Merck Frosst Canada Ltd. v. Canada (Minister of Health), (2009) 400 N.R. 1 (FCA)

• Judge: Desjardins, Noël and Pelletier, JJ.A.
• Court: Federal Court of Appeal (Canada)
• Case Date: February 17, 2009
• Jurisdiction: Canada (Federal)
• Citations: (2009), 400 N.R. 1 (FCA);2009 FCA 166

Merck Frosst Can. Ltd. v. Can. (2009), 400 N.R. 1 (FCA)

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[French language version follows English language version]

[La version française vient à la suite de la version anglaise]

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Temp. Cite: [2009] N.R. TBEd. JL.006

Le Ministre de la Santé (appelant/intimé incident) v. Merck Frosst Canada Ltée (intimée/appelante incidente)

(A-492-06; A-499-06; 2009 FCA 166; 2009 CAF 166)

Indexed As: Merck Frosst Canada Ltd. v. Canada (Minister of Health)

Federal Court of Appeal

Desjardins, Noël and Pelletier, JJ.A.

May 26, 2009.

Summary:

The Minister of Health (Canada) received two access to information requests from a requestor third party, a competitor of Merck Frosst Canada Ltd., pertaining to the disclosure of records concerning the new drug submission and a supplemental new drug submission for Singulair®, a drug developed by Merck Frosst for the treatment of asthma. Merck Frosst filed applications for judicial review against the Minister's decisions.

The Federal Court, in decisions reported at [2006] F.T.R. Uned. 943; 2006 FC 1201, and at (2006), 301 F.T.R. 241; 2006 FC 1200, determined the issues accordingly. The Minister appealed the decisions. Merck Frosst cross-appealed.

The Federal Court of Appeal allowed the appeals and dismissed the cross-appeals. With respect to the Minister's appeals, the trial judge: (1) erred in law in concluding that a government institution could not disclose information to an access requestor unless the third party (Merck Frosst) had been given prior notice by the government institution; (2) erred in fact and law in applying the exceptions provided at ss. 20(1)(a), (b) and (c) to the facts; (3) and erred in fact and law in applying s. 25. With respect to Merck Frosst's cross-appeals: (1) Merck Frosst was not entitled to a declaration with regard to the lawfulness of the government institution's disclosing its records to an access requestor without first notifying the third party; and (2) the trial judge did not err in ruling that the burden was on the party objecting to disclosure of the information.

Crown - Topic 7171

Examination of public documents - Freedom of information - Legislation - Disclosure - Confidential information supplied by third party - The Federal Court of Appeal summarized the state of the law regarding the particular requirements for the exception to disclosure provided at s. 20(1)(b) of the Access to Information Act - The exception "contains three conditions, namely, that the information be financial, commercial, scientific or technical; that it be confidential; and that it be consistently treated as confidential" - In the case at bar, the financial, commercial, scientific or technical nature of the information in the records in dispute was not being challenged - "The burden of proof is on the party that is objecting to the disclosure of records ... That burden is heavy" - The jurisprudence established that, to satisfy that burden, the objecting party must provide "actual direct evidence" of the confidential nature of the information at issue, which must disclose a "reasonable explanation for exempting each record" - Evidence which was vague or speculative in nature could not be relied upon to justify an exemption under s. 20(1) - See paragraphs 62 to 65.

Crown - Topic 7173

Examination of public documents - Freedom of information - Legislation - Disclosure of information where disclosure could result in financial loss or prejudice to competitive position - Section 20(1)(c) of the Access to Information Act exempted from disclosure any information which, if disclosed, would 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 - The Federal Court of Appeal stated that the test under s. 20(1)(c) required the applicant to establish on a balance of probabilities, a reasonable expectation of probable harm - "In meeting this burden, the applicant cannot make simple assertions, but must demonstrate a direct link between disclosure and the alleged harm ... An applicant cannot demonstrate a reasonable expectation of probable harm simply by attesting in an affidavit that such a result will occur if the records are released. Further evidence that establishes that these outcomes are reasonably probable is required" - See paragraphs 31 and 32.

Crown - Topic 7173

Examination of public documents - Freedom of information - Legislation - Disclosure of information where disclosure could result in financial loss or prejudice to competitive position - The Federal Court of Appeal addressed the exception under s. 20(1)(c) of the Access to Information Act - "It has been consistently established in case law that for paragraph 20(1)(c) to apply, the information for which an exception to disclosure is claimed must not be in the public domain and that there must be a 'reasonable expectation of probable harm'" - The court noted the jurisprudence regarding the evidentiary burden to be met under s. 20(1)(c) and emphasizing the importance of checking whether the specific information was in the public domain - As well, the case law established that the onus was on the party objecting to the disclosure to establish a probability of harm, and not a mere possibility thereof - Affidavit evidence which was vague or speculative in nature could not be relied upon to justify an exemption - See paragraphs 81 to 86.

Crown - Topic 7207

Examination of public documents - Freedom of information - Bars - Confidentiality - Merck Frosst Canada Ltd. objected to two decisions made by the Minister of Health (Canada), to disclose records to the access requestor - The records concerned the new drug submission and the supplemental new drug submission for a drug developed by Merck Frosst for the treatment of asthma - The reviewing judge concluded that disclosure of certain pages should be refused under s. 20(1)(b) of the Access to Information Act since those pages contained confidential information and was not available in the public domain - The Federal Court of Appeal held that, absent objective and direct evidence, the trial judge erred in refusing disclosure of the information on the basis of the confidentiality and the confidential treatment of that information - The test set out by the judge simply repeated s. 20(1)(b) - Merck Frosst failed to submit any direct and objective evidence regarding the information's confidentiality or its treatment as confidential - Further, relating to the new drug submission, this was an evolving process; Merck Frosst must accept the consequences of having chosen to remain silent with respect to the Minister's new version of the record, with even more deletions than the first - See paragraphs 66 to 80.

Crown - Topic 7210

Examination of public documents - Freedom of information - Bars - Financial loss - Merck Frosst Canada Ltd. objected to a decision made by the Minister of Health (Canada), to disclose records to the access requestor - The records concerned the new drug submission and the supplementary new drug submission for a drug developed by Merck Frosst for the treatment of asthma - The reviewing judge exempted records under s. 20(1)(c) of the Access to Information Act on the bases that they contained "information that is more specific or more detailed than information available in the public domain" and that they contained information the disclosure of which would likely cause Merck Frosst significant loss of profit or undermine its competitiveness - The Federal Court of Appeal held that the trial judge erred in fact and law - The judge did not have the evidence to support a refusal of disclosure - The statements of the affiants for Merck Frosst were "vague, speculative and silent" as to specifically how and why the disclosure would be likely to bring about the alleged harm - See paragraphs 88 to 100.

Crown - Topic 7214

Examination of public documents - Freedom of information - Bars - Trade secrets - Merck Frosst Canada Ltd. objected to a decision made by the Minister of Health (Canada), to disclose records to the access requestor - The records concerned the new drug submission for a drug developed by Merck Frosst for the treatment of asthma - The reviewing judge exempted 33 pages of the records under s. 20(1)(a) of the Access to Information Act on the basis that the pages contained information that constituted a trade secret - The Federal Court of Appeal found that the judge erred in law, absent explanations in support of the decision and absent adequate evidence - The judge's decision contained no statement on the notion of trade secret, the applicable legal test or the burden of proof - Further, the affidavits relied on by Merck Frosst contained very broad statements - Also, the bases for an exclusion under s. 20(1)(a) were entangled and sometimes confused with the bases required under s. 20(1)(b) (confidentiality) - Lastly, Merck Frosst did not meet its burden of providing objective and specific evidence providing a basis on which to conclude that the information constituted trade secrets - See paragraphs 42 to 59.

Crown - Topic 7214

Examination of public documents - Freedom of information - Bars - Trade secrets - The Federal Court of Appeal considered two decisions on what was a "trade secret" for the purposes of s. 20(1)(a) of the Access to Information Act - It was clear from those decisions "that the notion of trade secret is interpreted in a narrow sense and that in the test used in the case law to determine whether paragraphs 20(1)(a) applied to a record's contents, a high threshold is applied. Anyone who relies on that provision must necessarily furnish specific, objective and detailed evidence that the information constitutes a trade secret" - See paragraphs 52 to 54.

Crown - Topic 7217

Examination of public documents - Freedom of information - Bars - Inseverability - Merck Frosst Canada Ltd. objected to two decisions made by the Minister of Health (Canada), to disclose records to the access requestor - The records concerned a drug developed by Merck Frosst - The reviewing judge concluded that an entire page should be deleted and that disclosure of certain pages should be suppressed under s. 25 of the Access to Information Act - The Federal Court of Appeal held that the trial judge erred in fact and law - "The trial judge had a duty to ensure compliance with section 25 of the Act, which, where applicable, provides for severance, provided that such severance does not cause serious problems. It was not open to him to order the removal of the entire page without explaining the difficulties of the severance exercise, which he did not do. The trial judge substituted his own discretion for that exercised by the head of the government institution when there was no evidence from Merck Frosst establishing that the first exercise by the head of the government institution was incorrect. That is an error of law" - See paragraphs 101 to 106.

Crown - Topic 7220.04

Examination of public documents - Freedom of information - Bars - Reasonable expectation of probable harm - [See Crown - Topic 7210 ].

Crown - Topic 7283

Examination of public documents - Freedom of information - Practice - Evidence and proof - Merck Frosst Canada Ltd. objected to two decisions made by the Minister of Health (Canada), to disclose records to the access requestor - Merck Frosst submitted that the reviewing judge's finding that the onus of demonstrating the application of s. 20(1) of the Access to Information Act was on interested third parties (in this case, Merck Frosst), was erroneous - The Federal Court of Appeal held that the reviewing judge's finding was consistent with the Act, including ss. 2(1) and 4(1) - The case law of the court consistently established that the burden was on the party objecting to disclosure of the information - Contrary to what was argued by Merck Frosst, Parliament imposed nothing more on the government institution than the duty imposed on the head of the government institution under s. 27 of the Act - The words defining that duty did not substantially change following the amendments made to s. 27 in 2007 - See paragraphs 107 to 118.

Crown - Topic 7286

Examination of public documents - Freedom of information - Practice - Notice of intended disclosure - Merck Frosst Canada Ltd. objected to two decisions made by the Minister of Health (Canada), pursuant to which the Minister disclosed records to the access requestor without giving prior notice to the "third party"; i.e., Merck Frosst - The Minister alleged that s. 27(1) of the Access to Information Act did not require the head of a government institution to contact the "third party" unless the record contained or the head of the institution had reason to believe it might contain information protected by s. 20(1) - The trial judge ruled that it was irrelevant that the records disclosed without prior notice were not subject to s. 20(1) and found that the disclosure without prior notice contravened the spirit of s. 20(1) - The Federal Court of Appeal held that the trial judge erred in law - The court read the language of s. 27(1) according to the modern rule of statutory interpretation and considered the landmark case of the Federal Court regarding the duty of the head of a government institution under (now) s. 27 - The trial judge ignored that case law - See paragraphs 31 to 39.

Crown - Topic 7286

Examination of public documents - Freedom of information - Practice - Notice of intended disclosure - Merck Frosst Canada Ltd. objected to two decisions made by the Minister of Health (Canada), pursuant to which the Minister disclosed records to the access requestor without giving prior notice to the "third party"; i.e., Merck Frosst - The trial judge concluded that Merck Frosst was entitled to obtain a declaratory order with regard to the lawfulness of the disclosures - However, the formal judgment did not contain a declaration - The Federal Court of Appeal found, on a preceding issue, that the trial judge erred in law in concluding that a government institution could not disclose information to an access requestor unless the third party (Merck Frosst) had been given prior notice by the government institution - In light of that finding, it followed that Merck Frosst could not obtain a declaration regarding the lawfulness of the government institution's disclosing the records without prior notice - See paragraphs 40 and 41.

Crown - Topic 7292

Examination of public documents - Freedom of information - Practice - Appeals (incl. notice) - The Federal Court of Appeal had before it two appeals and two cross-appeals - The appeals were brought by the Minister of Health (Canada); the cross-appeals, by Merck Frosst Canada Ltd. - In its memorandum, Merck Frosst cited not only the provisions of the Access to Information Act, but also Canada's international agreements, the Treasury Board policy issued pursuant to s. 70(1)(c) of the Act, Health Canada's internal policies and the principles underlying the duty of fairness - Only the Act and procedural fairness were argued before the trial judge - The court made the following observation - "The trial judge focused on the Act in question, with one exception ... The standard of review can only be applied and the appeals decided on the basis of the Act at issue. For one thing, the trial judge cannot be criticized for errors on issues that were not brought to this attention. For another, the appellant cannot remake its case on appeal" - See paragraphs 27 to 30.

Practice - Topic 5652

Judgments and orders - Declaratory judgments - When available - General - [See second Crown - Topic 7286 ].

Statutes - Topic 2603

Interpretation - Interpretation of words and phrases - Modern rule (incl. interpretation by context) - Intention from whole of section or statute - [See first Crown - Topic 7286 ].

Cases Noticed:

Dr. Q., Re, [2003] 1 S.C.R. 226; 302 N.R. 34; 179 B.C.A.C. 170; 295 W.A.C. 170, refd to. [para. 25].

Housen v. Nikolaisen et al., [2002] 2 S.C.R. 235; 286 N.R. 1; 219 Sask.R. 1; 272 W.A.C. 1, refd to. [para. 25].

Rizzo & Rizzo Shoes Ltd. (Bankrupt), Re, [1998] 1 S.C.R. 27; 221 N.R. 241; 106 O.A.C. 1, refd to. [para. 35].

Rubin v. Canada (Minister of Transport), [1998] 2 F.C. 430; 221 N.R. 145 (F.C.A.), refd to. [para. 37].

Air Atonabee Ltd. v. Canada (Minister of Transport) (1989), 27 F.T.R. 194 (T.D.), refd to. [para. 38].

Société Gamma Inc. v. Canada (Secretary of State) (1994), 79 F.T.R. 42 (T.D.), refd to. [para. 52].

Information Commissioner (Can.) v. Canadian Transportation Accident Investigation and Safety Board (2006), 348 N.R. 263 (F.C.A.), refd to. [para. 52].

AstraZeneca Canada Inc. v. Canada (Minister of Health) et al., [2005] F.T.R. Uned. B37 (F.C.), affd. (2006), 353 N.R. 84 (F.C.A.), refd to. [paras. 53, 62].

Wyeth-Ayerst Canada Inc. v. Canada (Attorney General) (2003), 305 N.R. 317 (F.C.A.), refd to. [para. 62].

Cyanamid Canada Inc. v. Canada (Minister of National Health and Welfare) (1992), 52 F.T.R. 22 (T.D.), affd. (1992), 148 N.R. 147; 9 Admin. L.R.(2d) 161 (F.C.A.), refd to. [para. 81].

Canadian Imperial Bank of Commerce v. Canadian Human Rights Commission (2007), 367 N.R. 307; 2007 FCA 272, refd to. [para. 83].

SNC-Lavalin Inc. v. Canada (Minister of Public Works) (1994), 79 F.T.R. 113 (T.D.), refd to. [para. 84].

Viandes du Breton Inc. v. Canada (Ministre de l'Agriculture et de l'Agroalimentaire) et al. (2000), 198 F.T.R. 233 (T.D.), refd to. [para. 85].

Rubin v. Canada Mortgage and Housing Corp. (President), [1989] 1 F.C. 265; 86 N.R. 186 (F.C.A.), refd to. [para. 103].

Merck Frosst Canada v. Canada (Minister of National Health and Welfare), [2000] F.T.R. Uned. 334 (T.D.), refd to. [para. 112].

Statutes Noticed:

Access to Information Act, R.S.C. 1985, c. A-1, sect. 2(1), sect. 4(1), sect. 20(1)(a), sect. 20(1)(b), sect. 20(1)(c), sect. 25, sect. 27(1), sect. 28 [para. 26].

Authors and Works Noticed:

Driedger, Elmer A., Construction of Statutes (2nd Ed. 1983), generally [para. 35].

Counsel:

Sébastien Gagné, for the appellant/respondent to cross-appeal;

Karl Delwaide and Karine Joizil, for the respondent/appellant by cross-appeal.

Solicitors of Record:

John H. Sims, Q.C., Deputy Attorney General of Canada, Ottawa, Ontario, for the appellant/respondent to cross-appeal;

Fasken Martineau DuMoulin LLP, Montreal, Quebec, for the respondent/appellant by cross-appeal.

These appeals and cross-appeals were heard at Ottawa, Ontario, on February 17, 2009, by Desjardins, Noël and Pelletier, JJ.A., of the Federal Court of Appeal. Desjardins, J.A., delivered the following reasons for judgment and judgment of the Court of Appeal, at Ottawa, Ontario, on May 26, 2009.