{"id":14003,"date":"2024-01-17T10:35:15","date_gmt":"2024-01-17T10:35:15","guid":{"rendered":"https:\/\/www.taxpolicy.org.uk\/?p=13933"},"modified":"2024-01-17T10:35:15","modified_gmt":"2024-01-17T10:35:15","slug":"fujitsu","status":"publish","type":"post","link":"https:\/\/heacham.neidles.com\/2024\/01\/17\/fujitsu\/","title":{"rendered":"Do Post Office failures stop it from suing Fujitsu?"},"content":{"rendered":"\n

Fujitsu has indicated<\/a> that it’s willing to help compensate victims of the Post Office scandal.<\/em><\/strong> But will this be a small voluntary contribution, or can the Post Office sue Fujitsu to recover some of the \u00a31bn cost of the Horizon scandal?<\/a> <\/strong> <\/strong>We’ve spoken to leading commercial litigation lawyers, and we’re concerned that <\/em>the <\/em><\/span>Post Office’s own failures mean that there is little legal prospect of recovering the \u00a31bn from Fujitsu in the courts<\/em>.<\/b><\/span><\/p>\n\n\n\n

Ministers have said the Government will pursue Fujitsu<\/a> for its role in developing the faulty Horizon system; the Justice Secretary has said that Fujitsu should “pay a fortune”<\/a>. Many people would agree<\/a>. But can the Post Office make a claim?<\/p>\n\n\n\n

We have reviewed Post Office annual reports and accounts, and other publicly available documentation, and can see no mention of any potential claim against Fujitsu to recover some of its Horizon losses. This is surprising given the \u00a31bn+ cost to the Post Office<\/a> of the scandal, the fact that the ultimate cause was faulty software<\/a> provided by Fujitsu, and the evidence that Fujitsu personnel were complicit<\/a>.1<\/a><\/sup>There are an excellent series of articles here<\/a> on what technically went wrong.<\/span> Horizon is still being utilised by the Post Office and we understand that the software is still producing faults.<\/p>\n\n\n\n

The obvious route for any claim by the Post Office would be breach of contract.2<\/a><\/sup>We have not reviewed the contract between the Post Office and Fujitsu, but it would be surprising if so faulty a system was within contractual specifications.<\/span> Fujitsu’s staff may also have been negligent<\/a>, or even have deceived<\/a> the Post Office, both of which could give rise to a claim in tort (the law of civil wrongs). Whether any such claim could be successfully made by the Post Office is undoubtedly a difficult question, particularly that the Post Office appears to have been complicit<\/a> in Fujitsu’s failings. Establishing whether Fujitsu is liable, the quantum of its loss, questions of causation, contributory negligence, mitigation etc, would require an extremely lengthy and complex investigation and analysis, and any legal dispute would undoubtedly occupy the courts for years.3<\/a><\/sup>Fujitsu’s UK accounts don’t reveal any relevant liabilities, although that tells us no more than that Fujitsu (and\/or their auditors) do not think liability is likely.<\/span><\/p>\n\n\n\n

Even if the Post Office concluded that its prospects of success were limited, we believe a normal company in that position would make a claim to protect its position, and that of its shareholders.4<\/a><\/sup>Section 172 Companies Act 2006 requires that a director\u2019s overriding fiduciary duty is to \u201cact in the way he considers, in good faith, would be most likely to promote the success of the company for the benefit of its members as a whole\u201d. Section 172 also sets out a list of non-exhaustive factors which a director must consider while evaluating what would be likely to “promote the success of the company”.<\/span><\/p>\n\n\n\n

Last week, the Times reported that<\/a>:<\/p>\n\n\n\n

\"In<\/figure>\n\n\n\n

The problem is that 2020 may well have been too late. The Post Office may be time-barred.5<\/a><\/sup>This article does not discuss the actual contractual position, only the limitation period position. Generally in IT contracts there is a defects liability period after \u201ccompletion\u201d – typically 12 to 24 months for the contractor to remedy glitches at its own cost. If the glitches remain then a new contractor can be instructed to perform remedial action at the original contractor\u2019s cost. However the contract is commercially confidential, and so any analysis of the contractual position would be pure speculation. This article therefore focusses on the limitation period point.<\/span><\/p>\n\n\n

The Limitation Act – the basic position<\/h2>\n\n\n

Claims will become statute-barred under the Limitation Act<\/a> if an action is not started within the relevant period:<\/p>\n\n\n\n