23 April 2018

Background

The claimant businessmen (NT1 and NT2) were convicted of criminal offences many years ago. The defendant Google’s internet search engine returned search results that featured links to third party reports about the claimants’ convictions. The claimants issued data protection and misuse of private information proceedings, contending that the search results conveyed inaccurate information about their offending. They sought orders requiring information about their offending, convictions and sentences to be removed from Google search results, on the basis that such information was not just old, but out of date, irrelevant, of no public interest and/or otherwise an illegitimate interference with their rights. The claimants also sought compensation for Google’s conduct in continuing to return search results disclosing such details, after their complaints had been made.

Issues and decisions

(1) Whether the claims were, in substance, a claim to protect reputation, cast as claims under the Data Protection Act 1998 (the DPA 1998) and/or the law of misuse of private information, in an illegitimate attempt to circumvent the procedural and substantive law that applied to claims in defamation.

As a general rule, it was legitimate for a claimant to rely on any cause of action that arose, or might arise, from a given set of facts. That was not normally considered to be an abuse just because one or more other causes of action might arise or be pursued instead of, or in addition to, the claim that was relied on (see [61] of the judgment).

The authorities did not provide a justification for dismissing NT1’s claims as an abuse of process. First, the protection of reputational harm was a significant and substantial element of NT1’s claim and of his motivation. However, it would be wrong to draw too sharp a distinction between the protection of reputation and private life. Second, the protection of reputation was not NT1’s only objective or the nub of the claims. Third, it was possible and legitimate to take account in other ways of the fact and extent of the reputational concerns that featured so prominently in NT1’s case. Google’s argument in NT2’s case failed for the same reasons (see [61], [63]-[65], [177] of the judgment).

McKennitt v Ash [2006] All ER (D) 200 (Dec) applied; Khuja (formerly known as PNM) v Times Newspapers Ltd and others [2017] All ER (D) 114 (Jul) considered.

(2) With respect to the data protection claims, whether there was information in any of the third party publications which was inaccurate, in breach of the fourth data protection principle, in a way, or to an extent, that required or should lead the court to grant the blocking, erasure and injunctive remedies sought.

Even where data were found to be inaccurate, the court had a toolbox of discretionary remedies that could be applied according to the circumstances of the individual case. The court might grant a remedy even if the data were not found to be inaccurate. At one extreme, the court might deem it appropriate to order a data controller both to block and erase data, and to tell third parties to whom the data had been disclosed that that had been done. At the other extreme, the court might conclude that no order should be made. Between those two extremes lay a variety of options. The court’s order would need to be tailored to the circumstances, having regard to the effect a particular remedy would have on the parties and on the wider public. Some options might be excessive (see [86] of the judgment).

It was legitimate to have regard in the context to the contours of the English law of defamation, which had always allowed a generous latitude to those reporting proceedings in court or in Parliament, going so far as to permit reporting which conveyed the ‘impression’ of the journalist. It would be wrong to treat the two branches of the law as co-terminous, as they not only had different origins, but also served different purposes. It was possible to give more weight to literal accuracy in the context of data protection law, with its broader aims, and its wider and more flexible range of remedies. However, it was appropriate to bear in mind domestic principles in order to ensure, as far as possible, that the law had coherence (see [87] of the judgment).

With respect to NT1, all six complaints of inaccuracy would be rejected. NT1 had failed to provide all the information needed to establish the data were evidently inaccurate (see [93], [94] of the judgment).

With respect to NT2, there was a further issue as to whether the words complained in a newspaper article referred to, or would be understood to refer to, him. That was the language of defamation law. However, data protection law only applied to data that related to an identifiable individual. NT2’s case on the reference or identifiability was built simply on the content of the offending item. There was no material difference, at least for the purpose of the present case, between defamation and data protection. A person was referred to or identifiable if the words complained of would be taken by the reasonable reader of the article or item as a whole to refer to NT2 (see [189] of the judgment).

The article complained of was inaccurate, in that it gave a misleading portrayal of NT2’s criminality and conveyed imputations to the effect of which he complained. Accordingly, an appropriate delisting order would be made in respect of the URL for the national newspaper article, in its current form, on the grounds that the article was inaccurate in identified respects, contrary to the fourth data protection principle, so that continued processing by Google would represent a breach of duty under the DPA 1998 s 4(4) (see [191] of the judgment).

Charleston v News Group Newspapers Ltd [1995] 2 All ER 313 applied; Khuja (formerly known as PNM) v Times Newspapers Ltd and others [2017] All ER (D) 114 (Jul) applied.

(3) With respect to the data protection claims, whether Google was entitled to rely on the journalism exemption contained in the DPA 1998 s 32.

The concept of journalism in EU law was a broad one. It extended beyond the activities of media undertakings and encompassed other activities, the object of which was the disclosure to the public of information, opinions and ideas. However, the concept was not so elastic that it could be stretched to embrace every activity that had to do with conveying information or opinions. To label all such activity as journalism would be to elide the concept of journalism with that of communication. The two were plainly not the same (see [98] of the judgment).

Google’s case on the exemption issue failed at the threshold stage of whether processing by Google was undertaken with a view to publication for journalistic purposes. Google’s own activity could not be equated with journalism. Nor was the concept of journalism apt to cover, at least in the present cases, the purposes of the service provided to internet users by Google’s search engine. Its commercial purpose was not undertaken for any of the special purposes or with a view to the publication by others of journalistic material, within the DPA 1998 s 32(1)(a) (see [98]-[100], [193] of the judgment).

Google Spain SL v Agencia Espanola de proteccion de Datos (AEPD): C-131/12 [2014] 2 All ER (Comm) 301 considered.

(4) With respect to the data protection claims, at what point in the legal analysis should the court assess the compatibility of Google’s processing of the offending links with the principles in Google Spain SL and another v Agencia Española de Protección de Datos (AEPD) and another ([2014] 2 All ER (Comm) 301).

The solution that fit best with the structure of the law and the Court of Justice of the European Union’s (the CJEU) decision was the one advocated by the intervenor Information Commissioner. Namely, that the issue was a straightforward question of liability, which called for a decision on whether Google had complied with its duties under the DPA 1998, as interpreted in the light of Directive (EC) 95/46 and the Charter of Fundamental Rights of the European Union. However, there was reluctance to take the radical step of disapplying any part of the DPA 1998. There was a powerful argument that the DPA 1998’s scheme was incompatible with fundamental rights, as it failed to recognise any possibility of a free speech justification for the processing of sensitive personal data without consent. However, the same would seem to be true of the Directive, which in that respect, the DPA 1998 merely mirrored. It was not necessary to go as far as the Information Commissioner contended. On the facts of the case at least, the question of disapplication need not be confronted. A DPA 1998 Sch 3 condition was met (see [105], [193] of the judgment).

Google Spain SL v Agencia Espanola de proteccion de Datos (AEPD): C-131/12 [2014] 2 All ER (Comm) 301 considered.

(5) With respect to the data protection claims, whether Google’s processing complied with its obligations under the DPA 1998 s 4(4).

The DPA 1998 Sch 3 condition 5 did not require a deliberate decision or step by the data subject to make information public, but rather the taking by him of a deliberate step or steps, as a result of which the information was made public. A person who deliberately conducted himself in a criminal fashion ran the risk of apprehension, prosecution, trial, conviction and sentence. Publicity for what happened at trial was the ordinary consequence of the open justice principle. The same had to be true of the details of the offending and other information disclosed in open court, including information about himself which a criminal revealed at a trial or in the course of an application (see [111] of the judgment).

The argument in favour of the application of condition 5 would be stronger in the case of a person who had committed a crime in public; someone who did that had placed himself in public view. However, it would be wrong, as well as impractical, to draw a distinction of principle for those purposes between information about crimes committed in public and those committed in private. The place for drawing that distinction was in weighing up the competing considerations of privacy and publicity (see [112] of the judgment).

With respect to the first data protection principle, the general requirements that processing be fair and lawful added nothing to the particular requirements that processing comply with at least one DPA 1998 Sch 2 condition and, if the data were sensitive personal data, at least one condition in the DPA 1998 Sch 3 (see [106] of the judgment).

Most of Google’s arguments that its processing had been compliant with DPA 1998 Sch 3 would be rejected. However, the DPA 1998 Sch 3 condition 5 was satisfied, namely, that the information contained in the personal data had been made public as a result of steps deliberately taken by the data subject (see [107], [110] of the judgment).

Further, it was agreed that, in principle, DPA 1998 Sch 2 condition 6(1) was capable of application to the case. In general terms, Google plainly had a legitimate interest in the processing of third party data in pursuit of its business as an internet search engine and third parties had a legitimate interest in receiving information via Google or other internet search engines (see [115] of the judgment).

NT1’s case under the fourth data protection principle had already been dealt with. Otherwise, the question of whether Google’s processing of his personal data had been in breach of, or compliance with, the second to sixth principles collapsed into the Google Spain balancing exercise and did not require separate consideration (see [116] of the judgment).

With respect to NT2, the reasoning in NT1 applied, although two of the articles complained of had been published with his consent. That satisfied a DPA 1998 Sch 3 requirement (see [193] of the judgment).

Townsend v Google Inc. and another [2017] NIQB 81 adopted; Trinity Mirror Plc (A and B (Minors, acting by the Official Solicitor to the Supreme Court) Intervening), Re [2008] 2 All ER 1159 applied; Axel Springer AG v Germany (Application No 39954/08) (2012) 32 BHRC 493 considered.

(6) With respect to the data protection claims, whether Google’s processing complied with the requirements of Google Spain.

The balancing process in any individual case was ordinarily, as a matter of principle, to be entered into with the scales in equal balance as between delisting and continued processing. Accordingly, neither privacy nor freedom of expression had, as such, precedence over the other. The conflict was to be resolved by an intense focus on the comparative importance of the specific rights being claimed in the individual case (see [132] of the judgment).

Google Spain was not inconsistent with that. The general rule to which it referred was a descriptive, not prescriptive one. One factor in that conclusion was that the economic interests of an internet search engine were not of equal inherent weight or value to the privacy or data privacy rights of an individual. However, it had not been saying the same thing about the public’s rights to receive information and opinions. That would be at odds with principle and authority (see [133] of the judgment).

The CJEU’s references to a general rule and its observation that a claim to delist sensitive or other private information might be defeated by a preponderant interest of the general public in having access to that information were descriptions of how such cases were most likely to work out in practice, but were not tantamount to a declaration that the public’s interest in access to information was inherently of lesser value than the individual’s privacy rights (see [134] of the judgment).

With respect to NT1, around the turn of the century, he had been a public figure with a limited role in public life. His role had changed such that he now played only a limited role in public life, as a businessman not dealing with consumers. That said, he still played such a role. The crime and punishment information was not information of a private nature. It had been information about business crime, its prosecution and its punishment. It had been and was essentially public in its character. NT1 had not enjoyed any reasonable expectation of privacy in respect of the information at the time of his prosecution, conviction and sentence. Accordingly, he was not entitled to have it delisted. It had not been shown to be inaccurate in any material way. It related to his business life, not his personal life. It was sensitive information and he had identified some legitimate grounds for delisting it. However, he had failed to produce any compelling evidence in support of those grounds. Much of the harm complained of was business related and some of it pre-dated the time when he could legitimately complain of Google’s processing of the information. NT1’s private life rights were engaged, but did not attract any great weight. The information had originally appeared in the context of crime and court reporting in the national media, which had been a natural and foreseeable result of his own criminal behaviour. The information was historic and the domestic law of rehabilitation was engaged. However, that was only so at the margins. The sentence imposed on NT1 had been of such a length that, at the time, he had had no reasonable expectation that his conviction would ever be spent. The law had changed, but if the sentence had been any longer, the conviction would still not be spent. It would have been longer but for personal mitigation that had no bearing on culpability. NT1’s business career since leaving prison had made the information relevant in the past to the assessment of his honesty by members of the public. The information retained sufficient relevance. NT1 had not accepted his guilt, had misled the public and the court, and showed no remorse over any of those matters. He remained in business and the information served the purpose of minimising the risk that he would continue to mislead, as he had in the past. Delisting would not erase the information from the record altogether, but it would make it much harder to find. The case for delisting was not made out (see [170] of the judgment).

With respect to NT2, the crime and punishment information had become out of date, irrelevant and of no sufficient legitimate interest to users of Google search to justify its continued availability, so that an appropriate delisting order would be made. The conviction had always been going to become spent and it had done so in March 2014, though it would have done so in July of that year anyway. NT2 had frankly acknowledged his guilt and had expressed genuine remorse. There was no evidence of any risk of repetition. NT2’s current business activities were in a field quite different from that in which he had been operating at the time. His past offending was of little if any relevance to anybody’s assessment of his suitability to engage in relevant business activity now or in the future. There was no real need for anybody to be warned about that activity (see [223] of the judgment).

Campbell v Mirror Group Newspapers Ltd [2004] 2 All ER 995 applied; Murray v Express Newspapers plc [2008] 1 FLR 704 applied; Trinity Mirror Plc (A and B (Minors, acting by the Official Solicitor to the Supreme Court) Intervening), Re [2008] 2 All ER 1159 applied; Khuja (formerly known as PNM) v Times Newspapers Ltd and others [2017] All ER (D) 114 (Jul) applied; CG v Facebook Ireland Ltd and another [2016] NICA 54 adopted; Google Spain SL v Agencia Espanola de proteccion de Datos (AEPD): C-131/12 [2014] 2 All ER (Comm) 301 considered.

(7) With respect to the misuse of private information claims, whether the claimants enjoyed a reasonable expectation of privacy in respect of any of the information at issue and, if so, how on the particular facts should the balance between the rights of privacy and freedom of expression be struck.

With respect to NT1, the information at issue was public, not private in nature. At the time of his prosecution, conviction and sentence, art 8 of the European Convention on Human Rights had not been engaged and NT1 had had no reasonable expectation of privacy. That had changed with the passage of time, the fact that a recent statutory amendment had made his conviction spent, and the impact on his private life of the continued accessibility of the crime and punishment information. Although NT1’s main concern was reputation and primarily business reputation, there was enough to engage art 8. However, NT1 did not enjoy a reasonable expectation of privacy in respect of the information (see [171] of the judgment).

With respect to NT2, the information was essentially public, not private. However, the position had changed. With the passage of time and in all the circumstances, art 8 was engaged and the presence of a young family in NT2’s life was a distinguishing factor. He enjoyed a reasonable expectation of privacy in respect of the information (see [224] of the judgment).

The impact on NT2 was such as to engage art 8. The business prejudice did not suffice for that purpose, but there was just enough in the realm of private and family life to cross the threshold. The existence of a young, second family was a matter of some weight. Even so, the evidence did not, in the end, demonstrate a grave interference. However, it was enough to require a justification. Google’s case on relevance was very weak. NT2’s evidence suggested that he had acknowledged his past error. His current and anticipated future business conduct did not make his past conduct relevant to anybody’s assessment of him, or not significantly so. Continued accessibility of the information complained of was hard to justify. The factors that went to support that view were weak, by comparison with those that weighed in favour of delisting (see [226] of the judgment).

(8) Whether the claimants were entitled to damages or compensation.

With respect to NT1, since Google’s continued processing was justified according to the Google Spain test, there was no basis for any award of compensation under the DPA 1998 s 13. No damage had been suffered by reason of any contravention of the DPA 1998, nor could any question arose of damages for misuse of private information (see [173] of the judgment).

With respect to NT2, a delisting order was appropriate. It would be hard to say, by reference to the terms of the DPA 1998 s 13(3), that Google had failed to take such care as in all the circumstances had been reasonably required to comply with the relevant requirements. For similar reasons, no damages were payable for misuse of private information (see [227]-[230] of the judgment).

Hugh Tomlinson QC and Jonathan Barnes (instructed by Carter-Ruck) for the claimants

Antony White QC and Catrin Evans QC (instructed by Pinsent Masons LLP) for Google.

Anya Proops QC and Rupert Paines (instructed by the Information Commissioner) for the Information Commissioner, as intervenor.

Karina Weller - Solicitor (NSW) (non-practising).

The first claimant failed in his claim for delisting of personal information from Google’s search engine, as he had failed to prove the information was inaccurate and Google’s processing complied with the requirements of Google Spain SL and another v Agencia Española de Protección de Datos (AEPD) and another ([2014] 2 All ER (Comm) 301), and his claim for misuse of private information also failed. However, the Queen’s Bench Division upheld the second claimant’s claim, as some information was inaccurate, factors supporting continued accessibility were weak by comparison with those that weighed in favour of delisting and his misuse of private information claim also succeeded.

Background

When passing sentence the potential impact on the offender is generally ignored, save in certain defined circumstances. However, when the Court of Appeal is considering a sentence, s 11(3) of the Criminal Appeal Act 1968 (CAA 1968) required that taking the case as a whole, the defendant was not more severely dealt with than by the court below. That required a detailed consideration of the impact of the sentence. The test had also been articulated as that of right-thinking members of the public, but in the end the sentencing court was bound to give effect to its own subjective judgment of what justice required on the peculiar facts of the case before it. Four otherwise unconnected appeals against sentence engaged these principles.

The first defendant had pleaded guilty to multiple sexual offences against children. He had been found by the judge to be dangerous and sentenced to 27 years’ 8 months’ imprisonment with a three year extended licence under s 236A of the Criminal Justice Act 2003 (CJA 2003). However, the judge had wrongly imposed sentences under s236A CJA 2003, for the offences did not fall within that schedule. The second defendant had been convicted of causing grievous bodily harm with intent, contrary to s 18 of the Offences against the Person Act 1861 (OATPA 1861). He had been sentenced to 12 years’ detention pursuant to s 91 of the Powers of the Criminal Courts (Sentencing) Act 2000 (the PCC(S)A 2000). No separate penalty had been imposed in relation to other offences to which he had previously pleaded guilty. However, the judge had erred in believing that since the offender had been below the age of 18, he had no power to pass an extended sentence pursuant to s 226B of the CJA 2003. The third defendant had pleaded guilty to three counts of rape of a child under 13 contrary to s 5(1) of the Sexual Offences Act 2003 (SOA 2003). He had been sentenced to a term of 8 years’ imprisonment on each count, the sentences to run concurrently. However, the judge had erred in omitting to impose what were mandatory special custodial sentences pursuant to s 236A CJA 2003. Accordingly, the judge had corrected the sentence pursuant to s 155 of the PCC(S)A 2000 to a custodial term of 8 years’ imprisonment with a further licence period of 1 year. The fourth defendant had pleaded guilty to ten counts of making threats to kill, contrary to s 16 of the OATPA 1861. He had been sentenced to a determinate sentence of fully 45 years.

Issues and decisions

(1) Whether and to what extent the appeal court could restructure a sentence and substitute a standard determinate sentence with a mandatory sentence.

Decisions on whether a sentence was more severe were case specific and no general rule could be identified. Furthermore, whether a sentence was more severe was not only determined by the period for which the offender might be affected by it; it was the punitive element of the sentence that had to be considered (see [13], [15] of the judgment).

There was no doubt that s 11(3) CAA 1968 would bite to limit the powers of the court in relation to a special custodial sentence for offenders of particular concern under s 236A CJA 2003 and an extended sentence under s 226A or 226B CJA 2003 (see [16] of the judgment).

A court could restructure a sentence particularly where the sentence passed had been unlawful having failed to comply with mandatory sentencing provisions.However, it was not established law that if a custodial term had been reduced by at least a year, a sentence under s 236A CJA 2003 would necessarily satisfy the requirements of s 11(3) CAA 1968. The limit of its power was that the court had to be satisfied that, taking the case as a whole, the appellant had not been dealt with more severely on appeal. That required a detailed consideration of the impact of the sentence to be substituted which had to involve considerations of entitlement to automatic release, parole eligibility and licence. If a custodial sentence was reduced, the addition of non-custodial orders (such as disqualification from driving or sexual offences prevention orders) might be added but, in every case, save where the substituted sentence was ameliorative and remedial, that sentence had to be tested for its severity (or potential punitive effect) compared to the original sentence (see [23] of the judgment).

R v Bennett 52 Cr App Rep 514 considered; R v Thompson 66 Cr App Rep 130 considered; R v Mah-Wing 5 Cr App Rep (S) 347 considered; R v Sandwell 80 Cr App Rep 78 considered; R v Howells [1998] All ER (D) 391 considered; R v Reynolds [2007] EWCA Crim 538 considered; R v Aldridge [2012] EWCA Crim 1456 considered; R v Searles (Ashley) [2012] EWCA Crim 2685 considered; R v Meader (Melvin Michael) [2011] EWCA Crim 2108 considered; R v Watkins [2014] EWCA Crim 1677 considered; R v Bradbury [2015] EWCA Crim 1176 disapproved; R v Fruen [2016] EWCA Crim 561 considered; R v Needham and others [2016] All ER (D) 24 (May) considered; R v S (J) (2016) [2016] EWCA Crim 1607 considered; R v M (P) (2016) [2016] EWCA Crim 1895 considered.

(2) Whether if the court imposed consecutive extended sentences, the five or eight years’ extension pursuant to s 226A CJA 2003 was the maximum permitted for the total sentence, or whether it was possible to order extension periods also to run consecutively.

It was open to the court, in an appropriate (albeit exceptional) case to impose consecutive extended sentences where the total extended licence had been in excess of the maximum licence period for a single offence. That option should not, of course, be deployed to create what could be considered as the equivalent of life licence or one that was otherwise oppressive in nature (see [29] of the judgment).

R v Pinnell [2010] All ER (D) 74 (Dec) applied; R v Fruen [2016] All ER (D) 157 (May) applied.

(3) Whether the sentences for the four defendants had been manifestly excessive having regard to the principles discussed above.

Having regard to the first defendant: the judge had been plainly right to describe the offences as a catalogue of appalling crimes which merited a long total sentence. However, the sentences he purported to impose under s 236A CJA 2003 could not stand and had to be quashed (see [38], [39] of the judgment).

Had the court decided to maintain the overall length of the sentence, it would have been necessary to restructure it so as to quash all the sentences imposed under s 236A CJA 2003 and to impose extended sentences under s 226A CJA 2003 instead. In doing so, it would have had to ensure that the new sentence did not offend s 11(3) CAA 1968 . That would have involved consideration of the different release provisions for extended sentences and sentences under s 236A CJA 2003. The date on which release became unconditional would have been of particular importance when assessing comparative severity (see [41] of the judgment).

However, in looking at totality, the total sentence had been manifestly excessive. As a result, the correct approach had been for the court to consider the appropriate sentence leaving out of consideration the provisions for early release and licence in accordance with the general principle that a sentencing court would not have regard to the actual period the offender was likely to spend in custody. Having done that, it would then be necessary to compare the practical effect of the new sentence with the sentence originally imposed to ensure that it did not fall foul of s 11(3) CAA 196 (see [42] of the judgment).

Having regard to the second defendant: there had been a host of aggravating factors, all of which fully justified a sentence of 12 years’ detention. However, although it would be appropriate to replace the determinate sentence with an extended sentence, to do so would be to pass a more severe sentence, which would fall foul of s 11(3) CAA 1968 (see [54], [55] of the judgment).

Having regard to the third defendant, the variation to the sentence by the judge had been outside the statutory 56 day period provided by s 155 PCC(S)A 2000. In the circumstances, the purported sentences passed pursuant to s 236A CJA 2003 were quashed as having been invalidly passed; the original determinate sentences, though unlawful, remained valid and effective (see [62], [63] of the judgment).

The starting point adopted by the judge of 12 years before giving credit for the guilty plea to reach an overall sentence of 8 years’ imprisonment for three serious sexual offences had been justified and having regard to the mandatory provisions of s 236A CJA 2003, had been of less severity than that which would otherwise have been imposed. It had not been manifestly excessive. As a result, the provisions of s 236A CJA 2003 could not now be accommodated in a manner that would not offend s 11(3) CAA 1968 (see [66] of the judgment).

Having regard to the fourth defendant, the overall sentence had been entirely disproportionate to the offences and could not be upheld, although the protection of the public against the obvious risk that the fourth defendant presented had to be at the forefront of any consideration of the case (see [78] of the judgment).

The maximum sentence of 10 years’ imprisonment would not be sufficient to meet the seriousness of the offending. Furthermore, neither would it be sufficient to protect the public against the serious risk that the fourth defendant presented that a licence as part of an extended sentence, could amount to no more than five years. Accordingly, the case, provided the exceptional circumstances which justified the imposition of consecutive extended sentences. Moreover, the substituted sentence did not offend s 11(3) CAA 1968 (see [78], [79], [81] of the judgment).

The first defendant’s sentence of 27 years’ 8 months’ imprisonment with a three year extended licence was quashed and substituted with a sentence of 23 years’ 6 months’ imprisonment (see [43] of the judgment). The second defendant’s appeal against sentence was dismissed (see [55] of the judgment). The third defendant’s sentence of 8 years’ imprisonment with a further licence period of 1 year was quashed and substituted with the sentence of 8 years’ imprisonment, which had been originally passed by the judge (see [67] of the judgment. The fourth defendant’s sentence of 45 years’ imprisonment was quashed and replaced with an extended sentence of 20 years, comprising a custodial term of 12 years and 8 years’ licence (see [80] of the judgment).

Per curiam: The judge stated that it was to be hoped that the Sentencing Code proposed by the Law Commission would be adopted by the government and so permit all the relevant sentencing legislation to be found in one place, avoiding the correction of costly mistakes and thereby aiding the proper administration of justice.

Per curiam: All advocates (and, in particular, the Crown Prosecution Service and those who prosecuted on its behalf) had an obligation to ensure that the judge was correctly informed of the powers of the court. In the event of error, s 155 of the PCC(S)A 2000 Act existed to correct, within 56 days, any that slipped through without incurring the expense of an appeal or reference by the Attorney General pursuant to ss 35-36 of the Criminal Justice Act 1988 (CJA 1988). Having said that, another trap had to be avoided: the time limit within which the Unduly Lenient Sentence Scheme must be initiated (28 days) meant that a reference to the Attorney General might be necessary while, at the same time, an application under the slip rule was pursued. Furthermore, in the event of an application under the slip rule, compliance with pt 28.4 of the Criminal Procedure Rules was also essential (see [82], [83] of the judgment).

Brendan Carville for the first defendant.   

Siobhan Molloy for the second defendant.

Robert Banks for the third defendant.

Sam Robinson and Isabel Wilson for the fourth defendant.

Jonathan Polnay for the Crown in each case 

Paul Mclachlan Barrister.

It was held, among other things, that provided that the requirements of s 11(3) of the Criminal Appeal Act 1968 were satisfied, a court could restructure a sentence, particularly where the sentence passed had been unlawful having failed to comply with mandatory sentencing provisions. Accordingly, the Court of Appeal, Criminal Division dealt with four appeals against sentence.

Background

The first appellant and Mrs C each subscribed for 50% of the respondent company’s issued share capital and were appointed as its directors. However, after a deterioration in the working relationship with Mr C, the first appellant sold her shares in the respondent to a vehicle company incorporated and owned by Mr C for £3.15m, and agreed to resign as a director. She also agreed with the respondent to be bound for a period of three years by covenants requiring her to keep information concerning its business transactions confidential and prohibiting her from engaging in a business that was in competition with it or soliciting its clients, without its consent, such consent not to be unreasonably withheld. As part of the same transaction, the second appellant terminated her employment with the respondent and agreed to be bound by similar covenants against competition and solicitation.

The respondent issued proceedings, alleging that the appellants had acted in breach of the covenants and in breach of an equitable duty of confidence, had induced each other to breach the covenants and had conspired with each other to injure it by unlawful means.

The judge found that the appellants had acted in breach of contract by breaching the non-compete covenants, that they had also breached the non-solicit covenants by soliciting business, and that the first appellant had also acted in breach of the contractual confidentiality clause and an equitable duty of confidence by appropriating market research information and subsequently using it to set up another company ([2014] All ER (D) 128 (Jul)). He granted a declaration that the respondent was entitled to judgment for damages to be assessed on the basis of Wrotham Park Estate Company v Parkside Homes Ltd and others; Wrotham Park Estate Company v Parkside Homes Ltd ([1974] 2 All ER 321), for such amount as would notionally have been agreed between the parties, acting reasonably, as the price for releasing the appellants from their obligations or alternatively ordinary compensatory damages. The Court of Appeal, Civil Division dismissed the appeal. The appellants appealed.

Appeal allowed.

Issues and decisions

(1) Whether, where a party was in breach of contract, there were any circumstances in which the other party to the contract was entitled to seek damages assessed by reference to a hypothetical negotiation between the parties for such amount as might reasonably have been demanded by the claimant for releasing the defendants from their obligations (negotiating damages).

Damages assessed by reference to the value of the use wrongfully made of property were readily awarded at common law for the invasion of rights to tangible moveable or immoveable property (by detinue, conversion or trespass). The rationale of such awards was that the person who made wrongful use of property, where its use was commercially valuable, prevented the owner from exercising a valuable right to control its use and should, therefore, compensate him for the loss of the value of the exercise of that right. He took something for nothing, for which the owner was entitled to require payment. Damages were also available on a similar basis for patent infringement and breaches of other intellectual property rights.

Damages could be awarded under the Chancery Amendment Act 1858 (Lord Cairns’ Act) in substitution for specific performance or an injunction, where the court had jurisdiction to entertain an application for such relief at the time when the proceedings were commenced. Such damages were a monetary substitute for what was lost by the withholding of such relief. One possible method of quantifying damages under that head was on the basis of the economic value of the right which the court had declined to enforce and which it had consequently rendered worthless. Such a valuation could be arrived at by reference to the amount which the claimant might reasonably have demanded as a quid pro quo for the relaxation of the obligation in question. The rationale was that, since the withholding of specific relief had the same practical effect as requiring the claimant to permit the infringement of his rights, his loss could be measured by reference to the economic value of such permission. However, that was not the only approach to assessing damages under Lord Cairns’ Act. It was for the court to judge what method of quantification, in the circumstances of the case before it, would give a fair equivalent for what was lost by the refusal of the injunction.

Common law damages for breach of contract were intended to compensate the claimant for loss or damage resulting from the non-performance of the obligation in question. Therefore, they were normally based on the difference between the effect of performance and non-performance upon the claimant’s situation. Where damages were sought at common law for breach of contract, it was for the claimant to establish that a loss had been incurred, in the sense that he was in a less favourable situation, either economically or in some other respect, than he would have been in if the contract had been performed.

Where the breach of a contractual obligation had caused the claimant to suffer economic loss, that loss should be measured or estimated as accurately and reliably as the nature of the case permitted. The law was tolerant of imprecision where the loss was incapable of precise measurement and there were also a variety of legal principles which could assist the claimant in cases where there was a paucity of evidence.

Where the claimant’s interest in the performance of a contract was purely economic, and he could not establish that any economic loss had resulted from its breach, the normal inference was that he had not suffered any loss. In that event, he could not be awarded more than nominal damages.

Negotiating damages could be awarded for breach of contract where the loss suffered by the claimant was appropriately measured by reference to the economic value of the right which had been breached, considered as an asset. That might be the position where the breach of contract resulted in the loss of a valuable asset created or protected by the right which was infringed. The rationale was that the claimant had, in substance, been deprived of a valuable asset and his loss could, therefore, be measured by determining the economic value of the right in question, considered as an asset. The defendant had taken something for nothing, for which the claimant was entitled to require payment.

Common law damages for breach of contract could not be awarded merely for the purpose of depriving the defendant of profits made as a result of the breach, other than in exceptional circumstances. Common law damages for breach of contract were not a matter of discretion. They were claimed as of right and they were awarded or refused on the basis of legal principle (see [95], [127] of the judgment).

Robinson v Harman [1843-60] All ER Rep 383 applied; Leeds Industrial Co-operative Society Ltd v Slack [1924] All ER Rep 259 applied; Jaggard v Sawyer [1995] 2 All ER 189 applied; Ruxley Electronics and Construction Ltd v Forsyth [1995] 3 All ER 268 applied; A-G v Blake (Jonathan Cape Ltd third party) [2000] 4 All ER 385 applied; Wrotham Park Estate Co v Parkside Homes Ltd [1974] 2 All ER 321 explained; Johnson v Agnew [1979] 1 All ER 883 explained; Pell Frischmann Engineering Ltd v Bow Valley Iran Ltd [2010] 4 LRC 200 explained; Armory v Delamirie [1558-1774] All ER Rep 121 considered; Livingstone v Rawyards Coal Co (1880) 5 App Cas 25 considered; Meters Ltd v Metropolitan Gas Meters Ltd (1911) 28 RPC 157 considered; Watson, Laidlaw & Co Ltd v Pott, Cassels and Williamson (1914) 31 RPC 104 considered; Bracewell v Appleby [1975] 1 All ER 993 considered; Tito v Waddell (No 2); Tito v A-G [1977] 3 All ER 129 considered; Photo Production Ltd v Securicor Transport Ltd [1980] 1 All ER 556 considered; Stoke-on-Trent City Council v W & J Wass Ltd [1988] 3 All ER 394 considered; Surrey County Council v Bredero Homes Ltd [1993] 3 All ER 705 considered; Experience Hendrix LLC v PPX Enterprises Inc [2003] 1 All ER (Comm) 830 considered; Vercoe v Rutland Fund Management Ltd [2010] All ER (D) 79 (Jun) considered; Parabola Investments Ltd v Browallia Cal Ltd [2011] 1 All ER (Comm) 210 considered.

(2) Whether the Court of Appeal had been correct to uphold the judge’s finding that negotiating damages were available in the present case.

It was apparent that neither the judge nor the Court of Appeal had applied an approach which could be regarded as correct. The judge had been mistaken in considering that the respondent had had a right to elect how its damages should be assessed. He had been mistaken in supposing that the difficulty of quantifying its financial loss, such as it had been, had justified the abandonment of any attempt to quantify it and the award instead of a remedy which could not be regarded as compensatory in any meaningful sense (see [96], [127] of the judgment).

The Court of Appeal had been mistaken in treating the deliberate nature of the breach, the difficulty of establishing precisely the consequent financial loss or the respondent’s interest in preventing the appellants’ profit-making activities as justifying the award of a monetary remedy which had not been compensatory. The idea that damages based on a hypothetical release fee were available whenever that was a just response, that being a matter to be decided by the judge on a broad brush basis, was also mistaken. The basis on which damages were awarded could not be a matter for the discretion of the primary judge (see [97], [127] of the judgment).

The natural result of the parties’ competition had been a loss of profits and possibly of goodwill. The loss was difficult to quantify, and some elements of it might be inherently incapable of precise measurement. Nevertheless, it was a familiar type of loss, for which damages were frequently awarded. It was possible to quantify it in a conventional manner. The case was not one where the breach of contract had resulted in the loss of a valuable asset created or protected by the right which was infringed. In reality, the respondent’s loss was the cumulative result of breaches of a number of obligations, of which the non-compete and non-solicitation covenants had been treated as the most significant (see [98], [99], [127] of the judgment).

The ordered hearing on quantum should proceed, but not as the judge ordered, as an assessment of the amount which would notionally have been agreed between the parties, acting reasonably, as the price for releasing the appellants from their obligations. The object of the exercise was that the judge should measure, as accurately as he could on the available evidence, the financial loss which the respondent had actually sustained. How that assessment was best carried out was, in the first instance, a matter for the judge to consider, proceeding in accordance with the present judgment. If evidence was led in relation to a hypothetical release fee, it was for the judge to determine its relevance and weight, if any. However, it was important to understand that such a fee was not itself the measure of the respondent’s loss in a case of the present kind (see [100], [127] of the judgment).

Decision of Court of Appeal, Civil Division [2017] 2 All ER 262 Reversed.

Charles Bear QC and Ian Bergson (instructed by Neves Solicitors LLP, Milton Keynes) for the appellants.

Craig Orr QC and Mehdi Baiou (instructed by Pitmans LLP) for the respondent.

Karina Weller - Solicitor (NSW) (non-practising).

Neither the judge nor the Court of Appeal, Civil Division, had applied the correct approach in awarding the respondent damages for an amount notionally agreed between the parties, acting reasonably, for releasing the appellants from their obligations and damages should be measured by the financial loss the respondents had actually sustained. The Supreme Court gave guidance on the circumstances in which damages for breach of contract could be assessed by reference to the sum that a claimant could hypothetically have received in return for releasing a defendant from the obligation which he failed to perform.

Background

The proceedings concerned six individuals, who had been involved in road traffic accidents. Each accident had involved vehicles insured by the appellant insurance company (Haven). The six individuals entered into conditional fee agreements (CFAs) with the respondent solicitors firm (GE). Each individual retained GE on a particular type of identically worded CFA retainer, known in the trade as a ‘CFA lite’, designed to ensure that in no circumstances would the client have to pay the firm’s charges. The CFA used the Pre-Action Protocol for Low Value Personal Injury Claims in Road Traffic Accidents (the protocol). Under the protocol, if liability was admitted, the amount of the damages was negotiated. The insurer was expected to pay the solicitors’ fixed costs and charges direct to the solicitors. Haven decided to respond to the notification of the claims on the Road Traffic Accidents portal by offering to settle direct with various claimants, on terms which included no amount for their solicitors’ costs or disbursements (fixed or otherwise).

The settlements thereby achieved included claims by the six individuals, arising from three motor accidents, all of whom had retained GE. GE responded by a claim against Haven for wrongful inducement to the clients to breach their retainer contract, intentional causing of loss by unlawful means and, by amendment, seeking equitable enforcement of its solicitors’ lien (the lien).

At first instance, the court dismissed the claims and held that the lien could not be enforced, because there had been no collusion between Haven and the six individuals to cheat GE, and because Haven had not been on notice of the terms of the retainers.

The Court of Appeal, Civil Division, held that, on the true construction of the retainers, there was no contractual liability of the claimants for GE’s charges, so that there was nothing upon which an equitable security could be founded. Nonetheless, it held that the equitable jurisdiction to intervene could be extended far enough to enable the court to recognise and then enforce an interest of GE under the protocol in receiving its fixed costs and charges as therein provided or, alternatively, an interest under an express provision in the retainers to sue in its client’s names for recovery of those charges from Haven, and that Haven had known of those interests. Accordingly, the Court of Appeal ordered Haven to pay the charges allowable under the protocol to GE, in addition to the settlement sums already paid to the claimants. GE appealed to the Supreme Court.

Appeal dismissed.

Issues and decisions

(1) Whether GE had had a contractual entitlement to its charges under the CFA, and whether, on the true construction of the CFA, a client had any contractual liability to pay the solicitor’s charges. Consideration was given to three documents provided to GE’s clients: (i) the CFA itself; (ii) a document entitled ‘What You Need To Know About A CFA’ produced by the Law Society; and (iii) GE’s client care letter, which deal with, among other things, costs (for details, see [22] of the judgment).

The client care letter had not destroyed the basic liability of the client for GE’s charges expressly declared in the CFA and the Law Society’s standard terms. It had merely limited the recourse from which GE could have satisfied that liability to the amount of its recoveries from the defendant. It had both preserved and affirmed that basic contractual liability, to the full extent necessary to form the basis of a claim to an equitable charge as security (see [40] of the judgment).

The first question was whether the client care letter had had contractual effect at all. Both it and the two other documents had sought to make it clear that the full terms of the retainer were to be found in the CFA document and in the incorporated Law Society terms. Nonetheless the court was prepared to assume, in favour of the client, that the passage in the client care letter dealing with costs had been either part of the contract of retainer, or a collateral contract (see [41] of the judgment).

The language of that passage had done three things. First, it had asserted a right for GE to recover its fees and charges from the defendant. That had affirmed the equitable lien, since there would otherwise have been no basis upon which GE could have done so. Second, it had stated in clear terms that such a recovery was the means by which GE could give effect to a continuing responsibility of the client for those fees. Third, it had limited GE’s recourse for the fees to the amount recovered from the defendant (see [42] of the judgment).

There was a compelling parallel in a limited recourse secured loan agreement. A lender might lend a million pounds to a borrower, take valuable security, and then agree to limit his recourse to the amount recovered by enforcing that security. It would be absurd to say that the lender had thereby deprived the security of all effect because the borrower would not have had to put his hand in his pocket to pay anything in addition (see [43] of the judgment).

The client care letter had plainly been intended to be read, so far as possible, in accordance with, rather than in opposition to, the CFA and Law Society’s terms. Those two documents were, in the relevant passages, shot through with clear assertions of the client’s responsibility for the firm’s charges in the event of a win in the litigation, which was defined to include a settlement of the claim under which there was an agreement to pay the claimant damages. Full effect could be given to the objective stated in the client care letter, that the client should not have to put his hand in his own pocket to pay the solicitors’ charges, without destroying the basic contractual responsibility of the client for their payment (see [44] of the judgment).

The result of that analysis was that there had existed, in each of the six cases, a sufficient contractual entitlement of GE against its claimant clients to form the basis of a claim to an equitable lien over the agreed settlement debts payable by Haven on behalf of its insured drivers (see [45] of the judgment).

Welsh v Hole (1779) 99 ER 155 considered; Read v Dupper (1795) 101 ER 595 considered; Ormerod v Tate (1801) 102 ER 179 considered; Ex parte Bryant (1815) 1 Madd 49 considered; Gould v Davis (1831) 148 ER 1484 considered; Moss, Re (1866) 35 LJ Ch 554 considered; Mason v Mason and Cottrell [1933] All ER Rep 859 considered; Khans Solicitor (a firm) v Chifuntwe [2013] 4 All ER 367 considered.

(2) Whether the settlement debts had owed their creation, to a significant extent, to GE’s services provided to the six individuals under the CFAs and, in the absence of collusion, whether Haven had had notice (or knowledge) of GE’s interest in the settlement debts.

Once a defendant or his insurer was notified that a claimant in a road traffic case had retained solicitors under a CFA, and that the solicitors were proceeding under the protocol, they had the requisite notice and knowledge to make a subsequent payment of settlement money direct to the claimant unconscionable, as an interference with the solicitor’s interest in the fruits of the litigation. The very essence of a CFA was that the solicitor and client had agreed that the solicitor would be entitled to charges if the case was won. Recovery of those charges from the fruits of the litigation was a central feature of the protocol (see [50] of the judgment).

The Court of Appeal had proceeded upon the basis that the equitable remedy could be deployed to provide a means for GE to recover from Haven precisely those fixed costs, disbursements and success fee provided for under the protocol, regardless of the amount agreed to be paid in settlement. By contrast, the remedy existed to provide security for the solicitor’s charges under his retainer, limited to the amount of the debt created by the settlement agreement. In the present cases, one effect of the retainer had been to limit those recoveries to the amount recoverable from the defendants or their insurers. To the extent that the fixed costs regime limited those recoveries below that recoverable under the tables in the CFAs, that limitation would have to be taken into account, as it has been by the Court of Appeal’s order (see [65] of the judgment).

Decision of Court of Appeal [2015] All ER (D) 60 (Dec) affirmed.

Jonathan Crow QC, Lesley Anderson QC and Martin Budworth (instructed by Gavin Edmondson Solicitors Ltd) for GE.

Lord Marks QC, Jamie Carpenter and James Wibberley (instructed by Flint Bishop LLP) for Haven.

David Holland QC (instructed by the Law Society Legal Services Department) for the Law Society as intervener.

Toby Frost Barrister.

The appeal of the appellant insurance company (Haven) failed. The Supreme Court held that the respondent solicitors’ firm (GE) was entitled to the enforcement of the traditional solicitor’s lien against Haven. In the case of each of the individuals insured by Haven under consideration, there had been a sufficient contractual entitlement of GE against its claimant clients to form the basis of a claim to an equitable lien over the agreed settlement debts payable by Haven on behalf of its insured drivers.