Canada: Back To The Drawing Board: Federal Court Of Appeal Sends Elanco Down For Reconsideration

In Canada (Health) v. Elanco Canada Limited, the Federal Court of Appeal overturned a Federal Court decision refusing disclosure of certain information about Elanco's veterinary medication, Fortekor, under the Access to Information Act (the Act)1. The matter has been remitted back to the Federal ^Court to determine: 1) what information was erroneously exempted from disclosure under section 20(1)(d) of the Act (interference with contractual negotiations of a third party), 2) whether the identity of Elanco's suppliers is properly exempt from disclosure, and 3) what information can be reasonably severed from the exempted information.

What you need to know

• Elanco sought judicial review of Health Canada's decision to release information about Elanco's veterinary medication, Fortekor, in response to an access to information request. Elanco succeeded in invalidating Health Canada's decision to release the records at the Federal Court².
• On appeal, the Federal Court of Appeal clarified that the appellate standards of review apply to appeals from Federal Court decisions under the Act. Thus, a deferential standard of review applies to findings of fact and mixed fact and law made by the Federal Court.
• • The Federal Court of Appeal's conclusion on the standard of review means that appeals are not a second chance to re-argue the facts. The Federal Court of Appeal will rely on the Federal Court's findings of fact in examining whether the section 20(1) exemptions were correctly applied.
• The appeal court remitted Elanco's application to the Federal Court to reconsider the application of section 20(1)(d) of the Act to the information. But based on the deferential standard of review, the Federal Court of Appeal did not disturb the Federal Court's application of sections 20(1)(a), (b) or (c).
• • The Federal Court of Appeal's commentary on section 20(1)(d) illustrates the importance, where possible, of providing specific reasons why an exemption under the Act applies, both in third parties' initial responses to access to information requests and on judicial review.
• The Federal Court of Appeal has also directed the Federal Court to consider whether there are parts of the Fortekor record that could be severed from the exempted information and disclosed under section 25 of the Act, which requires disclosure of information that can be reasonably severed from exempted information.
• • This direction also highlights the importance of applying targeted redactions to requested documents based on a reasonable application of the exemptions. Third parties should not submit a blanket response to Health Canada, where all documents are redacted without specific consideration of the exemptions.

The underlying dispute

In 2019, under section 44 of the Act, Elanco applied for judicial review of Health Canada's decision to release information about Elanco's veterinary medication, Fortekor, in response to a third party's access to information request. The disputed records related to product-specific information about Fortekor, including solubility, concentration, stability, and packaging, as well as Elanco's supplier agreements.

Elanco argued that certain pieces of information were protected from release under the Act by virtue of being trade secrets or confidential (sections 20(1)(a) and (b)), or on the basis that the release would prejudice Elanco's competitive position (section 20(1)(c)) and interfere with Elanco's contractual negotiations (section 20(1)(d)).

The Federal Court agreed with Elanco's arguments under all relevant provisions of the Act as well as their proposed set of redactions and held that Health Canada's decision to disclose the records was invalid³. The Crown appealed, arguing that the Federal Court erred in its determination under sections 20(1)(a) to (d) of the Act and in not considering whether any material should be severed from the exempted information and disclosed.

The Federal Court of Appeal's decision

In a unanimous decision, the Federal Court of Appeal upheld the Federal Court's conclusions under sections 20(1)(a), (b), and (c) of the Act but overturned and remitted Elanco's application for judicial review to the Federal Court in relation to section 20(1)(d). The Federal Court of Appeal also considered whether the Federal Court adequately addressed all categories of disputed information, and whether parts of the Fortekor record could be reasonably severed and disclosed under section 25 of the Act.

Appellate standards of review apply

The Federal Court of Appeal clarified the standard of review that applies on appeals from Federal Court judicial review decisions under section 44 of the Act. Generally, appeal courts apply the appellate standards of review: the correctness standard of review applies to questions of law, and the palpable and overriding error standard applied to questions of fact and mixed fact and law. But on appeals from judicial reviews, courts apply a different standard of review that is less deferential to the court below. Elanco argued that the more deferential appellate standards applied, whereas the Crown argued that the more permissive judicial review standard applied.

The Federal Court of Appeal agreed with Elanco. Even though the decision of the Federal Court was a judicial review decision, the Federal Court of Appeal held that it was a judicial review in name only. Section 44.1 of the Act states that these reviews are "to be heard and determined as a new proceeding", meaning that the Federal Court makes its own determination on whether the exemptions from disclosure under section 20 apply. Because the Federal Court makes its own findings of fact, the palpable and overriding standard of review governs to them.

Applying this more deferential standard of review, the Court dismissed the Crown's arguments with respect to the Federal Court's findings of fact and mixed fact and law on the exemptions under sections 20(1)(a), (b) and (c) of the Act.

Information exempt from release under section 20(1)(d) of the Act

The Court reached a different conclusion under section 20(1)(d) of the Act. This exemption applies to information, that if released, would interfere with contractual negotiations may be exempt from disclosure. For section 20(1)(d) to apply, there must be evidence about the effect of disclosure on actual contractual negotiations.

The Federal Court of Appeal found a palpable and overriding error in the Federal Court's reliance on affidavit evidence submitted by Elanco, as the evidence did not support the Federal Court's finding that information should be exempt under s. 20(1)(d). The affidavit evidence indicated that some of Elanco's contracts had confidentiality provisions, but it did not refer to any actual contractual negotiations with suppliers, or how disclosure of the disputed information would interfere with Elanco's negotiations.

On reconsideration, the Federal Court was instructed to determine what information, if any, was only exempted under section 20(1)(d). Any information that is determined to fall within the scope of section 20(1)(d) in addition to sections 20(1)(a) to (c) should continue to be exempted, as only one valid exemption need apply for information to be withheld. However, information only exempted under section 20(1)(d) by the Federal Court was exempted in error and should be disclosed.

Identity of Elanco's suppliers

The Federal Court identified eight categories of information in the disputed records. The Federal Court of Appeal found that the Federal Court did not address whether the identity of Elanco's suppliers may be exempt from disclosure. It was not clear whether the Federal Court's assessment of "supplier information" included the "identity of suppliers". On reconsideration, the Federal Court was instructed to explicitly consider this category of information under sections 20(1)(a) to (d) of the Act.

Disclosure of information reasonably severed from exempted information

Section 25 of the Act states that information that can be reasonably severed from exempted information "shall" be disclosed. As written, the Federal Court's judgement purported to exempt the entire Fortekor record. The Federal Court of Appeal instructed the Federal Court to issue a judgement addressing the severability and disclosure of any information that was not exempt under the Act.

Practice points

The Federal Court of Appeal's decision highlights several practice points when contesting disclosure of records under an access to information request.

• On appeal, applications for judicial review brought under section 44 of the Act are subject to the appellate standards of review. As a result, appellate courts will not reweigh evidence or make their own determinations on questions of fact or mixed fact and law. Applicants should put their best put forward through their evidence before the Federal Court.
• To argue that information should be exempt from disclosure because it would interfere with contractual negotiations of a third party (section 20(1)(d) of the Act), the evidence led before the Federal Court should clearly identify actual contractual or other negotiations that would be affected by the disclosure. General statements regarding confidentiality provisions or other related obligations may not be sufficient.
• Demonstrating that certain pieces of information should be exempt from disclosure does not mean that the entire government record will be protected. Information that can be reasonably severed from exempted information will be subject to disclosure under section 25 of the Act. As a result, redacting documents thoughtfully based on applicable exemptions is important, as the courts will take issue with generalized arguments and redaction of information that may be severable.