Canada: Supreme Court Dismisses Appeal But Sets Out Disclosure Tests For ATI Requests

Merck Frosst Canada Ltd. v. Canada (Minister of Health)

The Supreme Court of Canada (SCC) dismissed Merck's appeal; allowing disclosure of certain documents filed with Health Canada. In a 6-3 decision, the SCC considered the competing interests of public policy in broad access to government documents and of companies in protecting trade secrets and other confidential commercial matters. The appeal considered both the interpretation of the substantive provisions of the Access to Information Act (the Act) and the operation of the procedural protections in the Act.

The SCC considered the following issues:

  1. What is the standard of appellate review?
  2. What is the threshold under the Act for triggering a duty to give notice of an access to information (ATI) request?
  3. What is the burden and standard of proof on a third party claiming an exemption under s. 20(1) of the Act?

In this alert, we are summarizing only the majority decision. The dissent agreed with the majority's treatment of the notice issue, and that the Federal Court of Appeal (FCA) imposed the wrong standard of proof, but held that the Federal Court's judgments did not contain any palpable and overriding error that would justify intervention.

With respect to the first question, the SCC held that the role of the Federal Court Judge is to determine whether the head of the government institution (the head) has correctly applied the exemptions to the records in issue. This decision is subject to appellate review in accordance with established principles.

Regarding the second question, the SCC held that there is no automatic right to notice of an ATI request to the party whose information is at issue (the third party) for certain categories of documents. The Act presumes disclosure with limited exceptions and to create automatic notice requirements would presume the exemption. However, there is a high threshold for disclosure without notice. It is only justified in cases where, after reviewing all of the relevant evidence, the head can conclude that there is "no reason to believe that the record might contain material referred to in s. 20(1)."1 By giving notice in all but clear cases, the risk of irreparable harm to the third party is reduced. Furthermore, head must give consideration to whether disclosure must be refused. This duty should be taken as seriously as the duty to disclose.

If the information does not fall within one of the two clear categories described above, notice must be given to the third party. The SCC held that this must be the meaning of the phrase "intends to disclose any record ... that the head of the institution has reason to believe might contain" exempted third party information.2 This does not mean that the head has formed an opinion on the matter. Furthermore, it sets a low threshold for the requirement of giving notice, as the third party is generally in a better position than the head to identify information that falls within one of the exemptions. A low threshold for notice can help to ensure procedural fairness and reduce the risk of disclosure of exempted information. In addition, notice must be given if the head intends to disclose exempted material to serve the public interest pursuant to s. 20(6) of the Act, or if the head intends to disclose severed material pursuant to s. 25 of the Act.

The "head must make a serious attempt to apply the exemptions within the constraints" noted by the SCC.3 Once notice is given, the third party may make representations, but the burden does not shift to the third party to persuade the head that the exemptions apply. It would be prudent for the third party to be as helpful as possible in showing why disclosure is not permitted, but it must be a cooperative approach. The head has the ultimate responsibility to apply the requirements to disclose or not to disclose. However, once the decision is made to disclose, if the third party challenges this decision in a judicial review, the third party has the onus to show why the decision was wrong.

With respect to the third question, the SCC held that, at the judicial review stage, disclosure is the general rule and any exemption must be established on the civil standard of the balance of probabilities. Any statements the FCA made regarding a "heavy burden" on the third party were held to be errors of law.

The SCC also considered the specific exemptions in the Act. The SCC held that a trade secret, for the purposes of s. 20(1)(a) of the Act is a plan, process, tool, mechanism or compound which possesses each of the following characteristics:

  1. the information must be secret in an absolute or relative sense (is known only by one or a relatively small number of persons);
  2. the possessor of the information must demonstrate that he has acted with the intention to treat the information as secret;
  3. the information must be capable of industrial or commercial application;
  4. the possessor must have an interest (e.g. an economic interest) worthy of legal protection.4

With respect to the exemption available under s. 20(1)(b), the SCC held that "financial, commercial, scientific or technical" should be given their ordinary dictionary meanings. Furthermore, in order to constitute such information, it does not need to have an inherent value, but one must look at the use that will be made of it and its consequent market value. In addition, the SCC held that administrative details are not scientific, technical, financial or commercial information. The SCC held that information in the public domain is not confidential; nor is information that reveals the existence of publically available information. However, a party's reliance on or evaluation of published studies may be confidential, if shown by the evidence. Furthermore, to qualify for this exemption, the SCC held that the information at issue must have been supplied to the government by a third party; and that it is the content, not the form of the information that must be considered.

Regarding s. 20(1)(c), the SCC held that the "reasonable expectation of probable harm" test should be applicable. Thus, on a balance of probabilities, the third party does not need to show that harm will come to pass, but must show more than that harm is possible. Furthermore, the types of harm exemplified in s. 20(1)(c) are disjunctive.

Finally, the Court considered the requirements of s. 25 of the Act, regarding severance. the SCC held that applying s. 25 is mandatory. Furthermore, the head must do their best to apply s. 25 before giving notice to the third party. However, whether material subject to the disclosure obligation can be reasonably severed from material that is exempt involves both a semantic and a cost-benefit analysis. What is left must be meaningful. If only disconnected snippets are left, then severance is not reasonable as the purpose of the Act is not fulfilled.

The SCC did not overturn the FCA's decision to allow disclosure of the remaining documents at issue. Although, in many cases, the SCC held that the wrong standard had been applied, the SCC also agreed with the FCA that Merck had not met its evidentiary burden with respect to the most recent redaction proposed by Health Canada. Thus, although the SCC clarified and restated the tests for disclosure under the Act, the appeal itself was dismissed.


1 Para 72.

2. Para 76.

3. Para 88.

4. Paras. 109-112.

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