Privacy Law Cannot Thwart Business Interests

SCC clarifies PIPEDA for creditors

Privacy Law Cannot Thwart Business Interests

Today's electronically-driven economy challenges the courts to balance individuals’ personal information remaining safe and ensuring parties’ legitimate business interests are not thwarted by privacy law. The Supreme Court of Canada (“SCC”) addressed this privacy balancing act under the Personal Information Protection and Electronic Documents Act [“PIPEDA”] in its decision of Royal Bank of Canada v Trang, 2016 SCC 50 [“Trang”] and delivered a common sense ruling.

PIPEDA – “consumer protection legislation for the digital economy”1 – provides rules regarding the collection, use and disclosure of personal information by organizations in the course of commercial activities.2 The general rule under PIPEDA is “consent is required for the collection of personal information and the subsequent use or disclosure of this information.”3 Consent normally means express consent; however, implied consent may be accepted in defined circumstances. Further, PIPEDA provides a list of exceptions where knowledge and consent are not required for personal information disclosure.4 

The facts of Trang are that Phat and Phuong Trang (the “Debtors”) defaulted on a Royal Bank of Canada (“RBC”) loan. RBC secured judgment against the Debtors. RBC filed a writ of seizure and sale to allow the sheriff to sell the Debtors’ property, which was mortgaged with Scotiabank. The sheriff refused to proceed without a mortgage disclosure statement from Scotiabank (the “Statement”); the Statement was necessary to settle the priority between mortgagees and creditors. Scotiabank refused to provide same, claiming PIPEDA required the Debtors’ consent. RBC obtained two separate orders for an examination in aid of execution but the Debtors did not appear on either occasion. RBC then sought an order compelling Scotiabank to produce the Statement. RBC’s motion was dismissed5 and the Court of Appeal upheld the motion judge’s decision.6 

The two main issues before the SCC were: (1) does the order sought by RBC constitute an “order made by a court” under s.7(3)(c) of PIPEDA? and (2) did the Debtors impliedly consent to disclosure of the Statement?

The SCC found that the order sought by RBC constituted an order made by a court, thus an exception for disclosure under PIPEDA: “the intention behind s.7(3) is to ensure that legally required disclosures are not affected by PIPEDA.”7 The SCC noted the motions judge had the power to order disclosure under the inherent jurisdiction of the court based on the Debtors failing to respond to a written request and failing to attend an examination. Further, it would be detrimental to access to justice to make RBC bring another motion: “a judgment creditor... should not be required to undergo a cumbersome and costly procedure to realize its debt.”8 

The SCC also found that the Debtors had impliedly consented to Scotiabank disclosing the Statement to RBC. The SCC acknowledged that financial information is generally extremely sensitive, but sensitivity of financial information should be determined contextually.9 The information available in the Statement was available publicly and disclosure only gave certainty to calculations already possible. The SCC found the Statement was less sensitive information, and that implied consent is generally appropriate with less sensitive information. Further, RBC, as the party seeking disclosure, had a legal interest in the information and required same to exercise a legal right and was not a disinterested party, nor a curious party or one with nefarious intent.10 

The Trang decision suggests that privacy laws need not obstruct legitimate, legal business interests such that debtors cannot reasonably expect that refusal to comply with an obligation to provide information would prevent a creditor from recovering the debt.

  1. Royal Bank of Canada v Trang, 2016 SCC 50 [“Trang”], para 22. | 
  2. PIPEDA, s.4(1)(a). | 
  3. PIPEDA, Schedule 1, cl.4.3.1. | 
  4. The exceptions under s.7(3) of PIPEDA include: “(b) for the purpose of collection debt owed by the individual to the organization; … (c) required to comply with a subpoena or warrant issued or an order made by a court, person or body with jurisdiction to compel the production of information, or to comply with rules of court relating to the production of records; … (i) required by law.” | 
  5. Royal Bank of Canada v. Trang, 2013 ONSC 4198; the motions judge felt compelled to follow a previous ONCA decision: Citi Cards Canada Inc. v. Pleasance, 2011 ONCA 3. | 
  6. Royal Bank of Canada v. Trang, 2014 ONCA 883; the ONCA agreed that the Statement is “personal information” under PIPEDA and that the Trangs did not impliedly consent to disclosure of the Statement. | 
  7. Trang, para 25. | 
  8. Trang, para 32. | 
  9. Trang, para 36. | 
  10. Trang, paras 46, 49. |