From: Neil Foster <neil.foster@newcastle.edu.au>
To: Robert Stevens <robert.stevens@law.ox.ac.uk>
Nick McBride <njm33@cam.ac.uk>
Andrew Tettenborn <a.m.tettenborn@swansea.ac.uk>
obligations@uwo.ca
Date: 26/01/2015 23:25:18 UTC
Subject: Re: bureaucratic bungling
Dear Colleagues;
Let me comment briefly on two issues, the defamation issue and the BSD point.
(1) It seems to me that a claim in defamation should have been possible. A statement that a firm is bankrupt (which is effectively what has been said here) will be defamatory. (In Australia the decision of the High Court in Aktas v Westpac Banking Corp Ltd [2010] HCA 25 deals with a related situation, a bank wrongly asserting that cheques would not be paid.) The fact that those who later quoted the assertion on the Companies Register would have had a defence of qualified privilege, as Rob points out, does not excuse Companies House, the actual publisher of the statement. There is no general “social interest” in allowing slapdash entry of information about companies which could have been avoided by ordinary carefulness and the following of written procedures. Under the Australian uniform defamation law, Sched 1, there are a number of government bodies who enjoy “absolute privilege” to say what they want, but the list doesn’t include the company registration body and I would be surprised if such a privilege was enjoyed In the UK. The majority of the HC in Aktas held that Westpac had no qualified privilege to issue false statements about insolvency, and I would guess that, while the situations are not identical, a similar result would follow here.
Whether the fact that a defamation claim was arguable means that a claim in negligence should have failed is not a matter I have a strong opinion on. It seems to me that while Spring v Guardian Assurance [1995] 2 AC 296 is good law in the UK, it would be hard to support such a view there. In Australia, however, our High Court has been much keener on “coherence” as a principle guiding the existence of a duty of care, so it may well be a claim which would fail here.
(2) On the breach of statutory duty (BSD) point, I think the trial judge was far too quick to dismiss the claim (in effect, as he says, he does not seriously address it because of his view on the negligence point.) At [106] he summarises his reasons by saying that a duty which was found to be for the benefit of all the users of the register would be far too wide. But since in his reasoning on the negligence claim he is happy to restrict the duty of care as owed to the specific company whose information was wrongly recorded, why not analyse the statutory duty in that way too?
Why might there not be a statutory duty owed to the actual company whose details are carelessly entered? The more important question is whether there is such a duty spelled out in the statute. But s 1080(5) quoted at para [73] seems to provide a suitable mandatory obligation: the register “must be such that information relating to a company is associated with that company”. That seems a plausible “duty”, and it would be quite feasible to find that the overall structure of the Act imposed that duty in the particular interest of the company whose details are recorded.
Indeed, in effect that is what the judge finds in his conclusion on negligence: see para [112] fourth dot point:
"the imposition of a duty would tend to reinforce the statute by requiring Companies House to do exactly what it is already required to do by statute.  The information relating to a company must be complete, accurate and easily retrievable."    
So it seems to me that the BSD claim was indeed arguable, and in a jurisdiction (like Australia) where a similar negligence claim might fail due to a reluctance to extend the duty of care on account of “coherence” factors, a BSD claim might be necessary to provide a suitable remedy.
Regards
Neil
 
NEIL FOSTER
Associate Professor
Newcastle Law School
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From: Robert Stevens <robert.stevens@law.ox.ac.uk>
Date: Tuesday, 27 January 2015 2:16 am
To: Nick McBride <njm33@cam.ac.uk>, "A.M.Tettenborn@swansea.ac.uk" <A.M.Tettenborn@swansea.ac.uk>, "obligations@uwo.ca" <obligations@uwo.ca>
Subject: RE: bureaucratic bungling

(i) They didn't just say that a business had ceased trading, which is not necessarily defamatory (as in RvE). They had the company listed as having gone into compulsory winding up. That is usually brought by an unpaid creditor, and always means you can't pay your debts. That is defamatory.

(ii) Is the explanation as to why this was not defamation to be found in qualified privilege? Those who repeated what was on the register would have a defence of qualified privilege under s15 of the DA 96, sched 1, para 5


R
From: Nick McBride [njm33@cam.ac.uk]
Sent: 26 January 2015 14:35
To: Robert Stevens; Andrew Tettenborn; obligations@uwo.ca
Subject: Re: bureaucratic bungling

Assuming Rob is referring to defamation, it's not necessarily defamatory to say of a business that it has gone into liquidation - such a statement does not necessarily reflect badly on the way the business is run, or the people running it. That's why in Ratcliffe v Evans [1892] 2 QB 524 - where the defendant newspaper said that the plaintiff had gone out of business - the claim for damages was brought under malicious falsehood, not defamation.
I think most people would be happy with the result in Sebry, but it should be noted that the result is in tension with Smeaton v Equifax plc [2013] EWCA Civ 108, where the Court of Appeal refused to find that a credit reference agency owed the claimant a duty of care not to tell other people that he had gone bankrupt.
Nick


On 26/01/2015 14:04, Robert Stevens wrote:
It is here for those interested


I am not as keen on the reasoning as Andrew is.

The gist of the complaint seems to me to be that the defendant has published false information about the claimant, damaging its reputation, so that it suffers consequential loss.

I had thought we had a name for that wrong, and that it isn't "pure economic loss in negligence".
R

From: Andrew Tettenborn [a.m.tettenborn@swansea.ac.uk]
Sent: 26 January 2015 13:14
To: obligations@uwo.ca
Subject: bureaucratic bungling

A rare (and in my view entirely justified) case of negligence liability for pure economic loss caused by bungling bureaucrats, courtesy of Edis J in the English High Court today.

X Ltd is in difficulties, trying (with some prospects) to turn the corner. The kybosh is put on all its efforts when, suddenly, no supplier will give it any credit and its bank will lend it nothing. Why? A bureaucrat in Companies House, having received a sloppily-prepared notice of liquidation proceedings against a company with a similar (but not identical) name, has broken CH's own internal procedures and misguidedly registered X Ltd as in liquidation. As a result (allegedly) X indeed goes bust. The guiding spirit of X, assignee of X's liquidator, sues CH for negligence.  CH understandably raise a duty of care point.

Edis J decides in favour of a duty at common law (having doubted an alternative plea of BSD). No problems of over-extended liability: any duty is owed to the company alone. And companies are forcibly subjected to the vagaries of CH, not having any alternative remedy against third parties. Good tight reasoning.

See Sebry v Companies House & Anor [2015] EWHC 115 (QB).


Andrew


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Andrew Tettenborn
Professor of Commercial Law, Swansea University

Institute of International Shipping and Trade Law
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