Supreme Court of Canada on implied consent for information statements
Author: Denise M. Hendrix
Posted: March 21, 2017
Please see this link for the most recent decision from the Supreme Court of Canada on implied consent and the ability to provide information statements under PIPEDA. I will speak to this decision as it relates to Alberta only.
The previous leading decision on the issue of a Lender’s ability to provide a subsequent encumbrancer with a mortgage information statement was TD Bank v. Sawchuk. The case held for the proposition that a prior mortgagee was required to provide a subsequent encumbrancer with a mortgage information statement when requested, if that subsequent encumbrancer either had the written consent of the borrower, or obtained a court order for that information. The decision gave us a legal basis to obtain those court orders for prior mortgage information if we did not have the written consent of the borrower obtained on funding. (I remain of the position that this written consent should be obtained at the time of funding or the granting of security and would be happy to provide you with a form of consent at any time).
This new decision of the Supreme Court states that the very nature of granting a mortgage to a subsequent encumbrancer gives the “implied consent” of the borrower for a prior encumbrancer to provide that information.
The decision is very specific in that it relates that “implied consent” to
a) A judgment creditor;
b) Who has obtained a writ of seizure and sale of the mortgaged asset;
c) And have filed it with the sheriff.
It states that those steps have demonstrated that it intends to exercise an established legal right that depends upon the disclosure of the mortgage discharge statement.
I think that the true interpretation of that decision is not limited to those 3 steps above, but any circumstance where it is clear on the face of the request that you are dealing with a judgment creditor who is exercising a legal right that depends upon the disclosure of the mortgage statement.
Now there are different foreclosure proceedings across the country and the language used for those proceedings is different.
It would be my position, in Alberta, that if you are getting a request for an information statement based upon a lender wanting to place subsequent mortgage financing, you absolutely still need a written consent of the borrower to obtain that information. Further, if that new subsequent mortgagee made random requests from time to time, for information statements just for their general information, you will still need a written consent of the borrower to obtain that information.
As to a subsequent encumbrancer that is a Mortgagee that has commenced foreclosure proceedings, I think if they provide you with confirmation of their foreclosure action (either by referencing their Court of Queen’s Bench action number or showing you title with evidence of their CLP registered) that would meet the test of giving you evidence of establishing a legal right that would depend upon the disclosure of your mortgage statement.
As for a subsequent encumbrancer that is a Judgment Creditor (a Writ Holder) if they provide you with a copy of title evidencing the registration of their Writ and/or their Notice of Intention to Enforce Security under the Civil Enforcement Act, they would meet the test of establishing a legal right that depends on the disclosure of the mortgage discharge statement.
As an aside, Section 38 (3) of the Law of Property Act in Alberta provides that a mortgagor (borrower) themselves, or a purchaser, may request a statement twice a year from their Mortgagee (Lender) for any reason and the Mortgagee must provide same within 30 days.
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