Docket: T-2143-12
Citation:
2015 FC 323
Toronto, Ontario, March 16, 2015
PRESENT: The
Honourable Mr. Justice Hughes
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BETWEEN:
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MARK RICHARD BLUM
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Applicant
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and
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MORTGAGE ARCHITECTS INC. AND JAMES NEUMANN
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Respondents
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JUDGMENT AND REASONS
[1]
This application is brought under the provisions
of section 16 of the Personal Information Protection and Electronic
Documents Act, SC 2000, c. 5 (“PIPEDA”) wherein the Applicant is seeking
damages of nearly $2.6 million dollars together with other damages, costs and further
relief against the two Respondents.
[2]
The Applicant, Mark Richard Blum (“Blum”), has
been in the business of buying, renting, improving and reselling properties in Ontario. For this purpose, he has secured mortgages on some of these properties. The
Respondent, Mortgage Architects Inc. (“Mortgage Architects”), is a company in
the mortgage brokering business in Canada.
[3]
The Respondent, James Neumann (“Neumann”), has
been an independent agent with the Respondent Mortgage Architects.
[4]
The Applicant Blum was involved in a series of
transactions with the Respondents, Mortgage Architects and Neumann, and with a
lawyer, Douglas Sutherland. Arising out of these transactions were two actions
initiated by Blum in the Ontario Small Claims Court. One action, against
Sutherland, was undefended at trial and resulted in an award to Blum of just
under $20,000.00. The other, against Mortgage Architects and Neumann, was
dismissed by the Court as being barred by a limitation period. Blum also instituted
proceedings under PIPEDA with the Office of the Privacy Commissioner of Canada wherein it was determined, in a report dated November 14, 2012, that the matter was
well-founded and resolved.
[5]
The present proceedings were commenced as an action
but, by Order of Prothonotary Tabib dated April 3, 2014, the action was
converted to an application. The Applicant Blum has provided, by way of
evidence, his own affidavit sworn the 12th day of May, 2104. The
Respondent Mortgage Architects have provided the Affidavit of Dong Lee, its
Vice President of Operations sworn on the 20th day of June, 2014. The
Respondent Neumann has provided his own Affidavit sworn the 23rd day
of June, 2014. There were no cross-examinations upon any of the affidavits.
[6]
Each party filed a Memorandum of Argument. The
Applicant Blum is self-represented and appeared in person before me at the
hearing. Each of the Respondents was represented by the same Counsel appearing
before me at the hearing.
[7]
The fundamental issue before me is whether the
Applicant Blum is entitled to an award under the provisions of section 16 of
PIPEDA and, if so, what is the nature and quantum of that award.
[8]
Section 3 of PIPEDA states the principal purpose
of that Act :
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3. The purpose
of this Part is to establish, in an era in which technology increasingly
facilitates the circulation and exchange of information, rules to govern the
collection, use and disclosure of personal information in a manner that
recognizes the right of privacy of individuals with respect to their personal
information and the need of organizations to collect, use or disclose
personal information for purposes that a reasonable person would consider
appropriate in the circumstances.
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3. La présente
partie a pour objet de fixer, dans une ère où la technologie facilite de plus
en plus la circulation et l’échange de renseignements, des règles régissant
la collecte, l’utilisation et la communication de renseignements personnels
d’une manière qui tient compte du droit des individus à la vie privée à
l’égard des renseignements personnels qui les concernent et du besoin des
organisations de recueillir, d’utiliser ou de communiquer des renseignements
personnels à des fins qu’une personne raisonnable estimerait acceptables dans
les circonstances.
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[9]
I also set out sections 14 and 16 of PIPEDA
wherein section 14 provides for proceedings to be taken in this Court, and
section 16 provides for remedies that may be granted by this Court (section 2
defines “Court” as the Federal Court):
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14. (1) A complainant may, after receiving the Commissioner’s
report or being notified under subsection 12.2(3) that the investigation of
the complaint has been discontinued, apply to the Court for a hearing in
respect of any matter in respect of which the complaint was made, or that is
referred to in the Commissioner’s report, and that is referred to in clause
4.1.3, 4.2, 4.3.3, 4.4, 4.6, 4.7 or 4.8 of Schedule 1, in clause 4.3, 4.5 or
4.9 of that Schedule as modified or clarified by Division 1, in subsection
5(3) or 8(6) or (7) or in section 10.
(2) A complainant must make an application within 45 days after
the report or notification is sent or within any further time that the Court
may, either before or after the expiry of those 45 days, allow.
(3) For greater certainty, subsections (1) and (2) apply in the
same manner to complaints referred to in subsection 11(2) as to complaints
referred to in subsection 11(1).
…
16. The Court may, in addition to any other remedies it may give,
(a) order an organization to correct its practices in order to
comply with sections 5 to 10;
(b) order an organization to publish a notice of any action taken
or proposed to be taken to correct its practices, whether or not ordered to
correct them under paragraph (a); and
(c) award damages to the complainant, including damages for any
humiliation that the complainant has suffered.
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14. (1) Après avoir reçu le rapport du commissaire ou l’avis
l’informant de la fin de l’examen de la plainte au titre du paragraphe
12.2(3), le plaignant peut demander que la Cour entende toute question qui a
fait l’objet de la plainte — ou qui est mentionnée dans le rapport — et qui
est visée aux articles 4.1.3, 4.2, 4.3.3, 4.4, 4.6, 4.7 ou 4.8 de l’annexe 1,
aux articles 4.3, 4.5 ou 4.9 de cette annexe tels qu’ils sont modifiés ou
clarifiés par la section 1, aux paragraphes 5(3) ou 8(6) ou (7) ou à
l’article 10.
(2) La demande est faite dans les quarante-cinq jours suivant la
transmission du rapport ou de l’avis ou dans le délai supérieur que la Cour
autorise avant ou après l’expiration des quarante-cinq jours.
(3) Il est entendu que les paragraphes (1) et (2) s’appliquent de
la même façon aux plaintes visées au paragraphe 11(2) qu’à celles visées au
paragraphe 11(1).
…
16. La Cour peut, en sus de toute autre réparation qu’elle accorde
:
a) ordonner à l’organisation de revoir ses pratiques de façon à se
conformer aux articles 5 à 10;
b) lui ordonner de publier un avis énonçant les mesures prises ou
envisagées pour corriger ses pratiques, que ces dernières aient ou non fait l’objet
d’une ordonnance visée à l’alinéa a);
c) accorder au plaignant des dommages-intérêts, notamment en
réparation de l’humiliation subie.
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[10]
Section 17 of PIPEDA provides that the
proceeding shall be heard without delay and in a summary way:
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17. (1) An application made under section 14 or 15 shall be heard
and determined without delay and in a summary way unless the Court considers
it inappropriate to do so.
(2) In any proceedings arising from an application made under
section 14 or 15, the Court shall take every reasonable precaution,
including, when appropriate, receiving representations ex parte and
conducting hearings in camera, to avoid the disclosure by the Court or any
person of any information or other material that the organization would be
authorized to refuse to disclose if it were requested under clause 4.9 of
Schedule 1.
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17. (1) Le recours prévu aux articles 14 ou 15 est entendu et jugé
sans délai et selon une procédure sommaire, à moins que la Cour ne l’estime
contre-indiqué.
(2) À l’occasion des procédures relatives au recours prévu aux
articles 14 ou 15, la Cour prend toutes les précautions possibles, notamment,
si c’est indiqué, par la tenue d’audiences à huis clos et l’audition
d’arguments en l’absence d’une partie, pour éviter que ne soient divulgués,
de par son propre fait ou celui de quiconque, des renseignements qui
justifient un refus de communication de renseignements personnels demandés en
vertu de l’article 4.9 de l’annexe 1.
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[11]
Thus PIPEDA provides that, once the Commissioner
delivers a report, a complainant may make an application to the Federal Court
for a hearing in respect of any matter in respect of which the complaint was
made. Such an application is to be determined without delay and in a summary
way. The Court hearing the application may, in addition to any other remedies,
award damages to the complainant, including damages for any humiliation that
the complainant has suffered.
[12]
The nature of the application taken under PIPEDA
has been considered in several decisions of this Court and the Federal Court of
Appeal. As explained by Décary JA in Englander v TELUS Communications Inc.,
[2005] 2 F.C.R. 572 at paragraphs 47 and 48, what is at issue is not the
Commissioner’s report but the conduct of the party against whom the complaint
was filed; the remedial power of the Court is remarkably broad. The proceeding
is akin to a de novo action; the report of the Commissioner, if put in
evidence, may be challenged or contradicted like any other document adduced in
evidence.
[13]
As observed by Noël J of this Court in Kniss v Canada
(Privacy Commissioner), 2013 FC 31 at paragraphs 25 to 28,
the Commissioner does not have the power to grant remedies; it is the Federal
Court that has jurisdiction to grant various remedies including an award of
damages or the issuance of compliance orders. The application to the Court is a
new matter, to be heard de novo; the burden is on the Applicant
to present evidence of a breach of the Act. To this, I would
add that it is trite law that an Applicant seeking damages must prove
entitlement to damages and their quantum.
[14]
With respect to damages, Phelan J of this Court
in Stevens v SNF Maritime Metal Inc., 2010 FC 1137 at paragraphs 27 to
29, wrote that PIPEDA’s right of action is not an end run on existing rights to
damages; it is a right to a different kind of damage claim arising from a
breach of a right to privacy.
[15]
Justice Mosley of this Court in Girao v Zarek
Taylor Grossman, Hanrahan LLP, 2011 FC 1070 made a survey of the
jurisprudence respecting damages at paragraphs 42 to 48. Damages should be
awarded only in the most egregious situations. The seriousness of the breach
must be evaluated both as to the impact of the breach on the complainant and
the seriousness of the breach. To that is to be added a consideration as to whether
an award of damages would further the general objectives of PIPEDA.
[16]
In order to determine damages, Justice Mosley
wrote in Randall v Nubodys Fitness Centres, 2010 FC 681 at paragraphs 34
to 58, that the Court must embark on a fact finding process. There must be a
connection between the breach of PIPEDA and the damages suffered. An award of
damages should only be made where there has been a serious breach and not just
an unfortunate misunderstanding.
[17]
Justice Zinn of this Court in Nammo v TransUnion
of Canada Inc., [2012] 3 F.C.R. 600 observed that while the Court has broad
power to award damages, such an award must be made on a principled basis, and
can be awarded even where no actual financial loss has been proven. At
paragraphs 64 and 65, Justice Zinn noted that an inquiry should be made as to
whether the Applicant attempted to mitigate the losses.
[18]
In Stevens, supra, at paragraphs 30 to
32, Justice Phelan held that damages not attributable to a PIPEDA breach cannot
be awarded. The Applicant must put forward some evidence of the impact of the
breach on his standing or community perception or similar features of a privacy
claim.
[19]
Taking this jurisprudence into account, I
conclude that this Court, in considering a claim under PIPEDA:
a)
cannot consider such a claim until the
Commissioner has given a report;
b)
the application is not a review of the report;
c)
the Applicant must prove de novo any
breach found by the report;
d)
the Applicant’s claim for damages must be based
on a breach of PIPEDA and cannot be used as a surrogate for another claim for
damages not arising out of the alleged breach of the provisions of PIPEDA;
e)
the Applicant bears the burden of proving the
nexus of damages claimed as arising out of a breach of PIPEDA;
f)
damages will only be given where there has been
a serious or outrageous breach of PIPEDA;
g)
where it is appropriate to award damage, an
award can be made even where the Applicant has not proved specific damage; and
h)
there is a duty to mitigate damages.
[20]
Justice de Montigny of this Court in Townsend
v Sun Life Financial, 2012 FC 550 provided a useful summary of
non-exhaustive factors to be considered by a Court in making an award in a
PIPEDA claim. He wrote at paragraphs 31 and 32:
[31] There
is very little jurisprudence with respect to the determination of damages for
breach of privacy, particularly in the context of PIPEDA. One of the most
comprehensive reviews of this matter is to be found in Nammo v TransUnion of
Canada Inc, 2010 FC 1284, 379 FTR 130 [Nammo]where my colleague Justice Zinn
provided some helpful guidelines. Referring to the decision of the Supreme
Court in Vancouver (City) v Ward, 2010 SCC 27, [2010] 2 S.C.R. 28, Justice Zinn
mentioned three rationales for awarding damages: compensation, deterrence and
vindication. He then listed a number of non-exhaustive factors for determining
whether damages should be awarded and the quantum of such damages:
(i) Whether awarding damages would further the general
objects of PIPEDA and uphold the values it embodies;
(ii) Whether damages should be awarded for deterring future
breaches; and
(iii) The seriousness or egregiousness of the breach.
(Nammo, above
at para 76)
[32] In
turn, the seriousness or egregiousness of the breach can be assessed by way of
the following considerations:
(i) The impact of the breach on the health, welfare, social,
business or financial position of the applicant;
(ii) The conduct of the respondent before and after the
breach; and
(iii) Whether the respondent benefited from the breach.
(Randall, above at para 47).
[21]
In the present case, the Applicant is claiming
about $2.6 million dollars in damages. I attached a Schedule A, the Applicant’s
itemization of those damages.
I.
FACTS
[22]
I will start in the year 2009. At that time,
the Applicant owned at least three properties in Arnprior, Ontario. There were
two adjacent properties at 50 and 52 Victoria Street and a property around the
corner at 16 Daniel Street. Each of the three properties were mortgaged. The
property at 50 Victoria Street was mortgaged to Bridgewater Bank, the property
at 52 Victoria Street was mortgaged to Magenta, and the property at 16 Daniel Street was mortgaged to My Next. It happens that there is a “familial” relationship between My Next and Mortgage
Architects. It appears that there were dwellings on at least some of those
properties which the Applicant rented to others and occupied one unit himself. The
Applicant dealt with the CIBC bank; he deposited cheques from the persons
renting units with the bank and directed that those funds, together with whatever
else was in bank account and line of credit, be used to satisfy his monthly
mortgage payment obligations which were paid by post-dated cheques.
[23]
In about December, 2009, the Applicant needed
additional funds to complete renovations he was doing on his properties. He
contacted the Respondent Neumann to see if a mortgage lender could be found. Both
Neumann and his wife were agents for Mortgage Architects at the time. Neumann’s
wife’s father, Dunphy, came forward as a mortgage lender. It is not clear whether
Neumann brokered this deal; he denies it. What appears to have happened is that
both the Applicant and Dunphy were directed by Neumann to a local lawyer,
Sutherland, who, acting for both parties, apparently with their consent, did
the paperwork and handled the funding to place a second mortgage, Dunphy’s, on
probably both Victoria Street properties.
[24]
A dispute arose between the Applicant and
Sutherland as to this and other transactions. The Applicant sued Sutherland
and while the action was defended, Sutherland never appeared in court. The
Applicant was awarded just under $20,000.00. Sutherland was eventually disbarred
for a number of irregular transactions, but none of them involved the
Applicant.
[25]
In late 2009, the Applicant married and planned
to take a honeymoon lasting a few months in the Philippines. Before he left, he
gave instructions to one Al Shepheard (“Big Al”), a local person in the real
estate business, to look after his real estate affairs, and to his long-time
personal lawyer, Douglas Gadient, to look after his legal affairs. There is no
evidence that the Applicant advised anyone else as to these arrangements.
[26]
The Applicant left Canada on December 25, 2009
for the Philippines and did not plan to return until April 15, 2010. He took
his computer with him and corresponded by e-mail using the address Preview
Inspections.
[27]
In late January or early February, 2010, the
CIBC decided to put a one-week hold on the rent cheques that were being
deposited into the Applicant’s account. This, in turn, caused some of the
post-dated cheques, used to satisfy the Applicant’s mortgage payment
obligations, to bounce.
[28]
By this time, the Applicant was in the Philippines. Apparently, his computer had crashed. He had the computer repaired but lost
some of the data and had forgotten how to enter into his e-mail at the Preview
Inspections address. He had, however, another address which he knew how to
access, a “single guy” address, however that
address was not known to some of his business associates; in particular, it was
not known to Neumann.
[29]
In February 2010, the Applicant’s mortgage
payment cheques were bouncing.
[30]
On March 10, 2010, Elizabeth Neumann, Dunphy’s
daughter and Neumann’s wife, sent an e-mail to the Applicant’s Preview
Inspections address stating:
I have tried
to reach you by phone but have been unsuccessful. Please be advised that your
February mortgage payment in the amount of $278.91 has been returned by your
bank non-sufficient funds and as of March 10, 2010, there has been no attempt
on your behalf to correct this matter.
I trust that
upon your receipt of this letter you will act accordingly to correct this
matter.
Please contact
me immediately to make arrangements.
[31]
On March 16, 2010, Neumann sent an e-mail to the
Applicant at the Preview Inspections address copying his wife, Elizabeth
Neumann. That e-mail said:
Hello Mark,
Hope all is going well in the Very Sunny South, With that being said Elizabeth
has sent you an e-mail about your chk coming back nsf on your second mtg for
Feb/2010 and now March has come back as well. I have spoken to Magenta and
their chk came back as well. Magenta is going to give you until March 19th
2010 to address this matter and get mtg up to date or they are going POWER OF
SALE, DUNPHY HAS ASKED US TO GET DOUG SUTHERLAND TO START POWER OF SALE ASAP
UNLESS YOUR MTG IS BROUGHT UP TO DATE. THE TOTAL AMOUNT TO BRING UTD TO AVOID
POWER OF SALE IS $1,447.82.
Being Sent without Prejudice.
[32]
Apparently, Neumann had spoken a day or two
earlier to Al Shepheard about concerns as to non-payment of the Dunphy
mortgages. Shepheard contacted the Applicant at his “single
guy” e-mail address about these concerns. The Applicant responded that
he must attend to the problems in person but, due to ticketing problems with
Air Canada, he could not return until mid-April. Shepheard e-mailed the
Respondent on March 17, 2010 saying that one of the mortgage lenders, Magenta,
wanted their money by Friday or they would start power of sale proceedings.
[33]
On April 6, 2010, Neumann sent an e-mail to the
Applicant at Preview Inspections saying simply “ARE YOU
BACK YET”.
[34]
The Applicant returned to Canada in mid-April and spoke by telephone with Neumann at which time he made a proposal to settle
the outstanding Dunphy mortgage claim. Neumann responded by e-mail on April 21,
2010, copying his wife, Dunphy, Sutherland and Gadient, proposing prompt
payment of a certain amount by a certain date or other date if a firm Offer for
Sale has been received. The Applicant did not respond.
[35]
On April 27, 2010, Neumann sent an e-mail to
Sutherland, copying Dunphy and his wife Elizabeth Neumann, saying:
Hi Doug,
Please be advised Mr. Dunphy will forward you a $10,000.00 {?} to start power
of sale on both homes.
[36]
This is referred to as the second e-mail of the
complaint.
[37]
On April 29, 2010, Neumann wrote an e-mail to
Sutherland, with a copy to “Preview Inspections”
(the Applicant by this time was able to access e-mails at this address),
Neumann’s wife Elizabeth, Dunphy, Bridgewater Bank, and Bridgewater’s lawyers
saying:
Good Morning
Doug, Re our conversation this morning, I have had a lengthy conversation with
Bridigewater Bank. The have started Power of Sale as of March 19th, 2010 for
non/payment of mortgage To date they have not heard anything from Mark Blum
which should not surprise anyone. Not only has he not talk to anyone at Bridgewater directly, he has not paid either. The last time Bridgewater was paid was
December 2009.
There was no
plan with Bridgewater based on wether Mr. Dunphy made any arrangements or not.
NOTE MARK’S COMMENT BELOW, Since Bridgewater has already started Power of Sale
lets just go after the other side being 50 Victoria For non/payment of Mortgage
to Mr. Dunphy.
I would hope
this could cut down the total costs of taking over control of his home.
Further I forwarded
Mark’s e-mail to Helene today with his comments, again no deal was made so
clearly this was further delay of payment that was to be paid April 26th 2010 PER
MARK’S E-MAIL, Elizabeth contacted Doug, Marks lawyer yesterday and was told
his not handling anything for Mark on this second Mortgage and hung up on her.
Note Mark’s e-mail clearly states that the funds will be sent through the
lawyers office on the 26th of April 2010.
Further this
morning, I have spoken to Lucia at Bridgewaters lawyers office and Lucia does
confirm Mark has been given an extention to bring the Mortgage up to date,
however no date was given.
During my
conversation last week with Mark he commented that it would not be worth Mr.
Dunphy’s time or expense to go Power of sale as the home would more likely be
sold before he got control. Since we cannot get paid Mr. Dunphy feels it is in
his best interest to take control of property to ensure he recovers what is
owed to him one being on pension he funds are limited.
Thanks
[38]
This is referred to as the third e-mail of the
complaint.
[39]
Ultimately, Power of Sale proceedings were taken
against the two Victoria Street properties and the Daniel Street property. The
Applicant had received appraisals on these properties and claims a shortfall on
loss of equity amounting to $67,905.19.
II.
THE COMPLAINT UNDER PIPEDA
[40]
The Applicant filed a complaint with the Privacy
Commissioner under PIPEDA, as against Mortgage Architects. It was accepted on
September 26, 2011. The complaint did not include Neumann. Indeed no complaint
could have been filed as against Neumann personally as he is not an “organization”, as described in section 3 of the Act.
[41]
The substance of the complaint was summarized in
the Commissioner’s Report provided November 14, 2012 at paragraphs 2 to 7. I
repeat paragraphs 4 to 7:
4. The complainant then left the country for several months.
While he was away, transactions occurred with his banking accounts that
resulted in a financial shortfall situation. In the context of this situation,
which appears to have affected the timeliness of the complainant’s mortgage
payments, the mortgage agent, who had facilitated the independent financing to “mortgage lender B”, sent three separate e-mails in March/April 2010 from his work
e-mail account to various parties. The e-mails displayed the agent’s work
signature as well as Mortgage Architects’ contact details. The e-mails
identified the complainant and informed the parties about his non-payment
situation. The e-mails also mentioned the legal actions anticipated by the
lenders of the two mortgages of the property.
5.
The e-mails, copies of which our Office
reviewed, consisted of the following information:
і. March 17, 2010:
An e-mail to the complainant’s property manager, informing him that mortgage
lender B “…wants their money this Friday or they will start power of sale
proceedings”.
іі. April 27, 2010: An e-mail to the
mortgage agent’s wife, his lawyer, and the mortgage lender B, advising the
agent’s lawyer that mortgage lender B was sending $10,000 to start legal
proceedings against the complainant.
ііі. April 29, 2010: An e-mail to the
mortgage agent’s wife, his lawyer, mortgage lender B, mortgage lender A and his
legal representative. The e-mail contained information concerning: (i)
mortgage lender A’s anticipated power of sale for non-payment of the
complainant’s mortgage and (ii) a possible power of sale by mortgage lender B
for non-payment.
6. For the alleged personal information disclosure occurring in
these e-mails, the complaint filed a complaint, which this Office accepted on
September 26, 2011.
7. In his complaint, the complainant stated that the mortgage
agent had no consent or authority to be involved in the complainant’s private
or business affairs. He alleged that the mortgage agent was using confidential
knowledge acquired through the complainant’s business relationship with
Mortgage Architects to launch an attack against the complainant and his
business relationships.
[42]
The foregoing three e-mails together with the
personal disclosures referred constitute the “matter
in respect of which the complaint was made” which, as provided for
in section 14 of PIPEDA, is the scope of that which the Court may consider in
the present proceeding.
[43]
In the Findings portion of the Commissioner’s
Report, it was held that no contravention of Principle 4.3 of Schedule 1 of
PIPEDA had occurred but there was a contravention of Principle 4.5. In that
latter regard, the Report stated at paragraphs 21 to 26:
21. Also
at issue is whether the complainant’s personal information was used or
disclosed for a purpose consistent with that for which it had been collected.
Principle 4.5 stipulates that personal information shall not be used or
disclosed for purposes other than those for which it was collected, except with
the consent of the individual or as required by law.
22. In
our view, Principle 4.5 was not upheld. The mortgage agent used the
complainant’s personal information, collected from his previous business
relationship with the complainant, to intervene in a separate private matter.
This information was subsequently disclosed to third parties without consent.
23. During
the course of our investigation however, Mortgage Architects demonstrated to
this Office that it has in place an appropriate privacy policy and procedures,
which it communicates to its agents and brokers. It has regular updates and
training for its staff on overall policy and accountability issues and conducts
periodic office visits to ensure brokers are compliant.
24. As a
result of our investigation, Mortgage Architects alerted its brokers throughout
the organization about this specific incident and explained why it was a breach
of PIPEDA. It took steps to streamline its forms for the brokers so that the
PIPEDA consent form was easier to find. Further, to prevent a recurrence of
the events similar to this complaint, Mortgage Architects ensured that its
agents and brokers were re-familiarized with their obligations under the Act as
well as the organization’s own compliance guidelines. This measure conforms to
our Office’s suggested privacy practices contained in our document Getting
Accountability Right with a Privacy Management Program, available on our
website.
25. This
Office determined that the incident was isolated and stemmed from the personal
relationship the mortgage broker had with the private lender. The mortgage
broker is no longer working for Mortgage Architects and further, we are
satisfied that the actions taken by the respondent will reduce the likelihood
of any recurrence.
Conclusion
26. Accordingly,
I conclude that the matter is well-founded and resolved.
[44]
As previously discussed, the Commissioner’s
findings are not the subject of these proceedings. The onus rests on the
Applicant to demonstrate on the record in these proceedings, and by applying
the appropriate legal principles, that there has been a breach of PIPEDA within
the scope of the issues before the Commissioner.
III.
APPLICANT’S POSITION
[45]
The Applicant submits that at all materials
times Neumann was the agent of Mortgage Architects, that he directly as such
agent brokered one mortgage deal with My Next and, by implication at least,
brokered the deals with Dunphy.
[46]
The Applicant submits that Neumann, acting in
his capacity as agent for Mortgage Architects, used the Applicant’s personal
information as to defaulting upon mortgage payments to stir up Dunphy, Bridgewater and Magenta to move to foreclose and exercise power of sale upon the
Applicant’s properties. The Applicant submits that, not only has he lost
expected equity upon such properties, but that his credit and business has been
ruined.
[47]
The Applicant reviewed his claim as itemized in
Schedule A. I am satisfied that he has substantiated, in terms of
quantification of deficiencies, the loss of equity as set out in items 1, 2, 3
and 4. I am not satisfied as to the loss of income, item 5. The Applicant has
not set out his other sources of actual income in the years involved. The
$41,997.00 figure is not substantiated; a $14,000.00 figure appears elsewhere. There
is no evidence as to any attempt by the Applicant to mitigate the damages.
[48]
I disregard the loss of living allowance; the
Applicant simply allowed himself to live free in one of the rental properties;
there is no evidence as to the cost of alternative accommodation.
[49]
The remaining losses of Aggravated Damages,
Stress and Duress, Punitive Damages, Socially Demonstrative Damages and To Be
Made Whole are unsubstantiated and purely speculative.
[50]
The legal costs and experts, the extent that
they are substantiated, deal with claims made in the Ontario Courts, not here.
IV.
RESPONDENTS’ POSITION
[51]
The Respondents’ position is first that no claim
can be made personally as against Neumann since he is not an “organization” within the meaning of section 3 of
PIPEDA. I agree, no personal claim as against Neumann can be asserted under
PIPEDA. The claim against Mortgage Architects is in respect of statements made
by Neumann and e-mails sent by him while acting as agent for Mortgage
Architects.
[52]
Mortgage Architects is an “organization”, as described in section 3 of PIPEDA. The
evidence as to whether, in respect of the statements made by Neumann and his
e-mails were made as agent for Mortgage Architects, is less clear. The first
e-mail, that of March 17, 2010, is from “Big Al” Shepheard (the Applicant’s
representative) to the Applicant advising that Neumann told him that Magenta
wants there (sic) money by Friday. It is unclear as to in what capacity, if
any, Neumann was acting.
[53]
The second e-mail, that of April 27, 2010, is
from Neumann to Sutherland, a lawyer who had acted for both the Applicant and
Dunphy, advising that funds were forthcoming to start the power of sale
process. The e-mail is “signed” James Neumann,
Mortgage Architects. While not entirely clear, I accept that Neumann must be
considered to be acting as agent for Mortgage Architects.
[54]
The third e-mail, that of April 29, 2010, is
also signed “James Neumann, Mortgage Architects”
and again, I find that Neumann must be considered as agent for Mortgage
Architects.
[55]
Thus, while the status of Neumann, whether
acting personally or on behalf of his father-in-law, Dunphy, or acting as agent
for Mortgage Architects is far from clear, I find that it is reasonable to
adduce that, in making the statements as reflected in the e-mails and in
sending the e-mails, in particular the third, that of April 29, 2010, he was
acting in his capacity as agent for Mortgage Architects.
[56]
The Respondents further take the position that
whatever Neumann said or whatever the e-mails stated, there was no direct or
consequential damage to the Applicant. They argue that the mortgages would have
been foreclosed and powers of sale exercised in any event. I accept this. Each
of Magenta, Bridgewater and My Next are sophisticated lenders and would have
been well aware that the Applicant’s mortgage cheques had bounced. Each would
have been within their rights to foreclose. Dunphy, a second mortgagee, would
have to give notice of his intention to foreclose to the first mortgagees in
any event.
[57]
The Applicant argues that Neumann, together with
Sutherland, were engaged in a conspiracy to foment trouble and encourage Dunphy
and the others to foreclose. I have been invited to speculate and “look further” into the matter and discern what must
have been a conspiracy to thwart the Applicant who, upon his return in
mid-April, could have calmed the waters and persuaded all the mortgagees to
refrain from taking action. I am not buying into the conspiracy theory. I
appreciate that Neumann was probably under pressure to ensure that his
father-in-law’s interests were protected but Magenta, Bridgewater and My Next
are sophisticated lenders; they would not be persuaded by someone in Neumann’s
position, into doing which they probably would have done anyway.
[58]
I find that the foreclosures by Magenta, Bridgewater and My Next were not caused or motivated by Neumann’s actions.
V.
WHAT DAMAGES, IF ANY?
[59]
I have found that the Respondents did not cause
the damages itemized as numbers 1 through 4 in Schedule A. I find the balance
of the Damages claimed in Schedule A to be remote and unsupported by the
evidence. What is left?
[60]
The jurisprudence is to the effect that damages
should only be awarded in cases where they are substantially justified and would
further the objectives of PIPEDA in ensuring that organizations are diligent in
retaining as secure, personal information.
[61]
In the present case, the Commissioner found that
a breach occurred but that Mortgage Architects has in place proper measures to
preclude such breaches, and to ensure that its agents were aware that such
breaches should not occur.
[62]
The facts are unique; Neumann was conflicted in
that he, probably improvidently, had acted in some way for his father-in-law in
securing a mortgage on the Applicant’s properties. It is not a common or
recurring practice.
[63]
While the Applicant feels that there was a
conspiracy to frustrate his business efforts, I cannot on the record before me,
conclude that such was the case.
[64]
As I result, I find that no real damages have
been incurred by the Applicant as a breach of PIPEDA. Any damages to be
assessed against Mortgage Architects would be nominal. I fix them at $1,000.00.
Neumann, in his personal capacity, is not subject to any award of damages under
PIPEDA.
[65]
This is not a situation for an award of costs to
any party.
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