Canada: Supreme Court Renders Landmark Privacy Decision In Royal Bank Of Canada v. Trang

The Supreme Court of Canada released a landmark decision today giving important guidance on how Canada's federal privacy law, the Personal Information Protection and Electronic Documents Act ("PIPEDA"), should be interpreted. In Royal Bank of Canada v. Trang, 2016 SCC 50, the Court ruled that courts can use their inherent jurisdiction to make orders permitting disclosures of personal information, including personal information contained in mortgage discharge statements. The Court also ruled that disclosures of personal information in such statements are permitted based on the implied consent of the mortgagor. Further, the Court held that while PIPEDA is consumer protection legislation for the digital age, it must be interpreted in a balanced way to facilitate the collection, use and disclosure of personal information by businesses.

Summary of Key Points

This decision arose out of a situation in which privacy law stymied the seizure and sale of a property in connection with a judgment debt. Although this may seem on first glance to be a technical question, the repercussions of this decision will be significant.

In particular, this decision provides a framework for assessing when it is reasonable to imply consent into a relationship, and comes down on the side of a balanced, contextual approach. The decision also appears to deter parties from employing privacy law as a form of collateral attack to gain an advantage in litigation. With the Trang decision, it is now clear that privacy law will not necessarily serve as a trump card for avoiding other legal obligations.

The first key issue under consideration was whether an order sought by judgment creditor constitutes an "order made by a court" pursuant to s. 7(3)(c) of PIPEDA. The Supreme Court found in the affirmative, noting explicitly that "PIPEDA does not interfere with the court's ability to make orders."

The second main issue was one of implied consent; specifically, whether the debtors impliedly consented to disclosure of a mortgage discharge statement. The Supreme Court found that implied consent was present. It noted that while financial information is a type of personal information that is generally regarded as sensitive (thereby requiring express consent) "the degree of sensitivity of specific financial information is a contextual determination". It must be assessed in the context of the related financial information already in the public domain, the purpose served by making the related information public, and the nature of the relationship between the parties and affected third parties relying on the information. As a result, the business and regulatory context was important in determining that the debtors had impliedly consented to their bank making the statement available in order to realize upon the judgment debt.


In April 2008, the Royal Bank of Canada ("RBC") loaned the Trangs approximately $35,000. The Trangs defaulted on the loan and on December 17, 2010, RBC obtained a judgment against the Trangs for $26,122.76 plus interest and costs. RBC then filed a writ of seizure and sale with the sheriff in Toronto, which permits the sheriff to sell the Trangs' property pursuant to the Execution Act, R.S.O. 1990, c. E.24. However, the sheriff refused to sell the property without first obtaining a mortgage discharge statement from Scotiabank.

Faced with the concern that PIPEDA did not permit such a disclosure without the Trangs' consent, as outlined in the Ontario Court of Appeal's binding decision in Citi Cards Canada Inc. v. Pleasance, 2011 ONCA 3, Scotiabank declined to provide the mortgage discharge statement to RBC.

The matter then went to the Ontario courts, with neither the Trangs nor Scotiabank taking a position at any level of court. At first instance (2012 ONSC 3272), Justice Gray found that he was bound by Citi Cards. Nonetheless, he expressed significant concerns that PIPEDA was not "intended to interfere in only a portion of a commercial activity that has been conducted in a particular fashion for many years", especially because RBC was not seeking "to open up to public scrutiny the entire relationship between a bank and its customer", but to obtain "a small sliver of information that has become germane only because the customer has a final court judgment against him or her, and has a mortgage with a bank" (¶40).

In particular, he noted that "Consent need not always be express; it may, in appropriate circumstances, be implied", and suggested that the specific purpose of the statement of account gave rise to a strong argument that there was implied consent on the part of the mortgagor to disclose to third parties the state of account when the exercise of those rights is in issue".

At the Court of Appeal (2014 ONCA 883), a five-judge panel heard the case given the challenge to the Citi Cards precedent. A 3-2 majority upheld the decision below, thus preserving the Citi Cards precedent. While all judges agreed that the mortgage discharge statement constitutes "personal information" of the Trangs, and that the general purpose provisions in ss. 3 and 5(3) did not provide an alternative to obtaining consent to disclosure of personal information or an exception to the need for consent, the Court of Appeal did split on two points.

The first was whether Scotiabank could disclose the mortgage discharge statement on the basis that the disclosure was "required to comply with ... an order made by a court" (PIPEDA, s. 7(3)(c)).

The majority opinion of Justice Laskin considered it "circular" for the proceeding commenced by RBC against Scotiabank to constitute the necessary "order". It read PIPEDA strictly on this point because:

Parliament has recognized the high value Canadians place on the privacy of their personal information. Exceptions, which allow our personal information to be disclosed without our knowledge or consent, are carefully and narrowly tailored. A party seeking disclosure without consent must satisfy the court that one of the narrow exceptions applies. (¶85)

The dissent of Associate Chief Justice Hoy took a different approach, viewing the procedure that would be necessary based on the majority interpretation would "result[] in unwarranted delay and expense and does not foster access to justice" (¶104, 112-14). The Rules of Civil Procedure stood as a "separate authority" satisfying the exemption in s. 7(3)(c) of PIPEDA (¶82-84).

The second point of disagreement was whether the Trangs had impliedly consented to the disclosure. The majority appeared to be concerned that "less sensitive" information could, in context, be highly sensitive:

Yet it is not just a number. The balance owing on a person's mortgage can be an important piece of private information that opens a window to many aspects of that person's financial profile. It indicates financial worth. It measures how a person deals with financial liabilities. It opens a portal to a person's financial stability or instability. In many contexts, the disclosure of this seemingly innocuous information to a third party without consent may affect a person's interests adversely. Even the timing of the disclosure could be sensitive. (¶51)

The majority also considered that, with foresight, RBC could have obtained the Trangs' consent to disclosure by a term in its loan agreement (¶76).

Associate Chief Justice Hoy disagreed. She considered the information at hand to be "less sensitive" in nature, as all of the details of the Trangs' mortgage – the principal amount, the rate of interest, the payment periods and the due date – were made publicly available when the mortgage was registered. The updated numbers could be easily calculated. As less-sensitive information, the information could be the subject of an implied consent.

More importantly, the question of sensitivity and reasonableness required consideration of the rights of others. Specifically,

The mortgagor knows that information about the transaction is highly relevant to the legal rights of creditors should the mortgagor fail to pay his or her debts. It would be unreasonable for the mortgagor to think that any privacy rights he or she might enjoy in the information as to the current state of the mortgage could stand in the way of creditors enforcing their legal rights.  (¶123)

Associate Chief Justice Hoy considered a "foresight" assessment to be potentially prejudicial if considered relevant, as it could hamper the interests of creditors unable to draw on sophisticated standard documentation (¶127).

The Supreme Court of Canada then granted leave in order to provide clarity in respect of the pressing questions raised by the Trang and Citi Card precedents. Only RBC and the Privacy Commissioner of Canada appeared and made representations before the Court.

The Supreme Court's Decision

In its decision drafted by Justice Côté, a unanimous Supreme Court agreed with the principles set out by Associate Chief Justice Hoy.

The key elements of this decision are discussed in turn.

The Balance Between Privacy and the Rights and Interests of Other Interested Parties

In a variety of previous cases well beyond Trang and Citi Cards (State Farm, Ferenczy, BMG v. Doe), litigants have attempted to use PIPEDA as a sword or a shield to gain an advantage in litigation, either to gain access to information that they would not otherwise have a right to obtain, or to prevent others from obtaining information necessary to pursue their case. The situation in Trang and Citi Cards was an extreme version of this, in that it appeared to require pursuit of multiple proceedings to obtain the "order" permitting the PIPEDA disclosure.

The decision in Trang suggests that such attempts will be disfavoured in future.

Drawing from the purpose principle in s. 3 of PIPEDA, which balances privacy rights of individuals against the need of organizations to collect, use or disclose personal information for "for purposes that a reasonable person would consider appropriate in the circumstances", the Supreme Court has clearly suggested that such attempts should fail:

PIPEDA does not diminish the powers courts have to make orders, and does not interfere with rules of court relating to the production of records. In addition, PIPEDA  does not interfere with disclosure that is for the purpose of collecting a debt owed by the individual to an organization, or disclosure that is required by law. In other words, the intention behind s. 7(3) is to ensure that legally required disclosures are not affected by PIPEDA. (¶25)

In particular, the Supreme Court emphasized that it would be "overly formalistic and detrimental to access to justice" to insist on multiple proceedings, and blessed Associate Chief Justice Hoy's statement:

It would fly in the face of increasing concerns about access to justice in Canada to dismiss this appeal and require RBC to bring yet another motion. A legal system which is unnecessarily complex and rule-focused is antithetical to access to justice. RBC has brought two motions and made two trips to this court over a several year period — simply to discern how much remains outstanding on the Trang's mortgage to enforce a valid judgment.

I add that not all litigants have the resources RBC has available, or are able to make multiple trips to court. Ensuring access to justice requires paying attention to the plight of all litigants. (¶30)

This theme returns later in the decision, where Justice Côté observes that:

a mortgage discharge statement "is not something that is merely a private matter between the mortgagee and mortgagor, but rather is something on which the rights of others depends, and accordingly is something they have a right to know" (2012 ONSC 3272, para. 29). In other words, the legitimate business interests of other creditors are a relevant part of the context which informs the reasonable expectations of the mortgagor. (¶45)

It appears, then, that attempts to use PIPEDA to frustrate access to justice will be difficult, especially in circumstances in which the privacy interests at stake appear to be collateral or out of proportion with the right the counterparty is seeking to assert.

Implied Consent and Reasonableness Must Be Examined in their Full Context

Without a doubt, this portion of the Supreme Court's decision will be cited in future, as implied consent situations arise in numerous settings beyond PIPEDA, including under provincial privacy laws as well as the "existing business relationship" exceptions found under CASL, and the Telecommunications Act's "Do Not Call" regime. The question of whether it is fair to imply consent to certain collections, uses or disclosures of personal information in a person's behaviours is essential to countless ordinary transactions across Canada every day.

As it stood, the majority at the Ontario Court of Appeal took a highly restrictive approach to implied consent, insisting that "exceptions, which allow our personal information to be disclosed without our knowledge or consent, are carefully and narrowly tailored". Thus, even though the Trangs' financial information was publicly available, and their withheld consent frustrated legitimate attempts of a debtor to collect on a legitimate obligation, the Trang and Citi Cards precedents allowed the Trangs' interest in safeguarding the "portal" to their finances to prevail.

This is no longer the case. The Supreme Court is clearly instructing that context is essential to determining the sensitivity of all personal information, including that information that falls into prima facie "sensitive" categories (such as financial information).

In the case of the Trangs, information was already in the "public domain" due to the deliberate decision of the Ontario legislature "to make this information available to the public, in part to allow creditors with a current or future interest in the land to make informed decisions". In the case of mortgage statements,

the Legislature has considered and debated the appropriate balance between the right to privacy and the need for transparency, and has made a decision that transparency outweighs privacy, in the public interest. ... The public interest is addressed by ensuring that the parties to this particular transaction have all pertinent information involving the property. (¶37)

Following on this public interest assessment, the Supreme Court confirms that an assessment of "reasonableness" does take into account the interests of other parties – in this case other creditors affected by the state of account. In the words of Justice Côté,

to do otherwise would unduly prioritize privacy interests over the legitimate business concerns that PIPEDA   was also designed to reflect, bearing in mind that the overall intent of PIPEDA   is "to promote both privacy and legitimate business concerns" (¶44).

Reasonableness does not view privacy concerns as being an impenetrable bubble, even in the context of information that has a degree of sensitivity:

A reasonable mortgagor in their 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. In my view, a reasonable mortgagor would know that the outstanding mortgage balance would ultimately be provided to the sheriff as a matter of law, once the writ of seizure and sale is filed. A reasonable mortgagor would also know that in such circumstances, the property would be sold to satisfy the RBC debt, subject to the settling of the mortgage with Scotiabank. Moreover, a reasonable mortgagor would know that a judgment creditor in such circumstances has a legal right to obtain disclosure of the mortgage discharge statement through examination or by bringing a motion.

This assessment makes it clear that the weight and importance of RBC's interests, or any judgment creditor, does have an effect on the analysis. It also implies strongly that "reasonable" observers would not approve of individuals resiling from a legal obligation, and then using privacy law to compromise the ability of the debtor to realize on the debt owed. The strength of this language may even imply that it may be difficult to withdraw this kind of implied consent, notwithstanding s. 4.3.8 of Schedule 1 to PIPEDA  ("An individual may withdraw consent at any time, subject to legal or contractual restrictions and reasonable notice".) If this were not the case, there would be a potential issue when unscrupulous persons purport to "withdraw" an implied consent in order to pervert the course of justice.

Balance Is Found in the Targeted Relevance of the Disclosure

Last, and importantly, this judgment is not a carte blanche. In her decision, Justice Côté emphasizes that the individual's privacy interests are supported by the relevance of the disclosure to the organization receiving the personal information. Associate Chief Justice Hoy observed that all that required was a "sliver" of personal information; Justice Côté notes that the implied consent to disclosure does not permit sharing of the information to the world at large, but only to a person with a "legal interest in the property" (¶49).

Accordingly, organizations should not treat the Supreme Court's decision as an open invitation to disclose personal information the moment a legal right to that information is asserted. Assuming there is no express consent to a given disclosure, they will still need to evaluate three critical points:

  • Does the full context of the original transaction or subsequent transactions, including the sensitivity of the personal information, its public or private character, and the legitimate interests of third parties, reasonably support implied consent?
  • Is the amount of personal information disclosed appropriate in the circumstances?
  • Is the information being provided to the correct person?

Assuming that these three elements are satisfied, it would appear that Trang provides a principled basis for disclosure under an implied consent theory.

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