Clairn No. HQ16X01.

238
POST OFFICE GROUP ACTION
{hr T'HE HrGH COURT OF JUSTICE
QtrJEEN'S BENCFI DIVISION
i}{ GROI]{' LITIGATIOhI
tlE'{"\s'EEN:

AI-AN tsATES & OTHERS Clrirnants

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POST OFFICE LIMITEI) D€fd*#hilt jiiii

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GENERIC DEFENCE AND COUNTERCLAIM

{NTRODUCTION
'['his Generic f)efence responds to the Amencled Generic Particulars of Claim ("GPoC")

F)rcept rvhere othenvise indicated:

(11 rcferences to paragraph numbers are to paragfaphs of the GPoC;

,, 1) riic llefendant ("Post Office") adopts the headings and abbrer''iations used in the
C PoC, withour ma}<rng any adnrissions of any matters implied or connoted tirereby;

:lftd

r$
ii) ',.vhere rnarters are note<1, Post Otfice makes no aeinission and tesen'r:s irs nqh.ts tn
,:r.iaiion thereto.

i'L,e !,enerir natare of tAe GPoL

1,, [a;:v r.tf t]"re aileqations rn rhe CiPoC are 'dt a level of generaiiry ri,hich onrits rntportant
iictalis" ireats clitt-erent situations as il they .were the same anci itads to tibscuntv. LJany of
,l:cse ellegations cannot meaningfuliv be addresse:d, not ieast i:c'cause theu rrue natrrre anrj

.{tLrr}r c}nnot. i.:e properly understr;orJ untii the (.jrimanrs iciunrifl'the parucular actions ot

r:irussiriirs rciieci on ancl rhe conrexr rn r.virir:ir and iimc at rvhich tirev are sairi to har.e
,":::ntrre{1. ii-. liris {ieneric flclence, ir}r:st (}i}ice rcsporiiis lii r-he E*ner*i iirnrst ol such
r:i:lrit:liiirleli{,i115",.';itirnrit,}()rlr,} ti''r11) rr i.ti :inLi';1Jiiill,iJ itrr:iirr-iirr,: t* iis r-trrirt l,J ilirtif.
 rlenv and/or arlvance a positive andf or detailed case in response to allegations by r:articular

Claimants pleaded wtth prc'per parriculars.

3 ,\t the pleadcd level of generalitv of the (iPoC, Post Oitice cannor auticipare:ril possrble
'claims that Claimants fi1ay he seeking to adl'ance . Nor can Post Offrce set out all facnral
and legal defetces thar it may pro\-e appropriate to advance in ali pr:ssibie cases. {n rhis

{leneric Detence, Post Office identit-ies the defences that it considers mav usefully be
icientified at this 1evel of generaliry, wtthout prejudice to its abilitl- ro rdentitl'furrhcr or

other matters and defenc*i ,t *uy be appropriate for such individual claims as may be

pieaded.

1. In this Generic Defence, Post Office cannot cover ali the variations in its operaring
ptactices andprocedures orin the operarion of Ilorizon thathave occurred in the lSyears
since Horizoa was first inttoduced. Indeed, unrii individual claims are properly pieadecl,

Post Office cannot determine which particular practices, procedures or operadons are

rerlevant to those claims. Accordingly, Post Office uenetally refers to the curent pracdces,
procedures and operations.

5. Similarly, Post Office cannot cover ali the vadadons made to the contracts relied upon by
the Claimants and so it refets to the versions of those contracts served with the GPo(1.

6. Although it alludes to possible ciaims by "Assistants" (a rerm which includes persons

'vhom the GPoC refers to as Nfanagers), Crown Otfice employees and directors or
guarantors of franchisees ("Franchisees"), the GPoC is essentially concerned wirh ciairns
,&
bv Subpostmasters. lvlany cif rhe allegations in the GPoC refer to "the Clarmants" as

Laving certain entidements" riplhts or obligations, as 'oeinq required to clo certain rhings, ;rs

rrking cx.rtain steps and/or as sufferinq ccttarn c()nsequences in circumstaflces wherc the
:'rllegations apper to reiate oniv to Subpostmasters. In this Generic l)efence, Post Office
rcspoarls accordingly, withour pointing out in e1rery case rhat rt believes the allegations are
iirnired to Subpostmasters.

;UMM3RY OF THE GENE&IC DEFENCE

,r -iubpr:stmesters run Post L)iEce lrranches on i:ehalf of .Pr;st {.]ttrce. 'l}rev have dav-ro,riay

':perari()nal conrroi over lirose brancircs anri ri-lev aneJ./ or their ;\gsistants have r-lircct
r l{)'rvif.i?e r;i.rrirat itaDDetrs in ihcr-ir. tirr cortfast" irtost {.llitce''s knrtrvie<lqe ts hrqeiv Laseo
r'l fiii-'rtlcr;lil-t1-,i. t::t:it tiecili:rt-io|rs:lnci r:ih::r trrfilirnri tron lrotrr,rtii:f:l>irfiatft]rs.
 Cash and stock can be lost irom Post Office branches or oiher losses caused in branches

due to mistakes or nriscondnct bv Subpostmasters andf ar their Ass;istants in e ffecting

traflsactions andf or accounting to Post Clffice. 'lhe Claimants now scek ro avoid rhe:ir

tor Iosses ansing in the branches that they operated. They do so by, arrlonllsr
.responsibtliry
oiher things, tq,ing to rervrite the iegal reladonship betrveen Pr,rsr otfice end its
Subpostmasters so as to impose on Post Office onerous obligations in relation to the

conduct of transactions and the inr.'estigation of losses arising in branches. T'he Ciaimanrs
go on to allege that Post (Jffice did not discharge these obligations and rhat, as a result,
Post OfEce acted uniawfully in seeking to recover shortfalls from them or rerminaring their

contracts or taking orher action to vindicate its rights.

,&
9. Post Office's posirion is thar Subpostmasters are responsibie for the conduct of
ttansactions and the security of cash and stock in their branches and tl-re submission of
eccllrate transaction records and accounts to Post Offrce, with Post Office havinq a duty
not to prevent Subpostmasters pertormtng their obligarions and to ptovide zny riecessarv
cooperation (which lt d1d). The Claimants have not pieadecl, ler alone properly
particularised, any cause for the losses tbr which thev rvould not be liable as asents ro Post
of{ice. }vIany of the allesauons they make in the GPcrC appear ro be specularive.

10. The parties agree thar subpostmasters are Post Of.fice's agents. ,\s one wouid expect, [he
express terms of their conttrcts rvith Post Office reflect this agency relationship. In the
circumstances, Subpostmasters are liable for iosses in their branches unless rhey can show
rhat the losses were caused by something other than their error or other thinss t-or which
r
tirey are responsible, such as the acts and r:missir:ns ("acts") of their Assistants. In line
virh usual agencv princrpies" Subpostmasters r.vho have signed off branch accourlrs
recording losses in tireir branches are bound bv those accounts (",.ind the losses in thern)
unless thsr,, cari -shorv that the accounts are mistaken and that it is appropiate for dre
';lccoLlnts to be re-opened ancif or correctcd.

rl 'ihe Claimafits caflriot rel-v on express contractuai terms ro support their ciaims. In an
;rtnbitious attempr ro invert rhe ler4al relationship beru,,een the parties, thev seek to artack
i;crtain expre ss contractuai terlxs as 'ireinq unenibrceabie. to impiy a great number of nerv
ii:tms afid to impose eiai:orate iiduciaw. rortious *nd other duties r.rn irost (lt?lce. in a

.r:ltLicnship ot riris sr>rt" tirese ericlirinnal fl-fms and duties lre unnec*:ssarv ancl

::lr,.propriale enrl lircu (-o1iir.1rlrcL lntr'rrnress conr,racmal fct'ms r.r;hlcir:lre i:olj: r<rrsonai-:ie
 u,"rite Subposimastersr contracts. .If the Clairlants fail ro their attempr to reverse the leqal
duries provided for in lhe cclntracts bcrrveen the parties, many of the factual complaints
rnade rvould nor give rise to :l c.dlrsc ..it action, er-en ii the; rvere to be proved.

1?- Post Ofi.ice denies that Claimants could r:ot efi:ectir-ely investigatc iosses in thelr branchcs.

Subpostnrastets had access to line bv line dzta r:n the ttansactiolls they r.indertook.

\{oreover, thev had access to traintng, ()peratiofls manuals, helplines ancl in-branch suppori
il rhey rvanted. Post Office also unciertook its trvn accouoting reconciiiations, w,here
possible matching a Subpostmaster's records against otller tecords pror.ided by third
parties, and then notifiring Subpostraasters oldiscrepancies tound and allowing thern to
choose whethet to accept or dispute those d.iscrepancies.
B
13. Some Claimants chose to subrrit false accr:unts to Post Oftlce. 'Ihis false accounring
concealed losses from Post Office, sometimes ior many months or even years. It also

corrupted the accounting records of trranches, making it impossible or alternatively

r:xcessively difficuit for Post Office to assist a Subpostmaster in finding the root cause of
losses, once thev were uncovered. Post Office expects that on closer enquiry of individual
cases it rr;ell become apparent that where there rvere large, undeclared iosses in a branch,
the respectrve Subpostmaster w'ill often have submitted false accounts to conceal those

lusses. Post Office's position is that where false accountinq is admitted or proved, this will
wpically give rise to insuperable evidentiai difiiculties frit rvhich the reievant Subpostmaster

is responsible.

14
'l'he Clairnants attempt to excuse rhis behaviour bv sa\,rng that thev were placed under such
,,&

lconornic duress or.:v'ere dealt trth so unccinscionably that thev had no choice tn.rt to
leceive Post Offrce bv suh;mirdag ialse accounts and/or making talse declarations ot eash
-lhese
aodf or stock at their branches. ailegations ate denied in the sffongest terms. Post
Office clid not make threats or put illegiumare pressure on Subpostrnasters and
nechanisms were in piace tbr isolatins disputed 1<;sses so {.hat accutate accounts could

iirvays be rendered. ln anv event, Post C)ftlce denies tirat anv pressure can have made it
lrqitimate fc.rr an aqent to act dishonesrlv vis-a-r'is his or i-ier princinal.

'i-1.re
{llaimants'attemnt to cxcllse iaise accountinq. cunrbined uath thcir artemot rr piace
.r:{t{lnsive rjuties oi investiqation and burdens oI i:rooi r.rn Post Oifice in r*lation ro ihe
',a)rlr cal1se of- icsses- rvr.l,-rkl tnean tiret ti-r* rr.reafr:r r iuirncsrn:astff :l tnrscondui:I- :ile mi-)rr
:,ilir-r.rir ir '.,r-otrir-i nt ir;r l)fi.ii i -!liii:e i-r) r'i-'ar)v'ir i;r t:r,:liirecr l;l i(]iaias lli,,m ri.: r,r: !rirr ;r.r,-,a*.
-l
rlrr : ;, i.cr ;;1,: -',.rr:,r tl r.i. i;r:,, | :i, l:',1.
 16. I-iighly seneralised and specularive allegations are rnade that Ilorizon @eing the iT svsrem
provided bv Posr L)ifrce and tl'rrough rvhich business is transacted in branches) is unreliable
or -,'r-rlnerable ro maniculetion, and tlrus rnav have been the root cause of some of the losses
in l;ranchcs. I-ike any other I'f' system, Iiorizon is not perfect, but Posr (f ffice mantains
' lhat it is robrist aird that it is exffcmely unlikely to be the cause of losses ir:r btanches. lts
.lesign and technical controls, when supplemented by the l,aric.rus accounting and cash
,:ontr:ols applied in branches, rnake it very uniikeiy indeed that an error in I iorizon cc,tild

rif.iect a Subpostmaster's financial position and go undctected. It is norable that the GPoC
rloes not identify any ertor in F-Iorizon said to have atfccted a Claimant and, in

r--orrespondence, the Claimants rnake it cleat that they do nor aliege that there is a
p systematic ilarv in F{orizon.

17. It is clenied tl-rat Post Office ignored, or concealed, possible problems rvith F{orizon or
tailed to investigate losses in branches l:efore holding postmasters liable for rhose losses or

terminatinq their contracts. Post Of fice provided reasonable cooperarion, training and
support.

18. Post Office also asserts its rights to rely on the accounts and other ftarisaction records

provided to it by Subpostmasters and on which it relied. As appropnate in pariicular

iactual circumstances, Post Office wili rel,v on estoppels and defences of accord and

satisfacticn and of accourrt stated. Post Office also asserts a generic counterclaim in
respect of any shortfalls that it has not to date recovered lrom Clairnants.

i9. Tt is denied that Post (Jffice's express nghts to terminate the Subpostmaster corltracts are
,i&
i:r:rtered in an-v clf the r.vays ailegecl by the Clairnants. Pr:st Office had a risht to terminate
,,'n nouce ranuing irorn 7 ilavs (for Temporary Subpostmasrers) to f: months (ftrr

-dr-ibpostmasters under the NTC). It :llsr: had a right tr: termi.nate summarilv tbr cause an<l

(contrart, to the impression rhe Claimants seek to create) ir exercised those rights

i:esponsibiy and after considering the material ctrcumstances. r\ny darnages ansrng tiorn a

r.:iaim for unlawtul termtnation will be resric,ied to the loss of proiits during the relevanr
r:ottce periorl end no claim {or unlarvful termination can arise w-here Post f)ffice terminated

{in profrer nodce. 'i'he attempts to claim the extensil,e rrnge ol orher iosses set our in the
r.,:PoC appear to be grosslv inflated. -fhev ate utriouneled in iact. tn larv, anci ia causation

',,,.ti./ <:t thr ir;sscs '.rte t{}o tcm{-Jte.

,l-',ri!.,r. ::r:lnv ol thr-: (.l:li;n,;-nts ll::li ilr;it iJt'ilce ol'cr 6 l:{-r:!rs '"1!,-(), x'ii,rr:tr is irkcil, ru; i:e iiir:

,,,- .t .n', n r, , It- .iri .'::'.i .ri.:ir:1 . I l(: ill\'i :r-,,r1..1. i '',:1,:'::j111. -i'-' l1r (: !trtj'-ti.
'
 Others have entered into settleinent agreements v,ith Post Office, are bankrupt and s9

ltave to standing to bring a claim, {lr are ettcmpllng to run clairns that are subiect to res
judrcata endf or issr-re estoppel and,/or are';ln abuse of process-

'THE GPoC

:1. ,\s to paragraph l, paragraphs 2 to 6 abr:r.e are repeated.

22. ,:\s to paragraph 2, the Schedules of Intbmratir:n pro-",ided to clate ofter little assisrancc in
understanding the claims that rhe Claimanrs propose to bnng.

23. i\s to patagraph 3:

s (1) Post Office has provided l-oluntarv infirrmation and disclosure to the Claimants on a

generous irasis. It is denied (if it be aileged) that the marters to which tire Claimanrs

rel-er provide any justification for a fai]ure properlv to plead t]reir case or for
advancing and seeking disclosute in relation ro speculative claims or contendons fbr
r:,rhici"r there is no proper basis.

(:) ilegarding the alleged asvmmetry of information, the Claimants or.,eriook an

impottant asvmmetry of information going the orher rvav. At all matetial tirtes,
Subpostmasters ancl/or their Assistants (but not Post Office) have had lrst-hand
lnc.,wledse oi the ttansactions taking place in their btanches. This as!-mmetry of
iribrmation is material to the constructjon of the parties'ngreements. to the issues oi
:act between them and ro rhe applicatir:n of the burclen of pr:oof.

7
.\. GFoC nNTRQDUCTION & KEY FAtTg

,'l.L Ehe Parucs

i;$endant

:-i. ,'\s to $araqrryh 1, it is admitted and averred that Post Oftlce operates tts brisiness thtor.iqh
l nclaliork oi arounri 1 1.6()0 branches tn the LTI{, that lt oflers products and sen iccs ro ihe
rr,"rbiic via this nefwork, inclu<lir-rg the services reierred ro, an<l that it soecifies orocerlures
gor.erning hou, branches xre to oDerare rts business r:n its hehalf- Where
'rrd srandarcis
.l:lsr: i-rrancircs a.e matlnged bv irost llf ce itseli i"Cr*wn Gffice branches"" iiow t'n()wrl
, ilir,.:r::,lt i',i:rnrrell iJri,tnr-"hcs"). ti:er,, ere ritrr:cd-,, rn"'rt;rqcd bi, ;r,rrrt iilficc rrrri.c*r erc.
t:,,1*r iis itrrl?ir{}1- ii1;r.;a]q1'g.'.iht'ri: ii.rr;sr: irrenr:i'res rre t;r:i:rzrct-i i:r,.:ri;i.}.ifosir:-tljtsleri-: i.ir
 F'ratclrisees ("agencv bfanchqs" and "franchise branches,, respectively), thev are under

the conirol oi the relevant Subpostmasters or Franchisees.

15. .\s iu pamgraph 5:

/ l) Post ()ffice's products and sen'ices include products and senices proviclecl t1 orher
businesses anci rlrganisations (known as "Fost office clients"). For example, post
{}ffice provides rhe physical location at which a persofi may deposit cash into a bank
2ecounr but it does nor provicie the undedying banking seryice.

/,1\
\.:) As one would expect, Post Office determines the producrs and sewices which it
oifers to the public, although rhis is sometimes driven by other factors such
a requlatory changes and the requirements of Post Office clients. Post C)ffice
as

re quires
some minimum products and services to be offered by its btanches. However, it
does not require all Post Office branches to offer all irs products and services.

,3) Some new products or services, such as AT'ivIs and National Lottery terminals, were

introduced in agency and franchise branches only rvhere the rncumbent

.!ubpostmasters and F-ranchisees specificallv consented to their intrr:ductiol.

i+) l.lo admissiorrs are made as to the "increased ... complexity" of anv particular
product ot setvice. Fost Office resen/'es the dsht to address these marters F:rther in
tlie event that the (.laimants plead that thev are rnaterial in sorne way, lvhich rvould
lurr.'oive the (,laimants identifi,'ine the product or scrvice concetncd, the nature of rhe
compiexirv relied on" the ciaims affecteci and how they are affected.
B

Save as aforesaid" paragraph -i is adrnitted.

1. y?es ol'Brantl)

irlaragraplr 6 is admttted. fhese branches are also caiied agency branches and

.i,libnosrmasters /now more colTtm(}niv tefeffed to as "postrnasters") r-erv oiten operate

rheir own retaii businesses i?om the same premises. In rheir cernduct of Post ()firce's

1;usiness, Subpostmasters act as Post {)ffice's agents, rvhich involves doirrq the fr.,ilowinq
,1ings on its behalf;

ilarflfiq rnto transecrions l-.,rth irost tjtTice {:usti}mflrs;

 (2) effecttng andf or proces-sing transactions with Post [)ffice clients such as Itoyal hfail
(for postal sen'iccs), rarious LlIi government .lepnrtflents (ior: sr:n'ices such as

bcncfit pavmeflis and passports) and r.atiours financra.l institunons (fr:r bankirg
scnices ;rnd insurance ptoducts);

(,i) making and receivjns pa)rnents ancl incurring liabilities;

(+) operating ecluipment belonging to Post Of6ce or Tiost Office ciients, ranging irom

I"l cqtiipmenr (c.g. a lottcry terrninal use<1 to seil Camelot lotterv products) to b:asic

equipment such as safes in which cash is stored;

p f5) hoiding and dealing q,ith stock (inciuding cheques, vriuchers and other items)
belongins to Post OiEce; and

(6) hoiding and dealing q,"ith cash beionginu to Post Otfice"

27. ,\s to parasraphT:

il) Franchisees are not ahvays iand are not required to be) limired companies.

(:) Post Office is unable to admit or denv whether most of the irmited companies that

are parties ft> F'ranchise Agreer-nents were se t up for tl.rc prrrpose of contracdng l,'-rri.r

Post L)fEce. N.{anywere not (e.g. WII Smith, N'IcCoils, ti-re Co-operative (iroup, and
Slakemore (Spar)).

53 (3) Save as aioresaid, paragraph 7 is :rchnitted.

"li u ltp o.r t ru a.r t e r {, I c i tn a n ts $u d t. a x h"/i c t "r

:8. Peragraph S is eclmitted as resards the Clairnant.s ti.e. thc claimatts in .,rcnon No.
f xQ r6,c01238).

:'1. "x.s lr: oaraqraph 9:

:i) itrrisr {JtEce c{rntacls rlith Suhnosrrnasre rs on stantierd fbrm r:ontracts.

.l) -1.s .i,eii :is beinq erpressed ilot io be conrracis ot r:mpiovment, tllese c.rnrrec[s ere
,illi- i:ill.itl'?ct< rri ernpir)l,'r'llr'nt..ts lire t.-.iaimants thr:msclves aiirnir.
 Office the right to control certain nspects of its business (e.g. the procedures and
standatds in accordance u,'rth which they are to conduct Post (Jifice's business and to

rlccounr to P6st C)ffrce flor t]re transactions. cash ancl stock they ]rave dealt with on

its behalt). ln rciauon ro matters such as these, Post (ltfice has the power to givc
.
' itrstrr:ctions that Subpostmasters are oLriiged to follorv.

(.1) [lowever, Post Oifice wouid not characterise its contracts tvith Subpt;stlnastcrs as

"reserveling] ro the Defendant a high degtee of porver, discretion and conttol".'Pnst

L)ffice is unsure r.vhit is meaflt bv this vasue expression and it docs not knour rvhat
har''e in mrnd.
irarticular powers, discretions and contrr:ls the Claimants

B (5) Save as atoresaid, parzgtaph 9 is admitted.

-i0. ;\s to the contfacts pleaded in paragraph 10 ("the Subpostmastet Contracts"):

(l) SFMC: Paraeraph 10.1 is admitted. sare that the SPI\{C is not dated 1994 bur

marked " 1994 issue".

(2) Temporary SPMC: Save that the r.vord "purporteti" is rnapposite, paragraph i0"2 is

:idmittecl.

(3) CommunitvSubpostmasterAglreement:

,.'1) The first seriteflce of paragraph 10'3 is admitted.

,,\s to the second sentence. irost ()tfice belier''es that aii ot st>rne oithe
? iir)
v
l.lairnants who rvere engaged on rhe terrns ()l these agreernents r-r,til have
r,:ratncci a copy of their cofiuacts. i;urther, in their llesponse to a i{equesr tor
(-lairnants
!-urther laformation dateci 16 }tav 2017 1"Part I"8 Response'1. the

irate that it is trr;t their case thet none of them (i) iras or (ii) has ever had a

i:opy of the (-ommuniry Subpostmasicr .{greemcnt, irorn rvhich Post {lifrce

rniers that at lcxst soflne ili these Cldmants in tact have a copY of tilat
.:.{reement. in any evenr, Posr ()iflce provided a copY to the Claimants r-\i-} 1U

,\prii 2017.

io the thirci sentence, the Clairnants shoi-rid not procecd on an tssurnotlon

1,,'l ,1"s

.i:; a{-} iiie tnatett:.ri .-{-}lltcnt i.}r illlf culllf:tctr crr l'.rhich f her'- intenr'i tc' ::1":iv l;ut

.r,.r i t:il.::;ci 1i tl{)ili11 1r c'lSu'.

 (r) NTC:

(r) 'i'he first sentfnce of paragraph 10..tr is aclrritted.

rh) 'lhe second sentellce .is noted.

(.) ,\s to the third sentence, Post Of{ice believes that all or solle of tl-ie Claimants
.vho were engaged on the tenns of these agreemenrs will har-e retained ,
lopl,
r--f their coflrracts. F-urther, from theit Part 18 Response, Post Office iniers
that at least some of these Claimants in fact have a copv of that conttact. [n

nny everit, Post ()iEce provtded a copv to the Clairnants on 10 April 2017.

B (0 As to the lburth sentence, the Claimants should not proceed on an assurrtption

3s to the material content of any contract on which they intend to rely but
must plead a positive case.

(.5) Paraeraph 10.5 is noted. Post ()fEce rvill iespond to anv ciaim based on any other
contract if and when such a claim is properlv pleaded.

ix lror rhe avoidance of doubt. Post Office pleads to the SPI\{C, the'I'emporary SPMC, the
NTC and rhe Franchise Agreement attached to the GPoC without preiudice to its tight to
reiy i11 inciivtdual cases on the terms of such agteements as d1e-v -ctood at the rime(s)

r-elevant to anv particlllar claims made bv rrarticular Clairnants.

{}tier {,laimanl.r
..P
tr2 .\s ro paraqraph 1 1:

ii) ij.eirardins paragraph 11.1, ivhicir is nr:tec[. Post (Jffice ]reiieves rhat all cr at least
:,{)fire oi thcse (,lairnants r.vill have re tained a copv of their elnDlot-ment conffact.
l;r-rrther. from rheir Part l8 Response, Post {)ffice infers that at ieast si-,me r.,irhese

i .iaimant,s rn iact have a 6qprt of that conf.ract.

a\ Resarriins paragraph I 1.2. rvfrrch is note d. Post Olfice had r:o cnnfacfuai or other
-)
;:llationsirip wirh these individrrels ancl these C"ldmanrs have not discioseci t}:re basis

,rr aerms upon rvirich thel, rvere ernpltlved bv tire reie'r.ant SuL;posttrasters"

i,ii::.;rr{-1inq oaraqrapi-r i !".i..viricii i:r r..lc*:ri, i}osr l-rfiicc i;eiicves rhat thc rticrra*t
llr! i ,(,\ r- rrrF ' t-'r1 .r'li'l 'tr1-, t i ':::{ i,ll l:1r',P[fl1r. (: li1' l'.'.:t.i'i,r' \'ri';/ lT:r llfr
 It had no contractual or nth.er relarionship nith the Clairnants rvho are merely alleged

ro har.e been directors and the Claimants have not disclosed tlre basi"o or terms upon

rvhich thcy acted :rs directors of the relevani Frar:chisees.

(1) Save as aforesaid, Post Ofllce is Lrnabie [o admit or cleny paragraph 11.

L.2 Florizon

33 Paragraph 12 is admittecl. Until 2A10,tlorizon \)r,as a distributecl s)-srem in rvhich

transactions rvere undertaken wrthin branches, rvhose terminais transmitted transaction

data in L,atches to a cental Post Office data centre. C)nce Florizon Oniine was introduced
in 2010, ttansaciions r.vere effected through real time exchanges of rJata from branches to a
:p
celrtral Post Office data centre. Save r.vhere otherwise indicated, Post Office uses the term
".Horizara" to reler both to the pre-2010 version of Florizon and to l{orizon Online as the

context may requrre.

)+. ,\s to paragtaph 13, the vast rnaiorrry oiSubpostmasters and their Assistants rvho have
,vorked in atency branches sirrce the introduction of Florizon in those branches rvould

lrave been usets oi Horiznn. Save as albresaid, parugraph 13 is not adrnirted.

i). As t<; paragraph 14:

, t) lle*arding paragraph 1.4.L, rt is admitted that, if and to the extent that any Cla:mants
..vorked in a Post Office branch prior to the introducdon of'Florizon in that btanch

lnd conrinueci workrng in ti-rat Lrranch thereafter, the introduction signiiicantlv

;3
inaniled irorv they rvete required to rvork in that lrranch. Save as aforesaic{,
.)arar{raph i.1.1 is denied.

:) Po:it Olfice caflnot meaningtr:llv pieari to paragraph 14.14 since neither the errors,

:ror the data entrv*, nor the "suiIcient error repellencv" alleged are idenrilied.
ilorr,,cvcr, ii is rlenied (if it i:e aileged) that l-{orizon had or>or cirecks and controls ior

',iata errors.

Ir Parasraphs 14.2 and i.t"3 iall to rdentrh' any ol iire lirnitations epparentiy relied on.
.[o1r.,e1,{:1. rire rf,enerai thrust of these parasraphs is rienied. 'fhe inrrclriucrion oi'
: ilrlizr:n rr;e reased. rarhrr Lhan lrmite d. ihe abilitv r:i Suboostr-nasters atrd rheir staif

, r ,i1.j.-a:rs" irir:nrin-" {)!)t i[n an<j rr:r:r:nctic irlttrsar:rion rr:ccrds :rtrri to i1r\-.: iir)]zt{t:

,r,',1'rr;.iiis. i'ti: r:;tlr,oicr. u,-:iolc li'ir;l itttlcductiotr oi iiu:r'izr;n":,:.lb${i}il1-il:i:itllrs

 maintained r-ariou-" hi,rnd-rvritten ledgers for particular products or serwices. fhese

leciqers had vari':us limitations, nrcluding that it u,'as nor possible to knorv hcrv much
cash shoulcl bc in the branch withor-rr fitsr rerconciljng all the lcdgers togethet:, rvhich

$'as a time-con,tr:ming process. Afler the introduction of Hc,rizon, Subpostnra-sters

had the ability at ary litne to obtain a "lSalance Snapshor" that showeel rhem hr.,rv

rnuch cash should be in a L:ranch, rnaking it much easier to irlentify anlr s},o.rt^,rr.

Subpostmasters also had the abiliq'ro obtain an extensive range of orher reports :rnd

int.rmatirn lronr l{orizon, as pleaded lurther in paragraph 38 beiolv.

36. Paragraph 15 is ernbarrassing ibr lack of parricularitv. In the absence of any indicatir n as

,,.h to the actual changes the Claimants intend to teiy on and as to the effect(s) each such
g
change rs alleged to have had, Post Office cannot plead to this paragraph. Ho-rvever, Post
()f{ice notes that, on the Clairaants'pleaded case, afly changes ir the Clalaants'abiliry- to
ilccess records and investigate sirorttalls caused bv the introduction of }{orizon or bv
:rubsequent changcs ro Horjzon or to products and servicers offered has no apparent

relevance to afly of tire breaches of contract or other claims advanced in the GPoC. .\s
regards such chan,qes. paragraph 35 above is repeated, ryutatis ruulandit"

)/ The first sentence oi paragJraph 16 is admitted. As ro tire second seflteflce, Post Oifice's
'*se oi the terms "I{orizon" and "Horizon ()nline" similarly doe-* not include training.

!'i:e aperation ol llonTon

.\:; tr-r paragraph 17:

'3

li:ll'e fr.rr the "r:th'-rs" referred to. rvhom the {.-laimants .iG ilot idenufv, rhe llrst
::;iilr*nct: ts admitted. -fhc nrocesses ir;r trenst'errinq transacrion data iiom brancir ro

ilr:st ()fdice's central data centre. and l}^le controls ensurinq fhe accLrtacv oirthat rlara
transfer" are discussec{ in paragraphs 5-} ancl 54 belr,rw.

:) Ilegar<ling the second senteflce:

tl Lln lhe introducrion of l{orizon, transacEon tiara rvls ireclr availairle t<>

-li,rirnostrnasters t-Or.i2 davs frr:n: the d*te of ihe fflevafit rransac-tion. llince
.ir* inircduction of iiorizon (.]niille. slrcir data iras been ireelv avaiiablc tor iiti
.i:itr:i.
 (b) while sucl-r transacti.n data is a'ailable, subpostmasters can search
for,
identiF", organise and anaiyse data by means of
a wide range of reports,
inclucling a transaction log report which idendfies
each and er.er1. rransaction
undertaken in rhe rerevant branch in the entire period.
T'his repott can be
foc'used rn a varierv of lvays if desired., incrurling by reference to dale rariges,
transaction rypes, stock iterns, value ranges and even
particular users or
terminals.

(3) Hotizon provides s'ubpostmastets with for searching, checking and rcviewing
toc>ls
rhe transacrions undertaken in the branches for which
they rvere responsibre.

& T ra nuctio n Corre clio ns

i9 Paragraph 18 refers to transaction corections. one

of the safeguards against errors by
subpostmastets (or theit staft) is a process by which Post
ofnce proposes correctlons to a
branch's accounts ("Transaction Cortections,,). 'fhese
are nprcally generated in the
[,rllowing way:

(1) Post office checks Horizon transacdon data (i.e. data as keved inro btanch terminais
bv branch staffl against data taken from separate sources.
For exarnple, post office
client banks provide their own records of fansactrons car-ried
out in post Otfice
branches, rvhich are iransmitred directly from rhe chip ancl pin
clevices used in
i:ranches ro the banks and posr office compares rhese to the transaction data on
iJorizon.
F
\Yr'here there is a discrepancy i:etw-een the rrvo sers of clata. Post tlffice reviervs tire
tvarlabie data li,irh a view to determining whether the branch
staff have proba6lv
,nade en crror iiral rcquires correction ,and rr may c()nrecr
r.he rclevant

'iui:postmaster for tutther inthrmaticin to assist in that cletermination). Where this is

tire case, Post ofEce will generate a T'ransaction Correction notificadon
which is sent
io rl-re reler.,anr
htanch via F{odzon. For example, where a cheque deposit
inro a

bnnk account is keved in on Florizon ns a

1,r00 credit but the rrue amouni r:f the
':heque rs d9{), a'I'ransaction correc'on r'"ith a'aiue /,10 clebit is ge*erated.
'f
-fransar:rir.,n
,'-,) i-r'-rrectton nc,[rficeuon rnciur]es 1i) a descriorioa oirh.e transacric;n
"\ fr:
"t i.:i;t:rr.:i.:lr:ci. i'lil lhe ccntacl r.lefails rrf :ln i:mi:ilrrct,t {)i"f}nst i)tEce.,l.,ho r:'liiii nr'ir_ir:
 fr"rther dcrail tf required, (iii) rrpicailv, the outiirre teason lor or narlrre of the

cclrreclion, and (irJ soinetimeri, evidcnce substanrialing rh. proposed correctiorr.

(+) ,\ Transaction (.otrt:criorr notification srnt b)- i)t,sr (Jftrcc to a branch is a proposal,

not an insrtuction, ilnd it dt>es not take eftcct unless acceptcd try the Subpostmastcr
concerned. On receiving a Transaction Cr-rrrectir)n tlotificati.rn, the Subposrmaster
crn cithcr xccepl thc corrcction or disputc ir.

(5) On the l-ir:rizon screen, therre are fu/o wa),s for a Sr,rbpostmaster to accept a
'fransaction Correction. i'Ie or she may "accept" the'fransaction Correction: this

immediately increases or decreascs the cash or stock position (as appropriate) in the

.& branch's accounts as recorded on Horizon. Alternatively, if the amount rlf rhe
'fransaction Correction is
{1 50 or more, he or she rnay "settle lt centrallv": this
causes the amount c"rf the Transaction Correction to be tansferred to his or her
personal account with Post C)ffice. Linless a dispute is lodged with Post C)ffice l-see

i:elow), he or she therebv accepts dre validirv of the 'fransaction (lorection and Post
Office will in due course pay or collect the reler.ant amount to or from the
-lhis
Sr,rbpostmaster. process is adi-lressed in page 30 of rhe operatrng manual
entitled "Rranch T'radins: balancing and disparch of docurnents" ("Branch Trading
&{anual").

-lransaction
i {r\ If the Subpostmaster wishes to query or riispr-rte the Corection, he or
::he should contact the person idenritied in rhe I'ransacdon Correcu,rn nofltication.
i-his process is iclendfied at page 34 of the lSranch Trading l\,'{anual. [f'. havine
3
r.liscussed the matter and revierverl ar:.,r furiher ilformation providecl by the pers.rn
idenriiled, ri-re Sr.rbpostff)aster wishes to dispute the proposeci i'ransacilr>o
i..lrrecfion, he or she should acccpt if or settie it cenrrallv and then iorlqe a dispute
.r",rth thc Post C)i:fice bv contacting the l{clpline. \1.'here it is settied cenrrall.v, the
rllilouflt of the Transaction Correction is rransierred ro the Subpostmaster's personal
.iccoLult *rtth Post (lfficc and a Llloclt is nlacr:d of il're ;1mouflt transf-erred to tire
rr,ersonei accoullt rvhilst the djsnure is resolved.

:ll" ,:1rS |o l-),lfzqtaph l8:

',,' :i,'. ! i{,ti( itCe is ,,( !rti'(i. 1',,.1 I }1licc rl,li's ,i,ri i,r:uit'(' r{:a11 I I r.rflS.rCIIiltl

:;:'f ijitf':i)11 lli::lij..itili{jd r,iltj.e:;s 1)r{)\ i:!1 lr'.- 1l1r; 5t.tb'$r:qtfit1.:r.tiijf il,i)l r!} !;{: fr.}1-fec{
 (2) Save fbr the relerenee to "limitetl" reports (udrich is denied as indicated in paraerapir

18 abor..e), the sec,lnd sentence is adn-ritted. llou'evct:

-fransaction (lort:eclion cotrtes with contact detatls lor a person al Post

1,,1) i11.611,

()ffice who can provide more inforinarion and a Subposrmastef can in an\'
cr'e1lt cofltact the Ilelpiine referted to belorv;o obtain n-rote intbtrnatiotl;

(1,) clepending .n the subject matter of the Trensaction Correction, the

Subpostmaster may hold cotresponding paper records in his ot her branch
which he ot she can and should check; and

(.) not ai1 Transaction Cortections reqriire fr"rrther iniotmarion (for example, a
F 'fransaction Correction could be genefated for a missing cheque and the

cheque might be found in rhe branch).

+1 paraqraph 19 bundles ser.,eral ditferent allegations together in a misleading way" Post

Off.lce sepalates out and addresses those allegations in paragraphs 12to 16 below' In the
lnrerests oi cladrr and consisrency, in this (]eneric l)efetrce Post Office uses t.he tbllowing

ilctlned terms:

(1) A "disctepancy" refets to a1ly difference iretu/eefl (i) the acnlal cash and stock

position of a Lrranch and (ii) the cash and stock posirion shorx,'n on Hodzon as

derived from transactions irrput by hranch stafiinto the branch's terminals'

{.?) ;\ "gain" reiers to an event that causes a positive discrepancv ii'e. rhe situarion
s .vitere the branch has more cash andT'or stock than the derir''erl fiE-rres for cash
-ind./or stock on {-{orizon). F'or exampie, a Sribpostmaster carryinq orii a bank

.lccoul-tt r,,rthrlra*ra1 oi- i,1t)0 tor a custome r, errtering that rr,tthdrarval into llodzrln

liut proviclinq only 1,90 in cash to the cr.rstomer r,vor-ricl qefierate a 54ain of {10'

i-i) ,\ "1oss" reters to afi event that ceuses a neqatle discrepancy fi.e. the siruadon
.,vl-rere rhe branch has iess cash andlor srock than the derived fiqures tor cash anclf or

-,t,--ek on tiorizon). fior exatnple, a Subpostmaster cerr\lnq out a bank account

.i,itheirarvai oi' ;1()0 {"or:r curtomcr. clltcrtllq that rrT thdrawal into i{nrizon b'-lt

j.-,r{}v1tlinq lli0 in c*sh to tire cr,istorter.aouir:l senerate a ioss of /,1i).

.lfrirfl'*il' .i IFi-:1r,,t r.i.,r1!ttIL. ilCI .ri::rjt-rl-11i)i.', :,1 lnr-' 'r1g r'1 | lr'lltll:1't 1r(a:l'{l 'i"
.

.:ij:iiirlt;i1l:ri ,,r;i:i<-i-r iorsr:s iif i:qr:t'cti i.t:tns i'i:,1i1r.:1 li1 rir': r;ilrjr:ti'i'
':;:r'l
 (5) ;\ "'net gain" tefers to a positive net discreparrc'r xr the erd of a rrading period (i.e.

rhc amounr bv rvhich gains (if an1) exceed losses (i[anfl in rhe period).

(fr) ,\ "'1{orizon-generated shottfall" relers to a shortfall that is artributablc io errors

endf or bugs in Ilorizon.

ll ra n c h'{ ra di n g,5. t u le w t n ts, m a ki ng go o d an d ditp a ti ng t h o rt/'a I /s

-12. ,1s to the first senteflce oi.partgtaph 19, it is denied that the n-]atters addressed in
paragtapirs 19.1 to 191.3 "accentuate d the importance of the accuracy of flortzon".
Paragraph 19 addresses requirements whose purpose is to ensure the proper discharge of
h rhe Subpostmaster's contractual and common law duties to account to Post Office for the
transactions thev enteted intn on its behalf and for the cash and stock it entnrsted to tl'reir
care. Such requirements are to the murual benefit of Subpostmasters and Post Office in
that (amongst c-rther things) they ensure the early idendficarion and con:ecrion of any errors
and defaults relatins to the transactions carried out and/or to the cash and stock held in the

branches tbr which the Subpostmasters are responsible.

+3. 'fhese requirements are as follows:

(1) Subpostmasters are requirecl to pertbrm a regular "balancing process", which

involves counting ali stock and cash at their btanches, cclmparing it r.vith the cash and

;tock indicated on Florizon and producing (and confirming) an account of the

transactions undertaken since the last balancing process and of the cash and stock

B ircid. Initiailv, Subpostmastets were required to do this rveekl-y, but since 2005, thev
irave been reiiutred tcl do so at the end of each "Brancir "Iradinq Period" post
i) lfice-specilie d periods rlf 4 or 5 rveeks. of rvhich there are 1 2 in the veat and w-hicir,
ior cr:nvenience " ere refcrrerl to irerein as "trading petiods").

l:) i.{''irere this process disclcises a shottfall and the SuLrpostmaster accepts liabiliw fbr
the shortfall. he or she is required to make it good (l) by providins his or her orvn

persoual luncis to the branch or i2) rf the:lmount invoived is {1:0 or more, by

.-r:ftlinE it centr:allv. Tl:ris elecdon is macie on ihe Hcirtzon tetrunai in branch. Bv

",,,etriinq cenrraliy", a separafe. entn' is added to the branch accounts rvhich riifsets the

',': iue r;iiire shorti*il. tir,-rebv brinEilre the dcriveri cash fiqure on f k;rizon in.irne
','iii-i ll're rr:tr:rl r::rsir,..t !ranr1 llqgre. 'i"1:e arnr-:rrnt oi-the shr:ritall is transferred tr'; tirc
 Subpostlnastet's personal account with Post ()i{ice. Arrangemenrs can then be macle
t0 pa), off the shortfall.

3) Whele the Subpostlnester disputes liabiliry' fcr the short*all, he or she is required
to
raise a dispute b)'calling the I{elpline and in the meanrime (if the amou1r invoh,cri is
less than {1 50) to provide it from his ot her o.,vn funcis pending resolution of the
dispute or (if the afficrunt is {150 or rnore) to semle it cenrally, thereby bringing the
btanch accourlts into balance. Raising a dispute causes a block to be placed or,, ih"
value of the shottfal'l that has been ransferted tcl the Subpostmaster's personal

account u'tth Post Office. The blocked value is not (and is not rreated as) a debt
ciue
to Post Office.

i&
(+) These processes are addressed in pages 92 - g() of the Branch Trading Manual.
The
same processes are tbllowed where the Subpostmaster accepis or disputes
a net gaifl,
with the reievant rransactions being rhe removal of cash from the branch or the
creation of a credit on the Subpostmaster's personal account w.ith post Office.

(s) Har.'ing fbllowed these processes, Subpostmasrers are required to produce and
sign a

statemerit setting out the quantities and values of the vadous receipt and. payment
transactions that irarre been carried out in the branch during the relevant penocl and
rhe cash and stock held in the branch at the end of the ffading period (called a
,.Cash

Account" unul 2005 and "Brarrch rtading statement" from 2005). Rranch
a
'I'rading Statements conrain rhe following
sraremeflt by the Subpostmaster: ..I conlirzn
ihat the rlttlefil oj'lhis ltalancing and trading statement is an accurate ftfle{tinn of lhe ca5h ond .rtotk
B tt itand al lbis branch".

.an
'"\ branch canfiot enrer (or "roll overt, into) a nerv trading period rvrthout the
:)ubpostmaster cteciarinq to Posr office rhe compietion of rhe Branch'liradin,q
Slatement as atoresaici. If ower''er. although Sul:postmasters are reqtrired tt., produce

Branch lrading Statemenrs at the end of each trading period, if rhev do not do this,
Lhek branches cin continue to trade r.r,rthin tire previous rrading period (although
ilosr tlffice does not allolv rhem to cio so indefinireh,).

'Tratling ,li lalewents

']ranch

!s r{} lisraqraph i?.1. si.i}:!ect ro raraqraph 4"i lbovc:

i',r: il rs r :rn ri sr:ccr: rl .sfi fi f encn's ;ire lcirnttteri

 -fhe
(2) third and fourth sentences are denied. Paragtaph -13(t) above is repeated as

regarcls the comparison berrveen the derived figures for cash and stock shorvn on

Horieon and the acrr:ai cash and stock as counted by the Subpostmastet; paragtaphs

' 43(2) ancl ,13(3) above are repeateel as regarcls bringing I{otizorr's tigures into helance
rrritlr the cash and stock as counted; attdparagraph a3(6) abcive is tepeated as regatcls

the abiliry to conLinue trading w'ithout eilterifl[t a new trading period.

illakinggood

,]15 Para$aplr 1.9.2 appears to be intended to a1lege that, whenever there is a shottfzili berrveen

F{orizon's figures and the cash and stock counted by the Subpostmaster: (1) unless some
s special arrangement is made, the Subpostmaster is required to make good the difference;

and (2) if he or she does so by settling centrally, the amount of the shortfall is treated as a

debt due to Post Office. These allegations are specifically denied. As explained in
paragraph rl3 above, Post Office's procedures provide Subpostmasters wlth the
opportunitl' to dispute liability for shortfalls'

Diiputing short1a/ls

16. As to patagraph L9.3:

(1) It is ad"mitted that there is no "option wrthin Horizon" to dispute a shortfall, in the
serise rhat the process of raising and resolving a dispute does not take place drrough
tire ff oriznn svstem. 'fhe process for disputtng a shortfall tequires the dispr:te to be
lodged bry caiiing the Ilelpiine.
'p

i:) Tt is denied lhat subpostmasters are unable to carrv- out effective investigations rnto
tire clisputed amounts. So is the aliegation that thete \r/-ere urispecified "limirations"
r;n Sr,rbpostmasters' abilin' to access, ideatif,- and reconciie transacrions in llorizon
.rnd rhat Horizon l'rad no "aclequate report-writing iearure". As indicated in

paragraph 38(2) abo.,,e, IJotizon provides Subpostmasters r.vith tools fbr. searching,
,:hecking and reviewing rhe transactions undertaken in the branches for wtich thev

ere responsible.

.I'here
i ]) are provtsions in irost (Jl{ice's Cperattng &fanuai as to lhe process rbr
1'lisputtng riisctepancies ('see, ir.,r cxampie, page -14 of the Ilr:lnch lradinq h{antrai)
. ,t it t. ilr.lti({l ilrtri ilttlse rrrrr\'!it{)qs 1,11"e lllri.Ir-IiLjcni '-iiiuattt'r: r.'''arriirrq lhar
 process' In any event, the process involves callitrg the l{elpline ancl,
if furt}rer
guidance is needed, it is available directly from the IIelpline.

(+) ;\s to the last sentence of paragraph 19.3, ir rs deniecl that post ofr-icc fnijs ro carrl-
out any, or any fair or adequate investigatiorrs into ilisputed afilounts.
\\1rere a
shorrf all is dispute d then the Clairnants' first point of contacr w3r-rld be .,r,,rth the
FJelpline. In tlie case of a -ftansaclion Correclion, the <iispute v,-ouicl
frst be raisecl
rarth the individual within Posr (lffice u,'ho issued the Transaction
Correcrion
notificatir-rn and then (if necessary) wrth the Helpline. nisputes are
generaily res.ivecl
at this stage, by Post office and the subpostmasrer reaching a co',lmorr

I understanding of the position. But

escaiated. 'Ihe
if rhis does nor happen, the dispute can be

in the escalaticin process, and the Post office teams in'.lved,

steps

have changed over time and the specific escalation route can cliffer
6epending on the
nature of the issue raised. However, in broad retms these woulcl inciucie:

(") After it is raised wrth the Ileipline, the issue woulcl eenerally be escalated to
more experienced and seniot personnel wrthin the Helpiine (or the ream
issuing the disputed f'ransaction correction) for further invesrigadon.

(D) If not resolved, the mafter would be referred to a senior persofl in a post
office ream responsible for investigating branch mamers, u.,hich is currendv the

support sen'ice Resoludon Team. This team undertakes a further

inr.esrigation into the disputed alnount, seeks to identifv the reason ior ir
':risinq and commuaicates weth the Subpostmaster concerned.
&
;\.3 fr{jlsu
+7' As to patagraph20, Post office has provideci to rire Claimanrs a {:opy cf irs colrractr.,rrh
itrujitsu ("the Fuiitsu Contract"). "11e Clairnanis
i:rar,e not identified anv reasons tbr
tlrinking that anv r:thet agreements berween Post l)ffice and F-ujitsu are require<1
for rhem
uroperiv to plead their seneric clairrs. l\dor irave the Claimants rclentitled anv rispecrs
in
';vlrrch the redactioflsto the lruiitsu Contract have orejudiceci their abilitv to pleacl rheir case
r-:n rhe relarionshio betw'een Post Office and Fuiitsu. -T'he reciactions
were macie in orcler fi>
lji:eserve comrnerciaiiv sensirive infgrmation tnrT/ or hecalse tire re6acted conteflr $.,,as

:lrcievent rcr iile is$ues in this case. r{ave ns afbresairi- pararrapir iil is acimrrteri.
 (1) Depending iln the speciiic. branch and time in question, rhe relecommunicatior line
from the branch to the internet may have been prr.rl'ided by Fuiitsu cr bv tlre
Sr-rbpostmastet. Save for rhis pnint of clarificadon, paragraph 21 .1 is aclrnitted.

' (Z) Iruiitsu was t,nlv responsible for the Post (Jffice side of rhe interface betrveen central
rlata centtes and Post f)fflce clients. llutther, some clienr equipment in branches
kansmitted data directlv to those clients without that data going through Horizon or
r;ther systems fcrr which Fuiitsu was responsible. Save as aforesaicl, paragraph ll.2 is

rdmited.

(3) Paragraph 21.3 bundles together several different concepts and uses language thar is
B open to different meanings andf ot misleading. However:

(u) F-uiitsu's role included identifving and remedfing coding errors and bugs in

Horizon.

(b) To the extent that the phrase "coffect apparent discrepancies in the dara" is
intended to mean that Fuiitsu implemented flxes rhat edited or deleted specific
items of ftansaction data. that is denied.

(.) It is denied that Fujitsu has implemented iixes that have affected the reliabilirv*

of accounting balances, statements or repofts.

(ci) Save as aforesaid. if Post Office understands it corectlv, the gereral rhrust of
paragraph 21.3 rs denied.
B
i+) As to paragraph 21.4, it is admitted that until 201.tr l;r:iitsu provided a relephone
aiivice service to Fost Office in relation to technical problems r.lrth the F-Iorizon

s-Ystem or equipment. 'lhis serr''ice r.vas used by Post Office stafT (such as staif

'vorkins ofl the l{elpline rei'erred to in para{:raphs 61 and 62 below), but someumes
i?uiitsu staff rvouid have direct cofltact with third parties such as Subposrmasters ln
r.;rrier to obtun a better understandinq of the problem on r.vhich it rvas asked ro
.ljvise. From i7 -|une 2014" this sen'ice rvas provided bv r\tos.

;ju{"r, uvots or d$icts in t:!odzon

,.ti. ,\s io Da:ragraph 22:

 (i) 1i'and to the extent that the Claimants wish to:rssert thrt any r;f the shr:rrfalis for

urhich []revlr,ert held responsible rvere Ilorizern-generated s]rortfalls, it is for rhcm to

make rhat distir:ct:lliegatir:n atrrl seek to provc it. Fost Oftice notes rhet ihev do r.rot

nrake the alk:gation in tire GPo{-. It iurther notcs rhat, in paragraph ?{i ot thcir
solicitors''lettrr to Fosr Officc's solicitors clated 27 l)ctober 201(l, the (llaimants
rnake it clear thal tlrey {6 not allege thar there is a systematic i'la.,v in Ilorizon or
iiideed irny flaw rvhich has caused any Ciaimant to be u,ronsly held responsible f<.,r

:iny shorttall.

r]) it is denied that Post Office has unreasonably or orherwrse faiied to provide

"r>bviously relevant disclosure" in relation to br.rgs, errors ot defects in Horizon.

fhere has been no ordet or application tbr disclosure and. in the premises sct ciut
above, there appears to be no basis for providing such disclosure.

50. Paragraph 23 is embatrassing for its lack of paticularirv, in that (amongst other thrngs) it
does not identifi,- the errors, bugs or defects on u,'hich the Claimants relv or horv "iarqe"

iheir number was or the period in which they are said to have occurred and nor does ir
rdenufy the transaction clata that Fuiitsu is alleged to have rebr:ilt, how "ftecluent" rvas the

need to rebuild it or the extent of the "risk of error" which is said to have been introduced.
ln the premises, Post Office canrlot plead to the first three sentences oi ti-ris parappaph.

i {owever:

All IT svsterns expedence soi-rware cociing errors or i:ugs which require ilxes to be
p Jeveloped and implementeci. ,\s is noted in paragraph 53 and 54 belorv, rhere are

ii.r'bust measures in place in I-Iorizon tor rheir detection, correction and remediation.

i
'l) i\11 IT svstems in'n,o1vinq the ransmission of ciata ovcr the internet experience ciata or

,.Lata packet errors during transmission and such svstfms routinel_tr have protectir.,e
rneesures in oiace to prevent sucir crrors creating anv diii-erence berween t1-re data

lransmitti:d and the data receive<i and rctained bv the recipient. ljorizon has robust
,.iilrlirols making it exffemcl-r'unlii<elv rirat transactron cjala urpur in a branch rvou]d

i;e cornrpteci rvhen being transterted to" and stored in, ilost Office's data centre in a

ln3nflei: laat wouid rrot l:e cletecte<l and remedied.

i.ike rr11 I"f'lr,stcrnq, ilor-izr:n iras backrins t,.-l quarel eqalllst any ii-,ss oi,-lara riue t,-r

:,;,i::]. ir;rriirr,-:rr: t;rii*re. i5i-rrre i-r:rllr;,,at'e t:rtis, tirr: rista oil rhrt harrhvate is recovn:eri
.i:it-1 iita irScktt-)" ilrr:;t t,rlf}:c t:ri<r,:s lltr: fr:rtn 'rrrilrLirj" 1r-.:,r:fcr fn ti-1.i 1r'!e1:rt,r.ln
 beftrre tire introduction of []orizon (Jnlir.re rrrherr: r new ienninal .,:,ras introduccd ro a

l:t::.nch and the dara stored on rhe othct hrmrcl-r terminals (or on a rlisc *,here ir rvas a

sltlglc cotlntcr l:tanch) rvrrs rcstorcd to rhc nerv rcilr-linal. ln rhis contcxt" Ilrist Oiflrc
docs not ilcccpt lhat tlterc rvas la "i-rcqr.rcirt" nceil ll-, "re build" clrrta irorn buck-ups.

( 1) Ir is arimirted that Frrjitsu uaintaitr a "Knorr;n F,rror I,t'rg". This i-. nor used by ll6st

{)ifice anrl nor ts it in Post {)[lice's conrol. "I'o the bcsr of Post ()fficc's
inicrrmaliotr and beliel the ldnou'n fitror: I.og is a knorvledge base tl,cumrnr r,rsrd bv
liujitsu thich explaiirs how to deal u.ith, Llr rlork around. rninor issues rhat can
sometitnes rrrise in Horizon tbr which (often because of tireir trivialin) systeln,wide

B iixes have not been deveioperi and implemenred. It is not a record of sof-tware
:#
.oiling errots or buqs fot which system-$ride t-ixes have been <leveioped and

irnpiemented. Io the best of Post Office's knorvledse and belief, there is no lssue in
the l{nown Flror Log that could af-fect the accL}racy r>f a branch's accounts or ihe
secure transrnission and storaqc of transaction data.

11. in parauraph ?4, the (-laimants aeain bundle manv ambiguous and/or misleading
;rllegations together. Post Office separates out and addrersses those allegauons in

parasraphs 52 to 56 belorv.

i2" .'\s paragraph 21.1 does not explain what is fileant b_v "ertor repeilency", .,vhar sorts of
i:rrors are rel.erred to, lvhat is meant bv "data entry levcl", rvhat rvould conslitute
"rrufticient" prevention. detection, identificatron or repordng of thcse errors, or in what
:.s i:fspects the r:ror repeilencr, oiHorizon rvas insutttcient, Post ()filce cannot plead to this
i:,,rrar-.raph. iiorvr:r'er, thegetreral ihrrrst oiparagraph 2:[.1 is rlenied and rhe rohust

.ontrois, procedures and nracttccs plcadcd in paraqraphs ,i3 ancl 54 L":elow are noted.

.{s to parauraph 2,1.1,\. ir is a truism that errors or bugs rn an If svsiem and dara or clata

;;acket crri;rs itave the potentiai to create errors in the data held in that svsrem. However,
1 Iorizon has at ai1 material tiraes included technical conffol measures to reduce to iu
,;-ttremciy lorv ievei the risli of an error in i}:e iransmission, repiication and storage of tl:e

:::ens:rcf:ion recotci clata. 1"hese have varied trom rirle lo time anci tirev cun:end\. incl-rde
.iie iirlirxrtng:

::*rizr;n cfrirles, tr':nstnir-q *nii stores irensa.ilon riarr in fi:e iorm oi."baskets". r\
, :is'i{rt ts l+ c$ifinir,:tt'transaclit;nll si:ssion l)cr,vcr:n z r-:*stot;tcr nnti Pr>si i.;fiice ar-rii

':' r'l.rl,,.:r(- (\'ii-:1t'.-.-i.],1,'i:t.11\'i,':r: l;ilnc'rii.itl-i i,.1itu:\it{-r:.\'illi.ilt,lr,-:ti1tr'

 session' I{orizon uri1l not.accept a basket of uansactions that does not ftet ro zero
(i.e. the r..aiue r.lI any 52]s. is set off by the value of an)r payment m*de or received).
'f]:is redr,rces grea.tly the risk of any error
in tlre data entercd trthin any given basket.

r)\ If a basket c-rf rransacrions tails properly to complete its transmissit:n ft,r rhe cenrral
clatabase (because, ior example, of a power loss), t1-re svstem rejects anv partjel
iransmission and requests the full basket lrom rhe branch terminal. This reeluces

greatiy the possibiJiry of baskets of ransactions lailing ro be recorcled.

(3) At the point of a basket being accepted by Ilorizon, it is assigned a unique sequential
number (a'JSN") that allows it to be idenufied relative ro the other baskers
.,&
transmitted by that branch. This reduces greatly the risk of recorcling duplicate
baskets or there i:eing a missing basket.

(+) Each basker is also given a digital signature, i.e. a unique cocle caiculatecl by using
industrr, standard cryptography. If the data in the basket were to change alter the
digital signature was generated, this would be apparent upon checking rhe digital
signature.

(s) Initial data integnry checks are undertaken when baskets are receiyed at the Post
{fffice data centre i}om a branch. Baskets are then copied from rhe central clatabase
ro the r\udit srore where a chgital seal is rhen applied (the "Audit store Seal,,). If
the baskets andf <x rhe data within the baskets were akered aiter rhe epplication of
the Audrt Store Seal, this would be apparent rvhen ttre baskets are extracted irom the
a
,'\udit Store.

lu) f ir:rizon and the above cofltrois are t}'remselves subjecr to various audits and checks
including audits carrjed out bv third parties.

.)a Further as to paragraph in addition to the technical controls referrecl to aboye. rhere
24. 1A.

:rre severai ooerational procedures and pracdces conducted bv post ()ffice and

.9r,ri:postrrrasters that serve to increase rhe reliabilirv of rhe data store<l in rhe cenrrai {ata
iicnre as an accurate record of the transactions entered on branch terninals. I'hese
rurrentlv include rhe tbllorvine:

i ','\ , rr'1fi11f1\- lrlns2clton it-ne::. iti,"r t )iilcc comnlrds lts,rwit il-:tn.::lr.unll rc(.i)r(t r82lr1:t
.i::ir.)rr*sDctlrlinqrecorelsireicibylinrt.(]lficr:ciients. lfencrrr;ri;riiorizgn..rrrre
 lo result in the corruprion of transactiotr data., this should be reveaied by rl-re

comparison.

(2) 'I'here are detarled proceciures in place to addtess

the risk of data loss re sulune ti-orn
intermpted sessions, power outaqes ot telecommunications failr-rres in branches.
'l-hese are set out in the "Recovery,
- Florizon Online Quick Referencc Guide" ancl

I Ionzon guides the systern user through the recoverv process (which inciudc
completing any transacdons that are cut short)" These procedutes shorrid preveflt
any data errors arising frclm interrupted sessions, polver outages and

telecommunications fadures.

:&
(3) 1.he displav of the ttansactions being effected on-screen at the branch terminal

i'"llows the user of the system to identify any inconsistency between the infbrmarion

shown on the screen and the transaction that the user has keyed into the system. If.
for example, a hlrpothetical bug in the terminal rvere to cause a kev-strike on number
5 to be recorded as an input of numbet 6, this w-ould be detected rapidly iry system
users, qiven the large number of system users and the huge number of transactrons
cifected on Florizon.

(-+) J'he accounting and record-keeping obligations placed on Subpostmasrers reduce the
nsk of anv errors going undetected. F-or example, there is an obligation for each

btanch ro counr and deciare ro Posr Otttce the cash it holds on a dailv basis. which
increases the iikelihooci of prompdy detecting afiy oversratemeot or Llnderstaterrlenr

B of the cash position on Horizon. I{ a Subpostmaster detects that an error has heen
l-nade at an earlv stxqe, tts cause rs rnore likely to be idenrrijed.

i5) liuiitsu oPerates industrv standatd processes tbr <ieveloprng and updaring I"{orizon
;r-nd for invesrigating and resolving anv identified potential systenr errors.

15. .\s to pzraeraph24.2, Post Olfice admits that. like all other IT svstems, I{oneon is not a

perf'ect svstem rvhich has never had anv errors or bu{rs. i"lciwe\rer, as indicated in

larasraphs 53 and 5.4 above, it has robust svstems in piace to icientriv them, ijx them and
{orrect rheir conse<luences (if anfl.

ti{;. ,1s fo naragraphs 2-1"3 aad 24.4:

ii fllr:re harre i:een c cr:asions on rvhich ilrrras or crrors rn FJortz*n havc rl:sulr*ci rn'
,,scrcolnctes enti lhitl; shorfiiils ()l ;)r-.t z'rins tn :;r)rnc ilr:i"fii"tn lcc(]!tnrs..r-r,,i.illinc* in
 Schedule 6 of the [.e tter of Rcsponse. lt is denietl (it it be alleged) rhat sucl-r bngs or
crrors lrave at-fected afl1" 6f the Claimants.

(r) on each occasi<:n, both the hugs or errors anrl rht: resrr.lring discrcpancies rn the

relel'ant i:tanch accounts were c()rrected. Pcst Of fice took str:ps to ensure that it
had identrtied ali branches alfecrcd by the buss or crrors and rhat nr: Subposuraster

'.vas ultimateiy held responsible ibr any resuhant shortfalis.

(r) )?ataSyaphs "1.1 ro 4,5 of Schedr-ile 6 to the I-etter of Response relate ro rhe so-cailed
suspense r\ccount Rug. without prejudice to the burden ol prool. none of the
branches aflected by the suspense Account Bug are branches for rvhich the
:B
Claimants were responsible.

(4) None of the Subpostmasters rvhose trtanches wete affected by the Suspense Account
Bus were ultimatelv held responsible for the shortfalls that ir qenerated. -fhe

Claimants are lherefore wrorl€l to undersrand Post Office es having admitted that it
"::ecovered such alleged shortfalls from Subpostmasters,,. \\,here Subpostmasters
in
ilre atlected branches had made good or settled centrallv shorrfalls thar r.vere larer
cotrected, those Subpostmasters received a payment or credit in the amount of the
shortfall.

F.taote etliting of'branth transaclion data

t] ParagraDh 25 appears to be concerned with the editing or deletion oi rransacrion ciata inpur
..s lr)' .rt .,.t behalf of a Subposlmaster without his oi: her consent. Accorciing,iv. post (f ffice
ilssulrles rhat it is nol concerned rvith ffansacrions such as T'ransactinn Corrections wl.rich
llre sent ro branches i-rut must be accepted bv or on behalf of rhe Subpostmaster before
i"orming part of his or her t,ranch accoulrt. :\s to the citcumsrances in which sgch

iransaction cfata can be eciited or deleted w-rrhour the consent of the Subpostmaster:

l) lJeither Post Office nor Fuiitsu has the ai:ilitr. to loq

on remotelv ro a I lorizr>n
.t'rminri in a hranch sc, its rr) conducr lransrctiorls.

:.-l i irost office emnlovee r.lrrh ";4iobal user" aurhorisation can. then phvsicaliv
iresent at a branch, use a tcrminal rvrthin the hrancir to ar-ld a transaction iato rhe
:ranch':; ,i.:coul'rts. '-l'he pur.1:crse ar""tik>i:ai Uscr" autirrinzation ls ro :,"tlow a{.:ccss ro

::i: lr.slems tor riuring rr:iiil1il:r ilr11,/ il1 .rui.1lfs. ,:\trV fr:rnsacrir>ns i:iiecLer,i hr,: r i-iil]l:li
:iir llre l:.cofticri trraittsl',r i iloh:ri i-,.rtr tr-f] 'i!fi(,i ;irrrr rl,lriii.; i,:j,.r'riifiahir::iil ii).1cil.
 f )i Itrjitsu (and not Post Oftice) has the abilirv to inject tr:ansacrit>ns inro branch

accounts (since the introducrion of 1-Iorizon (Jnlirre in 20i0, tansacrions of tl.ris sort

have becn called "Ealancing Transactions"). 'fhese trensactions clti rot involve
anl- refiroval r;r atnendment of the tlansactions enrered ar the trrancl-r. -I'heir intendcd
plirpose is'to allorv liujrrsu tcr crjrrect crrors or bugs in Ik;rizon br- cancelling the

.ri-t?ct rif an error or bug on a branch's clata. Thev rnay be conducted only bv a srnall
rrumi:er oi specialists at Fiuiitsu and onlv in accordance wirh sperific autirorisatir.;n

rcquitemcnrs. fhey. are rarely uscd. 'rer rhe bcst of Post office's infbrmalon and
belief-, only one Balancing fransacrion has ever been made so as ro affect e branch's

fransacdon data, and this was rrot in a branch operated bv a Claimant. A Balancing
B -I'ransaction
is readilv idenufiable as such.

(+) f'here ate a smali number of Fujitsu specialists who have certain pdvileeed user
lccess rtghts rvhich they could in theorl use to amend or delete the transaction data
ior a branch. J-he intendrd putpose of privilesed user nghts is sysrcm supporr, not
the alterarion of branch transaction data. 'fo have abused those righrs so as to alter
lrranch transaction <lata and conceai that this has happened would be an

dxtraordinarily difficult rhing to do, involving complex steps (including the rr,'riting of
sophisticated computer programmes and circumvention of sophisticated control
rneasures) which rvould tequire months of pianninq ard an exceptional level of,

iechnical experrise. Post L)tEce has nevr:r consenred ro the use of ptivileged user

rto;irts to alter branch data rrnd, to tl-re best oL its intbrmarion and beliei these riqhts

l:ave never been used for this nurbose.

P ti

i:) i)'lst office caflnot conceive oi a reason w-hv anv iiniitsu persr:nnei rvould harre

:ought to acl<i, inject, arnend or delete any transactrons in anv i:ranch accouflts so as

create a f'alse shortfall. Tt would for all practicai purposes be rnpossibie tor anl of
'i)
thrm to gencrate sigrtificant shortfells x,ithout cietection and. even if they rvere able
ii> do so. thev..vouid be unable to take the benellt of such shortfalls ibr thernselves,

;:t ,'\s to r:araq,rapil 26, rhe statements ret-ered to therein are arimitted. -fhese statementsr1:er63

i;nde in r\prii 2015 and;\uqust 2015. the Posr Ofhce r:epresenradves wh6 rvcre
;:tsnonsible ior tire makinq r>f these srarernents beiier.ecl that. thev were true.

1i:l t.) l)'.tragraph )7" ii l". ::ritnifteri t]:at. akhoLri,h ri-ris .vuriir-l rr,rt iLsuaiiv i;e classrtjerj *s
''::itcl.i()11r{iitv" ir-t rtn il-,-:"r-srcrn, thr-'rr-''is l irtqi-rlv iheoreric:ri I:Lnii nirhiv rc!:nr!re ) lrossit:llil.r,,
:' ,
. , " .:lil iri r l'.r .'.:,.r ,'.- r;.1 i'r'. r. : ! !i -..: r, -i il r.: i- :.'il'i 1r, ..,-,.: .j. r.t ll.,r.
 Protections in the svstem as destgned so as to eclit or delere branch transacfion clata as

clescritred in paragraph 57(4) above.

60. Paragraph 28 ts noted. 'fhe alieged infcrence s arc inappropriate ancl each oi them is

ilenied. Post Office is not au'are of any material suggesting thar ffansacrion clara has been

i:rlited r:ir clcietec{.

,\.4 Helpline

61" Paraeraph 29 is admitted.' Calls to the Ilelpline are handled in accordance wrth the
following processes:

(1) Ilelpline operators categorise the caller's query using an online system (now called
&
"I)vnamics", previously called "Remedv") and then provide advice by reference to
the Post Of-fice "I{nowledge Base", an online resource which contains numerous
articles and other quidance documents on various matters. 'Ihis is not scripred.

i:) If the l{nowledse Base does not conrain sufficient information ro aliow rhe operator

lo address the quer,v, the next step is ior the querv ro be escaiated to a second tier ol
rnore experienced staff.

If the second-rier :rdriser canflot respond in a sarisfactory wxy ro dre query, he or she
rnav 56sk assistance from the relevant Post Offrce product team. For example, if an
is"cue relates ro a lotterv- product, assistance could be sought from rhe team at Post
iltfice lvho manage the operational processes for rhat product. Illrrrhet, u,here
B 'tssistance is required in relation to reviewinq llorizon data then rhe,v mav seek
r-rsistance from the Support Services ii.esoiurion "i'eam. I;or issues relaring to the

icchnical r:peralir:n i:f l-Iorizon (e.g. a broken printer), the matter coulcl l:e r*ferred
ro irost ()fflce's 1T support pattner, rvhich was cirisinaily lrujrtsu and is norl' ..\ros.

i+) i[. aiier these steDs, a satisf-actory response has not been givcn, Iiost office r,,r11

cr.:nsider rvhethet fo orqanise a visit to the branch rrnd i or iurther training ior the
ilubDostmaster anci,/ or -r\ssis tan t(s) concerned.

llost Office is rvr]ling anci able to provide iurther assisrance ro ljubuosrmesfers rvtrose

';::r:i:lems ,lre not addresseri adequatelv throug.h the l"Ielpline. Ir is fbr anv i-laimanr
,;ir) as!{rrts ihar inader:tratr 'r:s1;irtnce q".rs orovirii--ci t,: irlcntrtrr. trt<;nsst r;ii,.cr
 things,thestepsthatheorshetooktoobtainfurtheradvice,assisrance andfar
raining.

62. Paragraph 30 makes allegations to rvirich Post Offlcr caflnot meaningfully responcl at lhe
, pleaded icr el of generaliq,. I lowever, rhe gcneral thrust of the allesations is clenied.
irurrher:

-fhe
rl) i{elphne's hours of operation have changed over time to 6cet demand anj.
there have been periods whete rhe lielp[ne was fi1ore difficult to conract t]ran in

othcr periods. It currentlv operates from 8am to 8pm on r.veekdays other than
wednesdays (the usual day lor branch balancing processes), Bam to 9pm r:n

Wednesdavs, Bam to 6pm on Sarurdavs and 9am to 5pm on Sundalrs and most bank
& l'rolidays.

1)\ I{elpline operators do not give script-based responses.

(3) i lelpline operators are not instructed to provide misleadine infbrmation or advice
and they rvould have had no reasofl to do so.

(+) whether it is apprc;pnare to advise a Subpostmaster that a discrepanry should sort

itself out depends on the context. F'or example, the branch could be arvaiting a

l'ransaction Crrrrection that should correct an issue.

f -r) i'{elpline operators are nor instructed to eflcourage a Subpostmaster to pro<iuce anrl
c,:ntlrm a Branch Trading Statement rvhich the Subpostmaster did not L':eiieve ro be

g\ lrue.

i6) i{e\tline operators are not irrsructed to review and adrrise callers as to rhe cxperience
ri tnd the incirience oi particular problems suf fered bv all users of Florjzon or of rhe
t{elpiine.

") Post Otfice notes rhat. rn the GPoC. the Claimants har..e not inclicered rvhether anci.

ri so, how each of the rnarters alleqed in paraqraphs 30.1 ro ,30.7 is aileqed to have

c:used anlr (-121*rttts anv ioss.

.1"5 {nvestiBationrs

,)+sr {)iEcr car-r11or rneaninr:iuilvt*sponri i,r; rhe eiieganr>ns rn 6ar:1qraph.r,i i,rr,irc

:.'-li i;rvinrr r.jas tln ;c :
 (1) The paragraph makes allegations said to apply generally across "inr.estigations,
audirs
r:r similar enquirl"'in circumstances rvhere investigations are funclamenrallv
different
processes (lnvoh.'ing dif-ferent Posr Office personnel and prr:cedures)
from autiits
of the term "sirnilar enquiry" is crnbarrassing tbr vlgucncss and
ancl r.vhere the use

(ilepending on rvhar it is intended to mean) may S6 misleadrng.

/:) 'rhe ret-erence to "investigators" is

mispiaced and.f or so ambiguous es to make the
.iilegauons incapable of meaningful response.

(3)
'fhe inlormation and instructions
that are aliegecl to heve been providecl to
"investigators" and what they are alleged to have done are expressed
at such a hish
level of generalirv* that it rs impossible to assen a gcneric case as to u,hat
B "in'estigators" were toid and/or othetwise knew ancl/or did in anv potentially
relevant period.

{l+. Without preludice to the foregoing:

(1) The people undertakine Post Of6ce's various audits, enquiries and invesrigations are
experienced rndlicluals with a good knowiedae of the operation of Horizon and
of
rhe experience of I Iorizon users.

-lhe
(2) natr-rre of thek instructions and actions varies depending on whether thev are
undertakinq an audit, enqurry or investiqation and the reasons wl-ry thev are doing so.
ilor example:

3 (n) At audit is a Drocess conducted by rhe iield supporr ream x.rthin Post of fice.
"l'he peopie
undertakins audits are nor called inr-esrisators. An audit is
rr,picaiiv ordereci rvhere Post office is concernecl that a btanch is failjns
Dropedv to account ro Post Office, though $ome are randomly selecte<l
branches. 'Lhe purpose of an audit is principallv to check the level of cash and
srock in a branch; ir is generallv nor to deterrnine rhe roor cause of ant

sirortfalls.

l-\ Iior a wide variefy of purDoses iinciuCing rhe purposes ret'erreel tc rn

1:arareph -i6(-{) above), Pr:sr office can make a wide varieq/ ol enquirids rnr()
i i:ranch's o1-:erations -.,rarhout unclerrakinrJ :rn :,ruoit. 'fire
neopie uncicrtaking
.,,.:h rnci:ities l.re 11.)r r.::lileei invrsrjgators.
 (.) Post Office has a securifv team rru'hose n-rain roie is to investigate (ancl/or to

assist the police to investigate) suspected criminal ofiences. Iersons in the

sccurity team sent to br:anches to cann'out such investications are oftcn called

investip;ators. ln trranv insrances, their rnquines tbcus t'rn suspectecl crirllinal

offences bry Suboostn'rasters and Assistants (sr-rcl-r as theft or tendering ialse

:rccounts), rvhich Inav or lnay not recy,rire therr ro deferrnine *re root causc of
e shortiall.

i.l) Nooe of these "invesdgators" were instructed to disregard pc"rssible problems with
Llorizon as a possible cause of shortfhlls, rior was intbrmation deiiberatelv withheid
irom them about buqs or effors in Hotizon or the alieged remote alteration oi data,

& (1) T'he alleged "organisational culture or practice" is specifically denied.

(5) Save as aioresaid, the general thrust ofparaeraph 31 is denied.

A.6 Terminations

65. Paragraph 32 makes allegations to w-hich Post Olfice cannot meaningtully respond at rhe

pleaded ievei of ueneraliry. For exampie. the parugraph or.eriooks crincal distincrir:ns
l:enveen summarv tetmination of appointments lor cause, termLnation oi appotntments oo
notice without cause and suspension of appointrnents. F{orvevet:

(1) Post (Jtfice has terminated Subpostmasters' appointrnents summanlv r,vhete it was oi
rhe vierv that therr acreci ciishonesri-v in relarion to their thnctions (e.g. b.v ialselv
e rccountinq to lJost Office with a vie.v to concealinq a shorttall from it; or that rhev
f
were othenvisr in materrai. irremediabie andi'or repuciiatrlrv breach r..>f their
obiigauons;

t:) Post OiEce has suspended Subpostmasters ll,'hen it has suspected them oi acttnq as

iier out -in sub-paragraph (1) abor.e; and

i rl Post ()ltjce has terrrinateci -iubpostlnasters on notice rvhere it did not wish conlinue

rrs relationship of principai and ager:t u,-ith tirem; br-rt

tl jrr,:st lllfrce has not terminated Subposr*lesiers sulnr-rrarlly or suspended thet"r

ncreiv i:ecau..e rher: have chailenqed siior:ttaiis rir irave aiicgrdir-l*dcqLrectes ur rht-

. a:;nzr;n s\:iilt:m r,,r rrirficuirir:s rit iuterroil-rtiflq Ltrta.

 66- Regarding the importalrce of dishonesry in the conduct
of its business, post c)ffice nore s
that:

(1) section 19' clar-rse 1 of the sPr{c provicles that clishonesty

is rnosr seriouslv
'rerved
and an1' subposrmaster invoh"ed in an act of dishonesty
against posr (Jffice renders
l:imself iiable to slllnmarv terminarion of his crintract.

l:) Fart 2' Clause 3'1.2 of the NTC pto'ides thst: "T/)e
operatar .rhai/ .. . utt /t*ne.rtfi at all
iints in lhe operation of the Branclt. -'1ryJbilrlre ty the Operator
to cotupty wiilt tltis claase j.1.2
'r/tal/ be deemed lo be a mateial breach oJ rhe ,4greement which rannol
be remetlied,.

67" As to paragraph 33, Post office will respond to properlv

parricularised clarms of wronsful
termination or suspension rf and when they are made.

A.7 Context and Effect on Claimants

68. In secrion A'7 of the GPoc, the Claimants set our what they
contend to be relevant
cootextual matters znd these are addressed below. Ffowever,
the Clarmants overiook the
importance of the role that Subpostmasters pcrformed es xgents
of post office, holding
cash and stock, effectlng transacfions, making pavmenrs
and incurring liabilities on its
behalf' -fhev also overlook the importance of iaise accoundng
ro, and its effect on, posr
Difice. Sutrpostmasrers are obliged (a) each wod<ing clav to counr
rhe cash in rheir
l>ranches and make "cash declarations" to Post ofEce
setting out the cash counted an<l
(h) at the end of each a'ading period to counr rhe cash and stock
in rheir branches and
make Branch Tradinq Statements to Pr:st office setting out the cash and stock counred an6
B tl:e transactions undertaken in the reievant aadtngpenod. i-lnless
an audit is undertaken.
rhese accounts are Ferst Oi:fice's onlv in{brmation abrour
fhe arnounf oi cash and srr:ck
rcrually held in the branch. In ail cases in which a Claimant sr-rbpostmasrer
makes false
cash declaratieins or lalse Rranch Tracling Statements (i.e.
caslr deciarations or llranch
-tr'racling
statements rhat he or she cioes not believe to be *ue):

i1) I,flrere a shortfall is subserluentjy

uncovereci at a branch, the fact of this false
accountinq invariablv tnakes it impossible or. aiternativelv,
excesslr,eiv 6itficult for
i:rost oliice to idennft, or assist in rhe iriennilcation oi the iitrcei-v cause(s) of ihe
:hortthll. Post ()fflce is unable to rrlace reiiance on ihe dcclarations
anci the branch,s
:r:c{funrs rn ier:l<inq ro rdcatilv thr: <iate {'s1 0n .vhich the ,,iiscrcoancrr {r:,r
 eliscrepancies) givrng rise to the shortfall are likeiy ro have irrisen or the cause(s) oi
rhe shorrfall.

(:) .'\s regards any enoui.i.s ir mrght make iirto rhc crusc(sl of a shortfali, post otfice
cafinot reasc"'nablY be expected and is not obligeci to rlevote
si{:nrficarrt resources ro
irr" csriqaring thcrual
circumsranccs rhat \\-erc. as ..r rt.sult of telse rccorrndng.
impossible ot altemarivelv excessivclv difticult properlv to
invesiigate.

(3) ,\s js nored a[:ove, talse account.ing or orher sir:rilar conduct

by a Subpost.masrer
represents a rnateriai, irremediabie and repudiatorv breach
of his or her contractuai
r,biigarions entitling Post office ro terminare the SuL:postmaster,s
appoinrment
summarilv. Itrurther, where post c)ffice suspects that a Subpostmasrer is guiirv of
B sr.rch conduct, it is contracfuaily entitled to suspend the Subpostmaster,s
aopointment.

(+) In relation to any issue arising in these proceediugs as io the rue state ol account
in
the rcievant branch' the (loutt shoulcl make ail presumption
s a{ factagainst that
Subpostmaster as are consistent with the other facts as proven
or aclmrtted.

69' Paragraph 34 appears to address a situation where a bralancing

process has been undertaken
at the end of a ffading pedod and this process has disclosed
a shortfall in rhe cash or stock
held at tlre branch rvhich is disputed by the televanr Subpostmaster.
It appears ro be the
{-lairnants' case that, in rhis si.ruadon, some Claimanrs ielt
that thev haci no choice but (a) to
,rir:n orf Branch "frading Statemenrs drsclosins rhe shortfall.
accepr liabilirv for the shr_rrrtall
and make rhe shortfall good by paFng or crerliting rhe relet anr
,.& am.runr ro posr Office or
si:) to sign oif incorrcct Branch'I'radrne Statements rvhich misrepresenre<1 the cash ancl
''t.ock held at the branch and tirereby c<xcealed the shortfall f-rom IJ'sr Offlce. posr OfEce
"will responci to properlv particuiariseci ailegatir.ins ol that sort ii and rvhen rhe1, are made b'
;:arricuiar Claimants. i {orvever:

it is dented that Subpostmasiers had no chr:ice hu.t ro proceed

in rhis r,,,av or rhat it
reasonable ibr them to feei that tl:ey had no such ciroice. i\s inrlicated
l,\,-as
in
;araqraphs 12 to 4(t above, Post Office's procedures prr:vicied Subpostrnasters
w-irh
rile rlpDorfunin'to riispute iiabilin" tbr sirorri.alls anrl render accurate
accoullts whilsr
'nv ,-iisni.rtcci sJrortfall rvas resolverl.
 (:) I t r'vould never have been.reasonable for- a subpostmaster to sign off a Branch

Trading Stateme.r - and thus to confirm to post offlce that the cash and stock
recorded bv Ilorizon as being helcl at his or het branch wes correct * ln
circumstances rvhere he or she clid not beiieve that it was true. _\mongst other

things, in'thar situation the Subposrmasrer rvould havc:

'ra) rleceive.d Posr office as to the true ler.el of cash andf or stock at his or her
!:rench, end rhe tfl-re stare of his or her branch accounts:

,,b) made it impossrble or altematively excessively difficult fbr anyone to iclentifv

rvhen or how the losses arose: and

a
;;r
(.) committed (i) a matenal, irremediable and repudiatory breach of the contracr
pursuant to which the subpostmasrer was appointed (includingr amorrgsr other
things, Section 12, Clause 3 of the SPMC andf u patt ?, Clause 3.(r.(r of the
i.J'I'c), and (ii) a fundamentai breach of the fiduciary- duties the Suboostmasrer
owed Post Office as its agent.

i3) As indicated in paragraphs 184 and 1fl5 belorv. Post office may hold Subposrmasters
'wiro signed Branch rrading starements ro the accounrs that they signed oif.

,ltlrernativelr,, in relation to any issue arrsing as to the trLre state of account in the
relevant branch, rhe Court should make all presumptions of tact ag5arnst the
Sllbpostmasters as are consistent urth the orher facts as proven or adrnitted. Furthet
i;r alternadveiy. Subpostmasrers may not now chailenge, seek to avr:id or seek anv
r:elief in relation to rhe payment(s) made to or: demandecl bv post f)ffice in
3
:rccordance wtrh those accounrs (inciuding in making goocl shortt-ails), without

irleadinq and proving such accounts to ire mistaken.

'[']rese principles applv to false

+) cash declarations macie by the Subpostrnasrer ro posr
i ;itlce, malalit wtrtttndis.

i'i) llesarkns paraqraph 35:

r) \s to paragraph 35.1. paragraph 29 above is reneateci

1\
\s til paraqraph 35"2. tlie iiorizon sr-stem did nol aiio.v a Sr.lbrrostrnaster ro r,:ii l.ris
'i .Ir*
r.:i:r i:tanr:h over !fi r{} l nr** ft*ding peno'J untii or rihe irad sio,;rerJ nil ::n j .

rrirnrrit*<i ro i:*sr i. -tilice a i:r:inch ec.ouni lar: tiic r;re.;irxr-. [fecung pcrrr.ro.
 (3) i\s to paragraph 35.3, Subposttnasters were contractualll, required to use the Horizon
sysrem but that systefil clid not require them to roll over into a new trad"ing period:

thar tequirernent was contracrual, being contained in "A Quick Guide to l3alancing -

Reconciling your Cash and Stock with l{orizon" rnd page 93 of the Branch Tr:rdine
l\.{enua1.

, l) Paragraph 35..1 and 35.5 are denied and paragtaphs 42 to 4(: above are repeated.

r5) .\s to paragraph 35,6, at this generic ievel, Post Office carrnot admit or deny rvl'rar
anv Claimants may have hoped. Florvever, Post C)ffice denies (if it be alleged) that ir
edvised or encouraged Claimants to believe that it was appropdate to sign otT faise
Branch Tradmg Statements and ti-reteby deceive Post Office.
t&

((, ,:1.s to paragraph 35.7, at this generic level, Post Office cannot admit ot deny anv
(liaimanr's individual financial circumstances. However, Post Off,ce denies (if it be

rlleged) that a desire to ensure that a Subpostmaster's appointment is not termrnated

justifies rendering false accounts to and deceiving Post Office as aforesaid.

(7) Paragraph 35.8 is denied andpara*raphs 29 above, 76 and.78 below are repeated.

11
As to para*raph 36:

(1) The act olintentionallv submrttine t-alse accounts is, of itseif, a dishonest act.

(2) In some circumstances (tor exampie rvhere a Subposrmaster reiuses to glve anI

.xplanatlon as to aflv of rhe material citcumstances in his or her branch), it is an

p
:rppropriate inf"erence that. where the Subpostmaster has deliberateiy rendeted ialse
:iccounts, he or she has done so in otder to corier up some cither clishrinest conriuct

{such as rheft).

'/?\ It is denied that it rvas untair. fiarr,-ed or irrational to int-er dishonesqv itom the
:;ubmission of false accoun[s. T]re natural inferencc trom en agcnt's decision to
render taise accounts to his principal is that the agent wishes to deceive his principal
tnd conceal a shortfbll in his accounts. ltenderrng false accoullts is a breach r:Ithe
i::ndarnental durv of loyalry o.x,'ed bv an agent ro his principai.

*f
.'lrl,ranh rl is ,icnred. ln rr;tt ttcullr:

tl;-.r i.iificr: jid nr.lt exerr rileqtrrrl?lfc Dres$lre r,-,ri i=i:rtmants.

 (2) Post Office drd not exert "unfair" ptessure on Clalmants (whatever that rneans).

(3) Ir is not clear to Posr Oft-ice rvhat it rs alleged to have done that constih:tes economic
duress exerted or uucoflscionable deaLing but rn any cr-cnr (a) Posr ()iiice denies that
ir exetted.econc;mic duress on Claimants and (b) Post Office clenies rlrat it is guilrv of
rinconscionable dealing u,-ith Clairnants.

(+) Post Office denies that it r.vas in material breach of contract.

(:s) Post Office elenies it wrongfully iailed to ciisclose matenal facts.

(6) Post Office denies that the legal concepts pleaded rn parugraph 37 ctnbe invokecl so
as to lustify false accounting.

The Defendant's Suspense Accounts

73. As to paraqraph 38:

(1) Post Office does not have a clear understanding of what the (,laimanrs mean bv

the term "suspense accoul-rtl' or by the phrase "unattributed surpluses including

those generated from branch accounts".

(2) In relation to its rlealins wrth its ciients, Post Otfice is aLmost alwavs able to
reconcile its figures to rhose of its ciients. However. as is inevirable given the
rlature and scale of those dealings, occasionallv Posr Office is nor ai:le ro do so.

iior exampie:
B
,\ client, such as a bank, makes a pavmenr to Post Office in respect of a

particular transaction rmdertaken in a branch but rhe pavm€nr exceeds the

amount that Post ()ffice considers to be due.

i-\ Frst (Jffice seeks but does not teach agreement l\,-ith the client as fo the
;tnount due and the client does nor accept repaymenr ot rvhat post of ilce
.onsiders to be the overpal,-ment. in paraliel, Post Office also seeks to
;lererrnine u,herher rhe overpayment should be credited to a branch or ro

rnv orher releva.nt oart of its business.

',{!rere
rhe nrr;per i:eneticiarv oi- a credit cannor i:e cieternrrneci. irost

.lllce t*mporarii-,, rccords lhe rircrtrat,l.nfflt 111 lls .:rcr:ci-rnrs. li the

 ovefpavment is.:tot resolved $..ithin 3 vezrs, the overpayment rl"lay be

credited to Post Oftice's profit and loss account.

(3) I'he existcnce olprocesses for recording ancl resoh,ing creriits of thc t1-pe

described above are an ordinar\,- business pracrice.

1'+. As to patagraph 39, tl-re Claimants have not pleaded any "shortfalls rvrongly attributecl to

the Claimants". In these circumsranccs, Post (Jffice cloes not speculate as to how anysuch
shotttails could in ptinciple irave arisen and how, if at all, such shottfalis (or, more
;tccutatelv, the losses gl'ing rise to such shortlalls) rnight relate to any discrepancies
l-leiureen Post Office and its ciients. In the absence of proper particulars, there is no case
to which Post Office can meaningfuilv respond.

ts. ,CONTRACT TERMS - SU

15. As to paraeraph 40. Post Office wrll also rely at any tri21 on the full contractual rerms in
iorce at the rnaterial rime(s) berween Post (f ftlce and the relevant Clairnant (if anlr). 'fhese
rerms varied from time to time, as alread1, noted.

8.1 Factual Nlatrix

-'{t. Post Office asserts that tire ibliowing matters are rmporrxnr aspects of factual matrix

nr{ainst which the various Subpostmaster (lontracts r:elied on bv the (,iairnants should be

ronstrued:

(t) Subpostmasters tr,pically stood to benelit frorn the relarionship vorth Pnst L)ffice in at
3
le'.ist |wo respects: iirst. bv r>btaininq remuneradon rn accordance with their
,iubpostmasterr Conrracts anci. scccincl. as a result of ofterinq irost Office serr-ices in

the Sutrpostmesters' premises, $'s enjoving increased tbotf'ail and revenue for the
rctatl businesses that Subnostmasrers npicailv operated alringside rhe Post Office

business.

(:) Subposrmasters contracted u,rth Post ()tfice on a business to busrness basis and rn
the expectation otprotirinq from ti-re brlsiness reiauonship as nored abor..e.

'-l) :i-iLrpostmasters..vere uncler no obligatic)n and rro pressurc t{) contract with irosr
iiiirc on iire tr.rfrns ti'rat it- oife rr:d r:r at ali.
 (+) Irost Oifice r.vas unable to.monitor at first hand rhe rrarisacrions undertaken in
hranches on its behalf, in reladon to which it rvas liable to Post Office clients. Tl.rese

transacrions and tl're tnaltrler in u,'hir:h ther werc carried out were the responsibility oi
ri-re relevant Subpos tmas ters.

(5) Post {)tEce tvas unable to monitor at frrst hand the custodv anel use of its properry
(principailv, cash and srock) in branches. Again, rl-rese marters were the respolsibiiiry
rri rhe reler.,an t Subpostmasters.

((, Post offlce relies on rhe accurate reportlng by Subposrmasters of accounts,

transactions and the cash and stock heid at a branch. Shoul<i Subpostmasters not

accuratelv report these things, it would be impossrble r:r altematively excessively

riifficult to determine (i) if a shortfail has occurred, (ii) rv"hen it occurred and/or (iii)
whv it riccurred. See further paragraphs 68 and 69 above.

i7) Gir.en the nafi:re of Post office's business and the variety of ttansactions and
processes requirecl for the operation oia Post office branch, it w-ould be
impracucable for ail of rhe parties' riehts and obligations to be ser out in a single

contractual document. Ii rvas to be expected that Post office would relv upon
rnanua[s and orher documcnts conraininq insrructions.

71 Parasraph 41 is admitted.

i3 If and insot-ar as it is understood. parauraph '12 is denred. At the time of contracting, each
r>f Fost ()ffice and the Subpostrnaster was free to contracr or not conracr with the other
3 ;rnci each of rhen-r took an unconstrained and self-interested commercial riecision in rhar
ir:gard.

:il .\s to paraqraph ,13:

(f ) llc-rst ()ffice is unable to admit or ilen1, what steps Subposrmasrers tor:k ro pur
;iremselves in a position to discharce therr oblisaaofls to Post LJffice. \Vlrether ancl

io rvhaa extent 2nV of the steps referred to in parauraphs 43.1 to 13.7 were taken in
r1flY case and. if theY were taken" whether and to rvhat extent they were expensive c.:r

l..iilg term" o.lrli be a matrcr lbr each (-laimant to plead and prove.
 (2) Post Office incurred long term and expensive cornmitmcnts in respect of rhe
Subpostn'raster relationship, inciudinf; tv providins '..al,rablc cash, srock anci
cquipmcrit to Subpostrnasters lln an Linsccllrrd basis.

i:f) It rvas tbr.rhe Subpostmaster to assess ihe comrnercial risk and reward i1v6[,cd ir:
.ontractin.q u'irh Post Oft-ice, takin.q into account (arnonust orher things) each parrr..'s

contrectual rigl-lts of termination.

Ito. ,1s ro paragraph 14, the opcration of the reladonship berrvecn a Suhpostmaster and posr

O ffi ce required cornmunication an d coopera tion.

et Regarding paragraph .15:

B
(1) The SP\{C. Temporary SPNTC and N'l'C all stated expressly that Subpostmasters
were not employees of Post Of{ice. Subpostmasrers were not employees of Pgst
Office and Post Office riotes that the Claimants accept this in pararraph
'15, as they
have in correspondence.

(2) i{eqardrns patagraph 45.i, paragraphs 29 above and 88 belorv are repeated.

(3) Paragraphs'15.2 and 45.3 appear to be based on a misconceprion as to what

constjtutes personal serwice. "Ilhe various Subpostmzster (lontrzcts were in no way

conrracts fnr personal ser-r,'ices and tl-re provisions reterred ro in paragraphs ,!5.2 and
i-5.3 did not reclure personai service. On the c()ntrary, most ol them made it ciear
ihat Subpostmasiers were entitied to empioy third pardes ro run their branches. lior
-a
.g C.-\ampie:

-ihe hoiiday
lll substitution .tllowance anci sick absence aliowance pror.rsrons in
l,lcctions 4 tnd i ,f the slrluc expresslv provided that rhey onlv appiied rvhere

:iulrpostmasters chose perst;nailv ro rvork in their branches ior at leasr 18

irours each lveek.

r!ll :iectic-rn 3 of the SPh,IC exDressly provided rhat Subposflxasrers were nor
rliriiged to render personal service and that they were entirled to make suitabie

lifafit{cments to empir:;r a third Pai:r\r to run rhe relevant Llranch. fhat they

'-.;rre reciuireci to nortv Pr:st (}ilice u,,he n a rhird parrv iv;is runnlflq the branclr
iir.1 io r:l\re irr.rst ()fiice the narire oi rire rhirri pern, r.ices iiilt meao tl-lat rherr

:".' . - ')1.tt i (l Ir ) trr rfilfrn ji l){ r:(rn.il *r n'1(:c.

 (.) Propedy understr:od, secrion B (which the GPoc rdstakenil, reters ro as

Secticin 10) and Section 15 of the SPL{C reinforce the point that the SP\{C is

not a coiltract for personai sen.ices.

82 Paragtaph -16 is nrrtcd

8.2 gkutesiXrulg
!i)rcn:iew

133. ,'\s to paragraph 47 , at a generic level, it is admrtted tha.t the written ter:ns of the
Subpostmaster Contracts reserv-ed to Post Office sofire conLrol over some aspects of the
business conclucted by Subpostmasters on its behalf (see paragraphs 29 above). It rs denred
&
these terms imposed *'1'erv few express obligations" on it. Post Office wrll respond to anv
particular allegations made about patticular terms if and rvhen they are made.

84. ,'\s to paragraph 48:

0) Post ()ffice's pracrice at all material times has been to provide prospectlve

Subpostmasters r.vith a copy of the written terms of the agreement wrth Post Office
and to require them to sigtr a document recording their agreement to those terms.

i2) If any Subpostmaster aileges that he did not obtain a copy of the rr,'ritten terms of his

agreement, Fosr office will respond to that ailegation if and when it is properlv
pleaded.

& (3) Jhe aileeation that Post Office did not a dtaw a Clairrrant's attention to "onerous or
unusual terms" is utrr:atricularised and cannot properh, be pieaded to in this Generic
l)efence. Without preiudice io tirat contention, it is denied thar anv ol the terms
rriieged bv tl-re Claimants to be onerous and unusuai were such: as indicated belorv,

ihev rvere the sort of terms tirat would be expected. It is further denied that Post
{ }ffice u'as undet any obligation to drarv a L,iairnanr's attention ro any such tenns.

ri5. ,\s to paraqraph 49:

i) T'her w'ritten Subpostmaster Contracts are to tre construed as a rvho-le and in liqht of
itle ,cle\rant milrrix of fact pleacleci in nararr-raf:h 7(r above.
 (2) It ts denied that lhose contracts ate to be construed preslunprlvelv against post

Office. Fttrthet, the Claimants have not icienrif-ied ar:y ambiguifi in rhe written tcrms
thar they contend should be resoived in acccirdarice with tL-re nntra pralereatem
principle, which is a princrple of lasr resort.

(3) It is <ienie<i tirat rhe contracts are "relational contracts,, in the sense alleged bv rhe

dliaimants and, even if they were classified as such, it is denied rhat rhis shouid alfect
their consrruction. They should not be construeci "in the context of'' rhe atle.gcd
impiied terms and a'nv tetm that tt is alieged shouid tre impliecl must (amongsr orher
rhinus) be consistent rr,'rth the express terms properly construed.

(+) It is denied that the rerms identifred by the claimants ate unenfbrceable.
&
(5) it is denied that rhe Unfair conrract Terms Act 1977 affects any ot- rhose terms.

Each and everv alleqatton in paragraph 50 is denied. The only agreemenrs berw-een rhe

parties as to tennination of the Subpostmaster Contracts are the agreements expressly

provided for in those contracts. The Ciaimants' attempt to invent an alternadve ,,true
asreement" between the patlies and thereby to invoke Autoclenz v Belcher in otder to

rewrite the Subpostmastet Contracts is unfbunded (see paragraphs 110 to 112 helow).

'')/. As to the cofltractual terms refetred to in paragraphs 51, et seq.,Post Office rvill refer ro all
rhe televant terms of the rejevant contracts for their tull meaning ancl true ettect.

9.a/es, I nstructio ns arud S tandards

,,.&
As to naragraph 51:

rt) Save that the teference in paraqraph 51 .3(a) shouid be to parr z. parugrtph 1.1 r:f the
i{TC" the terms oi rhe SPN{C, the lemporarv SPI\{C and the IrJTC pleacled rherein
:r:e admitted and averred.

,..1) ir is admitted that, in accordance rvith those rerms, Subposrmasters were requireci to
comply rvrth (and rvere required to procure compl-iance bv their r\ssistants q,rth) rhe
:lrles. instructions anci stanrlards ser cut in dre documenrs ro rvhich the terms

,:tierrecl and as were notified to Subpostmasters in accorciance rvith such rerrns. il.s

r;rii:carecl in paragraph 76(7) ai;ove, rn a iruslness suc.ir as pr;-sr {Jffice,s. rcrluiremenrs

't ti'rt:; lorl $;fre [o he cxDeclcd
 (3) It is denied that paragraph.5l is afl accu-rate characterizarion of rhese rules,
instructions and standards" and it is denied (if it be alieged) that rtre conrtacrual

star:dard olperlormance required by the SI)N.,IC. rhe Tcmporarl. Spll{C an{ the N.f(.
rvas Post Oifice's "discretionarv s:rtisfacdon".

,{, /a"r
t e.r a I B u.r fu e.r s

il9. As to graragraph 52, rhe rerrns of rhe SPL{C, rhe Temnorary SPN{C and the NTC pleatled
therein are admitted and ar''erred. In a business such as Post Office's, terms of this sort

wcre to be expected. 'I-hey reflected the fact that, as Subpostmasters were Post Office's
asents oilerins products and serv-ices to customers on Fosr (Jffice's behali Post Office

musf be entrtled to change thclse products and ser-vices from time to time.
r&
.'1genry

90. As to parasraph 53:

i1) fhe terms of the sPN,{C, the Temporary SPIvIC and the NTC pleaded rhetein are
admittecl and averred. 'ferrns of this sort u,'ere to be expected.

(2) In accordance with rhose terms. Posr ()ffice appointed subpostmasters and
Subpostmasters accepted appointment as agents of Post Office. Such apporntmenrs
'were true. not purpolted. -lhe leqal reladonship benveen Post O fice anrl

Subpostmasters $/as that of principal and arent.

:)1. Post Otfice notes that. as its agents:

iB

ii) Subpostmasters otved fiduciary duries to Post t)tfice. includins a dury to acr iu Fost
[Jffice's interests in reiation to the funcrions tl"rev undertook on Fost C)ffice's behaif
iwhich functions included holding and deaiins wrth Post Office cash and srock,
cilecdns and recotdins Post Office transactions, generatinq liabiliues fc-rr Post Oifice"
rnaintaining proper and accurate records anci prepatitrg anci rendering rccountsl.

i:) Sr:bpostmasters orved a ciufy to account to P<-rst ()ffice.

'iLccanls and I ial.tilitie.r.for I-*.rs

\s io i;araqraph i-N. rhe fetms or.tile:tilN{{]":he .l-emporan SPli"fC aird rhe fd't-I.l r:leaded
rrr:rrlin'.rr:e atimitttd eirri averreil. Iiarr 2. {-.I::usi: "i.7. I of rhe N-l{. :rls<-r i;rr-,vi'-it.ri tit::.t. "''!'/,t
 operatrtr thall " ' inruedialefi prodltce all Potl oiJice (-as/t and stockJitr irupertion
u/.tentt,er reqaa.ttrl by
Prtst o.J.fice rlrl'' 'lhese terms imposecl
on subpostmasrers responsibiliq, for losses at rherir
brenches' [n circumstances u'here Subpostmrrsrers
were in conrrol of anei ther.. ar:ri/or
thet ''\ssisrarrts had first-hancl knr.rrvledge of rhe ftansactions
efiectecl o, post ot]rce,s
i,r-lulf ancl the r:ash ancl stock trelonging to Posr office held
at their branches. such rernrs
.'vere io be expected. It is deniecl rrrat post office appried them
rvronglv.

t)?t" Post oifice n.res that the claimants' case set out rn paratraph 55 appl-ies onlv to
se crion
i ?. {-lause I ? ol rhe SpN,iC. N.fore senerally, as regards shorrfails
disclosed in a
Subpostmas[er's accounts, Post office notes rhe tbllowing
principles, each of rvhich applies
ro Subpostmasters:
-.

(1) $rhere a subpostmasrer asserts that he or she is not responsible or Liable for a
shortfall, thelegal andf or eviclentiai burden of proof is
on him orlrer to esrablish the
factual basis fnr such assr:rtion. in rhat:

(") In the absence of evidence from a subpostmaster to suqgest

that a shorttall
arose irom losses for u,hich rre or she was not responsible,
it is appropriate to
rnfer and/or presume that the shr:rtfall arose from losses
for which he r;r she
''vas responsible. such an inf-erence and,f or presumption is appropriare

L:ecause (1) branches are under the managefnent

of subpostmasters or their
,\ssistants, (2) losses do not arise in the orclinarr, course
of thrngs *,ithor-it faulr
,lr 6:r'0r on the part of Subpostmasters or rheir Assistants
and (3) it woulci nor
he rig-hr tr-r inf-et or presume that a shortfali and ioss
rvas caused insteaci bv a
a6
i:ug rrr error in !-lanxtn.

.b) Subposirnasters bear the leeai burden of-provinq ihat a shortfall

did not result
li:om losses for *rhich they were responsible. .I-his is because (1)
rhe rnrth of
rire inar.rer lies peculiarlv within dre knowledqe of subposrrnasters
as rhe
Fersons wrth resnonsibiiitv for branch oDeradons a.d the conciuct of
rransacrions in Lrranr:l'res, {2) it rvr.iuld be unjust tr.,r posr
t)ftrce to be required
io prove ailegati.ns reiating io lnarrers that f"a1i peculiariy rvithin tl-re
lnowiedqe oisrrhpostmasrers and/or (3) where a person ts subjecr ro a
llduciarrr obJigation as reqards iris or: i:rer rleaiinq v;irh assets.
the [:*rcien is on
:i:.'r nerson ro e"qtahlisl-r tire irrsrificatirn tr:r his r.rr irer: deelints.
 (r) where an agent renc{ers an account to his or her principal,
he is bound bv rhat
account unless and t. tire extent that he discharges the burden of demonstrating
that
there are in rhe accor:nt that he should r;e permitted to co*ect.
'ristakes

r1) Where an agent cleliberateiv renders a false accolrnt

to his or her principal. itr relation
rr the marrers covered by rhe account the Court shoukr rnake alr presumptrons
of
llct against that Subpostlnaster as are consistentv,-ith the other facts
as proven or
idmiited.

ti \s to Secrion 12, Clause 12 of the SI)N{C:

(l) section 12, clause I2 sir.uld be construed in accordance

with the principles set our
& in paragraph 93 above.

(2) on the ftue construction of Section 12, Clause 12, subpostmasters

are responsibre
tbt ail losses (as defined in paragraph 41 above) disclosed in their
branch accounrs
save lor losses which were neither caused bv any negligence,
any carelessness, or ariv
error on their part nor caused bv an). act or omission (..act,)
on the part of their
.,\ ssistants.

(3) Subpostmasters who allege that rhev ate not liabie for
any losses clisclosed in their
branch accounts bear the butden ofproving rhat such losses
rvere not caused bv rhe
ihinss referred to in sub-paragraph (2) above.

It) Regardinq parag,raph 55.1, no admissions are made as to

what is meant bv the term
3 "real loss", br-rt Post otfice note s thar, in Section 12, (Jlause 12, rhe concept
a
"loss" is not ded to or dependent on ec,nomic detriment to post ()fEce.
'f

is) Paragraph 55.2 is rienied.

r) I Paragraph 55.3 is denied.

l) Parasraph 55.4 is clenied.

'lssi.riants

1j5. ,ls to parargaph 56:

ih'; ferrms rlr fi'ie .iPlfc. i}:e l-emnoran, ;\irL{a.. rhe hl-f'C and tlie i_)nr:rar.ir>nr
'.ilrnrraj nirarir:<1 rhr_'rr:tn rre aririttcr{ :rnd avci:retj.
 (2) These rerms provided (and did not merely pur?ort to pror.icle) that Subpostmasrers

rvete [ab1e for the acts of the:ir -,\ssistants. Ijarring been appointed as agents of post

L)tilce to conduct its br.rsiness on its behalf from their branches, Suhpostnrastcrs
$.iere respol-rsible for thc cr:nduct of the business at rhose branches. Ii
Subpostm'asters seiected atcl employ ed Assistants for that pllrpose (giving those

.\ssistants at ieast some control or.er and/or custody of Post Oft-ice transacrions,

r:ash and stock), one would expect these Sr.rboostmastets to be responsible tor therr
JCtS,

(3) The SPN{(I and the NTC stated that Post Oftrce would provide initial training to
Assistants and,/ c:r rvouid ptovide to Subpostrnasters training materials that were

i& adequate fbr the provision of initial training of Assisrants.

(+) The terms pieaded in paragraph 5(r made it clear that the Subpostmasrer was
r:ltimatelv responsible for providing ot procuring rhe pro.i.,ision of such raining as

\i'es necessary to enable the Assistant to assist the Subpostmaster ia dischareing his

ot her oblieations to Post Office. i\ccordinqly, rvhere a Subpostmaster considered

that for 2ri\r 162tot an r\ssistant was not, without further training, abie properlv ro

discharEe his ot her functions in relation to Post Office business, the Subpostmaster
.'vas required to: (a) nori{1, Post Office that the ;\ssistant was nor so able; (b) rvhere
iurther ttaining couid resolve the siruadon, prtx.ide or procure the provision of such
training, as appropriate; and (c) where further training coriid not resolve rhe siaradon
(and/ar had taiied to dr: so), cease to ensage the Assistant on Posr Office br,rsiness.

3 lJ e$line

l)6. 1):ar:asraph 57 is admitted.

t7 tr)arargapir 58 is admitted.

., loess lo Branch ..ltcoanl.r and l?.ewtis

.:18
Paraqraph 59 is acimrtted" The terms of the SPI\4C. Temporary Sirhdc and NTC pleaded

'.i:erein are arimitied and arrered. In an eqencv reiarionship of this sort. such terrns were ro
i:e e:rpecteci. 'fhev reflected Post f)ffice's comlrlon larv rishts as principal anci the
:ir.rLrpostmaster's ccxlllr-lon ia.w duties as agent.
 f a.;j>ensiort

99 As to paragraph 60:

i1) '[-]re terms of the SPN'Ifl and the N'IC pleaded thcrein are admittecl ancl averrcj.

'll-rcse ter:ms provided for Post Ofiice

i:) to har.c the rigl'rt (and not meteh. a putporter-l
riqhr) to suspend Subposrmasrers in the circumstances pro.".,ided lot therein" In.
.ircumstances where Subpostmasters conducted Post Office's business, entering
into, ctfectinq ttansactions and incurring liabihties on its behalf, and dealing g,rth
Post (Jffice cash and stock lor tl'ris purpose, it rvas tr: be expected that Post Office
would have the right to suspend Subpostmaster:s in crrcumstances where it no ionger
,;la
.:g ielt that it cor"rld safely trust the subpostmaster ro discharge his c-rbligauons.

:1) Regarding rhe"Iemporary SPN{C, paragraph (;{1.2 is admitred.

ftrnination - ,olice

l0l). As tr> pzraeraph 61

il) Ihe terms oi the SPh{C, the 'I'ernporarv SPIVIC and rhe NTC pleaded therein are
admitted and averred.

-I'hese
(.r) terms perrutted (and did not merely purporr ro permrt) post oifice ro (a)
terminate its conrracts with Subpostmasters summarilv firr cause; and (:) terminare
those contracts on notice without cause (i.e. at wiil).
,a
J
Post Office rvas .in an agency reiationsirip wirh Subposfmasrcrs pursuailr tci rvhich

.iubpostmasters rvere entering into ancif or ei'fectitrq rransactions and incurrinq

iirbilities on its behali and dealing u'irir Post 0ffice cash and stock fcr this puffiose.
It rvas to be expected that. the conrracrs golierntrig rhis relatronship rvor-rid conrain

r.:rovisions contetring on Post Office (i) a rieht to terrninate rhat reiationsirip

lrnrrrediateiv rvirere the Sutrr;ostmesrt:r had committed rnatetiai brcaches of their

.otltracts and (ri) a right to terminate rhe reiarir;nship r:n notrce rvhere forrvhater.'er
i..ason Post i)fEce no longer u,ished to maintain lhat reiarionship u,irh that

.:,iu.bposttraster.

i'hc prol'isit;ns ior sumfira.n'.crminarion r:orrtarnrrl ru iircse ci)niracrs riiri nor

,::i:tlirii: tiil'i{:r na::l-",':i i:c}111111()t'l iilr.v rir-rhl li-) I,-]r:1n1il:1Tc iilr; L{.}ol]'-1.a.1.:; tl;r rr:*rriiirtUl"..,
 l

breach" I\rrthcr, ihe provisitins for termination on giving noticc r.,,ere matctrcd by
l

eeluivalcnt provisions cntifling the Subpostfirasrer to resig'n r:n gir.ing the same fioricc
'l -fcinporarr.
(sec Scctior: , (-lause 10 of rhe SPI\{(-, {-laruse 2.-t of the SPh,li" and P;rrL

l. (.lrrusc I(r. i ,,t-rhc N I L7.

l't;'minalion * (.anbe n.ralion

fitr Lai.t ol OLfae

I IJ I, ,'\s rcr ;:ararraph (r2 znd62.7 ttl {:2.3, fhe rcrms oithe SPN,.{(-. the'fcmporan ;{Pl\,{(- anii the
ti fC plcarled ti-retein ate adn-ritteci and averred. (Jn tlreir true consrlarction, rhese fcrrns

J:rovideci tirat Subpostrnasters did not irave a contractual riql-rt to compensation tor the
iar,viul terminati<>n of their contracts. Such terms did not altecr a Subpostmaster's right ter

damages for rvrongful lcrmination in crrcumstances rvirere (1) Posr Office had summariil,
E
F
ierminated the cofltract rvhere it had no right to do so; or (2) Post Ot{ice l-rad siven
insuiEcient nodce of termination (i.e. it had not given the period of norice specrtied in his
i;r her cofltract).

7- s ff]x in ation * .\' u fu e q a e n l,,1ppziiltmr n ts

I il1 ,\s to pataqraphs (r2..1 *t 62.7, rhe terms oithe SPI\IC, the'liemporary SPNIC ancl the l.J'lC

pieaded therein are admitted and averred. These terlns expressiv preserved (and did nor
tnereil, purport tr: presen e) Post ()ffice's commercial freedom to decide whon-i to appriint

rs irs aqent tt; conciuct its business on its behal( and f-rom rvhere such person should

conduct that business. Such rerms were to be expected in a contract of this sort.

3.3 Relational Contract and Implied Terms

%
.,3

i\tlutional Lantrad

i{}-1. i}araqtaph (r3 is dcnicd. }";urther:

iil It. is denied that the Subnostmaster (})ntracts are "reiationai conrracrs" in the sense

,iileqed bJ, the Cleimants. Wirhor,rt preludice to the r'cneraiirv of that contention. Post

i,ltiice notes that rhe reievant contracts u,ere rerminabie on notice rr;rthout cause.

1t is denieci ihat thc classiiicadon of these c.riltrects as ''relaiionri conmecrs" uu:id

,ril.;ct. rhcir c()nstrlrctlolr r;r cficcts. "i'here are no sl:eciai n:ies or nr:tnci1:ies r:1'

'''r'tilrrlcll{1n IltAl iir :ilcit r'!ni1':1clc.

'rrnlt
 (3) Whethel or ncit the relevant contracts can be called "relational contracts", the
implied term at paragraph 63 should not be implied because it is neithet so obvious
as to go r.r-ithout sa.r-ing nor neccssarv to the business etficacv of the agreefi)ents.
trurther. the implication o[ such broad and qeneral oirligations would contradicr rhe
.xpress terms of the cottracts.

i+) Post ()firce u.ril addtess Yam Seng Pte Ltd v International Trade Corpn Ltd
f
l013l f",\{ f IC 11 1 :rnd related case larv in due course as and rvhen appropriare.

lntplie d'fernt

10.+. Paragraph 634 is denied. At all materiai times, Pr:st ()ffice has obiiged Subpostmasters as

i& its agents to conduct its business on its behalf and to perform their duty to ?ccouflt to 1t

through the electronic point of sale and accounting system called Horizon. Ar no material
iime has Post Office agreed to carff orit Horizofi as a serr'ice to Subpostmasters, and nor
has it agreed to carrv out afiy of the steps necessary to enable Subposrmasters to fulfil therr
aqencv obligations as a senice to Subpostmasters. In relation to l{orizon, the Flelpline and

ihe treining and rtaining materiais refetred to in parugraph 63A, the Subpostmasrer
f-,ontracts are flot "relevant contracts for the supply of sen ices" by Post Office r,"rthin the
meaning of the Supply of ()oods and Services Act i982. Accordingly, ihat ,\ct does not

applv to those contracts as alleged. ;\s regards Claimants rvho are or were not

Subposrmasters, there ere no contracts to rvhich the Act could appiv as alleqed.

105. As to paragraph 6.1, Post (Jffice avers rhat each of the Sutrposrmaster Conracrs on which

3 the Claimants reiy contained the iollowing implied terms (impiied as being so cibvinus as icr

qo wlthout savinq andf or fiecessarv to the br:siness efficac,v of the agreements):

il) Each parry would tetiain trom taking steps that would inlrrbit or prevent the orher

pa{n' iiom complying wrth its oblisations rincier or bv r.irtue of the coatact {the
"Stirlirrg v Maitland Term").

l) i:ach parw rvould provicle tire other with such reasonable cooperation as was

iecessara/ to the peribrmance of that other's oi:irqadons under or bv virtue oi the

{j{)nrract (tire "S*lecessary Cooperation Terrn").

ii.j{:. 1ia1,6 ., aioresatrl. paracraph 6.,1 is rienied. J]i,rrlher:

 (i) 'l'he c.iaimants' reliance
9,n rhc alleged sratus of rhe subpostmaster Contracts as
"relational contracts" as the basis for implving terms is \1,-ro1lg in law.
Save fclr tcrms
implieci at larv. no terln is ro Lre implieci unless it is so obvious as ro go rvithout saring
and/or is necr:ssary to the business etTicacy of the agreement.

r2) The numerous adclitional terms allegecl by the Claimants in paraeraphs (;4.1 (r4.
ro l9
:tre neither necessary to the busincss eilicacv of the Subrpostmaster
Contracts nor so
obvious as i(){o rvithout saving. \'fany of them rvould obr-iously have been reyecred
by Post office had'they been propos ed anclf or are uflreasofl able and,/or lrake
no
comtaetcial sense. Further, many of them address mzrters that are alreaciy
gr:verned
bv the terms of dre said conracts (including the Stirling v h,faitland Term
and the
1
3
:& Necessary Cooperati.n Tetm) anrlf .r they posirively conraciict those terms.

( -)) Iror the avoidance of doubt, it is specifically dsnisd (if it be alleaed) that any
oi rhe
;rlleqed implrcd rerms:

ix) ai-fected or qualified Post office's contractual or common law nghts to

tcrminate the relevant sutrpostrnastet (-onrracts, rvhether summarilv frrr cause
i)r on flodce wlthout cause;

,b) affected or quairfied Post office's right ro asserr claims, riqhts and liabilides
irgainst Subpostmasters or anv other parn- which it beiieved to be valid or to
:reek to eatbrce or orherwise vindicate such claims, rights and liabiiities;

at-fected or qualified Posr office's riqht to rlecicie rvh.m ro appoint es its agent
3 io conduct its business on its behaii, and from rvhere such oerson shoriicl
ronduct that business; or

iti) at'fected or qualified Post Office's constirutional nght to brin.e a prir.are

p-rr:securion against Subpostmasters or anv orher parry.

1i17. Paraeraph 65 is noted. "fhe matters pleacled in that pararraph do nor support the
Llaimants'case on rhe impiied tenns rhev allege.

.3"4@
,tlit. Paraqrnnh ii6 is denieri. Specrficaiir,:
 (1) It is denied rhat any of the rerms idenrified in Section 8.2 of the GPoC was onerous
or unrisual in the relevant business context and, in parlicular, in the context of the
appoinrment of an agent such ;rs a subposrrnaster. ,\s noted in paragraphs BB(2), 89,
92,95(2),99(2) and 100(3) above. one would expec subposrmasrer conrracrs rc)

contain tei:rns r;f this sort.

1t is denied that the pdncipie in Interfoto Picture Library Limited v Stilletto

Yisual Programmes Limited [19tt9] QB -133 has any application to rhc idenrrfied
lerms. 'fhese tenls'formed oart of written corrffacts entered. into in a business to
business context and in the anticipation of a ccrmrnercial reiationship.

\ (3) If and to the exten t that any Claimant mav contend that ire or she did not obtain or
have access to a copy of his or her w-ritten agreement zndf or was unaware of or elid

rlot have access to its terms belore asreeinq to rhem, that is a matter fcrr hirn or her
ro plead and prove.

8.5 L]{rfair Contact Terms

109. Parastaphs 67 and 68 are denied. Specifically:

(1) l.Ione of the terms idenufled in Section 8.2 of the GPoC would enritie Post Office
(e) to render a contracrual perfotmance substantiallv different from that rvhich rvas

leasonablv expected ol it or (b) to render no pettbrmance ar all rn respect of the

q,hotre or anv part of its contractual oblisatlons. AccordingJv, Secrion 3(2) of the
Llnfair Conttaci Terms Lct i977 ('UCTA') does not apply.
3
(:) If (contrari, to Post Oft"ice's primary case) and to the extent that any of the idenrilied
rcrms do in anv r:espect(s) fail rvithia Section 312) o{ UCTA, Pr:st Office wril sav that

thev are fair and reasonabie and so may he relied upon.

8.6@
Ii 0. Paraeraph 69 is denied. Specificaliv, it is denied that the dicta rn Autoclenz v Belcher

i20111 LiKSC 41 at [35] irave any applicarion to the present case. \X,'ithout prejudice to the

:eneraiirt' of that clenial, Subpostmasters are fiot (afld are not allegeci to be) empiovees, ancl

rhe Subpostmaster l-eintracts are "arrfinart, nnttuct.f' tndior "nmrnerciai canlntfi-f' rhat te1l

''..:ririn rirr: pt:tnr:ipies set cut in Autoclenz at f20l to 121,1. Iiurther. ir is not aiieqed thar any
';r ihe ierms oi thosc c(-rtltracts wcre rlot acfuaih' reli*ci uoari i:r' itrost (lfiice andf nr *vere
 inscrted into tl're rvritten contracts fitr rhe sake of fonn oniy. Post Offrce v"i.ll acldress

Autoclenz in due course as and rvhcn appropriate.

111 Paragraph 7il is denied. Iiurrher:

i1) Llnder the NTC, the specified norice period -\\,as 6 monrhs, not 3.

.l\
(-.r 1t is denied tl-rat tetminarion of a Subpostmaster's appr:intmenr on norice would
.al1se a Subpostmaster's goodw,ill and other investments to be forferted. A
Su"bpostmasr., .,rrrld nclt assign tl're benefit of his or her Subposrmaster Contract ancl

tiris rvas not a saleable asset, whether or flot he or she was still appointed, Iiutther.

an ex-Sr-rtrpostmaster could sell his business (including any investmerir therein) ro a

,&
new hu\ret and the new bul.er could apply to be a Subpostmastet in the usual lva},.

r.)J Post Office and Subpostmasters both intended that the parties' agreements be as set

out in the rvritten tetrns. If Claimants allege that they intended some orher terms to

ijovem therr relatiooship ri,ith Post office, it is for rhem ro plead and prove such
intention and the grounds on which thel, ailege that it was sl:ared bv posr Office,
providinu particulars of the alleged tetms and rvhen and horv it is said rhose ter-r1s
'rr/ere agleed. Thev have not done so.

112. Paragraph 71 is denied" Furiher:

{1) Post Office notes rhar, on the Ciaimants' own case, there rvas no "true aqreement,,
l--etween the parties that Pr:st office would be enutled to terrninate the
? Suhpostmaster contracts without cause on giving the 12 months' norice of
iernrination thar the Claimants apparentlv seek.

2) Tt js denied rhat the pnnciple in Autoclenz (even if applicable) would permir

the
{.lairnants [o rewrite the termination provisions in the Subpostmaster (-onracrs in

the wav that thev r,l..ish to do. These are the sort of provisrons one rvould expecr to
l.ee irr such conlracts. '{1ie principle tn Autoclenz is erceptional, and it cannot be
used to circumvent the normai r-ries on constrllction and the irnplication oi terrns as

rhe Claimants seek ro riri.

 CONTRACTUAL TER.MS - OTHERS
C.l Crown Office Employees

, Inplitd Term

i13. .\s to paragrtphT2:

(1) 'flre implied term aliesed in paragrapb 7?.1

(:) Without knorvinq which "discretions" are referred to in patagraph 12.2,post Otfice
is unabie ro admit or deny rhe implied term alleged in that paragraph.

& I 14. ;\s to patagraph T3, the Claimants have not identified the particular disctetions on which

rhe implied terms in paragtaphT2 arc said to have operatecl or the reryns goveming rhose
r.liscretions. Post Office reserves its right to piead io such discretions if and when the
Claimants identifv them rvith proper particulars. For the avoidance of doubt, however, ir is
Jenied (if it be aileged) that such implied terms applied ro Posr Office's contracrual or
common law dghts to terrnlnate the relevant Cjaimants' employments, u,'hether summarily
ibr cause or on nodce rvithout cause.

115. Parugraph 73A is denied

C,.2 Assistauts

'::,ld)ts o{ T lr ird P atiu

;.@

115. Parao,raph 7'l is rienied. Secrion l(b) olthe Contracts (Rights of Thiril Parries) :\ct 19919

does not apply as alleged. Specificallr,:

i1) {ln the true coflstrucrion of rhe sPl\{c, section 15, clause 7.1 did nor purport ro
lonier a benefit on the Subpostmaster's Assistants.

f:) (ln the true consuncrrons oi the N-I'C. Parr ?, Clauses 2.3 and 2.5 did not purporr ro
*:onter a benefit on the Subpostmaster's Assistanrs.

-l'he
i-i) unexnlained allesation that the ailegeci irrrplied tenns puryorteci to benet-it the
:riul-:postmasrer's,1,s sistanrs is denied.

lr :,).;lrap:epir '7-4{d) is n.rt ? nroper niea but its ;lener::i rhr-rsf ts rienieci.
 C.3 FranchiseAgreements

111. As ro paralyaph 75:

, (1) Ir is adnritted that, where a colporate Franchisee lvas to be appointed rvhich

appeared to expose Post Of{rce to financial risk, Post Office generally requirerl a

personal Euarantee. save as atbresaicl, the first sentence is cienied.

(:) Regarring rhe secr:nd sentence, paragraphs 76 ro 80 al:ove are repeated . nrutatt.j
ruuland*.

l: xpre t s O b lig,a ti o ns oJ' t h e D efe n,la n t

:B
rs 1 18. The terms identified in paragraphs 76 and 77 zre admitted. Post Office wrll rely 9n aii the
r:elevant terms of the Ftanchise ,'\greement for their true meanins and full effect.

i?,e la lio n a / Co n I ruct.r

1i9. Patagraph 78is denied. In relation to the aliegation rhat the FranchiseAgreemenris a

relationai contract, parauaph 103 above is repeated, natali"r malandis.

{nplied Term-r

i:0. Paraqtaph 78A is denied. In relarion to the Supply oi(ioods and Senices:\ct 1982,
paragraph 104 above is repeated, mutdtis malandi.r.

-h i I I. Parae-raph 79 (which Post ()tfice assumes is intended tr> refer to paraeraph (rrt) is r]enieri.
u ln relation to the impiication of terms intr-r the Franchise -{qreement. parasraphs 103 16

i07 above are repeated, rualatis mutandis.

D. CQNCUR&ENT DUTY IN TORT

i22' ,\s to paraeraph 80, it is denied that Post Office assumed a tortious responsibilirv to rhe

i.laimants. liurthcr:

.1i u ts bot tm a.s leru * nd (.rawn e mp loye es

.Paraqraphs
ii) t10"1 anci 80.? are inadeq,.rateiv plrrticl-iiariseri. insofar as rhev are
,,*riers rr:cri. ther. :lrr,: r1r:nir:d.
 .;']-rsis'tants

(.2) [:-,ach and everl 2l]sg^,ion in paragraphs 80.3 and 80.4 are deniecl. Without prejudice
rhe generahty of rhis denial:

(*) Assistants.,vere untler the conttol, supen'ision and gr-ridance 6f the

qrrbpostmasters rvho emploved drem,
not Post Oifice, and thev rvere in a
proximate relationship wrth these Subposrmasters, not Post Office" Unjike
Post L)f.fice, such Subpostrnasters were in a position fo assess their

competence and to determine whether they needed ftaining (or further

trarning). Unlike Post Office, such Subpostmasters were uitimateiv

.B responsible for providing the training they needed.

(lr) If Post Office understands the Claimants' case corecdy, they allege that post
i)f{ice owed Assistants a duty to take care nor to seek to enfbrce any rights it
believed it had against anv person rf to do so mrght in any rvay al-fect or e\ren
raise a risk of affectins t\ssistants in any way. Such a duty rvould be

cxtraordinar'u')

(.) It would be would be unfair, uniust and unreasonable to impose the aileeed
duties of care on Post Office. It would also be inconsistent wrrh the
contractuai relationships befween Post (JfEce and Subpostmasters on rhe one
]rand and Subpostmasters and their Assistarits on the r:ther.

Directon or Gaarantors o.f lrranthisees

3
(3) Faragraph 80.5 is denied and sub-patagraph (2) above is repeated, rnutati.s tnutmli:.

E. AGENCY

123. i\s ro lraraqraph 81:

{1) Reearding paragtaph 81.1. Post Office recorded the transacijon dara entere<i on
I lorizon by Llaimants and so far as possible sr:ught to reconciie rhat tr:ansaction data

.vrth other rlata is *ossessed.

'':) Ieraqraphs 81.2 to 81.5 are admitteci isavr: fr:r its rclerence r{l naraqraph 52.1"."vhich
:nc3rs lo ne 1!t ('rr()rl.
 124. Paragraph 82 is denied. Specifically:

(1) The Subposlmaster (,ontrects made clear that Subpostmastcrs were agents of Posr
()ffice, and the1, ou'ed Post Ott-ice rhe contractuai, fiduciarl- ancl orher riuries ihat
-llhey
accompanY that status. wete under a dury to accollnt to Post Offlce, nor the
other u,'av around.

a:) Post Llffice did not xgree to act as an agent oi anv of the Claimant Subpostma-srers
ior anv purposes. $ot did it agree to act as an agerit of any Ciaimants whcl rvere
Subpostrr-raster's r\ssistants or Franchisee ditectors or guarantors or Crow-n

elrrploYees. Post Office notes that no such agreement is alleged b,v the Claimants.

& (3) Post Office did not hold or deal with cash or other assets on brehalf of Claimants,
and it ild not effect transactions ofi thelr behalf or commit them to transactions w-ith
tirird parties. Post Office did not undertake anv of the characreristic toles of an

agent and did not agree to be subject to anv of the characteristic duties of an agent.

125. Paragraph tJ3 is denied.

126. Paraqrap}r 84 is denied. Post Office was not an agent and.was under no such duties

r.. F.IDUCIARY DUTIES

121 . Parasraph 85 is denied. The l{odzofl accoununq svsrem was operared on Pt.:st Of{ice's
i:ehalf.

3 1:8. ''\s to paragraph 86, it is adrnitted in general terms that Post Office provided intbrrnanon ro

liubpr.rstmasters. .['{orvever. the contexts in which thev drd so were so various and rhe
ailegations made in paragraph 8(; are so Eeneric that Post Office canflor meaningfuilv piead

lo them.

129. Paragraph ST is denied"

130. Paraaraph 88 is clenied and oaraqraphs 29 and 88 above are repeated.

i3i. Paragraph 89 is clenied. Furthet, Post Otfice notes that the duties alieqed in paragraph 84
/,-:i111'rot proneriV i:e chatacleriseei as flduciarv duties.
G. fiENERIC BREACHES OT CONTRACT / TORT / FIDUCIW
112. Rer:arding thc gcncr:ic allcsations of breach set out in Section (i of rhe GPoC:

, (1) 'fhese allegations are so genetai that it is in manv insranccs

impossible ftrr pt>st
l)tllce ro prrlvidc mernrnghrl rcsponses. ,\mongst other things, they ovcrlook
i:rirical ciif-ferences betrveen Subpr:stmastcrs en the one hand and Assistents.
!;renchisee directors or guarafltors and Crorvn enrplovees on the other. &{oleover,
thc iacts relevant lo various of rire aiiegations of breach u,rll have ciranged

sLrbstantialiy ovet the relevant period.

(2) .\s tirese allegations turn on maners of fact and desree that rvould need to be pleade<i
md proved rn individuai cases. Post Office can onlv address these breaches in rhe
most qeneral of terms.

(3) In relation to anv particulff ciaims that may be asserted by any parricuiar claimanrs,
in appropriate cases Post ()tftce will assert rhe generic tletences referred io in Section
)nl beiow.

133. Paragtaphs 90 and 91 xe denied.

i.3.i. 'l'he generai thmst of paragraph g2 is denied:

! l) Post Office provided adequate trainine and trarning materials to Subpostmasrers,

L:orh initiaily on their appointment and thereafter (incluclinq in response ro requesrs
ibr training). Sr.rch training vaded from rirne to time and from case to case bur r.lrth

the benefit of such raining and the other assistance and supporr available to
Su"bpostmastefs, a reasonablV competent and diligent Subposimaster rvas able

properiv to discharse his or her oblieations ro Post Office.

i"f) 'ilre ()perating l{anua.ls relered rovaried f.rom dme to rime and iiom case ro case

!l:r tlev rru'ere sutllcient to enable compliance bv a reasonably competent and ciiliqent

SubDostmasaer.

i l) If ,:nd to iile extent that xnv Subpostmasrer consrdered himself or l:ersclf unabie

:-jroprriY to rlischarse the obliqations to Tlost Office. it rvas incumbent orr lrirn or ircr

ir) *Dntacr if,ost t_itfice and seek lirrther rraining anci.r,or make use of rhe assilirance
r':,:reri i-.r,- thc riclr:iine .
 135. Paragraph 93 is denied. \\''ith the benefit of the Flelpline and the rraining and cither
assistance and support availaL,le to Subpostmasters, a reasonablv competent ancl rliligenr
Subpostrnaster rvorJcl have trcen able properly to rlischarge his or her obligations ro posr

Office.
.
136. As to paragraph 94:

(1) Post ()ffice does nof knorv the rransaction $pes to rvhich the alleqarion in paragraph
1l:1.1 relates.

[) Resardins paragraphs L)4.2 to 91.4, transaction data relaung ro rhe preceding 42 davs
or (r(l davs (after the introducrjon of Horizon Online) rras freelv ar..aiiable to
& Subpr:rstmasters. In addiuon, more extensive transaction data was provided, an<J

furthet data was provided outside these periods, ..vhere this was necessary. 1'he
Claimants have not identified any circumstarces in u.'hich such data w-as requested,
r.vas denied and would, if pror.ided, har.e prorected any clairnant Subpostmasters

from any allesed prejudice.

(3) Paragraph 94.5 is admitted. F{owever, Post Otfice provideci access to rransacrion

iiata and other relevant records requested bv a Subpostmaster where this was
tlecessarv.

t37 :\s to paragraph 94A. it is denied that the Horizon system was nor reasonabft, tir for
puryose. Regarding the reference to "adequate error repellency". paraeraph 52 above is

h repeated.
F
l:18. Paragraph 95 is so vague thar Post c)ffice cannor piead ro it, orher rhan to repeat

paragraphs -i9 to 56 above.

r39 As to paragraph 96. Post {Jffice denies that it was under a dutv to do a}l r}re thinss alleqed

iherein. I:urther:

i1) trl-eqarding paragraph 96.1, it is demed that IJorizon thiled properiy ro recortj
ttansactions. Post Office notes that Sul:postmasters were under a dutv- to accoultr to
Iost Office, not the olher llzv around. Fr,rrther, takrng inro account the nlatters

i:ieaded in parar.-raphs 23 anri 7(r abr:ve. if an expianation was requireci fr.rr anv
,it<.,rtia1l" in tnany cases it rvor-rlci he lhr tire reievant Su-boosrmaster tD ir.iefitrfv the

,rlieiv cause {}r causes. ilosr tJi-iice iurther noles lha[":n cases rvhere a Sr.rbnr;-qrm:r:irr
 .'\''as guilry'-
of false accounting it v'ould be impossible or altcrnatir.ely excessively
dif{icult tbr anyone to do so.

(.2) Paragraphs 96.2 and 96.3 are denied. Post ()ff-ice pror-icled such
reasonable
coopefation as \vas necessarF in the circumstaflces.

(3) ltesarding 96.4,it is denied that, when tbrming a conclusi.on as ro rvherhet

a

Subpostmasier was or was not Liable fbr a shortiall, Post Oifice 6icl nor
give a
::easonable and flair.consideration to thar question. It is also denied that post Office
rvas tequired to "investigate" the matters refeffecl to in that para#aph. post otEce
notes that, in cases where a Subpostmaster was guilry of false accounting,
it would be
impossible or alternatively excessively, difficult to "invesrigate', rhose
i,"F -& matters.

i40' As to paragraph t)i, the alleged duties are denied as aforesaid. Post office did not demand
paYment othet than in accordance with the applicable Subpostmaster Con6acts.

1+1 ,\s to paragraph 98, the allesed duty of investigauon is deniecl, as is the allegatron that
compliance wrth this dun, was a precondirion for exercisinq post Office,s rights,
u.hether to
seek recr:very of shortfails ftom Subpostmasters, to suspencl their
apporntmenrs or ro
ierminate therr appointments. .[iurther, Post Office notes that the contractual terms
regarding suspensioa and terminauon pieaded in paragraph 60 expressly provided
for the
circumstances in which those rights apptied (rhe right of suspension applied in
cases of
mefe suspicion).

" l+2" Patagraph 99 is so vague that Post Office cannot plead tr: it. It confuses difflerent
situations in such a way [o make them appear the same. For example, suspension is

diferenr irom summarv termination tor cause. which is itseif dilferent

from termrnadr:n on
notice without cause. As to the aliesation rhat post Office applie<l unspecified ..pressure,,
lo cause a Clairnant tr.r resign, Post Otfice notes that the alleged pressure is neither
txplained nor aileged to be illegitimate. Post Office further nores rhat, uncler the
Subpostmaster Contracts. it rvas enudeci to terminate those aqreements urithogt ceuse
on
-Lrv
trving the same notice given Subpostrnasters on resigmng. I;urthermore, in relaticin to
: ummar\' lerminatlons filr causc:

i1) Paragraph 99.1 is ilenied as aforesaicl.

':) \s io laragraph 99.:" pararr.raph 9-l(,1) above is repeareci.

 (3) Paragraph 99.3 is denied.

(1) It is denied that Post C)ffice 's allocatron of the burclen of proof rvas wrong as allegecl
at paragraph 99.'1. It allocated such burden of proof as was reasonabie and
appropriate in the televant case, taking into account the material circumsrances,
including the as1'mmetry in knorvledge in t-avour of Subpostmasters, rhe cooperation
ihat Post Otfice u'as able to obtain lrom the relevant Subpostmaster anci/or his or
irur .\ssistants-

,;) ,\s to paragraph 99.5, it is denied tl-rat post ofiice was required to establish
"causative iault" by a Subpostmasters before it couid ft>rm the conclusion that
responsitrrliry tor shorrfalis at rheir branches resred unth tirem.
i&
(6) As to paragraph 99.6, Post Office denies that, when it fotmed the conclusion rhat
responsibiiity for shortfalls rested with Subpostmasters, it relied on t'larved or
run reas<lnable in lercnces.

1-+3. As to paragtaph 100, it is admitted that, in some insrances, Post (Jffice pursued
civil
';ndf ot criminal proceedings in relation to shortfalls. As to the reference
ro pararraph 99,
paragraph 1"42 above is repeated.

l,+4. As to paragraph 101:

i1) ;\s the Claimants admit in patagtaph 62.4 et "rerJ., rhe subpostmasrer Contracts
-:xpressly pror.ided that Post office was entitled ro decide for itseif (and bi, ref-erence
.,$ to its o-wn intetests) whom to appoint as a rlew Subposftnaster and from where he or
si-re shouid operate. It was subject ro no oblieations or constrainrs in that regard.

t2; It is denied that, havins reqard to its own interests, post (Jfflce acted unreasonabiy in
;:eiarion ro the appointment of new Subpostmasters.

I'+5. Paragraph 102 is clenred tndpau*raphs 5fl to 60 abr:ve are repeared. posr Office ha4 no
iun' to rlisclose rhc marrers s('r our in rht-rse paragraphs.

':+6. ,ls ro paraeraph 103, paragraphs (r1 and fi2 above are repeared.

l+7' Ptrst Office cannot olead to paratlraph 1()4. F-ot exarrDie, Post (]ffice <ioes n6t l<norv: ii)
-:;hich, if anl', breacirr:s are alieged to harre
been in bari iaith or the hasis of such allesarlr.;n;
r)',i'iricir. if anv, oiPnst ()tfice's conrracn,al ,:liscterions are aik:seri to Lra",'e l--er:n cxcrr:isi:d
 arbitrarilv, capriciously or Llnreasonabh, or the basis of such allegation; (3) which, if an1.,
steps taken by Post C)ffice are alleged tr: have been in breach of an implied dury of trust

and cr:nfidence or the basis of such allegarion; (.1) rvhich. if any, sreps by post Office ."rre

said to hal'e been taken v"-ithout reasonable care and slull or rhe basis fcx such allegation;
or
(5) rvhat, if anvrhitrg paragraph 104.5 is refetring to. I{owever, Posr Office denies rl-rar it
i:reached the subpostmaster contracrs to rvhich claimants were party.

1.18. ParaqraPh i05 is noted. Sar.e as set out ai:ol,e and belorv, Irost {)ftlce r&,as not.ub1..t to
|he pleaded duties and did not make the alleged misstatements or misrepresentarions.

H. ACTIONABLE MI SREPRESENTATION AND DECEIT

ti 119. Paragraphs 106 and 707 are noted. In relation to the "inclicative" allesaLions of deceit,
negliqent misstatement and misrepresentadon set out in Sectron [{ of the GpoC, paragraph
132 above is repeated, tuatatis mulandis. Post Office cannot meaningtuily respond to

"inciicative" allegations of this sort. The t-acts relevant to the makrng of a representation to
a (,1aimant, to the truth or falsity of the representation and to dre Claimant's reliance on the

representation will differ from nne case to anorher.

H.1 Renresentations

150. As to paraqraph 108:

rll Varagtaph i08.1 isdenied. -Ihefactof ashortfallwasapparentonthefaceofthe

rtccourlts sutrmitted Lrv a Subpostmaster to Post Offce. It rx.,as a mattef tvhich post
'& Office was enritled fo have a view on ancl discuss without making an actionabie
rcpresentation as a.lleged.

,)\ Paragraph 1t18.2 is denied and sub-paragraph (i) above is repeated. Shortfalls rvere
::rldressecl in accotciance wrth rhe parties' obligarions, inclurling the Subpostmasters,
lbligation ro account to Post Cffice, not o11 the basis of actionablc r:epresenratlons
rnacie bv Post Office to Claimants.

i-rI Paraeraph i08.3 is denied. Post OfEce did not ativise Subpostmasrers on rhe r1te

.oflstruction of'rhe Srrbpostmaster Contacts. XV-herher an explanatiofl was required

itom dre Sui:posftnaster in anl. case \\-es a matter w-hich Post (Jffice .ras entided to
,;i-e a ljerv on and rliscuss rvithor-rt makrnp an acdonairie rel)resentati6n as aileged.
 (1) if Post Office understands the Clairnants' case correctl,v, paragraph 108.4 relates to

statements that some Helpline operators are allcged to have made to some Claimants

u'hen thev cailed the Helpirne rvith particuiar problems. Posr C)f{ice canflot plead to

Lhis r:ase without knorving when and bv whom the reler.ant calls were m..rile. the
c{)11text arid purpose of rhose calls, rr,,hat problems rvere raised and l-row those
problems are alleged to have been c<>mmunicaterl. FIowever, paragraphs 6l and 62
:ilrole are repeated.

(5) Post Office canriot plead to patagraph 108"5 urithout knowing the words allegecl tn
l-rave been used and context in r.virich those words are alleged to have been said.

(, "fhe first partotparugraph 108.6 is denied.

As to the second p^fi,paragt^phs 63 and
&
6-4 are repeated.

(1) Resardine parugraph 108.7, rvhich appears to refer to the rwo alleged represenrarions
in paragraph 26, paruutaph 59 above is repeated.

il,eliance

151. In the absence o{ any c-letails, Post Office cafinoi piead to the ailegation of reliance made rn
pxagtaph 109. However, if (which as set out above is larsely denied) any oi rhe
reptesentations aileged in paragraph 108 r.vere made to rny particulat Claimants, they rvould

irar.e been made in different contexts. tbr different pur,Doses and at different times. Iror
cxample, in relation to the onlv tepresentation which is admimed (that alleged in paragraph
108.7), Post Ofhce notes that the tepresentations rvere made in 2015, long after rhe vasr
,3
inaioriry of the claims asserted bv the (-laimants had arisen and long alter rnanv of tire
i.laimants had left Post (Jffice. Irurther and in any evenr, Post Office relies on dre matrers
sr.t out in paragraph 155 below.

H.2 Falsiw

i 52. ]l"esardins paraeraph l l0, Post Office's tzeneral case is as set out in patavaphs .] i ro -16- ,+g

i:0 {i+, 68 to 71 anci 92 to t)l above.

I'L3 Lack of due c,are

'1-i!re
I i-1. ailegaiions in ilarap,raph i 11 are marie ,lr a l,erv hi.qh ler.el oi Eeneraiiw" Ri:sponding ar

'irr t1111-te ievti r;t ,'i'nemLn'. t'i..c tcnrrai thrust ol-oaraqtaoir 11i is denieri. Sncciiicrilv:
 (1) Pr;st Office considered gvery shr:rtfall chailenged by a Subpostmaster o1 irs facrs.

(2) It is denred (if it be alleged) that Post Of fice acted ,,r.rrhour rlue care if and insof ar as

in any case it a.ttached importance to the safeguards ancl other mater,ial lactrlrs
pleaded in paragraphs 53 to 55 aberve andf ot in consiclering that, absenr er,'itlence t3

thc conrrarv it rvas extremely r"rnLikely that any particular shortfall had been calsed bv
r l:uq or c'rror in Honzon.

'l) It is denied (if it be.alleged) that Post Office acted withour due care if and inso[-ar as

ln any case it drew adr.,erse inferences lrom a subpostmaster,s laihrre to prepare or

te taln proper accounting recotds andf or his or her decision to faisify accourlts or

B make false cash deciarations and/or his or her failure to cooperate r.vith Post Otfice's
investigations and/or proclrre cooperation from his or her Assistants.

i+) lr is denied that Posr C)ffice's sratements regardine rhe remote editing of branch data
neglisent. 'I"he
"vere Persons responsible for the making of the reptesentations w-ere
not aware that Fujitsu privileged user dghts couid in theorv be abused ro citcumyenr
iire protecrions of rhe system as designed and edit or deiete such <iata.

H.4 Negligent Misstatement

154. .\s teqards any represefltations that Post Office made ro any parricular Claimants
paragraphs 112 and 113 are denied. Withr:ut prejudice to the generalitv of this denial, if
and to the extent thar Post Office made anv of rhe represenrations alleged in paragraph 108
lo anY particuiar Claimants. Post Office reserves rhe nsht to deny that it made rhem rn
3
r;ircumstances imponine a duw of care owed to those particuiar Claimants.

H.5 Misrepresentation Act 1967

i 55. '\s to paraqraph I 1,1:

i.i ) iiave as expresslv admrtted above, rt rs denied rhat Post otfice rnacie anv
Lnisreprese ntations.

it) 'fr> ihe extcnt that it is the Claimants'

case that thev were bouncl bv their ecceprances

,rf slrortfalis andior the accounts that manv oirhem submitted to irosi Ot{ice" that
' :isr: is admitteri anri averreci" It is denied tirat the {,laimants relied on tire allcqecl

-::isi:i:nrr:sentailofis rvh*n rcccDnng ti:ose sirr:rttills zndlor.cu'bmittjnq rJ:3se

;,i{li}r.ii1lll f{} i}*sl { -}iEr:ir.
 (3) '['o the extent that it is the Clumants' case rhat they rvere
hound by rhe various
compromise andf ot settlement agreements that several of rhem entered into with
Post Offrce, that case is also aclrrrirteci and averred. Those pardes har,e settled

and/or clischargecl and may not now bring anv claims in rclation to the metters
.
covered by these al{reements- Iiurther:

(.) It is cieniecl that the Claimants relied upon anv alleqed misrepresentauon bv
Post Oifice in entering into those agreemenrs.

(b) In at least sorne of the agreements, tire relevant Claimants acknorvledged that
they had not eotered into the agreements in reliance on any assurances,
.k
; ,p statements, representatlons or misrepresenradons bv Post Office (rvithout

reieasing any liability for fraud). Post Office relied on these acknor.vledgments

in entering into these aqreements. 'I'he reler.,ant Cla:mants are not enritled to
:rrake and/or are estopped from making any claims for rnisrepresentation

other than claims for deceit (as to which see beiow).

(.) For the avoidance of anv doubt, Post Office nr:tes that mosr of the
e ornpromise andf or setdement xgreements were entered into before the
statements concerning the remote editing of branch tfansaction data rei-ered

to tn patagtaph 26 GPoC were made.

(+) Save as aforesaid, parasraph 114 is denied. Furthet and in anv event, if (which is

denied) any Claimant has entered into any conracr in reliance on anv
q
:sf mistepresentation made by Post Of{lce, I}ost Offlce resenres the riqht to contend
that it had reasonable grounds to belie-,'e and did beLieve that the facts represented
'*/ere true.

H.6 Deceit

l5(r. E:rch and even aiieqation in paragtaph i15 ts denied. 'fhe Claimants have no proper basis

io make alleqations rn deceit. Without preiudice to the generaliry ot this denial:

af ) .\s to paraqraph 115.1. r.vhere Post Office concluded that a shorttail rvas tire
.'i:sponsibiiiry of a Sui:postmaster. it believed that rhe shortiall (i) -"vas a shr:rti"aii" iii)
'iias neces:ianlv a shorrtail &vharever thai rneansj. qrii) rvas a of
-.horrtali to rhl: rraiuc
.l:e rccorcleci,imount. lil',] hari i;een Dr,rperhr rttrihuteci to ther reievant hranch anri rr.)

..';s liie lrllc resDr-)fls,1rijix1r of rh* reierrant (.1:lirn':nr.

 (:) Paragraph 1 15.2 is not understood.

(3'i It is denied that Post Otfice knerv or should harre knorvn (which is not an allegation

of knowledge) that it bore the (unparticulansed) conr.racrual lrurden. In these very

prriceedin.gs Post office denies that it bears the burden of showing rhe
Srbpostmaster's accottl-tt to be mistaken and/or showrng that a shortfall was caused

bv an Assistant or rvas caused by a Subpostmaster's crtor. negiigence or careiessness.

Paraqraph 115.3 is denied.

i+l Paragraph 115.4 is denied and paragraphs (>1 and (r2 abo'e are repeated.

{s) As to paragraph 115.5, rvhenever a particular shortfall wxs amributable to a parricular

11

I
\
t:t
-z subpostmaster, Posr office believed that this was the case. It would not have
reached that conclusion in circumstances where it knew that, or was reckless as to
rvhether, the shortfall rvas a F{orizon-generated shortfali.

{D) ?aragraph 115.6 is denied.

(7) Parasraph 115.7 is denied.

(B) Paragraph 115.8 is denied andparaurtphs 56 to (r0 above ate repeated.

H.7 Reliance

i 57 . As to paragraph I 1(;:

B (1) Paragraphs 151 and 155 above are repeated.

(2) Regarding paragraph (i), it is denied that any oi the alleged representations bv Post
{)ffice wouid l-rave been made in relation to, r:rr rvould har,-e been material to, any
decision to accept a'fransaction Corection. It was incumbent on a Subpostmasrer
to accept or dispute a Transaction Comection as he or she considered appropriate
raking into account informadon that was knorvn ro him andf or her or corild be

rrbtained lrom Post Office, the reievant r\ssistanrs or any other relevant thircl parry.
T"he Sui:postmaster is bound bv his acceptance and/or account in reiation to anv
cr:ntention that a' I'ransaction Correction was erroneous.

Iraraqraph 1ii) is not unrierstood.

\.s t<r parasraptr Liii)" uaragraph 155(3\, ll;ove ;s reoearcti.

 (5) Paragr:aph (ir') is not under.stood.

i. HARASSMENT

158.. Paragraphs 117 and 118 are notecl. In relation to the "indicarive" acrs ser our in Secti6n I
oi the (lPo(-. paragraph lJ2 above is repeatecl, mr.tradt nalrtnd*.

i ,9. Paraqraph 1 19 is denied. Specifically:

(1) Irr:st ()ffice has nr:t'ensaged in acts which amount to harassment.

(.2) Post Office was enlitled tr: make demands for payment, ro propose Transaction

B:: (lorrections, to seek admissions of liability fbr shorttalls, ro give rvarnings

' of 1ega1
J
ptoceedines and to pursue such proceedings wrthout beins uuilty of harassment.

i3) Post C)f{ice does not know what is the "pressure" ref-erred to in paragtaph i 19.2 but
:tl'ers that the matters of which the Ciaimanrs cornplalfl in paragraph 119 (1) are rhe
,-rrciinarv incidents of commercial life and, rn particular, an agent's operation of a

business on behalf of its princip al; or (2) in the case of crLminal proceedings, resufued
ttom the claimant's own wronqdoing and/or Post office's belief in such
ir,'rongdoing.

i+) Pr;st CJffice acted in accordance ."r,rth its own sood faith assessment of irs nghrs and
,;bliqations wirhout knowing ot F:elieving that its conduct amounted ro harassment.

A i' DUBESS,&'UDIEONSCIONABLE DEALING

g
i 60. Paranraoh i20 is noted.

j 61. I)ost {)tfice caflncrt meaningfuliv respond to generic alleeations of t}re sort made in
parauraph i?1. IIowever:

i1) I)arneraphs 29.76 and 8B abcive are repeated.

i.:) Pr:st Office r,vas cntitled to assert its dehts as ir understood them to be and to hold

lluboostmasters ro rireir contracts and to their duries as its asents.

tl) Ilcst (if:flce can neither aclmif nor rlenv rhe Eeneral aiiegauons as ro rhe t-laimants,
.r'':"n linotvieciqe :rnd siruations in nataurapirs i21 .,|. 121.5 and i2l.il. ir lr,rii resnond
:; :l.cri .-r,-iren i:aritcular aiiegatrcins are maclc br"'r:ardcular {.laimants.
 (-1) Post olfice does n,r knorv rvhat pressure it is alleged r. har.e appliecr ro any
claimant but it specrficaill. clenies having taking unconscionabie
acrvantage r-,f rhe
claimants tndf or har.in,g put dre Craimants in a posnion
rn which they actecr untler
cconomic duress.

ii) |Jo basis for appiying the concepts of econonric duress

or unconscionable deali'gs in
,liis case has becn arriculated with sufl]cient clarirl,: to allow
meaningful response.
Florvever. rt is denied (if it be alleged) thar the Claimants
mayinvoke rSese cr,rncepts
si) as to
lus[h', avoici rhe consequences of or biame post c)ffice flor any false
rccounting ibr which rhev mav be responsible.

l(t2. Paragraph 122 is denied. Furthet, (i)

3 the "transactions" rhar the claimants seek to rescind
tin the basis of ciuress andf or unconscionable dea[ng are
not properly iclentified; and (2)
the Claimants mav not claim damages for economic
duress or unconscionable dealins.

MALICIOUS PROSECUTION

io)_ Paragtaphs 123 and l?1 arcnoted. Fot rhe avoidance of doubt, post Oflice will deny all
.iaims fbr maiicious prosecution, which it wili contend are
macle rvithout any proper basis.
Post otfice aiso notes that most of the relevant Claimants
seek to claim malicious
prosecution in telarion to proceedinpJs that were determined in post
Office,s favour.

UI{JUST ENRICHMENT

1 6.1. Paragraph 125 is noted.

,3
Post (Jifice canrlor meaninqfullv responcl to generic ailegadons
of the sorr made in
paragraphs 126 and 127. I-{r:rvever, rhe claimants'eniitlement
to ciaim in unjust
.nricitment is denied. i he matters relieci upon in supporr of that
claimeci entjtlerrent are
{ienied as pieaded in the relevant pa-rrs o'f t}ris L}eneric Defence.

- 1)il. Further. in appropriare cases, post office will relv upon rhe fb1oq,-ins
riefences:

(1) Fost office uril rely ,p'n its riqhr to ffear acceprances oi shortfalls and accounrs
r:tndered br' f]traimanrs as irnai and binding or as giving rise
ane]./ to clet'ences of
rcccrd and sarisfacttcsn and,f rsr cstoppcrs and/ar c'mprornises ancr/or accounts
:iared anrilr)r setrieci accounts.
 (:) Ilosr (JfEce will if recessary asserr thar it rvould be inequitable in ail rhe
circunlstances tr; allorv a Claimant to rc-open the accounts that ther; harre rendercrl.

(3) Pr;st ()ffice v,,rll rclv o11 lhe clelence of changc of position in circurnstanccs u,hdre

ffor example) Post ()ffice resoh'ed its Lransacrions u.irh third parties in reliarcc orr

:lnv acceptances or accoLlnts as fendert:d.

1,I. LOSS AND DAI,{AGE

lt:
rt) / ,\s to paragraph i28:

(1) 'The Claimants must each propetly

particularise any loss and damaqe that rhe1. claim
B t{) hxve sut'fered.

r1\ 'f'he Claimants musr each

quantift that loss and damaee (which they have not clone
so in pre-acrion correspclndence and only clone so in ahaphaz.ard manner in the
Scheciules of Informarion provided to date).

r) 'fl-re
Claimants must each properly particularise thar such loss and damage resultecl
trorn specitic breaches of contracr or other legal wrongs on post ()ffice,s part.

l*) L.lntrl these matters are properly partrcularised, Post office resen'es rhe nght
l:rmonsst othet things) (a) to deny in any or ail cases that the aileged loss and damaqe
..r,as suflered bv the relevant Claimant; (b) to deny that such loss and damage was rhe
::esult of tl-re aileged breaches of contracr clr other iegai rrrongs; (c) to asscrt rhar eil
a .)r s()me of such loss and damage is irrecoverable as a resuit of failures to mitlgate;
',3

rnd (ci) to assert lril or some oi such krss and darrrage is too remore .

iti8. Paraqraph l29 is noted. In relation to the "indicative" tr,,nes of loss and damage ser our in

iecdon NI of the GPoC, paraqraph 132 ebove is repeated" rurtlrtti.r ntnlandis. It is not
plrssible meaningfully to respond to the pleaded heads of loss ior the iollowrng reasol-rs:

'l'he Llaimants }rave

i1) not idendtled rhe particular breaches or iegal w-ronqs rr,'i-rich are

said to sive rise to liabilin tor the pleaded }osses. It mav lre rhat rhe Claimanrs are rn
't,.)tne insf ances seeking losses rhat are not avarial:ie ibt pardcuiar l:reachcs D1u/rongs
:is a metter of latv (icrr example. neither riamaqes lbr pure siigrnafrcpr"ttarionai harm
iri)r ilameges tbr rjisrress raiiine short oi"a qenuinc Dsr.chiatrtc rilness 2re ar,..-iiable i,rr
]:.1-t'tct'rcs {1t c{)nfract :ucir as {i:o:lc al t:;sue jn the se X:roceeril]lrs;.
 (2) The Claimants have farled tr: identity the causal connection L:etween the alieged
breaches and the alleged losses.

(3) T"he npes of ioss are pleaded at a very high levei trf gene raiin. It mav be that liabiliw
ior some of the trpes of loss covered t), headrng are itecoverable in larv or fcrr
"r.h
reasons of causation andf ot remoteness (for erampier non-pecuniaw loss such as

rncntai ill-health consequent on a breach of contract is not ortlinarilv within the

cclntempiation of parties to contracts such as those at issue in these procee.linqs and

is hiqhly likely to be'roo remore, and financial losses alleged to atise trom

stigma,/teputarionai harm are, in the crrcumstances addressed in these proceedings,

hiqhly unlikely to pass rhe contract 1aw tests of causarion an<i rernoteness).
3
(+) Issues such as causation in fact, remoteness and quantiticatioll of ioss cannot

meaninqfullv be addressed in the absence of pleaded facts of individuai ciaims.

1(;9. In the premises, Post Office pieads to Section lv{ of the GPoC in genetai terms and
without prejudice to its righr to addtess such particularised allegations of loss as mav be
brought against it (including bv raising such affirmative allesations and defences as are
avallable in fact and law).

M.1 Financial loss

174. Parasraph 130 is noted

171. As to paragraphs 131:

.9
i1) T'he ciairns tbr loss of business investment and consequential losses appear to be

based on the prernise that, but fbr the breaches for which Post Otfice is alleged ro be

liable, the Claimants' appointments as Subpostmasters rvould have continued

indeiinitelv" Ftro-rzet,er, Post Office will relv upon its express right to terminate the
Subposhrraster (lonffacts without cause on flotice and upon the pnnciple oi
r runlmum leeal obliqatiorr.

l) By reason of this riEht and this principle, the only losses drat a Subpostmaster mav

:iaim in telation to rhe terminarion of his or her appointmenr iinciudinq bv

I'e sip.FattonJ w-oirld he the losses he or she rvouid nor have
-*uffered if P6st (]f fice irad
,'ir-en dre contracfi-rai notice oi termtnarion {'narneiv. 3 rncnrhs' notice under rhe ,

,i]l'I(-. i; mcnrhs' n..]rice i:nder tire NTC :rnri 7 rlays' nndce under the Ter:rnorarv
 SPlv{C). In ail c,r almost.ali cases, the Subpostmaster would be entitied to no more

than rhe net Droilts he or she wr:uld have earned dunng the contractual nodce
period' Wherc Post Office itr fact terminated the Subpostmasrer's appointment c;n

grvine this notice, or the Subpostmaster resignecl on giving thrs notice, the Claimalt
r.r,ould be entided to clarm nothing.

1.3) Further and in anY event, as regards the a.ileqation that Ciatmants have suffered lr:sses
,,t rhcir brrsrness 1n\-csrmcr.rrs. Paraqraph IIIr3):rboi-e is repeared.

112. ,\s to parasr apl't 132,rr-t't.r. Post ()tfice suspended or rerminated a Subpostmaster,s

appointment without ttotice, it had the express right ro do so under the applicable
.A
Subpostmaster Contracts. r\s regards tire right ro suspend, Post Office notes that, in many
) P
cases of suspension, temporary- Subpostmasters are appointed to rufl the relevant branch,
and that these temporarv Subpostmasters woically pay the suspended Subpostmasters fbr
ihe riehr to do so.

'173" As to paraqraph 133, no admissions

are made as to whether, and if so on what basis and to
lvhat extent, the Claimants' tesidentiai arrangemerrts may result in claims for consequenual
losses.

M.2 Stigma andlor reputational damage

17 4. As to paraqraph 134:

h 1) it is denied that damages for pure sugmafreputational harm are recoverable for
3 breaches of contracts such as tirose at issr:e in these proceerlings. Further, the

pieaded losses apnear unlikely to pass tl:e conrract law tests oi causatign and
remotelless.

(:) ,,\s to remoteness. srigm a and/ or reputationai harm r.vas not in the parries'

.ontempiation as a nor uniikeiv consequence r:f any of the pleaded t,reaches of

{roi:rract andf or Post Office canflot reasonably be assumed to have r.rnciertaken

responsibiliq, for anv sngrna/reputational harm that miqht resuit r.vere ir to breach its

'.:onrractuai ob[garions to Subposrmasters. "fhe pleaded losses are too remore

., ,r,d,f r:st are itrecoverahle hecause they do not satisfy the test stareci bvl-ords
iir;tfrnann anci llone in Transfield Shipping Inc v Mercator $hipping inc [200]1
\.r.. 6 i.
 (3) Tl-re contract law test fot remoteness (includrns rhe resr in Transfield Shipping v
Mercator) is also to be applied in relation ro lrny concurrenr ciuti.'in torr. It is lor
p.i ssc.I.

(1) 'lhe teference to "simiiar treattnent" is vague and ernbarrassing. Post Otfice dercs

not speculate as to whar is intended bv these rvords.

15) Post {)ffice wril also relv on the marters set out in parauraph 175 be}or.v.

175. .1s to paragraph 135:

(1) Jt is denied that lhe claimed ioss is attributable to anv breach or orher legal rvrong on
,p the part of Post Office.

/r\ trt is denied that Post Otfice suspending or terminating a Subposrmasrer (or requiring

rhe exclusion of an r\ssistant) would itself create the impression of dishonesty on

rheir part. Post Offlce rvas entitled to take those steps in the absence of dishonesw

(and, as resards termination, vrithout any cause). Ii rvhich is unclear, ir is alieged that
Post office acteci so as ro pubiicise or otherwise generate srigma and/clr the

irnpression of dishonestv, such allegaiion is denied.

-i-he
il) claimanrs are required to explain how any stlgma or teputational harm is
:ttributable to an!r' step taken bv Post (Jffice, rather rhan tcr a failure to mitigate on
rheir part andf or to the interveninq act of a third partv that rvould break anv chain of
ceusation.
P
M.3 Distress and related ill-health

,7 6. .,\s ro parauraph 136

i1) Tr is denied that damages l'ot disttess are recoverabie for breaches of contracts sucl"r

:rs f hose at issuc in rl-rese proceedings.

r:) Ir is dcnied that damages ior diskess are recoverable for tl're pleaded rorts. saye ibr
!rarassment.

i"-,-) Iil-i-reairh resr-rltinq from tlistress \\,'as nor in the parties' contempiauon as a nLit

:r'riiiielv c{)nsequence of any ot ti.re pleailed hreaches ,:i conract endiot lr}ost {.)ffice

.;lilllot reasona'bi.r, be;rs"cumed to i:ave r.rnc{crfaken resnonsti:ilin, iof 3r:t sr,rch hari:r
 es ma, (esult were it to irteacl"r its contractual otrliqations to Subpostmasters. "lhe
pleaded ioss is thetefore roo remote andf or is irrecoverai:le because they do not

sausfy the rest stared bv Lorris Hr:fTmann and Hope in Transfield Shipping v
fuIercator.
.
('+) 'fhe c.-rntract law test fot remoteness (itrcluding
the test in Transfield Shipping v
Mercator) is also to be appJied in relation to any concuuerit dug in tqrt.

M.4 Bankruntcv

17i. As to paraeraph 137

| .-a
9 (1) Post Office is aware that some Claimants entered into bankruptcv or indiyidual
toluntary arrangelnents. It is unable to admit or denv the causes of, or reasons for,
aflv parucular banknrptcy or voluntary affangement.

(.2) Post Office denies that is liable for any r:f the allesed iosses. It is rinable to admit or
denY the implicit ailegation that the relevant Claimants are endtled to recover such

ios ses.

(3) Further and in anv event, Post Of{ice does not admrt and requires the releyanr
f'laimants to plead and pror.,e theit standing and ritle ro sue post office.

M.5 Frosecutions

b 178. Paragraphs 138 and 1.39 are noted. As the Claimants have eiected nor to plead panicuiars
fl
t.'f, and are not currentiv proceedinu with, their clairns for rnalicious prosecution, post

i-]ffice does nor pleacl to these patagraphs.

1'I.6 Exemnlarv Damages

i1)" fhe claim in paragraph 1-10 is denied. It is denied rhat exemnlary damaqes are recoveraL:le
ior breaches of contracts such as those at issue in tirese proceedings. Furtirer and ln env
.r,reflt, no pardculars of deiiberare and/or cl,nical disregard of the Claimants, rig,hts have

i:een picade<l. Post Office denies rhat it acted so as ro iustifv anl claim ior exempiarv

.iamages.

l,'{"7 {sjg1gsl

. :;{}. r) rft:,r:nh I I I is ;r,,rr.c1.

 N. GENERIC DEFENCES

181' As against the vario's ciaims brousht by the'arious f-'laimants, posr office
andcipares rhat
it r-,rll raise sorrle or all of the foliorving points or defences.

l{.1 Butden of proof and associated rroints

182' If and insofar as claimants are aileging that Post office attributed to rhem or s,'ghr. to or
ltdrecover from them shortfalls in branch accounts for which
they rvere not liable. rhe'
bear tl-re burden of prc.rving those allegatrons.

I 83. Ifand insofar as clainrants are alleging that branch accounrs

that they have rendered to
..
Post olfice are incorrect, thev bear the burden of proving
those ailesations.

N.2

i84. In appropriate cases, post Office rxrill conrend as foliows:

(1) rvlrere aClaimant has rendeted false accounts ro Post office (including talse cash
rieclararons) or has tailed to maintain proper records or keep
proper accounting
records, in relation to the marters covered by the relevant
accouflts or records, rhe
Court should make all presumpuons of tact against rhat subpostmasrer
as are
consistent with the other tacts as proven or admitteci;

(2) tr:rther ot alternadvely, adverse inferences should be drawn against

a Ciaimant from
an,v false accounts rendered to post office or afiy other
fadure to rlarntain proper
lccounts or t. keep propef accounting records as were required lrom
to rime
time
under the televant Subpostmaster Contacts anci/or the televant
manuals and/ ot
instn:ctions;

(3) if (v-hich is denied) Post Cffice orved anv Claimant a clurv

to investiqare to identih
rhe roor cause(s) ol any discrepancv or shortfail, the ciaimant may not rery on .r
beneflt frr:m any breach of that riurv in circumstances where an inr-estrgauon
has
been tendered irnpossible or alrernativelv excessively difficult
b\, fijs or her false
icc()unrs rnci/,rr t:riure ro maintarn nrol)er lccounrs or kccp propcr
rccounring
records: and

in rencierinq raise accounts anci thdinq to maintain and keep proper

scc.ruilhng
.:':corris as aibft:satci, the responsibie Subnc;slmasaers committed
breaches ,f tl:rir
 subpostrnaster cofltracrs entitring posr office to rerminate them srrmmariiv, both
pursuant to the tetms of the conlracts and at common
iarv.

N.3

185' In appropdate cases, Post Office will rely upon rhe tbliowing defences:

i1) post Office may assert afl

esroppel ro preyent a Subpostmaster denyins
the truth of
:1ny'f1""u^.tion (lottections or shortfalls that he or sire
has acceptecl or of- any
ilccolrnts (includrng cash declarauons) that he or
she has ren6eted to post office.

(2) Post office maY assert that, rvhere a Subpostmaster

has accepteci anv Transaction
Corrections or shortfalis or has rendered any accounts
A to post of1ce, this amounts
to an accord and sarisfact-i on andf or a binding contract
andf or an accr:unt stated
andf or a settled account that a Subpostmaster mav
not re-operi.

hI.4 Settlement agreemenrs

186' In appropriate cases, Post office will say that the Claimants' claims have been setrled.
anri/
or comprolxised and/ or discharse d and/ ot satisfied
by agreement between the parties.

N.5

187' \x'here Claimants have been involved in other proceedings

with post office in relari.n ro
ihe matters of rvhich they seek to complain herein which
have been trrought to judgment,
Post office wll say that their claims are barrecl bv res
i.b ta and.f otissue
iudica estoppe.l
g .andf ot it is an abuse of the process for them ro seek to ar.r:ic{ or to reopen
the judgment
'tndf or to bringciaims drat they coultl and shor.rld have broughtin the course of 1hese
other proceedings.

?{"5 .X=inulatrss

l88' Post office rvlll where apprtpriate relv *pon the expiry
.f rhe applicable limrtation penods
'rs f:arring the Claimants' claims. In particulat, Post Office
will relv upon:

(1) 'l'he (l
-vear limrtauon perioris in reiarion ro claims 1n tort and contracr under Sections
I end 5 of rhe Limitatron Act 1980 and in respecr of all i,rniust
enrichmenr claims and
ii-r icspecr of ai1 similar e{rrritabie claims.
 (2) 'fhe 3 year [mrtation period in rel,don
to claims for personal iniury un<ier section 1l
of the Limitation Act 1980.

r'I.7 Reflective losg

189. Whe re a ciaim is brought bv a Claimant in respecr of losses he or she has suf-fered as a
shareholder in a company which has suffered iosses as a result of Post Office's acts (fbr

exampie. a companY which was a Subpos.master or a Franchisee), Post Ofdce wiil in.
rppropdate cases conrend that the claim is bared bv the principle of tefiectivc ioss.

N.8 Set off

.,,

1r0' Asainst any amouflts for rvhich Post Office may be fbuncl liabrie to any Claimant, post
llffice will set off in law andf or equity such amounts as are due frorn such Claimanr to
Post Office, including the amounts for rvhich such Ciaimant is lound to be liable ro posr
()ffice on the Counterciaims referred ro belorv.

191. Save as aforesaid" the GPoC is denied.

t
92. 'lhe claimanrs are nor entitled to the relief sought or any relief.

GENERIC COUNTERCI-AIM

b
193. The Genenc f)efence is reoeated.

19+. \xlhere anv Claimants are hable fcrr a shortfall and/or a loss of casir and/or stock which
Post Office has not to date recoveted from the Claimant in full ("unrecovered
shottfallstt), Post Office claims the amounts of such shorrfalls orlosses o,r rhe
unrecovered portion thereof as debts in accordance with its contractual riehts as pleade<1
:rl:ot'e. Post {)ffice relies upon the foiiow'ing terms in relarion to rhe pavment of shorttalis
attet rhe termitation of the telel'ant Subpostmaster Contracts. lramely Section 12, Ciause
i3 of the SPh'IC. Ciause (r.5 of the 'femporarl SPhIC. and Fart 2. Clause 4.3 o{ rhe NT'C.

'15. Ilurther ot alternatir.eiv. clepenciinq on the circumsrances oi'a particular {,laimaut's case.

trr;sr Offlce ciairns rhe vaiue of unrecorered shortf-alis ancl/or of lr.:st cash anrj/4r sir.;ck
 'andf or l'sses suffered tly Post ofEce caused by false or incorrect ira.sactions
entered into
IIorizon on rhe [,rllorving grounds:

(1) .,\s darnages tor breach of the Subpr)srlriaster Conrracts.

i2) Tn restituticin whcre a Claimant has bcen unlustly unenriched

by receivins the trcnelir
i-it rire shorrfall and/ or ca.*h and/or stock anil/or transactions.

i3) -\s clamages andf <tcompensauon in equirywirere a Claimant has committecl a irautl
r,r breach nf .orrt.*.t or breach of tmst or ilduciary tlutv.

(+) In cases rvhete cash has been str:len or taken by or with the consent of a Claimant
:rh F Subpostmaster. rcconstitudon ol rhe trust tuncl and,/or compensation in equin, tbr
breach of trust andf r>r damages tor breach of the applicable Subpostmaster gontract.

(5) In cases rvhere stock has been stolen or taken bv or rvith the consent of Claimant,
cr;mpensation in equiw tor breach of fiduciary dury anci/or damages for
conyersion
and/,,;t damages f or breach of the appricabre Subposrmasrer conract.

196' In reiation to Claimants 'lho ate guarantors of. Franchisees, Post Office claims the debts or
indemnities due under andf or damaqes for breach of their guarantees.

' F,st Office will claim lnterest on all amounts found to be due to it in accordance u,rth
s.
'97
''5A of the Seniot Courts ,\ct 1981 at such rates and for such periods as the Court shall
tlrink fit. it wiil claim compor.rnd interest in respecr ol its ciaims tor breach of
trust anclf rsr
_1
.p ticluciary dury and/or its claims in uniust enrichment-

,\T{D POST OFFICE CLAIMS:

1) 'Ihe amounts of anv reievant unrecovered

, shortfalls and,f or cash ancl/or stock (see

paragraph i94).

(.r) iiamases fbr breach r:f contract" traud andlor cun\.erslon.

lj) ,in c;tder frir teconstitution of anv trust tund and/or conrpensation in eq6it1, for breach of
iru.st anr{/'t-,r fidu cien' cluti,.

l) i1e-qtitution or-alt\r tin'tounts or irenetits in respect of-.,r.irlch {-lairnanrs have l;een

uniustir:
.:;trlche ri.
 (5) 'f1re atnounts due unrler andf u all necessary itderrnities an<J/nr damages in lespect of anv
relevn.nt guafantees.

r {6) Interest thelcon as ntoresaid.

J) Futiler or other relief.

'\ntironv cle Gatr Roi:inson QC

Orvarn Draper

STATEMENT OF TRUTH

The Defendant believes that the facts stated in this Generic Defence and Counterclaim are true.

Sisned
q
Position f oifice

Dateel

:B