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Simon Shields, LLB

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Collection Agencies (Ontario) Legal Guide
(01 July 2013)

Chapter 8 -
Tort Remedies

  1. Overview
    (a) General
    (b) Statutory Breach Alone is Not a Tort
    (c) Employment Discipline Against a Collector
  2. Negligence
    (a) Overview
    (b) Anderson v Excel Collection Services Ltd
    (c) Holtzman v Suite Collections Canada Inc.
  3. Negligent and Fraudulent Misrepresentation
  4. Intentional Infliction of Mental Suffering
    (a) Overview
    (b) Tran v Financial Debt Recovery Ltd
  5. Harassment
    (a) Overview
    (b) Lafleur v Canadian Bond Credits Ltd
    (c) Toban v Total Credit Recovery
    (d) Total Credit Recovery v Roach
    (e) Anderson v Excel Collection Services Ltd.
  6. Defamation
    (a) Overview
    (b) Paulin v PCM Collections Limited (Professional Collection Management)
    (c) Tran v Financial Debt Recovery Ltd
  7. Private Nuisance
  8. Intentional Interference with Economic or Contractual Relations
    (a) Overview
    (b) Tran v Financial Debt Recovery Ltd
    (c) Paulin v PCM Collections Limited (Professional Collection Management
  9. Invasion of Privacy
    (a) Jones v Tsige
    (b) Somwar v McDonald's Restaurants of Canada Ltd
    (c) Tran v Financial Debt Recovery
  10. Limitation Periods
  11. Evidence
    (a) Overview
    (b) Inspectors and Other CAA Officials Not Compellable Witnesses in Civil Proceedings
    (c) Director's Certificates
    (d) Copies of Documents Certified by CAA Inspectors
  12. Collection
    (a) Overview
    (b) Collection from Bond Funds
______________________________________________


1. Overview

(a) General

In addition to the regulatory and consumer rights provisions of the Collection Agencies Act (CAA), the common law provides debtors (and alleged debtors) the right to sue anyone who has committed particularly egregious violations of the normal standards of acceptable social and business behaviour, otherwise known as 'torts'.

The particular 'head' (ie. category) of tort that may be involved in your case depends on the nature of the wrongdoing, and in the following sections I consider specific heads of tort that have arisen in Ontario law in the course of challenging debt collection activities.

Of course in extreme cases, especially where violence is involved (ie. assault), the situation can also cross over into the criminal law. While that that subject is beyond the range of this present Isthatlegal.ca Collection Agencies (Ontario) Legal Guide, the fact that actions may be criminal does not preclude them being tortious as well.

Finally, unless violence or large economic loss is involved, it is likely that most collection-related causes of action will be advanced in the Small Claims Court. On that topic, readers may wish to refer to the Isthatlegal.ca Small Claims Court (Ontario) Legal Guide for guidance on the procedures in that court.

(b) Statutory Breach Alone is Not a Tort

Most of the other chapters of this Isthatlegal.ca Collection Agencies (Ontario) Legal Guide address the specific statutory rules established under the Collection Agencies Act (CAA). However it must be kept in mind that breach of a CAA rule does not necessarily - ie. by itself - ground a tort cause of action. The Supreme Court of Canada, in the leading case of R v Saskatchewan Wheat Pool (SCC, 1983) has established that while breach of a statutory or regulatory standard may be applied as eviden ce (along with other evidence) towards a tort finding (typically one of negligence), and while the statutory requirement may provide a useful structuring of the standard of care required, there is no tort of 'breach of statutory duty' as such.

However, this principle does not prohibit the legislature from expressly creating a 'statutory tort', as was considered in the BC case of Total Credit Recovery v Roach [see s.5(d) below].

Of course, if CAA rules do not themselves support a tortious cause of action, neither does a CAA exemption protect a person or corporation from liability under a common law tort claim. So CAA-exempt creditors such as lawyers, insurance companies, banks (and all those other entities and circumstances explained in Ch.2), are not protected from tort actions for their tortious debt collection activities only because they are CAA-exempt.

(c) Employment Discipline Against a Collector

As well, the excessively aggressive behaviour of a collector - which might also have grounded a tort action - has been used in at least one case to persuade the employing collection agency to terminate the services of the offender.

This was the Ontario Labour Relations Board (OLRB) case of Canadian Bonded Credits Ltd v Paré (2006). It involved a review, under the Employment Standards Act, of a prior 'Order to Pay' termination entitlements to an employee collector who had been terminated by a collection agency for "serious and wilful misconduct" (the ESA termination standard) in dealing with a debtor. The conduct included insulting remarks, slander against her husband, falsely stating that he worked for a lawyer, and failing to document the calls contrary to company policy. While the regulatory regime that the collector's behaviour was assessed under was that of Newfoundland, the case makes interesting reading for the standards that a collector will be held to in such circumstances, and the very sensible (and ultimately crucial) behaviour of the debtors in recording their conversations with the collector.


2. Negligence

(a) Overview

Negligence is the first and primary of all the heads of tort, and can be considered the most generally applicable to the many, many dispute situations that humans can become involved in. Perhaps the key defining feature of negligence as a tort is that it is unintentional; rather it is the classic, and avoidable, 'accident'.

There are literally thousands of cases which have addressed the elements of negligence but traditionally and formally they comprise the following:
  • a duty of care owned by the defendant to the plaintiff;

  • a standard of care with respect to the subject activity;

  • breach of the standard of care by the defendant;

  • causation of damages to the plaintiff by the defendant's breach;

  • the damages not being too 'remote' or unforeseeable.
The law of negligence is incredibly malleable and uncertain, and when considering each of the above elements a court will primarily have regard to past court treatment of similar fact situations ('jurisprudence' or case law), and then to their own instinct or feeling on just what society will (and will not and should) accept as reasonable behaviour ('public policy').

I have always been of the opinion that the formal 'elements' of the tort of negligence, while providing some analytic structure to the exercise of judgment, are secondary considerations to the more primary public policy considerations. I think it far more likely that judges decide cases on an instinctive level first, and then 'fill out' the formal elements of the case accordingly - almost as an after thought. In fact a review of the case law shows that many judges today dispense with the full
formal negligence analysis I have set out above.

(b) Anderson v Excel Collection Services Ltd (Ont Div Ct, 2005)

One case of a negligence-grounded claim against a debt collector that illustrates this point was that of Anderson v Excel Collection Services Ltd, an appeal of a negligence-grounded small claims court judgment. The plaintiff, successful at trial, was wrongfully alleged to be a debtor and relied primarily on a variety of CAA violations as the foundation of his action [recall from from s.1(b) above that while there is no tort of statutory breach as such, statutory breach can be used as evidence towards a tort conclusion].

In Anderson the Divisional Court reversed a lower court finding that a verbal statement by the alleged debtor that they dispute the debt is not, by itself, adequate to render any future contacts by the collector either harassing or negligent. The higher court noted firstly that continuation of collection efforts after such a denial is not a violation of the CAA unless it is done 'knowingly' (ie. knowing that there is no valid debt) [this position was affirmed by the Court of Appeal later in the case of R v Stucky (Ont CA, 2009)]. Then turning it's mind to the public policy issue of whether such continuation constitutes negligence under the common law, the court held that it did not - as long as the collector has take reasonable efforts to ensure that the debt exists.

Anderson is a good illustration of the practical and robust approach that courts takes to deciding negligence issues. The judge obviously realized that if debt collection efforts had to stop once the (alleged) debtor denied the debt, then the debt collection industry would quickly grind to a halt. While this may be an attractive result to many (me included), it was not one that accorded with what the court viewed as reasonable conventional public policy (a view in which they were plainly correct).

(c) Holtzman v Suite Collections Canada Inc. (Ont Div Ct, 2013)

This was a relatively straightforward case where a collection agency wrongfully alleged a debt against the plaintiff. After a bit of back and forth between the agency and her lawyer the agency registered the debt against the plaintiff's credit rating. Shortly after that they discovered their error, withdrew the allegation and apologized. The plaintiff nonetheless sued in Small Claims Court in negligence for general and punitive damages to a total of $15,000. That court awarded $1,500 for general damages, $1,500 for punitive damages, and $1,000 costs.

On appeal the issue was whether, largely because the plaintiff had not attempted to use any credit during the material period of time, she in fact suffered any general damages (typically equated with pain and suffering, or in these circumstances mental suffering). Citing law that required actual psychiatric evidence of a recognized condition before damages would be awarded for mental distress, the court disallowed those damages. It similarly disallowed the award in punitive damages, citing the absence of malice and quoting as follows:
[69] In Honda Canada Inc. v. Keays, 2008 SCC 39 (CanLII), [2008] 2 S.C.R. 362, Bastarache J. wrote at page 63:
.…punitive damages are restricted to advertent wrongful acts that are so malicious that they are deserving of punishment on their own. This distinction must guide judges on their analysis. [Italics added]
It did however allow sustain an award of $565 for special damages in the form of legal expenses.


3. Negligent and Fraudulent Misrepresentation

The two torts of negligent and fraudulent misrepresentation of course revolve around a specific type of behaviour: representations. As applied to debt collection situations, these torts are perhaps best suited to address claims made by a creditor (to a collection agency) that a debt exists where none in law does - thus subjecting the alleged debtor to unfounded collection activity. It may also apply against aggressive claims made by a collection agency as to false consequences of failure to
repay.

Further, the misrepresentation torts could apply to any wrongful statements, made by a creditor or debt collector to third parties that a valid debt exists - such as where a collector tells the 'debtor's' business partners, employer, family or friends of a non-existent debt. Of course such a fact situation might also merit a defamation-based claim (see s.6 below), though there is nothing to prevent them both being brought together.

Tort claims respecting false debts made directly against the collection agency are likely best brought in negligence, as occured in Anderson v Excel Collection Services Ltd (Ont Div Ct, 2005) (discussed in s.2 above) where the court would have supported such liability if the facts merited it.

The elements of the tort of negligent misrepresentation, which originated in the UK case of Hedley Byrne & Co v Heller & Partners Ltd [1964] AC 465, are set out in the leading Supreme Court of Canada case of Queen v Cognos (SCC, 1993):
The required elements for a successful 'Hedley Byrne' claim have been stated in many authorities, sometimes in varying forms. The decisions of this Court cited above suggest five general requirements: (1) there must be a duty of care based on a "special relationship" between the representor and the representee; (2) the representation in question must be untrue, inaccurate, or misleading; (3) the representor must have acted negligently in making said misrepresentation; (4) the representee must have relied, in a reasonable manner, on said negligent misrepresentation; and (5) the reliance must have been detrimental to the representee in the sense that damages resulted.
Much case law exists elaborating on the constituent elem ents of negligent misepresentation, but suffice it to say that in most situations where a debt is negligently and wrongfully alleged, and damages result, they will be met.

Fraudulent misrepresentation requires some additional element of prior knowledge of misrepresentation by the person making it, and would often - if proven - support a claim in punitive (as well as general) damages.


4. Intentional Infliction of Mental Suffering

(a) Overview

This tort is likely best suited for someone suffering from excessive or wrongful debt collection behaviour where the intention is to coerce or otherwise cause psychological harm, typically to predispose the victim to make payment of the alleged debt. In that sense it's most common form may be otherwise characterized as bullying, harassment (see s.5 below) or even extortion.

A leading case on this tort is Prinzo v Baycrest Centre for Geriatric Care [Ont CA, 2002], in which the court relied on the statement of the elements of the tort as set out by [now, not then] Supreme Court of Canada Chief Justice McLachlin CJ in Rahemtulla v Vanfed Credit Union (BCSC, 1984) [para 43]:
McLachlin J. at paras. 52-56 then set out the elements of the tort of intentional infliction of mental suffering: (1) conduct that is flagrant and outrageous, (2) calculated to produce harm (3) resulting in a visible and provable injury.
The fact situations that could fulfil this test are many, but amongst them are likely the situations where a debt collector alleges that they are going to 'ruin' the alleged debtor's credit rating, that their cost of borrowing will 'skyrocket', or that their reputation will be ruined, and similar.

The case of Anderson v Excel Collection Services Ltd (Ont Div Ct, 2005) is authority for the proposition that a claim for mental distress (ie. the resulting damages) must be substantiated by medical evidence of psychiatric illness (eg. depression or anxiety would qualify). Readers may be surprised how easy it is to get a psychiatrist to sign off on such diagnoses, particulary in their temporary or 'reactive' forms.

(b) Tran v Financial Debt Recovery Ltd

In Tran v Financial Debt Recovery Ltd. (Ont Sup Ct, 2000) the plaintiff sued a collection agency which was pursuing him for an alleged student loan debt (which was disputed by the plaintiff) for harassment. On dismissing the defendant's motion for a non-suit (dismissal on the face of the pleadings) the court described the defendant's conduct as "appalling" and found that the collection agency:
  • had improperly and repeatedly called the plaintiff's place employment and spoke with several people there in a manner that was abusive and threatening,

  • had disclosed, and even misrepresented, confidential information to third parties,

  • had engaged in bouts of serial abusive calling over short periods of time, and

  • that a collector misrepresented that they were a government lawyer.
The court stated that the Claim "set out the prerequisites for pleading the tort of defamation and probably also for the tort of intentional infliction of emotional suffering". It later stated "(i)t seems to me that the potential causes of action arising from the facts proven at trial are defamation, intentional infliction of emotional harm, interference with economic interests, threatening bodily harm and invasion of privacy."

On the tort of intentional infliction of mental harm, the court stated the following test [para 34]:
[34] Intentional infliction of emotional harm is a tort recognized in Canadian law and has been applied in the debt-collection context: Bateman v Newcourt Credit Group Inc., [1995] O.J. No. 325 (QL) (Gen. Div.) [summarized 53 A.C.W.S.(3d) 279]. The essential elements required to establish the tort are: (1) an intention to harm the plaintiff; (2) an overt act for which there is no legal just ification; and (3) mental suffering caused to the plaintiff as a result: Radovoskis v Tomm (1957), 9 D.L.R. (2d) 751 at 756; Blumas v. Institute of Chartered Accountants of Ontario, [2000] O.J. No. 3108 (QL) at para 16 (Sup. Ct.) [summarized 99 A.C.W.S. (3d) 168]; Bateman v Newcourt Credit Group Inc., supra, at para 9.
Plainly wishing it could do more, the court amended the claim to increase it to $25,000 (the simplified procedure maximum at the time) and awarded accordingly (plus costs). It also sent a copy of the ruling to the Registrar of Collection Agencies.


5. Harassment

(a) Overview

The tort of harassment, if it exists in Ontario law, is one of weak legal heritage. What doctrine there is on it has been bolstered by it's more commonly asserted form of sexual harassment. That said, despite the lack of any profound legal criteria defining it, in most cases a beset debtor can expect a robust and practical approach to the issue before a court.

In short, if you have facts that might constitute 'harassment' in its everyday meaning, you can try to run a case for breach of the tort of harassment - but if at all possible it should also be advanced under one or more of the other torts considered in this chapter as well.

(b) Lafleur v Canadian Bond Credits Ltd

In Lafleur v Canadian Bond Credits Ltd (Ontario Small Claims Court, 2003) the plaintiffs were the brother and sister-in-law of a debtor who gave their address and phone as his own. Despite the plaintiffs, and their lawyer, informing the collector that he did not reside there the collector persisted with numerous in-person and automated phone calls to them over an extended period of time. The plaintiffs sued successfully in private nuisance, and were together awarded $1500 general damages,
$3000 punitive damages and legal costs.

In finding the defendant liable the court found that several provisions of the Collection Act Regulation (as it then read) were violated. These provisions were with respect to too frequent calling constituting harassment [now s.22(6)6], and continuing to communicate with a person after being told they were not the debtor [now s.22(5)(b)]. As well, on the law respecting nuisance it relied upon the case of Motherwell v Motherwell (Alta CA, 1976) where the court stated:
It is clear to me that the protracted and persistent harassment of the brother and the father in their homes, and in the case of the brother as well in his office, by abuse of the telephone system is within the principle of private nuisance as it has been recognized in the authorities I have referred to. The question is whether the calls amounted to undue interference with the comfortable and convenient enjoyment by the plaintiffs of their respective premises. I can conceive that persistent and unwanted telephone calls could become an harassment even if the subject-matter is essentially agreeable. The deliberate and persistent ringing of the telephone cannot but affect the senses in time, and operate on the nervous system as the evidence discloses.
In relying on the tort of private nuisance, which requires interference with the use or enjoyment of private property, the court was identified the excessive calls as an intrusion into the plaintiff's homelife. The court also characterized the wrongdoing as harassment and an invasion of privacy, though those were not considered formally as heads of claim.

(c) Toban v Total Credit Recovery

In Toban v Total Credit Recovery (B.C.) Ltd. (BC Small Claims Court, 2001) the plaintiff alleged grossly unfair and intrusive collection practices with respect to his student loan arrears as the foundation for his tort claim of harassment. While he acknowledged that he owed the money he refused to deal with the collection agency due to their disrespectful behaviour towards himself, his family, his employer and his landlord.

The court cited several statutory prohibitions governing collection agencies that are similar to those in Ontario, including a prohibition on contacting employers except to verify the employment of the debtor [Ontario's CA 22(4)(c)] and too frequent calling constituting harassment [Ontario's CA s.22(6)6]. In finding the defendant liable under the tort of harassment, the court accepted the plaintiff evidence of widespread and aggressive communications to numerous parties other than the debtor and also noted as an aggravating factor that several of the contacted family members were dying at the time (and were deceased at the date of trial). It also found that some of the collectors were using fabricated names during collection attempts in an effort to stymy accountability. The court awarded $10,000 in mental distress damages and $10,000 punitive damages - the final award being reduced to conform to the court's $10,000 maximum monetary award limit.

Toban must be read in conjunction with Roach (below) on the issue of whether a free-standing common law tort of harassment exists in BC law.

(d) Total Credit Recovery v Roach

The case of Total Credit Recovery v Roach (BCSC, 2007) was an appeal from a BC Small Claims Court harassment tort judgment in favour of a debtor against a collection agency. In the course of their collection efforts the collectors left a message for the plaintiff respecting an 'urgent personal matter', contacted her employer improperly and repeatedly (after her employment there was already verified, which was all that was allowed), disclosed confidential information to third parties,
disregarded a st atutory 'cease and desist' letter sent by the plaintiff, and attempted to collect an amount in excess of the debt due.

The appeal court held that while the weight of authority in BC was against the existence of any common law tort of harassment, an express statutory 'tort' under s.20 of BC's Debt Collection Act had been successfully made out in light of the defendant's behaviour. This conclusion does not offend the Supreme Court of Canada's prohibition against there being a tort of 'statutory breach' [see Saskatchewan Wheat Pool discussed in s.1(b) above] because here the statute expressly created a cause of action.

(e) Anderson v Excel Collection Services Ltd.

The case of Anderson v Excel Collection Services Ltd (Ont Div Ct, 2005) was an appeal from a small claims court judgment in favour of an alleged debtor who sued a collection agency for negligence, relying on a variety of CAA violations.

In the case, the Divisional Court reversed a lower court finding that a verbal statement by the alleged debtor that they dispute the debt is not, by itself, adequate to render any future contacts by the collector as harassment. The court stated that continuation of collection efforts after such a denial is not a violation of the CAA unless it is done 'knowingly' (ie. knowing that there is no valid debt) [this position was affirmed by the Court of Appeal later in the case of R v Stucky (Ont CA, 2009)].


6. Defamation

(a) Overview

While defamation law has a huge body of doctrine (case law) behind it, in most debt collection cases you can expect it to be brought in small claims court with it's $25,000 monetary limit, where the court will apply a robust and practical approach to the claim. A claim of defamation would commonly - though not necessarily - be brought in conjunction with a claim of negligent or even fraudulent misrepresentation (readers should review s.3 above).

(b) Paulin v PCM Collections Limited (Professional Collection Management

Paulin v PCM Collections Limited (Professional Collection Management) (Ont Supt Ct, 2007) is an example of an extreme violation of the rule that a collector's communications with the debtor's employer must be limited to the specific allowed circumstances listed in the CAA. Here a collector faxed the employer several forged documents which slandered the debtor and led to his termination from employment. The debtor sued successfully for defamation and for "intentional interference with
economic or cont ractual relations" in and recovered general damages of $20,000, aggravated damages of $10,000 and as well loss of earnings of $410,000. The employer collection agency was found vicarious liable for the actions of the collector even though it's management neither knew of nor approved them (thus allowing the plaintiff to collect against them as that made them jointly liable).

In characterizing the elements of the tort of defamation the court stated:
[26] In order to recover in an action for defamation, the Plaintiff must show that:

1. the words about which the Plaintiff complains are defamatory;

2. they referred to the Plaintiff;

3. they were published to a third person.

[27] For the most part, defamation is a strict liability tort. A person is liable for a defamatory statement whether or not he or she intended to make any statement at all or one which carried a defamatory imputation or to cause any damage.

[28] The only exception to the rule of strict liability is the requirement that the Defendant must have acted intentionally or negligently in publishing the defamatory statement to a third party.

[29] A Defendant may successfully defend an action for defamation if he or she shows:

1. the words are true;

2. the Plaintiff consented to the defamatory publication;

3. the words were spoken on an occasion of absolute privilege;

4. the words were spoken on an occasion of qualified privilege and the Plaintiff is unable to show that the defendant was malicious;

5. the words were contained in a privileged report ;

6. the words are fair comment made honestly and in good faith on a matter of public interest.
(c) Tran v Financial Debt Recovery Ltd

In Tran v Financial Debt Recovery Ltd (Ont Sup Ct, 2000) the plaintiff sued a collection agency which was pursuing him for an alleged student loan debt (which was disputed by the plaintiff) for harassment. The court, describing the defendant's conduct as "appalling" found as facts that the collection agency improperly and repeatedly called the plaintiff's place employment and spoke with several people there in a manner that was abusive and threatening, disclosed - and even misrepresented - confidenti alinformation about him, engaged in bouts of serial abusive calling over a short period of time, and that a collector misrepresented that they were a government lawyer. This conduct only stopped when the plaintiff commenced his civil action.

In dismissing a preliminary non-suit motion, the court held that the Claim "set out the prerequisites for pleading the tort of defamation and probably also for the tort of intentional infliction of emotional suffering". It later stated "(i)t seems to me that the potential causes of action arising from the facts proven at trial are defamation, intentional infliction of emotional harm, interference with economic interests, threatening bodily harm and invasion of privacy."

On the tort of defamation, which was found, the court stated this standard [para 25]:
[25] In order to recover damages for defamation a plaintiff must prove that the words complained of were published, that the words complained of refer to the plaintiff and that the words complained of are defamatory of the plaintiff. Words are considered to be defamatory if they tend to lower a person in the estimation of right-thinking members of society: ....
Plainly wishing it could do more, the court amended the claim to increase from $15,000 to $25,000 (the simplified procedure maximum) and awarded accordingly (plus costs). It also sent a copy of the ruling to the Registrar of Collection Agencies.


7. Private Nuisance

Classically, private nuisance exists where someone interferes with a plaintiff's reasonable enjoyment of their private property (which would include their land, their home and also a rented home or apartment). As such it normally has only indirect relevance to typical debt collection behaviour.

However it was found in Lafleur v Canadian Bond Credits Ltd (Ontario Small Claims Court, 2003) where the plaintiffs were the brother and sister-in-law of a debtor who gave their address as his own. Despite the plaintiffs, and their lawyer, informing the collector that he did not reside there the collector persisted with numerous in-person and automated phone calls over an extended period of time. The plaintiffs sued successfully inprivate nuisance, and were together awarded $1500 general damages, $3000 punitive damages and costs.

In finding the defendant liable the court found that several provisions of the CA Regulation (as it then read) were violated. These provisions were with respect to too frequent calling constituting harassment [now s.22(6)6], and continuing to communicate with a person after being told they are not the debtor [now s.22(5)(b)]. As well, on the law respecting nuisance it relied upon the case of Motherwell v Motherwell (Alta CA, 1976) where the court stated:
It is clear to me that the protracted and persistent harassment of the brother and the father in their homes, and in the case of the brother as well in his office, by abuse of the telephone system is within the principle of private nuisance as it has been recognized in the authorities I have referred to. The question is whether the calls amounted to undue interference with the comfortable and convenient enjoyment by the plaintiffs of their respective premises. I can conceive that persistent and unwanted
telephone calls could become an harassment even if the subject-matter is essentially agreeable. The deliberate and persistent ringing of the telephone cannot but affect the senses in time, and operate on the nervous system as the evidence discloses.
In relying on the tort of private nuisance, which requires interference with the use or enjoyment of private property, the court was identified the excessive calls as an intrusion into the plaintiff's homelife. The court also characterized the wr ongdoing as harassment and an invasion of privacy, though those were not considered formally as heads of claim.


8. Intentional Interference with Economic or Contractual Relations

(a) Overview

The tort of 'intentional interference with economic or contractual relations' is a relatively little-used economic tort, though on the rights fact it can be brought to bear on improper collection behaviour (and perhaps misrepresentation to a credit bureau causing an incorrect credit rating, which may be considered in a later Isthatlegal.ca Legal Guide). In the two cases discussed below the 'contract' that was interfered with was the plaintiff's employment contract.

(b) Tran v Financial Debt Recovery Ltd

In Tran v Financial Debt Recovery Ltd (Ont Sup Ct, 2000) the plaintiff sued a collection agency which was pursuing him for an alleged student loan debt (which was disputed by the plaintiff) for harassment. The court, describing the defendant's conduct as "appalling" found that the collection agency improperly and repeatedly called the plaintiff's place employment and spoke with several people there in a manner that was abusive and threatening, disclosed - and even misrepresented -
confidential information about the plaintiff, engaged in bouts of serial abusive calling over a short period of time, and that a collector misrepresented that they were a government lawyer. This conduct only stopped when the plaintiff commenced his civil action (for $15,000 under the simplified rules).

In dismissing a preliminary non-suit motion, the court stated "(i)t seems to me that the potential causes of action arising from the facts proven at trial are defamation, intentional infliction of emotional harm, interference with economic interests, threatening bodily harm and invasion of privacy."

On the tort of intentional interference with economic interests, the court stated this standard drawn from Daishowa Inc. v Friends of the Lubicon (Ont Div Ct, 1996) [para 29]:
The tort of intentional interference with contractual relations and economic interests requires the plaintiff to prove:

(1) an intention to injure the plaintiff;

(2) interference with another’s method of gaining his or her living or business by illegal means; ....., and

(3) economic loss occasioned thereby.
(c) Paulin v PCM Collections Limited (Professional Collection Management)

Paulin v PCM Collections Limited (Professional Collection Management) (Ont Supt Ct, 2007) is an example of an extreme violation of the rule that a collector's communications with the debtor's employer must be limited to specific listed circumstances in the CAA. In this case a collector faxed to the employer several forged documents which slandered the debtor and led to his termination from employment. The debtor sued successfully for defamation and for "intentional interference with economic or contractual relations" in and recovered general damages of $20,000, aggravated damages of $10,000 and as well loss of earnings of $410,000. The employer collection agency was found vicarious liable for the actions of the collector even though it's management neither knew of nor approved them, thus allowing the plaintiff to collect the judgment against them directly.

On the claim for intentional interference with economic or contractual relations, the court characterized it's elements as comprising:
[35] In order to succeed in proving the tort of intentional interference with economic or contractual relations, a Plaintiff must prove:

1. that the Defendant intended to injure the Plaintiff;

2. that the Defendant interfered with the Plaintiff’s economic interests by illegal or unlawful means; and that as a result of the interference the Plaintiff suffered economic loss.

9. Invasion of Privacy

(a) Jones v Tsige

The tort of invasion of privacy was only very recently recognized in Ontario law with the case of Jones v Tsige (Ont CA, 2012). That case involved numerous (at least 174) unauthorized privacy violations of the plaintiff's bank records by an employee of the bank who also happened to be the new girlfriend of the plaintiff's former husband. While the tort is quite new and will require a lot of fleshing out in future cases, the Court of Appeal, in characterizing it's elements, Sharpe JA stated:
[70] I would essentially adopt as the elements of the action for intrusion upon seclusion the Restatement (Second) of Torts (2010) formulation which, for the sake of convenience, I repeat here:
One who intentionally intrudes, physically or otherwise, upon the seclusion of another or his private affairs or concerns, is subject to liability to the other for invasion of his privacy, if the invasion would be highly offensive to a reasonable person.
[71] The key features of this cause of action are, first, that the defendant’s conduct must be intentional, within which I would include reckless; second that the defendant must have invaded, without lawful justification, the plaintiff’s private affairs or concerns; and third, that a reasonable person would regard the invasion as highly offensive causing distress, humiliation or anguish. However, proof of harm to a recognized economic interest is not an element of the cause of action. I return below to the question of damages, but state here that I believe it important to emphasize that given the intangible nature of the interest protected, damages for intrusion upon seclusion will ordinarily be measured by a modest conventional sum.

......

[72] These elements make it clear that recognizing this cause of action will not open the floodgates. A claim for intrusion upon seclusion will arise only for deliberate and significant invasions of personal privacy. Claims from individuals who are sensitive or unusually concerned about their privacy are excluded: it is only intrusions into matters such as one’s financial or health records, sexual practices and orientation, employment, diary or private correspondence that, viewed objectively on the re asonable person standard, can be described as highly offensive.
The plaintiff was awarded $10,000 general damages.

Debt collection fact situations which may attract use of this tort include unauthorized access to bank records (as was the case in Tsige) and the obtaining of private information by fraudulent means (a common and until-now tolerated practice amongst private investigators). Other situations can no doubt be imagined that qualify.

(b) Somwar v McDonald's Restaurants of Canada Ltd

Incidental to many aggressive collection efforts is the obtaining of personal information regarding the alleged debtor by inapproriate or illegal means. That fact situation occured in Somwar v McDonald's Restaurants of Canada Ltd (Ont Sup Ct, 2006), an earlier Ontario case that was referred to in Tsige. In Somwar the court, facing an unauthorized credit check made by an employer, and considering a non-suit motion (which it dismissed) stated:
[22] In light of the trial decisions listed in this brief survey of Ontario jurisprudence, and the absence of any clear statement on the point by an Ontario appellate court, I conclude that it is not settled law in Ontario that there is no tort of invasion of privacy.
In light of the later decision in Tsige, it seems logical that today the facts of Somwar would result in liability.

(c) Tran v Financial Debt Recovery

In Tran v Financial Debt Recovery Ltd. (Ont Sup Ct, 2000) the plaintiff sued a collection agency which was pursuing him for an alleged student loan debt (which was disputed by the plaintiff) for harassment. The court, describing the defendant's conduct as "appalling" found that the collection agency improperly and repeatedly called the plaintiff's place employment and spoke with several people there in a manner that was abusive and threatening, disclosed - and even misrepresented - confidential information, engaged in bouts of serial abusive calling over a short period of time, that a collector misrepresented that they were a government lawyer, .... This conduct only stopped when the plaintiff commenced his civil action (for $15,000 under the simplified rules).

In dismissing a preliminary non-suit motion, the court stated: "(i)t seems to me that the potential causes of action arising from the facts proven at trial are defamation, intentional infliction of emotional harm, interference with economic interests, threatening bodily harm and invasion of privacy."


10. Limitation Periods

The standard limitation period in Ontario is two years from the date that the claim was 'discovered' - a concept which is more fully elaborated in s.5 of the Limitations Act, 2002. Much legal dispute has occured over when exactly a claim is 'discovered', but usually a common sense approach to this issue will produce a sound result. The basic idea is that once a party realizes that they have a claim that may be advanced by civil action then 'the clock starts to tick'. That said, there are numerous exceptions and variations on this basic theme.

As useful guide to Ontario Limitations law is located here:

PracticePro on Limitation Periods


11. Evidence

(a) Overview

If, as is usually the case, a collection-related tort action proceeds in Small Claims Court (maximum award of $25,000 as of Feb 2012) then the evidence rules of that court will apply to it. These rules are more lenient that those applied in the higher Superior Court (particularly with respect to hearsay evidence and documentation), and they are discussed at this Isthatlegal.ca link:

Small Claims Court (Ontario) Legal Guide: Ch.15: Evidence

The following sub-sections address some evidence rules that apply specifically to the advancement of collection-related torts.

(b) Inspectors and Other CAA Officials Not Compellable Witnesses in Civil Proceedings

No inspector or other person engaged in the enforcement of this Act may be compelled to give testimony in any civil proceedings (ie. lawsuits) with respect to information they have obtained [CAA 17(2)]. So if a debtor wants to sue a collection agency they cannot use a summons to compel testimony from such a person.

That said, such persons are still legally 'competent' to give such evidence, if the official (and their superiors) are willing to do so.

(c) Director's Certificates

In such a court action (and once again assuming their willingness to provide it), the CAA Director's certificate confirming any of the following is rebuttable (ie. unless the contrary is proven) proof of the following facts stated therein [CAA 29]:
  • the registration or non-registration of any person;

  • the filing or non-filing of any document or material required or permitted to be filed with the Registrar;

  • the time when the facts upon which proceedings are based first came to the knowledge of the Director; and

  • any other matter pertaining to such registration, non-registration, filing or non-filing.
(d) Copies of Documents Certified by CAA Inspectors

Copies of documents or records obtained by a CAA inspector, if certified to be true copies of the original, are admissible in any court in evidence to the same extent and with the same evidentiary weight as originals [CAA 13(7), 16(12)].


12. Collection

(a) Overview

Of course, once a positive court judgment has been issued in relation to a collection-related tort-based action, that judgment itself becomes collectable (and could, if you enjoy irony, be farmed out to another collection agency ;-). Normal court-based collection procedures in the Small Claims Court (the procedures are similar in the Superior Court), are explained at this Isthatlegal.ca link:

Small Claims Court (Ontario) Legal Guide: Ch.16: Collection

Additional collection law specific to collection agencies is discussed in (b) below.

(b) Collection from Bond Funds

The CAA requirement that registrants post bonds can be of assistance to a judgment creditor [on the subject of bonds generally see Ch.3, s.2(c) "Bonds"].

The first step in this process is the forfeiture of the bond, which can occur when either [CA Reg s.6(c,d)]:
  • civil judgment has been issued against the collection agency or any of it's collectors or officials "based on a finding of fraud"; or

  • other civil judgments issued against the collection agency or any of it's collectors or officials remain unpaid for 90 days.
Then, the Minister of Finance may pay such funds (or funds generated from sale of collateral bond security), to [Reg 9(1,2)]:
  • judgment creditors where the claim is collection-related;

  • non-judgment claims made to the Registrar and where the claim is collection-related if they are less than $100 in amount;

  • proven bankruptcy claims if the claim is collection-related, and

  • the Account of the Ontario Court in trust for the above potential claimants.
As such, anyone with a collection-related tort judgment against a CAA registrant which could trigger a bond default should be in touch the Registrar promptly. This would likely initially result in a letter to the registrant, with a strong suggestion that they 'pay up', failing which the Registrar must consider the stronger response of declaring the bond forfeit.

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