Avid readers of the trials and tribulations of low value data breach claims being pursued at great legal costs will be interested in the County Court’s allocation of these claims.
Low value data breach claims have the potential to create a significant financial exposure to organisations who defend against them. It is usual practice that a Claimant will instruct a solicitor taking out an After The Event insurance policy (“ATE”) with a conditional fee agreement. It is not unusual for Claimant’s solicitors costs to far exceed the value of damages that are being claimed. For example, in Johnson v Eastlight Community Housing Trust , the High Court noted that the Claimant’s cost budget was in excess of £50,000 for a damages claim which was pleaded at £3,000. The same figures were seen in Cleary v Marston Holdings Ltd .
Data breach claims may be issued in the County Court or High Court, but should only be issued in the High Court if their financial value, complexity or public importance warrants it. In the latter part of 2021, an increasing number of these claims were issued in the High Court, incorrectly, only for them to be transferred to the County Court which is the correct Court given the value and complexity of these claims.
However, this would not remove the exposure to the disproportionate level of Claimant costs, given that costs are normally recoverable from a Defendant (should the Claimant be successful). However, if the County Court were to allocate the claims to the Small Claims Track, then the recoverable costs would be significantly limited to certain fixed costs only.
Whilst the High Court typically resisted asserting jurisdiction over the County Court allocation process, there were a number of judgments which supported the view that these low value claims ought to be allocated by the County Court to the Small Claims Track.
Our team’s experience to date is that the County Court has allocated these claims to the Small Claims Track, in line with the High Court’s direction to date. The starting point for the allocation is for claims being issued with a pleaded value of less than £10,000 (usually in the region of £5,000), then the Small Claims Track allocation is the normal track. The Court may then have regard to a number of factors set out at CPR 26.8 as to whether alternative track allocation is appropriate, with value and complexity not being the only factor to take into account. One factor that is more increasingly asserted is the engagement of medical expert evidence and the possibility of a Claimant being unrepresented at trial. It is being argued that a Claimant would not be able to obtain legal support without the availability to recover the ATE premium. Although, a Defendant would argue that the ATE premium is not recoverable in any event because the County Court does not have the jurisdiction in respect of breach of confidence claims and any misuse of private information claim is otiose. Any misuse of private information claim in a low value compensation claim is only included for the recoverability of the ATE premium as no further damages are recoverable.
Again, our team’s experience is that such factors will be considered by the Court but not persuade an allocation to an alternative track other than the Small Claims Track. The Court is clear that District Judges routinely deal with unrepresented Claimants and the Court always ensures that the parties are on an equal footing. Further, the Small Claims Track also ensures that the Claimant cannot be subjected to an adverse costs order against them.
Should you require any advice or further information in relation to the question of track allocation in the County Court for low value data breach claims, then our team is ready to assist. Moreover, allocation may still be relevant on the question of costs following acceptance of any offers prior to allocation. Our data breach costs team is also able to advise in reducing cost recovery in such circumstances. Our specialist lawyers regularly reduce costs claims by over 50%.