The Information Tribunal has ruled that Derry City Council must disclose financial information relating to a contract with Ryanair (Derry City Council v The Information Commissioner, appeal no. EA/2006/0014). The decision provides important guidance on the scope of the exemptions for confidential and commercially sensitive information under the Freedom of Information Act ("FOIA") and has significant implications for any party to a public/private sector contract.
On 5 January 2005, a journalist made a request to Derry City Council (the "Council") for information about its agreement with Ryanair regarding the use of Derry City Airport (the "Airport"), including the amount paid by Ryanair to the Council. The Council declined to provide the information. After a complaint by the journalist to the Information Commissioner, the agreement was disclosed but with the financial terms redacted.
The only written record of the agreement's terms was a fax sent by Ryanair to the Council and headed "heads of agreement letter". No subsequent formal agreement was produced and the parties conducted their business on the basis of the terms set out in the fax. The fax was marked "private and confidential" and included a separate paragraph headed "disclosure" which provided that "until announced publicly by Ryanair, the service must remain private and confidential, and must not be disclosed under any circumstances."
Refusing to provide the information, the Council relied on the exemptions in section 43(2) (prejudice to commercial interests); section 29 (prejudice to the economic interests of the UK); and section 41 (disclosure giving rise to an actionable breach of confidence) of FOIA. The qualified exemptions under sections 29 and 43(2) are each engaged where disclosure of the information "would, or would be likely to, prejudice" the interests in question. If the likelihood of prejudice can be established, the public interest in disclosure is then weighed against the public interest in maintaining the exemption. The section 41 exemption is an absolute exemption. Information is exempt from disclosure under this provision if (a) it was obtained by the public authority from any other person, and (b) disclosure of the information would constitute a breach of confidence actionable by that or any other person.
The Information Commissioner's decision
The Commissioner found that the exemptions under sections 29 and 43(2) were not engaged because disclosure was not likely to cause any prejudice. His reasons for this conclusion related principally to the Council's failure to demonstrate how prejudice would have been caused by disclosure at the time when the request was made. He noted that the commercial interests of the Council (and the economic interests of the region) in 1999 were significantly different from the position in 2005. In particular, he found that due to a 2004 European Commission decision relating to advantages granted to Ryanair by Brussels South Charleroi airport, there was by 2005 considerable public awareness of the fact that carriers were offered incentives by airports in certain circumstances.
The Commissioner also concluded that the section 41 exemption was not engaged. He rejected the Council's argument that an express duty of confidence was owed to Ryanair in respect of information provided to the Council under the terms of the Heads of Agreement, finding that the Heads of Agreement did not contain any reference to or undertaking for non-disclosure of confidential information. The only non-disclosure provision included in the fax had ceased to have effect once Ryanair's flights from the airport started. He also found that the Council had been unable to identify any specific information in the Heads of Agreement which had been received by the Council from Ryanair.
The Tribunal's findings on the section 43(2) and section 29 exemptions
The Tribunal considered the factual background to Ryanair's commencement of flights from the Airport, including the general issue of agreements between publicly owned airports and low cost airlines and their scrutiny by the European Commission. In relation to section 43(2), the Tribunal, disagreeing with the Commissioner, found that the exemption was engaged. Although it recognised that by the time of the request the information was old and circumstances had changed, it accepted that disclosure would have caused prejudice to the Council's commercial interests in that it would inevitably have put the Council at a disadvantage in negotiations.
The Tribunal then went on to apply the public interest test and concluded that "on balance, the risk of prejudice to the Council's commercial interests by the time the Complainant made his request was not sufficient to outweigh the public interest in having the Ryanair Financial Information disclosed." Although the Tribunal's decision does not elaborate on the reasons for its conclusion, it evidently accepted the Commissioner's arguments as to the importance of informed public debate on the issue of publicly funded airports, particularly in circumstances where the Airport had never succeeded in covering its costs and ratepayers had to cover its losses. By contrast, the evidence as to the Council's commercial interests was weak.
The section 29 exemption was dealt with very briefly, on the basis that the public interest arguments were the same as for section 43(2) and its conclusion was therefore also the same. The Tribunal's findings on the section 41 exemption
There were 3 stages to the Tribunal's reasoning.
(1) Was the information "obtained from a third party"?
The Council argued that the purpose of the requirement for the information to have been obtained from a third party was to prevent authorities from withholding internal communications – it was not intended to exclude contracts or documents created during contractual negotiations from the scope of the exemption. The Commissioner argued that a written agreement between two parties did not constitute information provided by one of them to the other. The Tribunal accepted the Commissioner's arguments, finding that "a concluded contract between a public authority and a third party does not fall within section 41(1)(a) of the Act" and that the exemption did not therefore apply.
Although on the facts of this case the information in question did not take the form of a formal concluded contract, the Tribunal found that the fax recorded agreed terms and did not convey to the Council any information as to Ryanair's terms which it did not already possess. The fax was therefore to be treated in the same way as a formal contract for these purposes. Importantly, however, the Tribunal acknowledged that information regarding the pre-contractual negotiating position of a party, whether or not a contract was ultimately concluded, would not necessarily fall outside the scope of the exemption – this would depend on the circumstances of each case. Furthermore, the Tribunal acknowledged that contracts may contain confidential technical information which could be characterised as having been "obtained" by one party from the other, and which it may therefore be possible to redact.
Although the section 41 issue was resolved once the Tribunal had found that the exemption could not apply, because of the likelihood of a further appeal the Tribunal went on to consider the remaining issues.
(2) Would disclosure of the information constitute an actionable breach of confidence?
The Tribunal found that the circumstances in which the fax came into existence, namely commercial negotiations, gave rise to an obligation of confidence. It further found that this obligation was still in existence in January and February 2005 when the request for information was made and refused.
(3) Would the Council have had any defence to a claim for breach of confidence based on the public interest in disclosure of information?
The final issue was whether any action for breach of confidence against the Council resulting from disclosure could have been defeated by a public interest defence, so that the section 41 exemption would not apply. This issue was dealt with at some length by the Tribunal, largely because the parties did not agree on the scope of the applicable public interest. The Council argued that the disclosure of confidential information was only justified in circumstances where there was some serious wrongdoing or risk of harm to the public. The Information Commissioner, however, relied upon the case of London Regional Transport v The Mayor of London  EWCA Civ 1491 in support of his argument that the public interest defence was also applicable where disclosure was necessary to inform public debate.
The Tribunal again agreed with the Commissioner, holding that the effect of the LRT case was to require it to move away from the concept of precisely defined categories of public interests that may be said to justify disclosure. Instead, the Tribunal carried out a balancing exercise between the factors in favour of disclosure of and withholding the information, noting that the starting point in this context was the assumption that confidentiality should be preserved (as opposed to the position under FOIA, where the presumption is in favour of disclosure). Despite this, it held that the factors in favour of disclosure were sufficient to outweigh the competing interest in confidentiality and that therefore there would have been a public interest defence available to the Council if it had disclosed the information. On that basis, the Council could not rely on the section 41 exemption.
The Tribunal's decision in this case will be of particular interest for the finding that the section 41 exemption cannot apply to concluded contracts entered into by a public authority. In the light of this case, parties to such contracts may need to re-evaluate the extent to which information about their contractual arrangements will be protected in the event of a request for disclosure. In particular, it will be advisable for parties to consider whether any other exemption might apply.
It is clear from this decision (and indeed previous decisions involving the application of the section 43(2) exemption) that the Commissioner and Tribunal take a dim view of parties seeking to assert prejudice to their commercial interests without being able to support this with evidence. Ryanair's failure to present any evidence as to its own interests (as opposed to those of the Council) clearly did not assist the Council's case. If a party intends to resist information requests on the basis of this exemption, it should record properly the reasons why disclosure of the information would cause commercial prejudice and the public interest considerations justifying maintenance of the exemption, bearing in mind that these need to be kept under review as time passes.