Construction News

Sun October 25 2020

Related Information

PFI contract information was confidential

5 Nov 10 The appeal was concerned with the inspection rights provided to "persons interested" pursuant to section 15(1) of the Audit Commission Act 1998. This section provides:

"At each audit under this Act, other than an audit of accounts of a health service body, any persons interested may - "Inspect the accounts to be audited and all books, deeds, contracts, bills, vouchers and receipts relating to them…"

The principal issue before the court was whether commercial confidential information contained in a waste management PFI contract made between Veolia ES Nottinghamshire Limited and Nottinghamshire County Council and in invoices submitted under the contract came within section 15(1) and were , therefore, open to inspection or whether they were protected against disclosure.

Mr. Shlomo Dowen, an elector within the council's area, was a "person interested" for the purposes of the Act. He applied to the Council to inspect and make copies of the contract and its invoices, but Veolia objected on the ground of the confidential information contained in them; however, it consented to the disclosure of such documents or parts of them that were already in the public domain with Veolia's consent in response to freedom of information requests in the past. Mr. Dowen had previously sought such material under the Environmental Information Regulations and section 50 of the Freedom of Information Act 2000.

Although the purpose proceedings were to preserve the confidentiality of the disputed documents, the legal means by which Veolia sought to achieve that end were not on the basis of such confidentiality, but rather on the technical ground that neither the contract nor the invoices as documents fell within the statutory words "contracts…bills, vouchers…relating to them", i.e. relating to the "accounts to be audited". Veolia accepted that the documents were contracts, bills and/or vouchers, but submitted that the documents did not relate to the accounts to be audited because the accounts in question were not accounts to be found in the Council's general books of accounts, but rather the high level summarised accounts to be found in the Council's annual statement of accounts; and because the documents in question were not referred to in those high level summarised accounts, and the words "relating to" required some such express reference. The court at first instance had rejected this argument, and Veolia now appealed.

On appeal, Veolia's submissions were twofold: it renewed the technical argument put before the judge, and added an argument the provision for access to accounting documents in the context of an audit could be construed as an open sesame for the destruction of valuable confidential information.

Held:

There was no specific definition of "accounts to be audited", and it was wide enough to cover everything from the Council's most basic ledgers to their high level accounts. Even if the "accounts to be audited" were given the narrow meaning advanced by Veolia, the contract and its invoices would plainly be within the scope of documents relating to such accounts. That was so whether or not the notes to the statement of accounts were part of such accounts. The notes to the statement of accounts were plainly part of the accounts contained in the statement of accounts.

The question was not whether persons interested can use accrued information for a "proper" purpose, but whether they can use it otherwise than for the purposes of the audit. Limitation on use is common in situations where the law compels private documents to be disclosed, and that limitation is not prevented by fear of practical difficulties; for example, documents which have to be disclosed for the purposes of litigation can only be used for the purposes of that litigation, although a judge may give permission for them to be used in other litigation.

Related Information

The court saw no reason why even if section 15(1) did require access to confidential information, there needed to be any greater disclosure or use of such information beyond the purposes of the audit. There was no reason why persons interested should be entitled to obtain the confidential information of a contractor with a local authority in order to disclose it to the world, or sell it to its competitors. If that person brought the information to the attention of the auditor, the auditor would be subject to the limitations of section 49, so why should the person interested have limitless freedom to use or abuse valuable confidential information?

If an applicant were to make it clear to a local authority in advance that he did not seek to inspect confidential information for the purposes of the audit but for entirely other purposes, the court saw no reason why the authority should not be entitled to say that the right of inspection did not extend for the purpose of such use outside the audit. Given the protection afforded to confidential information by the European Court on Human Rights, whatever may be the position more generally, access to confidential information should be at the very least restricted to use only for the purposes of an audit.

Veolia ES Nottinghamshire Ltd. v Nottinghamshire County Council and Others, [2010] EWCA Civ 1214

This item has been selected from the content of the weekly construction law subscription bulletin. You can download a sample issue of the weekly construction law digest by clicking here   Subscriptions to the full weekly case law digest from Bliss Books from as little as £150 a year. Can you afford to be without it? 

 Also reported in this week's subscription bulletin:

  • Australian Case on the Prevention Principle
  • When Time Starts to Run for Building Defects Claims
  • Was the Specification for a Contract Advertisement Sufficiently Certain?
  • Repudiation of Contract  

Book of the Week

Pre-Publication Offer- ICE Manual of Construction Law, Save £10.00, plus FREE UK Postage

Click Here to Read More

Got a story? Email news@theconstructionindex.co.uk

MPU

Click here to view more construction news »