Smeaton v Equifax Plc
| Jurisdiction | England & Wales |
| Judge | His Honour Judge Anthony Thornton QC |
| Judgment Date | 11 May 2012 |
| Neutral Citation | [2012] EWHC 2322 (QB) |
| Court | Queen's Bench Division |
| Date | 11 May 2012 |
| Docket Number | Case No: HQ07X00699 |
[2012] EWHC 2322 (QB)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
His Honour Judge Anthony Thornton QC
Case No: HQ07X00699
Mr Smeaton appeared in person
Mr Alexander Milner (instructed by DAC Beachcroft LLP) for the Defendant
1. Introduction
The claimant (“Mr Smeaton”) is claiming damages from the defendant (“Equifax”) which is one of the three principal credit rating agencies (“CRAs”) operating in the United Kingdom 1. Each CRA collects and holds information (“credit data”) relevant to the financial standing of most adults (“consumers”) in the United Kingdom. The information includes details of the credit card and mortgage history, credit agreement defaults, electoral roll registration, county court judgments and bankruptcy information of United Kingdom-based consumers. This credit data is provided to the CRAs by banks and most other providers of finance and credit. The credit data for each consumer is collated and held on a credit file in that consumer's name and the credit file is provided on request to credit providers (“customers”) when those customers are processing a consumer credit application for that consumer or for a third party that the consumer has an interest in. The credit data will be used by the customer to assist it in deciding whether to provide the credit facilities being applied for.
It is obviously essential that the credit data held on a consumer's credit file is accurate at all times and that updating procedures are in place that enable any changes that occur to the data to be recorded as promptly as reasonably possible on that consumer's credit file. For many years, credit data has been collected and stored electronically and since the Data Protection Act 1998 (“ DPA”) came into force, the obtaining, recording, storing and sharing of these details are now subject to the requirements of that Act. The effect of the DPA is that each CRA, as a data controller, has a statutory duty to comply with the statutory data protection principles provided for in the DPA in relation to all credit data which that CRA controls. In particular, a CRA is subject to the fourth data principle which requires all personal data to be accurate and to be kept up to date. If a CRA causes a customer to suffer damage by reason of a contravention of any of the requirements of the DPA, including the fourth principle, section 13 of the DPA requires it to pay compensation for that damage to the consumer unless it proves that it took reasonable steps to ensure the accuracy of the credit data in question.
Mr Smeaton's complaint against Equifax is, in summary, that between 12 March 2001 and 17 July 2006, Equifax included in his credit file an entry that he was subject to a
bankruptcy order made by Aylesbury County Court pursuant to the relevant provisions of the Insolvency Act 1986 (“ IA”) 2 and the Insolvency Rules 1986 (“IR”) 3 on 1 March 2001 that was inaccurate in two material respects. Firstly, the entry was inaccurate between 12 March 2001 and 22 May 2002 since, between those dates, the bankruptcy order was subject to a stay order imposed by Hart J sitting in the Chancery Division of the High Court in an appeal application relating to that bankruptcy order. It was conceded by Equifax's witness Mr Beresford in evidence that had Equifax been made aware of the terms of this stay order, the entry would have been removed from Mr Smeaton's credit file whilst the stay was in place. Secondly, the entry was inaccurate between 22 May 2002 and 17 July 2006 because the entry remained on Mr Smeaton's credit file throughout that period although the bankruptcy order had been rescinded on 22 May 2002 by a consent order made by the Aylesbury County Court. In short, Mr Smeaton contends that his credit file erroneously recorded that he was bankrupt between 12 March 2001 and 17 July 2006 when the entry should have been removed in its entirety from the file on 12 March 2001 when the bankruptcy order was stayed or, alternatively, on 22 May 2002 when it was rescindedMr Smeaton now claims compensation for the loss and damage he alleges he was caused by this inaccurate entry. The loss and damage was triggered by two applications that he had made to National Westminster Bank (“Nat West”) on behalf of his company, Ability Records Ltd (“Ability”) and himself. He had applied to Nat West on behalf of Ability for a Small Firms Loan Guarantee Scheme (“SFLGS”) loan, for the opportunity to open a business account and for associated overdraft facilities and on his own behalf for the opportunity to guarantee both this loan and the associated business account and overdraft facilities. On receipt of his applications, Nat West consulted Mr Smeaton's credit file held by Equifax. Having done so, it refused both applications, initially on 30 June 2006 and finally on 10 August 2006. Mr Smeaton contends that these refusals occurred as the direct result of Nat West being provided on about 30 June 2006 with the inaccurate entry on his credit file that recorded that he was the subject of an undischarged bankruptcy order made on 1 March 2001. Mr Smeaton contends that Nat West would have granted these applications had his credit file been accurate when Nat West consulted it on 30 June 2006. He further contends that the refusal of the applications set in train a catastrophic series of events which have caused him extensive loss and damage.
Mr Smeaton's claim raises novel issues under section 13 of the DPA 1998. He brings his claim additionally as a claim for damages for negligence and this claim too raises novel issues. When the trial started, I made an order that the first trial would be confined to liability only with causation and damages to be tried later if Mr Smeaton succeeded on liability. I expressed the order that I had in mind in these terms:
“All questions of causation and remoteness should be held over and what I am trying today is the issue of breach. … I propose therefore to define what it is that I am to decide as including the general question of whether [there was a breach of duty] and whether any breach of duty that I find took place caused any loss. In doing that I am not deciding what loss. All I am deciding is whether there is no loss.” 4
I subsequently made an order dated 21 November 2011 that defined the issues that I was to decide in these terms:
1. The following issues are to be determined by the Court on the basis of the evidence and the submissions received to date:
(1) Did the Defendant breach any duty to the Claimant under the Data Protection Act 1998?
(2) Did the Defendant owe the Claimant a duty of care at common law, and, if so, what was the content of that duty?
(3) If the Defendant did owe the Claimant a duty of care, did the Defendant breach that duty?
(4) If the Defendant was in breach of any duties owed to the Claimant, did such breach or breaches cause Mr Smeaton to be unable to obtain funding on behalf of Ability Records Limited in mid-2006 or subsequently?
2. Any other issues are to be determined at a further hearing, if necessary, after the Court's judgment in relation to the issues identified in paragraph 1 above has been handed down.
The claim has had a long and troubled procedural history during the whole of which Mr Smeaton has acted in person. He is severely dyslexic and for some months in the early part of the period following Nat West's rejection of his applications, he was homeless and in poor health and he attributes both misfortunes to his stress-related response on learning of the inaccurate credit information that had been held by Equifax on his credit file for over five years. He has also had limited means since 2006 and has in consequence acted in person throughout. He has presented his claim clearly and with moderation. The claim identifies a number of heads of damage but these have not so far been particularised or quantified. Mr Smeaton regards his claim as being a substantial one but its scope and size
will only be determined if he succeeds in the liability and causation issues that I must first determineThe claim is brought under two related causes of action, breach of duty and statutory duty. The effect of its long procedural history is that I am concerned with alleged breaches of statutory and common law duty that occurred over a five-year period between 12 March 2001 and 17 July 2006. The claim form was issued on 1 March 2007 so that the entire period of these alleged breaches occurred within six years of the claim being issued and no question of limitation arises. For various reasons which are not relevant to my consideration of the claim, the trial itself did not take place until 2011. However, I am concerned with what has emerged as a novel and difficult claim that is based in both negligence and statutory duty and which raises issues of general importance that must be determined by reference to standards of care prevailing at least six years ago. Due to advances in the electronic processing of credit data and to legislative changes in the insolvency legislation concerning personal bankruptcies, it is very unlikely that the highly unusual facts of this case will ever re-occur in the future. Thus, if Mr Smeaton's claim succeeds, it will give rise to a tiny, albeit significant, incremental advance in the law of negligence as well as being a novel claim for breach of the statutory duty imposed by the DPA.
The trial itself occupied nearly three days. At the trial, Equifax was represented by Mr Alexander Milner and Mr Smeaton represented himself. Two witnesses were called on behalf of Equifax. These were Mr Nicholas Beresford, its then UK Data Director, and Mr Steven Martin, its then Head of Compliance and Regulatory Affairs. A witness...
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