Canada: Protecting The Commercial Case For Development - Essential Tips For Property Developers

Last Updated: August 31 2016
Article by Ryan Davies, Hilary Drenth, MSc and Kirsten Whitfield

Most Read Contributor in Canada, October 2018

Regeneration and development has long been a focus of public interest and activism. The public is increasingly aware of its rights around the disclosure of information held by public bodies, using disclosed information to scrutinise - and sometimes challenge - the planning and development process.

In this article, our Information Law and Property Law experts look at the recent case of Mr Jeremy Clyne v The Information Commissioner and London Borough of Lambeth, which highlights some of the issues in dealing with requests for disclosure made under the Environmental Information Regulations 2004 and outline five essential tips for managing this risk.

Mr Clyne made a request to see the developer's viability assessment for a London Borough of Lambeth development. At first his request was refused by the local authority. The Information Commissioner's Office agreed that exemptions to the obligation to disclose requested information had been correctly applied by the authority and the assessment could be withheld.

The Information Tribunal disagreed on the basis of a material public interest in seeing the information, which outweighed the interests of the developer in retaining confidentiality to protect its economic interests.

The case highlights that if a local authority has an existing planning policy which is overturned by a particular application, then there is even more reason to consider and give weight to the public interest in disclosure.

Environmental Information Regulations 2004 ("EIR")

The Environmental Information Regulations 2004 (EIR) apply to "environmental information", which is wide-ranging in scope and includes "measures such as policies, legislation, plans, programmes, environmental agreements" and "activities" likely to affect the environment, as well as related "cost-benefit and other economic analyses and assumptions".

The EIR requires public bodies such as local authorities to disclose the environmental information that they hold when requested to do so by members of the public.

This means that any environmental information supplied by a property developer to a local authority could be subject to disclosure. This information may include commercially sensitive material such as viability assessments and contract terms, information that a developer may prefer to remain confidential.

There are exceptions to the requirement to disclose environmental information. For information supplied by developers, one of the most relevant exceptions is where disclosure would adversely affect the confidentiality of commercial or industrial information "where such confidentiality is provided by law to protect a legitimate economic interest" (EIR, Regulation 12(5)(e)).

The exceptions to the duty to disclose are applied on a case by case basis, and are only engaged if the authority considers the public interest in non-disclosure outweighs the public interest in disclosure. Even if the information is supplied on a confidential basis in order to protect a legitimate economic interest (for example the developer's negotiating position), this will not protect information from disclosure under the EIR if the authority determines that the public interest is best served by disclosing it.

Mr Jeremy Clyne v The Information Commissioner and London Borough of Lambeth (EA/2016/0012)

This recent appeal before the First-Tier Tribunal General Regulatory Chamber considered the operation of the Regulation 12(5)(e) exception to protect a legitimate economic interest.

Mr Clyne made a request to see the developer's viability assessment for a London Borough of Lambeth development.

The local authority, and subsequently the Information Commissioner, decided that certain parts of the developer's viability assessment could remain confidential on the basis that they protected the developer's economic interest. The assessment contained potentially sensitive information, including the residual land value, expected profit margin, estimated construction costs and anticipated sale values for private and affordable housing (together with other data that it was claimed could allow someone to calculate them). This material supported the developer's case (which was accepted by the local authority) that there should be a much lower provision of affordable housing than local planning policy required - any more would make the development unviable.

The tribunal was asked to decide whether this information should be disclosed. It was argued that disclosure would compromise the development by exposing the developer's negotiating position with purchasers and building contractors. The appellant (an ex-councillor) contended that the public could not assess the viability argument that underpinned the lower affordable housing provision without seeing those figures.

The tribunal found that the Regulation 12(5)(e) exception applied. The material was commercial, a common law duty of confidentiality applied to it, it protected a legitimate economic interest - how the developer priced the scheme - and that disclosure would have an adverse effect for the developer, albeit a limited one.

In considering the public interest arguments around disclosure of the information, the tribunal noted that the objective of the EIR is to allow a community to have the information it needs to participate effectively in environmental decision making, including before planning consent is finalised. In this particular case, the transparency of the viability assessment was very important, since it allowed the public to understand the reasons why the developer was unable to fulfil core policy on affordable housing. While the public interest in withholding the information was significant because of the importance of respecting confidential information, it was "vastly outweighed by the interests in disclosure".

Although there was an argument that the requirement of openness might lead to viability reports becoming more generic and less useful for local authorities, the tribunal remarked that it has to assess the balance of public interest in each case. In this case, the developer would have had to provide the material that the Council needed to determine what level of affordable housing was possible. The tribunal did not accept the proposition that disclosure would have in any way endangered the development.

For this particular case, the tribunal found that:

  • Estimated sale values and/or average values based on unit size would not affect the developer's negotiation with prospective occupiers and purchasers, since such negotiations would take place by reference to the market at the time, whether for commercial or residential property.
  • The affordable housing average value per square foot should be disclosed, since this would have minimal impact on the developer's ability to achieve the best reasonable price from a registered provider. The tribunal did state that the fact there were only four affordable units in this scheme was a relevant factor.
  • Although figures for the gross developed value and marketing budget might enable other commercially-sensitive figures to be calculated, this information was not so sensitive that it would risk the development proceeding.
  • Construction costs and professional fees should also be disclosed - there was no reason to expect contractors to base their tendered fees on a viability assessment, since such assessments become outdated very quickly, and in any event, the public interest in disclosure of the material outweighed the risk to the developer's negotiating position.
  • The fact that the information had been thoroughly assessed by the local authority and also verified independently did not mean the public should not have the opportunity to review it.
  • The Council made various attempts to engage with the developer about what information should be disclosed, to which the developer was slow to respond. The tribunal did not look favourably on this, as it delayed the public's access to the information at a critical point in the planning process.

Five essential tips for dealing with local authorities

The Clyne case is not binding on future tribunals and the application of each exception to disclosure under the EIR will be based on the facts and public interest in each case. However, the findings of this tribunal may well be applied by local authorities in making their own disclosure decisions.

Based on this case and our experience at Gowling WLG, we can highlight five essential areas to consider when dealing with local authorities.

  1. Always bear in mind the possibility of disclosure when dealing with the public sector
    There is no hiding from the fact that the Freedom of Information Act (FOIA) and the EIR are part of dealing with the public sector. Private sector suppliers to the public sector need to be aware of the requirements on public authorities and implications of disclosure under FOIA and the EIR. There is general guidance issued by the Information Commissioner's Office on the EIR. Although implemented by EU directive, we expect the provisions of EIR to survive Brexit in largely the same form, being as the principles come from an international treaty to which the UK is a signatory in its own right.
  2. Manage information flow to local authorities and limit it to essential information
    Suppliers should always consider limiting information flow to a public authority. Some organisations appoint a single person on a transaction to filter and pass on relevant information to authorities. This provides some control over, and active consideration of, the content and amount of information being put at risk of disclosure. If information must be disclosed, an information manager can assess and plan for the potential effect on the business. The information manager can also make sure the confidential nature of the information is communicated to the authority. While there will always need to be some information sharing, often too much information is provided to the public sector. As well as putting the supplier's information at risk of public disclosure, over-sharing can create unnecessary work for the public sector, which may then be required to carry out searches and assess information (which they did not require in the first place) for disclosure if a FOIA or EIR request is made.
  3. Check for specific information or disclosure policies
    Some public authorities have specific policies about viability assessments, and it is always prudent to check whether the authority in question has published any guidance or policies, as these often cover transparency and disclosure. Both the Mayor of London's Housing Supplementary Planning Guidance and the draft London Borough Viability Protocol contain such sections. By taking account of relevant policies when preparing and managing information, you have some guidelines for mitigating the risk of an unhelpful disclosure.
  4. Limit contractual confidentiality clauses to truly confidential information; require consultation from the local authority before it makes disclosure decisions
    Confidentiality clauses in arrangements with public authorities will not override the authority's duties under EIR or FOIA. Many authorities use standard boilerplate contract clauses that acknowledge this. As part of recognising the possibility of disclosure, developers should approach confidentiality clauses realistically - using them to identify key pieces of information that are considered particularly sensitive. This will help direct the authority in its own decision making about what it has to disclose in response to an EIR or FOIA request.
  5. Respond to any requests from LA promptly and with detailed reasons as to why information falls within the exceptions.
    The Clyne case demonstrates that tribunals are not inclined to look favourably on developers which are slow to respond to local authority requests for input about whether information should be disclosed and reasons that support non-disclosure. As such, developers should always respond promptly and in a considered way. Public authorities and suppliers should ideally work closely together so that requests for the supplier's information are flagged to the supplier as early as possible. This then gives time to the supplier and authority to do the necessary (often very detailed) legwork of finding and reviewing requested information. Once located, the supplier and authority need to assess whether any supplier information should be withheld on the basis of applicable exemptions and even if that is the case, whether the public interest means that the information should still be disclosed (if the exemption is one to which the public interest test applies).

In summary

Developers should bear in mind that they may at some point be required to disclose environmental information - our experts in information law, real estate development and planning can help you navigate the issues for specific transactions. Please contact us if you would like to talk about avoiding disclosure of commercially-sensitive information in these situations or steps that could be taken to reduce the impact of disclosure on your organisation.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Topics
 
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions