To the Elected Members
1 June 2012

Dear Friends in Local Government

I am pleased to provide you further information and comment about consequences flowing from the defamation case brought against me, and a response to the recent missives of the President of the Local Government Association (the Association) on the issue of insurance protection for Elected Members who want to speak-out about Council machinations, especially elected member conduct.

 

The Judgement of Justice Lovell – City of Burnside v Jacobsen

Please find attached the judgement of the District Court deciding the City of Burnside’s appeal against being joined under section 39 of the Local Government Act 1999 (the LGA) to the defamation action currently being taken against me.

Apologies for not advising you earlier of this important decision, however with the limitation on appeal times to the full bench of the Supreme Court, my priority was to seek appropriate legal advice as to the likelihood of success should I wish to challenge the decision.

Unfortunately, the advice was that an appeal against the decision was unlikely to succeed so I have very reluctantly agreed with this opinion, but will continue to pursue the issues of freedom of speech and protection of Elected Members in local government in this litigation.

Fortunately however, I am therefore now free to forward a copy of that judgement for your attention and information, the issue no longer being before the courts.

The decision in my view presents cause for concern. Not only is freedom of honest speech by Elected Members now considered unprotected by the LGA, the insurance protection in section 80 has been also substantially re-interpreted. Other than should you fall over at a tea party, the judgement now interprets protection in a far more restrictive way.

Tellingly, at the court hearing the Association’s legal representatives for Burnside Council, a Mr Andrew Harris QC and a Mr Chris Wellington, a Member of the Association’s Mutual Liability Scheme panel (the LGAMLS) and partner of Wallmans lawyers, also argued that the intention of this section of the act was to afford protection from personal injury only.

You may be aware that Elected Members are supposed to have wide protection afforded them by Section 80 of the LGA. It provides:

“Insurance of Members –

80. A council must take out a policy of insurance insuring every member of the council, and a spouse or another person who may be accompanying a member of the council, against risks associated with the performance or discharge of official functions or duties by members.”

[The statutory “duties” (roles) of Elected Members are defined under section 58 and 59 of the LGA.]

Section 80 was always intended to protect and indemnify Elected Members from all risks, including legal costs associated with actions taken against them while fulfilling their roles as Elected Members. Indeed that was one of the reasons why such protections were changed and expanded when the current section 80 was introduced in the 1999 legislation, specifically changing to the scope of insurance protection sections of the previous iteration of these laws.

In formulating an interpretation of the law, the Court in this instance appear to have wrongly assumed that I have committed an act of negligence, and therefore no statutory insurance protection can apply to me. However, if there is truth in what I say then there can be no negligence.

The Court also appears to have failed to properly exercise it’s discretion in that it did not determine whether any Council decision made about my honesty was, as a matter of administrative law, based on relevant information about my actions being honest.

It is also notable that Burnside Council’s lawyers chose not to present any evidence about my honesty in support of their claims that I had not met a similar statutory requirement, and should therefore be denied protection under the LGA.

It flows from this that the judgement has, on one level determined my honesty without enquiry as to whether any evidence to support such a conclusion actually exists. In any event the Council is, and always has been, potentially liable to the former Councillors who are suing me, and an Elected Member should always have the right to join a Council to any proceedings in these circumstances. This judgement however prevents an elected member from joining the Council to a decision as part of the elected member’s defense.

The decision’s conclusions are also without reference to relevant precedent and legislation that clearly and unambiguously support such interpretations, and I note that the ‘immunity’ doctrine does not appear, among other things, to retrospectively protect Elected Members from legal costs despite acting honestly in the course of their statutory roles.

It now appears there is practically no protection for Elected Members speaking-out about any issue. Even if you were sued, but won such a case, and are found to have spoken and acted honestly, the judgement appears to say that a Council is under no statutory obligation to reimburse or refund your personal legal expenses.

Rather if joined, it would likely be in the Council’s and the LGAMLS’s interests to reject and ignore evidence of honesty in order to prevent the flow on to the Scheme for subsequent damages afforded under Section 39(2) to any successful plaintiff.

Further if, as in my case, the plaintiffs determine that they will only pursue the Elected Member and not the Council, then the Elected Member will be left exposed to bear the full cost burden of their own defence as the matter is pursued, often for years.

Eventually the Elected Member is left to bear the subsequent gap between the awarded costs and actual costs, (the solicitor/client costs) which may total in the tens of thousands of dollars, even if they are successful in defending the claim.

Imagine, if you would, having to fund a four week trial in the District Court, employing a number of lawyers to establish your innocence because you thought it was appropriate to blow the whistle on corruption of Elected Members, administrative staff and external influences in your local council.

This could easily run up a cost of around $60,000 to $100,000 on top of the cost of often lengthy pleadings and discovery processes prior to commencement of the case. Even with awarded legal fees, when successful, the final cost to the Elected Member could be in the realm of $30,000 to $50,000 dollars or more.

If an Elected Member was unsuccessful, as was recently the case in Duffy & Others v Trenowden, they would be left to bear all the legal costs and damages as well. Should my case proceed to trial, the costs will be in the order of $100,000 to $170,000 regardless of whether I win or lose.

Hence, it would appear from the recent judgment in my case that an Elected Member can be required to bear all their legal costs until the case is actually heard and decided, and even if they then win they cannot expect to get back all money they may have spent hiring their lawyers.

Then there is the issue of delay, whether by circumstance or design. In South Australia our courts are so hopelessly clogged such that in my case the decision took, on appeal, over 7 months to resolve a pre-trial procedural question. My case is now in its third year.

In light of all these matters I believe it is now critical for all current Elected Members to demand the Association, and the State Government, ensure Council’s can and do possess insurance cover necessary to protect freedom of honest speech in local government.

The Letter from the Local Government Association of 4 May 2012

I understand that Mr Kym McHugh of the current President of the Local Government Association recently forwarded a letter to all Mayors of South Australian Councils. For your information, below is a copy of that letter as well as a copy of the email from Cr Stephen Fisher forwarded earlier that it purported to address. A copy of the Association’s submission to the Parliamentary Select Committee inquiry into Burnside Council forwarded earlier is attached for the sake of completion

The letter makes claims which appear to be incorrect. For example:

“The email (from Mitcham Cr Stephen Fisher) criticises the LGA over its Submission in November 2011 to the Legislative Council Select Committee Inquiry into the Burnside Council Investigation Specifically, it claims that the LGA is supporting the removal of insurance protection of Councillors rights to protection against Civil Liability provided in Section 39(1) and 39(2) of the Local Government Act (LGAct).”

This claim is quite wrong and the LGA Submission says nothing to that effect.”

This contradicts the Association’s submission to the Select Committee Inquiry into City of Burnside. On page 6 of their submission to the Legislative Council, the Association stated:

“The Act also includes, at section 80, a requirement for a Council to take out a policy of Insurance insuring every Member of Council and their spouse, partner or other person who may be accompanying the Member of Council, against risks associated with the performance or discharge of their official functions and duties. This section is also ambiguous and is also under consideration in legal proceedings. The LGA believes it should be clarified to refer only to liability for personal physical injury.”

 

When Mr McHugh says “that whether or not Mr Jacobsen was in fact acting within the scope of Section 39 will be decided by the Trial Judge once all evidence has been heard” he demonstrates a lack of awareness of many other critical facts the letter does not appear to consider.

For example, the letter does not mention that in 2009 both the Association and the Burnside Council were determined to decide for themselves whether I had acted honestly. This included Council moving motions demanding that I provide documentary evidence that I had acted honestly, and a proposal from the Association that I provide them with a written outline for “independent assessment” by Mr Andrew Harris QC.

Even though I provided a statement to the Burnside Council on each occasion that one was requested, as well as a comprehensive ‘submission’ to Mr Harris detailing matters that demonstrated my fidelity, the Association did not make a decision and ultimately withdrew on the grounds that Mr Harris refused to further participate. Importantly, no evidence suggesting my dishonesty was ever produced.

Mr McHugh also states:

“Council members can be assured that the provisions of Section 39 provide them with a complete immunity from civil liability to third parties as long as they are acting honestly and within the scope of Council powers, when any alleged loss was incurred”.

By interpreting the law to not provide protection from legal costs when saying or trying to do something in local government in accord with your roles, the Court’s ruling effectively restricts Elected Member’s freedom to speak honestly and openly about this in their roles. There is even the suggestion that this conduct is “negligent” and therefore not whistle-blowing or accountability and therefore not something that should be covered by statutory protection.

While Mr McHugh notes “Judge Lovell held that section 39(1) creates an immunity – not an indemnity” he appears to fail to understand what an immunity actually is, and also fails to acknowledge that the immunity does not protect you from legal action, nor does it provide for compensation for legal costs, or the time devoted to contesting any legal action.

The immunity, and therefore Council’s liability, may only ever cover any damages that might be awarded at the end of any trial, but only if you have acted strictly in accordance with section 39 i.e. honestly and in accordance with statutory duties. Even then, the LGAMLS could still assert rights of appeal against any decision ordering damages, if it meant they had to pay them.

By using a “deep pockets” strategy to thwart attempts at gaining compensation, it could delay compensation through endless appeals until the injured party is unable to fund on-going challenges.

In my case the lawyers for the LGAMLS advised that they were prepared to go to the full bench if necessary to gain the verdict that they wanted, had they been unsuccessful in the District Court.

Mr McHugh then goes on at Page 2 to try to explain section 80 of the LGA citing confusion in Cr Fisher’s comments about the attempt by the Association to remove Elected Member’s protection by redefining the insurance protection granted under the act.

I also refer to where Mr McHugh makes the statement:

“Judge Lovell rejected any suggestion that S80 imposed an obligation to take out insurance to indemnify them for negligent acts that they may commit. That protection is covered by section 39”.

It appears to me that Mr McHugh’s contradiction is based on confusion about the Court’s decision. The judgement says section 39 does not offer any protection to Elected Members by way of an indemnity or insurance policy to protect them from legal costs. Again repeating what Judge Lovell has said, Section 39 simply “creates an immunity – not an indemnity”.

Also of concern is the use by Mr McHugh of the words:

“South Australian Council’s are all members of the LGAMLS and are entitled to seek indemnity from the LGAMLS for civil liabilities claimed by, or owed to at Third Party”.

Third Parties do not include Elected Members.

I also cannot reconcile when Mr McHugh said:

“A liability that attaches to the Council because of the operation of S39, can be the subject of an indemnity by the LGAMLS.”

In this regard I refer to the potential vagaries imposed by the word ‘can’, and again this occurs only after the Elected Member has proven their honesty and the lawfulness of their actions, when jointly sued with the Council. It appears that only the Council is protected through this indemnity.

I also refer to Mr McHugh’s assertions:

“The LGAMLS can defend and/or settle claims on the Council’s behalf and fund any compensation that might be payable”.

Again please note with the use of the word ‘can’ the LGAMLS is only acting on the Council’s behalf, not the Elected Members, and again note that the funding extends only to compensation to Third Parties.

Absent from this statement is whether or not Council’s legal costs will be covered, nor does it mention any legal costs an Elected Member might incur undertaking their statutory duties and meeting their legal obligations. The protection offered appears to extend only to the Council.

Further, there is no requirement placed upon the LGAMLS to protect the interests of Elected Members. Rather it is in their financial interest to sacrifice an Elected Member by making them prove their innocence before a court, if they can afford to, in order to eliminate any responsibility for damages to the Council and the Scheme.

Finally, I note McHugh’s last statement:

“Freedom of speech and the ability of Council Members to speak out in a forthright way in relation to the exercise or their powers duties and functions is protected. “

Clearly, the actions of the Association’s and the City of Burnside’s lawyers, based on the decisions of its Elected Members and staff contradict this assertion.

Rather it would appear one can no longer presume to have freedom of speech in local government, or any expectation of protection under the LGA from the substantial cost of litigation should exception be taken to something an Elected Member might conscientiously and honestly say or do in their official role.

While freedom of speech is notable by its absence from this court ruling, it gets worse for Elected Members with ordinary financial means. They will have significant financial challenges to adequately fund any legal defence, given that-

• they can have no expectation that either your Council or the LGAMLS will fund their defence, often over a protracted period of time,

• they are unable or unwilling to cover the potentially crippling costs of the gap created by the solicitor / client proportion of their costs after the awarding of costs at the end of a lengthy trial process, and
• they are not independently wealthy.

Notably, no argument promoting Object 3(d) of the LGA, and more generally articulating and agitating the primacy of the fundamental principle of ‘Accountability’, was put forward by the Association, Burnside Council or the Court in their recent endeavours to resolve the interpretation issues brought about by their dispute with my legal team joining Council to this defamation action taken by former Burnside councillors.

Further no consider appears to have been given on the impact upon Object 3(b) of the LGA, that is the encouragement of the participation of local communities in the affairs of local government, given the substantial risks now involved in community service or participation.

Rather, in my opinion, local government appears to have been changed by a Council, an insurance company, its agents, and an Association more interested in minimising it’s payouts than in ensuring freedom of speech and effective protection of its members amongst other things.

By now you could be thinking would I still make the same comments now as I did three years ago? The answer is yes, because I still believe that people have the responsibility to protect their community when entrusted to do so. But I am also concerned, based on my own experiences, that whistle-blowing on corruption or any unlawful activity is now demonised, subjected to personal vilification and afforded a lesser status such that it goes missing.

That said the question that you might now consider is without the appropriate statutory and insurance protection will serving on a local council personally expose you to unlimited legal and financial consequences for speaking openly and honestly?

I trust that has been of interest, and for any further information my contact details are below.

Yours faithfully,

Jim Jacobsen

31 May 2012

 

PS – You may also wish to ask for a copy of the insurance policy obtained by your council to determine exactly what and who is covered by it under section 80 of the LGA. For your further information, this letter concludes with a copy of the email correspondence between me and the CEO of Burnside Council, as I have attempted to obtain a copy of the policies for my most recent term of service. I trust that you have more success in obtaining your policy, than I have to date had in obtaining mine, given the access afforded to Elected Members by section 61 of the LGA. You might like to ask the question, is this what happens to my residents when they ask for information?

 

PPS – Your staff might also be interest to consider the consequences of this judgment with regard to Section 121 of the LGA, given they also now have only an immunity and not an indemnity.

 

On 26 April 2012 18:52, Jim Jacobsen <jimjacobsen@optusnet.com.au> wrote:

Dear Friends in Local Government,

I recently received the attached submission from the LGA to the Leg Council. Its contents are so potentially damaging, that I forwarded to my friend and long time Local Government colleague Cr Stephen Fisher. Stephen was kind enough to write the short message below to his fellow elected member. The Mitcham Council has at this months meeting (24/4/12) have now passed a motion calling for an explanation. Should you wish to move a similar one, it can be downloaded from their site.

I trust this information is of interest to you as the LGA continues to try to erode or eliminate Elected Members Protection in order to silence you. Given none of them have ever been an elected member, one can but wonder who and what motivates the employees of the LGA.

With my kind regards

Jim Jacobsen

Fw: LGA Attempt to stop insurance protection of elected members from risks associated with carrying out their duties

Fellow Councillors,

This submission from the LGA regarding the Burnside Council Investigation is alarming. You will no doubt understand after reading, that we are faced not only with a  Govt and Minister who are hell bent on closing down the  investigation but a Local Government Association as well.

When were member Councils asked by the LGA whether or not they thought the Burnside Investigation should be completed AND MADE PUBLIC.

If the findings do not reach the public, then how can the citizens of Adelaide regain confidence that their council is not under the undue influence of outside funds and vested interests.

How can the LGA be upholding legal shenanigans to prohibit publication of the Burnside investigation?

Who paid for the Supreme Court action to suppress the report?

The current outcome leads to a distinct impression that “might (money) is right”.

The words on page 6 in the LGA’s submission, dot point 4, and paragraphs 3, 4, 5, 6, and 7 should cause alarm to every Councillor in South Australia particularly paragraph 7, which states that Council Insurance Policies to protect Councillors “against risks associated with the performance or discharge of their official functions and duties” should be restricted to “personal physical injury”.

THIS SUBMISSION IS AN OUTRAGE!

IT HAS NOT, TO MY KNOWLEDGE, BEEN VOTED ON AT AN AGM OF THE LGA.

It has the potential to restrict every Councillor’s “freedom of speech to represent their constituents” to bland, zero effect statements, because they may be concerned to not “accidentally offend anyone”.

This may be the desired outcome for the former members of the Burnside Council who took the Supreme Court Action to suppress the report.

It should not be being supported by the LGA.

It leads to the question: “Qui bono”, or “WHO BENEFITS”

Why is the LGA supporting the suppression of the investigation?

Why is the LGA supporting the removal of insurance protection of Councillors (limited) rights to protection against Civil Liability provided in Section 39(1) and 39(2).

Best regards,

Stephen Fisher,

Councillor, City of Mitcham since 1991, Deputy Mayor, 1997-2000. Ph:  (08) 8277-3288      (Int): +61-8-8277-3288

Fax: (08) 8276-4024      (Int): +61-8-8276-4024 E-mail: stevef@kdfisher.com.au

From: Jim Jacobsen [jimjacobsen@optusnet.com.au]
Sent: Thursday, 24 May 2012 7:35 AM
To: Paul Deb
Subject: Section 80 Insurance Policy

The CEO
Burnside Council
PO Box 9
Glenside SA 5065

Dear Mr Deb

Re – Insurance Policies Issued Under Section 80 of the Local Government Act

Would be so kind as to forward a copy of the insurance policy issued under section 80 of the Local Government Act under which elected members were protected,  against “risks associated with the performance or discharge of official functions or duties by members”, for each of the years 2007, 2008, 2009, and 2010.

You are of course aware that under Section 80,

“Insurance of Members

“80. A council must take out a policy of insurance insuring every member of the Council, and a spouse or another person who may be accompanying a member of the council, against risks associated with the performance or discharge of official functions or duties by members.”

Therefore, I trust that you will agree that it is a reasonable request for a copy of the required policy.

Further would you also be so kind as to forward all Council reports in which copies of these policies were circulated to elected members during this period. I can not recall any, however, for the sake of appearing comprehensive in my inquiries, I am prepared to concede that there is a small possibility that they may have escaped my attention up to four times in the large volume of paper to which elected members are subjected.

Your prompt preliminary compliance with this request by Friday 25/5/12 would naturally be appreciated.

Yours sincerely

James W. Jacobsen
24 May 2012

********************************************************
Jim Jacobsen
A: 10 Carr Avenue, Frewville, South Australia 5063
T: 61 8 8379 8213, M: 0432 971 972
E: jimjacobsen@optusnet.com.au
********************************************************

At 02:01 PM 27/05/2012, Paul Deb wrote:

Dear Mr Jacobsen

I refer to your email of 24 May regarding Section 80 of the Local Government Act (the Act) and Council’s own insurance arrangements.

You request copies of policies held by Council, but give no reason as to why you require the copies.

I can advise that at all times Council has, and does, hold insurance in accordance with its obligations under Section 80 of the Act.

Given that you have not provided a valid reason for you to have a copy/copies of policies, your re quest for a copy/copies is declined.

Your request however, may be more readily processed if submitted in accordance with FOI guidelines.

Yours faithfully

Paul Deb | Chief Executive Officer
City of Burnside | 401 Greenhill Road Tusmore SA 5065
P: 08 8366 4205 | F: 08 8366 4299 | M: 0419827138
PDeb@burnside.sa.gov.au
www.burnside.sa.gov.au

From: Jim Jacobsen [ mailto:jimjacobsen@optusnet.com.au]
Sent: Monday, 28 May 2012 8:09 AM
To: Paul Deb
Subject: RE: Section 80 Insurance Policy

The CEO
Burnside Council
PO Box 9
Glenside 5065

Dear Mr Deb

Thank you for your response to my correspondence below.

I am unsure why you want a “valid reason” for my request or under what section of legislation or regulation I can find a definition of what constitutes a “valid reason” for my requesting the information or equally importantly, yours for asking for one.

However for the sake of speeding my very reasonable request,  my “valid reason” is that I require a copy of the requested elected member insurance policies and council notification to elected members for “information and knowledge”.

I am always happy to remind people in local government, of section 5 of the Local Government (Procedures at Meetings) Regulations 2000 that in my opinion define the way that Local Government is expected to operate. That is –

“5 (a) procedures should be fair and contribute to open, transparent, and informed decision making.”

Mr Deb, I am unsure why you seeking to withhold this very reasonable request for information, given it is something that your compliance officer could put their hands on with little difficulty and that you have advised below that you are in possession of.

Further I can not understand why you would want this matter to be made subject to an FOI request, as the general public immediately assume that the Council is trying to hide something
when it becomes known that a member of the community is being forced to obtain information in this manner.  In approaching you directly and appropriately, I have simply sought to avoid your council’s subsequent embarrassment at being caught out trying to conceal something. Personally, I would have thought you keen to avoid any damage to Council’s reputation if at all avoidable.

I look forward to your response to this communication by close of business this evening (Monday, 28 May 2012) and your immediate compliance with this very reasonable request.

Yours sincerely
Jim Jacobsen
28 May 2012

At 05:23 PM 29/05/2012, you wrote:

Dear Mr Jacobsen

I refer to your email dated 28 May 2012 in which you query Councils refusal to comply with your request for documents.

I refer you to Councils Information Statement (attached),  publically available on our website and published pursuant to Section 9 of the FOI Act.

In particular, I refer you to Part 4 Access to Council Documents.

As the documents you have described are not included in the list available for public viewing, it would be improper of me to acquiesce to your informal request.

I encourage you to consider the information provided in the Councils Information Statement which will guide you with respect to the FOI process.

I trust this adequately responds to the concerns raised in your email correspondence.

Yours faithfully
Paul Deb | Chief Executive Officer
City of Burnside | 401 Greenhill Road Tusmore SA 5065
P: 08 8366 4205 | F: 08 8366 4299
PDeb@burnside.sa.gov.au
www.burnside.sa.gov.au

From: Jim Jacobsen [ mailto:jimjacobsen@optusnet.com.au]
Sent: Thursday, May 31, 2012 4:04 PM
To: Paul Deb
Cc: john.darley@parliament.sa.gov.au
Subject: RE: Section 80 Insurance Policy

Dear Mr Deb

Thank you for your response to my previous emails.

I am afraid that I disagree with your position. Clearly under section 1.7 of the Council’s Information Statement which you were so kind as to forward, you are delegated the authority “to make decisions on a number specified administrative and policy matters” which would of course include communication with residents and the forwarding of  information as requested.
I note from the information statement that you do not keep the actual list of delegations on file in the library for residents and ratepayers to easily peruse.

Given your remarks below that ” As the documents you have described are not included in the list available for public viewing, it would be improper of me to acquiesce to your informal request“, clearly Mr Deb you appear to me intent on being obstructive to my very reasonable “formal” request for information conveyed by the earlier email correspondence.

That correspondence of course simply requests a copy of the statutorily required insurance policy to protect elected members under section 80 of the Local Government Act for each of the years of 2007 to 2010 which should have been forwarded to me whilst a serving elected member, but which I clearly have no record or recollection of receiving.

To circumvent this stalemate, I have asked the Hon John Darley, MLC to obtain the information for me under Parliamentary Freedom of Information Provisions. I trust you will be more cooperative with a fellow resident and ratepayer of Burnside, than you have been with me.

Yours sincerely

Jim Jacobsen
31/05/2012