Don’t Settle for a Bad Settlement

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Over the course of any lawsuit a victim has an interest of reaching a quick settlement. When you reach a settlement the plaintiff in the case will agree to accept an offer and give up the right to legal recourse at a later date. This means once an offer is agreed upon, the plaintiff will not have the right to receive additional compensation at a later date. When you do eventually settle don’t settle on a bad settlement offer!

Millions of people each day struggle to pay their bills and provide for their families. When you have been involved in an accident and it resulted in injury, the struggle may get harder. Personal injuries can be catastrophic and in many cases the victim is forced to take time off of work. If you are living pay check to pay check and you don’t have short or long term disability coverage, it can become very challenging. If you lose a job and incapable of returning back to your profession, it can become financially devastating to the victim.

When you read about personal injury cases oftentimes you think compensation is only available for medical bills, pain and suffering and property damage. While these are a few of the expenses that should be included in a compensation package, loss of job and loss of wages should be a high priority on the list. The average household income from state to state ranges from around $36,000-$69,000 with the average personal income lower. If you own a home, car, renting an apartment and your the breadwinner of a family, cutting out your income can be very problematic.

Insurance companies have the reputation of forgetting to include loss of income into the total compensation package. They may include a few days but what about time lost for follow-up visits to a doctor, hospital, physical therapist. If you are involved in an accident it may require additional visits for x-rays, MRI’s and medical evaluations. These costs should certainly be included. Consider the costs for retraining yourself to enter into a new occupation because you are no longer able to go back to work.

If you are considering a settlement make sure you consider all the costs associated with an accident and not just the ones you have bills for.  So when you reach the settlement table be sure not to settle for a “bad settlement”.

The Veil Doctrine in Company Law

A Glimpse at how Anglo-Saxon courts apply the principle

Forji Amin George

Doctoral Research Fellow, International law, Kent & Helsinki universities

I- The Veil Doctrine in Company Law

1.1: Introduction

A corporation under Company law or corporate law is specifically referred to as a “legal person”- as a subject of rights and duties that is capable of owning real property, entering into contracts, and having the ability to sue and be sued in its own name.[1] In other words, a corporation is a juristic person that in most instances is legally treated as a person, and empowered with he attributes to own its own property, execute contracts, as well as ability to sue and be sued.

One of the main motivations for forming a corporation or company is the limited liability it offers its shareholders. By this doctrine (limited liability), a shareholder can only lose only what he or she has contributed as shares to the corporate entity and nothing more.

Nevertheless, there is a major exception to the general concept of limited liability. There are certain circumstances in which courts will have to look through the corporation, that is, lift the veil of incorporation, otherwise known as piercing the veil, and hold the shareholders of the company directly and personally liable for the obligations of the corporation.

The veil doctrine is invoked when shareholders blur the distinction between the corporation and the shareholders. It is worthy of note that although a separate legal entity, a company or corporation can only act through human agents that compose it. [2]As a result, there are two main ways through which a company becomes liable in company or corporate law to wit: through direct liability (for direct infringement) and through secondary liability (for acts of its human agents acting in the course of their employment).[3]

The doctrine of piercing the corporate veil varies from country to country. In the opinion of two Corporate law scholars, apparently, there is a general consensus that the whole area of limited liability, and conversely of piercing the corporate veil, is among the most confusing in corporate law.”[4]

There are two existing theories for the lifting of the corporate veil. The first is the “alter-ego” or other self theory, and the other is the “instrumentality” theory.[5]

The alter-ego theory considers if there is in distinctive nature of the boundaries between the corporation and its shareholders. [6]

The instrumentality theory on the other hand examines the use of a corporation by its owners in ways that benefit the owner rather than the corporation. It is up to the court to decide on which theory to apply or make a melange of the two doctrines.[7]

 

Courts are generally reluctant to pierce the corporate veil, and this is only done when liability is imposed to reach an equitable result.

1.2: Meaning of Corporation in Company Law

To begin with, the word company will be used in this paper to refer to a legal entity with an identity different from that of its owners. It goes without saying that the owners in such an entity are not held liable for the firm’s obligations in excess of the value of their investment therein.[8] In fact, a company is equal in law to a natural person.

In different legal systems, corporate law and company law mean the same thing. In either circumstance, the term is used to denote the field of law concerning the creation and regulation of companies or corporations and other business organizations.

The important thing to note however is that although a separate legal entity, a company or corporation can only act through human agents that compose it. As a result, there are two main ways through which a company becomes liable in company or corporate law to wit: through direct liability (for direct infringement) and through secondary liability (for acts of it’s human agents acting in the course of their employment).

1.3: Veil Doctrine as derivative from Separate legal personality concept

As aforementioned, a company once incorporated becomes a legal personality or a juristic entity that has a separate and distinct identity from that of it’s owners or members, shareholder; and it’s further empowered with it’s own rights, duties and obligations, can sue and be sued in it’s own name, etc, etc

The most important ingredient that flows from the separate legal personality clause is that of limited liability. It is aimed at giving investors minimum insurance in their business over their own private lives. Hence, the most a member in the company can lose is the amount paid for the shares themselves and thus the value of his/her investment.[9] Thus, creditors who have claims against the company may look only to the corporate assets for the satisfaction of their claims as creditors and generally cannot proceed against the personal or separate assets of the members. This has the potential effect of capping the investors’ risk whilst, consequently, their potential for gain is unlimited.[10] Evidently, corporations exist in part, in the first place to shield their shareholders from personal liabilities for the debts of that corporation.[11]

The concept of limited liability was invented in England in the 17th century, and prior to this period, people were scared to invest in companies because any partner in a general partnership could be held responsible for all the debts of the corporation. As the capital needed to finance the largest projects grew, and along with it the necessity of raising money, investors were reluctant to invest because of the risk involved in essentially guaranteeing the entire debt of the business entity.

In fact, the concept of separate legal personality goes hand in hand with the doctrine of limited liability. The main importance of the limited liability concept is that it protects the company and its members, as well as to facilitate commercial ventures in which the company may be interested.[12] The principle further act to attract and encourage corporate investment, much needed in any society to speed up development. It is believed to be the springboard to raise managerial standards in a corporate organization. It goes without saying that it facilitates better investment strategies by the company question.

Farrar has described the concept of separate legal personality as “…essentially a metaphorical use of language, clothing the formal group with a single separate legal entity by analogy with a with a natural person”[13]

In fact, corporate law requires that company owners respond to organisational realities of the corporation as well as conforming with and making intelligible the treatment of organisations as legal actors.[14] In this sense, the conception of a corporation is analytical and ideological, descriptive and prescriptive.[15]

One scholar in the person of Blumberg has pointed out that the law’s conception that the company is at law a different person- in some ways seems proper and satisfying,[16] but then, the problem is far more complex. He argues that “in the law, concepts have a life of their own because their ability ex ante to influence the thinking of judges and ex post to be invoked by judges to justify their conclusion.”[17]

1.4: The Concept of Limited Liability

The main idea behind that the legal personality of a company is separate from that of it’s members. The most important ingredient that flows from he separate legal personality clause is that of limited liability. It is aimed at giving investors minimum insurance in their business over their own private lives. Thus, the most a member in the company can lose is the amount paid for the shares themselves and thus the value of his/her investment.[18] Thus, creditors who have claims against the company may look only to the corporate assets for the satisfaction of their claims as creditors and generally cannot proceed against the personal or separate assets of the members. This has the potential effect of capping the investors’ risk whilst, consequently, their potential for gain is unlimited.[19]

It is obvious that corporations exist in part, in the first place to shield their shareholders from personal liabilities for the debts of that corporation.

The concepts was invented in the 17th century, and prior to this date, people were scared to invest in companies because any partner in a general partnership could be held responsible for all the debts of the corporation. As the capital needed to finance the largest projects grew, and along with it the necessity of raising money, investors were reluctant to invest because of the risk involved in essentially guaranteeing the entire debt of the business entity.

In fact, the concept of separate legal personality goes hand in hand with the doctrine of limited liability. The main importance of the limited liability concept is that it protects the company and its members, as well as to facilitate commercial ventures in which the company may be interested.[20] The principle further act to attract and encourage corporate investment, much needed in any society to speed up development. It is believed to be the springboard to raise managerial standards in a corporate organization. It goes without saying that it facilitates better investment strategies by the company question.

1.5.1: The Courts’ treatment of Separate Legal Personality under Anglo-Saxon Jurisdictions

Under Anglo- Saxon jurisdictions, the doctrine of piercing the veil remains one of the primary method through which the courts mitigate the strenuous demands of the logical fulfilment of the separate legal personality concept.

The problems with finding some thread of principle through all the various court decisions basically stem from the false unity of the cases which, while involving vastly different underlying issues, are still linked under the metaphor of the ’veil’ concept.

Blumberg has written that the conceptual standards of entity law are frequently regarded as Anglo-Saxon principles and applied indiscriminately across the entire range of the law. [21]In other words, the application of the doctrine of separate personality in Anglo-Saxon jurisdictions is at the discretion of the judges and the courts. This is no surprising, given that Anglo-Saxon law is basically Judge-made law. [22]

The function of much of the Anglo-Saxon courts’ work in this area is to delineate the legitimate uses of the corporate form.

1.5.2: An Illustration of the Conceptual interpretation of Limited Liability versus lifting the veil: The decision in Salomon V. Salomon & Co. [23]

The case of Salomon V. Salomon & Co., commonly referred to as the Salomon case, is both the foundational case and precedence for the doctrine of corporate personality and the judicial guide to lifting the corporate veil.

The House of Lords in the Salomon case affirmed the legal principle that, upon incorporation, a company is generally considered to be a new legal entity separate from its shareholders. The court did this in relation to what was essentially a one person Company, which is Mr Salomon.

1..5.2.a: Facts and decision of the Salomon Case

Mr Aron Salomon was a British leader merchant who for many years operated a sole proprietor business, specialized in manufacturing leather boots. In 1892, his son, also expressed interest in the businesses. Salomon then decided to incorporate his businesses into a limited company, which is Salomon & Co. Ltd.

However, there was a requirement at the time that for a company to incorporate into a limited company, at least seven persons must subscribe as shareholders or members. Salomon honored he clause by including his wife, four sons and daughter into the businesses, making two of his sons directors, and he himself managing director. Interestingly, Mr. Salomon owned 20,001 of the company’s 20,007 shares – the remaining six were shared individually between the other six shareholders. Mr. Salomon sold his business to the new corporation for almost £39,000, of which £10,000 was a debt to him. He was thus simultaneously the company’s principal shareholder and its principal creditor.

At the time of liquidation of the company, the liquidators argued that the debentures used by Mr. Salomon as security for the debt were invalid, and that they were based on fraud. Vaughan Williams J. accepted this argument, ruling that since Mr. Salomon had created the company solely to transfer his business to it, the company was in reality his agent and he as principal was liable for debts to unsecured creditors.

The lord justices of appeal variously described the company as a myth and a fiction and said that the incorporation of the business by Mr. Salomon had been a mere scheme to enable him to carry on as before but with limited liability.

However, the House of Lords later quashed that Court of Appeal (CA) ruling, upon critical interpretation of the 1862 Companies Act.

The court unanimously ruled that there was nothing in the Act about whether the subscribers (i.e. the shareholders) should be independent of the majority shareholder. The company was duly constituted in law, the court ruled, and it was not the function of judges to read into the statute limitations they themselves considered expedient. The 1862 Act created limited liability companies as legal persons separate and distinct from the shareholders.

In other words, by the terms of the Salomon case, members of a company would not automatically, in their personal capacity, be entitled to the benefits nor would they be liable for the responsibilities or the obligations of the company. It thus had the effect that members’ rights and/or obligations were restricted to their share of the profits and capital invested.[24]

1.5.2.b: Significance of the Salomon Case

The rule in the Salomon case that upon incorporation, a company is generally considered to be a new legal entity separate from its shareholders has continued till these days to be the law in Anglo-Saxon courts, or common law jurisdictions. The case is of particular significance in company law thus:

Firstly, it established the canon that when a company acts, it does so in it’s own name and right, and not merely as an alias or agent of it’s owners. For instance, in the later case of Gas Lighting Improvement Co Ltd v Inland Revenue Commissioners, [25]Lord Sumner said the following:

“Between the investor, who participates as a shareholder, and the undertaking carried on, the law interposes another person, real though artificial, the company itself, and the business carried on is the business of that company, and the capital employed is its capital and not in either case the business or the capital of the shareholders. Assuming, of course, that the company is duly formed and is not a sham…the idea that it is mere machinery for effecting the purposes of the shareholders is a layman’s fallacy. It is a figure of speech, which cannot alter the legal aspect of the facts.”[26]

Secondly, it established the important doctrine that shareholders under common law are not liable the company’s debts beyond their initial capital investment, and have no proprietary interest in the property of the company. This has been affirmed in later cases, such as in The King v Portus; ex parte Federated Clerks Union of Australia[27], where Latham CJ while deciding whether or not employees of a company owned by the Federal Government were not employed by the Federal Government ruled that:

“The company…is a distinct person from its shareholders. The shareholders are not liable to creditors for the debts of the company. The shareholders do not own the property of the company…”[28]

II-The piercing of the veil by Common Law Courts

2.1 How do Common Law courts pierce the veil?

Lifting the veil of incorporation or better still; “Piercing the corporate veil” means that a court disregards the existence of the corporation because the owners failed to keep one or more corporate requirements and formalities. The lifting or piercing of the corporate veil is more or less a judicial act, hence it’s most concise meaning has been given by various judges. Staughton LJ, for example, in Atlas Maritime Co SA v Avalon Maritime Ltd (No 1)[29] defined the term thus:

“To pierce the corporate veil is an expression that I would reserve for treating the rights and liabilities or activities of a company as the rights or liabilities or activities of its shareholders. To lift the corporate veil or look behind it, therefore should mean to have regard to the shareholding in a company for some legal purpose.”[30]

Young J, in Pioneer Concrete Services Ltd v Yelnah Pty Ltd,[31] on his part defined the expression “lifting the corporate veil” thus:

“That although whenever each individual company is formed a separate legal personality is created, courts will on occasions, look behind the legal personality to the real controllers.”[32]

The simplest way to summarize the veil principle is that it is the direct opposite of the limited liability concept. Despite the merits of the limited liability concept, there is the problematic that it can lead to the problem of over inclusion, to the disadvantage of the creditors. That is to say the concept is over protected by the law. When the veil is lifted, the owners’ personal assets are exposed to the litigation, just as if the business had been a sole proprietorship or general partnership.

Common law courts have the lassitude or exclusive jurisdiction “lift” or “look beyond” the corporate veil at any time they want to examine the operating mechanism behind a company. [33]

This wide margin of interference given common law judges has led to the piercing of the corporate veil becoming one of the most litigated issues in corporate law.[34]

But it should be worthy of note that a rigid application of the piercing doctrine in common law jurisdictions has been widely criticized as sacrificing substance for form. Hence, Windeyer J, in the case of Gorton v Federal Commissioner of Taxation, remarked that this approach had led the law into “unreality and formalism.”[35]

As aforementioned, when the judges pierce the veil of incorporation, they accordingly proceed to treat the company’s members as if they were the owners of the company’s assets and as if they were conducting the companies business in their personal capacities, or the court may attribute rights and/or obligations of the members on to the company.

The doctrine is also known as “disregarding the corporate entity”.

In his 1990 article, Fraud, Fairness and Piercing the Corporate Veil, Professor Farrar remarked that the Commonwealth authority on piercing the corporate veil as “incoherent and unprincipled”. [36] That claim has been earlier backed up by Rogers AJA, a year ago in the case of Briggs v James Hardie & Co Pty[37] thus:

“There is no common, unifying principle, which underlies the occasional decision of the courts to pierce the corporate veil. Although an ad hoc explanation may be offered by a court which so decides, there is no principled approach to be derived from the authorities.”[38]

Another scholar in the person of M. Whincop in his own piece: ‘Overcoming Corporate Law: Instrumentalism, Pragmatism and the Separate Legal Entity Concept’[39], argued that the main problem with the Salomon case was not so much the argument for the separate legal entity, but rather the failure by the English House of Lords to give any indication of “What the courts should consider in applying the separate legal entity concept and the circumstances in which one should refuse to enforce contracts associated with the corporate structure.”[40]

2.2: Basis for court lifting of the veil of incorporation under Anglo-Saxon Jurisdictions

As aforementioned, common law courts are empowered to; under limited circumstances ignore the limited liability rule, and “pierce the corporate veil”, so that the members of the company in question may become liable for the actions of the company, in spite of the limited liability rule that the two have separate identities. [41]

It’s worth re-iterating that the piercing of the corporate veil remains one of the most litigated issues in English company law.[42] There are however a number of general factors that Anglo-Saxon would normally take into considering before piercing the veil, since as much as possible, the courts will like to maintain the preserve of companies to keep separate identity from its owners.

By and large, the separate legal personality of a company will be disregarded only if the court deems that there is, in fact or in law, a partnership between companies in a group, or that there is a mere sham or facade in which that company is playing a role, or that the creation or use of the company was designed to enable a legal or fiduciary obligation to be evaded or a fraud to be perpetrated.[43]

In a nutshell, common law courts have ever since the Salomon case recognized a number of discrete factors that would prompt them to piercing the corporate veil. The most outstanding factors would be examined hereunder:

2.2.1Fraud

English courts would allege fraud where its owners of a corporation merely used it as a window dressing to evade either fiduciary or legal obligations. This will most notably be the case where the company owner intentionally used it to deny the creditors pre-existing legal rights.[44] These were the facts in issue in the case of Re Edelsten ex parte Donnelly,[45] even though the court could not ascertain fraud on a company owner who had apparently denied his obligations towards his creditors on the grounds of limited liability. The court was faced with the question of ascertaining whether the company was incorporated and then used for the purpose of evading a legal obligation or perpetrating a fraud, as argued by the trustee. The court ruled thus.

“The argument of fraud is, of course circular. It can only succeed if the argument of

sham succeeds, because if no property was acquired by, or devolved upon, Edelsten,

no duty capable of being evaded could arise under the Act…The submission that the

VIP Group had been used to perpetrate a fraud was coincident, and stood, or fell, with

the submissions which sought to have the transactions, by which the VIP Group

acquired property, treated as shams.”[46]

In other words, the court could not ascertain fraud for the reason that the corporation had not been created out of sham, and had merely taken adequate steps to ensure that any property acquired after bankruptcy did not fall into the hands of any of the trustee in bankruptcy.

It has been said that the more conspicuous the sham, the more likely it would be for the Anglo-Saxon courts to ascertain that fraud had been perpetrated. In the 1997 Australian case of Re Neo, the Immigration Review Tribunal took this view in a case where a decision to refuse an application for a visa by an employee, where sponsorship had been arranged by a company formed on the same day that the application was lodged, and interestingly, the company never carried out any business.

The Australian Immigration Review Tribunal ruled thus:

“The company was merely a vehicle used to circumvent Australian migration law. It was only a façade, its true purpose being to allow the applicants to remain in the country.”[47]

2.2.2: Agency

The doctrine of separate legal entity that the company is a legal entity with a different identity from that of its members means that a company does not exist to become an agent for its shareholders. Where this is the case, Anglo-Saxon courts would not hesitate to pierce the corporate veil. In Rowland J, in Barrow v CSR Ltd[48], where the court found out that a parent company was responsible for the actions of a subsidiary in relation to an employee, it did not hesitate to lift he veil. The court stated:

“Now, whether one defines all of the above in terms of agency, and in my view it is, or control, or whether one says that there was a proximity between CSR and the employees of ABA, or whether one talks in terms of lifting the corporate veil, the effect is, in my respectful submission, the same.”[49]

But Anglo-Saxon courts do not have any unique judicial approach to determining whether the company acted as an agent. Hence, it is a bit too difficult to rationalize the judgments. For instance, the court refused to pierce the veil in The Electric Light and Power Supply Corporation Limited v Cormack[50]: a one-man company that had contracted with the plaintiffs to use their power supply for his work during two years, and not to install any other alternative source of energy power during that period of time. But within that period, the defendant sold his company to another company of which he was both the manager and the main shareholder. The new company thereupon installed energy power other than he one contracted with the plaintiffs. The court refused to pierce the veil, considering the act as a personal undertaking.[51] Lord Rich AJ found no evidence that the sale of the business by the defendant was done with the object of evading his personal obligations.

It has been remarked that Anglo-Saxon courts are generally less prepared to pierce the separate legal status, in the case of very small companies, such as the one business. In the case of small businesses, they are rather more prepared to apply agency principles. This is particularly the case where control was absolute, that is where the business was an integral part of it’s owner, such that the company itself can properly be seen as a mere agent for the shareholder. Hence in Ampol Petroleum Pty Ltd v Findlay,[52] Fullagar J. was only willing to pierce the veil, only after the owner of a small private company sought the lifting of the veil himself to demonstrate that the losses of the company were in fact his losses. The learned judge stated:

“If the defendant does embark on establishing loss of profits (or capital or goodwill) at an enquiry as to damages, I consider on the present state of the evidence that the “corporate veil” may be pierced for these purposes, that is to say, I consider that the defendant will be entitled to include losses to his company or companies flowing from the breach, provided he establishes (in addition to causation) that the loss to the company was his loss…The evidence presently before me strongly suggests that the defendant wholly controlled the relevant companies and their monies and other assets, and dealt with the monies and assets as though they were his own.”[53]

In a nutshell, it can be said that the main reason while Anglo-Saxon courts in he case of small companies tend to prefer agency principles is because they want to reduce the severity of a penalty as a consequence of piercing the corporate veil.

2.2.3: Unfairness

One other serious ground under which Anglo-Saxon courts would be so ready to pierce the corporate veil is in cases where it is deduced that there was unfairness on the part of the company in question. The plaintiff may for example pray the court to pierce the corporate veil on the grounds that doing so would help bring a fair and just result. Such was the case in the Australian case of RMS Glazing Pty Ltd v The Proprietors of Strata Plan No 14442,[54] where a body corporate bringing in an action against a defendant company argued that he veil be pierced because it’s Managing Director, Mr. Lo Surdo had play a very active role in the court proceedings and would normally not have done so if the company was in effect not just a “a body of straw”. The court in he pronouncement of Cole J. rejected this argument, finding that with the company’s record of profitable trading it could not be said to be a body of straw. Cole J. said thus:

“Quite apart from that I am not satisfied that justice would require the making of such an order. The Body Corporate dealt with RMS over a period of more than a decade. It was prepared to deal with the company rather than Mr Lo Surdo personally and to enter into contractual relationships with the company resulting in the payment of many millions of dollars. I do not think that the interest of justice requires that it now be permitted to simply disregard the corporate veil.”[55]

2.2.4: Group Enterprises

The argument of group enterprises is to the effect that in certain cases, some companies that act as a corporate group, may operate to hide behind the advantages of limited liability to the disadvantage of their creditors. They may operate in a way that the parent entity is not clearly distinguishable from the subsidiaries. The argument in favor of piercing the corporate veil in these circumstances is to ensure that a corporate group which seeks the advantages of limited liability must also be ready to accept the corresponding responsibilities. This was the opinion of Doyle CJ in the 1998 case of Taylor v Santos Ltd. [56]

The most outstanding instance however where Anglo-Saxon courts would most probably pierce the corporate veil on the ground of group enterprises is where there exists a sufficient degree of common ownership and common enterprise. In the case of Bluecorp Pty Ltd v ANZ Executors and Trustee Co Ltd (supra)[57], the following Lord Justices identified the main grounds under which Anglo- Saxon courts would be prompt to pierce the corporate veil as a result of group enterprises. The court stated thus:

“The inter-relationship of the corporate entities here, the obvious influence of the control extending from the top of the corporate structure and the extent to which the companies were thought to be participating in a common enterprise with mutual advantages perceived in the various steps taken and plans implemented, all influence the overall picture.”[58]

The above hints notwithstanding, the common law courts may hesitate to pierce the corporate veil where the outcome would produce a different result.

2.2.5: Sham or Façade

A argument that he company under scrutiny is a sham or a façade is one of he strongest points that would prompt a common law court to lift the veil of incorporation. The argument is quite close to he argument of fraud, but usually stands on it’s own. In short, to say a company was merely a façade or a sham means the corporate form was incorporated or merely used as a mask to hide the real purpose of the corporate controller. In the English case of Sharrment Pty Ltd v Official Trustee in Bankruptcy[59], Lockhart J, stated that:

“A ‘sham’ is…something that is intended to be mistaken for something else or that is not really what it purports to be. It is a spurious imitation, a counterfeit, a disguise or a false front. It is not genuine or true, but something made in imitation of something else or made to appear to be something which it is not. It is something which is false or deceptive.”[60]

To say the least, a fraud argument is usually dependent upon a sham argument, and common law jurisdictions have indicated over the years that no fraud can be perpetrated where he corporate form is real and not a façade.

2.3: Recent Development of the Doctrine in Common law jurisdictions (Resume)

The doctrine of piercing the corporate veil is apparently in a transitory state in many common law jurisdictions. Current practice by he Anglo-Saxon courts demonstrates that he courts are increasingly becoming as interested with legal and equitable principles as they are with the traditional fraud requirement. In other words, what the Common law courts typically consider is injustice and impropriety. Where his is he case, the only motive of the courts in lifting he veil is the restoration of equity.

The fraud requirement however remains of very vital importance in many common law jurisdictions. But other courts such as in the USA have adopted a more liberal approach to veil piercing in favor of tests such as for instance: what is the veracity in he shareholder control of the corporation? , The shareholders’ improper conduct in controlling he corporation and the causal link between improper conduct and the plaintiff’s injury.

3.0-CONCLUSION

The act of piercing the corporate veil until now remains one of the most controversial subjects in corporate law, and it would continue to remain so, even for the years to come. By and large, as discussed in the essay, the doctrine of piercing the corporate veil remains only an exceptional act orchestrated by courts of law. Courts are most prepared to respect the rule of corporate personality, that a company is a separate legal entity from it’s shareholders, having it’ own rights and duties, and can sue and be sued in it’s own name.

As we move from jurisdiction to jurisdiction across the globe, it’s application narrows down to how that system of the law appreciates the subject. Common law jurisdictions are examples par excellence where the piercing of the corporate veil has gained notoriety, and as the various cases indicate, courts under this system of the law generally appreciates every case by it’s merits.

The above notwithstanding, there are general categories such as fraud, agency, sham or façade, unfairness and group enterprises; which are believed to be he most peculiar basis under which the common law courts would pierce he corporate veil. But these categories are just a guideline and by no means far from being exhaustive.

Bibliography

BOOKS

Frank H. Easterbrook & Daniel R. Fischel, Limited Liability and the Corporation, (1985). 52 U.CHI.L.REV. 89

N Hawke, Corporate Liability, London Sweet and Maxwell 2000 p108.

Gower and Davies Principles of Modern Company Law (7Edition) London Sweet and Maxwell (2003) at 176

R Grantham and C Rickett, Corporate Personality in the 20th Century, 1998.

Dan-Cohen M, Rights, Persons and Organizations: A Legal Theory For Bureaucratic Society, University of California Press- Berkeley, (1987).

Keith Wallmelley, Butterworths Company Law Handbook, Butterworths Tolley (August 1997)

Ella Gepken-jager, Gerard Van Solinge, and Levinus Timmerman, Voc 1602-2002: 400 Years of Company Law, O C S L Press (December 30, 2005)

Gary Rogowski , Company Law in Modern Europe, Dartmouth Pub Co (July 1999)

 

 

 

 

 

 

 

JOURNALS AND MAGAZINES

SM Bainbridge, Abolishing Veil Piercing, 26 J. Corp Journal of Corporate Law Spring 2001 .479

Dan-Cohen M, Rights, Persons and Organizations: A Legal Theory For Bureaucratic Society, University of California Press- Berkeley, (1987) , 44.

 

Blumberg P. “The Corporate Entity in ~n Era of Multi-National Corporations,’ 15. Delaware Journal of Corporate Law , 324.

Cheong – Ann Ping, Corporate Liability, A Study in Principles of Attribution, Kluwer Law International (2001)

Ramsey M. Ian & David B. Noakes, Piercing the Corporate Veil in Australia, Melbourne University Press, , 2005. Paper for the Melbourne Centre for Corporate Law and Securities Regulation

H A J Ford, R P Austin and I M Ramsay, Ford’s Principles of Corporations Law, 9th ed, 1999

Robert B. Thompson, Piercing the Corporate Veil, an Empirical Study, 76 Cornell L. REV. 1036, 1991

J Farrar, ‘Fraud, Fairness and Piercing the Corporate Veil’ (1990) 16 Canadian Business Law

Journal 474.

M Whincop, ‘Overcoming Corporate Law: Instrumentalism, Pragmatism and the Separate Legal

Entity Concept’ (1997) 15 Company and Securities Law Journal

J Payne, ‘Lifting the Corporate Veil: A Reassessment of the Fraud Exception’ (1997) 56 Cambridge Law Journal

 

 

 

 

 

STATUTES

 

Section 3 (02) of the American Bar Association’s Revised Model Business Corporation Act (RMBCA)

 

 

 

 

 

 

-ONLINE SOURCES

– Piercing the Corporate Veil. Wikipedia. (Online). 2003. (Assessed: 2.4.2007)

< http://en.wikipedia.org/wiki/Piercing_the_corporate_veil&gt;

 

Ben C. Ball, Jr., Matthew S. Miller & Christine S. Nelson. The corporate veil. When is a subsidiary separate and different from it’s parent? . Cornerstone Research Foundation. (Online). 1997. (Assessed. 4.4.2007)

<www.cornerstone.com/pdfs/corp_vl.>

See Section 3 (02) of the American Bar Association’s Revised Model Business Corporation Act (RMBCA)

[1] Piercing the Corporate Veil. Wikipedia. (Online). 2003. (Assessed: 2.4.2007)

< http://en.wikipedia.org/wiki/Piercing_the_corporate_veil&gt;


[1] See Section 3 (02) of the American Bar Association’s Revised Model Business Corporation Act (RMBCA)

[2] See Piercing the Corporate Veil. Wikipedia. (Online). 2003. (Assessed: 2.4.2007)

< http://en.wikipedia.org/wiki/Piercing_the_corporate_veil&gt;

[3] ibid

[4] See Frank H. Easterbrook & Daniel R. Fischel, Limited Liability and the Corporation, (1985). 52 U.CHI.L.REV. 89

[5] Judith Waltz and Dan Reinberg, Foley & Lardner, Am i my company’s alter ego? theories of alternative liability for debts to the medicare program.

< http://www.foley.com/FILES/tbl_s31Publications%5CFileUpload137%5C1290%5Cliability.pdf&gt;

[6] ibid

[7] ibid

[8] See Ben C. Ball, Jr., Matthew S. Miller & Christine S. Nelson. The corporate veil. When is a subsidiary separate and different from it’s parent? . Cornerstone Research Foundation. (Online). 1997. (Assessed. 4.4.2007)

<www.cornerstone.com/pdfs/corp_vl.>

 

[9] See N Hawke, Corporate Liability, London Sweet and Maxwell 2000 p108.

 

[10] See Gower and Davies Principles of Modern Company Law (7Ed) London Sweet and Maxwell (2003) at 176.

 

[11] ibid

[12] See SM Bainbridge, Abolishing Veil Piercing, 26 J. Corp Journal of Corporate Law Spring 2001 .479

 

[13] See ibid, 72.

[14] See Dan-Cohen M, Rights, Persons and Organisations: A Legal Theory for Bureaucratic Society, University of California Press- Berkeley, (1987), 44.

[15] ibid.

[16] Blumberg P. “The Corporate Entity in an Era of Multi-National Corporations,’ 15. Delaware Journal of Corporate Law , 324.

[17] ibid

[18] See N Hawke, (Supra). p108.

 

[19] See Gower and Davies Principles of Modern Company Law (7Ed) London Sweet and Maxwell (2003) at 176.

 

[20] See SM Bainbridge, (Supra) .479

 

[21] ibid.

[22] ibid.

[23] Salomon V. Salomon, House of Lords. (1896), [1897] A.C. 22 (H.L.)

See also: R Grantham and C Rickett, Corporate Personality in the 20th Century, 1998.

[24] See Cheong – Ann Ping, Corporate Liability, A Study in Principles of Attribution, Kluwer Law International (2001)

 

[25] Case: Gas Lighting Improvement Co Ltd v Inland Revenue Commissioners, (1923) AC 723 at 740 – 741 [25].

[26] Ibid.

[27] Case: The King v Portus; ex parte Federated Clerks Union of Australia (1949) 79 CLR 42,

[28] See Ramsey M. Ian & David B. Noakes, Piercing the Corporate Veil in Australia, Melbourne University Press, , 2005. Paper for the Melbourne Centre for Corporate Law and Securities Regulation, 4.

 

[29] Case: Atlas Maritime Co SA v Avalon Maritime Ltd (No 1) [1991] 4 All ER 769.

[30] Atlas Maritime Co SA v Avalon Maritime Ltd (No 1) [1991] 4 All ER 769.

Cf: Ramsey M. Ian & David B. Noakes, Piercing the Corporate Veil in Australia, Melbourne University Press, , 2005. Paper for the Melbourne Centre for Corporate Law and Securities Regulation,6.

[31] Case: Pioneer Concrete Services Ltd v Yelnah Pty Ltd (1986) 5 NSWLR 254 (SCNSW, Young J).

 

[32] Case: Pioneer Concrete Services Ltd v Yelnah Pty Ltd (1986) 5 NSWLR 254 (SCNSW, Young J).

Cf: Ramsey M. Ian & David B. Noakes (Supra).

[33] H A J Ford, R P Austin and I M Ramsay, Ford’s Principles of Corporations Law, 9th ed, 1999

[34] See Robert B. Thompson, Piercing the Corporate Veil, an Empirical Study, 76 Cornell L. REV. 1036, 1991

[35] Case: Gorton v Federal Commissioner of Taxation (1965) 113 CLR 604

[36] J Farrar, ‘Fraud, Fairness and Piercing the Corporate Veil’ (1990) 16 Canadian Business Law

Journal 474.

Also on page 478.

[37] Briggs v James Hardie & Co Pty Ltd (1989) 16 NSWLR 549

[38] Ibid.

[39] M Whincop, ‘Overcoming Corporate Law: Instrumentalism, Pragmatism and the Separate Legal

Entity Concept’ (1997) 15 Company and Securities Law Journal 411

[40] ibid

[41] See Pickering, The Company as a Separate Legal Entity, (1968) 31 M.L.R. 482

 

[42] See Robert B. Thompson, Piercing the Corporate Veil, an Empirical Study, 76 Cornell L. REV. 1036, 1991

[43] As per Jenkinson J. in Dennis Willcox Pty Ltd v Federal Commissioner of Taxation (1988) 79 ALR 267

 

[44] See J Payne, ‘Lifting the Corporate Veil: A Reassessment of the Fraud Exception’ (1997) 56 Cambridge

Law Journal 284

[45] Case: Re Edelsten ex parte Donnelly (Unreported, Federal Court, Northrop J, 11 September 1992).

[46] See J Payne (Supra).290.

[47] Case: Re Neo (Unreported, Immigration Review Tribunal, Metledge M, 30 July 1997).

[48] Case: Barrow v CSR Ltd (Unreported, 4 August 1988, Supreme Court of Western Australia, Rowland J).

[49] Ibid, 5

[50] Case: The Electric Light and Power Supply Corporation Limited v Cormack (1911) 11 NSWSR 350

[51] ibid

[52] Case: Ampol Petroleum Pty Ltd v Findlay (Unreported, Fullagar J, Supreme Court of Victoria, 30 October

1986).

 

[53] Case: Ampol Petroleum Pty Ltd v Findlay (Unreported, Fullagar J, Supreme Court of Victoria, 30 October

1986).

[54] Case: RMS Glazing Pty Ltd v The Proprietors of Strata Plan No 14442 (Unreported, Supreme Court of

New South Wales, Cole J, 17 December 1993).

[55] ibid

[56]Case: Taylor V. Santos. Corporate Law Electronic Bulletin. No. 13, September 1998

[57] Case: Bluecorp Pty Ltd (in liq) v ANZ Executors and Trustee Co Ltd (1995) 18 ACSR 566

[58] ibid

[59] Sharrment Pty Ltd v Official Trustee in Bankruptcy (Unreported: Federal court, 3rd June 1988)

 

[60] ibid

TargetLaw’s Lawyer Search

Lawyer Search

Are you having trouble locating the right attorney? Have you searched through legal directories only to find out the attorney no longer practices law, changed their practice areas or even location? Are you annoyed by the fact it is taking so long to locate the right attorney or perhaps confused on which type of attorney you should hire? If you have answered yes to these questions, you now belong to an elite group of people searching for lawyers online. Unfortunately the number is on the rise.

TargetLaw is an all lawyer search engine consisting of only lawyers, law firms and attorneys. Our concept is to make it as easiest as possible for a consumer looking for a lawyer to search and find the right attorney each and every time.

Why is TargetLaw so unique?

There are hundreds of lawyer referral programs available on the internet. These programs are set-up mainly to make money on your referral. Unfortunately it makes no difference on the experience and qualifications of a lawyer, if an attorney is willing to pay the company fees for your referral, they will receive your name. There are some programs in which you get placed in a holding tank and your name is handed out to several attorneys. These programs can be called “first come, first serve.” Again, makes no difference on how good the lawyer may be, ultimately you are just another number to a referral company.

Lawyer directories although can be useful, they also can be frustrating. A lawyer directory typically consists of those attorneys willing to pay a fee to be listed in a lawyer directory. Again, makes no difference if you are qualified or experienced in a practice area, if you are willing to pay the company money, you will get listed! Furthermore, a lawyer directory can not be tailored to attorneys retiring, changes practice areas and changing location, unless the attorney manually goes in and changes his or hers listing. This can result in information that is outdated and ultimately causes frustration to the end user looking for the right lawyer to handle his or her case.

So why is TargetLaw so unique? TargetLaw is a lawyer search engine consisting of only lawyers, law firms and attorneys. When performing a search within the attorney search engine you will be presented with all lawyer websites. Depending upon your searches depends upon the relevancy of each search. Search for location and practice areas and the search result will present the best results for that search. Furthermore, each attorney can submit their lawyer website for free. The reason we don’t charge to be listed in our lawyer search engine is because we don’t want to limit people looking for attorneys only to those who pay. This gives the consumer more choices and the comfort that they can locate an attorney in an unbiased manner.

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Lawyer Search

TargetLaw is a leader in Lawyer Search

If you are searching for legal representation where do you turn? How do you know if the lawyer is qualified to handle your case? The simple answer to these questions is simply by looking at their website and finding out if they are qualified to handle your case.

People today rely on the internet for all sort of products and services. Seeking legal representation is no different. On average a consumer will investigate an attorney prior to hiring him or her. People tend to look at the content of a website and make an informed and educated decision on whether to hire the lawyer or not. This is why so many attorneys are focusing more of their marketing dollars into their websites now than ever. The decision process starts with the consumer looking for information regarding their legal need. Once they found the information they are looking for, many will search for a lawyer that handles their case.

It was not long ago that the only way to find an attorney was either through the local bar association, yellow page ads and possibly a referral from a friend. The internet has made it much easier for those people searching for legal representation. Still though, it may be a daunting process locating a qualified attorney in your area. TargetLaw is a lawyer search engine consisting of lawyers and attorneys located around the United States. Currently the search engine has close to 50,000 lawyer websites from attorneys located around the US. The search engine consists of only attorney websites which allows the end-user to easily locate an attorney by practice area and by location every single search. If you are a consumer looking for an attorney a great place to start is TargetLaw!

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Is Protecting Yourself Illegal?

Anti-speed camera , photo radar plate number sprays and covers , and other devices are protecting drivers everywhere. It’s undeniable that these anti-speed camera devices are gaining popularity everywhere because of the protection they offer. Businessmen are marketing them as the greatest thing since television to automobile drivers who invest in these number plate sprays and covers to avoid being fined for speeding. The popularity of these anti-speeding devices has given rise to the question, “Are these things legal?”

How Do Traffic Enforcers Catch Speeding Automobiles?
With the fast and growing pace of technology, traffic enforcers have found the answer to catching the number plates of speeding drivers in the forms of speeding cameras, photo radars, and laser guns.

The cameras, installed onto traffic lights, take high-quality photographs of a speeding vehicle’s number plate. To do that, a powerful flash is required.

Photo-radars are installed onto police mobiles that patrol areas where speeding violations happen often. Then, when speed limit violators pass, a computer stores speed violation data such as time, date and location.

Laser guns work like speeding cameras, but they are carried by traffic enforcers like rifles. The laser guns are aimed at a speeding vehicle, then it takes a photograph of the speeding vehicle’s number plate.

These advancements in technology make it almost impossible for law-breakers to outrun the law. Once your number plate has been photographed and your violation recorded, you are then issued a ticket which is mailed to you.

How Do Speeding Drivers Protect Themselves?
Frustrated drivers have turned their dislike for speeding cameras into a profit-generating venture. They’re protecting themselves with anti-speeding camera sprays and covers.

How do these work? Anti-speeding camera sprays are applied onto a vehicle’s number plate. They give a clear gloss finish that reflects the flash back into the speeding camera, resulting in an unreadable and overexposed photograph. When seen by the naked eye, however, the number plate remains visible.

Number plate covers work the same way. These covers contain light-reflecting crystals that reflect the high-intensity flash. Other plate covers incorporate thin lenses that distort the number plate when viewed from above at an angle. This makes it difficult for speeding cameras installed on traffic lights to take a photo.

The Big Question: Is This Illegal?
In most states, the law requires that a vehicle’s number plate be visible to the naked eye. Anti-speeding camera sprays coat the number plates with a transparent finish, so only the vehicle’s owner is aware that it’s being applied. The use of number plate covers to reflect flash or to distort the number plate at an angle is still under debate, however. Some states do allow the ownership of these number plate covers but ban their active use. Some states ban the retail of number plates and sprays for the purpose of avoiding speeding fines. If you plan on incorporating your automobile with these devices, know the laws that cover the use of anti-speeding camera devices in your state. Even so, it never hurts to simply follow traffic regulations.

Interested in speed camera number plate covers? Learn all about it and other means of beating red light cameras, such as PhotoBlocker spray when you visit Video-Surveillance-Guide.com today!

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The Insurance Company Run-Around

The first thing to keep in mind about insurance companies is that they make their money by investing. This explains why they love delay. When they can delay paying you the compensation you’re entitled to: · They can keep their money invested · It keeps earning them interest or profits · Increased income for a given year, more than was expected, makes the stock price rise · Increased stock prices lead to executive bonuses So from their point of view, all delay makes good sense, especially delay that will run to the end of a quarter or financial year. Insurance adjusters don’t work for you The same facts explain why insurance companies usually make a low offer, and usually make it quickly. · Immediately after an accident or injury, we tend to feel shocked or traumatized. Perhaps we’re not thinking clearly. We could be in pain, in hospital, even unconscious for a while. · If we can be persuaded in this vulnerable state to accept the insurance company’s initial offer, kudos to the adjuster. He’s just saved his company a lot of money. · Alternatively, the adjuster may be soothing and urge you to get all the medical care you need, it will all be covered, not to worry. Silently, the statute of limitations is running. Are you thinking about that in your hospital bed? Probably not, and much time may be lost that would be well-spent assembling facts and information for your claim. · Adjusters can be quite pleasant people, and they’ll be polite to you and appear to have your interests at heart. However, they don’t work for you. They work for their company and their job is to conserve the company’s money. An experienced personal injury lawyer would be invaluable at this point. Before you accept any offers or sign any documents, it’s a good idea to consult an attorney, so as to avoid falling into any traps. The attorney can negotiate for you and obtain a better settlement amount. If necessary, the attorney can take the matter to trial, present expert witnesses, argue why you deserve more, and very often win. Your agent and your policy If you bought your policy from an insurance agent, and if there’s a discrepancy between what the agent promised and what actually shows up in the policy, the company is legally obliged to interpret it as being in your favor, rather than in theirs. · Agents are trained by their company, but they usually aren’t experts on the small print. They’re taught enough so they can paint a glowing picture for you, but the all-important details are a minor matter. · You might have paid for the policy before you actually received it. So what you’re actually buying is what the agent has described, not the piece of paper you eventually receive in the mail. A personal injury attorney can read the small print of your policy and pinpoint any unclear or ambiguous items. If you made notes during your initial session(s) with the agent, the lawyer can compare your notes with what’s actually in the policy. Then he or she can follow up with correspondence and negotiations to obtain the full settlement you deserve. Prompt Pay laws Like many states, Michigan has a prompt-pay law that requires payment of our doctors’ claims to be made without undue delay (usually around 30 to 45 days, or less than that when the claim is filed electronically). But insurance companies have ways of avoiding this. They can: · Find flaws in the way paperwork was filled out · Quibble over exceptions in the fine print · Claim that they’ve hired another party to pay the claim, and it’s that person’s responsibility · Ask for more verification of injuries What does this add up to? More delay.

Equip Yourself – What if You’re in an Accident with an Uninsured Motorist? Buying auto insurance is not a festive occasion for most of us. We’re paying good money for something we aren’t sure we’ll ever need. But the law requires us to have a minimum amount of it, so we comply, maybe with a scowl. But picture the situation you’d be in if you’re rear-ended by someone, sustaining severe injuries and much vehicle damage, and you discover that this other driver has no insurance. Or that they have only the minimum insurance, which comes nowhere near being able to pay for your injuries. No-fault insurance Michigan has been a “no-fault” state since 1973. We’re all required to buy no-fault insurance and in fact, it’s required before we can get our license plate. It’s illegal to drive without it, or to let someone else drive your vehicle without it. Michigan law requires us to buy, in certain minimum amounts: · Personal Injury Protection (PIP) – to cover the cost of any injuries you sustain in an auto accident, and your lost wages for 3 years (with a cap) · Property Protection Insurance (PPI) – to cover the cost of any vehicle repair after that accident · Residual Liability – to cover you when your negligence causes injury to someone else If you’re still paying for your vehicle, your insurance company may also require you to buy two other items to cover the cost of repairing or replacing your car: · Collision, and · Comprehensive. The advantage of no-fault insurance is that it simplifies things and potentially speeds up the repair of your vehicle. Your insurance pays your injury and repair bills, and the other driver’s insurance pays his. It protects us from being sued. Michigan is not 100% no-fault No state is 100% no-fault. Michigan is a mix of no-fault and standard liability insurance. In other words, there are exceptions to the no-fault default. If the accident: · Happens outside Michigan, or · Causes serious injury or death, then the at-fault driver can be sued for damages, if he has insurance. Uninsured and under-insured motorist (UM and UIM) coverage Michigan doesn’t require us to buy UM or UIM coverage. It’s our choice, and it’s an added expense on the premium, so many of us don’t buy it. And in a no-fault state, the assumption is that our own insurance will pay our bills anyway, so why do we need UM or UIM coverage? But let’s think again of that driver who rear-ended you. You have severe injuries – whiplash, and maybe the airbag hit you too hard, maybe you hit your head on the glass – and you have expensive vehicle repair bills (a rear-end accident can even total your vehicle if it knocks the chassis out of shape). You can sue the other driver if you can prove that he/she caused the accident. But if he has no insurance, chances are that you won’t be able to get any compensation. However, if that driver is under-insured, you can potentially get compensation to the value of their insurance, such as it is. Advantage of UM and UIM But your bills total a higher amount than that. If you have no UM or UIM, you have no other recourse and will have to pay the bills out of your pocket. But let’s say you did buy UM and UIM along with your required coverage. Now you can potentially obtain compensation from your insurance company up to the value of your UM/UIM, as well as recovering from the under-insured driver. Hit and run accidents Looking at our rear-end scenario again, if the other driver takes off before you can get any contact information from him, that leaves you with only your own insurance as a source of compensation. If you’ve bought UM and UIM, you have more coverage than just the PIP and PPI. Enhance your changes with legal help If you’ve been in an accident with another driver who turns out to be uninsured or under-insured, the smartest thing to do is immediately consult an experienced accident attorney. The law is complex; there are exceptions to the no-fault law, and every situation is different. Some sound legal advice can help you decide on what course of action to take. You could well be eligible for more compensation than you think.

An experienced personal injury lawyer has ways of cutting through delay tactics. Rather than struggle alone against some faceless Goliath, why not call or email one today?

Frustrations with the insurance company could lead to unfair settlements. Don’t settle for less because you’re tired of the run around. Let an attorney help you.

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Women and the Social Security Program

“While distinctions in the treatment of men and women under the Social Security program are now virtually nonexistent, differences in the typical work patterns of men and women have significant effects on the benefits that they receive. Gender Sensitive Program

The Social Security program has not always been gender-neutral. At times, differences in the rules applying to men and women were quite obvious and significant. In nearly every case, women got more favorable treatment. For example, in 1956, women were granted the right to claim early-retirement benefits as early as age 62, while men had to wait until the normal retirement age of 65. Five years after, in 1961, men were finally granted the right to claim early-retirement benefits at age 62. In the same light, women were able to use, in general, three fewer years of earnings in the computation of their benefits compared to men who were born in the same year, which results in somewhat higher benefits for women than for men with identical birth dates and earnings histories. This is so because the average annual earnings always declines as more and more “”high”” years are included and such did not change until the mid-1970s.

A series of Federal court decisions and legislative changes, culminating in a massive clean-up of the Social Security Act in 1983, eliminated virtually all of the gender-based differences in the law.

The only remaining difference now of any significance is that women whose benefits were computed using the favorable shorter computation period that used to apply continue to receive the same benefits even today. These women are at least 86 years old in 1998. The benefits of otherwise identical men were not raised to what the benefits would have been if these beneficiaries had been able to use the more favorable computation procedure. Prospectively, however, identically situated men and women receive identical benefits provided that they have identical birth dates and earnings histories.

Earnings Patterns and Their Effects

Men and women seldom have identical earnings histories. Men have historically spent more time in the paid labor force and while these differences have certainly shrunk in recent decades which have seen huge numbers of married women enter and remain in paid employment, they have not disappeared entirely. Most women still leave paid employment for at least a short time after having children and many even leave paid employment for a substantial period of years. These “”gaps”” in the earnings histories of women usually result in lower Social Security benefits than they would have received if they had worked steadily, as most men do.

Even when women participate in paid employment, they still tend to earn less than men. The reasons for these differences are complicated, of course and cannot be completely explained by scientific study. On the average, however, they result in smaller Social Security benefits for women than for men.

With the tremendous increase over the last three decades in the labor-force participation rates of women, one might wonder whether these problems might not go away on their own someday. While anything is possible, that does not seem likely. Women’s labor-force participation rates have risen dramatically since the 1950s, but they seem to have stabilized at around 70 percent for married women at the typical working ages (higher for single women, of course), still substantially below the rates for men, which are over 90 percent at the typical working ages. The apparent ceiling in married women’s labor-force participation rates is undoubtedly related to child-bearing and child-raising, the first of which is exclusively the domain of women and the second of which is dominated by women. The differences in wage rates between men and women are difficult to explain currently and are even more difficult to predict. However for as long as women are primarily responsible for child-care, some differential is likely to remain.

Social Security Benefits for Spouses and Widows

Millions of women receive Social Security benefits as the spouses and widows of men who worked in Social Security-covered employment.

Men are technically eligible to receive exactly the same benefits as women do, but few men actually receive spouse’s or widower’s benefits because of Social Security’s dual-entitlement rules. These rules prevent duplication of benefits when a person is eligible for more than one type of Social Security benefits. For example, the 65-year-old widow of a deceased insured worker may have worked long enough in Social Security-covered employment to be eligible for a retired-worker benefit based on her own earnings record. In that case, she would receive her retired-worker benefit, and her potential widow’s benefit would be reduced dollar-for-dollar by the amount of her worker benefit. If the benefit based on her own work record exceeds her potential widow’s benefit, then the widow’s benefit would be reduced to zero.

A beneficiary always receives his or her own retired-worker benefit (assuming that he or she applies for it), and any spouse or widow/er benefit is reduced accordingly, as described above. Because men are almost always eligible for substantial benefits based on their own earnings and usually had higher and more consistent earnings than their wives did, men seldom can receive any additional benefits based on their wives’ earnings records. Therefore, the eligibility conditions for receiving spouse’s and widow’s benefits and the levels of those benefits tend to be of greater concern to women than to men. ”

Raven Kae Yonzon is a member of the Los Angeles Social Security Attorney . The firm offers legal representation for social security disability cases.