Castleton v Post Office: Court of Appeal rules hybrid preliminary issues approach unworkable

The Court of Appeal has allowed an appeal by Lee Castleton, a former sub-postmaster whose legal battle with Post Office Limited (POL) and Fujitsu Services Limited arises from the long-running Horizon scandal. The judgement, handed down on 12 May 2026 ([2026] EWCA Civ 577), sets aside the procedural framework ordered by the High Court for a preliminary issues trial, finding that a "hybrid" assumption about POL's knowledge of Castleton's claims was unworkable.

Castleton was suspended as sub-postmaster of the Marine Drive, Bridlington branch in March 2004 after the Horizon system recorded cash shortfall discrepancies. POL obtained civil judgement against him in 2007 for over £25,000, which together with costs produced a debt of £309,807 and led to his bankruptcy. He was among the GLO Claimants in Bates & Ors v Post Office Limited, the group litigation that produced Fraser J's seminal findings on Horizon's defects in 2019. That action settled on 10 December 2019 under a Settlement Deed containing a broad general release.

In March 2025, Castleton commenced fresh proceedings alleging unlawful means conspiracies — including that the 2007 judgement was obtained by fraud — and seeking its annulment along with damages exceeding £2 million. POL and Fujitsu rely on the Settlement Deed as a complete answer. Castleton advances three routes around it: first, that the deed does not on its proper construction release the historic claims; second, that it would be unconscionable for POL to rely on the release; and third, that POL fraudulently misrepresented why it had not called key witness Gareth Jenkins at the GLO trial, inducing Castleton to settle.

At a January 2026 directions hearing, Trower J and Master Kaye ordered a separate preliminary issues trial of these "Part A" questions. Critically, however, the order included a footnote providing that the unconscionability issue would be determined on the provisional assumption — not an admitted fact — that the historic claims were viable and that POL knew this on 10 December 2019.

The Court of Appeal, in a judgement delivered by Zacaroli LJ (with Popplewell and Peter Jackson LJJ agreeing), found this approach created too many practical difficulties to be workable. The central problem was that the provisional assumption was, as Peter Jackson LJ put it in argument, "a legal assumption unpopulated by any facts". The unconscionability inquiry does not exist in a vacuum: questions such as whether POL knew that Castleton was unaware of his claims, and the overarching question of whether reliance on the deed would be unconscionable in all the circumstances, would themselves require investigation into precisely the kind of facts — the seniority and state of mind of individuals within POL, the extent to which information was suppressed — that would have populated the assumed sub-issue.

The court also identified a significant ambiguity in the Order's effect. POL's counsel confirmed at the hearing that the provisional assumption was not intended to preclude POL from re-litigating its knowledge at a subsequent trial if it lost the preliminary issues. This interpretation surprised Castleton's and Fujitsu's counsel and had not been aired before the Judges below. On the court's reading, the order had directed a trial to determine the unconscionability issue, not merely aspects of it. If POL's understanding were correct, there would be a material risk of evidential overlap and inconsistent findings between two successive trials — a consequence inimical to the efficient use of court resources.

The Order cannot therefore stand in its present form. The court declined, however, to simply strike the POL knowledge assumption from the footnote without further consideration. Given that the key objections were not raised below, it directed that the parties file short submissions on whether the preliminary issues trial, absent the assumption, remains appropriate in its otherwise current form, and whether any such question should be resolved by the Court of Appeal or remitted to the Judges.

Castleton's application to remit to a differently constituted court was refused. An appellate disagreement with a case management decision does not, of itself, require reassignment, and no criticism of the Judges below was implied.