Subpostmasters receive their ‘inadequate’ damages over Horizon IT scandal

Victims of covered-up IT errors in the Post Office’s branch accounting system have received the damages agreed in the settlement following a multimillion-pound trial.

Although the subpostmasters had anticipated that the amounts they would receive would not come close to compensating them for their financial losses and suffering, seeing the figures in black and white has sparked fury.

Subpostmasters won a High Court battle against the Post Office, which concluded in December, proving that the Horizon computer system they used was to blame for unexplained accounting shortfalls, and not them. Subpostmasters were prosecuted for theft and false accounting, with prison sentences, community service, criminal records and heavy fines some of the injustices they suffered as a result.

The claimants have now received their payments and a breakdown of how the money has been shared.

One claimant tweeted: “My £8,500 in total doesn’t come anywhere near what me and my family went through. I went to jail and lost everything – job, house, everything I own.”

The £57.75m settlement, agreed in December, was reduced to about £11m after legal costs were taken out. This meant the damages received by subpostmasters do not remotely cover what they lost through fines and repaying money that they were wrongly accused of stealing. The law firm representing the subpostmasters in the litigation said that because of the nature of group litigation orders, the settlement received was the best possible.

To understand why subpostmasters believe they deserve more to cover quantified losses, a rough guide to what they were claiming can be estimated from figures calculated under 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, 39 of which 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 in the group litigation.

Also, Computer Weekly understands that the Post Office has settled with two subpostmasters who were not in the group action, awarding them a total of about £300,000 in damages.

The Post Office is said to have spent over £100m defending its claim that the Horizon system could not be to blame, something the High Court case proved was fantasy.

Computer Weekly first reported the problems with the Horizon accounting system in 2009, when it revealed the stories of a group of subpostmasters. Soon after this, more subpostmasters came forward, but the dispute dates back even further than that (see timeline below).

In his judgment on the Horizon IT system, as part of the litigation, High Court judge Peter Fraser 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 now considerable expert evidence to the contrary, 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.”

In March, the Criminal Cases Review Commission referred 39 appeals from subpostmasters against their criminal convictions to the Court of Appeal. This was the biggest group referral of potential miscarriages of justice in UK history. Helen Pitcher, chairman of the CCRC, told Computer Weekly that this was completely unprecedented, with the previous biggest group referral comprising 10 cases.  

“This is very unusual and of course we still have the other 22 cases under review, and more cases are coming to us with initial inquiries as a result of the announcement,” said Pitcher at the time. 

More than 500 claimants were forced to take on the Post Office in a group litigation to prove that the Horizon computer system they use in branches was responsible for unexplained losses, and not them.

To take on the government-owned Post Office, the claimants had to use litigation funding, which meant they had to repay the costs and the funder’s cut out of the settlement. Then, when the cost of lawyers and insurance was added, only about £11m was left.

Campaign group the Justice for Subpostmasters Alliance, supported by MPs, is calling for the government to pay the claimants’ costs.

In January, Alan Bates, the former subpostmaster who spearheaded a campaign for justice and then the legal battle, wrote to the minister for small business, consumers and corporate responsibility, part of the Department for Business, Energy and Industrial Strategy (BEIS). In his letter, 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 that the damages total was 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,” Bates wrote.