Hashem v Shayif & Anor [2008] EWHC 2380 (Fam)
Judgment in complex ancillary relief proceedings arising from a bigamous
marriage where beneficial ownership of properties owned by the husband’s
company and his shares in that company were disputed.
1. This was the husband's fourth marriage but the third had not been
formally dissolved. The company in question was set up in 1988 to buy
and manage properties. The other shareholders were the husband's
four sons from the first three marriages who were at the time of
incorporation aged from 18 years to 6 months old. Share certificates
showed that the husband owned 30% of the shares. Initially these
proceedings were for ancillary relief but in 2006 a Chancery action by
the company was started. From 2001 the wife had lived in a property
owned by the company which she had entered after leaving the
matrimonial home in Saudi Arabia following an argument.
2. Counsel for the wife made several claims including: i) the company
was in reality solely the husband's as he had provided all the funds and
prevented sale of assets without his consent; ii) that the husband had
been seeking to defeat the ancillary relief claim at all stages of the
proceedings; iii) the properties owned by the company, and in
particular the property she inhabited were in effect the husband's; iv)
that the husband was worth significantly more than he had disclosed –
a figure of £250m was claimed. Accordingly the properties and the
shares were to be available for the ancillary relief claim.
3. Munby J (Ben Hashem) surveyed the family and non-family cases on
"piercing the corporate veil" and formulated six principles from these
cases:
(i) Ownership and control of a company were not enough to justify
piercing the corporate veil;
(ii) The court cannot pierce the corporate veil, even in the absence
of third party interests in the company, merely because it is
thought to be necessary in the interests of justice;
(iii) The corporate veil can be pierced only if there is some
impropriety;
, (iv) The "impropriety" in question must be "linked to the use of the
company structure to avoid or conceal liability";
(v) To justify piercing the corporate veil, there must be "both control
of the company by the wrongdoer(s) and impropriety, that is
(mis)use of the company by them as a device or façade to
conceal their wrongdoing;
(vi) The company may be a "façade" even though it was not
originally incorporated with any deceptive intent, provided that it
is being used for the purpose of deception at the time of the
relevant transactions. The court would, however, pierce the
corporate veil only so far as it was necessary in order to provide
a remedy for the particular wrong which those controlling the
company had done.
(It was implicit in the above formulation that resort to piercing the corporate
veil should only be in circumstances where there was no other remedy
available against the wrongdoer.)
4. It is to be noted that, in the various cases to which I have referred, the
attempt to pierce the veil succeeded only in Gilford, Jones v Lipman,
Green, Gencor and Trustor. In all the other cases it failed. It is, I think,
useful, to examine briefly why the claim succeeded in those cases
where it did and why, in the other cases, it did not.
5. It will be noted that each of these cases lacked at least one or other of
the necessary ingredients. In four of the cases (Woolfson, Nicholas,
Mubarak and Dadourain) the requisite degree of control was lacking; in
the other two cases (Cape and Ord) there was no relevant impropriety.
(para 184)
6. I have already set out the way in which Miss Parker puts her case, both
generally and, more specifically, in relation to this particular part of it.
Miss Evans-Gordon's riposte falls into four parts. (Para 186)
Judgment in complex ancillary relief proceedings arising from a bigamous
marriage where beneficial ownership of properties owned by the husband’s
company and his shares in that company were disputed.
1. This was the husband's fourth marriage but the third had not been
formally dissolved. The company in question was set up in 1988 to buy
and manage properties. The other shareholders were the husband's
four sons from the first three marriages who were at the time of
incorporation aged from 18 years to 6 months old. Share certificates
showed that the husband owned 30% of the shares. Initially these
proceedings were for ancillary relief but in 2006 a Chancery action by
the company was started. From 2001 the wife had lived in a property
owned by the company which she had entered after leaving the
matrimonial home in Saudi Arabia following an argument.
2. Counsel for the wife made several claims including: i) the company
was in reality solely the husband's as he had provided all the funds and
prevented sale of assets without his consent; ii) that the husband had
been seeking to defeat the ancillary relief claim at all stages of the
proceedings; iii) the properties owned by the company, and in
particular the property she inhabited were in effect the husband's; iv)
that the husband was worth significantly more than he had disclosed –
a figure of £250m was claimed. Accordingly the properties and the
shares were to be available for the ancillary relief claim.
3. Munby J (Ben Hashem) surveyed the family and non-family cases on
"piercing the corporate veil" and formulated six principles from these
cases:
(i) Ownership and control of a company were not enough to justify
piercing the corporate veil;
(ii) The court cannot pierce the corporate veil, even in the absence
of third party interests in the company, merely because it is
thought to be necessary in the interests of justice;
(iii) The corporate veil can be pierced only if there is some
impropriety;
, (iv) The "impropriety" in question must be "linked to the use of the
company structure to avoid or conceal liability";
(v) To justify piercing the corporate veil, there must be "both control
of the company by the wrongdoer(s) and impropriety, that is
(mis)use of the company by them as a device or façade to
conceal their wrongdoing;
(vi) The company may be a "façade" even though it was not
originally incorporated with any deceptive intent, provided that it
is being used for the purpose of deception at the time of the
relevant transactions. The court would, however, pierce the
corporate veil only so far as it was necessary in order to provide
a remedy for the particular wrong which those controlling the
company had done.
(It was implicit in the above formulation that resort to piercing the corporate
veil should only be in circumstances where there was no other remedy
available against the wrongdoer.)
4. It is to be noted that, in the various cases to which I have referred, the
attempt to pierce the veil succeeded only in Gilford, Jones v Lipman,
Green, Gencor and Trustor. In all the other cases it failed. It is, I think,
useful, to examine briefly why the claim succeeded in those cases
where it did and why, in the other cases, it did not.
5. It will be noted that each of these cases lacked at least one or other of
the necessary ingredients. In four of the cases (Woolfson, Nicholas,
Mubarak and Dadourain) the requisite degree of control was lacking; in
the other two cases (Cape and Ord) there was no relevant impropriety.
(para 184)
6. I have already set out the way in which Miss Parker puts her case, both
generally and, more specifically, in relation to this particular part of it.
Miss Evans-Gordon's riposte falls into four parts. (Para 186)
