A woman who claimed that information about her husband’s finances provided by Barclays to credit reference agencies cost them their home and their business has lost a multi-million pound damages claim against the bank.
Judge Moloney QC rejected Carol Gatt’s breach of contract, negligence and defamation claims against Barclays, brought after the Bank of Scotland refused to provide remortgage finance in respect of their former home Melksham Court, in the Cotswolds, in 2008, due to a problem with Michael Gatt’s credit rating.
Gatt sued after it emerged that the principal credit reference agencies, Experian, Equifax and Callcredit, were stating on her husband’s credit reports that his Barclays current account – in fact a joint account – was “delinquent”, though not in “default”, because he had a credit limit of only £1,500 but an overdraft of some £260,000.
The judge said that it was accepted that the reports were an accurate reflection of computerised information provided by Barclays to the credit reference agencies under their long-standing and lawful data-sharing agreements.
He continued: “The Gatts in turn accept that the account was indeed overdrawn to that extent; but they say that the borrowing was well known to, and actually authorised by, their Barclays Relationship Manager, Mr Williams, and that it was therefore untrue for Barclays to imply to the credit agencies and those to whom they passed the data on that Michael Gatt and/or Carol Gatt had substantial unauthorised borrowings.
“It is the Gatts ‘ case that this false statement by Barclays, brought about by Mr Williams, had the foreseeable consequence that they were unable to re-mortgage their home to raise finance, which was required to fund their longstanding property-development business, and that that in turn led to the collapse of their business, the loss of their home and other assets, and in Michael Gatt’s case to bankruptcy.”
“At its maximum, depending how much is properly claimable in respect of loss of future business profits, the claim runs to many million pounds.”
However, the bank maintained that it was not guilty of any misconduct, essentially because it was true that the joint account had a very large unauthorised overdraft.
Rejecting Mrs Gatt’s claim, the judge said: “ My conclusion is that there is a clear distinction, which was accurately reflected in the information sent by Barclays to the credit reference agencies (CRAs), between an unauthorised overdraft and one that is in default. This overdraft was not authorised in any sense; nobody at Barclays had agreed to a higher limit. On the other hand, Michael Gatt was in discussions with the bank about it, as a result of which it was not being treated as in default.
“In these circumstances, Michael Gatt could not have succeeded in a claim for breach of contract in respect of the publication of this information to the CRAs; it was true information falling within the permitted categories for disclosure.”
As a result, he said that Mrs Gatt’s claim based on breach of contract must fail.
Whilst he said that, given the importance of credit rating in the modern world, he would have no great difficulty in recognising a duty of care owed by a bank to its customer in relation to credit references, there was no breach in this case.
He said: “The information was disclosed by the bank pursuant to its obligations under the data-sharing agreement, and with the husband’s contractual consent. The information was true and not misleading. The process by which the information was disclosed was largely automatic, and I do not find any employee of the bank, or the structure of its systems, at fault for failing to prevent this disclosure.
“I therefore conclude that if the bank (or Mr Williams personally) owed Carol Gatt any duty of care in negligence, in respect of its disclosure of credit information about her husband to the CRAs, it fulfilled that duty and did not breach it.”
Rejecting the additional defamation claim, he said that, for contractual reasons, Mr Gatt would be taken to have authorised the publication, and therefore could not have sued upon it, and that “there would obviously be a serious risk that the words complained of would be found to have been substantially true”.
He added that the bank could also rely on the defence of qualified privilege, explaining: “It is well established that such a privilege will apply to non-malicious communications between people who share a legitimate, common and corresponding interest in the subject-matter of the communications, provided that it is in the public interest for such a privilege to be recognised.”
He continued: “In the modern world, it is plainly in the public interest that such authoritative credit information can be obtained and relied on by banks and other financial institutions, provided it is done in a lawful and duly-regulated manner which respects the rights of the general public and the individuals affected.
“The passing of the present information by Barclays into the CRA pool, and its onward transmission by the CRAs to BoS and/or any other subscribers who may have accessed it for the purpose of deciding whether or not to accept an application from the Gatts for finance, plainly took place on occasions of common-law qualified privilege.”
Allowing a counter-claim by the bank, he ruled that Carol Gatt is personally liable to repay Barclays all sums due under both the couple’s joint loan account and the overdrawn joint current account.
Gatt v Barclays Bank plc and anr Queen’s Bench (Judge Moloney QC) 14 January 2013
The Claimant in person (assisted by Mr Michael Gatt )
Mr Rupert Allen (instructed by Matthew Arnold & Baldwin LLP) for the Defendants
A woman who claimed that information about her husband’s finances provided by Barclays to credit reference agencies cost them their home and their business has lost a multi-million pound damages claim against the bank. Judge Moloney QC rejected Carol Gatt’s breach of contract, negligence and defamation claims against Barclays, brought after the Bank of Scotland refused to provide remortgage finance in respect of their former home Melksham Court, in the Cotswolds, in 2008, due to a problem with Michael Gatt’s credit rating. Gatt sued after it emerged that the principal credit reference agencies, Experian, Equifax and Callcredit, were stating on her husband’s credit reports that his Barclays current account – in fact a joint account – was “delinquent”, though not in “default”, because he had a credit limit of only £1,500 but an overdraft of some £260,000. The judge said that it was accepted that the reports were an accurate reflection of computerised information provided by Barclays to the credit reference agencies under their long-standing and lawful data-sharing agreements. He continued: “The Gatts in turn accept that the account was indeed overdrawn to that extent; but they say that the borrowing was well known to, and actually authorised by, their Barclays Relationship Manager, Mr Williams, and that it was therefore untrue for Barclays to imply to the credit agencies and those to whom they passed the data on that Michael Gatt and/or Carol Gatt had substantial unauthorised borrowings. “It is the Gatts ‘ case that this false statement by Barclays, brought about by Mr Williams, had the foreseeable consequence that they were unable to re-mortgage their home to raise finance, which was required to fund their longstanding property-development business, and that that in turn led to the collapse of their business, the loss of their home and other assets, and in Michael Gatt’s case to bankruptcy.” “At its maximum, depending how much is properly claimable in respect of loss of future business profits, the claim runs to many million pounds.” However, the bank maintained that it was not guilty of any misconduct, essentially because it was true that the joint account had a very large unauthorised overdraft. Rejecting Mrs Gatt’s claim, the judge said: “ My conclusion is that there is a clear distinction, which was accurately reflected in the information sent by Barclays to the credit reference agencies (CRAs), between an unauthorised overdraft and one that is in default. This overdraft was not authorised in any sense; nobody at Barclays had agreed to a higher limit. On the other hand, Michael Gatt was in discussions with the bank about it, as a result of which it was not being treated as in default. “In these circumstances, Michael Gatt could not have succeeded in a claim for breach of contract in respect of the publication of this information to the CRAs; it was true information falling within the permitted categories for disclosure.” As a result, he said that Mrs Gatt’s claim based on breach of contract must fail. Whilst he said that, given the importance of credit rating in the modern world, he would have no great difficulty in recognising a duty of care owed by a bank to its customer in relation to credit references, there was no breach in this case. He said: “The information was disclosed by the bank pursuant to its obligations under the data-sharing agreement, and with the husband’s contractual consent. The information was true and not misleading. The process by which the information was disclosed was largely automatic, and I do not find any employee of the bank, or the structure of its systems, at fault for failing to prevent this disclosure. “I therefore conclude that if the bank (or Mr Williams personally) owed Carol Gatt any duty of care in negligence, in respect of its disclosure of credit information about her husband to the CRAs, it fulfilled that duty and did not breach it.” Rejecting the additional defamation claim, he said that, for contractual reasons, Mr Gatt would be taken to have authorised the publication, and therefore could not have sued upon it, and that “there would obviously be a serious risk that the words complained of would be found to have been substantially true”. He added that the bank could also rely on the defence of qualified privilege, explaining: “It is well established that such a privilege will apply to non-malicious communications between people who share a legitimate, common and corresponding interest in the subject-matter of the communications, provided that it is in the public interest for such a privilege to be recognised.” He continued: “In the modern world, it is plainly in the public interest that such authoritative credit information can be obtained and relied on by banks and other financial institutions, provided it is done in a lawful and duly-regulated manner which respects the rights of the general public and the individuals affected. “The passing of the present information by Barclays into the CRA pool, and its onward transmission by the CRAs to BoS and/or any other subscribers who may have accessed it for the purpose of deciding whether or not to accept an application from the Gatts for finance, plainly took place on occasions of common-law qualified privilege.” Allowing a counter-claim by the bank, he ruled that Carol Gatt is personally liable to repay Barclays all sums due under both the couple’s joint loan account and the overdrawn joint current account. Gatt v Barclays Bank plc and anr Queen’s Bench (Judge Moloney QC) 14 January 2013The Claimant in person (assisted by Mr Michael Gatt )Mr Rupert Allen (instructed by Matthew Arnold & Baldwin LLP) for the Defendants
