SCC renders practical privacy decision on mortgage information

The Supreme Court of Canada, in Royal Bank v Trang, made a privacy decision that will bring a sigh of relief to lenders and creditors.

A judgment creditor asked the sheriff to seize and sell a house to satisfy the judgment.  To do that, the sheriff needed to know how much was owed on the mortgage on the house.  The mortgage lender didn’t have express consent to provide the information, and said PIPEDA prevented it from giving it.  Lower courts agreed.

But the SCC took a more practical approach.  The issue was whether there was implied consent to release that personal information.  The SCC said there was.

They interpreted implied consent in a broader perspective, looking at the entire situation, including the legitimate business interests of other creditors.  Financial information is considered to be sensitive personal information, and thus in general faces a higher threshold for implied consent.  But in this context, they held that it is a reasonable expectation of a debtor for a mortgage lender to provide a discharge statement to another creditor wanting to enforce its rights against that property.

Cross-posted to Slaw

Supreme Court of Canada – is electricity consumption personal information?

The Supreme Court of Canada just released a decision in R v Gomboc  that dealt with whether the use of a device to measure electricity consumption at a suspected grow-op without a warrant (its purpose was to form the basis to get a warrant) was proper.

The court held that is was acceptable.  The case is not as helpful as it might be for precedent value though, as it hinged on specific Alberta regulations, and the reasons for judgment were split.  Some of the judges felt there was no reasonable expectation of privacy – while some felt there was, but that the regulation overrode that expectation.

For more detail, see commentary by David Fraser, Brian Bowman, and on the Canadian Technology & IP Law blog.

Destroy sensitive info before you toss it

For the London Free Press – May 11, 2009

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In R. v. Patrick, released by the Supreme Court of Canada last month, the court considered whether one has a reasonable expectation of privacy over the contents of garbage once it’s put out at the curb.

The issue arose from the defendant’s contention that police breached his constitutional right to be free from unreasonable search and seizure when it took his garbage bags.

Police suspected the defendant was operating an ecstasy lab, so they seized bags of garbage he had placed at the rear of his property beside a public alley. It’s notable that police actually had to reach over the property line to obtain the garbage bags.

The Supreme Court ultimately held that the defendant had abandoned his privacy interest when he placed the garbage bags for collection where they were accessible to any passerby.

In assessing the reasonableness of a privacy interest, the court said it should look at the “totality of the circumstances” and indicated that its decision might have been different if the garbage had been on a porch or in a garage.

Indeed, in determining whether someone has “abandoned” property, the Supreme Court said courts should consider both the location of the discarded property and the intention of the privacy claimant.

Some privacy advocates prefer the dissenting but concurring opinion in the case, which said there should be a reasonable suspicion of criminal activity before somebody’s trash can be perused, but this dissent wasn’t the opinion of the court as a whole.

The dissenting opinion was that household waste left for disposal is only “abandoned” for the specific purpose of reaching the waste disposal system. Therefore, the homeowner’s privacy interest in regard to personal information was not abandoned when trash was put out at the curb.

In any event, the dissenting opinion held that there was evidence of reasonable suspicion before the police obtained the garbage bags.

It’s important to point out that R. v. Patrick is a criminal case, so strictly speaking it does not apply to civil matters. But until a court decides otherwise, it is reasonable to assume that the same logic would apply to civil matters.

In the criminal context, the decision puts restrictions on how police investigations should be conducted to ensure any evidence obtained will be admissible in court.

For the average person or business, Patrick simply reinforces the need to be careful what you throw out. Because, depending on where your garbage ends up, it could be used by anybody — and you could be left with no legal recourse.

If you’re disposing of sensitive information that’s to specific privacy obligations, privacy laws dictate that it must be destroyed first.

But the bottom line in Patrick is this: if you’re going to throw out any sensitive information, destroy it first.

Ignored contract is still in force, top court says

For the London Free Press – March 16, 2009

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The Supreme Court of Canada recently rejected a lower court’s decision that you can’t enforce a contract that you’ve demonstrated no intention to comply with.

In Jedfro Investments (U.S.A.) Ltd. vs. Jacyk Estate, the top court actually upheld the outcome of the Ontario Court of Appeal’s decision, but on very different grounds. The Court of Appeal decision was the subject of a column published Nov. 3, 2006 (see canton.elegal.ca/2006/ 11/06/ignoring-written-deals-risky).

In the Jedfro case, three investors entered into a joint-venture agreement to purchase, develop and sell property in the United States.

The investors bought the property using cash and a promissory note. They intended to make payments on the promissory note by selling lots. But when the real estate market plummeted, the investors couldn’t meet their payment obligations, and the noteholder threatened to foreclose.

The joint-venture agreement contained provisions to deal with such a situation by providing a method for one party to buy any of the other parties out.

But instead of this occurring, one of the investors paid off the note on behalf of the other two, with no new agreement as to how he’d be compensated.

One of the other investors agreed to a profit-sharing deal to compensate the investor for paying off the promissory note.

The third investor, however, couldn’t come to terms about what he’d give the payer, so the plaintiff sued the payer of the note, arguing he had breached the original joint-venture agreement under which all were to share proportionally any profits of the joint venture.

The trial judge dismissed the action, holding that none of the parties had relied on the joint- venture agreement and it was therefore inappropriate for the court to force the parties to abide by its terms.

The Court of Appeal upheld the trial judge’s decision, saying that if parties ignore the terms of a deal, they can’t later enforce the ignored terms against the others.

Essentially, the appeal court held that contracting parties can’t ignore an agreement when it doesn’t benefit them, then ask the court to enforce the same agreement when it does benefit them.

The matter was further appealed to the Supreme Court, which upheld the previous decisions but disagreed with the lower courts’ reasoning.

The top court held that there are many ways to discharge a contract, including by performance, agreement, frustration, or by repudiatory or fundamental breach. But unless a contract is discharged by one of these methods, it remains in force and the parties remain bound by it.

Specifically, the Supreme Court held that, “while the parties may have ignored the joint-venture agreement, the obligations under it remained in effect.”

This decision represents a significant effort by the Supreme Court to reel in previous case law and send a clear message that contracts will remain in force and binding on the parties until discharged.

In other words, simply ignoring a written contract will not make the agreement go away.

Employment contracts require care

For the London Free Press – March 2, 2009

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A recent Supreme Court of Canada decision sent a message to employers to draft employment contracts carefully, holding that it’s inappropriate to rewrite restrictive covenants in most cases.

In Shafron vs. KRG Insurance Brokers (Western) Inc., the court dealt with a 15-year employee. His employment contract included a covenant forbidding him from being employed as an insurance brokerage in the “Metropolitan City of Vancouver” for three years after the end of his employment with KRG.

In 2001, the employee left KRG and began working at another insurance brokerage in Richmond, B.C. KRG commenced an action, arguing he was violating the restrictive covenant.

Restrictive covenants on employees are considered contrary to public policy because they’re viewed as a restraint on trade. In other words, they can prevent an individual from earning a living. Courts construe them very narrowly and won’t enforce them if they stray beyond certain accepted norms.

Courts are more inclined to enforce clauses that prevent a former employee from contacting customers of the former employer they dealt with or that prevent the employee using a former employer’s proprietary or confidential information.

Courts evaluate the reasonableness of a restrictive covenant based on its geographic and temporal scope and the scope of the work it seeks to prohibit. But reasonableness cannot be defined if the restrictive covenant is ambiguous.

In Shafron, the Supreme Court ruled that they could not assess the reasonableness of the covenant because the term “Metropolitan City of Vancouver” did not make clear what geographic location it was trying to exclude.

The court set out two possible ways of correcting an ambiguous covenant.

“Notional severance” includes “reading down” part of the restrictive covenant so the remainder is legal and therefore enforceable.

The court held that it is never appropriate to use notional severance to correct an ambiguous restrictive covenant because it amounts to the court rewriting the employment contract.

Such a remedy would cause problems because it would let employers draft overly broad restrictive covenants, knowing the courts will reduce unreasonable parts to make them reasonable.

The second method is “blue-pencil severance,” which involves removing the illegal or overbroad part of a restrictive covenant, then enforcing the rest.

The court held that blue-pencil severance is “only possible if the judge can strike out, by drawing a line through, the portion of the contract they want to remove, leaving the portions that are not tainted by illegality, without affecting the meaning of the part remaining.”

The court said blue-pencil severance should only be used in the rarest of circumstances and only when the removed portion does not affect the overall intended purpose of the contract provision.

Ultimately, the court held that neither amendment method was appropriate in the Shafron case and ruled the restrictive covenant was too ambiguous to uphold.

SCC decision on priviledge and Privacy commissioner powers

The Supreme Court of Canada has just stated that a privacy commissioner cannot look at documents over which solicitor client priviledge has been claimed in order to determine if priviledge has been properly claimed.   This is in the highly anticipated (well, at least for privacy lawyers) decision in the Canada (Privacy Commissioner) v. Blood Tribe Department of Health case.

For more detail see David Fraser’s post

Supreme Court of Canada refuses copyright levy on MP3 players

The SCC yesterday refused to hear an appeal of the private copying decision case.

This means that the private copying levy that was for a while charged on MP3 players is no longer applicable.

While this saves Canadians from paying that levy on MP3 players, it also puts into question the legality of copying music on to them. One of the reasons private copying of music in Canada is felt to be legal is the copyright tariff that is part of the private copying regime under the Copyright Act.

A couple of blog postings worth reading are Michael Geists discussion of the ramifications, and Techdirt’s thoughts on the music industry’s reaction.

Read Michael Geist’s post

Read the Techdirt post