The main issue was was Cape present in the US jurisdiction at the relevant time? Mr. Morison urged on us that the purpose of the operation was in substance that Cape would have the practical benefit of the group's asbestos trade in the United States of America without the risks of tortious liability. 3. when it can be established that the subsidiary company was acting Cape was joined and argued there was no jurisdiction to hear the case. RTF format. Cape Industries plc was a UK company, head of a group. Slade LJ (for Mustill LJ and Ralph Gibson LJ) began by noting that to ‘the layman at least the distinction between the case where a company itself trades in a foreign country and the case where it trades in a foreign country through a subsidiary, whose activities it has full power to control, may seem a slender one….’ He approved Sir Godfray’s argument ‘save in cases which turn on the wording of particular statutes or contracts, the court is not free to disregard the principle of Salomon… merely because it considers that justice so requires.’ On the test of the ‘mere façade’, it was emphasised that the motive was relevant whenever such a sham or cloak is alleged, as in Jones v Lipman. Cape Industries Plc was a UK registered company and head of Cape Industries group. However, in our judgment, Cape was in law entitled to organise the group's affairs in that manner and (save in the case of A.M.C. Lee v Lee’s Air Farming Ltd [1961] AC 12. It is not suggested that the arrangements involved any actual or potential illegality or were intended to deprive anyone of their existing rights. Adams v Cape Industries Plc – Group Reality or Legal Reality? Adams V Cape Industries Plc - Judgment. ... Macaura v Nothern Assurance Co Ltd 1925 - Duration: 1:10. legal I 464 views. the company's business is transacted from that fixed place of business. Menu Home; ... Clare Arthurs and Alex Fox reflect on the Supreme Court judgment in Nutritek. Adams v Cape Industries plc 1990 Ch 433 CA legal I. Loading... Unsubscribe from legal I? Scott J held that the parent, Cape Industries plc, could not be held to be present in the United States. Adams v Cape Industries PLC [1990] Ch 433. With regard to individuals, the court has held that it will mean that the defendant must be within the jurisdiction of a court when the proceedings were instituted, meaning service or notice that proceedings had begun. View all articles and reports associated with Adams v Cape Industries plc [1990] Ch 433. They sued Cape and its subsidiaries in a Texas court. Judgment was still entered against Cape for breach of a duty of care in negligence to the employees. Macaura v Northern Insurance Co (1925) AC 619. The court separately had to consider whether Cape had established a presence within the United States such that the English court should recognise the jurisdiction of the United States over Cape, and enforce a U.S. judgment against it (one of the criticisms made of the decision by U.S. lawyers is that the Court of Appeal fundamentally misunderstood the nature of the Federal system in the U.S.A., but that misunderstanding does not affect the general principles laid down by the court). Judgment was still entered against Cape for breach of a duty of care in negligence to the employees. H owever, the employees of NAAC got ill with asbestosis. The court held that one of Cape's subsidiaries (a special purpose vehicle incorporated in Liechtenstein) was in fact a façade, but on the facts this was not a material subsidiary such as to attribute liability to Cape. The employees appealed. As to condition (iii), we do not accept as a matter of law that the court is entitled to lift the corporate veil as against a defendant company which is the member of a corporate group merely because the corporate structure has been used so as to ensure that the legal liability (if any) in respect of particular future activities of the group (and correspondingly the risk of enforcement of that liability) will fall on another member of the group rather than the defendant company. 657 [1991] 1 All E.R. The tort victims tried to enforce the judgment in the UK courts. The case also addressed long-standing issues under the English conflict of laws as to when a company would be resident in a foreign jurisdiction such that the English courts would recognise the foreign court's jurisdiction over the company. PDF format. Adams v Cape Industries plc Ch 433 is the leading UK company law case on separate legal personality and limited liability of shareholders. E McGaughey, 'Donoghue v Salomon in the High Court' (2011) 4 Journal of Personal Injury Law 249, on, This page was last edited on 23 August 2020, at 09:10. Adams v Cape Industries plc [1990] Ch 433. The requirement, under conflict of laws rules, was either that Cape had consented to be subject to Texas jurisdiction (which was clearly not the case) or that it was present in the US. Whether or not this is desirable, the right to use a corporate structure in this manner is inherent in our corporate law. 433 [1990] 2 W.L.R. Adams v Cape Industries. But could they be enforced in England? 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