Compensation case victory for UK bulk mail customers

Thousands of Royal Mail customers who have received poor service could be in line for new compensation payments following a High Court ruling today.

The Consumer Council for Postal Services, known as Postwatch, won a legal challenge against Postcomm, the UK postal regulatory body.

The case arose after Postcomm refused last January to order the Royal Mail, which has already paid out some £35 million, to pay another £35 million to users of bulk mail services which were not up to standard.

Postcomm declined to make an enforcement order under the 2000 Postal Services Act for the financial year 2003-4.

Postwatch argued that Postcomm was under a statutory duty to enforce.

Today, Mr Justice Sullivan, sitting at the High Court in London, ruled in favour of Postwatch but gave Postcomm and Royal Mail time to consider appealing to the Court of Appeal.

The case turned on the disputed interpretation of an exclusion clause in the statutory compensation scheme.

After today’s judgment, Postwatch chief executive Gregor McGregor said: “We are very satisfied with the outcome today.

“This is a very important victory for customers, and our interpretation of the scheme has been vindicated.

“The important point now is that we should move together with Postcomm and the Royal Mail to ensure customers receive the money they should have had nearly 18 months ago.

“We say many tens of thousands of customers have been wrongly denied compensation.”

Although today’s ruling was concerned specifically with 2003-2004, compensation claims for the current year could also be affected by the legal ruling.

A Postcomm spokesman said after the judgment: “We will need to look at the full judgment before deciding on our next steps.”

During a recent hearing which led to the ruling, David Pannick QC, appearing for Postwatch, told the court: “There is no doubt that in the financial year 2003-4 – the first year for which the scheme applies – Royal Mail failed to meet any of the quality of service targets under their licence.”

He said: “We estimate that what would otherwise be compensation of £70 million for the aggrieved customers of the inadequate service has been reduced to compensation of £35 million by reason of the disputed interpretation adopted by Postcomm.”

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Direct mailers and magazine publishers may benefit from a pounds 55m windfall after the High Court said the Royal Mail had under compensated for poor service.

The case was brought against Royal Mail and regulator Postcomm by consumer group Postwatch. The ruling could result in pounds 40m of extra compensation being paid to corporate customers for 2003-2004, with around pounds 15m for 2004-2005.

‘We expect to ask leave to appeal the ruling,’ said a Royal Mail spokesman.

‘It is too early to say what will be the impact of the ruling for our business and bulk mail customers.’

The case stemmed from a compensation clause, interpreted for the Royal Mail by Postcomm, which Postwatch argued had allowed the carrier to under-compensate users of bulk mail.

‘The scheme, written by Postcomm, is the best of its kind in the postal world,’ added the Royal Mail spokesman. ‘It was applied by Royal Mail fully and fairly.’

‘We need to read a full transcript of the judge’s ruling and we are not likely to see that until after Christmas,’ said a Postcomm spokesman.