Hundreds of sub-postmasters on Friday won a major legal victory against the Post Office about the fairness of the contracts which they signed up to.
A group of 550 current and former sub-postmasters have sued the Post Office in the High Court in London over accounting errors relating to business transactions that they claim they were wrongly held responsible for by the company.
They alleged that problems with the Post Office’s Horizon computer system led to accusations of theft, fraud and false accounting by the company against sub-postmasters.
Some sub-postmasters were prosecuted or forced into bankruptcy after being told by the Post Office to repay thousands of pounds linked to the accounting discrepancies. A small number of sub-postmasters went to jail.
The complex litigation brought by the sub-postmasters against the Post Office has been split into four separate trials and Friday’s ruling related to the first one, which examined the contracts they signed with the company.
The sub-postmasters are seeking damages from the Post Office, but this will only be resolved at the end of the litigation.
The sub-postmasters argued there was an “imbalance” of power in the contractual relationship with the Post Office, and said some might not have known about their potential obligations to make good any accounting shortfalls or losses shown by the Horizon computer system.
On Friday Mr Justice Fraser ruled that contractual terms, including clauses governing liability for losses, failed the requirement of reasonableness in the 1977 unfair contract terms act.
He concluded that the two sides did not have equal bargaining strength and were “almost uniquely unequal”.
“The Post Office is a sizeable and significant institution,” said Mr Justice Fraser. “A [sub-postmaster] is a small business person. The two parties are not remotely equal.”
The judge noted in the ruling that the Post Office describes itself as ‘the nation’s most trusted brand”. “So far as these claimants, and the subject matter of this group litigation, are concerned, this might be thought to be wishful thinking,” he added.
Mr Justice Fraser was critical of Angela Van Den Bogerd, the Post Office’s business improvement director, who testified in the case.
He found in two instances “she did not give me frank evidence and sought to obfuscate matters, and mislead me”.
The judge also described Post Office witnesses generally in the case as “so entrenched. that they appear absolutely convinced that there is simply nothing wrong with the Horizon system at all”.
Friday’s ruling was welcomed by sub-postmasters. Alan Bates, one of the sub-postmasters who testified, said: “The judge has found in the claimants’ favour on all the important issues in this trial.
“In particular, the judge has found that Post Office owes duties of good faith, transparency and fair dealing, which is significant because we maintain Post Office has breached those duties for many years.”
Tim Parker, Post Office chairman, said: “We take this judgment and its criticisms 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.”
The Post Office, which is defending the litigation, is considering an appeal.