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.