Case Comment: Fallows v Harkers Transport (Royal and Sun Alliance, vehicle insurance)

Mr Fal­lows’ car was dam­aged by a vehicle owned by the defend­ants. Liab­il­ity was not an issue. Mr. Fal­lows’ vehicle was insured by Roy­al and Sun Alli­ance, who sought to recov­er their costs from the defendant’s insurers. The costs were £1825.53. Not a large sum. How­ever, the defend­ants objec­ted.

The reas­on for the objec­tion was that Roy­al and Sun Alli­ance arranged repair via a wholly-owned sub­si­di­ary, which then con­trac­ted with a sub­con­tract­or, who actu­ally repaired the vehicle. The sub­con­tract­or billed the sub­si­di­ary the sum of £1542.78. The sub­si­di­ary added on fur­ther costs, and billed Roy­al and Sun Alli­ance.

In Rom­ford County Court, the defend­ants ques­tioned the sum claimed. It was held that, giv­en the duty to mit­ig­ate, the best evid­ence of reas­on­able cost of repairs was that which RSA’s sub­si­di­ary nego­ti­ated with the sub­con­tract­or. There was no evid­ence that RSA itself could only nego­ti­ate a high­er price. While admin­is­tra­tion costs have been allowed by the courts in the past, there are no decisions allow­ing them to a sub­rog­ated insurer, let alone a sub­rog­ated insurer’s sub­sid­ary. And in coun­ter­bal­ance, there are decisions where admin­is­tra­tion costs have been dis­al­lowed.

The Judge (Platt J) said:

Since RSAARL is wholly owned by RSA the effect of these extra charges if they are paid by defend­ants is simply to boost RSA Group’s profits bey­ond the actu­al cost of repair by the mar­gins inser­ted by RSAARL. I can find no basis in law for say­ing that this is a course of action which a claimant insurer is entitled to take [..]. On the evid­ence the defend­ant has clearly estab­lished a fail­ure to mit­ig­ate on the part of the claimant.

Now that this judg­ment is pub­lic, the util­ity of this busi­ness arrange­ment to RSA is prob­ably moot. Oth­er insurers could use the same mod­el. This how­ever was found to be likely to lead to an increase in costs to the insured mem­bers of the pub­lic of some 25%.

RSA were held liable in costs to the defend­ant — exceed­ingly unusu­al in a small claim. Even though they were the claimant, they almost com­pletely failed to com­ply with pre–action pro­tocol and with the court–ordered dis­cov­ery pro­cess. For example, the exist­ence of a form­al invoice from the repairer to RSA’s sub­si­di­ary was not dis­closed, even once its exist­ence had become appar­ent dur­ing the tri­al.

Per­mis­sion was giv­en to appeal.

Judg­ment in the case can be found on BAILII at Fal­lows v. Hark­ers Trans­port (A Firm) [2011] EW Misc 16.

Your data in the Cloud is not secure from the US Government

Data stor­age in the cloud is clearly the where things are mov­ing just now. Giv­en the pleth­ora of devices people have — com­puters at home, laptops and tab­lets on the move, smart­phones in the pock­et, it makes per­fect sense for all of a person’s devices to use a single, com­mon repos­it­ory for shared inform­a­tion. Ser­vices such as Apple’s forth­com­ing iCloud at the domest­ic level, and commonly–used ser­vices such as Google’s Google Apps, Salesforce.com and Microsoft’s Office 365 all store your data in their own clouds.

You’d think that this would be done with respect to Data Pro­tec­tion laws. Wrong. If the USA wants your data, the USA gets it. My friends Simon Bis­son and Mary Branscombe have the details: regard­less of European pri­vacy dir­ect­ives and the UK Data pro­tec­tion act, the US see the PATRIOT act over­rid­ing these for US com­pan­ies and EU sub­si­di­ar­ies of US com­pan­ies:

That means that US gov­ern­ment can (under the aus­pices of the act) request the data of any indi­vidu­al or com­pany that’s using US-owned or hos­ted ser­vices, no mat­ter where that data is actu­ally being held. It doesn’t mat­ter if you’ve geo-locked your data, and it only resides in European data centres, it can still be requisi­tioned and taken to the US. Yes, it’s an issue of nation­al secur­ity, but when res­ults can be found by machine learn­ing and trawl­ing massive data sets (the lar­ger the bet­ter), there’s a tempta­tion for gov­ern­ments to take all they can and more.

Undoubtedly this will lead to much hand–wringing in the EU Par­lia­ment. How­ever, what can be done? It is unlikely that the USA will give up their powers.

There­fore, the only solu­tion is in the hands of indi­vidu­als and com­pan­ies wish­ing to use cloud ser­vices — only use cloud ser­vices from wholly–EU–owned com­pan­ies host­ing your data inside the EU. While the leg­al pro­tec­tions you will have in those cir­cum­stances are not huge, they are bet­ter than none at all.

Oh — an after­thought. How happy do you now feel, if per­haps you have just giv­en a whole heap of your per­son­al inform­a­tion to Google, dur­ing the Google Plus sign–up pro­cess?

Penalties from HMRC and reasonable excuses

For a long time, HMRC have taken the view that where the law allows a “reas­on­able excuse” for the late fil­ing of a return — be that a self-assess­ment per­son­al tax return, Cor­por­a­tion Tax return, VAT return or PAYE return — the reas­on­able excuse must relate to an event or situ­ation that was excep­tion­al and unfore­see­able. Ordin­ary fail­ings or mis­un­der­stand­ings were not enough.

We are def­in­itely see­ing, how­ever, a change in atti­tude from at least one Tribunal judge. In Colin Humphreys v Rev­en­ue & Cus­toms [2011] UKFTT 98 (TC), the tribunal said (at para. 8):

HMRC con­tends that if the appel­lant is to estab­lish that he has a “reas­on­able excuse” for the late pay­ment he must show that excep­tion­al cir­cum­stances exist. That is not the test stip­u­lated by the legis­lature. The words “reas­on­able excuse” are ordin­ary Eng­lish words to be giv­en their prop­er every­day mean­ing. There is no jus­ti­fic­a­tion for the gloss that HMRC seeks to put on those words.

I notice that one of the Tribunal judges in that case has gone some­what farther then before: In Ballysil­lan Com­munity For­um v Rev­en­ue & Cus­toms [2011] UKFTT 257 (TC) the tribunal said (at para. 3):

I have to bear in mind that this is a case in which a pen­alty has been levied. In those cir­cum­stances the decision of the European Court of Human Rights in Jusil­la v Fin­land (73053÷01) ECtHR (Grand Cham­ber) is highly mater­i­al. The Court decided that a pen­alty or sup­ple­ment charged by the rev­en­ue author­it­ies of a mem­ber coun­try is in the nature of a crim­in­al pen­alty and thus any pro­ceed­ings in respect of it attract the pro­vi­sions of art­icle 6 ECHR (right to a fair tri­al). Thus, in my judge­ment, it is for HMRC to sat­is­fy me to the crim­in­al stand­ard, so that I can be sure, that the required fil­ing did not take place.

So, we have a two-pronged attack here on HMRC’s insist­ence that an excuse must be excep­tion­al: firstly, an ordin­ary read­ing of the enact­ing legis­la­tion (Sched­ule 55 of the Fin­ance Act 2009) must be under­taken as the words “reas­on­able excuse” are not used with a spe­cif­ic defin­i­tion. And since the European Court of Human Rights have held that a pen­alty to make a return is essen­tially crim­in­al in nature, it requires a crim­in­al level of proof.

I wouldn’t be sur­prised if we see a first-stage tribunal determ­in­a­tion based on one or the oth­er of these points appealed. I per­son­ally am happy with the rul­ing based on the defin­i­tion of “reas­on­able excuse” — the phrase is clear, and I do not believe it to be ambigu­ous. Look, for example, at “reas­on­able doubt” — a phrase that has been clearly under­stood in crim­in­al cases for a very long time.

I’m not so sure though about the Jusil­la point. It seems to me to be a fairly inter­pret­ive read­ing of the case. One point, though, does jump out at me: the Grand Cham­ber (at paras 32–34) con­cern them­selves with the pro­por­tion­al­ity of the pen­alty. They have no prob­lems with 10% (with a cap at some level), they do seem to have a prob­lem with a fixed sum that is not in pro­por­tion to the tax owed.

It may be, ulti­mately, that “reas­on­able excuse” gets a leg­al redefin­i­tion, either judge-made or in stat­ute, but fixed pen­al­ties get changed into per­cent­age pen­al­ties. This may be of some advant­age to the indi­vidu­al or small busi­ness: it may reduce the pen­al­ties on small errors. That seems fair to me.

Instant Messenger Conversation Modifies Contract; Signed With ‘Awesome’

This isn’t a UK case, but I could see the same hap­pen­ing here — as the art­icle states, all the ele­ments of a con­tract seem to be present:

Instant Mes­sen­ger Con­ver­sa­tion Mod­i­fies Con­tract; Signed With ‘Awe­some’:

Many people don’t quite real­ize that almost any kind of “agree­ment” can be seen as an enforce­able con­tract in the eyes of the courts. While some people think a con­tract has to involve a full writ­ten doc­u­ment and sig­na­tures, that’s often not true at all. Take, for example, a case involving affil­i­ate sales of e-cigar­ettes, in which a writ­ten con­tract was deemed to be mod­i­fied by a simple instant mes­sen­ger con­ver­sa­tion. The affil­i­ate com­pany, CX Digit­al, wanted to remove the con­trac­tu­al lim­it of 200 refer­rals per day for sales of Smoking Everywhere’s e-cigs, and the fol­low­ing IM con­ver­sa­tion ensued:


[CX] (2:50:08 PM): We can do 2000 orders/day by Fri­day if I have your bless­ing

[CX] (2:52:13 PM): those 2000 leads are going to be gen­er­ated by our best affil­i­ate and he’s legit

[Smoking Every­where]: is avail­able (3:42:42): I am away from my com­puter right now

[CX] (4:07:57 PM): And I want the AOR when we make your offer #1 on the net­work

[Smoking Every­where] (4:43:09 PM): NO LIMIT

[CX] (4:43:21 PM): awe­some!

Smoking Every­where then tried to bail out on pay­ing CX the affil­i­ate fees owed, and claimed (among oth­er things) that this didn’t rep­res­ent an actu­al modi­fic­a­tion of the con­tract which had the 200 per day lim­it stated. The court didn’t buy it, not­ing that this is a per­fectly fine example of an offer, counter-offer and accept­ance, all encap­su­lated in instant mes­sen­ger.

(Via Tech­dirt.)