More than 550 sub-postmasters have won their first case against the Post Office over an IT system they say caused some of them to be wrongly accused of theft and false accounting.
The dispute over the Horizon system has spanned a decade, but on Friday a High Court judge ruled in the postmasters’ favour in the first of four trials.
Horizon was introduced between 1999 and 2000 but the six lead claimants, who represented the larger group, claim it was riddled with problems.
They accuse the Post Office of not training them properly on the system, failing to investigate the cause of alleged shortfalls and misleading them about its reliability.
The Post Office denies those claims and says the system worked perfectly well.
A second trial – to decide on the claims about the IT system itself – is currently under way.
However, Mr Justice Fraser has decided on 23 key issues about the parties’ contractual relationship which will be important in the other hearings.
He said the Post Office is subject to duties of good faith, fair dealing, transparency, cooperation, and trust and confidence when dealing with postmasters, and that failure to do so would be a breach of contract.
Post Office chairman Tim Parker said he took the judgment “very seriously” but said the organisation may appeal against the decision.
Some of those affected have told Sky News how they fell into depression and felt as if “I had a gun to my head” after being accused of stealing.
Balvinder Gill ran a post office in Oxford in 2003 before he was ordered to repay a massive shortfall which he says led to bankruptcy and depression.
“Every single week I had the same problems of not being able to understand the errors that were occurring,” he said.
“The figures on the system never matched the physical stock and cash. After six months, auditors arrived at my office and told me I couldn’t enter the counter.
“They said, by their calculations, I was approximately £60,000 down. I couldn’t stand up. I was devastated.”
The Justice for Subpostmasters Alliance (JFSA) said they had recorded an “emphatic” win.
The first trial took place at the end of last year and the others are expected to decide on other aspects of the case, including potential compensation.
Alan Bates, one of the lead claimants, called it a “major step forward to achieving justice and getting to the truth of the matter”.
He said: “Whatever happens from now on, this is the victory we’ve been fighting for – postmasters have won and Post Office will never again be able to behave as they have in the past with impunity.”
“The Post Office describes itself on its own website as ‘the nation’s most trusted brand’,” said Mr Justice Fraser’s judgement.
“So far as these claimants, and the subject matter of this Group Litigation, are concerned, this might be thought to be wholly wishful thinking.”
Post Office Chairman Tim Parker said: “We have taken his criticisms on board and will take action throughout our organisation.
“Our postmasters are the backbone of our business and our first priority will be to consider the points raised about the management of our contractual relationships and how we could improve them.”
He said problems raised by postmasters would be “investigated even more quickly and transparently” and that training would also be improved.
However, he added the Post Office was considering appealing the outcome of the first trial based on “certain legal interpretations”.