The corporate veil can be pierced where fraud is found, allowing imposition of joint and several liability among entities operated as a single economic unit.

Nallini Pathmanathan FCJ:

Introduction

[2] However the veil of incorporation is not entirely inviolable. One of the well-recognised and accepted exceptions to the principle of the separate personality of a company is where the five legal entity of a corporate body is utilised for fraudulent, dishonest or unlawful purposes. Those seeds of limitation were set out in the locus classicus of Salomon v. Salomon (above) itself by Lord Davey:

"If ... the company was formed for an unlawful purpose, or in order to achieve an object not permitted by the provisions of the [Companies] Act, the appropriate remedy (if any) would seem to be to set aside the certificate of incorporation, or to treat the company as a nullity, or, if the appellant has committed a fraud or misdemeanour... he may be proceeded against civilly or criminally..."

[3] In such circumstances the person or persons perpetrating such abuse cannot hide behind the separate corporate personality. The courts will "break" the shell of incorporation, by utilising the doctrine of the "lifting or piercing of the corporate veil". Our law journals are replete with case law on this subject.

[4] The instant appeal seeks to challenge those well-accepted principles as to the circumstances in which the veil of incorporation can be disregarded. The specific issues in respect of which leave was granted in this appeal include:

(a) The applicability of the doctrine where it is alleged that there are joint tortfeasors and joint liability is sought to be established;

(b) Whether the single economic unit test as expounded in Law Kam Loy & Anor v. Boltex Sdn Bhd & Ors, 2005 MarsdenLR 2399 ('Law Kam Loy v. Boltex') is confined to Industrial Court matters.

[5] At the outset it should be highlighted that the two questions of law did not feature in any material, substantial or significant manner in the parties' case either in the High Court or the Court of Appeal. In order to appreciate this fact, it is necessary to consider the factual background of the case.

Salient Background Facts

[6] The factual background has been comprehensively set out in the judgment of the trial Court as well as the submissions of the appellants and the 1st respondent, and I summarise the facts salient to this appeal from those sources.

The Parties

[7] The 1st appellant, Ong Leong Chiou ('Tony Ong') was the 1st defendant in the trial Court and was found to be the 'mastermind' or 'puppeteer' behind the 2nd appellant, Perfect Selection Sdn Bhd ('Perfect Selection') as well as the 3rd respondent company. Perfect Selection was the 3rd defendant in the trial Court.

[8] The 3rd respondent, PS Bina Sdn Bhd ('PS Bina') was the company that entered into contracts for the earthworks with the plaintiff. It was the 2nd defendant in the trial Court. It did not participate in this appeal, as the judgment granted against it was not disputed by the appellants.

[9]The two appellants and the 3rd respondent above were found to be jointly and severally liable for the monies claimed by the plaintiff in the suit.

[10] The 1st respondent, Keller (M) Sdn Bhd ('plaintiff') was the plaintiff in the trial Court. The 2nd respondent, Bina Puri Holdings Berhad ('Bina Puri') was the 4th defendant in the trial Court, and did not participate in this appeal.

The Facts Leading Up To The Dispute

[11] The dispute between the parties centres around the construction of the Melawati Mall Project ('the Project'), a 10 storey shopping mall a