This article is an excerpt from the 2020 edition of The Art of Tendering: A Global Due Diligence Guide, which is available for purchase.
In its October 2014 decision in Resolve Business Outsourcing Income Fund v. The Canadian Financial Wellness Group Limited, the Nova Scotia Court of Appeal issued a confidentiality order protecting supplier information from public disclosure in litigation proceedings since the public disclosure would prejudice the incumbent supplier’s upcoming bid opportunities. The incumbent was a current service provider administering $20 billion in student loans on behalf of Canada’s federal government and most of its provincial governments to 1.7 million students across Canada.
While the motions court initially ordered the disclosure of the incumbent’s commercial information as part of the litigation proceedings, the incumbent appealed that decision, arguing that the disclosure would be prejudicial to its future bidding opportunities. The Court of Appeal agreed, finding that it was in the public interest to protect the information in question based on the Supreme Court of Canada’s Sierra Club legal test:
The motions judge said that public interest did not apply here because the RFP “has yet to be issued” (by the decision date of December 4, 2013), and “will be issued in late 2013 with the valuation of the confidential bids set for the spring of 2014”.
With respect, I don’t follow the judge’s reasoning. The motions judge acknowledged that an RFP was expected within weeks, and an evaluation of tenders within several months. If D+H/Resolve’s confidential material were made available to its competitors, the competitors could tailor their imminent tenders to that material, while D+H/Resolve would not have those competitors’ equivalent confidential information. This would contravene the Government’s Rules of Engagement and the judicially endorsed principles of fairness and equality that should govern the tender process. That the RFP had not yet issued, but was anticipated in the immediate future, has no bearing on the public’s interest in the integrity of the upcoming tender process. The risk may well peak immediately before the expected RFP, when prospective tenderers gather information to prepare their bids. The motions judge’s qualification to the legal characteristics that define the public interest, in my view, errs in principle.
The first branch of Sierra Club’s test is satisfied. There is a real and substantial risk to an important commercial interest that can be expressed in terms of a public interest in confidentiality, and there is no reasonable alternative, short of a confidentiality order, that would preserve the interest in question.
Sierra Club’s second branch asks whether the salutary effects of the confidentiality order outweigh its deleterious effects, including the right to freedom of expression and the public interest in open and accessible court proceedings.
Despite notice, no representative of the media appeared in either the Supreme Court or this Court to object. There is little discernable public appetite for access to D+H/Resolve’s operational manuals and scripts.
At the chambers hearing in the Supreme Court, counsel for D+H/Resolve said “the confidential information, which we’re seeking to protect here, would be available to the parties and to the Court, and the order wouldn’t do anything which would impair public access to any hearings related to this matter”. Similarly, D+H/Resolve’s factum to the Court of Appeal said “the Appellants did not ask that the public be restricted from any hearings, nor that the media be restricted from any reporting”. In Sierra Club, para 79, Justice Iacobucci noted that such a restricted confidentiality order “represents a fairly minimal intrusion into the open court rule, and thus would not have significant deleterious effects on this principle”.
In my view, Sierra Club’s second branch is satisfied.
The Court of Appeal therefore allowed the appeal and ordered that the confidential information be sealed from the public but be available for the unrestricted use of counsel and the court in the litigation proceedings.
As this case illustrates, the disclosure of supplier information will turn on fact-specific questions of potential prejudice that must be carefully considered before disclosure decisions are made.
