Post Office scandal: £10k pay-out 'cruel', says bankrupt victim

Tony Downey can feel his heart racing a little as he walks up the main street in Hawkshead, a pretty village in the Lake District. It's the first time he's been back since he fled abroad after losing his livelihood and health from the Horizon Post Office scandal.

"We didn't even say goodbye, we were too embarrassed. We just ran," he says.

He went bankrupt two months after selling his post office and shop when he could no longer cover the shortfalls in his accounts.

But he's only ended up with £10,000 in compensation so far - way less than what he has lost.

"It's an insult, it's cruel... I should still be [in the post office]. I have no career, no money, no pension, no nothing. They took that all away from me."

Now, Tony's battle for financial redress is being seen as a test case by his legal team dealing with most of the bankruptcy cases in the biggest and earliest Horizon compensation scheme.

Tony, 56, bought the Hawkshead post office in 2001. Over the next six years he and his wife Caroline were forced to put in £35,000 of their own savings to make up for "losses" which never existed.

Instead, a faulty computer system called Horizon was to blame. They couldn't afford to put in another £7,000 when the shortfalls continued.

"We had no money left, so we resigned. And I told them I was selling the post office. Which we did manage to do to be able to pay most of our debts off, but we were short, so we were advised to declare bankruptcy."

Tony was already suffering from stress and anxiety from all the financial pressure. At one point, he says he was suicidal.

"I was terrified of driving because I thought: I'll kill myself. Somehow I managed to keep it together until it was sold and then that was it... I just fell apart."

Blaming himself, Tony felt too ashamed to stay in their small community.

They withdrew their daughter from school and fled, without the chance for her to say goodbye to her childhood friends.

"We just ran away," Tony says. Afterwards, he had a nervous breakdown and has not worked since.

He and Caroline have been living in a small, rented apartment in southern Spain to be close to his parents for support. His £120-a-week income is made up of benefit payments.

Then, just 18 months ago, he found out about the Horizon failures.

Tony filled out his application form for compensation from the Horizon Shortfall Scheme (HSS). When the Post Office responded with an offer, it admitted that Horizon was responsible for the losses at his branch, but it denied it caused him to go bankrupt.

After Tony sold the post office and shop, he paid off a £60,000 commercial loan which was guaranteed against his wife's parents' home as he could not face putting it at risk.

But the Post Office said Tony should have paid off his other debts first. As a result, he's only been paid £10,000 in damages for personal suffering so far.

Tony was awarded £140,000 to make up for his shortfalls and 26 months of lost income plus interest, but the money's been swallowed up by his debts and goes straight to the Official Receiver to pay off his creditors. He'll receive any surplus that's left.

Tony is now being represented by Hudgell Solicitors who are challenging his offer.

"Tony's been incredibly short-changed," says Neil Hudgell, partner in the firm.

He argues that if the Post Office had admitted causing Tony's bankruptcy, it would have meant far higher compensation - potentially covering 17 years of lost income as he has not been able to work.

"It is a particularly cruel irony for sub-postmasters to be deprived of compensation the Post Office is due to pay, given it was the Post Office which, in many cases, caused the financial collapse which preceded these bankruptcies," says Mr Hudgell.

"When we took the post office on we had no debts," Tony says. The business was running amazingly well. But taking £35,000 from us had a massive effect… we didn't want to go bankrupt."

"I now have no career, no money, no pension, no nothing... they took that all away from me."

"At the moment, they are not even close to putting me back to where I would've been, but they have to admit causation to do that."

There are now 74 bankruptcy cases in the Horizon Shortfall Compensation Scheme.

The Post Office told the BBC that to date, it had accepted causation of bankruptcy in 25 of them. 17 have been settled although it's not clear if the claimants did so with any legal advice.

Neil Hudgell's firm is dealing with more than 40, trying to "unravel the true picture" and warns that some former subpostmasters and postmistresses may see time run out before a resolution is reached.

He believes Mr Downey has "a very strong" case and that the HSS has got it wrong when it refused to accept the Post Office caused his client to go bankrupt.

"Tony had essentially no debt before taking on the Post Office. He went bankrupt within two months of leaving... He was cash generative until he'd seen the problems with Horizon," he says.

Bankruptcy adds a layer of complication to what are already complex cases - they're taking the longest to solve, adding to years of anguish.

"We need to start giving subpostmasters the benefit of the doubt. They don't have the documentation that backs up aspects of their claim in many instances. So, it's about trying to reduce the legal war of attrition, looking at things in the round, and doing the right and fair and proper thing," believes Mr Hudgell.

On his first visit back to the village he left behind, Tony feels nervous but validated.

His battle is far from over but after all these years he wants to "wave my little piece of paper, saying it wasn't me... It wasn't me."

His old post office is no longer there. It shut more than a year ago. The building has now been let to a nursery.

A Post Office spokesperson said: "We do not comment on individual cases, but we fully recognise that recompensing victims of the Horizon IT scandal who have been declared bankrupt or insolvent as a consequence of Horizon shortfalls has been a complicated and lengthy process - for which we apologise.

"All offers made under the Horizon Shortfall Scheme are assessed by an independent panel which includes forensic accounting specialists. Any individual in receipt of an offer is entitled to dispute the amount and seek legal advice on the offer received, the cost of that independent legal advice is reimbursed by Post Office."