Government will adopt all recommendations made by an independent review of its legal fee indemnity policy for public servants, announced Attorney General Shirley Bond.

Stephen Toope, president and vice-chancellor of the University of British Columbia and former dean of McGill University's faculty of law, was appointed in May 2011 to conduct a review of the policy instituted in the 1980s that assists with legal expenses arising from the performance of their employment.

Toope has reviewed the history and purpose of indemnity arrangements in British Columbia and has canvassed the equivalent programs across Canada and in other Commonwealth jurisdictions. His report unequivocally recognizes the value of such programs to effective government and to the public.

In particular, Toope has made recommendations for dealing with the handful of extraordinary criminal cases which, while forming only a tiny proportion of indemnities granted, have consumed a significant share of the program's resources. Toope's recommendations to help control these costs at arm's length from government will all be implemented.

In keeping with Toope's recommendations, provincial civil servants who plead guilty or are convicted of criminal charges will be required to repay the indemnity.

Government fully supports the recommendations and will introduce new regulations under the Public Service Act and Financial Administration Act as soon as possible and before the end of the fiscal year.

Recommendation highlights:

• Supports having an indemnity policy and recommends it be publicly available.
• Supports the government indemnifying employees for criminal and non-criminal matters.
• Suggests the government develop a specific policy for criminal matters and that the Province pay the employee's legal fees throughout the entire criminal process.
• If the employee is convicted or pleads guilty to a criminal matter, there would be mandatory repayment of the legal fees incurred by the Province.
• Supports the government's approach to defamation.
• Supports the government's management of civil cases and recommends high-cost criminal cases be managed externally.
• Suggests the government's approach to covering legal fees be transparent and consistent.

Learn More:

• Professor Toope's full report: www.ag.gov.bc.ca/public/Toope_Report_10_19_11.pdf

• Existing (non-criminal) indemnity policy - Terms and Conditions for Excluded Employees: http://www.bcpublicserviceagency.gov.bc.ca/policy/terms_conditions/Part_10.htm#73

• Indemnities in criminal matters were provided on a case-by-case basis under the Financial Administration Act, section 72: http://www.bclaws.ca/EPLibraries/bclaws_new/document/ID/freeside/00_96138_01#section72
  

Two backgrounders follow.

Contact:

Dave Townsend
Government Communications and Public Engagement
Ministry of Attorney General
250 387-4962
250 889-5945 (cell)

BACKGROUNDER 1

Indemnity review recommendations

Summary of recommendations:

Recommendation 1: Purposes and principles underlying indemnities: It is in the Crown's interest and is fundamentally fair to protect public servants from personal financial loss through indemnities - Public servants make important decisions that affect people's lives. Concern about potential legal action should not be allowed to impair the proper exercise of their functions. Indemnities protect government from liability, allow government to supervise and monitor costs in complex civil actions and motivate employees to co-operate fully.

Recommendation 2: Transparent and accessible policy: Detailed policy or regulations setting out the criteria and process for granting indemnities should be publicly available - Ministry of Attorney General officials have worked diligently, in the absence of formal policies and regulations and using firmly established common law methods, to exercise discretion in responding to indemnification requests. The results have been principled, but it is time for an explicit and fully co-ordinated policy and regulations.

Recommendation 3: Availability of non-criminal indemnities: Indemnities should be available in a range of non-criminal cases - Indemnities should be available to all public servants, order-in-council appointees and cabinet members for torts, defamation actions, human rights proceedings, criminal or regulatory offence prosecutions, complaints before professional and regulatory bodies, where they are called to be witnesses in legal proceedings involving government and inquiries. Special considerations are involved in criminal matters and when a public servant or other official seeks to sue for defamation.

Recommendation 4: Conditions for non-criminal indemnities: Indemnification is not an automatic entitlement. Conditions must be met before a public servant can ask for and receive indemnification - For civil actions. professional, regulatory and human rights proceedings, public servants should have acted in good faith and within the scope of their duties or in the course of their employment. They should not have been acting against government's interests. "Good faith" includes acting "honestly, openly and without malice or ulterior motive."

Recommendation 5: Discretion in the granting of non-criminal indemnities: Non-criminal indemnities should be granted when specific criteria are met - Sec. 73 of the Public Service Agency Terms and Conditions should be applied to non-criminal indemnities currently granted under the Financial Administration Act. It should apply to cabinet members, as well as employees. This would provide predictability, assure employees know they are valued and encourage them to fulfill their jobs without fear of litigation.

Recommendation 6: Indemnities in defamation cases: The approach to defamation in s. 73 of the PSA Terms and Conditions should continue - When public servants are acting in good faith and within the scope of their duties or employment, they should be indemnified to defend their and government's interests if they are sued in defamation. Civil servants are subject to intense public scrutiny and may be targeted by ill-considered, ill-judged and perhaps even defamatory remarks they may not be in a position to respond to. Regardless, public funding of a defamation action by a public servant should be rare, discretionary and only justified to protect the public servant and government's interests. Funding should be even more limited for cabinet members, who can more easily engage in public debate.

Recommendation 7: Criminal indemnities: (a) A specific policy regarding the indemnification of public servants in criminal matters should be developed. That policy should allow for indemnification throughout the entire criminal process, up to the determination of innocence or guilt - Public servants should be indemnified throughout the entire criminal process, until they are proven guilty or innocent. By trying to decide if an employee acted honestly or in good faith before granting an indemnity, government runs the risk of pre-judging guilt. Knowing a public servant could lose their indemnification coverage could also influence Crown's decision whether to charge the person.

(b) Only one condition need be met before granting an indemnity in criminal matters. The public accused servant must have been acting within the scope of duties or in the course of employment - The only condition that should apply in criminal cases is whether the act or omission took place "within the scope of their duties or in the course of their employment." Indemnification of public servants in criminal cases that are not associated in any way with work must be avoided.

Recommendation 8: Discretion in the granting of criminal indemnities: In the criminal law context the discretion to grant or refuse indemnities to public servants defending against a criminal charge should be very limited - A public servant must be presumed innocent for the purpose of granting an indemnity. The only question to be addressed should be if the circumstances that led to the charge were within the scope of their duties or in the course of employment.

Recommendation 9: Managing the cost of indemnification: (a) Civil cases should continue to be managed as they are now. High cost criminal cases should be managed externally - Most civil cases can be managed by government because they are not usually complex or costly. A different approach is required for complex criminal cases, where costs may escalate dramatically. Legal Services Society (LSS) should be requested to manage criminal cases expected to cost more than $175,000 because it has an established large case management program. When LSS is unable to manage a case, an external manager should be appointed who can apply an approach modelled on LSS', using a similar fee scale.

(b) Fees should be transparent and consistent - Rates for legal counsel in indemnity cases should be consistent with LSS' large case management model. Government should avoid one-off agreements for payment of legal costs.

Contact:

Dave Townsend
Government Communications and Public Engagement
Ministry of Attorney General
250 387-4962
250 889-5945 (cell)

BACKGROUNDER 2

Indemnity policy review - Terms of reference

Introduction

The present formal indemnity policy is set out in section 73 of the Public Service Agency's Terms and Conditions for Excluded Employees ("PSA Terms"), and relates to civil litigation (non-criminal) matters only.

In addition, indemnities in criminal and other matters have been provided case by case on an ex gratia basis through indemnities under Financial Administration Act, section 72.

The indemnity policy applies to excluded employees, and appointees under the Public Service Act as well as to former excluded employees and appointees. It also applies to members of Executive Council and officers of the legislature in the same manner and to the same extent as excluded employees. It does not apply to bargaining unit employees, as they are covered by the terms of the applicable collective agreements. It also does not apply to Members of the Legislative Assembly (MLAs) in that capacity.

Purpose and scope of review

The Attorney General has requested an independent review of the provincial government's current policy and practice (the "Policy") regarding the indemnification of its excluded employees and others for legal expenses arising from the performance of their employment.

In summary, the purpose of the review is to consider and answer these questions about the Policy:

What is the objective of the Policy?

• How does it work?
• Who is indemnified?
• Under what circumstances?
• Whether the Policy is fair and how it compares to other jurisdictions?
• What, if any, changes need to be made?

This review is to consider the rationale for the Policy, the history of the development of the Policy, how it has been applied in the past, and the need for indemnity arrangements from a public administration perspective.

The review should recommend the circumstances in which indemnity arrangements should be applied in respect of civil matters, and should separately consider an appropriate policy for criminal matters. Factors to be considered are further outlined below.

Specific considerations

1. In non-criminal cases, the review should consider the various situations in which a public employee may be faced with a legal challenge arising in the performance of their employment. These include a public servant who becomes a defendant or plaintiff in a civil action (including in defamation actions), is a witness in legal proceedings involving the government, is subject to prosecution for a regulatory offence, is a respondent in professional body proceedings or in human rights proceedings. The review should provide guidelines to be consistently applied in any circumstance where coverage is appropriate.

2. In the criminal context, the review should consider whether there are circumstances in which it is appropriate for government, rather than the public servant, to bear the legal costs involved and if so, provide policy guidance regarding both the circumstances and the approach (for example, whether there should be an indemnity or reimbursement, and if indemnity, whether upon a guilty plea or conviction repayment should be required).

3. Where alternate means of legal expense coverage exist, they should be considered, as well as the possibility in criminal proceedings where a court may order public funding of defence costs (e.g. "Rowbotham" orders).

4. The review should consider the approaches taken by other public sector employers in BC, in other Canadian provinces, by the federal government, and in England, Australia and New Zealand, in order to provide "best practices" recommendations. The reviewer should also consult with the Legal Services Society of British Columbia about how they administer legal counsel retainers and manage costs.

5. For any circumstances that the review recommends coverage in some form, there should be guidelines, such as who should determine eligibility for coverage, what factors are appropriate or relevant (for example, the presumption of innocence in criminal cases) and what measures should be taken when arranging for and administering legal counsel retainers in order to better control costs, ensure appropriate review of billings, and protect solicitor-client privilege, confidentiality and privacy.

6. If the review contemplates limitations on legal counsel retainers, it should discuss whether a limitation or refusal of coverage may face judicial review. The review should also provide guidance regarding any conditions or requirements that should apply, such as repayment, appropriate security and termination of coverage.

7. The reviewer is at liberty to consult with any part of government, including the Legal Services Branch, the Public Service Agency, and the Risk Management Branch, to understand the evolution and application of the Policy, as well as the circumstances in which the Policy has been previously applied.

8. The final review recommendations should:
(a) consider the legal issues, criteria, and principles relating to indemnity coverage, the benefits and costs of providing such coverage, the consequences of not providing coverage, and the need to achieve an appropriate balance between the interests of taxpayers and public servants;
(b) if coverage in any form is recommended, provide guidelines and reasons for the recommended coverage;
(c) to the extent possible discuss the potential cost impacts of the recommended approach; and
(d) discuss the benefits, disadvantages, and considerations that arise under the various options for overseeing any indemnity or other coverage arrangements, including oversight by the Legal Services Branch, another branch of government, the Legal Services Society of B.C. or another outside agency.

9. The reviewer's report is to be submitted to the Attorney General on or before October 28, 2011 and will be made public within 30 days of being received by the Attorney General.

10. Although the reviewer will not receive any remuneration for conducting this review and preparing the report, the Ministry of Attorney General will arrange resources, including external legal counsel familiar with the Policy, and support services, to assist in locating and reviewing existing documents, and researching the policies of other jurisdictions and public agencies.

Contact:

Dave Townsend
Government Communications and Public Engagement
Ministry of Attorney General
250 387-4962
250 889-5945 (cell)