The decision of the High Court in the case Terence William Smith v Lloyds TSB Bank Plc, given on 23 February 2005, counters a number of argument that endeavour to get around the decision in the case Durant v Financial Services Authority. The Court of Appeal, in that 2003 decision, held that information kept in a non-computerised manual system is only to be treated as data if the filing system is sufficiently structured to allow easy access to information specific to the data subject. The data controller is not to be put to a great deal of effort in extracting the relevant information.

Following the failure of his business, Mr. Smith lost his home, as a loan with Lloyds TSB was secured against it, and he was declared bankrupt. As Mr. Smith believed that Lloyds TSB had promised him long-term financial backing, he sought, under the provisions of the Data Protection Act 1998, the disclosure of documents that he believed were held by the bank and that would support his case. The bank refused to disclose any documents and the matter was taken to the High Court.

The High Court had no difficulty in applying the principle established by Durant that, if any such documents did exist, they would not contain biographical data about Mr. Smith, only information about the case in question, and such documents would not therefore contain "personal data". Mr. Smith's claim was therefore dismissed. However, the judge addressed two arguments that were presented by Mr. Smith's counsel in support of his case.

One processed always processed?
The first was a principle called "once processed always processed". If the information was processed by the data controller at some time in the past on automatic equipment, i.e. by computer, it was data then. It must therefore continue to be data now, even if it is no longer being processed in this way and the automatic equipment no longer exists. For example, if a series of letters about the data subject were typed on word processors and thereafter retained on computer hard discs, they would have been processed, i.e. held, on relevant automatic equipment. Even if the data controller has wiped all the hard discs clean some years ago and only retains hard copies of the documents in unstructured files, they still contain data within the meaning of the 1998 Act because "once processed always processed".

That argument was supported by the use of the words "wholly or partly" in the European Data Protection Directive but that do not appear in the 1998 Act. So, for example, data should be defined as "information which is being processed wholly or partly by means of equipment operating automatically …". Therefore, because the information was held on automatic equipment but now is not, this would mean that it is "partly" so held. The judge, however, dismissed these arguments as irrelevant because the issue is whether, at the time of the data request, the information is wholly or partly held by means of equipment operating automatically. At the time the disclosure request was made, Lloyds TSB did not hold information relating to Mr. Smith either wholly or partly on automatic equipment.

However, the validity of these arguments was not decided by the judge, only that they were not relevant to this case.

Any selection of paper documents is scannable
The second argument was that, by using high speed and high quality scanning equipment, any pile of paper documents, even if they are randomly ordered or of a random and haphazard structure, can be easily scanned and the information they contain extracted selectively at very low cost. They should therefore be treated as being just as accessible as if they were in a computer database.

If this argument were correct, the consequences would be extensive. It would mean that all documents, no matter where held or how widely dispersed geographically, should be treated as if recorded digitally in a database. To determine whether information is readily accessible, it would be necessary to know whether the data controller possessed relevant scanning equipment or was sufficiently close to a bureau which offered scanning services, how widely spread the documents were, how difficult it would have been to get them together, and how bulky they were.

The argument was not, however, accepted as it would remove the distinction between information processed by automatic equipment and information kept in relevant filing systems, a distinction clearly drawn by the Directive and the 1998 Act. In the view of the judge, "the duty imposed on data controllers who happen to have large quantities of unstructured manual records would be enormous."

The decision of the High Court is likely to be appealed to the Court of Appeal.

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Further information:
Smith v Lloyds