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You are here: BAILII >> Databases >> United Kingdom Information Tribunal including the National Security Appeals Panel >> Financial Services Authority v IC [2008] UKIT EA_2008_0047 (23 December 2008) URL: http://www.bailii.org/uk/cases/UKIT/2008/EA_2008_0047.html Cite as: [2008] UKIT EA_2008_0047, [2008] UKIT EA_2008_47 |
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Appeal under section 57 of Freedom of Information Act
2000
Information Tribunal Appeal
Number: EA/2008/0047 Information Commissioner’s Ref:
FS501234488
Heard at Care Standards
Tribunal,
Decision
Promulgated
London, SE1
0BW
On 17 November 2008
25 November
2008
BEFORE
CHAIRMAN Murray
Shanks
and
LAY MEMBERS
Pieter de Waal and Gareth
Jones
Between
FINANCIAL SERVICES AUTHORITY |
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Appellant |
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and INFORMATION
COMMISSIONER
and RIVERSTONE MANAGING AGENCY
LTD |
Respondent |
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Additional Party |
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Appeal Number: EA/2008/0047 |
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Representation:
For the Appellant:
Charles Flint QC and Jason
Coppel
For the Respondent:
Jane Oldham
For the Additional Party:
Helen Mountfield
Subject areas
covered:
Public interest test
s.2
Duty to advise and assist
s.16
Refusal of request
s.17
Commercial interests/trade secrets
s.43
Case referred to:
DBERR v Information Commissioner (Friends of the Earth,
additional party) EA/2007/0072
Decision
The Tribunal allows the appeal and
substitutes the following decision notice in place of the decision notice
dated 14 April 2008. |
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Appeal Number: EA/2008/0047 |
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Information Tribunal
Appeal Number: EA/2008/0047 |
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SUBSTITUTED DECISION
NOTICE
Dated 25 November
2008
Public authority:
Financial Services Authority
Address of Public authority:
25 North Colonnade
Canary Wharf London E14
5HS
Name of Complainant:
Michael Holman |
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The Substituted Decision
For the reasons set out below, the substituted decision is as
follows:
(1) the Public
Authority dealt with the request in accordance with the requirements of
Part I of the Act;
(2) no step is required to be
taken. |
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Dated this 25th day of November 2008
Murray Shanks
Deputy Chairman, Information Tribunal |
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Appeal Number: EA/2008/0047
Reasons for Decision |
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Background
1. Michael Holman, who made
the request for information in this case, was a member of Lloyd’s
syndicate 271, which wrote aviation hull insurance in the 1998, 1999 and
2000 years of account. In 2003 those years of account remained open and
there were very large exposures, in particular on the 2000 year of account
resulting from the events of 11 September 2001.
2. In November 2003 a
“re-insurance to close” transaction was put into effect in respect of the
three outstanding years of account. The arrangements were complex but the
main features were as follows:
(1) syndicate 271 entered
into re-insurance contracts with Riverstone Insurance (UK) Ltd and others,
which were themselves re-insured by other subsidiaries of Fairfax
Financial Holdings Ltd, the ultimate parent of companies in the Riverstone
group (which we shall refer to compendiously as
“Riverstone”);
(2) a new syndicate 3500
was established and the syndicate 271 open years of account were
re-insured to close into the new syndicate;
(3) the managing agent of
syndicates 271 and 3500 (Kingsmead) was acquired by Riverstone and
re-named Riverstone Managing Agency Ltd (RMAL).
3. Not surprisingly the
re-insurance to close transaction required approval from Lloyd’s. Although
it was so approved, Mr Holman and other members of syndicate 271 were
critical of the transaction because they believed that the closure was
premature and that the premiums they were having to pay were
excessive.
4. Lloyd’s regulation of
its own insurance market was itself subject to supervision by the
Financial Services Authority (FSA) under Part XIX of the Financial
Services and Markets Act 2000 (FSMA) so that the FSA was also involved in
the approval process. |
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Appeal Number: EA/2008/0047 |
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5. The FSA is a public
authority for the purposes of the Freedom of Information Act 2000 but its
ability to disclose information thereunder is substantially curtailed by
section 44 read with section 348 FSMA which provides so far as
material:
(1) Confidential
information must not be disclosed by [the FSA]…without the consent of-(a)
the person from whom [the FSA] obtained the information; and (b) if
different, the person to whom it relates.
(2) In
this Part “confidential information” means information which-(a) relates
to the business or other affairs of any person; [and]
(b) was received by the [FSA]
for the purposes of, or in the discharge of, any [of its] functions …
under this Act…
The request for information
6. On 20 October 2005 Mr
Holman wrote to the FSA requesting information under the Freedom of
Information Act 2000 in these terms:
[This] request for information
deals with the affairs of Riverstone Managing Agency Ltd (formerly
Kingsmead…) …On October 1 2003 … Kingsmead sent a letter to … FSA’s
Insurance Firms Division; and on October 17 2003 a presentation was given
by Kingsmead/Riverstone to the FSA. This correspondence related to a
scheme to reinsure to close syndicate 271 … I should be grateful if you
would kindly take steps to identify and disclose to me the information
held by the FSA relating to this transaction…
By letter dated 18 November 2005
the FSA refused that request in reliance on section 12 (“Exemption where
cost of compliance exceeds appropriate limit”) while stating that in any
event the information requested was not disclosable by reason of sections
44 (“Prohibitions on disclosure”) and 43 (“Commercial
interests”).
7. On 29 November 2005 Mr
Holman wrote again stating that he wished to make a further request for
information relating to the same managing agent and syndicate and
stating:
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Appeal Number: EA/2008/0047
In addition, syndicate 3500,
the reinsurer of syndicate 271, was permitted to accept a total premium of
£504.1m despite being capitalised at £5m. This would appear to be in
breach of the ‘regulatory minimum margin’ (of solvency) and, again, I
should be grateful if … you would arrange for me to be provided with full
details of any information you hold in relation to this.
The FSA responded on 23 December
2005 confirming they had information of the type requested and providing
some information but declining to supply the balance in reliance on
sections 40 (“Personal information”) as well as 43 and 44.
8. Mr Holman asked for an
internal review of those decisions and they were upheld in a letter dated
13 March 2006. Mr Holman then applied to the Information Commissioner
under section 50 on 13 May 2006; unfortunately his decision notice was not
delivered until 14 April 2008.
The Information Commissioner’s decision
9. The Commissioner upheld
the FSA’s decision to refuse the information requested in the letter of 20
October 2005 on the basis of section 12, accepting that there would be a
substantial amount of information held about RMAL, that the request
related to a specific transaction and that the cost of locating
information relating to that transaction within the information held about
RMAL would exceed the “appropriate limit”.
10. As for the other
request, in the course of the investigation the FSA supplied the
Commissioner with the documents which they said fell within the request
annotated to show where the particular exemptions were relied on; we shall
refer to these documents as the “withheld information”. The vast bulk of
the withheld information was shown as being exempt under section 44 and
the Commissioner upheld the FSA’s approach in relation to that section.
The Commissioner also upheld the FSA’s approach in relation to section 40.
As for the information which the FSA claimed they were entitled to
withhold under section 43, quite late in the course of the investigation
they informed the Commissioner that they also considered that it could be
withheld by virtue of section 31 (“Law enforcement”). The Commissioner
found that neither section 43 nor section 31 was engaged and that this
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Appeal Number: EA/2008/0047
should therefore be disclosed by
the FSA. Against that decision the FSA appealed to the
Tribunal.
The course of the appeal to the Tribunal
11. Although he made no
application Mr Holman was joined as a party to the appeal at the outset.
However he did not respond to any communication from the Tribunal and on 9
July 2008 it was ordered that if he wished to remain a party he must apply
in writing; this he has never done. RMAL applied to be joined as a party
because of their interest in the application of section 43 and they were
ordered to be joined. The hearing was set for three days starting 17
November 2008.
12. The Commissioner’s
skeleton argument for the appeal was served on 24 October 2008. In it he
stated that he had reviewed the case in the light of the witness statement
of Mr Nicholas Bentley (the managing director of Riverstone’s UK
operations) submitted on behalf of RMAL and that he now accepted that at
the relevant time section 43 was engaged and the public interest in
maintaining the section 43 exemption (narrowly) outweighed the public
interest in disclosure. This meant in effect that the Commissioner no
longer opposed the FSA’s appeal and the FSA therefore wrote to the
Tribunal on Friday 7 November 2008 inviting it to determine the appeal on
the papers without a hearing and to allow the appeal on the basis of the
Commissioner’s concession on section 43 without considering any issues
arising under section 31. Mr Holman was contacted by the Tribunal on 10
November and invited to make any observations or applications arising out
of the FSA’s letter by midday on 12 November but again he took no action.
(We should record that he did send an email to the Tribunal on Sunday 16
November 2008 stating that he was not sure what he could add to the
proceedings and would be unable to make himself available on 17 November
though he could be available on 18 and 19 November if the Tribunal wished;
in the event he appeared in the Tribunal just after lunch on 17 November
when the open part of the hearing had been completed and we were just
about to go into closed session and was therefore unable to observe or
participate.)
13. On 12 November 2008 the
Tribunal considered how to proceed in the light of these developments and
we decided that we were unwilling to determine the appeal
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Appeal Number: EA/2008/0047 |
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without the benefit of a hearing
and a (shorter than anticipated) hearing without witnesses attending in
person was therefore held. We also directed that the documents comprising
the withheld information which had been supplied to the Tribunal as part
of the material for the appeal should be re-organised so that they were in
chronological order. We are grateful to the FSA for carrying out this task
which made our own task much easier but we mention the point in the hope
that it will not be necessary to give such a direction in future: however
many different sources and files information is derived from, public
authorities must present it to the Commissioner and the Tribunal in a
logical and coherent way (which will usually involve putting documents
into chronological order) so that they can review it
properly.
The scope of the request
14. On consideration of the
withheld information it was apparent to the Tribunal that a large part of
it related to matters arising after the re-insurance to close transaction
had been completed in November 2003. The Tribunal took the view that the
request in Mr Holman’s letter dated 29 November 2005 arguably covered only
information relating to that transaction itself and not information
relating to subsequent events and we raised the point as a preliminary
matter. All three parties agreed that it was open to the Tribunal to raise
this issue itself and to determine the true scope of the request before
considering the question of exemptions and they also agreed that the
request could be read in the way the Tribunal was suggesting.
15. Although nobody was able
to say for sure exactly what Mr Holman was referring to when he mentioned
the premium of £504 million, the capitalization of £5 million and the
“regulatory minimum margin” in his request, the Tribunal has come to the
clear view, construing the request objectively in the context of the
earlier request in the letter of 20 October 2005, the background facts we
have outlined and Mr Holman’s own position as a member of syndicate 271,
that what he was asking for was information relating to the approval of
the re-insurance to close transaction. We are therefore satisfied that the
request was arguably even narrower than that in the letter of 20 October
2005 but that, in any event, it certainly did not cover information
relating to matters subsequent to the re-insurance to close transaction.
We would |
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Appeal Number: EA/2008/0047 |
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note that on any view the request
was not expressed in the clearest terms and it would have been a good idea
(and might have saved a lot of time and effort) if the FSA had taken steps
pursuant to section 16 to clarify matters with Mr Holman at an early
stage.
16. The effect of our
conclusion as to the scope of the request is that a large part of the
withheld information was never disclosable under Part I of the Act
regardless of the application of any of the exemptions and, in relation to
that part of the information, the appeal must therefore necessarily be
allowed.
Section 43
17. That conclusion still
leaves some information which comes within the terms of the request and
which is not covered by section 44 but which the FSA maintain they were
entitled to withhold by virtue of section 43. It was accepted on all sides
that, although the Commissioner no longer sought to uphold his decision
that this information should have been disclosed, there is no procedure
for disposing of the appeal by consent and that it had to be determined by
the Tribunal on its merits notwithstanding that there was no-one arguing
the case (at least in relation to section 43) against the appeal.
Nevertheless Mr Flint QC on behalf of the FSA submitted that, in spite of
the requirement for the Tribunal to determine the appeal on its merits, it
was in some way confined to considering the issues as they had been
formulated by the parties and in particular that it must determine whether
the information in question came within section 43 and where the public
interest lay on a “global basis” without considering the information in
detail. We reject that submission: the Tribunal can only allow the appeal
and vary the Commissioner’s decision notice to the extent that the
Commissioner’s notice is “not in accordance with the law” (as it is put in
section 58(1)(a)); in so far as the information in question can be divided
up, the Commissioner was obliged to consider each piece of information and
apply section 43 and the public interest test to it and the Tribunal must
accordingly adopt the same approach when considering the
appeal.
18. The Tribunal has
considered the documents comprising the part of the withheld information
which comes within the terms of Mr Holman’s request in detail and received
submissions on them in closed session. For reasons which are set out
in
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Appeal Number: EA/2008/0047 |
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detail in a fuller version of
this decision which has been supplied to the parties and Mr Holman and
which shall remain confidential, the Tribunal is satisfied that, to adopt
the wording of the relevant sections of the Act, disclosure of the
information in question would, or would be likely to, prejudice the
commercial interests of Riverstone and that the public interest in
maintaining the exemption in section 43(2) outweighs the public interest
in disclosing the information. We therefore agree with current view of the
Commissioner and accordingly also allow the appeal in relation to the
information considered in this section of our reasons.
Sections 31 and 17
19. Those conclusions mean
that the Tribunal does not need to consider the section 31 points raised
by this appeal and we are happy to accede to the invitation of the parties
not to do so.
20. There is one point we
wish to mention, however, notwithstanding that it did not feature in the
appeal and that the Commissioner has not had an opportunity to comment on
it. As we mention above it was only during the investigation by the
Commissioner that the FSA first sought to rely on section 31. This led the
Commissioner in his decision notice to find that the FSA had breached
section 17(1)(b) of the Act which requires a public authority to specify
any exemption relied on in its refusal notice. That finding cannot, we
think, be correct. Section 17 can only require the public authority to
specify an exemption relied on at the time of the notice and clearly the
FSA were not relying on section 31 at that time. Rather than finding a
breach of section 17 the Commissioner ought in these circumstances to have
considered whether to allow the FSA to claim reliance on a new exemption
for the first time before him. The Tribunal has recently given guidance as
to the correct approach to that issue in its decision in DBERR v
Information Commissioner (Friends of the Earth, additional party)
EA/2007/0072 at paras 41-45. The Commissioner cannot of course be
criticised for not following that approach since the decision of the
Tribunal in that case came after his decision in this
case. |
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Appeal Number: EA/2008/0047 |
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Conclusion and remedy
21. For all those reasons,
the appeal is allowed and the Commissioner’s decisions that the FSA did
not comply with the Act and should disclose information to Mr Holman are
set aside.
22. We are grateful for the
assistance given to the Tribunal and the hard work put in by the parties
and their lawyers.
23. Our decision is unanimous.
Murray Shanks Deputy
Chairman
Date: 23 December 2008 |
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