Whether the Council was justified in its decision to grant partial access to an auditors’ report of key financial controls and governance arrangements of an organisation

21 April 2020

Background

This review arises from the Council's decision to grant partial access to an auditors’ report (the report) of key financial controls and governance arrangements of a named organisation (the applicant) pursuant to an FOI request to which section 38 of the FOI Act applies. Section 38 applies where the FOI body concerned has, at some stage in the decision-making process, considered that the record(s) in question qualify for exemption under any of sections 35, 36 and 37 of the FOI Act (regarding, respectively, confidential, commercially sensitive, or personal information) but that the record(s) should be released in the public interest.

Where section 38 applies, the body is required to notify affected third parties before making a final decision on whether or not the exemption(s) considered to apply should be overridden in the public interest. The requester or affected third parties, on receiving notice of the final decision of the FOI body, may apply directly to this Office for a review of that decision.

In this case, the Council received a request on 28 August 2019 for a copy of the report and all correspondence during 2019 between a named staff member of the Council and the applicant’s chairperson. When processing the request, the Council formed the opinion that the report consisted of commercially sensitive information within the meaning of section 36. It informed the applicant of its view that the public interest would be better served by granting access to the majority of the report than by refusing access. The applicant identified certain parts of the record that it considered should be withheld. Having considered the applicant's submission, the Council decided to grant access to the report subject to a small number of redactions under section 36, comprising budget and income and expenditure amounts and a small number of specific financial transactions. On 30 October 2019, the applicant sought a review by this Office of that decision.

I have decided to conclude this review by way of a formal, binding decision. In conducting this review I have had regard to the contents of the report at issue. I have also had regard to correspondence between the Council and both the applicant and the requester on the matter, and to communications between this Office and both the applicant and the Council in relation to this review.

Scope of Review

The applicant included with its application for review to this Office a spreadsheet entitled “Submission”, containing details of the information it deemed to be commercially sensitive and that should be redacted. I note that many of the redactions identified have already been redacted by the Council in the version of the report it proposes to release. Only a small number of redactions, on pages 14, 15, 23 and 24 of the report, remain at issue.

Accordingly, this review is concerned solely with whether the Council was justified in its decision to grant access to those remaining parts of the report that the applicant has identified as being commercially sensitive under section 36(1)(b) of the Act.

Preliminary Matter

Under section 22(12)(a) of the FOI Act, a decision to grant a request to which section 38 applies shall be presumed to have been justified unless the person to whom the information relates shows to the satisfaction of the Commissioner that the decision was not justified. This means that the onus is on the applicant of satisfying this Office that the Council's decision to grant partial access to the record at issue was not justified.

Analysis and Findings

During the course of the review, the applicant was invited to make a submission in relation to the Council’s decision to grant partial access to the report but it did not do so. I note that in its application to this Office for a review of the Council’s decision, it argued that the release of the report, even in redacted format, is detrimental to its reputation, damaging to its relationship with all stakeholders and given the commercially sensitive nature of the material contained in the report, will have adverse effects on its business and operations. In light of my description above of the scope of the review, I take these arguments as referring solely to the text identified by the applicant as being commercially sensitive and that the Council decided not to redact.

Section 36(1) provides for the refusal of a request if the record concerned contains financial, commercial, scientific or technical or other information whose disclosure could reasonably be expected to result in a material financial loss or gain to the person to whom the information relates, or could prejudice the competitive position of that person in the conduct of his or her profession or business or otherwise in his or her occupation.

The essence of the test in section 36(1)(b) is not the nature of the information but the nature of the harm which might be occasioned by its release. For the exemption to apply, the only requirement that has to be met is that disclosure could reasonably be expected to result in financial loss or could prejudice the competitive position of the person concerned. The standard of proof necessary to meet the second part of the exemption, i.e. “could prejudice”, is considerably lower than the standard required to meet the test of "could reasonably be expected to" in the first part. Regardless, a party wishing to rely on this exemption should be in a position to identify the nature of the harm envisaged and how the release of the information at issue might give rise to that harm.

In Westwood Club v The Information Commissioner [2014] IEHC 375, the High Court clarified that it is not sufficient for the party relying on section 36(1)(b) to merely restate the provisions of the section, list the documents and say that they are commercially sensitive. The FOI body or the third party opposing release should explain why disclosure of the particular records could give rise to the harms set out in the section.

The information at issue comprises information relating to sample sizes of certain specified financial transactions selected for audit and the number of instances identified in respect of certain findings, and certain information relating to employee/contractor expenses.

As I have outlined above, the applicant argued that the release of the information at issue is detrimental to its reputation, damaging to its relationship with all stakeholders and will have adverse effects on its business and operations. However, it has not explained how such harms might arise as a result of the release of the specific information at issue, nor is it clear to me how such harms might arise. I find, therefore, that section 36(1)(b) does not apply.

Accordingly, having regard to the provisions of section 22(12)(a), I find that the applicant has not shown to the satisfaction of this Office, that the decision of the Council to grant access to the information at issue was not justified. I find, therefore, that the Council was justified in granting partial access to the report at issue.

Decision

Having carried out a review under section 22(2) of the FOI Act, I hereby affirm the decision of the Council to grant partial access to an auditors’ report (the report) of key financial controls and governance arrangements of a named organisation.

Right of Appeal

Section 24 of the FOI Act sets out detailed provisions for an appeal to the High Court by a party to a review, or any other person affected by the decision. In summary, such an appeal, normally on a point of law, must be initiated not later than four weeks after notice of the decision was given to the person bringing the appeal.

 

Stephen Rafferty

Senior Investigator