Merck Frosst Canada Ltd. v Canada (Health)

Merck unsuccessfully appealed a Federal Court of Appeal decision relating to an Access to Information Act request. The request related to certain documents submitted by Merck to the Respondent, Health Canada, when it sought approval to market the drugs.

[2012] S.C.J. No. 3

2012 SCC 3

Supreme Court of Canada

McLachlin C.J. and Binnie, LeBel, Deschamps, Fish, Abella, Charron, Rothstein and Cromwell JJ.

February 3, 2012

In 1997 and 1999, the Appellant (“Merck”) filed “new drug submissions” for an asthma medication, Singulair (R) in order to obtain approval from the Respondent (“Health Canada”) to market the drug in Canada. These submissions contained extensive information about the drug and, once the drug was approved, portions of the information were released to the public. A third party later applied to Health Canada for more extensive disclosure of the documents relating to Singulair (R) under the Access to Information Act (the “Act”).

Section 20(1) of the Act requires a government institution to refuse access to (a) “trade secrets”, (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 matter by the third party” and (c) “information the disclosure of which reasonably be expected to result in material financial loss or gain to, or... prejudice the competitive position of, a third party”. Section 25 of the Act requires the head of a government institution to disclose the information that can be disclosed (if it can be reasonably severed from the information that should not be disclosed).

Section 27 provides a procedural protection to third parties to information requests under the Act. That section requires the head of a government institution to give notice to a third party if they intend to disclose information which may contain information described in section 20(1). The third party is then given an opportunity to make representations to the government institution.

Health Canada disclosed approximately 23 pages without notifying Merck. Health Canada identified approximately 800 other pages that it intended to disclose and notified Merck. Merck made submissions about these pages and then redactions were proposed by Health Canada. Merck was not satisfied and filed two separate requests for judicial review under section 44 of the Act. After the initial hearings in the Federal Court, the Federal Court of Appeal (“FCA”) heard both appeals together. The unanimous FCA found the reviewing judge below made several errors. Merck appealed to the Supreme Court of Canada.

The SCC had to first consider three general issues. First, did the FCA apply the wrong standard of appellate review? Second, when does an institutional head have to give notice of disclosure to the third party? Third, what is the applicable standard of proof when claiming a section 20(1) exemption? The majority of the SCC disposed with each of these general issues as noted below.

First, Merck argued the FCA erred in the standard of review it applied because the FCA re-assessed the evidence. The SCC concluded the Federal Court judge did not give any indication of the legal and factual findings that lead him to his conclusions. Therefore, the FCA was right to conduct its own assessment.

Second, the SCC considered two elements related to the notice provisions. The SCC first considered the threshold to determine when notice must be given. Merck argued the threshold should be low and argued that certain types of documents automatically triggered the notice requirement. The SCC accepted that the threshold is low but reviewed the notice requirement in the context of the Act. The SCC held that an institutional head must give notice when he or she concludes the following: he or she is not required to disclose the information without notice and he or she is not required to refuse disclosure without notice. The SCC then considered the nature of the review to be conducted by the institutional head. The SCC held the review needs to be sufficient for the head to determine whether the threshold for notice is met.

Third, Merck argued the FCA applied a higher standard of proof than the balance of probabilities because the FCA referred to a “high threshold”. The SCC held the standard of proof is the balance of probabilities when a third party is attempting to argue that an exemption applies to it. The SCC held the FCA did apply a higher standard of proof.

The majority of the SCC then analyzed the FCA’s assessment of the section 20(1) exemptions.

First, with respect to section 20(1)(a), the SCC reviewed the operational guidelines for the Act and adopted the definition of “trade secrets” in the AstraZeneca case. The SCC upheld the FCA’s decision that Merck had not discharged its burden of proof in respect of this exemption.

Second, with respect to section 20(1)(b), the SCC first noted that the words “financial, commercial, scientific or technical” need to be given their ordinary meaning. The SCC went on to note that the information may not have an inherent value. The SCC further held that information is not confidential if it is in the public domain, through that source or another source. The SCC concluded that the question of whether a document is confidential is primarily a question of fact. It is also a question of fact whether a document was supplied by a third party to a government institution. The SCC upheld the FCA’s decision that Merck had not discharged its burden of proof in respect of this exemption.

Third, with respect to section 20(1)(c), the SCC upheld the requirement that the third party demonstrate a “reasonable expectation of probable harm”. The third party only needs to prove a reasonable expectation of one of the types of harm outlined in section 20(1)(c) since the provision is disjunctive. The SCC upheld the FCA’s decision that Merck had not discharged its burden of proof in respect of this exemption.

Finally, the SCC considered Health Canada’s decision to sever and disclose portions of the documents under section 25 of the Act. The SCC upheld the FCA’s decision that Merck did not satisfy its burden of proof in respect of its arguments about severance.

In the result, the SCC dismissed the appeals with costs.

The dissenting judges of the SCC disagreed with the majority in respect of one issue; namely, the appropriateness of the FCA’s re-assessment of the evidence before the Federal Court. The dissent would have allowed the appeals and restored the judgement of the Federal Court.