It also ended with a big bill for ratepayers, as legal costs covered by the Dunedin City Council and the settlement added up to more than $27,000.
Cr Andrew Whiley retracted claims he had made about Mosgiel-Taieri Board Community Board chairman Andrew Simms last year relating to a proposal to sell Aurora Energy.
Mr Simms was a leading critic of the council’s proposal, which did not end up going ahead, and he would later become a mayoral candidate.
Cr Whiley had suggested Mr Simms tried and failed at a meeting to get the board to oppose a sale - a claim now withdrawn.
He also claimed Mr Simms had used the board’s Facebook page to push his own cause about Aurora - Cr Whiley conceded this was not accurate, either.
Both claims were referenced in an article by the Otago Daily Times in September last year and Mr Simms issued defamation proceedings against Cr Whiley.
The ODT was not a party to the proceedings.
A $6000 settlement was reached and paid to the Dunedin Night Shelter at Mr Simms’ request.
"I accept that I should not have made these two allegations and retract them fully," he said in an email on June 5.
"I also unreservedly apologise to you for the harm that this may have caused."
The city council confirmed yesterday it had covered Cr Whiley’s legal expenses.
Council chief executive Sandy Graham said the council had received legal advice that it was obliged to indemnify Cr Whiley for his legal costs and any damages.
The requirement applied to elected representatives facing civil proceedings as defendants and did not extend to plaintiffs, she said.
Ms Graham said the council had insurance for such situations, but the excess was $25,000.
"In this case, total legal costs and the settlement sum total $27,481," she said.
"This includes legal costs of $21,481 plus GST."
There is precedent for the council covering elected representatives’ costs when they are drawn into legal proceedings.
In 2017, the council paid Cr Lee Vandervis $50,000 to settle a defamation case after then-mayor Dave Cull called Cr Vandervis a "liar" and ejected him from a meeting in 2015.
The cost was the excess of the council’s professional indemnity insurance policy.
In Cr Whiley’s case, Mr Simms said he found out about costs for ratepayers in April this year and, though determined to protect his reputation, he advised his lawyers to settle the matter.
The settlement covered half of his legal costs and included a clause for Cr Whiley to get a retraction in the ODT, he said.
Mr Simms said he was invited to a meeting with Ms Graham in May about this year’s election and towards the end of the discussion she raised the defamation matter.
"You expressed an opinion that the printing of Cr Whiley’s retraction and apology in the ODT was unlikely to benefit myself, Cr Whiley or the DCC and that in your opinion the matter was long forgotten by the public," Mr Simms said in an email to Ms Graham on May 28.
"You asked me to consider releasing Cr Whiley from the requirement to make his apology public and to advise you of my decision."
Mr Simms said he was "inclined to agree that reigniting the issue in public is unlikely to yield any benefit to anyone".
The settlement was then adjusted to remove the requirement for a public apology and retraction in the ODT, although he still sought an apology and retraction be sent to himself and he would be free to use the content how he wished, he said.
Mr Simms added the council covering Cr Whiley’s costs from ratepayer funds "created an imbalance and afforded Cr Whiley the ability to continue the matter without risk to himself".
"As part of that meeting, I also wanted to make sure Mr Simms understood the settlement he was receiving was ratepayer-funded," she said.
"At all times, I was clear that how he proceeded was his decision."
Mr Simms said false allegations were made about him and protecting his reputation was important.
Cr Whiley said he accepted he was mistaken in his initial understanding of the issues.
"Mr Simms and I have since had a productive coffee where for over 90 minutes we talked about many council issues," he said.
"This was a very stressful process for myself, my wife and family.
"The issues have been resolved and everyone can move on."
