R (Comninos) v Bedford Borough Council

Friday, 24 January 2003

Introduction

The claimant is the auditor appointed by the Audit Commission under the Audit Commission Act 1998 (the 1998 Act) to audit the accounts of the defendant, Bedford Borough Council. Section 24(1) of the 1998 Act gives the claimant power, subject to section 31(3) of the Supreme Court Act 1981 (the 1981 Act) to apply for judicial review in relation to any decision of the defendant which affects its accounts. In these proceedings the claimant challenges the defendant's decision to give financial support to libel claims brought by three council officers: Mr Field, the chief executive, who is also the returning officer for Bedford with responsibility for elections within the borough; Mr Gough, the borough solicitor and the council's statutory monitoring officer; and Mr Darkoh, a barrister employed by the council's legal department (the first, second and third interested parties respectively) against the fifth and sixth interested parties, and to indemnify the officers against the potential costs liabilities arising out of their claims.

Background Facts

The background facts are not in dispute and, since the claimant's challenge is presented as one of principle —a Local Authority does not have power, under any circumstances, to fund libel proceedings by its officers or to indemnify them against the costs of such proceedings —it is unnecessary to rehearse them in any great detail. In brief outline, there were elections to the defendant council in May 2000. In one of the 18 wards (Brickhill) an envelope containing 86 postal votes was overlooked. After two recounts the conservative candidate was declared the winner with a majority of nine votes. An informal count of the postal votes showed that, if they had been included, the outcome would have been the same, but the conservative majority would have been reduced from nine to six.

In an attempt to regularise matters, Mr Field, in his capacity as returning officer, made an application to the County Court under rule 47 of the Local Elections (Principal Areas) Rules 1986 for the formal inspection of the ballot papers. Although well-intentioned, this application was, to use a neutral word, ineffective. The judgment of Gray J in the libel proceedings dated 1 March 2002 considers this aspect of the case in great detail. I am told that Mr Gough is appealing against Gray J's judgment. In the circumstances, I say no more about the decision to make the application under rule 47.

The fifth interested party, Mr Lister, who was the local agent for the Conservative Party, issued a press release to the Bedfordshire on Sunday newspaper, a local newspaper published by the sixth interested party. The press release complained of "maladministration of Bedford Borough Council" and said, inter alia:

"It is the belief of Stewart Lister that the Council should not be taking the action that it is taking as it was wrong for the Council to fund and take action on behalf of any political party."

There followed two articles in the Bedfordshire on Sunday on 28 May and 11 June 2000, both of which were highly critical of the council. The latter article included the following:

"Tory election agent Stewart Lister said 'I am relieved the council is no longer planning to spend taxpayers money on aiding and abetting a political party. If anyone was to have brought the case it should have been the Lib Dems."

On 7 June Mr Field placed a report, "Legal Action Duty of Care to Employees", before the executive committee of the council. The report recommended the committee to ratify action that had been taken by him in consultation with group leaders. By way of background, the report explained:

"As the Committee is aware, senior officers in this Council have suffered a number of personal attacks in the local press in recent years. This was particularly evident in respect of the former Chief Executive, Laurie Gould, who, up until his retirement, suffered what seemed to be an ongoing press campaign against him.

"As the Head of the Paid Service it is my duty to advise the Council that it has a duty of care to all its employees (including its most senior managers). There is nothing in the contract of employment of any Council officer which allows for personal attacks through and by the local press when the officer is undertaking his/her duties on behalf of the Council. Indeed, council employees should be protected from personal attacks related to their work for the Council and in carrying out the policies of the Council. If there are any issues which relate to any failure or wrongdoing by a Council officer they should be dealt with through the Council's disciplinary procedure —not through the press who may wrongly influence this process."

Under "Current Issue" the report said:

"I have personally suffered regular targeting by the press on various issues which do not relate to any failure or wrongdoing on my part and these attacks are thus unjustified and totally unacceptable. The latest incident, tabled as a proposed press release by Bedfordshire on Sunday, appears to be quite clearly a serious libel, not only in respect of myself but also in respect of my legal staff. I am not prepared to accept this and thus, in consultation with Group Leaders, I have authorised legal opinion be sought from specialist defamation Counsel. Depending on the outcome, there could be appropriate legal action, the cost of which is yet to be determined but would be a charge on the Contingency Provision, further details relating to this will be tabled at the meeting."

The committee was asked to ratify the action that had been taken to date. The agenda item was accompanied by a further report containing supplementary information. That annexed a copy of both the press release and the full text of counsel's advice and said:

"Counsel advises that Members of the Executive Committee should read the full text of his advice before making a decision … "

Under "Summary of advice from Counsel" the supplementary information continued:

"The Council does have a legal power to finance action, taken by its employees, in respect of defamatory/libellous remarks made about them in respect of their work for the Council. The relevant legal power (as advised by Counsel) is Section 111 of the Local Government Act, the relevant section being 'calculated to facilitate or conducive or incidental to the discharge of any of the Council's functions'. Counsel says that it can be stated that this action would maintain staff morale and efficiency in ensuring that they (staff) felt more secure from any attacks in the paper generated as a result of the performance by them of their duties as employees.

"The duty of care of an employer to an employee is currently evolving under case law as more and more employees are taking action against employers who fail to provide a safe and healthy environment in which they work. Counsel advises that the Council's decision whether or not to take action in this instance should be based on the employer's duty to take reasonable steps to protect the health of its employees (including protecting employees from unreasonable levels of stress). Counsel does not advise that the decision should be influenced by whether or not employees could have a legal case against the Council if it failed to act in this case. In essence, the Committee's decision, under duty of care, should be based on its position as a good employer, seeking to help protect employees from undue stress levels."

The supplementary information summarised counsel's advice as to the prospects of success and dealt with the question of costs:

"Counsel advises that costs relating to an action could amount to £100,000 (Council share being £50,000). If the employees' action wins then the Council would be able to recover up to 75% of its borne costs, whilst if the employees lost, Council would bear not only its own costs, but up to 75% of the other parties costs. Counsel mentions that if the action is successful, the Council could seek to recover any net costs (not recovered from the defendants) from any damages awarded to the employees (by prior agreement)."

Under the heading "Other Relevant Factors" the supplementary information said:

"Mr Field and Mr Gough both hold statutory positions in the Council (Head of Paid Service and Monitoring Officer respectively) and both officers, naturally, consider that their integrity and reputation are essential in order to undertake their duties. Both officers consider that the recent press release/articles undermine their positions and Mr Gough has written to the Chief Executive enquiring as to what action the Council is going to take, under the duty of care, in respect of this situation."

Under the heading "Decisions for the Committee relating to future action" a number of...