Postmasters land funding for legal‎ clash over Post Office IT fiasco

13 February 2018, 19:18

Hundreds of sub-postmasters have secured funding for a class action lawsuit against the state-owned Post Office following an IT fiasco which left them accused of false accounting or theft.

Sky News has learnt that Therium Capital Management, a specialist litigation funder, has agreed to back the ‎claim, which has attracted more than 550 participants to date.

The case, which is being brought by the Justice for Subpostmasters Alliance‎, relates to an allegedly faulty computer system which mistakenly showed their branches to be in financial deficit.

Some of those affected by flaws in the Horizon accounting system were sent to prison for false accounting, with a substantial number losing their homes or being declared bankrupt as a consequence of their loss of income.

The precise size of their compensation claim was unclear on Tuesday night, although it is certain to run to many millions of pounds.

If the case goes to court, it is likely to embarrass the Government, which remains the sole shareholder in the Post Office even after privatising Royal Mail through a stock market flotation in 2013.

The Post Office, which has a network of abut 11,000 branches, has just recorded its first annual profit in 16 years, but still receives hundreds of millions of pounds in public funding.

Ministers are keen to see it become a more entrenched component of the banking industry as commercial lenders shrink their branch networks, with discussions taking place in recent weeks about securing support from big high street banks.

The Post Office has previously said that it intends to defend the sub-postmasters' claim and denied any general issues with Horizon.

Therium's involvement in the sub-postmasters' claim is the latest prominent legal case to attract its backing‎.

The firm, which is providing funding for the former television presenter Noel Edmonds' legal action against Lloyds Banking Group, is expected to announce this week that it is on the way to raising £300m for its largest-ever fund.

The new pool of capital, which is being provided by a broad selection of global investors, reflects the growing demand among ‎institutions for access to litigation funding.

Firms such as Therium cover the costs of a case in return for a proportion of any damages awarded.

Its previous fund, which was raised nearly three years ago, has already been deployed, with many of the cases on which the capital was spent still ongoing.

These include a shareholder group claim against Lloyds and several form directors over the rescue of HBOS during the 2008 financial crisis; a cartel action for the Road Haulage Association against several truck-makers; emissions litigation in the UK against Volkswagen on behalf of 45,000 motorists; and the recently filed claim against Google over its so-called "Safari workaround".

Sources said that Therium, which was established in 2009, expected to deploy the new money within two years amid booming demand.

The first closing of its latest fund, at £200m, is expected to be followed by a final close at £300m.

Therium, which is expected to unveil its plans on Wednesday, declined to comment.