Contract – Negligence – Defamatory words – Claimant seeking damages against defendant bank in respect of information provided to credit reference agencies (CRAs) – Whether defendants’ contractual obligation to claimant precluding disclosure of information about spouse – Whether defendants’ duty of care extending to information about spouse – Whether claimant making out essential elements of libel or slander – Whether claimant personally liable for sums owing to defendants – Claim dismissed – Counterclaim allowed
A bank refused to provide re-mortgage finance to the claimant and her husband in respect of their multi-million-pound home because of a problem with the husband’s credit rating since the principal credit reference agencies (CRAs) indicated that his current account with the defendants was “delinquent”, though not in “default”, because he had a credit limit of only £1,500 but an overdraft of £260,000. The reports were an accurate reflection of computerised information provided by the defendants to the CRAs under data-sharing agreements.
The account in question was a joint account in the names of both the claimant and her husband, though the reports did not say so. The claimant accepted that the account was overdrawn but said that the borrowing was well known to, and authorised by, the defendants so that it was untrue for the defendants to imply to the CRAs and those to whom they passed the data that the claimant and/or her husband had substantial unauthorised borrowings.
The claimant contended that the false statement by the defendants had the foreseeable consequence that they were unable to re-mortgage their home to raise finance to fund their longstanding property development business, which in turn led to its collapse, the loss of their home and other assets, and, in the husband’s case, to bankruptcy. The claimant alleged breach of contract, negligence/negligent mis-statement and defamation by the defendants.
The defendants maintained that they were not guilty of any misconduct, essentially because it was true that the joint account had a very large unauthorised overdraft. They further challenged the damages claim and counterclaimed against the claimant for her personal liability on the overdraft and another joint loan account. In each case, the claimant denied liability because the sums in question were her husband’s personal borrowings, attributed to her without her consent.
Held: The claim was dismissed. The counterclaim was allowed.
(1) The husband could not have succeeded in a claim for breach of contract since the publication of the information to the CRAs was true and fell within the permitted categories for disclosure. The defendants were clearly obliged not to disclose any confidential financial information about the claimant to the CRAs, whether true or false. Except in the refined sense that the information related to a joint account to which she was a party, the defendants had complied with that duty. Their contractual obligations to her could not have extended so far as to preclude them from disclosing information about her husband, when he had contractually consented to that disclosure.
(2) In the present case, given the importance of credit rating in the modern world and the analogies between job references and credit references, the court recognised a duty of care owed by a bank to its customer to whom the reference related which, if breached, could give rise to a claim for pure economic loss; and which was likely also to be a contractual duty. In the ordinary case, that duty would not extend to the spouse of the person given the credit reference but, in this case where, to the defendants’ knowledge the claimant was a joint holder of the same account and a co-director of the family business which largely depended on her husband’s credit, so that both proximity and foreseeability of damage were present, such a duty was owed to the claimant as well as her husband. However, the information had been disclosed by the defendants pursuant to their obligations under the data-sharing agreement, and with the husband’s contractual consent. The information was true and not misleading. Therefore, if the defendants owed the claimant any duty of care in negligence, in respect of their disclosure of credit information about her husband to the CRAs, it had fulfilled that duty and did not breach it: Caparo v Dickman [1990] 2 AC 605 and Spring v Guardian Assurance plc [1995] 2 AC 296 applied.
(3) It was in the public interest that authoritative credit information could be obtained and relied on by banks and other financial institutions, provided it was done in a lawful and duly-regulated manner which respected the rights of the general public and the individuals affected. On the evidence, the passing of the present information by the defendants into the CRA pool, and its onward transmission to any other subscribers, was covered by common-law qualified privilege which protected the publications equally whether complaint was made by the claimant and/or her husband, subject to the question of express malice. Negligence was not enough, unless it constituted reckless indifference to truth. Where the defendant was a corporation, it also had to show that a particular employee or agent both participated in the publication and had the required malicious state of mind: Broadway Approvals v Odhams [1965] 1 WLR 805 and Horrocks v Lowe [1975] AC 135 considered.
Even if the claimant could prove that the words referred to her, she would be unable to establish that they were defamatory, such as to lower her reputation in the minds of ordinary reasonable bankers evaluating the mortgage application. Accordingly, the claimant’s claim in defamation failed for lack of identification and/or defamatory meaning, as well as on the qualified privilege ground. Furthermore, the claim failed on limitation grounds since there were no exceptional circumstances making it equitable to extend the one-year libel limitation period.
(4) In any event, any claims in damages could not be pursued because they were claims for “reflective loss”, ie losses of profit sustained by the companies of which the claimant and her husband were directors and shareholders, not them personally. Furthermore, the court was not persuaded that, but for the problem with the credit reports, they would have succeeded in remortgaging their property so as to raise the extra finance required. It was probable that they would not have survived the falling market even if the credit reports had not been published.
(5) As regards the defendants’ counterclaim, when the claimant’s husband authorised the bank to debit the joint account with the amount of his sole overdraft he had her authority, both ostensible and actual, to do so. Therefore, the claimant was personally liable to repay the defendants all sums due under both the joint loan account and the overdrawn joint current account.
The claimant appeared in person. Rupert Allen (instructed by Matthew Arnold & Baldwin LLP) appeared for the defendants.
Eileen O’Grady, barrister