Federal Court Decisions

                                    

                            

                                      T-2185-96

BETWEEN:

     LINDSEY HUTTON

                                     Applicant,

     - and -

     THE MINISTER OF NATURAL RESOURCES

     TERRA INTERNATIONAL, INC. ("Terra"),

     INDUSTRIAL RISK INSURERS,

     THE INSURANCE COMPANY OF NORTH AMERICA,

     STARR TECHNICAL RISKS AGENCY, INC.,

     ZURICH INSURANCE COMPANY,

     COMMONWEALTH INSURANCE COMPANY,

     and FIREMAN'S FUND INSURANCE COMPANY

                                     Respondents

     REASONS FOR ORDER

GIBSON J.:

     These reasons arise out of an application pursuant to section 41 of the Access to Information Act¹ (the "Act"), to review the decision of the Minister of Natural Resources (the "Minister") denying Lindsey Hutton's (the "applicant") request under that Act for access to certain records in the Minister's control relating to studies conducted by the Canadian Explosive Research Laboratory ("C.E.R.L."). Notice of the Minister's decision is dated the 27th of June, 1996.

BACKGROUND

     On the 21st of May, 1996, the date on which the applicant made her request for access to the records here at issue (the "requested record"), she was a law student employed as a summer student with a large Canadian law firm. An affidavit filed in this matter by an associate of that firm, indicates that the firm is the solicitor for the applicant. It was not disputed before me that the applicant is a Canadian citizen or a permanent resident of Canada. Subsection 4(1) of the Act provides as follows:

4. (1) Subject to this Act, but notwithstanding any other Act of Parliament, every person who is (a) a Canadian citizen, or (b) a permanent resident within the meaning of the Immigration Act, has a right to and shall, on request, be given access to any record under the control of a government institution.

4. (1) Sous réserve des autres dispositions de la présente loi mais nonobstant toute autre loi fédérale, ont droit à l'accès aux documents relevant d'une institution fédérale et peuvent se les faire communiquer sur demande_: a) les citoyens canadiens; b) les résidents permanents au sens de la Loi sur l'immigration.

Thus, it was not seriously disputed before me that the applicant was entitled to make the access request that she did although it was at least implicitly acknowledged before me that she was nothing more than an agent or nominee in making the request and that her principal was not a person described in subsection 4(1) of the Act.

     The requested record was described in the following terms:

(a)      Any studies conducted since December, 1994 by the Canadian Explosive Research Branch (the "Branch") regarding whether titanium sensitizes ammonium nitrate; and

(b)      Any studies conducted by the Branch on behalf of Terra International Inc. since December, 1994.

     Section 41 of the Act reads as follows:

41. Any person who has been refused access to a record requested under this Act or a part thereof may, if a complaint has been made to the Information Commissioner in respect of the refusal, apply to the Court for a review of the matter within forty-five days after the time the results of an investigation of the complaint by the Information Commissioner are reported to the complainant under subsection 37(2) or within such further time as the Court may, either before or after the expiration of those forty-five days, fix or allow.

41. La personne qui s'est vu refuser communication totale ou partielle d'un document demandé en vertu de la présente loi et qui a déposé ou fait déposer une plainte à ce sujet devant le Commissaire à l'information peut, dans un délai de quarante-cinq jours suivant le compte rendu du Commissaire prévu au paragraphe 37(2), exercer un recours en révision de la décision de refus devant la Cour. La Cour peut, avant ou après l'expiration du délai, le proroger ou en autoriser la prorogation.

     On the 15th of July, 1996 the applicant formally complained to the Information Commissioner in respect of the Minister's refusal. On the 23rd of August, 1996, the Information Commissioner advised the applicant that he had decided to support the Minister's refusal and declined to support the applicant's complaint. Thus, the stage was set for the applicant's application under section 41 of the Act.

     In the Originating Notice of Motion commencing this proceeding, the only named respondent was the Minister. By Order dated the 14 of November, 1996, Terra International Inc., and its property insurers, Industrial Risk Insurers, the Insurance Company of North America, Starr Technical Risks Agency, Inc., Zurich Insurance Company, Commonwealth Insurance Company, and Fireman's Fund Insurance Company (collectively "Terra") were added as respondents.

     Pursuant to another Order, the requested record was filed with the Court under seal in order to preserve its confidentiality. None of the applicant, her counsel and her advisors was granted access for the purpose of preparation for the hearing of this matter. Counsel for the Minister and for Terra each filed two respondent's records: one an open record that was served on the applicant in the ordinary way, and one a confidential record also maintained under seal by the Court to preserve confidentiality. I have carefully reviewed the material filed with the Court, including the material filed under seal.

THE CENTRAL ISSUE

     The central issue on this application, although described differently by the parties, was whether the Minister, through her or his delegate, erred in the determinations and, where relevant, the exercise of discretion, in rejecting the applicant's request for access to the requested record on the basis of paragraphs 18(b) and 20(1)(b), (c) and (d) of the Act. Related but subsidiary issues will be referred to in the analysis porion of these reasons.

ANALYSIS

(1)      Statutory Framework and Scope of Review

     Subsection 2(1) of the Act sets out the purpose of the Act in the following terms:

2. (1) The purpose of this Act is to extend the present laws of Canada to provide a right of access to information in records under the control of a government institution in accordance with the principles that government information should be available to the public, that necessary exceptions to the right of access should be limited and specific and that decisions on the disclosure of government information should be reviewed independently of government.

2. (1) La présente loi a pour objet d'élargir l'accès aux documents de l'administration fédérale en consacrant le principe du droit du public à leur communication, les exceptions indispensables à ce droit étant précises et limitées et les décisions quant à la communication étant susceptibles de recours indépendants du pouvoir exécutif.

         In the terms of subsection 2(1), paragraphs 18(b), and 20(1)(b),(c) and (d) of the Act, are exceptions to the statutory right of access. The relevant portions of section 18 and subsection 20(1) of the Act read as follows:

18. The head of a government institution may refuse to disclose any record requested under this Act that contains ... (b) information the disclosure of which could reasonably be expected to prejudice the competitive position of a government institution; ... 20. (1) Subject to this section, the head of a government institution shall refuse to disclose any record requested under this Act that contains ... (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; or (d) information the disclosure of which could reasonably be expected to interfere with contractual or other negotiations of a third party.

18. Le responsable d'une institution fédérale peut refuser la communication de documents contenant_: ... b) des renseignements dont la divulgation risquerait vraisemblablement de nuire à la compétitivité d'une institution fédérale; ... 20. (1) Le responsable d'une institution fédérale est tenu, sous réserve des autres dispositions du présent article, de refuser la communication de documents contenant_: ... b) des renseignements financiers, commerciaux, scientifiques ou techniques fournis à une institution fédérale par un tiers, qui sont de nature confidentielle et qui sont traités comme tels de façon constante par ce tiers; c) des renseignements dont la divulgation risquerait vraisemblablement de causer des pertes ou profits financiers appréciables à un tiers ou de nuire à sa compétitivité; d) des renseignements dont la divulgation risquerait vraisemblablement d'entraver des négociations menées par un tiers en vue de contrats ou à d'autres fins.

     The authority of the Minister to refuse disclosure under paragraph 18(b) is discretionary, that is to say, where the Minister concludes that the requested record could reasonably be expected to prejudice the competitive position of a government institution, he or she may refuse to disclose the record. By contrast, a refusal to disclose any record by virtue of any of paragraphs 20(1)(b),(c) or (d) is mandatory. Where the Minister concludes that the requested record falls within any of those paragraphs, he or she shall refuse to disclose the record.

     Mr. Justice Heald discussed the appropriate procedure to be followed by this Court in matters such as this in Canadian Jewish Congress v. Canada (Minister of Employment and Immigration).² After reviewing a discussion by Strayer J., as he then was, in Kelly v. Canada (Solicitor General),³ of the approach to be taken, Justice Heald wrote:

If the exemption provision was mandatory, then there is only one type of decision: the factual decision as to whether the material comes within the description of the exempting provision. There is no second type of decision, as if the material is found to fall within the description, then the head of the institution is obligated to refuse disclosure. If a decision made under a mandatory exemption provision were to come before this Court for review, as was discussed above, then firstly the Court would have to go through the record and determine whether or not the Minister was authorized to refuse disclosure. In so doing, the Court is effectually reviewing the factual decision. If the Court determined the Minister was in fact not authorized to refuse disclosure, then the Court would have to make an appropriate order. In the case of a mandatory exemption, an order for disclosure of the record would be an appropriate order if the Court determined the Minister had erred in the factual decision. The Act is clear in those cases that the material shall not be disclosed if falling within the exemption and the material shall be disclosed if it does not.

If the exemption provision in question is a discretionary provision, then there are two decisions to be reviewed by the Court, as was stated above by Justice Strayer. Firstly, as in the case of a mandatory exemption, the Court shall review the record to determine if the head of the institution erred in the factual decision as to whether or not the requested information fell within the exempting provision. If the Court determines the material does fall within the exemption, then the Court must review the discretionary decision of the head of the institution. However, as was stated by Justice Strayer, the Court must only consider whether or not the discretion was properly exercised, but should not itself attempt to exercise the discretion de novo. If the Court finds the discretion was properly exercised, an appropriate order is simply to uphold the decision of the head of the institution to refuse disclosure. However, the determination of an appropriate order becomes somewhat more complicated if the Court finds the discretion was improperly exercised. If the Court strikes down the discretionary decision of the head of the institution, then the question arises as to whether it is appropriate for the Court to then proceed to make the discretionary decision, thereby exercising the discretion itself, or whether the Court ought to refer the matter back to the head of the institution to exercise his/her discretion properly.

....

I do agree that it is appropriate, once it has been determined that discretion has been improperly exercised in a matter, to order the matter be referred back to the head of the institution to exercise his/her discretion properly. It is not appropriate for the Court to exercise the discretion. The mandate of the Court under section 41 of the Act is to review the decision of the head of institution.          [emphasis in the original]

     Against these principles, I turn to a review of the exempting provisions of the Act relied on by the Minister against the evidence before me, including the requested record.

(2) Paragraph 18(b)

     Paragraph 18(b), as indicated earlier, is a discretionary exemption provision that allows for exemption of "...information the disclosure of which could reasonably be expected to prejudice the competitive position of a government institution". I emphasize the words that I have underlined in the foregoing sentence. The statute clearly envisages a test of reasonable expectation of prejudice; it does not require actual proof of prejudice.

     It was not in dispute before me that C.E.R.L. is a government institution within the purview of the Minister. C.E.R.L.'s primary function over the many years that it has been in existence has been to provide technical services and advice to the Chief Inspector of Explosives and the Explosives Regulatory Division of the Minister's Department. Since the mid-1980s, it has had authority to perform, on an expanded fee-for-service basis, tests and other types of research for persons and entities outside the Government of Canada. It has garnered significant and increasing revenue in recent years in the performance of such services and has come to rely increasingly on that revenue to supplement its budget from public funds which, it is anticipated, will decline significantly in the near future. The undisputed evidence before me was that a decline in its outside revenues would have a significant impact on its capacity to advise within government and its competitive position in the international market for scientific research and advice in its specialized area.

     The contract under which the requested record was produced contained an express undertaking on the part of C.E.R.L. of complete confidentiality. It was argued before me that if this undertaking is breached, the fact of such breach would become widely known as would the corollary that C.E.R.L. would in the future be unable to ensure confidentiality with respect to records produced under similar contracts. The result, it was argued, would be that C.E.R.L.'s competitive position with respect to non-governmental, revenue producing contract work would be significantly prejudiced in relation to other reputable, specialized laboratories capable of performing equivalent services on a confidential basis.

     I can find no basis to conclude that the Minister erred in determining that disclosure of the requested record could reasonably be expected to prejudice the competitive position of C.E.R.L. As indicated earlier, it was not incumbent on the Minister to determine that disclosure of the requested record would prejudice the competitive position of C.E.R.L.

     I turn then, to the second issue, the review of the discretionary decision of the Minister. I am satisfied that the evidence provided on behalf of the Minister is sufficient to demonstrate that the disclosure of the information could reasonably be expected to prejudice the competitive position of C.E.R.L. I am also satisfied that, in the current climate of fiscal restraint, protection of the competitive position of C.E.R.L. is an important public policy concern. In the result then, I conclude that the discretion vested in the Minister was properly exercised.

     Against the principles quoted earlier from Canadian Jewish Congress, in light of my conclusions, an appropriate order in this matter would be to uphold the decision of the Minister to refuse disclosure on the basis of paragraph 18(b).

(3) Paragraphs 20(1)(b), (c) and (d)

     The bases of refusal to disclose in paragraphs 20(1)(b), (c) and (d) are mandatory: that is to say, if the requested record is financial, commercial, scientific or technical information that is confidential information supplied to C.E.R.L. by a third party and has been treated consistently in a confidential manner by the third party (paragraph 20(1)(b)); is 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 (paragraph 20(1)(c)); or is information the disclosure of which could reasonably be expected to interfere with contractual or other negotiations of a third party (paragraph 20(1)(d)); then the Minister is required to refuse disclosure of the requested record.

     Affidavit evidence filed on behalf of the Terra respondents attests to the following. Terra is in the business of manufacturing and distributing fertilizer, crop protection products, seed and nitrogen products, including nitrogen fertilizers. Its principal place of business is in Sioux City, Ohio. In December 1994, a catastrophic explosion occurred at one of its fertilizer plants causing substantial damage to real and personal property and resulting in the death of four employees and injuries to eighteen others. As a result, Terra is engaged in substantial litigation in the United States. It retained C.E.R.L. as a non-testifying litigation consultant to assist counsel on matters relating to the explosion and resultant litigation. As mentioned earlier, the retainer was undertaken specifically on a confidential basis. On that basis, C.E.R.L. was provided by Terra or others on its behalf with "...confidential scientific and technical information that has been treated consistently as confidential by Terra and its Property Insurers." Affidavit evidence of a practising lawyer of some seventeen years experience before the Federal Courts of the United States is to the effect that the requested record would not be subject to disclosure, on discovery or otherwise, in the U.S. litigation.

     To fall within paragraph 20(1)(b), four requirements must be met: the information must be financial, commercial, scientific or technical information; confidential information; supplied to a government institution by a third party; and consistently treated in a confidential manner by the third party.⁴

     The requested record may be "based upon", to a greater or lesser extent, financial, commercial, scientific or technical information given to C.E.R.L. by Terra or one or more of its associates. But my review of the requested record indicates that the record was, in fact, generated or produced by C.E.R.L. A careful review of the requested record does not enable me to identify any information given to C.E.R.L. by Terra or one or more of its associates. Thus, on the basis of the evidence before me, I cannot conclude that the requested record contains financial, commercial, scientific or technical information supplied to C.E.R.L. by Terra or one or more of its associates that has been treated consistently in a confidential manner by the supplier. In short, my review indicates that the requested record is not within the ambit of paragraph 20(1)(b).

     I am satisfied, however, that the requested record does fall within the terms of paragraphs 21(1)(c) and (d). In both of those paragraphs, the test is whether the requested record "could reasonably be expected"⁵ to result in material financial loss or gain, prejudice to the competitive position of, or to interfere with contractual or other negotiations of a third party, in this case Terra. The evidence is sufficient to demonstrate the magnitude of the amounts at stake in the litigation that is before the courts in the United States that could reasonably be expected to be the subject of settlement negotiations.

(4) Public Interest (Subsection 20(6)) and Severance (Section 25)

     The applicant argues that the Minister erred in a manner justifying relief to the applicant by failing to demonstrate, on the face of the letter denying access, that she or he engaged in an analysis of whether subsection 20(6) of the Act should apply in favour of the applicant and whether the requested document is severable and therefore should have been at least partially disclosed pursuant to section 25 of the Act. Subsection 20(6) and section 25 read as follows:

(6) The head of a government institution may disclose any record requested under this Act, or any part thereof, that contain information described in paragraph (1)(b), (c) or (d) if that disclosure would be in the public interest as it relates to public health, public safety or protection of the environment and, if the public interest in disclosure clearly outweighs in importance any financial loss or gain to, prejudice to the competitive position of or interference with contractual or other negotiations of a third party. ... 25. Notwithstanding any other provision of this Act, where a request is made to a government institution for access to a record that the head of the institution is authorized to refuse to disclose under this Act by reason of information or other material contained in the record, the head of the institution shall disclose any part of the record that does not contain, and can reasonably be severed from any part that contains, any such information or material.

(6) Le responsable d'une institution fédérale peut communiquer, en tout ou en partie, tout document contenant les renseignements visés aux alinéas (1)b), c) et d) pour des raisons d'intérêt public concernant la santé et la sécurité publiques ainsi que la protection de l'environnement; les raisons d'intérêt public doivent de plus justifier nettement les conséquences éventuelles de la communication pour un tiers: pertes ou profits financiers, atteintes à sa compétitivité ou entraves aux négociations qu'il mène en vue de contrats ou à d'autres fins. ... 25. Le responsable d'une institution fédérale, dans les cas où il pourrait, vu la nature des renseignements contenus dans le document demandé, s'autoriser de la présente loi pour refuser la communication du document, est cependant tenu, nonobstant les autres dispositions de la présente loi, d'en communiquer les parties dépourvues des renseignements en cause, à condition que le prélèvement de ces parties ne pose pas de problèmes sérieux.

     The letter addressed to the applicant advising her of the Minister's decision not to disclose by reason of the exemptions under paragraphs 18(1)(b) and 20(1)(b), (c) and (d) makes no mention of subsection 20(6) or section 25. It gives no indication whatsoever that either provision was considered. In contrast, an affidavit filed and sworn by the Minister's delegate who responded to the applicant's request contains the following paragraph:

I also considered whether portions of the requested records could be severed and disclosed or whether other provisions of the Access to Information Act, namely subsections 20(2),(5) and (6) could permit disclosure. I determined that these provisions were not applicable and that all of any records responsive to the Applicant's request were exempt from disclosure based on the sections of the Access to Information Act which I have identified in paragraph 5 of my Affidavit [paragraphs 18(1)(b) and 20(1)(b), (c) and (d)].

     In Stevens v. Canada (Privy Council)⁶, Mr. Justice Rothstein considered the discretionary exemption contained in section 23 of the Act with respect to a requested record that contains information that is subject to solicitors-client privilege. He wrote:

There is explicit reference to section 23 being a "discretionary exemption". I think a reasonable inference can be drawn that regard was had by the decision maker to section 23 and the fact that it contemplates a discretionary exemption. In the circumstances I am satisfied that a discretionary decision not to disclose was made.

I am satisfied that the same can be said here with respect to the discretionary "public interest" authority for disclosure contained in subsection 20(6) and the mandatory requirement of section 25 of the Act to examine for severability and disclose any part of a requested record that can reasonably be severed from exempt portions. I reach this conclusion particularly in light of the paragraph quoted above from the affidavit of the Minister's delegate.

     The situation here at issue is to be contrasted on its facts with that in Rubin v. Canada (Canada Mortgage and Housing Corp.),⁷ where a request for access to a broad range of records (some thirteen lineal feet) was received by the government institution in question on the 6th of March 1985 and rejected outright the next day. In such circumstances, it was reasonable to conclude that the government institution in question had simply failed "...to enter into the severance exercise required pursuant to the provisions of section 25 of the Act." Here, the requested record is quite slim. A review under subsection 20(6), the public interest disclosure provision, and the severability examination could quite reasonably have been carried out in the time between receipt of the request for access on the 26th of May, 1996 rejection of the request on the 29th of June, 1996. The Court has before it the uncontradicted evidence of the Minister's delegate to the effect that he considered both of the provisions. In the absence of evidence to the contrary, the delegate's evidence should be accepted.

     Once again, I have myself reviewed the requested document against the provisions of subsection 20(6) and section 25. I find no reason to conclude that the decision not to rely on the discretionary authority to disclose under subsection 20(6) and not to sever under section 25 was other than reasonable.

(5) Additional Considerations

     Counsel for Terra urged that the Minister should have rejected access to the requested record by virtue of section 23 of the Act, in addition to the bases on which access was refused. Section 23 reads as follows:

23. The head of a government institution may refuse to disclose any record requested under this Act that contains information that is subject to solicitor-client privilege.

23. Le responsable d'une institution fédérale peut refuser la communication de documents contenant des renseignements protégés par le secret professionnel qui lie un avocat à son client.

Counsel before me urged different interpretations of the concept of "solicitor-client privilege" in the context of the Act, particularly, in the submission of counsel for the applicant, taking into account subsection 2(1) of the Act which, he urged, would warrant a very limited interpretation of the concept of solicitor-client privilege.

     In light of my earlier conclusions, I find it unnecessary to address this issue and decline to do so.

CONCLUSION

     For the foregoing reasons, while the applicant has in small measure been successful on this application, she has not succeeded to an extent that would warrant an order other than an order to the effect that this application be dismissed. Thus, my order will dismiss this application.

COSTS

     Section 53 of the Act makes specific provision with respect to costs on an application such as this. It reads as follows:

53. (1) Subject to subsection (2), the costs of and incidental to all proceedings in the Court under this Act shall be in the discretion of the Court and shall follow the event unless the Court orders otherwise. (2) Where the Court is of the opinion that an application for review under section 41 or 42 has raised an important new principle in relation to this Act, the Court shall order that costs be awarded to the applicant even if the applicant has not been successful in the result.

53. (1) Sous réserve du paragraphe (2), les frais et dépens sont laissés à l'appréciation de la Cour et suivent, sauf ordonnance contraire de la Cour, le sort du principal. (2) Dans les cas où elle estime que l'objet des recours visés aux articles 41 et 42 a soulevé un principe important et nouveau quant à la présente loi, la Cour accorde les frais et dépens à la personne qui a exercé le recours devant elle, même si cette personne a été déboutée de son recours.

     I conclude that subsection 53(2) is not applicable. In accordance with subseciton 53(1), costs will follow the event, that is to say, the respondents are entitled to costs as against the applicant.

                 _____________________________

                         Judge

Ottawa, Ontario

October 31, 1997

        

__________________

     ¹      R.S.C. 1985, c. A-1, as amended

     ²      [1996] 1 F.C. 268 at 280-82 (T.D.)

     ³      (1992), 6 Admin. LR. (2d) 54 (T.D.), 53 F.T.R. 147, aff'd (1993), 154 N.R. 319(F.C.A.)

     ⁴      Montana Band of Indians v. Canada (Minister of Indian Affairs and Northern Development (1988), 26 C.P.R. 3d 68 at 76 (F.C.T.D) and Air Atonabee Ltd v. Canada (Minister of Transport) (1989), 27 F.T.R. 194 at 207

     ⁵      Canada Packers Inc. v. Canada (Minister of Agriculture) [1989] 1 F.C. 47 at 57-60 (C.A.)

     ⁶      (1997), 144 D.L.R. (4th) 553 at 570 (T.D.)

     ⁷      [1989] 1 F.C. 265 (C.A.)