The Court of Appeal's recent decision in Royal Bank of
Canada v. Trang, 2014 ONCA 883 ("Trang") has important
implications for judgment debtors/creditors and
mortgagees/mortgagors. Writing for the majority in a 3-2 decision,
Justice Laskin held that a mortgage discharge statement is personal
information protected under the Personal Information Protection and
Electronic Documents Act ("PIPEDA").1As a
result, a mortgagee cannot provide a mortgage discharge statement
to a judgment debtor without the mortgagor's express consent, a
court order, or pursuant to a statutory requirement.
In Trang, the Royal Bank of Canada ("RBC") obtained a
judgment against its debtors Phat and Phuong Trang ("the
Trangs"). RBC sought to have the Sheriff sell the Trangs'
house to collect its judgment. The Sheriff refused to sell the
house without a mortgage discharge statement from Scotiabank, which
held the first mortgage on the house. The Trangs refused to produce
the statement. Scotiabank also refused to produce the discharge
statement without the Trangs' consent, because the discharge
statement was protected by PIPEDA. The Court of Appeal agreed that
the discharge statement was protected, and declined to order its
production absent the Trangs' consent.
The Court of Appeal indicated there were two possible avenues of
recourse open to judgment creditors seeking to collect on debts
where the mortgagor/judgment debtor refuses to consent to
production of a mortgage discharge statement.
First, creditors could include a term in loan agreements whereby
the mortgagor/debtor prospectively consents to the mortgagee
producing/disclosing the discharge statement when requested by the
creditor. This would satisfy the consent requirement in PIPEDA.
Second, creditors could seek to obtain the discharge statement
from the mortgagee through a motion under Rule
60.18(6)(a).2 This Rule allows the court to compel a
mortgagee (or any third party) to attend an examination, and to
bring the discharge statement (or any relevant document) to the
examination.3 Such an order would bring the mortgagee
within s. 7(3)(c) of PIPEDA, which allows it to produce the
statement without the mortgagor/debtor's consent where such
production is required by a court order or a statute.
The Court recognized that in order to succeed on a Rule
60.18(6)(a) motion, the creditor would need to demonstrate
"difficulty" enforcing its judgment. The Court indicated
that in the circumstances of the Trang case, the Sheriff's
refusal to sell the house without the discharge would not
constitute sufficient difficulty to support a motion under Rule
60.18(6)(a), but that the debtor's failure to attend
examinations, and the mortgagee's refusal to produce the
statement, would likely be sufficient. Ultimately, such an order is
discretionary, and the Court would not indicate definitively what
would constitute sufficient difficulty in the abstract.
This decision makes clear for mortgagees that absent a court
order or a requirement under a statute, a mortgage discharge
statement is protected by PIPEDA and cannot be released without the
mortgagor's express consent. The consent cannot be implied. The
Court of Appeal's decision in Trang therefore maintains the
status quo in this respect for mortgagees, as the Court entirely
upheld its previous decision in Citi Cards Canada Inc. v.
Plaisance, 2011 ONCA 3.
Accordingly, financial institutions may wish to consider whether
any of their agreements would benefit from the inclusion of an
express term whereby the mortgagor/debtor prospectively consents to
the disclosure of any mortgage discharge statements upon
1. S.C. 2000, c. 5.
2. Rules of Civil Procedure, R.R.O. 1990, Regulation
The Canadian Office of the Superintendent of Financial Institutions ("OSFI") recently ruled that a bank cannot promote comprehensive credit insurance ("CCI") within its Canadian branches under the Insurance Business (Banks and Bank Holdings Companies) Regulations (the "Regulations").
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