In Grenade (UK) Limited v Grenade Energy Limited & ANR, the ‘corporate veil’ did not protect a director from being held jointly liable with his company for the tort of passing off.
- Mr Chawla’s company Grenade (UK) Limited (GUL) made soft drinks and it copied the name and trademark of another company, Grenade Energy Limited (GEL) when it created a soft drink. GUL was accused of passing off and GEL claimed there was damage to its trade.
- Mr Chawla was named as second defendant in the action: he was sole director and sole shareholder of GUL.
The court found Mr Chawla jointly liable of passing off.
- As sole director he was found to be a knowing and willing participant and there was the evidential presumption that all acts done by the first defendant were done at the instigation of Mr Chawla alone.
- The acts were both initiated and controlled by him.
Comment
It is normally very difficult to pierce the corporate veil and to sue a director for the actions of his own company unless it can be established that there is deliberate wrongdoing, e.g. in cases of fraud. In this case the sole director directed the company and no one else could be said to be involved and so was jointly liable for its tortious act.
