Date: 20020830
Docket: T-1755-00
OTTAWA, Ontario, this 30th day of August, 2002.
PRESENT: THE HONOURABLE MR. JUSTICE MacKAY
BETWEEN:
PROMAXIS SYSTEMS INC.
Applicant
and
MINISTER OF PUBLIC WORKS AND
GOVERNMENT SERVICES (CANADA)
Respondent
UPON application pursuant to s. 44 of the Access to Information Act, R.S.C. 1985,
c. A-1, by the applicant, for review and setting aside of the respondent Minister's decision to release to a requestor under the Act certain specified information originally provided in confidence by the applicant in a response to request for proposal of a contract concluded in 1996, on grounds that the information should not be disclosed pursuant to paragraphs 20(1)(b), (c) and (d) of the Act;
UPON hearing counsel for the parties on May 28, 2002, when decision was reserved, and upon consideration of submissions then made;
ORDER
IT IS ORDERED that the application is dismissed, with costs to the respondent.
(signed) W. Andrew MacKay
______________________________
JUDGE
Date: 20020830
Docket: T-1755-00
Neutral citation: 2002 FCT 921
BETWEEN:
PROMAXIS SYSTEMS INC.
Applicant
- and -
MINISTER OF PUBLIC WORKS AND
GOVERNMENT SERVICES (CANADA)
Respondent
REASONS FOR ORDER
MacKAY J.
This is an application under section 44 of the Access to Information Act, R.S.C. 1985, c. A-1 as amended ("the Act"), for review of the decision of the Minister of Public Works and Government Services (the "Minister"), rendered September 19, 2000, to release certain information originally submitted by the applicant in a Request for Proposal concerning specified contracts concluded between the Minister and the applicant, Promaxis Systems Inc. ("Promaxis").
Background Facts
Promaxis is an engineering consulting firm that derives most of its revenue from government contracts concluded with the Ministry of Public Works for the Department of National Defence. The relevant contract involves technical Publications Management Services for Aircraft Maintenance Support Equipment ("PMS-AMSE"), for which Promaxis submitted a successful proposal. Promaxis had also been awarded a contract for Aircraft Maintenance Policy ("AMP"). Both contracts were extended to March 2001. At the time Promaxis initiated this review, it was expected that in March 2001 the Minister would issue a Request for Proposal that would combine the two contracts in March 2001.
The PMS-AMSE contract itself has already been released to a requestor under the Act, but Promaxis now seeks to prevent the Minister from disclosing certain total cost figures contained in its original proposal for the contract. Promaxis is concerned that the disclosure of this information to a third party, likely a potential competitor, would be detrimental to its competitive position and could severely damage its business. Specifically, Promaxis asserts that the following damage or potential damage would be caused by the disclosure:
- by knowing the total bid price, a competitor would be able to make several relevant calculations, particularly concerning the labour costs and exact rates of pay upon which the proposal was based;
- the disclosure could improve a competitor's ability to underbid Promaxis, hire away key Promaxis staff, or cause Promaxis staff to demand higher wages;
- if the PMS-AMSE and AMP contracts are lost by Promaxis, it would lose 6 to 12% of its total revenue; and
- without the PMS-AMSE contract, Promaxis would have to close down part of its operations, resulting in the layoff of 6 or 7 of its employees, and this would have a ripple effect, forcing Promaxis to either sub-contract certain work or lose other contracts.
Order Sought
Promaxis seeks a declaration pursuant to section 44 of the Act that the information in question, the total cost figures included in its Proposal for the contracts, should be exempt from disclosure under paragraphs 20(1)(b), (c) and (d) of the Act, which read as follows:
| Third party information
20. (1) Subject to this section, the head of a government institution shall refuse to disclose any record requested under this Act that contains
...
(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;
(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
(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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Renseignements de tiers
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 : ...
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;
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) 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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In applying s. 20 one must bear in mind that Promaxis, the applicant in this proceeding, is the third party referred to in that section.
In considering the arguments in this case, I have been mindful of the comments of the Supreme Court of Canada in Dagg v. Canada (Minister of Finance), [1997] 2 S.C.R. 403 at 428, that, under the Act, "access is the general rule". I am further bound by the Federal Court of Appeal, which has specified that: "[s]ubsection 2(1) provides a clear statement that the Act should be interpreted in light of the principle that government information should be available to the public and that exceptions to the public's right of access should be 'limited and specific'": Canada Packers Inc. v. Canada (Minister of Agriculture), [1989] 1 F.C. 47 at 60 (C.A.).
The Court of Appeal has also recently affirmed the judgment of my colleague Pinard J. in Merck Frosst Canada Inc. v. Canada (Minister of National Health), [2000] F.C.J. No. 1281, affirmed 2002 FCA 35, [2002] F.C.J. No. 150, in which he stated, at paragraph 6, that: "[i]t is clear law that under the Act disclosure is the general rule and exemption the exception, and that the burden is on those who claim an exemption to prove their entitlement in this regard."
Issues
The only issue raised by the parties is whether the information in question is exempt from disclosure pursuant to subsection 20(1) of the Act, paragraphs (b), (c) or (d). An issue not raised by the parties and upon which the Court received no submissions is, since the matter was heard in May 2002, more than a year after the contracts in question were to expire and be replaced by a supplementary contract, whether the issue raised by the parties, concerning the application of the Act, is moot.
In my opinion, even if the principal issue is moot, the Court, in accord with Borowski v. Canada (Attorney General), [1989] 1 S.C.R. 342, should nevertheless determine the principal issue on the facts adduced to provide guidance to the parties in their future relationships. Thus, I resolve the principal issue as follows:
Is the information exempt from disclosure under paragraph 20(1)(b) of the Act?
In Cistel Technology Inc. v. Canada (Correctional Service), 2002 FCT 253, [2002] F.C.J. No. 328, McKeown J., at paragraph 11, summarized the requirements under paragraph 20(1)(b) as follows:
The case of Air Atonabee Limited v. Canada (Minister of Transport) (1989), 27 F.T.R. 194 (T.D.) sets out the four conditions that must be met in order to fall within this exception. The information must be:
(a) financial, commercial, scientific or technical information;
(b) confidential information;
(c) supplied to a government institution by the third party; and
(d) treated consistently in a confidential manner by the third party.
In argument it is conceded that only condition (b) is at issue here. There is no doubt the information in question is financial information, supplied by Promaxis, and treated by it in a confidential manner consistently. In considering whether information is confidential within paragraph 20(1)(b), I commented at paragraph 42 of Air Atonabee, supra, as follows:
My review of the authorities, facilitated in part by submissions of counsel, is undertaken in order to construe the term "confidential information" as used in subsection 20(1)(b) in a manner consistent with the purposes of the Act in a case where the records in question under control of a government department consist of documents originating in the department and outside the department. This review leads me to consider the following as an elaboration of the formulation by Jerome A.C.J., in Montana [Montana Band of Indians v. Canada (Minister of Indian Affairs and Northern Development)(1988), 18 F.T.R. 15], that whether information is confidential will depend upon its content, its purposes and the circumstances in which it is compiled and communicated, namely:
a) that the content of the record be such that the information it contains is not available from sources otherwise accessible by the public or that could not be obtained by observation or independent study by a member of the public acting on his own,
b) that the information originate and be communicated in a reasonable expectation of confidence that it will not be disclosed, and
c) that the information be communicated, whether required by law or supplied gratuitously, in a relationship between government and the party supplying it that is either a fiduciary relationship or one that is not contrary to the public interest, and which relationship will be fostered for public benefit by confidential communication.
Further, Strayer J. (as he then was) commented in Société Gamma Inc. v. Canada (Secretary of State) (1994), 79 F.T.R. 42 at 46, as follows:
... One must keep in mind that these proposals are put together for the purpose of obtaining a government contract, with payment to come from public funds. While there may be much to be said for proposals or tenders being treated as confidential until a contract is granted, once the contract is either granted or withheld there would not, except in special cases, appear to be a need for keeping tenders secret. In other words, when a would-be contractor sets out to win a government contract he should not expect that the terms upon which he is prepared to contract, including the capacities his firm brings to the task, are to be kept fully insulated from the disclosure obligations of the Government of Canada as part of its accountability. ...
As in this case, the applicant in Société Gamma sought to preclude the release of proposal documents that had been submitted in response to a call for tenders, although in that case the release of bid prices was not at issue. Nevertheless, the principle is applicable to the circumstances of this case and I conclude, for reasons of public policy, that the information is not confidential information within the meaning of paragraph 20(1)(b), however it may have been considered and treated by Promaxis.
Is the information exempt from disclosure under paragraph 20(1)(c) of the Act?
The Air Atonabee case, supra, also includes a detailed discussion of the interpretation of paragraph 20(1)(c). In that case, and in the Federal Court of Appeal cases of Canada Packers, supra, and Saint John Shipbuilding Ltd. v. Canada (Minister of Supply and Services) (1990), 67 D.L.R. (4th) 315 (C.A.), the Courts held that the applicant must establish, on a balance of probabilities, that disclosure of the information would result in a "reasonable expectation of probable harm".
The only evidence of potential harm before me in this case is the confidential affidavit of Patrick Moore sworn on behalf of Promaxis. I have read it carefully, and I conclude that there is not evidence to warrant the conclusion that the information in question should be withheld from release. In general, it is not sufficient that an applicant's affidavit swear to his or her concerns about reasonable expectations of probable harm without some further evidence of specific harm anticipated. In SNC-Lavalin Inc. v. Canada (Minister of Public Works) (1994), 79 F.T.R. 113 at 127, I commented that:
Having examined the Record and the Proposal, it is not self-evident to me from the documents themselves that the applicant, whatever may be its concerns, has demonstrated a basis for "a reasonable expectation of probable harm". That is the standard enunciated and applied by Mr. Justice MacGuigan in Canada Packers, supra. The applicant does not demonstrate probable harm as a reasonable expectation from disclosure of the Record and the Proposal simply by affirming by affidavit that disclosure "would undoubtedly result in material financial loss and prejudice" to the applicant or would "undoubtedly interfere with contractual and other negotiations of SNC-Lavalin in future business dealings". These affirmations are the very findings the Court must make if paragraphs 20(1)(c) and (d) are to apply. Without further explanation based on evidence that establishes those outcomes are reasonably probable, the Court is left to speculate and has no basis to find the harm necessary to support application of these provisions.
Even if the assertions in the affidavit are correct, and the labour cost and hourly wage figures could be calculated by knowledgeable people from total costs proposed, that does not in itself demonstrate that the information ought not to be disclosed. Mr. Moore's evidence regarding potential layoffs arising from the loss of the contracts in question and the ripple effect on Promaxis' ability to serve its clients is speculative, and does not meet the burden required. Moreover, Promaxis' fears regarding the effects of its staff knowing the total bid prices and making the calculations of the applicant's margin of profits in relation to wage costs does not demonstrate probable harm to Promaxis. I conclude that Promaxis has not established, on a balance of probabilities, that disclosure of the information would result in a "reasonable expectation of probable harm".
Is the information exempt from disclosure under paragraph 20(1)(d) of the Act?
In Saint John Shipbuilding, supra, Hugessen J.A. (as he then was), held, for the Court of Appeal that:
As to the notion of interference, we think that in order to justify an application by a third party under section 44 there must necessarily be an interference whose consequences will likely be damaging to that party. "Interference" is used here in its sense of "obstruct" ("entraver", in French), much as it is in sports parlance, when the player is penalised for "interference". Here again, the threshold must be that of probability and not, as the appellant would seem to want it, mere possibility or speculation.
Under paragraph 20(1)(d), an applicant must show an obstruction in actual contractual negotiations and not merely a "heightening of competition": Société Gamma, supra. Further, a distinction must be drawn between actual contractual negotiations and the daily business operations of an applicant. In Canada (Information Commissioner) v. Canada (Minister of External Affairs), [1990] 3 F.C. 665 at 682 (T.D.), Mr. Justice Denault commented:
...While some evidence was tendered in the Dawes affidavit of the possible effect of disclosure on international contracts generally, and while hypothetical problems concerning foreign suppliers and local customers were raised in the third party's affidavit, these are not sufficient to establish a reasonable expectation that any particular contract or negotiations will be obstructed by disclosure. Consequently the grounds for exemption under paragraph 20(1)(d) have not been demonstrated.
Promaxis also expressed a concern as to the effect of disclosure on its negotiations with employees and sub-contractors. In my opinion the evidence does not indicate that there would be probable harm from interference with future negotiations between Promaxis and the respondent or between it and its staff. In Société Gamma, supra, at paragraph 10, the meaning of "interference" was discussed:
... That is, when paragraph 20(1)(d) refers to disclosure which could "interfere" with contractual negotiations it must refer to an obstruction to those negotiations and not merely the heightening of competition for the third party which might flow from disclosure. That being the case I am unable to perceive from the evidence and submissions of the claimant any demonstration as to how the disclosure of their Proposal format could obstruct their future contractual negotiations with the respondent. Further, there is the same problem of causality as in paragraph (c), the language being the same in both and therefore its standard being the same: namely, "a reasonable expectation of probable harm".
It seems clear that vague concerns about future negotiations between the parties or about employee relations with management do not suffice for the purposes of meeting the requirements of paragraph 20(1)(d). Those relations are properly matters within the day-to-day operations of Promaxis' business rather than matters arising from particular contractual negotiations without outside agencies. Any impact from release of the information at issue would not interfere with other specific contractual negotiations of Promaxis. In my opinion, release of the information in question does not fall under the exemption in paragraph 20(1)(d).
Conclusion
I conclude that Promaxis has failed to establish that the information in question is exempt under subsection 20(1) of the Act. This application for review of the respondent Minister's decision, to release the information in question, is dismissed by separate Order, now issued.
The applicant sought costs, but, as in the normal course, costs are awarded to the respondent, following the outcome of this application.
(signed) W. Andrew MacKay
_______________________________
JUDGE
OTTAWA, Ontario
August 30, 2002.
FEDERAL COURT OF CANADA
TRIAL DIVISION
NAMES OF COUNSEL AND SOLICITORS OF RECORD
DOCKET: T-1755-00
STYLE OF CAUSE:
PROMAXIS SYSTEMS INC.
-and-
MINISTER OF PUBLIC WORKS
AND GOVERNMENT SERVICES (CANADA)
PLACE OF HEARING: OTTAWA, ONTARIO
DATE OF HEARING: MAY 28, 2002
REASONS FOR ORDER OF THE HONOURABLE MR. JUSTICE MACKAY
DATED: AUGUST 30, 2002
APPEARANCES:
MR. RICHARD BOWLES FOR APPLICANT
MR. MICHAEL ROACH FOR RESPONDENT
SOLICITORS OF RECORD:
PARADIS, JONES, HORWITZ, BOWLES FOR APPLICANT
OTTAWA, ONTARIO
MORRIS ROSENBERG FOR RESPONDENT
DEPUTY ATTORNEY OF CANADA