Significant Privacy Law Decision from the Alberta Court of Appeal
In a split decision released March 29, 2011, the Alberta Court of Appeal overturned a decision of the Alberta Privacy Commissioner: Leon's Furniture Limited v. Alberta (Information and Privacy Commissioner), 2011 ABCA 94. Geoff Hall and Kara Smyth of McCarthy Tétrault LLP acted as counsel for the successful appellant Leon’s.
Leon's has a policy of recording driver's licence and licence plate information where a customer takes delivery of merchandise some time after the date of purchase. The purpose of doing so is to have the information available to give to the police in the event of subsequent allegations of theft or fraud, such as when a fraudster claiming to be the purchaser picks up merchandise. The information is kept in a secure location and is used for no other purpose than to assist police if there are allegations of theft or fraud.
The Privacy Commissioner had held Leon’s policy unlawful under Alberta's Personal Information Protection Act (PIPA), even going so far as to hold that recording licence plate numbers was a breach of the statute. The Privacy Commissioner’s decision was initially upheld on judicial review by the Alberta Court of Queen's Bench. In a two-to-one decision, the Alberta Court of Appeal reversed.
In the Court of Appeal, there was significant disagreement between the majority and the dissent over the proper interpretation of PIPA. The majority accepted Leon's argument that there must be a balance between (i) the right of an individual to have his or her personal information protected; and (ii) the need of organizations to collect, use or disclose personal information for purposes that are reasonable.
Writing for the majority, Justice Slatter emphasized that neither of the two competing values is paramount. At paragraph 34, he stated:
The statute does not give predominance to either of the two competing values, and any interpretation which holds that one must always prevail over the other is likely to be unreasonable. A balancing is called for. That balancing is not fully implemented by the other provisions of the Act. [emphasis added]
The majority acknowledged not only the rights of the retailer organization but the larger public interest in preventing fraud:
But their admitted importance [the importance of privacy rights] does not mean that privacy rights must predominate over all other societal needs, values and interests. Because the customer's interests are important does not mean that the retailer's are not. Our society is complex and increasingly information based, and many organizations, businesses and individuals must use personal information for legitimate reasons on a daily basis. (para. 35)
The majority agreed with the Privacy Commissioner’s finding that driver’s licences are "personal information" under PIPA, yet cautioned against placing blanket restrictions on their use:
Driver’s licences are not just proof that the holder is authorized to drive; the average Albertan uses his or her driver’s licence far more frequently to prove identity than to prove the right to drive….
In determining what use of driver’s licence numbers would be found to be ‘appropriate in the circumstances’ by ‘reasonable persons,’ one must therefore have regard to the important place that driver’s licences play as a universal form of identification…
While protecting Albertans from invasions of privacy, intrusive marketing practices and identity theft are laudable objectives, it is unreasonable to place restrictions on the use of driver's licences that seriously undermine their usefulness as forms of identification. Section 3 of the Act specifically recognizes that individuals and organizations all have legitimate reasons to use personal information in this way. (paras. 40-41)
In assessing the reasonableness of the collection of licence plate numbers, the majority found that licence plate numbers do not constitute "personal information … about an individual" under the Act. The court stated that a vehicle licence is "linked to a vehicle, not a person" (para 49) and "[i]t makes no sense to effectively order, as did the adjudicator, that everyone in the world can write down the customer’s licence plate number, except the appellant." (para. 50)
In assessing the reasonableness of the Privacy Commissioner’s decision, the court found that the Privacy Commissioner erred by concluding that an organization must implement the least intrusive policies. Rather, the court found that an organization must implement a reasonable approach towards the collection of personal information. The court stated:
...the reasonableness of the adjudicator's decision is undermined by her failure to recognize that the appellant needed to show only that its policies were 'reasonable,' not that they were the 'best' or 'least intrusive' approaches. Sections 3 and 11 do not create any test of 'paramountcy'; the test is whether the use being made of the information is 'reasonably necessary.' That standard does not require the organization to defer in all instances to the interests of individual privacy. The respondent [Privacy Commissioner] is not empowered to direct an organization to change the way it does business, just because the respondent thinks he has identified a better way. So long as the business is being conducted reasonably, it does not matter that there might also be other reasonable ways of conducting the business.
Finally, the court concluded that the Privacy Commissioner’s conclusion that Leon’s policy on the delivery of goods to third parties "was unreasonable is itself unreasonable":
The adjudicator’s [Privacy Commissioner] approach was influenced by the view that privacy rights prevail in all circumstances over the legitimate need to use information. It was also unreasonable for the adjudicator to conclude that the appellant’s policy was unreasonable, because the adjudicator thought that there were other reasonable ways that the business could be operated. (para. 65)
This decision is obviously a very important win for businesses, in particular retail businesses, in Alberta. It is also important in British Columbia, which has privacy legislation similar to Alberta’s. It may have limited relevance outside Alberta and B.C., because the majority's decision turned on a provision of the Alberta statute which is worded differently from the federal privacy legislation (PIPEDA). Nonetheless, it seems that even outside Alberta and B.C., this is an important decision that our clients will want to make full use of in limiting the excesses of privacy commissioners.