ARCHIVED - InfoSource Bulletin 2003 - Privacy Act and Access to Information Act

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PricewaterhouseCoopers, LLP v. Minister of Canadian Heritage
Indexed as: PricewaterhouseCoopers, LLP v. Canada
(Minister of Canadian Heritage)

File No.:	T-1785-99
Reference(s):	[2001] F.C.J. No. 1439 (QL) (F.C.T.D.) [aff'd 2002 FCA 406, A-611-01, judgement dated October 22, 2002-see "Comments" at the end of this summary]
Date of decision:	September 20, 2001
Before:	Campbell J.
Section(s) of ATIA / PA:	Ss. 20(1), 44 Access to Information Act (ATIA)

Abstract

• Third party information
• Trade secrets; technical and commercial information
• Confidentiality clause
• Proprietary methodologies and analysis used in preparation of reports
• Whether reports of a "technical nature" so as to meet definition of trade secret

Issue

Whether the two reports produced by the applicant are records that fall within paras. 20(1)(a), (b), and (c) of the ATIA.

Facts

In 1998, Canadian Heritage contracted the applicant's services for the purpose of reviewing, analysing and recommending changes to its documents being used to contract out or "outsource" elements of its work. The applicant claimed that the concern for confidentiality of the two reports produced was a fundamental feature of the relationship. In carrying out the contract, the applicant used such proprietary tools as its "Alternate Service Delivery" ("ASD") methodology developed by it over a period of time.

The applicant brought an application pursuant to s. 44 of the ATIA after Canadian Heritage made the decision to disclose the two reports as a result of an access request. The applicant claimed that the two reports were records to which subs. 20(1) of the ATIA applies. In support of its application, Price Waterhouse filed two affidavits outlining, in detail, the nature of the proprietary information involved and how the disclosure of such information would prejudice its competitive position. It claimed that disclosure of the reports would allow a competitor to reverse-engineer or work deductively to determine the means and analysis Price Waterhouse uses in its ASD assignments. Competitors could then improve or modify their own methodology based on Price Waterhouse's approach. Included in the evidence were copies of each of the reports in question which made it clear that the information contained therein was of a confidential technical nature, that it was supplied to Canadian Heritage on that basis and that the disclosure of that information could harm the applicant's competitive position and/or materially interfere with ongoing or future contract/tender negotiations.

Decision

The application was allowed with costs to be determined. Canadian Heritage was ordered not to disclose the two reports.

Reasons

Paragraph 20(1)(a)
The Court applied the definition of "trade secret" as set out by Strayer J. in Société Gamma Inc. v. Canada (Department of Secretary of State) (1994), 56 C.P.R. (3d) 58 (F.C.T.D.) at p. 62:

I am of the view that a trade secret must be something, probably of a technical nature, which is guarded very closely and is of such particular value to the owner of the trade secret that harm to him would be presumed by its mere disclosure.

Campbell J. held that the work product was capable of proving the methodology and that, therefore, they are one and the same. It was also held that the work product was of a "technical nature" within Strayer J.'s definition, above; it was guarded very closely by the applicant and regarded as of such a unique and peculiar quality that its mere disclosure could be presumed to cause economic harm to the applicant. Campbell J. therefore concluded that the reports in question contained trade secrets.

Paragraph 20(1)(b)
Relying on the findings made with respect to para. 20(1)(a), Campbell J. held that the reports in question contained "technical information"; the work was done as part of a commercial enterprise and therefore can be properly considered as containing "commercial information"; and, finally, that such information had be consistently treated in a confidential manner within the meaning set out in Air Atonabee Ltd. v. Canada (Minister of Transport) (1989), 37 Admin. L.R. 245 (F.C.T.D.).

Campbell J. also determined that in deciding whether the fostering of a confidential relationship between the government and the third party is for the "public benefit" (see criteria set out in Air Atonabee, supra), what is required to be established is only the type and workings of the relationship that exists. In this case, such a relationship produced confidential advice and guidance with respect to the public's business in order to ensure more beneficial governmental management very much to the public's benefit.

Paragraph 20(1)(c)
Campbell J. held that the criteria for proof of "material financial loss" set out in SNC-Lavalin Inc. v. Canada (Minister of Public Works) (1994), 79 F.T.R. 113 (F.C.T.D.) had been met, that is, proof of "a reasonable expectation of probable harm".

Comments

The Federal Court of Appeal dismissed the Minister's appeal from the decision of the Trial Division (2002 FCA 406, A-611-01, judgement dated October 22, 2002). The Court rejected the appellant's argument that the Motions Judge had applied too low a standard of proof with respect to the issue of reverse-engineering. More specifically, the appellant argued that the third party's evidence was insufficient.

The applicable standard of proof with respect to applications under paras. 20(1)(a) to (c) (the provisions invoked by the third party) is the civil standard, i.e. proof on a balance of probabilities. The FCA held that the Motions Judge had not altered that standard and that there was evidence which permitted him to allow the third party's claim. The appellant failed to show that the Motions Judge made an error of principle or completely misapprehended the facts or committed an overriding and palpable error.

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