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Government refuses request to pay legal costs for subpostmasters in Post Office case

The government has refused to pay the huge legal costs subpostmasters incurred in their battle with the government-owned Post Office, which they won

The government has said it will not pay the legal costs for subpostmasters, despite their court victory highlighting serious failings at the Post Office, which is publicly owned.

The multimillion-pound case saw 550 subpostmasters take the Post Office to court in a group litigation, in an attempt to redress the grievances caused to them by the error-prone computer system they use, as well as contract terms described as oppressive by a High Court judge.

Over the past two decades, some subpostmasters have received heavy fines, been sent to prison and still live with criminal records after they were prosecuted for theft or false accounting as a result of accounting shortfalls that were caused by the Horizon computer system they use (see timeline of Computer Weekly articles below)

In December 2019, the Post Office agreed to pay £57.75m in damages and made other concessions including resetting how it works with subpostmasters, after it admitted to getting things wrong. But the high cost of a group litigation, where funding had to be sought, left subpostmasters with just £10m. Both sides accrued tens of millions of pounds in legal fees.

Last month, Alan Bates, the former subpostmaster who spearheaded a campaign for justice and then the legal battle, wrote to Kelly Tolhurst MP, minister for small business, consumers and corporate responsibility, part of the Department for Business, Energy and Industrial Strategy (BEIS). In it he said the government could have done more to look into the behaviour of the Post Office and accusations that its computer system was problematic. He also called for the government to pay costs so the damages were more appropriate.

“Ministers and the 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,” he wrote.

Tolhurst replied in a letter: “I note that the settlement agreed with the Post Office included all legal and other costs. In those circumstances, I must respectfully refuse your request for payment.

“In engaging in mediation, it is almost invariably necessary for the parties to make difficult compromises. It also requires a recognition of the limits that the law places on what sums might be recoverable. I have no doubt that the process was a challenging one, particularly bearing in mind the long history, and I thank you and all the claimants for your participation to finally resolve this matter and enable the parties to move forward.”

Government keeps Post Office at arm’s length

But subpostmasters believe the government, which describes the Post Office as an arm’s length organisation of which it has no day-to-day control, should have investigated allegations from subpostmasters, which had been made clear to them through the press and campaigning MPs. They also believe the court case should not have been allowed to rack up huge costs.

“I note that the settlement agreed with the Post Office included all legal and other costs. In those circumstances, I must respectfully refuse your request for payment”
Kelly Tolhurst MP, BEIS

During the court trials, there was a failed attempt by the Post Office to have the judge remove himself from the trial due to alleged bias and the Post Office tried to appeal the damning judgments from the first trial in the case. Both of these racked up millions of pounds of extra costs and both were roundly rejected by the Court of Appeal.

A BEIS spokesperson told Computer Weekly in January that “ministers monitored the litigation and were updated regularly with developments”, but added: “While publicly owned, Post Office operates as an independent, commercial business within the strategic parameters set by government. As such, government did not play a day-to-day role in the litigation or on the contractual and operational matters that were at the heart of it.”

But Mark Baker, branch secretary for subpostmasters at the Communication Workers Union, who is a serving subpostmaster, said BEIS cannot distance itself from the Post Office decision-making process.

“BEIS has a government representative who sits on the board of the Post Office,” he said. “That rep presumably took part in those board meetings that made decisions on the litigation, including attempting to recuse a judge.”

During the trial, the Post Office received heavy criticism from two of the most senior judges in the UK.

In his judgment on the second trial, focused on the Horizon IT system, Judge Fraser, in the High Court, said the Post Office had exhibited “a simple institutional obstinacy or refusal to consider any possible alternatives to their view of Horizon, which was maintained regardless of the weight of factual evidence to the contrary”. 

He added: “That approach by the Post Office was continued, even though now there is also considerable expert evidence to the contrary as well, and much of it agreed expert evidence on the existence of numerous bugs.

“This approach by the Post Office has amounted, in reality, to bare assertions and denials that ignore what has actually occurred, at least so far as the witnesses called before me in the Horizon issues trial are concerned. It amounts to the 21st century equivalent of maintaining that the Earth is flat.”

Lord Justice Coulson in the Court of Appeal likened the treatment of subpostmasters by the Post Office to the way Victorian factory owners treated their workers.

Timeline of the Post Office Horizon case since Computer Weekly first reported on it in 2009


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