Jones v Lipman

A person who transferred land to a company he controlled in order to avoid an order for specific performance could be ordered, together with the company, to complete the sale.

Citation
[1962] 1 WLR 832
Court
Chancery Division
Year
1962
Subject
Company Law
Topic
Separate legal personality and the corporate veil

Facts

Mr Lipman agreed to sell a house to Mr Jones. He then changed his mind, and, to avoid having to complete the sale, he bought a company and transferred the house to it. He then argued that he could no longer be ordered to sell the house, because it belonged to the company.

Legal principle

Russell J ordered specific performance against both Mr Lipman and the company. He said that the company was the creature of Mr Lipman, a device and a sham, a mask which he holds before his face in an attempt to avoid recognition by the eye of equity. Since Mr Lipman controlled the company, he could make it transfer the house, so specific performance was ordered against both. The case was explained in Prest v Petrodel as an example of the concealment principle rather than true piercing of the veil.

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