COUNCIL ENTITLED TO WITHHOLD PROPERTY DEVELOPER’S FINANCIAL MODEL: BRISTOL CITY DISTINGUISHED

October 6th, 2010 by Robin Hopkins

Bath & North East Somerset Council v IC (EA/2010/0045) is the latest application of the ‘commercial confidentiality’ exemption under regulation 12(5)(e) EIR to a request for information on agreements between a local authority and a property developer.

 

The council and the developer entered into discussions about building homes on 70 acres of brownfield land within a UNESCO World Heritage Site. Only a small proportion of this land was owned by the council, the rest being owned by the developer, who would also bear 100% of the risk of the project. The proposed £500m project would deliver 50% of the council’s new homes target for the next 10 years – the council was therefore acting as both beneficiary and planning authority.

 

With a potential section 106 agreement in mind, the council and developer reached a co-operation agreement, whereby the developer taking an ‘open book’ approach, i.e. making its financial models and reports available to the council. This was the information at issue before the Tribunal.

 

The Tribunal found that the public interest favoured maintaining the exemption. In so doing, it distinguished this case from Bristol City Council v ICO and Portland and Brunswick Squares Association (EA/2010/0012) – on which, see my post here and article in the Local Government Lawyer here – where disclosure of the information was ordered. Bristol City concerned a viability assessment designed to show that a hypothetical scheme was not viable; that assessment used generic, industry-level pricing. In contrast, this case concerned detailed and developer-specific financial information about an actual proposal. The commercial sensitivities differed materially.

 

Disclosure of such information, held the Tribunal, would lead to the developer refusing to provide any further ‘open book’ information, which would stymie this particular development and dissuade developers from future ‘open book’ co-operation. The Tribunal was also impressed by the availability of alternative scrutiny mechanisms in this case. It was less impressed with the council’s argument that disclosure of the disputed information would damage its reputation with developers.

 

The Tribunal did order the disclosure of consultants’ reports and emails, with commercially sensitive information redacted. The developer’s financial model however, could not be redacted, and could be withheld. On this last point, a notable practical issue emerged: both the council and the Commissioner had interpreted the request as being for a static version of the developer’s financial model. A ‘live’ model – i.e. a spreadsheet containing visible formulae – is another matter. The Tribunal warned that in future cases, clarification should be sought from the requester.

 

LAW OF CONFIDENCE – THE TRUMP CARD IN MATRIMONIAL PROCEEDINGS

August 3rd, 2010 by Anya Proops KC

The Court of Appeal has recently handed down an important judgment on the application of the law of confidence in matrimonial proceedings: Tchenguiz & Ors v Imerman [2010] EWCA Civ 908. The background to the case was that an application for ancillary relief had been made by Mrs Tchenguiz Imerman (TI) against her husband, Mr Imerman. Fearing that Mr Imerman may seek to conceal the nature and extent of his assets in the context of the ancillary relief proceedings, one of TI’s brothers, possibly with the help of others, accessed a computer server in an office which Mr Imerman shared with TI’s brothers and then copied information and documents which Mr Imerman had placed on that server relating to his assets. In order to prevent TI relying on the information and the documents in the ancillary relief proceedings, Mr Imerman sought to restrain the defendants from communicating the information and documents which they had obtained to any third party (including TI and her lawyers). He also sought delivery up of all copies of the documents. Eady J granted the orders sought by Mr Imerman. The defendants appealed to the Court of Appeal. The central issue for the Court of Appeal was essentially whether TI should be allowed to use the information and documents in the context of the ancillary relief proceedings, despite the fact that they appeared to have been obtained by the defendants in breach of confidence and, hence, unlawfully.  The case was rendered particularly complex as a result of what is commonly known in matrimonial proceedings as the ‘Hildebrande rules’. Historically, these rules have been applied by the courts in matrimonial ancillary relief proceedings so as generally to allow individuals to rely on evidence as to their spouses’ assets notwithstanding that that evidence has been unlawfully obtained.

In summary, the Court of Appeal held as follows:

·         the information/documents had been unlawfully obtained by the defendants as they had been obtained in breach of confidence (and, further, in breach of Mr Imerman’s right to privacy);

 

·         it may be that the obtaining of the information/documents had also amounted to: (a) criminal conduct on an application of s. 17 of the Computer Misuse Act 1990; (b) unlawful processing of Mr Imerman’s personal data under s. 4(4) Data Protection Act 1998 (DPA); and, further, (c) a criminal act under s. 55 DPA; although having found that the information/documents were obtained unlawfully in breach of confidence, the Court did not need to reach a concluded view on these issues;

 

·         the question for the Court was whether it should effectively condone the illegal self-help methods adopts by the defendants simply because it was feared that Mr Imerman may behave unlawfully and conceal that which should be disclosed in the ancillary relief proceedings. The answer to that question was: ‘No’ (see para. 107). As the Court suggested:The tort of trespass to chattels has been known to our law since the Middle Ages and the law of confidence for at least 200 years, yet no hint of any defences of the kind now being suggested is to be found anywhere in the books’ (para. 117). Thus, the Hildebrande rules could not be justified on any grounds;

 

·         if there were concerns that an individual may seek dishonestly to conceal assets in the context of ancillary relief proceedings, the correct course would be for the spouse to seek to protect her/his position through lawful means, for example by applying to the court for an anton pillar order.

The judgment is important not least because it highlights the essentially inalienable nature of the common law rights to confidentiality and privacy. There is no doubt that the judgment will be controversial, not least because of concerns that it fails to recognise the significant power imbalance which often obtains between spouses in matrimonial proceedings. 

 

 

PLANNING DECISIONS & HISTORIC BUILDINGS: PUBLIC SCRUTINY TRUMPS COMMERCIAL CONFIDENTIALITY

May 28th, 2010 by Robin Hopkins

Local planning authorities will wish to take careful note of the recent Tribunal decision in Bristol City Council v ICO and Portland and Brunswick Squares Association (EA/2010/0012), which will please residents’ associations, conservation groups and others wishing to scrutinise planning decisions about historic buildings.

 

PPG 15 (a Planning Policy Guidance document) requires that, where a building is listed or makes a positive contribution to a conservation area, it should only be demolished if there is “clear and convincing evidence that all reasonable efforts have been made to sustain existing uses or find viable new uses and these efforts have failed”. Bristol CC granted permission to demolish a listed building in its ownership, relying for PPG 15 purposes on the developer’s viability reports which apparently showed alternative uses of the building to be commercially unviable. It subsequently refused to disclose those reports, relying on the exemption at regulation 12(5)(e) of the EIR 2004, which applies to the extent that disclosure “would adversely affect … the confidentiality of commercial or industrial information where such confidentiality is provided by law to protect a legitimate economic interest”.

 

The requesters argued that a reasonable person would not regard these reports as confidential because the planning process is one that assumes and requires public involvement. The Tribunal disagreed, and found that regulation 12(5)(e) was engaged.

 

It went on to find, however, that the public interest favoured disclosure, given the decisiveness of these reports in a matter which had aroused substantial local controversy. The Tribunal considered it proper to take into account the “general mismatch between the resources of developers and residents’ groups” and noted that “so far as PPG 15 viability reports are concerned, it seems to us that developers will not be able to refuse to supply them if they want to obtain the relevant consent but that, given their hypothetical nature, it may be possible for them to construct such reports in a way that does not reveal sensitive commercial information specific to themselves”.

 

The Tribunal stressed that it was not setting down a general precedent concerning planning decisions, and that absent PPG 15 (or, presumably, its successor guidance PPS 5) or council ownership of the building in question, its decision might have been different. Where those two factors are present however, public accountability trumps commercial confidentiality.

 

S. 41 FOIA: BREACH OF CONFIDENCE MUST BE “PROBABLE” RATHER THAN “ARGUABLE”

January 18th, 2010 by Robin Hopkins

The Information Tribunal’s judgment in Higher Education Funding Council for England v Information Commissioner (EA/2009/0036) is its most definitive decision to date on the exemption for confidential information provided by s. 41 FOIA. Most decisions about s. 41 will – for now – need to take into account the issues addressed in this judgment.

 

The Council, a statutory body for the administration of higher education funding, relied on this exemption in refusing to disclose to a Guardian journalist information relating to the state of the buildings at Higher Education Institutions that contributed to the Council’s database. The Commissioner decided that s. 41 was not engaged. The Tribunal agreed, addressing a number of important issues along the way.

 

First, and most crucially: s. 41 is triggered by an “actionable” breach of confidence. Does “actionable” in this context denote a claim that is likely to succeed on the balance of probabilities (as the Commissioner contended, supported by Guardian News as an additional party) or merely a claim that is properly arguable (as the Council argued)? The Tribunal regarded this as a novel point on which the statutory wording was ambiguous. Accordingly, it turned to Hansard, which provided an unequivocal resolution: “actionable” for s. 41 purposes means (in the words of the bill’s sponsor, Lord Falconer) “being able to go to court and win”. For public authorities wishing to rely on s. 41, a merely arguable potential action will not suffice.

 

Next, the Tribunal considered the long-established definition of actionable breach of confidence from Coco v AN Clark (Engineers) Ltd [1968] FSR 415, the first limb of which requires that the information has the “necessary quality of confidence”. Guardian News conceded that the information was neither trivial nor widely accessible, but argued that limb 1 of Coco imposed two further requirements, namely: the party claiming confidentiality must demonstrate some value it would derive from non-disclosure of the disputed information, and the information must be confidential from the objective standpoint of the reasonable person. While it found that both of these conditions were met in this case, the Tribunal found it unnecessary to read these supplementary questions into the Coco test.

 

Third, the Tribunal considered the principle (under limb 3 of Coco) that a breach of confidence is only actionable if the confider suffers detriment thereby. Caselaw shows that, where private (as opposed to commercial) information is at stake, courts have not insisted on this detriment criterion. Nonetheless, the Tribunal declined to deviate from Coco: for s. 41 to be engaged, the public authority must make out detriment. The standard of detriment is not onerous: reputational damage suffices. In the circumstances, however, it was only the higher education institutions who were capable of suffering detriment, and not the Council in its own right, because the latter was merely the servant of the former.

 

Finally, the Tribunal, applying the proportionality test from HRH Prince of Wales v Associated Newspapers Ltd [2006] EWCA Civ 1776, held that a public interest defence would defeat a claim for breach of confidence in these circumstances. Notably, the Tribunal held that even if disclosure were to result in uncooperative behaviour from Higher Education Institutions, little weight should be attached to any such detriment based on obstructive behaviour “which would fall short of the standard of stewardship which the public is entitled to expect”.

 

DISCLOSING CONSULTANTS’ REPORTS UNDER THE EIR

October 21st, 2009 by Anya Proops KC

Yesterday, the Information Tribunal promulgated an important decision on the application of certain exceptions in the Environmental Information Regulations 2004 (EIR), South Gloucestershire Council v Information Commissioner & Bovis (EA/2009/32). The case concerned an application made by a developer (Bovis) for disclosure of information contained in a number of consultants’ appraisals. The appraisals had been commissioned by the council in respect of a proposed section 106 planning agreement. The agreement in turn related to a major development which Bovis was proposing to undertake in the council’s area. The appraisals had been commissioned in essence in order to assist the council in its negotiations with Bovis in respect of the section 106 agreement. The council had refused disclosure of some of the information in the appraisals, which largely consisted of financial information, on the basis that that information fell within the exceptions provided for under r. 12(4)(e) EIR (the internal communications exception) and r. 12(5)(e) EIR (the confidential/commercial information exception). The Commissioner held that neither of these exceptions was engaged.

 

On appeal by the council, the Tribunal held that the circumstances of the case were such that the council had not been entitled to treat the appraisals as an ‘internal communication’ for the purposes of r. 12(4)(e) (cf. the Tribunal’s decision in Secretary of State for Transport v Information Commissioner (EA/2008/0052): draft report on transport policy prepared by independent third party was an ‘internal communication’, particularly in view of the extent to which the third party had been ‘embedded’ in the public authority). However, the Tribunal went on to allow the council’s appeal on the basis that the information in the appraisals did constitute confidential, commercial information falling within the ambit of r. 12(5)(e). The Tribunal also held that the public interest balance weighed in favour maintaining the exception and, accordingly, that the council had been lawfully entitled to withhold the requested information.

 

In reaching the conclusion that r. 12(5)(e) was engaged in respect of the information, the Tribunal rejected arguments advanced by the Commissioner that r. 12(5)(e) would only be engaged in respect of confidential information where the duty of confidence was owed by the public authority to a third party. It held that r. 12(5)(e) applied equally to the authority’s own confidential information. Notably, in finding that the public interest balance weighed in favour of the information being withheld, the Tribunal relied in particular on the volume of information which the council had already disclosed relating to the section 106 process and the planning process more generally.

 

Recent conference papers

April 30th, 2009 by Timothy Pitt-Payne QC

On 11 KBW’s main website, you can now find some conference papers delivered this month by members of chambers.

There’s a paper that I gave at a Northumbria University conference.  The theme of the conference was information sharing; my paper is about the new law on breach of confidence (post-Campbell v MGN).

Yesterday, the LGG/11KBW legal update conference took place, with about 115 delegates.  Karen Steyn gave a paper on recent case-law affecting local authorities; the first section is about information law.  I gave a paper about employment vetting.  In discussion, delegates were clearly very interested in getting to grips with the new ISA barring regime.  Questions were raised about its implications for elected members of local authorities, and for volunteers (e.g. parents helping out in schools).  

Another subject  raised in discussion was the recent decision of the Administrative Court in R(G) v Governors of X School and Y City Council.  A music assistant employed at a primary school was dismissed; the allegation was that he had formed an inappropriate relationship with a 15 year old boy who was on work experience at the school.  The school’s disciplinary committee told the employee that they would be reporting the case to the Secretary of State for potential inclusion in “list 99” (i.e. the statutory list of those banned from working in schools).  The Court quashed the decision because the school had refused to allow legal representation at the dismissal hearing or at a forthcoming appeal.  The disciplinary proceedings, and the referral to the Secretary of State for a potential banning direction, formed part of one and the same proceedings.  Those proceedings were not criminal in nature for the purpose of article 6 of the Convention.  However, their potential consequences were grave; and procedural fairness required the claimant to be allowed legal representation, before both the school’s disciplinary committee and its appeal committee.