Recommendation 15

HM Government · verbatim extract Acknowledged

The Government recognises the importance of ensuring that postmasters are compensated for consequential losses. The Post Office has been clear from the start of the Scheme that consequential losses would be covered under the Historical Shortfall Scheme. In establishing the Historical Shortfall Scheme, an initial round of test cases was used as the basis for the creation of the Case Assessment Principles. These principles were approved by the Independent Advisory Panel and by BEIS’ Steering Committee and set out the underlying legal principles which will be applied to claims within the Historical Shortfall Scheme to ensure consistency of approach. The ‘Consequential Loss Principles and Guidance’ document, published on the Historical Shortfall Scheme website, sets out the main principles and the process that is being followed in the case of a consequential loss claim.15 The Historical Shortfall Scheme application form asks applicants to identify any shortfall losses as well as any consequential losses caused by a Horizon shortfall. In this instance, a consequential loss is defined as a “financial or non-financial loss that is not a Shortfall Loss”. Types of consequential loss may include 15 httpsn//www.onepostoffice.co.uk/media/47793/historicalshortfallscheme_ consequentiallossprinciplesandguidance.pdf but are not limited to: loss of earnings; loss of profits; loss of property; loss of opportunity/ loss of chance; penalties/general or increased costs of financing; bankruptcies/insolvency; legal and professional fees; stigma/damage to reputation; personal injury/harassment. Consequential loss claims are assessed by Herbert Smith Freehills and put to the Panel to consider against the legal principles to determine whether, on a balance of probabilities, the loss can be attributed to a Horizon shortfall. This assessment takes into consideration the following legal principles; however, this list is not exhaustive and may depend on the individual circumstances of the claim: Causation – Whether the Horizon shortfall caused the consequential loss Remoteness – Whether the consequential loss was reasonably foreseeable at the time of the Horizon shortfall. Mitigation – Once causation is established, the extent to which the consequential loss was or could reasonably have been mitigated by the postmaster. Quantum – The object of the assessment will be, so far as the award of a sum of money can do so, to put the postmaster into the position that the postmaster would have been in but for the Horizon shortfall. Sufficient evidence may be required to prove a consequential loss claim, particularly in situations where a claim for consequential loss refers to a situation that is only known to the postmaster. The Independent Advisory Panel is, however, well aware of the issues around lack of evidence and lapse of time since claimants may have suffered a consequential loss, and as a result they have a degree of discretion to award ‘fair offers’ based on the facts of each case. The principles will be updated as necessary in the light of Panel decisions on individual cases and wider consideration on the handling of appropriate losses. Indicative examples: Claimant A included claims for shortfalls, loss of remuneration and increased insurance costs. Following assessment by the Independent Advisory Panel, the offer made by the Post Office included losses for all of the claimed areas as well as for compensation connected to dismissed employees, for distress and for compound interest. Claimant B included claims for shortfalls, loss of retail profit and time spent on shortfalls. Following assessment by the Independent Advisory Panel, the offer made by the Post Office included losses for all of the claimed areas as well as compound interest. Recommendation 11: We recommend that the Government in consultation with POL set out the reasons for involving POL in assessing claims, how this was discussed with stakeholders and how they dealt with any concerns stakeholders may have raised regarding POL’s involvement. We also recommend that POL set out what steps have been taken to ensure independence, including how robust challenge is achieved and the numbers of initial recommendations rejected or amended by the Independent Panel. We further recommend that Government explains how BEIS and UKGI are providing oversight of the Scheme with practical examples of how, if at all, it has intervened to ensure independence.