Following Adams v Cape Industries Plc, further extracts from which are set out, it is below, it is clear that the faade concealing the true facts test has become the primary reference point for any lawyer investigating whether it is possible to pierce the corporate veil and even the same judgment was held in the case of Ord & Another v Belhaven Pubs Ltd[ix]. and Bronze under which the former had an irrevocable licence to occupy the premises for as long as it wished, and that this gave D.H.N. This article is licensed under the GNU Free Documentation License. Woolfson v Strathclyde Regional Council: HL 15 Feb 1978 - swarb.co.uk Woolfson v Strathclyde Regional Council: HL 15 Feb 1978 The House considered the compensation payable on the compulsory purchase of land occupied by the appellant, but held under a company name. Held: The House declined to allow the principal shareholder of a company to recover compensation for the . 53/55 St. George's Road. The one situation where the veil could be lifted was whether there are special circumstances indicating that the company is a mere faade concealing the true facts. Held: The House declined to allow the principal shareholder of a company to recover compensation for the . Koalas are marsupials that are native to the Australian continent. In a nutshell, from the above case, we get that it serves as a useful reminder of the fundamental Principle of English Law that a company has a separate legal personality from its members, and that only in exceptional circumstances will the court pierce the corporate veil. Salomon v Salomon (1897) A.C. 22 (H.L.) In Woolfson v Strathclyde BC, the House of Lords held that it was a decision to be confined to its facts (the question in DHN had been whether the subsidiary of the plaintiff, the former owning the premises on which the parent carried out its business, could receive compensation for loss of business under a compulsory purchase order notwithstanding that under the rule in Salomon, it was the . Before the Second Division this line of argument was abandoned, and the appellants instead contended that in the circumstances Woolfson, Campbell and Solfred should all be treated as a single entity embodied in Woolfson himself. Salomon v Salomon [1896] UKHL 1. (H.L.) It was disregarded as being a heresy that had to be erased. No. Thus it noted (paragraph 48) the unanimous (albeit obiter) view of the House of Lords in, (2) SA 669 (A) at 675D-E; Salomon v A Salomon & Co Ltd [1897] AC 22 ([1895 - 9] All ER Rep 33); Woolfson v Strathclyde Regional Council. In my opinion the conclusion was correct, and I regard as unimpeachable the process of reasoning by which it was reached. Editors Note:Corporate Veil is the principle in corporate law which states that company and its shareholders are two different identities independent of its existence . 53/55 St Georges Road. 54 88 D Hayton, 'Contractual Licences and Corporate Veils' [1977] C.L.J. Ltd. v. Tower Hamlets must, we think, likewise be regarded as decisions on the relevant statutory provisions for compensation, even though these parts were somewhat broadly expressed, and the correctness of the decision was doubted by the House of Lords in Woolfson v. Strathclyde Regional . 3 Woolfson v. Strathclyde Regional Council [1978] SLT 159, confirmed by the Court of Appeal in Adams v. Cape Industries Plc [1990] 2 WLR 657. I have some doubts whether in this respect the Court of Appeal properly applied the principle that it is appropriate to pierce the corporate veil only where special circumstances exist indicating that is a mere faade concealing the true facts. Lord Keith's judgment dealt with DHN as follows. They had twenty and ten shares respectively in Solfred Ltd. Mr Woolfson and Solfred Ltd claimed compensation together for loss of business after the compulsory purchase, arguing that this situation was analogous to the case of DHN v Tower Hamlets LBC.[1]. This followed the refusal by the court to allow Campbell and Mrs Woolfson to be joined as additional claimants in the proceedings. Cape Industries plc., and on an observation by Lord Keith in the House of Lords decision in Woolfson v. Strathclyde Regional Council that "it is appropriate to pierce the corporate veil only where special circumstances exist indicating that it is a mere faade concealing the true facts." A significant fallout of the decision in Hashem v. swarb.co.uk is published by David Swarbrick of 10 Halifax Road, Brighouse, West Yorkshire, HD6 2AG. . Mr Solomon Woolfson owned three units and another company, Solfred Holdings Ltd owned the other two. This single economic theory was affirmed in Amalgamated Investment and Property Co Ltd V Texas Commercial International Bank Ltd but was criticised in Woolfson V Strathclyde Regional Council. This started from the proposition that compensation for disturbance is not in a special category but simply constitutes one aspect of the value of land to the persons whose interest in it is being compulsorily acquired. Therefore, English courts have shown a strong determination not to embark on any development of a group enterprise law. I agree with it, and for the reasons he gives would dismiss the appeal. Sorry, preview is currently unavailable. In the case of Woolfson v Strathclyde Regional Council[vi], it involves a similar fact pattern to DHN involving a compulsory purchase of property where the occupier of the property was not the owner. It carried on no activities whatever. President of the Council and Minister of Justice Lon Bourgeois - Minister of Foreign Affairs Eugne tienne - Minister of War Georges Clemenceau - Minister of . However, in Woolfson v Strathclyde Regional Council the House of Lords rejected Lord Dennings view, doubting whether the Court of Appeal had applied the correct principle in DHN. Horne. In the case of D.H.N. 33 (4) [para. The business in the shop was run by a company called Campbell Ltd. These cookies will be stored in your browser only with your consent. 17 Adams v Cape Industries plc [1990] Ch 433 at 543 which has been cited with Such relationships of agency would typically involve the explicit or implicit appointment of the company to act on behalf of the shareholder in relation to some activity. An alternative to lists of cases, the Precedent Map makes it easier to establish which ones may be of most relevance to your research and prioritise further reading. Impact of overriding interests under Land Registration Act 2002, THE MODER LAW OF MORTGAGES I TAZAIA THE ROLE OF THE LAD ACT, 1999. (155) Ibid 561-2, 564. PDF Lifting, Piercing and Sidestepping the Corporate Veil Ord v Belhaven Pubs Ltd [1998 . inTunstall v. Steigmann[1962] 2 Q.B. The circumstance that Solfred owned a substantial part of the shop premises was for purposes of this argument dismissed as irrelevant, on the basis that the part of the premises owned by Woolfson was essential to the carrying on of Campbells business, so that without it the business would have to be carried on, if at all, at some completely different place. and the premises were its only asset. a sufficient interest in the land to found a claim to compensation for disturbance and (3) (per Goff and Shaw LL.J.) Only full case reports are accepted in court. There can be no doubt, and it is not now disputed by the appellants, that Campbell was throughout the occupier of the shop premises and that the business carried on there was that of Campbell. Subscribers can access the reported version of this case. 95 (Eng.) that in the circumstances Bronze held the legal title to the premises in trust for D.H.N., which also sufficed to entitle D.H.N. The facts of the case, as set out in the special case stated by the Lands Tribunal for the opinion of the Court of Session, are incorporated at length into the opinion of the Lord Justice-Clerk. I was referred to Gilford Motor Co. Ltd v Horne [1933] Ch.935, Jones v Lipman [1962] 1 WLR 832, Woolfson v Strathclyde Regional Council [1978] SLT 159, Re a Company [1985] BCLC 333, Adams v Cape Industries plc [1990] 1 Ch. We and our partners use cookies to Store and/or access information on a device. 961; [1996] CLC 990; (1996), 160 J.P. Rep. 1130; 146 New L.J. The business in the shop was run by a company called Campbell Ltd. These premises were owned by Bronze, which had originally been the wholly owned subsidiary of a bank which had advanced money for the purchase of the premises, but which had later become the wholly owned subsidiary of D.H.N. Having examined the facts of the instant case, the Lord Justice-Clerk reached the conclusion that they did not substantiate but negatived the argument advanced in support of the unity proposition and that the decision in theD.H.N. However, in contrast to DHN, the occupier of the property whose business was disturbed by the compulsory purchase was not the sole shareholder in the company who owned the property. The whole of the shop premises was occupied by a company called M. & L. Campbell (Glasgow) Limited (Campbell) and used by it for the purpose of its business as costumiers specialising in wedding garments. Held, the company was an alien company and the payment of debt to it would amount to trading with the enemy, and therefore, the company was not allowed to proceed with the action. case company bank reconciliation; primary care doctor port jefferson, ny. There the company that owned the land was the wholly owned subsidiary of the company that carried on the business. (160), 20Adam (n.18) [536] and [542]. The compulsory acquisition resulted in the extinction of the grocery business, since no suitable alternative premises could be found. Bronze had the same directors as D.H.N. Food Distributors Ltd. v. Tower Hamlets London Borough Council [1976] 1 W.L.R. A compulsory purchase order made in 1966 by Glasgow Corporation, the respondents' predecessors as highway authority in that city, provided for the acquisition of certain shop premises in St. George's Road, the date of entry being 29th January 1968. Baron Gabriel van der Elst v LPA International Inc . upon report from the appellate committee, to whom was referred the cause woolfson and others against strathclyde regional council (as successors to the corporation of the city of glasgow), that the committee had heard counsel, as well on monday the 16th as on tuesday the 17th, days of january last, upon the petition and appeal of (one) solomon (H.L.) The parent company, D.H.N., carried on the business in the premises which were the subject of compulsory purchase. A bridal clothing shop at 53-61 St George's Road was compulsorily purchased by the Glasgow Corporation. [1978] UKHL 5, [1979] JPL 169, (1978) 248 EG 777, 1978 SC (HL) 90, 1978 SLT 159, (1979) 38 P and CR 521if(typeof ez_ad_units != 'undefined'){ez_ad_units.push([[300,250],'swarb_co_uk-medrectangle-4','ezslot_2',113,'0','0'])};__ez_fad_position('div-gpt-ad-swarb_co_uk-medrectangle-4-0'); Applied Adams v Cape Industries plc CA 2-Jan-1990 Proper Use of Corporate Entity to Protect Owner The defendant was an English company and head of a group engaged in mining asbestos in South Africa. I can see no grounds whatever, upon the facts found in the special case, for treating the company structure as a mere faade, nor do I consider that theD.H.N. Here the three subsidiary companies were treated as a part of the same economic entity or group and were entitled to compensation. The latter was in complete control of the situation as respects anything which might affect its business, and there was no one but itself having any kind of interest or right as respects the assets of the subsidiary. It was maintained before this House that the conclusion of the Lord Justice-Clerk was erroneous. Draft leases were at one time prepared, but they were never put into operation. Woolfson v Strathclyde Regional Council(1978) where he described this exception as 'the principle that it is appro- priate to pierce the corporate veil only where special circumstances exist indicating that it is a mere facade concealing the true facts'. The grounds for the decision were (1) that since D.H.N. A special case was at their request stated for the opinion of the Court of Session, and on 3rd December 1976 the Second Division (Lord Justice-Clerk Wheatley, Lords Johnson and Leechman) affirmed the decision of the Lands Tribunal. The veil will be lifted only where 'special circumstances exist indicating that it is a mere facade concealing the true facts': Woolfson v Strathclyde Regional Council (1978) Gilford Motor Co Ltd v Horne (1933) Out of these cookies, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. that the group was entitled to compensation for disturbance as owners of the business. The US subsidiary had no assets. It was argued, with reliance onD.H.N. Woolfson v Strathclyde Regional Council (1978) - 13th May 1975 - Lands tribunal in Scotland. It was held that the film could not be considered British made, even though the company owning the rights was a UK company. subsequent case following adams (O) williams v natural health foods ltd. subsequent case following adams (W) inland revenue commissioners v adam & partners ltd. company voluntary arrangement - a composition in satisfaction of the company's debts or a scheme of arrangement of its affairs. 1 reference. Even Evasion can be considered as Faade only. Denning refers to the subsidiaries as . Lords Wilberforce, Fraser and Russell and Dundy concurred. was in a position to control its subsidiaries in every respect, it was proper to pierce the corporate veil and treat the group as a single economic entity for the purpose of awarding compensation for disturbance; (2) that if the companies were to be treated as separate entities, there was by necessary implication from the circumstances an agreement between D.H.N. Counsel: James R. Kitsul, for the appellant; Sarah Macdonald, for the respondent. Therefore, English courts have shown a strong determination not to embark on any development of a group enterprise law. 90 (15 February 1978) Links to this case Content referring to this case We are experiencing technical difficulties. There are certain cases which involve attempts to use the corporate form to avoid existing legal obligations to which the defendants were subject. The business in the shop was run by a company called Campbell Ltd. Lord Keith's judgment dealt with DHN as follows. Statutes Noticed: Expropriation Act, R.S.B.C. We do not provide advice. WOOLFSON V. STRATHCLYDE REGIONAL COUNCIL 521 Woolfson and Another v. Strathclyde Regional Conncll HOUSE OF LORDS LORD WILBERFORCE, LORD FRASER OF TULLYBELTON, LORD RUSSELL OF KILLOWEN AND LORD KEITH OF KINKEL January 16 and 17 and February 15, 1978 Oompulsory purcha8e-Oompensationr-DiBt'Uf'bance-Shop premiBeB occupied by o Ltd.-U8ed by 0 Ltd. Jor purp08es oj its busine8a-Part oj premises owned . You can use it as an example when writing your own essay or use it as a source, but you need The third company, also a wholly owned subsidiary of D.H.N., owned as its only asset the vehicles used in the grocery business, and it too carried on no operations. Thus Adams significantly narrowed the ability of courts to lift the veil in contrast to where the Court of Appeal would lift the veil to achieve justice irrespective of the . Woolfson v Strathclyde Regional Council (1978) where he described this exception as 'the principle that it is appro-priate to pierce the corporate veil only where special circumstances exist indicating that it is a mere facade concealing the true facts'. The carrying on by the company of its business conferred substantial benefits on Woolfson. 2427356 VAT 321572722, Registered address: 188 Fleet Street, London, EC4A 2AG. 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