Canada (Minister of Public Works and Government Services) v. The Hi-Rise Group Inc., 2004 FCA 99

Date: 20040312

Docket: A-225-03

Citation: 2004 FCA 99

CORAM:        ROTHSTEIN J.A.

NOËL J.A.

SHARLOW J.A.

BETWEEN:

THE MINISTER OF PUBLIC WORKS AND

GOVERNMENT SERVICES CANADA

Appellant

                                                                           and

THE HI-RISE GROUP INC.

Respondent

                                        Heard at Toronto, Ontario, on February 19, 2004.

                                 Judgment delivered at Ottawa, Ontario, on March 12, 2004.

REASONS FOR JUDGMENT BY:                                                                                    NOËL J.A.

CONCURRED IN BY:                                                                                            ROTHSTEIN J.A.

                                                                                                                                  SHARLOW J.A.

Date: 20040312

Docket: A-225-03

Citation: 2004 FCA 99

CORAM:        ROTHSTEIN J.A.

NOËL J.A.

SHARLOW J.A.

BETWEEN:

THE MINISTER OF PUBLIC WORKS AND

GOVERNMENT SERVICES CANADA

Appellant

                                                                           and

THE HI-RISE GROUP INC.

Respondent

                                                    REASONS FOR JUDGMENT

NOËLJ.

[1]                This is an appeal from a decision of a Judge of the Federal Court allowing the application for judicial review by The Hi-Rise Group Inc. (the respondent herein and referred to as such) of a decision by the head of Public Works and Government Services Canada (PWGS or the appellant) acting through a delegate to disclose certain documents pursuant to a request made under the Access to Information Act, R.S.C. 1985, c. A-1 (the Act).

[2]                At issue is whether documents, the release of which would reveal the annual rents being paid by PWGS with respect to an office building located in Hamilton, Ontario, and the option prices at which this building can be acquired by PWGS, are exempt from disclosure under paragraph 20(1)(b) of the Act. The Federal Court Judge found that they were and the appellant contends that he erred in so finding.

[3]                Subsection 20(1) provides:

Facts

[4]                In response to a Request for Proposals (RFP) issued by PWGS in November 1999, the respondent, with other proponents, bid to provide leased office accommodation for various federal government departments in Hamilton, Ontario. The RFP required a proponent to provide a term of lease of fifteen years. The RFP additionally provided that PWGS would consider options to purchase at the end of each of year two, five, ten and fifteen.

[5]                The respondent's proposal outlined the requested lease rate and was the only one which also priced options to purchase at the end of year two, year five, year 10 and year 15.

[6]                The financial aspects of the various proposals were submitted by PWGS to a third party consultant for analysis. Financial evaluations were conducted and documented results were provided to PWGS. Amongst those were schedules each containing a single page showing the total Net Present Value associated with the respondent's five proposals that is, the total Net Present Value of:

i)        the total rent paid after the fifteen-year lease term;

ii)       the rent paid over two years of the lease term with the exercise of the option to purchase at that time;

iii)       the rent paid over five years of the lease term with the exercise of the option to purchase at that time;

iv)      the rent paid over ten years of the lease term with the exercise of the option to purchase at that time; and

v)       the rent paid over fifteen years of the lease term with the exercise of the option to purchase at that time.

[7]                The respondent was awarded the contract and a public announcement in that regard was made on or about December 15, 2000.

[8]                A contract was subsequently entered into reflecting the term, lease price and option prices which had been outlined in the respondent's proposal.

[9]                In May of 2001, PWGS received a request under the Act for a copy of records containing "Information on the bidding process for the new federal building identified as required for downtown Hamilton, Ontario in 1999" (Appeal Book, tab 14, page 104, paragraph 3).

[10]            At the relevant time, the Access to Information and Privacy Coordinator within PWGS (the access coordinator), had the delegated authority to exercise all the powers and duties conferred upon the head of PWGS by the Act pursuant to an order made under section 73 thereof.

[11]            The request was reviewed by members of the office of the access coordinator, and upon determination that PWGS was in possession of records described in the request and that some of the information reflected in these records was third party information pertaining to the respondent, the respondent was invited to make submissions with respect to disclosure. The respondent objected to disclosure on the basis that:

(a)      the Records contained sensitive financial and/or commercial information that was confidential, had been supplied in confidence, and had been consistently treated as such by Hi-Rise (20(1)(b));

(b)     a reasonable expectation of harm, either in the form of material financial loss or prejudice to Hi-Rise's competitive position, could reasonably be expected to result from disclosure of the Records (20(1)(c));

(c)     the disclosure of the confidential Records could reasonably be expected to interfere with Hi-Rise's future contractual and/or negotiations with respect to the Project, and future projects in the Hamilton area (20(1)(d)).

[12]            By letter dated July 17, 2001, the respondent was advised by the access coordinator that she had determined that there were not sufficient reasons to prevent disclosure of specified parts of the records reviewed. After the application of the exemptions to which the respondent was entitled, the only information remaining on the records, disclosure of which remained in issue, is the total Net Present Value associated with the respondent's proposals as reflected by the five documents described in paragraph 6.

[13]            The respondent sought judicial review of the aforesaid decision.

Decision under Appeal

[14]            By decision rendered April 11, 2003, the Federal Court Judge found that the five documents in issue were exempt from disclosure. He identified the respondent's primary concern about the release of these documents by quoting a passage from the affidavit filed by its president:

I anticipate other RFP's to be advertised for the Hamilton area in the future. Some RFP's will be for the Government of Canada. Knowledge of Hi-Rise's lease rates and option prices (which are a function of Hi-Rise's costs to build and other factors) will be serious disadvantage to Hi-Rise and a serious advantage to Hi-Rise's competitors and other proponents of projects in Hamilton.

[15]            The Federal Court Judge held that although the respondents had not established that the disclosure of these documents gave rise to a reasonable expectation of harm or prejudice within the meaning of paragraphs 20(1)(c) or (d), their release would reveal confidential information which had been supplied in confidence within the meaning of paragraph 20(1)(b).

Position of the Parties

[16]            The appellant maintains that in so holding, the Federal Court Judge misconstrued paragraph 20(1)(b) of the Act. Specifically, the appellant submits that he erred in finding that the total Net Present Value of the total costs associated with the five options was information "supplied to a government institution by a third party". Secondly, the appellant alleges that the Federal Court Judge erred in finding that this information was "confidential information" within the meaning of this provision.

[17]            The respondent takes the position that the Federal Court Judge arrived at the correct conclusion and stands by the reasons that he gave. The respondent reminds the Court that findings of fact cannot be overturned in the absence of a palpable and overriding error and that the same degree of deference must be paid to inferences of fact (Housen v. Nikolaisen, [2002] 2 S.C.R. 235).

Analysis and Decision

[18]            Before turning to the alleged errors, it is useful to go back to subsection 2(1) of the Act which provides, inter alia:

[19]            It is clear from subsection 2(1) that the intent of Parliament is to make access to government controlled information the rule and to ensure that exceptions are limited and specific (Canada (Information Commissioner) v. Canada (Prime Minister) (1993), 57 F.T.R. 180 at paragraphs 114 to 188, Rothstein J. (as he then was). The burden of proving that records come within any of the exceptions falls on the party opposing the disclosure (Maislin Industries Ltd. v. Minister for Industry, Trade and Commerce, [1984] 1 F.C. 939 at page 943 (T.D.); Cyanamid Canada Inc. v. Canada (Minister of Health and Welfare), (1992), 52 F.T.R. 22 at paragraph 36 (T.D.); aff'd (1992), 45 C.P.R. (3d) 390 (F.C.A.).

[20]            In order to bring the information in issue within the exceptions set out in paragraph 20(1)(b), it was therefore incumbent upon the respondent to demonstrate, on a balance of probabilities, that the information in issue is:

a)    financial, commercial, scientific or technical information;

b)    confidential information;

c)    that was supplied by it to a government institution, and

d)    that was treated by it consistently in a confidential manner.

[21]            The appellant concedes that the requirement in a) has been met and does not challenge the Federal Court Judge's conclusion that the requirement in d) has also been met.

[22]            With respect to the requirement that the information "be supplied to a government institution", the appellant maintains that the total Net Present Value figures associated with the respondent's five proposals is information which was developed on behalf of PWGS by its third party consultant. Although some of the variables used in the calculation include information provided by the respondent, the specific Net Present Value figures were not provided by the respondent. As such, it is not information that was "supplied" by the respondent within the meaning of paragraph 20(1)(b) (Canada Packers Inc. v. Canada (Minister of Agriculture), [1989] 1 F.C. 47 at page 54 (F.C.A.).

[23]            However, the Federal Court Judge had before him evidence in the form of expert opinion tending to show that the Net Present Value figures, if released, would allow a third party to calculate with reasonable certainty both the annual rents and the option prices at each stage. He accepted this evidence, and found as a fact that the information supplied by the respondent in its proposal and the information reflected by the Net Present Value figures was in effect one and the same.

[24]            This is a finding that was open to the Federal Court Judge on the evidence before him and it follows from this finding that the information reflected by the Net Present Value figures can be viewed as information that was "supplied" by the respondent within the meaning of paragraph 20(1)(b).

[25]            With respect to the further finding that this information was "confidential information", the Federal Court Judge framed his analysis by reference to the approach set out by MacKay J. in Air Atonabee Ltd. v. Canada (Minister of Transport) (1989), 27 C.P.R. (3d) 180 at 198 (T.D.):

...whether information is confidential will depend upon its content, its purposes and the circumstances in which it is compiled and communicated, namely:

(a) that the content of the record be such that the information it contains is not available from sources otherwise accessible by the public or that could not be obtained by observation or independent study by a member of the public acting on his own,

(b) that the information originate and be communicated in a reasonable expectation of confidence that it will not be disclosed, and

(c) that the information be communicated, whether required by law or supplied gratuitously, in a relationship between government and the party supplying it that is either a fiduciary relationship or one that is not contrary to the public interest, and which relationship will be fostered for public benefit by confidential communication.

[26]            It was conceded before the Federal Court Judge that the first consideration had been met. With respect to the second consideration, the Federal Court Judge recognized that the demonstration that information was communicated in a reasonable expectation of confidence had to be made by reference to objective evidence. In this respect, he identified two pieces of evidence.

[27]            First he referred to paragraph 12 of the "Request for Proposals" used in the present case which reads:

The Lessee considers that the leasing information listed hereunder is the type of government information that is normally available to the general public and therefore, the Lessee reserves the right to make this information available to the general public, that is;

(a)            the address of the Building;

(b)           the name and address of the Lessor;

(c)            the commencement date of this Lease;

(d)           the termination date;

(e)            the options to extend and dates thereof;

(f)            the area of the Leased Premises.

and the Lessor agrees to the disclosure to the public of such information and agrees not to object in any way whatsoever to the disclosure of such information.

The Federal Court Judge held that this provision had the effect of creating a reasonable expectation of confidence on the part of the respondent with respect to information not itemized.

[28]            Second, the Federal Court Judge had before him an internal e-mail by Mr. Fred Pincock, General Manager of Office Accommodation and Real Estate Services for PWGS, who wrote in relation to the present request:

We are proceeding to collect the requested information. However it will be transmitted to the [access coordinator] with a very strong recommendation that none of the material be released. The bids of the various proponents is proprietary and would divulge commercially sensitive information and therefore should be excluded from distribution.

In this case we received three bids and it is common knowledge in the community which proponents submitted bids. It is further known that one of the bids was disqualified which leaves two bids; one successful and one not. Therefore any information released as a result of this request could easily be identified with each proponent.

It is my understanding that our department's position has always been that bid evaluations are exempt from [disclosure]. It would seem to me we are wasting a lot of time and effort to send this material to the [access coordinator] if in fact it is policy that the material cannot be released.

[29]            On the basis of these two pieces of evidence, the Federal Court Judge found that the information in issue had been communicated in a reasonable expectation of confidence.

[30]            The Federal Court Judge then addressed the third consideration set out in Air Atonobee (supra), i.e. whether the relationship between PWGS and the respondent will be fostered for public benefit by keeping the records under consideration confidential. He quoted a passage from Société Gamma Inc. v. Canada (Department of Secretary of State) (1994), 56 C.P.R. (3d) 58 at 64 (T.D.), where Strayer J. (as he then was) held that the confidentiality which attaches to the bidding process ceases to apply once the process is completed.

[31]            The Federal Court Judge took the position that Société Gamma could easily be distinguished. He went on to conclude, placing particular reliance on Mr. Pincock's e-mail, that maintaining confidentiality of the information in issue was in the public interest. He said (paragraph 21):

In the present case, I put weight on Mr. Pincock's opinion as cited above to give content to the "public benefit" consideration. In my opinion, the evidence discloses a course of confidential conduct experienced by both the Government of Canada through officials at PWGSC and parties in the position of the Applicant. In my opinion, the agreement to this course of conduct should not be considered as contrary to the Act; instead, it should be viewed as necessary, in the public interest, to guarantee the integrity of the bidding process in the complicated lease and option-to-buy proposal in the present case. Thus, I find that, in the present case, the Applicant has adequately demonstrated that, tested objectively, the record under consideration is of a confidential nature.

[32]            In my respectful view, the Federal Court Judge erred in not applying Société Gamma and in holding as a result that the respondent had a reasonable expectation of confidentiality with respect to the records in issue and that public interest would be fostered by preserving the confidentiality of these records. It is important to recall that, having regard to the Federal Court Judge's earlier finding of fact, the information revealed by the documents in issue are the lease rates and option prices paid or payable by PWGS pursuant to the contract entered into with the respondent.

[33]            The question to be answered in the present case was therefore whether the respondent, assuming that its proposal was successful, could reasonably expect that amounts paid or payable to it out of public funds pursuant to the ensuing contract would remain confidential by reason of the fact that the process which led to the grant of the contract was confidential.

[34]            This is one of the questions which Strayer J. answered in Société Gamma (supra) when he said at page 64:

One must keep in mind that these proposals are put together for the purpose of obtaining a government contract, with payment to come from public funds. While there may be much to be said for proposals or tenders being treated as confidential until a contract is granted, once the contract is either granted or withheld there would not, except in special cases, appear to be a need for keeping tenders secret. In other words, when a would-be contractor sets out to win a government contract he should not expect that the terms upon which he is prepared to contract, including the capacities his firm brings to the task, are to be kept fully insulated from the disclosure obligations of the Government of Canada as part of its accountability.

[35]            In that case, Strayer J. was dealing with a request for records relating to two proposals submitted in response to a call for proposal in connection with specified translation services. The process was not materially distinct from the one with which we are concerned. One of the two proposals was accepted.

[36]            Strayer J. held that the records underlying both proposals had ceased to be confidential. Amongst the information ordered to be disclosed were the "unit prices" payable for the services provided pursuant to the contract entered into as a result of the successful proposal. Société Gamma had argued that releasing this information would "educate our competitors at our expense and prejudice our competitive position" (page 62).

[37]            We are not concerned here with information underlying an unsuccessful bid or proposal, and I express no opinion in that regard. I agree with Strayer J. that when a would-be contractor sets out to win a government contract through a confidential bidding process, he or she cannot expect that the monetary terms, in the event that the bid succeeds, will remain confidential.

[38]            The two pieces of evidence relied upon by the Federal Court Judge cannot detract from this result. This evidence does tend to show that monetary terms underlying tenders may have been kept confidential beyond the bidding process in the past but that is only one aspect of the test (Brookfield LePage Johnson Controls Facility Management Services v. Canada (Minister of Public Works and Government Services), [2003] F.C.J. No. 348 at paragraph 16 (T.D.) (Layden-Stevenson J.)). One must also determine whether such a practise, if it did exist, conforms with the Act (Ottawa Football Club v. Canada (Minister of Fitness and Amateur Sport), [1989] F.C.J. No. 7 at paragraph 13 (T.D.)). Maintaining confidentiality can only be justified under the Act if it fosters a confidential relationship for public benefit (Air Atonabee, (supra)).

[39]            The Federal Court Judge determined that it did. He found that the "public benefit" consideration justified shielding the documents in issue from disclosure (Reasons, paragraph 21). Relying on Mr. Pincock's e-mail, he held that it was necessary to withhold information as to the amounts paid or payable under the lease in order to guarantee the integrity of the bidding process in the "complicated lease and option-to-buy proposal" involved in this case.

[40]            In so concluding, the Federal Court Judge may have lost sight of the fact that PWGS, the government institution primarily concerned with maintaining the integrity of the bidding process, saw things differently. The decision to release the five documents was taken by the access coordinator acting in the name of the head of PWGS. She obviously did not share Mr. Pincock's view that releasing this information at this stage would impede the bidding process. In the circumstances, it was not open to the Federal Court Judge to base his assessment of public interest on the opinion expressed in the Pincock e-mail.

[41]            Morever, even if Mr. Pincock's opinion was reflective of the position of PWGS, there was no evidence before the Federal Court Judge to support this position and indeed no rationale for extending secrecy over the information in issue beyond the time when the respondent's proposal was accepted. As was pointed out in Société Gamma, there are good reasons for maintaining confidentiality during the bidding process but different considerations arise once the contract is awarded and public funds are committed to it. Absent special circumstances (national security comes to mind), I fail to see how public benefit could be fostered by maintaining the confidentiality of amounts paid or payable by government pursuant to contractual obligations with third parties.

[42]            The respondent knew that PWGS was acting on behalf of government and that public funds would be involved if its proposal was to succeed. The public's right to know how government spends public funds as a means of holding government accountable for its expenditures is a fundamental notion of responsible government that is known to all. Without commenting on the other information which formed part of its proposal, the respondent could not reasonably expect that information as to the amounts paid or payable to it under the ensuing contract would remain confidential.

[43]            In my respectful view it was not open to the Federal Court Judge on the record before him to hold that the documents in issue reflected confidential information within the meaning of paragraph 20(1)(b).

[44]            I would allow the appeal with costs here and below, set aside the decision of the Federal Court Judge and order that pages 147, 148, 149, 150 and 151 which appear at exhibit I to the Confidential Affidavit of Lucille Delbos, sworn October 5, 2001, be disclosed. I would make the order of disclosure effective 60 days from the date of this order, or if leave to appeal to the Supreme Court is sought within that period, on the day of the disposition of the leave application.

                 "Marc Noël"                  

J.A.

"I agree.

Marshall Rothstein, J.A."

"I agree.

K. Sharlow, J.A."