Secrets laying in an accessible place for 7 years... reasonable expectation is someone looked at them.
But somebody incidentally seeing them, and maybe, maybe not recognising they were passwords is not a breach. Somebody intentionally misusing them would be, and I haven’t seen anything to suggest there’s a reasonable expectation that that occurred.
A reasonable expectation is also not the standard of proof I’d generally like to see from a government attempting to enforce a penalty.
There is no evidence any unauthorised party gained access to any private data as a result of this incident. There is no evidence that any authorised party misused data as a result of this incident. A “breach” that involves no unauthorised access, and no misuse is not a breach.
A control failure occurred, and it was remedied in the most appropriate way possible.