Litigation Funding - the Post Office and Horizon IT scandal

The recent ITV series Mr Bates vs The Post Office has drawn to the Public’s attention the fact that over 900 postmasters were wrongly criminally convicted of theft and false accounting  as a consequence of the accounting defects within the Horizon IT systems manufactured by Fujitsu.

Over 500 of those sub-postmasters headed by Mr Bates (who founded the Justice for Sub-Postmasters Alliance) had sought financial compensation from the Post Office through litigation.

This group litigation only became financially viable with the assistance of “after the event” funding provided by Insurers. Such Litigation Funding Agreements with insurers were said to be vital to enable “David” to take on “Goliath” as in Mr Bates instance..

In the summer of 2023 however a Supreme Court Ruling in the case of PACCAR and others  v Competition Appeal Tribunal and others threw into doubt the enforceability of such Litigation Funding Agreements, having severe implications for both Litigation Funders and law firms relying on such third party funding models. Without protections in place, the whole sector could have been placed in jeopardy and with it the unintended consequence that the ability of “David” to take on “Goliath” would diminish.

The Department for Business and Trade became aware of the implications of the decision and through promptings from the Association of Litigation Funders and others resolved to address the issue. The UK Government, through its Justice Secretary Alex Chalk informed the Financial Times that he planned to reverse the damaging effect of the Supreme Court ruling at the first legislative opportunity. The Government is conscious that the UK is often  the venue for global disputes to be resolved and wants to retain that reputation. Ministers are now looking at the best options to change the law. They recognise that viable litigation funding options can be fundamental to justice being secured.

As an aside  Mr Bates and his Alliance colleagues is not finished with litigation yet. They seek to re-open their litigation and set aside the Settlement Agreements they entered into with the Post Office due to their failure to act in good faith. Although the group received a reported £56.75m the individual Post-masters received around £20,000 each after deduction of costs associated with the action, including to the “no win, no fee” litigation funder.  It is asserted that the Post Office’s deliberately legal team were trying anything and everything to run the litigation funding dry. In so doing, this forced the Postmasters into accepting the settlement terms previously secured to ensure they received something from the exercise.

The ongoing Parliamentary enquiry into the conduct of the Post Office may take some time to unravel, but is certain to remain in the public conscious.

Should you wish to seek advice in respect of any Litigation issues and the funding options open to you within such litigation, feel free to contact one of our Dispute Resolution Solicitors at our offices in Ashford, Cranbrook or Hythe today. Please call 01233 665544 or fill in our enquiry form on the right hand side of the page to request a call back.