Report 19 - Access to Information Review Task Force

THIRD PARTY PROVISIONS

Published: July 2001

T. Murray Rankin and Kathryn Chapman

Table of Contents

Executive Summary
The Statutory Scheme
Class Based Exemptions
Harm-Based Exemptions
Override Provisions
Third Party Notice Provisions
Analysis
Summary Of Options For Reform

Executive Summary

The Access to Information Act (the "Act") ⁽¹⁾ is designed to extend a right of public access to information in records over which government has control, with necessary limited and specific exceptions to that right. The third party provisions of the Act are set out in section 20 and limit the public disclosure of a third party's information found in government records. Where information falls within one of the enumerated exceptions to the general statutory rule of openness, government will be justified, and in some cases required, to refuse access to all or part of the information sought. Section 20 is designed to balance the objective of providing public access to information with that of protection of third party interests by providing limited and specific categories of exemption that safeguard third parties from competitive disadvantage that could result from disclosure of specific types of information.

These categories of exemption protect information that has been provided to government by third parties and protect information about third parties in records created by the government. Generally, this private business information, collected validly by government, is the public's business. Connelly says that in collecting information from private business enterprises, government is performing a legitimate public interest function and that such information must be available to the public, subject to the limited and specific exemptions set out in the Act. ⁽²⁾ Government downsizing and privatization has resulted in situations where matters affecting the public interest are increasingly likely to be dealt with by the private sector. If the purposes of the Act are to be fulfilled, it is essential that the third party provisions have sufficient strength and clarity to both ensure openness and accountability in light of changing instruments of governance and to ensure that the public interest in preventing disclosure of some categories of information is upheld.

In practice, the third party provisions, along with the section 19 personal privacy exemption, are used more than any other exemptions in the Act to refuse disclosure of records. While businesses may want to withhold more information than is permitted under section 20, access to records relating to government dealings with the private sector is essential if the public is to have confidence that public resources are being expended appropriately. Due to this general reluctance on the part of corporate third parties to disclose commercial information as required by the Act, use of the third party categories of exemptions account for a large percentage of the litigation initiated pursuant to the Act.

In addition, a very large percentage of requests for information under the Act are made by the business community. In this context, corporations attempt to use section 20 to gain competitive information, in many cases for the purpose of attempting to gain a competitive advantage. As corporate third parties are often well placed to litigate where access to information is denied, this factor also likely contributes to the high rate of litigation under section 20.

The Access to Information Review Task Force (the "Task Force") has undertaken a review of the third party provisions of the Act in order to determine if this rate of litigation is reflective of problems with the Act that call for amendments to the legislation or if this high litigation rate has other causes. Generally, this review concludes that the third party exemption provisions do function effectively, although some options for amendment could be considered.

The third party provisions in section 20 create two types of exemption from disclosure. The first are the class-based exemptions, which protect trade secrets and confidential financial, commercial, scientific or technical information from disclosure. Under the class-based exemption, there is a presumption that harm will arise from disclosure and the party claiming the exemption must only show that the information falls within one of the enumerated classes of protected information in order to resist disclosure.

The second category of exemptions are the harm-based exemptions, where disclosure of information is refused if it could result in harm to the third party. Information is protected where disclosure could cause material financial loss to the third party, prejudice its competitive position or interfere with negotiations. In order for the harm-based categories of exemption to apply, the third party must meet a rather stringent test by showing that the disclosure "could reasonably be expected to" result in a specified type of harm.

There has been some discussion as to whether the categories of exemption are sufficiently clear as to allow third parties and information officers to know and understand the disclosure requirements under the Act. This review concludes that, given the extensive judicial recognition of these provisions, the terms are clearly delineated and amendment is not required. For example, "trade secrets", as protected under paragraph 20(1)(a), are not defined in the Act. This has lead to some confusion as to how they are distinguishable from other types of confidential information, and suggestions that the Act be amended to include an express definition. However, the term "trade secrets" has been considered extensively by the Courts, and interpreted narrowly to include only information of a technical nature which is closely guarded and is of such value that harm to the third party would be presumed by its mere disclosure. Given this clear judicial interpretation, it may well follow that amendment of the Act to include an express definition is unnecessary. However, the Task Force may want to consider whether including a definition would serve to alert third parties to the narrow scope of the definition and further third party compliance with the purposes of the Act.

The Task Force may also wish to consider the option of repealing the "trade secrets" exemption entirely on the basis that such information could generally fit within other exemption provisions. However, when a review of the equivalent section in the Australian legislation was conducted, agencies and business opposed the suggestion on the basis that the exemption is necessary to ensure the certainty of protection for intellectual property rights. In the Australian context the exemption was found to be necessary to ensure that information with commercial value, but unrelated to business or professional affairs, would continue to be protected.

The number of objections to disclosure by third parties indicates that there may be a gap between interpretation of these categories of exemption by government and industry. This review concludes, however, that this gap is not due to inadequacies in the Act. The categories of exemption are clear due to extensive judicial consideration, as noted in the example above. However, third parties may need to be provided with further information and education in order to facilitate better understanding of the disclosure requirements under the Act when entering into business arrangements with government.

Despite extensive judicial interpretation of the section 20 provisions, application of the Act to specific information can be complicated in some circumstances. Even when information falls within the section 20 categories of exemption the government may be obliged to disclose it where the third party has consented to disclosure or where the information is the result of product or environmental testing. A head of a government institution must also disclose information other than trade secrets which falls within a third party exemption, where disclosure would be in the public interest as it relates to public health, public safety or protection of the environment.

It has been suggested that this public interest override could be amended to include consumer protection, could be broadened to include disclosure of trade secrets, or could be broadened so that it applied to all exemption sections of the Act, rather than simply to the third party regime. However, experience in jurisdictions with a broad public interest override tends to show that these provisions are rarely applied. The test as it is currently applied is high and applicants are rarely able to show a public interest in disclosure that overrides the public and private interests in exempting from disclosure information that falls with the protected categories.

In addition, an affected third party must be notified of the intention of a government agency to disclose third party information. These notice requirements can, in some instances, cause a procedural barrier to governmental transparency due to the delay associated with this process. For example, the notice requirements can place an undue burden on public bodies where the interests of multiple third parties may be engaged by possible disclosure of the information. The delay associated with requirements to deliver notice to each third party individually may seriously impact the value of time-sensitive information. Further, logistical burdens associated with the release of such documents may influence decision-makers to avoid release. Amendment of the Act to include provisions for substituted service would facilitate the timely release of information.

When a third party objects to disclosure of information and asks for a review by the Federal Court, there are no requirements, beyond those set out in the Federal Court Rules, that the actual review hearing be completed in a timely way. The potential for delay might be addressed by amending the Act so that the Information Commissioner, rather than the Federal Court, initially reviews third party complaints. Deadlines for timely resolution of complaints could be instituted to avoid unreasonable delay. Such an amendment could also provide an opportunity to incorporate alternative dispute resolution mechanisms into the process, thus providing opportunities for more informal, cost effective resolution of disputes. In addition, the provision of alternative dispute resolution processes could be used as a vehicle for increasing understanding of disclosure obligations under the Act.

The delay caused when a third party objects to disclosure may also be decreased by receiving timely consent for disclosure. At present, there is little or no incentive for third parties to consent in advance.

Unmeritorious objections by third parties to disclosure should be discouraged so that access requests can be processed quickly. Amending the Act to make it explicit that the burden is on the party who is attempting to deny disclosure may serve an important public education function, by making it clear to third parties that only serious objections should be filed. This onus is clearly established in the case law, but may not be readily understood by third parties. In addition, unmeritorious objections might be discouraged if it was stated explicitly within the third party provisions of the Act that unsuccessful third parties could be liable for the costs of section 44 applications in certain circumstances. This might serve an important public education function and encourage the Court to utilize the cost provisions in a manner which more directly addresses problems of delay arising from unmeritorious third party proceedings.

The general conclusion reached upon this review is that the third party provisions of the Act provide a good framework that balances the public interest in disclosure of government information with the public and private interest in ensuring that valuable commercial information is protected. The comparatively high rate of litigation does not necessarily reflect problems with the Act. Rather, litigation with respect to disclosure of third party information may underscore the fact that corporations are generally most impacted by these provisions and are often better placed than individuals to challenge application of these provisions. As well, the litigation rate may be reflective of the need for education with respect to the principles that inform the Act. Rather than making major amendments to the Act in this context, it may be more appropriate to focus on informing and educating corporations doing business with government as to their roles and responsibilities within the regime of open and accountable governance contemplated in the Act. While some minor amendments to the Act may well be appropriate, this review concludes that the third party provisions of the Act generally function effectively.

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1. R.S.C. 1985, c. A-1, s.20.

2. M. Q. Connelly, "Freedom of Information and Commercial Confidentiality, in John D. McCamus, Freedom of Information: Canadian Perspectives, (Toronto: Butterworths, 1981) at 97.