Chapter 5 - Seperate Legal Entity

Question 1

1) Salomon vs Salomon and Company Ltd (1897)

Answer 1

First Instance: It was believed that the company was the agent of Salomon.
Court of Appeal: Agreed, but believed that the limited liability was reserved for genuine shareholders (Not ‘one substantial person and six mere dummies’) - Thus, looked beyond the separate legal entity.
House of Lords: Overruled the previous decisions, stating that the company was registered correctly and that Salomon was indeed separate from his company - Separate legal entity established.

Question 2

2) Lee vs Lee’s Air Farming Ltd (1961)

Answer 2

It was decided that it is possible in law for one person to have dual capacity - Separate Legal Entity Reaffirmed.

Question 2

3) Malyon vs Plummer (1964)

Answer 2

Ruled that since the husband died, so to did his company - Thus, disregarding the separate legal entity.

Question 3

4) Buchan vs Secretary of State for Employment, Ivey vs Secretary of State for Employment (1997)

Answer 3

Being directors, they could have stopped the decision to be dismissed, thus, veil of incorporation was lifted - Disregarding Separate legal entity.

Question 4

5) Secretary of State for Trade and Industry vs Bottrill (1999)

Answer 4

Question was whether or not Bottrill was an employee, it was ruled that the veil should not be lifted as he held a genuine employment contract - Thus, separate legal entity reaffirmed.

Question 5

6) Macaura vs Northern Assurance Company Ltd (1925)

Answer 5

Court held that the veil of incorporation should not be lifted as, He had no interest in the timber and as a shareholder could not insure the company’s assets - Reaffirmation of Separate Legal Entity.

Question 6

7) Canada: Constitution Insurance Co of Canada vs Kosmopoulos (1987)

Answer 6

The court held that it was not necessary that the insured should have a legally enforceable claim in the property. Deemed that relation to, or concern in the subject matter resulting in a loss on occurrence of the insured risks was sufficient - Separate Legal Entity Disregarded.

Question 7

8) Adams vs Cape Industries Plc (1990)

Answer 7

Veil not lifted, damages not awarded through its subsidiary - Separate Legal Entity Reaffirmed.

Question 8

9) Prolly Peck International Plc (No. 3) (1996)

Answer 8

Salomon principle is one that is binding on first-instance judges, veil not lifted- Separate Legal Entity Reaffirmed.

Question 9

10) Creasey vs Breachwood Motors Ltd (1993)

Answer 9

One company substituted for another, holding the latter liable. Lifted the veil of incorporation - Separate Legal Entity Disregarded.

Question 10

11) Ord and Another vs Belhaven Pubs Ltd (1998)

Answer 10

In absence of impropriety, sham or concealment in group restructuring, veil should not be lifted to make the shareholders of the defendant company liable - Separate Legal Entity Reaffirmed.