Supreme Court Releases Important Decision on PIPEDA and Disclosure of Discharge Statements: RBC v. Trang

The Supreme Court of Canada recently released a significant banking decision[1] dealing with personal financial information and its disclosure under Canada’s federal privacy law, the Personal Information Protection and Electronic Documents Act (PIPEDA).[2]  In overturning the Ontario Court of Appeal decision, the Supreme Court of Canada interpreted the legislation in a way to balance individual privacy concerns with creditors' needs to collect personal information to enforce their legal rights.
 
Facts & Background
The Royal Bank of Canada had a judgment against the Trangs who owned a property that they had mortgaged with Scotiabank. The Sheriff refused to sell the property without a mortgage discharge statement from Scotiabank. RBC tried to obtain this statement by examining the Trangs but they refused to attend for examination. Scotiabank also refused to release the statement arguing that PIPEDA precluded them from doing so. Scotiabank needed the Trangs' consent, which they did not have. RBC brought a motion for an order that Scotiabank produce the discharge statement. The motion judge dismissed the motion relying on the Court of Appeal's judgment of Citi Cards Canada Inc. v. Pleasance, 2011 ONCA 3 which had similar facts and held that none of the exceptions in PIPEDA regarding disclosure were available to RBC. RBC appealed.

Court of Appeal
In a 3-2 split decision, the Court of Appeal dismissed RBC's appeal, finding, among other things, that RBC had not (similar to Citi Cards) exhausted all of its options. RBC could have brought a motion under Rule 60.18(6)(a) of the Rules of Civil Procedure to have the court make an order for the examination of Scotiabank. Then, under Rules 34.10(2)(b) and (3) Scotiabank would be required to bring to the examination, and produce, the discharge statement. This would permit Scotiabank to disclose the mortgage discharge statement to RBC without the Trangs' consent and it would satisfy the exemption in s. 7(3)(c) of PIPEDA which authorizes an organization to disclose personal information without the individual's knowledge and consent if disclosure is required to comply with a court order or the rules of court relating to the production of records. 

The dissenting judges (Justices Hoy and Sharpe) would have allowed RBC's appeal, finding that the mortgage discharge statement should be disclosed as the Trangs' consent to the disclosure of the discharge statement could be implied. Schedule 1, s.4.3.6 of PIPEDA notes that consent for the purposes of the statute can be implied when the information is “less sensitive”. Disclosure of this mortgage discharge statement accorded with reasonable expectations of an individual in the Trangs’ position.  The dissent would not have required RBC to bring another motion:

Whether RBC purported to move under rule 60.18(6)(a) or simply asked the court for an order requiring the mortgagee to disclose the Statement is immaterial. In either case the relief sought is substantively identical. Requiring a further motion would not be just, and it certainly would not be expeditious.(para. 96)

Supreme Court of Canada
RBC appealed once again and was finally successful. Coté, J. writing on behalf of the Court, sided with the minority in the Court of Appeal decision.

First, PIPEDA does not diminish the powers of the court to make orders relating to the production of documents. The motion judge, and majority of the Court of Appeal, erroneously concluded that the order sought by RBC did not constitute an “order made by a court” under s. 7(3)(c) of PIPEDA. They did so by relying on Citi Cards which the Supreme Court of Canada expressly overruled in this case. The motion judge had the power under the Rules of Civil Procedure or the inherent jurisdiction of the court to order disclosure.

Secondly, the Trangs impliedly consented to disclosure in the circumstances of this case. The information at issue was less sensitive than other financial information. A reasonable mortgagor in the Trangs’ position would be aware that the financial details of their mortgage were publicly registered on title, and that default on the RBC debt could result in a judgment empowering the Sheriff to seize and sell the mortgaged property. A reasonable mortgagor would know that the outstanding mortgage balance would ultimately be provided to the Sheriff and that a judgment creditor has a legal right to obtain disclosure of the mortgage discharge statement.

Coté J. concluded that “consent for the purpose of assisting a sheriff in executing a writ of seizure and sale was implicitly given at the time the mortgage was given”. However, it is not reasonable to expect a bank to disclose a mortgage discharge statement to a person with no legal interest in the property.

Scotiabank was ordered to produce the mortgage discharge statement.
​
Conclusion
While PIPEDA plays an important role in protecting our privacy rights, the Supreme Court confirmed that these rights will be balanced with legitimate business concerns in trying to comply with the legislation in a practical way. This decision has considerable implications for third party lenders and creditors. However, it should be noted that the Supreme Court has only found implicit consent regarding this particular type of personal information (mortgage discharge statement) in this particular circumstance (seizure and sale proceedings). This case will provide guidance to other situations where it can be argued that “implied consent” has been provided. Sensitivity of the information, reasonable expectations of all involved, and the nature of the transaction must be considered.


[1] Royal Bank of Canada v. Trang, 2016 SCC 50

[2] S.C. 2000, c.5