Confidentiality

February 7th, 2019

Two recent decisions of the FTT on confidential information are of interest, one under FoIA, the other under the EIR, with a local authority being the public authority in both cases.

The FoIA case is Driver v Information Commissioner and Thanet District Council, EA/2017/0218.  It concerned the absolute Section 41 exemption from disclosure: information provided in confidence to the public authority by a third party.  The FTT held that the exemption did not apply because the information was not obtained by  the Council from another person. The information was the names of parties who had been paid compensation by the Council.  This was pursuant to settlements concluded between the Council and businesses involved in the export of live animals from the Port at Ramsgate.  The Council had imposed a ban. The High Court found that the ban was unlawful and that the Council was liable in damages.The FTT said:-

“29. Section 41 requires the information to have been obtained by the public authority from another person.  This Tribunal has previously held that a contract between a public authority and a third person does not constitute information “obtained” from another person for these purposes, unless the contract or document recorded more than just the mutual obligations of the contracting parties.  The exemption is not designed to cover information that the public authority has generated itself (Derry City Council v Information Commissioner, EA 2006/0014, 11 December 2006).

30. Section 41 is an absolute exemption. However, the public interest must still be taken into account in determining whether disclosure would constitute an actionable breach of confidence. The public interest may constitute a defence to an action at common law for breach of confidence. There is an assumption that the information should be withheld unless the public interest in disclosure outweighs the public interest in upholding the duty of confidence.”

“37.    … settlement agreements are a type of contract, containing mutual obligations by both parties which are enforceable in the courts under contract law. … in principle, a contract would not normally contain information “obtained” by a public authority from another person.  As described in Derry, a contract contains the mutual obligations of the contracting parties.  A contract contains the result of negotiations, not a set of information provided by one party to another.

38. The withheld information in this case is the names of the five exporters, which becomes more significant if matched up with the information on individual settlement sums which has already been disclosed. We do not agree with the Commissioner that these names are in themselves information obtained by TDC from another person. Each exporter may have originally contacted TDC to make a claim for compensation, and in doing so disclosed their names.  However, the names of the contracting parties are an essential part of the mutually agreed terms in each settlement agreement.  It would be an artificial distinction to distinguish the names of the parties from all other contractual terms.

39. We have considered TDC’s argument that the agreements are based on commercially sensitive information about how the five exporters’ claims for compensation have been calculated. The withheld information is the names, not the sums paid. We do accept that the effect of revealing the names associated with each sum would show how much each exporter had negotiated by way of a payment. However, we are mindful that this was a negotiation – the amount paid would not necessarily equate to the amount originally claimed. The negotiations may have been based on specific information provided by each exporter, such as accounts and invoices, but this specific information is not contained in either the withheld information or the settlement agreements as a whole.  This is not a case such as that referred to in Derry (paragraph 32(e)), where the contract itself contains technical information which may have been provided in confidence.

40. For the above reasons, we therefore find that the withheld information was not obtained by TDC from another person. This means that the exemption in section 41 is not engaged. …”

The EIR case is London Borough of Sutton v Information Commissioner, EA 2017/0064.  It concerned Regulation 12(5)(e) of the EIR, which, subject to the public interest test, enables a public authority to refuse to disclose information to the extent that (i) its disclosure would adversely affect the confidentiality of (ii) commercial or industrial information where (iii) such confidentiality is provided by law (iv) to protect a legitimate economic interest.

Sutton Decentralised Energy Limited (“SDEN”) is a company wholly owned by the Council. It was set up as a sustainable energy supplier to provide low-carbon energy to homes and businesses in Sutton.  SDEN has a contract with Viridor under which it purchases energy at an agreed price.  SDEN sells this energy on.  At present it only sells some of the energy it purchases because it only has contracts relating to the new Barratt Homes Development in Sutton. It has a contract with Barratt Homes and with the individual residents of the development who are required by covenants on the properties to use SDEN as their energy supplier.  The Council’s intention is that SDEN will secure other customers in the future.  In doing so, it will be competing with other energy suppliers.  A Financial Model for the SDEN business was commissioned by the Council. The model has been refined, particularly through the Financial Model Review by KPMG, which was the subject of the information request.

The FTT said:-

“12.    There is a presumption in favour of disclosure under the EIR under reg. 12(2). The result is that the threshold to justify non-disclosure is a high one.”

“18.    If the conditions of 12(5)(e) are met, the information must only be disclosed to the extent that in all the circumstances the public interest in maintaining the exception outweighs the public interest in disclosure.

19. Having due regard to previous decisions, we consider that the relevant time for the application of the public interest test is the time of the initial request and refusals by the public authority not the time when the Tribunal hears the Appeal.”

“23.    There is no challenge to the Information Commissioner’s conclusion that the information is commercial or that it is subject to a common law duty of confidence.

24. We therefore need to consider the question of whether or not the confidentiality was required to protect a legitimate interest and whether that confidentiality would be adversely affected by disclosure. … the question is whether or not, on the balance of probabilities disclosure would cause some harm to the economic interests of the relevant parties.”

“31.    … we find on the balance of probabilities that some harm would be caused to the economic interests of SDEN or Viridor by disclosure and therefore we accept that confidentiality was required to protect a legitimate interest and that confidentiality would be adversely affected by disclosure.

32. In the light of the above findings, we do not find it necessary to make findings on whether or not the financial model review amounted to a trade secret.”

“34.    We do not think it is helpful or necessary for the purposes of the public interest balance to identify whether this information should or should not be classed as a ‘trade secret’. Instead we have factored into our consideration of the public interest the characteristics of the information which might lead to such a classification.

35. We accept that there is reasonably strong public interest in this case in maintaining the exemption. …”

“37.    We find that there is a very significant public interest in disclosure in this case. A very large sum of public money is being invested in a long-term scheme lasting more than 25 years. Local residents purchasing properties in the Barratt development enter into contracts for energy supplied from SDEN for 25 years.  It is a matter of important local significance. It has been publicly stated by the Council that the scheme would help alleviate fuel poverty. There is therefore also some public interest in the public knowing whether or not fuel poverty is referred to in the financial model review.

38. If the scheme fails there are significant risks to public money. There is a strong public interest in the public having access to information on how the project is proposed to function and how, if at all, it is eventually intended to make a profit. There is a strong public interest in the public being properly informed and therefore being able to make a more informed decision in both challenging and supporting the proposed scheme.

39. For the reasons set out above we conclude that despite the reasonably strong public interest in maintaining the exemption, it does not outweigh the very significant public interest in disclosure.”

Confidentiality issues also of course come before the High Court. Linklaters v Mellish (2019) EWHC 177 (QB) was an urgent application for an injunction to restrain an ex-employee from disclosing information obtained from and relating to his employment by the claimants, which the claimants say is confidential information, protected by express duties of confidence owed to them by the defendant, pursuant to his contract of employment. The threat, according to the claimants, was to provide such information for publication in the media by unidentified organisations. Warby J granted the injunction for a short period

Warby J said:-

“22.    When deciding to proceed on short notice I … bore in mind that an absent defendant has three important safeguards. The first is that a claimant seeking an injunction against such a defendant owes the Court a duty to make full and frank disclosure of any matter of fact or law that is material to the decision the Court is being asked to make. If that duty is not performed the injunction may be discharged, with appropriate costs orders as well as the possibility of compensation for the respondent. … The second safeguard is the requirement that the applicant’s lawyers make a note of the hearing, and provide it to the respondent. Thirdly, there should always be a judgment explaining the Court’s reasoning.

23. Sometimes, third parties are to be treated as respondents to an application such as this. They certainly would be if the claimants intended to serve them with the order, if obtained. The purpose of serving or notifying third parties in a case like this is to bind them with the so-called “Spycatcher” effect. Action, in the knowledge of such an injunction, that defeats or undermines its purpose will often if not usually amount to contempt of court. …

24.… It is well-established that the Court must adapt its procedures to ensure that rights of confidence or privacy asserted by those who come before it for protection are safeguarded unless and until the Court has concluded that they are not made out, or that they should be overridden.”

“26.    … The law of breach of confidence is summarised and considered in the recent judgment of the Court of Appeal in ABC v Telegraph Media Group Ltd [2018] EWCA Civ 2329 [2019] EMLR 5. In summary, however, the matters that have to be proved to establish a claim for an injunction in breach of confidence are: (1) That the information has the necessary quality of confidence; (2) That the information has been imparted to or acquired by the defendant in circumstances importing an obligation of confidence; and (3) That the defendant threatens or intends to misuse the information. Defences or justifications in a breach of confidence claim include loss of confidentiality due to prior disclosure in the public domain, and a compelling public interest in the disclosure of the information in question, which requires the duty of confidence to be overridden.

27. Whenever a person threatens or intends to publish information, the Convention right to freedom of expression must be considered by the Court. An injunction which restrains publication is an interference with that right, which can only be justified if it pursues one of the legitimate aims identified in Article 10(2) of the Convention, and is necessary to and proportionate for the pursuit of such aim(s). The method by which the Court should strike the balance between competing considerations in this field is discussed in the ABC case, which emphasises the weight to be given to obligations of confidence which are assumed under a contract, freely entered into, for good consideration. There is, as the Court of Appeal emphasised, an important public interest in upholding contractual bargains which cannot be impeached for fraud, undue influence or any other vitiating factor. … The authorities indicate that the right approach for the Court to take, when faced with a contest between public interest considerations and a contractual duty of confidence, is to ask itself not just whether the information is matter of public interest but “whether in all the circumstances it is in the public interest that the duty of confidence should be breached”: …”

“29.    The applicant for an interim injunction of this kind must meet some threshold conditions. First, and fundamentally, it must satisfy the Court that there is a threat or risk that, if not restrained, the respondent will publish. The Court must be persuaded that the threat or risk is sufficient to justify the intervention of the Court, assuming the other threshold conditions are met. Next, the applicant must satisfy the court that it is it is “likely to establish that publication should not be allowed”: HRA, s 12(3). This requirement looks forward to the time of a trial, and to what would happen then. “Likely” in this context normally means “more likely than not”, though a lesser prospect of success may suffice where the Court needs a short time to consider evidence/argument, or where the adverse consequences of publication might be extremely serious: …

30. This means that the Court must be persuaded that the claimant is likely to establish the three elements of the cause of action, and that there is no defence or justification for breach of confidence, which would be likely to succeed at trial. The extent to which the information at issue is already in the public domain, and the extent to which its publication would be in the public interest will always need to be considered. … All these requirements must be addressed by the Court, as best it can, on the evidence before it at the time of the application, …

31. Even if all of these requirements are met, the Court retains a discretion. An injunction may be refused if, for instance, damages would be an adequate remedy, or the defendant could not be adequately compensated if the Court eventually concluded that the injunction was wrongly granted. A court might refuse relief if it concluded that the nub of the claim was defamation, and the claimant was abusing the Court’s process by relying on another cause of action in order to circumvent the restrictions on interim relief against alleged libel: … A further factor which can play a part in deciding whether to exercise the Court’s discretion in favour of granting an injunction is whether it can be effective in practice. Where the information which is the subject of an injunction application is or may be of worldwide interest, and publication has taken place or is imminent abroad, the Court must take account of those facts in its decision-making. But in a case such as the present, where the claim seeks to enforce against a contracting party an express contractual obligation which is territorially unlimited, the Court can grant an injunction with worldwide effect against that party: …

32. I was satisfied that the likelihood that the claimants would succeed at a trial was sufficient to justify the relief that I granted. …

33. The rights of the third parties involved … complainants, bolstered the case in favour of granting an injunction. … There are strong policy reasons for upholding … legitimate expectations, to encourage genuine complainants to come forward rather than risk having sensitive material of the kind in issue here made public by a third party, against their wishes … without consultation.

34. It is accepted by the claimants that there is, in general terms, a legitimate public interest in the due performance by large firms such as Linklaters of their social and moral duties towards their staff. But the existence of such an interest cannot justify indiscriminate disclosure of otherwise sensitive confidential information which others have a legitimate interest in keeping confidential. A general desire to talk publicly about the “culture” of a large firm is not enough to justify the disclosure of such details. There may be cases in which the details of individual acts of alleged or establish misconduct, combined with one another, create a compelling picture of persistent or habitual wrongdoing, serious enough to satisfy the tests to which I have referred. In some cases, the public interest in correcting misleading public statements could come into the picture. But nothing of that kind emerges from the evidence presented to me in this case at this stage.

35. The claim is partly motivated by concern for the reputational harm disclosure might cause, but that is not the sole or main purpose behind this application, which I did not regard as an abuse of process. Damages would not be an adequate remedy. I saw no reason to doubt that the injunction, if granted, would be effective against the defendant. Its effects on third parties will depend on where they are, what they know, and the local laws. But this was not a case in which it was apparent that the Court’s decision was likely to be defeated or undermined by third party conduct over which the Court had no jurisdiction or control.”

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