Photocreo Bednarek - Fotolia
Conservative peer James Arbuthnot has suggested that the board and senior management of the Post Office are removed to enable the organisation to start again, after the Court of Appeal rejected its application to appeal damning judgments in its multimillion-pound legal battle with subpostmasters.
In the Court of Appeal, Lord Justice Coulson dismissed an application from the Post Office requesting leave to appeal on 26 different grounds of the judgment made in March by Judge Peter Fraser, as part of the first trial in a group litigation. Known as the Common Issues trial, the first of four planned, it focused on the contractual relationship between the Post Office and subpostmasters.
Fraser’s criticisms of the Post Office in the first trial judgment included that the organisation was engaged in “oppressive behaviour” when demanding sums of money that could not be accounted for by subpostmasters. He also said: “The Post Office describes itself on its own website as ‘the nation’s most trusted brand’. So far as these claimants, and the subject matter of this group litigation, are concerned, this might be thought to be wholly wishful thinking.”
At the time, the judgment was described as a “stunning victory” by lead claimant Alan Bates, and was a watershed superseded only by the dismissal of an application to appeal it in the Court of Appeal last week, which confirmed the higher court’s agreement with Judge Fraser. Following the judgment, the Post Office announced its intention to appeal.
After the Court of Appeal’s dismissal of the Post Office application to appeal, former Conservative MP Arbuthnot, now in the House of Lords, said this should signal to the government, which owns the Post Office, that it is time for change. “My own suggestion is that the government should clear out the entirety of the board and senior management of the Post Office and start again, perhaps with the assistance of consultancy services from Second Sight, who know where the bodies are buried,” he said.
Second Sight is the forensic accounting firm that put the Post Office’s Horizon computer system and supporting processes under the microscope.
The Post Office commissioned Second Sight to produce a report, but when the report revealed serious problems with the technology and processes, the Post Office rejected its findings. 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 conclusions were wrong.
Arbuthnot became a supporter of the subpostmasters when, as MP for Hampshire North East, he was contacted by constituent Jo Hamilton. She was a subpostmaster who was being threatened with jail for accounting irregularities that could not be explained. Hamilton was interviewed by Computer Weekly in 2009 as one of the seven initial cases made public. She ran a grocery store with a post office attached. Unable to explain accounting shortfalls and faced with the prospect of prison, Hamilton pleaded guilty to false accounting. Her house was remortgaged to pay off the money, and local villagers in South Warnborough raised £9,000 to help her.
Last week, Lord Justice Coulson was damning in his dismissal of the Post Office’s application to appeal, saying: “This application is founded on the premise that the nation’s most trusted brand was not obliged to treat their SPMs [subpostmasters] with good faith, and instead entitled to treat them in capricious or arbitrary ways which would not be unfamiliar to a mid-Victorian factory owner (the PO’s right to terminate contracts arbitrarily, and the SPMs’ alleged strict liability to the PO for errors made by the PO’s own computer system, being just two of many examples).”
Post Office difficulties ‘self-inflicted’
Coulson also said many of the Post Office’s difficulties were self-inflicted. “For example, as happened during the trial and on the application for permission to appeal both to the judge, and to this court, the Post Office has consistently put its arguments much too high,” he said. “It made sweeping statements about the trial and the judgment which were demonstrably wrong. The Post Office ascribed various findings or conclusions to the judge which, on analysis, formed no part of his judgment. As the judge himself noted when refusing permission to appeal, even when concerned with findings that he did make, the Post Office takes such findings either wholly out of context, mis-stated, or otherwise not correctly summarised.”
Arbuthnot said the dismissal of the Post Office’s application to appeal the first trial judgments by the Court of Appeal should have given the Post Office hierarchy “incontrovertible proof that they are heading firmly in the wrong direction”.
He added: “One of the problems we all face is that the government, which owns the Post Office, has, for reasons which seemed good at the time, handed over responsibility to a commercial-type board, so it feels it cannot intervene. But that commercial board has been accumulating vast legal debts and liability for damages, for which the government is liable. This cannot, and in my view will not, continue. Maybe a new government after the election, of whatever colour, will be able to say ‘that was then, this is now – we need a fresh approach’.”
Responding to the Court of Appeal ruling, Alan Bates, lead claimant and chairman of the Justice for Sub Postmasters Alliance, which he set up in September 2009, said: “The judge, in a damning decision, has dismissed the Post Office’s appeal on all 26 grounds. Therefore, the entirety of the Common Issues judgment in the claimants’ favour still stands. Yet again, this shows that the Post Office has wasted good public money in defending the indefensible and it is about time that someone at a very senior level steps in to control this storm that Post Office finds itself in.”
The Post Office said in a statement: “We are looking at the Court of Appeal’s decision in detail. The litigation is complex – the claims stretch back over around two decades. We remain focused on the work we are doing to improve the ways in which we work with postmasters, which is of the utmost importance. We have taken determined action at every level of the business to provide better support to the people operating the UK’s 11,500 Post Office branches. The litigation is continuing – none of the trials to date decide liability or the individual claimants’ cases.”
Although mediation is going on behind the scenes, the rulings are coming quickly, with the High Court judgments on the second trial in the litigation due before 4 December. The second trial examined the controversial computer system, known as Horizon, at the centre of the case. Horizon, a Fujitsu system that was introduced in 1999/2000, is used by nearly 12,000 post office branche, and the claimants allege it is the cause of unexplained accounting shortfalls.
Known errors log
The Post Office has always denied this. But in preparation for the trial, a document known as the known errors log was disclosed, revealing thousands of errors that the Post Office and Fujitsu knew about but did not inform the subpostmaster network about. One known error, which featured heavily on day one of the trial, was first made public by Computer Weekly in November 2015. The issue, which has become known as the Dalmellington case – named after the branch – involved an incident in which thousands of pounds’ worth of payments were duplicated for one subpostmaster. If undetected, this would have appeared as a loss when the accounts were completed, which would be the responsibility of the subpostmaster.
The plight of some subpostmasters was first reported in May 2009, when Computer Weekly revealed that the lives of some of them had been turned upside down after being fined, sacked, made bankrupt or even imprisoned because of unexplained accounting shortfalls. They blamed the Horizon accounting and retail system for the problems, which the Post Office rejects (see timeline of Computer Weekly articles below).
It is now more than a decade since Computer Weekly first published an article about the controversy. But it was as early as 2004 that Bates, previously subpostmaster in Craig-y-don, Wales, first contacted Computer Weekly with his concerns that the computer system could be the cause of unexplained accounting errors in Post Office branches.
But even that first contact came some years after Bates had alerted the Post Office to potential problems at the end of 2000. He first wrote to his area manager about the issue in December 2000, when he raised a number of queries about Horizon. In 2003 he set up a website, www.postofficevictims.org.uk, seeking to find subpostmasters with similar problems.
In his letter to Computer Weekly in 2004, Bates wrote: “We have lost our investment and livelihood by daring to raise questions over a computer system we had thrust upon us…”
From the start, Bates identified the contractual relationship between the Post Office and subpostmasters as a major problem. Judges Fraser and Coulson both tore into this contract in separate judgments. Bates’ 2004 letter continued: “The core of our problem stems from our refusal to blindly accept liability for figures derived from the system without having full access to the system to check the data we have entered. As a subpostmaster, I was an agent and not an employee of the Post Office and the system was brought in a couple of years after the contract was signed with them.”
In that letter, Bates made clear that he would not back down. “I fully expect it to take a number of years to bring Post Office Ltd to account for what they have done to us, but we are determined to do it,” he wrote. Now, almost 20 years after his first letter to the Post Office, Bates is still embroiled in the dispute.
The case, which has so far cost tens of millions of pounds, 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: 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: Post Office ‘lacked humanity’ in the treatment of subpostmasters, says peer.
- 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.
- May 2019: The judge in the Post Office Horizon trial has ordered the organisation to pay the legal costs of its courtroom adversaries, and refused to give permission to appeal a major judgment.
- June 2019: Post Office asks Court of Appeal for permission to appeal judgment in first Horizon trial.
- July 2019: The Post Office has admitted that some subpostmasters are at risk of accounts not balancing due to an error it does not understand.
- July 2019: Problem revealed during High Court trial left subpostmaster with £18,000 surplus after IT system failed to register full amount of cash scanned in.
- August 2019: Subpostmasters suffering slow running and frozen terminals while Post Office searches for a fix to issues apparently caused by a software update.
- August 2019: The Post Office has fixed the latest problems with its Horizon system, affecting hundreds of branches.
- October 2019: A High Court judgment for a trial that focused on the Post Office’s IT system at the centre of a multimillion-pound litigation will be announced early next month.
- November 2019: The Court of Appeal has rejected a Post Office application to appeal judgments made in the its multimillion-pound battle with subpostmasters over IT system failures.
Read more on IT for retail and logistics
‘It's a good day when we refer a case,’ CCRC tells MPs during review of Post Office prosecutions
Another 38 subpostmasters submit appeals against convictions
Potential miscarriages of justice of Scottish subpostmasters move to full review
More subpostmasters’ prosecutions sent to appeal for wrongful conviction