Case No: HQ16X01238 [2019] EWHC 606 (QB) THE ... - Judiciary

1 Case No: HQ16X01238 . Neutral Citation Number: [2019] EWHC 606 (QB). THE POST OFFICE GROUP LITIGATION. IN THE HIGH COURT OF JUSTICE. QUEENS BENCH DIVISION. Rolls Building Fetter Lane London, EC4A 1NL. Date: 15 March 2019. Before : THE HONOURABLE MR JUSTICE FRASER. --------------------- Between : Alan Bates and Others Claimant - and - Post Office Limited Defendant --------------------- Judgment ( ) Common Issues . --------------------- Patrick Green QC, Kathleen Donnelly, Henry Warwick, Ognjen Miletic and Reanne Mackenzie (instructed by Freeths LLP) for the Claimants David Cavender QC, Owain Draper and Gideon Cohen (instructed by Womble Bond Dickinson LLP) for the Defendant Hearing dates: 7, 8, 12, 13, 14, 15, 19, 20, 21, 22 and 26 November 2018.

2 3, 4, 5 and 6 December 2018. Draft distributed to parties on 8 March 2019. --------------------- Mr Justice Fraser: A. Introduction 1. This judgment is in the following parts: Paragraph no. A. Introduction 1. B. The Common Issues 44. C. The Lead Claimants 46. D. The Post Office Witnesses 365. E. The Factual Matrix 568. F. The Relationship between the Post Office and the National Federation of Sub Postmasters ( NFSP ) 574. G. Contractual Formation 599. H. The Contract Terms 607. I. Express and Implied terms 690. J. Relational Contracts 702. K. Supply of Goods and Services Act 769. L. Agency, Accounting and Horizon 782.

3 M. Suspension and Termination 865. N. Assistants 938. O. Onerous or Unusual Terms 957. P. Unfair Contract Terms 1063. Q. Conclusions and Summary 1111. R. Answers to the Common Issues 1122. Appendix 1: Extracts of the relevant SPMC terms Appendix 2: Extracts of the relevant NTC terms Appendix 3: Agreed Flow chart for Transaction Corrections Appendix 4: Agreed Flow chart for Branch Trading Statement Appendix 5: Appendix 2 of document dated 7 September 2012 entitled Branch Audit Trend Analysis YTD Q1 2012/2013 {G/7/6}. 2. These proceedings are being conducted pursuant to a Group Litigation Order ( GLO ).

4 Made on 22 March 2017 by Senior Master Fontaine. Although there is an introduction to these proceedings in both my first and second written judgments in this matter, both of which concern procedural rather than substantive issues, which are at [2017] EWHC. 2844 (QB) and [2018] EWHC 2698 (QB), I provide a similar introduction here. This is in order that this judgment can serve independently and be as comprehensible as possible to a reader with no background information to the litigation from those earlier judgments. 3. In general terms, in this Group Litigation there are a group of approximately 550.

5 Claimants, who were all for the most part sub-postmasters, although a small number were Crown Office employees and managers/assistants. These have contracts of employment with the Defendant which are different to the contracts of the sub- postmasters. Some of the Claimants therefore have a different status to the sub- postmasters generally. However, it is the contracts with sub-postmasters that are relevant to this Common Issues trial. The Defendant, as is well known, operates the network of over 11,000 Post Office branches throughout the UK. The Defendant used to be called Post Office Counters Ltd, and changed its name in 2002 to simply Post Office Ltd.

6 It refers to itself as Post Office , without the use of the definite article, and I was told (although none of the witnesses seemed particularly clear about this) that this may be for copyright reasons. In some of the documents, it referred to itself as POCL. when it was called Post Office Counters Ltd. I shall refer to it in this judgment as the Post Office. It is state owned. 4. All of the Claimants (regardless of their precise individual status, and whether they were individually either sub-postmasters or Crown Office employees) at the material times were responsible for running branch Post Offices.

7 Material times obviously means different periods for each claimant, as the dates upon which they became sub- postmasters or Crown Office employees differ between them, as do the dates upon which they ceased to have that status. The Post Office has been independent of Royal Mail Group since 2012, when the Postal Services Act 2011 came into force. The Post Office is not responsible for delivering mail. It does however provide postal based and other services to the general public. The range of services it offers has developed and changed over time. A customer of today probably expects far more of his or her local Post Office than would have been the case 30 years ago.

8 As an example, it is no longer possible to purchase a vehicle license (what used to be a paper car tax disc ) at a Post Office, or cash a Giro for payment of state benefit, but one can change foreign currency, purchase tickets to play the National Lottery, as well as perform other financial transactions. Post Office branches, often in rural areas, are the hub of the community in terms of these and other services. Sub-postmasters would, and do, often run the Post Office within a shop or other small business. The sub-postmaster would receive compensation from the Post Office for running the branch. This would be dependent upon the amount of business performed at the branch.

9 The Post Office provides a large number of services for other companies through the post office branches. These other companies are called the Post Office's clients . For example, Camelot (which runs the National Lottery) makes its games available, through lottery scratch cards and bi- weekly lotteries, to the customers who will buy such products in a post office branch. Camelot is a client of the Post Office. 5. In about 1999/2000, the Post Office introduced a new computerised system for the accounting function both in the branches, and between the branches and itself. This was (and still is) called Horizon, or the Horizon system.

10 Nowadays, it is an online system, having become a different system called Horizon Online in 2010. In 2000 and for some years afterwards, it operated down a telephone line, called the Official Branch Telephone Line. The requirement upon the sub-postmasters to provide this was stated in the following terms The Official Branch Telephone Line must be provided by BT. in order that Post Office Ltd may use the line for the Post Office Ltd Asymmetric Digital Subscriber Line [ADSL] service. Private use of this line by the sub-postmasters was permitted, but only if this did not conflict with its use as the ADSL service.