Business LAw
Research Paper: The principle of a separate corporate personality is a fundamental concept in Business Law. However this does not stop the courts from lifting or piercing the veil to see what lies beneath.
Critically discuss this statement citing the relevant case law.
As is evident with most principles of law there are exceptions to the doctrine of separate legal personality. The courts will generally depart from the principle separate corporate personality in certain instances where tools such as enemy, agency and fraud are used to pierce the corporate veil. Debdor v Wilkinson
It is commonplace within the law that equity will not allow an individual to use a company as a shield for improper conduct or fraud; the courts are thus prepared to pierce the corporate veil to combat fraud. Fraud allegations must be proven in depth as failure to prove such results in a penalty of payment of costs. CJ Williams in the decision of Debdor v Wilkinson posited that the corporate vehicle will not be used as a device to treat employees unfairly. Here the Defendant (Foster) purchased a hotel business from Bresmay (a company) .The sale agreement included a requirement that listed employees would be retained on their original terms of employment and allowed F to maintain the name Bresmay. F transferred the hotel business to another company, Debdor, of which he was the majority shareholder and which he controlled. Subsequently, one of the listed employees was dismissed by Bresmay and she obtained judgment against that company for wrongful dismissal. The judgment was not satisfied by F and she levied execution on the goods and chattels at her place of work. The court Marshall prior to removing the good which he had already loaded on to a truck was handed a cheque by F which was drawn on Debdor’s account and the goods were returned. Debdor subsequently claimed a refund of the money from the chief marshall. The court on appeal held that it was not the ordinary case of a
Critically discuss this statement citing the relevant case law.
As is evident with most principles of law there are exceptions to the doctrine of separate legal personality. The courts will generally depart from the principle separate corporate personality in certain instances where tools such as enemy, agency and fraud are used to pierce the corporate veil. Debdor v Wilkinson
It is commonplace within the law that equity will not allow an individual to use a company as a shield for improper conduct or fraud; the courts are thus prepared to pierce the corporate veil to combat fraud. Fraud allegations must be proven in depth as failure to prove such results in a penalty of payment of costs. CJ Williams in the decision of Debdor v Wilkinson posited that the corporate vehicle will not be used as a device to treat employees unfairly. Here the Defendant (Foster) purchased a hotel business from Bresmay (a company) .The sale agreement included a requirement that listed employees would be retained on their original terms of employment and allowed F to maintain the name Bresmay. F transferred the hotel business to another company, Debdor, of which he was the majority shareholder and which he controlled. Subsequently, one of the listed employees was dismissed by Bresmay and she obtained judgment against that company for wrongful dismissal. The judgment was not satisfied by F and she levied execution on the goods and chattels at her place of work. The court Marshall prior to removing the good which he had already loaded on to a truck was handed a cheque by F which was drawn on Debdor’s account and the goods were returned. Debdor subsequently claimed a refund of the money from the chief marshall. The court on appeal held that it was not the ordinary case of a