The news cycle at the start of 2024 has been dominated by the ongoing fallout of the Post Office scandal. This concerns the wrongful prosecution of hundreds of sub-postmasters and postmistresses after faulty computer software calculated money was missing from post office branches. A broadcast dramatisation of the scandal, Mr Bates vs The Post Office, served as a powerful catalyst in pushing it into public consciousness and up the political agenda.

The ongoing coverage continues to adversely affect the reputations of individuals and organisations involved, and is likely to have a significant impact for some time.

Background

More than 900 sub-postmasters and postmistresses were prosecuted for stealing money because of incorrect information provided by a computer system called Horizon. Many sub-postmasters had reported problems with the Horizon software, which had been developed by Japanese company, Fujitsu. The Post Office insisted Horizon was robust and failed to disclose any knowledge of faults in the system while securing convictions.

The majority of prosecutions were pursued privately by the Post Office against 700 people between 1999 and 2015, and the majority convicted received custodial sentences and were left in considerable financial difficulty. The resulting convictions together with the loss of livelihoods and homes, debts and bankruptcies, took a heavy toll on the victims and their families. Many have spoken out about their experiences, which include stress, illness, divorce and, in at least four cases, others have committed suicide.

Breaking the Post Office scandal story

Reporting of the impact on the victims was led by publications such as Computer Weekly, who first broke the story in 2009, but also Private Eye, with both publications reporting their own investigations into the problems with Horizon. Around the same time, Alan Bates, a former sub-postmaster, launched the Justice for Sub-postmasters Alliance (JFSA). From 2012, multiple major news outlets began to cover the story, both about the reported faults of Horizon and the impact on those prosecuted and convicted. Around this time, campaigners sought support from Members of Parliament.

Following political pressure, in 2012 the Post Office appointed forensic accountants to investigate the claims against Horizon, who concluded the software contained faults that could result in accounting discrepancies. The Post Office nevertheless insisted there were no systemic problems with the software. In 2015 a former Fujitsu employer came forward to ‘blow the whistle’ to the JFSA and to BBC Panorama.

Civil litigation commences and the resulting fallout

In 2017, a group containing 555 former sub-postmasters and postmistresses issued proceedings against the Post Office in the High Court and in December 2019, the Court determined there were bugs, errors and defects in the Horizon software. The Court’s ruling was the sixth decision in the group litigation and followed a prior application by the Post Office for the Managing Judge to recuse himself from the litigation. The Post Office’s application was dismissed, a decision upheld following a further application to the Court of Appeal.

The Court’s decision in 2019 was monumental and led to wide-ranging ramifications for the Post Office and associated parties:

• In December 2019, the Post Office announced it would pay £58million to settle the claims brought by the group action.
• The Post Office Horizon IT public inquiry was launched in June 2021.
• In April 2021, the Court of Appeal quashed the convictions of 39 former sub-postmasters and mistresses. As of 15 January 2024, 95 convictions have been overturned.
• In January 2024, the Metropolitan Police announced the Post Office was under investigation over potential fraud offences committed during the Horizon IT scandal.

Reputation of the victims and compensation for reputational harm

In January 2024, the UK government announced it will introduce legislation to exonerate all convicted sub-postmasters and to ensure victims can obtain compensation quickly. An immediate exoneration will offer victims an instant remedy for the reputational harm they have suffered and continue to suffer. However, the extent to which they can claim compensation for the reputational harm suffered is much narrower.

The claim for reputational damage should be a significant feature of any compensation claim, as it is currently in media law litigation, where courts have awarded damages for injury to reputation in defamation claims and, to a limited extent, in privacy claims.

Individuals affected by the scandal have suffered irreparable damage to their reputations, particularly where the damage was aggravated by the Post Office spending years defending the civil litigation. To be wrongly accused, charged and convicted for a criminal offence would plainly cause anyone serious harm to their reputation. It is therefore right that the Post Office compensation scheme, for the 555 former sub-postmasters and postmistresses who were claimants to the group litigation, allows claims for compensation where the claimants establish financial loss because of reputational damage.

How a compensation claim for reputational damage in the Post Office compensation scheme works in practice may not be what victims envisage. At least one victim has reportedly been offered £5,000 having claimed £75,000 for reputational damage. Any ongoing disputes on quantum will likely aggravate the distress for the eligible victims and continue to impact reputational damage for the Post Office.

Reputation management in the continuing fallout

Following the broadcast of an ITV dramatisation of the scandal in January 2024, coverage has intensified and brought the story to wider public and political attention, increasing the scrutiny on key players.

Reputation of Paula Vennells, former Post Office chief executive

In media reporting scrutinising Vennells’s role at the Post Office, reports surfaced which allege the former Chief Executive instructed solicitors to send newspapers a legal notice after the broadcast of the ITV drama. Vennells is, of course, entitled to seek to protect her reputation during a period of hostile news coverage featuring intense criticism of her role at the Post Office and in overseeing the prosecutions. On 9 January 2024, Vennells stated she would return her CBE, following comments by the Prime Minister’s spokesperson that he would support the Honours Forfeiture Committee if it decided to consider revoking Vennells’ CBE appointment.

Publishers’ due diligence when reporting

Given the intensified coverage, publishers reporting the fallout of the scandal will be mindful of any legal risks, particularly potential complaints in defamation, but also in privacy law. Any publisher reporting any defamatory criticisms or allegations made against individuals or organisations involved in the scandal, will possess a wide range of defences to support their coverage.

• A publisher could benefit from a public interest defence to any defamation complaint, so long as it can show its reporting is or forms part of a statement on a matter of public interest and the publisher has a reasonable belief that its publication was in the public interest.
• Additionally, privilege defences will be an immediate consideration for publishers given the various judgments in the group litigation but also the ongoing public inquiry, where interested parties will give evidence and the Inquiry will publish reports as to its findings.
  • An absolute privilege defence protects any statements made in the course of judicial proceedings and statements made by members of Parliament (or officials of the House) in the course of any parliamentary debate. The defence would apply to any statements made by members of Parliament who criticise or make allegations about individuals such as Vennells. The defence also protects fair, accurate and contemporaneous reporting of judicial proceedings held in public. As the Post Office Horizon IT Inquiry is now a statutory inquiry, absolute privilege will also apply to comments made by witnesses in written statements or in oral evidence.
  • Where an absolute privilege defence does not apply, a publisher may consider a qualified privilege defence, which applies where the publication is fair and accurate, published without malice and concerns a matter of public interest for public benefit. Reports of a government-appointed public inquiry (rather than a statutory inquiry) are an example of publication where qualified privilege applies. This would apply to any reporting of the inquiry before it was converted into a statutory inquiry in 2021.

However, any publisher reporting allegations which do not originate from either court judgments or inquiry reporting will need to ensure their reporting does not give rise to actionable defamation complaints, where no viable defence can protect their reporting. This will be an important consideration for publishers when the Post Office Inquiry resumes in Spring 2024 and, reportedly, where Paula Vennells will give evidence.

Reputation of the Post Office

The reputations of both the Post Office and Fujitsu are severely damaged by the scandal.

The Post Office, as an organisation owned by the government and managed day-to-day by a private company limited by shares, continues to receive the biggest share of criticism, and any effort at reputation management is hindered by findings of the Court and the Inquiry.

The Post Office was heavily criticised by the High Court in the 2019 ruling as demonstrating an “institutional obstinacy or refusal to consider” the Horizon system might be flawed.

The conduct of Post Office management will continue to be further scrutinised as the public inquiry continues and will inevitably undergo further reputational harm. It has already been reported that the Post Office instructed solicitors (using public money) to send letters to the BBC in 2015 threatening to sue Panorama for its reporting of the scandal. The anticipated testimony of former sub-postmasters to the public inquiry about their experience being prosecuted will likely lead to significant criticism of the Post Office’s management acting to protect the organisation’s reputation, as well as criticism against its agents, including its legal team.

The role of former postal affairs ministers in handling the scandal is also under scrutiny. This includes Sir Ed Davey, the current leader of the Liberal Democrats who, in May 2010, declined to meet Alan Bates, the sub-postmaster who led the campaign to expose the scandal. While Sir Ed later met Mr Bates in October 2010, he has faced questions about why he initially refused to do so. Sir Ed’s position is that he was advised by officials not to meet Mr Bates when he first became a postal affairs minister in May 2010, because the Post Office was owned “but not run” by the government. Sir Ed has said he took Mr Bates’s concerns seriously after their meeting, but was misled by the Post Office after he had raised Mr Bates’s concerns with Post Office executives. Sir Ed is also, reportedly, due to give evidence to the Post Office Inquiry when the hearings resume.

The scandal is a lesson in how easily reputations can be damaged and the last effects of such damage. Seeking advice from specialist reputation and crisis management experts must be a consideration for those who find themselves facing criticism and allegations in the continuing fallout.

Hamlins’ Media Disputes department is one of the largest and most successful Media Disputes teams in the UK and is widely recognised as an advisor of choice for both public and private figures seeking advice in relation to reputation management and  pre-publication complaints in defamation and privacy law. If you would like to find out more about how Hamlins can help you, please get in touch.