Australian Courts

Australian courts have been reluctant to pierce the veil in corporate groups, even in cases of control and the presence of other veil piercing factors.[1] Piercing occurs less frequently with respect to parent companies than in cases of natural person shareholders.[2] Courts are most willing to pierce the veil with respect to ‘proprietary companies that are closely controlled with shareholders managing the company’,[3] rather than public companies.[4] The reluctance to do so in other cases coheres with the long-standing attitude of the High Court of Australia, which emphasises the need to observe the separate entity principle even within groups of companies.[5] In Industrial Equity Ltd v Blackburn,[6] Mason J stated that ‘in the absence of contract creating some additional right, the creditors of company A, a subsidiary company within a group, can look only to that company for payment of their debts. They cannot look to company B, the holding company, for payment’.[7]

[1] Eg, Premier Building and Consulting Pty Ltd (rec apptd) v Spotless Group Ltd (2007) 64 ACSR 114; Pioneer Concrete Services Ltd v Yelnah Pty Ltd (1986) 5 NSWLR 254, 266-7 (Young J). See IM Ramsay and DB Noakes, ‘Piercing the Corporate Veil in Australia’ (2001) 19 C&SLJ 250, 257.

[2] IM Ramsay and D Noakes, ‘Piercing the Corporate Veil in Australia’ (2001) 19 C&SLJ 250, 263. See also P Oh, ‘Veil-Piercing’ (2010) 89 Tex LR 81, 110; R Thompson, ‘Piercing the Corporate Veil: An Empirical Study’ (1991) 76 Cornell LR 1036, 1038 and 1047; C Mitchell, ‘Lifting the Corporate Veil in the English Courts: An Empirical Study’ (1999) 3 CfiLR LR 15, 22.

[3] IM Ramsay and D Noakes, ‘Piercing the Corporate Veil in Australia’ (2001) 19 C&SLJ 250, 263; Mobile mechanic London

[4] Companies and Securities Advisory Committee, Corporate Groups Final Report (2000), 17; C Mitchell, ‘Lifting the Corporate Veil in the English Courts: An Empirical Study’ (1999) 3 CfiLR 15; PI Blumberg, The Multinational Challenge to Corporate Law: The Search for a New Corporate Personality (OUP, 1993), 123-4.

[5] Walker v Wimborne (1976) 137 CLR 1, 6-7 (Mason J). See also Equiticorp Finance Ltd (In Liq) v Bank of New Zealand (1993) 32 NSWLR 50, 97-9 (Kirby P); Pioneer Concrete Services Ltd v Yelnah Pty Ltd (1986) 5 NSWLR 254, 266-7 (Young J).

[6] (1977) 136 CLR 567.

[7] (1977) 136 CLR 567, 577.