PIERCING THE VEIL

Maritime v Avalon - treating the companies liabilities and property as that of the shareholders
Statutory
1. Insolvency Act 1986 s213-214 - Directors can be made personally liable for fraudulent or wrongful trading
Case Law
1. Four exceptions to Salomon:
  1. Agency
    1. Ebbw Vale - Subsidiaries are not automatically agents.
      1. Smith Stone - Atkinson J's relevant factors
        Chandler V Cape - parent had no day-to-day control. Did not pierce but able to recover through duty of care
        Caparo- risk was foreseeable. fair just and reasonable to impose liability
  2. Justice
    1. Re Company - pierce if it is necessary
      1. Adams v Cape - court is not free to disregard Salomon simply for justice
        Conway v Ratiu - only when common sense and reality demand it
  3. Sham/Facade
    1. Gilford Motor - way of escaping pre-existing legal duty
      1. Jones v Lipman - Russell J - " A mask which he holds in an attempt to avoid the eye of equity"
        Trustor v Smallbone - courts can pierce if façade was used to escape liability
  4. Single Entity
    1. DHN Food - Denning "bound hand and foot"
      1. Woolfson - did not pierce
        Albazero - "each company in a group of companies is a separate legal entity".

Resource summary

	Created by reashton about 11 years ago