DHN Food Distributors Ltd v Tower Hamlets LBC

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DHN Food Ltd v Tower Hamlets LBC
Greek grocery fruit.JPG
Court Court of Appeal
Decided 4 March 1976
Citation(s) [1976] 1 WLR 852
Court membership
Judge(s) sitting Lord Denning MR, Goff LJ and Shaw LJ
Keywords
lifting the veil

DHN Food Distributors Ltd v Tower Hamlets London Borough Council [1976] 1 WLR 852 is a UK company law case where, on the basis that a company should be compensated for loss of its business under a compulsory acquisition order, a group was recognised as a single economic entity. It stands as a liberal example of when UK courts may lift the veil of incorporation of a company.

The decision was, however, doubted in Woolfson v Strathclyde Regional Council[1] and qualified in Adams v Cape Industries plc.[2]

Facts[edit]

DHN imported groceries and provision and had a cash-and-carry grocery business. Its premises were owned by its subsidiary which was called Bronze. It had a warehouse in Malmesbury Road, in Bow, the East End of London. Bronze’s directors were DHN’s. Bronze had no business and the only asset were the premises, of which DHN was the licensee. Another wholly owned subsidiary, called DHN Food Transport Ltd, owned the vehicles. In 1970 Tower Hamlets London Borough Council compulsorily acquired the premises to build houses. As a result, DHN had to close down. Compensation was already paid to Bronze, one and a half times the land value. DHN could only get compensation too if it had more than a license interest. The Lands Tribunal held no further compensation was payable.

Judgment[edit]

The Court of Appeal held that DHN and Bronze were part of a single economic entity. Therefore as if DHN had owned the land itself, it was entitled to compensation for the loss of business.

Lord Denning MR's judgment went as follows.

Goff LJ concurred and read his judgment.

Shaw LJ concurred with both judgments, and concluded with the following.[3]

See also[edit]

Notes[edit]

  1. ^ 1978 SLT 159
  2. ^ [1990] Ch 433
  3. ^ [1976] 1 WLR 852, 867-868

References[edit]

  • E McGaughey, 'Donoghue v Salomon in the High Court' (2011) 4 Journal of Personal Injury Law 249, on SSRN