Canada: companies, the Charter of Rights and protection from cruel and unusual treatment or punishment

It is, I hope, not too late to note a judgment of the Supreme Court handed down at the start of last month: Quebec (Attorney General) v. 9147-0732 Québec inc., 2020 SCC 32. The court held that section 12 of the Canadian Charter of Rights and Freedoms, which provides that "Everyone has the right not to be subjected to any cruel and unusual treatment or punishment" did not apply to companies.  The Court of Appeal had, by majority, held that section 12 did apply to companies. A summary of the Supreme Court's judgment is available here. 

Gibraltar: The Companies (Amendment) Bill 2019

The Companies (Amendment) Bill 2019 was published earlier this week in the Gibraltar Gazette: see here (pdf). The short explanatory memorandum at the end of the Bill states: "This Act amends Parts XII, XIV, XV, XVI, and Schedule 26 of the Companies Act 2014 . The amendments extend the provisions relating to the registration or establishment in Gibraltar of a branch or place of business by overseas companies, to overseas entities having a legal personality other than companies".

Canada: Supreme Court considers separate legal personality and action in respect of harms suffered by companies

The Supreme Court gave judgment earlier this month in Brunette v Legault Joly Thiffault, s.e.n.c.r.l., 2018 SCC 55. A summary of the case is available here. By majority, the Court concluded (at para. [51]):

The principles of procedural and corporate law in Quebec bar shareholders from exercising rights of action that belong to the corporations in which they hold shares. Shareholders may institute proceedings, however, if they can demonstrate (1) a breach of a distinct obligation, and (2) a direct injury that is distinct from that suffered by the corporation in question. These requirements reflect the essential principles of civil liability under the C.C.Q. [Civil Code of Québec] and provide shareholders having a direct and personal interest with a means to seek damages against third-party defendants".

New Zealand: Court of Appeal upholds parent company's liability for debt of subsidiary company

The Court of Appeal gave judgment earlier this month in Steel & Tube Holdings Limited v Lewis Holdings Limited [2016] NZCA 366, on appeal from [2014] NZHC 3311. The case concerned a parent company that had placed one of its wholly-owned subsidiaries into liquidation. The liquidators of the subsidiary disclaimed a lease under section 269 ("Power to disclaim onerous property") of the Companies Act 1993. The lessor sought damages as well as an order that the parent company should be liable for those damages under section 271 ("Pooling of assets of related companies") of the 1993 Act.  Section 272 sets out the guidance the court is required to consider under section 271, including the extent to which the related company took part in the management of the company in liquidation and the extent to which the businesses of the companies were combined.

The trial judge held that it was just and equitable, as section 271 requires, for liability to be imposed on the parent company. The Court of Appeal upheld this decision.  Its judgment is important, not least because there are few authorities considering section 271. The first instance decision, which contains more analysis than the court of appeal judgment, remains a leading authority and its message remains clear: the separate legal personality of companies in groups will be respected where each company is conducted and governed as a separate entity.  To disregard the separate legal status of the companies will be to run the risk of liability being imposed under section 271 even where, as in the current case, the company's constitution permitted directors of the subsidiary to prefer the interests of the parent company (note also section 131(2) of the 1993 Act). Indeed, as the trial judge observed, provisions of this kind do not mean that the interests of both companies can be conflated or the subsidiary company's interests ignored.

UK: England and Wales: properties were held on resulting trust

Judgment was given earlier this week in M v M [2013] EWHC 2534 (Fam). The case concerned a wife's application for an order for financial relief under Part III of the Matrimonial and Family Proceedings Act 1984. At issue was whether a husband had a beneficial interest in properties the legal title of which was vested in companies. The trial judge found that the husband at all times intended to retain the beneficial interest in the properties and that they were held on resulting trust. The properties were therefore capable of being the subject of an order for relief under Part III. Permission to commence the Part III proceedings was given three years ago but the hearing was delayed until after the Supreme Court gave judgment in Prest v Petrodel Resources Ltd. [2013] UKSC 34.

UK: England and Wales: Court of Appeal rejects application of 'sole actor exception' and considers extra-judicial effect of section 213 of the Insolvency Act 1986

The Court of Appeal gave judgment yesterday in Jetivia SA v Bilta (UK) Ltd [2013] EWCA Civ 968 (on appeal from [2012] EWHC 2163 (Ch), [2012] WLR (D) 236). The court unanimously held that section 213 ("Fraudulent trading") of the Insolvency Act 1986 had extraterritorial effect. The court also rejected the argument that the sole actor exception was an established feature of English law for all purposes, noting that it was bound by Belmont Finance Corpn Ltd v Williams Furniture Ltd [1979] Ch 250 and Attorney-General's Reference (No 2 of 1982) [1984] QB 624 to hold that the director of a one-man company could be held liable to account for breaches of fiduciary duties which he committed against the company. The fact that a fraudulent director was the directing mind and will of the company was not an answer to a claim by the company against the director for breach of duty committed against the company.

UK: Scotland: Court of Session considers meaning of 'company' in investment syndicate constitution

Lord Hodge delivered his opinion yesterday in Symphony Equity Investments Ltd. v Shakeshaft [2013] CSOH 102. In doing so he was required to interpret an investment syndicate's constitution, one of the terms of which required a majority of the syndicate's members to approve in advance investments over a certain limit made in a 'single investment company'. The meaning of the word 'company' was disputed. Lord Hodge held that 'company' referred to a single, individual company with its own legal personality. There was, he observed, no ambiguity in the phrase 'single investee company' and he rejected the argument that 'company' should be capable of referring to an undertaking, such as a corporate group, where activities were carried out by different companies. The constitution, he noted, had been drafted by skilled solicitors with extensive commercial experience, who should be taken as being very familiar with the principle of separate corporate personality. Moreover, had they wished to restrict the board's power of investment in companies within a group, they could have chosen words which clearly achieved that result.

UK: Supreme Court gives judgment in Petrodel - appeal allowed - corporate veil not pierced but resulting trust found

The Supreme Court gave judgment today in Prest v Petrodel Resources Limited & Others [2013] UKSC 34, one of the most important recent company law cases. A copy of the judgment is available here or here (pdf). A summary is available here (pdf).

The court unanimously held, in the context of proceedings for financial remedies following a divorce, that there were three possible legal bases on which company assets might be available to satisfy a lump sum order against the husband: (1) where, exceptionally, the court may disregard the corporate veil in order to give effective relief; (2) that section 24 of the Matrimonial Causes Act 1973 confers a distinct power to disregard the corporate veil in matrimonial cases; or (3) that the companies hold the properties on trust for the husband, not because of his status as sole shareholder and controller of the company, but in the particular circumstances of the case.

The court held that the facts before it fell into the third category, finding that the properties were held on a resulting trust by the company for the husband. Nevertheless, the judgment contains much discussion of the boundaries of the first category. Lord Sumption, delivering the leading opinion, stated (at paras.[27] and [28]):

.... the principle that the court may be justified in piercing the corporate veil if a company’s separate legal personality is being abused for the purpose of some relevant wrongdoing is well established in the authorities. It is true that most of the statements of principle in the authorities are obiter, because the corporate veil was not pierced. It is also true that most cases in which the corporate veil was pierced could have been decided on other grounds. But the consensus that there are circumstances in which the court may pierce the corporate veil is impressive. I would not for my part be willing to explain that consensus out of existence. This is because I think that the recognition of a limited power to pierce the corporate veil in carefully defined circumstances is necessary if the law is not to be disarmed in the face of abuse. I also think that provided the limits are recognised and respected, it is consistent with the general approach of English law to the problems raised by the use of legal concepts to defeat mandatory rules of law.

The difficulty is to identify what is a relevant wrongdoing. References to a “facade” or “sham” beg too many questions to provide a satisfactory answer. It seems to me that two distinct principles lie behind these protean terms, and that much confusion has been caused by failing to distinguish between them. They can conveniently be called the concealment principle and the evasion principle. The concealment principle is legally banal and does not involve piercing the corporate veil at all. It is that the interposition of a company or perhaps several companies so as to conceal the identity of the real actors will not deter the courts from identifying them, assuming that their identity is legally relevant. In these cases the court is not disregarding the “facade”, but only looking behind it to discover the facts which the corporate structure is concealing. The evasion principle is different. It is that the court may disregard the corporate veil if there is a legal right against the person in control of it which exists independently of the company’s involvement, and a company is interposed so that the separate legal personality of the company will defeat the right or frustrate its enforcement. Many cases will fall into both categories, but in some circumstances the difference between them may be critical. This may be illustrated by reference to those cases in which the court has been thought, rightly or wrongly, to have pierced the corporate veil."

Lord Sumption also stated (at para. [52]):

Whether assets legally vested in a company are beneficially owned by its controller is a highly fact-specific issue. It is not possible to give general guidance going beyond the ordinary principles and presumptions of equity, especially those relating to gifts and resulting trusts. But I venture to suggest, however tentatively, that in the case of the matrimonial home, the facts are quite likely to justify the inference that the property was held on trust for a spouse who owned and controlled the company. In many, perhaps most cases, the occupation of the company’s property as the matrimonial home of its controller will not be easily justified in the company’s interest, especially if it is gratuitous. The intention will normally be that the spouse in control of the company intends to retain a degree of control over the matrimonial home which is not consistent with the company’s beneficial ownership. Of course, structures can be devised which give a different impression, and some of them will be entirely genuine. But where, say, the terms of acquisition and occupation of the matrimonial home are arranged between the husband in his personal capacity and the husband in his capacity as the sole effective agent of the company (or someone else acting at his direction), judges exercising family jurisdiction are entitled to be sceptical about whether the terms of occupation are really what they are said to be, or are simply a sham to conceal the reality of the husband’s beneficial ownership.

A recording of Lord Sumption, delivering the court's opinion this morning, is available below:

UK: England and Wales: company assets not controlled by sole director/shareholder for purposes of freezing order

Judgment was given yesterday in Group Seven Ltd v Allied Investment Corporation Ltd [2013] EWHC 1509 (Ch). At issue was whether an asset of a company, a chose in action, was to be treated as an asset of the company's sole director (also its only shareholder) for the purposes of a freezing order to which the director was subject. The freezing order was drafted so as to apply to all of the director's assets "whether or not they are in his own name ... For the purposes of this order the [director's] assets include any asset which he has the power, directly or indirectly, to dispose of or deal with as if it were his own".

The trial judge held that a company with a sole director, who also owned all its shares, did not hold or control its assets in accordance with that director/shareholder's direct or indirect instructions within the terms of the freezing order. The judge stated that this finding was mandated by settled principles of company law, referring to the judgments of Rimer and Patten LJJ in Petrodel Resources Ltd v Prest [2012] EWCA Civ 1395, [2013] 2 WLR 557. His answer was, he stated, one that "may dilute the efficacy of the standard CPR form of freezing order, and surprise and unsettle not a few; but to my mind, there is no escape from it." (para. [65]).

Note: Petrodel was the subject of an appeal to the Supreme Court, heard by a panel of seven justices earlier this year. Judgment will be given next Wednesday.

Update (12 June 2013) - a summary of the case has been provided by the ICLR: see here.

UK: The company's separate legal personality - Supreme Court to give Petrodel judgment next week

The Supreme Court has announced that it will hand down its judgment in Petrodel Resources Limited v Prest next week: see here.

The issue for the court, as outlined in its case summary, was: is it open to the court in ancillary relief proceedings to treat the assets of a company of which a spouse is the sole controller as being assets to which that spouse is ‘entitled’ for the purposes of section 24(1)(a) of the Matrimonial Causes Act 1973. In the Court of Appeal the majority (Rimer and Patten LJJ; Thorpe LJ dissenting) provided a strong endorsement of the company's separate legal personality: see [2012] EWCA Civ 1395. Rimer LJ stated: "... the separate corporate identity of a company is a fact of legal life that all courts are required to recognise and respect, whatever jurisdiction they are exercising" (para. [155]). Patten LJ stated that section 24(1)(a) did not give the court the power to disapply the established principles of legal and beneficial ownership or of company law (para. [160]).

UK: Supreme Court judgment in VTB Capital (piercing the corporate veil and other matters)

The Supreme Court gave judgment today in VTB Capital plc v Nutritek International Corp [2013] UKSC 5. A copy of the judgment is available here and here (pdf). A summary is available here (pdf) and also below (delivered by Lord Mance, the corporate veil point is considered at 5:36). A summary of the decision has also been provided by the ICLR: see here.

UK: Supreme Court appeal in Petrodel case - seven justices to hear appeal

Last October, as noted here, the Court of Appeal gave judgment in Petrodel Resources Ltd v Prest [2012] EWCA Civ 1395, [2012] WLR (D) 296. The majority provided a strong endorsement of the company's separate legal personality and its application in family proceedings. Indeed, Rimer LJ stated: "... the separate corporate identity of a company is a fact of legal life that all courts are required to recognise and respect, whatever jurisdiction they are exercising".

Permission to appeal was granted and earlier this year the Supreme Court announced that a panel of five justices would hear the appeal (Lady Hale and Lords Neuberger, Walker, Mance and Wilson). This has changed: seven justices will now hear the appeal, the original panel being joined by Lords Sumption and Clarke (the criteria used to determine if a panel of more than five justices should hear an appeal are available here). Three of the justices (Lords Neuberger, Mance and Wilson) heard argument last year in another case concerning the corporate veil, VTB Capital plc v Nutritek International Corp, the judgment for which is expected within the next couple of months (the hand-down date will be published here).

Note: a copy of the first instance Petrodel decision has only recently been added to the BAILII database: see here.

Update (31 January 2013) - the VTB judgment is being handed down on 6 Feb: see here.

Europe: competition law - undertakings - parent company liability for subsidiary company infringements

Last year, in Gosselin Group and Stichting Administratiekantoor Portielje v Commission (Joined Cases T-208/08 and T-209/08), the General Court held that a parent company of an undertaking which had infringed Article 81 of the EC Treaty (now Article 101 of the Treaty on the Functioning of the European Union) could not be penalised by a decision implementing Article 81 if it was not an undertaking itself. The Commission appealed and yesterday Advocate-General Kokott delivered her opinion: see Commission v Stichting Administratiekantoor Portielje and Gosselin Group NV (Case C-440/11 P). In her opinion, which is not binding on the Court of Justice, the Advocate General took the view that the General Court had erred in law when it found that the parent company must itself be regarded as an undertaking. In this regard she stated (paras. 36 to 38):

For the penalisation of an undertaking for infringing the cartel rules, on the basis of Article 81 EC (now Article 101 TFEU) in conjunction with Article 23(2)(a) of Regulation No 1/2003, it is, however, irrelevant whether all the natural or legal persons who legally comprise that undertaking are themselves economically active and are therefore each to be regarded as undertakings individually. The only decisive factor is that – viewed as a whole – one undertaking has committed the infringement and that all natural or legal persons on whom a fine is imposed as the penalty for the infringement are principals of that joint undertaking, since the aim of the penalties imposed pursuant to Article 23(2)(a) of Regulation No 1/2003 is to ensure that those persons who have a decisive influence on the undertaking involved in a cartel are called to account in accordance with the principle of personal responsibility and that the undertaking does not commit such infringements again. In terms of that objective, it is irrelevant whether the aforementioned natural or legal persons are engaged in an economic activity otherwise – that is to say, irrespective of their influence over the undertaking involved in the cartel."

UK: The company's separate legal personality and family proceedings - Supreme Court to hear Petrodel appeal

Last month, as noted here, the Court of Appeal gave judgment in Petrodel Resources Ltd v Prest [2012] EWCA Civ 1395. The majority provided a strong endorsement of the company's separate legal personality and its application in family proceedings. Indeed, Rimer LJ stated: "... the separate corporate identity of a company is a fact of legal life that all courts are required to recognise and respect, whatever jurisdiction they are exercising". The Court of Appeal granted permission to appeal and the Supreme Court has announced that it will hear the case in early March next year: see here (details will not remain on this linked page permanently but in due course further information will be available on the court's current cases page).

Update (2 January 2013) - the Supreme Court has set aside a couple of days in March 2013 to hear the case: see here (pdf).

UK: Supreme Court hears appeal in veil piercing case

The Supreme Court will begin hearing argument today in an appeal from VTB Capital Plc v Nutritek International Corp. [2012] EWCA Civ 808. The issue for the court, as stated in its case summary, is this: where a person uses a puppet company to enter a contract with a third party in order to perpetrate fraud on that third party, can the court pierce the corporate veil and treat that person as a party to the contract? Supreme Court hearings can be watched live here.

UK: England and Wales: upholding the Salomon principle in Family Division proceedings

The Court of Appeal gave judgment last Friday in Petrodel Resources Ltd & Ors v Prest [2012] EWCA Civ 1395. The majority (Patten and Rimer LJJ) allowed the appeal and provided an exceptionally strong endorsement of the consequences flowing from the company's separate legal personality. Rimer LJ observed (paras. [154] and [155]:

Salomon is House of Lords authority affirming the distinction between the separate legal personalities of a company and its corporators. It makes no difference to such distinction that the company has a single corporator with total control over its affairs. It is a feature of the principle that a company's assets belong beneficially to the company and that its corporators have no interest in, or entitlement to, them. It is a further feature of it that such assets cannot be looked to in order to satisfy the personal obligations of the corporators, any more than the latters' personal assets can be looked to in order to satisfy the obligations of the company. In special circumstances, in particular in the winding up of an insolvent company, there may be a statutory basis for requiring the corporators to contribute personally to the company's assets, for example if they have misapplied its assets or engaged in wrongful or fraudulent trading (see sections 212 to 214 of the Insolvency Act 1986). Exceptions of that nature are, however, irrelevant for present purposes.

Subject to exceptions such as those, and to cases in which it is legitimate to pierce the corporate veil, the separate corporate identity of a company is a fact of legal life that all courts are required to recognise and respect, whatever jurisdiction they are exercising. It is not open to a court, simply because it regards it as just and convenient, to disregard such separate identity and to appropriate the assets of a company in satisfaction either of the monetary claims of its corporator's creditors or of the monetary ancillary relief claims of its corporator's spouse. Salomon precludes any such approach; and the same was made clear by the House of Lords in Woolfson and by the Court of Appeal in Adams, Ord and VTB. The obiter dicta in Nicholas to different effect are inconsistent with Salomon, Woolfson, Adams, Ord and VTB and advance no reasoning why a different principle should apply in the family jurisdiction as compared with other jurisdictions. The Salomon principle must apply equally to all jurisdictions. A one-man company does not metamorphose into the one-man simply because the person with a wish to abstract its assets is his wife."

Update (29 October 2012) - a summary of the decision has been produced by the ICLR: see here.

Update (24 January 2013) - a copy of the High Court decision has today been added to the BAILII database: see here.

UK: England and Wales: piercing the veil - Court of Appeal judgment in VTB v Nutritek

The Court of Appeal's much anticipated judgment in VTB Capital Plc v Nutritek International Corp [2012] EWCA Civ 808 was delivered today. Amongst the matters for consideration were the principles governing the piercing of the veil of incorporation and whether a puppeteer company should be made a party to a contract entered by the puppet company. At first instance - see [2011] EWHC 3107 (Ch) - the trial judge held the puppeteer could not be made a party to the contract and in doing so declined to follow Antonio Gramsci Shipping Corp v Stepanovs [2011] EWHC 333 (Comm). Lord Justice Lloyd, delivering the judgment of the Court of Appeal, held that the trial judge was right to do so. His Lordship stated (at paras. [91] and [94]):

... whilst we accept that the court can, in an appropriate case, "pierce a company's corporate veil" and, in doing so, substantially identify the company with those in control of it, no authority has been cited to us, apart from Burton J's decisions in Gramsci and Alliance, that supports the proposition that, once the veil is pierced, the court either does or can (or that it is arguable that it does or can) proceed in consequence to a holding either that the puppet company was a party to the puppeteer's contract, or vice versa. As we have said, we interpret Burton J as having regarded [Gilford Motor Company Ltd. v Horne [1933] 1 Ch 935 and Jones v Lipman [1962] 1 WLR 832] as cases in which the remedies against the companies were granted on the basis that they were themselves parties to the individuals' contracts. We respectfully regard that as a misreading of both cases".

... there remains a question as to whether, even if founded on mistaken reasoning, Gramsci and Alliance anyway represent a principled development of the law that this court should adopt. We have said enough to show that we consider that they do not. The "veil piercing" cases show that the principle is, in its application, a limited one, which has been developed pragmatically for the purpose of providing a practical solution in particular factual circumstances. The reported authorities certainly proceed on the basis that (in the usual case) the puppet company and the controlling puppeteer are to be closely identified, an identification that will or may be regarded as justifying the grant of a judicial remedy against the puppet as well as the puppeteer, if only on the basis that it will be just and convenient to do so. They do not, however, go to the length of treating the puppet company as other than a legal person that is formally distinct and separate from the puppeteer; and, were they to do otherwise, they would wrongly be ignoring the principles of [Salomon v Salomon [1897] AC 22]. Consistently with that, they do not provide any basis for the proposition that the puppeteer should be regarded as having always been a party to a contract to which it or he plainly was not a party."

Update (30 August 2012): the case is heading to the Supreme Court, which granted permission to appeal in July 2012 (see here, pdf).

Update (31 January 2013) - the Supreme Court's judgment is being handed down on 6 Feb 2013.

UK: Scotland: company representation in court proceedings

In Secretary of State for Business, Enterprise and Regulatory Reform v UK Bankruptcy Ltd [2010] CSIH 80, 2011 SC 115, it was held that in Scotland a company could not be represented in proceedings by anyone other than an advocate or solicitor possessing a right of audience. This rule has been considered again by the Court of Session in an opinion delivered earlier this week - Apollo Engineering Ltd (In Liquidation) v James Scott Ltd [2012] CSIH 4 - in which one of Apollo's directors sought permission to represent the company in legal proceedings where the company was unable to afford legal representation.

The court unanimously held that the director should not be permitted to represent the company. Different reasons for reaching this conclusion were given by Lady Paton and Lord Reed (Lord Bracadale supported Lord Reed's position). In Apollo and unlike the earlier Bankruptcy case, the court considered the relevance of Article 6 ("Right to a fair trial") of the European Convention on Human Rights. Nevertheless, with reference to Airey v Ireland (1979) 2 EHRR 305, Lord Reed found that Article 6(1) did not require the court to give the director permission to represent the company because this would not provide the company with an effective right of access to the court.

UK: England and Wales: parent company owed duty of care to employee of subsidiary

Earlier this month, in Chandler v Cape plc [2011] EWHC 951 (QB), the trial judge held that a parent company (Cape plc) owed a duty of care to one of the employees of a subsidiary company (Cape Products). A copy of the judgment is not yet available on BAILII but has been published by Devereux Chambers: see here (Word). A short summary of the case has been published by LexisWeb: see here. Before considering whether a duty of care was owed, in accordance with the three stage test in Caparo Industries Plc v Dickman [1990] 2 AC 605, the trial judge made these important points (para. [66]):

... it is necessary to dispel certain possible misunderstandings which might arise in cases of this type or upon a cursory reading of this judgment. First, the fact that the Claimant was owed a duty of care by Cape Products does not prevent such a duty arising between the Claimant and other parties. No doubt, the fact that a duty situation exists between the Claimant and his employer is a factor to be taken into account when deciding whether another party owes the Claimant such a duty. But, to repeat, the existence of the duty between the Claimant and his employer cannot preclude another person being fixed with a duty of care. Second, the fact that Cape Products was a subsidiary of the Defendant or part of a group of companies of which the Defendant was the parent cannot mean by itself that the Defendant owes a duty to the employees of Cape Products. So much is clear from Adams v Cape Industries plc [1991] 1 AER 929. Equally, the fact that Cape Products was a separate legal entity from the Defendant cannot preclude the duty arising. Third, this case has not been presented on the basis that Cape Products was a sham – nothing more than a veil for the activities of the Defendant. Accordingly, this is not a case in which it would be appropriate to 'pierce the corporate veil' ".

UK: England and Wales: competition law, undertakings and separate legal personality

A summary of the Court of Appeal decision Cooper Tire & Rubber Company Europe Ltd. v Dow Deutschland Inc. [2010] EWCA Civ 864 has recently been provided by the ICLR as part of its (free) WLR(D) Service: see here. To quote from the summary:

Once the Commission of the European Communities had found that an undertaking had participated in anti-competitive practices the undertaking could not rely on the English domestic law concept of separate corporate entity to argue that the undertaking as a whole or a parent company in the group had not participated in those practices. Where it was alleged in a claim against the defendants that representatives of those alleged to have been party to the anti-competitive behaviour had had discussions to co-ordinate that behaviour and that those discussions had led to each of the defendants co-ordinating their anti-competitive behaviour, that was sufficient to allow the claim against the defendants to continue even if none of the defendants fined by the commission was domiciled in England.

LONGMORE LJ giving the judgment of the court said that in English domestic law, which proceeded on the basis that corporate bodies are all separate legal personalities, one could not say that the act of one company in a group of companies, all controlled by a holding company, was automatically the act of any other company in that group. The position in EU law was however, different at least in the area of competition law and alleged breaches of art 81EC of the EC Treaty [now Article 101 of the Treaty of the Functioning of the European Union, see here (pdf)]. What concerned EU law was the activity of 'undertakings' which might comprise a number of separate corporate entities. The question under art 81EC was whether an 'undertaking' had participated in anti-competitive practices and it would not avail the undertaking to say that because a corporate entity which was part of the undertaking was a party to anti-competitive practices, either the undertaking as a whole or a parent company in the group did not participate in those practices. Otherwise evasion of art 81EC would be too easy".