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.