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'Irreparably Destroyed' Cardiff Firm Set For £9m Payout After Companies House Error

The Government is facing a compensation bill of almost £9m after a clerical error forced a family company out of business.

Taylor & Sons Ltd, a Cardiff engineering company, was mistaken by Companies House for another firm with an almost identical name.

The company which should have been declared insolvent, Taylor & Son Ltd, bears no relation to the wronged family firm, which prior to the invalid wind-up order had been trading for 124 years.

In the High Court, Mr Justice Edis heard that Taylor & Sons had been "irreparably destroyed".

The judge said the firm had "no way of protecting itself" against the consequences of an official letter it received in error from Companies House.

Businesses Feared The Worst – And Fled

Once the document had been sent, other organisations connected with Taylor & Sons believed the firm to have gone into administration, leading them to cancel orders and withdraw credit facilities.

Companies House has recorded no other clerical error of this magnitude, of which the judge remarked: "That can only be because it was easy to avoid."

Data relating to the erroneous insolvency was placed in the register at Companies House in February 2009. Although the entry was rectified 3 days later, word had already rapidly spread of apparent problems.

Contracts Lost

Despite attempts at damage limitation the firm, which employed over 250 people, was mortally wounded. Among the associated companies which immediately distanced themselves was Tata Steel, with whom Taylor did monthly business worth £400,000.

The company also lost contracts to build 3 RNLI lifeboat stations worth £3m.

Companies House At Fault

Mr Justice Edis said that Companies House had an "assumption of responsibility" and that the effect on the ruined firm was not unexpected.

Finding on behalf of Taylor & Sons' former CEO Philip Davison-Sebry, the judge said holding Companies House responsible for the error was "fair, just and reasonable".

The court's ruling now leaves Companies House, and by association the Government, facing a claim for damages of £8.8m.

Huge Consequences

Commercial property specialist Lyndon Campbell from SM Commercial said the mistake would continue to have grave knock-on effects.

"Although this was apparently a routine clerical error, its consequences have been catastrophic: for a venerable and respected firm, for 250 people who found themselves out of work and for taxpayers who will effectively pick up an enormous bill for compensation.

"Although such a mistake is unprecedented, it is essential that procedures at Companies House are tightened and that an ironclad checking system is put in place to ensure nothing like this can ever happen again."

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Dated: 29/01/2015

Author: Greg Cox

Landlord - Residential Letting Contract

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