Case Number: 170090

Whether the Council was justified in refusing to release records relating to payments made by a named Sports Club to DLR Sports and Leisure (the Company) in 2012 and 2013 and a related agreement between the parties, on the basis that it did not hold the records

Conducted in accordance with section 22(2) of the FOI Act by Elizabeth Dolan, Senior Investigator, who is authorised by the Information Commissioner to conduct this review

Background

On 2 January 2017, the applicant sought copies of records from the Council relating to payments made by a Sports Club to the Company in 2012 and 2013 in relation to the use of Glenalbyn Swimming Pool by Club members, as well as a copy of the written agreement between the Club and the Company in this regard. The Council stated that it did not hold the records, but that it had contacted the Company and asked whether it would assist and release the relevant records. The Council stated that the Company agreed to do so and having carried out an "extensive search of [its] archives", located three invoices from 2013 relating to relevant payments. It also stated that the Company could not locate records relating to payments in 2012 due to "technological changes" caused by the "implementation of a new financial system" and that "no record of an agreement [between the Company and the Club] exists". The Council released copies of the three invoices located by the Company to the applicant, along with a Schedule of Records indicating that it was granting access to the three records located but refusing access to further records on the basis that they did not exist (section 15(1)(a) of the FOI Act).

The applicant sought an internal review on 8 February 2017, on the basis that he believed that the records sought should exist. He suggested that records of payments could be located from alternative sources, such as bank statements, and said that he was not satisfied with the Council's explanation relating to a new financial system. Furthermore, he was of the view that the Council controlled the pool when the agreement was introduced, and would expect it to hold related records.

On 16 February 2017, the Council issued its internal review decision. It stated that it had "decided to affirm the original decision" and went on to state that it was refusing the applicant's request. The internal review stated that the applicant was seeking records which were not held by the Council, but rather by the Company, which, it maintained, was an entirely separate legal entity. The Council also stated that it should have refused the original request and should not have contacted the Company in this regard, as this did not fall within the scope of the FOI Act. The internal reviewer further noted the applicant's suggestions as to where records may be located and re-stated that all relevant records were held by the Company. She then concluded that the request should be refused on the basis of section 15(1)(a) as "the records concerned do not exist", notwithstanding the records already supplied by the Company.

The applicant made an application to this Office for a review of the Council's decision on 19 February 2017.

During this review, I note that Ms Sandra Murdiff, Investigator in this Office, contacted the Council and asked it to make a submission addressing the issue of whether the Council controlled the records held by the Company. It made a brief submission and later provided some more information in order to clarify matters. The Council also provided a copy of the Company's Memorandum and Articles of Association to this Office.

Throughout this review the Council has maintained its position that it does not control the records at issue in this case. Accordingly, I have decided to bring this review to a close by way of a formal binding decision.

In conducting this review, I have had regard to the correspondence between the Council and the applicant as set out above. I have also had regard to the communications between this Office and both the applicant and the Council.

Scope of Review

This review is solely concerned with whether the Council was justified in refusing the applicant's request on the basis that it did not control the records sought.

Preliminary Matters

In his application for review of the Council's decision, the applicant stated that he had assumed that DLR Leisure Services Limited was a public body for the purposes of the FOI Act and that it would be appropriate for its controlling entity (in his view, the Council) to meet its FOI obligations. He stated that it was inconceivable to him that a special purpose company formed by an enacted entity for the overriding purpose of operating state-owned facilities would not be a public body for FOI purposes. In essence, he was of the view that the Company fell under section 6(1)(f) of the Act (an entity that is directly or indirectly controlled by an entity established by or under any enactment) and was therefore an FOI body. However, as his request was made to the Council, I am not required to consider whether the Company is a public body under section 6(1) of the Act.

Analysis

The Council relied on section 15(1)(a) to refuse access to the records requested. This provides for a refusal of access to records on the basis that they do not exist or cannot be found after all reasonable steps to ascertain their whereabouts have been taken.

I note that Ms Murdiff's email dated 10 April 2017 invited the Council to make a submission addressing the issue of whether it controls the records held by the Company. Section 11 of the Act provides for a right of access to any record "held" by an FOI body. The FOI Act does not define "held". However, section 2(5) states that a reference to records held by an FOI body includes a reference to records under the control of that body.

In considering the matter of "control", I believe that it is necessary to have regard to the relationship between the parties, to any agreement between them concerning the records and to any legal rights which a party seeking to assert control over the records might have. It seems to me that where records are not physically held by a public body, at the very least the public body concerned must have some legal entitlement to procure the records if they are to be under its control.

Ms Murdiff informed the Council that it appeared to her that the issue of control was a preliminary matter which should be addressed before dealing with section 15(1)(a). She reminded the Council that section 22(12)(b) of the FOI Act placed the onus on the Council of satisfying the Commissioner that its decision to refuse to grant a request was justified.

Ms Murdiff then set out her understanding of the nature of the relationship between the Council and the Company, as follows:

• That while the Company is a separate legal entity, it has no share capital and no shareholders and is controlled by its Board of Directors which comprise Council staff members and Councillors
• That the Company was set up by a resolution of the elected members of the Council, and that any change to the structure required a further resolution of the elected members (Minutes of Dún Laoghaire-Rathdown County Council Meeting Monday, 11 November 2013 refers)
• That the Company was not free to make any decision it wished, and that the Council would have a say in any major decisions made

Ms Murdiff also drew the Council's attention to the decision of the High Court in Westwood Club v The Information Commissioner [2014] IEHC 375, where Cross J held that control must include the real strategic control of one entity by another and that it also related to the financial nexus between the entities involved. In this regard, she asked the Council to describe how the Company was set up, how it was funded, and what the financial arrangements were between it and the Council, including details of any loans, lease arrangements, payments or funding, etc.

In its submission on 27 April 2017, the Council reiterated its position that it did not control the records at issue. The Council remained of the view that it was justified in refusing the applicant's request on the basis that it did not hold or control the records sought. In this regard, the Council asserted that it and the Company were separate legal entities. However, it did not provide any of the information sought by Ms Murdiff in her email of 10 April 2017, nor did it expand on the relationship between the two entities or the degree of control involved. In order to progress the case, Ms Murdiff asked the Council to provide further information.

In its response on 5 July 2017, the Council once again stated that the Company is an independent company and a separate legal entity to the Council. It contended that the records at issue are physically held by the Company and that such records "do not exist in the Council's offices or premises".

In relation to how the Company was set up, the Council stated that it was established [in 2009] to take over the operation of a number of Council-owned leisure facilities, which had been previously operated and managed by a variety of boards of management/directors. It said that the Company was established to operate the centres through a licensing and operating agreement, to provide for a consistent management and operating regime across all the centres and to take over as employer of all staff. It also stated that the objective in setting up the Company was to remove all Council involvement and participation in the leisure facilities, and to have the Company operate and run the centres without any financial subvention or assistance from the Council.

In relation to Board members, the Company's Articles of Association states as follows:

• No. 4 Members of the Company other than subscribers to the Memorandum of Association may be appointed at the absolute discretion of the County Manager.
• No. 7 Any member shall cease to be a member if they cease to be employed by the Council or, where they are an ex officio member of the Company, they cease to be an elected member of the Council.
• No. 34 The Cathaoirleach of the Council shall be a director of the Company and the County Manager has the right to nominate three local government officials as ex officio directors.
• No 51 A quorum necessary for the business of the directors, unless otherwise fixed, shall be five persons, as long as they include at least one Local Government Official and one Elected Member of the Council.

In relation to the dealings of the Company, the Memorandum of Association provides that:

• No. 3(q) The Company can "borrow or raise money or discharge any debt or obligation of or binding on the Company in such manner as may be thought fit" - subject to the the prior approval of the Council
• No. 3(r) The Company can "guarantee the payment of any debts or the performance of any contract or obligation... and .. give indemnities of all kinds..." - subject to the prior approval of the Council
• No. 3(t) The Company can "sell or dispose of the undertaking or the Company's property or any part therof for such consideration as the Company may think fit". This is also subject to the consent of the Council.

Findings

I have had regard to the High Court decision in Westwood Club v Information Commissioner & anor [2014] IEHC 375 (the Westwood case) in this review. In my view the facts of this case are quite similar. In the Westwood case the records requested from a Town Council were created by a board of a company whose three directors were all employees of the Town Council in question. The Council contended that the company, of which it was a 100% shareholder, controlled the records in question. The Council had provided a loan in excess of €10 million to the company. Having regard to all of these factors, Cross J. held that the records were under the control of the Council.

I do not accept the Council's position that there are two separate legal entities involved here as being definitive on the issue of control. Indeed, Cross J in the Westwood case held that neither the fact that one company is a separate legal entity from the other nor the level of "day to day interference" is definitive. The Council has made little or no effort to respond to the Investigator's detailed queries; neither has it sought to distinguish this situation from the Westwood case. For example, it has provided me with no information as to whether the Company is in possession of its property under a lease from the Council. I am particularly conscious of where the burden of proof lies in this case.

In light of the above, I am of the view that the Council has not met the burden of proof to satisfy this Office that it does not control the records at issue. While the Council stated that the Company operates without any financial subvention or assistance from the Council, it seems to me that a body which was established by the Council and cannot dispose of assets or incur debt without the consent of the Council cannot be said to be truly independent. I note, among other relevant provisions in the Articles of Association, that the Company's members are admitted at the "absolute discretion" of the County Manager. I also note that there is provision for the nomination of three Elected Members and three Local Government Officials employed by the Council as directors of the Company. Furthermore, the Council did not address any of the issues raised by Ms Murdiff in its submission; neither did it address her observation that any changes to the Company's Memorandum and Articles of Association had to be ratified by the Council, meaning that the Company was not free to make any changes it saw fit.

In the circumstances, I find that the Council has not satisfied this Office that it has justified its refusal to grant access to the records sought on the basis that it does not hold or control the records at issue.

Accordingly, I consider that the appropriate course of action in this case is to annul the Council's decision and direct it to undertake a fresh decision-making process in respect of the applicant's request. The effect of such a finding is that the Council must consider the request afresh and make a new, first instance, decision. The applicant will have a right to an internal review and a review by this Office if he is not satisfied with the Council's new decision. In making that decision, the Council must comply with the statutory requirements of the FOI Act.

Decision

Having carried out a review under section 22(2) of the Freedom of Information Act 2014, I hereby annul the Council's decision and direct it to undergo a fresh decision making process on the records at issue.

I specify that, subject to sections 24 and 26 of the FOI Act, effect shall be given by the Council to my decision within five working days of the expiration of the 4 week period for the bringing of an appeal to the High Court from this decision as provided for at section 24(4) of the FOI Act.

Right of Appeal

Section 24 of the FOI Act sets out detailed provisions for an appeal to the High Court by a party to a review, or any other person affected by the decision. In summary, such an appeal, normally on a point of law, must be initiated not later than four weeks after notice of the decision was given to the person bringing the appeal.

Elizabeth Dolan
Senior Investigator