The Post Office knew a post office operator would probably be bankrupted by a legal case he brought but wanted to send a warning message to others, a solicitor who worked for the company has admitted.
Lee Castleton was made bankrupt by the Post Office after a two-year legal battle. His case is one of the most high-profile in the Horizon IT scandal, which has been described as the most widespread miscarriage of justice in UK history.
Castleton bought a post office in Bridlington, east Yorkshire, in 2003. However, within a year his computer system showed a £25,000 shortfall, despite him calling the Post Office’s helpline 91 times as he suspected the Horizon IT system was at fault.
He was taken to court by the Post Office, where he had to represent himself as he could not afford a lawyer, and was ordered to repay the money and pay costs of £321,000, which bankrupted him.
On Thursday, Stephen Dilley, who represented the Post Office in the civil claim against Castleton, told the inquiry into the IT scandal that it knew he would not be able to pay if he lost but that the state-owned company wanted to “show the world” it would defend the Horizon system.
“I entirely accept that in so far as we could understand Mr Castleton’s asset position there was a significant risk he would be unable to pay,” said Dilley, who denied the suggestion that Castleton had been seen as a “sacrifice”. Dilley added: “The Post Office were aware of the risk they would not be able to enforce their judgment.”
After the legal action, Castleton was forced to close his shop, sell his house and move into rented accommodation, while his wife suffered stress-induced seizures and his children had to move schools because of bullying.
Dilley was asked whether he bore any responsibility for what happened to Castleton. “I am satisfied I acted, and my firm acted, professionally, politely and appropriately at all times,” he said.
Castleton’s claim against the Post Office that it was the Horizon IT system, which he was unable to provide expert technical evidence on during his court case, meant the company viewed securing a victory as key to dissuading other post office operators from pursuing claims.
Dilley said: “As the case continued the motivation of the Post Office changed and what they wanted out of the case changed. It was less about making an example of Mr Castleton and more about sending a message that they were willing to defend the Fujitsu Horizon system.”
He added that for the Post Office the main goal in pursuing Castleton was “achieved in that we showed the world, if you like, [they/we] were willing to defend allegations about the Horizon system”.
However, Dilley said the Post Office tried to reach a settlement with Castleton multiple times but ultimately was forced to go to court because he made a £250,000 counterclaim.
“I think they were cognisant of personal impact on Castleton, they tried really, really hard to settle the case,” he said. “Once [Castleton] had issued the [counter] claim it had to either settle or go to trial. I do have one regret in the case, and that is that we were unable to settle it.”
Castleton has claimed that during the run-up to the hearing Dilley contacted him and told him to drop his defence, allegedly telling him: “We will ruin you. Think of your family.”
Dilley said: “I refute using that language. First of all it just doesn’t sound like language I would use, I know myself, it doesn’t sound at all like something I would say. It makes me sound like a Vinnie Jones character from an East End gangster film.”
On Wednesday, Castleton said of the bankruptcy: “It changed our lives completely. It was absolutely terrible and devastating.”
The Horizon scandal resulted in more than 700 post office operators being prosecuted between 1999 and 2015 for theft, fraud and false accounting because of faulty accounting software installed in the late 1990s.
To date, 86 operators have had their wrongful convictions overturned and £21m has been paid in compensation.