One particular typographical error is estimated to cost 250
people their jobs, and a UK government department almost GBP 9
million (AUD 17 million).
At KordaMentha Forensic, we are frequently asked to reconstruct
corporate structures and flows of funds as part of forensic
accounting investigations. This requires us to use publicly
available information (such as ASIC company searches) to ascertain
the ownership of companies, trusts and their related parties.
Differentiating between entities with very similar names and
attention to details is important, particularly to identify any
possible 'phoenix' companies, which may acquire the assets
of a company in liquidation. As this case demonstrates, mistaking
one company as another could potentially have dire
Companies House is a UK government department that is
responsible for incorporating and dissolving limited companies, a
role performed in Australia by ASIC. It also registers the
information companies are legally required to supply (such as
annual returns and financial statements) and makes this information
available to the public. Credit reference agencies frequently use
this information to adjust the credit ratings of companies.
Taylor & Sons Ltd, a Cardiff engineering firm, had a
profitable business, although it was facing some difficulties after
the GFC, and was undergoing a financial restructure. However in
April 2009, a Companies House document examiner wrongly amended the
companies register to state that a winding up order had been made
against Taylor & Sons Ltd in February 2009, when in fact it was
against Taylor & Son Ltd (with no 's'), a completely
Although the mistake had been left unattended for only three
days, the incorrect information was passed onto various credit
agencies by Companies House, and was not quickly corrected on those
records. This led Taylor & Sons' suppliers to doubt the
company's credibility, terminate all their orders and shut down
all their credit facilities.
The directors of the company said that as a result of the error
"the Company ran out of cash and the Bank would not lend
it any more... because its suppliers demanded to be paid up to date
before supplying any further goods or services rather than allowing
the usual 30 days credit which actually extends to 90 days in real
life... Unfortunately, this unexpected reduction in cash
occurred just at the time when the Company was in any event trying
Despite attempts to reassure suppliers, within two months, 250
people lost their jobs, and the company had to go into
A UK Court recently ruled that the Companies House was held
responsible for this avoidable blunder as it owed a duty of care to
enter a winding up order against the correct company. The
administrative slip-up was apparently the only one of its kind ever
recorded at Companies House and Justice Edis said: "That can
only be because it was easy to avoid." The amount of damages
payable by Companies House has yet to be finally assessed but Mr
Davison-Sebry (owner of Taylor & Sons Ltd) has claimed damages
at GBP 8.8 million. Ouch.
1From paragraphs 11 and 32 of the judgement
Sebry v Companies House & Anor  EWHC 115 (QB) (26
This Update highlights two recent cases that considered circumstances where liens could take priority over a registered security interest.
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