1 Wednesday, 6 July 2022 2 (10.30am) 3 SIR WYN WILLIAMS: Good morning, everyone. By the reaction 4 of one or two people so far in the distance that I can 5 hardly see them, I guess you can hear me. Is that 6 correct? Good. Thank you very much. 7 We're going to embark today on the first of two 8 days of hearings, dealing with various compensation 9 issues. 10 There's been some misreporting about the extent of 11 what's going on in the next two days. So can I be clear 12 that there are two days devoted to discussions about 13 compensation issues, and I use the word discussions, 14 because essentially what we're going to have are oral 15 submissions from lawyers about those issues. We won't 16 be hearing oral evidence. 17 With that introduction, I should just also explain 18 why the two days are split apart. As you'd imagine, to 19 get so many lawyers into the same room at the same time 20 is not an easy business. So to facilitate all the 21 lawyers who needed to be here over these hearings 22 I agreed that we would schedule them on a day when their 23 advocate of choice could come to present their 24 submissions, so that's why we're having a hearing this 25 week and a hearing next week. The short delay between 1 1 the hearings won't impede the Inquiry's work in any way. 2 With that introduction, I'm about to hand over to 3 Mr Beer QC who will open the proceedings. 4 I do have one announcement. I was told in no 5 uncertain terms that I should not make any cricketing 6 analogies. In fact, I can't avoid it. Because this 7 evening there is a cricket match starting at the Oval 8 and that may begin in terms of its preparation at around 9 about 3.30 to 4 o'clock. I am hopeful -- I am not 10 saying I am confident -- I am hopeful that by that time 11 the submissions will be more or less complete. But if 12 they are not, we will have to compete with various 13 things going on around the cricket ground. Now, I'm 14 sorry I had to raise the word cricket but I do not think 15 I can be criticised for so doing in all the 16 circumstances. 17 Mr Beer? 18 Submission by MR BEER 19 MR BEER: Thanks very much, sir. As you said, this is the 20 hearing of submissions by all participants on the issues 21 arising from the payment or non-payment of compensation 22 to subpostmasters at their families. 23 I appear as counsel along with Mr Blake today. 24 You will hear oral submissions later today in accordance 25 with the timetable that you have published from 2 1 Ms Gallafent QC on behalf of Post Office Ltd, from 2 Mr Mertens on behalf of UK Government Investments and 3 from Mr Stein QC on behalf of those core participants 4 represented by Howe & Co solicitors. 5 Your terms of reference, sir, require you, amongst 6 other things, to assess whether the commitments made by 7 Post Office Ltd within the mediation settlement, 8 including the Historical Shortfall Scheme, have been 9 properly delivered. The reference there to the 10 mediation settlement is a reference to the settlement 11 deed of 10 December 2019. 12 You had originally planned to address this issue 13 in phase 5 of your Inquiry, which is concerned with, 14 amongst other things, redress, access to justice, the 15 complaint review and mediation scheme, responding to the 16 scandal and compensation schemes. 17 In our concluded list of issues, we had isolated 18 the following issues in particular for consideration 19 within phase 5 of the Inquiry: issue 182, to what 20 extent, if at all, has Post Office Ltd properly 21 delivered upon the commitments which it made in the 22 mediation settlement to make improvements in its 23 relationships with subpostmasters and to bring finality 24 to all outstanding issues in respect of historic 25 shortfalls via the Historic Shortfall Scheme. 3 1 183, to what extent, if at all, has the creation 2 and implementation of the Historic Shortfall Scheme and 3 the interim compensation scheme provided an adequate 4 means for affected subpostmasters, managers, and 5 assistants to obtain financial redress for wrongs which 6 they have suffered. 7 However, phase 5 of the Inquiry is presently 8 scheduled to occur in February and March of next year. 9 In the course of your human impact hearings in London 10 between 14 and 25 February, in Cardiff on 1 and 2 March, 11 in Leeds on 9 and 10 March, in Glasgow on 11 and 12 May, 12 and in Belfast on 18, 19 May, you heard from a number of 13 subpostmasters and members of their families about the 14 devastating financial consequences that the operation of 15 the Horizon IT system had and is having on them, the 16 financial consequences that civil proceedings brought 17 against them by the Post Office had and is having on 18 them, and the financial consequences that wrongful 19 conviction for criminal offences (including in some 20 cases resulting in imprisonment) had and is having on 21 them. This included significant accounts of penury, 22 precarious financial arrangements, bankruptcies, debt 23 management plans, loss of credit ratings, loans for 24 significant sums of money, and second mortgages, many of 25 which continue to this day. 4 1 The evidence also touched upon the operation, 2 effectiveness and speed of past and present compensation 3 schemes offered by the Post Office. 4 In the light of that evidence, you decided that 5 you ought not to wait until early spring of next year to 6 hear the evidence about past and present compensation 7 schemes. As you put it in a public announcement, some 8 of these issues, "needed to be addressed sooner rather 9 than later". So accordingly, on 9 May, you announced 10 that you would be conducting these hearings and 11 thereafter gave directions for the making of written 12 submissions and a timetable for delivering oral 13 submissions from the recognised legal representatives of 14 core participants. 15 In terms of the factual background, although you, 16 sir, know the steps in the long and tortuous chronology 17 which brings us to this point in mid-2022, addressing 18 issues about the payment of compensation, to wronged 19 subpostmasters, there may be those listening or watching 20 the proceedings that do not. Therefore with your 21 permission I should like to spend a little time 22 detailing some of the background which brings us to that 23 point today. 24 For present purposes it is sufficient to begin 25 with the litigation that commenced in 2017 between 5 1 Mr Alan Bates and 554 other claimants against Post 2 Office Ltd, which is known as the group litigation. 3 That is because it proceeded under a group litigation or 4 a GLO. 5 In this litigation the claimants brought claims 6 for compensation for alleged losses consequent on 7 breaches of contract and other wrongful acts arising out 8 of decisions made by the Post Office in reliance upon 9 information generated by the Horizon IT system. 10 Those proceedings were brought to an end by a deed 11 of settlement dated 10 December 2019. During the course 12 of the litigation the managing judge handed down six 13 judgments, two of those judgments, the common issues 14 judgment and the Horizon issues judgment, were it is 15 reasonable to suppose critical to the decision made by 16 the Post Office subsequently to offer terms of 17 settlement of the litigation. 18 The deed of settlement contains terms that are 19 relevant to the issues that arise today, including by 20 clause 2.1 the Post Office agreed to make settlement 21 payments are they as called which in aggregate amounted 22 to £57.75 million. Of that sum £15 million was 23 earmarked for the legal costs of the solicitors and 24 barristers who acted for the claimants in the group 25 litigation, 42 million was paid over by way of damages, 6 1 litigation funding, ATE costs and other costs or other 2 relief claimed in the action. That was called the 3 settlement payment. 4 By clause 3 it was provided that none of the terms 5 of the Settlement Deed were to be construed as an 6 admission of liability on the part of the Post Office in 7 respect of any of the various claims made by the 8 claimants which were the subject of the litigation. 9 Clause 4.1 provided that the terms of the 10 settlement set out in the deed were to be in full and 11 final settlement of all claims made by the claimants, 12 save for the claims brought for malicious prosecution 13 which were defined as being brought by "convicted 14 claimants". 15 Clause 9.4 and schedule 6 of the deed laid the 16 foundation for the establishment of what is now known as 17 the Historical Shortfall Scheme or the HSS. 18 Approximately £10.5 million of the £42 million set 19 aside as the settlement payment were shared between the 20 GLO claimants as compensation for the losses which they 21 claimed in the litigation, a very substantial proportion 22 of the settlement payment was therefore swallowed up in 23 litigation funding and other costs. 24 Accordingly, most if not all of the claimants 25 received a sum by way of compensation which was 7 1 substantially less than the alleged losses which they 2 had claimed in the group litigation. 3 Pursuant to the deed the Historical Shortfall 4 Scheme was established in 2020. It is a remediation 5 scheme. Under its terms none of the claimants who had 6 been party to the Group litigation were eligible to seek 7 compensation under the scheme. The HSS was and is 8 intended to benefit all of those subpostmasters who 9 suffered loss as a consequence of Horizon but who were 10 not a part to the group litigation. 11 The scheme secondly identifies a number of 12 principles upon which compensation under it must be 13 assessed. 14 Thirdly, the scheme includes detailed provisions, 15 dispute resolution procedures for resolving how claims 16 should be determined in the event that an applicant and 17 the Post Office cannot agree upon the compensation which 18 should be awarded. 19 The scheme finally closed on 20 November 2020. 20 If you turn up in your bundle sir, tab 17, there 21 will be an update to these in a moment, you should see 22 figures published on 7 June 2020. 23 SIR WYN WILLIAMS: Sorry, Mr Beer. Is that occasional 24 banging disturbing you? Because if so I will try to get 25 something done about it. 8 1 MR BEER: Moderately. 2 SIR WYN WILLIAMS: Somebody is going to try and suggest that 3 they should bang when we're having a break. 4 MR BEER: Thank you very much. I see somebody leaving from 5 the back. Very kind of you, sir. 6 You will see that at the foot of page 302 as at 7 7 June there were of the applications which had been 8 made 2,368 assessed to be eligible, 155 assessed to be 9 non-eligible. Which means that by 7 June if one adds 10 those two figures together, some 2,523 applications had 11 been made, so the scheme closed 27 November 2020, by 12 June 2022, 2,523 applications made. 13 On 21 July 2021 the Secretary of State for 14 Business, Energy, and Industrial Strategy announced that 15 funds would be made available to the Post Office so that 16 interim payments of compensation of up to £100,000 per 17 person could be paid to subpostmasters whose convictions 18 for dishonesty offences had been quashed. That 19 announcement was made in a statement in Parliament. 20 The announcement was followed up by a press 21 release the next day, which we have in your tab 8A of 22 the bundle. You will see it is dated 22 July 2021 and 23 is a press release on behalf of BEIS. It is the second 24 page of that, page 217, to which I should draw attention 25 under the heading "Additional information", and it 9 1 reads: 2 "For final compensation the Post Office is 3 proposing alternative dispute resolution arrangements 4 which aim to facilitate the swift quantification and 5 resolution of compensation claims. However, interim 6 payments announced today do not prevent people from 7 bringing civil claims through the courts." 8 So the HSS had been set up. Then in July 2021 an 9 announcement of the payment of up to £100,000 per person 10 for each postmaster by way of interim payments, and 11 a proposal by the Post Office it was said to set up 12 alternative dispute resolution arrangements for 13 compensation to be paid finally to those whose 14 convictions had been overturned. 15 As we understand it, in fact, no formal 16 remediation scheme was constituted thereafter, and 17 alternative dispute resolution has not occurred in 18 relation to those whose convictions have been quashed. 19 In practice, those whose convictions have been quashed 20 have applied to the Post Office for an interim payment 21 and, in the main, the Post Office has made such a 22 payment within a very short time, i.e., promptly, often 23 within weeks of the application being made. And the 24 information that the Inquiry has received suggests that 25 that interim scheme has operated well and effectively. 10 1 There remains the issue of final appointments for 2 those whose convictions were quashed. On 3 14 December 2021, the Minister, Paul Scully MP, made 4 a further statement which is relevant to the payment of 5 compensation to subpostmasters whose convictions had by 6 then been quashed or would after then be quashed, and we 7 have that behind tab 8B, the statement of 14 8 December 2021. 9 The relevant parts are the last two paragraphs on 10 page 219 where the Minister said: 11 "I am pleased to confirm that today the Government 12 is making funding available to facilitate Post Office to 13 make final compensation payments to postmasters whose 14 convictions have been overturned. We are working with 15 Post Office to finalise the arrangements that will 16 enable the final settlement negotiations to begin as 17 soon as possible. By providing this funding, Government 18 is helping Post Office deliver the fair compensation 19 postmasters deserve. With the Secretary of State's 20 status as sole shareholder in the Post Office my 21 department continues to engage actively with Post Office 22 Ltd on this and will maintain strong oversight of the 23 compensation process." 24 On 21 March 2022 you requested core participants 25 to respond to the Inquiry with written submissions on 11 1 the availability of compensation for three discrete 2 subcategories of postmasters. I'm not going to outline 3 them as matters have moved on more broadly since then. 4 The next day, 22 March 2022, the Minister, Paul 5 Scully MP, made a further announcement in Parliament 6 which we have in our tab 8C, the relevant part of which 7 is in the second paragraph, where he said: 8 "The Government has long considered unfair the 9 unequal treatment received by members of the GLO and 10 their non-GLO peers, I am therefore pleased to announce 11 that the Chancellor will make additional funding 12 available to give those in the GLO group compensation 13 similar to that which is available to their non-GLO 14 peers." 15 You received submissions in response to your 16 request from the core participants represented by 17 Howe & Co and Hudgell solicitors and on 9 May 2022 you 18 issued a preliminary view in relation to compensation 19 schemes for subpostmasters. 20 On 30 June 20202, so seven days ago, the Minister, 21 Mr Scully, made a further statement to the House and you 22 have that behind your tab 8D. I'm not going to read it 23 all out. The main elements of it were, firstly, in 24 relation to the GLO claimants. He said, firstly, that 25 the Government intended to make interim payments of 12 1 compensation to eligible members of the GLO cohort who 2 were not already covered by another scheme totalling 3 £19.5 million. 4 Secondly, he said that the Government was working 5 towards delivering a final compensation scheme for the 6 GLO claimants and would be appointing Freeths Solicitors 7 to assess the data and methodology that they had 8 developed in relation to the 2019 settlement. 9 Third, that members of the GLO group would be able 10 also to claim reasonable legal fees as part of their 11 participation in the final compensation scheme. 12 Then, secondly, in relation to those who 13 convictions had been quashed, the Minister announced 14 that a number of subpostmasters had agreed to refer the 15 issues of non-pecuniary damages to a process of early 16 neutral evaluation to be conducted by Lord Dyson. 17 So your request to core participants invited 18 submissions on 12 issues and they are set out in tab 2 19 of your bundle, which I would invite you to turn up. 20 They are broadly divided into three categories: issues 21 arising from the existing Historical Shortfall Scheme; 22 issues concerning the compensation to be paid to those 23 subpostmasters whose convictions have been quashed; and 24 issues relating to the payment of fair compensation to 25 the Group litigation claimants. 13 1 I would propose to identify by reference to those 2 three categories the issues that we have identified as 3 your counsel team as arising in the light of all of the 4 written material that has been lodged by the core 5 participants. I should state in that regard that we as 6 your counsel team will not be making positive 7 submissions as to outcome on any of those issues. 8 So category 1 or category A, issues arising under 9 the Historical Shortfall Scheme. You have in front of 10 you, sir, the core material in relation to the operation 11 by design of the Historical Shortfall Scheme. So in tab 12 14 you have the Terms of Reference of the HSS; in tab 15 13 you have the Terms of Reference for the Independent 14 Advisory Panel to the Historical Shortfall Scheme; in 15 tab 16 you have the eligibility criteria for the 16 Historical Shortfall Scheme; in tab 17 you have 17 a document called "Consequential loss principles and 18 guidance for the Historical Shortfall Scheme"; in tab 18 19 you have a questions and answers document published by 20 the Post Office as to the operation of the Historical 21 Shortfall Scheme. 22 Then going back to tab 7A, please, you have two 23 versions of application forms under the Historical 24 Shortfall Scheme, and so from page 188 to 194 you have 25 the version that was extant from May 2020, and then from 14 1 195 to 202 you have the version that was extant from 2 June 2020. So that's the underlying material. 3 It seems to us that the four issues which you had 4 previously identified in your document asking for 5 submissions remain fit for consideration by you along 6 with an additional issue identified by core 7 participants. I will describe the four issues 8 previously identified and fill them out a little by 9 reference to the submissions and then turn to the 10 additional issue, and do the same. 11 Issue 1 is the heads of loss which are recoverable 12 under the HSS and the reasons for any exclusions. That 13 on its face raises two separate issues, the heads of 14 recoverable loss and reasons for exclusions from the 15 scheme. 16 Dealing with heads of recoverable loss first, you 17 will have seen that despite its name which suggests that 18 the focus of attention is shortfalls, the HSS in fact 19 allows in principle the payment by the Post Office of 20 much wider classes of compensation than the simple 21 repayment of sums of money wrongfully taken by the Post 22 Office from subpostmasters, or wrongly paid by 23 subpostmasters to the Post Office, or sums of money 24 wrongly treated by the Post Office as owing by 25 subpostmasters. That it includes, in principle, the 15 1 payment of much wider classes of compensation is not 2 clear from the Terms of Reference of the scheme at tab 3 14, which only refer to shortfalls, or the eligibility 4 criteria at tab 16, which again only refer to 5 shortfalls. 6 However, it is clear from the Terms of Reference 7 of the HSS Independent Advisory Panel at tab 15 that the 8 scheme does permit the payment of consequential losses, 9 and if I could invite you to turn that up please, tab 15 10 at page 285. 11 If one looks at paragraph 4A of the Terms of 12 Reference for the Independent Advisory Panel 13 consequential losses are defined to mean financial or 14 non-financial losses that are not shortfall losses, 15 shortfall losses being defined by paragraph 4D. 16 Then perhaps more significantly, it's also clear 17 from the consequential loss principles and guidance at 18 tab 17 that such consequential losses are in principle 19 recoverable. One can see that from paragraph 1.3 but 20 more significantly, from paragraphs 5.1 to 5.10 between 21 pages 291 to 295, one can just scan the headings there 22 which include claims for loss of earnings, loss of 23 profit, loss of property, loss of opportunity or loss of 24 chance, penalties, and increased costs of financing, 25 bankruptcy and insolvency, legal and professional fees, 16 1 stigma and damage to reputation, and personal injury or 2 harassment. That a wide range, a very broad spectrum of 3 losses are in principle recoverable, providing that they 4 have been caused as a direct consequence of the Horizon 5 shortfall loss that is claimed. 6 So it seems from those documents that the issues 7 which may arise are not ones of principle or theory, or 8 drafting in relation to the terms of the HSS, but at 9 a more practical level, as to whether the operation of 10 the scheme on the ground is such that subpostmasters are 11 put in the best position possible to recover such 12 consequential losses under the HSS. 13 Aside from the provision of legal assistance, to 14 make and pursue claims under the HSS, an issue that 15 I will address in a moment, the other issues which 16 appear to arise include the following: both Howe & Co 17 and Hudgell Solicitors who represent the vast majority 18 of subpostmasters in this Inquiry, state in their 19 submissions that in their experience when applications 20 have been made under the HSS by subpostmasters 21 themselves, heads of loss, especially these 22 consequential losses, have been routinely missed from 23 the applications, often meaning that significant sums of 24 money to which the subpostmasters are in principle 25 entitled have been left out. 17 1 If that is right, you may wish to consider what it 2 is about the way in which the scheme is operated that 3 has caused such a result. 4 SIR WYN WILLIAMS: When you say it is missed out, if that's 5 the phrase you used, you mean it was never included in 6 the application form? 7 MR BEER: Yes. 8 SIR WYN WILLIAMS: Fine. 9 MR BEER: One point that is made, firstly, is whether the 10 application form itself was designed in a way which 11 actively encouraged subpostmasters to pursue these 12 claims for consequential losses or whether, like the 13 Terms of Reference and the eligibility criteria, the 14 focus is too on shortfalls. 15 The Post Office say in their submissions at tab 7 16 at page 172 to 173, it's the last line on 172: 17 "The HSS application form accordingly invited 18 postmasters to identify any such shortfall that the 19 applicant has repaid or is regarded by Post Office as 20 still owing [shortfall losses] as well as 'any other 21 losses claimed by Horizon shortfall', namely 22 consequential losses", and a cross-reference in 23 footnote 7 is given to the consequential loss principles 24 and guidance document. 25 It is said, continuing, consequential loss is 18 1 defined to mean financial or non-financial loss that is 2 not a shortfall loss, which we have seen is obviously 3 correct by looking at the consequential loss and 4 guidance document -- sorry, consequential loss 5 principles and guidance document. 6 If we turn up the application form, which is the 7 next tab, using the May 2020 version, there is no 8 material difference between the May and the June version 9 in this regard, you will see from page 190 a series of 10 boxes for an applicant to complete, and on the second 11 page, on page 191, under the heading "Shortfalls", the 12 applicant is presented with the following statement: 13 "For each shortfall in respect of which you are 14 applying please specify", and then there are six 15 subparagraphs setting out the information that is to be 16 given in relation to the shortfall. 17 Then question 19 -- sorry, question 20, also 18 relates to shortfalls. Question 21 is about whether 19 there had been an audit into the relevant branch. 20 Question 22 concerns whether there was any other 21 investigation into the shortfall. Question 23 is 22 whether action was taken by the Post Office as a result 23 of the alleged shortfall. Then question 24 does ask the 24 broad question: 25 "Have you experienced any other losses that are 19 1 directly related to the alleged shortfalls in respect of 2 which you would like to claim. If yes, please provide 3 the following details for each alleged loss: the nature 4 of the alleged loss, the dates of the alleged loss, how 5 the loss arose as a direct result of the alleged 6 shortfall, and the value/size of the loss." 7 Then there is a little box for a person to include 8 that information. 9 You may wish to consider whether that single 10 question, not mentioning consequential losses, not 11 mentioning the consequential loss principles and 12 guidance, has led to the issue that both Howe & Co and 13 Hudgell Solicitors have raised. And, if so, what is to 14 be done about it? 15 The second issue is whether the facility within 16 the scheme for a payment to a subpostmaster in the 17 interests of fairness, even though they cannot discharge 18 the burden of proving on the balance of probabilities 19 that they have suffered a loss, is in fact operating in 20 practice as a sufficient mechanism to ensure that 21 subpostmasters are properly compensated. 22 We can see the operation of that facility, the 23 fairness principle, written into the scheme in a number 24 of places. Can I invite you to turn up tab 17 please, 25 which is the consequential loss principles and guidance 20 1 document. 2 Under paragraph 3.1 at the foot of page 289 under 3 the heading "Key principles", paragraph 3.1 is headed 4 "Burden of proof in relation to consequential losses", 5 and reads: 6 "3.1.1 The burden of proof is on the postmaster 7 to provide sufficient evidence in support of their claim 8 to demonstrate that on the balance of probabilities, 9 i.e. a greater than 50 per cent likelihood, (a) such 10 losses have been suffered, and (b) as a consequence of 11 a Horizon shortfall as such are found in the common 12 issues judgment or the Horizon issues judgment. This 13 means evidencing the fact that a loss was incurred, the 14 amount of that loss, and that the cause of the loss was 15 due to Horizon shortfall. 16 "3.1.2 where the subpostmaster is unable to 17 satisfy the burden of proof in relation to their claim, 18 their claim may nonetheless be accepted in whole or in 19 part if the scheme considers it to be fair in all the 20 circumstances." 21 Then under 3.2.3, which is under a cross heading 22 of "Evidence", the guidance document states: 23 "The need to provide evidence is particularly 24 important where a postmaster's claim relates to matters 25 which are known only to the postmaster. While the 21 1 burden is on postmasters to provide sufficient evidence 2 to demonstrate their claim for consequential loss, the 3 scheme will also consider any relevant evidence Post 4 Office holds when assessing the claim. Any key 5 supporting documentation relied upon will be shared with 6 postmasters when they receive the outcome of their 7 claims to enable them to consider whether they wish to 8 accept the offers made to them." 9 I will come back to that in a moment. 10 The second place in which we can see the fairness 11 principle described is in tab 15, of your bundle which 12 is the terms of reference for the Independent Advisory 13 Panel to the HSS. It is at page 287 and clause 30, this 14 reads: 15 "In formulating its recommended offer the Panel 16 may recommend the making of an offer to the postmaster 17 if, guided by broad considerations of fairness, the 18 Panel considers that doing so would produce a fair 19 result in all the circumstances of the particular case. 20 For the avoidance of doubt, in doing so the Panel's 21 discretion will not be confined solely to the specific 22 heads of consequential loss claimed by the postmaster 23 but will take into account at any facts and matters 24 which the Panel considers will produce a fair result on 25 the facts of a particular case." 22 1 So in those two places one can see that the scheme 2 and, in particular, the Panel are to be guided by broad 3 considerations of fairness, that the Panel's discretion 4 is not confined solely to heads of loss claimed, and 5 that the Panel may take into account any facts and 6 matters which it considers will produce a fair result in 7 the circumstances of a particular case. 8 In terms of the operation of the scheme in 9 practice, there is no information that we have seen as 10 the Inquiry, no data in particular, and no explanation 11 as to the approach that's been taken, as to the 12 frequency with which this facility has been used, i.e. 13 the fairness principle applied even though 14 a subpostmaster on evidence grounds has fallen short of 15 proving a loss on the balance of probabilities, nor 16 whether there are any examples of the initiative in fact 17 having come from the Panel to award a sum outside 18 a class of loss, a consequential loss claimed by the 19 subpostmaster, i.e. where the Panel has taken the 20 initiative and suggested to a subpostmaster it appears 21 on the facts that you have presented that there is 22 a category of loss or there are broader categories of 23 loss that you ought to have claimed. You should do so. 24 Or examples of where the Panel has made an award on the 25 basis of a broad consideration of what is fair, rather 23 1 than the application of the legal principles of 2 remoteness, causation, mitigation, and quantum. 3 So the question which arises is whether this 4 fairness facility is operating in practice in 5 circumstances where for the reasons described by the 6 subpostmasters it's very likely that a high number of 7 them have not retained records from a decade or two 8 decades ago that are necessary to prove to the relevant 9 standard the losses that they have suffered. That's an 10 issue that you may wish to explore in particular with 11 the Post Office. 12 Turning then to the reasons for exclusion. The 13 reasons for exclusion of certain classes of applicant 14 have been broadly explained in all of the submissions of 15 the core participants and I'm not going to rehearse 16 them. But an outstanding issue is the exclusion of 17 applicants who did not apply within the relatively short 18 window during which the scheme was open for 19 applications, which relatively short window was at the 20 height of the pandemic, and the approach that the Post 21 Office has taken after that closure of the window to 22 applications made out of time. 23 You will see in tab 7, at page 176, at paragraph 24 23, this is the Post Office submissions, the Post Office 25 say: 24 1 "The scheme was initially open to applications 2 from 1 May to 14 August 2020. This deadline was 3 subsequently extended by 15 weeks until 27 November 2020 4 in order to enable further applicants to apply following 5 an amendment to the scheme's eligibility criteria, as 6 well as to accommodate difficulties in making 7 applications due to the Covid 19 pandemic." 8 Then this: 9 "Since closure of the scheme to applications, Post 10 Office has received in excess of 170 applications to 11 date, all of which Post Office is actively considering 12 how best to address", so you may wish to consider the 13 approach that the Post Office is taking to applications 14 made out of time and whether that statement, which is 15 "We're still thinking about it", is adequate in the 16 circumstances. 17 Issue 2, sir, under this first category is whether 18 there has been delay and, if so, the causes of delay in 19 processing applications under the HSS. As we said, 20 after the 15-week extension period to 27 November 2020 21 the scheme was closed. 22 In terms of the number of applications made and 23 the awards made, if we can go back to tab 19, please, 24 which we looked at earlier, this time look at the second 25 page, page 303. Again, these are figures to 7 June this 25 1 year, so these are figures 19 months after the closure 2 of the scheme, it shows that settlement offers of the 3 eligible claims have been made in 1,483 cases, i.e. 4 63 per cent, and payments have been made in 1,135 cases, 5 i.e. 48 per cent, so less than half. 6 Last night the Post Office filed some additional 7 submissions to update these figures amongst other 8 things. The 63 per cent has gone up to 65 per cent, 9 i.e. the number of eligible claims in which offers made, 10 and payments have been made in -- sorry, that's 67 per 11 cent, not 65. Payments have been made in 52 per cent of 12 eligible cases as opposed to the previous figure of 13 48 per cent. So still at around the half figure, and 14 we're 19 months after the closure of the scheme. 15 Now, those numbers, those figures, obscure perhaps 16 the human stories that sit behind them. You may recall 17 Mr Baljit Sethi who I asked questions of in the human 18 impact hearings. He told you, sir, that although he had 19 received standard form acknowledgements from the Post 20 Office after he had made the claim, he waited for just 21 under two years before he received any substantive 22 reply. That was a couple of days before he gave 23 evidence to you. 24 There were other accounts of delays in any contact 25 at all from the Post Office in the HSS. So, sir, the 26 1 issue that may arise for your consideration is what is 2 the cause of the delay that 19 months on only 50 per 3 cent of eligible claimants have had payments made to 4 them. 5 Sir, issue 3 is the provision which has been made 6 for applicants to obtain independent legal advice in 7 respect of their claims under the HSS and whether it has 8 been adequate. Sir, you know that the scheme makes 9 provision for the payment of a figure of either £400 or 10 £1,200 in respect of legal fees. That figure is 11 dependent on whether the Post Office offers to pay the 12 claim in full, in which case the former figure is paid, 13 or whether it does not, in which case the latter figure 14 may be paid. 15 The scheme makes no provision for any other forms 16 of assistance, for example, fees for medical evidence to 17 be obtained to support a claim for consequential losses, 18 or forensic accountancy services, again, to prove on the 19 balance of probabilities that losses which are 20 consequential on a shortfall have been suffered. 21 You may wish to consider whether this approach is 22 adequate in circumstances where, firstly, the nature of 23 the consequential losses claimed are in many instances 24 likely to be complex; where the scheme, secondly, 25 requires losses to be evidenced by a range of 27 1 contemporaneous and other documentary material, material 2 which a lay person may not be used to collecting, 3 organizing and presenting; where, thirdly, the scheme 4 self evidently applies legal concepts such as 5 remoteness, causation, mitigation, and quantum that may 6 be unfamiliar to people; where, fourthly, further 7 difficult issues may arise in claims that arise 8 following bankruptcy, where the trustee-in-bankruptcy 9 must be involved and the consequential losses that are 10 properly recoverable may be complex; where, fifthly, tax 11 advice it's likely to be necessary in relation to 12 different elements of payments made under the scheme. 13 No provision is made for the payment of legal 14 costs when the dispute resolution procedure within the 15 scheme is triggered, including where a good faith 16 meeting is required or if the case goes to mediation. 17 The point has been made by the subpostmasters that by 18 contrast the Post Office has appointed a law firm to 19 operate the scheme on its behalf and to prepare the 20 analysis which is then passed to the Independent 21 Advisory Panel, i.e. which appears to form the basis of 22 the material on which the Independent Advisory Panel 23 makes its decisions. 24 In its submissions of last night, the Post Office 25 stated that it has contributed to the legal costs of 45 28 1 applicants. If that is correct that means that it has 2 made a contribution in 45 out of 1,242 cases in which 3 the payments have been made, a tiny proportion. It 4 follows that no appointments have been made in some 5 1,100 or so of the cases -- sorry, 1,200 of the cases in 6 which compensation payments have been made. 7 In the same submissions the Post Office says that 8 it's currently considering whether contributions to 9 legal fees or other professional costs can be made 10 available and that it will update the inquiry in due 11 course. 12 You may wish to consider whether that is 13 satisfactory in circumstances where the scheme has been 14 operating for 2 years and according to the Post Office 15 figures, half of the eligible applicants have already 16 been paid a sum of money and only 45 of them have had 17 their legal fees paid. 18 Issue 4, is the provision which has been made for 19 interim payments pending completion of the procedures 20 under the HSS. You will have seen that Hudgell & Co 21 suggest that the Post Office has refused to make interim 22 payments under the HSS in respect of losses which are 23 agreed whilst other species of loss are investigated, 24 and that Howe & Co have suggested that the making of an 25 interim payment under the scheme, such as the HSS ought 29 1 not to be seen as controversial or novel, but instead 2 the norm. 3 You may wish to consider whether this approach of 4 generally not making interim payments under the HSS has 5 placed pressure on subpostmasters to accept early 6 payments at undervalues or instead hold out for the 7 possibility of a higher payment. 8 If we go to tab 7 again, the Post Office 9 submissions, at page 182, at the foot 182 and on to 183, 10 it is said, as noted in some previous submissions, 11 payments have been made on an interim basis prior to 12 a final offer of compensation, so those applicants to 13 the HSS whom Post Office understood to be in difficult 14 circumstances, who could be irredeemably impacted by the 15 time necessary fully to assess their claim and make 16 a fair offer. To date Post Office has made payments on 17 an interim basis to 25 applicants, including of 18 circumstances of severe financial hardship, terminal 19 illness, risk of personal hardship and old age. 20 So interim payments made in 25 cases, and you will 21 recall that as of 7 June 1,482 offers of settlement have 22 been made, so interim payments in about 1.6/1.7 per cent 23 of cases. There appears to be a difference of desire or 24 of approach here. You may wish to consider whether 25 interim payments ought to be made irrespective of 30 1 showing for example, a terminal illness or old age, but 2 instead where some losses have been agreed and payment 3 of that sum should be effected, whilst argument 4 continues over other losses. 5 Sir, those are the four issues that arise under 6 the first category. 7 Howe & Co have raised an additional issue over the 8 operation of paragraph 3.2 of the consequential loss and 9 principles guidance. That is tab 17 at page 290. 10 I mentioned it to you earlier. Tab 17, page 290, and 11 it's 3.2.3 which I read out earlier. The point made on 12 behalf of Howe & Co is that subpostmasters are provided 13 under this scheme with the evidence that the Post Office 14 possesses at the stage and only at the stage when "they 15 received the outcome of their claim", i.e. they received 16 evidence from the Post Office after they had formulated 17 a claim and after receipt of an offer. 18 So the burden is on the postmaster to prove his or 19 her claim without the material that the Post Office 20 itself possesses. It's suggested by Howe & Co that such 21 material as to the Post Office possesses as is relevant 22 to the claim that is made, ought to be disclosed at the 23 outset or at least in the course of the process and not 24 at its end. 25 Can I turn more briefly to consider categories 2 31 1 and 3 or B and C. Category 2, back to tab 2, sir, final 2 compensation for subpostmasters with quashed 3 convictions. Issue 5 was the principles which are being 4 applied to the calculation of final compensation 5 schemes -- sorry, final compensation payments; issue 6, 6 the mechanism which by which final compensation payments 7 are being calculated; issue 7, the provision, if any, 8 which is made for applicants to obtain independent legal 9 advise in relation to their claims; issue 8, the 10 procedures which are being adopted to resolve the 11 disputes about the value of compensation payments. 12 These are all about subpostmasters who have had their 13 convictions quashed. 14 These issues do not address the question of 15 interim payments and that's deliberately so. That's 16 because, as I mentioned already, the payment of sums of 17 money to subpostmasters in this category of claim appear 18 on the information received by the Inquiry largely to 19 have worked well, with such payments generally being 20 made promptly. 21 In their May submissions the Post Office noted 22 that of the 73 men and women whose convictions have been 23 quashed, 69 had applied for interim payments and such 24 payments had been made by the Post Office in 66 of them. 25 The questions that we have instead raised relate to 32 1 final payments. That's what questions five to eight 2 relate to. 3 The collective answer to all of those questions is 4 that there is no formal mechanism or scheme to value 5 claims or to administer claims. Instead, the claims are 6 being pursued through pre-action correspondence in the 7 hope that they will be resolved without recourse to yet 8 further litigation. 9 It's been said in the submissions both by BEIS and 10 the Post Office that the absence of a formal mechanism 11 or scheme was at the express request of the 12 subpostmasters themselves. Certainly in the submissions 13 of Hudgell & Co there is no request for such a scheme to 14 be set up. Instead, the Hudgell & Co submissions to you 15 focus on the merits of their clients' claims for certain 16 losses, a matter which I anticipate you will not wish to 17 address, the individual substantive merits of the claims 18 made. 19 However, there has been a further development in 20 that a number of subpostmasters represented by 21 Hudgell & Co have agreed that the issue of non-pecuniary 22 losses, which it is said was causing a particularly 23 difficulty to assess and to agree, should be referred to 24 early neutral evaluation, a process which by a valuer 25 who is respected expresses a non-binding conclusion, 33 1 non-binding view, on the likely outcome were the matter 2 before him or her to proceed to court, and it is has 3 been announced by the Minister, Mr Scully, and in the 4 BEIS submissions of last night that Lord Dyson has 5 agreed to act as the evaluator. 6 So rather than looking individually at issues -- 7 SIR WYN WILLIAMS: Sorry, Mr Beer. Did you say BEIS 8 submissions of last night? 9 MR BEER: No, I meant Post Office of submissions of last 10 night. 11 SIR WYN WILLIAMS: I thought you were in advance of me 12 that's all. 13 MR BEER: No, the Post Office submissions of 8.59pm last 14 night. 15 SIR WYN WILLIAMS: I know we all work late but I was 16 thinking when could they have come. 17 MR BEER: Yes. So the issue rather than individually 18 looking at points 5, 6, 7 and 8 that you may wish to 19 explore, in particular with counsel for the Hudgell & Co 20 core participants, who represent it seems 62 of these 21 claimants, i.e. the vast majority of them, is whether 22 they are content for the current approach to continue. 23 That's a polite way of saying whether they, in 24 fact, ask you to butt out. Whether they wish you to 25 stand back and not interfere in arrangements that are 34 1 proceeding satisfactorily. 2 Can I turn then to category 3, fair compensation 3 for the group litigation claimants. This raises issues 4 9 to 12 on your list, sir. These issues have been 5 overtaken by events. In particular, the announcement by 6 the Minister seven days ago about the payments by way of 7 interim payments to the GLO claimants with a fund of 8 £19.5 million set aside for that purpose and his 9 announcement that a new scheme for the payment of final 10 compensation was being developed. There are no details 11 yet available as to that scheme for the payment of final 12 compensation to the Group litigation claimants. 13 It seems to us that the issues which may arise 14 include whether the voice of all of the GLO claimants is 15 being heard and fairly represented in the development of 16 a scheme to administer payments, both interim and final, 17 for the group litigation claimants. 18 You will have seen that the Minister announced 19 seven days ago that the Government had engaged Freeths 20 Solicitors in the way that I have described and they 21 were of course the firm that represented the 555 GLO 22 claimants in the group litigation. It's fair to say 23 that the papers that the inquiry has received and some 24 of the evidence that it has seen, raise some issues as 25 to the extent to which all of the 555 GLO claimants knew 35 1 and understood in the course of and at the conclusion of 2 the litigation the extent to which any sums paid by the 3 Post Office would be lost in legal and other 4 professional fees, and issues as to the extent to which 5 their interests were represented in a structured and 6 transparent way by the JFSA. 7 The inquiry has not of course been a party to and 8 knows nothing about the negotiations which it seems have 9 taken place between BEIS on the one hand, the JFSA on 10 the other, and Freeths on the third part as to the sums 11 of money to be paid by BEIS, the scheme by which such 12 payments will be made on an interim and on a final 13 basis, or the principles that will apply under that 14 scheme to ensure fair and reasonable compensation for 15 all of the 555 GLO claimants. 16 In that regard, I would end by asking you look at 17 a letter written by Freeths Solicitors, which is in 18 tab 3 at page 21, a letter to the solicitor to the 19 Inquiry. It's the final paragraph about half way 20 through, where Freeths say: 21 "On behalf of individual GLO claimants who choose 22 to instruct us, we are consulting with BEIS and JFSA in 23 order to collaborate on developing a scheme and 24 associated arrangements that work in the interests of 25 those of the GLO claimants who will instruct us, so 36 1 naturally Freeths Solicitors will only be acting in the 2 interests of those of the GLO claimants who instruct 3 us." 4 It is apparent that a number of the GLO claimants 5 are represented in the Inquiry by Howe & Co and so the 6 issue that you may wish to consider with representatives 7 of both BEIS and the Howe & Co core participants is what 8 mechanisms have been put in place to ensure that the 9 arrangements work in the interests of all of the GLO 10 claimants and not those simply represented by Freeths in 11 circumstances where issues have arisen in the past as to 12 the openness, transparency and organisation of decision 13 making in the group litigation itself. 14 In short, this scheme, it is presumed, is designed 15 to put right what went wrong at the conclusion of the 16 Group litigation. It will be unfortunate putting it 17 mildly if something similar was to happen again. 18 SIR WYN WILLIAMS: Can I say now, Mr Beer, so that there is 19 no misunderstanding about what's in my mind, that that 20 sentence that you just focused on "on behalf of 21 individual GLO claimants who chose to instruct us [past 22 tense]. We are consulting with BEIS and JFSA in order 23 to collaborate on developing a scheme and associated 24 arrangements that work in the interests of those of the 25 GLO claimants who will instruct us." 37 1 I'm not quite sure how the past and the present 2 fits together there. 3 MR BEER: Yes, in particular where the -- 4 SIR WYN WILLIAMS: I am not asking you to answer. I am 5 throwing it out so that that puzzle in my mind can be 6 pondered on by those who may know the answer. 7 MR BEER: That's why I focused on that sentence in 8 particular, sir. Because, as I said, putting it mildly, 9 it may cause concerns that the issues that unfolded in 10 December 2019 have the potential to repeat themselves 11 once again. 12 Sir, those are the only points that I raise for 13 your consideration. 14 SIR WYN WILLIAMS: Thank you very much. 15 Ms Gallafent, I think you are next up but I take 16 it we'd all like a morning break so is this a convenient 17 moment to have it? 18 MS GALLAFENT: In your hands, sir. 19 SIR WYN WILLIAMS: All right then, 10 minutes and then we 20 will start again. 21 (11.42 am) 22 (A short break) 23 (11.56 am) 24 SIR WYN WILLIAMS: Before I ask Ms Gallafent to make her 25 submissions, I appreciate that there is a large number 38 1 of people here and when we have our break it's very 2 tempting to have a chat with people. Let me tell you a 3 story about a crusty old judge who used to walk into 4 court dead on the appointed time regardless of who was 5 there. On one occasion I wasn't there and got a rocket. 6 So from now on, if you want to have a chat outside 7 please do but I'm going carry on without you. All 8 right. 9 Ms Gallafent. 10 Submission by MS GALLAFENT 11 MS GALLAFENT: Sir, thank you. I would like to state at the 12 outset that Post Office is grateful for the opportunity 13 to make both written and oral submissions on the issues 14 you identified in your invitation of 10 May as well as 15 oral submissions on the matters set out in your 16 provisional view on compensation issues relating to 17 prosecuted subpostmasters of 9 May of this year. 18 We are conscious that so far as your invitation of 19 10 May is concerned, these hearings are only intended to 20 cover points that you consider should be addressed 21 sooner rather than later and are not intended as 22 a substitute for the full hearing on the issues of 23 financial and other sorts of redress which fall within 24 phase 5 of the Inquiry's work currently scheduled to 25 take place next spring. In these circumstances in 39 1 particular we have not treated today's hearing as the 2 appropriate point for Post Office to make its opening 3 statement generally, which we look forward to making at 4 the beginning of phase 2 in September. 5 So far as the content of our submissions today are 6 concerned could I make three preliminary points. First, 7 in line with the position adopted in our written 8 submissions we will primarily be focusing on the 9 specific questions asked by you rather than other issues 10 which may be raised in due course. 11 Secondly, in line with the indication in your 12 statement of 30 June of this year, we will be taking the 13 opportunity to highlight the aspects of the written 14 submissions made on behalf of other organisations and 15 persons with which we agree or disagree, and seeking to 16 explain the reasons for any disagreement. 17 Thirdly as, sir, we expect you will have 18 anticipated from our own written submissions, we intend 19 to focus on sections of A and B of your invitation and 20 that is questions 1 to 8 and leave section C to the 21 Secretary of State for BEIS to address in due course. 22 Can I start then with section A and Historical 23 Shortfall Scheme. Before I address the particular 24 questions, can I just make clear that we had not 25 ourselves understood or anticipated that the first 40 1 question concerning heads of loss, and which were 2 recoverable or not recoverable, would be read and 3 regarded as covering the rather wider question of the 4 functioning and application of the fairness principle 5 under the scheme and, in particular, the use of the 6 provisions under the Terms of Reference of the 7 Independent Advisory Panel when it comes to its 8 recommendations. We make no criticism in this respect 9 but we emphasise that is why, sir, you haven't to date 10 received data or analysis on the use of that fairness 11 principle. 12 Now, I can confirm that it is used regularly, and 13 we are happy to assist the Inquiry by providing some 14 data and analysis on that issue should it be of 15 assistance. But that is why we haven't done it so far 16 because we hadn't interpreted that issue in the way that 17 Mr Beer has indicated it may be read this morning. 18 Can I move on to then the particular question 19 which is asked about recoverable heads of loss. We're 20 grateful to Mr Beer for introducing in particular the 21 Terms of Reference of the Independent Advisory Panel and 22 the definition of shortfall loss and consequential loss, 23 consequential loss being there defined as financial or 24 non-financial loss that is not a shortfall loss. 25 Mr Beer also took you to, sir, the consequential 41 1 loss principles and guidance and went through at 2 section 5 the non-exhaustive list of the types of loss 3 that can be claimed, assuming they meet the applicable 4 legal tests and noting there they must be linked clearly 5 back to Horizon shortfall. 6 It is suggested by Mr Beer that effectively the 7 question as to what is or is not recoverable by way of 8 a consequential head of loss is pretty much settled, 9 that nothing is ruled out. At the risk of perhaps 10 raising questions that no longer arise can I just 11 address a couple of points that are made in the written 12 submissions of other core participants. 13 The first one is in relation to expert advice, and 14 it is suggested by Howe & Co that the heads of loss 15 under the guidance are deficient in that there is no 16 provision to obtain expert guidance to support or 17 quantify claims under the heads set out in the guidance. 18 We'd make four points in response. This is a point 19 raised in relation to heads of loss. 20 The first is that the guidance itself, and we say 21 rightly, expressly delineates -- sir, for your note 22 that's paragraph 5.8.1, of course, the guidance itself 23 is tab 17, I do not suggest you need to turn it up -- 24 but it delineates between a claim for legal or 25 professional fees incurred in relation to dealing with 42 1 a Horizon shortfall at the time which may be recoverable 2 as loss under the terms of the scheme, and any legal and 3 professional fees incurred by a postmaster in bringing 4 an application to the scheme. We say that simply 5 reflects the position in line with civil proceedings 6 generally, which is that the costs associated with the 7 bringing or making of an application or claim are 8 treated separately to actual losses flowing from 9 a relevant breach of contract or breach of duty that's 10 relied upon on which the claim is founded. 11 The second point we make in this context in 12 relation to expert advice, is that every case will be 13 assessed by three members of the Independent Advisory 14 Panel, comprising one legal specialist, one forensic 15 accounting specialist, and one retail specialist. There 16 is therefore a very significant degree of expertise 17 already built into the process. 18 Thirdly, where a panel considers that it requires 19 expert assistance in order to make a recommendation, it 20 may recommend to Post Office that such assistance be 21 obtained at Post Office's cost. That's paragraph 27 of 22 the Independent Advisory Panel's terms of reference. 23 That's, sir, for your note page 286 in the bundle for 24 today. So it's open to any applicant to raise the 25 question of expert assistance being required and if the 43 1 Panel agrees then it can recommend it's obtained at no 2 cost to the applicant. So it would be unnecessary for 3 such an applicant in those circumstances themselves to 4 bring any claim or seek any reimbursement of any such 5 expenses. It would be Post Office who would be footing 6 the bill in that case. 7 Sir, you might like to note that the Panel in the 8 past has asked Post Office to obtain expert evidence on 9 generic issues, including cardiac and mental health 10 issues to assist it in adopting an approach to claims 11 generally. 12 The fourth point I make in this context is that 13 the Panel's Terms of Reference also provide and, sir, 14 you have already been taken to this provision at Section 15 35, in relation to personal injury claims, where 16 insufficient evidence has been provided for a claim to 17 succeed, without further medical and/or expert evidence, 18 the Panel may nevertheless recommend the making of an 19 offer to the postmaster which the Panel considers fair. 20 Now, this provision is designed to be advantageous 21 to an applicant. It enables an applicant who is not 22 potentially able to obtain expert evidence to prove and 23 support their claim, nevertheless to obtain 24 a recommendation from the Panel on the basis of 25 fairness. 44 1 We're conscious also that an applicant may wish to 2 avoid the inconvenience and potential distress of 3 obtaining a report which may be a particularly acute and 4 sensitive concern in cases involving mental health 5 issues, but that the Panel has the power nevertheless in 6 the absence of such evidence to recommend an offer which 7 it considers to be fair. 8 In these circumstances we wouldn't agree that 9 there is any deficiency in the Historical Shortfall 10 Scheme in this respect. 11 The second head of loss that's flagged up again by 12 Howe & Co as potentially not being recoverable under 13 this scheme, is the question of aggravated and exemplary 14 damages, and what is said is that no reference to them 15 or provision for them in the guidance and the heads of 16 loss are therefore deficient. 17 Now, Post Office's response so far as aggravated 18 damages are concerned is that where an applicant has 19 identified aggravation or stress that Post Office caused 20 when having to deal with shortfall issues, however that 21 claim is described by the postmaster, that is something 22 that would be fully taken into account when assessing, 23 recommending and making offers in that particular case. 24 Compensation for aggravation would be taken into 25 account in the round rather than being characterised or 45 1 identified as such on the face of any decision as 2 aggravated damages. It would most likely be taken into 3 account when the Panel considers the issue of distress 4 and inconvenience. 5 The Panel's role of course is with a view to 6 recommending an offer which is fair overall, hence why 7 it isn't specifically identified as such necessarily. 8 So although applicants may not have expressly 9 characterised their claim as including a claim for 10 aggravated damages, a number of offers have included an 11 element reflecting just such a claim where it is 12 justified on the facts of the case. 13 The position for exemplary damages is potentially 14 slightly different in principle. Were any claim to be 15 made it would be carefully considered along with all the 16 other claims that have been made. That said, POL's 17 initial view is that as a legal matter a claim for 18 exemplary damages does not naturally sit within the 19 scheme. It can't, strictly speaking, be said to be 20 a loss incurred by an applicant, or a type of damage 21 that's typically available for a breach of contract 22 claim. However, the Panel can and does consider overall 23 fairness when recommending offers to applicants and, as 24 I have said, any such claim would be carefully 25 considered. We therefore do not agree there is 46 1 a deficiency in respect of the question of aggravated or 2 exemplary damages either. 3 SIR WYN WILLIAMS: Well, Ms Gallafent, you put it very 4 elegantly but I think the reality is that you take 5 a great deal of persuading, POL I mean, not you 6 personally of course, that a claim for exemplary damages 7 should be entertained. 8 MS GALLAFENT: Under the -- 9 SIR WYN WILLIAMS: Because you say there is a problem with 10 the legal principles which underpin the award of 11 exemplary damages. 12 MS GALLIFANT: We wouldn't say it's a problem with the legal 13 principles. We'd say they are the legal principles that 14 apply. That is what the Terms of Reference provide for 15 but of course we would carefully consider it were it to 16 be made. But I emphasised that the vast majority of 17 claims brought under the HSS by far are brought on the 18 basis of contractual obligations, so the question may 19 arise but not necessarily in claims that have been 20 brought so far. 21 SIR WYN WILLIAMS: So is this a fair representation of what 22 you are telling me: that if, as a matter of principle, 23 legal principle, a particular claim was made in which an 24 award of exemplary damages was possible as a matter of 25 legal principle, it would be carefully considered. But 47 1 if a particular claim was made in which, as a matter of 2 legal principle, exemplary damages was not to be 3 awarded, it wouldn't be carefully considered. It would 4 be rejected. 5 MS GALLAFENT: Well, the claim itself would be carefully 6 considered in either of those events to work out 7 whether, as a matter of legal principle, it was 8 recoverable or not. So that's my starting point. It 9 wouldn't be rejected out of hand at all. 10 Of course, were then the Panel to reach 11 a conclusion and a recommendation based on saying, well, 12 exemplary damages are not recoverable in the 13 circumstances of this particular case, then of course 14 that could be a matter which is taken further in dispute 15 resolution process. I'm not seeking to rule out the 16 award of those damages, but I'm simply flagging up what 17 we perceive to be the potential issues going forward, 18 and perhaps just to anticipate we do not take the view 19 that, as it were, exemplary damages have been missed in 20 previous cases because we do note that those are 21 primarily brought on a basis of a contractual obligation 22 and exemplary damages are not generally available for 23 a breach of contact. 24 SIR WYN WILLIAMS: And I should make clear, lest people 25 misunderstand what I am doing, I am simply seeking to 48 1 understand what you are saying. I recognise the limits 2 of my Terms of Reference. Everyone should understand 3 that. 4 MS GALLAFENT: Thank you. Thank you, sir. 5 Sir, can I move on to another category of loss 6 which it is suggested is not covered, which is third 7 party losses. Again, Howe & Co have suggested that the 8 heads of loss should reflect suffering caused to 9 children and family members and others in caring roles. 10 Can I emphasise that the Panel has throughout sort 11 to take an applicant-friendly approach to compensation, 12 including for this issue. Whilst a family member's 13 distress and inconvenience is not technically 14 recoverable from Post Office for a breach of contact 15 claim, such as in the scheme, in a number of cases the 16 Panel has nevertheless taken distress and inconvenience 17 of family members or others into account by considering 18 and having regard to the indirect impact of that on the 19 applicant when they are making recommendations. In 20 other words, when they feel it is fair to do so, so 21 practically speaking it will be taken into account where 22 it is justified to do so, despite the fact that our 23 position is it is not technically recoverable. 24 For completeness, I would note that the Panel has 25 also made recommendations for compensation for distress 49 1 and inconvenience or personal injury for corporate 2 entities that are stress and inconvenience or personal 3 injury suffered by directors or shareholders. 4 Going back to my point which we do not consider it 5 to be technically recoverable, I will emphasise again 6 that it does not follow from the fact that claims may 7 not fall directly within the scheme that a claimant is 8 precluded from bringing a claim because of course it 9 remains open to a potential claimant to bring 10 proceedings in which the legal basis for any such claim 11 could be fully considered. Again, we therefore wouldn't 12 agree that there is a deficiency in the scheme in this 13 respect. 14 Those three points are, in our view, as it were, 15 the core points raised by other core participants on the 16 question of heads of loss themselves and what is or is 17 not recoverable. We do recognise that the submissions 18 from other core participants went rather more widely 19 than that and, in particular, the question of the 20 application form and question 24. 21 It's common ground that what was asked was, of an 22 applicant, whether they had experienced any losses that 23 were directly related to the alleged shortfalls in 24 respect of which they would like to claim and asked for 25 details of each such loss to be provided if so. 50 1 Mr Beer noted that it doesn't there refer to 2 consequential losses. Indeed it doesn't, and we say 3 that the reason for that is simply because this form was 4 designed and anticipated to be completed by lay persons 5 rather than having to require explanation or advice from 6 a lawyer in order to understand the meaning of 7 consequential losses. So the description of losses 8 directly related to the alleged shortfalls we say is 9 adequate in all the circumstances. 10 A suggestion is made by Hudgells that this 11 question was, as they put it, potentially misleading 12 because it didn't signpost applicants to any of the 13 examples set out in the guidance. We do not accept the 14 form was misleading on this or any basis. It was 15 designed to strike a balance between being comprehensive 16 and being capable of being used by lay persons. 17 Now, the guidance was introduced on 1 October 2020 18 at which point Post Office wrote to all applicants to 19 the scheme at that stage to communicate that update and 20 the availability of the guidance. Post Office also 21 published a press release about the guidance. And 22 published it on the scheme website so any applicants who 23 hadn't applied by that point would be made aware of it 24 from the website itself. 25 So we do not say there is any fault or deficiency 51 1 in not sign posting the guidance in the application 2 form. Sir, as you have heard from Mr Beer, the 3 application forms, of course, predate the guidance. But 4 POL took all reasonable and appropriate steps to flag up 5 the existence of the guidance to applicants and 6 potential applicants. 7 Moreover, of course, and you have been taken to 8 this part of the terms of the reference of the Panel as 9 well, they provide that the discretion of the Panel 10 making a recommendation is not confined solely to 11 specific heads of consequential loss claimed by the 12 postmaster but will take into account any facts and 13 matters which the Panel considers will produce a fair 14 result on the facts of a particular case. That's 15 paragraph 30. Sir, you have it that tab 15, page 287. 16 SIR WYN WILLIAMS: I just wanted to check that I had marked 17 it. I had. 18 MS GALLAFENT: I am grateful, thank you. We've already set 19 out in our submissions that we put in in May for the 20 purpose of these hearings the proactive approach that is 21 being taken to assessing consequential loss. That 22 includes not just a proactive approach by the Panel, but 23 a proactive approach by those, as it were, the case 24 managers by virtue of the very detailed bespoke process 25 for requesting further information. 52 1 We emphasise that the bespoke request for further 2 information is designed to identify and ask further 3 questions of an applicant only when they arise from the 4 key facts of the individual case, provided on the 5 application form, so the case manager will be prompted 6 by the application form to identify potential further 7 questions and those questions will be asked, and 8 sometimes there will be number of them asked. But that 9 is all aimed to elicit information which may assist with 10 a claim for consequential loss. 11 Now, were such questions to have been asked as 12 a matter of course on the application form, which seems 13 to us the logical consequence of what's being suggested, 14 then inevitably many of them would have been irrelevant 15 to any particular applicant for asking, for example, 16 saying do you think there are any stigma damages, do you 17 have any personal injury, and so forth. 18 Far from being of assistance we say that to have 19 effectively built in guidance or something akin to it 20 into the application form itself would have been 21 perceived as overly burdensome and a barrier to making 22 an application. We repeat, the guidance was available 23 and flagged up to applicants and potential applicants, 24 the form itself is not deficient in this respect. 25 We also note that where an applicant having 53 1 received an offer credibly says they did not appreciate 2 that they needed provide information earlier, which 3 would include matters of consequential loss, this would 4 be taken into account in the post offer process. So the 5 door is not closed in those circumstances to raising 6 a matter of consequential loss even after the offer has 7 been made. 8 Another point that is raised, this time by 9 Hudgell, is that the guidance itself, the consequential 10 guidance, should be supplemented to ensure greater 11 clarity and consistency in decision making. We don't 12 accept that's necessary, not least as it's very clear 13 that every case will turn on its own facts, but it might 14 help to assuage concerns for me to address directly the 15 three examples given by Hudgell who obviously represent 16 a large number of the applicants that is suggested to 17 give rise to inconsistent decision making. 18 First, its alleged that there is a difference 19 between the level of reduction applied to shortfall 20 losses where there is an absence of paperwork. Hudgell 21 identify that as being between 10 and 30 per cent. We 22 don't say that reflects something requiring greater 23 guidance. The fact that is that a change or a 24 difference of the level of reduction simply reflects on 25 the particular facts of that case the Panel feels are 54 1 relevant and a higher or lower reduction is appropriate. 2 That's likely to depend on its view of there being a 3 greater or lesser degree of uncertainty on the question 4 of a particular element of consequential loss. 5 We say it is not just unnecessary but it would be 6 inappropriate to constrain the Panel's discretion in 7 this context, i.e. to say you must only ever reduce 8 shortfall losses by 10 per cent rather than 20 or 30 per 9 cent, or whatever it might be. That would inevitably 10 lead to unfair outcomes in some cases and overly complex 11 rules, we say, to attempt to deal with every potential 12 permutations of circumstances. 13 The second suggestion made is that credit has been 14 given in some cases for heads of loss which haven't been 15 claimed, such at the time taken to deal with Horizon 16 shortfalls. I would again emphasise that the Panel does 17 not seek to hold applicants to and strict legal pleading 18 requirement. It will recommend an offer where it feels 19 it is fair to do so and in those cases where credit has 20 been given, that is because, on those cases, the Panel 21 feel on the facts its appropriate to do so, even though 22 it hasn't been claimed. 23 There is also, finally, a suggestion that there is 24 an absence of a consistent explanation as to how loss 25 for distress and inconvenience is quantified. The 55 1 answer to that is each offer letter explains the factors 2 taken into account, for distress and inconvenience. 3 There is not a separate loss to be quantified but it's 4 a matter that goes into fairness of the offer overall. 5 So, again, we say so far as the suggestion that greater 6 guidance is required, we say that that is not the case 7 and there is not a deficiency in that respect. 8 Can I move to other points that are not directly 9 linked to the first question but are raised in this 10 context. The first, and Mr Beer lagged flagged it up, 11 is in relation to late applications to the scheme. That 12 is after the closing date from November 2020. 13 In our May submissions we noted that the Post 14 Office was actively considering how best to address 15 those applications. At the time in 2020 the Post Office 16 went to very considerable lengths to bring the deadline 17 to the attention of all potentially eligible 18 postmasters. It extended the initial 10-week period for 19 applications by a further 15 weeks, which took it to 20 November 2020, to take into account both the numbers of 21 applications that had already been made and the Covid 19 22 situation pertaining at the time. 23 Nevertheless it is common ground that, for 24 whatever reason, a number of postmasters didn't apply at 25 the time and I can confirm that Post Office has now 56 1 received as at today's date a total of 186 applications 2 made after the deadline passed. 3 Post Office remains keen to ensure and wishes to 4 ensure that compensation is delivered to everyone 5 affected and it is sympathetic to those who could not, 6 for justifiable reasons, apply to the scheme in time. 7 It remains the case that it is considering how best to 8 deal with such applications. 9 SIR WYN WILLIAMS: You can see that I'm pondering that, 10 Ms Gallafent. 11 MS GALLAFENT: I can indeed, sir. 12 Sir, may it assist if I put it in this context: in 13 our May submissions we made very clear that we do not 14 act alone, that Post Office is part of a wider mechanism 15 of governance and one of the reasons for the delay in 16 relation to the HSS scheme itself more generally are 17 questions of funding, so we cannot act unilaterally, if 18 I can put it that like. So the position remains that we 19 are carefully considering the position and remain 20 committed to ensuring that compensation is delivered to 21 everyone affected. 22 SIR WYN WILLIAMS: Well, there are two aspects to that that 23 I'll just float my thoughts about. One, the governance 24 aspect. It surprises me that an issue of this kind 25 would take quite so long. 57 1 The second is should POL be the final arbiter of 2 this in any event? In effect, it's akin to a limitation 3 provision, though I accept that there are differences, 4 I am not going to press that. But in most scenarios in 5 which a time limit is applied in one way or another, it 6 might surprise someone to hear that the alleged 7 wrongdoer is the final arbiter of whether a time limit 8 should apply. 9 MS GALLAFENT: Could I put it like this, sir: the terms of 10 reference for the scheme provided for a deadline which 11 was, of course, subsequently extended. That principle 12 was one of the principles that had been discussed and 13 agreed as part of the deed of settlement with 14 representatives of postmasters. So in principle the 15 provision of a deadline was common ground. 16 We are not acting unilaterally in saying we will 17 not take in to account late applications. We are 18 considering and continue to consider how to ensure that 19 compensation is delivered to everyone affected. 20 It is not that we have shut the door on those late 21 applicants. Can I assure you, sir, of that. We 22 continue to aim to ensure that those applicants are 23 treated fairly. 24 SIR WYN WILLIAMS: Well, I think we can leave this with my 25 observation that the door is moving either to open or 58 1 close at a pretty slow pace. 2 MS GALLAFENT: Sir, I hear what you say. 3 Can I pick up then, before I move off from 4 question 1, can I pick up three further points not 5 directly related but relevant we say. 6 The first is an issue raised by Hudgell in 7 relation to independent legal advice. That is whether 8 it be more appropriate for the Independent Advisory 9 Panel to have its own independent legal advice rather 10 than offers being made on the basis of legal advice and 11 analysis prepared by Herbert Smith Freehills. 12 Post Office doesn't consider this would be 13 necessary. There are five Queen's Counsel on the Panel. 14 The Panel is free to accept or reject the analysis and 15 advice given by Herbert Smith Freehills. As we 16 previously indicated in the May submissions, there have 17 been no cases where Post Office has offered an applicant 18 less than the Panel has recommended. That remains the 19 position to date. 20 Moreover, were the Panel itself to consider that 21 it wished to take independent legal advice, then it 22 would be open to it, to recommend to Post Office that 23 such advice be obtained at Post Office's cost. Just as 24 it is under section or paragraph 27 of the Panel's terms 25 of reference in relation to any other expert assistance. 59 1 For the same reason we reject the suggestion that 2 the current scheme is not independent in the light of 3 the clear independence of the Panel and the procedure 4 followed thereafter, and I emphasise again no 5 recommendation has been rejected by the Panel and 6 a lower offer made, and some offers have been higher. 7 The second of the indirectly related issues to 8 question 1 is the evidential question. The way it was 9 put in the written submission of Howe & Co was that it's 10 unreasonable for the scheme to require contemporaneous 11 evidence of events from up to 20 years ago, particularly 12 in circumstances where postmasters may have been 13 deprived of access to their records at the point of 14 suspension and they may have been destroyed by Post 15 Office. 16 But we emphasise and, sir, as you have seen and 17 been taken to, the guidance on consequential loss makes 18 it clear that contemporaneous evidence is not required, 19 it is not a bar not to have it, but greater weight may 20 be placed on it as well as the factual evidence that is 21 undisputed or verifiable. That's what the guidance 22 says. Of course, where an application is concerned 23 about the Panel's approach to an alleged lack of 24 contemporaneous evidence, that's a matter that can be 25 raised as part of a dispute process. 60 1 That point is connected to the third point, which 2 is the sharing of supporting information held by Post 3 Office. This was an issue flagged up by Mr Beer as 4 well. 5 Howe & Co have suggested that a procedural flaw in 6 the scheme is that the sharing of supporting information 7 held by Post Office won't be until the point of 8 receiving the offer. They say that's a substantial 9 procedural flaw. 10 Can I just highlight first, the terms of reference 11 that you have for the scheme at tab 14. I don't 12 believe, sir, you were taken this particular element of 13 it, at paragraph 6, so it's page 283 internally, 14 paragraph 6 provides: 15 "Once an application has been made either party 16 may write to the other to request relevant information. 17 The parties shall cooperate with each other in providing 18 any other information which the other party may 19 reasonably request. Information obtained and provided 20 in relation to each application should be proportionate 21 to the circumstances of that application." 22 So there is express anticipation that an applicant 23 saying to Post Office, "I need this. Please provide me 24 with this", and Post Office can equally say of an 25 applicant, "Could you please provide the following 61 1 maters and documents", so that's the starting point. 2 The second point is that number of postmasters 3 have made data subject access requests prior to or 4 during the course of making an application and, of 5 course, there they will be provided with all data that 6 falls within that access request. 7 Turning then to the outcome letter, the outcome 8 letter lists all contemporaneous evidence which the 9 Panel assessed to make the recommendation and it 10 expressly explains that the applicant can request a copy 11 of any or all of those documents and pieces of evidence. 12 Applicants can also request a copy of the Post Office 13 investigation report, the Herbert Smith Freehills legal 14 case assessment, and a record of the Panel assessment 15 and recommendation. 16 All of this data is provided in order to support 17 the applicant's consideration of the offer and, of 18 course, having considered it the applicant is free to 19 accept or reject the offer, following which a good faith 20 meeting can be held and, if necessary, disputes can be 21 escalated thereafter. 22 SIR WYN WILLIAMS: Sorry, this is my fault, but this 23 information about the documentation which an applicant 24 can obtain. 25 MS GALLAFENT: Is set out in the outcome letter. 62 1 SIR WYN WILLIAMS: It in the outcome letter. 2 MS GALLAFENT: Yes. 3 SIR WYN WILLIAMS: It is not in any prior guidance. 4 MS GALLIFANT: No. 5 SIR WYN WILLIAMS: So it's at that point. 6 MS GALLAFENT: Exactly, so taking different stages, at the 7 point of the application paragraph 6 of the terms of 8 reference emphasises the opportunity for the parties to 9 ask for information from each other. Then you get to 10 the point of the outcome letter and that is where the 11 applicant is expressly told -- there is a list of all 12 the contemporaneous evidence that Panel assessed and 13 it's told that it can -- the applicant is told what they 14 can ask for and obtain. 15 SIR WYN WILLIAMS: Right. 16 MS GALLAFENT: Yes. 17 SIR WYN WILLIAMS: Right. I am with you. 18 MS GALLAFENT: Thank you. We say there is not any prejudice 19 to an applicant as a result of disclosure not 20 necessarily having been made earlier, if it has not been 21 requested. Again, if the applicant feels that the 22 material has been misunderstood or is incomplete that 23 can be raised at the good faith meeting. 24 Can I leave, subject of course to any indication, 25 sir, from you that you would like to us to do a little 63 1 bit of analysis and data collection on the question 2 of -- 3 SIR WYN WILLIAMS: Well, I think I will say now that rather 4 than going along trying to listen to you and formulate, 5 in inverted commas, rules and requests at the same time, 6 what may happen -- and I stress may -- is that if there 7 is any data that I require from any party before I make 8 a written report in whatever form it is following these 9 hearings I will do it in writing after the hearings 10 rather than trying to do it as we are going along. 11 MS GALLAFENT: I certainly wasn't suggesting that, sir. If 12 you were to indicate that you would be open to the 13 provision of such data then we will crack on with that 14 and get that ready. But I'm certainly not anticipating 15 that you need to, as it were, tell me precisely what you 16 would like at this stage. It might be more helpful, 17 frankly, for us to provide you with an indication and 18 then it might assist you in understanding what more or 19 less you would want from us. 20 SIR WYN WILLIAMS: Well, as you know, Ms Gallafent, people 21 write to me at all times of the day or night in this 22 Inquiry providing me with information. Far be it for me 23 to stop you from doing the same. 24 MS GALLAFENT: We shall endeavour to do it perhaps a little 25 earlier in the day on the next occasion, sir. Thank you 64 1 for your patience with us. 2 Can I move then to the second of the questions 3 posed, sir, in relation to delay. I'm not going to seek 4 to repeat the explanation set out in the May submissions 5 about the process between setting up the scheme and the 6 position reached by the time of those submissions. 7 You have our submissions on delay and I'm again 8 conscious, sir, of your indication in the note of 9 30 June that you have those well in mind and don't 10 require us to go through them again. 11 I do though want to flag up the continuing 12 progress being made since those submissions which 13 demonstrates, we say, a clear and continuing positive 14 trajectory towards resolving all current applications. 15 Now, we provided an update in the late night note, as it 16 may become referred to, yesterday but in fact as of 17 midnight yesterday I can confirm that further letters 18 have been sent out during the course of yesterday, which 19 take the number of eligible applicants who have been 20 sent offer letters up to 1,659 out of 2,370, which takes 21 us to us a 70 per cent rate of offers from applications. 22 SIR WYN WILLIAMS: So I'm trying to make a note on the 23 relevant pages of my bundle, so this all starts on 24 page 302 and then goes over to page 303. That was as at 25 7 June I think it was. Then Mr Beer gave me further 65 1 figures based upon what your statement said last night. 2 MS GALLAFENT: Yes, that was at the end of June. 3 SIR WYN WILLIAMS: Now we're getting up to midnight on 4 July 5 or 6, whichever you prefer. Is that it? 5 MS GALLAFENT: That's exactly it. 6 SIR WYN WILLIAMS: Fine, right, so if you tell me that 7 I will make a note on this document. 8 MS GALLAFENT: 1,659, which takes the percentage of offers 9 to eligible applicants to come to 70 per cent. 10 SIR WYN WILLIAMS: All right. 11 The figure that Mr Beer gave me, obviously, for 12 payments made is the same today as it was last night, so 13 I don't need to worry about that. 14 MS GALLAFENT: Yes. 15 SIR WYN WILLIAMS: Right. 16 MS GALLAFENT: They would have been very speedy indeed if 17 they'd accepted it. Exactly. 18 You may note, just going back to page 302, of 19 course the information on progress and the anticipated 20 rate of progress to get us to 95 per cent by 21 December 2022 provides that the target was to reach 70 22 per cent by the end of July. We have actually reached 23 it on 5 July which is why I emphasise a clear and 24 continuing positive trajectory, and Post Office remains 25 on course to provide at least 95 per cent of eligible 66 1 applicants with offer letters by the end of this 2 calendar year. You will see that again on page 302. 3 To date 115 applicants have formally engaged the 4 dispute resolution process. 31 of those, 27 per cent, 5 have now reached agreement on the amount of 6 compensation. Good faith meetings have taken place with 7 47 applicants, escalation meetings with seven 8 applicants, are there are a further 11 good faith 9 meetings scheduled for the coming weeks. 10 On delay there are a couple of particular points 11 raised by other core participants. The first is raised 12 by the National Federation of Subpostmasters who have 13 suggested it would be justifiable, sir, for you to ask 14 whether the non-renewal of a contract of the previous 15 head of historical matters resulted in there being 16 a significant period of time during which no individual 17 was responsible for driving the scheme forward. 18 The position is that the fixed term contract for 19 the previous head of historical matters ended on 20 23 July 2021. Prior to that, in May 2021, the 21 Government had announced that this Inquiry would be 22 moved on to a statutory footing. As a result, the Chief 23 Executive Officer of Post Office, Mr Read, revised the 24 structure of the then existing historical matters team 25 to ensure that Post Office was appropriately set up to 67 1 assist the Inquiry. That then resulted in 2 Mr Racaldin(?) becoming Historical Matters Director in 3 January 2022. 4 However, in that period during which there was no 5 longer a head of historical matters before Mr Recaldin 6 took up his post the historical matters team continued 7 throughout to focus on matters arising from the group 8 litigation including the Historical Scheme. 9 We wouldn't accept that any delay arose as 10 a result of the reinstructing of Historical Matters 11 Scheme which was considered necessary and appropriate to 12 anticipate the needs of this Inquiry. 13 As I say, we've set out the reasons for the delay 14 in our May submissions and I don't repeat them here. 15 Hudgell also flags up the issue of bankruptcy 16 cases. We recognise and agree that bankruptcy cases are 17 extremely complicated and may well take longer to 18 resolve. We are actively working to resolve the 19 challenges posed by such cases, including the issue of 20 the costs of the Official Receiver or 21 Trustee-in-Bankruptcy. In the meantime, Post Office 22 expects that the first offer will be made to an 23 applicant in a bankruptcy case in the coming weeks. 24 Finally, Howe & Co have raised the case, and it 25 was identified by Mr Beer in his opening submissions, of 68 1 Mr Sethi who of course was the first witness to give 2 evidence before you, sir, in the human impact hearings. 3 If the Inquiry were to consider it helpful and if 4 Mr Sethi were to consent we would be happy to provide 5 the Inquiry with a full timeline of the processing of 6 his application. But for today it may suffice for me 7 just to note that his application is one of the 8 particularly complex ones which has raised a number of 9 procedural issues in terms of representation. 10 So far as the request for information that he 11 received shortly before he gave evidence is concerned, 12 for the avoidance of any doubt, the timing of that 13 request was in no way connected with the fact of his 14 giving evidence. Rather, it reflected that his 15 application had reached the request for further 16 information, that is the proactive request for 17 information designed to elicit further information, 18 particularly in relation to consequential losses stage 19 of the process. 20 Mr Sethi helpfully responded at the end of March 21 and his responses are currently being considered under 22 the scheme in the usual way. 23 Finally, there is a question of tax implications. 24 It is not raised again in relation to the delay. But in 25 this context we have been asked to confirm what 69 1 provisions we have made for dealing with tax 2 implications on certain pecuniary heads of loss. That's 3 a request by Hudgell that it made in relation to 4 question 2. 5 It's common ground that shortfall compensation 6 does not attract tax, but Post Office is obliged to 7 deduct tax for the other heads of compensation. It does 8 so at the basic rate of 20% in accordance with the 9 Income Tax Act 2007 section 874, which as is explained 10 in outcome letters may result in POL, in Post Office, 11 deducting less or more tax than the applicant is 12 actually liable to pay. 13 Post Office notes that it's the applicant's 14 responsibility to ensure the correct amount of tax is 15 paid and that they may want to seek independent tax 16 advice, and the letter also points applicants towards 17 resources they might look to for further information on 18 this particular issue. In these circumstances, Post 19 Office does not consider it necessary or appropriate to 20 offer any indemnity for scheme applications. 21 The third issue, if I may move on to the third 22 question, sir, in relation to independent legal advice. 23 It's availability. The Inquiry is obviously well aware 24 the scheme provides for a contribution currently of 25 £1,200 towards the cost of legal advice for the purpose 70 1 of enabling an applicant to consider an offer made to 2 them, or £400 where the offer is to pay the applicant's 3 claim in full or largely in full. So far as we are 4 aware no request for a contribution for legal advice has 5 ever been refused. So the figures that you have seen of 6 the number of contributions made we say reflects the 7 number of request received. 8 We do not consider that the absence of any 9 contribution to legal fees towards the making of the 10 application is itself unfair or inadequate. That's 11 suggested by Howe & Co. 12 This scheme has been designed to be simple and 13 user friendly, to avoid the need to incur such costs, as 14 set out in our May submissions. That's paragraph 39 for 15 your note. 16 In short, guidance is available to postmasters to 17 assist them in preparing an application. Sir, you have 18 seen a number of elements, key elements, of that 19 guidance. 20 Secondly, there is a presumption that a shortfall 21 was caused by a previous version of Horizon or a breach 22 of duty by Post Office in the absence of evidence to the 23 contrary. 24 Thirdly, Post Office has agreed not to take any 25 limitation defence in relation to claims brought under 71 1 the scheme. 2 Fourthly, as I have already identified the Panel 3 and case assessors act proactively to obtain further 4 information from applicants where appropriate. 5 Again, sir, as you are also well aware, the Panel 6 has a full discretion take into account any facts and 7 matters which it considers will produce a fair result on 8 the facts of each particular case, including but not 9 limited to applicable legal principles. 10 As we set out in our further note and as Mr Beer 11 emphasised as well as paying applicants the contribution 12 towards legal fees at the offer stage, it has also paid 13 contributions towards costs incurred by applicants prior 14 to them receiving a compensation offer in two cases, for 15 example, in relation to the costs of providing medical 16 records in support of a claim for personal injury. 17 So far as the Post Office phase is concerned, Post 18 Office does recognise that there may be some cases in 19 which the current provision may be insufficient to 20 support an individual applicant to resolve their claim. 21 It is currently considering whether contributions 22 towards further legal or other professional costs can be 23 made available to applicants to help resolve their 24 claims. We will obviously update the Inquiry as soon as 25 a decision has been reached on this issue. 72 1 SIR WYN WILLIAMS: I mean, the impression I get and I do not 2 want to say this in any flippant sense, but many of the 3 offers which have been made and accepted are 4 comparatively easy to resolve. One is now getting to 5 the stage where there are likely to be much more 6 significant difficulties in resolving the applications. 7 MS GALLAFENT: Yes, and for the reasons we set out in the 8 May submissions that was because of the approach adopted 9 to the scheme by dealing with what we would characterise 10 as low value claims, and those were the ones that were 11 dealt with first. So the low value claim is a claim for 12 a shortfall up to £8,000, in some cases a claim for 13 distress and inconvenience, but not all, but not for any 14 other form of consequential loss. 15 So those block of cases were, I would entirely 16 agree, sir, they were on their face simpler to resolve 17 because of the presumption in relation to shortfall and 18 because of there being no issue in relation to 19 consequential loss apart from distress and 20 inconvenience. 21 It may assist, sir, if I then deal perhaps with 22 the statistics, because Howe & Co also suggested that we 23 should provide you, sir, with the percentage of 24 applicants who were and were not represented at the time 25 of the application, and the same percentages in relation 73 1 to accepting offers under the scheme. It is suggested 2 it is instructive to examine the level of offer or award 3 made to unrepresented applicants as opposed to 4 represented applicants. 5 The position as at midnight yesterday is 1,300 6 applicants have accepted settlement offers. Of those, 7 two applicants had legal representation. 92 applicants 8 have rejected settlement offers and of those 13 9 applicants had legal representation. Can I put some 10 context on those statistics by virtue of the question of 11 low value claims, sir, that I was just alluding to. 12 Of the 1,300 accepted offers, just over half of 13 them, 678 for precision, were claims for shortfalls up 14 to £8,000 and no consequential loss, so potentially for 15 distress and inconvenience. 16 Of the 92 rejected offers ten of them were those 17 types of claims, what we have characterised as lower 18 value claims. So, sir, you anticipate entirely 19 correctly, which is there are more as it were rejected 20 offers where it is not a lower value claim 21 proportionately but there are roughly half and half when 22 it comes to acceptance of offers. 23 SIR WYN WILLIAMS: Sorry, can you repeat that? Of the 92 24 rejected, on the [draft] transcript in front of me, the 25 number has not come up after that. 74 1 MS GALLAFENT: Ten of them were lower value claims. That's 2 my lack of articulacy, I apologise. I'm standing too 3 far away from the microphone, ten. 4 SIR WYN WILLIAMS: I'm busily writing a note, even though 5 I have a contemporaneous transcript. It's the habit of 6 a lifetime. 7 MS GALLIFANT: It is, it is. I'm grateful, thank you. 8 I hope that provides some context in which the 9 otherwise quite bald figures of representatives being on 10 record and contributions being made, as to why perhaps 11 those figures are not quite so straightforwardly an 12 indication there has been any form of inadequacy when it 13 comes to legal costs at the point of offer. 14 Can I move to question 4, which is interim 15 payments. It's been suggested by Howe & Co that the 16 scheme should make provision for interim payments in all 17 cases, and it's unacceptable for Post Office to be able 18 to decide to whom such payments should be made. It is 19 not clear whether that suggestion is made in the context 20 of pre offer interim payments or post offer payments. 21 Can I address each of those in turn. 22 As Mr Beer indicated, payments have been made on 23 an interim basis, prior to an offer being made, to those 24 applicants to the scheme who Post Office understood to 25 be in difficult circumstances who could be irremediably 75 1 impacted by the time necessary to fully assess their 2 claim and make a fair offer. To date, 28 such payments 3 have been made, that includes circumstances of severe 4 financial hardship, terminal illness, risk of personal 5 hardship, and old age, where concerns have been raised 6 about the impact of the speed of progress on the 7 applicant. Some of those concerns have been raised by 8 the applicant. Others have been raised within Post 9 Office and a proposal for an interim payment made on 10 Post Office's recommendation. 11 Where such appointments are made, it is expressly 12 explained to the applicants that they would not need to 13 repay any of the interim payment in the event that the 14 final offer is made for less, or that accepting an 15 interim payment would in anyway adversely impact their 16 claim. It wouldn't. 17 So far as the position post offer is concerned, 18 other than potential hardship interim payments, Post 19 Office's priority is to seek to resolve applicants 20 claims in a manner which is fair in all the 21 circumstances of the case. 22 That will we say typically be achieved by reaching 23 full and final settlements with the applicants rather 24 than on a piecemeal basis through interim and part 25 payments. As I have indicated at this stage offers have 76 1 been made to over two-thirds of applicants and of those 2 accepted by 80 per cent of those applicants. 3 There is a structured and clear plan to work 4 through the dispute resolution process with those who 5 formally engaged it and to provide, as I've indicated, 6 at least 95 per cent of applicants with offer letters by 7 the end of this year. 8 Our position is it would be an unhelpful 9 divergence of resource and cost to set up some form of 10 sub-scheme within the Historical Shortfall Scheme by 11 which applicants could then apply for and interim offers 12 be made to them other than on hardship grounds. 13 An additional factor for not making interim offers 14 is that the approach under the scheme is to reach an 15 overall offer, as you have heard me say on a number of 16 occasions, rather than break down the offer by 17 individual heads of loss. As already indicated it's 18 made on a number of applicant-friendly presumptions, 19 such as the presumption that a shortfall loss was caused 20 by Horizon. These presumptions would not apply were it 21 not possible to resolve the claim without the applicant 22 going to court. In that situation, it's entirely 23 possible in principle that a postmaster would not obtain 24 compensation in the same sum as the offer, which offer 25 of course is built on those applicant-friendly 77 1 principles, and therefore potentially not in the same 2 sum as any interim payment which might have been made. 3 So we say that the position under the scheme is 4 significantly different from the approach to interim 5 payments in relation to postmasters whose convictions 6 have been overturned when its considered by Post Office 7 and BEIS that all such persons were likely to receive 8 greater sums than the up to £100,000 in due course for 9 their claims. 10 As for the suggestion that it should not be Post 11 Office which decides when an interim payment should be 12 made, were an independent body such as the Panel to 13 determine such requests, there would inevitably be some 14 further delay in the process for applicants generally, 15 in order to accommodate such cases going to the Panel 16 not once but twice. In those circumstances, we do not 17 accept that the absence of an express provision for 18 interim payments under the scheme is unfair or 19 inappropriate. 20 Sir, I'm going to move now to section B dealing 21 with final compensation for postmasters with quashed 22 convictions. I note the time. I am very happy to press 23 on with section B then I have very little to say on C 24 and a couple of other points, but if you would prefer me 25 to break now and come back -- 78 1 SIR WYN WILLIAMS: I think my view is simply this, 2 Ms Gallafent, if you were to complete your submissions 3 within say 25 minutes that might be preferable, but if 4 that's not possible we'll have a break whenever it suits 5 you. 6 MS GALLAFENT: No, I'm confident I can do that. 7 SIR WYN WILLIAMS: Let's carry on until the end then. 8 Before we do, just a variation on the theme of 9 interim payments, which I don't think you touched on. 10 The suggestion -- and this might become more 11 a possibility as the more complicated cases are dealt 12 with -- that interim payments may be made about agreed 13 sums, not whether they need them, just if agreed, let's 14 get it over with and only discuss what's not agreed. 15 Have you got anything to say about that? 16 MS GALLAFENT: I do because that's goes back to the factor 17 I mentioned in relation to the applicant-friendly 18 premise of the offer. So when it's an agreed offer, it 19 will be made on the basis that, you know, the shortfall 20 of (unclear) Horizon, no limitation, et cetera. So 21 again it's a slightly different position to the position 22 under the final scheme or the interim or final scheme 23 for postmasters with quashed convictions, because 24 there's no such presumption. The approach under section 25 B, which I will come on to, is simply that the ordinary 79 1 principles apply to compensation. Here the ordinary 2 principles do not apply, so that's why you might be able 3 to agree in principle a particular element of the offer, 4 say the shortfall or some element but I emphasise again, 5 offers are made in the round, so you might be able to 6 agree in principle and say, well, we accept this or 7 that, but it wouldn't follow that then were there to be 8 no agreement overall, that the applicant would actually 9 obtain through civil litigation a sum anything like the 10 amount that's been offered based on the 11 applicant-friendly principles. So I do say it raises 12 very different and difficult questions that simply are 13 not there in the scheme in relation to -- sorry, the 14 mechanism used in relation to postmasters with quashed 15 convictions. 16 SIR WYN WILLIAMS: All right. I will think about that. 17 MS GALLAFENT: I thought you might. 18 Section B then, final compensation for postmasters 19 with quashed convictions. Mr Beer also emphasised and 20 we say it is important to emphasise as well. There is 21 no formal remediation scheme such as that established by 22 the Historical Shortfall Scheme for the payment of 23 compensation to such persons. All claims are being 24 dealt with through without prejudice negotiations. We 25 say that is an important distinction, because a number 80 1 of the submissions made by other core participants are 2 predicated on a scheme approach. 3 It's also important to emphasise that as at 4 3 July, Post Office has only received a total of six 5 largely fully quantified claims. So that's where we are 6 in terms of final compensation. 7 So far as the principles to be applied to the 8 calculation of final compensation payments are 9 concerned, some of those representing postmasters have 10 suggested that BEIS and/or ourselves should be invited 11 to clarify the approach to the general principles in 12 play in assessing liability and quantum. 13 I can confirm that Post Office agrees with Hudgell 14 Solicitors that the value of any individual claim must 15 be calculated applying the ordinary principles 16 applicable to the recovery of civil damages for 17 malicious prosecution. We also agree that such damages 18 may include aggravated and exemplary damages. 19 Mr Beer has already alluded to it but in applying 20 those principles it's the issue of non-pecuniary damages 21 that's proved particularly damaging in the negotiations 22 to date. There is case law in this area which indicates 23 what likely awards may look like but the current 24 circumstances of the particular postmasters involved are 25 unique, we say. 81 1 It is in order to find a way thorough that issue 2 that we agreed with a number of former postmasters 3 represented by Hudgell Solicitors that the issue of 4 non-pecuniary damages should be referred an early 5 neutral valuation. That of course is an expression of 6 a view on the likely outcome if the matter were to go to 7 court. 8 We emphasise that the fact that the process is 9 without prejudice and is confidential allows a more open 10 and less formal process in that respect. We're very 11 grateful that the very eminent senior judge Lord Dyson 12 has agreed to act as the evaluator for that process. It 13 is anticipated that the evaluation will be concluded by 14 the end of this month. 15 The outcome is not of course binding on the 16 parties. But it is hoped that it will allow these 17 issues to be resolved quickly. 18 We are also and separate to the early neutral 19 evaluation continuing to progress without prejudice 20 negotiations in relation to the first of two fully 21 quantified claims from the total of six that we have 22 largely quantified. Good progress has been made on 23 pecuniary loss claims to date. We anticipate that the 24 early neutral evaluation process to be conducted by Lord 25 Dyson will provide guidance that will facilitate the 82 1 parties reaching an agreed resolution on the 2 non-pecuniary aspects of those claims and we hope that 3 that guidance may also be of wider use. 4 In this context it's also important for me to 5 emphasise that in no circumstances will Post Office be 6 the final arbiter of individual claims. That's 7 a suggestion made by Hodge Jones & Allen. If the 8 parties cannot resolve the claims themselves, whether 9 with the involvement of early evaluation, mediation, or 10 some other process, then the final arbiter of individual 11 claims will be the court. But would I would like to 12 emphasise that Post Office remains wholly committed to 13 seeking a negotiated outcome to all claims to avoid that 14 outcome if at all possible. 15 We also note the suggestion made by Hodge Jones 16 & Allen that the settlement deed is flawed, insofar as 17 it limits GLO claimants to claims of malicious 18 prosecution. It should be amended. 19 Paul Marshall goes further. He argues and says 20 there are prima facie grounds for the view that Post 21 Office secured the settlement deed as a result of 22 misleading the claimants and the court. On that basis 23 he and Hodge Jones & Allen seek to argue the approach to 24 the calculation of direct and consequential loss should 25 be carried out by reference to the approach to claims in 83 1 fraud. 2 I note Mr Beer didn't reference to this in his 3 opening, and I anticipate that's for the same reasons 4 that we say is simply isn't open to you, sir, to 5 consider it at this point. It goes way beyond the issue 6 identified in your invitation, which is the principles 7 that are being applied to the calculation of final 8 compensation payments, rather than the principles which 9 some of those representing postmasters suggest should 10 be. 11 It also doesn't appear to fall within the scope of 12 the Inquiry's Terms of Reference, but even were the 13 Terms of Reference to be amended in some way, it is 14 obvious that any such argument could be not be fairly 15 considered far less in some way any view given on it at 16 this point of Inquiry, prior to the Inquiry having heard 17 or considered any of the evidence in relation to the 18 conduct of the group litigation. That's a matter also 19 due to be heard next spring. 20 For the avoidance of any doubt, Post Office would 21 emphatically refute any suggestion that it behaved in 22 a fraudulent way or misled the GLO claimants or the 23 court in resolving those proceedings. The terms of the 24 settlement deed were negotiated and agreed in good 25 faith. But we do emphasise we say at this stage that 84 1 one simply cannot consider or reach any view on those 2 submissions made by Mr Marshall and Hodge Jones & Allen 3 in that context. 4 On the question of disgorgement which is raised by 5 Mr Marshall and Hodge Jones & Allen again, they have 6 raised the issue of the inclusion of sums received by 7 Post Office by way of compensation or confiscation post 8 conviction as being included as direct and consequential 9 losses. I can confirm that claimants can claim any sum 10 Post Office received through post conviction orders for 11 compensation or confiscation as losses directly 12 connected to their wrongly conviction, so that is 13 claimable. 14 Moving to the mechanisms by which final 15 compensation payments are being calculated, to an extent 16 our response here overlaps with the question as to the 17 principles being applied, but three discrete issues have 18 been raised in this context. 19 First, Howe & Co have suggested that BEIS should 20 undertake -- will undertake -- sorry, that BEIS should 21 undertake, that it will undertake not to seek to claw 22 back any interim payment made to a postmaster. This is 23 a subject on which Post Office has been very closely 24 engaged with HMRC and we confirmed in our late night 25 note from yesterday that as of yesterday we had received 85 1 confirmation from HMRC that the removal of the claw back 2 provisions will not affect the tax status on which the 3 payments are made. We wrote yesterday to all claimants 4 to communicate the position of HMRC in this regard, so 5 that concern has been assuaged. 6 Secondly, it is suggested that any disputes should 7 be referred to independent arbitration within an 8 appropriate arbitration scheme. That's also Howe & Co. 9 If particular representatives wish to raise that 10 option with Post Office they are obviously free to do so 11 and Post Office can assess with those claimants the best 12 way to resolve the cases. For example, arbitration or 13 early neutral valuation or mediation or even litigation 14 potentially were it to be regarded as being relevant for 15 precedential value. 16 Thirdly, Mr Marshall has suggested that Post 17 Office should make available to claimants data that it 18 holds on employees' pay bands over time. I can confirm 19 Post Office already proactively offers and provides, 20 subject to the provision of necessary data protection 21 consents, the remuneration data that it holds to 22 claimants with quashed convictions. 23 Question 7 is the provision for applicants to 24 obtain independent legal advice. As we indicated in our 25 May submissions, Post Office will consider the payment 86 1 of a postmaster's reasonable costs as part of the 2 negotiations. 3 Question 8 is about procedures adopted to resolve 4 disputes about the valuation of final compensation 5 payment. I have already highlighted in particular the 6 early neural evaluation process. But Post Office 7 remains open and supportive to the use of further such 8 processes or other alternative dispute mechanisms to 9 resolve other disputes in due course. 10 SIR WYN WILLIAMS: Ms Gallafent, when Mr Beer was addressing 11 me, he suggested that I might wish to probe with the 12 representatives of this category of claimants to what 13 extent I should involve myself at all. He put it rather 14 more elegantly, I should butt out of it perhaps. 15 MS GALLAFENT: He did. 16 SIR WYN WILLIAMS: What's the Post Office view about that? 17 MS GALLAFENT: Sir, in response to the questions that you 18 have raised, our position is that there is no need for 19 you to intervene on those points. There is nothing that 20 would give you concern from what we have told you about 21 the concerns that have been raised by the other core 22 participants, so that's our position. 23 SIR WYN WILLIAMS: Fine, all right. 24 MS GALLAFENT: The other position though that's -- the other 25 issue is the role of Post Office and this again it is 87 1 not a point flagged up by Mr Beer in his opening 2 therefore I anticipate it may not be a point that you 3 deal with directly, it's the role of Post Office in the 4 resolution of these claims. 5 In their initial submissions Hodge Jones & Allen 6 submitted that what was required was a transparent 7 process operated by BEIS working with Herbert Smith 8 Freehills. In an annex they now argue that Post Office 9 should terminate its continuing retainer of Herbert 10 Smith Freehills and they say Herbert Smith Freehills 11 should be retained by BEIS with a consequential set of 12 agreements about duties of confidence and the like owed 13 to Post Office. So they say that Herbert Smith 14 Freehills would be retained by BEIS for both final and 15 further compensation claims. Further, by which I mean 16 you have identified in category C fair compensation 17 claimants. 18 This argument again goes well beyond the 19 questions, sir, set out in your invitation and, 20 arguably, again beyond the Terms of Reference of the 21 Inquiry, but without prejudice to the position can 22 I make it clear the Post Office immediate view is there 23 is no justification at all for any such recommendation. 24 So far as final compensation for postmasters with 25 quashed convictions is concerned, it is clear we say 88 1 from the information updates provided, that Post Office, 2 represented by Herbert Smith Freehills, is acting 3 promptly and reasonably in its approach negotiating 4 settlements with those that have brought fully 5 quantified claims and there is no reason to doubt that 6 it will continue to do so. 7 Certainly, we'd submit that the inherent and 8 obvious complications with any such rearrangement in 9 terms on legal representation and the entity with whom 10 negotiations take place, would very considerably 11 outweigh any perceived benefit, particularly in terms of 12 the speed of resolution of the claims. 13 Finally, can I just deal then with final 14 compensation, in that context where its suggested that 15 Post Office shouldn't be involved, Post Office has made 16 it clear that it has not been asked by Government to 17 deliver this type of compensation. This is, sorry, the 18 further or fair compensation. But it will of course 19 cooperate to the fullest extent possible with any scheme 20 or mechanism set up for that purpose and any request for 21 support from Government in that matter. So we say it's 22 wholly premature to raise any issue as to Post Office 23 involvement in any further or final compensation scheme 24 or mechanism. 25 As for that scheme or mechanism, as I indicated at 89 1 the outset, we leave it to BEIS to address the Inquiry 2 on those matters but, of course, if there is any issue 3 arising following BEIS's submissions next week on which 4 the Inquiry would like to hear from us then we're very 5 happy to do that in writing after the hearing next week. 6 Of course, more generally we're very keen to 7 ensure that we listen carefully to the points to be made 8 by other core participants who follow us later today and 9 next week and we will seek to pick up any further 10 matters which we consider we haven't already adequately 11 addressed so we can offer clarification or assistance as 12 soon as possible thereafter. 13 Finally, and very briefly, can I deal shortly with 14 your provisional view on compensation issues relating 15 prosecuted subpostmasters. Just for the avoidance of 16 any doubt we can confirm, as set out in your document on 17 compensation issue dated 9 May, we agree with your 18 provisional views, subject to two points. The first is 19 we do not seek to make any submissions on BEIS's 20 position that persons in categories 1 and 2 were 21 eligible for claims for compensation under the December 22 announcement, that is predating the subsequent March 23 announcement. We have seen what BEIS says on the 24 subject. We don't say anything about that. 25 Secondly, so far as persons falling within 90 1 category 3 are concerned, so those are as it were the 2 public interest quashed convictions, paragraph 28 of 3 your provisional view, you indicated that fairness 4 demands that Post Office should not be the final arbiter 5 of whether an interim or a final payment should be made 6 to those postmasters. 7 Neither announcement by the Minister, neither the 8 December announcement nor the July announcement on 9 interim compensation, neither of those resulted in the 10 establishment of a remediation scheme such as HSS, so 11 ultimately the question of whether or not compensation 12 is payable falls to go to the court. 13 I confirm in the event of any dispute over payment 14 of compensation, whether on an interim or final basis, 15 POL, as with the scheme more generally, remains willing 16 to engage in mediation, arbitration, other forms of 17 alternative dispute resolution, to avoid if possible any 18 applicant having to bring civil proceedings. 19 I can also confirm that Post Office legal 20 representatives continue to liaise with the 21 representatives of the three named potential category 3 22 claimants set out in your provisional view on the 23 subject of whether they are or are not entitled to 24 compensation. Sir, we say that in no circumstances 25 would we be the final at arbiter. 91 1 I am going to glance over just to check that those 2 sitting behind me and behind me behind me, as it were, 3 have nothing further to add. 4 I am very grateful. Those are our submissions. 5 As I said, we stand ready to assist in any other way we 6 can on these subjects. 7 SIR WYN WILLIAMS: Thank you, Ms Gallafent. 8 All right. It's time for another break. Can 9 I ask just ask Mr Mertens because I think you are next, 10 some kind of rough time estimate? 11 MR MERTENS: Very short, it will be five or ten minutes. 12 SIR WYN WILLIAMS: Right. Well, Mr Stein, Mr Enright 13 predicted you wouldn't need a full two hours and I will 14 say no more than that. 15 MR STEIN: Thank you, sir. 16 SIR WYN WILLIAMS: Because of the likely timings this 17 afternoon it is now 1.08, according to this wonderful 18 machine I have in front of me, so I think we'll start at 19 2.05 and then we should finish comfortably before the 20 cricket begins. Thank you. 21 (1.10 pm) 22 (Luncheon adjournment) 23 (2.07 pm) 24 SIR WYN WILLIAMS: Yes, Mr Mertens. 25 Submission by MR MERTENS 92 1 MR MERTENS: Good afternoon. May I first of all thank the 2 Inquiry for having been given the opportunity to provide 3 written submissions in relation to today's issues and 4 also for being given the opportunity to address you 5 briefly today. I make these submissions on behalf of UK 6 Government Investments who I will refer to as UKGI. 7 As indicated in its written submissions, UKGI is 8 very grateful to the Inquiry for being able to attend 9 and participate in these hearings concerning issues of 10 compensation to subpostmasters and others. It 11 recognises that the issues that you have identified are 12 very important issues for the Inquiry to examine now, 13 and it's ready to work with the Inquiry to assist in 14 anyway that it can. 15 UKGI's role in relation to these issues is, as 16 described in our submissions, one of assisting BEIS with 17 its oversight of various of the arrangements that have 18 been put in place and providing challenge to POL on its 19 delivery of those arrangements, both at official level 20 and through the attendance of the shareholder 21 non-executive director on the Post Office board and 22 relevant subcommittee. It seeks to fulfil those 23 functions in light of the clear objective of achieving 24 full and fair compensation delivered as promptly and as 25 effectively as possible. 93 1 Since the hearings began on 14 February, UKGI has 2 followed the Human Impact Hearings and Focus Groups 3 closely. It's been concerned to hear in many of the 4 accounts that have been given, which are now reflected 5 in some of the submissions that the Inquiry has received 6 for these hearings, that compensation is not being 7 delivered effectively. 8 UKGI wants to ensure that it has as full an 9 understanding of these issues as it can so that it can 10 fulfil its functions most effectively. UKGI has 11 therefore referred each of the written submissions for 12 these hearings with care. It now attends these hearings 13 today and next week for the principal purpose of 14 listening, listening so as to hear clearly the 15 submissions made on behalf of all Core Participants, 16 including the responses that POL gives to the issues 17 that have been raised by others. In that way, the views 18 expressed by all concerned can be taken into account in 19 UKGI's delivery of its function of supporting BEIS, both 20 in terms of oversight and of challenge. 21 As indicated in UKGI's written submissions, 22 additional detail concerning its involvement in the 23 compensation issues and arrangements have been set out 24 in the Government's response to the BEIS Committee's 25 report on Post Office compensation, which appears in the 94 1 bundle for today at tab 13. 2 UKGI's role in supporting BEIS is also reflected 3 in BEIS's written submissions for these hearings and, to 4 the extent that they bear on UKGI's role, it notes and 5 endorses their submissions. 6 UKGI, nevertheless, recognises that there is an 7 urgent and ongoing need to examine rigorously the 8 operation of the compensation arrangements in light of 9 the submissions of some of the Core Participants that 10 have been received, and of any interim conclusions which 11 the Inquiry may now decide to express in a report or any 12 other update following these hearings. Thank you for 13 the opportunity to address you. 14 SIR WYN WILLIAMS: Thank you, Mr Mertens. For those who may 15 not be as familiar as others with the aim and object of 16 these hearings, can I say in respect of UKGI that I'm 17 grateful for their explanation of their role and, for 18 present purposes, that is sufficient for me. But when 19 it comes to phase 5, I think it is, when there will be 20 a more detailed examination, including evidence, then 21 I would expect that UKGI would have a significantly 22 greater role. 23 MR MERTENS: Yes, of course. 24 SIR WYN WILLIAMS: Thank you. 25 MR MERTENS: Thank you very much. 95 1 SIR WYN WILLIAMS: The floor is yours. Mr Stein. 2 Submission by MR STEIN, QC 3 MR STEIN: Sir, good afternoon. Sir, as you know, I appear 4 with Mr Jacobs instructed by Howe & Co Solicitors. 5 Together we represent 153 subpostmaster, 6 subpostmistresses and Post Office manager Core 7 Participants involved in this Inquiry. 8 All of our clients have had lives devastated by 9 this scandal. All of our clients have had lives that 10 have been badly affected by the scandal. Within our 11 client group, we represent GLO litigants and I'll just 12 explain that, so that we all understand what I mean. If 13 I refer to "GLO litigants" that means the individuals 14 that were part of the group litigation that took this 15 matter and broke this scandal by taking that action at 16 the High Court. 17 We also represent those threatened with criminal 18 action, those who were wrongly convicted, those who were 19 cautioned, those threatened with civil cases, and those 20 who are hounded by the Post Office to pay sums of money 21 for which subpostmasters were not at fault. 22 So you will recall through the evidence that has 23 been heard through the Human Impact Hearings that each 24 one of our client families have been affected, their 25 partners affected, their children's lives affected, and 96 1 generally the family life of those individuals derailed 2 by the actions of the Post Office, Fujitsu and BEIS. 3 So we have considered your statement of 30 June of 4 this year where you have stated that once you have heard 5 oral submissions, you will make a determination as to 6 whether to proceed to an interim report pursuant to 7 section 24(3) of the Inquiries Act 2005 or provide a 8 non-statutory progress update. 9 Can we strongly request that you issue an interim 10 report. It is our submission that it will be important 11 you, sir, as the Chair of this Inquiry, having heard the 12 evidence from those people that have given evidence 13 before you within the Human Impact Hearings, having seen 14 all of the written representations that have been made 15 by the various bodies and institutions, to make findings 16 as to the position reached in relation to compensation. 17 But the other value of an interim report will be 18 that within that report you can set out your 19 recommendations, recommendations which you will then be 20 able to consider and review during the lifetime of the 21 Inquiry. 22 Now, we know the background to this. In relation 23 to the GLO litigants, it is that they played a crucial 24 role in exposing the Post Office Horizon scandal. We 25 also know that in 2019 much of the monies paid over as 97 1 part of the settlement were swallowed in legal costs, 2 and we also know that the settlement described in its 3 terms a reference to "litigation funders". So it is 4 very clear that the Post Office has known for some time 5 that a lot of the money that would otherwise have been 6 paid over in a settlement was never going to go to the 7 GLO litigants. One of the points that we make, 8 therefore, in relation to this is the delay that has 9 taken place. 10 We have heard obviously on 22 March the Minister 11 announcing that additional funding would be made 12 available to give those in the GLO Compensation Group 13 compensation that is similar to that which is available 14 to non-GLO group members. One of the findings that we 15 would ask you to make, though, is this, that since March 16 of this year not one GLO group member has received any 17 compensation. 18 We do say that there has been obfuscation and 19 delay in dealing with these matters as should have been 20 appropriate by essentially what is a public body: the 21 Post Office. We know it is privatised but it is owned 22 by the Government. Therefore, an interim report setting 23 out recommendations would provide a target list for the 24 Government and for the Post Office to then follow. 25 We ask for the following points to be made if you 98 1 would consider them, please, in such part of your 2 recommendations as you would be prepared to consider. 3 SIR WYN WILLIAMS: Mr Stein, will you give me those in 4 slightly slower fashion because, for whatever reason, 5 I'm not getting a simultaneous transcript now. I want 6 to make a careful note of what you are saying. 7 MR STEIN: Sir, not only will I do that but we will also 8 undertake to provide it in writing so that you have 9 those set out. 10 There are six individual points that we ask you to 11 consider making. Firstly, that significant interim 12 payments are made immediately to all of those 13 subpostmasters who are outstanding. 14 Point 2, that as regards the recent press release 15 from BEIS that they are making available 19.5 million as 16 an interim payment fund, that you, sir, are provided 17 with the principles to be used for the distribution of 18 these funds amongst the GLO litigants. Sir, that would 19 allow you to consider the fairness of payments amongst 20 the litigants and make any recommendations as may be 21 required. 22 Point 3, that fairness demands that the 23 Post Office should not be the final arbiter of whether 24 an interim or final payment should be made in 25 compensation claims made by any individual in categories 99 1 in A, B or C. 2 Point 4, that BEIS should make provision for 3 reasonable legal costs all in stages of compensation 4 applications in all three categories that you have 5 identified, and that claimants are provided with proper 6 access to disclosure at all stages. 7 Point 5, that of the principles that you have 8 sought to discover for all compensation schemes, or 9 proposed schemes, there needs to be transparent and 10 disclosed settled precedents and comparables, allowing 11 for legal advice to be given to the Post Office's 12 victims at their individual category of claim and 13 expected financial outcome. 14 Finally, at point 6, a timetable be set out for 15 the establishment of the GLO Compensation Scheme capable 16 of being monitored and followed by all those involved. 17 SIR WYN WILLIAMS: Can I just be clear with you, Mr Stein. 18 That last point, point 6, is clearly related solely to 19 I will call them the GLO claimants. You call them GLO. 20 Point 1 to 5 apply to all categories, so that I'm clear, 21 A, B and C. 22 MR STEIN: Sir, yes. 23 SIR WYN WILLIAMS: A, B and C, 1 to 5, 6 is specific to GLO. 24 MR STEIN: Sir, yes. 25 SIR WYN WILLIAMS: Okay. 100 1 MR STEIN: Sir, we recognise, as has already been made in 2 passing comment this morning, this is not a court. This 3 is not the High Court. Your powers are limited to 4 making statements, recommendations, and putting forward 5 findings. It is, though, nevertheless possible for you 6 to set out what you would regard as being within the 7 range of reasonable responses that could be made by 8 setting out a timetable and, of course, that can then be 9 reconsidered if there is any attempt, if you like, or 10 any suspicion that such a timetable is not being 11 followed. It would be an indication, in other words. 12 The reason why we say that such recommendations 13 are required is because, in our submission, the approach 14 of the Post Office and BEIS to compensation replicates 15 past behaviour. We suggest that what is happening is 16 that the Post Office is continuing to attempt, and 17 actually succeeding, in siloing subpostmasters, keeping 18 them ignorant of what is happening in relation to 19 compensation claims as regards to one to another. There 20 is a limitation being provided on access to full legal 21 advice. The onus of proof point has been made already, 22 but the onus of proof point is that despite the fact 23 that many Post Office business papers and accounts were 24 removed, or over the years have gone, that the burden of 25 proof is nevertheless placed upon the applicants within 101 1 these schemes. We say that the collection of those 2 issues is causing the same problem that you have heard 3 through the Human Impact Hearings, that each one of the 4 subpostmasters in their individual post offices was left 5 in ignorance of what going on elsewhere without 6 information that would have assisted them in dealing 7 with the Post Office. 8 Now if, sir, you are able to follow that request 9 and put forward an interim report, it would assist in 10 providing us with a way forward because one of the 11 things that has been apparent this week, and indeed up 12 until today, is that the sands have been moving in the 13 background. We have heard very submissions coming in 14 late. The submission that you referred to as the one 15 last night, in fact, I think my instructing solicitors 16 received it at 8.30 this morning, as it was passed on by 17 the Inquiry -- we're grateful for that -- and so we 18 didn't even have it at the 9.50 last night that it 19 otherwise might have been available. We know that what 20 has been happening is behind the scenes letters have 21 been sent to many of the people that we represent and, 22 therefore, there is a problem that exists which is a 23 shifting sands of position that is hard to grasp, which 24 is why, sir, an interim report setting out what you 25 would regard as being the way forward would be of real 102 1 assistance. 2 The interim report that we ask you, sir, to make 3 does not relate to recent events. The Post Office and 4 its sole shareholder (the Department for Business, 5 Energy and Industrial Strategy, BEIS) which monitors the 6 performance of the Post Office through UK Government 7 Investments, has been firmly aware of the failings of 8 the Horizon system for many years. 9 There were the two judgments by Mr Justice Fraser 10 in 2019 that demonstrated that the Post Office had 11 failed to ensure that its operating system, Horizon, was 12 fit and reliable for the purposes of its systems and as 13 a basis for any type of legal case. Nevertheless, the 14 Post Office throughout those proceedings fought the case 15 tooth and nail thorough the High Court, even seeking at 16 one stage to remove from Mr Justice Fraser from the 17 case. 18 Not one of the Horizon system. The Horizon system 19 is not a sentient being. The Horizon system did not 20 pick its victims. The Horizon system did not decide 21 which of the Post Office offices individual balances it 22 would disturb and infect with its bugs. The Horizon 23 system is a product of the negligence and lack of care 24 of the people who operated and owned it. In fact, we 25 suspect, as the Inquiry progresses we're going to find 103 1 that all post offices had some problems. The question 2 is: to what degree? 3 The Post Office should never have thought to 4 preserve its reputation at all costs by fighting the 5 High Court case. But what it did do, by doing so, was 6 at the cost of further harm to the lives, financial 7 health, and mental wellbeing of those we represent. The 8 Post Office is in, in effect, a public organisation and 9 should have immediately told the truth to its 10 Post Office workers. Instead, what has happened in 11 relation to compensation it has set about putting in 12 place complicated schemes run by corporate lawyers to 13 provide access to some compensation for some its 14 victims. 15 Sir, on 8 November last year I addressed you at 16 the first hearing of this Public Inquiry after it had 17 been put on a statutory basis. I set out then that many 18 ex-subpostmasters face imminent financial ruin and that 19 people will lose their homes unless something is done 20 urgently to assist them. I added then that some may not 21 survive the lifetime of the Inquiry due to 22 stress-related illnesses. Indeed, since the Inquiry has 23 started hearings in February of this year, I am sad to 24 say that I have been informed that another of those 25 affected by the Post Office in this scandal has died. 104 1 We don't, of course, forget such individuals as Marian 2 Holmes' husband Peter, a proud and distinguished 3 ex-police officer who went to his grave with a wholly 4 undeserved conviction recorded against his name. 5 The obfuscation and denial that I have referred to 6 has continued since the time of the High Court hearings. 7 On 1 December 2021, BEIS wrote to two of our clients and 8 told them a full and final settlement was reached 9 between the claimants in the GLO and the Post Office. 10 There is nothing further the Department can do at this 11 time. 12 On 6 December last year, Mr Enright, partner at 13 Howe & Co Solicitors, wrote to Mr Scully and stated 14 that: 15 "Neither you nor your Government's hands are tied 16 by the settlement in the Group Litigation. It is 17 entirely open to your department and your Government to 18 acknowledge the widely accepted fact that claimants in 19 the Group Litigation performed a vital public service." 20 Without their action, for which they paid a very 21 high price, the greatest miscarriage of justice in 22 British legal history would never have been uncovered. 23 In November, I asked you, sir, as Chair, to use 24 your wide powers to require the production of evidence 25 that the Inquiry believes is relevant to the terms of 105 1 its reference and issues to compel the Post Office and 2 BEIS to disclose an up-to-date clarification on 3 compensation. 4 Of course, all of our clients have asked me to 5 convey their gratitude to you and your team at this 6 Inquiry for acknowledging and prioritising this 7 important issue through conducting these hearings today 8 and next week. But it may assist you to know that many 9 of our clients have found it helpful to give evidence in 10 the Human Impact Hearings, finding the experience 11 cathartic and giving them a degree of closure. 12 But the harm which the Post Office has caused to 13 our clients is ongoing and is made manifest in the their 14 desperate financial consequences. Let me give you some 15 examples of what has been said. Marion Drydale says: 16 "I have sold my jewellery, used my inheritance, 17 cashed in my pension. Every day is filled with 18 uncertainty, a dread of more bills I cannot pay." 19 Peter Worsfold says that he has still not been 20 able to repay his 94-year-old mother for bailing him out 21 when the Post Office demanded money for shortfalls in 22 2002. He visits the supermarket at 4 p.m. when they 23 have put short-dated items out at reduced prices. 24 Faisal Aziz is on the verge of declaring 25 bankruptcy. He worries that he will not be able to feed 106 1 his five children. 2 Susan Hazzleton, who you will recall as you asked 3 questions in relation to her particular circumstance. 4 She says that she is 69 years old in December and she 5 still works four days a week as she can't afford to 6 retire, and she has just had to put her house on the 7 market. 8 Geoffrey Pound says. 9 "Our house and business were repossessed back in 10 2008. At 74, I would need to live until about 150 years 11 old to repay in full." 12 Shazia Siddiq: 13 "The ounce of dignity I thought was remaining is 14 being eroded daily. I am so tired. At the age of 38, 15 I feel like a pensioner. The effect of Post Office 16 Limited actions have destroyed me." 17 All these Core Participants are GLO litigants and 18 there are obviously many other examples that we could 19 provide. These are the very people who risked 20 everything to expose the scandal. Some you heard from. 21 Some, like Gareth Etheridge, received sums as little as 22 £1,800 from the Group Litigation, which is why we go 23 back to the point we're making in relation to 24 recommendations. 25 Sir, you've asked for the principles to be 107 1 expressed in relation to groups A, B and C. We need to 2 know, looking forward, what are the principles that are 3 going to be used in relation to the setting out of 4 compensation in the future for the GLO group. 5 Now, sir, we have had comment today about the 6 responses made in the institutions to this Inquiry. Can 7 we set out our disappointment at the responses from the 8 Post Office Limited and BEIS to the questions that you 9 have asked, particularly, may we say, sir, in relation 10 to the issue of fair compensation for the Group 11 Litigation claimants. You called, sir, for specific 12 answers at questions 1 to 12 on 10 May of this year, 13 nearly two months ago. Your direction was this, this is 14 on 9 May: 15 "Although the Minister's announcement of 22 March 16 2022 was no doubt very welcome to the claimants in the 17 Group Litigation, it is extremely important that effect 18 is given to the announcement as expeditiously as 19 possible. No doubt these two issues will be the subject 20 of detailed submissions at the hearing which I have 21 decided to convene." 22 On 10 May, you set out with considerable clarity 23 the questions you invited answers to as regards the GLO 24 litigants, setting them out of at paragraphs 9 to 10, 25 fair compensation for the Group Litigant claimants. The 108 1 principles which we apply to the calculation of further 2 compensation payments. 3 10. The mechanism or mechanisms by which further 4 compensation payments will be calculated. 5 11. The provision, if any, which will be made for 6 applicants to obtain independent legal advice in 7 relation to their claims. 8 12. The procedure or procedures which will be 9 adopted to resolve disputes about the value of further 10 compensation payments. 11 Yet the Post Office responded in six lines at 12 paragraph 58 of its written submissions to say that: 13 "Until further information is released by 14 Government, Post Office is unable to assist the Chair 15 further in relation to issues 9 to 12." 16 Well, BEIS went one better and responded in two 17 paragraphs. At paragraphs 38 and subsequently 39 of 18 their submissions dated 31 May, they have said that they 19 convened a working group, that decisions have been made, 20 and, whilst the Department has a strong desire to begin 21 payments as soon as possible, the Department hopes to be 22 able to provide a further update to the Inquiry at the 23 hearing in July. 24 So we are at a loss to understand why BEIS has 25 failed to answer your questions. They were simple 109 1 questions, setting out the need for simple answers, 2 targeted at what is required by the Group Litigation 3 individuals. 4 Our clients do not wish to wait to hear BEIS 5 proposals such as they may be on the next occasion that 6 we meet in relation to this Inquiry. 7 May I make a note now that, because of the 8 timetabling (of which I make no complaint whatsoever), 9 that we would ask if points arise that we need to deal 10 with that we may need to then return to make some 11 submissions in response after hearing from BEIS on the 12 next occasion. 13 Sir, what is more concerning is that on 30 June, 14 instead of complying with your requests for information, 15 BEIS decided to issue a press statement on its website 16 entitled: 17 "New Story 19.5 million interim compensation 18 package for subpostmasters who helped uncover Horizon 19 scandal." 20 This is a terrible and heartrending scandal. It 21 should not be an opportunity for a Government department 22 to seek to score public relations points through the 23 Media. Nor should BEIS seek to disregard the Inquiry 24 process and embark on a frolic of its own, particularly 25 when directed by the Chair to answer particular 110 1 questions. 2 The view that our clients takes is that BEIS has 3 to be dragged kicking and screaming by my instructing 4 solicitors Howe & Co and this Inquiry into finally 5 agreeing to at least move in the right direction. Is it 6 actually possible to believe that the Post Office and 7 BEIS are so incapable of understanding, even now, that 8 they have victimised their own staff? 9 So what does this mean? Our clients are now 10 aware, and this is all it means to them, that the 11 Government announcement means that they may be receiving 12 some interim compensation. Now, of course, this 13 position should have been reached a very long time ago 14 and we still have no clear time-frame for a matter that 15 is urgent. This is not a gift. The people we represent 16 are not a charity. They deserve adequate immediate 17 compensation, as we have said many times, for their huge 18 actual and reputational losses. 19 The BEIS news story says that Ministers are to 20 provide a 19.5 million interim compensation package to 21 the postmasters who played a crucial role in exposing 22 the Horizon scandal. The news story contains next to no 23 detail. There is nothing setting out the date by which 24 that will be set out. My clients do not know who will 25 be eligible, what the application process is, and the 111 1 basis upon which the funds will be apportioned. These 2 matters need to be clarified so that the representatives 3 of the Core Participants and my instructing solicitors 4 and others can consider them and comment upon them, if 5 necessary, on the next occasion. 6 May I also add at this point that the lack of 7 trust between my client group and the Post Office, 8 Fujitsu and BEIS is so extreme that they doubt the 9 reality of the interim compensation package and, given 10 the track record of the Post Office and BEIS, who can 11 blame them? Put it this way: there are not many 12 ex-subpostmasters who are holding their breath. 13 Sir, as you know from the hearings, some people 14 who are before you and before this Inquiry, are facing 15 ruin, absolute ruin, right now staving off people coming 16 to their door demanding money. So we do ask for a 17 commitment from BEIS to making immediate -- looking this 18 up to make sure we know what it means. It mean do at 19 once, instantly, get this done, hardship payments to 20 those SPMs who are facing hardship as a consequence of 21 the scandal. 22 We've heard Ms Gallafent today speak about 23 hardship payments in relation to the Group A group or 24 class A group. But what we would respectfully invite 25 you to accept, sir, is that this appears to have been 112 1 done at the will of the Post Office when it feels that 2 it should do so in particular circumstances that it's 3 notified of. No system, no settled way ahead, no 4 application process. 5 Now, aside from our criticisms of the delay and 6 the BEIS failure to follow your directions, the 7 announcement of 30 June may represent some progress but 8 it needs to be made reality now, not at some later 9 stage. We need a timetable and we need that now. 10 May I set out then and move on to the particular 11 positions in relation to the points that you have asked. 12 Sir, you have made it very clear that you have read all 13 the written submissions and that indeed we interpret, in 14 fact, the need of this Inquiry for these particular 15 hearing purposes as being more directed towards the 16 institutions to see what they are saying about it as 17 well as the points that we make on their submissions. 18 Sir, can we set out our concerns with the HSS. 19 I wonder who came up with that title? Our first point 20 is this in relation to the burden of proving losses: 21 Post Office Limited and BEIS as responsible for this 22 scandal. They should not be treating the issue of 23 compensating victims as anything akin to litigation or, 24 indeed, what appears to be adversarial litigation. The 25 HSS scheme requires that SPMs, subpostmasters, establish 113 1 causation and prove each and every loss, preferably with 2 contemporaneous evidence. 3 Many people we represent, and I'm sure many people 4 who have suffered at the hands of the Post Office, 5 endure victim fatigue and some may well be suffering 6 from undiagnosed PTSD. This system that is put forward 7 is a system in which people who are already finding it 8 difficult to manage their lives and look after their 9 families then have to go through this rather difficult 10 process. You will remember that the evidence is that in 11 many, if not most, cases the Post Office seized the 12 paperwork of subpostmasters and their records when 13 suspending them. 14 The Post Office now seeks to place the burden on 15 subpostmasters to produce the very records that POL (the 16 Post Office) took from them. This is wrong-headed and 17 badly thought out and we'll look at the details been 18 moment. 19 Ms Linnell (Kay Linnell will be, we suspect, an 20 important witness in the later phases of this Inquiry) 21 tells us that during the mediation scheme a senior 22 Post Office official told Sir Anthony Hooper during the 23 mediation scheme that Post Office Limited destroys all 24 records after six years. If that is right, then Post 25 Office Limited requires HSS applicants, and presumably 114 1 all applicants for compensation, to bear a burden of 2 producing documents which Post Office Limited have 3 seized and destroyed, in effect directing hurdles that 4 no horse could jump. 5 It is no answer, we suggest, to our concerns for 6 Post Office Limited BEIS to rely on the statements in 7 the guidance to the effect that where the postmaster is 8 unable to satisfy the burden of proof in relation to 9 their claim, their claim may nonetheless be accepted in 10 whole or in part if the scheme considers it to be fair 11 in all the circumstances. What does that mean? What 12 are the principles being used for such a determination? 13 Essentially, this has been, and remains, an 14 enormous and far-reaching public scandal. Our clients 15 should not have to go cap in hand to the perpetrators of 16 that scandal when applying for compensation to ask for 17 indulgences or some form of largesse. 18 The heads of loss within the HSS scheme. Whilst 19 the heads of loss in the HSS are non-exhaustive and 20 generic, it is problematic that they do not reflect the 21 full range of harm caused by the Post Office in this 22 scandal. 23 Now, Post Office Limited states at paragraph 11 of 24 its written submissions that there is no form of loss 25 that cannot be taken into account. This approach is 115 1 wrong. The scheme should be tailored to reflect the 2 consequences of Post Office's actions and include: 3 suffering to children and family members; the roles that 4 family members have played in caring for traumatised 5 subpostmasters; and the fact that many subpostmasters 6 have been required to work long into what would 7 otherwise have been a planned retirement, and, sir, you 8 have heard evidence that relates to such matters. 9 Well, the administration of the compensation 10 scheme has been described by Post Office Limited. They 11 say it's designed to be simple and user-friendly to 12 avoid the need to incur costs of legal representation. 13 Well, we suggest that the scheme is neither simple nor 14 user-friendly. It's beset with problems. You will 15 recall the evidence of Mr Sethi, the Inquiry's first 16 witness, who received a request from the HSS for answers 17 to 68 questions which included a number of sub-accounts, 18 which brought the total to approximately 100 questions. 19 Mr Sethi expressed considerable frustration while giving 20 evidence that he has being asked to consider questions 21 in relation to matters that had occurred some 20 years 22 previously, in respect of which much of information was 23 still being held by the Post Office. 24 Nor, we suggest, is the scheme necessarily being 25 administered fairly. Subpostmasters have said that they 116 1 received offered from the HSS that have been derisory. 2 Fiona Elliott gave evidence on 19 May 2022. Ms Elliott 3 said that she had lost just over a £1 million but had 4 been offered instead £24,000. BEIS's assertion at 5 paragraph 21 of their written submissions is that -- 6 sorry, the Post Office Limited is on track to issue at 7 least 95 per cent of offers by the end of this year. 8 It seems to us, and even having listened to 9 carefully to what Ms Gallafent has said today, that 10 given the difficulties and the restrictions in 11 application process, that there may well be a number of 12 people who have already had offers, and in fact accepted 13 them, through settlements, that could well have put 14 forward further matters that relation to consequential 15 losses. It's a matter of grave concern, we suggest that 16 at paragraph 25 of the Post Office Limited's written 17 submissions that they are saying that the vast mortality 18 of offers have been accepted. We say that those offers 19 may well have been made within a scheme where applicants 20 are not able to receive legal advice or disclosure in 21 relation to their possible claims. It is quite likely, 22 we say, that there will be many subpostmasters who 23 received offers in a similar derisory way to that 24 received by Ms Elliott and who, in the absence of legal 25 advice, have accepted those offers. 117 1 There's a danger, we suggest, of there being 2 a scandal within a scandal about the compensation and 3 the way it is being handled by the Post Office. 4 Sir, you have questioned already the sign or the 5 lack of sign of independence in the running of the 6 scheme. At paragraph 31 of the submissions filed on 7 behalf of Post Office Limited, it is stated that HSS 8 claims will be first assessed an assessor from Herbert 9 Smith Freehills and then by a team of reviewers at 10 Post Office. The assessment is then reviewed again by 11 the case assessor before being looked at by a so-called 12 Independent Advisory Panel. Ultimately, it is the 13 Post Office which decides the outcome with the benefit 14 of the Panel's assessment and recommendation. 15 We suggest, and we agree with the provisional view 16 that you have set out, that fairness demands that the 17 Post Office Limited should not be the final arbiter of 18 whether an interim or final payment of compensation 19 should be made in accordance with the Minister's 20 announcements in July and December last year, and that 21 any disputes should be determined therefore by an 22 independent person. In particular, it would be 23 inappropriate for Post Office Limited to play any part 24 in the determination of aggravated or exemplary damages 25 which will be claimed by subpostmasters. We are not 118 1 aware of any previous scheme where an abuser institution 2 awards punitive damages against itself. 3 The further disturbing feature of the HSS scheme 4 you've already dealt with today in discussion with 5 Ms Gallafent and Mr Beer, Queen's Counsel, is that there 6 is a denial before an application is made of access to 7 documents disclosed by Post Office Limited at those 8 initial stages. We have submitted in our written 9 submissions that there is therefore a substantial 10 procedural flaw in the HSS scheme. We say that that is 11 wholly unacceptable. 12 Now, as to legal representation during the 13 compensation process, we saw in the BEIS news story of 14 30 June a comment that is made there which says, 15 "Postmasters will be able to claim reasonable legal fees 16 as part of participating in the final compensation 17 scheme." Well, we hope that the wording of the 18 Ministerial Statement reflects acceptance by POL and by 19 BEIS that postmasters simply cannot be expected to 20 embark upon a complex procedure involving detailed and 21 historic claims without legal representation and access 22 to experts, if necessary. 23 It is important to highlight (although the data is 24 still not, we suggest, entirely clear) that it appears 25 that when we were drafting these oral submissions we 119 1 worked it out as being 4 per cent of applicants to the 2 HSS scheme were legally represented. In fact, having 3 looked at the documentation again and considered what 4 has been said for us this morning, it looks as though 5 it's 3 per cent of those applying to HSS have had some 6 type of legal representation. 7 Now, it may be therefore useful to briefly go to 8 the application form itself. Sir, can I take you to the 9 bundle, please. At page 192 -- you have been directed 10 to already by Mr Beer -- sir, this is a form that we 11 learn from Ms Gallafent -- and I hope I quote her 12 correctly, just after midday today -- this is designed 13 not to refer to the consequential losses and that is 14 done to help lay persons who are making an application. 15 Well, therefore it seems we're being told that it 16 was quite deliberate that this form didn't have a 17 reference to consequential losses. You've been directed 18 to paragraph, I think, 24 by Mr Beer. Can I take you to 19 paragraph 193. Sorry, page 193 which is paragraph 29. 20 In the bundle, page 193 and it's paragraph 29 of the 21 form. Let's see what it says here. 22 "Please provide an explanation as to why you 23 believe you have not been treated fairly by the 24 Post Office. In doing so, you should set out what you 25 would like the Post Office to do to remedy the situation 120 1 and why." 2 Well, there are a number of answers to that I'm 3 sure that many of my clients would like to give in 4 relation to what the Post Office can do with itself. 5 But otherwise, why is the Post Office setting out there 6 a suggestion of what has happened as a result of the 7 unfair treatment but it is not dealing in any way with 8 the consequential losses and the effect upon and the 9 stigma of having been dealt with by the Post Office in 10 a particular way or regarding people's character or what 11 has happened to them by way of their own experiences, 12 their mental health or their medical health. 13 We have also been directed to the guidance that is 14 set out at page 303 as being guidance that might assist. 15 It doesn't take but a moment to look at the pages that 16 have been referred to already to realise that these are 17 complex matters, dealing with heads of loss, in terms of 18 loss of earnings, loss of profits, loss of property, 19 loss of opportunity, loss of chance (these are legal 20 terms), penalties, general or increased costs of 21 financing, bankruptcy, insolvency, and so on. 22 We listened carefully to Ms Gallafent who did her 23 very best in, we would suggest, rather difficult 24 circumstances to defend the Post Office's actions. This 25 form is wholly inadequate. It is not that it doesn't 121 1 make much by way of reference to consequential losses: 2 it makes no reference to it. 3 We take away our legal qualifications and put 4 ourselves in the position of the distressed 5 subpostmaster who is trying to deal with such a form in 6 awkward circumstances such as this thinking about, no 7 doubt, the time that they've got to get it in otherwise 8 that door is going to be closed. What we say is, in 9 effect, a form that appears to be designed not to help 10 lay people make the application but, in fact, to avoid 11 particular types of losses. 12 You will have seen, sir, that the HSS scheme only 13 provides for contribution of 1200 or 400, depending on 14 the scope of the dispute, taken in relation to an offer 15 in relation to legal costs or legal expenses. And POL 16 (Post Office Limited) states in its written submissions 17 that it's made payments of legal expenses in 35 cases 18 where requested to. This should have been built into 19 the scheme. People that are making such applications 20 that really have to be told, as we learned today from 21 Ms Gallafent, that what they should do is look at this 22 application form and look at guidance, make sure that 23 they put in a separate document setting out their answer 24 to these heads of damages in relation to consequential 25 damages. The Post Office is essentially asking for 122 1 individuals to perform with, one would hope, the 2 facility of a trained lawyer and that, we suggest, is 3 continuing unfairness. 4 Now, it is quite clear that Post Office Limited 5 views the compensation process as litigious. I mention 6 Ms Elliott again, Fiona Elliott. She applied to the HSS 7 and on 26 June Ms Elliott attended a good faith meeting, 8 accompanied by Mr Enright, a partner at Howe & Co who is 9 handling these matters, and that was because she had 10 rejected an offer that had been made to her. Now, 11 attending at that meeting, which was conducted by 12 a barrister instructed or employed by Herbert Smith 13 Freehills, it was pure good fortune that Mr Enright was 14 present. At the start of the meeting, it was explained 15 to Ms Elliot that the meeting was to be conducted on 16 a without prejudice basis. Well, it seemed to us, on 17 her behalf, that a good faith but without prejudice 18 meeting is absurd and this, yet again, has all the 19 trappings of litigation. 20 We hope that Post Office Limited and BEIS accept 21 that the provision in the HSS scheme, which probably is 22 going to be asked for or attempted to be replicated in 23 the other schemes, for legal assistance of perhaps three 24 hours work and only after an offer has been made is 25 wrong, it is untenable, it is unfair, and designed to 123 1 disadvantage subpostmasters. 2 Now, we understand that Post Office Limited and 3 the Department of Business are considering using Freeths 4 Solicitors to assist eligible subpostmasters in relation 5 to compensation claims that were brought in the Group 6 litigation. Now, we can provide some further update in 7 relation to that as being contact to clients of ours by 8 Freeths in a letter that's essentially called Freeths 9 facts. Again, going back to the fast-moving pace of 10 matters, this is yesterday. Freeths write to 11 subpostmasters: 12 "Please note that you are not obliged to 13 reinstruct Freeths. If you do not instruct us, this 14 means that we will not be able to represent you in stage 15 1 of the process and we will not be able to pay your 16 interim payment to you." 17 Freeths, therefore, have already acknowledged -- 18 and, sir, you've considered the wording of their 19 communication to the Inquiry already -- that not all 20 individuals will necessarily be wishing to instruct them 21 within this process. 22 Now, Mr Enright of Howe & Co Solicitors recently 23 had a meeting with BEIS and it has been accepted by BEIS 24 that other representatives of subpostmasters before this 25 Inquiry will be included in the further discussions 124 1 about how the scheme for the GLO litigants will be put 2 together and its terms. So moving forwards, it seems as 3 though there is acceptance by BEIS that Howe & Co, and 4 no doubt other firms of solicitors, will be involved in 5 that process. 6 Now, we welcome that. It will enable discussions 7 about funds being distributed to be discussed openly and 8 transparently and that will be capable of being shared 9 with the Inquiry as the Inquiry makes it progress. 10 Nevertheless, the work that will need to be done 11 within those discussions and in making the applications 12 in the future must be properly funded to put those 13 applicants within the GLO litigation on the same basis 14 as the Post Office in terms of legal representation. 15 Can I then deal with interim patients themselves. 16 This is interim payments for those who underwent 17 prosecutions, not convicted. We have submitted that 18 there should be no distinction between those who are 19 entitled to interim payments having had their 20 convictions overturned and to those who are prosecuted 21 and acquitted at trial or where prosecutions were 22 discontinued or cautions accepted. 23 We understand that BEIS's position as stated in 24 their written submissions is that any subpostmaster who 25 was acquitted or otherwise prosecuted and cautioned or 125 1 not convicted can apply through the HSS scheme. 2 Presumably BEIS will say that any subpostmaster who was 3 acquitted and who was a member of the GLO can apply 4 under the new, but as yet unparticularised, scheme. 5 Our position is that those subpostmasters who were 6 acquitted fall between the mechanisms and should be 7 transferred into the category B cohort of cases and 8 should have the facility to receive up to £100,000 in 9 interim compensation in accordance with that process. 10 This would remove the unacceptable position reflected in 11 the evidence of Ms Hamilton and Ms Palmer, that those 12 who are convicted are at least eligible for conviction 13 whereas those who were acquitted were not. 14 We hope that the announcement of 30 June that 15 Ministers are to provide a 19.5 million compensation 16 package for all GLO litigants will assist in practical 17 terms. But the distinction should be made. However, 18 basic mathematics suggest that acquitted subpostmasters 19 will still receive substantially less in interim relief 20 than those who were convicted. 21 Can we deal with the compensation questions that 22 relate to subpostmasters with quashed convictions. The 23 subpostmasters with overturned convictions who we 24 represent would wish that BEIS clarify their position in 25 relation to how it will proceed in this category of 126 1 cases in these hearings. 2 Can I deal immediately with a point that's already 3 been subject to some discussion. We know that there are 4 discussions ongoing that include a reference to 5 Lord Dyson who, as we understand, has agreed to come in 6 and consider these particular category of cases. We go 7 back to our primary submission which is that you, sir, 8 should have answers to what are the principles being 9 employed in relation to such determinations. We were 10 pleased to hear the possibility set out today that the 11 comparables or the precedents or the determinations made 12 by Lord Dyson may well be available so that people can 13 see what has happened one to another with such 14 applications. 15 We do not wish to make any further submissions on 16 this particular point because we would like to consider 17 what has have be said so far between now and the next 18 hearing, but our main consideration being that 19 principles need to be open, need to be transparent, need 20 to be capable of being examined by subpostmasters and 21 our representatives remain in relation to all of those, 22 including those individuals who otherwise might go 23 through what may be described as the alternative scheme 24 employing the good services of Lord Dyson. But the 25 principles upon which decisions should be made should be 127 1 open and clear to others. 2 SIR WYN WILLIAMS: Mr Stein, you probably heard Mr Beer 3 suggest that I might want to enquire of the affected 4 Core Participants to what extent I should butt out or in 5 in relation to this particular issue. I asked 6 Ms Gallafent what she thought and she answered me. Am 7 I butting in or out or somewhere in between on what you 8 say? 9 MR STEIN: Well, sir, naturally of course, we are asking you 10 to stay somewhat in the doorway. 11 The position that we are asking you to adopt is 12 this: that it is important that the principles for 13 compensation are established, are known, are transparent 14 and accessible. We also don't wish to interfere in 15 anyway with any current application or anything that we 16 put forward delay compensation being provided. So on 17 that basis, and subject to further thought between now 18 and the next occasion in this rather rapidly moving 19 situation, we suggest that the way forward will be for 20 your to stand in that doorway and say that the process 21 needs to have some level of oversight and needs to be 22 transparent and to request, if all parties agree, that 23 the Lord Tyson principles, can I put it that way, be 24 made available. That would seem to us to be, 25 respectfully, a halfway house that would be acceptable 128 1 at this time. 2 SIR WYN WILLIAMS: I mean, I'm looking at this from 3 a practical point of view as well. You invited me in 4 the strongest terms to provide an interim report. In 5 the very nature of this things that would probably mean 6 a greater length of time between these hearings elapsing 7 than if I were to just provide a progress update 8 because, as you will appreciate, an interim report has 9 to be laid before Parliament and all the rest of it. 10 MR STEIN: Yes. 11 SIR WYN WILLIAMS: If it happened to be the case that 12 Lord Dyson's work was -- I think someone suggested that 13 he may complete part of his work by the end of July, who 14 knows what then might follow from that. So I think the 15 probability is that instead of us talking to each other 16 sideways about doors open and shut, I should just -- the 17 very great likelihood is that Lord Dyson might pronounce 18 before I certainly provide and interim report and my 19 interim report, if that's what it is, will then no doubt 20 take great account of what transpires. Does that sound 21 reasonable? 22 MR STEIN: Sir, yes. It does seem to us to be a practical 23 way forward. Being blunt, it may well be that 24 Lord Dyson will hear of this hearing, may well pay 25 attention to it, and may want to consider contact with 129 1 the Inquiry and in such contact, the Inquiry may be 2 prepare, I know not, to accept that he would be prepared 3 to set out the general nature of his considerations. 4 We don't, in any event wish, to put anything 5 forward that delays any compensation going to anyone. 6 There have been enough delays and enough obfuscation and 7 that that cannot be done. So we accept the problem and 8 we accept also, therefore, the solution. 9 Now, we understand that as regards the claw-back 10 position that this is one of the matters that has 11 changed. For us, we learnt about this this morning. 12 We're told in the correspondence that was received last 13 night, that we saw I think at 8.30 this morning, that 14 there would be no attempt now to claw that back. That 15 is progress at least in relation to those payments. 16 We note that Post Office Limited has made that 17 concession in relation to paragraph 43, we think, of its 18 written submissions. BEIS has now confirmed, it seems, 19 that it agrees with that position. 20 Now, I turn then to paragraph 33 of the written 21 submissions from BEIS which states this: 22 "One reason for the Department providing funding 23 to Post Office Limited to enable claimants to receive an 24 interim payment of up to 100,000 was to make ensure that 25 they could secure independent legal advice to assist 130 1 them in making claims." 2 It also stated that the Department was concerned 3 to avoid a situation whereby postmasters were forced to 4 engage expensive litigation funders and end up with 5 their compensation reduced as a result, as happened of 6 course with the Group Litigation. 7 The need for interim payment is such that that is 8 required to allow people to get their heads above water, 9 not for such luxuries as legal costs. Legal costs 10 should be paid for by BEIS and we suggest that there 11 still is a failure of understanding by BEIS and the 12 Post Office that the subpostmasters were, and are, their 13 victims. They have created this problem. They have 14 created the need for subpostmasters to have legal 15 assistance at all. 16 Now, there appears to be some conflict with 17 submissions made by the Post Office at paragraph 56 of 18 its written submissions, that as part of the 19 negotiations Post Office will consider the postmasters' 20 reasonable legal costs. So it seems that BEIS will need 21 to reconsider its position based upon the way that the 22 Post Office has set matters out. 23 Effectively, BEIS is saying that they don't want 24 legal costs to eat into subpostmasters' final 25 compensation awards, so those costs should be taken from 131 1 the postmasters at source and deducted from interim 2 payments at the outset. 3 The money is needed right now to solve people's 4 immediate problems, to get them out of the financial 5 hole created by the Post Office. What are those 6 individuals to do? To receive an interim payment, put 7 some rather unspecified sum of money aside which they 8 can't touch to use for legal costs. At the heart of 9 this suggestion, it is badly wrong that those 10 individuals are being deprived of the ability to 11 properly have fully funded legal assistance. 12 BEIS will know that the aim of compensation is to 13 try to place postmasters back in the position where they 14 would have been but for the scandal. Costs are a 15 separate issue. 16 Of course, BEIS may pay the reasonable legal costs 17 associated with making claims under the scheme. It 18 appears to have agreed to do so in relation to category 19 C, the GLO litigants. It cannot, we suggest, reasonably 20 fail to do likewise in respect of HSS applicants and it 21 should not try to short change those who are convicted 22 unlawfully as a result of Post Office's abusive 23 prosecutions. It is obvious that Post Office or BEIS 24 never has to worry about the cost of its own legal 25 representatives: Government is paying for that. 132 1 Our clients are very grateful, sir, that these 2 hearings have been convened in what we all know is an 3 early stage of the inquiry process. But sadly it seems 4 that it is only by repeated correspondence from my 5 instructing solicitors and others, and by this Inquiry 6 taking upon itself the need to have these hearings, that 7 BEIS and the Post Office are having their feet held to 8 the fire in order to make them pay up. 9 There is still a very, very long way to go. 10 A large number of subpostmasters remain in highly 11 precarious situations. The HSS scheme itself is riven 12 with problems. No doubt for those people that have made 13 applications already and we suggest that it's very 14 likely that many people, if they are prepared to listen 15 to the representations we have made and others, will be 16 wanting to go back to the Post Office and say, "Well, we 17 didn't realise the consequential losses could be 18 claimed". 19 It would also be helpful to have it confirmed for 20 all of those people out there that might be in a 21 position, who having heard what is being said by 22 Ms Gallafent regarding the potential for there being an 23 open door to making a claim within the HSS scheme, for 24 that door to be made clear that it is open and that the 25 application system is still present. It needs more than 133 1 counsel on behalf of the Post Office that says that that 2 is being considered. It needs to be said that the door 3 is open and applications can be made. 4 Let's compare briefly y the evidence that you have 5 heard, what's happened in the past to what is happening 6 now. Sinead Rainey's evidence heard in Belfast in the 7 Human Impact Hearings, transcript 18 May (just for your 8 note) at page 43, lines 12 onwards. You will remember 9 that she spoke of an audit which take place on 1 May 10 2019 and she had just dropped her children off at 11 school -- small children. Sinead said that when the 12 auditors had finished tallying up, they came to her and 13 they called her into the office and they said, "Sinead, 14 have you got any more money belong beginning to the 15 Post Office?" The auditors explained, "There's a 16 discrepancy here of £63,000". The auditor said, 17 "Sinead, you've got an hour to get as much money into 18 that safe. I'll be locking that safe in an hour and 19 you've got an hour to get as much money in there as you 20 possibly can. Whatever money you can put in there will 21 be deducted off the total discrepancy". 22 So Sinead says this: 23 "Well, I got into the car. I drove home and 24 I lifted a bucket in my house and I emptied my wee'uns 25 moneyboxes into them and I emptied my own purse and any 134 1 money that I had in the house, tuppences, 5ps, 2 everything went into the bucket." 3 She explained that her mummy and daddy arrived. 4 She didn't know it until that point but Darren, her 5 husband, had phoned them and they went to Ballymena and 6 withdrew as much money as they could out of their own 7 bank accounts but they couldn't get enough. So they 8 rang two of the uncles and they did the same. 9 "My sister, when she was on the way to her shop to 10 lodge her own takings, she gave me her takings. So 11 I don't know the exact figure because I never got a 12 receive but somewhere in the region of £42,000 was in 13 that bucket." 14 Counsel to the Inquiry asked Sinead: 15 "Where did that bucket go?" 16 Sinead said: 17 "I couldn't drive at that stage. So I got my 18 sister to drive me down to the shop and I carried that 19 bucket in and the auditors made me stand there and watch 20 them count it. And they tutted, made me feel so lousy 21 for bringing them all these pennies but I brought them 22 whatever I could." 23 I mentioned Fiona Elliott. She gave evidence on 24 19 May. Two auditors arrived at the office. The 25 auditors told Fiona, "There's a shortfall here of £6,000 135 1 showing in the system. We need to get that £6,000 now 2 or you'll have a criminal offence." Well, she said, 3 "Where did that £6,000 come?" She said, "I'm constantly 4 putting money here all the time, hundreds of pounds a 5 week and never showed up that huge amount. What will 6 I do now?" They said, "You'll have to pay it". She 7 hadn't got it in the shop. "So I ended up by saying can 8 I go to the bank?" The bank was closed. They said no. 9 "So I couldn't leave and go that far. They wouldn't 10 wait on until the bank was going to open in the 11 afternoon. She tried to offer the Post Office official 12 a cheque. They wouldn't accept that. 13 And Ms Elliott said to you, Fiona said to you,sir: 14 "Then I went and my brother owned a car business 15 in the village as well and I asked him would he have any 16 cash on him and he said, 'Aye, there's cash there'. So 17 I got the cash off him and gave it to the Post Office. 18 I never got a receipt for it." 19 These are just two examples but you have heard 20 scores of witnesses when the Post Office wanted their 21 money, they wanted it there and then under threat of 22 criminal prosecution. However, when we see the failings 23 of the Horizon system and the Post Office's conduct is 24 uncovered repeatedly and starkly, and they are called 25 upon to properly compensate the victims, we suggest 136 1 there has been delay, obfuscation and basically these 2 issues being kicked into the long grass. They make 3 statements to Parliament, they issue press releases, 4 they do everything but pay up promptly. 5 I go back to where I started. Our clients simply 6 asks that compensation schemes are drawn up in such 7 a manner that indications are given as to the amounts 8 they are likely to receive by way of final compensation. 9 That requires precedence, it requires comparables, it 10 requires a way of accessing what it is that they might 11 be able to receive by way of the application. Schemes 12 should be transparent. They should provide indications 13 of likely quantum in a banding format. This would 14 assist in removing the unfortunate litigious elements 15 that the schemes currently contain and provide a measure 16 of certainty and facilitate targeted representations. 17 Our clients, for very good reason, do not trust 18 the Post Office nor BEIS, the department of Government 19 which owns the Post Office. On 22 March, the Minister 20 made an announcement in Parliament accepting that the 21 Government has long considered unfair the unequal 22 treatment received by members of the GLO litigation 23 group and their non-GLO litigation peers. The Minister 24 said: 25 "I'm therefore pleased to announce that the 137 1 Chancellor will make additional funding available to 2 give those in the GLO group compensation similar to that 3 which is available to their non-GLO peers." 4 And accepting that, because they had signed a full 5 and final settlement of the court case in 2019, 6 postmasters in the group were ineligible to apply to the 7 Historical Shortfall Scheme. 8 "So despite winning the case [the Minister went on 9 to say] the group was left worse off than other affected 10 postmasters for whom they had blazed the trail." 11 In your announcements on 9 May, you refer to the 12 fact that in their written submissions both Post Office 13 Limited and BEIS suggest that claimants in the group 14 litigation falling within categories 1 and 2 will be 15 eligible to claim compensation for malicious prosecution 16 by virtue of the Minister's announcement of 22 March. 17 You go on to say this: 18 "It is also [your] provisional view, however, that 19 Post Office Limited and BEIS are correct to suggest that 20 claimants in the Group Litigation who fall within 21 categories 1 and 2 can claim compensation for malicious 22 prosecution in reliance upon the Minister's 23 announcement." 24 So it is for these reasons that I have set out 25 today that we invite you to set out your view on the 138 1 current compensation schemes and what little is known 2 about the GLO compensation proposals and that we ask you 3 do that within the format of an interim report. 4 Sir, those are our submissions this afternoon. 5 I hope I have dealt with them reasonably so that if 6 cricket is about to start that people might start to 7 turn out to the windows to their side and watch that. 8 I finish with this: it is troubling that in order 9 to get BEIS and the Post Office to come to arrangements 10 that relate or explanations that relate to the HSS 11 scheme or to answer questions that you have set out, 12 that all of the expense that is required to set up such 13 hearing has been done. It is troubling that the 14 Post Office does not seem to have been able to 15 understand that individuals that have been affected by 16 the Post Office's actions, Post Office being wholly 17 owned by BEIS, need support and need assistance. It is 18 troubling that all of those matters have been behind the 19 scenes to a large extent and that, right up until the 20 day of this hearing, including today (and I am quite 21 sure whilst I have been on my feet), that further 22 changes have been taking place. 23 So I ask, sir, that you indulge us if need be on 24 the next occasion by the ability, if required, to make 25 further short submissions in relation to what happens 139 1 between now and then and after having had a little bit 2 more and more time to think of some of the submissions 3 that have been made today. I will make a promise that 4 it will be a short series of submissions targeted at 5 only those issues itself, and no more than that, and 6 obviously after hearing from others that set out their 7 submissions on that day. 8 SIR WYN WILLIAMS: Thank you, Mr Stein. I think that 9 I would be remiss in not making some reference to what 10 might happen on the next occasion and so I'll do it. 11 In the notice which I published on 30 June, 12 I anticipated that these hearings would produce a flurry 13 of activity. I didn't use those words but that was what 14 was in my mind and I'm not disappointed. I am quite 15 sure that between now and 13 July there may be further 16 activity, in which case I will give people an 17 appropriate opportunity to deal with what occurs. What 18 is appropriate will depend on what occurs. So I'm not 19 going to promise anyone that they can make any further 20 submissions (although I don't rule it out) and, as 21 I say, an appropriate opportunity will be available to 22 everyone to respond to this shifting process. 23 Thank you all very much for the economy with which 24 you've addressed me and for accepting my invitation to 25 deal with things which were controversial rather than to 140 1 major on what you thought were your good points. 2 I look forward to seeing many, if not all, of you 3 again next week. 4 (3.22 pm) 5 (The hearing adjourned until Wednesday, 13 July at 10.30 am) 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 141 1 I N D E X 2 Submission by MR BEER .........................2 3 Submission by MS GALLAFENT ...................39 4 Submission by MR MERTENS .....................92 5 Submission by MR STEIN, QC ...................96 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 142