Upper Tribunal (Administrative Appeals Chamber)

IN THE UPPER TRIBUNAL Case No.  GIA/1253/2011

ADMINISTRATIVE APPEALS CHAMBER

 

Before: A Lloyd-Davies Judge of the Upper Tribunal

 

 

 

DECISION

 

The decision of the tribunal given on 16 March 2011 involved the making of errors of law.  I set that decision aside and remit the case for rehearing by a differently constituted First‑tier Tribunal. 

 

REASONS

 

1. The appellant, Chichester District Council (“CDC”), is the owner of a sports field of approximately 3.75 acres (“the site”).  CDC is also the planning authority for the site.  In or about 2003 CDC decided in principle that the site should be sold for development into residential units.  Things became delayed.  However, on 4 September 2007, for the purposes of a management team meeting (consisting of officers of CDC only) to be held the following day, the Director of Employment and Property of CDC, Mr Over (who is a FRICS and who stated in evidence that he had many years experience of preparing valuations), prepared a valuation (“the valuation”) of the site.  That valuation, which covered approximately one and a third sides of A4 paper, set out the anticipated gross receipts from the site if planning permission for residential development were to be granted, and the estimated outlays that would be necessary to enable a development to proceed.  The valuation ended with a figure representing the estimated net receipt for CDC.  (Mr Over subsequently gave evidence before the First‑tier Tribunal to the effect that the valuation was made from his own experience and expertise in such matters, although in one respect, relating to certain construction costs, he did seek external advice from a third‑party contractor).

 

2. The valuation was considered by the management team meeting on 5 September 2007, as a matter of report.  On 7 February 2008 Mr Over, having personal delegated authority to act, made an application for outline planning permission for the site.  This was subsequently granted on 8 July 2010. 

 

3. At an Executive Board meeting of councillors of CDC on 12 February 2008 it was decided that a contribution should be made out of the eventual proceeds of sale of the site to a local football club.  In order to satisfy itself as to the level of contribution that might be made the Executive Board enquired of Mr Over what the estimated net proceeds of sale of the site would be.  Mr Over made an oral report on this.  This part of the Executive Board meeting was held in closed session pursuant to a resolution made under section 100A of the Local Government Act 1972.

 

4. On 18 May 2009 the enquirer, Ms Lynne Friel (the secretary of a local residents’ group) made an enquiry of CDC seeking eight, numbered, items of information relating to the outlays required if a development of the site were to go ahead and also what the estimated net receipt to CDC would be after deduction of the outlays. 

 

5. CDC responded:

 

(a) giving an answer to one of the numbered requests;

 

(b) stating that no information was held in relation to three of the numbered requests; and

 

(c) refusing to answer the remaining four numbered requests and also the request relating to the estimated net receipt on the grounds that these items were commercially sensitive.

 

CDC maintained that the public interest in non‑disclosure outweighed the public interest in disclosure on the grounds that the duty of CDC to obtain the best possible price for the site might be prejudiced by release of figures in advance of any tender process or contract negotiations. 

 

6. Ms Friel requested a review.  CDC responded on 18 June 2009 maintaining its original stance, albeit relying on slightly different legislative provisions.

 

7. Ms Friel complained to the Commissioner on or about 30 June 2009.  Whilst the Commissioner was considering the complaint, figures relating to two of the requested pieces of information came into the public domain, namely the sum to be paid to a local football club and the sums required to be expended under an agreement entered into pursuant to section 106 of the Town and Country Planning Act 1990.  The remaining three requests, which related to the construction costs for a new roundabout, the provision of a new junior football pitch and the estimate of the net proceeds of sale, remained unanswered. 

 

8. After correspondence between the Commissioner and CDC it was agreed between them that the relevant legislation to be considered was the Environmental Information Regulations 2004 (“EIR”), rather than the Freedom of Information Act 2000.  CDC sought to rely on the exceptions contained in EIR 12(4)(d) (material still in the course of completion, unfinished documents or incomplete data), EIR 12(4)(e) (internal communications) and EIR 12(5)(e) (confidential commercial information). 

 

9. By a decision notice dated 5 August 2010 the Commissioner determined that:

 

(a) EIR 12(4)(d) was not engaged;

 

(b) EIR 12(5)(e) was not engaged; but

 

(e) EIR 12(4)(e) was engaged, but the public interest in disclosing the information outweighed the public interest in maintaining the exception.

 

The Commissioner ordered CDC “to disclose the information to [Ms Friel]”.  (The Commissioner did not clearly identify what information should be disclosed, but the inference could easily be drawn.)

 

10. CDC appealed to the First‑tier Tribunal (General Regulatory Chamber).  Before the tribunal CDC no longer sought to rely on the exception contained in EIR 12(4)(d) (material still in the course of completion, etc), but still sought to rely on EIR 12(4)(e) (internal communications); additionally it sought to rely, for the first time, on EIR 12(5)(d) (confidentiality of proceedings); and at a very late stage it reasserted its reliance on EIR 12(5)(e) (confidential commercial information).

 

11. The tribunal found that (as was accepted by all parties) the exception in EIR 12(4)(e) (internal communications) was engaged, but that the public interest in disclosure outweighed the public interest in maintaining the exception.  It further held that neither the exception in EIR 12(5)(d) (confidentiality of proceedings) nor the exception in EIR 12(5)(e) (confidential commercial information) was engaged.  The tribunal ordered the disclosure of the valuation, with the redaction of one line and a related footnote.  The tribunal recommended that the redacted information be disclosed as soon as it was no longer commercially sensitive.

 

12. CDC applied for permission to appeal to the Upper Tribunal.  Permission was granted by the First‑tier Tribunal judge who had chaired the tribunal hearing the appeal.  A judge of the Upper Tribunal suspended the effect of the First‑tier Tribunal’s decision pending the outcome of the appeal.  I directed an oral hearing of the appeal. 

 

13. Ms Friel unfortunately could not attend the oral hearing.  CDC was represented by Mr Philip Coppel QC and Ms Hanif, both of counsel.  The Commissioner was represented by Mr Hopkins of counsel.  I am grateful to all for their submissions, both written and oral:  I add that I am satisfied that Mr Hopkins, representing the Commissioner, took every point that might have been open to Ms Friel had she been able to attend. 

 

14. As mentioned above it was not in dispute that the exception in EIR 12(4)(e) (internal communications) was engaged.  In the appeal before me CDC did not seek to challenge the tribunal’s finding that, in relation to this exception taken alone, the public interest in disclosure outweighed the public interest in maintaining the exception.  Rather, CDC sought to argue that the First‑tier Tribunal erred in finding that neither EIR 12(5)(d) (confidentiality of proceedings) nor EIR 12(5)(e) (confidential commercial information) was engaged. 

 

15. So far as is relevant to this appeal EIR 12  provides:-

 

“ (1) Subject to paragraphs 2 …, a public authority may refuse to disclose environmental information requested if

 

(a) an exception to disclosure applies under paragraphs (4) or (5);  and

 

(b) in all the circumstances of the case the public interest in maintaining the exception outweighs the public interest in disclosing the information.

 

(2) A public authority shall apply a presumption in favour of disclosure.

 

…

 

(5) For the purposes of paragraph 1(a) a public authority may refuse to disclose information to the extent that its disclosure would adversely affect –

 

…

 

(d) the confidentiality of the proceedings of that or any other public authority where such confidentiality is provided by law;

 

(e) the confidentiality of commercial or industrial information where such confidentiality is provided by law to protect a legitimate economic interest”.

 

16. In relation to EIR 12(5)(d) (confidentiality of proceedings) CDC relied on the fact that at the Executive Board meeting of CDC held on 12 February 2008 a resolution was passed under section 100A of the Local Government Act 1972 in respect of the item relating to the contribution to be made to the local football club, resulting in that item being taken in closed session (that is to say, to the exclusion of the public). The Executive Board orally enquired of Mr Over what the anticipated net receipt from the sale of the site was likely to be in order to ascertain what funds might be available for the contribution to the football club.  Mr Over reported orally on what the anticipated net receipt would be.  On this issue the First-tier Tribunal (in paragraph 19 of its decision) stated as follows:-

 

“The report of the net land value had been given orally, it was not an agenda item in itself and the figure did not appear in any report or minutes ([CDC] was asked to produce any such document but declined to do so).  As neither FOIA or EIR applied to oral information, unrecorded in any form the submission that regulation 12(5)(d) was engaged did not begin to hold any weight.  The Tribunal noted moreover its doubts that a discretionary power to withhold information for one purpose only, would amount to confidentiality “provided by law” such as to defeat the obligations under the EIR.”

 

17. On behalf of CDC it was argued that the First‑tier Tribunal had wholly misconstrued the exception in EIR 12(5)(d) inasmuch as it clearly thought that the exception related to the confidentiality of the information given during the proceedings, rather than to the confidentiality of the proceedings themselves.  On behalf of the Commissioner it was submitted that the valuation itself was never before the meeting of 12 February 2008, that the EIR are concerned with written (or recorded) information, that the information given at the meeting was given orally, that that information did not feature in any material way and that, accordingly, disclosure of the information would not have affected the confidentiality of the proceedings.

 

18. In my judgment it is clear, on a fair reading of paragraph 19 of the First‑tier Tribunal’s decision (which I fully appreciate is not to be construed as if it was a legislative provision), that the tribunal was asking itself the wrong questions and hence erred in law.  Under regulation 12(5)(d) it was required to ask itself whether the proceedings of the Executive Board on 12 February 2008 were confidential; whether the confidentiality of the proceedings was provided by law; and whether the disclosure of the information contained in the valuation which was referred to at the meeting would adversely affect the confidentiality of the proceedings.  The tribunal did not ask itself any of those questions.  The entire thrust of paragraph 19 concentrated on the information provided in the proceedings, rather than on the proceedings themselves.  This is emphasised by the final sentence of paragraph 19 (quoted above) which referred to the tribunal’s doubts whether a “discretionary power to withhold information” amounted to confidentiality provided by law:  section 100A(4) of the Local Government Act 1972 is not concerned with the withholding of information but with the confidentiality of the proceedings in which the relevant recorded information was discussed.

 

19. I come now to the exception contained in EIR 12(5)(e) (confidential commercial information).  As stated above this exception provides that a public authority may refuse to disclose information to the extent that its disclosure would adversely affect “the confidentiality of commercial or industrial information where such confidentiality is provided by law to protect a legitimate economic interest”.  In paragraph 20(a) of its decision the tribunal stated that all parties agreed that the valuation consisted of commercial information. Having discussed the submissions made to it the tribunal came to the following conclusion (in paragraphs 24 and 25 of its decision):-

 

“24. Taking a narrow approach to the application of the exception [contained in EIR 12(5)(e)], the Tribunal found that it would not suffice for the information [contained in the valuation] solely to have the quality of confidence.  The Tribunal accepted that it did have this quality, in the sense that it was inaccessible to the public, was non‑trivial, and a reasonable person would consider it was the kind of information which might be viewed as ‘confidential’.  This however was not sufficient on its own. In the Tribunal’s view, more was required, notably that a duty of confidence should be owed to, or by a third party.  [CDC] could not in some way self‑generate the confidentiality. The tribunal reminded itself that pursuant to the exception in EIR 12(5)(d) [sic, presumably 12(5)(e) was intended] the confidentiality had to be ‘provided by law’.  For [CDC’s] submission to be accepted, it would be necessary for the Tribunal to find there was confidentiality ‘provided by law’ despite the fact that no‑one would be obliged to keep that information confidential and no‑one could enforce that confidentiality either by way of injunction or declaration. Thus, the confidentiality ‘provided by law’ would be of no effect.  In fact the only effect would be for the information to be rendered confidential by virtue of the EIR themselves, which would of course be entirely circular. 

 

25. There are a range of other exceptions that could apply if the requisite tests were met and the public interest was against disclosure, such that [CDC] could not complain that this left a lacuna in the Regulations.  The Tribunal were satisfied that the exception in regulation 12(5)(e) was not engaged.” 

 

20. On behalf of CDC it was submitted that the tribunal had erred in law by importing a requirement that in order to be confidential information for the purposes of regulation 12(5)(e) it was necessary that the information be supplied by a third party in confidence and that, in the absence of third party supply, the exception could not apply.  The submission on behalf of the Commissioner was to the effect that the tribunal was right.  In my judgment the submission on behalf of the CDC is to be preferred.  There is no requirement in regulation 12(5)(e) that the confidential information be supplied by a third party: contrast section 41(1) of the Freedom of Information Act 2000 which provides:

 

“Information is exempt information if

 

(a) it was obtained by the public authority from any other person (including another public authority), and

 

(b) the disclosure of the information to the public (otherwise than under this Act) by the public authority holding it would constitute a breach of confidence actionable by that or any other person.”

 

There is no such wording in regulation 12(5)(e) and there is no necessary implication that such wording should be imported.  Having found that the undisclosed information contained in the valuation was commercial and confidential and non-trivial the tribunal asked itself whether the confidentiality found was provided by law.  It clearly misdirected itself when it held that no-one could be obliged to keep that information confidential and that no-one could enforce that confidentiality. The tribunal rejected, on the grounds that the information concerned was internally generated, the possibility whether, if any employee of CDC (including Mr Over) had attempted without authorisation to disclose the information, CDC would have been entitled to apply for appropriate legal relief to restrain such disclosure: such rejection is clearly erroneous since it is well-established law that an employer can restrain unauthorised disclosure by an employee of commercially confidential information such as trade secrets, estimates, costings and prices whether or not the information has been internally generated.

 

21.  On behalf of the Commissioner it was further submitted that (if the first submission did not succeed) in the circumstances of this case CDC would not have been able to obtain injunctive relief against Mr Over (or any other employee), on the basis that the valuation was prepared out of Mr Over’s own professional expertise and that so long had elapsed between the date of the valuation (September 2007) and the date at which the request fell to be considered (June 2009) that the valuation ceased to have any commercial value.  The first problem with this submission is that it was not addressed to the tribunal and the tribunal hence did not consider it: in effect this submission amounts to an attempt to make a further finding of fact on behalf of the tribunal which the tribunal was not asked to, and did not, make.   The second problem is that the fact that the valuation was made out of Mr Over’s own professional expertise does not prevent the figures and results contained in the valuation from being  enforceably confidential. The third problem is that the tribunal’s findings that “disclosure might feasibly have an impact on price” but that this was viewed “as a risk and no more” (paragraph 41) and that it “did not find itself able to conclude that the disclosure would be likely (as distinct from possible) to have a negative impact” (paragraph 46) do not amount to a finding that the valuation ceased to have any commercial value and, in any event were made in the context of the public interest balancing exercise for EIR 12(4)(e), and not in the context of the possibility of CDC obtaining injunctive relief against unauthorised disclosure.

 

22.  It therefore follows that in my judgment the tribunal erred in law in finding that neither EIR 12(5)(d) nor 12(5)(e) could potentially be engaged. The matter does not however end there. On behalf of the Commissioner it was submitted that, even if the tribunal had found that both exceptions were engaged, the tribunal’s findings on public interest in relation to the exception in EIR 12(4)(e), which findings took into account commercial sensitivity and confidentiality, were so emphatic that they should  be applied to the exceptions in EIR12(5)(d) and 12(5)(e).

 

23.  If I had found that the exception in EIR 12(5)(d) was the only additional exception which fell to be considered, I might have acceded to this submission on the footing that, before the First-tier Tribunal, it was submitted on behalf of CDC that the issues raised in the public interest test in  relation to this exception “are essentially identical to that raised in respect of the internal communications [exception]” – see paragraph 26 of CDC’s grounds of appeal dated 2 September 2010. I do not, however, have to decide this point – and do not do so – since, contrary to the findings of the tribunal, I have decided that not only EIR 12(5)(d) could be potentially engaged but also EIR 12(5)(e).

 

24.   The First-tier Tribunal stated in paragraph 26 of its decision:

“The Tribunal’s next task was to consider the public interest balancing test in relation to the only exception under consideration, that is, under regulation 12(4)(e),   internal communications.”

It further stated, in paragraph 35, having previously referred to the First- tier Tribunal decision in Hogan v ICO:

“Thus, this appeal being considered under regulation 12(4)(e) only,  the relevant public interests were those concerned with the importance of the need for internal communication free from the risk of disclosure. Thus, whilst the risk of commercial prejudice (addressed below) was relevant to the public interest balancing test, it did   not hold as much weight as the factors concerned with internal communications.”

In my judgment these passages show that the tribunal was only considering the public interest balancing test in the context of the single exception it considered applied. It is implicit in the tribunal’s statement in paragraph 35 that things might have been different had EIR 12(5)(e) been in play.   I consider that the public interest balancing test conducted by the tribunal in relation to EIR 12(4)(e) cannot be applied to the exceptions potentially in issue under EIR 12(5)(d) and (e), because (i) the tribunal did not do this but recognised that different considerations might apply to different exceptions and (ii) if more than one exception should be found to apply it is now clear law that the public interest factors against disclosure particular to each exception may be cumulated in the balancing test, notwithstanding that individually considered each did not prevail –see the decision of the CJEU in C-71/10 (the Ofcom case). I therefore do not accept the submission made on behalf of the Commissioner.

 

25.  I turn to the question of remedy. The decision of the tribunal must be set aside because (i) it erroneously held that the exceptions in EIR 12(5)(d) and (e) were as a matter of law not capable of being engaged and (ii) I cannot hold that the public interest in disclosure found by the tribunal in relation to EIR 12(4)(e) can be necessarily applied to any other exceptions potentially applicable (whether individually or collectively).   I remit the case to a differently constituted tribunal before which all matters will be at large. That tribunal should make findings as to which of any exceptions put in issue are engaged; decide the public interest balancing test in relation to each exception found to be engaged; and, if more than one exception is found to be engaged, apply the Ofcom case cumulative test. I was asked to consider substituting my own decision: I decline to do so both because further findings of fact are necessary and because the fresh public interest balancing test required should be carried out by a tribunal with lay members who have expertise in the field of information rights.

 

 

A.Lloyd-Davies

  Judge of the Upper Tribunal

 

(Date) 23 August 2012