No Liability for Defamation for incorrect communication by Bank to Credit Reference Body

A recent High Court decision has confirmed that a communication by a financial institution to a credit reference body gives rise to an occasion of qualified privilege, thus defeating a claim in defamation. 

This decision will come as a welcome development for such institutions who regularly have to publish potentially sensitive information about customers.

In the case of Cornelious M. Cagney v. The Governor and Company of the Bank of Ireland, [2015] IEHC 288, the plaintiff claimed that, by communicating certain information about him to the Irish Credit Bureau (ICB), the bank had caused two entries to be made against his name in the ICB, thereby defaming him. The two entries suggested that (i) the plaintiff's credit card had been revoked, and (ii) the plaintiff had settled an account for less than the amount due. 

While defamation proceedings are traditionally heard before a judge and jury, the bank made a preliminary application to have the plaintiff's case withdrawn from the jury on the basis that the bank had a prima facie defence of 'qualified privilege' and therefore had no case to answer. An occasion of qualified privilege arises where the publisher has a legal, social or moral duty to publish the relevant material and the recipient has a reciprocal interest in receiving it. It is a question of fact in each particular case whether such a mutuality of duties or interests exists. In coming to its conclusion, the court noted that in order to do business, a credit institution must be able to accurately assess the creditworthiness of prospective customers – a service which the ICB provides for such institutions.

It was noted that the defence of qualified privilege will not be lost if the statement in question is untrue. Therefore, even if it transpired that the information supplied by the bank was incorrect, the privilege will remain. The defence of qualified privilege could have been defeated only if the plaintiff could establish that the bank had acted with malice or improper motive in making the relevant communication. However, the plaintiff had not pleaded malice nor had it sought to establish malice during the hearing. It was also clear from the facts that the relevant bank official had acted in the normal way in communicating the information to the ICB.    

It was therefore held that the communication by the bank to the ICB of information concerning the plaintiff was made on an occasion of qualified privilege and accordingly no defamation could arise.  The court found that, on the facts before it, no case in law existed and it was therefore compelled to withdraw the case from the jury.  

The implication of this decision is that, where a financial institution publishes certain information about its customers in good faith to another body with a duty to receive such information, it is very likely that an occasion of qualified privilege would arise, thus defeating any claim in defamation. 

For further information please contact Justine Hession at jhession@algoodbody.com or your usual contact in A&L Goodbody.

Date published: 26 May 2015