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The Post Office was ordered to pay 90% of the costs for the claimants incurred in the first trial in its court battle with 550 former subpostmasters who are suing for damages for suffering caused by alleged faults in the Horizon IT system they use to run branches.
In the same court hearing, Judge Fraser, who is managing the group litigation order (GLO), refused the Post Office permission to appeal his judgment in first Horizon trial.
The Horizon accounting and retail system, which was introduced in 1999/2000, is used by nearly 12,000 post office branches, and is the centre of the case.
Subpostmasters have been held liable for any unexplained losses, and in 2009, Computer Weekly told the stories of seven postmasters who suffered life-changing hardship as a result of problems they blame on Horizon. Some received heavy fines and had to repay thousands of pounds because of unexplained shortfalls in their accounts, some lost their life savings and went bankrupt, and others subpostmasters were sent to prison (see timeline of Computer Weekly coverage below).
A hearing in the High Court on 23 May began on the matter of the request lodged by the Post Office a few days earlier to appeal the judgments from the first trial in the GLO. The first month-long trial, held late last year, focused on the contractual relationship between the Post Office and subpostmasters. This was the first of four planned trials.
In his judgment for the first trial, announced in March, Judge Fraser said there was a general culture of secrecy and confidentiality in the Post Office, particularly around the Horizon accounting and retail system used by subpostmasters to run their branches.
He issued significant judgments on the nature of the relational contract between subpostmasters and the Post Office. Criticisms of the Post Office included “oppressive behaviour” when demanding sums of money that could not be accounted for by subpostmasters.
In court this week, the Post Office legal team requested permission to appeal 37 points of law, three of fact and eight of process, but Judge Fraser refused the request from Post Office’s legal team for permission to appeal. The Post Office has the option to go to the Court of Appeal.
The court also heard arguments over a claim submitted on 29 March for the claiment’s legal costs for the first trial. Freeths, the solicitors acting for the subpostmasters, did this after the judgment came out heavily in favour of the claimants.
The fact the claimants won the vast majority of the points in dispute was reflected in Judge Fraser’s order that the Post Office should pay 90% of the claimant’s costs on account.
The Post Office legal team argued for the payment to be reserved until the case is complete. Post Office QC David Cavender argued that the case has not been won by the claimants as the first trial is just part of it.
“The winner is the winner of the game, not the person that at the first stage gets its rules adopted and approved by the court,” he said.
But Fraser ordered that the costs would not be reserved, but paid on account. After much deliberation, a figure of about £5.5m including VAT was ordered to be paid on account.
The Post Office requested permission to appeal the order to pay now rather than reserve payment until the end of the case, but Fraser refused and the Post Office has 21 days to pay. Judge Fraser also indicated that the final outcome of the GLO will not be until the middle of 2020 at the earliest.
Funds are critical in group litigation and, due to the many millions of pounds in costs, the claimants’ case is being funded by Therium through third-party litigation funding, which involves a number of funders investing in litigation, paying fees and other costs. If the case succeeds, they make a profit, but their investment is at risk if the case is lost.
When discussing the high costs of the case, Judge Fraser said the last time he was updated on the costs to the Post Office so far, the figure was more than £12m.
He said the legal teams were originally supposed to inform him every time their costs went up by £250,000.
“Then they were writing so often that it was changed to half a million. The most recent letter I received was one from the Post Office which told me that their costs were £12.8m,” said Fraser. “That was earlier this month, but it didn’t include, so far as I know, the £300,000 that was agreed and the consent order for today about the recusal costs.”
Alan Bates, lead claimant and leader of the Justice for Subpostmasters Alliance, said: “We are delighted that the court continues to see errors in Post Office’s conduct. Yet again, the court has identified faults and failures and rightfully awarded costs to the claimant group. Every appeal by Post Office just adds further delay and cost to these proceedings.”
Former MP and now Conservative peer James Arbuthnot said: “Post Office is spending the taxpayers’ money on defending the indefensible. It is now time the government stepped in to halt this cruel profligacy. It will not get better by being drawn out for longer – it will get much, much worse.”
This case is currently part way through the second trial, which covers disputes related to the Horizon system itself. During the second trial, which began in March and focused on the Horizon computer system, the Post Office made an application for the judge to recuse himself for alleged bias, following his judgment. After being refused by Judge Fraser, the Post Office went to the Court of Appeal, but its application was rejected.
Trial two was suspended when the recusal request was made, but will restart on 4 June when expert IT witness evidence will be heard. The case continues.
Timeline of the Post Office Horizon case since Computer Weekly first reported on it 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 will 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.
- October 2018: After over a decade of controversy, next week marks the beginning of a court battle between subpostmasters and the Post Office.
- November 2018: Case against Post Office in relation to allegedly faulty computer system begins in High Court.
- November 2018: High Court case in which subpostmasters are suing the Post Office has revealed a known problem with a computer system at the core of the dispute.
- November 2018: A High Court trial, where subpostmasters are suing the Post Office for damages caused by an allegedly faulty IT system, ends second week.
- November 2018: Post Office director admits to Horizon errors and not sharing details with subpostmaster network.
- November 2018: The High Court trial in which subpostmasters are suing the Post Office has reached an important stage.
- December 2018: CCRC may hold off subpostmaster decision until after Post Office Horizon trial.
- December 2018: Court case where subpostmasters are suing the Post Office set to span at least four trials and extend into 2020.
- January 2019: Subpostmasters’ campaign group attacks Post Office CEO Paula Vennells’ New Year honour amid ongoing court case.
- January 2019: Thousands of known errors on controversial Post Office computer system to be revealed.
- March 2019: Tech under spotlight at High Court in second subpostmasters versus Post Office trial.
- March 2019: Post Office considered Horizon IT system “high risk”, court told.
- March 2019: Post Office ‘lacked humanity’ in the treatment of subpostmasters, says peer.
- March 2019: CCRC watching Post Office Horizon trial closely.
- March 2019: Judge rules that Post Office showed “oppressive behaviour” in response to claimants accused of accounting errors they blamed on Horizon IT system.
- March 2019: A High Court judge heard that the Post Office did not investigate a computer system error that could cause losses, despite being offered evidence.
- March 2019: The Post Office legal team in the case brought by more than 500 subpostmasters has called for the judge to be recused after questioning his impartiality.
- March 2019: A senior civil servant asked the Post Office to repay public money it had wrongly allocated to paying legal costs.
- April 2019: Subpostmaster claimants’ legal team makes application for the Post Office to pay millions of pounds of costs associated with trial.
- April 2019: Post Office to appeal judgment from first Horizon trial.
- April 2019: The Post Office’s claim that the judge overseeing the case concerning its controversial Horizon IT system was biased has been dismissed – but will now be considered by the Court of Appeal.
- April 2019: MP questions government over Post Office Horizon case.
- April 2019: Government says no conflict of interest in trial despite Post Office chairman’s dual role.
- May 2019: The Court of Appeal has refused the Post Office’s application to appeal a major decision in the Horizon IT trial.
- May 2019: The Post Office has applied for permission to appeal judgments from the first trial in its IT-related legal battle with subpostmasters.