Veolia ES Nottinghamshire Ltd v Nottinghamshire County Council & Ors

Under section 15(1) of the Audit Commission Act 1998, “accounts to be audited” are not confined to high-level summaries in a statement of accounts. They include underlying running accounting records. Contracts, invoices and other documents relate to those accounts where there is a factual connection; express cross-reference is unnecessary.

The right of inspection must be read down to exclude commercial confidential information protected by the ECHR, subject to a fact-sensitive proportionality assessment. The assessment balances transparency and democratic accountability against confidentiality and legitimate economic interests. The court did not decide by majority whether information obtained under section 15(1) is subject to an implied audit-purpose restriction.

Veolia challenged Nottinghamshire County Council’s decision to allow Mr Shlomo Dowen, an elector, to inspect and copy a waste-management PFI contract, invoices and schedules under section 15(1) of the Audit Commission Act 1998. Cranston J dismissed the claim in the Administrative Court. Veolia appealed.

The appeal concerned whether the documents related to the accounts to be audited and, alternatively, whether commercial confidentiality, the ECHR and public-procurement law restricted inspection or subsequent use. The court considered payment and performance documents, together with schedules containing Veolia’s financial model and profit margin.

1. The court upheld Cranston J’s decision on the principal ground. “Accounts to be audited” means the local authority’s underlying running accounts and accounting records, kept and made up for the relevant financial year. It is not confined to the high-level accounting statements in the statement of accounts.
2. “Relating to” requires a factual connection assessed by the nature and function of the document. It does not require an express reference between the document and the accounts. Contracts under which payments are made and invoices recording those payments therefore fall within section 15(1).
3. All three judges agreed that section 15(1) should be read down so as to exclude confidential information protected by the ECHR. Commercial confidential information could constitute a possession for the purposes of Article 1 of the First Protocol. Access therefore required a fact-sensitive and proportionate balancing of public transparency, accountability and audit functions against confidentiality and legitimate commercial interests.
4. On the material before the court, the Council had not shown that disclosure of the schedules containing Veolia’s financial model and profit margin was justified. Access to those second disputed documents should in principle be refused. The first disputed documents had already been disclosed, and the circumstances made further relief in respect of them unavailable.
5. Rix LJ considered that confidential information obtained under section 15(1) could be used only for audit purposes. Etherton LJ and Jackson LJ declined to decide that issue, considering that any restriction on use should be addressed in an appropriate private-law claim on particular facts. That reasoning therefore did not form part of the majority holding.

• Court of Appeal (Civil Division): [2010] EWCA Civ 1214. The court upheld the decision on the meaning of accounts and documents relating to them, and gave guidance that section 15(1) must exclude unjustified disclosure of ECHR-protected confidential information.
• Administrative Court, Queen’s Bench Division: Cranston J dismissed Veolia’s judicial-review claim by order dated 21 October 2009, following judgment dated 1 October 2009.