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Warning of huge cost burden for councils after High Court rules Royal Borough acted unlawfully in refusing right to inspect accounting records on basis of time it would take

A London borough acted unlawfully in refusing a request to inspect its accounting records on the grounds of the time it would take to satisfy the request, a High Court judge has ruled.

In Moss v Royal Borough of Kingston Upon Thames [2021] EWHC 1032 (Admin) Mrs Justice Thornton noted that a public right to inspect the accounts of a local authority dated back to the Poor Law Amendment Act of 1844.

The current version of the right is set out in section 26 of the Local Audit and Accountability Act 2014 (LAAA), which provides, so far as relevant, that:

"(1)   At each audit of accounts under this Act…any persons interested or any journalist may—

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(a)  inspect the accounting records for the financial year to which the audit relates and all books, deeds, contracts, bills, vouchers, receipts and other documents relating to those records, …"

The ruling from Mrs Justice Thornton is thought to be the first on the public’s right of access under the 2014 Act.

The judge said: “In the modern digital age, the right to inspect ‘all books, deeds, contracts, bills, vouchers, receipts and other documents relating to’ the accounts has the potential to impose a significant burden on a local authority, as demonstrated by the facts of this case.”

The claimant, Mr Moss, sought access to documents relating to Kingston’s housing stock of 4,602 properties for which the revenue expenditure for 2018-19 was in excess of £24m and its capital expenditure for the same year was in excess of £14m.

The Royal Borough estimated that fulfilling the terms of Mr Moss’ original request would have required locating, extracting, reviewing and redacting well over 7,000 invoices and associated paperwork and at least 28 supplier contracts. It would have taken one staff member around five weeks' full time work to extract the documents from the system and redact the necessary personal or confidential information.

The council initially sought to process the claimant’s request. It provided approximately 400 documents before notifying Mr Moss that: "My team estimate they have spent over 72 hours of their time collating the information you requested to inspect already and a considerable amount of time has also been spent by colleagues in other departments in gathering information. The Council estimates that it will take substantially in excess of 18 hours to determine appropriate material and locate, retrieve and extract the further information requested. Accordingly, the request will not be processed further."

The issue of principle raised by the case was whether the council was lawfully entitled to refuse to process the claimant's request because of the time involved in compliance.

In turn, it raised a point of statutory construction of s26 LAAA.

The council contended that it was unlikely that Parliament intended to confer a statutory right which, in the modern context of extensive digital accounting records, entitled an individual to inspect each and every document within the scope of section 26(1), irrespective of the time it would take to comply with the request. It argued therefore that a relevant authority may refuse to process a request where it rationally concludes that a request by a particular individual is disproportionate or manifestly unreasonable.

The claimant contended that implying a 'time to comply' provision into section 26 LAAA would be contrary to the longstanding legislative intent that the public should be able to scrutinise the expenditure of public money.

Mrs Justice Thornton said that on the plain and ordinary meaning of the words in section 26 LAAA there was no provision for a relevant authority to refuse to process an inspection request on the grounds of the time it would take to do so.

“The section says nothing about the time or cost of compliance to a relevant authority. Rather to the contrary, the indications are that there will be an inevitable time and cost to compliance. The range of accounts- related documents eligible for inspection is potentially extensive (all books, deeds, contracts, bills, vouchers and receipts and other documents relating to the accounts). Regulation 14(3) of the 2015 Regulations [The Accounts and Audit Regulations 2015] stipulates that during the period for the exercise of the right the accounts related documents must be available for inspection 'at all reasonable times', on reasonable notice. The exemptions are more limited than those under modern information legislation,” she said.

“Moreover, in the present context, the wording of section 27(4) of the Act is significant. Section 27 applies if a local government elector makes an objection to the auditor. If the objection is properly made, the auditor must decide whether to consider the objections. However, the auditor may decide not to consider the objection if he considers that the cost of considering the objection would be disproportionate to the sums to which the objection relates, unless the objection looks like it might disclose serious concerns about the authority's financial management.”

The judge said the presence of a proportionality-based control mechanism in section 27(4) in relation to the auditor's time must be contrasted with the corresponding absence of any such control mechanism in relation to the relevant authority in section 26.

“The contrast must be taken as an evident legislative intention that the right to scrutinise the financial dealings of a relevant authority is not to be curtailed by the time it will take the relevant authority to comply with the inspection request,” she said.

There was an obvious rationale for this stance, the judge said. "It is not hard to see that any such control mechanism in the hands of a relevant authority could be used to impede proper public scrutiny of its expenditure. Conversely, the auditor's time is protected but he is given the assistance of the 'custodians of the custodian' (in the words of Rix LJ in Veolia), armed with a broad inspection right under section 26.”

Counsel for Kingston, Ranjit Bhose QC, submitted that section 26 was to be read as providing an inspection right to a class of people ('persons interested') to inspect the relevant documents and not as a right for a particular individual within the class to inspect each and every relevant document.

“However, the starting point in statutory construction is the ordinary linguistic meaning of the words used. The stronger the claim of a particular meaning to be the clear grammatical meaning of the enactment the weightier will the factors arising from an opposing criteria need to be if it is to be displaced (Bennion on Statutory Construction) at [10.5]),” Mrs Justice Thornton said.

“On a plain and ordinary reading of section 26(1), anyone with sufficient interest benefits from the inspection right. Mr Bhose's interpretation does not advance the purpose of the inspection right which is to provide assistance to the auditor. The depth of the Claimant's analysis of the documents inspected is apparent from a review of his letter to the auditor. It demonstrates an assiduous trawl for, and review of, relevant documents on the Council's housing spend.”

The judge said it was not clear how disclosing fewer documents to a larger number of people assisted either the auditor or the council, unless the aim was to stymie the small number of electors prepared to undertake the sort of painstaking analysis conducted by the claimant in this case.

“The auditor faces the prospect of a larger number of more superficial objections and the Council faces a potentially greater administrative burden in facilitating inspection by more people,” Mrs Justice Thornton suggested.

Counsel for Kingston sought to emphasise the potential burden placed on relevant authorities by a broad inspection right in a digital age. The claimant was, Mr Bhose said, seeking to inspect every single document going towards a £46 million spend during the course of that year i.e. 'millions of pounds and thousands of documents'.

Mr Bhose pointed to the council's evidence about the manpower and time required to process the request and explained that the annual expenditure of larger authorities could run into billions of pounds. Their accounting records would, he said, be extensive and bound to include a lot of personal and confidential information because local authorities provide services to people and habitually contract with companies. Parliament must be taken to have known of these factors and accordingly, he submitted, must be presumed to have intended there to be a proportionality filter in the exercise of the right.

Mrs Justice Thornton acknowledged there could be no dispute about the potential burden on relevant authorities. But she said the burden must be seen in context:

  1. The section 26 inspection right is not a freestanding general right of access to information at any time, as under other information regimes like FOIA. It is only exercisable at the point at which the relevant authority has done the work of pulling together draft accounts.
  2. Section 3 of the LAAA requires a relevant authority to keep adequate accounting records. This means records that are sufficient to show and explain the relevant authority's transactions and disclose the financial position with reasonable accuracy. Compliance with section 3 would seem likely to necessitate some sort of general housekeeping of accounts related documents. “I accept Mr Bhose's submission that section 3 does not expressly extend to documents underlying the accounts, like the supplier/consultant contracts. However, I also accept Ms Mannion's submission that contracts imposing ongoing financial obligations on the Council are not obscure documents. In addition, they may be a good way for the Council to demonstrate compliance with the requirement in section 3(1)(a) of the Act 'to show and explain the relevant authority's transactions'. There may be some force in Ms Mannion's suggestion that the Council's difficulties in providing the contracts arose not from the scope of the Claimant's request but from its internal document management system. In any event, it is clear that the quality of a relevant authority's document management system cannot be allowed to define the extent of the section 26 inspection right.”
  3. It is open to a relevant authority to seek to reduce the burden of an inspection request by providing assistance and advice to refine its scope. “It is apparent from the correspondence in this case that this sort of advice and assistance was underway prior to the Council's decision of 9 July. The Claimant had agreed to accept a sample of the invoices and indicated that he did not need to see the repair invoices. He explained to the Court that he would have been prepared to refine his request further if the Council had explained its difficulties to him.”

In her evidence the head of the council’s team with responsibility for responding to section 26 requests noted that Mr Moss’ requests far exceeded the typical use of the rights under the LAAA that other local authorities received both in volume and complexity.

“In my judgment, it must be presumed that Parliament would consider the burden undoubtedly placed on the Council in this case to be a necessary consequence of maintaining the long standing public right to scrutinise the accounts of a local authority,” Mrs Justice Thornton said.

However, the judge did go on to hold that the council's reasons for its decision to redact the invoices were adequate, intelligible and lawful and the claimant's challenge failed on that ground.

The judge also said that in light of her decision on the construction of section 26 LAAA, it was not necessary to address the claimant's legitimate expectation challenge.

In a statement Kingston Council said it was fully committed to operating in a transparent and efficient way.“Officers worked extremely hard to fulfill Mr Moss’ requests for information and spent several weeks compiling and releasing hundreds of documents to him.”

The Royal Borough added: “This ruling has confirmed that under the Local Audit and Accountability Act, unlike other legislation such as the Freedom of Information Act, there is no limit on the amount of time that can be spent on complying with a request for information. This places a huge cost and resources burden on local authorities, which is particularly difficult in these financially challenging times.

“We will be liaising with the local government sector to understand the cost and time implications this has in responding to requests of this significant scale.”

William Kenyon of ITN Solicitors, who with Amy Mannion of 1 Crown Office Row acted for Mr Moss, said: “This is an important judgment for those seeking to scrutinise the spending of local authorities. As the Court held, the Act empowers local government electors, “the custodians of the custodian”, to provide meaningful input into the audit of local authorities’ accounts, as is their right under s. 27 of the Act.”

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