A critical discussion, with reference to how the courts approach veil piercing in England and Wales, of the statement that:

‘The doctrine of veil piercing, as applied by the courts in England and Wales, adequately protects against abuses of limited liability and separate legal personality’.

Introduction

‘One of the most uncertain and therefore debated areas of Company law is the circumstances in which the courts are justified in disregarding the autonomous legal personality of a registered limited company.’[1] The aim of this study is to determine whether the courts’ approach to the doctrine of veil piercing, adequately protects against abuses of limited liability and separate legal personality. In order to achieve this, first the principles of limited liability and separate legal identity are addressed. The definition of the doctrine of veil piercing is then explained, followed by establishing a working definition of ‘abuse’. A critical discussion of the courts’ approach to the doctrine, with regard to the main scenarios under which it is applicable ensues; concluding with a verdict on the matter.

Limited liability

Under company law, all economically developed countries allow corporate vehicles the opportunity to conduct business with the advantage of limited liability for their stakeholders (or members).[2] The implications of this upon the shareholder are that their personal liability to the company’s debt is limited to the capital they have invested, in return for shares. Therefore, if the firm a shareholder has invested in becomes insolvent, the worst thing that can happen is that they lose their entire invested capital.[3] Thus creating positive risk asymmetry in favour of the shareholder; as when the firm is successful shareholders benefit from an appreciation of their invested capital and possible dividends, whilst possible losses are finitely limited to the amount invested.[4]

Separate legal personality

Along with the benefit of limited liability, under successive Companies Acts since 1844, it is clear that companies are considered, autonomous legal entities. Each with the right to own property along with individual rights and obligations. Importantly, companies are to be considered to have a separate legal personality to that of their original incorporators[5]. Meaning a limited company is in effect a non-human legal person.

The formulation of this legislation is based on the premise of promoting economic prosperity through the facilitation of public investment.[6] As persons seeking to invest their surplus capital will benefit from the risk asymmetry outlined above. Additionally, limited liability is said to be an essential prerequisite for successful securities markets. As investors are unaffected by the personal wealth of fellow shareholders as shareholders are not liable for company debt; thus, eliminating shareholders’ ability to service debts from the formation of share price.[7] Moreover, limited liability facilitates portfolio diversification therefore helping to reducing risk for the investor.[8]

The legislation extends to all companies as is confirmed by the rule in Salomon v Salomon, [9] this decision remains controversial[10] although it has become entrenched in company law.

The doctrine of veil piercing

The advantages provided under this legislation are inevitably open to abuse, and it is the endeavour of the courts to mitigate this. The practice of disregarding the separate legal personality of a registered limited company in order to achieve this is commonly identifiable as the doctrine of ‘veil piercing’ or ‘lifting the corporate veil’. The circumstances in which a court is justified in this action are ambiguous at best.[11]

The approach taken by the courts has evolved over the years since the rule in Salomon’s case. However, the general rule has been to stick rigidly to the principals this rule established, with a very small number of exceptions.[12] The courts reluctance to stray from the rule is understandable as it allows what some may refer to as the ‘counter-factual’[13] ruling of the House of Lords to remain in place, to the benefit of the wider economic community.

However, this rigid adherence has had some undesirable effects, specifically in the arena of personal injury at work. A classic example is the ruling of Slade L.J in Adams v Cape Industries[14]. The court refused to pierce the veil in order to bring to bear the defendant that had allegedly been using undercapitalised subsidiary companies to distribute potentially carcinogenic asbestos, thus endangering employees. Reasoning that the defendant was entitled to establish and use a corporate structure of this nature. Taking a similar, somewhat literal stance on the law, as was the case in Salomon. In which the defendant used the law to protect himself from his creditors and profit from the sale of a previous business, through the application of a primary charge over assets.[15] This may be considered an abuse of the legislation as Cape has used this principle to protect against tortuous liability to Adams[16]. It may therefore be said that the courts failed in their duty to mitigate this injustice through their strict approach to the doctrine of veil piercing.

Cases of this nature must be considered, however, they are beyond the scope of this study as they fall under the law of tort.[17] A wider area of law concerned with civil wrongs[18], not specifically company law which this study chooses to focus upon. Further, it is in line with the limited liability principle for one to be able to contract out of such benefits[19], similarly this falls under a different subsection of the law, contract law, and lies beyond the scope of this study. There are a number of statutory exceptions to limited liability[20], which are also important to bear in mind. Although, legislation is more strictly followed by the courts and parliaments commitment to the economic cornerstone that limited liability has become would be called into question should they consistently require the courts to lift the veil. Subsequently, these occurrences are rare and often for a reason other than to hold shareholders personally liable for company debts. For example; F G Films Ltd, Re[21] in which the courts disregarded the separation between an American company and its English subsidiary that it had established in order to claim that a film it had made was British.

Definition of abuse

F G Films brings us to the next important issue in addressing the question. The doctrine of veil piercing has shown its versatility in mitigating abuse, as it is apparent that the courts can be dynamic in its application. It is therefore sensible to provide a definition for the term ‘abuse’ that this study will work to. As it is inevitable that some will deem an abuse that which others will not.

The preferred definition of ‘abuse’ is paraphrased from the Oxford English Dictionary, this definition is chosen for its clarity and pertinence. Abuse will be characterised as: the use of something ‘to bad effect or for a bad purpose; misuse’.[22] That something in this case being the advantages of limited liability and separate legal personality; with the bad effect being interpreted as: ‘where some injustice is intended, or would result, to a party (either internal or external to the company) with whom the company is dealing.’[23]

One can sit and debate the meaning of the words abuse, bad and unjust indefinitely, but that is beside the point, although it is conceded that the words meanings are unavoidably subjective.

With a definition established the next issue to tackle is that of appropriately categorising scenarios in which the courts use the doctrine. As the effects of the entity doctrine juxtaposed with attempts by the courts to be fair and just when the doctrine yields unexpected results, have led to a set of decisions that seem to be lacking a principled thread throughout.[24] However, it is submitted that the following categories offer a relevant and coherent structure upon which to continue as the areas of contract and tort are excluded, providing a purely company law perspective. First, national identity; second, fraud; third, subsidiaries operating no true activity[25] and fourth, doing justice to the case/facts.

Nationality and Identity

Consider the case, F G Films Ltd, Re[26] on the surface it may appear the court determined the company’s nationality via piercing the veil of incorporation for the purposes of the Cinematograph Films Act 1938. However, this is contrary to the facts, this case appears not to be a true veil piercing case; it instead involves the court answering a specific question posed within the statute, namely: ‘did the company make the film?’[27] If the company was lacking in both staff and premises how can it have made anything? It can however, function as an agent for the true makers of the film. Subsequently, this case does not tell us much about how the courts apply the doctrine to mitigate abuse. The sole purpose of including this then is to illustrate the complexity of the issue, many academics and professionals[28] will cite this case as a clear cut veil piercing case when in fact it is debatable.

Fraud and avoidance of existing obligations

The courts approach in, Gilford Motor Co Ltd v Horne [29]through granting an injunction against both the company Mr Horne controlled and Mr Horne personally, clearly disregarded the separate legal identity of the company. Moreover, Mr Horne was neither director nor company member, but was viewed as the true controller of the company. More recently courts have relied upon this principle is the case of Faiza Ben Hasem v Adbulhadi Ali Shayif, [30] in which Mr Justice Munby stated: ‘the common theme running through all the cases in which the court has been willing to pierce the veil is that the company has been used by its controller in an attempt to immunise himself from liability for some wrongdoing which existed entirely dehors the company’.[31]

It is important to consider the language used by the courts in reaching the decision. Companies are often referred to as a ‘cloak’ or ‘sham’[32] Lord Diplock defined a sham to be: ‘Acts done or documents executed by the parties to the ‘sham’ which are intended by them to give to third parties or the court the appearance of creating between the parties legal rights and obligations different from the actual legal rights and obligations (if any) which the parties intended to create’.[33]

The Gilford case illustrates quite clearly the supposedly straightforward nature in which the courts approach veil piercing in cases of this nature[34]. The separate legal identity of the company will be disregarded when the company is being used to avoid existing legal obligations. Whether this is an adequate protection against abuse remains questionable as the language and guiding principles are relatively inconsistent, and it is down to the individual courts interpretation of the facts.

The questionable nature of the courts approach is evident in their justification for the rule in Creasey v Breachwood Motors Ltd. [35] There seems to be some confusion as the courts considered the fraud exception in this case and subsequently disregarded it, in favour of the grounds of doing ‘justice’ to the facts. Some commentators[36] note that a court should uphold the fraud exception where: a corporate vehicle is being used to deny a pre-existing legal right, the company does not have to be incorporated for this sole purpose, as the motive of fraud exists whether a new company is being used or an existing one. And importantly, the existence of said legal rights should pre-date the use and not the incorporation of said corporate vehicle.[37] The Creasey case clearly fits these parameters and it therefore should have been decided on this basis.

The courts approach may therefore be considered inconsistent in their reasoning but relatively consistent in their final decision to pierce the veil in the case of fraud. The courts clearly recognise the abuse that a fraud constitutes and so endeavour to combat it, although, it may be argued that their methods lack fairness on the grounds of their apparently unpredictable nature. It is important to note that tax evasion would fall within the scope of this section, as a subsection of fraud.

Companies established specifically for an illegitimate reason

I. Agency

The House of Lords in Salomon made it explicitly clear that a company is not an agent of the shareholder simply by the fact of incorporation.[38] This must then mean that in order for a company to be considered to be performing merely as an agent it must fulfil some specific additional criteria. Atkinson J upon consideration of previous cases[39] in the rule in the case of, Smith, Stone and Knight Ltd v City of Birmingham [40] settled on six norms that must be met in order for a company to be considered a mere agent.

First, were profits treated as the profits of the parent company, second, were the staff appointed by the parent company, third, was the parent company the ‘head and brains’ of the operation, fourth, did the parent wholly govern the subsidiary, fifth, were the parent company’s ‘skill and direction’ responsible for the creation of profits, and sixth, was the parent company in constant control.[41]

The six criteria basically all boil down to the simple question of: was the subsidiary carrying on its own business or was it carrying out the business of its parent? The courts approach in this particular case was to attempt to retain the pretence of upholding the separate legal entity doctrine; however, the test of agency that they applied ultimately ended in the veil being pierced. The fact-specific nature of this case causes problems with its use as precedent, Kerr L.J. stated; the facts of Smith, Stone and Knight ‘were so unusual that they cannot form any basis of principle’.[42]

The courts approach in the case of agency is very similar to that of the next two subsections of this category. Therefore it is logical to save the critical analysis to the close of this section.

II. Single Economic Unit

The common perception, supported by the media, is that large multinational companies such as Tesco Plc and Rolls-Royce Plc are one company. When in reality they are most often groups of companies comprised of a parent company that owns the shares of several subsidiaries. These companies may seem to the layman as a single unit; however, in law these companies are many separate legal entities. Again, Salomon made it perfectly clear a company is a separate legal person to its members and incorporators, but what it did not stipulate was whether this rule applied to companies owned by other companies.

One of the key cases in which the courts applied the single economic unit principle is that of: DHN Food Distributors v Tower Hamlets London Borough Council. [43] The case involved the compulsory acquisition of land owned by a subsidiary company of DNH (Bronze Investment Ltd) and the subsequent legal proceedings regarding relevant levels of compensation for loss of use of the land. In which Lord Denning stated ‘they[44] should not be treated separately so as to be defeated on a technical point. They should not be deprived of the compensation which should be justly payable for disturbance.’[45]

This particular case embodies a drastic divergence from the rule of Salomon, ultimately suggesting that the courts have a duty to assess each case individually in terms of the economic and factual reality in reaching a decision to treat them as separate legal entities or as, in this case, partnerships.[46] However, the judiciary quickly returned to upholding the Salomon doctrine amidst a spell of post DHN debate about the obvious threat to the integrity of the corporate veil it posed.[47]

In the judgement in the case of Woolfson v Strathclyde Regional Council [48] the courts (referring to a previous judgment[49]) asked a very pertinent question to the effect of was the company operating as a façade, thus concealing the true facts? This was one of the original principles for lifting the veil established in Salomon.[50] Marking a return to the original doctrine, the single economic unit argument is still viable; however, the circumstances in which it will be drawn upon are very limited.

The courts approach to lifting the veil had changed again seemingly away from being fair and just in a return to the strict application of the Salomon doctrine. However, in truth the courts approach had simply changed tact towards a new justification for veil piercing, the façade.

III. Façade

The House of Lords in the case of Woolfson expressly stated the special circumstance in which a company is being used as a mere façade to conceal the true facts as the reason for piercing the corporate veil. However, the House of Lords was not kind enough to provide a specific definition of façade, or what the ‘special circumstances’ amounted to.

Although the language appears very similar to that of the ‘cloak’ or ‘sham’ principles which apply to the avoidance of existing obligations. In practice the ‘special circumstances’ amount to more than the avoidance of existing obligations,[51] they in fact bear closer resemblance to those of the ‘single economic unit’ argument and those of ‘agency’.[52]

I, II & III Discussion

These three principles therefore seem inextricably linked; the courts approach may appear different from case to case although in reality it appears to be a mere variation of the same argument of illegitimate purpose.

It is submitted that the current view of DHN as an ‘aberration’[53] is welcomed as the court’s decision contradicted the popular maxim qui sentit commodum sentire debet et onus,[54] through misreading the precedent. This argument was put forward by Rixon[55] who opined the premise to be based on an incorrect interpretation of Harold Holdsworth & Co. (Wakefield Ltd) v Caddies.[56] Specifically, since group companies often operate an ‘asset partitioning’[57] policy, piercing the veil would not mitigate abuse, but constitute an injustice. The rationale being that by simply owning or acquiring shares in a company does not mean that one owns said company’s assets and so the veil should not be pierced.[58]

The façade concept is considered by Gower to be the only true instance of veil piercing as it expressly denies the independent existence of a company.[59] However, Lord Cooke sees it as a ‘spurious concept’ as to lift the veil on a company that in fact does not exist is jurisprudentially inconceivable.[60] These polar opposite opinions illustrate the complexity and misuse by the courts of the façade premise, as in its simplest fashion, providing action against a company thus proves that it exists.[61]

Doing Justice to the Facts

In the judgement in DHN, Lord Denning and Shaw L.J. cited doing justice to the facts as a pertinent factor in reaching a verdict. In the lifting of the veil in DHN however, there was no indication that this notion alone would have sufficed as a justification to do so. Since this judgement, subsequent cases followed a similar theme, most notably Re a Company,[62] in which Cummings L.J. opined ‘the cases…show that the court will use its powers to pierce the corporate veil if it is necessary to achieve justice irrespective of the legal efficacy of the corporate structure under question.’[63] Despite the statement merely being a roundabout expression of the fact that the courts would not allow a company to be used to avoid existing obligations, it had further reaching implications, for a short while at least.

The so called ‘justice’ principle was later debunked by Slade L.J. who stated: ‘save in cases which turn on the wording of particular statutes or contracts, the court is not free to disregard the principle of Salomon v Salomon merely because it considers that justice so requires.’[64] Thus creating two conflicting Court of Appeal judgements, the courts have subsequently rejected the ‘justice’ approach[65] and so it is no longer considered grounds upon which to pierce the veil.[66]

The conflicting judgements of the House of Lords clearly display the complexity of this issue. The earlier judgements from Denning in particular seem to be in the form of justice at any cost to the corporation. However, more recent judgements have moved away from this to a stricter adherence to the Salomon principle, this may represent the increasing level of influence that the world of commerce, particularly very wealthy and high powered individuals have over the courts. As clearly a stricter adherence to these principles will be of great advantage. [67]

Discussion

The four categories have a number of common themes: piercing the veil appears a complicated process that is ultimately very rarely achieved. It is also clear that if a company is used to limit possible future liabilities, this is entirely legal, but under the definition posed in this study that may be construed as an abuse. It is also clear that the corporate vehicle cannot be used to evade existing legal obligations and that this is the main justification for piercing. However, in the majority of cases it is not clear that piercing the veil was ultimately necessary to achieve justice.[68]

Many of the cases discussed do not involve insolvency as the principles laid out Salomon still hold true today. In securitisation cases for example Polly Peck [69] legal reality takes precedent over economic substance.[70] Group enterprises are permitted to use subsidiaries as fronts for limited liability or as prior claimants in insolvency, even if it results in prejudice of creditors.[71] The rationale being that creditors ought to be aware of the situation prior to entering into an agreement, therefore a pragmatic rather than jurisprudential stance should be adopted; as companies solely operate for ‘the preservation and the greatest practicable enhancement over time of their shareholders’ investment’[72].

The courts approach to veil piercing is significantly affected by the jurisprudential disjuncture between Salomon and the root authorities of exception to the separate legal identity doctrine,[73] ultimately revealing the clear lack of precedent. Therefore, there are ‘grey area’ cases such as Creasey v Breachwood Motors [74] in which the sham principle was applied, giving rise to a positive judgement in favour of the plaintiff. However, this judgement was later deemed to be wrong upon consideration of the facts by L.J. Hobhouse in Ord v Belhaven Pubs. [75].

Courts are further reluctant to provide specific definitions of key terms such as façade and circumstances in which the veil may be pierced. This may be because they prefer the flexibility of a case by case approach and the application of strict definitions would severely limit this. This may be the reason for the second ground upon which the veil may be pierced, referred to as many names, façade, single economic unit, and agency. It basically boils down to when a parent company fails to treat a subsidiary as a separate legal entity. This seems to leave the courts with enough room to manoeuvre if there seems to be an injustice but there are no legally justifiable grounds upon which to pierce the veil.

Conclusion

While the cases discussed above reveal extensive divergence form the nuanced aspects on when the veil can be pierced. The main justification that holds true in the majority of cases is that of the prevention of injustice.[76] If a court understands that a specific ruling would result in injustice, or would prejudice a company, it tends to favour the rule that prevents injustice. It is further laudable that the courts are amiable to economic reality when reaching a decision.

Therefore, under the definition this study opts to use it may be said that the courts do adequately protect against abuse of limited liability and separate legal personality. The key word being adequately, it may not be unequivocally stated that the courts’ approach stops all abuse.

Bibliography

Case list

Adams v Cape Industries [1897] A.C. 22

Adams v Cape Industries Plc [1990] Ch 433

Adams and others v Cape Industries Plc and another [1991] 1 All E.R. 929

Antonio Gramsci Shipping Corp v Stepanovs [2011] E.W.C.H. 333

Apthorpe v Peter Schoenhofen Brewery Co Ltd [1899] 80 LT 551

Creasey v Breachwood Motors Ltd [1993] B.C.L.C. 480

DHN Food Distributors v Tower Hamlets London Borough Council [1976] 1 W.L.R. 852

Faiza Ben Hasem v Adbulhadi Ali Shayif [2008] E.W.H.C. 2380 (Fam)

F G Films Ltd, Re [1953] 1 W.L.R. 483

Frank Jones Brewing Co v Apthorpe [1898] 4 Tax Cas 6

Gilford Motor Co Ltd v Horne [1933] Ch. 935 (C.A.)

Harold Holdsworth & Co. (Wakefield Ltd) v Caddies. [1955] 1 W.L.R. 352 HL

J.H. Rayner v Department of Trade and Industry [1989] Ch 72

Ord v Belhaven Pubs [1998] B.C.C. 607

Raja v Van Hoogstraten [2006] E.W.H.C. 2564(Ch)

Re a Company [1985] B.C.L.C. 333

Re Polly Peck International [1996] 2 All E.R. 433

Salomon v A. Salomon & Co Ltd. [1897] A.C. 22

San Paulo Brazilian Ry Co v Carter [1896] AC 31

Smith, Stone and Knight Ltd v City of Birmingham [1939] 4 All E.R. 116

Snook v London & West Riding Investments Ltd [1967] 1 All E.R. 518

St Louis Breweries v Apthorpe [1898] 79 LT 551

Tate Access Inc v Boswell [1991] Ch. 512 Ch. D

Trustor AB v Smallbone (No.2) [2001] 3 All E.R. 987

Tunstall v Steigmann [1962] 2 Q.B. 593, 601

Woolfson v Strathclyde Regional Council [1979] J.P.L. 169

Article list

S. Bowmer, ‘To Pierce or not to Pierce the Corporate Veil – Why Substantive Consolidation is not an issue in Corporate Law’ [2000] 15(8) J.I.B.L. 193.

T. Cheng-Han, ‘Piercing the Separate Personality of the Company: A Matter of Policy?’ [1999] S.J.L.S. 531.

Foster, ‘Company Law Theory in Comparative Perspective’ [2000] 48 A.J.C.L. 573.

J. Fulbrook, ‘Case Comment Chandler v Cape PLC: Personal Injury: Liability: Negligence’ (J.P.I. Law Vol.3, 2012) pp.C135-C139.

Halpern, Trebilcock & Turnbull, ‘An Economic Analysis of Limited Liability in Corporation Law.’ (The University of Toronto Law Journal, Vol.30, No.2, 1980) pp.117-150.

R.Hamilton, ‘The Corporate Entity’ [1971] 49 T.L.R. 979.

H. Hansmann et al., ‘The Essential Role of Organisational Law’ [2000] Y.L.J. 387.

O. Kahn-Freund in ‘Some Reflection on Company Law’[1944] 7 M.L.R. 54.

S. Mohanty & V. Bhandari, ‘The evolution of the separate legal personality doctrine and its exceptions: a comparative analysis’ [2011] Comp. Law. 194.

M. Moore, ‘A Temple built on faulty foundations’ [2006] J.B.L. 180.

P. Muchlinski, ‘Limited liability and multinational enterprises: a case for reform?’ [2010] Cambridge Journal of Economics 34 pp.915.

J. Payne, ‘Lifting the Corporate Veil: A Reassessment of the Fraud Exception’ [1997] C.L.J. Vol. 56 (2) pp.284-290.

F.G. Rixon, ‘Lifting the Veil between Holding and Subsidiary Companies’ [1986] L.Q.R. 415 pp. 421.

C.M. Schmitthoff, ‘The Wholly Owned and Controlled Subsidiary’ [1978] J.B.L. 218 pp.223.

P. Zeigler & L. Gallagher, ‘Lifting the corporate veil in pursuit of justice’ [1990] J.B.L. 292.

Book list

A. Dignam & J. Lowry, Company Law, (7th ed., Oxford University Press, Oxford, 2012).

D. Kershaw, Company Law in Context, (2nd ed., Oxford University Press, Oxford, 2012).

L. E. Talbot, Critical Company Law, (Routledge-Cavendish, 2008).

P.L. Davies & S. Worthington, Gower & Davies: Principles of Modern Company Law, (9th ed., Sweet & Maxwell, London, 2012).

V. Bermingham & C. Brennan, Tort Law: Directions, (3rd ed., Oxford University Press, Oxford, 2012).

R. B. Cooke & H. Trust. Turning Points of the Common Law. (Sweet & Maxwell, 1997).

Statutes

Companies Act 2006

s213

s251

s993

s399

s409

Employee Rights Act 1996

Insolvency Act 1986

s212 Delinquent Directors

s213 Fraudulent Trading

s214 Wrongful Trading

s216 & s217 Re-use of Company Names

Footnotes

[1] M. Moore, A Temple built on faulty foundations [2006] J.B.L. 180

[2] P.L. Davies & S. Worthington, Gower & Davies: Principles of Modern Company Law, (9th ed., Sweet & Maxwell, London, 2012).

[3]Insolvency Act 1986 s.74(2)(d). In the case of a company limited by guarantee the member’s obligation will be limited to the amount of the guarantee (normally issued): ibid. s.74(3).

[4] P. Muchlinski, Limited liability and multinational enterprises: a case for reform? [2010] Cambridge Journal of Economics 34 pp.915.

[5] A concise history of the development of limited liability and separate legal personality, see P.L. Davies & S. Worthington, Gower & Davies: Principles of Modern Company Law, (9th ed., Sweet & Maxwell, London, 2012) pp.4-6.

[6] S. Mohanty & V. Bhandari, The evolution of the separate legal personality doctrine and its exceptions: a comparative analysis [2011] Comp. Law. 194.

[7] Halpern, Trebilcock & Turnbull, An Economic Analysis of Limited Liability in Corporation Law. (The University of Toronto Law Journal, Vol.30, No.2, 1980) pp.117-150.

[8] Ibid.

[9] [1897] A.C. 22

[10] Described as ‘calamitous’by Otto Kahn-Freund in Some Reflection on Company Law

[1944] 7 M.L.R. 54,

[11] M. Moore, A Temple built on faulty foundations [2006] J.B.L. 180.

[12] Davies & Worthington, Gower & Davies: Principles of Modern Company Law (9th ed, Sweet & Maxwell, London, 2012).

[13] M. Moore, A Temple built on faulty foundations [2006] J.B.L. 180

[14] [1991] 1 All E.R. 929

[15] Ibid.

[16] Who is in effect an involuntary creditor to the business having been an employee

[17] J. Fulbrook, Case Comment Chandler v Cape PLC: Personal Injury: Liability: Negligence (J.P.I. Law Vol.3, 2012) pp.C135-C139.

[18] V. Bermingham & C. Brennan, Tort Law: Directions, (3rd ed., Oxford University Press, Oxford, 2012) pp.2.

[19] S. Mohanty & V. Bhandari, The evolution of the separate legal personality doctrine and its exceptions: a comparative analysis [2011] Comp. Law. 194.

[20] For a concise analysis of the examples from statute that permit the veil to be pierced, see A. Dignam & J. Lowry, Company Law, (7th ed., Oxford University Press, Oxford, 2012) pp. 32-34.

[21] [1953] 1 W.L.R. 483

[22] Oxford English Dictionary (www.oed.com)

[23] P. Zeigler & L. Gallagher, Lifting the corporate veil in pursuit of justice [1990] J.B.L. 292.

[24] D. Kershaw, Company Law in Context, (2nd ed., Oxford University Press, Oxford, 2012) pp.47.

[25] Divided into three subsections: agency, single economic unit and façade.

[26] [1953] 1 W.L.R. 483

[27] D. Kershaw, Company Law in Context, (2nd ed., Oxford University Press, Oxford, 2012) pp.54

[28] L. E. Talbot, Critical Company Law, (Routledge-Cavendish, 2008) pp.33

[29] [1933] Ch. 935 (C.A.)

[30] [2008] E.W.H.C. 2380 (Fam)

[31] Meaning ‘something outside the ordinary business of the company’- Antonio Gramsci Shipping Corp v Stepanovs [2011] E.W.C.H. 333 also observing that ‘whether dehors the company is ever a helpful or meaningful expression I do not know’!

[32] [1933] Ch. 935, per Lord Hanworth M.R., at 956

[33] [1967] 1 All E.R. 518

[34] where companies are obviously being used as a cloak or sham

[35] [1993] B.C.L.C. 480

[36] J. Payne, Lifting the Corporate Veil: A Reassessment of the Fraud Exception [1997] C.L.J. Vol. 56 (2) pp.284-290.

[37] Ibid

[38] D. Kershaw, Company Law in Context, (2nd ed., Oxford University Press, Oxford, 2012) pp.57.

[39] The cases referred to in the determination of the criteria were: San Paulo Brazilian Ry Co v Carter [1896] AC 31, Apthorpe v Peter Schoenhofen Brewery Co Ltd [1899] 80 LT 551, Frank Jones Brewing Co v Apthorpe [1898] 4 Tax Cas 6, St Louis Breweries v Apthorpe [1898] 79 LT 551.

[40] [1939] 4 All E.R. 116

[41] Ibid

[42] [1989] Ch 72

[43] [1976] 1 W.L.R. 852

[44] The three companies of DHN Food Distributors Ltd and their subsidiaries, Bronze Investment Ltd and DHN Transport Ltd.

[45] [1976] 1 W.L.R. 852 pp.860

[46] L. E. Talbot, Critical Company Law, (Routledge-Cavendish, 2008) pp.30

[47] Evident in the case of Woolfson v Strathclyde Regional Council [1979] J.P.L. 169, three years later in a very similar case in which the veil was not pierced.

[48] Ibid

[49] The courts referred to Ormerod L.J. in Tunstall v Steigmann [1962] 2 Q.B. 593, 601.

[50] Ibid 35,pp.33

[51] See, Adams v Cape Industries Plc [1990] Ch 433.

[52] D. Kershaw, Company Law in Context, (2nd ed., Oxford University Press, Oxford, 2012) pp.74.

[53] C.M. Schmitthoff, The Wholly Owned and Controlled Subsidiary [1978] J.B.L. 218 pp.223.

[54] Literally translated as ‘He who enjoys the benefit ought also to bear the burdens and vice versa’; Browne-Wilkinson V.C. in Tate Access Inc v Boswell [1991] Ch. 512 Ch. D. Noted: ‘If people are choosing to conduct their affairs through the medium of corporations, they are taking advantage of the fact that in law those corporation are separate legal personality. In my judgement controlling shareholders cannot for all purposes beneficial to them insist on the separate legal personality and when disadvantageous say to the contrary.’

[55] F.G. Rixon, Lifting the Veil between Holding and Subsidiary Companies [1986] L.Q.R. 415 pp. 421.

[56] [1955] 1 W.L.R. 352 HL.

[57] See, H. Hansmann et al., The Essential Role of Organisational Law [2000] Y.L.J. 387.

[58] T. Cheng-Han, Piercing the Separate Personality of the Company: A Matter of Policy? [1999] S.J.L.S. 531.

[59] P.L. Davies & S. Worthington, Gower & Davies: Principles of Modern Company Law, (9th ed., Sweet & Maxwell, London, 2012).

[60] Lord Cooke, A Real Thing: Salomon v SA. Salomon & Co. Ltd. In Turning Points of the Common Law, 1997 pp.15.

[61] Ibid pp.17.

[62] [1985] B.C.L.C. 333

[63] Ibid. This case involved a network of companies being used to drain assets out of a company to which insolvency was imminent, or in other words the network was being used to evade existing obligations.

[64] [1990] Ch 433

[65] See, Trustor AB v Smallbone (No.2) [2001] 3 All E.R. 987, in which Andrew Morritt VC reaffirmed Adams v Cape Industries Plc [1990] ch 433. Subsequently Faiza Ben Hasem v Adbulhadi Ali Shayif, [2008] E.W.H.C. 2380 (Fam); Re a Company [1985] B.C.L.C. 333 and Raja v Van Hoogstraten [2006] E.W.H.C. 2564(Ch) followed suit.

[66] R.Hamilton, The Corporate Entity [1971] 49 T.L.R. 979

[67] See, above. pp1-2.

[68] D. Kershaw, Company Law in Context, (2nd ed., Oxford University Press, Oxford, 2012) pp.76.

[69] Re Polly Peck International [1996] 2 All E.R. 433.

[70] S. Bowmer, To Pierce or not to Pierce the Corporate Veil – Why Substantive Consolidation is not an issue in Corporate Law [2000] 15(8) J.I.B.L. 193.

[71] Ibid.

[72] Foster, Company Law Theory in Comparative Perspective [2000] 48 A.J.C.L. 573.

[73] M. Moore, A Temple built on faulty foundations [2006] J.B.L. 180 pp.9

[74] [1993] B.C.L.C. 480

[75] [1998] B.C.C. 607 This case represented a very similar situation in which the plaintiff was unsuccessful in their claim.

[76] S. Mohanty & V. Bhandari, The evolution of the separate legal personality doctrine and its exceptions: a comparative analysis [2011] Comp. Law. 194.