Ratepayers have been forced to pick up the bill for part of two defamation cases between Port Stephens councillors over comments made in an email.
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The council, riven by personality differences that have found their way to the courtroom, has been forced to call in its insurer to help fund two legal cases between three councillors.
Port Stephens Mayor Bruce MacKenzie and one of his political allies, Cr Paul Le Mottee, both filed defamation suits against fellow councillor and political rival, Cr Geoff Dingle.
The legal imbroglio was sparked by an email sent by Cr Dingle in March 2016.
As Cr Dingle was deemed to be acting in his role as a councillor at the time he sent the email, the council’s insurer accepted responsibility for his legal fees, court costs and any payouts.
Cr MacKenzie, who paid his own legal fees to pursue the case, agreed to settle the suit against Cr Dingle before it went to a full hearing.
The payout to Cr MacKenzie, covered by the council’s insurance, is believed to be about $70,000, plus legal costs.
The mayor told Fairfax Media on Thursday he’d “heard a rumour” that the council’s insurer footed the bill.
“If the insurance company did pay, it’s a bloody disgrace,” he said.
Cr Dingle said he couldn’t comment because one matter was still before the court.
Tomaree Business Chamber president and independent mayoral candidate Ryan Palmer said ratepayers deserved to know exactly how much these cases were costing.
“Relying on council’s insurer to cover some of the costs of these cases will increase the premiums council has to pay,” he said.
“It’s only fair that ratepayers know what is being spent on these disputes.”
Cr Le Mottee, who is funding his case against Cr Dingle, said that if a settlement was reached he did not believe it should be covered by the council's insurance.
“In the event that a settlement was offered up and it was paid by insurance it would be very much a hollow feeling,” he said.
“It wouldn't give you the satisfaction that you've been defamed and that you receive compensation for that.”
When Port Stephens Council was pushing to have the state government consider a merger between it and Dungog, Cr Dingle sent a long email to a Dungog councillor with the subject line “a summary of issues that your Councillors should consider about a merge with PSC”.
The email, which was circulated to other councillors, discussed finances and governance, and made a number of accusations about Cr MacKenzie and Cr Le Mottee.
At the time it prompted the general manager of Port Stephens Council, Wayne Wallis, to accuse Cr Dingle of spreading “misleading” information.
Mr Wallis, who has been the council’s general manager since 2014, followed up the March email with his own detailed missive, responding to what he called “the significant number of factual errors contained in the email”.
While the email war eventually became irrelevant when the state government abandoned its plan to merge Port Stephens, Mr Wallis’s extraordinary intervention into council politics reveals the schism that has developed during a bitterly divided council term in which Cr Dingle has found himself a minority voice against Cr MacKenzie’s allies.
A Port Stephens Council spokesman said he was unable to comment.