Macaura v Northern Assurance Co Ltd
Encyclopedia
Macaura v Northern Assurance Co Ltd [1925] AC 619 appeared before the House Of Lords
concerning the principle of lifting the corporate veil. Unusually, the request to do so was in this case made by the corporation's owner.
, Northern Ireland
. He sold the timber there to Irish Canadian Sawmills Ltd for 42,000 fully paid up £1 shares, making him the whole owner (with nominees). Mr Macaura was also an unsecured creditor for £19,000. He got insurance
policies - but in his own name, not the company's - with Northern Assurance covering for fire
. Two weeks later, there was a fire. Northern Assurance refused to pay up because the timber was owned by the company, and that because the company was a separate legal entity, it did not need to pay Mr Macaura any money.
Lord Buckmaster, Wrenbury, Atkinson and Phillimore concurred.
House of Lords
The House of Lords is the upper house of the Parliament of the United Kingdom. Like the House of Commons, it meets in the Palace of Westminster....
concerning the principle of lifting the corporate veil. Unusually, the request to do so was in this case made by the corporation's owner.
Facts
Mr Macaura owned the Killymoon estate in County TyroneCounty Tyrone
Historically Tyrone stretched as far north as Lough Foyle, and comprised part of modern day County Londonderry east of the River Foyle. The majority of County Londonderry was carved out of Tyrone between 1610-1620 when that land went to the Guilds of London to set up profit making schemes based on...
, Northern Ireland
Northern Ireland
Northern Ireland is one of the four countries of the United Kingdom. Situated in the north-east of the island of Ireland, it shares a border with the Republic of Ireland to the south and west...
. He sold the timber there to Irish Canadian Sawmills Ltd for 42,000 fully paid up £1 shares, making him the whole owner (with nominees). Mr Macaura was also an unsecured creditor for £19,000. He got insurance
Insurance
In law and economics, insurance is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss. Insurance is defined as the equitable transfer of the risk of a loss, from one entity to another, in exchange for payment. An insurer is a company selling the...
policies - but in his own name, not the company's - with Northern Assurance covering for fire
Fire
Fire is the rapid oxidation of a material in the chemical process of combustion, releasing heat, light, and various reaction products. Slower oxidative processes like rusting or digestion are not included by this definition....
. Two weeks later, there was a fire. Northern Assurance refused to pay up because the timber was owned by the company, and that because the company was a separate legal entity, it did not need to pay Mr Macaura any money.
Judgment
The House of Lords held insurers were not liable on the contract, since the timber that perished in the fire did not belong to Mr Macaura, who held the insurance policy. Lord Sumner said,Lord Buckmaster, Wrenbury, Atkinson and Phillimore concurred.
See also
- Kosmopoulos v Constitution Insurance Co of Canada [1987] 1 SCR 2
- Attorney General of Belize v Belize Telecom LtdAttorney General of Belize v Belize Telecom LtdAttorney General of Belize v Belize Telecom Ltd [2009] is a case on which the Privy Council gave advice, relevant for contract law, company law and constitutional law...
- JJ Harison (Properties) Ltd v Harrison [2001] EWCA Civ 1467, said there is no company law rule which says the company is a trustee and the shareholders the beneficiaries.
- Lee v Lee’s Air FarmingLee v Lee’s Air FarmingLee v Lee’s Air Farming Ltd [1961] AC 12 is a UK company law case, concerning the veil of incorporation and separate legal personality. The Privy Council reasserted that a company is a separate legal entity, so that a director could still be under a contract of employment with the company he solely...
[1961] AC 12