An Ontario appeals court will allow a proposed class action suit against credit-reporting agencies Equifax Canada and Trans Union of Canada to go ahead, overturning a lower court decision.

The appellant, Glenn Haskett, is a representative plaintiff in two proposed class actions brought against the respondent credit reporting agencies. His original suit was dismissed as disclosing no reasonable cause of action. On the original motion, the judge dealt with three theories of liability: breach of fiduciary duty, invasion of privacy and negligence.

After dismissing the first two theories, the motion judge dealt with the negligence claim by holding that although the respondents could owe the appellant a duty of care, there were policy reasons for declining to consider a cause of action in negligence. On the appeal, the appellant did not challenge the first two rulings, but limited his claimed cause of action to negligence. In addition, the appeals court has decided to set aside the order of the motion judge and allow the appellant to proceed with the action as a claim in negligence.

Haskett has an MBA. and is a real estate broker in Toronto. He was obliged to declare bankruptcy in the early 1990s when third parties breached their financial obligations to him during the recession. Both before the circumstances that caused his bankruptcy and since his discharge in November 1996, the appellant has met all of his financial obligations. He was discharged from bankruptcy without conditions as his trustee was satisfied that his bankruptcy resulted from circumstances beyond his control.

However, since his discharge, the appellant has applied for and been denied credit despite the fact that he had an uninterrupted earning record averaging in excess of $75,000 per year, has been current on all debt, rent and car lease obligations and has had significant net worth from his post-bankruptcy earnings.

The appellant’s claim is against two Canadian credit-reporting agencies, Equifax Canada Inc. and Trans Union of Canada Inc., and their respective American parent companies. The appellant claims that he has been denied credit from credit grantors in Canada because the two Canadian respondent credit reporting agencies “have improperly and illegally included information in [the appellant’s] credit report which they are not entitled to report and which is inaccurate.” It is because of these actions by the respondents that the appellant has not been freed of the consequences of his bankruptcy, notwithstanding his discharge.

Haskett claims the agencies are negligent and in breach of their duty in failing to comply with the statutory requirement not to report statute barred debts and in failing to implement procedures to remove the prohibited information from their reports. As a result, that negligence has caused harm to the members of the class, as credit has been denied to them by credit grantors as a result of this improperly reported information. Furthermore, because it is very difficult for an individual to have the credit report corrected, the class members are often obliged to incur expenses by retaining counsel or a credit rehabilitation company to have the record corrected. The appellant claims that the damages suffered by the class members include mental suffering, anguish, embarrassment, humiliation and injury to reputation. The appellant also claims punitive damages.

“In my view,” the appeals court said, “the motion judge erred in concluding that it was plain and obvious that the appellant has no cause of action against the respondents in negligence and that the action must be struck out at this stage. I would allow the appeal on that issue.”

However, it struck down the part of the action against the U.S. parents of the Canadian companies, citing insufficient proximity.

It also noted, “In reaching this conclusion, I wish to make it clear that this finding in no way speaks to the issue of the suitability of this action as a class action. To strike the action at this stage would mean that no individual consumer could bring an action against a credit-reporting agency for damages suffered as a result of a harmfully false credit report. However, whether the action can meet the tests for certification of a class action including appropriate common issues, the determination of preferable procedure and damages is left for another day.”

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