Merck Frosst Canada Ltd. Appellant v. Minister of Health, 2012 SCC 3

SUPREME COURT OF CANADA Citation: Merck Frosst Canada Ltd. v. Canada (Health), 2012 SCC 3, [2012] 1 S.C.R. 23 Date: 20120203 Docket: 33290, 33320 Between: Merck Frosst Canada Ltd. Appellant and Minister of Health Respondent - and - BIOTECanada Intervener Coram: McLachlin C.J. and Binnie, LeBel, Deschamps, Fish, Abella, Charron, Rothstein and Cromwell JJ. Reasons for Judgment: (paras. 1 to 242) Dissenting Reasons: (paras. 243 to 265) Cromwell J. (McLachlin C.J. and Binnie, LeBel, Fish and Charron JJ. concurring) Deschamps J. (Abella and Rothstein JJ. concurring) Merck Frosst Canada Ltd. v.

Canada (Health), 2012 SCC 3, [2012] 1 S.C.R. 23 Merck Frosst Canada Ltd. Appellant v. Minister of Health Respondent and BIOTECanada Intervener Indexed as: Merck Frosst Canada Ltd. v. Canada (Health)

2012 SCC 3 File Nos.: 33290, 33320. 2010: November 12; 2012: February 3.

Present: McLachlin C.J. and Binnie, LeBel, Deschamps, Fish, Abella, Charron, Rothstein and Cromwell JJ. on appeal from the federal court of appeal Access to information — Third party information — Exemptions — Notice requirements — Severance — Access to information requests filed with Health Canada relating to third party pharmaceutical company’s new drug submissions — Whether government institution fulfilled obligations to review records before providing notice of intention to disclose third party’s information and in severing non-exempt information — Whether statutory notice requirements triggered — Whether third party information falling within Act ’s exemptions — Access to Information Act, R.S.C. 1985, c.

A-1, ss. 20(1) , 25 , 27 , 28 . Access to information — Appeals — Standard of appellate review — Evidence — Access to information requests filed with Health Canada relating to third party pharmaceutical company’s new drug submissions — Whether deference owed to reviewing judge’s findings that exemptions from disclosure applied to third party information — Whether pharmaceutical company provided sufficient direct and objective evidence information falling within exemptions — Access to Information Act, R.S.C. 1985, c. A-1, ss. 20(1) , 44 .

Health Canada received access to information requests relating to two new drug submissions made to it by M, a pharmaceutical company and third party to the requests. A series of disputes arose between the parties about what information had to be disclosed and what was exempt from disclosure under the Access to Information Act (“Act”). In particular, Health Canada identified several hundred pages in response to each request. It reviewed those pages, concluded some contained information that could not be disclosed under the exemptions found in s. 20(1) of the Act, and redacted those pages in part.

It also concluded a number of pages did not contain any exempted information and disclosed those pages without notifying or consulting M. Enclosing hundreds of the still undisclosed pages, Health Canada then notified M of the access to information requests and of its intention to disclose the enclosed pages, asking M to explain which portions of the remaining pages M considered confidential under s. 20(1), and why. Following a number of exchanges, Health Canada agreed to further redactions but rejected the balance of M’s objections. M filed for judicial review of Health Canada’s decisions under s. 44 .

The Federal Court found that disclosure by Health Canada without prior notice to M contravened s. 20(1) of the Act and held that over 200 pages were exempted from disclosure, while the remaining pages could be disclosed. The reviewing judge also held that it would be extremely difficult to sever and disclose non-exempt information pursuant to s. 25. The Federal Court of Appeal allowed Health Canada’s appeals, ordering that all the remaining pages at issue should be disclosed. Held (Deschamps, Abella and Rothstein JJ. dissenting): The appeals should be dismissed.

Per McLachlin C.J. and Binnie, LeBel, Fish, Charron and Cromwell JJ.: The decision of the judge conducting a review under the Act , which will often have a significant factual component, is subject to appellate review in accordance with the well- established principles set out by this Court. The Federal Court of Appeal correctly set out and applied the applicable standard of review. The reviewing judge did not make requisite findings of fact and failed either to state the applicable legal principles or to explain how the legal principles applied to the facts before him or, in some cases, both.

The Court of Appeal was therefore entitled to intervene and to carry out its own assessment of whether the reviewing judge had correctly applied the Act’s exemptions to the records. There is nonetheless some merit to M’s complaints. The Act must be interpreted and applied so that it strikes the balance Parliament intended between broad rights of access and protection of third party information. Both the Act and the considerations identified by the reviewing judge and by M support a fairly low threshold to trigger the obligation to give notice under s. 27(1).

Observing a low threshold for third party notice ensures procedural fairness and reduces the risk that exempted information may be disclosed by mistake. Disclosure without notice is only justified in clear cases where the government institutional head, reviewing all the relevant evidence, concludes that there is no reason to believe that the record might contain exempted material. A head should refuse to disclose without notice where there is no reason to believe that the information is subject to disclosure.

M’s submission, that there is an automatic right to notice with respect to certain categories of records is not, however, supported by the grammatical and ordinary meaning of s. 27(1), or by the jurisprudence which makes plain that notice is required only if certain conditions are met in the particular circumstances.

The institutional head must give notice if he or she is in doubt about whether the information is exempt; intends to disclose exempted material to serve the public interest pursuant to s. 20(6); or intends to disclose third party information by severing the non-exempt information and disclosing only that as required by s. 25. In giving notice, the institutional head cannot simply shift the responsibility to review the records onto the third party. Institutions must make a serious attempt to apply the exemptions by reviewing each individual record to determine which portions, if any, may be exempted.

The same principle applies to the severance of material under s. 25. It is also prudent and in accordance with common sense for a third party, who is generally in a better position than the head of the institution to identify information that falls within one of the s. 20(1) exemptions, to be as helpful as it can be in identifying precisely why disclosure is not permitted. In these appeals, it is of limited use to decide if the notice provisions and the appropriate level of review by the institutional head were correctly applied throughout.

It may be observed, however, that both M and Health Canada at times took rather extreme positions that were not in accordance with the purpose, letter or spirit of the Act. The party seeking judicial review bears the burden of demonstrating that the statutory exemptions apply on a balance of probabilities. In relation to the exemptions themselves, M has not shown that any of the pages in issue, as redacted by Health Canada, contain any information exempted under s. 20(1)( a ), (

b) or ( c ). First, a “trade secret” for the purposes of s. 20(1)(

a) should be understood as a plan or process, tool, mechanism or compound, which possesses the following characteristics: the information must be secret in an absolute or relative sense (is known only by one or a relatively small number of persons); the possessor of the information must demonstrate he or she has acted with the intention to treat the information as secret; the information must be capable of industrial or commercial application; and the possessor must have an interest (e.g. an economic interest) worthy of legal protection. This approach is consistent with the common law definition and takes account of the legislative intent that a trade secret is something different from the

broader category of confidential commercial information protected under s. 20(1)( b ). While the Court of Appeal correctly defined “trade secrets”, it erred in law by insisting the term should be interpreted restrictively and that there was a high threshold for invoking the exemption. The applicable standard of proof is still the civil standard of the balance of probabilities. However, this error did not result in the Court of Appeal reaching the wrong conclusion about how s. 20(1)(

a) applies here. It did not err in finding that M’s evidence was not responsive to the documents as redacted by Health Canada. The reviewing judge’s failure to refer to the applicable legal test or the relevant evidence constituted a material error justifying appellate intervention. Second, M’s submission that the Court of Appeal erred in finding that it had not discharged its burden of proof, and that the documents, as redacted, continued to contain confidential information, must fail.

In order to qualify for the s. 20(1)( b ) “confidential information” exemption, the information must be financial, commercial, scientific or technical information; confidential and consistently treated in a confidential manner by the third party; and supplied to a government institution by a third party. Government reviewers’ notes may fall under the exemption to the extent that they contain information communicated to them by a third party.

While the Court of Appeal once again applied an unduly onerous standard of proof, finding that the third party opposing disclosure has a heavy burden to establish the exemption, the result did not turn on its description of the standard of proof. Rather, the court’s decision rested on the findings that Health Canada conceded that extensive redaction was necessary and that there was no direct and objective evidence from M to show that the remaining information was confidential. Both of these conclusions focussed on the primarily factual question of whether the substance of the information was publicly available.

M’s submissions, including references to the evidence, are of no assistance in explaining how what is left on the often heavily redacted pages is confidential in the face of Health Canada’s evidence that the unredacted material is in the public domain and therefore not confidential. As for the formatting and structure of the new drug submissions, they do not qualify for exemption as confidential information in this case.

Generally, as here, the choice about how information is presented or the precise organization and ordering of sections of a document are the subject of publicly available guidelines, although the nature of the information and evidence in the particular case must be considered in deciding whether or not the exemption applies. M’s argument that the very fact it listed particular articles and studies otherwise available in the public domain in its new drug submissions is confidential information, because it would be understood by competitors that M had relied on those studies, must also fail.

The record shows that M itself proposed that copies of all published articles referred to in the submissions should be provided to the requester. In addition, the fact that M had referred to many studies was already in the public domain as a result of the publication of the Product Monograph (a scientific document which contains the information for safe and effective use of the drug) and other documents. While the possibility of establishing a claim of this nature in cases where the evidence supports it cannot be foreclosed, the evidence does not support it here. Third, the exemption in s. 20(1)(

c) applies if disclosure could reasonably be expected to harm the third party. The test to establish the degree of likelihood that harm will result from disclosure is “a reasonable expectation of probable harm”. This long-accepted formulation is intended to capture that, while the third party need not show on a balance of probabilities that the harm will in fact come to pass if the records are disclosed, the third party must nonetheless do more than show that such harm is simply possible. The important objective of access to information would be thwarted by a mere possibility of harm standard.

Exemption from disclosure should not be granted on the basis of fear of harm that is fanciful, imaginary or contrived. There is no reason to reformulate the test. As to whether it is possible that disclosing information already in the public domain can cause harm, publicly available information is generally not exempt information under the harm test. It may, however, be possible in some cases to show that the way in which publicly available information has been compiled for a particular purpose is not, itself, publicly known, giving rise to the risk of harm by disclosure.

Information, not already public, that is shown to give competitors a head start in developing competing products, or to give them a competitive advantage in future transactions may, in principle, meet the requirements of s. 20(1)( c ). The evidence must convince the reviewing court that there is a direct link between the disclosure and the apprehended harm and that the harm could reasonably be expected to ensue from disclosure.

Disclosure of information such as dates, numbering and location of information within a new drug submission or the manner of its presentation, as well as lists of studies or acknowledgement that certain studies have been consulted, and information about how the regulatory process works, usually does not give rise to the necessary expectation of harm or competitive prejudice required in s. 20(1)( c ). In this case, while Health Canada applied an unduly onerous test of probability of harm, a review of M’s submissions and evidence confirms the Court of Appeal’s intervention was nevertheless justified.

Health Canada’s evidence that virtually all of the unredacted information in issue was in the public domain was largely unanswered by M and it did not provide evidence showing how the disclosure of the redacted form of the information could reasonably be expected to give rise to the harm and prejudice it claimed. Moreover, M’s submission that the release of some of the information could give an inaccurate perception of the product’s safety cannot be accepted. Courts have often — and rightly — been sceptical about claims that the public misunderstanding of disclosed information will inflict harm.

Refusing to disclose information for fear of public misunderstanding undermines the fundamental purpose of access to information legislation; the public should have access to information so that they can evaluate it for themselves. Finally, the Court of Appeal’s disposition of the s. 25 issue should be affirmed. M did not provide any submissions and the reviewing judge failed to explain why non-exempt material could not reasonably be severed and disclosed as required under s. 25 .

The Court of Appeal was obliged to intervene, although it erred to the extent it faulted the reviewing judge for having substituted his view for that of the institutional head. The reviewing judge was required to consider whether the institutional head had properly applied s. 25 . The heart of the s. 25 exercise is determining when material subject to the disclosure obligation can reasonably be severed from exempt material.

Severance will be reasonable only if disclosure of the unexcised portions of the record would reasonably fulfill the purposes of the Act , having regard to whether what is left after excising exempted material has any meaning and whether the effort of redaction by the government institution is justified by the benefits of severing and disclosing the remaining information. Where severance leaves only disconnected snippets of releasable information, disclosure of that type of information does not fulfill the purpose of the Act and severance is not reasonable.

Per Deschamps, Abella and Rothstein JJ. (dissenting): The Federal Court judge reviewing the decision of the head of an institution pursuant to s. 44 of the Act discharges a function similar to a trial judge. An appellate court must defer to a trial judge’s findings on questions of fact as well as on questions of mixed fact and law. The standard to be applied on such questions, per Housen v. Nikolaisen , 2002 SCC 33 , [2002] 2 S.C.R. 235, is that of a palpable and overriding error.

Deferring to trial judges’ findings where it is appropriate to do so ensures that judicial resources are used efficiently, enhances access to justice and is consistent with the institutional role of the appellate court. Here, the reviewing judge’s findings on the exemptions are fact-based or bear on questions of mixed fact and law, so deference is owed to them. No palpable and overriding error can be found in his judgments. While one may disagree with the

result, the judge’s conclusions can easily be explained by referring both to his reasons and to the parties’ submissions. This Court oughtnot to be conducting the kind of technical review which is required in order to determine whether information qualifies for an exemptionfrom disclosure under the Act. The size of the record, the time allotted to the parties to argue their cases in this Court, and the Court’sinstitutional role are all factors that militate against reviewing the facts in minute detail. The deferential approach dictated by Housen ismore consistent with this Court’s role.

The reviewing judge should not be required to provide a word-by-word, line-by-line, or evenpage-by-page explanation for his or her decision. The Federal Court of Appeal erred in retrying the case. Cases Cited By Cromwell J. Discussed: Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235; referred to: Dagg v. Canada (Minister of Finance), (SCC), [1997] 2 S.C.R. 403; Ontario (Public Safety and Security) v. Criminal Lawyers’ Association, 2010 SCC 23,[2010] 1 S.C.R. 815; Canada Post Corp. v. Canada (Minister of Public Works), (FCA), [1995] 2 F.C. 110; Canada(Privacy Commissioner) v.

Canada (Labour Relations Board), (FC), [1996] 3 F.C. 609, aff’d (2000), (FCA), 25 Admin. L.R. (3d) 305; Canada (Information Commissioner) v. Canada (Commissioner of the Royal CanadianMounted Police), 2003 SCC 8, [2003] 1 S.C.R. 66; Canada (Information Commissioner) v. Canada (Minister of National Defence),2011 SCC 25, [2011] 2 S.C.R. 306; Air Atonabee Ltd. v. Canada (Minister of Transport) (1989), 37 Admin. L.R. 245; Merck FrosstCanada & Co. v. Canada (Minister of Health), 2003 FC 1422 ; Rizzo & Rizzo Shoes Ltd. (Re), (SCC), [1998]1 S.C.R. 27; Twinn v.

Canada (Minister of Indian Affairs and Northern Development), (FC), [1987] 3 F.C. 368, aff’d(1987), 80 N.R. 263; H.J. Heinz Co. of Canada Ltd. v. Canada (Attorney General), 2006 SCC 13, [2006] 1 S.C.R. 441; SNC-Lavalin Inc.v. Canada (Minister of Public Works) (1994), 79 F.T.R. 113; Maislin Industries Ltd. v. Minister for Industry, Trade and Commerce, (FC), [1984] 1 F.C. 939; Canada Packers Inc. v. Canada (Minister of Agriculture), (FCA), [1989] 1F.C. 47; Rubin v. Canada (Canada Mortgage and Housing Corp.), (FCA), [1989] 1 F.C. 265; AstraZeneca CanadaInc. v.

Canada (Minister of Health), 2005 FC 189 (supplementary reasons 2005 FC 648 ), aff’d 2006 FCA 241, 353N.R. 84; Canada (Information Commissioner) v. Canada (Prime Minister), (FC), [1993] 1 F.C. 427; F.H. v.McDougall, 2008 SCC 53, [2008] 3 S.C.R. 41; Société Gamma Inc. v. Canada (Department of the Secretary of State) (1994), 56 C.P.R.(3d) 58; R. v. Stewart, (SCC), [1988] 1 S.C.R. 963; R. I. Crain Ltd. v. Ashton, (ON SC), [1949] O.R.303, aff’d (ON CA), [1950] O.R. 62; R. v. Hape, 2007 SCC 26, [2007] 2 S.C.R. 292; Zingre v. The Queen, (SCC), [1981] 2 S.C.R. 392; Ordon Estate v.

Grail, (SCC), [1998] 3 S.C.R. 437; Baker v. Canada (Minister ofCitizenship and Immigration), (SCC), [1999] 2 S.C.R. 817; Schreiber v. Canada (Attorney General), 2002 SCC 62,[2002] 3 S.C.R. 269; Van de Perre v. Edwards, 2001 SCC 60, [2001] 2 S.C.R. 1014; Janssen-Ortho Inc. v. Canada (Minister of Health),2007 FCA 252, 367 N.R. 134, aff’g 2005 FC 1633 ; Les viandes du Breton Inc. v. Canada (Canadian Food Inspection Agency),2006 FC 335 ; Ottawa Football Club v. Canada (Minister of Fitness and Amateur Sports), (FC), [1989] 2F.C. 480; Saint John Shipbuilding Ltd. v.

Canada (Minister of Supply and Services) (1990), (FCA), 67 D.L.R. (4th)315; Brookfield Lepage Johnson Controls Facility Management Services v. Canada (Minister of Public Works and GovernmentServices), 2004 FCA 214, 322 N.R. 388; Chesal v. Nova Scotia (Attorney General), 2003 NSCA 124, 219 N.S.R. (2d) 139; Lavigne v.Canada (Office of the Commissioner of Official Languages), 2002 SCC 53, [2002] 2 S.C.R. 773; Information Commissioner (Can.) v.Immigration and Refugee Board (Can.) (1997), (FC), 140 F.T.R. 140; Hilewitz v. Canada (Minister of Citizenship andImmigration), 2005 SCC 57, [2005] 2 S.C.R. 706; Kwiatkowsky v.

Minister of Employment and Immigration, (SCC),[1982] 2 S.C.R. 856; Re Actors’ Equity Assn. of Australia and Australian Broadcasting Tribunal (No 2) (1985), 7 A.L.D. 584; Watt v.Forests, [2007] NSWADT 197 (AustLII); Cyanamid Canada Inc. v. Canada (Minister of Health & Welfare) (1992), 9 Admin. L.R. (2d)161; AB Hassle v. Canada (Minister of National Health and Welfare) (1998), (FC), 161 F.T.R. 15, aff’d (FCA), [2000] 3 F.C. 360; Wells v. Canada (Minister of Transport) (1995), 103 F.T.R. 17; Culver v. Canada (Minister of PublicWorks and Government Services), ; Bitove Corp. v.

Canada (Minister of Transport) (1996), 119 F.T.R. 278; CoradixTechnology Consulting Ltd. v. Canada (Minister of Public Works and Government Services), 2006 FC 1030, 307 F.T.R. 116; CanadaPost Corp. v. National Capital Commission, 2002 FCT 700, 221 F.T.R. 56; Aventis Pasteur Ltd. v. Canada (Attorney General), 2004 FC1371, 262 F.T.R. 73; Prud’homme v. Agence canadienne de développement international (1994), 85 F.T.R. 302; Coopérative fédérée duQuébec v.

Canada (Ministre de l’Agriculture et de l’Agroalimentaire) (2000), (FC), 180 F.T.R. 205; Blank v.Canada (Minister of the Environment), 2007 FCA 289, 368 N.R. 279; Canada (Information Commissioner) v. Canada (SolicitorGeneral), (FC), [1988] 3 F.C. 551; Montana Band of Indians v. Canada (Minister of Indian and Northern Affairs), (FC), [1989] 1 F.C. 143. By Deschamps J. (dissenting) Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235; Dunsmuir v. New Brunswick, 2008 SCC 9, [2008] 1 S.C.R. 190;Prairie Acid Rain Coalition v. Canada (Minister of Fisheries and Oceans), 2006 FCA 31, [2006] 3 F.C.R. 610; Zenner v.

Prince EdwardIsland College of Optometrists, 2005 SCC 77, [2005] 3 S.C.R. 645; Canadian Imperial Bank of Commerce v. Canada (ChiefCommissioner, Human Rights Commission), 2007 FCA 272, [2008] 2 F.C.R. 509; Rubin v. Canada (Minister of Health), 2003 FCA 37,300 N.R. 179; Merck Frosst Canada Ltd. v. Canada (Minister of National Health), 2002 FCA 35 ; SNC Lavalin Inc. v. Canada(Minister for International Co-operation), 2007 FCA 397, 77 Admin. L.R. (4th) 1; 3430901 Canada Inc. v. Canada (Minister ofIndustry), 2001 FCA 254, [2002] 1 F.C. 421; Air Atonabee Ltd. v. Canada (Minister of Transport) (1989), 37 Admin.

L.R. 245;Underwood v. Ocean City Realty Ltd. (1987), (BC CA), 12 B.C.L.R. (2d) 199; Janssen-Ortho Inc. v. Canada(Minister of Health), 2007 FCA 252, 367 N.R. 134. Statutes and Regulations Cited Access to Information Act, R.S.C. 1985, c. A-1, ss. 2(1), 3 “third party”, 4, 13 to 28, 41, 42, 44, 45, 46, 50, 51,

Schedule II. Access to Information Act Extension Order, No. 1, SOR/89-207. Act respecting access to documents held by public bodies and the Protection of personal information, R.S.Q., c. A-2.1.

Anti-terrorism Act, S.C. 2001, c. 41, ss. 25, 29. Competition Act, R.S.C. 1985, c. C-34, ss. 11(1), 74.11(4). Criminal Code, R.S.C. 1985, c. C-46, ss. 25.1(9), 382.1(2). Food and Drug Regulations, C.R.C., c. 870, ss. C.01.017, C.08.002. Food and Drug Regulations, amendment, SOR/95-411. Freedom of Information and Protection of Privacy Act, R.S.O. 1990, c. F.31. Insurance Companies Act, S.C. 1991, c. 47, s. 294(6). Regulations Amending the Food and Drug Regulations (Data Protection), SOR/2006-241. Security of Information Act, R.S.C. 1985, c. O-5 [formerly Official Secrets Act], s. 19(4) [ad. 2001, c. 41, s. 29].

International Documents Agreement on Trade-Related Aspects of Intellectual Property Rights, 1869 U.N.T.S. 299 (being Annex 1C of the Marrakesh AgreementEstablishing the World Trade Organization, 1869 U.N.T.S. 3), art. 39. North American Free Trade Agreement Between the Government of Canada, the Government of the United Mexican States and theGovernment of the United States of America, Can. T.S. 1994 No. 2, art. 1711. Authors Cited Bastarache, Michel, et al. The Law of Bilingual

Interpretation. Markham, Ont.: LexisNexis, 2008. Brandeis, Louis D. “What Publicity Can Do”, Harper’s Weekly, vol. 58, December 20, 1913, 10. Canada. Health Canada. Therapeutic Products Programme Guideline — Preparation of Human New Drug Submissions. Ottawa: TheDepartment, 1991. Canadian Oxford Dictionary, 2nd ed. Edited by Katherine Barber. Don Mills, Ont.: Oxford University Press, 2004, “expect”, “likely”. Doray, Raymond, et François Charette. Accès à l’information: loi annotée: jurisprudence, analyse et commentaires.

Cowansville, Qué.: Yvon Blais, 2001 (feuilles mobiles mises à jour décembre 2010, envoi no 20). Hughes, Roger T., and Dino P. Clarizio. Halsbury’s Laws of Canada — Patents, Trade Secrets and Industrial Designs. Markham, Ont.: LexisNexis, 2007. Hughes, Roger T., Dino P. Clarizio and Neal Armstrong. Hughes & Woodley on Patents, 2nd ed. Markham, Ont.: LexisNexis, 2005(loose-leaf updated April 2011, release 25). Parisien, Serge. Les secrets commerciaux et la

Loi sur l’accès à l’information du Québec. Montréal: Wilson & Lafleur, 1993. Sullivan, Ruth. Sullivan on the Construction of Statutes, 5th ed. Markham, Ont.: LexisNexis, 2008. Vaver, David. “Civil Liability for Taking or Using Trade Secrets in Canada” (1981), 5 Can. Bus. L.J. 253. APPEALS from a judgment of the Federal Court of Appeal (Desjardins, Noël and Pelletier JJ.A.), 2009 FCA 166, 400 N.R.1, [2009] F.C.J. No. 627 (QL), 2009 CarswellNat 5226, reversing the decisions of Beaudry J., 2006 FC 1200, 301 F.T.R. 241, 59 C.P.R.(4th) 312, [2006] F.C.J.

No. 1504 (QL), 2006 CarswellNat 5635, and 2006 FC 1201 , [2006] F.C.J. No. 1505 (QL), 2006CarswellNat 5644. Appeals dismissed, Deschamps, Abella and Rothstein JJ. dissenting. Catherine Beagan Flood and Patrick Kergin, for the appellant. Bernard Letarte and René LeBlanc, for the respondent. Anthony G. Creber and John Norman, for the intervener. The judgment of McLachlin C.J. and Binnie, LeBel, Fish, Charron and Cromwell JJ. was delivered by Cromwell J. — I. Overview [1] Broad rights of access to government information serve important public purposes.

They help to ensureaccountability and ultimately, it is hoped, to strengthen democracy. “Sunlight”, as Louis Brandeis put it so well, “is said to be the best ofdisinfectants” (“What Publicity Can Do”, Harper’s Weekly, December 20, 1913, 10, at p. 10). [2] Providing access to government information, however, also engages other public and private interests. Government, for example, collects information from third parties for regulatory purposes, information which may include trade secrets

and other confidential commercial matters. Such information may be valuable to competitors and disclosing it may cause financial or other harm to the third party who had to provide it. Routine disclosure of such information might even ultimately discourage research and innovation. Thus, too single-minded a commitment to access to this sort of government information risks ignoring these interests and has the potential to inflict a lot of collateral damage.

There must, therefore, be a balance between granting access to information and protecting these other interests in relation to some types of third party information. [ 3 ] The need for this balance is well illustrated by these appeals. They arise out of requests for information which had been provided to government by a manufacturer as part of the new drug approval process.

In order to get approval to market new drugs, innovator pharmaceutical companies, such as the appellant Merck Frosst Canada Ltd. (“Merck”), are required to disclose a great deal of information to the government regulator, the respondent Health Canada, including a lot of material that they, with good reason, do not want to fall into their competitors’ hands. But competitors, like everyone else in Canada, are entitled to the disclosure of government information under the Access to Information Act , R.S.C. 1985, c.

A-1 (“Act” or “ ATI ”). [ 4 ] The Act strikes a careful balance between the sometimes competing objectives of encouraging disclosure and protecting third party interests. While the Act requires government institutions to make broad disclosure of information, it also provides exemptions from disclosure for certain types of third party information, such as trade secrets or information the disclosure of which could cause economic harm to a third party. It also provides third parties with procedural protections.

These appeals concern how the balance struck by the legislation between disclosure and protection of third parties should be reflected in the

interpretation and administration of that legislation. [ 5 ] Health Canada received access to information requests relating to certain new drug submissions made to it by Merck. A series of disputes then arose between Merck, a third party to the requests, and the Minister of Health about what information had to be disclosed and what was exempt from disclosure. An avalanche of paperwork and court proceedings ensued. No fewer than five proceedings before the Federal Courts, generating a record of some 67 bound volumes of material, have brought the parties to this Court. At issue are the

interpretation and application of several provisions of the Act that govern the disclosure or non-disclosure of third party confidential commercial information. [ 6 ] Merck says that the balance has swung too far in favour of disclosure, both in the way the Act was administered by Health Canada and in the way it was interpreted by the Federal Court of Appeal. Merck has three main complaints. First, it says that Health Canada failed to give it notice and an opportunity to make objections before disclosing some of its confidential information.

This complaint raises issues about the threshold under the Act for giving third parties notice before disclosing their information. Second, Merck says that Health Canada failed to conduct an adequate review of the information before making its initial decision that the information was subject to disclosure. The effect of this, Merck claims, is that Health Canada effectively shifted its statutory obligations onto it, resulting in Merck having to expend extensive human and financial resources to deal with the access to information requests. In short, the process itself inflicted undue commercial injury.

This point requires analysis of the nature of the government institution’s duties under the Act and the role of the third party when it claims exemption for the information sought. Third, Merck contends that both Health Canada and the Federal Court of Appeal held it to too onerous a standard of proof that the information was exempt.

This contention requires an examination of the burden and standard of proof on a third party claiming exemptions from disclosure. [ 7 ] In addition to these main points, Merck also submits that the Federal Court of Appeal applied the wrong standard of appellate review and misapplied the provisions relating to the disclosure of information that can be reasonably severed from exempt material in the same record. [ 8 ] Although my view is that Merck’s appeals should be dismissed, there is nonetheless some merit to its complaints.

I will take the opportunity the case provides to set out my understanding of when notice must be given to a third party, what the role of the government institution is in applying the third party exemptions and what are the applicable standards and burdens of proof in relation to them. I will address the standard of review on appeal and how the severance provisions should be applied. Finally, I will deal with the specific rulings about the numerous pages of information still in contention.

The main challenge of the appeals is to determine how to interpret and apply the Act so that it strikes the balance Parliament intended between broad rights of access and protection of third party information. [ 9 ] A good deal of background is required in order to understand the precise issues before the Court, which I will provide in the following section. II.

Facts, Proceedings and Issues [ 10 ] The case arises out of two access to information requests made with respect to information submitted by Merck to Health Canada in the course of seeking approval to market two products. [ 11 ] Merck applied to obtain approval to market Singulair®, an asthma medication, by filing a New Drug Submission (“NDS”) in early 1997. To obtain Health Canada’s approval, Merck had to make full and frank disclosure of all of its knowledge and information about the drug. Approval was granted approximately a year and a half later and, as a result, the drug was marketed and sold in Canada.

In 1999, Merck applied for approval of Singulair® in a 4-mg dose that would extend the permitted indications for the drug to patients two to five years of age. This required the submission of a Supplementary New Drug Submission (“SNDS”). An SNDS is submitted to request the authorization to market a drug that has already been approved and for which certain changes have been made, for instance and as in this case, proposing a new dosage. This process of approval, as with an NDS, required Merck to submit a great deal of information.

The new dosage was approved and the drug marketed. [ 12 ] In due course, Health Canada received access to information requests relating to both Merck’s NDS and SNDS. With respect to the NDS, the requester sought access to the Notice of Compliance, the Comprehensive

Summary, the Health Canada reviewers’ notes, and the correspondence between Health Canada and Merck. With respect to the SNDS, the requester asked for all releasable records. [ 13 ] As we shall see, these access to information requests led to lengthy exchanges between Merck and Health Canada

about how Health Canada was processing them and what documents were or were not subject to disclosure, leading ultimately toextensive court proceedings. [14] These appeals engage two quite complex legislative and regulatory schemes, one relating to new drug approval andthe other to access to information. I will, therefore, briefly outline these schemes. I will then set out a brief account of how HealthCanada addressed the access to information requests, a brief

summary of the ensuing court proceedings in the Federal Courts leading tothe appeals to this Court and a statement of the precise issues that must be resolved. A. The New Drug Approval Process [15] To seek approval to market a new drug in Canada, Merck was required to file an NDS which must comply with theFood and Drug Regulations, C.R.C., c. 870, s. C.08.002. This submission is a comprehensive disclosure of all of Merck’s informationon the new drug.

Amongst other things, it must submit a list of ingredients, the details of the methods of manufacture, details of the teststo be applied to control the potency, purity, stability and safety of the new drug, and detailed reports of the tests made to establish safety.Some of this information is made public upon approval of the new drug.

Merck was also required to submit a statement of allrepresentations to be made for the promotion of the new drug respecting the administration of the proposed dosage, the claims to bemade and the contra-indication and side effects of the new drug. [16] Health Canada has issued quite detailed guidelines for the preparation of new drug submissions. The submission isto be in five main parts:

Part 1 — Master Volume;

Part 2 — Chemistry and Manufacturing, which sets out detailed information about the drug substance;

Part 3 — Comprehensive

Summary, which sets out investigational studies relating to pharmacology, toxicology, microbiology, publishedand unpublished investigational articles, clinical studies and research and development of the drug. The Comprehensive

Summary is theheart of the NDS, consisting of factual, concise descriptions of the methodology, results, conclusions and evaluations of the relevantinvestigational animal and clinical human studies;

Part 4 — Sectional Reports detailing investigational and clinical studies; and

Part 5 — Raw data from preclinical and clinical studies. (Therapeutic Products Programme Guideline — Preparation of Human New Drug Submissions (1991)) [17] Once submitted, Health Canada reviews and evaluates this information. This produces what is referred to in therecord as “reviewers’ notes”. During the review process, the reviewers of course comment on the information provided and frequentlypose questions and seek additional information from the manufacturer.

These requests, along with other communications passingbetween Health Canada and the manufacturer constitute what has been referred to in the record as correspondence. Before this Court,information in three types of documents is at issue: the Comprehensive

Summary, the reviewers’ notes and the correspondence. [18] When all this information has been reviewed by Health Canada, a publicly available Product Monograph will beapproved. This is a scientific document which contains the information for safe and effective use of the drug. It is based on datasummarized in the Comprehensive

Summary and is drafted and redrafted as Health Canada and the manufacturer discuss the product andexchange information. The final Product Monograph may not include all of the information exchanged between the parties. Rather, it isthe result of discussions and compromise between them. It is published as part of the Notice of Compliance issued by Health Canada. [19] An SNDS follows a similar process. B.

Access to Information Legislation and Process [20] It is useful now to turn to a brief review of the legislative provisions that governed Health Canada’s response to theaccess to information requests relating to Merck’s NDS and SNDS. I have set out the most relevant provisions of the Act in theAppendix to these reasons. [21] The purpose of the Act is to provide a right of access to information in records under the control of a governmentinstitution.

The Act has three guiding principles: first, that government information should be available to the public; second, thatnecessary exceptions to the right of access should be limited and specific; and third, that decisions on the disclosure of governmentinformation should be reviewed independently of government (s. 2(1)). [22] In Dagg v.

Canada (Minister of Finance), (SCC), [1997] 2 S.C.R. 403, at para. 61, La Forest J.(dissenting, but not on this point) underlined that the overarching purpose of the Act is to facilitate democracy and that it does this in tworelated ways: by helping to ensure that citizens have the information required to participate meaningfully in the democratic process andthat politicians and officials may be held meaningfully to account to the public. This purpose was reiterated by the Court very recently,in the context of Ontario’s access to information legislation, in Ontario (Public Safety and Security) v.

Criminal Lawyers’ Association,2010 SCC 23, [2010] 1 S.C.R. 815. The Court noted, at para. 1, that access to information legislation “can increase transparency ingovernment, contribute to an informed public, and enhance an open and democratic society”. Thus, access to information legislation isintended to facilitate one of the foundations of our society, democracy. The legislation must be given a broad and purposiveinterpretation, and due account must be taken of s. 4(1), that the Act is to apply notwithstanding the provision of any other Act ofParliament: Canada Post Corp. v.

Canada (Minister of Public Works), (FCA), [1995] 2 F.C. 110, at p. 128; Canada(Privacy Commissioner) v. Canada (Labour Relations Board), (FC), [1996] 3 F.C. 609, at para. 49, aff’d (2000), (FCA), 25 Admin. L.R. (3d) 305 (F.C.A.).

[ 23 ] Nonetheless, when the information at stake is third party, confidential commercial and related information, the important goal of broad disclosure must be balanced with the legitimate private interests of third parties and the public interest in promoting innovation and development. The Act strikes this balance between the demands of openness and commercial confidentiality in two main ways. First, it affords substantive protection of the information by specifying that certain categories of third party information are exempt from disclosure. Second, it provides procedural protection.

The third party whose information is being sought has the opportunity, before disclosure, to persuade the institution that exemptions to disclosure apply and to seek judicial review of the institution’s decision to release information which the third party thinks falls within the protected sphere. These appeals raise significant issues about the

interpretation of the substantive protections as well as about how the procedural protections should operate. [ 24 ] I turn now to a brief overview of the most directly relevant provisions of the Act .

Section 4 (as extended by the Access to Information Act Extension Order, No. 1 , SOR/89-207) sets out the right of persons and corporations present in Canada to have, on request, “access to any record [defined to mean any documentary material regardless of medium or form] under the control of a government institution” (s. 4(1)). This right is accorded “[s]ubject to this Act” and, for present purposes, the important qualification of the right is found in s. 20 .

It sets out the exemptions relating to third party information. (A “third party” is defined to be a person, group of persons or organization other than the requester or a government institution (s. 3).) Subsection 20(1) provides that the government institution has a duty to refuse to disclose certain categories of third party information. The subsection, as material to these appeals, read as follows at the relevant time: 20.

(1) Subject to this section, the head of a government institution shall refuse to disclose any record requested under this Act that contains (

a) trade secrets of a third party; (

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; . . . [ 25 ] The duty not to disclose these sorts of third party information must be read with s. 25 of the Act , which may be called the severance provision. It requires the institution to disclose any part of a record that does not contain material which the institution is authorized not to disclose and which can reasonably be severed from any part that does contain exempted material.

Section 25 provides: 25.

Notwithstanding any other provision of this Act , where a request is made to a government institution for access to a record that the head of the institution is authorized to refuse to disclose under this Act by reason of information or other material contained in the record, the head of the institution shall disclose any part of the record that does not contain, and can reasonably be severed from any part that contains, any such information or material. [ 26 ] Thus, we see that the general right of access is subject to a duty on government institutions not to disclose these types of third party information, including information that would normally be subject to disclosure, but cannot reasonably be severed from the exempted third party information.

These are what I have called the substantive protections. [ 27 ] I turn now to the procedural protections for third parties. The Act , as noted, establishes a process of notification and judicial review. This process permits the third party to mount objections and have them considered before the information is disclosed. Section 27(1) of the Act details the circumstances in which a government institution must make every reasonable effort to give notice of its intention to disclose the third party’s information. At the time of the applications it read: 27.

(1) Where the head of a government institution intends to disclose any record requested under this Act , or any part thereof, that contains or that the head of the institution has reason to believe might contain (

a) trade secrets of a third party, (

b) information described in paragraph 20(1)(

b) that was supplied by a third party, or (

c) information the disclosure of which the head of the institution could reasonably foresee might effect a result described in paragraph 20(1)(

c) or (

d) in respect of a third party, the head of the institution shall, subject to subsection (2), if the third party can reasonably be located, within thirty days after the request is received, give written notice to the third party of the request and of the fact that the head of the institution intends to disclose the record or part thereof. [ 28 ] When a third party receives such a notice, it must be given the opportunity to make representations pursuant to s. 28 of the Act and the institution must then make a decision whether or not to disclose all or part of the record.

Once again, the third party is given written notice of this decision and is accorded 20 days to request a review of it in the Federal Court, as provided for in s. 44 . The text of ss. 28 and 44(1) are as follows: 28.

(1) Where a notice is given by the head of a government institution under subsection 27(1) to a third party in respect of a record or a part thereof, (

a) the third party shall, within twenty days after the notice is given, be given the opportunity to make representations to the head of the institution as to why the record or the part thereof should not be disclosed; and (

b) the head of the institution shall, within thirty days after the notice is given, if the third party has been given an opportunity to make representations under paragraph ( a ), make a decision as to whether or not to disclose the record or the part thereof

and give written notice of the decision to the third party.

(2) Representations made by a third party under paragraph (1)(

a) shall be made in writing unless the head of the government institution concerned waives that requirement, in which case they may be made orally.

(3) A notice given under paragraph (1)(

b) of a decision to disclose a record requested under this Act or a part thereof shall include (

a) a statement that the third party to whom the notice is given is entitled to request a review of the decision under

section 44 within twenty days after the notice is given; and (

b) a statement that the person who requested access to the record will be given access thereto or to the part thereof unless, within twenty days after the notice is given, a review of the decision is requested under

section 44.

(4) Where, pursuant to paragraph (1)( b ), the head of a government institution decides to disclose a record requested under this Act or a part thereof, the head of the institution shall give the person who made the request access to the record or the part thereof forthwith on completion of twenty days after a notice is given under that paragraph, unless a review of the decision is requested under

section 44 . 44.

(1) Any third party to whom the head of a government institution is required under paragraph 28(1)(

b) or subsection 29(1) to give a notice of a decision to disclose a record or a part thereof under this Act may, within twenty days after the notice is given, apply to the Court for a review of the matter. C. Proceedings

(1) Health Canada’s Response to the Access to Information Requests [ 29 ] Health Canada identified about 550 pages in response to the NDS access to information request. It reviewed those pages and concluded that approximately 30 of them contained confidential information that could not be disclosed under s. 20(1) of the Act . Health Canada redacted those pages in part.

It also concluded that 15 pages did not contain confidential information, with the exception of some information on one page that it redacted, and disclosed those pages without first notifying or consulting Merck. [ 30 ] Health Canada then notified Merck of the access to information request and of its intent to disclose part of the NDS record. It provided Merck with a copy of the over 500 still-undisclosed pages that it sought to disclose to the requester, some of which were partially redacted.

By letter dated August 16, 2000, Health Canada specified that some of those pages had already been redacted pursuant to s. 20(1) of the Act , and that others may also be subject to s. 20(1) , however they were unable to determine this at the time. It sought Merck’s representations on the proposed disclosure pursuant to s. 27 of the Act . In particular, it asked Merck to explain which portions of the remaining record it considered to be confidential under s. 20(1) , if any, and why. Merck responded on September 25, 2000.

It took the position that, with the exception of the Product Monograph and some published studies, all of the information covered by the ATI request — including the already-disclosed pages — was exempt from disclosure under s. 20(1) of the Act. [ 31 ] Health Canada considered Merck’s response and redacted additional information from approximately 300 pages. Most of those pages were redacted in part, though some were withheld completely. Following these further redactions, approximately 490 pages were still at issue.

On January 2, 2001, Health Canada sent Merck a second notice informing it of the additional redactions and enclosing the remaining 490 pages for Merck’s review. Health Canada informed Merck that, if Merck continued to object to the redactions, it could file a request for judicial review before the Federal Court in accordance with s. 44 of the Act . Merck filed such a request for judicial review on January 19, 2001. [ 32 ] With respect to the SNDS, Health Canada identified over 300 pages of information that were responsive to the access to information request.

It concluded that about 60 of those pages contained confidential information that could not be disclosed under s. 20(1) of the Act . Those pages were redacted in part, or in a few cases deleted entirely. In addition, Health Canada concluded that eight pages contained no confidential information and could be disclosed to the requester directly. Health Canada disclosed those pages without advance notice to Merck. [ 33 ] Health Canada notified Merck of the access to information request, provided a copy of about 300 pages and solicited Merck’s submissions concerning their disclosure.

Merck, as it had with respect to the NDS request, took the position that none of the pages could be disclosed, except for the Product Monograph and published studies. Health Canada replied by agreeing to some additional, partial redactions on about 45 pages and rejected the balance of Merck’s objections. Merck then sent a further reply based on a review prepared by outside consultants. The review identified as exempt from disclosure all of the information that was not already publicly available and which had not been redacted by Health Canada.

In particular, the consultants identified information which Merck had requested Health Canada to withhold (i.e. everything except the Product Monograph or a published study — which were otherwise publicly available), and which was not already published on the U.S. Food and Drug Administration (“FDA”) website. Merck maintained that none of this unpublished information could be disclosed.

It did, however, agree to the partial disclosure of a number of pages. [ 34 ] In its second and final notice to Merck, Health Canada agreed to withhold additional details from about 10 more pages, but rejected the balance of Merck’s objections. Health Canada informed Merck of its right to seek judicial review before the Federal Court in accordance with s. 44 of the Act .

Merck filed a request for judicial review in the SNDS file on January 8, 2002. [ 35 ] Merck maintained throughout the proceedings that Health Canada did not conduct a sufficiently detailed review of the documents before giving it the notices, while Health Canada maintained that Merck’s submissions did not address the exemptions it claimed specifically enough.

(2) Proceedings in the Federal Courts

[36] The initial NDS judicial review was heard in the Federal Court before Harrington J., but the Federal Court of Appealset aside his decision and directed a new hearing. The new hearing of that judicial review was heard in the Federal Court at the sametime as the SNDS judicial review application. Both decisions were appealed to the Federal Court of Appeal. There are thus fivedecisions leading to the appeals now before the Court and I will briefly summarize them. (

a) First Federal Court Decision, 2004 FC 959, [2005] 1 F.C.R. 587 [37] The first decision pertains solely to Merck’s application for judicial review in relation to the NDS disclosure.Harrington J. allowed the application in part. He was of the opinion that Health Canada could not disclose any of the NDS recordwithout prior notice to Merck.

Further, apart from the one document called the Notice of Compliance, which is a public documentpublished upon approval of the drug, Harrington J. found that although some of the information contained in the record was available inthe public domain, it was not available “as such” and therefore remained confidential and should be exempted from disclosure (paras. 53and 58). In addition, he held that this case was not a case where severance of the confidential information was reasonable.

Accordingly,he ordered that no part of the record apart from the Notice of Compliance could be disclosed as, in his view, it was exempt fromdisclosure pursuant to s. 20(1)(

b) of the Act. He did not include in his reasons any analysis of ss. 20(1)(

a) or 20(1)(c). (

b) First Appeal, 2005 FCA 215, [2006] 1 F.C.R. 379 [38] The Minister of Health appealed and a unanimous Federal Court of Appeal overturned Harrington J.’s decision.Desjardins J.A. found that Harrington J. erred in law in his

interpretation of s. 20(1)(b). The Court of Appeal decided that rather thanundertaking its own analysis of the records, the interests of justice would be better served by remitting the matter to the Federal Court. (

c) Rehearing of NDS Judicial Review and SNDS Judicial Review, 2006 FC 1201 and 2006 FC 1200, 301F.T.R. 241 [39] The reviewing judge, Beaudry J., heard both the rehearing relating to the NDS (2006 FC 1201) and the SNDSapplication (2006 FC 1200).

Merck sought two remedies: a declaratory order with regard to the lawfulness of the procedure followed byHealth Canada in processing the request for access to information and an order prohibiting the disclosure of the NDS and SNDS records. [40] Turning first to the lawfulness of the process, Merck took issue with the disclosure of some of the record withoutbeing notified and objected to the fact that Health Canada had imposed on it the onus of showing why disclosure should be refusedwithout having conducted its own genuine and thorough review.

Health Canada argued that Merck could not ask for a declaratory orderregarding the decision to disclose without notice because that decision was not properly before the court. The reviewing judge disagreedand held that the court should rule on the matter because not only were the issues serious, but also it would avoid the multiplication ofdecisions pertaining to the same access to information request. He also held that it was unrealistic to separate the process followed byHealth Canada from the substance of the final decision.

He held that the disclosure of some of the record without prior notice to thethird party contravened the spirit or scheme of s. 20(1) of the Act. Given the potentially irreparable harm to third parties, disclosurewithout prior notice should not have occurred. The reviewing judge made this finding and concluded that Merck was entitled todeclaratory orders in both cases. [41] The reviewing judge then turned to consider disclosure of the records.

By the time he heard the NDS and SNDSmatters, Health Canada had agreed to further redactions via affidavits so that the number of pages in issue was reduced to approximately235 for the NDS request and 135 pages for the SNDS request. For the NDS request, the reviewing judge found that over 170 pages wereexempted from disclosure pursuant to s. 20(1), while approximately 65 pages could be disclosed.

For the SNDS request, he found thatalmost 60 pages were exempted pursuant to s. 20(1), and that the remaining pages could be disclosed. [42] With respect to the NDS records, the reviewing judge found that three paragraphs of s. 20(1) were implicated. Hefound that some of the records were exempted from disclosure because they contained trade secrets (s. 20(1)(a)), confidentialinformation (s. 20(1)(b)) or information that if disclosed could reasonably be expected to result in material financial loss or gain toMerck or prejudice its competitive position (s. 20(1)(c)).

The reviewing judge was of the view that, where the information contained inthe record is more detailed than what is available in the public domain, it may be possible to resist disclosure based on the s. 20(1)(c)exemption. He held that in several instances Health Canada had wrongly applied the severance provision in s. 25; he was of the viewthat the material that was not exempt could not reasonably be severed from the material that was exempt. [43] In the SNDS file, the reviewing judge found that some information should be exempted pursuant to s. 20(1)(

b) and(c), but found no trade secrets in these records. (

d) Second and Third Appeals and Cross-Appeals, 2009 FCA 166, 400 N.R. 1 [44] For both the NDS and SNDS judgments, Health Canada appealed and Merck cross-appealed. The Federal Court ofAppeal heard the two appeals and cross-appeals concurrently and delivered one judgment for all of them. Desjardins J.A., writing for aunanimous court, found that the reviewing judge made several legal errors.

The Court of Appeal allowed the appeals and dismissed thecross-appeals, holding that all of the remaining pages at issue for both the NDS and SNDS should be disclosed. [45] With respect to the requirement to give notice, the Court of Appeal held that the obligation only arises if a recordcontains, or the head of the government institution has reason to believe that it might contain, information described in s. 20(1) of theAct.

Contrary to the opinion of the reviewing judge, the Court of Appeal held that disclosure of records without prior notice to the thirdparty does not contravene the text or spirit of the Act. [46] With respect to the s. 20(1)(

a) exemption for trade secrets, the Court of Appeal was of the opinion that the term“trade secrets” should be interpreted narrowly and that when determining whether information constitutes a trade secret, a high thresholdapplies. The Court of Appeal found that the reviewing judge had failed to present any analysis in support of his decision to exclude somepages based on this exemption.

[47] With respect to the s. 20(1)(

b) and (

c) exemptions for confidential information, the Court of Appeal held that theremust be direct and objective evidence that the information is confidential in order for either exemption to apply. Merck, in the view ofthe Court of Appeal, did not provide sufficient evidence to meet its “heavy” burden (para. 62). Accordingly, the reviewing judge erred inrefusing to order disclosure of the requested information pursuant to s. 20(1)(b).

The Court of Appeal also found that Merck’s evidencerelating to s. 20(1)(c) “remain[ed] vague, speculative and silent as to specifically how and why the disclosure of the requestedinformation would be likely to bring about the harm alleged by Merck Frosst” (para. 93; see also para. 99).

Thus, the Court of Appealheld that the reviewing judge erred in fact and law when he refused to order the disclosure of information pursuant to the s. 20(1)(c)exemption. [48] Finally, the Court of Appeal concluded that the reviewing judge had failed in his obligation to ensure compliancewith s. 25 of the Act and to explain why severance was not reasonable. The court also concluded that the reviewing judge erred in lawwhen he substituted his own discretion for that exercised by the head of the government institution where there was no evidence that thehead of the institution’s assessment was incorrect. D.

Issues [49] I will first address the general issues of principle and then turn to the issues relating to particular claims forexemption. [50] The general issues are these: (

i) What is the standard of appellate review and did the Federal Court of Appeal err in this regard? (ii) What is the threshold for triggering the institutional head’s duty to give a third party notice of the access to information requestand what sort of review of the record is required of the head of the institution in deciding whether or not to give notice? (iii) What are the applicable burden and standard of proof on a third party claiming a s. 20(1) exemption? [51] After considering these issues I will turn to the principles relating specifically to the s. 20(1)(a), (

b) and (c)exemptions and to the severance provision in s. 25. III. Analysis A. General Issues

(1) What Is the Standard of Appellate Review and Did the Federal Court of Appeal Err in This Regard? [52] Merck submits that the Federal Court of Appeal erred in the standard of review it applied in these cases. The Courtof Appeal, it argues, intervened based on its own reassessment of the evidence and in the absence of any reversible error on the part ofthe reviewing judge.

The respondent, Health Canada, accepts that the Federal Court of Appeal had to apply the usual standards ofappellate review but it contests Merck’s position that the Court of Appeal failed to do so. [53] There are no discretionary decisions by the institutional head at issue in this case. Under s. 51 of the Act, the judgeon review is to determine whether “the head of a government institution is required to refuse to disclose a record” and, if so, the judgemust order the head not to disclose it.

It follows that when a third party, such as Merck in this case, requests a “review” under s. 44 ofthe Act by the Federal Court of a decision by a head of a government institution to disclose all or part of a record, the Federal Courtjudge is to determine whether the institutional head has correctly applied the exemptions to the records in issue: Canada (InformationCommissioner) v. Canada (Commissioner of the Royal Canadian Mounted Police), 2003 SCC 8, [2003] 1 S.C.R. 66, at para. 19; Canada(Information Commissioner) v. Canada (Minister of National Defence), 2011 SCC 25, [2011] 2 S.C.R. 306, at para. 22.

This review hassometimes been referred to as de novo assessment of whether the record is exempt from disclosure: see, e.g., Air Atonabee Ltd. v.Canada (Minister of Transport) (1989), 37 Admin. L.R. 245 (F.C.T.D.), at pp. 265-66; Merck Frosst Canada & Co. v. Canada (Ministerof Health), 2003 FC 1422 , at para. 3; Dagg, at para. 107. The term “de novo” may not, strictly speaking, be apt; there is,however, no disagreement in the cases that the role of the judge on review in these types of cases is to determine whether the exemptionshave been applied correctly to the contested records.

Sections 44, 46 and 51 are the most relevant statutory provisions governing thisreview. [54] The decision of the judge conducting a review under the Act, which will often have a significant factual component,is subject to appellate review in accordance with the principles set out in Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235, andCanada (Information Commissioner) v. Canada (Minister of National Defence), at para. 23. [55] The Federal Court of Appeal correctly set out the standard of review (para. 25). Did it err in applying that standard? In my view, it did not.

As I will explain in more detail in my analysis of each exemption provision, the reviewing judge did not makefindings of fact and failed either to state the applicable legal principles or to explain how the legal principles applied to the facts beforehim or, in some cases, both. Generally, he gave no indication of the legal and factual findings that took him to his conclusions. Hisconclusions are not explicable when the documents and the evidence are reviewed.

The Court of Appeal was therefore entitled tointervene and to carry out its own assessment of whether the reviewing judge had correctly applied the exemptions to the records. Itwould have been open to the Court of Appeal to remit the matter to the Federal Court for reconsideration by a judge of first instance.

However, in light of the fact that this had already been done once in the NDS file, my view is the Court of Appeal was right to conduct itsown assessment. [56] The Federal Court of Appeal did not simply fault the reviewing judge for failing to provide a detailed explanation ofevery conclusion or for failing to make his reasoning more explicit. The Federal Court of Appeal intervened because the reviewingjudge made no findings of fact in the face of conflicting evidence, and generally provided no explanation of the applicable legalprinciples or how or why they applied to the disputed documents.

The Court of Appeal did not err in doing so.

(2) What Is the Threshold for Triggering the Institutional Head’s Duty to Give a Third Party Notice of the AccessRequest and What Sort of Review of the Record Is Required in Deciding to Give Notice? [57] I briefly reviewed the notice provisions earlier. Before disclosing certain types of third party information, the headof a government institution must make every reasonable effort to give that third party written notice of the request for disclosure, exceptwhere the third party has waived the notice requirement.

Unless the third party consents to disclosure, the head must also give the thirdparty an opportunity to make representations as to why the record or part of it should not be disclosed (ss. 27(1), 27(2) and 28). [58] These appeals, strictly speaking, relate to judicial review applications of the institutional head’s decisions to releaseinformation in response to two access to information requests. It follows that the focus is on the decisions to disclose. However, theparties have made extensive submissions about how the notice provisions in ss. 27 and 28 of the Act ought to be applied.

In light of theimportance of the issues and the fact that both parties have made extensive submissions on the notice provisions, I will address them. [59] There are two main issues about this notice scheme. The first relates to the threshold for triggering the head’sobligation to give notice to the third party and the second to the nature of the head’s obligation to examine the record before decidingwhether or not notice is required. (

a) The Threshold for Notice Under Section 27(1) [60] As noted earlier, s. 27(1) of the Act specifies when the head of the government institution must make reasonableefforts to give notice to a third party. (I will simply refer to this as the notice requirement.) For convenience, the text of the provision asit read at the time of the applications is as follows: 27.

(1) Where the head of a government institution intends to disclose any record requested under this Act, or any partthereof, that contains or that the head of the institution has reason to believe might contain (

a) trade secrets of a third party, (

b) information described in paragraph 20(1)(

b) that was supplied by a third party, or (

c) information the disclosure of which the head of the institution could reasonably foresee might effect a resultdescribed in paragraph 20(1)(

c) or (

d) in respect of a third party, the head of the institution shall, subject to subsection (2), if the third party can reasonably be located, within thirty days afterthe request is received, give written notice to the third party of the request and of the fact that the head of the institution intends todisclose the record or part thereof. [61] In this case, the Health Canada head disclosed some documentation without giving notice to Merck. Merckcomplains that it should have been given notice before any disclosure was made.

In the Federal Court, the reviewing judge (afterdealing with a number of procedural arguments that are not in issue before this Court) found that this disclosure without prior noticecontravened the spirit of the legislation. Since disclosure without notice could result in irreparable harm to the third party concerned,such disclosure should not have taken place (2006 FC 1201, at para. 64). The Federal Court of Appeal disagreed. It found that s. 27(1)requires notice only if the record contains or might contain information the disclosure of which is prohibited by s. 20(1).

In the Court ofAppeal’s view, both the object of the Act as articulated in s. 2 and the contextual and grammatical analysis of s. 27(1) favour thisconclusion. [62] Before this Court, Merck argues that the Federal Court of Appeal’s decision has the effect of unduly limiting thescope of the s. 20(1) exemptions by narrowing the procedural right conferred on third parties by s. 27. Merck suggests that the test for giving notice and the test for actually applying the exemption must be different. To have procedural fairness in this legislative scheme,s. 27(1) must set a low threshold for notice to affected parties.

Merck therefore maintains that certain categories of records, because oftheir nature, should automatically trigger a right to notice. In its view, NDS and SNDS records, in light of the confidentiality andcompetitive value of the information they contain, fall within such a category where notice is required. [63] In my view, the text of the statute and the considerations identified by the reviewing judge and by Merck in itssubmissions support a fairly low threshold to trigger the obligation to give notice.

However, I do not accept Merck’s submission thatthere is any “automatic” right to notice with respect to certain categories of records. Such a right to automatic notice is not supported bythe text or purpose of the provisions or by the jurisprudence that has interpreted them. [64] Following the modern approach to statutory

interpretation, the words of a provision are to be read in their entirecontext and in their grammatical and ordinary sense, harmoniously with the scheme of the Act, the object of the Act, and the intention ofParliament: Rizzo & Rizzo Shoes Ltd. (Re), (SCC), [1998] 1 S.C.R. 27, at para. 21. The grammatical and ordinarysense of s. 27(1) makes plain that notice is required only if certain conditions are met in the particular circumstances. The

section doesnot refer to particular categories of documents but rather to particular types of information that are or may be contained in recordsotherwise subject to disclosure. The subsection sets out specific conditions precedent for engaging the notice requirement. As theFederal Court Trial Division put it in words that were endorsed by the Federal Court of Appeal: “The essential condition precedent to theissuance of the notice is that the respondent has reason to believe the disclosure of the record might be contrary to his obligation undersection 20 not to disclose records” (Twinn v.

Canada (Minister of Indian Affairs and Northern Development), (FC),[1987] 3 F.C. 368, at p. 373, aff’d (1987), 80 N.R. 263). To the same effect, MacKay J. put it this way in Air Atonabee, at p. 257: “. . .the Act does not require notice to a third party before disclosure of information relating to that party, except in the circumstances set outin [s. 27(1)]”. [65] While this precise issue has not been decided by this Court, the approach taken in Twinn and Air Atonabee isconsistent with comments on this subject by both the majority and dissenting judges in H.J. Heinz Co. of Canada Ltd. v.

Canada(Attorney General), 2006 SCC 13, [2006] 1 S.C.R. 441, at paras. 41 and 66.

[ 66 ] Merck’s submission that there is always a right to notice with respect to particular categories of records is thus not supported by the grammatical and ordinary meaning of the words of s. 27(1). [ 67 ] Neither is Merck’s position consistent with one of the Act ’s animating principles, the principle that exceptions to the right of access should be limited and specific (s. 2(1)).

The creation of classes of documents as proposed by Merck which would presumptively trigger the notice requirement and be presumptively exempt from disclosure would be inconsistent with this principle. [ 68 ] Finally, Merck’s proposed approach is not consistent with the scheme of the Act . It makes provision for giving effect to restrictions on rights of disclosure contained in other statutes.

Section 24 provides that disclosure must be refused if disclosure is restricted by any provisions set out in

Schedule II of the Act . As the respondent Health Canada points out, Parliament has decided not to establish such a regime for information of the type in issue here; nothing listed in

Schedule II restrains the disclosure of information submitted to the Minister with a view to approval of a new medication. There is no statutory indication that the records in issue here — NDS and SNDS records — are intended to be approached on a categorical basis. [ 69 ] I therefore reject Merck’s contention that the proposed disclosure of any part of an NDS or an SNDS automatically triggers the duty to give notice.

I turn next to the circumstances that do engage the notice requirement. [ 70 ] The institutional head has a general duty, subject to the other provisions of the Act , to provide access to the record requested ( s. 4(1) ). This is the duty that Health Canada purported to carry out when it disclosed some documents without giving notice to Merck of its intention to do so. There is also a duty not to disclose information falling within the s. 20(1) exemptions.

The notice provisions relate to how the institutional head carries out that duty. [ 71 ] In considering a request for disclosure of third party information under the Act , the institutional head has four main possible courses of action (aside from the exercise of discretion under s. 20(6) ), two of which engage the notice provisions. He or she may decide to (

i) disclose the requested information without notice; (ii) refuse disclosure without notice; (iii) form an intention to disclose severed material with notice; or (iv) give notice because there is reason to believe that the record requested might contain exempted material. I will review each option briefly. [ 72 ] I turn first to disclosure without notice. The practical realities as well as the text of the notice provision in s. 27(1) suggest a high threshold for disclosure without notice.

Such disclosure is only justified in clear cases, that is, where the head, reviewing all the relevant evidence before him or her, concludes that there is no reason to believe that the record might contain material referred to in s. 20(1) . The institutional head cannot repent after the fact from an ill-advised decision to disclose. Disclosure without notice and any harm that might follow are irreversible. Giving notice in all but clear cases reduces the risk of irremediable harm to the third party through inappropriate disclosure.

Moreover, the institutional head may not have enough information to make a correct judgment about whether the information is exempt; the input of the third party may be required in order for the institutional head’s decision to be properly informed. It is, therefore, both prudent and consistent with the text of the Act for the institutional head to disclose without notice only where the exemptions clearly cannot apply. [ 73 ] I turn to the second option, refusal to disclose without notice.

It is important to recognize that the institutional head has a duty both to disclose non-exempt material and to refuse to disclose exempted material. Just as the institutional head must not deny access without due consideration, he or she also must give due consideration to whether access must clearly be refused. This latter point was well put by MacKay J. in SNC-Lavalin Inc. v. Canada (Minister of Public Works) (1994), 79 F.T.R. 113 (T.D.) . He noted, at para. 47, that the institutional head’s duty under s. 20 to refuse to disclose the information described in that

section is not discharged by simply noting the possibility that the information may fall within the duty to refuse disclosure, but leaving it solely up to the third party to prove to the head’s satisfaction that it ought not to be disclosed. [ 74 ] Institutional heads must have some reason to believe that access cannot be refused without notice to the third party. They must apply their minds to the record in light of the known circumstances. They should be able to articulate a rational basis, emerging from this initial review, on which the exemptions from disclosure may not apply.

To put it simply, institutional heads must take their duty not to disclose exempt third party information as seriously as their duty to disclose information that the Act requires to be disclosed. [ 75 ] That brings us to the two situations relevant to this case in which notice must be given under s. 27(1) : first, when the head has reason to believe that the record might contain information described in s. 20(1); and, second, when the head proposes to disclose information severed from other information as required by s. 25.

An element of each of these conditions is that the head “intends to disclose [a] record” and this phrase needs careful consideration. (I put to the side the situation in which the head proposes to use the s. 20(6) public interest override.) [ 76 ] I turn first to the situation in which the head “intends to disclose any record . . . that the head of the institution has reason to believe might contain” exempted third party information. How, it may be asked, can the head “inten[d] to disclose” something that he or she has reason to believe is exempt from disclosure?

The answer, in my view, is that the phrase “intends to disclose” must be understood in the context of the scheme of the Act . There need not be an actual, present intention to disclose i

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