Company Law - English law Case Study Example | Topics and Well Written Essays - 2500 words

Company Law - English law - Case Study ExampleCommentators have attempted to categorise those decisions under dissimilar headings, such as agency, fraud, group enterprise, tort and so forth6. What is clear on a close reading of the cases which have distinguished Salomon is that the courts will only deputise - by lifting the veil of incorporation - where there is clear severalise of wrongdoing or where they are required to interfere by Statute. There is therefore a presumption that members of a limited company are only liable to the extent of any unpaid amount on nominal value of their shares unless wrongdoing contribute be established.LJM Limited seems to have been in incorporated for the sole intention of providing a vehicle for the directors Jean, Lynette and Lauren to unlawfully uncase W&H Limited, its shareholders and its members of its corporate assets and any contain profits from the international contract.There is authority to suggest that the courts will lift the veil t o prevent evasion of an existing obligation7 and the court will grant an prohibition/specific performance in that instance. For a short while it also seemed to be the case that the court would lift the veil where there was clear evidence of asset stripping. In Creasey v. Breachwood Motors Ltd 19928 proprietors of Breachwood Welwyn Ltd transferred that companys assets to the defendant company. The evidence indicated that the defendant company had been formed for the sole purpose of avoiding the payment of a substantial wrongful dismissal claim. Breachwood Welwyn Ltd was thence struck off the company register following the procedure laid down in Section 652 of the Companies Act 1985 hence depriving the plaintiff of any redress. Robert Southwell QC, school term as deputy High Court Judge, held that the plaintiff could present his claim for damages directly against the new company, Breachwood Motors Limited, as its sole purpose was to strip Breachwood Welwyns assets and deprive Crease y of redress. The decision in Creasey was unequivocally overruled in Ord & Another v Belhaven Pubs Ltd 1998 by the Court of Appeal. Hobhouse L.J said Creasey v. Breachwood . represents a wrong adoption of the principle of piercing the corporate veil. Therefore, in my judgement the case of Creasey v. Breachwood should no longer be treated as authoritative.The Court of Appeal cited its previous decision in Adams v. mantlepiece Industries plc 19909 where plaintiffs were not able to seek redress from a holding company when its subsidiary (the defendant) went into liquidation. The House of Lords have endorsed this stricter interpretation of Salomon more recently in Williams v. native Life Health Foods Ltd 199810. In that case a franchise company had already gone into liquidation by the time a misrepresentation was discovered. The plaintiff sought redress directly from the sole director of the former franchise company. Their Lordships held not only that the corporate veil was sacrosanc t and should only be raise in the most