It's Your Right to Know

29 October 2010:
The Court of Appeal today ruled that taxpayers and voters are entitled to examine and copy local authority contracts and invoices - but that councils and contractors are permitted to protect legitimate 'trade secrets'.



Lords Justice Rix, Jackson and Etherton today said the Audit Commission Act 1998 (a law which permits the public to trawl through local govt accounts each summer) requires councils and police authorities to disclose files to local taxpayers and voters except where there is a 'strong public interest' against disclosure.

The three appeal judges agreed that the European Convention on Human Rights, as enacted in the Human Rights Act, and European Directives on confidential data, provides limited scope for protecting '
commercially confidential' information contained in contracts, invoices and other documentation in council and police authority accounts.

On one hand the council must subject itself to public scrutiny by allowing local persons to inspect contracts, invoices, deeds, bills and receipts, but on the other hand the council has a duty to protect the
public purse and ensure that 'confidential' information is not disclosed in a way that harms the public interest, the court stated.

The case concerned an attempt by environmental campaigner Shlomo Dowen (pictured left) to obtain details of PFI contractor Veolia's commercial dealings with Nottinghamshire County Council, notably copies of the contract and associated schedules, and monthly invoices.

The Court of Appeal had to balance Mr Dowen's legal right to view the data and (should he choose) to make representations or objections to the district auditor, with Veolia's rights to protect its own pricing formulae. The company argued that such disclosure would harm its interests should the information get into the hands of its competitors, which could only compromise the council's attempts to achieve '
best value' and efficiency. That point was endorsed by the Audit Commission, which was an interested party in the case.

The court's decision (which is a re-statement of existing legal approaches to treatment of confidential information and which follows a 2004 EU directive on public bodies' usage of confidential information) means that councils and police authorities will have to
balance the public and private interest before disclosing or withholding data described as 'confidential'.

It also means that local taxpayers, journalists and voters will either need to seek Judicial Review (if they have reason to believe data is withheld during the statutory public audit period for improper reasons) or lodge an
objection with the external auditor (who has wider powers to obtain documents).

The court agreed confidential information can be withheld during the audit period, but disagreed whether the common law or the 1998 Act impliedly prevents voters, taxpayers or journalists using any information gleaned other than for the
express purpose of raising questions or objections with the auditor.

Veolia pressed for a resstriction on publication of any data viewed and copied by 'interested persons' during an audit, but Mr Dowen's Counsel Mr Timothy Pitt-Payne argued any general restriction was a matter for
Parliament and not for the courts to implement.

Rix LJ said: "I am not entirely convinced that English common law has always regarded the preservation of confidential information as a fundamental human right. Nevertheless it can be seen that it is a species of 'possessions' with which the state cannot interfere without justification.

"I see no difficulty in reading down section 15(1) [the right of an 'interested person' to inspect and copy accounts and associated documents] so as to provide an exception for confidential information because ... the structure of the Audit Commission Act as a whole shows a clear regard for preservation of confidence subject to the demands of a
proper audit."

That does not mean that any financial record described as 'confidential' can be withheld from taxpayers, voters and journalists, the court concluded.



Rix LJ said: "Confidential information comes in all shapes and sizes and there is also an opportunity for parties by agreement to misuse its categorisation.

"In my judgment, the proper and preferable approach is that of reading down the right of access by reference to well developed principles for dealing with confidential information which exist where there is a
conflict between competing values."

In a dissenting part of his judgment, Rix LJ argued that local taxpayers, voters and journalists should not be permitted to disclose any information to any person other than the district auditor, and should not be at liberty to publish the data without
permission. Mr Dowen had already received some confidential material which he could "only use for the purposes of the audit".

But Etherton LJ and Jackson LJ disagreed. Etherton LJ said: "There are many ways an interested person who obtains information might seek to deploy such information. I am doubtful that it is helpful to consider the lawfulness of such conduct in the abstract ... where a claimant seeks to restrain the use of information."

If a party to a contract wanted to prevent a local taxpayer, voter or journalist publishing the data (whether 'confidential' or not) then equitable relief through an
injunction might be available, Etherton LJ said.

Jackson LJ said: "We should not decide the use to which information accessed under section 15(1) of the Audit Commission Act 1998 should be put."

Laura Gyte, Friends of the Earth lawyer (acting for Mr Dowen) said: "The Court of Appeal have confirmed the victory in this case for freedom of information.

"We are disappointed that the Court of Appeal implied a qualification on commercial confidentiality - in our view this is a matter for Parliament to decide upon - but it is important that even where commercial confidentiality is
claimed, the audit laws mean that public authorities must still disclose the
information where it is in the
public interest to do so."

The Court of Appeal decision is available on the bailii.org (British and Irish Legal Information Institute) website.

BAILII link.



12 July 2010:
The Court of Appeal has been tasked to decide whether UK taxpayers and voters (including journalists) are free to view, copy and then publicise details of Town Hall finances.

Lords Justice Rix, Jackson and Etherton are to judge whether the Audit Commission Act (a law which permits the public to trawl through local govt accounts each summer) must be tightened up, to enable councils and consultants to keep 'confidential' contracts and invoices out of public view.

The court is also to rule whether taxpayers and voters (including journalists) should be
prohibited from disclosing any information inspected and copied to any individual or organisation other than a nominated district auditor - who will determine what information can be made public.

Nottinghamshire County Council was constrained under a temporary injunction obtained by Veolia ES (Nottinghamshire) Ltd not to disclose parts of a contract and parts of invoices relating to a waste incinerator PFI project, to a local taxpayer and Friends of the Earth campaigner Mr Shlomo Dowen (left).


Mr Justice Cranston ruled in October 2009 that there was no provision in the Audit Commission Act to allow Veolia or Notts CC to withhold information from a local elector or taxpayer on grounds of '
commercial confidentiality'. Veolia's appeal against that High Court decision was heard before Lords Justice Rix, Jackson and Etherton on 5/6 July 2010. Judgment was reserved.

The case has taken on added significance because of its wider implications for the rights of local government electors and taxpayers, journalists, campaigners and local businesses to
probe details of local council and police authority accounts in the future, and to publish, disclose or network material gleaned from their own enquiries.

That is because Counsel for Veolia, the Audit Commission and Notts CC presented the Court of Appeal with two critical questions on legitimate and illegitimate use of information gathered.

Firstly whether any information in invoices, contracts, receipts or bills, described by contractors or consultants as 'commercially confidential' or '
trade secrets' , can be withheld from public scrutiny altogether.

Secondly to rule whether the law prohibits
taxpayers and voters from showing any documents inspected and copied to persons other than the district auditor - regardless of whether or not it is marked 'confidential'.



It means the Court of Appeal is being asked to rule whether voters and taxpayers (including journalists) act lawfully or unlawfully if they publish (or upload onto the web) any details of council and police authority expenditure inspected and copied during the annual audit at their local authorities.

Counsel for taxpayer and campaigner Mr Dowen urged the Court of Appeal not to impose any legal limitations on voters' and taxpayer's' rights to access and circulate financial records, warning of a '
chilling effect' on the public's right to know.

In the course of submissions, Lord Justice Rix said: "When the court has to conduct a balancing exercise, or a 'reading down' exercise, there are three ways you can read down the primary authority with confidential information in mind.

"One is to say that the statute only gives a limited right of
access to certain documents. One way is to say that you can have documents but you should be concerned about how much confidential information you give away.

"It may be that the statute allows for redaction because the auditor can see the documents and can determine how far to dig, given that the auditor has
obligations of confidentiality.

"Another way is to say you may inspect the documents but only for the purpose envisaged by the Act, [which is] to inspect and to object to the accounts."


Mr Philip Coppel QC, for Veolia (claimant)

"The only purpose for making the accounts available for 20 days, is for the purpose of questioning the auditor.
"There is an obligation on the auditor to listen to an objection from an elector but not to act on every objection. It is not an opportunity for a local government elector to duplicate what the auditor does. The auditor is independent of the local authority and is qualified.
"The principle is that anyone doing business with a council will want to be very sure that, when they provide confidential information to a public authority, that confidentiality is maintained.
"The [legislation enabling an interested person to inspect and copy accounts to be audited] lacks a sufficient clear intention to displace the protection afforded to commercially confidential information [recognised] by [common] law. The right of access does not extend to such information."

Mr Peter Oldham, for the Audit Commission (2nd interested party)

"Given our remit, we feel a result permitting untainted use of confidential information is not going to support cost effective local government.
"If the information becomes generally available, it might affect the value that a local authority got from a particular contractor.
"My learned friend [Mr Coppel] says the information [Veolia] seek to protect is commercially valuable.
"In other words, if it were to be released generally then clearly that could have a damaging effect on the prices available for that type of service.
"We see nothing that would prevent the person interested from taking it to the auditor, who would make use of the information to report any iniquity."


Mr Clive Lewis QC, for Nottinghamshire CC (defendant)

"There is a question [that] if we do have access to information, confidential or not, what does Parliament intend the local government elector to have the access for? [One] interpretation is that, once you have the information, then you are free to do what you want.
"We say that inspection must be for a legitimate purpose and, if it is more limited, then we just use it for the audit purposes. It is clear that the intention of Parliament was to ensure proper democratic accountability for public funds.
"It is public money and the local government electors need to be sure that it is being spent wisely, especially at the present time.
"Veolia knew or should have known there is emphasis on value for money and that interested persons may exercise their rights [to inspect the accounts]. They can't say that they didn't know about it."

Mr Timothy Pitt-Payne QC, for Mr Dowen (1st interested party)

"If there is a restriction about the purpose or intention about how the information can be used, then that would suggest that the local authority can ask questions about the interested person's purpose before the information is disclosed.
"That would have a chilling or limiting effect on the exercise. [Can an elector] show the information to a friend who has some expertise, to formulate some questions to the auditor?
"What if he wants to tap on the expertise from further afield and he puts it on the internet and invites comments from anyone with relevant experience?
"Let's say the local government elector has information and wishes the Press to cover the issue, and shows the information to a journalist so that the journalist can write about the issue. Is that proper or improper?"

A detailed summary of Counsels' submissions to the court, and judges' questions and comments, are available in the following PDF files.

Day 1 Proceedings
Day 2 Proceedings

Mr Justice Cranston's High Court decision is available on the bailii.org (British and Irish Legal Information Institute) website.

BAILII link.

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