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Cite as: [2002] EWLC 163(SUMMARY)

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Executive summary

1. In February 2000 Sir Ronald Waterhouse published the results of the inquiry he chaired into abuse of children in care in North Wales.[1] Concern was expressed in the Waterhouse Report that in some circumstances local authorities may be unduly inhibited from acting in the wider public interest. They might be constrained by threat of legal action or loss of insurance cover from publicising failures in service delivery and from acting on inquiry recommendations, and identifying necessary reforms in the light of the results of inquiries conducted by them, or on their behalf.

2. If the effect of the law is to impede publication of the report of the inquiry, then there are several adverse results. Whatever has gone wrong will be more likely to occur again if steps are not taken to prevent it. The authority which set up the inquiry could learn from the report – but if the report is not published, other authorities and bodies which could also benefit from the report will not be prompted to improve their own practices. The facts in relation to the individual complaint ought to be put into the public domain, but if the report is not published they may not be.

3. The Waterhouse Report recommended that the Law Commission examine the legal issues surrounding the publication of local authority reports, and consider whether there is a need to reform the law. The matter was formally referred to us on 19 February 2001.

4. The particular legal problems which we examine arise out of the concern that publication of an inquiry report might amount to an admission of liability and the waiver of legal rights by the authority, and that it might precipitate an action in defamation. We consider also what effect publication might have on the local authority’s liability insurance cover, given that there is likely to be a term in the insurance policy forbidding any admission of liability or waiver of rights without the insurer’s consent. We also consider whether there might be any further constraint on what actions an authority might take in relation to an inquiry report, in the light of duties it might owe to the insurer, such as the duty of utmost good faith.

5. We analyse the different kinds of inquiry which may be conducted by, or on behalf of local authorities which fall within our terms of reference. We reach this working definition of a local authority ad hoc inquiry: one which is established by a principal local authority, in circumstances which are not already governed by a statutory or other procedural code, involving serious complaints against the authority or a failure in its services.

6. While we have considered the issues only in relation to local authority ad hoc inquiries, we believe the same underlying principles will apply to other kinds of inquiries. Therefore this paper is relevant not only to local authorities but also to other bodies which instigate non-statutory inquiries.

Our provisional conclusions on the problems

We provisionally conclude in relation to admissions of liability that

· 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.

7. In relation to waiver of rights, we provisionally conclude that

· 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;

· legal professional privilege depends on confidentiality;

· an authority must not therefore waive a right which it has to confidentiality, and thus legal professional privilege, in a communication without the permission of the insurer.

We wish to know whether fear of waiving these rights, in breach of the contract of insurance, leads to evidence being withheld from an ad hoc inquiry.

8. And in relation to defamation, we provisionally conclude that

· 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;

· the degree of uncertainty about the availability of the common law defence of qualified privilege is likely to promote an overly cautious approach to publication;

· 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.

Our provisional conclusions on the solutions

9. We provisionally conclude that there are three elements to the resolution of these difficulties: an Agreement to be drawn up by the insurers and the local authorities, a Code of Practice for the conduct of local authority ad hoc inquiries, and possible legislative reform for defamation. Only the third of these is suitable for further detailed work by us.

10. There is already material which can be built on to produce the proposed Agreement between insurers and local authorities: the Local Government Association and the Association of British Insurers produced joint guidance to local authorities on the insurance aspects of ad hoc inquiries in 1999. Further, the Association of British Insurers published a Response to the Waterhouse Report which addresses many of the issues.

11. The Code of Practice we think is needed is, in effect, already being developed by the Society of Local Authority Chief Executives, which has set up a Group to review guidance on the conduct of local authority ad hoc inquiries.

12. The legislative reform which we put to consultees for their consideration is:

to extend statutory qualified privilege to any local authority inquiry report where

(1) the inquiry has been fairly conducted, and

(2) the report

(a) is about a serious matter of genuine public interest

(b) only contains judgments and apportionment of blame where they are supported by the factual findings of the inquiry panel, and

(c ) only contains criticisms of people which have been put to them in advance of publication, with an opportunity for them to respond and, subject to the requirements of observing confidentiality, those responses are fairly represented in the report.

13. We also put before consultees the possibility of an additional legislative reform which would go wider than simply making qualified privilege available as a defence in defamation to local authorities. This consists of a new power for local authorities to set up formal inquiries, with the powers to summon witnesses, require the production of documents and take evidence on oath.

14. We have 18 questions for consultees. We should be very grateful for responses to these questions, or any other comments, by 31 July 2002.

[1]Lost in care: Report of the Tribunal of Inquiry into the abuse of children in care in the former county council areas of Gwynedd and Clwyd since 1974 HC 201 (“the Waterhouse Report”). This inquiry was set up under the Tribunals of Inquiry (Evidence) Act 1921 on 17 June 1996.

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