[Slide 7] Salomon v A Salomon & Co Ltd (1897)

Facts
The company went bankrupt when the business failed.
The company didn`t have sufficient assets to pay its unsecured creditors.
Liquidators of the company sued the individual shareholder, Salomon.
Issue Was Salomon obliged to pay the debt?
Decision No
Reasoning
The House of Lords held that a corporation is an entity separate from its members.
Only the corporation held the debt; the individual shareholders did not hold the debt.
If a company fails to pay its debts, the person to be sued is the company, not its members.
[Slide 12] Gilford Motor Co v Horne (1933)
Facts
Mr Horne was an ex-employee of the Gilford motor company and his employment contract provided that he could not
solicit the customers of the company.
In order to defeat this, he incorporated a limited company in his wife`s name and solicited the customers of the company.
The company brought an action against him.
Issue Did court lift the corporate veil against the company set up by Horne?
Decision Yes
Reasoning
The court was satisfied that the company was formed by Horne for the purpose of avoiding liability under the agreement.
The court noted that while a company usually has its own separate legal identity, the company was formed as a device, a
strategem, in order to mask the effective carrying on of business of Mr Horne, in which it was clear that the main purpose
of incorporating the new company was to perpetrate fraud.
[Slide 12] Adams v Cape Industries plc(1990)
Facts
The plaintiffs obtained a judgment against Cape an English registered company in the American courts.
As Cape had no assets left in the US, they then sought to enforce the judgment against the parent company in the group in
the English courts.
The plaintiffs sought to ignore the separate legal personality of a parent (Cape) and its subsidiary company and to hold the
parent company liable for the obligations of the subsidiary.
Issue Did court lift the corporate veil against Cape?
Decision No
Reasoning
The court concluded that although Cape`s motives in dealing its US its business through its various subsidiaries was to try
to minimise its presence in the US to avoid tax and other liabilities and that that might make the company morally
culpable, but there was nothing legally wrong with this.
[Slide 12] Prest v Petrodel Resources Ltd (2013)
Facts
Wife asked the court to lift the corporate veil to procure the transfer of seven properties legally owned by two companies
within the Petrodel Group, which is controlled by the husband, in partial satisfaction of the lump sum to the wife.
Issue Was there abuse of corporate form?
Decision No
Reasoning
The court held that there was no evidence that the husband had been seeking to conceal or evade any legal obligations to
his wife.
There was legal interest in properties vested in company long before the marriage broke up.
The properties had been acquired before the companies had their own resources to do so.

[Slide 22] Saudi Al Jubail Admiralty in Rem No 399 of 1984

Facts
The Plaintiff entered into a charterparty with Cargo Carriers Ltd (CCC) in respect of the plaintiffs vessel (The Fidelity)
- Charterparty: A written contract between the owner of a vessel and the one (the charterer) desiring to empty the vessel
setting forth the terms of the arrangement, i.e., freight rate and ports involved in the contemplated trip.
The plaintiffs arrested The Saudi Al Jubail in a sister-ship action. To succeed, Plaintiffs had to show that the charterer of
The Fidelity was the beneficial owner of The Saudi Al Jubail.
- Sister-ship action: the arrests of another ship belonging to the same owner.
The Saudi Al Jubail was apparently owned by Omega Shipping Co Ltd (OSC)
The plaintiffs alleged that both CCC and OSC were controlled by one Orri.
However as it transpired, CCC did not actually exist
Issue Was there abuse of corporate form?
Decision Yes
Reasoning
Orri did not keep the companies separate from one another or from his own personal affairs.
The court therefore concluded that Orri was the beneficial owner of the Saudi Al Jubail, notwithstanding that it was
nominally owned by OSC.
The court lifted the corporate veil on the basis that the company was a sham or faade where Orri used the company as an
extension of himself and makes no distinction between the company`s business and his own.
[Slide 22] Children`s Media Pte Ltd and Others v Singapore Tourism Board (2009)
Facts
STB had agreed to sponsor an event called Listen Live, which was to be staged in Singapore by the defendants, Children's
Media Limited ("CML"), Tribute Third Millennium Limited ("Tribute") and Anthony David Hollingsworth ("Tony
Hollingsworth").
Tony Hollingsworth was a director and CEO of both CML and Tribute. Tribute is the sole member and guarantor of CML
whilst Tony Hollingsworth is the sole shareholder of Tribute.
Shortly after the signing of the agreement, the defendants informed STB that they were cancelling the event, but refused to
refund the sponsorship monies which STB had paid for the staging of Listen Live.
Issue Were the companies used as a faade or sham?
Decision Yes
Reasoning
The court found that two companies were no more than corporate puppets compliantly dancing to the tune of their
common CEO and that the CEO treated their assets as his own.
Given that the companies were used as a faade and sham to siphon off money for the CEO, the court pierced the corporate
veil and made the CEO personally liable to reimburse monies paid in good faith to the companies.
[Slide 21] Armagas Ltd v Mundogas SA (1986)
Facts
Amidst apparent fraud, an agent (Magelssen on behalf of Mundogas) purported to conclude an agreement leasing a ship
back from its buyer (the principal - Mundogas) for a period of 3 years
The agent only had actual authority to conclude an agreement which lasted for 1 year
The agent claimed that he had obtained specific authority for the transaction
The agent was appointed as the principals chartering manager
Issue Was the principal bound by the agreement?
Decision No
Reasoning
The House of Lords suggested that there is no such thing as a self authorising agent.
For apparent authority to operate, the representation as to the agent`s authority must come from the principal and not from
the agent.
Principal not liable for agent`s false representations
The agents title of chartering manager did not bring with it the apparent authority to conclude the contract or represent
specific authorization

[Slide 22] Royal British Bank v Turquand (1856)

Facts
The company could only borrow such sums as were authorized by a general resolution of the company.
The company borrowed money.
When sued, they pleaded that a proper resolution had not been passed.
Issue Was the company bound?
Decision Yes
Reasoning
A party dealing with the company in good faith is entitled to assume that all matters of internal requirements and
procedures have been complied with. (Indoor`s management rule / rule in Turquand`s case)
The company will consequently be bound by the contract even if the internal requirements and procedures have not been
complied with.
[Slide 23] Northside Developments Pty Ltd v Registrar-General (1990)
Facts
ND mortgaged its lands to Barclays.
The mortgage was executed under the company`s common seal, signed by a director (Robert Sturgess) and counter-signed
by a company secretary.
The articles were not complied with as the company secretary had not been properly appointed.
The other directors also had no knowledge of the mortgage and had not authorised the director to affix the company seal.
The mortgage was given to secure a loan made to other companies controlled by Robert Sturgess and in which ND had no
interest.
When Barclays exercised its power of sale as mortgagee after the mortgagor defaulted, ND argued that it did not execute
the mortgage.
Issue Whether ND was bound by the mortgage?
Decision No
Reasoning
Barclays should have been put to inquiry and that it had failed to carry out inquiries.
The nature of transaction was such as to put Barclays to inquiry, which is, the purpose of the transaction was not for the
benefit of ND.
Dawson J also held that the transaction was outside the apparent authority of Robert Sturgess.
[Slide 23] Banque Bruxelles Lambert v Puvaria Packing Industries (Pte) Ltd (1994)
Facts
Directors of PPI undertook a loan from BBL (bank) which they had no authority to do, and were in breach of their
fiduciary duty to the company.
Issue Whether the debts incurred were void because they were ultra vires the company?
Decision No
Reasoning
The bank had no notice that Papan was not acting for PPI`s purpose when he entered into the transaction on its behalf.
The transactions looked like an ordinary business deal among companies within the same group; in fact, it might have been
said that the transaction was for the apparent benefit of all three companies involved.
Hence, BBI was not put on inquiry as to Papan`s authority.
*Papan MD and majority of shareholder in PPI; borrowed money from bank on behalf of PPI