Court delivers a blow to the PO

Judge questions Subpostmaster contracts

Post Office is locked in a legal battle
Post Office is locked in a legal battle

A HIGH Court judge has dragged Post Office contracts over the coals, calling into question Subpostmasters’ liability for cash shortfalls.

In the first ruling of an ongoing legal battle between the Post Office and a sizeable group of Subpostmasters, High Court Justice Peter Fraser found that existing contracts between the Post Office and retailers failed tests of “reasonableness” on multiple counts.

Around 550 Subpostmasters have been engaged in a legal battle with the Post Office over alleged incidents of lost cash, many of which have cost retailers thousands – with some Subpostmasters ending up in prison over cash allegedly owed to the Post Office.

At its core, the ongoing legal battle revolves around the use of the Post Office’s Horizon IT system, which Subpostmasters blame for inaccurately reporting shortfalls in cash.

Under current contracts, retailers must submit a regular Branch Trading Statement to the Post Office, which must line up with the revenue reported through the Post Office’s Horizon IT system. 

Any shortfall between the Branch Trading Statement and the Horizon IT system’s figures is treated by the Post Office as an error on the part of the Subpostmaster – who is then liable for any missing cash.

Justice Fraser found that the clauses in Subpostmaster contracts which deal with these losses were unreasonable and could leave retailers on the hook for “very sizeable sums with no upper limit, for something entirely out of their control.”

Due to the complexity of the issue, the legal battle is scheduled to take place over four separate trials, however the first ruling handed down by the High Court last month – which focused on the nature of Subpostmaster contracts – has already caused a major stir.

Since the ruling, the Post Office has requested Justice Fraser recuse himself, putting a temporary halt on further proceedings until 3 April.

The Post Office has called into question Justice Fraser’s ability to continue to oversee proceedings due to an “apparent bias”.

When proceedings resume, the High Court will turn its attention to the reliability of the Horizon system.

Commenting on the initial ruling, Post Office chairman Tim Parker said: “We take this judgement and its criticism of Post Office very seriously.

“While the culture and practices of the business have improved in many ways over the years, the Judge’s comments are a forceful reminder to us that we must always continue to do better. We have taken his criticisms on board and will take action throughout our organisation.”

Parker added that there are areas where the judge’s conclusions differ from what the Post Office would expect “from a legal standpoint,” and “we are therefore seriously considering an appeal on certain legal interpretations.”

Update: Justice Peter Fraser ruled on 9 April that he will not recuse himself from the ongoing proceedings. The trial continues.