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Irish Information Commissioner's Decisions |
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You are here: BAILII >> Databases >> Irish Information Commissioner's Decisions >> Henry Ford & Sons Ltd, Nissan Ireland and Motor Distributors Ltd and The Office of Public Works [1999] IEIC 98049 (31 March 1999) URL: http://www.bailii.org/ie/cases/IEIC/1999/98049.html Cite as: [1999] IEIC 98049 |
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Case 98049, 98056, 98057. Note : The decision in this case was initially appealed to the High Court on a point of law under section 42(1) of the Act by Motor Distributors Ltd. That appeal was subsequently withdrawn and the Commissioner's decision is now final and binding on all parties.
Disclosure of name of successful tenderer and price of goods offered - objection by tenderers to disclosure of prices - whether prices given in confidence - whether breach of a duty of confidence - section 26(1) - whether prices a trade secret - section 27(1)(a) - whether disclosure could prejudice competitive position - section 27(1)(b) - whether prejudice to the conduct or outcome of negotiations - section 27(1)(c) - consideration of the public interest.
A requester sought access to all the documentation relating to a tender for army vehicles. The tender was in four parts. Following consultation with the tenderers under section 29, the Office of Public Works decided to release the Order Form relevant to each part of the tender, containing the successful tenderer's name, the tender price and the number and type of vehicle involved. Three of the four successful tenderers applied for a review of this decision by the Commissioner. They argued that section 26(1)(a) applied because the prices were given in confidence, on the understanding that they would be treated as confidential and that disclosure would be likely to prejudice the giving of similar information in the future. It was also argued that disclosure would constitute a breach of a duty of confidence within the meaning of section 26(1)(b). It was also claimed that the tender prices were commercially sensitive information within the meaning of section 27(1) and that the public interest did not require disclosure. DecisionThe Commissioner decided that to successfully invoke section 26(1)(b), it is necessary to show that disclosure would constitute a breach of a duty of confidence provided for by a provision of an agreement or enactment or otherwise by law. He decided that 26(1)(b) could only apply in this case if there was a duty of confidence provided "otherwise by law". He accepted that a breach of an equitable duty of confidence is comprehended by section 26(1)(b) and that the tests set out in Coco v. A.N. Clark (Engineers) Limited F.S. R. 415 are the correct tests to apply. Having applied these tests he found that section 26(1)(b) did not apply in this case.
In considering section 26(1)(a), the Commissioner decided that the tender price was given to the OPW in confidence. He decided that section 26(1)(a) required a mutual understanding that information be treated as confidential. He found that there was no evidence of such a mutual understanding. The third requirement is that disclosure would prejudice the supply of further similar information from the same person or other persons in the future. He considered that the test is not to be applied by reference to whether the particular confider whose confidential information is being considered for disclosure could reasonably be expected to refuse to supply such information in the future, but by reference to whether disclosure could reasonably be expected to prejudice the future supply of such information from a substantial number of sources available or likely to be available to an agency. He found that section 26(1)(a) did not apply in this case.
In relation to the argument that the tender price was a trade secret within the meaning of 27(1)(a), the Commissioner decided that section 27(1)(a) cannot apply to a tender price after the conclusion of the tender process.
The Commissioner decided that the essence of the test in section 27(1)(b) is the nature of the harm that might be occasioned by the release of the information. He decided in the particular circumstances of this case that a prejudice to the competitive position of the tenderers could arise in that the price quoted in this tender could differ from that quoted to other customers and that knowledge of this by those other customers could disrupt that business relationship. He accepted that section 27(1)(b) applied.
While expressing some reservations about the arguments made on the point, the Commissioner decided that disclosure could prejudice the conduct and the outcome of negotiations in this case and he accepted that section 27(1)(c) applied.
Having examined the public interest, the Commissioner found that the advantages in terms of openness and accountability of disclosing the tender prices outweighed the possible harm to the tenderers and the tender process and that the public interest in this case was better served by disclosing this information.
The Commissioner affirmed the decision of the Office of Public Works.
Mr Mark Henry of Policywatch made an application under the Freedom of Information (FOI) Act to the Office of Public Works (OPW) on 5 June 1998 to view all the information and documentation relating to the tender competition for army vehicles (T/0747). The tender was for the supply of fifty 3/4 ton trucks, ten trucks (troop carrying vehicles), four midibuses and ten minibuses. Parties were free to tender for all or part of the order. The closing date for receipt of tenders was 30 April 1998, very shortly after the FOI Act came into operation. There were four successful tenderers - Nissan Ireland (3/4 ton trucks), MAN Importers Ireland (troop-carrying vehicles), Motor Distributors Ltd (midibuses) and Henry Ford & Son Ltd (minibuses).
The OPW notified the Defence Forces of the request and sought submissions as the competition was held on their behalf. They also wrote to the successful tenderer in each of the four categories notifying them of the request, identifying the nature of the documentation which was the subject of the review and seeking submissions. OPW also enclosed a copy of section 27 of the FOI Act which relates to commercially sensitive information. A similar letter was forwarded to the unsuccessful tenderers seeking their views. It would appear that this consultation was carried out under section 29.
Submissions were received from Renault, Nissan Ireland, Motor Distributors Ltd, Citroen, Henry Ford & Sons, Iveco, Mitsubishi, DAF, and Toyota outlining their opposition to the release of the information. The main grounds of the objections were that the information was provided in confidence, that the information provided was commercially sensitive and release of any detail could damage the competitive position of the companies concerned by giving an advantage to its competitors. Following receipt of submissions from the Defence Forces, the OPW decided to release two records. The first was a letter from the Defence Forces to OPW briefly setting out the vehicle requirements of the Defence Forces and asking that a tender competition be advertised in the European Journal. The second was a letter advising OPW to proceed to purchase vehicles from the successful tenderers.
OPW contacted the unsuccessful tenderers and advised them that they were not releasing any information about them. They also wrote to the four successful tenderers and advised them that they would be releasing the Order Form relevant to their part of the tender and which contains the tender price, the number and type of vehicle involved and the name of the tenderer. The tenderers were advised that they had a right of appeal. Three of the four successful tenderers appealed to me against this decision. As the three appeals relate to the one request and as the arguments put forward by each party overlap to a significant degree, I have decided to deal with the three appeals at the same time.
Having examined the records, I asked the OPW to clarify its decision. It confirmed to me that the OPW considered that the records sought contained information which was "commercially sensitive". By this it meant that the information was of the kind described in section 27(1) of the Freedom of Information Act. However, it had decided on balance that it was in the public interest to release the records. In their letter applying for a review of this decision, the solicitors for Motor Distributors Ltd made the point that the notification from OPW that it intended to release the Order Form relating to their client, did not explain the basis upon which the decision was made. I considered that the letters conveying the OPW's decision to the requester and to each of the tenderers were not clear and suggested that OPW should write to Mr Henry explaining its decision and in particular clarifying the fact that not all of the records would be released to him. I also wrote to each of the appellant third parties clarifying the position in relation to the records that it was proposed to release and asking them in particular to address the public interest factors to be considered.
All three appellants made submissions to me in support of their appeals and also responded to my clarifying letter. Mr Henry subsequently applied to me for a review of the decision of the OPW to release only the names of the successful tenderers and their prices. His request is for all documentation relating to the matter. To avoid any further delay in dealing with this matter I decided to confine this review to the objections raised to the OPW decision by three of the successful tenderers. However, in the course of dealing with Mr Henry's application for review, I consulted a number of parties under section 34(6) of the Act, including the fourth successful tenderer, MAN Importers Ireland. In the course of that consultation it became clear that it also objected to the release of any information relating to its tender, although it did not make any formal objection to me originally in relation to the decision of the OPW to release the tender price. In the circumstances, I have decided to take into account the comments of MAN Importers Ireland in this decision, as I am entitled to do under section 34(6), notwithstanding the fact that the company is not a party to the present set of appeals. A further review will be necessary in relation to other documentation sought by Mr Henry.
All three objectors made submissions to me when first applying to me for a review of the decision of the OPW. The objectors made further submissions in reply to my invitation that they address the question of the public interest. There was some overlap in the terms of all of the submissions including that of MAN Importers Ireland, but all sought to rely to some degree on the exemptions in section 26 (information given in confidence) or section 27 (commercially sensitive information) and they dealt with the public interest factors relevant to the decision. I have summarised the submissions under the three headings - section 26, section 27, public interest - below.
Nissan Ireland argued that "the tender documentation was supplied by us to the OPW on the clear understanding by us that the contents of it would remain at all times confidential". They further remarked that if the information sought was disclosed then Nissan Ireland could be reluctant to submit future tenders to the OPW. Although, the company did not say so explicitly I take it that these arguments are made in reliance on section 26(1)(a).
Motor Distributors Limited also seek to rely on section 26(1)(a). They argue in the first place that the tender price is confidential information. In support of this proposition they say:
"The tender price is clearly a piece of information that enjoys the necessary character of confidence, a piece of information which is imparted in circumstances importing an obligation to confidence and a piece of information the unauthorised dispersal of which would be to the detriment of Motor Distributors Limited. We might add that it is clearly reasonable for Motor Distributors Limited to be of the view that the release of such information beyond the circle of people to whom Motor Distributors Limited determine to release such information for the purpose of doing business would be of advantage to Motor Distributors Limited's rivals and injurious to them and a matter which Motor Distributors Limited fairly believe to be confidential.
The above attributes clearly mean that the tender price is confidential information and falls within the principles enunciated inCoco v. A. N. Clarke (Engineers) Limited (1969) RPC Page 41 at Page 47, 48, Spring Gardens Limited v. Point Blank Limited (1084) IR Page 611 at 658/9 and the passage in Tomas Marshall Limited v. Gunier (1979) 1 Ch Page 227which is cited with approval by the former President of the High Court, Mr Justice Costello in theSpring Gardenscase.
It has long been the case that the necessary character of confident in information is established by showing that the information is secret. In the absence of any contractual arrangement or indication by the Office of Public Works, that they are of the view that information contained in tenders would or could be released or that they intend to release such information we are satisfied that the tender information is confidential information and it is quite wrong that the Office of Public Works should consider releasing the same in the face of the interests of Motor Distributors Limited.
There is no way in which any third party could determine the tender price offered by Motor Distributors Limited. The price is unique to the tender in question. The tender price has been arrived at by the application of the skill of personnel in Motor Distributors Limited in assembling a package of several elements leading to the most competitive price they can offer in order to win the sale of the articles in question. The basis upon which the price is reached is not a matter Motor Distributors Limited would or are obliged to share with third parties. In short, the tender price is a piece of information which has a necessary quality of confidence.
The question of the Freedom of Information Act aside the tender price in question is something which would clearly enjoy protection as confidential information. The release of such information outside the bounds of confidence is a breach of the rights of Motor Distributors Limited."
The above arguments appear to be made in support of the proposition that the tender price is information which was given to OPW in confidence and on the understanding that it would be kept confidential.
Motor Distributors Limited also sought to rely on section 26(1)(b). It stated "Section 26(1)(b) provides that the disclosure shall be refused if it would constitute a breach of duty of confidence provided for by a provision of an agreement or otherwise by law.
Motor Distributors Limited have been tendering to the Office of Public Works and other State bodies seeking motorised transport for upwards of 40 years and at all times it has been a term of the contracts that tender information would be kept confidential. It was also the duty of confidence in law in Motor Distributors Limited because it is clear the information they are given is confidential information, a business secret of Motor Distributors Limited, which enjoys protection in law in the circumstances already outlined above."
Motor Distributors Limited also sought to rely on section 27. In support of its proposition that section 27(1)(a) applies it stated "The fact that the price put forward in a tender document is confidential as atrade secretis recognisedFaccenda Chicken Ltd. v. Fowler and Others [1986] 1 AER....this case has been cited with approval in this jurisdiction on many occasions."
It also claimed that "It is also clear that the Unit tender price is commercially sensitive information and pursuant to section 27(1)(a) a head shall refuse such request for such information if the record concerned contained trade secrets of a person other than the requester."
Motor Distributors Limited also relied on section 27(1)(b). It stated that "Section 27(1)(b) prohibits the disclosure of financial and/or commercial information whose disclosure can reasonably be expected to result in material loss to the person to whom the information relates or could prejudice the competitive position of that person in the conduct of his business. Again this section is clearly of application in the current case"
Motor Distributors relied on section 27(1)(c) and it stated "It is also clear that the disclosure of such information could prejudice the conduct or outcome of contractual or other negotiations in which Motor Distributors Limited are or will be engaged in relation to the sale of its motor vehicles. Accordingly, section 27(1)(c) also mandates that the information should not be released."
M/s Henry Ford & Sons Limited relied on section 27(1)(b) stating "Requests for this information involves our client's financial and commercial interests in that the papers contain information as to the calculation and price for the sale of the ten mini-buses. If details of this offer are released to third parties it may end up in the hands of our client's competitors with whom they are constantly competing in similar tender packages. These competitors will use this information for their own advantage in subsequent tender offers as they will be aware of the level of discount which our client gives to the State and Semi-State sector. They will then calculate their future tender offers with the benefit of this information. Furthermore, by releasing this information our client's operating margins will be within the public domain"
Referring to section 27(1)(c) it stated that "the legislature provided that information need not be released if its disclosure could prejudice the conduct or outcome of contractual or other negotiations of the person to whom the information relates.' The legislature use of the word 'could' clearly shows that if there is any possibility of Henry Ford & Sons been prejudiced then the information should not be released. Henry Ford & Sons' concerns in this regard are very valid because if its tender package is released its competitors will use this information in any future negotiations which may not only with public bodies but, more importantly, in its dealings with private entities. Society has demanded competition in the market place and the release of this information will stymie competition to the detriment of the public. Competitors will use this information in future tender offers and this can only hinder competition. The title of the Act recognises Henry Ford & Sons' right of privacy and this right has to be balanced with the public's right to access to Henry Ford & Sons' tender package."
Nissan Ireland, in arguing that section 27(1)(b) applies, stated "Nissan Ireland is of the strong belief that disclosure of this information would prejudice the competitive position of this company in the conduct of its business. It would clearly be of advantage to competitors to be aware of the details in the tender documentation supplied by Nissan Ireland to the OPW and which the OPW have indicated they do intend to supply to the requester under the FOI Act. It would enable a competitor to ensure that any future tender of a similar nature to be prepared by them is made with the benefit of knowledge of what may be contained in a tender emanating from this company."
MAN Importers Ireland Limited said that the price was a special one. Vehicles had been sold to other good customers at the normal price. It claimed that "if the special tender price was to be made known, this would have serious repercussions with our existing customers".
Motor Distributors Ltd made a detailed submission to me in relation to the question of where the balance of the public interest lies in this case.
Its first point was the vital importance of confidentiality in business affairs. It stated "In Section 26 and 27 we are concerned with confidence and commercially sensitive information. The two go hand in hand. Business cannot be conducted if the release of confidential information or the imparting of commercially sensitive information to a restricted audience automatically brings with it the public release of such information. It is difficult to see any public interest that is served by an approach that determines a release in such circumstances is, without suitably argued reasons, justified in the public interest."
It also argued that the key public interest which the Act seeks to serve is the right of access to personal information. It stated "It is noteworthy that in the long title to the Act mention is made of enabling members of the public to obtain access to information in the possession of public bodiesandto enable persons to have personal information relating to them in the possession of such bodies corrected. We suggest that the first and central public interest being served is to ensure that records concerning members of the public are accurate and that members of the public have appropriate access to ensure that this is so and if necessary ensure mistaken records are corrected.....In the circumstances we submit that where a request falls within that loose grouping of a request born out of curiosity as opposed to a request for personal information which might or might not need correcting, the public interest does not demand disclosure if disclosure is of confidential and or commercially sensitive information which would damage the person interested in the information but provides no immediate benefit to the person requesting save they have found information which, but for the fact it was imparted to a public body, would remain confidential was information which was admittedly commercially sensitive and as a matter of common sense is best kept confidential and private". In support of this view it referred to recent proceedings in which the State argued that the primary concern of the Act is to ensure access to personal information for the purposes of ensuring that it is accurate. However it accepted that this was not the full ambit of the Act.
Its next argument was that the function of the Comptroller& Auditor General provided an adequate level of scrutiny of the spending of public money. It claimed that it was not necessary to duplicate this process in the FOI Act to protect public interest. It also stated "the fact that the record concerns a transaction by a public body accountable for its expenditure to the Oireachtas brings with it scrutiny by the Auditor General and, one assumes, the internal audit functions of each department. In addition the allocations to the Departments are a matter of Dáil debate. How a curiosity question asked by a member of the public is necessary in the public interest to ensure appropriate accountability for expenditure is not immediately obvious. Particularly where the member of the public making a request has advanced no reason why it is in the public interest that he should find out this particular piece of commercially sensitive information. The request was advanced on the basis that the requester is entitled to know under the Act. He makes no case that is in the public interest that he be informed and in the circumstances it is difficult to fathom the basis upon which the Head formed the view that the public interest was better served or that such view is an appropriate view or withstands the reasoned argument which was being put up in this Appeal."
It further argued that release of tender prices will irreparably damage the tender process. It stated "Tender prices are special prices which are offered to persons who seek to obtain the most competitive price. If tender prices are available for publication, the very process of tendering will be irreparably damaged to the disadvantage of the very public bodies the Head of which now appears to suggest releasing the information is in the public interest.
If public bodies, conducting business with MDL or their competitors, have no alternative but to release tender prices this can only be prejudiced to the ability of the State and its public bodies to obtain the best tender prices. Although it is tempting to suggest the release of such information will lead to a reduction in tender price we suggest that the opposite is in fact likely to happen. There will be a refusal of parties to tender because they will be aware that in tendering to a public body that likelihood is that their commercially sensitive tender price offered in confidence will become public knowledge. It is without doubt the fact that a competitor who knows the tender price is able to make series of informed deductions about the make up of the MDL price and how MDL have conducted themselves in determining what to offer. If it was appropriate that tender prices should be made public and the making of tender prices public was in the public interest one would assume that public bodies seeking tenders would have this as a condition because it would lead to a better price being obtained. The reality is they know nothing of the sort would happen. Rather tenders advertised would simply receive little or no response."
In the course of its submission Motor Distributors Limited also referred to the fact that OPW had given no reasons for its opinion that the public interest is on balance better served by granting the request. It suggested that in applying section 34(12) in these circumstances "the hurdle the person concerned must jump to satisfy the Commission that the decision is not justified must differ to the hurdle that must be jumped where the Head has given the person concerned reasons for arriving at the decision that the public interest is better served by release. To interpret the Section otherwise is to encourage unreasoned assertions that the public interest is better served and to unfairly prejudice a person concerned through an administrative decision which requires to be reasoned by the head but in respect of which the head has chosen to give no reasons. Given the importance of Section 34(12) we suggest that an unreasoned determination that a release is in the public interest is likely to be a determination that is susceptible to judicial review because clearly the person concerned (MDL) suffers detriment because it cannot argue against the basis of the decision."
I will deal with the arguments put to me in the order in which they appear under the headings of "Submissions" above.
This section provides as follows:
26.(1) Subject to the provisions of this section, a head shall refuse to grant a request under section 7 if
(a) the record concerned contains information given to the public body concerned in confidence and on the understanding that it would be treated by it as confidential (including such information as aforesaid that a person was required by law, or could have been required by the body pursuant to law, to give to the body) and, in the opinion of the head, its disclosure would be likely to prejudice the giving to the body of further similar information from the same person or other persons and it is of importance to the body that such further information as aforesaid should continue to be given to the body, or
(b) disclosure of the information concerned would constitute a breach of a duty of confidence provided for by a provision of an agreement or enactment (other than a provision specified in column (3) of the Third Schedule of an enactment specified in that Schedule) or otherwise by law.
For section 26(1)(a) to apply it is necessary to show four things viz.
To successfully invoke section 26(1)(b) it is necessary to show that disclosure would constitute a breach of a duty of confidence provided for by a provision of an agreement or enactment or otherwise by law. None of the parties has argued that there is a duty of confidence provided by any enactment in this case. Motor Distributors Ltd was the only party which claimed that confidentiality was provided for in an agreement. It contended that it had been a term of its contracts with OPW over the years that tender information would be kept confidential. However, no evidence in support of this assertion was offered. Therefore, I find that section 26(1)(b) can only apply in this case if it can be said that there is a duty of confidence provided "otherwise by law".
The submissions of Motor Distributors Limited appear to be founded in part on the argument that disclosure would constitute the breach of such a duty of confidence on the basis that an equitable duty of confidence exists in this case. I accept that a breach of an equitable duty of confidence is comprehended by section 26(1)(b). I also accept that the tests propounded by Motor Distributors Limited are the correct tests to apply in deciding whether there has been an equitable breach of confidence. These tests are set out in the leading case of Coco v. A. N. Clark (Engineers) Limited F.S. R. 415 (which is accepted as reflecting the Irish law on the subject - see, for example, House of Spring Gardens Limited v. Point Blank Limited [1984] I.R 611) in which Megarry, J. stated as follows:
'Three elements are normally required if, apart from contract, a case of breach of confidence is to succeed. First, the information itself...must have the necessary quality of confidence about it. Secondly, that information must have been imparted in circumstances imposing an obligation of confidence. Thirdly, there must be an unauthorised use of that information to the detriment of the party communicating it.'"
In the light of what I have said it will be clear that confidential information, depending on the circumstances, could qualify, under section 26(1)(a) or section 26(1)(b) or both. There is also a degree of overlap in the sense that the first two requirements of section 26(1)(a) are similar to the first two elements of the test used to determine the existence of an equitable duty of confidence, which is relevant in considering the possible application of section 26(1)(b). I have decided that it is more convenient to deal with the application of the two sub paragraphs of section 26 in reverse order.
In arguing that the price quoted in its tender had the necessary quality of confidence, Motor Distributors Limited referred to the case of Faccenda Chicken Ltd v. Fowler & Others [1986] 1 AER. It says that the case recognises that the price put forward in a tender document is confidential as a trade secret. In particular my attention was drawn to the comment of Neill, L.J that "We can well appreciate that in certain circumstances information about prices can be invested with a sufficient degree of confidentiality to render that information a trade secret or its equivalent. The price put forward in a tender document is an obvious example. But there may be many other cases where the circumstances show that a price or prices are matters of great importance and highly confidential."
However the Court of Appeal did not go on to elaborate the circumstances in which a price contained in a tender document would be held to be confidential. It may very well be that the Court had in mind such information during the currency of a tender document. It is less clear that the Court contemplated the confidentiality of the information after the conclusion of a tender process. Indeed, Neill, L.J. was clearly mindful of the fact that information can lose its secret nature, pointing out elsewhere that "innumerable...pieces of information are capable of being trade secrets, though the secrecy of some information may only be short lived"
In coming to its decision, the Court of Appeal had regard to a passage from the judgement of the trial judge, Goulding, J., in which the latter said:
"I find that an experienced salesman quickly acquires a good idea of the prices obtained by his employer's competitors, but usually such knowledge is only approximate and in this field accurate information is valuable, because a difference of even a penny a pound may be important."
"neither the sales information in general, nor the information about prices in particular, though of some value to a competitor, could reasonably be regarded as plainly secret or sensitive."
Thus, one can glean from the judgement of the Court of Appeal that the information in this case, albeit of some value to competitors and relating to a field in which the slightest differences of price might be important, was not sufficiently secret or sensitive to warrant protection.
In the light of this it seems to me that the Faccenda case provides no authority for saying that price information is inherently confidential. Neither does it provide support for the proposition that a tender price has, to quote the first requirement listed by Megarry, J., "the necessary quality of confidence" to found an action for a breach of confidence.
However Motor Distributors Limited also argue that the quality of confidence is demonstrated by the skill, knowledge and labour which went into its computation. In my view this is an argument which might support the view that the method of computing the price was confidential but I do not accept, in the circumstances of this case, that it supports the view that the price itself is confidential information. Having said that, I accept that at the time the tender was entered, the information had the necessary quality of confidence within section 26(1)(b) in the sense that the price was known only to each tenderer and each disclosed its price to OPW on the understanding that it in turn would keep the information confidential - at least until the conclusion of the tendering process.
The second requirement which is relevant in considering section 26(1)(b) is whether the information was imparted in circumstances imposing an obligation of confidence. None of the parties argued in specific terms as to the particular circumstances in this case which imposed an obligation of confidence, apart from Motor Distributors Ltd. which, as I have said, contended that confidentiality of price had been a term of its contracts with OPW over the years. I rejected this claim, however, since no evidence in support of it was offered to me.
The matters which seem to me to be of most relevance in deciding whether this requirement is met is the relationship between the parties and the purpose for which the information was communicated. If the relationship is of a kind which is generally understood to attract the badge of confidentiality, it may be presumed that information, not already in the public domain, which is imparted in the course of that relationship is to be kept confidential. No such relationship exists in this case. Indeed, it might be said that the reverse is true. In the relationship of vendor/purchaser there is no general expectation that a purchaser will keep secret the price he pays for goods or services.
On the question of the purpose for which information has been disclosed, the Courts have accepted that where information is imparted for a limited purpose, then such a communication gives rise to an obligation of confidence. This test was accepted by Costello J. in House of Spring Gardens v Point Blank Ltd. when he said:
"The duty arose because Mr Sacks was conferring a benefit on Mr Waite in the form of highly technical information on how to produce a valuable product, and he did so on the faith of an understanding which, if not express was certainly to be implied, that the information would be used only for the purpose of the joint venture...."
It could be argued that the only purpose for which the tenderers provided the price information to OPW was to enable the latter to evaluate the tenders and, in the case of the successful tenders, to order the goods which were the subject of the tender. However it seems to me that considerable care is needed in applying this test in a vendor/purchaser situation. The test has developed generally in the context of one party becoming privy to another's secret information and using that information to its own benefit, and to the possible detriment of the others. Such circumstances are very far removed from the "disclosure" by a vendor to a purchaser of the purchase price.
As I indicated above, there is no general expectation that purchasers will keep secret the price at which they purchase goods or services. Presumably one of the reasons for this is that purchasers consider the information to be as much theirs as that of the vendor and that, in the absence of any agreement to the contrary, they are free to make whatever use they wish of it. In this sense the circumstances in which purchasers become aware of the price of the goods which they are purchasing differs fundamentally from, say, the circumstances in which an employee of the vendor becomes aware of the same information. It is conceivable that an action for breach of confidence might lie against the employee but there is nothing in the purchaser/vendor relationship or in the purpose for which the purchaser has been informed of the price of the goods which suggests that such information has been imparted in confidence. Therefore I do not accept that the second requirement necessary in order to successfully found an action for breach of confidence is met in this case.
In relation to the third requirement, it is true that the tenderers have objected to release of the information. However, it seems to me that this does not mean that there has been "unauthorised use" of the information. I have some difficulty with the concept that the disclosure on foot of a request under the Freedom of Information Act, of the price paid by a public body for goods, is a use of that information or, at least, a useof the kind contemplated in the term "an unauthorised use". In any event, given the view which I have taken that the information was not imparted in confidence, it seems to me to follow that the question of unauthorised use does not arise.
Therefore, I find that disclosure in this case would not constitute a breach of an equitable duty of confidence. As indicated earlier, I find that in the present case disclosure would not constitute a breach of a duty of confidence provided for by an agreement or by enactment.
Therefore, I find that section 26(1)(b) does not apply in this case.
I turn now to the application of section 26(1)(a). It will be clear from what I have already said that I accept that each tenderer originally disclosed his tender price in confidence, so the first of the four requirements of section 26(1)(a) is met.
The second requirement of section 26(1)(a) is that there be an understanding that this information be treated as confidential. I accept that there was an understanding that the price would be treated as confidential until the end of the tender process. However, it is clear that what is being argued by Motor Distributors Limited is that there was an understanding that the information would be treated as confidential, indefinitely. I accept that the tenderers may have assumed, based on past experience, that this information would be kept confidential. This raises the question of whether it is sufficient for the provider of the information to assume or to "understand" that it will be treated as confidential. It seems to me that in normal parlance the phrase "on the understanding" connotes a mutual understanding. For example, the Oxford English Dictionary refers to understanding as meaning, inter alia, "a mutual arrangement or agreement of a more or less explicit nature". The Collins English Dictionary defines the phrase "on the understanding that" as meaning "with the condition that; providing". Once again, it seems to me that this definition implies mutuality.
I am strengthened in this view by a passage from the reports of the Oireachtas on the report and final stages of the Freedom of Information Bill, 1996. At one point, it was sought to amend section 26(1)(a) by inserting the words "specified condition" in place of the word "understanding". The Minister sponsoring the Bill, Ms Eithne Fitzgerald, succeeded in having the suggested amendment withdrawn after saying the following (at 150 Seanad Debates, Cols. 88-89):
"In the light of the concerns expressed by Senator Dardis on Committee Stage, I received further legal advice on the meaning of the term "understanding". My legal advice is that it means an understanding by both parties and it would not be open to only one person to have an understanding that it [sic] be treated as confidential.Whether it is implicit or explicit that it be treated as confidential, an understanding by one party only could not be regarded as an understanding of confidence." [Emphasis added.]
Regard may be had to debates of this nature in interpreting legislation (see the judgement of Costello, J. in Wavin Pipes Limited v. Hepworth Iron Co. Limited [1982] F.S.R. 32). At the very least, the Courts permit recourse to material of this kind in cases where the words of the statute are obscure or ambiguous. As I indicated above, the natural meaning of the phrase "on the understanding that" involves mutuality. In so far as there is any ambiguity on this point, I believe that it is removed when reference is made to the debates which I have just quoted.
In the case of OPW there is no evidence of a mutual understanding of confidence. Indeed, one would have to question, having regard to the coming into force of the Freedom of Information Act, how any public body could have an understanding that the details of its expenditure of public money would be kept confidential. I find that the second requirement of section 26(1)(a) is not met.
I do not accept that the third requirement of section 26(1)(a) is met. In my view the correct approach to interpreting this section is well summarised in a decision of the Queensland Information Commissioner, "B" v Brisbane North Regional Health Authority (Decision No 94001) at paragraph 161 "Where persons are under an obligation to continue to supply such confidential information (e.g. for government employees, as an incident of their employment; or where there is a statutory power to compel the disclosure of the information) or persons must disclose information if they wish to obtain some benefit from the government (or they would otherwise be disadvantaged) by withholding information then ordinarily, disclosure could not reasonably be expected to prejudice the future supply of such information. In my opinion, the test is not to be applied by reference to whether the particular confider whose confidential information is being considered for disclosure, could reasonably be expected to refuse to supply such information in the future, but by reference to whether disclosure could reasonably be expected to prejudice future supply of such information from a substantial number of the sources available or likely to be available to an agency."
Some of the objectors have argued that if the price of the tenders are published in the future then neither they nor anyone else will tender and, in this sense, disclosure in this case would be likely to prejudice the giving of similar information in the future. Is this a distinct or significant possibility? In the absence of any available evidence in this jurisdiction, I have enquired into the practice in other jurisdictions.
I note for example in the Queensland case of Sexton Trading Company Pty Ltd. v South Court Regional Health Authority (Decision Number 95033) the Queensland Information Commissioner drew attention to the following extracts from a policy document of the Queensland Administrative Services Department entitled "Public Disclosure of Information with Respect to Offers" (May 1993).
This policy has been developed to ensure that no doubt exists as to the type of information which may be disclosed with respect to offer documents submitted by an offeror in response to an invitation issued by a Business Unit (including Corporate Services) of the Department. The policy attempts to balance the principles of openness and accountability of Government with the need to protect information held by government about business affairs of an individual or organisation. The policy is closely linked with, but is in addition to the rights and obligations of the Government under the Freedom of Information Act....
Invitations for offers are to be issued by Business Units in accordance with State Purchasing Policy.
Offers may be opened publicly at the discretion of the Business Unit issuing the invitation. All members of the public may attend a public opening. No restriction is to be placed on attendees.
The disclosure of information supplied by an offeror in response to an invitation may take place in the circumstances as set out below.....
When an oral or written offer is received in response to an oral invitation issued in accordance with the State Purchasing Policy, the name of the successful offeror and the total price may be disclosed in any manner at the option of the Business Unit issuing the invitation but must be disclosed upon request.
Written invitation with written offerWhen written offers are received from a supplier of goods and/or services in response to a written invitation and the offer is not to be opened publicly, the name of offerors and the total prices (when required in the offer documents) may be disclosed after opening at the option of the Business Unit issuing the invitation.
Upon acceptance of an offer, the name of the successful offeror and the total price (when required in the offer documents) must be disclosed upon request.
Information provided by the offeror on the "additional information available for disclosure" page, as described at paragraph 5.5, may be disclosed at the option of the Business Unit issuing the invitation.
It is recommended that the name of the successful offeror and the total price or estimate contract value be published in the Procurement Gazette in accordance with Ministerial guidelines.
When written offers are received in response to a written invitation and the offer is opened publicly, the name of offerors and the total price (when required in the offer documentation) must be disclosed upon opening.
Information provided by an offeror on the "additional information available for disclosure" page in the offer documentation, as described at paragraph 5.5, may be disclosed upon opening. The information may be posted on a notice board at the option of the Business Unit issuing the invitation.
All the above mentioned information must be made available upon request. The information may be made available in writing or by verbal communication at the discretion of the Business Unit issuing the invitation.
Upon acceptance of an offer, the name of the successful offeror and the total price (when required in the offer documents) must be disclosed upon request.
It is recommended that the name of the successful offeror and the total price or estimated contract value be published in the Procurement Gazzette in accordance with Ministerial guidelines."
It will be clear from this that prices in tenders are released in Queensland as a matter of course.
In the same decision the Information Commissioner referred to the position in Western Australia and stated that the long standing practice in regard to State Government tenders was that names and prices of successful tenderers were published in the Government Gazette.
I also note a more recent policy change in Canada which is summarised in the following extract from case summary 12-98 of the Canadian Information Commissioner.
"Public Works and Government Services Canada (PWGSC) has routinely taken the position, in the past, that unit prices for goods and services should be withheld when the information about winning bids was requested under access law. The department believed that disclosure of unit prices (as opposed to overall contract value) could put third parties at a competitive disadvantage. Though this position has been supported by the Information Commissioner (and his predecessor), it has been so with growing sceptical reservation. The Commissioner has urged that possible harm to the third parties be weighed against the public interest in order to make the government contracting process more transparent. The Commissioner made his concerns known in his 1993-94 Annual Report.
PWGSC this year has, to its great credit, reconsidered its position on unit prices. As a result, effective March 31, 1997, PWGSC's contracting authorities were directed to include - in all requests for proposals (RFPs) for standing offers for goods and services - a clause informing the bidders that the unit prices of the winning bid would be disclosed. A similar clause would be included in any subsequent standing offer agreements for goods and services between the department and third parties."
It is clear from the above that a tender system which involves price disclosure has been found practicable in other jurisdictions. In the circumstances I do not accept that it is likely that a similar system in this country will result in commercial enterprises refusing to tender. For the above reasons, I do not accept that section 26(1)(a) applies in this case.
Section 27(1) provides as follows.
27.(1) Subject to subsection (2), a head shall refuse to grant a request under section 7 if the record concerned contains
a) trade secrets of a person other than the requester concerned,
b) 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, or
c) information whose disclosure could prejudice the conduct or outcome of contractual or other negotiations of the person to whom the information relates.
Motor Distributors Ltd argue that the tender price in this case is a trade secret. I consider the following dicta a useful guide to the meaning of the term "trade secret". In Ansell Rubber Co Pty Ltd v Allied Rubber Industries Pty Ltd [1967 v.r.373], Gowans J. stated:
"An exact definition of a trade secret is not possible. Some factors to be considered in determining whether given information is one's trade secret are: (1) the extent to which the information is known outside of his business; (2) the extent to which it is known by employees and others involved in his business; (3) the extent of measures taken by him to guard the secrecy of the information; (4) the value of the information to him and to his contemporaries; (5) the amount of effort or money expended by him in developing the information; (6) the ease of difficulty with which the information could be properly acquired or duplicated by others"
Another aspect of the matter was touched on in Lansing Linde v Kerr by Staughton LJ:
"......what are trade secrets and how do they differ (if at all) from confidential information? Mr Poulton suggested that a trade secret is information which, if disclosed to a competitor, would be liable to cause real (or significant) harm to the owner of the secret. I would add, first, that it must be information used in the trade or business, and secondly, that the owner must limit the dissemination of it or at least not encourage or permit widespread publication."
As I have already indicated, I accept that during the currency of the tendering process the price offered by each tenderer was confidential. In the light of the above dicta it seems to me that a strong case can be made that during that time the price was a trade secret. However, as the dictum of Neill L. J. in the Faccenda chicken case which I have already quoted makes clear, the secrecy of some information may be short lived. Indeed, the decision in the Faccenda case suggests to me that it is only in exceptional circumstances that historic price information would qualify as a trade secret. I am also mindful of the requirement mentioned by Staughton, L.J. that the information must be used in the trade. It does not seem to me reasonable to say that this information is now being used in the trades of each of the objectors.
Finally there is the question of the value of this information to Motor Distributors Ltd and to its competitors. It is not clear to me that the information, of itself, is of any significant value to Motor Distributors Ltd - although the company clearly believes that restricting the information is to its advantage. Neither is it clear to me that the information is of significant value to competitors. On this point the comments of the Queensland Information Commissioner, in the case of McPhillimy v Queensland Treasury (Decision No. 96011) are useful:
"In essence, Mr Jones claims that knowledge of previous year's tender prices will enable a firm to make an informed judgement of the likely price range in a forthcoming tender so as to ensure that it does not quote significantly below that range. However, in my view, provided that market for the supply of security services to the Grand Prix event remains a competitive market, in which security firms do not know the details of their competitors' forthcoming tenders (i.e., provided there is no collusion in the market), one firm cannot with any certainty predict the behaviour of its competitors who have knowledge even of a previous year's tender prices. (I note that the GCMEC has not presented any evidence to suggest that such a competitive market does not exist, and further note that security firms not based at the Gold Coast have in the past been willing to tender for the provision of security services to the Grand Prix). One firm cannot exclude the possibility that one ore more competitors may be prepared to cut profit margins drastically and attempt to significantly undercut the previous year's range of tender prices in a bid to win such a high profile contract. "
These comments were made in response to a suggestion that knowledge of previous tender prices among prospective tenderers would damage the tender process by enabling tenderers to judge the likely range of prices. However I think it is a fair statement of the value to tenderers of knowledge of previous prices. Taking all of these matters together I have concluded that the tender price in this case can no longer be considered a trade secret within the meaning of section 27(1)(a) after the tender process has concluded.
All three objectors also relied on section 27(1)(b). I am satisfied to accept that the information in this case comes within the description "financial or commercial". However, the essence of the test in section 27(1)(b) is not the nature of the information but the nature of the harm which might be occasioned by its release. The subsection protects information whose disclosure might 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.
I think that the arguments of the objectors in relation to section 27(1)(b) really come down to three points. The first is that disclosure of the price of a successful tender puts the successful tenderers at a disadvantage vis-à-vis other tenderers for similar contracts in the future, perhaps leading to the loss of business that might otherwise be won. The second point is that disclosure will impact on the ability of the successful tenderers to compete for contracts in the private sector. The third point is that the price in this case was a special price offered in the context of a competitive tender and not available to other customers who may be upset that they bought similar goods at higher prices.
In relation to the first point, the remarks of the Queensland Information Commissioner in the McPhillimy case which I quoted earlier seem to me to be relevant. Knowledge by future tenderers of the price quoted by an earlier successful tenderer does not automatically give them a significant advantage over the previously successful party. As the Queensland Information Commissioner has pointed out, future tenderers (in the absence of any collusion in the market) cannot predict the behaviour of competitors.
As a slightly separate point it might be argued that Motor Distributors Ltd will suffer a loss in the future because it simply will not tender. Even if I were to accept that disclosure of prices will drive prospective tenderers from the market - something which seems rather unlikely in the light of the experience in Canada and Australia which I highlighted earlier - it seems to me that any loss of business resulting from a decision not to tender in the future flows from that decision rather than from the release of the information in the present case.
The second point seems to me to have even less force. If disclosure of price information has no effect on the competitive positions of prospective tenderers in a similar future competition run by OPW, then it seems to me that it can have no effect in relation to other business. Indeed, some of the objectors emphasised the special or the unique nature of the price in question. In the circumstances, its relevance to other contracts seems to me to be very limited and I cannot see that its disclosure will put the tenderers at a disadvantage in winning other unrelated business.
The third point was not supported by any evidence. It seems to me to be based on mere speculation. I would not be justified in accepting on the basis of the material before me that the reaction of customers would be such that it may reasonably be expected that disclosure will result in a material loss to each of the objectors through the disruption of their business relationships with other customers.
However, I would envisage, in the particular circumstances of this case, that a prejudice to the competitive position of the successful tenderers could arise in the following way. It is clear that each of the tenderers put forward its price in the expectation, however ill-founded, that it would not be disclosed. I accept that the price quoted in these circumstances might very well differ from that quoted to other customers and knowledge of this could disrupt these other business relationships and, perhaps, cause some customers to seek other suppliers. Clearly, the only parties who would suffer in these circumstances are those whose prices were disclosed. Competitors who, for one reason or another, had not tendered, would not suffer from the same difficulty. In this sense disclosure in the present case could prejudice the competitive position of the parties whose prices are disclosed. I should note that I consider this possibility rather unlikely as customers, even if piqued, are likely to make their purchasing decisions on the basis of their perceptions of the best value for money. However, I am conscious that the only requirement which has to be met in this case is that disclosure "couldprejudice the competitive position" of the person concerned. In my view the standard of proof necessary to meet this test is considerably lower than the standard required to meet the test of "might reasonably be expected to." In the circumstances I am, with some hesitation, accepting the argument that section 27(1)(b) applies in this particular case.
I turn now to section 27(1)(c). Once again a number of objectors relied on this exemption. As with the latter part of section 27(1)(b), the standard of proof required to meet this exemption is relatively low. Having said that, I would expect 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. I would also expect such a person to be able to demonstrate how exactly the disclosure could prejudice the conduct or the outcome of such negotiations.
In the present case, it is likely, given the nature of the businesses conducted by each of the objectors, that negotiations for the sale of vehicles of the sort involved in the present case are an ongoing feature of the business. It is arguable that knowledge of the price at which a given quantity of such vehicles was supplied to OPW could prejudice the conduct of the negotiations in the sense that it could provide a lever to the other party in the negotiations. It could also prejudice the outcome, in the sense that the objector might be forced to accept a lower price than otherwise might have been received. I have some reservations about the validity of these arguments because the strength or weakness of the parties to the negotiations ultimately depends on the level of competition from other suppliers. However, I have decided with reservations to accept that in the circumstances of this case the exemption in section 27(1)(c) applies.
Accepting, as I do, that section 27(1)(b) and 27(1)(c) apply in this case, I now turn to the question of whether notwithstanding this, the public interest is better served by disclosure than by non-disclosure.
As a preliminary point I should deal with the comments of Motor Distributors Limited in relation to how this request was handled by the OPW and, in particular, to the fact that OPW did not articulate any reasons for its decision to release the information in question in the public interest.
I agree that a public body should explain fully what public interest factors it took into account in deciding to grant a request to which section 29 of the Act applies. The fact that the OPW did not do so in this case is regrettable. However, I do not agree that this failure shifts the burden of proof imposed by section 34(12), nor do I see why Mr Henry's rights should be prejudiced simply because of inadequate handling of the matter by the OPW. Motor Distributors Limited has responded very fully to my invitation to address the public interest factors in this case and I have taken its submissions into account.
It is convenient for me to deal with the public interest arguments as presented by Motor Distributors Limited. The other objectors made less detailed arguments in relation to the public interest and I think that it is fair to say that their points are fully encompassed in the submissions of Motor Distributors Limited.
The first argument made by Motor Distributors Limited is that business cannot be conducted if the release of confidential information or the imparting of confidential information or the imparting of commercially sensitive information automatically brings with it the public release of such information. In a sense this argument goes to the heart of the public interest balancing test envisaged by section 27(3). 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 27(1) seeks to protect. However the Act also recognises, both in its long title and in its individual provisions that there is a significant public interest in government being open and accountable.
Motor Distributors Limited refer to the "automatic" release of commercially sensitive information. Of course, there is no automatic disclosure of confidential information nor of commercially sensitive information if by those terms is meant information of the kind covered by section 26(1)(a) and section 27. Indeed, the reverse is true. Such information cannot be released under the Act unless it is considered that the public interest is better served by doing so.
In attempting to strike the balance between openness on the one hand and the need to protect commercially sensitive information on the other I think that 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.
In relation to the positive public interest which would be served by disclosure, it seems to me that there are two. The first is the public interest in ensuring the maximum openness in relation to the use of public funds. Such openness is a significant aid to ensuring effective oversight of public expenditure, to ensuring the public obtains value for money, to preventing fraud and corruption and to preventing the waste or misuse of public funds.
Motor Distributors Limited has argued that there are existing mechanisms to ensure accountability and that these are adequate. It is not for me to comment on the adequacy of such mechanisms. I do not accept that the existence of current safeguards in relation to public expenditure means that there is no public interest in creating further safeguards. The very existence of secrecy carries with it the scope for abuse. In contrast, openness in relation to public expenditure is an important additional safeguard against fraud, waste and misuse of funds. I consider that the public interest in openness about public expenditure is of very great significance.
The second positive public interest which would be served is the public interest in requesters availing of their rights under the Act. Motor Distributors Limited argued strongly that no such public interest arose in this case. It characterised Mr Henry's request as one born out of curiosity. Section 8(4) requires that a public body, in dealing with a request, disregard any belief or opinion it may have as to the reasons for the making of the request. In the light of this, I do not consider that I can take Mr Henry's motive into account. I can see nothing in the Act which requires me to discriminate between requesters seeking information of the kind covered by Mr Henry's request and to accept that one requester is more worthy than another.
I also do not accept the argument that the central public interest disclosed by the Act is the right of members of the public to access personal information about themselves and to correct it, if necessary. Indeed, Motor Distributors Limited conceded that this was not the full ambit of the Act. In my view, therefore, there is a public interest in any member of the public availing of his or her rights under the Act and it is a factor which cannot be lightly dismissed.
As I have said, the public interest factors in favour of disclosure, which I have described above, have to be balanced against the harm which might be caused by disclosure. In approaching this balancing test, it seems to me that I must identify the possible harms and then weigh them against the public interest in favour of disclosure, taking into account both the degree of harm and the likelihood of its occurrence.
In discussing the possible application of section 27(1)(b) and 27(1)(c), I have accepted that there is the possibility of prejudice to the competitive position of some of the tenderers in this case and that release could also prejudice the conduct or outcome of negotiations. While I must take these matters into account in considering where the balance of the public interest lies, I have decided that they should not be accorded significant weight. In so deciding I have taken into account a number of factors. The first is that the information is historic, pertains to a single transaction and, of itself, discloses nothing about the policy adopted by tenderers or how they arrived at the quoted prices. Because of this it seems to me that release of the information could not have the same adverse impact as, for example, the release of a trade secret comprising a secret process where release could result in a material loss to the party concerned.
The second factor which I have taken into account is that no evidence was presented to me that the harms envisaged by section 27(1)(b) and 27(1)(c), and which I accept could occur, are likely to occur. In balancing the public interest, a prejudice which is no more than a mere possibility has to carry a great deal less weight than a prejudice which is likely to occur.
Motor Distributors Limited also argued that release of tender prices in this case and in future cases would irreparably damage the tender process. The argument here is that future tenders would receive little or no response because tenderers would be unwilling to have their prices disclosed. It seems to me that there is some contradiction between this argument and the argument that information on tender prices, if released, will be used by competitors in future tenders. It is, of course, possible that some prospective tenderers may be discouraged from tendering in the future by the knowledge that the price quoted by a successful tenderer may be revealed. It is also possible that some tenderers will quote less competitively in the future. However, it seems to me that provided there is a competitive market (and this seems to be the case) then it is unlikely that the release of tender prices will affect the tender process in the way in which Motor Distributors Limited fears. As will be apparent from what I have already said, disclosure of tender prices has not been found in other jurisdictions to be incompatible with the operation of a competitive tender system.
In the circumstances I am of the opinion that the advantages in terms of openness and accountability of disclosing the tender prices outweigh the possible harm to the tenderers and to the tender process and I find that the public interest in this case is better served by release.
Having reviewed of the decision of the Office of Public Works, both initially and on internal review, I confirm the decision of the Department in this case insofar as it relates to the release of the Order Forms T/0747/1333, T/0747/1334 and T/0747/1335.
