3.4.1 Personal liability

Indemnity of members

1. Members of Auckland Council (including local board members [1] and appointees to council committees or other subordinate decision-making bodies) are indemnified by Auckland Council for the following [2]:

   • costs and damages for any civil liability, as long as the member was acting in good faith and in pursuance of the responsibilities or powers of Auckland Council (or relevant committee or other subordinate decision-making body)

   • costs arising from any successfully defended criminal action relating to acts or omissions in his or her capacity as a member

Personal liability for losses incurred

1.  Elected members may be liable (jointly and separately) for the losses of Auckland Council where [3]

   • council money has been unlawfully spent

   • an asset has been unlawfully sold or otherwise disposed of by the council

   • a liability has been unlawfully incurred by the council

   • the council has intentionally or negligently failed to enforce the collection of money it is lawfully entitled to receive.

2. Members are only liable for such losses if the Auditor-General issues a report on those losses to the Minister of Local Government [4]. The Auditor-General has not issued a report on losses incurred by a local authority since the Local Government Actwas enacted in 2002 (although the possibility has been considered) [5].
3. If the Auditor-General issues such a report and members do not pay the amount of the loss to the Crown or to Auckland Council within a reasonable time, the Crown may take proceedings against any or all of the members to recover the losses [6]. Any amount recovered by the Crown is payable to Auckland Council (less any costs of recovery incurred by the Crown) [7].
4. However, individual members are not liable if they prove the act (or failure to act) that resulted in the loss occurred: [8]

   • without their knowledge

   • with their knowledge but against their protests made at or before the time when the loss occurred

   • contrary to the manner in which they voted on the issue

   • in circumstances where they acted in good faith and in reliance on reports, information, or professional or expert advice given by:

     1. an Auckland Council employee whom they reasonably believed was reliable and competent in relation to the matters concerned
     2. a professional advised or expert in relation to matters that they are reasonably believed to be within the persons professional or expert competence.
5. A local board member can be liable only in respect of a matter that is the responsibility of their local board [9].

Personal liability for costs

1. Members may also be liable to pay the costs and expenses of a proceeding commenced by the Attorney-General, where Auckland Council is held to have disposed of or dealt with property wrongfully or illegally, applied its property to an unlawful purpose, or permitted the reserves it manages to be used for unlawful purposes [10].
2. Such costs must be paid, by order of the court, by the members who, by voting or otherwise, agreed to the acts concerned [11].
3. A member will not be liable where they prove that, in doing the act concerned, they [12]:

   • acted in good faith and in accordance with written legal advice from a lawyer acting for Auckland Council or

   • acted honestly and reasonably, and having regard to all the circumstances of the case, it would be fair for the member to be excused.

 

  Previous | Next