High Court judge orders Liverpool City Council to reconsider refusal of indemnity for former elected mayor

A High Court judge has told Liverpool City Council to revisit whether it should grant an indemnity to its former elected mayor Joe Anderson to defend criminal allegations.

In Anderson, R (On the Application Of) v Liverpool City Council [2021] EWHC 2205 (Admin) Mrs Justice Yip said the council had misdirected itself because it had “proceeded on the basis of the position if the allegations are true”, even though this was yet to be determined.

The case arose after Mr Anderson - who was Liverpool’s Labour elected mayor for nine years - was arrested in December as part of Merseyside Police’s Operation Aloft on suspicion of bribery and witness intimidation. He has strongly denied any wrongdoing.

The judge noted that Mr Anderson had twice before had the benefit of an indemnity from Liverpool.

Mr Anderson was in 2016 asked by Lancashire Constabulary to attend an interview voluntarily in connection with allegations of misconduct in a public office being investigated as part of Operation Sheridan, which involves Liverpool and Lancashire County Council. The judge said no charging decision had yet been made in Operation Sheridan.

Liverpool granted him an indemnity for his legal defence fees and again against the costs associated with a claim for unfair dismissal against the governors of Mr Anderson’s former employer Chesterfield High School. This was because the council considered his dismissal was directly linked to his election as mayor.

Following his arrest, Mr Anderson’s lawyers contacted the council for a similar indemnity for Operation Aloft to enable a lawyer to accompany Mr Anderson to a police interview. But when the council was asked to extend this it refused.

The court heard that police told the council of two alleged offences by Mr Anderson. These were that he “requested / agreed to receive / accepted a financial or other advantage, intending that in consequence, a relevant function or activity, namely give favourable treatment to various companies and individuals and that your duties should be performed improperly”; and that he “committed an act which harms and is intended to harm and you did so knowing or believing the person harmed or threatened has assisted into the investigation into an offence and you did so because of that knowledge or belief”.

Liverpool resolved that neither of these alleged offences concerned Mr Anderson’s proper duties as mayor and so were not amenable to an indemnity.

The allegations included that he had tried to discredit or cause financial loss to Tony Reeves, the council's chief executive and had improperly obtained a disciplinary file relating to Nick Kavanagh, a former council officer, who had also been arrested as part of Operation Aloft.

Mr Anderson argued “the relationships and politics involved were complex and submitted it was in the council's interests for his defence to be properly advanced, for which he believed he required proper funding of his legal costs”, Yip J said.

Liverpool’s statutory officers group took external advice and decided it would be unlawful for the council to give the indemnity as none of the alleged acts were committed with the authority of the council, at its request, with its approval or for its purposes.

Officers said that if Mr Anderson had acted as alleged he could not reasonably have believed that he was acting within the scope of his powers or those of the council and if proven these constituted criminal acts and/or intentional wrongdoing.

The council told Mr Anderson the decision whether to grant an indemnity was “exquisitely fact sensitive” and one had been given for Operation Sheridan as that concerned allegations of misfeasance in public office

Giving judgment, Yip J said: “The council has proceeded on the basis of the position if the allegations are true.

“However, those allegations have not yet been tested by way of criminal proceedings and the claimant's defence is not addressed at all within the council's reasoning.”

She added: “To approach the application of the [indemnity] policy on the basis that if the claimant had acted as alleged he was guilty of criminal conduct is to render the provision for the funding of criminal defence costs nugatory.”

Yip J said it followed the council misdirected itself, and “this led to a running together of a number of different issues rather than the structured approach that was required”.

She rejected the council’s contention that section 31(2A) of the Senior Courts Act 1981 applied as any reconsideration was highly likely to give the same result.

“I am unable to say that it is highly likely that the outcome would not have been substantially different had the council properly directed itself on the terms of the policy,” Yip J said.

“Equally, I do not consider that, on the basis of the material before me, I can conclude that the claimant is entitled to an indemnity.”

Yip J quashed the council’s decision on the indemnity and said it should reconsider Mr Anderson’s argument that criminal allegations did not in themselves mean no indemnity could be given.

A Liverpool City Council spokesperson said: “We are disappointed that the initial decision, which was taken in accordance with the advice of leading counsel has been quashed.

“However, we respect the findings of the court and we will now reconsider the decision.

“We were pleased to note that in her judgment, Mrs Justice Yip made it clear that there was no evidence that council officers had acted disingenuously - and/or with any improper motives - in reaching their decision, which had been claimed by lawyers representing Mr Anderson.”

Landmark Chambers, whose David Lock QC and Galina Ward appeared for Mr Anderson, said: “The judgment contains salutary lessons for all local authorities having to make decisions in this difficult area. The key lesson is that a local authority needs to read and understand its own policy, and that it cannot refuse a legal costs indemnity to a member or officer because of the seriousness of the allegations. In order to act lawfully, local authorities need to follow a decision-making process which addresses the relevant facts and precisely follows the terms of the policy.”

Mark Smulian