I can imagine this decision having quite serious repercussions for credit reporting agencies in Malaysia in general. It imposes an obligation on a credit reporting agency to ensure any information that it inserts into its database or report to be factually correct. Further, that information must continue to be factually correct at all times. A credit reporting agency cannot rely on any disclaimer in their report that the information may not be up to date and that the person relying on the report should conduct their own checks.
So for example, if an individual had originally been adjudged a bankrupt but he had since been discharged from his bankruptcy, a credit reporting agency must ensure that information is updated quickly. So quite a victory for individuals and companies worried about their creditworthiness.
Background to CTOS and Credit Reporting
CTOS is a credit reporting agency. It provides easily-accessible credit reports relied on by financial institutions in Malaysia. It not only picks up on financial worthiness but also legal proceedings like legal suits, bankruptcy and winding up proceedings.
Parties involved in litigation would normally face a difficulty. Information in the CTOS report on pending legal suits, financial institutions may be reluctant to extend loans to such parties.
On the other hand, CTOS itself will face difficulty in knowing the most recent updates to such litigation. I would imagine CTOS largely relies on the advertisements taken out (for instance, for service of court papers or substituted service) or the public court records on the Court website. A credit reporting agency would not know the immediate updates, or withdrawal of such legal proceedings.
Mr Tan’s High Court Suit against CTOS
In this decision, Mr Tan was aggrieved by the CTOS report listing out various pending legal proceedings, including pending bankruptcy proceedings. The information contained records as far back as the 1990s.
Mr Tan had been rejected by banks for loans for motor vehicles and property.
Mr Tan contacted CTOS, demanding that their records be updated as he had cleared all his debts and had been discharged from his bankruptcy. It appeared that Mr Tan provided CTOS with the information and documents to show this and CTOS subsequently updated their records in their database.
However, Mr Tan was still not satisfied and filed a suit for defamation against CTOS. HE claimed that CTOS had failed, refused or neglected to initially update their database and clear all outdated records.
At the end of the High Court trial, Mr Tan had lost his case for defamation. Briefly, the High Court found that Mr Tan could not show there was publication. Further, the High Court also found that there was a disclaimer wording in the CTOS report that the information was not intended to be a confirmation of the current status.
Mr Tan Succeeded in the Court of Appeal
At the Court of Appeal however, Mr Tan succeeded.
On the issue of publication, the Court of Appeal held that the CTOS database is available to anyone who subscribed to the services. It did not matter that access to the database is by way of subscription or by paying a fee. Further, CTOS could not be afforded protection by the law if CTOS also allowed the information to go outdated and stale such that it did not reflect the true state of affairs.
The Court of Appeal found that any reasonable reader of the information in the CTOS database would be led to be suspicious of the creditworthiness of Mr Tan.
Nonetheless, Mr Tan could not actually prove the actual damage that he suffered or the quantum of the damages. In such a situation, he was awarded nominal damages of RM5,000.00. Costs of RM40,000.00 was awarded in his favour as well.