UK Royal Mail appeals against compensation ruling
Royal Mail is appealing against a High Court decision that it should pay up to £40m in compensation to business customers for missing service targets.
Last Thursday, a day before the deadline to appeal, the postal operator decided to continue the legal battle pitting it and regulator Postcomm against postal customers’ representative Postwatch.
Postwatch went to the courts last year after differing with Postcomm over the amount of compensation the two organisations believed was due from Royal Mail to its customers for missing its service targets in 2003-2004.
The total compensation due was £80m, but Postcomm allowed Royal Mail to withhold around £40m from customers who had paid invoices late during the year. There is a smaller amount at stake relating to service targets for 2004-2005.
In December, High Court judge Justice Sullivan upheld Postwatch’s challenge, ruling that Postcomm incorrectly interpreted a clause that said Royal Mail was under no obligation to provide compensation if a customer was “in default of credit terms”. The judge left the amount that Royal Mail should pay to be decided by negotiation between the two sides.
Postwatch’s senior director Andy Frewin said last Friday that customers were unhappy about the appeal because it would mean a further wait for compensation.
“Postwatch is naturally disappointed that Royal Mail’s application for permission to appeal will inevitably further delay customers receiving the £45m in compensation they are due for the poor service they experienced in 2003-2004 and 2004-2005.
“We remain confident that compensation will be paid and can only ask customers to continue to be patient for a little while longer.”
A Royal Mail spokeswoman said on Friday: “The compensation scheme, which was written by Postcomm, is the best of its kind in the postal world.”
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Postcomm press release
Postcomm not to appeal JR26 January 2006
Postcomm has decided not to appeal the judgment given against it in the judicial review proceedings brought by Postwatch.
Postcomm continues to believe that its approach to the interpretation of Royal Mail’s bulk compensation scheme was correct but, having failed to persuade Mr Justice Sullivan of its view, the prospects of persuading the Court of Appeal to overturn that decision are not strong enough to pursue. We therefore think the best course of action is to move on.
We understand that Royal Mail is appealing against the High Court decision.
