Facts[ edit ] Cape Industries plc was a UK company, head of a group. Its subsidiaries mined asbestos in South Africa. They sued Cape and its subsidiaries in a Texas court. Cape was joined and argued there was no jurisdiction to hear the case.
His sons wanted to become business partners, so he turned the business into a limited company.
His wife and five elder children became subscribers and the two elder sons became directors but as nominee for Salomon, making it a one-man business.
Transfer of the business took place on 1 June Soon after Mr Salomon incorporated his business there was a decline in boot sales, exacerbated by a series of strikes which led the Government, Salomon's main customer, to split its contracts among more firms to avoid the risk of its few suppliers being crippled by strikes.
Salomon's business failed, defaulting on its interest payments on the debentures half held by Broderip.
Gilford Motor Co Ltd v Horne: CA July 28, dls Off Company, References:  All ER ,  Ch Coram: Lord Hanworth MR, Lawrence and Romer LJJ Ratio: The defendant was the plaintiff’s former managing director. He was bound by a restrictive covenant after he left them. To avoid the covenant, he formed a company and sought to. In the first case, 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. Spokeo searches thousands of sources across 12 billion public records to look up the most recent owner of that number, whether it’s a landline or cell phone number, the location, and even the carrier if available.
Broderip sued to enforce his security in October The company was put into liquidation. When the company failed, the company's liquidator contended that the floating charge should not be honoured, and Salomon should be made responsible for the company's debts.
Issues[ edit ] The liquidatoron behalf of the company, counter-claimed wanting the amounts paid to Salomon paid back, and his debentures cancelled.
He argued that Salomon had breached his fiduciary duty for selling his business for an excessive price.
|Lifting of Corporate Veil with reference to Leading Cases||It constitutes the bedrock principle upon which company is regarded as an entity distinct from the shareholders constituting it.|
|Gilford Motor Co Ltd v Horne||Grateful if anyone can answer ANY the following questions please:|
He also argued the formation of the company in this was fraud against its unsecured creditors. It was undisputed that the shares were fully paid up.
He said the company had a right of indemnity against Mr Salomon. He said the signatories of the memorandum were mere "dummies", the company was just Mr Salomon in another form, an alias, or at most his agent. Therefore, it was entitled to indemnity from the principal.
The liquidator amended the counter claim, and an award was made for indemnity. Salomon had abused the privileges of incorporation and limited liability, which Parliament had intended only to confer on "independent not counterfeit shareholders, who had a mind and will of their own and were not mere puppets".
Lindley LJ an expert on partnership law held that the company was a trustee for Mr Salomon, and as such was bound to indemnify the company's debts. The incorporation of the company cannot be disputed see s.
Whether by any proceeding in the nature of a scire facias the Court could set aside the certificate of incorporation is a question which has never been considered, and on which I express no opinion, but, be that as it may, in such an action as this the validity of the certificate cannot be impeached.
The company must, therefore, be regarded as a corporation, but as a corporation created for an illegitimate purpose. Moreover, there having always been seven members, although six of them hold only one 1l.
Aron Salomon cannot be reached under s. As the company must be recognised as a corporation, I feel a difficulty in saying that the company did not carry on business as a principal, and that the debts and liabilities contracted in its name are not enforceable against it in its corporate capacity.
But it does not follow that the order made by Vaughan Williams J. A person may carry on business as a principal and incur debts and liabilities as such, and yet be entitled to be indemnified against those debts and liabilities by the person for whose benefit he carries on the business.
The company in this case has been regarded by Vaughan Williams J.
I should rather liken the company to a trustee for him - a trustee improperly brought into existence by him to enable him to do what the statute prohibits.
It is manifest that the other members of the company have practically no interest in it, and their names have merely been used by Mr. Aron Salomon to enable him to form a company, and to use its name in order to screen himself from liability.
I do not go so far as to say that the creditors of the company could sue him. In my opinion, they can only reach him through the company.Gilford Motor Co Ltd v Horne Gilford Motor Co Ltd v Horne  Ch is a UK company law case concerning piercing the corporate veil.
It gives an example of when courts will treat shareholders and a company as one, in a situation where a company is used as an instrument of fraud. Facts Mr EB Horne was formerly a managing director of the Gilford Motor Co .
Gilford Motor Co Ltd v Horne  Ch is a UK company law case concerning piercing the corporate veil. It gives an example of when courts will treat shareholders and a company as one, in a situation where a company is used as an instrument of fraud.
INTRODUCTION Corporate personality has been described as the ‘most pervading of the fundamental principles of company law”.
It constitutes the bedrock principle upon which company is regarded as an entity distinct from the shareholders constituting it. torosgazete.com vacanza. Gilford Motor Co Ltd v Horne: CA July 28, dls Off Company, References:  All ER ,  Ch Coram: Lord Hanworth MR, Lawrence and Romer LJJ Ratio: The defendant was the plaintiff’s former managing director.
He was bound by a restrictive covenant after he left them. To avoid the covenant, he formed a company .
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