {J7/7/10}, at paragraph 32 it gives pretty important
       context to the test the Court of Appeal was applying and
       what the Court of Appeal's own view was, because four
       lines down on the right-hand side:
           "Whilst in the exercise of his discretion the Judge
       could have made, and indeed might well have been
       expected to make, an immediate order for the payment to
       the Claimant of the costs of the trial of the issue of
       liability or at least a proportion of those costs ...
       with some hesitation I reach the conclusion that on this
       appeal it is not possible to say that the Judge's
       decision was clearly one which he was not entitled to
           So the artifice --
   MR JUSTICE FRASER:  So you're saying the part of
       paragraph 32 that's quoted in the skeleton is taken out
       of context.
   MR GREEN:  Paragraph 33 in the skeleton.
   MR JUSTICE FRASER:  Paragraph 33 is taken out of context and
       if you read paragraph 32, actually it looks very
   MR GREEN:  The out of context --
   MR JUSTICE FRASER:  Is that the short point?
   MR GREEN:  It is.  It goes the other way directly, we
       respectfully say.
   MR JUSTICE FRASER:  I have that point.
   MR GREEN:  I'm most grateful.  That of course unravels to
       some extent --
   MR JUSTICE FRASER:  The case wasn't group litigation anyway.
   MR GREEN:  It wasn't group litigation anyway, which is why
       it is more instructive, if I may respectfully say so, to
       look at -- if we can go to Giambrone next, which is at
       tab 6 {J7/6/1}, which again is a case against the
       Post Office but which the Post Office cites as if it
       supports it.
           The very paragraph that's relied on at {J7/6/4} --
   MR JUSTICE FRASER:  Just give me the paragraph number of the
   MR GREEN:  The paragraph number of the skeleton is at
       paragraph 40 on {J1/4/13}.
   MR JUSTICE FRASER:  It says, "generally ... inappropriate in
       group litigation".
   MR GREEN:  Yes.
   MR GREEN:  Before going into the detail that follows from 11
       onwards, it's pretty important for your Lordship to see
       what 10 actually says {J7/6/4}, because true it is that
       the first sentence says:
           "In my judgment in almost all group litigation cases
       there should be no need for any detailed assessment of
       costs until the conclusion of the group litigation.
       Solicitors engaged in group litigation will be
       specialists and experienced in the field."
           Then pausing there:
           "Solicitors for claimants ..."
           This is very important, and reflects the approach in
           "Solicitors for claimants are fully entitled to
       an adequate cash flow from the defendants once the
       general issue of liability has been admitted or
       determined in the claimants' favour, similarly on
       determination of generic issues in the claimants[']
       favour and on the assessment or settlement of awards of
       damages to individual or batches of claimants."
           So in either of those cases, this is positively
       authority in favour of that point.  And the cash flow
       point faced by claimants has been recognised in a number
       of decisions, as your Lordship knows.
           So --
   MR JUSTICE FRASER:  So you're saying that's in your favour.
   MR GREEN:  Your Lordship has the point.
   MR JUSTICE FRASER:  Right.  Yes.
   MR GREEN:  Can I take your Lordship just briefly to Corby,
       which is at tab 11, simply because it is referred to.
       A slightly different situation.  But {J7/11/4} of the
       Opus reference, tab 11 physically of the authorities
       bundle, "Should the Court make a costs order at all at
       this stage?"
   MR JUSTICE FRASER:  Which paragraph are you looking at?
   MR GREEN:  Paragraph 9, my Lord, I'm sorry, under that
       heading, "Should the Court make a costs order at all at
       this stage?":
           "There is no good reason not to make a costs order
       at this stage.  The Group Litigation is now effectively
           Which was the situation in this case.
   MR JUSTICE FRASER:  Well, the situation in that case, not
       the situation in this case.
   MR GREEN:  No, in Corby.  So it is a fair distinction that
       can be said to be made there.
           "The Claimants have effectively and substantially
       won on the Group Litigation issues.  It was always open
       to CBC to make admissions on those issues but it decided
       that the issues merited contesting.  There are no
       Part 36 offers or payments into Court ... to complicate
           And there is nothing of that sort here.  Indeed,
       my Lord, the approach the claimants took in this
       litigation on the Common Issues, particularly in
       relation to the implied terms, was openly, not without
       prejudice save as to costs, openly to send a table of
       implied terms and say, "Please tell us what you say the
       implied terms or their incidence are and we will
       sympathetically consider them because it could
       substantially narrow everything".
           Your Lordship had submissions on that and I'm not
       going to go over them again.  They were foreshadowed in
       our opening under the heading of "Utility", and that
       throws your Lordship forward in our --
   MR JUSTICE FRASER:  I understand.
   MR GREEN:  That's all.
           Paragraph 10 {J7/11/4}:
           "The only argument of any force ... for CBC was that
       until one knows what the final outcome of all the
       Claimants' claims is it would be premature and
       inappropriate to award costs now.  There is at least
       a hypothetical possibility that all the Claimants will
       fail to recover damages."
           I mention that, my Lord, because basically the big
       fight was over but it wasn't clear whether they would
       all actually recover damages.  So that's the sense in
       which one has to read paragraph 9.
           This paragraph is instructive, as your Lordship has
       probably seen already.  This is six lines down:
           "The scale and breadth of the Group Litigation
       issues would inevitably lead to a major litigation
       exercise with a large number of witnesses, experts and
       documents and a very large costs risk.  It was open to
       CBC to protect its position on the Group issues by
       admitting the duty ..."
           All the other issues they had there.  {J7/11/5}:
           "Put another way, these issues and the additional
       25 associated issues (largely agreed to be resolved)
       have been fought because CBC contested them.  It would
       be wrong for the Claimants to be out of pocket as
       a result."
           We respectfully say that that and the reference at
       paragraph 12 to the Colour Quest case, your Lordship
       will see just above the bottom hole punch, the fact that
       the trial judge is well placed to make a relevant
       assessment of the criteria is correctly in issue.
           If we go over the --
   MR JUSTICE FRASER:  Which authority are we in now?
   MR GREEN:  It's just on paragraph 12 {J7/11/5}, my Lord, in
       the same --
   MR JUSTICE FRASER:  Still in Corby?
   MR GREEN:  Yes.  There is just a reference there to
       Colour Quest dealing with indemnity costs, but I will
       come to indemnity costs separately.  The short point is:
       by parity of reasoning, just as the judge is well placed
       to assess indemnity costs, the trial judge is extremely
       well placed to assess the context of this.
   MR JUSTICE FRASER:  Your short point I think, or short
       points, is, or are, depending on how many there are, is
       that these were a group of self-contained issues that
       had to be resolved one way or the other.  They were in
       a separate trial.  They are part of group litigation.
       You have won on the majority of those issues and you
       shouldn't be out of pocket until the end.
   MR GREEN:  Precisely.
   MR JUSTICE FRASER:  It is as simple as that, isn't it?
   MR GREEN:  Plus they are determinative of final relief
       claimed, declaration --
   MR JUSTICE FRASER:  Understood.
   MR GREEN:  -- plus --
   MR JUSTICE FRASER:  But even if they weren't, they would
       still have to be determined in order to move on to the
       next step.
   MR GREEN:  Precisely.
   MR JUSTICE FRASER:  You're saying even though some of the
       claimants might in due course not recover substantial or
       indeed any damages -- and Mr Cavender makes a perfectly
       fair point, which is quite a lot of the claimants might
       be time-barred -- you're saying in the group litigation
       it had to be resolved anyway.
   MR GREEN:  Precisely.  My Lord, the only final point in
       relation to that is that the points made by the
       Post Office in relation to no evidence of injustice are
       wrong, and demonstrably wrong, for three reasons.
           The first reason is: there is obviously injustice to
       funded claimants of the cash flow point and the multiple
       point, because your Lordship is entitled to take
       judicial notice that funders aren't doing it for free.
       Even very --
   MR JUSTICE FRASER:  Sorry, what's the multiple point?  You
       mean multiple of the costs?
   MR GREEN:  Yes.  So there's an acute difference in the
       impact of those cash flow considerations for claimants
       when they're funded, and the ordinary cash flow point
       underlying it even without funders has been recognised,
       as I have just shown your Lordship.  So that's wrong,
       that there isn't any injustice.
           The second point they make is: there's no evidence
       of injustice, which is wrong because Mr Hartley's third
       witness statement, which is at {J3.4/10/13}, spelt out
       the consequence -- the multiple point, if I can put it
       that way.  So there is evidence of it, even if
       your Lordship didn't take judicial notice.
           The third point is --
   MR JUSTICE FRASER:  Hold on, before you go there.  We
       haven't got to Mr Hartley yet.  We're now in
       Mr Hartley's third statement.  Which paragraph?
   MR GREEN:  It's on page 13 {J3.4/10/13}.  It's under the
       costs and security point.  At paragraph 42, second line:
           "The Claimants are reliant on funders continuing to
       invest further money and the greater the level of
       investment, the greater the sum required to be repaid to
       the funders from the sums recovered on success."
   MR JUSTICE FRASER:  Understood.
   MR GREEN:  And:
           "The net effect is to magnify ..."
   MR JUSTICE FRASER:  Right.  Can you just remind me of the
       date of that statement?  I know it's September 2018.
   MR GREEN:  It is ...
   MR JUSTICE FRASER:  If we just go back to the first page,
       please {J3.4/10/1}.
   MR GREEN:  Yes.  12 September 2018.
   MR JUSTICE FRASER:  Thank you very much.  Right, so that's
       your second point.
   MR GREEN:  And the third point is that the Post Office
       really ought to know that there is injustice and there
       is evidence of it because that very witness statement,
       that very point, was referred to in our written
       submissions for this application in March at
       paragraph 39, which is on {J1/1/9}.  So it's a bad
   MR JUSTICE FRASER:  All right.
   MR GREEN:  So those are the points in relation to now.
   MR JUSTICE FRASER:  In relation to whether they're now or
       they're reserved.
   MR GREEN:  Precisely.
   MR JUSTICE FRASER:  Yes, all right.
   MR GREEN:  My Lord, is it convenient, do you want to hear --
   MR JUSTICE FRASER:  I will hear from Mr Cavender because he
       perfectly sensibly says: if he's right on this, then we
       don't need to go on to the next point.
   MR GREEN:  Precisely.
   MR JUSTICE FRASER:  Mr Cavender.
                    Submissions by MR CAVENDER
   MR CAVENDER:  My Lord, in my submission the normal order in
       a case like this, following the termination of
       preliminary issues, would be to reserve the costs.
   MR JUSTICE FRASER:  They are not preliminary issues, is the
       first point, are they?
   MR CAVENDER:  My Lord, in my respectful submission they are
       akin to preliminary issues.  True it is that it's being
       done in the context of group litigation, but for the
       purpose of costs, in my submission the analogy is a good
           The time-honoured formula has been and still
       remains, to decide who has won or lost the case and has
       to pay the costs, who writes the cheque at the end of
       the day.  As your Lordship rightly pointed out in the
       recusal judgment, no one yet has won or lost.
           What the court has done is to determine the rules
       that will apply, the contract, so to speak, and I think
       I used, not flippantly but by way of analogy, the rules
       of the game, so to speak, have been determined by the
       contract and the agency relationship.  But the "game"
       so-called, ie who wins or loses, has yet to take place.
           That is, on the authorities I'm going to go through,
       in my submission a classic case where relying on the
       various -- we have seen a little bit of the authority --
       snippets of authority, the court can't be sure that
       things will happen in the future that will affect and
       alter its view about incidence of costs.  It simply
       cannot do so.  If it does so now, in my submission as
       a matter of principle, that would evidence
       a predetermination or would go towards suggesting the
       court has reached a view about matters as to how things
       are going to pan out in the future.
           In the future whether any of these claimants win or
       lose will be dependent on questions of breach, questions
       of causation, questions of limitation and settlement.
       All this is in the skeleton.  So simply to have declared
       the contract and its incidence in a way that the
       claimants wanted doesn't mean to say they are going to
       be successful in the action.  Indeed, I think we said
       that in our cost submissions and your Lordship was kind
       enough in your recusal judgment to say you thought that
       reflected the position.
   MR JUSTICE FRASER:  Can you show me in your skeleton where
       you say it would suggest a predetermination that the
       court has reached a view on matters yet to be dealt with
       in the future?
   MR CAVENDER:  My Lord, it doesn't say it in my skeleton.
       I'm saying that now, as a --
   MR JUSTICE FRASER:  I thought you said -- you just said,
       "All this is in the skeleton".
   MR CAVENDER:  Not that part, my Lord, no.
   MR JUSTICE FRASER:  All right.  But your express submission
       today is that if I were to decide costs now in any way
       other than reserving them, that would provide evidence
       that there had been a predetermination by the court
       suggesting how the trial, the group litigation as
       a whole, would pan out?
   MR CAVENDER:  Well, it would award success to one party at
       a preliminary stage; it is no most or less than that.
           If we could go to the Mean Fiddler case again.  It's
       a Court of Appeal authority.  That's in bundle 1, tab 7.
       My learned friend was looking at paragraphs 32 and 33
       {J7/7/10}.  He is right to say that 33 has to be read in
       light of 32, no problem about that.  And I do rely upon
       the point that:
           "There is much to be said ..."
           This is in 33:
           "... for the view that the incidence of costs should
       be the same whether or not for case management reasons
       there has been an order for a split trial ..."
           Pausing there, that's an important point.  You can
       imagine a different court at an earlier stage saying
       there would be an omnibus trial deciding all the issues,
       deciding issues of construction, breach, causation,
       limitation and settlement and loss.  In that world, the
       result may have been very different.
           If that's right -- in my submission it must be --
       then why should there, as a matter of principle, be
       a different result because for case management reasons
       the court decides to have an earlier trial, a Common
       Issues trial, which I say is akin to preliminary issues?
       Why, as a matter of principle, should that alter the
       incidence of costs?  In my submission it should not;
       neither should the fact it is wrapped up in the envelope
       of group litigation, as a matter of principle, make any
       difference either.
           Taking my learned friend's point on Mean Fiddler, he
       is right to say that the Court of Appeal in this extract
       was deciding whether or not to interfere with the
       discretion of the judge.  But look at paragraph 31
       {J7/7/9}, which he hasn't taken you to, which is the
       important point here as to what the outstanding issues
       that the defendants were saying were at large and which
       prevented the award of costs:
           "In this case the Defendant sought ..."
           This is in the third line down in 31:
           "... to establish the existence of special
       circumstances requiring or justifying a different
       course.  These special circumstances were that: (a) the
       Defendants would at the subsequent hearings seek to
       establish (though no hint of this suggestion was given
       in the Defence) that the warrants were valueless ...
       [and the] damages ... would be nominal ...
           So what the defendant in Mean Fiddler was doing was
       saying, "Well, whatever was argued or pleaded, we have
       these other great points we're going to bring, and
       therefore there are still matters to be determined".
       That is a million miles from our case, where there are
       on the pleadings issues of causation or breach of
       causation, of settlement, of limitation and of damage.
       So it's not: we're coming along and saying, "Oh, well,
       we may have lost on the first set of issues, but there
       are all these other issues that we haven't even pleaded
       or hint", in 31.  So it's a very different case.  In
       that context, the submission based on 33 in my
       submission is a good one.
           If we can go to the Beiber decision, authorities
       bundle 2, tab 18, the decision of Mr Justice Norris.  It
       is paragraph 27 {J7/18/6}, I think as your Lordship
       said, obviously having pre-read this, which in my
       submission encapsulates the correct principle, namely
           "... the ultimate outcome of costs should not be
       determined by the case management directions that have
       been given.  I consider that the court should be
       confident (before making a major and final costs order
       partway through a staged trial) ..."
           We're talking about such a case here, millions of
           "... that nothing will occur in the remainder of the
       case that will render such an immediate order
       substantially unjust."
           And he refers to the de Jongh Weill case.
           Then he says, over at 28 {J7/18/7}:
           "In my judgment, there is a real possibility that
       the outcome of any trial will affect the merits of the
       parties' entitlement in respect of the settlement of
       earlier determined issues.  I think that justice to the
       claimants requires me to postpone any decision on costs
       until the final outcome of the action is known."
           So, my Lord, that is the principle I urge you to
       follow and adopt, and that's based on the prior Court of
       Appeal authority.
           Can I then take you to Perriam v Wayne, bundle 2,
       tab 16 {J7/16/1}, the decision of Mr Justice Coulson, as
       he then was.  This was an appeal he heard against
       a judgment of his Honour Judge Cockcroft in the Leeds
       County Count.
           In terms of the liability for costs, because he
       allowed an appeal on the point of construction, but the
       costs bit is paragraph 50 and following {J7/16/13}.  So
       at 51:
           "In the present case, I have allowed the appeal
       against Judge Cockcroft's order as to the interpretation
       of clause 4.2.  In my judgment, clause 4.2 does provide
       the appellants with a complete defence to the
       dilapidations claim ...
           "... [the court has] no basis on which the
       appellants should pay the claimant's costs of the
       preliminary issues."
           He talks about the "driving seat".  Then 53 is
       really the point:
           "I do not make an order that the claimant should pay
       the appellants' costs of the preliminary issues, despite
       their success on the preliminary issues.  It seems to me
       that those costs should always have been costs in the
           So there are a couple of points one gets from that.
       One is that failure or success of preliminary issues at
       an earlier stage is not an event, so far as
       Mr Justice Coulson is concerned in that case, that they
       be costs in case.  There is nothing in the rules, in my
       submission, that simply says because something is part
       of group litigation that some other rule should apply.
           If we go to Corby, for instance.  My learned friend
       relies on that.  You have to be careful about Corby
       because there the group litigation had ended.
   MR JUSTICE FRASER:  No.  Duty breach and causation had been
       resolved, but the group litigation hadn't.
   MR CAVENDER:  I may have misunderstood it then.  Let's go to
       it.  If we go to tab 11 {J7/11/1}.
   MR JUSTICE FRASER:  Maybe it had de facto ended.  I don't
       think damages had been quantified, but I might be wrong.
   MR CAVENDER:  Let's go to it.  It is bundle 1, tab 11
       {J7/11/2}.  At paragraph 2 he says:
           "Following my judgment on the Group Litigation
       issues, and subject to questions of costs and
       applications for leave to appeal ... as the judge
       allocated ... [I] have completed all that I have been
       required to do."
   MR JUSTICE FRASER:  Yes, that's right.  That's because what
       happens in group litigation, we haven't yet reached this
       stage in this case, but the managing judge is in charge
       of effectively such issues as the managing judge feels
       he or she ought or wants to resolve themselves, but, for
       example, damages consequent on those findings can be
       tried by other courts elsewhere.
   MR CAVENDER:  Indeed.  No, I understand that.
           Then paragraph 9 {J7/11/4}.  So that's the
       background to paragraph 9.  It says:
           "There is no good reason not to make a costs order
       at this stage.  The Group Litigation is now effectively
           Often what happens in group litigation, I think as
       you're hinting at, very often the case is then released
       to county courts and other courts across the land --
   MR CAVENDER:  -- to then implement the determinations by the
       group litigation order and the managing judge.
   MR CAVENDER:  So as far as he's concerned, his jurisdiction
       is over really, so he has nothing else to say.  And
       there has been cost-sharing and all the rest of it by
       the group litigation people on the register at that
       date, so it's not surprising that in such a case he
       decides to deal with the costs in the way he does, even
       though there may be issues hypothetical.
           That's the other point, my Lord, paragraph 10
           "There is at least a hypothetical possibility that
       all the Claimants will fail to recover damages."
           So he's saying, "Well, okay, that's theoretical.
       But as far as I'm concerned, as managing judge, my role
       is over", and therefore it's not surprising in such --
   MR JUSTICE FRASER:  Right, because the group litigation
       issues had all been resolved by then.
   MR CAVENDER:  Exactly.  So in my submission that doesn't
       really assist my learned friend very much at all, when
       looked at in context.
           Then if we can goes to Mr Justice Foskett in
       AB & Others v The Ministry of Defence.  This is trial
       bundle 1, tab 12 {J7/12/1}.  This was group litigation.
       There were a series of preliminary issues.  The debate
       was whether costs should be reserved or not.
           One of the points that the judge made is at
       paragraph 14 {J7/12/5}, that doesn't apply here.  Does
       my Lord have paragraph 14 of this case?
   MR JUSTICE FRASER:  Remind me of the tab number?
   MR CAVENDER:  This is tab 12 in bundle --
   MR JUSTICE FRASER:  In the authorities.
   MR CAVENDER:  In the authorities at bundle 1.  Bundle 1,
       tab 12 {J7/12/5}.
   MR CAVENDER:  The submission made by Mr Browne there was
           "... since the Defendant elected to take the
       limitation point and has substantially failed on that
       issue, it should meet the costs of that issue."
           That isn't the case here.  This is the case where
       the court, divested of its management role, has decided
       to decide the issues for case management reasons in
       a particular order.
   MR GREEN:  In my submission, as a matter of principle, that
       should not affect the incidence of costs.
           So those are the two cases my learned friend relies
       upon, Corby and AB.  They don't, in my submission,
       really get very far and don't really say much about the
       general principle that Mr Justice Norris, in the case
       I referred you to, thought he got from the Court of
       Appeal case, and in my submission he's right: that the
       court can't at an early stage, in preliminary issues,
       determine who is going to be the eventual winner.
           By "winner", I mean winner in the action, not just
       the winner of deciding what the rules of the game are,
       if I may put it that way.  The winner is the winner of
       the game, not the person that at the first stage gets
       its rules adopted and approved by the court.
           There can't be, in my submission, a different rule
       based on whether the claimants have commercial offshore
       funders.  It cannot be the law, as a matter of
       principle, that if you have commercial offshore funders
       that fund litigation of this type for commercial reward,
       that somehow that should be taken into account in making
       an order at this stage of costs which otherwise you
       would not make.
           So the injustice point -- did your Lordship want to
       carry on reading that, and I can sit down and then carry
   MR JUSTICE FRASER:  I'm paying attention.
   MR CAVENDER:  All right.
   MR JUSTICE FRASER:  I'm actually looking at the part of the
       White Book that deals with specific costs orders in
       group litigation, which you told me didn't exist.  I am
       paying attention to what you are saying.
   MR CAVENDER:  My Lord, of course there is a part in the
       White Book dealing with costs in group litigation.  I'm
       saying as matter of principle though --
   MR JUSTICE FRASER:  No, I understand.  You're saying the
       situation where there are commercial offshore funders
       doesn't put this into its own separate category, and if
       I wouldn't ordinarily make an order in the claimants'
       favour, the fact that they have funders means I should
       not make an order in reliance on that feature --
   MR CAVENDER:  Exactly.
   MR JUSTICE FRASER:  -- I think.
   MR CAVENDER:  Exactly right.
   MR JUSTICE FRASER:  And I, for what it's worth, happen to
       agree with you.
   MR CAVENDER:  My Lord, that's the so-called "injustice"
           So in terms of fairness -- and of course you
       exercise your discretion here, but obviously you must do
       so judicially and fairly.  In terms of "fairly",
       reserving the costs holds the ring.  One doesn't know
       what the future will hold in complex litigation of this
       type.  It is a long road, and if the court does make
       costs orders, and significant, millions of pounds, then
       that does look as if it has formed a view that based on
       that, those claims are eventually going to win, because
       only the people that win get costs.
   MR JUSTICE FRASER:  But that's the point at which the part
       of the White Book I'm looking at is rather important,
       which is special cases for costs, which isn't in part 44
       at all; it's in part 46.
   MR CAVENDER:  Which page is your Lordship looking at?
   MR JUSTICE FRASER:  Why don't we look at 46.6 on page 1512:
           "There is a difference in group litigation between
       costs that are common costs and costs that are
       individual costs."
   MR CAVENDER:  Indeed.  At the moment these, as I understand
       it, are all common costs.
   MR JUSTICE FRASER:  Well, one of the things I have to do
       today, because I will be making an order about costs in
       relation to what are effectively GLO issues, one of the
       things I have to do -- I'm not necessarily sure it's in
       either party's draft order but I might have missed it --
       is an order under 46.6(5) that all the costs are common
       costs, because there is no debate between you that they
       are.  But    MR CAVENDER:  Correct.
   MR JUSTICE FRASER:  But those would be individual costs,
       they wouldn't be common costs, would they?
   MR CAVENDER:  I think that's probably right.
   MR JUSTICE FRASER:  So judging it in terms of potential
       overall success for a group of, or some, or even many
       individuals approaches it more on the basis that I would
       be making an individual costs order today, whereas
       I will be making Common Issues costs orders.
   MR CAVENDER:  In my submission it is a distinction without
       a difference for these purposes.
   MR CAVENDER:  It makes no difference at all because in order
       to win, to fund, if you like, your claim which is
       individual costs, you have to have won or lost on the
       common issues.  It's parasitic, obviously, a bit like in
       the AB case.  You've found a contract or a breach and
       causation, and perhaps causation and damage is left to
       the individual to bring in their local county court or
       whatever.  That's obviously the individual costs.
           Here we're agreed this is common costs, but in my
       submission this distinction doesn't bear upon whether or
       not the common costs should be reserved or not.  It's
       a distinction, but not a material one, in my submission,
       for this debate.
   MR JUSTICE FRASER:  But you accept that I'm correct I should
       be making an order under 46.6(5)?
   MR CAVENDER:  My Lord, yes.  I haven't had my attention
       drawn to this previously, but yes, it looks as if that
       is a --
   MR JUSTICE FRASER:  I'm specifically required to do that
       I think, with 100% of the costs being common costs.
   MR CAVENDER:  Yes, the other point I'm reminded of, of
       course, is at the end of the day, were a claimant to
       win, right at the end of the day, they would obviously
       get their individual costs but they'd also get
       a proportion of the common costs, it would be allocated
       to them, whether they'd won or lost.
   MR JUSTICE FRASER:  That's by no means automatic.
   MR CAVENDER:  It's not automatic but that's my understanding
       of what would normally happen.  Let's assume it's
       a single trial, to make it simple --
   MR JUSTICE FRASER:  Yes, but that's why -- it's different.
       This is group litigation though, Mr Cavender.
   MR CAVENDER:  I'm saying group litigation, where you have 50
       or 500, it's our case, and you win or lose at the end:
       in that case all the costs of the trial wouldn't have
       been common costs because you would be investigating
       individual cases as well, on my premise.  So you would
       have individual costs and common costs.
   MR JUSTICE FRASER:  It would be a rare group litigation case
       that had a single trial though, wouldn't it?  The whole
       purpose of group litigation is that you don't have
       a single trial.
   MR CAVENDER:  No, but you could have a small group of, say,
       15 and try all the cases out, and the common issues
       would be those of law and the individual things of
       damage would be tried.
   MR JUSTICE FRASER:  All right.
   MR CAVENDER:  I have just been passed something here.
           If you look at 46.6(5)(a) and (b) --
   MR JUSTICE FRASER:  That is the part I draw your attention
       to, I think.
   MR CAVENDER:  Indeed.  And (4) is relevant as well.
   MR JUSTICE FRASER:  Well, at the moment -- (4) deals with
       a group litigant who is a paying party.  The Post Office
       isn't a group litigant.  You are not seeking your costs
       from the claimants.  Your suggestion for today's costs
       order I don't think would lead to any group litigants
       being a paying party, but I might be wrong.
   MR CAVENDER:  No, but the point I make is (4)(b):
           "... an equal proportion, together with all the
       other group litigants, of the common costs."
           So what that does do is reflect what I was saying,
       that there are two elements --
   MR JUSTICE FRASER:  I think whoever has passed you that note
       might be jumping rather ahead.  I don't understand any
       of the orders being sought by either party today to lead
       to a situation where a group litigant would be a paying
       party, because your primary position today is: reserve
       the costs, which I understand.  If I'm not prepared to
       do that, you resist Mr Green's application on other
           I think your skeleton also accepts that the
       claimants were -- let me use your exact phrase, because
       it was quite well put, I thought, in terms of the degree
       of who had won.
   MR CAVENDER:  It was obviously more successful on the --
   MR JUSTICE FRASER:  Yes, so you're not seeking any group
       litigant today to be a paying party, and that's the only
       position in which 46.6(4) comes into operation.
   MR CAVENDER:  But (5) is the one you drew my attention to.
   MR CAVENDER:  The second part of (5), after (a) and (b),
           "... the court will direct the proportion of the
       costs that is to relate to common costs and the
       proportion that is to relate to individual costs."
   MR JUSTICE FRASER:  Correct.  That's entirely correct.
   MR CAVENDER:  Yes.  But, my Lord, the reason we went down
       this rabbit hole, which is whether or not this special
       cases provision says anything or has any influence on
       whether the costs should be reserved or not -- that's
       how we got here.  In my submission you might have to
       make another order today to make sure we comply with
       this, once we agree what it says and what we need to do.
       But in my submission that doesn't impact in any way upon
       whether or not costs should be reserved --
   MR JUSTICE FRASER:  Which is your primary position.
   MR CAVENDER:  -- which is my primary position.
   MR JUSTICE FRASER:  I understand that.  Right.
           Is there anything you'd like to add?
   MR CAVENDER:  What's being pointed out to me, 44.6(5),
       apparently we're not in that because that anticipates
       a case where there is:
           "... one or more GLO issues; and
           "... issues relevant only to individual claims ..."
           That suggests a situation that your Lordship thought
       would be unlikely: it's where you have both together.
       Whereas here, as I understand it, it's common ground we
       only have common issues.
   MR JUSTICE FRASER:  That's why I wanted to check.  That's
       the point I wanted to check.
   MR CAVENDER:  Yes.  So I think we don't even get down the
       rabbit hole.
   MR JUSTICE FRASER:  Well, (a) it's not a rabbit hole; and
       (b) I'm pretty sure that whether you're confident that
       we do or not, the simplest thing is to include in
       today's draft order that all of the Common Issues costs,
       or the costs of the Common Issues trial, are, for the
       purposes of 46.6, GLO issues.
   MR CAVENDER:  My Lord, yes.  We have no objection to that.
   MR JUSTICE FRASER:  Yes, all right.  Okay.  But we're not
       getting on to the drafting of the order at the moment.
       You just need a decision from me as to whether I'm going
       to reserve the costs or not.
   MR CAVENDER:  Indeed.  The point I make -- and again we have
       gone into that, very helpful -- there is nothing, in my
       submission, at all to do or impact upon whether to
       reserve costs or not.
   MR JUSTICE FRASER:  That might be right, Mr Cavender.  But
       you said there were no special orders for costs in
       relation of group litigation, and there are.
   MR CAVENDER:  There are no provisions that are relevant to
       this point about reserving or not.  There is nothing
       that says, as I understand it -- my learned friend
       hasn't shown you -- that because it is group litigation,
       the costs should be paid at every stage and all
       revisited later, whether preliminary issues or not.
       That's the point I was making.  I think I'm right about
   MR JUSTICE FRASER:  I don't need you to answer at all.  I'm
       just going to tell you whether I'm going to reserve or
   MR GREEN:  I'm most grateful.
   MR JUSTICE FRASER:  All right.  Because there's a passage
       which I'm going to start.  I'm just going to give you
       an brief ruling about it, so that you know why.
   (1.00 pm)
              (Ruling awaiting the judge's approval)
   (1.10 pm)
   MR JUSTICE FRASER:  For the purposes of today's draft order,
       whoever is drafting it, it will need to include
       a 46.6(5) passage in it at the beginning.
           I'm going to rise now.  I will come back at 2.10.
       Can you, between you, just remind me what is on today's
       agenda then remaining?
   MR GREEN:  My Lord, it is the remaining points --
   MR JUSTICE FRASER:  It is what the costs order should be --
   MR GREEN:  It's what the costs order should be.
   MR JUSTICE FRASER:  -- basis of assessment --
   MR GREEN:  Basis of assessment.
   MR JUSTICE FRASER:  -- any payment on account --
   MR GREEN:  Payment on account.
   MR JUSTICE FRASER:  Actually what the costs order should be
       includes within it any percentage reduction to reflect
       the fact that there has been less than 100%.
   MR GREEN:  Precisely.  There is one distinction, my Lord, in
       relation to indemnity costs: there is the budgeted
       costs --
   MR JUSTICE FRASER:  I understand that point.
   MR GREEN:  We just say --
   MR JUSTICE FRASER:  That's rolled up within --
   MR GREEN:  -- standard certainty, standard basis.  Sorry.
   MR JUSTICE FRASER:  That point is rolled into basis of
       assessment because you are, as I understand it, seeking
       a different assessment up to a date in April 2018 and
       then -- I think you are looking for indemnity costs up
       to a date in 2018 and thereafter standard costs?
   MR GREEN:  My Lord, yes.
   MR CAVENDER:  The other point is the timing of the
       assessment.  My learned friend wants a detailed
       assessment now; we are saying that shouldn't happen.
       That is another item.
   MR JUSTICE FRASER:  I understand that.  Is that, however,
       though -- and I will just ask you that question now.  If
       I'm making a payment on account, does that really make
       any difference?
   MR CAVENDER:  It's for my learned friend to answer that.  It
       is something he's seeking, and I'm saying it's not
       normal.  It makes less of a difference, for the reason
       your Lordship has intimated.
   MR CAVENDER:  But it is for him to decide whether he wants
       to maintain that or not.
   MR JUSTICE FRASER:  All right.  Mr Green, we will deal with
       that further this afternoon.
   MR GREEN:  I'm grateful.
   MR JUSTICE FRASER:  So it is what the costs order should be,
       including any percentage reduction; basis of assessment,
       including the curiosity we have identified; when the
       assessment should start; and any payment on account.
   MR GREEN:  My Lord, yes.
   MR JUSTICE FRASER:  Those are the matters this afternoon.
   MR GREEN:  Those are the four points.
   MR JUSTICE FRASER:  All right.  2.10.  Thank you very much.
   (1.12 pm)
                     (The short adjournment)
   (2.10 pm)
   MR JUSTICE FRASER:  Just before we start, I gave
       an incorrect reference when I was giving the ruling on
       the Post Office's application for permission to appeal.
       It is a case called Wheeldon v Millennium.  I think
       I said it was [2019] EWCA; in fact it is [2018]
       EWCA Civ 2403.
           Then I just want to add one passage to the ruling
       I gave just before 1 o'clock about reserving the costs.
       What I am going to do is I am going to produce somewhat
       more detailed written reasons both for that and for any
       other rulings I make this afternoon.
   (2.14 pm)
              (Ruling awaiting the judge's approval)
   (2.15 pm)
   MR JUSTICE FRASER:  So, Mr Green.
                     Submissions by MR GREEN
   MR GREEN:  My Lord, yes.  The first point of the four is the
       principle of costs and any reduction.
   MR GREEN:  Your Lordship has seen that the Post Office
       contends, at paragraph 27 {J1/4/8}, for a 30% reduction.
   MR JUSTICE FRASER:  To reflect their success on the issues
       they succeeded on.
   MR GREEN:  Exactly.  We respectfully say our primary
       submission is there should be no reduction at all, for
       reasons I'll explain.
   MR GREEN:  And our secondary submission is that were there
       to be any reduction, it should be minimal, very small,
       possibly 5 --
   MR JUSTICE FRASER:  Thank you for clarifying what "minimal"
   MR GREEN:  Sorry.  I was about to say: possibly of the order
       of 5%.
   MR GREEN:  The reasons for that are some of principle and
       some based on the judgment itself and some based on
       their submissions.
           The point of principle I would like to invite
       your Lordship to consider first is in the Kastor case,
       which is at {J7/8/1}.  That is tab 8 in the authorities
       bundle.  My Lord, I don't think these are particularly
       controversial points, but I think it is right to just
       identify any points of principle very briefly.
           The first point, it is paragraph 151 {J7/8/44}.
       I can't see what page that is, but it's the
       penultimate --
   MR JUSTICE FRASER:  We're at tab 7, are we?
   MR GREEN:  I'm so sorry, tab 8.  {J7/8/44}.  It is the
       penultimate page.
   MR GREEN:  My Lord, bottom of the page, paragraph 153.
       I don't think it's in any sense controversial, it's
       probably absolutely trite, but it's obviously not
       a simple mathematical calculation.
   MR JUSTICE FRASER:  That is effectively accepted by the
       Post Office.  They have very sensibly said they're not
       seeking a mechanistic issue by issue and it should be
       done by means of a percentage.
   MR GREEN:  Exactly.
   MR JUSTICE FRASER:  That is the modern way, isn't it?
   MR GREEN:  That's exactly right.  But what we would go on to
       say, with respect, is: when one is looking at
       an percentage it is not a mechanistic approach either
       arithmetically.  It is not meant to be controversial.
           The reason I'm taking your Lordship to the authority
       is paragraph 151 {J7/8/44}, which is the alternative
       case point, and it's quite an important point because
       the principle is that where a party advances two
       alternative arguments directed at the same outcome, they
       are not to be penalised if they succeed on one and not
       the other.  This is the distinction being made, to show
       you exactly what's said and then relate it across to our
       case.  It says:
           "This is not a case where the issue on which the
       successful party lost was a separate head of claim: it
       was a separate basis for putting the successful party's
       only claim.  Accordingly, unlike in many cases involving
       issue based orders for costs, this was a case where the
       issue on which the successful party lost would not have
       been litigated if the unsuccessful party had conceded
       the issue on which the successful party won."
           Just to give a practical example from
       your Lordship's judgment, supply of goods and services:
       the Post Office claims to have won on the act.  We
       respectfully say, on the correct principle, your
       Lordship doesn't just tick a box whether they won or
       lost, but looks at the fact that your Lordship
       effectively found similar obligations otherwise implied,
       but not by statute.
   MR JUSTICE FRASER:  But there were issues which don't fall
       into that category.
   MR GREEN:  My Lord, I agree.  I'm just trying to identify --
   MR JUSTICE FRASER:  The Post Office as SPM agent, for one.
   MR GREEN:  Indeed.  My Lord, the point I was coming to in my
       order -- I will take that point now -- the short point
       on that was essentially that was I think about two
       questions to Mrs Van Den Bogard, "You've said in your
       witness statement this is a service you supply to
       subpostmasters", and a couple of paragraphs in our
       submissions.  So it's a minimal point.  But
       your Lordship is quite right, we lost on it, and that's
       fair enough.
           The obligations which the claimants were seeking to
       establish by virtue of that relationship, the substance
       of those obligations are reflected in the finding of
       relational contract.  So for two reasons we say there
       that on a proper analysis, it's more in the appearance
       than in the reality of a win, but it's fair to say they
       did win that issue.
   MR GREEN:  So, my Lord, that was the first point of
           Then the court obviously has in mind --
   MR JUSTICE FRASER:  What exactly is the point of principle
       though?  You're saying: not mathematical?
   MR GREEN:  No, the point is that one should carefully have
       regard to whether one has arrived at substantially the
       same route by an alternative --
   MR JUSTICE FRASER:  Understood.
   MR GREEN:  The second point, my Lord, is to have regard --
       and this picks up I think on their NTC not incorporated
       point.  They say: it would have been fantastic if we had
       taken notice of the binding Court of Appeal authority.
       There are two points in relation to that.
   MR JUSTICE FRASER:  On it being signed?
   MR GREEN:  It being signed.
   MR GREEN:  The first point is that there is an enormous
       overlap between the unfair contract terms arguments and
       the argument that they were onerous terms in relation to
       NTC.  And secondly, as to the principles, those had to
       be argued in any event for the SPMC.
   MR GREEN:  It is completely artificial to regard those
       matters of evidence as the Post Office seeks to
       characterise them where the same substantive material
       would have been deployed in any event, both the legal
       arguments on the SPMC and consideration of the actual
       effect of the terms for our purposes.
           There is authority for that, my Lord, which is at
       {J7/17/8} at paragraph 28, which picks up the point that
       I have already made by reference to Kastor but also adds
       the same material point.  28:
           "However, on analysis, it seems to me that that
       approach would not be appropriate in this case.  It is
       right that the defendant lost on its statutory authority
       defence.  However, all of the detailed legislation that
       was considered by reference to that unsuccessful defence
       was directly relevant to the alternative defence of
       reasonable user, on which the defendant was entirely
           So you can have situations where --
   MR JUSTICE FRASER:  That doesn't really add anything to your
       submissions you've already made, does it?
   MR GREEN:  Well, my Lord, I think ...
   MR JUSTICE FRASER:  You're saying you can't look at it, for
       example, as 7 -- well, let's use different numbers --
       10 issues out of 20, so therefore it's automatically
       a half, because some of the issues may have been either
       overlapping issues or different ways to get to the
       ultimate same answer.
   MR GREEN:  Yes.
   MR JUSTICE FRASER:  I have that point.
   MR GREEN:  Then the second point is that some of the issues
       were interdependent in a different sense, in that a term
       may be less onerous if its exercise is governed by
       implied duties of good faith.  And as heralded for two
       years by the claimants repeatedly, we could not possibly
       win on every issue.  That was made absolutely clear for
       two years.
   MR GREEN:  Then there is the point about how the issues were
       in fact resolved.  We would just invite some caution,
       my Lord, in accepting the characterisation of those
       issues in the lengthy footnote by which they are said to
       have been recited as having been determined in their
       favour.  I will take an example.  Just to take
       an example, true agreement, my Lord, at 925 {B7/29/264}.
   MR JUSTICE FRASER:  Just give me a second to find the
       lengthy footnote.
   MR GREEN:  There is actually a very similar one in two
       different places.  One is a footnote in their permission
       to appeal skeleton and the other is a footnote at page 7
       of their skeleton argument, footnote --
   MR JUSTICE FRASER:  Let's go to page 7.
   MR GREEN:  Defendant's skeleton argument on page 7, which is
       {J1/4/7}.  It has come up.  Your Lordship will see at
       the bottom --
   MR JUSTICE FRASER:  Just bear with me, just for a second.
       I'm just chasing up a hard copy.
           So this is the note at number 1?
   MR GREEN:  It is the footnote at number 1, which is very
       long, and recites the issues on which the Post Office
   MR GREEN:  I have already mentioned supply of goods and
       services, my Lord, but can I mention, for example, true
       agreement, where they say they won.  Your Lordship will
       well know from your Lordship's own decision that what
       you actually found was that this common issue didn't
       fall to be determined, but you would otherwise have
       followed the approach argued in the alternative by the
   MR GREEN:  That's at 925 on page 264 of the judgment
   MR GREEN:  It is paragraph 925.
   MR JUSTICE FRASER:  Sorry, the mouse was hovering over the
       paragraph number.  You're talking about Judgment No 3
       now, not what I've said in Judgment No 4?
   MR GREEN:  No, my Lord, what you said in Judgment No 3 --
   MR GREEN:  -- in terms of what -- your Lordship was
       absolutely right in Judgment No 4 to say you were
       invited to decide some issues, and some of them you
       found in the Post Office's favour, and that's absolutely
       correct.  But we say, when you come to costs, the
       context is: how were they determined in fact?
   MR GREEN:  And we look at paragraph 925, which is the very
       paragraph to which reference is made, about six lines
       down --
   MR JUSTICE FRASER:  But you're saying I think, on the basis
       that your opening submission this afternoon was that
       there should be no reduction, you're effectively saying
       the degree of success on the Post Office's point of view
       on all of the common issues was such that it does not
       warrant a reduction.
   MR GREEN:  Precisely.
   MR JUSTICE FRASER:  That's pretty optimistic, if not failing
       to pay attention to paragraphs 295 and 296 of Judgment
       No 4 {B11.2/3/74}, is it not?  Because I've already
       dealt with this point in Judgment No 4.  I've given the
       global summary.  What I said in Judgment No 4 was: the
       Post Office's solicitors' submissions of 29 March
       correctly reflected the success or otherwise of both of
       the parties in Common Issues Judgment No 3.
   MR GREEN:  My Lord, I think that is completely right.
   MR JUSTICE FRASER:  But aren't you trying to reinvent the
       wheel by persuading me that actually they didn't; or if
       they did, it shouldn't affect the costs at all?
   MR GREEN:  I think, my Lord, I can't say that they didn't,
       because (a) they did, and your Lordship said they did.
       That's --
   MR JUSTICE FRASER:  If one accepts they did, is not the
       modern consequence of that that consideration is given
       to a percentage reduction?
   MR GREEN:  Yes.  But, my Lord, the modern consequence is
       consideration is given.  I'm now addressing
       your Lordship on whether --
   MR JUSTICE FRASER:  But you're saying the reduction should
       be zero.
   MR GREEN:  Yes, that's our primary submission because --
       I will give your Lordship all the points together.
   MR JUSTICE FRASER:  I'm acutely aware of what the common
       issues were, what my answers were on all of them, how
       they interrelated between one another and whether, and
       if so, how many of them were more or less important than
       the others.
   MR GREEN:  Precisely.  I won't labour the point.
   MR JUSTICE FRASER:  I mean, you can labour it as much as you
       want, but I don't think you're going to add to the sum
       of human knowledge, to be honest.
   MR GREEN:  I'm most grateful, my Lord.  I will move on.
       Your Lordship has the point though.  925 is a good
       example of being a bit careful about what they've said
       they won on and what the substance of the finding is.
           In relation to the NTC signature point, if we just
       go back to that, your Lordship already has my
       submissions on the UCTA and the principles being
       deployed on SPMC.  There is a further reason for that
           Your Lordship essentially got to the point of being
       prepared to consider finding for the claimants on the
       evidence, but was barred from doing so by a Court of
       Appeal authority.  If --
   MR JUSTICE FRASER:  I then went on to deal with it in case
       I was wrong.  You could have appealed that point.
   MR GREEN:  My Lord, yes.
   MR JUSTICE FRASER:  That doesn't mean the Post Office
       haven't won on it.
   MR GREEN:  No, they have won on it.  But in terms of doing
       that in parallel and the reasonableness of taking the
       point at all, which is one of the express factors that
       Mr Justice Neuberger, as he then was, identified, it is
       not available to us in the Court of Appeal if we don't
       have your Lordship's treatment of it in this judgment,
       if we seek to cross-appeal.
   MR JUSTICE FRASER:  No, that's correct.  But that doesn't
       mean you haven't not lost on it.
   MR GREEN:  No, it doesn't at all.  But it goes to the --
   MR JUSTICE FRASER:  Sorry, that doesn't mean you haven't
       lost on it.
   MR GREEN:  Yes, and your Lordship is right.  But just on the
       background factor of whether it was reasonable to take
       the point in the first place, we respectfully say that
       that is a fact, although a small one, but it's
       a material one.
   MR JUSTICE FRASER:  Understood.
   MR GREEN:  The central point, which your Lordship is well
       aware of, basically relational contract -- which my
       learned friend said suffused everything else -- and the
       implied terms, those issues, your Lordship will
       remember, particularly in relation to the implied terms,
       which I just briefly mentioned this morning, go back to
       requests for further information in 2017 of what the
       Post Office's case actually meant for specific points.
       There were two of those in 2017 and the failure to
       answer them resulted in the Post Office agreeing to
       an order from your Lordship on 2 February 2018, the
       second CMC order, ordering them to provide the
       information.  They didn't do so: they didn't actually
       provide the information itself.
           As your Lordship knows from the extensive recital of
       that in our opening and reference back to it in our
       closing, that rumbled all the way along, in a way which
       we respectfully submit was extremely unsatisfactory,
       through the provision of the table that we can just call
       up briefly at {H/19.1/1} in a final attempt to get some
       specificity from the Post Office as to what the terms or
       their incidence were.
           I actually prepared this and typed it myself, put it
       in myself.  This was the table offering the Post Office
       the chance to say what they actually agree in respect of
       each of the terms.  I typed it all out, so they all
       needed to do was type in what they said, and I even gave
       examples, "E.G.", of what I thought their case might be,
       to --
   MR JUSTICE FRASER:  No, but as I understand it, apart from
       two of the terms that were agreed, that invitation
       wasn't taken up.
   MR GREEN:  What they did was they responded in a very
       lengthy document that didn't condescend to any clarity.
   MR JUSTICE FRASER:  Well, it may or may not have done.  And
       the Common Issues dealing with implied terms or
       incidence of implied terms was, to a certain extent,
       entwined within a consequential upon the finding on
       common issue 1.
   MR GREEN:  Indeed.
   MR GREEN:  My Lord, the short point is -- "but" quite a lot,
       we respectfully say, because if they had in 2017, when
       they pleaded these two general terms and we said, "Hold
       on a second, what does that mean for the specific areas
       we're actually concerned with?", and they said:
       actually, we agree there were the sorts of obligations
       your Lordship has found, there may not even have had to
       be a trial about all that.
   MR JUSTICE FRASER:  Okay.  I have that point.
   MR GREEN:  So it was completely unnecessary.  We say that
       that unreasonable conduct goes all the way back --
   MR JUSTICE FRASER:  You're moving on to a different point?
   MR GREEN:  I am.  I say it's relevant to how the trial and
       the entire litigation was run for the general point
       about no discount, but I also say it goes to the
       question of the basis of assessment.
           Because your Lordship has seen we've set out the
       conduct which we rely on in our skeleton argument, and
       your Lordship is very familiar with it all because much
       of it comes from your Lordship's own judgment.  That's
       at {J1/1/14} and {J1/1/15} in particular of our written
       submissions, all the way through to {J1/1/16}.  But we
       respectfully say that it was completely unreasonable to
       agree to provide information and agree to an order to
       that effect and then not provide it, with the
       consequence that those matters could not be agreed.
           All of those offers for them to clarify the
       incidence or the implied terms were made openly, not
       even without prejudice save as to costs.  And that goes
       all the way back to 2017.  My Lord, that feeds in to
       the -- I think your Lordship described it as a "curious
       point" in relation to basis of assessment.  I'm not
       going to go through all these points --
   MR JUSTICE FRASER:  "Curious point"?
   MR GREEN:  About budgeted costs and pre-budgeted costs.
   MR JUSTICE FRASER:  Well, as I understand the situation,
       it's as follows, and if I'm wrong, correct me.  You want
       indemnity costs up to a particular date --
   MR GREEN:  My Lord, yes.
   MR JUSTICE FRASER:  -- and detailed assessments, subject to
       assessment on the standard basis --
   MR GREEN:  Indeed.
   MR JUSTICE FRASER:  -- after a particular date.
   MR GREEN:  Yes.
   MR JUSTICE FRASER:  Now, I am well used to and parties often
       do ask for indemnity costs for a different period.  It
       is highly unusual to have the period for indemnity costs
       pre-dating a period for standard assessment because it's
       normally because something has happened --
   MR GREEN:  Indeed.
   MR JUSTICE FRASER:  -- where the conduct after a particular
       date falls to be looked at from a different point of
       view --
   MR GREEN:  Indeed.
   MR JUSTICE FRASER:  -- or of a different character.
   MR GREEN:  Indeed.
   MR JUSTICE FRASER:  Very unusual to have it the other way
   MR GREEN:  Yes.
   MR JUSTICE FRASER:  It might be, I suppose, said that
       conduct was exceptionally unreasonable and out of the
       norm up to a particular date and then there was
       a Damascene conversion and everything changed, but
       I don't understand this to be --
   MR GREEN:  No, we're not saying that.
   MR JUSTICE FRASER:  No, that's rather why I'm asking the
   MR GREEN:  That's the curious point, quite.
           The short point is this: that the claimants'
       submission is that looked at throughout the overall
       period as a whole, the Post Office's conduct was out of
       the norm in the lack of co-operation which the court
       would expect from a party in a case like this, in
       a number of material respects which we've sought to
       identify, and from an early stage, and I've given
       your Lordship the example of the repeated requests for
       further information in relation to those implied terms
       and their incidence.
   MR JUSTICE FRASER:  Yes, but none of that really jumps out
       at one as all occurring at or near a watershed date.
   MR GREEN:  No, my Lord, we're coming to that.
           So the primary submission is that when you look at
       the conduct of the case across the whole piece, you see
       factors justifying an award of indemnity costs across
       the whole piece.  Another example of that is where the
       defendant does an apparent volte-face at trial, the
       seeds of that volte-face are sown not at trial but when
       they take the point originally.  So our submission is
       it's the assessment across the whole period that
       justifies an award of indemnity costs, not that the
       period starts or stops.
           But what we have respectfully said is that we don't
       invite the court to exercise its discretion in the light
       of that conclusion in relation to the period for which
       costs were budgeted, because of the certainty that
       budgeting is supposed to bring to those costs and to
       avoid the need for disputes on detailed assessment
       ab initio, just to take the benefit of the certainty of
       the budgeted costs.
           So, my Lord, we don't say it all happens before and
       then it stops.  What we say is: looked across the piece,
       it should be indemnity costs.  But notwithstanding the
       justification for an order at that time, we say: given
       that costs were budgeted from April 2018 onwards, and
       the certainty that that affords, on balance, it is not
       just and convenient to make a different order because
       your Lordship has already approved a costs budget, which
       we came underneath.  The cost budget was £3.4 million
       and we were £3.1 million.  So it doesn't help anyone.
           So it's not withdrawing from the submission.
   MR JUSTICE FRASER:  When you say it doesn't help anyone, you
       mean the cost management order doesn't help anyone?
   MR GREEN:  No, no, no, no.  If we were to seek to invite
       your Lordship to make an indemnity costs order, it's not
       going to make a material difference --
   MR JUSTICE FRASER:  Because you can still --
   MR GREEN:  -- such as to justify the waste of everyone's
   MR JUSTICE FRASER:  Understood.
   MR GREEN:  So that's the basis on which that is put.
   MR JUSTICE FRASER:  You have, I think, dealt both with costs
       in principle, percentage reduction and basis of
   MR GREEN:  Indeed.  My Lord, I have.  Then --
   MR JUSTICE FRASER:  Is that right?
   MR GREEN:  I have, exactly.
   MR JUSTICE FRASER:  Right.  Well, I would like to hear from
       Mr Cavender about that first.
                    Submissions by MR CAVENDER
   MR CAVENDER:  My Lord on the question of percentage
       assessment, this is of course is meant to be
       an impressionistic and to an extent broad brush, but
       educated broad brush; educated particularly by the trial
       judge of course who has just decided the case and who is
       intimately knowledgeable about the various issues.
           We had grouped at footnote 1, page 7 of my skeleton
       {J1/4/7}, below 23, those items where the Post Office
       did win.  That is an accurate summary.
           My learned friend, when he talks about the true
       agreement point, when you look at the reference, we're
       just talking here about that argument in relation to
       termination for breach, not in a situation where it is
       terminated other than for breach.  So that's a bad point
       he makes about that.
           Again, he goes into certain of these things, but
       when he does so, he does so inaccurately.  Take the
       agent point, that the Post Office was somehow the agent
       of the postmasters: it is obviously a ridiculous
       suggestion.  But what's inaccurate is he says it's
       a couple of paragraphs.  If you look just in his
       closing, it's six pages: it's {A/6/205} to {A/6/210} in
       his closing.  In my closing, I don't know, it's probably
       a similar amount; in the opening similarly.
           So I don't invite you to go through page by page;
       it's impressionistic.  But my learned friend isn't being
       quite straight when he says it's a couple of paragraphs;
       it's rather more.  So you ought to bear that in mind.
           It is true that if obviously a parallel point is won
       then it's not mechanistic; I accept that, obviously.
       But my learned friend says in relation to, for instance,
       the onerous and unusual, it's all is the same.  Well, of
       course it's not the same because the terms under the NTC
       are very different to the terms under the SPMC.  You
       have to consider each of the terms separately.  You
       can't begin to say, as my learned friend does, "Well,
       it's all the same".  Clearly it isn't.
           Similarly, although there is some overlap between
       the material one looks at for UCTA and onerous and
       unusual, of course, as your Lordship rightly points out,
       it is a very different test.
           So the points he makes don't really get him
       anywhere.  One is then left back to the impressionistic
       approach that in my submission you should be doing
       anyway, and doing the best that we can.
           If you look at our skeleton at paragraph 23 and
       following {J1/4/7}, we put some skin on the bones of
       what I have just said.  For instance, paragraph 26
       {J1/4/8}, in relation to signature and incorporation,
       all the evidence that related to the two NTC lead
       claimants that went to the interview, what they were
       told, what they knew, Mrs Dar and Mrs Stockdale, was
       only related to that.
           So I don't overemphasise it, but one has to do it
       fairly.  We have sought to do that and we've come up
       with a round figure of 30%.  You may think that's too
       high or too low.  Certainly the idea that it's zero,
       it's difficult to understand that submission having been
       made.  Equally, 5%: it's obviously much more than that.
       But whether it's 25%, 30% or 35%, right-minded people
       could disagree.  I don't pretend that there's a right
       answer.  This is costs, a discretion.  That's really
       what I wanted to say on that.
           My Lord, then going to the basis of assessment,
       I have to say I'm very surprised that an experienced
       party or team like this would seek indemnity costs in
       this case.  I say that because the test is a very high
       one.  If you look in our skeleton at paragraph 28 and
       following {J1/4/9} Lord Justice Coulson reminded us of
       that in a case called Hislop.  It's authorities
       bundle 2, tab 26 {J7/26/1}.
   MR CAVENDER:  My Lord, yes.
   MR CAVENDER:  This is a decision of Hislop v The Board of
   MR JUSTICE FRASER:  Paragraph 36; is that right?
   MR CAVENDER:  Indeed, yes.  He gives all the relevant
       authority in 35.  {J7/26/14}:
           "Indemnity costs are appropriate only where the
       conduct of a paying party is unreasonable 'to a high
           So that is the test.
           We then cite also at paragraph 35 {J1/4/10}
       Arcadia Group, which is in the bundle at tab 20
       {J7/20/20}.  I don't think I need to take you to it, but
       we extract it at paragraph 35 of the skeleton, where he
       says the "weakness of a legal argument" could not
       justify indemnity costs unless the argument was
       "motivated by some ulterior commercial or personal
           And what was said also in Hosking by Hildyard J
           "The merits of the case are relevant in determining
       the incidence of costs: but, outside the context of
       an entirely hopeless case, they are of much less, if
       any, relevance in determining the basis of assessment."
           Then over the page {J1/4/11}, Digicel.  So this is
       paragraph 36(b), the decision of Mr Justice Morgan
       {J7/14/11}, where he makes the point that:
           "... further refinements of the legal or factual
       analysis as the parties deepen their understanding of
       the issues and the adoption of new positions in the
       light of indications, direct or indirect, actual or
       guessed at, of how the judge appears to be approaching
       the matter ... are not particularly unusual in long and
       complex cases."
           That's aimed at the volte-face point.
   MR JUSTICE FRASER:  It is without doubt sensible -- or
       rather I will put it the other way round.  It is not
       sensible for judges to penalise parties who concede
       points during litigation by saying, "Well, that
       justifies indemnity costs", depending upon the nature of
       the point, because otherwise one would hamstring
       advisers in terms of making sensible concessions.
   MR CAVENDER:  Indeed.  Also I think the point
       Mr Justice Morgan was saying is that the way you put the
       point may alter slightly because things develop, and if
       you look at the whole part of this judgment, witnesses
       have given evidence, the judge has a certain view: often
       judges will offer -- it has been done to me before --
       different implied terms: "How about this one?"  You buy
       it or you don't, effectively.  No one suggests that's
       wrong or should result in indemnity costs.
           Then at paragraph 36(e) {J1/4/12} we cite Williams
       v Jervis {J7/13/3}:
           "... important to bear in mind, firstly, that an
       order for indemnity costs should not be made simply
       because the paying party has been found to be wrong or
       his evidence has been rejected in preference to that of
       the receiving party."
           So that is the tenor of the law.  It has to be
       something significantly out of the ordinary.
           What is said against the Post Office here?  My
       learned friend says: well, for the whole time, the whole
       period of the litigation, he says very boldly, the
       Post Office behaved in the way he suggests.  He gives
       very few particulars on his feet.  The ones he does give
       are bad ones.
           So he says, for instance, in relation to the implied
       term debate -- the implied terms were pleaded by us in
       our original defence: they were necessary co-operation
       and Stirling v Maitland.  The claimant admitted those
       implied terms were part of the contract.  If they had
       wanted to, at any stage they could have pleaded what
       they meant, how those implied terms interacted with the
       express terms and what the incidence of those implied
       terms were.  Had they have done so, we would have had to
       plead to that.  At no stage did they do so.
           They say that we didn't answer their request.  We
       did.  Look at {B4/3/1}.  The fact they don't like the
       answer doesn't make it not an answer.
           So that's the main one.  My learned friend says the
       whole costs, the millions of pounds of costs in this
       action going on for a number of years, because he says
       we didn't answer an RFI in the way he would like, in
       circumstances where he could have pleaded terms he
       admitted no incidence, the court should award indemnity
       costs throughout.  It is, in my submission, nonsensical
       as a submission.
           We then go to his costs submission at {J1/1/16},
       where he goes from (a) to (h) and lists what he says are
       grounds for giving indemnity costs.  Just look at (d)
       and (e) by way of example:
           "(e) Its treatment of the Lead Claimants ..."
           I assume he's talking about that when they were
       employed, the way they dealt with them.  Nothing at all
       to do with the costs of the action in which the parties'
       disputes are -- it is really very surprising to see that
       written down.
           "(b) Post Office's approach to agreeing facts, and
       the relevance of evidence."
           Well, we did agree a lot of facts.  You'll remember
       there were schedules of facts agreed as to whether they
       were true, admissible, or one of two.  So a lot of work
       was done and there was good co-operation in relation to
           Yes, we didn't agree about the relevance of certain
       evidence, we applied to strike it out, and your Lordship
       said: well, it may be; you couldn't say it was all
       inadmissible, some of it may be.  You awarded costs on
       that application.  You can't then say: well, therefore
       that then passes into the costs of the action and
       somehow infects that.  That would be unprincipled.
           The volte-face point, in relation to paragraph (a)
       of this: all your Lordship was doing was saying you
       understood -- in one place you said you thought it was
       a volte-face; in another place you said: on reflection,
       it is the same point.  And maybe I didn't put it very
       clearly; maybe I can be criticised for that.  But this
       is a complex case, we had our written submissions.  To
       say that, "There should be awarded indemnity costs
       against you for the whole action", is fanciful really.
       I've never heard it in any other case I've been in,
       I have to say.
           And then we have -- all of this, none of these,
       alone or together, begin to pass muster as being able to
       satisfy tests for indemnity costs.  That's all I want to
       say about it.
   MR JUSTICE FRASER:  Can I just check one thing with you.
       The date that Mr Green is taking as a watershed date,
       I think -- is it April 2018?
   MR GREEN:  Yes.
   MR JUSTICE FRASER:  It is April 2018.  Is it 11 April 2018?
   MR CAVENDER:  It is, and that --
   MR GREEN:  It's the 13th.  It's the date up to which the
       cost budget went.  We're just saying the ones in the
   MR JUSTICE FRASER:  No, I understand the basis on which
       you've chosen the date.
   MR CAVENDER:  Then if you look at the basis of assessment in
       our skeleton, we outline why they've done this: it's
       a tactical reason, to try and avoid their costs being
       looked at more carefully.
   MR JUSTICE FRASER:  Well, it depends, doesn't it, on -- not
       that it depends on this case.  On a different case
       though, whatever their reasons for it in this particular
       case, to award indemnity costs for one period of time
       and standard assessment for another period of time, one
       would ordinarily look for something that has occurred at
       or about that date that would relate to the conduct of
       the paying party, rather just than the date of
       a costs --
   MR CAVENDER:  My Lord, of course, and that happens.  Certain
       points are taken, or expert evidence, or some particular
       point that played badly, that can be disallowed or you
       can't recover your costs on it.
           But here we have a blanket for the whole period, all
       the costs of the action to date, we're talking about
       here, from the very start of the pleading all the way
       through, subject to a device -- and it is a device, as
       we explain in paragraphs 28 and following {J1/4/9} --
       not to have the budgeted costs area looked at because
       they think they will do better if indemnity costs aren't
       ordered over that period.
   MR JUSTICE FRASER:  Presumably because they don't have to
       have a detailed assessment, as I understand it.
   MR CAVENDER:  Indeed.  In my submission it is in principle
       wrong and is -- well, it's obvious what's going on.
       I need say no more.
   MR JUSTICE FRASER:  I don't think you need to say anything
       more about that.  Thank you very much.
           Right.  Mr Green, anything in reply?
                  Reply submissions by MR GREEN
   MR GREEN:  Two quick points.
           Firstly in the MacInnes case at {J7/23/8}.  So it's
       tab 23 in the bundle of authorities.  This is
       Mr Justice Coulson in MacInnes v Gross.  At 26, the
       first four lines; he obviously goes on to talk about
       relevance to interim payments thereafter.  But the first
       four lines:
           "One of the main benefits to be gained from the
       increased work for the parties (and the court) in
       undertaking the detailed costs management exercise at
       the outset of the case is the fact that, at its
       conclusion, there will be a large amount of certainty as
       to what the likely costs recovery will be."
   MR JUSTICE FRASER:  But this is on interim payments though.
   MR GREEN:  Well, yes, he goes on to deal with interim
       payments, you're absolutely right.  But the central
       point, the rationale underpinning the budgeting
       exercise, we respectfully rely on --
   MR JUSTICE FRASER:  That's undoubtedly correct, but it is --
       well, I've explored the point with you already.
   MR GREEN:  Yes.  It's unusual in that respect.
   MR JUSTICE FRASER:  All right.
   MR GREEN:  The other point I wish to address very briefly is
       in relation to the implied terms point which my learned
       friend has responded to.  There are three points to make
       on that.
           The first point is: this is not a criticism that we
       are making of the Post Office having made a concession.
       The criticism is that they didn't make any concession
       or, rather more particularly, did not actually say what
       the incidents were for the material purposes of the
           The second point my learned friend made was that we
       could have pleaded what we said the incidents of those
       were, and we never did.  He's wrong about that, because
       our case was that our implied terms were either
       free-standing implied terms or incidents of the terms
       that the defendant had pleaded.  So we had set them out
       in our generic particulars of claim and they chose to
       plead to them in the defence as they did.  So he's wrong
       about that.
           The third point is just to invite your Lordship to
       actually look at what we did say in the reply, because
       it's not what you have been told.  It's at {B3/3/32}.
       I'm obviously aware that the pleading point didn't find
       favour with your Lordship anyway in the judgment.  But
       actually looking at it carefully, if we start under
       "Implied Terms" at B.4.  If you look at paragraph 58,
       that's pleading back to 106 in their defence.  And at
           "As to the Defendant's averment, at
       paragraph 106(2), that 'many' of the implied terms
       pleaded by the Claimants 'address matters that are
       already governed by the [thereto] terms ...' the
       Claimant notes the Defendant's refusal to specify which
       of those terms are 'already governed' by the Defendant's
       accepted implied terms."
           So that's the first point.  It's not that they're
       denying them.  They're saying, "They are governed by
       Stirling v Maitland and the other term, but we're not
       going to tell you how".
           58.3 was the reference to the only example
       identified in the RFI.  Then over the page {B3/3/33},
       58.4, they are called out expressly for being evasive
       this respect.  And then 58.5:
           "The Claimants aver that to the extent that their
       pleaded implied terms are 'already governed' by the
       Stirling v Maitland Term and/or the Necessary
       Co-operation Term, these are in substance admitted by
       the Defendant, contrary to Response 61A."
           So it was specifically saying, "If you're saying
       there are these overarching terms which already govern
       the very things we've set out, this is ridiculous".
           My Lord, I'm sorry, we do say that is unreasonable,
       as was the pleaded case on special knowledge
       subpostmasters.  The seeds were planted when they did
       the pleading; the harvest was taken in the Common Issues
           Those are my submissions.
                 Reply submissions by MR CAVENDER
   MR CAVENDER:  My Lord, in connection to that, do you want to
       look at {B7/7/13}, where the claimants admitted these
       implied terms unconditionally.  So it's {B7/7/13}.  It's
       number (2), in brackets:
           "(For the avoidance of doubt, the implied terms
       admitted at Defence para 105 are agreed)"
   MR JUSTICE FRASER:  Thank you very much.  Right.
   (3.00 pm)
              (Ruling awaiting the judge's approval)
   (3.08 pm)
   MR JUSTICE FRASER:  I will put this in writing, but is that
       sufficiently clear for today's purposes and for drawing
       up the order?
   MR GREEN:  Yes.
           What is there now?  Payment on account and whether
       a detailed assessment should commence now or not?
                     Submissions by MR GREEN
   MR GREEN:  My Lord, yes.  The short point is: those two
       points are interrelated.  Payment on account would
       ordinarily be ordered.  As your Lordship observed to me
       when I referred to the judgment of Lord Justice Coulson
       in --
   MR JUSTICE FRASER:  Which one?
   MR GREEN:  The one about the benefit of cost budgeting.
   MR JUSTICE FRASER:  Remind me of the name.
   MR GREEN:  That was in tab 23, it's MacInnes v Gross, and it
       was Mr Justice Coulson, as he then was.  It's {J7/23/8}.
   MR JUSTICE FRASER:  Yes, you were taking me to paragraphs --
       I think it's 26 and 27 together, isn't it?
   MR GREEN:  Precisely.
           So the two points are that in terms of budgeted
       costs, your Lordship effectively knows what they are
       already, and my learned friend Mr Warwick is going to
       deal with numbers and calculations, if he may, if that's
   MR JUSTICE FRASER:  Yes.  So in terms of principle then, you
       would like a payment on account; the amount is going to
       have changed slightly, one imagines.
   MR GREEN:  My Lord, yes.  My learned friend will --
   MR JUSTICE FRASER:  But you want a payment on account.  You
       also want an order that the detailed assessment be
       commenced straightaway.
   MR GREEN:  My Lord, yes.  And there is a balance to be
       struck, because if the payment on account is a very
       substantial proportion of the costs, the interest in
       having a detailed assessment -- the balance to be struck
       by your Lordship is different.
   MR JUSTICE FRASER:  Right.  So when I observed just before
       the short adjournment, in a point to Mr Cavender, simply
       because he was on his feet, "Is there really any
       difference?", and he understandably said it's really
       a point for you --
   MR GREEN:  Yes.
   MR JUSTICE FRASER:  -- if you get a payment on account, is
       there really any difference?
   MR GREEN:  My Lord, normally if the payment on account is at
       or about the budgeted costs plus a substantial
       proportion of the other costs, there may be no
       justifiable reason to go through the expense of detailed
       assessment now rather than later.
   MR JUSTICE FRASER:  Right.  But Mr Warwick is going to deal
       with the figures?
   MR GREEN:  He will deal with the -- exactly.
   MR JUSTICE FRASER:  All right.  So is there anything else
       you want to add?
   MR GREEN:  My Lord, not unless I can help you further.
   MR JUSTICE FRASER:  Right.  I will hear from Mr Warwick on
       the figures and then, Mr Cavender, I will come to you
       about both whether there should be a payment on account
       and, if so, how much.
   MR GREEN:  I haven't really addressed what it should be,
       because it's for my learned friend to --
   MR JUSTICE FRASER:  When you say "what it should be" ...?
   MR GREEN:  Sorry, the issue of principle beyond just saying
       it's normally made, because of course the burden is on
       my learned friend.
   MR JUSTICE FRASER:  Yes, understood.
           Mr Warwick.
                    Submissions by MR WARWICK
   MR WARWICK:  Yes, my Lord.
   MR JUSTICE FRASER:  Am I right to look at paragraph 74 of
       your costs submissions {J1/1/17}?
   MR WARWICK:  My Lord, yes, which is in terms the same as
       paragraph 5(a) {J1/3/3}, which I've been working from.
   MR WARWICK:  Yes.
   MR JUSTICE FRASER:  I think I might have a different version
       of the document.
   MR WARWICK:  It's found at {J1/3/3}, my Lord, under
       heading A.1.
   MR JUSTICE FRASER:  No, I have it on the screen; I'm just
       looking in my hard copy document.  Just give me one
           All right, yes.
   MR WARWICK:  My Lord, if you'll forgive me, the figures have
       changed by reason of the deduction that you have
       applied --
   MR JUSTICE FRASER:  I guessed that they would have done,
       because your figures I don't think had any adjustment.
       That's not to criticise you: you didn't know if there
       was going to be one and, if there was, what it was going
       to be.
   MR WARWICK:  Indeed, my Lord.
   MR JUSTICE FRASER:  So what are the figures now then?
   MR WARWICK:  In the time available --
   MR JUSTICE FRASER:  Incurred figures haven't changed?
   MR WARWICK:  The incurred figures haven't changed, no.
       I beg your pardon, sorry.  The budgeted costs, from
       which this is taken, were budgeted at £3,480,382.50.
   MR JUSTICE FRASER:  And 3.1 had been incurred.
   MR WARWICK:  And 3.1 has been incurred.  Actually, on
       instruction, a little over that has been incurred: about
       £90,000 more.  It has been rounded down for simplicity.
   MR JUSTICE FRASER:  All right.
   MR WARWICK:  I mention that, my Lord, because there is
       obviously a danger in this process in adding rounding
       downs upon rounding downs.
   MR JUSTICE FRASER:  Well, there might be, but I'm afraid
       that's the best that anyone can do.
   MR WARWICK:  Pausing there for a moment, my Lord, I do also
       wish to add that of course there's no difference of
       principle between us about your approach to this, my
       Lord, save only that Lord Justice Christopher Clarke
       observed in Excalibur {J7/22/1}, quite rightly, that you
       shouldn't be looking to find the irreducible minimum;
       it's rather based on --
   MR JUSTICE FRASER:  No, I understand that.
   MR WARWICK:  Indeed, my Lord.
           So that figure would fall to £2,790,000 with the
       application of a 10% discount.
   MR JUSTICE FRASER:  Well, hold on one second.  At the moment
       we're looking at costs from the costs management order
       date onwards.
   MR WARWICK:  Yes.
   MR JUSTICE FRASER:  So that can purely have a percentage
       reduction applied to it --
   MR WARWICK:  Absolutely.
   MR JUSTICE FRASER:  -- because I haven't given an indemnity
       costs assessment, so there's no detailed assessment.
   MR WARWICK:  Quite.  Quite.
   MR JUSTICE FRASER:  So what does 3.1 go to?
   MR WARWICK:  £2,790,000 my Lord.  Correspondingly, VAT down
       to £558,000.
   MR JUSTICE FRASER:  VAT to what?  £558,000?
   MR WARWICK:  Correct, my Lord, yes.
   MR WARWICK:  And the allowance for budgeting costs is
       reduced to £27,900 from £31,000.
   MR JUSTICE FRASER:  That's just a 1%.
   MR WARWICK:  It's just a 1%, yes.  My Lord, you may recall
       there is a split approach to that.  The initial
       preparation of budgets is subject to a cap of 1%.
   MR WARWICK:  Further cost management costs, which are not
       insignificant in a case like this -- there have been
       several hearings since April; although I should add,
       my Lord, you have made one costs order in respect of one
       of those hearings.  But nevertheless, they are a large
       sum.  And just for ease of rounding --
   MR JUSTICE FRASER:  Can I just check though: this does not
       include any of the £300,000 in respect of the consent
       order for the recusal?
   MR WARWICK:  Not at all.  That's correct, yes, my Lord.
   MR JUSTICE FRASER:  Understood.
   MR WARWICK:  But just making that point good, my Lord, just
       1% has been applied as a blanket for the purposes of
       estimation, rather than breaking it down.
   MR JUSTICE FRASER:  Understood.
   MR WARWICK:  If I may have a moment to reach a total for
       that, now that your adjustment has been added.  (Pause)
           I make that, my Lord, £3,375,900 on the budgeted
       costs element.
   MR JUSTICE FRASER:  Well, all of those figures can be
       checked afterwards.  But it is incurred costs --
   MR WARWICK:  Yes.
   MR JUSTICE FRASER:  -- up to 13 April 2018, which requires
       a little bit more analysis, doesn't it?
   MR WARWICK:  It does, yes.  Subject of course, my Lord, to
       not applying an approach that would look to find
       an irreducible minimum.
   MR WARWICK:  And those have been taken --
   MR JUSTICE FRASER:  But your total, or the balance, is what?
       It was originally 3.284 and you were looking for
       an interim payment of 60% of that --
   MR WARWICK:  That's right, my Lord.
   MR JUSTICE FRASER:  -- to reflect your recovery on
       a detailed assessment --
   MR WARWICK:  That's right, my Lord.
   MR JUSTICE FRASER:  -- and the fact it's not a full
   MR WARWICK:  That's correct, my Lord, yes.
   MR WARWICK:  Built into it though, I have to say, my Lord,
       was an element of rounding down, because how that figure
       has been reached, if I may explain very briefly, is to
       take the total incurred costs from the costs budget,
       which was £6,142,540.08, and strip out some things that
       the costs --
   MR JUSTICE FRASER:  Well, however it was reached,
       Mr Warwick, that's the figures that you've ended up
       with --
   MR WARWICK:  That's right, my Lord, yes.
   MR JUSTICE FRASER:  -- where you explain what the balance
       is, having removed the costs management order budgeted
       costs --
   MR WARWICK:  Yes.
   MR JUSTICE FRASER:  -- and applying 60% to that.
   MR WARWICK:  That's right.
   MR JUSTICE FRASER:  But your 2.384 takes no account, so far
       as I can tell, of any percentage reduction for your
       recovery, but you say it does take account of the fact
       you're not going to recover everything on a detailed
   MR WARWICK:  That's right, my Lord.  Yes, it does.
   MR WARWICK:  That proposition is correct.
   MR JUSTICE FRASER:  But your 2.384 includes VAT on the 1%?
   MR WARWICK:  It does, my Lord, yes.
   MR JUSTICE FRASER:  Is there any reason why you have not
       given me those figures separately?  I'm not saying
       I need them separately; I'm just curious.
   MR WARWICK:  In the skeleton argument, for simplicity, they
       are there as just figures; but in the correspondence to
       which it refers, they are set out in a little more
   MR JUSTICE FRASER:  Yes, all right.  Okay.
           Is there anything you would like to add on the
   MR WARWICK:  My Lord, if I could say: in support of the sum
       claimed for incurred costs, as if to stress-test the
       figure, one could also look at the period of time that
       elapsed since the first CMC.  For very obvious reasons,
       what is sought here would go back beyond the first CMC
       to the time when, for example, the Common Issues were
       negotiated and agreed and put into an order and so
       forth.  They have been in issue since a very early
       stages of these proceedings.
           But what is interesting to note is that under
       your Lordship's costs reporting requirements, first
       imposed in fact by the Senior Master under the GLO and
       latterly by your Lordship, there have been letters
       informing of costs updates along the way, and the
       increase between the first CMC before you in
       October 2017 and for 13 April 2018 was roughly
       £2 million, and that broadly aligns with the underlying
       figure that's being claimed here.
           Wo whichever way one looks at it, there is support
       for that figure in round terms, my Lord.
   MR JUSTICE FRASER:  So far as your stress test is concerned,
       doesn't there have to be some application to your
       current paragraph 74(b) in the costs submission
       {J1/1/17}, the version that I'm using, to reflect the
       90% point?
   MR WARWICK:  On budgeted costs, my Lord.
   MR JUSTICE FRASER:  No, no, I'm not --
   MR WARWICK:  Your 90% that you've just applied in making the
       costs order you have, my Lord.
   MR JUSTICE FRASER:  Right.  At the moment, Mr Warwick, your
       costs, for understandable reasons, have been dealt with
       post-13 April 2018 because they're subject to the costs
       management order.
   MR WARWICK:  Yes.
   MR JUSTICE FRASER:  And I entirely understand the way you've
       taken me through the figures.  You applied a reduction
       of 90% to the £3.1 million to get to 2.79; yes?
   MR WARWICK:  Yes, my Lord.  Yes.
   MR JUSTICE FRASER:  Costs incurred up to 13 April, you had
       taken a balance and you had applied 60%, but there had
       been no 90% analysis because you didn't know I was going
       to make a 10% reduction.
   MR WARWICK:  That's right, my Lord, yes.
   MR JUSTICE FRASER:  Did you want to tell me what the figures
       are with the 10% reduction?
   MR WARWICK:  Yes.  So the figures --
   MR JUSTICE FRASER:  Because even the most optimistic counsel
       I don't think would be maintaining recovery of
       an interim payment on account in the same amount as
       before they had their costs reduced by 10%.
   MR WARWICK:  That's well understood, my Lord.  Yes, of
           So the total of incurred costs that would be said to
       be recoverable, but to which I will apply your 10%
       reduction, was to be £3,284,835, would now be
       £2,956,351.50, to which the 60% is applied, leading to
       £1,773,810.90, meaning that the total sought is ...
   MR JUSTICE FRASER:  Can you just give me the product when
       you apply the 60% again, because I didn't note it down.
   MR WARWICK:  Yes, it is £1,773,810.90.
   MR WARWICK:  So taken together with the reduced budgeted
       costs, that would come to just over £5 million, so 5 --
   MR JUSTICE FRASER:  No we haven't got there yet.  At the
       moment we're at £1,773,810, which I think --
   MR WARWICK:  Yes, my Lord.
   MR JUSTICE FRASER:  -- doesn't have VAT, does it?
   MR WARWICK:  I'm so sorry.  I beg your pardon.  I will just
       add that in.
   MR JUSTICE FRASER:  I want to know what the figures are like
       with like.  I can only compare them if you do them on
       the same basis.
   MR WARWICK:  Indeed.  So the VAT would be reduced to
       £354,762.18.  And the 1% budgeting figure --
   MR JUSTICE FRASER:  That's going to be £17,738, isn't it?
   MR WARWICK:  Indeed, my Lord, yes.  £17,738.10.
   MR JUSTICE FRASER:  I don't think you need to worry about
       the 10 pence.
           So the total of those three is, please?
   MR WARWICK:  The total of the VAT and the 1%, or all
       underneath that line?
   MR JUSTICE FRASER:  The £1.773 million plus the VAT plus the
   MR WARWICK:  Is £2,146,311.
   MR JUSTICE FRASER:  All right.  Thank you very much.
           So your submissions seeking payments on account have
       changed, as a result of my 90% ruling, to be £3,379,500
       for budgeted costs and £2,146,311 for incurred costs up
       to 13 April?
   MR WARWICK:  That's correct.  So the budgeted cost is in
       fact £3,375,900.
   MR JUSTICE FRASER:  £3,375,900?  I'm sorry.
   MR WARWICK:  Correct.
   MR JUSTICE FRASER:  All right.  That's very useful.  Thank
       you very much.  I'm now going to hear from Mr Cavender.
           Mr Cavender, I wanted to do that in detail first so
       you could see what figures are that are being claimed
       against you now, as opposed to the ones claimed against
       you in the skeleton.
                    Submissions by MR CAVENDER
   MR CAVENDER:  Indeed.  Can we go to my skeleton though,
       because that outlines what we understood was going on
       here and why there are difficulties particularly with
       the approach and the incurred costs.
           So we outline at 42(a) and (b) {J1/4/14} what we
       understood the position to be.  This is before the 10%
       reductions.  But they wanted 100% of budgeted costs and
       60% of pre-budget costs.
           Then we outline the approach at paragraphs 45 and 46
       {J1/4/15} and we rely particularly, where a costs
       management order was in place for the budgeted costs,
       that 90% of budgeted costs has been awarded in a couple
       of cases.
   MR CAVENDER:  So that is the basis on which we are
           Let's take budgeted costs first.  90% of the
       £3.1 million-odd plus VAT gives you the 3.3348 figure.
       You then have to reduce that by 10% to reflect the
       discount of the success.
   MR JUSTICE FRASER:  The order I've made this afternoon, not
       the 90%.
   MR CAVENDER:  Correct.
   MR CAVENDER:  So you need to take 90% of --
   MR CAVENDER:  Correct.  So 90% of the £3,348,000, which
       comes to £3,013,200.
   MR JUSTICE FRASER:  So in other words, the figures that
       Mr Warwick has given me don't take account of the 10%
       Cleveland Bridge/MacInnes reduction.
   MR CAVENDER:  Correct.
   MR JUSTICE FRASER:  And it has to be done as well.
   MR CAVENDER:  Indeed.
   MR JUSTICE FRASER:  And if it is, budget costs go to
       £3.013 million.
   MR CAVENDER:  Correct.
   MR JUSTICE FRASER:  And that extra 90% doesn't really apply
       to incurred costs up to April 2018 because they're done
       in the old-fashioned way, which Mr Warwick has explained
       was a 60% reduction.
   MR CAVENDER:  My Lord, he does.  But the trouble is, and the
       trouble with incurred costs, if you look at
       paragraphs 49 and 50 of our skeleton {J1/4/16} -- this
       is a point we raised in our submissions, served some
       weeks ago, but unfortunately it has not been dealt with,
       so there's a hole in the information.  If you go to
       {J1/2/8}, which is our costs submissions, paragraphs 22
       and 23, if you could read those.
   MR JUSTICE FRASER:  Is this the original submissions on
       29 March?
   MR CAVENDER:  Exactly.
   MR JUSTICE FRASER:  Yes, I have those.  Just give me one
   MR CAVENDER:  So paragraphs 22 and 23 outline that there
       can't be any costs of the Common Issues in advance of
       the Common Issues being ordered.  That was ordered on
       25 October 2017.  There were quite a lot of costs before
   MR JUSTICE FRASER:  They were ordered in October which year?
   MR CAVENDER:  2017.  But all the stuff before that are
       general costs of the action that are not generally
       currently in play.  We asked: if they want to seek
       these, they ought to produce us with a figure.
   MR CAVENDER:  Without a figure, we can't do it.  But that
       was months ago.  We still don't have that figure.  We
       record that at paragraphs 49 and 50 --
   MR JUSTICE FRASER:  Of your skeleton?
   MR CAVENDER:  -- of our skeleton {J1/4/16}.
           So quite what to do, it's very difficult to know
       whether to put anything in here, because we don't want
       to guess.  But you're going to have to, in my
       submission, if you want to do it on a rough and ready
       basis, apply some kind of discount to reflect that lack
       of knowledge, that those costs can't be Common Issues
   MR JUSTICE FRASER:  And you'd be happy for me to do that in
       an impressionistic rather than
       a mathematical/arithmetical way, would you?
   MR CAVENDER:  Well, I'm not very happy about it.
   MR CAVENDER:  I'd rather get the information.  I've ask my
       costs junior, who knows about these things, "Come on,
       can't we have a stab at it?", but he's very reluctant.
           So that's where we --
   MR JUSTICE FRASER:  Some account will have to be taken of
   MR CAVENDER:  Or whether you say: well, they've put nothing
       in to allow you to do it, so you have no real judicial
       basis to do it.  It might seem somewhat harsh, on one
       view: there must be some costs.  But I think you should
       be super-cautious about it.  If you are going to go down
       the route and say, "Well, there must be some costs", you
       should reduce it by a margin to ensure that you cover
       this degree of uncertainty.
   MR JUSTICE FRASER:  But remember, this would be a payment on
       account of a detailed assessment for costs in that
       period, wouldn't it?
   MR CAVENDER:  Yes, I think that's true.  There would be
       a detailed assessment in that period.
   MR JUSTICE FRASER:  Yes.  So it doesn't necessarily have
       potentially unfair consequences, but it has to be taken
       into account in fixing what's a payment on account of
       a detailed assessment.
   MR CAVENDER:  Indeed.
   MR JUSTICE FRASER:  Understood.  All right.
   MR CAVENDER:  The danger is an overpayment that we might
       struggle to get back.  This is always the problem.
           They have had a fair chance to do this; they haven't
       done it.  I'm not being unrealistic about it.  But I'm
       not sure that they haven't done that should be visited
       on my client, the uncertainty.
   MR JUSTICE FRASER:  Understood.  All right.
   MR CAVENDER:  So I hazard to give you a figure that would
       encompass that.
   MR JUSTICE FRASER:  No, I understand that.
   MR CAVENDER:  My Lord, I have asked to leave it to you
       to ...
   MR JUSTICE FRASER:  Thank you very much.
           Anything else?
   MR CAVENDER:  I think that was all that was in issue,
       wasn't it?
   MR JUSTICE FRASER:  Yes, it was just to -- all right.  Thank
       you very much.
   MR WARWICK:  My Lord, might I say one thing as a point of
       principle that has arisen out of that?
   MR JUSTICE FRASER:  Of course you can.  I was going to come
       back to you on that anyway.
   MR WARWICK:  I'm very grateful, my Lord.
                 Reply submissions by MR WARWICK
   MR WARWICK:  There are just two points here: the Cleveland
       90% if I can call it that, and then the pre-first CMC
           The Cleveland 90% has not been applied.  But
       I should point out, if it hasn't been seen already from
       when my learned leader took your Lordship to the case on
       which it's based, which was the judgment of
       Mr Justice Coulson in MacInnes, at paragraph 28 in that
       judgment, which is found at {J7/23/8} --
   MR JUSTICE FRASER:  Yes, I have that judgment open.
   MR WARWICK:  It's important to bear in mind in this
       analysis, my Lord, that the 90% applied by then
       Mr Justice Coulson is regarded as the maximum deduction
       that's appropriate in a case where there is an approved
       costs budget.
           The same reasoning was applied in the later case to
       which you have been referred in writing and orally, the
       Cleveland Bridge case {J7/27/1}, where Ms Joanna Smith
       QC, sitting under section 9, followed then
       Mr Justice Coulson's approach pretty much verbatim in
       her judgment.  I needn't trouble your Lordship by taking
       you through that.
   MR JUSTICE FRASER:  No, I don't think you need to.
   MR WARWICK:  The point to make here, my Lord, is that my
       clients have come in under.  So they have come in
       significantly -- indeed, more than 10% -- under the sum
       that this court has already found to be reasonable and
       proportionate for the purposes of costs budgeting.  In
       my submission, my Lord, there is no basis to apply
       a Cleveland 90% reduction in this situation.  It would
       be for little, if anything.
   MR JUSTICE FRASER:  I think the real answer is in
       paragraph 25 of that case {J7/23/8}, where it said:
           "In my view, the ... approved costs budget is the
       appropriate starting point for the calculation of any
       interim payment on account of costs.  CPR 3.18 ... [if]
       there is an approved or agreed costs budget, when costs
       are assessed on a standard basis at the end of the case,
       'the court will … not depart from such approved or
       agreed budget unless satisfied that there is good reason
       to do so.'  The significance of this rule cannot be
   MR WARWICK:  Indeed.
   MR JUSTICE FRASER:  However, in this case the "good reason"
       is the fact that I've only award you 90%.
   MR WARWICK:  Yes, in a sense the reasoning here is the idea
       that somehow the seal has been broken.  But the point is
       that my clients have come in at 10% below --
   MR JUSTICE FRASER:  No, no, I understand that.  I do
       understand that.
   MR WARWICK:  Yes.
   MR JUSTICE FRASER:  That is a point -- I'm not sure,
       Mr Green, that Mr Warwick is necessarily going to find
       it useful to listen to you when he's supposed to be
       listening to me, but I might be wrong.  You can have
       a moment in a second.
           But the essential point is, isn't it, that in the
       case of MacInnes the judge was dealing with what the
       correct interim order should be on account of costs,
       taking into account the costs budgeted figure, where
       there had been an order for costs?
   MR WARWICK:  Yes.
   MR JUSTICE FRASER:  In this case there is an order you get
       90% of the Common Issues costs, so there has to be
       an adjustment.  That's the "good reason", isn't it?
   MR WARWICK:  My Lord, that's certainly the "good reason" to
       apply the adjustment that your Lordship has ordered
       should be applied.  There is no good reason, in my
       respectful submission, to apply a further 10% discount
       or deduction I should properly say on the
       MacInnes/Cleveland basis, my Lord.
   MR JUSTICE FRASER:  I think what you are saying is that the
       figures you have given me achieve it because you have
       done the 90% analysis that I took you through 15 minutes
   MR WARWICK:  They do my Lord, yes, and for the further
       reason that my clients anyway came in 10% under budget.
   MR JUSTICE FRASER:  I understand.  All right.  So you are
       under budget.
           What about Mr Cavender's point?  What I will do is I
       will just hear from you on this point, then I'm going to
       give the shorthand writers a break and then I'm going to
       come back in.
   MR WARWICK:  Very grateful.  The pre first CMC point
       my Lord.  It is true that at the first CMC before you in
       October 17 --
   MR JUSTICE FRASER:  There were no common issues.
   MR WARWICK:  The common issues were ordered at that point,
       but they have an extremely long history my Lord.  They
       go right back to pre-action correspondence.  If it
       assists the court I can take you to where that is found
       in the defendant's letter of response.
   MR JUSTICE FRASER:  It doesn't assist me, but I think your
       answer to the point is what?
   MR WARWICK:  My answer to the point is that on detailed
       assessment, as my learned friends rightly identified in
       their skeleton, this would be something argued at
       detailed assessment, but it would be argued very
       strongly by the claimants too that the Common Issues
       were a core feature of this litigation, always have
       been, and that a substantial proportion of pre-October
       2017 costs are entirely referable to that element of the
           But if it assists your Lordship's decision-making on
       this, as I have already pointed out when I made
       reference to a stress-testing process, the increasing
       costs which the claimants have incurred between
       October 2017 and the cut-off date for these incurred
       costs, namely 13 April 2018, was a whisker over
       £2 million and that £2 million now roughly aligns and
       now exceeds the figure that I gave your Lordship of
       £1,773,810, which was the 60% discounted figure.
           Therefore, looked at either way, that figure should
       properly be regarded as reasonable and proportionate as
       an estimate of Common Issues costs that were incurred as
       at 13 April.  The final point to make my Lord is just to
       repeat again that we are not looking to strip everything
       out and achieve an irreducible minimum which appears to
       be the gravamen of my learned friend Mr Cavender's
       submission that we should have nothing for this period
       since there are doubts.
           Inevitably, my Lord, there are doubts because we are
       not at detailed assessment and the production of a
       detailed bill of costs in this will be a lengthy
       exercise and we are working only with estimated figures.
           I have one further point if I may.
   MR WARWICK:  My learned leader is right to point out that
       under first the Senior Master's cost reporting regime
       and latterly your cost reporting regime, information
       about the level of costs has been reported throughout.
       I understand on both sides there has been some wobbles
       about that over the last few months --
   MR JUSTICE FRASER:  What do you mean by wobbles?
   MR WARWICK:  I'm afraid I don't have full instructions but
       I do understand there have been some periods of time
       when the parties have not written strictly to the
       letter --
   MR JUSTICE FRASER:  Originally they were supposed to notify
       me every time their costs went up by £250,000.  Then
       they were writing so often that that was changed to half
       a million.  The most recent letter I received was one
       from the Post Office which told me that their costs were
       £12.8 million.  That was earlier this month but it
       didn't include, so far as I know, the £300,000 that was
       agreed and the consent order for today about the recusal
           So I'm anticipating another letter very soon about
       that and it won't reflect any orders I make today.  They
       won't be taken into account.
   MR WARWICK:  I'm grateful my Lord.  If I can come good on
       that submission by injecting a little more precision --
       not -- than your Lordship's summary, I mean in the
       submission I made so far.  Under the GLO the regime
       required a statement of costs to be produced shortly
       before the first CMC.  That was produced identifying the
       claimants' costs at just over £4 million, 4.15 in round
   MR WARWICK:  Through costs reporting letters in the
       intervening period running up to 13 April 2018 ongoing
       costs were reported first at £250,000 increments and
       I think at the very end, perhaps on the first of the
       £500,000 increments, I'm afraid I'm not sure but I do
       not think anything turns on it.
   MR JUSTICE FRASER:  I don't think either, I only mentioned
       it because you mentioned it.
   MR WARWICK:  Indeed my Lord.  Then when one looked at the
       cost budget, one sees the £6.15 million total incurred
       cost figure.  The difference between the two is
       £2 million.  In short, my Lord, the claimants had to go
       through £2 million during that period in any case and
       that is the figure that in fact exceeds the figure that
       your Lordship has been given as part of my calculation
       after the various deductions today.  If your Lordship
       forgives the convoluted way of explaining that, that is
       my point on it.
   MR JUSTICE FRASER:  Insofar as I understand that, thank you
       very much.
           I'm going to rise for ten minutes purely for the
       shorthand writers because they are entitled to a break.
       I will come back in and give you the brief ruling on
       figures on amount, of payments on account, and then we
       will deal with the one final outstanding matter which is
       whether there should be a detailed assessment ordered to
       take place straight away or whether it should wait.  So
       I will come back in at 3.45.
   (3.39 pm)
                         (A short break)
   (3.51 pm)
   MR CAVENDER:  My Lord, before you rule on that, can I raise
       one point.  We can check the transcript to make sure
       I am right.  I was a bit confused about my learned
       friend's submissions as to the costs for the incurred
           On the transcript at page 143, line 9, it is
       recorded as my learned friend saying that their incurred
       costs at the date of the first CMC was £4.1 million.
       I ask: is that right, because if so, that's a much
       bigger problem than I anticipated for that uncertain
   MR JUSTICE FRASER:  That would be the first CMC in front of
       me which was October --
   MR CAVENDER:  17.
   MR CAVENDER:  I don't know if he misspoke.  I thought the
       amount would be very much smaller and so I was being
       quite relaxed about it.  If it was £4.1 million of the
       6-odd and we have no detail about it, that becomes a bit
       more of a serious problem.
   MR JUSTICE FRASER:  I understand.  That can't possibly be
   MR CAVENDER:  I would not have thought so.
   MR JUSTICE FRASER:  What was the page of the transcript,
       Mr Cavender?
   MR CAVENDER:  Page 143, line 9.  It is not a perfect bit of
       the transcript because they have yet to complete it.
   MR JUSTICE FRASER:  All right.  Thank you very much.
   MR CAVENDER:  I am sure my learned friend must know what the
       costs were at the first CMC because he told us.
   MR WARWICK:  Yes, my Lord, I do.  I'm looking at a copy
       here.  It is not in your bundle my Lord but a copy of
       the statement or cost summary that was produced pursuant
       to paragraph 35 of the GLO and it was sent to the
       defendant, I believe, shortly after 2 October 2017 when
       it was prepared and the grand total is £4,180,803.35 --
   MR JUSTICE FRASER:  4-point ...?  We are talking millions?
   MR WARWICK:  Yes, my Lord.  £4,180,803.35.
   MR JUSTICE FRASER:  As at October 2017?
   MR WARWICK:  It included estimated costs for the first CMC
       as well that was then just about to happen.  The major
       point that I'm asked to point out which is absolutely
       right is that it includes a significant sum for
       preparation of the statements of core information which
       your Lordship will remember were prepared for each of
       the 550, perhaps 560 at that stage, claimants in
       considerable detail and at considerable length.  That is
       a figure that's been mentioned in court previously --
   MR JUSTICE FRASER:  Therefore, it may not make any
       difference but I am going to go back to Mr Cavender in
       a moment, if I look in paragraph 74 of your skeleton,
       74(a) and (b) reading together has a total figure of
       £6.384 million.  Now, obviously, there will be some
       costs prior to the first CMC that aren't Common Issues
   MR WARWICK:  Yes, my Lord.
   MR JUSTICE FRASER:  But the costs information that you have
       already provided to WBD is that 4.1 of the total, which
       obviously is going to be bigger than the 3.2 and the
       3.1, 4.1 of that had been incurred as at the date of the
       first CMC on 2 October?
   MR WARWICK:  Yes, my Lord, although of course including the
       then estimated costs of the first CMC itself.
   MR JUSTICE FRASER:  I understand that, some of those will be
       Common Issues costs and some won't.
   MR WARWICK:  That is right, my Lord.
   MR JUSTICE FRASER:  I understand.
           There you go, Mr Cavender.
   MR CAVENDER:  My Lord, I just reiterate the point about the
       uncertainty.  We have pointed this out and now we are
       talking about £4 million-odd.  Maybe some of it is
       related partly to Common Issues.  Even if you take
       £1 million of that, you have £3 million.  In my
       submission you should be a lot more careful about that
       element rather than waiving it through on the basis of
       the other amounts we have information about.
   MR JUSTICE FRASER:  When you say waiving it through?
   MR CAVENDER:  Making an interim payment in relation to it.
   MR JUSTICE FRASER:  But it is an interim payment -- the
       interesting thing or -- I don't know maybe the
       Post Office will decide they would like to start
       a detailed assessment sooner rather than later -- but
       for this period it is a payment on account of a detailed
   MR CAVENDER:  Correct.
   MR JUSTICE FRASER:  Which on the figures that Mr Warwick has
       taken me through takes what they say are their common
       issues costs up to that date, multiplied by 60% because
       of his -- let me think of a neutral way of putting it --
       "we are never going to recover everything it's a
       taxation point"; to which I then asked him to apply
       a further 10% deduction.  But you are saying I think
       that you don't know how much of those could be
       potentially not Common Issues costs.
   MR CAVENDER:  Correct.
   MR JUSTICE FRASER:  Up to the date of the first CMC, is that
   MR CAVENDER:  It is.  I have no idea and I shouldn't have
       an idea frankly given what we said in our costs
   MR JUSTICE FRASER:  You don't know the precise figure but on
       the basis that there is to be a detailed assessment at
       some point, which I haven't yet decided, that will all
       come out in the detailed assessment.
   MR CAVENDER:  Of course.  It is a timing point but it is
       also a cash flow point and trying to get the money back
       and those kinds of issues.
   MR JUSTICE FRASER:  Understood.
   MR CAVENDER:  If we just sort of -- back of a fag packet
       approach -- unfortunately we are in here for reasons
       that are not due to my client -- even if you did a --
       say 1 million odd of them were definitely related to
       Common Issues because they are drafting the statements
       of individual particulars etc, you still have a chunk of
       costs there whose -- the generation of which is at best
       unclear and may not be recoverable at all in this
   MR JUSTICE FRASER:  Just for precision terms, I don't think
       this is back of a fag packet.
   MR CAVENDER:  It is in the absence of information I mean.
   MR JUSTICE FRASER:  Well, the information available is,
       I think, based on what they have submitted, is that the
       total of their Common Issues costs up to 13 April 2018
       is £3.2 million.  That is the extent of the information,
       isn't it?  You are saying there should be a delineation
       within that of costs as at the first CMC because they
       can't possible be Common Issues costs?
   MR CAVENDER:  Correct.
   MR JUSTICE FRASER:  I understand.
   MR CAVENDER:  That's the point and it is a better point when
       you realise at that date there is a 4.1 incurred they
       say.  So it becomes a bigger point.  I thought it would
       be a little local difficulty.  It turns out it is quite
       a sizeable point. in my submission you should reflect
       that in reducing the interim payment in relation to the
       incurred costs to reflect that.
   MR JUSTICE FRASER:  I understand.
   MR CAVENDER:  I'm obliged.
   MR JUSTICE FRASER:  Thank you very much.
   MR WARWICK:  My Lord, I appreciate you won't want
       submissions tennis on this.  But with the greatest
       respect to my learned friend, it is a better point by
       reason of that £4 million figure because between that
       figure and the date on which incurred costs ended on
       13 April was almost entirely Common Issues work in the
       case.  Your Lordship will remember that some directions
       have been given for Horizon issues matters --
   MR JUSTICE FRASER:  That's what you say costs £2 million.
   MR WARWICK:  Indeed, my Lord.  In fact very little Horizon
       Issues work had been done.  There had been limited
       disclosure.  My learned leader and my learned friend
       Mr Cavender had been ordered to meet to agree some
       issues.  There had some limited disclosure of dimensions
       documents --
   MR JUSTICE FRASER:  What you say is, on the basis of that
       information you have read out, one, in broad brush
       terms, would take £2 million off the 3.2 and that shows
       about 1.2 of the 4.1 had been incurred at the first CMC.
   MR WARWICK:  Indeed my Lord.
   MR JUSTICE FRASER:  But whatever it is, this is only
       a payment on account.
   (3.58 pm)
              (Ruling awaiting the judge's approval)
   (4.06 pm)
   MR JUSTICE FRASER:  So is the only outstanding point
       therefore whether there should be a detailed assessment
   MR GREEN:  My Lord, I'm not going to invite you to do that
       in light of the interim payment ordered.
   MR JUSTICE FRASER:  Let me ask Mr Cavender.
           Mr Cavender, do you want one to be ordered now
       because unless I order one I do not think the claimant
       is obliged to agree.
   MR CAVENDER:  We don't want one now, my Lord.
   MR JUSTICE FRASER:  Therefore it is unnecessary in this
       order to say anything about the time for a detailed
       assessment.  Is there anything else?
   MR GREEN:  My Lord, the only thing is the costs of today.
       I don't know how your Lordship would like to dispose of
       those.  I was going to venture to suggest that they
       should be claimants' costs in the case.
   MR JUSTICE FRASER:  Well you have not succeeded on
   MR GREEN:  Not on everything, no.
   MR JUSTICE FRASER:  So why should they be the claimants'
       costs in the case?
   MR GREEN:  Because half the hearing was the permission --
   MR JUSTICE FRASER:  Some of them would be costs in an appeal
       if an appeal happened, wouldn't they?
   MR GREEN:  I'm in your Lordship's hands.
   MR JUSTICE FRASER:  Well what costs order are you
   MR GREEN:  I was suggesting claimants' costs in the case but
       if your Lordship orders costs in the case --
   MR JUSTICE FRASER:  Let me hear from Mr Cavender.
       Mr Cavender, what do you want to do about costs today,
       what are you asking me?
   MR CAVENDER:  I rather thought they would be costs in case,
       that's what I would expect.
   MR JUSTICE FRASER:  I think the sensible and fairest thing
       is to make them costs in case.
   MR CAVENDER:  The other thing is the date of payment of the
       interim payment.  Is it normally 28 days?
   MR JUSTICE FRASER:  No, it is normally 14.
   MR GREEN:  My Lord, that is what was agreed with recusal as
   MR CAVENDER:  Can we ask for 28?  I have been asked to seek
       28 days, so an extra 14 days.  I'm not sure that there's
       any real prejudice to the claimants.  It is a question
       of arranging the funds I suppose and talking to our
       shareholder about it.
           It is only going to sit in the -- this is another
       point I should raise, it is only going to sit in because
       they have undertaken to keep it in the solicitor's
       client account.  So there's that point.
           Allied to that, in my learned friend's order, so we
       are clear, which is attached to his skeleton, in
       relation to that he has a recital that the claimants
       agree to hold and not disperse.  I spoke to my learned
       friend about this, he is happy that that be the
       solicitors --
   MR JUSTICE FRASER:  A fair copy of the order is going to
       have to be drawn up by both of you reflecting everything
       I have done and I was not necessarily going to, unless
       it was agreed, make recitals in the form sought by
       either party to be honest because I am going to look at
       the recitals in detail, but you would rather that be the
       claimants' solicitors?
   MR CAVENDER:  Yes, it has to be --
   MR GREEN:  My Lord, the claimants were going to hold it by
       their solicitors retaining it.
   MR JUSTICE FRASER:  So that is a non-point.  Time for
       payment you want 28 days?
   MR CAVENDER:  My Lord, yes.
   MR GREEN:  My Lord, I'm not going to quibble --
   MR JUSTICE FRASER:  You are either going to agree 28 days or
       you would like to stick with 14 and then I will decide.
   MR GREEN:  I would like to stick with 14.
   MR JUSTICE FRASER:  All right.  You can have 21 days
       Mr Cavender.
   MR CAVENDER:  I'm obliged.
           Finally I'm instructed to ask for permission to
       appeal against the ruling that costs not be reserved;
       just that element.  I do so on the basis, really two
       bases, one is your Lordship identified a distinction
       that applied to group litigation --
   MR JUSTICE FRASER:  Just before you do this, can I just make
       an observation?
   MR JUSTICE FRASER:  You haven't had my detailed reasons.  If
       you make this application now your time will start
       running to make the application to the Court of Appeal.
       I'm very happy to hear you now.
           If you wait until you have had the detailed reasons,
       then you would be able to make the application in view
       of the detailed reasons and your time would then run
       from whenever you make that application.  But if you
       would like to make the application now I will hear you
   MR CAVENDER:  It is just a question whether your Lordship is
       right about that because you have given reasons.  You
       are going to give --
   MR JUSTICE FRASER:  All right.  If you want to make it now
       that's fine.
   MR CAVENDER:  I'm instructed to carry on with it.  Two
       bases, one was the group litigation was different in
       some way and my analogy of preliminary issue was not
       apposite and was not appropriate.  In my submission
       there is a real prospect the Court of Appeal may
       disagree with that.
           Whilst group litigation is a great thing and it gets
       Common Issues together and it is a great vehicle and
       there are special rules about it, they don't apply to
       whether the incidents of costs should go one way or the
       other in advance when that would appear to be dependent
       on how you group the issues.
           What it will do, if it is right, is it will put
       enormous premium in the future on agreeing particular
       issues being hived off because parties won't want to
       agree say just deciding the question of interpretation
       if they think well they might lose on that but they win
       on breach.
           There will be an unhelpful tension in group
       litigation and in people agreeing sensible things if
       there is a massive cost consequence depending how you
       parcel them.  That's point 1.
           Point 2 is that your Lordship relied on the Court of
       Appeal in the David de Jongh Weill case and relied upon
       that.  If we can return to that which is in bundle 1,
       tab 7, paragraph 33.  The thing about that that
       your Lordship certainly emphasised but is important is
       that that principle applied, if you look at 33:
           "The fact that only nominal damages are awarded
       after a single trial of the issues of liability... "
           {J7/7/10}.  It is envisaging a case where liability
       has been determined.  There has been no liability
       determined in this case at all, any liability.  There
       has just been a determination of the contract.  So to
       therefore elide the two and say that's authority for the
       situation is, in my submission -- is a real prospect on
       that and so for those reasons in my submission this is
       a case where there is a real prospect.
           Group litigation seems to be on the increase.  There
       is a point of principle there about group litigation
       costs and whether they in fact -- the way in which
       issues are parcelled can affect incidents of costs and
       the policy is: that's tough because group litigation is
       there, it is all about cashflow and funding and that
       should take precedence over absolute fairness.  That's
       the competition.  In my submission that is
       an interesting point and we should have permission on
   MR JUSTICE FRASER:  Thank you very much.  I'm not going to
       give you permission.  So the order for today will also
       say permission to appeal -- I think Mr Cavender you were
       just seeking it in respect of that part of the costs
       order that declined to reserve the costs, is that right?
   MR CAVENDER:  That is my Lord but of course the other points
       are parasitic on that but we don't specifically say you
       got anything wrong assuming you haven't reserved costs.
   MR JUSTICE FRASER:  The order will have to make reference to
       the paragraph higher up the order where I declined to
       reserve costs.
           Anything else?
   MR GREEN:  My Lord, one point of finesse --
   MR JUSTICE FRASER:  Would you like permission to appeal in
       respect of anything, is that what you are asking?
   MR GREEN:  My Lord, no, that's my learned friend's --
   MR JUSTICE FRASER:  You are not winning everything Mr Green.
       Are you asking me -- what are you asking me for?
   MR GREEN:  I was just trying to clarify one point on
       drafting the order.
   MR GREEN:  In relation to, our draft of the order envisages
       the claimants, by their solicitors, holding the money on
       account pending determination of the application for
       permission to appeal to the Court of Appeal.  That's the
       issue.  It is not in perpetuity, obviously, and that is
       reflected in our order.  I wanted to say that clearly
       this open court.
   MR CAVENDER:  My Lord that's absolutely right.
   MR GREEN:  I just want that clear.  It is not a solicitor's
       undertaking by them, it is solicitors agreeing to
       perform that function at the claimants' behest.
   MR JUSTICE FRASER:  If there's any wrinkles on the actual
       wording of those important parts of the order that you
       can't sort out between yourselves, you can of course
       come back and ask me.
   MR CAVENDER:  My Lord, the final thing, could I ask for
       an extension of time for 21 days from when we get your
       written reasons to go to the Court of Appeal so we can
       marry up.  I have made my submissions based on your
       summary reasons.  They are probably better if I could --
       for the purposes of the Court of Appeal deciding it and
       the skeleton, because if the skeleton is at the same
       time as the grounds now, if we have a extension of time
       for 21 days, when we get your full reasons then that
       will be procedurally more sensible.
   MR JUSTICE FRASER:  Just remind me of the rule?
   MR CAVENDER:  You can give permission --
   MR JUSTICE FRASER:  I know I can extend time I would just
       rather do it by reference to the specific rule.  It is
       the same rule that I gave you an extension of time on
       the --
   MR CAVENDER:  It is.  It is 52.
   MR JUSTICE FRASER:  The easiest thing might be to look at
       the order where I gave you the extension of time in the
       Common Issues.
   MR CAVENDER:  52.12.2, my Lord.
   MR JUSTICE FRASER:  Let me have a look.52.12.2 (a).
   MR CAVENDER:  Indeed.
   MR JUSTICE FRASER:  All right.
   MR CAVENDER:  We ask for 21 days from the date we receive
       the written reasons.
   MR JUSTICE FRASER:  Extension of time to the Post Office to
       make an application to the Court of Appeal to 21 days,
       starting with the date upon which the managing judge
       hands down his written reasons for his costs orders
   MR CAVENDER:  It is on the reservation.  I don't know if you
       intend to extend beyond that.
   MR JUSTICE FRASER:  Hands down written reasons on his order
       declining to reserve the costs on an issues trial.  So
       that needs to go into today's order, yes?  Everywhere is
       nodding enthusiastically and between you I am sure that
       you can produce a composite order that reflects
       everything.  Mr Warwick are you about to ask me
   MR WARWICK:  No, my Lord, just to say yes --
   MR JUSTICE FRASER:  All right.
   MR CAVENDER:  I'm being asked very enthusiastically --
   MR JUSTICE FRASER:  Yes, and I think perhaps wrongly but
       I will let you tell me what you are wanting to ask me.
   MR CAVENDER:  Whether we ought to try -- and I am not sure
       we can do this actually --
   MR JUSTICE FRASER:  Whether we ought to try?
   MR CAVENDER:  And extend because you are going to produce as
       I understand it some written reasons as to why you are
       turning down permission on the main appeal.
   MR CAVENDER:  The question is -- because at the moment we
       are under 21 days starting today for the main appeal.
   MR CAVENDER:  The question is whether we can it is possible
       to or whether the court should give us 21 days from the
       date when you give your written reasons for refusal or
   MR JUSTICE FRASER:  I have already extended you time.
   MR CAVENDER:  No, exactly.  I'm not sure you can actually --
   MR CAVENDER:  Whether you can only do it at the time of
       the --
   MR JUSTICE FRASER:  I can do it but I can only do it within
       the period prior to expiry.  Rather than getting into
       extended tendencious and overly technical debate about
       whether it's expired already or not, I would not be
       minded given the two months extension you have already
       had to further extend time.
   MR CAVENDER:  No.  The only reason to do it in terms of
       procedure is in terms of trying to marry what you say
       and make sure --
   MR JUSTICE FRASER:  I understand.
   MR CAVENDER:  But nothing is perfect.
   MR JUSTICE FRASER:  The written reasons for refusing you
       permission to appeal have got to go in the form that
       I referred to this morning N460.
   MR CAVENDER:  Quite, which are quite brief anyway.
   MR JUSTICE FRASER:  Exactly.  All right.  Anything else?
   MR CAVENDER:  I do not think so, my Lord, no.
   MR JUSTICE FRASER:  Anything else?
           Thank you all very much.  Until 4 June, although
       I imagine not all of you will be here then, but that's
       when this case will next sit.  It is 4 June, isn't it?
   MR GREEN:  My Lord, yes.
   MR JUSTICE FRASER:  Thank you all very much.
   (4.19 pm)
         (The court adjourned until Tuesday, 4 June 2019)

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