Dave Persad v Anirudh Singh

Corporate personality is not disregarded merely because an individual controls a one-man company, negotiated a transaction personally, occupied premises, or hoped to avoid personal liability. Piercing the corporate veil is confined to rare cases where a person already owes a legal obligation, liability or is subject to a restriction and deliberately evades or frustrates its enforcement by interposing a controlled company. A prospective lessee who has no existing obligation before the lease is granted cannot be made personally liable on that basis. A company’s adoption of a pre-incorporation agreement can bind it from inception, while the person otherwise bound ceases to be bound under the Companies Act.

Anirudh Singh leased premises to Chicken Hawaii (Trinidad) Ltd (CHTL), although negotiations had proceeded on the assumption that Dave Persad would be the lessee. The trial judge held both CHTL and Mr Persad liable for rent, covenant breaches and mesne profits, treating them as one and piercing the corporate veil. The Court of Appeal of Trinidad and Tobago dismissed Mr Persad’s appeal on 21 May 2014. Before the Board, he challenged only his personal liability; CHTL’s liability and the primary factual findings were not in issue. Mr Singh also sought to rely on late-discovered evidence that CHTL was incorporated after the lease, raising the questions whether the veil could be pierced and whether pre-incorporation rules made Mr Persad liable.

Lord Neuberger, delivering the judgment of the Board, allowed Mr Persad’s appeal and refused Mr Singh’s application to rely on new evidence.

1. Corporate veil. Piercing the veil is justified only in very rare circumstances. The relevant approach, identified in VTB Capital Plc v Nutritek International Corpn [2013] 2 AC 337 and stated expressly in Prest v Petrodel Resources Ltd [2013] 2 AC 415, requires an existing legal obligation, liability or restriction which the individual deliberately evades or whose enforcement is deliberately frustrated by interposing a controlled company.
2. Mr Persad had no relevant obligation to Mr Singh when the draft lease was submitted or when the lease became binding. The parties contemplated a five-year lease, which could be granted only by deed under section 3 of the Landlord and Tenant Ordinance. Personal negotiations therefore did not create an existing lessee liability.
3. The surrounding facts did not justify piercing. Mr Persad gave no personal assurance, did not mislead Mr Singh, and Mr Singh understood that CHTL was a separate legal person. Early occupation, failure to produce corporate documents and CHTL’s status as a one-man company added nothing. Salomon v A Salomon and Co Ltd [1897] AC 22 confirms that separate personality and the avoidance of personal liability are integral features of limited liability. Describing CHTL as a front or alias could not alter that conclusion.
4. Gilford Motor Co Ltd v Horne [1933] Ch 935 and Jones v Lipman [1962] 1 WLR 832 were distinguishable. Those cases involved an existing obligation being avoided and unilateral interposition of a company without the other party’s knowledge or consent. Here, Mr Singh was directly involved in and a necessary party to the lease.
5. The possible claim against Mr Persad for trespass after expiry of the lease was not determined because there was no satisfactory evidence of his occupation during the relevant period or of the value of any occupation, and the issue had not been raised below.
6. Even if the incorporation certificate were admitted, it could not establish Mr Persad’s liability. Under section 20(2) of the Companies Act, CHTL’s payment of rent signified adoption of the written lease; section 20(3) consequently bound CHTL from inception and released the person otherwise bound. Alternatively, section 20(1) would concern the person who entered the agreement on behalf of the non-existent company, identified as Sandra Dass, not the issue of Mr Persad’s liability. The parties were directed to seek agreement on costs and the form of order.

• Privy Council: On 30 October 2017, allowed Mr Persad’s appeal against personal liability and refused Mr Singh’s application to rely on new evidence.
• Court of Appeal of Trinidad and Tobago: Dismissed Mr Persad’s appeal on 21 May 2014 and upheld the trial judge’s conclusion that he was personally liable.
• High Court of Trinidad and Tobago: Pemberton J gave judgment on 15 July 2011 against CHTL and Mr Persad for damages, rent arrears and mesne profits, while granting CHTL limited relief on its counterclaim.