Whether the Department was justified in its decision to refuse access to records relating to the Local Infrastructure Housing Activation Fund (LIHAF), on the ground that they are exempt under section 36 of the FOI Act 

13 November 2018 

Background

On 16 January 2018, the applicant made an FOI request to the Department for "copies of the agreements between developers benefitting under the LIHAF fund and their respective local authorities, which include details of the 'affordability dividend' and the agreements around sales prices for the units that will be built on sites benefitting from the fund". On 9 February 2018, the Department refused access to the records on the ground that they were exempt under section 36 (commercial sensitivity) of the FOI Act. On 4 March 2018, the applicant applied for an internal review of the decision. The Department issued an internal review decision on 29 March 2018, in which affirmed its original decision. On 31 March 2018, the applicant applied to this Office for a review of the Department's decision. 

In conducting my review, I have had regard to the correspondence between the applicant and the Department as outlined above and to the correspondence between this Office and both parties, as well as the content of the records that were provided to this Office by the Department for the purposes of this review. During the review, third parties whose interests might be affected were invited to make submissions and I have also had regard to those submissions received.

Scope of this Review

The Department scheduled 39 records. During the review process, the Department confirmed to this Office that the developers concerned in three records were no longer proceeding with the LIHAF project either because they had decided not to develop the site at this time or the site was sold to another landowner/developer. As those records fell within the scope of the FOI request, I will deal with them in my review. The question for me is whether the records are exempt under section 36 of the FOI Act. 

Preliminary Matters

Before considering the exemptions claimed, I wish to make the following points. First, section 22(12)(b) of the FOI Act provides that when I review 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 me that its decision is justified. 

Secondly, my jurisdiction under section 22 of the FOI Act is to make a new decision, in light of the facts and circumstances as they apply on the date of the review. The Courts have endorsed this approach. 

Thirdly, with certain limited exceptions, the FOI Act does not provide for the limiting of access to records to particular individuals only. When a record is released under the FOI Act, it effectively amounts to disclosure to "the world at large". The FOI Act places no restrictions on the type or extent of disclosure or the subsequent use to which the record may be put. 

Fourthly, while I am required to give reasons for my decision under section 22(10) of the FOI Act, I am also required to take reasonable precautions to prevent disclosure of information in an exempt record, under section 25. This means that the extent to which I can describe the records and the level of detail I can discuss in my analysis are limited. 

Finally, section 18 of the FOI Act provides that if it is practicable, records may be granted in part, by excluding the exempt material. Section 18 shall not apply if the copy of the record provided would be misleading. This Office takes the view that the provisions of section 18 do not envisage or require the extracting of particular sentences or occasional paragraphs from records for the purpose of granting access to those particular sentences or paragraphs. Generally speaking, therefore, this Office is not in favour of the cutting or "dissecting" of records to such an extent. Being "practicable" necessarily means taking a reasonable and proportionate approach in determining whether to grant access to parts of records.

Analysis and Findings

Section 36(1) - Commercial Sensitivity

Having regard to the parties' submissions, I consider it appropriate to consider section 36(1)(c) of the FOI Act first. Section 36(1)(c) provides that an FOI body shall refuse to grant an FOI request if the record concerned contains 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). 

The standard of proof required to meet section 36(1)(c) is relatively low in the sense that the test is not whether prejudice or harm is certain to materialise but whether it might do so. Having said that, the Commissioner expects that a person seeking to rely on section 36(1)(c) would be able to show that contractual or other negotiations were in train or were reasonably foreseen which might be affected by the disclosure and explain how exactly the disclosure could prejudice the conduct or the outcome of such negotiations. Where an FOI body is relying on this exemption for the refusal of a record, it must go on to consider the public interest and whether section 36(3) applies in relation to the record concerned.

Submissions

The Department

The Department gave the following background to its submissions: the LIHAF aims to provide infrastructure such as roads, bridges and parks, which will in turn open up key development sites in areas of high demand for housing. The value of the fund is €200 million, of which the Exchequer provides €150 million and local authorities provide €50 million. Local authorities are required to negotiate agreements with developers and landowners of the relevant development sites to ensure that housing is delivered. The content of the local agreements differs according to each project. 

The Department submits that releasing the records could undermine the ongoing negotiations between local authorities, developers and landowners regarding the continued development of the related LIHAF sites. It says that releasing the records could damage the competitive position of landowners or developers with regard to future market prices of housing and could provide a commercial advantage to other developers. It also says that releasing the information could harm the ability of local authorities to re-negotiate agreements where developers withdraw from the agreements. In relation to the public interest, it says that a substantial amount of information about LIHAF is available on the Rebuilding Ireland website.

The Third Parties

The records consist of letters and various other documents titled as undertakings, memoranda of understanding, agreements subject to contract and agreements. During the review process, the Investigator consulted the parties to these documents: local authorities, landowners, receivers and developers. She received 28 submissions in response, which objected to release (except one, which I address below under section 36(2)). For the purposes of this decision, I will outline the main arguments. 

The third parties say that negotiations between the various parties remain ongoing. They say that the agreements are not concluded and are subject to change. They say that they do not reflect the final costs and other terms. They say that in circumstances where different agreements are being reached between the various local authorities and landowners or developers, disclosing the records when all agreements have not been finalised could jeopardise the conclusion of the agreements. They also say that there are ongoing negotiations between landowners and developers regarding the development of the sites, as well as negotiations between landowners (or receivers) and purchasers regarding the sale of the sites. The third parties submit that releasing their commercial positions at this point could put them at a competitive disadvantage and prejudice their ability to negotiate commercially. They submit that releasing the information could prejudice the conduct and outcome of negotiations. They say that there is a public interest in concluding negotiations in confidence. 

The Applicant

The applicant says it is unclear how publishing the records would prejudice the competitive position of developers and that there is a significant public interest in releasing the details to allow for transparency about the use of public funds. She says that the following points undermine the claim of commercial sensitivity: the Department has published certain information about the agreements on its website and the parties say that the agreements do not reflect the final terms. The applicant submits that the information in the agreements would not be new to those involved in negotiations, as the sites with LIHAF funding are known and purchasers or developers would request information about the agreements. She says that developers publish their development plans when applying for planning permission and there is no argument that planning applications should be secret. The applicant says that in 2017 her FOI request for LIHAF applications was granted with limited redactions. She says that if a developer has signed a legal agreement with a local authority to sell homes at certain prices, nothing will change the price at which it is sold.

Analysis & Finding

I note that negotiations are ongoing around the agreements themselves, between the local authorities and the landowners/developers. I also note that negotiations are in train between individual landowners or receivers and prospective purchasers or developers around the sale or development of the sites concerned and accept that it is reasonable to foresee future such negotiations. Finally, I accept that it is reasonable to foresee future negotiations for the local authorities where landowners/developers withdraw from the LIHAF project, as some already have. 

The records disclose detailed information such as: development costs; payment terms; worked examples of affordability; pricing; financial arrangements between the parties, and schedules of delivery. I accept that releasing these and other commercial details to the world at large could provide insights to others which could prejudice the competitiveness of the parties in the various negotiations. Therefore, the conduct and outcome of such negotiations could be prejudiced as far as those parties are concerned. I consider that releasing the records at this time could prejudice both the conduct and outcome of contractual or other negotiations of the person to whom the information relates. I find that section 36(1)(c) applies to the withheld information. This finding includes the three records where developers are not proceeding, as I consider that disclosing the material in these records could result in the harm which I have identified; e.g. in relation to current negotiations by other local authorities and future negotiations with new landowners/developers.

In support of her argument, the applicant cites Case 98078 (Sunday Tribune and the Department of Health and Children, atwww.oic.ie). I accept that information being in the public domain can be a relevant factor. However, having compared the detail in the records with the publicly available information, I do not consider that the possibility of prejudice identified above is negated in the circumstances of this case. The applicant also submits that the claim that the agreements are not final undermines the argument of commercial sensitivity. On the contrary, I believe that this fact supports, rather than undermines, the argument of commercial sensitivity, in circumstances where negotiations are ongoing and agreements can be subject to change or indeed abandoned altogether. Finally, the applicant says that purchasers or developers would seek information about the agreements. This may be true, but I cannot infer from that possibility that the full records would be made available to them. Neither can I equate the possible supply of certain information on a limited basis with release of all the detail to "the world at large". As noted, the third parties object to disclosure.

Section 36(2)

Section 36(2) provides for the release of information to which section 36(1) is found to apply in certain circumstances.  I am satisfied that none of the circumstances identified at section 36(2) arises in this case. 

One of the parties to one of the 39 records stated that it did not object to the release of that record under FOI. I must therefore consider whether section 36(2)(a) of the FOI Act applies to that particular record. Section 36(2)(a) provides that an FOI body shall grant an FOI request to which subsection (1) relates if the person to whom the record relates consents, in writing or in such form as may be determined, to access being granted to the requester concerned. The other party to the record concerned did not make any submissions to this Office on the matter and therefore cannot be taken as having consented in writing to its release. I consider that there are two persons to whom this record relates. As both of them have not consented in writing to its release, I find that section 36(2)(a) of the FOI Act does not apply to the record concerned. 

Section 36(3)

Section 36(3) of the FOI Act requires me to consider whether, on balance, the public interest would be better served by granting than by refusing the request. 

On the one hand, section 36(1) itself reflects the public interest in protecting commercially sensitive information. On the other hand, the FOI Act recognises, both in its long title and in its individual provisions, that there is a significant public interest in government being open and accountable. Section 11(3) of the FOI Act provides that public bodies shall, in performing any function under the FOI Act, have regard to a number of matters, including the need to achieve greater openness in their activities and to promote adherence by them to the principles of transparency in government and public affairs. 

I take the approach that in attempting to strike the balance between openness on the one hand and the need to protect commercially sensitive information on the other, it is legitimate to consider two things: the positive public interest which is served by disclosure; and the harm that might be caused by disclosure.

In relation to the positive public interest in disclosure, I recognise that there is a public interest in transparency and accountability around the expenditure of public funds. In this respect, I agree with the principles of transparency identified by the applicant in her submissions. In relation to the harm which might be caused by disclosure, I have already identified the potential prejudice above. 

In deciding where the public interest lies, I consider it particularly relevant that at this time, there are various negotiations ongoing, which have not concluded. In my view, the potential harm to such negotiations outweighs the positive public interest in release at this time. Furthermore, the Department has published certain information about LIHAF on its website, including the number of housing units to be provided, the amount of funding under LIHAF and the cost reductions to be achieved. As the applicant has pointed out, the locations of sites have also been published. Furthermore, the schedule supplied to the applicant by the Department names the parties in the various records. I consider that this disclosure goes some way towards meeting the public interest in transparency around the information sought. 

The applicant says she was previously granted access to redacted LIHAF applications. Yet I must decide this review in the context of the particular records before me (which are not LIHAF applications). Furthermore, I do not believe that the fact that planning applications are published means there is a public interest in releasing the records under review. Finally, I acknowledge the argument that if a legal agreement is made to sell property at a certain price, releasing that agreement under FOI will not change that. However, the main issue arising in this case is that various negotiations are ongoing and agreements have not been concluded.

I considered whether it would be practicable to release the records with redactions, in accordance with section 18 of the FOI Act. I concluded that this would be misleading given the level of detail in the various records as described.

In the circumstances and on balance, I consider that the public interest would not be better served at this time by granting access to the records. I find that the Department is justified in refusing access to the records, under section 36(1)(c) of the FOI Act. 

I have found that the records are exempt under section 36(1)(c) of the FOI Act. I therefore do not need to consider arguments raised under sections 36(1)(b), 29, 30 or 35 of the FOI Act.

Decision

Having carried out a review under section 22(2) of the FOI Act, I affirm the Department's decision, under section 36(1)(c) 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