Innovation, Science and Economic Development Canada (Re), 2022 OIC 32

Date: 2022-07-04
OIC file number: 5819-00671
Institution file number: A-2018-00684

Summary

The complainant alleged that Innovation, Science and Economic Development Canada (ISED) had improperly withheld information under paragraph 20(1)(c) (financial impact on a third party) of the Access to Information Act in response to an access request related to all investments and transfer payments approved under the Program for Strategic Industrial Projects, Strategic Aerospace and Defence Initiative, and Strategic Innovation Fund, including the Repayments to Date figures.

The scope of the complaint was narrowed to information related to twelve (12) third parties.

Several third parties and ISED provided representations in support of the exemption. However, neither the third parties nor ISED demonstrated that the information at issue met all of the requirements of the exemption.

The Information Commissioner ordered ISED to disclose all information at issue.

ISED gave notice that it would implement the order.

The complaint is well founded.

Complaint

[1]      The complainant alleged that Innovation, Science and Economic Development Canada (ISED) had improperly withheld information under paragraph 20(1)(c) (financial impact on a third party) of the Access to Information Act in response to an access request related to all investments and transfer payments approved under the Program for Strategic Industrial Projects, Strategic Aerospace and Defence Initiative, and Strategic Innovation Fund, including the Repayments to Date figures.

[2]      During the investigation, the complainant decided it was no longer necessary for the Office of the Information Commissioner (OIC) to investigate the information withheld by ISED relating to all of the third parties. The complainant decided to narrow the scope of the complaint down to 12 third parties which have a total of 16 projects relating to them. The information at issue in the complaint is the Repayments to Date figures for the 16 projects listed in Table 1.

[3]      The 12 third parties as named in the records are as follows:

1. 843818 (Alberta) Ltd
2. ASCO Aerospace Canada Ltd
3. CAE Inc (CAE)
4. Diamond D-Jet Corporation (currently Diamond Aircraft Industries Inc.)
5. Ford Motor Company of Canada Limited (Ford)
6. General Motors of Canada Limited
7. Héroux-Devtek Inc
8. Magellan Aerospace Limited (Magellan)
9. Norsat International Inc (Norsat)
10. PCI Geomatics Enterprises Inc (PCI)
11. Thales Canada Inc
12. Ultra Electronics TCS Inc

[4]      The 16 projects related to the above third parties within the responsive records are as follows:

Table 1: Information previously disclosed to the complainant

*Repayments to Date figures differ from the above assistance and expenditures and are associated with each of these projects.

Investigation

[5]      When an institution withholds information related to third parties, the third parties and/or the institution bear the burden of showing that refusing to grant access is justified.

[6]      The OIC sought representations from all 12 third parties concerning the information exempted by ISED under paragraph 20(1)(c). The information at issue is the Repayments to Date figures for 16 projects relating to the 12 third parties.

[7]      Three of the third parties, Norsat, PCI and Magellan, provided representations opposing disclosure of the Repayments to Date figures corresponding to their projects.

[8]      843818 (Alberta) Ltd, ASCO Aerospace Canada Ltd., Diamond Aircraft Industries Inc., Ford, Héroux-Devtek Inc. and Ultra Electronics TCS Inc. were asked to provide representations, but did not do so.

[9]      General Motors of Canada Limited and Thales Canada Inc. indicated to the OIC that they do not object to disclosure of the information related to their companies.

[10]    CAE provided the OIC with written consent for full disclosure of the information related to its company, but asked that ISED provide additional context to the complainant. ISED indicated that it is willing to include an explanatory note to provide additional context as requested by CAE.

[11]    One of the third parties provided representations on the applicability of the exemption in paragraph 20(1)(d). Although ISED decided to only rely on paragraph 20(1)(c) in its response to the access request, ISED was also provided with an opportunity to make representations on paragraph 20(1)(d).

Paragraph 20(1)(c): Financial impact on a third party

[12]    Paragraph 20(1)(c) requires institutions to refuse to release information that, if disclosed, could reasonably be expected to have a material financial impact on a third party (that is, a private company or individual, but not the person who made the access request) or harm its competitive position.

[13]    To claim this exemption with regard to financial impact on a third party, institutions must show the following:

• Disclosing the information could result in material financial loss or gain to the third party.
• There is a reasonable expectation that this harm could occur—that is, the expectation is well beyond a mere possibility.

[14]    To claim this exemption with regard to competitive position, institutions must show the following:

• Disclosing the information could injure the competitive position of the third party.
• There is a reasonable expectation that this prejudice could occur—that is, the expectation is well beyond a mere possibility.

[15]    When these requirements are met, and the third party to whom the information relates consents to its disclosure, institutions must then reasonably exercise their discretion to decide whether to release the information.

[16]    Institutions must also reasonably exercise their discretion to decide whether to release the information for public health or public safety reasons, or to protect the environment, when both of the following circumstances exist:

• Disclosure of the information would be in the public interest; and
• The public interest in disclosure clearly outweighs any financial impact on the third party, any prejudice to the security of the third party’s structures, networks or systems, or competitive position, or any interference with its contractual or other negotiations.

[17]    However, subsections 20(2) and 20(4) specifically prohibit institutions from using paragraph 20(1)(c) to refuse to release information that contains the results of product or environmental testing carried out by or on behalf of a government institution, unless the testing was done for a fee for an individual or an organization other than a government institution.

Does the information meet the requirements of the exemption?

[18]    For paragraph 20(1)(c) to apply, there must be a clear and direct connection between the disclosure of specific information and a risk of harm well beyond the merely possible or speculative (see Merck Frosst Canada Ltd. v. Canada (Health), 2012 SCC 3, paras. 197, 206). 

[19]    I am not convinced that any of the Repayments to Date figures at issue meet this test. The main submissions advanced by the third parties and ISED are that disclosure of these Repayments to Date figures could enable outsiders to derive sensitive information relating to the third parties, which would in turn create a risk of harm well beyond the merely possible. However, neither the third parties nor ISED demonstrated how, specifically, these derivations could be done and how such derivations would create an adequate risk of harm.

[20]    During the investigation, ISED examined the contracts with each of the third parties and determined that 11 of the 12 contracts allow ISED to disclose information of this nature. Given the lack of compelling representations from the third parties, ISED has indicated it is now willing to disclose the information relating to 11 of the 12 third parties. Consequently, ISED did not provide any representations supporting the application of paragraph 20(1)(c) to the information related to any of the third parties other than the one whose contract does not contain the clause allowing for disclosure.

[21]    As a result, I am not convinced that the paragraph 20(1)(c) exemption applies to the information relating to the third parties who either did not make representations to my office or provided representations explaining that they do not oppose disclosure of their information, and whose information ISED is willing to disclose. Neither the third parties nor ISED met their burden of establishing the applicability of the paragraph 20(1)(c) exemption to this information.

[22]    Below, I consider the information relating to the three third parties that did make representations to my office opposing disclosure. The three third parties that provided representations in support of ISED’s application of paragraph 20(1)(c) are Magellan, Norsat and PCI.

[23]    Further below, I consider ISED’s representations with regard to the one third party whose information it maintains should be withheld. Notably, this third party did not respond to the OIC’s request for representations or notice of my intention to order disclosure of the information related to it. I am not convinced that the paragraph 20(1)(c) exemption applies to the information relating to these remaining four third parties, because neither those third parties nor ISED met their burden of demonstrating the applicability of the paragraph 20(1)(c) exemption to this information. 

[24]    Upon receiving notice of my intention to order disclosure of the information related to it, Magellan provided representations alleging that the information related to it should be withheld pursuant to paragraphs 20(1)(a), (b), (c) and (d). Magellan did not provide any specific representations and instead, made general assertions. While Magellan raised the exemptions in paragraphs 20(1)(a), (b) and (d), Magellan merely identified them with zero additional rationale; in the circumstances, an examination of these three exemptions in relation to Magellan’s information is not warranted since its burden of establishing their applicability has clearly not been met.

[25]    Norsat claimed that disclosure of the Repayments to Date figures could reasonably be expected to have a material financial impact and could harm its competitive position. Norsat did not provide any representations as to how allegedly sensitive information could be derived from the Repayments to Date figures for its two projects and therefore did not establish a clear and direct connection between disclosure of the information at issue and a risk of harm well beyond the merely possible. Norsat’s representations rest on unsubstantiated assumptions.

[26]    PCI claimed that disclosure of the Repayments to Date figures could reasonably be expected to prejudice PCI financially and competitively. PCI’s representations do not address how disclosure of the Repayments to Date figure alone, without assuming knowledge of the terms of PCI’s contribution agreement, could reasonably be expected to result in the alleged prejudices from competitors. Although some parties may have knowledge of the agreement terms, such parties would appear likely to know PCI’s repayment status – the information at issue. As such, I am not convinced that disclosure through this access request could reasonably be expected to result in the types of prejudice raised by PCI.

[27]    With respect to the information related to one third party, ISED submits that the paragraph 20(1)(c) exemption should be maintained. ISED submits that the repayment information derives from sensitive information. ISED claimed that, because many ATIP requests are made for this type of information, competitors would be able to piece together enough information to deduce the third party’s success or failure on this project. ISED also claimed that competitors could understand the value of the investments made by the third party, and additional commercially sensitive information.

[28]    I am not convinced that ISED has demonstrated a clear and direct connection between disclosure of the specific information at issue relating to this third party and a risk of harm well beyond the merely possible has been shown.

[29]    I note that ISED has not explained why the disclosure of one third party’s information could reasonably be expected to result in prejudice whereas the disclosure of the information from the other eleven third parties could not be reasonably expected to result in the same prejudice.

[30]    ISED’s representations do not address the fact that it is unclear whether the terms of the contribution agreement in question would be known to the public, including the basis for repayments, the timing of repayments, and the amount of repayments. The actual figure under Repayments to Date as of 2018 does not necessarily reflect negatively on a third party, depending on the terms of the agreement. This casts doubt on the argument that there is a reasonable expectation of competitors using this information to create an adequate risk of harm to the third party.

[31]    ISED encouraged my office to complete the consultation process with this third party, in order to have its representations on the information at issue. Despite the third party having had two opportunities to make representations (in response to a letter pursuant to paragraph 35(2)(c), and a notice pursuant to section 36.3), it did not provide my office with representations.

[32]    To conclude my analysis of the applicability of the paragraph 20(1)(c) exemption, I note that where the Repayments to Date figures in the record at issue as of 2018 might be low, that would not necessarily reflect negatively on the relevant third parties. It cannot be assumed that the terms of the relevant contribution agreements governing repayments are known, and in any event, the projects in question are long-term projects for which repayments may not have become due by 2018. These variables cast doubt on the required clear and direct connection between disclosure of the information at issue and a risk of harm well beyond the merely possible.

[33]    In light of all of the above, I come to the conclusion that the Repayments to Date figures do not meet the test for exemption pursuant to paragraph 20(1)(c).

Paragraph 20(1)(d): Negotiations by a third party

[34]    Paragraph 20(1)(d) requires institutions to refuse to release information that, if disclosed, could reasonably be expected to interfere with the contractual or other negotiations of a third party (that is, a private company or individual, but not the person who made the access request).

[35]    To claim this exemption, institutions must show the following:

• A third party is or will be conducting contractual or other negotiations.
• Disclosing the information could interfere with those negotiations.
• There is a reasonable expectation that this harm could occur—that is, the expectation is well beyond a mere possibility.

[36]    When these requirements are met, and the third party to whom the information relates consents to its disclosure, institutions must then reasonably exercise their discretion to decide whether to release the information.

[37]    Institutions must also reasonably exercise their discretion to decide whether to release the information for public health or public safety reasons, or to protect the environment, when both of the following circumstances exist:

• Disclosure of the information would be in the public interest; and
• The public interest in disclosure clearly outweighs any financial impact on the third party, any prejudice to the security of the third party’s structures, networks or systems, or competitive position, or any interference with its contractual or other negotiations.

[38]    However, subsections 20(2) and 20(4) specifically prohibit institutions from using paragraph 20(1)(d) to refuse to release information that contains the results of product or environmental testing carried out by or on behalf of a government institution, unless the testing was done for a fee for an individual or an organization other than a government institution.

Does the information meet the requirements of the exemption?

[39]    One of the third parties provided representations on paragraph 20(1)(d). However, ISED has indicated that, in its view, there is insufficient evidence to demonstrate a clear and direct connection between disclosure of the information at issue and interference with specific negotiations.

[40]    Interference, in the context of paragraph 20(1)(d), has been interpreted in the Courts as meaning “obstruction” – as indicated by the corresponding word for interference in the French version, “entraver”. (see Blood Band v. Canada (Minister of Indian Affairs and Northern Development), 2003 FC 1397, para. 49; Canada (Information Commissioner) v. Canada (Minister of External Affairs), [1990] 3 F.C. 665 (F.C.T.D.), paras. 24-25). I am not convinced that this requirement for the paragraph 20(1)(d) exemption, of a risk of harm well beyond the merely possible obstruction of the third party’s negotiations resulting from disclosure of its Repayments to Date figure, is met.

[41]    I come to the conclusion that the Repayments to Date figures do not meet the test for exemption pursuant to paragraph 20(1)(d), as insufficient representations have been provided to meet the test for exemption.

Result

[42]    The complaint is well founded.

While I have found this complaint to be well founded, it is worth mentioning that the relevant contracts for 11 out of the 12 third parties allowed ISED to disclose repayment information from time to time. Based on the decision of the Federal Court of Appeal in Canada (Office of the Information Commissioner) v. Calian Ltd., 2017 FCA 135, at paras. 72-80, it is my view that this could be considered a third party’s consent to disclosure of the Repayments to Date information within the meaning of subsection 20(5). Accordingly, had I found that the section 20 exemption applies to the information at issue, ISED would still have the discretion to disclose those third parties’ repayment information under subsection 20(5).

Order

Under subsection 36.1(1) of the Act, I order the Minister of Innovation, Science and Industry to:

1. Disclose all Repayments to Date figures within the record for the 16 projects relating to the 12 third parties listed within the narrowed scope of the complaint, appearing within the record under the following Applicant Legal Names:

• 843818 (Alberta) Ltd
• ASCO Aerospace Canada Ltd.
• CAE Inc.
• Diamond D-Jet Corporation (DDJ)
• Ford Motor Company of Canada Limited
• General Motors of Canada Limited
• Héroux-Devtek Inc.
• Magellan Aerospace Limited
• Norsat International Inc.
• PCI Geomatics Enterprises Inc.
• Thales Canada Inc.
• Ultra Electronics TCS Inc.

2. Disclose this information within 10 days after the day on which the order takes effect under paragraph 36.1(4)(b).

On May 4, 2022, I issued my initial report to the Minister of Innovation, Science and Industry setting out my order.

On June 3, 2022, the Corporate Secretary gave me notice that ISED would be implementing my order.

I have provided a copy of this report to CAE Inc., General Motors of Canada Limited, Magellan Aerospace Limited, Norsat International Inc., PCI Geomatics Enterprises Inc. and Thales Canada Inc.

Section 41 of the Act provides a right to any person who receives this report to apply to the Federal Court for a review. Complainants and institutions must apply for this review within 35 business days after the date of this report. When they do not, third parties may apply for a review within the next 10 business days. The person who applies for a review must serve a copy of the application for review to the relevant parties, as per section 43. If no one applies for a review by these deadlines, this order takes effect on the 46th business day after the date of this report.