Thread by @nickwallis

Day 15 of Bates v Post Office about to begin. Stick around for live tweets from a confused hack who is beginning to understand relational, implied, express, breach and the contra proferentem principle of construction. We can all learn together from 10.30am...

Silence in Court 26 of the High Court Rolls Building as we await his Lordship.

The usually impeccably punctual Mr Justice Fraser is one minute late. This has been noted by a barrister.

He’s here, we’re underway. Mr Cavender is on his feet for the Post Office. Strapped in.

Everything I live tweet is a note or a paraphrase. Nothing is a direct quote unless it is in “direct quotes”.

If you want me to read anything - either @nickwallis me or #postofficetrial

DC this is an unprecendented attack - to treat the SPMR/PO relationship as sort of employment, but not employment. The weapons they use to do that - ignoring agency, ignoring financial duties and ignoring the words of the contract, ignoring agreed implied terms...

… you didn’t hear a word from m’learned friend on that. They then seek to impose 21 implied terms… they seek to argue ALL the operative terms are not incorporated into the contract. So far as they are they seek to strike them down.

… My Lord you should not approach these in silos, independently… the overall effect is one your Lordship should keep in mind. "Without sounding too pompous about it… his is an attack on freedom of contract and of certainty of law."

… there has been an industrial scale of introduction of evidence.

This is not a case where there is allegations of estoppel or waiver, we are dealing with interpretation and implication.

Any judgement based closely on the experience of the Lead Claimants is flawed as this is is for the 560 claimants.

What has happened over the last four weeks is much akin to a public inquiry into the Subpostmaster contract [SPMC], which is wrong.

There is a real risk of this court being led inadvertently into error.

DC really doesn’t want any judgements made on the basis of the Lead Claimants evidence.

[MLF = My Learned Friend = Patrick Green QC for the claimants]

MLF yesterday twice he said he was going to take you through basis for admission for all these post-contractual evidence. He has not.

If you read all their closing submission there is acres of evidence which he says is all admissable. It is not.

Questions about the robustness of Horizon are the wrong question. This trial is about the contract.

There is no pleaded issue or case about the robustness of Horizon. No q’s were put to any witness let alone senior witness about corporate knowledge of Horizon.
J by corporate do you mean board level?
DC yes.

J So far as Common Issues 12 and 13, the court had to have evidence on how that was supposed to be done.
DC no that’s a question of construction
J I’m not sure it is Mr Cavender. If we turn to the Common Issues [CI]
I know there’s various versions of these floating around..

J if you look at number 13
J now… it is of course correct a court can and often does construe contractual terms without evidence, but the wording of these CIs was agreed by the parties.

J how without any evidence from a claimant would a judge know how CI13 can be implemented?
J so far as evidence being irrelevent as to how an SPMR operated their branch… I’m struggling as to see how that evidence in law can be irrelevant to 13 or indeed 12

DC well 12 is a matter of law…
J well let’s look at the defence 91.1 which describes the functions
DC in agent, fiduciary
J surely its relevant to what the SPM is doing
DC what they are doing is unpacking their fiduciary…
J exactly. The way in which they are doing it, how...

… can it be said to be irrelevant?

DC we say in this relationship if an agent disputes an account when making it - obviously he’s not stating that part of the account he disputes. That is a simple statement of law.

DC this is not a trial to discuss how the LC’s accounted
J on an individual basis?
DC on any basis. it’s not an issue for this trial. yes you need an understanding of how the system worked, but all you need to know is there is a branch accounting system

… and accounts were rendered every 4 or 5 weeks and there was a dispute process. Then you need to decide who was responsible for it.
J so I don’t need to look at the accept, settle to cash etc?
DC not at a granular level
J so you accept I need to consider the process of how...

… the accounts were submitted.
DC i suppose it’s question of degrees
[suggests doesn’t have all the evidence to make an informed decision]
DC all this will be disclosed at the breach trial
[o god…]

J no judgement on a case of this nature would be adequate if it simply said “and each SPM was required to account to PO branch trading accounts” that’s not what CI 13 requires me to do.

J some of these CI are purely points of law. Not all of them are or have I got that wrong?
DC I think, my Lord you have. MLF hasn’t got a case that the SPMs were unable to dispute matters they didn’t want. They could. They could ring the helpline.

J the answer to CI 13 is not agreed between the parties, that therefore means I have to address my mind to how an SPM came to account to PO each month.
DC no that’s wrong. there is no sense the PO tried to disapply agency principles. SPMs had to account monthly or 5 weekly...

DC in terms of mechanics they produce a branch trading statement… it doesn’t require you or entitle you to go into the details of the mechanics. it’s not part of the case.

[DC is trying to draw a line under it - calling it a helpful exchange at that he will address it further in agency tomorrow]
DC moves on. dealing with the way the parties presented and dealt with the evidence. In closing they give lip service to the correct test...

… what they do say is what the witnesses say they did in hindsight.
DC suspension is a contractual right - we can determine whether it is applied correctly when it comes to breach. This is not that trial. The C’s approach is wholly inappropriate.

… we say even now there’s no proper basis for the inclusion of this evidence. in terms of missability…MLF says this was dealt with in 10 Oct - we failed to get it struck out, but now you have to decide the legal justifcation for it. In my submission there is none.

DC points out there is case law binding on this court which makes it very plain what the process of deciding what a contract means. It’s not is it reasonable or in the light of what happened in fact. There’s a real risk of doing that here.
J I don’t think there is

DC it’s an easy mistake to make.
DC when you look at implied terms MLF is fascinated by looking at this in the guts of the dispute… it’s wrong… at stage of contracting you know much less so the notion of implied terms for what might happen down the line.

[think the line of thought here is that the SPMC wasn’t inherently problematic because it failed to anticipate the advent of Horizon]

MLF makes a category error in the way he presents this case. The common reference we get from MLF is “commercial reality” this is...

… directly contrary to [case law]. It is down to the words in the contract.

There is no special or different rule when it comes to relational contracts - let’s get that out of the way. That’s wrong. There’s no difference to interpretation of terms when there’s an allegation of relational contract.

… He is relying on what happened and trying to transpose it onto the construction of the contract.

Relational contract is a step along the way to look at certain types of contract. It’s not a warrant card to tear up case law.

DC relational is helpful label for certain species of contract where a court may look with care at certain terms.
DC this is not a jury trial, but it seems by the partial and inaccurate presentation of the evidence he hopes to make certain points.
[DC hands up inaccurate...

… sorry his list of inaccuracies made by Claimants]
DC says C are cynical in their approach especially as there has not been full disclosure on both sides.

DC there is an incomplete documentary evidence and an incomplete evidence, so making a ruling on this incompleteness would be wrong.

J you did have evidence on training
DC it was only very high level. not proper evidence
J there is no distinction between evidence and proper evidence
DC yes but very high level. you can’t make a judgement on that. [says anyway whole issue of training is irrelevant...

… to the contract]
J well - i’ll just have to take a view on that...

J for example - Mr Abdulla - you put to him a fairly detailed and rather different version of how he said he had to mechanically deal with matters in terms of accounting….

… On the basis there were issues of fact between the parties as to what an SPM was physically able to do… it would be bold to say all of that is irrelevant.
DC but they’re not relevant to this trial - it’s not a normal trial on all the issues. I did xe on breach...

… I didn’t want to, but I had to to correct the false impression that had been submitted, but I don’t ask you to find anything against him because it’s not relevant to that trial.

* this trial.

J but are we saying there are disputes of fact in terms of the process of submitting their accounts?
DC I think we are… there’s no debate about what buttons you press. I think MLF is arguing that he wants the clock to stop on settle centrally or whatever. We say...

… it’s part of a wider process - eg calling the helpline.
[J is really pushing on nuance of accepting/settling/seek evidence issues of mechanically making an account to PO]

J what I’d like you both Mr C and Mr G - simply to agree a single sequence flow chart of this series of choices (when settling etc) as that would be very helpful for me.
J you are not inviting me to make adverse findings on the LC credibility
DC correct
J when you xe’d them

J on their evidence and suggested they weren’t telling the truth… do you want me to ignore their answers?
DC treat them with caution. a lot of this evidence is very very old and when you look at documents, you’d probably prefer the documents.

DC the only decision you have to make is whether they received their contract.
J some of them
DC yes Mrs Dar and Mrs S did receive and sign
J that’s why I said some of them

[DC says Bates and Stubbs are special cases and Abdulla and Sabir were not representative of the 560 claimants]
J so far as LC evidence goes - treat it all with caution but do not make any findings on their credibility
DC quite so, as to do so you would...

… have to have the full evidence, which you don’t have. It is classic breach trial stuff. That is what will happen in October or whenever.
They have submitted evidence and can be questioned on it during the breach trial, but you shouldn’t make findings on it in this trial.

J just to consider the Mr Bates situation for the moment. AB gave evidence as to whether a chunk doc was in an envelope and you put to him quite forcefully that it was. I have to find whether it was or wasn’t. How do I do that without making a finding about his credibility?

DC well memory, reliability, factual evidence, he has convinced himself no doubt it is true
J those are classic features to take into account the credibility of a witness
DC indeed
J it seems I have to consider AB’s credibility

DC you can’t make an inference or findings on these cases as you don’t have the full evidence
J but you have made submissions on credibility [points out where]
[J arguing he has to make findings on credibility as there are two different accounts of what happens and what LCs...

… were told during interview]
Mr Green intercedes to say that DC says he might say Mr Abdulla lied and notes DC says he lied in his submission.
J lets him speak but warns him not make interjections too often “store them up”
J to DC so you basically don’t...

…. want me to make any findings on breach.
DC or any comments that could lead towards findings
J understood

[think DC is gunning for a dry legal judgment with no newsworthy comments on Horizon or the comments about what happened to LCs and the various witnesses credibility incl Post Office]

We are on to Losses and Gains policy document which DC says JFSA QC is very fond of.

DC showing a document which JFSA QC PG did not put to any witness dated 2014. If I hadn’t shown you this, you would be left with MLF’s case that there were no documents of this nature.

DC MLF’s case is very badly made, there’s been no attempt to build it from the ground up and there’s been a scattergun approach throughout.

J the evidence goes as follows. Mr Green put the ‘98 losses and gains policy to AvdB and asked if there was any changes. She couldn’t recollect. but if there ARE policy changes post 98, one of which you appear to be showing me now, that changes things.

DC seems to have dismantled JFSA QC argument re ’98 PO losses and gains policy, revealing there are 4 subsequent losses and gains docs up to 2014

which PG did not put to anyone.

We have just had a 10 minute break. I have never bowed so much in my life as I have over the last 5 weeks.

I’m still not very good at it.

Post Office QC Mr David Cavender on his feet (DC).

DC serious error by MLF in demonstrating his case in that he has failed to insert his 21 implied terms into the lacuna between express and agreed implied terms.

DC in summary in terms of scope no rgard to post-contractual evidence or evidence of breach. An error of law and procedure.

DC court should also not engage in inferential finding or comments along the way. Particularly as we have two trials coming up on those issues.

Points out there has not been enough disclosure. Disclosure orders were to common issues, much more general and before LCs were selected. DC now noting the court did not order any disclosure on helpline because it was not relevant to CIs

J judge pointing out saying we have no disclosure is not correct -the Claimants have had no disclosure
DC well - there has been no disclosure is more correct
J yes the Post Office has the doucments
DC yes but they haven’t been searched for

… retrieved and examined. because we are not here to decide on these issues.

DC saying we haven’t had disclosure from the claimants retail businesses which we would need - 3 years accounts etc to see if there are problems there because that goes to breach. we have disclosed what we have been instructed to disclose for the basis of this trial. There...

… is no “generic evidence”. The is the evidence submitted.

[DC now goes to case law - notes JFSA QC failed to quote the leading authority on construction in contracts once - very worrying and should ring alarm bells at once]

DC you are invited by the claimant to apply common sense. That is not the right approach and I am sure your Lordship won’t do that.
[inference being - your job is to apply the law, but it does sound funny to the lay person. Remember it’s not a direct quote, but I will...

… dig it out when I get the transcript tonight]

DC quoting Arnold V Britton from Supreme Court: "The third point I should mention is that commercial common sense is not to be invoked retrospectively. The mere fact that a contractual arrangement, if interpreted according to its natural language...

… , has worked out badly, or even disastrously, for one of the parties is not a reason for departing from the natural language. Commercial common sense is only relevant to the extent of how matters would or could have been perceived by the parties...

…. , or by reasonable people in the position of the parties, as at the date that the contract was made.”

This expressly rebuts MLF’s suggestion that this starts and ends with commercial common sense. It doesn’t.

More from AvB "As already explained, the mere fact that a court may be pretty confident that the subsequent effect or consequences of a particular interpretation was not intended by the parties does not justify rejecting that interpretation."

More AvB: "But there must be a basis in the words used and the factual matrix for identifying a rival meaning. The role of the construct, the reasonable person, is to ascertain objectively...

… and with the benefit of the relevant background knowledge, the meaning of the words which the parties used. The construct is not there to re-write the parties’ agreement because it was unwise to gamble on future economic circumstances in a long term contract...

…. or because subsequent events have shown that the natural meaning of the words has produced a bad bargain for one side. The question for the court is not whether a reasonable and properly informed tenant would enter into such an undertaking….

…. That would involve the possibility of re-writing the parties’ bargain in the name of commercial good sense. In my view, …

… Mr Morshead’s formulation (para 67 above), on which his case depends, asks the court to re-write the parties’ leases on this illegitimate basis.”
DC and that is what MLF is asking you to do. And this case is about people leasing holiday homes. Ordinary people, another test...

… MLF seeks to apply.
[judge takes DC to 17 of AvB]
"The exercise of interpreting a provision involves identifying what the parties meant through the eyes of a reasonable reader, and, save perhaps in a very unusual case...

… , that meaning is most obviously to be gleaned from the language of the provision. Unlike commercial common sense and the surrounding circumstances, the parties have control over the language they use in a contract….

… And, again save perhaps in a very unusual case, the parties must have been specifically focussing on the issue covered by the provision when agreeing the wording of that provision.”
J asks about that
DC says well these were standard leases. SPM have an advantage...

… in that they have the NFSP negotiating for them.
[this causes a very strong gasp of disbelief from the two SPMs sitting in the public area]

J asks what if he should take Mr Green’s view that the NFSP is not independent and therefore not a voice for SPMs
DC accepts they are funded by PO but they do negotiate contract on SPMs behalf

We have moved on to Wood v Capita par 12: "This unitary exercise involves an iterative process by which each suggested interpretation is checked against the provisions of the contract and its commercial consequences are investigated: Arnold para 77 citing In...

… re Sigma Finance Corpn [2010] 1 All ER 571, para 10 per Lord Mance. To my mind once one has read the language in dispute and the relevant parts of the contract that provide its context, it does not matter whether the more…

… detailed analysis commences with the factual background and the implications of rival constructions or a close examination of the relevant language in the contract, so long as the court balances the indications given by each.” and 15: “The recent history of the common...

… law of contractual interpretation is one of continuity rather than change. One of the attractions of English law as a legal system of choice in commercial matters is its stability and continuity, particularly in contractual interpretation."

J asks about par 14 "On the approach to contractual interpretation, Rainy Sky and Arnold were saying the same thing.”
J you are saying effectively Arnold and Wood are the bedrock on which I should read this [case]
DCyes my lord

A very loud announcment has just be made: "Attention please we are investigating an alarm in another part of the building. Please listen for further announcments."

J says this is not a drill so we may have to leave the court.

The bongs go again: "Attention please we are investigating an alarm in another part of the building. Please listen for further announcments.”

This goes 5 times. The judge asks DC if he is happy to continue

DC [ironically] “I’m loving this."

We struggle on until 1250 when the judge says we still stop for lunch as it’s not fair to DC to have to negotiate these very loud announcements. We are back at 2pm. Lunch!
#postofficetrial.

Live tweets recommence shortly. A claimant has just come in with a chocolate shortbread for me to eat in the next break….

… I am declaring this chocolate slice for the record (with gratitude). If anyone from the Post Office side wishes to buy me cake, or similar it will be gratefully received.

QCs are on their feet. The building was briefly evacuated but there are currently no alarms being investigated and soon the judge will appear. He’s late again.

These tweets are being powered by a new laptop battery btw.

This trial killed off my old one.

Right. Judge is here… my bow was exceptional. We’re off...

Hashtag is #postofficetrial - live tweeting until 4.30pm

Mr David Cavender QC is going through Marks and Spencer v BNP which is a Supreme Court judgement:
"a term should not be implied into a detailed commercial contract merely because it appears fair or...

...merely because one considers that the parties would have agreed it if it had been suggested to them.”

DC [QC for the PO btw] says JFSA QC did this.

"In most, possibly all, disputes about whether a term should be implied into a contract, it is only after the process of construing the express words is complete that the issue of an implied term falls to be considered….

… Until one has decided what the parties have expressly agreed, it is difficult to see how one can set about deciding whether a term should be implied and if so what term."

"Further, given that it is a cardinal rule that no term can be implied into a contract if it contradicts an express term, ...

…. it would seem logically to follow that, until the express terms of a contract have been construed, it is, at least normally, not sensibly possible to decide whether a further term should be implied."

"In any event, the process of implication involves a rather different exercise from that of construction. As Sir Thomas Bingham trenchantly explained in Philips at p 481:
“The courts’ usual role in contractual interpretation is, by resolving ambiguities or reconciling ..

… apparent inconsistencies, to attribute the true meaning to the language in which the parties themselves have expressed their contract. The implication of contract terms involves a different and altogether more ambitious undertaking..

… the interpolation of terms to deal with matters for which, ex hypothesi, the parties themselves have made no provision. It is because the implication of terms is so potentially intrusive that the law imposes strict constraints on the exercise of this extraordinary power.”

[DC basically saying that JFSA QC has failed to take note of this case law in his argument and therefore it fails.]

DC it is binding. it is supreme court authority. That approach also applied to relational contracts. MLF refers to "the practical realities of the relationship” - but you can’t have hindsight

We are going to “Ukraine” on the meaning of the word “coherence”. A decision of the Court of Appeal.

"Necessity to give commercial or practical coherence
v) The judge also concluded that the proposed terms were unnecessary to give business efficacy to the contract, because the contract was “effective without such terms”: [356(viii)]. However, ...

… that was based on a misunderstanding of the meaning of the business efficacy test. In Marks & Spencer plc v BNP Paribas Securities Services Trust Co (Jersey) Lts [2015] UKSC 72; [2016] AC 742 at [21] ...

… Lord Neuberger PSC suggested that “a more helpful” way of expressing Lord Simon’s requirement would be that the term would only be implied if “without the term, the contract would lack commercial or practical coherence”….

…. vi) That expression of the test was of importance in this case: if the test were whether the contract could be “effective” without it, the implied term against preventing performance would never arise. ...

… The real question was whether the result was a commercially coherent result - whether it was necessary or obvious in that sense. Just as in the case of a bilateral loan arrangement, such an implied term was necessary and obvious."

And now to Bou-Simon - another court of appeal judgement...

Can’t find the original. Here’s a write up… constructionnews.co.uk/best-practice/…

Here it is: 20essexst.com/sites/default/…

DC takeaway points - judgement must be done on time of taking contract not in hindsight - must be necessary, not just reasonable - and this presents a problem for the claimants...

DC as there are plenty of people operating perfectly happily on that contract - this is not just a jury point
J it is - what point are you making
DC I can point to many thousands of others who operate on this contract without the need to write in the 21 implied terms...

DC MLF seeks to insert. MLF needs to explain the NECESSITY for these terms to be in the contract and he doesn’t.
DC also there must be a gap or hole in the contract which needs filling. It is a high hurdle to overcome.

To imply a term into a contract is an ambitious undertaking. To imply 21 terms is extremely ambitious.

If you imply one term and accept it. You then have to re-apply the necessity test every time. It’s quite a task he’s given you with no assistance. And he has not taken you to a single one.

J have we finished with the Authorities?
DC I’m going to go to construction in a minute, but yes

[we are now at the pleading]
DC We are at now at the so-called Yam Seng term
J well it is the Yam Seng term isn’t it
DC well not entirely
J we can go round in circles on this..

Judge is querying order of examining contract. Express, agreed implied terms, relational contracts…?
[all agree express terms first and then second and third could be considered together]
J says you seemed in your opening to query existence of relational contracts at all

DC oh no they clearly are a thing, but they are a staging post and not a warrant card.
DC the danger of rolling it up in the way that attracted my Lord…
J why did you say that?
DC because you seem to be saying that you are going to consider them as a piece

J no I just want to know exactly how you propose I consider this
[getting pointy-headed here tho judge accepts this could be a semantic or miscom]
J whether it’s a relational contract or not, the Post Office say there is no duty of good faith in it
DC correct

J there is no doubt the M&S test has to be applied to see what implied terms exist
DC correct
J I understood PO opening was that relational contract don’t exist at all
DC my lord, no
J as I understand it now you accept as a legal species there is a type of contract...

J but you don’t want me to imply that a relational contract is one of inherent good faith
DC yes
J so what should I call a relational contract which does have good faith and one which doesn’t
DC a relational contract!
J what if they are exactly the same except for good faith?

[DC alights on the long term nature of relational contracts as one essential]
J so the PO case is that the SPMC can be a relational contract, but it doesn’t imply any good faith.
DC correct

DC goes back to 21 implied terms from JFSA case and says that every single one has to be proved NECESSARY. MLF passes them up without any work being done on them.

DC we now get to construction point wrt to the infamous clause 12.12

sorry that should read

DC we now get to construction point [wrt to the infamous clause 12.12]

as in - he didn’t say infamous. I did.

J wants to know whether he should be looking at 12.12 differently re the SPMC LCs and NTC LCs separately.
DC there is no material difference that is relevant to construction
J the JFSA had been created pre-2012. the parliamentary inquiry was pre 2 x cases

J but if your case is that they are essentially the same
DC it is
J alright
DC we say the point of departure for construction is that this is an agent contract

DC The relation of agency is a fiduciary one. MLF seems to be moving away from this. They say the agency agreement in this case is a hollow one and I’m not sure what that means.

DC i’m assuming for the purposes of this argument that Horizon bugs and errors are a thing and assuming that the SPMC pre-dates Horizon, but before we get to burden of proof we have to determine the meaning of the clause as it may be that interpreting burden of proof...

… or the need to evaporates.
J but if I keep an eye on Horizon aren’t I employing hindsight?
DC for the purposes of argument. let’s look at the meaning of the clause, then look at burden of proof and then how it might affect errors in Horizon

DC so - Meaning. I say Horizon generated losses do not come within 12.12 due to the meaning of the clause. Why? a) deficiency
Deficiencies have often been refrred to as shortfalls...

a deficiency refers to what has happened at a branch and the screen generated sum. The deficiency is the comparison between the two. A Horizon error does not come into this.

J that’s a circular argument. but lets assume it is correct - where in the contract does the PO seek to recover losses caused by Horizon errors
DC in 12.12, but if there is a loss generated by Horizon it is not a deficiency
[judge totally not buying this]

J you are defining Horizon generated loss as something that would never hit the radar of recovery from the SPM at all. You can shake your head but that is what this whole case is about.

J if you are going to accept for the purposes of argument that Horizon errors exist it’s not terribly helpful to define it in such a narrow way that one could never be applied to an SPM’s account

DC goes back to 12.12 - says that deficiency and cause in 12.12 simply do not refer to any Horizon error. They cannot.
J yep [judge appears to accept]
DC so to accept that H losses exist - they do not fall within 12.12 and CANNOT be recovered under it

[DC goes to burden of proof]
DC - PO have the legal burden of proving a deficiency - that it was not a Horizon generated loss. When you get to discussing burden within 12.12 - H losses have to be dealt with outside it. So you don’t need to alter the construction of 12.12

to get them out they’re already out.

So at this stage of the argument you’re dealing with all losses except Horizon

J no you’re not - you’re only dealing with carelessness, negligence or error

DC well this is where our pleading comes in. You might get losses elsewhere, (being robbed etc). You usually won’t and so most you will have to deal with.
DC goes back to “infamous” par 93 in generic defence. He did use the word “infamous” then. Who knew?

Sorry it was opening submission not generic defence

This is what is says:

93. Putting Horizon to one side, it is important to recognise the fundamental difference between Post Office’s case on clause 12 and the case advanced by Cs...

… Post Office contends that clause 12 forms part of the accounting relationship between Post Office and the SPM. It does not relate to the relationship between Post Office and the customer or Post Office and the third- party client. Post Office is...

… responsible for the transaction as a whole (and is liable as such to the third-party client and the customer), whereas the SPM is only responsible for the branch operations and for effecting transactions correctly. If the SPM makes no error, it does not matter ...

… what ultimately happens in the transaction – if an SPM correctly processes a cheque in payment for stock, it is Post Office that loses out if the cheque then bounces. This is essential context to the construction of the clause."

and this is
94. A loss caused by Horizon would not quality under section 12, clause 12
94. Post Office pleads at GDXC, para. 41 a meaning for the word “loss” in the context of the
accounting relationship between the parties...

… – in short, any event that causes a negative difference between two things: (1) the actual cash and stock position in the branch and (2) the cash and stock position for the branch derived from...

… the transactions conducted in the branch. This would, on the natural meaning of the word “loss”, include both (1) physical losses, such as mislaying or stealing cash from the branch (2) transaction...

… losses in the branch, such as taking too little payment for a given item of stock (e.g. taking £10 in payment for an item of stock with a price of £2069, resulting in a £10 loss on that transaction)."

[JFSA QC has just been told off for muttering too loudly]

DC the 12.12 clause does not expressly allocate the burden of proof.

DC is it implicit? In my submission, no.

DC in so far as you want to go down that route. The first thing the SPMR has to do is show the losses were not caused by his assistant. That is a strict liability. The negligence carelessness or error only comes in with regard to them.

DC so the SPM HAS TO PROVE FIRST it was not his assistant THEN he has to prove it wasn’t his error or negligence. That’s on him. Otherwise the proof burden would be on Post Office. The SPM is in a much better position to know what happened in branch.

DC my learned friend has never pleaded the proper construction of 12.12 which you can’t crit the PO for. MLF straw man suggests we were putting Horizon losses on SPMs. We never said that.

It’s a trojan horse. Horizon is outside 12.12

[we are on a 10 minute break. This is a very interesting argument DC is developing here. Horizon errors outside 12.12, burden of proof within 12.12 on SPM]

We are back from the break. one more hour of this to go today #postofficetrial

DC if an SPM puts a loss into dispute then the burden is on the PO on balance to prove it is not a H generated loss. because it is a generally reliable system it is not a Horizon generated loss and that possibility should be excluded

DC so it becomes a 12.12 loss and the SPM is liable for it and must prove it was not by his assistant or his error.
DC - standing back… put H losses to one side. If there is a loss the PO says overwhelming likelihood it is an error in branch.

DC that’s not to say things can go wrong, they might and the SPM can adduce evidence to show it did go wrong.

DC [talking about LCs] there were errors made, and thefts in fact by temp SPMs.

J anything that has been settled centrally and disputed you accept that the burden is on the PO to find source of loss, but H would be discounted on the basis it is generally reliable
DC yes
J if that’s right tho where does your inference come in?

DC that H is generally reliable
J that’s what the PO has done since it was rolled out in 2000
DC yes that’s the situation on the ground, but I’m looking at the construction
J yes I’m aware it’s the PO case that H is generally reliable - it’s part of the reason why we are here..

J let’s use Mrs Stubbs as an example. If you meet the burden of proof and apply the inference (that H is generally reliable) it’s for Mrs S to prove that the error is caused by electrical error
DC yes.

J but in your second example that there has been no dispute raised, and the account has been published. The burden is on them…
DC no it’s not a burden. It’s the law of agency…
J but it’s still on them. So apart from the declaration of the account how is the process any...

… different between the two examples.
DC because the SPM can’t just say all my accounts are all wrong - they have to identify where it is wrong. it is not a burden. it is a process - if there needs to be necessary co-operation, the PO would provide that. it has to.

DC if, on the flip side the SPM has been false accounting for 6 months, the duty of nec co-operation diminishes.

DC now goes to Transaction Corrections - TCs. Made to correct errors often made by SPMs - can be by others, but the scale of this problem is really very small.

Take an average of 140,000 TCs pa, and split that between the 11,500 SPMS you get about 1 per month per branch. It’s not that big a deal.

Whilst there will be clusters - some will have more than others. But it’s not a massive problem.
[goes to AvdB WS]
you’ll see there the number of transactions per branch 900 to 2500 depending on the size of the branch.

MLF suggests there’s almost an avalanche of TCs - that’s not the case. The impression given - that you have piles of these the whole time… it is the wrong impression.

TCs don’t have a life outside of the accounts - they become part of the accounts.

DC goes back to 12.12 - asks us to look at claimants closing 153 "153. Cs have not identified any specific factual matrix said to bear on the meaning...

… of the word “loss” in clause 12. There is no good reason to give it anything other than its ordinary meaning, which includes an accounting / transaction loss."

they say losses doesn’t mean losses, but economic losses - so not the branch, but the loss to PO and the downstream effect it has on PO and its clients.

DC it has nothing at all to do with this. It is about what happens in branch. that’s the frist thing they do. The second thing they do is that the losses must be established after due inquiry. That’s not a matter of construction - they’re implying a term.

DC we think these are not sensible methods of construction.

They are ignoring the words or putting in words they wish were in there.

J and you say 4.1 (in the NTC) is the same as 12.12
DC well it is slightly different in that it makes the liability strict on the SPM’s assistants and the SPM

[sorry that is - liability for losses]
DC what 4.1 does include both what was in 12.12 and 12.5
J it does seem to roll them all up together

DC it does.

4.1 Liability for PO cash and stock
liability for any cash and stock loss except loss arising from third party which SPM could not have prevented or taking reasonable care
J that’s a mirror, reflection or evolution of SPMC 12.4
DC also any deficiencies or shortfall...

… both important words. It’s dealing with accounting losses. It’s going beyond cash and stock.

PO says deficiencies and shortfall in 4.1 have same meaning as 12.12 - ie Horizon losses are outside 12.12
J clarifying on scope of liability
DC pointing out strict liability in 4.1 - there is no carve out for negligence or error

J querying strict liability claim on 4.1 - notes “taken reasonable care” and asks if they’d taken reasonable care how they could be liable
DC that bit is only about robbers
J is part B strict liability as well?
DC yes

J and DC having a long discussion about the construction of 4.1 and whether and how strict liability applies.
They agree 4.1 is strict liability
J but 12.12 is not because carelessness, negligence or error connotes fault
DC agrees

[There are 2700 SPMs on the SPMC]
J some transferred onto the NTC and those who did so gave up their rights on the SPMC. Mr Green’s suggestion NTC is the child of the SPMC might seem a bit ambitious.

J but to those claimants pre-NTC this is not relevant
DC yes

J when did NTC come in?
DC 2012

J so save for anything that happened under a criminal act an SPM under NTC would have wider liabilty than an SPM on the SPMC

[DC drily notes we are about to deal with “everyone’s favourite subject” - relational contracts.
We won’t be on it long tho as judge indicates he has to leave at 1615.]

We are on necessary cooperation:

from the defendants closing: 248. The Necessary Cooperation Term is in many respects similar to the Stirling v Maitland Term. ...

… But it creates a broader and more powerful obligation in that it may require positive action to facilitate the other party’s performance, rather than merely not hindering it….

…. It is nonetheless bounded in its operation by the express terms of the agreement and the need to make the contract work in accordance ...

…. with those express terms: see Lewison, at 6.15 {A1.3/3/20}.
249. In James E McCabe v Scottish Courage Ltd136, Cooke J expressed the essence of a duty to cooperate as follows at para. 18"

Now into Agreed Implied Terms which are set out partly in PO closing statement.

He is comparing Agreed IMplied Terms with 21 contested implied terms.

Says they are onerous - eg to investigate shortfalls

DC says it chips away the agency relationship and chips away and undermines or are in conflict with the Agent’s obligation to Account. That is very important and should be noted.

[we’re winding up now - PO QC has been very cogent and clear throughout. Wants judge to disregard lead claimants evidence and any thoughts he might have about Horizon...

… as these apply to future trials. He wants judge to look at the authorities as they relate to the type of contract SPMs are given...

… and disregard the case built up JFSA as “scattergun"]

We are starting at 10am tomorrow so as to hit the 4.30pm finish. We, I think, are going to spend a lot of time on the nature of Agency, I think.

I’m going to get these tweets posted up asap on postofficetrial.com

And then do you a write up once I get the court transcripts.

If you’ve enjoyed or endured any of these tweets or just want to put a few quid in the tip jar, please go to the paypal button on postofficetrial.com - I am only here thanks to the generosity of my backers.

@threadreaderapp unroll please

Incidentally if you want to read the Post Office closing submission, it is here: scribd.com/document/39495…

and the JFSA closing is here:

scribd.com/document/39479…

There’s a good couple of hours of reading, right there!

#postofficetrial