Donahue Inc. v. Canada (Attorney General), docket T-2620-96

     T-2620-96

OTTAWA, ONTARIO, THIS 18th DAY OF APRIL 1997

PRESENT: THE HONOURABLE MADAME JUSTICE TREMBLAY-LAMER

BETWEEN:

     DONAHUE INC.

     -and-

     PRODUITS FORESTIERS DONAHUE INC.

     -and-

     DONAHUE QUNO INC.

     -and-

     LÉO CAUCHON LTÉE,

     Applicants,

     - AND -

     ATTORNEY GENERAL OF CANADA

     -and-

     MINISTER OF INTERNATIONAL TRADE

     -and-

     MINISTER OF FOREIGN AFFAIRS,

     Respondents.

     O R D E R

     I allow the respondents' objection in respect of solicitor-client privilege in part. I allow their objection in respect of section 39 of the Evidence Act. I dismiss their objection in respect of the common law privilege attaching to trade secrets and the two objections in respect of section 37 of the Evidence Act.

     Accordingly, I order that the respondents produce documents 125, 127, 128, 129, 130, 131, 136, 138, 139, 143 and 166. However, disclosure of documents 136, 138 and 139 will have to be made in accordance with the order of Dubé J.

     Danièle Tremblay-Lamer

                         JUDGE

Certified true translation

C. Delon, LL.L.

     T-2620-96

BETWEEN:

     DONAHUE INC.

     -and-

     PRODUITS FORESTIERS DONAHUE INC.

     -and-

     DONAHUE QUNO INC.

     -and-

     LÉO CAUCHON LTÉE,

     Applicants,

     - AND -

     ATTORNEY GENERAL OF CANADA

     -and-

     MINISTER OF INTERNATIONAL TRADE

     -and-

     MINISTER OF FOREIGN AFFAIRS,

     Respondents.

     REASONS FOR ORDER

TREMBLAY-LAMER J.

     On November 29, 1996, the applicants filed an application for judicial review of the decision of the Minister of International Trade dated October 31, 1996.

     Also on that day the applicants served a request for disclosure of documents on the Minister of International Trade, pursuant to Rule 1612 of the Federal Court Rules¹ (hereinafter referred to as the "Rules").

     The respondents objected to this request for disclosure, citing the confidential nature of the documents. The issue in this case is therefore whether the request was proper.

The relevant statutory provisions

     Sections 37 and 38 of the Canada Evidence Act² are relevant in this instance. They read as follows:

37. (1) A minister of the Crown in right of Canada or other person interested may object to the disclosure of information before a court, person or body with jurisdiction to compel the production of information by certifying orally or in writing to the court, person or body that the information should not be disclosed on the grounds of a specified public interest.

(2) Subject to sections 38 and 39, where an objection to the disclosure of information is made under subsection (1) before a superior court, that court may examine or hear the information and order its disclosure, subject to such restrictions or conditions as it deems appropriate, if it concludes that, in the circumstances of the case, the public interest in disclosure outweighs in importance the specified public interest.

(3) Subject to sections 38 and 39, where an objection to the disclosure of information is made under subsection (1) before a court, person or body other than a superior court, the objection may be determined, on application, in accordance with subsection (2) by

(a) the Federal Court--Trial Division, in the case of a person or body vested with power to compel production by or pursuant to an Act of Parliament if the person or body is not a court established under a law of a province; or

(b) the trial division or trial court of the superior court of the province within which the court, person or body exercises its jurisdiction, in any other case.

(4) An application pursuant to subsection (3) shall be made within ten days after the objection is made or within such further or lesser time as the court having jurisdiction to hear the application considers appropriate in the circumstances.

(5) An appeal lies from a determination under subsection (2) or (3)

(a) to the Federal Court of Appeal from a determination of the Federal Court--Trial Division; or

(b) to the court of appeal of a province from a determination of a trial division or trial court of a superior court of a province.

(6) An appeal under subsection (5) shall be brought within ten days from the date of the determination appealed from or within such further time as the court having jurisdiction to hear the appeal considers appropriate in the circumstances.

(7) Notwithstanding any other Act of Parliament,

(a) an application for leave to appeal to the Supreme Court of Canada from a judgment made pursuant to subsection (5) shall be made within ten days from the date of the judgment appealed from or within such further time as the court having jurisdiction to grant leave to appeal considers appropriate in the circumstances; and

(b) where leave to appeal is granted, the appeal shall be brought in the manner set out in subsection 60(1) of the Supreme Court Act but within such time as the court that grants leave specifies.

39. (1) Where a minister of the Crown or the Clerk of the Privy Council objects to the disclosure of information before a court, person or body with jurisdiction to compel the production of information by certifying in writing that the information constitutes a confidence of the Queen's Privy Council for Canada, disclosure of the information shall be refused without examination or hearing of the information by the court, person or body.

(2) For the purpose of subsection (1), "a confidence of the Queen's Privy Council for Canada" includes, without restricting the generality thereof, information contained in

(a) a memorandum the purpose of which is to present proposals or recommendations to Council;

(b) a discussion paper the purpose of which is to present background explanations, analyses of problems or policy options to Council for consideration by Council in making decisions;

(c) an agendum of Council or a record recording deliberations or decisions of Council;

(d) a record used for or reflecting communications or discussions between ministers of the Crown on matters relating to the making of government decisions or the formulation of government policy;

(e) a record the purpose of which is to brief Ministers of the Crown in relation to matters that are brought before, or are proposed to be brought before, council or that are the subject of communications or discussions referred to in paragraph (d); and

(f) draft legislation.

(3) For the purposes of subsection (2), "Council" means the Queen's Privy Council for Canada, committees of the Queen's Privy Council for Canada, Cabinet and committees of Cabinet.

(4) Subsection (1) does not apply in respect of

(a) a confidence of the Queen's Privy Council for Canada that has been in existence for more than twenty years; or

(b) a discussion paper described in paragraph 2(b)

(i) if the decisions to which the discussion paper relates have been made public, or

(ii) where the decisions have not been made public, if four years have passed since the decisions were made.

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Analysis

     A.      Solicitor-client privilege

     The privileged nature of communications between a solicitor and his or her client has long been recognized in Canadian law. In Solosky v. The Queen,³ the Supreme Court of Canada defined this privilege as a "fundamental civil right". Also in that decision, Dickson J. (as he then was) set out the tests for determining whether privilege attaches, as follows:

As Mr. Justice Addy notes, privilege can only be claimed document by document, with each document being required to meet the criteria for the privilege -- (i) a communication between solicitor and client; (ii) which entails the seeking or giving of legal advice; and (iii) which is intended to be confidential by the parties. To make the decision as to whether the privilege attaches, the letters must be read by the judge, which requires, at a minimum, that the documents be under the jurisdiction of a court. Finally, the privilege is aimed at improper use or disclosure, and not at merely opening.4

     The tests for determining whether privilege attaches as formulated in that case by Dickson J. have since been the subject of a constant and unanimous line of decisions. Suffice it to refer to the following three decisions: Descôteaux v. Mierzwinski,⁵ Geffen v. Goodman Estate⁶ and Idziak v. Canada (Department of Justice).⁷

     I have examined documents 136 and 139. In my view, they do not meet the applicable tests. These are not communications that entail the seeking or giving of legal advice. On the other hand, documents 145 to 169 meet the test and accordingly privilege attaches thereto. The respondents will therefore not have to disclose their content.

B.      Objection under section 39 of the Evidence Act (confidence of Cabinet)

     While for a long time the interpretation of section 39 of the Evidence Act was a source of problems, it is now settled that the section must be strictly construed. In Samson Indian Band v. Canada,⁸ my colleague MacKay J. stated, after reviewing all of the case law on this point:

The evolution of public interest immunity as an evidentiary matter concerning the federal Crown is traced by Mr. Justice Strayer in Smith, Kline & French Laboratories v. Canada (Attorney General) ... . In light of that evolution it seems clear that Parliament has moved to restrict Crown immunity, and s. 39 of the Act, preserving that immunity where a certificate drawn in accord with the Act is filed. Section 39 does not create an immunity for cabinet confidences. Rather, those confidences are immune from ordered production of documentary or oral evidence relating to them, provided the requirements of the section are met. In these circumstances, s. 39 is to be strictly construed, in my opinion.

     The rule set out in section 39 previously appeared in section 36.3. The wording of the provision has not changed, and so the cases decided under section 36.3 are still, in my view, entirely on point. A judge who must rule on an objection based on section 39 may not examine the documents, as he or she may normally do. The judge's examination is limited to analyzing the certificate. The court must determine whether, prima facie, the certificate sets out grounds that justify the executive's assertion of privilege. Thus in Canada (Attorney General) v. Central Cartage Co.,⁹ Iacobucci C.J. (then of the Federal Court of Appeal) stated the following opinion:

---

It appears clear that Parliament intended by passing section 36.3 that the determination of whether any information constitutes a confidence of the Queen's Privy Council is to be made by a Minister of the Crown or the Clerk of the Privy Council. Subject only to compliance with the express requirements of the section, the decision of the Minister or the Clerk, as certified in writing by him or her, is not subject to review by any court. The court cannot go behind the certificate and examine the documents as it can under sections 36.1 and 36.2 [now sections 37 and 38] of the Canada Evidence Act. However, it is open to a court to see whether the certificate on its face asserts a privilege within the statutory limitations on claims for privilege by the executive.

     Thus it must be determined, first, whether the certificate complies with certain formal requirements, and second, whether the document on its face is in the nature of the documents dealt with by subsection 39(2). On the question of the formal requirements, we would note that the seal of the Clerk of the Privy Council is not an essential requirement.¹⁰

     With respect to the substance of the certificate, the Federal Court of Appeal has held that a certificate is not insufficient solely by reason of the fact that it merely reiterates the substance of subsection 39(2).¹¹ Thus in Central Cartage Co.¹² the Federal Court of Appeal held a certificate in which the Clerk of the Privy Council certified that she had examined the documents and that she had determined from that examination that the documents contained "confidences of the Queen's Privy Council for Canada" to be valid and sufficient. The certificate then gave three general descriptions that essentially reiterated the wording of paragraphs 39(2)(a), 39(2)(d) and 39(2)(e) of the Evidence Act. At a minimum, if a certificate is to be adequate, it must refer to subsection 39(2). On this point, an indication that the information in question is a "confidence of the Queen's Privy Council for Canada" will be sufficient.¹³

     Applying these principles to the facts of the instant case, I consider it advisable to refer first to the certificate of the Clerk of the Privy Council, which reads as follows:

[translation]

I, the undersigned, Jocelyne Bourgon, domiciled in the City of Ottawa, in the Regional Municipality of Ottawa-Carleton, Ontario, certify and state as follows:

1.      I am the Clerk of the Queen's Privy Council for Canada and the Cabinet Secretary;

2.      I have personally examined and carefully inspected the documents referred to in Appendix A hereto, in order to determine whether they contain confidences of the Queen's Privy Council for Canada within the meaning of section 39 of the Canada Evidence Act, R.S.C. 1985, c. C-5;

3.      I certify to this honourable Court that the documents referred to in the said Appendix contain confidences of the Queen's Privy Council for Canada, within the meaning of subsection 39(1) of the Canada Evidence Act, and I object to the disclosure of the said confidences;

4.      I further certify to this honourable Court that paragraph (a) of subsection 39(4) of the Canada Evidence Act does not apply to these documents since they did not exist twenty years ago, and that paragraph (b) of that subsection of the Act does not apply to these documents.

5.      If an attempt were made to obtain oral testimony concerning the content of the confidences contained in these documents, disclosure of which I object to in this certificate, I would object to such testimony for the same reasons as the reasons for which I hereby object to disclosure of the confidences in question.

OTTAWA, Ontario, this 21st day of February, 1997.

     In my opinion, this certificate is unquestionably sufficient. I therefore conclude that the privilege set out in section 39 of the Evidence Act attaches to documents 135, 137, 140 and 142.

C.      Objection under section 37 of the Evidence Act (public interest: commercial information supplied by third parties

     With respect to documents 125, 127, 128, 129, 130, 131, 143 and 166, the respondent relies not only on the rule set out in section 37 of the Evidence Act, but also on a common law privilege.

         (a)      At common law

     The respondents first cite the common law privilege attaching to trade secrets. They refer to the following passage from Professor Wigmore's textbook:¹⁴

In a day of prolific industrial invention and active economic competition, it may be of extraordinary consequence to the master of an industry that his process be kept unknown from his competitors, and that the duty of a witness by not allowed to become by indirection the means of ruining an honest and profitable enterprise. The risk and the necessity of guarding against it, may extend not only to the chemical and physical composition of substances employed, and to the mechanical structure of tools and machines, but also to such other facts of possibly private nature as the names of customers, the subjects and amounts of expense, and the like.

Accordingly, there ought to be and there is, in some degree, a recognition of the privilege not to disclose that class of facts which, for lack of a better term, have come to be known as trade secrets.

     The documents in question in the instant case are documents in which nearly 1,000 firms supplied various information to the Canadian government for the purpose of obtaining lumber export quotas. After reviewing documents 125, 127, 129 and 143, I am of the view that they are not in the nature of the documents to which Professor Wigmore is referring. They contain information of a general nature and not information on which the survival and profitability of an enterprise might depend.

         (b)      Under section 37 of the Evidence Act

     Having concluded that documents 125, 127, 128, 129, 130, 131, 143 and 166 are not covered by the common law privilege attaching to trade secrets, I shall now move on to the privilege set out in section 37 of the Evidence Act. The issue, in fact, is whether the privilege set out in that section can apply to trade secrets.

     The parties are in agreement as to the tests that apply in deciding whether the respondents' objection is legitimate. They referred to the following tests, which were recognized by the Supreme Court of Canada in R. v. Gruenke¹⁵ and which, they submit, are consistent with the spirit of subsection 37(2) of the Evidence Act:

(1)      the communications must originate in a confidence that it will not be disclosed;

(2)      this element of confidentiality must be essential to the full and satisfactory maintenance of the relation between the parties;

(3)      the relation must be one which in the opinion of the community ought to be sedulously fostered;

(4)      the injury that would inure to the relation by the disclosure of the communications must be greater than the benefit thereby gained for the correct disposal of the litigation.

     The information set out in documents 127, 128, 129, 130, 131, 143 and 166 was obtained from questionnaires. Those questionnaires were filled out by all firms involved in the lumber business. The questionnaire told the respondents that the information collected would be treated as confidential. This being the case, the first Gruenke¹⁶ test seems to me to have been met. However, I cannot say the same for the other tests.

     As I noted earlier, the documents primarily contain information such as the firm's total sales and production capacity. In the circumstances, I am not satisfied that it was essential to the maintenance of harmonious relations between the Department and all of these firms that the correspondence be confidential. As well, I am not satisfied that the community has an interest in correspondence between a government department and private firms being conducted on a confidential basis.

     Also, because the documents contain statistics which were used in establishing quotas, I am inclined to believe that they are highly relevant in the context of the application for judicial review brought by the applicants. In the circumstances, an order for disclosure seems to me to be entirely justified. I therefore conclude that documents 125, 127, 128, 129, 130, 131, 143 and 166 are not covered by the privilege set out in section 37 of the Evidence Act.

D.      Objection under section 37 of the Evidence Act (public interest: federal-provincial relations)

     The respondents were unsuccessful in their claim to the privilege attaching to communications between a solicitor and his or her client for documents 136 and 139. We must now determine whether those documents, and also document 138, are covered by the privilege set out in section 37 of the Evidence Act. The respondents submit that they are so covered by virtue of the public interest in federal-provincial relations.

     In the recent decision in K.F. Evans Ltd. v. Canada (Minister of Foreign Affairs),¹⁷ my colleague Rothstein J. had the following to say about the applicable principles:

Normally, in cases of claims for confidentiality under the Canada Evidence Act, the jurisprudence contemplates a two stage process. In the first stage, without inspection of the confidential documents but only on the basis of the certificate and other evidence and argument, the court must weigh the competing public interests (the public interest in disclosure versus the public interest in keeping information immune from disclosure for reasons of harm to federal-provincial or international relations) in order to determine if an apparent case for disclosure has been made out. If the case in favour of disclosure is at least equal to that for immunity for disclosure, the court proceeds to the second stage (examination of the information) in order to determine which public interest is predominant in the particular circumstances.

     In K.F. Evans Ltd.,¹⁸ the issue was, as it is in the instant case, the legality of decisions made in respect of a contractor operating in the lumber export industry. Rothstein J. concluded:

In the case of the other Canada Evidence Act deletions, I have carefully considered the confidential information. The information is not self-explanatory of its need for confidentiality. A reading of the confidential information indicates it is not information obtained in surreptitious investigations which might be self-descriptive of its sensitivity nor is it obviously confidential as would be the case with the names of informers. As I previously indicated, it does not indicate a negotiating strategy or fall-back position.

I do not think a claim for confidentiality may be sustained simply because the information in question has some relationship to a sensitive international consultation.

     He therefore concluded that the documents had to be produced. However, he restricted disclosure of the documents: he ordered counsel for the applicants to supply an undertaking promising to use the content of the documents solely for the purposes of the litigation.

     I have examined documents 136, 138 and 139. These documents refer to discussions concerning the method to be used for calculating lumber export quota levels. These documents contain information on which the Department ultimately based its decision. I do not believe that, to quote Rothstein J., this is obviously confidential information.

     For these reasons, I am of the view that documents 136, 138 and 139 must be disclosed. However, these documents may be used only for the purposes of the litigation and accordingly they shall be disclosed in accordance with the terms of paragraphs (2) and (3) of the order made by Dubé J. on December 3, 1996. In my view, this approach will promote both the public interest in federal-provincial relations and the sound administration of justice.

V.      Disposition

     For these reasons, I allow the respondents' objection in respect of solicitor-client privilege in part. I allow their objection in respect of section 39 of the Evidence Act. I dismiss their objection in respect of the common law privilege attaching to trade secrets and the two objections in respect of section 37 of the Evidence Act.

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     Accordingly, I order the respondents to produce documents 125, 127, 128, 129, 130, 131, 136, 138, 139, 143 and 166. However, disclosure of documents 136, 138 and 139 shall be made in accordance with the terms of the order of Dubé J.

OTTAWA, ONTARIO

This 19th day of April, 1997

     Danièle Tremblay-Lamer

                             JUDGE

Certified true translation

C. Delon, LL.L.

     FEDERAL COURT OF CANADA

     TRIAL DIVISION

     NAMES OF COUNSEL AND SOLICITORS OF RECORD

COURT FILE NO:      T-2620-96

STYLE OF CAUSE:      DONAHUE INC. et al.

     v.

     ATTORNEY GENERAL OF CANADA et al.

DECIDED WITHOUT APPEARANCE OF THE PARTIES

REASONS FOR JUDGMENT OF TREMBLAY-LAMER J.

     DATED APRIL 19, 1997

WRITTEN REPRESENTATIONS BY:

PAUL LALONDE          FOR THE APPLICANT

ROSEMARIE MILLAR          FOR THE RESPONDENT

SOLICITORS OF RECORD:

FLAVELLE KUBRICK & LALONDE          FOR THE APPLICANT

OTTAWA, ONTARIO

GEORGE THOMSON          FOR THE RESPONDENT

DEPUTY ATTORNEY GENERAL

OF CANADA

__________________

¹ R.R.C. 1978, c. 663, as amended.

² R.S.C. 1985, c. C-5 (hereinafter referred to as the "Evidence Act").

³      [1980] 1 S.C.R. 821">[1980] 1 S.C.R. 821.

⁴      Ibid., at p. 837.

⁵      [1982] 1 S.C.R. 860">[1982] 1 S.C.R. 860.

⁶      [1991] 2 S.C.R. 353.

⁷      [1992] 3 S.C.R. 631.

⁸      (1996) 110 F.T.R. 1 (F.C.T.D., MacKay J.).

⁹      [1990] 2 F.C. 641 (C.A.).

¹⁰      Samson Indian Band v. Central Cartage Co., supra, note 8.

¹¹      Canada (Attorney General) v. Central Cartage Co., supra, note 9.

¹²      Ibid.

¹³      Samson Indian Band v. Canada, supra, note 8 and Smith, Kline & French Laboratories Ltd. v. Attorney General of Canada, [1983] 1 F.C. 917 (F.C.T.D., Strayer J.).

¹⁴      John Henry Wigmore, Evidence in Trials at Common Law, Little, Brown & Company, Vol. 8, 1961.

¹⁵      [1991] 3 S.C.R. 363.

¹⁶      Ibid.

¹⁷      (1996), 106 F.T.R. 210, at p. 217 (F.C.T.D.).

¹⁸      Ibid., at p. 219.