05. CASES on Companies: incorporation.

Question 1

Saloman v Saloman & Co. (1897)

Answer 1

Established that a limited company, properly incorporated, is a separate legal entity from those involved in running it and its beneficial owners.

Question 2

Firestone Tyre v Lewellin (1957)

Answer 2

The veil of incorporation was lifted in order to produce a tax liability.

Question 3

Smith v Birmingham (1939)

Answer 3

The veil of incorporation was lifted in order to give entitlement to compensation.

Question 4

Re H and others (1996)

Answer 4

The veil of incorporation was lifted in order to prevent the removal of assets pending a customs investigation.

Question 5

Daimler v Continental (1916)

Answer 5

The veil of incorporation was lifted in order to expose illegal trading with the enemy.

Question 6

Ebrahimi v Westborne Galleries (1972)

Answer 6

The veil of incorporation was lifted in order to provide a just and equitable solution after the breakdown of a quasi partnership.

Question 7

Gilford v Horne (1933)

Answer 7

The veil of incorporation was lifted in order to prevent the circumvention of a restrictive employment covenant.

Question 8

Re F G Films Ltd (1953)

Answer 8

The veil of incorporation was lifted in order to prevent the unethical exploitation of a tax sheme.

Question 9

Macaura v Northern Assurance (1925)

Answer 9

A company in which Macaura was the sole shareholder and director was deemed responsible for insuring its own timber.

Macaura had no proprietorial rights over it so his private insurance policy was invalid.

Question 10

Erlanger v New Sombrero (1878)

Answer 10

Established that a promoter has fiduciary duties to the company.

In this case the promoter sold a guano island to the company at an inflated price.

Question 11

Kelner v Baxter (1866)

Answer 11

Established that a promoter can not act as an agent for an as yet unincorporated company.

Question 12

Clinton’s Claim (1908)

Answer 12

Established that a company is not bound by a pre-incorporation contract even if it has derived some benefit from it.

Question 13

Eley v Positive Government (1876)

Answer 13

Established that the articles of association have contractual force on members only in their capacity as members.

Question 14

Beckwith’s Case (1898)

Answer 14

Established that the articles of association could be used to imply terms into the contract of employment of a director, in this case one regarding remuneration.