Whether the Defence Forces was justified under section 36(1)(b) of the FOI Act in refusing the applicant’s request for access to a record concerning a Naval Services survey report

12 June 2019

Background

On 5 October 2018, the applicant made a request for access to records relating to engineers/inspectors and serviceability reports on certain systems installed on the Irish Naval Service fleet between 2017 and 2018. The Defence Forces granted access to all but one record (a survey report) which it withheld on the basis of section 36(1)(b) (Commercial sensitivity) of the FOI Act. Following an application for an internal review, the Defence Forces affirmed its original decision. On 7 February 2019, this Office received an application for review from the applicant.

In conducting this review I have had regard to correspondence between the applicant, the Defence Forces and this Office. I have also had regard to the provisions of the FOI Act. I consider that the review should now be brought to a close by the issue of a formal, binding decision. The Defence Forces and the applicant were invited to make submissions but none was received from either party by this Office.

Preliminary Matters

The decision making process of the Defence Forces in this case fell short of the requirements of the Act. No attempt was made to give reasons or findings and there was no reference to the public interest balancing test having been carried out as required under section 36(3). Section 13 of the FOI Act provides that where a body decides to refuse a request, it must notify the requester of the reasons for the refusal, the provisions of the Act under which the request has been refused and the findings on any material issues relevant to the decision and particulars of any matter relating to the public interest taken into consideration for the purposes of the decision. Given that the Defence Forces has been subject to the provisions of FOI legislation since 1998, it ought to be fully aware of its obligations under the FOI Act. There is a wealth of training material and other resources to assist FOI bodies on the website of the Central Policy Unit (CPU) of the Department of Public Expenditure and Reform (DPER) at www.foi.ie, and on the Commissioner's website (www.oic.ie) and I find it hard to understand why decision makers do not avail of the guidance available in carrying out their statutory  functions.

Scope of Review

This review is concerned with whether the decision of the Defence Forces to refuse the applicant's request for the withheld record under section 36(1)(b) of the FOI Act was justified.

Analysis and Findings

Section 36 (commercial sensitivity)
Section 36(1) provides a mandatory exemption for commercially sensitive information. It applies to a record containing:

 (b) financial, commercial, scientific, or technical or other information the disclosure of which could reasonably be expected to result in a material financial loss or gain to the person to whom it relates or could prejudice the competitive position of that person,

Section 36(2) provides for various exceptions to section 36(1). Section 36(3) provides that Section 36(1) is subject to a public interest balancing test. I am satisfied that none of the circumstances set out at section 36(2) apply in this case.  
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 this part of section 36(1)(b) is that disclosure "could reasonably be expected to result in material loss or gain". The Commissioner takes the view that the test to be applied is not concerned with the question of probabilities or possibilities but with whether the decision maker's expectation is reasonable.

The harm test in the second part of section 36(1)(b) is that disclosure of the information "could prejudice the competitive position" of the person in the conduct of their business or profession. The standard of proof to be met here is considerably lower than the "could reasonably be expected" test in the first part of this exemption. However, the Commissioner takes the view that, in invoking "prejudice", the damage which could occur must be specified with a reasonable degree of clarity.

In the High Court case of Westwood Club v The Information Commissioner [2014] IEHC 375 (the Westwood case), Cross J. held that it is not sufficient for a party relying on section 36(1)(b) to merely restate the provisions of the section, list the documents and say that they are commercially sensitive. A party opposing release should explain why disclosure of the particular records could prejudice their financial position. As mentioned above, the standard of proof required in the second part of section 36(1)(b) is relatively low, in the sense that the test is not whether prejudice is certain to materialise but whether it could do so. 

This Office invited the Defence Forces to make submissions as to why it considers section 36(1)(b) to apply. The Investigator notified the Defence Forces of the importance of addressing the issues that he had raised including key questions as to how, as claimed, the terms of the section 36 exemption are met. A submission was not received by this Office. In its internal review decision, the Defence Forces simply said that the information in the report "involves commercially sensitive information". 

During the review the Defence Forces forwarded a letter from the company that created the report. The letter stated that the report was "considered commercial in confidence" and that it contained technical information. It said that the report was created for the internal use of the Irish Naval Service. 

As a general principle, the Commissioner takes the view that section 36 is primarily aimed at protecting the commercial interests of parties engaged in commercial activity. He has found that there is some uncertainty as to the position of FOI bodies under section 36. However, depending on the circumstances of the case, the Commissioner has accepted that 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. However, the Defence Forces has not claimed that release of the record would be likely to cause any loss or prejudice to commercial interests that it might have and it is difficult to envisage how this might arise. I take it therefore that the interests involved are those of the authors of the report i.e. the company.

Section 2 of the Act defines a service provider as “a person who, at the time the request was made, was not an FOI body but was providing a service for an FOI body under a contract for services."  While the Defence Forces did not rely on an exemption under section 35 (Information obtained in confidence) in its decision, the company did express the view that the report was for the internal use of the Naval Service. By reason of section 35(2), the confidentiality exemption generally does not apply to a record prepared by a staff member of an FOI body or a service provider "unless disclosure of the information concerned would constitute a breach of a duty of confidence that is provided for by an agreement or statute or otherwise by law and is owed to a person other than an FOI body or head or a director, or member of the staff of, an FOI body or of such a service provider". Neither the Defence Forces nor the company referred to a duty of confidence provided for under an agreement or statute or cited the section 35 exemption.

I am not satisfied that either the Defence Forces or the company have identified a harm that could reasonably be expected to result in material loss or could prejudice their competitive position or gain to any entity under section 36(1)(b). Both parties asserted only that the information was commercially sensitive. In addition, while the company said that the information in the report was "not for public consumption", neither the Defence Forces nor the company referred to any arguments in consideration of the public interest test. I further note, from the description of the records in the schedule, that the company, as a service provider to the public body, is the provider of the 49 other similarly titled reports to which the applicant was granted access in full by the Defence Forces as part of her original request. Even if I  were to find that the terms of the section 36(1)(b) exemption had been met, I would have to go on to the public interest balancing test in the circumstances where the harms envisaged to result from release of this report have not been explained. 

Adopting the reasoning set out in the Westwood case, I find that the decision to refuse access on the basis of section 36(1)(b) has not been justified. In the circumstances, there is no need for me to go on to apply the public interest balancing test at section 36(3). 

Decision

Having carried out a review under section 22(2) of the FOI Act, I find that section 36(1)(b) does not apply and I annul the Defence Force's decision on the applicant's request and I direct it to release the record concerned. 

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