Supreme Court to hear PIPEDA case that left lender out in the cold

The Supreme Court of Canada has granted leave to appeal from the Ontario Court of Appeal decision in Royal Bank of Canada v. Trang, 2014 ONCA 883. This is and will be an important decision about how to deal with certain provisions of the federal privacy law that have an impact on lenders.

On December 9, 2014, the Ontario Court of Appeal decided that the Personal Information Protection and Electronic Documents Act (PIPEDA) prevents a mortgagee from disclosing the mortgagor’s discharge statement to another lender – even when that lender has a judgement against the mortgagor – without either the mortgagor’s express consent or a specific court order. The decision is relevant beyond Ontario because PIPEDA is federal legislation applicable across Canada, and Atlantic Canadian Provinces have legislation analogous to the Ontario legislation.

Scotiabank held a registered first mortgage on the Trang’s Toronto real property. RBC subsequently loaned the Trangs money. They defaulted and RBC obtained a judgment against them. Twice, the Trangs did not appear for their examination in aid of execution. RBC asked Scotiabank for a mortgage discharge statement to facilitate sale of the property. Scotiabank said PIPEDA precludes it from disclosing the statement without the Trangs’ consent. RBC asked the Ontario court for an order compelling Scotiabank to produce the mortgage discharge statement – but a split five-judge panel of the Ontario Court of Appeal refused. The Court did note that RBC could use the usual procedural tools to examine a representative of Scotiabank, though it is unclear to me whether that would result in the discharge statement.

The majority of the Court found that a mortgage discharge statement is personal information, and there was no implied consent on the part of the borrowers to have it disclosed in the circumstances.

It'll be interesting to see where the Supreme Court of Canada falls on this issue.