Alan Bates and Others v Post Office Ltd
| Jurisdiction | England & Wales |
| Judge | Mr Justice Fraser |
| Judgment Date | 09 April 2019 |
| Neutral Citation | [2019] EWHC 871 (QB) |
| Docket Number | Case No: HQ16X01238, HQ17X02637 and HQ17X04248 |
| Court | Queen's Bench Division |
| Date | 09 April 2019 |
[2019] EWHC 871 (QB)
THE POST OFFICE GROUP LITIGATION
IN THE HIGH COURT OF JUSTICE
QUEENS BENCH DIVISION
Rolls Building
Fetter Lane
London, EC4A 1NL
THE HONOURABLE Mr Justice Fraser
Case No: HQ16X01238, HQ17X02637 and HQ17X04248
Patrick Green QC, Kathleen Donnelly, Henry Warwick, Ognjen Miletic and Reanne Mackenzie (instructed by Freeths LLP) for the Claimants (the Respondents to the application)
Lord Grabiner QC, David Cavender QC and Gideon Cohen (instructed by Womble Bond Dickinson LLP) for the Defendant (the Applicants)
Judgment (No.4) “Recusal Application”
Hearing date: 3 April 2019
Introduction
These proceedings are being conducted pursuant to a Group Litigation Order (“GLO”) made on 22 March 2017 by Senior Master Fontaine. There is one substantive judgment dealing with what the parties referred to as the “Common Issues” which is called Judgment (No.3) “Common Issues”. This is at [2019] EWHC 606 (QB). Other judgments, which concern procedural rather than substantive issues, are at [2017] EWHC 2844 (QB) and [2018] EWHC 2698 (QB). These were numbered Judgment No.1, and Judgment No.2. It is the substance of Judgment No.3 “Common Issues” that is relevant to the application the subject matter of this judgment. There were 23 different Common Issues between the parties that were decided in Judgment No.3. The Post Office, the defendant in these proceedings, issued an application on Thursday 21 March 2019 that I recuse myself as the Managing Judge in the whole group litigation, and adjourn what is called the “Horizon Issues” trial, which commenced on 11 March 2019 and had been underway for two weeks when the recusal application was issued. That trial had almost reached the end of both sides' evidence of fact at that stage. The relief sought also included an adjournment of the Horizon Issues trial, but as I explain at [15] below, in reality it means abandonment of that trial so that it can be started again before another judge at some unspecified date in the future.
My first involvement with this case came after I was appointed the Managing Judge in April 2017. I issued Directions Order No.1 on 25 April 2017 which ordered the 1 st Case Management Conference (“CMC”) to take place before me on 19 October 2017, a date six months later. This was the first date possible due to paragraph 40 of the Group Litigation Order itself, which was made on 22 March 2017. That required a CMC to be held on “the first open date after 18 October 2017”. 19 October 2017 was therefore the earliest date upon which such a CMC could take place before me. In the Introduction to Judgment No.3 at [2] to [43], I set out an extensive background to the Group Litigation, which I will not fully repeat here. In general terms, the litigation concerns claims by about 550 sub-post masters and mistresses (or “SPMs”) who used to run branch Post Offices. The subject matter of the litigation is the Horizon computerised system (“Horizon”). Horizon is the computerised point of sale system which was adopted by the Post Office in 2000 and is used in all its branches. It also deals with individual SPMs branch accounts.
SPMs are men and women who run small retail businesses, in which branch Post Offices are located. They operate the branches, selling Post Office and other products (such as postal orders, postage stamps and so on) to members of the public, and the cash and stock in those branches belong to the Post Office. Stamps are in fact products that belong to the Royal Mail, but most readers of this judgment will be aware of what branch Post Offices are, and what they do. The Post Office also has a large number of what are called “clients”, including (for example) Camelot for the National Lottery, the Bank of Ireland for banking products, the DVLA and other similar institutions. SPMs both sell, and provide services in respect of, these products too on behalf of the Post Office, and the Post Office has separate arrangements with its clients for these services to be provided to the public in branch Post Offices. The Post Office pays SPMs remuneration, but they are not employees of the Post Office. They are self-employed small businesspeople. A small number of branch Post Offices are run through limited companies. Prior to 2000, SPMs accounted to the Post Office using a paper-based system. Horizon was introduced in 2000, and in 2011 the Horizon system became an online system. In the litigation, the Horizon system from 2000 to 2011 is called “Legacy Horizon”, and thereafter it is called “Horizon Online” or “HOL”. The litigation concerns both Legacy Horizon and Horizon Online.
The claimants' case is that Horizon contained, or must have contained, a large number of software coding errors, bugs and defects, and as a result apparent shortfalls and discrepancies would, and did, appear in SPMs' branch accounts. The subject matter of the litigation is highly controversial, and none of the claimants' claims are admitted. The claimants allege that when financial, accounting and other shortfalls occurred in branch accounts, the Post Office did not investigate these fairly or properly; required claimants to make good the alleged shortfalls; excluded claimants from their own branches; suspended and/or terminated their appointments; and imposed undue and/or unreasonable pressure or influence upon them to resign, or otherwise end their contract with the Post Office. It is also claimed that the Post Office unfairly investigated them, prosecuted some of them for theft, false accounting and/or other criminal charges, and acted unreasonably so as to prevent them from recovering the value of their businesses. It is also the claimants' case that throughout the relevant period (which is from 2000 onwards) the Post Office has concealed material facts from them and misled them about the reliability of Horizon and the errors in, and generated by, Horizon. This concealment is said to have included the ability of the Post Office (but most particularly its IT provider Fujitsu) remotely to access and make changes to transactions, data and/or branch accounts on Horizon, without the knowledge of the particular SPMs in question. Claims are also made in the torts of deceit, malicious prosecution, duress and harassment. The Post Office strongly defends all these allegations, maintains that the Horizon system is what is called robust and can be relied upon, and maintains that in the great majority of cases the shortfalls and discrepancies that arose are explicable by carelessness or dishonesty on the part of SPMs and their staff. Defences raised by the Post Office include the burden of proof, false accounting, failure to maintain records, estoppel, accord and satisfaction, account stated, settlement agreements, res judicata, issue estoppel, abuse of process, limitation, reflective loss and set off. A counterclaim is made by the Post Office for the amounts of unrecovered shortfalls, damages for breach of contract, fraud and/or conversion, an order for reconstitution of any trust fund and/or compensation in equity, and restitution in respect of amounts by which the claimants have been unjustly enriched.
The role of a Managing Judge in Group Litigation is to case manage the proceedings and try the issues. CPR Part 19 rules 19.10 to 19.15 set out the specific provisions relevant to Group Litigation. Under CPR Part 19 rule 19.12(1) where a judgment or order is made in a claim in relation to one or more GLO issues, such a judgment or order is binding upon the parties to all the other claims in the Group Litigation unless the court orders otherwise. Practice Direction 19B paragraph 8 states that the Managing Judge “will assume overall responsibility for the management of the claims and will generally hear the GLO issues.” PD19B Paragraph 15.1 states that directions may be given for the trial of common issues and for the trial of individual issues. PD19B Paragraph 15.2 states “common issues and test claims will normally be tried at the management court”.
In this litigation, the first group of common issues (which both the court and the parties have called the “Common Issues”) relate to the contractual and agency relationship between the Post Office and SPMs. The litigation spans a long period of time, namely from 2000 until 2016. The Post Office changed the terms upon which SPMs contracted with it in 2011, when what was called the Standard Sub-Postmaster Contract (or “SPMC”, which also existed in modified form from 2006 as the “Modified SPMC”) was replaced with the National Transformation Contract or “NTC”. The SPMC had existed from 1994, some years prior to the introduction of Horizon and when branch accounts were paper based. The Common Issues govern contractual and agency issues concerning the claimants, and arise under both the SPMC and the NTC contract forms.
The Common Issues trial took place between 7 November and 6 December 2018. Case management directions have been given for other rounds of the litigation going forwards, and the trial of a second round of substantive issues, called the “Horizon Issues”, commenced on 11 March 2019. The Horizon Issues trial involves the computer-specific issues, and for these issues each party is calling an expert in computing or IT. There are 15 such computing issues. One is to what extent was it possible or likely for bugs, errors or defects in the Horizon system to have the potential to cause apparent or alleged discrepancies or shortfalls relating to SPMs' branch accounts or transactions? Another is whether the Post Office and/or Fujitsu was able to access transaction data recorded by Horizon remotely (which means not from within a branch). The IT experts have issued four joint statements agreeing certain points. They have each served two expert reports.
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