Case Update: Court of Appeal Overturns High Court Decision on CTOS Liability

Following our earlier article on “Understanding Your Rights in Cases of Inaccurate CTOS Scores”, there has now been a significant development.

In CTOS Data Systems Sdn Bhd v Suriati binti Mohd Yusof [2024] 5 MLJ 811, the Court of Appeal has overturned the High Court’s decision, marking an important shift in how liability of credit reporting agencies such as CTOS is to be understood.

Previously, the High Court had taken a strong stance in favour of consumer protection. It held that CTOS owed a duty of care to ensure the accuracy of credit information and could not merely rely on its role as a data aggregator. On that basis, the High Court found CTOS liable for inaccurate reporting and awarded RM200,000 in damages to the plaintiff.

However, this position has now been reversed in its entirety by the Court of Appeal. The Court found that the allegedly “inaccurate” information was, in fact, true. The plaintiff did have an outstanding debt at the material time, even though it was later resolved. In other words, there was no inaccuracy to begin with. As truth constitutes a complete defence to a claim in defamation, the plaintiff’s claim could not be sustained.

The Court of Appeal further held that, in the circumstances of the case, CTOS did not owe a duty of care to the plaintiff as alleged. CTOS operates as a credit reporting agency which provides a platform for its subscribers to upload information relating to debts owed by third parties, commonly referred to as “trade references”. In this context, CTOS’ role is to collect and disseminate such information. In any event, even if a duty of care were to arise, there was no breach here, as the information reported was factually correct.

Equally significant in this case was the Court’s emphasis on the importance of proper pleadings. The plaintiff’s reliance on breach of statutory duty was rejected on the basis that it had not been specifically pleaded. The Court reiterated that parties are strictly bound by their pleadings, and a claim cannot succeed on grounds that were not properly raised from the outset.

The Plaintiff’s claim was further weakened by a critical gap: the absence of evidence. There was no proof that any loan application had been rejected due to the CTOS report. Without clear evidence of loss, the claim simply could not stand.

Taken together, this decision substantially narrows the scope of liability for credit reporting agencies. It clarifies that CTOS is not an insurer of the information it reports, particularly where such information originates from third-party subscribers and is, in fact, accurate. The real question, therefore, is not the score, but whether the underlying debt is correct.

The takeaway in this Court of Appeal decision is clear: dissatisfaction with a CTOS score alone is not enough. A successful claim requires proof of actual inaccuracy, properly pleaded causes of action, and clear evidence of loss. Without these, the law will not intervene.

This case now represents the prevailing position on CTOS liability in Malaysia and will likely guide future disputes involving credit reporting and alleged inaccuracies.

This article is written by

Jareen Lee Hoay Yin
Principal Associate, Low & Partners