Whether the Council was justified in refusing access to records concerning Bray Swimming Pool Sports & Leisure Centre 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 31 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". The Council's decision of 29 June 2011 refused the request on the basis that it did not hold the requested records and that it had no right of access to any records held by Council staff in their capacity as officers of the company. Following the applicant's internal review application of 1 July 2011, the Council's internal review decision of 26 July 2011 upheld that refusal. On 10 August 2011, the applicant sought a review by this Office of the Council's refusal of his request.

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 letter sent to him by Ms Anne Lyons, Investigator, dated 28 February 2013 (to which I will generally refer as "the preliminary views letter" in the remainder of this decision, as necessary) and his reply dated 6 March 2013; and the relevant provisions of the FOI Act. In considering the public interest at section 28(5)(a), I have also had regard to certain comments in the judgment of the Supreme Court issued in July 2011 in the case of The Governors and Guardians of the Hospital for the Relief of Poor Lying-In Women v The Information Commissioner(to which I will refer as "the judgment").

Scope of the Review
The scope of this review is confined to assessing whether or not the Council is in accordance with the terms of the FOI Act in refusing to grant the applicant's FOI request.

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".

The applicant has argued that the company is "directly owned, controlled and funded" by the Council and that public money "funded the company and built the facilities, which are on council land". He has also contended that, as company law requires directors to keep proper accounting records, the Council, and/or the directors it has appointed to the company, must hold the records sought.

Firstly, as explained to the applicant in the preliminary views letter, 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, 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.

In the course of the review, it transpired that the Council holds copies of records laid before the company's Annual General Meeting in 2008 and 2009, which were sent by the company to the Council (as the company's only member/shareholder), further to section 159(1) of the Companies Act 1963. The preliminary views letter noted that, although abridged versions of such documents have been lodged in the Companies Registration Office (the CRO) that are thus available to the public and outside the scope of the FOI Act, additional details are contained in the documentation sent by the company to the Council. I agree that such records were subject to the FOI Act, in that they are now "held" by the Council - a view not disputed by the Council. Thus, it is necessary to consider whether such records should be released further to the FOI Act. In this regard, it should be borne in mind that the Courts consider such release to be akin to disclosure to the world at large.

Records Held by the Town Council in its Capacity as Shareholder
Section 27(1)(b) of the FOI Act provides for the refusal of a record if it contains financial, commercial, scientific or technical or other information whose disclosure could reasonably be expected to result in a material financial loss or gain to the person to whom the information relates, or could prejudice the competitive position of that person in the conduct of his or her profession or business or otherwise in his or her occupation. As outlined in the preliminary view, the standard of proof that is required to show that information "could" prejudice the competitive position of a person in the conduct of his or her profession or business if released, is very low.

The records held by the Council are draft unabridged accounts for the company, for the years 2008 and 2009. The main difference between these documents and those submitted to the CRO is that the former contain a breakdown of the company's profit and loss account and tangible fixed assets for the years 2008 and 2009, as well as the details of employee numbers and costs for 2009. The company argues that release of these details to the world at large will enable competitors to understand how its business is run, notwithstanding that they date from 2008 and 2009.

As set out in the preliminary view letter, insight into the finances of a private company could be used by competitors to the company's detriment (especially when the company whose details are at issue would not be party to similar details concerning its competition). As I accept that such release could prejudice the company's competitive position in the conduct of its business, I accept, and find, that section 27(1)(b) applies to the details at issue.

The preliminary views letter then went on to explain that a record to which section 27(1)(b) applies may be released if the public interest in its release outweighs the public interest in withholding it (section 27(3) refers). It outlined comments made by the Supreme Court in the judgment referred to earlier, which although concerning information of an entirely different nature, are considered by the Information Commissioner to be relevant to the consideration of all public interest tests contained in the FOI Act. In short, a public interest ("a true public interest recognised by means of a well-known and established policy, adopted by the Oireachtas, or by law") must be distinguished from a private interest for the purpose of section 27(3).

The FOI Act itself recognises the public interests in ensuring the openness and accountability of public bodies as to how they conduct their business, and in ensuring that people can exercise their rights under the Freedom of Information Act. However, section 27 of the Act also recognises a public interest in safeguarding an operation's ability to carry on its business without inappropriate interference from competition, which could arise by disclosing its commercially sensitive information to the world at large.

The preliminary views letter noted that the company to which the commercially sensitive information relates is not a public body, and expressed the view that release of such information would not serve any public interest in ensuring the openness and accountability of a public body, such as the Council. Whilst there could be argued to be a public interest in ensuring that the company is being managed and operated in accordance with the laws of the State, any such public interest would appear to have already been adequately served by the CRO's publication of those accounts that the company is required to submit under the relevant provisions of the Companies Acts. The preliminary views letter suggested that, on balance, the extent to which the latter public interest may be further served by release of the details at issue does not require the release of information that could damage the company.

The applicant's response of 6 March 2013 does not appear to dispute the commercially sensitive nature of the details at issue. Instead, it appears to argue that the details at issue should be released simply because other companies at a commercial disadvantage when they are not owned by local authorities and cannot obtain grant funding. However, this would seem to me to represent a "private interest" in obtaining access to the withheld details. I do not consider that this argument, or the circumstances of the company's establishment, should be taken into account in considering the public interest in the release of the information at issue.

In so far as there is a public interest in the release of commercially sensitive information regarding a limited company that is not subject to the FOI Act, I am satisfied that this has been adequately met by the various requirements of company legislation. On the other hand, in my view, the low standard of proof that is required to be met in order for section 27(1)(b) to apply recognises the public interest in ensuring that the release of material under FOI does not impact inappropriately on commercial interests. On balance, therefore, I accept, and find, that the public interest weighs in favour of withholding the details at issue.

The Council's Control of the Company
Presumably, additional records are held by the company that may or may not be relevant to the request as framed in this particular case. Although it is not clear to me that there is any need to consider whether or not such records may be deemed to be held by the Council, in that any information therein of a commercially sensitive nature would be likely to be exempt under section 27 in any event, I will do so for completeness.

The applicant contends that the Council controls the company, and its records, and that such records are potentially releasable under the FOI Act. As set out in the preliminary views letter, 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 pool, the construction of the pool on Council land, or the advertisement of the pool on the Council's website, 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 City 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 letter as to why the Council argues that it does not control the company. However, I understand that former and current local authority staff are represented on the company's Board of Directors, whilst there are also elected Town Council members on what is referred to as the company's "Advisory Committee".

The Council argues that, although the company's Board of Directors includes two current and one former local authority staff, it does not control the Board or the company. It says that the company's CEO makes decisions on day-to-day, operational, decisions and makes recommendations to the Board on more strategic matters. Although it could be argued that the Town Council, via the local authority staff on the Board, has control over the latter variety of decisions accordingly, company law requires Directors to make decisions in the interests of the company, such that they must declare conflicts of interest and abstain from decision making where such conflicts arise. Thus, it seems to me that the relevant former and current local authority staff make such decisions in their capacity as officers of the company, rather than as local authority officials. Thus, I do not accept that the Council can be said to control those Board decisions (in which regard I also note the strategic, rather than operational, nature thereof). Furthermore, neither does it seem that the Town Manager or the Town Council's elected members have any role in approving the Board's decisions, other than deciding on matters that are required to be taken at a general meeting.

I understand that there are three elected Town Council members (along with three user representatives) on the company's "Advisory Committee", which was established to "give advice and feedback to the CEO and the Board about the running of the facility, the customer experience etc". I do not consider the provision of such advice to amount to directions with which the CEO, and the company, must comply such that the company can be said to be controlled by the Council, however.

Noting the various arguments made by the Council, the preliminary views letter said it appeared that the company is "in business on its own account", and that any records held by the company (other than those it is required to submit to the Council as per section 159 of the Companies Act) are not under the Council's control and thus cannot be deemed to be held by the Council further to section 2(5)(a) of the FOI Act.

Reiterating the requirements imposed on company directors further to companies legislation, the preliminary views letter suggested that any records held by current or former Council staff, for the purpose of meeting their statutory duty as company directors, are not under the Council's control or subject to FOI accordingly.

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.

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 current or former local authority staff 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, further records as held by the company that might be relevant to the request.

Accordingly, I accept, and find, that further records as held by the company that might be of relevance to the request 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 such records.

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

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
29 April 2013