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The Ontario Court of Appeal says information is being generated and stored at a staggering rate, but legislation has not kept pace – leaving aggrieved parties no recourse against those who violate their privacy.

Paparazzi, underhanded spouses and sneaky private investigators have much to fear from a ground-breaking decision that gives individuals a legal weapon against intrusions into their privacy.

Experts say the Ontario Court of Appeal judgment that created a right to sue for "intrusion upon seclusion" will send a chill through anyone who snoops, hacks or uses confidential information to create mischief.

The decision also poses a threat to companies that fail to safeguard their customers' private information or allow it to be used for unintended purposes, Toronto lawyer Scott Hutchinson said.

"If you have a breach of privacy on a large scale, I can foresee class actions where damages become quite significant," Mr. Hutchison said. "This decision gives individuals a real tool with which to assert their privacy interests in a way that will capture the attention of private custodians of information."

The decision permitted a Toronto woman, Sandra Jones, to sue a fellow Bank of Montreal employee, Winnie Tsige, for allegedly gaining improper access to Ms. Jones's banking records on 174 occasions over a four-year period. At the time, Ms. Tsige had been in a common-law relationship with Ms. Jones's former husband.

The new legal tort – a basis for a lawsuit – can be used by those whose sexual practices, private correspondence or personal records have been snooped on for no legitimate reason.

The appeal court awarded Ms. Jones $10,000 in damages. It said that awards should not rise above $20,000 except in the most extreme cases.

Christopher Du Vernet, a lawyer for Ms. Jones, warned on Thursday that the $20,000 ceiling could lead individuals with ample resources to decide that they will violate an individual's privacy anyway and simply pay damages later.

The ceiling could also encourage underhanded behaviour by well-heeled litigants who hope to damage an ex-spouse's credibility by digging up dirt on them, Mr. Du Vernet said.

"I can tell you that for half my clientele, $10,000 is chump change," he said. "They would happily pay a license fee of $10,000 to get something. And, in a commercial context, it could be worth thousands of times that amount."

Mr. Du Vernet expressed disappointment that the court refused to award punitive damages and legal costs against Ms. Tsige. "We need a disincentive for other Tsiges to not do this sort of thing," he said. "She dodged one hell of a bullet."

Mr. Du Vernet predicted that the greatest impact of the ruling will come when celebrities in the entertainment industry realize they can use it to keep bloggers, overzealous fans and paparazzi at bay. As with any other litigant, he said, the key will be to show that the plaintiff's "reasonable expectation of privacy" was violated.

The Ontario ruling is also likely to change profoundly the way private investigators delve into the lives of their targets in search of compromising information on behalf of employers, companies or suspicious spouses, Mr. Du Vernet said.

However, Brian King, chairman of CKR Global – a private detective agency with 400 employees – strongly disagreed. Mr. King said that the profession is so tightly regulated that only fringe players conduct underhanded investigations.

"Gone are the days when private investigators are digging into confidential information that is very restricted," Mr. King said. "We have to adhere to the law."

He said that provincial regulators would likely pull the licence of any P.I. who bribes an official, gains unlawful access to financial records or is found liable in an intrusion lawsuit.

Four provinces currently have legislation that enables individuals to sue for intrusions into their personal life, Mr. Du Vernet said. However, he said that the laws tend to be cumbersome and difficult for litigants to use.

Courts in those provinces – as well as others that have no legislation – may well opt to follow the lead of the Ontario Court of Appeal and create an "intrusion upon seclusion" cause of action, Mr. Du Vernet said.