Paper details:
Question:
Canopy Pavilion Ltd is a large, well-capitalised company which imports and distributes fine wine and cigars.
Canopy Pavilion Ltd runs its business through a number of wholly-owned subsidiary companies. one of
whom, Raxon Ltd, owns and operates the warehouse in which Canopy Pavilion Ltd’s cigars are stored.
As well as owning all of its shares, Canopy Pavilion Ltd nominated most of Raxon’s directors and receives all
of the profits. Aaron operates a business which supplies and installs industrial humidifiers designed
specifically to keep fine cigars at optimum humidification. A year ago, Aaron made a lucrative contract with
Raxon Ltd to supply and install new humidifiers in the warehouse Raxon Ltd operated. Aaron completed the
work six months ago and sent his account to Raxon Ltd for payment.
Recent anti-smoking legislation has caused a downturn in Canopy Pavilion Ltd’s cigar business. Last month,
Canopy Pavilion Ltd closed its cigar warehouse and put Raxon Ltd into liquidation. Aaron has not been paid by
Raxon Ltd before it went into liquidation. Fearing that he will not be paid in full by the liquidator, Aaron now
wants to make Canopy Pavilion Ltd liable for the indebtedness of its former subsidiary.
Critically discuss.
