In Part 1 of this short series I quoted at length from a letter written to the Post Office Horizon IT Inquiry on 9 Jan 2024, by the barrister Paul Marshall. That blog post covered Mr Marshall’s concerns about Subpostmaster claimants in the Bates v Post Office High Court litigation with overturned criminal convictions.

The following blog post quotes from the same letter. In this instance Marshall is concerned with what he describes as the “complete absence of any principled approach to interim payments”.

It is another lengthy extract, but it makes clear an invidious and unfair situation. The only Subpostmasters with access to any guaranteed interim compensation are those who have had their convictions quashed. They are given £163,000. For everyone else (those in the Horizon Shortfall Scheme (HSS) or the Group Litigation Order (GLO) scheme – the vast majority of claimants) there is no policy of providing guaranteed interim payments.

Mr Marshall writes:

“I read with surprise and dismay the Department for Business and Trade [DBT] response to the Horizon Compensation Advisory Board 9th Meeting (29th November 2023) in connection with item 8 – GLO Scheme: “The availability of interim payments”. The DBT response that is recorded is that “The Department explained that it was willing to make interim payments based on partial claims where postmasters had an urgent need for them.” (The meaning of the expression “based on partial claims” is not entirely clear.)

In this, as in other respects and across different compensation schemes, the compensation arrangements are out-of-step with the requirements of justice and fairness as these are provided for, for example, by statute under the Civil Procedure Rules. The arrangements for interim payment of damages, first introduced under the Administration of Justice Act 1969, were for the explicit purpose of mitigating the hardship caused to claimants making well- founded personal injury claims by the long delays in receiving payment. From 1980 the arrangements were extended to all claims where liability was not in issue. The position under the DBT GLO scheme (and also “Overturned Convictions” scheme) is analogous to a civil claim where liability is not in issue, and the only question is one of quantum – how much must be paid to satisfy the claim(s) of the individual concerned for the injury and loss that they can show that they sustained as a result of the wrongful act(s)?

The legal principles in this regard are well settled and you will not consider it any discourtesy to remind you of them. The relevant test for a court to have jurisdiction to make an interim payment is set out in the Civil Procedure Rules at rule 25.7(1)(c). That provides that the court must be satisfied that “if the claim went to trial, the claimant would obtain judgment for a substantial amount of money (other than costs) against the defendant…”.

Formally, of course, the DBT ‘GLO’ compensation scheme is ex gratia, but the compensatory principle (namely, to put a person in the position that they would have been but for the Post Office’s actions/wrongdoing) has been clearly expressed/restated in your Inquiry. There is no reason, as a matter of principle, why a claimant for compensation should not be treated analogically to a claimant in litigation and every reason why they should be, given that the ‘compensatory principle’ is essentially identical/materially indistinguishable.

CPR rule 25.7(4) provides that the court must not order an interim payment of more than a reasonable proportion of the likely amount of the final judgment. CPR rule 25.6(2) confirms that a claimant may make more than one application for an interim payment.

Once the gateway criteria for making an interim payment are satisfied, the court should make an order for an interim payment unless there is specific reason not to do so: Test Claimants in FII Group Litigation v Revenue & Customs Commissioners (No2) [2012] EWCA Civ 57.

The important point is that the default position is that, subject to satisfying the gateway criteria under CPR 25.7(1)(a)-(c), a person claiming damages is in principle entitled as of right to receive an interim payment. The grounds for the paying party objecting to an interim payment under the rules are narrow and limited. Among these there is no basis for a court not to make an interim payment order because a claimant has not demonstrated their need – let alone urgent need – for such payment. Importantly in this regard, in Stringman v. McArdle [1994] 1 WLR 1653 the court confirmed that need is not a requirement for an interim payment, nor, for the same reason, for a further interim payment to a payment already made.

The purpose of the interim payment arrangements is to facilitate justice and to mitigate the unfairness of a claimant entitled to substantial compensation being kept out of their money simply because of the time that it frequently takes to fully evaluate an individual’s loss – delay occasioned simply by the mechanics of the evaluation and quantification and by the payment process.

The interim payment principle has particular importance and obvious application in circumstances where Post Office victims have suffered financial loss and injury over a very long period of time, extending indeed to the roll-out of Horizon in 1999.

In Eeles v. Cobham Hire Services Ltd [2010] 1 WLR 409, the Court of Appeal said that a reasonable proportion “may well be a high proportion, provided that the assessment has been conservative. The objective is not to keep the claimant out of his money but to avoid any risk of overpayment.” (Risk of overpayment is thus the principal constraint.)

In TTT v. Kingston Hospital NHS Trust [2011] EWHC 3917 the court held that a reasonable proportion meant not more than 90% on a conservative estimate of the amount that the claimant was likely to be awarded at trial as a capital sum.

So in the DBT’s response to the Compensation Advisory Board, that it was willing to make interim payments where there was “urgent need” demonstrated – and (seemingly) not otherwise, DBT parts company with legal principles of justice and fairness as these are given statutory effect under the rules of court.

It appears unprincipled, and requiring justification, for DBT to withhold compensation otherwise payable, in the absence of demonstrated “urgent need”. Introducing such a test suggests unfairness and a denial of justice, where the interim payments regime under the rules of court are explicitly aimed at facilitating those ends and thus reflect and give effect to general legal principle.

This is not merely an issue of desirability, it has a substantive aspect; a person who is required to formulate and establish the full scope and detail of their claim before any payment is made, is placed under pressure and is put in an impaired bargaining position – and, further, is kept out of money to which they are otherwise entitled (disregarding the point that the GLO scheme is ex gratia – that for this purpose is irrelevant). The reasons are perhaps too obvious to require elaboration. The effect is, that it encourages DBT, and, indeed, the Post Office in the other compensation arrangements, to make low opening offers. The resulting situation may readily result in unfairness because it exploits the consequences of delay and ‘litigation fatigue’.

I shall give two concrete examples of how the unavailability of proper arrangements for interim payments works injustice (in both the Overturned Convictions and GLO schemes).

Tracy Felstead was maliciously prosecuted by the Post Office in 2002 and was wrongfully convicted of theft. She was imprisoned aged 19. Her entire adult life, including most obviously her employment prospects, has been blighted by the consequences of wrongful conviction for theft. As a result of her deeply traumatic experience of prison, she suffers from severe PTSD and depression. Her conviction for theft was quashed in April 2021. The Post Office has been willing in June 2023 to make payment of a substantial proportion of her claim for general damages, as submitted with a full medical consultant’s report in January 2023. Despite an application having been made for Ms Felstead’s loss of earnings – limited to the period of the subsistence of her conviction between 2002-2021 (and thus disregarding any future losses) the Post Office has to date declined to make any interim payment on account of special/liquidated damages, despite the request for an interim payment being supported by an accountant’s letter and evaluation.

You will understand that the evaluation of special damages over a long period that has passed, regardless of the calculation of future losses, is a complex task of reconstruction, not least because of the general paucity of documents, but also because of the length of time that has elapsed. I have in recent months decided that it is strongly in the interests of my clients to engage the services of the specialist employment experts Keith Carter & Associates. Mr Carter is a very experienced employment specialist who recently has been engaged in assisting Sir Brian Langstaff, to whose inquiry (Infected Blood) he has given both written and oral evidence. The purpose of obtaining Mr Carter’s assistance is to reconstruct what Tracy Felstead’s employment profile would have looked like, but for the catastrophe that befell her in her wrongful prosecution and imprisonment in 2002.

To my mind it is profoundly unsatisfactory, and it might be said inexcusable, that there is no formal structured arrangement for the payment of interim payments where, as is almost too obvious to state, the subsistence of a criminal conviction for dishonesty over many years has operated to blight an individual’s employment prospects and earnings. In Ms Felstead’s case it is now 22 years since she was convicted.

The Post Office has made an interim payment in a substantial sum to one of my clients, but only in circumstances where they were faced with imminent eviction from their modest rented home – and where I infer the Post Office would not have welcomed the attention that that eventuality would have attracted from the media. The point is therefore that interim payments can be made, the Post Office and DBT are simply unwilling to make them in the absence of a demonstrated urgent requirement. Not doing so enhances the offeror’s (DBT’s/Post Office’s) negotiating position in making offers.

Mrs Nichola Arch was one of the first victims of the Post Office to give evidence to your Inquiry. She was suspended and dismissed from her employment as manager of Chalford Hill Post Office, Chalford, Stroud in October 2000. Most unusually, she was acquitted after a trial in the Bristol Crown Court in April 2002. Between those dates she lost her reputation and standing in her community and became the subject of vilification. Her experience almost drove her to suicide. Although having previously been a teacher and having tertiary education, she obtained work as a local authority care assistant. She had aspired to own her own post office and to run more than one branch in her locality. She suffers from morbidity, depression and serious PTSD and she recently underwent surgery connected with her long-term illness. She retired on grounds of ill-health. Her claim for general damages was submitted in the DBT “GLO” scheme at the beginning of July 2023. Her claim for special damages together with an accountants report was submitted in October 2023. No offer, whether interim or otherwise, has been made. Indeed no substantive response has been received. Mrs Arch’s circumstances are rendered particularly complicated because she not only lost property as a result of the Post Office’s actions in wrongfully prosecuting her, she was also subject to an IVA.

Mrs Arch has recently engaged Keith Carter & Associates to model her employment profile, but for the disaster of her criminal prosecution between 2000-2002 and its consequences for her health and upon her working life. Addleshaw Goddard on behalf of DBT have declined to agree to that course (which DBT requires approval for), as I understand it on the basis that other claimants in the GLO scheme have not sought to rely on similar evidence.

If I was to be discourteous, one wonders how the counterfactual of what Mrs Arch’s employment history might have looked like from 2000, without such expert assistance; is one to simply guess? In any event, my considered opinion is that such evidence is required to evaluate the true extent of her liquidated claims. It may take some time for that evidence to be finalised.

Next year it will be 25 years from the date that Mrs Arch’s hopes for a career as a postmistress were dashed by her malicious prosecution by the Post Office. She never recovered from her experience. It is profoundly unsatisfactory that as recently as November 2023, the position of the Department for Business and Trade was that it would make interim payments only in cases of “urgent need”. As I have suggested previously, withholding an interim payment, that on any view must be substantial, constitutes a denial of justice and is manifestly unfair, it is also contrary to ordinary legal principle as given effect in the CPR. Accordingly not facilitating interim payment is unjustifiable.

There is a compelling case to be made that every person wrongfully prosecuted by the Post Office should be presumed to be entitled to £600,000 as an interim award. That may satisfy the claims for compensation of some claimants, it will be insufficient for many (perhaps most) others, but it would be a step in the right direction.”

Since Mr Marshall wrote his letter, Alan Bates, the founder of the Justice for Subpostmasters Alliance has received his offer of compensation from the government, twenty one years after he was sacked. The offer is a sixth of what he asked for when he submitted his claim at the beginning of October. Bates called the offer “cruel” and “derisory”. I spoke to another Subpostmaster yesterday in the same (GLO) scheme as Alan Bates. They too have received an offer of around a sixth of the seven-figure sum they were asking for. Many of the campaigning Subpostmasters seem to have lost faith in the government’s ability to do the right thing. Judging by Paul Marshall’s letter, I’m not surprised.

Read Part 1 of What’s really going on with the Subpostmaster compensation schemes here.

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