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Figures calculated by forensic accountants during the Post Office’s mediation scheme for subpostmasters who had incurred losses because of its computer system, show why the victors in the long-running court battle are fighting on.
The group of 550 subpostmasters recently accepted an offer of £57.75m damages from the Post Office in an out-of-court settlement. But after costs are taken into account, this is expected to leave about £10m.
As reported by Computer Weekly last week, the group representing claimants has called on the government directly to pay the legal costs they have incurred to enable subpostmasters to receive a figure closer to their actual losses.
The settlement is confidential and there is no public information about how the money will be divided. Losses incurred by subpostmasters that can be quantified include money they had repaid to the Post Office when wrongly accused of accounting irregularities, loss of business and loss of future earnings. They do not include pain and suffering, stress and living with a criminal record.
To understand why subpostmasters believe they deserve more to cover quantified losses, a rough guide to what the subpostmasters were claiming can be estimated from figures calculated during the Initial Complaint Review & Mediation Scheme. This scheme, which was set up in 2013 by the Post Office and later prematurely ended, saw claimants use forensic accountants to examine their cases, produce a report of what had taken place and calculate the quantum loss (what a court is likely to award).
There were 150 cases in the mediation scheme, of which 39 had their quantum loss calculated by forensic accountants. Adding up the figures available for the cases in that scheme produces a total of just over £27m, or an average loss of nearly £700,000. Most of the 39 are in the group of 550 subpostmasters.
These figures put into context the £10m that claimants will be left with after costs following the settlement.
The costs of the court case were high because the subpostmasters’ only option for bringing a group litigation order against the Post Office was to obtain private litigation funding. In this case, litigation funding provider Therium invested in the litigation, paying fees and other costs. Now that the case is won, claimants must pay Therium out of the damages awarded on top of legal costs.
Could have got nothing
Following the settlement, James Hartley, partner at Freeths, the law firm managing the group action, said that if the claimants had not pulled out of the litigation at this point, it is highly likely they would have got nothing.
“The reason for this is that there were another two trials planned and to get through those trials, we would have needed more funding,” he said. “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.”
With all the claimants being given damages from this pot, the amount they will receive will not come close to the losses they incurred because of problems with the Horizon system.
The money will not be shared out evenly because the 550 are actually a diverse group. Many lost only a few thousand pounds, while others lost their properties, livelihoods and some were sent to prison after being wrongly convicted of theft.
Of the 550 subpostmasters, about 20% were still in post when the case began, around 35% had retired or resigned, with about 40% having their contracts terminated. The final 5% is an assortment of smaller claims. About 10% of the whole group were prosecuted by Post Office.
The Justice for Subpostmasters Alliance (JFSA), the campaign group set up to support subpostmasters, sent a letter to claimants last week making it clear that the fight is not over and requesting the government pay the costs to leave them with more appropriate damages. The JFSA claimed that the government had failed to act on claims of problems with Horizon that it had been warned about from various quarters, which were ultimately proved correct.
The JFSA wrote: “Ministers and the Department for Business, Energy & Industrial Strategy (BEIS) should have been considerably more proactive in delving into the problems that individuals, the media and MPs have been raising with the department ever since Horizon was introduced.”
Ron Warmington, manager director at Second Sight, the forensic accounting firm that carried out an examination of Horizon, said it would be a good idea for the government to pay the costs.
He said the government should share the responsibility, adding: “It did not seem any of the government were doing any investigation and just agreeing to what the Post Office said.”
Fujitsu, the supplier of the Horizon system, has also been on the receiving end of stinging criticism, including condemnation by the High Court judge in charge of the group litigation.
Peer James Arbuthnot wrote recently: “It may well be that the Post Office may feel let down by Fujitsu, but it is certain that the subpostmasters will. Might there be some tripartite settlement between the Post Office, Fujitsu and the subpostmasters to create the compensation fund that is needed?”
Computer Weekly first reported the problems with Horizon in 2009, when it made public the stories of a group of subpostmasters. Soon after this, as more subpostmasters came forward, subpostmaster Alan Bates formed the Justice for Subpostmasters Alliance and began campaigning. Bates first contacted Computer Weekly in 2004, four years after he had first alerted the Post Office to the problems.
After years of campaigning, Bates and others forced a group litigation against the Post Office and, after the second trial of the four that were planned, claimed victory when the Post Office agreed to settle with the claimants.
There have been calls for a judge-led inquiry, most notably from Arbuthnot, and questions remain over the role of Fujitsu.
Computer Weekly contacted BEIS with questions by email on 17 December, but had not received a reply by the time of going to press.
Update: On 15 January, Computer Weekly received a response from BEIS, which said: “We have received the letter from Mr Bates and are considering the correspondence. We are pleased that a comprehensive resolution to the litigation was reached in December.
“As part of the resolution to the litigation, the Post Office accepted and recognised that in the past they had got things wrong in their dealings with a number of postmasters, apologised and is looking to 'reset' the relationship with postmasters.”
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 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: The Post Office has settled its long-running legal dispute with subpostmasters, and will pay £57.75m in damages.
- December 2019: Subpostmasters ended their legal battle with the Post Office at the optimal time, according to the lawyer that managed the High Court action.
- December 2019: Subpostmasters proved right on IT system failures as calls for full public inquiry mount.
- December 2019: Criminal Courts Review Commission to review Horizon judgment ‘swiftly’.
- December 2019:National Federation of Subpostmasters cries foul after court ruling on controversial computer system.
- December 2019:Former Post Office CEO apologises to subpostmasters over Horizon scandal.
- December 2019: Call for former Post Office CEO to step down from public roles after IT court battle lost.
- January 2020: Fujitsu must face scrutiny following Post Office Horizon trial judgment.
- January 2020: Subpostmaster group calls for government to pay legal costs for Horizon trial.
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