Company Law - Corporate Veil
Salomon v Salomon - ANS Legal Personality is absolute.
Prest v Petrodel - ANS Can pierce corporate liability as a last resort only if there is
dishonesty or fraud.
Jones v Lipman - ANS Concealment Principle. Where a company is interposed so as to
conceal the true identity of the real actors - in that case , their true identity will be used.
WIll not allow company to coneal.
Gilford v Motor Co Ltd v Horne - ANS Evasion Principle - Court could disregard
corporate veil if there is a legal right against the controller, which is independent of the
company's involvement (exists outside the company) and the company is being used to
frustrate/evade that right
Adams v Cape - ANS If you set up a company to avoid claims it is illegal
Ord v Bellhaven Pubs; Creasey v Beachwood Motors - ANS Involved company
reorganizing their finances and structures - result being some creditors had not been
paid - they lost their claim due to it. In Creasey, it was held that the restructuring was
dishonest so it was illegal.
DHN Food Distributors Case - ANS Denning said you could take a holding company
and its subsidiaries and regard them as a single economic unit.
Woolfson v Strathclyde - ANS Overruled DHN, said that there is no general exception
for single economic identity and for it to even be considered, the companies must have
the same directors and must be based in the same offices and the holding company
must fully own the subsidiary.
Chandler v Cape - ANS It says that if you find a duty of care on the holding company
you can make it liable for injury caused by the subsidiary.
1. 2 companies must be in the same business
2. Does holding company have superior knowledge of health and safety?
3. Did holding company know/ought to know that the practices of the subsidiary were
unsafe
4. Did the holding company know or ought to have known that the subsidiary would rely
on them for information?
Salomon v Salomon - ANS Legal Personality is absolute.
Prest v Petrodel - ANS Can pierce corporate liability as a last resort only if there is
dishonesty or fraud.
Jones v Lipman - ANS Concealment Principle. Where a company is interposed so as to
conceal the true identity of the real actors - in that case , their true identity will be used.
WIll not allow company to coneal.
Gilford v Motor Co Ltd v Horne - ANS Evasion Principle - Court could disregard
corporate veil if there is a legal right against the controller, which is independent of the
company's involvement (exists outside the company) and the company is being used to
frustrate/evade that right
Adams v Cape - ANS If you set up a company to avoid claims it is illegal
Ord v Bellhaven Pubs; Creasey v Beachwood Motors - ANS Involved company
reorganizing their finances and structures - result being some creditors had not been
paid - they lost their claim due to it. In Creasey, it was held that the restructuring was
dishonest so it was illegal.
DHN Food Distributors Case - ANS Denning said you could take a holding company
and its subsidiaries and regard them as a single economic unit.
Woolfson v Strathclyde - ANS Overruled DHN, said that there is no general exception
for single economic identity and for it to even be considered, the companies must have
the same directors and must be based in the same offices and the holding company
must fully own the subsidiary.
Chandler v Cape - ANS It says that if you find a duty of care on the holding company
you can make it liable for injury caused by the subsidiary.
1. 2 companies must be in the same business
2. Does holding company have superior knowledge of health and safety?
3. Did holding company know/ought to know that the practices of the subsidiary were
unsafe
4. Did the holding company know or ought to have known that the subsidiary would rely
on them for information?
