Last month the Court of Appeal handed down judgment in Dawson-Damer v Taylor Wessing, reversing the decision of HHJ Behrens QC at first instance. There will be no further appeal from this decision.

The decision is significant for both trust and data protection professionals. The main concern has been that beneficiaries may use the subject access request (“SAR”) procedure contained in section 7 of the Data Protection Act 1998 (the “Act”) to circumvent the well-established principle in Re Marquess of Londonderry’s Settlements that trustees will not normally be ordered to reveal details of their confidential decision-making to beneficiaries. It is worth noting that, as well as UK-resident trustees, the UK-based solicitors of non-resident trustees are susceptible to a SAR.

Dawson-Damer offers no comfort on the point. On the contrary, the Court of Appeal’s decision confirms that trustees and their solicitors cannot refuse to provide information in response to a beneficiary’s SAR on the grounds of the Londonderry principle alone. While this apparent breach in the Londonderry wall may horrify trust practitioners, data protection experts may see the Court of Appeal’s decision as a vindication of the universality of the SAR regime.

The Facts

Ashley Dawson-Damer is the beneficiary of a Bahamian-law discretionary trust (the “Trust”). She and her two adult children (the “Appellants”) served SARs on Taylor Wessing. Taylor Wessing is the English solicitor to the Bahamian trustee of the Trust (the “Trustee”). There are ongoing proceedings for breach of trust in the Bahamas between Mrs Dawson-Damer and the Trustee. Taylor Wessing declined to provide the information requested in the SARs, relying on the legal professional privilege exemption in schedule 10, paragraph 7 of the Act (the “LPP Exemption”).

At first instance, HHJ Behrens QC found as follows:

  • Taylor Wessing was entitled to rely on the LPP Exemption to refuse to provide any information which was protected from disclosure in the Bahamas.
  • It was disproportionate to expect Taylor Wessing to search its files to establish whether there was any non-LPP material on them.
  • He would in any event exercise his discretion (under section 7(9) of the Act) to refuse to order Taylor Wessing to comply with the SARs.

The Appellants appealed.

The Court of Appeal’s Decision

The Court of Appeal has reversed HHJ Behrens QC’s decision on the following grounds:

  • The LPP Exemption only applies to information which would attract LPP as a matter of English law. Insofar as the judge at first instance had suggested that it exempted information which would only be protected from disclosure under Bahamian law, he was wrong.
  • Taylor Wessing could not refuse to provide information on the basis that any search for non-LPP material would require disproportionate effort, and the judge was wrong to hold otherwise. While a search need not necessarily be exhaustive, a solicitor seeking to rely on the LPP Exemption must show in evidence that it has carried out a reasonable search of its files.
  • The fact that the purpose of Mrs Dawson-Damer’s SAR was to obtain information for use in her Bahamian litigation against the Trustee was not a ground upon which the court at first instance should have refused to exercise its discretion in her favour to order compliance.

The Implications

The narrowness of the LLP Exemption (as construed by the Court of Appeal) is at first sight disastrous for trustees and their solicitors. Whereas a trustee’s reasons for making a decision and the documents on which that decision is based would hitherto have been protected from disclosure (at least in administrative proceedings) under the Londonderry principle, it appears that there is nothing to prevent a beneficiary serving a SAR on a trustee or its solicitor and enforcing compliance without reference to that principle.

For example, a beneficiary may arguably be able to use a SAR to establish whether they are named (and with what frequency) in a letter of wishes accompanying a trust or will, notwithstanding that they would not ordinarily be entitled to demand disclosure of such a document (per Breakspear v Ackland).

So should foreign trustees avoid instructing UK-resident solicitors? Or should the solicitors develop a system whereby they are no longer the data controller for the purposes of the Act? The former solution is not a welcome thought nor a practical one. The latter solution is unlikely to be achievable in view of the wide definition of “data controller”.

Luckily, the situation is not as bad as it seems for several reasons.

First, when responding to a SAR, the data which has to be disclosed is limited in scope. For a start it must be the data subject’s “personal data” within the meaning of the Act. There is no specific obligation to provide the document in which that data resides nor any other data contained in that document. The data controller will also not always be compelled to provide personal data where this would unavoidably require the provision of a third party’s personal data.

Secondly, data held on non-electronic files is only “data” within the meaning of the Act if it is structured so as to allow easy access to information specific to the data subject. Provided information is not collated on file by reference to individual beneficiaries or the paper files for a particular matter are not, by the nature of the matter, specific to a particular beneficiary, the paper records are likely to fall outside the scope of the SAR. Therefore it is electronic data processing which will likely be the concern, but in this era of paperless offices, remote access and email, this cannot realistically be avoided and we suspect many firms’ risk managers would also see difficulties in a return to the paper-only file.

Finally, and as always, the devil is in the detail. The Court of Appeal in Dawson-Damer did not make any findings about privilege in specific documents and any further dispute about these will have to be adjudicated by the Chancery Division, to which the case has now been remitted.

So how should a legal adviser faced with a SAR respond and how much information should it provide to discharge its statutory obligation? The Court of Appeal has made clear that some sort of search will usually be necessary and that evidence will be needed where any reliance is placed on the LPP Exemption. Therefore firms should give thought to how they will, in practice, search their electronic files and communications in order to produce the necessary data. In many cases this may be an expensive exercise. We also expect that contentious practitioners will see an increase in “fishing” SARs as a litigation tactic.