Re: POST OFFICE SETTLEMENT OF CLAIMS OF THOSE CONVICTED OF OFFENCES

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NOTE
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1. From the date of settlement of the Post Office litigation, 10 December 2019, 6 days’ prior
to Mr Justice Fraser handing-down his judgment in the Bates v Post Office ‘Horizon Issues’
trial (though the draft judgment by then had been received), Freeths LLP has declined to
make available to its (550-odd) claimant clients the terms of settlement of their claims
against the Post Office, which settlement Freeths made on their behalf. Legally this
position is indefensible, subverting, as it does, the solicitor/client relationship which is
fiduciary as well as professional.

2. Clause 7 of the Settlement Deed provides as follows:

3. I believe that there were 66 convicted claimants in the Group Litigation (i.e. a significant
minority of slightly more than 10%). The CCRC has now referred 49 convictions to the

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 Court of Appeal for review (3 June 2020). Some 900 convictions are being reviewed, at the
instance of the Post Office, by Peters & Peters LLP.

4. The striking aspect of this is cl. 7.1.3. This initially struck me as surprising. That is to say, it
struck me as intuitively strange that the claimants who had been convicted of criminal
offences should have got nothing out of this enormously expensive large-scale litigation at
all - except that they retained (i.e. had preserved to them under the settlement terms) a
residual possible claim for malicious prosecution, contingent upon (i) the CCRC referring
their case to the Court of Appeal and (ii) the Court of Appeal quashing their conviction. A
rather rocky and uncertain road that starts, if at all, after the Court of Appeal.

5. My surprise was augmented by my knowledge of Tracy Felstead and Seema Misra,

respectively, aged 19 and 8 weeks’ pregnant when imprisoned as a result of their being
convicted of theft following prosecutions by the Post Office. (I am very aware of, e.g. just
how unsatisfactory Seema Misra’s prosecution was, having read the full transcript of her
trial.) When I first heard how little compensation Tracy (who suffered serious ill-health as
a result of her imprisonment) had been paid - £17,000, I was dumbfounded (and, frankly, a
bit upset). I now understand what has happened, the ‘convicted claimants’ have not
received any payment at all from the Post Office as compensation for their claims. They
have received a payment from other claimants out of sums paid in settlement of the non-
convicted claimants’ settlement (cl. 7.1.4) or else out of a ‘Support Fund’ for those
suffering financial hardship (cl. 8.1). Effectively, this represents an ex gratia payment – not
compensation (made on their behalf without discussion) to the convicted claimants by the
‘Claimant Steering Committee’, itself defined in the Settlement Deed as Alan Bates (the
first claimant) and Kay Linnell (an accountant).

6. The other aspect of this is that all other claims of convicted claimants (other than the
uncertain one of malicious prosecution) have been settled under the Deed of Settlement
for no value. This follows from a reading of cl. 7.1.3 and 7.2 (that expressly preserves only
the malicious prosecution claims of the convicted claimants).

7. Put another way, the outcome of the Post Office litigation for the convicted claimants was:

a. That the only thing they keep as a matter of right that has any value is a
prospective possible claim for malicious prosecution that they shall have to
pursue on their own without the help of Freeths as their solicitors. (I understand,
but am yet to have final confirmation, that Tracy Felstead was prosecuted in 2002
by the Crown Prosecution Service – in which case I don’t think there is a single
instance of a claim for malicious prosecution ever succeeding.) They of course
had these contingent claims entirely independently of the litigation so claims for
malicious prosecution cannot be said to be something “achieved” for them as a

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 result of the litigation by Freeths or their legal team. A possible claim for
malicious prosecution is all that is left – it’s a residue from their original claims.

b. That all their other potential civil claims, such as e.g. for damages for breach of
contract and breach of the Post Office’s duty of good faith owed to them (one of
the main issues of the earlier “Common Issues” trial was whether the Post Office
owed the sub-postmasters a duty of good faith – an issue answered by Fraser J in
the affirmative) were settled for nil value: cll. 7.1.3 and cl. 7.2.

c. Receipt of an ex gratia payment (that is to say a gift) made by the ‘Claimant

Steering Committee’ in their discretion out of monies paid in settlement of the
non-criminal claims or the ‘Support Fund’ (i.e. out of sums paid by the Post Office
other than to claimants convicted of offences).

8. It is perhaps understandable/comprehensible now, why there has been so much secrecy

surrounding the settlement – because those who suffered most grievously, i.e. those who,
like Tracy Felstead, Janet Skinner (Panorama) and Seema Misra (Panorama), were
convicted of offences and went to prison as a result of flawed Post Office prosecutions,
received no payment whatever from the Post Office under the December 2019 settlement.
Further, they are left to their own devices (Freeths is expressly prohibited from giving them
further legal assistance) so far as pursuing a claim for malicious prosecution is concerned.
Freeths received £15 million in fees and legal costs.

9. I have considered what amounts to a proposition of law (rather than a term of settlement)
under cl. 7.1.2. It seems to me that the legal position is that, as a rule a claimant cannot
succeed in a civil claim for malicious prosecution if a prosecution terminates adversely (i.e.
by a conviction). This is because there may arise a conflict between civil and criminal
justice and all the issues, the conclusive determination of which belongs to the criminal
court, might be tried again as a kind of informal appeal. So, a claim for breach of contract
and loss of business etc, will not be open to a claimant if there is, say, a conviction for theft
– until that conviction is set aside. There is here a question as to what has been by
implication ‘conclusively determined’ by the conviction. But it is amenable to common
sense that to claim, say, breach of contract or business interruption/loss as a result of Post
Office wrongful action as a civil claim may be tricky if the claimant sub-
postmaster/mistress has been convicted of theft from the Post Office and had their
contract terminated for that reason.

10. It follows that, generally speaking, for a sub-postmaster/sub-postmistress who was

convicted of an offence to succeed in a civil claim (i.e. to recover damages), for say, their
loss of business, they would first have to establish that their conviction was not properly
obtained.

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11. That does not in my view mean, however, that such a civil claim has no intrinsic value until
the conviction is set aside because, as is obvious, much turns on the likelihood of that
event. If it is 100% certain that a court seized of the true facts will set aside a conviction,
then the contingent civil claim will have substantial (and arguably its full – subject to usual
litigation risks) value.

12. The Horizon Issues judgment of Mr Justice Fraser provides a necessary and good platform
for getting the criminal convictions quashed because

a. The judgment reveals that the evidence relied upon by the Post Office in its
prosecutions of its subpostmasters/mistresses was (neutrally) seriously unreliable
– the principal Post Office witness in Mrs Misra’s trial, Mr Jenkins (architect of the
Horizon system), has been referred by Fraser J to the Director of Public
Prosecutions. (Most of the Post Office expert evidence in the Bates litigation was
attributable to him – though he was not called as a witness.) The ‘remote access’
point - the subject of the Post Office’s public statement in 2015, held by Fraser J
to have been “untrue” - and Mr Roll’s evidence (that remote access and
intervention in branch accounts was practised by Fujitsu without knowledge of
sub-postmasters/sub-postmistresses, including by him) would alone have
undermined all of the prosecutions); and

b. The judgment reveals that the Post Office routinely withheld from defendants to
its prosecutions documents (Known Error Logs (KELs) and PEAKs) that revealed
the true extent of the Horizon system’s unreliability. This made the prosecutions
very arguably, as the CCRC notes, an abuse of process and the trials also ex facie
unfair (as the CCRC also notes). This engages Article 6 of the European
Convention on Human Rights (right to a fair trial). As the CCRC notes in its
statement to the Court of Appeal, it is “an affront to the public conscience” that
these people were ever prosecuted (CCRC Statement of Reasons paragraph 7[2]).

The CCRC in its Statement of Reasons has said that Mr Justice Fraser’s judgments represent
a “fundamental shift in understanding” in connection with the safety of the convictions of
the applicants it has referred to the Court of Appeal: CCRC Statement of Reasons,
paragraph [5].

13. It is notable that, as recently as 5 March 2020, Lucy Allan MP, moving a debate in
Westminster Hall, told Members of Parliament that the Post Office’s position, as
communicated to her, was that sub-postmasters and sub-postmistresses who had pleaded
guilty to offences should be excluded from the CCRC’s review process: “I understand from
my discussions with representatives of the Post Office that it would prefer each case to be
treated separately. They have said that the Post Office will insist that those who pleaded

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 guilty to false accounting should be excluded from the process.”1 That intended
“insistence” in 2020 may be revealing of the Post Office’s thinking behind cl. 7 of
settlement in December 2019 – the Post Office intended that those convicted who had
pleaded guilty should receive nothing, and should not have their cases reviewed by the
CCRC. (Lucy Allan MP properly stated her objection to the Post Office having anything to
say about the CCRC’s review processes - and the CCRC in its review and referral has
included those who pleaded guilty.)

14. The purpose of my writing this Note is to explain that it seems to me that:

a. The convicted claimants are in a far worse position as a result of their

participation in the Bates v Post Office litigation than they would have been had
they not participated.

b. The convicted claimants have had all their available claims against the Post Office
settled without their knowledge or participation for nil value (i.e. those claims
have been surrendered) with the exception of a contingent prospective claim for
malicious prosecution (Settlement Deed cl. 7.2). This is a claim that is preserved
to them in the event that their convictions are quashed by the Court of Appeal (in
my view, given the CCRC referral and its terms, likely). The value of such a claim
is not certain, is difficult to pursue and there is a high bar.

c. Freeths is disqualified/disabled from acting for the convicted claimants further in

their malicious prosecution claims – so these claimants are now ‘on their own’
and left to do the best they may.

d. All that the convicted claimants have received by way of payment, is not
compensation paid by the Post Office, but is, rather, an ex gratia payment at the
discretion of, and as calculated by, the Steering Committee. This may explain the
exiguous nature of the payments.

15. It is perhaps understandable, but at the same time troubling, that the Settlement Deed has
until now been (and in almost all cases at the time of writing continues to be) withheld
from the claimants by their solicitors. Legally, in my view this is indefensible. Regardless of
the group nature of the litigation, the claimants are the clients of Freeths and are entitled
to be advised properly upon why and how their claims have been (a) calculated and (b)
settled in the way that they have been.

1 5 March 2020 Hansard 672 Col 361 WH – my emphasis.

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16. What remains puzzling, is why, although strictly the Post Office’s position that the
convicted claimants’ claims were contingent upon their convictions being quashed on
appeal is arguable as a matter of legal principle, the claims of the convicted claimants were
not treated for the purpose of settlement ex hypothesi as intrinsically valuable despite that
contingency - given what any competent lawyer would consider to be the likelihood of the
Court of Appeal quashing the convictions in the light of the Horizon judgment - a likelihood
reflected in the CCRC’s unusually trenchant statements. That the other civil claims of the
convicted claimants, excepting only a claim for damages for malicious prosecution, should
have been surrendered for nil value seems to be a surprising concession.

17. It is, at any rate, now possible to understand why the convicted claimants such as Tracy
Felstead (£17,000) and Janet Skinner (£8,400), who both were imprisoned as a result of
their prosecution by the Post Office and conviction, have received such pitifully (some may
think, shamefully) small payments following the settlement of their claims against the Post
Office. The reason is, that it was expressly agreed that their claims had nil (strictly, were to
be attributed nil) value and thus agreed that the Post Office would pay them no
compensation. This appears profoundly unsatisfactory and remains troubling.

18. The overarching point is that, by participating in the litigation the convicted claimants have
surrendered all their claims against the Post Office with the exception of a very uncertain
claim for malicious prosecution and have surrendered those claims for no value. It appears
to me that, on the face of it, each of the convicted claimants, but for their participation in
the litigation, would now have individual claims of very considerable value – especially
those who were imprisoned. Compare, for example, the compensation paid to those
wrongly arrested by the police for the Gatwick drone episode – I understand Sussex Police
paid out £200,000 for their wrongful arrest.

19. It is further concerning that the settlement was negotiated by Herbert Smith Freehills LLP
on behalf of the Post Office, the same firm that is behind the Historic Shortfall
compensation scheme now established by the Post Office.

PAUL MARSHALL
Cornerstone Barristers
2-3 Gray’s Inn Square
Gray’s Inn