IT.CAN Newsletter/Bulletin
November 30, 2016/30 novembre 2016

Supreme Court permits disclosure of mortgage document over debtor’s privacy objections

Though financial information is generally “sensitive”, a mortgage discharge statement is much less so and debtor impliedly consents to its disclosure

In a proceeding brought by the Royal Bank of Canada against a debtor, the bank required the mortgage discharge statement held by Scotiabank in order to complete a sheriff’s sale of the property. Scotiabank took the view, following Citi Cards Canada Inc. v. Pleasance, 2011 ONCA 3, that the discharge statement is “personal information” and that the Personal Information Protection and Electronic Documents Act (“PIPEDA”) prohibits its disclosure unless there is consent or a court order. The debtor would not consent.

The Royal Bank brought a motion for such an order and was denied, citing the Citi Cards case. The Ontario Court of Appeal upheld this decision.

Ultimately, in front of the Supreme Court of Canada (Royal Bank of Canada v. Trang), the Court overruled Citi Cards and made some interesting observations that likely have broader application. The Court principally considered two questions: first, would the order sought by the Royal Bank satisfy the consent exception in PIPEDA that permits disclosure pursuant to a court order? Secondly, is there implied consent so that a mortgage discharge statement can be disclosed to a judgement creditor?

On the first question, the Court was clear that a creditor can seek and obtain such an order, and that the order would satisfy the provisions of PIPEDA:

[31] Further, it is clear that this is a case in which it was appropriate to make an order for disclosure. The majority of the Court of Appeal observed that a party seeking an order under rule 60.18(6) must demonstrate “difficulty” in enforcing its judgment, and that “courts should be reticent to require strangers to the litigation to appear on a motion” (para. 77). Hoy A.C.J.O. concluded, however, that rule 60.18(6)(a) can be applied less cautiously where a mortgagee is being examined in order to obtain a mortgage discharge statement. I agree. As Hoy A.C.J.O. noted, a mortgagee is not a stranger to the litigation in the sense that its interest in the property is at issue as well — the sheriff requires the mortgage discharge statement in part to settle the priority between mortgagees and creditors. Moreover, in practice, only the mortgagee can produce a mortgage discharge statement.

[32] I also agree with Hoy A.C.J.O. regarding the application of rule 60.18(6). I conclude that an order requiring disclosure can be made by a court in this context if either the debtor fails 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 fails to attend a single judgment debtor examination. A creditor who has already obtained a judgment, filed a writ of seizure and sale, and completed one of the two above-mentioned steps has proven its claim and provided notice. Provided the judgment creditor serves the debtor with the motion to obtain disclosure, the creditor should be entitled to an order for disclosure. A judgment creditor in such a situation should not be required to undergo a cumbersome and costly procedure to realize its debt. The foregoing is a sufficient basis to order Scotiabank to produce the statement to RBC, and I would so order. But there is more in the present case.

On the second question, the Court effectively determined that an order – while available – is not necessary. It can be given under implied consent. PIPEDA provides that implied consent can be applicable where the information is less sensitive. Though financial information is generally considered to be sensitive, the Court noted that the information in a mortgage discharge statement is at the less sensitive end of that spectrum. PIPEDA also states that the reasonable expectations of the individual are relevant in the circumstances.

[43] Turning to the reasonable expectations of the individual, the parties disagree on the appropriate scope of the inquiry. The Privacy Commissioner submits that only the relationship between the Trangs as mortgagors and Scotiabank as mortgagee is relevant to assessing the Trangs’ reasonable expectations in the circumstances; the relationship between the Trangs and RBC has no role to play. On the other hand, RBC argues that the party receiving the disclosure is a relevant consideration when determining the Trangs’ reasonable expectations.

[44] In my view, when determining the reasonable expectations of the individual, the whole context is important. This is supported by the Office of the Privacy Commissioner’s consideration of context in various decisions: PIPEDA Report of Findings No. 2014-013; PIPEDA Case Summary No. 2009-003; PIPEDA Case Summary No. 311. Indeed, 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”: L. M. Austin, “Reviewing PIPEDA: Control, Privacy and the Limits of Fair Information Practices” (2006), 44 Can. Bus. L.J. 21, at p. 38.

[45] As the motion judge observed in the initial motion, and as I have already noted, 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 (CanLII), 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.

Looking at the situation and assuming a “reasonable debtor”, the Court found implied consent:

[48] Here, RBC is seeking disclosure regarding the very asset it is entitled to, and intends to, realize on. A reasonable person borrowing money knows that if he defaults on a loan, his creditor will be entitled to recover the debt against his 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 refused to comply with his obligation to provide information, his creditor would never be able to recover the debt.

Interestingly, the Court did not consider or comment on whether this implied consent that would have existed initially had been or could be overridden by the debtor’s clear refusal of consent that was communicated during the collection proceedings.

Searching for Devices Capable of Accessing the Internet

Search warrant for internet capable devices implies examination of devices found

The Alberta Court of Appeal was required to deal with the margin between simply “seizing” electronic devices and “searching” them with its decision in R. v. King. The accused was convicted of possession of child pornography and breach of probation, following a search of a computer found in his possession. He argued on appeal (as he had at trial) that the police had acted unlawful in obtaining the evidence: he was unsuccessful in both courts.

The accused had previously been convicted of possession of child pornography and was on probation. Among the terms of his probation were that he was not allowed to have internet access at his residence and that he was not allowed to possess any device capable of accessing the internet. Rather surprisingly, in light of that, at a visit with his probation officer he gave her a copy of his business card, which contained not only his address and home phone number, but a website, an email address and a cell phone number. The probation officer investigated further and discovered that there was an active internet subscription at the accused’s apartment, and so she provided that information to the police.

The police obtained a warrant which authorized a search of the accused’s residence for devices “capable of accessing the internet”. While executing the warrant (and after waiting briefly for the accused to open the door), the police found a laptop under some couch cushions. The power indicator lights were on, and so the police opened the laptop. When they did so, an application called “IMVU”, which was a chat room, was operational in full screen. Two avatars were onscreen in the chat room, one significantly smaller than the other, and the two were positioned in a sexually provocative manner. The chat room was also decorated with large teddy bears. The officer testified as to the nature of his examination of the computer at the time, which he described as “cursory”:

10… Just photgraphed [sic] it, attempted to document what was being displayed on the screen there, and then after I have satisfied I had photographs of, of the window that was up and live, because I could lose that if the laptop were to lose power or be shut down or something, it could be volatile information … Certain applications that were being displayed in the status bar on the computer, I just photographed what those were, one of which you can see as I hovered the mouse over it was IMVU. I checked the disk configuration in the computer just to see what kind of hard drives and storage were in it, photgraphed [sic] that, and then I went back to the open window that was on the screen when I first turned it on, which had multiple tabs in it and photographed the contents of those tabs, again to preserve what was there since, after we shut this computer down, that information will be gone.

As a result of those observations the police sought and obtained a general warrant to search the contents of the laptop: the search under that warrant turned up child pornography.

The accused argued, however, that the general warrant ought not to have been issued. He argued that the initial examination of his laptop at the apartment was an unlawful search, and therefore that the observations could not be used as the basis for obtaining a general warrant. The Alberta Court of Appeal rejected that argument.

The search predated the Supreme Court of Canada’s decision in R v Vu, which had created the rule that a warrant authorizing the search of a location must specifically authorize the search of an electronic device found therein if a search of that device is to be permitted under the warrant. Nonetheless they found that the search conducted here was specifically authorized. The nature of the officer’s search, they concluded, was not to discover the contents of the laptop, but to discover whether it was a device “capable of accessing the internet”, which was exactly what they were permitted to do. The Court of Appeal held:

[19] We agree that there is no breach of s 8 Charter but rest our conclusion on the basis that the face and wording of the first warrant authorized an assessment of whether the device was “capable of accessing the internet”. The warrant authorized actions that incorporated a defined and limited purpose which bridges the strict demarcation between search and seizure pressed by the appellant. In our view, there is no ambiguity in the search warrant. It authorized steps to determine whether an electronic device, which obviously contemplated and included a computer, was capable of accessing the internet. There existed, therefore, prior judicial authorization that permitted the search of electronic devices to ascertain their connectivity to the internet. The authorizing judge would have taken into account the privacy interests associated with a computer.

[20] The evidence at trial was that one cannot determine if a device can access the internet by an external examination. A brief examination of some sort would be necessary to accomplish the authorized purpose. One way of doing that, especially when transitory evidence may be lost, is to see if the device was actually connected to the internet at the time of the seizure. We agree with the Crown who noted the appellant’s argument that the police were not permitted to check devices to see if they could access the Internet: “If correct, this would lead to the absurd result that the warrant authorized the police to search for these devices, but denied them any practical way to know if they had found them.”

Nude Selfies and Breach of Contract

Community not shocked by intimate images

A different aspect of the non-consensual sharing of intimate images arose for the Ontario Superior Court of Justice in

Zigomanis v. 2156775 Ontario Inc. (c.o.b. D'Angelo Brands). The plaintiff was a hockey player who had signed an endorsement contract with the defendant, which the defendant had later purported to terminate: the plaintiff maintained that this was a breach of the contract. There were a number of issues in the case, one of which concerned the so-called “morals clause” in the contract.

One of the provisions in the contract permitted the defendant to terminate it if the plaintiff “commits any act which shocks, insults, or offends the community, or which has the effect of ridiculing public morals and decency”. Some time after the contract was signed, two pictures of the plaintiff appeared on the internet, one showing his buttocks and the other showing his genitals. Neither showed his face, and for some time the plaintiff maintained publicly and to his hockey team that the pictures were not of him, though considerable publicity at the time was reporting that it was. In fact they were pictures which the plaintiff had taken prior to signing the contract and which he had sent to his then-girlfriend. He had no involvement with them being placed on the internet, and indeed hired a lawyer in an attempt to have them removed.

The defendant purported to rely on these pictures as a violation of the morals clause entitling them to terminate the contract. The trial judge disagreed, for several reasons.

First, the trial judge noted that temporally the morals clause was concerned with actions of the plaintiff, not of someone else. Here the posting of the images was done without his knowledge or consent, and so that was not his action.

Second, to the extent that the plaintiff had undertaken any actions, that was in taking the photographs and sending them to his girlfriend. Temporally, however, all of that occurred before the plaintiff had signed the contract, and the morals clause did not cover past actions.

Finally, the judge concluded, even if the clause could be interpreted to apply to past actions, the plaintiff’s behaviour did not breach the clause. Ultimately, the judge decided, taking nude photos of oneself and sending them to a willing recipient is not conduct which shocks, insults or offends the community. The judge held:

[56] The private communication of intimate information is a fact of life that is not a new phenomenon. Private letters, poems, sketches, photographs and the like, containing intimate information, have been exchanged between individuals for centuries, in the expectation that they would remain private between sender and recipient. Therefore, for consenting adults to communicate in such a fashion, with an expectation of privacy, would not, in my view, be likely to shock, insult, or offend the community or ridicule public morals and decency.

[57] In recent years, new methods of communication have emerged that enable individuals to exchange information via email, text message and in numerous other ways. Many people choose to privately exchange intimate information and photographs in this fashion. This reality has been recognized and the privacy of such communications has been protected by the Parliament of Canada. In 2014, Parliament amended the Criminal Code to create the offence of "publication of an intimate image without consent": Criminal Code, R.S.C., 1985, c. C-46, as amended, s. 161.1. The Province of Manitoba has enacted legislation to create the tort of “non-consensual distribution of intimate images”: see The Intimate Image Protection Act, C.C.S.M. c. I87, s. 11.

[58] In light of historic practices, the realities of modern communication, individuals’ continuing expectations of privacy and the protection given to such communications by legislators, I conclude that to send an intimate photograph to another consenting adult by electronic means would not be likely to shock, insult, or offend the community or ridicule public morals and decency. It follows that, in my opinion, the defendant cannot rely on the past act of Mr. Zigomanis in sending the photographs to his girlfriend as triggering s. 10(b)(iii). Thus, this defence fails as well.

Publication ban on Twitter direct messages granted in judicial review of police investigation

Disclosing explicit text messages before the formal investigation would be detrimental to the proper administration of justice

In the wake of a well publicized scandal involving the Chief Constable of the Victoria Police Department, the a judge of the Supreme Court of British Columbia in Elsner v British Columbia (Police Complaint Commissioner) has imposed an interim sealing order related to embarrassing materials. Chief Constable Elsner had been the subject of an internal investigation when it the Mayors of Victoria and Saanich received information that he had been exchanging explicit and inappropriate direct messages on Twitter with a police officer employed by another police department, who was also the spouse of one of the Chief Constable’s officers.

Elsner sought judicial review of the decision to conduct an external investigation and in connection with the proceeding petitioned the Court to impose a publication ban on the identities of the other officers involved and on the content of the direct messages. First and foremost, Elsner argued that the order would protect the privacy of those involved and he also argued that the direct messages were unlawfully obtained. Finally, he argued that such investigations are required to be confidential under the province’s Police Act.

The test for such a discretionary common law order is well established as the Dagenais/Mentuck test, which states (quoted at para 27):

A publication ban should only be ordered when:

(a) such an order is necessary in order to prevent a serious risk to the proper administration of justice because reasonably alternative measures will not prevent the risk; and

(b) the salutary effects of the publication ban outweigh the deleterious effects on the rights and interests of the parties and the public, including the effects on the right to free expression, the right of the accused to a fair and public trial, and the efficacy of the administration of justice.

The Court reasoned that if the direct messages were unlawfully obtained and would be excluded from the investigation, it is premature to permit them to be released at this stage:

[40] With respect to the requested publication ban on the Twitter exchanges, if, on the hearing of the petition in this case, I am persuaded that the acquisition of the Twitter messages was the result of an unlawful and unauthorized search of the petitioner’s Twitter account, it would be unfair and unreasonable to have permitted their publication at this stage of the proceedings. As a decision on that issue will not be made until I hear the petition, I find that the petitioner’s privacy interest must be protected until the issue is fully argued.

The Court also noted that because the investigation is intended to be confidential, consistent with the statutory scheme, sacrificing that confidentiality at this stage would be detrimental to the proper administration of justice.

With respect to the identities of the other officers involved, the Court found that the Dagenais/Mentuck test was not made out. The caselaw has established that such orders will not be granted to protect a purely personal interest. The Court reasoned:

[44] The privacy interests of innocent persons are amongst the factors to be considered in applying the Dagenais/Mentuck test: see Vickery v. Nova Scotia Supreme Court (Prothonotary), 1991 CanLII 90 (SCC), [1991] 1 S.C.R. 671. The petitioner contends that in this case, those interests include those of Officer A as well as those of her family.

[45] I am not, however, persuaded that the privacy interests of Officer A warrant the exclusion of her Twitter exchanges with the petitioner. Both she and the petitioner were police officers at the time that they exchanged messages, and both are accountable for their conduct as set out in the Act.

[46] While the petitioner asserted that his family would be adversely affected by further publicity and disclosure of the information he seeks to avoid, I am not persuaded that such concerns could justify the orders he seeks, and would not rely on these grounds to grant the orders sought and set out at para. 9 above.

While the order would not issue, the petitioner was permitted to withdraw the affidavits that contained these materials.

I Saw It on the Facebook…

Personal injury plaintiff undermines claim (in two different ways) via Facebook use

In Dhaliwal v. Randhawa, Justice Butler of the British Columbia Supreme Court presided over a negligence trial arising from a motor vehicle accident in which the plaintiff suffered soft tissue injuries. While the defendant contested liability Justice Butler held that it was clear that he was 100% responsible for the accident, and the rest of the judgment dealt with the plaintiff’s claim for damages for his injuries and in particular chronic pain arising therefrom, which he argued was severe and ongoing. The defence sought to cast doubt on this, emphasizing the plaintiff’s “very active social and recreational life which can be seen from his Facebook postings.”

Justice Butler found much of the plaintiff’s medical evidence to be of dubious value and as not establishing much beyond the plaintiff having some chronic discomfort in his shoulders and back which he managed with chiropractic sessions. The overall credibility of the plaintiff’s case that his injuries continued to impair him was undermined by his Facebook account, which the court described as follows:

His Facebook postings show that he purchased a sport-style motorcycle in February 2015 and rode it in and around the Lower Mainland area. He has taken part in white-water rafting, hiking and has taken trips to Winnipeg, India and London. In addition, he regularly lifts weights and runs on a treadmill at the gym, although he says he has curtailed the workouts somewhat.

The plaintiff also claimed for loss of working capacity due to his injuries, on the basis that he had planned to become a police officer or firefighter and was curtailed from doing so. Justice Jackson reviewed the plaintiff’s employment history and concluded that it was his attitude and approach to his work that was holding him back from becoming a firefighter, rather than his injuries (which were, in fact, not preventing him from attaining the needed physical standard). Facebook figured in here again as the evidence disclosed that the plaintiff had a history of making bad choices:

He had previously been suspended [from an earlier job with Canada Cartage] for loading errors, including one instance where he was responsible for a trailer which was loaded incorrectly and fell off its support. It caused damage to the trailer and to the roof of the building and put the safety of employees at risk. To make matters worse, he posted photos of the damaged trailer and building on Facebook.

Mr. Dhaliwal’s employment record with Canada Cartage would negatively impact the possibility of future employment opportunities with any police force. He has also made Facebook postings critical of the police. This is unwise for someone who professes an interest in police work.

In the end, Justice Jackson awarded damages to the plaintiff but with no award for loss of future income.

“Oh, THAT Facebook Message”

Man has conviction overturned on the basis of Facebook messages sent by complainant to his girlfriend

In R. v. A.B., the Ontario Court of Appeal heard a motion for admission of fresh evidence on an appeal from the accused’s three convictions for sexual assault and one for uttering threats. The accused had been convicted after a jury trial which centred around evidence that the complainant, the accused’s former spouse, had undergone non-consensual sex with the accused three times during a 26-month period. The accused admitted the sex but testified that it was consensual on each occasion. At trial, the accused’s lawyer sought to cross-examine the complainant regarding a Facebook message she had sent to the accused’s then-girlfriend (now wife), around midway through the time period in which the alleged assaults had occurred. “It would not be unfair,” commented the Court, “to say that the message recounted several incidents of sexual activity between the appellant and complainant and made it clear that the sexual activity was consensual on the complainant’s part.” The complainant had disavowed any knowledge of the Facebook message and denied sending it, and the judge had directed the jury to disregard all of the evidence about it.

The appellant appealed his conviction, and had a forensic analysis conducted on his wife’s computer, which was able to retrieve the message and determine that neither its content nor its date had been tampered with. The analyst also concluded that the message had been sent from an IP address associated with the complainant’s brother. When interviewed about this information, the complainant admitted having sent the message. The Court of Appeal agreed to admit all of this as fresh evidence on the appeal, as it went to the central issue at trial which was the credibility of the complainant on the element of non-consent. The Crown having conceded that the authentication of the message warranted withdrawing the charges entirely, the Court of Appeal ordered a new trial and then stayed it.

Contemptible Tweeting

Court upholds finding of contempt for parent who Tweeted about child, in violation of court order

In Friedlander v. Claman, the British Columbia Court of Appeal heard an appeal from a lower court finding of contempt on the part of the mother in a contentious divorce and custody proceeding. Earlier court orders had prohibited the parties from posting information in any form of social media about either the proceedings or the child. As part of contempt proceedings alleging 32 separate breaches of the orders, the father alleged that the mother had breached this particular condition. The Court of Appeal summarized the lower court’s findings on point:

The Initial Order prohibited the parties from posting anything about the proceedings or the child on any form of social media. The father attached as exhibits to his affidavit tweets from the mother’s Twitter account referring to the proceedings and information about the child. The mother responded that she was just re-tweeting the information and showing photos of the child that did not include her face. She claimed that was not a breach of the Initial Order, and that it was her “intern” who posted the material.

The judge did not find this explanation credible and found the mother guilty of one count of contempt with respect to this term of the Initial Order.

The Court of Appeal affirmed this finding, holding that it was amply supported by the evidence before the lower court judge.