Decision
Ms. X and Dublin City Council (FOI Act 2014)
From Office of the Information Commissioner (OIC)
Case number: 170565
Published on
From Office of the Information Commissioner (OIC)
Case number: 170565
Published on
Whether the Council was justified in its decision to refuse access to financial and procurement process details of insurance contracts entered into for the years 2015 to 2017 on the basis that the information refused is exempt under sections 30 and 36 of the FOI Act
06 July 2018
On 12 October 2017, the applicant made an FOI request to the Council for "financial and procurement process details of insurance contracts entered into over the past three years". On 7 November 2017, the Council granted the applicant's request in part. The Council released spread sheets listing details of its insurance policies for 2017 and 2016 including the policy number, risk insured against and period of cover. The Council also provided more limited details of insurance cover on a spreadsheet for 2015 and minutes of an Audit Committee meeting at which insurance matters were discussed. The Council withheld details of premium, indemnity and excess from the three spreadsheets on the basis that release could have an adverse effect on the management of industrial relations and negotiations (section 30) and on the basis that the information is commercially sensitive (section 36).
On 10 November 2017, the applicant requested an internal review of the Council's decision. On 30 November 2017, the Council affirmed its original decision. On 13 December 2017, the applicant applied to this Office for a review of the Council's decision. Both the applicant and the Council made submissions during the course of this review. This Office also obtained submissions from IPB Insurance.
I have decided to conclude this review by way of a formal binding decision. In conducting this review, I have had regard to correspondence between the applicant and the Council, to correspondence between the applicant, the Council, IPB and this Office, to the contents of the records at issue and to the provisions of the FOI Act.
It is helpful here to set out some details of the background to some of the material involved in this review.
In 2015, the Council commissioned Willis Towers Watson (WTW) to undertake a review of its approach to risk transfer/insurance. In May 2016, WTW submitted its risk report to the Council. Also in 2015, a Value for Money Steering Group was established with representatives of the County and City Management Association and others. The objective of the Steering Group was to oversee a value for money (VFM) review of Irish Public Bodies Mutual Insurance Limited (IPB). Price Waterhouse Cooper (PwC) were commissioned to undertake this review. PwC submitted its VFM review in July 2016.
Prior to 2017, the Council's approach in areas of high risk/potential liability had been to carry a high degree of self-insurance up to a certain threshold per individual claim in each risk class. It purchased insurance cover over the self-insurance threshold from IPB. Following receipt of the above reports/reviews, the Council decided that from 2017 onwards it would change its insurance model from largely self-insurance to the purchase of ground-up insurance cover with IPB.
In November 2016, the Council's management met with the IMPACT Trade Union and provided it with a copy of the risk report and a summary of the conclusions contained in the VFM review. The Council stated that the move would result in a smaller central claims unit (CCU) and certain staff would be re-assigned. IMPACT argued that the work should continue to be done by Council staff as this would be more cost effective.
The matter was referred to the Workplace Relations Commission (WRC) and to the Labour Court. IMPACT engaged the applicant as an independent advisor. In December 2016, she made an FOI request to the Local Government Management Agency (LGMA) for access to a copy of the VFM review. The LGMA refused to release the record and the applicant applied to this Office for a review of that decision. In case number 170136 (X and the Local Government Management Agency available on www.oic.ie) this Office annulled the LGMA’s decision and directed release of the VFM review. That decision is currently under appeal to the High Court.
In her submissions to this Office, the applicant argues that the risk report and VFM review fall within the scope of her request and ought to have been released by the Council. The applicant states that record 3 (Audit Committee minutes) specifically refers to the risk report and the VFM review. She argues that these records fall under the "procurement" heading of her request. I do not accept that reports/reviews on the approach to risk or value for money can be categorised as financial or procurement process details of insurance contracts entered into over the past three years. Arguably, the applicant's request and her reference to "financial and procurement process details" do not identify the precise records to which she seeks access. The Council does not appear to have asked her to clarify what she was seeking. I have examined the withheld records by reference to the wording of the request and I find that those two records are not in the scope of the request or of this review. I consider that my review must be confined to whether the Council has justified its decision to refuse access to premium, indemnity and excess details from records 1, 2 and 4 on the basis of sections 30(1)(b), 30(1)(c), 36(1)(b) or 36(1)(c) of the FOI Act.
Section 13(4) of the FOI Act provides that the actual or perceived reasons for a request must generally be disregarded by the decision maker, including the Information Commissioner, (except insofar as such reasons are relevant to consideration of the public interest or other provisions of the Act).
Section 22(12)(b) of the FOI Act provides that when reviewing a decision to refuse a request, there is a presumption that the refusal is not justified unless the public body "shows to the satisfaction of the Commissioner that the decision was justified." Therefore, in this case, the onus is on the Council to satisfy me that its decision is justified.
Although I am obliged to give reasons for my decision, section 25(3) requires all reasonable precautions to be taken in the course of a review to prevent disclosure of information contained in an exempt record. This means that the description which I can give of the records at issue and the material that I can refer to in the analysis is limited. Under FOI records are released without any restriction as to how they may be used and thus, FOI release is regarded, in effect, as release to the world at large.
The Council argues that the withheld information is exempt under section 30(1) subsections (b) and (c). Section 30(1) provides that a head may refuse to grant an FOI request if access to the record concerned could, in the opinion of the head, reasonably be expected to:
(b) have a significant, adverse effect on the performance by an FOI body of any of its functions relating to management (including industrial relations and management of its staff), or
(c) disclose positions taken, or to be taken, or plans, procedures, criteria or instructions used or followed, or to be used or followed, for the purpose of any negotiations carried on or being, or to be carried on by or on behalf of the Government or an FOI Body.
Section 30(2) provides that the exemption does not apply where the public interest would, on balance, be better served by granting than by refusing to grant the FOI request.
When invoking section 30(1)(b), the FOI Body must make an assessment of the degree of significance attaching to the adverse effects claimed. Establishing “significant adverse effect” requires stronger evidence of damage than the “prejudice” standard in section 30(1)(a) of the Act. Having identified the significant adverse effect envisaged, the FOI body should then consider the reasonableness of its expectation that the harm will occur. In examining the merits of an FOI body's view that the harm could reasonably be expected, the Commissioner does not have to be satisfied that such an outcome will definitely occur. It is sufficient for the FOI body to show that it expects an outcome and that its expectations are justifiable in the sense that there are adequate grounds for the expectations.
Section 30(1)(c) is designed to protect positions taken for the purpose of any negotiation carried on by or on behalf of the Government or an FOI body. It is important to note that this exemption does not contain a harm test unlike section 30(1)(b). It is sufficient that access to the record concerned could reasonably be expected to disclose such negotiation positions. Relevant factors in considering whether there is a negotiation include whether the FOI body was trying to reach some compromise or some mutual agreement.
The applicant states that the Croke Park Agreement is relevant in the context of the Council's procurement of insurance services externally. She says that this provides that trade unions will be consulted on all aspects of the procurement process consistent with the requirements of EU and national procurement law and commercial sensitivity. The applicant argues that the relevant industrial relations mechanisms ensure that the unions are provided with all relevant information. She argues that release of the information she has requested under FOI could not, therefore, have a significant adverse effect on the performance by the Council of its functions relating to industrial relations and management of its staff.
The applicant also argues that "positions for the purposes of negotiations" under section 30(1)(c), refers to the tactics that might be employed in situations other than those covered by the public sector agreements under which there must be openness and transparency during consultations.
I refer to the synopsis above on the industrial relations matter. The Council states that the CCU was in place for nearly 20 years and that re-assignment of highly experienced staff is a sensitive industrial relations issue. It says that all relevant information has been provided to the parties to the negotiations including the applicant. According to the Council, the process is at a very sensitive time and failure of the talks would have a significant impact on the management of staff and the management its public liability, employers' liability and property damage claims management function.
The Council states that settlement efforts have failed on at least two occasions and that a final proposal was rejected. According to the Council, there is a tenuous agreement to a draft proposal at this stage which remains unsigned. It states that negotiations have been going on for approximately 15 months and the matter has been through conciliation, before the Labour Court and before the WRC who directed that negotiations recommence. A facilitator was been retained to mediate between the parties. In addition, the Council states that there is a directive in place for certain union members which will not be lifted until after the IR process has concluded and that this is effecting its handling of claims. The Council also argues that release of the withheld information could disclose positions for the purposes of its negotiations with the union.
In relation to section 30(1)(b), the adverse effect expected by the Council is that release of the information could result in the collapse of the talks thus damaging its management of industrial relations and its claims function. I am satisfied that this adverse effect would be significant if it were to occur. The next question I must address is whether this adverse effect can reasonably be expected to result from the release of the withheld information. As I understand it, the Council has provided IMPACT with copies of the insurance policies it took out with IPB in 2017 with contain premium, indemnity and excess details withheld from record 1. Records 2 and 4 contain similar details from 2016 and 2015 when the Council was largely self-insuring.
According to the Council, the main objection by the staff and unions to the change in the insurance regime is that the new premiums are excessive and the previous regime was, in their view, a better use of public funds. The Council states that the release of the cost per policy goes to the heart of the union's issues and negotiations surrounding the dispute. However, it has not explained how the release of the figures involved is tied to the harms envisaged. I am not satisfied that the Council has provided this Office with adequate grounds for its expectation that release of the information under FOI could result in the collapse of the talks or to support the proposition that release of the figures would significantly affect its management and industrial relations function. I find that the Council has not justified refusing access to the records under the section 30(1)(b) exemption.
Turning to the claim that section 30(1)(c) applies, clearly the Council and the unions are involved in negotiations arising from the decision to change the way the Council manages its insurance. However, the Commissioner has distinguished between disclosing the existence of a fact and disclosing a position or plan used for the purposes of negotiations. In case 98078 (Martin Wall, The Sunday Tribune Newspaper and Department of Health and Children on www.oic.ie) the Commissioner found that information relating to actual expenditure was not information relating to positions under section 30(1)(c). I am not satisfied that release of premium, indemnity and excess details would disclose positions taken for the purposes of negotiations. I find that the withheld information is not exempt under section 30(1)(c). In light of these findings, it is not necessary to consider section 30(2).
The Council argues that the withheld information is also exempt under section 36(1) subsections (b) and (c). Section 36(1) provides a mandatory exemption for commercially sensitive information. It applies to a record containing:
(b) financial, commercial, scientific, or technical or other information the disclosure of which could reasonably be expected to result in a material financial loss or gain to the person to whom it relates or could prejudice the competitive position of that person, or
(c) information the disclosure of which could prejudice the conduct or outcome of negotiations of that person.
Section 36(2) provides for various exceptions to section 36(1). Section 36(3) provides that Section 36(1) is subject to a public interest balancing test.
The essence of the test in section 36(1)(b) is not the nature of the information but the nature of the harm that might be occasioned by its release. The harm test in the first part of subsection (1)(b) is that disclosure of the information "could reasonably be expected to result in material financial loss or gain." The test to be applied in this regard is whether the decision maker's expectation is reasonable. The harm test in the second part of subsection (1)(b) is whether disclosure of the information "could prejudice the competitive position" of the person concerned. The standard of proof necessary to meet this test is considerably lower than the standard to meet the test of "could reasonably be expected to" in the first part of subsection 36(1)(b). However, the Commissioner takes the view that, in invoking "prejudice", the damage which could occur must be specified with a reasonable degree of clarity.
Under section 36(1)(c), access to a record must be refused where disclosure of information contained in the record could prejudice the conduct or outcome of contractual or other negotiations of the person to whom the information relates. The standard of proof required to meet this exemption is relatively low. Having said that, the Commissioner expects that a person seeking to rely on this exemption would be able to show that contractual or other negotiations were in train or were reasonably foreseen which might be affected by the disclosure and explain how exactly the disclosure could prejudice the conduct or the outcome of such negotiations.
The applicant states that what is being proposed here is the purchase of ground-up insurance from IPB without any public procurement process or other form of tendering. The applicant argues that it is impossible to see how the Council could avail of exemptions to avoid competitive tendering for insurance contracts since the introduction in April 2016 of the EU (Award of Public Contracts) Regulations. She states that there are some limited exemptions to that EU Directive but she argues that the Council would not qualify under the terms of that legislation. The applicant states that the Department of Public Expenditure and Reform's (DEPER's) Model Publication Scheme provides that FOI bodies should provide details of public contracts awarded. The applicant argues that the Council’s position that details of these contracts are commercially sensitive is inconsistent with the Publication Scheme.
The applicant also argues that the information sought is not commercially sensitive in relation to IPB Insurance as there is a wealth of information in the public domain on insurers. She states that since January 2016 the EU Solvency 11 Regime requires additional disclosure and transparency from insurers and the first such reports are available on the Central Bank website for the financial year ending on 31 December 2016. She argues that there is far more commercially sensitive information in those reports than in the information she is seeking from the Council under FOI. The applicant states that her role as an independent advisor in the industrial relations process ended in August 2017 and the Council was aware of this when it refused the records. She argues that her status should not be determinant of the FOI application. She argues that the public interest would, on balance, be better served by granting rather than by refusing the FOI request as there is a strong public interest in members of the public knowing how much public monies are spent on such contracts.
Council's Submissions
The Council states that IPB is a mutual insurance company which provides cover to local authorities across the country along with other public sector bodies. It argues that releasing the exact financial details of the policies would impact on IPB's ability to negotiate with those separate public sector bodies in relation to their annual insurance renewals and/or any new policies of cover sought. It also argues that IPB’s competitors would be better informed by the release of this information and they would be more likely to succeed at IPB’s expense. The Council argues that public bodies need to be able to negotiate in relation to their insurance needs and IPB needs to be able to negotiate with individual organisations without its commercially sensitive pricing being publicly available. The Council states that it complies fully with its public procurement obligations and information regarding Council contracts is published on the eTenders website and on its own website.
IPB argues that the withheld material contains commercially sensitive information, including breakdown costs specific to IPB's insuring relationship with the Council. It argues that release of the withheld information would provide competitors with an insight into its rating and pricing methodologies and potential competitors could avail of this information which could prejudice IPB’s competitive position or prejudice future negotiations with other entities. IPB argues that the public interest would not be better served by granting the request in view of the positive nature of the insurance arrangements which the Council currently enjoys.
The Information Commissioner does not have jurisdiction to adjudicate on how FOI bodies perform their functions generally. The role of this Office is confined to deciding whether an FOI body has justified its decision to refuse access to records having regard to the provisions of the Act.
In relation to records including those about the award of public contracts, the Department of Public Expenditure and Reform's (DPER's) Model Publication Scheme under the FOI Act allows for the publication or giving of records outside of FOI provided that such publication or giving of access is not prohibited by law. Section E of the scheme provides that FOI bodies should provide details of public contracts awarded over €10,000 for ICT and over €25,000 for other contracts. The Council's website lists all purchase orders over €20,000 for each quarter. Q2 of 2017 and Q1 of 2018 contain the total amount for liability insurance paid to IPB insurance but not the details of premium, indemnity and excess for each individual policy.
IPB primarily provides insurance services to a specific market i.e. its members, including the Council. The members are local authorities, education and training boards and some other public sector organisations. However, I understand from its publications that IPB also provides insurance services to non-members and to the semi-state and private sectors. I accept therefore that IPB has potential competitors. I also accept that it is possible that IPB's potential competitors could use premium, indemnity and excess details to their advantage in future competitions for the provision of insurance services and this could prejudice its competitive position. It is fair to say that IPB enjoys a certain competitive advantage in dealing with public bodies - the advantage which a provider of services normally enjoys - of knowing more precisely than potential competitors what the customer's needs are and of being able to anticipate those needs. I accept that release of the information in the records could potentially prejudice the competitive position which IPB has enjoyed in the conduct of its business with public bodies. I find therefore that the withheld information is exempt under section 36(1)(b) of the Act.
Strictly speaking, having found that section 36(1)(b) applies, it is not necessary for me to make a finding on the claim in respect of section 36(1)(c). In line with the analysis under section 30(1) above, I do not accept that the industrial relations negotiations at issue would be prejudiced by the release of the premium, indemnity and excess figures. The Council also says that it and other public bodies need to be able to negotiate in relation to their insurance needs. I take this as an argument that other companies might bid for the business in the knowledge of what IPB has charged. However, the Council has not shown me that negotiations are in train or are reasonably foreseen as part of a process which might facilitate this. As regards IPB's assertion that release of the records would result in prejudice to its insurance negotiations with other entities, little detail has been provided to support the claim. However, I am prepared to accept that such negotiations can reasonably be foreseen and that prejudice to these could occur. I am satisfied therefore that Section 36(1)(c) applies.
Section 36(1) is subject to subsection (2) and is also subject to a public interest balancing test as set out in section 36(3). I am satisfied that none of the provisions of section 36(2) apply to the information which I have found to be commercially sensitive.
Section 36(3) provides that subsection (1) does not apply in relation to a case in which, in the opinion of the head concerned, the public interest would, on balance, be better served by granting than by refusing to grant the FOI request. Section 36(1) itself reflects the public interest in the protection of commercially sensitive information. The Commissioner accepts that there is a legitimate public interest in persons being able to conduct commercial transactions with public bodies without fear of suffering commercially as a result and it is this public interest which section 36(1) seeks to protect.
On the other hand, the Act also recognises, both in its long title and its individual provisions that there is a significant public interest in government being open and accountable. The Commissioner takes the view that in attempting to strike the balance between openness on the one hand and the need to protect commercially sensitive information on the other, it is legitimate to consider two things; the first is the positive public interest which is served by disclosure and the second is the harm that might be caused by disclosure.
The Council states that release of the information could prejudice IPB’s competitiveness as “… the cost of insurance to the City Council on a unit cost breakdown would be released to third parties…As per OIC decision unit breakdown cost is deemed to be financially and commercially sensitive...” IPB also states that the material contains commercially sensitive information, including breakdown cost which OIC has previously determined as financially and commercially sensitive. The Council has identified case 160340 (Mr. X and Galway County Council - available on www.oic.ie) as a previous relevant decision.
Case 160340 concerned a request for access to all tender records (successful and unsuccessful and including subcontractors) relating to a contract for works. It is clear from the decision and the detailed consideration of the public interest balancing tests that very detailed redactions were required in relation to some unit costs quoted by tenderers for certain works. In his published guidance note on section 36, the Commissioner gives examples of the type of information that would not normally be required to be disclosed in the public interest such as details of the internal organisation of a tenderer's business, analysis of the requirements of the public body or detailed requirements of how the tenderer proposed to meet those requirements.
The records under consideration in this review can be distinguished from those in 160340 as the records in this case do not contain a breakdown of how the prices were arrived at. The records simply contain spreadsheets listing amounts charged in relation to premium, indemnity and excess for the various insurance policies provided by IPB to the Council for the period 2015 to 2017. The breakdown provided is by reference to the various risks/assets of the Council to which premiums, indemnities and excesses apply. I note that the risks/assets list itself is amongst the information already released by the Council. While I accept that the figures of themselves could be of use to IPB’s competitors and that section 36(1) applies, I do not accept in the context of giving weight to the competing public interests that the records contain a breakdown of how the figures were arrived at which would give IPB’s competitors an insight into its rating and pricing methodologies.
The Council and IPB also submit that while the motives of a requester are generally disregarded by the Information Commissioner, they can be relevant when considering the public interest. The Council says that the applicant was a party to the industrial relations process and it argues that she cannot step outside the process given the information she has been privy to and request the information under FOI so that she can disseminate the information in public. IPB says that it is concerned as to the motives for which FOI legislation is being employed in this case and claims that such "a prospect of prejudice to the public interest" warrants consideration of motive or reasons in the context of section 13(4) of the Act.
I have not been provided with any information which suggests an improper or vexatious intent for requesting the records. I fail to see how the Council or the third party expects me to treat the applicant any differently from any other requester who might seek the same records under FOI. Furthermore, I do not accept that the possibility that some information could be misunderstood by members of the public is a good reason to refuse the information in the public interest.
Section 11(3) of the FOI Act requires public bodies to have regard to the need to achieve greater openness in their activities and inform scrutiny, discussion, comment and review by the public of their activities. It provides that FOI bodies shall, in performing any function under the Act, have regard to a number of matters including the need to achieve greater openness in the activities of FOI bodies and to promote adherence by them to the principles of transparency in government and public affairs. I note here, that what is at issue is a public interest which equates with "a true public interest recognised by means of a well known and established policy, adopted by the Oireachtas, or by law " as referred to by Macken J. in Rotunda Hospital v Information Commissioner [2011] IESC 26.
Where records relate to the expenditure of public money, there is a strong public interest in openness and accountability in the use of public funds. Openness in respect of the expenditure of public funds is a significant aid in ensuring effective oversight of public expenditure, in ensuring that the public obtains value for money, and in preventing fraud, corruption and waste or misuse of public funds. FOI legislation has been in force for two decades and section 36(3) clearly permits the release of commercially sensitive information where, on balance, the public interest would be better served by this. Parties which engage with FOI bodies must be aware of this.
The public interest in openness and accountability is not limited to the expenditure of public funds and the value for money obtained although that is a key factor in this case. The Commissioner also recognises (e.g. as in case 080232 (Mr Colin Coyle, the Sunday Times and Dublin City Council - on www.oic.ie) that there is a compelling public interest in openness and transparency in transactions or agreements involving the finances and assets of public bodies whether or not expenditure or revenue is involved and that there is a strong public interest in the proper administration of public contracts and ensuring that value, in the broadest sense of that term, is obtained.
While the public interest has been served to some degree by releasing information about the total expenditure by the Council on its insurance for the period concerned as well as other related records, I take the view that real transparency about value for money and efficiency on the Council's part would require access to further information about the significant amounts concerned by reference to the various substantial assets and risks as set out in the withheld records. However, I must weigh this against the effect that release of the figures involved could have on the business interests of IPB and on its insurance provision to public bodies and others.
I recognise that there is a public interest in protecting the commercially sensitive information of third parties. I also accept that there is a legitimate public interest in persons being able to conduct commercial transactions with public bodies without fear of suffering commercially as a result. I accept that there is a possibility that disclosure of the information could have some effect on IPB's (the entity to whom the payments were made) commercial position as discussed above. On balance, however, I consider that the public interest in refusing the request is outweighed by the public interest in the information in the records being disclosed. I am satisfied that the advantages in terms of openness and accountability of disclosing the withheld information outweighs any possible harm to IPB or to the Council. I find that the Council is not justified in refusing access to the withheld parts.
Having carried out a review under section 22(2) of the FOI Act, I find that the Council has not justified its refusal of access to the withheld information under sections 30(1)(b), 30(1)(c), 36(1)(b) or 36(1)(c) of the Act. I annul its decision and direct release of records 1, 2 and 4.
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.
Elizabeth Dolan
Senior Investigator