Separation of Legal Personality and Lifting the Corporate Veil

This report covers the separation of legal personality and the lifting of the corporate veil from the cases of Salomon v A Salomon co ltd (1897), Catherine lee v Lee’s Air farming ltd (1960). Salomon v Salomon was the first principle case of its kind and its principle was that a limited company is a separate legal entity, in catherine lee v lee this case was reaffirmed, and Gilford Motors v Horne was the first law case to ‘pierce the corporate veil.WHAT IS THE PRINCIPLE OF separate CORPORATE PERSONALITY?There are 3 types of ownership generally speaking in the law context. There are sole traders, partnerships and companies. Sole traders are the sole owners to a business entity in which there is no legal distinction between the business and the owner. The owner receives all profits and is responsible for its debts as well. A partnership is when 2 or more parties agree to advance their interests. There are 2 types of partnership, which are the general partners and limited p artners. General partners are liable for all debts and obligations whereas the limited partners contribute working capital and are not liable for the debts of the business entity. There are 2 types of companies:Private limited company (LTD) & Public limited company (PLC)Private limited companies is usually owned by fewer people and usually are smaller businesses who do not trade in the stock exchange, their business accounts don’t need to be audited and their statements are also private, whereas public limited companies need to public their financial statements and get audited. The advantage of this type of ownership over others is that there is a limited liability of the owners of business as the business is a separate legal personality. meaning of limited liability?Limited liability is referring to the legal protection to shareholders, whether it be private or public limited companies in which the financial liability of every shareholder of the business entities is limited to the value of their fully paid shares, in short shareholders will not lose more than they put in, into the business. This is because the business itself is a legal entity on its own. Creditors can only sue the company for its assets, any unpaid capital and guaranteed capital. The company must declare its limited liability in its name and must provide financial information for the public inspection. the concept of separate legal personality.The contractual capacity is that a company can enter into any contract under its name and is also liable for such contracts. The separate business entity also has some legal powers, for example to sue on its own behalf and even suing its own members. It is a separate property and does not belong to any of its members. The company will still continue as normal even in the event of death to any of the owners or any transfer of any stock. The shares of the business entity are completely transferable and approvals are not required unless stated or a greed. The first principle case to arise is Salomon v A Salomon,Mr. A Salomon was a sole trader and was doing well as a sole trader. Mr. Salomon’s sons became interested in joining the business, so he incorporated his business to a limited liability company. Mr. Salomon sold his business for  £39,000 of which  £10,000 was debt to him; He kept 20,001 of the 20,007 shares, so he was principle shareholder and principle creditor. The company then went into liquidation and the liquidator then accused Mr. A Salomon of fraud and stated that the debentures used as a  security of the debt is invalid.The judge Vaughn Williams accepted his argument saying that â€Å"Mr. Salomon had created the company solely to transfer his business to it, the company in reality was his agent and he as principle was liable to debts.† The House of Lords ruling was to hold firmly the doctrine of corporate personality as is mentioned in the companies’ act 1862, it is so that creditors o f a failing company cannot take the shareholders to courts over an outstanding debt because the company is a separate legal entity. Another case that reaffirmed Salomon v Salomon is Catherine Lee v Lee Farming co. Geoffrey Lee had a farming company and held 2999 shares of the 3000, he was the sole director and chief pilot and unfortunately died in a plane crash.Mrs. Lee tried to claim for damages of  £2340 under the Workers Compensation Act (1922) for the death of her husband. The Privy Council advised Mrs. Lee that she is entitled to compensation, since it is possible Mr. Lee can have a contract with the company he owned. The company is a separate legal entity.It is generally the rule regarding limited companies that the entity is a separate legal personality. There are exceptions to this rule when the courts will not treat it as a separate legal entity, this is known as ‘lifting the corporate veil’. The courts will ignore the separate personality when there is fraud , or by statute, or whether it’s an enemy during wartime, or if there is an agency involved with complications or when there is a ‘tort’. The case of Gilford Motors v Horne where Mr. Horne was a former managing director at the Gilford motors, his employment contract clause 9 said he cannot solicit customers of the company if he were to leave employment.Mr. Horne was later fired, after that he set up his own business and undercut Gilford Motors prices, later being told he was possibly in breach of contract; he decided to set up a company in which his wife and friend are directors and only shareholders. Mr. Horne later sent out fliers which read â€Å"Spares and service for all models of Gilford vehicles. 170 Hornsey Lane, Highgate, N. 6. Opposite Crouch End Lane†¦ No connection with any other firm†. This company had no contract with Gilford Motors about not competing but Gilford Motors did bring up actions that needed attention from the courts, Which w as that the company was being used as an instrument of  fraud.The Court of appeal did grant the injunction and Lord Hanworth mentioned â€Å"the purpose of it was to enable him, under the cloak or sham, to engage business on consideration of agreement, was one the former employees would object to†. Since the Adams v Cape indsutries case courts have changed their attitude and made the salomon principle a lot stronger. Courts will be more likely to lift the corporate veil when the court is having a look at a statute, or contracts. The court must be satisfied that the company is a faà §ade and which should show abuse of the corporate form. Another way the courts will decide to lift the veil is if it can be proven that the company is an authorized agent of its controllers or members.

Oscar Triplett Case Analysis

Triplett had been in insane asylums before and was released but still considered mentally unstable, which reflects poorly upon the Canadian justice system at that time. At the inquest, various people admitted that they knew he was a danger in the days before he died yet only one person attempted anything and that strikes me as odd. The third discrepancy is why Mrs.. Temple was not punished in any way after having killed Triplett. She admitted that her shot took his life, the coroner's report corroborated with this admission of guilt and yet, she was not punished.Again, there re various reasons that could explain this and I will briefly look at each one. The fourth discrepancy Is how the police force and the detectives appear so uninterested In this case. A proper Investigation did not start until December 17th, 4 days after the death of Triplett. Even after the investigation had begun, there was no urgency to come to the bottom of what really happened. On December 13th 1918 Mrs.. Loi s May Temple shot, and killed, James Oscar Triplett in defense of her honor, her life and her daughter's life.That afternoon Jacob Statesman went to the Temples' house to make sure that Triplett had not harmed Mrs.. Temple or her daughter in any way. Shortly after Statesman had arrived they became aware that Triplett was at the house. Triplett kept threatening Mrs.. Temple and her young daughter, using obscene language, so both Statesman and Temple pointed guns at Triplett until he exited the house. Triplett began killing chickens in the hen house, throwing them around, until he finally went down to the river. When Triplett returned he climbed on top of the roof and sat there, yelling threats and random nonsense. On her way to the barn Mrs..Temple shot at Triplett, and both Statesman and Temple thought she had killed him then but they were incorrect. While Temple was at the barn Statesman tried to coax Triplett off the roof, firing four shots in his direction in the process. He even tually succeeded and then began chasing Triplett around the house while Mrs.. Temple was inside. Triplett tried entering the house through the back door but during his attempt both Statesman and Temple shot at him, Temple firing through the door and Statesman firing directly at him. They both agreed that it was Mrs.. Temple's shot that had killed him, and not Statesman's shot.For the most part, the statements of Jacob Statesman and Lois May Temple regarding the death of Oscar Triplett were identical. However, there were slight differences that were peculiar. The first noticeable difference was when they were describing when Mrs.. Temple first saw Triplett on the porch. She claimed that she had seen him before she reached the top of the hill and that he had opened the cellar door before Statesman reached the top of the hill. However, Statesman claimed that she had reached the top of the hill Detour seen screamed Tanat Earliest was on near porch, Ana Tanat en Ana wellness's t opening of the cellar door.The simplest explanation for this difference is that Statesman is smaller than Mrs.. Temple in height and that gives him a different view of the world than she has. Another explanation could be that during traumatic events, small details sometimes become trivial and are forgotten by the person in question. The second peculiarity is the issue of the guns. In both his statements Statesman recalled Mrs.. Temple asking him for help with loading the magazines; in the statement he gave at the inquest he claimed that had to show her how the guns worked and how to fill the magazine.The claim he made during his inquest statement is curious because Temple had already fired a shot before asking him for elf. Another reason it is curious is that Temple never mentioned needing help with how to work the guns in either of her statements. One explanation for this is that Statesman felt emasculated by the whole affair because he was unable to properly protect Mrs.. Temple and her c hild. Therefore, in his statements he tried to make himself appear more manly and helpful than he really was during the ordeal. The third difference in their statements is how many shots Statesman really fired.In his initial statement, he claimed that he had shot six in total – four whilst he was on the of, one discharge whilst chasing Triplett, and one when Triplett was trying to enter the house. However, during the inquest he only mentioned the last two shots; he said that he had never made it onto the roof, but in his initial statement he claimed he had made it onto the roof and that he had fired four shots at Triplett. Again, this could have been Statesman's way of fighting the emasculation he felt he had suffered. It is odd that he felt the need to make this claim in his first statement, when Mrs..Temple never mentioned it in either of her statements. Every person in the community agreed that Oscar Triplett was not a sane man. He had been an inmate in the Insane Asylum a t Pomona, but had been released for unknown reasons. It is unusual that every member of the community thought he was insane, and yet only one person admitted to having made any type of inquiry into the reasons behind his release. Dry James Miller bore witness that Triplett was â€Å"a man of unbalanced mind. † He felt that Triplett should never have been released from the asylum because he was a danger to himself and to the community.At the inquest, Dry Miller said that immediately after hearing that Triplett had been released from the asylum, he annotated the Provincial Police to discuss Triplet's liberty. According to Dry Miller, they told him that nothing could be done unless Triplett performed some act that would make another arrest possible. Despite Dry. Miller's personal inquiry into Triplet's liberty, the authorities did nothing until after his death and after the inquest. Attached to the verdict was a rider that stated that a full inquiry should be made into Triplet's release from Pomona, and his apparent rehabilitation when he was so obviously insane.James Chalmers had spent 36 hours with Triplett in the days leading up to his death. During this time, he noticed that Triplett was acting in an odd manner; he was restless and talkative, quite unlike himself. Chalmers admitted that after his last interaction with Triplett he was convinced that Triplett was insane, again, but he neglected to inform anyone on the basis that Triplet had done nothing to Justify an arrest. Levi Spangle encountered Oscar Triplett at his (Spangle) residence on the day before Triplet's death.He claimed that Triplett had walked Insane Ana Immolate Degas teenager toners Ana acting strange . HIS octagons caused Spangle to assume that Triplett was not of sane mind; Spangle left for own immediately after Triplett had departed and reported to the police, but they were unable to locate Triplett. Mrs.. Spangle concurred with her husband's opinion of Triplet's sanity. She alleged that Triplet's actions made her fearful for her life and the life of her daughter. Of all the people who gave testimony at the inquest, Mr.. Spangle was the only one who had notified the police of Triplet's insanity.It is peculiar that only one person had enough sense to notify the authorities that Triplett could possibly be a danger to others or himself. This is especially peculiar because everyone seemed to agree that he was insane and that he would end up in the asylum again. Triplet's liberty shows obvious error in the Canadian Justice system at this time, because he should not have been released from the asylum at Pomona. It also shows the misplaced faith that people had in the Justice system, since everyone assumed that the law would eventually step in and apprehend Triplett again, recommitting him to the insane asylum.When Mrs.. Temple was tried for Oscar Triplet's death, the Jury only took fifteen minutes to reach a verdict. Temple had admitted to killing Triplett and all th e physical evidence seemed to corroborate her Tory, yet the Jury verdict was that of â€Å"Justifiable homicide. † The Jury felt that Mrs.. Temple should have been commended for her actions because Triplett was assaulting her in her own home. It is possible that the Jury looked at this case and saw a poor, defenseless woman trying to protect herself and her daughter from a known lunatic.The Jury could have taken pity on her, because she basically had to decide between life and death. Her gender had to have swayed the Jury verdict because it is doubtful that they would have come to the same conclusion if a man had fired the fatal shot. This is so because not only Mrs.. Temple's life was at stake, but also the honor and the life of her infant daughter. This is very likely because the society at that time was an inherently chauvinistic society; women and men were not seen as equals, and women were considered to have less rights than men.Another possible reason for the lack of pu nishment is that most people felt that Mrs.. Temple did them a favor by ridding the world of a lunatic like Triplett. Therefore, why should she be punished for making the community a safer, more ordinary area to live in? The police who investigated the death of Oscar Triplett appeared to have little or no interest in the case, and arriving at the truth. A proper investigation into Triplet's death was not launched until 16 December 1918, three days after his death. Neither the coroner nor the investigating detective from Install arrived until early morning on 17 December 1918.There was no apparent urgency by anyone to come to the bottom of what happened: indeed the detective often took breaks to satiate his hunger and he took his time in pursuing the truth. Constable Marks received a wire on 13 December that notified him of Triplet's lunacy, but he did not leave for Horrors until the following day. He claimed this was because he required assistance in handling Oscar Triplett, yet he arrived in Horrors alone. Constable Marks alleged that even if he had left for Horrors immediately after receiving the wire, he would not have reached the Temples' residence before Triplet's death.It is possible that he felt compelled to mention this because he felt slightly guilty that the case transpired this way; however it shows the town people's disinterest in everything concerning I reelect – no one put too much effort In along Walt ml. A possible reason Deanna the authorities' disinterest in this case was because they saw little point in investigating the death of a lunatic. It would be interesting to know whether they would have acted in the same manner if Triplett had been a sane man, even though it is unlikely that they would have been so lax about investigating the case.This lack of interest shows the Canadian Justice system's predisposition to Judging the importance of various cases based on the character of the victim. Mrs.. Lois May Temple admitted to having kil led Oscar James Triplett, and the evidence and eyewitness testimony of Jacob Statesman did not disagree with her. However, the case document of Oscar Triplet's death had various peculiarities that made the hole affair seem quite unusual. The document shows human error – that of eyewitness testimony; this is a result of the human brain working in mysterious ways.In the event of a trauma some details will remain engraved in one's memory, no matter how insignificant they are; other details will be blocked by one's memory as being too traumatic. This was most likely the case concerning Mrs.. Temple and Jacob Statesman. The case document also shows how life worked in remote communities of Canada in the early 20th century. In those years, people were less apprehensive of the criminally insane than people today. If a known lunatic, such as Oscar Triplett, were allowed to roam free in a 21st century society there would be a colossal outcry by the members of society.They would be more outspoken about their fears and trepidation as a result of his liberty than people in 1918 would be. The case document also gives some insight into how the Canadian Justice system worked, especially in remote areas of the country. The Justice system was more lax in those times than they are today, as were the police. They were also more inclined to be biased about issues such as gender when looking at various cases unlike the system n place today, which is generally not allowed to be biased on such things. This is a result of early 20th century societies being more sexist than societies in the 21st century.

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