High Court shields database state from blame
No comeback on stigma of invented £254,000 bad debt
An entrepreneur whose fledgling business was ruined by a false entry in a court database has had his claim for compensation rejected by a High Court judge.
The decision could set a broad and troubling precedent, because Mr Justice Bill Blair QC - brother of the former PM Tony Blair - ruled that the civil service cannot be found liable for the damage caused by its record keeping mistakes.
The case was brought by Andre Power, from Benfleet in Essex, against the Ministry of Justice, which is responsible for HM Courts Service. It was prompted by the failure of Chi-qi.com, a world music download service and social network Mr Power set up with a business partner in 2006.
After sinking tens of thousands of his own money into the venture, Mr Power fell three months - or about £5,000 - behind on his mortgage payments and was taken to Southend County Court by his lender in July 2007. He settled the debt in full before it came before a judge.
An unknown official at Southend County Court nevertheless registered a County Court Judgement (CCJ) against his name for £254,000, the full value of the mortgage.
Commenting on the error, Phil Booth, the national coordinator of the campaign group NO2ID, said: "In the database state, it's the citizen who takes all the risk and suffers the consequences - even when he or she has done nothing wrong. My sympathies go to Mr Power. I fear he's not the first and he definitely won't be the last."
Completely unaware of the heavy black mark against his name, Mr Power continued developing Chi-qi.com. He and his partner began to seek a £250,000 investment to fund a full launch.
Despite his successful record of launching and running new businesses, the pair struggled for 13 months to get financial backing. Eventually they accepted £50,000 from two investors in August 2008 to keep the venture afloat.
At the last minute however, one of the investors pulled out, citing a credit check with Experian, which sucks up data from County Court databases. It revealed the £254,000 CCJ against Mr Power. It was the first he had heard of it.
It then took three months for Southend County Court to issue a clearance certificate admitting its error. When the certificate arrived, Mr Power was aghast to find it was made out to only £5,000, rather than the full £254,000 bad debt wrongly registered to his name.
Still, by now the certificate was academic, at least in terms of his business prospects. Without investment Mr Power and his partner had been forced to close the company operating Chi-qi.com and transfer its goodwill assets to a shell company.
A circuit judge has since corrected the record properly, and ruled that the CCJ should never have been registered. It has been removed from court records and Mr Power's credit history.
An initial claim for compensation to Southend County Court was immediately rejected. In March this year Mr Power faced government lawyers at an initial hearing before Master Foster, who found in favour of the government's argument that a legal precedent meant the case should be struck off.
However, because Mr Power had only five minutes to prepare to counter the Ministry of Justice argument, he was immediately granted leave to appeal at the High Court.
The legal precedent the Ministry of Justice cited was set in 2003 in the case of Quinland v Governor of Swaleside Prison. A man had received jail sentences totalling two years and three months. Some were to be served concurrently and some consecutively. The judge in the case got his sums wrong and the man ended up serving two years six months.
Judges are immune from negligence liability, so once released the man tried to sue the prison governor. His claim was rejected on grounds the governor was discharging his duties as a civil servant.
Before Justice Blair at the Court of Appeal last week, Mr Power argued that the precedent did not apply. "I wasn't suing individuals - I didn't even know who they were," he told The Register.
He also claimed his case and that of the prisoner were not comparable because the CCJ was not larger than it should have been, but should never have been registered in the first place. He also alleged negligence in Southend County Court's apparent failure to alert him to the CCJ, in contrast with the prisoner, who knew the details of his sentence from the outset.
Mr Power also contested the Ministry of Justice's contention that the CCJ was registered by civil servants discharging their duties, arguing that since they made the error they could not have been discharging their duties.
Those arguments were rejected by Mr Justice Blair, who upheld Master Foster's decision.
"I've got no more recourse," Mr Power said. "What chance do I have against the court establishment?"
Cambridge University's Professor Ross Anderson, author of a recent Joseph Rowntree Foundation report on the Database State, said the judgement fitted with the pattern of more liability being shifted to the individual by the growth and sharing of government databases.
"When these liability shifts occur," he said, "it always tends to be from the more powerful entities in a transaction towards the individual."
He said that as the civil service had "sought to interpose itself in more transactions" as part of an "empire building" strategy, it had also sought to shield itself from the law.
Phil Booth agreed. "This is indeed very worrying, and precisely the sort of situation that the database state and mass data-trafficking tends to exacerbate. I wouldn't say that Mr Power's story is typical, but it starkly illustrates the dangers and shows that bureaucratic cock-ups and foot-dragging are far from a victimless crime," he said.
And, he said, Mr Power may have no comeback against Experian either. "I'm not aware of any successful prosecutions against Experian or the other credit reference agencies for propagating untruths about people, though it seems to happen with alarming frequency."
An HM Courts Service spokesman confirmed it won the case, but declined to comment on the implications of the decision.
It now falls to judges in future cases to interpret Mr Power's loss when damaging mistakes are made in the CRB database, National ID Register, DNA database, ContactPoint, NHS care records... ®