Lee v lee s air farming ltd

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.

Lee v lee s air farming ltd

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. 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. 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.

Lee v lee s air farming ltd

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.

MY WORDS: Lee v Lee’s Air Farming Ltd []

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.

Lee v lee s air farming ltd

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.

Aron Salomon's liability to indemnify the company in this case is, in my view, the legal consequence of the formation of the company in order to attain a result not permitted by law.

The liability does not arise simply from the fact that he holds nearly all the shares in the company. A man may do that and yet be under no such liability as Mr. Aron Salomon has come under. His liability rests on the purpose for which he formed the company, on the way he formed it, and on the use which he made of it.

There are many small companies which will be quite unaffected by this decision. But there may possibly be some which, like this, are mere devices to enable a man to carry on trade with limited liability, to incur debts in the name of a registered company, and to sweep off the company's assets by means of debentures which he has caused to be issued to himself in order to defeat the claims of those who have been incautious enough to trade with the company without perceiving the trap which he has laid for them.

It is idle to say that persons dealing with companies are protected by s. It is only when a creditor begins to fear he may not be paid that he thinks of looking at the register; and until a person is a creditor he has no right of inspection.

As a matter of fact, persons do not ask to see mortgage registers before they deal with limited companies; and this is perfectly well known to every one acquainted with the actual working of the Companies Acts and the habits of business men.

Aron Salomon and his advisers, who were evidently very shrewd people, were fully alive to this circumstance.Energy is the largest overhead cost in the production of agricultural greenhouse crops in temperate climates.

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Moreover, the initial cost of fossil fuels and traditional energy are dramatically increasing. Lee v Lee's Air Farming Ltd, [] AC 12, PC, [date uncertain] Case Summary.

AccessPress Lite is a HTML5 & CSS3 Responsive WordPress Business Theme with clean, minimal yet highly professional design. With our years of experience, we've developed this theme and given back to this awesome WordPress community. Energy is the largest overhead cost in the production of agricultural greenhouse crops in temperate climates. Moreover, the initial cost of fossil fuels and traditional energy are dramatically increasing. Frequently Asked Questions (FAQ) Important: Leave most of the blocks (search criteria) blank. Only fill in the blocks that will help you in your search. More Help.

Authority for the proposition that: a company is separate from its shareholders and one result is that an individual can be an employee of the company notwithstanding that he is a director and majority shareholder.

Eric Thomas VC10 Ground Engineer. Eric sadly passed away on Saturday 8 September at the age of He was not a member of the Association, mainly because he never had internet access, however he was a crew member for many years on VC10s, working as a flying Ground Engineer, when stationed at RAF Brize Norton.

was born at Tinakill, Queen's County, Ireland, in (the date is sometimes given as but is more usual, and the notices of his death stated that he was in his sixty-second year on 9 February ). The Separate Entity Principle is a fundamental principle of Company Law applied on a global basis.

Pursuant to this principle, a company is treated as a distinct entity from its members.

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Lee v Lee's Air Farming Ltd [] AC Secretary of State for Trade and Industry v Bottrill (), 1 All ER Adams v Cape Industries Plc () Ch The Content - It's not just about batteries.

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Adams v Cape Industries plc - Wikipedia