Upper Tribunal (Administrative Appeals Chamber)

DECISION BY THE UPPER TRIBUNAL

(ADMINISTRATIVE APPEALS CHAMBER)

 

The DECISION of the Upper Tribunal is to dismiss the appeal.

 

The decision of the First-tier Tribunal (General Regulatory Chamber) (Information Rights) dated 28 February 2011, following the review on 10 February 2011 under file reference EA/2010/0142, does not involve an error on a point of law.  The appeal is therefore dismissed.

 

This decision is given under section 11 of the Tribunals, Courts and Enforcement Act 2007.

 

 

REASONS

 

The parties

1. The Appellant in this appeal before the Upper Tribunal is UK Coal Mining Ltd. (“UK Coal”).  The First, Second and Third Respondents are respectively the Information Commissioner (“the Commissioner”), Nottinghamshire County Council (“the Council”) and Veolia ES Nottinghamshire Ltd. (“Veolia”).  The parties’ various roles in the proceedings before the First-tier Tribunal (FTT) were different.  To avoid confusion, I therefore refer to each party in this decision by the relevant abbreviation as indicated above.

 

The context of this appeal

2. The context of this appeal can be stated fairly shortly, not least as the underlying circumstances have given rise to other litigation, albeit under a different statutory regime and in respect of another aspect of the same overall contractual arrangements: see Veolia ES Nottinghamshire Ltd v Nottinghamshire County Council & Others [2010] EWCA Civ 1214.

 

3. In summary, UK Coal owns a former colliery site in Nottinghamshire.  UK Coal and the Council entered into a complex PFI agreement for an option to lease the site, comprising Contract A and Contract B.  Veolia would then sub-lease the site from the Council to operate a waste management facility and an Energy Recovery Facility (an ERF or, in plain English, an incinerator).

 

4. Unsurprisingly, this proposal generated considerable local interest (and opposition).  Mr Dowen, on behalf of People Against Incineration (“PAIN”), asked the Council for copies of the PFI contracts, citing the Environmental Information Regulations 2004 (SI 2004/3391) (EIR) and the Freedom of Information Act 2000 (FOIA).  The Council declined to disclose the contracts in full and Mr Dowen complained to the Commissioner.

 

5. By the time that the Commissioner issued his Decision Notice (FER0206320, dated 30 June 2010), the disputed information comprised various documents (including a head lease, an under lease and a license to sub-let) contained in Schedule 8 to Contract B. The Commissioner concluded that the disputed information engaged regulation 12(5)(e) of the EIR (confidentiality of commercial or industrial information) but that the public interest in maintaining that exception did not outweigh the public interest in disclosure.  He accordingly ordered that the disputed information in Schedule 8 to Contract B be disclosed.

 

The proceedings before the First-tier Tribunal

The appeal and the initial decision

6. The Council appealed the Commissioner’s Decision Notice to the FTT.  In reality, however, UK Coal was for all intents and purposes the appellant in those proceedings.  The Council and Veolia played no active part.  Neither Mr Dowen nor PAIN was made a party to the appeal before the FTT.

 

7. The FTT considered the appeal on the papers – involving detailed submissions, principally from UK Coal and the Commissioner – on 24 November 2010 and issued its (initial) decision on 29 December 2010, allowing (what was nominally) the Council’s appeal in part.

 

8. In outline, the FTT concluded that some of the disputed information, which it described as “core financial information”, when properly analysed fell within the FOIA regime rather than under the EIR.  The FTT considered the applicability of section 43 of FOIA (commercial information) to that information.  Insofar as that data constituted what it described as “confidential financial data”, the FTT held that the balance of the public interest favoured the maintenance of the exemption (and conversely that section 43 did not relate to the entirety of the contracts).  However, the FTT did not specifically identify which parts of the disputed information fell within this confidential category.  Instead, the FTT directed that it was for UK Coal “to agree suitable and appropriate redactions” with the Commissioner (in the second and concluding sentence at [81]).  The substituted Decision Notice was to the same effect.

 

The FTT’s review decision

9. The Commissioner then applied to the FTT for it to review its decision or in the alternative to give permission to appeal to the Upper Tribunal.  The Commissioner only took issue with the FTT’s decision as to the disposal of the appeal and as summarised in the preceding paragraph.  The Commissioner’s principal submission was that the FTT had no power to remit matters to the Commissioner in the way that had been done in this case.  Further, it was argued that the FTT’s decision had failed to identify the confidential information in question, resulting in a lack of clarity both for the requester and for the Council as to their respective rights and obligations.

 

10. The FTT sensibly decided to review its decision under rules 43 and 44 of the Tribunal Procedure (First-tier Tribunal) (General Regulatory Chamber) Rules 2009 (SI 2009/1976) and made directions on 26 January 2011 for the conduct of the review.  The Commissioner and UK Coal both made further written submissions (open and closed in nature) as to the parts of the disputed information which they argued should be redacted in accordance with the FTT’s initial decision.

 

11. The overall extent of the parties’ respective suggestions as regards redaction can be summarised as follows.  The disputed information itself ran to 63 pages of printed text in total.  UK Coal’s proposed redactions, in red, involved the exclusion of approximately 12 pages, including both pages of Schedule 2 to the head lease, setting out the methodology for calculating what was called the “throughput rent”. The Commissioner’s suggested redactions (also in red, but struck through) totalled about 20 lines of text (less than a page), including the actual numbers and the equation for calculating the throughput rent, but not the rest of Schedule 2.

 

12. The FTT’s review decision, dated 28 February 2011, was in almost identical terms to its initial decision.  The only difference of note was the second sentence of paragraph [81], which now read:

 

“The Tribunal has redacted the confidential commercial information in a confidential annex that has been sent to the parties and ordered disclosure of all the disputed information not highlighted in yellow by the Tribunal.”

 

13. The FTT’s redactions (in yellow) were, for the most part, the same as those proposed by the Commissioner.  There were, however, a number of changes at the margins.  For example, UK Coal and the Commissioner had both proposed that the definition of the initial rent in the head lease be excluded in its entirety.  The FTT’s conclusion was that the definition itself could stand, with only the amount of the rent being redacted, as in “£X per annum together with the additional rents set out in the Lease”, where X was the commercially sensitive information about the actual rent charged.  The FTT also decided that the contractual rent dates should be redacted, whereas the Commissioner would have left that information included.  The final redactions to Schedule 2 were, with one small addition, as advocated by the Commissioner.  The FTT subsequently granted UK Coal permission to appeal.

 

The proceedings before the Upper Tribunal

Judicial personnel

14. Initial case management directions were issued in this appeal by Judge Howell QC, but the case has since been transferred to me for decision.

 

Should there be an oral hearing of this appeal?

15. The decision on whether to hold an oral hearing of an appeal before the Upper Tribunal is a discretionary one (rule 34(1) of the Tribunal Procedure (Upper Tribunal) Rules 2008 (SI 2008/2698)).  In reaching that decision I have to consider the parties’ views (rule 34(2)).

 

16. UK Coal does not consider an oral hearing to be necessary.  The Council expresses no view either way but indicates that it would only attend a hearing if directed.  Veolia has stated that it has no submissions to make on the appeal.  The Commissioner suggests that a short oral hearing might be helpful.

 

17. I have considered the Commissioner’s suggestion in the light of the overriding objective of dealing with cases fairly and justly.  In my view an oral hearing is unnecessary and disproportionate.  It would also inevitably cause some further delay.  The appeal concerns a discrete point which has been well argued on paper by the principal protagonists (UK Coal and the Commissioner), responding to Judge Howell QC’s directions.  I do not think that in the circumstances of this case there would be much (if any) added value in an oral hearing.  The principal parties’ submissions can be summarised thus.

 

UK Coal’s grounds of appeal

18. UK Coal’s central submission, as set out in its grounds of appeal and its reply to the Commissioner’s response, is that the FTT’s interpretation and application of section 43 of FOIA failed adequately to protect the company’s commercial interests.  It further submits that the FTT erred in law by taking too narrow a view of “core financial information” and accordingly misdirected itself in ordering the disclosure of so much of the disputed information.  The FTT’s reference to “commercial and financial information” demonstrated that the confidential data was not confined to financial figures, but included a broader category of information putting such data into context.  In particular, UK Coal argued that the entirety of Schedule 2 to the head lease constituted “core financial information”, in that it sets out UK Coal’s commercial methodology and was thus commercially sensitive and so should have been redacted in full.  The company also argues that the FTT’s decision is inconsistent with the outcome in the East Sussex County Council (FER0099394) and East Riding of Yorkshire (FER0066052) cases. UK Coal requests that the scope of the redactions be expanded to include substantially the same text as the red text in the confidential annex to the FTT’s decision.

 

The Commissioner’s arguments

19. The Commissioner opposes UK Coal’s appeal.  He submits that the company seeks to place too much weight on the phrase “core financial information”, which is not a term of art but simply the FTT’s term for the information it had identified as exempt as the public interest balance favoured the maintenance of the section 43 exemption.  In effect, UK Coal was seeking to challenge the FTT’s evaluation of the merits of the case. The FTT’s reference to “commercial and financial information” took the appeal no further forward, as this was simply the FTT referring back to its earlier concept of “core financial information” rather than purporting to recognise some wider category of confidential information. In sum, the FTT reached a decision it was entitled to do on the evidence it had received.  For example, it had redacted key figures and definitions from Schedule 2 but had left unredacted the surrounding text where the public interest balance favoured disclosure. The FTT’s review decision was not inconsistent with the East Sussex County Council and East Riding of Yorkshire cases, which were in any event Decision Notices by the Commissioner and not even binding on the Commissioner, let alone the FTT.

 

The Upper Tribunal’s analysis

The legislation

20. Section 43 of FOIA provides as follows:

 

Commercial interests

43. (1) Information is exempt information if it constitutes a trade secret.

(2) Information is exempt information if its disclosure under this Act would, or would be likely to, prejudice the commercial interests of any person (including the public authority holding it).

(3) The duty to confirm or deny does not arise if, or to the extent that, compliance with section 1(1)(a) would, or would be likely to, prejudice the interests mentioned in subsection (2).

 

21. This is a qualified rather than absolute exemption under FOIA.  Accordingly, the issue for the FTT to determine was whether “in all the circumstances of the case, the public interest in maintaining the exemption outweighs the public interest in disclosing the information” (section 2(2)(b)).

 

The FTT’s decision

22. The FTT’s initial and review decision detailed the chronology of the case ([1]-[24]) and similarly set out at some length the respective submissions of the Commissioner ([25]-[50]) and UK Coal ([51]-[63]).  There is no dispute but that the FTT correctly directed itself as to the questions it had to answer, namely (1) was the disputed information within the EIR (as the Commissioner contended); (2) had the Commissioner correctly applied the public interest balance required by regulation 12(5)(e); and (3) if the EIR did not apply, was the disputed information protected from disclosure by section 43 of FOIA ([64])? After a reference to the evidence received ([65]), the FTT focussed on its conclusions and the appropriate remedy ([66]-[83]).  The FTT’s principal conclusions were as follows.

 

23. First, there was “core financial information” within the disputed information which the FTT recognised as having the quality of “genuinely commercial and confidential information” ([77]).

 

24. Secondly, that information had no more than a tangential association with the environment and was particular to the PFI contract in question in terms of e.g. pricing.  Such information fell within the scope of FOIA, not under the EIR regime, and the public interest supported the maintenance of the exemption under section 43 for such confidential information ([78]-[79]).

 

25. Thirdly, however, and bearing in mind the requirements of proportionality inherent in the public interest balancing exercise, the disputed information could be supplied to the requestor “with the confidential commercial and financial information redacted” ([80]).  UK Coal’s appeal to the FTT therefore succeeded to the extent that the operative test was section 43, not regulation 12(5)(e), and that the disputed information could be released, not in its entirety, but rather subject to the redactions highlighted in yellow in the confidential annex ([80]-[81]).

 

Why this appeal fails

26. It is important that the FTT’s statement of reasons is read as a whole, rather than highlighting particular phrases and taking them out of their wider context.  The FTT’s extensive and detailed discussion of the principal parties’ submissions on the appeal makes it plain that the FTT was well aware of the scope of the section 43 exemption under FOIA (relating to information the disclosure of which would, or would be likely to, “prejudice the commercial interests of any person”) and the parallel exception under regulation 12(5)(e) of the EIR (where “disclosure would adversely affect the confidentiality of commercial or industrial information” (etc)).  The FTT also considered the various factors relevant to the public interest balancing test, acknowledging the Commissioner’s argument that the outcome would not be materially different whether section 43 or regulation 12(5)(e) applied.

 

27. The FTT’s conclusion that there was “core financial information” in the disputed information which was “genuinely commercial and confidential information” (at [77]) was, as the Commissioner submits, no more than a convenient way of summarising its finding that, in applying the public interest balancing test, the engagement of the section 43 exemption and the application of the public interest test led to the withholding of only certain parts of the disputed information.  The phrases in inverted commas in the previous sentence are not statutory expressions that admit of close textual analysis. This was a quintessential issue of fact and degree for the tribunal at first instance to determine.  There is no serious suggestion here that the FTT failed to take account of relevant matters or had regard to irrelevant factors or in some way acted perversely.  The bottom line is that UK Coal is essentially seeking to re-argue questions of fact and judgement which have been litigated and adjudicated upon on their merits by the FTT. 

 

28. Moreover, for the reasons advanced by the Commissioner, neither the East Sussex County Council nor the East Riding of Yorkshire case can stand as any precedent for the FTT in the present case.  As Judge Jacobs has  commented in the context of the FTT’s own earlier decisions, there are dangers in paying too close a regard to previous first instance decisions, as this may elevate issues of fact into issues of law or principle (see London Borough of Camden v Information Commissioner and Voyias, GIA/2986/2011, at [20]).  This warning applies with even greater force, if that were possible, when one is concerned with the Commissioner’s previous Decision Notices. In short, therefore, I agree with the submissions made on behalf of the Commissioner and reject the submissions made on behalf of UK Coal.

 

29. In reaching this conclusion I have reviewed the suggested redactions proposed by the principal parties and those directed by the FTT in its review decision.  The example cited at paragraph [13] above about the definition of the rent is one indication of how the FTT was astute to sever the information which, properly considered, fell to be protected by the section 43 exemption (or, had it been applicable, the regulation 12(5)(e) exception).  Other examples may be cited to similar effect.  For instance, the interpretation clause in the head lease defines the term “interest rate”.  If the agreed redactions by UK Coal and the Commissioner had been adopted by the FTT, this would have simply read as “‘Interest Rate’ means....”.  The FTT’s final version was slightly less terse: “‘Interest Rate’ means interest at the rate of....”, so excluding the key financial and textual description of how the actual interest rate was to be calculated.  These various changes and others persuade me that the FTT approached the task on review of deciding precisely which passages should be redacted with considerable care and precision, bearing in mind the principles underpinning FOIA and in particular the section 43 test. 

 

30. Even assuming the section 43 exemption was engaged in respect of all the disputed information, UK Coal’s proposed redactions were, on any analysis, in my view far too wide-ranging to survive the public interest balancing test.  Many of the provisions which UK Coal sought to redact (e.g. those relating to the tenant’s insurance obligations and the rent review provisions) are commonplace in any commercial lease.  In those circumstances the FTT’s conclusion that the public interest test favoured disclosure was entirely understandable. 

 

31. The contents of Schedule 2 to the lease, concerning the calculation of “throughput rent”, were the subject of specific submissions both before the FTT and also the Upper Tribunal.  According to UK Coal, “the entire contents of Schedule 2 ... are core financial information and are commercially sensitive as they set out UK Coal’s commercial methodology”.  This argument simply will not run for two reasons. 

 

32. First, for the reasons explained above, this is a further example of how the appeal is seeking to re-argue the case on its merits, rather than identify an error of law in the FTT’s approach. 

 

33. Second, and in any event, the effect of the targeted redactions proposed by the Commissioner, and agreed by the FTT with one addition, do precisely what they are supposed to do – they strike a balance in protecting UK Coal’s proper commercial interests under section 43 while ensuring that other information is disclosed, having applied the public interest test.  The requestor (and anyone else to whom the redacted version of Schedule 2 is disclosed) will simply have no idea as to either the commercial methodology or the key financial and other numerical variables used in calculating the throughput rent. Any such reader of Schedule 2 will be left with a series of rather unhelpful definitions, with key figures and phrases redacted, along with several terms setting out various consequential obligations, again standard in this type of contract, such as the tenant’s obligation to deliver a certificate of the amount of throughput, the default option of referral to an arbitrator in the event of a dispute, and the tenant’s duty to make payment of the rent duly calculated.  To suggest both that section 43 was engaged and moreover that redaction of these latter clauses was required in applying the public interest balancing test, and that the FTT’s decision accordingly demonstrates an error of law, is simply unsustainable.

 

A postscript

34. Finally, I note that the Commissioner does not seek to challenge any of the FTT’s findings which went against him, and in particular whether or not the disputed information was to be properly considered under the EIR.  The FTT, of course, had accepted UK Coal’s argument that the contracts fell to be considered under FOIA and not under the EIR.  The arguments on this point were well-made on both sides before the FTT.  Given that the Commissioner has not brought a cross-appeal, and that it is very unlikely that the outcome would be different according to whether FOIA or the EIR applied, notwithstanding the differing juridical and conceptual routes adopted by those two regimes, I do not need to express a view either way on this issue.  It may yet need to be addressed in a subsequent case. 

 

Conclusion

 

35. I therefore conclude that the First-tier Tribunal did not err in law in its review decision.  The appeal by UK Coal to the Upper Tribunal is accordingly dismissed.

 

36. This means that Judge Howell QC’s order (in the directions dated 26 July 2011) suspending the effect of the FTT’s decision pending the resolution of this appeal now falls away. The FTT had directed that the disputed information (except that highlighted in yellow in the confidential annex to its decision) should be disclosed within 35 days.  I make a direction to the same effect.  For the avoidance of doubt, the period of 35 days for disclosure runs from the date that this decision is issued to the parties by the Upper Tribunal office, not the date below on which I have signed the decision on the original.

 

 

 

Signed on the original Nicholas Wikeley

on 19 June 2012 Judge of the Upper Tribunal