Dockets: A-20-16
A-31-16
Citation:
2017 FCA 135
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CORAM:
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DE MONTIGNY J.A.
GLEASON J.A.
WOODS J.A.
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A-20-16
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BETWEEN:
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ATTORNEY
GENERAL OF CANADA
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Appellant
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and
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CALIAN LTD.
AND
INFORMATION
COMMISSIONER OF CANADA
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Respondents
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A-31-16
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BETWEEN:
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INFORMATION
COMMISSIONER OF CANADA
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Appellant
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and
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CALIAN LTD.
AND
ATTORNEY GENERAL OF CANADA
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Respondents
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REASONS
FOR JUDGMENT
DE MONTIGNY J.A.
[1]
These appeals raise the interesting question of
the interplay between contractual law and the statutory regime governing access
to information in Canada. More particularly, the ultimate result of these
appeals turns on the impact of a disclosure clause on the third party
information exemptions found under the Access to Information Act, R.S.C.
1985, c. A-1 (the Act). For the reasons that follow, I am of the view that the
clause in question constitutes consent to disclosure to the public of otherwise
exempt information under the Act. However, such consent is not determinative of
whether the information in question must be disclosed. I would therefore grant
the appeals in part, but would make no award of costs as success on the various
arguments was divided.
I.
Background
[2]
The respondent Calian Ltd. (Calian) is an
Ottawa-based company that provides flexible and short-term personnel services
in the engineering, information technology, health care, and telecommunications
sectors. A large portion of its business activities arises from the procurement
of placement services to the federal government. As such, it routinely
participates in federal procurement processes.
[3]
In 2009, Public Works and Government Services
Canada (PWGSC, represented by the Attorney General of Canada) launched a
tendering process by way of a Request for Standing Offer (RFSO) for the
provision of research assistance to the Royal Military College of Canada (RMC
or the College). RMC is mandated to equip the Department of National Defence (DND)
and a number of other governmental departments with research and other forms of
support. As the College’s funding to hire research assistants is linked to
federal grants obtained by professors, it utilizes the federal procurement
process every five years to fulfill its various and complex personnel needs.
[4]
The purpose of the 2009 RFSO was framed as
seeking to assist RMC in the carrying out of its research and development
activities within three Faculties (Arts, Engineering and Science) and two
Divisions (Graduate Studies & Research and Continuing Studies). The RFSO
required that bidding parties include detailed personnel rates, in the form of “firm all-inclusive hourly rates”, for approximately
100 different categories of personnel, along with any annual adjustments to
those personnel rates over the five-year life of the contract (see RFSO,
Exhibit “A” to the Affidavit of Louise Kelly sworn May 30, 2014, Appeal Book,
Vol. 8, Tab 20 at pp. 1849 and following).
[5]
The RFSO also specified that PWGSC’s 2005
(25/05/07) General Conditions – Standing Offers – Goods and Services (the General
Conditions) form a part of the Standing Offer. These General Conditions require
that bidding parties agree to the disclosure of their standing offer unit
prices or rates pursuant to the following clause (the Disclosure Clause):
The Offeror agrees to the disclosure of its
standing offer unit prices or rates by Canada, and further agrees that it will
have no right to claim against Canada, the Identified User, their employees,
agents or servants, or any of them, in relation to such disclosure.
Disclosure Clause, Exhibit “E” to the
Affidavit of Louise Kelly sworn May 30, 2014, Appeal Book, Vol. 8, Tab 20 at p.
1870. See also Clause 3.1 of the RFSO, Exhibit “A” to the Affidavit of Louise
Kelly sworn May 30, 2014, Appeal Book, Vol. 8, Tab 20 at p. 1833.
[6]
Calian, which had successfully tendered bids in
1997 and 2002 for a similar type of work for RMC, was again successful in its
2009 bid to PWGSC. On November 30, 2009, standing offer W0046-080001/001/TOR (the
2010-14 Standing Offer) was issued to Calian, thereby making it the exclusive
supplier of specialized research personnel to RMC for the period of January 1,
2010 to December 31, 2014, with the possibility of extension by PWGSC for a
further one-year period.
[7]
On November 1, 2013, PWGSC received a request
under the Act for a copy of “all contracts, contracts
amendments, correspondences and e-mails” relating to the contract awarded
to Calian for the period of 2009/11/30 to 2013/03/01 (2013 Access Request,
Exhibit “H” to the Affidavit of Jerry Johnston sworn March 10, 2014, Appeal
Book, Vol. 7, Tab 18 at p. 1565). Pursuant to subsection 27(1) of the Act,
PWGSC consulted Calian before responding to the request regarding the
disclosure of certain information. In its correspondence, PWGSC invited Calian
to make representations as to why the records subject to the 2013 Access
Request should not be disclosed. PWGSC also notified Calian that the disclosure
of information clause incorporated in the 2010-2014 Standing Offer prevented it
from treating its unit prices and personnel rates as confidential third party
information.
[8]
In addition to requesting that any information
regarding its employees and its own procurement and GST numbers be redacted,
Calian took the position that the information contained in its personnel rates was
proprietary in nature, and thus exempt from disclosure under paragraph 20(1)(b)
of the Act. Indeed, in earlier versions of the same RFSO, the Crown had specified
“base rates” for different categories of
personnel, to which bidders would add their mark-ups and quote an
all-inclusive, “fully-burdened rate” (see
Affidavit of Jerry Johnston sworn March 10, 2014, Appeal Book, Vol. 7, Tab 18
at p. 1415, para. 19). Departing from that practice, the 2009 RFSO did not
include the base rates for each labour category, thus requiring bidders to
develop competitive pricing without any guidance as to what would constitute an
acceptable level of compensation for each category of research contractors.
Calian argued that the risk of harm arising from the disclosure of the billing
rates found in its 2009 bid was significantly increased, as it had to rely on
its extensive and proprietary skills in managing personnel services to develop competitive
pricing. Calian further submitted that for the purpose of paragraph 20(1)(c)
of the Act, disclosure of its rates would result in substantial and important
material financial loss.
[9]
As for the Disclosure Clause, Calian responded
that it did not apply to its personnel rates, mainly for three reasons. First,
it argued that the clause had been developed to only apply to material related
values (i.e. base rates developed by the Crown for each labour category, as found
in previous standing offers), and not to the fully-burdened rates included in
the 2009 bid. Second, Calian put forward the past treatment of the Disclosure
Clause by DND, the previous contracting authority for the RMC research
assistance bid, as evidence of the clause’s narrow meaning. It noted that, based
on this past experience with the federal procurement process, it understood the
Disclosure Clause as constituting consent to disclosure to other government
departments, and not as consent to disclosure to the public. Third, and given
the modalities of this specific RFSO (i.e. awarding the successful bid to only
one supplier, compared to the more common situation where there are multiple
vendors), Calian submitted that disclosure in this specific context would cause
irreparable harm from a competitive standpoint, thus heightening the need for a
restrictive reading of the clause.
[10]
On January 3, 2014, PWGSC communicated its
decision under section 28 of the Act to redact only those portions of the 2010-14
Standing Offer referencing (1) Calian’s employee names, titles, extensions,
cell phone numbers and/or personal phones/fax numbers; (2) Calian’s procurement
business number; and (3) Calian’s GST registration number. PWGSC rejected
Calian’s request to redact the personnel rates, stating that “[…] as the disclosure of information clause has already been
incorporated in the Standing Offer, the unit prices and rates cannot be
considered to be confidential third party information that would prejudice your
competitive position and we must therefore release them” (see Section 28
Decision, Exhibit “H” to the Affidavit of Jerry Johnston sworn March 10, 2014,
Appeal Book, Vol. 7, Tab 18 at p. 1565). While the reasons are not explicit in
this respect, it can be inferred that PWGSC considered the Disclosure Clause as
an outright bar or waiver from claiming confidentiality under subsection 20(1)
of the Act.
[11]
As a result of PWGSC’s section 28 decision,
Calian filed the first judicial review application underlying the current appeals
pursuant to section 44 of the Act. During the course of this application, it
became clear that additional records responsive to the request had been
identified but not included in the original third party consultation. PWGSC
therefore conducted further consultations with Calian with respect to these
additional records, which ultimately led to the same result regarding
disclosure of the personnel rates. Calian applied for judicial review of that
second decision, and the two applications were consolidated and ordered to be
heard together by order dated September 18, 2014. A decision was made by
Justice Brown of the Federal Court (the Judge) on December 18, 2015 (reported
as Calian Ltd. v. Canada (Attorney General), 2015 FC 1392).
II.
The Federal Court’s decision
[12]
The Judge first identified the applicable
standard of review as being that of correctness. Relying on Merck Frosst
Canada Ltd. v. Canada (Health), 2012 SCC 3 at para. 53, [2012] 1 S.C.R. 23
[Merck], he found that there are no discretionary decisions under
subsection 20(1) of the Act, and that the application of the exemptions to the
requested records must be reviewed without any deference to the decision-maker.
[13]
The Judge then made a number of factual findings
that bore on his interpretation of the relevant statutory provisions. He
started off by noting that the personnel rates were much more “business-sensitive” and “confidential”
in nature than those included in previous RFSOs, given the absence of “base rates” for each labour category in the 2009 RFSO
(see Reasons at para. 47). This meant that bidders had to develop pricing from
the ground up. He also noted that pricing was the most important factor
weighing in the decision to award the 2009 RFSO, constituting 60% of the
assessment (Reasons at para. 41).
[14]
As for the history of the parties’ dealings, the
Judge found that it was both of the parties’ intention to treat and consider
the personnel rates as exempt. His conclusion on this point rested primarily on
the treatment of an access request filed in 2009 in relation to one of Calian’s
previous successful bids (the 2003-09 Standing Offer) which resulted in an exclusion
from disclosure of the “fully-burdened” unit
prices pursuant to paragraph 20(1)(c) and subsection 24(1) of the Act.
In comparing the 2003-09 Standing Offer with the one currently at issue, the
Judge noted that both involved the same government contracting party, namely,
the Crown (despite the change in contract administration from DND to PWGSC);
both covered the same subject matter, being the supply of specialized consultancy
services to RMC; and both contained a similarly worded disclosure clause. He
thus found no basis upon which to treat the 2013 Access Request differently
than the one submitted in 2009. If anything, he noted that there were more
important confidentiality concerns regarding the information contained in the 2010-14
Standing Offer (given the nature of the personnel rates and the structure of
the contract now being silent on the “base rates”
for each labour category) which gave rise to a heightened expectation that
disclosure would reasonably result in material financial loss and/or prejudice
to Calian’s competitive edge (Reasons at paras. 49-54).
[15]
In light of the above findings, the Judge
concluded that disclosure of the personnel rates would result in prejudice or
harm to Calian’s competitive position under paragraph 20(1)(c) of the
Act. He determined that such disclosure would allow competitors to “spring board” off the skills and experience of
Calian, effectively harming its ability to submit a winning bid, and that the
risk of undermining Calian’s competitive advantage was more than a mere
possibility (Reasons at para. 61). The Judge based this finding on the fact
that, given the tendering cycle in the provision of personnel services to RMC,
Calian had every reason to believe that another bidding process would soon be
launched (Reasons at para. 59).
[16]
On the issue of the impact of the Disclosure
Clause, the Judge found that it was but one factor to be taken into
consideration when determining what “could reasonably
be expected” under paragraph 20(1)(c) of the Act, in conjunction
with, for instance, the history of the dealings between the parties. He
accepted the evidence of Calian to the effect that its understanding of the
clause was shaped by years of experience and discussions with several
governmental entities, and that its inclusion was meant to allow the disclosure
of rates between various government departments. As the Crown did not file any
evidence on its understanding of the Disclosure Clause, the Judge found that
the parties reasonably intended the clause to permit disclosure of the
personnel rates only to other governmental departments. He thus exempted
disclosure of the personnel rates in accordance with paragraph 20(1)(c)
of the Act (Reasons at paras. 65-78).
[17]
The Judge also found that the personnel rates
were exempt from disclosure under paragraph 20(1)(d) of the Act,
determining that such information could reasonably be expected to interfere
with contractual or other negotiations of a third party. Relying on the test
for interference set out in Burnbrae Farms Limited v. Canada (Canadian Food
Inspection Agency), 2014 FC 957 [Burnbrae], according to which it
must be more than speculative and may not merely consist in the heightening of
competition, he concluded that the risk of Calian’s customers seeking to
improve their negotiating position following the disclosure of its rates was
probable. He also determined that this would put pressure on Calian to pay its
consultants at higher rates. For the same reasons outlined above, the Judge did
not see in the Disclosure Clause an outright bar to claiming the exemption
under paragraph 20(1)(d). Again, he determined that the Disclosure
Clause had to be read together with all of the other relevant factors in order
to assess whether exemption from disclosure would be warranted in the circumstances.
He thus exempted the personnel rates on the additional ground of paragraph
20(1)(d) of the Act (Reasons at paras. 79-88).
[18]
Finally, the Judge also found that the decisions
should be set aside, independently of his findings related to paragraphs 20(1)(c)
and 20(1)(d), on the basis that PWGSC failed to consider its discretion
to refuse to disclose otherwise exempt information under subsection 20(5) of
the Act. Having found that PWGSC missed a critical step in its reasons that
could not be cured, the Judge decided to quash the decisions on this additional
basis (Reasons at paras. 89-101). On the other hand, the Judge determined that
neither paragraph 20(1)(b), nor section 18 of the Act, could be relied upon
by Calian to support its request for redaction (Reasons at paras. 102-107).
III.
Issues
[19]
The Attorney General of Canada (File No.
A-20-16) and the Information Commissioner of Canada (File No. A-31-16) (the
Commissioner) both appealed the decision of the Judge. By Order dated April 6,
2016, the files were consolidated and ordered to be heard together.
[20]
The issues in both appeals overlap considerably,
and different formulations are used by the parties to address similar
questions. In essence, the issues to be decided by this Court boil down to the
following questions:
- Are the
personnel rates exempt from disclosure under paragraphs 20(1)(b),
20(1)(c), and/or 20(1)(d) of the Act?
- What is the
proper interpretation of the Disclosure Clause?
- How does the
Disclosure Clause interact with the scheme of the Act?
[21]
As will soon become apparent, I am of the view
that both PWGSC and the Federal Court erred in their reading of the Disclosure
Clause. PWGSC erred in finding that it constitutes waiver to treat the
information as exempt and the Federal Court erred in finding that the
Disclosure Clause provided a limited consent. In my view, the proper course of
action would have been to first determine whether the information sought to be
protected would otherwise be exempt under the Act. Such will be the question I
answer under issue A. On a proper interpretation of the Disclosure Clause as
consent to disclosure to the public of otherwise exempt information, which I
will canvass under issue B, it must be decided whether there are any
circumstances militating against disclosure, notwithstanding consent to such a
clause. This aspect of my analysis, which will be dealt with under issue C,
pertains to the discretion given to the head of the government institution to
refuse to disclose information which would be treated as exempt had it not been
for the presence of the Disclosure Clause. My findings on this front will bear
on the appropriate remedy to be granted in the current appeals.
IV.
The relevant legislative provisions
[22]
The purpose of the Act is to extend the right of
access to information under government control, subject only to limited and
specific exceptions set out in the Act (s. 2(1)). As stated by Justice La Forest
in Dagg v. Canada (Minister of Finance), [1997] 2 S.C.R. 403 at para.
61, 148 D.L.R. (4th) 385 (dissenting but not on this point), “[t]he overarching purpose of access to information
legislation […] is to facilitate democracy”, first by ensuring “that citizens have the information required to participate
meaningfully in the democratic process”, and second “that politicians and bureaucrats remain accountable to the
citizenry”. Consistent with that goal, the head of a government
institution must disclose, where a request is made for access to a record, any
portion of that record that does not contain information that warrants
exemption and that can reasonably be severed from information that calls for being
withheld (s. 25 of the Act).
[23]
One of the exceptions to the disclosure
principle relates to third party information. The relevant excerpts of subsection
20(1) provide as follows:
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20 (1) Subject to this section, the head of a government
institution shall refuse to disclose any record requested under this Act that
contains
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20 (1) Le responsable d’une institution fédérale est tenu, sous
réserve des autres dispositions du présent article, de refuser la
communication de documents contenant :
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…
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…
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(b) financial, commercial, scientific or technical information
that is confidential information supplied to a government institution by a
third party and is treated consistently in a confidential manner by the third
party;
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b) des renseignements financiers, commerciaux, scientifiques ou
techniques fournis à une institution fédérale par un tiers, qui sont de
nature confidentielle et qui sont traités comme tels de façon constante par
ce tiers;
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(b.1) information that is supplied in confidence to a government
institution by a third party for the preparation, maintenance, testing or
implementation by the government institution of emergency management plans
within the meaning of section 2 of the Emergency Management Act and
that concerns the vulnerability of the third party’s buildings or other
structures, its networks or systems, including its computer or communications
networks or systems, or the methods used to protect any of those buildings,
structures, networks or systems;
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b.1) des renseignements qui, d’une part, sont fournis à titre
confidentiel à une institution fédérale par un tiers en vue de l’élaboration,
de la mise à jour, de la mise à l’essai ou de la mise en oeuvre par celle-ci
de plans de gestion des urgences au sens de l’article 2 de la Loi sur la
gestion des urgences et, d’autre part, portent sur la vulnérabilité des
bâtiments ou autres ouvrages de ce tiers, ou de ses réseaux ou systèmes, y
compris ses réseaux ou systèmes informatiques ou de communication, ou sur les
méthodes employées pour leur protection;
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(c) information the disclosure of which could reasonably be
expected to result in material financial loss or gain to, or could reasonably
be expected to prejudice the competitive position of, a third party; or
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c) des renseignements dont la divulgation risquerait
vraisemblablement de causer des pertes ou profits financiers appréciables à
un tiers ou de nuire à sa compétitivité;
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(d) information the disclosure of which could reasonably be
expected to interfere with contractual or other negotiations of a third
party.
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d) des renseignements dont la divulgation risquerait
vraisemblablement d’entraver des négociations menées par un tiers en vue de
contrats ou à d’autres fins.
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[24]
Even when such exemptions apply, the third party
may consent to the disclosure, and where such consent is given, the head of the
government institution possesses discretion as to disclosure:
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(5) The head of a government institution may disclose any record
that contains information described in subsection (1) with the consent of the
third party to whom the information relates.
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(5) Le responsable d’une institution fédérale peut communiquer
tout document contenant les renseignements visés au paragraphe (1) si le tiers
que les renseignements concernent y consent.
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[25]
The Act also requires that notice be given to
third parties if the head of a government institution intends to disclose a
record that the head has reason to believe might contain information described
in paragraphs 20(1)(b), 20(1)(b.1), 20(1)(c) or 20(1)(d)
(see subs. 27(1) of the Act). The third party to whom such a notice is given
may then make representations, within 20 days after the notice is given, as to
why the record or parts thereof should not be disclosed (subs. 28(1)). If the
head of the government institution nevertheless decides to disclose the record
or part thereof, the third party may apply to the Federal Court for review of
the matter (subs. 44(1)).
V.
The standard of review
[26]
The parties are all in agreement that appellate
review in the context of the Act must be conducted in accordance with the
principles set out in Housen v. Nikolaisen, 2002 SCC 33, 2002 2 S.C.R.
235 [Housen]. This is consistent with the position taken in Merck,
where the Supreme Court stated that “[t]he decision of
the judge conducting a review under the Act, which will often have a
significant factual component, is subject to appellate review in accordance
with the principles set out in Housen [...]” (at para. 54). Accordingly,
the focus of this Court’s review is on the decision of the Federal Court, and
the standard is that of correctness on questions of law, and of palpable and
overriding error on findings of fact and of mixed fact and law. Where a
question of mixed fact and law contains an extricable legal question, the
standard of review will also be that of correctness.
[27]
The impact, if any, of the subsequent decision
rendered by the Supreme Court in Agraira v. Canada (Public Safety and
Emergency Preparedness), 2013 SCC 36 at paras. 45-47, [2013] 2 S.C.R. 559,
is better left for another day. While this Court is obviously not bound by the
parties’ agreement as to the applicable standard of review, the argument should
nevertheless be fully canvassed before setting aside an established line of
cases in the absence of clear indication from the highest court. Not only have
such discussions not taken place here, but it would in any event be of an
academic nature in light of my conclusion that the Judge’s reasons with respect
to the first question withstand scrutiny on the most exacting standard of
review.
[28]
Indeed, I am of the view that the Judge did not
commit a reviewable error in determining that the decision to disclose or not
to disclose must be judicially reviewed on the correctness standard. As the
Supreme Court properly noted in Merck, there is no discretion involved
when the institutional head of a government institution determines whether a
record can be disclosed or not (at para. 53). Pursuant to the opening words of subsection
20(1) of the Act, a record “shall” not be
disclosed if it contains the type of information described in paragraphs (a)
to (d). As a result, the reviewing court must examine whether the
exemptions to the general principle of disclosure have been applied correctly
to the requested records:
[…] It follows that when a third party […]
requests a “review” under s. 44 of the Act by the Federal Court of a decision
by a head of a government institution to disclose all or part of a record, the
Federal Court judge is to determine whether the institutional head has
correctly applied the exemptions to the records in issue […]
Merck at
para. 53
[29]
The Judge was therefore called upon to determine
whether Calian’s personnel rates were correctly found to fall outside the exemptions
from disclosure under the Act. This is not to say that there is no factual
component in such an assessment. As recognized by the Supreme Court in Merck,
the relevant legal principles cannot be applied in a contextual vacuum and must
always be considered in light of the evidence disclosed in each case (at para.
150). With this caveat in mind, I shall therefore proceed to determine
whether the Judge erred in respect of the first question identified above.
[30]
As for the second and third questions, being ones
of contractual interpretation and of the interplay between the clause and the
Act, the applicable standard of review is that of correctness. The Supreme
Court of Canada recently held in Sattva Capital Corp. v. Creston Moly Corp.,
2014 SCC 53 at para. 50, [2014] 2 S.C.R. 633 [Sattva] that questions of
contractual interpretation, being so intricately connected to the facts of any
given case, will generally be construed as questions of mixed fact and law. Absent
a showing of an “extricable question of law”, such
a characterization considerably limits the scope of appellate intervention, and
is a clear call for deference on these types of questions. In the
administrative context, the reasonableness standard of review will thus generally
be said to apply to such questions. In the appellate context, it will be that
of overriding and palpable error.
[31]
Appellate courts have wrestled, in the period
following the Sattva decision, with identifying the circumstances under
which the interpretation of a contract will properly be said to involve an “extricable question of law”, thus attracting a more
scrutinized form of review by way of the correctness standard. One line of
recent cases has held that a lower threshold of judicial intervention should
apply to standard form contracts (see for instance MacDonald v. Chicago
Title Insurance Company of Canada, 2015 ONCA 842, 127 O.R. (3d) 663 [MacDonald];
True Construction Limited v. Kamloops (City), 2016 BCCA 173, 386 B.C.A.C.
82; Ledcor Construction Limited v. Northbridge Indemnity Insurance Company,
2015 ABCA 121, 386 D.L.R. (4th) 482 [Ledcor, ABCA]). The Supreme Court
recently endorsed this approach (see Ledcor Construction Ltd. v. Northbridge
Indemnity Insurance Co., 2016 SCC 37, [2016] 2 S.C.R. 23 [Ledcor,
SCC], reversing Ledcor, ABCA (though affirming, in part, the Court of
Appeal’s analytical framework)).
[32]
The Supreme Court came to that conclusion for
two reasons. First, it held that the factual matrix is much less relevant to
the interpretation of a standard form contract than it generally is for
contractual interpretation. As the Ontario Court of Appeal put it in MacDonald,
at paragraph 33:
The importance of the factual matrix is far
less significant, if at all, in the context of a standard form contract or
contract of adhesion where the parties do not negotiate terms and the contract
is put to the receiving party as a take-it-or-leave-it proposition. Any search
for the intention of the parties in the surrounding circumstances of these
contracts “is merely a legal fiction”. [references omitted]
[33]
Second, unlike the majority of contractual
interpretation cases where the decision has no impact beyond the interests of
the parties to the dispute, a court’s interpretation of a specialized standard
form contract will have a wide impact with significant precedential value.
Consistency is essential where numerous parties will be impacted by shifting
interpretations of a particular contract clause:
[…] It would be undesirable for courts to
interpret identical or very similar standard form provisions inconsistently,
without good reason. The mandate of appellate courts – “ensuring the
consistency of the law” (Sattva, at para 51) – is advanced by permitting
appellate courts to review the interpretation of standard form contracts for
correctness.
Ledcor, SCC at
para. 39
[34]
In the case at bar, the terms of the Disclosure Clause,
and indeed of the procurement contract as a whole, were clearly not negotiated
by the parties (Affidavit of Jerry Johnston sworn March 10, 2014, Appeal Book,
Vol. 7, Tab 18 at p. 1419, para. 33). Calian does not dispute that the General
Conditions were in fact a standard form contract.
[35]
The Attorney General further argues that this
Court’s interpretation of the Disclosure Clause will have an impact beyond the
interests of the parties to the current dispute, as the General Conditions are
standard form terms which apply to all standing offers for goods and services
and have been used for more than 10 years. In fact, it appears that the clause
at issue in the present case has been the subject of repeated adjudication (see
Stenotran Services v. Canada (Minister of Public Works and Government
Services) (2000), 186 F.T.R. 134 (T.D.) [Stenotran]; Top Aces
Consulting Inc. v. Canada (National Defence), 2011 FC 641, 391 F.T.R. 14 [Top
Aces], affirmed 2012 FCA 75, 430 N.R. 260). Counsel for the Attorney
General also notified this Court that a stay has been granted in another matter
pending the resolution of this case, given that it bears on similar legal
issues as the ones involved in the current appeals (The Typhon Group Ltd. et
al. v. Attorney General of Canada, File No. T-1246-15, Order of
Prothonotary Aalto issued December 14, 2015).
[36]
Counsel for Calian, however, submits that there
is no precedential value in interpreting the meaning of the Disclosure Clause,
as this question is but one among many other relevant factors in determining
whether a record is exempt from disclosure under the Act. Calian further opines
that the present case involves a meaningful factual matrix that is specific to
the parties and that sheds particular light on how the contract should be
interpreted. Counsel relies for that proposition on the Supreme Court’s
cautioning in Ledcor, SCC that the interpretation of a standard form
contract may call for deferential review on appeal in some circumstances,
notably when “the factual matrix of a standard form
contract that is specific to the particular parties assists in the
interpretation” (at para. 48).
[37]
Calian’s first argument is without merit. The
interplay between the Disclosure Clause and the various exemptions to
disclosure found in subsection 20(1) of the Act, and whether the Disclosure Clause
operates as a total bar to the exemptions or must be construed as but one
factor in assessing the application of paragraphs 20(1)(b), 20(1)(c)
and (d), is a pure question of law. Moreover, these questions are
separate and distinct from the contractual interpretation issue. Therefore, no
deference is owed to the Judge.
[38]
Calian’s second argument is at first sight more
appealing but must nevertheless similarly be rejected. The subjective intention
of one party to a contract cannot be relied upon to interpret the meaning of a
contract, particularly where a standard form contract is involved as this would
be contrary to the principles of contractual interpretation and antithetical to
the need for certainty, consistency and predictability in the interpretation of
clauses that are widely used in a particular field of activity. This is
particularly true in a case like the present one, where a number of reasons
could explain why a different government department decided not to disclose the
information requested in a previous access to information request. At the end of
the day, to quote from Justice Iacobucci in Canada (Director of Investigation
and Research) v. Southam Inc., [1997] 1 S.C.R. 748 at para. 37, 144 D.L.R.
(4th) 1 (relied upon by the majority in Ledcor, SCC at para. 48), it
seems to me that the dispute is first and foremost over a “general proposition”, and not about “a very particular set of circumstances that is not apt to be
of much interest to judges and lawyers in the future”. Accordingly, I am
of the view that the interpretation of the Disclosure Clause and how it
interacts with the scheme of the Act involve extricable questions of law, and
thus the standard of review applicable to the second and third issues identified
above must be that of correctness, pursuant to the Housen appellate
standard of review.
VI.
Analysis
A.
Are the personnel rates exempt from disclosure
under paragraphs 20(1)(b), 20(1)(c), and/or 20(1)(d) of the Act?
[39]
The general rule of disclosure enshrined in the
Act is subject to a number of exemptions. Of relevance to this appeal are
various exemptions relating to third party confidential commercial information
set out in subsection 20(1). Of particular relevance are paragraphs 20(1)(b),
20(1)(c) and 20(1)(d), which have been reproduced at paragraph 23
of these reasons.
[40]
There is no dispute between the parties as to
the legal principles underlying the application of paragraph 20(1)(c).
Indeed, the appellant Commissioner acknowledges that the Judge correctly cited
the legal test for determining the applicability of paragraph 20(1)(c).
Relying on Merck, the Judge set out the following principles:
- The onus is on the applicant to establish its entitlement to
the exemption, which depends on the nature of the material and the
particular context of the case;
- A third party claiming an exemption under paragraph 20(1)(c)
must show that disclosure will result in a risk of harm that is well
beyond the merely possible or speculative, based on evidence provided by
the party opposing the disclosure, but need not prove on a balance of
probabilities that disclosure will in fact result in such harm;
- The types of harm covered by paragraph 20(1)(c) are
disjunctive (financial loss to the third party or gain to its competitors,
on the one hand, and competitive prejudice on the other).
Reasons at para. 38
[41]
Counsel for the Commissioner submitted that the
Judge failed to properly apply these principles, and erred in finding that
Calian’s evidence was sufficient to establish a reasonable expectation of
probable harm under paragraph 20(1)(c). Relying on a number of cases
from this Court and from the Federal Court, counsel argued that the evidentiary
burden required to claim the exemption provided by paragraph 20(1)(c)
cannot be satisfied by affidavit evidence that simply affirms that disclosure
would cause the type of harm described in that provision (Merck at para.
227, affirming 2009 FCA 166 at paras. 84-86, 400 N.R. 1, citing SNC-Lavalin
Inc. v. Canada (Minister of Public Works) (1994), 79 F.T.R. 113 at para. 43,
49 A.C.W.S. (3d) 211 (T.D.). See also Brainhunter (Ottawa) Inc. v. Canada
(Attorney General), 2009 FC 1172 at para. 32, 182 A.C.W.S. (3d) 244; Toronto
Sun Wah Trading Inc. v. Canada (Attorney General), 2007 FC 1091 at para.
27, 62 C.P.R. (4th) 337; AstraZeneca Inc. v. Canada (Health), 2005 FC
1451 at para. 90, [2005] F.C.J. No. 1775, affirmed 2006 FCA 241, 353 N.R. 84; Wyeth-Ayerst
Canada Inc. v. Canada (Attorney General), 2003 FCA 257 at para. 20, 305
N.R. 317; Brookfield LePage Johnson Controls Facility Management Services v.
Canada (Minister of Public Works and Government Services), 2003 F.C.T. 254
at para. 21, 121 A.C.W.S. (3d) 397, affirmed 2004 FCA 214 at para. 18, 322 N.R.
388; Viandes du Breton Inc. v. Canada (Department of Agriculture and
Agri-food) (2000), 198 F.T.R. 233 at para. 9, 107 A.C.W.S. (3d) 3 (T.D.); Canadian
Broadcasting Corp. v. National Capital Commission (1998), 147 F.T.R. 264 at
paras. 25-27, [1998] F.C.J. No. 676 (T.D.) [Canadian Broadcasting Corp.]).
[42]
In my view, the Judge correctly applied the Merck
framework and committed no reviewable error in concluding, on the basis of the
evidence that was before him, that releasing Calian’s detailed personnel rates
would give its competitors a “free ride” and “tilt the level playing field” against Calian (Reasons
at para. 58). Contrary to the position taken by the Commissioner, the Judge did
not merely rely on bald and unsupported assertions found in the affidavit of
Calian’s Vice President of Operations (Mr. Jerry Johnston). He came to the
conclusion, based on his own assessment, that the personnel rates individually
and in the aggregate were the most significant factor in the success of Calian’s
bid and were crucial to Calian’s competitive position (Reasons at para. 41). He
also accepted Mr. Johnston’s evidence that the development of the personnel
rates was effected through the confidential and proprietary salary and other information
that Calian directly obtained from, or negotiated with, the numerous potential
providers of the required specialist labour services, in addition to its own
business analyses of overhead, other costs, and profit (Reasons at para. 45).
While the absence of cross-examination and of contradictory evidence is not
conclusive one way or another, the Judge could certainly take these factors
into consideration to determine whether Calian had met its burden of
establishing a reasonable expectation of probable harm.
[43]
That being said, the Judge erred in taking the
history of past dealings between the parties as a factor to be considered for
the purposes of assessing whether the information sought to be disclosed could
reasonably be expected to result in material financial loss or gain to Calian
or to prejudice its competitive position. In that respect, the Judge wrote (at
para. 51):
While the Respondents [appellants before
this Court] disagree, in my view, the inference arising from the parties’ past
dealings and course of conduct is compelling in terms of what is asked for
under paragraph 20(1)(c) of the Act. In 2009, the Crown
recognized that disclosure of the fully burdened unit prices could reasonably
be expected to result in material financial loss to the Applicant, could
reasonably be expected to result in material financial gain to a competitor, or
could reasonably be expected to prejudice the Applicant’s competitive position.
While we know that paragraph 20(1)(c) was relied upon in 2009, we do not
know which part(s) of it the head of the institution actually based his or her
decision on. But we do know the head of the institution, as required by
paragraph 20(1)(c), redacted the fully burdened unit price information
from the disclosure and did so notwithstanding his or her consideration of the
same Disclosure Clause now raised by the Respondents [appellants before this
Court].
[44]
I agree with the Commissioner that such evidence
should not have been considered by the Judge when deciding whether the
paragraph 20(1)(c) exemption applied to the information at issue in these
appeals. First of all, we do not know why the head of the government institution
redacted the information relating to the personnel rates in 2009. Secondly, the
Judge assumed that the previous decision made by DND was correct and binding.
Finally, and more importantly, the evidence of harm flowing from disclosure can
only be determined on the basis of the specific records at issue in an access
request; such an assessment is fact specific and turns on the circumstances of
each case.
[45]
Despite this flaw in his reasoning, it was open
to the Judge to come to the conclusion that there was sufficient evidence
before him to meet the Merck standard. There was no need for Calian to
provide specific evidence about its competitors or the ability of these
competitors to compete for comparable future service contracts in response to
future requests for standing offers. Neither the Act, nor the case law, exact
such a high standard.
[46]
The Supreme Court made it clear in Merck that
“[i]t is for the reviewing judge to decide whether the
evidence shows that disclosure could reasonably be expected to result in harm
of the nature specified in s. 20(1)(c)” (at para. 211). The
Supreme Court went on to say that disclosure of information “that is shown to give competitors a head start in developing
competing products, or to give them a competitive advantage in future
transactions may, in principle, meet the requirements of s. 20(1)(c)”
(at para. 219). This is precisely what the Judge found, on the basis of “broadly-sourced” evidence that he characterized as
reliable and credible from a “very senior officer”
of Calian (Reasons at paras. 74 and 59). These findings were available to him,
and I see no basis upon which to interfere with his conclusion.
[47]
The same is true for the exemption provided by
paragraph 20(1)(d). Once again, the Judge correctly identified the
applicable principles and made it clear that the obstruction or interference
with contractual or other negotiations of a third party “must be probable and not merely speculative” (Reasons
at para. 80). He also accepted that evidence of heightened competition or
increased competitive pressure is not sufficient to establish that the harm
described in paragraph 20(1)(d) can reasonably be expected to occur.
These principles have been consistently applied by the Federal Court, and I see
no reason to depart from them (see Burnbrae at paras. 124-125; Oceans
Ltd. v. Canada (Newfoundland and Labrador Offshore Petroleum Board), 2009
FC 974 at para. 64, 356 F.T.R. 106; 131 Queen Street Ltd. v. Canada
(Attorney General), 2007 FC 347 at paras. 42-43, 334 F.T.R. 298; Canada
Post Corp. v. Canada (National Capital Commission), 2002 F.C.T. 700 at para.
18, 115 A.C.W.S. (3d) 353 (T.D.); Canadian Broadcasting Corp. at paras.
28-29; Société Gamma Inc. v. Canada (Secretary of State) (1994), 79
F.T.R. 42 at para. 10, 47 A.C.W.S. (3d) 898 (T.D.)).
[48]
Applying these principles, the Judge concluded that
it was probable that two forms of pressure, both working against Calian, were
at play and risked negatively impacting negotiations with both its employees
and potential suppliers, separately and in combination (Reasons at para. 83).
Specifically, the Judge found that if Calian’s personnel rates, and in particular,
the precise micro-level unit rates, were disclosed, its other customers, who
are currently paying more, would probably seek to pay less, and its specialized
consultants would probably demand higher rates of remuneration (Reasons at
para. 81).
[49]
Counsel for the Commissioner objected to the
Judge’s assessment and argued that Calian offered no specific evidence of any
actual or ongoing negotiations with other customers or regarding the identity
of said customers. The Commissioner further noted that there was also no evidence
regarding the bargaining strength of Calian’s current or prospective employees
or the likelihood of these individuals insisting on higher pay rates should
Calian’s personnel rates be disclosed.
[50]
For many of the same reasons spelled out earlier
in the context of paragraph 20(1)(c), I find that the interference with
contractual or other negotiations that would result from the disclosure is not
merely speculative but rests on cogent, credible and reliable evidence. As
noted by the Judge, Mr. Johnston spoke both from his many years of experience
and for others in his company with whom he had consulted. His experience with
Calian goes back 25 years, and his credibility was not challenged by the
appellants. There is every reason to believe that the risks Mr. Johnston
alluded to in his affidavit were heightened given the upcoming tender. Having
carefully considered the case law marshalled by the appellants in support of
their argument, I have not been convinced that the level of specificity that they
have insisted upon to establish a reasonable expectation of probable harm is
warranted. As frequently mentioned in those cases, there is an element of
forecasting and speculation inherent to establishing a reasonable expectation
of probable harm. As long as the prediction is grounded in ascertainable facts,
credible inferences and relevant experience, it is unassailable. Accordingly,
it was open to the Judge to find that Calian could rely on the paragraph 20(1)(d)
exemption to request the redaction of its personnel rates.
[51]
Finally, I see no reason to vary the Judge’s
finding with respect to paragraph 20(1)(b). The Judge correctly found
that to claim the exemption under that provision, an applicant must meet the
four-part test outlined in Air Atonabee Ltd. v. Canada (Minister of
Transport), [1989] F.C.J. No. 453 at para. 34, 16 A.C.W.S. (3d) 45 (T.D.), as
summarized in St-Joseph Corp. v. Canada (Public Works and Government
Services), 2002 F.C.T. 274 at para. 41, 112 A.C.W.S. (3d) 812 (T.D.):
1. financial, commercial, scientific or
technical information as those terms are commonly understood;
2. confidential in its nature, according to
an objective standard which takes into account the content of the information,
its purposes and the conditions under which it was prepared and communicated;
3. supplied to a government institution by a
third party; and
4. treated consistently in a confidential
manner by the third party.
[52]
The Judge found that the first and third parts
of the test were met, but not the second and fourth, since Calian agreed to some
type of disclosure, albeit limited in scope. In other words, Calian was unable
to meet the requirement that the information be communicated with a reasonable
expectation of confidentiality since the personnel rates, though confidential
in nature, were both prepared and communicated under an understanding of the
Disclosure Clause which allowed, in Calian’s view, disclosure to other
government departments.
[53]
Calian submitted that agreement to disclosure of
information to other departments within government does not constitute an
outright waiver of confidentiality, as it is perfectly possible for numerous
government departments to have a party’s confidential information while
maintaining the confidentiality of that information vis-à-vis the
public. Given my interpretation of the Disclosure Clause, which, as will be
more fully explained below, does not expressly nor impliedly limit disclosure
of the personnel rates to other government institutions, there is no need to
address Calian’s submissions on this point.
[54]
Having found that the Judge committed no
reviewable error for the purposes of issue A, I am therefore in agreement with
the Judge that PWGSC erred in determining that the information requested could
not be treated as third party exempt information under the Act.
B.
What is the proper interpretation of the
Disclosure Clause?
[55]
So far, I have addressed the issue as if the
situation was exclusively governed by the application of subsection 20(1) of
the Act. What are we to make, however, of the Disclosure Clause that forms part
of the 2010-14 Standing Offer? As previously noted, the Judge found that the
Disclosure Clause was not, in and of itself, determinative and did not operate
as a complete bar to a finding that the exemptions found under subsection 20(1)
of the Act could apply. Instead, he was of the view that it was only one of the
considerations to be taken into account when assessing what could reasonably be
expected by a third party in the context of paragraphs 20(1)(c) and 20(1)(d).
As he stated (Reasons at para. 72):
[…] In other words, the Act, in
asking what “could reasonably be expected” requires the Court to engage in a
comprehensive analysis of relevant circumstances, not the one-dimensional
truncated review advanced by the Respondents [appellants before this Court].
Specifically, while I agree the Court must consider the Disclosure Clause, it
must also assess the history of dealings between the parties, their past
experiences dating back to 1997 including the 2009 access request, the 2009
decision to redact notwithstanding a materially identical Disclosure Clause.
The Court for the same reasons must also assess and consider the Applicant’s
[respondent before this Court] understanding of how and why that clause would
be applied. These are components of the required analysis of the statutory
test.
[56]
Against this backdrop, the Judge came to the
conclusion that the Disclosure Clause had to be interpreted in accordance with
the reasonable understanding of Calian, which was shaped by its years of
experience and discussions with various government procurement officers. As a
result, he accepted Calian’s understanding of the clause according to which it
was only meant to allow PWGSC to share its personnel rates with other government
departments, but not with its competitors or to the public at large. He
therefore concluded as follows (Reasons at para. 76):
Assessing the matter generally, and
assessing it at the time of signing the 2010-14 Standing Offer, which I believe
is appropriate, the Applicant was reasonably expecting that any access request
related to the Personnel Rates would have similar outcomes to the 2009 and
other access requests, where the Crown redacted similar information under
paragraph 20(1)(c). Indeed, it is likely this was the reasonable
expectation of both parties given the 2010-14 Standing Offer was essentially
contemporaneous with the 2009 decision to release with redactions. These facts,
together with the Applicant’s credible and reasonable understanding of the limited
nature of the Disclosure Clause, and the fact that such rates were not
disclosed over the Applicant’s objections, in my respectful view, have the
effect of depriving the Disclosure Clause of the determinative effect urged by
the Respondents; the Disclosure Clause is not fatal to this application.
[57]
In my view, this reasoning is flawed for a
number of reasons. First, as previously indicated, it is by now well
established that the interpretation of a standard form contract is a question
of law. Following the decision of the Supreme Court in Ledcor, SCC,
recourse to the reasonable expectations of a party and to its subjective intent
clearly have no place in the analysis of a standard form contract. Such a
contract is not negotiated in any meaningful way; as recognized by Mr.
Johnston, a standing offer is “a framework agreement
which sets out pre-negotiated terms and conditions against which specific
orders (call-ups) can be made by authorized users” (Affidavit of Jerry
Johnston sworn March 10, 2014, Appeal Book, Vol. 7, Tab 18 at p. 1412, para.
7). In that context, it would be illusory to suggest that anything could be
inferred about the meaning of the contract from the facts surrounding its
formation or from the subjective understanding of one of the parties.
[58]
Moreover, consistency is of particular
importance when interpreting standard form contracts. The meaning of a given
RFSO’s disclosure clause cannot change from one bidder to the next based on the
bidder’s prior history with any government institution and the bidder’s
subjective understanding of the clause’s meaning. Fairness among bidders
requires consistency and predictability.
[59]
As a matter of fact, the clear language of a
contract must always prevail over the surrounding circumstances, even when
interpreting a negotiated contract. As the Supreme Court stated in Sattva (at
para. 57):
While the surrounding circumstances will be
considered in interpreting the terms of a contract, they must never be allowed
to overwhelm the words of that agreement. The goal of examining such evidence
is to deepen a decision-maker’s understanding of the mutual and objective
intentions of the parties as expressed in the words of the contract. The
interpretation of a written contractual provision must always be grounded in the
text and read in light of the entire contract. While the surrounding
circumstances are relied upon in the interpretive process, courts cannot use
them to deviate from the text such that the court effectively creates a new
agreement. [references omitted]
[60]
In the case at bar, I agree with the appellants
that the Disclosure Clause is unambiguous on its face. Whether read in
isolation or within the context of the General Conditions, there is no explicit
or implicit restriction to the type of disclosure agreed upon by the Offeror
regarding its standing offer unit prices or rates. This interpretation is
consistent with previous Federal Court decisions confirming that clauses of
this sort constitute consent to disclose records not only within government,
but also to the general public (see Stenotran and Top Aces).
[61]
Counsel for Calian tried to distinguish these
two cases on their facts. It is true that in Top Aces, the Federal Court
was considering whether a disclosure clause amounted to “consent” for the purposes of section 30 of the Defence
Production Act, R.S.C. 1985, c. D-1, thereby removing the information in
question from the protection afforded by subsection 24(1) of the Act.
Nevertheless, the disclosure clause in that case was virtually identical to the
one at issue here, and both the Federal Court and this Court found that it
amounted to consent to disclosure by the third party of its unit prices without
any restriction. Likewise, I accept that the Federal Court relied on a
similarly worded clause in Stenotran to conclude that the third party
had not met its burden of proving that the information was confidential and
should not be disclosed under paragraph 20(1)(b) of the Act. While this
finding does not speak directly to the third party’s consent to disclosure, it
is nonetheless further evidence of the disputed Disclosure Clause’s broad
application.
[62]
In addition to the clear wording and the
principles established by these two cases, there are further reasons why the
Disclosure Clause must be interpreted as encompassing consent to disclosure not
only to other government institutions, but also to the public at large. First,
the Act itself does not distinguish between disclosure within government and
disclosure to the public. In the absence of a contrary indication, be it
explicit or implied, it must be presumed that the Disclosure Clause found in
the General Conditions was meant to be consistent with the intent and spirit of
the Act.
[63]
Second, the Disclosure Clause appears to be superfluous
if it were to be interpreted merely as a licence for government departments to
share between themselves standing offer unit prices or rates. Neither party
raised the issue at the hearing, but it is well established that departments
have no legal personality distinct from that of the Crown, and are mere
administrative divisions under the control of a minister acting on behalf of
the Crown (see René Dussault and Louis Borgeat, Administrative Law: A
Treatise, 2nd ed. (Toronto: Carswell, 1985) at p. 85; Patrice Garant, Droit
Administratif, 6th ed. (Cowansville, Qc.: Éditions Yvon Blais, 2010), at p.
20, citing R. v. Wood (1877), 7 S.C.R. 634 at p. 645 (Ex. Ct.). See also
Canada (National Harbours Board) v. Langelier, [1969] S.C.R. 60 at p.
71, 2 D.L.R. (3d) 81). To the extent that the information sought to be
protected by Calian does not fall within a statutory or policy limitation on
disclosure within the government, such as section 3 of the Privacy Act,
R.S.C. 1985, c. P-21, which prevents the circulation of “personal information”, there seems to be no
impediment to government departments sharing that kind of information.
[64]
As a matter of fact, the Judge himself seemed to
acknowledge in his Reasons, the principle that government departments are pure
emanations of the Crown, stating, at paragraph 50, that the 2003-09 and 2010-14
Standing Offers “both involved the same government
contracting party, namely, the Crown (represented by DND in 2003 and PWGSC in
2010)”. He reiterates this view a few paragraphs later, as part of his
discussion relating to the relevance of the 2009 Access Request and of the
decision then made by DND to redact the requested information. Responding to
the appellants’ argument that the 2009 decision involved a different
decision-maker and a different subject matter, the Judge wrote (at para. 54):
These are not persuasive grounds to deny the
Applicant [respondent before this Court] the statute’s protection from public
disclosure of the Personnel Rates. The institutions implementing and managing
the RFSO processes and the processes under the Act in this case are
materially the same, whether DND which redacted in 2009 or PWGSC which refused
to redact in 2014. The executive authority in both cases is the Crown,
acting through the relevant head of the institution. To accept otherwise would
see form triumph over substance. There is no evidence the change of
delegated contracting administration or management from DND to PWGSC made any
difference to the outcome of this case, given the nature of the information is
the same. And, as noted already, the Disclosure Clauses are materially the
same. [emphasis added]
[65]
If, therefore, the Crown is managing the
procurement process and is ultimately the designated contracting authority, I
see no reason why a disclosure clause would be needed in order to enable the
government to share the information contained in a bid between its various
departments. If such were the case, the Disclosure Clause would be redundant
and deprived of any meaningful significance; it would, in effect, merely state
the obvious. As a result, it seems to me that the correct interpretation of the
Disclosure Clause, consistent not only with its clear wording but also with the
general scheme and purpose of the Act together with basic principles of
administrative law, must be to permit disclosure not only within government but
also more broadly to the public at large.
[66]
In conclusion, I find that the Judge erred in
accepting Calian’s subjective understanding of the scope of the Disclosure
Clause instead of focusing on the unambiguous wording of that clause and on the
judicial interpretation of similarly worded clauses. That approach led him to
an erroneous and overly restrictive interpretation of the Disclosure Clause,
which in turn skewed his overall appreciation of the Act.
[67]
I would even venture to add that the
interpretation given by the Judge to the Disclosure Clause is not only
incorrect, but also cannot stand on the overriding and palpable error standard
of review. Even assuming that surrounding circumstances could be taken into
account in interpreting the terms of this standard form contract, Calian’s
subjective understanding of the Disclosure Clause cannot be given effect on the
record before us. There is simply no evidence that such an interpretation was
shared by the government.
[68]
In his affidavit, Mr. Johnston asserted that the
government had always protected detailed billing rates in contracts, and put
much emphasis on the 2009 Access Request to DND. The Judge accepted Mr.
Johnston’s evidence, and found in particular that Calian “was reasonably expecting that any access request related to
the Personnel Rates would have similar outcomes to the 2009 and other access
requests, where the Crown redacted similar information under paragraph 20(1)(c)”
(Reasons at para. 76). Yet, a careful examination of what took place in 2009
leads to a more nuanced evaluation of DND’s prior treatment of the Disclosure
Clause.
[69]
In response to DND’s request for Calian’s views
and recommendations on the disclosure of the information involved in the 2009
Access Request, counsel for Calian offered a number of grounds of objection to
its unit prices being disclosed. In its letter providing Calian with an
opportunity to submit representations regarding the disclosure of the contract,
DND had drawn Calian’s attention to the fact that as of August 15, 2006,
standing offers are subject to the General Conditions, which form part of the
procurement contract and contain a standard disclosure clause. Counsel for
Calian responded that retroactive changes to the General Conditions could not
give rise to either a right or an obligation on DND to disclose Calian’s
pricing information, unless those terms were incorporated by reference into the
original contract. Calian acknowledged that a similar disclosure clause had in fact
been included in the draft contract that was produced for review, but noted
that it had not been signed (see Exhibit “D” to the Affidavit of Jerry Johnston
sworn March 10, 2014, Appeal Book, Vol. 7, Tab 18 at p. 1483).
[70]
In its submissions to DND, Calian also
communicated its understanding that the disclosure clause at issue for the
purposes of the 2009 Access Request, and in particular its reference to the
disclosure of “unit prices or rates”, referred
only to the disclosure of the Crown’s base rates (which had already been
disclosed as part of the RFSO), and not to the fully burdened rates offered by
Calian or any of its competitors (see Exhibit “D” to the Affidavit of Jerry
Johnston sworn March 10, 2014, Appeal Book, Vol. 7, Tab 18 at p. 1483).
[71]
Following further discussions about the
confidential pricing information and the redactions Calian had proposed, DND
eventually refused to release the fully burdened rates, yet provided no
detailed reasons for doing so. In these circumstances, I am unable to accept
the Judge’s inference that DND’s decision was based on its acceptance of
Calian’s restrictive interpretation of the Disclosure Clause. In the absence of
any evidence to the contrary, there might be a number of explanations for DND’s
course of action, including the non-retroactivity of the General Conditions and
the unenforceability of a clause found in an unsigned contract. As submitted by
the Commissioner, DND may even have been of the view that the non-finalized
contract with Calian was not responsive to the 2009 Access Request for a “[c]opy of an existing contract” (Call
for submissions regarding 2009 Access Request, Exhibit “C” to the Affidavit of
Jerry Johnston sworn March 10, 2014, Appeal Book, Vol. 7, Tab 18 at p. 1479
[emphasis in the original]). Considering the range of possible rationales for
DND’s refusal to release the requested information, it was a palpable and
overriding error for the Judge to conclude that based on past treatment, Mr.
Johnston’s understanding of the Disclosure Clause should prevail. This is
particularly so considering that Calian made no attempt to confirm with
departmental officials that its reading of the Disclosure Clause was shared by
the government.
C.
How does the Disclosure Clause interact with the
scheme of the Act?
[72]
I have determined, above, that the Disclosure
Clause constitutes consent to disclosure to the public at large of otherwise
exempt information under the Act. As previously mentioned, the Judge found (in obiter)
that there was a further ground upon which the decisions to disclose the
personnel rates ought to be set aside. According to the Judge, the head of the
government institution failed to discharge his or her legal duty to consider
the discretion he or she had to refuse to disclose the information which stems
from the use of the word “may” in subsection
20(5). I am of the view that the Judge came to a proper determination on this
front, but for different reasons.
[73]
The Judge held, at paragraphs 94 and 95 of his
Reasons, that this Court’s pronouncement in Attaran v. Canada (Minister of
Foreign Affairs), 2011 FCA 182, 337 D.L.R. (4th) 552 regarding the
discretionary exemption found in subsection 15(1) of the Act was applicable to
this case, because the two subsections are worded very similarly. With all due
respect, these two provisions cannot be analogized. While they both call for
the use of discretion by the head of a government institution, they operate in
a completely different set of circumstances. Subsection 15(1) allows the head
of a government institution to “refuse to disclose”
a record, whereas subsection 20(5) allows the head of a government institution
to “disclose” a record even if it falls within
one of the exemptions provided in subsection 20(1), and then only with the
consent of the third party to whom the information relates. In other words,
subsection 20(5) does not provide a further (discretionary) ground of exemption
over and above the enumerated grounds found in subsection 20(1). Quite to the
contrary, it allows the disclosure of a record that would otherwise be
exempted, provided the affected third party consents to that course of action.
Such is precisely the case in the current instance.
[74]
The discretion granted to the head of a
government institution is entirely compatible with the purpose of the Act,
which is meant to provide for a general right of access to information
contained in records under the control of government, subject to necessary and
limited exceptions (section 2 of the Act). Where the third party that is
protected by an exemption to the right of access consents to disclosure, there may
be public policy objectives served by continuing to refuse access. The same
logic underpins section 19 of the Act, which protects personal information.
Pursuant to subsection 19(2), the head of a government institution may disclose
information falling within the scope of the mandatory exemption for personal
information if, inter alia, “the individual to
whom [the information] relates consents to the disclosure” (para. 19(2)(a)).
[75]
That being the case, I find that the Judge was
correct in coming to the conclusion that the decisions be set aside for failure
to consider the discretion found under subsection 20(5). PWGSC decided that as
the exemptions claimed by Calian with respect to its personnel rates did not
apply, there was no residual discretion to refuse the disclosure of the
information requested. In finding that the exemptions did not apply, I am of
the view that PWGSC proceeded on an incorrect reading of the Disclosure Clause.
In its first section 28 decision, PWGSC noted that the clause prevented Calian
from treating the information as “confidential third
party information that would prejudice your competitive position and we must
therefore release them” (see Section 28 Decision, Exhibit “H” to the
Affidavit of Jerry Johnston sworn March 10, 2014, Appeal Book, Vol. 7, Tab 18
at p. 1565). As mentioned above, it appears that PWGSC construed the Disclosure
Clause as an outright bar to claiming the third party information exemptions,
which led to its finding that there was no residual discretion to exercise
under subsection 20(5) of the Act.
[76]
With respect, this interpretation is not
supported by the language of the clause, or by the scheme of the Act. In fact,
it proceeds on a conflation between the wording of the clause and its effect. The
Disclosure Clause merely stipulates that the Offeror is agreeing to disclosure
of certain information which may otherwise be treated as exempt under the Act. A
necessary corollary to this involves, as I have explained above, an initial determination
that the information would in fact be treated as exempt under the Act had it
not been for the existence of the clause. Thus it cannot be said that the
clause precludes certain information from being characterized as third party
confidential information, nor can it be said to convey that parties agreeing to
its contents are outright prevented from claiming the exemptions found under
the Act. In other words, the clause’s impact is not that the exemptions found
under subsection 20(1) do not apply; rather, it is that despite them applying,
the third party nonetheless agrees to disclosure.
[77]
PWGSC’s reading of the Disclosure Clause as a
waiver of claiming the section 20(1) exemptions is at odds with the scheme of
the Act. I am of the view that agreeing to the Disclosure Clause simply
constitutes the sort of consent contemplated by subsection 20(5) of the Act. Parliament
clearly envisioned the situation under which information otherwise considered
as third party confidential information could be disclosed by way of consent,
and I must give effect to its intent. By making such a provision discretionary
in nature, Parliament unequivocally considered that there would be
circumstances where notwithstanding consent to disclosure, the head of the
government institution may still decide to not disclose the requested
information. One could think of a host of scenarios under which, despite the
existence of consent, disclosure of requested information would still be
misguided. On such a reading of the interaction between the Disclosure Clause
and the scheme of the Act, it becomes clear that the reasons behind a section
28 decision must show that the head of the government institution turned its
mind to the discretion afforded to it under subsection 20(5). Such was not done
here.
[78]
PWGSC decided, on the basis of an erroneous
reading of the Disclosure Clause, that it had to order disclosure because the
exemption regime found under subsection 20(1) of the Act had been waived by
Calian. In so doing, it incorrectly interpreted the terms of the Disclosure
Clause, and was not alive to the situation codified in subsection 20(5) under
which Calian clearly fell. Accordingly, it failed to consider the discretion
afforded to it under that provision. Such was a reviewable error warranting
that the matter be remitted back for reconsideration.
VII.
Conclusion
[79]
For all of the foregoing reasons, I am therefore
of the view that the proper framework under subsections 20(1) and 20(5) of the
Act in the face of a disclosure clause of this type requires that the head of a
government institution (1) determine whether the information would otherwise be
treated as exempt under the Act, and then (2) decide whether any circumstance
militates against the information being shared with the public, notwithstanding
the consent to disclosure. Both the Judge and PWGSC erred in their
interpretation of the Disclosure Clause. Had a proper analysis of that clause
been conducted, it would have been found to constitute Calian’s consent to
disclosure to the public of otherwise exempt information pursuant to subsection
20(5) of the Act, thus triggering the discretion found under that provision.
PWGSC made a reviewable error in not turning its mind to the discretion
afforded to it as head of a government institution under that provision.
[80]
I would grant the appeals in part and set aside
the decision of the Federal Court. Making the decision that the Federal Court
ought to have made, I would grant the applications for judicial review, and
remit the matters back to PWGSC for redetermination in accordance with these reasons.
The parties shall be allowed to make representations as to the proper exercise
of PWGSC’s discretion. As there has been divided success on appeal, no costs should
be awarded.
“Yves de Montigny”
“I agree
Mary J.L. Gleason J.A.”
“I agree
J. Woods J.A.”
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