Britain’s Post Office is facing a class action suit from more than 500 of its sub-postmasters, who claim that a faulty computer system led to them being wrongly accused of false accounting or theft.
Some of the postmasters were prosecuted and imprisoned after the Horizon accounting system, which was introduced in 1999, allegedly showed their branches to be in deficit. Sub-postmasters hold the rights to operate smaller Post Office branches.
Others lost their homes, suffered ill health or declared bankruptcy after being told to repay tens thousands of pounds in certain cases, according to the Justice for Subpostmasters Alliance (JFSA).
Lawyers for the group allege there was “a pattern of bullying and intimidation” by the Post Office dating back to shortly after Horizon was rolled out.
The system records day-to-day financial transactions at 11,600 branches. The Post Office has previously described it as “extremely robust” but the claimants say errors were caused both by bugs in the software and inadequate training and support.
Alan Bates, of the JFSA, said: “We expect these proceedings will reveal that Post Office Ltd began with a presumption of guilt. They aggressively interviewed sub-postmasters experiencing problems with the Horizon accounting system, telling them they were the only ones with these problems.”
People were held and their homes searched, said Mr Bates. “Many were pressured to pay alleged balance shortfalls and to resign.”
It said that an examination by independent forensic accountants found no systemic issues. Subsequent investigations of 150 cases, completed in 2015, did not identify any transaction caused by a technical fault that resulted in a postmaster being held responsible for a loss of money.
The Post Office said it would defend the case and added: “We welcome [the group litigation order] as offering the best opportunity for the matters in dispute to be heard and resolved.
“We will be continuing to address the allegations through the court’s processes and will not otherwise comment on litigation whilst it is ongoing.”
The High Court this year granted a group litigation order, to which 522 current and former postmasters attached as eligible claimants before a deadline last week.
A procedural hearing with a managing judge will take place in October, which should lead to a timetable for final resolution by the court.
Among the allegations are that the Post Office failed to act upon warnings about Horizon, or adequately investigate once sub-postmasters fell under suspicion.
Deirdre Connolly ran the Killeter Post Office in a rural part of County Tyrone, Northern Ireland, between 2006 and 2010. She said she was often told the Horizon system would “sort itself out” when she reported problems with balancing the accounts.
But when an alleged deficit of nearly £15,600 was revealed during an unannounced audit, Ms Connolly said she was not given a proper opportunity to respond. Out of fear she repaid the amount by borrowing from relatives and was dismissed by the Post Office, though she did not face prosecution.
Bankruptcy followed and Ms Connolly’s son later attempted suicide, which she put down to witnessing the stress she was under. Today she is unable to work and is on benefits after her health deteriorated.
“It’s a real struggle to pay the mortgage,” she said. “I worked my whole life and now I can hardly go out into a crowd. I don’t have any confidence — I’m a different person.”
The law firm Freeths, which is leading the sub-postmasters’ collective legal action, said the claim was being pursued on various grounds, including breach of contract, negligence, breach of fiduciary duty, harassment and unjust enrichment, among others.
James Hartley, a partner, said: “We are confident that this will enable the full extent of this systemic behaviour by Post Office Ltd to be brought to light, wrongdoers held to account, victims compensated and hopefully a broken Post Office culture mended.”
The litigation threatens to cast a shadow over efforts to turn round the Post Office.
Following a wave of strikes in the run-up to last Christmas over redundancies and pension cuts, Paula Vennells, chief executive, said in March that the institution was on the verge of breaking even for the first time in more than a decade.
In parallel with the collective legal action, the Criminal Cases Review Commission is reviewing 29 convictions where applicants say the Horizon system played a part. More than 10 postmasters participating in the class action went to prison, with sentences of between three weeks and two years.
“This litigation isn’t just about money but about lives being destroyed,” said Mr Bates.
Fujitsu, which built the system, declined to comment.