How Not to Serve a Debtor With a Statement of Claim

I wanted to blog about this interesting privacy case but a work colleague of mine beat me to it. Consequently, I obtained permission to publish it on Slaw. This post was written by Adam Gorley, editor, in my stead.

It’s not always easy to collect moneys owing from individuals. If the person doesn’t respond to attempts at communication, or if you simply can’t find the debtor, few options might remain. But one federal agency recently learned that despite having limited options, it couldn’t publicize a debtor’s personal information in its attempts to serve him with a statement of claim for the debt, supposedly at his workplace.

The debtor was a freelance information technology consultant under contract to a company that was itself under contract to a consulting firm. In other words, he was a sub-contractor, employed by himself, and not by either the consulting firm or the company that directly hired him.

During this contract, a federal agency was attempting to collect a credit card debt that the consultant owed. The agency issued a statement of claim for the debt, and tried to locate the consultant to serve the statement to him. The agency first looked for him at his residence in Calgary, but he was away from home for an extended period. The agency left several messages for the worker, but still received no response.

The agency subsequently determined incorrectly that the debtor was an employee at the consulting firm, and left the statement of claim at the firm’s reception desk. The document, which indicated that the federal agency was suing the worker for an unpaid debt and disclosed the amount, remained there, open for all to see.

The consultant eventually found out about the statement of claim, and subsequently complained to the Office of the Privacy Commissioner of Canada (OIPC) that the federal agency had disclosed his personal information without his consent. He was especially concerned that the disclosure might harm his reputation, which, as a freelancer, was how he acquired work.

The agency argued that in Alberta, statements of claim are open to public scrutiny and creditors can use the province’s courts in a number of ways to notify debtors, including publishing the information in a newspaper. Thus, leaving the statement of claim at the presumed employer’s office was actually a reasonably intrusive method of notification, which didn’t amount to a violation of the Personal Information Protection and Electronic Documents Act (PIPEDA).

The OIPC disagreed. In Alberta, without permission from a court, a creditor must serve a statement of claim to an individual in person. The creditor in this case obtained no such permission. Moreover, while in certain circumstances a creditor may disclose personal information that is appropriate to its aim of collecting the debt, the assistant commissioner found that the creditor’s statement of claim was inappropriate since it was unsealed and contained unnecessary information.

The assistant commissioner said:

the action of disclosing the complainant’s personal information to a stranger in the litigation process (i.e., individuals at the consulting firm’s office) was not directly related to the core purpose of recovering the debt through the pursuit of legal action against the complainant.”

The OIPC found the consultant’s complaint well-founded, and recommended that the creditor

review its procedures on the appropriate delivery and confidentiality of statements of claim served in debt-recovery proceedings”.

The creditor made the following policy changes:

    1) Using envelopes in all cases of service when a statement of claim is not being handed directly to the party in question

    2) Only serving statements of claim to addresses allowed on the claim document itself

    3) Providing privacy legislation training to its staff

The OIPC accepted the changes and considered the case resolved.

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