Insurance advised for council officers after liability ruling

Chris Fogarty reports

Council officers engaged in joint commercial ventures should take out directors' insurance to protect themselves from any financial liability, says leading Nabarro Nathanson partner and local government expert Ray Ambrose.

His warning comes after the High Court last month found two Waltham Forest council officers personally liable for over £1m in debts after the failure of a joint venture company of which they were directors.

The judge ruled they were not covered by the council's indemnity because Waltham Forest's decision to guarantee the company was ultra vires.

Commenting on the decision, Ambrose said that council officers should take out separate insurance if they became involved in commercial developments or joint ventures just in case they were later found to be ultra vires.

"The trouble here is it was not in Waltham Forest's power to get involved in the company in the first place," said Ambrose. "The problem for council officers is: how do they know?"