The £57.75m settlement agreed between the Post Office and 500 subpostmasters over the controversial Horizon branch accounting system, was the best possible deal for the claimants, according to the lawyer that led their High Court action.
The Post Office this week settled a legal dispute with the group led by former subpostmaster Alan Bates, almost 20 years after he first raised concerns with the organisation about the computer system used in branches. The Post Office apologised to the affected subpostmasters and agreed to the payment, but the amount has caused further questions to be asked regarding the subpostmasters' victory.
Dividing the settlement between 550 people after taking away additional costs might seem small compensation for subpostmasters that suffered damaging and often life-changing events as a result of the way they were treated by the Post Office.
But speaking exclusively to Computer Weekly, James Hartley, partner at solicitors Freeths, the law firm managing the group action, said: “If the claimants had not pulled out of this litigation at this point, it is highly likely they would have got nothing.”
Hartley was unable to discuss any specific details about the settlement, but with social media rife with questions regarding the payment, we spoke to Hartley following the subpostmasters’s victory.
There will be deductions from the £57.75m before any money goes to the claimants, including a payment for the funder of the case, Therium, which took the financial risk of the litigation in return for a share of any settlement . There will also be payments made to lawyers that have delayed their fees to enable the case to proceed, and a payment to the insurance company providing cost insurance. The remaining money will go to the claimants using a criteria to value their claims. “This will determine what proportion each claimant is entitled to,” said Hartley.
These claims could, for example, be valued as low as £5000, if it was a case of a subpostmaster trying to recover money they had paid to the Post Office to cover a shortfall in their branch accounts. For some claimants this will be the extent of their claim, but there will also be much more serious claims that will demand a higher proportion of damages.
“But people will not recover anything like their full losses. This was always understood by everyone because we knew the group action would have a lot of costs,” added Hartley.
The lawyer said this moment in the court case was the optimum time for claimants to exit.
“The reason for this is that there were another two trials planned and to get through those trials we would have needed more funding. Even if we had got that funding, which is not certain, for every £1m we got from the case, £3m would have to go back to the funders. Every month that had gone on in the case, the value of damages available to claimants would have gone down, to the point where they would have got nothing even if we had won.”
The settlement followed quickly after a failed attempt by the Post Office to appeal the judgment in the first trial in the court battle, made by Judge Fraser. The judgment on the trial that focused on the contractual relationship between the Post Office and subpostmsters was damning, as was the Court of Appeal’s decision to reject it. Lord Justice Coulson in the Court of Appeal said the Post Office treated subpostmasters like Victorian factory workers.
The subpostmaster problems were 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 persistently and strongly denied, (see timeline of Computer Weekly articles below).
Following the settlement, Hartley added that there were also still some “very big risks” left in the litigation, such as some cases being so old that they are time barred. This means that by law those subpostmasters would not be able to make their claims. “We were trying to find a way around this but there were serious risks,” said Hartley.
Another risk was due to the fact that some claimants had made separate settlements with the Post Office in the past that were difficult to reverse. “There was a large risk that a lot of the claims in the group would have failed, and if some of the claims had succeeded the damages pot would not have been enough to give the claimants anything,” said Hartley.
But Hartley added that there have been other benefits secured for claimants in the settlement, beyond cash. He could not go into detail, due to a confidentiality agreement, but said: “A lot of the claimants have had all sorts of problems that will now be sorted out.” These included charges over their homes that had been used by the Post Office to enforce judgements, which can now be lifted. He added that suspended subpostmasters can also be helped following the settlement.
And the settlement goes way beyond the financial agreement. It is vindication that lead claimant Alan Bates was right all along that the Post Office computer system and its businesses practices were responsible for unexplained account shortfalls and other subpostmaster problems.
The settlement will also lead to a huge transformation in the Post Office. Hartley said: “I am completely satisfied that there will be a transformation of the Post Office as a consequence of this case and the new Post Office CEO [Nick Read] coming in and recognising what has happened.”
There are also cases of potential wrongful prosecution being reviewed by the Criminal Courts Review Commission (CCRC), which will continue despite the settlement. Hartley said: “The CCRC will be massively interested in the judgment for the second trial next week. I anticipate the CCRC will come to a decision relatively quickly after the Horizon judgment." It is Computer Weekly’s understanding that if previous convictions were to go to appeal and are overturned, those claimants will still be able to claim damages separately.
On Monday 16 December, Judge Fraser will hand down his judgment on the second trial, which focused on the robustness of the Horizon computer system at the centre of the case.
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 only 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. Bates’s 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.
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.
- November 2019:Peer calls for clear-out of Post Office board after Court of Appeal confirms major court defeat.
- December 2019: Post Office settles legal dispute with subpostmasters, ending 20-year battle for lead claimant
Read more on Financial applications
MPs to examine fairness of private prosecutions in light of Post Office IT scandal
Firm that investigated controversial Post Office IT system to support criminal conviction appeals
Blow to government review of Post Office scandal as key forensic accountants refuse to support it
CCRC sends 47 subpostmaster miscarriages of justice for appeal, asks for prosecution powers review