Corporate Liability and Veil Piercing

This assignment delves into the concepts of corporate liability and veil piercing in law. Part A explores the 'Directing Mind and Will' doctrine, analyzing case laws like DPP v. Kent and Sussex Contractors Ltd and Sugarloaf Hill Nominees Pty Ltd v Rewards Projects Ltd to demonstrate how a company can be held liable for the actions of its directors. Part B examines the principle of separate legal entity, using Salomon v Salomon as a foundation, while also discussing situations where courts lift the corporate veil, as seen in cases like Briggs v James Hardie & Co Pty Ltd and Peate v Federal Commissioner of Taxation.

Running Head: Law 1
Law

Law 2
Part A
Directing Mind and Will- Doctrine was introduced by the law for the purpose of determining
the liability of the corporation in both civil and criminal wrong conduct by the agents and
servants of the company. In this theory law consider the mind collectively and individually of the
person who directs the management of the company, the mind of the company itself. This
doctrine is known as the doctrine of “Directing mind and will”.
In case law DPP v. Kent and Sussex Contractors Ltd, Court held that company was liable under
two offences that were, company made statement which was not true and company use false
documents for the purpose of deceiving others. Therefore, Divisional Court stated that company
was held liable for both the offences, because officers of the company had intention to deceive.
This intention of the officers of the company will be considered as intention of the company
itself.
There is one more case law Sugarloaf Hill Nominees Pty Ltd v Rewards Projects Ltd [2011]
WASC 19. In this case, Supreme Court of Australia recently considers this doctrine and makes
the company liable for the acts of directors.
High Court stated that this doctrine is based on the principle where individual is or individual are
considered as representative of the organization. This law was recently considered by Australian
Court in case law Krakowski v Eurolynx Properties Ltd (1995) 183 CLR 563. In this case, court
made the corporate responsible on the basis of the knowledge of corporate officers.

Law 3
Part B
In case Salomon v Salomon, Court held that after the incorporation of the company it is
considered as the separate legal entity. In other words, it is considered as new legal entity which
is separate from its members. In case law, Peate v Federal Commissioner of Taxation Court
stated Company is the new person in the eyes of law.
Organization is considered as separate legal entity and its assets and liabilities are different from
its members and directors. It must be noted that only company is liable for breaches of contracts
and other liabilities, but this fundamental principal is rejected by Court in some cases. Court lifts
the corporate veil for the purpose of making the members liable. In some particular situations
court has power to lift the corporate veil, which means creditors and third parties has right to
access the assets of members and directors of the company. In case of corporate group, creditors
has right to access the assets of the subsidiary company.
It must be noted that Court lifts the corporate veil in very exceptional cases and not in every
case, because of which it becomes difficult to explain the exact reasons of lifting the corporate
veil. Generally, piercing of corporate veil is done by the Court when any person uses the identity
of corporate for dishonest and improper purpose. Rogers AJA said in case Briggs v James
Hardie & Co Pty, there was no fundamental principle which defines the occasional decision of
Court to Pierce the corporate veil.

Law 4
Reference:
Briggs v James Hardie & Co Pty Ltd (1989) 16 NSWLR 549.
D.P.P. v Kent and Sussex Contractors Ltd [1944] K.B. 146).
Krakowski v Eurolynx Properties Ltd (1995) 183 CLR 563.
Peate v Federal Commissioner of Taxation - [1966] HCA 29.
Salomon v A Salomon and Co Ltd [1897] AC 22.
Sugarloaf Hill Nominees Pty Ltd v Rewards Projects Ltd [2011] WASC 19.