Summary

It was appropriate to pierce the corporate veil and to require the transfer of a property held by a company where the true owner of the property had transferred it to the company to conceal his fraudulent activities.

Facts

The liquidator for the claimant company (C) claimed for the transfer of a property from the first defendant company (D) to it.

The property had been bought by a de facto director (T) of C, who had then transferred it to D.

The liquidator, supported by the seventh defendant Revenue and Customs, submitted that T had set up D in order to conceal his assets and prevent their seizure for his involvement in tax evasion, and accordingly that D had no genuine corporate existence. On that basis, they argued that the liquidator was entitled to pierce the corporate veil and to require a transfer of the property from D to C.

Held

In order to pierce the corporate veil, C was required to show that T had control of D and that D had been used as a device or facade to facilitate or conceal T's wrongdoing, Trustor AB v Smallbone (No.2) [2001] 1 W.L.R. 1177 applied. Those conditions were satisfied. D was clearly owned and controlled by T, and the purpose of transferring the property was to conceal T's ownership of it until his liabilities arising out of his fraudulent activities were resolved. Accordingly, T was the true owner of the property and a declaration was granted to that effect (see paras 22-24 of judgment).

Judgment for claimant