Disclosure of Mortgage Balance to Creditor Not Prevented by PIPEDA

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Royal Bank Plaza by Peter Broster (CC BY 2.0) | https://flic.kr/p/dhpfMj

This morning, the Supreme Court of Canada released its decision in Royal Bank of Canada v. Trang, 2016 SCC 50 (Trang), overturning the reasoning of two decisions of the Ontario Court of Appeal. In the SCC’s view, the Personal Information Protection and Electronic Documents Act, S.C. 2000 c. 5  (“PIPEDA”) does not preclude a mortgagee from producing a mortgage discharge statement to a judgment creditor. The unanimous decision, written by Justice Côté, concluded that such disclosure was in accordance with an order made by a court or, alternatively, that the mortgagors had provided implied consent.

The case involved the Trangs and two banks, Scotiabank and RBC. Scotiabank held a registered mortgage on the Trangs’ property. Subsequently, RBC loaned the Trangs approximately $35,000, and after they defaulted on that loan in 2010,  RBC obtained judgment against the Trangs for $26,122.76. To collect on its judgment, RBC attempted to have the sheriff sell the Trangs’ property. However, the sheriff refused to do so without obtaining a mortgage discharge statement from Scotiabank. Scotiabank would not provide the statement, since, in its opinion, PIPEDA precluded it from doing so. As for the Trangs, they failed to appear at examination in aid of execution, despite an order indicating as much.

RBC was unsuccessful at first instance and at the Court of Appeal. In the majority of the Court of Appeal’s view, the issues before it were previously decided by Citi Cards Canada Inc. v. Pleasance, 2011 ONCA 3, and there was no reason to overrule that decision. However, Hoy A.C.J.O. (with whom Sharpe J.A. concurred) would have allowed the appeal.

The SCC agreed with Hoy A.C.J.O, noting that the relevant subsection of PIPEDA (section 7(3)) did not pose an impediment to legally required disclosures. From the SCC’s perspective, the reasoning in Citi Cards was to be rejected since Ontario judges have the authority to order disclosure under the Rules of Civil Procedure (Rules) or the inherent jurisdiction of the court. Based on the facts and the circumstances, the SCC held that it was appropriate to order the disclosure of the mortgage statement.

Interestingly, with access to justice concerns front of mind, the SCC expressly stated that “[i]n this case, the mere fact that the rule number was not pled is not fatal. It would be overly formalistic and detrimental to access to justice to conclude that RBC must make yet another application, this time specifying rule 60.18(6)(a), to obtain the order it seeks” (at para 30).

Even though the SCC would have ordered disclosure pursuant to the Rules or the court’s inherent jurisdiction, it went on to discuss implied consent and concluded that the Trangs had, in the circumstances, provided their implied consent to the disclosure of the mortgage discharge statement. From the SCC’s perspective, the current balance of a mortgage was less sensitive than other financial information since there was already public disclosure of the principal amount of the mortgage, the rate of interest, the payment periods and the due date.

The SCC also considered the reasonable expectation of the individual (which is relevant pursuant to clause 4.3.5 of PIPEDA), and agreed with RBC that the receiving party was relevant, and not just the relationship between the Trangs and Scotiabank. Finding that the “whole context is important” (para 44), the SCC held that the legitimate business interest of RBC, as a judgment creditor, was a relevant part of the context which informed the reasonable expectation of the Trangs. So was RBC’s purpose for seeking disclosure, since, in the Court’s view, “disclosure to a person who requires the information to exercise an established legal right is clearly different from disclosure to a person who is merely curious or seeks the information for nefarious purposes” (at para 46).

Trang reflects a balance between consumer privacy interests and legitimate commercial interests. Perhaps more importantly, the decision provides clarity on privacy issues that had divided five judges of the Court of Appeal, as well as guidance on implied consent.

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Author: Adam Jacobs

Adam Jacobs is a partner at Hayes eLaw LLP. His practice is focused on intellectual property, privacy, media and technology law.

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