(Scottish) Data protection litigation – South Lanarkshire and more

I have observed (Panopticon passim) that the Data Protection Act 1998 features surprisingly sparingly in litigation. That appears to be somewhat less true of Scotland: for instance, Common Services Agency [2011] 1 Info LR 184, the leading case on anonymisation and barnardisation, came before the House of Lords from Scottish litigation. Here are two more recent examples, one from today, the other from last month.

South Lanarkshire

The Supreme Court has today given judgment in an appeal from the Inner House of the Scottish Court of Session about a FOI(S)A request for the number of individuals employed by South Lanarkshire Council on specific points in the pay structure, for the purposes of analysing compliance with Equal Pay legislation. The Council relied on the personal data exemption (contending that individuals could be identified from the requested information), but the Scottish Information Commissioner ordered disclosure. The Council’s appeal was dismissed by the Court of Session ([2012] CSIH 30) and, today, by the Supreme Court (South Lanarkshire Council v Scottish IC [2013] UKSC 55).

There were two issues for the Supreme Court. First, what does ‘necessary’ mean when it comes to condition 6(1) of schedule 2 to the DPA (the condition most often relied upon in support of disclosing personal data to the public), which provides that:

The processing is necessary for the purposes of legitimate interests pursued by the data controller or by the third party or parties to whom the data are disclosed, except where the processing is unwarranted in any particular case by reason of prejudice to the rights and freedoms or legitimate interests of the data subject.

Giving the Court’s judgment, Baroness Hale said that it was obvious that condition 6 requires three questions to be answered: (i) is the data controller or the third party or parties to whom the data are disclosed pursuing a legitimate interest or interests?, (ii) is the processing involved necessary for the purposes of those interests?, and (iii) is the processing unwarranted in this case by reason of prejudice to the rights and freedoms or legitimate interests of the data subject? In her view, “it is not obvious why any further exegesis of those questions is required” (paragraph 18).

Further exegesis was, however, required because of the Council’s submissions as to how strictly the term “necessary” should be construed. Baroness Hale’s answer was entirely unsurprising (see paragraphs 25-28). “Necessary” has to be considered in relation to the processing to which it relates. If the processing involves no interference with Article 8 ECHR rights, then it might be thought that all that has to be asked is whether the requester is pursuing a legitimate interest in seeking the information (which was not at issue in this case) and whether he needs that information in order to pursue it. If the processing does engage Article 8 ECHR rights, then “it is well established in community law that, at least in the context of justification rather than derogation, “necessary” means “reasonably” rather than absolutely or strictly necessary”. None of this will come as a surprise – as, for example, Jon Baines has observed in his Information Rights and Wrongs post. Indeed, as Baroness Hale observed, it is unclear that the stricter standard of necessity for which the Council argued would have been any more favourable to it.

The second issue before the Supreme Court was a natural justice challenge. The Scottish IC had asked the applicant a number of questions during his investigation, and had also received letters supporting the request from a number of MPs. This information had not been shared with the Council.

Baroness Hale observed that it was common ground that the Commissioner has a duty to act fairly (see for example Glasgow City Council v Scottish Information Commissioner [2009] CSIH 73, 2010 SC 125). The Commissioner is entitled to make his own enquiries and formulate cases on behalf of applicants, but “he must, of course, give them notice of any new material which his inquiries have elicited and which is adverse to their interests” (paragraph 31). Her Ladyship further observed (paragraphs 31-32) that:

“31. I would add that the Commissioner is fulfilling more than an administrative function. He is adjudicating upon competing claims. And in Scotland, unlike England and Wales, there is no appeal to a tribunal which can decide questions of both fact and law. The Commissioner is the sole finder of facts, with a right of appeal to the Inner House on a point of law only. These factors clearly enhance his duty to be fair. If wrong findings of fact are made as a result of an unfair process, the Inner House will not be able to correct them.

32. However, it does not follow that every communication passing between the Commissioner and the applicant, or between the Commissioner and third parties such as Members of the Scottish Parliament, has to be copied to the public authority…”

In this case, there was no breach of natural justice, and the Council’s appeal failed on both grounds.


Another of the more notable recent data protection cases is also Scottish. Additionally, it touches upon another of my observations (see here, for example) about the potential synergies and overlaps between the DPA and defamation. The case is Lyons v Chief Constable of Strathclyde Police [2013] CSIH 46 A681/10, and will be reported in the upcoming edition of the 11KBW/Justis Information Law Reports. In rough outline, the case concerned Mr Lyons’ complaints about two disclosures about him made by the police authority to regulatory/licensing bodies. The police had said that he was recorded on the Scottish Intelligence Database as having been involved in serious organised crime. Mr Lyons denied such involvement, and sued for defamation and damages under section 13 of the DPA.

His defamation claim failed because the police’s communications were made in circumstances which attracted qualified privilege, and were not tainted by malice.

The DPA claim failed too. The accuracy requirement of the fourth data protection principle had not been breached, because even if “Mr Lyons is involved in crime” were inaccurate, “Mr Lyons is recorded on the database as being involved in crime” could not be said to be inaccurate. The police’s reporting of that information arguably lent it some credence, but there was no indication on the facts of unequivocal endorsement of these statements such as to constitute the processing of inaccurate personal data by the police. Here the Court considered the Kordowski DPA/defamation case.

There was also an argument that disclosure of this information had been unfair, though (surprisingly) the case does not appear to have been pleaded as such. The essence of the unfairness argument was that, in Mr Lyons’ view, the police should have contextualised its disclosures by explaining to the recipients the source of the intelligence as to his alleged criminal involvement. The Court of Session dismissed this argument: the police could not sensibly disclose the identities of informants, given the DPA rights of the informants themselves, while Mr Lyons would not be entitled to learn through a subject access request who the informants were (see the exemptions under sections 29 and 31 of the DPA).

Here are a few interesting DPA points to emerge from the Court’s discussion. One is if a data controller endorses the veracity of inaccurate information obtained from someone else, that is not of itself a breach of the DPA (see paragraph 21). Some might query this, at least if applied inflexibly.

A second interesting point is that some might argue as follows: “to present decontextualised allegations in a manner which suggests you consider them credible could surely constitute unfairness. Perhaps you were not required to name your sources, but in the interests of fairness you could at least have made clear that you were passing on information obtained from others whom you considered to be credible”. Roughly that sort of argument seems to have been advanced here; no doubt the facts did not ultimately support it, but stepping back from the facts of this case, the (admittedly woolly and under-litigated) notion of fairness would arguably demand such an approach in many cases.

A third and final point of interest: the complainant relied on what he said were breaches by the police of a number of common law principles emerging from judicial review jurisprudence and the like. The Court was not impressed by their relevance to alleged DPA breaches, at least in the context of this case: see paragraphs 26-27, where the Court suggested that for there to be a DPA breach, there must be a particular DPA requirement which has been breached (though admittedly it did observe earlier in its judgment that ‘lawful’ in the context of the first data protection principle has no special meaning). Some might argue that fairness and lawfulness are designed to be broad enough to encompass principles outside of the black letters of DPA law. Indeed, Article 8 ECHR is increasingly the focus of arguments as to the lawfulness of processing: see for example the ICO’s enforcement notice concerning the use of ANPR cameras in the policing context, issued last week.

In other words, the DPA is not designed to be an entirely self-contained legal world, but rather to protect personal information by reference to all considerations having a bearing on what is being done with that individual’s information, whether or not they are listed by name in the DPA. This is not necessarily a point of disagreement with the Lyons outcome, but a broader observation about what kind of a creature the DPA is, or is intended to be.

Robin Hopkins (@hopkinsrobin)

Court of Appeal gives judgment on credit reference agencies and accuracy of personal data

The fourth data protection principle requires that “personal data shall be accurate and, where necessary, kept up to date”. It does not, however “impose an absolute and unqualified obligation on [data controllers] to ensure the entire accuracy of the data they maintain. Questions of reasonableness arise in the application of the fourth principle, as paragraph 7 of Part II of Schedule I spells out.” This statement by Davis LJ (at para. 80) encapsulates the case of Smeaton v Equifax plc [2013] EWCA Civ 108, in which the Court of Appeal handed down judgment today.

Equifax is a well-known credit reference agency. Between 22 May 2002 and 17 July 2006 Equifax included in its credit file concerning the Respondent, Mr Smeaton, an entry to the effect that he was subject to a bankruptcy order. This was incorrect – that order had been rescinded in 2002.

He was subsequently declined a business loan, with serious detrimental consequences for that business. He brought a claim against Equifax for those business losses and “other losses and distress consequent upon his descent into a chaotic lifestyle”.

Initially, his cause of action was defamation. By the time of trial in 2011, it had become (a) a claim under s. 13 of the Data Protection Act 1998, and (b) a parallel common law tort claim.

The judge, HHJ Thornton QC (having substantially amended the first draft of his judgment following submissions at handing down), found that Equifax had breached the fourth data protection principle (as well as the first and the fifth, though he had heard no argument on these points), that it owed Mr Smeaton a parallel duty in tort and that he had suffered losses as a result of these breaches.

The Court of Appeal disagreed in strong terms, Tomlinson LJ saying this at para. 11 about the judge’s approach and conclusions – particularly on causation:

“In retrospect it is I think unfortunate that the judge attempted to resolve the causation issue in principle, divorced from the question what loss could actually be shown to have been caused by the asserted breaches of duty. I have little doubt that Mr Smeaton believes in all sincerity that a good number of the vicissitudes that have befallen him can be laid at the door of Equifax, but a close examination of the relationship between the losses alleged and the breaches of duty found by the judge would perhaps have introduced something in the way of a reality check. Had the judge looked at both issues together he might I think have had a better opportunity to assess the proposition in the round. As it is, the judge’s conclusion that the breaches of duty which he identified caused Mr Smeaton loss in that they prevented Ability Records from obtaining a loan in and after mid-2006 is in my view not just surprising but seriously aberrant. It is without any reliable foundation and completely unsupported, indeed contradicted, by the only evidence on which the judge could properly rely.”

Turning from the facts of the case and the question of causation to the approach to the fourth data protection principle in general, Tomlinson LJ said this at para. 44:

“The judge was also in my view wrong to regard the mere fact that the data had become inaccurate and remained accessible in its inaccurate form for a number of years as amounting to a “clearly established breach of the fourth principle” – judgment paragraph 106. Paragraph 7 of Part II provides that the fourth principle is not, in circumstances where the data accurately records [erroneous] information obtained by the data controller from the data subject or a third party, to be regarded as contravened if the data controller has, putting it broadly, taken reasonable steps to ensure the accuracy of the data. A conclusion as to contravention cannot in such a case be reached without first considering whether reasonable steps have been taken. As the facts of this case show, that may not always be a straightforward enquiry. Perhaps often it will and it may not therefore usually be difficult to establish a contravention. Once it is concluded that reasonable steps were not taken in this regard, a consumer may seek compensation under s.13. It will then be a defence for the data controller to show that he had taken such care as in all the circumstances was reasonably required to comply with the requirement concerned. It may be that that enquiry is in substance no different from that required under paragraph 7 of Part II in the limited class of case to which that paragraph refers. However it should be noted that in cases not covered by paragraph 7 a contravention may be established without consideration of the reasonableness of the steps taken by the data controller. In such a case reasonableness would arise only if a defence were mounted under s.13(3).”

Tomlinson LJ then summarised the law and relevant legal guidance on credit reference agencies and bankruptcy proceedings. At para. 59, he concluded that:

“The judge’s approach begins with the observation, at paragraph 95 of the judgment, that erroneous or out of date data which remains on a consumer’s credit file can be particularly damaging. Of course this is true, and nothing I say in this judgment is intended to undermine the importance of the fourth data protection principle. But before deciding what is the ambit of the duty cast upon CRAs to ensure the accuracy of their data, it is necessary to put this important principle into context and to maintain a sense of proportion. In the context of lending, arrangements have been put in place to ensure that an applicant for credit should not suffer permanent damage as a result of inaccurate information appearing on his file. As recorded above these safeguards are set out in the Guide to Credit Scoring and are further explained in at least two other published documents…. The judge made no reference to these arrangements which are in my view relevant to the question how onerous a duty should be imposed upon a CRA to ensure that its data is accurate. I agree with Mr Handyside that in most cases of applications for credit failed on account of incorrect data the harm likely to be suffered is temporary inconvenience. It is possible that the judge overlooked this as a result of his flawed conclusion that it was inaccurate data, or more precisely the alleged breach of duty which gave rise thereto, which prevented Mr Smeaton / Ability Records from obtaining credit in and after July 2006.”

He continued at para 62:

“The judge ought in my view to have taken into account that these various publications demonstrate that both the methods by which CRAs collected and updated their data and the shortcomings in those methods were well-known to and understood by the Information Commissioner and the Insolvency Service.”

Tomlinson LJ also concluded (at paras. 67-68) that part of the judge’s conclusions on DPA breach “amounts to a conclusion that Equifax was in breach of the duty required of it under the DPA because it failed to attempt to persuade the Secretary of State and the Insolvency Service to initiate modifications to the legislative and regulatory framework and in particular failed to secure the reversal of the legislative choice made in 1986 no longer to require the automatic advertisement of annulments and rescissions. I do not consider that this is a realistic conclusion. Self-evidently it is not realistic to conclude that an exercise of this sort was either necessary or feasible in relation to a tiny number of cases where the consequences of inaccuracy could not normally be expected to be anything other than temporary inconvenience. A duty the content of which is to lobby for a change in the law must be very uncertain in its ambit and extent and in my view is implausible.”

Finally, not only had the judge erred in his approach to causation and the fourth data protection principle, he was also wrong to find that there was a parallel duty in common law: the House of Lords said in Customs and Excise Commissioners v Barclays Bank [2007] 181 that statutory duties cannot generate parallel common law ones, and on the raditional three-fold test of foreseeability, proximity and whether it is fair, just and reasonable to impose a duty, the answer here would also be ‘no’.

The judgment will be welcomed not only by credit reference agencies, but by all those data controllers whose particular circumstances mean that data inaccuracy is, best efforts notwithstanding, an occupational hazard.

For another blog post on this judgment, see Information Rights and Wrongs, where Jon Baines was quick off the mark.

Robin Hopkins