cases separate legal personality etc

Question 1

salomon v salomon

Answer 1

HL: unanimous in favour of Mr S - the company was duly formed as registered. Formalistic approach unlike lower courts

Question 2

macraura v northern assurance

Answer 2

shareholder tried to receive benefit of an insurance policy in his name for the company’s benefit. HL: Lord Buckmaster ‘no shareholder has any right to any item of property owned by the company for he has no legal or equitable interest

Question 3

lee v lee’s air farming

Answer 3

lee was a director, shareholder and employee of company. PC held: he could be in both capacities

Question 4

the gramophone and typewriter v stanley

Answer 4

HMRC sued C arguing that he was liable to pay income tax on profits made by a German company that he owed wholly but had not distributed dividends. CA held: the holding of all the shares does not establish the relationship of principle and agent - not liable

Question 5

revenue customs v holland

Answer 5

the question was whether Mr H was personally liable for shortfalls in tax as a de facto director - Held: 3:2 he was not - merely the guiding spirit

Question 6

adam v cape industries

Answer 6

leading modern case - concerned liability within a group of companies and the purpose of the claim was the circumvent the separate legal personality of the subsidiary to make parent company liable - all arguments failed

Question 7

prest v petrodel resources

Answer 7

Lord Sumption: veil piercing involves ‘disregarding the separate legal personality of the company’
wife trying to gain from company that was in her husband’s name - not piercing the veil but could benefit through trust

Question 8

gilford motor company v horne

Answer 8

D set up company in breach of contract with ex-employer not to solicit customers CA held: the covenant was enforceable against C - lord hanworth mr ‘the company was a mere cloak for sham and a mere device for enabling C to breach covenant

Question 9

jones v lipmann

Answer 9

lippman moved property to separate company he had control over to defeat Cs right to specific performance HC held: ‘a creature, a device and a sham’

Question 10

smith stone and knight v city of birmingham

Answer 10

Atkinson test for agency 1) profits 2) appointment 3) head and brain 4) decision making 5) skill and direction 6) effectual and constant control

Question 11

DHN Food Distribution v Tower Hamlets LBC

Answer 11

CA held: that all the companies should be treated as one

Question 12

Woolfson v Strathclyde Regional Council

Answer 12

HL distinguished the DHN approach - emphasis facade concealing the true facts

Question 13

Re A Company

Answer 13

Cummings-Bruce LJ ‘the cases show that the court will use its power to pierce the veil if necessary to achieve justice’
questioned since Adams
Kershaw: evading responsibility case - does it stand for a wider jurisdiction

Question 14

creasy v breachwood motors

Answer 14

HC: distinguished adams and followed re a company - but clearly a case where D seeks to evade liability in law

Question 15

VTB Capital v Nutriek International

Answer 15

SC held following Woolfson it is appropriate to pierce the veil only where there are special circumstances indicating a mere facade

Question 16

prest v petrol resources

Answer 16

put cases into categories - concealment and evasion

emphasised that other options must be exhausted

Question 17

Chandler v Cape

Answer 17

Arden LJ held that Cape assumed a duty of care to advise Cape Products on what steps that it had to take in the light of knowledge then available to provide those employees with a safe system of work or to ensure those steps were taken 1) the business of the parent and subsidiary are in relevant respect the same 2) parent has or ought to have superior knowledge of the health and safety 3) subsidiary work is unsafe and parent co should know 4) parent knew or ought to know that the subsidiary would rely upon that knowledge for superior protection

Question 18

Thompson v The Renwick Group

Answer 18

the mere fact that a parent appoints a director to a board is not enough - Caparo threefold test must be satisfied

Question 19

standard chartered bank v pakinstan national shipping corp

Answer 19

director made a fraudulent misstatement on behalf of the company, he and the company were liable

Question 20

Williams v Natural Life Health Food

Answer 20

an action against the director could only succeed on the basis of Headly Byrne on the facts there was no negligence

Question 21

MCA Records v Charly Records

Answer 21

if in relation to the wrongful acts which are subject to complaint, the liability of the individual director as a joint tortfeasor with the company arises from his participation or involvement in ways that go beyond the exercise of constitutional control