Philip Davison Sebry v Companies House and Another
| Jurisdiction | England & Wales |
| Judge | Mr Justice Edis,Mr. Justice Edis:,MR JUSTICE EDIS |
| Judgment Date | 26 January 2015 |
| Neutral Citation | [2015] EWHC 115 (QB) |
| Docket Number | Case No: HQ12XO4271 |
| Court | Queen's Bench Division |
| Date | 26 January 2015 |
[2015] EWHC 115 (QB)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr Justice Edis
Case No: HQ12XO4271
Mr. Clive Freedman QC & Mr. Neil Mendoza (instructed by Clyde & Co) for the Claimant
Mr. Paul Rees QC & Mr. Neil Sheldon (instructed by The Treasury Solicitor) for the Defendants
Hearing dates: 12–14, 17–21 & 24–25 November 2014
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
This is a claim for damages for negligence and breach of statutory duty brought by the Claimant who was the Managing Director of a company called Taylor and Sons Limited ("the Company"). The Company went into Administration on 9 th April 2009 and the Administrators assigned any cause of action it may have had to the Claimant who therefore brings this claim in the shoes of the Company. As will appear, the two Defendants are, effectively, the same person. The reason for this appears at paragraph 6 below.
This is the trial of 3 preliminary issues as ordered by Master Cook on 19 th June 2013. The issues are defined in that Order as follows:-
• Whether the Defendants owed the Company a duty of care under statute or common law in the terms alleged in the Claimant's Particulars of Claim ("the Duty Issue").
• Whether, if so, the Defendants breached any such duty. It is now conceded that if there was any such duty, it was breached. I do not therefore have to decide this issue. I will set out the facts relating to the breach below, because they illuminate the Duty Issue.
• Whether, if so, the Defendants' breach of duty caused the Company to enter administration ("the Causation Issue").
The statutory duty of care said to have been owed by the Defendants to the Company is defined in paragraph 7 of the Particulars of Claim as follows:-
"In discharging their functions and/or maintaining the register in accordance with section 1080 of the Companies Act 2006 the 1 st and/or 2 nd Defendants owed a statutory duty to any company on the register, and in respect of which information was being entered or recorded, to take reasonable care and skill so as to ensure that incorrect information was not entered on the register relating to that company."
An identical duty is also said to arise at common law by paragraph 8 of the Particulars of Claim.
During the trial I allowed an application to amend the Particulars of Claim to add paragraphs 7A and 8A. I gave reasons in a separate judgment at that time. No amendment is necessary to the Preliminary Issues because they are to be read as relating to the Particulars of Claim as it now stands. The amendments are as follows:-
"7A. Further or alternatively, without prejudice to paragraph 7 above, in discharging their functions, and/or maintaining the register in accordance with section 1080 of the Companies Act 2006, and in respect of Taylor and Sons Limited (company number 00067032) ("the Company") to show that the Company had gone into liquidation, the 1 st and/or 2 nd Defendants owed a statutory duty to the Company in the processing of the information which it received to take reasonable skill and care not to enter and/or record on the register information relating to a different company (bearing a different name and number) and/or otherwise incorrectly.
8A. Further or alternatively, without prejudice to paragraph 8 above, in altering and/or maintaining the register in respect of the Company to show that the Company had gone into liquidation the 1 st and/or 2 nd Defendants owed a common law duty of care to the Company in the processing of the information which it received to take reasonable skill and care not to enter and/or record on the register information relating to a different company (bearing a different name and number) and/or otherwise incorrectly."
THE DEFENDANTS: SUMMARY
I shall set out more detail about the Defendants below, but in order to assist the understanding of this judgment at the outset this paragraph contains a brief description of their function and explains why there are two of them. The Defendants are, respectively, Companies House which is an Executive Agency of the Department for Business, Innovation and Skills ("the Department"), and the Registrar of Companies who is the Chief Executive of the First Defendant. There has been some argument about whether the First Defendant should have been sued because it is said not to have any separate legal personality from the Department. An application was made to me by the Claimant to change the name of the First Defendant to the Department. I declined to rule on it until I had heard the evidence about the relationship between the Defendants, and between them and the Department, which is relevant to whether it is fair, just and reasonable to impose any duty of care on all or any of them. In the event the application was not pursued because the Second Defendant accepts that he is properly joined and liable in the event that the claim succeeds. The Treasury Solicitor confirmed that any judgment will be met and it is unthinkable in those circumstances that the Government would seek to avoid paying the judgment on the ground that the Department had not been formally joined in the proceedings. Evidence was then given by Jo Jones, Head of Policy at Companies House, who said that the Registrar has decided to meet the claim if it succeeds out of reserves controlled by him. The Registrar has statutory duties which he discharges by the agency which is Companies House. Companies House, as its name suggests, provides the buildings. It also employs the staff and administers, through them, the recording and publication of company information. It charges fees to the companies whose information it keeps and to those who use its services. In most years it pays a dividend to the Government out of those fees. It is self funding.
THE COMPANY
The Company was incorporated in 1900, but traced its roots back to the late 18 th Century. It operated as steel fabricators and founders and was part of a group of companies. The corporate structure does not greatly matter for present purposes and I shall not set it out here. I am principally concerned with the Company itself and two companies in the group, Taylor Marine Limited (TML) and Taylor and Sons (Engineering) Limited whose fortunes were closely connected to those of the Company. Similarity in the names of companies in the same group is one reason why companies with very similar names can appear on the Register. That is also a feature of "phoenix" companies which acquire the assets of a company in liquidation. Other companies have very similar names by chance. One function of the Registrar is to ensure that no two companies are registered with an identical name. Every Companies House employee who works with the Register (and everyone else whose work involves the technical side of corporate existence) knows that this is a phenomenon which requires care. This is one reason why each company on the register has not only a unique name, but also a unique number.
The Company had traded successfully for many years including supplying military equipment during both World Wars. It was a well respected and substantial business which retained its family connection to the Taylor family until just a few weeks before the Administration. It was no doubt a source of pride to many people as well as a source of income and valuable work. Its fate was big news in the engineering and steel making community in South Wales and beyond.
In 2008 the fortunes of the Company suffered a setback because of the recession and the banking crisis. Its largest customer, Corus (now Tata Steel), endured problems of its own which affected its demand for work from the Company. When problems came they exposed underlying weaknesses in the Company which required very urgent attention. A corporate strategy was evolved which was intended to reduce the dependence of the Company on Corus and to diversify its customer base. It also involved selling property to raise money, and reduce cost. Unhappily, the banking crisis rendered property unsaleable just at the critical time and the Company had a need for cash from another source. On the advice of its Bank, Lloyds, the Company retained a specialist accountant, Mr. Geoff Eades, to assist it in its financial restructuring to enable it to survive. Because of the way the preliminary issues have been drawn I do not have all the evidence necessary to decide whether (and if so for how long) it would have survived had not an error ("the error") been made by the staff of the Official Receiver and subsequently by the staff of the Defendants. Neither side has chosen to seek to adduce any expert evidence at this stage. It was to avoid incurring the cost of expert evidence if the action fails on other grounds that the preliminary issues were drawn as they were, but such evidence is clearly capable of being relevant to the third preliminary issue. I have considered carefully whether I should in fact decide that issue and have decided to do so on the evidence which the parties have decided to call. This means that I will answer the third question, but I will make no finding about the future path of the Company after 9 th April 2009 had there been no error. That issue will be determined at a quantum hearing, if there is one.
The Causation Issue is a factual question. The factual context in which the Duty Issue falls to be resolved is of importance in resolving even a pure point of law on facts which are not in dispute. The authorities make it clear that any...
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