Salomon v Salomon
Separate entity concept + limited liability concept ( corporate veil, which ensures that shareholders are not personally liable to creditors for their company’s debts, even though:
❖ all the company’s shares are beneficially owned by one person; and
❖ the sole purpose of the company was to obtain the benefit of limited liability.
Macaura v Northern Assurance: Where a member transfers property to his company, he loses any proprietary interest in the property. [A company owns property distinct from the property of its members.]
LIFTING the corporate veil
Incorporation for a fraudulent/improper purpose
❖ Gilford Motor v Horne: ...view middle of the document...
➢ *Holding company owned land on which its wholly owned subsidiary conducted business.
➢ *The land was compulsorily acquired.
➢ *Holding company argued that it in fact conducted the business on the land ( entitled to compensation for disturbance caused by the compulsory acquisition.
➢ The subsidiary did not do anything (only acted on sole direction of holding company) ( subsidiary acted as agent ( holding company entitled to claim compensation.
❖ Spreag v Paeson
➢ *P Pty Ltd misrepresented the production rate of equipment that it sold to S.
➢ *C was parent company of P.
➢ P acted as agent for C ( corporate veil lifted, because:
▪ C really carried on the business of P;
▪ Persons conducting the business of P were appointed by C;
▪ C was the head and brain of the trading venture;
▪ C governed the adventure, decided what should be done & what capital should be embarked on the venture;
▪ P made profits by C’s skill and direction;
▪ C was in effectual & constant control of P; and
▪ P had no bank account.
❖ Pioneer Concrete Services v Yelnah:...