Legal Case Summary
DHN Food Distributors Ltd v Tower Hamlets London Borough Council [1976] 1 WLR 852
Piercing the corporate veil – groups of companies
The corporate veil may be pierced where groups of companies can be treated as partners.
Facts
DHN was the holding company in a group of three companies. There were two subsidiaries, wholly owned by DHN. One subsidiary owned land used by DHN, the other owned vehicles used by DHN. The land was subject to compulsory purchase, and DHN sought compensation for disturbance of its business.
Decision / Outcome
In the Court of Appeal, Lord Denning MR said:
“These subsidiaries are bound hand and foot to the parent company and must do just what the parent company says… This group is virtually the same as a partnership in which all the three companies are partners. They should not be treated separately so as to be defeated on a technical point.” (at 860)
It was therefore held that DHN was entitled to claim. The separate corporate personality doctrine was overridden. However, this is likely to only be followed where the subsidiaries are wholly owned and serve no purpose other than to own the parent company’s assets. The case has not been applied to make one company in a group liable for the debts of another – Re Southard and Co Ltd [1979] 1 WLR 118.
Updated 19 March 2026
This summary accurately reflects the decision in DHN Food Distributors Ltd v Tower Hamlets London Borough Council [1976] 1 WLR 852 and the reference to Re Southard and Co Ltd [1979] 1 WLR 118 is correct. However, readers should be aware that the authority of DHN has been substantially undermined by subsequent case law. In Adams v Cape Industries plc [1990] Ch 433, the Court of Appeal expressed serious doubt about the reasoning in DHN and confirmed that the corporate veil will not generally be pierced merely because companies form a group. More significantly, the Supreme Court in Prest v Petrodel Resources Ltd [2013] UKSC 34 clarified and considerably narrowed the circumstances in which the corporate veil may be pierced, with Lord Sumption describing the doctrine as a limited one applicable only where a person under an existing legal obligation deliberately interposes a company to evade it. The partnership analogy relied upon by Lord Denning in DHN is not consistent with this modern approach. Students should treat DHN as a historically significant but heavily qualified authority, and should be cautious about relying on it as a statement of current law on piercing the corporate veil.
