Freedom of Information: The Teeth of Contractual Consultation Obligations

It is well known that the Freedom of Information Act 2000's

right of access to information held by public authorities came into force on 1

January 2005. It is also known that commercial entities dealing with or

otherwise providing information to public authorities could be affected by the

changes.† For example, individuals,

competitors, journalists or potential claimants may request and sometimes

obtain commercially sensitive information originally supplied by those

entities.†

Public authorities transacting with such entities are

likely to find that contractual negotiations include a request for inclusion of

a clause requiring consultation prior to disclosure under the Act.† Questions may arise as to what liabilities a

public authority could face if it were to breach that clause, given that the

circumstances surrounding such a breach would usually entail the public

authority's compliance with a statutory duty to disclose information to the

requesting party.† Could a public

authority find comfort in the notion that compliance with that statutory duty

might trump a contractual obligation and therefore exclude contractual

liability?† In all likelihood, the short

answer is no and that a failure to comply with a contractual consultation

clause may render the authority liable for damages.† This article considers this issue by reference to relevant New

Zealand case law under that country's Official Information Act 1982.

Consultation

as a prerequisite to disclosure under the Freedom of Information Act

("FOIA")

Where an authority is in doubt as to whether its

disclosure would constitute a breach of confidence, or might otherwise fall

under an exemption, it can be expected to consult with the party from whom the

information was obtained. To some extent this issue is now covered in the

Secretary of State's Code of Practice on the Discharge of Public Authorities'

Functions Under Part I of the Freedom of Information Act 2000 (the "FOIA

Code") as revised in November 2004.(1)

The FOIA Code states that in some cases it will be necessary to consult, directly

and individually, with third parties to determine whether or not an exemption

applies to information requested, or to reach a view on whether the Act's

disclosure obligations arise in relation to that information. It also states

that in a range of other circumstances it will be good practice to do so:† ìfor example where a public authority

proposes to disclose information relating to third parties, or information

which is likely to affect their interests, reasonable steps should, where

appropriate, be taken to give them advance notice, or failing that, to draw it

to their attention afterwards.î† The

Code states further that it may also be appropriate to consult third parties

about matters such as whether any further explanatory material or advice should

be given to the applicant together with the information in question. Such

advice may, for example, refer to any restrictions (including copyright restrictions)

which may exist as to the subsequent use which may be made of such

information.(2)

One may note that the FOIA Code's expectation of

consultation ìin some casesî is neither precisely defined nor statutory in

nature.(3) One might argue on public law grounds that consultation is mandatory

where confidential or commercially sensitive information is at stake, but these

arguments, although strong, are not necessarily robust.(4)† Perhaps more importantly, breach of a public

law obligation does not, without more, give rise to an action for damages

against the public authority.† For these

reasons, companies transacting with public authorities may wish to include

contractual consultation clauses to ensure, to the extent one can, that their

counterparty public authorities will be subject to a contractually binding

obligation to consult.† For example,

they may want to include a term stating that no confidential information shall

be disclosed except where:

the public authority has consulted the other contracting party

on the proposed disclosure or at least reasonably informed that party of the

proposed disclosure (within, for example, 7 days of receipt of a request, to

enable that party to respond); and

disclosure is required by law, under FOIA or...