By: Douglas Hoyes, Ted Michalos
Licensed Bankruptcy Trustees
Bankruptcy Canada
February, 14, 2005
Bankruptcy trustees in Canada are covered either by the
federal Personal Information Protection and Electronic Documents
Act ("PIPEDA") or by provincial legislation that
is "substantially similar" to the federal statute.
Privacy legislation recognizes the rights of individuals
to control the use of their 'personal information' and requires
organizations to protect personal information in a manner
that a reasonable person would consider appropriate in the
circumstances.
What is Personal Information?
Information is personal if it can be attributed to a specific
individual, either directly or indirectly, by reference
to an identification number or one or more factors specific
to his or her physical, psychological, economic, cultural
or social identity. In the context of a bankruptcy in Canada,
personal information may include:
- financial records;
- credit and loan records;
- account numbers;
- documented disputes between consumer and merchant; and
- causes of financial difficulty that lead to a bankruptcy
filing in Canada
What organizations are covered?
Under PIPEDA legislation, the individual bankruptcy trustee
and/or trustee in bankruptcy firm is accountable for personal
information under their control. The bankruptcy trustee
must identify the purposes for which the personal information
is collected, and consent is required for the collection
and disclosure of personal information.
Trustees in bankruptcy may not collect personal information
indiscriminately, and may only collect what is necessary
to fulfill the purposes identified, using fair and lawful
means.
Bankruptcy trustees in Canada collect information that is
accurate, complete and up to date, and as a general rule
only disclose personal information as required by law, or
with the consent of the bankrupt.
All personal information is protected by appropriate security
safeguards, and the individual bankrupt is given access
to this information.
How does PIPEDA legislation impact on bankruptcy trustees?
It is likely that the impact of PIPEDA legislation on trustees
in bankruptcy in Canada was not considered by the legislators.
The PIPEDA language is general in nature, with no specific
references to trustees in bankruptcy in Canada or the provinces,
and thus ultimately it may be left to the courts to determine
what impact, if any, PIPEDA legislation will have on the
bankruptcy process in Canada.
We do know that the PIPEDA statue specifically states that
it has priority over other statues, including, we assume,
the Bankruptcy & Insolvency Act.
In order to file a bankruptcy in Canada, the trustee in
bankruptcy must transmit to the Office of the Superintendent
of Bankruptcy, generally either electronically or by fax,
various personal information, including the bankrupt's name,
address and phone number. In fact, a typical bankruptcy
application form will contain in excess of ten pages of
personal information.
It would appear that the PIPEDA statute would seem to suggest
that the trustee must obtain the debtor's written consent
for the collection of this information and must, at that
time, inform the debtor that it will be forwarded to the
OSB, which may make it public.
In practice, all debtors, prior to filing a bankruptcy
assignment, are required to complete an information form
containing this information. All debtors are informed that
bankruptcy is a legal process, and as such this information
must be filed with the government before the bankruptcy
process commences.
In recent years the information contained on the bankruptcy
documents has changed. For example, in the case of a debtor
who was indebted to the Canada Revenue Agency, is was formerly
commonplace to list, as the account number, the debtor's
social insurance number.
This is no longer the case. The debtor's social insurance
number is no longer printed on any public documents, or
an any documents that are sent to the Office of the Superintendent
of Bankruptcy. Instead, the trustee completes a separate
form, (the DC905 form), and transmit the notice of the bankruptcy
and the bankrupt's social insurance number directly to Canada
Revenue Agency.
At our firm, Hoyes, Michalos & Associates Inc., we
have instituted various other privacy related measures.
For example, our internal policies specifically prevent
our staff from releasing a bankrupt's phone number. If a
creditor calls requesting the phone number of a bankrupt,
it will not be provided. Phone numbers will only be provided
if authorized by the bankrupt or the trustee and then generally
only as required by law enforcement or other applicable
officials.
In conclusion, the requirements of PIPEDA and similar provincial
legislation do impose additional requirements on a trustee
in bankruptcy in Canada. However, the legislation is tempered
by the fact that it is the trustee in bankruptcy's duty
to protect personal information in a manner that a reasonable
person would consider appropriate in the circumstances.
Most reasonable people will not object to their name being
released in association with their bankruptcy, because under
those circumstances certain information must be released.
About the Authors:
Ted Michalos and Douglas Hoyes are chartered accountants
and licensed trustees in bankruptcy
in Canada. They are the founders of Hoyes,
Michalos & Associates Inc., one of Ontario's largest
personal insolvency firms. Information on this and other
topics can be found on their web site at www.hoyes.com;
information on bankruptcy in Canada can be found at www.bankruptcy-canada.ca
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