DHN Food Distributors Ltd v Tower Hamlets London Borough Council [1976] 1 WLR 852

Court: Court of Appeal

Tag: Separate Corporate Personality

Facts: DHN Food Distributors Ltd operated a business on land owned by its subsidiary. When the local council compulsorily acquired the land, DHN sought compensation not just for the land’s value but also for the disruption to its business operations. The Land Tribunal initially denied compensation beyond the land value, arguing that DHN had no direct interest in the land.

Issue: Can a parent company claim compensation for losses incurred by its subsidiary due to compulsory land acquisition, considering the separate legal personality of the subsidiary?

Held: The Court of Appeal, led by Lord Denning MR, allowed the appeal, holding that the corporate veil between DHN and its subsidiary could be pierced. This allowed DHN to claim compensation for the losses incurred due to the compulsory acquisition, treating the parent and subsidiary as a single economic entity.

Key Judicial Statement: Lord Denning MR remarked, "This group of companies is virtually the same as a partnership... They should not be treated separately so as to be defeated on a technical point." However, this ruling was later discredited by the House of Lords in Woolfson v Strathclyde Regional Council (1978), which reinforced the principle of separate corporate personality.

💡Leveluplaw: The Court of Appeal allowed the piercing of the corporate veil to enable a parent company to claim compensation for its subsidiary's losses, though this approach was later overturned in subsequent cases.