LGO pressures council over refusal to pay £25k after bankruptcy maladministration

The Local Government Ombudsman has sought to turn up the heat on a council over its refusal to pay the recommended £25,000 in compensation to a man made bankrupt without having proper regard to his mental health.

In May 2011 the Ombudsman, Dr Jane Martin, called on Torbay Council to pay the sum after finding it guilty of causing serious injustice.

But the local authority has only offered to pay £1,000.

Dr Martin has now issued a second report, saying that the £25,000 payment was recommended in order to put the complainant back in the position he would have been in had no maladministration occurred.

The sum also takes into account the financial costs incurred, the distress caused, and the time and trouble in pursuing the complaint.

In her original investigation the LGO agreed that Torbay had had difficulties communicating with the man, who did not open his post.

However, none of the council’s officers visited him at his home.

A bailiff noted warning signs that might reasonably have alerted Torbay that the man was unwell. The bailiff also later advised the council that the man was suicidal.

Torbay did not act on this concern. It did take proceedings against the man over a council tax debt of £2,248.

The LGO said the council could have reconsidered its actions at any time in the light of information on the debtor’s state of health but failed to do so and was guilty of maladministration.

The Ombudsman argued that if Torbay had reconsidered its approach, the complainant would not have incurred costs in the region of £24,000.

In its publication Focus report on the use of bankruptcy for council tax debts, the LGO highlighted measures a council should take to determine whether bankruptcy is a fair and proportionate action before proceeding.

These include:

• making reasonable efforts to contact the debtor in person by a home visit if necessary;
• a case review by a senior officer that includes gathering sufficient evidence about the debtor’s personal circumstances and considering whether those circumstances warrant them being protected from recovery action.

Philip Hoult