Canada: The Supreme Court Of Canada Strengthens The Judgment Creditor Tool Box

Last Updated: June 7 2017
Article by Scott Gfeller

Collecting can be a pain. Getting a judgment is one thing but getting paid is a different ball game entirely, particularly when privacy legislation stands in the way of pursuing certain remedies. However, the Supreme Court of Canada in Royal Bank of Canada v. Trang, [2016] 2 SCR 412 recently provided a practical and balanced interpretation of privacy rights under the Personal Information and Electronic Documents Act (the "Act") as they relate to the disclosure of personal information by financial institutions.

One of the most valuable tools for judgment creditors is to file a Writ of Seizure and Sale against a judgment debtor. The Writ encumbers any land owned or subsequently acquired by the judgment debtor. Practically speaking, if the judgment debtor seeks to sell or mortgage their land, they will first have to pay out your judgment.

Once a Writ has been filed, judgment creditors can direct the Sheriff to seize and sell real property owned by the judgment debtor. The Sherriff is empowered to do so by the Execution Act, R.S.O. 1990, c. E.24. However, if the judgment debtor's property is subject to a mortgage, which is often the case, judgment creditors are required to obtain a current mortgage statement from the mortgagee (lender) so the Sherriff can ascertain the mortgagee's interest in the property. Until recently, this posed a major road block for judgment creditors as institutional mortgagees have been wary to disclose their clients' personal information without express consent to do so. Fear no more.

Background of decision

Phat Trang and Phuong Trang (the "Trangs") had a $35,000 unsecured loan through Royal Bank of Canada ("RBC") which they defaulted on. In December 2010, RBC obtained judgment against the Trangs for $26,122.76 plus interest and costs and filed a Writ of Seizure and Sale with the Sheriff in Toronto. The Trangs owned a property in Toronto which was subject to a first mortgage in favour of the Bank of Nova Scotia ("BNS") in the principal amount of $262,500. However, the Sheriff would not sell the property unless RBC provided a mortgage statement from BNS who refused to do so on the basis that it would contravene the privacy protections set out in the Act.

The Trangs ignored RBC's attempt to conduct an examination in aid of execution. RBC did, however, examine a representative of BNS who appeared voluntarily (not by court order) and maintained the refusal to produce a current mortgage statement for the Trangs. Cue RBC's motion to compel BNS to do so.

RBC's motion was heard by Justice Gray on June 18, 2013, and was not opposed by BNS (or the Trangs). Nevertheless, Justice Gray held that he was bound by the unanimous decision of the Court of Appeal for Ontario in Citi Cards Canada Inc. v. Pleasance (2011), 2011 ONCA 3 (CanLII) where the Court found that a mortgage discharge statement was "personal information" as defined by the Act and was precluded from disclosure without the mortgagor's consent. In doing so, the Court noted that Act did not "contemplate a balancing between the privacy rights of the individual and the interests of a third-party organization that may by happenstance have commercial dealings with the individual that make the targeted information attractive to it".

On June 16, 2014, RBC's appeal of Justice Gray's decision was heard by the Court of Appeal for Ontario. The majority upheld Justice Gray's decision but noted that RBC could have brought a motion under Rule 60.18(6)(a) of the Rules of Civil Procedure which provides that "[w]here any difficulty arises concerning the enforcement of an order, the court may make an order for the examination of any person who the court is satisfied may have knowledge of the matters...". The Court went on to note that the combined obligations under Rule 60.18(6)(a) and Rule 34.10 (which requires parties to bring all relevant records to an examination) would have satisfied the exception in section 7(3)(c) of the Act which permits an organization to disclosure personal information without the consent of the individual if the disclosure is required to comply with a court order. Unfortunately for RBC, their motion was not brought under Rule 60.18(6)(a) and the Court was prepared to send them back to the drawing table.

Given that RBC was asking the Court of Appeal to overrule it prior decision in Citi Cards, the Court sat as a panel of five and Justice Hoy, who wrote a lengthy dissent, appointed the Privacy Commissioner of Canada as amicus curiae. Neither BNS nor the Trangs responded to the appeal. In her dissent, Justice Hoy reasoned, amongst other things, that it was "immaterial whether a judgment creditor purports to move under [Rule 60.18(6)(a)] or (as here) simply asks the court for an order requiring disclosure". A glimmer of practicality shines through.

On November 17, 2016, the Supreme Court of Canada unanimously allowed RBC's appeal and ordered BNS to produce the mortgage discharge statement to RBC. The basis for the SCC's decision was twofold, (i) the order sought by RBC constituted an "order made by a court" under section 7(3)(c) of the Act which permitted the disclosure of personal information without consent of the individual, and (ii) the Trangs impliedly consented to the disclosure of the mortgage discharge statement by BNS to RBC.

In terms of the first issue, the SCC disagreed with Justice Gray and the Court of Appeal who both concluded that the order sought by RBC did not constitute an "order made by a court" given that the order had not yet actually been made. According to the lower Courts, it was a circular argument. This reasoning was consistent with the decision in Citi Cards where Justice Blair held that "[e]ven the most liberal interpretation of the legislation cannot lead to such a pliant result". However, the SCC held that the Act does not diminish the Court's authority to make orders requiring disclosure and that it would be "overly formalistic and detrimental to access to justice" to require RBC to bring yet another motion under Rule 60.18(6)(a). The Court found the distinction to be "artificial". On a practical level, the Court noted 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". Well said.

On the second, arguably more important issue, the Court relied upon Schedule 1, cl. 4.3.6 and Schedule 1, cl. 4.3.5 of the Act which acknowledges there can be "implied consent" in connection with "less sensitive" information and that the reasonable expectations of the individual are a relevant consideration. In the end, the SCC found that the information contained on the mortgage discharge statement was "less sensitive" and that a reasonable person would expect that a creditor would have access to the information it required in order to recover against the debtor's assets. This resulted in the SCC unanimously concluding that "...consent for the purpose of assisting a sheriff in executing a writ of seizure and sale was implicitly given at the time the mortgage was given". After two attendances before Justice Gray, two trips to the Court of Appeal for Ontario and a visit to Ottawa, RBC can finally collect of the Trangs' debt.

Practical Implications

It goes without saying that RBC took one for the team. This was a $26,000 problem that made it all the way to the Supreme Court of Canada. Clearly, RBC (as a frequent judgment creditor) saw this as a road block that needed clearing. Quite frankly, it was a much needed shift from an otherwise difficult to understand stance by our province's highest appellate Court. It was also an important decision regarding access to justice and balancing the legislated right of individuals to protect against the disclosure of their personal information. The Court must continue to strike a balance so that the enforcement of orders is not unreasonably frustrated and remains economically viable. Going forward, financial institutions can rely on the SCC's decision in acceding to the requests of judgment creditors in similar circumstances. As Justice Hoy aptly noted in her dissent, "[t]his equates to the elimination of a non-trivial barrier to justice, particularly for creditors trying to enforce relatively modest claims".

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 Mondaq.com.

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

Authors
 
In association with
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
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
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (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 www.mondaq.com

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 Mondaq.com’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.

Disclaimer

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.

Registration

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 by clicking here .

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 unsubscribe@mondaq.com 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.

Cookies

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.

Links

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.

Mail-A-Friend

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.

Security

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 webmaster@mondaq.com.

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 EditorialAdvisor@mondaq.com.

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 enquiries@mondaq.com.

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