Property, Fairness and the Constitution: The Grand Court Marks the Boundaries of Freedom of Information

Background

The Freedom of Information Act (2021 Revision) (the FOIA) confers a general right of access to records held by public bodies, subject to a series of exemptions, including the exemption which section 21 of the FOIA provides for records concerning a person’s commercial interests and/or which have commercial value.  Where access is refused, the person who has made that FOI request may appeal to the Ombudsman, who must then decide the appeal and may order disclosure: importantly, even where such an exemption applies, the Ombudsman may nonetheless order disclosure pursuant to section 26 of the FOIA, if satisfied that this would be in the public interest.

There is however a structural difficulty under the FOIA: the provisions governing the appeal process only contemplate that the person pursuing the FOI request, on the one hand, and the public authority from which the disclosure is sought, on the other, may participate in the appeal process. Yet the records or information which are the subject of that appeal will typically belong to a third party, most obviously where a regulator holds commercially sensitive material belonging to an entity that it regulates, which it has required that entity to file with it for regulatory purposes. It is that third party which stands to be prejudiced by any order for disclosure, but which has no express statutory right to be heard on the appeal.

It is that structural difficulty which led to the issues that the Court was required to decide in R (Caribbean Utilities Co Ltd) v Ombudsman.  The FOI applicant, who has a commercial interest in the supply of renewable energy within the Cayman Islands, sought disclosure of two studies belonging to CUC, which CUC had provided to OfReg for regulatory purposes: (i) a cost of service study, and (ii) a study on the impact of increased solar generation.  OfReg refused disclosure on commercial sensitivity grounds. The FOI applicant then appealed to the Ombudsman, who, following a written hearing in which OfReg participated but CUC did not, ordered that the studies be released in full.

CUC had never been notified that a formal hearing was taking place, was not provided with the parties’ submissions, and was not told of the concerns the Ombudsman had raised with OfReg during the appeal.  It learned of the outcome only when informed that the studies would be disclosed within a matter of days.  CUC thus applied for judicial review of the Ombudsman’s decision to order disclosure, on conventional grounds of procedural unfairness, error of fact and irrationality.

Judicial review and its growing role in Cayman

Judicial review is the mechanism by which the Grand Court supervises the legality of decisions made by public bodies. It is not an appeal on the merits: the Court is not tasked with deciding whether the decision was right (or whether it would have reached the same decision), but whether it was lawful, i.e. whether the decision-maker acted within its powers, observed a fair procedure, took account of relevant considerations and disregarded irrelevant ones, and/or reached a rational conclusion. Where a decision is found to be unlawful, the usual remedy is to quash it and, where appropriate, remit it to the public body to be retaken properly.

Judicial review is an increasingly prominent feature of the Cayman Islands litigation landscape.  As the jurisdiction’s regulatory architecture has expanded, across financial services, utilities, data protection and beyond, so too have the points of contact between private enterprise and the administrative state. Decisions of regulators and statutory office-holders now bear directly on commercial interests in a way they did not a generation ago, and businesses are increasingly prepared to test those decisions in court. The entrenchment of the Bill of Rights in the Constitution has added a further dimension, furnishing litigants with constitutional standards, including a free-standing guarantee that the decisions and acts of public officials must be procedurally fair,[1] against which official action may be measured.

The Decision

In R (Caribbean Utilities Co Ltd) v Ombudsman, the Honourable Justice Asif KC quashed the Ombudsman’s decision and remitted the appeal to be reheard.  Three aspects of the judgment merit particular attention.

Procedural fairness extends to affected third parties

 The Court rejected the argument that, because the FOIA confers rights only on the FOI applicant and the public body, the Ombudsman owed no procedural duties to anyone else.  The Ombudsman is a public official positively bound by the constitutional guarantee of procedural fairness, which duty informs how she should exercise her broad discretion as to the conduct of an appeal.  Applying the well-known statements of principle in R v Secretary of State for the Home Department, ex parte Doody [1994] 1 AC 531 and Bank Mellat v HM Treasury (No 2) [2014] AC 700, the Court held that, where an appeal raises the prospect of a serious adverse effect on a third party, the Ombudsman should give active consideration to whether her duty of fairness requires that third party to be afforded an opportunity to make representations, and in appropriate cases the opportunity to intervene, in the appeal.

Importantly, the Court was unpersuaded that the public body from which the commercially sensitive disclosure was sought could always be relied upon to advance the third party’s case.  It would not necessarily be safe for the Ombudsman to rely on that public body to advance all relevant arguments on behalf of the third party, as, on the facts of this case, OfReg had failed to do.  The Court found that the process had been procedurally unfair to CUC, implicitly rejecting criticisms that the fault for the procedural unfairness lay principally with OfReg rather than the Ombudsman: fairness is assessed objectively, and the question is whether the process was fair, not who was to blame for any unfairness.

 Commercially sensitive information as “property”

The most novel aspect of the judgment is a constitutional point. Section 15 of the Bill of Rights protects against interference with the peaceful enjoyment of property otherwise than in accordance with law, and requires that any law providing for such interference must make provision for the prompt payment of adequate compensation. Following the Privy Council’s guidance in Changyou.com Ltd v Fourworld Global Opportunities Fund Ltd [2025] UKPC 12 that the concept of “property” in section 15 is equivalent to that of “possessions” under Article 1 of the First Protocol to the European Convention on Human Rights, and the reasoning of the English Court of Appeal in R (Veolia ES Nottinghamshire Ltd) v Nottinghamshire County Council [2012] PTSR 185, the Court held that the studies were “property” for these purposes: they had been purchased and were capable of being sold, and derived real value from the confidential information they contained, which value would be destroyed by public disclosure.

Because no Cayman Islands law makes provision for compensation for the interference with property rights brought about by a disclosure order under the FOIA, the Court held – applying section 5 of the Constitution Order, which requires existing laws to be read with such modifications as are necessary to conform with the Constitution – that section 21 of the FOIA must be “read down” so as to exempt from disclosure any records that constitute third-party property within the meaning of section 15.  This is a notable extension of the protection which the Constitution provides for property into the information context, and aligns the Cayman position with the broad approach to “possessions” developed under the European Convention.

 The public interest is not a blanket override

Notably, the Court declined to read down the FOIA’s separate public interest provision (section 26) in the same absolute manner. There may, the Court accepted, be cases in which a strong public interest justifies disclosure even of constitutionally protected property; but where there is such a public interest, the absence of any compensation for the affected third party must still weigh very heavily against ordering disclosure. The Court also observed that, in many cases, careful redaction will be capable of reconciling the competing interests, permitting disclosure of material of genuine public interest while protecting the commercially sensitive core.

Comment

The judgment in R (Caribbean Utilities Co Ltd) v Ombudsman strikes a careful balance.  It does not undermine the FOIA’s important transparency objectives; rather, it ensures that the regime operates fairly towards those whose property and commercial interests are at risk of being adversely affected by disclosure, and consistently with the constitutional protections that underpin Cayman Islands public law.  As regulatory engagement with private enterprise continues to deepen, the principles which this judgment confirms, being (i) objective procedural fairness towards affected third parties; (ii) the constitutional status of confidential commercial information; and (iii) the central role of proportionate redaction, are likely to be of enduring significance.

[1] Section 19(1) of the Constitution provides that all decisions and acts of public officials must be lawful, rational, proportionate and procedurally fair.