The Case Of Gilford Motor Co Ltd V Horne (1933)

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There are several examples where “the veil is lifted” by case law. In the case of Gilford Motor Co Ltd v Horne [1933] CH 935 1, a company cannot be used in order to avoid legal obligations or to commit fraud. A person is not allowed to use his or her own company to abstain from contractual obligation. Horne was appointed by Gilford Motor Co Ltd for six years employment and he had signed an agreement with the terms of he is not allowed to solicit or entice away any customers of the Gilford, during his employment or after the termination of the employment. Horne resigned three years later; he had formed a new company which competes with his former employer. He also sent out the circulars to the customers of his former employer. However, Gilford
Birmingham Corporation, a local government authority, was looking for a compulsory acquisition of land which operated by a subsidiary company, Birmingham Waste Co Ltd. The owner of the land is Smith, Stone & Knight. Birmingham Waste Co Ltd was a wholly owned subsidiary of Smith, Stone & Knight.2 However, Birmingham Corporation refused to apportion compensation for disturbance of business to Birmingham Waste Co Ltd. Birmingham Corporation claimed that the subsidiary company did not own the land and not entitled to the compensation claim. The court, Atkinson J (Judge) held that the subsidiary company acted as an agent of the holding company and Birmingham Corporation must pay for the compensation. Nevertheless, Atkinson J had formulated six criteria that must be fulfilled to verify the agency relationship. By giving an example of the situation, King Sdn.Bhd is a subsidiary company of Queen Sdn.Bhd. King occupies premises which owns by Queen. King is carrying on the business on behalf of Queen. The government decides to purchase the premise as a compulsory for another purpose of use. Therefore, Queen claims for the compensation due to the disturbance of the acquisition for the premises which is occupied by King now. However, the government authority refuses to make a claim to King as King is holding less than one year of the land tenancy, King is not entitled to the compensation according to the relevant legislation. In fact, King is acted as an agent and conducting the business on behalf of Queen. Therefore, Queen can sue the authority for the compensation claim due to disturbance of business. Queen is entitled to the compensation as the subsidiary (King) is merely an agent of its parent

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