In Westwood Club v Information Commissioner and Bray Town Council (notice party) [2014] IEHC 375, the High Court allowed an appeal against a decision of the Information Commissioner (the IC), which upheld a decision of Bray Town Council (the Council) that records were not "held by" the Council for Freedom of Information (FOI) purposes. The court found that the IC had made a material error in failing to properly analyse the issues of commercial sensitivity, control, and the burden of proof.

This case demonstrates the narrow scope of the commercial sensitivity exemption and the difficulties with showing whether a record is "under the control of" a public body and hence subject to FOI. It also serves as a reminder that the burden of proof rests upon the public body refusing disclosure to show why its refusal is justified.

Background

Section 6 of the FOI Acts 1997 and 2003 (theActs) confers a general right of access to records "held" by a publicbody. Section 2 (5) (a) of the Acts provides that a reference to records "held" by a public body includes records "under the control of the body".

The appellant sought access to certain financial records of Shoreline for 2008 and 2009, held by the Council (as 100% shareholder of Shoreline), in order to establish the funding relationship between Shoreline and the Council. The Council refused the request on the basis that the records were held by staff members of the Council in their capacity as officers of Shoreline (a private company), and were not held by the Council per se. Accordingly, the information sought was held by a private company which was not subject to the Acts.  On internal review, the Council's initial decision was upheld.

The appellant subsequently appealed to the IC. The IC upheld the Council's refusal on the basis that those records held by the Council, as shareholder, contained commercially sensitive information that was not required to be released in the public interest, and on the basis that any further records of relevance to the request as held by Shoreline were not under the Council's control and thus could not be deemed to be "held" by the Council pursuant to section 2 (5) (a) of the Acts.

Decision

The High Court held that the IC had made a material error in failing to properly analyse the issues of commercial sensitivity, of control, and in failing to repudiate a legally erroneous statement by an investigator of her office, that the burden of proof was on the appellant to show why the documents should be released. The court therefore allowed the appeal against the IC's decision. The judge will hear counsel at a later date for submissions of the final order to be made.

  1. The Commercial Sensitivity exemption - whether records held by the Council, in its capacity as shareholder of a private company, were subject to FOI

The court accepted that certain documents held by the Council, in its capacity as shareholder, contained commercially sensitive information. However it held that the IC was under an obligation, in determining whether the commercial sensitivity exemption in section 27 (1) (b) of the FOI Acts applied, to consider whether the release of such information could result in a detriment to the Council.  The court held that the phrase "could prejudice" in section 27 (1) (b) required evidence of potential harm (Dr X v Midland Health Board (decision No. 030759, 30 August 2004)). All that the IC had done was to note the contention by Shoreline that detriment would accrue to its commercial interests from release of the documents requested. This was not a reason and the IC had fallen into an error of law in this regard.

  1. The Control Issue - whether records held by Shoreline were "under the control of" the Council, and subject to FOI

Cross J. held that in assessing whether the Council exercised control over Shoreline, and thus its records, it was important to consider, (as the IC had done), the extent to which the Council took an active role in the company's day-to-day operations. However the judge found that this was not the definitive test on the matter. "Control" must include the real strategic control of one entity by the other and the financial nexus between them. 

Cross J. held that the IC had not adequately considered all relevant matters in relation to the issue of control, and some matters were not considered at all or were given erroneous consideration. For example, the €10m loan provided by the Council to Shoreline, was erroneously referred to by the IC as a "payment of grant monies", when in fact it was a debt which clearly showed that Shoreline was dependent on the goodwill of the Council, and might well be deemed to be controlled by the Council.

In addition, the IC had failed to take into account the fact that Shoreline was in possession of property under a lease from the Council, which was not a commercially viable one.

The court found that the Council must be said to control Shoreline and that the conclusion to the contrary was irrational within the meaning of the O'Keefe decisions on judicial review.

Accordingly, the court held that the IC had erred in law in its consideration of the matters of control by concentrating entirely on what it defined as the day to day control of the operations of the swimming pool and leisure facility, rather than the obvious and clear real control that the Council exercised over Shoreline and its records.

  1. Burden of Proof

Pursuant to section 34 (12) (b) of the FOI Act, the burden of proof lies in favour of disclosure and the public body refusing disclosure at all times carries the burden of demonstrating why the documents should be released. The court held that whilst the IC, in her decision, had accepted that this was the case, she had failed to repudiate a legally erroneous statement made in a preliminary decision by an investigator of her Office (that it was incumbent on the appellant to show why the documents should be released). The court found that the incorporation of the reasoning of the preliminary decision maker into the IC's final decision, without such a repudiation, fatally undermined and tainted the final decision.

Comment

This decision demonstrates that in considering whether a record is exempt on the grounds of commercial sensitivity, it is vital that a public body shows how the release could result in the detriment contended. It also highlights that it is not sufficient to confine the issue of control as being the extent to which the alleged controller "takes an active role in that company's day-to-day operation". In addition, it serves as a reminder that the burden of proof rests with the public body refusing disclosure, to show why its refusal is justified.