Focus On

Creditors & Debtors Law - EXECUTION - Writ - Filing - With sheriff - Seizure - Sale by sheriff or bailiff

Thursday, December 01, 2016 @ 7:00 PM  


Appeal by the Royal Bank of Canada (RBC) from a judgment of the Ontario Court of Appeal affirming a decision which denied RBC’s motion for an order compelling the Bank of Nova Scotia (Scotiabank) to produce a mortgage discharge statement. The appeal raised the issue of the proper interpretation of the Personal Information Protection and Electronic Documents Act (PIPEDA). The RBC was a judgment creditor of Phat and Phuong Trang (the Trangs) and sought a sheriff’s sale of the Trangs’ property, for which the sheriff required a mortgage discharge statement. The RBC had been unable to obtain the statement from the Trangs and thus brought a motion to compel the Scotiabank, the Trangs’ mortgagee, to produce the mortgage discharge statement. The motion judge denied the RBC’s motion and the majority of the Court of Appeal upheld the motion judge’s decision. The Court of Appeal concluded that a mortgage discharge statement was “personal information” for the purposes of PIPEDA, and that the Trangs did not impliedly consent to disclosure of the mortgage discharge statement. It declined to overrule prior jurisprudence set out in the Citi Cards decision and observed that the exceptions in PIPEDA for disclosure ordered by a court (under s. 7(3)(c)) and required by law (under s. 7(3)(i)) did not apply. The majority of the Court of Appeal also observed that RBC could have obtained the mortgage discharge statement in other ways. For example, the RBC could have obtained the Trangs’ consent to disclosure by including an appropriate term in its loan agreement. Further, the RBC could have applied for a motion under rule 60.18(6)(a) of the Rules of Civil Procedure to get an order for the examination of a representative of Scotiabank. Under rules 34.10(2)(b) and 34.10(3), Scotiabank would be required to bring the mortgage discharge statement to the examination. Such an order would satisfy the exemption in s. 7(3)(c) of PIPEDA.

HELD: Appeal allowed. PIPEDA governed the collection, use and disclosure of personal information by organizations in the course of commercial activities. In general, PIPEDA prohibited organizations from disclosing “personal information” without the knowledge and consent of the affected individual. However, as a result of s. 7(3), PIPEDA did not diminish the powers courts had to make orders, and did not interfere with rules of court relating to the production of records. Further, PIPEDA did not interfere with disclosure that was for the purpose of collecting a debt owed by the individual to an organization, or disclosure that was required by law. The order sought by the RBC constituted an “order made by a court” under s. 7(3)(c), therefore Scotiabank was ordered to disclose the mortgage discharge statement to the RBC. The Citi Cards decision was overruled. The motion judge had the power under either the Rules of Civil Procedure or the inherent jurisdiction of the court to order disclosure. The mere fact that the rule number was not pled was not fatal. It would be overly formalistic and detrimental to access to justice to conclude that the RBC must make yet another application to obtain the order it sought. An order requiring disclosure could be made by a court in this context if either the debtor failed to respond to a written request that he or she sign a form consenting to the provision of the mortgage discharge statement to the creditor, or failed to attend a single judgment debtor examination. A creditor who had already obtained a judgment, filed a writ of seizure and sale, and completed one of the two above-mentioned steps had proven its claim and provided notice. The state of account between the mortgagor and mortgagee affected more than just the relationship between them. It also affected other creditors. A mortgage discharge statement was not something that was merely a private matter between the mortgagee and mortgagor, but rather was something on which the rights of others depended, and accordingly was something they had a right to know. A reasonable person would consider it appropriate for a mortgagee to provide a mortgage discharge statement to a judgment creditor who had obtained a writ of seizure and sale of the mortgaged asset from the court and filed it with the sheriff. Consent for the purpose of assisting a sheriff in executing a writ of seizure and sale was implicitly provided at the time the mortgage was given.