Legal Updates

 Litigation and Dispute ResolutionJuly 20, 2023

Corporate Veil: The High Court allows plaintiffs to proceed with a claim to treat two companies as a single entity

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Dillon Eustace recently acted for the plaintiffs in the successful defence of an application brought by two defendants to strike out proceedings against them as an abuse of process. In Coen & anor v Doyle, Mark Doyle Building Contractors Limited & ors [ 2023] IEHC 310, the High Court held that there were arguable grounds to allow the plaintiffs the benefit of discovery and cross examination as they seek to advance their case for an order piercing the corporate veil between two corporate defendants.


The proceedings involve a dispute in respect of a construction contract. The plaintiffs’ case is that they engaged the first defendant, an individual, and the second defendant, a company incorporated with limited liability, in respect of a design and build project. The first defendant, who is the principal shareholder of the second defendant, contends that there was no contractual relationship between him and the plaintiffs, that all works were carried out by the second defendant and therefore, the case against him should be dismissed.

The third defendant is a company, which was incorporated after the date of the construction project the subject matter of the proceedings. The plaintiffs argued that the business of the second and third defendants should be treated as a single entity, noting that the name of the second defendant and the business name of the third defendant are almost identical, the first defendant is the controlling shareholder for both companies, they have the same directors and there was a transfer of assets from the second defendant to the third defendant at an undervalue. The first and second defendants contend that the third defendant had been incorporated for tax planning purposes.

Jurisdiction to dismiss proceedings as bound to fail

The High Court noted that the principal question for the court in determining an application to strike out proceedings is whether the very act of instituting the proceedings represents an abuse of process. The fact that a case might be very weak and successfully defended is not sufficient. Instead, the court must be satisfied the proceedings disclose no cause of action and/or are bound to fail.

In terms of the court’s inherent jurisdiction to dismiss proceedings, it is open to the court to consider the credibility of the plaintiff’s case to a limited extent, but it is not entitled to determine disputed questions of fact.

Decision in respect of the first defendant

Applying these principles, the court held that there could be no credible basis for suggesting that the plaintiffs’ proceedings against the first defendant are bound to fail on the merits. The first defendant, in arguing that there was no contract between him and the plaintiffs, relied upon a draft contract prepared by the plaintiff with the second defendant. The court noted that only limited weight can be attached to a draft contract, particularly where there is no contemporaneous documentation before the court. In addition, a certificate submitted to the local authority, confirming the identity of who had been commissioned to undertake the works, appeared to have been signed by the first defendant personally, while the assigned certifier averred that he believed the first defendant was personally engaged in the project. The court held that such factual disputes can only be fairly resolved by way of oral evidence and cross examination, while the discovery of documents may have a significant bearing on the outcome of the proceedings.

Decision in respect of the third defendant

The plaintiffs relied on the UK Supreme Court decision in Prest v Petrodel Resources [2013] UKSC34, which held that a court may pierce the corporate veil where a person, who is under an existing legal liability, seeks to deliberately evade that liability or deliberately frustrate its enforcement by interposing a company under his control. In this case, the court found that there was a significant factual dispute as to the precise status of the third defendant and its relationship with the second defendant and it was noted that no taxation, accounting or legal advice was exhibited to support the contention that the third defendant had been incorporated for tax planning purposes. The court held that it was satisfied that there are arguable grounds for saying that the plaintiffs, having regard to the benefit of discovery and cross examination, might be able to persuade a judge to make an order piercing the veil between the two companies and treating them as a single entity.


The court explicitly referenced the benefit that the plaintiffs might potentially obtain from discovery, oral evidence and cross examination in the furtherance of their action. As such, the High Court, in refusing to dismiss the proceedings against the first and third defendants, illustrated the high threshold which a defendant must meet to have a case dismissed as an abuse of process at an early stage in the proceedings.

The willingness of the court to allow the plaintiffs proceed with their case against the third defendant, in which they seek to pierce the corporate veil, demonstrates the pragmatic approach adopted by the court when it is claimed there is a basis for treating separate companies as a single entity.

DISCLAIMER: This document is for information purposes only and does not purport to represent legal advice. If you have any queries or would like further information relating to any of the above matters, please refer to the contacts above or your usual contact in Dillon Eustace.

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