Saturday, 29 September 2012

Harassment and the service industry: let the seller beware?

If there has been a more stirring introduction to a court opinion than the following, I haven't read it recently:

“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, the claimant in this case.”

So said the English Court of Appeal in 2009 when it upheld Ms. Ferguson's complaint against British Gas Trading Ltd, brought under the Protection from Harassment Act 1997. To some, Ms. Ferguson may well be a hero; to others, perhaps less so. In any event, on closer consideration, the approach the courts have adopted in this and other applications under the Act is clearly broadening the scope of its applicability far beyond the original intention and, moreover, in ways of direct and critical relevance to the day to day work that clients and their lawyers do. 


The 1997 Act was in large part the product of the efforts of Evonne Powell-Von Heussen-Countryman, a victim of stalking and physical attack who found that she got no assistance from the police or criminal law. She campaigned for the introduction into the UK of the legal protections which were available in other jurisdictions to “protect frightened, endangered individuals from their assailants”. Now, the law of unintended consequences is a well known one. As George Monbiot has pointed out, the inspiration for the Act herself became appalled at how it was later applied and amended:

"In 2001, the Act was used to prosecute protesters outside the US intelligence base at Menwith Hill, who were deemed to have distressed American servicemen by holding up a placard reading "George W Bush? Oh dear!" In the same year a protester in Hull was arrested under the act for 'staring at a building'."

But the law has also been used in a quite different context in ways which mean that the terms of the Act should be familiar to anyone trying, for example, to recover a debt or enforce performance of any legal obligation.

The 1997 Act provides different sets of rules in England and Wales (sections 1 to 7), on the one hand, and Scotland (sections 8 to 11), on the other, but the provisions in the context of a civil claim for damages are broadly the same. A person is deemed entitled to be free from “harassment”, which is defined simply by reference to what a reasonable person would view as amounting to such. Someone who pursues a course of conduct amounting to harassment can be sued for damages for, amongst other things, anxiety and financial loss.

In the Ferguson case, the court set out, as a kind of appendix to its decision, the course of conduct complained of, and it did make unhappy reading. Ms. Ferguson, a self-employed property investor, had a domestic gas supply contract with British Gas. She cancelled that contract on 25 May 2006 and contracted with Npower as her new supplier. Between then and January 2007, she received from British Gas a series of bills and demands for payment of amounts varying from £0.28 to £253.31, as well as related threats of action and disconnection. She was warned that her credit rating might be adversely affected if she didn't pay. Of course, she had paid. Reading through the litany of largely computer-generated correspondence, many of us will be warmed by a comfortable familiarity with the kind of bureaucratic stubborness, lack of coordination and refusal to engage that it displays.

And yet. We are not dealing with frightened or endangered individuals requiring protection from assailants, are we? We are talking about letters demanding payment of a gas bill of, at most, £253.31. Infuriating, frustrating, enervating and worrying but so are many exchanges many of us have every day. No court action was raised by British Gas but Ms. Ferguson nevertheless instructed solicitors and raised action at Bromley County Court, for damages under the 1997 Act. She sought £5,000 for distress and anxiety and £5,000 for financial loss due to “time lost” and expenses.

Now, perhaps British Gas might at that point have offered some kind of settlement (and they may well have done for all we know). What actually happened was that they defended the action and went on the offensive, arguing that the claim should be struck out as entirely without merit: what, in Scotland, we would call taking a preliminary plea to the competency or relevancy. That application was transferred to the High Court. It was duly considered, and refused. Leave to appeal was refused and the case remitted back to the County Court. British Gas persisted and got leave to appeal by separate application. The argument before the Court of Appeal was twofold: that a corporate entity like British Gas could not be liable under the Act and that, in any event, what was complained about was not of sufficient gravity for it possibly to amount to harassment within its meaning. British Gas apparently suggested that there might be “a defence of incompetence or the right hand not knowing what the left hand was doing.”

To say the Appeal Court was unimpressed would be to understate things. The Appellants were excoriated for everything from the procedural error of introducing affidavit evidence in a strike-out application to their whole characterisation of what had happened.

“British Gas sent Ms Ferguson bill after bill and threatening letter after threatening letter. Nothing she could do would stop it. ... She wrote letter after letter pointing out that she had no account with British Gas, she made phone calls (with all the difficulty of getting through), but to no avail. Mainly her letters received no response. Sometimes she received apologies and assurances that the matter would be dealt with. But then the bills and threats continued.
…British Gas says it has done nothing wrong; that it is perfectly all right for it to treat consumers in this way, at least if it is all just done by computer. It goes so far as to say that the claim is so weak that Ms Ferguson's Particulars of Claim disclose no reasonable ground for bringing it. So the claim should be struck out and not even allowed to go to trial...I am quite unable to conclude that the impugned conduct is incapable of satisfying the test. On the contrary I think, at the very least, that it is strongly arguable that it does.
…What British Gas was threatening was undoubtedly serious. Mr Porter sought to downgrade it by saying that Ms Ferguson knew the claims and threats were unjustified. 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. ...Mr Porter 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. 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. ..How is a consumer such as Ms Ferguson to know whether or not, for instance, a threat such as "we will tell a credit reference agency in the next 10 days that you have not paid" (letter of 2nd January) will not be carried out by the same computer system which sent the unjustified letter and all its predecessor bills and threats? After all 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.
…I think it deplorable that, both by evidence and by argument, British Gas sought below to bolster their contention that the claim on its face was incapable of succeeding with untried explanations or excuses for their conduct...One excuse which has formed part of British Gas's legal argument for striking out the claim, and which has been advanced as incontestable and decisive, is that a large corporation such as British Gas cannot be legally responsible for mistakes made either by its computerised debt recovery system or by the personnel responsible for programming and operating it. The short answer is that it can be, for reasons explained by Lord Justice Jacob. It would be remarkable if it could not: it would mean that the privilege of incorporation not only shielded its shareholders and directors from personal liability for its debts but protected the company itself from legal liabilities which a natural person cannot evade. That is not what legal personality means.
...[I]n order to bring this claim Ms Ferguson has had to put her own resources at risk. For my part I would draw attention to the fact – which has been prominent elsewhere in British Gas's argument – that harassment is a crime as well as a tort. ...[O]n a prosecution, the identical elements must be proved not simply on the balance of probability but so that the court is sure...Parliament's intention in passing the Protection from Harassment Act 1997 was to criminalise the kind of serious and persistent unwarranted threat which is alleged here, giving a right of civil action as a fallback. In this situation it ought not to be left to hardy individuals to put their savings and homes at risk by suing. The primary responsibility should rest upon local public authorities which possess the means and the statutory powers to bring alleged harassers, however impersonal and powerful, before the local justices.”

Now this was all really quite a different approach from earlier decisions. In Majrowski v Guys and St Thomas' NHS Trust, Lord Nicholls stated:

"Courts will have in mind that irritations, annoyances, even a measure of upset, arise at times in everybody's day to day dealings with other people. Courts are well able to recognise the boundary between conduct which is unattractive, even unreasonable, and conduct which is oppressive and unacceptable. To cross the boundary from the regrettable to the unacceptable the gravity of conduct must be of an order which would sustain criminal liability..."

Similarly, in Conn vSunderland City Council the court felt:

"... the touchstone for recognising what is not harassment for the purposes of sections 1 and 3 will be whether the conduct is of sufficient gravity to justify the sanctions of the criminal law".

In these earlier cases, the assumption appeared to be that prosecution would follow only in the graver examples of conduct which might be characterised as amounting to “harassment” and that civil liability should attach only in such cases. The civil remedy and criminal sanction were then correlative results of the same kind of conduct and it wasn't as if civil liability should be the only outcome of, say, a less serious kind of conduct. In the Ferguson decision, the court was saying almost the opposite and appeared to be exhorting the prosecuting authorities to pursue those guilty of any and every instance of “harassment”.

A couple of weeks after the Ferguson decision, it was reported that British Gas had apologised to Ms. Fergsuon and settled her claim. It was also reported that her legal bill amounted to £35,000. So, interesting as it was, the Ferguson case was authority only for the proposition that a claim of this kind was apt to go to a full evidential hearing. There was no decision on the merits or proper level of award.

However, there was in the unreported decision in the action raised by Christopher Poncelet against, coincidentally, Npower. The facts in this case were that Mr. Poncelet worked in England for an American company. Due to the time differences, he worked at night and signed up to an Npower tariff that offered a cheap nighttime rate . His agreement required him to complete and submit his own meter readings, which he did. Npower assumed the (admittedly unusual) readings were wrong and charged him on the basis of daytime rates. Over three years, Mr. Poncelet received 15 incorrect bills and 14 visits from five different debt collection agencies together with threats to cut off his supply. Npower's claim that he was due them money prevented him from switching to a new supplier. In awarding him £3,000 compensation under the 1997 Act, the court characterised what Npower had done as “the oppressive and unacceptable conduct of a large company over a small individual”.

The problem of course is that utility companies have millions of customers. At any one time, there will be complaints or queries or transfer requests from hundreds of thousands being handled by ranks of call centre workers or similar faced with flow charts and scripts offering a limited numbers of ways in which they can respond. But companies with much smaller customer bases than that have adopted systems for dealing with such queries which, whilst sensible from a strict cost point of view, risk the kind of inflexibility that fails to provide an opportunity to stand back and respond when customers like Ms. Ferguson and Mr. Poncelet try to point out errors. And even an honest belief that money is due will make no difference. The judge in the Poncelet case made it clear that the most cursory check by Npower would have shown that they were in error.

There are, then, critics of the extension of the provisions of the 1997 Act which the Ferguson and Poncelet cases exemplify. It has been pointed out that the developing case law cuts across the EU's attempts to harmonise the rights and responsibilities owed between business and consumers represented by the Unfair Commercial Practices Directive 2005, and the UK's Consumer Protection from Unfair Trading Regulations 2008, by exploiting the “sloppy definition of harassment in the [1997 Act]... to stretch its boundaries” and provide new remedies to “oversensitive consumers”. Be that as it may, it looks like this is the direction of legal travel.

And this has pretty profound implications for most businesses: “[i]t cannot be overstated how radical [the Ferguson]...case is”. We were once asked by clients to raise action to recover quite a sizeable debt. We asked for, amongst other things, confirmation of who the debtor was. We were told that it was a post office box in the Bahamas. Quite a few letters had by that time been sent by the clients demanding payment from the box and threatening that it would be sued if it didn't pay up. There, the clients could be told simply that they had no chance of success and their file could be quietly closed. But what about the much more common situation where demand letters are repeatedly sent out to an address from which a debtor has moved and an exasperated current occupier has repeatedly to return them, perhaps worried about an adverse effect on their own credit rating? There are many different kinds of queries raised by those from whom payment is demanded. Clients are rarely keen to pay their lawyers to consider these or act as some kind of adjudicator and the temptation is to dismiss them as the same old excuses. What the developing case law shows is that lawyers need to warn their clients that they risk gifting an opponent a chance to sue them if their recovery procedures are so automated or inflexible that they allow for no possibility of anyone at any stage standing back to review things.

The 1997 Act has moved into the “realms of customer services departments” and all of us involved in the service industries had better recognise the fact.

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