The meaning of the phrase "in consequence" is "as a result."
If something happens first, and something else happens afterwards in consequence, it happens as a result of the first event.
In this particular example, a man has lost his mind because of an event that is not mentioned, and has not been sane since then. His insanity is, therefore, a result (or a consequence) of that event. We can assume that the person described a traumatic event that the man experienced, and the other person replied with a question:<em> "And he lost his mind in consequence?"
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