In an article published in the Cayman Financial Review in the third quarter of 2016, I talked about the English case of Dawson-Damer & Ors v Taylor Wessing LLP, Michael Morrison and James Burns and its relevance for practitioners here, given the likelihood of a Data Protection Law (DPL) making its way onto the statute books in the Cayman Islands this year.
I concluded my article in the hope that there might be an appeal of the High Court decision that would add another stage to the debate about the application of the English Data Protection Act 1998 (DPA) in the context of dispute between trustees and beneficiaries. In fact, an appeal was heard in November last year and the Court of Appeal handed down its decision on Feb. 16. The issues in the appeal were considered so important that the Information Commissioner (IC) in England was given permission by the court to intervene in the appeal and to provide for oral and written submissions via leading counsel.
As readers will recall, the trustee, Grampian, was resident and incorporated in the Bahamas. The trusts in question were governed by the laws of the Bahamas. In early 2014, Mrs. Dawson-Damer, a beneficiary of one of the trusts involved, sought copies of trust documentation from the trustees, having learned of appointments and resettlements totalling some US$402 million, out of a family trust of which they were beneficiaries, on to new trusts of which she and her children were not beneficiaries.
She followed that request with a formal “subject access request” (SAR) under the DPA of Taylor Wessing (TW), the trustee’s London solicitors, for copies of all “data” of which she and her children were the subject, pursuant to her rights under the DPA. When TW refused to comply with her SAR, citing legal professional privilege, she issued an application in the English High Court to compel them to do so.
She followed the application in England with a claim in the Bahamian court against the trustee seeking to set aside the aforementioned appointments and resettlement of assets. As Lady Justice Arden commented in the Court of Appeal judgment, “It is an important part of the background that under The Bahamian Trustee Act 1998, section 83(8) and (10), no trustee can be compelled to disclose a variety of trust documents and the Bahamian court would similarly not be able to order any such disclosure.”
The focus of the appeal was centered on three issues:
(1) The extent of legal professional privilege and whether documents were exempt from disclosure under English law only (referred to as the “narrow view” in the judgment and supported by the IC), or whether the exemption should also cover documents that the trustee could refuse to disclose under Bahamian law, the governing law of the trust;
(2) Whether, if the narrow view at (1) is correct, whether the search to ascertain which documents were exempt from disclosure was “disproportionate” and so TW could be excused from doing so; and
(3) Whether the judge at first instance was correct to refuse to exercise his discretion in favor of Mrs. Dawson-Damer because her real motive was to obtain documentation for use in legal proceedings against the trustee rather than to verify the accuracy of documentation relating to her held by TW.
On the first issue, the court held, supporting the position of the appellants and the IC, that legal professional privilege under the DPA applies only to documents which attract such privilege as a matter of English law.
Accordingly, beneficiaries can request disclosure of their personal data from a trustee (or the trustee’s solicitors in their capacity as the trustee’s agents) using a SAR under the DPA. Of particular note for trustees, the personal data which can be disclosed includes “any expression of opinion about the individual and any indication of the intentions of the data controller or any other person in respect of the individual.” This category of information arguably encompasses documentation recording a trustee’s deliberations in contemplation of the exercise of its dispositive discretions, information and documentation which would otherwise be protected from disclosure under common law principles.
The Court of Appeal acknowledged that “documents generated in connection with the exercise by trustees of their discretion to make distribution are highly sensitive and likely to antagonise one or other class of beneficiaries. The law recognises this by not in general requiring a trustee to disclose such documents unless he is required to do so under procedural rules applying in litigation.” They also acknowledged that in certain circumstances a trustee cannot be obliged to disclose documents to a beneficiary, other than by order of the court.
However, their narrow interpretation of the meaning of the legal professional privilege led the court to conclude that “the DPA does not contain an exception for documents not disclosable to a beneficiary of a trust under trust law principles,” even if the trustee is at liberty to refuse to disclose those documents under the governing law of the trust.
Here in the Cayman Islands, a DPL is expected to be enacted imminently. Broadly, the DPL is likely to operate in much the same way as the DPA in England with one notable exception. The first issue in the Dawson-Damer appeal was anticipated by trusts practitioners here and amendments have been proposed by which there will be an exception from the subject access provisions of the draft DPL in respect of trusts and wills. If the DPL includes those proposed amendments, then the particular issue summarized above ought not to be of relevance.
This was, however, only the first of three issues before the Court of Appeal in Dawson-Damer. The appellants argued that TW had produced no evidence that they had taken any adequate steps to locate their personal data. Evidence filed by their lawyers cast doubt on the assertion that TW’s paper files “are in such disarray that they cannot be said to constitute a relevant filing system under the Act” and concluded that it was “inconceivable” that trustees and their advisers could operate properly in a commercial environment without creating and maintaining proper electronic records.
While the IC accepted that there was an element of proportionality involved in searching for and assessing documents for disclosure, it argued that it was nevertheless not open to a data controller to argue against substantive compliance with the request by arguing that undertaking proper searches and assessment would be disproportionate. The IC argued, “the cost of compliance is the price data controllers pay for processing data …. The burden of proof is on the data controller to show that it has taken all reasonable steps to comply with a [subject access] request.” The court of appeal agreed, concluding that “TW must produce evidence to show what it has done to identify the material and to work out a plan of action. It has singularly failed to do this and so has not discharged the onus on it.”
This may well be of relevance in the Cayman Islands once the DPL is in effect. Data controllers should take note that they have to make an effort to locate personal data after receiving a subject access request. Readily searchable records will make that task a great deal easier than in Dawson-Damer, where TW is now facing a search through 30 years or so of paper files.
The final issue for consideration by the Court of Appeal was perhaps central to the judge’s thinking in the lower court. Is there a prohibition or restriction on use of the DPA for a collateral purpose, in this case, to obtain information that the appellant could not otherwise obtain from the trustee? The Court of Appeal conclusively rejected that analysis, finding that there is no such limitation allowing an individual to obtain information via a subject access request for use in litigation rather than simply for the purposes of verifying the accuracy of the information held by a data controller about that individual. That principle is still subject to the limited nature of “personal data” under the DPA, by which it is defined at clause 1(1) as “… data which relates to a living individual who can be identified –
(a) From those data, or
(b) From those data and other information which is in the possession of, or is likely to come into the possession of, the data controller ….”
It would then be a matter for the courts of the Bahamas to assess the admissibility of that documentation in the proceedings there, in accordance with local law.
The court was unanimous in finding that the appeal should be allowed. The matter has now been remitted to the Chancery Division where, should there be objection to disclosure of certain documents on the basis of legal professional privilege once TW have completed their substantive review, a judge of the Chancery Division will review the disputed documentation and decide whether it should be disclosed or not. Meanwhile, in the Cayman Islands, we await the new DPL with interest.