What are POL’s chances?

 

Looking Ahead

We are reaching the conclusion of the Horizon trial and recently I have found it interesting to review the opening statements of both the Claimants (Cs) and the Defendants (POL)

The next trial will be looking at Breaches of Contract and Causation (whether or not Horizon or other areas could have caused the losses the Cs are looking to recover).

An interesting extract then from POL’s opening statement in the Horizon trial:

4.The robustness issues are so important because of their impact on the “breach” trials that will be held in this Group Litigation. When the Court comes to decide the claims made by individual Cs, it will do so with the benefit of the generic judgments it will have given in the Common Issues and the Horizon Issues trials:

24.1The Common Issues judgment will have determined the contractual rights and obligations between Post Office and the relevant Cs and certain other incidents of their legal relationships.

24.2The Horizon Issues judgment will have determined, in effect, the extent to which Post Office can generally rely on the contents of the relevant Cs’ Horizon-generated branch accounts as evidence of the true accounting position. In each case, Post Office will rely on the relevant branch accounts as evidence of a deficiency (or shortfall) for which the relevant C is liable. For that purpose, PostOffice will wish to say that Horizon is generally reliable to a high degree and so, absent special circumstances, the accounts generated from Horizon can be taken as accurate. Against that, the relevant C will wish to say that Horizon is not anything like so reliable and that, accordingly, the branch accounts generated by Horizon cannot be given anything like as much weight as Post Office contends.

So far so good then for the Claimants particularly those who claimed for losses under the old SPMR contract (pre Network Transformation) as practically all of the issues under this contract were settled in the claimants favour.

Any decisions in favour of the claimant’s issues in the Horizon trial will therefore put them in a strong position for the third trial.

Without commenting on the current trial or the next one, other than to note there are errors in Horizon from time to time which has been admitted by POL, I would take issue with the above statement from POL with regard to the present day activities of subpostmasters.

A subpostmaster who today discovers a shortfall in his accounts of say £1,000 has the following options:

  1. They can look at the transaction logs for common user errors. The transaction log being a print out on 4” wide receipt paper roll that may be several metres long and contain unknown acronyms and product codes.  This data is available to the post office however in electronic form and can be rapidly searched and sorted.  It is way beyond my comprehension why subpostmasters are not provided with that facility.
  2. They can look at their CCTV footage to see if anything unusual has happened. CCTV though is not a pre-requisite and a lot of offices don’t have any let alone cameras that cover every counter from both sides.  A very important point is that POL have NO access to this information even if cameras are present (excluding some branches that have recently been installed with anti-crime surveillance equipment)
  3. They can call the Hell Line for assistance and/or advice. Good luck with that one.

 

A subpostmaster faced with a unexplainable discrepancy DOES NOT have the option to query whether or not a problem with Horizon was to blame, but it is and always has been a possibility.    The oxymoron of course is that POL/Fujitsu only find out and investigate these errors in Horizon when a subpostmaster informs them of something strange happening that causes a discrepancy that he cannot explain.   Even worse, POL for whatever inexplicable reason, decide not to inform their subpostmasters when an error does exist in their system that can cause these  losses.  They rely it seems totally on back office procedures to pick up and automatically correct shortages caused by known errors which does not help the poor subpostmaster locate his problem.

 

As an aside, not only does that way of dealing with errors cause the subpostmaster lots of wasted time and effort in trying to locate the source of the error plus sleepless nights, in most cases it will result in the subpostmaster having to put his own money into the safe to balance the books until such time as this confidential error have been rectified.  It truly is an absurd way of doing things.

 

Of course there are several other ways a discrepancy can occur in a subpostmasters account that would be inexplicable such as theft or counter fraud.   There is however a reason for EVERY discrepancy and to find that reason it may be down to excluding all other logical possibilities.  In Seema Misra’s case POL decided that theft by her could be the only explanation and the attempted in court to prove that was the case by EXCLUDING all other possibilities.

 

How could they do that with no CCTV recordings as evidence?   How could they do that without revealing to the court all known Horizon errors and specifically excluding ALL of them as the possible source of the discrepancies?  How could they do that without investigating whether or not there was an unknown, yet to be discovered error in Horizon, that could have caused the shortages?

 

The last sentence is intriguing.   Errors in computer systems exist until they are found.   It has been suggested and agreed by both experts in the current trial that some of the errors that have so far been found existed in the system for years before they were located and fixed.  So how can you possibly bring a prosecution against a subpostmaster until you are sure you have excluded ALL the possibilities?  How long do you have to wait before the possibility of an UNKNOWN Horizon error can be discounted?

 

So POL have the almighty problem of justifying their actions or lack of them in this regard.  For me the overwhelming evidence that cannot be counted on in court is the fact that so many claimants are vociferous and persistent in their belief – no their knowledge – that they stole not one penny.   Where the losses went is not for the claimants to find out because they do not have and never had the tools and wherewithal to do that, it is for POL to do that and in the absence of CCTV footage and no knowledge of what errors currently exist in the system and for how long they have existed then they have no chance.

Remember we need continued coverage of the trial from Nick Wallis and that has to be paid for so drop a tip or two in his tip jar at http://www.postofficetrial.com

Thanks too to Tony Collins http://www.ukcampaign4change.com for his excellent articles on the background to this trial.

 

 

Post Office Ltd – The End is Nigh

With all the attention that is being focused on Post Office Ltd (POL) at the moment with the on-going trial (www.postofficetrial.com) you would think POL would be displaying a modicum of common sense when it comes to even more unwanted publicity that would tend to put off anyone considering buying a post office.

There are many key components to a sustainable Post Office Network but none is as important as a steady stream of individuals keen enough to borrow and invest in purchasing a Post Office from an incumbent subpostmaster.   You see all subpostmasters need to retire eventually and to do that they have only two options, sell the business on or close it completely.  As the NFSP are very helpfully pointing out today in the press, more and more subpostmasters are finding the latter the only option they have and while I don’t blame the NFSP for making this point it is just adding fuel to the fire and will only serve to put more individuals off buying a post office.

In an absurd attempt to maintain the Network size, Post Office Ltd are offering interested parties the opportunity to open a brand new post office more often than not in close proximity to an existing one.  There is absolutely no commercial sense in this for anyone involved.   This won’t increase overall sales of Post Office products, it will make existing Post Offices harder to sell therefore increasing the chances of them closing altogether and it will increase the costs associated with supporting a Post Office for POL.  It is complete and utter madness.

I was going to write more about this but it seems I already have as my evidence statement to the BEIS select committee has just been published http://data.parliament.uk/writtenevidence/committeeevidence.svc/evidencedocument/business-energy-and-industrial-strategy-committee/post-office-network/written/99315.pdf and it re-iterates much of the above.  I wrote that in April so POL decided in their wisdom to provide me with a clear cut example of the very problem I am referring to above as well as one quite local to me.

In the same newspaper last week two reports – side by side – tell of one subpostmaster clearly infuriated with POL and desparate to sell only to find one of these White Space offices opening up right next door to him in a small town with a more than ample supply of Post Offices.

https://www.thesouthernreporter.co.uk/business/concerns-voiced-over-shock-shutdown-of-hawick-post-office-1-4926354

https://www.thesouthernreporter.co.uk/news/new-post-office-set-to-open-in-hawick-next-month-1-4927937

POL are completely out of control and led by idiots.   If the management are not replaced then there is no hope for the network.   A very sad state of affairs for all of those who still have their own money invested in their post offices and those lucky enough to sell on have been replaced by people who clearly have no business acumen and who didn’t do their research properly and are now regretting their decision.

 

POL and the Money Tree

With £3 million already spent at the 31st March 2018 on defending the current Group Litigation Order trial brought by the Justice for Subpostmaster Alliance (JFSA), Post Office Ltd (POL) are looking at significant legal costs as they attempt to delay the trial in one way or another.   The absurd recusal application alone cost them £500k.   Now they say they are definitely going to appeal the decision of the court in the first trial which is a ‘double down’ on what they have already spent on that to date.

I am not entirely sure of the sequence of events as far as legal costs go but the recusal hearing gave some insight into the process when the JFSA QC claimed costs, the POL QC objected to the amount they were claiming and that will result in a case management hearing to determine how much POL pay JFSA.   In much the same way, the costs for the first trial in the series will be settled except in this case POL actually won a few points so some of the costs will be to the account of JFSA.   Of course then there will be an appeal and I would assume at that time the JFSA may concede the points POL won from the start so ALL the costs will fall to POL for that one when they lose again.

It is pretty much clear cut that POL will lose the Horizon trial as well and there is no doubt that they will appeal that one, they have to otherwise the consequences of losing must take place immediately and again the costs become payable fairly soon after the decision is published.  A much longer trial and considerable background detective work went into this one by the JFSA so the costs will be far higher.   By the end of the year the whole process will have repeated itself in the Breach and Causation trial and I am as confident as I can be that POL will lose that one completely.

The end of POL’s financial year is 31st March so costs to date will be reported on when they publish their accounts in September and they will then certainly have to advise a contingent amount for the appeal process.   In fact they may even have to start considering the possible total liability they face should they complete the quadruple and lose all four trials, something I would definitely not bet against.

So stab in the dark time, how much is this all going to cost in total?   I sat in the trial for a couple of days and there were 20 or so highly paid legal professionals attending, plus the back office staff plus the court costs.   I am going for £100 million by the time it is all over and let’s say £80m of that is to POL’s account.    If that is the case then that means POL lost and the JFSA claimants have won so it won’t just be the legal fees they are paying it will be the quantum of those claims as decided by the Judge.    These will be huge and include compensation for wrongful imprisonment which if it had been carried out by the Crown Prosecution Service would have been limited to £500k.  As Post Office Ltd carried out the prosecution as a private company then there is no maximum amount of compensation.   (that is my opinion and not necessarily a legal fact!)

My guess is that the total claim will be in excess of £500m plus the legal costs of £80m – let’s just round it up to £600m

The big problem for POL is that they have no access to that sort of cash.   A bigger problem for POL and the Government is that from a political perspective POL cannot go bust so they need to raise that money in some way and in fact at some point in the near future they (the Government and POL) are going to have to comment on where they expect to raise the capital required should the very likely happen and they lose the cases.   It is not just POL, POL’s auditor’s will have to express a view  on the viability of the business as a going concern if a source of funds is not available to meet the company’s legal penalties.

There is a further conundrum in the fact that POL’s hands are very much tied by their articles of association.   While these articles allow them to spend up to £50m without approval from the Secretary of State (SoS) which would allow them to pay the legal fees, they also prevent POL from borrowing any amount in excess of £75m without the SoS permission whether that amount is to be borrowed from the Government or not.  So the SoS has the power to prevent POL paying the claimants their dues.  Perhaps it is time for the SoS to make it clear that when the JFSA win the SoS will not use their power to stop POL raising the funds necessary to pay off the claimants.   In any event it would be an extraordinary act of political suicide to cast POL into the insolvency courts because the government withdraws support not only from POL but from the claimants whose suffering the government were as guilty of as POL. (just re-read the above and to make it perfectly clear – when the JFSA win it is the Secretary of State who will make the decision directly or indirectly whether or not to pay the claimants .  Secretary of States come and go as do parties forming governments so I am not sure they should remain in denial of the problem and put all questions to them asked in the house about the matter back to POL or refused due to sub judice)

POL as we know remain unaccountable to nearly everyone, except now the JFSA who are truly holding them to account so I imagine they think they can get away with misusing the funds they have at their disposal in order to settle this.  I did say they didn’t have any and legally they don’t but that has not stopped them in the past from making use of government funding they are not entitled to.  In this trial alone they have already had to repay the government funds they misused.

POL remain bound by EU State Aid rules, at least for 2 years after Brexit if it ever happens.  They are prevented from using the Working Capital Loan provided by BEIS for anything other than financing the level of cash they require to keep in the network.  I have caught them out before with misusing this and if they try it again I will see it.

They could try and tell us that the source of funds was the working capital in the business less the BEIS loan but they can’t utilise that either because the conditions of the BEIS loan state clearly that BEIS retain a lien over the working capital as security against the loan.   It all gets a bit incestuous I know but rules are rules and conditions must be met.

Any business can always try and leverage their cash flow in a way to free up cash to pay off liabilities.  By extending the time they take to pay creditors and reducing the time they allow debtors to pay them could solve their problems if they hadn’t already gone down that road.  I am pretty sure the government is keen to see small businesses being paid quickly by their departments so it is something of a surprise to see that in the last financial report from POL in 2018 their creditors were owed twice as much as their debtors.  There is no more meat on that particular bone of capital to pick from.

POL aren’t going to continue to make a profit for very much longer.  They only recently did for the first time in years but what they seem to forget is that they need subpostmasters to carry on making that profit for them and who in their right minds will be buying a post office in the light of the extraordinary disclosures that have already been made, are waiting to be made and are going to be repeated in the appeal court.   So raising debt to pay off the claimants will be problematic as again they are restricted by state aid rules and it remains to be seen whether or not Brexit happens if those state aid rules will continue to be enforced.

And then ….

When the court case is over and the claims settled there is more expenditure needed.   A fairly significant amount to put in place what I will call the replacement therapy.  Political expediency demands a post office network and a phoenix rising from the ashes of this burnt out mismanaged enterprise will be required.   Replacing the staff (OK some of them won’t get redundancy payments because they will be jailed) will be expensive and putting in place the systems and technology that should have been in place from the start will add to the cost.  However that is a reasonable expenditure for the Government to provide grant funding for under state aid rules but the government will also have to wake up to the realisation that subpostmasters will not work for less than the minimum wage and as a result a network of 11,500 offices will always require financial support.

And Oh! … how the government would wish that that was the end of it all.  But no there is more.  The CWU are bringing POL before an employment tribunal with the awarding of worker’s rights to subpostmasters almost certain.   Holiday pay, sick pay, maternity leave, workplace pensions all going to have to be paid for.

And just like those ads you see on TV .. but wait there is more .. this trial is only the first round .. there are far more claimants being added every day.  When I attended the trial in London I was surprised to meet several ex subpostmasters who had come along to find out what it was all about and who had never heard of the JFSA.  The publicity hasn’t really started and most shamefully the position of POL has not changed one bit and they haven’t even informed the network of the errors that were in the system let alone the ones they know are current.   Kimberley diamond mine is not the biggest hole in the world….

Need I say all this could have been avoided?  If they had done it properly from the start?  If they had listened to the people like Alan Bates there would have been no claimants to bring a court case in the first place.   Does the government really want to entrust the very people who are continuing to deny there is a problem even after two highly respected judges have found against them so far, to sort this mess out?

When we add it all up it is beginning  to look a lot like a billion (there’s a song in there but I’ll leave that til Xmas) So will somebody please tell me and the rest of the world how on earth POL intend to pay for it all?  I think this question must be the last remaining concern for the JFSA team as they stride towards total victory in the courts.

As ever, grateful thanks to Nick Wallis (www.postofficetrial.com) for his coverage as well as Karl Flinders at Computer Weekly and Tony Collins at https://ukcampaign4change.com/ whose latest blog post looks at this very question of where is the money going to come from.

Time for the conspiracy theories

 

I have been dreading this moment.  I have stayed away from conspiracy theories because they are usually so easy to discredit.   The amount of people needed to be involved and hold their silence is the first thing that one would look at in order to shoot down the conspirators.   Then there is the type of people of involved.  In this case they hold very senior positions in their respective spheres.  It really would be bordering on the incredulous if a conspiracy theory turns out to be correct.   But hey! Nothing – I repeat – Nothing in Post Office Land surprises me anymore so I will say it one more time (won’t be the last) everything they say and do is “beyond belief” which is the definition of incredulous.

This morning sees the revelation courtesy of Nick Wallis and his blog at www.postofficetrial.com (stick a penny in the tip jar please) that Lord Justice Coulson has turned down the appeal by Post Office Ltd to allow them to appeal the decision by Justice Fraser not to recuse himself from the current Post Office Group Litigation trials.    It marks the end of one chapter of this long drawn out claim by the JFSA claimants, that they were mistreated by Post Office Ltd.

Now we need to look back at what has transpired, the sequence of events, the decision making process and the people involved to try and come up with a plausible explanation as to why POL asked the judge to recuse himself and even more relevant why they decided to appeal his decision not to.

On Thursday 21st March on the last day of factual evidence to be presented to the court and during the lunch break, Justice Fraser found himself reading a request from POL QC Lord Grabiner to recuse himself.    The application was put together by a Mr Parsons, a partner in the law firm Womble Dickinson.  (https://www.postofficetrial.com/2019/03/horizon-trial-application-to-recuse.html)

My immediate impression when I read this application was that it had been put together in ten minutes.  Both Patrick Green QC, Justice Fraser himself and now Lord Justice Coulson tend to agree, as all have said the application lacked any substance at all.  Justice Fraser went so far as to instruct Womble Dickinson to go away and put some meat on the bones and present it back to the court for deliberation.

POINT ONE Two Judges and one QC immediately thought that the initial application was scandalously short of substance so from a conspiracy theorist point of view the question has to be asked, at that moment in time did not POL legal team think so too?  It would be a couple of sandwiches short of a picnic for the legal profession if they did not surely.

POINT TWO How long did it take to prepare the application?  This is a really serious point.  If,as Lord Grabiner went on to explain in the actual recusal hearing, that the matter had been under consideration for some time, was decided by a board meeting of POL and a further delay was necessitated by the need to take advice from a mysterious very senior legal figure, then why oh why did the application lack so much substance?  Surely that substance would have had to be revealed to the mystery legal man (MLM) for him to provide advice on it?

POINT THREE Why was no notice given to Justice Fraser immediately the decision was made to ask for a recusal?  So short was the notice that even POL’s QC in court that day knew nothing of it and just to confirm point one he also agreed the application lacked substance.  How on earth could their own QC not know the application HAD been prepared?   Lord Justice Coulson remarked specifically on this point (no notice given to Justice Fraser) in his decision saying that it was “at best discourteous; at worst, it betrayed a singular lack of openness on the part of POL and their advisors”

POINT FOUR POL’s legal team consist of multiple QCs from different chambers.   They all must be instructed to carry out the requests of their clients.   The legal teams can advise their clients of the chances of success and the cost but at the end of the day the decision to make the recusal application and the decision to appeal Justice Fraser’s decision not to recuse himself had to be taken by POL.

POINT FIVE the appeal has been decided.  The trial continues with the new timetable but the same judge and the same witnesses and evidence.  The only thing the recusal application and appeal has done is to delay the trial by a few weeks.  (at a cost to POL and the taxpayer of some £1m) Was that the only objective?

So the overriding question must be WHY did POL decide to ask for the recusal?  The overriding answer must be: to win the case, but a recusal application is only one part of that strategy.   It wasn’t going to stop the trial being completed under another judge, the same evidence would be produced and the same questions asked.  There is nothing to suggest that a new judge would come to a different decision than the one that Justice Fraser will arrive at.

Lord Justice Coulson goes so far as to suggest that there must be more to the timing and manner of the recusal request than meets the eye given the nature of what followed after they had made it.  My interpretation of Lord Justice Coulson’s comments in this regard are that the recusal request was a spur of the moment tactical decision made to delay the trial as it clearly never had any chance of success.

I have previously considered that POL have been purposefully using delaying tactics in order to push the costs up for the claimants as ultimately these costs will come out of any compensation that may be awarded to them.   Given that even POL must realise now that they are on a hiding to nothing in court then the claimant’s funders must also be extremely confident in the outcome and will not be willing to back off now given their expenditure to date.

So fellow conspirators where does that leave us?  What rationale was behind this recusal fiasco?  Will we ever find out?  What theories could provide a solution to this conundrum?

  1. a) has POL’s expert witness realised what is going on and is about to change his testimony?
  2. b) was it important enough to have the trial stopped until after the 31st March which is the end of POL’s financial year?
  3. c) Are POL actually making these decisions or is the mysterious senior legal figure a politician or the legal representative of the civil service as the sole shareholder?
  4. d) did Mr Parsons make a mistake and didn’t deliver the recusal application in time to prevent the witness testimony on the last day of the trial which was pretty damning against POL?

I originally thought either a) or d) made sense but neither explains the appeal which was legally unsound and POL should have been advised of this by their legal team.

Thoughts from fellow conspiracy theorists welcome as I think the more minds work on this the better.