Entries Tagged 'Case Law' ↓

The case of Johnson v Medical Defence Union has hit the Court of Appeal, with Mr Johnson still pursuing a claim for breach of the Data Protection Act 1998 in relation to the processing of his personal data in relation to his indemnity insurance policy.  The original decision[case via BAILII] was made back in March last year.  The Court of Appeal decisionhas just been published on BAILII.

To recap for those of you who are not familiar with the case, Mr Johnson had had his membership, and therefore insurance, revoked by the Medical Defence Union, something that they were contractually entitled to do.  However, his claim was that the information which lead to this decision had been obtained through unfair processing of his personal data in breach of the Act.  A risk manager had reviewed his claims files, and inputted information from those files onto a summary sheet which incorporated a scoring system.  It was this sheet which, when presented to a committee set up to decide such things, lead to the withdrawal of his membership. 

Case law in this area is scarce, and so judicial interpretation of wide terms such as “processing” and “fairness” as are set out in this decision - even if the judges are divided - are welcome.  Even if it is just so that those of use who work in this sector can breathe a sigh of relief that the courts find as much difficulty in interpreting them as we do!

The court had to consider whether the Act applied, and if it did, if there had been a breach.  Mr Johnson claimed the breach arose from:

“Selecting the information contained in the personal data and thereby presenting a false picture of the situation.”

It was not sufficient to show that there was personal data processed, and the result was unfair.  Mr Johnson had to show which act of processing was in itself unfair. 

“However, that said, the difficulty for Mr Johnson remains that the selection, and thus the carrying out of operations, of which he complains was done by Dr Roberts, using her own judgement, and not by any computer or by any automatic means. To the extent that the material on which she worked was already recorded on a computer Dr Roberts had to operate that computer in order to access the information, but no complaint is made of that: because it is not suggested that in looking at Mr Johnson’s record Dr Roberts shut her mind to, and therefore refused even to look at, any particular data. Similarly, having made her decisions Dr Roberts recorded them, or caused them to be recorded, in electronic form; but by that stage Dr Roberts had already made her decision, so the subsequent mechanical recording of her decision did not add to the alleged unfairness.”

In other words, and to summarise an incredibly complicated analysis in one sentence, the judges held (by a majority) that the act of selecting data was not in itself processing of data for the purposes of the Act - it was not automatic processing. 

An analogy (one of many) which particularly caught my eye was this one:

“Judges when they have decided what their reserved judgments should say place those conclusions on a computer, or dictate those conclusions for typing up by their clerk, again by use of a computer. Judgments tend to contain or to refer to a good deal of personal data in respect of the parties to the case. Judges are for that reason data controllers under the terms of the 1998 Act; but one does not need to stress the oddity of a conclusion that the typing of the judgment brings the decision-making process that preceded the typing within the “fairness” terms of the first Data Processing Principle.”

I have a lot of sympathy with the analysis of Buxton LJ, but Arden LJ, in the minority, disagreed.  Like the definition of personal data before it, as explored in the Durant case, “processing” can mean so many different things in so many different scenarios that the effect of making a firm decision as to its meaning could lead to a whole manner of unjust effects where the facts differ.  Like Durant, I can tell that this case will require some time before its effects are fully understood.

As an aside however, the commentary on the purpose of the Act and indeed the data protection directive contained in this judgement is also of interest.  Buxton LJ draws our eye to recital 10 of the directive, which states that:

“Whereas the object of national laws on the processing of personal data is to protect fundamental rights and freedoms, notably the right to privacy, which is recognised both in Article 8 of the European Convention for the Protection of Human Rights and Fundamental Freedoms and in the general principles of Community law;”

The judges seemed to agree on this point - the Act is primarily there to protect privacy - not employment related detriment which occurs as a result of a decision taken with reference to personal data.  It is not there to create a new cause of action for an injustice where no other cause would assist.  With the Data Protection Act being held as the reason for so much nonsensical bureaucracy, it is worth bearing in mind this overriding theme.

In this case from the European Court of Human Rights, an employee from a UK College was subjected to monitoring of telephone, email and internet use.  There was no policy in place at the relevant time regarding monitoring.

The court briefly considered the relevant domestic law, which included the Regulation of Investigatory Powers Act 2000, the tort of misfeasance in public office, the Data Protection Act 1984 (now replaced, but this was the relevant legislation at the time), the obligation of trust and confidence between employer and employee, and the lack of a distinct law of privacy.

It went on to consider whether there was a breach of Article 8 - namely whether the College had interfered with her right to respect for private life and correspondence.  The court referred to the existing case law which states that telephone calls made from work do consititute an element of private life.  It therefore summised that emails must also fall within this category, together with information gathered from internet monitoring.

As this was information relating to the private life of the individual, and it was monitored, the court found that there was interference with Article 8.  It then turned on whether this interference was “in accordance with the law”.

Whilst the government argued that College was authorised under its statutory powers to do “anything necessary or expedient” for the purposes of providing higher and further education, the court found this unpersuasive.

There was nothing in law at the time which permitted such monitoring (and in particular the provisions of Telecommunications (Lawful Business Practice) Regulations 2000, which permit monitoring under certain conditions) were not yet in force.  The individual in question had not been notified of the monitoring and so could not have expected that this monitoring was going to take place.

There had therefore been a breach of Article 8, and the court awarded damages for non-pecuniary loss of €3,000, as well as legal costs of €6,000 (which were limited due to the other complaints which had been brought but not upheld - total costs claimed had been £9,363).

This case doesn’t impact greatly on monitoring taking place today under the regime now in place.  However, it does stress the fact that an employee does  carry out his or her private life whilst at work, and as such there is some expectation of privacy. 

Tip: Monitoring if it does occur should take place only within the realms of the Lawful Business Practices Regulations, and employers should ensure that employees are informed of and understand the monitoring that takes place.

COPLAND v. THE UNITED KINGDOM - 62617/00 [2007] ECHR 253 3 April 2007 [link from BAILII]

No. 

The House of Lords have recently looked at the operation of s 35 (6)(a) of the Sale of Goods Act 1979 where a customer and a seller had agreed to the repair of defective goods.

s35 can be a confusing provision which sets out when a customer may be “deemed” to have accepted goods purchased under a contract for the sale of goods. 

In this case, the customer had used the goods (a power harrow) for a few days before it was clear they were defective.  The supplier took them away to investigate.  On investigation, the defect was identified and fixed.  So no problem?

Well, not quite.  The customer asked what the problem had been and what had been done to fix it - but the supplier would only tell him that the problem had been resolved.  When the customer found out what the problem had been, he was concerned that the use before the repair could have caused long term damage - and he wouldn’t find that out until next spring when next cultivating the soil. 

s 35 (6)(a) says that the buyer is not obligated to accept goods just because he has agreed to their repair.  But it goes no further regarding what the effect of agreeing to repair has on the contract of sale.

The House of Lords have tried to fill this gap.  They held that there was a separate contract for the repair of the goods, which did not in itself affect the customer’s right to rescind the contract of sale, but which must contain an implied term that if it was performed correctly, the customer would not exercise this right.  This was required for business efficacy.

There was also an implied term in the repair contract that the customer would be informed of the defect and the actions taken to cure it - this was required to enable the customer to make an informed decision about whether to accept the repaired goods.

Failure to comply with this implied term was a material breach.  The customer was entitled to rescind the repair contract, and then the contract of sale.

Phew.  All in all, a complex analysis, but one which was required by the absence of detail in the statute. 

Tip: If you are negotiating a sale of goods contract which includes an option for the supplier to repair any defective goods, consider including provisions which explain what this means rather than relying on the statutory provisions.  What information does each party need to provide?  How long will the repairs take?  Can the customer reject the repaired products?

This applies whether you are acting for the customer or the supplier - the certainty that can be obtained through a clearly drafted clause has to be preferable to costly court action to determine the outcome.

J & H Ritchie Ltd v Lloyd Ltd [2007] UKHL 9, 7 March 2007 [link from BAILII]

The courts have once again had reason to consider a contractual obligation to act reasonably and in good faith in the case of Tramtrack Croydon Ltd v London Bus Services Ltd [2007] EWHC 107 (Comm). In the contract the parties had agreed to agree (acting reasonably) some particular financial arrangments and to refer any failure to agree to expert determination. Considering the authorities including Walford v Miles [1992] 1 All ER 453, the parties did not contest that the clause was unenforceable for lack of certainty, and the court went on to confirm this stating: “In those circumstances the Court can, in my judgment, decide, in the case of dispute, at least what they, and the expert, acting reasonably, are bound to take into account or ignore. An agreement such as this should not be construed to mean that the parties (or the expert) may legitimately take into account anything (however unreasonable or irrelevant) they choose, or that their contractual fate is to be determined by whatever the appointed expert happens (on whatever basis) to decide. Reasonableness is a criterion on which the Court (and the expert) can make a judgment; and, if the parties cannot agree whether it would be unreasonable to take into account, or to exclude, a particular consideration, the Court may determine the question.”

The recent case of Marplace (No. 512) Limited v Chaffe Street [2006] revisits some of the issues raised in Football League Ltd v Edge Ellison (a Firm) [2006] EWHC 1462 regarding the scope of a solicitor’s duty to advise on the commercial aspects of a transaction, and caps on solicitor’s liability for negligence. The firm of solicitors advised a company on a corporate acquisition. For various reasons the acquisition went wrong and the solicitors were accused of negligence.

Ultimately the solicitors were found not to be negligent. The scope of a solicitor’s duty depended on the context of his instructions from his client. 

A solicitor may be duty bound to proffer unsolicited advice or seek further instructions for example, if they were not involved in the negotiation of a transaction but were simply instructed to implement that transaction, the solicitor must still point out any legal obscurities of which the client may be unaware, or point out any hidden pitfalls.

However, a solicitor is not under a duty to review the whole range of commercial considerations underlying a particular deal to which the client may have given insufficient thought. In this instance, the solicitors in question had been entitled to take the view that their clients were intelligent, sophisticated and experienced businessmen who were perfectly able to seek advice if they desired it.

The case went on to comment on the cap on liability.  The solicitors letter of engagement said “You agree that … our maximum aggregate liability to you in the event of professional negligence on any matter in relation to which we are instructed shall be £20 million… should you want to vary these limitations we shall be pleased to discuss it with you but we reserve the right to vary our fees accordingly”.

As context:

• Chaffe Street’s turnover was low - about £4 million.
• The amount of the limitation set by Chaffe Street with its various clients did vary from one transaction to another.
• Chaffe Street’s insurance at the time of the alleged breach was £25 million.
• Chaffe Street accepted that the Unfair Contract Terms Act applied to the cap on liability and therefore they were obliged to demonstrate it was reasonable.

The court did find that limitation was reasonable for the following reasons:

• The claimant was a sophisticated and wealthy consumer, and therefore the bargaining positions of the parties were equal. In particular the claimant was used to contracting with professionals and the basis of limitations of liability.
• The claimant was aware of the cap on liability and had in fact discussed it with Chaffe Street. It had not been imposed as a non-negotiable term (albeit the court recognises that it would have probably been difficult to switch solicitors at the time).
• The engagement letter made it clear that if the claimant wanted different limitations of liability then Chaffe Street was prepared to discuss that.
• Chaffe Street determined the £20 million limit on reasonable commercial principles taking into account insurance cover, expenses and circumstances of the transaction.

We don’t frequently get suggestions from the court as to what levels of limitation of liability will be reasonable under UCTA.  It’s always nice when one comes along!

In the case of Point Solutions Limited v Focus Business Solutions Limited and another [2007] EWCA Civ 14 [from BAILII], Point Solutions were appealing the decision to decline their request for a declaration that they had not infringed the IPR of Focus in developing its software.  Point had had access to Focus’ software during a period of providing outsourcing services to Focus.

The court found that without the instruction of an expert to assess whether there had been any infringement, and for a number of other reasons, Point had not been able to satisfy the court that it had independently created the software.  There was no reason for Point to require the declaration - Point could alternatively resolve the dispute by appointing an independent expert to determine whether or not copying had taken place.

In what was all in all an unsatisfactory judgement, Chadwick LJ pointed out that the case could have been avoided if the parties had simply appointed a joint expert as ordered by an earlier hearing - without this, insufficient evidence was placed before the court to enable it to make such a declaration.