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Why subpostmasters and Post Office are battling it out in the High Court
After over a decade of controversy, next week marks the beginning of a court battle between subpostmasters and the Post Office over allegations of faults in an accounting system leading to unfair prosecutions
In late 2008, Computer Weekly was contacted by a subpostmaster who had unexplained losses in his accounts, and suffered life-changing hardship because he was held liable for them by the Post Office.
He was not alone. Computer Weekly discovered some subpostmasters, who run local Post Office branches, were heavily fined, lost their livelihoods and even sent to prison because of unexplained shortfalls in accounts. One subpostmaster was in jail while pregnant.
Some subpostmasters suspected problems with the Horizon accounting system, which was developed by ICL/Fujitsu Services, were the cause of accounting shortfalls.
Horizon, which has been used by thousands of Post Offices since its introduction in 1999, became central to a dispute that has spanned over a decade (see timeline of Computer Weekly’s coverage below). Next week, a High Court trial begins, with hundreds of former subpostmasters seeking damages through a group litigation order (GLO).
The subpostmaster who first contacted Computer Weekly lost a court case to contest the Post Office’s insistence that he should pay the accounts shortfall. He lost his Post Office and was left heavily in debt as a result.
After months of legal considerations, Computer Weekly made public the stories of seven subpostmasters and how the unexplained accounting shortfalls affected their lives.
Confidence in Horizon
The Post Office reaffirmed its confidence in the Horizon system to Computer Weekly in a statement.
“We have confidence in the Horizon system, which is robust, reliable and used across 11,500 branches by postmasters, agents and their many thousands of staff to process millions of transactions successfully every day, including on behalf of the UK’s high street banks.”
Since the first Computer Weekly article in 2009, a pressure group has formed, campaigning to clear the names of affected subpostmasters. This has been gathering steam, with the national press taking on the story, parliamentary debates on the matter and, this week, the beginning of a court action.
The trial is set
The group action brought by over 500 claimants against the Post Office will seek damages.
The first month-long trial is set to begin on 5 November 2018, followed by another in February 2019. A third trial will be held in the summer of 2019. These will be in the Rolls Building of the High Court, on Fetter Lane London.
The initial trial will concentrate on issues around the contractual relationship between the Post Office and subpostmasters. It will look at the obligations of both parties, including whether the Post Office should have investigated account shortfalls before taking action.
The second trial in March will focus on technical issues with the Horizon system, and will feature expert witnesses. The judge recently said the “issues or claims for [the third] trial have not yet been formalised but are likely to be some of the lead claimants’ individual cases”.
In a statement, the Post Office said the GLO “offers the best opportunity for the matters in dispute to be heard and resolved”. It added: “We are continuing to address the allegations through the court’s processes and will not otherwise comment on specific details.”
The litigation is only happening because of former subpostmaster Alan Bates, whose determination to get to the truth led to the case. The official claimant is “Alan Bates and Others”.
Third-party litigation funding
The case is being funded by Therium, through third-party litigation funding. This works by a number of funders investing in litigation, paying fees and other costs. If the case is a success, they make a profit, but are risking their investment if the case is lost.
Bates was a subpostmaster at Craig-y-don Post Office Wales, from 1998 to 2003. In 2000, he discovered a shortfall of over £1,000 which he couldn’t account for, and wrote to the Post Office. After two further letters, the Post Office wrote back in 2002, saying it would write off the amount, but without giving any reason.
Bates continued to have problems with deficits. He refused to sign his weekly accounts, as it would have made him liable for any losses.
Alan Bates, former subpostmaster
“Why didn’t the Post Office prosecute me? Because it knew there were faults with my system,” he told Computer Weekly in an interview in 2009. “It did not want to take me to court. I never tried to take it to court, as I had received quite a broad range of legal advice about doing so. I was told that [the Post Office] could keep me in court and keep appealing any findings until I ran out of money.
“I am in no doubt that many subpostmasters have finished up breaking the law because of the Post Office and the position it left them in,” he added at the time.
That same year, Bates formed pressure group Justice for Subpostmasters Alliance (JFSA). Over the years, hundreds of subpostmasters who had suffered unexplained losses came forward.
Information supporting subpostmaster claims
Sources have also approached Computer Weekly with information supporting subpostmaster claims. One of these is Andy Clark, visiting professor in information security at Royal Holloway University of London and director at information security and expert witness company Primary Key Associates.
In 2015, he told Computer Weekly that about 10 years earlier he had been called as an expert witness for the defence in a case brought by the Post Office against a subpostmaster.
After seeing the Post Office Horizon accounting system in action, he said it was quickly apparent there were questions about its integrity. After asking the Post Office questions about the system the Post Office dropped the case, he said.
Subpostmasters continued to experience technical issues. In November 2015, the Communication Workers Union (CWU) wrote to subpostmasters warning them of a problem with the system, following an incident in which thousands of pounds worth of payments were duplicated for one subpostmaster.
If undetected, this would have appeared as losses when the accounts were completed, which would be the responsibility of the subpostmaster. In relation to this, Post Office IT support sent an email to a member of the postmasters’ branch of the CWU revealing the flaw.
In the email at the time, an Atos representative said this was not an isolated incident: “This issue is caused by the user forcing log-off when the post-login checks have not fully completed. We have experienced previous instances of this issue in other branches [that] have been caused in the same way [forced log off].”
The Atos employee said the problem was a process issue that would require a code change, from Horizon supplier Fujitsu, to stop it happening again across the network.
Subpostmasters run Post Offices on high streets in most towns and villages, so it is unsurprising that the national press got involved. For example, the BBC Panorama programme featured the subpostmasters’ claims in 2015.
Freelance broadcast journalist Nick Wallis, who was a producer on the programme, has been following the case since he was contacted by the husband of one subpostmaster.
“I got involved when I met a cab driver whose pregnant wife, a subpostmaster, was sent to prison for stealing £70,000 from her branch,” he told Computer Weekly.
Nick Wallis, freelance broadcast journalist
“He was adamant she was innocent. She was adamant she was innocent. Even the judge in her trial pointed out that there was no direct evidence she had taken any money, but the Post Office went on Horizon’s figures and prosecuted accordingly.”
Wallis said the more he looked into it, the more it turned out the Post Office had a habit of prosecuting subpostmasters who couldn’t prove Horizon’s figures were wrong. “This struck me as a potential Kafkaesque hellhole for anyone caught up in it.”
He added that it was important for the general public to know about the case, claiming there was “a clear possibility that several serious miscarriages of justice have taken place”.
Expenses paid through crowdfunding
Wallis set up a crowdfunding page to enable people to pay his expenses so he can cover the trials in full. He reached his target quickly.
The case has also been discussed in the corridors of power, with MPs debating it on several occasions. In February 2015, Post Office CEO Paula Vennells and programme director for branch support Angela van den Bogerd were questioned at a parliamentary select committee investigating the Horizon dispute.
Former Conservative MP for Hampshire East James Arbuthnot, now Lord Arbuthnot of Edrom, became involved when one of his constituents, Jo Hamilton, contacted him. Hamilton was interviewed by Computer Weekly in 2009 as one of the seven initial cases made public.
Arbuthnot said he was sad that this trial should be necessary. “The Post Office is owned by us, and it ought to treat its subpostmasters properly,” he said. “But time and time again, it has failed to live up to the standards we expect of it, not just in the original claims it made against the subpostmasters, but even in failing to disclose the evidence that the subpostmasters were entitled to see.
“I commend Alan Bates and all those involved in their persistence in bringing the matter to court, which is now the only authority that can get to the bottom of what happened.”
Asked about the upcoming case by Computer Weekly, Hamilton welcomed the beginning of the end for the subpostmasters’ fight. “At last the truth is going to come out,” she said.
Post Office investigation raises further questions
Following pressure, the Post Office commissioned an investigation to try to ascertain whether problems with Horizon and its supporting technologies and processes could have caused accounting shortfalls. The Post Office had always claimed this was not the case.
It hired forensic investigation firm Second Sight to look into the alleged problems. But after Second Sight’s 96-page report was published in April 2015, saying that the Post Office had been too quick to take legal action against subpostmasters, the Post Office published an 83-page report of its own, claiming that Second Sight’s claims were wrong.
The Second Sight report said: “The Post Office’s investigators have, in many cases, failed to identify the underlying root cause of shortfalls prior to the initiation of civil recovery action or criminal proceedings.”
The Post Office responded: “In none of the Post Office’s own work, nor through any of Second Sight’s work, has any information emerged to suggest a conviction is unsafe.”
Subpostmasters are also awaiting the judgment of the Criminal Courts Review Commission (CCRC), which is to rule on whether some prosecutions of subpostmasters by the Post Office were unsafe.
In April 2015, separate to the litigation, the CCRC began reviewing claims from subpostmasters of wrongful prosecution for offences such as theft and false accounting, as a result of problems with the Post Office’s Horizon IT system through which they file accounts. It is reviewing 27 cases put forward by subpostmasters who claim they did not get a fair trial.
Timeline of events in the Post Office Horizon case since Computer weekly published its first article in 2009
May 2009: Bankruptcy, prosecution and disrupted livelihoods - Postmasters tell their story
September 2009: Postmasters form action group after accounts shortfall
November 2009: Post Office theft case deferred over IT questions
February 2011: Post Office faces legal action over alleged accounting system failures
October 2011: 85 subpostmasters seek legal support in claims against Post Office computer system
June 2012: Post Office launches external review of system at centre of legal disputes
January 2013: Post Office admits Horizon system needs more investigation
January 2013: Post Office announces amnesty for Horizon evidence
January 2013: Post Office wants to get to bottom of IT system allegations
June 2013: Investigation into Post Office accounting system to drill down on strongest cases
July 2013: Post Office Horizon system investigation reveals concerns
October 2013: End in sight for subpostmaster claims against Post Office’s Horizon accounting system
October 2013: Former Lord Justice of Appeal Hooper joins Post Office Horizon investigation
November 2013: 150 subpostmasters file claims over “faulty” Horizon accounting system
September 2014: Fresh questions raised over Post Office IT system’s role in fraud cases
December 2014: MPs blast Post Office over IT system investigation and remove backing
December 2014: Why MPs lost faith in the Post Office’s IT investigation, but vowed to fight on
December 2014: MPs to debate subpostmaster IT injustice claims
December 2014: MP accuses Post Office of acting “duplicitously” in IT investigation
January 2015: MPs force inquiry into Post Office subpostmaster mediation scheme
January 2015: Post Office faces grilling by MPs over Horizon accounting system
February 2015: Post Office CIO would talk to any subpostmaster about IT problems, promises CEO
March 2015: Post Office ends working group for IT system investigation day before potentially damaging report
March 2015: MPs seek reassurance over Post Office mediation scheme
March 2015: Retiring MP aims to uncover truth of alleged Post Office computer system problems
April 2015: Post Office failed to investigate account shortfalls before legal action, report claims
April 2015: Criminal Courts Review Commission set to review subpostmasters’ claims of wrongful prosecution
May 2015: IT system related to subpostmaster prosecutions under review by CCRC
June 2015: Post Office looking to replace controversial Horizon system with IBM, says MP
July 2015: Campaigners call for independent inquiry into Post Office Horizon IT system dispute
October 2015: James Arbuthnot takes Post Office IT fight to House of Lords
November 2015: The union that represents Post Office subpostmasters has warned of a problem with the Horizon accounting system
November 2015: An email from Post Office IT support reveals a problem with the Horizon system and supporting processes that could lead to accounting errors
November 2015: Group litigation against Post Office being prepared in Horizon dispute
February 2016: Post Office faces group litigation over Horizon IT as subpostmasters fund class action
June 2016: Post Office chairman Tim Parker says there would be “considerable risk” associated with changing its Horizon computer system
November 2016: The legal team hired by a group of subpostmasters will take their case to the next stage
January 2017: The group action against the Post Office that alleges subpostmasters have been wrongly punished for accounting errors gets a green light from the High Court of Justice
March 2017: 1,000 subpostmasters apply to join IT-related group litigation against Post Office
April 2017: Investigation into claims of miscarriages of justice in relation to a Post Office accounting system has appointed a forensic accountant firm
May 2017: Hundreds of subpostmasters have applied to join IT-related legal action since March
July 2017: Post Office defence in computer system legal case due this week
August 2017: Campaigners submit initial evidence in group litigation against Post Office over controversial Horizon IT system
October 2017: Subpostmasters’ group action against the Post Office reaches an important milestone
November 2017: An end is in sight for subpostmasters’ campaign against alleged wrongful prosecution, which they blame on a faulty computer system
November 2017: The high court judge managing the subpostmasters versus Post Office legal case over an allegedly faulty computer system tells legal teams to cooperate
January 2018: Forensic investigation into Post Office IT system at centre of legal case nears completion
April 2018: Criminal Cases Review Commission forensic examination of the IT system at the centre of a legal case against the Post Office has raised further questions
May 2018: Post Office branches unable to connect to Horizon computer system for several hours after morning opening time