Gilford Motor Company v Horne [1933] Ch 935

Court: Court of Appeal (Lord Hanworth MR)

Facts: Horne, a former employee bound by a restrictive covenant, established a company to compete with his former employer, Gilford Motor Company, after leaving employment. Gilford sought an injunction, arguing that the company was a sham to evade Horne’s contractual obligations.

Issue: Can the corporate veil be pierced to prevent the misuse of a company as a façade for breaching contractual obligations?

Held: The Court of Appeal granted an injunction against both Horne and his newly established company, finding that the company was used as a façade to evade Horne’s legal obligations under the restrictive covenant.

Key Judicial Statement: Lord Hanworth MR found that the company was a "device, a stratagem" to disguise Horne’s breach of contract, justifying the piercing of the corporate veil.

💡 Leveluplaw: Courts may pierce the corporate veil when a company is used as a façade to avoid contractual or legal obligations.