Post Office settles legal dispute with subpostmasters, ending 20-year battle for lead claimant

The Post Office has issued an apology to subpostmasters for the way some of them have been treated as it agreed to pay £57.75m in damages to settle a long-running legal battle over a faulty computer system.

This comes after days of mediation, which followed the Court of Appeal’s rejection of a Post Office request to appeal a damning judgement from the first High Court trial in the group litigation.

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). 

Brought by more than 500 subpostmasters against the Post Office, the group litigation has already cost tens of millions of pounds.

A joint statement from the claimants and the Post Office said: “The Parties to the Group Litigation in Bates v Post Office are pleased to report that they have reached a comprehensive resolution to their long-running litigation in the High Court, following several days of respectful, challenging and ultimately successful mediation during which the parties engaged with each other in good faith.”

The Post Office thanked claimants for holding it to account “in circumstances where, in the past, we have fallen short, and we apologise to those affected”. It said it is applying the lessons it has learnt form the case and will make changes to how it works with subpostmasters.

Tim Parker, Post Office chairman, said: “We are grateful to the claimants for taking part in this mediation and agreeing a settlement, bringing the Group Litigation to a close. 

“We accept that, in the past, we got things wrong in our dealings with a number of postmasters and we look forward to moving ahead now, with our new CEO currently leading a major overhaul of our engagement and relationship with postmasters.”

Alan Bates, the former subpostmaster who has been challenging the Post Office over the Horizon issues for almost 20 years, said: “The Steering Committee would like to thank Nick Read, the new CEO of Post Office, for his leadership, engagement and determination in helping to reach a settlement of this long-running dispute. 

“During the mediation, it became clear that he intends to reset the relationship between the Post Office and its subpostmasters and put in place new processes and support for them, as part of a wider programme of improvements.”

"It would seem that from the positive discussions with Post Office’s new CEO, Nick Read, there is a genuine desire to move on from these legacy issues and learn lessons from the past."

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. 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. 

Mark Baker from the Communications Workers Union (CWU), who has campaigned for the claimants, said: “I am delighted that they have reached an agreement. We are waiting for the details with interest.”

“This is a massive vindication of all the work Alan Bates has done over 20 years,” he added. “Heads must roll in the Post Office and the CWU will be pushing forward with greater intensity to get the Post Office to sit down with the union to develop solutions to ensure this never happens again.”

Conservative peer James Arbuthnot has supported supostmaster claimants since he was MP for Hampshire North East, when a subpostmaster in his former constituency was threatened with jail for accounting irregularities that could not be explained.

“I’m thankful to hear that mediation has finally been successful,” he said. “We couldn’t go on as we were, with many millions of pounds being squandered on fighting about something that should have been resolved much earlier.

“We will all need to consider the detail of the results of the mediation to see what remains unresolved. I do hope we are not (as has been all too usual in this saga) inhibited by gagging clauses.

“Where does this leave, for example, the consideration by the Criminal Cases Review Commission?  How does it leave those who have been convicted of, or who were persuaded to plead guilty on the basis of incomplete or misleading evidence to, crimes such as false accounting or even fraud?  How are those sub-postmasters who are not parties to the litigation affected? I shall look forward to the answers to these and many more questions as details begin to emerge,” added Arbuthnot.