trustor ab v smallbone

On the facts of this case it is unnecessary to decide whether the dictum of Kekewich J in In re Barney [1892] 2 Ch 265, 273 referred to in paragraph 18, is applicable where the recipient is a wholly owned corporate body. He suggested that the authorities justified such a course in three, potentially overlapping, categories, namely (1) where the company was shown to be a fa ade or sham with no unconnected third party involved, (2) where the company was involved in some impropriety and (3) where it is necessary to do so in the interests of justice and no unconnected third party is involved. 14. Mr Smallbone has no real prospect of successfully defending this part of the claim because he is bound by the findings of Rimer J to which I have referred. Its subsidiaries mined asbestos in South Africa. Smallbone paid money from the Claimant company’s account to the second Defendant which was another company. 15. With regard to the summons against Mr Smallbone Rimer J considered (Tr: 34 and 36) there was no defence to the claim by Trustor to recovery of that part of its money which Mr Smallbone paid to himself and retained. Between mid-June and early November 1997 SEK 486m. The cases linked on your profile facilitate Casemine's artificial intelligence engine in recommending you to potential clients who might be interested in availing your services for similar matters. Recent cases have sought to narrow the exceptions. It was unsuccessful in respect of the claims for knowing assistance and conspiracy. Of the sums received by Introcom SEK 43,335 and 327,509 were applied for the benefit of Mr Smallbone in payments to his wife and Cove Investments Ltd, a company incorporated in the Turks and Caicos Islands and controlled by Mr Smallbone. The hearing took seven days. The dictum suggests that complete control of the actual recipient may be enough. No alteration to the draft judgment was made before it was handed down on 9th May 2000; the Court of Appeal indicated that Trustor would have to make a further application for summary judgment on which Mr Smallbone would be able to raise any contrary arguments he chose. Pennyfeathers Jersey proceeded to take a conditional contract in respect of the land and to enter options to acquire surrounding lands. Furthermore, Trustor had an additional claim against Smallbone, as the managing director of Trustor, for damages or compensation for conspiracy and breach of duty. This is a claim which is plainly governed by Swedish law. As against Mr Smallbone, Trustor has two types of claim. The dictum suggests that complete control of the actual recipient may be enough. The first application of Trustor was for summary judgment against Introcom. Please log in or sign up for a free trial to access this feature. The third proposition is said to be derived from the decision of this court in Re a Company [1985] BCLC 333. United Kingdom company law, Trustor AB v Smallbone (No 2), Ord v Belhaven Pubs Ltd, Gencor ACP Ltd v Dalby, Bank of Tokyo Ltd v Karoon: Collection: Publisher: World Heritage Encyclopedia: Publication Date: Jones v Lipman. Formerly it held major investments in the steel, engineering and automotive parts industries. All the more as of late, in Trustor v Smallbone and Introcom, Smallbone was a chief of Trustor AB, a Swedish enrolled company. VTB Capital plc v Nutritek International Corp [2013] UKSC 5. In Ord v Belhaven Pubs Ltd [1998] BCC 607, 614/5 Hobhouse LJ expressed similar reservations. See pp. For all these reasons I make an order under CPR Rule 24.2 for payment by Mr Smallbone of the sums set out in and on the terms of the draft order accompanying the application notice. In paragraphs 57 and 58 the Vice-Chancellor pointed out that Trustor had two types of claim against Mr Smallbone, namely, compensation for breach of duty and claims based on what happened to its money, more specifically the misappropriation arising from the payment out from the Trustor account with Barclays, Cheapside. I have been concerned whether that passage was referring to a liability based on knowing receipt or knowing assistance. 27. 265, 273 that there is no liability "unless he has the trust property vested in him, or so far under his control that he can require it should be vested in him". Cape Industries plc was a UK company, head of a group. The judge in that case held that: tuesday 9th may 2000. Exam June 2014, answers Exam 12 May 2017, questions Labour Law notes Supervsion 1 Equity Supervision 8 Resulting Trusts and Property Holding by UAs Equity Supervision 9 Charities Company Law Selected Essay Notes Mr Smallbone's petition for leave to appeal was dismissed by the House of Lords on 18th December 2000. 25. Paragraphs 36-39 contain allegations concerning claims to trace at law and for money had and received, paragraphs 40-42 relate to a claim for damages for conspiracy and paragraph 43 seeks equitable compensation. In the case of Mr Smallbone it is alleged that all transfers from the account of Trustor with Barclays were made on the instructions of Mr Smallbone. Counsel suggested that the facts, as found by Rimer J, brought this case within each of the three categories. 24. This principle was applied by the Court of Appeal in Adams v Cape Industries plc [1990] 1 Ch. Appeal against setting aside of order transferring properties to the wife that were legally owned by the former husband's companies. He considered that the directors of Introcom were nominees acting on the instructions of Mr Smallbone so that Introcom could be regarded as Mr Smallbone's company and his knowledge could be treated as Introcom's knowledge. 19. 433, 542A-B. a submission of Mr Smallbone to the effect that the payments to Introcom were justified by an agreement dated 8th August 1997. However, there is st… In Jones v Lipman [1962] 1 WLR 832 an individual had contracted to sell land. Each of those contentions was rejected. Both Trustor, Mr Smallbone and Introcom appealed with the permission of the Judge or of the Court of Appeal. They point out that receipt by a subsidiary company will not count as a receipt by the parent if the subsidiary is acting in its own right, not as agent or nominee, at any rate in the absence of a want of probity or dishonesty. Creating your profile on CaseMine allows you to build your network with fellow lawyers and prospective clients. This aspect of their judgment was applied in Trustor AB v Smallbone (No 2) [2001] 1 WLR 1177. Trustor AB v Smallbone (No 2) [2001] EWHC 703. Smallbone was a manager of Trustor AB. this essay will discuss the instances where the court decided that there is jurisdiction to pierce the corporate veil and situation where it did not. Phrases that include trustor: trustor ab v smallbone: Search for trustor on Google or Wikipedia. 265, 273 that there is no liability "unless he has the trust property vested in him, or so far under his control that he can require it should be vested in him". In White & Tudor's Leading Cases in Equity 9th Ed. the scope Companies are often involved in improprieties. Counsel pointed out that it had been common ground in the Court of Appeal that the findings of dishonesty made by Rimer J against Mr Smallbone were academic. A decree of specific performance was made against both the individual and the company on two grounds. The Vice-Chancellor then considered the order for an interim payment of 1m. Rimer J also concluded that the payments to Introcom were unauthorised and involved an inexcusable breach by Mr Smallbone of his duty as managing director of Trustor "being payments to Mr Smallbone's own company which was then going to and did devote itself to further unauthorised and improper dissipations of the money". 7. In my judgment the court is entitled to "pierce the corporate veil" and recognise the receipt of the company as that of the invididual(s) in control of it if the company was used as a device or fa ade to conceal the true facts thereby avoiding or concealing any liability of those individual(s). The significance in this instance lies in the manner advocate for the claimant invited the Court of Appeal to put down regulations as to when the head covering of incorporation may be lifted. 23. Without the assent of different executives, he moved a lot of corporate assets into a company constrained by him, Introcrom Ltd. change. 8. Click on the first link on a line below to go directly to a page where "trustor" is defined. In White & Tudor's Leading Cases in Equity 9th Ed. But it would make undue inroads into the principle of Salomon's case if an impropriety not linked to the use of the company structure to avoid or conceal liability for that impropriety was enough. Mr Smallbone is bound by the findings made by Rimer J and the Court of Appeal in relation to the issues before them. 1999 0787/3. First, Trustor has a claim against him for breach of duty. The judgment of the Court of Appeal recognised liability on Introcom for knowing receipt but not at that stage for knowing assistance. See Trustor AB v Smallbone C) If it could be established that the subsidiary was Cape's agent and acting within its actual or apparent authority, hen the actions would bind the parent (not traditional veil lifting but essentially same outcome). The issues on the appeal were whether by virtue of other recoveries their liabilities would be reduced to nothing. The third proposition is said to be derived from the decision of this court in Re a Company. He pointed out that Mr Smallbone had succeeded on these issues and that Trustor had not appealed. He posed the question whether it was clear that Trustor would establish a liability on the part of Mr Smallbone for compensation of at least that amount. The latter statement is not consistent with the views of the Court of Appeal in Adams v Cape Industries plc [ibid] where Slade LJ at p. 536 said. Get 1 point on providing a valid sentiment to this 3. On about 23rd May 1997 Lord Moyne acquired voting control of Trustor. The judgment of the Court of Appeal was provided to counsel in draft in advance of the proposed date for handing it down, then fixed for 12th April 2000. In that case a complicated structure of foreign companies and trusts was used to place the individual's assets beyond the reach of his creditors. On 25th June 1999 Rimer J gave summary judgment under RSC Order 14 for the claimant Trustor AB against the first defendant Mr Smallbone for 426,439 and interest. It appears to me that the argument for Trustor raises a point of some general importance. It was successful in respect of the claims for money had and received and knowing receipt. Paragraph 21 of the witness statement of Mr Wilkes made in support of the application led Mr Smallbone to believe that the application was pursued on the basis of knowing assistance. At the same time he dismissed an appeal of the second defendant Introcom (International) Ltd ("Introcom") from the order of Master Bowman giving summary judgment under the same rule in favour of Trustor for SEK 166.7m, … Mr Smallbone had been the managing director of Trustor AB, and it was claimed that in breach of fiduciary duty he transferred money to a company that he owned and controlled. The Editors suggest that there is a sufficient receipt if, in accordance with the normal rules of tracing in equity, the trust property can be identified in the hands of the defendant. He contended that there was no finding or evidence of impropriety sufficient to justify the order sought by Trustor. Cases & Articles Tagged Under: Trustor AB v Smallbone (no 2) [2001] 1 WLR 1177 | Page 1 of 1. The only signatories to that account were Lord Moyne and Mr Smallbone. On 9th May 2000, on appeal from the orders of Rimer J, the Court of Appeal indicated that, in their view, Mr Smallbone's liability was not limited to the amount of the judgment against him but extended to a joint and several liability for the much larger amount for which Introcom had been found to be liable. They shipped it to Texas, where a marketing subsidiary, NAAC, supplied the asbestos to another company in Texas. 57. By clicking on this tab, you are expressly stating that you were one of the attorneys appearing in this matter. 16. A recent case (Trustor AB v Smallbone & ors, NLD, 16 March 2001) has considered the circumstances in which it might be appropriate to pierce the corporate veil, that is, to disregard the separate legal identity of a company and to look behind it to the actions and possible liability of its directors or members. They sued Cape and its subsidiaries in a Texas Court. Its use was improper as it was the means by which Mr Smallbone committed unauthorised and inexcusable breaches of his duty as a director of Trustor. This application was made by Trustor on 12th September 2000 seeking judgment for the additional relief the Court of Appeal had suggested. For this reason he had not pursued them in oral argument particularly when invited to do so late on the last day of the hearing. In summary he dismissed the appeal of Introcom and gave judgment against Mr Smallbone for (1) 426,439 and interest for knowing receipt, (2) damages and equitable compensation to be assessed for breach of duty and (3) payment of 1m by way of interim payment on account of his liability for damages or compensation. See also the case of V-C in Trustor AB v Smallbone (supra) where the court pierced the veil to hold a director liable for the sum £20m traced to his personal company from the claimant company where he was a former director. In this case there is no doubt that Mr Smallbone had the requisite knowledge because the liability of Introcom, upheld by the Court of Appeal, depended on the imputation of the knowledge of Mr Smallbone to Introcom. Liability arising from the knowing receipt of trust property stems from the speech of Lord Selborne in Barnes v Addy (1874) LR 9 Ch App 244, 251 that, "strangers are not to be made constructive trustees merely because they act as agents of trustees in transactions within their legal powers....unless these agents receive and become chargeable for part of the trust property, or unless they assist with knowledge in a dishonest and fraudulent design of the trustees.". 23. With regard to the claim for knowing assistance Rimer J considered (Tr: 38) that it was artificial to regard Mr Smallbone as having dishonestly assisted Lord Moyne in the breach of Lord Moyne's duties rather than being in breach of his own. 9. 2 pages) He submitted that as there could be no question but that Mr Smallbone had the requisite knowledge he should be ordered to repay all the money of Trustor received by Introcom on the basis of knowing receipt. in re: supreme court of judicature. Woolfson v Strathclyde Regional Council [1978] UKHL 5. Two such bases were raised in the statement of claim, namely knowing receipt and knowing assistance. In the case of Mr Smallbone it is alleged that he acted fraudulently and dishonestly and in breach of duty as a director of Trustor. In my judgment the court is entitled to “pierce the corporate veil” and recognise the receipt of the company as that of the individual(s) in control of it if the company was used as a device or facade to conceal the true facts thereby avoiding or concealing any liability of those individual(s). Vol 2 p.595 in relation to that passage from the speech of Lord Selborne the Editors quote with approval from the judgment of Kekewich J in Re Barney [1892] 2 Ch. It is also necessary that the receipt by the defendant should be for his own benefit or in his own right in the sense of setting up a title of his own to the property so received. He noted the tension between Adams v Cape Industries plc and later cases and stated that impropriety is not enough to pierce the veil, but the court is entitled to do so where a company is used ‘as a device or façade to conceal the true facts and the liability of the responsible individuals.’, 18. The second proposition also appears to me to be too widely stated unless used in conjunction with the first. 6 ibid [63], [103]. 433, Yukong Line Ltd v Rendsburg Investments Corporation of Liberia [1998] 1 WLR 294, Ord v Belhaven Pubs Ltd [1998] BCC 607 and Mubarak v Mubarak Bodey J 23rd October 2000 (unreported). However, courts have ‘lifted the veil’ in certain circumstances, such as when authorized by statute, in wartime and to prevent fraud. Position: Does not feature in the chart but it had three appearances. I should also refer to some of the cases relied on by Counsel for Trustor. I have reached this conclusion from a consideration of the facts as found by Rimer J and the principles to be derived from the cases independently from the passage in paragraphs 97 and 98 of the judgment of Sir Richard Scott V-C which I have quoted earlier. Important cases at the Court of Appeal from October 1999-July 2000: Trustor AB v Lindsay James Trevor Smallbone & ors – A&O acted for Trustor to decide whether recovering misappropriated money from third parties reduced the amount for which the defendants are liable […] The employees of that Texas company, NAAC, became ill, with asbestosis. Mr Smallbone, who appeared in person, told me that there was a sensible justification for the payment of Trustor's money to Introcom. Before confirming, please ensure that you have thoroughly read and verified the judgment. He submitted that. The statement of claim, which has been amended twice, sets out the relevant facts. Trustor AB v Smallbone (No 2) [2001] 1 WLR 177. 956, 965 and 969. In Woolfson v Strathclyde Regional Council [1978] SLT 159 Lord Keith of Kinkel pointed out that it was appropriate to pierce the corporate veil "only where special circumstances exist indicating that [the company] is a mere fa ade concealing the true facts". 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