Housing developer loses libel suit against CTOS
KUALA LUMPUR : The High Court has dismissed a suit brought by a housing developer against credit ratings agency CTOS Data Systems Sdn Bhd for defamation, negligence and breach of statutory duty.
Justice Roz Mawar Rozain said the plaintiff, Bagan Kurnia Development (BKD), had failed to discharge the burden of proving each element of its pleaded claim on a balance of probabilities.
Roz Mawar said BKD had failed to establish that the trade reference inserted by a third party against the company was defamatory.
She described the insertion as a neutral factual assertion which had originated from Lye Yoon Hon Construction Sdn Bhd (LYHC) and was reflected in an ongoing contractual dispute.
She also said there was no cogent evidence before the court that CTOS had published the statement.
'There is no proof that CTOS provided or disseminated it to Public Bank Berhad or any other external party,' she said.
The judge also ruled that the claim for breach of statutory duty under the Credit Reporting Agencies Act 2010 (CRA) was unsupported by evidence or law.
'The CRA does not impose an obligation on CTOS to independently verify the accuracy of trade references received from its subscribers unless a formal dispute mechanism is invoked, which was not done in this case,' she said in her 14-page judgment.
Roz Mawar also ruled that the plaintiff's claim of negligence was untenable in law.
She said its claim for RM2 million due to the rejection of a facility, and an additional RM7.3 million in profits, was speculative and had not been proven.
She said the fact that CTOS was a credit reporting agency carrying out a statutorily regulated role further underscored the need for courts to scrutinise carefully any attempt to impose liability on such entities.
'A finding of liability in the absence of clear evidence and legal foundation risks undermining the utility of regulated credit reporting and chilling the legitimate functions of licensed agencies,' she said, awarding costs of RM50,000 to CTOS.
In its suit, BKD had contended that a trade reference entered by LYHC into CTOS's database in connection with an alleged RM1.1 million debt owed to LYHC by BKD was false and defamatory.
The plaintiff further asserted that CTOS, the database operator, had failed to verify the accuracy of the information and had wrongfully allowed it to be published, thereby causing reputational and financial harm.
CTOS maintained that as a licensed credit reporting agency, it had operated within the legal parameters of the CRA. It said the subscriber's uploading of the impugned trade reference complied with its standard procedures.
Lawyer M Kamalam appeared for the company, while Ashok Kandiah and Mishand Patmanathan represented CTOS.
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