Dussault v. Canada (Customs and Revenue Agency), 2003 FC 973

Date: 20030825

Docket: T-1062-01

Citation: 2003 FC 973

Guelph, Ontario, Monday, the 25^th day of August 2003

PRESENT:      The Honourable Madam Justice Dawson

BETWEEN:

                                                           DYANE DUSSAULT

                                                                                                                                             Applicant

                                                                         - and -

                                 CANADA CUSTOMS AND REVENUE AGENCY

                                           and CANADA POST CORPORATION

                                                                                                                                        Respondents

                                          REASONS FOR ORDER AND ORDER

DAWSON J.

[1]              The applicant has applied under section 41 of the Access to Information Act, R.S.C. 1985, c. A-1 ("Act") for review of the decision of the Canada Customs and Revenue Agency (the "CCRA") refusing to disclose certain information contained in an agreement between Revenue Canada (as predecessor to the CCRA) and Canada Post Corporation ("CPC"). The question to be determined on this application is whether the CCRA was justified in refusing to disclose information under paragraph 20(1)(c) of the Act on the basis that its disclosure would prejudice the competitive position of CPC.

BACKGROUND FACTS

[2]             In her information request, the applicant requested:

"A copy of the memorandum of understanding between Revenue Canada and the Canadian Post Office (CPO) regarding the roles and responsibilities and financial arrangements pertaining [to] the Customs operations related to release of international mail and parcels handled by the CPO and involving the presence of Customs Officers in designated international postal centers [sic] operated by the CPO."

[3]                 Employees of the CCRA determined that a document entitled "Agreement Concerning Processing and Clearance of Postal Imports" ("Agreement") was relevant to the request. Employees of the CCRA also determined that the Agreement contained information which might pertain to a third party, namely CPC. The CCRA therefore provided CPC with a copy of the Agreement and requested that CPC identify any portions of the Agreement that might be exempted from disclosure under the Act, and provide a rationale for the exemption of any information.

[4]                 The Agreement is a commercial fee-for-service contract entered into in 1992 between CPC and the CCRA. Under the Agreement, CPC agreed to provide certain services regarding postal imports. The services which CPC agreed to provide to the CCRA include:

1.          Scanning or entering a bar-code identification number on each item of mail to be inspected by the CCRA;

2.          Entering into the CCRA data entry system specified information, including the name of the exporter and the country of export, the name and address of the importer, any applicable invoice or order number, and the postal code;

3.          Re-sealing postal imports following inspection;

4.          Printing and affixing invoices to postal imports; and

5.          Collecting duties and excise taxes from the recipients of postal imports and remitting those duties and taxes to the CCRA.

[5]                 Prior to 1992, the services provided under the Agreement by CPC were all carried out by the CCRA.

[6]                 On receipt of the CCRA's request that it identify any portions of the Agreement that might be exempted from disclosure, CPC took the position that certain specific portions of the Agreement should be exempted. After considering the information provided by CPC, the CCRA determined to exempt portions of the Agreement from disclosure under paragraph 20(1)(c) of the Act. A copy of the Agreement was provided to the applicant, minus the exempted portions, on November 15, 1999.

[7]                 The applicant disagreed with the application by the CCRA of paragraph 20(1)(c) of the Act and filed a complaint with the Office of the Information Commissioner ("Commissioner"). Further correspondence then ensued between the Commissioner and the CCRA and CPC, and between the Commissioner and the applicant.

[8]                 As a result of the investigation carried out by the Commissioner and subsequent negotiations, the CCRA decided to provide additional information to the applicant. The Commissioner confirmed that the remainder of the record withheld by the CCRA was in his view properly exempted under paragraph 20(1)(c) of the Act, on the ground that its disclosure would injure the competitive position of CPC.

[9]                 The resulting status is that the CCRA has disclosed all of the Agreement to the applicant except for certain information contained in articles 9.1, 9.3 to 9.8, and Annexes "D" and "E" of the Agreement. This information may generally be described as the financial terms of the Agreement. It is described in the following terms in the public portion of the applicant's application record:

13.            For instance, Article 9.1 provides that CCRA shall be liable to pay Canada Post an amount for each postal import upon which duties are rated, but the amount of that payment has been withheld. Similarly, Article 9.6 provides for the payment by Canada Post to CCRA of an amount for each Priority Courier item which is dutiable, but again, the amount of the payment has been withheld. And, under Article 9.3, CCRA has withheld from disclosure the period of time following which an invoice is rendered by Canada Post to CCRA that CCRA has to pay any amounts outstanding.

14.            Additionally, certain information in Annex D and Annex E to the Agreement has been withheld. Annex D is entitled "Remittance Schedule and Disposition of Unmatched E14s", and is two pages in length. The withheld information relates, under Section A of the Annex (entitled "Monthly Cash Flows"), to the scheduling of payments by Canada Post to CCRA, and under Section B ("Payment of Unmatched Items"), to the amounts of "credits or adjustments" Canada Post will receive in respect of unmatched or returned items. Annex E (pages 20-24) is five pages. The first page (Section A) deals with "Supplementary Payment Methodology", and provides that Canada Post and CCRA agree that "supplementary payments" will be administered in a certain way, but the manner in which such payments will be administered has been deleted. Section B deals with "Determination of Adjustments to Compensation", although the provisions respecting such adjustments have been withheld.

[10]            In this proceeding, the evidence concerning the alleged prejudice to CPC's competitive position was provided in an affidavit sworn by the Director of Economic Strategy and Regulatory Affairs at CPC ("Director"), who was involved in the negotiation of the Agreement. Much of this affidavit is confidential and is filed in confidence with restricted access. An affidavit was also sworn by the Manager of the Access to Information and Privacy Division of the CCRA ("Manager"), and much of this affidavit was also filed in confidence. The evidence referred to in these reasons is found in the public version of those affidavits, and is not confidential in nature.

[11]            In his affidavit the Director swore that:

1.          Canada Post is a commercial undertaking, operating in a competitive environment. Paragraph 5(2)(b) of the Canada Post Corporation Act, R.S.C. 1985, c. C-10 requires CPC to conduct its operations on a self-sustaining financial basis.

2.          Approximately half of the nearly $6 billion in consolidated revenues of CPC is earned as a result of the provision of services in areas in which the CPC has no statutory protection from private sector competition. The CPC faces what it describes as vigorous competition in many of the markets in which it operates, including competition posed by very large, well-financed multi-national corporations such as United Parcel Services ("UPS") and Federal Express.

3.          Article 18.1 of the Agreement provides that the Agreement may be terminated by either party on the giving of 120 days notice. The CCRA could therefore terminate the Agreement and enter into a similar agreement with another service provider, or could commence a tendering process with respect to the services.

4.          With respect to the collection of duties and taxes on postal imports under the Agreement, there are a number of alternate ways in which outstanding monies are collected by Canadian businesses. Prior to 1992, the CCRA collected duties and taxes without any involvement on the part of CPC. This collection could again be accomplished without the involvement of CPC. For example, a "pick up & pay" system could be used, or an invoice could be attached to a parcel on delivery so that the recipient could remit payment directly to the CCRA. There are a number of other companies in the customs brokerage or financial services communities that would be capable of, and might be interested in, providing these services to the CCRA.

5.     If the currently exempted portions of the Agreement are disclosed, it is highly probable that it would be used by competitors of CPC to bid against CPC for the provision to the CCRA of the services covered by the Agreement. CPC would be particularly disadvantaged in any future bidding process because it would not be able to obtain similar information with respect to its competitors' operations or proposals. This disclosure would therefore prejudice the competitive position of CPC.

6.     Reasons were given by the Director as to why each exempted provision is commercially sensitive.

[12]            The Director was cross-examined on his affidavit. The entire transcript of the cross-examination is treated as being confidential, because the confidential material is so interwoven with material that is not confidential.

RELEVANT LEGISLATION

[13]            The relevant provisions of the Act are subsection 2(1), paragraph 20(1)(c), and

subsection 44(1). They are as follows:

STANDARD OF REVIEW

[14]            The standard of review to be applied to the decision of the CCRA is correctness. See: 3430901 Canada Inc. v. Canada (Minister of Industry) (2001), 14 C.P.R. (4^th) 449 at pages 462-466 (F.C.A.); 2003 SCC 8">Canada (Information Commissioner) v. Canada (Commissioner of the Royal Canadian Mounted Police), 2003 SCC 8.

ANALYSIS

[15]            The parties are agreed as to the applicable legal principles. The onus is on the party resisting disclosure. Any exception to the public's right of access should be limited and specific. In order for information to be exempted from access pursuant to paragraph 20(1)(c) of the Act, the person resisting disclosure must establish, on a balance of probabilities, a reasonable expectation of probable harm if the information is disclosed. See: Canada Packers Inc. v. Canada (Minister of Agriculture), [1989] 1 F.C. 47 (C.A.); Northern Cruiser Co. v. Canada (1995), 99 F.T.R. 320 (F.C.A.).

[16]         A reasonable expectation of probable harm resulting from disclosure is not demonstrated by evidence which consists of a general assertion of that harm. The Court must weigh the facts in evidence in order to determine whether the person resisting disclosure has established a reasonable expectation of specific harm. The evidence of harm must not be speculative, and the evidence must establish on a balance of probabilities a clear and direct linkage between the disclosure and the harm alleged. See: Promasix Systems Inc. v. Canada (Minister of Public Works and Government Services), 2002 FCT 921; Canadian Broadcasting Corp. v. National Capital Commission (1998), 147 F.T.R. 264 (T.D.).

[17]            I am satisfied, based upon my review of all of the evidence in the record, including that contained in the confidential portion of the record, that the CCRA has established, on a balance of probabilities, that CPC has a reasonable expectation of probable harm if the remaining information is disclosed. I reach that conclusion for the following reasons.

[18]            First, the Director's evidence establishes that the information not now disclosed would provide an astute analyst with a fairly accurate picture of the structure and the nature of the compensation which CPC negotiated under the Agreement. This information could be used by competitors of Canada Post to bid against Canada Post for the provision to the CCRA of the services covered by the Agreement, particularly by designing a bid that would undercut CPC's compensation.

[19]            Second, as to the likelihood of this happening, the Director swore that if the information is disclosed "it is highly probable that this information would be used by competitors of Canada Post to bid against Canada Post for the provision to [the] CCRA of the services covered by the Agreement". The Director was asked on cross-examination if specific analysis had been done by Canada Post regarding the extent of the harm that would befall CPC if the currently undisclosed information were disclosed. He responded with CPC's consideration of the specific financial harm that could result from the loss of the Agreement with the CCRA.

[20]            The Director also testified in cross-examination that in any case where price information is divulged in relation to a particular set of activities, one is able to impute implicit cost information. He testified that this could be used against CPC where CPC was bidding for a contract, including courier services contract, or competing for other opportunities.

[21]            The Director's evidence was not contradicted by any evidence, and in my view was not repudiated in any material way on cross-examination.

[22]        Third, also relevant to the probability of harm is that the applicant is employed by a public relations and media firm, Global Public Affairs, that presently represents UPS. Global Public Affairs is currently shown on Industry Canada's lobbyist registration as a lobbyist for UPS. In its correspondence with the Commissioner with respect to its complaint, Global Public Affairs confirmed that the CCRA is involved in a NAFTA proceeding with UPS, and that "UPS and other courier companies could compete with the CPC for the provision of services to the federal government". There is also relevant confidential information. See particularly page 2 of Exhibit "T" to the confidential affidavit of the Manager.

[23]        Finally, I have had regard to the report and recommendations of the Commissioner, as contemplated by Mr. Justice Evans, as he then was, in Canadian Council of Christian Charities v. Canada (Minister of Finance), [1999] 4 F.C. 245 (T.D.) at paragraph 14 and by Mr. Justice Evans writing for the Court of Appeal in 3430901 Canada Inc., supra at paragraph 42.

[24]            The applicant argued that the Director's evidence of the likelihood of competing bids was nothing more than a bald assertion; that there was no evidence the services covered by the Agreement have been performed or would likely be performed by others; that the CCRA has never publicly tendered the services now provided under the Agreement (and there was no evidence that it was likely to do so); that an amendment would be required to the Customs Act to permit any other arrangement; and, that due to CPC's monopoly with respect to mail delivery and the fact that the mail processing facilities where customs processing takes place are all owned or leased by CPC, there is no linkage between the asserted harm and the withheld information. Disclosure of the information cannot, in the applicant's submission, reasonably be expected to result in material financial loss or prejudice to the competitive position of CPC.

[25]            The force of the applicant's submissions is, in my view, reduced by the fact that the Agreement may be terminated on either party giving 120 days written notice to terminate the agreement. Until July of 1992, the services CPC performed under the Agreement were carried out directly by the CCRA.

[26]            As to the argument that an amendment to the Customs Act would be required, the existing Agreement is permitted by section 147.1 of the Customs Act, R.S. 1985, c. 1 (2^nd Supp.). In applicable part, that section provides:

[27]            It can be seen that the section applies only to one of the services that CPC performs under the Agreement, namely the collection of duties, and the section is permissive, not mandatory. Therefore, upon proper termination of the Agreement, the provision does not preclude the CCRA from performing all functions covered by the Agreement as was the case prior to 1992, and it does not prevent the CCRA from contracting out the administrative and data processing services performed by CPC for the CCRA under the Agreement.

[28]            As to CPC's alleged monopoly, CPC has an exclusive privilege with respect to the collection, transmission and delivery of letters. That exclusive privilege in respect of letters does not confer any particular monopoly or advantage in the collection of duties and taxes, which do not have to be collected concurrently with the delivery of a letter. The uncontradicted evidence establishes that there are a number of other companies in the customs brokerage business or the financial services business which would be capable of performing those services.

CONCLUSION

[29]            The evidence in my view establishes, on a balance of probabilities, that disclosure of the information could reasonably be expected to prejudice the competitive position of CPC. It follows that the CCRA has met the onus upon it to establish, by cogent evidence, a reasonable expectation of probable harm.

[30]            As a result of this conclusion, the application will be dismissed. Counsel were in agreement that costs should follow the event, but should be limited in that there should be no allowance of costs for second counsel.

                                                                       ORDER

[31]            THIS COURT HEREBY ORDERS THAT:

1.          The application for judicial review is dismissed.

2.          The applicant shall pay to each respondent its costs. If not agreed, the costs should be assessed in accordance with the high end of column III of the table to Tariff B of the Federal Court Rules, 1998.

3.          I direct that in any assessment, counsel fees be assessed only in respect of first counsel for each party.

"Eleanor R. Dawson"

                                                                                                                                                    Judge                        

                                                            FEDERAL COURT

                        NAMES OF COUNSEL AND SOLICITORS OF RECORD

DOCKET:                                T-1062-01

STYLE OF CAUSE: Dyane Dussault v. Canada Customs and Revenue Agency and Canada Post Corporation

PLACE OF HEARING:         Vancouver, British Columbia

DATE OF HEARING:           March 20, 2003

REASONS FOR ORDER:

AND ORDER:                         Hon. Madam Justice Dawson

DATED:                                   August 25, 2003

APPEARANCES:

Mr. Keith E.W. Mitchell                         FOR THE APPLICANT

Mr. John B. Laskin

and Mr. John A. Terry              FOR THE RESPONDENT CPC

Mr. Brian J. Saunders                 FOR THE RESPONDENT CCRA

SOLICITORS OF RECORD:

Davis & Company

Vancouver, British Columbia      FOR THE APPLICANT

Torys

Toronto, Ontario                                     FOR THE RESPONDENT CPC

Morris Rosenberg

Deputy Attorney General                        FOR THE RESPONDENT CCRA

of Canada