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You are here: BAILII >> Databases >> The Law Commission >> In In the Public Interest: Publication of Local Authority Inquiry Reports (Report) [2004] EWLC 289(4) (15 July 2004)
URL: http://www.bailii.org/ew/other/EWLC/2004/289(4).html
Cite as: [2004] EWLC 289(4)

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PART IV

NON-LEGISLATIVE SOLUTIONS

1 Introduction

In the CP we provisionally concluded that with the exception of qualified privilege in defamation the problems we identified would best be tackled non-legislatively:

(1) by an agreement between the local authorities and their insurers and

(2) by a Code of Practice on the conduct of inquiries.^[1]

Waterhouse said: "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."

^[2]

In this Part we describe the responses to those proposals and what has taken place since publication of the CP.

2 LGA/ABI Guidance

4.4

Following completion of the Jillings report the Local Government Association (LGA) and the Association of British Insurer Insurers (ABI) issued a Guidance Circular to local authorities on how to approach inquiries concerned with reviewing statutory responsibilities which are subject to indemnity insurance cover: "Ad Hoc Inquiries in Local Government – Insurance Aspects".

^[3]

The Guidance "sets out principles which the LGA recommends local authorities apply when considering arrangements for an inquiry concerned with reviewing statutory responsibilities which are subject to indemnity insurance cover."

^[4]

Waterhouse recommended that this Guidance be reviewed.

^[5]

^[6]

We concluded in the consultation paper that the LGA/ABI Guidance and the ABI response had addressed to an important degree the practical matters on which agreement between local authorities and insurers is needed. We thought they provided a good basis for developing a further statement of agreed principles. We think it essential that agreement is negotiated by the local authorities and their insurers so that an authority knows what steps it ought to take at each stage of a local authority inquiry.

4.8

Whether such an agreement is cast in the form of revised joint LGA/ABI Guidance or a Statement of Practice such as might be issued by insurers

^[7]

It is highly desirable to obtain legal advice on the terms of reference or if the inquiry is to be independent of the authority for the person who will be chairing the inquiry panel to be consulted on the terms of reference.

The terms of reference of an inquiry should allow for the drawing of inferences and the expression of judgments and opinions in the inquiry report only where they are supported by evidence.

The presumption that publication of the report or some version of it will take place.

There should be an agreed procedure for the handling of a report by the council which should include steps the council should take to satisfy itself of the fairness of the inquiry and the report.

Whether an admission of fact from which an admission of liability may be inferred will be a breach of any term of the contract of insurance if made without the insurer's consent.

The need for the authority to respect duties of confidentiality owed to others.

4.10

We asked consultees: Given our description of how an agreement between the local authorities and their insurers could be developed do consultees agree that this would be the right way forward? If not what additional points would consultees say should be included or what alternative would consultees propose?

^[8]

Twenty respondents commented on this question. None has caused us to think that legislative action is the way forward. Most were supportive of our suggestion of an agreement. There was some concern that the details of such an agreement would have to be fully worked through and that it would not be a complete answer to the problem.

4.12

One academic respondent considered that an agreement between individual authorities and insurers could work given the limited number of insurers in the market and the record of good compliance with a similar "code" not to pursue subrogation rights for employers' liability insurance. On the other hand another academic commentator argued that a "code" is unnecessary because if an inquiry report is published which indicates that the authority bears some responsibility but the authority is not authorised by the insurer to settle the claim then adverse publicity will discourage insurers and authorities from resisting claims. We do not think that the possibility of media pressure is a good or sufficient substitute for a statement of agreed principles.

4.13

We have reached this view for three principal reasons:

(1) the decision to refuse the claim will often be made known initially at least to a small group of officers and members. It will not be in their best interests to publicise the attitude of their insurer. Whether or not backbench councillors or members of the Overview and Scrutiny Committee wish to consider the decision will only arise at a later stage;

(2) insurers do in practice "lean" in some way on authorities to prevent publication when reports may reveal admissions of liability. One Head of Legal Services wrote: "It is certainly the experience of this authority that the inquiry reports have been withheld for a variety of reasons not solely because of admissions of liability although this was an issue." Similarly the Corporate Standards Officer at another authority wrote: "Our insurers have been very reluctant to permit the dissemination of a report despite the fact that its publication was necessary in order to prevent a recurrence of the problems identified in it";

(3) any media pressure may not reflect the justice of the case.

4.14

We have concluded that a Statement of Agreed Principles would leave the underlying framework of responsibilities shared between insurers and authorities intact yet recognise the democratic and multi-functional nature of local authorities. The LGA and the ABI indicated a willingness to work together to draw up such a Statement. The ABI thought this was best pursued once the SOLACE guidance was drafted – on which see paragraphs 4.14 below.

4.15

We hope that the ABI and the LGA will collaborate on revising the joint guidance that was issued in 1999 and that a revised document would cover amongst other things:

(1) recording of information;

(2) inclusion of evidence-based conclusions;

(3) disclosure by the local authority of documents to assist the inquiry particularly documents to which the right to confidentiality attach and those subject to legal professional privilege;

(4) evidence to the inquiry by council staff;

(5) handling of the inquiry report by the authority;

(6) publication of the inquiry report; and

(7) resolution of disputes between the authority and the insurer.

4.16

Following publication of this report we shall be convening a meeting between representatives of local authorities and their insurers to start this process. If as we hope this reaches a satisfactory conclusion the new agreement should resolve many of the uncertainties to which the Waterhouse report drew attention. We hope that once the new LGA/ABI code of practice is in place local authority insurers and local authorities will work to adopt an approach that is fair to both sides while allowing the authority to function as an accountable public body.

3 The conduct of inquiries

4 A "Code of practice" and the SOLACE review group

4.17

In 1978 a committee appointed by Society of Local Authority Chief Executives (SOLACE) and the Royal Institute of Public Administration issued recommendations for the attention of local authorities

^[9]

The Local Authorities Association published its response to the SOLACE report in August 1980. It "fully endorse[d] the proposition that a code of practice and rules of procedure are needed."

^[10]

^[11]

Nevertheless neither the SOLACE nor the Local Authority Association recommendations were widely known. In the consultation paper we said (at paragraph 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 [between local authorities and insurers] 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.^[12]

The ABI stated that it accepted the recommendation "that there should be an agreed code of practice to guide local authorities in their response to situations of [this] kind…"

^[13]

^[14]

In the event the Code of Practice we thought was needed was already being developed by SOLACE who had set up a Group to review guidance on the conduct of local authority ad hoc inquiries. The review included a questionnaire to local authority chief executives to establish how inquiries are conducted reports are written and how the inquiries are handled by the local authorities. A Law Commission lawyer was invited to be an Observer of the Group in January 2002. Information and views were shared between the Review Group and the Commission.

4.22

In our CP we asked:

Given our description of the principles that should underlie a Code of Practice its content and who should issue it what would consultees want to see in a Code of Practice for the conduct of local authority ad hoc inquiries?

4.23

Twenty respondents commented. Nearly all were positive about the idea of a Code of Practice (Guidance as it now is) and many made suggestions. The Council on Tribunals warmly supported this idea. It expressly agreed with our statement that "While we think it may not be either practicable or desirable to produce guidance which prescribes particular ways of conducting inquiries and writing reports it is nevertheless both possible and desirable to produce guidance which alerts the authority as to the issues to be thought about the options and the factors to be taken into account when deciding how to progress".

^[15]

The Review Group published its Guidance on 5 December 2002: Getting it Right: Guidance on the conduct of effective and fair ad hoc inquiries. The Guidance is not prescriptive but sets out in some detail the various considerations which a local authority and an inquiry panel may need to take into account and the kinds of decisions they will need to make. We are grateful to SOLACE for permission to reproduce substantial extracts from the main body of the Guidance as Appendix B to this Report. Copies of the Guidance itself can be obtained from SOLACE.

^[16]

We also commend the succinct guidelines produced by the Department of Health which are appended to the Guidance and reproduced with the kind permission of the Department as Appendix C to this report.

4.26

It is obviously essential that these documents are better known and understood by local authorities and their insurers than were the original SOLACE guidance and the Local Authorities Association version.

5 Conclusion

4.27

The evidence both from the Waterhouse report and from other respondents to our consultation is that many of the problems that arise with ad hoc inquiries arise when basic principles of fair procedure are not followed. While not creating a procedural strait-jacket for those conducting ad hoc inquiries we think that the principles set out in the SOLACE Guidance serve a most useful purpose in identifying the ways in which inquiries can be conducted fairly. These will be invaluable to those running inquiries particularly those without much experience of such a process.

4.28

Further where local authorities need to satisfy themselves that inquiries have been conducted fairly

^[17]

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Note 1    Para 7.47.    [Back]

Note 2    The Waterhouse Report para 32.62.    [Back]

Note 3    Referred to here as “the LGA/ABI Guidance” or “the Guidance”.    [Back]

Note 4    LGA Circular 631/99 covering note to the LGA/ABI Guidance p 1.    [Back]

Note 5    Recommendation 72 at para 56.05 of the Waterhouse Report: Subject to the preceding recommendation [that the Law Commission look at the legal issues recommendation 71] guidance to local authorities on the setting up and conduct of inquiries and the dissemination of reports thereon should be up-dated and re-issued.    [Back]

Note 6    ABI “The Waterhouse Report Supplementary Matters – recommendations 71 and 72: A Response by the Association of British Insurers” (December 2000) (“The ABI Response”).    [Back]

Note 7    Such as the ABI Statement of General Insurance Practice (L 249 August 1997 first issued 1977) which states that the code “shall be taken into account in arbitration and any other referral procedures which may apply in the event of disputes between policyholders and insurers”: p 2. No mention is made of its legal status beyond this. Birds comments that although not legally binding a large majority of insurers generally observe the terms of the Statement of General Practice: Birds’ Modern Insurance Law (5th ed 2001) p 4.    [Back]

Note 8    Question 12 para 8.46 of the CP.    [Back]

Note 9    SOLACE and RIPA “Ad hoc Inquiries in Local Government” (1978).    [Back]

Note 10    Local Authority Associations “Ad hoc Inquiries in Local Government: Report of the Local Authority Associations” (1980) para 13.    [Back]

Note 11    Ibid para 14.    [Back]

Note 12    And the insurers could require a local authority to observe a Code of Practice.    [Back]

Note 13    The Waterhouse Report para 32.62.    [Back]

Note 14    The ABI Response section 2 para 2.8.    [Back]

Note 15    Para 8.48 of the CP.    [Back]

Note 16    http://publications.solace.org.uk/acatalog/adhoc.htm; SOLACE Hope House 45 Great Peter Street London SW1P 3LT.    [Back]

Note 17    Which is an important feature of our proposals relating to the amendment of the law on qualified privilege discussed below in Parts V to VI.    [Back]

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