High Court in England curbs excessive use of privacy claims in data breach cases deemed fraudulent
In a landmark decision that has significantly altered the landscape of data breach and Misuse of Private Information (MPI) allstate claims, the High Court's judgement in the case of Stephenson v Paymaster has set new standards and requirements for claimants and law firms.
The case involved a retired police officer, whose personal data was accidentally sent to another officer by Paymaster. Despite the data breach, the claimant's MPI claim was not successful, as the High Court held that for an MPI claim to be recoverable, it must be genuine and not spurious.
The High Court's judgement has curtailed the common practice of tagging on MPI claims to data breach cases. After the event (ATE) insurance cover, which provides claimants with financial protection if their claim fails, is not generally recoverable from the defendants. This means that claimants may need to accept some financial risk, leading to only high-value claims with a substantial chance of success being pursued.
The judgement in Stephenson v Paymaster has also impacted breach of confidence claims, as they may be subject to the same requirements as MPI claims. The High Court held that "use" of private information involves doing something with the information with the purpose of achieving or obtaining a particular result or objective. In the case of Stephenson v Paymaster, Paymaster's sending of an email was not considered "use" of the claimant's private information in the true sense of the word.
Amelia Hodder, a Trainee Solicitor, co-authored an Insight on the decision in Stephenson v Paymaster, highlighting its implications for claimant law firms. The decision encourages claimant law firms to adopt a more judicious approach when selecting data breach cases, ensuring that claims are substantive and not spurious.
The Legal Aid, Sentencing and Punishment of Offenders Act 2012 has curtailed the circumstances in which ATE premiums can be recovered. However, the Legal Aid, Sentencing and Punishment of Offenders Act 2012 (Commencement No. 5 and Saving Provision) Order 2013 allows for ATE premiums to be recoverable in "publication and privacy proceedings", which include MPI and breach of confidence claims.
Previously, the High Court, in Stadler v Currys Group and Warren v DSG, had affirmed that MPI and breach of confidence claims were unlikely to be appropriate in circumstances where a data breach did not involve a positive, wrongful act by the defendant. The judgement of Stephenson v Paymaster has further solidified this stance, reinforcing the importance of substantive claims in data breach cases.
The judgement of Stephenson v Paymaster has significantly curtailed the circumstances in which the approach of supplementing statutory claims with MPI and breach of confidence claims can be used. As such, claimants and law firms must carefully consider the merits of their cases before pursuing MPI or breach of confidence claims in conjunction with data breach claims.
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