Legal Assignment
LEGT 2741 MAJOR ASSIGNMENT
The chances of successfully enforcing the contractual agreement between Casino Ltd. and its employees depends upon the issues raised, the rules and subsequent applications that could be established by the trade union against Casino Ltd.
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Issues 1. Whether Casino Ltd. (the parent company) and Caterers Ltd. (its wholly-owned subsidiary company) are considered as separate legal entities. Additionally, whether the concept of corporate veil applies to the corporate groups (between Casino Ltd and Caterers Ltd). 2. Is it possible to lift or pierce the corporate veil of corporate groups on the basis that: (a) there is an implied agency relationship between the companies in the group? (b) the subsidiary company is incorporated to avoid a contractual obligation? 3. Has the company breached Section 596 of the Corporations Act?
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Rules 1. The Salomon case establishes that an incorporated company is a separate legal entity from its participants, namely founders, shareholders, directors, employees and agents. Consequently, a company could enter into contracts in its own rights and possess assets and liabilities distinct from its members. In legal terminology, this rule is referred to as the ‘corporate veil’.
According to the Walker case at 6 per Justice Mason, a corporate group is “a number of companies associated by common or interlocking shareholdings, allied to unified control or capacity to control.” Accordingly, Lord Justice Roskill in Albazeo case observed:
“… each company in a group of companies … is a separate legal entity possessed of separate legal rights and liabilities … the existence of those principles . … is impossible to deny, ignore or disobey ...” 2. (a) When an agency relationship exists in the corporate groups, the corporate veil could be pierced. Piercing the corporate veil is a judicially
The chances of successfully enforcing the contractual agreement between Casino Ltd. and its employees depends upon the issues raised, the rules and subsequent applications that could be established by the trade union against Casino Ltd.
-------------------------------------------------
Issues 1. Whether Casino Ltd. (the parent company) and Caterers Ltd. (its wholly-owned subsidiary company) are considered as separate legal entities. Additionally, whether the concept of corporate veil applies to the corporate groups (between Casino Ltd and Caterers Ltd). 2. Is it possible to lift or pierce the corporate veil of corporate groups on the basis that: (a) there is an implied agency relationship between the companies in the group? (b) the subsidiary company is incorporated to avoid a contractual obligation? 3. Has the company breached Section 596 of the Corporations Act?
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Rules 1. The Salomon case establishes that an incorporated company is a separate legal entity from its participants, namely founders, shareholders, directors, employees and agents. Consequently, a company could enter into contracts in its own rights and possess assets and liabilities distinct from its members. In legal terminology, this rule is referred to as the ‘corporate veil’.
According to the Walker case at 6 per Justice Mason, a corporate group is “a number of companies associated by common or interlocking shareholdings, allied to unified control or capacity to control.” Accordingly, Lord Justice Roskill in Albazeo case observed:
“… each company in a group of companies … is a separate legal entity possessed of separate legal rights and liabilities … the existence of those principles . … is impossible to deny, ignore or disobey ...” 2. (a) When an agency relationship exists in the corporate groups, the corporate veil could be pierced. Piercing the corporate veil is a judicially
Bibliography: Australian Corporations Legislation, 2010, LexisNexis/Butterworths Harris J, Hargovan A and Adams M, Australian Corporate Law, 2nd edition, 2009, LexisNexis/Butterworths. Ramsay and Noakes, “Piercing the Corporate Veil in Australia” (2001) 19 Companies and Securities Law Journal 250. Hargovan, A and Harris, J “The Relevance of Control in Establishing an Implied Agency Relationship between a Company and its Owners” (2005) 23 Companies and Securities Law Journal 461-466 [electronic source]. http://www.austlii.edu.au/cgi-bin/sinodisp/au/cases/wa/WASCA/2002/107.html?stem=0&synonyms=0&query=title%28Australian%20Liquor%20%20and%20%20Burswood%20Catering%20 (accessed on 9th April 2010) -------------------------------------------- [ 2 ]. Walker v Wimborne (1976) 137 CLR1. [ 4 ]. Ramsay and Noakes, “Piercing the Corporate Veil in Australia” (2001) 19 Companies and Securities Law Journal 250 at 251. [ 8 ]. Australian Liquor, Hospitality and Miscellaneous Workers Union, Western Australia Branch v Burswood Catering and Entertainment Pty Ltd (2002) 82 WAIG 544. [ 12 ]. Burswood Catering and Entertainment Pty Ltd v Australian Liquor, Hospitality and Miscellaneous Workers Union, Western Australian Branch [2002] WASCA 107 (23 April 2002) para 4.