COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION (MR JUSTICE SULLIVAN)
London, WC2A 2LL
Friday 24 August 2001
B e f o r e :
LORD JUSTICE ROBERT WALKER
LORD JUSTICE SEDLEY
| (1) LONDON REGIONAL TRANSPORT
(2) LONDON UNDERGROUND LIMITED
|- and -
|(1) THE MAYOR OF LONDON
(2) TRANSPORT FOR LONDON
Smith Bernal Reporting Limited, 190 Fleet Street
London EC4A 2AG
Tel No: 020 7421 4040, Fax No: 020 7831 8838
Official Shorthand Writers to the Court)
Lord Lester of Herne Hill QC and Mr Thomas de la Mare (instructed by Baker & McKenzie for the respondents)
Crown Copyright ©
LORD JUSTICE ROBERT WALKER:
The Public-Private Partnership
"With most considerable regret, I write to advise you that I have concluded it will not be possible to agree a contract structure with the PPP bidders consistent with the provisions of our 4 May Memorandum Agreement.
Accordingly, I believe the only option consistent with sound public policy is to terminate the existing procurement. If this action is taken now, it need not lead to any delay in rebuilding the Underground. We can begin immediately to deliver new project specific procurements that maximise private sector involvement in the rebuilding of the Underground."
The Prime Minister's reply dated 5 July indicated that the PPP was to proceed, and within a fortnight Mr Kiley was removed from office as chairman of LRT.
The debate about 'Value for Money'
"You have asked me, as Commissioner of Transport for London (TfL), to review the London Underground's proposed PPP for the Underground railway system. I have concluded that the basic structure of the PPP is fatally flawed, that it is not an effective way to restore the London Underground to a state of good repair, and that it will not promote an improvement in the service being offered to Londoners."
Mr Kiley elaborated his criticisms in a long and detailed letter dated 27 April 2001 to Sir Malcolm Bates, then chairman of LRT. That letter was in evidence before Sullivan J and is in the public domain. The transport strategy was finally published on 10 July, shortly before Mr Kiley's removal as chairman of LRT.
"Value for money depends on a wide range of factors. Analysis of the financial implications of different options is one factor. This financial analysis typically involves three elements:
The preparation of a Public Sector Comparator. A Public Sector Comparator is a benchmark against which value for money is assessed. It is typically a cost estimate based on the assumption that assets are acquired through conventional funding and that the procurer retains significant managerial responsibility and exposure to risk;
an evaluation of bids, which produces estimated costs of the private sector option;
and a comparison between the two sets of costs."
An idea of the complexity can be obtained from the list of sixteen appendices to the Deloittes report (all but one of which were excluded from the redacted version prepared by Mr Kiley).
The confidentiality agreements and the Deloittes report
"All information and documentation pertaining to the PPP competitions, the bids and the bidders was kept in a room at LUL headquarters ("the LUL Bid Room"). The information and documents kept in the room included information which was highly confidential to the parties who had supplied the information and documents. LUL had concluded written agreements with the respective bidders recognising that such information is of a proprietary and confidential nature. The agreements obliged each party to receive and keep the relevant information in strictest confidence and precluded the parties from using the information other than for the agreed purposes of: (a) on the part of the bidders, conducting and concluding with LUL any necessary negotiation for the Infraco Service Contract; or (b) on the part of LUL, evaluating, negotiating and concluding an Infraco Service Contract with the bidder."
"(3) In discharging their functions during the transitional period it shall be the duty of –
(a) the Mayor(b) London Regional Transport, and(c) Transport for London,
to consult and co-operate with each other for any transitional purpose.
(4) The following provisions of this section have effect for the purpose of facilitating the discharge of the duty of co-operation imposed on London Regional Transport and Transport for London by subsection (3) above.
(5) London Regional Transport and Transport for London shall each provide to the other such information as may reasonably be required by that other for the purpose of discharging any of its functions during the transitional period."
'Transitional purpose' is defined in subsection (1) as including the making of PPP agreements and the transfer of functions, property and rights to TfL.
"TfL agrees that any information it receives from Mr Robert Kiley or named members of his team with access to the LUL Bid Room in accordance with the Personal Confidentiality Agreement signed by the aforementioned persons shall be subject to the terms and conditions set out in this agreement attached hereto."
The February agreement then set out three conditions:
"1. All information related to the review of bids ("Relevant Information" ) being undertaken by Robert Kiley and named individuals of his team must be held in the strictest confidence and not used for any purpose other than for the purpose of enabling TfL and the Mayor to discharge their duties pursuant to Section 298(3) of the Greater London Authority Act 1999.
2. All persons ("Relevant Persons"), who have access to the LUL Bid Room are required to sign an acknowledgement in the form attached to this agreement.
3. TfL shall, and shall procure that Relevant Persons shall, use best endeavours at all times to ensure that in using the advice provided by Robert Kiley or named individuals of his team none of the current LUL PPP competitions are undermined by revealing information relating to the competition which, if revealed to bidders, could distort the competitions."
The annexed form of individual agreement was in similar terms, together with practical details about notes, laptops, and so on.
"but for the purposes of this Agreement shall exclude all information relating to the review of the PPP bids, and the negotiations with bidders to conclude the PPP contracts."
"In order to prepare the Report Deloitte & Touche did indeed need to access LUL's "Data Room". The Data Room is the site where all information relating to the various bids as well as the PSC [Public Sector Comparators] models are kept. I believe that Deloitte & Touche signed the standard confidentiality undertaking that was prepared by LUL, as all other parties having access to the Data Room, including myself, routinely did.
Necessarily, such detailed bidding information in the Data Room is highly confidential. As is obvious were, say, one competitor in the tendering process to learn of some details of a rival bid, it could 'trim' its bid accordingly. Any such unfairnesses could taint any selection process and lead to legal action against LUL or other parties. I have at all times been acutely aware of such sensitivities and have never proposed or considered disclosing information of this kind. I have never proposed to disclose any part of the Report that did not pay heed to and preserve such genuine commercial confidences. "
"(1) Neither the 30 years nor the 7½ year comparison provides a satisfactory basis for establishing VFM.
(2) Highly material adjustments to the PSC are judgmental, volatile or statistically simplistic.
(3) Some of the statistical analysis is arbitrary and could be misinterpreted by the reader.
(4) Selection of preferred bidders too early in the process could lead to a materially adverse impact on VFM.
(5) The financial advantages of selecting [deleted – itself a code name for one of the bidders] as the [deleted] preferred bidder depends upon judgmental adjustments.
(6) Public sector bond financing has been largely dismissed."
PSC refers to Public Sector Comparators. The reference to 7½ years reflects the fact that the PPP contracts were to be open to renegotiation after that period (and again after 15 and 22½ years). I should perhaps add that it would be an understatement to say that much of the Deloittes report is not easy reading for anyone who lacks expert knowledge of statistics and probability theory, including the intriguingly named technique of Monte Carlo simulation.
THE JUDGMENT OF SULLIVAN J
"Until the decision of the House of Lords in American Cyanamid Co v Ethicon Ltd  AC 396 it was generally considered that an applicant for interlocutory relief had to show a strong prima facie case (cf Hubbard v Vosper  2 QB 84 at 96). In the American Cyanamid case the House of Lords substituted for the strong prima facie case the concept of 'a serious question to be tried' or 'a real prospect of succeeding in his claim to a permanent injunction at the trial'. That threshold test is amplified in cases in which the grant or refusal of an interim injunction would have the practical effect of putting an end to the action. In such a case the strength or otherwise of the claimant's case (in excess of the threshold of a serious question to be tried) must be brought into the balance in weighing the risk of injustice to either party by the grant or refusal of the injunction sought (see NWL Ltd v Woods  1 WLR 1294)."
"(1) This section applies if a court is considering whether to grant any relief which, if granted, might effect the exercise of the Convention right to freedom of expression …
(3) No such relief is to be granted so as to restrain publication before trial unless the court is satisfied that the applicant is likely to establish that publication should not be allowed.
(4) The court must have particular regard to the importance of the Convention right to freedom of expression …"
"I have been referred to the well-known line of cases consisting of Initial Services Ltd v Putterill  1 QB 396, Hubbard v Vosper  2 QB 84, Francome v Mirror Group Newspapers Ltd  1 WLR 892, Lion Laboratories Ltd v Evans  QB 526, Re a Company's application  Ch 477 and A-G v Guardian Newspapers Ltd (No 2)  1 AC 109. Each of them demonstrates that the public interest in disclosure may outweigh the right of the plaintiff to protect his confidences. They demonstrate that the court will also consider how much disclosure the public interest requires; the fact that some disclosure may be required does not mean that disclosure to the whole world should be permitted.
In addition the 1998 Act requires the court, as a public authority, to take into account the right of freedom of expression conferred by art 10 of the convention. That provides:
'Freedom of expression
1. Everyone has the right to freedom of expression. This right shall include freedom to hold opinions and to receive and impart information and ideas without interference by public authority and regardless of frontiers. This article shall not prevent States from requiring the licensing of broadcasting, television or cinema enterprises.
2. The exercise of these freedoms, since it carries with it duties and responsibilities, may be subject to such formalities, conditions, restrictions or penalties as are prescribed by law and are necessary in a democratic society, in the interests of national security, territorial integrity or public safety, for the prevention of disorder or crime, for the protection of health or morals, for the protection of the reputation or rights of others, for preventing the disclosure of information received in confidence, or for maintaining the authority and impartiality of the judiciary.'
The effect of that article for present purposes is that any injunction, which by definition is a restriction on the exercise of the right to freedom of expression, must be justified as being no more than is necessary in a democratic society."
" … although the basis of the law's protection of confidence is that there is a public interest that confidences should be preserved and protected by the law, nevertheless that public interest may be outweighed by some other countervailing public interest which favours disclosure. This limitation may apply, as the learned judge pointed out, to all types of confidential information. It is this limiting principle which may require a court to carry out a balancing operation, weighing the public interest in maintaining confidence against a countervailing public interest favouring disclosure.
Embraced within this limiting principle is, of course, the so called defence of iniquity. In origin, this principle was narrowly stated, on the basis that a man cannot be made "the confidant of a crime or a fraud": see Gartside v Outram (1857) 26 L.J.Ch. 113, 114, per Sir William Page Wood V-C. But it is now clear that the principle extends to matters of which disclosure is required in the public interest: see Beloff v Pressdram Ltd  1 All E.R. 241, 260, per Ungoed-Thomas J, and Lion Laboratories Ltd v Evans  QB 526, 550, per Griffiths LJ. It does not however follow that the public interest will in such cases require disclosure to the media, or to the public by the media. There are cases in which a more limited disclosure is all that is required: see Francome v Mirror Group Newspapers Ltd  1 WLR 892. A classic example of a case where limited disclosure is required is a case of alleged iniquity in the Security Service."
" … the true principle is not (as dicta in some cases suggest) that the court will permit a breach of confidence whenever it considers that disclosure would serve the public interest more than non-disclosure, but rather that no obligation of confidence exists in contract or in equity, in so far as the subject matter concerns a serious risk of public harm (including but not limited to cases of "iniquity") and the alleged obligation would prevent disclosure appropriate to prevent such harm."
"Everything depends upon the facts of the case; thus the court will not restrain the exposure of fraud, criminal conduct, iniquity; but these are only examples of situations where the conflict will be resolved against the plaintiff. I do not think that confidence can be overridden without good reason to support the contention that it is in the public interest to publish. The plaintiff will not necessarily be seeking to prevent publication of matters derogatory to himself, but nevertheless there may be circumstances that make it just not to restrain publication."
Griffiths LJ said at p.550:
"I can see no sensible reason why this defence should be limited to cases in which there has been wrongdoing on the part of the plaintiffs. I believe that the so-called iniquity rule evolved because in most cases where the facts justified a publication in breach of confidence, it was because the plaintiff had behaved so disgracefully or criminally that it was judged in the public interest that his behaviour should be exposed. No doubt it is in such circumstances that the defence will usually arise, but it is not difficult to think of instances where, although there has been no wrongdoing on the part of the plaintiff, it may be vital in the public interest to publish a part of his confidential information."
"The cases show that the duty of confidence does not depend on any contract, express or implied, between the parties. If it did, it would follow on ordinary principles that strangers to the contract would not be bound. But the duty "depends on the broad principle of equity that he who has received information in confidence shall not take unfair advantage of it". Seager v Copydex Ltd  1 WLR 923 at 931 per Lord Denning MR. "The jurisdiction is based, not so much on property or on contract, but rather on the duty to be of good faith": Fraser v Evans 1 QB 349 at 361 per Lord Denning MR."
From this Simon Brown LJ derived the test (at p.796) of whether the confidant's conscience would (or should) be troubled by disclosure of the confidence. Simon Brown LJ also recognised (at p.800)
"the importance of confining any public interest defence in this area of the law within strict limits – lest, as Gummow J put it at first instance in Smith Kline & French Laboratories (Australia) Ltd v Secretary to the Dept of Community Services and Health,  FSR 617 at 663, it becomes 'not so much a rule of law as an invitation to judicial idiosyncrasy by deciding each case on an ad hoc basis as to whether, on the facts overall, it is better to respect or to override the obligation of confidence.' "
"Upon the basis that an exceptional case has to be shown by the defendants, have they surmounted that hurdle? The answer in my judgment is emphatically "yes". The reasons are as follows:
1. It is genuinely in the public interest that this material should be made available. This is wholly unlike cases concerned, for example, with celebrity pictures in Hello. [see Douglas v Hello  2 AER 289] Undoubtedly the public would be interested in such pictures, but it could not sensibly be suggested that there is some public interest in them being revealed. One can think of many stories that are published in the newspapers in which the public are interested. But it would be difficult for a journalist to say with a straight face that there is a public interest in them being published. Whether the Government's PPP meets the VFM test is a matter of vital concern to Londoners. There can be no doubt whatsoever that it is a matter of very considerable public interest.
2. Having conducted the judicial review hearing between TfL and LRT/LUL over a number of days, I am only too well aware of the existence of the hotly fought political debate over the merits and demerits of the Government's form of PPP and the elected Mayor of London's alternative. As I indicated in my judgment yesterday, that dispute is a political, not a legal dispute. It has to be resolved not by judges, but by politicians through the democratic process. There is a wealth of authority to the effect that the democratic process, if it is to be effective, must be informed by freedom of information. It is vital that the Government and LUL are not seen to control the flow of information about the PPP process.
3. I take into account the nature of the document that is proposed to be produced. This is not some item of distasteful trivia. It is not the equivalent of paparazzi photographs. It is a serious report about a matter of very considerable public interest, prepared by a highly reputable organisation, Deloittes. I would also add that it is quite different from those cases where "moles" try to publish leaked documents. In the present case, what Deloittes have done is to peruse LUL's confidential documents, but the report is their own analysis. They are not seeking to leak LUL's documents. LUL would say that they are seeking to leak information which is contained in those documents. But in my judgment the redactions to the Deloittes report meet that objection. What remains, and what would be made public, is Deloittes analysis.
PricewaterhouseCoopers, the advisers of LUL, disagree with Deloittes. They think that the report is inaccurate and incomplete in a number of respects. They are perfectly entitled to disagree. The fact that they disagree does not mean that the report should not be made public. There is no doubt that it is a serious critique by a serious player of a matter that is of very considerable public importance. That brings me to the next point.
4. Much of the methodology of the PPP assessment process is already in the public domain. There have been discussions before the Select Committee, the National Audit Office has reported and there have been Government statements and statements from LRT/LUL and indeed the Mayor and TfL. Thus it is not as though Deloittes are revealing some matter of which otherwise people would simply not be aware. The only conceivable objection could be that these are commercial details which would be prejudicial to the bidding process. But the redactions have removed such detail as would be inimical to the bidding process.
5. Those seeking to release the information are, firstly, the democratically elected Mayor of London and secondly, a public servant, Mr Kiley, who is Commissioner of Transport for London. It is plain that they are not seeking to release this information for private gain. They are seeking to have the information released because they conceive it to be their public duty as Mayor for London and as the person who is going to inherit the running of London's underground system.
It is quite clear that the criticisms made in the report of the methods of VFM assessment have been foreshadowed in correspondence by Mr Kiley. He has set out his criticisms of the methodologies employed by London Underground. I do not suggest that those criticisms are justified. It is quite obvious that LUL say that they are wholly unjustified. That is part and parcel of the political debate and that leads me to the next point, which is linked with the identities of those who are seeking to release the information.
6. I have mentioned that this is not a case where some employee is seeking to pass confidential information to someone else for commercial gain, or where someone is trying to use confidential information to steal a march on a commercial rival. What the Defendants seek to do is to disclose matters which are of genuine public concern. To that end they have agreed to the removal of commercially sensitive material. The court should have regard to the Defendants' wholly proper motives in seeking to make the redacted version of the report available.
7. I am not concerned with the publication of the Deloittes report in its original form, with all of the figures and identities included. I am concerned with the redacted version, which I have read, where figures and identities are blanked out.
Bearing in mind all of these factors, it seems to me that this is a most exceptional case. It could not possibly be described as the normal, run-of-the-mill breach of confidence case, whether it is breach of an implied duty of confidence or an express duty of confidence contained in an agreement such as we have in the present case. In all the circumstances, it seems to me that LRT would have to put forward a very persuasive case of harm to outweigh the factors which I have mentioned as justifying publication in the public interest."
"This is not a finely balanced case as between the desirability in the public interest of upholding confidentiality agreements and the public interest in freedom of access to information. For all the reasons I have indicated, the balance comes down very firmly in favour of making this information available."
He therefore discharged the injunction, on the undertaking as to redaction, and refused permission to appeal.
The Grounds of Appeal
LORD JUSTICE SEDLEY
LORD JUSTICE ALDOUS