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High Court data breach claim transferred to Small Claims Track

Why is Cleary v Marston (Holdings) Ltd of interest to businesses potentially facing data breach claims?

There has been an increase in data breach litigation since the introduction of GDPR and the UK data protection legislation framework. Some really significant cases have been decided over the last year or two.  For example, the rejection, in Lloyd v Google [1], of mass data breach claims where individual evidence is not provided; and the narrow view of data breach claims advanced on the basis of breach of confidence, misuse of private information and negligence adopted by the court in Warren v DSG [2].

In Cleary v Marston (Holdings) Ltd [3], a low value data breach case was transferred from the High Court to the Small Claims Track in the County Court.  Businesses are often the target of such claims. Business defendants will welcome this decision, as it reiterates the dim view the courts take against claimants who purport to overstate the complexity of their case.

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What are the key takeaways for data breach litigation?

Cleary v Marston (Holdings) Ltd demonstrates the court’s view that low value data breach claims can, and should, be dealt with via the Small Claims track in the County Court – not in the High Court.  A key corollary to that is the fixed costs regime that applies. The decision is another example of the court actively managing data breach claims to ensure they are dealt with at proportionate cost.

Other key takeaways are:

  • Breach of confidence, misuse of private information and breach of data protection claims are seen as three different ways to characterise the same complaint. Courts will give short shrift to claimants unnecessarily claiming more than one of these in any one action in an attempt to overstate the complexity and costs of a claim.
  • Declarations in media and communication claims are unnecessary and do not justify a claim being allocated to the High Court. Mr Justice Nicklin stated in Cleary that declarations are not usually sought in these types of claims and should not be included unless there is exceptional justification for it. A declaration in these claims would provide no more value to a claimant than a court judgment.
  • The existence of After the Event (ATE) insurance policy premiums or a claimant’s agreement with its legal advisors as to costs will not affect the track allocation of a claim.
  • If successful, claimants can benefit from the limited costs recovery on the Small Claims Track provided the parties have not acted unreasonably.

What happened in the particular case?

Mr Cleary issued proceedings against Marston for an alleged breach of data protection legislation after an employee of Marston mistakenly sent an email containing information regarding Mr Cleary to a third party. The third party deleted the e-mail on the same day.  The only factual point in dispute was whether the email had been read before it was deleted.

Mr Cleary instructed solicitors with an ATE insurance policy and arranged a conditional fee agreement (CFA) with them, which allowed for a success fee. The pleaded value of Mr Cleary’s claim was £3,000, but his cost budget for the claim totalled £46,908.

At the Costs and Case Management Conference (CCMC) Mr Justice Nicklin ordered the claim be transferred to the Small Claims Track because:

  1. there were limited facts in dispute between the parties;
  2. there were no issues which were too legally complex for a County Court judge to determine;
  3. the claim for a declaration was unnecessary; and
  4. the value of the claim meant it would ordinarily be allocated to the Small Claims Track.

Mr Cleary’s solicitors argued that this raised potential issues in respect of access to justice.  They alleged that Mr Cleary would not be able to obtain legal support without the availability to recover the ATE premiums. (Recoverable costs are limited to fixed costs in the Small Claims Track.)

Mr Justice Nicklin rejected that argument.  He confirmed that the ability to recover costs should not affect the allocation of the proceedings.  He also noted that no ordinary litigant would incur costs of circa £50,000 pursuing a £3,000 claim.

Defending data breach claims: How we can help

Walker Morris’ Commercial Dispute Resolution lawyers are highly experienced in resolving and defending data breach claims. This expertise, when combined with our specialist Regulatory & Compliance team’s comprehensive understanding of the regulatory background, ensures that an informed and robust strategy can be adopted.  

As well as helping you to respond quickly and effectively if and when a data breach occurs and any claim is threatened, our specialist solicitors can help you to refine your pre-emptive risk management strategies.  Whether that be carrying out health checks in respect of policies and procedures with a view to mitigating against claims of this nature, training staff and/or keeping you up to date with the legal and regulatory matrix, Walker Morris’ data breach litigation specialists will be very happy to help.

If you would like to discuss any of the issues covered in this or our earlier briefings, please contact Gwendoline DaviesNick McQueen or Jack Heward.

 

[1] [2021] UKSC 50 See Walker Morris’ earlier briefing on Lloyd v Google

[2] [2021] EWHC 2168 (QB) See Walker Morris’ earlier briefing on Warren v DSG

[3] [2021] EWHC 3809 (QB)

Gwendoline
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(FCIArb) Head of Commercial Dispute Resolution

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Nick
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Jack
Heward

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Dispute Resolution

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