Law Case Summary
Jones v Lipman [1962] 1 W.L.R. 832
Company law – Property – Sale of land
Facts
Lipman agreed to sell a property to Jones for £5,250, but subsequently changed his mind. He then formed his own company, which had £100 in capital, and made himself the director and owner. He then transferred the land, which he had agreed to sell to Jones, to this sham company for £3,000. To enable such a transaction, Lipman had borrowed over half the money needed by way of a bank loan, and the remainder was owed to other sources. Under the Rules of the Supreme Court Order 14A, the purchaser applied for specific performance to be carried out against the vendor and the vendor’s company for the transfer of the property in question.
Issues
The court was required to decide if an order of specific performance could be enforced in the circumstances. Specifically, it was important for the court to assess the company that Lipman had created and the transaction of the sale of the property to see if it was equitable. The court also had to establish whether it was appropriate for the Rules of the Supreme Court to be applied to the circumstances.
Decision/Outcome
Firstly, the court held that the Rules of the Supreme Court could apply to the circumstances. Further to this, it was found that the defendant’s company was created by the defendant as ‘a mask to avoid recognition by the eye of equity’ (at p.836) and on this basis, a requirement of specific performance could not be avoided. It was clear that the defendant had control of the sham company which held the property, and therefore Lipman was the only individual who could perform the agreement.
Updated 21 March 2026
This case summary remains legally accurate. Jones v Lipman [1962] 1 WLR 832 continues to be good law and is regularly cited as a leading authority on lifting the corporate veil in equity, particularly where a company is used as a sham or device to evade existing legal obligations. The case is still widely referred to in academic and professional contexts for this principle.
Readers should be aware that the broader doctrine of lifting the corporate veil was significantly clarified and narrowed by the Supreme Court in Prest v Petrodel Resources Ltd [2013] UKSC 34. In that case, Lord Sumption distinguished between the ‘piercing’ of the corporate veil (which he held was a very limited doctrine, applying only where a person under an existing obligation interposes a company to evade it) and other equitable remedies, such as those based on property law or trust. The Supreme Court suggested that Jones v Lipman may be better explained on the basis of specific performance against the individual defendant, who had the power to procure the company to transfer the property, rather than on veil-piercing as such. This does not undermine the outcome of Jones v Lipman, but students should understand that the theoretical basis for the decision is now treated with some nuance following Prest. The procedural references to the Rules of the Supreme Court have been superseded by the Civil Procedure Rules 1998, though this does not affect the substantive legal principles discussed.
