Evans, Katrine --- "The rise and rise of damages awards for breaches of privacy? Hamilton v The Deanery 2000 Ltd" [2003] PrivLawPRpr 56; (2003) 10(7) Privacy Law and Policy Reporter 127

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The rise and rise of damages awards for breaches of privacy? Hamilton v The Deanery 2000 Ltd

Katrine Evans VICTORIA UNIVERSITY OF WELLINGTON

At the end of August this year, the New Zealand Human Rights Review Tribunal gave its highest ever award of $40,000 for interference with privacy to Paula Hamilton, a British model, television presenter and actress who has settled in New Zealand.^[1] The defendant agency was The Deanery, an exclusive private alcohol treatment clinic in Christchurch, and the complaint related to actions of one of its directors, Mr Ewan McLeod. Ms Hamilton may actually never receive any money from The Deanery, since the clinic went into liquidation earlier in 2003 before the case was heard, and Mr McLeod was declared bankrupt.^[2] However, the decision is important in that it gives an indication of the factors which will be influential in calculating damages before the Tribunal. It also indicates that, in contrast with the low awards in some other areas of law, the Tribunal is growingly interested in making privacy damages a real recompense for loss. Awards appear to be on the rise.

Facts

It is clear from even a cursory reading of the facts in the case that there were very serious breaches of r 11 of the Health Information Privacy Code 1994 (NZ), relating to disclosure of health information.^[3] Ms Hamilton, who has publicly had difficulties with an alcohol addiction for many years, sought treatment from The Deanery after coming to live in New Zealand. For a while, Ms Hamilton and those at The Deanery had a very friendly relationship, but this deteriorated for some reason, and it was this which led to the disclosures.

While Ms Hamilton was back in Britain on a visit, Mr McLeod took it upon himself to contact the New Zealand Immigration Service and tell them that Ms Hamilton was an ‘active drug user’ and that therefore he was withdrawing his support of her application for permanent residence. He had a follow-up conversation with an immigration officer on the subject. Consequently Ms Hamilton was searched and interviewed when she returned to the country and some of her baggage was impounded. She was subsequently involved in proceedings with the Removal Review Authority and appeals to the High Court, and her ability to work, study or return to the UK without risk was seriously curtailed. Mr McLeod’s motivation for making the allegation appeared to be simply to be to make life difficult for her. The Immigration Service apparently became aware of this and his claims were then treated with scepticism (at [44]), but in the meantime Ms Hamilton had been unnecessarily and seriously inconvenienced.

Not satisfied with this angle of attack, Mr McLeod also informed the New Zealand Sunday Star Times how long Ms Hamilton had been at The Deanery and that she had ‘failed the programme’. He also provided reporters with her contact details, as a result of which she received phone calls from the local and international press and reporters turned up at her home. He was also in communication with two newspapers in the UK, one of which became engaged in a defamation suit taken by Ms Hamilton. He repeated allegations that Ms Hamilton was an active drug user, and said that she had been expelled from The Deanery’s programme because of this. He informed the newspaper involved in the defamation case that he had evidence, from a random urine test, of the drug use. He appeared to be saying there was evidence to support a defence of truth to their statements (which also involved use of drugs), though he said that he could not forward the test results ‘unless there is some way by law we can by pass the Privacy Act of The New Zealand Government 1993’ (quoted at [26]). The defamation case was later settled with unspecified financial compensation for Ms Hamilton, but the Tribunal unsurprisingly concluded that Mr McLeod’s intervention had fortified the newspaper in its view of the case and that it would have settled much earlier otherwise (at [49]). Looking at the whole picture, the Tribunal concluded that ‘Mr McLeod’s failure to respect the obligations of discretion and confidentiality that so obviously existed in the circumstances is extraordinary’ (at [31]).

Damages under the Privacy Act

Under s 85(1)(c) of the Privacy Act 1993 (NZ), once it is satisfied that there has been an interference with the plaintiff’s privacy, the Tribunal has the discretion to grant an award of damages. Section 88 sets out the different heads of damages:

(a) Pecuniary loss suffered as a result of, and expenses reasonably incurred by the aggrieved individual for the purpose of, the transaction or activity out of which the interference arose;

(b) Loss of any benefit, whether or not of a monetary kind, which the aggrieved individual might reasonably have been expected to obtain but for the interference;

(c) Humiliation, loss of dignity, and injury to the feelings of the aggrieved individual.

Section 85(4) states that lack of intention or lack of negligence are not defences to an interference with privacy, but that the Tribunal shall take the conduct of the defendant into account when deciding what, if any, remedy to grant. The intent of this section was probably to allow the defendant to mitigate the damage which has occurred. In the Hamilton case the defendant’s behaviour was an aggravating factor instead, as discussed below. However a subsequent decision from the Tribunal, Feather v the Accident Compensation Corporation, illustrates the positive impact that an agency’s attitude to the complaint can have. The Accident Compensation Corporation (ACC) unwittingly, but carelessly, disclosed a claimant’s financial information to another person, and his wife ended up finding out what his income was (he had never told her, instead only giving her an allowance for the household bills). The disparity between income and allowance then caused very considerable friction in the 50 year marriage. The ACC recognised and acknowledged its mistake, made a sincere apology and did not put up any arguments or try any tactics which would have caused the plaintiff further distress in the Tribunal. The Tribunal acknowledged this and stated that, while it awarded the plaintiff $8000 for the humiliation he suffered, this would have been a great deal higher had it not been for the ACC’s positive conduct in the proceedings, and that the ACC deserved credit for this.^[4]

Factors for consideration in allocating damages

The defendant’s behaviour

Paragraph 49 of the Hamilton decision consists of a list of the factors which the Tribunal considered made this case an especially serious interference with privacy. Since they have such a major bearing on the record damages awarded, it is worth listing them fairly fully here.

1. It was the healthcare provider itself which disclosed the health information.

2. The materials from The Deanery had referred to it as a ‘discrete [sic], confidential sanctuary for people with alcohol problems’ and ‘confidentiality’ and discretion were mentioned elsewhere too. It had therefore breached its own promotional undertakings, without any apparent concern for the plaintiff’s privacy.

3. There were multiple disclosures of health information, which is inherently sensitive information, to several different agencies.

4. The defendant director essentially had malicious motivations in making the information available to the Immigration Service; the Tribunal assumed that he was trying to gain some ‘commercial advantage ... by keeping the plaintiff out of the country’. The search she suffered was a direct result of the disclosures he made.

5. Mr McLeod gave the information to the press: he understood that it would be published at least in the Christchurch area. It was also obvious to him that giving reporters her telephone number and address would lead to those reporters contacting her, which would be embarrassing for her.

6. The disclosure to the Sunday People newspaper in the UK was done in circumstances which meant he would know the information would be published internationally.

7. The disclosures to the Mirror Group were intended to encourage it in its defence of the plaintiff’s defamation claim, and complicated and almost certainly delayed the resolution of the claim, therefore prolonging the injury suffered by the plaintiff.

8. Mr McLeod never at any stage of the proceedings showed any form of remorse. He was ‘unashamedly unrepentant about what had been done’. No action of the defendant mitigated the injury caused to the plaintiff. On the contrary, Mr McLeod sent her copies of correspondence, apparently to increase the pressure on her.

Although not listed here, it was also somewhat material that Mr McLeod was at least aware of the Privacy Act and the fact that he should not be disclosing information (as evidenced by his comments to the British newspaper about the supposed drug test results). This acted as another aggravating factor, making his behaviour ‘irresponsible in the extreme’.^[5]

It is interesting to contrast the Feather case mentioned above. There, the Tribunal also considered a number of factors, which mainly contrast noticeably with the Hamilton situation:

• the inadvertence of the disclosure;

• the limited nature of the disclosure;

• the overall effect of the disclosure (significant) on the plaintiff;

• the extent to which the plaintiff was the author of his own misfortune (although the Tribunal tried to avoid making a moral judgment about his decision not to tell his wife what his income was) which meant the ACC should not be held liable for all the subsequent disharmony in the marriage;

• the steps taken by the ACC to correct the error;

• the apology that was given; and

• the acceptance of responsibility throughout (at [24]).

The ACC never raised as an issue the fact that the ultimately damaging disclosure was made by a third party. In an earlier case, the then Complaints Review Tribunal had decided that such a situation was essentially immaterial.^[6] The Tribunal in Feather avoided making any formal determination of the matter, since it had not been raised in argument as the ACC was prepared to accept all liability (at [21]). It is arguable in any case that the earlier ruling of the Tribunal illustrates the sensible approach to the problem. Were it not for the defendant’s default, the information would never have come to the knowledge of Mrs Feather. The chain of disclosure in Feather is fairly long (the ACC disclosed to another claimant, who told the Feathers’ son, who told his mother), but it is nonetheless intact. If in these circumstances the agency is held liable, there must be few situations where third party disclosures would mitigate the agency’s liability. This makes sense. There was a clear breach of the standards required of agencies under the Privacy Act. If it had no reasonable grounds for believing that one of the exceptions in Principle 11 applied, then it should be held to account. Wrongful disclosure of information, by its nature, may lead to all sorts of people apart from the immediate disclosee coming into possession of the information. That is exactly why the rules on disclosure must be reasonably strict. Third party disclosure to the end user of the information should not, therefore, be a matter which lets the defendant escape liability.

Lack of evidence by plaintiff of some costs

The award in Hamilton could have ended up a great deal higher but for the plaintiff’s inability to show with sufficient precision what financial losses she had in fact suffered. Ms Hamilton claimed $200,000 damages, the maximum amount possible in a Privacy Act claim, although she said the actual costs associated with the disclosures were:

• $180,000 for value of lost opportunities to work in the UK since she could not leave New Zealand while her residence was in doubt;

• $18,000 for the cost of storage of her furniture and personal effects, which she had shipped to New Zealand, during the period of uncertainty about her residence;

• $20,000 for legal costs and representation required to deal with the immigration issues; and

• $125,000 legal costs in obtaining the defamation settlement.

The Tribunal commented, however, that while the disclosures would have complicated the processing of her immigration application, it did not think that it could be ‘confidently asserted that all of the extra costs were necessarily caused by disclosure’. It was unclear what exactly the issues were that the Immigration Service raised as regards her application, and it seemed as if the Service had noted that Mr McLeod possibly had ulterior motives. Consequently, the Tribunal was ‘not satisfied that any sufficient connection between the sums claimed and the act of interference with privacy [had] been established’ (at [44]). Nor was there sufficient evidence to be able to calculate in financial terms whether there had been any loss of a benefit under s 88(1)(b).^[7]

Ms Hamilton also failed in her bid to get costs towards her defamation settlement. As is usual, the settlement included ‘a considerable element of reimbursement for costs incurred by the plaintiff in the matter’. The Tribunal had no evidence, however, of how much was paid to Ms Hamilton in this respect (at [46]). Also, it appeared that some of the costs claimed were only contingency costs: it was therefore not plain that all of the costs had actually been incurred (at [29]). This indicates that the Tribunal is going to require evidence with a fair degree of precision in order to grant awards of damages under the more specific heads of financial loss. A loss of benefit is, by its nature, more flexible and discretionary, but even so, evidence of what that purported benefit was is clearly required.^[8]

The ‘only secure basis’, therefore, for an award of damages in Hamilton was under the heading of compensation for humiliation, loss of dignity and injury to feelings. Despite the numerous breaches, the Tribunal felt the proper approach was to make a global award rather than calculating each head of damage separately (at [47]). Given the cumulative effect that the defendant’s disclosures would have had on Ms Hamilton, this appears to be a sensible approach in this area. It also avoids the perceived development of a ‘tariff’ system for various types of breaches, for example, release of contact information. Tariffs will never work effectively in the privacy area, since the fact situations are inevitably too variable: they could make agencies too risk averse or too lackadaisical and could unreasonably raise complainants’ expectations about the money to be had from pursuing a claim. The lack of a tariff system does not mean, however, that the Tribunal cannot or will not take account of previous awards. Indeed, in Hamilton, the Tribunal obtained some guidance from descriptions of disclosure cases in which reasonably substantial awards of damages had been granted.^[9]

A reassessment of damages awards?

A previous, but still recent, decision of the Human Rights Review Tribunal (Parker in 2002) had mentioned an argument that the Tribunal should reassess the level at which damages were awarded. This was prompted by a sexual harassment case under appeal from the same Tribunal, but acting in its capacity under the Human Rights Act 1993 (NZ) rather than the Privacy Act. Gallen ACJ in Laursen had commented on the level of awards in this jurisdiction, on which he had been provided with considerable comparative evidence from Canada, Australia and England:

Making a comparison with other cases is difficult, since in the end it is only the Tribunal hearing the complaint which is in a position to make a full and overall assessment. On the basis of the information before me, I agree with the contention of the respondent that the amounts awarded in New Zealand in this area appear to be lower and out of step with those awarded in comparable jurisdictions. The circumstances of this case are that it must be regarded as a very serious case of its kind.^[10]

The Court upheld the Tribunal’s award of $20,000, but dismissed the cross-appeal that the damages were actually too low:

There are good grounds for substantially increasing the amount to a figure which would at least have equated with the sort of sums that might have been awarded and the pattern which appears from the decisions in the Employment Court [the maximum noted was $50,000 for a dismissal ‘in a peremptory fashion’]. There are only two considerations against this. The first is that the award is already substantially greater than is represented by the pattern of awards which have previously been made in this jurisdiction in New Zealand [the maximum was $10,000]. While it is appropriate to conclude that the general level ought to rise, the question of disparity must also be borne in mind. Much more significant however is the fact that throughout the major part of the period during which the behaviour concerned occurred, Parliament had considered it appropriate for the maximum amount to be fixed at a sum of $2000.

...

I express the view however that awards of damages in cases of this kind should be reconsidered in the light of what has clearly become an established pattern overseas and in the Employment Court in this country (at [28]-[29]).

In Parker, the Tribunal hesitated to ‘effectively raise the bar’ in a case where the defendant had acted as responsibly as it could have done in the circumstances. No such mitigating factors were present in Hamilton, which the Tribunal described as ‘being a very great deal more serious’ than any of the previous disclosure cases, both in number and type of disclosure, scale of publication via the media, and motivations of the defendant (at [51]). An award of $40,000 here — double the previous privacy award — was therefore exactly on a par with the Laursen award, which was apparently double the previous sexual harassment maximum for a particularly severe case.

This does not at all appear to have been a conscious calculation on the part of the Tribunal. Indeed, the contrary is true: it stated that the award was reached bearing in mind the legislative words, previous awards and the particular facts of the case (at [57]). The Tribunal deferred any consideration of the concerns raised in Laursen as far as privacy cases are concerned. It indicated that current information is needed to compare humiliation damages awards under the Privacy Act with awards under similar provisions overseas and, perhaps, ‘relevant awards made by the courts in respect of privacy issues raised in contexts other than the Privacy Act’. It acknowledged that that information could reveal the Hamilton award to have been modest in the circumstances (at [56]).

Compiling this sort of comparative information would seem to be a potentially fruitful undertaking. However, it might not actually assist a view that privacy awards should be higher than they are in the light of Hamilton at least. The damages here in fact look reasonably comparable to some Employment Court awards, where, for example, an award of $50,000 was considered to be a very large sum^[11] and can probably be seen as very close to the upper limit which would be acceptable.^[12] This may be disproved by the statistics and is also not quite the comparable information in the privacy arena which the Tribunal is looking for. More recently, there has been a definite trend to keeping the level of awards down in the employment jurisdiction, with the Court of Appeal being very prepared to reduce levels of damages awarded.^[13] This will be even less helpful to a view that privacy awards might need to rise to represent realistic compensation for the harm done.

Getting the information from supposedly comparable areas of law in New Zealand might prove rather difficult. The privacy tort field provides no particularly useful information since there has only been one damages award to date: L v G in which the plaintiff was awarded $2500 for non-consensual publication of a sexually explicit photograph of her (it was important in that instance, however, that she could not be identified.)^[14] The Broadcasting Standards jurisdiction also provides no assistance, since the statutory maximum for breach of privacy damages is $5000, and the Broadcasting Standards Authority has so far not come close to giving that amount in compensation for a breach. Breach of confidence tends far more often than not to focus on injunctive relief rather than damages. Trespass to land might provide us with some interesting information. Defamation, I would suggest, is rather too specialised an area of compensation to be of any direct assistance at all, despite the practical (though not theoretical) links with privacy. In short, looking to other jurisdictions with similar legislation is likely to be the most fruitful angle of inquiry.

Conclusion

Even with all the comparative information, it is dubious in any case whether privacy damages awards ought to rise much beyond the level that is starting to emerge in cases such as Hamilton, Feather and the like. The Tribunal appears to be taking the level of damages seriously, and is developing some helpful guidelines for plaintiffs, agencies and their advisers to be able to calculate the advisability of taking or continuing with proceedings before the Tribunal. It is likely that the clarity of the Tribunal’s reasoning will also help the settlement process, particularly within the Privacy Commissioner’s office; all parties can start to assess the reasonableness of their preferred position in a rather clearer light, and advisers can perhaps manage parties’ expectations with more certainty. Importantly, also, agencies who might be contemplating following in Mr McLeod’s footsteps stand warned — their actions will not escape serious and costly censure at the end of the day. l

Katrine Evans is Senior Lecturer in Law, Victoria University of Wellington, New Zealand.

Endnotes

[1]. (29 August 2003) Human Rights Review Tribunal, Decision 28/03, Ref No HRRT 36/02.

[2]. ‘Model awarded $40,000’ The Christchurch Press 3 September 2003, available on the ‘Stuff’ website at <http://stuff.co.nz/stuff/0,2106, 2647679a11,00.html> .

[3]. Clause 4 of the Health Information Privacy Code states that the Code applies, among other matters, to information about the health of an individual including that person’s medical history; information about any health services that are being provided or have been provided to the individual; and information about an individual which is collected before or in the course of, and incidental to, the provision of a health service.

[4]. Feather v Accident Compensation Corporation (4 September 2003) Decision No 29/03, HRRT 17/03.

[5]. At [31]. Lack of awareness would, of course, not be a defence after 10 years of the Act being in force, although an earlier case, W v P (Decision No 2/99; CRT 24/98) seemed to take some note of the fact that a general practitioner released information to a patient’s mother in February 1997, apparently in ignorance of the Privacy Act’s requirements. The Tribunal only awarded $3000 in damages against the GP, predominantly because the complainant’s mother was, in its view, predominantly responsible for the damage. However, ignorance seems also to have been a partial excuse.

[6]. K v Proceedings Commissioner (26 November 1999) Decision 33/99; CRT 17/99.

[7]. At [45]. The leading New Zealand case on loss of a benefit is the case of Proceedings Commissioner v Health Waikato where the High Court gave the plaintiff $5000 for loss of the opportunity to use information which should have been provided to him. The context was that he could have used the missing documents to pursue a constructive dismissal claim before the Employment Tribunal or Employment Court. There was, as the High Court said, no guarantee of success, but at least the plaintiff would have felt that he had done all he could do. The withholding of the relevant documents (which he was unaware even existed) led directly to the loss of this non-monetary benefit.

[8]. The leading cases on loss of benefit are Proceedings Commissioner v Health Waikato Ltd (12 July 2000) High Court, Hamilton, AP39/00 ($5000 for loss of benefit); and Jans v Winter (27 June 2003) Decision No 21/03; HRRT 39/01 paras [139]–[146] where $15,000 was awarded for a loss of a benefit, and a further $5000 for injury to feelings.

[9]. These were W v P (Decision 2/99) disclosure by doctor of patient’s information to patient’s mother, $3000; B v IRD (Decision 8/00) disclosure by Inland Revenue of plaintiff’s income to her partner’s former spouse, $5000 (upheld on appeal AP 112/00); Proceedings Commissioner v Commissioner of Police (Decision 37/99) disclosure of information to media about serving of non-molestation order on plaintiff’s partner (the plaintiff was, very unusually, not the applicant for the order), which led to media presence at the time the order was served, $10,000; Parker v Ministry of Agriculture and Forestry (Decision 9/02) disclosure of plaintiff informant’s name (she had told them a farmer may be mistreating his stock), $4000; Steele v Department of Work and Income (Decision 12/02) disclosure of details of plaintiff’s financial difficulties to his neighbour, $10,000. They have recently been followed, also, by the Feather v ACC case, where the plaintiff received $8000 damages.

[10]. Laursen v Proceedings Commissioner (1998) 5 HRNZ 18, 28.

[11]. Ogilvy & Mather Ltd v Turner [1995] NZCA 248; [1995] 2 ERNZ 398, though this was seen as being appropriate in the circumstances.

[12]. Anderson G and others Employment Law Guide (6th ed) LexisNexis Sydney 2002 p 717.

[13]. This tendency was criticised by Thomas J, dissenting on the quantum of remedies, in New Zealand Fasteners Stainless Ltd v Thwaites (17 May 2000) unreported, CA 10/99.

[14]. L v G [2002] DCR 234, Abbott J.