Agenda item

[Report of the Assistant Director of Corporate Governance (Monitoring Officer). To be introduced by the Cabinet Member for Corporate and Civic Services.]

This report requests Cabinet consider and respond to the Local Government Ombudsman finding with regard to Ms B – bankruptcy.

The Cabinet Member for Corporate and Civic Services introduced this report which requested Cabinet consider and respond to the Local Government Ombudsman finding with regard to Ms B – bankruptcy.

The Cabinet Member informed that the Ombudsman had made a report finding fault with the Council in relation to a complaint made by Ms B and had asked the Council to take certain steps to remedy that fault. This report summarised the Ombudsman’s report and the steps that have already been taken. It also proposed further steps to be taken by the Council in response to the report.

The Cabinet Member noted the service had apologised for the mistakes made and was determined to learn from them. Members were required to consider the Ombudsman’s report (shown at Appendix 1) and the steps it was proposed to take in response with the Cabinet Member recommending that the findings, recommendations and compensation payments be approved.

In response to questions from Councillor Dennison, the Cabinet Member confirmed that to prevent an issue of this kind occurring again, the Council would be putting in place all the recommendations of the Local Government Ombudsman. Information would also be better shared between officers and the relevant Cabinet Member.

RESOLVED

1. To accept the findings and recommendations of the Ombudsman in the report dated 17th September 2019, as shown at Appendix 1.
2. To authorise officers’ reduction of Ms B’s debt by £3,400 as compensation, as set out in paragraphs 4.2 and 4.8 below.
3. To authorise officers to compensate Ms B by applying to annul her bankruptcy and paying the court and trustee costs of doing so up a value of £20,000, as set out in paragraph 4.6 below.
4. To adopt this report as the Council’s formal response under s.31 Local Government Act 1974, to be communicated to the Ombudsman.
5. To adopt this report as the Cabinet’s formal response as required by s.5A Local Government and Housing Act 1989, to be distributed to all members and the Monitoring Officer.

Reasons for Decision

Overview

As set out in the Ombudsman’s report, Ms B has been found to have suffered injustices as a result of faults on behalf of the Council. In summary:

• The Council’s procedure was to consider bankruptcy only if there were sufficient assets to pay the debt and costs incurred.
• Ms B’s property was mistakenly assessed as having sufficient equity to allow the Council’s debts and costs to be recovered. However, there was in fact insufficient equity.
• Therefore, bankruptcy was pursued contrary to the Council’s procedure.
• As part of good practice, the Council contacted the local authority where Ms B lives to ascertain any vulnerabilities Ms B might have. However, Ms B worked for her local authority and her colleagues were informed of her debt to the Council, causing her considerable professional embarrassment. The Council should have identified that Ms B worked for her local authority because this had been evident from her email signature.
• Ms B made a subject access request to the Council. The Information Commissioner has found that the Council did not respond promptly or provide all of the relevant information held.

The Ombudsman’s findings are accepted. The service has apologised for the mistakes made and is determined to learn from them. Apologies have been given to Ms B, as set out at paragraph 36 of the Ombudsman’s report. The Ombudsman has also recommended further ways the Council should try to remedy the mistakes for Ms B, and it is proposed that these are followed.

Recommendations

The Ombudsman has recommended that action be taken to remedy the injustice to Ms B. The recommendations are to:

• apply to annul the bankruptcy and pay the court and trustee costs to do this;
• make a financial payment of £3,000 to Ms B to reflect the distress she suffered because of the Council’s decision to start bankruptcy proceedings;
• make a financial payment of £400 to Ms B to reflect the distress she suffered because of the Council’s breaches of the Data Protection Act; and
• Write and send a letter to Ms B saying if it intends to recover the debt, the amount it is seeking to recover and how it is going to do this.

The Ombudsman has stated that the Council may offset the payments against the debt Ms B owes the Council.

Reasons

The Ombudsman’s recommendations are considered to be appropriate for the following reasons.

The initial view of officers liaising with the Ombudsman was that the Council should not apply to annul Ms B’s bankruptcy because Ms B continues to owe the Council money and bankruptcy was legally permissible. However, it is now recommended that the Council do so in accordance with the Ombudsman’s recommendations. This is because the Council’s pursuit of bankruptcy was contrary to its procedure at that time which was only to consider bankruptcy if there were sufficient assets to pay the debt and costs incurred (i.e. the full debt and costs incurred). Therefore, bankruptcy would not have been pursued if the equity in Ms B’s property had been correctly calculated. The procedure has since been updated to provide that bankruptcy may be appropriate even if the Council cannot recover the entirety of its debt and costs.

Ms B should not be expected to pay costs that have arisen because of fault on the part of the Council and so the costs of applying to annul the bankruptcy should be paid by the Council. The Council has been informed that the trustee’s costs will be under £15,000. The cost of applying to the court is estimated to be no more than £5,000.

The trustee in bankruptcy has informed the Council that it would not oppose an application to annul Ms B’s bankruptcy. However, the final decision as to whether to annul Ms B’s bankruptcy would be made by the court and is at the court’s discretion.

It is appropriate to pay compensation to Ms B given the Ombudsman’s findings of injustice. However, given that Ms B continues to owe a significant sum to the Council, it is also appropriate for such compensation to be offset against that debt. Ms B would otherwise receive £3,400 from the Council despite owing the Council more than £50,000. Therefore, in accordance with the Ombudsman’s recommendations, it is proposed to compensate Ms B by reducing her debt by £3,400.

The Information Commissioner has found that the Council should have identified that Ms B was likely to still be an employee of her local authority and there was potential for disclosure of her personal data to colleagues who would not necessarily need to know about the Council’s investigation. As set out in the Ombudsman’s report, Ms B had written to the Council between December 2014 and July 2015 using her local authority work email account with a signature that set out her job title.

The Information Commissioner found that the Council responded to a subject access request from Ms B late and did not conduct an adequate search to ensure all information was provided to Ms B. Ms B had made a subject access request in mid-March 2018 and this was responded to by the Council on 4 June 2018. A subject access request should normally be complied with within 1 month, unless the request is particularly complex.

Action already taken

Two public notice advertisements were placed in newspapers: (i) the Enfield and Haringey Independent and (ii) the Ham and High, stating that copies of the Ombudsman’s report were available to inspect by the public at the Council’s offices for a period of three weeks.

Officers have written to Ms B confirming that the outstanding debt has been reduced by £3,400 in accordance with the Ombudsman’s recommendations.

Action it is proposed to take

It is proposed that the Council apply to annul the bankruptcy and pay the court and trustee costs of doing so.

Ms B would be informed of the effect on the recovery of the debt.

Views of senior officers

The Monitoring Officer has consulted with the Chief Executive and Chief Finance Officer, and they agree with the recommendations within this report.

Alternative Options Considered

The Ombudsman cannot force local authorities to follow its recommendations, but local authorities generally do follow them.

If the Ombudsman is not satisfied with the Council’s response, he will make a further report explaining this and making recommendations. He can also require the Council to make a public statement about the matter.

Therefore, Cabinet could choose to reject any of the recommendations made by the Ombudsman.

However, this alternative is not recommended because the Ombudsman’s recommendations represent an appropriate remedy for the reasons set out above.