Saturday, December 02, 2017

Federal Court of Appeal: Past privacy consent does not prevent new means of handling and distributing personal information

The Federal Court of Appeal released its long-awaited decision in Toronto Real Estate Board v Commissioner of Competition on Friday, December 1, 2017. The decision is a statutory appeal and is the latest chapter in a very long saga in which the Competition Bureau has accused Canada's largest real estate board of acting in an anti-competitive manner to prevent new forms of competition in the real estate market.

The Canada Real Estate Board (CREA), and its members such as the Toronto Real Estate Board (TREB) own and operate the Canadian Multiple Listing Service (which is the backbone of A lot of information about current properties on the market is available on the site and realtors have access to a much wider range of information, including historical sales and listing information that is essential to carrying out market analyses for buyers and sellers.

The main issue is that TREB has not permitted innovative forms of real estate sales, such as online, using this much richer information. And privacy was one of the reasons TREB pointed to in order to justify its practices:

[2] TREB maintains a database of information on current and previously available property listings in the GTA. TREB makes some of this information available to its members via an electronic data feed, which its members can then use to populate their websites. However, some data available in the database is not distributed via the data feed, and can only be viewed and distributed through more traditional channels. The Commissioner of Competition says this disadvantages innovative brokers who would prefer to establish virtual offices, resulting in a substantial prevention or lessening of competition in violation of subsection 79(1) of the Competition Act, R.S.C. 1985, c. C-34 (Competition Act). TREB says that the restrictions do not have the effect of substantially preventing or lessening competition. Furthermore, TREB claims the restrictions are due to privacy concerns and that its brokers’ clients have not consented to such disclosure of their information. TREB also claims a copyright interest in the database it has compiled, and that under subsection 79(5) of the Competition Act, the assertion of an intellectual property right cannot be an anti-competitive act.

Focusing on the privacy argument, TREB essentially argued that people who consented to having their information made available when they hired a realtor, really only consented to having it made available through traditional channels and not published online. The Tribunal below was of the view that TREB's privacy arguments were pretty flimsy and one gets the sense that it was really a pretext to justify their way of doing things.

[131] In considering privacy as a business justification under paragraph 79(1)(b), the Tribunal found that the “principal motivation in implementing the VOW Restrictions was to insulate its members from the disruptive competition that [motivated] Internet-based brokerages”. It concluded that there was little evidentiary support for the contention that the restrictions were motivated by privacy concerns of TREB’s clients. The Tribunal also found scant evidence that, in the development of the VOW Policy, the VOW committee had considered, been motivated by, or acted upon privacy considerations (TR at para. 321). The privacy concerns were “an afterthought and continue to be a pretext for TREB’s adoption and maintenance of the VOW Restrictions” (TR at para. 390).

TREB argued that nobody consented to having this information disseminated via the internet or "virtual office websites" (VOWs), so new consent would be required to do so. Absent new consent, this information cannot be disseminated online:

[160] While the Listing Agreement used by TREB provides consent to some uses of personal information, TREB asserts that had the Tribunal examined it more closely, it would have found that the Listing Agreement did not provide sufficiently specific wording to permit disclosure of personal information in the VOW data feed. Specifically, TREB contends that the consents do not permit the distribution of the data over the internet, and that is qualitatively different from the distribution of the same information by person, fax, or email.

The Commissioner argued that consent for PIPEDA purposes is to the "purposes" proposed for the collection, use and disclosure of personal information, and not the means by which it would be disseminated. The Court of Appeal agreed:

[164] The wording in the Listing Agreements from 2003 onwards is substantially similar to that quoted above. However, the phrase “during the term of the listing and thereafter” (underlined above), first appears in 2012. The Use and Distribution of Information clause in the Listing Agreement is broad and unrestricted. Sellers are informed that their data could be used for several purposes: for distribution in the database to market their house; to compile, retain, and publish statistics; for use as part of comparative market analysis; and any other use in connection with the listing, marketing, and selling of real estate. Nothing in the text implies the data would only be used during the time the listing is active. Indeed, the use of data for historical statistics of selling prices necessitates that the data will be kept. The Tribunal noted that TREB’s policies 102 and 103 add that, apart from inaccurate data, “[n]o other changes will be made in the historical data” (TR at para. 401). We note as well that clause 11 of the Listing Agreement allows for the property to be marketed “using any medium, including the internet”.

[165] PIPEDA only requires new consent where information is used for a new purpose, not where it is distributed via new methods. The introduction of VOWs is not a new purpose–the purpose remains to provide residential real estate services and the Use and Distribution of Information clause contemplates the uses in question. The argument that the consents were insufficient−because they did not contemplate use of the internet in the manner targeted by the VOW Policy−does not accord with the unequivocal language of the consent.

Why is this important? Because it is clear that though technology may shift and putting services online may change the extent of the distribution of information and the possible uses of the information by someone who accesses it, the key to obtaining consent is to clearly articulate the purposes of the collection. The stated purposes are what dictate how the information can be used, but do not dictate the means of dissemination.