SCC issues comprehensive third-party information exemption decision

Yesterday the Supreme Court of Canada issued a comprehensive decision on the third-party information exemption in the federal Access to Information Act. Although the third-party, research based pharmaceutical company Merck, lost its appeal, the decision establishes decent procedural and substantive protection for third-parties.

The matter – about a Health Canada access decision

The matter involves a request made to Health Canada for records related to a New Drug Submission and Supplementary New Drug Submission. Health Canada disclosed some records without providing notice to Merck and gave notice to Merck regarding parts of others with a note that it was “unable to determine” whether the mandatory exemption for third-party information in section 20(1) of the ATIA applied. This led to a Heath Canada decision to disclose numerous records that Merck challenged by way of judicial review. It took issue with the process by which Health Canada administered the request and its decision not to apply section 20(1).

The relevant provisions – the third party information exemption

Section 20(1) is the “third-party information exemption.” It protects the interests of third-parties whose information is under the control of federal government institutions. The three subsections at issue in yesterday’s decision read as follows:

20. (1) Subject to this section, the head of a government institution shall refuse to disclose any record requested under this Act that contains

(a) trade secrets of a third party;

(b) financial, commercial, scientific or technical information that is confidential information supplied to a government institution by a third party and is treated consistently in a confidential manner by the third party;

(c) information the disclosure of which could reasonably be expected to result in material financial loss or gain to, or could reasonably be expected to prejudice the competitive position of, a third party

A head has a duty to refuse to disclose a record containing information fitting within any one of section 20(1)’s three subsections, subject to a duty to sever and disclose non-exempt information that can “reasonably be severed.” A head also has a duty to give notice to an affected third-party (and hear submissions) when the head, “intends to disclose any record requested under this Act, or any part thereof, that contains or that the head of the institution has reason to believe might contain…” information that is exempt under section 20(1).

The majority decision – eleven principles

Justice Cromwell wrote for the six judge majority. He endorsed the following 11 principles (my list) about the scope of the third-party information exemption and the procedure for dealing with requests that engage the exemption:

  1. Most generally, the duty to provide access to government information is equally important to the duty to protect third-party information: “when the information at stake is third party, confidential commercial and related information, the important goal of broad disclosure must be balanced with the legitimate private interests of third parties and the public interest in promoting innovation and development.”
  2. The threshold for giving notice to a potentially affected third-party is low: disclosure without notice “is only justified in clear cases, that is where the head, reviewing all the relevant evidence before him or her, concludes that there is no reason to believe that the record might contain material referred to in s. 20(1).”
  3. A head must give notice to a third-party even in the absence of a firm intention to disclose, including when “in doubt” about the application of section 20(1): “the institutional head ‘intends to disclose’ a record that might contain exempt information if the head concludes that he or she cannot direct either refusal or disclosure without notice.”
  4. A head, however, must make a “serious attempt” to apply the exemption and not simply shift the onus of review to a third-party.
  5. On judicial review of a decision to disclose, a third-party must establish application of section 20(1) on a balance of probabilities. It is an error of law to hold a third-party to a “heavy burden.”
  6. Section 20(1)(a) applies to information that meets the traditional legal test for a “trade secret.” It is an error of law to associate the definition with any particularly restrictive meaning.
  7. Section 20(1)(b) applies to information supplied to government that is “not available from sources otherwise available to the public or obtainable by observation or independent study by a member of the public acting on his or her own.” The information need not have inherent value (as a client list would, for example).
  8. For the purposes of section 20(1)(b), information is not “supplied” if it is “collected by government officials’ observation.”  In general, judgements or conclusions expressed by government officials are not “supplied.”
  9. The reasonable expectation of harm that triggers the application of section 20(1)(c) exists when there is “considerably more” than a “mere possibility of harm” and “somewhat less” than a likelihood of harm. It is an error of law to demand harm that is “immediate” and “clear.”
  10. In general, it will be hard to demonstrate that harm will flow from the disclosure of publicly available information and, as a matter of principle, difficult to establish that harm will flow from the misunderstanding of disclosed information.
  11. Declining to sever and produce information from an otherwise exempt record will be justified when the non-exempt information has little meaning on its own or when a cost-benefit analysis otherwise weighs against disclosure.

These principles are likely to have at least some significance to the handling of matters under statutes other than the ATIA. Principle 9, in particular, has the potential to calibrate the handling of harms-based exemptions and promote a uniform standard for proof of harm under all Canadian access statutes.

The dissent – differs on a non-substantive issue

Justice Deschamps wrote for the three judge minority, which would have deferred to the application judge’s findings. The minority did not differ with the majority on any of the 11 principles noted above, and expressly agreed with the majority’s views on the duty to provide notice and on the standard of proof.

Merck Frosst Canada Ltd. v. Canada (Health), 2012 SCC 3.

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