A recent Alberta case highlights the need for banks to ensure that they properly report on their debtor's credit status, especially in disputed situations. In Parmar v Royal Bank of Canada, Mr. Parmar brought a successful summary judgment application for damages he alleged stemmed from a bank's inaccurate reporting of his credit status to TransUnion and Equifax.
The facts, in short, are these. Initially, Mr. Parmar claimed he was not responsible for a mortgage in his name. The bank claimed he was. The two actions were consolidated and ultimately settled and discontinued, with Mr. Parmar paying the bank $10,000.
Subsequently however, the bank inaccurately reported the status of its claim against Mr. Parmar to two credit bureaus, TransUnion and Equifax. Because of the improper reporting, Mr. Parmar claimed he had difficulty obtaining, or was unable to obtain, credit. He started a new action against the bank and the credit unions, seeking damages. He alleged that his prospects of owning property in Canada had "been dealt a fatal blow", and brought a summary judgment application for his damages.
A paragraph 14 of the decision, the Court noted that the bank admitted that the file was an atypical situation that created "a specific challenge" to the bank's "normal and typical procedures and systems for accurately reporting and recording Parmar's outstanding indebtedness". Unfortunately, the bank did not immediately correct its internal records, but continued to (incorrectly) show funds outstanding by Mr. Parmar under the mortgage and this was duly reported by the credit reporting agencies.
The bank admitted that its reporting was inaccurate. While the Court accepted that the unusual situation created challenges for the bank in terms of reporting, this did not excuse it from liability. The Court found that on summary judgment, and pursuant to the Alberta Fair Trading Act, the bank was liable to Mr. Parmar in the sum of $5,000 for the inconvenience caused to him by the bank's failure to accurately and promptly report to the credit reporting agencies.
The summary judgment application against the credit unions was dismissed, as both raised genuine issues of merit, requiring a trial.