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Leicester City Council (20 003 297)

Category : Other Categories > Other

Decision : Upheld

Decision date : 28 Oct 2021

The Ombudsman's final decision:

Summary: Mr X complained about the way the Council administered the purchase of his former Council house. He said the Council wrongly assigned the house next door to him with the Land Registry, as well as the house he bought. The Council accepted fault for its part in the conveyancing error and offered a suitable remedy. The Ombudsman did not find fault with the way the Council tried to correct its error.

The complaint

  1. Mr X complained about the way the Council administered the purchase of his former Council house. He said the Council wrongly assigned the house next door to him with the Land Registry, as well as the house he bought.
  2. Mr X is unhappy the Council has failed to resolve its error.
  3. Mr X said the Council’s error prevented him from re-mortgaging or selling his house and from raising finances for his business.

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What I have investigated

  1. I have not investigated Mr X’s original purchase of his home and the error in also assigning the house next door into Mr X’s name. That is because the purchase took place in 2007 and the Council accepted fault for its error. I have referred to these matters for context.
  2. I have investigated the actions the Council took to resolve its error and the remedy it offered.

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The Ombudsman’s role and powers

  1. We investigate complaints about ‘maladministration’ and ‘service failure’. In this statement, I have used the word fault to refer to these. 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)
  2. 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)

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How I considered this complaint

  1. As part of the investigation, I have considered the following:
    • The complaint and the documents provided by the complainant.
    • Documents provided by the Council and its comments in response to my enquiries.
  2. Mr X and the Council now have an opportunity to comment on my draft decision. I will consider their comments before making a final decision.

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What I found

What happened

  1. I have summarised below some of the key events leading to Mr X’s complaint. This is not intended to be a detailed account of what took place.
  2. Mr X and his wife bought their home from the Council in 2007 under the ‘right to buy’ scheme.
  3. Because of a conveyancing error, the house next door to Mr X was included in the transfer and was mistakenly registered in Mr X’s name with Land Registry.
  4. Neither the Council nor Mr X’s solicitor noticed the error at the time. Mr X said the Council continued to rent the house to one of its tenants.
  5. Mr X found out about the error in 2013 when he tried to re-mortgage his house. His bank could not complete the transaction because the Land Registry details were wrong. However, Mr X did not tell the Council about the error.
  6. Mr X contacted the Council about the error in March 2018.
  7. The Council contacted the Land Registry and Mr X’s solicitor. The Land Registry would not agree to simply correct the error. The Council therefore suggested buying the house next door back from Mr X at no cost. Mr X agreed. He also asked for compensation due to loss of business and stress.
  8. Mr X instructed new solicitors and they contacted the Council in May 2018 to arrange the purchase. They asked the Council to pay Mr X’s costs. The Council agreed to pay Mr X’s reasonable costs.
  9. The Council gave Mr X’s new solicitors instructions to proceed with the purchase in August 2018. It sent a transfer document to the solicitors in September.
  10. Also in September, Mr X told the Council his bank would not agree to the transfer.
  11. The Council asked Mr X’s solicitor for an update in November 2018. Mr X’s solicitor said they were waiting for an answer from Mr X’s bank.
  12. Mr X contacted the Council in June 2019. He said he lost a potential business unit because he could not get funding from his bank while the transfer was unresolved. He asked the Council for significant compensation for his losses and personal distress.
  13. The Council rejected Mr X’s request in July. It said the situation arose because of a mutual mistake by the Council and Mr X’s solicitor. It offered to pay Mr X half of his legal costs connected to the transfer.
  14. The Council offered to contact Mr X’s bank to resolve the situation. Mr X did not provide his consent.
  15. Mr X then instructed new solicitors. The Council sent Mr X’s new solicitor the transfer document on 11 July.
  16. After Mr X made more requests for compensation, the Council agreed to pay all of his reasonable legal costs connected to the transfer.
  17. In March 2020, the Council received a letter from another solicitor acting on Mr X’s behalf. The new solicitor told the Council they were pursuing Mr X’s first solicitor and had joined the Council to the claim.
  18. Mr X complained to the Ombudsman on 13 August 2020. He told us the Council would not offer him any payment for lost business opportunities or being unable to re-mortgage at a lower interest rate. That is why Mr X did not agree to go ahead with the transfer in the past.
  19. The Council told the Ombudsman it had not received a formal complaint from Mr X. It said it has been trying to resolve the error for the past few years but was unable to because Mr X would not proceed on the terms the Council offered. It said he agreed twice but then pulled out.
  20. The Council agreed to investigate Mr X’s complaint and sent a response on 25 September. It said:
    • It had been trying to correct the error, which only came to light in April 2018 when Mr X made an enquiry with its housing department.
    • It agreed for Mr X to transfer the house next door back to the Council at no cost to Mr X. The Council also agreed to pay his reasonable legal costs.
    • It prepared a transfer document and sent it to Mr X’s solicitor in July 2018. The matter did not proceed as the Council was told the solicitor was no longer instructed.
    • It was told Mr X instructed a new solicitor in July 2019. It sent the transfer document to them but again the transfer did not proceed.
    • It accepts it made a mistake on the initial purchase, but Mr X was receiving legal advice and the Council is not solely to blame. The error was also missed by Mr X’s solicitor. The Council tried to resolve the issue with Mr X’s former solicitor, but it was not possible.
  21. The Council said it remains willing to resolve the situation and its offer remains open.
  22. Mr X replied on 30 September. He said he was going to transfer the house back to the Council, but it took too long, and was only willing to pay his legal costs. He said because of the Council’s error he lost the opportunity to buy the unit for his business and to re-mortgage his house. He also said he could not give the house back to the Council because his bank held the deeds, and he could not afford to repay the mortgage in full.
  23. The Council said it understood Mr X’s concerns and difficulties, but he did not pay any extra money for the house next door – it was transferred to him in error. It noted the losses he said his business suffered but said the Council cannot consider payment without seeing evidence. It said if he provides evidence it will consider it.
  24. Mr X’s new solicitor asked the Council for a transfer document in October so the house next door to Mr X could be returned to the Council. The Council sent the transfer document and confirmed its agreement to pay Mr X’s reasonable costs.
  25. Mr X’s new solicitor confirmed the transfer had been executed in November.
  26. The Council completed the transfer with Mr X’s new solicitor on 25 November.
  27. Mr X’s solicitor asked the Council to pay a total of £1,156 costs.
  28. Mr X emailed the Council on 16 December asking when the transfer would be registered with Land Registry. He said he was at risk of losing a buyer for his house because of the delay.
  29. The Council sent the transfer documents to the Land Registry on 17 December and asked them to expedite the matter. It apologised to Mr X for the slight delay.
  30. Mr X complained about the delay registering the transfer on 5 January 2021. The Council told him there were delays with Land Registry which it could not control, but it asked them to register the transfer urgently.
  31. On 13 January Land Registry contacted the Council. It said there was an error in the spelling or Mr X’s name on one of the documents and Mr X had not signed one of the transfer plans.
  32. The Council asked Mr X’s solicitor to correct this and get Mr X to sign the plan. It followed this up with Mr X’s solicitor in February, March, April, and May, but without success.
  33. Mr X’s solicitor said they chased Mr X, but he had not returned the documents. They offered to sign them on Mr X’s behalf, but the Land Registry would not allow it.
  34. The Land Registry therefore cancelled the Council’s application to register the transfer. The Council instead sent a unilateral transfer notice to the Land Registry to protect its position. This was registered in August.

Response to my enquiries

  1. The Council accepted it wrongly transferred the house next door to Mr X to him as well. However, it said this was a joint error and Mr X’s solicitors were also responsible because they did not notice the mistake.
  2. The Council told me it contacted Mr X’s solicitor from the time of the purchase in April 2018, as well as Land Registry, to try to resolve the error. The Land Registry would not agree to rectify the mistake and Mr X’s solicitor refused to help.
  3. The Council accepts there were delays buying back the house next door to Mr X between May and August 2018. This was due to staff changes.
  4. The Council said it heard nothing from Mr X’s new solicitor about the transfer after November 2018. Despite this, Mr X continued to telephone the Council asking for updates.

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Analysis

  1. The Council accepts fault for its part in the error that led to the house next door to Mr X being wrongly transferred into his name as part of his house purchase in 2007.
  2. Mr X did not tell the Council about the error until 2018, about 5 years after he found out. On the evidence seen, I am satisfied the Council took suitable steps to correct the error. The Council did not significantly delay the transfer process. There was a short delay initially, and in registering the documents with Land Registry, but not significant enough for me to find fault.
  3. The reason the transfer was not completed initially was due to Mr X’s lack of cooperation. He was unhappy the Council would not pay him compensation and would not agree to the transfer. That was his choice. It was not due to any fault on the Council’s part.
  4. When Mr X agreed to the transfer in 2020, the Council sent the paperwork to the Land Registry but unfortunately the Land Registry would not accept it. The Council then did all it could by chasing Mr X’s solicitor for the corrections needed. Again, it was Mr X’s lack of cooperation which prevented the transfer from completing.
  5. While I can appreciate Mr X wanted compensation from the Council (for lost business opportunities and being unable to re-mortgage at a lower interest rate), I do not consider the Council was at fault for refusing. Mr X was seeking substantial compensation and did not give the Council enough evidence of his claimed losses.
  6. The Ombudsman has published guidance to explain how we calculate remedies for people who have suffered injustice because of fault by a council. Our primary aim is to put people back in the position they would have been in if the Council’s fault had not occurred. When this is not possible, we may recommend the Council makes a symbolic payment to recognise what could have been avoidable distress, harm, or risk. However, we do not recommend compensation payments in the same way as the Courts.
  7. We can consider quantifiable losses, where there is enough evidence. Where large sums of money are claimed it is more fitting for the Courts to consider the matter, particularly where the losses are not certain and need professional consideration.
  8. We have broad discretion to recommend remedies which we judge to be suitable. Our remedies guidance exists to help decide remedies in a consistent way, but every case must be considered individually according to the scale and significance of the injustice.
  9. The Council has not made an offer for Mr X’s claimed business losses or mortgage interest payments. I do not propose to consider this further as the Ombudsman cannot assess Mr X’s claim. Our informal means of investigation are not suited to assess claims for compensation of this nature. While we can make findings about the Council’s actions, and decide where there was fault, we do not have the expertise to judge the impact of the Council’s fault on Mr X’s business and financial position. These decisions need specialist judgement and are usually made by the Courts.
  10. The Ombudsman can only make recommendations to remedy injustice. To make recommendations, there must be a direct link between any fault we identify, and the injustice claimed. In Mr X’s case, the fault is clear, but the link with the claimed injustice is less so. Even if there had been no fault by the Council, I cannot say what position Mr X’s business may have been in or what his mortgage payments may have been.
  11. Based on the evidence Mr X provided, I have no way of assessing the value of his lost business opportunities or the value of the extra interest payments made on his mortgage. It follows therefore that I have not found the Council at fault for not doing so.
  12. The Council offered to pay Mr X’s reasonable legal costs to transfer the house back. I consider that to be a suitable remedy and it is in line with what the Ombudsman would recommend.

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Final decision

  1. I have completed my investigation. The Council accepted fault for its part in the conveyancing error and it offered a suitable remedy. I have not found fault with the way the Council tried to correct its error.

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Investigator's decision on behalf of the Ombudsman

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