A plaintiff wins judgment, but the defendant (judgment debtor) refuses to pay or provide information necessary for the plaintiff (judgment creditor) to realize against the debtor’s assets. When and how can the creditor obtain that necessary information from a third party?
This is the question at the heart of Royal Bank of Canada v. Trang, a case that the Supreme Court of Canada (SCC) has just agreed to hear. In this appeal, the SCC will have to balance the right of creditors to substantive access to justice — receiving the money that was awarded to them — against the right of debtors to privacy — having third parties protect their personal information, even from legitimate judgment creditors.
Judgment creditors across Canada will be watching this appeal closely. The SCC’s decision will affect the enforcement of all types of judgments, whether they are for large or small amounts, and whether they arise as a result of court actions, private arbitration, or, in some cases, negotiated settlement.
The decision will also affect anyone seeking to enforce an award won through any non-court process that can yield a judgment enforceable as a court order. These include, among other things, awards for workers’ compensation, restitution awards for victims of crime, and awards under human rights, employment standards, or landlord and tenant legislation.
While the immediate issue concerns enforcement against a debtor’s real property, this case could have an effect on judgment enforcement more broadly.
The underlying facts are simple. The Trangs borrowed and failed to repay a loan to Royal Bank of Canada (RBC). RBC sued successfully. The Trangs did not pay and refused to comply with their legal requirement to appear at judgment debtor examinations. Had they attended, the Trangs would have had to provide RBC with a mortgage discharge statement, which RBC needed in order to enforce its judgment against the Trangs’ real property. (The location of their property and any initial mortgage amounts were already in the public registry; the discharge statement sets out how much equity is in the property.)
COURT OF APPEAL DECISION
The Court of Appeal divided 3-2 on the effect of the Personal Information Protection and Electronic Documents Act (PIPEDA) on a judgment creditor’s request for a mortgage discharge statement.
According to Justice J. Laskin’s reasons (Justice E.A. Cronk and Justice R.A. Blair concurring), a mortgagee would be in breach of PIPEDA if it produced a mortgage discharge statement to a judgment creditor, even if the mortgagee attended an examination in aid of execution requested by the creditor. To obtain the statement, a judgment creditor would need to undertake each of the following specific steps:
- The creditor schedules a judgment debtor examination, which the debtors do not attend;
- The creditor moves for and obtains a court order compelling the debtors to attend a second judgment debtor examination;
- The creditor schedules the second judgment debtor examination, which the debtors again do not attend;
- The creditor moves for and obtains a court order compelling the mortgagee to attend an examination in aid of execution;
- At the examination, the creditor asks the mortgagee to produce a discharge statement;
- If the mortgagee refuses on the basis of PIPEDA, the creditor moves for and obtains an order compelling production; and
- The creditor provides the order to the mortgagee, who must then provide the discharge statement to the creditor.
Since each of the aforementioned motions seeks discretionary relief, and since the mortgagee may not be able to provide its consent, each motion may require multiple court appearances for the judgment creditor to move on to the next step. Nevertheless, Justice Laskin held that the more summary process sought by RBC was not available to it.
Associate Chief Justice A. Hoy’s dissenting judgment (Justice R.J. Sharpe concurring) took exception to the majority’s interpretation of PIPEDA. First, Associate Chief Justice Hoy held that, under PIPEDA, judgment debtors impliedly consent to the disclosure of their mortgage discharge information, particularly to a legitimate judgment creditor. Second, even if this were not the case, a court nevertheless has the jurisdiction to order a mortgagee to produce a discharge statement. PIPEDA does not prevent the court from making such an order, irrespective of whether or not a creditor followed the multiple steps outlined by the majority.
Associate Chief Justice Hoy noted that an “unnecessarily complex and rule-focused” legal system is “antithetical to access to justice.” The majority’s circuitous path would make judgment enforcement out of reach for many creditors, since they “can ill-afford the expense of being in and out of court to enforce a valid judgment for a relatively modest amount.” Such expenses would include the venue, court reporter, and legal fees associated with three or more out-of-court examinations. In the result, Associate Chief Justice Hoy would have ordered the mortgagee to provide a copy of the Trangs’ discharge statement to RBC.
The SCC will be asked to rule definitively on this issue when it hears this appeal, likely sometime in early 2016. Unless and until that appeal is granted, judgment creditors seeking to enforce judgments in Ontario should be mindful to follow the process endorsed in the reasons of Justice Laskin.