Case number: 170340
23 February 2018
This review concerns a request made by RTÉ on 5 January 2017 seeking access to records relating to the acquisition, funding, administration and performance of IMI. In its internal review decision dated 27 April 2017, UCC identified two sets of records as relevant to the request: one set held in its Office of Corporate and Legal Affairs (OCLA) and the other in its Finance Office. UCC granted access in full or in part to four of the OCLA records but otherwise refused access to both the OCLA and Finance Office records under sections 31(1)(a), 36(1)(b), or 37(1) of the FOI Act. On 1 July 2017, the applicant applied to this Office for a review of UCC's decision. In support of his application, the applicant submitted a number of documents, including a copy of the UCC submission made to the Public Accounts Committee (PAC) dated 22 June 2017 regarding the IMI acquisition; the submission, the transcript of the hearing before the PAC, and the PAC's report on the matter are all very relevant to this review insofar as they relate to the IMI acquisition and may be found at the following links:
I have now completed my review in accordance with section 22(2) of the FOI Act. In carrying out my review, I have had regard to the submissions made by the applicant, UCC, and IMI as the affected third party in this case. I have also examined the contents of the records concerned. I have decided to conclude this review by way of a formal, binding decision.
This review is concerned solely with the question of whether UCC was justified in refusing access in full or in part to the records it holds relating to the acquisition, funding, administration and performance of IMI. Adopting the numbering and categorisation system used by UCC in its schedules of records, the records concerned are the following:
No. 1 - Presentation to UCC's Governing Body meeting of November 2016 re acquisition of IMI (refused in part under sections 31(1)(a), 36(1)(b), and 37(1));
No. 2 - Mason Hayes Curran Due Diligence Report, September 2016 (refused in full under sections 31(1)(a) and 36(1)(b));
No. 3 - PwC Due Diligence Report (refused in full under section 36(1)(b));
No. 4 - Deloitte Tax Advices (refused in full under section 36(1)(b));
No. 5 - Lisney Valuations (refused in full under section 36(1)(b));
No. 6 - Presentation to UCC Governing Body, January 2015 (refused in part under section 36(1)(b));
No. 7 - Report to UCC Governing Body, January 2015 (refused in part under section 36(1)(b));
No. 8 - Mercer Report (refused in full under section 36(1)(b));
No. 9 - Millward Brown Report (refused in full under section 36(1)(b));
No. 10 - IMI Programme & Activity Portfolio (refused in full under section 36(1)(b));
No. 13 - Mason Hayes Curran Legal Advice (refused in full under section 31(1)(a)).
No. 1 - Finance Committee 09-16 Ag. 4.6.1 Briefing Note to FC (verbal report) on 15 identified issues (but consisting of a two-paged document of agenda items listed with manuscript notations);
No. 2 - Special Finance Committee 14-10-16 (but consisting of 15 separate documents altogether, one of which is a partial duplicate of OCLA record 4 - an earlier version of the schedule referred to three additional documents, but these were included in error and do not fall within the scope of the request).
Before setting out my findings, I should point out that while I am required by section 22(10) of the FOI Act to give reasons for my decisions, this is subject to the requirement of section 25(3) that I take all reasonable precautions to prevent disclosure of information contained in an exempt record or matter that, if it were included in a record, would cause the record to be exempt. This constraint means that, in the present case, the extent of the reasons that I can give is limited.
In addition, I wish to explain the approach of this Office to the granting of access to parts of records. Section 18 of the FOI Act provides for the deletion of exempt information and the granting of access to a copy of a record with such exempt information removed. This should be done where it is practicable to do so and where the copy of the record thus created would not be misleading. However, this Office takes that the provisions of section 18 do not envisage or require the extracting of particular sentences or occasional paragraphs from records for the purpose of granting access to those particular sentences or paragraphs. Generally speaking, therefore, this Office is not in favour of the cutting or "dissecting" of records to such an extent. Being "practicable" necessarily means taking a reasonable and proportionate approach in determining whether to grant access to parts of records.
Lastly, I wish to highlight the provisions of section 11(3) of the FOI Act in light of comments made by UCC before the PAC and in its submissions to this Office. UCC has stressed that "[j]ust 47%" of its funding is derived from the Exchequer. This view of its financing seems to me to indicate an insufficient appreciation of the fact that, not only does 47% represent a significant amount of public funds, but also that a large portion of UCC's other funds is derived from the mandatory fees that are paid for by students and their families from income which, through tax payments, also contributes towards the 47% of UCC's Exchequer funding. In any event, it is not disputed that UCC is an FOI body within the meaning of section 6 of the FOI Act. As an FOI body, UCC, like any other FOI body, is expressly required by section 11(3) of the FOI Act to have regard to the following in performing any function under the Act -
(a) the need to achieve greater openness in the activities of FOI bodies and to promote adherence by them to the principle of transparency in government and public affairs,
(b) the need to strengthen the accountability and improve the quality of decision-making of FOI bodies, and
(c) the need to inform scrutiny, discussion, comment and review by the public of the activities of FOI bodies and facilitate more effective participation by the public in consultations relating to the role, responsibilities and performance of FOI bodies.
This Office considers that section 11(3) is particularly relevant to the consideration of the public interest. I will return to this point below.
Section 22(12)(b) of the FOI Act provides that a decision to refuse to grant access to a record "shall be presumed not to have been justified unless the head concerned shows to the satisfaction of the Commissioner that the decision was justified." It should also be noted that a review by this Office under section 22 of the FOI Act is de novo in that it is based on the circumstances and the law as they apply on the date of the decision.
Section 31(1)(a) is a mandatory exemption which protects records that would be exempt from production in proceedings in a court on the ground of legal professional privilege.
Legal professional privilege enables a client to maintain the confidentiality of two types of communication:
(a) confidential communications made between the client and his/her professional legal adviser for the purpose of obtaining and/or giving legal advice (advice privilege); and
(b) confidential communications made between the client and a professional legal adviser or the professional legal adviser and a third party or between the client and a third party, the dominant purpose of which is the preparation for contemplated/pending litigation (litigation privilege).
Unlike several other of the exemptions in the FOI Act, the provision at section 31(1)(a) does not provide for the setting aside of that exemption where to do so would serve the public interest.
In its decision, UCC claimed that OCLA records 2 and 12 and parts of OCLA record 1 contain or consist of legal advice from its solicitors. Based on my examination of the records, I accept that OCLA records 2 and 12, both of which were prepared by the law firm of Mason Hayes Curran, qualify for legal advice privilege and are exempt in full under section 31(1)(a) of the FOI Act. However, I see no basis for the claim of privilege in relation to any part of OCLA record 1, which, as noted above, is a presentation. UCC has not identified the parts of the presentation that it regards as consisting of legal advice and it has not explained the basis for its claim in its submission to this Office. I am not satisfied that section 31(1)(a) applies to any part of OCLA record 1 in the circumstances.
UCC and IMI claim that the remaining records at issue contain commercially sensitive information that is exempt under section 36(1)(b) of the FOI Act. Section 36(1)(b) of the FOI Act provides that a request shall be refused if the record concerned contains "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". Section 36(1) does not apply if the public interest would, on balance, be better served by granting rather than by refusing the request (section 36(3) refers)
The essence of the test in section 36(1)(b) is not the nature of the information, but the nature of the harm which might be occasioned by its release. I note that the standard of proof is relatively low under section 36(1)(b) in that the mere possibility of prejudice to the competitive position of the person concerned is sufficient. However, in the High Court case of Westwood Club v The Information Commissioner  IEHC 375, Cross J. held that it is not sufficient for a party relying on section 36(1)(b) to merely restate the provisions of the section, list the documents and say that they are commercially sensitive. A party opposing release should explain why disclosure of the particular records could prejudice its competitive position.
The records at issue in the Westwood Club case involved dated financial information of a private limited company owned by Bray Town Council (the Council). The records included a breakdown of the company's profit and loss accounts and tangible and fixed assets for a two-year period, as well as the details of employee numbers and cost for one of the years. In its submissions to this Office, the Council had described the information concerned and claimed that disclosure would reveal to a competitor how the business was run. Cross J. found, however, that the Commissioner erred in accepting that the information was commercially sensitive within the meaning of the Act.
In this case, UCC stated generally in its decision that disclosure of the relevant records "would prejudice the competitive position of a private third party in the conduct of its business, would result in a material financial loss to that organisation and would decrease the likelihood of meaningful engagement by private firms willing to partner with the University". UCC indicated that this, in turn, would be harmful to its own interests, because such organisations would be discouraged from working with it in the future, which would undermine its "ability to fulfil its objects and to combine with external private bodies for that purpose".
In response to this Office's invitation to make focused submissions in support of its decision, UCC emphasised that IMI remains a private entity that must operate in a competitive market place with other business schools whose records are not publicly available. It noted that the information provided to its Finance Committee includes "details on pricing, gross margins, net margins, profitability customers and so forth - all of which is integral to the successful operation of the IMI". It therefore maintained that disclosure would be damaging to IMI's commercial and financial sustainability. It suggested that the statutory accounts available from the Company Registration Office (CRO) establish the norm for disclosure for private entities such as IMI, the implication being that publicly available financial information about IMI should not exceed that which is available about its competitors. According to UCC, "[i]t would be hugely damaging to IMI to have such commercially and legally sensitive data, that was only made available to UCC in the context of a formal acquisition, disclosed and made available via the media to its competitors". UCC added:
"[T]here are no public funds provided by the state for IMI. The reference by the PAC relates to UCC funding. The IMI campus was purchased via a loan. No exchequer capital grant was received from the state. The loan is repaid from non-exchequer sources as the IMI campus is now leased back to IMI, where the lease payment services the loan repayment. No exchequer funds are used in any element of the UCC/IMI transaction. At this, given the growth in fee paying students and the increase in the student contribution, UCC is funded primarily from non-exchequer sources. Just 47% is derived from the exchequer."
In its submission, IMI asserted that information it provided to UCC prior to 21 November 2016 was provided under an agreement that included a confidentiality clause but no further information regarding a confidentiality clause or its relevance to this case has been provided, nor has any claim for exemption been made under section 35(1) of the FOI Act, the exemption relating to information given in confidence.
Like UCC, IMI emphasised that it is not a public body and is not in receipt of state funds. It stated that the information at issue includes much greater detail than the Consolidated accounts filed with the CRO, such as information on product margins and profitability that would put it at a competitive disadvantage if disclosed to a competitor. IMI also expressed concern over pricing information related to "Customised programmes that would facilitate competitors in re-tendering".
In addition, IMI identified the different marketplaces in which it competes and explained how it differs from its competitors. It stated: "Disclosure of financial information such as the value of its revenue in these different product ranges, its pricing and its margins would facilitate IMI's larger competitors in undermining individual market segments, which would cast doubt on IMI's overall viability." It also referred to the competitive labour market that influences the availability of resources and stated that disclosure of margins for any or all of its programme types would potentially be very damaging to its ability to attract talented presenters to certain programmes.
The applicant's position
In his application for review, the applicant emphasised that IMI is a now a wholly-owned subsidiary of UCC and that the investment by UCC was required in order to avoid a forced sale of its campus. He contended that the acquisition of IMI was a "bespoke arrangement involving at the very least €20m of public funds" that will not be relevant to other transactions. He argued that "precedent overwhelmingly favours release and the need to ensure accountability and transparency in commercial activity".
I note that neither UCC nor IMI addressed the records at issue individually, though both were urged to provide full and succinct reasoning as to how or why the particular information concerned meets the criteria of the relevant exemption provisions. It is fair to say that one would expect the parties who are most familiar with the business at issue and the detailed content of the records to be in the best position to identify and address particular "sensitive" parts of the records. I also note that, in addition to the information about the UCC/IMI transaction that has been published as a result of the hearing before the PAC, IMI's annual accounts are publicly available from the CRO and information about its programmes and activity portfolio is available on its website, www.imi.ie.
Nevertheless, having regard to the contents of the records in light of the arguments that were presented, I accept that disclosure of certain information contained in the records at issue, such as information relating to IMI's revenue streams, margins, and profitability in relation to the particular types of programmes it offers could prejudice its competitive position. Such information could provide competitors with meaningful insight into IMI's business model and facilitate efforts to gain advantage over the company in the competitive business school marketplace.
However, much of the information at issue relates to the overall financial position and performance of IMI at the time of its acquisition by UCC. This information, in turn, relates to the question of taxpayer exposure as a result of the acquisition. Although UCC obtained a €20 million loan for the acquisition and therefore claims that no exchequer funds are involved, the PAC found that "the servicing and repayment of the bank borrowings for the €20 million will come substantially from public funds". The €20 million was made available to IMI in exchange for its primary fixed asset, its campus, but according to IMI's CRO accounts for 2016, the campus was then leased back to IMI "on favourable terms". Moreover, the campus is unlikely to be regarded as an asset that could be readily liquidated given that it would be needed for IMI to remain operational. It is also a matter of public record that UCC agreed to invest a further €2.5 million for the refurbishment and upgrading of the campus. IMI's CRO accounts reflect that €1.8 million was received in 2016 in addition to the €20 million for the sale of the campus. Other details regarding IMI's income and expenditure, financial position, and cash flows is also publicly available through its CRO accounts.
Neither UCC nor IMI has specifically identified any basis for finding that information relating to the acquisition itself could be harmful to IMI's competitive position in light of the information that is already publicly available about the matter. Moreover, UCC has not explained how disclosure of the information relating to the transaction with IMI could be detrimental to its partnerships with other private firms given the particular circumstances of the acquisition and the scrutiny that it has already received through the PAC and in the media. Indeed, as FOI legislation has been in force for two decades, the potential for the release of information held by FOI bodies should come as no surprise to parties that engage with FOI bodies. In any event, I consider that there is a strong public interest in openness and transparency in relation to the financial position and performance of IMI at the time of its acquisition and in the due diligence carried out by UCC. I must also have regard to the general principle of transparency and accountability which is reflected in section 11(3) of the FOI Act insofar as it relates to the actions of UCC and its decision-making with respect to the acquisition.
The purpose of the public interest test is to strike a balance between competing interests insofar as they are relevant. As noted in previous decisions, the Commissioner takes the view that the FOI Act was designed to increase openness and accountability in the way in which public bodies conduct their operations; generally speaking, it was not designed as a means to open up the operations of private enterprises to scrutiny. In this case, a balance must be struck between protecting the commercially sensitive information of a wholly-owned subsidiary of UCC, an FOI body, on the one hand, and the public interest in openness and accountability in relation to UCC's acquisition of the company and the consequent taxpayer exposure.
In light of these general conclusions, I make the following findings on the individual records concerned:
OCLA records 1 and 6 are presentations to the UCC Governing Body which have been refused in part. The redacted parts of these records relate to the IMI Pension Scheme and a related settlement involving a former staff member, the structure of the UCC/IMI financial transaction, general information about IMI's market position and its history of engagement with UCC, information about IMI's financial position and performance in recent years, and an identification of risk factors and key integration elements. Having regard to the submissions and the information that is in the public domain, including the information disclosed by the PAC and in IMI's CRO accounts, I am generally not satisfied that the redactions contain commercially sensitive information within the meaning of section 36(1)(b) of the Act. Record 6 includes forecasts for 2017 and 2018 that may be of some interest to IMI's competitors, but the forecasts do not provide details regarding particular revenue streams or product ranges. I further note that UCC made statements before the PAC regarding IMI's return to operational profitability in light of the elimination of its debts and removal of pension liabilities. It seems to me that any commercial sensitivity is minimal in the circumstances and that the information should be disclosed in the public interest in any event given its relevance to the question of taxpayer exposure. However, the information relating to the pension settlement of the former employee will be addressed below in relation to section 37 of the Act.
OCLA record 3 is a PwC Due Diligence Report, dated 13 January 2015. Unlike the presentations, this record includes detailed information about IMI's revenue and margins in different product ranges. It also includes somewhat dated information about IMI's general financial position and performance, but in the context of providing detailed analysis, including analysis of financial projections and discussion of trends that could still be of interest to competitors. Given the detail involved and the period of time covered, I accept that section 36(1)(b) applies. For the sake of clarity, I note that I make this finding in light of the need to be practicable under section 18 of the Act, as discussed above. However, the report also provides significant information about the due diligence process undertaken.
In considering the public interest under section 36(3) of the Act, I find that disclosure of the overview information provided at the beginning of the report (pages 1-16), subject to the redaction of the graphs on page 9 and related commentary providing details regarding IMI's revenue streams and cost of sales mix, would strike the right balance between the competing interests involved.
OCLA record 4 - Deloitte Tax Advices: This record, which is dated 10 October 2016, sets out the tax implications and exposures of the transfer of the campus from IMI to UCC. It discusses the financial position of IMI at the time of the acquisition, and in particular its liabilities, but as indicated above, information about IMI's financial position and performance, including information about its Pension Scheme, is publicly available. No specific arguments have been made to show how disclosure of the information contained in the record could reasonably be expected to result in a material financial loss or gain to IMI or UCC, or could prejudice the competitive position of either entity, in light of the information that is already in the public domain.
Accordingly, I am not satisfied that the record qualifies for exemption under section 36(1)(b) of the Act. In any event, I find that the record should be disclosed in the public interest given the importance of openness and transparency in relation to the transaction.
OCLA record 5 consists of valuation reports for the IMI campus, dated October 2009, September 2010, and 30 September 2015, respectively. Again, no specific arguments have been made to show how these records meet the criteria of section 36(1)(b). I further note that the 2015 valuation report has been published in part as a result of the hearing before the PAC (but no claim for exemption has been made on this basis under section 15(1)(d) of the Act, a discretionary exemption relating to information that is already in the public domain). In the circumstances, I find no basis for concluding that section 36(1)(b) applies. However, the reports include biographical information about the valuer that will be addressed below in relation to section 37 of the Act.
OCLA record 7 is a report to the UCC Governing Body dated January 2015. The redacted parts of the record contain general information about IMI's market position and programmes, its financial position and performance, as well as analysis of the UCC/IMI transaction being proposed at the time. It also includes general information about IMI's business plan 2013-2017 and general forecasts that may be of some interest to competitors. As with record 6, I consider that any commercial sensitivity is minimal whereas the public interest in disclosure of this and other information contained in the record is strong given that the information evidently remained relevant to the transaction that ultimately took place. Thus, even assuming that the redactions include commercially sensitive information, I find that, on balance, they should be released in the public interest.
OCLA record 8 is described in the schedule as a Mercer report, but it is in the form of a presentation for the UCC Finance Committee. It is dated 23 April 2013 and concerns the IMI Pension Plan. Having regard to the historic nature of the information contained in the document, the information about IMI's historic pension liabilities that is in the public domain, and the absence of any specific arguments in respect of this document, I find no basis for concluding that section 36(1)(b) applies.
OCLA record 9 is a detailed market research report, dated 10 December 2012, that was prepared by Millward Brown for IMI. Although the document is dated, it is apparent that it relates to the development of IMI's business model, including the design of its programmes and the promotion of its "brand". Having regard to the contents of the document and the importance of IMI's business model to the company's commercial success, I accept that section 36(1)(b) applies. As the document is not directly related to the UCC/IMI transaction that ultimately took place in November 2016, I consider that the public interest in the disclosure is minimal and does not outweigh the public interest in protecting IMI's commercially sensitive information.
OCLA record 10, on the other hand, simply contains a listing of IMI's programmes, courses, and certain other activities. It is not apparent to me how this information differs from information that is freely available from IMI's website and brochures. I do not accept that section 36(1)(b) applies.
Finance record 1 appears to be merely an agenda for a meeting of the Finance Committee that was held on 5 September 2016. It includes the same list of items that is provided in the schedule, though it also includes manuscript notations. I find no basis for concluding that section 36(1)(b) applies.
Finance record 2 consists of 15 documents that apparently were presented to the Special Finance Committee on 14 October 2016. It includes the agenda, a commentary on the IMI acquisition, a copy of part of OCLA record 4, IMI management accounts and notes to the accounts dated July 2016, a signed copy of the implementation agreement relating to the acquisition of IMI and other documents relating to the merger, such as the sale and leaseback documents, as well as IMI's Memorandum of Association, which is a publicly available document. I note that the management accounts provide detailed breakdowns of such matters as the revenues streams, budgets, costs, and margins of particular programmes. Having regard to the detailed nature of the information and the arguments made by UCC and IMI in their submissions, I am satisfied that the detailed management accounts and related notes are exempt under section 36(1)(b). Moreover, I find that, on balance, the public interest does not favour the release of such detailed accounting information, particularly as IMI's audited financial statements for 2016 are available from the CRO.
However, no specific arguments have been made to explain how the other documents included in Finance record 2 meet the criteria of section 36(1)(b) of the Act. Having regard to the contents of these records in light of the burden of proof under section 22(12) of the Act, I am not satisfied that section 36(1)(b) applies to Finance record 2 apart from the management accounts and related notes, which are also attached in part to the implementation agreement. In any event, I find that there is a strong public interest in the release of the documents relating to the acquisition apart from the detailed management accounts and related notes. However, the personal information included in the records will be addressed below in relation to section 37 of the Act.
The third redaction made from page 1 of OCLA record 1 provides identifiable information about the former employee who reached a pension settlement with IMI prior to its acquisition by UCC. Details of the pension settlement, including the name of the former employee, are also included in the Project Spring documents included in Finance record 2. The implementation agreement included in Finance record 2 lists the names and private addresses of individuals associated with IMI in various capacity. In addition, as noted above, the valuation reports include biographical information about the valuer, including the name of valuer. I find that these parts of the records concerned qualify as personal information within the meaning of the Act.
Section 37(1) is a mandatory exemption that applies where the grant of a request would involve the disclosure of personal information (including personal information relating to a deceased individual). Personal information is defined in section 2 of the FOI Act as information about an identifiable individual that (a) would, in the ordinary course of events, be known only to the individual or their family or friends or, (b) is held by a public body on the understanding that it would be treated by it as confidential. The FOI Act details fourteen specific categories of information which are included in the definition without prejudice to the generality of the forgoing definition, including "(ii) information relating to the financial affairs of the individual" and "(iii) information relating to the employment or employment history of the individual". I note that information about the pension settlement with the former employee of IMI is publicly available. The settlement was discussed before the PAC and has also received a great deal of media attention outside the context of the PAC hearing. However, the Supreme Court has determined that information coming within any of the categories included in the definition is personal information and need not also come within part (a) or (b).
Section 37(2) of the FOI Act sets out certain circumstances in which 37(1) does not apply. However, I am satisfied that none of those circumstances arises in this case in relation to the third party individual concerned. Section 37(5) provides that a request that would fall to be refused under section 37(1) may still be granted where, on balance:
(a) the public interest that the request should be granted outweighs the right to privacy of the individual to whom the information relates, or
(b) the grant of the information would be to the benefit of the person to whom the information relates.
As I find no basis for concluding that the release of the information concerned would be to the benefit of the individuals to whom it relates, I find that section 37(5)(b) does not apply. In considering the public interest test contained in section 37(5)(a), I note that the FOI Act recognises a strong public interest in protecting privacy rights. It is also worth noting that the right to privacy also has a Constitutional dimension as one of the unenumerated personal rights under the Constitution. Privacy rights will therefore be set aside only where the public interest served by granting the request (and breaching those rights) is sufficiently strong to outweigh the public interest in protecting privacy. In this case, having regard to the details concerned, the information that is already in the public domain, and information about IMI's financial position and the UCC/IMI transaction that falls to be released in accordance with this decision, I find that the public interest in granting access to the personal information identified above does not, on balance, outweigh the public interest in upholding the right to privacy of the individuals concerned.
Having carried out a review under section 22(2) of the FOI Act, I hereby affirm the decision of UCC in this case with the following exceptions:
Section 24 of the FOI Act sets out detailed provisions for an appeal to the High Court by a party to a review, or any other person affected by the decision. In summary, such an appeal, normally on a point of law, must be initiated by the applicant not later than eight weeks after notice of the decision was given, and by any other party not later than four weeks after notice of the decision was given.