Whether the Department of Education & Skills was justified in refusing to release the contract of sale concluded between the Department and Notre Dame Schools Trust Ltd (the vendor) for the purchase of lands in Churchtown, Dublin 14 on the basis of sections 36, 40 and 42 of the FOI Act

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

Background

On 24 August 2017, the applicant sought access to 'the contract/agreement made between the Department of Education ..... and the Trustees of Notre Dame School, Churchtown, Dublin for the sale of the school and any adjoining lands to the Department'.  The contract at issue was signed on 15 January 2016 between the parties for sale of the lands from which the Notre Dame des Missions Secondary School and a primary school operated. Under a separate licence agreement, the vendor was authorised to continue to operate from the premises to allow the wind-down of the secondary school. While the primary school has since closed, it is expected that the wind-down of the secondary school will be complete by June 2019. 

On 4 September, the Department refused the request under section 36(1) of the FOI Act which serves to protect to certain commercially sensitive information and negotiations. The applicant sought an internal review of that decision on 11 September. On 2 October the Department affirmed its original decision and also cited section 40, which serves to protect the financial and economic interests of the State, as an additional ground for refusing the request. On 9 October the applicant sought a review by this Office of the Department's decision.

During the course of the review, Ms Connery of this Office wrote to the vendor and invited a submission on the matter. The vendor made a submission through its solicitors. I have decided to bring this review to a close by way of a formal binding decision. In conducting the review I have had regard to the Department's correspondence with the applicant as outlined above, to the vendor's submission, and to the communications between this Office and both the applicant and the Department on the matter. I have also had regard to the contents of the record at issue.

Scope of Review

This review is solely concerned with whether the Department of Education & Skills was justified in refusing to grant access to the contract of sale under sections 36(1) and section 40(1) of the FOI Act.

Preliminary Matters

Section 22(12)(b) of the FOI Act provides that when the Commissioner reviews a decision to refuse a request, there is a presumption that the refusal is not justified unless the public body "shows to the satisfaction of the Commissioner that the decision was justified". Therefore in this case, the onus is on the Department to satisfy this Office that its decision to refuse to grant access to the record at issue was justified.

Analysis and Findings

Section 36(1)

Section 36(1)(b) provides for the refusal of a request if the record sought contains

(b) 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, or

(c) information whose disclosure could prejudice the conduct or outcome of contractual or other negotiations of the person to whom the information relates.

However, section 36(1) does not apply if the public interest would, on balance, be better served by granting rather than refusing the request (section 36(3) refers).

Section 36(1)(b)

The essence of the test in section 36(1)(b) is not the nature of the information but the nature of the harm which might be occasioned by its release. The harm test in the first part of subsection (1)(b) is that disclosure of the information could reasonably be expected to result in material financial loss or gain. The test to be applied is whether the decision maker's expectation of the identified harm arising is reasonable. The harm test in the second part of subsection (1)(b) is whether disclosure of the information "could prejudice the competitive position" of the person concerned. The standard of proof necessary to meet this test is considerably lower than the standard to meet the test of "could reasonably be expected to" in the first part of subsection 36(1)(b).

In a submission to this Office, the Department argued that the contract contains three specific pieces of commercially sensitive information that would affect the Department and the vendor, namely the acquisition price, the special conditions relating to mortgages/charges on title, and the document schedule and special conditions relating to title documents. I will address the arguments that the release of the information would affect the vendor in the first instance.

The Department argued that the release of the record would reveal sensitive financial information about the financial situation of the vendor. It also argued that the secondary school is still being operated by the Trustees and that the disclosure of financial information relating to the Trust would be inappropriate at this stage and could impact the present operation of the school to the detriment of the current pupils. While I do not dispute that the release of the record would disclose information about the financial situation of the vendor, the Department has not explained how the release of such information might give rise to the harms identified in section 36(1)(b), nor did it explain how release might impact on the operation of the school that might result in any of the harms identified in the section arising.

In its submission of 28 November 2017, the vendor stated that it has no issue whatsoever with the release of the record after the school has closed down in 2019. It argued, however, that the release of the conditions of sale at this point would have the potential to be disruptive, distressing and stressful to the students, teachers, general staff and parents. Whilst not wishing to dismiss the concerns expressed, these are not arguments to which I can have regard when considering the applicability of section 36(1)(b). The vendor has presented no argument that the release of the contract might give rise to any of the harms identified in that section.

Having examined the record at issue I cannot see any information in the contract whose release which might give rise to the harms identified in section 36(1)(b) in respect of the vendor. I note that the contract itself was signed on 15 January 2016 and follows the format of the Law Society's 2009 General Conditions of Sale, meaning that it comprises standard general conditions of sale as well as property-specific special conditions. The general conditions of sale are by their very nature generic and cannot be altered other than by special condition. Therefore a considerable part of the contract, by virtue of its non-specific nature, cannot said to be commercially sensitive.  I accept that the contract contains commercial information relating to the vendor. In particular the special conditions contain details in relation to mortgages associated with the property. However there are no details provided in relation to the amounts of these mortgages and I cannot find that the disclosure of the existence of mortgages over a property is in and of itself commercially damaging to the vendor.

Having regard to the provisions of section 22(12)(b) outlined above, I therefore find that the Department has not satisfied this Office that section 36(1)(b) applies to protect the interests of the vendor.

As outlined above, the Department also argued that section 36(1)(b) applies to protect its own interests. I must admit that it is not entirely clear to me that section 36 was intended to protect the commercial interests of FOI bodies. The exemption is one of three sections of the Act which serves to protect the interests of third parties, along with section 35 (protecting confidential information) and section 38 (protecting personal information). The Act contains a formal notification process where the FOI body is considering the release of such information relating to third parties in the public interest. In my view, there are other exemptions contained in the Act that serve to protect the related interests of FOI bodies. For example, section 40 is concerned with the protection of the financial and economic interests of the State and has been cited by the Department in this case, while section 30 is concerned with the protection of, among other things, the negotiating positions of FOI bodies.

Nevertheless, this Office has, in the past, accepted that there is uncertainty on the matter and that depending on the circumstances of the case, the FOI Act does not prohibit an FOI body, either as a decision making body or as a third party applicant to his Office, from relying on the provisions of section 36 to protect its interests.

In this case, the Department argued that the disclosure of the conditions agreed and the acquisition price could prejudice conditions to be agreed regarding the purchase of properties for other schools and that it could affect potential discussions by the Department with other privately run schools with similar financial circumstances. It seems to me that the Department's arguments are more appropriate for consideration under section 36(1)(c), which I will deal with below. It is worth noting again that the acquisition price has been agreed in this case. I see nothing in the record whose release could reasonably be expected to result in a material financial loss or gain to the Department or could prejudice the competitive position of the Department.

In its submission to this Office the Department also argued that disclosure of details associated with the title could impact on the proposed registration of the property with the Property Registration Authority. It argued that the release of such details could result in queries being raised by adjacent landowners which could delay registration, affect the final boundaries registered to the Department, and/or cause the Department to incur costs. In my view, this is not an appropriate argument for withholding the record at issue. Adjacent landowners are entitled to raise queries and if such queries result in the boundaries being affected, it will be as a result of any such claims having been proven, and not simply as a result of the release of the record at issue.

Having regard to the provisions of section 22(12)(b) outlined above, I therefore find that the Department has not satisfied this Office that section 36(1)(b) applies to protect the interests of the Department. 

Section 36(1)(c)

As outlined above, this section provides for the refusal of a request where the record sought contains information whose disclosure could prejudice the conduct or outcome of contractual or other negotiations of the person to whom the information relates. This Office takes the view that a party seeking to rely on section 36(1)(c) should be able to show that contractual or other negotiations were in train or were reasonably foreseen which might be affected by the disclosure and to explain how exactly the disclosure could prejudice the conduct or the outcome of such negotiations.   

The Department argued that as its Site Acquisition & Property Management Section is engaged in a number of negotiations to purchase lands for educational purposes in the Dublin area, the release of matters such as the purchase price or the conditions of sale could prejudice the outcome of these future negotiations. It argued that such release could drive up the price the Department has to pay on behalf of the taxpayer or prejudice the conditions to be agreed regarding the purchase of properties for other schools.

I note that the Department also stated that it would be premature to disclose the acquisition price at this stage and that, as a general policy, it does not disclose acquisition prices for at least twelve months from the previous year's acquisitions. In the current case the contract was signed almost two years ago. In light of an evolving property market, I cannot accept that the release of the price paid by the Department in January 2016 would be detrimental to current or future negotiations in relation to the purchase of further properties in the Dublin area. I am also not persuaded by the Department's argument that the release of the special conditions, which are specific to the property at issue, could prejudice the conduct or outcome of other current or future negotiations. I find, therefore, that section 36(1)(c) does not apply.

The Public Interest

Given my finding that neither part of section 36(1) applies in this case, it is not strictly necessary for me to consider the public interest balancing test in section 36(3). However, in view of the arguments put forward by the Department, I consider it appropriate to comment on the matter. The Department argued that while the public interest would be served by releasing details of the acquisition price, the public interest would be better served by refusing the request in light of the harms it identified under sections 36(1)(b) and (c) above. However, it did not state why it holds this view.

The public interest balancing test in section 36(3) expressly acknowledges the potential for harm arising from the release of a record. Therefore, the fact that release of the record might give rise to one or more of the harms identified in section 36(1) does not, of itself, provide a sufficient basis for concluding that the public interest would be better served by refusing the request. The public interest test involves a balancing exercise between the public interest served by granting the request and the public interest served by refusing it. The FOI body must consider or assess the competing interests that must be weighed in that balancing exercise and explain the basis on which it has decided where the balance of the public interest lies.

On the matter of public interest factors favouring release, it is important to note the long title to the Act which provides for a right of access "to the greatest extent possible consistent with the public interest". There is a strong public interest in the enhancement of openness, transparency and accountability in FOI bodies. These principles are recognised by section 11(3) of the Act which provides that an FOI body, in performing any function under the Act, shall have regard to -”

(a) the need to achieve greater openness in the activities of FOI bodies and to promote adherence by them to the principle of transparency in government and public affairs,

(b) the need to strengthen the accountability and improve the quality of decision-making of FOI bodies, and

(c) the need to inform scrutiny, discussion, comment and review by the public of the activities of FOI bodies and facilitate more effective participation by the public in consultations relating to the role, responsibilities and performance of FOI bodies.

This Office considers that section 11(3) of the Act is relevant to the consideration of the public interest. There is a significant public interest in openness, transparency and accountability in public bodies, particularly where the use of public funds is concerned. The release of information relating to the expenditure of public funds by FOI bodies acts as a significant aid in ensuring the effective oversight of public expenditure and bringing transparency to the principle of ensuring value for money.

In this case the amount of expenditure involved is significant. Therefore, even if I had accepted that the release of the record at issue might cause commercial harm to either the vendor or the Department, the public interest in release is particularly strong in this case. In any event, I do not accept the Department's arguments relating to the consequences of release and I am satisfied that the public interest would, on balance, be better served by the release of the record at issue.

Section 40(1)

Section 40(1)(b) provides for the refusal of a request where the body considers that premature disclosure of information contained in the record could reasonably be expected to result in undue disturbance of the ordinary course of business generally, or any particular class of business, in the State and access to the record would involve disclosure of the information that would, in all the circumstances, be premature'. 

Section 40(1)(d) provides for the refusal of a request where the body considers that release of the record could reasonably be expected to result in an warranted benefit or loss to a person or class of persons.

Section 40(2) sets out a list of the types of records to which section 40(1) may apply, including (i) "property held by, or on behalf of the State or a public body and transactions or proposed or contemplated transactions involving such property".  However, the mere fact that a record falls within one or more of the categories described in section 40(2) does not mean that the record qualifies for exemption. On or more of the provisions of section 40(1) must also apply.

This Office takes the view that section 40(1)(b) is designed to cover business in the ordinary meaning of the word (that is relating to commercial activity, trade or professions). Release of a contract of sale on a specific transaction could not, in my view, reasonably be expected to result in an undue disturbance of the ordinary course of business generally, as opposed to an individual business activity. Furthermore, the Department has not identified any particular class of business that might be affected. I find, therefore, that section 40(1)(b) does not apply.

In relation to section 40(1)(d), the Department argued that the disclosure of the record could prejudice current and future acquisitions and impact negatively on the value received on behalf of the taxpayer. I have already considered this argument in respect of section 36(1)(c) above. For the same reasons as those already outlined, I do not accept the Department's argument. I find, therefore, that the Department has not justified its decision to refuse access to the record at issue under section 40(1)(d). It is also noteworthy that section 40(1) is also subject to a public interest balancing test (section 40(3) refers).

Section 42(f)

In its submission to this Office the Department stated that it also wished to rely on section 42(f) as a ground for refusing the request. That section provides that the FOI Act does not apply to a record 'held or created by ... the Office of the Attorney General ...... other than a record relating to general administration'. The Department argued that the record at issue, as a contract of sale, is held by the Chief State Solicitor's Office (CSSO), a constituent part of the Attorney General's Office.

Section 42(f) is restricted to records held or created by the Office of the Attorney General. Where a record is held by, but was not created by, that Office, section 42(f) does not serve to protect all other copies of that record held by other bodies. Furthermore, I cannot accept that the particular record at issue, a contract of sale between the Department and the vendor, can be deemed to have been created by the Office of the Attorney General, although I fully accept that it may have been created with considerable assistance from that Office. I find that section 42(f) does not apply.

Decision

Having carried out a review under section 22(2) of the Freedom of Information Act 2014, I hereby annul the decision of the Department of Education & Skills.  I find it was not justified in refusing access to the record at issue under sections 36, 40 or 42 of the FOI Act and I direct that the record be released.

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.

Stephen Rafferty
Senior Investigator