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The Law Commission

(LAW COM No 289)

IN THE PUBLIC INTEREST:

PUBLICATION OF LOCAL AUTHORITY INQUIRY REPORTS

Report on a reference under section 3(1)(e) of the Law Commissions Act 1965

Presented to the Parliament of the United Kingdom by the Secretary of State
for Constitutional Affairs and Lord Chancellor by Command of Her Majesty

July 2004

The Law Commission was set up by section 1 of the Law Commissions Act 1965 for the purpose of promoting the reform of the law.

The Commissioners are: The Honourable Mr Justice Toulson, Chairman

Professor Hugh Beale QC

Mr Stuart Bridge

Professor Martin Partington CBE

Judge Alan Wilkie QC

The Chief Executive of the Law Commission is Mr Steve Humphreys and its offices are at Conquest House, 37-38 John Street, Theobalds Road, London, WC1N 2BQ.

The terms of this report were agreed on 17 May 2004.

The text of this report is available on the Internet at:

http://www.lawcom.gov.uk

CONTENTS

	Paragraph
Executive Summary	Summary
PART I: INTRODUCTION
The factual background	1.3
The Cartrefle inquiry 1990-1992	1.5
The Jillings inquiry 1994-1996	1.9
The Waterhouse Report 1996-2000	1.16
Terms of reference	1.20
The consultation paper (CP)	1.22
Structure of this report	1.26
Summary of the recommendations	1.32
Qualified privilege	1.33
Local authority special inquiries	1.35
The impact of our recommendations	1.39
Recommendations in Part VI: qualified privilege	1.40
Recommendations in Part VIII: special inquiries	1.47
Implications of our recommendations	1.56
Inquiries other than ad hoc inquiries	1.57
Inquiries by other public bodies	1.59
Review of the law of defamation?	1.63
PART II: LOCAL AUTHORITIES, AD HOC INQUIRIES
AND POWERS OF INQUIRY
The definition and organisation of local authorities	2.2
General	2.2
Principal local authorities	2.3
The organisation of local authorities	2.6
The definition of ad hoc inquiry	2.10
Exclusions	2.14
Inclusions	2.16
Inquiries by Overview and Scrutiny Committees	2.18
Independent Inquiries	2.26
Internal Inquiries	2.28
Ad hoc inter-agency inquiries	2.31
Powers to establish local authority ad hoc inquiries	2.33
Local Government Act 1972	2.35
Local Government Act 2000	2.38
PART III: THE INSURANCE PROBLEMS
Introduction	3.1
The insurance background	3.5
Insurance arrangements	3.6
The express term	3.9
An implied limitation on the express term	3.11
Implied terms	3.12
Admissions of liability	3.16
Consultation	3.17
Defamation	3.27
Consultation	3.28
Waiver of rights	3.34
The right to confidentiality	3.36
Legal professional privilege	3.40
Public interest immunity	3.50
The position of third parties	3.60
Breach of confidence and a duty to disclose?	3.63
A statutory duty to disclose material to inquiries?	3.69
Conclusions	3.76
PART IV: NON-LEGISLATIVE SOLUTIONS
Introduction	4.1
LGA/ABI Guidance	4.4
The conduct of inquiries	4.17
A "Code of practice" and the SOLACE review group	4.17
Conclusion	4.27
PART V: DEFAMATION AND MALICE
Introduction	5.1
The elements of defamation	5.2
Defences	5.6
Privilege	5.9
Absolute privilege	5.10
Qualified privilege	5.13
Statutory qualified privilege	5.15
Common law qualified privilege	5.33
Critique: the uncertain scope of common law privilege	5.40
What respondents said	5.49
Conclusion	5.52
Malice	5.53
The doctrine	5.53
Critique of the law	5.63
Public policy considerations	5.70
A duty on a person acting in an official capacity	5.71
The local authority's duty of accountability	5.74
The countervailing need to protect individuals' reputations	5.75
The lack of other remedies	5.76
Maintaining the quality of inquiries	5.80
Conclusion: the case for reform of the law	5.84
PART VI: QUALIFIED PRIVILEGE: OUR PROPOSED REFORMS
Introduction	6.1
Preliminary questions	6.3
Is there a need for a statutory solution?	6.3
Should reforms be proposed in isolation from a general review of the law of defamation?	6.10
An additional form of statutory qualified privilege	6.12
Which inquiries are covered?	6.17
Ad hoc inquiries	6.18
Overview and Scrutiny Committee Reports	6.21
Joint inquiries and inter-agency inquiries	6.22
Special inquiries	6.38
Inquiries not covered	6.39
A limit on the privilege	6.40
Who is to be the publisher?	6.41
Joint inquiries	6.42
Publication of part or of a summary of the report	6.45
Application of the statutory qualified privilege – publication to the public	6.47
Internal publication	6.48
Other forms of private publication	6.51
The question of fairness	6.53
What makes an inquiry report fair?	6.53
The inquiry has been fairly conducted	6.54
The inquiry's conclusions are based upon findings of fact	6.77
What if the local authority is not satisfied that inquiry and report were fair?	6.81
Procedure where a claim in defamation is brought	6.83
Malice	6.88
Interaction with other statutory qualified privilege	6.91
Privilege under the Access to Information provisions	6.91
Data Protection Act 1998 and Freedom of Information Act 2000	6.92
Commencement	6.94
Retrospectivity	6.95
Convention-compatibility of these recommendations	6.97
The rights in issue	6.98
Right to a fair trial and access to a court	6.100
Freedom of expression	6.103
Necessary, prescribed by law, and proportionate?	6.106
An advance ruling?	6.112
Respondents' comments	6.113
Our conclusion	6.114
Recommendations	6.115
Recommendation 1	6.115
Recommendation 2	6.116
Recommendation 3	6.117
Recommendation 4	6.118
Recommendation 5	6.119
Recommendation 6	6.120
PART VII: THE NEED FOR AN ADDITIONAL FORM OF LOCAL AUTHORITY INQUIRY
Introduction	7.1
The case against a local authority having a new form of inquiry	7.8
Heavy-handedness	7.9
The intrusive nature of inquiry powers	7.10
The risk of misuse	7.12
There is no need	7.17
Powers of compulsion will not necessarily be appropriate or useful	7.17
Proliferation of powers	7.19
Costs implications	7.21
Potential for political abuse	7.25
The case for a new statutory form of inquiry	7.26
The views of respondents	7.27
The Linford/Edwards inquiry	7.32
The Interest Rate Swaps Inquiry	7.34
Powers of inquiry available to a local authority	7.36
Tribunals of Inquiry Act inquiries	7.37
Petitioning for a ministerial inquiry	7.40
Comment	7.42
The need for proper investigation	7.43
The positive obligations arising under the Convention	7.45
The principle of effectiveness as an origin of positive obligations	7.46
Positive obligation arising under Article 2	7.49
When is an effective investigation required by Article 2?	7.53
Positive obligation arising under Article 3	7.55
What constitutes an effective investigation?	7.58
Who is the State for the purpose of discharging the duty?	7.67
The duty on the local authority to act compatibly with the Convention	7.71
Comment	7.75
Might another body have the appropriate powers?	7.76
Inquiry established by Parliament or by a Minister	7.77
E    ternal bodies with a duty or power of inspection	7.78
E    ternal bodies with a duty or power of investigation	7.80
An action in a court or tribunal	7.83
The Coroner's court	7.84
Why these might not be adequate	7.85
Conclusion	7.91
PART VIII: LOCAL AUTHORITY SPECIAL INQUIRIES
Introduction: the purpose of an inquiry	8.2
The power for a local authority to establish a special inquiry	8.10
The pre-conditions to establishing a special inquiry	8.11
A serious failure	8.12
Lack of any other specific power of inquiry	8.16
Appropriateness	8.17
Authorities with power to set up a special inquiry	8.21
Principal local authority	8.21
Joint working	8.22
Recommendation 7	8.24
Establishing the special inquiry	8.26
The decision is to be made by the full council	8.27
Limit on powers of delegation under the new executive arrangements	8.29
The decision is to be made in public	8.30
Recommendation 8	8.32
Requirement to notify the Minister	8.33
Recommendation 9	8.35
Requirement to notify the complainant or someone acting on behalf of the complainant	8.36
Who is to be notified on the complainant's behalf?	8.39
Recommendation 10	8.43
Running the inquiry: practical matters	8.44
Terms of reference	8.45
Appointments	8.46
The authority may not limit the inquiry's powers to seek a court order	8.47
Effect if the inquiry is ultra vires	8.48
Rules of procedure	8.51
Recommendation 11	8.52
Taking evidence on oath/affirmation	8.53
Recommendation 12	8.55
Resources	8.56
Indemnifying the inquiry	8.57
Recommendation 13	8.58
Power to direct payment of the costs of a witness's representation	8.59
Recommendation 14	8.60
Publication of the report and privilege	8.61
Recommendation 15	8.63
The inquiry's power to apply for an order	8.64
Power to apply to the High Court	8.66
Who	8.68
When	8.71
Recommendation 16	8.73
The court's powers	8.74
The order	8.74
Conditions for issuing the order	8.76
Having material evidence to give	8.77
Challenges to the application	8.79
Recommendation 17	8.83
Answering questions at the inquiry	8.84
Recommendation 18	8.85
Restricting the use that may be made of evidence given	8.87
Recommendation 19	8.92
Ancillary orders	8.93
Recommendation 20	8.95
Procedure	8.96
Pre-action steps - need for a protocol?	8.99
The claim form	8.100
Service of the claim form	8.103
The decision	8.105
Decision on the papers	8.107
Decision after a hearing	8.108
Costs of the application	8.109
Funding of the respondent's legal representation beforetb the court	8.111
Appeals	8.114
Enforcement of the order of the court: civil contempt	8.115
Mens rea for civil contempt	8.116
Powers of court once contempt is proved	8.118
Recommendation 21	8.125
The Minister's power to stop a special inquiry	8.126
Recommendation 22	8.130
Commencement	8.132
Convention-compatibility of our recommendations in this part	8.134
PART I    : SUMMARY OF RECOMMENDATIONS
Qualified privilege	9.1
Local authority special inquiries	9.7
APPENDI     A: DRAFT LOCAL AUTHORITY INQUIRIES BILL AND E    PLANATORY NOTES	Appendix A
APPENDI     B: E    TRACTS FROM 'GETTING IT RIGHT',SOLACE GUIDANCE ON THE CONDUCT OF EFFECTIVEAND FAIR AD HOC INQUIRIES	Appendix B
APPENDI     C: DEPARTMENT OF HEALTH ADVICE	Appendix C
APPENDI     D: EXISTING NON-LOCAL AUTHORITY POWERS OF INQUIRY AND INSPECTION	Appendix D
APPENDI     E: RESPONDENTS AND ADVISERS	Appendix E

E    ECUTIVE SUMMARY

Local authorities have statutory responsibility for the delivery of many essential social and other services. On occasion, things go seriously wrong. The authority will want to find out why. To do this, it may set up an inquiry. The public will not feel confident that the issue has been properly investigated if the inquiry report cannot be published. In February 2000, when Sir Ronald Waterhouse published his report into abuse of children in care in North Wales, he found that there were situations where a local authority had found itself unable to publish its own inquiry report. Sir Ronald recommended that the Law Commission should be asked to investigate the issue.

The matter was formally referred to the Commission in February 2001. In particular, the Commission was asked to review:

the law of defamation as it applies and the privilege that local authorities can claim, in such circumstances;

•    the possible loss of public interest immunity or privilege against disclosure, and the making of admissions of liability in such circumstances; and

•    the way in which e    isting practices for insuring local authorities against liabilities in relation to defamation, or other torts, may contribute to these problems.

•    

The Commission was also asked to recommend courses of legislative and/or administrative action that would better enable local authorities to take effective action in response to matters of serious public concern revealed by such inquiries, and to do so in as open a way as possible.

Form the outset, the Commission has not limited its work to issues arising in the specific conte    t of the abuse of children. Its analysis covers any serious failure in the delivery of local authority services. The Commission also noted that, increasingly, local authorities deliver their services in partnership with or through other organisations.

The Commission issued a consultation paper in April 2002. In the light of responses to the consultation and further analysis of the issues, the Commission now publishes its final report and draft Bill.

The principal conclusions of the Commission are as follows.

(1) Many of the problems relating to inquiries would not occur if inquiries were properly run and established. New guidance has been issued by the Society of Local Authority Chief E    ecutives (SOLACE). It is essential that careful note is taken of this.

(2) The code of practice issued jointly by the Association of British Insurers (ABI) and the Local Government Association (LGA) should be refined to ensure that local authorities can act in the public interest without putting their insurance cover at risk. The Commission will provide the ABI and LGA with a note of issues it thinks the code should address.

(3) The law of defamation, in particular the defence of qualified privilege, should be amended. Where there has been an ad hoc inquiry into a failure in the delivery of a local authority function, then so long as the inquiry has been conducted fairly, and neither the inquiry nor the local authority is motivated by 'malice', publication of the report, either in whole or in part, should be privileged. This means that the local authority will have a defence against any action brought by a person alleging that he or she was defamed in the report.

(4) Ad hoc inquiries may be established jointly with another local authority. The new statutory qualified privilege should similarly attach to the report of such an inquiry.

(5) In addition, a joint inquiry may be established by a local authority and another public body. In this case, the new form of qualified privilege will attach only to the local authority. The other public body will continue to rely on the common law defence of qualified privilege.

(6) An inquiry will be treated as having been conducted fairly where: the report's conclusions are based upon findings of fact derived from evidence put before it; those criticised in a report have notice of the criticisms and the opportunity to respond; and any response is fairly represented in the report.

(7) There should be a statutory power to set up a new form of special inquiry. This power should be e    ercisable where there has been a serious failure to deliver a service, and the local authority anticipates that those who have relevant information may not be willing voluntarily to provide that information to the inquiry. Such a special inquiry may be set up jointly with another local authority. The special inquiry will have power to seek an order from the High Court requiring persons to attend the inquiry or to produce documents or other things to the inquiry.

The draft Bill deals with items (3) to (7).

In making these recommendations the Commission has been conscious of the difficult balance that must be struck between enabling local authorities to be open and accountable to the public while at the same time ensuring that officers and others connected with the delivery of services are not unfairly maligned in any report.

In addition, the Commission has taken into account significant developments in Human Rights law, the effect of which is that if the state cannot provide an effective means of investigating serious service failures, in particular where a life has been lost, the United Kingdom may be in breach of its obligations under the European Convention.