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A US court held that a US subsidiary was liable to pay damages to the US claimants. The claimants wanted to enforce the judgment against the English parent company in an English court, but could only do this if the parent was present in the USA. To do this, the separate personality of the subsidiary had to be ignored.
Each company in a group has its own separate corporate personality. The US subsidiary was separate and distinct from its English parent and the claimants could not therefore enforce the US judgment in an English court.
Two directors of a company engaged in fraud, leaving the company insolvent and unable to pay its debts.
Generally, where a company has been a victim of wrongdoing by its directors, the directors’ wrongdoing cannot be attributed to the company for the purpose of raising the illegality defence.
The claimant contracted asbestosis whilst working for a subsidiary of the defendant. When the claimant discovered his condition, the subsidiary had long since been dissolved, so the claimant commenced proceedings against the subsidiary’s parent.
A parent company can owe a duty of care directly to an employee of its subsidiary, providing that the three-stage test for establishing duty has been satisfied. This does not involve piercing the corporate veil.
The defendant attempted to avoid a restrictive covenant by conducting business through a company set up by his wife.
Corporate personality will be cast aside where a company is a sham or is used to evade a contractual obligation.
The sole director (and majority shareholder) of a company entered into a contract of employment with that company. He was killed whilst working for the company, but the insurance company refused to pay compensation to his widow.
As the company is a legal person, it can enter into binding contracts, with persons inside the company, as well as those outside the company.
The claimant transferred his stock of timber to a company and took out, in his own name, an insurance policy insuring against loss caused to the timber by fire.
The assets of the company are separate from the assets of its members and the members have no proprietary interest in the company’s assets.
Mrs Prest was awarded a divorce settlement of £17.5 million, but most of Mr Prest’s assets were tied up in companies that he controlled. Mrs Prest argued that the corporate personalities of these companies should be pierced.
The veil will only be pierced where (i) a person interposes a company in order to evade, or frustrate the enforcement of, an existing legal obligation or restriction, and (ii) other conventional remedies have been exhausted.
Salomon sold his business to a company that he created, in return for shares and a debenture, secured by floating charge. The company failed and Salomon enforced the charge and recovered the monies owed to him. As a result, the company’s other creditors went unpaid. The liquidator argued that Salomon should be personally liable.
Setting up a company to shield the directors or members from liability is a legitimate use of the corporate form. Holding shares in a company does not create a relationship of agency or trusteeship.