ISSN 1198-6182
Office of the Information and Privacy Commissioner
Province of British Columbia
Order No. 47-1995
July 7, 1995
INQUIRY RE: A request for an internal audit report in the custody of the Ministry of Attorney General
Fourth Floor
1675 Douglas Street
Victoria, B.C. V8V 1X4
Telephone: 604-387-5629
Facsimile: 604-387-1696
Web Site: http://www.cafe.net/gvc/foi
1. Description of the review
As Information and Privacy Commissioner, I conducted a written inquiry at the Office of the Information and Privacy Commissioner (the Office) in Victoria on May 23, 1995 under section 56 of the Freedom of Information and Protection of Privacy Act (the Act). This inquiry arose from a request by Kim Pemberton (the applicant), a reporter with The Vancouver Sun, for a copy of an internal audit report concerning, a third party, Pacific Court Bailiff Execution Services Inc. (PCB). The audit report is in the custody of the Ministry of Attorney General (the Ministry). The focus of the inquiry is the fact that PCB does not want the Ministry to release certain of its information.
2. Documentation of the inquiry process
The parties were provided with a three-page statement of the facts (the Portfolio Officer's fact report), which the parties accepted as accurate for the purposes of conducting the inquiry.
3. The record in dispute and the issues under review
The context for this case is the fact that various bailiff companies provide for the execution of civil services under contract with the Court Services Branch of the Ministry. This means that they deliver summons, seize properties, and arrange for auctions of such material. Omni Auctions (Omni), another third party in this case, provided auction services to PCB.
The first review
On March 28, 1994, the applicant requested several records, including a copy of an internal audit report (the record) concerning PCB, from the Ministry of Finance and Corporate Relations. The record is dated December 24, 1993.
On April 18, 1994, the Ministry of Finance and Corporate Relations transferred the portion of the request dealing with the record to the Ministry on the grounds that it had the greater interest in the record. Since the record contained references to PCB, the Ministry gave notice to PCB as a third party under section 23 of the Act on August 12, 1994.
After consulting with PCB, the Ministry decided to disclose part of the record to the applicant and notified PCB of this decision on September 28, 1994. PCB objected to disclosure of any information relating to it and therefore on October 17, 1994 requested a review of the Ministry's proposed disclosure.
The Office reviewed the decision of the Ministry to disclose part of the record. The review period commenced on October 17, 1994 and concluded on February 2, 1995, when mediation resulted in PCB agreeing to a modified severance of the record. Byconsent of the Ministry and PCB, the ninety-day period was extended to permit completion of the mediated settlement outside the ninety-day time limit.
During the first review, the Portfolio Officer consulted Omni Auctions, and all references to Omni in the record were severed to remove any of its objections to disclosure. On February 2, 1995, the applicant received a severed version of the record, which concluded the third-party review requested by PCB.
The second review
On February 13, 1995, the applicant requested a review of the Ministry's partial disclosure of the record. In this second review, the applicant challenged the Ministry's application of section 21 of the Act (third-party business information) in respect of information relating to PCB and Omni, but did not request a review of the Ministry's application of section 14 (solicitor-client privilege), and section 22 (third-party personal information). The ninety-day period for this second review commenced on February 15, 1995 and concluded on May 16, 1995.
On April 28, 1995, the Ministry provided the two third parties with revised severances of the record. The copy provided to PCB proposed the severance of all information relating to PCB that, in the opinion of the Ministry, could be lawfully severed under section 21. The copy provided to Omni did not reveal information relating to PCB; this copy highlighted the information in the record relating to Omni. Both these copies included all parts of the record already disclosed to the applicant in the first review.
On May 3, 1995, the Office gave notice to the applicant, the Ministry, and the two third parties of a written inquiry to be held on May 16, 1995. Subsequent to this, the applicant, PCB, and Omni consented to hold the inquiry on May 23, 1995, a date beyond the end of the ninety-day investigation period. The Ministry does not take issue with the fact that the inquiry was not completed within the ninety-day period specified by section 56(6) of the Act.
The initial submission and affidavit of Michael Redmond for PCB were received and treated on an in camera basis.
The focus of this inquiry is the Ministry's application of section 21 of the Act to the record under review. The applicability of section 22 of the Act is also under review because PCB requested that the Ministry apply section 22 to its third-party information in the record.
The Act
The relevant sections of the Act are as follows:
Section 21: Disclosure harmful to business interests of a third party
21(1) The head of a public body must refuse to disclose to an applicant information
(ii) commercial, financial, labour relations, scientific or technical information of a third party,
(c) the disclosure of which could reasonably be expected to
...
21(2) The head of a public body must refuse to disclose to an applicant information that was obtained on a tax return or gathered for the purpose of determining tax liability or collecting a tax.
For the purposes of section 21, where the head of the public body has refused the applicant access to part of a record, it is up to the head to prove that the applicant has no right of access to the part (section 57(1)). However, as in the present inquiry, where the head has decided to give the applicant access to part of a record containing information that relates to a third party and that is not "personal information," it is up to the third party to prove that the applicant has no right of access to the part (section 57(3)(b)).
Section 22: Disclosure harmful to personal privacy [of third parties]
22(3) A disclosure of personal information is presumed to be an unreasonable invasion of a third party's personal privacy if
(b) the personal information was compiled and is identifiable as part of an investigation into a possible violation of law, except to the extent that disclosure is necessary to prosecute the violation or to continue the investigation,
...
(f) the personal information describes the third party's finances, income, assets, liabilities, net worth, bank balances, financial history or activities, or creditworthiness,
....
4. The Vancouver Sun's case
Kim Pemberton, a staff reporter for The Vancouver Sun, is dissatisfied with the Ministry's severances of the record in dispute under section 21 of the Act. She asks that I apply section 21 "in the most narrow way possible" and argues that this would be consistent with my previous Orders Nos. 19-1994, July 26, 1994; 22-1994, September 1, 1994; and 26-1994, October 3, 1994.
5. The Ministry of Attorney General's case
The Ministry notes that this review concerns its refusal to disclose to the applicant "a small amount of information in an audit report which the Ministry feels is the business information of Pacific Court Bailiffs ('PCB'), one of the third parties in this review." (Argument for the Ministry of Attorney General, p. 3)
The record in dispute is an audit report prepared by the Internal Audit Division of the Ministry of Attorney General on PCB. The Ministry and PCB disagree about how much information should be released under section 21 of the Act. In its first release of information, the Ministry did not provide the applicant with information that PCB and Omni did not want disclosed. Given the applicant's request for review of this decision, the Ministry, PCB, and Omni "must now each justify why certain information cannot be released to the applicant under s. 21 of the Act." (Argument for the Ministry, p. 6) The burden of proof shifts from the Ministry to the two third parties, depending on which information is at stake.
The information that the Ministry has withheld under section 21 is in two groups:
A. the revenue sharing percentages in the contract between Court Services Branch [Ministry of Attorney General] and PCB (these percentages occur in narrative form as well as in graphs and charts); and
B. the breakdown of expenses of PCB's business operations set out in graphs and charts. (Argument for the Ministry, p. 7)
In both categories of information, the Ministry argues that the information withheld meets the three-part test for non-disclosure set out in section 21 of the Act. (Argument for the Ministry, pp. 8-9)
The revenue sharing percentages are derived from PCB's successful bid to perform civil execution services for the Ministry and are "clearly commercial or financial information of PCB ...." Court Services Branch treats bidding information in a confidential manner, since "[s]ecrecy is essential to a successful bidding process." Disclosing this information "could reasonably be expected to harm PCB's competitive position or interfere significantly with PCB's negotiating position," since it would essentially disclose its profit margin as a private company, especially since tendering and renegotiation of the contract with the Ministry to provide civil execution services in the Vancouver area serviced by PCB is currently underway. (Argument for the Ministry, pp. 8-9)
The Ministry severed a breakdown of PCB's business expenses from a chart in the audit report. The Ministry argues that this is clearly financial and commercial information of PCB and Omni that they provided to Ministry of Finance and Corporate Relations auditors with verbal assurance that it would be kept confidential. Release of the severed graphs could harm the competitive position of PCB, interfere with its negotiating position in the ongoing tendering process, and give other companies who are bidding on civil execution services contracts a competitive advantage.
With respect to other information that the Ministry wishes to release to the applicant, the Ministry's argument is that it does not meet the three-part test set out in section 21:
Most of the information in dispute was not 'supplied' by PCB to the Ministry, but reflects judgments made by the Ministry about the operations of PCB. Additionally, the Ministry does not feel that disclosure of the information would harm PCB's competitive position or interfere significantly with its negotiating position. (Argument for the Ministry, p. 10)
The Ministry also submitted that section 22 was not an issue in this review, as the applicant has sought a review of the application of section 21 only. Alternatively, the Ministry argued that section 22 does not apply to the information PCB wishes to withhold, on the basis that corporations do not have privacy interests.
6. Pacific Court Bailiff Execution Service Inc.'s case
PCB wants additional information severed from the record in dispute, under both sections 21 and 22 of the Act, before it is released to the applicant.
PCB argues that an internal audit in fact was an investigation into possible violations of law, including federal tax laws, by two persons associated with both PCB and Omni, the exclusive auctioneer for PCB. This should allow the personal information about them to be withheld under section 22(3)(b) of the Act. (Submission of PCB, paragraphs 2-13)
PCB further argues that section 22(3)(f) of the Act applies to the personal information in the records in dispute about the principals of PCB and their spouses, including their finances, assets, liabilities, and past financial activities. (Submission of PCB, paragraphs 14-16)
With respect to section 21 of the Act, PCB is of the belief that more information should be withheld than the Ministry intends, because it meets the test under this section, not least because it was provided to the auditors with an expectation that it would be kept in confidence. To expect otherwise would put PCB's enterprise at risk, since its work for the Ministry comprises a significant percentage of its overall business. (Submission of PCB, paragraphs 17-19) Furthermore, the Ministry has only slightly "processed" certain information supplied by PCB that it now proposes to disclose: "It cannot be the intent of the Act that any [basic] calculation done by the public body, even if that calculation does nothing to disguise the original information, precludes the third party from protection against disclosure of that data." (Submission of PCB, paragraph 20)
Release of sensitive business information would have a particularly negative impact on PCB, since the tendering process is already underway for the next round of contracts with the Ministry.
In sum, PCB argues that disclosure of the information in dispute "will in no way contribute to making the Ministry more accountable for its actions, but it will seriously compromise the personal privacy of the principals of PCB and cause considerable harm to PCB's competitive position, particularly at this most sensitive of times during the tendering process." (Submission of PCB, paragraph 25)
7. Omni Auctions' case
The only submission received from Omni has been a simple statement of refusal to allow release of the information in the record in dispute. It submitted no substantive arguments.
8. Discussion
Although the applicant's case tends to be lost in the thicket of this inquiry, because of its focus on the concerns of PCB as a third party, I am in effect rejecting her request for a narrower application of section 21 of the Act by finding that the Ministry should not be disclosing as much information about PCB from the audit report as it had intended to do. On the other hand, the applicant is definitely receiving more information from the audit report than originally disclosed to her by the Ministry in the first review.
Section 21: Commercial or financial information
Section 21(1) sets out a three-part test for the protection of business information about third parties. In this order, I accept that the first part of the test has been met under section 21(1)(a)(ii): the information requested by the applicant is "commercial or financial information of a third party." (i.e., PCB)
Section 21: Supplied in confidence
The Ministry rejects PCB's arguments that PCB "supplied" various information in confidence to it. The Ministry states: "Many of the figures in the audit report were derived or calculated by government employees. The Ministry feels that release of these derived figures does not reveal the raw figures that PCB provided to the Ministry. There is simply no way to work back from the derived figures to identify what PCB's original numbers were." (Reply for the Ministry, paragraph 10) My detailed conclusions on this issue are indicated below in my review of the records in dispute. Generally, I do not agree with the Ministry's position.
With respect to PCB's argument that it would not have supplied the information in dispute to the Ministry had it not been promised confidentiality under section 21(1)(b), the Ministry points out that PCB is contractually obligated to supply information for audit purposes under the terms of its contract with the Ministry. (Reply for the Ministry, paragraph 11) I do not accept the Ministry's position on this point. Under whatever circumstances a public body acquires business data, disclosure of this information is still subject to the exceptions in the Act, including section 21(1)(b).
Application of section 21 to the records in dispute
The full audit report runs 21 pages, and the Ministry proposes to disclose most of it to the applicant. I note that the Ministry, of its own accord, has severed a series of paragraphs and a chart of personal information under section 22 of the Act. These mainly concern issues of tax liability and an analysis of remuneration to specific employees for various time periods. The Ministry has also used section 14 to except from disclosure specific items of legal advice that are covered by solicitor-client privilege.
The Ministry has also severed, under section 21 of the Act, various precise figures that disclose percentages, two pie charts that reveal auction proceeds and payments to two auction services, and a chart of the impact of revenue sharing percentages. I find that these severances done by the Ministry are appropriate and justifiable under section 21.
The more problematic issue concerns a list of information that PCB wants withheld from the applicant under section 21 of the Act. (See Submission of PCB, paragraph 18) I have reviewed each of these proposals in detail and the related arguments advanced by PCB and the Ministry. I will discuss each of them separately, even if my conclusions will only have direct meaning for those who have access to the full record in dispute. Sometimes the same information appears at more than one place in the report, and my findings apply to each such appearance in the record in dispute. For this purpose, I have prepared a new severance of the record in dispute to guide the Ministry with respect to what to release to the applicant.
In each instance below, my finding reflects the application of the three-part test under section 21. As needed, I discuss the most relevant part of the test in more detail below. If the specific record does not meet the full test, then the Ministry should disclose it.
a, p. 1: These comparative data were calculated by the internal auditors on the basis of data received from PCB and thus do not meet the second part of the section 21 test.
b, p. 1: These findings are those of the audit team and thus do not meet the section 21 test.
c, p. 2: This finding is directly based on the audit team's own "analysis" of PCB's data and thus does not meet the section 21 test.
d, p. 2: PCB proposes to omit two words from disclosure, which bear no relationship to the section 21 exception against disclosure. These should be disclosed.
e, p. 4: This statement describes a request with respect to financial arrangements that the owners of PCB have made to the Ministry, omitting the specific amount requested. I find that this information meets the section 21 test and should not be disclosed.
f, p. 8: The data in dispute describes the incidence of use of various auction services during a specific time period. I find that this information meets the section 21 test and should not be disclosed.
g, p. 13: This is the same information as at e, p. 4, above, and the same conclusion applies.
h, p. 13: The next two statements are based on a forecast by the audit team and thus do not meet the section 21 test.
i, p. 13: This conclusion describes how various profit margins of PCB's operations in different locations impact on the company's overall operations. Since such a conclusion can only be based on information obtained in confidence from PCB, it meets the section 21 test for non-disclosure.
j, p. 14: There are four sentences in this proposed exception, which describe a request made by PCB since the draft report was written. I find that the first and last sentences meet the section 21 test for non-disclosure, since they reveal intimate details of the company's operations. The other two sentences are relatively non-revealing about PCB and can be disclosed as not meeting the section 21 test.
k, p. 15: These describe legal fees paid by PCB over specific time periods and to whom. These meet the section 21 test for non-disclosure.
l, p. 16: These figures cover a specific amount earned by PCB in fees and what its legal costs were. These meet the section 21 test for non-disclosure.
m, p. 16: This statement is a conclusion reached by the audit team and does not meet the section 21 test.
n, p. 17: The audit team used a statement of fact that it had reached in order to draw two conclusions. None of this information meets the section 21 test, since even the percentage figure is based on calculations made by the team, not PCB.
In general, as noted above, I find that PCB has made a reasonable case for non-disclosure of a considerable amount of the information itemized above, and I find in its favour on these specific issues. In particular, I find that the disclosure of such information could reasonably be expected to harm significantly the competitive position of PCB, or interfere significantly with its negotiating position, thus satisfying the third part of the test in section 21(1)(c)(i).
Confidentiality requirements
The project manager who assisted in the preparation of the audit report at issue in this inquiry is a Chartered Accountant bound by the Rules of Conduct of the Institute of Chartered Accountants of B.C. Section 210 of these Rules sets out confidentiality requirements. Based in part on these, he "made assurances to PCB that all information provided to us would be treated confidentially." (Affidavit of Daniel S. Maxwell and Exhibit A) The relevant portion of these Rules reads as follows:
210.1 A member or student shall not disclose or use any confidential information concerning the affairs of any client, former client, employer or former employer except:
...
(c) when such information is required to be disclosed, by order of lawful authority
....
Section 22: Personal versus corporate information
PCB argued that a considerable amount of personal information in the record in dispute concerns two principals of the company and should not be disclosed under section 22(3)(b) of the Act, since to do so would be an unreasonable invasion of their privacy.
PCB submits that it would be manifestly unfair to permit information that has been applied in the Report as evidence of personal wrongdoing to be released simply because the individuals in question conducted their activities through a corporation. (Submission of PCB, paragraph 12)
I do not accept the argument of PCB on this matter. Corporations and their executives do not have privacy rights that can be asserted under the Act in the same way that individuals can. It is my finding that the information about the two principals in the record in dispute concerns their business activities and is not subject to an exception to disclosure under section 22 of the Act. (See also the Reply for the Ministry, paragraphs 5-7)
From a privacy perspective, I am of the view that corporations and businesses have no "privacy interests" under section 22 of the Act (as opposed to confidentiality interests under section 21 of the Act). An expectation of privacy is a human characteristic and value. Thus, there must be a difference in treatment between personal information about "John Smith," individual employee, and information about the "John Smith Company Ltd." If an individual carries on business as a corporation and is required to supply information about his or her business activities to the government (e.g., business taxation), the corporation runs the risk of having information about its "business activities" disclosed to the public, in the same way some information about larger corporations may be disclosed.
In its reply submission, the Ministry argued that I had no jurisdiction to accept PCB's section 22 arguments, because it had not appealed on the grounds of that section. (Reply for the Ministry, paragraphs 3, 4) While this is a moot point, given my decision in the previous paragraphs, I am of the opinion that some latitude should be allowed to third parties in particular in making claims for exceptions right up to the occurrence of a inquiry. This right to introduce new exceptions does not apply where the late addition of exceptions could prejudice another party in the review. (See Order No. 36-1995, March 31, 1995, p. 13) Thus I was prepared to entertain PCB's section 22 claims, even if I do not accept them. In this case there may have been no prejudice to the Ministry, but the applicant may be at a disadvantage since she bears the burden of proof under section 57(2). However, on balance, both parties had sufficient opportunity to respond to the third party's submissions on section 22(3)(b) and (f). The fact that the applicant chose not to make a submission on this point has no bearing due to my conclusion that section 22 does not apply in this case.
Omni Auctions
I agree with the submission of the Ministry that Omni has "submitted no argument and no evidence to support its position that information should not be disclosed to the applicant. In addition, Omni did not supply the Ministry with any of the information in dispute in this inquiry. Therefore, they do not meet the second part of the three-part test under section 21(1)(b)." (Reply for the Ministry of Attorney General, paragraphs 1, 2) Therefore, I find that the Ministry must disclose information about Omni in the record in dispute.
9. Order
Under section 58(2)(a) of the Act, I confirm the decision of the Ministry of Attorney General to give the applicant access to part of the record (which has not been withheld under any other exception), since it does not meet the three-part test set out in section 21 of the Act.
Under section 58(2)(c) of the Act, I require the Ministry to refuse access to the applicant, under section 21 of the Act, to certain information that it wished to disclose. I find that the head is required to refuse access to this information. For this purpose, I have prepared a newly-severed version of the record for disclosure to the applicant.
July 7, 1995
David H. Flaherty
Commissioner