Part VII
The policy, the Problems and the solutions
7.1
In this Part we first explain what policy considerations
govern our analysis of the legal problems and the solutions. We then set out
what we see as the legal difficulties, drawing on the preceding Parts, and
consider how they might best be addressed. We conclude that some can be
resolved or mitigated by agreed practice between local authorities and the
insurance industry, and also that a Code of Practice for the conduct of local
authority ad hoc inquiries would itself, by helping to promote good quality
inquiries, make it less likely that such problems would arise in individual
cases. We examine these two non-legislative solutions in more detail in Part
VIII.
7.2
We also conclude in this Part that the issue of qualified
privilege as a defence in defamation may require a legislative solution. We
discuss possible legislative solutions in Part IX.
The policy
7.3
We start by setting out the underlying policies which have
informed our analysis.
Publication
7.4
Publication, in some form, of the inquiry report is desirable
to inform the complainants, their families, the local authority constituents
and the public at large about what happened, to promote transparency, and to
bring about changes in practice. There may be a need to hide the identities of
individuals from (wide) public knowledge. There may be a duty to respect
confidentiality. These two considerations will legitimately restrict what may
be published in the inquiry report.
7.5
Publication
(1)enhances the accountability of local authorities for the
manner in which they discharge their statutory functions;
(2)enables an authority to change its own practices and
procedures to prevent a wrong being repeated;
(3)encourages the possibility that lessons learned by one
local authority can be publicised so that improvements in practice will spread;
and
(4)encourages the publicisation of findings of fact in matters
where there is a genuine public interest.
7.6
When the Society of Local Authority Chief Executives (SOLACE)
issued its report on ad hoc inquiries in local government in 1978, it stated
that there should be a presumption in favour of publication.
It said,
Following any formal inquiry,
public or private, the local authority shall accept an obligation to publish a
report.
If the inquiry has been public
the report shall be published in full. Very exceptionally there may be
additional conclusions reached in a public inquiry which are nevertheless
reported privately, in which case this report would be withheld from
publication.
If the inquiry is private a
report, though not necessarily the full report, shall be published. We endorse
the relevant Davies proposal:
When an inquiry is held in private it should submit two
reports:
(i) a full confidential report to the appointing authority;
(ii) an abridged report which safeguards parties to whatever
extent the Chairman and members think necessary, where professional capacity
and reputation or disclosure of intimate personal circumstances are concerned.
Copies of the report to be
published shall be sent to interested parties before publication.
…
The obligation on local authorities to publish a report
shall apply whether or not they accept it or propose to take action on it.
7.7
We agree that this should be the presumption. With one caveat
relating to the quality of the inquiry and of the report, we cannot see that
there is any good reason that some version of the inquiry panel’s findings
should not be made available to the public.
7.8
The decision whether to publish, and what to publish, should
be the authority’s. It is in our view undesirable for the insurer to be able to
prevent publication (and thereby avoid liability) purely on the grounds that the report is adverse to the insurer’s
interests in the sense of disclosing valid grounds for claims against the local
authority.
7.9
It is also our provisional view that if the local authority
was right to instigate the inquiry, and it has been fairly conducted, then
merely publishing the findings of the inquiry should not, as a matter of
policy, leave the local authority, or an insurer, vulnerable to a new cause of
action for defamation.
The conduct of
inquiries
7.10
An inquiry report should be fair to all interested parties,
which includes complainants, their families, and others who might have been
similarly affected, alleged perpetrators of wrong-doing, and those with
supervisory or managerial responsibility for the alleged perpetrators.
7.11
A fairly conducted inquiry should start with an open mind,
allow witnesses to tell their full story, hear from all those people with
relevant information to give and uncover all relevant documents, allow people a
fair chance to respond to allegations made against them, accord evidence
appropriate weight, be factually accurate, stay within its terms of reference
which have been carefully and clearly defined, and reach conclusions on the
evidence heard.
7.12
Very occasionally it might be apparent that an inquiry was not
well conducted, was unfair, or that the report itself is poor, meaning that it
goes beyond its terms of reference, or reaches unsustainable conclusions, or is
evidently unfair in some other way. The commissioning authority might become
aware of the defects of the report when it is presented to the council for its
consideration, prior to any decision being taken on how to react to it. For
example, when parts of the report are shown to those criticised in advance of
publication, their responses might alert the authority to unfairness or
unsustainability.
7.13
A statement in a report which is defamatory
should not be published unless it is believed to be true, with good grounds for
the belief. Therefore, in these unusual circumstances, it might be right not to
publish a report or even an abbreviated version of it, because of the potential
for serious harm if unfounded criticisms of a person are put into the public
domain.
7.14
Our provisional view is that, if an inquiry report is fair, it
or an edited version of it should usually be published.
The problems
7.15
We now draw together the legal difficulties which have emerged
from the analysis in the preceding Parts.
Admissions of
liability
7.16
Our provisional view is that the risks of making an admission
of liability, in contravention of the insurance contract, could pose a real
problem for authorities because the insurer may be entitled to avoid an insurance
contract where an admission of liability is made without the insurer’s consent.
7.17
This may occur where a member or official of a council makes a
public statement admitting liability, with the authorisation of the council but
without the insurer’s consent. It may also occur where a council responds to an
inquiry report by publishing it. It is not sufficiently clear what kind of act
by the council will amount to an admission of liability, especially in relation
to its response to an inquiry report.
7.18
We provisionally consider that the problem could also arise at
an earlier stage in the process for local authorities, namely when deciding
what evidence may be given to the inquiry. While the inquiry is taking evidence
there is the possibility that a member or an official or other employee, with
knowledge of the facts will make an admission of fact to the inquiry, from
which liability may follow. If the authority anticipates that the inquiry, even
though held in private, will produce a report which is likely to be published,
it may be inclined not to make full disclosure to the inquiry panel on the
grounds that it fears making an admission of liability, and thereby being in
breach of its insurance contract. Part of the difficulty arises because the
admission of some facts might amount to an admission of liability.
7.19
We would expect the local authority to remain covered by its
insurers where the claim is brought on the basis of vicarious liability for its
employees, even where relevant admissions were made to the inquiry by the
employees, because that is what the insurance is for. However, whether this is
in fact the case will depend in part on the construction of the insurance
contract and in part on the approach of the insurers.
7.20
Admissions of liability by those with authority to make them
are a different matter: it seems to us reasonable for the insurer to stipulate
in the contract that such admissions should not be made without their consent.
It will therefore be especially important to the authority that those officers
who might be thought, by virtue of their position, to have sufficient standing
to speak for the authority, do not make admissions without the insurer’s
consent.
7.21
As regards admissions in a published report, our provisional
view is that, where the authority has considered the inquiry report and has no
grounds to doubt its findings, and it is in the public interest that the report
be made public, the authority ought to be able to release it without fear of
loss of cover. Insurers have told us it is not their general practice to seek
to prevent the publication of reports purely
on the grounds that they contain statements or conclusions which might give
rise to legal liabilities, and in that sense be contrary to the insurers’
interests. To do otherwise would negate the whole purpose of the insurance
which is to provide cover against the risk of unforeseen liability.
7.22
However, insurers often conduct their own investigations into
the validity of complaints against authorities, and if they conclude that there
are no grounds for admitting liability, they may be inclined to see a report
which reaches or implies a contrary conclusion as adverse to their interests.
They might then seek to rely on the express term in the insurance contract
which prevents the authority admitting liability without the insurer’s consent.
7.23
We noted at paragraph 3.24 above that an insurer does not have
a wholly unfettered discretion as to the circumstances in which it may refuse
consent to an admission of liability being made. Its decision must be
reasonable in the “Wednesbury” sense,
in that the insurer should “form a genuine view as to the appropriateness of
settlement or compromise without taking into account considerations extraneous
to the subject-matter of the reinsurance”.
It may be a problem for the claimant or potential claimant if the insurer’s
consent is unreasonably withheld, because it may be harder to pursue a
justified claim. It may be a problem for the authority if the insurer’s consent
is unreasonably withheld because its freedom to respond to the complaint, and
to address the matter openly and transparently, is curtailed. Moreover, there
may be a problem for the local authority if the insurer reasonably withholds
consent, on the ground that there will be an admission of liability, because
again the local authority will be inhibited from addressing the matter openly.
7.24
It may well be that insurers’ normal practice is to settle
claims at the earliest stage where liability is clear, rather than defending a
claim at all costs, but this may not be the practice across the board. For
example, while insurers do not, we understand, now adopt a hostile attitude to
claims arising out of alleged abuse of children in care, this may not always
have been the case when the issue of child abuse was less frequently identified
than it is today. It is possible that they might adopt such an attitude to
other kinds of claims, particularly newly-emerging issues.
7.25
The problems may be summarised as follows:
·
The local authority’s co-operation with the inquiry may
be impeded if there is a risk that evidence given to the inquiry panel will
amount to an admission of liability in breach of the insurance contract.
·
It is not sufficiently clear what kind of admission
will be treated as an admission of liability within the terms of the insurance
contract.
·
It is not sufficiently clear what kind of act by the
council will amount to an admission of liability, especially in relation to its
response to an inquiry report.
·
The lack of clarity might either result in a breach of
the insurance contract, or lead an authority to make less full disclosure than
it could to an inquiry panel, or to hold back from publishing the inquiry
report for fear of invalidating the insurance contract.
·
The interests of the insurer and the local authority
may conflict: if the insurer withholds consent, publication could be impeded
where it ought not to be.
The
following consultation questions aim to clarify how much of a problem these
legal issues pose in practice.
Questions for
consultees
7.26
Is it the experience of
consultees that, even though liability may be inferred from an admission of
fact, witnesses to local authority non-statutory inquiries are free to give all
relevant facts to an inquiry (subject to requirements of confidentiality)?
7.27
Is it the experience of
consultees that publication of an inquiry report, whether internal or
independent, is treated in practice as amounting to acceptance of any findings
of fact and conclusions reached in that report, and thus to an admission of
liability?
7.28
Is it the experience of
consultees that inquiry reports are ever withheld from publication for fear
that statements in them will amount to admissions of liability?
7.29
Is it the experience of
consultees that consent to an admission of liability is ever withheld by an
insurer in circumstances where the local authority would have wanted to make
that admission? If so, we should be interested to know the circumstances.
Waiver of rights
7.30
Waiver of the right
of confidence in a document or communication may entitle the insurer to avoid
the contract because waiver without the insurer’s consent would be a breach of
an express term of the contract, and therefore an authority must not waive a
right which it has to confidentiality
in a communication without the permission of the insurer. This is important
because loss of confidentiality may bring in its wake loss of legal
professional privilege.
7.31
If privileged material is referred to in a public document,
privilege in that document will have been waived. Privilege might also have
been waived in collateral documents and other parts of the same document if
disclosure was partial but misleading. A local authority must be alert to the
danger of waiving privilege, as waiver of privilege without the insurer’s
consent will put the authority in breach of the insurance contract.
7.32
We wish to know whether there is a problem in practice for
local authorities in determining what documents may be disclosed to an inquiry
without breach of this term of the insurance contract, or in waiving these rights
inadvertently and thus losing insurance cover.
7.33
We concluded in Part V that the duty to claim public interest
immunity is not a right that can be waived by the authority, and therefore not
a matter which can lead to a breach of the condition in the contract of
insurance which prohibits waiver of rights without consent. The authority will,
however, want to keep documents confidential where public interest immunity
will or may apply. A question is, therefore, included in relation to public
interest immunity.
Questions for
consultees
7.34
In consultees’
experience, does the fear of waiving the right to confidentiality which may be
claimed by the authority lead to the withholding of documents (and other
evidence) from local authority ad hoc inquiries?
7.35
Does the fear of
waiving legal professional privilege lead to the withholding of documents (and
other evidence) from local authority ad hoc inquiries?
7.36
Does the fear of
disclosing a document which might be subject to public immunity privilege lead
to the withholding of documents (and
other evidence) from local authority ad hoc inquiries?
7.37
In the experience of
consultees, has insurance cover ever been lost through waiver of rights to
confidentiality, legal professional privilege or through disclosure of a
document subject to public interest immunity?
Defamation
7.38
We concluded in Part VI that it is difficult for a local
authority to know how widely it may disclose a report and claim qualified
privilege: the law is currently just not clear enough on this point. This will
have important consequences for the public image of local authorities and may
lead to a doubly chilling effect if local authorities are loath to publish any
report for fear of actions in defamation, not only to avoid legal action in
itself, but also for fear of invalidating the authority’s insurance cover. Our
questions for consultees are aimed at finding out the extent of the problem in
practice.
Question for
consultees
7.39
In consultees’
experience, are inquiry reports ever withheld from publication because of defamatory
statements in them? If this has occurred, was it because of fear of an action
in defamation, or because of the risk
of invalidating the insurance cover, or both?
7.40
Equally importantly, if the local authority knew that any
report was unlikely to receive the publicity it wished to give to its findings,
it may be reluctant to undertake the inquiry in the first place. This could
mean that facts which ought to be established might not be; steps which could
be taken to make improvements might not be; it could also lead to allegations
of cover-ups by the public and frustration on the part of the council.
7.41
A further problem follows from the vicarious liability of a
local authority for the acts of its employees. For example, if a director of
social services criticised council staff in public before an inquiry had
concluded, and without authorisation by the council, that criticism could
amount to actionable defamation, and the council could be vicariously liable.
7.42
Thus, from the point of view of the insurers and of the
authorities, there are two main concerns in relation to defamation: (1)
avoiding precipitating an action for defamation, especially one which will be
hard to defend, and (2) the impact on the insurance contract.
7.43
In relation to the first point, as regards the risk of an
action in defamation, if an authority is confident that its reports could
attract qualified privilege at common law if the point were litigated, then the
courts might expect the authority to be robust, whatever the insurer might say.
The court might take a similar line to that in relation to the provision of
information to the Department of Health about an employee found to be
unsuitable to work with children. Lord Woolf MR said,
We recognise that there may be a few timid spirits who will
be deterred from doing their duty if it is not clear that they cannot be sued
for defamation. However, we find it difficult to accept that a local authority
under the statutory duties to which the authority are subject would be deterred
from providing the appropriate information to the service by the threat of
litigation. We say this despite the straightened circumstances of local
authorities.
7.44
We accept that the fact that it may have to defend itself in
the courts should not, in itself, inhibit a local authority, but the degree of
uncertainty about the availability of the common law defence of qualified
privilege seems to us likely to promote an overly cautious approach. We
identify this issue as requiring legislative reform, and we set out the possibilities
in Part IX.
7.45
In relation to the second point, our provisional view is that
the risk of avoiding the insurance contract can be resolved by agreement
between the insurer and the local authority. An agreed statement of principles
might state that insurance cover will continue if the authority carefully and
conscientiously assesses the quality of a report and the public interest in
knowing of it before deciding to make it available to the public. This will be
so even if it subsequently loses a court action for defamation. Publication
would not be unfairly impeded.
7.46
Similarly, it could be agreed between the local authority and
the insurer that if the authority takes all reasonably practicable steps to
advise its officers not to make statements which could lead to an action in
defamation without proper consideration and authorisation by the council, then
it will have been acting prudently.
Solutions
7.47
Our provisional view is that, with the exception of the one
issue of qualified privilege in defamation, all the problems we have identified
would best be tackled in two non-legislative ways: by an agreement between the
local authorities and their insurers, and by a Code of Practice. As was stated
in the Waterhouse Report: “The contractual issues that arise are less suitable
for legislation because insurers cannot be compelled to underwrite liabilities
and will make their own assessments of risk when they do agree to provide
cover.” The Report continued, “It is highly desirable, however, that there
should be an agreed code of practice to guide local authorities in their
response to situations of the kind that arose in Clwyd.”
An agreement between
local authorities and insurers
7.48
With regard to an agreement between authorities and insurers,
we have to consider whether a set of ground rules can be established, which
will in practice bind both local authorities and insurers, as to how these
possible points of conflict between them will be addressed. Our provisional
view is that, in the light of the problems we have identified, such an
agreement should cover:
·
what evidence members officers and employees of the
local authority may give to the inquiry;
·
what will be treated as an “admission of liability”
such as will trigger a breach of the express term of the insurance contract if
made without the insurer’s consent, including when an admission of fact will be
treated as an admission of liability within the terms of the contract;
·
in general terms, the circumstances in which the
insurer will withhold consent to an admission of liability and to the waiver of
legal professional privilege;
·
how the authority is to respond to an inquiry report
and what procedures it should adopt;
·
statements to the public made on behalf of the
authority;
·
statements made without the authorisation of the
authority;
·
the consequence for the insurance contract of
inadvertent waiver of a right to confidentiality or legal professional
privilege;
· the
impact on the insurance contract of potential actions in defamation.
7.49
In Part VIII we examine the steps taken so far by the ABI and
the LGA to address these kinds of issues, and suggest how they could be taken
further.
A Code of Practice
7.50
The second strand to the solutions should, in our provisional
view, be a Code of Practice for the conduct of local authority ad hoc
inquiries. We see this as a distinct, and important, component of the solutions
to the problems identified in the Waterhouse Report and in this consultation
paper. A Code of Practice would guide those involved in the setting up of and
the running of a local authority non-statutory inquiry, and promote best
practice. The agreement we have outlined in paragraph 7.52 above would, by
contrast, be a matter of regulating practice between local authorities and
their insurers. The two would be connected in that if an inquiry were conducted
in accordance with any guidance in a Code of Practice, the kinds of problems we
have outlined would be less likely to arise in the first place.
7.51
A Code of Practice would also be relevant to the possible
legislative solution to the defamation issue which we outline in Part IX.
7.52
The fairness of the inquiry and report are key. The complaint
which gives rise to the inquiry ought to be properly and fairly investigated
for the benefit not only of the complainant, and his or her family, but also in
the wider public interest.
7.53
As we have said above,
we think publication of the resulting inquiry report is desirable as an
important aspect of the public interest. While any solution needs to allow for
the possibility that publication might not be appropriate where the inquiry or
report are unfair, non-publication should be a rare occurrence. On the other
hand, no solution should make it such that an authority, with or without the
agreement of its insurer, could easily suppress a report on the ostensible
grounds that the inquiry was unfair or the report defamatory when the reality
was that the report was accurate but the authority did not wish to publicise
it. This eventuality can best be avoided by securing a high quality inquiry and
report in the first place.
7.54
We therefore consider what principles might govern a Code of
Practice for local authority ad hoc inquiries, and what matters it might cover
at paragraphs 8.00 below.
Question for
consultees
7.55
Our provisional view is
that, without some clarification or change in the law, authorities and insurers
can only avoid the risk of publishing, being sued, and finding that the defence
of qualified privilege is not applicable, by a very cautious approach, which is
not in the public interest, and legislative reform in relation to qualified
privilege is therefore desirable. Do consultees agree?
7.56
Do consultees agree
that the other legal difficulties are best addressed by (1) a binding
agreement between local authorities and their insurers, and (2) by development of a Code of Practice for the conduct
of local authority ad hoc inquiries?
