Royal Bank of Canada v. Trang, 2014 ONCA

The Court of Appeal’s decision in Royal Bank of Canada v. Trang demonstrates how the Personal Information Protection and Electronic Documents Act (“PIPEDA”) is affecting the enforcement of judgments and has important implications for debtors and creditors. In a 3-2 decision, the Court strengthened debtor’s privacy rights and held that creditors are required to obtain a court order to bypass the consent requirements of PIPEDA.

This case arose as a result of the Royal Bank of Canada’s (“RBC”) attempts to obtain a mortgage discharge statement in order to enforce a judgment it obtained against the Trangs. RBC registered a writ of seizure and sale to enforce the judgment and directed the Sheriff to seize and sell the Trang’s property. The Sheriff refused to sell the property unless the Bank of Nova Scotia (“Scotiabank”), who held a first mortgage on the property, provided a mortgage discharge statement. Scotiabank refused to provide the statement on the basis that PIPEDA restricted it from disclosure as it contained sensitive personal information that required the Trangs’ explicit consent to disclose to a third party. The Court of Appeal agreed that the mortgage discharge statement was protected by PIPEDA.

Justice Laskin, writing for the majority, held that there are two possible options for creditors in RBC’s situation where the debtor refuses to consent to production of a mortgage discharge statement:

1. A creditor can include a term in its loan agreements so that the debtor consents to disclosing the discharge statement to the creditor in advance; or

2. A creditor can seek production through a motion under Rule 60.18(6)(a) of the Rules of Civil Procedure. This Rule is the judgment debtor exam rule which requires a third party to attend an examination and bring the discharge statement examination.

Justice Hoy, writing for the dissent, expressed concern that not all creditors have the same resources as RBC to protect their interests through court proceedings, and this may create access to justice issues. They were of the view that strict compliance with rule 60.18(6)(a) was unnecessary since RBC had already brought two motions to obtain the discharge statement from Scotiabank. The dissent further stated that a rule 60.18(6)(a) motion was unnecessary in the circumstances because the mortgage discharge statement contained “less sensitive” information for the purposes of s. 4.3.6 of Schedule 1 to PIPEDA, and that the Trangs had implicitly consented to disclose this information.

The law, however, is that a mortgage statement is protected under PIPEDA unless a court order or the debtor’s express consent in obtained. The Court of Appeal effectively upheld its previous decision in Citi Cards Canada Inc. v. Plaisance, wherein it refused to order production of a bank customer’s mortgage statement to Citi Cards Canada Inc. so that it could enforce its judgment on a credit card debt.

Creditors may wish to consider the inclusion of an express term in its loan agreements so as to avoid the time and expense of a motion under Rule 60.18(6)(a) for production a mortgage discharge statement, or other relevant document.