Canada: The Supreme Court Of Canada Rules On When Lenders May Share Personal Information Without Violating Federal Privacy Legislation

Introduction: Privacy Legislation and Secured lenders

Privacy legislation, exemplified in Canada by the federal Personal Information Protection and Electronic Documents Act ("PIPEDA"), has been passed in one form or another in almost every jurisdiction in the developed world. In Canada, the Courts have held that PIPEDA aims to achieve the legitimate purpose of protecting the private, personal information of individual consumers, when such information is gathered by organizations in the course of commercial activities.

It has never been totally clear, however, just how privacy legislation dovetails with the day-to-day world of banking and secured lending, in which personal private information of borrowers is shared between lenders many thousands of times every day. The lack of harmonization between privacy legislation and established banking practice is particularly evident when creditors are required to enforce their in rem rights against real property. A common complaint of bankers and lenders is that PIPEDA can create major headaches and lead to costly, negative and unintended consequences when loans have to be enforced against borrowers.

In the recent case of Royal Bank of Canada v. Trang, the Supreme Court of Canada dealt with one such unintended consequence. In Trang, the Supreme Court of Canada changed the existing law in Ontario, gave direction to the courts throughout Canada and provided guidance to bankers and lenders in dealing with requests for information from fellow creditors. The most immediate significance of this case is that the Supreme Court has held that a creditor may, without violating PIPEDA, share certain information with other creditors on request, when that information is reasonably required by the other creditor in order to enforce its rights against the property (in this case, real property) of the debtor. The Court provides valuable guidance as to the circumstances in which such information may be shared.

Perhaps more interestingly, the Court goes on to make a number of statements that may signal a new (or, perhaps, a reminder of an older) approach in the way Courts deal with commercial disputes. Specifically, the Court agreed with the dissenting judge at the Ontario Court of Appeal, Justice Hoy, in criticizing interpretations of the law that lead to overly-formalistic results that do not accord with common sense and commercial reasonableness. These statements, although pitched at a high level of generality, may be used in future cases as evidence of the general direction of the Courts in this type of case.

The Issues Raised by PIPEDA in a Lending Context

The types of problems that can, and, as Trang illustrates, frequently do occur in this context are not difficult to imagine. For example:

  • As was the case in Trang, where a creditor obtains a Court-issued judgment for possession of the property and has requisitioned the relevant court officials (in Ontario, the local county sheriff's office) to take possession of the property, is the first mortgage-holder prevented by PIPEDA from sharing with the judgment creditor information that is required by the sherriff in order to enforce the judgment?
  • If a lender wants to advance a second mortgage loan to a borrower and wants to know the balance of the existing first mortgage, can this be disclosed by the first mortgagee to the second mortgagee directly, without violating privacy legislation?
  • Can a mortgagee who has sold a property under power of sale and now needs to pay out the indebtedness owing to the first mortgagee obtain the outstanding balance, annual interest rate, costs incurred, and per diem interest in respect of the first mortgage? Do statutory provisions that permit or require disclosure under mortgage law statutes create an exemption under PIPEDA for permitted disclosure "as required by law"?

What's the Big Deal? Don't All Loan Agreements Today Contain "Consent to Disclosure" Clauses?

Most banking and loan arrangements today contain express written "consent to disclosure" clauses, pursuant to which borrowers agree, at the time they apply for the loan, to this type of disclosure. The question that arises is whether these clauses are worded broadly enough to encompass every conceivable situation in which disclosure of personal information may be requested. In addition, relying on fine-print clauses that may not have been drawn to the debtor's attention when the documents were signed, which is often many years ago, is not typically the preferred option for any lender or litigator.

Also, as Trang shows, many existing loan agreements relating to loans advanced prior to the advent of privacy laws do not contain these consent provisions.

The Facts in Trang

In April, 2008, RBC lent the Trangs approximately $35,000. The Trangs defaulted on the loan and in 2010, RBC obtained a judgment against the Trangs.

The Trangs owned property in Toronto. Scotiabank held the first mortgage on the property, in the face amount of $262,500. In order to collect on its judgment, RBC 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.

The sheriff, however, refused to sell the property without first obtaining a mortgage discharge statement from Scotiabank. The mortgage discharge statement was necessary for the sheriff to know Scotiabank's interest in the property, and to ascertain the rights as between Scotiabank and RBC.

In an attempt to obtain the mortgage discharge statement, RBC served the Trangs with multiple notices of examination in aid of execution. The Trangs did not appear. RBC also requested a mortgage discharge statement from Scotiabank. Scotiabank refused to provide the statement on the basis that PIPEDA precluded it from doing so without the Trangs' consent. RBC sought an order compelling Scotiabank to produce the mortgage discharge statement.

A Quick Word About PIPEDA

PIPEDA is a federal stature that governs the collection, use and disclosure of personal information by organizations in the course of commercial activities. PIPEDA prevents organizations from disclosing personal information without the knowledge and consent of the affected individual, which, significantly, can be implied. The Act contains specific definitions of what constitutes "personal information", as well as a number of exceptions in which personal information can be disclosed in certain circumstances.

The Court accepted that the balance owing and other details surrounding the Trangs' mortgage with Soctiabank constituted personal information for purposes of the statute. The issue before the Court was whether the requested disclosure fit into one or both of two exceptions contained in PIPEDA, namely: (a) whether the Trangs had impliedly consented to disclosure of their personal information when they took out the loan from RBC; or (b) whether the disclosure was permitted by a specific exception set out in PIPEDA regarding disclosure when ordered by a Court or otherwise permitted by law.

It should be noted that the loan documentation executed by the Trangs in connection with both the RBC loan and the Scotiabank mortgage did not contain a consent to disclosure of personal information. RBC was forced to argue that the Trangs had given implied consent, or that the disclosure was required by a court order, or otherwise permitted by law.

How the Courts Have Handled this Issue in the Past

The first judge to hear the case denied RBC's motion. The judge observed that the sharing of mortgage discharge statements between banks in these circumstances was formerly commonplace, and he questioned whether Parliament intended to protect debtors by preventing judgment creditors from realizing on their Court judgments. Nonetheless, the judge felt bound by an earlier 2011 Court of Appeal decision, Citi Cards Canada Inc. v. Pleasance. In Citi Cards, a creditor similarly sought disclosure of mortgage discharge statements from mortgagees in order to enforce a judgment through a sheriff's sale of the debtor's home. The Court of Appeal in Citi Cards held that a mortgage discharge statement was "personal information" for the purposes of PIPEDA and that none of the exceptions in the Act applied.

On appeal, the majority of the Court of Appeal upheld the motion judge's decision and declined to overrule Citi Cards. The majority concluded that a mortgage discharge statement is "personal information" for the purposes of PIPEDA, and that the Trangs did not impliedly consent to disclosure of the mortgage discharge statement.

The majority observed that RBC could have obtained the mortgage discharge information it sought in several ways that would have complied with PIPEDA. First, RBC could have obtained the Trangs' consent to disclosure by a term in its loan agreement. Second, RBC could apply under the Ontario Rules of Civil Procedure for an order for the examination under oath of a representative of Scotiabank. Scotiabank would be required to bring the mortgage discharge statement to the examination. Such an order would satisfy the exemption in PIPEDA because it would be made on the basis of a separate authority, namely the Rules of Civil Procedure which would not cause the "circular" reasoning described in Citi Cards.

The assumption underlying the reasoning of the majority at the Court of Appeal was that when there is a choice of legal avenues open to a creditor to pursue its rights against a borrower, the creditor is bound to utilize avenues of recovery that are compliant with PIPEDA, notwithstanding that those avenues of recovery may be more expensive and time consuming than simply requesting the information from a fellow creditor. This aspect of the case was perhaps the most controversial and attracted considerable criticism from various commentators.

The Supreme Court's Decision

In a judgment concurred-in by a full nine-judge panel of the Supreme Court of Canada, the Court overturned the decision of the Ontario of Appeal and found that the order sought by RBC constitutes an "order made by a court" under PIPEDA. The Court ordered that Scotiabank disclose the mortgage discharge statement to RBC. The Supreme Court overruled the Court of Appeal's decision in Citi Cards.

The Court agreed that financial information is generally extremely sensitive; it is one of the types of private information that falls at the heart of a person's "biographical core". However, the degree of sensitivity of specific financial information is a contextual determination. The sensitivity of financial information, here the current balance of a mortgage, 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 mortgagor, mortgagee, and directly affected third parties. When mortgages are registered electronically on title, the principal amount of the mortgage, the rate of interest, the payment periods and the due date are made publicly available.

The Court observed, as had the courts below, 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". 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.

The more intriguing statements made by the Court related to the reasonable expectations of borrowers and lenders, and the rule of the Court in enforcing those expectations. For example, the Court held that a reasonable person borrowing money knows that, if he or she defaults on a loan, his or her creditor will be entitled to recover the debt against his or her assets. It follows that a reasonable person expects that a creditor will be able to obtain the information necessary to realize on its legal rights. From the opposite perspective, it would be unreasonable for a borrower to expect that as long as he or she refused to provide the information, a creditor would never be able to recover the debt.

At the end of the day, it is not exactly clear how far the principles set out in this case extend. Would the same principles apply in a situation where a borrower is applying for a second mortgage? Obviously, the potential new lender, even before it has made the loan will seek to obtain information regarding the relationship between the borrower and the existing first mortgagee. Could it be argued, based on the comments made by the Supreme Court of Canada in Trang, that any borrower applying for a loan cannot reasonably expect that the lender will not communicate with, and request information from, existing creditors, in order to assess risk, value, etc. and therefore express consent (although obviously prudent to obtain) is unnecessary?

It can be argued that the Supreme Court is making clear that commercial cases should always be interpreted in the context of the legitimate and objective expectations of reasonable commercial parties in the same circumstances. To be sure, these are not new ideas, and this is not the first time a Court has encouraged this approach. Nonetheless, Trang represents a potentially-important case in Canadian commercial law. As the dissenting judge at the Court of Appeal, Justice Hoy said, and the Supreme Court agreed: "overly formalistic and artificial interpretations of the law...and a legal system which is unnecessarily complex and rule-focused is antithetical to access to justice". It remains to be seen whether this signals a new direction in which the interests of all litigants will be interpreted to include the interest of "big bad banks" and other lenders to obtain timely and cost effective loan enforcement.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions