2056 WHERE DIRECTORS ACT WHILE DISQUALIFIED Where a director continues to act

2056 where directors act while disqualified where a

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20.5.6 WHERE DIRECTORS ACT WHILE DISQUALIFIED Where a director continues to act after being disqualified, that director would be jointly and severally liable with the company for any liabilities incurred during that time. 20.5.7 WHERE IT IS IN THE PUBLIC INTEREST The veil could be lifted where the paramount interest of the public or state requires it. Daimler Co. Ltd v Continental Tyre & Rubber Co. Ltd (Great Britain) [1916] 2 AC 307 A company was incorporated in England in order to sell in the country tyres made in Germany by a German Company. The German company held most of the shares in the English company while all remaining shareholders (except one) and all the directors were Germans living in Germany. The only non-German was in fact a German who had become a British citizen by naturalisation and lived in England. After the outbreak of war between England and Germany, a case was brought in England by the English company for the recovery of debts owed to it by the German company. The defendant challenged the action on the ground that it was an alien enemy company and that payment of the debt would be a trading with the enemy, and that the action was commenced without the authority of the company. The English company obtained judgment at the High Court and Court of Appeal. On further appeal by the German company, the House of Lords held among other things that the company “was in substance a hostile partnership and was therefore incapable of suing, and that any payment to it would be illegal as a trading with the enemy” (at p. 307). However the mere fact that a British company did business in an enemy country through an agent will not make it an enemy company. Download free eBooks at bookboon.com
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BUSINESS ORGANISATIONS AND AGENCY 378 CORPORATE PERSONALITY In Re Hilckes [ 1917 ] 1 KB 48 (CA), an English company in 1910 acquired the estate of a debtor (a German national) in German East Africa and appointed the debtor its commercial agent in that country. When the debtor/agent failed to make the expected returns from the estate, the company dismissed him. He sued the company in Germany and lost and was ordered to pay the litigation cost. In the meantime, war had broken out between England and Germany and the debtor was detained in England. In a claim by the company from the debtor’s estate of the court cost, it was argued that since the judgment was by a German court, and since the claimant company was owned by Germans, the money was not recoverable. It was held that the company was not an alien enemy and was therefore entitled to recover the cost. 20.5.8 IN CASES OF JUST AND EQUITABLE WINDING UP The court may wind up a company on the petition of a member on the ground that it is just and equitable to do so. In such situations, the court would treat the company as a quasi -partnership. For more on this, see chapter 28.6.2.
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  • Fall '19
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