These propositions are supported by the authorities to which the editors refer, namely Cowan de Groot Properties Ltd v Eagle Trust plc  4 AER 700, 762a-b and El Ajou v Dollar Land Holdings plc  3 AER 717, 738. But it would make undue inroads into the principle of Saloman v Saloman & Co. Ltd if an impropriety not linked to the use of the company structure to avoid or conceal liability for that impropriety was enough. Trustor Ab v Smallbone and Another (No 2): ChD 30 Mar 2001 Directors of one company fraudulently diverted substantial sums to another company owned by one of them. Michael Prest (husband) and Yasmin Prest (wife) were married for 15 years and had four children before the wife petitioned for divorce in March 2008. Cape was joined, who argued there was no jurisdiction to hear the case. Third, he concluded (Tr: 13) that Introcom was simply a vehicle Mr Smallbone used for receiving money from Trustor and that the payments to Introcom "were unauthorised and involved an inexcusable breach of his duty as managing director of Trustor". The third proposition is said to be derived from the decision of this court in Re a Company  BCLC 333. On the facts of this case it is unnecessary to decide whether the dictum of Kekewich J in In re Barney  2 Ch 265, 273 referred to in paragraph 18, is applicable where the recipient is a wholly owned corporate body. 1999 0787/3. Between mid-June and early November 1997 SEK 486m. He noted the tension between Adams v Cape Industries plc and later cases and stated that impropriety is not enough to pierce the veil, but the court is entitled to do so where a company is used ‘as a device or façade to conceal the true facts and the liability of the responsible individuals.’, 18. The statement of claim, which has been amended twice, sets out the relevant facts. Woolfson v Strathclyde Regional Council  UKHL 5. Westpac Banking Corporation v Savin  2 NZLR 41, 69. 2. The cases linked on your profile facilitate Casemine's artificial intelligence engine in recommending you to potential clients who might be interested in availing your services for similar matters. Citation. summary judgment under RSC Order 14 for the claimant Trustor AB against the first defendant Mr Smallbone for £426,439 and interest. But this was not said in relation to a limited company and predates the decision of the House of Lords in Salomon v A Salomon & Co Ltd  AC 22. https://en.wikipedia.org/w/index.php?title=Trustor_AB_v_Smallbone_(No_2)&oldid=943224015, United Kingdom corporate personality case law, Creative Commons Attribution-ShareAlike License, This page was last edited on 29 February 2020, at 16:55. In paragraphs 16-22 it alleges that SEK 486m of Trustor's money was misappropriated in the manner and in the amounts I have summarised. Phrases that include trustor: trustor ab v smallbone: Search for trustor on Google or Wikipedia. Appeal allowed. The case against Mr Smallbone was eventually dropped by Trustor AB as there was no breach of fiduciary duty. Creating a unique profile web page containing interviews, posts, articles, as well as the cases you have appeared in, greatly enhances your digital presence on search engines such Google and Bing, resulting in increased client interest. Indeed there was some suggestion to that effect in Salomon v A Salomon & Co Ltd  AC 22. Without the assent of different executives, he moved a lot of corporate assets into a company constrained by him, Introcrom Ltd. This principle was applied by the Court of Appeal in Adams v Cape Industries plc  1 Ch. The third proposition is said to be derived from the decision of this court in Re a Company. I have reached this conclusion from a consideration of the facts as found by Rimer J and the principles to be derived from the cases independently from the passage in paragraphs 97 and 98 of the judgment of Sir Richard Scott V-C which I have quoted earlier. * Enter a valid Journal (must 15. He considered that the directors of Introcom were nominees acting on the instructions of Mr Smallbone so that Introcom could be regarded as Mr Smallbone's company and his knowledge could be treated as Introcom's knowledge. The latter statement is not consistent with the views of the Court of Appeal in Adams v Cape Industries plc [ibid] where Slade LJ at p. 536 said. The defrauded company sought return of the funds, from the company and from the second director on the basis that the corporate veil should be lifted by treating the receipt by the company as his. On 9th May 2000, on appeal from the orders of Rimer J, the Court of Appeal indicated that, in their view, Mr Smallbone's liability was not limited to the amount of the judgment against him but extended to a joint and several liability for the much larger amount for which Introcom had been found to be liable. He thought that it might be premature to reach that conclusion and continued: The result was that the order against Mr Smallbone for payment of 1m was set aside but otherwise the order of Rimer J stood save that the liability of Mr Smallbone for 426,439 was declared to be joint and several with Introcom. Position: Does not feature in the chart but it had three appearances. See Trustor AB v Smallbone C) If it could be established that the subsidiary was Cape's agent and acting within its actual or apparent authority, hen the actions would bind the parent (not traditional veil lifting but essentially same outcome). Important cases at the Court of Appeal from October 1999-July 2000: Trustor AB v Lindsay James Trevor Smallbone & ors – A&O acted for Trustor to decide whether recovering misappropriated money from third parties reduced the amount for which the defendants are liable […] Trustor was wound up by the court in Stockholm on 23rd December 1997. In Ord v Belhaven Pubs Ltd  BCC 607, 614/5 Hobhouse LJ expressed similar reservations. However, there is st… Trustor AB v Smallbone (No 2)  EWHC 703 (Ch) is a UK company law case concerning piercing the corporate veil. Prest v Petrodel Resources Ltd & ors  UKSC 34. In Trustor AB v Smallbone (No 2)  1 WLR 1177, Sir Andrew Morritt V-C reviewed many of the same authorities. Get 1 point on adding a valid citation to this judgment. However, a number of other exceptions exist which are wider in scope. 18. For this reason he had not pursued them in oral argument particularly when invited to do so late on the last day of the hearing. It was pursued in respect of all the causes of action relied on in the Statement of Claim. Mr. Stephen Smith QC (instructed by Messrs Allen & Overy for the Claimant). Paragraph 21 of the witness statement of Mr Wilkes made in support of the application led Mr Smallbone to believe that the application was pursued on the basis of knowing assistance. court of appeal (civil division) on appeal from the chancery division. Click on the first link on a line below to go directly to a page where "trustor" is defined. These are narrow exceptions to the general rule. Cumming-Bruce LJ described the structure as a fa ade (p.336) but expressed the principle (p.337/8) to be that the Court will use its powers to pierce the corporate veil if it is necessary to achieve justice irrespective of the legal efficacy of the corporate structure under consideration. royal courts of justice. Liability arising from the knowing receipt of trust property stems from the speech of Lord Selborne in Barnes v Addy (1874) L.R.9 Ch.App 244, 251 that. Introcom appealed. In White & Tudor's Leading Cases in Equity 9th Ed. 27. 19. The judgment of the Court of Appeal recognised liability on Introcom for knowing receipt but not at that stage for knowing assistance. Accordingly my conclusion is consistent with the decision of the Court of Appeal whether or not I was bound by that decision to reach the same conclusion. Trustor AB applied to treat receipt of the assets of that company as the same as the assets of Mr Smallbone. strand, london, wc2a 2 ll. I should also refer to some of the cases relied on by Counsel for Trustor. For all these reasons I make an order under CPR Rule 24.2 for payment by Mr Smallbone of the sums set out in and on the terms of the draft order accompanying the application notice. Rimer J gave judgment on 25th June 1999. 3plr/2000/221 (ch.d) before: the hon. Mr Smallbone, who appeared in person, told me that there was a sensible justification for the payment of Trustor's money to Introcom. All the more as of late, in Trustor v Smallbone and Introcom, Smallbone was a chief of Trustor AB, a Swedish enrolled company. Get 1 point on providing a valid sentiment to this But paragraph 98 recognises joint and several liability for "the whole of the sums for which Introcom is accountable". In my view these conclusions are such as to entitle the court to recognise the receipt of the money of Trustor by Introcom as the receipt by Mr Smallbone too. 7. Its use was improper as it was the means by which Mr Smallbone committed unauthorised and inexcusable breaches of his duty as a director of Trustor. In his summary of the result of the appeal the Vice-Chancellor upheld the order of Rimer J regarding the liability of Mr Smallbone for the sum of 426,439 received by him from the money of Trustor paid to Introcom. These authorities plainly establish the first proposition of counsel for Trustor I referred to in paragraph 14 above. This application came before Master Bowman. 6. facts (impropriety)21 can the veil be pierced according to Woolfson v Strathclyde Regional Council.22 In Gencor ACP Ltd v Dalby (Gencor)23 and Trustor AB v Smallbone (No.2) (Trustor),24 both cases held that the corporate veil was pierced on the basis that the companies were ‘used 25as a façade to conceal the true facts’. 16. He submitted that the fact that Introcom was controlled by him was well known to the other directors of Trustor. Introcom was a device or fa ade in that it was used as the vehicle for the receipt of the money of Trustor. The second, following the principle applied in Gilford Motor Co. Ltd v Horne, was that the company was the creature of the first defendant, "a device and a sham, a mask which he holds before his face in an attempt to avoid recognition in the eye of equity". See also the case of V-C in Trustor AB v Smallbone (supra) where the court pierced the veil to hold a director liable for the sum £20m traced to his personal company from the claimant company where he was a former director. Thus the claim for summary judgment is necessarily advanced on a restitutionary basis only. VTB Capital plc v Nutritek International Corp  UKSC 5. United Kingdom company law, Trustor AB v Smallbone (No 2), Ord v Belhaven Pubs Ltd, Gencor ACP Ltd v Dalby, Bank of Tokyo Ltd v Karoon: Collection: Publisher: World Heritage Encyclopedia: Publication Date: Jones v Lipman. In paragraphs 23-27 Trustor sets out its allegations of knowledge and complicity. Counsel suggested that the facts, as found by Rimer J, brought this case within each of the three categories. In my judgment the court is entitled to "pierce the corporate veil" and recognise the receipt of the company as that of the invididual(s) in control of it if the company was used as a device or fa ade to conceal the true facts thereby avoiding or concealing any liability of those individual(s). He relied on the findings of Rimer J that Introcom acted on the instructions of Mr. Smallbone, that Mr Smallbone was its directing mind and will and that Introcom had no independent business, third party directors, creditors or shareholders. The individual was held to be in breach of covenant, notwithstanding the interposition of the company, because the company was formed as the device, stratagem or mask to "the effective carrying on of a business of" the individual. A recent case (Trustor AB v Smallbone & ors, NLD, 16 March 2001) has considered the circumstances in which it might be appropriate to pierce the corporate veil, that is, to disregard the separate legal identity of a company and to look behind it to the actions and possible liability of its directors or members. chan. This aspect of their judgment was applied in Trustor AB v Smallbone (No 2)  1 WLR 1177. The barrier between the company’s assets and those of its members is known as the ‘veil of incorporation’. Paragraph 97 seems to be dealing with the payments out of the Introcom account and so understood refers prima facie to knowing assistance. On the facts of this case it is unnecessary to decide whether the dictum of Kekewich J in Re Barney referred to in paragraph 18, is applicable where the recipient is a wholly owned corporate body. Mr Smallbone was its managing director. 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