Council refuses to pay out over bankruptcy 5 April 2012

A potentially suicidal debtor was made bankrupt without proper regard for his mental health and the local authority responsible has refused to compensate him, the Local Government Ombudsman ruled today (5 April).

The ombudsman took the unusual step of again criticising Torbay Council after it refused to pay the full compensation recommended by it to the man after its ruled in his favour last year.

Ombudsman Dr Jane Martin found the council’s failure caused “serious injustice” as it led to the man having to pay costs of £24,000 and she recommended the council pay £25,000 compensation – but it has so far only offered to pay £1,000.

The ombudsman, by taking the unusual step of issuing a second report, called on the council to reconsider its position and pay the man the full £25,000.

But, so far, the authority has declined to comment further than releasing a short statement on the subject saying no decsion will be made until the middle of next month.

In her original report, issued in May 2011, the Ombudsman had found a bailiff noted warning signs that might reasonably have alerted the council to the possibility that the debtor was unwell and potentially suicidal.

The ombudsman said: “There is no evidence 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.”

According to the ombudsman the man’s council tax debt was just £2,248 and 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”.

A spokesman for Torbay Council refused to comment on whether the authority would now pay the full amount saying it would need to be considered by its full council meeting in May.

He said: “The ombudsman’s second report will be presented to full council on 16 May, it would be inappropriate to make further comment at this time.”