Supreme Court of Canada Ruling on Sensitive Information and “Implied Consent” under PIPEDA

The case of Royal Bank of Canada v Trang, 2016 SCC 50 was recently before the Supreme Court of Canada. In its decision, Justice Côté issued a rare and notable interpretation of implied consent under Canada’s Personal Information Protection and Electronic Documents Act (PIPEDA).

In this case, the two individual Respondents (the Trangs), had defaulted on a Royal Bank of Canada (RBC) loan for the mortgage of a Toronto property. In order to recover the money, RBC sought a judicial sale of the property, which could not be done without first obtaining a mortgage discharge statement from Scotiabank, who had held the first mortgage on the property.

Scotiabank refused to provide RBC with this statement, arguing that the document contained the Trang’s personal information, and thus could not be produced without their (the Trang’s) prior consent.

As a result, RBC applied for a court order to enable disclosure of the document. In doing so, RBC relied on the exceptions in PIPEDA that allow for the disclosure of personal information without consent in certain circumstances. RBC argued that the relevant circumstances include:

(i) When disclosure is for the purpose of collecting a debt owed by an individual to the organization;

(ii) When disclosure is required to comply with an order made by a court; or

(iii) When disclosure is required by law.

Thus, at issue was whether, in light of PIPEDA, Scotiabank was precluded from disclosing the mortgage discharge statement to RBC without the Trang’s consent. Since Scotiabank refused to produce the statement, RBC applied for a court order to enable disclosure without consent. As a result, the Justice Côté for the Supreme Court of Canada considered the second exception put forward by RBC; namely, that disclosure of personal information can be made without consent when it is required to comply with an order made by the court.

In evaluating the evidence and the nature of the mortgage discharge statement itself, Justice Côté acknowledged that financial information is considered “generally extremely sensitive” (para 36); this is significant because according to PIPEDA, express consent is generally required when information is of a sensitive nature. However, Justice Côte stated that determining the degree of sensitivity of specific financial information is a contextual analysis. As a result of applying such an approach, the Court ruled that the mortgage discharge statement was to ultimately be considered less sensitive. In reaching this decision, the Court stated that 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 (para 36). Subsequently, the Court’s reasonings including the following:

• when mortgages are registered electronically on title, the Land Registration Reform Act has mandated that the financial details are also publicly registered; these details include the principal amount of the mortgage, the rate of interest, the payment periods, and the due date (para 36);

• a mortgage discharge statement is not something that is merely a private matter between the mortgagee and the mortgagor, but rather is something on which the rights and legitimate business interests of other creditors depends; this was stated to be a relevant part of the context which informs the reasonable expectation of privacy (para 45);

• the identity of the party seeking disclosure of the information, as well as the purpose for doing so was also deemed relevant: “disclosure to a person who requires the information to exercise an established legal right is clearly different from disclosure to a person who is merely curious or seeks the information for nefarious purposes” (para 46);

• a reasonable mortgagor in the same circumstances as the Trangs would be cognizant of the fact that if they had ever defaulted, their mortgaged property could be seized and sold, thus also giving a judgment creditor the legal right to obtain disclosure of the mortgage discharge statement either through examination or by bringing a motion (para 47).

As a result of its contextual analysis, Justice Côté ultimately held that the character of the mortgage discharge statement was “less sensitive” in nature. Subsequently, Schedule 1, cl. 4.3.6 of PIPEDA acknowledges that consent can be implied when the information is “less sensitive”. As a result, Justice Côté concluded that the circumstances of the case justified the finding that the Trangs had given implied consent to the disclosure of the mortgage statement by Scotiabank to RBC.