Anum Khan

20211-29978
W1-13409
Corporate And Business Law

Gilford Motor Co Ltd v Horne [1933] Ch. 935

1. Can the court pierce the veil of J.M. Horne & Co. Ltd.?

There are two situations where cooperate veil can be lifted. One is Statutory Provisions and other
is judicial interpretation. Here the situation comes under the judicial interpretation. If we keep
them in mind, by contrast with the limited and careful statutory directions to ‘lift the veil’
judicial inroads into the principle of separate personality are more numerous. Besides statutory
provisions for lifting the corporate veil, courts also do lift the corporate veil to see the real state
of affairs.

As Horne is the managing director and he was legally bounded by the company that an employee
entered into an agreement that after his employment is terminated he shall not enter into a
competing business or he should not solicit their customers by setting up his own business. After
the defendant’s service was terminated, he set up a company of the same business.

Here court has the liability to lift the veil.

2. Has Horne violated the covenant in the previous employment contract regarding
the restraint on trade?

Yes he has violated the section 5. In his contract it was clearly mentioned that he was a
contractual employee but contract contained a restriction on trade to be carried on by the
employee, wherein the employee was not allowed to entice any of the customers of the employer
while at the company or after termination of the contract.

As Section 5 of the Companies Act defines the individual person committing a wrong or an
illegal act to be held liable in respect of offenses as ‘officer who is in default’. This section gives
a list of officers who shall be liable to punishment or penalty under the expression ‘officer who is
in default’ which includes a managing director or a whole-time director.

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