The Administrative Court has held that local electors and other interested parties are entitled to inspect and make copies of contract documents that are related to the council’s accounts to be audited, and that that right overrides any express confidentiality obligations in the contract.
Peter Keith-Lucas considers the implications for local authorities of the decision in Veolia ES Nottinghamshire Ltd v Nottinghamshire CC.
The case of Veolia ES Nottinghamshire Ltd v Nottinghamshire CC [2009] EWHC 2382 (Admin) concerned the county council’s waste PFI contract that Veolia held. D, a local elector, applied to the council to exercise his right to inspect and take copies of all books, deeds, contracts, bills, vouchers and receipts relating to waste management in the council’s area. These documents included the schedules to the waste contract and Veolia’s monthly invoices for work done under the contract.
Veolia applied for an injunction to prevent the council disclosing the documents. It claimed that the documents did not fall within the statutory right of inspection and copying, and it contended that the documents had been supplied to the council on a confidential basis. The information was valuable to commercial competitors and to its subcontractors and, were any of that information to enter the public domain, it would damage its ability to compete on bids with other local authorities and it would impair its ability to hold down subcontract prices on the contract.
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The court considered:
- whether the documents fell within the statutory right of inspection and copying under s.15(1) of the Audit Commission Act 1998;
- whether they were documents “relating to the accounts to be audited”; and
- the extent to which commercially confidential information could be excluded from disclosure.
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The decision
The judge reviewed the background to the1998 Act and relevant case law. He held that:
- section 15 gave those with a real and close interest in a council's activity, including both electors and local business groups, the opportunity to scrutinise its accounts in the audit process, so that they could consider whether the authority’s arrangements were lawful and secured value for money;
- however, the section did not create a general free-standing right of access – the book, deed, contract, bill, voucher or receipt must relate to the accounts of the council so there must be a factual connection between the accounts to be audited and the document being inspected and copied;
- when considering whether the document “related to the accounts to be audited”, the Audit Commission’s broader meaning of “accounts” was to be preferred, i.e. the general ledger and any account feeding into it.
Applying this approach, the judge found that the schedules to the waste management contract and monthly invoices submitted under it were documents that related to the accounts of a local authority to be audited under the 1998 Act, and D was therefore entitled to inspect and take copies of those documents under s.15.
Regarding confidentiality, the judge noted that s.15(3) contained a confidentiality protection as it excluded personal information from the right to inspection. This express provision for confidentiality showed that Parliament had addressed that issue in relation to s.15 and had not considered it necessary to extend protection to commercial cases.
The judge held that the policy background to s.15 was different from that of modern information rights legislation, such as the Freedom of Information Act 2000 (FOI), which excluded commercially confidential information. Those pieces of legislation gave general rights of access to information held by public authorities and were based on principles of openness and transparency, whereas the 1998 Act was a mechanism of democratic accountability that gave an interested party the opportunity to be involved in the audit process. Section 15 therefore trumped the confidentiality obligations set out in the contract.
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The right of access to documents connected with expenditure has always been wider than that under FOI and other information rights legislation, even though it can only be exercised during a limited period of time. Nor it is subject to the same safeguards as FOI over the disclosure of commercially sensitive information and, importantly, contractual disputes. But, equally, local authorities have no duty under the 1998 Act to assist the applicant or to supply the document – they can simply direct the applicant to a room full of papers and say “it’s in there”.
This has not been an issue for local authorities up to now, as not many people knew of the 1998 Act provisions. However, the publicity given to the Veolia decision has raised awareness of this right of access. Local authorities should brace themselves for queues at the doors come the next audit inspection period.
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