Financial and Other Redress

a. Introduction

¶4.1. Until 3 June 2025 there were four schemes in being under which claimants could seek financial redress as a consequence of being affected by Horizon.²⁶²⁶ As a matter of fact, there are seven schemes in being under which postmasters can claim financial redress for losses. However, the four schemes identified in this paragraph and considered in this volume of my Report are those which allow postmasters to claim for losses specifically caused by Horizon and/or the use of data from Horizon. The other three schemes are the Suspension Remuneration Review, the Post Office Process Review and the Stamp Compensation Scheme which are not necessarily related to losses caused by Horizon.Show full note They were (i) the Horizon Shortfall Scheme ("HSS"); (ii) a process/scheme under which redress is provided to those persons whose Horizon-related convictions have been quashed by the courts known as the Overturned Convictions Scheme ("OCS"); (iii) a scheme to provide additional financial redress for the claimants in the Group Litigation, known as the Group Litigation Order Scheme ("GLOS"); and, (iv) a scheme to provide financial redress for those whose convictions have been quashed under the provisions of the Post Office (Horizon System) Offences Act 2024 and the Post Office (Horizon System Offences (Scotland)) Act 2024, known as the Horizon Conviction Redress Scheme ("HCRS").²⁷²⁷ Over time, OCS has morphed into a remediation scheme. The process/scheme has been described variously. I use the word "scheme" throughout this volume of my Report even though, more accurately at given moments in time, the word "process" should be used. In the Interim Report this scheme was known as the Overturned Historic Convictions Scheme but the word Historic is no longer used in connection with the scheme.Show full note Each of these schemes came into existence at different times and they are aimed at different groups of people who have been adversely affected by Horizon and its use by the Post Office.

¶4.2. As from 3 June 2025 OCS and HCRS have been merged. Accordingly, although much of this section is concerned with the schemes as they existed prior to 3 June 2025, I have also considered the merged scheme to the extent that is possible at the time of writing.

¶4.3. The first scheme to come into existence was HSS (at inception known as the "Historical Shortfall Scheme" as opposed to the "Horizon Shortfall Scheme"). The roots of this scheme are to be found in the Settlement Deed which signalled the end of the Group Litigation.²⁸²⁸ [POL00006304] at [7/9.4] to [7/9.5] and Schedule 6 at [46]. The parties to the litigation recognised that there were postmasters and former postmasters who were not claimants in the litigation but who had been held liable by the Post Office for losses (usually referred to as shortfalls) in branch accounts which were illusory, not real. The object of HSS was and always has been, to reimburse such postmasters for the sums they were forced or volunteered (no doubt very reluctantly) to pay to the Post Office in respect of such shortfalls and further, to compensate them for any consequential losses which they had suffered, and/or which they continue to suffer. This scheme was launched in May 2020.

¶4.4. The Settlement Deed also anticipated that those of the claimants who had been convicted of offences in criminal proceedings in which data from Horizon formed part of the case of the prosecution might, in due course, have their convictions quashed. Accordingly, it contained provisions whereby those convicted claimants would have the right to bring claims for malicious prosecution in the event that their convictions were quashed.²⁹²⁹ Ibid.

¶4.5. On 11 December 2020, the Crown Court at Southwark quashed the convictions of six persons who had been prosecuted for and convicted of offences of dishonesty before Magistrates Courts in England. On 23 April 2021, the Court of Appeal (Criminal Division) quashed the convictions of 39 persons who had been convicted of offences of dishonesty as a consequence of prosecutions brought against them by the Post Office in Crown Courts throughout England and Wales. The convictions of all these people were dependent upon data produced by Horizon.³⁰³⁰ See Hamilton and others v Post Office Limited [2021] EWCA Crim 577. On 22 July 2021, the Minister made an announcement to Parliament, indicating that the government would fund interim compensation of up to £100,000 for each postmaster whose Horizon-related convictions were overturned.³¹³¹ [RLIT0000625] at [3]. This announcement was the beginning of the scheme (OCS) by which convicted postmasters (and other convicted users of Horizon) could obtain financial redress.

¶4.6. In all relevant respects (other than to preserve claims for malicious prosecution in defined circumstances) the settlement of the Group Litigation was expressed to be in full and final satisfaction of all claims and counterclaims brought by the parties. On the face of it, therefore, the ending of the Group Litigation brought an end to the claims for financial redress to which those claimants who had no claim for malicious prosecution were entitled. However, it soon became apparent that those claimants' share of the settlement sum payable by the Post Office under the Deed of Settlement was far less than was necessary to provide them with appropriate compensatory payments. Indeed, almost immediately following the settlement, it was recognised that the amounts received by individual Claimants were but a fraction of the losses which they had sustained. Accordingly, JFSA as an organisation, Sir Alan Bates and other members of JFSA began a campaign to seek to persuade Ministers and/or the Post Office that further compensation should be payable to the claimants in the Group Litigation who had no claims for malicious prosecution. This campaign gathered pace after the announcement and launch of HSS.

¶4.7. The campaign succeeded. On 22 March 2022, the Minister announced that "the Chancellor will make additional funding available to give those in the GLO Group compensation similar to that which is available to their non-GLO peers".³²³² [RLIT0000618] at [1]. GLOS was on its way although it was a further year before the scheme was actually launched and claimants under the scheme were able to submit claims to those administering it.

¶4.8. Following the success of Ms Josephine Hamilton and others in the Court of Appeal, a number of persons who had been convicted of offences of dishonesty in prosecutions brought against them by the Post Office appealed against their convictions. Most of the appeals were considered by the Court of Appeal (Criminal Division) and a much smaller number were heard at the Southwark Crown Court on appeal from various Magistrates' Courts. A very significant number of the appeals were successful. However, the number of persons bringing appeals before the courts was a small proportion (comparatively) of the number of persons who had been convicted of offences of dishonesty following the introduction of Horizon. This state of affairs prompted some to call for the exoneration by Act of Parliament of all persons who had been convicted of offences of dishonesty in reliance upon data generated by Horizon. The calls for such exoneration grew ever louder and more frequent following the showing of the television drama Mr Bates vs The Post Office. On 24 May 2024, the Post Office (Horizon System) Offences Act 2024 came into force in England, Wales and Northern Ireland. Shortly thereafter, the Post Office (Horizon System (Scotland)) Offences Act 2024 became the law in Scotland. The effect of this legislation is that the convictions of hundreds of persons have been quashed. On 30 July 2024, HCRS was launched in order to provide an appropriate process by which persons whose convictions had been quashed by legislation could obtain financial redress.

¶4.9. My Terms of Reference are silent about schemes for delivering financial redress, save for the obligation imposed upon me to assess whether HSS has been properly delivered. That is hardly surprising, since when the Terms of Reference were finalised, HSS was the only scheme in existence. Nonetheless, I have always interpreted my Terms of Reference as permitting me to assess whether all schemes for providing financial redress to those who have suffered losses by reason of Horizon are being and have been properly delivered. No one has objected to that interpretation. Indeed, I have been actively encouraged by all Core Participants, including the Post Office and the Department, to involve myself in assessing each of the financial redress schemes which have come into existence and identified above.

¶4.10. I stress however, as I have done from time to time throughout the Inquiry, that it is not open to me to make my own assessment of the value of individual claims as presented to the administrators of the four schemes. My task is to make an assessment about whether the schemes are fit for the purpose for which they were brought into existence and whether they have been administered and delivered in accordance with commitments made about them by Ministers, the Department and the Post Office.

The governance of the financial redress schemes

¶4.11. From the time of its launch to the present time, the Post Office has administered and delivered HSS. It administered and delivered OCS from its launch to 3 June 2025. Throughout these periods, it has been assisted by Herbert Smith Freehills LLP ("HSF").³³³³ I understand that on 1 June 2025 HSF merged with Kramer Levin Naftalis & Frankel LLP, a law firm based in the United States of America. Notwithstanding this merger, it is convenient to continue to use the acronym HSF in my Report. Prior to the launch of HSS and OCS, HSF advised upon the nature of each scheme. Following their launch HSF helped to administer the schemes and advised upon offers to be made in respect of claims made thereunder. This administrative and advisory role continues.³⁴³⁴ I understand that the Post Office appointed Pinsent Mason LLP to replace HSF in 2024, but that they are still providing their services to the Post Office under a "Transitional Contract". I presume that HSF will cease to have any role in OCS on or before 3 June 2025 – see paragraph 4.13 above.

¶4.12. The Post Office does not fund the payments made to claimants in each scheme; it is incapable of generating sufficient funds to do so.³⁵³⁵ The operational costs of the scheme are also provided by the Department although the Post Office has contributed to those costs from its own reserves. Accordingly, it has been the Department (authorised and itself funded by His Majesty's Treasury "HM Treasury") which has funded the payments which have been made to claimants. Further, the Department will continue to do so until every claim in each scheme has been determined. In these circumstances, it is, perhaps, not surprising that the Department has always had an oversight role in respect of the administration and delivery of both the schemes.

¶4.13. On 3 March 2025 the Minister announced that as from 3 June 2025 OCS will be administered and delivered by the Department.³⁶³⁶ [RLIT0000623]. I consider the significance of this announcement from paragraph 6.191 below.

¶4.14. GLOS and HCRS are administered and delivered by the Department. The Department has appointed Addleshaw Goddard LLP as its legal advisors in relation to both schemes and the multi-national law firm Dentons UK and Middle East LLP ("Dentons") as facilitators in respect of both schemes.³⁷³⁷ As the word suggests facilitators seek to promote settlements of claims made by claimants which are disputed in whole or in part by the Department. Payments to claimants under these schemes are made from funds provided to the Department by HM Treasury. The Post Office plays no role in the administration and delivery of the schemes. Its only role is to provide information and/or documents about individual claims if called upon to do so.

¶4.15. I do not propose to provide a detailed account of the governance provisions for each of the four schemes at this point. Rather, I will describe their important governance features below as and when appropriate.