By Norman Groot – April 1, 2004

Effective March 30th, 2004, private investigators and independent adjusters in Canada are designated in the regulations of the Personal Information Protection and Electronics Documents Act (PIPEDA) as investigative bodies for the purposes of sections 7(3)(d) and 7(3)(h.2) of the Act – the provisions pertaining to the non-consensual disclosure of an individual’s personal information to and from third party organizations. The granting by Industry Canada of the “investigative body” designation to the private investigation and independent adjuster industries in Canada has been the result of the efforts of their respective professional associations, and the support of many of their members. As counsel to both the CPIO and the CIAA on privacy issues, it was my pleasure to assist with the application process to Industry Canada. As a result of this experience, I am familiar with the many concerns that have been raised by their membership and legal counsel across the country as to the effect PIPEDA will have on how private sector investigations are conducted in Canada. This article addresses some of the more frequently asked questions.

Is the “Investigative Body” Designation An Exemption from PIPEDA?

The “investigative body” designation does not exempt private investigators and independent adjusters from PIPEDA. The general rule that consent must be obtained from an individual if that individual’s personal information is to be collected, used or disclosed as a part of a commercial transaction between organizations must be followed unless a case can be made that the obtaining of consent would compromise the availability or accuracy of the information sought.

Are all Private Investigators and Independent Adjusters Investigative Bodies?

Industry Canada has designated both the private investigation and independent adjuster industries in Canada as investigative bodies as a “class”, as opposed to by “name”, pursuant to section 26 of PIPEDA. For private investigators, Industry Canada has required that all private investigation companies either be incorporated or operate as a partnership in order to fulfill the definition of “body.” Industry Canada further required that all private investigation companies be licenced pursuant to their enabling legislation, be members in good standing of a professional association that has a privacy code compliant with the CSA Model Code, and have a corporate privacy code comparable to this standard as well. The result of these requirements is that all private investigation companies formerly operating as sole proprietors must now either incorporate or establish a partnership. Furthermore, all private investigation companies must be members of a professional association. Prior to PIPEDA, less than 25% of private investigation companies were members of their professional associations, and only four provinces had professional associations for their industry. Over the past months, the CPIO has been instrumental, with the B.C., Alberta and Newfoundland associations, in creating new provincial associations as well as a national association, and membership has significantly increased. For independent adjusters, Industry Canada has imposed slightly less onerous requirements. Independent adjusters must also be incorporated or operate as a partnership. However, independent adjusters have the choice of being licenced pursuant to their enabling legislation and having a corporate privacy policy compliant with the CSA Model Code, or being members in good standing of a professional association with such a privacy code. In other words, Industry Canada did not impose on independent adjusters the self-policing mechanism of membership in a professional association.

What Is Required Before An Investigation May Be Conducted Under PIPEDA?

One word - documentation. The primary issue that must be documented at the commencement of any investigation is the purpose for collecting, using and disclosing the personal information at issue. The first step in any such analysis is to determine if the information sought can be acquired by first requesting the consent of the person under investigation. The test is what is reasonable in the circumstances. If it is reasonable to expect that obtaining consent would compromise the availability or accuracy of the information sought, PIPEDA allows for the collection, use and disclosure of personal information reasonable for purposes related to investigating a breach of an agreement or a contravention of a law of Canada or a province. The investigative process, by its nature, requires the collection, use and disclosure of personal information. As indicated, the standard to which all investigations governed by PIPEDA must conform is that of reasonableness. It would seem safe to assume that what was reasonable for the purposes of investigating a breach of a contract or a contravention of a law prior to January 1, 2004 is also reasonable today. What PIPEDA has prohibited, however, is the conducting of investigations without consent when the purpose of the investigation does not reasonably relate to a breach of a contract or a contravention of a law. We might recall that section 3 of PIPEDA states that the legislative purpose of the Act is to provide rules to govern the collection, use and disclosure of personal information in a manner that recognizes the right of privacy of individuals and the need of organizations to collect, use and disclose personal information for purposes a reasonable person would consider appropriate in the circumstances. Representatives of Ontario’s Privacy Commissioner’s office have relied on studies concluding that 10% of Canadian society is unconcerned about privacy, 64% are privacy pragmatists, and approximately 26% are privacy fundamentalists as support for their own position as privacy pragmatists. We might therefore conclude that if the fictional “reasonable person” is a privacy pragmatist, privacy adjudicators will tend to view the societal cost of breaches of agreements and contraventions of laws as outweighing an individual’s privacy interest where there are grounds to suspect there has been or there is the potential for a breach of an agreement or a contravention of a law. Accordingly, what has changed with the passage of PIPEDA is the need for private sector investigators to document the grounds for their investigations. To conclude that PIPEDA has suddenly prohibited all investigations in the private sector is simply unreasonable.

What is a Breach of an Agreement or a Contravention of a Law?

There are those who say PIPEDA only permits non-consensual collection, use and disclosure of personal information in narrow circumstances. I do not subscribe to this view. Under both British Columbia’s and Alberta’s private sector privacy legislation, the term “investigation” is defined to include not only a breach of an agreement and a contravention of a law, but also circumstances or conduct that may result in a remedy or relief under an enactment, common law or in equity, as well as the prevention of fraud. In the near future we expect the federal privacy commissioner to find the B.C. and Alberta legislation to be “substantially similar” to PIPEDA. Accordingly, in order to determine the scope of investigations under the non-consent provisions of PIPEDA, we must be cognizant of the scope of nonconsent investigations permitted by the regimes in B.C. and Alberta. Certainly there are many arguments that can be made for the broad interpretation of the terms “breach of agreement” or “contravention of law”. For example, a “breach of agreement” could be interpreted to include not only traditional contracts, but also such agreements as domestic relationships, which would allow for the continued lawful undertaking of domestic investigations. Another example can be taken from the law of negligence, both under common law and statute. In Ontario, the Negligence Act provides that in any action for damages that is founded upon the fault or negligence of the defendant, if fault or negligence is found on the part of the plaintiff that contributed to the damages, the court shall apportion the damages in proportion to the degree of fault or negligence found against the parties respectively. The argument might therefore be made that conducting investigations of plaintiffs or potential plaintiffs in third party claims is permissible under PIPEDA.

Can Adjusters Take Statements? Can Investigators Conduct Surveillance?

On one end of the spectrum, independent adjusters in most cases will request the consent of an insured from whom they take a statement for the purposes of investigating a claim for that insured. Most reasonable insured persons will provide their consent for their information to be collected, used and disclosed to permit the adjusting of their claim. The inclusion of third party personal information in a statement from an insured or another witness is a more complicated matter, and well beyond the scope of this article. On the other end of the spectrum, if a private investigator is required to obtain the consent of an insured to place them under surveillance, most reasonable people would conclude that such consent would likely compromise the availability or accuracy of the information. Accordingly, what then must be determined is if the investigation is into a breach of an agreement or a contravention of a law. There are insurers who have discontinued all surveillance as a result of the passage of PIPEDA. We might wonder whether this is a reasonable response to combating insurance fraud.

Consent – Can It Be Implied Or Must It Be Express?

It is agreed by most who have grappled with PIPEDA that express consent is required for sensitive personal information– that is, for the collection, use and disclosure of an individual’s financial and medical information and personal identification numbers such as SINs and driver licence numbers. What is less clear, however, is if express consent is required to collect, use and disclose personal information such as an image on a videotape which has been captured from a public place. In Druken v. RG Fewer & Associates Inc., [1989] N.J. No. 312 (S.C.), the court held that in the Canadian justice system, while the mere commencement of an action does not grant a defendant the licence to delve into private aspects of a plaintiff’s life which are not relevant to the subject matter of the litigation, a litigant must accept such intrusions upon their right to privacy as is necessary to enable a judge or jury to get to the truth and render a just verdict. Based at least on this case, there is an argument that by commencing litigation, for example in a personal injury case, or even threatening the commencement of litigation, the plaintiff or potential plaintiff has implicitly consented to the collection, use and disclosure of their personal information by way of a surveillance video.

Going Forward

The social utility of private sector investigations has not diminished as a result of PIPEDA. What has been imposed is a new standard of documentation of the grounds for conducting your investigations – a standard insurers should be able to meet. Norman Groot is counsel on privacy issues to the Canadian Independent Adjusters Association and the Council of Private Investigations – Ontario. Mr. Groot is a litigation associate at McCague Peacock LLP, Suite 2700, PO Box 136, The Exchange Tower, 130 King Street West, Toronto, ON M5X 1C7 416-869-7839 (b) 416-860- 0003 (f) ngroot@mwpb.com . Mr. Groot is also the author of Canadian Law and Private Investigations, (Toronto: Irwin Law Inc., 2001), available from www.irwinlaw.com .