Failings by Torbay Council led it to make a man with mental health problems bankrupt.
The Ombudsman said a bailiff noted warning signs that might reasonably have alerted the Council to the possibility that the debtor was unwell. The Council’s failure had serious consequences, as the debtor incurred costs of £24,000.
While the Ombudsman recognised that the Council has a duty to its taxpayers to try to recover money owed to it, she said that “In making decisions about debt recovery, I expect that Council officers should make reasonable efforts to contact the debtor in person.”
The Council had difficulties engaging with the complainant. It was known that he did not open his post but left it to accumulate over a long period. None of the Council’s own officers visited ‘Mr C’ at home. The bailiff advised the Council’s solicitor that Mr C was suicidal.
Mr C complained that the Council took bankruptcy proceedings against him in response to a council tax debt of £2,248 without having proper regard to his personal circumstances, in particular his mental health.
The Ombudsman said, “I recognise that, having obtained liability orders and having tried to collect its debts through the use of bailiffs, the Council was short of options as to how it could collect the money it was due. It is clearly not the case that bankruptcy should never be contemplated, but the consequences bankruptcy can impose upon a debtor are severe and in selecting options for recovery the impact on the individual debtor should be taken into account.”
The Ombudsman did not consider the Council followed due process in making Mr C bankrupt. She found that the Council failed:
- to document its decision making in respect of the recovery action by way of bankruptcy, and
- to reconsider its decision to pursue bankruptcy when information came to light that Mr C might be considered suicidal.
The Ombudsman considered that, had such failings not occurred, then the Council would not have continued with bankruptcy proceedings against Mr C and he would not have incurred the high punitive costs of some £24,000 associated with that action.
In order to put Mr C in the position that he would have been in had no maladministration occurred, and taking account of both the financial costs incurred, the distress caused and time and trouble taken, the Ombudsman recommended that the Council issue Mr C with a formal apology and pay him £25,000.
The Council did no at first agree to pay the full amount of compensation, and the Ombudsman issued a further report on the investigation on 28 March 2012.
Subsequently, the Council agreed to fulfil the remedy in full.
LGO satsified with Council's response after further report: 25 June 2012