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You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Veolia ES Nottinghamshire Ltd v Nottinghamshire County Council & Ors [2010] EWCA Civ 1214 (29 October 2010) URL: https://www.bailii.org/ew/cases/EWCA/Civ/2010/1214.html Cite as: [2010] EWCA Civ 1214, [2010] UKHRR 1317, [2012] PTSR 185, [2011] BLGR 95, [2011] Env LR 12, [2011] Eu LR 172 |
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COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE QUEEN'S BENCH, ADMINISTRATIVE COURT
MR JUSTICE CRANSTON
CO/7514/2009
Strand, London, WC2A 2LL |
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B e f o r e :
LORD JUSTICE ETHERTON
and
LORD JUSTICE JACKSON
____________________
Veolia ES Nottinghamshire Limited |
Claimant / Appellant |
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- and - |
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Nottinghamshire County Council | Defendant / Respondent |
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(1) Shlomo Dowen (2) The Audit Commission for Local Authorities and the National Health Service for England |
Interested Parties |
____________________
Mr Clive Lewis QC and Mr Ian Rogers (instructed by Nottinghamshire County Council) for the Defendant / Respondent
Mr Timothy Pitt-Payne QC (instructed by Friends of the Earth Rights and Justice Centre) for the First Interested Party
Mr Peter Oldham QC (instructed by Audit Commission In-house solicitors) for the Second Interested Party
Hearing dates : Monday 5th & 6th July 2010
____________________
Crown Copyright ©
Lord Justice Rix :
Introduction
"At each audit under this Act, other than an audit of accounts of a health service body, any persons interested may –
(a) inspect the accounts to be audited and all books, deeds, contracts, bills, vouchers and receipts relating to them…"
"Although all of the disputed documents constituted commercial confidential material that Veolia would have preferred did not find its way into a competitor or individual's hands, Veolia took the view that the damage from their disclosure was capable of being contained. Veolia's initial reaction was to accept the judgment of Mr Justice Cranston, but on the understanding that disclosure was to be limited to what had been called "the [first] disputed documents"…"
"The harm from disclosure of Veolia's Financial Model and Profit Margin is very considerable indeed. It eclipses the harm from disclosure of the "[first] disputed documents"."
Mr Lambert also went on to explain that the second disputed documents "do not determine or influence amounts payable under the Contract. They are there to enable [the Council] to make predictions which help it to determine the evolution of the Contract". This is apparently because, due to the extremely long nature of PFI contracts (many decades), they need to include certain information to enable the parties to them to manage and price risks which may or may not occur over their life. Normally contracts do not reveal a contractor's profit margin or financial model. However, a local authority needs these highly sensitive pieces of information in case it wants to vary the contract to include or exclude elements from it. Using the financial model and the profit margin, the contractor can show the local authority how such a change would affect its operational costs for the remainder of the contractual term. Thus the local authority can satisfy itself that the contractor's profit margin stays the same and the contract is not rendered uneconomic by a proposed change. Such information is "of such sensitivity that [it] is never revealed to anyone other than the contracting authority". That is what Mr Lambert says about the second disputed documents.
The broad structure of the parties' submissions
The contract and confidentiality
"123.1 The parties agree that the provisions of this Contract and each Project Document or Ancillary Document shall, subject to Clause 123.3 below, not be treated as Confidential Information and may be disclosed without restriction.
123.2 Clause 123.1 above shall not apply to provisions of this Contract or a Project Document or Ancillary Document designated as Commercially Sensitive Information in Schedule 45 (Commercially Sensitive Contract Provisions) to this Contract which shall, subject to Clause 123.4 below, be kept confidential for the periods specified in that Schedule.
123.3 The parties shall keep confidential all Confidential Information received by one party from the other party and shall use all reasonable endeavours to prevent their employees and agents from making any disclosure to any person of any such Confidential Information.
123.4 Clause 123.2 and 123.3, shall not apply to:
…
123.4.4. Any disclosure which is required pursuant to any statutory, legal (including any order of a court of competent jurisdiction) or Parliamentary obligation placed upon the party making the disclosure…
123.4.10. any disclosure for the purpose of:
123.4.10.1. the examination and certification of the Authority's or the Contractor's accounts;…
123.4.10.4. (without prejudice to the generality of Clause 123.4.4 above) compliance with the FOIA and/or the Environmental Information Regulations,
provided that, for the avoidance of doubt, neither Clause 123.4.10.4 nor Clause 123.4.4 above shall permit disclosure of Confidential Information otherwise prohibited by Clause 123.3 above where the information is exempt from disclosure under section 41 of the FOIA."
The legislative history of section 15(1)
"A copy of the accounts duly made up and balanced, together with all rate books account books deeds contracts accounts vouchers and receipts mentioned or referred to in such accounts, shall be deposited in the office of such authority, and be open, during office hours thereat, to the inspection of all persons interested for seven clear days before the audit, and all such persons shall be at liberty to take copies or extracts from the same, without fee or reward."
"A copy of every account which is subject to audit by a district auditor, duly made up and balanced, and all rate books, account books, deeds, contracts, accounts, vouchers and receipts relating to the accounts, shall be deposited in the appropriate office of the authority, and shall for seven clear days before the audit be open at all reasonable hours to the inspection of all persons interested, and any such person shall be at liberty to make copies of or extracts from the deposited documents, without payment."
Section 226 of the 1933 Act also conferred a right upon a local government elector to make objection to the account (see now section 16 of ACA 1998).
"(2) The council of each county shall keep a fund to be known as the county fund…
(4) All receipts of a county council shall be carried to the county fund, and all liabilities falling to be discharged by that council shall be discharged out of that fund.
(5) Accounts shall be kept of receipts carried to, and payments made out of, -
(a) the county fund…
and any account kept in respect of general expenses only of a principal area shall be called the general account of that area and any account kept in respect of any class of special expenses only of any such area shall be called a special account of that area."
No party on this appeal has questioned this history, as set out by the judge.
Audit Commission Act 1998
"(1) The accounts to which this section applies –
(a) shall be made up each year to 31st March or such other date as the Secretary of State may generally or in any special case direct, and
(b) shall be audited in accordance with this Act by an auditor or auditors appointed by the Commission.
(2) This section applies to the accounts mentioned in Schedule 2.
"(1) In auditing accounts required to be audited in accordance with this Act, an auditor shall by examination of the accounts and otherwise satisfy himself –
…
(b)…that they are prepared in accordance with regulations under section 27;…
(e) that the body whose accounts are being audited has made proper arrangements for securing economy, efficiency and effectiveness in its use of resources.
(2) The auditor shall comply with the code of audit practice applicable to the accounts being audited as that code is for the time being in force."
"(1) An auditor has a right of access at all reasonable times to every document relating to a body subject to audit which appears to him to be necessary for the purposes of his functions under this Act."
This is a wide provision, albeit expressly subjected to the purposes of the auditor's statutory functions. Subject to that restriction, the documents to which the auditor is entitled to access, at all reasonable times, only have to relate to the body subject to audit and not to the accounts themselves. Moreover, it is clear that the expression "relating to" in the phrase "relating to a body" cannot be given the narrow meaning of "expressed in" or "referred to in" which Veolia wishes to give to the expression "relating to" in section 15(1).
"14.- (1) A local government elector for the area of a body subject to audit, other than a health service body, may –
(a) inspect and make copies of any statement of accounts prepared by the body pursuant to regulations under section 27;
(b) inspect and make copies of any report, other than an immediate report, made to the body by an auditor; and
(c) require copies of any such statement or report to be delivered to him on payment of a reasonable sum for each copy.
(2) A document which a person is entitled to inspect under this section may be inspected by him at all reasonable times and without payment.
This right, given to an elector, would not avail Mr Dowen to obtain the documents he seeks in this case. It is limited to inspection of statements of accounts, and reports. It is not framed in terms of accounts or their underlying documents.
"(1) At each audit under this Act, other than an audit of accounts of a health service body, any persons interested may –
(a) inspect the accounts to be audited and all books, deeds, contracts, bills, vouchers and receipts relating to them, and
(b) make copies of all or any part of the accounts and those other documents.
(2) At the request of a local government elector for any area to which the accounts relate, the auditor shall give the elector, or any representative of his, an opportunity to question the auditor about the accounts.
(3) Nothing in this section entitles a person –
(a) to inspect so much of the accounts as contains personal information within the meaning of subsection (3A) or (4); or
(b) to require such information to be disclosed in answer of any question.
(3A) Information is personal information if –
(a) it identifies a particular individual or enables a particular individual to be identified; and
(b) the auditor considers that it should not be inspected or disclosed.
(4) Information is personal information if it is information about a member of the staff of the body whose accounts are being audited which relates specifically to a particular individual and is available to the body for reasons connected with the fact –
(a) that the individual holds or has held an office or employment under that body; or
(b) that payments or other benefits in respect of an office or employment under any other person are or have been made or provided to that individual by that body.
(5) For the purposes of subsection (4)(b), payments made or benefits provided to an individual in respect of an office or employment include any payment made or benefit provided to him in respect of ceasing to hold the office or employment.
The Accounts and Audit Regulations 2003
"(2) The accounting records determined by the responsible financial officer on behalf of the relevant body in accordance with paragraph (1)(a) shall be sufficient to show the body's transactions and to enable the responsible financial officer to ensure that any statement of accounts, income and expenditure account, statement of balances or record of receipt and payments and additional information to be provided by way of notes to the accounts as the case may be, which are prepared under these regulations, comply with these Regulations."
"(a) entries from day to day of all sums of money received and expended by the body and the matters to which the income and expenditure or receipt and payments relate;
(b) a record of the assets and liabilities of the body…"
"(1) A relevant body which is not a smaller relevant body shall prepare, in accordance with proper practices in relation to accounts, a statement of accounts for each year, which shall include such of the following accounting statements as are relevant to the functions of the relevant body -
(a) housing revenue account;
(b) collection fund;
(c) firefighters' pension fund;
(d) any other statements relating to each and every fund in relation to which the body is required by any statutory provision to keep a separate account."
"(a) the period during which the accounts and other documents referred to in paragraph (1) will be available for inspection in accordance with regulation 14;
(b) the place at which, and the hours during which, they will be so available;
(c) the name and address of the auditor;
(d) the provisions contained in section 15 and section 16 of the 1998 Act; and
(e) the date appointed under regulation 13."
"(1) As soon as reasonably possible after conclusion of an audit, a relevant body…shall give notice by advertisement stating that the audit has been concluded and that the statement of accounts is available for inspection by local government electors and including –
(a) a statement of the rights conferred on local government electors by section 14 of the 1998 Act…"
The Code of Practice 2008
"8. Whilst the term 'accounts' is sometimes used to refer to the 'statement of accounts', it has a wider meaning, and the 1998 Act distinguishes between the two. The 'accounts' of a local government body include the 'general ledger', which is the main record of transactions, assets and liabilities of a body of which the 'statement of accounts' is a summary. It includes subsidiary accounts that feed into the 'general ledger', such as payroll accounts or council tax accounts."
Mr Warren also states:
"13. An audit is not a substitute for the arrangements an authority puts in place itself. Auditors cannot and do not review or check every transaction reflected in the authority's accounts or every element of the authority's arrangements for securing economy, efficiency and effectiveness. The Code of Audit Practice requires auditors to adopt a risk-based approach, targeting resources appropriately in the context of the particular circumstances of the body. In seeking to obtain reasonable assurance that the accounts have not been materially misstated, auditing standards allow for auditors to employ sampling techniques to test the details of transactions in the accounts and the effectiveness of the operation of financial controls."
"54. Where any representations are made or information is provided that is relevant to the audit, or matters relevant to the audit otherwise come to their attention, auditors should consider whether the matter needs investigation and action under their specific powers or whether it can be considered more effectively within planned work programmes and audit reporting arrangements under their general audit powers.
55. In considering whether to exercise any of their specific powers under the Act, auditors should apply a balanced and proportionate approach in determining the time and resources to be spent on dealing with matters that come to their attention. They should consider:
• the significance of the subject matter;
• whether there is a wider public interest in the issues raised;
• the costs of dealing with the matter, bearing in mind that these fall directly on the taxpayer;
• in the case of objections, the rights of both those subject to objection and the objector.
56. Auditors should reject objections that disclose no reasonable cause for action, are frivolous or vexatious, or are otherwise an abuse of the audit process."
"Confidentiality
12 Auditors should take all reasonable steps to ensure that they and their staff comply with relevant statutory and other requirements relating to the holding and disclosure of information received or obtained during the audit."
Information rights legislation
"(5)…a public authority may refuse to disclose information to the extent that its disclosure would adversely affect - …
(e) the confidentiality of commercial or industrial information where such confidentiality is provided by law to protect a legitimate economic interest…"
"22. On 6 January 2010, NCC confirmed to the Commissioner that it continued to rely on the exception contained in Regulation 12(5)(e) and that, while schedules 6A, 6B, 6C and 7 had been disclosed to the complainant, they had not been made public…
28. The Commissioner's decision is that the relevant information falls within the definition of environmental information provided in EIR Regulation 2(1)(c)…
33. The PFI contracts were signed on 26 June 2006 and NCC made a redacted version of them available to the general public on 12 June 2008…
38. NCC told the Commissioner that the Regulation 12(5)(e) exception could only be relied upon where it was satisfied that releasing the information would have an adverse effect. NCC was satisfied, for the information to which it had applied the exception, that Veolia would be disadvantaged in the marketplace because the effectiveness of its tenders would thereby be reduced, in turn this would affect the quality of tenders received by public authorities including itself…
43. The Commissioner considers that "provided by law" will include confidentiality imposed on any person under the common law of confidence, contractual obligation, or statute. In this matter he has seen evidence that it was the intention of the parties, during the negotiations and as provided in the contract, for some defined parts of the information exchanged by them not to be disclosed. The Commissioner is satisfied that some of the relevant information has been imparted to NCC in circumstances which gave rise to an obligation of confidence. He also considered whether the information had the necessary 'quality' of confidence. He is satisfied that some of it did as some of the information still being withheld is not trivial and is not available from other sources…
49. NCC said that it recognised that there were arguments in favour of disclosing all of the relevant information and that under the legislation there is a presumption in favour of disclosure. NCC said that waste management was a core function of public authorities and that the public had a right to know that the contract was for an appropriate price, for the provision of appropriate services, with adequate safeguards. It was important for NCC to demonstrate transparency and accountability in the spending of public money. Disclosure of operational information would: give an overview of what had been agreed by NCC; allow a detailed understanding of the process; and, help to demonstrate that value for money had been achieved. Generally the more information that was in the public domain, NCC said, the greater the scope for public debate and understanding of the reasons for its decisions…
51. NCC told the Commissioner that only information of the utmost commercial sensitivity had been considered by the public interest panel and subsequently withheld from the complainant because NCC and Veolia had already agreed to release a large amount of information in accordance with the spirit of the Act…
53. In summary NCC said, it had decided that the majority of the information could be disclosed but that Veolia and NCC officers had correctly objected to the release of detailed financial modelling information and information that would affect their future negotiating positions. NCC therefore had decided that the technical and detailed information requested would not add significantly to the public debate but would significantly harm the commercial interests of Veolia and itself; it should therefore be withheld.
Balance of the public interest arguments
54. In reaching his decision, the Commissioner has taken full account of the arguments put to him by the parties. Through his staff, he has reviewed all of the information being withheld and taken full account of its content. He has also followed the principles set out in the decisions in the lead cases. In summary he decided that the public interest in maintaining the exceptions outweighed the public interest in disclosure for information about: specific systems and technical matters; the costs and profits of contractors including the relevant financial models; the claw back of costs e.g. from the sale of by-products; and technical manual matters. Information other than these categories fell to be disclosed.
55. The Commissioner has prepared a detailed decision schedule…"
The Council's statement of accounts
"The Authority has received Government support for a Nottinghamshire Waste PFI scheme which involves the commissioning of Materials Recycling Facilities and an Energy Recovery Facility. The contract was signed on 26 June 2006 and the main facilities are expected to become operational over the next five years. The charge to the County Council in 2008/09 was £21.2 million (£19.5 million in 2007/08). The first main new facility became operational in January 2009, the Materials Recycling Facility (MRF). The MRF site is subject to a rental agreement with NCC, 50 years, which is then recharged to Veolia at the same rates. The residual value of the facility as at 31/03/2033 is assessed at £6.87m."
The first ground: documents "relating to" the "accounts to be audited"
The second ground: limiting the right of inspection by reference to confidential information
"…legal professional privilege was a fundamental human right that could be overridden only by express words or necessary implication; that section 20(1) of the 1970 Act did not exclude it expressly; and that it was not a necessary implication from the structure of the 1970 Act as a whole that it was intended to be overridden…"
"an inspector may by notice in writing require a person to deliver to him such documents as are in the person's possession or power and as (in the inspector's reasonable opinion) contain, or may contain, information relevant to any tax liability to which the person is or may be subject, or the amount of any such liability."
"[7] Two of the principles relevant to construction are not in dispute. First, LPP is a fundamental human right long established in the common law…It has been held by the European Court of Human Rights to be part of the right of privacy guaranteed by article 8…
[8] Secondly, the courts will ordinarily construe general words in a statute, although literally capable of having some startling or unreasonable consequence, such as overriding fundamental human rights, as not having been intended to do so. An intention to override such rights must be expressly stated or appear by necessary implication."
All their Lordships agreed with Lord Hoffmann.
"The context in which Lord Hoffmann was speaking was human rights but the principle of statutory construction is not new and has long been applied in relation to the question whether a statute is to be read as having overridden some basic tenet of the common law…
[46] …At best from the point of view of the revenue the legislation is equivocal. Left to myself I would incline to the view that the implication, if any, is that the legislature was intending to preserve the legal professional privilege of the taxpayer rather than abrogate it; otherwise, why preserve it in the hands of the adviser when the client has not consented to the waiver of the privilege?...
[47] The present appeal thus falls to be decided applying the well established principles of statutory construction to be found in English law. The appellants do not need the assistance of the Human Rights Act 1998 or the Convention…The judgments of the European Court of Human Rights…and the European Court of Justice…show a general recognition of the importance of legal professional privilege."
"It may be said that the result is unfortunate in that the employees' private affairs are thereby likely to be revealed and revealed to persons who are under no obligation to respect confidentiality. That, if it be the case, is a matter for Parliamentary consideration."
Watkins LJ said:
"It seems to me that it might be as well if Parliament now looks at this provision, altogether sweeping, as my Lord has said it is, in section 17(1) having regard to the facts of this particular case and the implications of it which obviously allow of a local government elector inspecting a confidential matter and revealing its contents as he chooses."
"1. Everyone has the right to respect for his private and family life, his home and correspondence.
2. There shall be no interference by a public authority with the exercise of this right except such as is in accordance with the law and is necessary in a democratic society in the interests of national security, public safety or the economic well-being of the country, for the prevention of disorder or crime, for the protection of health or morals, or for the protection of the rights and freedoms of others."
"Every natural or legal person is entitled to the peaceful enjoyment of his possessions. No one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law.
The preceding provisions shall not, however, in any way impair the right of a State to enforce such laws as it deems necessary to control the use of property in accordance with the general interest or to secure the payment of taxes or other contributions or penalties."
"Confidentiality
Without prejudice to the provisions of this Directive, in particular those concerning the obligations relating to the advertising of awarded contracts and to the information to candidates and tenderers set out in Articles 35(4) and 41, and in accordance with the national law to which the contracting authority is subject, the contracting authority shall not disclose information forwarded to it by economic operators which they have designated as confidential; such information includes, in particular, technical or trade secrets and the confidential aspects of tenders."
"Certain information on the contract award or the conclusion of the framework agreement may be withheld from publication where release of such information would impede enforcement or otherwise be contrary to the public interest, would harm the legitimate commercial interests of economic operators, public or private, or might prejudice fair competition between them."
Article 41(3) (article 41 is concerned with informing candidates and tenderers about the outcome of the procedure) provides for the possibility of withholding certain information in identical terms.
"9(3) Contracting authorities who have awarded a contract shall make known the result by means of a notice. However, certain information on the contract award may, in certain cases, not be published where release of such information would impede law enforcement or otherwise be contrary to the public interest, would prejudice the legitimate commercial interests of particular enterprises, public or private, or might prejudice fair competition between suppliers."
"15(2) The contracting authorities shall respect fully the confidential nature of any information furnished by the suppliers."
"[34] The principal objective of the Community rules in that field is the opening-up of public procurement to undistorted competition in all the Member States…
[35] In order to attain that objective, it is important that the contracting authorities do not release information relating to contract-award procedures which could be used to distort competition, whether in an ongoing procurement procedure or in subsequent procedures.
[36] Furthermore, both by their nature and according to the scheme of Community legislation in that field, contract-award procedures are founded on a relationship of trust between the contracting authorities and participating economic operators. Those operators must be able to communicate any relevant information to the contracting authorities in the procurement process, without fear that the authorities will communicate to third parties items of information whose disclosure could be damaging to them…
[43] It follows that, in a review procedure in relation to the award of public contracts, the body responsible for that review procedure must be able to decide that the information in the file relating to such an award should not be communicated to the parties or their lawyers, if that is necessary in order to ensure the protection of fair competition or of the legitimate interests of the economic operators that is required by Community law."
[51] It follows that, in the context of a review of a decision taken by a contracting authority in relation to a contract-award procedure, the adversarial principle does not mean that the parties are entitled to unlimited and absolute access to all of the information relating to the award procedure concerned which has been filed with the body responsible for the review. On the contrary, that right of access must be balanced against the right of other economic operators to the protection of their confidential information and their business secrets.
[52] The principle of the protection of confidential information and of business secrets must be observed in such a way as to reconcile it with the requirements of effective legal protection and the rights of defence of the parties to the dispute…
[55] Accordingly, the answer…must be that…the body responsible for the reviews…must ensure that confidentiality and business secrecy are safeguarded in respect of information contained in files communicated to that body by the parties to an action, particularly by the contracting authority, although it may apprise itself of such information and take it into consideration. It is for that body to decide to what extent and by what process it is appropriate to safeguard the confidentiality and secrecy of the that information, having regard to the requirements of effective legal protection and the rights of defence of the parties to the dispute…"
The third ground: limiting the use to which accessed information might be put.
"It is, in my judgment, unfortunate that it sires the opportunity to an elector, allowed to look at the books of the council, to use the information thereby gained for an improper purpose. That is not to say that Mr Oliver would avail himself of that. I do not believe for a moment that he would."
"[18] Third, I accept, as Mr Stilitz submits, that the structure of these provisions suggests that at least the major purpose of a right conferred by section 15 is to facilitate the right to ask questions under section 15(2) and to raise objections under section 16(2). That is supported by the fact that the right is limited to the accounts to be audited, but, consistently with this purpose, the information is only made available for a relatively short period each year in the run up to finalising the accounts. Also, the documents which can be scrutinised are limited to those needed to verify the accuracy and integrity of the accounts.
[19] However, whilst I would accept that on any view a major purpose of section 15(1) is to assist the local government elector who may wish to raise issues in the auditing process, were it solely limited to that purpose then there would be no point in conferring the right under that section beyond the electors themselves. I confess that I have found difficulty in discerning why that right has been conferred more widely. There does not appear to be any obvious rationale why Parliament has conferred different rights relating to the accounts on different categories of persons."
"[55] The premise here is that the provision requires the information to be used for a limited purpose or purposes. As I have indicated, I accept that Parliament probably did envisage that the information would be used primarily in order to enable electors to raise questions with the auditor and ultimately raise objections. But the fact that those who have access to the information extend beyond those who can make such a request, or raise such an objection, shows that it cannot be the only purpose.
[56] In any event there is no express limitation in the statute as to the use to which this information can be put. I see significant practical difficulties in confining the use of the material once it has been acquired."
"It is not hard to see that the existence of such an implied power to judge the genuineness, sufficiency, or admissibility of a tax payer's desire to inspect the local authority's accounts and supporting documentation could be used to impede or defeat the evident intention of the legislation that the transactions of the local authority should be transparent and open to proper scrutiny by at least those members of the public who embrace their tax payers. I do not consider that the intention of the legislature was that persons such as local tax payers with a legal interest arising from that relationship should be at risk of forfeiting their right to inspect the accounts and supporting documentation of the authority because the exercise of that right might privately be sought for some wider or other purpose than the lodging of a complaint with the auditor."
"[60] I respectfully agree with that analysis. I think there are considerable difficulties in identifying the purpose for which the interested person can use the information in any event. There would be practical problems in enforcing the obligation. As I have said, the right of inspection cannot be limited to the purpose of participating in the audit process, since interested persons who are not government electors have no rights in the process.
[61] How are, to take an uncontentious example, members and officers who are not local government electors, to use this material if it can only be used in the audit process? Are they to be limited to making representations to the auditor even though they have no right, as such, to question him? Surely they must, at the very least, be able in an appropriate case, to mount a legal challenge if they think, as a result of their inspection, that something is amiss. It would be highly unsatisfactory to deny them the right to use the information for that purpose.
[62] If they wish to raise their grievance with a local newspaper, perhaps because it was a cheaper way of pursuing redress than going to court, would they be prevented from doing so? It would surely be inconsistent with the purpose behind the provision to prevent this. I think it then becomes very difficult to identify what would be the contours separating legitimate and illegitimate purposes."
"It is not necessary to decide the point, but I do not think that the Inland Revenue were entitled to use any information supplied by Mr Taylor for another purpose. In consequence, I do not think that the disclosure of the documents by Mr Taylor in confidence for the limited purpose of determining his own tax liability infringed any LPP vested in his clients."
"But I think that the true justification for the decision was not that Mr Parry-Jones's clients had no LPP, or that their LPP had been overridden by the Law Society's rules, but that the clients' LPP was not being infringed. The Law Society were not entitled to use information disclosed by the solicitor for any purpose other than the investigation. Otherwise the confidentiality of the clients had to be maintained. In my opinion, this limited disclosure did not breach the clients' LPP or, to the extent that it did, was authorised by the Law Society's statutory powers."
Decision
Lord Justice Etherton :
Lord Justice Jackson :