Friday 7 August 2020

Bates v Post Office settlement agreement revealed

The confidential and controversial Bates v Post Office settlement agreement, announced on 11 Dec 2019, has been made public

Responding to a persistent FOI request by Peter Bell, the Post Office decided to hand it over to him, publish it on its website and email me a copy, for which I am grateful.

The document brought to an end the epic High Court group litigation against the Post Office, and it is interesting precisely because it has been shrouded in so much secrecy. It was not sent to the claimants when the case was settled. Given the outrage expressed in some quarters at the paucity of sums paid to the claimants - it's possible the agreement might offer some insight into the dynamics at play. Let's have a look.

What's in the box?

The most striking characteristics of the settlement agreement to me are:

a) that the steering committee which made the decisions on behalf of 555 claimants comprised just two people - Alan Bates and Kay Linnell. 

b) the Post Office's insistence that they are not awarding a penny to any of the convicted claimants.

c) that Alan Bates has arguably done more to advance the cause of serving Subpostmasters in one single document than the National Federation of Subpostmasters has achieved in its entire existence.

Pilot and co-pilot make the decisions - the rest are passengers

I do wonder how Alan Bates and Kay Linnell allowed themselves to be solely responsible for making significant decisions about the future of the litigation and the outcomes for the claimants. 

It's certainly something Alan Bates was uncharacteristically slippery about when I approached him recently. In putting together the script for the recent Radio 4 series I asked Alan who exactly was responsible for taking the decisions on the claimants' side. He replied:

"As with other large Group Actions, a Steering Committee is contractually appointed at the outset of the case by the Claimants, to make all decisions on behalf of the Group (and in the interests of the Group as a whole) based on the legal advice of Leading Counsel and the solicitors. That is what happened in this case.   

One of the main reasons for that structure in Group Actions is to ensure that confidential strategic decisions can be made without important strategic information about the strengths and weaknesses of the case getting into the opponent’s hands, as that would likely be very damaging to the Claimant Group’s case.

The Claimants have been advised of the detailed and complex legal and economic risks, issues and matters underpinning the legal advice that was given to the Steering Committee by Leading Counsel and Freeths, and Freeths will continue to speak directly to each of the Claimants who would like further clarity on any issue. 

Beyond that, you will appreciate that as with any legal case of this type, there are legal confidentiality constraints that we should all observe."

He could have just said "me and Kay". I'm not sure why he didn't. It's certainly there in black and white in the settlement agreement:

Confidential Settlement Deed, par 1.1

Kay and Alan may consider themselves uniquely qualified to fulfil such important responsibilities. They may feel they had earned the right to do so. They may not have thought that much about it, but a steering committee of two to decide the outcome for such a diverse group of claimants is arguably unfair on the claimants. It's also arguably unfair on Kay and Alan. 

Mediation is a high pressure environment. If they didn't feel that pressure, they were doing it wrong. Kay and Alan were entirely responsible for making a series of important and difficult decisions worth millions of pounds. Were they up to it? Would any two people be?

It might be that a steering committee of two was perfect for playing out the litigation (indeed, given the trouncing the claimants were giving the Post Office, it was something of a dream team). But when it came to negotiation, mediation and decision-making on a deal to tie the whole thing up, I would have wanted the insight and experience of more than one other claimant.

When I recently asked Kay Linnell, on the record, if she had any sympathy for the claimants who were complaining about the size of the awards they were receiving, she said "No", making that point that without Alan, they wouldn't be getting anything.

Convicted claimants = £0

On, then, to the startling revelation that the Post Office was very keen to ensure it was not seen to be giving any money to convicted claimants and to ensure that the convicted claimants agreed the value of their claim against the Post Office was nil.

To spell it out:


This is the Post Office's way of making it abundantly clear that whilst the settlement agreement does not for one instant accept any liability for any wrongdoing against any claimant at all, ever...

... it is keen to ensure that on top of that, everybody knows not a penny of the settlement cash takes into account any aspect of the convicted claimants' case.

The barrister Paul Marshall (who is now representing several convicted claimants) has been dwelling on this. In a note released by the All Party Parliamentary Group on Fair Business Banking (read it here), Mr Marshall says:

"it struck me as intuitively strange that the claimants who had been convicted of criminal offences should have got nothing out of this enormously expensive large-scale litigation at all - except that they retained (i.e. had preserved to them under the settlement terms) a residual possible claim for malicious prosecution, contingent upon (i) the CCRC referring their case to the Court of Appeal and (ii) the Court of Appeal quashing their conviction. A rather rocky and uncertain road that starts, if at all, after the Court of Appeal.

... Put another way, the outcome of the Post Office litigation for the convicted claimants was... That the only thing they keep as a matter of right that has any value is a prospective possible claim for malicious prosecution that they shall have to pursue on their own without the help of Freeths as their solicitors. (I understand, but am yet to have final confirmation, that Tracy Felstead was prosecuted in 2002 by the Crown Prosecution Service – in which case I don’t think there is a single instance of a claim for malicious prosecution ever succeeding.) They of course had these contingent claims entirely independently of the litigation so claims for malicious prosecution cannot be said to be something “achieved” for them as a result of the litigation... A possible claim for malicious prosecution is all that is left – it’s a residue from their original claims.

That all their other potential civil claims, such as e.g. for damages for breach of contract and breach of the Post Office’s duty of good faith owed to them (one of the main issues of the earlier “Common Issues” trial was whether the Post Office owed the sub-postmasters a duty of good faith – an issue answered by Fraser J in the affirmative) were settled for nil value.

Receipt of an ex gratia payment (that is to say a gift) made by the ‘Claimant Steering Committee’ in their discretion out of monies paid in settlement of the non-criminal claims or the ‘Support Fund’ (i.e. out of sums paid by the Post Office other than to claimants convicted of offences)."

Mr Marshall goes on to say:

"It is, at any rate, now possible to understand why the convicted claimants such as Tracy Felstead (£17,000) and Janet Skinner (£8,400), who both were imprisoned as a result of their prosecution by the Post Office and conviction, have received such pitifully (some may think, shamefully) small payments following the settlement of their claims against the Post Office. The reason is, that it was expressly agreed that their claims had nil (strictly, were to be attributed nil) value and thus agreed that the Post Office would pay them no compensation. This appears profoundly unsatisfactory and remains troubling.

The overarching point is that, by participating in the litigation the convicted claimants have surrendered all their claims against the Post Office with the exception of a very uncertain claim for malicious prosecution and have surrendered those claims for no value. It appears to me that, on the face of it, each of the convicted claimants, but for their participation in the litigation, would now have individual claims of very considerable value – especially those who were imprisoned. Compare, for example, the compensation paid to those wrongly arrested by the police for the Gatwick drone episode – I understand Sussex Police paid out £200,000 for their wrongful arrest."

When I approached the claimants' solicitors, Freeths, about Mr Marshall's comments, they became most exercised. I received the following statement:

"Following discussions today with Patrick Green QC, we have formally written to Paul Marshall to inform him that the Note he has produced contains a number of serious inaccuracies and  omissions.  

The content of the Note is defamatory.

The “convicted claimants” have received a compensation share that has been calculated on precisely the same basis as for all other claimants (with malicious prosecution excluded, as that remains to be pursued upon convictions being quashed) and that approach was factored into the assessment of the acceptability of the global settlement sum, in the interests of the Claimant Group as a whole."

Another very well-informed source I spoke to was unequivocal that Mr Marshall had managed to get completely the wrong end of the stick. They explained that a clause in the agreement which specifically precluded any credit being apportioned to the convicted claimants was a good thing for those claimants because it staved off the possibility of the Post Office trying to use the total settlement monies to reduce any damages claim which could arise as a result of malicious prosecution. 

This isn't apparently just a matter of delaying credit - it seals off any argument the Post Office could raise as to how much of the settlement could or should have been apportioned to convicted claimants whilst ensuring that the convicted claimants did get some money from the civil settlement. As my source says:

"The fact that the settlement deed records no payment being made to [the claimants] by the Post Office simply means that the Post Office cannot argue otherwise for the purpose of any credit against damages in any - carefully preserved - malicious prosecution claim."

There are ongoing communications between Freeths and Paul Marshall. I am sure it will result in an outbreak of peace, love and understanding. If it doesn't, I have my popcorn at the ready. 

By the way, Alan Bates has not responded to any of my multiple requests for comment save to say: "my focus remains on continuing to achieve justice for all of the claimant group, which has been my focus all along."

Serving Subpostmasters

Alan Bates is, of course, the hero of this story. It was his 17 year campaign which got us here and it is his relentless pursuit of the Post Office which continues. Earlier this year he made it quite plain to me that he was absolutely determined to get proper financial compensation for the claimants, and he has spent the last eight months manoeuvring his tanks from the High Court to the lawns outside the Palace of Westminster. He has raised more than £100,000 to bring a complaint to the parliamentary ombudsman and he continues to demand a full independent inquiry.

It's also worth noting that the conclusion of the litigation produced more media and parliamentary scrutiny of this scandal than at any stage over the last ten years. 

Which brings me, finally, to point c). When you read section 9 and schedules 5 and 6 in the annex to the settlement agreement, you can make a case for Alan Bates having achieved more to improve the lot of serving Subpostmasters than any other individual in the history of the Post Office. 

As a direct result of the litigation and settlement agreement the Post Office has committed to more training, more trainers, new business support managers, a new handover process, a new branch support model including new area managers, new branch support tools, increased Subpostmaster remuneration, better quality control on transaction corrections, a new team to deal with disputed transaction corrections, dedicated case handlers to investigate discrepancies, better access to Horizon data from Fujitsu, a completely different approach to "losses" (which suggests they won't automatically be treated as Subpostmaster debts), better audits, better phone support, etc etc. It's quite a list.

Now - it doesn't mean the Post Office is actually implementing any of this, or doing it properly. Given what I have learned about Post Office managers I wouldn't want them to implement the opening of a bottle of milk, but the point stands. 

The Post Office has committed, in a legally-binding document, to rolling out all the above improvements, and I am sure the NFSP and CWU, MPs and the government will be chasing them like rottweilers to ensure they come to pass.

The day the settlement was announced I asked who the winner of the litigation actually was. The publication of the settlement agreement does not make the answer any clearer, but it makes all the questions around it more pertinent than ever.


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