Torbay Council has refused to pay the full compensation recommended by the Local Government Ombudsman to a man it had made bankrupt without having proper regard to his mental health.

Ombudsman Dr Jane Martin found that the Council’s failure caused serious injustice, as it led to the debtor incurring costs of £24,000, and so she recommended the Council to pay £25,000 compensation: the Council has offered to pay £1,000.

In response, the Ombudsman has taken the unusual step of issuing a second report, calling on the Council to reconsider its position and remedy the injustice by paying the man the full £25,000.

In her original report, issued in May 2011, the Ombudsman had found that a bailiff noted warning signs that might reasonably have alerted the Council to the possibility that the debtor was unwell, and subsequently the bailiff advised the Council’s solicitor that the man was suicidal. However, the Council took no steps to act on this concern.

The Ombudsman said: “There is no evidence that the complainant was capable of dealing with his own affairs at the time of the recovery action, or that bankruptcy was a considered decision taken in the knowledge of potential mental illness after the due weighing of all pertinent facts.”

The Local Government Ombudsman’s Focus report on the use of bankruptcy for council tax debts refers to the serious consequences of bankruptcy for affected individuals and the importance of particular measures a council should take to determine whether bankruptcy is a fair and proportionate action before proceeding. Such measures include making reasonable efforts to contact the debtor in person by a home visit if necessary and 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.

The man’s council tax debt was £2,248. 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 that was maladministration. Had it done so, the complainant would not have incurred the high costs of some £24,000.

The Ombudsman recommends payment of £25,000 in order to put the complainant back in the position that he would have been in had no maladministration occurred, taking account of both the financial costs incurred, the distress caused, and time and trouble in pursuing the complaint.

Report ref no 10 002 564 FR

Article date: 05 April 2012