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This "purpose" focuses on ascertaining a person's 'fitness or competence'.
'Fitness and competence' are applied to three separate groups of activities:
This relates to the fitness and competence of persons who are involved in management of corporate bodies. This will include company directors, but is not limited to them, and so can also include shadow directors or company secretaries. The management of corporate bodies is an extensively regulated activity and so there are may be considerable overlap with purpose at s.31 (2) (c).
For example, the Department of Trade and Industry carries out investigations into limited companies under the Companies Acts 1985 and 1989 and in some cases under the Financial Services and Markets Act 2000 and also considers complaints which may lead to investigations.
The Company Directors Disqualification Act 1986 ("the CDDA"), in particular, allows a court to order that a person be disqualified from being a director or shadow director of a company. The CDDA can also extend to directors of other bodies, such as NHS Trusts. Under the CDDA these persons can be prevented from being directly or indirectly concerned or taking part in the promotion, formation or management of a company or acting as an insolvency practitioner for various reasons The reasons allowing the taking of such action include:
In addition an un-discharged bankrupt person is automatically barred from acting as a director of a company or be concerned in the promotion, formation or management of a company etc. without the leave of the court (s.11 CDDA). And a person subject to a disqualification order under Part II of the Companies (Northern Ireland) Order 1989 may not act as a director of a company (as defined in s.22 of CDDA) or be concerned in the promotion, formation or management of such a company unless he has leave of the High Court of Northern Ireland, and such a person may not be a insolvency practitioner (s.12A CDDA).
On the specific issue of 'unfitness', s 9 of the CDDA provides that the court shall take into account certain matters when determining a person's unfitness for the purposes of the Act. Schedule 1 to the CDDA sets out some of those matters but it is not exhaustive. Part 1 sets out the matters applicable in all cases and Part II sets out the matters applicable where a company has become insolvent. Some matters applicable in all cases are :-
and some matters applicable only where a company has become insolvent are :-
In circumstances where a disqualification order could have been sought under either s.6 or 8 of the CDDA, s.1A (inserted by the Insolvency Act 2000) allows the SOS to accept a disqualification undertaking where he considers it expedient to do so. The OFT may accept a disqualification undertaking in the circumstances described in s.9B of the CDDA (inserted by the Enterprise Act 2002.)
Different maximum periods of disqualification apply depending on which sections of the CDDA is used to obtain a disqualification order or undertaking with the highest being 15 years. S. 13 of the CDDA makes it a criminal offence to act in contravention of a disqualification order or undertaking, and the maximum penalty is 2 years' imprisonment, an unlimited fine or both. A disqualified person may seek leave of the court to act as a director or in the management of a company (s.17 CDDA) or to vary the terms of a disqualification undertaking (s.8A CDDA). Companies House maintains a list of disqualified directors. CDDA applies to building societies and incorporated friendly societies as it does to companies. The provisions of the CDDA also apply to limited liability partnerships.
The section 31 (2) (d) purpose is linked to the prejudice test imposed by section 31 (1) and the test of the balance of the public interest. A request for information may be refused only if:
Much will depend on the nature of the information being sought.
Where a disclosure would or would be likely to prejudice an authority's functions or civil proceedings in this area, the public interest in avoiding that prejudice will need to be weighed against the public interest in disclosure.
To justify withholding the information requested, the public interest in doing so must outweigh the public interest in disclosing. In practice those who conduct investigations into and institute proceedings against those not fit and competent to manage companies rely heavily on information voluntarily disclosed from third parties. Disclosure of this information may inhibit the sources of information open to such public authorities and prejudice their functions.
In a free market, all those who deal with companies should be protected from misleading, unethical or incompetent practices, so there is a strong public interest in ensuring that there is an effective system in place to ensure that misconduct in relation to the running of companies comes to light and that applications for disqualification orders are made where appropriate.
On the other hand disclosures confirming an investigation is underway may serve to warn members of the public who have dealings with the company or individual being investigated e.g. those who own, or are considering buying franchises from a franchise operation whose directors are under investigation. This would have to be balanced against the risk of prejudice to the investigation that might be caused by premature disclosure. This will depend on the facts of the case.
There may be statutory provision for disclosure or non disclosure of information obtained for purposes under section 31 (2) (d). As with other exemptions public authorities will need to look at any relevant domestic or EC legislation to consider whether section 44 (prohibitions on disclosure) will apply. They should also consider whether section 21 (alternative rights of access) apply before considering sections 30 and 31.
For example, the Department for Trade and Industry has investigatory powers under section 447 of the Companies Act 1985. However, section 449 of the Companies Act 1985 prohibits disclosure of information obtained under section 447, and thus section 44 of the Act should be considered first.
There may well be an overlap with other exemptions such as: -
However, in many instances it will be more obvious that the exemption on which a public authority seeks to rely, in relation to all or some of the information, should be section 31(2)(d).
There is no special definition of 'profession' in the Act but the term is widely recognised as referring to an occupation for which there are specific qualifications and which is subject to a code of conduct or ethics which might be regulated by the profession itself or by an independent body.
This part of the section 31(2)(d) 'purpose' is restricted to ascertaining whether a person is fit or competent in relation to any profession.
The functions most likely to be exercised by public authorities in relation to this purpose will be considering authorising a person to practice as a professional or investigating complaints against professional alleging they are not fit and competent to carry out the activities commonly carried out by such professionals.
Many professions are self-regulatory and unlike section 31(2)(c), section 31(2)(d) does not require the public authority to be exercising statutory functions when ascertaining whether a person is fit and competent.
However, many professions are regulated by statute and there will be considerable overlap with section 31(2)(c) in relation to information obtained when considering applications to licence person or in investigations as to whether to remove authorisation to practice as a professional. However, this information will more obviously fall within 31(2)(d).
Some examples of situations in which public authorities may exercise relevant functions follow:
The GMC receives a request from a member of the public for information relating to investigations into complaints received against doctors who practise at their local surgery.
In performing its function of protecting patients the GMC can exercise their discretion to send the doctor concerned a letter of advice or warning where the matter is not serious enough o warrant further action. Such measures will not be made publicly known, unlike other decisions on a doctors fitness to practise. If information of this nature was disclosed, it would undermine the effectiveness of the GMC's action because doctors may be less willing to co-operate with the GMC to improve their services if they could not be sure that their discussions and correspondence would remain confidential. Thus, in disclosure there is a likelihood of prejudice to the GMC's functions, as they may be less able to maintain the standards the public have a right to expect of doctors.
The public interest in withholding the information may well be that it gives support to warnings given so that doctors seek to improve their services impacting on the main function of the GMC of maintaining standards the public should expect from doctors. It may also harm the GMC's relationship with the medical profession at large if it was to routinely disclose such information.
The public interest in being able to rely on the fitness and competence of doctors is extremely high - both in general and to individual patients. The GMC is charged with maintaining the standards the public have a right to expect from doctors and in protecting patients from harm.
It could also be said that there is a public interest in patients being satisfied that appropriate action is taken against doctors falling short of proper standards of fitness or competence.
These considerations will need to be weighed up in the context of individual cases.
If the exemption were to be maintained in this case, the GMC would then need to consider the applicability of the "neither confirm nor deny" component of the exemption indicating whether or not information was held, could of itself disclose information about whether there had been a complaint or investigation. This could undermine the willingness of doctors to improve their standards to those considered acceptable by the GMC and the professional body at large. The public interest in maintaining the disapplication of the duty to confirm or deny would then be in improving the standards of medical care, although it would have to be weighed against the public interest in awareness of the fact that the person may have fallen below the standards of a fit and competent doctor
Most 'authorisation' of this nature is pursuant to the statute and therefore covered by other subsections. Overlap with those sections will be considerable. This limb of the subsection is essentially aimed at ensuring that less formal authorisation for which the criteria will amount to fitness or competence can fall within the terms of the exemption. Examples in central government will be rare but departments may have information relating to authorisations by a public authority to drive vehicles on their sites for which no national licence is required (MOD authorise the driving of tanks), permissions to use the land of the public authority by another person or body or the authorisation of individuals to carry out voluntary work on behalf of charities.
Of course each case must be considered on its facts but these types of authorisations tend to be of a lesser order than ones covered by earlier provisions. It may therefore be harder to demonstrate that the public interest in avoid prejudice to the process outweighs the public interest in the process of being transparent. The same public interest considerations may apply as referred to in relation to more highly regulated professions and activity above but the weight to be attached to them is likely to be lower so care should be exercised in seeking to rely on this section to withhold information.
There is a clear public interest in ensuring the probity and competence of the members of what may be still essentially self-regulating professions, but also in the transparency of investigations into allegations of misconduct or serious incompetence against them. The balance has to be drawn between ensuring transparency of process and potentially prejudicing the exercise by a public authority of its functions in relation to that process, and hence the public interest in the process being operated fairly and efficiently and not being affected by disclosures. Depending on the nature of the misconduct alleged (for example, if it involves fraudulent activity, or, say, a solicitor "laundering" for clients) there may be a read-across to other exemptions such as other aspects of section 31 where, for example, a criminal prosecution or other legal proceedings are a possible outcome.