to compensation for disturbance. 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. 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. 53-61 St George's Road Glasgow Corporation . The development of these sources of law will be considered throughout the essay and this will help assess the impact on lenders following the decision in Scott v Southern Pacific Mortgages in 2014. wgci past radio personalities; auto sear jig legal Like those before him in this case, he reiterated the Woolfson starting point that it is appropriate to pierce the corporate veil only where special circumstances exist indicating that it is a mere faade concealing the true . Common law countries usually uphold this principle of separate personhood, but in exceptional situations may pierce or lift the corporate veil. 17 Adams v Cape Industries plc [1990] Ch 433 at 543 which has been cited with 18 Ibid.% atp. facts (impropriety)21 can the veil be pierced according to Woolfson v Strathclyde Regional Council.22 In Gencor ACP Ltd v Dalby (Gencor)23 and Trustor AB v Smallbone (No.2) (Trustor),24 both cases held that the corporate veil was pierced on the basis that the companies were 'used 25as a faade to conceal the true facts'. My Lords, for these reasons, I would dismiss the appeal. He said that DHN was easily distinguishable because Mr Woolfson did not own all the shares in Solfred, as Bronze was wholly owned by DHN, and Campbell had no control at all over the owners of the land. I agree with it, and for the reasons he gives would dismiss the appeal. It must, however, be kept in mind that any right to compensation for disturbance presupposes that the owner of the relevant interest has in fact suffered disturbance. LORD KEITH OF KINKEL.My Lords, This is an appeal against an interlocutor of the Second Division of the Court of Session affirming the decision of the Lands Tribunal for Scotland upon a question relating to compensation for the compulsory acquisition of land. Secondly it might be argued that the court should pierce the corporate veil, for instance, it should conclude that the company structure is a mere facade concealing the true facts applying Woolfson v Strathclyde Regional Council 10. In times of war it is illegal to trade with the enemy. It was held by the Court of Appeal (Lord Denning M.R., Goff and Shaw LL. Woolfson v Strathclyde Regional Council [1978] UKHL 5 is a UK company law case concerning piercing the corporate veil. You can use it as an example when writing your own essay or use it as a source, but you need How does the decision in DHN Food Distributors Ltd v Tower Hamlets LBC [1976] 1 WLR 852 compare with the decision in Woolfson v Strathclyde Regional Council 1978 SLT 159? 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. Academia.edu no longer supports Internet Explorer. (157) Ibid 562. Food case to be clearly distinguishable on its facts from the present case. 2. The leading case is Cape Industries. Nos. Manage Settings Therefore, English courts have shown a strong determination not to embark on any development of a group enterprise law. The argument is in my opinion unsound, and must be rejected. The statement of Lady Hale in Scott v Southern Pacific Mortgages points strongly toward the loopholes in land law, whereby the lenders can avoid the law relating to overriding interests, usually unregistered, on registered dispositions. edit. 53/55 were owned by the second-named appellant Solfred Holdings Ltd. ("Solfred"), the shares in which at all material times were held as to two thirds by Woolfson and as to the remaining one third by his wife. There are certain cases which involve attempts to use the corporate form to avoid existing legal obligations to which the defendants were subject. Note that since this case was based in Scotland, different law applied. Denning refers to the subsidiaries as . 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. Jones v Lipman, Gilford Motor Co Ltd v Horne, Woolfson v Strathclyde Regional Council, New Zealand Seamen's Union IUOW v Shipping Corporation Ltd, Official Assignee v 15 Insoll Avenue Ltd in favour of lifting the corporate veil. Woolfson v Strathclyde Regional Council [1978] UKHL 5 is a UK company law case concerning piercing the corporate veil. It is the first of those grounds which alone is relevant for present purposes. In the case Woolfson v. Strathclyde Regional Council [1978] 2 EGLR 19 (HL), Limited company 'A' carried on a retail business at a shop comprising five premises. Lord Keith observed that it is appropriate to pierce the corporate veil only where special circumstances exist indicating that it is a mere facade concealing the true facts. Where the evidence shows that a company has been used as a vehicle or device for receiving monies wrongly paid out of a claimant company in breach of a defendants duty to that company, the receipt by the third party vehicle will be treated as the receipt by the defendant. Companies use subsidiary companies rather than carrying out the activity through the parent company itself because of liability avoidance, tax, and regulatory reasons, as well as practical and geographical reasons. Note that since this case was based in Scotland, different law applied. . 33 (4) [para. Prest v Petrodel Resources Ltd and Others, [2013] UKSC 34. Usually, a corporation is treated as a separate legal person, which is solely responsible for the debts it incurs and the sole beneficiary of the credit it is owed. 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) For example: Gilford Motor Co Ltd v Horne (1933) Jones v Lipman (1962) Nationality. 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. Woolfson v Strathclyde Regional Council UKHL 5 is a UK company law case concerning piercing the corporate veil. in support of this ground of judgment and, as to the first of them, to some extent also by Lord Denning, M.R., do not, with respect, appear to me to be concerned with that principle. In my opinion the conclusion was correct, and I regard as unimpeachable the process of reasoning by which it was reached. Mr Woolfson had 999 shares in Campbell Ltd and his wife the other. . Salomon v Salomon (1897) A.C. 22 (H.L.) Mr Woolfson had 999 shares in Campbell Ltd and his wife the other. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. In the recent case Prest v Petrodel Resources Ltd[x], it was held that evasion is piercing. Commentators also note that the DHN case is self-contradictory. In Daimler Co. Ltd V. Continental Tyre And Rubber Co. Ltd[i], A company was incorporated in England for the purpose of selling in England, tyres made in Germany by a German company which held the bulk of shares in the English company. Copyright 2020 Lawctopus. From 1952 until 1963, when Schedule A taxation was abolished, payments by way of rent for Nos. The business in the shop was run by a company called Campbell Ltd. 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. In so far as Woolfson would suffer any loss, that loss would be suffered by virtue of his position as principal shareholder in Campbell not by virtue of his position as owner of the land. Mr Solomon Woolfson owned three units and another company, Solfred Holdings Ltd owned the other two. This followed the refusal by the court to allow Campbell and Mrs Woolfson to be joined as additional claimants in the proceedings. IMPORTANT:This site reports and summarizes cases. I have had the advantage of reading in print the speech of my noble and learned friend Lord Keith of Kinkel, and I agree with it. Introduction Woolfson v Strathclyde Regional Council In re FG (films) Ltd[ii], FG films wanted Monsoon registered as a British film. LORD FRASER OF TULLYBELTON.My Lords I have had the advantage of reading in print the speech of my noble and learned friend Lord Keith of Kinkel, and I agree with it. (158) Ibid 564. .Cited Prest v Petrodel Resources Ltd and Others SC 12-Jun-2013 In the course of ancillary relief proceedings in a divorce, questions arose regarding company assets owned by the husband. Further, the decisions of this House inCaddies v. Harold Holdsworth &Co. (Wake-field) Ltd.1955 S.C. Click here to start building your own bibliography. After the case . Woolfson v Strathclyde RC 1978 S.C. During the marriage the matrimonial home was in England, though for most of the time the husband was found to be resident in Monaco and there was also a second home in Nevis. Held: The House declined to allow the principal shareholder of a company to recover compensation for the . At the same time, pursuing a group interest might assist in resolving the financial difficulties. All rights reserved. 95 (Eng.) Any direct loss consequent on disturbance would fall upon Campbell, not Woolfson. Woolfson v Strathclyde Regional Council [1978] UKHL 5 is a UK company law case concerning piercing the corporate veil. [para. 59/61 St Georges Road were credited to Woolfson in Campbells Road. Copyright 2017 Netdesign Group Co.,Ltd. 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. to compensation for disturbance. Food Distributorscase (supra) is, on a proper analysis, of assistance to the appellants argument. During the First World War, the English company commenced action for recovery of a trade debt. 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. It was held that the film could not be considered British made, even though the company owning the rights was a UK company. It was maintained before this House that the conclusion of the Lord Justice-Clerk was erroneous. 8]. Woolfson v Strathclyde Regional Council [1978] UKHL 5 is a UK company law case concerning piercing the corporate veil. This was supported by a copious citation of authority, but I do not consider the proposition as such to be in any doubt. Yes! Lord Keith's judgment dealt with DHN as follows. Woolfson v Strathclyde Regional Council[viii] that the House of Lords considered that there is one circumstance in which the corporate veil can pierce, namely when there is one circumstance in which the corporate veil can be pierced, namely when there are special circumstances indicating a faade concealing the true facts. A bridal clothing shop at 53-61 St George's Road was compulsorily purchased by the Glasgow Corporation. 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 . The Land Tribunal denied it on the basis that Campbell Ltd was the sole occupier. (H.L.) The House considered the compensation payable on the compulsory purchase of land occupied by the appellant, but held under a company name. He said that DHN was easily distinguishable because Mr Woolfson did not own all the shares in Solfred, as Bronze was wholly owned by DHN, and Campbell had no control at all over the owners of the land. Campbell was throughout shown in the valuation roll as occupier of the shop premises, but its occupation was not regulated by lease or any other kind of formal arrangement. Woolfson v Strathclyde RC [1978] UKHL 5 (15 February 1978), William Trotter and Others v Young Trotter, Epping Forest District Council v Philcox [2000] EWCA Civ 515 (08 December 2000), The Magistrates of Glasgow, and Others, V James Paton, and Others. The Dean of Faculty, for the appellants, sought before this House to develop a further line of argument which was not presented to the Lands Tribunal for Scotland nor to the Second Division. Woolfson v Strathclyde Regional Council (1978): This was similar to DHN v Tower Hamlets. reasons for lifting the veil of incorporation circumstances when the veil is lifted are haphazard and difficult to categorize. Woolfson holds two-thirds only of the shares in Solfred and Solfred has no interest in Campbell. We and our partners use cookies to Store and/or access information on a device. 57 St. George's Road. 57 and 59/61 St Georges Road were owned by the first-named appellant Solomon Woolfson (Woolfson) and Nos. Draft leases were at one time prepared, but they were never put into operation. 40, which were founded on by Goff L.J. Prest Piercing The Corporate Veil? Horne. Lords Wilberforce, Fraser and Russell and Dundy concurred. Commentators also note that the DHN case is self-contradictory. Draft leases were at one time prepared, but they were never put into operation. Counsel: James R. Kitsul, for the appellant; Sarah Macdonald, for the respondent. Jones v. Lipman and Another[iv], L Agreed to sell certain land to J. Here, on the other hand, the company that carried on the business, Campbell, has no sort of control whatever over the owners of the land, Solfred and Woolfson. 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 Woolfson, 30 Restan Road, Newlands, Glasgow and (two) Solfred Holdings Limited, a Company incorporated under the Companies Acts and having their Registered Office at 18/28 Woodlands Road, Glasgow, praying, That the matter of the Interlocutor set forth in the Schedule thereto, namely, an Interlocutor of the Lords of Session in Scotland, of the Second Division, of the 3rd of December 1976, might be reviewed before Her Majesty the Queen, in Her Court of Parliament, and that the said Interlocutor might be reversed, varied or altered, or that the Petitioners might have such other relief in the premises as to Her Majesty the Queen in Her Court of Parliament, might seem meet; as also upon the case of Strathclyde Regional Council (as Successors to the Corporation of the City of Glasgow), lodged in answer to the said Appeal; and due consideration had this day of what was offered on either side in this Cause: It is Ordered and Adjudged, by the Lords Spiritual and Temporal in the Court of Parliament of Her Majesty the Queen assembled, That the said Interlocutor of the 3rd day of December 1976, complained of in the said Appeal, be, and the same is hereby, Affirmed, and that the said Petition and Appeal be, and the same is hereby, dismissed this House: And it is further Ordered, That the Appellants do pay, or cause to be paid, to the said Respondents the Costs incurred by them in respect of the said Appeal, the amount thereof to be certified by the Clerk of the Parliaments: And it is also further Ordered, That unless the Costs, certified as aforesaid, shall be paid to the party entitled to the same within one calendar month from the date of the Certificate thereof, the Cause shall be, and the same is hereby, remitted back to the Court of Session in Scotland, or to the Judge acting as Vacation Judge, to issue such Summary Process or Diligence for the recovery of such Costs as shall be lawful and necessary. 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 business in the shop was run by a company called Campbell Ltd. and the premises were its only asset. - 3rd December 1976 - Court of Session (affirmed) - 15th February 1978 - House of Lords (affirmed) However there are many such situations and this paper hashighlightedfew of them. (H.L.) I have had the advantage of reading in print the speech of my noble and learned friend Lord Keith of Kinkel, and I agree with it. the "well-recognised exception" to the rule prohibiting the piercing of the corporate veil derives from a line of cases preceding prest v petrodel which determined that only in certain limited and well defined circumstances will a court be permitted to pierce the corporate veil, including where the existence of the corporate veil is abused by 6 Adams v Cape Industries Plc [1990] Ch 433 (CA). A significant fallout of the decision in Hashem v. The business in the shop was run by a company called Campbell Ltd. SSRN-id3371379 - Free download as PDF File (.pdf), Text File (.txt) or read online for free. The issued share capital of Campbell was 1,000 shares, of which 999 were held by Woolfson and one by his wife. The issued share capital of Campbell was 1,000 shares, of which 999 were held by Woolfson and one by his wife. Woolfson v. Strathclyde Regional Council, [1978] S.C. 90 (H.L. (Piercing the veil for attempting to evade a legal obligation); In re Darby, Brougham, [1911] 1 KB. Founded over 20 years ago, vLex provides a first-class and comprehensive service for lawyers, law firms, government departments, and law schools around the world. In my opinion there is no basis consonant with principle upon which on the facts of this case the corporate veil can be pierced to the effect of holding Woolfson to be the true owner of Campbell's business or of the assets of Solfred. United Kingdom. However, in Woolfson v.Strathclyde Regional Council [14], Lord Keith refused to follow DHN and cast a shadow of doubt over Lord Denning MR's approach and principle. 542. until 2015 The principles leading to a finding of agency were considered by Atkinson J in 26 E. g. Woolfson v. Strathclyde Regional Council [1978] SLT 159, in which Lord Keith of Kinkel stated that it was appropriate to lift the veil "only where the special circumstances exist indicating that [the company] is a mere facade concealing the true facts . Facts. Food Distributors Ltd. v. Tower Hamlets London Borough Council[1976] 1 W.L.R. Im a simple gal who loves adventure, nature Resource Type Case page Court 1540 Date 15 February 1978 Jurisdiction of court United Kingdom Where Reported What people are saying - Write a review. The issued share capital of Campbell was 1,000 shares, of which 999 were held by Woolfson and one by his wife. Request a trial to view additional results, Petrodel Resources Ltd and Others v Prest, The Shipping Corporation of India Ltd v Evdomon Corporation and Another, The Esteem Settlement (Abacus (CI) Ltd as Trustee. 433 VTB Capital v Nutritek [2011] EWHC 3107 Woolfson v Strathclyde Regional Council, under the general law disregard the separate legal personality of a company if he considered that a company in which one spouse was 8, the canonical statusof a case is not immutable and static but contingent and provisional.547136 Woolfson v. Strathclyde Regional Council, (1998) 43 NSWLR 554, 557 (Sheller JA). ), refd to. In these circumstances, the appellants jointly claimed a sum of 80,000 as compensation for the value of the heritage under section 12 (2) of the Land Compensation (Scotland) Act 1963 and a further sum of 95,469 in respect of disturbance under section 12 (6) of that Act. The grounds for the decision were (1) that since D.H.N. This argument was rejected by the court for the reasons given in the opinion of the Lord Justice-Clerk. Salomon v Salomon [1896] UKHL 1. The courts have typically been averse to allow a shareholder to drop the corporate veil and obtain a benefit on the basis that he and the company are in effect the same (Woolfson v Strathclyde Regional Council [1978] UKHL 5; Tunstall v Steigmann [1962] 2 QB 593; Macaura v Northern Assurance Co Ltd [1925] AC 619 (HL); Thomas K Cheng, "The . imported from Wikimedia project. J.) This has proven to be a more successful line of argument in past case law. 935 C.A. Company Constitution What is the purpose of the memorandum of association . The parent company, D.H.N., carried on the business in the premises which were the subject of compulsory purchase. 2023 vLex Justis Limited All rights reserved, VLEX uses login cookies to provide you with a better browsing experience. ACCEPT, Strathclyde Regional Council (as Successors to The Corporation of the City of Glasgow), to the court to 'pierce the veil'. 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. Compensation for the compulsory purchase, as payable to Woolfson, ought to reflect this element of special value to him, and the claim in respect of disturbance was the appropriate way to secure that result. In my opinion there is no basis consonant with principle upon which on the facts of this case the corporate veil can be pierced to the effect of holding Woolfson to be the true owner of Campbells business or of the assets of Solfred. 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. But the shop itself, though all on one floor . Facts; Judgment; See also; Notes; References; External links; Facts. Therefore, English courts have shown a strong determination not to embark on any development of a group enterprise law. Subscribers are able to see a list of all the cited cases and legislation of a document. It is the first of those grounds which alone is relevant for present purposes. 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. I agree with it and with his conclusion that this appeal be dismissed. In Canada, the case of Ernst v. EnCana Corporation was inspired by the rule of Rylands v Fletcher. From 1952 until 1963, when Schedule A taxation was abolished, payments by way of rent for Nos. But however that may be, I consider the D.H.N. Woolfson v Strathclyde RC [1978] UKHL 5 (15 February 1978) admin March 8, 2020 INTERNATIONAL / U.K. House of Lords At delivering judgment on 15th February 1978, LORD WILBERFORCE .My Lords, I have had the advantage of reading in draft the speech to be delivered by my noble and learned friend Lord Keith of Kinkel. In Woolfson v. Strathclyde Regional Council it was held that the veil could be pierced where special circumstances exist indicating that the company is a facade concealing the true facts. Updated daily, vLex brings together legal information from over 750 publishing partners, providing access to over 2,500 legal and news sources from the worlds leading publishers. 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. View Notes - Spring+2015+ACCT4610+Topic+3 from ACCT 4610 at HKUST. case of DHN Food Distributors v Tower Hamlets (1976) 1 WLR 852 which, however, had been disapproved by the decisions in Woolfson v Strathclyde Regional Council [1978] SCHL 90 and Adams v Cape Industries plc [1990] Ch 433. From ACCT 4610 at HKUST: this was similar to DHN v Tower Hamlets Borough... You click on 'Accept ' or continue browsing this site we consider that you accept cookie! Use the corporate veil ( Woolfson ) and Nos - Spring+2015+ACCT4610+Topic+3 from ACCT at... Opinion the conclusion was correct, and for the appellant, but in exceptional situations may or... % atp must be rejected its only asset on any development of a group enterprise.. The corporate veil Georges Road were credited to Woolfson in Campbells Road to See a list of all woolfson v strathclyde regional council case summary cases! 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