Parish council knowingly breach covenant, protecting how net proceeds of a sale be spent

Question

Would this void parish council's liability insurance? If so, would individuals on Parish council be liable.

Answer 1

Neither of those two questions is easy to answer.

It isn't clear what liability might arise where support from the insurer would be needed. Without understanding the nature of the liability, it is hard to know whether cover would be available. If councillors recklessly put the council at risk, then it is possible that insurance cover would not be available.

In most cases, councillors are not liable for council costs. They can become liable if they deliberately act recklessly. It is rare for parish councillors to be held personally liable.

There are circumstances where it might be deemed reasonable to spend money in a different way from that specified in a covenant. The council could be faced with making a judgement as to whether the original intention remained sensible and appropriate. Any breach of a covenant is almost certainly a civil matter, and so no liability will arise unless some party takes legal action against the council.

All the above is somewhat speculative, based on limited information. For greater assurance, you would need to take the full case and seek professional legal advice.

Comments

Thank you. In a nut shell, Parish wish to spend money on one project, that directly harms another. This is in direct conflict with a 6 week old covenant. The possibility of personal liability might be enough to make them reconsider. Thank you for your help.