Keith Smeaton v Equifax Plc
| Jurisdiction | England & Wales |
| Judge | Lord Justice Tomlinson,Lord Justice Davis,Sir Robin Jacob |
| Judgment Date | 20 February 2013 |
| Neutral Citation | [2013] EWCA Civ 108 |
| Docket Number | Case No: A2/2012/1317 |
| Court | Court of Appeal (Civil Division) |
| Date | 20 February 2013 |
[2013] EWCA Civ 108
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
His Honour Judge Thornton QC
Royal Courts of Justice
Strand, London, WC2A 2LL
Lord Justice Tomlinson
Lord Justice Davis
and
Sir Robin Jacob
Case No: A2/2012/1317
Peter Arden QC and Timothy Calland (instructed by Cormac T Cawley and Co Solicitors) for the Respondent
Richard Handyside QC and Alexander Milner (instructed by DAC Beachcroft LLP) for the Appellant
Hearing dates: 15, 16 November 2012
Introduction
All of us are affected, whether we realise it or not, by the operation of Credit Reference Agencies, "CRAs", which furnish to lenders or extenders of credit such as utility providers information relevant to our financial standing. The Appellant in this case, Equifax, one of the three principal CRAs in this country, maintains a credit file on virtually everyone within the UK. CRAs must be licensed to operate and are heavily regulated in the obtaining retention, dissemination and correction of data concerning an individual. This appeal from a decision of HHJ Anthony Thornton QC, sitting as a Deputy Judge of the High Court, concerns the potential liability of CRAs for the dissemination of incorrect information.
Between 22 May 2002 and 17 July 2006 Equifax included in its credit file concerning the Respondent, Mr Keith Smeaton, an entry to the effect that he was subject to a bankruptcy order. This was incorrect. Mr Smeaton had been made subject to a bankruptcy order made against him in the Aylesbury County Court on 1 March 2001. However on 22 May 2002 the bankruptcy order was rescinded by the same court. In June 2006 Mr Smeaton made an enquiry of National Westminster Bank with a view to opening an account on behalf of a company, Ability Records Limited. Mr Smeaton had himself incorporated and funded Ability Records and he was at all material times the beneficial owner of it, taking all management decisions on its behalf. The approach was declined, apparently because of adverse data on Mr Smeaton's credit file at Equifax, including in the first instance a reference to the bankruptcy order. On receiving National Westminster's letter of rejection dated 30 June 2006 and having ascertained that it was from Equifax that the bank had obtained its information, Mr Smeaton wrote to Equifax pointing out that he was no longer bankrupt and enclosing for its attention a copy of the court order rescinding the bankruptcy order. He also asked for £500,000 compensation, apparently for defamation. Equifax immediately amended its records, pointing out that it had done so as soon as it had been informed of the rescission of the bankruptcy order, which information had not previously been published in the London Gazette. Mr Smeaton pursued his approach to National Westminster Bank, this time with a view to the bank extending credit to his company, in the shape of a Small Firms Loan Guarantee for approximately £60,000. This approach, which fell short of a formal application, was considered by a different branch and apparently at a different level but it again, in the language of the bank, "fell for a decline" in the light of adverse data. The bankruptcy order had not been the only adverse item in the data in Mr Smeaton's credit record.
Mr Smeaton claims that Equifax has caused him enormous losses, not limited to unrecovered forecast profits of Ability Records in a sum in excess of £500,000. He also claims in respect of other losses and distress consequent upon his descent into a chaotic lifestyle. He was in fact homeless and living out of a car between January and August 2006. I simply reiterate in passing that his first approach to National Westminster Bank was made in June 2006.
The present proceedings issued in March 2007 have a tortuous history which it is unnecessary to recount. Originally brought in defamation and against additional parties, by the time of the trial in January 2011 the action had resolved into a claim for:-
i) compensation pursuant to s.13 for damages and distress suffered by reason of contravention by Equifax of the requirements of the Data Protection Act 1998; and
ii) damages at large for breach of duty at common law.
Mr Smeaton represented himself at trial which, despite the considerable assistance which he was able to give, inevitably presented the judge with some difficulties in addressing novel issues. Despite the length of the gestation period, Mr Smeaton was not at the outset of the trial in a position to present his case as to the loss which he had allegedly suffered. The judge therefore ruled that the trial would in the first instance be confined to the following issues:-
(1) whether Equifax was in breach of its duties under the Data Protection Act 1998;
(2) whether Equifax owed Mr Smeaton a duty of care in tort, and if so what the content of the duty was and whether it was breached by Equifax; and
(3) whether any breaches of duty by Equifax caused Mr Smeaton or Ability Records to be unable to raise finance in or after mid-2006 (on which it is common ground that all Mr Smeaton's alleged losses, whatever they may be, depend).
The trial process was regrettably unhappy. The trial initially occupied two days, 7 and 8 February 2011. Thereafter the parties made closing submissions in writing, Equifax on 17 February 2011 and Mr Smeaton on 28 April 2011. On 4 May 2011 the judge directed that "The hearing as to liability and causation is now closed and judgment is now reserved". However on 15 August 2011 the judge sent a note to the parties calling for further submissions and evidence on a series of points, including clarification of what issue the court was supposed to be determining in relation to causation. Submissions and evidence were duly provided and on 16 November 2011 a further one day hearing took place at which oral evidence was given on behalf of both parties.
On 30 March 2012 the judge handed down a draft judgment, "Judgment 1". However, following criticisms of Judgment 1 made by Equifax at the hand-down hearing, the judge decided to retract Judgment 1 and to produce a revised judgment, which was eventually handed down on 11 May 2012, "Judgment 2". Judgment 2 is very significantly different from Judgment 1. The judge made these extensive revisions despite the fact that he had recently been criticised by this court for adopting a similar course in another case: see Brewer v Mann [2012] EWCA Civ 246. It is right to note however that in the present case Equifax did not object to the judge revising Judgment 1 before it made its application for permission to appeal. This appeal is of course concerned with Judgment 2 which provides the basis for the Order which the judge made, although the court has also been shown Judgment 1.
Judgment 1 had failed to resolve the causation issue. In particular, the judge failed to dispose of the three principal arguments deployed by Equifax on this issue, which were:-
(1) that Mr Smeaton was not refused credit by NatWest on the sole ground of the entry concerning the bankruptcy order, but at least partly because of other adverse data in his credit file;
(2) that Mr Smeaton made no real attempts to raise finance after his unsuccessful application to NatWest in August 2006; and
(3) that even if he had made such attempts, he would not have succeeded in obtaining the substantial loan he was seeking, again largely because of his poor credit record.
In relation to these three arguments the judge said, in Judgment 1, that it was "not possible to find that Equifax's breaches caused no pleaded or claimed loss"; that "I cannot make any findings about [Mr Smeaton's reasons for not making more effort to raise finance]" and that "I cannot make a finding [as to whether Mr Smeaton had any prospect of raising finance] at this stage". At trial Mr Smeaton had been extensively cross-examined on his attempts to raise finance and on the contents of his credit file.
In Judgment 2 the judge determined in favour of Mr Smeaton all three of the issues to which he had directed that the trial would, in the first instance, be confined. Thus:-
(1) he held that Equifax had breached the Data Protection Act 1998, in particular the fourth data protection principle, but also the first and fifth principles. This was upon the basis that Equifax had failed to take reasonable steps to ensure the accuracy of its data.
(2) he held that Equifax owed Mr Smeaton a duty of care in tort, which was co-extensive with its duties under the Act, and that Equifax breached this duty also.
(3) he found that Equifax's breaches of duty caused Mr Smeaton loss, in that they prevented Ability Records from obtaining a loan in and after mid-2006.
The judge had heard no argument on the first and fifth data protection principles and as Mr Peter Arden QC for Mr Smeaton on the appeal accepted he had in this respect gone further than he had been asked. Mr Arden did not appear below and he did not seek to uphold the judge's conclusions in that regard. There were other parts of the judge's reasons which Mr Arden felt unable to support but he nonetheless sought to uphold his principal conclusions, including therefore his determination of the third issue, causation, in Mr Smeaton's favour.
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...
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