The contract that subpostmasters were forced to sign by the Post Office was so weighted against them that the organisation’s contracts manager said he would not have agreed to it if he had been in their shoes.
During a Horizon scandal public inquiry hearing, he also admitted a High Court battle with subpostmasters in 2018, which the Post Office spent more than £100m of taxpayers’ money fighting and ultimately losing, was seen by the Post Office as a way of “killing off” challenges to the Horizon system.
Subpostmasters were made to repay or were punished for unexplained accounting shortfalls, although they were caused by errors in the retail and accounting software used in branches, known as Horizon. The phantom losses were their responsibility because of the contract they signed with the Post Office.
Victims of what is now known as the Post Office Horizon Scandal suffered from depression, ill health, bankruptcy and imprisonment. Many received criminal records, and there are suicides connected to the suffering.
John Breedon, former Post Office contract manager, told the public inquiry the terms of the contract he was pushing on subpostmasters would not be something he would “personally want to sign”.
He said the “obligations were all on the subpostmaster”, and that it “put them on the hook for doing everything”.
Jason Beer KC, barrister to the public inquiry, asked Breeden why this view was not expressed in his 16-page written evidence. He said he didn’t know, but admitted, when prompted, that it was “perhaps” because he wasn’t asked directly.
A key part of the Horizon scandal was that the contract contained a clause that stated: “The subpostmaster is responsible for all losses caused through his negligence, carelessness or error and also for all losses caused by his assistants. Deficiencies due to such losses must be made good without delay.” Unless subpostmasters could prove there was some other cause, such as a bug in the Horizon system, they would have to pay.
But the Post Office went further in pressuring subpostmasters when it wrote to them demanding they cover all shortfalls. These letters omitted details about which losses subpostmasters were responsible for, simply stating that they were responsible for all losses. This would mean the subpostmaster had no choice but to pay the Post Office the amount of the shortfall, or face suspension or prosecution.
Beer KC said this was mis-stating the clause.
This enabled the Post Office to glean money from subpostmasters without evidence of where the money had gone, and those that contested the losses, many of which blamed Horizon, were often dragged through court, made bankrupt and prosecuted, with many convicted and sent to prison.
A High Court group litigation order (GLO) in 2018, where 555 subpostmasters sued the Post Office, proved that Horizon errors caused unexplained accounting shortfalls, which due to the unfair contract, subpostmasters paid a heavy price for.
During the legal battle, judge Peter Fraser said in a judgment: “There can be no excuse, in my judgment, for an entity such as the Post Office to mis-state, in such clearly expressed terms, in letters that threaten legal action, the extent of the contractual obligation upon a [subpostmaster] for losses. The only reason for doing so, in my judgment, must have been to lead the recipients to believe that they had absolutely no option but to pay the sums demanded. It is oppressive behaviour.”
In 2009, a Computer Weekly investigation first revealed that subpostmasters were being blamed for unexplained accounting shortfalls, which they believed to be caused by software errors. (See timeline of all Computer Weekly’s Horizon scandal coverage since 2009).
So far, 93 former subpostmasters have had wrongful criminal convictions overturned, with many more expected. Over 900 were prosecuted in Wales, Scotland and Northern Ireland based on evidence from the Horizon system from 2000 to 2014 in England.
The Post Office was able to continue its approach to unexplained losses through secrecy around problems with Horizon. During the hearing, Breeden admitted the Post Office had a policy of only relaying “good news”, with details about challenges to the robustness of the Horizon system ignored while the organisation focused on its brand.
Breeden said this attitude was “part of the Post Office’s DNA”, which he said, “came from the top [of the organisation]”. During this period, Paula Vennells was Post Office CEO.
Beer KC referred to a write up of a recorded meeting between Breeden and lawyers at Womble Bond Dickinson in 2018. The meeting was in preparation for Breedon giving evidence in the High Court GLO. Beer asked Breedon if the GLO was seen as a way of “killing off” subpostmaster challenges to the Horizon system. He agreed that it was.
In his evidence in the first trial in the GLO, which was focused on the contractual relationship between the Post Office and subpostmasters, Breedon never mentioned his view that the contract was “weighed against subpostmasters”.
He was criticised by judge Fraser for providing what he described as providing “PR-driven” evidence during GLO trials.
Fraser also said there was a culture of secrecy and confidentiality generally in the Post Office, but particularly around the Horizon system.