A former subpostmistress who was convicted of fraud based on evidence from the Post Office’s faulty Horizon IT system has had her conviction quashed by the Court of Appeal.

Kathleen Crane was handed a 12-month community order and ordered to repay more than £18,000 she was accused of taking from her branch in Eastbourne, East Sussex, when she was sentenced for fraud in 2010.

She was one of hundreds of postmasters who were convicted after the Post Office’s defective Horizon accounting system produced figures which suggested money was missing at their branches.

At a hearing in London on Thursday, three appeal judges ruled there was “no doubt” that Mrs Crane’s conviction was unsafe, adding that she was “kept in ignorance” over Horizon’s defects.

Giving their judgment, Lord Justice Holroyde said: “We have no doubt that her prosecution was an abuse of process.

“Nor do we have any doubt that her conviction is unsafe.”

Mother-of-two Mrs Crane, 68, attended Thursday’s hearing and wept when her conviction was quashed.

Speaking to ITV outside the Royal Courts of Justice following the decision, Mrs Crane said her “horrible” experience was “over now” and urged others affected by the scandal to come forward, saying: “If you’re innocent, you should have your conviction quashed.”

I absolutely think someone should serve some jail time

Her daughter, Katy Crane, who joined her mother in court alongside her sister, Lucy Crane, said: “I actually don’t know how they (the Post Office) sleep at night.

“I absolutely think someone should serve some jail time.

“I think somebody needs to be held to account.”

Mrs Crane’s case is the first of many expected to reach the Court of Appeal as a result of the Post Office’s own case review, with the company contacting her last June to say it believed there had been a miscarriage of justice.

With the support of her daughter, Katy, Mrs Crane lodged an appeal on January 10 this year, which the Post Office did not resist.

Flora Page, representing her in court, said Mrs Crane had “suffered in silence” since her “appalling experience”, adding that a “fraud she had not committed brought its own humiliation”.

She added: “She is somewhat overcome with the prospect of clearing her name.

“She works in a care home and she will no longer have to contend, we hope, with the fact that this conviction comes up every year when they do their enhanced checks.

“It will close a very long and painful chapter in Mrs Crane’s blameless life.”

No leap of imagination is needed to understand the anxiety and fear which Mrs Crane and her late husband, who is since sadly deceased, and their two daughters must have experienced

Mrs Crane’s husband, Robert, became subpostmaster of the Old Town Post Office in Eastbourne in October 2000, but she took over the running of the branch due to his ill health.

Mr Crane died in 2016, with Mrs Crane wearing his scarf during Thursday’s hearing.

An audit in January 2010 found a financial shortfall, but after voluntarily attending an interview with Post Office investigators Mrs Crane was accused of defrauding the company of £18,721.52.

During the investigation, she said she had been aware of inexplicable shortfalls since 2008 and asked for them to be investigated, but no action was taken.

She later pleaded guilty to fraud by false representation after legal advice made her feel that the Horizon system was infallible.

On top of her sentence, she was ordered by a judge at Lewes Crown Court in July 2010 to pay £1,550 in costs and complete 200 hours of unpaid work.

The Court of Appeal heard that Mrs Crane maintained that she and her husband were “at a loss” to explain the shortfall.

Simon Baker KC, representing the Post Office on Thursday, said that while the company was duty-bound to investigate the case based on evidence available at the time, he told the court the case “amounts to an abuse of process”.

He also told the court that three appeals against convictions arising from the scandal had been lodged in the last week.

Lord Justice Holroyde, sitting with Mr Justice Picken and Mrs Justice Farbey, said: “No leap of imagination is needed to understand the anxiety and fear which Mrs Crane and her late husband, who is since sadly deceased, and their two daughters must have experienced.”

He added: “We are satisfied that the respondent’s (the Post Office) concession is right and properly made.

“This is indeed a Horizon case in which the reliability of the Horizon data was essential for the prosecution.

“No relevant investigation was carried out and no disclosure was made of the known concerns about Horizon.

“She (Mrs Crane) pleaded guilty because she and those representing her had been kept in ignorance.”

We are pleased that Mrs Crane’s conviction has been overturned ... We continue to work with the Government to support efforts to speed up the exoneration of people with wrongful convictions and ensure compensation is paid

Following the ruling, a Post Office spokesman said: “We are deeply sorry for past wrongs and are doing all we can to put these right, including extensive work to support overturning wrongful convictions.

“As part of this work we contacted Mrs Crane and other individuals who were unjustly convicted, on the evidence that we hold, to encourage them to mount an appeal and we are pleased that Mrs Crane’s conviction has been overturned.

“Additionally, in 2020 we contacted all current and former postmasters about the launch of the Horizon Shortfall Scheme to encourage more victims to come forward.

“We continue to work with the Government to support efforts to speed up the exoneration of people with wrongful convictions and ensure compensation is paid.”

Alongside the hundreds convicted in court, the Post Office also forced at least 4,000 branch managers to pay back cash based on the flawed Horizon data.

Some victims – whose plight was highlighted by the recent ITV drama Mr Bates vs The Post Office – were left financially ruined and shunned by their communities, while others took their own lives.

In the wake of the scandal, Prime Minister Rishi Sunak announced that the Government intended to introduce blanket legislation to exonerate those wrongly prosecuted in England and Wales.