Summary: There was no evidence of fault in the Council’s deduction of outstanding rent arrears from an agreed settlement, relating to the loss of the complainant’s belongings. The Ombudsman has not investigated a complaint about the loss of the belongings, because it is made too late. For this reason, the Ombudsman has completed his investigation.

The complaint

1. The complainant, to whom I will refer as Miss R, says the Council:

• lost her belongings, after taking responsibility to store them under its homelessness duties; and
• inappropriately decided to deduct her rent arrears from compensation it agreed to pay her.

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The Ombudsman’s role and powers

2. We investigate complaints about ‘maladministration’ and ‘service failure’. In this statement, I have used the word ‘fault’ to refer to these. If we are satisfied with a council’s actions or proposed actions, we can complete our investigation and issue a decision statement. (Local Government Act 1974, section 30(1B) and 34H(i), as amended)
3. We cannot investigate late complaints unless we decide there are good reasons. Late complaints are when someone takes more than 12 months to complain to us about something a council has done. (Local Government Act 1974, sections 26B and 34D, as amended)

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What I have investigated

4. I have investigated Miss R’s complaint about the handling of the compensation. I have not investigated the loss of her belongings itself, for reasons I will make clear in the Analysis section of this statement.

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How I considered this complaint

5. I reviewed Miss R’s correspondence with the Council, including that sent on her behalf by her MP and another representative. I have also reviewed her inventory of her belongings and their claimed value, copies of her rent accounts for a number of different properties, and letters sent by the Council relating to rent arrears.
6. I also sent a draft copy of this decision to each party for their comments.

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What I found

7. In 2016, the Council took a quantity of Miss R’s belongings into storage, as part of its duty under homelessness legislation. Sometime after this, the property was destroyed, for reasons which are unclear.
8. On 8 May 2018, Miss R’s representative contacted the Council. She asked the Council to take responsibility for the loss of Miss R’s property, and provided an inventory compiled by Miss R. The total value, according to the inventory, was £4039.48. Miss R asked the Council to pay £5500, to compensate her for the property and for her distress at its loss.
9. The Council accepted liability for the loss of the property. There followed a period of negotiation between Miss R, her representative and the Council; eventually, on 4 September, it was agreed the Council would pay £2500 in full and final settlement.
10. On 9 October, the Council informed Miss R’s representative it intended to deduct £1396.76 from the £2500. This was because Miss R owed this to the Council in rent arrears for a number of different properties. The Council therefore said it would pay her £1103.24.
11. Miss R’s representative emailed the Council on 23 October to say she would accept the £1103.24, but had lodged a complaint on 11 October to pursue the deducted balance.
12. The Council responded to Miss R’s complaint on 6 November. It said Miss R was receiving the full settlement of £2500, but the Council would deduct money to account for her debt. It said it had informed Miss R’s representative of its intention to do this at the first opportunity.
13. Miss R’s representative asked the Council to escalate the complaint to stage 2 on 9 November. She said the Council had not disclosed it would deduct debts from any offer of compensation it made, and had in fact not even informed its own legal representative of this. She complained the settlement had been agreed on 4 September, and it was not until 8 October, after Miss R had chased the Council, it had informed of its intention to make deductions.
14. The representative also highlighted the Council had failed to apologise for its loss of Miss R’s belongings, which included her children’s personal effects.
15. The Council responded on 19 December. It said it was ‘standard practice’ for the Council to check to determine if any debts existed before paying compensation. It acknowledged this point should be made clear before any payment was made, and apologised if that had not been the case here. However, it said the Council was prepared to make a full payment and then pursue Miss R for her debt, when it could offset the debt against its compensation.
16. Miss R referred her complaint to the Ombudsman on 8 March 2019. She complained about the original loss of her belongings, and said the Council had not adequately recorded the items it was storing. She also complained about its handling of the compensation, and reiterated that it was never made clear the Council would deduct debts from the agreed figure. Miss R said she had previously entered into a repayment agreement of £21 per month for one of the debts, and the deducted figure was insufficient for her to replace her belongings.

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Analysis

17. Miss R’s complaint has two elements: the original loss of the belongings, and how the Council has handled the compensation settlement.
18. As explained at paragraph 3, the Ombudsman expects complainants to approach him within 12 months of becoming aware of the main issue. The Ombudsman can disapply this rule if he considers it appropriate, but would need to be satisfied there was a good reason the complainant did not approach him earlier. He must also be satisfied it is still possible to undertake an effective investigation.
19. As I understand it, Miss R was unaware of the existence of the Ombudsman at the time the Council originally stored, and then destroyed, her property. However, I can see Miss R was already, at that time, being supported by a specialist housing charity, which I would expect to be aware of the Ombudsman.
20. Even accepting this point, I cannot see what useful purpose would now be served by an investigation into the loss of Miss R’s property. The main aim of such an investigation would be to determine whether the Council was liable for it, but the Council has already accepted liability.
21. And while I appreciate Miss R does not feel the Council’s inventory was made properly, it is clear there is no other objective record of the property it stored. This would come down to Miss R’s word against the Council’s, and I could not uphold a complaint on that basis.
22. So, for this reason, I will not investigate the loss of the property itself. I will therefore turn to the second part of Miss R’s complaint.
23. Between May and September, the Council was in negotiation with Miss R, through her representative, to agree a compensation figure. This negotiation appears to have taken the form of ‘haggling’; each party starting with a high or low figure, then gradually working towards an agreement in the middle.
24. I understand the Council could not simply accept Miss R’s valuation without supporting evidence. I also understand the Council’s own record was quite different from the list of property Miss R provided.
25. But I am not convinced it was appropriate for the Council to negotiate a figure in this manner. This was not a business arrangement, but an attempt to provide Miss R with compensation for missing property. As imprecise as this would have been, it would have been better if the Council had attempted to calculate a figure, based on what it considered Miss R’s property was actually worth.
26. I do not propose to make a finding of fault on this point. There is no rule which says the Council cannot negotiate in this manner, and so I cannot say it should not have done so. But I would ask the Council to reflect on the point I have made.
27. In either case, I do not think this represents an injustice to Miss R. The Council could defensibly have based such a calculation solely on its own inventory. And having reviewed this myself, it does not appear likely this would have produced a figure significantly different from the £2500 it eventually agreed.
28. So, even accepting my doubt about the appropriateness of the Council’s approach to this, I do not consider it has changed the outcome for Miss R.
29. Once the figure was agreed, the Council then informed Miss R it intended to deduct £1396.76 from it for rent arrears. This left a figure of £1103.24.
30. The Council’s stage 2 response says this should have been made clear before the payment was made. I am confused about this comment – the payment had not been made at the date of the response, and in fact, to my knowledge, has still not. So there is no question the Council made clear its intention to deduct the arrears before it made payment.
31. The question is actually whether the Council should have made this clear during the negotiation process. I consider this point to have merit – the negotiation was protracted. There does not appear to have been any reason not to have warned Miss R then, even speculatively, of the possibility of deductions for debt. This would have at least helped soften the blow when it eventually came.
32. However, Miss R considers the Council should not deduct anything from the agreed settlement. I cannot agree with this.
33. The Council has provided me with a number of letters sent to Miss R, over the course of several years, which point out her arrears for different properties. Most of these are for small amounts, but one is for more than £1300.
34. Miss R says she entered into an agreement to repay the £1300 arrears at a rate of £21 per month. The Council has acknowledged this in its response to my enquiries, and said the agreement was made in April 2018. However, it has provided me with an up-to-date copy of the account record for that property, which shows Miss R has not actually maintained this agreement since she made it.
35. Ultimately, I cannot see what sense it would make, nor how it would benefit Miss R, if the Council paid her £2500, and then began pursuing her to repay £1300 of it. She would be in exactly the same position she is now.
36. I am satisfied the Council’s failure to inform Miss R of the deduction policy earlier is fault. I cannot see any reason why it could not have done this, and it clearly caused her a degree of distress when she found out.
37. But, in the material sense, I do not consider this caused her an injustice.

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Final decision

38. I have completed my investigation with a finding of fault which did not cause injustice.

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Investigator's decision on behalf of the Ombudsman