Bates V Post Office: Opening Submissions - Bates and Others

THE POST OFFICE GROUP LITIGATION
Claim No. HQ16X01238, HQ17X02637 & HQ17X04248
IN THE HIGH COURT OF JUSTICE
QUEEN’S BENCH DIVISION

Before The Hon. Mr Justice Fraser
B E T W E E N:-
ALAN BATES & OTHERS

Claimants
– and –
POST OFFICE LIMITED

Defendant
CLAIMANTS’ WRITTEN OPENING

FOR TRIAL OF COMMON ISSUES
Abbreviations & terminology
The following abbreviations are used:-
Lead Claimants, where abbreviated, are “LCs” and are individually referred to by surname
Generic pleadings: Particulars of Claim “GPOC”; Defence “GDef”; Reply “GReply”
Individual pleadings: Particulars of Claim “IPOC”; Defences “IDef”; Replies “IReply”
References to Subpostmasters include all operators
References to Subpostmaster contracts are to the SPMC and NTC
References
References are generally as follows:-
Electronic trial bundle: in square brackets, in the format [Bundle/Tab/Page]
Witness statements: Surname, §para, e.g. Bates, §5
Individual pleadings: Surname/Pleading/ Paragraph number e.g. Bates/IPOC at §14
Suggested Pre-Reading and a table of Contents are set out below.
Internal references within this document are generally provided with an embedded hyperlink;
and headings and sub-headings are all viewable in the navigation pane.
Annexes amplify certain issues; their internal page numbers are prefaced with an ‘A’.
A/1/1
SUGGESTED PRE-READING
Suggested Pre-Reading
The Claimants respectfully invite the Court to read the following (time estimate 2 days):
(1) Claimants’ Written Opening (and Annexes, as the Court may wish) [A/1]
(2) Defendant’s Written Opening [A/2]
(3) Generic Pleadings:
Amended Generic Particulars of Claim [B3/1]
Generic Defence [B3/2]
Generic Reply [B3/3]
(4) Individual Pleadings (for some or all six Lead Claimants):
Individual Particulars of Claim [B5.1/2] [B5.2/2] etc
Individual Defences [B5.1/3] [B5.2/3] etc
Individual Replies [B5.1/4] [B5.2/4] etc
(5) Claimant’s witness statements (in chronological order):
Alan Bates [C1/1]
Pamela Stubbs [C1/2]
Mohammad Sabir [C1/3]
Naushad Abdulla [C1/4]
Elizabeth Stockdale [C1/6]
Louise Dar [C1/5]
(6) Defendant’s witness statements: [C2/1] - [C2/14]
(7) Contract Documents:
Standard SPMC 1994 and 2006 versions [D2.1/3] and [D2.1/6]
NTC (Preface and Conditions) [D1.6/4/3-34] and [D1.6/3/1]
A/1/2
CONTENTS
Contents
INTRODUCTION .................................................................................................................................1
Preliminary Observations ............................................................................................................. 1

Relational Contract & Implied Terms ......................................................................................... 2
Utility of the Common Issues Trial.............................................................................................. 3
Sequencing of Issues ...................................................................................................................... 4
Interdependence of Issues............................................................................................................. 7
Statements of Case ......................................................................................................................... 8
Contracts ....................................................................................................................................... 10
Witness Evidence ......................................................................................................................... 17
SECTION A: FACTS..........................................................................................................................19
Experience Prior to Contracting ................................................................................................. 19

Appointment Process Overview ................................................................................................ 21
Commitment to and Investment in the Relationship .............................................................. 27
Security of the Position ................................................................................................................ 29
Features of the Relationship ....................................................................................................... 31
Assistants ...................................................................................................................................... 32
Training Subpostmasters ............................................................................................................ 33
Support and the Helpline............................................................................................................ 36
Apparent Shortfalls and Horizon .............................................................................................. 37
SECTION B: COMMON ISSUES .....................................................................................................39
Issue 1: Relational Contract ....................................................................................................... 39

Issues 2 and 3: Implied Terms ................................................................................................... 55
Issue 4: Supply of Goods and Services Act 1982 ..................................................................... 83
Issues 5 and 6: Onerous and Unusual Terms .......................................................................... 89
Issue 7: Unfair Contract Terms.................................................................................................. 97
Issues 8 and 9: Liability for Alleged Losses ........................................................................... 107
Issues 10 and 11: Post Office as Agent.................................................................................... 123
Issues 12 and 13: Subpostmasters as Agents ......................................................................... 131
Issues 14 to 21: Suspension, Termination, etc ....................................................................... 141
Issues 22 and 23: Assistants ..................................................................................................... 161
SECTION C: CONCLUSION .........................................................................................................165
–i–
A/1/3
CONTENTS
Annex I: Contractual Construction ...................................................................................................1
Annex II: Issue 1 – Relational Contract ............................................................................................7
Annex III: Issues 2 and 3 – Implied Terms .....................................................................................23
Annex IV: Issue 4 – Supply of Goods and Services Act ...............................................................33
Annex V: Issues 5 and 6 – Onerous and Unusual Terms .............................................................37
Annex VI: Issue 7 – Unfair Contract Terms ....................................................................................45
Annex VII: Issues 10 and 11 – Post Office as Agent......................................................................55
Annex VIII: Issues 12 and 13 – Subpostmasters as Agents ..........................................................63
Annex IX: Issues 17 to 18 – True Agreement .................................................................................67
Annex X: Issues 22 and 23 – Assistants ..........................................................................................71
– ii –
A/1/4
INTRODUCTION
Preliminary Observations
INTRODUCTION
1. The Common Issues Trial will determine important aspects of the legal relationship
between Post Office and Subpostmasters, which are central to these proceedings.
2. The Claimant regards Liability for Shortfalls and the Relational Contract issues as central
to the resolution of this Group Litigation (amplified briefly below). That said, the
Claimants would respectfully make the following preliminary observations:
(1) Express Terms: It remains difficult to identify the universe of express terms
in the various documents governing the relationship between the parties as at
any particular date, or to do so with confidence and precision.
(2) Subpostmaster Contracts: Nonetheless, the SPMC and the NTC are the
primary sources of the parties’ respective contractual obligations. Their
provisions fall to be construed in the context of the contract as a whole,
including all contractually binding obligations incorporated therein.
(3) Construction of Express Terms: Issues as to the proper construction of the
express terms of the contracts broadly fall into two categories: (a) Liability for
Alleged Losses; and (b) Suspension, Termination, Compensation for Loss of
Office and Subsequent Appointments.
(4) Need for Implied Terms Agreed: Despite the volume of documents actually
or potentially having contractual effect (see: Contracts, on p.10), both parties
agree that the express terms did not fully describe the agreement between the
parties, such that it was necessary to imply additional terms into the contracts.
The usual battle over whether any term(s) are to be implied at all is not in play
in this case. The parties agree that it is necessary to imply terms. However,
they disagree as to the terms to be implied.
(5) Real Target: For the Claimants, the real target of their case on the Common
Issues is the Defendant’s extreme and/or opaque case as to the legal
relationship between the parties – which gives rise to the Common Issues.
–1–
A/1/5
INTRODUCTION
Relational Contract & Implied Terms
Relational Contract & Implied Terms
3. As noted above, one of the most important aspects of the legal relationship is whether or
not Post Office was subject to certain duties by reason of the Subpostmaster contracts
being relational contracts (as understood in Yam Seng, below): namely, duties of good
faith, fair dealing, transparency, cooperation, and trust and confidence. The Relational
Contract issue is dealt with below under Issue 1: Relational Contract, on p.39; and
amplified in Annex II: Issue 1 – Relational Contract.
4. Not only will this issue have an important, if not central, bearing on the outcome of these
proceedings, but its determination may overlap with (or obviate any distinct need for) a
number of the free-standing implied terms (or incidents of those terms) contended for by
the Claimants (Issues 2 and 3: Implied Terms, on p.55).
5. To be clear, the Claimants do not contend for the implication of terms which seek to exact
a higher degree of cooperation than that which could be defined by reference to the
necessities of the contract. On the contrary, they contend for the implication of terms
which reflect standards of conduct (e.g. the degree of cooperation) inherent in and
necessary to the parties’ respective obligations, and/or necessary to the commercial or
practical coherence of the contracts (Issues 2 and 3: Implied Terms). But it is salient
background to note that the implication of the terms in Yam Seng v International Trade
Corp [2013] EWHC 111 (QB) [2013] 1 All ER (Comm) 1321 (“Yam Seng”) imported, by way
of the terms implied, shared values and norms of behaviour, in the light of a considered
analysis of the nature of the agreement itself – findings as to which are matters of mixed
fact and law for this Court to determine.
6. The evidential picture which emerges from the witness statements of the Lead Claimants
(as to their expectations) at least subjectively supports the implication of duties of good
faith, fair dealing, transparency, cooperation, and trust and confidence. It remains to be
seen how far the Defendant’s evidence will go to establish that the Defendant did not
share such expectations, including as to honesty and fair dealing.
7. For reasons developed below, the Claimants will submit that these are obviously
relational contracts, into which the duties are, in any event, to be implied in this case.
–2–
A/1/6
INTRODUCTION
Utility of the Common Issues Trial
Utility of the Common Issues Trial
8. There is an important difference of approach between the parties, of which the Court
should be aware from the outset, as to the clarity of the outcome to be achieved by the
Common Issues Trial. Put shortly, the Claimants seek greater clarity; the Defendant
disputes that that can be achieved. In particular, the Defendant has refused, thus far, to
be drawn as to the import and effect of the two implied terms which it admits.
9. It ought to be uncontroversial that the purpose of the Common Issues Trial is to determine
important aspects of the legal relationship between Post Office and Subpostmasters, and
thereby to clarify those issues for the purposes of resolving this Group Litigation. The
Court has emphasised to the parties the need to make progress in resolving the litigation.
The Defendant can be in no doubt about that.
10. Despite this, and being pressed upon the issue for over a year, the Defendant has
staunchly refused to be drawn into providing any clarity as to the incidents of the implied
terms which it admits and to what extent the Defendant’s admissions resolve, or at least
narrow, disputes under Issues 2 and 3: Implied Terms. The Defendant takes this position
notwithstanding the agreed words in brackets, having been included in Issue 2 “or
incidents of such implied terms”.
11. As explained in more detail below (under Uncertainty as to implied terms (or incidents)
admitted, on p.65), the Defendant has stated that this is a matter to address in submissions
and has declined to explain the impact of its admitted terms.
12. In short therefore, the Claimants do not yet know the case which the Defendant will
advance, even as to the incidents of the admitted implied terms. The Defendant’s
approach would have the effect, even if not the aim, of undermining the utility of the
Common Issues Trial, by seeking to inhibit the Court from clarifying the legal relationship
between the parties which is the very object of the Common Issues Trial.
13. It would certainly assist the resolution of the Common Issues if the Defendant were to
clarify its position as to the effect of its admitted implied terms and which of the Claimants
implied terms conflict with which express provisions of the contracts.
–3–
A/1/7
INTRODUCTION
Sequencing of Issues
14. Although the Relational Contract issue plainly looms large, it is not the first issue for
ultimate resolution. The order in which the Court seeks to resolve the issues is important,
as the well-known authorities make clear: although the proper construction of a contract
involves an iterative process, it is clear that express terms must be identified and
construed before the Court considers the characterisation of the contract and the
implication of any terms and the existence (see: Annex I: Contractual Construction, on
p.A1).
15. The existence, nature, scope and effect of any agency relationship fall to be determined in
the light of any contractual provisions and the conduct of the parties.
16. So, although contractual construction is plainly an iterative process, the Claimants
respectfully submit that the correct order in which the Court should ultimately determine
the issues, at least broadly, is as follows:-
(1) Identification of Express Terms: Identify express terms which may form
part of the contract (as varied over time), including:
(a) terms contained in documents signed by the Subpostmasters;
(b) terms contained in other documents to which those signed documents
expressly refer by name (e.g. “the Operations Manual”);
(c) terms contained in documents falling within categories of documents in
(a) or (b);
(d) individual variations with particular Subpostmasters (e.g. requiring
Subpostmasters to agree not to dispute, and to pay immediately, any
subsequent apparent shortfalls, as a condition of not immediately paying
an existing disputed alleged shortfall).
(2) Construction of Express Terms: Identify the true construction, scope and
effect of the express terms, relevant to the Common Issues (possibly in the
following order):
–4–
A/1/8
INTRODUCTION
(a) the terms providing for liability for alleged losses i.e. Section 12 Clause
12 for the SPMC and paragraph 4.1 of the NTC (Issues 8 and 9:
Liability for Alleged Losses);
(b) the terms identified in Issue 5 (rules, instructions and standards; classes
of business – see p.89); accounts and liability for loss; assistants;
suspension (Issue 14 – see p.142); termination (see also Issues 15 to 18 –
see p.142 to 148); no compensation for loss of office (see also Issues 19
and 20 – see p.153);
(c) the terms relating to appointing prospective purchasers of a
Subpostmaster’s business, in order to discern what if any restrictions
there were on the Defendant’s discretion in that regard (Issue 21 – see
p.155);
(d) the terms in Issue 22 (p.161), to determine whether they purport to
confer a benefit on Assistants for the purposes of section 1 of the
Contracts (Rights of Third Parties) Act;
(e) the terms relating to the responsibility of Subpostmasters to train
Assistants (Issue 23 – see p.161)
(3) Implied Terms:
(a) Relational Contract (Issue 1: Relational Contract);
(b) Implied Terms as to the following (Issues 2 and 3: Implied Terms – the
terms being enumerated below at paragraph 150, on p. 56):
(i) Training and Support1 (1)
(ii) Horizon and recording transactions2 (2)
(iii) Investigations and shortfalls3 (3) to (12)
(iv) Exercising of powers and discretions4 (13) to (17)
1 GPOC at §64.1 [B3/1/35]

2 GPOC at §64.1A to 64.2 [B3/1/35]
3 GPOC at §64.3 to 64.11 [B3/1/36]
4 GPOC at §64.12 to 64.18 [B3/1/37]
–5–
A/1/9
INTRODUCTION
(v) Reasonable care5 (18)
(c) Whether the Defendant supplied Horizon, the Helpline and / or
training / materials as services in the course of its business, such that there
was an implied term requiring the Defendant to carry out any such
services with reasonable care and skill, pursuant to section 13 of the
Supply of Goods and Services Act 1982 (Common Issue 4).
(4) Onerous or Unusual Terms: Whether any such terms were onerous or
unusual; and if so what steps would be required to draw them to the attention
of Subpostmasters (Issues 5 and 6: Onerous and Unusual Terms, on p.89).
(5) UCTA: Whether any or all of the terms identified in Issue 5 are unenforceable
under the 1977 Act (Issue 7: Unfair Contract Terms).
(6) Agency: The agency of the Defendant and Subpostmasters respectively:
(a) The Defendant as agent: Whether the Defendant was the agent of
Subpostmasters as alleged and if so, what obligations followed (Issues
10 and 11: Post office as Agent)?
(b) Subpostmasters as agents: What was the extent and effect of the agency
of Subpostmasters to the Defendant and did Subpostmasters bear the
burden of proving accounts to be incorrect (Issues 12 and 13:
Subpostmasters as Agents)?
5 GPOC at §64.19 [B3/1/38]
–6–
A/1/10
INTRODUCTION
Interdependence of Issues
Interdependence of Issues
17. As noted in the Preliminary Observations above, the real target of the Claimants case on
the Common Issues is the extreme construction of the legal relationship between the
parties, for which the Defendant contends, one thread of which is highlighted at
paragraph 52 of the GReply (as to liability for alleged shortfalls).
18. Success on one issue may diminish the significance or soften the arguments on another.
The construction of express terms may well inform the need for and content of implied
terms.
19. For example, the burden of proof in establishing liability for shortfalls (Issues 8 and 9:
Liability for Alleged Losses) is likely to inform the implication of related terms or their
content.
20. Equally, the construction of express terms (such as those governing liability for shortfalls)
together with any implied terms, will be essential to the Court’s assessment of whether
those express terms were onerous (Issues 5 and 6) or unfair under the Unfair Contract
Terms Act 1977 (Issue 7).
21. Therefore, the scope and effect of any implied terms must be determined with clarity,
before the Court considers Issues 5 to 7. That is one of the reasons why the Claimants
have, as mentioned above, sought to clarify the reality of the Defendant’s concessions in
admitting the implication of the Stirling v Maitland Term6 and the Necessary Cooperation
Term.7 Unfortunately, the clarity sought has not been forthcoming and the Defendant has
refused to explain the content of its admitted terms (see below, at p.63).
22. It is for this reason that the Claimants have characterised many of the Common Issues as
interdependent and have commended to the Court the sequencing of determining the
issues above.
6 GDef at §105(1) [B3/2/47]

7 GDef at §105(2) [B3/2/47]
–7–
A/1/11
INTRODUCTION
Statements of Case
Statements of Case
23. The Court is very familiar with the generic pleadings in this case. The Claimants confine
their observations to the following particular points, as to how they broadly relate to the
individual pleadings.
Generic Statements of Case
24. The Generic statements of case were prepared on all issues (i.e. not specific to the
Common Issues Trial). The GPOC encompass allegations common to each of the
Claimants (or groups of them) and provide the foundation for core parts of the IPOCs
subsequently served by the LCs for the Common Issues Trial, in particular: Section B
Contract Terms – Subpostmasters; and Section E – Agency.
Individual Statements of Case
25. Individual statements of case for each party, in turn, are pleaded in the light of those
generic pleadings and indeed refer back to and highlight particular aspects of the
respective generic cases. The IPOCs have adopted a common structure in so far as could
be accommodated by the facts of each particular case:-
25.1. Section A primarily contains the individual facts (grouped, where possible,
under headings common to other Lead Claimants); and
25.2. Section B, which addresses the common issues (these are to a large extent set
out under headings common to the Lead Claimants, albeit following the
course of the individual facts pleaded in Section A).
26. This division between Section A (Facts) and Section B (Common Issues) is therefore
reflected in this Written Opening (see: SECTION A: FACT, on p.19; and SECTION B:
COMMON ISSUES, on p.39, below). The Lead Claimants have provided more detail in
relation to the Common Issues in the Annexes, in case this is of assistance.
–8–
A/1/12
INTRODUCTION
Statements of Case
27. Significant features of the Defendant’s case include:
27.1. a lack of clarity and definition to the express terms applicable between the
parties from time to time, or even a reasonably complete overview of how
these changed over time;
27.2. the Defendant not nailing its colours to the mast as to the contractual
significance of documents provided (or said to have been provided) to
Subpostmasters generally or even the Lead Claimants individually;
27.3. a high level of generality, in terms of what events took place or more usually
“would have” taken place, when, why and how;
27.4. opacity as to the import of the implied terms which the Defendant has
admitted and, in particular, the extent to which any of the terms contended
for by the Claimants are incidents of those terms (despite the wording of Issue
2, as agreed between the parties and ordered by the Court); and
27.5. assertions in the IDefs which are expressly stated to be confined to issues of
liability or breach.8
8 See, for example, Bates/IDef at §44 to 49 [B5.1/3/22-26]
–9–
A/1/13
INTRODUCTION
Contracts
Contracts
SPMC and NTC
28. The Defendant contracted with the LCs on two main types of standard form contracts: the
SPMC (Bates, Stubbs, Sabir, Abdulla) and the NTC (Stockdale, Dar).
28.1. The SPMC is a set of standard contract terms, of which there are a number of
different versions, including the Standard SPMC and the Modified SPMC (the
Defendant describes the main difference between these versions as being in
respect of remuneration structure).9 The Defendant amended these contracts
in such a way that later versions were produced with a list of variations at the
front of the 1994 version (i.e. the variations were not actually made in the body
of the 1994 contract itself). The versions of the SPMC relevant to Bates and
Stubbs are the 1994 Standard SPMC [D2.1/3] (which was Appendix A to the
GPOC); for Sabir the 2006 Standard SPMC [D2.1/6] and for Abdulla the
2006 Modified SPMC [D2.1/4].
28.2. The Defendant’s NTC standard terms also had minor variations (for offsite or
onsite variants). Stockdale and Dar contracted on these terms, by an
Agreement which was in the form of a Preface with Appendices, incorporating
standard NTC terms. For Stockdale see [D1.6/4/1] and [D1.6/3/3-34] and Dar
at [D1.5/2].
29. Those are the two types of contract to be construed at the Common Issues Trial.
30. By way of background, there are other forms of contract before the Court, including the
Temporary SPMC and a Franchise Agreement (Appendices B and D to the GPOC); but
none of the LCs contracted on that basis, and the Court is not being invited to make
findings on the Common Issues in respect of any Claimants who contracted on that basis.
9 Beal , §22 [C2/2/4]
– 10 –
A/1/14
INTRODUCTION
Contracts
Other Contractual Documents
31. As foreshadowed above, the Claimants have found it difficult to identify the universe of
express terms in the various documents said to govern the legal relationship between the
parties, or how that changed over time – or at least to do so with confidence and precision.
32. There are a wide range of documents which the Defendant sought to incorporate by
reference or otherwise require LCs to agree or abide by. These differ by LC, but certainly
include:
32.1. Conditions of Appointment, required by the Defendant at or following
interview (Sabir and Abdulla).10
32.2. Acknowledgement of Appointment, signed on branch transfer / opening day
(all LCs except Stubbs, and for Sabir, not the Crossflatts branch ).11
32.3. Manuals, instructions and other documents, which Post Office sought to
incorporate by reference, by the SPMC,12 NTC,13 and/or Acknowledgement of
Appointment.14
10 Sabir [D1.3/1/1] and [D1.3/3/1], Abdulla [D1.4/1/1]

11 Bates [D1.1/2/1]; Sabir [D1.3/4/1]; Abdulla[D1.3/3/1]; Dar [D1.5/3/1]; Stockdale [D1.6/5/1]
12 See GPOC at §51.1 for all relevant SPMC terms, which include Section 1, paragraph 18: "Changes
in conditions of service and operational instructions, including those which are agreed with the National
Federation of Sub-Postmasters, will appear from time to time in Counter News or by amendment to the
Contract. Such changes and instructions are deemed to form part of the Subpostmaster's contract." And
Section 1, paragraph 19: "All instructions received from the Regional General Manager should be carried
out as promptly as possible."
13 See GPOC at §51.1 for all relevant NTC terms which include Part 1, paragraph 1.1 "The Operator
agrees to operate the Branch on behalf of [the Defendant] in accordance with the express terms of
the Agreement (including for the avoidance of doubt the Manual)", and the definition of Manual
at Part 5 paragraph 1.1 as follows: “The following list includes the manuals, guidelines and instructions
which currently come under the definition of "Manual": - Local Post Office Operations Manual - Horizon
online administration and equipment operations manual - National lottery operations manual (where branch
offers this product) - Ordering stock and operations manual (where branch offers this product) - Post Office
outreach services operations manual (where applicable) - Post Office paystation operations manual - Security
operations manual - Horizon system user guide (online) - Horizon online help (online) - Branch Focus - Post
Office branch standards - Post Office Ltd's Accessibility Guide - Branch Conformance Standards - Post
Office cash and secure stock remittance services manual (online) - FOS project operations manual - FOS
project training workbook (x2) - Mailwork specification (where applicable) - Any other instructions to
operators or updates to such instructions issued by [the Defendant] from time to time".
– 11 –
A/1/15
INTRODUCTION
Contracts
32.4. Variations (below) including, for example, requiring agreement to pay all
alleged shortfalls immediately, going forward, as a condition of paying an
existing alleged shortfall back by instalments (para. 36.2, below).
Date of Contractual Construction – Variations
Appointment
33. The contracts for each of the LCs fall to be construed on the date each of them accepted
their appointment, usually by signing contractual documents prior to branch transfer
and/or on the date of branch transfer (or, as may be relevant, at the date of any variation).
For each of the LCs the dates on which they appear to have contracted are:
33.1. Bates: 31 March 1998 (signed three page Conditions of Appointment
document;15 and 8 May 1998 (signed Acknowledgement of Appointment, day
after branch transfer);16
33.2. Stubbs: 4 August 1999 (the date she agreed to take on the role of
Subpostmaster);17
33.3. Sabir: Cottingley branch: 19 July 2006 (signed Conditions of
Appointment);18 and 8 September 2006 (signed Acknowledgement of
Appointment);19
Crossflatts branch: 19 August 2006 (signed Conditions of
Appointment);20
14 E.g. for Abdulla [D1.4/3/1], “I accept The Appointment as Subpostmaster at CHARLTON and agree to
be bound by the terms of my contract, and by the rules contained in the book of rules and the instructions
contained in those postal instructions issued to me.” D’s case is expressed without limitation, that these
phrases “were obviously intended to mean (and must have been understood by the Claimant to mean) the
rules and instructions issued by Post Office to the Claimant from time to time, including those contained in
the Operations Manual” (Abdulla/IDef at §25(1) [B5.4/3/10]).
15 Bates/IPOC at §15 [B5.1/2/5]
16 Bates/IPOC at §17 [B5.1/2/5]
17 Stubbs/IPOC at §5, 88 [B5.2/2/2] and [B5.2/2/19]
18 Sabir/IPOC at §12, [B5.3/2/4]
19 Sabir/IPOC at §16, [B5.3/2/5]
20 Sabir/IPOC at §12, [B5.3/2/4]
– 12 –
A/1/16
INTRODUCTION
Contracts
33.4. Abdulla: 11 December 2006 (signed Conditions of Appointment);21
and 24 January 2007 (signed Acknowledgement of Appointment);22
33.5. Stockdale: 17 February 2014 (signed Agreement);23 and 8 May 2014 (signed
Acknowledgement of Appointment);24
33.6. Dar: 2 July 2014 (signed Agreement);25 and 19 November 2014 (signed
Acknowledgement of Appointment).26
Variation - Introduction of Horizon
34. For Bates and Stubbs, their contracts also fall to be construed on the date Horizon was
introduced during their appointment, as this marked a fundamental change to how they
were required to work, away from the situation that prevailed at the date they had
originally contracted with the Defendant.27 It was therefore a material variation. The
relevant dates are:
34.1. Bates: in or around October 2000;28
34.2. Stubbs: mid 2000.29
Variation – Assistants
35. It is the Defendant’s evidence that variations were applied to the Subpostmaster Contract,
including in July 2006, in respect of training assistants.30 Stubbs (appointment 1999 – 2010)
was unaware of this alleged variation, but on the Defendant’s case, her contract would
again fall to be construed as at July 2006 when the Defendant contends the variation was
made.
21 Abdulla/IPOC at §12, [B5.4/2/4]

22 Abdulla/IPOC at §15, [B5.4/2/5]
23 Stockdale/IPOC at §13 [B5.6/2/4]
25 Dar/IPOC at §16 [B5.5/2/5]
26 Dar/IPOC at §20 [B5.5/2/6]
27 GPOC at §14 [B3/1/5], Bates/IPOC at §85 [B5.1/2/24] and Stubbs/IPOC at §88 [B5.2/2/19]
28 Bates/IPOC at §40 [B5.1/2/12], Bates §102 [C1/1/23]
29 Stubbs/IPOC at §16[B5.2/2/5], Stubbs §38-42 [C1/2/9-10]
30 Beal, §38.9 [C2/2/8]
– 13 –
A/1/17
INTRODUCTION
Contracts
Variation - New Conditions
36. For Dar and Stockdale, their contracts also fall to be construed on the date that the
Defendant imposed new / further conditions upon them, as follows:
36.1. Dar: letter dated 28 August 2015 following a period of suspension;31
36.2. Stockdale: email dated 5 November 2015, after deductions taken from her
remuneration.32
Liability for Loss
37. An important issue before the Court is the interpretation of the clauses in the contracts
which govern liability for loss, particularly as to the burden of proof and the scope and
basis of such liability.
38. In the SPMC the relevant term is Section 12 Clause 12:
"The Subpostmaster is responsible for all losses caused through his own negligence, carelessness
or error, and also for losses of all kinds caused by his Assistants. Deficiencies due to such losses
must be made good without delay."
39. The short point is that the literal words of this provision confine the Defendant’s ability
to hold a Subpostmaster responsible for losses to those which were “caused through his own
negligence, carelessness or error”. That is plainly a matter for the Defendant to establish, if
and when it is queried or disputed by the Subpostmaster. Furthermore, as to liability for
Assistants, on a true construction of this provision, a Subpostmaster is liable “also for
[such] losses of all kinds caused by his Assistants” that is to say, any such
losses caused by Assistants, regardless of whether it is due to the negligence, carelessness
or error by the Assistant or by the Subpostmaster, since the Subpostmaster is effectively
vicariously responsible for what his or her Assistants do.
40. Any interpretation imposing wider liability for Assistants would defy commercial
common sense.
31 Dar/IPOC at §60.2 [B5.5/2/15]

– 14 –
A/1/18
INTRODUCTION
Contracts
41. This is easy to demonstrate by the following example: If the Defendant accepts, as it
appears to, that Subpostmasters would not be liable if, for example, they were
personally at the terminal when it was afflicted by the (known) Payments Mismatch bug,
any wider liability for Assistants falls into sharp focus. Does the Defendant really contend
that if, perchance, it was an Assistant at the terminal when it was so afflicted, the
Subpostmaster would then be liable? Apparently so; this appears to be precisely the
case advanced by the Defendant, at paragraphs 94(2) of the Generic Defence,33 repeated in
the Individual Defences.34 It is demonstrably absurd and such a construction ought to be
rejected, if persisted in by the Defendant at trial.
42. In the NTC it is Part 2, paragraph 4.1:
"The Operator shall be fully liable for any loss of or damage to, any Post Office Cash and
Stock (however this occurs and whether it occurs as a result of any negligence by the
Operator, its Personnel or otherwise, or as a result of any breach of the Agreement by the
Operator) except for losses arising from the criminal act of a third party (other than
Personnel) which the Operator could not have prevented or mitigated by following [the
Defendant's] security procedures or by taking reasonable care. Any deficiencies in stocks
of Products and/or any resulting shortfall in the money payable to [the Defendant] must
be made good by the Operator without delay, so that, in the case of any shortfall, [the
Defendant] is paid the full amount when due in accordance with the Manual".
43. The Claimants contend that a natural reading of this provision really imposes liability in
similar terms to Section 12 Clause 12 of the SPMC and any ambiguity resolved against the
Defendant. Certainly, the phrase in the first parentheses appears to contemplate fault as
an ingredient of liability, when it is read as a whole.35
44. However, the Court is already aware that there is a central dispute between the parties as
to the burden of proof when a Subpostmaster queried or disputed an alleged shortfall
33 [B3/2/43]
34 e.g. Bates/IDef at §93(1) [B5.1/3/52]
35 Interpreted "ejusdem generis". For example, the words "or other inevitable accident" in a clause
making reference to "fire, flood, storm, tempest" means other accidents of a similar kind: see e.g.
Saner -v- Bilton (1878) 7 Ch D 815; Manchester Bonded Warehouse Co. -v- Carr (1880) 5 CPD.
– 15 –
A/1/19
INTRODUCTION
Contracts
- both as to establishing whether there is a real loss to the Defendant, and if so the cause
of the loss.36
45. It is said to be an important part of the Defendant’s positive case that “losses do not arise in
the ordinary course of things without fault or error on the part of Subpostmasters or their
Assistants”, and that “the truth of the matter lies peculiarly within the knowledge of
Subpostmasters” as the persons with responsibility for branch operations and the conduct
of transactions in branches.37
46. As the Court is now well aware, following the Defendant’s unsuccessful application to
strike out the Lead Claimants’ evidence to the contrary, those propositions are highly
controversial, to say the least.
47. The Defendant’s case is in direct opposition to the central premise of this litigation:
namely that was excessively difficult, if not impossible, for Subpostmasters to identify the
cause of alleged shortfalls, or even whether they represented a real loss at all.
48. The experience of the Lead Claimants does not support the Defendant’s case.
49. Furthermore, the Defendant’s own knowledge of such difficulties and its acceptance that
Horizon is not a perfect system (taken together with clear evidence of errors affecting
branch accounts and the agreed statement filed by the experts, for the Horizon trial) will
be important in considering those assertions upon which the Defendant’s pleaded case
relies and the proper construction of the contracts.
36 GPOC at §55 [B3/1/24]; GDef at §94 [B3/2/43]; GReply at §95 [B3/3/43] and Bates/IPOC at §98;
Stubbs/IPOC at §101.1; Sabir/IPOC at §77.1; Abdulla/IPOC at §75.1; Stockdale/IPOC at §89.1;
Dar/IPOC §90.1.
37 GDef at §93(1)(a) and (b), incorporated by GDef at §94(1) [B3/2/42-43]
– 16 –
A/1/20
INTRODUCTION
Witness Evidence
Witness Evidence
Claimant’s Evidence – the six Lead Claimants
50. The Claimants’ witness evidence is provided by six Lead Claimants, who have each given
an account of how they came to be appointed by Post Office and evidence in respect of
the Common Issues, including as to the burden of proof, and in response to the
Defendant’s case.
51. The table below identifies the period of appointment and branch for each of the Lead
Claimants. The Claimants will call this evidence chronologically in order of start date.
Lead Claimant Period of Appointment Branch
1. Alan Bates 31 March 1998 to 5 November 2003 Craig y-Don
2. Pamela Stubbs 4 August 1999 to 8 June 2010 Barkham
3. Mohammad Sabir 9 September 2006 to 2 October 2009 Cottingley

12 October 2006 to 2 October 2009 Crossflatts
4. Naushad Abdulla 24 January 2008 to 8 May 2009 Charlton
5. Elizabeth Stockdale 8 May 2014 to 16 September 2016 Sandsacre
6. Louise Dar 19 November 2014 to 27 March 2017 Lenzie
Defendant’s Evidence – fourteen Witnesses
52. The Defendant has served witness statements for fourteen witnesses, many of which are
wholly or partly generic and unbounded in time. Angela Van Den Bogerd is the
Defendant’s main witness, who speaks to an overview of many of the matters in issue,
referring to colleagues who deal with particular points in more detail.
53. Some of the witnesses give evidence directed to the appointment of individual LCs, on
particular dates.
54. The Defendant intends to call those witnesses in the order identified in the table (below),
which identifies each witnesses’ role and the period covered by their evidence, as well as
whether the evidence is generic or relates to an individual Lead Claimant, or both.
– 17 –
A/1/21
INTRODUCTION
Witness Evidence
PO witness Position Period covered Generic/LC

1. Nicholas Beal Head of Agents Unbounded Generic
Development and
Remuneration
2. Paul Williams Restrictions Advisor 1994 to 1999 Generic

for Post Office
Bates
3. Sarah Rimmer Agent Remuneration Unbounded Generic

& Expenses Manager
4. John Breeden Head of Agency Unbounded Generic

Contracts
5. Angela Van Den People Services Unbounded Generic

Bogerd Director
6. Timothy Dance Retail Transformation Unbounded Generic

Integration Manager
7. Helen Dickinson Security Team Leader Unbounded Generic
8. Michael Shields Temporary Unbounded Generic

Subpostmaster
Advisor
9. Elaine Ridge Network Contract November 2006 Abdulla

Advisor
10. David Longbottom Training and Audit Unbounded Generic

Advisor Stockdale
11. Michael Webb Training and Audit September 2006 Sabir

Advisor
12. Michael Haworth Network Engagement July 2006 Sabir

Manager
13. Andrew Carpenter Agents Contract February 2014 Stockdale

Advisor
14. Brian Trotter Network Contract December 2013 Dar

Advisor
– 18 –
A/1/22
SECTION A: FACTS
Experience Prior to Contracting
SECTION A: FACTS
55. The LCs had varied backgrounds prior to their appointment by the Defendant, covering
project management (Bates), medical sales (Abdulla) accountancy (Sabir), IT support
helpdesk (Dar), and retail admin work (Stockdale). With the exception of Stubbs (who
had been an assistant in the branch when it was operated by her former husband as
Subpostmaster), none of the LCs had worked in a Post Office branch prior to their first
day of opening following branch transfer.38
56. Most of the LCs also had very limited or no relevant IT experience (Bates and Dar are
notable exceptions).39
57. In making the switch from other careers, and/or or taking on the role of Subpostmaster, a
theme in the LC evidence is the extent to which the LCs had trust in the Defendant as an
established brand and a national institution:
“A key attraction to working with Post Office was that it would provide secure employment,
based on the fact that it provides a community service and has an established brand in the
community.” (Bates, §9)
“I believed that Post Office would support me during this difficult time of my husband’s death
and I placed a large amount of trust in them.” (Stubbs, §14)
“Post Office was a well-respected name in the community and I trusted that they would be a good
company to work with.” (Sabir, §9)
“I perceived Post Office to be a reliable, trustworthy, national institution – a contrast to the
pharmaceutical industry in terms of stability and the way it dealt with people.” (Abdulla, §9)
38 For completeness, Sabir was appointed in relation to two branches. He had technically been
working in the first branch (Cottingley) for a month prior to the branch transfer of the second
branch (Crossflatts).
39 Bates had experience commissioning and using Electronic Point of Sale (EPOS) systems (Bates,
§7), and Dar had experience as an IT support helpdesk analyst, involved in testing and
programming the Hilton Hotels reservation system (Dar, §5).
– 19 –
A/1/23
SECTION A: FACTS
“Running a Post Office, together with a retail business, sounded like a safe and secure option as
I would be backed by the help of a large, trusted institution.” (Stockdale, §13) “I was looking
forward to working with Post Office and I trusted Post Office as an organisation and that what
I was signing were standard terms that would be fair and reasonable.” (Stockdale,
§64)
“I thought Post Office was a big company with old fashioned values, which was at the centre of
the community. I expected Post Office to be a good company to work with, and that I would be
able to build a food future for my family. Post Office had a respectable reputation, and throughout
the appointment process, Post Office came across as approachable and supportive. I remember
they provided me with glossy brochures about how they would support and help me and that I
could build my future with them.” (Dar, §8) “In the interview preparation guide there was a
reference to a sense of pride, and a requirement to “Share with us why you want to be part of our
Post Office community, operating a Post Office branch” … which fitted with my expectations
about how it would be working with Post Office.” (Dar, §22)
58. This evidence is presumably uncontentious, the Defendant itself placing reliance on its
“trusted” brand and reputation as being “deeply embedded in the hearts and minds of many
local communities”.40
59. The Defendant’s pleaded description of its having contacted with individual
Subpostmasters on a “business to business basis” 41 is not a good fit for the evidence, and is
apt to minimise the extent to which Subpostmasters were reliant upon and trusted the
Defendant during this period and, as addressed further below, beyond.
60. One final point as to the differing prior experience of the Lead Claimants emerges from
considering their evidence as a whole. With their different backgrounds, skills and
experience, all six of them struggled with alleged shortfalls shown on Horizon. Although
their difficulties with Horizon and coping strategies differed, their evidence, considered
together, speaks with an eloquence beyond any one individual account.
40 Van Den Bogerd, §38 [C2/1/9]

41 GDef at §6(2): “Subpostmasters contracted with Post Office on a business to business basis”,
relied on by the Defendant as an “important aspect of the factual matrix”
– 20 –
A/1/24
SECTION A: FACTS
Appointment Process Overview
Appointment of Lead Claimants
61. In broad overview, the appointment process for each of the LCs was as follows:
61.1. Bates:42 after initial enquiry, received 6 January 1998 letter, completed
application form and business plan and provided documents on 15 January
1998; attended interview; received 30 March 1998 letter confirming application
successful, enclosing two short conditions of appointment documents; signed
three page conditions of appointment on 31 March 1998; classroom training in
April 1998; branch transfer on 7 May 1998 and 5 days initial training/support,
signed Acknowledgement of Appointment and other documents on 8 May
1998.
61.2. Stubbs:43 Husband who was Subpostmaster died on 3 August 1999; Area
Manager visited on 4 August 1999; Stubbs (who had been assistant) agreed to
take over the branch, recalls signing a document relating to her appointment
around this date;
61.3. Sabir:44 For the Cottingley branch: registered interest, received 18 May 2006
letter, completed application form and business plan and provided documents
in May/June 2006; received 30 June 2006 invitation to interview enclosing
“brief summary” of Subpostmaster Contract terms, attended interview on 10
July 2006 when conditions of appointment re: branch improvements and
opening hours discussed, received letter dated 13 July 2006; signed Appendix
1 “conditions of appointment” document on 19 July 2006; classroom training
in August 2006; branch transfer on 8 September 1998 when signed
Acknowledgement of Appointment and other documents, followed by onsite
training/support. For the Crossflatts branch: registered interest, received 3
July 2006 letter, completed application and business plan
42 Bates/IPOC at §8-23, and Bates, §34-86 [C1/1/8-19]

43 Stubbs/IPOC at §8-23, and Stubbs, §12-37
44 Sabir/IPOC at §3-32, 35, and Sabir, §21-101
– 21 –
A/1/25
SECTION A: FACTS
in July 2006; interview on 15 August 2006; received letter dated 16 August
2006; signed Appendix 1 “conditions of appointment” document on 19 August
2006; branch transfer on 11 October 2006 when signed Acknowledgement of
Appointment and other documents.
61.4. Abdulla:45 registered interest, received 6 September 2006 letter, completed
application form and business plan and provided documents in
September/October 2006; received 9 November 2006 invitation to interview
enclosing “brief summary” of Subpostmaster Contract terms, attended
interview on 22 November 2006 when conditions of appointment re: branch
improvements and lottery discussed, signed Appendix 1 “conditions of
appointment” document on 11 December 2006; classroom training in January
2007; branch transfer on 24 January 2007 when signed Acknowledgement of
Appointment and other documents, followed by onsite training/support.
61.5. Stockdale:46 registered interest, received 8 November 2013 email from
Defendant with guidance, information and forms; completed application form
and business plan and provided documents in November 2013, Defendant’s
scoping visit 27 November 2014 to determine required works; interview on 5
February 2014; received letter dated 14 February 2014, enclosing subject to
contract Agreement including works required prior to opening, signed
Agreement 17 February 2014; 25 March 2014 letter identifying works required;
fit out works arranged and completed; 3 days classroom training in April/May
2014; branch transfer 8 May 2014 8 when signed Acknowledgement of
Appointment and other documents, followed by one week onsite
training/support.
61.6. Dar:47 visited by Defendant in retail premises in September 2012 and April
2013, registered interest (multiple times); received 9 August 2013 email from
Defendant with guidance, information and forms; completed application form
and business plan and provided documents in October/November
45 Abdulla/IPOC at §3-19, and Abdulla, §13-74 [B5.4/2/2-7] and [C1/3/4-14]

46 Stockdale/IPOC at §3-20, and Stockdale, §20-83 [B5.6/2/2-6] and [C1/6/4-17]
47 Dar/IPOC at §5-25, and Dar, §9-101 [B5.5/2/2-7] and [C1/5/3-19]
– 22 –
A/1/26
SECTION A: FACTS
2013; interview on 9 December 2013; told unsuccessful and should reapply to
operate from existing premises; Defendant’s scoping visit 6 January 2014 to
determine required works; submitted revised business plans and applications,
attended meeting on 4 June 2014; received subject to contract Agreement
including works required prior to opening 18/19 June 2014, signed Agreement
2 July 2014; fit out works arranged and completed; 3 days classroom training
in November 2014; branch set up 17-18 and opening 19 November 2014 when
signed Acknowledgement of Appointment and other documents, followed by
6/7 days onsite training/support.
Appointment Themes
62. There are significant themes in the LC evidence about the appointment process.
62.1. Early commitment: Compliance with the Defendant’s requirements prior to
interview (including the completion of business plans, projections and
provision of documents e.g. loan offers) itself represented a commitment of
time, energy and money by LCs.
62.2. Increasing commitment: The LCs became increasingly committed to the
appointment – by paying deposits, taking out loans, purchasing freehold or
leasehold premises, goodwill and stock, and arranging and paying for works
prior to opening. (See further Investment by the Claimants, below).
62.3. Business Plans – long-term: The standard form business plans which the
Defendant required the LCs to complete reflected the long-term nature of the
commitment, by requiring LCs to give an account of their long-term plans /
projections for the branch.48
48 E.g. versions sent to Sabir and Abdulla required 1, 3 and 5 year objectives to be provided: Sabir,
§28 [C1/3/5-6]; Abdulla, §24 [C1/4/5]; Stockdale a 1 and 5 year forecast Stockdale, §31 [C1/6/6-7].
For business plans of Bates see [E1/2] and Dar see [E5/56] and [E5/84]
– 23 –
A/1/27
SECTION A: FACTS
62.4. Business Plans – no provision for losses: None of the LCs made any
provision for losses in their projections49 - albeit it appears the Defendant in
its own calculations did.50
62.5. Interview: The main focus of the interview was generally a discussion about
the LCs’ business plan, employment history and any conditions of contract
required by the Defendant e.g. about works to be done and opening hours (in
contrast to a discussion of the terms of the SPMC).51
62.6. Personal Service: Some LCs were told, or records indicate, that personal
service was a requirement of the appointment.52
62.7. Missing documentation: Contractual documents were either not sent at all,
or not available to LCs until on or after branch transfer. E.g. Bates did not
receive a full copy of the 114 page SPMC until over a year after his
appointment; Stubbs didn’t receive a copy of the SPMC (she later received an
extract from the CAB), nor did she have a copy of the Operations Manual; and
Sabir didn’t see the Operations Manual until after branch transfer day.53
62.8. Unclear documentation: Contractual documents provided were not
explained or understood, or were understood differently to how the
Defendant contends they were intended. E.g. Bates understood the reference
to “my contract” in his Acknowledgement of Appointment to refer to the 2
and 3 page documents he had been sent, not the 114 page SPMC he had not
seen; Sabir understood the document headed “conditions of appointment”
which he was required to sign related to the Post Office requirements to
repaint the exterior of the branch and opening hours (which had been
advertised and referred to using that phrase), and LCs did not
49 Bates §42-43 [C1/1/10]; Sabir §29-30,79 [C1/3/6] [C1/3/14]; Abdulla, §30 [C1/4/6]; Stockdale, §33
[C1/6/7]
50 Sabir, §38 [C1/3/7]; Abdulla, §30 [C1/4/6-7]
51 Bates, §48-51; Sabir, §42-45; Abdulla, §37-45; Stockdale, §45; (for Dar the position was slightly
different as she was not successful at interview, and did not attend a formal second interview: Dar,
§38-42, 55-58
52 Bates, §57 [C1/1/13]; Sabir, §44 [C1/3/8]; Abdulla, §44-45 [C1/4/10]
53 Bates, §52-62,105-110; Stubbs, §26-33; and Sabir, §64
– 24 –
A/1/28
SECTION A: FACTS
know what “Book of Rules” and “postal instructions” referred to in the
Acknowledgement of Appointment meant.54
62.9. Branch Transfer: The LC experience of branch transfer was that documents
were presented as a formality with little or no explanation, and the day itself
was busy, rushed and hectic;55
62.10. No legal advice: None of the LCs took legal advice in relation to their
appointment with the Defendant.56 This possibility either wasn’t mentioned
by the Defendant at all (Bates, Stubbs, Sabir, Abdulla), or wasn’t raised until
a late stage in the process (Stockdale and Dar), in the latter case negated by
the Defendant having previously conveyed to the LC that this wasn’t really
necessary.57
62.11. Non-negotiable terms: The Defendant’s standard contractual terms were in
any event non-negotiable. The LCs (correctly) understood the terms to be
imposed by the Defendant, and not open for negotiation – they had no choice
but to contract on the Defendant’s terms.58 (And on this matter, the
Defendant’s evidence is also clear.)59
63. The Defendant’s evidence about the appointment process in many respects paints an
unrealistic picture of consistent good practice, persisting over a long period of time, often
based on evidence outside the individuals’ direct knowledge, and either not referenced to
documents or sources at all at all, or so imprecisely referenced as to be meaningless. For
example Mr Williams states: “As far as I was aware, for both my Region and other Regions
(based on my management meetings with other Team Leaders) the same
54 Bates, §76 [C1/1/18]; Sabir, §47 [C1/3/9]; Abdulla, §57 [C1/2/12]; and Bates, §77 [C1/1/18];
Stockdale, §81 [C1/6/16]; Dar, §95 [C1/5/18]
55 Bates, §73-77 [C1/1/17] ; Sabir, §95-97 [C1/3/16-17]; Abdulla, §55-61 [C1/4/11-12]; Stockdale, §81
[C1/6/16]; Dar, §94-97 [C1/5/18]
56 Bates, §59; Stubbs §23; Sabir §68,98; Abdulla, §47; Stockdale, §64,87; Dar, §58,68-69,95.
57 Stockdale, §64,87 [C1/6/13] [C1/6/17]; Dar, §58,68-69,95 [C1/5/11] [C1/5/14] [C1/5/18]
58 Bates, §49; Stubbs, §23; Sabir, §44; Abdulla, §43; Stockdale, § 65; Dar, § 70 and Bates/IPOC at
§120.3; Stubbs/IPOC at §123.3; Sabir/IPOC at § 99.3; Abdulla/IPOC at § 97.3; Dar/IPOC at § 112.3;
Stockdale/IPOC at §111.3.
59 Beal, §16 “If a Subpostmaster requested a change to the standard contract offered, the request would not be
acceptable to Post Office” [C2/2/3]
– 25 –
A/1/29
SECTION A: FACTS
Transfer Pack was utilized for transfers carried out when there was a Death in Service
appointment. …60”, and the account then given of the Defendant’s process in relation to
Death in Service is provided without reference to a single document or any defined period
of time. Where evidence is given by the Defendant’s witnesses involved with the
appointment of LCs, it is almost exclusively in the format of what the Defendant says
“would have” happened, e.g. what “would have” been said at interview, and will in many
respects be the subject of challenge by the Claimants.
60 Williams, §39
– 26 –
A/1/30
SECTION A: FACTS
Commitment to and Investment in the Relationship
64. The LCs made significant investments in their relationship with Post Office. In many
cases, prior to branch opening, but also continuing thereafter.
65. The nature of the investments included purchasing or leasing premises and goodwill,
fixtures, fittings and stock: Bates paid £175k for the freehold, goodwill and fixtures and
fittings, Sabir paid a total of £9,150 in deposits for the two branches as well as a total
purchase price of £55,000 plus stock for the Cottingley branch, and £36,000 for the
goodwill of the Crossflatts branch. Abdulla paid £80k plus stock, and entered a 12 year
term lease at £14.5k per annum, Stockdale paid £1,309.77 to the former Subpostmaster for
newspaper round balances and £900 in relation to the lease assignment. These financial
commitments were financed by either savings (e.g. Bates), family loans (e.g. Abdulla),
and/or in most cases, by long-term bank loans on commercial terms (e.g. Bates had a 15
year loan with RBS, Sabir had 10 and 8 year loans with Lloyds, Abdulla had a ten year
loan with Barclays Bank).
66. All of the LCs operated the branch together with connected retail business – consistent
with the Defendant’s evidence across the network to this effect.61 Two of the LCs (Bates
and Stubbs) resided in residential accommodation connected to the branch, a relatively
common arrangement as reflected in s13 clause 8 of the SPMC, and e.g. the Defendant’s
application forms62, but not mentioned at all in the Defendant’s evidence.
67. The LCs were in many cases required by Post Office to carry out updating or more
substantial renovation works to the premises before or soon after branch opening. For the
SPMC LCs Sabir and Abdulla, these requirements were imposed as “Conditions of
Appointment”, and consisted of cleaning and clearing the interior and repainting the
exterior of the branch and refurbishing lighting, ceiling and carpets. 63 For the NTC LCs,
Stockdale and Dar, the Defendant required substantial refit works to be carried out,
61 Van Den Bogerd, §27 “The majority are owned by independent small business owners, who
usually locate the branch within a larger retail offering like a newsagent or convenience store”
[C2/1/7]
62 See e.g. [E3/31.1/1] and [E3/96/1]
63 Sabir, §74 [D1.3/1/1], [D1.3/3/1], Abdulla, §72 [D1.4/2/1]
– 27 –
A/1/31
SECTION A: FACTS
which were largely paid for by the Defendant, but nonetheless with obligations on the
LCs to arrange, undertake and/or pay for parts of those works.64
68. The investments made by the Claimants continued during their appointment, including
for Bates, a 25% deduction from his remuneration made by Post Office during the first 12
months’ of his appointment, for all LCs, by the employment of assistants, and substantial
refurbishment works to the premises carried out by Bates (in mid-2000)65 and Stubbs (in
2009).66
69. The Defendant’s pleaded position is defensive on the issue of investment by Claimants,67
but there can be no serious challenge to the fact that each of the LCs did invest in the
relationship, and that the nature of their investments and commitment to the relationship
was substantial and long-term.
70. The Claimants also rely on the Defendant’s positive assertion in the Generic Defence:
“Post Office incurred long-term and expensive commitments in respect of the Subpostmaster
relationship, including by providing valuable cash, stock and equipment to Subpostmasters on an
unsecured basis”,68 admissions in individual LC defences,69 and the generic evidence as to
the investments made by the Defendant.70
64 Stockdale, §77 [C1/6/15]; Dar, §73-79 [C1/5/14-15]

65 Bates, §92.4-92.5 [C1/1/21]
66 Stubbs, §49-50 [C1/2/11]
67 GDef at §79(1), and each of the individual defences: Bates/IDef at §37-38; Stubbs/IDef at §21-22;
Sabir/IDef at §40; Abdulla/IDef at §29; Stockdale/IDef at §23-24; Dar/IDef at §/29
68 GDef at §79(2)
69 E.g Stockdale/IDef at §24 “Post Office paid £15,089.59 for Post Office equipment and installation costs
at the Branch.”
70 E.g. Van Den Bogerd §65.5 statement: “Post Office provides the equipment, including IT equipment,
needed to conduct customer transactions and maintain the branch accounts, including safes, mail scales,
Horizon, printers, barcode scanners and chip and pin machines. It also provides the back-end IT
infrastructure that connects each branch with Post Office’s clients.”; Van Den Bogerd §100, identifying
the “relatively high cost” to Post Office of providing training which “can be very labour intensive”,
and subsequent paragraphs referring to initial classroom and in branch training; and Dance §31-
38 in respect of investment in NT branches by enabling costs and equipment costs [C2/1/18]
– 28 –
A/1/32
SECTION A: FACTS
Security of the Position
71. The LCs were generally attracted to the position of Subpostmaster because of the security
of the role: LCs variously describe perceiving the role as “a safe option”; being led to
believe they could “build a good future” and that it was a “very secure position and long-term
commitment” and that the role was “secure and stable”.71
72. They made their investments into the relationship on this basis, and in the expectation of
return: e.g. “It was a large amount of money, but we were willing to invest it in this way because
we were sure there was a large measure of security in running a Post Office branch, which was, to
our mind, a relatively safe investment upon which we would likely receive a return”;72
73. The LCs did not expect the Defendant to terminate their appointments, at least absent
serious wrongdoing on their part, and the Defendant did not prior to contracting inform
the Claimants otherwise.73
74. The Defendant in reality recognises the investment of Subpostmasters and their
expectation of return by its practice of compensating Subpostmasters when closing
branches, and the existence of a long-term arrangement for compensation to this effect –
as pleaded and evidenced for the Claimants by Bates,74 a principle now further supported
by evidence as to compensation given by the Defendant’s witness, Beal. 75 The Claimants
further note the evidence of the Defendant’s witness Breeden that the Defendant would
typically not terminate on notice unless there was a capability or performance issue and
even then only after discussions aimed at improving performance,76 and further that the
3 month notice period in the written SPMC terms
71 Bates, §11 [C1/1/3]; Dar, §150 [C1/5/28-29]; Abdulla, §10 [C1/4/2]; Sabir, §9 [C1/3/2]; Stockdale, §13
[C1/6/3]
72 Bates, §27 [C1/1/6]
73 E.g. Dar, §150; Stubbs, §129; Sabir, §123;
74 Bates/IPOC at §27 and Bates, §94-97
75 Beal, §32
76 Breeden, §60
– 29 –
A/1/33
SECTION A: FACTS
was in reality insufficient for an Subpostmaster to sell the business and premises and
find an incoming Subpostmaster.77
77 Breeden, §62
– 30 –
A/1/34
SECTION A: FACTS
Features of the Relationship
Features of the Relationship
75. Whilst the Claimants do not contend that their relationship with Post Office was that of
an employee and employer, the relationship was in many respects akin to employment,
noting e.g. the imbalance of power between the Defendant and Subpostmasters; 78 the
degree of the Defendant’s discretion and control in the relationship; the Defendant’s
requirements for personal service (paragraph 62.6 above); payments made by PAYE and
payment of holiday pay;79and, the verbal warning issued by the Defendant to Sabir.80
76. It is a theme of the LC evidence that they considered themselves to be working as partners
or in partnership with Post Office.81 The Defendant’s evidence is indeed consistent with
that view, Trotter conceding that in his interview with Dar “I may have used the colloquial
term of “partnership” in relation to the fact that Ms Dar and Post Office would be working together
to make the most of the Local branch.”82
78 GPOC at §47 et seq

79 Rimmer, §59
80 Sabir, §73
81 Bates, §47, 84, 98 ; Sabir, §103; Abdulla, §9; Stubbs, §20; Dar, §42
82 Trotter, §10
– 31 –
A/1/35
SECTION A: FACTS
Assistants
Assistants
77. All of the LCs employed assistants, who generally transferred to their employment by
TUPE transfer at the outset of their appointment,83 and the LCs relied on the experience
of those assistants when taking up appointment as Subpostmaster - in some cases they
were expressly encouraged to do so.84
78. The Defendant had control over assistants by vetting them prior to permitting the
Subpostmasters to appoint them, the decision as to the training to offer to them, and
effective control as to whether they should continue to be employed by the
Subpostmaster.85
79. It is part of the Claimants’ case that Subpostmasters were not in a position to provide
training to Assistants that went beyond the training provided by the Defendant to them.
83 E.g. Bates, §92.1 [C1/1/21]

84 E.g. Dar, §125 [C1/5/24]
85 E.g. Dar, §126 [C1/5/25]
– 32 –
A/1/36
SECTION A: FACTS
Training Subpostmasters
80. With the exception of Stubbs, prior to or immediately following their appointment as
Subpostmaster, all LCs were provided with a combination of classroom and in branch
training.
81. In respect of the classroom training prior to appointment:
81.1. Bates: received 2 days classroom training in April 1998.86
81.2. Sabir: received 5 days classroom training in August 2006.87
81.3. Abdulla: received 10 days classroom training in January 2007.88
81.4. Stockdale: received 3 days classroom training in April 2014.89
81.5. Dar: received 3 days classroom training in November 2014.
82. The themes in the LC evidence about the pre-appointment classroom training include, the
generality of training and its focus on sales, and the inadequacy of the training as
preparation for the reality of opening and running a branch: e.g. “When we worked on the
dummy Horizon terminal, we would simulate someone coming in to buy a stamp. The terminal
was not live and I don’t think we covered balancing or how to deal with a transaction correction.
If we did then this was not covered in any detail.” (Abdulla, January 2007);90 “The training
focused mainly on sales and processing day-to-day transactions, and I do not feel that it adequately
prepared me for running a branch on my own. The training environment was completely different
from the real branch environment and the reality of operating the Horizon system day to day.”
(Sabir, August 2006);91 and “I did not find the classroom training to be adequate at all. Given
my background as an IT analyst at Hilton Hotels, I was very aware of the amount of training
required to equip users with the necessary knowledge to enable them to use a
86 Bates, §68-70 [C1/1/16]

87 Sabir, §51 [C1/3/9]
88 Abdulla, §51-54 [C1/4/11]
89 Stockdale, §71-76 [C1/6/15]
90 Abdulla, §53 [C1/4/11]
91 Sabir, §53 [C1/3/10]
– 33 –
A/1/37
SECTION A: FACTS
complex IT system such as Horizon and the many complex tasks which a user may need to carry
out. In my opinion the training should have been far more thorough.” (Dar, November 2014)92
83. Where the classroom training did cover balancing or resolving apparent shortfalls, it was
very limited, e.g.: “Balancing and the signing off on trading statements was covered only briefly.
As I recall when we did a dummy balance using Post Office paperwork all of the Subpostmasters
on the course had problems. We weren’t given any guidance about signing off on trading
statements other than that we had to do it. The training didn’t involve any information on how to
investigate or resolve discrepancies. We were simply told that if a shortfall arose we would be
required to make it good.” (Sabir, August 2006);93 “One of the sessions of the classroom training
covered the basic process for balancing, which was essentially explained as counting all of the cash,
checking stock and inputting the figures into Horizon. I recall being told that if there is problem
you just need to re-count the cash. It was suggested that any problems with balancing would be a
result of mistakes such as giving the wrong change or inputting a figure wrong, such as adding an
extra zero. It was made to seem like mistakes such as these would be easy to fix. There was no
mention of how to investigate and deal with settling shortfalls or disputing them.” (Stockdale,
April 2014);94 and “During the training I asked the trainer what should we do if we had problems
with balancing and the trainer said we should check over the figures and if in doubt, call the
helpline. I asked about troubleshooting and was told that this would be covered during the onsite
training (Dar, November 2014).95
84. The LCs’ experience of Branch training provided immediately on or following branch
opening was that it was also very limited and did not make up for the limitations in the
classroom training e.g. “[The trainer] was not present for the full working day, and she mainly
just shadowed me and stepped in if I had specific questions” (Sabir);96 “Having the trainers on site
was helpful, but it didn’t greatly increase my understanding about how to use Horizon as they
mainly observed me rather than actively training me;” (Stockdale)97 and “Ms
92 Dar, §86
93 Sabir, §55
94 Stockdale, §75
95 Dar, §85
96 Sabir, §69
97 Stockdale, §82
– 34 –
A/1/38
SECTION A: FACTS
Guthrie was shadowing me, and intervening in customer transactions. I often didn’t find her
interventions helpful, …” (Dar).98
85. If problems with balancing and resolving discrepancies was covered at all during this
time, the advice was essentially to call the Helpline e.g. “I wasn’t told in any detail how to
investigate or resolve discrepancies or apparent shortfalls showing on Horizon, or how I could use
any of the Horizon functionality to do this, I was just told to contact the Helpline. I think this was
the main area where the Post Office training provided was lacking.” (Abdulla),99 “I … specifically
asked Ms Guthrie what to do if the system wasn’t balancing, but she just said to call the Helpline
and that they would resolve any problems I told Ms Guthrie that I wasn’t comfortable opening the
branch without any troubleshooting training and I asked if any could be provided, but she didn’t
offer anything more ,she told me that I would just have to get on with it and call the Helpline if I
had problems.”(Dar)100
86. Bates and Stubbs, who were each appointed prior to the introduction of Horizon, each
had training when Horizon was introduced. The limitations in this training are plain from
their evidence - Bates received 1.5 days in a hotel with 150 others;101 Stubbs received 1
day of training with 12-15 others, on terminals set up in a pub.102
87. The Defendant’s evidence in relation to training is provided by Van Den Bogerd, and is
in conflict with that of the LCs in key respects.103 However, on her own evidence, the
quality or otherwise of training is relevant to the prevalence of apparent shortfalls. 104
98 Dar, §98
99 Abdulla, §62-71, at 66
100 Dar, §93
101 Bates, §132-140
102 Stubbs, §61-65
103 Van Den Bogerd, §99.
104 Van Den Bogerd, §99.1,99.6 “There are strong incentives for Post Office to deliver effective
training: It reduces the chance of an accounting or cash / stock handling error in branch, thereby
reducing shortfalls; ...It may reduce other costs at Post Office (e.g. back office processing of
transaction corrections; …).
– 35 –
A/1/39
SECTION A: FACTS
Support and the Helpline
Support and the Helpline
88. The Claimants do not accept the Defendant’s evidence to the effect that the Helpline was
an effective means of obtaining information and support or that further training would
readily be made available to them during their appointment if only they would ask.105 The
universal experience of the LCs was that whereas they were reliant on the Helpline, and
expected it to provide a high level of support, the Helpline support was in fact very poor,
and not an effective way to resolve their problems in relation to apparent shortfalls. 106
Further, a number of the LCs specifically asked for additional training which was refused:
Bates specifically asked for more training prior to the installation of Horizon, and Dar
asked for training on a number of occasions with her area manager. 107
89. The Claimants do rely on what is implicit in Van Den Bogerd’s evidence, namely that to
the extent training was deficient to prevent errors occurring, the obligation was on Post
Office to provide further training and additional support.108
105 Van Den Bogerd, §114-115 [C2/1/32-33]

106 Bates, §142-143; Stubbs, §69-73; Sabir, §110-113; Abdulla, §83-87; Stockdale, §95-98; Dar, §116-122.
107 Bates, §143.3; Dar, §115
108 Van Den Bogerd, §99.4, 99.5 “It may reduce the amount, and therefore cost, of other support
needed by Subpostmasters (e.g. calls to the NBSC helpline); It avoids the cost of having to repeat
training” [C2/1/29]
– 36 –
A/1/40
SECTION A: FACTS
Apparent Shortfalls and Horizon
90. The experience of the LCs was that:
90.1. they encountered apparent shortfalls for which they were unable to ascertain
the cause using information to which they had access, and the Helpline was
not an effective way to resolve their problems (paragraph 88 above);
90.2. the apparent shortfalls which they experienced far exceeded the small
discrepancies that, in many cases, they had been led to believe during training
might arise;109
90.3. the Defendant’s auditors with access to the same information as the LCs in
branch were also unable to ascertain cause;110
90.4. LCs were reliant on the Defendant to find the cause of apparent shortfalls, and
the Defendant had greater knowledge than they did in relation to transactions
and transaction data;111
90.5. LCs received transaction corrections which they were told they had to accept,
even when they did not agree with it or the basis for it;
90.6. LCs were treated as liable for lost cheques or where any other documentation
was missing;
90.7. when apparent shortfalls were recorded by the Defendant during audits
which led to LCs being suspended, they were then excluded from their
branches and records, and unable to investigate;
90.8. apparent shortfalls were pursued by the Defendant post termination of
contract when the LCs were again unable to investigate.
91. There is no acknowledgment in the Defendant’s evidence of any of these problems, or
that that Horizon might be the cause of apparent shortfalls. The evidence of Van Den
109 Bates, §187; Dar, §43

110 Bates, §155, 179; Dar, §125, 157
111 Bates, §176; Stubbs, §131; Sabir, §130; Abdulla, §126; Dar, §153; Stockdale, §134
– 37 –
A/1/41
SECTION A: FACTS
Bogerd in relation to shortfalls and transaction corrections will be subject to challenge
by the Claimants.
92. The Claimants will also rely on the experts’ joint report for the Horizon trial, which
records at point 1, areas of agreement:
“Evidence exists that that bugs/errors/defects have caused actual discrepancies or

shortfalls relating to Subpostmasters’ branch accounts/transactions.
Each time any IT system (including Horizon) is changed there is the potential to
introduce new bugs/errors/defects.
Once bugs/errors/defects are discovered, they take time to resolve and therefore systems
such as Horizon often continue to operate with bugs/errors/defects with or without
workarounds in place.
Theoretically, bugs/errors/defects that existed within Horizon have the potential to cause
apparent or alleged discrepancies or shortfalls in relating to Subpostmasters’ branch
accounts/transactions.
In the event that any specific bug/error/defect had such an effect, the experts have
differing views as to the ‘extent’ of the impact that such bugs/errors/defects may have had
on branch accounts.”
93. The LCs were not aware of any of the matters at paragraph 90 above prior to their
appointments, did not prepare their business plans on this basis (paragraph 62.4 above),
and did not expect the Defendant to operate the contract in this way. For example:
“I certainly did not think that I would be taking on open-ended responsibility for any and all
losses including those for which I was not responsible, still less significant sums … It did not
occur to me that I would ever be held liable for losses that were not my fault, as this concept
seems so unjust that I did not consider it a possibility” (Bates, §37 [C1/1/8]); E.g. “I had
understood (despite not being provided with a contract) that I would only be liable for losses
in the event that I was negligent or had done something wrong that gave rise to the
losses”(Stubbs, §28 [C1/2/6]); “Prior to contracting I expected that if Post Office could prove
there is a loss which is a Subpostmaster’s fault then yes the Subpostmaster is responsible. If
the Subpostmaster is doing something wrong on purpose or is careless then he will have to
pay. I thought that Post Office had to show that was the case, not that the Subpostmaster had
to prove the opposite” (Sabir, §132 [C1/3/24]); “If I had been told at interview that…I would
be held liable for hundreds and thousands of pounds of alleged shortfalls, I would have never
accepted the appointment (Abdulla, §42 [C1/4/9]).
– 38 –
A/1/42
SECTION B: COMMON ISSUES
Issue 1: Relational Contract
Issue 1: Was the contractual relationship between Post Office and Subpostmasters a
relational contract such that Post Office was subject to duties of good faith, fair
dealing, transparency, cooperation, and trust and confidence (in this regard, the
Claimants rely on the judgment of Leggatt J in Yam Seng Pte v International Trade
Corp [2013] EWHC 111)?
Statements of Case Particulars Defence Reply

Generic 43 to 44, 63 103 55 to 56
Bates 82 to 84 51 to 53 57 to 61
Stubbs 85 to 87 36 to 38 49 to 53
Sabir 61 to 63 50 to 52 54 to 58
Abdulla 59 to 61 38 to 40 48 to 51
Dar 74 to 76 38 to 40 47 to 51
Stockdale 74 to 76 33 to 35 42 to 45
94. As the Court is well aware, it is in important part of the Claimants’ case that the contracts
between Subpostmasters and the Defendant are properly to be characterised as ‘relational
contracts’, as described by Leggatt J in Yam Seng v International Trade Corp [2013] EWHC
111 (QB) (“Yam Seng”), such that duties of good faith, fair dealing, transparency,
cooperation and/or trust and confidence are to be implied.
95. As foreshowed in the Introduction (above, on p.2), the Claimants contend that these are,
even as a matter of preliminary impression, obviously relational contracts.
96. On analysis, the Claimants will respectfully submit that this is beyond doubt.
97. The Claimants recognise that this question overlaps to some extent with those questions
arising under Issues 2 and 3: Implied Terms (below); but the Claimants have sought to
treat them distinctly as far as possible.
98. For the reasons explained below, the basis upon which the Defendant denies the
implication of the above duties and that these were relational contracts is both threadbare
and flawed.
– 39 –
A/1/43
Example: the Defendant’s case on good faith
99. The Defendant’s overall case on this issue is considered below at p.49. However, it is
useful, by way of specific example, to consider the ingredients of the Defendant’s pleaded
case in relation to the duty of good faith:–
99.1. The Defendant flatly denies all the duties contended for, including that of
good faith, in the context of relational contracts at GDef §103.112
99.2. As to the implied terms pleaded at GPOC §64, and specifically the duty to
exercise any contractual, or other power, honestly and in good faith for the
purpose for which it was conferred at GPOC §64.16, the Defendant denies
these at GDef §106(2) on various bases including:
“Many of them would obviously have been rejected by Post Office had they
been proposed and/or are unreasonable and/or make no commercial
sense.”113
99.3. However, in the IDefs, the Defendant admits an implied term that it would
not exercise its power to change the contract and its operational instructions
(without the agreement of the NFSP) “dishonestly or in an arbitrary, capricious or
irrational manner”114 although the Defendant denies any such qualification to
its “power to change the contract and its operational instructions with the agreement
of the NFSP” – presumably because of the NFSP’s role, which is (as Mr Beal
explains in his witness statement)115 “an independent members’ organisation
supporting Subpostmasters”.
100. It remains to be seen how far the Defendant will go in its evidence to establish that it
would “obviously have rejected” an obligation that: (a) it generally act in good faith; or (b)
exercise its power to change the contract honestly – had either of those been proposed
when the contract was made. The Defendant’s case appears awkward.
112 Although the Defendant has reserved its position, at least on the case law, at GDef at §103(4).
113 Other aspects of the Defendant’s stance in this respect are dealt with in more detail under Issues
2 and 3: Implied Terms, below at p.56 onwards
114 e.g. Bates/IPOC at §65(2)
115 Beal, §44; and as contractually stipulated by the Defendant at Clause 1.3 of the NTC
– 40 –
A/1/44
Straw men
101. The Claimants are positively contending for the implication of terms which do no more
than reflect standards of conduct (e.g. the degree of cooperation) inherent in and
necessary to the parties’ respective obligations, and/or necessary to the commercial or
practical coherence of the contracts.
102. However, before addressing the implication of the duties for which the Claimants
contend, it may be helpful to spell out what the Claimants are not contending for in
relation to implication of the terms in issue here (to avoid straw men being set up by the
Defendant):
102.1. The Claimants do not contend for the implication of terms which seek to exact
a higher degree of cooperation than that which could be defined by reference
to the necessities of the contract.
102.2. These are not contracts in which the Court can infer that the parties have
considered making express provision for a duty of good faith and then chosen
deliberately to step back from an express agreement that they would owe each
other such a duty116 – there is no such inference to be drawn here and, in any
event, the Defendant’s standard contracts are very far from the commercially
negotiated contracts in issue in many other cases (individual Subpostmasters
having no say at all over their terms).
102.3. The Claimants do not contend that such duties are to be implied into every
contract or can never be excluded – that is not the law.
102.4. The Claimants do not contend that the implication of these duties follows
simply from the general nature of the agreement (save to the extent that some
terms are implied in certain classes of contractual relationship e.g.
116 See: Fujitsu Services Ltd v IBM United Kingdom Ltd [2014] EWHC 752 (TCC) (21 March 2014);
153 Con LR 203 – express good faith term pleaded but rejected, at [162]; and Portsmouth City
Council v Ensign Highways Ltd [2015] EWHC 1969 (TCC) (14 July 2015) – implied term asserted
and defeated, not least because there were “specific and narrow” express duties of good faith at
numerous points throughout the agreement, at [82] and [93], and other differently framed but
express qualifying obligations, such as a requirement to use reasonable endeavours, at [83] and
[93].
– 41 –
A/1/45
employment – see Two categories of implied terms, at p.59 below). The
implication of such duties flows only from a thoughtful consideration of the
agreement, as well as the functions and obligations of the parties, including
the practical demands upon the parties inherent therein.
102.5. The Claimants do not contend that the Court should construe obligations such
as the duties to 'cooperate' or 'to act in good faith' as cutting across more specific
provisions and any limitations in them.117
The Claimants’ case
103. These contracts are paradigm examples of relational contracts, into which duties of good
faith, fair dealing, transparency, cooperation and/or trust and confidence are to be
implied.
104. Those duties govern the Defendant’s exercise of all powers and discretions under
Subpostmaster contracts and relating to the relationship arising therefrom; and they
extend to sharing information relevant to the performance of the contracts.118
105. As the judgment of Leggatt J in Yam Seng itself makes clear, the implication of such duties
in English law is not new. Indeed, well before the decision in Yam Seng, authoritative
commentators regarded the implication of a duty of good faith as uncontroversial – see,
for example, Conaglen on Fiduciary Loyalty119 (2010):
"Undoubtedly, fiduciaries must act in good faith [but] it is suggested that the duty of
faith is not peculiar to fiduciaries. In particular, a duty of good faith has frequently
been recognised in circumstances that are not traditionally considered to be fiduciary
relationships and when fiduciary analysis played no part in reaching the court's
conclusion. In numerous cases, for example, courts have held that discretionary powers
in contracts had to be exercised in good faith …”
106. Relational contracts are a developing area of the law. It is salient in the present case to
note that these contracts bear many of the hallmarks of employment contracts, yet the
117 Beatson LJ (in what?)

118 Yam Seng, [142]
119 p.43 – see also the lines of authority referred to therein and by Leggatt J in Yam Seng at [145]
– 42 –
A/1/46
liabilities centrally in issue in this case are not commonly found in the employment
context.
107. These hybrid characteristics mark them out as unusual contracts, at the nexus of two
(usually distinct) classes of contractual relationship. It is interesting to note, however, that
the duty of trust and confidence contended for by the Claimants is one which is
automatically implied in employment relationships. To the extent that this context relied
upon by the Claimants120 bears upon whether the Subpostmaster contracts are to be
characterised as relational contracts, it tends to support such a characterisation – on one
view, strongly.
108. Re-focusing on the approach in pure commercial contracts, as per Yam Seng, the
Claimants’ submissions are set out below. However, in case it is of assistance to the Court,
a more detailed treatment as to the approach to ascertaining of the nature of the
contractual relationship for these purposes, and the implication of such duties, is set out
in Annex 2.
109. The approach in Yam Seng follows the established methodology in English law for the
implication of terms in fact, based on the presumed intention of the parties.121 There
appears to be little controversy as to the image of Post Office in the minds of those hoping
to become Subpostmasters or Subpostmistresses and their expectations.
110. The background reasonably available to the parties, in this context, includes not only
matters of fact known to the parties, but also the norms of behaviour specific to the
particular commercial activity in question and arising from the features of the contract.122
As the Defendant has made clear, it is essentially performing a public service and, even
today, remains wholly owned by the state. It controls almost all aspects of what it
contends is a business to business relationship. There is no way that it can work without
a high degree of cooperation and trust. Furthermore, in this context, it would seem
fanciful to suggest that honesty and fair dealing would not be regarded as shared values
or norms by both the Defendant and Subpostmasters and
120 GPOC at §45 (and §9)

121 Yam Seng at [131]
– 43 –
A/1/47
indeed there is no such suggestion in the evidence. All this forms part of the
background against which the relationship with Subpostmasters falls to be considered.
111. A ‘relational contract’ in which the duties set out above may be implied is a longer term
relationship involving substantial commitment, in which:123
111.1. there is a high degree of commitment, cooperation and predictable performance;
111.2. based upon mutual trust and confidence and expectations of loyalty which are
not legislated for in the contract; but
111.3. are implicit in the parties’ understanding and necessary to give business
efficacy124 to the arrangements.
112. The Claimants will invite the Court to find, on the evidence to be heard at trial, that the
Subpostmaster contracts at issue in these proceedings are paradigm examples of
‘relational contracts’. On the relevant facts: -
112.1. They are of a long-term nature and involved a high degree of commitment,
cooperation and predictable performance of the nature described.
112.2. The mutual trust and confidence upon which those requirements are based are
plainly not legislated for in their express terms.
113. They are both implicit and necessary in this context, and the implied duties thereby
arising are essential features of the legal relationship. The Claimants deal with each of
these factors in turn.
Long-term commitment, cooperation and predictable performance
114. First, that the contractual relationship between Subpostmasters (of all types) and the
Defendant is a commitment that made commercial sense over the long-term and one
which involved a high degree of commitment by both parties in the relationship.

124 Now understood to mean achieving practical and commercial coherence
– 44 –
A/1/48
115. That “Post Office incurred long-term and expensive commitments in respect of the Subpostmaster
relationship, including by providing valuable cash, stock and equipment to Subpostmasters on an
unsecured basis” is admitted, for example, by the Defendant.125
116. It is beyond serious dispute that the Claimants themselves made a significant
commitment to the relationship over the long-term. The Claimants will rely upon the
evidence set out in Section A: Factual Context above, under ‘Commitment to and
Investment in the Relationship’ and such further evidence as will be heard at trial on the
factors relevant to implication of the duties relied upon.
116.1. Each of the Lead Claimants, for example, made significant financial investments.
These were not only in their own retail business, or the premises from which the
branch operated, but were also investments whose value depended upon being in
a working relationship with the Defendant for the long-term.
116.2. Without limitation, the investments made by the Lead Claimants included:
a. purchasing the goodwill of the business, including the branch itself, from
the previous Subpostmaster;
b. entering into a contract to purchase or lease premises from which to operate
the branch, with associated borrowing from banks or other lenders;
c. taking up residential accommodation on those or linked premises;
d. entering into, or taking on, employment contracts with assistants;
e. investing in the training of those assistants; and
f. incurring refurbishment, fit out and/or decorating costs for the Branch –
including as a condition of appointment imposed by the Defendant.126
116.3. Many of the investments made by the Lead Claimants were directly aimed at
increasing Branch business – to the benefit of both parties to the relationship.
125 GDef at §79(2) [B3/2/38]

126 E.g. Sabir [D1.3/3/1] and Abdulla [D1.4/2/1]
– 45 –
A/1/49
116.4. As at least one Lead Claimant makes clear, such investments would not have been
made had it been known that the investment could be put at risk, still less
undermined entirely, by Post Office terminating the appointment without cause
or compensation.127
116.5. All of the Lead Claimants purchased retail business which they ran alongside their
Branch, but it is clear that such businesses were reliant upon the existence of the
branch and (as was the case with at least one Lead Claimant) likely not viable
without it in the same premises.128
116.6. In some cases, the contract provided for the withholding of 25% of the
Subpostmasters’ remuneration during the first 12 months of trading “in recognition
of the opportunity to operate a Post Office on behalf of Post Office…”129 The Claimants
will say, as one Lead Claimant (Bates) observes,130 that such requirements made a
longer term commitment to running a Post Office branch necessary, in order to
amortise and recoup the investment made by the Subpostmaster.
117. Second, the operation of the contractual relationship necessarily required a high degree
of cooperation and predictable performance.131
118. The Defendant admits that “the operation of the relationship between a Subpostmaster and Post
Office required communication and cooperation”.132 That this was required to a high degree
appears beyond any sensible dispute.
119. The Claimants will nevertheless rely upon the following:
119.1. The Defendant’s requirement that detailed business plans be provided that
included long-term financial projections for the branch in the future of which
127 Bates, §30 [C1/1/7]

128 Stockdale, §17 [C1/6/ 3-4]
129 Bates/IPOC at §8 [B5.1/2/2-3]
130 Bates, §90 [C1/1/20]
131 GPOC at §43 to 44 [B3/1/15]
132 GDef at §80 [B3/2/38]
– 46 –
A/1/50
both parties were invested, and the commitment to the application process
otherwise required by the Defendant.133
119.2. The shared expectations of cooperation and support as evidenced by
representations made by the Defendant during the appointment process, and the
impression given to some Lead Claimants that Subpostmasters were to operate the
branch (in colloquial/business terms) in partnership with the Defendant.
119.3. The significant level of trust reposed in the Defendant by Subpostmasters by
reason of its role in the Community, that fact of it being a national institution, 134
and by its established brand.
119.4. The Defendant’s own evidence as to that brand135 as to the Defendant and
Subpostmasters mutual interest in both “a strong and sustainable network and brand”
and in “the success of any particular branch”136 and as to the importance placed upon
Subpostmasters supporting the brand.137
119.5. The aspects of the business of the Branch that it is common ground the Defendant
provides to Subpostmasters, which include the Post Office brand (as above), the
ability to sell a wider range of products, working capital, provision of IT
equipment, back-end IT infrastructure, cash management planning, banking and
transaction services and the benefit of the Defendant’s expertise.138
119.6. The Defendant’s imposition of a contractual requirement to provide personal
service at the branch – half of the Lead Claimants were either told, or their
documents indicate, such a requirement was imposed upon them.139
133 As to which, see Section A above, under ‘Appointment Themes’ on p.23

134 As to which, see Section A, under ‘Experience Prior to Contracting on p.19
135 Van Den Bogerd, Section B, esp. §38 to §42
136 Van den Bogerd, §32
137 Van den Bogerd, §41
138 Van Den Bogerd, §65
139 Bates, §57, 83 and [AB1/98-99]; Sabir, §44; Abdulla, §45 and [NA1/103-107]
– 47 –
A/1/51
119.7. The Defendant’s purported imposition of onerous burdens upon Subpostmasters
and / or the reservation to itself of a high degree of power, discretion and control
over them.140
119.8. The necessary reliance by the Claimants upon the Defendant during the
relationship for the provision of training, assistance, support and information.
119.9. The inadequacy of the training and support provided by the Defendant during the
relationship, which the Claimants reasonably infer generally reflected the
Defendant’s practice in this respect – indeed across the six Lead Claimants
consistently so.
119.10. The inherent limitations of Horizon and consequential practical limitations on the
Claimant’s ability to investigate apparent shortfalls using Horizon.
Subpostmaster contracts and implication of duties
120. It is plain from the foregoing that the relationship between the Defendant and
Subpostmasters is underpinned by mutual expectations as to the duties contended for by
the Claimants.
121. Both the SPMC and the NTC contracts contain no general obligation of good faith, fair
dealing, transparency, cooperation, and trust and confidence, nor any general obligation
to provide information necessary for the performance of the contracts. Nor do those
contracts contain express obligations that would be at odds with the implied duties
contended for.
122. These requirements are entirely necessary to give business efficacy to the contracts, and
are so obvious as to go without saying. Reasonable persons in the position of the
140 Examples of such provisions are provided in the GPOC at §51 (Defendant’s requirement of
compliance with extensive and poorly defined list of changeable rules, instructions and guidance),
§52 (Defendant’s discretion to unilaterally alter classes of business to be undertaken at the branch),
§54 (express terms imposing wide ranging responsibility for losses on the Subpostmaster), §56
(Subpostmaster liability for actions of assistants, but minimal corresponding duty on the
Defendant to train Subpostmaster assistants) and §60 to 62 (express terms as to suspension and
termination – in particular, the purported discretion to terminate a Subpostmaster’s appointment
on three or six months’ notice, with no right to compensation for loss of office) [B3/1/17-21]
[B3/1/22-24] [B3/1/25-29] [B3/1/30-34]
– 48 –
A/1/52
Defendant and Subpostmasters at the time of contracting would have expected such
duties to have been owed in the circumstances set out above and given the norms of
commercial behaviour in this context – and indeed expected by the Defendant.
The Defendant’s case
123. Notwithstanding the foregoing, the Defendant denies that the Subpostmaster contracts
can be characterised as relational contracts. In this, the Defendant:141
123.1. seeks to rely upon terms permitting termination of the relevant contracts on
notice without cause;
123.2. suggests that the implied duties are not so obvious as to go without saying; and
123.3. suggests that the implication of general duties of this nature would contradict
(unspecified) express terms of the contracts.
124. The Claimants do not consider any of these points to militate against the findings sought
by them in respect of Issue 1: Relational Contract.
125. First, as to the power to terminate without cause:
125.1. that is entirely in conflict with the long-term relationship envisaged by both
parties and the long-term commitments made to that end;
125.2. it is clear that neither party anticipated that the power would normally be
exercised in the manner in which the Defendant now prays in aid; and
125.3. the true construction of that power is in issue, in any event, including as to the
“true agreement” (Issue 18: True Agreement) and the extent to which that
power was subject to implied terms contended for by the Claimants and/or
admitted by the Defendant.
126. The unreality of the Defendant’s position is now shown in sharp relief by the fact that it
has been a party to a “long-standing” agreement with the National Federation of
Subpostmasters that provides for 28 (or 26) months’ income as compensation for
141 GDef at §103 [B3/2/46-47]
– 49 –
A/1/53
outgoing Subpostmasters where their branch is closed.142 The idea that, for example, the
Defendant could (or would have been expected to) defeat the application of that
agreement by exercising the bare right to terminate on 3 months’ notice is fanciful. It may
well be the case (particularly in pure commercial contracts) that the Court will be slower
to infer that a contract involved expectations of a long-term relationship and concomitant
commitments by the parties where the parties were able to terminate at short notice.
However, the Defendant is wrong to submit the obverse, namely that, if a Court were to
find the same, the termination provisions are some sort of trump card that defeats the
legal consequences that would otherwise follow.
127. In the circumstances the Defendant cannot rely upon a purportedly unfettered right to
terminate Subpostmaster contracts at will as militating against, or defeating, the
characterisation of these contracts as giving rise to long-term relationships, which
involved significant valuable investment by both parties.
128. The Defendant’s position, in this respect, is also at odds with:
128.1. its case that its own investments were themselves “long-term and expensive
commitments”143, despite the fact that the termination provision could, on its own
case, also have been exercised by a Subpostmaster.
128.2. its own witness evidence, by which it seeks to confirm how the contracts with
Subpostmasters functioned in practice and, in particular, the need for a longer
notice period due to the practicalities of the operation of a sub-Post Office and its
capacity to recruit replacement Subpostmasters.144
129. The Claimants will further say that it is simply lacking in reality to describe the nature of
the Claimants’ investments (which included purchases or leases of premises, purchases
of goodwill, refurbishment costs, and the general investing of life savings) as anything
other than long-term commitments to the relationship.
142 See Bates/IPOC at §27; and Bates, §94-97 at [AB1/113-165] [C1/1/22] or [E1/34/1-4], [E1/38/1-10],
[G/83/1], [G/84/1-8], [G/85/1-30].
143 GDef at §79(2) [B3/2/38]
144 See, e.g., Breeden, esp. at §59 to 63 [C2/3/15-16]
– 50 –
A/1/54
130. Second, the Defendant seeks to suggest that such duties do not meet the requirements for
implication on the grounds because they are not obvious or necessary. The denial of the
need to imply additional terms into the contracts is impossible to reconcile with the
Defendant’s own concession in its case that the Subpostmaster contracts failed to legislate
for important aspects of the legal relationship and so were subject to broad implied terms
importing obligations of cooperation, specifically:
130.1. the Stirling v Maitland Term145 and
130.2. the Necessary Cooperation Term.146
131. The Defendant seeks to rely upon those terms to suggest that the implication of further
terms is unnecessary.147 But despite Court making an order (by agreement) pursuant Part
18 CPR requiring the Defendant not only to answer the RFI but to provide the
information requested, the Defendant has refused to be drawn as to the incidents of its
accepted implied terms and how they differ, in reality, from the matters and terms
advanced by the Claimants.
132. The Defendant’s contention that the duties (including those of good faith, transparency
and fair dealing) are neither necessary nor obvious is also very difficult to reconcile with
its own admissions regarding the parties roles and functions in the relationship, which
include the Defendant:148
132.1. requiring Subpostmasters to comply with contractual obligations in relation to
the keeping and producing of branch accounts;
132.2. recording transactions effected by Subpostmasters;
132.3. seeking to reconcile transaction data with other data;
145 Defined by the Defendant as: “Each party would refrain from taking steps that would inhibit or prevent
the other party from complying with its obligations under or by virtue of the contract” (GDef at §105(1)
[B3/2/47]).
146 Defined by the Defendant as: “Each party would provide the other with such reasonable cooperation as
was necessary to the performance of that other’s obligations under or by virtue of the contract” (GDef at
§105(2) [B3/2/47]).
147 See: (i) the Defendant’s Response to the RFI dated 31 July 2017, at Response 61A [B4/2/24]; and
(ii) the Defendant’s Response to the Second RFI [B4/3]
148 See GDef at §123 [B3/2/53], responding to GPOC at §81 [B3/1/44-45]
– 51 –
A/1/55
132.4. possessing and/or controlling underlying transaction data in relation to
transactions undertaken in branches;
132.5. having the power to seek recovery from Subpostmasters for losses relating to
branch accounts; and
132.6. in fact seeking to recover apparent shortfalls from Subpostmasters.
133. The Claimants will say the foregoing are entirely consonant with a relationship in which
there must be a high degree of cooperation, co-ordination and predictable performance,
such that such duties are to be implied.
134. Third, and finally, the Defendant seeks to characterise the SPMC and NTC as “detailed
and professionally drafted written agreement(s)” which “made detailed provision as to the core
obligations within that relationship”.149 In circumstances in which no Lead Claimant is
confident of the date upon which he or she contracted and the Defendant itself pleads to
the same in the alternative, this is quite a bold claim.
135. More particularly, it appears also to be an unjustified claim, given the difficulty which
even the Defendant has encountered in identifying the universe of express terms and
how they changed over time. This can be illustrated by reference to the following:150
135.1. the Defendant’s provision (or non-provision) of various documents of uncertain
contractual effect and the issuing of changing rules, instructions, ‘tips’ and
guidance over the course of the operation of the contract;
135.2. the Defendant’s inability to explain how its own policies fit together, and which
policy or policies applied at which time;
135.3. the unnecessary ambiguity (certainly, on the Defendant’s construction) in the
provisions as to the liability of Subpostmasters for alleged shortfalls, which
provisions the Defendant invites the Court to regard as of key importance to its
business;
149 See, e.g. Bates/IDef at §51(1)(c) [B5.1/3/28]

150 See, e.g. Bates/IReply at §52 to 53 [B5.1/4/20-21]
– 52 –
A/1/56
135.4. the patchiness and apparent inconsistency of the Defendant’s version control of
contractual and policy documents and the use of earlier documents with later
Subpostmasters and/or earlier documents with later Subpostmasters;
135.5. the fact there was no single resource where a Subpostmaster could look up the up
to date provisions relevant to a particular issue or problem, collected together and
presented with clarity in an organised and intelligible way;
135.6. the acceptance by the Defendant of the need to imply essential basic terms, which
its professional drafting had failed to address.
136. As to the Defendant’s almost entirely unparticularised case that these duties (and other
implied terms) would conflict with some of the express terms, it appears to be without
foundation. The contracts are silent on those points – hence the belated concession of an
implied term not to alter the contract dishonestly (etc) where the NFSP has not agreed
the amendments.
137. The basis upon which the Defendant may say that duties of good faith, fair dealing,
transparency, cooperation, and trust and confidence would generally traverse other
express terms of the contracts in issue remains entirely elusive and cannot be discerned
in advance of the Defendant’s submissions (or perhaps its Written Opening).
Findings on Issue (1): Relational Contract
138. The Subpostmaster contracts in issue are paradigm ‘relational contracts’ subject to
obligations of good faith, fair dealing, transparency, cooperation and trust and
confidence.
139. The Claimants respectfully invite the Court so to find and to answer Issue (1) in the
affirmative.
140. The content of those duties is sensitive to context, but in the context of this relationship,
there is no reason to depart from the natural import of those duties. Terms such as “fair
dealing” are readily understandable and applicable.
– 53 –
A/1/57
141. The obligation of good faith imports the objective standard of barring conduct regarded
as commercially unacceptable by reasonable and honest people.151 The Defendant ought
to have nothing to fear from being held to that standard.
142. For present purposes, the Claimants invite the Court to find that the content of the
implied obligation extends to: 152
142.1. acting honestly and with fidelity to the bargain;
142.2. not acting dishonestly and not acting to undermine the bargain entered or the
substance of the contractual benefit bargained for.
143. These duties of fair dealing, transparency, cooperation and trust and confidence had an
obvious bearing upon the Defendant’s dealings with Subpostmasters, with regard to
alleged shortfalls.
151 Yam Seng, [145]

152 Al Nehyan v Kent [2018] EWHC 333 (Comm) (“Al Nehyan”), [175]
– 54 –
A/1/58
Issues 2 and 3: Implied Terms
Issue 2: Which, if any, of the terms in the paragraphs listed below were implied terms
(or incidents of such implied terms) of the contracts between Post Office and
Subpostmasters?
Issue 3: If the terms alleged at GPOC, paras 64.16, 64.17, 64.18 and / or 64.19 are to be
implied, to what contractual powers, discretions and / or functions in the SPMC and
NTC do such terms apply?

Generic 64 to 65 105 to 107 58
Bates 86 to 90 55 to 68 46, 48 to 49, 63 to 79
Stubbs 89 to 93 40 to 53 38, 40 to 42, 55 to 67
Sabir 65 to 69 54 to 67 43, 45 to 47, 60 to 72
Abdulla 63 to 67 42 to 55 37, 39 to 41, 53 to 65
Dar 78 to 82 42 to 55 36, 38 to 40, 53 to 65
Stockdale 77 to 81 37 to 50 31, 33 to 35, 47 to 59
Introduction
144. It is the Claimants’ case on Common Issue 2 is that some or all of the terms enumerated
at paragraphs 64.1 to 64.19 of the Claimants’ Generic Particulars of Claim are implied
terms (or incidents of implied terms) of the SPMC and NTC contracts:
144.1. by reason of the contract being a ‘relational contract’ (as to which see Issue 1:
Relational Contract, above); and/or
144.2. by reason of business necessity and/or obviousness:
a. as appraised through the prism of commercial and practical coherence
(Type 1: Commercial or practical coherence, on p.60, below); and/or
b. given the class of contractual relationship created by the contracts (Type 2:
Class of relationship created, on p.62, below).
145. The Claimants will respectfully submit that all roads lead to Rome: these approaches are
not truly distinct (as is obvious from the orthodox and principled underpinning of the
reasoning in Yam Seng) and in the present case, they largely sing with one voice.
– 55 –
A/1/59
146. The proper starting point is found in the orthodox and now well-established principles
expressed by the Supreme Court in Marks and Spencer plc v BNP Paribas Security
Services Trust Co [2016] AC 742, [2015] UKSC 72 (‘Marks & Spencer’), briefly addressed
from p. 60 below and more fully explored in Annex III: Issues 2 and 3 – Implied Terms.
147. Marks & Spencer establishes the correct approach with clarity and highlights one matter
as to which the Claimants and Defendant may take very different views, namely the
meaning of necessity in this context. Lord Neuberger PSC (with whom Lord Sumption
and Lord Hodge JJSC agreed) said this, at [21]:
“… necessity for business efficacy involves a value judgment. It is rightly common

ground on this appeal that the test is not one of ‘absolute necessity’, not least because
the necessity is judged by reference to business efficacy. It may well be that a more
helpful way of putting Lord Simon’s second requirement is, as suggested by Lord
Sumption JSC in argument, that a term can only be implied if, without the term, the
contract would lack commercial or practical coherence.”
148. If the Defendant seeks to oppose the implication of the terms in issue on the basis that
they are not ‘absolutely necessary’ (however that may be presented), such an approach
would be wrong in law.
149. Accordingly, the Claimants approach the test on the correct footing, above.
The terms to be implied
150. With that brief introduction, the implied terms contended for by the Claimants are set
out below (categorised by subject matter and numbered (1) to (19)):
Training and Support
150.1. An implied term that the Defendant was required: 153
(1) to provide adequate training and support (particularly if and when the Defendant
imposed new working practices or required the provision of new services)
153 GPOC at §64.1 [B3/1/35]
– 56 –
A/1/60
Horizon and recording transactions
150.2. Implied terms that the Defendant:
(1A) provide a system that was reasonably fit for purpose, including any adequate error
repellency;154
(2) properly and accurately to effect, record, maintain and keep records of all
transactions effected using Horizon;
Investigations and shortfalls
150.3. Implied terms requiring the Defendant155
(3) properly and accurately to produce all relevant records and/or explain all relevant
transactions and/or any alleged or apparent shortfalls attributed to Claimants;
(4) to co-operate in seeking to identify the possible or likely causes of any apparent or
alleged shortfalls and/or whether or not there was indeed any shortfall at all;
(5) to seek to identify such causes itself, in any event;
(6) to disclose possible causes of apparent or alleged shortfalls (and the cause thereof)
to claimants candidly, fully and frankly;
(7) to make reasonable enquiry, undertake reasonable analysis and even-handed
investigation, and give fair consideration to the facts and information available as
to the possible causes of the appearance of alleged or apparent shortfalls (and the
cause thereof);
(8) to communicate, alternatively, not to conceal known problems, bugs or errors in or
generated by Horizon that might have financial (and other resulting) implications
for Claimants;
(9) to communicate, alternatively, not to conceal the extent to which other
Subpostmasters were experiencing relating to Horizon and the generation of
discrepancies, or alleged shortfalls;
154 GPOC at §64.1A [B3/1/35]

155 GPOC at §64.2 to 64.12 [B3/1/35-37]
– 57 –
A/1/61
(10) not to conceal from Claimants the Defendant’s ability to alter remotely data or
transactions upon which the calculation of the branch accounts (and any
discrepancy, or alleged shortfalls) depended;
(11) properly, fully and fairly to investigate any alleged or apparent shortfalls;
(12) not to seek recovery from Claimants unless and until:
(a) the Defendant had complied with its duties above (or some of them)
(b) the Defendant has established that the alleged shortfall represented a
genuine loss to the Defendant; and
(c) the Defendant had carried out a reasonable and fair investigation as to the
cause and reason for the alleged shortfall and which it was properly
attributed to the Claimants under the terms of the Subpostmaster contract.
Exercising of powers and discretions
150.4. Implied terms limiting the manner in which the Defendant may exercise its powers
and discretions; specifically, the following implied terms, requiring the
Defendant156
(13) not to suspend Claimants:
(a) arbitrarily, irrationally or capriciously;
(b) without reasonable and proper cause; and/or
(c) in circumstances where the Defendant was itself in material breach of duty.
(14) not to terminate the Claimants’ contracts:
(a) arbitrarily, irrationally or capriciously;

(b) without reasonable and proper cause; and/or
(c) in circumstances where the Defendant was itself in material breach of duty.
(15) not to take steps which would undermine the relationship of trust and confidence
between the Claimants and the Defendant;
(16) to exercise any contractual, or other power, honestly and in good faith for the
purpose for which it was conferred;
156 GPOC at §64.13 to 64.18 [B3/1/37]
– 58 –
A/1/62
(17) to exercise any such discretion in accordance with the obligations of good faith, fair
dealing, transparency, cooperation and trust and confidence.
Reasonable care
150.5. An implied term requiring the Defendant
(18) “to take reasonable care in performing its functions under the contract,
particularly when those functions could affect the accounts, business, health and
reputation of the Claimants. 157
151. As to Issue 3, the Claimants’ case is that the terms alleged (a) at GPOC §64.16 to 64.18
(under Exercising of powers and discretions above), and (b) at GPOC §64.19, under
Reasonable care above, apply to all contractual and other powers and discretions.158
Relevant principles
152. As set out at the outset of this Written Opening (p.4), sequencing is important: it is only
after the process of construing the express provisions of the relevant Subpostmaster
contracts that consideration can be given to the implication of the terms pleaded by the
Claimants and, indeed, those implied terms admitted by the Defendant.
153. It is necessary to preface consideration of the relevant principles with brief observations
as to the approach in different contexts.
Two categories of implied terms
154. Although they are not, on analysis, actually distinct, there are two kinds of implied terms,
whose implication is based on obviousness and/or necessity:
154.1. those which, on a proper (objective) construction, the parties must have
intended in order to give the agreement the necessary commercial or practical
coherence (Type 1, p.60 below); and
154.2. those that necessarily arise out of a class of contractual relationship created by
the contract (Type 2, p.62 below).
157 GPOC at §64.19 [B3/1/38]

158 The Claimants contend
– 59 –
A/1/63
155. Unusually, the implied terms in issue in the present case are, at the nexus of those two
types of implied terms.
156. These two kinds of categories themselves were recognised in Société Générale, London
Branch v Geys [2013] 1 AC 523, [2012] UKSC 63, per Lady Hale (Soc Gen),159 as follows:
“In this connection, it is important to distinguish between two different kinds of

implied terms. First, there are those terms which are implied into a particular contract
because, on its proper construction, the parties must have intended to include them:
see Attorney General of Belize v Belize Telecom Ltd [2009] UKPC 10, [2009] 1 WLR
1988. Such terms are only implied where it is necessary to give business efficacy to the
particular contract in question. Second, there are those terms which are implied into a
class of contractual relationship, such as that between landlord and tenant or between
employer and employee, where the parties may have left a good deal unsaid, but the
courts have implied the term as a necessary incident of the relationship concerned,
unless the parties have expressly excluded it: see Lister v Romford Ice & Cold Storage
Co Ltd [1957] AC 555, Liverpool City Council v Irwin [1977] AC 239.”
157. The Claimants expressly rely upon the fact that “many aspects of the written contractual terms
reflect a contract of employment” (GPOC at §45).160 It is clear that the contracts which this
Court is asked to consider in this litigation have aspects of both commercial and
employment contracts – a material factor informing their construction and the terms to be
implied. However, it is helpful to consider the different emphasis in the two kinds of cases
to which Lady Hale refers.
Type 1: Commercial or practical coherence
158. For the purposes of first type of implied term referred to by Lady Hale, the approach is
clearly established in in Marks & Spencer and the Claimants case is that the implied terms
for which they contend satisfy the five requirements in that case, as properly understood.
159. The implied terms for which the Claimants contend are obviously both reasonable and
equitable (although that does not itself justify their implication).
159 Lady Hale’s classification having been subsequently adopted, for example, by Jackson LJ in Mid
Essex Hospital Services NHS Trust v Compass Group [2013] BLR 265 at [80]
160 See also GPOC at §9
– 60 –
A/1/64
160. They are to be implied because they are necessary to give business efficacy to those
contracts (as now understood to embrace commercial and practical coherence).
161. This would be so, even if this were to be treated as a “detailed commercial contract” or “a
very detailed document, which had been entered into between two substantial and experienced
parties, and had been negotiated and drafted by expert solicitors” as was being considered in
Marks & Spencer (which these agreements were clearly not, in the sense used in that case).
162. Alternatively, they are so obvious that they go without saying – or at least they would go
without saying certainly to notional reasonable person in the position of the parties at the
time they entered into those contracts.161
163. The Defendant’s position as to the implication of a duty of good faith (see: Example: the
Defendant’s case on good faith, on p.40, above) illustrates this point well. The test is not
whether the Defendant would “obviously have rejected” an obligation of good faith,162 but
whether a notional person in the position of the Defendant would have done.
164. The terms contended for are capable of clear expression do not contradict any express
term of the contract. The Defendant’s contentions to the contrary are strained.
165. The Claimants primary case is that it is clear that without the implied terms, the contract
would lack commercial or practical coherence. While the Defendant denies the
Claimant’s implied terms, it is significant to recall the Defendant’s admission that it is
necessary to imply terms into the agreements of which the Defendant was itself the
author – albeit, the Defendant’s own implied terms of wide application, namely implied
duties to co-operate and not to prevent performance of the contracts.
166. The Claimants will also rely upon the general proposition that in the absence of very clear
language to the contrary, any genuine contractual discretion must be exercised in good
faith and not arbitrarily or capriciously, nor contrary to the purpose of the
161 ‘As [Lord Neuberger PSC] says (para 21), one is concerned not with “the hypothetical answer of the actual
parties”, but with that of “notional reasonable people in the position of the parties at the time at which they
were contracting”, or in other words of Lord Hoffmann’s “reasonable addressee”: the Belize case, para 18’
per Lord Carnwath JSC at [72] in Marks & Spencer
162 GDef at §106(2)
– 61 –
A/1/65
contract, or in a manner that is irrational. The Defendant’s refusal to concede this is
telling; its position is unrealistic.
Type 2: Class of relationship created
167. In Soc Gen, Lady Hale continued from the passage quoted above, as follows:
“A great deal of the contractual relationship between employer and employee is

governed by implied terms of the latter kind. Some are of long-standing, such as the
employer's duty to provide a safe system of work. Some are of more recent discovery,
such as the mutual obligations of trust and confidence. This was referred to by Dyson
LJ in Crossley v Faithful and Gould Holdings Ltd [2004] IRLR 377 as an
"evolutionary process". He also described the "necessity" involved in implying such
terms as "somewhat protean", pointing out that some well-established terms could
scarcely be said to be essential to the functioning of the relationship. At para 36, he
said this:
‘It seems to me that, rather than focus upon the elusive concept of necessity, it is
better to recognise that, to some extent at least, the existence and scope of
standardised implied terms raise questions of reasonableness, fairness and the
balancing of competing policy considerations.’
There is much to be said for that approach, given the way in which those terms have
developed over the years.”
168. Dyson LJ’s judgment in Crossley v Faithful and Gould Holdings Ltd [2004] ICR 1615,
[2004] EWCA Civ 293 (‘Crossley’) helpfully discusses the meaning of necessity in the
context of the employment relationship – probably correctly foreshadowing the more
nuanced meaning above, in Marks & Spencer, in the parallel but different context of
detailed commercial contracts (see [34] to [40]) – in the course of rejecting an implied duty
to give employees financial advice.
169. One example given by Dyson LJ, as to the concept of necessity, in the context of an
employment relationship, is the implied term of trust and confidence (the so-called ‘t&c’
term) that an employer will not engage in conduct which is likely to undermine the trust
and confidence required if the employment relationship is to continue in the manner the
employment contract implicitly envisages: see per Lord Nicholls in Mahmud v Bank of
Credit and Commerce International SA [1997] ICR 606, at 610–611. Parenthetically, it is
striking that one of the duties implied in Yam Seng was that of mutual trust and
– 62 –
A/1/66
confidence. Indeed, it is also one of the free-standing implied terms pleaded by the
Claimants (see: GPOC at §64.15).
170. In fact, one can see from the principles applied in Braganza v BP Shipping Ltd [2015]
UKSC 17 (“Braganza”) that the approach to the implication of terms in the employment
context is not an exercise which is, in itself, categorically distinct from that applicable to
detailed commercial contracts negotiated and drafted by the parties’ expert solicitors.
Rather, there is a continuum on which the court makes the ‘value judgment’ to which Lord
Neuberger referred in Marks & Spencer at [21]. The context informs the making of that
value judgment.
171. In result, on that approach, these contracts and the nature of the legal relationship which
they created both invite and admit the implication of the terms for which the Claimants
contend, on the basis of the Claimants’ case.
172. However, for completeness, it is also necessary to consider the aspects of the Claimants’
case which are admitted (fully or in part) by the Defendant – including whether the
Defendant effectively agrees that such terms (or other terms with like incidents) are
necessary and do not conflict with the express terms of the Subpostmaster contracts.
The Defendant’s case on implied terms
173. By its Generic Defence, the Defendant admits and avers that the two broad terms noted
above governing the relationship between the parties were implied in Subpostmaster
contracts. These implied terms are that:163
173.1. each party would refrain from taking steps that would inhibit or prevent the other
party from complying with its obligations under or by virtue of the contract (the
“Stirling v Maitland Term”); and
173.2. each party would provide the other with such reasonable cooperation as was
necessary to the performance of that other’s obligations under or by virtue of the
contract (the “Necessary Cooperation Term”).
163 GDef at §105 [B3/2/47]
– 63 –
A/1/67
174. By its Individual Defences in the Lead Claims, the Defendant goes beyond this (as noted
above, in relation to good faith). It further accepts the following to be implied terms (the
“Dishonesty Terms”):-
174.1. SPMC: Pursuant to Section 1, Clause 18 of the SPMC, the Defendant had: (i) a
power to change the contract and its operational instructions with the agreement
of the National Federation of Subpostmasters (“NFSP”); and (ii) a power to change
the contract and its operational instructions without the agreement of the NFSP.
As to these powers:
a. The Defendant admits that with respect to the latter such power, it is an
implied term of the SPMC that the Defendant will not to exercise the same
“dishonestly or in an arbitrary, capricious or irrational manner”.
b. Somewhat surprisingly, it is not accepted by the Defendant that the implied
term would apply with respect to the former such power.164 The basis for the
distinction is unclear, and the Individual Replies have put the Defendant to
strict proof as to the basis upon which the Defendant is entitled to so act (e.g.
dishonestly) when making a change which was agreed by the NFSP.165
174.2. NTC: The Defendant identifies three clauses – Part 2, Clause 20.2; Part 3, Clause
3.1; and Part 5, Clause 1.3 – in respect of which
a. The Defendant admits that there is an implied term requiring the Defendant
to not exercise those entitlements dishonestly or in an arbitrary, capricious or
irrational manner.166
b. Similarly, the Individual Replies put the Defendant to strict proof on the basis
upon which the Defendant contend it is entitled to act dishonestly in relation
to any other powers under the contract.167
164 See, e.g. Bates/IDef at §65(2) [B5.1/3/38]

165 See, e.g. Bates/IReply at §73.2 [B5.1/4/32]
166 See, e.g. Dar/IDef at §52(2) to (4) [B5.5/3/26-27]
– 64 –
A/1/68
175. Yet save as above, the Defendant’s case is that the relevant Subpostmaster contracts were
not subject to any of the implied terms pleaded in GPOC §64 and set out above. In
particular, the Defendant’s case is that:-
175.1. The alleged terms are not so obvious as to go without saying and were not
necessary for the business efficacy of the contract. The contract is said to have not
lacked practical or commercial coherence.168
175.2. The SPMC and NTC are said to be detailed and professionally drafted written
agreements designed to be used for a business-to-business relationship.169
175.3. The alleged terms would have prevented the parties from acting commercially,
sensibly and flexibly in response to situations arising during the contractual
relationship.170
176. The Defendant also takes issue with the number and detail of the implied terms
contended for by the Claimants. Somewhat surprisingly, it is said by the Defendant that
this (alone) “demonstrates that none of those terms was a term that the parties would
necessarily have agreed had they sought to make express provision for the subject matter”.171 The
Defendant claims that only the express terms of the contract, and its admitted implied
terms, are what the parties in fact chose to contract upon.
Uncertainty as to implied terms (or incidents) admitted
177. Although the Defendant admits the Necessary Cooperation Term and the Stirling v
Maitland Term, it has proved impossible for the Claimants to discern the true import of
these admitted terms, so far as regards the Common Issues and particularly the implied
terms alleged by the Claimants which the Defendant contends are already ‘governed’ by
the admitted terms (GDef at §106(2)).
167 See, e.g. Dar/IReply at §63.3 [B5.5/4/28] – although the Claimants readily accept that the absence
of a term requiring good faith is not necessarily to be equated with permission to a party to act in
bad faith, the way in which the Defendant’s case is pleaded in the present case appears to claim,
or at least to come very close to claiming, a right to exercise powers dishonestly.
170 See, e.g. Bates/IDef at §56(5) [B5.1/3/34-35]
– 65 –
A/1/69
178. It follows from the Defendant’s admission and averment that of implied terms of the
breadth and general application as the Necessary Cooperation Term and the Stirling v
Maitland Term that it is uncontroversial that:
178.1. the Subpostmaster contracts did not legislate for the relationship (including e.g.
cooperation) required between the parties in order to give effect many of the
express terms agreed or to give the contracts the necessary commercial or practical
coherence;
178.2. the express terms in question includes dealing with the subject matter at which the
Claimants’ pleaded implied terms are directed;
178.3. it is both necessary to give business efficacy to Subpostmaster contracts and so
obvious as to go without saying that terms requiring the parties to co-operate and
not to prevent performance are to be implied so as to address that subject matter.
179. Thus it follows from the foregoing that it is also uncontroversial that the Subpostmaster
contracts forming the subject of this trial were, despite their apparent complexity,
materially incomplete in a great many respects including as to the full spectrum of subject
matter at which the Claimants’ implied terms are directed.
180. It is in respect of this chasm that both parties seek to imply duties:
180.1. the Defendant admits and avers wide ill-defined duties of cooperation and
prohibition on prevention of performance; whereas
180.2. the Claimants plead formulated, narrower implied terms that are clearly
expressed (alternatively, in any event, meet the requirement of being capable
of clear expression) that are both obvious and go no further than is necessary
to give business efficacy to the terms of the Subpostmaster contracts.
181. The Claimants’ approach accords with, and satisfies the requirements of, the established
approach to the implication of such terms insofar as:
181.1. that there is no general requirement in law to imply either such terms; and
– 66 –
A/1/70
181.2. such terms are to be implied out of necessity and in order to give efficacy to
the express terms of the contract (see Ukraine v The Law Debenture Trust
Corporation Plc [2018] EWCA Civ 2026 and overview of the principles
restated and affirmed by the judgment of Gloster LJ in that case in Annex C:
Implied Terms, below).
182. Despite every effort made by the Claimants to narrow the extent of disagreement, the
Defendant has refused to be drawn on the precise extent to which the Defendant in fact
admits the substantive obligations imposed by the implied terms contended for by the
Claimants, or admits that those terms are incidents of other implied terms.
183. This remains at large, despite the clear wording of Issue (2):
“Which, if any, of the terms in the paragraphs listed below were implied terms (or
incidents of such implied terms) of the contracts between Post Office and
Subpostmasters?” [Emphasis added]
184. By its Generic Defence at §106(2), the Defendant pleaded that:
“The numerous additional terms alleged by the Claimants in paragraphs 64.1 to 64.19 are neither
necessary to the business efficacy of the Subpostmaster Contracts nor so obvious as to go without
saying. Many of them would obviously have been rejected by Post Office had they been proposed
and / or are unreasonable and / or make no commercial sense. Further, many of the matters that
are already governed by the terms of the said contracts (including the Stirling v Maitland Term
and the Necessary Cooperation Term) and / or positively contradict those terms.” [Emphasis
added]
185. The Claimants sensibly enquired as to which of its proposed terms are already said to be
governed by the Defendant’s admitted implied terms. The first such enquiry was made
by a Part 18 CPR Request dated 31 July 2017 (Request 61).172 The Defendant’s response
dated 13 September 2017 did not clarify its position:
“61: These are matters for submissions. However:
61A: Post Office's case in this regard is that certain of the implied terms alleged by the Claimants
address matters that are already governed by the Stirling v Maitland Term and/or the Necessary
Cooperation Term; in other words, Post Office contends that the subject matter of the
172 [B4/2/23-24]
– 67 –
A/1/71
implied terms alleged by the Claimants is addressed sufficiently by the implied terms that Post
Office pleads, such that the test of necessity cannot be met in relation to the Claimants' alleged
terms. This is not "in substance" the acceptance of the Claimants' alleged terms. On the contrary,
it forms part of an argument that those terms are not to be implied. An example of such an alleged
term is that pleaded at paragraph 64.1 of the GPoC.
61B: Post Office's case in this regard is that certain of the implied terms alleged by the Claimants
would contradict the express terms of the agreements and/or the Stirling v Maitland Term and/or
the Necessary Cooperation Term by requiring Post Office to take steps that would not facilitate
the discharge of the Subpostmaster's obligations and/or would in some circumstances hinder the
discharge of those obligations. An example of such an alleged term is that pleaded at paragraph
64.3 of the GPoC.” [Emphasis added]
186. With justification, the Claimants regard the Defendant’s response as both unclear and
evasive. Seeking to narrow the scope of the issues to be determined at this trial, the
Claimants requested further information pursuant to Part 18 CPR on 29 December
2017.173 They asked of the Defendant’s Response 61A:
“(a) Save for the example given [which was an implied term to provide adequate training
and support], which implied terms alleged by the Claimants are said to be addressed sufficiently
by the implied terms that Post Office pleads?
(b) With respect to each such implied term alleged by the Claimants, please state the extent to
which it is admitted that those pleaded by Post Office could give rise to the same contractual
obligations as those by the Claimants in paragraph 64 of the Amended Generic Particulars of
Claim?” [Emphasis added]
187. The Defendant consented to the inclusion of a direction under Part 18 CPR in the Second
CMC Order that it not only respond to the Claimants RFI, but that it also provide the
information requested. Despite this, the Defendant’s response was as follows:174
“1. As indicated in Response 61A of the Response to the Claimants' Request for
Further Information dated 31 July 2017 ("the July 2017 RFI Response"), this is a
matter for submissions. Further, the Claimants seek particulars of Post Office's case
on implied terms in circumstances where they admit the implied terms that Post Office
asserts. The Claimants do not require the information that they seek now to
173 [B4/3/2]
174 [B4/3/2]
– 68 –
A/1/72
understand Post Office's case or to prepare to meet it. The matters set out below are
without prejudice to these points.
2. As to Request 67(a) specifically, the request is based on an apparent

misunderstanding of Post Office's case and is inappropriate;
a. The request proceeds on the assumption that Post Office contends that the
Stirling v Maitland and Necessary Cooperation Terms address the further implied
terms alleged by the Claimants in paragraph 64 of the Amended Generic
Particulars of Claim ("AGPoC").
b. That is not Post Office's case. Post Office's case is that, if and insofar as it may
be necessary for a term to be implied addressing the subject matter of the further
implied terms alleged by the Claimants, that subject matter is addressed sufficiently
by the Stirling v Maitland and Necessary Cooperation Terms. In other words, if
and insofar as it may be necessary for a term to be implied which in any way
addresses any of the innumerable circumstances which might be affected by the
further terms alleged in relation to a particular subject matter, such necessity is
satisfied by the Stirling v Maitland and Necessary Cooperation Terms, terms which
are admitted by the Claimants.
c. If and to the extent that the Claimants wish to contend that the Stirling v
Maitland and Necessary Cooperation Terms would not be sufficient because of
specific facts and matters on which they rely in contending that any specific term
should be implied, Post Office will respond to any particularised case to that effect.
d. Post Office cannot identify all the various circumstances that would be
addressed by the further implied terms alleged by the Claimants and explain in each
case why the Stirling v Maitland and Necessary Cooperation Terms are sufficient
to meet any alleged necessity to imply a term. The Claimants' generic pleadings are
not sufficiently detailed to allow detailed argument on matters of this sort,
including because the Claimants have not separately pleaded specific facts and
matters in support of each of their alleged implied terms. It would not be reasonable
to require Post Office to speculate as to the Claimants' case on the supposed
necessity of each of the further alleged implied terms.
3. Notwithstanding the above, on Post Office's present understanding of the

Claimants' case and seeking as best it can to anticipate the Claimant's arguments on
implied terms:
a. Post Office contends that the Stirling v Maitland and Necessary Cooperation
Terms are sufficient to meet any necessity to imply terms in relation to following
general areas: the provision of training (addressed by the implied term alleged at
– 69 –
A/1/73
AGPoC, paragraph 64.1), the steps taken in relation to shortfalls disclosed by the
accounts (addressed by the implied terms alleged at AGPoC, paragraphs 64.3-
64.12) and dealing with any problems with Horizon (addressed by the implied
terms alleged at AGPoC, paragraphs 64.1A, 64.8 and 64.9).
b. Post Office contends that the Stirling v Maitland and Necessary Cooperation
Terms are sufficient to meet any necessity to imply terms in relation to the overall
contractual relationship between the parties. Accordingly, Post Office will rely on
those terms in resisting the implication of the further implied terms that the
Claimants allege in relation to that overall contractual relationship: see the implied
terms alleged at AGPoC, paragraphs 63, 64.15, 64.18 and 64.19.
4. As to Request 67(b) specifically, the request is based on an apparent misunderstanding

of Post Office's case and is inappropriate:
a. The request proceeds on the assumption that the Defendant admits that the Stirling v
Maitland and Necessary Cooperation Terms "give rise to the same obligations as [some
or all of] the further terms alleged by the Claimants".
b. That is not Post Office's case. Post Office's case is that, if and insofar as it may be
necessary for a term to be implied addressing the subject matter of the further implied
terms alleged by the Claimants, that subject matter is addressed sufficiently by the
Stirling v Maitland and Necessary Cooperation Terms. In other words, if and insofar as
it may be necessary for a term to be implied which in any way addresses any of the
innumerable circumstances which may be affected by the further terms alleged in relation
to a particular subject matter, such necessity is satisfied by the Stirling v Maitland and
Necessary Cooperation Terms, terms which are admitted by the Claimants. This is
different from an admission that the Stirling v Maitland and Necessary Cooperation
Terms include the same contractual obligations as any of the alleged further implied
terms, and no such admission is made. The implied terms and obligations are different.
c. For the avoidance of doubt, nor is it Post Office's case that the practical effects of the
Stirling v Maitland and Necessary Cooperation Terms are the same as the practical
effects that would result from the alleged further implied terms. The extent of overlap in
the practical effects would depend on the particular factual circumstances at issue, and
the Claimants' generic pleadings are not sufficiently detailed to allow detailed argument
on matters of this sort.” [Emphasis added]
188. The Claimants asked a similar question in relation to which of the implied terms in
GPOC §64 are said to positively contradict the terms of the contract (both express and
– 70 –
A/1/74
the implied terms accepted by the Defendant), and received a similarly evasive
answer.175 For example, the Defendant states that:
“Whether the further implied terms alleged by the Claimants would hinder the
discharge of the obligations under the express and implied terms relied upon by Post
Office depends on the alleged practical consequences of the alleged implied terms in
particular circumstances. This is a matter for submissions in light of the matters put
forward in more detailed pleadings. It would not be reasonable to require Post Office
to seek to identify exhaustively the inconsistencies that may arise in all possible
circumstances.”176
189. The Defendant has refused therefore to identify which argument applies to which terms,
reserving the matter for submissions at trial rather than narrowing this issue. As the two
arguments (i.e. “already governed” and “positively contradict”) are polar opposites, the
consequences of that ambiguity are stark.
190. By a letter dated 27 June 2018,177 the solicitors for the Defendant, after being further
pressed by the Claimants, stated that, in the example of training:
“Post Office was required to provide training and support in accordance with (a) the
express terms of the contracts and/or (b) the implied term as to Necessary Cooperation
and/or (c) the Stirling v Maitland implied term.” [Emphasis added]
191. The implied term pleaded by the Claimants at GPOC §64.1 is that the Defendant is
required to “provide adequate training and support (particularly if and when the Defendant
imposed new working practices or systems or required the provision of new services)”.
Accordingly, the Claimants’ solicitors sought by letter dated 29 June 2018 to ascertain the
extent to which this apparent concession further narrowed the issues for determination
at the Common Issues Trial by asking further:
“If there is no material difference between this and an obligation to provide adequate
training and support, then please say so now. If Post Office will in fact contend that
there is some material difference, please also say so now and explain what that is. For
example, Post Office could deny any requirement that the training and support
175 See Responses 5 to 6 of the Defendant’s Response to the Claimants’ Second RFI [B4/3/5]
176 ibid at Response 5.
177 [H/10]
– 71 –
A/1/75
should be adequate. Is that in fact Post Office’s case? If so, please spell it out now,
by return.”178
192. No satisfactory answer has been received. The Defendant was finally persuaded to
provide further information by means of a table, said to describe “Post Office’s case on the
subject matters addressed” by the implied terms contended for by the Claimants and those
accepted by the Defendant (the “Implied Terms Table”).179
193. The Court is respectfully requested to read the Implied Terms Table. It is regrettably
unclear, but in the circumstances, is informative as an overview of the extent of difference
between the parties on Issues 2 and 3.
194. By the Implied Terms Table (which is qualified by a wide ranging disclaimer)180 the
Defendant sought to respond to each implied term alleged by the Claimants by conceding
whether a breach of the Stirling v Maitland and Necessary Cooperation Terms could
amount to a breach of the Claimants’ pleaded implied terms.
195. Despite pleading that the “subject matter of the implied terms alleged by the Claimants is
addressed sufficiently by the implied terms that Post Office pleads, such that the test of necessity
cannot be met in relation to the Claimants' alleged terms.”181 the Defendant’s case appears to
amount to no more than an assertion that failure to comply with the Claimants pleaded
implied terms could, circumstances depending, also be capable of constituting a breach
of the Stirling v Maitland or Necessary Cooperation Terms.182
178 [H/11]
179 [H/19]
180 Being said, on its first page, to be “…without prejudice to any other argument that Post Office may
advance in relation to the implication of the Additional Terms and without prejudice to Post Office’s position
(as set out in earlier correspondence) that this document is not required by the Claimants nor are the
Claimants are entitled to it.”
181 Response to the Claimant’s RFI at 61A [B4/2/24]
182 See, for example, the Defendant’s response in the Implied Terms Table to the Claimants’ pleaded
implied term that Post Office provide adequate training: “The subject matter of the term alleged in
paragraph 64.1 is training. Post Office accepts that the Common Terms could address that subject matter,
in the sense that the provision of training may be capable of constituting a breach of those terms, if it
inhibited or prevented the other party from complying with his obligations under or by virtue of the contract,
or constituted a failure to provide reasonable training by Post Office (where such was necessary to the
performance of the other party’s obligations under or by virtue of the contract). Whether in
– 72 –
A/1/76
196. Notwithstanding the obvious lack of clarity with which the Defendant has approached
this matter, the Court is invited to proceed (from the foregoing) that the Defendant either
expressly or impliedly admits:
196.1. the Stirling v Maitland and Necessary Cooperation terms;
196.2. that those terms are necessary to give business efficacy to the contracts;
196.3. that they address the same “subject matter” as the Claimants’ implied terms;
196.4. that Post Office was required to provide training and support in accordance with
(a) the express terms of the contracts and/or (b) the implied term as to Necessary
Cooperation Term and/or (c) the Stirling v Maitland Term;
196.5. that provision of inadequate training could be a breach of that obligation; and
196.6. that the obligations imposed by the Claimants’ implied terms pleaded at GPOC
§64.16 to §64.18, being those numbered (16) and (17) above are either free- standing
obligations, contrary to its Generic Defence as pleaded, or incidents of its implied
terms.
The case for implication of the Claimants’ proposed terms
197. In the light of the foregoing, and in support of their case that the terms referred to as (1)
to (19) above, and pleaded at GPOC §64.1 to §64.19 are implied terms, the Claimants will
rely upon the following.
198. In general and with respect to all of the implied terms contended for:
198.1. To the extent those terms arise by reason of the contract being a ‘relational
contract’, the facts and matters set out in relation to Common Issue (1) above, upon
the principles set out in ‘Annex B: Relational Contracts’.
any particular case a failure to provide training, or the nature of the training provided, constitutes such a
breach would depend on the circumstances.” [Emphasis added] [H/19/1]
– 73 –
A/1/77
198.2. The Defendant’s admissions that it was necessary and / or obvious that the Stirling
v Maitland, Necessary Cooperation and Dishonesty Terms should be implied (as
admitted both in its Generic and Individual Defences).
198.3. That the implied terms do not contradict the express terms of the contact. This is
also apparently common ground insofar as it is the Defendants case that the subject
matter of the terms are already dealt with by its own pleaded implied terms. Given
this there can be no basis for its wholly unparticularised and contradictory
assertion that the Claimants’ pleaded implied terms do so conflict.
198.4. The contract was not a detailed and professionally drafted written agreement.
Rather, it was poorly and confusingly drafted. From 2000 onwards, the SPMC
became ever more outdated and ineffective in addressing the increasingly
digitised and complex Post Office operations. The SPMC quickly became outdated
and it wasn’t clear to Subpostmasters what the contract comprised. The contract
was sufficiently unclear on its express terms for the Defendant to concede the
necessity to imply wide terms requiring cooperation.
199. Further, with respect to the specific implied terms pleaded by the Claimants, the
following further considerations are relevant.
200. Under Training and Support (implied term (1)) above, the Claimants will rely on:
200.1. The Defendant’s (limited) admission that Post Office was required to provide
training and support183 and that provision of inadequate training may be a breach
of that requirement, as above. (Indeed, the contracts made provision for the
Defendant to provide training to assistants: see, Issues 22 and 23: Assistants,
under the sub-heading The express terms purporting to confer a benefit, on
p.161 below.)
183 An opaque concession, extracted from the Defendant – paragraph 190, on p.72 above
– 74 –
A/1/78
200.2. The expectations of the parties, no more clearly evidenced than in the Defendant’s
own “Welcome – Subpostmaster’s appointment pack”184 in which Defendant made
promises including the following:
“To help you make your new business a success, on-going training and support
are available. There is a lot to learn, but there will be plenty of expert support and
advice available, often just a phone call away. To support you with running your
branch, we offer a training package which is flexible and based upon your
individual needs.”
[…]
“On-site training
This takes place at your Post Office ® branch or neighbouring branch. It covers a
host of different aspects of your day to day work. The duration of training varies
from branch to branch, and is tailored to individual requirements.”
200.3. This was reflected in the Defendant’s own expectations in providing training for
Stockdale:185
“As Liz will not have had her training by then it would be up to you Karen to make
sure she is adequately trained and Karen you would be responsible for the Post Office
cash until Liz has officially taken over.”
200.4. Even on the Defendant’s admitted case, it is necessary (to comply with the
admitted requirement of cooperation and in order that such training be effective)
that the training be adequate in order that Subpostmasters are able to comply with
the contractual requirements upon them inter alia to use Horizon for the handling
of branch transactions and prepare and submit branch accounts using Horizon.
200.5. The Defendants own evidence that “[t]he aim of training is to equip the Subpostmaster
with the skills to perform the role that they have been asked to do” and that “effective
training… reduces the chance of an accounting or cash / stock handling
184 [F2/37/18]
185 [E6/45/1]
– 75 –
A/1/79
error in branch, thereby reducing shortfalls.”186 It follows that inadequate training
increases shortfalls.
200.6. That a term requiring adequate training be provided by the Defendant would, in
the circumstances, be so obvious as to go without saying (particularly given that
the Defendant intimated as much in the Welcome pack).
200.7. That such a term is plainly capable of clear expression, as pleaded.
200.8. That such a term does not conflict with express terms of the contract.
201. Under Horizon and recording transactions (implied terms (1A) and (2)) above, the
Claimants will rely on:
201.1. The Defendant’s own pleaded description of Horizon and the functions that it
performed, set out in the GDef at §§33, 38, 40 and 53 to 54.
201.2. The Defendant’s admitted role at §123 GDef, by which it largely admits GPOC
§81, which pleads that the Defendant:
a. effected, recorded and managed the reconciliation of transactions effected
by the Claimants;187
b. possessed and/or controlled the underlying transaction data in relation to
such transactions;
c. required Claimants to comply with contractual obligations in relation to the
keeping and production of branch accounts;
d. had the power to seek recovery from Claimants for losses relating to branch
accounts; and/or
e. in fact sought recovery from the Claimants for apparent shortfalls.
186 Van Den Bogerd, §99 and 99.1

187 The GDef pleads at §123(1) [B3/2/53] in respect of this averment that: “Post Office recorded the
transaction data entered on Horizon by Claimants and so far as possible sought to reconcile that transaction
data with other data is (sic) processed.” Otherwise, the remaining sub-paragraphs of GPOC §81 are
admitted.
– 76 –
A/1/80
201.3. The Defendant’s own evidence is that it provides Horizon to Subpostmasters as a
‘key benefit’ to joining the Post Office network.188 The Defendant’s own evidence is
that Horizon removes the burden upon Subpostmasters of preparing, maintaining
and submitting accounts by use of Horizon and has clear benefits (as a record
keeping system) over what went before.189
201.4. The provision of a system that was not fit for purpose (including by lacking
sufficient error repellency) would prevent Subpostmasters from performing
services for which they were appointed under their contracts – such that a term
requiring fitness for purpose is necessary for the contract to be workable.
201.5. It would be impossible for Subpostmasters (or indeed the Defendant) to perform
the contract, once Horizon had been introduced, if the Defendant was not obliged
properly and accurately to effect, record, maintain and keep records of all
transactions effected using the system.
201.6. In particular, Subpostmasters would be unable to comply with terms of the SPMC
and NTC contracts requiring them to (a) use Horizon for branch transactions, (b)
prepare and submit branch accounts using Horizon.
201.7. The terms pleaded by the Claimants requiring that it be fit for purpose and that
relevant data be recorded and maintained by Defendant on it (as formulated
above) are, in the circumstances, so obvious as to go without saying.
201.8. Finally, such terms are capable of clear expression – as pleaded.
202. Under Investigations and shortfalls (terms (3) to (16)) above, the Claimants will rely
on:
202.1. The Defendant’s admitted role at §123 GDef, as above.
202.2. That the contractual requirements upon Subpostmasters to produce and submit
branch accounts could not be performed at all, alternatively properly or accurately
performed, in circumstances where Subpostmasters were unable fully
188 Van Den Bogerd, §65.5

189 Van Den Bogerd , §91-98
– 77 –
A/1/81
and fairly to investigate the cause of alleged shortfalls either themselves or with
the assistance of the Defendant.
202.3. That it was therefore necessary for business efficacy that terms of the nature
pleaded by the Claimants be implied enabling the cause of any discrepancies in
branch accounts to be ascertained, whether by investigation by the Subpostmaster
(for which records in the Defendants possession were needed) or by the Defendant
(having access to information to which Subpostmasters do not).
202.4. The overwhelming evidential support for the foregoing by the like experience of
each of the Lead Claimants, as summarised in Section A above.
202.5. It was in any event necessary, to give effect to the express terms of the relevant
contracts imposing liability upon Subpostmasters for losses, for the cause of any
discrepancies to be ascertained and whether it represented a loss to Post Office for
such liability to arise – and without which, therefore, the contracts would be
unworkable and lack commercial coherence.
202.6. Such terms would be so obvious as to go without saying, accordingly.
202.7. Such terms are each capable of clear expression (being clearly expressed as they
are pleaded).
203. Under Exercising of powers and discretions (implied terms (13) to (17)) above, the
Claimants will rely on:
203.1. The absence of ‘very clear language’ (or indeed any language)190 in the relevant
contracts purporting to exclude of any implied obligations to exercise contractual
discretions in good faith, not arbitrarily or capriciously, and consistently with the
purpose of the contract.
203.2. The clear necessity for such implied obligations, in order to constrain exercise of
otherwise unfettered contractual discretions, whose effect would otherwise be
190 On the principles above, amplified in Annex III: Issues 2 and 3 – Implied Terms
– 78 –
A/1/82
contrary to the purpose of the contracts and contrary to the norms to be expected
both in the commercial context and in a relational contract of this nature.
203.3. The Defendant’s admitted role at §123 GDef, as above.
203.4. That it would be so obvious to notional reasonable persons in the position of the
parties as to go without saying that Post Office could not exercise such discretions
arbitrarily, capriciously, or inconsistently with the purpose of the contract.
203.5. Again, that such terms are so obvious as to go without saying, and capable of clear
expression – as accepted by analogy in the authorities referred to under the
heading Implied restriction on contractual discretion.
204. Under Reasonable care (implied term (19)) above, the Claimants will rely on:
204.1. The necessity, in order to give effect to the relationship created by the relevant
contracts, that the Defendant take reasonable care in performing its functions
under it: the powers and discretions to which the implied term relates could
adversely affect the accounts, business, health and reputation of the Claimant and
without such a limitation the bargain of the contract could be subverted.
204.2. That again, in a relational contract of this nature, the exercise of such care would
accord with the commercial norms to be expected.
Final matters arising on the Defendant’s case
205. Finally, it is the Defendant’s case that the following implied terms pleaded by the
Claimants “would have been onerous, unreasonable, uncommercial and/or unnecessary”:
205.1. the implied terms alleged in paragraphs §64.4 to 64.11 of the GPOC (implied terms
(4) to (11) above), being the requirements to investigate, or assist in the
investigation of, alleged shortfalls, which are also said to be “open-ended and
unlimited obligations”;191 and
191 See, e.g. Bates/IDef at §60 [B5.1/3/36]
– 79 –
A/1/83
205.2. the implied term pleaded at GPOC §64.12 (implied term (12) above), being the
requirement not to seek recovery of disputed shortfalls from the Claimants unless
and until it can be satisfied that the same represents a genuine (i.e. financial) loss
to the Defendant, and the Defendant has carried out a “reasonable” and “fair”
investigation).192
206. In all the circumstances, and given the necessity and obviousness of those terms, the
Defendant’s case in this respect is lacking in reality – particularly so in circumstances
where the Defendant itself contends for wider, less narrowly defined, implied duties to
co-operate which it contends obviate the need to imply those terms.
207. The focus of the Defendant’s case in this respect appears to be the assertion made by its
primary witness that “[i]f Post Office had to positively prove every shortfall was the fault of a
Subpostmaster, the administrative burden would be massive. It would also potentially require a
disproportionate amount of effort to be put into proving very small losses in branches, which to a
single branch may immaterial, but across 11,000 branches could add up to significant losses.”193
208. The Defendant has set up a straw man: nobody is suggesting a requirement, in practice,
for the Defendant to prove every alleged shortfall or a Transaction Correction sent to a
Subpostmaster – merely a reasonable system by which Subpostmasters could ascertain
the basis of any particular shortfalls and challenge them on an informed basis. If, under
such a system, the Defendant could not show that the alleged shortfall was both real and
caused by fault on the part of the Subpostmaster, then the Subpostmasters would not be
liable for it. What is in issue is the imposition of liability (without proof).
209. The Defendant’s position involves two assumed, if not express, premises:
209.1. that deviating from its own practices would be unfairly disruptive to the
Defendant and impose impossible or undue administrative burdens; and
209.2. therefore, the Court’s contractual construction must conform to the
Defendant’s own internal practices – the very subject of this dispute.

193 Van Den Bogerd, §144 [C2/1/39]
– 80 –
A/1/84
210. The Defendant seeks to rely upon in terrorem predictions of its witnesses as to the burden
to be imposed by, for example, checking daily cash declarations, and its alleged reliance
upon Subpostmasters as to what occurred in individual branches.194
211. But the terms it is necessary to imply do not impose burdens of the nature described:
211.1. Terms (3) and (4) impose requirements produce relevant records and to
cooperate in seeking to identify the causes of apparent losses – these are
functions for which Helpline was presumably intended.
211.2. Terms (5) to (7) (and (11)) require only that the Defendant, seek to identify
such causes itself, disclose (and not conceal) the same, and give fair and even
handed consideration to information available.
211.3. Terms (8) to (10) amount to requirements to disclose and/or not to conceal
certain matters including known bugs/errors with Horizon, the experience of
other Subpostmasters and its ability to alter relevant data remotely.
211.4. Term (12) requires, fairly and reasonably, that the Defendant not seek to
recover from Subpostmasters unless it had complied with the foregoing,
established that a shortfall amounted to a genuine loss and conducted a fair
investigation.
212. On Issue (3), the Claimants will also rely upon the Defendant’s admission that certain
contractual discretions and powers were, in any event, subject to an implied term that
they would not be exercised dishonestly, arbitrarily, capriciously or irrationally.
213. The Defendant’s concessions on implied terms are highly selective and the fact that the
Defendant refuses to be drawn on the impact of those concessions suggests, at least on
one view, that such concessions are tactical rather than realistic.
214. It is noteworthy that the Defendant appears very ready to concede implied obligations
when it is to its advantage, as illustrated by the Defendant’s previous concession before
the Court of Appeal in Moeze Lalji v Post Office Limited [2003] EWCA Civ 1873, at the
194 Van Den Bogerd, §126-139 [C2/1/34-38]
– 81 –
A/1/85
hearing of a renewed application for permission to appeal. The Defendant conceded that
its exercise of rights regarding suspension and termination, (including the power to
forfeit remuneration during suspension), was qualified by an implied term that “the power
must not be exercised capriciously”.195
215. There is no rational basis upon which such a term should not equally apply to all such
powers and discretions, or for confining the term to preclude only caprice rather than (for
example) bad faith. It will be for the Defendant to explain why it was contractually
entitled to act otherwise in its dealings with the Claimants or other Subpostmasters.
Findings sought by the Claimants on Issues 2 and 3
216. In the light of the foregoing, the Claimants will respectfully invite the Court find as
follows:
216.1. The context is important to the value judgment which the Court is required to
make. (The Claimants will address any particular factual findings to be made in
the light of the evidence at trial in closing.)
216.2. On Issue (2), all (or substantially all) of the implied terms pleaded by the Claimants
were implied terms (or incidents of implied terms) of the relevant Subpostmaster
contracts; and
216.3. On Issue (3), the implied terms referred to at GPOC, paras §§64.16, 64.17, 64.18
and/or 64.19 apply to all of the Defendant’s contractual powers, discretions and/or
functions under the terms of the SPMC and NTC contracts.
195 As recited by Sedley LJ at §27.
– 82 –
A/1/86
Issue 4: Supply of Goods and Services Act 1982
Issue 4: Did Post Office supply Horizon, the Helpline and / or training / materials to
Subpostmasters (i) as services under “relevant contracts for the supply of services” and
(ii) in the course of its business, such that there was an implied term requiring Post
Office to carry out any such services with reasonable care and skill, pursuant to section
13 of the Supply of Goods and Services Act 1982?

Generic 63A 104 57
Bates 91 to 92 69 to 70 76 to 79
Stubbs 94 to 95 54 to 55 68 to 71
Sabir 70 to 71 68 to 69 73 to 76
Abdulla 68 to 69 56 to 57 66 to 69
Dar 83 to 84 56 to 57 66 to 69
217. Depending on the Court’s decision as to the implied terms (above) this issue may be
unnecessary. Indeed, aspects of this issue may be moot because of the Defendant’s own
admissions as to its obligations (below).
218. However, the Claimants’ case is that the Defendant agreed to supply the following
services to the Claimants in the course of its business (together the “Services”) pursuant
to ‘a relevant contract for the supply of services’ within the meaning in Section 12(1) of the
1982 Act:
218.1. Horizon;
218.2. the Helpline; and
218.3. training and / or materials provided in relation to the foregoing.
219. As a result, the term requiring exercise of reasonable skill and care is to be implied under
Section 13 of the 1982 Act with respect to the provision of those Services.
220. The following preliminary observations set the stage:-
220.1. The Defendant itself admits that it was contractually bound to provide training
and support; specifically, that “Post Office was required to provide training and
– 83 –
A/1/87
support in accordance with (a) the express terms of the contracts and/or (b) the implied
term as to Necessary Cooperation and/or (c) the Stirling v Maitland implied term”.196
220.2. Indeed, the Defendant’s practice (at least at some point and when that practice was
actually followed) to require some Subpostmasters to agree to avail themselves of
training provided by the Defendant, in Appendix 1 to their Appointment Letters.
For example, see Appendix 1 in Sabir’s case:197
“I, Mr Mohammad Sabir, fully understand and accept these terms and
conditions and agree to avail myself of the pre-appointment introductory
training.”
220.3. As noted also below, the Defendant stipulated in the NTC that it:
“provides customer and business services such as helplines to support

Subpostmasters / operators”.198
221. There seems no sensible argument that the training which the Defendant admits it was
obliged to provide should not embrace the provision of materials for such training.
222. Equally, there seems to be no sensible distinction to be drawn between the provision of
Helpline and the support which the Defendant admits that it was obliged to provide.
223. The relevant principles on this issue are set out more fully in Annex IV: Issue 4 – Supply
of Goods and Services Act. They are encapsulated in the propositions set out below, by
which the Claimant contends that:
223.1. The Services were provided by the Defendant in the course of its business199 – a
proposition that is supported by the Defendant’s repeated characterisation of these
contracts as ‘business to business’ contracts (on its own case and, in any event, in
contradistinction to consumer contracts, which are now dealt with under a totally
separate statutory regime).
196 By letter dated 27 June 2018, [H/10]

197 [D1.3/1/1]
198 See, e.g., Stockdale/IPOC at §6.4 and 83.2 [B5.6/2/2] [B5.6/2/18]
199 “Business” is widely defined in 1982 Act at s.18(1) as: “includes a profession and the activities of any
government department or local or public authority”. This would capture a entity such as the
Defendant, wholly owned by the state.
– 84 –
A/1/88
223.2. The Services were plainly provided to the Claimants as ‘services’ within the
meaning of the 1982 Act. Provision of Horizon, the Helpline and training to
Subpostmasters was not a right that the Defendant simply elected to exercise in its
own interest and for its own protection;200 rather, they formed part of the package
of services provided by each party to the other under the terms of the
Subpostmaster agreements, and cannot be separated from other services to be
provided under those agreements – indeed they were integral to them. The
Defendant itself emphasises on the Subpostmaster contracts being contracts for
services. This was plainly a two way street.
223.3. The Services were essential to the operation by Subpostmasters of their branch and,
therefore, to the operation of the contract as a whole. Without them,
Subpostmasters could not possibly accepted the appointment, let alone performed
their core obligations under it.
224. Any attempt to parse the provision of Horizon as a service from the provision of the
Services as a whole is wholly artificial. These were provided as a central part of the wider
bargain struck between the Defendant and Subpostmasters, as explained below.
Horizon
225. Provision by Defendant: First, the position with regard to Horizon is straightforward
insofar as the Defendant’s own evidence is that “Post Office provides the equipment,
including IT equipment, needed to conduct customer transactions and maintain the branch
accounts, including safes, mail scales, Horizon, printers, barcode scanners and chip and pin
machines. It also provides the back-end IT infrastructure that connects each branch with Post
Office's Clients. I do not believe that a small business owner could put this infrastructure in place
on their own.”201
200 Such as, for example, the right to close out a client Forex position considered in Marex Financial
Limited v. Creative Finance Limited & another [2013] EWHC 2155 (Comm), per Field J at §71
201 Van Den Bogerd, §65.5
– 85 –
A/1/89
226. These services and hardware are said to be provided by the Defendant to Subpostmasters
as a ‘key benefit’ in joining the Post Office Network.202
227. The Defendant’s claims that Horizon reduced the burdens of preparing, maintaining and
submitting accounts, by generating them ‘automatically’.203
228. Horizon Online was (on the Defendant’s case) provided to facilitate the very business
that forms the primary subject-matter of the contract, as described in the Generic Defence
at §33:
“… Until 2010, Horizon was a distributed system in which transactions were

undertaken within branches, whose terminals transmitted transaction data in
branches to a central Post Office data centre. Once Horizon Online was introduced in
2010, transactions were effected through real time exchanges of data from branches to
a central Post Office data centre…” [Emphasis added]
229. Focus of training: Second, the necessary training (on the Defendant’s account) related
particularly to how to use the Horizon system and the service provided by the Defendant
thereby. The Defendant’s evidence is that at all material times initial training was offered
to new Subpostmasters by the Defendant,204 said (controversially) to include as “core
features”:
229.1. how to conduct basic transactions;
229.2. how to deal with remittances of cash and stock in and out of branch;
229.3. how to submit the required daily, weekly and monthly accounts;
229.4. how to declare, investigate, make good and dispute shortfalls; and
229.5. how to get further advice and support.205
230. Service to Subpostmasters: Third, the Lead Claimants’ evidence entirely supports the
characterisation of the provision of Horizon as a service, intended to offer them a

204 See, e.g., Van Den Bogerd §102 [C2/1/30]
205 See Van Den Bogerd §104 [C2/1/31]
– 86 –
A/1/90
means of performing tasks otherwise performed by them through other systems
procured by them personally.206
Helpline
231. In the GPOC, the Claimants pleaded at §29:
“The Defendant operated the Network Business Support Helpline (“the Helpline”) which it
provided and recommended to Claimants as a primary source of advice and assistance in relation
to Horizon, transactions, errors and issues relating to their trading statements and accounts.”
[Emphasis added]
232. GPOC §29 is admitted by the Defendant in the GDef.207 Whether (and if so, how) this falls
outside the admitted implied obligation to provide support remains wholly unclear. But
on any view, the Helpline was provided under ‘a relevant contract for the supply of services’.
233. It is evident from the Defendant’s admission above that: (i) the Defendant did provide
the service of the Helpline (indeed it recommended the same); and (ii) the functions to
which it relates go to the primary subject-matter of the Subpostmaster contract – namely:
(i) carrying out transactions via Horizon in branch; (ii) keeping accurate accounts; (iii)
and submitting trading statements to the Defendant.
234. The NTC contract makes express reference to the Defendant’s provision of the Helpline:-
234.1. The Defendant provided a ‘restrictions policy’ which expressly stated that the
Defendant “provides customer and business services such as helplines to support
Subpostmasters / operators”208 (replicated in Part 6, Paragraph 1.4);
234.2. Part 2, Paragraph 1.6.1 of the NTC states that “Post Office Ltd shall provide: a helpline
to enable to Operator to consult with Post Office Ltd about running the branch”.209
206 Such as, by using the ‘Capture’ IT system used by Bates and Stubbs, or other accounting systems
207 See the GDef at §61 [B3/2/27]
208 See, e.g. Stockdale /IPOC at §6.4 and 83.2 [B5.6/2/2] [B5.6/2/18]
– 87 –
A/1/91
234.3. replicates the ‘restrictions policy’ referenced above.
Training
235. This starts (and arguably finishes) with the Defendant’s admission of an implied
obligation to provide training as addressed above. This was plainly a service provided
under ‘a relevant contract for the supply of services’.
236. Training and support obviously overlap to some extent, and the Claimants will refer to
the Defendant’s own evidence and the reasons why the Defendant provided them.210
237. Not only does the Defendant admit such an obligation, but (without admitting any
requirement as to the quality of such training) the Defendant nonetheless admits that that
provision of inadequate training could be a breach of that implied obligation.211
238. Thus the Defendant plainly contracted to provide training to Subpostmasters and it is
common ground that the Defendant was obliged to provide this service as necessary to
give business efficacy to the contracts. Again, this was part of the bargain reached
between the Defendant and its Subpostmasters. The provision of training and support
– in the form of the Defendant’s Helpline, are properly to be characterised as services.
239. The Defendant contends that in this respect the SPMC and NTC are not ‘relevant contracts
for the supply of services’ under 1982 Act.212 Specifically, the Defendant argues that it did
not agree to provide Horizon, the Helpline or training as: (i) a service to the Claimant; or
(ii) in return for consideration.213
240. That is obviously wrong, for all the reasons set out above.
209 See, e.g., Stockdale/IPOC at §83.2 [B.6/2/18

211 See the Implied Terms Table, Defendant’s response to the Claimant’s pleaded implied term that
adequate training be provided at §64.1 GPOC
212 See the GDef at §104 [B3/2/47]
213 See, e.g. Stockdale/IDef at §52 [B5.6/3/26]
– 88 –
A/1/92
Issues 5 and 6: Onerous and Unusual Terms
Issue 5: Were any or all of the express terms in the GPOC paragraphs listed below
onerous and unusual, so as to be unenforceable unless Post Office brought them fairly
and reasonably to the Subpostmasters’ attention?
para 51.1 and 51.3 (rules, instructions and standards)
para 52.1 and 52.3 (classes of business)
para 54.1 and 54.3 (accounts and liability for loss)
para 56.1.a and 56.2.a (assistants)
para 60.1 and 60.3 (suspension)
para 61.1 and 61.3 (termination)
para 62.1 and 62.3 (no compensation for loss of office)
Issue 6: If so, what, if any, steps was Post Office required to take to draw such terms to
the attention of the Subpostmaster?

Generic 66 108 52 to 53, 61
Bates 93 to 95 71 to 77 80 to 86
Stubbs 96 to 98 56 to 62 72 to 78
Sabir 72 to 74 70 to 76 77 to 83
Abdulla 70 to 72 58 to 64 70 to 76
Dar 85 to 87 58 to 64 70 to 76
241. The Claimants rely upon the terms identified in the relevant GPOC paragraphs (and Issue
5) in full and the points made as the unreasonableness of the terms in issue under Issue
7: Unfair Contract Terms, which equally inform the distinct analysis here.
242. GReply at §52214 spells out some important aspects of the construction of the contracts for
which the Defendant contends, which is obviously onerous and unusual.
243. In particular, the terms (whether on their face or, a fortiori, as construed by the Defendant)
purportedly allow the Defendant the following largely unqualified215 rights:
214 [B3/3/30]
– 89 –
A/1/93
243.1. Rules, instructions and standards: To impose contractual requirements by notice,
including in Counter News. The terms captured by this category require
Subpostmasters to comply with an ill-defined corpus of obligations, so extensive
that the Defendant is unable and / or unwilling to identify which obligations were
in place at which time.216
243.2. Classes of business: To change services and classes of business to be transacted,
upon which the Subpostmaster’s business was reliant and / or upon which
Subpostmasters had relied in contracting with the Defendant, and without
compensation.217
243.3. Accounts, liability and loss: Pursuant to the Defendant’s construction (which is
denied), the terms captured by this category allowed the Defendant:218
a. to hold Subpostmasters liable for losses which do not represent any economic
detriment to the defendant; and
b. to require Subpostmasters to prove the cause of alleged errors, including
where these are due to Horizon errors (which the Defendant contends no
Subpostmaster has ever been able to prove to its satisfaction), even where the
Defendant was itself well aware of such errors.
243.4. Assistants: to impose liability for losses and / or for the acts and omissions of
assistants, regardless of cause or fault.219
243.5. Suspension: to suspend the claimant and withhold or forfeit their remuneration,
even if they are reinstated.220
243.6. Termination: to determine the appointment for breach or (unspecified) non-
performance or on three months’ notice without cause.221
215 E.g. not changing contract terms which have not been agreed with the NFSP, dishonestly etc.
216 See, e.g. Bates/IReply at §80.5.f. [B5.1/4/34]
217 See, e.g. Bates/IReply at §80.5.a. [B5.1/4/34]
218 See, e.g. Bates/IReply at §80.5.d. to e. [B5.1/4/34]
219 See, e.g. Bates/IReply at §80.5.c. [B5.1/4/34]
220 See, e.g. Bates/IReply at §80.5.g [B5.1/4/34]
– 90 –
A/1/94
243.7. Compensation for loss of office: to terminate the Subpostmaster’s appointment
without compensation.222
244. The Claimants’ case is that these terms are particularly onerous when viewed in the
context of the contract as a whole and the character and position of the parties to it.
Specifically:-
244.1. On the Defendant’s own case, Subpostmasters contracted with it in the expectation
of profiting from the business relationship.223 The Defendant was therefore, at all
material times, aware of the basis upon which Subpostmasters were contracting
with it – on its own case.
244.2. The Defendant required Subpostmasters to commit to making significant
investments in time and cost. This included, for example, in the case of Sabir:224
a. providing lengthy business plans which included financial projections;
b. entering into commitments for the purchase of two branches;
c. entering into long-term loan agreements with Lloyds TSC (for 10 years and
eight years respectively);
d. carrying out improvement works required by the Defendant; and
e. carrying out other improvement works to the retail side of his businesses.225
244.3. The Defendant’s purported unfettered right (on its case) to terminate the
Subpostmaster’s engagement on notice the day after branch transfer (perhaps
when agreed works were still underway or had just been completed) is obviously
221 See, e.g. Bates/IReply at §80.5.h. [B5.1/4/35]

222 See, e.g. Bates/IReply at §80.5.i. [B5.1/4/35]
223 See, e.g. GDef at §76(2). [B3/2/36]
224 See Sabir/IPOC at §33 [B5.3/2/9-10]
225 The Claimants further rely upon the terms of the Discretionary Payments Agreement (the
“DPA”) dated 1 April 1989 (and all variations and supplemental agreements thereto) made by the
NFSP (on behalf of all Subpostmasters from time to time) and the Defendant, and the implicit (and
negotiated) recognition of the investments typically made by Subpostmasters and losses incurred
by them on termination of their appointment without the ability to sell on their business: see, e.g.
the Sabir/IReply at §82 [B5.3/4/33-34]
– 91 –
A/1/95
onerous and unfair in the context of the relationship as understood by the parties
when contracting.
244.4. The operation of the challenged terms by the Defendant also had the potential to
drastically reduce a Subpostmaster’s remuneration and / or diminish their
investment.
244.5. Further, it is relevant when assessing broad considerations of fairness and
reasonableness, and the nature and effect of the challenged clauses, to have regard
to the apparent general inadequacies of the training, assistance, support and
information available to Subpostmasters, including the inherent limitations in
Horizon.226
245. The Claimants’ case is that the relevant terms are not of a kind that notional persons in
the position of the parties would have anticipated in such a contractual agreement. In the
circumstances, these terms need to be brought fairly and reasonably to the attention of
Subpostmasters by the Defendant taking the following steps:-227
245.1. Clearly identifying each of the terms to the Subpostmaster and explaining to the
Subpostmaster how the Defendant would operate those terms in practice
(including, specifically, in relation to ‘accounts and liability for loss’).
245.2. Clearly explain to the Subpostmaster the potential consequences of the Defendant
relying on those terms and / or advising the Subpostmaster to seek independent
legal advice as to such consequences.
245.3. As to ‘rules, instructions and standards’, in fact providing copies to the
Subpostmaster of all of the rules, instructions and standards,228 explaining to the
226 An inability properly to investigate the causes of alleged shortfalls is especially relevant to an
analysis of the terms under the category of ‘accounts, liability and loss’, but it is also of relevance
in the categories of ‘assistants’, ‘suspension’, ‘termination’ and ‘compensation for loss of office’.
See, e.g. Bates/IPOC at §94.3.b. [B5.1/2/26]
227 See, e.g. Sabir/IPOC at §74 [B5.3/2/19]
228 There was no online resource where all the relevant provisions on a particular topic were to be
found together. The presentation of the Modified SPMC (with 48 pages of amendments, attached
to the front of an earlier version) is a totemic illustration of the Defendant’s approach to this.
– 92 –
A/1/96
Subpostmaster their intended relationship and contractual effect, and permitting
the Subpostmaster time to read and understand them.
246. The Defendant denies that the approach in Interfoto applies here, where some of the
contractual documents were signed by some of the Lead Claimants. Putting the rather
patchy picture of provision of contractual documents (below, at paragraph 250) to one
side, the Defendant’s contention is contrary to the development of the law in this area
and contrary to an informed application of the principles to the particular relationship in
this case (see: Annex V: Issues 5 and 6 – Onerous and Unusual Terms).
247. In short, the Court is concerned with a principled answer to the following question:
“whether it would in all the circumstances be fair (or reasonable) to hold a party bound
by any conditions or by a particular condition of an unusual and stringent nature.”
(per Bingham LJ, in Interfoto Picture Library v Stiletto [1989] 1 QB 433)
248. The Defendant’s case is that the relevant terms are not onerous and unusual. The
Defendant goes on to argue that, if the terms are onerous and unusual, sufficient notice
was in fact229 provided to the Claimants by virtue of: (i) providing a copy of the contract
to the Claimant; (ii) alternatively, even if no contract was provided and the Claimant was
not aware of its terms, “on the other facts pleaded above, adequate notice was still provided”; 230
and (iii) further, and in any event, the relevant terms were not so onerous and unusual
so as to require any notice beyond a document confirming that the Claimant was bound
by the terms of the contract, and the contract being available to the Claimant at the time
the acknowledgment of appointment document was signed.
249. The Defendant’s case proceeds on the assumed premise, reflected in its generic evidence,
as to its practices and procedures and the extent to which those were uniformly followed
with total clarity and rigour.
229 Not, in itself, a question for this Common Issues Trial

230 See, e.g. Sabir/IDef at §76(2) [B5.3/3/36]
– 93 –
A/1/97
250. However, the lack of reality in the Defendant’s case can be seen in the circumstances
surrounding the provision (or lack thereof) of contractual documents to the Lead
Claimants (which the Claimants will invite the Court to find represents the general
practice of the Defendant), as set out above.
251. In short, it was fairly chaotic:-
251.1. Bates: Bates did not see a copy of his contract until it was provided to him in
August 1999 (over a year after he opened the branch), in response to an enquiry
he had made about holiday substitution allowance.231
251.2. Stubbs: Stubbs’ husband was the Subpostmaster at the branch before he sadly
passed away. The next day, a representative from the Defendant visited Ms Stubbs
and confirmed Ms Stubbs’ appointment to be the new Subpostmaster at the
branch. No contract was provided to Ms Stubbs by the Defendant at this time or at
all. Indeed, the first time Ms Stubbs had sight of the SPMC was when she obtained
a copy of somebody else’s SPMC from the Citizens Advice Bureau after the
termination of her appointment. No other relevant contractual documents
provided to her have been disclosed by the Defendant in these proceedings.232
251.3. Abdulla: Prior to his appointment, Abdulla was provided with a “brief summary
of the conditions of the Subpostmaster Contract for your attention”; although the
document stated that it “may not be relied upon, for any purpose, by the
Subpostmaster”.233 Abdulla was later required to sign a ‘conditions of
appointment’ document which confirmed, inter alia, that he would be “bound by the
terms of the Standard Subpostmaster Contract for Services at Modified Payment Offices”
–Abdulla denies that he was provided with such a contract at any time, and the
same has not been disclosed by the Defendant to date.234 On the date of
branch opening, Abdulla was provided with number of disparate documents
containing references to all manner of terms, none of which were explained by
231 See Bates/IPOC at §23 [B5.1/2/7-8]

232 See Stubbs/IPOC at §5 to 8 [B5.2/2/2-3]
233 See Abdulla/IPOC at §8 [B5.4/2/3]
234 See Abdulla/IPOC at §12 to 13 [B5.4/2/4-5]
– 94 –
A/1/98
the representative of the Defendant; he was unable to read this documents prior
to signing them or otherwise before taking up his appointment.235
252. However, the issue for the purposes of this Common Issues Trial is not whether these
particular Lead Claimants were in fact given sufficient notice. Rather it is, as expressed
in Issues 5 and 6: whether any or all of the express terms in issue were onerous and
unusual; and if so, what, if any, steps were required for the Defendant to draw them to
attention of Subpostmasters.
253. The experiences of the individual Lead Claimants is not directed to any finding that
insufficient notice was given in their particular cases (whether that is in fact established
on the evidence or not). However, their individual experiences allow the Court the
opportunity to reach an informed view of the effectiveness of various means of bringing
the terms of the contract to the attention of Subpostmasters generally.
235 See Abdulla/IPOC at §15 to 16 [B5.4/2/5-6]
– 95 –
A/1/99
– 96 –
A/1/100
Issue 7: Unfair Contract Terms
Issue 7: Were any or all of the contract terms at [Issue 5] unenforceable pursuant to the
Unfair Contract Terms Act 1977?

Generic 67 to 68 109 52 to 53, 61
Bates 96 to 97 78 to 92 87 to 93
Stubbs 99 to 100 63 to 77 79 to 85
Sabir 75 to 76 77 to 91 84 to 90
Abdulla 73 to 74 65 to 79 77 to 83
Dar 88 to 89 65 to 78 77 to 83
255. The requirements and effect of Section 3 of the Unfair Contract Terms Act 1977 (“UCTA”)
are set out and considered in detail in Annex VI: Issue 7 – Unfair Contract Terms.
256. Section 3 of UCTA applies “to any contract term“236 in one party’s “written standard terms of
business”237 by confining the effect of terms excluding liability for that party’s breach or
entitling that party to defeat reasonable expectations as to performance (or no
performance) to what is reasonable.
257. The terms in issue fall to be considered in the context of the contract as a whole and with
regard to their combined effect and, in particular, whether construed individually or
cumulatively, the terms in question purport to entitle the Defendant to render a
contractual performance substantially different from that which was reasonably expected
of it and/or render no performance at all.238
236 Section 3(2); and see, for example as to termination provisions, Timeload Ltd v British
Telecommunications Plc [1995] E.M.L.R. 459, at 468 per Sir Thomas Bingham MR: “If a customer
reasonably expects a service to continue until BT has substantial reason to terminate it, it seems to me at
least arguable that a clause purporting to authorise BT to terminate without reason purports to permit partial
or different performance from that which the customer expected.”
237 Section 3(1)
238 See, for example Bates/IReply at §87 [B5.1/4/36]
– 97 –
A/1/101
258. The terms plainly did one or both of the above. They were unenforceable because they
failed to comply with the requirement of reasonableness under Section 3(2) UCTA.
259. For the purposes of Section 3(2)(b), the extent to which the terms purported to permit the
Defendant’s performance to fall short of reasonable expectations is identified, for
avoidance of repetition, under Reasonableness, on p.104.
260. The Defendant’s case is that Section 3 UCTA does not apply to the SPMC and NTC
contracts at issue in these proceedings. This proposition is advanced on two limbs.
260.1. Written standard terms: First, in each Lead Case, it is pleaded that the contract
was not on the Defendant’s “written standard terms of business” within the
meaning of section 3(1) UCTA. As to this, the Defendant’s case rests upon the
somewhat ambitious submission that “Post Office’s business was not the
appointment of Subpostmasters.”239
260.2. Contractual performance: Second, it is pleaded (both generically and
individually) that none of the terms in question would entitle Post Office to
render a contractual performance substantially different from that which was
reasonably expected of it, or to render no performance.240 This is difficult to
reconcile with well-established authority.
261. In the alternative to the above, the Defendant’s contends that the terms (apparently
analysed individually) satisfy the statutory requirement of reasonableness,241 on the basis
that:242
261.1. the Lead Claimants were aware, or ought to have been aware, of the terms;
261.2. The contract was a business-to-business agreement entered into in the
expectation of profit;
239 See, for example, Bates/IDef at §78(1)

240 GDef at §109
241 GDef at §109
242 See, for example, Bates/IDef at §78(4) and §80 to 92 [B5.1/3/43-51]
– 98 –
A/1/102
261.3. In light of the “scale and complexity” of the Defendant’s business, it would not
have been reasonable for the Claimants to expect that matters such as which
products and services they could offer would remain fixed in time.
261.4. It was commercially necessary and reasonable to determine which products
and services were offered, and to be able to change its operational instructions
and conditions of service from time to time and to be entitled to terminate both
for repudiatory breach of contract and on notice.
261.5. It would be reasonably anticipated that an agent’s appointment would be
terminated without compensation for loss of office – the Claimants had no
reasonable expectation that their appointment would be any different.
The issues
262. Thus, the following fall to be determined at trial:
262.1. Written standard terms: Whether the relevant contracts, pursuant to which
Subpostmasters were appointed, were the Defendant’s “written standard terms
of business” such that Section 3 UCTA applies to those contracts 243 –
262.2. Combined effect: Whether the terms fall to be considered in the context of the
contract as a whole and with regard to their combined effect (and not as the
Defendant’s case appears to suggest, in isolation);
262.3. Contractual performance: Whether the terms identified above purport to
entitle the Defendant:
a. to render contractual performance substantially different from that which
was reasonably expected (as above); and/or
b. render no performance at all with respect of the whole or part of the
contract.
243 Section 3(1), UCTA
– 99 –
A/1/103
262.4. Reasonableness: Whether the terms each (or together) fail to satisfy the
requirement of reasonableness to which they were subject under Section 3(2)
and are unenforceable, accordingly.
263. The relevant principles are amplified in Annex VI: Issue 7 – Unfair Contract Terms.
Contractual context and combined effect
264. It would be contrary to principle to regard these terms in isolation as opposed to
considering them both in context and as to their combined effects. In so far as the
Defendant’s case depends upon looking at each term in isolation, it is wrong.
265. The terms in question purport to confer upon the Defendant largely unfettered rights to
vary almost every aspect of the relationship between the parties, including performance
by the Defendant. Their effects when viewed individually, are as described below.
266. But taken in combination and in the context of the terms of the contracts as a whole, their
effect is profound. They purport to allow the Defendant to act as follows (as in fact those
terms were applied in the case of each of the Lead Claimants):244
266.1. unilaterally to impose contractual requirements upon Subpostmasters of
which they may not be aware, which could (on the Defendant’s construction)
later form purported grounds for suspension or termination of the contract
and could vary the required performance by the Defendant, or (in the above
event) the need for it to perform it at all;
266.2. impose purported liability for alleged shortfalls upon Subpostmasters by
operation of an undisclosed network-wide internal policy of presumed fault
and, in the case of Assistants, purportedly regardless of cause or fault,245
including in circumstances in which:
a. it had carried out no, or no reasonable or fair, investigation of the cause;
244 As to the specific and permissible purposes for which the Claimants rely upon evidence of the
Lead Claimants, see the final paragraph of this Section.
245 See, e.g. Bates/IReply at §80.5.c. [B5.1/4/34]
– 100 –
A/1/104
b. it was impossible, or unreasonably difficult, for the Subpostmaster to
investigate the cause and/or to dispute the same;
266.3. to suspend Subpostmasters on the basis of such presumed liability;
266.4. withhold remuneration during suspension, whether in accordance with an
apparently undisclosed internal policy of doing so where a temporary
Subpostmaster is appointed,246 or otherwise;
266.5. terminate the appointment, without cause or compensation, on the basis of
breach of a unilaterally imposed rule, instruction or other requirement, or on
the basis of such presumed liability, and/or, for example:
a. without an investigation of the nature above, or any investigation;
b. arbitrarily, irrationally or capriciously, without reasonable and proper cause
and/or where the Defendant was itself in material breach; and
c. in circumstances where the parties entered into the relationship on the
premise of their long-term commitments, or at least the making of long- term
commitments by the Claimants.247
The Defendant’s written standard terms of business
267. The basis upon which the Defendant joins issue with the Claimants on the straightforward
proposition that the terms of the SPMC and NTC were the Defendant’s “written standard
terms of business” that “Post Office’s business was not the appointment of Subpostmasters”248 is
difficult to understand. Not only is this proposition obviously wrong, but these contracts
are paradigm examples of written standard terms of business. To hold otherwise would
substantially defeat the purpose of the Act.
246 Evidence relating to appointment of temporary Subpostmasters of Mr Shields, [C2/7]

248 See, e.g., Bates/IDef at §78(1) [B5.1/3/43]
– 101 –
A/1/105
268. Moreover, the Defendant admits that:249
268.1. “the Defendant contracts with Subpostmasters on standard form contracts”
268.2. the terms of its contracts are not open to negotiation by individual Claimants
(save for limited purposes, such as opening hours); and
268.3. the Defendant “…incurs expense and time-costs in recruiting (including
advertising for applicants and assessing and selecting applicants) and training new
Subpostmasters” (Fact 24).
269. The appointment of Subpostmasters is an integral part of the Defendant’s business, and
the statutory monopoly it operates:
269.1. the Defendant’s core services are provided through branches, the majority of
which are agency branches operated by Subpostmasters;
269.2. its own evidence is that it also operates through different agency models in
order to provide a commercially viable offering to Subpostmasters to serve a
range of constituencies.250
270. Finally, and for the avoidance of any doubt, Subpostmaster contracts are all drawn as a
matter of routine in all transactions of this type in question, namely the appointment of
Subpostmasters. That is why the Court in construing them at the Common Issues Trial.
Substantially different performance / no performance at all
271. The Claimants will invite the Court to find that the clauses in question purported to entitle
the Defendant to perform significantly differently than what was, in fact, “reasonably
expected” of it, or to render no performance at all.
272. This involves a different, subjective, enquiry; it contrasts with the expectations of “notional
reasonable people in the position of the parties” which are the touchstones for the
anterior exercise of construing contractual provisions.
249 Joint Matrix of Fact, Facts 9 and 24 [B6/1.1/3-5]; see also Agreed Statement of Facts [B6/2/1]
250 Van Den Bogerd §26-32
– 102 –
A/1/106
273. Such reasonable expectations are not limited to what may be expected of by virtue of the
express terms of the contract, and in appropriate circumstances may include what was
expected by way of pre-contractual representations or promises.251
274. The reasonable expectations as to performance are those that existed as at the time the
contract was made. They may include the reasonable expectations that a service provided
by one party to another will to continue until the other party had “substantial reason to
terminate it”, so as to subject clauses purporting to allow the party to terminate without
such reasons to the requirement of reasonableness.252
275. Without limitation, the Claimants draw the Court’s attention to following:-
275.1. Rules, instructions and standards: terms within this category purport to
permit the Defendant to vary the contract, including as to its own performance
of it as that was expected at the time of contracting, unilaterally.
275.2. Classes of business: terms within this category253 purport to entitle the
Defendant to withdraw Services, the provision of which was a key expectation
for Subpostmasters (indeed, regarded by the Defendant as a ‘key benefit’);
these may have been specifically required to be provided by a Subpostmaster
as a term of their appointment, were to be the basis of a Subpostmaster’s
estimated remuneration and indeed supported the business case for the
appointment itself.254 Such clauses would permit the Defendant to render
contractual performance substantially different from what was reasonably
expected – or not at all.
275.3. Accounts, liability and loss: terms within this category, including those
relating to liability in respect of Assistants, purport to permit the Defendant to
perform the contract differently from what was to be expected by imposing
liability in the circumstances described above, with the
251 See, e.g., AXA Sun Life Services Plc v Campbell Martin Ltd [2011] EWCA Civ 133 at [50]
252 Timeload Ltd v British Telecommunications Plc [1995] E.M.L.R. 459.
253 GPOC at, §52.1 and 52.3 [B3/1/20-21]
254 See, e.g. Bates/IReply at §87.3 [B5.1/4/37-38]
– 103 –
A/1/107
consequence that the Defendant could (apparently at its own election)
withhold remuneration, suspend or terminate the appointment.
275.4. Suspension and Termination: such terms purport to entitle the Defendant to
a. terminate a Subpostmaster’s appointment on three months’ notice without
cause, notwithstanding the reasonable expectations of the Subpostmasters to
the contrary, long-term commitments undertaken by both parties upon
entering into the contract255 and the Defendant’s own expectation as to the
compensation to be paid in like circumstances pursuant to long-standing
arrangements with the NFSP;256
b. Suspend Subpostmasters without compensation on a like basis;257 and
c. Terminate appointments with cause, but without adequate (or any)
investigation or justification, as above.
276. It is also important to note that the Defendant expressly relies upon the provision in its
standard written terms of a right to terminate on 3 months’ notice without cause as
amounting to a limitation of liability clause, capping any compensation that
Subpostmasters might recover. Such a clause falls within Section 1(2)(a) of UCTA, so as
to be subject to the requirement of reasonableness.
Reasonableness
277. The Court will be familiar with the guidelines as to reasonableness which are to be read
across to section 3(2), more fully set out in Annex VI: Issue 7 – Unfair Contract Terms.
278. By way of preliminary observation, the Defendant’s case on reasonableness is difficult to
reconcile with its own claim that Subpostmasters entered into their contracts with the
Defendant “in the expectation of profit” or indeed any contract between an individual and
a state monopoly engaging the individual to make a significant personal investment, in
pursuit of the delivery of a public service, on a commercial basis.

256 As to which, see Bates/IPOC at §27 [B5.1/2/9]
257 See, e.g. Bates/IReply at §80.5.g. [B5.1/4/34-35]
– 104 –
A/1/108
279. The Court will be invited to have regard, inter alia, to the following factors militating
against any finding of reasonableness:258
279.1. Strength of bargaining power: the profound imbalance of bargaining power
between the Defendant and individual Claimant Subpostmasters. As to this,
the Court is asked to have particular regard to
a. The Defendant’s statutory monopoly;
b. The Defendant’s access to both internal and external legal advice;
c. The Defendant’s knowledge of its own business processes, including (in stark
contradistinction to the Lead Claimants) of its own application of those terms
and the consequences of the same to Subpostmasters;
d. the absence of any opportunity to enter into a similar contract with anyone
other than the Defendant for the products and brand type in question; and
e. the absence of any meaningful opportunity to negotiate the terms.
279.2. Whether Subpostmasters knew or ought to have known of the existence and
extent of the challenged terms: no meaningful attempt was made by the
Defendant to draw the Lead Claimants’ attention to the existence of the
challenged terms and/or the Defendant’s practices with respect to the same.
279.3. The draconian effect of those terms: when applied as construed by the
Defendant and apparently in accordance with its own policies and
procedures, as described above – and by the Lead Claimants.
280. The above considerations are further exacerbated by the impediments to transparency
and the provision of information to Subpostmasters inherent in Horizon, and the
inadequacies in the training and support provided to Subpostmasters.
281. For the avoidance of doubt, the Claimants do not rely upon evidence of the Lead
Claimants of events post-dating their entry into a contract of appointment for the
258 See, e.g. Bates/IReply at §88 to 92 [B5.1/4/39-41]
– 105 –
A/1/109
purposes of establishing unreasonableness upon the statutory test in their particular
individual cases, as opposed to the Claimants’ case on the generic issues.
282. Rather, such evidence is relied upon to establish relevant factual background (as far as
individual Lead Claimants are able to) as what was reasonably to be expected of the
Defendant’s performance. This is necessary to the resolution of Issue 7 as a generic issue.
As the Court has recognised, it is important for the Court to have before it a realistic and
balanced picture (rather than one selectively tailored by one party alone) as to the likely
effects of the impugned terms and knowledge of the parties (including that of the
Defendant, through its dealings with Subpostmasters generally) as to these matters, at the
time of contracting.
Findings
283. The Claimants will respectfully invite the Court to find on the evidence heard at trial: 259
283.1. that the relevant contracts were contracts on the Defendant’s “written standard
terms of business” under Section 3(1);
283.2. that the impugned terms (when considered in the context of the contract as a
whole and/or individually or cumulatively) purported to entitle the
Defendant:
a. to restrict liability when in breach of contract; and/or
b. to render a contractual performance substantially different from that which
was reasonably expected of it; and/or render no performance at all;
283.3. that, in the premises, the terms failed to comply with the requirement of
reasonableness under Section 3(2) UCTA; and
283.4. the impugned were therefore unenforceable by the Defendant.
259 See, paragraphs of Claimants’ generic pleadings identified at the outset of this part of Section B,
and, for example, Bates/IReply at §87 [B5.1/4/36-37]
– 106 –
A/1/110
Issues 8 and 9: Liability for Alleged Losses
Issue 8: What is the proper construction of section 12, Clause 12 of the SPMC?
Issue 9: What is the proper construction of Part 2, paragraph 4.1 of the NTC?

Generic 49, 55 93 to 94 9 to 13, 52
Bates 98 to 99 93 to 94 94 to 96
Stubbs 101 to 102 78 to 79 86 to 88
Sabir 77 to 78 92 to 93 91 to 93
Abdulla 75 to 76 80 to 81 84 to 86
Dar 90 to 91 79 to 80 84 to 85
Terms to be construed
284. The relevant terms which the Court is required to construe are as follows:
(1) SPMC – Section 12, Clause 12:
"The Subpostmaster is responsible for all losses caused through his own
negligence, carelessness or error, and also for losses of all kinds caused by his
Assistants. Deficiencies due to such losses must be made good without delay."
(2) NTC – Part 2, paragraph 4.1:
“The Operator shall be fully liable for any loss of or damage to, any Post Office
Cash and Stock (however this occurs and whether it occurs as a result of any
negligence by the Operator, its Personnel or otherwise, or as a result of any
breach of the Agreement by the Operator) except for losses arising from the
criminal act of a third party (other than Personnel) which the Operator could
not have prevented or mitigated by following [the Defendant’s] security
procedures or by taking reasonable care. Any deficiencies in stocks of Products
and/or any resulting shortfall in the money payable to [the Defendant] must be
made good by the Operator without delay so that, in the case of any shortfall,
[the Defendant] is paid the full amount when due in accordance with the
Manual”.
– 107 –
A/1/111
The Claimants’ construction
285. The Claimants’ case260 is that, on a proper construction of these terms in their contractual
context, the Subpostmasters are not strictly liable for all alleged losses; rather they are
only liable for:
285.1. actual losses (Cf. the Defendant’s case that no economic detriment is required
for there to be a loss);261
285.2. caused by the negligence, carelessness or error, of the Subpostmaster, or
their assistant;
285.3. the contractual burden of proof as to which was on the Defendant.
286. Thus, for example, on the Claimants’ construction of either of the above terms,
Subpostmasters would not be liable for an alleged shortfall in branch accounts:
286.1. which did not represent a real loss to the Defendant; or which was not
established by the Defendant, after due enquiry, to be a real loss;
286.2. in circumstances where the loss was caused or contributed to by the
Defendant’s own breach of duty;
286.3. where it was not established to be due to the Subpostmaster’s own
negligence, carelessness or error, or that of his/her assistants.
287. Prior to the introduction of Horizon, there was a fairly precise functional identity in the
role and responsibility of the Subpostmaster: the Subpostmaster kept his (Bates) or her
(Stubbs) own accounts and ledgers, often using software that they procured for
themselves; they genuinely submitted their accounts to the Defendant in the manner
contemplated in a traditional agency relationship. However, as both Bates and Stubbs
make clear, that completely changed for them after the introduction of Horizon.
260 See GPOC at §55 [B3/1/24] NB it should be noted that §55 is pleaded as to “a proper construction of
section 12, paragraph 12 of the SPMC (and similar clauses said to impose such liability)” [Emphasis
added]. This captures Part 2, clause 4.1 of the NTC, contrary to the position adopted by the
Defendant in the Individual Lead Claims (see, e.g., Stockdale/IDef at §74(1) [B5.6/3/37]
261 The Defendant contends at GDef §94(4) that “in Section 12, Clause 12, the concept of a ‘loss’ is not
tied to or dependent upon economic detriment to Post Office.” [B3/2/43]
– 108 –
A/1/112
288. No longer were Subpostmasters solely in control of the figures shown in the accounts.
289. Indeed, it is clear (both as a matter of common ground262 and on the Claimants’ case263)
that the Defendant was now in control of the data and its reconciliation with other data
sources,264 as well as the Subpostmasters’ access to the relevant data and the interface
through which such access (as was allowed by the Defendant) was made available.
290. Against that background, it is essential to remind oneself that the alleged shortfalls for
which the Defendant contends Subpostmasters were liable (unless they could prove
otherwise) were, in reality, derived from one of the following: (a) a discrepancy
automatically detected between two or more data sources; or (b) such a discrepancy which
one of the Defendant’s staff had considered.265
291. The Claimants therefore rely upon the following in support of their construction:
291.1. Statement of Facts: the agreed facts set out in the Statement of Facts;266
291.2. Factual Matrix: the agreed facts, and those which are not agreed, but upon
which the Claimants rely, in the Statement of Factual Matrix document.267
291.3. The facts and matters pleaded in Section B of each Lead Claimants’ IPOCs
under the heading Issues 8 and 9: Liability for Alleged Losses on p.107;
291.4. The evidence of the Lead Claimants, for the purposes explained to the Court
on the hearing of the Defendant’s application to strike-out their evidence – not
least so that the Court can test the implications of the of rival constructions
against commercial common sense, on an informed basis.
262 Paragraph 331.1, on p.122 below, as to the Admitted Functions of the Defendant, in these respects
(see also paragraph 367, on p.135, further as to those Admitted Functions)
263 Paragraph 357.2, on p.132 below, as to how the functions (previously in sole control of the
Subpostmasters) were in fact distributed and performed following the introduction of Horizon
264 GDef at §39(1) [B3/2/13] “Post Office checks Horizon transaction data (i.e. data as keyed into branch
terminals by branch staff) against data taken from separate sources”
265 GDef at §39(2) [B3/2/13] as to whether or not “the branch staff have probably made an error that
requires correction”
266 [B6/2/1]
267 [B6/1.1/1]
– 109 –
A/1/113
The Defendant’s construction
292. The Defendant’s case268 on construction is:
292.1. SPMC, Section 12, Clause 12: Subpostmasters are responsible for all losses
disclosed in their branch accounts, save for losses which were neither caused
by any negligence, any carelessness, or any error on their part, nor caused by
any act or omission on the part of their assistants. As to this:
a. Subpostmasters who allege that they are not liable for any losses disclosed in
their branch accounts bear the burden of proving that such losses were not
caused by the matters set out above; and
b. the concept of “loss” is not tied to or dependent on any economic detriment
to the Defendant.
292.2. NTC Part 2, paragraph 4.1: Subpostmasters are liable in respect of all losses
caused by themselves or their assistants, save for losses that: (i) arise from the
criminal act of a third party (other than an assistant); and (ii) could not have
been prevented or mitigated by the Subpostmaster following Defendant’s
security procedures or by taking reasonable care.269
293. Further, the Defendant’s case as to construction of these contracts and the relevant factual
matrix for that purpose, has been canvassed extensively before the Court, particularly on
the hearing of the Defendant’s strike-out application. It is only repeated here because the
Claimants deal with the points raised in turn below.
294. It is found at §§76, 85 and 93 to 94 of the GDef.270 The Defendant’s case is that:-
294.1. Generic Defence at §76: “important aspects of the factual matrix against which the
various Subpostmaster Contracts relied on by the Claimants should be construed” include
the extent to which the Defendant:
a. was able to monitor at first hand the transactions undertaken in branches;
268 See GDef at §94 [B3/2/43]

269 See, e.g. Stockdale/IDef at §74(2) [B5.6/3/37]
270 [B3/2/36-37] [B3/2/39-40] [B3/2/42-43]
– 110 –
A/1/114
b. was unable to monitor at first hand the custody and use of its property
(principally, cash and stock) in branches; and
c. relies on the accurate reporting by Subpostmasters of accounts, transactions
and the cash and stock held at a branch.
294.2. Generic Defence at §85: emphasises the Defendant’s reliance on the matrix of
fact pleaded in §76.
294.3. Generic Defence at §93 to §94: as to the construction of Section 12, Clause 12
SPMC:
a. “it is appropriate to infer and/or presume that the shortfall arose from losses for
which [the Subpostmaster] was responsible” because “losses do not arise in the
ordinary course of things without fault or error on the part of Subpostmasters or

their Assistants”; and
b. Subpostmasters bear the legal burden of proving that a shortfall did not
result from losses for which they were responsible, because “(1) the truth of
the matter lies peculiarly within the knowledge of Subpostmasters as the persons with
responsibility for branch operations and the conduct of transactions in branches, (2)
it would be unjust for Post Office to be required to prove allegations relating to
matters that fall peculiarly within the knowledge of Subpostmasters...”
294.4. By its IDefs, the Defendant expressly refers back to and relies upon §94 of the
GDef (which, in turn, imports §93 above).271
295. The Defendant’s factual case is largely based on what purports to be generic evidence of
what ‘would have’ happened, often on the basis that various practices and procedures (not
always defined well or at all, either in their content or temporally) were followed.
296. The Defendant also relies upon (a) the agreed facts in the agreed Statement of Facts,272 and
(b) agreed facts, or facts which are asserted by the Defendant but not agreed in the
Statement of Factual Matrix document.273
271 See, for example, Bates/IDef at §93(1) [B5.1/3/52]
– 111 –
A/1/115
Relevant principles
297. In short, the Claimant commend the following seven principles to the Court:
(1) The Court should look for the meaning of the provisions not just the meaning
of the words.
(2) The correct approach is to start (and finish) by looking for and adopting the
interpretation that most accords with commercial common sense.274
(3) Interpretation is the ascertainment of the objective meaning in the light of the
parties’ background knowledge at the time of the contract.
(4) This iterative process involves checking the rival meanings against other
provisions of the document and investigating the commercial
consequences.275
(5) 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.276
(6) The Court must have regard to “the quality of drafting of the clause” striking that
balance.277
(7) To the extent of any ambiguity in the meaning of the terms, those terms are to
be construed contra proferentem:
(a) so as to remove (and therefore not create) doubt or ambiguity, and
(b) as an aid to construction where the matter cannot otherwise be resolved
by the application of prior principles of construction.278
298. Briefly as to contra proferentem, the principle has obvious potential for application where
clauses are “by no means free from obscurity” or are of “remarkably wide scope”.279
272 [B6/2/1]
273 [B6/1]
274 Rainy Sky SA v Kookmin, per Lord Neuberger, at [21] to [30]
275 Rainy Sky at [28]
276 Lord Hodge, at [12]
277 Lord Hodge, at [11]
278 For the purposes of these opening submissions, the Claimants refer to the helpful summary of
the principle of construction contra proferentem in Chitty on Contracts (32nd Ed.) at 13-086.
– 112 –
A/1/116
299. Further, it is material in the present context that the justification for the principle is that:
“a person who puts forward the wording of a proposed agreement may be assumed
to have looked after his own interests so that if the words leave room for doubt about
whether he is intended to have a particular benefit there is reason to suppose that
he is not.”280
300. There is no separate Annex specific to these Issues. However, should there be any dispute
as to the above (which it is hoped are uncontroversial), these propositions have been
explored more fully in Annex I: Contractual Construction.
The express terms in context
301. Neither Section 12, Clause 12 SPMC, nor the paragraphs of the NTC contract which deal
with such losses (including Part 2, paragraph 4.1 NTC, above; and, for example,
paragraph 13.1 under “Reimbursement”) contain any express provision imposing the
burden of proof upon Subpostmasters.
302. No such interpretation can be derived from the contractual context in which they appear:
while both contracts are prescriptive in their requirements as to how Subpostmasters
should deal with cash and stock, the express provision which the Defendant could easily,
clearly and prominently have made for this is nowhere found.
303. In this respect, for example, the SPMC requires Subpostmasters to keep accounts in the
Defendant’s prescribed form and to “make good any losses.281
304. The NTC elsewhere requires Operators to “account for and remit to [the Defendant] all
monies collected from Customers in connection with Transactions, in accordance with the
Manual…”, not to apply them for its own private use, to “reimburse [the Defendant] in full
on demand for all losses” resulting from negligence or breach282 and, more widely, to “make
good any losses”. 283
279 John Lee & Son (Grantham) Ltd v Railway Executive [1949] 2 All E.R. 581, 583.
280 Tam Wing Chuen v Bank of Credit and Commerce Hong Kong Ltd [1996] 2 B.C.L.C. 69, 77 (Lord
Mustill), applied in Lexi Holdings Plc v Stainforth [2006] EWCA Civ 988.
281 Section 12, Clause 4 [D2.1/1/39]
282 Part 2, paragraph 13.1 [D1.6/3/23]
283 Part 2, paragraph 4.3 [D1.6/3/13]
– 113 –
A/1/117
305. Neither is in the least consistent with the giving of what amounts to an unqualified
indemnity for which the Defendant contends, or the importing of a reverse burden of
proof as to reality and/or cause of alleged losses.
306. On the contrary:
306.1. Even the literal words of Section 12, Clause 12 SPMC only impose liability
upon a Subpostmaster for “losses caused through his own negligence, carelessness
or error, and also for losses of all kinds caused by his Assistants”. The construction
contended for by the Defendant cuts directly across its plain and ordinary
meaning so as to invent a presumption of negligence, carelessness and error
simply not found in the words of the clause – effectively to re-write the clause
the other way around.
306.2. The language used in NTC Part 2, paragraph 4.1 only imposes liability for “loss
of or damage to, any Post Office Cash and Stock”. The Court should be slow to
import into the words “or otherwise” causes going beyond those that are the
fault of the Subpostmaster (such as “carelessness or error” as used in the SPMC,
but not replicated in the NTC) not found in its wording and inconsistent with
the compensatory and fault based nature of the obligations elsewhere found
in that document.
307. The construction contended for by the Defendant is akin, in its effect, to the giving of a
contractual indemnity in respect of any losses that appear to be shown on its Horizon
system in respect of a branch. The Court should not construe a clause to impose such an
indemnity, in the context of this relationship, particularly in the absence of “clear and
unambiguous language”. 284 No such wording is found here.
284 See, e.g., Lewison on The Interpretation of Contracts (6th Ed.) at 12.15 (“in order to be effective,
particularly in relation to loss caused by the negligence of the party indemnified, clear and unambiguous
language must be used”) and the authorities referred to therein. In particular, in the case of Smith v
South Wales Switchgear Ltd [1978] 1 WLR 165: (i) “when considering the meaning of such a clause one
must, I think, regard it as even more inherently improbable that one party should agree to discharge the
liability of the other party for acts for which he is responsible” (per Viscount Dilhorne); and, (in referring
to the guidelines laid down in Canada Steamship Lines Ltd v R [1952] AC 192) (ii) “While they apply
to the construction both of a clause relied on as exempting from certain liabilities a party who has undertaken
to carry out contractual work and of a clause whereby such a party has agreed to
– 114 –
A/1/118
308. In any event, there is no foundation in the words used, or in the contractual context, for
the suggestion made that the term “loss” should extend to something that is not a loss,
namely, beyond any actual loss to include a sum (which the Claimants find hard to
describe) which does not amount to an economic detriment to the Defendant. In addition
to the obvious points that might be made as to that, it is irreconcilable with the words
“make good”.
309. The fact that the Defendant may have adopted a policy or practice to this effect is not
determinative of the proper construction of these provisions.
310. Taken in their contractual context, liability for actual shortfalls is essentially compensatory
in nature and based upon fault, caused by or attributable to Subpostmasters.
311. No notional reasonable person in the position of the parties at the time of contracting
would attribute the consequences contended for by the Defendant to the words used.
312. To the extent that either contract (in particular, the NTC) is ambiguous, those terms
should be interpreted contra proferentem – not least since in the latter case, the
interpretation contended for by the Defendant would be “remarkably wide in scope” (as
above) and could have been clearly provided for by the Defendant.
Relevant commercial context
313. Further and in any event, the likely focus of the dispute between the parties on Issues 8
and 9 is as to the guidance given by the relevant factual matrix, the implications of the
rival interpretations and, importantly, commercial common sense.
314. All factors bear heavily in favour of the construction contended for by the Claimants.
315. The origin of Section 12, Clause 12 SPMC – pre-dating the introduction of Horizon –
provides essential context to what was intended when the SPMC was first drafted and the
Court is respectfully referred to the observations above (at paragraphs 287 to 290, above
at p.108) as to the significance of the introduction of Horizon.
indemnify the other party against liabilities which would ordinarily fall on him, they apply a fortiori in the
latter case, since it represents a less usual and more extreme situation” (per Lord Keith).
– 115 –
A/1/119
316. The Defendant’s attempt to pray in aid its existing practice as to liability for shortfalls
(itself in issue, in this litigation), in support of the strained meaning contended for not
only assumes what the Defendant seeks to prove (apparently premised on the
Defendant’s infallibity) but would have profound implications out of kilter with
commercial common sense; so too, would the imposition (as the Defendant effectively
seeks with respect to the NTC terms) of an indemnity, by a side-wind.
317. This can simply be tested under either contract, as a matter of commercial common sense,
by looking at the Payments Mismatch documents and asking this question:
Were Subpostmasters contractually liable for those shortfalls

caused by Horizon (to the clear knowledge of the Defendant)?
318. Further support, if needed, is found in the application of orthodox principles: the meaning
given by notional persons in the position of the parties would not import the draconian
meaning or effects for which the Defendant contends. As to this, the likely focus of the
evidence at trial will include the following:
318.1. contrary to the Defendant’s case, the practical difficulties (in reality, impossibility,
on the Lead Claimants’ evidence) faced by Subpostmasters in identifying if, how,
when and why a shortfall had occurred;
318.2. whether, contrary to the Defendant’s case, shortfalls did in fact arise in the
ordinary course of things without fault or error on the part of Subpostmasters or
their Assistants – on the Lead Claimants’ evidence they plainly did, at least
sufficiently often to account for the claims in this litigation;
318.3. whether, contrary to the Defendant’s case, the Defendant was in fact able to
monitor the transactions undertaken in branches on its behalf, in relation to which
it was liable its clients, the custody and use of its property (principally, cash and
stock) in branches; and
318.4. whether (and to what extent) the Defendant relies upon the accurate reporting by
Subpostmasters of accounts, transactions and the cash and stock at a branch – as
opposed to Subpostmasters being reliant upon the Defendant for information
bearing upon the likely cause of apparent shortfalls in branch accounts.
– 116 –
A/1/120
Comparative knowledge on causes of shortfalls
319. It is a central premise of the Defendant’s case, said to justify imposition of a contractual
burden of proof as to the cause of shortfalls, that Subpostmasters were able to (or better
placed to) identify errors made in branch accounts.
320. First, as to this, the Defendant relies upon the evidence of Ms Van Den Bogerd as to a
range of matters, but in particular: 285
320.1. as to a step-by-step process that she herself would use to ascertain the cause
of alleged shortfalls; and
320.2. overall that it “would be unlikely that a Subpostmaster, having kept his accounts
diligently, still has no idea where a material problem was arising from”.286
321. Though the evidence falls to be tested at trial, what is said by Ms Van Den Bogerd on these
matters simply cannot be squared with the actual experiences any of the Lead Claimants
(three of whom were selected by the Defendant). On this, theirs is the only direct evidence,
as summarised in SECTION A: FACTS, above.
322. To take but one example, Lead Claimant Stubbs gives evidence that she took every step
possible287 to ascertain the cause of shortfalls which appeared in her branch accounts in
2009 but, “despite reviewing that information… I was still unable to find out for myself whether
the apparent shortfall of £9,033.79 was a real or just an apparent loss and why it had occurred. I
was simply unable to do that without having the full information from Horizon, to which Post
Office had access and not me.”288
285 Van Den Bogerd, §91 to 98 (as to Horizon and the ability of Subpostmasters to keep accounts and
investigate shortfalls); §102 to 103 and §114 to §116 (on training provided (or available) to
Subpostmasters and its content); §131 to 137 (and on the ability of a Subpostmaster to identify
errors in branch accounts)
286 See Van Den Bogerd’s witness statement at §131 to 137 [C2/1/36-37]. It is further suggested that
“the Subpostmaster is best placed to investigate shortfalls and Post Office generally cannot find the root
cause of a shortfall without the Subpostmaster’s cooperation.”
287 Having sought assistance from the Helpline, obtained and reviewed transaction information
including logs encompassing the previous 42 days, reviewed hand-written accounts that she had
produced herself in an attempt to keep track of the apparent shortfalls and sought further
assistance from the Defendant
288 See Stubbs, §88 to 93 [C1/2/21-22]
– 117 –
A/1/121
323. Second, the Defendant’s evidence sidesteps two key aspects of the allocation of functions
following the introduction of Horizon:
323.1. first, the fact that data input by Subpostmasters in relation to transactions in
the branch was only one of several sources of data289 affecting branch accounts
on Horizon (yet was the only such source with which Subpostmasters had any
involvement);
323.2. the Defendant then performed its own reconciliation exercise, in accordance
with its own processes for reconciling these various sources of data, of which
Subpostmasters had scant if any knowledge and into which they had no
involvement; and
323.1. the raising of a Transaction Correction is said by the Defendant to involve the
making of a value judgment, by the Defendant’s staff, as to whether or not “the
branch staff have probably made an error that requires correction” – without any
requirement for an informed response from the Subpostmaster (i.e. with the
benefit of all relevant information) before the Defendant makes that judgment
(see: for example, Stubbs, §81 [C1/2/19]. Indeed, on the Defendant’s case,
whether or not and how (if at all) to do any of this was completely ungoverned
by any contractual provision whatsoever.
324. As to this (and in order to focus the factual issues at trial), it is important to note that the
following appear to be common ground (some even admitted or averred by the
Defendant):
324.1. from the introduction of Horizon Online in 2010, transactions were effected
through real time exchanges of data from branches to a central Post Office data
centre;290
324.2. the Defendant and/or Fujitsu had access to291 the Known Error Log and/or
other similar logs or records of system bugs and errors;292
289 GDef at §39(1) [B3/2/13] “Post Office checks Horizon transaction data (i.e. data as keyed into branch
terminals by branch staff) against data taken from separate sources”
290 GDef at §33 [B3/2/11]
– 118 –
A/1/122
324.3. all such data and reports which were available to the Claimants on Horizon293
were, in any event, similarly also available to the Defendant;
324.4. the Defendant and/or Fujitsu could investigate apparent shortfalls;294
324.5. “more extensive transaction data was provided, and further data was provided outside
[the 42 or 60 day] periods, where this was necessary”;295
324.6. “Fujitsu provided a telephone advice service to Post Office in relation to technical
problems with the Horizon system or equipment”;296
324.7. the Defendant had a process for the escalation of disputes including a “team
responsible for investigating branch matters’ which ‘undertakes a further
investigation into the disputed amount, seeks to identify the reason for it arising and
communicates with the Subpostmaster concerned”;297
324.8. ‘for many transaction types’, the Defendant is able to compare its own
transaction records against the corresponding record held by its clients;298
324.9. Fujitsu has had the ability to inject transactions into branch accounts since at
least the introduction of Horizon Online in 2010 (though initially falsely
denied in a public statement, now admitted and described as “Balancing
Transactions”);299
291 Noting that it is the Claimants case, further to this admission, that the Defendant and/or Fujitsu
had access to all transaction data, including a detailed stream of transaction data (XML data) and
all transactions affecting the accounts of individual branches, including transactions linked to
individual users, system generated transactions, and those initiated by the Defendant and/or
Fujitsu: GReply at §9.1 [B3/3/4]
292 GDef at §50(4) [B3/2/22]
293 As pleaded in the GDef at §38(2) and (3) [B3/2/12-13]
294 GDef at §§46(4) and 54(5) [B3/2/19] [B3/2/22]
295 GDef at §136(2) [B3/2/56]
296 GDef at §48(4) [B3/2/20]
297 GDef at §46(4)(b) [B3/2/19]
298 GDef at §54(1) [B3/2/23-24]
299 GDef at §57(3) [B3/2/26]; noting that Claimants do not accept that Fujitsu alone had this
capability, nor that this capability did not exist before 2010; the extent of the Defendant’s ability to
carry out Balancing Transactions, without the consent or even knowledge of the Subpostmaster,
falls to be determined as part of the Horizon Issues Trial.
– 119 –
A/1/123
324.10. the Defendant had access to Helpline records300 (relating to particular
individuals, and collectively, identifying common issues/concerns);
324.11. the Defendant had access to historic information both for a particular branch
and across multiple or all branches; and
324.12. was able to carry out audits “to check the level of cash and stock in a branch” and
enquiries “For a wide variety of purposes … Post Office can make a wide variety of
enquiries into a branch’s operations without undertaking an audit”.301
325. Further, while the precise extent of the same falls to be determined at the Horizon Issues
trial, it is common ground that Horizon was in fact susceptible to bugs and errors. The
Defendant admits three in its Generic Defence.302 The experts’ first joint statement for the
Horizon Issues Trial records the following as agreed: 303
325.1. “Evidence exists that that bugs/errors/defects have caused actual discrepancies or
shortfalls relating to Subpostmasters’ branch accounts/transactions.” [Emphasis]
325.2. “Each time any IT system (including Horizon) is changed there is the potential to
introduce new bugs/errors/defects.”
325.3. “Once bugs/errors/defects are discovered, they take time to resolve and therefore
systems such as Horizon often continue to operate with bugs/errors/defects with or
without workarounds in place.”
325.4. “Theoretically, bugs/errors/defects that existed within Horizon have the potential to
cause apparent or alleged discrepancies or shortfalls in relating to Subpostmasters’
branch accounts/transactions.”
326. Despite the foregoing, the Defendant contends for an interpretation that would impose a
burden of proof upon Subpostmasters to establish the cause of apparent shortfalls in
300 The Claimants rely on the Defendant’s admission at Responses 19A and 19B to the Claimants’
RFI dated 31 July 2017 [B4/2/9]
301 GDef at §64(2)(a) to (b) [B3/2/29-30]
302 GDef at §56(1) [B3/2/24-25]
303 First Joint Statement of the parties IT experts, [G/61]; noting that this agreed position is subject
to differing views as to the extent to which they caused apparent discrepancies
– 120 –
A/1/124
circumstances where it admits that no Subpostmaster has ever been able to establish, to
its satisfaction, that an alleged shortfall was the result of Horizon.304
327. In the Claimants’ respectful submission, any such interpretation would be profoundly at
odds with what was feasible.
NTC provisions
328. While the terms differ, the Claimants’ case is broadly the same: for material purposes, Part
2, paragraph 4.1 NTC is not to be construed as imposing an obligation beyond that in the
SPMC (i.e. liability where negligence, fault or error – which, where disputed by
Subpostmasters, the Defendant was required to prove).
329. In particular, the Defendant’s construction:
329.1. purports to impose upon Subpostmasters liability for sums which do not even
represent any real loss (or “economic detriment”);
329.2. in view of the apparently open-ended scope of the provision, both as to the
amount and cause of liability, effectively imposing a complete indemnity (save
only as for losses caused by certain unpreventable criminal conduct by third
parties), inconsistently confines such liability (in its Individual Defences) to
cases of loss “caused by the Operator or her assistant(s)”;305
329.3. is apparently aimed at excusing the Defendant’s undisclosed policy (as
revealed in disclosure in this litigation to have been documented since at least
1998)306 of effectively imposing strict liability upon Subpostmasters for all
losses, subject to a scheme of discretionary reductions; and
329.4. in any event, is at odds with commercial common sense.
330. The Court is respectfully invited to prefer the Claimants’ construction.
304 GReply at §52.4 [B3/3/30]

305 See. e.g. Stockdale/IDef at §74(2) [B5.6/3/37]
306 See Losses & Gains Policy [F3/8]
– 121 –
A/1/125
– 122 –
A/1/126
Issues 10 and 11: Post Office as Agent
Issue 10: Was Post Office the agent of Subpostmasters for the limited purposes at
GPOC paragraphs 82 and 83?
Issue 11: If so, was the Defendant thereby required to comply any or all of the
obligations at GPOC paragraph 84?

Generic 81 to 84 123 to 126 59 to 64
Bates 100 to 103 95 to 98 97 to 98
Stubbs 103 to 106 80 to 83 89 to 90
Sabir 79 to 82 94 to 97 94 to 95
Abdulla 77 to 80 82 to 85 87 to 88
Dar 92 to 95 81 to 84 86 to 87
Common Ground and Position of the Parties
Common ground
331. The following aspects of the Claimants’ case are common ground:-307
331.1. The Defendant did the following (the “Admitted Functions”)
a. effected, recorded and managed the reconciliation of transactions effected
by the Claimants (save as set out immediately below); and
b. possessed and/or controlled and/or oversaw the underlying transaction
data in relation to such transactions;
331.2. Further, the Defendant
a. required Claimants to comply with contractual obligations in relation to the
keeping and production of branch accounts;
b. had the power to seek recovery (and in fact sought recovery) from
Claimants for apparent shortfalls said to relate to branch accounts.
307 GPOC at §81 [B3/1/44-45]
– 123 –
A/1/127
332. The Defendant admits the foregoing, save that in respect of the first Admitted Function,
it pleads: “Post Office recorded the transaction data entered on Horizon by Claimants and so far
as possible sought to reconcile that transaction data with other data is (sic) possessed.” 308 This
confinement of the admission does little to undermine the obvious practical realities of
the system and its operation.
333. The Claimants’ case is that the Defendant acted as an agent for Subpostmasters:-309
333.1. for the purpose of rendering and making available accounts and/or was under
an equitable duty to render accounts.
333.2. further or alternatively, for the specific purpose of effecting, reconciling and
recording transactions initiated by the Claimants.
334. Effectively, the Defendant carried these functions on behalf of Subpostmasters.
335. The Claimants contend that the foregoing agency relationship was limited in scope and
gave rise to the obligations upon the Defendant described in GPOC, §84, namely:
335.1. properly and accurately to effect, execute, record, and/or maintain and keep
records of all transactions which the Subpostmasters initiated using Horizon
or for which the Subpostmasters were potentially responsible;
335.2. to render and make available to Subpostmasters accounts (as above); and
335.3. further or alternatively, where the Defendant alleged shortfalls to be
attributed to Subpostmasters, to comply with the implied duties averred in
GPOC, §64.3 to 64.11,310 namely to produce and explain relevant records, to
carry out fair investigations and to communicate, and not conceal, any
material problems (see, for example, the Payments Mismatch documents) or
matters which are of relevance to Subpostmasters and their accounts.
308 GDef at §123(1) [B3/2/53]

309 GPOC at §83 [B3/1/45]
310 [B3/1/36]
– 124 –
A/1/128
336. The Defendant denies any such agency. It’s position is that:311
336.1. the SPMC and NTC are clear in that they provide for the Subpostmasters to
act as agents of the Defendant not the other way around;
336.2. the Defendant did not agree to act as an agent for any Subpostmaster; and
336.3. the Defendant did not hold or deal with cash or other assets on behalf of
Subpostmasters, and did not effect transactions on their behalf or commit
them to transactions with third parties;
336.4. rather the Defendant characterises the Admitted Functions as steps taken “in
the conduct of its own business and as principal”.312
Relevant principles
337. As Bowstead & Reynolds on Agency (21st Ed.) at 1-001 makes clear, an agency
relationship is:
“…the fiduciary relationship which exists between two persons, one of whom expressly or impliedly
manifests assent that the other should act on his behalf so as to affect his relations with third parties,
and the other of whom similarly manifests assent so to act or so acts pursuant to the manifestation.”
338. That definition is subject to the qualification that “[a] person may have the same fiduciary
relationship with a principal where he acts on behalf of that principal but has no authority to affect
the principal’s relations with third parties. Because of the fiduciary relationship such a person may
also be called an agent.”
339. Authoritative statements in the case law make clear that agency is a relationship which
may be implied from the conduct of the parties and in all the circumstances of the
relationship: Garnac Grain Company Inc v HMF Faure & Fairclough Ltd and Ors [1968]
311 GDef at §124 [B3/2/54]

– 125 –
A/1/129
AC 1130 HL(E) at 1137C per Lord Pearson.313 Subjective assent is not required and, indeed,
the parties may create an agency relationship in law even where they both positively
disclaim it.
340. The relevant principles are amplified in Annex VII: Issues 10 and 11 – Post Office as
Agent.
The issues to be considered at trial
341. Thus, in light of the foregoing and applying those principles, the issues for
consideration will largely focus, therefore, on:
341.1. whether the Admitted Functions are performed by the Defendant on behalf of
its Subpostmasters, or exclusively on its own account;
341.2. whether authority is conferred by Subpostmasters upon the Defendant to do
so – in particular, whether such conferral is to be implied from conduct from
which it is reasonable to infer the necessary assent to such an agency
relationship;314
341.3. whether it is relevant that the SPMC and NTC also provided that
Subpostmasters act as agent for Post Office for other (wider) purposes;
341.4. whether it is relevant (as suggested by the Defendant) that the Defendant did
not hold or deal with cash or other assets on behalf of Subpostmasters, and
did not effect transactions on their behalf or commit them to transactions with
third parties – and if so, whether that is in fact the case; and
341.5. where such conferral of authority is to be implied, whether (or to what extent)
the Defendant’s duty to produce documents and information relating to
Subpostmasters’ affairs follows, as is contended for at §84 GPOC.
313 See also: Branwhite v Worcester Works Finance Ltd [1969] 1 AC 552, per Lord Wilberforce at
p.587E
314 As to which, the relationship may exist even if the parties have professed to disclaim it.
– 126 –
A/1/130
342. In order to clarify the issues, the Claimants make the following preliminary observations
in opening, in the light of the nature of the dispute between the parties on this issue.
Agency to be implied
343. It is common ground that there was no express written contractual agreement between
Subpostmasters and Defendant whereby the latter was stated to be acting as agent for the
former. Rather, the agency is to be implied315 from the conduct of the parties, the system
as it in fact operated and all the circumstances of the relationship.
344. The fact that the SPMC and NTC may also provide for the agency (of a quite different
scope) of Subpostmasters for different purposes, has no bearing on whether the agency in
issue, for the limited purposes contended for by the Claimants, is properly to be implied
in accordance with accepted principle and authority, on the facts of this case.
345. The Court has already had sight of the written evidence filed and served on behalf of the
Lead Claimants from which the Claimants will invite the Court to imply a relationship of
agency arose in answer to the question posed by Issue 10, as well as Mr Carpenter’s one
line dispute on that issue at §10 of his witness statement.
346. But – as a starting point – it is to be noted that the following is largely uncontroversial:
346.1. as above, the Defendant required Subpostmasters themselves to comply with
contractual obligations in relation to the keeping and production of branch
accounts, had the power to seek recovery from them for losses relating to
branch accounts and/or in fact sought recovery for apparent shortfalls (in the
course of a role which the Defendant itself sought to characterise as fiduciary
in nature);
346.2. the Defendant also imposed a requirement upon Subpostmasters to use its
Horizon system;
315 Garnac Grain Co Inc v HMF Faure & Fairclough Ltd [1968] AC 1130, per Lord Pearson at
p.1137C; Branwhite v Worcester Works Finance Ltd [1969] 1 AC 552, per Lord Wilberforce at
p.587E.
– 127 –
A/1/131
346.3. Subpostmasters were unable to comply with their contractual obligations in
respect of the keeping and production of branch accounts without Horizon;
346.4. As above, in this respect the Defendant performed the Admitted Functions
with respect to branch accounts and the Defendant in fact effected branch
transactions and recorded and maintained accounts thereof;
346.5. Indeed, Subpostmasters were unable to comply with their contractual
obligations in respect of branch accounts without the Admitted Functions, set
out above, performed by the Defendant;
346.6. The Defendant relies on the relationship as having been a business to business
relationship, whilst at the same time being in sole charge (as between itself
and Subpostmasters) of the system by which transactions initiated by
Subpostmasters was effected, processed, reconciled and recorded;
346.7. Further the Defendant not only did the above, but also reconciled transaction
data with its own data and/or data from third party clients (to which
Subpostmasters did not have access) – as to which the Defendant admits it
"...also undertook its own accounting reconciliations, where possible matching a
Subpostmaster's records against other records provided by third parties, and then
notifying Subpostmasters of discrepancies found and allowing them to choose whether
to accept or dispute those discrepancies".316
346.8. These functions included functions in respect of branch accounts in respect of
which Subpostmasters were to be legally bound – as to the latter, for example,
by ‘accepting’ a Transaction Correction giving effect to the same.
346.9. The Defendant undertook these functions on behalf of Subpostmasters.
347. Thus, the arrangements between the Defendant and Subpostmasters included the
Defendant performing functions, and taking actions, with respect to Subpostmasters’ own
branch accounts.
316 GDef at §12 [B3/2/4]
– 128 –
A/1/132
348. It is to be inferred from this and the conduct of the parties more generally that
Subpostmasters assented to the conferral of authority on the Defendant to carry out the
Admitted Functions which affected the Subpostmasters’ own businesses and branch
accounts as set out above.
349. The Defendant seeks to suggest, by its written evidence, that it could not have acted as
agent to Subpostmasters as “this was not how the relationship worked”.317 This position is at
odds with the admission made that the Defendant performed the Admitted Functions,
and with the clear picture of the parties’ conduct that emerges from the Lead Claimants’
evidence and, indeed, in some respects from the evidence of the Defendant.
350. That evidence includes, for example, evidence as to the following:
350.1. the issue of Transaction Corrections by the Defendant, the acceptance of which
affected branch accounts, based on its own information;318
350.2. reliance upon the Defendant (which was encouraged by the Defendant itself)
to resolve accounting issues by issue of such transaction corrections;319
350.3. the effecting or acceptance of transactions in branch accounts by employees of
the Defendant, such as auditors, in branch;320
350.4. Subpostmaster’s reliance upon the Defendant for the purposes of
investigating apparent shortfalls in branch accounts upon information to
which only the Defendant had access;321
350.5. the asymmetry of information referred to in relation to Common Issues (8) and
(9) in the previous section of this Written Opening, above; and
350.6. the control of branch accounts and branch data (in respect of which
Subpostmasters were held responsible), apparently exercised by the
317 See, for example, the witness statement of Carpenter, §10 [C2/10/4]
318 For example, see Abdulla, §128 [C1/4/25-26]
319 For example, see Stockdale, §109 [C1/6/23]
320 Of which there are many instances – see, for example, see Abdulla, at §136 [C1/4/27]
321 Of which examples in the evidence are legion, see, for example Stubbs, at §133 [C1/2/30]
– 129 –
A/1/133
Defendant following suspension or termination at a time when
Subpostmasters had no access to the same.322
Duties
351. It follows from the foregoing, and from the Admitted Functions performed by the
Defendant on behalf of Subpostmasters, that the Defendant owed the corresponding
duties to Subpostmasters:
351.1. to provide Subpostmasters with records in relation to those transactions; and
351.2. to disclose any information which would be likely to influence
Subpostmasters in the context of their relationship and, in particular, to
furnish Subpostmasters with information that is directly pertinent to the
rendering of accounts and potential causes of apparent shortfalls
Findings
352. The Claimants will therefore invite the Court to find, on the evidence:323
352.1. that it is to be implied from the relevant facts that the Defendant acted as an
agent for Subpostmasters:
a. for the purpose of rendering and making available accounts and/or was under
an equitable duty to render accounts; and further or alternatively, for the
specific purpose of effecting, reconciling and recording transactions initiated
by the Claimants;
352.2. that the limited agency contended for gave rise to the specific correlative
obligations upon the Defendant, described in GPOC, §84.
322 For example, see Stubbs, §135

323 GPOC at §83 [B3/1/45]
– 130 –
A/1/134
Issues 12 and 13: Subpostmasters as Agents
Issue 12: Was the extent and effect of the agency of Subpostmasters to Post Office such
that the principles of agency alleged at Defence 91 and 93(2) and (3) applied as Post
Office contends?
Issue 13: Did Subpostmasters bear the burden of proving that any Branch Trading
Statement account they signed and / or returned to Post Office was incorrect?

Generic 34 to 35 69(3), 90 to 91 59 to 64
Bates 104 to 106 99 to 101 99 to 101
Stubbs 107 to 109 84 to 86 91 to 93
Sabir 83 to 85 98 to 100 96 to 98
Abdulla 81 to 83 86 to 88 89 to 91
Dar 96 to 98 85 to 87 88 to 91
The Parties respective positions
The Defendant’s Case
353. Issues 12 and 13 arise on the case pleaded by the Defendant in response to the
Claimant’s case (at §34 and §35 GPOC), that some Subpostmasters felt they had no
effective choice but to proceed either:
353.1. by ‘making good’ apparent or alleged shortfalls in branch accounts; or
353.2. by signing off incorrect Branch Trading Statements.
354. The Defendant’s case on Issues 12 and 13 can be summarised324 as follows:-
354.1. By virtue of the contractual relationship between the parties, Subpostmasters
owed fiduciary obligations to the Defendant, namely: 325
a. a duty to act in the Defendant’s best interests in relation to functions
Subpostmasters undertook on the Defendant’s behalf (including holding and
324 Taken here from the GDef, but also as put, largely without further elucidation, against the Lead
Claimants - see e.g., the Bates/IDef at §99 to 101 [B5.1/3/54-55]
325 GDef at §91 [B3/2/41]
– 131 –
A/1/135
dealing with the Defendant’s cash and stock, effecting and recording
transactions, generating liabilities for the Defendant, and maintaining proper
and accurate records and preparing and rendering accounts); and
b. a duty to account;
354.2. As Subpostmasters render accounts to the Defendant, which accounts are
subsequently settled, Subpostmasters are bound by those accounts and the
Court must make all presumptions of fact against them in respect of these
accounts unless they can plead and prove such accounts to be mistaken.326
355. This represents an attempt by the Defendant to use equitable principles of agency to
defeat the claims in this litigation (particularly that the Claimants were unable to ascertain
the cause of shortfalls) by seeking to hold Claimants to be bound by accounts submitted
whilst facing such difficulties, unless the Claimants can now prove the causes of shortfalls
which at the time they were unable to ascertain. This device is without merit, for the
reasons set out below.
356. It is first necessary to identify the terms of the SPMC and NTC which the Defendant prays
in aid:327
356.1. SPMC – Section 1, clause 1: “The contract is a contract for services and
consequently the Subpostmaster is an agent and not an employee of [the
Defendant].”
356.2. NTC – Part 2, paragraph 1.2: “The Agreement is a contract for services and the
Operator is an agent and not an employee of [the Defendant]. The Operator
acknowledges that no relationship of employer and employee exists between [the
Defendant] and the Operator, or between [the Defendant] and any Assistant.”
The Claimants’ Case
357. The Claimants’ case is that:328
326 GDef at §69(3) [B3/2/33]

327 See GDef at §90 [B3/2/41]
– 132 –
A/1/136
357.1. Subpostmasters were agents of the Defendant for the purposes of effecting
transactions on its behalf with third parties, such as members of the public;329
357.2. However, the relationship was distinct from the factual premises upon
which the Defendant seeks to apply what it calls “usual agency principles”:
a. Subpostmasters would initiate transactions for the Defendant;
b. transactions would be effected (i.e. executed) by a system imposed, provided,
controlled and managed by the Defendant;
c. Subpostmasters had no control over the efficacy and accuracy of the same;
d. as the Defendant admits, it reconciled data with data in its own possession
(and, as above, it performed the Admitted Functions);
e. the Defendant did not regard itself as bound to disclose errors affecting the
system and/or potentially affecting branch accounts to Subpostmasters, in
timely manner or at all (see, for example, the Payments Mismatch
documents);
f. the Defendant (and/or its IT suppliers) had remote access to the branch
accounts of Subpostmasters and were able to inject transactions into those
branch accounts, without the knowledge of Subpostmasters;
g. further and/or alternatively the Defendant presented figures to
Subpostmasters through Horizon and made representations to
Subpostmasters (see GPOC §108) as to the existence of shortfalls which
Subpostmasters were unable to investigate but were required by the
Defendant to disprove; and
h. it follows that the factual relationship was strikingly different to that upon
which the Defendant appears to rely and the principles upon which the
328 GReply at §59-§64 [B3/3/33-36]

329 GPOC at §82
– 133 –
A/1/137
Defendant relies are not apt to bind the Claimants to account to the
Defendant in the manner alleged.
Relevant principles
358. The relevant principles to be applied in relation to Issues 12 and 13 are amplified in
Annex VIII: Issues 12 and 13 – Subpostmasters as Agents.330
The Issues
359. The following matters fall to be considered at trial in order to determine the questions
posed by Issues 12 and 13:
359.1. Functions performed by each party: what functions were each of the
Defendant and its Subpostmasters responsible for with respect to branch
transaction data, branch accounts and as to Branch Trading Statements?
359.2. Scope of alleged agency: which functions did Subpostmasters perform on
behalf of the Defendant act as agent – i.e. what was the scope of the agency?
359.3. Position of the parties, inter se: what was the nature of the relationship
between the parties and their relative positions within it?
359.4. Full information: did Subpostmasters submit the accounts in issue with the
benefit of full information as to the sums in dispute and, if they did not, did
the Defendant (a) have access to any of the missing information and (b) bear
any responsibility for providing it to the Claimants?
359.5. Settled accounts: can Subpostmasters therefore be held to the account
presented in Branch Trading Statements as a ‘settled account’ on agency
principles that would apply in a typical agency situation, where accounts are
settled with the benefit of access to the relevant information?
330 General principles are also set out in Annex VII (‘Annex VII: Issues 10 and 11 – Post Office as
Agent’)
– 134 –
A/1/138
359.6. Burden of proof: if so, in these particular circumstances, did Subpostmasters
bear the burden of proving that any Branch Trading Statement account they
signed and/or returned to Post Office was incorrect?
360. On the principal issues, by way of opening, the Claimants submit as follows.
Scope of Subpostmasters’ agency (Issue 12)
Agency relationship and functions performed by each party
361. As noted above and in Annex VII: Issues 10 and 11 – Post Office as Agent, the terms of
a contract are far from definitive as to the existence and scope of an agency relationship.
362. But as a starting point, terms relied upon by the Defendant do no more than describe
Subpostmasters as agents and not employees. Indeed, this appears to be part and parcel
of wording designed to disavow employee status of Subpostmasters.
363. In particular, those terms:
363.1. do not specify the purposes for which Subpostmasters acted as agent; and
363.2. do not expressly purport to impose any fiduciary obligations of the effect now
relied upon by the Defendant.
364. The scope of any fiduciary duties owed by an agent is necessarily context-specific and an
agent may owe fiduciary obligations in respect of some of the functions that it carries out
for a principal and not in respect of others.331
365. The findings the Claimants will ask the Court to make on the evidence as to the scope of
the agency relationship are set out below.
366. In short, however, in this context, the agency can necessarily only be limited to what
Subpostmasters were required to perform on behalf of Defendant. Their fiduciary duties
must be limited to such of those services in respect of which single minded loyalty was
owed. It would be contrary to principle to impose either in respect of
331 See Annex VIII below and, by way of example, John Youngs Insurance Services Ltd v Aviva
Insurance Service UK Ltd [2011] EWHC 1515 (TCC)
– 135 –
A/1/139
matters over which Subpostmasters had no (or inadequate) knowledge or could have no
(or inadequate) control.
367. As to this, the Court is asked to have regard to the following:
367.1. The functions the Defendant admits it performs, which include:
a. The Admitted Functions (see: Common ground, on p.123) which include
effecting, recording and managing the reconciliation of transactions effected
by the Claimants 332 and possessing and/or controlling the underlying
transaction data in relation to such transactions; and
b. undertaking "...its own accounting reconciliations, where possible matching a
Subpostmaster's records against other records provided by third parties, and then
notifying Subpostmasters of discrepancies found and allowing them to choose
whether to accept or dispute those discrepancies".333
367.2. The Defendant’s agency in respect of Subpostmasters: as a result of the
above.
367.3. What was in fact undertaken by Subpostmasters as agent: which included
effecting transactions for the Defendant with third parties, such as members
of the public, and the initiation of transactions in branch via Horizon.
Subpostmasters were contractually obliged to submit or produce accounts –
but that obligation can be no greater than what was possible from transaction
data managed, controlled, transmitted to clients and reconciled by the
Defendant.
367.4. As to this, the Claimants rely upon (i) the Admitted Functions above, and (ii)
the evidence of the Lead Claimants – including as to:
332 Noting that with respect to the latter function, the Defendant admits “Post Office recorded the
transaction data entered on Horizon by Claimants and so far as possible sought to reconcile that transaction
data with other data is (sic) possessed”: GDef §123(1) [B3/2/53]
333 GDef at §12 [B3/2/4]
– 136 –
A/1/140
a. The inadequate training and support provided, including Helpline; 334 and
b. the inherent limitations of Horizon, difficulties experienced of investigating
the cause of apparent shortfalls and imbalance of knowledge as between The
Defendant and Subpostmasters.335
367.5. The obvious distinction to be drawn with a traditional agency/accounting
relationship: in light of the foregoing and the actual relationship and its
operation.
Settled accounts (Issue 13)
368. The Defendant’s aim on Issues (12) to (13) is to seek to persuade the Court, despite the
complexities of the arrangements described above, that Subpostmasters are to be held to
Branch Trading Statements that they have signed and/or returned to the Defendant as
traditional settled accounts.
369. The Defendant’s argument that Subpostmasters are unable to reopen those accounts
without specific proof of error rests upon this ambitious case.
370. This suggestion cannot be sustained in the face of the Defendant’s admissions above, and
the only direct evidence, from the Lead Claimants, as to the difficulty (if not near
impossibility) of proving the causes of alleged shortfalls without assistance from the
Defendant and/or information to which the Defendant had access and as a matter of
practice refused Subpostmasters access.
Whether to be bound by accounts
371. The relevant factual context therefore overlaps with that applicable to resolution of Issues
(8) and (9) and, again, the Court is respectfully invited to have regard to the facts and
matters relied upon by the Claimants for the purposes of those issues.
334 For a summary of the evidence to be heard: see Section A above: under ‘Training Subpostmasters’
and ‘Support and Helpline’
335 For a summary of the evidence to be heard: see Section A above: under ‘Apparent Shortfalls and
Horizon’; as to the imbalance of knowledge see also Section B – Issues
– 137 –
A/1/141
372. The relevant circumstances, which militate strongly against the application of the
principles relied upon by the Defendant, include:336
372.1. the Defendant’s requirement that Claimants sign off on branch accounts in
order to be permitted to enter a new trading period, the next day;
372.2. the contractual requirement upon the Claimants to offer the Defendant’s
services using the Horizon system, which required them to enter a new
trading period on that system;
372.3. that Claimants faced alleged shortfalls which they could not effectively
dispute, investigate, or trace the cause of;
372.4. the Defendant’s approach of requiring repayment of alleged debts as a
condition of Subpostmasters’ continuing appointment;
372.5. the Lead Claimants’ aspirations that discrepancies may subsequently be
resolved, by pending transactions, transaction corrections or otherwise;
372.6. The fact that some of the Lead Claimants could not afford to pay (or keep
paying) the Defendant the amounts of the apparent shortfalls; and
372.7. the acute relational imbalance and asymmetry of information between the
parties overall.337
373. As to the relevant circumstances, the Claimants further rely upon:
373.1. The following, as pleaded by the Lead Claimants: 338
a. they “were required to submit accounts to the Defendant in circumstances in
which they were unable to ascertain the cause (or reality) of apparent shortfalls”;339
336 GPOC at §35

337 As to which, the Claimants will rely inter alia upon the express terms of the contracts, which were
replete with power and discretion in the hands of the Defendant
338 See, e.g. Bates/IPOC at §105.2 [B5.1/2/30] - again, on the Lead Claimant’s evidence, such
knowledge would be a matter it all but impossible for a Subpostmaster to prove
339 See, e.g. Bates/IPOC at §105.1 [B5.1/2/29]
– 138 –
A/1/142
b. “Subpostmasters were sometimes told to sign off accounts which did not reflect
their contemporaneous understanding”.
373.2. the Defendant’s narrow admission of the latter averment that Subpostmasters
should not be bound by in those circumstances, albeit only where the
Defendant itself knew the account to be false;340
373.3. the issue of Transaction Corrections by the Defendant, based on its own
information, the acceptance of which affected branch accounts;341
373.4. reliance upon the Defendant (which was encouraged by the Defendant itself)
to resolve accounting issues by issue of such transaction corrections;342 and
373.5. the effecting or acceptance of transactions in branch accounts by employees of
the Defendant, such as auditors, in branch.343
Re-opening accounts
374. The Claimants will further rely, if necessary, upon the circumstances in which it is
permissible to re-open a settled account set out in Annex VIII: Issues 12 and 13 –
Subpostmasters as Agents. These include where the specific circumstances demonstrate
that the party settling the accounts had insufficient information at the time of doing so.
375. As to this, the Claimants rely upon the matters set out above, and:
375.1. the relative situation of the parties is such that the balance of power is clearly
in the favour of the Defendant (as above); and
375.2. that Subpostmasters did not have the fullest information available to them
when it came to submitting Branch Trading Statements.

341 For example, see Abdulla, §128 [C1/4/25-26]
342 For example, see Stockdale, §109 [C1/6/23]
343 Of which there are many instances – see, for example, see Abdulla, §136 [C1/4/27]
– 139 –
A/1/143
Findings
376. In light of the foregoing, the Claimants will invite the Court to find:-
376.1. As to the functions each party performed with respect to branch accounts and
the data forming the basis of Branch Trading Statements, that:
a. Subpostmasters would initiate transactions for the Defendant;
b. transactions would be effected (i.e. executed), by a system imposed, provided
and managed by the Defendant;
c. Subpostmasters had no control over the efficacy and accuracy of the same;
d. as the Defendant admits, it reconciled data with data in its own possession
(and, as above, it performed the Admitted Functions);
e. the Defendant presented figures to Subpostmasters through Horizon and
made representations to them as to the existence of shortfalls which they
were unable to investigate but required by the Defendant to disprove.
376.2. As to the agency relationship, that Subpostmaster was agent only for the
purposes of effecting transactions on its behalf with third parties, such as
members of the public, and initiating those transactions on Horizon.
376.3. Application of agency principles: Subpostmasters may be held to the account
presented in Branch Trading Statements only to the limited extent they
initiated the aforesaid transactions;
376.4. Settled accounts: in the particular circumstances of this relationship,
Subpostmasters did not bear the burden of proving that any Branch Trading
Statement account they signed and/or returned to Post Office was incorrect.
377. On the basis of the foregoing, and the evidence to be heard at trial on these matters, the
Claimants invite the court to answer both Issues 12 and 13 in the negative.
– 140 –
A/1/144
Issues 14 to 21: Suspension, Termination, etc
378. Issues (14) to (21) concern related topics, namely issues arising relating to the parties’
relationship as regards suspension and termination of a Subpostmaster’s engagement
with the Defendant and certain consequential matters.
379. It is subdivided into four sections:-
379.1. Issues 14 to 16: the proper construction of the SPMC and NTC’s terms relating
to suspension and termination rights (the “Suspension and Termination”
issues).344
379.2. Issues 17 and 18: whether the express terms of the SPMC and NTC represent
the ‘true agreement’ between the parties as to termination (the “True
Agreement” issues).345
379.3. Issues 19 and 20: the circumstances, if any, in which Subpostmasters are
entitled to compensation for loss of office (the “Compensation for loss of
office” issues).346
379.4. Issue 21: what restrictions, if any, there were on the Defendant’s discretion as
to whether or not to appoint as a Subpostmaster the prospective purchaser of
an incumbent Subpostmaster’s business (the “Subsequent Appointments”
issue).347
344 Issues (14) to (16)

345 Issues (17) to (18)
346 Issues (19) to (20)
347 Issue (21)
– 141 –
A/1/145
SUSPENSION AND TERMINATION
Issue 14: On a proper construction of the SPMC and NTC, in what circumstances and /
or on what basis was Post Office entitled to suspend pursuant to SPMC Section 19,
clause 4 and Part 2, paragraph 15.1 NTC?
or on what basis was Post Office entitled summarily to terminate?
or on what basis was Post Office entitled to terminate on notice, without cause?

Generic 32 to 33, 49, 60 to 61, 64, 99 66 to 72, 99 to 100, 75 to 80
104 to 106, 142
Bates 107 to 111 102 to 106 102 to 105
Stubbs 110 to 114 87 to 91 94 to 97
Sabir 86 to 90 101 to 105 99 to 102
Abdulla 84 to 88 89 to 93 92 to 95
Dar 99 to 103 88 to 92 91 to 94
380. As these Common Issues call for construction of express terms, the Claimants’ rely upon
the principles of construction set out in Annex I: Contractual Construction.
Relevant terms
381. The terms forming the subject matter of Issues 14 to 16 are as follows:-
381.1. Suspension:
a. SPMC – Section 19, Clause 4:
"A Subpostmaster may be suspended from office at any time if that course is
considered desirable in the interests of [the Defendant] in consequence of his:
(a) being arrested, (b) having civil or criminal proceedings brought against him,
(c) where irregularities or misconduct at the office(s) where he holds
appointment(s) have been established to the satisfaction of [the Defendant], or
are admitted, or are suspected and are being investigated."
– 142 –
A/1/146
b. NTC – Part 2, paragraph 15.1:
“[The Defendant] may suspend the Operator from operating the Branch
(and/or, acting reasonably, require the Operator to suspend all or any of its
Assistants engaged in the Branch from working in the Branch), where [the
Defendant] considers this to be necessary in the interests of [the Defendant]
as a result of: (15.1.1) the Operator and/or any Assistant being arrested, charged
or investigated by the police or [the Defendant] in connection with any offence
or alleged offence; (15.1.2) civil proceedings being brought against the Operator
and/or any Assistant; or (15.1.3) there being grounds to suspect that the
Operator is insolvent, to suspect that the Operator has committed any material
or persistent breach of the Agreement, or to suspect any irregularities or
misconduct in the operation of the Branch, the Basic Business or any Post
Office® branches with which the Operator and/or any Assistant is connected
(including any financial irregularities or misconduct).”
381.2. Summary termination:
a. SPMC – Section 1, clause 10:
“… The Agreement may be determined by [the Defendant] at any time in case

of Breach of Condition by [the Subpostmaster], or non-performance of his
obligation or non-provision of Post Office Services, but otherwise may be
determined by [the Defendant] on not less than three months’ notice.”
“In addition to any other rights of termination contained in other Parts, [the
Defendant] may terminate the Agreement immediately on giving written notice
to the Operator if the Operator:
16.2.1 commits any material breach of the provisions of the Agreement

or any other contract or arrangement between the Parties and fails to
remedy the breach (if capable of remedy) within 14 days of a written
notice from [the Defendant] specifying the breach and requiring the
same to be remedied. Any references in these Standard Conditions to a
breach of a particular obligation by the Operator being deemed to be
material and/or irremediable are not intended to be exhaustive and
shall not prevent [the Defendant] from exercising its rights under
this clause in respect of any other breach of the Agreement which is
material and/or irremediable;
– 143 –
A/1/147
16.2.2 fails to provide the Products or Services to the standards

required by [the Defendant] as set out in the Manual and fails to
remedy the failure (if capable of remedy) within 14 days of a written
notice from [the Defendant] specifying the failure and requiring the
same to be remedied; …
16.2.16 fails to pay any sum due to [the Defendant] under the
Agreement by the due date”.
381.3. Termination on notice:
a. SPMC – Section 1, clause 10 (as above).
“Following the Commencement Date the Agreement will continue until:

(16.1.1) either Party gives to the other not less than 6 months’ written notice
(unless otherwise agreed between the Parties in writing), which cannot be given
so as to expire before the first anniversary of the Start Date; or (16.1.2) it is
terminated at any time in accordance with its terms.”
Suspension
382. The Claimants’ case is that construed in accordance with commercial common sense, so
as to give expression to the common expectations of the parties when the contract was
made (by reference to the relevant factual matrix) and contra proferentem: the terms on
suspension should therefore be construed so as to render the implied terms at GPOC
§64.13348 unnecessary (which the Claimants contend ought to be uncontroversial),
and/or:
382.1. such that the phrases “considered desirable”, “established to the satisfaction of the
Defendant” and “suspected” (under the SPMC), and “considers this to be
necessary”, “suspect” and “irregularities” (under the NTC) would import the
effect of the said implied term; and
348 i.e. not to suspend Claimants: (i) arbitrarily, irrationally or capriciously; (ii) without reasonable
and proper cause; and / or; (iii) in circumstances where the Defendant was itself in material breach
of duty.
– 144 –
A/1/148
382.2. so as to require the Defendant to give fair consideration to all the relevant
circumstances and as to whether or not to suspend the Subpostmaster even if
the threshold for doing so was established.349
383. The Claimants contend this is the proper construction of the terms, so as to obviate not
only the implication of the terms governing their exercise (Issues 2 and 3), but to mitigate
the extent to which they were onerous and unusual (Issues 5 and 6) and/or unreasonable
so as to be unenforceable under UCTA (Issue 7).
384. The Claimants would draw particular attention to the submissions in Annex III: Issues 2
and 3 – Implied Terms, under Implied restriction on contractual discretion and Implied
terms in relation to powers of suspension.
385. The relevant factual matrix includes the long-term commitments and expectations of the
parties set out, in particular, above in: (i) Section A, under the heading Commitment to
and Investment in the Relationship (p.27); and (ii) Section B under Issue 1: Relational
Contract (p.39).
386. Furthermore, these provisions fall to be construed in their contractual context, including
the contractual consequences in relation to remuneration during (and after) a period of
suspension.
387. The Defendant accepts that the contractual right to suspend a Subpostmaster is not an
“unfettered” right.350 It confines its right to suspend Subpostmasters by reference to:
387.1. the existence of the factual grounds expressly set out in the relevant
contractual provision on termination;
387.2. where the Defendant “genuinely believed suspension to be in its interests”;351 and
387.3. where the Defendant’s “belief that suspension was in its interests was genuinely in
consequence of the factual grounds that were present”.352
349 See, e.g. Bates/IPOC at §109 [B5.1/2/30]

350 See, e.g. Bates/IDef at §102 [B5.1/3/55]
351 See, e.g. Bates/IDef at §102(1)(b) [B5.1/3/55]
– 145 –
A/1/149
388. The Claimants will rely upon:
388.1. the Defendant’s admission that its rights were not unfettered, as above;
388.2. the lack of clarity in the wording of the terms (contrary to what the Defendant
suggests)353 by reason of the words and phrases identified above (“desirable”,
“established to the satisfaction…” etc.) which are ambiguous; and
388.3. the Defendant’s additional gloss, not found in the express words, that its
beliefs in exercise of the terms must be ‘genuine’354 – which appears to be an
attempt by the Defendant to confess and avoid by making such a fine and
tailored concession (see Lalji, at paragraph 214, on p.81, above).
Termination
389. As with the contractual terms on suspension the Claimants’ case is that, by reference to
commercial common sense, the relevant factual matrix, and the principle of contra
proferentem, the contractual terms on suspension should be construed as per GPOC
§64.14355, so as to prohibit ‘knee jerk’ termination, and or:
389.1. such that the phrase “may be determined” (under the SPMC) and “may
terminate” (under the NTC) imported the foregoing, so as to require the
Defendant conscientiously to consider whether or not to do so; and
352 See, e.g. Bates/IDef at §102(1)(c) [B5.1/3/55] NB – the wording of other Individual Defences differs,
but not apparently to any material effect: see, for example, the Stockdale/IDef (an NTC Lead
Claimant) at §83(1)(b) (which requires the Defendant to have “genuinely believed suspension to be
necessary in its interests”) and §83(1)(c) (which states that the Defendant’s “belief was genuinely as a
result of the factual grounds that were present”) [B5.6/3/40]
354 See, e.g. Bates/IDef at §102(1)(b) and (c) [B5.1/3/55]
355 i.e. not to terminate Claimants: (i) arbitrarily, irrationally or capriciously; (ii) without reasonable
and proper cause; and / or; (iii) in circumstances where the Defendant was itself in material breach
of duty.
– 146 –
A/1/150
389.2. the phrase “not less than three months’ notice” (under the SPMC) and “not less
than 6 months’ notice” (under the NTC) required to the Defendant
conscientiously to consider what period of notice to give.356
390. The Defendant’s case as to termination can be set out simply in the following terms:-
390.1. Summary termination: The Defendant had a right to terminate without notice
when it had cause to do so under the terms of the SPMC (said to be limited to
repudiatory breach)357 and NTC (if one of more of the factual grounds under
Part 2, paragraph 16.2 was established).358
390.2. Termination on notice: The Defendant had a right to terminate for any reason
whatsoever on either three months’ notice (per the SPMC) 359 or six months’
notice (per the NTC).360
391. The Claimants will rely upon the same matters in support of its construction as set out
above, in relation to suspension, and will invite the Court to prefer the Claimants’
construction.
356 See, e.g. Bates/IPOC at §110 to 111 [B5.1/2/30-31]

– 147 –
A/1/151
TRUE AGREEMENT
Issue 17: Do the express written terms of the SPMC and NTC between Post Office and
Subpostmasters represent the true agreement between the parties, as to termination (in
this regard, the Claimants rely on Autoclenz v Belcher [2011] UKSC 41?
Issue 18: If not, was the “true agreement” between the parties as alleged at GPOC, para
71?

Generic 55, 69 to 71 86, 110 to 112 N/A
Bates 112 to 113 107 106 to 108
Stubbs 115 to 116 92 98 to 100
Sabir 91 to 92 106 103 to 105
Abdulla 89 to 90 94 96 to 98
Dar 104 to 105 93 95 to 97
Stockdale 103 to 104 88 89 to 91
Position of the Parties
392. On analysis, in accordance with the principles in Autoclenz v Belcher [2011] UKSC 41
(“Autoclenz”), the written agreement as to termination did not reflect the true agreement
between the parties.
393. The Claimant advances this case further or alternatively to the Claimants’ case on Issues
15 to 16.361
394. Neither party intended that the Claimants’ contracts were terminable on 3 months’ (per
the SPMC) or 6 months’ (per the NTC) notice such as to forfeit the Claimants’ substantial
long-term investments:
394.1. without substantial cause or reason, established after a fair investigation and
consideration;
394.2. if the Defendant was itself in material breach of contract;
361 That, on a proper construction of the SPMC and NTC terms, the Defendant did not have an
unfettered right to terminate on will or on the short notice periods provided for in those contracts
– 148 –
A/1/152
394.3. vindictively, capriciously or arbitrarily; or
394.4. in response to reasonable correspondence about (i) any apparent breach by the
Defendant, or (ii) alleged shortfalls and the difficulties faced by
Subpostmasters in investigating alleged shortfalls.362
Illustration
395. The written agreement regarding termination can be tested by asking:
Was the true agreement between the parties that the Defendant could
terminate the Subpostmaster’s engagement on notice expiring 3 months
and one day after branch transfer, in the context of the commitments being
made by the parties?
396. The Defendant:
396.1. denies the application of Autoclenz principles on the grounds these are not
employment contracts (nor are they said to be)363 – and cannot be used to
circumvent normal principles of construction;
396.2. denies that the terms in question were inserted for reasons of form;
396.3. denies that long-term investments would be forfeited; and
396.4. relies on the absence of a pleaded true agreement that Subpostmasters may
terminate on 12 months’ notice.
Relevant principles
397. The principle that the Court should always seek to find the “true agreement” between the
parties is uncontroversial. The manner in which that principle found expression in the
employment context in Autoclenz is addressed in Annex IX: Issues 17 to 18 – True
Agreement. The Claimants also address the application of those principles in this case.
362 See Bates/IPOC at §§62, 67, 69 and 72 [B5.1/2/17] [B5.1/2/18] [B5.1/2/ 19]
363 The Court should be aware that there is presently a group Employment Tribunal claim, on behalf
of 123 Subpostmasters, seeking to establish worker status, pending before London Central ET
– 149 –
A/1/153
Did the terms represent the ‘true agreement’?
398. The inconsistency between the contractual terms as to termination and the true agreement
are to be gleaned from all the circumstances, of which the written agreement was only
one part (see commentary on Autoclenz set out in Annex IX: Issues 17 to 18 – True
Agreement).
399. These circumstances will form the subject of evidence to be heard at trial. However, in
opening the Claimants make the following observations.
400. As to whether Autoclenz may be applied:
400.1. Autoclenz addressed the anterior question of whether terms in a contract
purporting to provide for self-employment were not reflected by the true
agreement consistent with employment.
400.2. The distinction between contracts of employment (or those potentially
construed as such) and commercial contracts was based upon the relative
bargaining positions of the parties364 – it is far from the bright line distinction
that the Defendant seeks to rely upon in this case. The application of Autoclenz
principles depends on a considered analysis of the overall character of the
relationship, not upon whether it is, or is not, an employment contract. If that
were not so, cases such as Autoclenz would be impossible to decide.
400.3. Further and in any event:
a. while not expressed to be contracts of employment, the SPMC and NTC have
many of the indicia of such contracts365 (see Annex IX) including detailed
personnel provisions and reserving to the Defendant a high degree of
discretion and control;366 and
b. the dicta of Lord Clarks JSC in Autoclenz are to be applied accordingly.
364 Specifically, “…the relative bargaining power of the parties must be taken into account in deciding
whether the terms of any written agreement in truth represent what was agreed”
365 GPOC at §9, §45, §50 and §69 [B3/1/2] [B3/1/15] [B3/1/17] [B3/1/39]
366 GPOC at §45 [B3/1/15-16]
– 150 –
A/1/154
401. As to the relevant circumstances from which the true agreement is to be gleaned, the
Claimants will rely upon:
401.1. the evidence of the Lead Claimants to be heard at trial as to their long-term
investments and commitments to the relationship and the high degree of
discretion and control exercised by the Defendant;
401.2. the express terms of The Discretionary Payments Agreement (the “DPA”)
dated 1 April 1989367 made by the NFSP (on behalf of all Subpostmasters) and
the Defendant, being a long-standing agreement on the compensation to be
paid to Subpostmasters upon the termination in certain circumstances, which
applies a multiplier of 28 (or 26) months of the gross remuneration as of their
last day of appointment368 - upon which the Claimants will rely as to the
mutual expectations of the parties of the value of the Subpostmasters’
goodwill and period over which that should be amortised; and
401.3. aspects of the Defendant’s own evidence from senior management, in
particular to the effect that: 369
a. the contractual notice period was extended from three months under the
SPMC as this was not a realistic timeframe for replacing a Subpostmaster –
even for the Defendant;
b. 12 months “would be necessary” in the case of a ‘Mains Contract’ and “[i]n
short, longer notice periods for both parties seemed to make more sense in light of
the timescales involved in replacing a Subpostmaster.” [Emphasis added]
What was the ‘true agreement’? (Issue 18)
402. In all the circumstances, the Claimants will invite the Court to find on the evidence to be
heard at trial, that the ‘true agreement’ as to termination was, as pleaded, namely that:
367 [G/84/1]; and all variations and supplemental agreements thereto

368 such as in the case of Bates and his letters dated 19 December 2000, 18 July 2001, 7 January 2002,
and 13 February 2002 [E1/23/1], [E1/50/62] , [E1/30/1] and [E1/32/1]
369 Breeden, §62 [C2/3/16]
– 151 –
A/1/155
402.1. Subpostmasters’ contracts would not be terminated in the manner contended
for by the Defendant;
402.2. the Defendant would not terminate such contracts without giving such
notice as the court may hold to be reasonable; and
402.3. such notice was, on any view (and as consistent with the Defendant’s
evidence – as above), never to be less than 12 months.370
370 GPOC at §71 [B3/1/40]
– 152 –
A/1/156
COMPENSATION FOR LOSS OF OFFICE
Issue 19: On a proper construction of the SPMC and NTC, where Post Office lawfully
and validly terminated a Subpostmaster’s engagement, on notice or without notice for
cause, was the Subpostmaster entitled to any compensation for loss of office or
wrongful termination?
Issue 20: On a proper construction of the SPMC and NTC, in what, if any, circumstances
are Subpostmaster’s breach of contract claims for loss business, loss of profit and
consequential losses (including reduced profit from linked retail premises) limited to
such losses as would not have been suffered in Post Office had given the notice of
termination provided for in those contracts?

Generic 62, 131 101, 171 81 to 82
Bates 114 108 109
Stubbs 117 93 101
Sabir 93 107 106
Abdulla 91 95 99
Dar 106 94 98
Stockdale 105 89 92
403. The Claimant’s case on these provisions is confined to their enforceability as Onerous and
Unusual Terms and/or under UCTA.
404. The principles relevant to these Issues are set out in Annex V: Issues 5 and 6 – Onerous
and Unusual Terms and Annex VI: Issue 7 – Unfair Contract Terms.
The relevant terms
405. The written terms of the Defendant’s contracts with Claimants purported (on the
Defendant’s construction) to provide that Subpostmasters had no right to any
compensation for loss of office, irrespective of whether loss of office and damage suffered
thereby was due to breach or other unlawful act by the Defendant, as follows:
405.1. SPMC – Section 1, clause 8: “The terms of the appointment of Subpostmaster do
not entitle the holder to be paid … compensation for loss of office."
– 153 –
A/1/157
405.2. NTC – Part 2, paragraph 17.11: “The Operator acknowledges that he shall not be
entitled to receive any compensation or other sums in the event of the termination or
suspension of the Agreement.”
406. These terms, in their contractual context, are very one-sided in making acutely
asymmetric provision for the parties’ respective liabilities: the Defendant reserves to itself
the right to pursue Subpostmasters for unlimited sums in relation to alleged losses in their
branches, after termination of their appointment, but excludes its own liability to pay any
“compensation for loss of office” (SPMC) or, strikingly, “any compensation or other sums in the
event of termination or suspension” (NTC – emphasis added).
407. The Claimants’ case on the above terms is therefore that:
407.1. the terms are onerous and unusual, such that they are not enforceable unless
the Defendant has provided sufficient notice of them to Subpostmasters;
alternatively
407.2. the terms were unenforceable as failing to comply with the requirement of
reasonableness under Section 3(2) UCTA.371
408. Thus, the issues to be determined with respect to these terms, and the case relied upon
by the Claimants (and points made in opening with respect to the same) are as set out
above under Issues (5) to (7).
371 See, e.g. Bates/IPOC at §114 [B5.1/2/31]
– 154 –
A/1/158
SUBSEQUENT APPOINTMENTS
Issue 21: On a proper construction of the SPMC and NTC, what if any restrictions were
there on Post Office’s discretion as to whether or not to appoint as a Subpostmaster the
prospective purchaser of a Subpostmasters’ business?

Generic 62 102 N/A
Bates 115 to 116 109 110 to 113
Stubbs 118 to 119 94 102 to 104
Sabir 94 to 95 108 107 to 109
Abdulla 92 to 93 96 100 to 102
Dar 107 to 108 95 99 to 101
Stockdale 106 to 107 90 93 to 95
The relevant terms
409. The relevant terms are the following:
409.1. SPMC – Section 1, Clause 9: “If on resignation of his appointment the
Subpostmaster disposes of his private business and/or premises in which the sub- office
is situated, the person acquiring the private business and/or the premises or
exchanging contracts in connection with the purchase of the private business and/or
premises will not be entitled to preferential consideration for appointment as
Subpostmaster.”
409.2. NTC – Part 2, paragraph 19: “…On termination of the Agreement, the appointment
of any New Operator shall be entirely at the discretion of [the Defendant]. [The
Defendant] may, but shall not be obliged to, consider any application for the operation
of a Post Office branch at the Branch Premises made by a genuine prospective
purchaser of the Basic Business and the property interest at the Branch Premises, but
any such prospective purchaser shall not be given preferential treatment in the
application or appointment process.”
– 155 –
A/1/159
Discretion or a veto
410. The Claimants’ case on the above terms is straightforward:372
410.1. The terms, properly construed, afforded the Defendant a ‘discretion’ as to
subsequent appointments, as opposed to simply a right of ‘veto’ (i.e.
unfettered commercial freedom to do as they pleased). The Defendant’s
decision involved a value judgment.
410.2. The exercise of a discretion of this nature is subject to the implied duties in
Yam Seng and/or the terms set out in GPOC §64.15 to 64.19 (in essence, an
obligation not to exercise such discretion arbitrarily, capriciously or
unreasonably, but rather in accordance with the obligations of good faith, fair
dealing, transparency, cooperation, and trust and confidence).
411. Whether the Defendant had a discretion or a veto (paragraph 410.1, above) is essential to
resolution of this Issue, i.e. Issue 21 (and, generally, see: principles of contractual
construction set out in Annex I: Contractual Construction).
412. As to the exercise of the discretion (paragraph 410.2), the Claimants’ case for the
implication of terms is set out under Issue 1 and under Issues 2 and 3, above.
413. The Defendant, conversely, argues that nothing in the Subpostmaster Contracts creates
any such discretion, and it had “complete commercial freedom”.373 The Defendant then
repeats its case in relation to implied terms, asserting that the discretion contended for
would be “onerous, unreasonable and uncommercial”, as the same would qualify the
Defendant’s commercial freedom to operate its business in its own interests after
termination of the contract.374
414. The Claimants further rely upon the case of Watson v Watchfinder.co.uk Ltd [2017]
EWHC 1275 (Comm) (“Watchfinder”). That case concerned a share option agreement
which was said to be subject to the consent of a majority of the board of directors. The
term under construction was clause 3.1, which provided: “The Option may only be
372 See. e.g. Bates/IPOC at §115 to 116 [B5.1/2/31] and the Bates/IReply at §110 [B5.1/4/48]
– 156 –
A/1/160
exercised with the consent of a majority of the board of directors of the Company.” Clause 3.2 then
provides: “If the consent specified in clause 3.1 has not been obtained by the Investors before the
Options Expiry Date the Option shall lapse and neither party to this agreement shall have any
claim against the other under this agreement except in relation to any breach occurring before that
date.”
415. Waksman J found that this clause did not provide the company with an unconditional
right of veto. Rather, it conferred a discretion. After setting out relevant principles of
construction derived from Arnold v Britton [2015] AC 1619,375 the Judge held:
“Does Watchfinder have an unconditional right of veto?
98. This cannot be the correct construction of clause 3.1. If it was, then the option is
meaningless because the grant of shares is entirely within the gift of Watchfinder. But in that
event the position would be no different from when any person sought to buy shares in
Watchfinder. Ms Hitchens for Watchfinder sought to maintain this construction, however, by
saying that in truth and despite its appearance and the clear and numerous references to an
“option” within it, the Option Agreement was nothing of the kind. The court should therefore
not be troubled if clause 3.1 undermined the purpose of the option-because there was no option to
speak of in the first place. I regard that as a “bootstraps” argument which cannot be correct. It
defies common sense and the detailed provisions of the Option Agreement as well as its title and
terms and indeed the references to it as such by the parties (albeit subjectively). Moreover, the
Option Agreement was always intended to be, and became, part of an overall contractual package
for Adoreum and the claimants in relation to their relationship with Watchfinder. That is why
they required both agreements to be signed before proceeding with the initial meeting with
Richemont. In that context, it is a commercial absurdity to conclude that objectively, one part of
that package was in fact worthless. Moreover, it is not as if the option was contained in a mass
of other contractual terms where it might have been easier to downplay its importance or read it
down. It was a separate agreement whose only purpose was the option albeit part of a package
with the Services Agreement. This is not one of those cases where (as noted by Lord Neuberger
PSC) the importance of commercial common sense is being overstated or over-used
375 Distilled at [96] as: (1) commercial common sense should not be invoked to undervalue the
importance of the language used; (2) the less clear the centrally relevant words are, the more
readily the court can properly depart from their meaning; (3) commercial common sense should
not be invoked retrospectively. The mere fact that a contractual arrangement has worked out badly,
or even disastrously for one of the parties is not a reason to depart from the natural language; (4)
a court should be slow to reject the natural meaning as correct simply because it appears be have
been very imprudent for one party to have agreed it; (5) facts known only to one of the parties
cannot be taken into account; (6) if an event occurs which had plainly not been intended by the
parties, the court will give effect to what the parties would have intended if clear
– 157 –
A/1/161
99. Accordingly, I reject this construction of clause 3.1.”
416. The two clauses under consideration in the present case go no further than stating that a
prospective purchaser of a Subpostmaster’s branch will not be given preferential
treatment, but this does not indicate an unfettered veto. Indeed, the relevant provision in
the NTC refers to the “discretion” of the Defendant in the appointment of a subsequent
Subpostmaster: that description is plainly correct. A discretion is plainly conferred under
both agreements.
417. The Claimants’ construction does not seek to deny the Defendant commercial freedom to
appoint a replacement Subpostmaster, merely to exercise that commercial freedom in
accordance with well-established principles by which other commercial freedoms are
regularly governed. That is the consequence of the Defendant having a discretion rather
than a veto.
418. The Claimant’s construction is to be preferred, in any event, and particularly in light of
the following:-
418.1. It recognises the long-term commitment and financial investment made by
Subpostmasters upon entering into the relationship, by affording them a
prospect of the protection of that investment in the goodwill of the business.
418.2. An unfettered discretion (effectively amounting to a veto) would allow the
Defendant in practice to defeat the expectations as to the value of the business
inherent in the bargain between the parties and the very premise upon which
the above investments were to be made.
418.3. A (high) degree of reciprocity and cooperation must always have been
intended to be part of the overall package in the relationship agreed between
Subpostmasters and the Defendant.
418.4. The characterisation of these terms as conferring a ‘discretion’ as opposed to
unfettered veto does not deprive the Defendant of its “commercial freedom”.
– 158 –
A/1/162
418.5. In the circumstances, it accords with commercial common sense. It would
otherwise be a commercial absurdity as it renders these specific terms
regarding subsequent appointments meaningless.
419. The extent to which that discretion is framed by any implied terms is a separate issue,
although, for present purposes, it is sufficient to question how the Defendant could object
to an implied term that the discretion is not exercised arbitrarily, capriciously or
unreasonably – if there are genuine commercial considerations which warrant a rejection
of a prospective Subpostmaster (whether those considerations are specific to that
individual or to the branch in question), then such exercise of the discretion would
unlikely be characterised as arbitrary, capricious or unreasonable.
420. The Claimants invite the Court to find that the Defendant had a discretion, not a veto, in
relation to the appointment of replacement Subpostmasters, which was therefore subject
to the limitations above, and the duties in Braganza.
– 159 –
A/1/163
– 160 –
A/1/164
Issues 22 and 23: Assistants
Issue 22: Did SPMC Section 15, clause 7.1; NTC, Part 2, clauses 2.3 and 2.5 and / or any
of the implied terms contended for by the parties and found by the Court purport to
confer a benefit on Assistants for the purposes of section 1 of the Contracts (Rights of
Third Parties) Act, and if so which of these terms did so?
Issue 23: What was the responsibility of Subpostmasters under the SPMC and the NTC
for the training of their Assistants?

Generic 56, 74 95(4), 116 92
Bates 117 to 119 110 to 112 114 to 116
Stubbs 120 to 122 95 to 97 105 to 107
Sabir 96 to 98 109 to 111 110 to 112
Abdulla 94 to 96 97 to 99 103 to 105
Dar 109 to 111 96 to 98 102 to 104
Rights of Third Parties
The express terms purporting to confer a benefit
421. The relevant terms are the following:-
421.1. SPMC – Section 15, clause 7.1:
“[The Defendant] will: (7.1.1) provide the Subpostmaster with relevant training
materials and processes to carry out the required training of his Assistants on the Post
Office ® Products and Services; (7.1.2) inform the Subpostmaster as soon as possible
where new or revised training will be necessary as a result of changes in either the law
or Post Office ® Products and Services; and (7.1.3) where appropriate
… update the training materials (or processes) or provide new training materials (or
processes) to the Subpostmaster. However, it is the Subpostmaster’s responsibility to
ensure the proper deployment within his Post Office ® branch of any materials and
processed provided by [the Defendant] and to ensure that his Assistants receive all
the training which is necessary in order to be able to properly provide the Post Office
– 161 –
A/1/165
® Products and Services and to perform any other tasks required in connection with
the operation of the Post Office ® branch.”
421.2. NTC – Part 2, paragraphs 2.3: “Where [the Defendant] considers it necessary, it
shall initially train the first Manager and such number of Assistants as [the
Defendant] shall determine, in the operation of the System at the Branch.”
421.3. NTC – Part 2, paragraphs 2.5: “[the Defendant] may require the Manager and/or
the Assistants to undertake further training at any reasonable location and time
during the Term if [the Defendant] (2.5.1) reasonably considers such training to be
essential; or (2.5.2) wishes to train them in new and improved techniques which have
been devised and which the Operator will be required to use in operating the System.”
422. The Claimants’ case is that Assistants employed by a Subpostmaster to work in a branch
are conferred benefits pursuant to those terms for the purposes of section 1(1)(b) 1999
Act, such that they may in their own right enforce them.
423. The Defendant denies that the terms purported to confer a benefit upon Assistants.
The issues
424. On the issues, the Claimants submit in opening
424.1. The terms purports to confer a benefit on Assistants (s.1(1)(b)):
a. The SPMC term requires training materials and processes to be provided to
Subpostmasters in order to train assistants and the NTC addresses initial and
further training which the Defendant would provide to Assistants.
– 162 –
A/1/166
b. These benefits are not received collaterally or incidentally;376 rather, the very
purpose of those terms is to ensure Assistants have the training needed to
do their job. Without such a term, an Assistant could not.377
424.2. Burden of proof (section 1(2)): it is for the Defendant to rebut the presumption
that it was intended that this term would be enforceable by Assistants.378 It
cannot do so on the ground that it (alone) did not intend this.
424.3. Assistants sufficiently described in the terms (section 1(3)): it does not
appear to be suggested that the requirements of section 1(3) have not been
made out. These are clearly satisfied: the terms refer to ‘Assistants’, a term
defined by reference to a class of persons in both the SPMC379 and NTC.380
425. The relevant implied term, on this Issue, is confined to the implied obligation that training
(above) provided to Assistants would be adequate (to which other implied terms, in
context, would add nothing).
Responsibility of SPMs to train Assistants
426. The Claimants’ case is that any obligation upon Subpostmasters to train their Assistants
cannot be construed so to require Subpostmasters to have been better able to train
Assistants than the training provided by the Defendant would allow or enable.
427. Any other interpretation would defy both logic and commercial common sense and could
not possibly have been the intention of the parties. The practical (if not
376 And the conferral of a benefit need not be a predominant purpose or intent: see Annex X: Issues
22 and 23 – Assistants
377 Prudential Assurance Co Ltd v Ayres [2007] EWHC 775 (Ch), [2007] 3 All E.R. 946 at [28],
reversed ([2008] EWCA Civ 52, [2008] 1 All E.R. 1266) on the different ground that the contract, on
its true construction, purported, not to benefit the third party, but to restrict the third party’s rights
378 See, e.g., The Laemthong Glory [2005] EWCA Civ 519
379 “A Subpostmaster must provide, at his own expense, any assistance which he may need to carry out the
work in his sub-office” and “Assistants are employees of the Subpostmaster” (Section 15, clauses 1, 2)
380 “a person employed by the Operator who is approved by Post Office Ltd in accordance with the Manual to
work in the Branch” (Part 1, paragraph 1.1)
– 163 –
A/1/167
insuperable) difficulties of a Subpostmaster providing training in matters upon which
he has not himself received any or any adequate training speak for themselves.
428. The SPMC specifically requires (under Section 15, clause 7.1) that materials be provided
by the Defendant for the purposes of training Assistants and that Subpostmasters are
required “to ensure the proper deployment within his Post Office ® branch of any materials and
processes provided by [the Defendant] and to ensure that his Assistants receive all the training
which is necessary…”
429. The Claimants’ further rely upon the implied terms that it alleges and/or the Defendant’s
own admitted implied terms as further qualifying the responsibility of Subpostmasters
to train Assistants. Indeed, the Defendant admits that the implied terms which it pleads
in the GDef at §105 “may, in appropriate circumstances, have required Post Office to cooperate
with Subpostmasters in relation to training assistants.”381
381 See, e.g. Bates/IDef at §111(1) [B5.1/3/61-62]
– 164 –
A/1/168
SECTION C: CONCLUSION
430. The purpose of the Common Issues Trial is to determine important aspects of the legal
relationship between Post Office and Subpostmasters. There are two very different
constructions advanced by the parties as to their legal relationships, which give rise to
interesting legal questions, some of them in developing areas of the law.
431. The Claimants have made clear that the real target of their case on these Common Issues
is the extreme construction advanced by the Defendant in almost every aspect of the
relationship with Subpostmasters.
432. The Defendant seeks to support its case by reference to its generic evidence, largely as to
what would have happened, both in asserting its positive case and in answer to the direct
evidence of the Lead Claimants. Much of that evidence purports to inform the
interpretation of the contract. As will be explored at trial, much of it is controversial.
433. Subpostmasters sought and accepted appointments on the basis of positive expectations
of the relationship, promoted or encouraged by the Defendant as a “trusted and high quality
brand” and entirely consonant with the public understanding of the role of a
Subpostmaster.
434. Subpostmasters invested and made long-term commitments on the strength of those
shared expectations.
435. The Defendant was solely responsible for drafting its written standard terms of business,
although the communication of contractual obligations to Subpostmasters was
unsatisfactory and it remains difficult to identify the universe of express obligations to
which, under those contracts, Subpostmasters were subject.
436. The experience of the Lead Claimants (including the three Lead Claimants chosen by the
Defendant) fell very far short of their pre-contract expectations. However, on the
construction of the relationship for which the Defendant contends, none of its actions can
be impugned. At least on one view, the Defendant appears to advance a construction
based on its conduct, rather than on a proper interpretation of the contracts in issue. How
the Defendant conducted itself is not the lodestar for construing its duties.
– 165 –
A/1/169
437. The Defendant seeks to resist the implication of duties of good faith, fair dealing,
transparency, cooperation and/or trust and confidence (and the specific implied terms
contended for) by the device of admitting other implied terms but refusing to explain
what they mean. That approach is apt to put the clarification of the legal relationship (and
its incidents) in this case beyond the reach of this Court – so as to undermine the utility of
this Common Issues Trial.
438. As to accounts and shortfalls, the Defendant’s admitted role and responsibilities after the
introduction of the Horizon are impossible to reconcile with its case on liability for
shortfalls or as to agency and Subpostmasters’ sole responsibility for accounts (which are
no longer within their control) – whether as a matter of commercial common sense or at
all.
439. By contrast, the Claimants contend for a legal relationship which conforms entirely with
commercial common sense and, even if not what the Defendant subjectively had in mind,
with the reasonable expectations of notional reasonable persons in the positions of the
parties.
440. The Claimants submit that all roads lead to Rome – in the sense that such a legal
relationship may be identified through a number of different combinations on the
Common Issues.
PATRICK GREEN QC
KATHLEEN DONNELLY
HENRY WARWICK
OGNJEN MILETIC
REANNE MACKENZIE
26 October 2018
Henderson Chambers
2 Harcourt Buildings
Temple
London EC4Y 9DB
– 166 –
A/1/170
Annex I: Contractual Construction
1. The general principles of construction are well established and uncontroversial.
However, their application to this case is important. Put shortly:-
(1) The Court should look for the meaning of the provisions not just the
meaning of the words.
In Investors Compensation Scheme Ltd v West Bromwich Building Society
(“ICS”),382 Lord Hoffmann made clear that the process of contractual
interpretation is such that the meaning of a phrase, clause or provision may
not be the same thing as the meaning of its words. The Court should therefore
be open to the possibility that the drafted words may not reflect the
objectively ascertained intention of the parties and that the parties (or in the
present case, the Defendant) may therefore have used the wrong words or
syntax. The Court should be alive to the fact that parties do not normally make
linguistic mistakes, particularly in formal documents such as a contract, but
that it is nevertheless possible for something to have gone wrong with the
language. At the same time, the Court should not attribute to the parties
intentions that they plainly did not have.
(2) The correct approach is to start (and finish) by looking for and adopting
the interpretation that most accords with commercial common sense.
That said, circumstances may arise where a particular term is credibly open
to more than one interpretation. The Supreme Court confirmed in Rainy Sky
SA v Kookmin,383 at [21] to [30] that the correct approach is to start (and finish)
by looking for and adopting the interpretation that most accords with
commercial common sense. The exercise of identifying the parties' commercial
intention should be carried out from the outset, and is not simply a tool to be
deployed once it has first been concluded that the natural
382 [1998] 1 W.L.R. 896, 912

383 [2011] 1 W.L.R. 2900, following a review of the relevant case law and noting Lord Mance’s
summary of the position in In re Golden Key Ltd [2009] EWCA Civ 636 (at [12])
– A1 –
A/1/171
meaning of the words produces a result that appears to have been unintended
(see [20]). The Court must therefore conclude what interpretation accords
with 'business common sense'.
(3) Interpretation is the ascertainment of the objective meaning in the light of

the parties’ background knowledge at the time of the contract.
The task of construing a written agreement has been said to be that of
ascertaining the “common intention of the parties” to the agreement.384 But this
may be misleading since it is clear that the agreement must be interpreted
objectively:385 the question is not what one or other of the parties meant or
understood by the words used rather what a reasonable person in the position
of the parties would have understood the words to mean. In ICS, Lord
Hoffmann stated:
“Interpretation is the ascertainment of the meaning which the document

would convey to a reasonable person having all the background knowledge
which would reasonably have been available to the parties in the situation
in which they were at the time of the contract.”
2. So, in the light of the above, whilst the words of the agreement must be construed as they
stand,386 that is not to say that the meaning of the words in a written document must be
ascertained by reference to the words of the document alone – far from it. The Courts will
look at all the circumstances surrounding the making of the contract and factual
background reasonably available to the parties (usually referred to as the ‘factual matrix’
or ‘available background’) which would assist in determining how the bargain made by
the parties and the language used to express it would have been understood by a
reasonable person in their position.
3. The range of materials on which the modern Courts now draw is considerably wider as
the ambit of the ‘factual matrix’ has increased, permitting the Court to draw upon a
384 e.g. Marquis of Cholmondeley v Clinton (1820) 2 Jac. & W.I. 91

385 Mannai Investment Co Ltd v Eagle Star Life Assurance Co Ltd [1997] A.C. 749, 767, 775, 782;
Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 W.L.R. 896, 912–
913
386 IRC v Raphael [1935] A.C. 96, 142; British Movietonews v London and District Cinemas [1952]
A.C. 166
– A2 –
A/1/172
greater range of materials when seeking to put the words of the contract in their context
and interpret them accordingly. In ICS, Lord Hoffmann, referring to the matrix of fact,
stated:
“Subject to the requirement that it should have been reasonably available to the parties
… it includes absolutely anything which would have affected the way in which the
language of the document would have been understood by a reasonable man”.387
4. Further, it has long been accepted that the Courts will not approach the task of
construction with too much concentration upon individual words to the neglect of the
contract as a whole:
“The common and universal principle ought to be applied: namely, that [an agreement]
ought to receive that construction which its language will admit, and which will best
effectuate the intention of the parties, to be collected from the whole of the agreement, and
that greater regard is to be had to the clear intention of the parties than to any particular
words which they may have used in the expression of their intent.”388
5. As noted by Lord Clarke in Rainy Sky, this process is sometimes referred to as an “iterative
process, involving checking each of the rival meanings against other provisions of the document
and investigating its commercial consequences”. It was in Rainy Sky that Lord Clarke held at
§21:
“The language used by the parties will often have more than one potential meaning. I
would accept the submission made on behalf of the appellants that the exercise of
construction is essentially one unitary exercise in which the court must consider the
language used and ascertain what a reasonable person, that is a person who has all the
background knowledge which would reasonably have been available to the parties in the
situation in which they were at the time of the contract, would have understood the
parties to have meant. In doing so, the court must have regard to all the relevant
surrounding circumstances. If there are two possible constructions, the court is entitled
to prefer the construction which is consistent with business common sense and to reject
the other.” [Emphasis added]
387 [1988] 1 W.L.R. 896, 912–913

388 Ford v Beech (1848) 11 Q.B. 852, 866
– A3 –
A/1/173
6. This point was underscored by the Supreme Court again in Wood v Capita Insurance
Services Ltd,389 in which Lord Hodge declined “to reformulate the guidance given in the
Rainy Sky and Arnold cases”:390
“10. The court's task is to ascertain the objective meaning of the language which the
parties have chosen to express their agreement. It has long been accepted that this is not
a literalist exercise focused solely on a parsing of the wording of the particular clause but
that the court must consider the contract as a whole and, depending on the nature,
formality and quality of drafting of the contract, give more or less weight to elements of
the wider context in reaching its view as to that objective meaning. In Prenn v
Simmonds [1971] 1 WLR 1381 , 1383H–1385D and in Reardon Smith Line Ltd v
Yngvar Hansen-Tangen (trading as HE Hansen-Tangen) [1976] 1 WLR 989 , 997,
Lord Wilberforce affirmed the potential relevance to the task of interpreting the parties'
contract of the factual background known to the parties at or before the date of the
contract, excluding evidence of the prior negotiations. When in his celebrated judgment
in Investors Compensation Scheme Ltd v West Bromwich Building Society
[1998] 1 WLR 896, 912–913 Lord Hoffmann reformulated the principles of contractual
interpretation, some saw his second principle, which allowed consideration of the whole
relevant factual background available to the parties at the time of the contract, as
signalling a break with the past. But Lord Bingham of Cornhill in an extrajudicial
writing, “A New Thing Under the Sun? The Interpretation of Contracts and the ICS
decision” (2008) 12 Edin LR 374, persuasively demonstrated that the idea of the court
putting itself in the shoes of the contracting parties had a long pedigree.”
11. Lord Clarke of Stone-cum-Ebony JSC elegantly summarised the approach to

construction in the Rainy Sky case [2011] 1 WLR 2900, para 21f. In the Arnold case
[2015] AC 1619 all of the judgments confirmed the approach in the Rainy Sky case:
Lord Neuberger of Abbotsbury PSC, paras 13–14; Lord Hodge JSC, para 76 and Lord
Carnwath JSC, para 108. Interpretation is, as Lord Clarke JSC stated in the Rainy Sky
case (para 21), a unitary exercise; where there are rival meanings, the court can give
weight to the implications of rival constructions by reaching a view as to which
construction is more consistent with business common sense. But, in striking a balance
between the indications given by the language and the implications of the competing
constructions the court must consider the quality of drafting of the clause (the Rainy Sky
case, para 26, citing Mance LJ in Gan Insurance Co Ltd v Tai Ping Insurance Co
Ltd (No 2) [2001] 2 All ER (Comm) 299, paras 13, 16); and it must also be alive to the
possibility that one side may have agreed to something which with hindsight did not
serve his interest: the Arnold case, paras 20, 77. Similarly, the court must not lose sight
of the possibility that a provision may be a negotiated compromise or that the negotiators
were not able to agree more precise terms.
389 [2017] UKSC 24

390 §8
– A4 –
A/1/174
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: the Arnold case, para 77 citing In re Sigma Finance
Corpn [2010] 1 All ER 571 , para 12, per Lord Mance JSC. 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.
13. Textualism and contextualism are not conflicting paradigms in a battle for exclusive
occupation of the field of contractual interpretation. Rather, the lawyer and the judge,
when interpreting any contract, can use them as tools to ascertain the objective meaning
of the language which the parties have chosen to express their agreement. The extent to
which each tool will assist the court in its task will vary according to the circumstances
of the particular agreement or agreements. Some agreements may be successfully
interpreted principally by textual analysis, for example because of their sophistication
and complexity and because they have been negotiated and prepared with the assistance
of skilled professionals. The correct interpretation of other contracts may be achieved by
a greater emphasis on the factual matrix, for example because of their informality, brevity
or the absence of skilled professional assistance. But negotiators of complex formal
contracts may often not achieve a logical and coherent text because of, for example, the
conflicting aims of the parties, failures of communication, differing drafting practices, or
deadlines which require the parties to compromise in order to reach agreement. There
may often therefore be provisions in a detailed professionally drawn contract which lack
clarity and the lawyer or judge in interpreting such provisions may be particularly helped
by considering the factual matrix and the purpose of similar provisions in contracts of
the same type. The iterative process, of which Lord Mance JSC spoke in Sigma Finance
Corpn [2010] 1 All ER 571 , para 12, assists the lawyer or judge to ascertain the objective
meaning of disputed provisions.
14 On the approach to contractual interpretation, the Rainy Sky and Arnold cases
were saying the same thing.” [Emphasis added]
7. It followed that, when it came time to construe the relevant clause in Wood, Lord Hodge
held (at §26) that “it is necessary to place the clause in the context of the contract as a whole, to
examine the clause in more detail and to consider whether the wider relevant factual matrix gives
guidance as to its meaning in order to consider the implications of the rival interpretations” –
effectively endorsing the iterative process of discerning commercial common sense,
above.
– A5 –
A/1/175
– A6 –
A/1/176
Annex II: Issue 1 – Relational Contract
Introduction
1. The concept of relational contracts and the duties that may be implied into such contracts
are developing areas of the law. Those duties include the duty of good faith, to which
English law has been said to be opposed; but that is not so. English law has only been
opposed to the imposition of a general duty of good faith. Implied duties of good faith
are well-established, as is the common law’s tradition of its own development.
Traditional view of implied term of good faith
2. The traditional view of the concept of a duty of good faith between contracting parties
was summarised by Bingham LJ (as he then was) in Interfoto Picture Library Ltd v
Stiletto Visual Programmes Ltd [1988] 1 All E.R. 348 at 352:
“In many civil law systems, and perhaps in most legal systems outside of the common law world,
the law of obligations recognises and enforces an overriding principle that in making and
carrying out contracts parties should act in good faith. This does not simply mean that they
should not deceive each other, a principle which any legal system must recognise; its effect is
perhaps most aptly conveyed by such metaphorical colloquialisms as ‘playing fair’, ‘coming clean’
or ‘putting one’s cards face down on the table’. It is in essence a principle of fair and open
dealing… English law has, characteristically, committed itself to no such overriding principle
but has developed piecemeal solutions in response to demonstrated problems of unfairness.”
Yam Seng
3. In the case of Yam Seng Pte v International Trade Corp [2013] EWHC 111 (QB); [2013] 1
CLC 662 (“Yam Seng”), Leggatt J (as he then was) held that there was a category of
contract which was long-term in nature, pursuant to which the parties made a substantial
commitment, and the operation of which required a high degree of communication,
cooperation and predictable performance. Such contracts were ‘relational’ contracts, and
they tended to give rise to an implied duty of good faith.
– A7 –
A/1/177
4. Yam Seng itself was a case involving an exclusive distribution agreement between two
entities for the marketing of Manchester United branded products in duty free outlets
overseas. The relationship was unsuccessful. The defendant was alleged to have misled
the claimant about the relevant legal, commercial and logistical position, and to have
repeatedly missed deadlines for supplying products to the claimant.
5. The claimant’s pleaded case was that it was an implied term of the agreement that the
parties would deal with each other in good faith. It was argued that English law could
and should recognise such an implied duty in commercial contracts, and the content of
that duty was dependent on context.
6. On the implication of a term of “good faith” in commercial contracts, Leggatt J commented:
“131. Under English law a duty of good faith is implied by law as an incident of certain categories
of contract, for example contracts of employment and contracts between partners or others whose
relationship is characterised as a fiduciary one. I doubt that English law has reached the stage,
however, where it is ready to recognise a requirement of good faith as a duty implied by law, even
as a default rule, into all commercial contracts. Nevertheless, there seems to me to be no difficulty,
following the established methodology of English law for the implication of terms in fact, in
implying such a duty in any ordinary commercial contract based on the presumed intention of
the parties.” [Emphasis added]
7. Leggatt J agreed with the claimant’s argument that what good faith requires “is sensitive
to context”.391 Against this backdrop, Leggatt J held:
“143. In some contractual contexts the relevant background expectations may extend further to
an expectation that the parties will share information relevant to the performance of the contract
such that a deliberate omission to disclose such information may amount to bad faith. English
law has traditionally drawn a sharp distinction between certain relationships – such as
partnership, trusteeship and other fiduciary relationships – on the one hand, in which the parties
owe onerous obligations of disclosure to each other, and other contractual relationships in which
no duty of disclosure is supposed to operate. Arguably at least, that dichotomy is too simplistic.
While it seems unlikely that any duty to disclose information in performance of the
contract would be implied where the contract involves a simple exchange, many
contracts do not fit this model and involve a longer term relationship
391 Yam Seng, §142
– A8 –
A/1/178
between the parties which they make a substantial commitment. Such ‘relational’
contracts, as they are sometimes called, may require a high degree of communication,
cooperation and predictable performance based on mutual trust and confidence and
involve expectations of loyalty which are not legislated for in the express terms of the
contract but are implicit in the parties' understanding and necessary to give business
efficacy to the arrangements. Examples of such relational contracts might include some joint
venture agreements, franchise agreements and long-term distributorship agreements.
[…]
145. Although its requirements are sensitive to context, the test of good faith is objective in the
sense that it depends not on either party's perception of whether particular conduct is improper
but on whether in the particular context the conduct would be regarded as commercially
unacceptable by reasonable and honest people. The standard is thus similar to that described by
Lord Nicholls in a different context in his seminal speech in Royal Brunei Airlines v Tan [1995]
2 AC 378 at pp. 389–390. This follows from the fact that the content of the duty of good faith is
established by a process of construction which in English law is based on an objective principle.
The court is concerned not with the subjective intentions of the parties but with their presumed
intention, which is ascertained by attributing to them the purposes and values which reasonable
people in their situation would have had.
146. Understood in the way I have described, there is in my view nothing novel or foreign to
English law in recognising an implied duty of good faith in the performance of contracts. It is
consonant with the theme identified by Lord Steyn as running through our law of contract that
reasonable expectations must be protected: see First Energy (UK) Ltd v Hungarian International
Bank Ltd [1993] 2 Ll Rep 194, 196; and (1997) 113 LQR 433. Moreover such a concept is, I
believe, already reflected in several lines of authority that are well established. One example is the
body of cases already mentioned in which duties of cooperation in the performance of the contract
have been implied…” [Emphasis added]
8. Leggatt J found the contract in Yam Seng to be a relational contract – it was a
distributorship agreement “which required the parties to communicate effectively and cooperate
with each other in its performance”392 and satisfied the requirements outline in the above
paragraphs. Accordingly, the agreement contained an enforceable implied obligation on
the parties to act in good faith and concluded that the defendant’s breach
392 Yam Seng, §144 – such terms will normally govern the performance, rather than termination of
the contract, esp. in commercial contracts (although this will depend upon the ambit and scope of
the terms implied in the context of the bargain as a whole): Ilkerler Otomotiv Sanayai VE v Perkins
Engines Company Ltd [2017] EWCA Civ 183; [2017] 4 WLR 144
– A9 –
A/1/179
of that term was of a repudiatory nature which justified termination and gave rise to an
entitlement to damages.
Subsequent cases
9. The topic of relational contracts still represents fairly untilled ground, but it has been the
subject of discussion in a handful of cases following Yam Seng.
10. One such case is Bristol Groundschool Ltd v Intelligent Data Capture Ltd [2014] EWHC
2145 (Ch) (“Bristol Groundschool”). In Bristol Groundschool, the parties agreed to
collaborate to produce training materials for pilots. The claimant provided the content
for the manuals and the defendant converted the content into an electronic application,
which the parties jointly published and marketed.
11. The parties fell out. Anticipating the end of the joint venture, the claimant secretly
accessed the defendant’s database and downloaded material. After the contract was
terminated, the claimant used the downloaded material to continue selling the electronic
training manuals.
12. One of the issues before Mr Richard Spearman QC (sitting as a Deputy Judge of the
Chancery Division) was whether the secret download was a breach of contract, despite
there being no express term of the contract which prohibited this conduct. The Judge held
that the contract did constitute a ‘relational’ contract of the kind referred to by Leggatt J
in Yam Seng and that it contained an implied duty of good faith. He further held that
good faith extends beyond, but at the very least includes, the requirement of honesty,
and that the relevant test for breach is that of conduct that would be regarded as
“commercially unacceptable” by reasonable and honest people in the particular context
involved.393
13. In Carewatch Care Services Ltd v Focus Caring Services Ltd [2014] EWHC 2313 (Ch)
(“Carewatch”), it was held that the contract in question, a franchise agreement for the
393 Bristol Groundschool, §196
– A10 –
A/1/180
provision of care services, was not a relational contract. In particular, Henderson J
found that the contract:
“contains very detailed express terms, dealing with all aspects of the franchised
business from its inception to its termination. The agreement is for a commercial
relationship, from which both parties hoped to profit, and where both sides had
interests of their own to protect. I can find no “clear lacuna” in the detailed provisions
of the agreement which has to be filled if the agreement is to work commercially, let
alone by terms framed in such wide and imprecise language as those which are
pleaded.”394
14. It was also of importance to Henderson J’s analysis that many of the proposed implied
terms would be inconsistent with the express provisions of the agreement.395
15. In D&G Cars Ltd v Essex Police Authority [2015] EWHC 226 (QB) (“D&G Cars”), a
private contractor had agreed to dispose of cars for a police authority. The police
authority gave instructions for one particular vehicle to be completely crushed. It was
later discovered that, contrary to those instructions, the contractor had re-built the car,
transferred the number plates from a different vehicle, and used it in the contractor’s own
fleet.
16. The parties in that case had accepted an implied term to act with honesty and integrity.
Dove J, however, deemed it appropriate to nevertheless set out for the avoidance of doubt
the legal basis for the implication of such a term into the contract. After referring to
Leggatt J’s Judgment in Yam Seng, Dove J held at §175:
“It will be clear from what has been set out above that both the existence and the
content of an implied condition in relation to honesty and integrity is highly sensitive
to the context of the contract itself. By the use of the term ‘integrity’, rather as Leggatt
J uses the term ‘good faith’, the intention is to capture the requirements of fair dealing
and transparency which are no doubt required (and would, to the parties, go without
saying) in a contract which creates a long-standing relationship between the parties
lasting some years and which has the qualities and features to which I shall turn
shortly…”
394 Carewatch, §109

395 Carewatch, §110
– A11 –
A/1/181
17. In analysing the contract in D&G Cars, Dove J went on to find:
“176. As noted above, there are particular features of this contract which warrant the
inclusion of this implied term. Firstly, as already noted, the contract created a
relatively lengthy period of contractual relationship between the parties, during which
there were going to be a very large number of individual transactions undertaken
under the auspices of the contract. It was, in my view, a ‘relational’ contract par
excellence…”
18. Having found that the contract was a relational contract, the Judge held that it was an
implied term that the contractor would perform the contract in good faith.396 Dove J
further found that, even if the contractor had not been deliberately fraudulent, there had
been a breach of the implied term which amounted to a repudiatory breach of the
contract.
19. In Globe Motors v TRW Lucas Varity Electric Steering [2016] EWCA Civ 393 (“Globe
Motors”), the Beatson LJ addressed relational contracts at §67:
“… in certain categories of long-term contract, the court may be more willing to imply
a duty to co-operate or, in the language used by Leggatt J in Yam Seng PTE v
International Trade Corp Ltd [2013] EWHC 111 (QB); [2013] 1 CLC 662 at [131],
[142] and [145], a duty of good faith. Leggatt J had in mind contracts between those
whose relationship is characterised as a fiduciary one and those involving a longer-
term relationship between parties who make a substantial commitment. The contracts
in question involved a high degree of communication, cooperation and predictable
performance based on mutual trust and confidence and expectations of loyalty ‘which
are not legislated for in the express terms of the contract but are implicit in the parties’
understanding and necessary to give business efficacy to the arrangements'. He gave
as examples franchise agreements and long-term distribution agreements. Even in the
case of such agreements, however, the position will depend on the terms of the
particular contract. Two examples of long-term contracts which did not qualify are the
long-term franchising contracts considered by Henderson J in Carewatch Care
Services Ltd v Focus Caring Services Ltd [2014] EWHC 2313 (Ch) and the agreement
between distributors of financial products and independent financial advisers
considered by Elisabeth Laing J in Acer Investment Management Ltd v Mansion
Group Ltd [2014] EWHC 3011 (QB) at [109].”
396 Or, as it had been described in the proceedings in D&G, a duty of “honesty and integrity”: see, e.g.
D&G at §171.
– A12 –
A/1/182
20. Although it was “not the occasion to consider the potential for implied duties of good faith in
English law because the question in this case is one of interpretation or construction, not of
implication”, Beatson LJ did make two observations at §68:
“The first is to reiterate Lord Neuberger's statement in Marks and Spencer plc v BNP
Paribas Security Services Trust Co (Jersey) Ltd… that, whatever the broad similarities
between them, the two are ‘different processes governed by different rules'. This is, see
the statement of Lord Bingham in Philips Electronique Grand Public SA v British Sky
Broadcasting Ltd [1995] EMLR 472 at 481 cited by Lord Neuberger, because ‘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’. The second is that, as seen from the
Carewatch Care Services case, an implication of a duty of good faith will only be
possible where the language of the contract, viewed against its context, permits it. It
is thus not a reflection of a special rule of interpretation for this category of contract.”
21. Most recently, relational contracts were considered again by Leggatt LJ in Al Nehyan v
Kent [2018] EWHC 333 (Comm) (“Al Nehyan”). In Al Nehyan, the parties entered into a
joint venture in 2008, pursuant to which the claimant agreed to invest in the defendant’s
hotel business. The venture was later expanded in 2010 to include an online travel
business. Over the next few years, the businesses experienced significant financial
difficulties and the claimant contributed further financial support in the form of loans
and share capital.
22. In 2012, the claimant decided to separate his interest from that of the defendant, and a
scheme was devised to restructure the travel businesses and return part of the claimant’s
capital contribution. Following a series of meetings, the parties entered into two
agreements to implement this scheme: a promissory note, which dealt with the
repayment of the capital contribution, and a framework agreement dealing with the
demerger of the businesses. The claimant issued proceedings for breach of contract, as
the defendant had allegedly failed to make the requisite payments under those
agreements. However, in the same proceedings, the defendant advanced various
counterclaims, including that he and the claimant owed each other fiduciary duties,
including a duty to act in good faith, which the claimant is said to have breached.
– A13 –
A/1/183
23. Leggatt LJ reviewed the relevant case law at §167 to 176, starting with his own decision
in Yam Seng. Leggatt LJ reiterated that there was a category of contract in which:
“the parties are committed to collaborating with each other, typically on a long-term
basis, in ways which respect the spirit and objectives of their venture but which they
have not tried to specify, and which it may be impossible to specify, exhaustively in a
written contract. Such 'relational' contracts involve trust and confidence but of a
different kind from that involved in fiduciary relationships. The trust is not in the loyal
subordination by one party of its own interests to those of another. It is trust that the
other party will act with integrity and in a spirit of cooperation. The legitimate
expectations which the law should protect in relationships of this kind are embodied in
the normative standard of good faith.”397
24. He noted the divergent reactions prompted by his Judgment in Yam Seng, but remarked
that “there appears to be growing recognition that such a duty may readily be implied in a
relational contract”.398 With regards the specific joint venture before him, Leggatt J found:
“173. I have held that Sheikh Tahnoon did not agree to provide funding on an open-
ended basis and did not owe any fiduciary duties to Mr Kent. But I think it clear
that the nature of their relationship was one in which they naturally and
legitimately expected of each other greater candour and cooperation and
greater regard for each other's interests than ordinary commercial parties
dealing with each other at arm's length. When Sheikh Tahnoon agreed to become
an equal owner of the Aquis business with Mr Kent, the two men entered into a joint
venture agreement which was intended to be a long-term collaboration, in which their
interests were inter-linked and which they saw, commercially albeit not in law, as a
partnership. Their collaboration was formed and conducted on the basis of a personal
friendship and involved much greater mutual trust than is inherent in an ordinary
contractual bargain between shareholders in a company. Although day to day
management of the businesses was left to Mr Kent, strategic decisions which would
involve further capital investment, such as whether to purchase a hotel or the decision
to acquire the majority stake in YouTravel, were (of necessity) taken jointly and could
only be reached by consensus between them. The pursuit of the venture therefore
required a high degree of cooperation between the two participants. They did not
attempt to formalise the basis of their cooperation in
397 Al Nehyan, §167

39
8
Al Nehyan, §168
– A14 –
A/1/184
any written contract but were content to deal with each other entirely informally on
the basis of their mutual trust and confidence that they would each pursue their
common project in good faith.
174. In the circumstances the contract made between these parties seems to me to be a
classic instance of a relational contract. In my view, the implication of a duty of good
faith in the contract is essential to give effect to the parties' reasonable expectations
and satisfies the business necessity test which Lord Neuberger in Marks & Spencer
Plc v BNP Paribas Securities Services Trust Co (Jersey) Ltd [2016] AC 742, [2015]
UKSC 72 at paras 16 to 31 reiterated as the relevant standard for the implication of a
term into a contract. I would also reach the same conclusion by applying the test
adumbrated by Lord Wilberforce in Liverpool City Council v Irwin [1976] AC 239 at
254 for the implication of a term in law, on the basis that the nature of the contract as
a relational contract implicitly requires (in the absence of a contrary indication)
treating it as involving an obligation of good faith.” [Emphasis added]
25. As to what such an obligation involves, Leggatt J held that it was “unnecessary and perhaps
impossible to attempt to spell out an exhaustive description”.399 He noted, however, an
Australian case in which Allsop CJ:400
“summarised the usual content of the obligation of good faith as an obligation to act
honestly and with fidelity to the bargain; an obligation not to act dishonestly and not
to act to undermine the bargain entered or the substance of the contractual benefit
bargained for; and an obligation to act reasonably and with fair dealing having regard
to the interests of the parties (which will, inevitably, at times conflict) and to the
provisions, aims and purposes of the contract, objectively ascertained. In my view,
this summary is also consistent with the English case law as it has so far developed,
with the caveat that the obligation of fair dealing is not a demanding one and does no
more than require a party to refrain from conduct which in the relevant context would
be regarded as commercially unacceptable by reasonable and honest people…”
[Emphasis added]
26. Allsop CJ’s summary drew on a number of Australian authorities which consider good
faith and its place in contractual relationships. These are discussed below.
Implied term of good faith in other jurisdictions

40
0
Al Nehyan, §175
– A15 –
A/1/185
27. In order to provide this court with a broader picture of the concept of contractual good
faith and further commentary, certain illustrative examples of the position in
commonwealth, civil law and American jurisdictions follow. The latter examples are
illustrative of the practical way in which the duty of good faith has been implied into
contracts in various jurisdictions.
28. Leggatt J provided critical extra-judicial commentary on the subject in a lecture401 which
considered the point from a broad and cross-jurisdictional perspective. His speech was
given after the decision in Yam Seng, but before his later judgment in Al Nehyan. It was
also, notably, given after the Canadian Supreme Court’s decision in Bhasin v Hrynew
[2014] 3 SCR 495 (“Bhasin”) referred to below.
29. Taking as an example the French Civil Code, at Article 1104 (as amended and in force as
at 1 October 2016), which provides “Les contrats doivent être negociés, formés et exécutés de
bonne foi. Cette disposition est d’order public” Leggatt J noted three points about the law in
civilian jurisdictions:-402
29.1. The French doctrine of good faith applies to the negotiation, formation and
performance of contracts. The freedom of the parties to contract is therefore
limited.
29.2. This limitation is imposed for reasons of public policy.
29.3. Public policy is the overriding policy out of which the parties cannot contract.
30. Leggatt J went on to draw a contrast with the position in the United States.403 Restatements
of American law, published by the American Law Institute, aim to give clear formulations
of common law, and its statutory elements or variations, as it presently stands.404 The
most recent contractual restatement is the US Restatement
401 “Contractual duties of good faith” Mr Justice Leggatt, Lecture to the Commercial Bar Association on
18 October 2016
402 Ibid at §7
403 Ibid at §8
404 As the Court may be aware, their primary audience is the bench and they act as an aid to
navigation of the common law in the United States jurisdictions
– A16 –
A/1/186
(Second) of Contracts which was updated with an appendix in 2013, which provides at
§205: “Every contract imposes upon each party a duty of good faith and fair dealing in its
performance and its enforcement.” This is said to reflect the position in the Uniform
Commercial Code which states at §1-304: “Every contract…imposes an obligation of good faith
in its performance or enforcement” and which defines good faith as “honest in fact and
reasonable commercial standards of fair dealing”.405
31. As Leggatt J observed extra-judicially, parties contracting under American law are
therefore said to be afforded greater freedom than those contracting under French law,
since good faith is not a matter of public policy and it is the contract that imposes the duty
of good faith, leaving its negotiation and formation outside the scope of that duty. Indeed,
this American understanding of the meaning of good faith is said to have had some
indirect influence on English law insofar as a judgment given in Berkeley Community
Villages Ltd v Pullen [2007] EWHC 1330 (Ch) (per Morgan J) construed a good faith clause
in a contract as “imposing on the defendants a contractual obligation to observe reasonable
commercial standards of fail dealing”.406 Morgan J cited an Australian case in which the court
had itself been referred to the American position.407
32. The above cited Australian case in which Allsop CJ summarised the usual content of the
duty of good faith was that of Paciocco v Australia and New Zealand Banking Group
Limited [2015] FCAFC 50. In arriving at his helpful summary, Allsop CJ referred to a
number of Australian cases including Renard Constructions (ME) Pty v Minister for
Public Works (1992) 33 Con LR 72. A body of cases is now said to follow from this New
South Wales Court of Appeal decision which found that “anything less” than good faith
was “contrary to prevailing community expectations.”408
33. The Canadian Supreme Court has gone further. The case of Bhasin marked a turning
point in implication of good faith in Canadian contracts. The judgment was unanimous
and involved a comprehensive review of earlier Canadian cases and broader common
405 At §1-201(20) and §2-103(1)(b)

406 At §97
407 “Contractual duties of good faith” Mr Justice Leggatt (supra) at §19 and §20.
408 At §113
– A17 –
A/1/187
law literature. Per Cromwell J, the court held that the duty of honest performance was a
“general doctrine of contract law” rather than as an implied term, thereby operating
“irrespective of the intentions of the parties” at § 74.
34. The editors of Chitty on Contracts (32nd Ed.) comment that the duty is therefore
“mandatory and… not affected by an express entire agreement clause in the contract, though there
may be circumstances in which it could be influenced by the agreement of the contracting
parties”.409 That said, Cromwell J suggested that contracting parties may through clear
language “relax the requirements of the doctrine so long as they respect its minimum core.”410
35. By contrast, there is no established doctrine of contractual good faith in New Zealand, but
the theory has proponents. Thomas J, dissenting in the Court of Appeal in Bobux
Marketing Ltd v Raynor Marketing Ltd [2002] NZLR 506 at §48, referred to the “void in
the law owing to the absence of a developed doctrine of good faith” and commented that
“commerce would undoubtedly be better served by a law which recognised the underlying
imperative arising from the mutual trust and confidence which the parties repose in one another in
a relational or long-term contract.”
36. The position in other jurisdictions can do no more than provide useful comparison for the
now developing position in English Law. In his extra-judicial speech, Leggatt J identified
the “suspicion which some English commercial lawyers continue to feel towards the concept of
good faith”. He went on to suggest that this “may derive from thinking of good faith in civil
law terms, as a doctrine capable of overriding the parties’ bargain. I have sought…to describe a
different conception of good faith, which is a development of the common law, and to explain how
it is rooted in the parties’ agreement and seeks to uphold the justified expectations arising from that
agreement.”
37. That concept would be recognisable to English lawyers in the American restatement,
which does not venerate good faith to the exclusion of contractual freedom unlike the
position which exists and/or is developing in French and Australian law.
409 Chapter 1 ‘Introductory’ Section 3 ‘Fundamental Principles of Contract Law’ footnote 321
reviewing §75-78 of Bhasin
410 At §77
– A18 –
A/1/188
Summary of relevant principles
38. This is clearly a developing area of the law, in which the present case falls squarely
within the established case law and the principles established thereby.
39. Those principles can be distilled from the case law in this jurisdiction which it is
respectfully submitted, this Court should follow.
Overall approach
40. As set out under Issue 1: Relational Contract, in ascertaining whether Subpostmaster
contracts are ‘relational contracts’ subject to implied duties of good faith and fair dealing,411
the Court should follow the established methodology of English law for the implication
of terms in fact, based on the presumed intention of the parties.412
41. The relevant background to be taken into consideration includes not only matters of fact
known to the parties, but also the norms of behaviour specific to the particular
commercial activity in question and arising from the features of the contract.413
42. A ‘relational contract’ in which such a duty may be implied is a longer term relationship
involving substantial commitment, in which:414
42.1. there is a high degree of commitment, cooperation and predictable performance;
42.2. based upon mutual trust and confidence and expectations of loyalty;
42.3. which are not legislated for in the contract; 415
42.4. but are implicit in the parties’ understanding and necessary to give business
efficacy to the arrangements.416
411 Being duties of good faith, fair dealing, transparency, cooperation, and trust and confidence,
extending to a requirement to share information relevant to performance of the contract: Yam Seng
Pte v International Trade Corp [2013] EWHC 111
412 Yam Seng, §131
413 Yam Seng at §134
414 Yam Seng at §142
415 See also Carewatch, §109 – in which there was no ‘clear lacuna’
– A19 –
A/1/189
Relevant considerations
43. The following factors are relevant in determining whether a contract is a for these
purposes a ‘relational contract’:-
43.1. Whether the contracts involve a longer-term relationship.417
43.2. Whether the parties make a substantial commitment to the relationship.418
43.3. Whether the relationship involves a very large number of individual transactions
being undertaken under the auspices of the contract.419
43.4. Whether the operation of the contract requires a high degree of communication,
cooperation and predictable performance (based on mutual trust and confidence,
as above).420
43.5. Whether it is clear from the nature of the relationship that the parties naturally and
legitimately expected of each other greater candour and cooperation and greater
regard for each other's interests than ordinary commercial parties dealing at arm's
length.421
43.6. Whether the intention for the relationship is to be collaborative, in which the
parties’ interests are interlinked and which they saw commercially, albeit not in
law, as a partnership.422
The duties arising
44. The requirements of any such implied obligation of good faith are sensitive to context.
But the test is an objective one: whether in the particular context the conduct would be
regarded as commercially unacceptable by reasonable and honest people.423
416 It may arguably also satisfy the test to be implied in law, as well as in fact.
417 Yam Seng, §143
418 Yam Seng, §143
419 D&G at §176, in which such a contract was viewed as a relational contract “par excellence”
420 Yam Seng, §143
– A20 –
A/1/190
45. The usual content of the obligation is: 424
45.1. to act honestly and with fidelity to the bargain;
45.2. not to act dishonestly and not to act to undermine the bargain entered or the
substance of the contractual benefit bargained for; and
45.3. to act reasonably and with fair dealing, having regard to the interests of the parties
(which will, inevitably, at times conflict) and to the provisions, aims and purposes
of the contract, objectively ascertained.
46. The natural import of the requirements of fair dealing, transparency, cooperation and
trust and confidence is clear and there is no reason in the present case to stretch or confine
them otherwise.
47. Those requirements have a vital bearing upon the central issue as to the Defendant’s
dealings with Subpostmasters in relation to alleged shortfalls and may well, in
themselves, overlap with or address the issues to which many of the distinct implied
terms are directed.
48. In short, a finding that duties of good faith, fair dealing, transparency, cooperation and
trust and confidence were implied may well resolve much of what in issue at this trial.
423 Yam Seng, §145

– A21 –
A/1/191
– A22 –
A/1/192
Annex III: Issues 2 and 3 – Implied Terms
Overview
1. The issue of implied terms is one of central importance in the Common Issues Trial and,
accordingly, the relevant legal principles have already been set out above in the Written
Opening, in Section B under the heading Relevant principles (p.59). Of course, the Court
will be very familiar with these principles, however, as considerations of commercial or
practical coherence are of particular importance in the present context, this Annex
addresses briefly:
1.1. the decision of the Supreme Court in Marks & Spencer Plc v BNP Paribas
Securities Services [2016] A.C. 742 (“Marks & Spencer”), (the importance of
which has been dealt with in the Written Opening);
1.2. subsequent consideration of Marks & Spencer at appellate level, in the recent
decision of the Court of Appeal in Ukraine v The Law Debenture Trust
Corporation Plc [2018] EWCA Civ 2026 (“LDTC”); and
1.3. implied restrictions on the exercise of contractual discretion (including as to
powers of suspension).
Marks & Spencer v BNP Paribas
2. Overall approach: In Att-Gen of Belize v Belize Telecom Ltd [2009] 1 WLR 1988, a broader
approach to the implication of terms was adopted by the Privy Council. Lord Hoffmann
held that:
“… in every case in which it is said that some provision ought to be implied in an instrument,
the question for the court is whether such provision would spell out in express words what the
instrument read against the relevant background, would reasonably be understood to mean”.425
3. With reference to the approach taken in prior cases, Lord Hoffmann observed that this:
“… is best regarded not as a series of independent tests which must each be surmounted, but
rather as a collection of different ways in which judges have tried to express the central idea
425 Att-Gen of Belize v Belize Telecom Ltd [2009] 1 WLR 1988, at §21.
– A23 –
A/1/193
that the proposed implied term must spell out what the contract actually meant, or in which
they have explained why they did not think that it did so.” 426
4. No dilution of previous requirements: By its judgment in Marks & Spencer, quoted
above in the Written Opening, the Supreme Court clarified that Lord Hoffmann’s
judgment in Att-Gen of Belize should not be taken to have diluted the requirements to
be satisfied before a term will be implied into a contract.427
5. Relevant starting point: In Marks & Spencer the Supreme Court: 428
5.1. clarified that as a starting point “it is only after the process of construing the express
words is complete that the issue of an implied term falls to be considered”;
5.2. observed that although there may be cases in which it could be appropriate to
reconsider the interpretation of the express terms of a contract once it has
decided whether to imply a term, this would not alter the fact that the express
terms of a contract must be interpreted before one can consider any question
of implication; and
5.3. reaffirmed that the interpolation of terms which the parties ex hypothesi have
made no provision themselves is an extraordinary power upon which the law
places some strict constraints. 429
6. Conditions to be satisfied for implication: As noted above, the Supreme Court accepted
that for a term to be implied, the following relevant conditions (which may overlap, and
in the case of (2) and (3) are alternatives):
(1) it must be reasonable and equitable (though as further clarified by the Supreme
Court, this rarely, if ever, adds anything over and above the other requirements);
426 Supra, at §28

427 Marks & Spencer, cited above, §24, §66 and §77
428 §28, per Lord Neuberger
429 Citing with approval Phillips Electronique Grand Public SA v British Sky Broadcasting Ltd
[1995] EMLR 472, per Bingham MR at 481
– A24 –
A/1/194
(2) it must be necessary to give business efficacy to the contract, so that no term will be
implied if the contract is effective without it (though, as again clarified by the Supreme
Court, this requirement need not be satisfied in addition to obviousness (3));
(3) it must be so obvious that it goes without saying (see (2) above);
(4) it must be capable of clear expression; and
(5) it must not contradict any express term of the contract.
7. ‘Necessity’ involves a value judgment on commercial and practical coherence: The
foregoing approach was subject to the six observations made by Lord Neuberger in the
Judgment, at §21, as set out in the Written Opening. Of particular importance is Lord
Neuberger’s formulation of the business efficacy test:
“Sixthly, necessity for business efficacy involves a value judgment. It is rightly common ground
on this appeal that the test is not one of absolute necessity, not least because the necessity is
judged by reference to business efficacy. It may well be that a more helpful way of putting Lord
Simon's second requirement is, as suggested by Lord Sumption JSC in argument, that a term
can only be implied if, without the term, the contract would lack commercial or
practical coherence." [Emphasis added]
8. The Supreme Court accepted that support for the general principle that a term will only
be implied if it satisfies the test of business necessity is found in a number of observations
made in judgments of the House of Lords.430
Subsequent consideration at appellate level
9. The approach taken by the Supreme Court in Marks & Spencer, was recently considered
and applied by Gloster LJ in LDTC. LDTC is of particular relevance in light of the findings
made by the Court of Appeal with respect to the implication of general terms requiring
cooperation and prohibiting a party preventing performance by another (i.e. the
substance of the implied terms averred by the Defendant: the ‘Necessary Cooperation’
and ‘Stirling v Maitland’ terms).
430 Marks & Spencer, §17
– A25 –
A/1/195
10. Implied terms of cooperation or prevention from performance depend on context of
contract and necessity: In the judgment of Gloster LJ, the Court of Appeal has accepted
that although in various different contexts courts are willing to imply into a contract a
term prohibiting one party from preventing the performance of another, there is in fact
no general rule that either such a term will be implied. Rather:431
10.1. the implication of such a term, and, perhaps more importantly, its scope, will
depend on the contract under consideration, and in particular its express
terms;
10.2. where there is some agreed precondition for performance that a party to a
contract needs the other party's assistance to satisfy, an implied duty not to
prevent performance of the condition by failing to provide assistance might
follow; and432
10.3. any implied term of cooperation or prevention from performance can only be
given shape in the light of the express terms which set out the obligations of
the parties and only has content by virtue of the express terms – specifically
the court cannot, by implication of such a duty, exact a higher degree of
cooperation than could be defined by reference to the necessities of the
contract, so “…the duty of cooperation or prevention/inhibition of performance is
required to be determined, not by what might appear reasonable, but by the obligations
imposed upon each party by the agreement itself”.433
431 LDTC, per Gloster LJ at §207, applying CEL Group Ltd v Nedloyd Lines UK Ltd [2003] EWCA
Civ 1716; [2004] 1 Lloyds Rep 381, per Hale LJ at §15 and per Waller LJ at §28
432 Citing, by way of example, Swallowfalls Ltd v Monaco Yachting and Technologies SAM [2014]
EWCA Civ 186; [2014] 2 Lloyd's Rep 50, per Longmore LJ at §30 - §35
433 Citing with approval the judgment of Cook J in James E McCabe Ltd v Scottish Courage Ltd
[2006] EWHC 538 (Comm), at §18 which went on to make clear “…the law can only enforce a duty of
cooperation to the extent that it is necessary to make the contract workable. The court cannot, by implication
of such a duty, exact a higher degree of cooperation than that which could be defined by reference to the
necessities of the contract. The duty of cooperation or prevention/inhibition of performance is required to be
determined, not by what might appear reasonable, but by the obligations imposed upon each party by the
agreement itself”
– A26 –
A/1/196
Implied restriction on contractual discretion
11. The general approach: As it relates to discretions conferred by contract, by its judgment
in British Telecommunications Plc v Telefonica O2 UK Ltd [2014] UKSC 42 the Supreme
Court has recently reaffirmed that:
“…the scope of a contractual discretion will depend on the nature of the discretion and the
construction of the language conferring it. But it is well established that in the absence of very
clear language to the contrary, a contractual discretion must be exercised in good faith and
not arbitrarily or capriciously: Abu Dhabi National Tanker Co v Product Star Shipping Ltd (No
2) [1993] 1 Lloyd's Rep 397, 404, per Leggatt LJ; Gan Insurance Co Ltd v Tai Ping Insurance
Co Ltd (No 2) [2001] 2 All ER (Comm) 299, para 67, per Mance LJ and Paragon Finance plc v
Nash [2002] 1 WLR 685 , paras 39–41, per Dyson LJ. This will normally mean that it must
be exercised consistently with its contractual purpose: Ludgate Insurance Co Ltd v
Citibank NA [1998] Lloyd's Rep IR 221 , para 35, per Brooke LJ and Equitable Life Assurance
Society v Hyman [2002] 1 AC 408 , 459, per Lord Steyn, and p 461, per Lord Cooke of
Thorndon.”434 [Emphasis added]
12. The cases in which a term of this nature has been implied commonly concern contractual
discretions on the part of one party to make an assessment or choose from a range of
options, taking into account the interests of both parties.435
13. In Socimer International Bank Ltd v Standard Bank London Ltd [2008] EWCA Civ 116,
the Court of Appeal (per Rix LJ, at §66) on a review of the relevant authorities, held:
“It is plain from these authorities that a decision-maker's discretion will be limited, as a matter
of necessary implication, by concepts of honesty, good faith, and genuineness, and the need for
the absence of arbitrariness, capriciousness, perversity and irrationality. The concern is that the
discretion should not be abused. Reasonableness and unreasonableness are also concepts deployed
in this context, but only in a sense analogous to Wednesbury unreasonableness, not in the sense
in which that expression is used when speaking of the duty to take reasonable care, or when
otherwise deploying entirely objective criteria: as for instance when there might be an
434 §37, per Lord Sumption

435 See, e.g., Mid Essex Hospital Services NHS Trust v Compass Group UK and Ireland Ltd [2013]
EWCA Civ 200, at §83. The Claimants will rely upon a recent example of the implication of a term,
upheld by the court of Appeal, in Paragon Finance Plc v Nash [2001] EWCA Civ 1466, in which an
implied term was pleaded to the effect that a mortgagee was bound to exercise discretion under a
variable interest clause so as to varying interest rates fairly, honestly, in good faith, and not
arbitrarily, capriciously or unreasonably, having regard to all relevant matters and ignoring the
irrelevant. See, in particular, the Judgment of Dyson LJ at §§31 to 32, and 41 to 42
– A27 –
A/1/197
implication of a term requiring the fixing of a reasonable price, or a reasonable time. In the latter
class of case, the concept of reasonableness is intended to be entirely mutual and thus guided by
objective criteria. Gloster J was therefore, in my judgment, right to put to Mr Millett in the
passage cited at para 57 above the question whether a distinction should be made between the
duty to take reasonable care and the duty not to be unreasonable in a Wednesbury sense; and Mr
Millett was in my judgment wrong to submit that it made no difference which test was deployed.
Laws LJ in the course of argument put the matter accurately, if I may respectfully agree, when
he said that pursuant to the Wednesbury rationality test, the decision remains that of the decision-
maker, whereas on entirely objective criteria of reasonableness the decision- maker becomes the
court itself. A similar distinction was highlighted by Potter LJ in Horkulak [2005] ICR 402, para
51. For the sake of convenience and clarity I will therefore use the expression “rationality” instead
of Wednesbury-type reasonableness, and confine “reasonableness” to the situation where the
arbiter on entirely objective criteria is the court itself.” [Emphasis added]
14. The ‘Braganza duty’: The foregoing authorities were considered in Braganza v BP
Shipping Ltd [2015] UKSC 17 (“Braganza”). The facts of this case, which are instructive,
are as follows:
14.1. Mr Braganza, a Chief Engineer on one of BP’s oil tankers, then in the mid-
North Atlantic, disappeared. It is unclear what happened to him, but his
employer formed the view that the most likely explanation was that he had
committed suicide by throwing himself overboard.
14.2. Under his contract of employment, a finding of suicide would mean that his
widow was not entitled to certain death benefits. The relevant clause in issue
stated:
“For the avoidance of doubt compensation for death, accidental injury or illness
shall not be payable if, in the opinion of the Company or its insurers, the death,
accidental injury or illness resulted from amongst other things, the Officer’s
wilful act, default or misconduct whether at sea or ashore …” [Emphasis
added]
14.3. Mr Braganza’s widow brought a claim against BP, inter alia, for death benefits
amounting to over US $230,000.
– A28 –
A/1/198
15. The Court, therefore, had to decide whether BP was entitled to form the opinion that it
had. The general issue was what it meant to say that the decision of a contractual fact-
finder had to be a reasonable one. By a majority of 3 to 2 in the Supreme Court, it was
determined that BP should have sought more cogent evidence of suicide before making
such a finding.
16. Lady Hale held at §18:
“Contractual terms in which one party to the contract is given the power to exercise a discretion,
or to form an opinion as to relevant facts, are extremely common. It is not for the courts to rewrite
the parties' bargain for them, still less to substitute themselves for the contractually agreed
decision-maker. Nevertheless, the party who is charged with making decisions which affect the
rights of both parties to the contract has a clear conflict of interest. That conflict is heightened
where there is a significant imbalance of power between the contracting parties as there often will
be in an employment contract. The courts have therefore sought to ensure that such contractual
powers are not abused. They have done so by implying a term as to the manner in which such
powers may be exercised, a term which may vary according to the terms of the contract and the
context in which the decision-making power is given.” [Emphasis added]
17. Lady Hale referred to the test applied to the review of a decision of an administrative
body in Associated Provincial Pictures Houses Ltd v Wednesbury Corp [1948] 1 K.B. 223
(“Wednesbury”)436, which she pointed out at §24 had two limbs:
“The first limb focusses on the decision-making process—whether the right matters have been
taken into account in reaching the decision. The second focusses upon its outcome—whether even
though the right things have been taken into account, the result is so outrageous that no
reasonable decision-maker could have reached it.”
18. The danger of only referencing ‘irrationality’ is that it focuses only on the second limb,
whereas Lady Hale’s view (with which she understood Lord Neuberger – dissenting – to
agree) was that both limbs should apply in relation to the term to be implied into the
436 i.e.: “The court is entitled to investigate the action of the local authority with a view to seeing whether they
have taken into account matters which they ought not to take into account, or conversely, have refused to
take into account or neglected to take into account matters which they ought to take into account. Once that
question is answered in favour of the local authority, it may still be possible to say that, although the local
authority have kept within the four corners of the matters which they ought to consider, they have
nevertheless come to a conclusion so unreasonable that no reasonable authority could ever have come to it.”
– A29 –
A/1/199
contract.437 It follows that in assessing whether a discretion has been exercised rationally,
in some cases an assessment will involve reviewing the decision-making process itself –
i.e. did the decision maker properly take into account relevant factors and exclude
irrelevant factors.
19. The precise term to be implied will depend on the terms and context of the particular
contract involved.438 Due to the particular context of an employment contract,439 and the
“inherent probability” of suicide, it was held that cogent evidence was required in order to
satisfy the requirements of the contractual term.440 Lady Hale held that it followed that,
while no one would suggest that the decision reached by BP was “arbitrary, capricious or
perverse”, it was unreasonable in the Wednesbury sense, having been formed without
taking relevant matters into account.441
20. Whether or not a ‘Braganza duty’ arises in contexts other than employment remains an
open issue. 442
Implied terms in relation to powers of suspension
21. In the context of employment relationships, there is a significant body of case law
establishing the following propositions in relation to an employer’s right to suspend their
employee:-
21.1. An employer’s right to suspend an employee must not be exercised on
unreasonable grounds – McClory v Post Office [1993] 1 All ER 457 (per
437 Braganza, §30

438 Braganza, §31
439 Braganza, §32 – with Lady Hale noting that such contracts include an implied obligation of trust
and confidence
440 Braganza, §35
441 Braganza, §42
442 See, e.g. Lehman Brothers International (Europe) (in administration) v Exxonmobil Financial
Services BV [2016] EWHC 2699, in which Blair J held that the ‘Braganza duty’ did not apply in the
context of a case in which commercial parties had contracted with each other on the wholesale
financial markets and one party had a contractual discretion involving the valuation of securities
in case of default. However, a ‘Braganza duty’ was held to be applicable in a commercial context
in two recent decisions of Waksman J: Watson v Watchfinder.co.uk Ltd [2017] EWHC 1275
(Comm) (see §102) and BHL v Leumi ABL Limited [2017] EWHC 1871 (QB) (§§34 to 36 and 89)
– A30 –
A/1/200
David Neuberger QC, as he then was) and Watson v Durham University
[2008] EWHC Civ 1266 (per Lawrence Collins LJ).
21.2. Suspension without reasonable grounds may amount either to a breach of
contract – Watson v Durham University443 – or a breach of an implied term of
trust and confidence – Gogay v Hertfordshire County Council [2000] IRLR 703
(“Gogay”).444
22. Suspension not a ‘neutral act’: Gogay has been endorsed in several subsequent cases,
including the recent decision of Agoreyo v Lambeth LBC [2017] EWHC 2019 (QB), in
which Foskett J held that the view of the Courts is that suspension is not a “neutral act”.445
Further, he held:
22.1. “It is well-established that suspension is not be considered a routine response to the
need for an investigation”;446 and
22.2. “the need to avoid a "knee jerk" reaction, with suspension as the default position
without consideration of the alternatives, was emphasised” in Gogay.447
23. Each case requires consideration of the particular relationship, context and contractual
terms.
443 Watson v Durham University, §21

444 See also Watson v Durham University at §22.
445 Agoreyo, §24
446 Agoreyo, §27
447 Agoreyo, §29
– A31 –
A/1/201
– A32 –
A/1/202
Annex IV: Issue 4 – Supply of Goods and Services Act
Statutory implication of a term
1. As the Court will be aware, Section 13 of the Supply of Goods and Services Act 1982 (the
“1982 Act”) provides as follows:
“In a relevant contract for the supply of a service where the supplier is acting in the course of a
business, there is an implied term that the supplier will carry out the service with reasonable care
and skill.”
2. Thus, the first requirement for statutory implication of the term referred to in Section 13
is that the contract is a ‘relevant contract for the supply of a service’. Such contracts are defined
in Section 12(1) of the 1982 Act in the following terms:
“In this Act a “relevant contract for the supply of a service” means, subject to subsection (2)
below, a contract under which a person (“the supplier”) agrees to carry out a service, other than
a contract to which Chapter 4 of Part 1 of the Consumer Rights Act 2015 applies.” [Emphasis
added]
3. Section 12(2) of the 1982 Act provides that contracts of service or apprenticeship are not
contracts within the definition and the excepted contracts to which Chapter 4 of Part 1 of
the Consumer Rights Act 2015 applies are contracts for a trader to provide services to a
consumer.448
4. These exceptions do not apply with respect to the relevant Subpostmaster contracts. No
further clarification is expressly provided in the 1982 Act as to what is meant by a ‘contract
for the supply of a service’ and for the reasons given below, the Subpostmaster contracts
forming the subject of this trial are contracts to which Sections 12(1) and 13 of the 1982
Act apply.
5. The second requirement for statutory implication of the term in Section 13 of the 1982 Act
is that “the supplier is acting in the course of its business”. For these purposes, ‘business’ is
defined in Section 18(1) of the 1982 Act as including “a profession and the activities of any
government department or local or public authority”. It is common ground and entirely
448 Sections 1(1) and 1(3)(c), Consumer Rights Act 2015
– A33 –
A/1/203
uncontroversial that for all purposes in this litigation the Defendant acts in the course of
its business.
6. It is clear that the Courts are not prepared to interpret the scope of Section 12(1) to include
a wider category of rights and obligations arising under a contract for the provision of a
service. Mrs Justice Gloster (as she then was), for example, considered the meaning of
Section 12(1) of the 1982 Act in Euroption Strategic Fund Ltd v Skandinaviska Enskilda
Banken AB [2012] EWHC 584 Comm (“Euroption”) and concluded (with respect to what
were said to be services provided by a bank, SEB, relating to the liquidation of a portfolio
of assets) at §111 of her judgment:
“In my judgment, SEB's rights under the Mandate to impose limits on Euroption's activities
under clause 6, to close out Euroption's positions under clause 11, or to refuse instructions under
clause 12 (c) cannot be characterised as “services” within the definition contained in section 12
(1) of the Act (meaning the Supply of Goods and Services Act 1982). The definition in section
12(1) of “contract for the supply of a service” is (subject to exclusions) “a contract under which a
person (‘the supplier’) agrees to carry out a service”. Thus the “implied term about care and skill”
imposed by section 13 of the Act only applies to services agreed to be provided under a contract for
services and not to all rights and obligations under such a contract.” [Emphasis added]
7. The meaning of that section accepted by Gloster J was further applied in Marex Financial
v Creative Finance [2013] EWHC 2155 (Comm) (“Marex”) (with respect to a claim
between a foreign exchange broker and a client concerning the close out of cross- currency
positions, said to have been undertaken in an irrational or negligent manner and whether
a term was implied under Section 13 1982 Act fell to be considered), 449 in which Field J
distinguished, at §69 to §71, between the provision of a service to which Section 13 of the
1982 Act applies and exercise of a right by one party to a contract to act in its own interests.
449 On the facts, the claim followed the steep drop in the US Dollar and Japanese Yen exchange rate
after the Japanese earthquake in March 2011, when accumulated cross-currency positions were
closed, obliging the client to buy NZD 450 million and EUR 360 million in exchange for Japanese
Yen. This was achieved by new back-to-back trades at the best price available. One of the issues
was whether, pursuant to the contract between them, the exchange broker owed a duty of care
beyond the duty to act rationally, inter alia by way of an implied term under section 13 of the 1982
Act
– A34 –
A/1/204
8. Further, in Finch v Lloyds TSB Bank [2016] EWHC 1236 (QB), the Court accepted (in a
claim against for inter alia breach of contract by reason of a bank’s alleged failure to advise
a company as to the effect of a potentially onerous term), Section 13 did not apply in
respect of an alleged failure to advise (as opposed to where the advice was said to be
wrong) on the grounds that “If reliance is to be placed on s.13 in the context of this case, it
follows that it is necessary for the claimants to plead and prove a contract under which the
Defendant has agreed to provide a service that included the provision of advice” but the
Claimants had not done so.
9. It follows from the above that the Courts have explored the limits of what can properly
be characterised as a relevant contract for services under Section 12(1) 1982 Act and
accepted that:
9.1. The implied term as to reasonable care and skill imposed by Section 13 of the
1982 Act only applies to services agreed to be provided under a contract, and
not to all rights and obligations under such a contract.
9.2. A term as to reasonable skill and care is not implied under Section 13 in respect
of the simple election by one party to exercise a right under the contract in its
own interests and for its own protection.
9.3. The service must have been supplied by one party in the course of its business.
10. Nevertheless, the contract may properly be characterised as a relevant contract for the
supply of services, such that the term in Section 13 is to be implied in respect of the
provision of those services, where: -
10.1. The services in question are not in fact the primary subject matter of the
contract – provided the contract is one pursuant to which a supplier agrees to
carry out a service: Section 12(1) 1982 Act. Indeed, any contrary interpretation
would cut across the scheme of the 1982 Act, which applies to contracts for the
supply of services (a) whether or not they are also for the transfer, bailment or
bailment for hire of goods (i.e. they have other subject
– A35 –
A/1/205
matter, which may be the primary subject matter), and (b) whatever the nature
of the consideration for which the service is to be carried out: Section 12(3)
1982 Act.
10.2. There is no statutory requirement that the service is to be provided pursuant
to an express, as opposed to an implied, term of the contract in question.
Indeed, in the latter case, a term requiring provision of a service may only be
implied in the event it is found to be necessary to give business efficacy to the
contract and/or is so obvious as to go without saying.450
11. For the reasons set out in Section B, under ‘Issue 4: Supply of Goods and Services Act’, the
Subpostmaster contracts forming the subject of this trial were relevant contracts for the
supply of services within the meaning in Section 12(1) of the 1982 Act, such that the term
in Section 13 is to be implied in respect of the provision of those services by the Defendant.
Submissions as to the services provided and to which the statutory implied term applies
are set out in Section B.
450 As to which, see Annex III: Implied Terms
– A36 –
A/1/206
Annex V: Issues 5 and 6 – Onerous and Unusual Terms
Onerous and unusual
1. Although the party receiving a contractual document knows it contains conditions, if the
particular condition relied on is one which is regarded as sufficiently onerous or unusual,
or is one which involves the abrogation of a right given by statute, the party tendering the
document must show that it has been brought fairly and reasonably to the other party’s
attention. As famously stated by Denning LJ (as he then was) in J Spurling v Bradshaw
[1956] 1 WLR 461:
“Some clauses which I have seen would need to be printed in red ink on the face of the document
with a red hand pointing to it before the notice could be held to be sufficient.”451
2. J Spurling v Bradshaw concerned an exemption clause in a warehousing contract. This
was followed by Thornton v Shoe Lane Parking [1971] 2 QB 163, a case in which a
customer received from an automatic machine a ticket which stated that it was issued
subject to conditions. Both Lord Denning MR and Megaw LJ held as one of the grounds
of their decision in that case that where a condition is particularly onerous or unusual the
party seeking to enforce it must show that that condition, or an unusual condition of that
particular nature, was fairly brought to the notice of the other party. Lord Denning MR
re-stated and applied what he had said earlier in J Spurling v Bradshaw, and held that the
Court should not hold any man bound by such a condition unless it was drawn to his
attention in the most explicit way.452 Megaw LJ deals with the point at p.172, where he
said:
“I agree with Lord Denning M.R. that the question here is of the particular condition on which
the defendants seek to rely, and not of the conditions in general. When the conditions sought to
be attached all constitute, in Lord Dunedin's words [in Hood v. Anchor Line (Henderson
Brothers) Ltd.] [1918] A.C. 846, 847, 'the sort of restriction ... that is usual,' it may not be
necessary for a defendant to prove more than that the intention to attach some conditions has
been fairly brought to the notice of the other party. But at least where the particular condition
relied on involves a sort of restriction that is not shown to be usual in that class of contract, a
defendant must show that his intention to attach an unusual condition of that particular nature
451 At p.466
452 See p.169H to 170D
– A37 –
A/1/207
was fairly brought to the notice of the other party. How much is required as being, in the words
of Mellish L.J. [in Parker v. South Eastern Railway Co.], 2 C.P.D. 416 , 424, 'reasonably
sufficient to give the plaintiff notice of the condition,' depends upon the nature of the restrictive
condition.” [Emphasis added]
Interfoto
3. Interfoto Picture Library v Stiletto [1989] 1 QB 433 (“Interfoto”) is a decision of a two-
man Court of Appeal, which consisted of Dillon LJ and Bingham LJ (as he then was).
4. In Interfoto, the claimants ran a photographic transparency lending library. Following a
telephone inquiry by the defendants, the claimants delivered to them 47 transparencies
together with a delivery note containing nine printed conditions. Condition 2 stipulated
that all the transparencies had to be returned within 14 days of delivery, otherwise a
holding fee of £5 per day plus VAT would be charged for each transparency retained
thereafter. The defendants, who had not used the claimants’ services before, did not read
the conditions and returned the transparencies four weeks later, whereupon the claimants
invoiced the defendants for £3,783.50. The defendants refused to pay and the claimants
brought an action to recover that sum.
5. The claimants succeeded at first instance, but the Court of Appeal allowed the appeal and
held that condition 2 was particularly onerous and usual, with the corollary effect that the
claimants was required to have brought it fairly and reasonably to the attention of the
defendants. It was held that they had taken no steps to draw the defendants’ attention to
the condition and, accordingly, the claimants could not claim pursuant to that condition.
Dillon LJ and Bingham LJ gave different reasons, however, for reaching the same
conclusion.
6. As for Dillon LJ:
6.1. He held that the question is whether condition 2 was sufficiently brought to
the defendants’ attention to make it a term of the contract. This was in
circumstances when the contract was only concluded after the defendants
– A38 –
A/1/208
had received, and must have known that they received, the transparencies
and the delivery note.453
6.2. Dillon LJ referenced the cases of J Spurling v Bradshaw and Thornton v Shoe
Lane Parking. He noted the claimants’ argument that Thornton was a case of
an exemption clause, and should be read as limited to exception clauses.454 This
argument was rejected, with Dillon LJ stating:
“… what their Lordships said was said by way of interpretation and application
of the general statement of the law by Mellish LJ in Parker v South Eastern
Railway Co… and the logic of it is applicable to any particularly onerous clause
in a printed set of conditions of the one contracting party which would not be
generally known to the other party…
It is, in my judgment, a logical development of the common law into modern

conditions that it should be held, as it was in Thornton v Shoe Lane Parking…
that, if one condition in a set of printed conditions is particularly onerous or
unusual, the party seeking to enforce it must show that that particular condition
was fairly brought to the attention of the other party.”455
7. Bingham LJ took a slightly different approach:
7.1. He framed case law on notice in the following terms:
“The well known cases on sufficiency of notice are in my view properly to be read
in this context. At one level they are concerned with a question of pure
contractual analysis, whether one party has done enough to give the other notice
of the incorporation of a term in the contract. At another level they are concerned
with a somewhat different question, whether it would in all the circumstances be
fair (or reasonable) to hold a party bound by any conditions or by a particular
condition of an unusual and stringent nature.” [Emphasis added]
453 p.436G
454 And, in particular, exemption clauses which would deprive the party on whom they are imposed
of statutory rights: see p.438D
455 pp.438D to 439B
– A39 –
A/1/209
7.2. Bingham LJ carried out an analysis of the relevant cases and found several
references to the concept of fair dealing which had very little to do with a
conventional analysis of offer and acceptance.456 His conclusion was that:
“The tendency of the English authorities has, I think, been to look at the nature
of the transaction in question and the character of the parties to it; to consider
what notice the party alleged to be bound was given of the particular condition
said to bind him; and to resolve whether in all the circumstances it is fair to hold
him bound by the condition in question. This may yield a result not very different
from the civil law principle of good faith, at any rate so far as the formation of
the contract is concerned.”457
Subsequent cases
8. Interfoto, therefore, contains important observations to the effect that unusual or onerous
terms must be brought to the attention of the other party in order to be relied upon. It
was not, however, a case involving a signed contractual document.
9. The general rule as to signed contractual documents derives from L’Estrange v F Graucob
Ltd [1934] 2 KB (“L’Estrange”), where Scrutton LJ held:
“When a document containing contractual terms is signed, then, in the absence of fraud, or, I
will add, misrepresentation, the party signing it is bound, and it is wholly immaterial whether
he has read the document or not.”458
10. The question then becomes whether the principle derived from Interfoto acts as an
exception to the rule in L’Estrange. To date, it remains an undecided question whether
the Interfoto principle can apply to a signed contract. It has, however, been the subject of
discussion in several cases:-
10.1. In Ocean Chemical Transport v Exnor Crags Ltd [2000] 1 Lloyd's Rep. 446,
Evans LJ, with whom Henry and Waller LLJ agreed, held at §48 that he would
be prepared to apply the Interfoto principle in the appropriate circumstances:
456 See, e.g. p.443G

457 p.445B
458 p.403
– A40 –
A/1/210
“Mr Charkham submits that the Interfoto test, as he called it, has to be applied, even in
a case where the other party has signed an acknowledgement of the terms and conditions
and their incorporation. It seems to me that Mr Charkham could be right in what might
be regarded as an extreme case, where a signature was obtained under pressure of time
or other circumstances, and where it was possible to satisfy the Interfoto test; that is to
say, that the clause was one which was particularly onerous or unusual for incorporation
in the contract in question. I would prefer to put the matter more broadly and to say that
the question is whether the defendants have discharged the duty which lies upon them of
bringing the existence of the clause upon which they rely (and, if Mr Charkham is right,
of the effect of that particular clause) to the notice of the other party in the circumstances
of the particular case.”
10.2. In HIH v New Hampshire [2001] 2 Lloyd's Rep. 161, Rix LJ doubted obiter
whether the principle was properly applicable outside the context of
incorporation by notice.459
10.3. In Amiri Flight Authority v BAE Systems Plc [2004] 1 All ER 385, Mance LJ,
with whom Rix and Potter LLJ agreed, noted the doubts of Rix LJ in HIH v
New Hampshire and stated that it was unnecessary to decide whether the
principle could apply to signed contracts. By reference to Bingham LJ’s
Judgement in Interfoto, Mance LJ did, however, envisage that the Interfoto
principle might apply in such a case:
“15. As I read both the judgments in Interfoto the decision there was that the ‘holding
fee’ clause was not incorporated. The formal reason was that no sufficient notice had been
given of so stringent a clause. But Bingham LJ, in deciding accordingly, stressed that
whether or not sufficient notice had been given was a question which also involved broad
considerations of fairness and reasonableness, having regard to the nature and effect of
the clause and the circumstances relied upon as constituting notice that the contract was
to contain a clause of such a nature and effect. It is unnecessary in this case to consider
whether there may be contracts in writing to which such reasoning would also apply: cf
Rix LJ's doubt in HIH Casualty and General Insurance Ltd v New Hampshire Insurance
Co [2001] CLC 1480. One could take the case of a car-owner entering a car-park and
being asked to sign a ticket handed to him by a car-parking attendant, or that of the
holiday-maker required to sign a long small-print document in order to hire a family car
at an airport, if, in either case, the relevant document proved on close reading to contain
a provision of an extraneous or wholly unusual nature. It is
459 §209
– A41 –
A/1/211
possible that other arguments could then also exist, e.g. that the nature or effect of the
document had been impliedly misrepresented.”
10.4. In Do-Buy 925 Ltd v National Westminster [2010] EWHC 2862, Andrew
Popplewell QC (as he then was), after setting out the above case law, decided
not to depart from the general rule set down in L’Estrange as his was “not an
extreme case, nor one in which there is any reason to depart from the principle that a
party should be bound by a contract he has signed”. This was not, however, because
he decided that the Interfoto principle could not apply in relation to signed
contracts; it was a fact-specific finding on the facts of the case:
“The signature on the Application Form was immediately below an acknowledgement

that the signatory had read the General Terms and Conditions which came at the end of
a section headed “Important-you should read this carefully”. Ms Searle accepted that she
was provided with the General Terms and Conditions and had had an opportunity to
read them; and that the Bank were entitled to assume that she had done so. I see no room
for the application of the Interfoto principle in this case, even were it capable of applying
to some signed contracts.”460
10.5. In One World (GB) Limited v Elite Mobile Limited, [2012] EWHC 3706 (QB),
His Honour Judge Behrens, after setting out the relevant case law, held at
§58:
“In the light of the authorities I am content to assume (without deciding) that there is a
possible exception to the rule in L'Estrange v F Graucob Ltd in relation to provisions
that are onerous or unusual. However I agree with Mr Stacey that on the facts of this
case the requirement of a 40% threshold before a connection bonus is paid is neither
unusual nor onerous. To my mind the reasons given by Mr Stacey are compelling. Mr
Jory is correct that there is no detailed evidence as to how common such clauses are.
However the matters referred to by Mr Stacey together with paragraph 29 of Mr
Mughal's witness statement satisfy me that the clause is not sufficiently unusual so as
to enable Mr Mughal to avoid the rule. Equally this is a case where Mr Mughal was fully
aware of the need for a high connection rate. He had himself spoken of the 80% he had
achieved for Vodafone. In those circumstances I do not regard the clause as onerous even
if, as Mr Jory pointed out, it applied to networks other than Vodafone.” [Emphasis
added]
460 §92
– A42 –
A/1/212
10.6. Kaye v Nu Skin Ltd [2012] CTLC 69 applied the Interfoto principle to a signed
contract. This case involved an agreement between English parties, one of
which was part of an enterprise based in Utah, which contained an arbitration
clause. After setting out Bingham LJ’s Judgment in Interfoto (including,
specifically, the passages cited above at §7), he held at §42:
“In my view, following both the Parker case and what Bingham LJ said, the arbitration
clause in this case was clearly incorporated into the agreement and therefore the only
question is whether, in the words of Bingham LJ, it is such an unreasonable clause as to
require very specifically being brought to the attention of the claimant.”461
11. It follows from the above cases that:-
11.1. While there is no authority conclusively establishing that the Interfoto
principle does apply to signed contracts (such that it displaces the general rule
in L’Estrange), the trend in the case law is to accept that such application may
be possible.
11.2. Interfoto was itself, per Dillon LJ, regarded as a logical development of the
common law in that it rejected an argument that would confine the ratio of
Thornton v Shoe Lane Parking to the type of clause under review (i.e.
exemption clauses).
11.3. The Court is required to: (i) look at the nature of the transaction in question
and the character of the parties to it; (ii) consider what notice the party alleged
to be bound was given of the particular condition said to bind him; and (iii)
resolve whether in all the circumstances it is fair to hold him bound by the
condition in question. While it may arguably be more difficult to rely upon
Interfoto when there is a signed contract, there is no principled reason why
such contracts should be ruled out of this analysis by type.
461 The Judge’s conclusion was that it was difficult to characterise an arbitration clause as
unreasonable and / or extortionate – it is an extremely common clause in many commercial
contracts and the evidence before the Judge exalted the benefits of such a clause to the parties: see,
e.g. §43 to 52.
– A43 –
A/1/213
12. Further, as to reasonable sufficiency of notice, the editors of Chitty on Contracts (32nd
Ed.) state at 13-014:
“… The question whether the party tendering the document has done all that was reasonably
sufficient to give the other notice of the conditions is a question of fact in each case, in answering
which the tribunal must look at all the circumstances and the situation of the parties. But it is
for the court, as a matter of law, to decide whether there is evidence for holding that the notice is
reasonably sufficient. Cases in which the notice has been held to be insufficient have been those
where the conditions were printed on the back of the document, without any reference, or any
adequate reference, on its face, such as, “[f]or conditions, see back”, where, on documents sent by
fax, reference was made to conditions stated on the back, but those conditions were not in fact
stated on the back or otherwise communicated, or where the conditions were obliterated by a
printed stamp. In many situations, however, the tender of printed conditions will in itself be
sufficient. It is not necessary that the conditions themselves should be set out in the document
tendered: they may be incorporated by reference, provided that reasonable notice of them has been
given. Reference to standard terms to be found on a website may be sufficient to incorporate the
terms on the website into the contract.” [Emphasis added]
– A44 –
A/1/214
Annex VI: Issue 7 – Unfair Contract Terms
UCTA, section 3
1. Section 3 UCTA provides as follows:
(1) This section applies as between contracting parties where one of them deals . . . on the
other's written standard terms of business.
(2) As against that party, the other cannot by reference to any contract term—
(a) when himself in breach of contract, exclude or restrict any liability of his in respect
of the breach; or
(b) claim to be entitled—
(i) to render a contractual performance substantially different from that which

was reasonably expected of him, or
(ii) in respect of the whole or any part of his contractual obligation, to render
no performance at all,
except in so far as (in any of the cases mentioned above in this subsection) the contract
term satisfies the requirement of reasonableness.
Written standard terms of business
2. As foreshadowed above, the Defendant denies that the parties entered into the SPMC and
NTC contracts upon the Defendant’s written standard terms of business on the basis “Post
Office’s business was not the appointment of Subpostmasters.”462
3. UCTA contains no definition or further elucidation as to the meaning of the words “the
other’s written standard terms of business”.
4. However, what are to be regarded as standard form contracts was considered by the Law
Commission and Scottish Law Commission in their reports that ultimately gave rise to
its enactment.
5. The Law Commission’s identified at §152 of its report, as follows:463
“Broadly speaking, standard form contracts are of two different types. One type is
exemplified by forms which may be adopted in commercial transactions of a

463 Law Com. No. 69; Scot. Law Com. No. 39.
– A45 –
A/1/215
particular type or for dealings in a particular commodity such as the different forms of
sale contracts used by the Grain and Feed Trade Association or the forms for building
and engineering contracts sponsored by the Royal Institute of British Architects, the
Institution of Civil Engineers and the Federation of Associations of Specialists and
Sub-contractors. Such forms may be drawn up by representative bodies with the
intention of taking into account the conflicting interests of the different parties and
producing a document acceptable to all. The other type is the form produced by, or on
behalf of, one of the parties to an intended transaction for incorporation into a number
of contracts of that type without negotiation. Examples include a multitude of printed
documents setting out conditions of various kinds, terms found in catalogues and price
lists, and terms set out or referred to in quotations, notices and tickets. Although it is
the second type of standard form contract that has attracted most criticism, both types
have in common the fact that they were not drafted with any particular transaction
between particular parties in mind and are often entered into without much, if any,
thought being given to the wisdom of the standard terms in the individual
circumstances.” [Emphasis added]
6. The Law Commission had difficulty formulating a precise definition and discounted lack
of negotiation alone as the defining characteristic of written standard terms;464 it
recommended that the matter be left to the Courts, as follows:465
“We think that the courts are well able to recognise standard terms used by persons in
the course of their business, and that any attempt to lay down a precise definition of
‘standard form contract’ would leave open the possibility that terms that were clearly
contained in a standard form might fall outside the definition. In our view this would
be unfortunate. We have not, therefore, attempted to formulate a statutory description
of a standard form contract.”
464 Law Com. No. 69, at §156, in which it was observed that “[t[he essential element that has led us to the
decision that there must be some measure of control over terms in standard form contracts between persons
in business is the lack of negotiation that exists in most situations where they are used. Nevertheless it does
not seem to us that the lack of negotiation, or of any opportunity for negotiation, can itself be regarded as the
distinguishing feature of standard form contracts. In many contracts there may be negotiation as to some
terms, such as the quantity or price, with no opportunity to negotiate the exempting terms with which we
are concerned. Moreover, an expressed willingness to discuss terms may not in practice mean that the terms
are any the less proffered on a ‘take it or leave it’ basis. Accordingly, our conclusion is that the lack of
opportunity to vary or negotiate terms should not be made a feature of a statutory description of standard
terms.”
465 Law Com. No. 69, §157
– A46 –
A/1/216
7. Further, the meaning and application of Section 3(1) has been variously considered and
applied and the following authorities and/or sources are instructive as to its application
to the SPMC and NTC contracts.
8. In British Fermentation Products Ltd v Compair Reavell Ltd [1999] 2 All E.R. (Comm)
389 (“British Fermentation”) at issue was whether the Institution of Mechanical Engineers
Model Form of General Conditions of Contract were the defendants’ standard terms and
conditions so as to be terms to which section 3(1) applied.
9. The Court had regard to the Law Commission and Scottish Law Commission reports cited
above, and to the following observations made by Lord Dunpark in the Scottish case
McCrone v Boots Farm Sales Limited [1981] SLT 103:
“The Act does not define ‘standard form contract’, but its meaning is not difficult to
comprehend. In some cases there may be difficulty deciding whether the phrase
properly applies to particular contract. I have no difficulty deciding that, upon the
assumption that the defenders prove that their general conditions of sale were set out
in all their invoices and they were incorporated by implication in their contract with
the pursuer, the contract was a standard form contract within the meaning of the said
section 17.
Since Parliament saw fit to leave the phrase to speak for itself, far be it from me to
attempt to formulate a comprehensive definition of it. However, the terms of section
17 in the context of this Act make it plain to me that the section is designed to prevent
one party to a contract from having his contractual rights, against a party who is in
breach of contract, excluded or restricted by a term or condition, which is one of a
number of fixed terms or conditions invariably incorporated in contracts of the kind in
question by the party in breach, and which have been incorporated in the particular
contract in circumstances in which it would be unfair and unreasonable for the other
party to have his rights so excluded or restricted. If the section is to achieve its purpose,
the phrase ‘standard form contract’ cannot be confined to written contracts in which
both parties use standard forms. It is, in my opinion, wide enough to include any
contract, whether wholly written or partly oral, which includes a set of fixed
terms or conditions which the proponer applies, without material variation,
to contracts of the kind in question.” [Emphasis added]
10. In British Fermentation, the Court further observed that section 12(3) UCTA imposed a
burden upon those claiming that a party does not deal as a consumer to show that it
– A47 –
A/1/217
does not, and held that the burden of proof must be upon the party alleging that UCTA
applies to demonstrate its application.466
11. In Hadley Design Associates Ltd v Westminster City Council [2004] TCLR 1 – it was
found as to the meaning of written standard terms as follows:467
“The concept underlying the provisions of Unfair Contract Terms Act 1977 section 3,
in my judgment, is that there should exist a stock of written, no doubt usually, at any
rate, printed, contract conditions which was simply drawn from as a matter of routine
and intended to be adopted or imposed without consideration or negotiation specific to
the individual case in which they were to be used. That seems to me to be the force of
the words ‘written’ and ‘standard’ in the expression ‘written standard terms of
business’. In other words, it is not enough to bring a case within Unfair Contract
Terms Act 1977, section 3, that a party has established terms of business which it
prefers to adopt, as, for example, a form of draft contract maintained on a computer, or
established requirements as to what contracts into which it entered should contain, as,
for example, provision for arbitration in the event of disputes. Something more is
needed, and on principle that something more, in my judgment, is that the relevant
terms should exist in written form prior to the possibility of the making of the relevant
agreement arising, thus being ‘written’, and they should be intended to be adopted
more or less automatically in all transactions of a particular type without any
significant opportunity for negotiation, thus being ‘standard’.” [Emphasis added]
12. In Yuanda (UK) Co Ltd v WW Gear Construction Ltd [2011] Bus LR 360 – Edwards- Stuart
J adopted the same approach, at §21:
“The conditions have to be standard in that they are terms which the company in
question uses for all, or nearly all, of its contracts of a particular type without
alteration (apart from blanks which have to be completed showing the price, name of
the other contracting party and so on). One encounters such terms on a regular basis-
whether when buying goods over the internet or by mail order or when buying a ticket
for travel by air or rail.” [Emphasis added]
13. In African Export-Import Bank v Shebah Exploration and Production Co Ltd [2017]
EWCA Civ 845: The Court of Appeal considered and approved the foregoing first instance
decisions, and held at §25 (Longmore LJ) as follows:
466 British Fermentation Products Ltd v Compair Reavell Ltd, §49

467 Judge Seymour QC, at §78
– A48 –
A/1/218
“I would also approve these first instance decisions and hold that it is relevant to
inquire whether there have been more than insubstantial variations to the terms which
may otherwise have been habitually used by the other party to the transaction. If there
have been substantial variations, it is unlikely to be the case that the party relying on
the Act will have discharged the burden on him to show that the contract has been
made “on the other's written standard terms of business”.”
14. It follows from the foregoing, that the following factors are relevant to the question
whether a contract represents a party’s “written standard terms of business”, as to which,
the burden of proof is upon those contending that section 3(1) UCTA applies:
14.1. whether the contract is simply drawn as a matter of routine in all
transactions of a particular type;
14.2. whether there is any significant opportunity for negotiation; and
14.3. whether there were any substantial alterations to the individual contract
compared to the ordinary ‘standard form’.
Contractual performance substantially different / no performance at all
15. As a starting point, it has been observed that section 3(1)(b) of UCTA applies where there
is no breach of contract at all, but where the obligation as to performance has been limited
or qualified.468 As the editors of Chitty on Contracts (32nd Ed.) observe:
“… it is submitted that a sensible meaning can in most cases only be given to

paragraph (b) if one assumes that the contractual performance and contractual
obligation referred to is the performance required and the obligation imposed by the
contract apart from the contract term relied on. For this purpose, the contractual
performance reasonably expected of a party may, in appropriate cases be determined
by the content of representations made by that party in precontract negotiations. On
the other hand, where on its true construction a contract term provides for performance
to a certain level by the proferens, the other party cannot claim that that very term
entitles the proferens to render a contractual performance substantially different from
that which he reasonably expected.”469
16. It is important to consider the term that is said to be subject to the requirements of Section
3 UCTA not in isolation, but in combination and in the context of the contract as
468 Chitty on Contracts (32nd Ed.) at 15-085

469 Chitty on Contracts (32nd Ed.) at 15-085
– A49 –
A/1/219
a whole. The relevant questions are (a) what is the performance required by the contracts
and (b) are the challenged terms such that they allow the proferens to render a substantially
different performance?
17. The foregoing observations of the editors of Chitty were cited by the Court of Appeal in
AXA Sun Life Services Plc v Campbell Martin Ltd [2011] EWCA Civ 133. Stanley Burnton
LJ held that section 3(2)(a) of UCTA did not apply to an entire agreement clause, which
purported to prevent reliance upon any collateral contract or warranty, as there was no
collateral contract of which the claimant company could be in breach. 470 He went on, to
observe, at §50, that:
“However, different considerations apply to section 3(2)(b)(i). Quite how that

“paragraph” should operate is not entirely clear, as is demonstrated by the somewhat
tentative discussion in Chitty on Contracts , 30th ed (2008), vol 1, para 14–073. I have
no doubt that it is principally aimed at the small print that entitles a party to a contract
to provide something other than that defined by the principal terms of the contract, as
where a holiday company reserves the right to substitute a hotel or resort for that
specified in the main part of the contract. In most cases, as Chitty suggests, the
performance reasonably expected of a party is that which is defined by the written
contract between the parties. But this “paragraph” of section 3 refers not to the
performance specified in the contract but to the performance “which was reasonably
expected” of that party. It seems to me that in appropriate circumstances a pre-
contractual representation or promise may affect the performance that is reasonably
expected of a party… It follows that clause 24 may be subject to the reasonableness test
in UCTA in relation to both collateral warranties and representations. However,
section 3(2)(b)(i) will only come into play in the present cases if it is possible to identify
both the performance by AXA that was reasonably expected and that defined by the
contract. The effect of clause 24, if any, on a representation such as “We are the largest
insurance company in England” will not be within the scope of section 3(2)(b)(i).”
[Emphasis added]
18. The reasonable expectations as to performance are those that existed as at the time the
contract was made.471
470 AXA Sun Life Services Plc v Campbell Martin Ltd, §49
471 Shearson Lehman Hutton Inc v Maclaine Watson & Co [1989] 2 Lloyd’s Rep. 570, 612; Timeload
Ltd v British Telecommunications Plc [1995] E.M.L.R. 459
– A50 –
A/1/220
19. Further, section 3 UCTA may also apply to a term permitting termination of a contract
without cause.
20. In Timeload Ltd v British Telecommunications Plc [1995] E.M.L.R. 459, the claimant
applied for an injunction restraining BT from terminating a contract. The facts are
instructive: the claimant ran a free telephone inquiry service and obtained a number that
was said by BT to have been allocated either by mistake or due to a breach of duty by a
BT employee; the claimant had begun to market its services when BT gave it one month’s
notice of termination of the contract, relying on a termination clause in their standard
terms. The Court found that the term was subject to the requirement of reasonableness in
section 3(2) of UCTA, as BT was attempting to deliver a performance which was different
from that reasonably expected.
21. The injunction was granted, and upheld on appeal; with regard to section 3(2) of UCTA,
Sir Thomas Bingham MR (as he then was) held at p.468:
“The argument accordingly turns on section 3(2)(b) and that I find more difficult. Mr
Hobbs submits that the subsection cannot apply where, as here, the clause under
consideration defines the service to be provided and does not purport to permit
substandard or partial performance. He says that the customer cannot reasonably
expect that which the contract does not purport to offer, namely enjoyment of telephone
service under a given number for an indefinite period. That may indeed be so, but I
find the construction and ambit of this subsection by no means clear. If a customer
reasonably expects a service to continue until BT has substantial reason to terminate
it, it seems to me at least arguable that a clause purporting to authorise BT to terminate
without reason purports to permit partial or different performance from that which the
customer expected.” [Emphasis added]
Reasonableness
22. A requirement of reasonableness is imposed upon all terms to which Section 3(2) applies.
The Schedule 2 greylist guidelines of considerations relevant to the test of reasonableness
under Section 11(2) UCTA (applicable for the purposes of terms referred to in sections 6
and 7) are regarded as being of general application.472
472 See, e.g. Stewart Gill Ltd v Horatio Myer & Co Ltd [1992] Q.B. 600, 608. See also Singer Co (UK)
Ltd v Tees and Hartlepool Port Authority [1988] 2 Lloyd’s Rep. 164, 169
– A51 –
A/1/221
23. The guidelines are:
23.1. the strength of the bargaining positions of the parties relative to each other,
taking account (among other things) alternative means by which the
customer’s requirements could have been met;
23.2. whether the customer received an inducement to agree to the term, or in
accepting it had an opportunity of entering into a similar contract with other
persons, but without having to accept a similar term;
23.3. whether the customer knew or ought reasonably to have known of the
existence and extent of the term (having regard, among other things, to any
custom of the trade and any course of dealing between the parties);
23.4. where the term excludes or restricts any relevant liability if some condition is
not complied with, whether it was reasonable at the time of the contract to
expect that compliance with that condition would be practicable;
23.5. whether the goods were manufactured, processed or adapted to the special
order of the customer.
24. The Schedule 2 guidelines are not, however, exhaustive. The following further factors
were identified in Overseas Medical Supplies Ltd v Orient Transport Services Ltd [1999]
2 Lloyd’s Rep 273:473
24.1. the way in which the relevant conditions came into being and are used
generally;
24.2. in relation to the question of equality of bargaining position, the court will
have regard not only to the question of whether the customer was obliged to
use the services of the supplier but also to the question of how far it would
have been practicable and convenient to go elsewhere;
24.3. the question of reasonableness must be assessed having regard to the relevant
clause viewed as a whole: it is not right to take any particular part of
473 Per Potter LJ at §10
– A52 –
A/1/222
the clause in isolation, although it must also be viewed against a breach of
contract;
24.4. the reality of the consent of the customer to the supplier's clause; and
24.5. the availability of insurance.
25. It is clear that the list of relevant factors is not a closed one.
26. As the Court is aware, there is a large body of reported cases illustrating in general terms
the way in which the Courts apply the statutory requirement of reasonableness. However,
many are of limited authoritative value since the position of the parties, relevant
circumstances of the transaction, and the precise wording of the clause in question
necessarily differ in each particular situation.474
27. However, the following cases illustrate the importance of equality of bargaining power in
assessing reasonableness:
27.1. A number of the authorities have upheld terms as reasonable where they
have been freely agreed by parties of broadly equal size and status.475
27.2. In Granville Oil & Chemicals Limited v Davis Turner & Co Limited [2003] 2
Lloyd's Rep 356 at 362, Tuckey LJ commented:
“The 1977 Act obviously plays a very important role in protecting vulnerable
consumers from the effects of draconian contract terms. But I am less
enthusiastic about its intrusion into contracts between commercial parties of
equal bargaining strength, who should generally be considered capable of being
able to make contracts of their choosing and expect to be bound by their terms."
[Emphasis added]
27.3. In Watford Electronics Limited v Sanderson CFL Limited [2001] EWCA Civ
317 (“Watford Electronics”), Chadwick LJ observed at §55:
“Where experienced businessmen representing substantial companies of equal

bargaining power negotiate an agreement, they may be taken to have had regard
to the matters known to them. They should, in my view be taken to be the best
judge of the commercial fairness of the agreement which they have
474 An observations made by the editors of Chitty on Contracts (32nd Ed.) at 15-101
475 As to which, see observations of Lord Diplock in Photo Production Limited v Securicor
Transport Limited [1980] AC 827 at p.848F to G, a decision that pre-dated UCTA
– A53 –
A/1/223
made; including the fairness of each of the terms in that agreement. They should
be taken to be the best judge on the question whether the terms of the agreement
are reasonable. The court should not assume that either is likely to commit his
company to an agreement which he thinks is unfair, or which he thinks includes
unreasonable terms. Unless satisfied that one party has, in effect, taken unfair
advantage of the other – or that a term is so unreasonable that it cannot properly
have been understood or considered - the court should not interfere." [Emphasis
added]
27.4. In Allen Fabrications Ltd v ASD Ltd [2012] EWHC 2213 (TCC), His Honour
Judge Waksman QC (as he then was) assessed the parties’ respective positions
at 73:
“Allen has a turnover of around £4-5m each year. ASD is very much larger being
part of the Klockner international group of companies and the largest
independent metal stockholder in the UK. But this is not simply a “numbers”
game. The fact is that both parties were and are substantial commercial
entities.” [Emphasis added]
27.5. The availability of insurance, being a further consideration regarded as
particularly important, is of primary concern to the application of the
requirement of reasonableness imposed with respect to certain exclusion and
limitation of liability clauses which are not in issue here.
– A54 –
A/1/224
Annex VII: Issues 10 and 11 – Post Office as Agent
Creation of Agency
1. On the Claimants’ case, the Defendant was required as their agent to comply with a series
of obligations which included, for example, to effect, execute, record and/or maintain and
keep records of all transactions that they initiated on Horizon or for which they were
potentially responsible.
2. Thus addressing the questions posed by Issues 10 and 11 requires the application of
principles of agency to the facts as they are before the Court. Admitted facts are set out in
Section B (under ‘Issues 10 and 11 - Post Office as Agent’) above.
General Definition
3. For the purposes of these Issues (and Issues 12 and 13), the Claimants commend the
following general description of that relationship as: 476
“…the fiduciary relationship which exists between two persons, one of whom expressly or impliedly
manifests assent that the other should act on his behalf so as to affect his relations with third parties,
and the other of whom similarly manifests assent so to act or so acts pursuant to the manifestation.”
but where “[a] person may have the same fiduciary relationship with a principal where he acts on
behalf of that principal but has no authority to affect the principal’s relations with third parties.
Because of the fiduciary relationship such a person may also be called an agent.”
Assent to be implied from conduct
4. The Claimants rely upon the following principles as to the basis upon which the agency
is to be inferred.
5. Assent implied by conduct: in the absence of contractual agreement to an agency, as here,
agreement between principal and agent for the conferral of authority may be
476 Bowstead & Reynolds on Agency (21st Ed.) at 1-001 – as to which, the Court is invited to have
regard to all limbs of the definition given therein and the limits to that definition, at 1-003
– A55 –
A/1/225
implied on the basis one party (the Defendant) has conducted itself towards another
(Subpostmasters) in such a way that it is reasonable for that other to infer from that
conduct assent to an agency relationship.477
6. Implication from words, conduct or a course of dealing: assent to a relationship of
agency may be implied from the parties words and conduct, or from evidence of a course
of dealing:
6.1. As established by the House of Lords in Garnac Grain Co Inc v HMF Faure
& Fairclough Ltd [1968] AC 1130:
“The relationship of principal and agent can only be established by the consent of the
principal and the agent. They will be held to have consented if they have agreed to
what amounts in law to such a relationship, even if they do not recognise it

themselves and even if they have professed to disclaim it, as in Ex parte Delhasse.
But the consent must have been given by each of them, either expressly or by
implication from their words and conduct. Primarily one looks to what they said and
did at the time of the alleged creation of the agency. Earlier words and conduct may
afford evidence of a course of dealing in existence at that time and may be taken into
account more generally as historical background. Later words and conduct may have
some bearing, though likely to be less important. As to the content of the relationship,
the question to be asked is: "What is it that the supposed agent is alleged to have done
on behalf of the supposed principal?"478 [Emphasis added]
6.2. As clarified by the House of Lords by its judgment in Branwhite v Worcester
Works Finance Ltd [1969] 1 AC 552, with Lord Wilberforce stating at p.587E
– citing the foregoing passage with approval:
“The significant words, for the present purpose, are "if they have agreed to what
amounts in law to such a relationship." These I understand as pointing to the fact
that, while agency must ultimately derive from consent, the consent need not
477 Bowstead & Reynolds on Agency (21st Ed.), Article 8

478 At 1137C, per Lord Pearson
– A56 –
A/1/226
necessarily be to the relationship of principal and agent itself (indeed the existence of
it may be denied) but may be to a state of fact upon which the law imposes the
consequences which result from agency. It is con-sensual, not contractual.”
7. Voluntary conferral of authority and manifestation of assent: the law recognises that the
agent has power to affect the principal’s legal position by voluntary conferral of authority
which may be by the manifestation of such willingness by the principal. As the editors
of Bowstead & Reynolds on Agency (21st Ed.) observe:
7.1. as to such request or authorisation “[t]he basic notion behind the common law of
agency can be explained along the following lines. The mature law recognises that a
person need not always do things that change his legal relations himself: he may utilise
the services of another to change them, or to do something during the course of which
they may be changed. Thus, where one person, the principal, requests or authorises
another, the agent, to act on his behalf, and the other agrees or does so, the law
recognises that the agent has power to affect the principal’s legal position by acts
which, though performed by the agent, are to be treated in certain respects as if they
were acts of the principal. The conferral of authority is voluntary”;479 and
7.2. as to manifestation of willingness “[t]he basic justification for the agent’s power
as so far explained seems to be the idea of a unilateral manifestation by the principal
of willingness to have his legal position changed by the agent. To this any contract
between principal and agent is secondary, though there will usually be one, which
often provides the reason for the conferral and indeed may contain it. The phrase
“consensual agency” used in the previous paragraph and below, and “agency by
agreement” used later in this book, are to be understood in this sense and not as
relating to any supporting contract. There is certainly no conceptual reason which
requires a contract between principal and agent to achieve this creation of power,
and it is indeed clear that no contract is necessary, for a person without juristic
capacity may be an agent. Nor need the agent undertake to act as such. It is
sufficient if the principal manifests to the agent that he is willing for the agent to act,
479 At 1-005
– A57 –
A/1/227
and the agent does so in circumstances indicating that his acts arise from the
principal’s manifestation. This is not dissimilar from the formation of a contract, but
is notionally separate, as the example of a power of attorney shows. In common with
other situations where in the civil law it is important to derive a party’s intention, the
principal’s manifestation of will is generally determined on an objective basis,
whether or not the conferral of power meets the requirements of the law of contract.”
[Emphasis added]”480
8. Relevant conduct, in this respect: as to the conduct the Court is to look for where there is
a pre-existing contractual relationship, such implied authority may to be inferred from
the surrounding circumstances but need not be “necessarily incidental to the commercial
venture”, the correct test being whether one party had conducted itself towards another in
such a way that it was reasonable for that other to infer from that conduct assent to the
agency relationship (as clarified by Court of Appeal authoritatively stated in Marine
Blast Ltd v Targe Towing Ltd & Anor [2004] EWCA Civ 346.481
Duties with respect to transaction records and information
9. As to an agency for the purposes contended for by the Claimants, the following principles
apply and are instructive to the approach to be taken in addressing the question posed by
Issue 12 in particular.
10. Duty to provide records: where an agent is entrusted to make transactions that are
binding on his principal, there is a corresponding duty on the agent to provide records in
relation to those transactions. In particular:
480 Bowstead & Reynolds on Agency (21st Ed.) at 1-006. See also 1-007 which notes:
“The phrase “manifestation of assent” is selected by Restatement, Third instead of “manifestation of
consent” in Restatement, Second, seemingly to stress the objective nature of the inquiry.”
The Restatement, Third, explains at § 1.031 (Comment b.):
“A manifestation is conduct by a person, observable by others, that expresses meaning. It is a broader
concept than communication. The relevant state of mind is that of the person who observes or otherwise
learns of the manifestation.”
481 Marine Blast Ltd v Targe Towing Ltd & Anor [2004] EWCA Civ 346, §§14, 19, 21 to 22, citing
with approval, for example, Article 8 Bowstead & Reynolds on Agency
– A58 –
A/1/228
10.1. A duty to produce records is a legal incident of the relationship of agency:
as authoritatively staged by Mummery LJ as a “general rule” in Fairstar Heavy
Transport v Adkins [2013] 2 CLC 272, at §53 thus: “It is a legal incident of that
relationship [between principal and agent] that a principal is entitled to require
production by the agent of documents relating to the affairs of the principal”
10.2. The duty arises in a gratuitous agency: as to which the judgment in Yasuda
Fire & Marine Insurance Co of Europe Ltd v Orion Marine Insurance
Underwriting Agency Ltd [1995] QB 174 (“Yasuda”) is instructive in that, on
an application for declaratory relief and orders requiring access to
documentary and computer records, Colman J held at p.185 that:
“…it can in logic make no difference to whether such a duty exists that the agency is
or is not founded on contract. Indeed, so far as my researches have gone, there is no
suggestion in any authority - decided case or textbook - that, if there is merely a
gratuitous agency, there is no duty to provide records or accounts.”
“…in the absence of express agreement to the contrary, the agent's duty to provide to
his principal the records of transactions effected pursuant to the agency must subsist
notwithstanding termination of the agent's authority. That, as I have held, is
a duty that is imposed by law in consequence of the existence of the agency
relationship and is not founded on the existence of a contract of agency.”
[Emphasis added]
11. Duty to provide information: An agent is, in general, under a duty to keep his principal
informed about matters which are of his concern. As to the precise content of that duty,
as follows from the foregoing, cases vary on their facts depending upon the authority that
is given. Nevertheless:
11.1. An agent is under a duty to deliver up, upon request, all documents and
electronic records and correspondence (together “records”) concerning the
– A59 –
A/1/229
affairs of the principal which have been prepared by the agent in the course
of the agency.482
11.2. The information to be provided depends on the nature of the agent’s mandate.
The basis of the entitlement derives from the fact that such records have been
created for preserving information as to the very transactions which the agent
was authorised by him to enter into.483
11.3. It matters not if the agent keeps those records in such a manner that are
inextricable from records relating to other principals – it is for the agent to
provide find some means of extracting what is relevant from the mass of their
material; if such means cannot be devised with sufficient expedition, the
principal will have to see the irrelevant material in so far as it is inseparable
from the relevant.484
11.4. As noted in the Canadian case of Ocean City Realty Ltd v A & M Holdings
Ltd (1987) 36 D.L.R. (4th) 94) (cited with approval by the editors of
Bowstead):485
a. The duty extends to everything known to an agent respecting the subject-
matter of the contract which would be likely to influence the conduct of his
principal would be likely to operate upon the principal’s judgment.
b. The test is an objective one to be determined by what reasonable persons in
the position of the agent would consider, in the circumstances, would be
likely to influence the conduct of the principal.
12. Conflict of interest: finally, an agent in a position of conflict of interest cannot normally
use the conflict as an excuse for not passing on information relevant to a principal.486
482 Fairstar Heavy Transport NV v Adkins [2013] EWCA Civ 886

483 Yasuda Ltd v Orion Underwriting Ltd [1995] QB 174, at 185C to E per Colman J; Equitas Ltd v
Horace Holman & Co Ltd [2007] EWHC 903 (Comm)
484 Yasuda Ltd v Orion Underwriting Ltd [1995] QB 174, at 191F per Colman J; Equitas Ltd v Horace
Holman & Co Ltd [2007] EWHC 903 (Comm)
485 See Bowstead & Reynolds on Agency (21st Ed.) at 6-021
– A60 –
A/1/230
Summary of relevant principles
13. It follows from the above that:-
13.1. Conferral of authority may be implied where one party has conducted itself
towards another in such a way that it is reasonable for that other to infer from
that conduct assent to an agency relationship.
13.2. That relationship may arise where an agent acts on behalf of that principal but
has no authority to affect the principal’s relations with third parties.
13.3. The relationship may exist even if the parties have professed to disclaim it.
13.4. It is sufficient that the principal manifests to the agent that he is willing for the
agent to act, and the agent does so in circumstances indicating that his acts
arise from the principal’s manifestation.
13.5. In the context of an existing contractual relationship, the surrounding
circumstances from which agency is to be inferred need not be necessarily
incidental to the commercial venture.
13.6. It is a legal incident of that relationship between principal and agent that a
principal is entitled to require production by the agent of documents relating
to the affairs of the principal. The duty thus arises in a gratuitous agency.
13.7. The duty extends to everything known to an agent respecting the subject-
matter of the contract which would be likely to influence the conduct of his
principal would be likely to operate upon the principal’s judgment. The test is
an objective one.
486 See Hilton v Barker Booth & Eastwood [2005] UKHL 8; [2005] 1 W.L.R. 567 (in the context of a
solicitor / client relationship)
– A61 –
A/1/231
– A62 –
A/1/232
Annex VIII: Issues 12 and 13 – Subpostmasters as Agents
Fiduciary duties of an agent
1. General principles as to the establishment of a relationship of agency are set out in Annex
VII (‘Annex VII - Issue 10 and 11: Post Office as Agent’) above.
2. Set out here, are principles that fall to be applied when addressing the questions posed by
Issues 12 and 13. Most are uncontroversial, established principles, which are set out here
for completeness and as a reference for the approach to be taken.
Scope of duty
3. The Defendant’s case is pleaded with no more specificity that a general assertion that
Subpostmasters owed fiduciary duties to the Defendant, including a duty to act in the
Defendant’s interests in relation to functions undertaken on the Defendant’s behalf.487
4. As to the nature and scope of fiduciary duties that may be owed by an agent, the
Claimants will rely upon the following.
5. Nature of fiduciary obligations: as a matter of general principle:488
5.1. a fiduciary “…is someone who has undertaken to act for or on behalf of another in a
particular matter or circumstances which give rise to a relationship of trust and
confidence.”; and
5.2. “[t]he distinguishing obligation… is the obligation of loyalty. The principal is entitled
to the single-minded loyalty of his fiduciary. This core liability has several facets. A
fiduciary must act in good faith; he must not make a profit out of his trust; he may not
act for his own benefit or the benefit of a third person without the informed consent of
his principal”.
6. The scope of any such duty is context specific: an agent may owe fiduciary obligations
in some respect of some services that it provides, but not others. The touchstone is
487 GDef at §91(1) [B3/2/41]

488 Bristol and West Building Society v Mothew [1998] Ch. 1, per Millett LJ at p.18
– A63 –
A/1/233
whether, in the commercial circumstances, single minded loyalty was owed in respect of
those services. As to this:
6.1. Nature of the relationship: the agreement of the parties or background of the
case may establish either that the relationship is not one of agency or that the
fiduciary duties have been modified from the normal standards.489
6.2. By way of illustration, a construction company providing claims-handling
and building-repair services to an insurer, may be found to owe to fiduciary
duties in respect of the latter, which are services provided to the policy holder
in respect of which no single minded loyalty is owed to the insurer nor was
the company precluded from making a profit (John Youngs Insurance Services
Ltd v Aviva Insurance Service UK Ltd [2011] EWHC 1515 (TCC), per Ramsey,
at §97 to 98).
6.3. In this case:
a. it is clear that this is far from a traditional accounting relationship in which
Subpostmasters, as agents, were to keep and render accounts.
b. Rather, the relationship involved a complex division of roles with respect to
branch accounts and significant input from the Defendant – in respect of
which the Claimants’ case is that the Defendant acted as agent (see Section B
– Issues 10 and 11: Post Office as Agent).
c. It is common ground that Subpostmasters initiate transactions on the
Defendant’s (as opposed to their own system), perform cash and stock
declarations and submit Branch Trading Statements, but the Defendant
performs (at least) the Admitted Functions and undertakes admitted
reconciliation processes to compare data with data that it itself holds or
receives from third parties. Transaction Corrections are issued when those
data did not reconcile. Subpostmasters do not perform, not do they have any
capacity to perform, those functions.
489 As to which, see in summary, Bowstead & Reynolds (21st Ed) at 6-035
– A64 –
A/1/234
Settled accounts
7. Likewise, with respect to settled accounts, the Claimants will rely upon the following.
8. As a general rule: an agent is under an obligation to keep an accurate account of all
transactions entered into on his principal’s behalf and where it contains a statement
money was received for the principal, the agent will be held to be bound by it, unless he
can show that the statement was made unintentionally or by mistake.490
9. Settled accounts: Traditionally, an account is ‘settled’ between the parties when the
principal approves the accounts, or enters them in its books or approves them in some
other way; once settled, they cannot be re-opened unless there is “a direct, distinct and
specific averment of errors to entitle the party to open the account”.491
10. It should be noted from the outset that the Claimants deny that that there is any proper
basis to hold Subpostmasters to Branch Trading Statement as ‘settled accounts’ on the
basis of traditional accounting principles for the reasons given in Section B – Issues 12 and
13: Subpostmasters as Agent, above.
11. Settled accounts may be re-opened: in certain circumstances settled accounts may in any
event be re-opened, such that the agent is not held to them as settled. These include
(a) where the accounts have been settled under undue influence, in which case, they may
be reopened from the commencement of the agency; or more generally, (b) where the
specific circumstances demonstrate that the party settling the accounts had insufficient
information at the time of doing so.492 Relevant considerations include:
490 As stated established by Shaw v Picton (1825) 4 B.&C. 715, in which Bayley J held at 729 “It is
quite clear, that if an agent (employed to receive money, and bound by his duty to his principal from time to
time to communicate to him whether the money is received or not,) renders an account from time to time
which contains a statement that the money is received, he is bound by that account unless he can shew that
that statement was made unintentionally and by mistake. If he cannot shew that, he is not at liberty
afterwards to say that the money had not been received, and never will be received, and to claim
reimbursement in respect of those sums for which he had previously given credit.”
491 Parkinson v Hanbury (1867) L.R. 2 H.L.
492 Bowstead & Reynolds on Agency (21st Ed.) at 6-098
– A65 –
A/1/235
11.1. The relative situation of the parties, and whether the balance is in favour of
one party under the peculiar circumstances affecting the case.493
11.2. The manner in which settlement took place, and if those circumstances
gave one party a commanding power or influence over the other.494
11.3. Whether the party settling the accounts had the fullest information
available to it, taking into account all of the circumstances.495
12. Approach of the Courts: it has long been established that accounts may be re-opened at
a very considerable distance in time after such settlement.496
13. As to whether, in this case, a right to reopen any account in the form of a Branch Trading
Statement is exercisable by the Defendant or Subpostmasters, the Claimants will refer to
and rely upon the complexities of the accounting process using Horizon (including the
Defendant’s admitted roles in this respect) and division of functional responsibility as
between the Defendant and Subpostmasters described above.
493 Lewes v Morgan (1817) 5 Price 42

494 Coleman v Mellersh (1850) 2 Mac. & G. 309
495 Watson v Rodwell (1879) 11 Ch.D. 150
496 Lewes v Morgan (1817) 5 Price 42 - case involving more complex agency arrangements
– A66 –
A/1/236
Annex IX: Issues 17 to 18 – True Agreement
‘True Agreement’ – general principles
1. The Claimants rely upon the principles established in Autoclenz v Belcher [2011] UKSC
41 (“Autoclenz”) as to the requirement for the Court to find the “true agreement”.
2. Autoclenz principles apply with respect to the terms of the SPMC and NTC, on the
grounds that “the written terms do not accurately reflect the true agreement of the parties”497 and
not on the historically established basis of mistake as justifying rectification where there
was an outwardly manifested continuing common intention to agree another term
– a distinct principle upon which Autoclenz did not intrude.498
3. The question to be addressed: in cases of contracts concerning work or services, where it
is alleged that the written contract terms do not accurately reflect the true agreement of
the parties, there may be various reasons why, but the question to be addressed is: what
contractual terms did the parties actually agree?499
4. Evidence relevant: Both in Autoclenz itself and in subsequent cases, the Court has had
regard to events subsequent to the date when the contract was made, in determining the
true agreement. The EAT (Langstaff J) took this approach in Dynasystems for Trade and
General Consulting Ltd & Ors v Moseley [2018] UKEAT 0091/17/2501 (25 January 2018).
At [36] he held as follows:
“The reality is that it must always be the case that actions after an agreement has been
made may help as evidence, not as being conclusive but as evidence, of the nature of
that agreement. After all, if the parties to an agreement have indeed agreed X but they
behave as if they have agreed Y, that would be surprising. If, however, they have agreed
Y it is entirely to be expected. To behave as if they have agreed Y is therefore some
evidence that they have indeed done so. It is not conclusive, and of course in many
cases there may be contractual terms which are simply never acted upon because the
occasion for doing so never arises. In such cases it would be futile, as many authorities
show, to suggest that they are not still terms of the contract
497 Aikens LJ [2010] IRLR 70, as approved by Lord Clarke in Autoclenz at §20
498 Chartbrook Ltd v Persimmon Homes Ltd [2009] AC 1101, per Lord Hoffman at §48–66
499 Autoclenz, per Lord Clarke, at §21, citing with approval the judgment of Aikens LJ in the Court
of Appeal below, at §88-89
– A67 –
A/1/237
merely because they have not been put into operation. However, though the weight of
it must be examined with care, it can be evidence as to what was in fact agreed to look
to see if the parties had behaved as if that were the case, particularly immediately after
the date of initial agreement, but following on from that as well, and equally so where
there is an unbroken series of events telling overall the same tale.”
5. Approach: for the purposes of determining the true agreement, Lord Clarke JSC (with
whom Lord Hope, Lord Walker, Lord Wilson and Lord Collins JJSC agreed) held at §35
that the Court is to have regard to the relationship in question, particularly:
5.1. Relative bargaining power: the relative bargaining power of the parties must
be taken into account;
5.2. True agreement to be gleaned the circumstances: “[w]hether the written terms
of any written agreement in truth represent what was agreed and the true agreement
will often have to be gleaned from all the circumstances of the case, of which the
written agreement is only a part”;
5.3. Purposive approach: this was described as a purposive approach.
6. Relevant considerations: the Supreme Court in Autoclenz relied upon findings made in
the Courts below in support of its conclusion that the claimants were employees rather
than sub-contractors.500 These are instructive as to the relevant considerations: 501
6.1. the presence of “elaborate protestations” in the contractual documents that the
claimants were self-employed, found to be unusual in themselves and, when
examined, bore no practical relation to the reality of the relationship;
6.2. that (in contradistinction) the contracts began by spelling out that each worker
was required to ‘perform the services which he agrees to carry out…
500 On the facts, the Claimants were 20 individuals who had been engaged by Autoclenz as car
valeters, but alleged worker status under the National Minimum Wage Regulations 1999 reg.2(1)
and the Working Time Regulations 1998 reg.2(1); the terms of their contracts, however, described
them as sub-contractors responsible for paying their own tax and NI, entitled them to provide a
substitute to carry out work, and stated they were not obliged to work and that Autoclenz did not
undertake to provide work
501 Autoclenz, §36 to §37
– A68 –
A/1/238
within a reasonable time and in a good and workmanlike manner’, an obligation
found to be entirely consistent with employment;
6.3. the claimants had no control over the way in which they worked: “[t]hey have
no real control over the hours that they work, save and except that they can leave when
their share of the work on site has been completed. They do not have any real economic
interest in the way in which the work is organised, other than the fact that the more
work they do the more they earn. They cannot source materials for themselves” and
were subject to Autoclenz’s direction and control;
6.4. the claimants had no say in the terms upon which they perform work, the
contracts which are placed before them are devised entirely by Autoclenz and
the services they provided were subject to a detailed specification; and
6.5. the claimants were required to provide personal service under their
agreements, notwithstanding substitution clause later introduced.
The employment relationship
7. In Autoclenz, the question for determination was the anterior question of whether the
contracts gave rise to self-employment, as the terms purported to suggest, or the true
agreement was something else (in that case an agreement consistent with employment).
8. In the present case, the Claimants rely upon the relational imbalance between the parties,
which loomed large in the decision in Autoclenz. Indeed, the relationships in issue are
similar in a number of respects:
8.1. while, like the contracts in Autoclenz, the SPMC and NTC expressly
disclaimed an employment relationship, they nonetheless reflected similar
relational imbalances, and similarly high degrees of discretion and control;502
502 GPOC at §9, §45, §50 and §69 [B3/1/2] [B3/1/15-16] [B3/1/17] [B3/1/39]
– A69 –
A/1/239
8.2. in practice, Subpostmasters were generally required to agree how many hours
of personal service they would provide; and the Defendant required, for
example, notification in relation to the provision of any substitute, evidence of
incapacity for work;
8.3. provision was made in the SPMC for holiday substitution allowance;
8.4. the contractual provisions and the nature of the legal relationship
substantially reflected many of the features of an employment relationship.503
9. In all the circumstances, the principles set out by Lord Clarks JSC in Autoclenz are general
principles of particular application to relationships with these indicia. The plainly allow
this Court to ask and answer the question: what was the true agreement as to termination?
10. The Claimants submit that the true agreement was as set out above.
503 GPOC at §45
– A70 –
A/1/240
Annex X: Issues 22 and 23 – Assistants
Rights of Third Parties Act
Section 1
1. Section 1 of the Contracts (Rights of Third Parties) Act 1999 (the “1999 Act”) provides:
1. Right of third party to enforce contractual term
(1) Subject to the provisions of this Act, a person who is not a party to a contract (a “third party”)
may in his own right enforce a term of the contract if—
(a) the contract expressly provides that he may, or
(b) subject to subsection (2), the term purports to confer a benefit on him.
(2) Subsection (1)(b) does not apply if on a proper construction of the contract it appears that
the parties did not intend the term to be enforceable by the third party.
(3) The third party must be expressly identified in the contract by name, as a member of a class
or as answering a particular description but need not be in existence when the contract is entered
into.
(4) This section does not confer a right on a third party to enforce a term of a contract otherwise
than subject to and in accordance with any other relevant terms of the contract.
(5) For the purpose of exercising his right to enforce a term of the contract, there shall be
available to the third party any remedy that would have been available to him in an action for
breach of contract if he had been a party to the contract (and the rules relating to damages,
injunctions, specific performance and other relief shall apply accordingly).
(6) Where a term of a contract excludes or limits liability in relation to any matter references in
this Act to the third party enforcing the term shall be construed as references to his availing
himself of the exclusion or limitation.
(7) …
2. The following principles and observations pertain to its application to Issues 22 and 23
and may be of assistance to the Court.
Term purporting to confer a benefit
3. Section 1(1)(b) allows a third party to enforce a term of the contract:
3.1. if “the term purports to confer a benefit on him”, but
– A71 –
A/1/241
3.2. his right to do so in such a case is subject to section 1(2): he has no such right
“if on a proper construction of the contract it appears that [the contracting parties]
did not intend the term to be enforceable by” the third party.
4. Meaning of benefit: it is generally accepted that “benefit” can include any performance
due under the contract; thus it can include a payment of money, a transfer of property, or
the rendering of a service.504
5. Purport to confer: the requirement that the term must “purport” to confer a benefit “…is
satisfied if on a true construction of the term in question its sense has the effect of conferring a
benefit on the third party in question. There is within s.1(1)(b) no requirement that the benefit on
the third party shall be the predominant purpose or intent behind the term”.505
6. Purpose of the term: there is no requirement for the benefit to be a predominant purpose
or intent behind the term, but it must be a purpose, i.e. it is not enough simply to show
that a third party would happen to benefit from it or their position improved by its
performance.506
Burden of proof as to parties’ intention
7. Question of construction: if a term purports to confer such a benefit, it is then necessary
to construe the contract as a whole to determine the nature and extent of the third party’s
right to enforce the term. This follows from section 1(4). The question of whether the
parties intended to confer a benefit is one of construction.507
504 Chitty on Contracts (32nd Ed) point out at 18-093

505 Prudential Assurance Co Ltd v Ayres [2007] EWHC 775 (Ch), [2007] 3 All E.R. 946 at §28,
reversed ([2008] EWCA Civ 52, [2008] 1 All E.R. 1266) on the different ground that the contract, on
its true construction, purported, not to benefit the third party, but to restrict the third party’s rights
506 Dolphin Maritime and Aviation Services Ltd v Sveriges Angfartygs Forening [2009] EWHC 716
(Comm) at §74: “[a] contract does not purport to confer a benefit on a third party simply because the position
of the third party will be improved if the contract is performed”
507 Nisshin Shipping Co Ltd v Cleaves & Co Ltd [2003] EWHC 2602
– A72 –
A/1/242
8. What has to be shown is that “the parties” did not intend the term to be enforceable by the
third party, so it is insufficient for one party to show he did not intend that.508
9. Burden on contracting party: the burden of proof (under s.1(2)) is on the contracting
party, not the third party: if the third party can demonstrate that a term did purport to
confer a benefit on him under section 1(1)(b), then there is a rebuttable presumption that
the term was intended by the contracting parties to be enforceable by the third party.509
Identified by name, as a member of a class or as answering to a particular description
10. Section 1(4) of the 1999 Act further requires that the third party be “expressly identified in
the contract by name, as a member of a class or as answering a particular description but need not
be in existence when the contract is entered into”.
11. In this, by use of the word “express”, the 1999 Act does not allow a process of construction
or implication to identify a party not referred to at all (Avraamides v Colwill [2006]
EWCA Civ 1533, Waller LJ).510 However, the Assistants are repeatedly referred to and
defined in the relevant agreements.
508 As observed by the editors of Chitty on Contracts (32nd Ed) at 18-094

509 See, e.g., The Laemthong Glory [2005] EWCA Civ 519
510 Avraamides v Colwill, §19. The difficulty in that case was that the relevant term did not identify
any third party or class of third parties
– A73 –
A/1/243
THE POST OFFICE GROUP LITIGATION
Claim No. HQ16X01238, HQ17X02637 & HQ17X04248
IN THE HIGH COURT OF JUSTICE
QUEEN’S BENCH DIVISION

Before The Hon. Mr Justice Fraser
B E T W E E N:-
ALAN BATES & OTHERS

Claimants
– and –
POST OFFICE LIMITED

Defendant
CLAIMANTS’ OPENING SUBMISSIONS
FOR THE TRIAL OF THE COMMON ISSUES
PATRICK GREEN QC
KATHLEEN DONNELLY
HENRY WARWICK
OGNJEN MILETIC
REANNE MACKENZIE
Henderson Chambers
2 Harcourt Buildings
Temple
London EC4Y 9DB
Freeths LLP
Floor 3, 100 Wellington Street
Leeds LS1 4LT
DX: 310016, Leeds Park Square
Telephone: 0845 077 9570
Solicitors for the Claimants
A/1/244

Bates V Post Office: Opening Submissions - Bates and Others

Hochgeladen von

Dokumentinformationen

Originaltitel

Copyright

Verfügbare Formate

Dieses Dokument teilen

Dokument teilen oder einbetten

Freigabeoptionen

Stufen Sie dieses Dokument als nützlich ein?

Sind diese Inhalte unangemessen?

Copyright:

Verfügbare Formate

Bates V Post Office: Opening Submissions - Bates and Others

Hochgeladen von

Copyright:

Verfügbare Formate

THE POST OFFICE GROUP LITIGATION

Claim No. HQ16X01238, HQ17X02637 & HQ17X04248

IN THE HIGH COURT OF JUSTICE

QUEEN’S BENCH DIVISION

ALAN BATES & OTHERS

POST OFFICE LIMITED

CLAIMANTS’ WRITTEN OPENING

Abbreviations & terminology

The following abbreviations are used:-

Generic pleadings: Particulars of Claim “GPOC”; Defence “GDef”; Reply “GReply”

Individual pleadings: Particulars of Claim “IPOC”; Defences “IDef”; Replies “IReply”

References to Subpostmasters include all operators

References to Subpostmaster contracts are to the SPMC and NTC

References are generally as follows:-

Electronic trial bundle: in square brackets, in the format [Bundle/Tab/Page]

Witness statements: Surname, §para, e.g. Bates, §5

Individual pleadings: Surname/Pleading/ Paragraph number e.g. Bates/IPOC at §14

Suggested Pre-Reading and a table of Contents are set out below.

(2) Defendant’s Written Opening [A/2]

(3) Generic Pleadings:

Amended Generic Particulars of Claim [B3/1]

Generic Defence [B3/2]

Generic Reply [B3/3]

(4) Individual Pleadings (for some or all six Lead Claimants):

Individual Particulars of Claim [B5.1/2] [B5.2/2] etc

Individual Defences [B5.1/3] [B5.2/3] etc

Individual Replies [B5.1/4] [B5.2/4] etc

(5) Claimant’s witness statements (in chronological order):

Alan Bates [C1/1]

Pamela Stubbs [C1/2]

Mohammad Sabir [C1/3]

Naushad Abdulla [C1/4]

Elizabeth Stockdale [C1/6]

Louise Dar [C1/5]

(6) Defendant’s witness statements: [C2/1] - [C2/14]

(7) Contract Documents:

Standard SPMC 1994 and 2006 versions [D2.1/3] and [D2.1/6]

NTC (Preface and Conditions) [D1.6/4/3-34] and [D1.6/3/1]

Preliminary Observations ............................................................................................................. 1

Experience Prior to Contracting ................................................................................................. 19

SECTION B: COMMON ISSUES .....................................................................................................39

Issue 1: Relational Contract ....................................................................................................... 39

SECTION C: CONCLUSION .........................................................................................................165

Annex I: Contractual Construction ...................................................................................................1

Annex II: Issue 1 – Relational Contract ............................................................................................7

Annex III: Issues 2 and 3 – Implied Terms .....................................................................................23

Annex IV: Issue 4 – Supply of Goods and Services Act ...............................................................33

Annex V: Issues 5 and 6 – Onerous and Unusual Terms .............................................................37

Annex VI: Issue 7 – Unfair Contract Terms ....................................................................................45

Annex VII: Issues 10 and 11 – Post Office as Agent......................................................................55

Annex VIII: Issues 12 and 13 – Subpostmasters as Agents ..........................................................63

Annex IX: Issues 17 to 18 – True Agreement .................................................................................67

Annex X: Issues 22 and 23 – Assistants ..........................................................................................71

Claimants would respectfully make the following preliminary observations:

in the various documents governing the relationship between the parties as at

any particular date, or to do so with confidence and precision.

primary sources of the parties’ respective contractual obligations. Their

provisions fall to be construed in the context of the contract as a whole,

including all contractually binding obligations incorporated therein.

(3) Construction of Express Terms: Issues as to the proper construction of the

Alleged Losses; and (b) Suspension, Termination, Compensation for Loss of

Office and Subsequent Appointments.

or potentially having contractual effect (see: Contracts, on p.10), both parties