Parmar v Royal Bank of Canada, 2016 ABQB 439

Court of Queen’s Bench of Alberta Citation: Parmar v Royal Bank of Canada, 2016 ABQB 439 Date: 20160809 Docket: 1401 10358 Registry: Calgary Between: Amrinder Parmar Plaintiff - and - Royal Bank of Canada, TransUnion of Canada Inc., and Equifax Canada Co. Defendants _______________________________________________________ Memorandum of Decision of J.B. Hanebury , Master in Chambers _______________________________________________________ [ 1 ] This is an application by Mr. Parmar to either strike the Defendants’ Statements of Defence or for

summary judgment. Only the application for

summary judgment was argued. At issue is the liability of a Bank and two credit reporting agencies for their reports on the creditworthiness of Mr. Parmar. OVERVIEW [ 2 ] Mr. Parmar and the Royal Bank sued each other. Mr. Parmar was the first to commence an action, alleging that an employee of the Bank was involved in mortgage fraud and the theft of Mr. Parmar’s identity, which identity was then used to grant a mortgage. The Royal Bank sued Mr. Parmar on the mortgage, claiming he was liable.. The two actions were consolidated. Ultimately Mr. Parmar and the Bank entered into a settlement agreement, Mr.

Parmar paid the Bank $10,000, and the consolidated action was discontinued. [ 3 ] The Bank reported the status of its claim against Mr. Parmar to two credit bureaus, TransUnion Services Corporation, and Equifax Canada Co. Mr. Palmer alleges that as a result of their improper reporting, he had difficulty obtaining credit and he has not “known peace”. He seeks damages.

[ 4 ] Mr. Parmar also alleges defamation but as that was not pursued in argument, I have not considered that claim further. [ 5 ] During the course of argument it became quite clear that both Mr. Parmar and the Royal Bank did not discuss what should be reported to the credit agencies following their settlement. The settlement agreement stated that both parties denied liability. However, both parties continued to espouse their respective positions on their consolidated action. Mr. Parmar thought that the reporting should make it clear that he had no liability for the mortgage.

The Royal Bank was of the view that it was obligated to ensure that the reporting indicated that Mr. Parmar was liable under the mortgage, for it believed that to be the case. [ 6 ] Needless to say, this approach by the parties was not helpful. This Court will not, and cannot, determine liability under the mortgage. The release did not determine this fact, and despite Mr. Parmar’s arguments to the contrary based on the wording of the release, the parties chose to settle their actions without making a determination of that issue.

While they mutually released each other from their claims, they did not decide liability. The two concepts are different. In essence they both washed their hands of their actions and walked away with liability undetermined. [ 7 ] What this Court must do is examine the facts and determine whether the situation, as it existed, was accurately reported to and by the credit reporting agencies. If it was inaccurately reported, the court must decide who, if anyone, was liable for the inaccuracies and what, if any, damages Mr. Parmar suffered. [ 8 ] As the application is for

summary judgment, these determinations can only be made if there is no genuine issue of merit requiring a trial. FACTS [ 9 ] The mortgage in issue was granted in 2007 and was an insured mortgage. In 2009 Mr. Parmar sued the Bank claiming the mortgage was fraudulently obtained with the assistance of a Bank employee. Foreclosure proceedings were started in 2010 and the two lawsuits were consolidated. [ 10 ] The land in foreclosure was ultimately sold leaving a deficiency in excess of $200,000.00. A

summary trial of the consolidated action was scheduled and ultimately adjourned and the parties settled their claims. [ 11 ] The release of July, 2013, signed by the Royal Bank and Mr. Parmar, was a mutual release. Mr.

Parmar paid the Royal Bank the sum of $10,000 and the release stated: [ 12 ] The parties hereby release, remise, quitclaim and forever discharge from and against any and all manner of action, causes of actions… Suits, proceedings, liabilities, sums of money, obligations, duties, dues, accounts, interests, bonds, covenants, complaints, matters, contracts, claims, damages, and demands whatsoever both in equity and in law, against the other which each have, ever had, now has, can, shall or may hereafter have, arising out of or in connection… to the mortgage. … It is understood and agreed that the consideration paid or to be paid is not an admission of liability on the part of the part [sic] of the persons and corporations discharged by this mutual release and that such liability is denied. [ 13 ] Releases of this sort are very common.

A mutual discontinuance of action was filed after the execution of the release and it referenced the settlement of the consolidated action. [ 14 ] The Royal Bank admits that the file was an atypical situation that created “a specific challenge to RBC’s normal and typical procedures and systems for accurately reporting and recording Parmar’s outstanding indebtedness”. Unfortunately, it did not immediately correct its internal records. The Royal Bank continued to show funds outstanding by Mr. Parmar under the mortgage and this was duly reported by the credit reporting agencies. [ 15 ] Mr.

Parmar says that after he discovered the incorrect information on his credit history at the credit reporting agencies he made numerous attempts to have the Royal Bank correct its records. The Royal Bank says it has a record of three calls in late June and early July 2014, almost a year after the settlement. In any event, Mr. Parmar also involved his counsel to try to sort the matter out and the below-described series of communications ensued. [ 16 ] In December, 2013, some five months after the settlement, counsel for Mr.

Parmar contacted counsel for the Bank and advised that his client’s credit report continued to show an amount outstanding with respect to the mortgage. Bank counsel advised Mr. Parmar’s counsel that he thought the credit reporting agencies obtained their information from the courts and he should send the agency a copy of the mutual discontinuance. Counsel for Mr.

Parmar agreed to proceed in that way. [ 17 ] It appears from an answer to an undertaking given by the representative of the Bank, that this information was incorrect and it is the lender, i.e. the Bank, that reports monthly to the credit reporting agencies any updates to debtors’ credit information. [ 18 ] As the communications with the two credit reporting agencies developed along different time lines, I will first outline the communications with Equifax. [ 19 ] On January 15, 2014, as had been suggested by counsel to the Bank, Mr.

Parmar’s counsel wrote to Equifax and asked that the credit report reflect the fact that the matter with the Royal Bank of Canada was settled and the action discontinued. He enclosed a copy of the discontinuance. At the same time he wrote to counsel for the Bank asking that he confirm that the matter was settled and

there was no amount outstanding on the mortgage. [ 20 ] On February 12, 2014, Equifax contacted the Bank requesting more information. The Bank responded to Equifax’s request on February 12, 2014, indicating that the information being reported by Equifax in relation to Mr. Parmar was accurate and “there was a balance outstanding of 29,451.48 on the account [and] in the narrative ‘foreclosure’ should remain on Mr. Parmar’s credit file.” [ 21 ] Equifax requested further information from the Bank on February 14, February 24, March 6 and March 10, 2014, with the latter request resent on March 25, 2014.

It provided the Royal Bank with copies of certain court documents that had been provided to it by Mr. Parmar's counsel. It also emailed a senior team leader at the Bank on March 20, 2014. [ 22 ] On March 19, 2014 counsel for Mr. Parmar wrote to Equifax and said that we "hereby demand that you immediately update his credit report".

The letter threatened legal action and pointed to an obligation on the part of a credit reporting agency to ensure that its information was accurate, complete and up-to-date. [ 23 ] On March 25, 2014 the Bank responded to Equifax stating that "judgment obtained against this consumer has been satisfied". [ 24 ] A supervisor with Equifax then spoke to a representative of the Bank and confirmed that Mr. Parmar had "settled" his account with the Bank; the Bank would not be pursuing any remaining or outstanding balance; and all credit history relating to the account should remain reported on Mr.

Parmar’s credit file and Equifax should simply update the current account status. [ 25 ] Equifax responded to Mr. Parmar’s counsel on March 27, 2014 and said that the account has been updated, after contact with the Royal Bank, and now showed as "settlement made with a balance of zero". The letter noted that all the information contained in Mr. Parmar’s credit file is part of the credit history and for that reason prior information is still reported even if an account is paid or settled by other means.

The letter also noted that consumers have the right to add a consumer statement to their credit report, if they dispute the information shown. [ 26 ] On June 27, 2014, the Bank faxed Equifax, requesting that Mr. Parmar's credit file be updated as a result of "Bank error" to report "paid in full and closed since 2014 – 05 – 23". Equifax stated that it was not asked by the Bank to remove or otherwise modify any other credit information. [ 27 ] On August 18, 2014, counsel for Mr. Parmar complained that the notation contained in Mr.

Parmar's credit file, "settlement made with zero balance", was not sufficient and demanded that Equifax insert the phrase "zero balance" only “to reflect a more nuanced and accurate state of his credit record.” [ 28 ] That letter was copied to the Bank. [ 29 ] On August 22, 2014 Equifax responded to counsel for Mr. Parmar and said that: [T]his account has been updated to show as "account paid" with a balance of zero". The date of the last activity has been updated to show as October 1, 2009.

The item will automatically purged on October 1, 2015. [ 30 ] I turn next to the communications with TransUnion, the other credit reporting agency. [ 31 ] On February 11, 2014, Mr. Parmar called TransUnion complaining that the mortgage was incorrectly reported on his credit file. On February 13, 2014, TransUnion responded that the mortgage was accurately reported. [ 32 ] On March 19, 2014 counsel for Mr. Parmar wrote to TransUnion, as he had to Equifax, and said that we "hereby demand that you immediately update his credit report".

The letter threatened legal action and pointed to an obligation on the credit reporting agency to ensure that its information was accurate, complete and up-to-date. [ 33 ] On April 7, 2014 TransUnion contacted the Bank on a rush basis seeking verification of Mr. Parmar’s account information. It also advised Mr. Parmar’s counsel that it required photocopied identification from the plaintiff and a written statement appointing his lawyer to act on his behalf before it could disclose confidential information.

I note that this request for verification is in line with Alberta legislation. [ 34 ] No response was ever received from Mr. Parmar's lawyer. [ 35 ] On April 8, 2014, TransUnion received a response from the head office of the Royal Bank indicating that the mortgage was still open and there was almost $30,000 outstanding. [ 36 ] On April 24, 2014, TransUnion wrote Mr. Parmar directly and advised that the Royal Bank confirmed that the mortgage was correctly reported.

TransUnion pointed out that a consumer can add an explanatory statement to its report if he or she disagrees with the information found in the report. [ 37 ] On May 1, 2014, TransUnion received a fax from the Bank asking that Mr. Parmar’s account be updated to remove “delinquent mortgage from transit #”. TransUnion did so, leaving the narrative that described the mortgage as disputed. [ 38 ] On May 2, 2014, TransUnion received a fax from the Royal Bank requesting that the mortgage be changed to report that "judgment has been obtained" against Mr.

Parmar and “had been satisfied.” On May 5, 2014, TransUnion contacted the Royal Bank again and updated its report to add “Legal/account taken to court”, and the balance was changed to zero. [ 39 ] On or about November 25, 2014 TransUnion updated the credit file and the mortgage was reported as "M0P: 9– bad debt/collection/skip". There were two narratives included on the credit file stating "DS – disputed account" and SD – settlement/arrangements made with creditor" and there was a zero balance owing.

[40] On April 24, 2015 TransUnion updated the credit file again, based on information provided by the Royal Bank, to report thatthe mortgage had been satisfied. [41] Finally, on September 30, 2015, the mortgage was removed from the credit file by TransUnion’s system in accordance with itsretention requirements. [42] Mr.

Parmar points to two incidents where he says he was unable to obtain credit as a result of the misreporting of one or moreof the credit agencies and states that his prospects of owning a property in Canada have “been dealt a fatal blow”. [43] The first occurred in January, 2015 when his application for a mortgage was denied. It appears he provided a copy of therelease to the lender and when the lender saw that he had paid $10,000 to the Royal Bank “together with foreclosure reporting(regardless of reason)” it would not proceed.

The second application was in January, 2016, and his mortgage was approved by the TDBank but as it was a high ratio loan it required insurance financing. Genworth was the original insurer of the Royal Bank mortgage and itdeclined a request by the TD Bank to insure him. ISSUES [44] Mr. Parmar’s claims against the Bank and the credit reporting agencies raise the following issues: [45] When was the reporting on Mr Parmar’s credit files accurate? [46] Who was responsible for the inaccurate reporting? [47] Is Mr. Parmar entitled to damages for any inaccurate reporting? [48] Other issues raised by the parties.

ANALYSIS [49] As this is a

summary judgment application, the Court is to determine whether there is a genuine issue of merit requiring atrial: 776826 Alberta Ltd. v. Ostrowercha, 2015 ABCA 49; P(

W) v. Alberta, 2014 ABCA 404, para. 25. It was suggested by counsel forone of the Defendants that this is an appropriate situation for the Court to summarily dismiss Mr. Parmar’s claim, even though theDefendants did not file such an application. That request is considered after the analysis of the aforementioned issues. When was the reporting on Mr Parmar’s credit file accurate? [50] As earlier noted, this Court is not the forum to determine whether Mr. Parmar was or was not liable on the mortgage.

Thatissue was left undetermined by the parties and therefore any reporting on his credit file could fairly show the facts, ie. that there was alawsuit naming him that sought to foreclose on a mortgage; the action was settled; and, there was no money owed by him. [51] If Mr. Parmar wished more than this on his credit record either the release should have been differently structured or heshould have accepted the invitation of both credit agencies to provide an explanatory note to be included with his credit report.

He didneither. [52] The Royal Bank acknowledges that it inaccurately reported Mr.Parmar’s credit status. In the case of its reporting to Equifaxthe Bank said that its reporting was accurate as of March 25, 2014, when it advised “settlement made with zero balance”. [53] I agree. At that point the situation was accurately reported to Equifax who amended its records accordingly. I note that thechange made by Equifax to its report in August, 2014, appears to be as a result of a specific request from Mr.

Parmar’s counsel. [54] In relation to TransUnion, the Royal Bank stated that its reporting was accurate as of May 5, 2014 after it advised thatjudgment had been obtained against Mr. Parmar and satisfied. [55] I disagree. No judgment was ever obtained. In my view the evidence only discloses that the Royal Bank’s reporting wasaccurate as of November 25, 2014. That was when TransUnion reported “DS – disputed account" and “SD – settlement/arrangementsmade with creditor" and there was a “zero balance owing”. Who was responsible for the inaccurate reporting? [56] Mr.

Parmar points the finger at the credit reporting agencies and the Bank, arguing that all three are liable to him under theFair Trading Act, RSA 2000, c. F-2, the related regulations, and the common law. [57] The Bank acknowledges that its reporting was inaccurate. The credit reporting agencies dispute their liability. [58] The Court commented on the important role played by credit reporting agencies in Haskett v. Equifax et al., (ON CA), [2003] 63 O.R. (3d) 577 Ont. C.A., para. 29: Without credit, one is unable to conduct any financial transactions over the telephone or on the internet.

As credit is so ubiquitous, thereis nothing exceptional about consumer reliance on credit reporters to carry out their function not only honestly, but accurately, with skilland diligence and in accordance with statutory obligations. [59] As a result, credit reporting agencies can be liable to debtors for negligent reports: Haskett; Fair Trading Act Credit andPersonal Reports Regulation, AR 193/99, s. 2.1, s. 5.

[ 60 ] Credit reporting agencies are required to provide their reports based on the most reliable evidence reasonably available. Taking into consideration the over 110,000 reports the agencies receive monthly, relying on the credit granting institutions for information seems the only commercially reasonable way for them to carry on business. Their obligation is to set up reasonable procedures for ensuring information is fair and accurate and for investigating disputes: Spencer v. Equifax Canada Inc ., 2011 ONSC 7284 (Ont.

S.C.J.), para’s 34, 35. [ 61 ] If an individual disputes the accuracy or completeness of the information found in his or her file, the Act provides that he or she may file a written statement of protest. This triggers a requirement that the agency use its best efforts to check the accuracy and completeness of all the information disputed and report within 45 days: Fair Trading Act Credit and Personal Reports Regulation , s. 3.3. [ 62 ] Was a letter of protest filed in this case, triggering the 45 day timeline? [ 63 ] In the case of TransUnion, Mr.

Parmar’s counsel did not provide the authority to communicate with it as is required under the regulations. He communicated with TransUnion no further and therefore, arguably, no letter of protest was ever filed. Despite the failure of Mr.

Parmar’s counsel to respond to their request for authorization, TransUnion undertook to determine the accuracy of the information it was reporting. [ 64 ] In my view, as arguably no letter of protest was filed and it still undertook efforts to ensure the accuracy of its information, it has raised genuine issues of merit requiring a trial as to whether it has any liability for the inaccurate information contained in its report. [ 65 ] The situation is somewhat different in relation to Equifax. Mr. Parmar’s counsel sent a complaint to Equifax on January 15, 2014, which it chose to treat as a letter of protest.

Equifax then repeatedly contacted the Bank seeking further information, both in writing and by telephoning. [ 66 ] In my view the efforts it undertook raise a genuine issue of merit requiring a trial as to whether it made reasonable efforts to verify the accuracy and completeness of its information. [ 67 ] That leaves for further consideration the question of the liability of the Royal Bank. The Royal Bank failed to properly report on the status of Mr. Parmar’s account to both credit reporting agencies, a problem it acknowledges. It points to systemic difficulties in dealing with such an unusual situation.

While that may be a reason, it does not excuse the Bank from liability. [ 68 ] The Fair Trading Act , provides that “no person may give false or misleading information to a reporting agency”: s. 49.

A civil remedy is provided in s. 50: If an individual has suffered loss, damage or inconvenience as a result of a contravention of this Part or the regulations made under this Part, the individual has a cause of action against the person who contravened this Part or the regulations made under this Part and is entitled, if the court finds the individual has suffered loss, damage or inconvenience, to a judgment for the damages suffered. Is Mr. Parmar entitled to damages for any inaccurate reporting? [ 69 ] The reporting by both agencies was accurate by November, 2014. Mr.

Parmar’s first attempt to gain a new mortgage was in January, 2015, after the corrected reporting was available. Mr. Parmar made available to the lender the release so that it was aware of the circumstances of the case. I fail to see how damages should be awarded on the basis of that lender’s refusal. It apparently knew and understood the situation. [ 70 ] The second attempt to obtain a mortgage failed as a result of the insurer refusing to insure the loan as it had previously paid out on the original mortgage. This payout occurred two years before the settlement. An insurer is not obligated to insure.

It assesses each situation and makes a determination. At that time the credit reporting was accurate and I cannot see how damages should be awarded on that basis. [ 71 ] Mr. Parmar has not provided any further specific evidence to support his claim for damages. There are no doctor’s reports or other evidence to support his claim of mental distress. [ 72 ] However, the Act permits an award of damages for inconvenience: Fair Trading Act , s. 50. Case law in somewhat similar situations supports an award of damages: Nammo v. TransUnion of Canada Inc ., [2010] F.C.J. No. 1510 ; Albayate v.

Bank of Montreal , 2015 BCSC 695 ; Neil v. Equifax Canada Inc. , 2005 SKPC 105 . [ 73 ] There is an obvious reason behind this legislative approach. The Royal Bank, and for that matter the credit reporting agencies, are in a position of power vis a vis the ordinary consumer. They control what is reported about the creditworthiness of an individual. An individual should not have to hire counsel and undertake the measures taken by Mr. Parmar, a taxi driver, to have the record set straight. [ 74 ] While the Bank was prepared to admit it made an error, it does not appear to have apologized to Mr.

Parmar and even in argument turned a blind eye to the settlement agreement and argued that the Bank knew Mr. Parmar was liable under the mortgage. While there was no evidence the Bank acted maliciously, it seems to have had difficulty accepting the terms of the release it executed. Mr. Parmar had to deal with a lender who, to a large extent, controlled what was reported by Equifax and TransUnion, and who continued to see him as liable, despite the release it does not deny it properly signed. It left him with an uphill battle that required him to hire a lawyer. [ 75 ] In my view, in these circumstances, Mr.

Parmar is entitled to an award of nominal damages against the Royal Bank in the sum of $5000.00 for the inconvenience caused to him by its failure to fairly and promptly report to the credit reporting agencies. [ 76 ] This does not end the matter, as other claims were made by Mr. Parmar. Other Issues

[ 77 ] Mr. Parmar made various other arguments. [ 78 ] He argued that the records of the Bank should have been retroactively adjusted to show that the Bank never claimed that funds were owed by Mr. Parmar. As earlier noted, the release did not determine liability. That issue remained undetermined and the fact remained that the Royal Bank had filed a lawsuit against Mr.

Parmar seeking the amount outstanding under the mortgage. [ 79 ] He argued that the terms of the release had been breached because two years prior to the execution of the release Genworth paid the Royal Bank pursuant to the terms of its insurance contract. [ 80 ] The Royal Bank did not breach the terms of the release by accepting that payment two years prior, and even it did, no damages flowed from that breach. I cannot see how a prior payment by an insurer has the effect argued. [ 81 ] He argued that the wording of the release rendered the lawsuit of the Bank essentially non-existent as it released prior claims.

Therefore the Bank should advise all parties that there was no lawsuit. That is not the effect of the release. [ 82 ] He argued that the credit reporting agencies violated s. 4(2)(

a) of the Regulations by including unfavourable personal information in their reports. However, the information at issue here does not come within the definition of personal information found in s. 4(1) of the Regulations. [ 83 ] All of these arguments fail to support Mr. Parmar’s claim against the Defendants for damages. [ 84 ] It was argued by TransUnion that this Court should not consider the arguments under the Fair Trade Act as the Act was not pled in the Statement of Claim. [ 85 ] No one was caught by surprise by the provisions of the Act.

I see nothing to be gained by denying this application on that basis, the claim then being amended and the application set back before the Court of Queen’s Bench. That is a waste of everyone’s time. In any event, the application for

summary judgment against the credit reporting agencies was dismissed. However, before proceeding further, Mr. Parmar must amend his claim to reference the Act. [ 86 ] Finally a request was made by TransUnion that the Court dismiss the claim against it summarily, despite the fact that no such request was made by way of application: Pyrrha Design Inc v. Plum and Posey Inc , 2016 ABCA 12 . [ 87 ] Unlike Pyrrha , where the request for such a counter-application was included in the respondent’s filed brief, no mention was made of this request by TransUnion until oral argument.

Since this request was only made in oral argument, and in light of TransUnion’s late filing of its affidavit, which was only filed at the same time as its brief, its request is denied. Applications for

summary judgment should not be defended by way of ambush. CONCLUSION [ 88 ] The application for

summary judgment is granted against the Royal Bank and damages are awarded in the sum of $5000.00. The application is dismissed against both Equifax and TransUnion as they have raised genuine issues of merit requiring a trial. [ 89 ] If costs cannot be agreed by the parties, the parties are to speak to the Clerk within 45 days to arrange for a further attendance. Heard on the 30 th day of June, 2016. Dated at the City of Calgary, Alberta this 9 th day of August, 2016. J.B. Hanebury M.C.C.Q.B.A. Appearances: Ugochukwu (Ugo) Ukpabi Lacourciere Associates

for the Plaintiff Darin J. Hannaford Miller Thomson LLP for the Defendant Equifax Canada Co. Ellery C. Lew Witten LLP For Defendant Royal Bank of Canada Taylor Schappert Osler, Hoskin & Harcourt LLP For TransUnion of Canada Inc.