Companies House, the UK’s registrar of companies, has been found liable in a High Court negligence case.
In February 2009, Companies House recorded Taylor and Sons Ltd, a 124-year-old military equipment business employing over 250 staff, as being wound up. In fact, it was a different company, Taylor & Son Ltd, which was in difficulties.
The Claimant argued that the spelling mistake caused the collapse of Taylor and Sons Ltd, as customers walked away because they thought it was being wound up. The business lost a £400,000-a-month contract with Teta Steel and a contract to construct three Royal
Lifeboat Institute Stations, costing the firm a potential £3million.
The case assessed whether there was a duty of care in negligence owed by Companies House to a trading company to ‘exercise reasonable skill and care not to enter falsely in the register that it had gone into liquidation’.
The Court ruled that Companies House caused Taylor and Sons Ltd to go into administration as a result of the agency’s spelling mistake.
Justice Edis said that ‘….balancing the harm actually done to the company in this case against the potential adverse impact upon Companies House it is clear that the balance favours the loss falling on Companies House rather than the company.’
This is a preliminary judgment and the issue of damages still has to be resolved.
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