A High Court judge has blasted the Post Office in a long-running case over whether its Horizon IT system was to blame for alleged fraud by subpostmasters.
More than 500 subpostmasters are suing the Post Office after they were accused of stealing money from the state-owned postal network.
In a blistering 1,000-paragraph judgment handed down today, Mr Justice Peter Fraser scorned the Post Office for its boast of being "the nation's most trusted brand", describing this as "wholly wishful thinking" as far as the case was concerned.
The judgement is the first in what is expected to be a series of trials. It deals only with how the subpostmasters' contracts with the Post Office, or in some cases their lack of contracts, will be interpreted in all the later hearings – in all cases ruling in favour of the subpostmasters.
Mr Justice Fraser described the case so far as "bitterly contested litigation", summarising the posties' legal arguments by saying: "The Claimants' case is that the Horizon system contained, or must have contained, a large number of software coding errors, bugs and defects, and as a result of this threw up apparent shortfalls and discrepancies in the accounting of different branches."
The Horizon accounting system was introduced across the whole of the Post Office at the turn of the millennium and the postal network insisted in court that "the system is what is called 'robust' and can be relied upon". Fujitsu, which currently maintains Horizon, is not a party to the lawsuit, having acquired Horizon when it bought out IT provider ICL in 2002.
"Some shortfalls started in the hundreds of pounds, and moved into the thousands, and then tens of thousands of pounds over a few months," said the judge. One subpostmaster, Pamela Stubbs, found that Horizon generated a shortfall of £9,000 over Christmas and New Year 2009, a period when her post office branch was closed. The Post Office told her to resign.
A number of subpostmasters were criminally prosecuted by the Post Office for theft and false accounting, with some being convicted and imprisoned. The Post Office later confessed that some of these prosecutions were wrong and the Criminal Cases Review Commission is investigating.
The court ruled:
Software "fixes" were introduced by the Post Office to the Horizon system over time, and one, "the ping fix" regarding Camelot and the Lottery, which was introduced in 2012, resulted in a sizeable shortfall of transaction corrections being issued by the Post Office. These had been to the value in 2007 approximately (to 1 decimal point) of £22.8 million; in 2008 approximately £12.5 million; in 2009 approximately £12.0 million; in 2010 approximately £11.3 million; and in 2011 approximately £4.5 million. In 2012, the year the "ping fix" was introduced, these fell below £1 million for that year.
The case is set to continue until next year.
'Threatening dire consequences to national business'
Mr Justice Fraser heavily criticised the Post Office for its behaviour during the hearings leading up to today's initial judgment.
He said: "A party (here the Post Office) threatening dire consequences to national business should their case not be preferred is not helpful, and this seemed to me to be an attempt to put the court in terrorem."
As well as questioning whether some of the postal operator's legal tactics were used because "it fears objective scrutiny of its behaviour", the judge also highlighted what he described as "a culture of secrecy and excessive confidentiality generally within the Post Office, but particularly focused on Horizon".
He stated: "The Post Office wished entirely to exclude, and made this very clear in closing, any evidence of how Horizon was actually operated in fact."
The judge also commented that the Post Office "has resisted timely resolution of this Group Litigation whenever it can". In other words, it had tried to keep kicking the can down the road. This is a common tactic in High Court cases where one side suspects the other might run out of money to keep the case going.
Addressing those criticisms, Post Office chief exec Tim Parker said in a statement that his business had taken the judge's comments "on board", claiming he "will take action throughout our organisation". But he also vowed to appeal against the judgment, alleging there were "areas around the interpretation of our contracts where the judge's conclusions differ from what we expected from a legal standpoint".
Mr Justice Fraser's full judgment can be read on the Judiciary UK website. ®