Former subpostmasters have hailed a High Court victory in their ongoing legal battle against the Post Office over its computer system.
More than 550 claimants are involved in a group legal action against the Post Office over the Horizon IT system, which it introduced between 1999 and 2000.
Represented by a group of six lead claimants, they allege the system contained a large number of software defects – which they say caused shortfalls in their accounts.
The Justice for Subpostmasters Alliance (JFSA) said subpostmasters had scored an “emphatic win” after a judge made a series of findings on the first of at least three trials in the case.
In a ruling on Friday, Mr Justice Fraser determined a number of key issues about the legal relationship between the subpostmasters and the Post Office, resolving most of them in favour of the subpostmasters.
Alan Bates, one of the lead claimants in the case and a JFSA representative, said: “This is a major step forward to achieving justice and getting to the truth of the matter.
“This judgment is consistent with the incredibly serious miscarriage of justice that we believe has taken place.
“The judge has found in the claimants’ favour on all the important issues in this trial.
“This goes to the heart of the relationship between Post Office and the postmasters.”
Mr Bates added: “Whatever happens from now on, this is the victory we’ve been fighting for – postmasters have won and Post Office will never again be able to behave as they have in the past with impunity.”
During a trial in November – before which legal fees in the case had already reached more than £10 million – Mr Justice Fraser was asked to look at the contractual relationship between the claimants and the Post Office.
The judge found in his ruling that the contract was a “relational” one which he said means the Post Office could not act in a way “considered commercially unacceptable by reasonable and honest people”.
He said this implied duty of “good faith” also applied to the subpostmasters.
He also said the Post Office occupied a “potentially unique position in terms of strength” and that the two parties were “almost uniquely unequal”.
The six lead claimants are Alan Bates, Pamela Stubbs, Mohammad Sabir, Naushad Abdulla, Elizabeth Stockdale and Louise Dar – who all ran branches of the Post Office when the system was introduced.
The claimants allege the Horizon system caused shortfalls in their financial accounts, which led to some being made bankrupt, while others were prosecuted and even jailed for offences including false accounting, fraud and theft.
They accuse the Post Office of failing to provide adequate training in the use of Horizon, for failing to investigate the cause of alleged shortfalls and also of misleading them about the reliability of the system.
The Post Office is rigorously defending the case and says Horizon worked perfectly adequately.
It argues that the burden is on the claimants to prove that any of their shortfalls were generated by flaws with Horizon.
The judge said: “The Post Office describes itself on its own website 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 wholly wishful thinking.
“Trust is an element of an obligation of good faith, a concept which I find is to be implied into the contracts between the Post Office and the subpostmasters because they are relational contracts.
“The Post Office asserts that its brand is trusted by the nation, but the subpostmasters who are claimants do not trust it very far, based on their individual and collective experience of Horizon.”
Mr Justice Fraser is currently hearing a second trial, to determine issues relating to the Horizon computer system.
Other issues, including whether the Post Office breached the terms of its contracts with the subpostmasters and compensation, will be dealt with at future hearings.
The judge added: “Much hinges on the outcome of this litigation as a whole, both in terms of the individual claimants and the effects upon them of the events over a number of years, as well as the potential effect upon the Post Office, both financial and reputational.
“This judgment is the first substantive step in resolving the group litigation, but it does not dispose of all the issues between the parties.”
The judge said he intends to hold hearings in every judicial term from November of this year until the litigation is resolved.
James Hartley, of Freeths law firm, who is acting for the claimants, said: “This is a substantial and complex case and we shall continue to drive it forward to a final conclusion in the interests of the claimant group – this case is of profound importance to them.”
Post Office chairman Tim Parker 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.
Mr Parker said the Post Office is considering an appeal on certain aspects of the ruling.