R (Veolia ES Nottinghamshire Ltd) v Nottinghamshire County Council

Hearing dates : Monday 5 th & 6 th July 2010

Lord Justice Rix :

Introduction

1. This appeal is concerned with the inspection rights provided to “persons interested” pursuant to section 15(1) of the Audit Commission Act 1998 (the “ACA 1998”), which provides as follows:

“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…”

2. The principal issue canvassed on this appeal is whether commercial confidential information contained in a waste management PFI contract made between Veolia ES Nottinghamshire Limited (“Veolia”) and Nottinghamshire County Council (the “Council”) and in invoices submitted pursuant to that contract, if such documents are within section 15(1) and therefore open to inspection, a question which is in itself disputed, can nevertheless be protected against disclosure. There is practically no case law on such a question.

3. The person interested in the present case is Mr Shlomo Dowen, an elector within the local government area of the Council. It is common ground that, as such an elector, he qualifies as a “person interested”. On 29 June 2009 he applied to the Council to inspect and make copies of the contract and its invoices pursuant to section 15(1). Veolia objected, on the ground of the confidential information contained in them, but consented to the disclosure of such documents or parts of them as were already in the public domain with Veolia's consent in response to freedom of information requests in the past. Indeed, Mr Dowen had previously sought such material pursuant to the Environmental Information Regulations (the “EIR”) and section 50 of the Freedom of Information Act 2000 (the “FIA 2000”) (see below).

4. On 4 July 2009 the Council wrote to Veolia to inform it that it proposed to make available Schedules 6A, 6B, 6C and 7 of the contract, the monthly invoices submitted to the Council in the financial year to 31 March 2009, and the documents appended to the invoices which set out the individual items under the contract for which payment was demanded, as well as the rates, quantities and totals for such items. Schedule 6A sets out the various formulae according to which payments under the contract are made. Schedule 6B provides for deductions payable in the event of default by Veolia. Schedule 6C is a performance scorecard. Schedule 7 sets out the key performance indicators by reference to which some deductions are made. In effect these documents showed what Veolia had charged and the Council had paid during the relevant year, and the contractual mechanisms for calculating such payments (the “first disputed documents”).

5. On the same day, 3 July 2009, Veolia obtained an interim injunction to preserve the position, stating that it had no objection to Mr Dowen seeing any part of the contract other than the confidential information contained in it. That confidential information was defined by the contract's own clause 123.2 referring to Schedule 45 of the contract which listed “Commercially Sensitive Contract Provisions”. On 13 July 2009 Veolia served its Statement of Facts and Grounds seeking judicial review of the Council's decision dated 3 July 2009 on the basis that section 15(1) did not permit the disclosure of the confidential information. Its proceedings were served on Mr Dowen and the Audit Commission for Local Authorities and the National Health Service in England (the “Audit Commission”), respectively the first and second interested parties to the proceedings and this appeal.

6. Although the purpose and function of these proceedings are to preserve the confidentiality of the first disputed documents, the legal means by which Veolia sought to achieve that end were not on the basis of such confidentiality, but on what I might describe as the technical ground that neither the contract nor the invoices as documents fell within the statutory words “contracts…bills, vouchers…relating to them”, ie 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 (a) 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 (b) 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 judge, Mr Justice Cranston, considered those submissions carefully, but rejected them. In the final analysis, he considered that it was obvious that, whatever the accounts in question were, the disputed documents related to them.

7. Those submissions are renewed by Veolia on this appeal. I will call them Veolia's first or principal ground of appeal. However, they are supplemented by two alternative submissions. One is that section 15(1) has to be read down in order to preserve the confidentiality of confidential information by reason of either (i) English common law, and/or (ii) the provisions of article 8, and/or article 1 of the First Protocol, of the European Convention of Human Rights (the “ECHR”), and/or (iii) the provisions of article 6 of the Directive 2004/18/EC (and in domestic legislation regulation 43 of the Public Contracts Regulations 2006), which deals with the procurement of public contracts as a matter of European law (the “2004 Directive”). The other alternative submission is that the public inspection provisions of the ACA 1998 only permit use of the disclosed information for the purposes of the Act itself and not otherwise, so that even if inspection has to be granted, the obligation of confidence remains and is preserved outside the audit itself. The first of those submissions, at any rate so far as article 8 of the ECHR was concerned, was canvassed by the Council in its acknowledgment of service, and at any rate as far as the Directive was concerned, was canvassed by the Audit Commission in its acknowledgment of service: but these suggestions were not adopted by Veolia below. They have now been formally raised by Veolia in its notice of appeal in the three-fold aspect referred to above, viz English common law, ECHR and the 2004 Directive. The second of those submissions, which logically is prior, for it arises out of a consideration of the ACA 1998 itself, was developed in the course of the submissions on appeal. It was adverted to in Veolia's skeleton argument, but there said (in footnote 2) not to be an issue presently before the court. However, in the course of the appeal, it became an issue and was addressed by all the parties. I will refer to these post-judgment alternative submissions as respectively Veolia's second and third grounds of appeal.

8. Despite the novelty of these arguments, even to these proceedings, there has been no objection to their deployment. All parties recognise that, because these arguments have been deployed late, it may not be possible to give definitive rulings on them in relation to the documents in question in this court: nevertheless, all parties are anxious for the court to give as much guidance as it feels able to.

9. For similar reasons, to assist the parties to resolve as much of their dispute as possible, the court has also been asked to consider the position of a second range of disputed material. These are further schedules to the contract, namely Schedules 33, 38 and 40. These are also specified in the contract's Schedule 45 as containing commercially sensitive and therefore confidential information (the “second disputed documents”). It only emerged subsequently to the judgment below that Mr Dowen was not satisfied with access to the first disputed documents, and was now pressing to be given these further schedules. He says that he had originally asked to inspect the contract as a whole, and had reserved his position in the light of the Council's 3 July 2009 decision as to what he could have access to. It is not clear to me whether the Council had already implicitly rejected Mr Dowen's request in respect of these documents by its decision only to release for inspection the first disputed documents. Certainly in the context of Mr Dowen's application under FIA 2000 and the EIR, the Council has considered all aspects of the requested documents’ confidentiality, and its decision not to disclose those parts embracing the first and second disputed documents has been upheld by the decision dated 30 June 2010 of the Information Commissioner. Nor is it clear to me, conceptually...