Former News of the World editor Andy Coulson took his ex-employer to the High Court today over its refusal to reimburse his legal fees arising from the phone-hacking affair.
Mr Coulson, 43, is suing News International subsidiary News Group Newspapers over the construction of a clause within the severance agreement entered into when he resigned from the paper in February 2007.
His counsel, James Laddie, told Mr Justice Supperstone in London that it stated: "To the extent that it is lawfully able to do so, the employer will pay any reasonable professional (including, without limitation, legal and accounting) costs and expenses properly incurred by the employee after the termination date which arise from his having to defend, or appear in, any administrative, regulatory, judicial or quasi-judicial proceedings as a result of his having been editor of the News of the World."
He asked for a declaration that NGN, which stopped reimbursement in August, "must pay the professional costs and expenses properly incurred" by Mr Coulson "in defending allegations of criminal conduct" during his editorship.
Mr Coulson, who was arrested in July over the allegations and released on bail, resigned as Prime Minister David Cameron's director of communications in January, saying that coverage of the scandal was making it too difficult for him to do his job.
Mr Laddie emphasised today: "I should make it clear at this stage that the claimant denies any allegations of wrongdoing."
He said that NGN's broad position was that, whatever the clause meant, it did not cover criminal allegations.
Mr Coulson was not in court for the contested hearing, which is due to last up to a day.
Mr Laddie said that Mr Coulson's construction of the clause was supported by what might be presumed of both sides' intentions at the time that they entered into the agreement.
This was that they had a joint interest in taking steps to protect Mr Coulson from allegations of wrongdoing whilst he was the editor and to advance his defence against such allegations - not least because NGN would be vicariously liable and might also bear corporate criminal liability for any allegations made against its senior directors.
Such allegations were "not entirely hypothetical" when the agreement was entered into in early 2007, as the convictions of reporter Clive Goodman and investigator Glenn Mulcaire could not eliminate the possibility that further proceedings might ensue in relation to activities at the News of the World.
It was common ground that the parties' joint interest was served by NGN reimbursing Mr Coulson's legal fees in the event that he was involved in regulatory proceedings arising out of his editorship, such as participation in the Leveson Inquiry.
Such interest would be served to at least the same degree by reimbursing his legal fees in the event of threatened civil and criminal proceedings in which the conduct of the paper during his editorship was challenged, Mr Laddie said.
"Accordingly, the parties' commercial incentives reflect the ordinary and natural meaning of the clause, which is the meaning for which MrCoulson contends."
He added that NGN's construction of the clause was offensive to a fundamental principle of English criminal law - that a man was innocent until proven guilty.
If its construction was adopted, it would mean that NGN would bear no responsibility for the payment of Mr Coulson's legal costs even where no charges were preferred or where he was acquitted of criminal charges.