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The House of Lords in Woolfson v Strathclyde Regional Council, 171 expressed doubt
as to the decision in D.H.N. and refused to lift the veil unless the corporate form was
"a mere façade concealing true facts." 172 The courts, however, indicated their
willingness to pierce the veil in cases where it was necessary to achieve justice for
parties. 173
This decision, however, was rejected in Adams v Cape Industries plc 174 in which the
Court of Appeal concluded that doing justice to parties and the use of the corporate
structure in order to ensure that legal liability will fall on another member of the
group is not sufficient to lift the veil. There must be an element of control by the
parent company of the subsidiary and the subsidiary must not be independent in
making its decision, before an agency relationship can be established within
members of the groups. The fact that the companies within the group operate as one
single company is not sufficient. Adams v Cape Industries plc 175 was followed and
approved in subsequent cases 176 where the courts held that in the absence of fraud or
mere façade concealing true facts, justice to parties does not justify the departure
from the Salomon‟s principle.
payable for disturbance. The three companies should, for present purposes, be treated as one and
the parent company, D.H.N., should be treated as that one.”
171 1978 S.L.T. 159.
172 Lord Keith of Kirkel stated at 161 “I have some doubts whether…the Court of Appeal properly
applied the principle that it is appropriate to pierce the corporate veil only where special
circumstances exist indicating that it is a mere façade concealing the true facts.” Lord
Wilberforce, Frazer of Tullybelton and Russell of Killowen concurred with the statements. The
House of Lords, however, did not overrule the decision in D.H.N. thus it remains good law.
173 Re A Company (1985) 1 BCC 99 at 421 the Court of Appeal held that “In our view the
cases…show that the court will use its power to pierce the corporate veil if it is necessary to achieve
justice irrespective of the legal efficacy of the corporate structure…”
174 [1990] Ch. 433.
175 [1990] Ch. 433.
176 Ultraframe (UK) v Fielding & Ors [2005] EWHC 1638; Dadourian Group v Simms [2006]
EWHC 2973.
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