Data protection: enforced subject access requests

Demanding CRB checks now an offence

Employers and service providers requiring individuals to obtain and disclose certain protected data, such as criminal records checks or barring records, will commit an offence from 1 December 2014.
Only employers in certain sensitive occupations can lawfully obtain enhanced criminal record checks from the Disclosure and Barring Service (still often called "enhanced CRB checks"). Some employers and service providers, such as insurance companies, have developed a practice of insisting that applicants exercise their rights under the Data Protection Act to obtain their own sensitive personal data, then provide a copy of the report to the company. The report might be from the Disclosure and Barring Service (which replaced the Criminal Records Bureau and the Independent Safeguarding Authority), the police or the government.

Many businesses will have to change their practices as a result. Some unfortunately have not realised that rights to privacy are now real and are here to stay, even relating to important matters such as serious criminal records or preventing insurance fraud.

There are exceptions where the company is authorised by law to obtain the information or where obtaining them is in the public interest, but in most cases it will no longer be possible to circumvent the restrictions on who can access this sensitive data.

What does "in witness" mean in in my legal document?

What meaneth witnesseth?

What do those strange words about "witnesseth" (or similar) mean, at the beginning and end of a legal document?

Apart from telling you that your solicitor is a bit old-fashioned, they don't add a great deal.

"In witness whereof" does not have anything to do with witnesses to the signatures. It means "as evidence of which", or "to demonstrate their agreement". It has no particular legal significance in the modern age, except that in England a document intended to have effect as a deed must say so, and this is the usual place to do that: "in witness whereof the parties have executed this document as a deed on..." This is the "testimonial clause"  or "incujus rei testimonium" and it matches the testatum at the beginning of the document, after the recitals, traditionally "Now this deed witnesseth...". What is sandwiched between the two is the operative part of the deed, so the recitals or schedules do not normally have legal effect as operative provisions unless the deed says so.

It can certainly but put in modern English. I start the business part of my documents with a heading "Operative provisions:" and end with "The parties have [signed this agreement][executed this document as a deed] on the date stated at the top of page 1." I just hope my abandoning tradition never ends up being challenged in the Court of Appeal!

Proportionate liability clauses upheld

Need a small slip make you liable for the whole loss?

For many years, businesses have been trying to limit liability according to their fair share of the fault.  Among the first to argue for "proportionate liability" were the big accountants, who are regularly sued over corporate failures because their insurers had deep pockets. The issue frequently arises in the constructions industry, where there are often several firms of contractors and professionals who might share responsibility for a fault or delay.

In most cases, where there are two or more possible defendants, they will be jointly and severally liable for the loss. that means the claimant can sue any or all of them, and recover the whole of his loss from the chosen defendant, leaving the defendants to sort out contributions amongst themselves. that can be very unfair to defendant if the others have gone bust or disappeared. In the very worst cases it can even make claimants careless about the choice of contractors: so long as they have one solid defendant, they need not worry about the competence or financial strength of the others.

"Net contribution clauses" have often been inserted in contracts, but lawyers have doubted whether they worked. Now the Court of Appeal has confirmed that they do - even in consumer contracts.

In West v Ian Finlay & Associates a very simple term was held to work: "Our liability for loss or damage will be limited to the amount that it is reasonable for us to pay in relation to the contractual responsibilities of other consultants, contractors and specialists appointed by you". The clause protected an architect from liability for the part of the claimant's loss fairly attributable to defective work by the (insolvent) building contractor. It survived challenges under the Unfair Terms in Consumer Contracts Regulations and the Unfair Contract Terms Act 1977.

All businesses which could potentially share liability with others should review their contract terms and consider whether they should be using a net contribution clause. That includes most businesses in the construction industry and most professional firms. It remains to be seen whether the same approach can be extended to exclude liability for the defaults of your own sub-contractors.

Consumer credit licences all expire

If you haven't acted, your consumer credit activities are now illegal

All licences granted by the OFT under the Consumer Credit Act 1974 lapse at midnight tonight. That includes the group licence granted to all solicitors.

 

From tomorrow (1 April 2014), consumer credit businesses - including ancillary activities such as credit brokerage and debt collection - require authorisation by the Financial Conduct Authority. If you haven't already applied for interim authorisation, you will need to stop carrying on the regulated activity until you have gone through the application process - likely to take some months.

 

There is no general permission for solicitors, so those engaged in consumer credit activities, including debt collection from consumers, now have to be dual-regulated by the FCA and the SRA (and pay two sets of fees for the privilege). Will consumers be any better off? No, of course not.

Address for service

Directors' risk of being served with a claim in the UK

Directors of UK companies have to give an "address for service" to Companies House. This came in in 2009 as a trade-off for the ability to conceal the director's home address (section 1140 Companies Act 2006).

In a surprising decision, a Master of the High Court has ruled that the address for service at Companies House can be used to serve any document on the director, including a claim form starting legal proceedings against him which were unrelated to the company in question (Key Homes Bradford Ltd & Ors v Patel [2014] EWHC B1 (Ch) 10 January 2014). That applies even if the director is not in the UK, and proceedings against him could not otherwise be started in England without the court giving leave to serve proceedings outside the UK (which is not automatic), and an expensive process of serving abroad. The usual rules of court requiring an individual to be served at his usual or last known residence are overridden.

Directors' addresses for service are often given quite casually, often as the company's registered office, perhaps without consulting the director in question. Now it is clear that directors should take more interest, especially directors resident abroad. Giving an address for service in the UK makes them vulnerable to being sued in England much more easily, even in unrelated matters. They can also be seriously prejudiced if proceedings are served at the company's offices and are not passed on. Disputes with the company are a particular risk: the company may be tempted to serve its claim at its own office, not pass the papers to the defendant, and enter judgment in default.

It is even possible that the address for service can be used for things that would otherwise have to be served personally, such as a statutory demand in bankruptcy or a court order threatening imprisonment for contempt.

Advisers should be much more careful in future about giving an address for service for directors, especially for those resident overseas. The address given does not have to be in the UK, and if it is outside the UK it would still be necessary to get leave from the court to serve a claim form there. Even UK directors might want to give an address abroad!

Negligence: staying out of the firing line

Shared responsibility in a professional team

Professionals work in teams, formally or informally, on all sorts of projects. Where something goes wrong, it may not be clear that one professional firm is solely responsible.  One professional may have relied entirely on another to do his bit, either by agreement between them or because it naturally fitted in the other's area of expertise; or one may have appointed the other to assist. Successive advisers may have made the same mistake. Two advisers may assume that each other are dealing with an issue. If work or advice has been negligent, the client will be tempted to sue all parties and let them fight it out amongst themselves. It may come down to assessing the contributions to be made by different parties.

In Flanagan v Greenbanks Ltd (t/a Lazenby Insulation) & Cross two successive firms carried out negligent surveys to assess suitability for cavity wall insulation. The Court of Appeal said that both were liable: the negligence of the later survey had not absolved the earlier one of responsibility, nor could the second firm assume that the first had done its work correctly without checking.

Firms can improve their position if sued by including suitable terms in their conditions of engagement - subject always to the usual considerations on limitation and exclusion clauses, especially in consumer contracts. Something like this can help:

"Where other professionals are engaged by you or on your behalf (including any predecessor of ours), we will be entitled to rely on the work and advice of those other professionals and to assume that they have carried out their work with due care and skill and to all relevant standards. We will not be responsible for checking or re-doing their work, or for checking their instructions, assumptions or conclusions, unless specifically instructed to do so, and then only to the extent falling within our area of expertise. We may review or comment upon the work of other professionals where we consider it appropriate but we will not be obliged to so and by doing so we do not assume responsibility for such work. Where we engage or recommend other professionals, our responsibility for their work is limited to selecting professionals whom we believe to be reasonably suitable for the purpose. Where we engage such professionals with ourselves as principals (and not as your agents) our liability for loss or damage arising directly or indirectly from their act or default (including negligence) is limited to the amount we are actually able to recover from them. If we recommend the engagement of other professionals but you decline to do so, we will not be liable for any loss or damage which would have been avoided had such professionals been engaged."

Of course it also helps if the roles of the professional teams are clearly defined, and if each member has a proper definition of its scope of work and terms of engagement. Specifically exclude from your scope of work any high-risk areas you don't regard as part of your role, and adapt your contract terms carefully to each situation.