Ben Hashem v Ali Shayif and Another: FD 22 Sep 2008

The court was asked to pierce the veil of incorporation of a company in the course of ancillary relief proceedings in a divorce. H had failed to co-operate with the court.
After a comprehensive review of all the authorities, Munby J said: ‘The common theme running through all the cases in which the court has been willing to pierce the veil is that the company was being used by its controller in an attempt to immunise himself from liability for some wrongdoing which existed entirely dehors the company. It is therefore necessary to identify the relevant wrongdoing – in Gilford and Jones v Lipman it was a breach of contract which, itself, had nothing to do with the company, in Gencor and Trustor it was a misappropriation of someone else’s money which again, in itself, had nothing to do with the company – before proceeding to demonstrate the wrongful misuse or involvement of the corporate structure. But in the present case there is no anterior or independent wrongdoing. All that the husband is doing, in the circumstances with which he is now faced – the wife’s claim for ancillary relief – is to take advantage, in my judgment legitimately to take advantage, of the existing corporate structure and, if one chooses to put it this way, to take advantage of the principle in Salomon.’
Munby J
[2008] EWHC 2380 (Fam), [2008] Fam Law 1179, [2009] 1 FLR 115
Bailii
Family Proceedings Rules 1991, Matrimonial Causes Act 1973 24(1)(c)
England and Wales
Citing:
CitedA v A FD 29-Jan-2007
Munby J referred to the robust approach which had always been adopted in the Family Division in seeing through sham arrangements designed to hide the ownership of assets of the marriage by vesting them in relatives or companies which were in reality . .
CitedA v A (Maintenance Pending Suit: Provision for Legal Fees) FD 15-Nov-2000
An application for maintenance pending suit could properly be made, to include payment on account of the legal costs of pursuing the action. Such legal expense were of a recurring, and income type nature. Maintenance was not confined to the day to . .
CitedTrustor Ab v Smallbone and Another (No 2) ChD 30-Mar-2001
Directors of one company fraudulently diverted substantial sums to another company owned by one of them. The defrauded company sought return of the funds, from the company and from the second director on the basis that the corporate veil should be . .
CitedRe Shephard, Shephard v Cartwright HL 1-Dec-1954
The House considered the equitable doctrine of advancement, and the admission of evidence which might go to rebut it.
Held: The presumption is one which ‘should not . . give way to slight circumstances’.
Viscunt Simonds approved, from . .
CitedSnook v London and West Riding Investments Ltd CA 1967
Sham requires common intent to create other result
The court considered a claim by a hire-purchase company for the return of a vehicle. The bailee said the agreement was a sham.
Held: The word ‘sham’ should only be used to describe an act or document where the parties have a common intention . .
CitedF v F (Divorce: Insolvency: Annulment of Bankruptcy Order) FD 1994
Thorpe J, having conducted a detailed analysis of the evidence, concluded ‘that the husband has, in my judgment, so obfuscated his financial position and services that it is quite impossible for this court to be sure as to what he has now in . .
CitedThomas v Thomas CA 2-May-1995
H was a wealthy businessman, but, as a member of Lloyds, he had been required to charge the family home to secure potential liabilities. Also, the company of which he was managing director had always paid out only smaller sums by way of dividends, . .
CitedRe W (ex-parte orders) FD 2000
The circumstances in which ex parte relief is obtained in the Family Division are likely to vary very widely. Moreover, relief is often granted by the Division in circumstances which are very much removed from those in which ex parte relief will be . .
CitedAl-Khatib v Masry FD 2002
The court heard an application for an ancillary relief order in divorce proceedings.
Held: General reputation prevailing in the community, and the mere opinions, inferences or beliefs of witnesses, are inadmissible in proof of material facts. . .
CitedJ v V (Disclosure: Offshore Corporations) FD 2003
A prenuptial agreement had been signed on the eve of marriage without advice or disclosure and without allowance for arrival of children. Coleridge J also considered the use of documents recovered by a party by unauthorised or improper means. He . .
CitedSalomon v A Salomon and Company Ltd HL 16-Nov-1896
A Company and its Directors are not same paersons
Mr Salomon had incorporated his long standing personal business of shoe manufacture into a limited company. He held nearly all the shares, and had received debentures on the transfer into the company of his former business. The business failed, and . .
CitedLee v Lee’s Air Farming Limited PC 11-Oct-1960
Mr Lee had formed a company, Lee’s Air Farming Limited and held nearly all its shares. He was the managing director, but by profession a pilot. The company was formed to conduct an aerial top-dressing business. He appointed himself the chief pilot . .
CitedWilliams and Another v Natural Life Health Foods Ltd and Another HL 30-Apr-1998
A company director was not personally reliable in negligence for bad advice given by him as director unless it could clearly be shown that he had willingly accepted such personal responsibility. A special relationship involving an assumption of . .
CitedWhig v Whig FD 23-Jul-2007
The court heard ancillary relief and bankruptcy proceedings together.
Held: Munby J refused to annul the husband’s bankruptcy. . .
CitedMacaura v Northern Assurance Company Limited HL 1925
Macaura owned the large majority of shares in a limited company, trading in timber. The company also owed him substantial sums. He kept on the insurance of timber and other assets within the business but in his own name. When he came to claim, his . .
CitedRe Shephard, Shephard v Cartwright HL 1-Dec-1954
The House considered the equitable doctrine of advancement, and the admission of evidence which might go to rebut it.
Held: The presumption is one which ‘should not . . give way to slight circumstances’.
Viscunt Simonds approved, from . .
CitedTribe v Tribe CA 26-Jul-1995
Illegal intent alone rebutted presumption
The plaintiff held 499 of the 500 issued shares of a company. In 1986 he wished to retire and transferred 30 shares to his son, one of four children, who was to take over the business. In 1988 he was worried about a bill for dilapidations and to . .
CitedHussey v Palmer CA 22-Jun-1972
A mother had provided a sum to her daughter and son in aw when she moved in with them. The money was used to build an extension. She now appealed against a finding that she did not have an equitable interest in the house.
Held: lord Denning MR . .
CitedPettitt v Pettitt HL 23-Apr-1969
A husband and wife disputed ownership of the matrimonial home in the context of the presumption of advancement.
Lord Reid said: ‘These considerations have largely lost their force under present conditions, and, unless the law has lost its . .
CitedGilford Motor Co Ltd v Horne CA 1933
The defendant was the plaintiff’s former managing director. He was bound by a restrictive covenant after he left them. To avoid the covenant, he formed a company and sought to transact his business through it. At first instance, Farwell J had found . .
CitedRe Bugle Press Ltd ChD 1961
Two shareholders held more than 90% of the issued shares of the company. To get rid of the holder of the remaining shares, they incorporated another company for the purpose of acquiring all the shares of the company. The acquiring company offered to . .
CitedJones v Lipman and Another ChD 1962
The defendant had contracted to sell his land. He changed his mind, and formed a company of which he was owner and director, transferred the land to the company, and refused to complete. The plaintiff sought relief.
Held: Specific performance . .
CitedDadourian Group International Inc and others v Simms and others ChD 24-Nov-2006
The Claimants sought, principally, damages for fraudulent misrepresentation and conspiracy against the first to fourth Defendants and damages for breach of contract against the third and fourth Defendants.
Ownership and control of a company are . .
CitedMubarak v Mubarak FD 23-Oct-2000
The court had made an order for payment by H to W on the divorce, and was now asked whether W could take jewelry held by H’s company in part satisfaction of the capital sums due. . .
CitedGencor ACP Ltd v Dalby ChD 2000
The plaintiff made a large number of claims against a former director, Mr Dalby, for misappropriating its funds. These included a claim for an account of a secret profit which Mr Dalby was said to have been procured to be paid by a third party, . .
CitedYukong Lines Ltd v Rendsburg Investments Corporation and Others (No 2) QBD 23-Sep-1997
Repudiation by charterer: Funds were transferred by a charterer’s ‘alter ego’ to another company controlled by him with intent to defeat owner’s claim – whether ‘alter ego’ acting as undisclosed principal of charterer – whether permissible to pierce . .
CitedWallersteiner v Moir CA 1974
The making of a declaration is a judicial act. A shareholder is entitled to bring a derivative action on behalf of the company when it is controlled by persons alleged to have injured the company who refuse to allow the company to sue. It is an . .
CitedGreen v Green FD 1993
In an ancillary relief application, Connell J awarded to the wife assets vested in a limited company whose entire share capital was owned by the husband. . .
CitedAdams v Cape Industries plc CA 2-Jan-1990
Proper Use of Corporate Entity to Protect Owner
The defendant was an English company and head of a group engaged in mining asbestos in South Africa. A wholly owned English subsidiary was the worldwide marketing body, which protested the jurisdiction of the United States Federal District Court in . .
CitedGencor ACP Ltd v Dalby ChD 2000
The plaintiff made a large number of claims against a former director, Mr Dalby, for misappropriating its funds. These included a claim for an account of a secret profit which Mr Dalby was said to have been procured to be paid by a third party, . .
CitedN v N and Another FD 16-Dec-2005
. .
CitedBosworthick v Bosworthick CA 1927
An annuity secured by a bond was found to be a settlement. . .
CitedSmith v Smith 1945
Denning J said: where a husband makes a continuing provision for the future needs of his wife in her character as a wife, which is still continuing when the marriage is dissolved, the provision is a `settlement’ which can be brought before the court . .
CitedLort-Williams v Lort-Williams CA 1951
two individuals had taken out a single premium insurance policy on the life of Sir John Rolleston Lort-Williams. The benefits were payable to these trustees as ‘moneys payable under this policy, effected for the benefit of the widow or children or . .
CitedSmith v Smith CA 1970
The husband had deserted the wife and gone abroad to work; the sole asset was the matrimonial home which was in joint names, and which constituted a post-nuptial settlement. The wife applied for variation of the settlement, whereby, on obtaining the . .
CitedBrooks v Brooks HL 29-Jun-1995
A director’s pension scheme could be treated as a post-nuptial marriage settlement where the director was the only scheme member. It was thus a matrimonial asset capable of variation by a court in ancillary relief proceedings in a divorce. The court . .
CitedC v C (Ancillary Relief: Nuptial Settlement) FD 2-Apr-2004
Application for ancillary relief to vary post-nuptial settlement. . .
CitedCharalambous v Charalambous; C v C (Ancillary Relief: Nuptial Settlement) CA 30-Jul-2004
The parties had been wealthy. Whilst still married, substantial sums had been placed in a trust. Their business interests had crashed and both faced personal bankruptcy. The husband appealed an order setting aside the trust.
Held: A clause in . .
CitedDormer v Ward CA 1901
One of the assets included in the marriage settlement was a jointure rent-charge charged on certain specified hereditaments. The CA considered whether what was brought into the settlement so as to be amenable to the court’s statutory jurisdiction . .
CitedBlood v Blood 1902
Gorell Barnes J, considered the ambit of section 5 of the 1859 Act, and said: ‘Those words are extremely wide, and I am anxious that they should not, by any construction the Court may put upon them, be narrowed in any way. To narrow them would be . .
CitedPrescott v Fellowes CA 1958
The court considered whether a deed of trust created a post nuptial settlement within the 1950 Act: ‘Inasmuch as the deed vested no property in trustees and created no successive legal or beneficial interests it had none of the attributes of a . .
CitedPrinsep v Prinsep 1929
Hill J considered what is meant by a nuptial settlement: ‘Is it upon the husband in the character of husband or in the wife in the character of wife, or upon both in the character of husband and wife? If it is, it is a settlement on the parties . .
CitedIn Re Hunter and Hewlett’s Contract 1907
A moiety of a freehold was settled during the life of the trustees and the survivor of them for the benefit of the two daughters of the settlor, their husbands and issue. The reversion in fee expectant remained with the settlor. It was common ground . .
CitedHargreaves v Hargreaves 1926
The marriage settlement included an annual sum of pounds 500 appointed by the settler. The question was whether there was any property settled other than the pounds 500.
Held: There was not: ‘to my mind, the property settled is not the whole . .
CitedHartopp v Hartopp and Akhurst 1899
Gorell Barnes J said: ‘Now the guiding principle which will be found running through the cases is, in my opinion, this: Where the breaking up of the family life has been caused by the fault of the respondent, the Court, exercising its powers under . .
CitedWhitton v Whitton 1901
Sir Francis Jeune P said: ‘But one has in these cases to consider what is really for the benefit of the children, because I think the authorities shew that nothing must be done that on the whole would be for the disadvantage of the children. This . .
CitedCartwright v Cartwright 1983
Sheldon J said: ‘when considering the financial background of the parties, the standard of life that they and the children have been accustomed to, and that the children will undoubtedly continue to enjoy while living with [their mother], I am of . .
CitedPurnell v Purnell 1961
Cairns J considered a request for the variation of a post-nuptial trust and said: ‘Now it is well established by authority that the variation may be such as to confer a benefit on a stranger to the settlement provided it also confers a benefit on . .
CitedGarforth-Bles v Garforth-Bles 1951
Pearce J said: ‘It is, in my view, to the child’s interest in another respect to allow the husband to remove a part of his fund from the settlement. He brought into the settlement reversions that were substantially all that he possessed; he now has, . .
CitedEgerton v Egerton 1949
The court considered its power to vary a post-nuptial settlement. Barnard J said: ‘No one could quarrel with this statement as a guiding principle, but at the same time I think it would be wrong to interpret it as meaning that it is a principle . .
CitedColclough v Colclough and Fisher 1933
Any variation of a post-nuptial settlement should be addressed so as to place the parties in the same position as if the marriage had not come to an end. . .

Cited by:
See AlsoHashem v Shayif and Another FD 17-Apr-2009
. .
See AlsoHashem v Shayif and Others CA 22-Jul-2009
. .
CitedLaw Society of England and Wales v Isaac and Isaac International Holdings Ltd and Others ChD 7-Jul-2010
. .
CitedLindsay v O’Loughnane QBD 18-Mar-2010
lindsay_oloughnaneQBD11
The claimant had purchased Euros through a foreign exchange dealer. The dealer company became insolvent, causing losses to the claimant, who sought to recover from the company’s managing director, the defendant, saying that he was aware of the . .
CitedVTB Capital Plc v Nutritek International Corp and Others SC 6-Feb-2013
The claimant bank said that it had been induced to create very substantial lending facilities by fraudulent misrepresentation by the defendants. They now appealed against findings that England was not clearly or distinctly the appropriate forum for . .
CitedPrest v Petrodel Resources Ltd and Others SC 12-Jun-2013
In the course of ancillary relief proceedings in a divorce, questions arose regarding company assets owned by the husband. The court was asked as to the power of the court to order the transfer of assets owned entirely in the company’s names. The . .

These lists may be incomplete.
Updated: 21 May 2021; Ref: scu.278557