Former News of the World editor Andy Coulson has lost a High Court action against his ex-employer over its refusal to pay legal fees arising from the phone-hacking affair.
This morning former News of the World investigator Glenn Mulcaire was successful in his bid to recoup legal costs from News International.
Coulson, 43, who was not in court today, sued News International subsidiary News Group Newspapers (NGN) over the construction of a clause within a severance agreement from his resignation in February 2007.
He asked Mr Justice Supperstone for a declaration that NGN, which stopped reimbursement in August, “must pay the professional costs and expenses properly incurred” by him “in defending allegations of criminal conduct” during his tenure.
Coulson, who was arrested in July over the allegations and released on bail, has always denied any wrongdoing.
He resigned from his position as Prime Minister David Cameron’s director of communications in January, saying that coverage of the scandal was making it too difficult for him to do his job.
Christopher Jeans QC, for NGN, said the clause covered the “occupational hazards of being an editor” and not alleged criminal activity.
Dismissing the claim, the judge said the agreement did not cover the criminal allegations made against Coulson personally and if, contrary to his view, the criminal allegations were covered, no proceedings had commenced.
He ordered Coulson to pay NGN’s costs and refused him permission to appeal, although he can renew his application directly to the Court of Appeal.
NGN loses Mulcaire legal fee bid
Mulcaire, who was jailed for six months in 2007 for intercepting messages on royal aides’ phones, had sued News International subsidiary NGN for breach of contract.
He said he could not fund his legal defence or pay costs or damages incurred in the civil hacking litigation – due to start in February – and asked for a declaration that NGN had no right to terminate an alleged June 2010 indemnity.
NGN argued that Mulcaire’s demand for £750,000 in return for his co-operation over the proceedings negated the offer.
Mulcaire was not in court in London for the ruling by the Chancellor of the High Court, Sir Andrew Morritt.
The judge said a valid contract of indemnity was concluded between Mulcaire and NGN on the terms of the indemnity letter of June 28 2010, by which it agreed to indemnify him from the costs and damages arising from voicemail litigation to which they were joint defendants, and NGN had no right to end the contract, which continued to exist.
Mulcaire’s counsel, Ben Williams, had told the court that NGN did pay Mulcaire’s legal costs until July 19 when Rupert and James Murdoch were questioned by a Commons select committee and challenged about the payment.
“Glenn Mulcaire’s case is that the defendant did agree to pay his costs, the agreement is enforceable and the defendant did not have the right to terminate it.”
He said that, despite the rhetoric employed by MPs at the committee, there was nothing “exotic, unusual or improper” in the arrangement contended for by Mulcaire.
“Where an employer and an employee have each acted unlawfully and the employer is liable to pay damages and costs resulting from one or both, it is not remarkable to find the employer paying an employee’s legal costs and involving itself closely in his defence of civil proceedings.”
Equally, where there was joint liability and one party had substantial means while the other did not, it was not surprising for them to reach an agreement between themselves as to how it would be funded.
He denied that the request for additional compensation constituted a rejection of the offer of indemnity.
‘They are, as they always were, in it together’
In his ruling, the judge said that Mulcaire’s conduct had given rise to 70 separate claims against him and NGN – the first by Professional Footballers’ Association chief executive Gordon Taylor, in March 2007, and the most recent by model Abigail Clancy, on December 6 this year.
When he left NGN in 2007, Mulcaire was paid £80,000 in full and final satisfaction of all his claims, but sought to extract a further sum as he considered he had “carried the can” and been harshly treated by comparison with others equally involved in phone tapping, he added.
The judge concluded that the discussions about compensation were “collateral” to discussions about the indemnity, and did not constitute a counter-offer to the offer contained in the indemnity letter nor a rejection of it.
He said it seemed clear that, following the indemnity letter, Mulcaire accepted the offer and performed his obligations under it.
By the same token, NGN clearly recognised its contractual liability on a number of occasions and paid no fewer than 72 invoices submitted by Mulcaire’s solicitor.
Ruling that the indemnity was not terminable at will or on the ground that a conflict of interest had arisen, he said: “It has not been suggested that there is any issue in any of the voicemail interception claims to which NGN and Mr Mulcaire are joint defendants where their interests in relation to an issue or issues now diverge so as to conflict.
“They are, as they always were, in it together.”