Can you keep a secret? Perhaps not, if you are a public authority. Just suppose you are a contractor that has been awarded a PFI contract by a public authority to supply a public service over many years. Your contract naturally includes a confidentiality clause. Open book accounting is adopted and the authority has copies of your invoices, rates and prices. But all that information is, of course, strictly between you and the authority (and their auditors) and the Freedom of Information Act and the Environmental Information Regulations protect commercial information (subject to the public interest). So there is no way that anyone else is entitled to see it – or is there?

An unassuming section of the Audit Commission Act 1998, s15 (1), says that:

“15(1) At each audit under this Act, other than an audit of accounts of a health service body, any persons interested may –

(a) inspect the accounts to be audited and all books, deeds, contracts, bills, vouchers and receipts relating to them, (emphasis added)

(b) make copies of all or any part of the accounts and those other documents.”

And this section was thrust into the judicial limelight after Nottinghamshire County Council notified the public that its accounts for the year ended 31 March 2009 “together with all books, deeds, contracts, bills, vouchers and receipts relating to them” were to be open for public inspection. A local elector, Mr Shlomo Dowen, asked to inspect and take copies of documents open to inspection including all books, deeds, contracts, bills, vouchers and receipts relating to waste management in the area of the Council.

The Council proposed to comply with the request and the documents it proposed to disclose included invoices and schedules which showed rates, quantities, work pricing formulae, key performance indicators and other financial information relating to a PFI waste management contract entered into by the Council with its chosen contractor, Veolia ES Nottinghamshire Limited.

Veolia understandably objected. It said its information was valuable to commercial competitors and to its sub-contractors under the contract. Its contract contained a confidentiality clause. It challenged the Council’s decision in the Administrative Court in the High Court and the key question was whether the Veolia documents constituted information “...relating to...” the accounts to be audited.

Mr Justice Cranston said that they did. The accounts were “...the general ledger and any account feeding into it. Thus the accounts show all the financial movements or items of account in the Council’s funds.....Parliament’s intention in using the words “relating to” in section 15(1) was simply that there should be an enquiry as to the factual connection between the limited category of documents mentioned on the one hand and the accounts to be audited on the other.” On that interpretation, the factual connection between the disputed documents and the Council’s accounts was “obvious”.

The right to inspect and copy documents is given to “persons interested”, but who are they? The judge said that the group was “..a wider group than local government electors and could include local businesses and community groups. It seems to me that the Parliamentary purpose is to enable those with a real and close interest in a council’s activity to scrutinise its accounts in the audit process.”

And can a person interested who inspects documents under s15 (1) use the information for any purpose? The judge referred to two cases which indicated that they could.

But then the Freedom of Information Act and the Environmental Information Regulations protect commercial information from disclosure (subject to the public interest). Does the Audit Commission Act 1998 not do the same? Remarkably, it does not. S15(3) of the Act gives confidentiality protection, but only for “personal information”.

So Veolia’s challenge to the Council’s decision failed before Mr Justice Cranston but Veolia are off to the Court of Appeal to ask for permission to appeal. The story is not over yet.