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Case Update: No Duty of Care Owed by Credit Reporting Agency in Negligence Claim

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15 August 2024

LAW OF TORTS
Negligence – Defamation – Duty of Care – Breach of Statutory Duty – Credit Reporting – Appeal

CTOS Data Systems Sdn Bhd v Suriati Binti Mohd Yusof
Civil Appeal No. W-02(NCvC)(W)-230-02/2024 | Court of Appeal
- see the grounds of judgment here

Facts CTOS Data Systems Sdn Bhd (the ‘Appellant’) is a company incorporated under the Credit Reporting Agencies Act 2010 tasked with collating credit reports from various sources including the Central Bank and other agencies for purposes of dissemination to subscribers. Suriati Binti Mohd Yusof (the ‘Respondent’) was at the material time the director and shareholder of Keranji Beach Resort Sdn Bhd situated in Pulau Perhentian, Terengganu Darul Iman and sole proprietor of Keranji Management which managed Keranji Beach Resort Sdn Bhd. The Respondent instituted a claim for negligence and defamation against the Appellant at the High Court on the grounds that the Appellant’s inaccurate credit information lead to the Respondent’s loss of reputation, personal losses as well as business losses. At the High Court, the learned Judge allowed the Respondent’s claim against the Appellant on the grounds that the Appellant owed a duty of care towards the Respondent in providing accurate credit information. Further, the Learned High Court Judge held that by formulating a credit score, the Appellant has gone beyond its statutory functions and the Respondent has suffered a loss as a result of being labelled as a delinquent by the Appellant when the Appellant had no right to do so. The Learned High Court Judge awarded the Respondent general damages in the sum of RM200,000. Dissatisfied, the Appellant filed an appeal to the Court of Appeal. Hence, this appeal.

Issues 1. Whether the learned High Court judge had erred in fact and/or law in concluding that the Appellant was not empowered to "formulate a credit score" or to “create its own criteria or percentage to formulate a credit score" and that by having formulate a credit score the Appellant had caused the Respondent to suffer a loss.
2. Whether the learned High Court judge had erred in fact and/or law in concluding that the Appellant had breached its duty of care to the Respondent in all circumstances.

Held In unanimously allowing the appeal, YA Dato’ Azmi Bin Ariffin, in delivering the judgement of the Court of Appeal held that the Appellant does not owe a duty of care to the Respondent as a customer as defined in the Credit Reporting Agencies Act 2010. Even assuming for a moment that there was a duty of care, there was still no breach of this duty as the information cannot be said to be inaccurate, incomplete, misleading or irrelevant. As for the alleged breach of statutory duty, the Court of Appeal held that it had not been specifically pleaded by the Respondent. Hence, the learned High Court Judge was not entitled to make any finding on such a claim. In this case, the Respondent claimed that her creditworthiness amongst financial institutions had been affected by the fact that the Appellant had given her a low credit score in the Appellant’s database and Respondent’s credit reports, consequence of which she was unsuccessful in obtaining a loan due to the Appellant’s reports. Notwithstanding, even assuming that there was an implied reference to it, the Court of Appeal found that there was no breach of any statutory duty at all. There was also no connection proven between the rejection of the Respondent’s car loan application and the contents of the credit report. In conclusion, the Court of Appeal held that the trial judge had been plainly wrong in his analysis of the evidence and in his failure to appreciate the evidence before him that led to his erroneous finding of liability. The appeal was allowed and the order of the High Court was set aside.

Zul Rafique & Partners
{15 August 2024}

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