Mortgage Broker

MORTGAGEBROKER mbabc.ca fall 2015 | 39 Mortgage brokers collect considerable private and sensitive information from clients. e client provides the information to the broker for the specific purpose of it being used to arrange a mortgage. What happens when the broker breaches the client's privacy rights by disclosing that information, even accidentally, to a third party? e Supreme Court of British Columbia addressed such a situation in Albayate v. Bank of Montreal, 2015 BCSC 695. While the case concerned a bank and its customer, the principles would be applicable to the relationship between a broker and client. Of note is that a single breach of privacy can at once amount to a breach of the Privacy Act (Act), civil law negligence and a breach of contract. However, of these, only a claim under the Act does not require proof of damages resulting from the breach in order to be successful. Aer examining the facts of this case, we will look at all three possible claims for damages. We will conclude with some takeaways for the mortgage broker. The Facts e Bank had changed a customer's address and telephone number in its computer system without her consent or authorization, in fact by mistake. e Bank employee who made the change was unable to recall why the change was made. Because of the changed information, the Bank incorrectly sent the customer's bank statements to her ex-husband's address (but indicating her name as the addressee). e ex-husband did not open the envelopes but rather gave them to his ex-wife; she opened the envelopes and showed the statements to the ex-husband to prove she had no money. It would have been an offence for the ex-husband to open mail addressed to someone else. Because of the changed information, the Bank also provided an incorrect address and telephone number for the client to two credit reporting bureaus. Once the Bank learned of its error, it apologized to the customer and immediately corrected the error in its computer system. In addition, it launched an internal investigation. Although there was a three-year delay in doing so, it corrected the error with the credit bureaus as well. e Bank had a privacy policy which was part of its contract with the customer. e policy stipulated that: ■ personal information gathered must be accurate; ■ the Bank would protect the accuracy of the personal information and not amend it without authorization; ■ the Bank has comprehensive security controls in place to protect against unauthorized use, alteration or disclosure of the client's personal information; and ■ aer a client reports inaccuracies in their personal information, the Bank would use its best efforts to advise others of important amendments to the client's personal information which the Bank may have released to them. e customer did not suffer any damages resulting from the information having been disclosed. Now we will look at the three areas for claiming damages: the Act, civil law negligence and breach of contract. The Privacy Act— Breach of Privacy Tort e Act provides the right to sue someone for breach of privacy if the breach is done wilfully and without a claim of right. A breach of privacy is considered wilful if the act is done intentionally and knowing it would violate the privacy of the other person, or if the person doing the act should have known it would violate the privacy of the other person. A person has a claim of right if they honestly believe in a state of facts which would be a legal justification or excuse for disclosing the information. A person is entitled to the nature and degree of privacy reasonable in the circumstances, taking into account the lawful rights of others. In determining whether there has been a breach of privacy, regard has to be given to the nature, incidence and occasion of the act or conduct and to the relationship between the parties. Because the ex-husband did not open the envelopes, the breach of privacy by the Bank did not under the Act result in unauthorized disclosure to him. However, the Bank did breach the customer's privacy and made unlawful disclosure by providing inaccurate information to the credit bureaus and then failing to correct it immediately upon the customer complaining as to the inaccurate information. clientconfidential

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