In a problematic judgement, the Federal Court of Canada has awarded damages against a bank for the wrongful disclosure by one of its employees of account information in response to a subpoena.

This is only the second case in which the Court has awarded damages for non-compliance with the Personal Information Protection and Electronic Documents Act (PIPEDA); and like the first damage award under the statute, the amount awarded was minimal. The case is also perplexing, because it seems to contradict the reasoning in an earlier decision by the same court, which established that to be eligible for an award of damages, the alleged injury must result directly from a breach of the Act.

In the case of Landry v. Royal Bank of Canada, the husband in a divorce proceeding sent a subpoena duces tecum1 to the bank, ordering one of the bank’s employees to appear before the court and bring certain records concerning the account records of his wife. In violation of the bank’s own policy, which requires the consent of the account holder before account information can be released to a third party, an employee of the bank disclosed the records in question directly to counsel for the husband.

Not surprisingly, the Court readily found that the disclosure was in breach of the bank’s obligations under PIPEDA. What was surprising was that any damages at all were awarded on the facts of the case.

In this regard, the record revealed that the applicant wife had, in the last years of her marriage, opened a bank account without her husband’s knowledge and built a nest egg. In the divorce proceeding, she concealed the existence of the account in question from both her husband and the court, despite a clear legal obligation to make a full and honest disclosure of assets and despite being asked repeatedly under oath about the existence of such an account. As a result of the subpoena, the account records were properly provided by the bank to the divorce court, which later placed the information on the public record and took it into account in rendering judgement. The divorce judgement itself made pointed reference to the applicant’s secretive behaviour and denials under oath.

In her pleadings, the applicant had claimed that the bank’s disclosure had done great harm to her personal life, and that she now had problems with her family and friends “as a result of the conduct of her ex-husband, who was using certain passages of the divorce judgement to harm her reputation.”

In earlier cases, the Court seemed to have established the principles that damage awards under PIPEDA should only be made “in the most egregious situations” and that to be eligible for an award from the court, the applicant would have to establish damages flowing directly from the privacy breach itself, rather than from some concealed behaviour that only came to light through the privacy breach.

For example, in the case of Stevens v. SNF Maritime Metal Inc., the Court found that the applicant’s claim for damages flowed from the loss of his employment, and implicitly, that the employment had been lost due to a fraud he committed against his employer. Although the Court found that, although the fraud may not have come to light except through the privacy breach of a third party, it was the fraud itself, and not the disclosure thereof, that gave rise to the damages.

By contrast, in Landry, the Court seems to have taken the opposite approach. Despite the Court’s explicit acknowledgement that the bank had acted properly in filing the applicant’s account information with the divorce court pursuant to the subpoena, and its implicit finding that the alleged damages stemmed from public dissemination of the resulting divorce judgement by the husband, the Court nevertheless awarded damages – albeit minimal damages -- to the Applicant, noting that the bank’s error remained serious, even when these factors were taken into account.

Although the applicant sought damages totalling $100,000, including $25,000 in exemplary damages, she was awarded only a token $ 4,500. Although she was also awarded her costs, plus interest, the resulting damage award likely pales in comparison to the amount that the applicant would have incurred in legal fees, which would not be covered by the cost award.

While the Landry decision shows that the court may not been entirely consistent in its approach to damage awards under PIPEDA, one thing seems certain: litigants are unlikely to receive any substantial damage awards under the statute unless they can demonstrate significant, tangible losses.