Ratio Decidendi
The corporate veil will be pierced where a company is used as a device or stratagem to evade an existing legal obligation, such as a restrictive covenant.
Facts
Horne was a former managing director of Gilford Motor, bound by a non-solicitation covenant. He incorporated a company and used it to solicit Gilford's customers, circumventing the covenant.
Judgment Summary
The Court of Appeal pierced the corporate veil. The company was formed as a device to mask Horne's activities and evade his contractual obligations. An injunction was granted against both Horne and the company.
Key Quotes
"The company was formed as a device, a stratagem, in order to mask the effective carrying on of a business of Mr E.B. Horne."
— Lord Hanworth MR
Subsequent Treatment
Classic example of veil-piercing for evasion. Approved in Prest v Petrodel [2013] as an illustration of the evasion principle.