Coulson v Newsgroup Newspapers Ltd

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Overview

A fairly standard indemnity in a compromise agreement did not oblige an employer to pay an ex-employee’s legal expenses associated with a criminal investigation into action allegedly taken by him when he was an employee.

This case arose out of the arrest and police interview of former News of the World editor Andy Coulson in relation to allegations of conspiracy to intercept communications and unlawful payments to police officers. Mr Coulson asked the High Court to clarify whether his compromise agreement obliges his former employer to pay the costs and expenses he incurs in defending the criminal allegations. The legal expenses indemnity in the agreement provided for reimbursement of legal expenses ‘ which arise from his having to defend, or appear in, any administrative, regulatory, judicial or quasi-judicial proceedings as a result of his having been Editor of the News of the World’.

The High Court held that although the compromise agreement was wide ranging and sought to protect Mr Coulson from incurring expenses associated with the ‘ordinary occupational hazards’ of being an Editor, it did not cover criminal allegations made against him personally. He was required to act lawfully within his employment and as such the indemnity could not have been intended to cover criminal activities or personal wrongdoing.

Comment

The wording of this indemnity clause is standard in most compromise agreements and this is welcome clarification and comfort for employers that such wording will only cover professional fees and expenses arising from lawful activities flowing from an employee’s employment. Note however that Mr Coulson has been given permission to appeal to the Court of Appeal so this may not be the end of the matter.

Coulson v Newsgroup Newspapers Ltd