economic entity’ was the degree of control the parent company
excised over the activities of the subsidiary company and the complete
ownership of all the shares.
Two years later the House of Lords on Wooflson v Strathclyde 1specifically disapproved of
Denning’s views on group structures in finding that the veil of incorporation
would be upheld unless it was a facade. The Lords determined that as the
company which carried on the business had no control over the owners of the
land they could not be regarded as a single economic entity and so they
reverted back to the rule in Salomon. Lord Keith was of the opinion that it is
appropriate to pierce the veil only when special circumstances exist indicating
that it is a mere façade concealing the true facts. On this basis Lord Keith
seemed to doubt the Country Appeal decision in DHN. This represented a high
point in the interventionist era where the courts seemed to treat the separate
personality of the company as an initial negotiating position which could be
overturned in the interest of justice.
Wooflson v Strathclyde (1978) SC (HL) 90