Court File and Parties

COURT FILE NO.: CV-12-109087
DATE: 20120426
SUPERIOR COURT OF JUSTICE - ONTARIO

RE: In the Matter of an Application under Rules 14.05(3)(d), (g) and (h) of the Rules of Civil Procedures

And in the Matter of the Purchase of All of the Assets of Southlake Regional Health Centre Employees’ Credit Union Ltd., by its purchaser The Energy Credit Union Ltd.

BEFORE: The Honourable Mr. Justice P. D. Lauwers

COUNSEL:
Naaila Sangrar, for The Energy Credit Union

Penny-Lynn Rintoul, for Southlake Regional Health Centre Employees’ Credit Union Ltd.

HEARD: By written submissions, April 26, 2012

ENDORSEMENT

[ 1 ] The Applicants in this matter are the Southlake Regional Health Centre Employees’ Credit Union Ltd. (“Southlake C.U.”) and The Energy Credit Union Ltd. (“Energy C.U.”). They seek an order under section 7(3)(c) of the Personal Information Protection and Electronic Documents Act , 2000, c. 5 T-8.6 (“PIPEDA”) that Southlake C.U. may disclose the personal information of identifiable individuals to Energy C.U., but only to the extent necessary to complete and implement a proposed Asset Purchase Agreement and assume the assets and liabilities of Southlake C.U. . It is proposed that Energy C.U. be permitted to continue to use the personal information provided to it in a manner identical to the prior use of such information by Southlake C.U. and ensure that such information is destroyed.

Background Facts

[ 2 ] Southlake C.U. and Energy C.U. are credit unions incorporated under the Credit Unions and Caisses Populaires Act , 1994, S.O. 1994, c. 11 (the “CUCPA”).

[ 3 ] The parties have entered into an Asset Purchase Agreement expected to close on or about May 31, 2012. Under the Agreement Energy C.U. will assume all of the deposits of Southlake C.U.’s member and will purchase the portfolio of all of Southlake C.U.’s outstanding mortgages and loan agreements. The parties assert that “the acquisition of the assets and the assumption of the liabilities of Southlake C.U. by Energy C.U., is in the best interests of Southlake C.U. and its members because the merger will create a Credit Union far more capable of serving the needs of members and a more secure and cost effective manner.”

[ 4 ] Energy C.U. has agreed to assume all the deposits of Southlake C.U.’s 856 members and all of Southlake C.U.’s members will become members of Energy C.U. The members of Southlake C.U. have been notified of the pending transaction and a meeting will be held on May 3, 2012.

[ 5 ] For the Asset Purchase Agreement to be implemented efficiently and effectively, certain personal information about identifiable individuals that Southlake C.U. collected will have to be disclosed and transferred to Energy C.U., particularly the pertinent information regarding its members whose accounts will be transferred as assumed by Energy C.U. This disclosure and transfer of personal information is essential to the successful implementation of the Agreement. Without it, it would be impossible for Energy C.U. to manage the purchased and assumed accounts or to perform many other normal and regular activities necessary to manage and operate a credit union including honouring members’ withdrawal requests. The transaction should proceed quickly in order to protect the depositors and Southlake C.U.’s system from any disruption.

The Issue

[ 6 ] Under section 7(3) (b) of PIPEDA, the disclosure of personal information “for the purpose of collecting a debt owed by the individual to the organization” may be made without the knowledge or consent of the individuals concerned. However, it is unclear whether disclosure of personal information as part of the assumption of liabilities is permissible under PIPEDA.

[ 7 ] The parties assert that “it is impractical to obtain consents from this number of people in a timely way.” Instead, Southlake C.U. has ensured that Energy C.U. has an appropriate privacy policy that will continue to protect the depositors’ privacy. I am satisfied, based on the material filed, that the privacy policies of Energy C.U. are at least stringent as the existing policies of Southlake C.U. so that members will be fully protected.

[ 8 ] Energy C.U. submits that the contemplated disclosure falls within the type of disclosure that is considered reasonable, appropriate and permissible without consent under PIPEDA. Sections 3 states that the purpose of Part I of PIPEDA is to establish rules to govern the collection use and disclosure of personal information in a manner that recognizes both the right of privacy of individuals, and the need of organizations to collect, use or disclose personal information for reasonable purposes.

[ 9 ] Clause 4.3 of Schedule 1 of PIPEDA provides that the knowledge and consent of the individual are required for the collection, use or disclosure of personal information, except where inappropriate. Section 7 of PIPEDA lists those situations where it would be inappropriate to require the knowledge and consent of the individual in order to collect use or disclose personal information. Under section 7 (3)(c), one such situation is where a Court so orders.

[ 10 ] Farley J. granted an order very similar to the one sought here to the Deposit Insurance Corporation of Ontario (“DICO”) in Re London & District School Staffs’ Credit Union Limited , Court File No. 04-CL-5648, dated November 30, 2004 (Ont. S.C.J. – Commercial List). In that case, DICO acted as liquidator for the London & District School Staffs’ Credit Union Limited, whose assets, and therefore members’ personal information, were sold to the London Civic Employees’ Credit Union Limited. To conclude the sale, DICO needed to be able to transfer the members’ personal information so that, as here, the purchaser could properly manage and administer the purchased and assumed accounts. In granting the order, Farley J. suggested that PIPEDA should be amended: “Certainly this type of situation should be addressed to avoid unnecessary court applications.”

[ 11 ] Similar orders have been made by other Justices of the Superior Court:

(i) In the Matter of a Plan of Compromise or Arrangement of PSINET Limited , Court File No. 01-CL-4155; Endorsement and Order of Farley J., dated June 1, 2001 (Ont. S.C.J.);

(ii) In the Matter of Mariposa Community Credit Union Limited , Court File No. 07-CL- 6876; Endorsement of Justice Pepall, dated February 14, 2007 (Ont. S.C.J. – Commercial List) - Mariposa Community Credit Union Limited’s assets sold to Kawartha Credit Union Limited;

(iii) In the Matter of the Winding-Up of Portuguese Canadian (Toronto) Credit Union Limited , by its administrator, Deposit Insurance Corporation of Ontario, Court File No.: 09-C-8150; Order of Marrocco J. dated April 28, 2009 (Ont. S.C.L. – Commercial List);

(iv) In the Matter of the Purchase of Sunnybrook Credit Union by Meridian Credit Union , Court File Number 10-CU-008835-00LC; Order of Pepall J. dated July 30, 2010 (Ont. S.C.J.) ;

(v) In the Matter of the Purchase of Air Toronto Credit Union by Starnews Credit Union , Court File Number CV-10-8861-00CL; Order of Newbould J. dated August 20, 2010 (Ont.S.C.J.) ;

(vi) In the Matter of the Purchase of Campbell’s Employees’ (Toronto) Credit Union by Starnews Credit Union , Court File Number CV-10-8932-00CL; Order of Morawetz J. dated October 14, 2010 (Ont.S.C.J.);

(vii) In the Matter of the Purchase of So-Use Credit Union by Ukrainian Credit Union , Court File Number CV-10-8948-00CL; Order of Morawetz J. dated October 26, 2010 (Ont.S.C.J.);

(viii) In the Matter of the Purchase of Prime Financial Savings and Credit Union by FirstOntario Credit Union , Court File Number 10-23882; Order of Whitten J. dated November 22, 2010 (Ont.S.C.J.);

(ix) In the Matter of the Purchase of Community Savings and Credit Union by Sudbury Credit Union , Court File Number A-12 115-10; Order of Del Frate J. dated December 31, 2010 (Ont. S.C.J.);

(x) In the Matter of the Purchase of some of the assets of Provincial Alliance Credit Union by Boomerang Credit Union , Court File Number 4242-11; Order of Gorman J. dated May 25, 2011 (Ont. S.C.J.);

(xi) In the Matter of the Purchase of Sheridan Park Credit Union Ltd. by Prosperity One Credit Union Ltd. , Court File Number 3868/11; Order of Goodman J. dated July 14, 2011 (Ont. S.C.J.);

(xii) In the Matter of the Purchase of Food Family Credit Union Ltd. by Luminus Financial Services & Credit Union Ltd. , Court File Number 11-435870; Order of Low J. dated September 28, 2011 (Ont. S.C.J.);

(xiii) In the Matter of the Purchase of Lasco Employees’ (Whitby) Credit Union Ltd. by The Energy Credit Union Ltd. , Court File Number 11-9434CL; Order of Morawetz J. dated October 21, 2011 (Ont. S.C.J.);

(xiv) In the Matter of the Purchase of Scarborough Hospitals Employees’ Credit Union Ltd. by Prosperity One Credit Union Ltd. , Court File number 11-9435CL; Order of Morawetz J. dated October 26, 2011 (Ont. S.C.J.) [unreported]

[ 12 ] It is evident from this long list of cases that Farley J. was prescient in suggesting that “this type of situation should be addressed to avoid unnecessary court applications.” I join Farley J. in urging that a route be provided that will permit the disclosure of the necessary personal information in such circumstances as these to avoid wasting the court’s time and the parties’ funds.

[ 13 ] The order sought is granted in the terms of the draft order filed:

1. THIS COURT ORDERS that pursuant to section 7(3)(c) of the Personal Information Protection and Electronic Documents Act , 2000, c. 5 (“PIPEDA”) that:

(i) Southlake Regional Health Centre Employees’ Credit Union Limited (“Southlake C.U.”), may disclose the personal information of identifiable individuals to The Energy Credit Union Limited (“Energy C.U.”), but only to the extent necessary to complete and implement the agreement to purchase and assume the assets and liabilities of Southlake C.U. that Energy C.U. and Southlake C.U. are expected to enter into prior to the closing of the transaction on or around May 31, 2012.

(ii) Energy C.U. shall be entitled to continue to use the personal information provided to it in a manner identical to the prior use or such information by Southlake C.U. and shall ensure that such information is destroyed.

Justice P. D. Lauwers

RELEASED: April 26, 2012