Anglo German Breweries Ltd v Chelsea Corporation Inc & Ors

Piercing the corporate veil requires more than an individual’s ownership and control of a company, and more than a conclusion that piercing would serve the interests of justice. The company must have been used improperly as a device or facade to conceal the individual’s true position or liability. The necessary elements are control of the company and its improper use to facilitate or conceal wrongdoing. Where those elements are established, the court may treat the individual as the true owner of property held in the company’s name and grant appropriate relief.

The liquidator of Anglo German Breweries Ltd claimed the transfer of a disused bingo hall bought with money provided by Tufail Ahmad and registered in the name of Chelsea Corporation Inc. Ahmad had been involved in excise duty and VAT fraud and was treated as the beneficial owner of the property.

The claim depended on establishing that Chelsea’s ownership was a sham and that the corporate veil could be pierced. Ahmad’s estate and other defendants were involved in the proceedings. An alternative claim under section 423 of the Insolvency Act was also pleaded.

1. The court held that Chelsea Corporation Inc was owned and controlled by Tufail Ahmad, but that control alone was insufficient to justify piercing the corporate veil.

2. The court adopted the principles stated in Ben Hashem v Shayif [2008] EWHC 2380 (Fam), drawing on Salomon v Salomon & Co Ltd [1897] A.C. 22, and in Trustor AB v Smallbone (No. 2) [2001] 1 W.L.R. 1177. Piercing is not justified merely because it appears necessary in the interests of justice.

3. The required conditions were control of the company and its improper use as a device or facade to facilitate or conceal wrongdoing. Chelsea had been used to conceal Ahmad’s ownership of the bingo hall while liabilities arising from his fraudulent activities remained unresolved.

4. Those conditions were satisfied. Ahmad was the true owner of the property, and the court granted the appropriate declaration and other relief. It was unnecessary to determine the alternative claim under section 423 of the Insolvency Act.

First-instance decision. No prior appellate decision is stated in the judgment.