Post Office Ltd v Castleton

An account stated is cogent evidence of the debt admitted, and the accounting party bears the burden of showing that the account is wrong or that an admission was made unintentionally and by mistake. Where the underlying entries and arithmetic are accepted, a computerised accounting system is not shown to be defective merely by unexplained anomalies that do not affect the relevant balances. A subpostmaster responsible under contract for the proper running of a sub-office may be summarily dismissed where substantial unexplained deficiencies establish non-performance of that obligation. The subpostmaster remains liable to account for money received during the appointment, including receipts arising after the office has closed where those receipts were admitted or proved.

The claimant sought payment of £25,858.95 from its former subpostmaster. The claim comprised an apparent shortage recorded in weekly accounts and a further sum relating to National Lottery receipts and prize payments. The defendant admitted that he was an accounting party, had signed the weekly Cash Accounts (Final), and that the entries and arithmetic were accurate, but contended that the apparent losses were caused by defects in the Horizon computer and accounting system.

The defendant also counterclaimed damages, alleging that the claimant had wrongfully terminated his contract. The court had to determine whether the account was wrong, whether the lottery money was repayable, and whether the contractual conditions justified summary termination.

1. Account and burden of proof. The defendant admitted that he was an accounting party and had signed the relevant Cash Accounts (Final). The statement of account was therefore admitted, subject to its validity. He bore the burden of showing that it was wrong or that an admission had been made unintentionally and by mistake, applying the principles stated in Shaw v Picton and Camillo Tank Steamship Company Ltd v Alexandria Engineering Works.
2. Horizon system. The weekly balances were mathematically coherent. The receipts, payments, stock and accumulated discrepancies reconciled according to the system’s stated logic. The accepted entries and arithmetic showed that the shortage of £22,963.34 was real. The alleged anomalies were either explained, insignificant, unsupported by expert evidence, or did not affect the weekly accounts. Evidence of problems at other branches did not establish a defect at this branch.
3. Lottery money. The defendant admitted receiving the relevant National Lottery receipts. He had not proved that he paid them to his successor. The claimant was accordingly entitled to restitution of £100.20.
4. Counterclaim. The contract required the subpostmaster to accept responsibility for the proper running of the sub-office and to make good deficiencies caused by his own or his assistants’ error. The substantial unexplained deficiencies were irrefutable evidence that the office was not properly managed. The claimant was entitled under section 1, clause 10, to determine the contract summarily for non-performance of the obligation in section 1, clause 5.
5. Judgment was entered for the claimant for £25,858.95. The counterclaim was dismissed. The question of interest was reserved for further hearing.