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A blunder over a single letter on an official document caused the collapse of a 124-year-old Welsh family business – and could cost the Government millions after a High Court ruling.

Companies House is facing a damages bill for up to £8.8m after it mistakenly recorded Cardiff engineers Taylor & Sons Ltd as having been wound up.

It was another, entirely unconnected, company – Taylor & Son Ltd – which had actually gone bust.

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When the word got out following the February 2009 error Taylor & Sons business ran dry, orders were cancelled, and credit facilities were withdrawn.

Ultimately, the business, which was established in 1875 and had its roots in the 18th Century, ended up in administration.

In a stunning triumph for the company’s former MD and co-owner, Philip Davison-Sebry, a judge on Monday ruled Companies House legally responsible for the debacle.

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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.”

Taylor & Sons, the judge added, had absolutely “no way of protecting itself” against the error and its catastrophic consequences.

The damage to the company was foreseeable and there had been an “assumption of responsibility” by Companies House.

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And, in handing victory to Mr Davison-Sebry, the judge said it was “fair, just and reasonable” to hold Companies House liable for what happened.

The one-letter mistake was the direct cause of Taylor & Sons going into administration in April 2009, the judge said.

The company had traded successfully for generations and, although the recession had not been easy, the blunder was the “precipitating factor” in its demise, he concluded.

The information was wrongly recorded on the companies register on February 20, 2009, and was corrected three days later.

But Clive Freedman QC, for Mr Davison-Sebry, said that was already too late as it had already got around that the company was in trouble and the false record remained elsewhere.

Despite desperate attempts to reassure customers and suppliers Taylor & Sons Ltd, which employed more than 250 people, was hit hard.

It lost its best customer in Tata Steel, which had provided it with a £400,000-a-month income.

'The business of the company was irreparably destroyed'

And contracts to construct three Royal National Lifeboat Institution stations never materialised, costing £3m in lost business.

“The business of the company was, effectively, irreparably destroyed,” Mr Davison-Sebry’s legal team told the court.

“The business was damaged so as to become of no real value.”

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.

Words: Strand News Service