Wednesday 21 April 2021

Settlement disagreement

Alan Bates
The confidential (now published) settlement agreement which ended the Subpostmasters' group litigation has been attacked twice in the space of two weeks by the two men who signed it. What's going on?

On 11 Dec 2019 the Bates v Post Office High Court litigation was brought to a sudden end by the announcement that both sides had settled.

The agreement's confidentiality was immediately broken by the Post Office, which gleefully confirmed to journalists it had got away with paying Subpostmasters the sum total of £57.75m. This sounds a lot, and is a lot, but not when you divide it by the 555 litigants and remove around £46m in legal fees.

I asked on the day of the announcement who had really won, and the mixed emotions among Subpostmasters when the settlement payments began to land were reported here.

Last year Alan Bates, lead claimant in the group litigation, crowdfunded a Parliamentary Ombudsman complaint against the government, seeking to claim back the fees he feels the government have a moral obligation to pay. 

Two weeks ago Nick Read, the Post Office Chief Executive, surprised everyone by swinging in behind him,  saying the government should indeed cough up.

Full n' final

The government has so far stood firm, saying the settlement is "full and final". This creates a two-tier compensation system - relative peanuts for those who threw their lot in with the litigants, but potential full redress for applicants to the Post Office's Historical Shortfall scheme

This scheme only exists because of the efforts of the claimants in forcing a very heavy loss on the Post Office (which fought tooth and nail to avoid responsibility for its actions), but it's only open to non-litigants. So it doesn't seem fair. In fact, it's not fair.

Now Alan Bates has written a piece for Computer Weekly which suggests that the settlement agreement itself is open to challenge, saying:

"in trying to agree a settlement figure, the only issues that could be used to calculate a financial figure were based on those legal points we had won as part of the judgments in the two trials that had been held."

There were, apparently a further eight points set to be contested as part of the litigation, but the claimants "did not have the funds to carry on with the case". Mr Bates says the 555 claimants:

"have never received a penny for these other eight – and possibly significantly more – issues, yet the Post Office Historical Shortfall Scheme, with 2,400 applicants, will compensate those people for all the 10 issues. The Post Office, BEIS and the government will not allow the 555 to take part in the scheme, no doubt as further punishment for daring to take the Post Office to court and exposing the failures of them all."

Mr Bates stops short of saying whether or not he'll be going after the Post Office or the government to open up the other eight litigation points but concludes:

"when you see the Post Office, the Department for Business, Energy and Industrial Strategy (BEIS) and the Her Majesty’s Government bandying around the phrase “full and final settlement”, in actuality they are only referring to the issues that formed part of the first two trials, although they would have you think everything had been addressed. Some people might think they were deliberately trying to mislead everyone."

Could the settlement be reopened? I approached Freeths, the solicitors instructed by Mr Bates to see if they had any response to the Computer Weekly piece. They told me they were not able to comment, due to "some final consequential legal steps” still being carried out in relation to "following through the Post Office’s procedural obligations under the settlement agreement itself."

The third way

Chris Head

Chris Head is a group litigation claimant who has campaigned tirelessly since the settlement agreement - taking petitions to Downing Street and building a decent following on social media for his efforts. The day after the publication of the Post Office's latest annual report in March this year, Mr Head wrote to Mr Read with a suggestion:

"The Post Office (with recommendations from yourself) could request from the government a further commercial loan at an agreed interest rate to cover the entire cost of full settlement to the group, settlement of the Historical Shortfall scheme and settlement of the malicious prosecution claims that are to follow after the conclusion of the Court of Appeal hearing.  This loan could be provided to the Post Office on a long term basis anything from 20 to even 30/40 year period with the ability to re-negotiate the terms as needed based on profitability and cash flow."

Mr Head announced today on twitter that he had been contacted by Mr Read to set up a meeting to discuss his proposal.

I suspect there will be more to come on this once the Court of Appeal has handed down its rulings on the 42 Subpostmaster appellants (and the Post Office's behaviour in prosecuting them) on Friday.

The full text of Mr Head's letter can be read below:

"25 March 2021

Dear Nick Read,

I write to you with regards to the Post Office Horizon Scandal and after your statement alongside the annual accounts that were released yesterday.

It is encouraging to hear the change in tone at Post Office Ltd with regarding to maximising the potential of Postmasters which as you rightly say was not the case previously.  Without them the Post Office does not exist as they make up the vast majority of the business.  The other point to make is every single one of these Postmaster owned branches are different.  They are based in different locations, have different cliental and football, and for this reason one model does and never has suited all.  Although it is important that Post Office make a profit, it is imperative that these Postmasters thrive and want to grow their business not fighting against a management who only want to drive cost efficiency without any inventive ideas to grow.  

I want to give you my background; back in 2006 aged 18 I became at the time the UK’s youngest Sub Postmaster.  Having worked at my local branch in the retail offering from 12 years old delivering newspapers and then from 14 behind the retail counter I knew the type of business inside out by the time I was 18.  Having come from a family who had no business or retail experience, only office based jobs they were not very keen on me taking this avenue.  When the business came up for sale I approached a number of banks to raise the funding to proceed.  After months of negotiating and business plans and having spent over 5 years saving £10,000 from such a young age I secured the mortgage and passed the Post Office interview.  My branch was a single position, small village community branch with an income of £18,100 (£10,900 of that being an assigned office payment and the remainder commission).  Over the presiding 7 years I was able to grow the Post Office income year on year until it reached over £30,000 at a time when a very large percentage were seeing year on year cuts from falling footfall, lower product commissions and loss of products and services.  Having a salary of this size in a single counter office (Post Office was no more than 9 square metres in size) in a community setting was almost unheard of.  The secret behind that was although the Post Office was pushing me to push all the banking and telecoms products I knew the core business was far more important to my business and for me to thrive.  I was successful in selling credit cards, telecoms and insurance but I knew that this was limited to me because of the area and my customer base.  The vast majority were elderly, had no bank accounts and on the BT Basic scheme where we couldn’t transfer them to the Post Office telephone service.  I didn’t receive a great amount of passing trade, so I had to focus on Mails, Banking and Travel that would result in repeat business and repeat commission for income.  I spent months building up a rapport with businesses and individuals who I knew would return week in and week out.  Doing this allowed me to grow the Post Office income whilst also growing my retail business with continued daily and weekly visits from these customers.  I can see your vision for a return to basics, it is just sad that it has taken so long and many offices are virtually unviable as a result of the Network Transformation program.  

Anyway onto the main reason I am writing to you today.  You talk about your excitement being tempered by the group litigation between yourselves and the Post Office (myself being one of them).  You came in and wanted it resolved, however the way Post Office Ltd conducted itself in the litigation was nothing short of a disgrace.  Spending unlimited amounts of taxpayer cash, attempting to bring the court into disrepute by applying for the judge to recluse himself simply because you didn’t like his findings and the failure to disclose documents that were in the possession of the Post Office.  At times Post Office released documents way beyond deadlines hampering the claimants build a case.  It is now known as heard in the Court of Appeal this week that Post Office still had not released all the relevant documents to the claimants in that previous civil litigation, not really a great look for openness and transparency is it?  Also forgive me for not trusting the Post Office by since it has also come to light about a member of the security team authorising the shredding of documents and meeting minutes, how do we know this hasn’t happened previously before that date without 100% full disclosure of every single document the business holds.  You say there is and has been a dissonance within the Post Office.  It has always been a ‘them and us’ approach in the 9.5 years I was a Sub Postmaster.  

You must realise that due to the actions of Post Office Ltd in court and the unlimited funding Post Office had from BEIS as they allowed you to continue with the litigation as seen in FOI requests, the claimants had very little chance of success overall, our funding was running low and you simply outspent us.  The judge mentioned on numerous occasions that even for a commercial entity the spending was obscene.  We were therefore forced into settlement, not out of choice.  Had we continued we would have ran out of funding and had to stop and even if we were successful the amounts needing to be repaid to our funder could have eclipsed the damages awarded.  Now it was us as claimants who exposed all the shocking revelations of the Post Office’s actions over the two decades and allowed you to make the necessary changes you are.  Without us the business would not be able to be turned around.  I fully endorse the Historical Shortfall scheme you have agreed to utilise to ensure Postmasters are given redress for the actions of the Post Office.  However as you are probably aware because these new claimants have no legal expenses and Post Office has already been exposed therefore even if these new claimants decide to take the legal route rather than the new scheme, Post Office will not have much of a defence.  Therefore whichever option these new claimants make they are to receive substantially more compensation, much closer to the actual losses they made at the hands of the Post Office.  You want to reset the relationship with Postmasters past and present and change the culture of the Post Office.  I am afraid that until full disclosure is made and changes made to this Historical Shortfall scheme this cannot and will not happen.  For the same scandal and cover-up one group of claimants who didn’t bother to join the group litigation are now going to receive far greater sums of compensation, and how are they to achieve that by using the judgement from us claimants who battled tooth and nail to expose years of wrongdoing and cover-up within the Post Office. 

 So if you are genuine regarding resetting the relationship of Sub Postmasters, changing the culture within the Post Office and turning the business model on its head then I urge you to do the right thing and go further.  Allow the 555 claimants to use the historical shortfall scheme to have their cases and losses calculated as they would have in the scheme had they not gone down the litigation route (let’s remember this scheme would never have been setup if it hadn’t been for us and Post Office would be carrying on as if nothing had happened) and then deduct the amounts they have already received from the £11 million litigation settlement (after legal expenses) from the amount due under the new shortfall scheme.  This would show you genuinely want to put this scandal to bed once and for all and move on.  The reality is otherwise it is not going away as the group will continue until fair justice is delivered for everyone and continue to expose the Post Office wrongdoings.  

I have written to the Secretary of State, the Postal Minister and the Prime Minister outlining similar to what I have suggested along with calls to make the inquiry statutory.  Also I have suggested another idea instead of the government/taxpayer footing the bill for all of this mess as is currently the case.  The Post Office (with recommendations from yourself) could request from the government a further commercial loan at an agreed interest rate to cover the entire cost of full settlement to the group, settlement of the Historical Shortfall scheme and settlement of the malicious prosecution claims that are to follow after the conclusion of the Court of Appeal hearing.  This loan could be provided to the Post Office on a long term basis anything from 20 to even 30/40 year period with the ability to re-negotiate the terms as needed based on profitability and cash flow.  From the recent accounts without the one time exceptional items of the litigation and legal costs it appears the Post Office is progressing in the right direction to profitability.  You could use the annual profits to pay an agreed % of that off this new loan so therefore the more profit that is made the more that is repaid.  Wouldn’t this send to the public and Postmasters that the Post Office itself is paying for the mistakes and wrongdoing of the past rather than the taxpayer footing the majority of the bill.  It also allows the Post Office the flexibility based on its future progress and profit.  I know the business needs to succeed and want to see this happen regardless of the past especially for the current Postmasters.  This would also help send the message that the Post Office is committed to resetting its relationship with Postmasters, change its past image and move on from the dark days of the past.

I am happy to discuss these ideas with you further if you so wish.  

I look forward to your response.  


Christopher Head

Ex Postmaster West Boldon Post Office"


I am currently running a crowdfunding campaign to ensure I can attend all relevant appeal court, high court and government inquiry hearings related to the Post Office Horizon IT scandal. Reward levels include access to the secret email, and a forthcoming book. Please click here for more information, and if you would like to support my work.