Councils warned over bringing libel claims through employees

The rights of local authorities to provide financial backing for staff to mount defamation actions in respect of allegations about their work has been back under High Court scrutiny.

The latest case to raise a question mark over how far councils can go in backing employees who claim they have been libelled was taken to court by the auditor for Bedford Borough Council. He questioned the council’s backing for a group of employees to sue Bedfordshire on Sunday and local Conservative party agent Stewart Lister over allegations relating to the conduct of an election.

Mr Justice Sullivan has ruled at the High Court that the council was entitled to provide the financial backing.

But in doing so he stressed the danger local authorities could face if they attempted to circumvent normal rules barring them from taking libel action by giving employees financial backing for libel claims.

Section 111(1) of the Local Government Act 1972 gives councils the power to provide such backing.

However, the judge warned: “If a local authority’s true purpose is to sue for damage to its own reputation, and it gives its officers an indemnity in respect of the costs of defamation in order to circumvent the rule that it has no right to commence such proceedings itself, then it will have acted for an improper purpose and/or taken irrelevant consideration into account and its decision will be liable to be quashed on normal public law principles.”

But he said that in this case, there had “never been any suggestion of improper purpose”.

He queried the wisdom of the council in acting as it had, saying that his decision was not to say that the council’s action “was wise”. But he continued: “The fact that a decision can be seen, with the benefit of hindsight, to have been unwise does not mean that it was unlawful.”

By Roger Pearson

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