Kieran Pezzack discusses whether the Post Office could sue its former directors and advisers in relation to the Horizon scandal.

When looking at the long history of the Horizon scandal, a natural question arises: where were the Post Office board? An insight into where the board were was given at the Business, Energy and Industrial Strategy Select Committee in June by a statement from Paula Vennells: “The message that the Board and I were consistently given by Fujitsu… was that…it was fundamentally sound. I believed that it was reasonable for the Board to rely on these assurances.”

Time is a growing 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 clear that the Post Office knew there were serious problems by 2013 (and arguably a long time before) – it is highly unlikely that a court would extend the limitation period.

At a House of Commons business select committee hearing 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 prior to 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.)

However, 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.

Fundamentally, it would appear that the Post Office and its government owners could not exercise informed, independent judgement over the functioning of their key IT system. In the absence of that expertise, and impressed by the technical sophistication of Fujitsu, it chose to place arguably blind faith in the competence of its IT provider rather than a gathering a body of contradictory evidence or learning the functionality of the system. When combined with a defensive mindset that avoids transparency, the consequences are catastrophic.

Going forward, a lack of technical literacy will continue to place many boards in an extremely vulnerable position. As we look ahead to the brave new world of AI, it is worth reflecting that the Horizon IT scandal is a textbook example of how the weak governance of technology can pose existential risks for an organisation, especially if it takes place in an environment in which board members are either unwilling or unable to grasp the full implications of their legal duty to promote the best interests of the company.

For further information on this topic or on any other legal area, please contact John Szepietowski or Kay Stewart at Audley Chaucer Solicitors on 01372 303444 or email or visit our Linkedin page.

Annabelle Hubbard

This information was correct as of February 2024


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