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British Gas ruling sends warning to all suppliers

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A woman who took a case for harassment against British Gas has won a settlement from the company. One legal expert said that the case should act as a warning to all firms to make sure their debt collection and complaint handling operations communicate.

Lisa Ferguson took the energy giant to court over a string of threatening letters she received demanding payment of gas bills that she was not responsible for. Ferguson had switched suppliers but continued to receive demands and threats from British Gas for eight months.

Ferguson repeatedly wrote to the company and telephoned it to inform it that she had switched suppliers. She wrote to the company's chairman but received no reply and alerted the energy watchdog to her plight.

Even when British Gas employees told her that the matter was settled and the activity would stop, the letters and threats kept coming. Ferguson runs her own property investment business and was told that the failure to pay the bills would affect her credit rating.

Ferguson took a case claiming that British Gas's behaviour was unlawful under the Protection from Harassment Act, which created a civil and a criminal offence of harassment.

That law says:

"A person must not pursue a course of conduct - (a) which amounts to harassment of another, and (b) which he knows or ought to know amounts to harassment of the other. (2) For the purposes of this section, the person whose course of conduct is in question ought to know that it amounts to harassment of another if a reasonable person in possession of the same information would think the course of conduct amounted to harassment of the other."

British Gas said that the behaviour was not serious enough to amount to harassment and that as a company, rather than an individual, it could not be caught by the legislation. It argued that Ferguson would have to identify an individual directing the activity in order for harassment to be demonstrated.

British Gas asked the the Court of Appeal to throw the case out before it reached a full hearing because it had no basis.

The Court refused and said there was a case to answer. British Gas has now settled the case with Ferguson, but would not reveal how much it has paid her.

A litigation expert at Pinsent Masons, the law firm behind OUT-LAW.COM, said that the case showed that companies should pay close attention to the way they collect debts.

"It was important in this case that the customer had told British Gas so many times that the debt was disputed," said Chris Breen, a litigation specialist at Pinsent Masons, the law firm behind OUT-LAW.COM. "Companies chasing debts need to be aware that the way they pursue debts could be scrutinised and subject to claims under the Act."

"They need to ensure that their complaints handling procedure is effective and linked up and when they do chase debts that they don't do it in an overly aggressive and threatening way," he said.

Lord Justice Jacob, giving the ruling of the Court, said that British Gas's arguments about why its behaviour stopped short of harassment held no water.

"[British Gas] sought to downgrade [the behaviour] by saying that Ms Ferguson knew the claims and threats were unjustified," he said in the ruling. "That is absurd: a victim of harassment will almost always know that it is unjustified. The Act is there to protect people against unjustified harassment. Indeed if the impugned conduct is justified it is unlikely to amount to harassment at all."

The company also tried to argue that because automated systems created the correspondence it did not amount to harassment.

"[British Gas] also made the point that the correspondence was computer generated and so, for some reason which I do not really follow, Ms Ferguson should not have taken it as seriously as if it had come from an individual," said the ruling. "But real people are responsible for programming and entering material into the computer. It is British Gas's system which, at the very least, allowed the impugned conduct to happen."

"No amount of writing and telephoning had stopped the system so far – at times it must have seemed like a monster machine out of control moving relentlessly forward – a million miles from the 'world class level of service' (letter of 9th January) which British Gas says it aims to offer," the ruling said.

Lord Justice Jacob rejected British Gas's claims that in order to win a harassment case a person would need to demonstrate that the company had "actual knowledge" that its behaviour was harassment.

"As at present it seems to me that all the Act requires of the victim is to identify the course of conduct and what passed between the victim and the alleged harasser. The court is then notionally to put knowledge of that and of any other relevant information into the mind of this reasonable person. The court then decides whether that person would consider that the course of conduct amounts to harassment," he said.

Breen said that the ruling should leave companies in no doubt about their potential culpability. "It is clear from this case that a corporation, large or small, can be responsible for harassment and can't rely on the argument that there is no 'controlling mind' in the company and that the left hand didn't know what the right hand was doing," he said.

Breen also said that companies may find that they face action on similar grounds under the Consumer Protection from Unfair Trading Regulations. "Those have prohibitions against aggressive commercial practices, so it is not inconceivable that companies will find that rather than someone pursuing a court case under the Act at their own expense they just complain under the Regulations to Trading Standards," he said.

Lord Justice Jacob praised Ferguson for taking a stand against the company at great personal financial risk. "It is one of the glories of this country that every now and then one of its citizens is prepared to take a stand against the big battalions of government or industry. Such a person is Lisa Ferguson," he said. "Because she funds the claim out of her personal resources, she does so at considerable risk: were she ultimately to lose she would probably have to pay British Gas's considerable costs."

He told British Gas to pay its own costs of £20,368.75 and Ferguson's costs of £10,575.

See: The ruling

Copyright © 2009, OUT-LAW.com

OUT-LAW.COM is part of international law firm Pinsent Masons.

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