Canada: Business Contracts With Government Institutions Subject To Disclosure

Last Updated: April 13 2017
Article by Alan Melamud

Following the Divisional Court's decision in Toronto-Dominion Bank v. Ryerson University ("TD Bank"),1 companies that contract with government institutions should be aware that such contracts are likely open to disclosure under the Freedom of Information and Protection of Privacy Act (the "Act").2 Pursuant to section 10 of the Act, any person can request disclosure of a document from the various government institutions listed in the Act and its regulations.3 In TD Bank, the Divisional Court upheld a decision of the Information and Privacy Commissioner of Ontario ("IPC"), which provides for the disclosure of most negotiated agreements notwithstanding the protections for confidential business information found in section 17.

Background

In 2014, Ryerson University ("Ryerson") received a request for disclosure of its Affinity Agreement (the "Agreement") with Toronto-Dominion Bank ("TD"). The Agreement allowed TD to promote certain financial products to Ryerson's alumni, staff, and students in return for fees paid to the university. TD considered the Agreement to be confidential commercial information, citing the competitiveness of the market for affinity agreements, and so took the position that the Agreement should not be disclosed pursuant to section 17 of the Act:

17 (1) A head shall refuse to disclose a record that reveals a trade secret or scientific, technical, commercial, financial or labour relations information, supplied in confidence implicitly or explicitly, where the disclosure could reasonably be expected to,

  1. prejudice significantly the competitive position or interfere significantly with the contractual or other negotiations of a person, group of persons, or organization;
  2. result in similar information no longer being supplied to the institution where it is in the public interest that similar information continue to be so supplied;
  3. result in undue loss or gain to any person, group, committee or financial institution or agency; or
  4. reveal information supplied to or the report of a conciliation officer, mediator, labour relations officer or other person appointed to resolve a labour relations dispute.

After considering the request, Ryerson decided that the Agreement should be disclosed with the exception of Schedule B, which Ryerson considered to contain commercial and financial information that had been disclosed by TD in confidence.

Both TD and the requester appealed Ryerson's decision to the IPC. The IPC concluded that while the Agreement constituted commercial information, the general rule was that contracts were not protected by section 17(1), because they are not "supplied in confidence". Instead, contracts are "mutually generated", as they are the product of negotiation and agreement.

The IPC went on to consider the two exceptions to the general rule: the inferred disclosure and immutability exceptions. Inferred disclosure applies "where disclosure of the information in a contract would permit the making of accurate inferences with respect to underlying non-negotiated confidential information supplied by the third party to the institution."4 The immutability exception applies "where a contract contains information supplied by a third party that is not susceptible to negotiation".5 The IPC rejected both exceptions, and concluded that the entirety of the agreement was to be disclosed, including the Schedule B that Ryerson had determined was confidential.

TD brought an application for judicial review of the IPC's decision.

The Divisional Court's Decision

The Divisional Court upheld the IPC's decision as reasonable. First, the Divisional Court agreed with the IPC that the purpose of section 17 of the Act is to protect confidential information being supplied by or received from the third party organization dealing with the government.6 TD attempted to argue that the IPC had unreasonably focused on the nature of the Agreement as a negotiated contract instead of the content of the Agreement, but the Court upheld as reasonable that prima facie such agreements are not protected because they are not supplied by the third party.7

Second, the Court rejected TD's argument that the structure of the Agreement itself was commercially sensitive information that had been supplied in confidence.8 While TD had initially provided Ryerson with a standard form Affinity Agreement, the final agreement being disclosed was the product of negotiation and differed from the standard form contract.9 The IPC had found that the structure of the agreement could not be distinguished from its terms, and therefore the structure was also a product of negotiation.10 Similarly, the Court concluded that negotiation meant section 17 did not apply:

Given that some of the terms were changed in the Agreement and given that the Agreement was the result of contractual negotiations, it was reasonable for the adjudicator to conclude that the Agreement was not supplied in confidence.11

Ultimately, the Court identified the intent of the Act as favouring disclosure subject to limited and specific exceptions, and therefore it can be expected that courts will generally limit the protections provided by section 17.12

We understand that TD has sought leave to appeal to the Ontario Court of Appeal, and so we will provide an update when the decisions on the application and/or ultimate appeal are released.

Footnotes

1. 2017 ONSC 1507. [TD Bank]

2. R.S.O. 1990, c. F. 31.

3. Ibid., s. 1; Freedom of Information and Privacy Act, R.R.O. 1990, Reg. 460.

4. TD Bank, supra note 1 at para. 10.

5. Ibid.

6. Ibid. at para. 24.

7. Ibid. at paras. 26-29.

8. Ibid. at paras. 31-33.

9. Ibid. at para. 32.

10. Ibid.

11. Ibid. at para. 33.

12. Ibid. at para. 35.

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