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Sloppy spelling makes for expensive mistake Annabel Fordham
30 January 2015

taylor and sons edit

It can be tedious to check those final details. Sometimes it hardly seems worth the effort. The British Companies House (equivalent to our Companies Office) found out the hard way that it really is worth it. The Companies House is facing an eye-watering damages bill because of wrongly listing Cardiff engineering firm Taylor & Sons Ltd as being in liquidation.

In fact, business was ticking over nicely for Taylor & Sons. It was Taylor & Son that had hit a rocky patch.

The Companies House had posted the incorrect information on their website, and then on-sold that information to credit reference agencies.

While the Companies House acknowledged the error, it also discovered there was no system to recall the information that had been on-sold to the credit reference agencies. The information was corrected after three days, but the erroneous information had been spread and the damage had been done.

Taylor & Sons told Radio New Zealand’s Morning Report that their credit lines dried up and orders were cancelled. An aggravating factor was the fact that because the mistake happened in during the 2009 financial crisis, other businesses were understandably especially edgy and responded quickly in cutting off their links with company. After being in business for 124 years, Taylor & Sons was forced to fold.

The High Court found that the Companies House mistake had been the direct cause of Taylor & Sons going out of business. The judge ruled that the Companies House owed a duty of care to the company; that they had breached that duty by posting inaccurate information about the company, and that breach had caused the company’s collapse. The damage to the company was foreseeable.

An arbitrary estimate of loss for Taylor & Sons came in at nine million pounds. The actual quantum of damages is to be fixed in a later trial - but in any event it makes a compelling case for carefully checking the accuracy of information before uploading and sharing it with the world. Although this case was in Britain, New Zealand courts recognise the same common law tort of negligence as exists in the UK. Conceivably, an equivalent action could occur in New Zealand courts if similar events happened here.

And while the facts here related to company information, the same sort of thing could play out with personal information – and with equally disastrous consequences. 

The Privacy Act would cover those sort of situations in New Zealand. Principle 8 of the Privacy Act requires agencies to check the accuracy of the personal information they hold. The agency needs to take reasonable steps to ensure that the information is “accurate, up to date, complete, relevant, and not misleading.” It’s an important step. But that requirement is also moderated by the purpose for which the information is to be used. And that makes pretty good sense. 

It maybe doesn’t matter too much if a post code is mixed up on a school class list. But it probably matters a whole lot if a person is listed as bankrupt when they are not, or finds they are mistakenly linked to a crime, or is wrongly identified as failing to meet professional standards. In those cases, livelihoods, reputation and careers can suffer.

In those sort of instances, the Privacy Act and the Privacy Commissioner’s complaint process can provide an avenue of redress, and parties often reach settlement – which can include compensation - during that process. For cases that can’t be resolved that way, the Human Rights Review Tribunal look at it and can also award damages of up to $250,000.

The lesson from Taylor and Sons is the common law liability for negligence remains an option for cases where the harm caused exceeds the level of compensation available under the Privacy Act. That should act as an extra incentive to double and triple check that prejudicial information before publishing.





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