Gadgets Bhd manufactures and distributes all forms of safety equipment used in the petrochemical industry. Gadgets recently developed a revolutionary "petrol vapour indicator" that claims to be able to identify the existence of petrol fumes in the air faster than any other similar device on the market.

However, safety testing for this new equipment could not be done effectively. This was because Gadgets did not have the requisite expertise to facilitate proper variable climate testing of the equipment. In view of these concerns, Gadgets sets up a new company, Subgadgets Sdn Bhd, for the purpose of manufacturing and distributing the device to the market.

Subgadgets is wholly owned by Gadgets and Subgadgets uses the facilities of Gadgets Bhd for the all their business activities including all manufacturing, distribution, retailing and promotional activities related to the product.

Aaron, the managing director of Gadgets appoints his close friends, Benny and Calvin to be the directors of Subgadgets. Benny and Calvin have very little time to spend on Subgadgets activities, but that seems irrelevant as Aaron appears to control all of Subgadgets activities. In fact, Aaron and many other employees are often seconded to Subgadgets on a regular basis using short term contracts.

The sale of the device has been a resounding success with most if not all petrol stations in the country installing the device as a means of an early warning device. For the last eighteen months, the volume of trade has been increasing steadily. However, in March this year, the device failed to detect a ruptured pipe in a petrochemical plant and hundreds of employees were severely injured in the ensuing fire.

The investigation into the incident reveals that the device failed to detect fumes as it had not been adequately tested in situations where there were extremes in climate temperature. Subgadgets is facing substantial losses from all the claims arising and

are unlikely to be able to meet these claims as it has no assets. Gadgets Bhd on the other hand has been trading successfully and has a substantial asset to liability ratio.

Kelly was injured in the explosion. Advise her whether any party, in addition to Subgadgets, may be sued for her injuries and losses.