Whether the Council was justified in refusing access to records concerning Kildare Sports & Leisure Facilities Ltd (the company), which is a limited company that was established by the Council.

Review Application under the Freedom of Information Acts 1997 & 2003 (the FOI Act) to the Information Commissioner

Background
On 30 May 2011, the applicant made an FOI request for "any records held [by the Council] as shareholders of the company in relation to the breakdown of its income and expenditure figures for the years 2008 and 2009", which he subsequently clarified as records of: income broken down into various income categories; expenditure broken down into various expenditure categories; wages by department; directors' fees; individual directors' expenses; lists of creditors and debtors and amounts owing as at the end of 2009; and breakdowns of accruals and deferred income into various nominal accounts as at the end of 2009.

The Council's decision of 1 July 2011 refused the request on the basis that it did not hold the requested records. Following the applicant's internal review application of 4 July 2011, the Council's internal review decision of 22 July 2011 upheld that refusal. On 9 August 2011, the applicant sought a review by this Office of the Council's refusal of his request (the Council's refusal of an additional aspect of the request, for architectural plans, did not form part of the application concerned).

In carrying out my review, I have had regard to copies of certain records held by the Council (which were provided to this Office for the purposes of this review); to correspondence between the Council and the applicant as set out above; to details of various contacts between this Office and the Council; to details of various contacts between this Office and the applicant, particularly the letters sent to him by Ms Anne Lyons, Investigator, dated 5 December 2012 and 28 February 2013 (to which I will generally refer as "the preliminary views letters" in the remainder of this decision, as necessary) and his reply dated 6 March 2013; and the relevant provisions of the FOI Act.

Scope of the Review
The scope of this review is confined to assessing whether or not the Council was justified in refusing to grant the applicant's FOI request on the basis that it does not hold or control the records sought.

Findings
Section 6 of the FOI Act refers to the general right to "be offered access to any record held by a public body", whilst section 2(5)(a) of the Act provides that "a reference to records held by a public body includes a reference to records under the control of the body".

Although the company is not subject to the FOI Act, the applicant has argued that it cannot be a separate legal entity to the Council, given that the Council owns 100% thereof and funded the construction of the swimming pools by way of a local government grant. He has also contended that the Council controls the company and that the Council, and/or the Directors of the company that are Council staff or elected Council members, must therefore hold the records sought.

On the other hand, the Council's position is that it does not physically hold the records the subject of the request, and that it does not control the company or its records, including those the subject of the FOI request.

As explained to the applicant in the preliminary views letters, only the Minister for Finance has the power to designate entities as public bodies for the purposes of the FOI Act. Although the Council set up the company to operate swimming pools built on Council land, it is a matter of fact that the Minister for Finance has not designated the company as a body to which the FOI Act applies.

The preliminary views letters noted that, although the Council holds copies of records laid before the company's Annual General Meeting (which were required to be sent by the company to the Council, as the company's only member/shareholder, further to section 159(1) of the Companies Act 1963), these records do not contain the level of detail specified in the request. I note that the applicant did not take issue with this view, which, having examined the records concerned, I am satisfied is appropriate. Accordingly, I find that those records are outside the scope of the request and this review.

I am also satisfied, having noted the relevant Schedule to the Companies Acts, that the Council would not ordinarily be expected to hold the records the subject of the request. I also note that the applicant did not take issue with the preliminary view to this effect. Thus, I have no basis to dispute the Council's contention that it does not physically hold the requested records.

Accordingly, the only way that the requested records may be potentially releasable is if this review finds that the Council controls the records the subject of the FOI request.

As set out in the preliminary views letters, companies have separate legal personalities to those who own and/or manage them. Although the applicant contends otherwise, the company must be legally seen as a separate entity to the Council. Company case law also indicates that it is not the majority, or 100%, ownership of a company that determines if an owner controls a company, but rather the extent to which he or she takes an active role in that company's day-to-day operations. Having regard to this point in particular, I would accept that the payment of grant monies in respect of the construction of the pools, or the advertisement of the pools on the Council's websites, do not, of themselves, prove that the Council controls the company's day-to-day operations.

The preliminary views letters referred the applicant to the High Court judgement in the case of the Minister for Enterprise, Trade and Employment v the Information Commissioner [2004 No. 56 MCA], which concerned an FOI request to the Minister's Department for records held by a County Enterprise Board, regarding its evaluation of a particular grant application. The judgment found that the Department did not control the Board's evaluation of such applications, in that it was "in business on its own account subject to limited and defined reporting requirements that do not include the information requested"; that the Board, not the Department, was responsible for determining whether to grant or refuse grant applications; and that directions given by the Minister to safeguard grants given did not amount to his control of the business and administration of the Board.

I do not intend to repeat each point made in the preliminary views letters as to why the Council argues that it does not control the company. In particular, however, I note the Council's argument that, although the company's Board of Directors includes two Council staff and two Councillors, the Board is not subject to Council control nor does it report to the Council. In this regard, the Council referred to the Board's legal responsibility for the management of the company (and the requirements on Directors to disclose conflicts of interest and to abstain from decision making on any issue where such conflicts arise) which it said rendered the Board, not the Council, responsible for the company's commercial direction.

The Council has also said that the company's CEO is responsible for all operational matters in running the facilities in Athy and Naas, in which regard she is accountable to the Board of Directors. It has argued that the company's staff and CEO are not Council employees, and that some former Council staff transferred to the company under the Protection of Employees on Transfer of Undertakings Regulations, which it maintained would not have happened if the Company was not a separate legal entity.

Noting the various arguments made by the Council, along with the company's Articles of Association and relevant parts of the Companies Acts, the preliminary views letters said it appeared that the company is "in business on its own account subject to limited and defined reporting requirements [as per section 159 of the Companies Act] that do not include the information requested"; that such business is managed by the company's Directors; and that it is not necessary for the Council to make any decisions other than those which must be taken by at the company's general meeting. Accordingly, the Investigator expressed a view that the Council does not appear to control the company's day to day operations or any related records, in which event the records the subject of the request cannot be deemed to be held by the Council further to section 2(5)(a) of the FOI Act.

The preliminary views letters also outlined the view that any records that may be held by the Council staff or Councillors, for the purpose of meeting their statutory duty as company directors to keep proper accounting records, are held by them in their capacity as company directors, rather than in their capacity as Council staff or elected Council members.

In response, the applicant argued that this Office should investigate further the lack of transparency and accountability that arises from a public body's transfer to a private company of functions that would previously have been subject to FOI. However, a review such as this, which is conducted under section 34 of the FOI Act, is confined to assessing whether or not a public body's refusal of an FOI request is in accordance with the relevant provisions of the Act. It cannot examine the Council's reasons for setting up the company, nor can this Office seek to extend the remit of the FOI Act, whether by direct or indirect means, to a particular entity simply because of the circumstances of its establishment.

The applicant also reiterated that the Council must have day to day interaction with the operation of the company and that it must be able to access more than just the company's annual accounts, via those Council staff and elected members that are company Directors.

Firstly, in assessing the validity of the Council's reasons for refusing the request, this Office has no power to conduct an exhaustive investigation into how a private company, which has been set up in accordance with Company law, is operated in practice. All that can be had regard to is the argument, and evidence, placed before this Office in the course of the review.

I accept that the arguments made to date indicate that the Council does not control the company or have any role in its day-to-day operations. Furthermore, as already noted, company law requires company Directors to act in the interests of that company, and to abstain from any matters that represent a conflict of interest. Company law also requires the Council and the company to be treated as two separate entities. Accordingly, I am also satisfied that the Council has no legal entitlement to any records that came into the possession of its employees or elected members as a result of their roles as company Directors. It follows that I do not consider the applicant's contentions to be an appropriate basis for me to find that the Council controls, or has a legal entitlement to, the records the subject of the request.

Accordingly, I accept, and find, that the records sought by the applicant cannot be deemed to be held by the Council, further to section 2(5)(a) of the FOI Act, and that the Council was justified in refusing access to the requested records.

Decision
Having carried out a review under section 34(2) of the FOI Act, I hereby affirm the Council's refusal of the withheld records.

Right of Appeal
A party to a review, or any other person affected by a decision of the Information Commissioner following a review, may appeal to the High Court on a point of law arising from the decision. Such an appeal must be initiated not later than eight weeks from the date on which notice of the decision was given to the person bringing the appeal.

Stephen Rafferty
Senior Investigator
15 April 2013