The Supreme Court of Canada (SCC) has rendered judgment in a closely-watched case involving the intersection of judgment enforcement and privacy rights. As discussed in an our July 2015 Blakes Bulletin: You Won Your Case — Now What? SCC to Consider Intersection of Judgment Enforcement and Privacy Rights, this matter required the SCC to weigh enforcement rights of winning plaintiffs (judgment creditors) against privacy interests of losing defendants (judgment debtors).
In allowing Royal Bank of Canada’s appeal, the SCC provided a clear, simple, and practical process that should make it easier for successful litigants to collect judgments owing. The authors of this bulletin represented RBC in the successful appeal.
More broadly, the SCC also provided welcome guidance to lower courts and tribunals confirming that the Personal Information Protection and Electronic Documents Act (PIPEDA) is intended to promote legitimate business concerns in addition to privacy rights.
Creditors are generally entitled to enforce judgments against debtors by having the sheriff seize and sell real property owned by the debtors. However, in Ontario, the sheriff does not seize and sell property without being satisfied that the debtor has sufficient equity in the property. To determine the amount of equity in real property requires knowing how much is currently owing to any mortgagees. The only way to obtain that information is from mortgage discharge statements provided by mortgagees. As a result, a judgment cannot be enforced unless the mortgagee provides personal information of the debtor to the creditor.
In Royal Bank of Canada v. Trang (Trang), Justice Côté, writing for a unanimous court, held that PIPEDA does not preclude a mortgagee from providing a mortgage discharge statement directly to a creditor that has taken the steps necessary to execute a judgment. A creditor seeking enforcement by means of a writ of seizure and sale is entitled to know the current value of the debtor’s mortgaged property without the creditor having to spend time and money holding multiple debtor examinations or taking several trips to court. As long as the creditor has obtained and filed a writ against a property, and the mortgage discharge statement it seeks is with regard to that property, the mortgagee can provide the creditor with a statement. PIPEDA does not present an impediment, because it is reasonable to imply the debtor’s consent.
In implying consent, the SCC relied on a contextual analysis of the information at issue, which is “less sensitive” than other financial information, given how much information about a mortgage is public in land registries. The court also considered the reasonable expectations of debtors, which include an expectation that a creditor will be able to obtain the information necessary to realize its legal rights.
A mortgage discharge statement is also available through an alternate route. The SCC held that the creditor is entitled to obtain a court order requiring production. Courts have the power to grant such orders both under the Rules of Civil Procedure and under their inherent jurisdiction. The only prerequisite is that the motion be made with notice to the debtor, and either the debtor failed to consent to the creditor obtaining the statement, or the debtor failed to show up to a properly-scheduled judgment debtor examination.
If a plaintiff obtains judgment and the defendant refuses to pay, the plaintiff (creditor) can, as always, exercise its enforcement rights under provincial law. Most rights are available irrespective of whether the award arose as a result of court action, private arbitration, or a non-court process that can yield a judgment enforceable as a court order (e.g. awards under workers’ compensation, victim restitution, human rights, employment standards, or landlord-tenant legislation).
What is new under Trang is that a creditor who seeks to enforce an award through a writ of seizure and sale over real property need only obtain a writ, file it with the sheriff, and ask any mortgagee(s) for the mortgage discharge statements that the sheriff requires. PIPEDA does not prevent the mortgagee from providing this information.
Alternatively, the creditor can file a motion (on notice) for a court order requiring the mortgagee to provide a mortgage discharge statement. The court should grant the order if it is satisfied the debtor previously failed to consent to provide a discharge statement, or previously failed to attend a judgment debtor examination. Under PIPEDA, no consent to disclosure is needed if a court order requires production.
BROADER PRIVACY LAW IMPLICATIONS
Trang is an important recalibration of the balance between privacy rights and legitimate business concerns more generally. The Ontario Court of Appeal had held that the business or other interests of a party seeking disclosure of personal information are always irrelevant under PIPEDA. The SCC rejected that narrow approach.
The SCC held that when determining the reasonable expectations of an individual with respect to his or her personal information “the whole context is important” [emphasis added]. That context includes the identity of the party seeking disclosure, and the purposes for which it is sought. Justice Côté warned: “to do otherwise would unduly prioritize privacy interests over the legitimate business concerns that PIPEDA was also designed to reflect, bearing in mind that the overall intent of PIPEDA is ‘to promote both privacy and legitimate business concerns’.” This return to the original intent of PIPEDA as a law that would facilitate commerce (particularly online), in addition to protecting privacy, should reverberate through all privacy cases and assessments, in all business contexts.