Pay As You Go – Phone Hacking Scandal leads to “Compensation Fund” for Victims

In the latest twist in the long-running “Phone-Hacking” Scandal involving several UK Newspapers’ alleged attempts to intercept private voicemail messages of Celebrities and other public figures, the News Of The World has issued a rare admission of liability and apology.

News International’s dramatic statement comes after a long-running internal investigation and described “past behavior” as “a matter of genuine regret”. The company is taking steps to set up a compensation scheme for “justifiable claims” after “failing to uncover important evidence”, leading to action which was “not sufficiently robust”.

The Statement follows the recent launch of several sets of proceedings against one of the UK’s most popular tabloids by, amongst others, Sienna Miller, Steve Coogan, Kelly Hoppen, George Galloway, Andy Gray and Tessa Jowell. They may, along with other claimants, receive substantial damages payouts which will cost News International an estimated £20 Million, although each case will be assessed in line with a set of criteria including whether or not the interception of voicemails actually led to a story being published.

With the publication of the Defamation Bill over the course of the last fortnight, the issue of the relationship between the media and those they report on has been brought firmly back into the public eye. Even if you believe that the Press’ freedom to report has been cut back too far by the Courts after the Max Mosely case in 2008, it’s impossible not to have sympathy for the Claimants in this case.

“Phone hacking” involves both criminal offences, which can lead to a fine and/or imprisonment for those involved and a civil cause of action which allows its victims to sue for damages.

Section 1 of the Regulation of Investigatory Powers Act 2000 (“RIPA”) makes it an offence to intentionally intercept communications transmitted over a public telecommunication system without a “lawful excuse”, which will only usually cover investigations by the Police or Security Services.  Section 3 of the same Act allows any victim of unlawful interception to sue in the Civil Courts.  Unlike many similar offences and civil claims, there is no “public interest” defence available to Hackers.

The first major conviction under RIPA for phone hacking came in 2006 after Journalist Clive Goodman and investigator Glen Mulcaire, also at the heart of the current scandal, received prison sentences against a backdrop of claims that there were only a few “rotten apples” involved.

The Data Protection Act 1998 (DPA) allows the Information Commissioner’s Office to prosecute hackers for criminal offences including unlawfully obtaining, disclosing and procuring the collection of personal under section 55. Available defences involve obtaining the information in question to prevent or detect crime or if otherwise authorized to do so, again leaving surveillance solely within the province of the Police or other law enforcement bodies except where a disclosure is in the public interest – this will be exceptionally rare.

The prosecutions brought under either Act have not led to the deterrent action that many predicted or expected, but in the wake of new evidence and a public outcry, several Journalists and their support teams may well now find themselves facing serious criminal penalties.

Even if evidence which proves guilt to the criminal standard of proof – beyond reasonable doubt – isn’t available or any sentences continue to be more lenient than victims may demand, civil cases will still continue and may be far more damaging as well as easier to prove on the “balance of probability”.

Apart from a claim under section 3 of RIPA, the hotly-disputed “right to privacy” established in cases involving Naomi Campbell and Max Mosley will form the basis of the current cases against News International.

Privacy law is a combination of a balancing act involving the individual’s right to respect for their private and family life from Article 8 of European Convention on Human Rights and the Press, Article 10 right to Freedom of Expression and the law of confidential information, which deals with the misuse of information that is confidential in nature and disclosed under conditions of confidentiality.

The basic question which the Court needs to answer in a privacy case is whether or not an individual has a “reasonable expectation of privacy” in the information obtained, and whether or not the Press’ ability to report matters of public interest should take precedence.  It’s hard to see how personal voicemails could be seen as anything but private, especially in light of the judgment in Mosley v NGN which set the bar for public interest comparatively high – there is a big difference between what is of genuine public interest and what it simply “interesting to the public”.

Former Government Director of Communication Andy Coulson claimed that there was no “culture of phone hacking” during his tenure as Editor at the News of The World, but  evidence in the civil claims issued in the High Court against the Paper by a number of public figures, celebrities and even members of the general public and the ongoing criminal investigations by the Information Commissioner and Metropolitan Police tells a very different story – the worry now is that, not only was phone hacking far more widespread than has been suggested so far, that it went far higher than the “lone Journalists” previously suspected and that the News Of The World may not be alone in being willing to step outside the law in search of a story.

This kind of ‘mea culpa’ statement is a very rare thing and the amounts which look likely to be paid out are high – Max Mosley recovered around £60,000 for the invasion of his privacy a few years ago, but out-of-Court settlements with Max Clifford and Gordon Taylor in similar phone hacking cases have apparently been far higher, with a combined value of just under £2 Million.  The chances are that it had become very clear that the News Of The World’s defences to at least some of the 24 civil claims against them simply wouldn’t hold up at trial. If the case had ever come before a Judge, then the eventual and very public findings may have been far more costly to News International, so doing a deal is very tactically astute.

We know a little about how the News Of The World intends to work out the figure payable to each Claimant using a sliding scale dependent upon whether or not a claimant’s phone number and PIN number were used, whether voicemails were actually accessed by a Journalist or Private Investigator and finally whether the interception led to a story being published – damages will increase with each criteria being met. If settlements aren’t reached, then the Court will need to look at the effect that the hacking has had on each Claimant, including upon their career and private life, which could lead to record amounts of compensation being awarded.

What we don’t know is more significant. Questions will now be asked over how widespread phone hacking really is in the british press, how many Journalists have been involved so far and how much was known about their activities by senior management. We’re clearly no longer talking about a lone journalist, and the original failed investigations may now be the focus for renewed criticism.

What’s worth remembering is that the prosecutions will still continue, and that not all of the claims against the News Of The World have been settled – Sienna Miller in particular has suggested that she may choose to have her day in Court – so the chances are that we’ve not seen the last of this story. Examples may still be set and any institutional and systematic invasions of privacy won’t be tolerated any longer, especially after several previous abortive investigations. Even though the Crown Prosecution Service had previously concentrated on voicemails intercepted before they were listened to by the intended recipient, this may now be less of a concern and even older messages may be the focus of new investigations.

As the scandal continues to develop, more cases are likely and it may be a long time before investigative journalism rebuilds its reputation. Freedom of expression will certainly survive, but not by any means necessary.

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