Can a Collection Agent Be Found Liable For Aggressive Collection Efforts?
A Collection Agency, Business, or Even a Private Individual, May Be Found Liable For Engaging In Tortious Conduct As a Tactic to Collecting Debts. While a Licensed Collection Agent Will Have Special Rules to Follow, Essentially Anyone Who Behaves Tortiously May Be Sued. and Found Liable.
Understanding When Debt Collection Efforts Become Harassing With Potential For Liability
Every so often calls are received from people who complain of being harassed by collection agents. While a collection agent calling to collect on an overdue account is generally lawful, collectors are required to perform collection efforts in accordance to the Collection and Debt Settlement Services Act, R.S.O. 1990, c. C.14 as well as the judicially established common law.
The Collection and Debt Settlement Services Act prescribes and prohibits various forms of collection agency and collection agent conduct. Specifically, the Collection and Debt Settlement Services Act states, among other things:
22 No collection agency or collector shall,
(a) collect or attempt to collect, on its own behalf or for a person for whom it acts, any money in addition to the amount owing by the debtor;
(b) communicate or attempt to communicate with a person for the purpose of collecting, negotiating or demanding payment of a debt by a means that enables the charges or costs of the communication to be payable by that person;
(c) receive or make an agreement for the additional payment of any money by a debtor of a creditor for whom the collection agency acts, either on its own account or for the creditor and whether as a charge, cost, expense or otherwise, in consideration for any forbearance, favour, indulgence, intercession or other conduct by the collection agency;
(d) deal with a debtor in a name other than that authorized by the registration;
(e) engage in any prohibited practice or employ any prohibited method in the collection of debts; or
(f) engage in any prohibited practice or employ any prohibited method in providing debt settlement services or in respect of debt settlement services agreements.
When a collection agent becomes overly aggressive and engages in tactics such as calling too frequently or contacting people other than the debtor such as demanding that a friend or relative either pay the debt of the debtor or provide information as to where the debtor can be contacted directly. Where a collection agent breaches the Collection and Debt Settlement Services Act, by harassing telephone calls, or other improper conduct, the collection agent may be found found liable. This potential for liability was explained within the cases of Anderson v. Excel Collection Services Ltd., 2005 CanLII 35681; LaFleur v. Canadian Bond Credits Ltd., 2003 CanLII 64307; and Tran v. Financial Debt Recovery Ltd., 2000 CanLII 22621, wherein each it was respectively said:
 The Deputy Judge concluded that Excel had engaged in conduct prohibited by the regulations under the Collection Agencies Act. More particularly, he found that Excel had violated s. 20(d) of Regulation 74, R.R.O. 1990, which provides that no collection agency shall “make telephone calls or personal calls of such nature or with such frequency as to constitute harassment of the debtor…”. He also found that Excel violated s. 20(f) of the regulation by giving any person “any false or misleading information that may be detrimental to a debtor” and s. 21 of the regulation because of improper contacts with Mr. Anderson’s employer.
 With respect to s. 20(f), the Deputy Judge stated that in order for the calls to be harassment, the language used must be abusive or threatening. He found that an employee of Excel, Roger Lansing, called Mr. Anderson nine times in September 2002, using threatening and abusive language and thus committing harassment. There is evidence from Mr. Anderson, which the Deputy Judge accepted, to support this conclusion.
 The Deputy Judge also made findings of fact with respect to the information reported to Equifax, a credit reporting bureau. Having considered the evidence, he concluded that Mr. Anderson had given proper notice to terminate his tenancy, and therefore, he did not owe Azuria the amount claimed, which Excel had reported to Equifax. Again, there was evidence to support the conclusion that there was no debt to Azuria and, therefore, incorrect information was provided to Equifax. However, as set out below, that does not determine the issue of negligence.
 Finally, the Deputy Judge concluded that Mr. Lansing made contacts with Mr. Anderson’s employer and conveyed information beyond what he was entitled to discuss under s. 21 of the regulation. Again, there is evidence to support this finding.
 The issue, then, is whether the Deputy Judge erred in finding that Excel failed to meet the standard of care for a collection agency, given his findings of fact. The Deputy Judge correctly stated that proof of a statutory breach which causes damages may be evidence of negligence (Galaske v. O’Donnell, 1994 CanLII 128 (SCC),  1 S.C.R. 670 at para. 30).
 In my view, the Deputy Judge did not err in concluding that the Collection Agencies Act and regulations, designed as they were to protect debtors from certain practices, are evidence of the standard of reasonable conduct to be expected of a collection agency.
 Given his findings about the nature of Mr. Lansing’s calls and their frequency, the Deputy Judge reasonably concluded that s. 20(d) of the regulation set a standard of reasonable behaviour and, given the violation, Excel’s conduct fell below the standard of care.
 However, the Deputy Judge also held that the number of calls from Excel was excessive and constituted harassment, since Mr. Bryant, the first caller, was told in February, 2000 that Mr. Anderson disputed the debt. The Deputy Judge stated in his reasons that once a debtor makes a statement that he does not owe any money, the collection agency must stop contacting him, and to continue to call is “generally speaking, harassing”. In my view, this definition of harassment is overbroad, given the evidence of Mr. Bryant that it is very common for debtors to deny the debt initially. Moreover, the regulation refers to the “frequency” of the calls, which suggests that the focus is on the number of calls, in addition to their nature.
 Nevertheless, the evidence of the nature and frequency of Mr. Lansing’s calls in September, 2002 reasonably led to the conclusion that there was harassment within the meaning of s. 20(d) of the regulation and conduct that fell below the standard of care - especially given Mr. Anderson’s explanation of events throughout to Excel.
 With respect to s. 20(f) of the regulation, the Deputy Judge stated, “The statutory or regulatory duty to be honest in respect of the information given to a third party is a reasonable standard of behaviour at common law.” He expressed the opinion that a collection agency should not report a debt to a credit bureau without a judgment from the courts if the debtor disputes the debt. Therefore, Excel was negligent in reporting the debt because Mr. Anderson was found to owe no money to Azuria.
 The Collection Agencies Act, in s. 28(10)(c), makes it an offence for a person to “knowingly” contravene the Act and regulations. Moreover, the Consumer Reporting Act, R.S.O. 1990, c. C.33, s.22 prohibits a person from “knowingly” supplying false or misleading information to another who is engaged in making a consumer report. The Deputy Judge made no finding that Excel knowingly provided false information to Equifax. Mr. Bryant gave evidence that he relied on information provided by Azuria, and the fact that there was no debt was not determined until the trial in this proceeding.
 As Galaske, supra stated, breach of a statute may be evidence of negligence. In this case, there is no offence under the two Acts unless the person making the report knew that the information was false. It may also be reasonable to find a breach of the standard of care when a person reports a debt without taking reasonable care to determine the existence of the debt. In the absence of a finding that the report here was made with knowledge that the information about the debt was false or without due care in determining the debt existed, there was no breach of the standard of care in reporting the debt. The fact that the debt was subsequently found not to exist is not, on its own, sufficient to show dishonesty nor a breach of the standard of care.
 Finally, the Deputy Judge reasonably found that Excel fell below the standard of care in the contacts made with Mr. Anderson’s employer.
In the case of Motherwell v. Motherwell (1976), 1976 ALTASCAD 155 (CanLII), 73 D.L.R. (3d) 62,  6 W.W.R. 50 (Alta. S.C. App. Div.), the Alberta Court of Appeal dealt with harassing telephone calls and whether or not they gave rise to a cause of action in nuisance. At p. 10 of the Quicklaw version [p. 74 D.L.R.] provided to me by counsel for the plaintiffs, Clement J.A. had the following observation:
It is clear to me that the protracted and persistent harassment of the brother and the father in their homes, and in the case of the brother as well in his office, by abuse of the telephone system is within the principle of private nuisance as it has been recognized in the authorities I have referred to. The question is whether the calls amounted to undue interference with the comfortable and convenient enjoyment by the plaintiffs of their respective premises. I can conceive that persistent and unwanted telephone calls could become an harassment even if the subject-matter is essentially agreeable. The deliberate and persistent ringing of the telephone cannot but affect the senses in time, and operate on the nervous system as the evidence discloses. No special damage is required to support an injunction: it is the loss of the amenities of the premises in substantial degree that is involved.
The case of R. v. Ens,  S.J. No. 393 (QL), D.C.C.A. No. 1 A.D. 1979 J.C.S. (Dist. Ct.) was a prosecution in Saskatchewan under the Collection Agents Act, 1968, S.C. 1968, c. 11 where the legislation is essentially the same as that in force in Ontario. The respondent made six telephone calls to the complainant in the course of two days with respect to collection of a debt owed by the complainant to the collector's client. When looking at whether or not the calls constituted harassment within the Act, the court [at para. 11] made the following observation in relation to harassment:
It may be described as the point at which the collector's tactics go beyond what the society concerned thinks decent under the circumstances. It may be described as the point at which the collection practice involved is offensive and unacceptable. It may be described in terms of unreasonableness in all [page761] the circumstances. The differences are more apparent than real, but perhaps, at the heart, really lies reasonableness in all the circumstances.
In that case, a collector was dealing with the debtor and the court found that the calls constituted harassment and a conviction was registered.
From May 26, 2003 onward, the defendant knew that it was not dealing with the debtor when it called the phone number at the residence of the plaintiffs; that the calls were unwanted, that the plaintiffs wanted them to cease immediately; that the plaintiffs found the calls to be upsetting and distressing to the point that the plaintiff Lynn Bourke was brought to tears, and that the plaintiffs were sufficiently distressed that they employed the services of a solicitor to assist them in getting the calls stopped. Notwithstanding all of that information in the hands of the representative of the defendant, the calls did not stop. They persisted. There was no justification whatsoever for the plaintiffs to have received even one phone call after May 26, 2003 and even less justification after the 27th day of June when Exhibit 2 was delivered by the Pitblado firm to the defendant.
I find that the defendant contravened the Collection Agencies Act and that its persistent unwarranted telephone calls constituted harassment of the plaintiffs. It was an invasion of their privacy and constituted a nuisance deserving of compensation.
 In order to recover damages for defamation a plaintiff must prove that the words complained of were published, that the words complained of refer to the plaintiff and that the words complained of are defamatory of the plaintiff. Words are considered to be defamatory if they tend to lower a person in the estimation of right-thinking members of society: Gatley on Libel and Slander, 9th ed. (London: Sweet & Maxwell, 1997) at p. 7; Botiuk v. Toronto Free Press Publications Ltd, 1995 CanLII 60 (SCC),  3 S.C.R. 3 at 24, 126 D.L.R. (4th) 609; Cherneskey v. Armadale Publishers Ltd., 1978 CanLII 20 (SCC),  1 S.C.R. 1067 at 1079, 90 D.L.R. (3d) 321.
 The defendant argues that the comments and name-calling by Alexander on the telephone to Mr. Tran do not give rise to liability because they were not published. I disagree. It was clear to Mr. Tran from his end of the line that Alexander was making these derogatory statements about him to the general merriment of other employees of the defendant who could hear Alexander’s end of the conversation. However, it is not clear that those individuals who heard the conversation knew that the remarks related to Mr. Tran. An argument could be made that it is reasonable to draw an inference to that effect, especially given the failure of the defendant to call any evidence to rebut it. However, I have decided against doing so. Any damages for this particular act of defamation would not be extensive in any event given the limited extent of the publication and the persons to whom the publication was made.
 The statements made by Mr. Papatetrou to Ms. Marshall are, however, clearly actionable. Mr. Papatetrou told Ms. Marshall that Mr. Tran had applied for another job and suggested that this put him in a position of conflict of interest. There was an innuendo created that Mr. Tran was therefore a disloyal and unreliable employee. Mr. Papatetrou also told Ms. Marshall that the Sheriff would be attending at the workplace to serve a court order, thereby giving the impression that there was in fact a judgment against Mr. Tran for failing to pay a debt. The statements made by Mr. Paptetrou were untrue. Counsel for the defendant conceded that they are defamatory. I agree. Ms. Marshall herself acknowledged that she thought less of Mr. Tran as a result of this call from Mr. Papatetrou.
 Thus, the evidence establishes all of the requisite elements of the tort of defamation. Upon proof of the tort, damages flow: Gatley on Libel and Slander, supra at p. 11. As stated by the Supreme Court in Hill v. Church of Scientology of Toronto, 1995 CanLII 59 (SCC),  2 S.C.R. 1130 at 1196, 126 D.L.R. (4th) 129: “It has long been held that general damages in defamation cases are presumed from the very publication of the false statement and are awarded at large.” It is not necessary to prove specific damages, although if special damages can be shown, they are also compensable. The defendant argues that the plaintiff’s general damages for defamation should be at the low end of the scale because he was a recent graduate without a well-established reputation and because of the limited extent of the publication of the defamation. The application of that reasoning to this case is flawed. Although the defendant did not publish its defamatory statements to the whole world, it chose the one person in the world to whom publication would have the most devastating impact on the plaintiff, his employer. In assessing damages, the nature of the audience may be more important that its size: Raymond E. Brown, The Law of Defamation in Canada, 2nd ed. (Toronto: Carswell, 1994) at p. 27-72.2. In Hill, supra, the Supreme Court noted the uniqueness of each libel case, stating at para. 187:
The assessment of damages in a libel case flows from a particular confluence of the following elements: the nature and circumstances of the publication of the libel, the nature and position of the victim of the libel, the possible effects of the libel statement upon the life of the plaintiff, and the actions and motivations of the defendants.
Mr. Tran was a recently hired employee. This was his first real job in his chosen career. He was working in the field of finance. He had yet to develop a proven track record of responsibility and loyalty to his employer. He was therefore particularly vulnerable at this time and in this kind of workplace to the kind of defamation perpetrated by the defendant. Ironically, it was because he was a recent graduate that the defendant’s attack on his reputation was particularly harmful. In addition, defamation related to one’s profession is particularly harmful and should be reflected in the award of damages: Schultz v. Porter (1979), 1979 CanLII 1049 (AB QB), 9 Alta. L.R. (2d) 381 (S.C.), where the court stated at p. 400 that the fact that the plaintiff’s “commercial and professional reputation was directly involved merits an award of damages substantially higher than would be the case if the defamation did not involve economic consequences”. How closely the defamation touches the core elements of a person’s personality, and his or her integrity, professional reputation, and loyalty are key considerations in awarding damages: Gatley, supra at p. 202.I will deal below with the quantum of damages in more detail. Intentional Interference with Economic Interests.
 The essential elements of the tort of intentional interference with economic interests were confirmed by the Ontario Court of Appeal in Lineal Group Inc. v. Atlantis Canadian Distributors Inc. (1998), 1998 CanLII 4248 (ON CA), 42 O.R. (3d) 157, quoting the following excerpt from the decision of Corbett J. in Daishowa Inc. v. Friends of the Lubicon (1996), 1996 CanLII 11767 (ON SC), 27 O.R. (3d) 215 at 230, 29 C.C.L.T. (2d) 76 at 93 (Div. Ct.) (leave to appeal to the Ont. C.A. refused April 24, 1996, Doc. CAM 17675):
The tort of intentional interference with contractual relations and economic interests requires the plaintiff to prove:
(1) an intention to injure the plaintiff;
(2) interference with another’s method of gaining his or her living or business by illegal means; see International Brotherhood of Teamsters, Local 213 v. Therien, 1960 CanLII 33 (SCC),  S.C.R. 265 at 280, 22 D.L.R. (2d) 1; and
(3) economic loss occasioned thereby.
 In my opinion, the evidence in this case establishes that the defendant committed this tort. The defendant argues that there is no direct evidence of intent to injure. It is certainly the case that there was no direct evidence from the defendant as to its intention in respect of the actions taken against Mr. Tran. The defendant called no evidence at all. However, what other possible reason can the defendant have had in calling the president of the company employing Mr. Tran and fabricating a story that Mr. Tran had applied for a job at another company? Why suggest that Mr. Tran was in a position of conflict of interest based on that fabricated story? Why tell the president of the company that the Sheriff will be coming to serve court orders when there was not even an action started? It is a reasonable, indeed perhaps an inescapable, inference from that conduct that the defendant intended to put pressure on the defendant by getting him into trouble with his employer. Further, the defendant’s constant and extreme harassment of the plaintiff at work must have been directed towards the same end. I can and do draw an adverse inference from the defendant’s unexplained failure to call any evidence. I find as a fact that the defendant intended to injure the plaintiff.
 It is obvious that the defendant’s conduct interfered with Mr. Tran’s ability to earn a living. Mr. Tran was constantly being interrupted and distracted at work by harassing telephone calls from the defendant’s employees. He testified that his ability to concentrate and his memory were adversely affected. In addition, the defendant’s conduct affected other people at Mr. Tran’s place of employment, a factor that made his relationships with co-workers more difficult. Both the president and vice-president of the company were required to speak to Mr. Tran about the problems being caused in the workplace by the defendant.
 The defendant used illegal means in the course of this interference with Mr. Tran’s work. Some of the statements made by the defendant’s representatives were untrue and defamatory, as I have stated above. Further, the defendant’s conduct was a violation of several provisions of the Regulations under the Collection Agencies Act, R.S.O. 1990, c. C.14, the statute by which companies such as the defendant are supposed to be governed. Sections 20 and 21 of those Regulations, R.R.O. 1990, Reg. 74, set out certain prohibited practices and methods in the collection of debts. The defendant’s conduct breached s. 20(d) which prohibits making “telephone calls or personal calls of such nature or with such frequency as to constitute harassment of the debtor”. Both the nature and frequency of the phone calls constituted harassment. The defendant’s conduct also breached section 20(f), which prohibits giving “any person, directly or indirectly, by implication or otherwise, any false or misleading information that may be detrimental to a debtor”. The defendant’s action in contacting Mr. Tran’s employer was also prohibited by s. 21 of the Regulation. Therefore, I find that the defendant interfered with Mr. Tran’s work by illegal means.
 Finally, the plaintiff has established economic loss as a result of the defendant’s actions. I will deal with this issue in more detail below under the heading “Damages”. For present purposes, it is sufficient to note that Mr. Tran received a significant raise and bonus in his first year of work. In 1999, the year in which the defendant’s harassment of Mr. Tran began, he got no raise and no bonus. Ms. Marshall acknowledged in her evidence that the actions of the defendant were a factor in the decision not to give Mr. Tran a raise or bonus in 1999. Thus, Mr. Tran has proven actual economic loss as a result of the defendant’s actions.
Intentional Infliction of Emotional Harm
 Intentional infliction of emotional harm is a tort recognized in Canadian law and has been applied in the debt-collection context: Bateman v. Newcourt Credit Group Inc.,  O.J. No. 325 (QL) (Gen. Div.) [summarized 53 A.C.W.S. (3d) 279]. The essential elements required to establish the tort are: (1) an intention to harm the plaintiff; (2) an overt act for which there is no legal justification; and (3) mental suffering caused to the plaintiff as a result: Radovoskis v. Tomm (1957), 1957 CanLII 451 (MB QB), 9 D.L.R. (2d) 751 at 756; Blumas v. Institute of Chartered Accountants of Ontario,  O.J. No. 3108 (QL) at para 16 (Sup. Ct.) [summarized 99 A.C.W.S. (3d) 168]; Bateman v. Newcourt Credit Group Inc., supra, at para 9.
 As I stated above, the nature of the defendant’s conduct was such that the only reasonable inference is that the defendant intended to injure the plaintiff. It is also apparent that the campaign of harassment was specifically designed to put the plaintiff in a situation of such stress that he would capitulate to the defendant’s demands. There was, therefore, a deliberate attempt to cause emotional suffering to the plaintiff.
 There is no justification for the behaviour of the defendant. The defendant’s employees lied about their own identities, fabricated defamatory stories about the plaintiff, harassed the plaintiff at work, harassed other employees at the plaintiff’s office, threatened physical harm to the plaintiff, called him offensive names and generally humiliated him. Their conduct was not only reprehensible, it was illegal under their licensing statute.
 The plaintiff testified that the actions of the defendant caused him emotional suffering. He was depressed and anxious. He felt humiliated in front of his fellow workers and his employer. He became worried about his job. He was unable to concentrate and began to have memory problems. He lost weight. Mr. Tran did not seek medical treatment for his anxiety. Instead, he tried to deal with his emotional state through physical exercise and meditation. I accept Mr. Tran’s evidence as to the genuine nature of his emotional suffering. I agree with his statement (made during cross-examination) that just because he is not the type to turn to a doctor for help, does not mean he is not suffering. I find that Mr. Tran did suffer emotional harm as a result of the defendant’s wrongful acts. It is not necessary that such harm amount to a psychiatric condition before it can be compensable: Mason v. Westside Cemeteries Ltd. (1996), 1996 CanLII 8113 (ON SC), 135 D.L.R. (4th) 361; Peters-Brown v. Regina District Health Board (1996), 31 C.C.L.T. (2d) 302 (Sask. C.A.); Anderson v. Wilson (1997), 1997 CanLII 12104 (ON SC), 32 O.R. (3d) 400 (Gen. Div.); Vanek v. Great Atlantic & Pacific Co. of Canada,  O.J. No. 3304 (QL) (Gen. Div.) [reported 39 O.T.C. 54]. The severity of the emotional harm is a factor determining the quantum of damages.
Invasion of Privacy
 In addition to his right to damages for the torts of defamation, intentional interference with business interests and intentional infliction of emotional harm, I believe the facts of this case are sufficient to warrant damages for the tort of invasion of privacy. Although this cause of action is a relatively recent innovation in the law of torts, there are numerous decisions which have recognized its validity: Allen M. Linden, Canadian Tort Law, 6th ed. (Toronto: Butterworths, 1997) at pp. 55-59; Motherwell v. Motherwell (1976), 1976 ALTASCAD 155 (CanLII), 73 D.L.R. (3d) 62 (Alta. C.A.); Saccone v. Orr (1982), 1981 CanLII 1708 (ON SC), 34 O.R. (2d) 317 (Co. Ct.); Lipiec v. Borsa,  O.J. No. 3819 (QL) (Gen. Div.) [reported 31 C.C.L.T. (2d) 294]; Garrett v. Mikalachki,  O.J. No. 1326 (QL) (Sup. Ct.) [summarized 96 A.C.W.S. (3d) 239]. There have also been cases in which the tort of invasion of privacy has been used to find liability in the context of harassment by a debt collector: C.R.B. Dunlop, Creditor-Debtor Law in Canada, 2nd ed. (Toronto: Carswell, 1995) at 55-59; S.A. Nagy Farm Ltd. v. Repsys,  O.J. No. 1987 (QL) (Dist. Ct.) [summarized 4 A.C.W.S. (3d) 100]; Palad v. Pantaleon,  O.J. No. 985 (QL) (Dist. Ct.); Dawe v. Nova Collection Services (Nfld.) Ltd.,  N.J. No. 22 (QL) (Nfld. Prov. Ct.) [reported 160 Nfld. & P.E.I.R. 266].
Established Causes of Action
 Accordingly, I find that Mr. Tran has proven a case entitling him to recover damages from the defendant for the torts of defamation, intentional interference with economic interests, intentional infliction of emotional suffering, and invasion of privacy. In these circumstances, it is unnecessary for me to deal with whether the threats of bodily harm made by Alexander might also constitute the tort of assault. Any emotional suffering caused by such threats is already covered within the tort of intentional infliction of emotional suffering.
Interestingly, in Anderson, the judge found the conduct of the collection agent to constitute the tort of negligence for the failure to adhere to the statutorily prescribed conduct required of a collection agent. In LaFleur,, the judge applied the tort of intrusion upon seclusion as a form of breach of privacy as well as nuisance for the interference and disruption that arose from repeated telephone calls. In Tran, the judge applied an extensive number of torts within findings against the collection agent.
Furthermore, while Anderson shows that a collection agent may be liable in negligence for negligently failing to adhere to provisions within the statute law, the decisions in LaFleur and Tran show that various common torts may also apply; and accordingly, whereas common torts would apply to any person or business, such decisions show support that claims alleging harassing collection efforts could be brought against individuals or businesses rather than just an outsourced collection agent service.
Collection agent services as well as individuals or businesses who engage in exceptionally aggressive efforts to collect debts, being old Judgments, unpaid loans, or balancing owing on an account, may become liable for engaging in various forms of tortious conduct. Accordingly, efforts to collect should be kept civil and appropriate so to avoid risk of litigation and to avoid a role reversal with the collection agent, individual, or business, becoming liable to the very person that the collection agent, individual, or business, was trying to collect from.
Lastly, it is interesting to note that research for, and a review of, cases regarding harassing collection efforts upon the Canadian Legal Information Institute website (CanLII.org) website provided very few cases alleging harassing collection efforts. It is possible that the few cases indicate that collection efforts rarely improper or perhaps that victims of harassing collection efforts are unable to afford to litigate for compensation and instead, where the offender is a collection agency, report the matter as a complaint to the Ministry of Consumer and Business Services.