UK Government in £9m payout after single letter blunder causes business to collapse
It was a 124-year-old Welsh family business which took five generations to build up, yet a blunder over a single letter was all that was needed to cause its collapse, leaving the British government with a £9m (€12m) legal bill.
A High Court ruling has found Companies House liable for the demise of Taylor & Sons Ltd, after they erroneously recorded that the Cardiff engineering firm had been wound up.
In fact it was another, entirely unconnected, company - Taylor & Son Ltd - which had actually gone bust.
By the time Companies House, an executive agency of the Department of Business, Innovation and Skills, tried to correct its mistake three days later, it was already too late for the Cardiff engineering firm.
“They [Companies House] had already sold the false information to the credit reference agencies,” said Philip Davison-Sebry, 57, former managing director and co-owner of Taylor & Sons Ltd.
“We lost all our credibility as all our suppliers thought we were in liquidation. It was like a snowball effect.”
Mr Davison-Sebry, a father-of-three from St Fagans, Cardiff, said that within just three weeks, all of its 3000 suppliers had been in touch to terminate orders and credit facilities were withdrawn.
“I was on holiday in the Maldives when I got a message to urgently contact Corus, one of our major clients. They said they weren’t happy at all I was on holiday, asking how could I be on holiday at a time like this?” he said.
“They said we were in liquidation and that the credit agencies had told them. I rang the office to find out what was going on – it was like Armageddon. This was all on the day of my wife’s 50th birthday. We will never forget it”.
Despite desperate attempts to reassure customers and suppliers that there had been a mistake, the business, which was established in 1875 and had its roots in the 18th century, proved impossible to save.
It lost its best customer in Tata Steel, which had provided it with a £400,000-a-month income, and contracts to construct three Royal National Lifeboat Institution stations never materialised, costing £3m in lost business.
The one-letter mistake was recorded on the companies register on 20 February, 2009 and within two months the company, which employed 250 people, had gone into administration.
But after a four year legal battle, Mr Davison-Sebry has emerged victorious when a High Court judge ruled this week that Companies House was legally responsible for Taylor & Sons’ catastrophic loss of business and ultimate collapse.
The administrative slip-up was the only one of its kind ever recorded at Companies House and Mr Justice Edis said: "That can only be because it was easy to avoid."
Mr Davison-Sebry said he was “absolutely delighted” by the ruling, adding: “Although it was a long and painful experience and very expensive, the truth came out and the judge understood fully what they [Companies House] did.
"It was worthwhile because we never would have known the full extent of what went wrong otherwise."
The amount of damages payable by Companies House has yet to be finally assessed but Mr Davison-Sebry's lawyers have valued his claim at £8.8m.
A spokesman for Companies House said: “Companies House has recently received the judgement in this case and is currently considering the implications at this time. Until these considerations are complete we remain unable to comment further."