REASONS FOR JUDGMENT
COURT FILE NO.: 6464/10
DATE: 2012-06-06
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
ROYAL BANK OF CANADA Plaintiff – and – PHAT TRANG and PHIONG TRANG aka PHUONG THI TRANG Defendants
Justin R. Winch, for the Plaintiff, Moving Party
No one appearing for the Bank of Nova Scotia, Responding Party
HEARD: May 16, 2012
GRAY J.
[ 1 ] The plaintiff is an execution creditor of the defendants. In this motion, it seeks to compel a mortgagee, the Bank of Nova Scotia, to provide a discharge statement, so that the plaintiff can realize on its judgment against the defendants. The sheriff will not sell the defendants’ property without a discharge statement from the mortgagee. The mortgagee refuses to provide such a statement.
[ 2 ] The plaintiff, and this Court, are immediately confronted with a decision of the Court of Appeal that appears to prevent the plaintiff from obtaining the order it seeks: Citi Cards Canada Inc. v. Pleasance (2011), 2011 ONCA 3 , 103 O.R. (3d) 241 (C.A.). In that case, the Court held that the requested statement could not be provided because of a federal statute, the Personal Information Protection and Electronic Documents Act ( PIPEDA). The plaintiff argues persuasively that Citi Cards was delivered per incuriam , or is distinguishable.
[ 3 ] I am not persuaded that Citi Cards was delivered per incuriam , nor is it distinguishable. I am bound by it. Thus, with some regret, I dismiss the plaintiff’s motion for the reasons that follow.
Background
[ 4 ] Rather than paraphrase, I will simply set out the contents of the affidavit (without exhibits) sworn in support of this motion by James M. Satin, a partner with the law firm representing the plaintiff, as follows:
I am a partner with the law firm of Devry Smith Frank LLP (“ DFS” ), lawyers for the plaintiff, Royal Bank of Canada (“RBC”), in this matter. As such, I have knowledge, information and belief of the matters hereinafter deposed. Where the information set out herein is not within my personal knowledge, I have identified the source of that information, and I believe that information to be true.
I swear this affidavit in support of a motion for an Order that The Bank of Nova Scotia (“BNS”) provide to the applicant, RBC, as an execution creditor of the respondents, Phat Trang (“Phat”) and Phuong Trang AKA Phuong Thi Trang (“Phuong”) the mortgage discharge statement (the “Statement”) relating to the mortgage registered against the Property (as defined below) in favour of BNS.
In order to explain the circumstance of the within motion, I would advise this Honourable Court of the following:
a) Attached hereto and marked as Exhibit “A” to this my affidavit is a true copy of the Bank’s judgment in this matter dated December 17, 2010 (the “Judgment”).
b) RBC filed a writ of seizure and sale (the “writ”) with the Sheriff of the City of Toronto against Phat and Phuong. The writ has been filed with the Sheriff for more than one (1) year.
c) In order to determine Phat and Phuong’s ability to satisfy the Judgment, an examination in aid of execution of Phat and Phuong was scheduled for April 5, 2011 (the “Examination”).
d) Attached hereto and marked collectively as Exhibit “B” to this my affidavit are true copies of the Notices of Examination with respect to the Examination addressed to Phat and Phuong together with the affidavits of service of same.
e) On April 5, 2011, I attended the Examination at the offices of Devry Smith Frank LLP located 95 Barber Greene Road, Suite 100, Toronto, Ontario M3C 3E9 at 9:00 a.m. Despite having been served with the Notices of Examination with respect to same, Phat and Phuong did not appear. Attached hereto and marked as Exhibit “C” to this my affidavit is a true copy of the Certificate of Non-Attendance.
f) On November 15, 2011, RBC’s lawyers, DSF, requested the Statement from BNS. In the letter, DSF explained that it intended to collect on the Judgment by instructing the Sheriff to sell the defendants’ interest in the property municipally known as 334 Sentinel Road, Toronto, Ontario (the “property”) pursuant to a sheriff’s sale (the “Sheriff’s Sale”). RBC further explained that before it can exercise its legal rights and remedies by proceeding with the Sheriff’s Sale, it needed the Statement from BNS who holds a mortgage against the Property.
g) On November 23, 2011, BNS advised DSF that it would not provide the Statement because the Bank of Nova Scotia (“BNS”) did not believe that the applicant was entitled to receive the statement. BNS advised that they thought that the Statement constituted personal information as defined by the Personal Information Protection and Electronic Documents Act , S.C. 2000, c.5 (“PIPEDA”) and consequently, BNS was unable to give the Statement to the applicant unless they had authorization from Phat and Phuong.
h) Following BNS’s refusal to provide the statement, RBC brought a motion to compel Phat and Phuong’s attendance at a newly scheduled Judgment Debtor Examination at which we hoped to get the required authorization. The motion was granted on January 5, 2012. Attached hereto and marked as Exhibit “D” to this my affidavit is the Order.
i) DSF scheduled a second examination in aid of execution of Phat and Phong returnable on February 17, 2012 (The “Second Examination”). Attached hereto and marked collectively as Exhibit “E” to this my affidavit are true copies of the Notices of Examination with respect to the Second Examination addressed to Phat and Phuong together with the affidavits of service of same.
j) Despite being served with Notices of Examination with respect to the Second Examination, as well as the court order compelling their attendance, Phat and Phuong did not attend at the Second Examination. A Certificate of Non-Attendance was obtained. Attached hereto and marked as Exhibit “F” to this my affidavit is a true copy of the Certificate of Non-Attendance.
RBC intends to collect on the Judgment by instructing the Sheriff to sell the defendants’ interest in the property pursuant to a sheriff’s sale. There is a first mortgage registered against the property in favour of BNS for $262,500 registered on November 21, 2005 as Instrument No. AT984917. RBC requires the Statement from BNS so that it can exercise its legal rights and remedies by proceeding with the Sheriff’s Sale.
Had Phat and/or Phuong, attended at either the Examination or Second Examination, RBC would be entitled to the Statement from Phat and Phuong, or alternatively authorization to obtain the same direction from BNS.
Given that Phat and Phuong failed to attend at the examinations, RBC is left with acquiring the mortgage statement from BNS or having the judgment go unenforced.
The Defendants did not defend the Bank’s action and are therefore not entitled to notice of this motion.
In light of the foregoing, I believe that this is a just and proper circumstance for this Honourable Court to order BNS to provide the Statement to RBC, without Phat and Phuong’s consent, so that it is able to enforce its judgment.
[ 5 ] The plaintiff’s judgment was obtained on December 17, 2010, in the amount of $26,122.76, and a writ of execution in that amount has been on file with the Sheriff for more than one year. While not stated in the affidavit, I will assume that the mortgage held by the Bank of Nova Scotia, in the face amount of $262,500, is not in default and is in good standing.
[ 6 ] In the final analysis, in this case, the Sheriff will not proceed to sell the defendants’ property without a discharge statement from the Bank of Nova Scotia.
Submissions
[ 7 ] Mr. Winch, counsel for the plaintiff, submits that Citi Cards was delivered per incuriam .
[ 8 ] Furthermore, Mr. Winch submits that Citi Cards is distinguishable.
[ 9 ] For these reasons, Mr. Winch submits that the plaintiff should be granted an order requiring the Bank of Nova Scotia to furnish a discharge statement.
Analysis
[ 10 ] What is sought by the plaintiff here was, in years past, provided almost as a matter of course.
[ 11 ] In many cases, statements of this sort are provided with the consent of the mortgagor.
[ 12 ] In some cases, however, statements of this sort will be sought without the express consent of the mortgagor.
[ 13 ] In years past, and as is still the case with respect to mortgagees under provincial jurisdiction, a mortgagee would routinely provide a statement.
[ 14 ] Since the enactment of PIPEDA , federally–regulated banks have been reluctant to provide such statements.
[ 15 ] In Citi Cards , Blair J.A. for the Court referred to this issue as a “knotty and interesting question”.
[ 16 ] At para. 17 of his judgment, Blair J.A. noted that PIPEDA prohibits organizations from disclosing “personal information” without the knowledge or consent of the affected individual.
[ 17 ] Blair J.A. held that information contained in a mortgage discharge statement is “personal information” of the debtor.
[ 18 ] One of the arguments made was that the statute provided an exemption for information required to comply with a court order.
[ 19 ] Another argument was that the order requested could be made because the information was required by law.
[ 20 ] At para. 37, Blair J.A. stated, in obiter , “There may well be situations where a financial institution could be ordered to make such information available as the result of a rule 60.18(6)(a) motion.”
[ 21 ] Rule 60.18(6)(a) provides as follows:
Examination of Person other than Debtor
(6) Where any difficulty arises concerning the enforcement of an order, the court may,
(a) make an order for the examination of any person who the court is satisfied may have knowledge of the matters set out in subrule (2);
[ 22 ] What this rule contemplates is an order for an examination, not an order for the provision of information directly.
[ 23 ] As noted earlier, counsel for the plaintiff argues that Citi Cards was delivered per incuriam .
[ 24 ] In David Polowin Real Estate Ltd. v. Dominion of Canada General Insurance Co. (2005), 2005 21093 (ON CA) , 76 O.R. (3d) 161 (C.A.), Laskin J.A., at para. 111, stated that the per incuriam doctrine is restricted.
[ 25 ] It is noteworthy that in David Polowin itself, having held that the per incuriam principle was inapplicable, the Court of Appeal proceeded to hold that one of its earlier decisions, McNaughton Automotive Ltd. v. Co-operators General Insurance Co . (2001), 2001 21203 (ON CA) , 54 O.R. (3d) 704 (C.A.), was wrongly decided.
[ 26 ] I will refer to the arguments arising from certain statutory provisions later in these reasons.
[ 27 ] Nor to I agree that Citi Cards is distinguishable.
[ 28 ] Having held that I am bound by Citi Card , and thus precluded from ordering the Bank of Nova Scotia to provide a mortgage discharge statement, I confess to some disquiet about the result.
[ 29 ] What is sought to be disclosed, fundamentally, is the state of account between the mortgagee and mortgagor.
[ 30 ] For many years, statutes regulating land registration, now reflected in the Land Registration Reform Act , have required the disclosure of the state of account as between mortgagee and mortgagor at the outset of the relationship.
[ 31 ] The state of account does not simply govern the rights of the immediate parties to the transaction.
[ 32 ] Regardless of the stated face amount of the mortgage, the mortgagee has priority only with respect to the amount actually advanced under it.
[ 33 ] Once the principal amount of the mortgage is reduced, the amount outstanding defines the value of the equity of redemption.
[ 34 ] Under the Execution Act , it is clear that land may be sold in order to satisfy a judgment.
[ 35 ] Certain provisions of the Execution Act are particularly germane.
[ 36 ] It seems to me that the rights reflected in these provisions would be somewhat illusory if the execution creditor is unable to ascertain the value of the “interest of the mortgagor” in the land.
[ 37 ] While the issue is not before me, it seems to me that the same considerations would apply in the case of a sale under power of sale by a second mortgagee.
[ 38 ] How do these considerations intersect with PIPEDA ?
[ 39 ] Second, there are certain aspects of PIPEDA that may suggest a different approach.
[ 40 ] It should be noted that it is not sought, in these circumstances, to open up to public scrutiny the entire relationship between a bank and its customer.
[ 41 ] Subject to certain exceptions, s. 7(3) of PIPEDA prohibits the disclosure of personal information.
[ 42 ] The operative provisions that deal with consent are actually found in Schedule 1 of PIPEDA .
[ 43 ] Section 4.3.6 of Schedule 1 provides as follows:
The way in which an organization seeks consent may vary, depending on the circumstances and the type of information collected.
[ 44 ] Thus, the notion of implied consent is specifically recognized in the Schedule.
[ 45 ] Furthermore, since the exercise of the express right recognized under the Execution Act to sell the equity of redemption depends on knowing what the equity of redemption is worth.
[ 46 ] There is also an argument that the mortgagee is required to disclose the information pursuant to s. 7(3) (b) of PIPEDA.
[ 47 ] These interpretive considerations may be assisted, in my view, by what Professor Sullivan refers to as a “consequential analysis”.
[ 48 ] Parliament has obviously considered it important to preserve as private the personal information about an individual.
[ 49 ] Before closing, I will refer to the Alberta case of Toronto Dominion Bank v. Sawchuk (2011), 2011 ABQB 757 .
[ 50 ] In that case, Master Schlosser was asked to decide whether he could order a first mortgagee to provide a mortgage payout statement to a foreclosing second mortgagee.
[ 51 ] Master Schlosser held that Citi Cards was distinguishable.
[ 52 ] At para. 8, Master Schlosser stated:
Even if this case were not distinguishable from the case at bar, I decline to follow it.
[ 53 ] Unlike Master Schlosser, I do not have the luxury of declining to follow a decision of the Ontario Court of Appeal.
Disposition
[ 54 ] For the foregoing reasons, the motion of the plaintiff to require the Bank of Nova Scotia to provide a mortgage discharge statement is dismissed.
[ 55 ] Since the Bank of Nova Scotia did not appear on this motion, this is obviously not a case for costs.
GRAY J.
Released: June 6, 2012
COURT FILE NO.: 6464/10
DATE: 2012-06-06
ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN:
ROYAL BANK OF CANADA Plaintiff – and – PHAT TRANG and PHIONG TRANG aka PHUONG THI TRANG Defendant
REASONS FOR JUDGMENT
GRAY J.
Released: June 6, 2012