Council publishes legal advice as row over libel indemnity worsens

A council has taken the unusual step of publishing legal opinions it received from two QCs as a row with the Wales Audit Office rumbles on over the lawfulness of an indemnity the authority granted to its chief executive for a libel counterclaim.

Carmarthenshire County Council also called on the the Appointed Auditor (and Assistant Auditor General for Wales), Anthony Barrett, to retract a statement that the authority had not sought fresh legal advice at the time of granting the indemnity.

Publication of the legal advice as well as correspondence with the WAO was part of attempts by Carmarthenshire to “set the record straight” after Barrett issued a public interest report last week.

In that report Barrett concluded that the decision by the council to give Mark James, its chief executive, an indemnity for his counterclaim against blogger Jacqui Thompson was unlawful.

The Assistant Auditor General said this was because:

  • In view of the specific publications in Articles 6(3) of the Local Authorities (Indemnities for Members and Officers) (Wales) 2006 Order, the council was not authorised by statute to grant an indemnity in respect of bringing a claim or counterclaim for defamation. “The council may not rely on section 111 of the Local Government Act 1972 (the 1972 Act) to avoid that limitation on its powers.”
  • There were failings in governance arrangements and processes adopted by the council.

Barrett said the council should rescind the decision and withdraw the indemnity.

But the authority said the advice it had received from the two Queen’s Counsel – James Goudie and Tim Kerr, both of 11KBW – was that the 2006 order had not replaced the 1972 Act.

Goudie gave his opinion in 2008, advising that the powers in s. 111 should be used only in exceptional circumstances. The council said this advice stated that the 2006 order was in addition to, and did not restrict, the existing powers under the 1972 Act.

Tim Kerr QC’s advice was meanwhile given following the WAO investigation. “He gave a detailed view of the case and said he considered that the Executive Board’s decision to grant the indemnity was lawful,” Carmarthenshire said.

The council added that further legal advice was given by Adam Speker of specialist libel set 5 Raymond Buildings prior to the Executive Board taking its decision to indemnify in 2012. A verbal presentation was given to the meeting, “a fact which the Wales Audit Office has not acknowledged”.

In the High Court in March 2012 Mr Justice Tugendhat rejected Mrs Thompson’s claim against James and the local authority in its entirety, and ordered her to pay £25,000 in damages to the chief executive when his counterclaim succeeded.

Carmarthenshire is understood to have paid out more than £26,000 in external legal costs since 2012 under the decision to indemnify.

In the latest stage in the row between the council and the WAO, Carmarthenshire issued a statement saying its councillors and officials were “bitterly disappointed and frustrated at misinformation being circulated around the recent public interest report issued by the Wales Audit Office”.

The public interest report from the WAO is due to be debated at an extraordinary council meeting later this month (27 February).

A spokesperson for Carmarthenshire said: “For almost two years the Wales Audit Office gave the council every indication that it was quite satisfied that the authority was within its rights to indemnify a council officer to bring a counterclaim in response to being sued for libel and was fully aware of the legal advice that the council had received supporting its action.

“In fact, some six months after the indemnity was granted, the auditors – responding to questions raised by a local resident – repeatedly confirmed that they were satisfied that the council was acting within their powers. We feel the only way to prove this is to publish the correspondence between ourselves and the auditors so that everyone can see for themselves what has taken place.”

The local authority insisted that it had notified the WAO of its intention to provide the indemnity before it proceeded and had kept the watchdog “fully informed of legal advice that [it] received and all developments in the court case throughout the past two years”.

The council claimed that the WAO had not raised any concerns until 20 months after the legal action started.

It also suggested that, in correspondence with a member of the public in August 2012, the Auditor had stated that the WAO was content that the council had the necessary legal powers to issue the indemnity.

“We would ask the Auditor to reflect that their failure to suggest at any time that we did not have the legal powers and this explicit statement that we DID have those powers could not have been taken as anything other than confirmation that the Wales Audit Office was quite happy with the actions that the council was taking,” the spokesperson said. [Emphasis from council's statement]

“The auditor seems completely unwilling to accept that their inaction and, in fact, positive confirmation of the council’s actions for most of the period in question, has contributed to the unfortunate ‘stand-off’ of differing legal interpretations that we now find ourselves in, as they appear to have changed their minds.”

On the Auditor’s claims that the council did not seek fresh legal advice, the spokesperson said: “This is not true. The Auditor knows that we did seek such advice and that part of it is referenced within the officer report presented to members and quoted within the Auditor’s own public interest report.

“We have published on the council website several pieces of legal advice, two of which are from separate QCs, which indicate that in their view, the council has acted lawfully. We remain confident in the advice we have received and we do not believe that the Auditor should present his opinion as if it was the only opinion that mattered.”

The correspondence published by Carmarthenshire can be viewed here.

A spokesman for the WAO said: “The Appointed Auditor stands by the conclusions set out in his public interest reports, published last week. The proper place for this matter to be resolved is in the council chamber or the courts. We await Carmarthenshire Council’s meeting on 27 February and the council’s subsequent decision on the reports.”