1 Thursday, 27 April 2023 2 (10.00 am) 3 (Proceedings delayed) 4 (10.10 am) 5 SIR WYN WILLIAMS: Before I invite oral submissions on the 6 compensation issues which I have identified, it's my sad 7 duty to report that on 5 April Mr Robert Boyle, a former 8 subpostmaster and a Core Participant, passed away 9 suddenly. On my own behalf and on behalf of the whole 10 Inquiry team, I extend my deepest sympathies and 11 condolences to Mr Boyle's family and friends. 12 Shortly after Mr Boyle's passing, I received 13 an application from his son, Christopher, who is 14 Mr Boyle's executor, to become a Core Participant in the 15 Inquiry, and I have granted that application. 16 Mr Moloney, I understand the position to be, but 17 correct me if I'm wrong, that Mr Boyle Senior, if I can 18 call him that, received two interim payments under the 19 Overturned Historical Convictions but his final award 20 had not been finalised prior to his death. Thank you. 21 Right, well, I have an audience on a scale with 22 which I am completely unused. So I think, Mr Chapman, 23 it's for you to begin the oral submissions. 24 Submissions by MR CHAPMAN 25 MR CHAPMAN: Thank you, sir. 1 1 I make these submissions on behalf of the Department 2 for Business and Trade, which I'll refer to as "the 3 Department". The Department was created on 7 February 4 of this year to bring together aspects of the work of 5 the Department for Business, Energy and Industrial 6 Strategy, or BEIS, with that of the Department for 7 International Trade. Amongst other areas of Government 8 work, the Department's taken on those functions relating 9 to the Post Office, which were previously carried on by 10 BEIS. 11 The Department has expressed on a number of 12 occasions its disgust at the Horizon scandal and the 13 awful impact it had on many people's lives. It's 14 important to restate that today. The Department remains 15 fully supportive of the Inquiry's vitally important work 16 in establishing the facts of how this appalling 17 situation came about, identify fault and make 18 recommendations to ensure nothing like it ever happens 19 again. 20 For the purposes of today's hearing, the Department 21 wishes to reiterate that the issue of compensation 22 remains one of its top priorities. Significant progress 23 has been made on this front since the last hearing 24 dealing with compensation matters. 25 In relation to both the Historical Shortfall Scheme, 2 1 the HSS, and the compensation for postmasters with 2 Overturned Historical Convictions, the OHC, the 3 Department continues to devote considerable resources to 4 working with the Post Office to ensure that full awards 5 are provided to all those affected as soon as possible. 6 As you know, the Department itself is directly 7 responsible for the implementation and administration of 8 the Group Litigation Order, or GLO, further compensation 9 scheme. This opened for applications on 23 March of 10 this year and good progress -- which we all recognise is 11 positive news. 12 SIR WYN WILLIAMS: I'm trying to think of something 13 appropriate to say but I simply can't, Mr Chapman! 14 MR CHAPMAN: Good progress has been made in the first month 15 of its operation. 16 However, the Department recognises that there's 17 clearly much work still to be done. Its position 18 remains one of genuine and open engagement, with the 19 goal of doing whatever it reasonably can now and in 20 future to ensure full and fair compensation as quickly 21 as possible for everyone affected by the Horizon 22 scandal. 23 The Inquiry has seen the Department's written 24 submissions for the purposes of this hearing, dated 25 6 April 2023, which are publicly available to read on 3 1 the Inquiry's website. I don't intend to repeat what's 2 set out there but instead will seek to provide further 3 relevant updates and engage with some of the issues 4 raised by the other Core Participants in their written 5 submissions, in the hope that that will be the most 6 helpful, useful way to spend the allotted time this 7 morning. 8 I'll address these issues under four headings 9 relating to four matters upon which you, sir, have 10 requested Core Participants' input at this hearing, and 11 they are: bankruptcy; taxation; an update on the HSS and 12 OHC schemes; and an update on the GLO scheme. 13 Starting with bankruptcy, the Department has been 14 clear throughout that its objective is to ensure that 15 all postmasters are put back in the position they would 16 have been in had the Horizon scandal not happened. This 17 applies as much to those who have faced bankruptcy due 18 to Horizon as to all others. The Department is 19 determined to do whatever is necessary, whatever it 20 takes, to achieve that aim. 21 We are grateful to the Inquiry for commissioning and 22 sharing the careful and detailed opinion of Catherine 23 Addy KC. Without attempting to explore in any detail 24 the obvious complexities of the issues identified, 25 I will try to provide an update and summary assurance in 4 1 relation to three points raised by the Core 2 Participants. 3 First, as noted in our written submissions, there is 4 one insolvency practitioner, Moore, who so far refused 5 to agree that compensation payments under the GLO scheme 6 do not vest in the bankruptcy estate. The Department 7 has already been considering the option of 8 an application to the court for a direction in respect 9 of the 16 cases held by Moore. 10 The Department will now see if Catherine Addy's 11 opinion has caused that insolvency practitioner to 12 reconsider its position, before making any application 13 to the court. 14 Whatever the outcome, the Department will ensure 15 that claimants personally receive full and fair 16 compensation. It shouldn't be necessary for any 17 postmaster to take action themselves under the 18 Insolvency Act and join the Department as an interested 19 party, as Howe+Co have suggested in their written 20 submissions. 21 Second -- 22 SIR WYN WILLIAMS: Before we leave that, Mr Chapman -- and 23 it's a theme that will recur, so I might as well get it 24 out in the open now -- there's an end point on the GLO 25 of early August next year, yes? So delays related to -- 5 1 and I use the word "delay" at the moment without seeking 2 to apportion any blame for delay, simply using it in 3 that way -- but delays in relation to issues such as 4 whether Moore are right or Ms Addy and you are right are 5 likely to be -- or are likely to impact upon the 6 timescale that we're all working to here. 7 MR CHAPMAN: Yes. 8 SIR WYN WILLIAMS: Ms Addy's advice has been in the public 9 domain for many weeks now and I would have hoped that 10 a swifter resolution of this could have been achieved, 11 in the sense that either Moore, putting it bluntly, say 12 "Okay, you were right" or someone does something that 13 prove that you are right. 14 MR CHAPMAN: I will address that head-on, the Department 15 understands the point, and if -- it realises that time 16 is of the essence and, as a result of that, it is going 17 to press Moore for an answer and, if the answer is not 18 satisfactory, then it will take appropriate steps. 19 In relation to the delay, and I'll turn to that -- 20 to the end point of the GLO scheme, and I'll turn to 21 that to address it more fully in due course, the 22 Department is conscious that under the Appropriation Act 23 which provides the statutory basis for the GLO scheme, 24 there is a defined end point, and it has to work towards 25 that. At the same time, as I've already indicated, the 6 1 Department is keen to observe its objective that nothing 2 should get in the way of full and fair compensation as 3 swiftly as possible. 4 I was going to turn, sir, to my -- to the second of 5 the points raised by Core Participants and to address 6 that. That relates to the suggestion made by Howe+Co 7 that the Department has been, to quote, "holding back 8 bankruptcy cases at the back of the queue". That is not 9 correct. The Department recognises the very difficult 10 circumstances of bankrupts and that there's often 11 a particularly urgent need for resolution in their 12 cases. However, what is absolutely clear is that the 13 issues are complex and those have inevitably taken time 14 to work through, and a great deal of effort to work 15 through and, as just discussed, some of those issues are 16 ongoing and are still being worked through. 17 It's not possible for the Department to avoid or 18 sidestep those complexities and, indeed, doing so and 19 attempting to do so might simply store up issues for 20 further down the line. 21 All bankrupts have now received GLO interim 22 payments, except for one who has only recently applied. 23 The third, Howe+Co have suggested that the 24 Department should provide further detail on how certain 25 bankruptcy cases will be dealt with within the GLO 7 1 scheme and have asserted that the current scheme doesn't 2 give sufficient protection to those made bankrupt 3 through annulment or rescission applications or those 4 who have been required to enter IVAs. 5 The Department actively encourages those who wish to 6 seek an annulment or rescission to do so and will cover 7 their reasonable legal fees. 8 Howe+Co have also proposed that the Department 9 prepare a schedule of potential cases or situations 10 where damages would not be recoverable by the insolvency 11 practitioner. As set out in the Department's written 12 submissions, all but one relevant insolvency 13 practitioner -- that one being Moore -- has signed 14 a waiver to the effect that it is agreed GLO interim and 15 final payments don't vest in the bankruptcy estate. 16 Given this, it's unlikely to be necessary, in the 17 Department's estimation, for further detail on specific 18 cases to be provided. But -- and this is a sort of 19 golden thread running through the Department's 20 position -- it remains in listening mode and it will 21 keep this under review. 22 Can I turn, then, to taxation. 23 SIR WYN WILLIAMS: Well, can I again, just for clarity's 24 sake and so that I'm not minimising what's going on 25 here, the point of principle in the GLO relates to 8 1 Moore, all other issues to a greater or lesser extent 2 are issues of assessment and practicality. Yes? 3 MR CHAPMAN: Yes. 4 SIR WYN WILLIAMS: Right, thank you. 5 MR CHAPMAN: Taxation. 6 As set out in our written submissions, compensation 7 payments under the OHC and the GLO schemes have been 8 exempted from tax. Payments to HSS claimants have not 9 been. The HSS was set up primarily to put postmasters 10 back into the financial position they would have been in 11 had they not had to repay shortfalls, as well as 12 reflecting any non-financial losses that they may have 13 suffered. In a similar way to commercial compensation 14 schemes, awards are calculated late on a gross basis, 15 with tax then payable on amounts relating to what would 16 have been taxable income in the year it's received. 17 Now, for the OHC and GLO, where an exemption is now 18 in place, awards are calculated on a net basis and then 19 no tax is due on the final amount. In respect of 20 financial losses, all of the Post Office compensation 21 schemes aim to compensate the postmaster for the actual 22 net amount that would have been received. 23 SIR WYN WILLIAMS: You're going to have to educate me, and 24 Ms Gallafent may have something to say about this as 25 well, but my understanding is that, in terms of 9 1 computing the loss, both under HSS and the other two 2 schemes, those administering the scheme adopt what 3 I might call the conventional approach to computing 4 damages. So, in other words, if there is a claim for 5 loss of wages, the loss of wages paid to the particular 6 applicant is the loss of wages net of tax. That would 7 be what would happen in a court, wouldn't it? 8 MR CHAPMAN: Yes. 9 SIR WYN WILLIAMS: I'm assuming that this is what's going 10 on. You may tell me that's not what's going on, all 11 right? 12 Therefore, I am struggling to understand the 13 distinction that is being drawn between the two schemes, 14 on the one hand, and HSS, on the other. 15 MR CHAPMAN: Can I perhaps cut to the chase in this way: 16 that the HSS system was set up without recognition or 17 without full recognition of the potential tax 18 consequences that may flow from it, and it may well be 19 that Ms Gallafent can also expand upon this, because 20 this is, of course -- 21 SIR WYN WILLIAMS: Nothing like passing the buck! 22 MR CHAPMAN: I want to ensure that the Inquiry fully 23 understands the position. 24 Now, at the time that the HSS was set up and, as you 25 know and as we've discussed at previous compensation 10 1 hearings, it was set up on the assumption -- 2 an assumption which turned out to be incorrect -- that 3 a relatively small number of applications would be made 4 and that that relatively small number of applications 5 would be to a relatively small value. 6 SIR WYN WILLIAMS: Yes. 7 MR CHAPMAN: That has proved not to be the case but that 8 assumption has affected the way in which the taxation 9 consequences were understood. 10 Now, the Department recognises that, because of 11 that, there is potential unfairness to those within the 12 HSS of a non-exemption for tax and it has looked, 13 together with HMRC and the Treasury, at the possibility 14 of exempting payments within the HSS from tax, in the 15 same way as the other scheme. 16 The problem -- and that is a suggestion that you 17 yourself made, sir, in a previous hearing. 18 The essential problem with that is that a number, 19 a large number, of payments have already been made and 20 in order to -- if those payments were retrospectively to 21 be exempted from tax, it would make the -- or place the 22 recipients of those payments in a substantially 23 advantageous position, as compared to recipients of 24 payments under the other schemes. 25 As is clear, as I've made clear previously, and as 11 1 I'll go on to make clear, one of the Department's 2 objectives is to ensure reasonable parity as between the 3 different schemes. 4 SIR WYN WILLIAMS: Yes. 5 MR CHAPMAN: What the Department is obviously keen to avoid 6 is a situation where an exemption for the HSS payments 7 is put into effect because that would, in order to 8 achieve parity, involve retrospectively recalculating 9 the payments and, in some cases, in order to ensure 10 parity, seeking to or potentially seeking to recoup some 11 of the payments and that is something that, for obvious 12 reasons, it wishes to avoid. 13 But it does have -- HMG, the Government, does have 14 a solution to this. The Government will support the 15 Post Office with funding to make additional payments to 16 postmasters in the Historical Shortfall Scheme to ensure 17 that compensation is not unduly lost to tax. So there 18 are various ways of skinning the cat, but the 19 Government, the Department, has concluded that that is 20 the best -- in practice, the best way of doing it. 21 The implementation of these payments is complex, and 22 the Department will announce further details as soon as 23 possible. But the outcome of that will be that 24 recipients of compensation under the Historical 25 Shortfall Scheme are in exactly the same position in 12 1 relation to tax as recipients of payment under the other 2 schemes where tax is exempted. 3 SIR WYN WILLIAMS: Well, speaking -- obviously having heard 4 what you said for the first time, speaking therefore to 5 an extent without having thought it through, it's 6 obviously highly desirable that parity is achieved in 7 this way, and I don't suppose that will be controversial 8 by any right thinking person. 9 My concern is simply to ensure that the Department 10 actually tells us what it's going to do -- and I'm not 11 trying to be unduly difficult -- but sooner rather than 12 later, because these things are taking time, Mr Chapman. 13 MR CHAPMAN: The Department gets that; it understands that 14 loud and clear. 15 SIR WYN WILLIAMS: All right. 16 So, I was going to ask you and Ms Gallafent to give 17 me a tutorial in the assessment of damages and the 18 impact of tax upon it, but am I now to understand that 19 that is unnecessary because, one way or another, every 20 applicant to whichever scheme will in the end be treated 21 in the same way, in practice? 22 MR CHAPMAN: In practice, in outcome, yes. 23 SIR WYN WILLIAMS: In outcome, which is what presumably they 24 are concerned about? 25 MR CHAPMAN: That's what matters, as far as the Department 13 1 is concerned, yes. 2 SIR WYN WILLIAMS: Well, then we'll defer the tutorial, 3 unless Ms Gallafent disagrees with what you have to say. 4 MR CHAPMAN: Can I turn to tax advice and the cost of tax 5 advice -- 6 SIR WYN WILLIAMS: Yes. 7 MR CHAPMAN: -- because questions have been raised by 8 Howe+Co in their submissions as to whether £1,000 is 9 sufficient in legal costs to get adequate tax advice for 10 postmasters claiming under the GLO scheme. 11 Given that GLO payments have been exempted from tax, 12 the Department expects that £1,000 will be sufficient in 13 many or most cases but, as Howe+Co are aware, the rates 14 for legal costs were agreed by the Department with them 15 and other claimants' representatives and this includes 16 a process for approving financial support for further 17 expert advice, which might include tax advice, where 18 needed in addition, on top of the £1,000. 19 So £1,000 is not a fixed, set in stone, upper limit. 20 Turning briefly to progress on the HSS and OHC. As 21 you know, the Department does not have direct day-to-day 22 responsibility for these, and this is not intended to be 23 an example of buck passing, but the Post Office, 24 Ms Gallafent, will obviously be better placed to provide 25 details. 14 1 We're pleased to note, however, the acknowledgement 2 by, for example, Hudgell Solicitors that there has been 3 encouraging progress, and we endorse that. We also make 4 the following higher level comments. 5 First, in relation to the HSS, we welcome the 6 substantial progress that's been made with over 99 per 7 cent of applicants having received first offers and the 8 remaining 23 cases waiting on information from third 9 parties. Late applications are being accepted without 10 any requirement to justify or explain lateness, which is 11 news with which the Department is very pleased. We're 12 also pleased that there has been a very high rate of 13 acceptance of offers. 14 Second, in relation to OHC compensation, interim 15 payments continue to be made promptly and the Early 16 Neutral Evaluation has led to offers of non-pecuniary 17 damages being made in 67 of the 69 claims which have 18 been submitted to date. The Department welcomes the 19 Post Office's proposal to move to a remediation process 20 for pecuniary damages, which should allow full and final 21 settlement to be reached more quickly than would 22 otherwise have been the case. 23 Then turning to progress on the GLO scheme, the 24 Department has been working as fast as it can and has 25 devoted substantial resources to this process to set up 15 1 the GLO scheme since announcing it last year. The 2 Department has asked me to express its condolences on 3 the death of Isabella Wall and its regret that it was 4 unable to get the GLO scheme up and running in time for 5 her to receive final compensation before her sad death. 6 The scheme opened last month and, so far, some 377 7 registration forms have been received. 90 per cent of 8 the claimants are already legally represented. I'm 9 going to deal with six issues about the scheme which 10 have been raised by other Core Participants and, indeed, 11 in the media. 12 First, there have been concerns raised about the 13 timeline for the scheme. The Department's powers under 14 the Appropriation Act to make payments run out in August 15 2024. Howe+Co have called for the Department to extend 16 this deadline. That is not within the Department's 17 gift. The use of the Appropriation Act for these 18 purposes is restricted by Parliament but, as I've 19 already indicated, the Department is determined to meet 20 the deadline and, indeed, complete the scheme well 21 before that date. 22 It's recently appointed Dentons as claim 23 facilitators and they are currently undertaking 24 a planning exercise. The intention is to agree with all 25 parties, including claimants' solicitors, a detailed 16 1 timetable, for the scheme which will ensure its timely 2 completion with all claimants having been given a proper 3 opportunity to apply and to consider offers. 4 The progress of delivery against that timetable will 5 be publicly reported. 6 SIR WYN WILLIAMS: Well, I can't express my anxieties about 7 this timeline too strongly. Anxieties in the sense of, 8 just put to it in terms I think we can all understand, 9 you will have upwards of 400 people, no doubt, by the 10 end, who are making applications under this scheme, and 11 you have approximately 14 months or thereabouts, 12 15 months, in order to achieve your objective. Again, 13 without wishing to attribute blame for this, albeit with 14 much greater numbers, HSS is now roughly three years old 15 and counting, so you understand why I'm concerned. 16 MR CHAPMAN: The Department hears that. I do emphasise 17 again the Department's commitment to doing what it 18 reasonably can, doing everything it reasonably can, to 19 ensure full and fair compensation. 20 Second, in relation to timing, a particular concern 21 has been raised by Freeths and others about the pace of 22 disclosures by Post Office. It's important to emphasise 23 that there is no issue about meeting the costs of 24 disclosure. The Department is of the view that these 25 disclosures are vital and that they will be delivered. 17 1 The constraint on pace is the sizeable task; the 2 difficulties faced by the Post Office in locating 3 historical records; and, critically, the availability of 4 resources, and that means, in this case, individuals 5 with the right background and experience to ensure that 6 the disclosure process is completed fully and properly. 7 This is plainly a very significant task requiring 8 staff who understand the complexities of the accounting 9 records. An estimate of 32 weeks was initially 10 suggested for the completion of the task but, since that 11 estimate was made, the Post Office have brought in 12 additional resources from elsewhere in the business to 13 accelerate the work and the Department is aware that the 14 Post Office is currently developing a revised estimate. 15 It's also important to note that the 32 -- or the 16 initial 32-week estimate was for all disclosure to be 17 completed and, in practice, documents were produced on 18 a rolling basis progressively over that period. 19 The Department is aware the Post Office will 20 mitigate the effects of the process on the overall 21 timeline for the scheme by prioritising disclosures for 22 the most difficult cases, as identified by claimants' 23 solicitors. 24 The Department will also ensure that no applicants 25 are prejudiced by lack of documents held by the Post 18 1 Office. The GLO scheme guidance states that: 2 "Although it is in your interest that your claim is 3 well evidenced and quantified in respect of each head of 4 loss, the scheme recognises that this may not always be 5 possible, given the circumstances and length of time 6 which has passed, and that there will be an absence of 7 evidence. As such, DBT will take a proportionate and 8 considerate approach to the availability of evidence." 9 Third, on the theme of documents and evidence, 10 Freeths have questioned whether expert input will be 11 allowed, such as from medical or forensic accountancy 12 experts where required. 13 As part of the tariff which was agreed with 14 claimants' lawyers, the Department has agreed to 15 consider requests to fund the provision of expert 16 evidence and, where such applications are approved, 17 claimants' lawyers will be authorised to commit costs of 18 up to £7,000 for advice from a forensic accountant and 19 £3,000 for advice from a medical expert, and the 20 Department will consider applications for further costs 21 in more complex cases. 22 The Department recognises that expert evidence will 23 be required in many cases. However, its goal is to 24 maximise the proportion of expenditure on the GLO scheme 25 which goes to postmasters rather than to the costs of 19 1 processing awards. It's important to explain here that 2 what I'm talking about is a proportion. There's no 3 arbitrary pot of money for the GLO scheme. In effect, 4 it costs what it costs. 5 The Department will, as the guidance says, take 6 a proportionate and considerate approach to the 7 availability of evidence and so, in less complex or 8 severe cases, expert evidence should not be necessary 9 because the claimants' factual evidence, such as GP 10 records, will be held to be sufficient. 11 The Department is concerned that claimants' lawyers 12 will assume expert evidence is needed in too many cases 13 where that is not necessary and that, in turn, will lead 14 to unnecessary complexity and delay. For that reason, 15 it does reserve the right to challenge claimants' 16 lawyers on the point but it will do so promptly when 17 that's appropriate. 18 So far, responses to all applications have been 19 given within 15 days. 20 Fourth, questions have been raised about the banded 21 approach to compensation for stigma or reputational 22 damage and, indeed, for some other heads of loss. This 23 seems to be based on the misperception that the bands 24 represent or constitute an upper limit. They don't. 25 They're based on awards made by the independent panel 20 1 for the HSS, based on well established legal precedents, 2 and the Department has yet to see precedents which are 3 demonstrably inconsistent with the guidance given. 4 But at the Minister's request, the advisory board 5 has considered the issue. It comprises Professor 6 Richard Moorhead, Professor Christopher Hodges, 7 Lord Arbuthnot and the Right Honourable Kevan Jones MP, 8 and they together have proposed that the GLO scheme's 9 principles and guidance be revised to make clear the 10 following. 11 First, the bands are not maximum limits or a cap, 12 but indicative guidance for claimants, their lawyers and 13 the independent panel. 14 Second, that each case will, of course, be decided 15 on its merits and it's expected that there will be cases 16 where the facts demand awards higher, indeed sometimes 17 significantly higher, than the upper figure for the top 18 band. 19 Third, if the claimants' compensation cannot be 20 agreed through the alternative dispute resolution 21 process, claimants have the right to have it considered 22 by the independent panel, which includes a KC and other 23 experts. 24 Fourth, the independent panel will look at the whole 25 of each case in the round and be guided by overall 21 1 considerations of fairness. 2 So that was the advisory board's proposal. It 3 intends to hold discussions with members of the HSS 4 independent panel in order to confirm the way in which 5 their figures were devised and used, so as to encourage 6 greater transparency and consistency about these 7 matters. In a written statement to Parliament 8 yesterday, the Minister has publicly accepted the 9 board's proposal and amendments to the principles and 10 guidance will be published as soon as possible. 11 Fifth, concerns have been raised, particularly by 12 Howe+Co, about the extent to which the Department has 13 consulted with claimants' lawyers in the design of the 14 scheme and various criticisms are levelled at the design 15 of the scheme on that footing. 16 The Department wishes to make the position very 17 clear and to do so publicly. In fact, the Department 18 has engaged extensively with Howe+Co and other 19 solicitors representing claimants in the course of 20 designing and developing the GLO scheme. This has 21 included: circulating the initial draft of the scheme 22 principles on 7 November last year and discussing 23 comments from postmasters' solicitors at a meeting on 24 14 November last year; publishing a further version of 25 the draft scheme principles on the Department's website 22 1 for consultation on 7 December last year; informing 2 postmasters' solicitors on 26 January this year of the 3 Department's initial proposals on the sequence of 4 actions under the scheme, the claim and registration 5 forms, and the data which would be disclosed by the Post 6 Office. This was then discussed at a further round 7 table meeting on 27 January this year. 8 Engaging in a mediation process involving several 9 meetings and exchanges of documents which led to 10 agreement of the tariff of reasonable legal costs; 11 providing a further draft of the scheme guidance and 12 principles, together with a supporting Q&A document for 13 claimants on 20 February this year for comment; 14 providing a near final draft of the scheme guidance and 15 principles, including the proposed bandings for stigma 16 and other issues on 14 March; and providing a draft of 17 the application form, claims overview form and claimant 18 journey process map on 3 March for comment. 19 The Department therefore does not accept the 20 assertion that the Department failed to consult with 21 claimants' solicitors. 22 The Department notes that both Freeths and Hudgells 23 make the more specific comment that they did not feel 24 there was sufficient opportunity for claimants' 25 solicitors to engage with the compensation bands and the 23 1 tariff for stigma damages in particular. Freeths, as 2 part of their contract with the Department, were asked 3 to identify and give anonymised details of moderate, 4 serious and severe cases, which could serve as 5 benchmarks for the GLO scheme. 6 The Department's lawyers developed an upper and 7 lower figure for those cases described for each band 8 based on awards made to claimants by the independent 9 panel of the HSS. Given the pace at which the scheme 10 had been developed, the Department regrets that, 11 although it shared the banding information in advance of 12 publication, there was insufficient time to consult 13 claimants' lawyers on the figures attached to each band. 14 But it's confident that the figures are consistent with 15 established legal principles and the advisory board is 16 continuing to review the evidence in this area, as I've 17 already said. Amendments to the principles and guidance 18 will be published soon to clarify the approach being 19 taken and, in any event, the bands represent, in effect, 20 guidance rather than caps. 21 Sixth, Freeths have also raised the point about 22 whether there is an unduly narrow definition in the 23 scheme's guidance and principles documents about 24 causation, where the wording "Horizon shortfall" is used 25 rather than the "Horizon issue" wording that Freeths has 24 1 suggested. 2 The Department recognises that the High Court's 3 judgments deal with issues of the Post Office's conduct 4 and contracts, as well as the false shortfalls generated 5 by the Horizon system, and, in light of concerns about 6 this issue expressed by Freeths, the Department 7 inserted, in paragraph 1.3.4 of the scheme's principles 8 and guidance, a reference to the findings of common 9 issues and Horizon issues judgments. 10 It believes that this reference should be sufficient 11 to enable it to address the concerns which Freeths have 12 raised. It has asked that, if losses are found which 13 cannot be dealt with under the existing text, it should 14 be notified as soon as possible so that it can assess 15 whether and how the principles should be changed. But 16 its view, in substance, is that the text of the -- the 17 text that's been adopted should not restrict suitable 18 awards and compensation. 19 Finally, a brief comment on the case of 20 Nichola Arch, who I know is here in the hearing today. 21 Whilst the Department generally steers away from 22 dealing with individual cases in submissions to the 23 Inquiry on compensation issues, HJA have suggested that 24 her case was only accepted into the GLO scheme following 25 a detailed objection from Paul Marshall. That is not 25 1 a correct analysis of the position. 2 As the Inquiry has noted, evidence of events over 3 20 years ago can sometimes be hard to come by. The 4 Department has pursued all opportunities to seek out 5 such evidence so that postmasters can be fully 6 compensated. Where Post Office records are 7 insufficient, it is sometimes necessary to ask the 8 postmaster themselves if he or she has any evidence 9 because it's known that some of them do have relevant 10 documents. However, that's not necessarily and in all 11 cases the only source of further evidence. It would be 12 unfair on other postmasters if the Department did not 13 take a consistent approach across every case and, in 14 fact, the Department did find sufficient evidence from 15 other sources to satisfy itself of the nature of the 16 prosecution of Ms Arch, and an interim payment has been 17 made. The Department is grateful to Ms Arch for 18 liaising with it and for her patience as it's worked to 19 increase her interim compensation for the distress and 20 hardship that she's experienced over so many years. 21 I conclude with a brief word about what the 22 Department's doing to ensure consistency across the 23 three schemes. 24 The existence of three separate streams of 25 compensation reflects the complex history of the Horizon 26 1 scandal and the way it's developed over time. The 2 Department already had extensive measures in place to 3 ensure that postmasters in similar situations were given 4 similar treatment, regardless of the particular scheme 5 under which they fell. It has now created an internal 6 programme board to provide additional assurance and it's 7 extended the remit of the GLO advisory board to include 8 the Department's supervision of the schemes delivered by 9 the Post Office. 10 All three schemes have come a long way since the 11 Inquiry reviewed them in July last year and, indeed, in 12 December. When attempting to deliver a complex 13 programme apace, some issues will inevitably emerge and 14 the Department remains in listening mode. But the 15 extent of progress should, at the same time, be 16 recognised. The Department remains committed to 17 ensuring that all postmasters affected by Horizon get 18 full and fair compensation and they get it as promptly 19 as possible. 20 The Department continues to stand ready to assist 21 the Inquiry, however it can, and, in particular, to 22 provide further updates on the progress of the 23 compensation schemes that would be helpful in due 24 course. 25 Thank you, sir. 27 1 SIR WYN WILLIAMS: Thank you, Mr Chapman. Do you want 2 a short break or are you happy to start straightaway, 3 Ms Gallafent? 4 MS GALLAFENT: I'm happy to start straightaway, sir, thank 5 you. 6 SIR WYN WILLIAMS: Let me adjust myself. 7 Submissions by MS GALLAFENT 8 MS GALLAFENT: Thank you, sir. We are grateful for the 9 opportunity to update the Inquiry on developments in 10 relation to compensation since the last hearing on this 11 matter in December last year. Before doing so, the Post 12 Office wishes to offer its most sincere condolences and 13 sympathies in respect of the passing of Mr Robert Boyle. 14 We wrote to the Inquiry in this respect on 20 April last 15 week, copying in his solicitors, confirming the position 16 in relation to compensation, which we hope is of 17 assistance. 18 In advance of this hearing, we provided written 19 submissions on compensation, dated 6 April, addressing 20 the four particular topics on which you invited Core 21 Participants to address you. I'm conscious that you 22 will already have had the opportunity to read those 23 submissions and they've been published on the Inquiry's 24 website, together with submissions from other Core 25 Participants. I'm also very conscious you've just heard 28 1 from the Department on a number of the same points as 2 were set out in Post Office's submissions. 3 In these circumstances, you may be grateful to know 4 I don't intend to go through every aspect of our written 5 submissions but to flag the key points from the 6 perspective of Post Office and to seek to respond to 7 a number of matters that have been raised on behalf of 8 the postmaster Core Participants in their written 9 submissions. 10 Before I turn to those matters, I'd like to explain 11 my use of certain terminology today. To date, the 12 scheme established pursuant to the Group Litigation 13 settlement deed has been known as the Historical 14 Shortfall Scheme, or HSS. Similarly, the mechanism by 15 which those with overturned convictions can obtain 16 damages for malicious prosecution has been known as the 17 Overturned Historical Convictions, or OHC. In the past 18 few months, the Post Office has received feedback that 19 some postmasters consider that the use of the term 20 "historical" is inappropriate and offensive in this 21 context, as it suggests that the suffering of 22 postmasters affected by the Horizon scandal is in the 23 past. 24 The Post Office wishes to make it absolutely clear 25 that this was never its intention and it deeply regrets 29 1 any further distress caused to any postmaster as 2 a result of its use of that term in this context. 3 Having heard the depth of feeling on the part of 4 some postmasters, the Post Office will now be taking 5 steps to change the terminology used. So, for the 6 purposes of today only, I will be referring to the 7 Shortfall Scheme and to Overturned Convictions and, in 8 due course, the Post Office will consider how best to 9 change the names of those schemes. 10 If any postmaster wishes to raise any other concerns 11 or queries about Post Office's use of terminology in 12 relation to compensation, or indeed otherwise, then Post 13 Office would welcome their views. 14 Taking each of the topics, sir, in turn, I start, of 15 course, with the issue of bankruptcy. With the 16 Shortfall Scheme at the outset of my submissions, can 17 I put the issue into context. Out of 2,417 applications 18 to the Shortfall Scheme prior to June 2022, there are 63 19 cases in which it's been determined that the cause of 20 action vests in the trustee in bankruptcy, two in which 21 it's determined it vests in the IVA Supervisor and two 22 in which that question is still being clarified. 23 In relation to 263 applications which have been 24 received since June 2022, sometimes referred to as the 25 "late applications", there are 27 cases in which 30 1 a potential issue due to bankruptcy or an IVA has been 2 identified -- sorry, 27 cases. Of those, there are six 3 in which it's been determined that the cause of action 4 vests in the trustee in bankruptcy and the remaining 5 cases are yet to be determined. 6 Starting with causes of action and entitlement to 7 damages, with respect to the vesting of causes of action 8 and entitlement, Post Office broadly agrees with 9 paragraphs 34 to 36 of Catherine Addy KC's opinion. At 10 paragraph 10 of our written submissions, we've set out 11 the Post Office's approach in practice on making offers 12 and apportionment of damages between the trustee and the 13 individual. We would emphasise that to date there has 14 been close engagement and co-operation with the Official 15 Receiver with regard to the apportionment of losses in 16 order to ensure that payment is being received by the 17 appropriate party who has the right to recover damages. 18 Bankruptcy cases in which the trustee has 19 an interest are intended to be settled through 20 a tripartite settlement agreement, by which all parties 21 agree the release of causes of action on the basis of 22 the agreed apportionment of the damages between the 23 trustee and the individual and any surplus from 24 bankruptcy estate is then returned to the individual. 25 Now, individuals are encouraged to take legal 31 1 advice, paid for by the Post Office, on this issue and 2 they can also of course dispute the proposed 3 apportionment if they wish to do so but, as yet, Post 4 Office is not aware of any such dispute having occurred 5 in terms of apportionment. 6 SIR WYN WILLIAMS: Are most of those people, if not all of 7 them, taking legal advice, Ms Gallafent, as far as you 8 know? 9 MS GALLAFENT: I believe so but I'll be corrected otherwise 10 if I'm wrong on that. But it's an offer made to all of 11 them. 12 The Post Office considers that the approach it's 13 taken to compensation offers relating to bankruptcies so 14 far, in relation to the Shortfall Scheme, represents 15 a fair outcome, consistent with the legal rights of the 16 parties. 17 The position is of course slightly different when it 18 comes to bankruptcies caused by a rise in shortfalls. 19 Now there, the independent advisory panel considers each 20 case on its merits, as it does with all cases, having 21 regard not only to the complex legal principles involved 22 in relation to bankruptcy but, of course, the overriding 23 objective ensuring offers are full and fair. 24 In considering this, it makes no difference whether 25 Post Office was the petitioning creditor or whether the 32 1 postmaster applied for their own bankruptcy or whether 2 another organisation petitioned for it. The panel 3 considers and makes recommendations on all cases 4 following the same principles. 5 In such a case, the panel assesses the heads of loss 6 on broadly similar principles to those set out in 7 Catherine Addy KC's opinion, in respect of the order of 8 general damages, consequential financial losses, 9 diminution in value of the bankruptcy estate, other 10 costs, fees and expenses incurred and consideration in 11 particular in each case of the question of the 12 postmaster applying to annul the bankruptcy order and 13 the Post Office offers to pay the legal costs of any 14 such application. 15 Moreover, the Post Office has waived its right to 16 claim any dividend in the bankruptcy and will repay any 17 dividend that may have previously been received. 18 In addition, the panel has sought to compensate 19 individuals for the malicious institution of bankruptcy 20 proceedings and/or an abuse of process where that's 21 applicable in an individual case, and we've used 22 Lord Dyson's findings in the Early Neutral Evaluation as 23 well as damages awarded in cases in the Shortfall Scheme 24 involving criminal prosecution but no conviction to 25 inform the level of damages in that context. 33 1 We note the concern raised by Hudgell Solicitors in 2 their written submissions, paragraph 12, that there 3 appears to be, in their view, a change of approach to 4 the assessment of the awards of general damages by Post 5 Office. We would like to reassure postmasters that the 6 panel has applied the same principles throughout to each 7 and every claim. It may appear that higher offers are 8 being made in the later stages of the process but we'd 9 ask you to note, sir, as we anticipated, this is the 10 result of more complex claims being assessed, not 11 because there has been a change of approach in principle 12 by the panel. 13 Each case is determined individually, on its own 14 legal merits, according to the applicable legal 15 principles. I also note that where the panel considers 16 and determines that the bankruptcy was due to Horizon 17 related shortfalls, it will consider an award of stigma 18 attached to the bankruptcy. 19 We note the request for earlier offers where 20 bankruptcy has been an issue to be revisited but, as the 21 principles have been applied consistently, we don't 22 consider that that's required, unless we receive further 23 information from applicants. If further evidence is 24 produced which goes to the issue of whether a Horizon 25 shortfall loss was the cause of a bankruptcy, then Post 34 1 Office will consider the issue of causation, taking into 2 account that evidence. This is the approach that Post 3 Office has always adopted and it's reiterated this 4 approach in correspondence recently with Dr Hudgell. 5 The Post Office is paying for legal advice for 6 applicants on the offer and its allocation between the 7 trustee and the individual, as I've mentioned. Similar 8 principles to those I've just set out are applied to 9 IVAs. 10 SIR WYN WILLIAMS: So can I take it that the 63 cases that 11 you referred to in which bankruptcy is an issue is 12 a figure relating to those outstanding cases, those 13 cases which are outstanding, I should say, and that 14 there are more cases than 63 which may have been dealt 15 with by an award which has been accepted? Have I got 16 that right? 17 MS GALLAFENT: No, it's that there were 63 -- 18 SIR WYN WILLIAMS: So 63 is the total? 19 MS GALLAFENT: Is the total figure. 20 SIR WYN WILLIAMS: Right, so 63 is the total but some of 21 them may have been resolved? 22 MS GALLAFENT: Exactly, and I'll come to that when I update 23 you on the scheme more generally but yes, that's the 24 total. There aren't more. 25 SIR WYN WILLIAMS: No, no, that's what I was wondering 35 1 about. 2 MS GALLAFENT: There are only two still remaining to be 3 clarified but other than that there are 65, 63 with the 4 official receiver -- 5 SIR WYN WILLIAMS: So that I'm absolutely clear, of the 6 2,400 plus cases which were received in time, if I can 7 put it in that way, there were a total of 63 cases which 8 involved bankruptcy? 9 MS GALLAFENT: Possibly 65, two to be -- 10 SIR WYN WILLIAMS: So there were a total of 63 cases 11 determined to be involving bankruptcy, two cases 12 involving IVA and two which are in the process of being 13 determined? 14 MS GALLAFENT: Exactly. That's exactly right, sir. 15 SIR WYN WILLIAMS: Right. 16 MS GALLAFENT: Thank you. 17 SIR WYN WILLIAMS: Sorry to have taken you out of your 18 thread but I wanted to be clear about that. 19 MS GALLAFENT: No, no, it's absolutely fine, of course. 20 Now, just dealing with one short point in relation 21 to the assessment of damages, where there is a causal 22 link between Post Office's conduct and bankruptcy. It 23 is Post Office's view that a full and fair award has 24 been determined in each case within the Shortfall 25 Scheme, having regard to the individual circumstances, 36 1 but there is one aspect where Post Office does differ 2 with the opinion of Catherine Addy KC, which is at 3 paragraph 49(ii), which is in relation to the relevance 4 of the jury damages awarded to one Major Wilson and that 5 was for a loss of credit and reputation in a case that 6 dates from 1920. 7 Now, the principles derived from that case have been 8 taken into account by the independent advisory panel in 9 all of their assessments but we do say that Major 10 Wilson's circumstances were rather uncommon and personal 11 to him and it's Post Office's view that it would be 12 inappropriate to use his award as a yardstick for 13 postmasters generally. 14 The important thing, we say, in every case, is that 15 the independent advisory panel aims to achieve each 16 postmaster having their case assessed on its own merits 17 in a way that is personal to them, in accordance with 18 applicable legal principles but I simply put that down 19 as a marker, it being flagged up by some other Core 20 Participants. 21 SIR WYN WILLIAMS: So that people can understand my role in 22 all this, there is an internal mechanism within HSS for 23 resolving disputes? 24 MS GALLAFENT: Absolutely. 25 SIR WYN WILLIAMS: Ultimately, someone might push that point 37 1 as far as it will go, so to speak -- 2 MS GALLAFENT: Indeed they might. 3 SIR WYN WILLIAMS: -- and it will be resolved -- 4 MS GALLAFENT: Exactly, that's exactly right. 5 SIR WYN WILLIAMS: -- but I cannot resolve it. 6 MS GALLAFENT: No, and we're certainly not inviting you to, 7 sir. It's more a question of expectation management 8 rather than anything else and we felt it right to be 9 clear on that small point -- but potentially important, 10 of course, for individual postmasters who may have read 11 or been reported the outcome of the Catherine Addy 12 opinion -- just to make it clear that that's one point 13 on which Post Office does diverge slightly but, 14 absolutely, it's a matter which, were it to be taken, 15 could be resolved in accordance with the dispute 16 resolution procedure. 17 Thank you. 18 Can I just deal with, then, briefly, the practical 19 approach to applications for annulment or rescission of 20 bankruptcy. Again, the Post Office seeks to engage the 21 applicant in good faith regarding the potential to make 22 such an application, should they wish to do so and it 23 will cover their reasonable costs associated with it 24 both to the costs incurred by the applicant and by 25 an insolvency practitioner, both in respect of the 38 1 decision to apply and the application themselves, were 2 they to make it. 3 We note the submissions and the request made by 4 Howe+Co, paragraphs 58 to 61 of their written 5 submissions, for a list of all cases where Post Office 6 secured bankruptcies of postmasters as the petitioning 7 creditor, and they seek witness statements from Post 8 Office, confirming those orders shouldn't have been 9 being made. 10 Sir, the short point is Post Office is already 11 communicating with postmasters about bankruptcies which 12 should not have been pursued due to Horizon related 13 shortfalls where the Post Office was the petitioning 14 creditor, and it is already taking all practical steps 15 to assist the postmaster in annulling such bankruptcies 16 within a reasonable time. In those circumstances, quite 17 apart from the data protection issues that would arise 18 in any proposal to provide such a list to all solicitors 19 firms, we consider it would not take matters further to 20 provide the information suggested. 21 Sir, you may want to note, going back to your 22 earlier query, of the applications accepted into the 23 Shortfall Scheme prior to June 2022, in time 24 applications, if I can put it like that, the Post Office 25 has identified 27 applications where a causal link 39 1 exists between Horizon shortfalls and bankruptcy and 2 it's made offers in all of those 27 cases. 3 So far as applications that were accepted after 4 June 2022, Post Office is yet to determine the total 5 number of applications in which a bankruptcy or personal 6 insolvency has been caused by Horizon shortfalls but 7 work considers apace on those applications and Post 8 Office hasn't yet, of course, made them any offers in 9 respect of those applications. 10 We reiterate these figures are not static, issues 11 can arise, they are resolved as the circumstances 12 develop in each case. We are, of course, very happy to 13 continue to update the Inquiry, as regularly as it would 14 wish to, on the numbers involved. 15 In respect of personal causes of action that clearly 16 vest in individuals or where they otherwise have a right 17 to recover damages, Post Office is currently looking to 18 make interim payments to those postmasters who entered 19 bankruptcy by reference to any personal injury and/or 20 distress and inconvenience that they've suffered and for 21 which they should be compensated. 22 We note and agree with the indication in the written 23 submissions of Hudgell Solicitors that the bankruptcy 24 issue in respect of shortfall cases is more complex than 25 in relation to Overturned Convictions. We equally 40 1 welcome their view that some encouraging progress is 2 being made in this respect. 3 We also note the concerns raised by Howe+Co, 4 paragraph 76 and 105 to 109 of their written 5 submissions, regarding procedural delays in relation to 6 one of their clients in the Shortfall Scheme. The 7 Post Office wishes to apologies for the delay that's 8 occurred and wishes to reassure you and her 9 representatives that a letter will be sent to her within 10 the next fortnight. 11 Can I turn to bankruptcy issues in respect of 12 Overturned Convictions. As we indicated in our previous 13 note on bankruptcy on 16 January this year, Post Office 14 and relevant stakeholders had resolved the key issue 15 affecting compensation payments. That was in relation 16 to Moore. Those were resolved in a way which is 17 consistent with Catherine Addy KC's opinion on the basis 18 that compensation didn't vest in the bankruptcy estate 19 and that enabled compensation payments to be made to the 20 claimants in that group. 21 Of the 16 claimants identified by Post Office as 22 having potential insolvency-related issues, 14 have 23 brought non-pecuniary claims and received offers. 13 of 24 those have been settled and paid. One has been settled 25 in principle but not yet paid. 41 1 The remaining two claimants who fall into this 2 category who haven't yet brought non-pecuniary claims 3 have both been paid interim payments with appropriate 4 waivers being given in each case by the trustees in 5 bankruptcy. There is no suggestion that similar waivers 6 won't be available in respect of forthcoming 7 non-pecuniary settlements once reached. 8 No claimants with bankruptcy issues have yet settled 9 their pecuniary claims. There is one case in which 10 Post Office is waiting receipt of a waiver from the 11 Official Receiver in respect of a settlement offer, but 12 the Post Office does not regard that as an insolvency 13 issue per se and doesn't seek to trouble you, sir, upon 14 that matter. It's seeking to resolve the issue. If and 15 when it becomes clear that there is an insolvency issue 16 concerned, or bankruptcy, we will inform you and seek to 17 resolve the matter as soon as possible, but we will keep 18 you, as it were, up-to-date if anything changes in 19 respect of that single case. 20 We note the invitation of Hudgell Solicitors at 21 paragraph 8 to confirm in advance that we will meet an 22 agreement that has already been made to reimburse the 23 claimants who had their bankruptcy cases with Moores as 24 part of their pecuniary loss claims. Post Office has no 25 reason to depart from what it's already agreed with 42 1 Hudgell Solicitors. It encourages those claimants to 2 claim reimbursements when they're making the claims for 3 pecuniary losses. 4 Finally, for completeness, when addressing the 5 submissions made by other Core Participants, I note that 6 Post Office doesn't intend to engage in this forum with 7 the submissions made by Hodge Jones & Allen which are 8 based on communications and discussions which are 9 subject to confidentiality and, we say, ought not to 10 have been referred to on an open basis in written 11 submissions. 12 The Inquiry is aware, as we have updated you on 13 several occasions, considerable progress has been made 14 in resolving part or all of the claims from a number of 15 postmasters with Overturned Convictions on 16 a confidential basis, including through negotiation, 17 mediation, and the Early Neutral Evaluation process. 18 All of those processes depend on the very 19 well-established principle of confidentiality, 20 applicable in all alternative dispute resolution 21 processes, designed to enable the parties to resolve 22 disputes without recourse to the courts. We say breach 23 of the confidentiality are highly regrettable and not in 24 the interests of any party. 25 Sir, can I then turn to the issues of taxation, 43 1 a slightly shorter issue than I might have anticipated. 2 Can I make it clear, Post Office has always been live to 3 the concerns raised about the tax treatment of some 4 recipients of payments and have been working closely 5 with DBT and supporting them in its discussions with His 6 Majesty's Revenue & Customs as to whether the tax 7 treatment of the Shortfall Scheme could be approved. 8 Sir, we entirely agree that, in the light of the 9 indication given by the Department this morning, it's 10 not necessary to give a full tutorial on the tax regime 11 applicable and why it might differ between the Shortfall 12 Scheme and Overturned Convictions but it may be helpful 13 just to note, sir, for your understanding the rationale 14 which comes down to timing. 15 So compensation paid under the Shortfall Scheme 16 since 2020 has been awarded on a gross basis. Now, it 17 isn't entirely on a tax-free basis because sometimes the 18 Post Office is required by tax legislation to withhold 19 tax; for example, compensation relating to earnings from 20 an office holding, it's required to withhold it on a POI 21 basis. So it isn't as straightforward as saying on 22 every case it's paid out gross and of course, equally, 23 there are some elements of compensation where no tax 24 will be payable in due course, such as compensation for 25 personal injuries, damages and distress. So it's 44 1 slightly more complicated but I don't invite you, sir, 2 to get into the weeds of it because the reason why it's 3 different in relation to the Shortfall Scheme and the 4 Overturned Convictions is that, when the Shortfall 5 Scheme was set up, paying out on the gross basis, save 6 where it was required to do otherwise, meant that 7 payments could be made much more swiftly because, if 8 they had been looked at individually according to the 9 tax positions of each individual applicant, that would 10 have created an inherent delay in getting the offers out 11 and the payments made. 12 The difference is that postmasters with Overturned 13 Convictions, those payments are subject to an 14 announcement made in September of last year, which was 15 subsequently legislated to give effect to it, whereby 16 they would be exempt from income tax, capital gains tax, 17 and a number of other provisions. That was made with 18 retrospective effect from 22 July 2021, and that date is 19 after a large number of interim payments had been made 20 but shortly before the first agreed settlements in 21 relation to non-pecuniary loss had been entered into. 22 So you may remember this is the period in which the 23 Early Neutral Evaluation process was ongoing and, very 24 soon after that, that process unlocked the ability to 25 make offers and they to be accepted in relation to 45 1 non-pecuniary claims. 2 So the reason that the exemption was capable of 3 being made in relation to the Overturned Convictions was 4 that there's no need to go back and unpick or revisit 5 the tax treatment of those payments because of the 6 timing of when those payments were offered and made. So 7 that's why historically there is a key difference. 8 But we don't say that, sir, you need to trouble 9 yourself other than perhaps putting your mind at rest 10 that there is a rationale for it, but the Post Office 11 welcomes the Department's indication that it will 12 support Post Office with funding to make additional 13 payments to postmasters in the Shortfall Scheme to 14 ensure that their compensation is not unduly lost to 15 tax, and we await formal advice from Government as to 16 exactly how it's intended that we do that. 17 SIR WYN WILLIAMS: Nothing as formal as a direction, but 18 I would, simply for my own peace of mind, encourage 19 Mr Chapman and yourself to persuade your clients that 20 when the Department makes a formal announcement about 21 this, it either at the same time has a fuller 22 explanatory note than might otherwise be the case, or is 23 prepared to write to me to explain to me the basis for 24 what it is doing because I don't want to prolong today's 25 hearing with esoteric topics, but the relationship 46 1 between taxation and compensation I find quite 2 difficult, and it would help if I had in writing 3 precisely what it is you are both seeking to achieve. 4 MS GALLAFENT: We can assure you what we're seeking to 5 achieve is that no postmaster suffers as a result of the 6 tax treatment. 7 SIR WYN WILLIAMS: I understand. I understand that 8 Mr Chapman and I agree the end point, it's just the 9 route to the end point or the posts along the route that 10 I need a bit of educating about. 11 MS GALLAFENT: And we certainly need that guidance or 12 indication or direction, however one is characterised as 13 well, in order that we can implement what the Department 14 is proposing. So I think on this, sir, we're in the 15 same shoes. 16 SIR WYN WILLIAMS: Good. 17 MS GALLAFENT: Sir, then may I briefly give a progress 18 update on the Shortfall Scheme itself? 19 SIR WYN WILLIAMS: Yes. 20 MS GALLAFENT: At the last hearing, sir, in December, 21 I explained that Post Office was expected to meet its 22 target of making offers of 95 per cent of eligible 23 applications by the end of that day. That was ahead of 24 its self-imposed deadline by the end of the year. It 25 did, in fact, meet them that day, shortly after I'd 47 1 finished speaking, but I don't seek to identify any 2 causal relationship between that. 3 It has now made offers in more than the 99 per cent 4 of eligible in-time applications and, as of the point 5 that I'm speaking now this morning, that is 2,396 offers 6 in total. So there are just 21 cases remaining, and 7 those cases each involve specific complexities. The 8 Post Office is working through them, balancing speed 9 with the overarching principle of full and fair 10 compensation. But very significant progress, sir, has 11 been made since we last updated you, and the offers that 12 the Post Office has made represent a combined value of 13 approximately £97.8 million, including interest and the 14 deduction of withheld tax. 15 Now, out of the offers which have been made, 1,979 16 applicants have accepted offers in settlement. That's 17 approximately 83 per cent. 18 SIR WYN WILLIAMS: 19 ...? 19 MS GALLAFENT: 1,979, and payments have been made in 1,940 20 cases, approximately 81 per cent. So the total 21 payments, including interim payments, now reach 22 approximately 63.3 million. 23 Now, we note the concerns raised by Howe+Co about 24 delays in the operation of the scheme. We fully 25 acknowledge that it has taken longer than expected and 48 1 indeed hoped to make some offers and we expressly and 2 unequivocally apologise for those delays, but 3 Post Office is taking all steps available to progress 4 the outstanding claims. In the just under 1 per cent of 5 claims remaining outstanding, the reason offers haven't 6 been made is because they are awaiting information from 7 third parties, from applicants, or the determination of 8 the final case assessment principles that I'll come on 9 to on particularly difficult and sensitive issues. 10 It may help, sir, you referred earlier to the 11 dispute resolution procedure under which issues which 12 are not agreed can be resolved. Now, in relation to 13 applicants who didn't initially accept their offer, 14 there have been 410 of these, including queries rather 15 than objections. 128 applicants have subsequently 16 accepted it, and of those, 82 accepted it before any 17 good faith meeting which, sir, you will remember is the 18 first stage in that process. 41 had accepted it after 19 a good faith meeting but before an escalation meeting, 20 and, of the 14 cases that had proceeded to an escalation 21 meeting, to date four have accepted the offer 22 thereafter, three have asked to proceed to mediation, 23 and following mediation, one applicant has accepted the 24 offer. A total of the 282 further cases are currently 25 being actively supported through the Shortfall Scheme 49 1 dispute resolution procedure by the dedicated dispute 2 resolution team. 3 Now, that team continues to work to schedule goof 4 faith meetings as quickly as possible. In some cases, 5 such a meeting has not yet occurred and this can be for 6 a number of reasons. Now, of the cases that haven't yet 7 got to the good faith meeting within 100 days of the 8 offer, approximately 30 per cent of those applicants 9 have declined or cancelled good faith meetings or not 10 responded to invitations. Approximately another 30 per 11 cent have had their case reassessed by the Independent 12 Advisory Board rather than go to the good faith meeting 13 as further information has been supplied which might 14 result in a revised offer. The remaining cases, the 15 remaining third, have been delayed where an applicant 16 wishes to source further evidence or where a response is 17 awaited from applicant's solicitors. 18 The dispute resolution team hasn't declined any good 19 faith meetings request to date and, as I've indicated, 20 sometimes it isn't actually necessary as a dispute is 21 resolved before that stage. 22 Can I move to interim payments, a matter on which, 23 sir, we have updated you previously. The ability to 24 request an interim payment has now been specifically 25 drawn to the attention of any applicants who entered the 50 1 scheme's dispute resolution process, and to date 215 2 interim payments have been requested, and that includes 3 those which we previously referred to as being hardship 4 payments. Of that 215, 193 payments have been paid 5 representing a total value of approximately 6 £7.67 million. 7 Can I move on to the topic of legal assistance. 8 Since 10 October 2022, when, sir, you will recall the 9 arrangements changed, Post Office has received 290 10 requests to pay legal fees. It sought to work through 11 those requests as quickly as it can in order to avoid 12 delay in progressing applications. It's made payments 13 to applicants in 229 cases. A further 61 offers are 14 awaiting proof of payment. 15 Post Office listened to the feedback from a claimant 16 firm that there are different governance paths to follow 17 between the Shortfall Scheme and the GLO scheme for 18 approving legal costs which they suggested was 19 inefficient and time-consuming. We recognise the need 20 for a fair and consistent approach to assessing the 21 legal and professional costs and, as such, it's now 22 modified the Shortfall Scheme cost assessment process, 23 and representatives of applicants to the Shortfall 24 Scheme were informed of these changes on 25 April, 25 earlier this week. 51 1 The Shortfall Scheme costs allowance is now broadly 2 in line with those published in the GLO scheme and 3 representatives are required to self-certify the 4 allowance applicable to their clients' case. 5 Now, the result is a more streamlined process 6 enabling cases to progress through dispute resolution 7 without undue delay and, we say, providing an improved 8 journey for applicants. 9 It's hoped that this more streamlined process will 10 address the delays in obtaining expert evidence that 11 have been referred to by Howe+Co in their written 12 submission (for your note, sir, paragraphs 97 to 100). 13 We also note the submissions made by Howe+Co 14 (paragraphs 43 to 46) in relation to multiple causes of 15 action. Now, we wish to reassure all postmasters we are 16 alive to the issues identified in relation to multiple 17 causes of action by Ms Addy in her opinion at 18 paragraph 37 and to emphasise that each case is assessed 19 and managed in accordance with the principles that she 20 has identified. As such, we don't consider that it 21 would advance or assist matters further by providing the 22 schedule of claimants with potential multiple causes of 23 action requested by Howe+Co. 24 Can I turn then to late applicants, that is 25 applications by postmasters who submitted their 52 1 applications after the 27 November 2020 deadline. Post 2 Office carefully listened to and considered your 3 comments following and during the hearing on 8 December 4 2022 and, in particular, acknowledges your statement in 5 the interim statement of 9 January this year that 6 fairness now advanced an unequivocal statement to the 7 effect that all applications received by Post Office but 8 made after 27 November 2020 will be accepted into the 9 Shortfall Scheme, provided other eligibility criteria 10 are met. 11 We have now made the unequivocal statement, sir, 12 that you asked for. On 2 March this year, Post Office 13 and the Department agreed that late applicants will not 14 be required to provide a reason for the late submission 15 of the application. The decision was put into effect 16 immediately. The website was updated on the same day to 17 remove the requirement to provide a reason and the 18 question and answer document was equally updated for new 19 applicants. 20 We have ceased, therefore, asking late applicants to 21 provide reasons and evidence and we wish to make it 22 clear that no application has been or will be rejected 23 because it was not brought by the provisional November 24 2020 deadline. 25 The Post Office is in discussions with the 53 1 Department about the time at which the Shortfall Scheme 2 will in due course close but it can confirm this will be 3 no earlier than 31 March 2024. 4 SIR WYN WILLIAMS: Well, it may assist you to know that 5 I certainly don't think it inappropriate for there to be 6 an end date. 7 MS GALLAFENT: That's a very helpful indication, sir, thank 8 you. 9 SIR WYN WILLIAMS: I don't think this can be open-ended, 10 all right? 11 MS GALLAFENT: No. 12 SIR WYN WILLIAMS: So, on this issue, I will allow you to 13 discuss an appropriate end date. 14 MS GALLAFENT: I'm grateful. At the moment we can say it 15 will be no earlier than the date of the end of March 16 2024 and I can also indicate that as soon as that date 17 is agreed, that will be published on the relevant page 18 of the Post Office's website. But we reiterate that we 19 encourage all applicants who are eligible under the 20 Shortfall Scheme to come forward and submit their 21 applications as soon as possible. 22 So just in terms of progress update on those late 23 applications we have received to date: 263 have been 24 received of which 242 have been assessed for eligibility 25 and 214 found to be eligible. 27 found not to be 54 1 eligible but none of those were due to reasons of 2 lateness. There is an outstanding query in relation to 3 one application that's yet to be determined and there 4 are 21 yet to be assessed at all. 27 offers have been 5 made totalling just over £350,000, 13 payments have been 6 made totalling approximately £84,000. 7 Post Office is committed to achieving an effective 8 resolution of all of these cases, again, as you 9 indicated, sir, balancing speed with the overarching 10 principle of fair and full compensation. 11 SIR WYN WILLIAMS: I'm smiling, Ms Gallafent, because 12 I think on every occasion that you've written since 13 I used that phrase and addressed me, you've reminded me 14 of it. 15 MS GALLAFENT: I hope usefully, rather than otherwise, but 16 we're grateful for that characterisation, sir. 17 Can I move on to a slightly different cohort, in 18 relation to prosecuted but not convicted. Now, that's 19 a category of applications that has some pretty case 20 specific complexities, and it has taken longer to 21 proceed to issue offers in that category. Those are 22 potential instances of prosecution but not conviction or 23 the issue of a caution by the Post Office or, in some 24 cases, by the police in lieu of prosecution. 25 Now, we addressed the status of these applicants in 55 1 our submissions at the last hearing. Again, we 2 acknowledge that the progress of these applications has 3 not proceeded as quickly as it had hoped. 4 In the majority, we've had to undertake additional 5 investigations to determine, firstly, whether or not 6 a prosecution had in fact been commenced or a caution 7 issued in lieu of prosecution and, secondly, what 8 matters the prosecution or the caution related to, in 9 other words whether it was or wasn't a prosecution or 10 caution relating to a Horizon shortfall or whether it 11 was in relation to some other matter. 12 SIR WYN WILLIAMS: I remind myself, I think, that this 13 category of cases excludes those prosecuted but 14 acquitted who are members of the GLO, where you would 15 have had much more information in all probability. 16 MS GALLAFENT: Exactly. 17 So, in some cases, we have had to send requests for 18 further information to potentially affected postmasters 19 but, based in part on the findings of the Early Neutral 20 Evaluation regarding non-pecuniary losses of postmasters 21 who were prosecuted and convicted -- that's, of course, 22 in late July 2020 when we had that -- and following 23 completion of additional investigations, the independent 24 advisory panel has determined a fair approach to 25 compensating Shortfall Scheme applicants who were 56 1 prosecuted and not convicted cautioned in relation to 2 what the panel has determined to be Horizon shortfalls. 3 We have duly proceeded to make offers to 17 of these 4 applicants. 5 Can I turn then to the progress update on Overturned 6 Convictions. Again, we say we have worked hard to 7 deliver both interim and final payments in respect of 8 the claims we have received to date but can I take the 9 opportunity, at the risk of repeating myself on every 10 occasion, to reiterate the importance of all potential 11 claimants coming forward to bring claims and submit 12 schedules of loss. We encourage all claimants and 13 potential claimants to do so, as soon as they're able 14 to. 15 SIR WYN WILLIAMS: How many firms of solicitors are you 16 actually dealing with in that -- we'll call it a scheme, 17 for want of a better word at the moment? 18 MS GALLAFENT: The last I was aware of it was five, sir, but 19 it might now be six, but I'm sure someone can correct me 20 if it's changed since the last time I was advised of 21 that. 22 SIR WYN WILLIAMS: Are there any "litigants in person" in 23 that scheme? 24 MS GALLAFENT: Sir, I believe there is one, and I will come 25 on to deal with the position of that individual, but 57 1 they have been encouraged, you may recall from the last 2 time, to seek legal advice and assistance. 3 So far then on interim payments, there are 84 4 convictions that to date have been overturned on appeal. 5 Sir, you may be aware that there are two that are in the 6 Court of Appeal today. They are not being contested, so 7 that will go up as of today to 86. 8 But of the 84, as of earlier this morning, the 9 applications for initial interim payments have been made 10 in 83 cases, the one remaining claimant is a deceased 11 estate who doesn't wish to make an application for 12 interim payment. They have been offered, accepted and 13 paid in 80 of those cases. No further applications have 14 been declined, putting aside for a moment the three -- 15 what we have referred to as public interest only cases. 16 As we indicated in December, following the increase 17 in the value of interim payments up to £163,000, in the 18 light of Lord Dyson's Early Neutral Evaluation, all 19 claimants who were not going to be offered -- sorry, not 20 going to be able to lodge non-pecuniary claims by 21 December 2022, would be offered a top-up interim payment 22 up to £63,000. We have made offers to 31 such claimants 23 and to date 29 of them have accepted those offers and 24 received that top-up payment. The remaining two have 25 not yet accepted offers that were made to them in 58 1 December 2022. 2 So far as settlements are concerned, the position is 3 as follows: the Post Office has received non-pecuniary 4 claims from a total of 69 claimants with Overturned 5 Convictions and made offers in respect of 67 of those 6 claims, 55 of which have been accepted, so that's 7 non-pecuniary. 8 So far as pecuniary claims are concerned, we have 9 received claims, rather, from a total of 14 claimants, 10 11 of which have been fully particularised, the others 11 not fully particularised. We have reached full and 12 final settlement in respect of four claims including two 13 of the three public interest only cases. We have made 14 offers in respect of four of the six claims received by 15 mid-2022, together with offers of further interim 16 payments where appropriate. The remaining three claims, 17 this is the pecuniary claims, were received last month 18 in March 2023, the Post Office is in the process of 19 reviewing them and will endeavour to make offers in 20 relation to those claims as soon as possible. 21 Now, in total, the Post Office has paid over 22 £18.5 million in compensation to postmasters with 23 Overturned Convictions since August 2021. 24 As I have already flagged up, following a process of 25 independent mediation, full and final settlements have 59 1 been reached with two of the three public interest only 2 claimants, both represented by Hudgell Solicitors. As 3 yet, Post Office has been unable to agree a settlement 4 with the remaining public interest only claimant who 5 participated in the mediation. 6 Can I move on then to the question of pecuniary 7 claims and contingency planning. Sir, Post Office has 8 carefully considered the observations you made in 9 relation to the need for contingency planning for 10 disputes about final compensation payments that cannot 11 be resolved by negotiated settlements. That was flagged 12 up in your original progress update from August of last 13 year reiterating your statement of January this year. 14 Now, to, we hope, at least some extent address your 15 concerns, Post Office has been in active discussions 16 with claimant representatives as to the best way to 17 approach the assessment of compensation for those losses 18 and, in particular, on 31 March of this year Post Office 19 shared on a without prejudice -- on a confidential basis 20 proposals with claimant representatives relating to 21 a new process for managing claims by those with 22 Overturned Convictions and those proposals concerned 23 both the first of two tranches of suggested principles 24 to help determine the value of pecuniary losses and, 25 secondly, a suggestion in the process for handling such 60 1 claims, which includes an option for an independent 2 assessor to make a recommendation in respect of any 3 aspect of a claim which cannot be resolved consensually. 4 Now, Post Office is currently consulting with 5 claimant representatives in relation to these proposals, 6 it hopes that these proposals will make it simpler for 7 claimants to present their claimants and allow Post 8 Office to make full and fair offers of compensation more 9 quickly. 10 You will have indicated, I said that they -- the 11 first tranche of principles have been sent through. We 12 intend to send the second tranche of principles which is 13 55 out of 16 of the principles to be included. Those 14 tranche of principles also to help determine pecuniary 15 losses, we intend to send those through next week. 16 They're just going through the final stages of the Post 17 Office governance process. Again those principles are 18 open for consultation and responses by Core Participants 19 and/or claimant representatives about principles. 20 Now, we have reaffirmed to claimant representatives 21 our commitment to paying claimants' reasonable costs of 22 participating in the new process and that includes the 23 process for considering and commenting on the proposed 24 principles and process. That's to be assessed on 25 a standard basis not agreed. 61 1 We acknowledge that the work to design and consult 2 on this process has taken some time but our hope and 3 expectation is that that initial investment of time will 4 increase the rate at which claims come forward, as I've 5 indicated it's only 14 to date and in which then offers 6 can be made in respect of pecuniary claims and also will 7 provide claimants with a greater degree of transparency 8 as to how Post Office intends to approach issues 9 relating to compensation and that, of course, we hope 10 will also help achieve consistency in levels of 11 compensation offered. 12 It will also, we hope, establish useful and agreed 13 arrangements for independent third party resolution of 14 disputes arising in the course of such assessments. 15 To ensure that the introduction of this process 16 doesn't cause any delay, though, Post Office will and 17 has been continuing to make offers and consider offers 18 in relation to pecuniary claims that have already been 19 received and will continue to do that on any that are 20 received during this consultation period. It 21 emphatically doesn't want the introduction of this 22 process and these principles to delay potential 23 claimants coming forward and submitting claims now. 24 So we're very happy to provide an update on those 25 principles and that process, if it would be of 62 1 assistance, once the consultation period has ended and 2 we have drafted them, taking into account those 3 comments, but I leave that, sir, in your Inquiry team's 4 hands. But as I have indicated, in respect of any of 5 these matters, we are happy to update but it does seem 6 to me and Post Office that that's a matter upon which 7 you would welcome some further information in due 8 course. 9 Can I move then to a slightly separate topic of 10 prosecution related payments. So these are cases where 11 claimants have been subject to financial recovery 12 measures, either by Post Office or His Majesty's Court 13 Services in the course of criminal proceedings against 14 them. Our understanding is that up to 67 of the 15 overturned conviction claimants were subject to such 16 measures. That's either because they proactively repaid 17 claims said to be owing, in the hope of avoiding 18 prosecution or receiving a lesser sentence, or because 19 a formal confiscation or compensation order was made 20 against them in the context of a criminal trial. 21 We had originally intended to repay these sums at 22 the same time that it processed and settled pecuniary 23 claims but, given the relatively small number of 24 pecuniary claims received to date, we have now commenced 25 a more proactive process to do this. 63 1 Now, Post Office through its solicitors has analysed 2 the historical Post Office and third party records to 3 identify and quantify the amounts actually recovered, so 4 as to enable Post Office where possible to commence 5 proactive repayments of its amounts which will be made 6 together with compound interest at 3.45 per cent. That 7 is in advance of receiving particularised pecuniary 8 claims. That is subject to one somewhat technical 9 caveat which is confiscation orders paid through 10 HM Courts and Tribunal Service, rather than directly to 11 Post Office are required at the request of the Court 12 Service to be recovered through them, rather than 13 through Post Office, but Post Office will proactively 14 assist affected claimants with that process. 15 SIR WYN WILLIAMS: So, again, just so that I can get the 16 picture, if a postmaster voluntarily paid £20,000 either 17 to try and avoid a prosecution or to, as you say, help 18 with sentence, Post Office themselves can activate 19 whatever needs to be done in order to repay the sum? 20 MS GALLAFENT: Yes. 21 SIR WYN WILLIAMS: If, however, the postmaster was subject 22 to a confiscation order by the court, there has to be 23 a different process through the court? 24 MS GALLAFENT: Exactly, but we will assist with that process 25 that needs to be gone through. That's at the request of 64 1 the Courts and Tribunal Service and we will assist with 2 that. 3 So, as of today, 16 offers have been communicated in 4 relation to such payments and two have been accepted and 5 paid. So where Horizon related shortfalls were paid 6 directly to Post Office, the number of offers or 7 settlements are 23 out of a potential 39. We will 8 continue to review our records and we will make further 9 offers in due course, if that's possible. 10 Can I just deal with two other short matters. 11 The first is in relation to potential future 12 appellants. Now, sir, you may recall, in our 13 submissions at the previous compensation hearing, we set 14 out the considerable efforts that Post Office and the 15 CCRC had been taking to ensure that all convicted 16 postmasters are contacted and encouraged to consider 17 their options for appeal. That included, you may 18 recall, most recently setting up a dedicated phone line 19 and a micro site, in collaboration with Citizens Advice, 20 so that postmasters who felt uncomfortable interacting 21 with the Post Office, or otherwise wish to seek 22 independent advice, could do so. 23 However, as of today's date, of 700 -- that's the 24 figure, sir, which following further investigations we 25 believe to be the number of potentially Horizon related 65 1 prosecutions during the relevant period -- of 700 only 2 159 individuals have brought an appeal or applied to the 3 CCRC. That leaves 541 who are yet to appeal, whether 4 they wish to do so. 5 SIR WYN WILLIAMS: Without committing you to what might 6 happen in any of the appeals, when you use the phrase 7 "700 Horizon related convictions", do I understand that 8 those are convictions which you accept potentially might 9 give rise to a ground for appeal? 10 MS GALLAFENT: I'm going to come on to exactly that point, 11 sir. Those are cases in which Horizon had some role -- 12 SIR WYN WILLIAMS: Right. 13 MS GALLAFENT: -- and what Post Office has done, to take 14 an even more proactive approach, is that it has decided 15 that it should determine whether it already holds 16 sufficient material to reach a view that an individual's 17 case could properly be conceded as a Horizon case, as 18 set out by the Court of Appeal in Hamilton and others, 19 were an appeal to be brought. Now, the decision, of 20 course, as to whether or not a conviction should be 21 overturned remains that of the appropriate appeal court. 22 SIR WYN WILLIAMS: Of course. 23 MS GALLAFENT: But that process is now in place, it's being 24 administered by the Post Office's external criminal 25 lawyers and the process is that cases are initially 66 1 reviewed by independent junior counsel and then King's 2 Counsel will provide Post Office with the formal advice 3 on whether, on the papers available currently to Post 4 Office, the case could reasonably be conceded by Post 5 Office if an appeal were to be received. 6 SIR WYN WILLIAMS: And then what? 7 MS GALLAFENT: Then, in respect of appeals and cases where 8 the appeal lies to the appropriate appeal court, the 9 Post Office intends to contact those individuals to 10 notify them it would not oppose any future appeal on the 11 basis of the information that it currently holds and it 12 would set out what to do next. 13 For cases where the necessary route is via the CCRC, 14 Post Office is in discussions with the CCRC as to what 15 approach should be taken, how that route should be 16 followed. 17 Now, in terms of the progress that's already been 18 achieved to date in relation to this process, junior 19 counsel have already reviewed the vast majority of cases 20 of the 541, where no appeal or application to the CCRC 21 has been brought and King's Counsel are in the process 22 of drafting their advices. Post Office's remediation 23 committee has delegated board authority to deal with 24 criminal appeals and it will shortly consider the first 25 cases that senior counsel has identified are cases that 67 1 could properly and reasonably be conceded were an appeal 2 to be brought. It's anticipated that letters will be 3 sent to this first tranche of individuals in May or June 4 of this year. 5 We are continuing to review options in relation to 6 those cases where it has been impossible to identify as 7 a case that the Post Office could reasonably concede. 8 So there are obviously going to be a number of cases 9 where the material before Post Office at the moment 10 doesn't mean that it's in a position to say that they 11 would reasonably have conceded. 12 Now, this initiative goes beyond Post Office's legal 13 duties of post-conviction disclosure but I make it clear 14 Post Office wishes to take every step to ensure that no 15 miscarriage of justice is missed, so we will obviously 16 continue to update you in relation to this exercise in 17 due course. 18 Finally, can I deal with the GLO compensation 19 scheme. 20 Firstly -- it might not be quite finally: 21 pre-finally. Firstly, in relation to that scheme, we 22 welcome the announcement of 23 March that the GLO 23 compensation scheme is now open for applications. We 24 further welcome the statement yesterday that the 25 scheme's guidance and principles will be amended to make 68 1 it clear to postmasters that the guidance is not 2 prescriptive, the facts of each case will be looked at 3 in the round and all decisions guided by considerations 4 of fairness. 5 We note that since 2021 the Post Office has 6 encouraged and supported the commencement of such 7 a compensation scheme and indeed on 25 May that year, 8 the then Chairman of the Post Office, Tim Parker, wrote 9 to the then Parliamentary Undersecretary of State for 10 then BEIS, proposing options for further and more 11 fulsome compensation for postmasters. 12 Post Office has been collaborating and co-operating 13 fully with the Department on matters of disclosure to 14 support the scheme, it is using all resources available 15 to it to collate disclosure for that scheme but I would 16 emphasise that the gathering of the data to support 17 these claims does require a detailed and technical 18 knowledge of Horizon and other Post Office systems, 19 meaning that specialist personnel within Post Office are 20 required. 21 Now, we note the concerns raised on behalf of 22 postmasters both by Howe+Co and Freeths and, indeed, 23 concerns, sir, that you have reiterated this morning in 24 relation to the timeframe for disclosure. We would wish 25 to emphasise that the indicative timeframe of 32 weeks 69 1 is for the total delivery of the project. We will aim 2 to provide a regular output of disclosure once 3 applications are formally received by Post Office from 4 the Department. In other words, the indicative time is 5 not how long each application will take, it's the 6 long-stop anticipated currently for all of them. 7 We emphasise though delivery of disclosure is 8 subject to a number of external factors: receipt of 9 complete applications and application volumes, paired 10 with the availability of appropriately experienced and 11 skilled staff. The timeframe for provision of 12 disclosure is under constant review by Post Office. We 13 fully aim to provide a service to the Department in 14 order to support the GLO scheme, as soon as reasonably 15 practicable. We continue, in the meantime, to service 16 all urgent applications from the Department relating to 17 any form of hardship to avoid any delay. 18 SIR WYN WILLIAMS: For these purposes, I accept what you 19 tell me, Ms Gallafent, that, even on the basis of the 20 rolling programme, which of course I fully accept will 21 occur, inevitably it's going to be virtually the end of 22 the year before some documents relating to some 23 applicants surface. 24 MS GALLAFENT: Sir, I would accept that. 25 SIR WYN WILLIAMS: So I keep banging on about it, to use 70 1 that phrase, but that leaves eight months next year. 2 MS GALLAFENT: Sir, we entirely accept that, and we are 3 using all best endeavours. 4 Finally, sir -- and I promise this is actually 5 finally -- can I just emphasise that Post Office fully 6 recognised that, although today's hearing concerns 7 compensation, money is not the only form of redress that 8 Post Office could or should offer, and Post Office is 9 listening to the calls for restorative justice similar 10 to the processes agreed in the Windrush and the Grenfell 11 Tower civil litigation recently. It will work closely 12 with the Department to consider how best it can assist 13 with any restorative justice proposal. 14 Now, during Post Office's opening submissions in 15 October last year, Post Office invited any postmaster 16 who would like to meet a senior member of Post Office 17 and receive a personal apology to contact Post Office 18 for that to be arranged. So far, six meetings have 19 either occurred or have been scheduled. Both the Chief 20 Executive Officer of Post Office, Mr Read, who sits to 21 my right, and the Chair, Mr Staunton, who sits behind 22 me, are present today and both take this issue very 23 seriously. 24 On behalf of Post Office, I renew the invitation, 25 which is made in good faith and a genuine desire to 71 1 listen to those affected by the scandal and to apologise 2 for it, and I would encourage all the postmasters to 3 consider it. 4 Thank you, sir. I'm conscious that I've overrun my 5 time, but I hope that was helpful. 6 SIR WYN WILLIAMS: All right. Don't worry about 7 overrunning, Ms Gallafent, I've been listening carefully 8 to what both you and Mr Chapman have to say. 9 I think everyone knows that, for my convenience, 10 I want to take lunch at 12.00 today and not 1.00 and 11 we're almost there so I'm not going to ask anybody to 12 speak before lunch, so can we start again at 1.10? Is 13 that all right? 14 Fine, perfect. 15 (11.57 am) 16 (The short adjournment) 17 (1.14 pm) 18 SIR WYN WILLIAMS: Before we begin, in our enthusiasm to get 19 through this morning's submissions, I forgot to have 20 a break for the transcriber, so we need to have 21 an appropriate break this afternoon. That might mean 22 that the person speaking second, I'd ask to organise 23 their submissions so that they allow for a break for the 24 transcriber. All right? 25 MR HENRY: Sir, could I, in fact, ask for a break before my 72 1 submissions? Would that be possible? Because I need to 2 take more instructions. 3 SIR WYN WILLIAMS: All right. That may solve the problem. 4 Submissions by MR JACOBS 5 MR JACOBS: Sir, I have told the transcriber I speak quite 6 slowly, so that might help. 7 Sir, I make these submissions today on behalf of the 8 Core Participants who Mr Stein KC and I represent, who 9 are instructed by Howe+Co who act for 156 Core 10 Participants, including 60 applicants under the GLO 11 scheme, 10 applicants in the HSS and five applicants 12 under the Overturned Convictions Scheme, and some of our 13 clients, we're very happy to say, have attended today. 14 Sir, you have our written submissions, dated 15 13 April, at tab A2. Before I start, I would like to 16 say, in fact I am instructed to say, that our clients 17 firmly believe that any progress that has been achieved 18 in relation to compensation is very largely due to the 19 fact that the Inquiry has taken an active approach on 20 this point, and our clients have asked us to urge that 21 the Inquiry continues to hold these hearings and publish 22 progress updates to ensure that DBT and POL meet their 23 commitments to the victims of this scandal. 24 We understand that Mr Henry, on behalf of Hodge 25 Jones & Allen today, will be proposing that the GLO 73 1 scheme is restarted from scratch. We've thought about 2 that suggestion and, although we completely understand 3 why the suggestion is being made, we are unable to 4 support this proposal because our clients instruct that 5 they need compensation now and can't afford to wait any 6 longer. 7 So my submissions are based on how we work with the 8 scheme as we have it now and, sir, there are three 9 headline issues that I would like to draw your attention 10 to. 11 Firstly, and it might come as no surprise after this 12 morning's hearing, that the deadline of 7 August 2024 13 for all processes and payments under the GLO scheme is 14 simply unworkable. 15 The second point is that the delays by the 16 Government are negatively affecting and, in some cases, 17 retraumatising our clients. 18 The third point, sir, is that this scheme must, we 19 suggest, include consideration of facts that are being 20 established now within this Inquiry. Fair compensation 21 must include fair consideration of all the facts. 22 Sir, on the first issue, the 7 August 2024 deadline, 23 we know that the scheme sets out at 4.4.2 that it is to 24 enable payments to be made no later than 7 August 2024 25 and, in your January 2023 statement on the compensation 74 1 issues, you said at paragraph 39 that the effect of this 2 deadline was that approximately 550 claims would have to 3 be considered in the course of the next 20 months. 4 Sir, you said today, which I adopt, that it's 400 in 5 14 months now, so it's not getting any easier or better. 6 Freeths have sent a letter in to the Inquiry dated 7 20 April 2023 and they've expressed serious concerns 8 over the August 2024 deadline for the scheme. Part of 9 the problem, they say, is that the scheme can't move at 10 a reasonable pace because of the process of disclosure 11 of documents by Post Office Limited, that's been 12 exceptionally slow and been made unnecessarily complex 13 by Post Office resourcing problems being cited by them 14 as the major issue. 15 Mr Chapman's confirmed this morning that there is no 16 issue about meeting costs on disclosure but it is 17 a resource problem. Freeths are extremely concerned, 18 they say, that there will be insufficient time for DBT 19 to conduct a full and fair evaluation and that there is 20 an obvious risk that compensation offers will be made by 21 DBT without there having been time for consideration of 22 expert accounting and medical evidence. 23 Our position hasn't changed for quite a while. We 24 raised this issue, sir, with you in Howe+Co's letter of 25 9 January 2023, which is in the bundle at tab B, 7B. We 75 1 repeat these concerns and we agree with Freeths that the 2 August 2024 deadline does represent a serious project 3 risk and it appears to our clients that the scheme will 4 barely have got off the ground before the clock runs 5 down, before the claims are timed out. This would, we 6 say, represent yet another scandal for our clients. 7 As Freeths have commented, there's a real problem 8 with Post Office giving disclosure in respect of 9 compensation and this perhaps may not come as much of a 10 surprise because we know that disclosure is a recurring 11 theme, a problem, with the Post Office in this Inquiry. 12 We have referred, at paragraph 30 of our written 13 submissions, to DBT having informed Howe+Co by email on 14 4 April this year that POL explain the constraints that 15 mean the full set of disclosure will take 32 weeks and 16 Mr Chapman dealt with the 32 weeks point in submissions 17 today and said that this estimate is being revised. 18 But the problem that we see, sir, is that the matter 19 is still in flux. We have nothing specific, we have no 20 date or time to give to our very anxious clients, and 21 this is part of the problem. We are constantly being 22 told or our clients are constantly being told that 23 something will be done but they don't know when it is 24 going to be done by. 25 Sir, those who instruct me are very interested in 76 1 putting forward solutions that are pragmatic and might 2 assist the Inquiry and we propose two solutions to 3 perhaps overcome this -- what might be an existential 4 problem for the GLO scheme. 5 The first solution that we propose is that you, sir, 6 impose a timetable for the GLO scheme to deal with 7 disclosure, offers and reviews in a meaningful way, so 8 as to avert the disastrous consequences that would 9 follow from any further delays by DBT and POL in 10 relation to the GLO scheme. 11 The imposition of a timetable by you, sir, would 12 require Post Office to really get on top of disclosure, 13 and perhaps, almost like an unless order, there could be 14 a provision within the timetable that if disclosure 15 isn't forthcoming by a certain date then presumptions 16 will operate in favour of the applicant. 17 It would also enable DBT or require DBT to remove 18 what we say is unnecessary bureaucracy in the scheme. 19 We don't understand why there has to be a role of 20 facilitator and we don't understand why so much time has 21 been taken to approve requests for expert evidence. 22 A timetable would concentrate minds in this regard. 23 By way of a suggestion, we think that perhaps the 24 progress from start to finish ought to take no more than 25 eight months within this timetable and that would give 77 1 us sufficient buffer for the August 2024 deadline. 2 We know from what Mr Chapman told the Inquiry this 3 morning and from what is written at paragraph 41 of 4 DBT's written submissions that the Department is working 5 with Dentons, independent claims facilitators, and 6 Addleshaw Goddard, DBT's legal advisers, to agree 7 a detailed timetable for the scheme, against which the 8 scheme will be monitored, delivered and publicly 9 reported. 10 The submissions go on to say, somewhat ominously, 11 that the timetable will be reported to the Inquiry when 12 it has been agreed. 13 Sir, the difficulty with DBT's position is that 14 there is no timetable for a timetable, and we're only 14 15 to 15 months away from the time when the Department's 16 legal powers will expire and our clients cannot be 17 expected to put their lives on hold waiting for DBT to 18 agree a timetable with a variety of other parties. 19 They've waited long enough, sir. 20 Sir, the second solution that we propose is the 21 appointment of an overseer, perhaps or ideally a retired 22 senior judge, with power to resolve disputes in the GLO 23 scheme and to ensure that the scheme is delivered 24 effectively and in a time-efficient manner. This has 25 been done before and to good effect. 78 1 Sir, you will recall that Sir Anthony Hooper was 2 able to manage the mediation scheme in a robust and 3 efficient manner and we say that a similar appointment 4 is necessary to allay our clients' very real concerns 5 over the deadline and to wrest control of the scheme 6 away from the Government and placed in the hands of 7 an independent figure. 8 If this problem is left unchecked, there will be 9 a very real possibility that a current application in 10 a complex case that proceeds to review stage would most 11 likely use up all of the time that is available. 12 Now, I've spoken to one of the claims lawyers at 13 Howe+Co who has given me an indicative timescale of how 14 long it will take to process a claim that was complex 15 and proceeds to the review stage, and she says that: 16 May 2023 would involve perusal of Post Office 17 documents, if they'd already been received, if they'd 18 already been disclosed; 19 June 2023, perusal of hospital records; 20 July 2023, draft first witness statement; 21 August 2023 is when it's anticipated that authority 22 would be received for medical or accounting reports; 23 September 2023, that's when those who instruct me 24 would expect to receive expert reports, and that's 25 somewhat optimistic because there are only a limited 79 1 amount of experts and I expect they will all be very 2 busy in this area; 3 October 2023 would be preparation of witness 4 statements and a schedule of losses and the preparation 5 of a bundle to lodge with Dentons; 6 November/December 2023 will be a first meeting 7 following an offer from Addleshaw Goddard, and then 8 of course we have Christmas and New Year intervening; 9 So a mediation would take place in January 2024; 10 A first panel meeting, non-binding, March 2024; 11 A final panel meeting which is binding, May 2024; 12 A review would take place in July 2024; 13 Final offer and completion of the matter in 14 August 2024. 15 So when looked at and when analysed from the point 16 of view of a compensation lawyer, if a case is complex, 17 it's going to be very, very difficult to resolve it in 18 the very limited timeframe and this is, in my 19 submission, the stuff of sleepless nights for 20 compensation lawyers. Sir, you have already indicated 21 this morning that it's a matter that you've viewed with 22 anxiety. 23 There might even be less time, and one shouldn't 24 speculate, but if there is an autumn 2024 general 25 election, DBT will be required to enter into a period of 80 1 purdah, which will effectively halt matters for, 2 I believe, three months. 3 There are other reasons why an independent overseer 4 would be useful and we say that the appointment of 5 an overseer would protect the victims of this scandal 6 from some of the more objectionable views that -- or 7 actions of the scheme's administrators that we've 8 recently witnessed. For example, on 25 April, only 9 two days ago, DBT wrote to a number of representatives 10 of the GLO scheme applicants and stated -- Mr Chapman 11 covered this this morning in his submissions, but I'll 12 read out what was said: 13 "We want to maximise the proportion of our spending 14 which goes to postmasters rather than to pay for the 15 compensation process. To ensure a proportionate 16 approach and that we're only using expert evidence as 17 far as reasonably necessary to assist claimants with 18 their claims, we are asking Addleshaw Goddard to develop 19 some standardised approaches to common situations, 20 working with those claimant legal advisers and their 21 experts who have significant numbers of clients in the 22 scheme. This work should help us process claims more 23 quickly with less to and fro between the parties. Once 24 developed, these standardised approaches will be shown 25 to representatives of all claimants. They will not be 81 1 rigid and each case must of course be considered on its 2 merits but we hope you will find them helpful." 3 What we say is this is another layer of 4 decision-making, another administrative layer of delay, 5 and our position is this approach represents a serious 6 misstep. It is not for DBT to determine whether expert 7 evidence is needed in any particular case. That must be 8 the decision of each applicant's legal representatives, 9 lawyers and officers of the court. They are in the best 10 position to know what evidence they need for their 11 clients acting in their clients' best interests to 12 advance their claims, and if that's expert evidence, 13 it's a decision for them, not for the DBT. 14 This is an example of further unfairness in the 15 operation of the scheme, which will only lead to more 16 delay, and it's a good example of the sort of issue 17 which an independent overseer could grapple with and 18 resolve very quickly. 19 So the solutions that we propose -- the impose 20 a timetable and the appointment of an independent 21 overseer -- we say, are reasonable and pragmatic and we 22 hope that the Inquiry will adopt these suggestions. 23 We've proceeded, of course, on the basis that the 24 August 2024 date is stet in stone because that's what 25 the DBT has told the Inquiry. It appears that there was 82 1 an Appropriation Act, which fixes funding to that date. 2 We don't, however, know the exact legislative basis for 3 the deadline and we would like to know from DBT the 4 particular legislation involved so we can look at it and 5 we can advise our clients accordingly, so they can 6 understand. 7 We will also be very interested to know whether 8 there are any contingency plans in place for when and if 9 the clock runs down on GLO scheme applications. It's 10 been said this morning by Mr Chapman that it's not 11 within the Department's gift to extend the deadline. We 12 would like to know whether there can be or whether there 13 should be or whether there are any contingency 14 arrangements so that we can explain that to our clients 15 and advise them accordingly. 16 Sir, the second issue is the consequences of ongoing 17 delays and we want to say that the Government has 18 unacceptably delayed in publishing the GLO scheme. 19 Howe+Co called for the establishment of the GLO scheme 20 in correspondence with BEIS, as the Department then was, 21 as long ago as October 2021. That's over a year and 22 a half ago, sir. The scheme was published only until 23 23 March 2023 and yesterday, perhaps in keeping with 24 a tradition for there to be a ministerial statement the 25 day before an Inquiry hearing, there was a ministerial 83 1 statement which said that the Department will publish 2 a revised version of the guidance in due course. 3 Now, in fairness to the Department, the statement 4 has taken on board a number of issues which has been 5 raised by Core Participants in this Inquiry but it is 6 unhelpful, sir, that the Department continues to make 7 announcements on the very eve of every compensation 8 hearing, it seems, and this wasn't foreshadowed in DBT's 9 written submissions. If there is going to be 10 a ministerial statement in future, we would like to have 11 some advance warning of it we say that the decision to 12 amend the guidance is in response -- I think it's quite 13 clear -- to the views of a Horizon Compensation Advisory 14 Board, but this further delay would not have been 15 necessary had Howe+Co, who represent approximately 130 16 GLO litigants, been meaningfully consulted on the scheme 17 prior to its publication last month. 18 Now, I hear what Mr Chapman has said, of course, 19 about consultation and my instructions are that there 20 have been discussions but every decision is presented as 21 a fait accompli and perhaps an example of the approach 22 that is being taken is that yesterday there was 23 an announcement by the Minister that there would be 24 changes to the scheme. Howe+Co knew nothing about that, 25 and I assume no other representative for Core 84 1 Participants or applicants under the schemes, potential 2 applicants under the schemes, would have known. 3 The real issue, sir, is that these delays are 4 affecting our clients and we suggest that there should 5 be a second stage of interim payments that could be 6 based on the first offers that the scheme produces. 7 There's no rationale for holding any money back until 8 the final resolution of an application. 9 Sir, it's often the case that the best proposals for 10 action to be taken come from our clients, from those who 11 are directly affected, and I would like to read out 12 a letter that we received, I think yesterday, from Chris 13 Dawson, one of our GLO clients, and he said: 14 "I write to ask that Howe+Co ask the Chair to 15 recommend a second round of interim compensation 16 payments to be made by the Department of business. I'm 17 sure I'm not alone in being grateful for the interim 18 payment, albeit I wish it had been made many years ago. 19 However, that interim payment was made some months ago 20 and I am also sure I am not alone in respect to having 21 to use a considerable amount of the interim compensation 22 to pay off debts accrued in the years since being made 23 bankrupt. 24 "With the current cost of living crisis, fuel 25 crisis, food price increases, electricity and gas 85 1 prices, I am finding myself living hand to mouth. 2 Again, I'm sure I'm not alone in this. It has taken 3 years for the Post Office and the Department of Business 4 to agree to pay any compensation at all. Last year they 5 made big announcements about a compensation scheme for 6 postmasters who were part of the group action. However, 7 it is not far off a year since that announcement and the 8 compensation scheme appears to be moving at a snail's 9 pace. 10 "It is not fair to ask postmasters like myself to 11 wait for POL and DBT to get their act together and move 12 things forward so that postmasters can receive final 13 compensation. If they cannot do this efficiently, then 14 at least they should help me and others out by making 15 a further interim payment. Although I'm asking you to 16 raise this with the Chair, I'm embarrassed to do so as 17 it makes me feel that I'm going cap in hand to those who 18 wrecked my life." 19 This is very much the psychology of how the victim 20 feels in these processes; they feel that they have to 21 ask someone to compensate them when it should be the 22 authority that is making those approaches. 23 Francis Maye, another of our clients whose interim 24 payment was taken in part by a bankruptcy trustee, has 25 told us that he has learned to live with the mindset 86 1 that there could be a disaster at any time. He said 2 last week: 3 "I have got used to things hanging over my head. 4 It's embedded in my head that the rope can be pulled 5 from under me again. It's always there, it will never 6 go away." 7 The husband of Isabella Wall, (who died very sadly 8 before she was finally compensated) Peter, he says: 9 "Isabella was found not to have committed any crime 10 but deemed unfit to run a post office and required to 11 pay back thousands of pounds because Horizon had 12 recorded large shortfalls in the accounts. Isabella was 13 suspended indefinitely. We continued to fight the cause 14 but eventually were forced into bankruptcy and an IVA. 15 We lost the Post Office and store, two flats above, all 16 our savings, investments and health and retirement. I am 17 working. I still owe thousands of pounds." 18 Suzanne Palmer is unable to move from a tiny flat in 19 an area where she feels unsafe because of the ongoing 20 consequences of her bankruptcy and the scandal. I have 21 received, and Mr Enright and Mr Stein have also 22 received, many other messages from other Core 23 Participants. Time does not permit me to read them out. 24 But the important point is that all of these clients are 25 still suffering. Aside from the seemingly never-ending 87 1 financial difficulties that they continue to face, our 2 clients who were made bankrupt as a consequence of the 3 scandal also live with the stigma of having been made 4 bankrupt. Ms Palmer told me that she remembers bailiffs 5 putting her furniture out on the street in the view of 6 all her neighbours. 7 We say that everything possible must be done to 8 alleviate the ongoing suffering of our clients. An 9 obvious solution, sir, would be a second interim payment 10 and as I've already said, by way of an example, if 11 an initial offer under the GLO scheme is rejected as 12 being too low, there would be no reason for DBT not to 13 pay that sum pending resolution of the final 14 compensation award. 15 Sir, the third point is about assessing compensation 16 on the basis of the full facts. In the course of this 17 Inquiry, sir, we learn in every new tranche of 18 disclosure and at every hearing more of what happened: 19 the deliberate stigmatisation of postmasters as 20 criminals, notwithstanding no proof of offending; the 21 deliberate turning of the screw against postmasters 22 within the IMPACT programme; the desire to win cases 23 against postmasters whatever the cost; and the 24 deliberate suppression of the truth. We can all see 25 that the judgments of Mr Justice Fraser in the High 88 1 Court were hugely incriminating against the Post Office. 2 But these findings were incomplete because the trial 3 process did not conclude and do not portray the very 4 worst of it, and we will see that and we will continue 5 to see that as the Inquiry progresses into its next 6 phases. 7 But despite the worsening picture for POL and DBT, 8 the scheme guidance says that the scheme will be divided 9 by considerations of fairness in addition to applying 10 established legal principles and the findings from the 11 common issues judgment and Horizon issues judgment. 12 We say it shouldn't stop there. Instead, the scheme 13 must, we suggest, include a consideration of the facts 14 that are being established now within this Inquiry. 15 Fair compensation must include fair consideration of all 16 the facts. 17 There is of course a tension, because no one wants 18 the payments for the GLO litigants to be delayed for 19 even a day more than necessary, but in my submission, 20 sir, we have to be realistic. The facts under 21 examination in this Inquiry will, and not may, be 22 relevant to consideration of the extent of harm and pain 23 and suffering within traditional models of compensation 24 assessment. The GLO litigants' module comes close to 25 the end of this Inquiry, I think it's Phase 5, and there 89 1 will be facts that will affect compensation payable that 2 will emerge within that module. 3 When the Inquiry investigates the conduct of the 4 litigation in Phase 5, no doubt our clients will be 5 forced to relive much of what happened to them and will 6 have access to more detail of just how appallingly the 7 Post Office acted towards them. This is a factor, sir, 8 that we say needs to be incorporated into all of the 9 schemes. 10 Sir, I'm conscious of the time, I will briefly 11 address you on other matters. 12 SIR WYN WILLIAMS: Yes. 13 MR JACOBS: I will do so as quickly as I can. 14 As far as the Historic Shortfall Scheme is 15 concerned, Howe+Co act for ten claimants for making 16 applications. There are problems with delays, and 17 I appreciate Ms Gallafent having apologised in relation 18 to one of our clients, I believe Ms Elliott, who has 19 been affected by the delays, and may now have to face 20 an interim IVA. 21 One of the problems -- it's important though that 22 Post Office recognise that the delays are inflicting 23 harm on our clients and contributing to their suffering. 24 A particular concern that Howe+Co have had is that it's 25 difficult to go into a good faith meeting fully armed 90 1 without an expert report to establish what it is the 2 claim is about, and those are taking time. 3 Howe+Co act for five clients in the Overturned 4 Convictions Scheme and we've said in our written 5 submissions that a dispute has arisen in relation to 6 whether payments received under the 2019 settlement 7 agreement should be deducted from the final payment made 8 to applicants who are in the Overturned Convictions 9 scheme but who are also in the Group Litigation. 10 Howe+Co's position is that payments to the GLO in 11 the settlement agreement expressly excluded malicious 12 prosecution. This is a matter which we would like to 13 perhaps lay down a marker for the Inquiry to consider 14 when dealing with the settlement agreement in Phase 5. 15 There is a related point to the August 2024 deadline 16 in respect of clients who were made bankrupt and have 17 had entered into IVAs being in a more precarious 18 position in relation to the GLO scheme, and this is 19 because bankrupt and IVA affected subpostmasters are 20 required to discharge a more onerous evidential burden 21 than applicants who are not burdened with trustees or 22 office holders. 23 The GLO scheme requires that applicants who have 24 been subject to bankruptcy must provide details and 25 documentation to support their claims, and they're 91 1 additionally required to demonstrate that the bankruptcy 2 insolvency was due to the Horizon shortfall rather 3 than -- 4 SIR WYN WILLIAMS: Mr Jacobs, can I just ask you, because 5 I obviously haven't got them at the tip of my fingers, 6 are you saying that the evidential burden for GLO 7 claimants who were made bankrupt is a different or 8 higher burden than is applied in HSS for bankrupt 9 people? 10 MR JACOBS: Sir, probably not, because they still have to 11 produce all their accounts, produce all the details of 12 their bankruptcy -- 13 SIR WYN WILLIAMS: Because, as you'll appreciate, what I'm 14 concerned about is overall fairness and consistency, and 15 I would obviously be worried if schemes were applying 16 different criteria. 17 MR JACOBS: Yes, of course. 18 SIR WYN WILLIAMS: But I take it from what you've said that 19 what GLO effectively does is reproduce what is in HSS 20 about proof in bankruptcy cases? 21 MR JACOBS: Absolutely, sir, I think the point that I was 22 trying to make was that the more onerous evidential 23 burden means that it's going to be more difficult for 24 them to hit the August 2024 deadline. 25 SIR WYN WILLIAMS: Well, I think there's -- as I said, this 92 1 morning, it's like that piece of rock with something 2 running through it and August 2024 is certainly a strand 3 that's bound up with all these things. 4 MR JACOBS: Absolutely, sir. 5 I can also say that there's likely to be an issue in 6 relation to aggravated damages. We say that it cannot 7 be only the case that aggravated damages will follow 8 when the Post Office was the petitioning creditor. 9 Francis Maye, for example, told us that the Post Office 10 told him that they had blocked the sale of his lease 11 unless the Horizon debts, which had led to the sale in 12 the first place, were paid from the proceeds of the 13 sale. He instructs that, had he been given reasonable 14 time to pay the Post Office, it's likely that he would 15 have been able to avoid bankruptcy. 16 There is a "but for" presumption that we submit 17 ought to be necessary. We ask that aggravated damages 18 are paid where it can be established that but for the 19 Horizon shortfalls the subpostmaster would not have been 20 made bankrupt. There doesn't have to be a nexus between 21 the Post Office being the petitioning creditor and 22 the -- 23 SIR WYN WILLIAMS: Well, I don't wish to sound unhelpful, 24 but you are trying to ease me into the position where 25 I cannot be, with these submissions, Mr Jacobs, since 93 1 the statute specifically prohibits me from determining 2 civil liability. 3 MR JACOBS: Absolutely. 4 SIR WYN WILLIAMS: But I understand that you use me as 5 a forum for some of your submissions. 6 MR JACOBS: I shall avoid doing that and move on. 7 There are outstanding issues with insolvency 8 practitioners, we've heard from Mr Chapman, and it's 9 Moore. We say that it would be entirely proportionate 10 and appropriate for DBT to commence proceedings almost 11 immediately if Moore doesn't respond positively to the 12 opinion of Ms Addy KC, and we echo your comment that you 13 made this morning, sir, that a swift resolution is 14 needed. 15 It's also important that applications for annulment 16 and rescission proceed as quickly as possible because 17 those are the very devices that can have the best means, 18 certainly in relation to stigma, of restoring people to 19 the position they would have been in but for the 20 scandal. If there is a public acknowledgement that they 21 should never have been made bankrupt in the first place, 22 that would mean a great deal to very many clients. Some 23 of them will say "Well, it's too late now", but others 24 may very, very much want that relief. 25 We say that the Post Office should do everything 94 1 they can to support those applications and we've asked 2 for witness statements for use in annulment applications 3 where Post Office agrees with the test but for -- and 4 agrees that the order for bankruptcy should never have 5 been made. That will certainly make the passage of 6 these claims go much quicker through the courts. So we 7 don't agree that this is something that's not necessary 8 because Post Office are already communicating with 9 subpostmasters. 10 We don't think necessarily that there are data 11 protection issues. We would only ask for information in 12 respect of our own clients. But this is something that 13 is proactive, that Post Office can do, to ensure that 14 these claims are dealt with in very short time periods. 15 We all know how long the court process can take. 16 In relation to payment for annulment and rescission 17 where the Post Office was not the petitioning creditor, 18 again, we ask for a but for presumption that Post Office 19 should pay for the rescission and annulment 20 applications, where the Post Office was the petitioning 21 creditor, where the Horizon shortfall or actions of the 22 Post Office materially contributed to the subpostmaster 23 or another party making an application for bankruptcy. 24 We've also asked that DBT modifies the scheme, the GLO 25 scheme, to expressly provide for funds for SPMs to 95 1 receive legal advice on matters in relation to annulment 2 of bankruptcies and rescission and that they help 3 facilitate the making of such applications where 4 appropriate. 5 Sir, moving on to IVAs, Ms Addy KC's view is that, 6 as IVAs operate on their individual terms, it's not 7 possible to generalise in relation to what assets will 8 or will not be caught by them. 9 We ask that there is a reflection in the scheme, 10 that there is an appropriate degree of flexibility or 11 discretion on the question of IVAs, in particular cases 12 involving those subject to IVAs must be considered by 13 specialists as individual cases and funding for such 14 advice provided as a matter of course, this is not 15 something that can just be done by a general lawyer, 16 these are complex technical matters and this issue is 17 especially urgent for one of our clients, Ms Elliott, 18 who is facing the prospect of having to enter into 19 an IVA and who requires advice very quickly on how to 20 proceed with her compensation claim. 21 In relation to taxation, we've made the point in our 22 written submissions that the £1,000 cap was unreasonable 23 because a tax consultant would have to deal with matters 24 of a complex historical nature which may very well be 25 affected by an insufficiency of documentation. 96 1 Mr Chapman has said that this is not set in stone and 2 it's not an upper limit. We think that is something 3 that we would like you to record in your decision, if 4 possible, sir, just so that that is there. 5 There are likely to be difficulties where 6 postmasters are pushed into a higher tax bracket due to 7 receiving a lump sum payment, other Core Participants 8 have said that in their submissions, and we note that 9 DBT, at paragraph 21 of its submissions, is working 10 urgently to address this issue. 11 Mr Chapman has given a proposal today that there be 12 a sort of a form, for want of a better word, and 13 indemnity by way of additional payments to those in the 14 HSS scheme who aren't exempt, and we note that that does 15 appear, at the very least, to resolve this issue but, 16 again, we need to have a decision made very quickly for 17 the benefit of our clients. 18 In order to -- in respect of the issue of stigma for 19 bankruptcy, I note what Mr Chapman said this morning 20 that the advisory panel has said that the bands are 21 indicative only, cases will be decided on the merits, 22 and awards may be significantly higher and, if not 23 agreed, there is a right for consideration by 24 an independent panel. 25 But this nevertheless is very important because 97 1 stigma is an overwhelming issue for those of our clients 2 who have been made bankrupt. It does appear to be in 3 discussion stages only. I hope that's not unfair. So 4 I would ask that you rule or that you recommend that 5 there be a confirmed and concluded decision on this 6 issue very possibly, and I give an example of how many 7 of our clients are still continuing to be affected by 8 bankruptcy. 9 I referred earlier on to Ms Palmer, she gave 10 evidence in phase 1, she was prosecuted and acquitted at 11 trial, however the Post Office refused to restore her 12 contract and she lost her branch. This led to her shop 13 losing business and eventually she borrowed some money 14 from one of her children to petition for bankruptcy. 15 She lost her home, moved into rented accommodation with 16 her husband and suffered significant stigma. I referred 17 earlier to bailiffs putting her furniture out on the 18 street, her car was clamped in full view of her 19 neighbours in public, she describes this as total 20 humiliation. 21 Although she was discharged after a year, the stigma 22 has never gone away. She is still unable to rent 23 property, she was rejected when she applied from 24 a credit card after she received her interim payment, 25 she and her husband wanted to go away on holiday for 98 1 Christmas and wanted the assurance that a credit card 2 can bring. She has also recently had to declare her 3 past bankruptcy state when applying for motor insurance. 4 Furthermore, she has a telltale six-year gap in her 5 credit record which would alert any potential lender, we 6 say, to her former bankrupt status. 7 So the stigma of bankruptcy is very real for our 8 client even today. Ms Palmer lives in a tiny housing 9 association property in an area where she says there are 10 drug dealers. She is desperate to move but can't borrow 11 or rent property and it's this situation arising from 12 stigma which still continues to oppress Ms Palmer and 13 her husband. So we want some finality on the banding 14 and levels of compensation for bankrupt clients who 15 suffer from stigma as soon as possible, and we suggest 16 maybe there should even be a separate head of damage 17 within the scheme. Stigma of bankruptcy, for our 18 clients, never goes away. 19 So, sir, I'll conclude. As set out above, as I've 20 said, there are three main issues in relation to the GLO 21 scheme. Firstly, the need to avert a further scandal to 22 SPMs running out of time and being forced to accept 23 derisory offers as a consequence of the GLO scheme 24 August 2024 deadline. 25 There is another related issue of course, if 99 1 a solicitor is required to advise a client as to whether 2 to accept a low offer or have no compensation at all, 3 that puts that solicitor in a very invidious position 4 because it would be potentially negligent to advise 5 a client that they should accept an offer which is 6 derisory or substantially lower than what they ought to 7 have claimed. 8 We hope that our proposed solutions of the 9 imposition of a timetable and, perhaps more importantly, 10 the appointment of an independent overseer in the mould 11 of Sir Anthony Hooper will do much to alleviate this 12 very real concern. 13 Secondly, we are concerned that many of our clients 14 continue to live in desperate financial situations. We 15 suggest that Chris Dawson's suggestion of a second 16 interim payment would go a long way to resolving the 17 plight of many. We see no reason why these suggestions 18 couldn't be adopted and wouldn't work very well to 19 resolve this issue. 20 Finally, it's important that a degree of recognition 21 is given to the fact that some of the worst facts may 22 not be known yet and will be uncovered in future phases 23 and we say that the compensation regime or compensation 24 scheme, should address these points. 25 As I've said at the outset, sir, it's very important 100 1 that the Inquiry continues to monitor this issue of 2 compensation. 3 Sir, the Post Office Minister has given a statement 4 and said: 5 "We will keep fighting for the postmasters and their 6 families and it is right that they will now receive full 7 and fair compensation for the pain and suffering caused 8 by this scandal." 9 Sir, that is an exasperating statement in the ears 10 of our clients, from their point of view. What is 11 needed, in my submission, for the GLO scheme to have any 12 effect whatsoever and to be capable of resolving the 13 very serious issues that it addresses is robust case 14 management and that is what we are proposing. 15 The sentiments expressed by the Minister have not 16 been borne out by the fact that there have been delays 17 which cause continued suffering to our clients and there 18 is the fact, the unavoidable fact that the GLO scheme 19 may very well time out. 20 Sir, can I just finally say something about 21 restorative justice. We welcome what Ms Gallafent said 22 today about the six meetings that have been arranged, 23 but restorative justice is not about apologies. In the 24 Grenfell Inquiry, by way of example, the bodies 25 administering restorative justice appointed 101 1 an appropriate adviser to consult with the victims. 2 That is the sort of action that is needed. 3 Sir, if I could refer you to page 31 of our written 4 submissions, we set out what we say a restorative 5 justice scheme should involve. I won't read it out 6 because of the time but what we ask for is we ask for 7 the Post Office to engage with Howe+Co on those very 8 issues. 9 SIR WYN WILLIAMS: So this is paragraph 132, yes? 10 MR JACOBS: Yes, it is, sir, yes. 11 SIR WYN WILLIAMS: Fine. 12 MR JACOBS: In relation to compensation, we ask that the 13 Inquiry determines, in line with what's been held in the 14 Infected Blood Inquiry, that compensation under the 15 schemes should be open to family members of those who 16 have been affected by the Post Office scandal and the 17 Inquiry has heard evidence in Phase 1 that many family 18 members became carers of subpostmasters or mistresses 19 whose health was affected by their parents' or family 20 members' treatment at the hands of the Post Office. 21 Many children of subpostmasters suffered adverse mental 22 health impacts as a result of stigmatisation of their 23 parents. Other family continue to suffer the financial 24 consequences, even today, associated with having 25 provided assistance to subpostmasters who experienced 102 1 shortfalls. 2 So it's very important, we say, that the 3 compensation which arises from this Inquiry recognises 4 that the Post Office's conduct impacted on whole 5 families and not just the individual subpostmasters who 6 were targeted by the Post Office. 7 Absolutely very finally, sir, Ms Gallafent helpfully 8 referred to an internal review in relation to unsafe 9 convictions and a process that's being established. 10 That, of course, is a welcome step but we say that it 11 needs to include the victims. Those victims need to be 12 able to have input into that review and they need legal 13 representation to do so because they may not agree with 14 the decisions and the outcomes and they need to have 15 a right to be heard in that, as in all the other 16 schemes. 17 Sir, I'm sorry for going off quite so long. Unless 18 I can be of any further assistance, those are my 19 submissions. 20 SIR WYN WILLIAMS: That's fine, thank you. 21 Right, so it's very nearly 2.00. How long would you 22 like to take instructions, Mr Henry? 23 MR HENRY: Sir, could I ask for 20 minutes? 24 SIR WYN WILLIAMS: Approximately how long will you be, 25 having taken instructions? 103 1 MR HENRY: Having taken instructions, sir, I hope very much 2 that I will be no more than 30 minutes. 3 SIR WYN WILLIAMS: Right, fine. I think I'll remember that. 4 MR HENRY: You shall. You shall. 5 SIR WYN WILLIAMS: Just so that we can be clear, Mr Moloney, 6 how long do you expect to be? 7 MR MOLONEY: Sir, I think I can make my submissions much 8 shorter than the written submissions, given what's been 9 said, so I would like to keep them within 15 minutes. 10 SIR WYN WILLIAMS: So it looks like we're going to finish 11 comfortably within the normal afternoon, so you can have 12 your 20 minutes, Mr Henry. 13 MR HENRY: Thank you, sir. 14 SIR WYN WILLIAMS: Right. 15 (2.00 pm) 16 (A short break) 17 (2.23 pm) 18 Submissions by MR HENRY 19 SIR WYN WILLIAMS: Everybody ready? The floor is yours, 20 Mr Henry. 21 MR HENRY: Thank you, sir. 22 We're all familiar with compassion fatigue. Here we 23 are again, sir, compensation fatigue. You keep, as you 24 say, "banging on". One might imagine more satisfaction 25 would be derived from bashing one's forehead repeatedly 104 1 against a stone wall, such is the frustration that any 2 right thinking member of society would feel: a sense of 3 outrage, in fact, at the grotesque spectacle that occurs 4 again and again, notwithstanding your best efforts. 5 You are, in one sense, being stonewalled because you 6 are always being assured that it's just around the 7 corner, great progress has been made, all best 8 endeavours will be undertaken, and these are accompanied 9 with emollient words and ardent expressions of disgust 10 and how everybody is fully supportive about identifying 11 fault and making sure that nothing like this happens 12 again. 13 The leader in The Times yesterday, sir, reveals the 14 reality, and you are familiar with the reality, and it 15 may be presumptuous of me, but your patience and your 16 ineffable courtesy, at times it appeared that even you 17 seemed to be, as it were, overwhelmed by the sense that 18 you were again being kept at a distance and those people 19 who were destroyed by the Post Office -- either through 20 wrongful civil judgments or being forced to repay 21 imaginary debts that never existed except in a flawed 22 computer program, or being sent to prison -- well, that 23 they really -- they don't matter. 24 But they do matter and you know that. But the clock 25 is running, and it is running down very badly. 105 1 Now, on 8 December I addressed you as follows, and 2 you will find this, sir, in the coda to our submissions 3 which were submitted on 6 April. There are two issues. 4 The first is the continuing and inexcusable delay in 5 delivering compensation to the wronged, to the innocent, 6 and that will include whether the awards proffered are 7 even remotely approaching acceptability. The second, 8 which is inextricably entwined with the first, is 9 whether the Post Office will accept that it: 10 "... deliberately denied, obstructed and delayed 11 appellate rights needlessly unjustly and wrongly 12 prolonging the suffering of those that it had devastated 13 either by civil judgments and bankruptcy or criminal 14 convictions." 15 That remains unanswered, and it does not auger well. 16 We continued, in paragraph 32: 17 "The second issue was a direct question to test the 18 candour, integrity and remorse of the Post Office, and 19 the continuing silence of the Post Office does not auger 20 well for either disclosure or compensation. The 21 question as to deliberate and tortious suppression of 22 appellate rights was framed in the context of 23 an additional head of damages but there is silence." 24 Now, sir, it was our concern that why are these poor 25 people rushing into settlements, their lives having been 106 1 destroyed, for years they have suffered huge financial 2 insecurity, loss of earning power, loss of reputation. 3 One of my clients, she does not mind me mentioning it, 4 is facing eviction on 6 June, Mrs Misra, unless she can 5 muster six months' rent to be paid in advance. 6 Yet a number of these poor people, whether 7 represented or not, it doesn't matter, are rushing into 8 settlements which, as we saw from Mr Moloney's 9 submissions on 8 December last year, some of them were 10 agreed on an irregular basis where a global law firm 11 had, as it were, it seems, failed to appreciate that 12 there were additional heads of damages to which these 13 claimants were eligible. 14 So, sir, the problem with this continuing lack of 15 candour by the Post Office is that it is part and parcel 16 of the disgraceful conduct that brings you and I here 17 today, with all of these other people who have suffered. 18 It is part of that disgraceful conduct where they are 19 continuing to suppress the truth. 20 Only until you get at the truth, that they for years 21 knew about this and deliberately suppressed it and 22 manipulated evidence and procedure to their advantage, 23 will you arrive at proper quantum. Because there is, 24 for example, the wrongful bankruptcy -- and, again, your 25 ingenuity and creativity in asking Ms Addy to address 107 1 those issues, and we thank you on behalf of the Core 2 Participants for that -- but there is also the tortious 3 abuse of process as well. Yet those whom I represent, 4 certain of them, who have put in claims, have been told 5 "Well, you're not getting that. You're not getting 6 abuse of process. Nobody else has". 7 The fact that they have got away with it with other 8 people is no answer to depriving our clients of rightful 9 and proper compensation. Or is it because they are 10 standing on what really is the most unfortunate 11 settlement, whereby, for absolutely nothing, for zero 12 consideration, those convicted innocent people in the 13 Group Litigation forfeited every other claim, except for 14 malicious prosecution, at the insistence of the 15 defendant? How bizarre was that: driving a wedge, as it 16 were, between the claimants in the Group Litigation? 17 So, sir, until we get at the truth, then I'm afraid 18 this exercise in which we are involved, in which you 19 have played a very important role in trying to keep it 20 on track, I regret to submit will be hopelessly 21 derailed. Because what will happen -- and I hope that 22 I am wrong -- is that we can see in a few years' time 23 people will come and they will say "Well, we were had 24 over, we were trounced, we were taken advantage of. 25 This settlement is a travesty, this compensation that 108 1 we've been awarded is utterly unfit for purpose". 2 Of course, apart from the GLO scheme, who is 3 nominally in charge of those other schemes, the Post 4 Office, aided, advised, assisted, dare I say abetted, by 5 Herbert Smith Freehills? Now, I submit what I do now -- 6 what I now submit I do with care and forethought and 7 deliberation. 8 On 4 October 2022, Mr Sheldon, King's Counsel 9 together with his learned junior Mr Mertens, put in 10 written submissions on behalf of UKGI, the Relativity 11 reference is SUBS0000006. 12 This is what you were told, sir. You were told, in 13 paragraph 214 that the board met to consider the issue 14 of recusal in obviously Horizon, mention is made that 15 Lord Neuberger had been asked to provide an opinion 16 which was strongly in favour of making a recusal 17 application. UKGI's general counsel, the shareholder of 18 the NED played no part in the board's decision-making on 19 the recusal issue. The other member, the Permanent 20 Secretary, recused himself from the decision, and so on 21 and so forth. 22 As we know, that recusal application was made, it 23 was dismissed and the subsequent application for 24 permission to appeal was refused. But it is, in our 25 respectful submission, a seminal episode in the whole 109 1 saga of injustice. 2 May I briefly develop why and its relevance to 3 compensation will therefore be obvious. 4 Because we all have heard and, in the same way that 5 people repeat apologies, I suppose, on behalf of the 6 Core Participants, I repeat words such as egregious and 7 iniquitous, turpitude, et cetera, on behalf of the 8 Post Office's -- characterising the Post Office's 9 conduct. 10 But what can be in no doubt, sir, is that the Post 11 Office knew that the CCRC was riding on the back of the 12 Horizon litigation. That was apparent to the Post 13 Office. If the Horizon litigation had foundered, if it 14 had resulted in a defeat for the claimants or a miserly 15 settlement, perhaps even more miserly than the one that 16 was eventually obtained after the funders' costs and 17 interests had been deducted, et cetera, but if the Post 18 Office had succeeded, again, sir, you and I, together 19 with all of these other people, would not be here. But, 20 worse, who can say what would have happened to the CCRC 21 referral? 22 So, therefore, the Post Office was playing for very, 23 very high stakes indeed by attempting to recuse 24 Mr Justice Fraser. 25 Well, in paragraph 215 of the submissions of the 110 1 UKGI, it was then stated: 2 "Accordingly, Mr Justice Fraser continued to hear 3 the Horizon issues trial. UKGI provided the Secretary 4 of State with an update on the current state of the 5 litigation on 12 April 2019, including the fact that 6 following intervention by the Chair and the Shareholder 7 NED, the Post Office had refreshed its legal team 8 [whatever that means] including internally reorganising 9 its legal team and replacing its general counsel and 10 employing a new firm of solicitors, HSF, to revisit the 11 approach to the litigation." 12 But, sir, we know that, however it came to be, and 13 that submission being made and submitted to you, sir, by 14 none other than leading counsel and a highly reputable 15 junior, that was wrong. Who knew what when, who conned 16 who in respect of paragraph 215, it's not really for me 17 to say. But what is clear is that there was an attempt, 18 deliberately or inadvertently, to mislead you. 19 Everybody can read. These documents are circulated. 20 There was no correction from the Post Office, no 21 correction from anybody on the Post Office team, so far 22 as I am aware. If there has been a correction at the 23 time, saying "I'm terribly sorry, Herbert Smiths were 24 directly involved in advising us on the recusal", then 25 I will withdraw what I have just submitted. 111 1 These are public documents, they've been published 2 and circulated, cross-served. There has been no 3 correction. 4 So, sir, here you have Herbert Smiths advising on 5 the recusal, advising the Post Office and witnesses in 6 respect of this Inquiry, in which the recusal 7 application will be a seminal moment in Phase 4, and 8 also supervising certain of the compensation schemes, 9 one of them, them having to supervise it because the 10 original hard bargain they drove, ruthlessly drove on 11 behalf of their clients, consistent with their duty to 12 their client, was completely unfit for purpose. 13 It's a hopeless conflict but what concerns us 14 particularly, sir, is the fact that, unless you get at 15 the truth then there can be no proper sum awarded in 16 compensation and, more importantly, sir, because, as 17 Ms Skinner said to you many, many, many, many months 18 ago: 19 "No amount of money can compensate us. But what we 20 do owe, we owe the debt, and there are people, as we 21 sadly know, who have died, either by their own hand or 22 through just the passage of time. We owe them and their 23 families the truth and those who have survived this 24 catastrophe." 25 We respectfully submit that this compensation as 112 1 currently supervised by Herbert Smith on behalf of the 2 Post Office just will not do, because if they are 3 involved in the recusal, which is a massively 4 aggravating feature of this campaign of wrongful 5 conviction, this campaign of injustice, perhaps the 6 worst to be seen in modern times, then you will 7 inevitably fail, sir, despite your best efforts. 8 SIR WYN WILLIAMS: Can I just see where the logic of what 9 you are submitting is taking me, because I understand 10 full well your submission that it is necessary to get at 11 the truth in order to properly compensate people. 12 I follow that. 13 MR HENRY: Yes. 14 SIR WYN WILLIAMS: But, in terms of this Inquiry, getting at 15 the truth means, in effect, hearing all except possibly 16 the last phase of the Inquiry in terms of what you are 17 now talking about, and it means me taking, no doubt 18 inevitably, some months thereafter in order to formulate 19 my conclusions upon it. So the logic of what you're 20 saying -- and I'm not saying this in any critical sense, 21 but simply to understand where we're going -- is that no 22 proper compensation in the sense of it being reliably 23 founded on evidence, on all relevant matters, can be 24 paid for another 12 months or more. 25 Is that fair, Mr Henry? 113 1 MR HENRY: Well, sir, the way I'm going to dodge that bullet 2 is to endorse -- 3 SIR WYN WILLIAMS: We've had passing the buck and now we're 4 dodging bullets! 5 MR HENRY: There we are. I'm endorsing Howe+Co's approach, 6 because one of the mischiefs of rushing into settlements 7 and the financial pressure that these disadvantaged and 8 marginalised people suffer, living in poverty, on the 9 bread line, is that they're forced to accept something 10 without the truth being fully exposed. 11 SIR WYN WILLIAMS: And, Mr Henry, that would be awful, let 12 me make that plain. 13 MR HENRY: Yes. Yes. 14 SIR WYN WILLIAMS: But we are on the horns of a dilemma, as 15 I see it, in the way we're trying to organise this. 16 MR HENRY: Not so, sir, if we endorse the Howe+Co approach, 17 which is that there are structured interim payments 18 where, if you can show that you are likely to receive 19 substantial damages, and those Mr Marshall has the 20 privilege of representing and, in this Inquiry, I have 21 the privilege of representing are deserving of very, 22 very considerable damages, then they can make 23 applications for their reasonable requirements, and they 24 can provide reasonable evidence of the strength of their 25 claim. Therefore, they can receive -- without any 114 1 financial pressure driving them into an unjust 2 settlement, they can receive proper structured interim 3 payments. It's also an integrity test as to whether 4 Government and the Post Office really mean what they 5 say, because it will protect people from being forced 6 into a settlement. 7 Unfortunately, sir, whether this is happening up and 8 down the wicket, I do not know, but it looks like, from 9 the submissions that were made last year, that a number 10 of people are settling because it would seem that really 11 they have no choice but to settle, and they may be 12 settling for a mess of pottage as opposed to a proper 13 award, and that is the concern. 14 Now, can I just develop this because very important 15 to answer your question. So it would not mean that the 16 Core Participants who are eligible do not receive any 17 money at all until the very end but they receive proper 18 structured payments and that the matter can then be, as 19 it were, set off at the very end when the final award is 20 made. 21 At the moment, for example, further financial 22 pressure is being exerted, inexcusably, on these 23 unfortunate, weak, poverty stricken individuals because, 24 for example, interim awards are then deducted when there 25 is a payment of -- towards general damages, and so, 115 1 therefore, the Post Office, as it were, gives with one 2 hand and then takes away with the other. 3 So it helps, no doubt, the Post Office's liquidity, 4 or rather the Treasury's liquidity, but one might think 5 the Treasury has a better way of coping with cash flow 6 problems than people who have been living on the bread 7 line or living way beyond the lifestyle that they ought 8 to have had for years as a result of the Post Office's 9 misfeasance. So why, as it were, make the deductions? 10 Why make the deductions that the Post Office insist? In 11 other words, you'll get your 163,000, but then as soon 12 as a stage payment is made, that 163,000 is clawed back. 13 So, in other words, you get the 200,000, but then there 14 is a clawback. 15 It has been described in correspondence, forgive me, 16 I'm sure that Ms Gallafent will not be amused, but it's 17 been described as "spiteful and vindictive" and that's 18 what it is because it is done deliberately, knowing that 19 the other side do not have the means to withstand it. 20 They are forced between the rock and the hard place. 21 Then the other argument, of course, is that there 22 were ex gratia payments for the wrongly convicted. 23 Ex gratia; it was charity. Now the Post Office are 24 saying "Well, the charitable donations that you received 25 from the other claimants in the GLO, you have having 116 1 forfeited everything except for your claim for malicious 2 prosecution, so those charitable ex gratia payments 3 they've got to be deducted as well". 4 Well, that's a strict matter of law that can be 5 litigated but, in good faith, in good faith, the Post 6 Office should not even begin to countenance advancing 7 an argument like that. 8 There was no consideration given by the Post Office 9 for those claimants who had been the subject of wrongful 10 conviction, surrendering all of their claims, 11 surrendering absolutely every single one of their claims 12 but for malicious prosecution. There was no 13 consideration given at all. So now, after the event, 14 the Post Office, seeking to deduct the ex gratia 15 payments of the other claimants, again, we respectfully 16 submit it's low behaviour, and what the Post Office 17 should do is that the Post Office should, even if it 18 can't reconcile itself to the arguments that have been 19 properly advanced, the Post Office should say "Well, 20 we'll treat that as, as it were, ex post facto 21 consideration, admittedly given by the claimants, for 22 you surrendering your claims, so you can keep that and 23 we won't deduct it". 24 So that would be my argument, sir, you've got to 25 relieve these people of the financial pressure that 117 1 they're being put under, because they are being driven, 2 we respectfully submit, quite deliberately, to settle 3 below the quantum that they rightly deserve. 4 This is why we were asking for transparency. Some 5 of my learned colleagues prefer not to have transparency 6 in this matter. Everybody to their own. We can only 7 respectfully submit that, in a case or a saga -- and 8 I don't trivialise it by calling it that -- involving so 9 many secrets and discreditable manipulations behind the 10 scenes, the lack of openness and the lack of 11 transparency again gives rise to potential injustice. 12 Because if this awful episode in English legal 13 history means anything, it means that if you can just 14 get a group of people to coalesce, who actually know 15 everything about each other's cases, then you might have 16 a chance against this behemoth or this monolith, you 17 might just have a chance of getting a shot at justice. 18 But if you're dealt with individually and separately, 19 you're batted away or you're swatted like flies. 20 So, sir, those are our submissions on the matter. 21 I respectfully submit that it's not destructive, what 22 I am arguing. I'm basically trying to answer the point 23 that you made in your 9 January report on the matter -- 24 your statement, forgive me, sir -- where at paragraph 52 25 you were responding to my learned friend Mr Stein, 118 1 King's Counsel, and at paragraph 51: 2 "Mr Stein KC invited me to recommend that all three 3 schemes should be subject to overall supervision by 4 a person or body who is independent of BEIS and/or POL." 5 Then I omit words. 6 "There are three schemes in various stages of their 7 development which are functioning in substantially 8 different ways. In my view, it would not now be 9 possible to appoint a person or board to supervise all 10 the schemes without there being a significant risk of 11 substantial delay as a result. In relation to all 12 schemes that would be very undesirable. In relation to 13 the GLO however such delay could be disastrous." 14 We respectfully endorse that, sir, so far as the GLO 15 is concerned. But given the untenable position of HSF 16 in this matter, because the recusal issue is central to 17 the question of misfeasance, whether, for example, there 18 might have been joined-up thinking between the criminal 19 litigation, the criminal litigation that was in 20 contemplation in the Court of Appeal, and the civil 21 litigation, the litigation subcommittee, but it's 22 absolutely critical to the issues that you are required 23 to investigate. If that isn't a conflict and if they 24 cannot see that it is a conflict, then one respectfully 25 submits, well, they are so purblind that it's even more 119 1 dangerous, and that affects again disclosure. 2 So that is why, sir, somebody would have to come in 3 and they would have to review, they would have to review 4 the awards already made and also the conduct of the 5 schemes going forward. We make that submission with 6 regret but, in fairness, last June when we were making 7 submissions to the Inquiry we alluded to the issue of 8 conflict and that, ordinarily, we would therefore object 9 but for the necessity to get these matters processed 10 without undue delay. But at that stage we were not 11 aware of HSF's involvement in the recusal. 12 That now being apparent and the very, very 13 unfortunate submissions that were made to you on 14 4 October by no less than UKGI itself, there is, in our 15 respectful submission, very considerable cause for 16 concern. 17 I can put it bluntly: why does the Post Office not 18 want to countenance abuse of process? Why will they not 19 answer the questions put to them on 8 December? Because 20 HSF wasn't a new broom, HSF was part of the problem, it 21 was, as it were, an oily rag that tried to tarnish the 22 reputation of the judge. Deeply implicated. That's the 23 problem. Why don't they want to countenance abuse of 24 process? Because they would have to disclose all of 25 that. 120 1 That is, in our respectful submission, utterly 2 unconscionable and that is why, sir, with regret, we 3 have to make the submission we do, so far as HSF's 4 continued involvement in those compensation schemes. 5 SIR WYN WILLIAMS: Thank you very much, Mr Henry. 6 Further submissions by MS GALLAFENT 7 MS GALLAFENT: Sir, I wonder if I may ask an indulgence to 8 respond on one point of fact. I didn't want to do 9 Mr Henry the discourtesy of interrupting him mid-flow. 10 It's suggested that someone should have corrected or 11 objected to UKGI's submissions, we don't and didn't for 12 the simple reason that they are based on 13 a contemporaneous document, which is BEIS0000071. 14 I don't ask you, sir, to turn it up, but can I just make 15 it clear that that document does not say that HSF was 16 involved in the recusal application. The inference that 17 Mr Henry seeks to draw from it is completely different 18 from what the document itself says. I wonder if I might 19 simply give the factual timeline. 20 The decision was taken to apply for recusal of 21 Mr Justice Fraser on 20 March 2019. On 21 March, the 22 recusal application was issued. On 3 April, it was 23 heard before Mr Justice Fraser. On 8 April, HSF made 24 a presentation to the board as part of the proposed 25 refreshing of the legal team referred to in the UKGI 121 1 submission. The recusal application was heard and 2 refused by Mr Justice Fraser on 9 April. It was 3 thereafter that HSF were instructed. So they were not 4 the people who advised on making the application. It is 5 a simple point of fact, no doubt you will look at all 6 the relevant documents in Phase 5, but it is important 7 simply to put that down as a marker at this point before 8 you consider Mr Henry's submissions. 9 MR HENRY: I'm very grateful to Ms Gallafent. I'm not sure 10 if I need to withdraw it though because -- 11 SIR WYN WILLIAMS: Well, I'm not going to let this continue. 12 The facts surrounding it will be investigated. 13 MR HENRY: They will, yes. 14 SIR WYN WILLIAMS: So that's sufficient for these purposes. 15 MR HENRY: Thank you, sir. 16 SIR WYN WILLIAMS: To what extent your recusal point is 17 necessary for your more general point, I will ponder. 18 MR HENRY: Could I just mention one thing and, I promise 19 you, one sentence. 20 SIR WYN WILLIAMS: Really, one sentence, Mr Henry? 21 MR HENRY: One sentence: if they were not formally 22 instructed, were they, as it were, acting below the 23 parapet? 24 SIR WYN WILLIAMS: That's enough. There has to be some 25 decorum in these proceedings. I like to be informal, 122 1 but there comes a line and we're about to cross it, and 2 we're not going to cross it again. All right? 3 Mr Moloney, are you ready? 4 Submissions by MR MOLONEY 5 MR MOLONEY: Yes, sir. 6 Sir, I make submissions, as you know, on behalf of 7 Hudgell Solicitors' Core Participants. Hudgell 8 Solicitors represent 125 claimants under the Historical 9 Shortfall Scheme, after this morning, 73 persons whose 10 convictions have been overturned -- the two did have 11 their convictions quashed this morning, sir -- and then 12 four persons involved in the Group Litigation scheme. 13 We provided written submissions, sir, in respect of 14 the issues you asked to us address and I'll take each of 15 those issues in turn briefly, if I may, sir. 16 Firstly bankruptcy. In respect of the opinion of 17 Ms Addy, King's Counsel, it seems that the only point of 18 contention there, in respect of her advice, is the 19 figure of £300,000 as the starting point for the stigma 20 damages for bankruptcy. 21 SIR WYN WILLIAMS: Well, if I could use you as a sounding 22 board, having heard everyone apart from you now, and 23 possibly Mr Beer, there is the £300,000, which is 24 a point of contention, and there is what to do about 25 more, and everything else seems to be, as a matter of 123 1 legal principle, agreed. 2 MR MOLONEY: Indeed, sir. Entirely, and I'll come on to 3 Hudgells' position in relation to Moores in due course. 4 As you said, sir, but firstly it was dealt with by 5 Ms Gallafent in relation to the HSS, it also applies to 6 the Group Litigation scheme. As you said, sir, there is 7 a potential dispute resolution process in HSS and the 8 Group Litigation scheme where that point could be taken 9 and resolved. But we wonder, sir, in the interests of 10 consistency and in the interests of clarity, whether it 11 might be useful, and we put this out as a suggestion, if 12 there was a further Early Neutral Evaluation where that 13 point could be adjudicated on by Lord Dyson or some 14 other appropriate person, but it would be preferable 15 that it's Lord Dyson because he is now familiar with the 16 cases and issues. 17 As you know, sir, in the early part of 2022 there 18 was some distance between the Post Office and the 19 Hudgell clients on the appropriate levels for 20 non-pecuniary damages and the parties agreed to Early 21 Neutral Evaluation in order -- and this is the point of 22 it -- to secure some sort of realistic assessment of the 23 damages that would be recoverable if the courts were 24 required to adjudicate on this, because that's what's 25 important in these cases ultimately, if these cases were 124 1 to not be settled but go to litigation. 2 Lord Dyson, the former Vice President of the Supreme 3 Court, with enormous expertise in the area, was agreed 4 upon by the parties -- not imposed by one party, agreed 5 upon by the parties -- and as is said by Howe+Co in 6 their written submissions, the ENE has proved valuable 7 in facilitating the settlement of the non-pecuniary 8 claims of their clients, subject to, if I might call it 9 this, sir, the GLO ex gratia clawback, subject to that 10 concern, and it's proved valuable in settling the 11 non-pecuniary claims of the Hudgell claimants. 12 Now, I, sir, I'd submit, suggest that that issue of 13 the proper stigma damages for bankruptcy is one of three 14 issues really that have become apparent between the 15 parties during the course of today's hearing. 16 The second one is one I've just referred to, the 17 ex gratia clawback, and the third one is whether -- and 18 Mr Henry has just mentioned it -- whether the tort of 19 abuse of process could make any difference to the awards 20 for exemplary damages. 21 It may be that an Early Neutral Evaluation could 22 deal with all three of those points, it seems to me that 23 they're all susceptible to Early Neutral Evaluation, and 24 it could be just one applicant on the part of all of the 25 Core Participants -- we would be happy to step back to 125 1 leave that to others -- and there is no reason why it 2 couldn't take place very soon. 3 The issues are relatively confined and it could be 4 decided very soon, before the summer break. The 5 decision of Lord Dyson, or whoever else it may be, could 6 then be made available to the Core Participants and the 7 parties could get on with things as they choose, but 8 with that background. 9 As I say, sir, it's only a suggestion, but 10 experience tells us that it's been very useful. 11 SIR WYN WILLIAMS: In the early days, by which I mean 12 probably at the time of the first hearings about 13 compensation, there was some -- and this is my words, so 14 nobody should read anything into it in particular, it's 15 just a description, but some disquiet that some of the 16 people affected by the Early Neutral Evaluation scheme 17 were not party to all its terms. If you recall, I think 18 originally it was a scheme borne between Hudgells and 19 the Post Office, and there were obviously other people 20 who were not represented by Hudgells. 21 Your suggestion, I take it, now carries with it the 22 suggestion that all the representatives of convicted 23 postmasters whose convictions have been overturned would 24 be party to this evaluation. 25 MR MOLONEY: Not only all who have had convictions 126 1 overturned but all who are part of the HSS, part of the 2 GLS, Group Litigation Shortfall, all could be involved 3 because they are points that apply to each of the 4 schemes, as it were, and they are self-contained points 5 of law with applications in a case-specific way to each 6 of the cases which will be considered. 7 SIR WYN WILLIAMS: This is a purely practical point, we're 8 not running into the difficulty that, in respect of all 9 the people in all the schemes, there are simply too many 10 lawyers involved to make this practical. 11 MR MOLONEY: We would be prepared to step back, sir, there 12 are points which can be made, they have been rehearsed 13 in submissions already. We'd step back, I don't know 14 what Mr Stein's position would be. 15 SIR WYN WILLIAMS: I'm not asking for instant answers, I'm 16 exploring your suggestion, Mr Moloney, that's all. 17 MR MOLONEY: In our respectful submission, sir, it only 18 needs one to take the argument, if it's agreed -- so far 19 as the Core Participants are concerned, if agreement be 20 reached on the appropriate person to take the arguments, 21 and we would step back. 22 SIR WYN WILLIAMS: Okay. 23 MR MOLONEY: So, sir, that's the general point in relation 24 to Ms Addy's opinion. 25 If I could now turn to the specifics of bankruptcy 127 1 in relation to the schemes, and use that shorthand, 2 although -- and, firstly, the Overturned Convictions. 3 Today, matters are resolved, so far as the issue of 4 bankruptcy, as it appears in Overturned Convictions for 5 Hudgell claimants. We've heard from -- you know, sir, 6 that this has been the case for some time, that the 7 Official Receiver has relinquished all interest in 8 overturned conviction cases for those represented by 9 Hudgells, and we heard from Mr Chapman this morning 10 about the situation with Moores. We'd already resolved 11 the position with Moores by essentially the three 12 cases -- the Hudgell cases that involve bankruptcy with 13 Moores, payments were made to settle things with the 14 trustee, and those payments were required because the 15 persons affected had assigned a proportion of the 16 benefit of their claims against Post Office to the 17 trustee as part of the GLO settlement. We're grateful 18 for the indication that those payments will be 19 reimbursed in full and that puts an end to it so far as 20 Hudgells' clients and Moores are concerned. 21 So far as the Historical Shortfall Scheme is 22 concerned, this is more complex but, again, some 23 encouraging progress is being made. I hesitate to use 24 that term representing Core Participants, but we are 25 actually making progress. The insolvency expert 128 1 instructed by Hudgells is working closely with the 2 Official Receiver to devise a formula for dealing with 3 cases involving bankruptcy where Post Office or POCL was 4 responsible for the bankruptcy and the proposal which 5 is, in effect, the same as I gave when you asked me at 6 the December hearing, sir, is that it first establish 7 what's needed to pay off the bankruptcies and, from 8 there, gross up the proposed settlement to ensure that 9 the claimants are restored to the position they would 10 have been in but for what was occasioned to them from 11 Horizon unreliability. There seems, sir, to be broad 12 agreement as to that approach and things are moving 13 forward in that way. 14 Additionally, sir, interim payments are now being 15 made for losses, which it's agreed could not form part 16 of the bankrupt estate and that's for the general 17 damages, and they're being made whilst the complex 18 picture around each bankruptcy is analysed and resolved. 19 And it is a complex process, sir, as you can imagine, 20 because the Official Receiver needs to look at the 21 records from some time back, in order to establish who 22 they need to approach and so on. 23 At paragraphs 17 to 19 of our written submissions we 24 identified concerns around the payment of damages for 25 bankruptcy stigma in these cases, and what could be done 129 1 to improve the position of Mr Duff and others. There 2 have been discussions since then around the provision of 3 further information, which have clarified matters and we 4 expect to make progress in improving their position very 5 soon, but it does have to be very soon, sir, and we're 6 conscious, as their representatives, of the duty on us 7 and on others to make sure that this is done. 8 As we have said in each of these compensation 9 hearings, these are some of the most vulnerable 10 claimants for obvious reasons. Not just Mr Duff, one of 11 the claimants who has recently instructed Hudgell 12 Solicitors, a Mr Ranganathan Kumar -- and of course 13 whenever I use the name, sir, there is a consent to my 14 using that name within these proceedings -- Mr Kumar 15 received a six figure offer but because of the nature of 16 the bankruptcy only received an interim payment of 17 £4,000. He is now facing repossession proceedings in 18 respect of his family home at the end of May, despite 19 the fact that he's owed six figures in terms of damages, 20 at least, on the offer that's been made. So we're 21 having to work very hard to try and resolve that 22 situation, sir, and we hope, following the discussions 23 that we've had today and prior to today that we will be 24 able to do that. 25 That's it on bankruptcy, sir, save to say that many 130 1 of the advances -- and there have been many so far as 2 Hudgells' claimants are concerned -- many of the 3 advances around claims involving bankruptcy have 4 followed the airing of these issues in the hearings that 5 the Inquiry has devoted to compensation, sir, and for 6 that we are grateful. 7 Now, sir, taxation. Sir, for many months, as is 8 reflected in our written submissions, Hudgell Solicitors 9 have been requesting that Government provide a tax 10 exemption to bring the HSS into line with other schemes. 11 We have now heard from Mr Chapman today that something's 12 going to be done. We don't see how that tax exemption 13 in just a simple tax exemption would advantage HSS 14 claimants over the other schemes, but we are at least 15 encouraged that something is to be done, but we echo 16 very respectfully what you said, sir, that it needs to 17 be done sooner rather than later, so far as those 18 claimants are concerned. 19 You also asked, sir, for a factual update on the 20 Historical Shortfall Scheme and Overturned Convictions. 21 Taking each in turn: Historical Shortfall Scheme, 22 Hudgell represents 125 claimants, those include 26 23 bankrupt claimants and 12 out of time or late 24 applications, which I know are matters of concern. 25 There are some encouraging matters to report. In 131 1 previous submissions on compensation we explained how 2 the lack of interim payments in HSS cases impacted 3 claimants, obviously. We're pleased to say that interim 4 payments are now made on a regular basis and at a level 5 of up to 80 per cent of the overall offer. Also there 6 had been a delay in agreeing a cost matrix, including 7 provision for expert fees, however that delay now 8 appears to have been resolved and a matrix similar to 9 that provided for under the Group Litigation Scheme but 10 based on reasonable costs and not fixed fees is close to 11 being formally adopted. 12 Hudgell Solicitors, as you know, sir, had previously 13 expressed concern in July and December last year that 14 expert evidence, such as a medical report, was not 15 available to HSS claimants due to lack of funding. The 16 current position now, sir, is that all cases are now 17 able to benefit from appropriate analysis by relevant 18 experts. 19 It's not all rosy. Despite weekly meetings between 20 Post Office and Hudgells, not one of the 120 plus cases, 21 is currently capable of final settlement. They are 22 cases of complexity which require significant 23 investigation and negotiation and, inevitably, sir, 24 I hope you will forgive me for repeating our previous 25 concern, which in fact Mr Henry has just echoed, whether 132 1 or not the earlier cases, where claimants were 2 unrepresented were prematurely settled at a level which 3 did not reflect their true value. 4 We take into account what's been said about whether 5 or not they might be the more simple cases, the more 6 easily resolved and we, of course, realise that the 7 Inquiry will be turning to this topic in stage 5 and so 8 we say no more about it at this stage. But it's hoped 9 that the 125 cases will be resolved this year, but we 10 can't really guarantee that, but that is our hope. 11 In submissions on compensation in December, sir, we 12 remarked on the delay of the HSS in deciding whether 13 late applications would be accepted. There are 12 for 14 Hudgells, four have been accepted, but there are eight 15 that are still outstanding, sir, we have listened to 16 what's said this morning but there are eight of the 12 17 that are still outstanding. 18 Finally, sir, on this section, many of the concerns 19 that were expressed in our July and December 20 submissions, omitting heads of damage and loss, issues 21 around burden of proof in the absence of documentation, 22 limiting loss of earnings to 26 months, and the settling 23 of cases without advice, those problems remain of 24 concern to us, sir, and, in fact, are highlighted by 25 others today, but we're conscious that they'll be 133 1 returned to in stage 5 and so we say no more. 2 So far as the Overturned Convictions are concerned, 3 since the December compensation hearing, there has been 4 significant progress made in respect of non-pecuniary 5 loss claims. The current position is as follows: 53 6 have been settled and paid, the total was 15 at the 7 December hearings; two are subject to negotiation 8 following the making of offers; and 12 are yet to be 9 presented. 10 Now, those largely concern recently quashed 11 convictions. But they're also clients who would prefer 12 to wait until the end of the Inquiry before settling 13 their claims, which demonstrates that, contrary to 14 what's said by some, nobody is bound by the Early 15 Neutral Evaluation. Clients are free to accept or 16 reject the Early Neutral Evaluation and, indeed, free to 17 proceed to litigation if they wish to. So, sir, that 18 residual potential to proceed to litigation is very 19 important to all of our clients, sir. So some have 20 decided to, as it were, delay the decision on settlement 21 until the Inquiry reports, as is their power. 22 The submissions on behalf of Howe+Co reiterate, as 23 we've said before, how useful the ENE has been to their 24 position, and it has been so far as the Hudgell 25 claimants are concerned. 134 1 So far as the pecuniary loss claims are concerned, 2 two cases have been settled, four are in negotiation 3 following offers, three have been submitted in full with 4 offers awaited, and the remaining cases are yet to be 5 presented. Now, that delay is nothing to do with 6 Hudgell Solicitors, nor indeed the claimants, we say, 7 sir. You'll remember sir, that in appendix E to our 8 December submissions we provided details of the delay in 9 the progress of the four cases, which were being used as 10 a pilot for future cases. It was expected as well that 11 those cases would provide a basis for principles 12 proposed by Post Office for dealing with future cases. 13 We've included in our written submissions the further 14 delays that happened after December. I won't go through 15 all of those, sir, you have the details in the written 16 submissions but, in case 1, the schedule of loss was 17 submitted on 20 June 2022, that's fully particularised, 18 and there was a period of five and a half months between 19 the last evidence being submitted and an offer being 20 advanced. 21 In case 2, again schedule of loss submitted on 22 20 June 2022, and there was a period of five months from 23 the last evidence being submitted to an offer being 24 advanced on 2 March 2023. 25 Case 3, schedule of loss submitted on 5 August 2022, 135 1 period of five months from the last evidence being 2 submitted to an offer being advanced. 3 Then case 4, schedule of loss submitted on 20 June 4 2022, a period of three months from the last evidence 5 being submitted to an offer being advanced. 6 For months and months, Hudgells pushed for draft 7 principles for the resolution of claims. They were 8 finally received from POL on the evening of Friday 9 31 March 2023, so just a week before the written 10 submissions were due in relation to this compensation 11 hearing, and we hear that there are more coming. We are 12 considering the proposed principles, and will revert 13 expeditiously, but we note that the principles do not 14 preclude any head of loss from consideration, nor have 15 any been precluded during the course of our work so far. 16 Moreover, they contemplate the recovery of joint 17 losses with partners and others, which is important. We 18 will be looking, as part of the discussions, to explore 19 how far that approach will be extended, for example will 20 it cover non-pecuniary losses of immediate family? But, 21 obviously, that's something to discuss as we move 22 forward in relation to those principles. 23 But the delay from Post Office in making offers in 24 the pilot cases and providing proposed principles for 25 dealing with the remaining cases has meant that more 136 1 pecuniary claims have been unable to be submitted. 2 There are also delays in case specific disclosure, 3 which you have heard about, sir, from others, it's still 4 incomplete in many cases. We have raised this in 5 previous submissions and it's reflected in the 6 experience of Freeths, in the GLS scheme, as set out in 7 section 2 of their letter, and, indeed, those delays 8 have been acknowledged this morning. 9 But, nevertheless, considerable progress is being 10 made and we can repeat what we said at paragraph 40 of 11 our December submissions, there is no reason why these 12 claims realistically will not be resolved during the 13 course of this calendar year. 14 So, sir, that's the update in respect of the 15 Overturned Convictions. 16 Finally, the factual progress updates on the 17 implementation and administration of the Group 18 Litigation Scheme. Hudgells only represent four 19 claimants in this, each of whom is a relative of a 20 client who pursues a claim pursuant to an overturned 21 conviction. So I won't take too long. 22 There is a general concern, repeating what we said 23 in our December submissions, that, in the absence of 24 a significant escalation of resources for the panels, 25 then the complexity of the cases to which this scheme is 137 1 devoted precludes any prospect that the full and proper 2 compensation will be paid by August 2024 and, as has 3 been said, the guidelines and tariffs for this scheme 4 have recently been issued. Widespread concern about 5 those guidelines or tariffs have been expressed. The 6 provision that has attracted most public attention, 7 namely the tariff for stigma damages was not the subject 8 of any discussion with claimants' lawyers. We are 9 grateful to Mr Chapman for the acknowledgements of that 10 during the course of the morning, but we would ask that 11 if there is any further decision of that nature that 12 there is consultation going forward, so that some input 13 can be given. 14 So to conclude, sir, in preparation, we have spoken 15 to approximately 200 clients for this, and these 16 submissions reflect the responses we've received. Our 17 clients really are rightly concerned about delay. That 18 delay has not been on the part of them or their legal 19 representatives and each time that the Inquiry calls for 20 submissions, we have been able to identify delays in 21 this process that have not been the fault of the clients 22 nor their legal representatives. 23 We have included, sir, within our written 24 submissions -- and I hope you will indulge me just for 25 another couple of minutes, sir, comments from some of 138 1 our clients, that Barbara Atkins says that she feels 2 like she has spent the last 20 years of her life trying 3 to prove herself: 4 "... from in the early days explaining on CVs when 5 employers ask for explanations of why I lost the 6 Post Office, trying to explain over and over that I'd 7 done nothing wrong but no matter what I say there is 8 always an element of doubt on their faces. 9 "Why is it delay after delay even after the result 10 of the Public Inquiry, it only adds up to victims more 11 misery, anxiety, confusion and uncertainties and more 12 nervous breakdowns." 13 That's the reality, sir. That is the reality for 14 these claimants. 15 Margaret Smith, whose brother died, she says: 16 "The unacceptable amount of time that it took to 17 process his and others' claims. I wrote to the 18 Historical Shortfall Compensation Scheme when John 19 became ill as he wasn't looking at his post, etc, so I 20 lodged a power of attorney so they could correspond with 21 me too, at John's request. That was around April 2021. 22 I told them John was ill but it still took over a year 23 to process his claim. They could have offered him an 24 interim compensation then as he was very short of money 25 and it would have made his life less stressful and more 139 1 comfortable. It would most certainly have given him 2 comfort not just to get compensation but to get a formal 3 recognition for himself and his family and friends that 4 the Post Office and not him were at fault. It's 5 an injustice upon injustice that they have dragged this 6 out so and not thrown more resources at sorting it out 7 for the claimants." 8 The other issue, sir, which exercises our claimants 9 is that the Post Office dictated the narrative of this 10 compensation process in the way that they have with 11 previous schemes, and that's why the last resort of 12 going to the courts is so important to them. But they 13 remain as well concerned that Post Office has not 14 accepted liability for what's occurred. 15 Examples of that include Mr Trousdale, 16 Chris Trousdale, who is here today, who says that the 17 Post Office's ongoing failure to admit liability is 18 actively and purposefully perpetuating the harm and 19 suffering of myself and other victims on a continued 20 daily basis. It is prolonging the healing process and 21 delaying the start of what will ultimately be a long 22 recovery. I need to see restorative action from the 23 Post Office. How can I consider an apology and start to 24 move on when Post Office are still refusing to admit 25 liability? I cannot put into words how excruciating and 140 1 exhausting it is to have to keep playing mental anguish 2 as a currency of dealing with the Post Office. They 3 seem to think we have an unlimited capacity for mental 4 distress. We don't." 5 Then Jane Kemp: 6 "My view is that the Post Office need to accept that 7 the issues caused by the faulty system had a direct 8 impact on the lives of many subpostmasters and their 9 families and the ongoing process to agree a fair 10 settlement is just further stress and misery when we've 11 not done anything wrong." 12 Jaswinder Dosanjh says that: 13 "The offer has been covered by the caveat 'without 14 prejudice', which I understand is probably standard 15 practice in these matters but it also demonstrates that 16 they are not serious about righting past wrongs." 17 There is concern, sir, about something that has been 18 raised today, that the absence of the admission of 19 liability is preventing some from coming forward to 20 address what has happened to them during the course of 21 their convictions because they fear for what might 22 happen to them during the course of any claim that they 23 take. 24 So, sir, those are our submissions and thank you for 25 the opportunity to present them. 141 1 SIR WYN WILLIAMS: Thank you. 2 The only other person who is potentially likely to 3 speak is Mr Beer, but I'll just look at the transcriber 4 for a moment. 5 Mr Beer, first of all, are you going to say 6 something? 7 MR BEER: Yes, in ten minutes. 8 SIR WYN WILLIAMS: That's fine. Over to you, Mr Beer. 9 Submissions by MR BEER 10 MR BEER: Thank you, sir. 11 You and the Core Participants know that, in the last 12 three hearings about the issues concerning compensation 13 that you have held, we as your counsel have not 14 submitted to you that you should draw any particular 15 conclusions from the material before you. This is 16 partly because we do not understand our role generally 17 to be to urge conclusions upon you after any evidence 18 has been heard and, moreover, in relation to 19 compensation issues, no evidence has yet been heard. 20 That must await Phase 5. 21 On this occasion, however, in the light of the way 22 that matters have developed, we felt able to isolate 23 a range of issues which we suggest may benefit from 24 consideration by you for inclusion in a further interim 25 progress update or statement or, indeed, in an interim 142 1 report issued under section 24.3 of the Inquiries Act 2 2005. 3 As you know, sir, we will be hearing evidence on 4 compensation in Phase 5 of the Inquiry which is likely 5 to be in the late autumn. For reasons already canvassed 6 before you, there can be no further delay here in 7 relation to some of the issues that have been canvassed. 8 Compensation relates to wrongs done many years ago, 9 a decade or even decades ago. We're two years on, 10 almost to the day, from the decision of the Court of 11 Appeal Criminal Division. Every day, week, month and 12 year that passes further reduces the possibility of the 13 achievement of the stated aim of the compensation 14 process, namely of putting the wronged back in the 15 position that they would have been in had the wrongs not 16 been done to them. 17 The issues that we have identified are all ones 18 where it's not necessary, in our view, to hear oral 19 evidence before making an interim report. You have 20 a sufficient body of written material before you. 21 You've identified to those properly interested in the 22 subject matter the possibility of your making an interim 23 report and you have received extensive oral and written 24 submissions on the issues. 25 I should say briefly that the benefits of making 143 1 a formal interim report under the Inquiries Act 2005, as 2 opposed to producing a progress report or a progress 3 statement include the following: 4 Firstly, such a report would stand in distinction to 5 the progress reports and updates that you have made to 6 date. It ought properly to be interpreted by those 7 receiving it and by those to whom any recommendations in 8 it are addressed as representing an escalation in the 9 seriousness with which you view compensation issues. 10 Secondly, by section 26 of the 2005 Act, read with 11 section 25.1 and 25.8, any interim report that you issue 12 must be laid before Parliament. Although there is no 13 requirement under the Act for the Government or for 14 those to whom recommendations within a report are 15 addressed formally to respond to such recommendations, 16 the long-standing convention is that they do so, and 17 that they do so formally, not simply by taking action or 18 not taking action: by stating whether they accept your 19 recommendation and, if not, why not. 20 Thirdly, the use of the facility of making 21 an interim report and the convention that I've just 22 mentioned may be particularly useful in the case of any 23 recommendations that you make that touch on the GLO 24 scheme, where something of a guillotine is in operation, 25 the operative date being 7 August 2024. This is because 144 1 the Inquiry itself will have a limited life and so you 2 may consider that it's time to use the formal powers and 3 mechanisms that are open to you whilst you can. 4 So the four areas which I suggest respectfully could 5 properly be amongst those which you consider are as 6 follows, and I should stress this is simply a list of 7 four. You've heard, by my reckoning, some 36 or 37 8 suggestions today. 9 Firstly, you should -- 10 SIR WYN WILLIAMS: I've lost count, Mr Beer. 11 MR BEER: Yes. 12 First, you should consider whether to recommend to 13 the Department that it should apply to the court for 14 a direction pursuant to section 303 of the Insolvency 15 Act 1986 before final compensation payments are made in 16 the GLO scheme, that GLO scheme payments do not vest in 17 the trustee in bankruptcy, and that, secondly, the 18 Department should undertake to pay the reasonable legal 19 costs of any subpostmaster involved in such proceedings. 20 You've heard and you've seen that it's Catherine 21 Addy's opinion that such payments do not vest in the 22 trustee in bankruptcy, paragraph 62 and 63 of her 23 opinion. Another insolvency practitioner took the 24 opposite view, affecting 16 cases and Ms Addy has 25 suggested that the Department could apply to the court 145 1 under section 303. 2 The Department said in response, in its written 3 submissions at paragraph 16, that it was "considering 4 the position". You may consider that to be rather weak 5 and non-committal. Today, the Department has said that 6 it allowed time for Moores to respond to Ms Addy's 7 opinion. That opinion was published over a month ago. 8 You may consider that this issue has gone on long 9 enough. 10 Secondly, sir, I was going to submit that you should 11 consider whether to recommend to the Government that it 12 should exempt payments under the Shortfall Scheme from 13 income tax, capital gains tax and National Insurance 14 Contributions, just like those payments under the OHC 15 and the GLO schemes are, highlighting that the 16 consequences of the current arrangements and the 17 difficulties that they present to the average 18 subpostmaster. But in the light of the announcements 19 made on behalf of the Department today, for the first 20 time there's no need for me to make a suggestion of such 21 a recommendation, because it appears the Department and 22 the Government more widely have taken a decision to 23 address the issue differently, by making payments to 24 subpostmasters in respect of tax. But this is a matter 25 which you may wish to review within a set period, 146 1 a number of months now, ie the operation of the 2 Department's new tax scheme to address problems created 3 by the HSS. 4 Third, you should consider whether to recommend that 5 the Government should exempt payments under the HSS and 6 the GLO scheme from inheritance tax. This isn't 7 something that's been developed in any of the oral 8 submissions that you've heard today, the inheritance tax 9 issue. You know, sir, that regulation 5 of the 2023 10 regulations provides that OHC compensation payments but 11 not GLO scheme or HSS payments are exempt from 12 inheritance tax. 13 There is an attempt at an explanation of this 14 difference in tax treatment in paragraphs 22 and 23 of 15 the Department's submissions. I summarise: the 16 explanation is OHC claims are principally about 17 non-pecuniary loss, whereas GLO scheme and HSS claims 18 are generally focused on pecuniary loss; and, secondly, 19 that had subpostmasters in the GLO and HSS continued in 20 the financial situation that they were, then their 21 estate would have been subject to inheritance tax in due 22 course. 23 You will wish to consider whether either of those 24 explanations pass muster for the distinction in 25 treatment. I would add that, given the large number of 147 1 subpostmasters who were entitled to compensation have 2 sadly passed away, including recently, this is not just 3 a dry tax issue, it's an issue of real substance that 4 will have a real effect on real people. 5 Fourthly, you should consider whether to recommend 6 that, first, the Department must promptly promulgate 7 a timetable that will deliver fair and reasonable 8 compensation for all applicants under the GLO scheme 9 before 7 August 2024; that, secondly, that timetable 10 should be published; thirdly, that the Department must 11 put in place sufficient resources, including by making 12 appropriate funds available to both the Post Office and 13 to applicants, to enable the published timetable to be 14 delivered by 7 August 2024. 15 So it's essentially the promulgation of a timetable 16 that meets the guillotine point that the Government 17 itself, through its own legislation, has imposed on this 18 scheme. 19 In this connection, sir, I should note that the 20 Secretary of State for Business and Trade, Grant Shapps 21 MP, stated in Parliament, back on 7 December 2022, 22 that's just under five months ago, on the announcement 23 of the GLO scheme that: 24 "Experts [and by that he meant lawyers and ADR 25 specialists] should be on board by the early spring, at 148 1 which point full claims can start to be submitted and 2 assessed. I hope that compensation will start to flow 3 before the summer and that most cases can be resolved 4 before the end of 2023." 5 So three things were suggested by the Secretary of 6 State in terms of timing: claims being submitted and 7 assessed in early spring; compensation flowing before 8 the summer; and most cases resolved before the end of 9 the year. That's a timetable to which the Department 10 and the Post Office ought reasonably to have been held 11 but it's seemingly slipped already. Claims cannot now 12 be submitted and assessed in early spring, as that date 13 has already passed. Payments will unlikely be made 14 before the summer. So you may consider that something 15 new is required. 16 We would suggest that you ought to be circumspect 17 when considering the submission made by Mr Jacobs to 18 take on responsibility for setting the timetable 19 yourself, given the role you perform, the statutory 20 constraints upon it and your terms of reference. But 21 what you can do is ensure that those whose job this is 22 do it properly and you can set a timetable for 23 a timetable, you can monitor compliance with it and you 24 can, if necessary, hold those responsible for delivering 25 the timetable to account if they fail to comply with it. 149 1 Sir, that's all I say. 2 SIR WYN WILLIAMS: Thank you very much. 3 Right, I think that brings to an end this 4 compensation hearing. I will reflect upon the 5 submissions that I have had in writing and orally, and 6 deliver -- I won't say a report or an update, I'll keep 7 you all in suspense on that until you get it, but you 8 will get something in writing as soon as I can muster 9 it. 10 Obviously, to an extent, my ability to produce 11 something very quickly is hampered by the fact that we 12 are starting to hear evidence again next week from, as 13 many would think, very important witnesses. So you will 14 have to bear with me to an extent. But you will have 15 something sooner rather than later. 16 Thank you all very much and I'll see some of you on 17 Tuesday morning. 18 (3.38 pm) 19 (The hearing adjourned) 20 21 22 23 24 25 150 1 I N D E X 2 Submissions by MR CHAPMAN .....................1 3 Submissions by MS GALLAFENT ..................28 4 Submissions by MR JACOBS .....................73 5 Submissions by MR HENRY ....................104 6 Further submissions by MS GALLAFENT .........121 7 Submissions by MR MOLONEY ...................123 8 Submissions by MR BEER ......................142 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 151