The business was owned by DHN and the land upon which the business was operated was owned by a wholly owned subsidiary, Bronze. The Council acquired land owned by Bronze on which DHN operated its cash and carry warehouse. The Council submitted that while Bronze was entitled to compensation for loss of market value, DHN was not entitled to disturbance loss because it did not have any interest in the land, either legal or equitable. DHN was a licensee only. Section 20 of the Compulsory Purchase Act 1965 provided that if a person had no greater interest than a tenant from year to year in the land, then that person was only entitled to compensation for that lesser interest.
Held: The Court combined the interests of a parent and its subsidiary for the assessment of compensation following a compulsory acquisition.
Lord Denning MR observed: ‘Seeing that a licensee can be turned out on short notice, the compensation payable to DHN would be negligible.’
Lord Denning further observed that where a parent company owns all the shares of the subsidiaries, it can control their every movement. The subsidiaries are bound ‘hand and foot’ to the parent company and must do what the parent company says. He continued: ‘So here. This group is virtually the same as a partnership in which all the three companies are partners. They should not be treated separately so as to be defeated on a technical point. They should not be deprived of the compensation which should justly be payable for disturbance. The three companies should, for present purposes, be treated as one and the parent company, DHN, should be treated as that one.’
Lord Justice Goff upheld the appeal on the basis that DHN had an equitable interest in the land under a resulting trust. For his Lordship, the case was one which required the realities of the situation to be looked at to pierce the corporate veil.
Lord Justice Shaw, held that DHN and Bronze had an identity and community of interest.
Lord Denning MR, Lord Justice Goff, Lord Justice Shaw
[1976] 1 WLR 852, [1976] 3 All ER 462
England and Wales
Cited by:
Cited – R and B Customs Brokers Co Ltd v United Dominions Trust Ltd CA 1988
There was an issue whether or not the purchase by the plaintiff of a second-hand car was made ‘in the course of a business’ so as to preclude the plaintiff from relying upon the provisions of the 1977 Act.
Held: Speaking of Lord Keith’s . .
Cited – Alec Lobb (Garages) Ltd v Total Oil Ltd CA 1985
The court was asked whether the terms of a lease and lease back amounted to an unconscionable bargain and was unenforceable.
Held: The court affirmed the decision at first instance, but emphasised the need for unconscientious behaviour rather . .
Lists of cited by and citing cases may be incomplete.
Updated: 01 August 2021; Ref: scu.652989
