Time is a problem for the Post Office, and its government owners, in making any legal claim against Fujitsu.
This is because any claim would probably be for breach of contract, and the limitation period for suing for breach of contract is normally six years from the breach.
Unless there was concealment – and here it is plain that the Post Office knew there were serious problems by 2013 (and no doubt for a long time before) – it is rare for a court to extend the limitation period.
At the House of Commons business select committee hearing today Fujitsu accepted a “moral obligation” to provide compensation. This indicates that Fujitsu’s response is PR-driven rather than strictly legalistic, as there is probably no legal obligation to compensate for any breaches obvious before six years ago.
(There may be a possible indemnity that may still be legally live in the Post Office Horizon contract, outside the limitation period, but that is unlikely.)
*
But.
The Post Office, and its government owners, may have claims against its own former directors and advisers for any wrongs in respect of how the scandal has been dealt with in the last six years.
In essence: could Paula Vennells and others be sued?
It would be interesting if any such recovery is sought.
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I think the likelihood of the chief execs being subject to action is pretty small, however I think the legal counsel within the organisation may have a harder time escaping sanction.
There was an effort to get legal opinion from Simon Clarke which produced what appears to be a fairly clear indication that further prosecutions would be unwise and yet the prosecutions continued. That, together with the rebuke later issued by the Appeal Court, seems to suggest that the legal function within PO wasn’t working as it should.
Depends on whether the directors/advisers have PII.
Would suing directors be different to, and separate from, using contractual malus and claw back clause provisions to recover bonuses?
At last someone else has brought up PII. I published an article in The Justice Gap almost a year ago (https://www.thejusticegap.com/the-justice-systems-role-in-non-disclosure-of-horizon-material/ ) on the use of PII hearings by the prosecution in these cases which enabled non-disclosure of computer programs and data by Fujitsu and the Post Office. It implies that judges must have been involved in the granting of immunities and hence implicated in the successful prosecutions of many innocent people. How else could have computer engineers and other Fujitsu personnel have been so sure that they did not need to disclose material needed by defendants?
I assume the directors will have been indemnified by HMG so government will need to prove actual fraud or dishonesty by directors in order for their liabilities not to be borne by HMG in any case – possible, but quite a high bar, yes?
Why do you make that assumption?
BEIS accounts disclose that ‘indemnities have been given to the directors appointed by the core department to wholly owned subsidiaries. These indemnities are against personal liability following any legal action against the companies”
It may well be that that applies to the Chair & Non execs, rather than the CEO though.
I suspect those indemnities would not cover action by the PO itself for breach of contract.
We are often told that our big public & private corporations must pay highly to attract world class talent. But it would seem entirely reasonable that those who are highly remunerated should face high levels of accountability. Perversely the opposite often seems to be true.
I remember that in pre-Thatcher times, the highest marginal tax rate faced by top earners was 98%. Perhaps we could return to such tax rates but with an option for top earners to shelter their income from the top rate of tax by placing their earnings in a trust fund for 10 years. In return, the employer, and other stakeholders, would be able to seek compensation from the trust fund if it subsequently became apparent that the high earner had failed in their duties while in receipt of high levels of remuneration.
Such trust funds would not simply be a potential source of compensation for victims of bad management but an incentive for high earners to consider the long term as well as short term consequences of their decision making. Bankers tempted to pursue high risks strategies, house builders tempted to cut corners and PO executives turning a blind eye to problems would perhaps think twice.
What a good and reasonable idea. I can’t imagine how any of the sort of people it would fetter could possibly countenance it.
The NEDs (Non Executive Directors) should be pursued without mercy. Their role is to ask the awkward, even if seemingly stupid or simple, questions. Why did the senior Board believe (and who told them) that the Horizon system was absolutely foolproof? that it could never go wrong? That in the entire history of new computer systems, especially a huge repurposed system, this one uniquely had zero bugs? What was the increase in apparently criminal sub postmasters ante and post Horizon roll out? Not hard, nor obtuse nor unaswerable questions. They failed abjectly – as they do so frequently in the cosy little merrygoround of NEDs at FTSE and State entities. Yet they walk away scot free, only to turn up like the three wise monkeys rolled up into a single individual on the Board of another big enterprise being paid big money for a few days work. At the very least seek the return of their fees, expenses and emoluments.
Although, as you’ve said, breach of contract has its limitations, it was announced relatively recently, that the PO contract for the Horizon system would be extended to 2025.
Are there differences between the ongoing umbrella contract and that which was in force in 2013 when it became clear there were problems and, if so, does that affect the legal limitations?
If the directors were proven to have acted in fraudulent breach of their fiduciary duties to the Post Office, then there would no limitation period per section 21(1)(a) Limitation Act. Even an action to recover the benefits of a non-fraudulent breach may be possible per section 21(1)(b) (applying Burnden v Fielding)? Not to mention dishonest assistance claims against those who assisted the directors in committing such breaches. All at the instance of the Post Office (acting by its current board) or its shareholders (by way of derivative claim) if the directors won’t act. Not to suggest that such claims would be legally or evidentially straightforward…
I think fraud is not a runner here. That is why I did not mention it as an exception to limitation generally.
This is all going to cost people living working and paying taxes in Britain a small fortune.
I’m sure we’d all love to see Paula Vennels and the rest of the directors, along with Fujitsu, take some sort of fall. But criminal proceedings seem to be the right way to proceed here. As you’ve often said, civil actions are usually or ideally settled out of court, and this would surely happen here.
I think this is one where we want as much detailed evidence as possible to be tested in court, to lay down markers for public agencies for the future.
Is there any reason why “out of court” should not include “from behind bars”?
It seems a significant part of the pay structure was performance related bonuses. Those bonuses were based on accounts that the CEO knew or ought to have known to be misrepresenting the state of the company, and the actual performance was significantly less than was represented to shareholders (HMG).
So yes, there should absolutely be recovery.
Over the course of a week or so, I have read all the judgements apart from the costs for the common actions. My overall impression is that the solicitors instructing for Post Office behaved as though they were unfamiliar with the Civil Procedure Rules. Unfortunately (for them), they were dealing with a judge who is very familiar with those rules and the overriding objective.
It was also noted on more than one occasion where lead council, when pressed about the contents of a submission, agreed that there was no basis for something argued.
Add that that, there were numerous instances in which a witness was cross examined as though one or more other witnesses of fact had not already modified their witness statements. In some instances, this was accompanied by clearly unfounded positive assertions of criminal activity.
Whether or not PO may sue its former directors and advisors, I feel that Womble Bond Dickinson ought to forfeit theirs fees. Call it, I don’t know, a “moral duty” or something.