## Facts

- Intercon (Cattle-meats), Ltd. (Intercon) owned an aircraft used mainly to transport cattle from Ireland to Germany for Friedrich Dobler KG, a German limited partnership that paid Intercon for those flights.
- Intercon was formed in 1973 but did not trade until 1976, when Dieter and Gunther Dobler provided financing (apparently sourced from Friedrich Dobler interests) that enabled Intercon to acquire the aircraft.
- The Doblers held about 42% of Intercon’s shares; the remainder were held by Irish shareholders, including Intercon’s managing director, Padraig (Predrig) O’Toole.
- Intercon and O’Toole did not hold shares in Friedrich Dobler KG, and O’Toole was not a director of any Dobler company.
- Monarch Airlines Engineering, Ltd. (Monarch) supplied aircraft maintenance and engineering services to Intercon.
- Monarch sued Intercon for unpaid sums for those services.
- Intercon counterclaimed, alleging Monarch’s maintenance caused the crash and destruction of Intercon’s aircraft.
- In earlier proceedings, the court found for Intercon on the counterclaim and Monarch paid roughly £300,000; the remaining counterclaim damages were sent to a referee for further determination.
- Intercon became insolvent, raising Monarch’s concern that if it later succeeded on issues affecting the counterclaim or costs, it would not recover costs from Intercon.
- Monarch applied to join Dieter Dobler, Gunther Dobler, Friedrich Dobler KG, and O’Toole as additional parties so that they might be liable for costs if Monarch ultimately succeeded.
- Monarch argued Intercon was effectively the Doblers’/Friedrich Dobler KG’s agent (or a mere front), relying on: references by Dieter (via interpreter) and correspondence describing Intercon as “our airline”; evidence of a pre-1976 agency relationship between O’Toole and Friedrich Dobler said to have continued; and Intercon’s substantial indebtedness to the Doblers compared with minimal indebtedness to Irish directors.

## Issues

1. Whether Monarch showed a sufficient basis to treat Intercon as the agent (or nominee) of Dieter and Gunther Dobler and/or Friedrich Dobler KG so as to justify joining them (and O’Toole) as parties.
2. Whether the evidence justified disregarding Intercon’s separate corporate personality as a sham or façade so that the proposed parties could be exposed to liability (including for costs) in relation to the counterclaim/reference.

## Decision

- The Queen’s Bench Division (Fox-Andrews J.) refused Monarch’s application to join Dieter Dobler, Gunther Dobler, Friedrich Dobler KG, and O’Toole as parties.
- The court held the material relied on—funding arrangements, business dependence, indebtedness, and “our airline” language—did not establish a legally operative principal–agent relationship between Intercon and the proposed parties.
- The court found no sufficient basis to treat Intercon as a sham or façade or otherwise disregard its separate corporate status.
- Because Monarch had not shown a proper legal foundation to fix the proposed parties with responsibility for Intercon’s acts or liabilities, joinder (aimed at possible costs recovery) was not permitted.

## Legal Principles

- A company is a distinct legal person; shareholding, financing, and commercial influence do not, without more, make the company the agent of shareholders or associated businesses.
- Agency requires more than commercial control or close ties; there must be clear authority for the company to act on behalf of an identified principal and an intention that the principal be bound.
- Informal expressions such as calling a company “our airline” may describe commercial involvement or association, but they do not by themselves prove agency or justify treating the company as a mere name.
- Disregarding corporate personality is exceptional; absent evidence of improper use of the company (such as a device to evade obligations or a dishonest front), the court will generally not lift the corporate veil.
- An application to add parties to expose them to costs must rest on a real, legally sustainable basis for liability; insolvency risk and close financial involvement are not enough.

## Conclusion

The court declined to add Intercon’s financiers, shareholders, associated partnership, and managing director as parties because Monarch’s evidence showed at most close funding and business dependence, not a legally binding agency relationship or an improper use of the corporate form. As a result, Intercon’s separate identity was respected and the proposed parties could not be joined simply to improve Monarch’s prospects of recovering costs from an insolvent company.


Monarch Airlines Engineering, Ltd. v. Intercon (Cattle-meats), Ltd., [1986] 11 Con LR 58 (1985)