Damages (Credit Reporting)

Nammo v. TransUnion of Canada Inc., 2010 FC 1284 (CanLII)

[34] PIPEDA recognizes the reality that organizations collect, use, and disclose personal information. The acceptable purposes for collection, use and disclosure are those described in s. 3 of PIPEDA, namely those that “a reasonable person would consider appropriate in the circumstances.” These are not necessarily the standards set by or for an industry. In this respect, I agree with the following statement of the PCC in its Report:

TransUnion has taken the position that it acted at all times in accordance with the Alberta Fair Trading Act and section 3.3(2) of the Credit and Personal Reports Regulation of the Act. It takes the position that PIPEDA has no application in these circumstances. I disagree. PIPEDA sets out independent obligations that must be respected by all organizations covered by the Act. The fact that TransUnion may have respected its obligations under the Fair Trading Act does not mean that it can ignore the obligations under PIPEDA.

Lastly, I note that nowhere in the Accuracy Principle or in Schedule I is there any reference to industry standards. If all industries had standards that equalled the scheme in PIPEDA, then the Act would have been unnecessary. To now tie the two together would be to neuter the Act and its impact.

[40] Credit information, such as that supplied by TransUnion, has one use: to allow credit grantors to make informed, reliable and objective decisions. Informed, reliable and objective decisions require that the information on which the decisions are based meets a high standard of accuracy, completeness and currency. This role of credit information and credit agencies such as TransUnion was described by Justice Feldman of the Ontario Court of Appeal in Haskett v Equifax Canada Inc. et al., 2003 CanLII 32896 (ON CA), (2003) O.J. No. 771, para 29, as follows:

Credit is an integral part of everyday life in today's society. Not only people seeking loans, mortgages, insurance or car leases, but those who wish, for example, to rent an apartment or even obtain employment may be the subject of a credit report, and its contents could well affect whether they are able to obtain the loan, the job or the accommodation. Credit cards are a basic form of payment but their availability is also limited by one's creditworthiness. Without credit, one is unable to conduct any financial transactions over the telephone or on the internet. As credit is so ubiquitous, there is nothing exceptional about consumer reliance on credit reporters to carry out their function not only honestly, but accurately, with skill and diligence and in accordance with statutory obligations. [emphasis added]

[43] I find that the applicant’s personal information in the possession of TransUnion was not “as accurate, complete, and up-to-date as is necessary for the purposes for which it is to be used” (clause 4.6) and was not “sufficiently accurate, complete, and up-to-date to minimize the possibility that inappropriate information may be used to make a decision about the individual” (clause 4.6.1). I agree with the findings of the PCC that TransUnion failed to meet its obligations under clauses 4.6 and 4.6.1 and thus breached PIPEDA.

[66] Section 16 of PIPEDA provides that “[t]he Court may, in addition to any other remedies it may give … award damages to the complainant, including damages for any humiliation that the complainant has suffered.” This provides the Court with exceptionally broad power to award damages. Nevertheless, any damages awarded must be awarded on a principled basis, and be appropriate and just in the circumstances.

[68] I am satisfied that in the circumstances experienced by Mr. Nammo it would be the exceptional person who would not be humiliated. He had partnered with a friend to undertake a business; his role was to secure financing because he was creditworthy while his friend was not, and the loan was approved subject to the credit check, which came back indicating that Mr. Nammo had poor credit. Mr. Nammo then had to inform his partner of this result. Although he said to his partner that the information was wrong, the credit reporting service said that it would take up to 30 days to investigate, during which time the opportunity and partnership were lost. In addition, RBC officials were provided with information that led them to conclude that the applicant was not a good credit risk. The reasonable person, knowing that the assessment made of his creditworthiness must be incorrect, would be humiliated at having to face and to protest to both his prospective partner and to bank officials. The reasonable person would suffer additional humiliation when the error was not clearly corrected by informing RBC and the credit applicant that an error was made, that there was no debt owed by the applicant, and that the error had been corrected.

[72] In Vancouver (City) v Ward, 2010 SCC 27, the Supreme Court awarded damages for a breach of the Charter even though it found that the breach was not “intentional, in that it was not malicious, high-handed or oppressive” and even though no financial loss had been proven. The Supreme Court addressed the different goals of awarding damages for a Charter breach; these include compensation, for which loss is relevant, but also vindication and deterrence, for which loss is not a determinative factor. At paras. 25 and 30, the Court wrote that:

For damages to be awarded, they must further the general objects of the Charter. This reflects itself in three interrelated functions that damages may serve. The function of compensation, usually the most prominent function, recognizes that breach of an individual’s Charter rights may cause personal loss which should be remedied. The function of vindication recognizes that Charter rights must be maintained, and cannot be allowed to be whittled away by attrition. Finally, the function of deterrence recognizes that damages may serve to deter future breaches by state actors. [emphasis in original]

…

However, the fact that the claimant has not suffered personal loss does not preclude damages where the objectives of vindication or deterrence clearly call for an award. Indeed, the view that constitutional damages are available only for pecuniary or physical loss has been widely rejected in other constitutional democracies… [emphasis added]

[73] At paras. 51-52, the Court explained the process for arriving at the quantum of damages:

When we move from compensation to the objectives of vindication and deterrence, tort law is less useful. Making the appropriate determinations is an exercise in rationality and proportionality and will ultimately be guided by precedent as this important chapter of Charter jurisprudence is written by Canada’s courts. That said, some initial observations may be made.

A principal guide to the determination of quantum is the seriousness of the breach, having regard to the objects of s. 24(1) damages. The seriousness of the breach must be evaluated with regard to the impact of the breach on the claimant and the seriousness of the state misconduct: see, in the context of s. 24(2), R. v. Grant, 2009 SCC 32, (2009) 2 S.C.R. 353. Generally speaking, the more egregious the conduct and the more serious the repercussions on the claimant, the higher the award for vindication or deterrence will be.

[74] The Supreme Court found that “to be ‘appropriate and just’, an award of damages must represent a meaningful response to the seriousness of the breach and the objectives of compensation, upholding Charter values, and deterring future breaches.” In my view, the same reasoning applies to a breach of PIPEDA, which is quasi-constitutional legislation.

[78] In Ward, the trial judge had awarded damages of $5,000. The quantum of that award was upheld by the Supreme Court as appropriate. In so doing, the Supreme Court described the nature of the breach of Mr. Ward’s rights, which involved him being stripped searched, as follows:

The object of compensation focuses primarily on the claimant's personal loss: physical, psychological, pecuniary, and harm to intangible interests. The claimant should, in so far as possible, be placed in the same position as if his Charter rights had not been infringed. Strip searches are inherently humiliating and thus constitute a significant injury to an individual's intangible interests regardless of the manner in which they are carried out. That said, the present search was relatively brief and not extremely disrespectful, as strip searches go. It did not involve the removal of Mr. Ward's underwear or the exposure of his genitals. Mr. Ward was never touched during the search and there is no indication that he suffered any resulting physical or psychological injury. While Mr. Ward's injury was serious, it cannot be said to be at the high end of the spectrum. This suggests a moderate damages award.

[79] In my assessment, much the same can be said in this case. Although the dissemination of false credit information is not a strip search, it does lay bare to those receiving the information the creditworthiness of a person. In my assessment, it can be as equally intrusive, embarrassing and humiliating as a brief and respectful strip search. Accordingly, I have determined that Mr. Nammo is entitled to an award of damages of $5,000.00, inclusive of the humiliation he suffered as a result of the breaches of PIPEDA by TransUnion.

[80] Mr. Nammo is also entitled to a declaration that his rights under PIPEDA were breached by TransUnion, and he is entitled to a declaration that TransUnion forwarded inaccurate financial information concerning him to RBC; hopefully this will assure his potential business partner that the reason for the rejection of the loan application had nothing to do with his creditworthiness.

Neil v. Equifax Canada Inc., 2006 SKQB 169 (CanLII)

[4] The standard of care contained in s. 19 of The Credit Reporting Agencies Act provides:

Every credit reporting agency shall take reasonable steps to assure the maximum accuracy of any information in a credit report.

As providers of credit information to lending institutions, credit reporting agencies are in a position to exert considerable influence on the credit rating of individual consumers. Any error in the information reported to a lending institution has the potential of affecting the success of individual endeavours. Maximum accuracy is the goal in recording and disseminating credit information. The standard is understandably high.

[17] The second breach referred to by the Small Claims judge was a failure of the appellant to contact the Saskatoon Credit Union, the National Bank of Canada and Resort Funding LLC as required under s. 25(5) of The Credit Reporting Agencies Act. It was those breaches of the Act that the Small Claims judge found to be high-handed, callous and reckless, because the appellant acted without consideration for the requirements of the Act.

[18] McIntyre J., of the Supreme Court of Canada, in Woelk v. Halvorson, 1980 CanLII 17 (SCC), (1980) 2 S.C.R. 430, stated:

It is well settled that a Court of Appeal should not alter a damage award made at trial merely because, on its view of the evidence, it would have to come to a different conclusion. It is only where a Court of Appeal concludes that there was no evidence upon which a trial judge could have reached that conclusion, or where he proceeded upon a mistake or wrong principle, or where the result reached at trial was wholly erroneous, that a Court of Appeal is entitled to intervene.

Mercado-Castillo v Bazely, 2018 CanLII 99158 (ON SCSM)

23. The following definition of a defamatory statement was approved by Abella J.A. (as she then was) in Color Your World v. Canadian Broadcasting Corp. (1998), 1998 CanLII 1983 (ON CA), 38 O.R. (3d) 97 (C.A.), leave to appeal denied [1998] S.C.C.A. No. 170:

A defamatory statement is one which has a tendency to injure the reputation of the person to whom it refers; which tends, that is to say, to lower him [or her] in the estimation of right-thinking members of society generally and in particular to cause him [or her] to be regarded with feelings of hatred, contempt, ridicule, fear, dislike or disesteem. The statement is judged by the standard of an ordinary, right-thinking member of society. Hence the test is an objective one...

24. The question whether a communication is defamatory calls for a fact-specific analysis of the context of the communication: Baglow v. Smith (2012), 2012 ONCA 407 (CanLII), 110 O.R. (3d) 481 (C.A.), at para. 31.

25. The communication in this case is not proved in its precise words or form. Rather it is simply an accepted fact that a credit report was made about the plaintiff to one or more credit reporting agencies. The content of the report made in July 2013 according to Ms. Fraser’s evidence was simply that an overdue account owed to Anytime Fitness. It appears the amount at the time was $3,245.80 but that it had risen to $4,267 as of August 2016, suggesting additional reports were made.

27. By its nature this credit report was a report of nothing more than a claimed debt. Such a claim could eventually give rise to legal proceedings or other determinations, consensual or otherwise, resulting in a conclusion that the debt was not owed as claimed or at all. Whether it is right or fair that credit reports of disputed claims can adversely affect customers whose denials may later be vindicated, is a policy question falling beyond this court’s mandate.

28. The plaintiff cited no authority to suggest that a false report of a relatively small unpaid account is defamatory. At common law such a report could be actionable in negligence and perhaps otherwise, but here the sole cause of action advanced is defamation.

29. Applying first principles derived from the appellate authorities cited earlier, I was not persuaded on a balance of probabilities that the credit report or reports made in this case were defamatory. Many individuals in the normal course of their lives have disputes over small accounts claimed by businesses. The customer may decline to pay and the business may elect to make a credit report despite knowing that it is a disputed account. Such claims may then find their way into the credit reporting system, at least temporarily and may or may not cause chagrin to the customer. In this case it is a comparatively minor matter of gym membership dues alleged to have remained unpaid.

Clark v. Scotiabank, 2004 CanLII 34438 (ON SC)

[43] While I do not find the defendants liable for psychiatric harm or loss of financial reputation, it is clear that Mr. Clark has suffered distress caused by the negligence of each defendant: Scotiabank for having caused the error which endured so long in the first place; and Equifax for having failed to clean up the mistake when it was first, then repeatedly, brought to its attention. This distress was clearly foreseeable by the defendants. While Mr. Clark’s seeming lack of persistence in the early days might be seen to diminish any egregiousness on the part of the defendants, still the defendants caused the problem, not Mr. Clark. He went to the source of the problem vis-à-vis himself, namely Equifax. He was given assurances that Equifax would correct his credit rating if, as it said, its ratings of him were incorrect. He was entitled to rely on those assurances. Equifax did nothing for many years. Mr. Clark encountered some roadblocks as a result, but none that he was unable to work past, all the while apparently oblivious to the error not having been corrected. By the time Mr. Clark put his complaint in writing, his battle lines were drawn. I am disappointed that he refused to endeavour to negotiate toward settlement when invited to do so, but that does not erase his claim for damages.

[44] I find that Mr. Clark has suffered from intrusion on the financial integrity which he is entitled to enjoy occasioned by the negligence of the defendants. Accordingly, I attribute limited damages of $5,000 against each defendant for their respective transgressions.

Matutschovsky v. Equifax Canada Inc., 2009 CanLII 13619 (ON SC)

35] Ms. Matutschovsky also argued that Equifax had included prohibited information in the consumer report, contrary to sections 9(3)(c) and (d) of the Act. The postscript to her February 22, 2007 expressed Ms. Matutschovsky’s argument: Equifax could not include any information regarding her indebtedness under the guarantee until a final judgment had been rendered against her. Since the Supreme Court of Canada only dismissed her leave application in October, 2007, Ms. Matutschovsky argued that the January, 2007, consumer report referring to her debt was improper.

[36] There is no basis to this argument. First, the Act is clear that consumer reporting agencies can report on a person’s credit history and status, regardless of whether any indebtedness has resulted in a judgment. Second, sections 9(3)(c) and (d) prescribe how long reports of judgments may remain on a consumer report; they do not proscribe reporting on a debt before it results in a judgment.

Larizza v. The Royal Bank of Canada, 2017 ONSC 6140 (CanLII)

[57] In my view, it appears that there may have been a contravention of PIPEDA. PIPEDA defines “personal information” very broadly as “information about an identifiable individual”. PIPEDA applies to an organization, such as Minto, that “collects, uses or discloses [personal information] in the course of commercial activities”. Principle 4.3 of Part 1 of PEPIDA states that the knowledge and consent of the individual are required for the collection, use, or disclosure of personal information, except where inappropriate. In this case, Minto relies on section 7(1)(d) PIPEDA as an exception to the requirement for consent. Section 7(1)(d) provides that an organization is permitted to obtain personal information without an individual’s consent if “the information is publicly available and is specified by the regulations”, and SOR/2001-7, which is the applicable regulation made under PIPEDA, provides that information made publicly available in a registry is prescribed for the purpose of section 7(1)(d) of PIPEDA:

1(c) personal information that appears in a registry collected under a statutory authority and to which a right of public access is authorized by law, where the collection, use and disclosure of the personal information relate directly to the purpose for which the information appears in the registry.

[58] “Registry” is not defined in PIPEDA or the regulation, but I do not accept Minto’s argument that Equifax is a “registry” as intended in the regulation. The term is qualified by reference to “collected under a statutory authority”, which suggests the activities of a publicly operated land registry or other such mandated collectors of information.

[59] Accordingly, in my view, Minto may have contravened PIPEDA when it failed to obtain Ms. Larizza’s consent prior to conducting the credit check. However, this does not end the inquiry in relation to the second element of the test. Notably, contravention of a statute on its own does not give rise to a cause of action, and PIPEDA contains its own regimen for complaints, investigations and resolutions. In addition, the second element of the test requires that the defendant invade the “private affairs or concerns” of the plaintiff. In Powell v. Shirley, 2016 ONSC 3677 at para. 87, this court considered whether the information in a credit report is the type of information over which a person has a legitimate privacy interest. The Court found that credit checks do not give rise to such an interest because they tend to contain information about dealings with third parties:

Chrysler Financial Canada v. Morris, 2009 SKQB 510 (CanLII)

[198] Mrs. Morris claims punitive or exemplary damages against CFC, DaimlerChrysler and Markham. It is well established that punitive or exemplary damages awarded are not to compensate the plaintiff but to punish the defendant. Wallace v. United Grain Growers Ltd. 1997 CanLII 332 (SCC), (1997) 3 S.C.R. 701. The Supreme Court of Canada in Whiten v. Pilot Insurance Co. [2002] S.C.C. 18; (2002) 2002 SCC 18 (CanLII), 209 D.L.R. (4th) 257, sets forth guidance to judges on punitive damages. The court noted that punitive damages are much the exception rather than the rule. The Supreme Court also noted the punitive damages are only to be imposed where there has been high-handed malicious highly reprehensible misconduct.

[199] In the instance before me, there is no question that Mrs. Morris was completely frustrated with her dealings with all of the defendants. CFC, DaimlerChrysler and Markham all refused to fulfill their obligations to Mrs. Morris and took the position right up to and including the trial that it was someone else’s responsibility, including Mrs. Morris. They argued that they were all separate entities and in that respect took advantage of their position, the organization of their commercial power.

[200] While I am concerned with the conduct of the defendant parties, I am not satisfied that this case meets the test for punitive damages. The manner in which CFC, Markham and DaimlerChrysler have conducted themselves in regards to Mrs. Morris is shameful but it does not approach a level of maliciousness or reprehensibility that would constitute an entitlement to punitive damages. The plaintiff’s claim for punitive damages or exemplary damages is therefore dismissed.

[209] In the circumstances here, accurate credit reporting by CFC should have, as a minimum, necessitated an insertion of a notation that the alleged debt involved the dispute over an alleged defective vehicle. Perhaps CFC could have held off reporting to the credit agencies or withdrawn the negative report in any resolution of the dispute in court. Given Ms. Morris’ evidence about her credit record and the involvement of CFC in this dispute, there was no risk of harm that could flow to the credit community as a result of not reporting the vehicle as repossessed and disputed debt in the circumstances.

[210] In the result, I am satisfied that CFC is liable for damages to Mrs. Morris for breach of its obligation to provide accurate and complete information of its credit experience with her.

[214] Mrs. Morris shall have judgment against CFC, DaimlerChrysler and Markham jointly and severally in the amount of $11,610.48.

Dimov v. Equifax Canada Co., 2017 NSSM 1 (CanLII)

[1] Mr. Dimov claims $25,000.00 in damages against the defendant Equifax Canada Co (“Equifax”). He says that Equifax kept incorrect information containing his credit worthiness in its files. He says that he had been declined credit card applications on three occasions because of this error, as well as a car loan and a rental application. He claims as well for emotional distress and embarrassment; lost working time; and punitive damages.

[12] In making his claim Mr. Dimov relied upon two decisions involving similar fact scenarios: Neil v. Equifax Canada Inc 2005 SKPC 105, and Nammo v. Transunion of Canada Inc 2010 FC 1284. In Neil damages of $4,500.00 were awarded to a lawyer for the lost time, damage to reputation and distress associated with his efforts to fix the erroneous credit score. With great respect to O’Hanlon, PCJ (the judge in that case) I was not persuaded by the reasoning that led to that result. However, and in any event, the limit for general damages (that is, damage and loss not related to a specific and identified loss) in this court is only $100.00. I drew this to Mr. Dimov’s attention at the close of his case. At that point he wanted to withdraw his claim in order to advance it in the Supreme Court. Ms. Nicholson objected on the grounds that having come so far it was too late for Mr. Dimov to change direction. I agreed.

[13] In Nammo the claimant was awarded $5,000.00 general damages because the defendant had collected inaccurate personal information pursuant to the federal Personal Information Protection and Electronic Documents Act, disseminating that information and then failing to correct it promptly upon being advised of the error. The difficulty here is that Nammo involved a claim pursuant to federal legislation; and, in any event, resulted in an award well in excess of the jurisdiction of this court.

[18] It is to be recalled that pursuant to s.10(3)(a) of the Consumer Reporting Act Equifax was forbidden from including in a consumer report “any information unless the name and address of the source of information is recorded or retained in its files or can be readily ascertained by the consumer” (emphasis added). The point of such a requirement is obvious. It is to provide a consumer with the information necessary to enable him or her to identify and contact the entity that has supplied the disputed information to Equifax. Yet Equifax did not list the bank’s address in Mr. Dimov’s consumer report (being Ex. C3). I think I can take notice of the fact that the Bank of Nova Scotia has thousands of branches in Canada, any one of which could generate inaccurate credit information. Equifax’s failure to record the address meant that Mr. Dimov could not locate for himself the bank branch (or office) which had generated the information recorded in Equifax’s files. The fact that the only information recorded by Equifax in its consumer repot was a fax number of a hair salon in Mississauga, Ontario simply highlights Equifax’s failure to comply with its obligation pursuant to s.10(3)(a).

[19] Equifax’s difficulty in this regard is compounded by s.13(2)(a) of the Act. That section required Equifax to immediately expunge information from Mr. Dimov’s consumer file where it could not verify the disputed information. Counsel argues that Equifax’s correspondence of May 15th to the bank, and its subsequent correspondence of July 6th to Mr. Dimov, establish that it did attempt to confirm the information it had. It says that it cannot be faulted because the bank provided it with the wrong information, or erroneously confirmed it.

[20] On this point I agree with counsel that Equifax did attempt to verify the disputed information and, to that extent, satisfied its obligation under s.13(2)(a). However, the information Equifax asked the bank to confirm was itself erroneous. It contained what appeared to be a phone number for a bank branch that was in fact a fax number to a hair salon in Ontario. In the absence of any direct evidence from the bank, or from Equifax (other than its correspondence), we cannot know what–if any–impact that erroneous information had on the bank’s decision to confirm the confirmation requested by Equifax. It seems clear, however, that when Equifax attempted to confirm the disputed information it did not itself contact the bank at the number in its own records. Had it done so it would have discovered that there was an error (since the number it had was a fax number to a hair salon), and hence would have been alerted to the existence of some problem with its records. That in turn would have raised a red flag that required more than a fax to a different office of the bank to resolve. With those observations in mind I was not satisfied that Equifax had established on a balance of probabilities that it carried out its duties “with skill and diligence” as required by the authorities above noted.

[21] For these reasons I am satisfied that Equifax is liable to the claimant for a breach of its obligations under the Consumer Reporting Act. However, Mr. Dimov failed to establish any out-of-pocket damage or loss as a result of the breach. His claim accordingly sounds only in general damages, which in this court are limited to $100.00. I am satisfied that he has suffered general damages to that extent, plus costs of $100.00, and will make an order to that effect.

Albayate v. Bank of Montreal, 2015 BCSC 695 (CanLII)

[142] Ms. Albayate established that the bank breached her privacy rights and its contract with her by changing her address in its computer system without her authorization, and reporting inaccurate information to the credit bureaus, Equifax and TransUnion, and not correcting it in a timely manner when it became aware of the error.

[143] However, Ms. Albayate has not established that she suffered any damages as a result of the bank’s conduct. As a result, her claim against the bank in negligence fails. As well, she has not established that the conduct of the bank was such as to warrant an award of aggravated or punitive damages.

[144] Ms. Albayate is entitled to nominal damages in the amount of $2,000. Given the divided results, the bank and Ms. Albayate will each bear their own costs.