Ombudsman disturbs confidential settlement agreement

Ombudsman disturbs confidential settlement agreement
Thursday 3 May, 2018
The Ombudsman has required that Whanganui District Council reveal some details of a supposedly commercial settlement.
In 2013 the council sued MWH in negligence over the failure of the wastewater treatment plant designed by the company for the city. There were odour issues from the outset and the plant was never able to meet the terms of its resource consent. In March 2016 MWH paid a sum to Council to settle the dispute, without admitting fault or liability. The settlement sum was expressed as being confidential.
The Wanganui Chronicle made a LGOIMA request for details of the settlement. The council refused the request, citing the importance of maintaining the confidentiality of the settlement. LGOIMA protects confidential information if disclosure would prejudice the supply of similar information or would otherwise damage the public interest. LGOIMA also protects information which is likely to prejudice the commercial position of the person who supplied, or is the subject of, the information.
Unsatisfied, the newspaper took the matter to the Ombudsman. The Ombudsman ruled that the council was entitled to refuse to disclose the settlement sum but took the view that there was a public interest in the disclosure of adequate information to promote the council’s accountability in achieving a responsible and reasonable settlement. Accordingly, the Ombudsman recommended disclosure of “a certain level of information”.
The Ombudsman’s approach in this case is consistent with his approach to official information generally. Since his appointment as Ombudsman in December 2015, Peter Boshier has made clear his intention to encourage greater transparency and swifter resolution of official information complaints.
The council accepted the Ombudsman’s recommendation. It disclosed that in the settlement the council had received an amount which was greater than both the total costs of the litigation and the professional fees paid to MWH for the design of the wastewater plant.
This disclosure, when coupled with information already in the public arena, revealed somewhat more than might appear at first glance. The council had previously disclosed that its legal costs to the end of 2015 in relation to the dispute were $860,000. And in March 2016 the council applied $8 million to debt reduction.
The council complied with the Ombudsman’s recommendation but would have been reluctant to reveal any details of the settlement. It had agreed with MWH that the settlement sum would be confidential. More importantly, the council is likely to enter into settlement negotiations on other matters at some point in the future, and it now has first-hand knowledge that the Ombudsman has an appetite for greater disclosure than parties to a settlement would prefer.
We understand that the Ombudsman has made similar recommendations in other cases concerning out of court settlements with local authorities and we appreciate that this may be of concern to other councils.
Please contact Megan Crocket if you would like to discuss the implications of the Ombudsman’s recommendation.
Related Articles

Councils challenge to transfer of water services rejected in High Court
Thursday 30 March, 2023

Director personal liability more acute as tough times bite business
Tuesday 14 February, 2023

When the rubber hits the road - All aboard Aotearoa's challenge
Tuesday 11 October, 2022

Declarations that an Enactment Inconsistent with Bill of Rights
Tuesday 11 October, 2022

Proposed mandatory consideration of specific Māori representation
Tuesday 11 October, 2022

New Regime for Protected Disclosures (Whistleblower legislation)
Wednesday 29 June, 2022

Notices of requirement are relevant for resource consent applications
Wednesday 30 March, 2022

Court gives guidance on consultation and decision-making process
Wednesday 30 March, 2022

Cultural evidence and the continued draw of the overall judgment
Tuesday 21 December, 2021

Fluoridation debate lifted from shoulders of local government
Tuesday 21 December, 2021

Judicial review of Hamilton City Council's development contributions policy
Tuesday 5 October, 2021

Lease of Wanaka Airport set aside due to insufficient consultation
Tuesday 15 June, 2021

What if an abatement notice requires you to breach the Resource Management Act?
Tuesday 15 June, 2021

“No ‘wine-ing’ covenants” declined for a subdivision consent in Gibbston Valley
Tuesday 15 June, 2021

From car parking fine to judicial review of a council’s code of conduct
Tuesday 15 June, 2021

Councils remain liable for compliance of contractors with the RMA
Thursday 18 March, 2021

Could companies be liable to the public for the harm caused by their emissions?
Tuesday 10 March, 2020

Avoiding double penalties when sentencing a company and director
Thursday 23 April, 2020

Can an easement be granted over an esplanade reserve for a commercial activity?
Thursday 12 December, 2019

How can you identify the subject of an anonymous defamatory statement?
Thursday 10 October, 2019

Australian defamation decision raises risk for public Facebook pages
Wednesday 31 July, 2019

Local authority requiring monetary contributions on designations
Thursday 20 June, 2019

Bella Vista: MBIE Report highlights failure to perform statutory functions
Tuesday 9 April, 2019

Recent decision on "affected persons" highlights the importance of context
Wednesday 28 November, 2018

Court of Appeal recognises new public interest defence to defamation claims
Thursday 27 September, 2018

High Court finds Council liable in negligence for damage from fallen tree
Thursday 27 September, 2018
