Post Office faces court battle over accounting software

A dispute over the accuracy of a digital accounting system used by the Post Office has now reached the High Court as sub-postmasters start their class action over the relationship between employees and the company, and the operation of the IT system

The Horizon accounting system, designed and installed by Fujitsu Services, came into operation in 1999. Former sub-postmasters claimed to have experienced problems with the Post Office's Horizon accounting system since 2009, with funds reported missing.

According to an initial judgment over a group litigation order on Alan Bates and Others v Post Office Limited[2018] EWHC 2698 (QB), this led to some claimants ‘convicted in the criminal courts of false accounting, fraud, theft or other offences. Some had their contracts with the defendant terminated, sometimes very abruptly’.

The approximately 600 claimants have repeatedly stated that the problems were due to computer faults within the new software.

Sub-postmasters are not directly employed by the Post Office and are required to make up shortfalls in accounts out of their own pocket.

The five-week trial at the High Court began on 5 November 2018 and will focus on the particular features of this contractual relationship between the sub-postmasters and the Royal Mail and its impact on the case.

Six lead claimants will give evidence on behalf of the employees and 14 witnesses will give evidence for the defendant, Post Office Limited. The sub-postmasters will be represented by Patrick Green QC of Henderson Chambers, Henry Warwick and Ognjen Miletic.

It will be followed by a second trial in March 2019, which will take evidence from IT experts on the operations of the Horizon system.

Commenting on the case Paolo Sidoli, partner at Russell-Cooke, said: ‘Significant public interest will be generated by this high profile and costly group action claim, which the Post Office has confirmed would be “material” to its business in the event of an adverse outcome.

‘The proceedings will be carefully case-managed by the Court, given the complexity of the legal issues and the quantities of financial, expert and accounting evidence with which it will be presented by the parties in the coming weeks.

‘The legal issues will include whether the allegedly faulty computer system caused the financial and personal losses being claimed and the extent to which the claims are time-barred under the Limitation Act. Other companies who deploy similarly complex computer systems dealing with high volume transactions will doubtless be keeping a careful eye on the effectiveness of their own systems, as will their insurers.’

Commenting on the case, a Post Office spokesperson said: 'The Post Office will be robustly defending its position in the court and welcomes the opportunity to do so. We take these cases extremely seriously and we have worked hard over a number of years to address the issues raised. We have conducted thorough investigations and sought to resolve some of the claims through mediation.'
'It is important to note that the claimants represent a very small proportion (0.01%) of users of our Horizon computer system users since 2000.'
'Our employees and postmasters are important to us and we take our relationships with them very seriously. We have confidence in our network of 11,500 Post Office branches and the systems underpinning it. The Horizon computer system is operated successfully by thousands of employees, postmasters and their staff to process 47m transactions every week.'

Report by James Bunney 




James Bunney

James Bunney, Accountancy magazine and Accountancy Daily...

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