PIERCING THE CORPORATE VEIL: TORT CLAIMS This r

This research paper examines if it is possible to find a solution to the problem of whether or not the veil of incorporation should be lifted as regards tort claims. A solution can be found, but only if statutory tort reform is enacted in England. English courts have steadfastly resisted efforts through private law suits to pierce the corporate veil except under very egregious circumstances where observing corporate niceties defeated the very purposes of justice itself. They have adhered excessively to form over substance. They have in a series of very narrow rulings been grudgingly willing to lift the corporate veil where the legislature has enacted statutes which clearly indicate its intent to prevent fraud and other forms of misconduct by company directors and controlling shareholders. However, in the absence of statutory tort reform English courts appear wedded to a more reactionary stance.

The leading case is Salomon v. Salomon [1897] AC 32, (1895-1899), All ER 32. There a founding unincorporated shareholder, just before his trading company went insolvent, sold his business to a new English company which was owned by himself and six other nominal shareholders. After the business fell on hard times, the new company was liquidated. The issue was whether the founding shareholder was liable for the debts of the company. The House of Lords, L.J.s Halsbury, Watson, Herschell, Macnaghten, Morris and Davey, reverse

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they transferred the assets and liabilities of the first company to the second company "without regard to their duties as directors and shareholders." It is doubtful whether the court could have reached this decision if the corporate formalities had been observed. In any event it is unclear whether Creasey is still good law. According to Comparative Commercial Law The Veil of Incorporation, it was overruled by Ord v. Belhaven Pubs Ltd. [1998] 2 B.C.L.C. 447 CA. In Acatos and Hutcheson Plc v. Watson [1994) (Ch.D.) Chancery Division, a case involving the validity of a corporate reorganization, different and more restrictive standard than the one in Creasey was announced. The corporate veil could only be pierced where there was no sound commercial reason for the transaction in question and those who dealt with the company were thereby disadvantaged. Applicability to Tort Claims Sometimes the courts' excessively formalistic approach to the issue appears to produce a fair and just result. In Catherine Lee Appellant v. Lee's Air Farming Ltd. Respondents [1960) Judicial Committee, the issue was whether a New Zealand widow's statutory workers' compensation claim under a 1922 statute should be honored. Her husband was a pilot for a
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Some common words found in the essay are:
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Approximate Word count = 2155
Approximate Pages = 9 (250 words per page)

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