Decision : Upheld
Decision date : 29 Mar 2017
The Ombudsman's final decision:
Summary: Mrs X complained on behalf of Y, a young person she fostered, about the Council’s refusal to continue funding legal action to recover money he inherited. The Council was not at fault in the way it reached its decision but it did not communicate it properly to the complainants. The Council has agreed to apologise and make a payment of £100. This is a suitable remedy.
- The complainant, referred to here as Mrs X, complained on behalf of Y, a young person she fostered, that the Council has unfairly refused to pay for legal fees to set up a trust to enable Y to receive money from an inheritance. She says the Council agreed to pursue the matter for him and gave him to understand it would cover the fees.
The Ombudsman’s role and powers
- We investigate complaints about ‘maladministration’ and ‘service failure’. In this statement, I have used the word fault to refer to these. We cannot question whether a council’s decision is right or wrong simply because the complainant disagrees with it. We must consider whether there was fault in the way the decision was reached. (Local Government Act 1974, sections 26(1), 26A(1) and 34(3) as amended)
- We must also consider whether any fault has had an adverse impact on the person making the complaint. I refer to this as ‘injustice’. If there has been fault which has caused an injustice, we may suggest a remedy. (Local Government Act 1974, sections 26(1) and 26A(1), as amended)
- 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)
How I considered this complaint
- I discussed the complaint with Mrs X and considered the information she provided. I considered the information the Council provided in response to my enquiries. I considered the Ombudsman’s decision on Mrs X’s previous complaint on behalf of Y. I shared my draft decision with the Council and the complainant and considered their responses.
- Under the information sharing agreement between the Local Government Ombudsman and the Office for Standards in Education, Children’s Services and Skills (Ofsted), we will share the decision on the complaint with Ofsted.
What I found
- Local authorities have a duty under section 20 of the Children Act 1989 to provide accommodation for any child in need within their area where:
- there is no-one who has parental responsibility for the child;
- the child is lost or abandoned; or
- the person who has been caring for the child is prevented from providing suitable accommodation or care.
unless the person who has parental responsibility objects. A child accommodated this way is a ‘Looked after Child’.
- Local authorities have a duty to continue to provide certain forms of support to care leavers from the age of 18 including:
- a Pathway Plan, to be reviewed regularly and revised as necessary; and
- help with expenses associated with employment, education and training.
- Y came into the care of the Council in 2008 as a Looked after Child when his mother could no longer look after him. He went to live with Mr and Mrs X and they became his family and friends foster carers.
- In July 2011, Mrs X discovered that Y had inherited money from his grandmother. She told the Council. Y’s grandmother had died in 2005 and left a quarter of her estate to Y to be held in trust until he reached the age of 25.
- Y’s aunt (‘the Aunt’) was the executor of his grandmother’s estate. The Council wrote to the Aunt about the money in April 2012.
- In November 2012 the Council instructed solicitors on behalf of Y to try to recover the money. They found that the Aunt had received the proceeds of sale of Y’s grandmother’s house in 2006, but by June 2007 most of the money had gone. As a result of the investigation by the solicitors the Aunt deposited a sum equivalent to 5% of the inheritance with her solicitors. She remained the sole trustee. She had no property in her own name.
- The Council wrote to Y on 11 August 2015. By this time Y had turned 18. The Council explained the result of the investigations so far. It said it had asked the Aunt’s solicitors to transfer the remaining sum to the Council’s solicitors’ account while Y made a decision about who should hold it for him until he reached the age of 25. The Council said it had taken advice from a barrister who advised him about his legal options if he wished to try and pursue recovery of the rest of the money himself. However the Council warned that the barrister’s advice was that the legal route would be expensive and was unlikely to be successful as the Aunt had no assets. The Council explained it had already spent around £10,000 trying to recover the money for him.
- The letter explained that as Y was now an adult, he would need to decide what course of action he wanted to take. He could either instruct his own solicitors to pursue action in the courts, or accept the money currently held for him. The Council asked him to confirm in writing if he wanted to accept the money. If so, it asked him to say who he wanted to nominate to hold the money in trust for him until he turned 25.
- The Council also explained that its solicitors had been in contact with the police who would be starting a criminal investigation against the Aunt for fraud.
- The Council invited Y and Mr and Mrs X to a meeting to discuss the matter if he wished. He attended a meeting with Mrs X and the Council’s Assistant Director of Children’s Social Care in August 2015. The Assistant Director wrote to him on 26 August 2015 to summarise what they had discussed. She said she had explained the result of the solicitors’ and police investigations. Mrs X had expressed her view that the Council had taken too long to pursue these investigations and had not supported Y enough. The Council apologised for the length of time it had taken. But it said this made no difference to the outcome as the money had gone before the Council became involved in Y’s care.
- The letter also set out the next steps. It explained that:
“the local authority would not be funding further investigations or applications in relation to the missing inheritance”.
- It said Y had decided not to pursue further action through the courts as there was little chance of success. However the Council would continue to help him liaise with the police over their investigation and would update him on progress each month. Y had told the Council he wanted Mrs X and one other person to be his new trustees for the recovered money. On this point the letter said “I will pursue with the probate lawyers”, but warned the Council had no legal powers if the Aunt did not agree to sign the trusteeship over to the new trustees.
- In September 2015 Mrs X made a complaint to the Ombudsman on behalf of Y. She complained that the Council had not done enough to help Y recover the money he inherited. As part of its response to the Ombudsman’s enquiries the Council said as Y was now an adult, he was entitled to take over instructions from the Council and arrange to meet the lawyers. The Council said it was happy to ask its legal department to arrange a meeting. It said:
“if [Y] takes over the role of instructing [the solicitors] on his own behalf, that will end the Council’s involvement and funding of the instructions….We just need to hear from Y in this regard”.
- The Ombudsman’s decision, issued in February 2016, was that the Council had taken satisfactory action to promote Y’s welfare when it instructed solicitors to help him try and get his inheritance money back. The Council had duties towards him as a Looked after Child and then as a care leaver. But it did not have sole parental responsibility for him, and the Aunt was responsible for the safe keeping of his inheritance money. The Ombudsman found there was some delay by the Council in instructing the solicitors and seeking advice from a barrister. But the delay did not reduce the likelihood of getting the money back as it had all gone before the Council became involved with Y. So the apology from the Council was a suitable remedy.
- In March 2016 Mrs X contacted the Ombudsman again. She said the Council had told her it would no longer fund the solicitors dealing with the inheritance and would not cover the cost of setting up the new trust. I am not clear how she learned this information. The Ombudsman’s investigator previously dealing with the complaint checked the position with the Council as he had understood when he closed the complaint that the Council would be continuing its involvement. The Council confirmed it had decided to end the legal funding. It agreed to deal with Mrs X’s contact as a new complaint.
- After further discussion with Y and Mrs X, the Council responded to the complaint. It referred to the letter from the Assistant Director dated 26 August 2015 confirming that the Council would not be funding any further investigations or applications. It said its position remained unchanged since then. The Council set out more recent developments it had discussed with Y and Mrs X. It confirmed that further sums had been recovered and placed with the Aunt’s solicitors. It noted that Mrs X had indicated she understood the Aunt would take responsibility for ensuring the money was transferred to the new trustees.
- Mrs X’s response to the Council was that she and the Council had different interpretations of the 26 August 2015 letter. Her understanding was that the Council would continue to pursue the matter of the new trust with the probate lawyers.
- Mrs X contacted the solicitors to discuss what to do next. She agreed with them that they would liaise with the Aunt’s solicitor to draw up a new trust deed. This was done and I understand that the new deed has been signed and is with the Aunt’s solicitor. Mrs X says the solicitors are charging £250 for this work.
The complainant’s position
- Mrs X believes that the Council gave assurances it would continue to support Y until all the money that could be recovered was in trust for him so he could access it when he turns 25. She understood that this support would include funding the cost of setting up the new trust. She takes this view from:
- her understanding of the discussion at the meeting in August 2015,
- the wording at the end of the 26 August 2015 letter about the new trust (“I will pursue with the probate lawyers”),
- statements in Y’s Pathway Plans for the periods June 2015 to January 2016 and January to June 2016 which say:
“The local authority to support [Y] through legal action to locate the whereabouts of his inheritance, support the change of trustees to individuals that can be trusted to protect this money until such a time that [Y] is able to access this….Support in resolving this issue will continue past the age of 18 should it be unresolved by this stage”.
The Council’s position
- The Council says that when it began the action on behalf of Y it hoped this would result in him being able to recover most, if not all, of the money left to him. However by 2015 it was clear that the executor had spent most of the money before Y became a Looked after Child. The Council reviewed its involvement and considered there was no purpose in continuing with legal action as this would only incur further expenses when there was no money left to recover. It had already spent a considerable sum in pursuing the matter and it felt the costs of continuing with the action would be disproportionate to the likely benefits.
- For this reason and because Y was now an adult, it decided to stop funding the legal costs in August 2015. The Council’s view is that it explained its decision in the 26 August 2015 letter, although it accepts it did not explicitly say it would not pay for the transfer of the trust.
- It says Pathway Plans are meant to be reviewed every six months and that the decision to cease the funding occurred during the life of the first Pathway Plan Mrs X mentioned. The next Pathway Plan followed the discussion with Mrs X and correspondence where the Council had explained its position. By referring to ‘support’ the Council did not intend to imply further financial support.
- The Council also referred to a record of a telephone call with Mrs X in July 2016 which it said indicated she agreed to fund the transfer of trustee document, at a cost of approximately £250. Mrs X denied she was happy to pay this fee. She says she only agreed to do so to ensure Y did not lose out on the money he was owed.
- The Ombudsman’s decision on the previous complaint has already found that the Council was not obliged to take action to help Y recover his inheritance money, but the steps it did take in instructing the solicitors were satisfactory, despite some delay. The Council has a duty to all its residents to use public money carefully. It had already spent a large sum of money on the matter. It was entitled to review the cost of continuing to fund the legal action in 2015, given the prospects of success and the fact that Y was now an adult. In my view the Council weighed up the costs and likely benefits, obtained legal advice, and gave proper consideration to its decision. So I cannot criticise the decision it made.
- However from the evidence I have seen I do not consider that the Council communicated the decision to Y and Mrs X clearly. While the 26 August 2015 letter stated the Council would not fund any further “investigations or applications”, the same letter confirmed the Council would pursue the matter of setting up the new trust with the probate lawyers. There is no evidence that the Council specifically said it would cover the costs of this further action. But in my view it is understandable that Mrs X took away the impression that it would. Arranging the new trust was the last step in the process, it was not in Mrs X’s view a further ‘investigation’ or ‘application’, and the Council did not say it would not fund this final step.
- In addition, the Pathway Plan covering the period after the Council had made its decision to cease the funding used the same wording as previously. It was not until the Plan issued in June 2016 that the Council noted that it expected Y to pay the costs of drawing up the transfer deed. Mrs X says she and Y did not see this Plan until January 2017 after she had made her complaint.
- Also the Council told the Ombudsman during the previous investigation, in a letter shared with Mrs X, that it would end its involvement and funding ‘if’ Y took over instructing the solicitors. It said it was waiting to hear from him. Neither Mrs X nor Y told the Council that Y had agreed to take over the instructions. This left both the complainants and the Ombudsman’s investigator at the time under the impression that the Council would continue to fund the legal action until the matter was resolved.
- In my view the failure to explain the decision to Mrs X and Y properly caused them an injustice. It raised their expectations that the Council would fund the action until it was complete. It caused confusion and meant they had to make a further complaint when they learned that the Council would not do so.
- The Council has agreed to my recommendation to:
- apologise to Mrs X and Y for failing to make its decision clear in August 2015 that it would no longer fund any action in connection with securing the inheritance money; and
- pay them £100 to recognise the injustice caused.
- The Council failed to communicate its intentions properly to Mrs X and Y. I am satisfied with the action it has agreed to take to remedy the injustice to them. So I have completed my investigation.
Investigator's decision on behalf of the Ombudsman