Question 1 scenario: James Farmer, an ex RAF pilot and former executive director of Core Airways Ltd, has decided to set up an aviation company to operate local and international flights. James has registered a private limited liability company, Spark Airways Ltd, of which he is the sole director and shareholder. After its incorporation, Spark Airways Ltd purchased two planes from Core Airways Ltd. The planes were sold to Spark Airways Ltd, accompanied by a covenant that the planes would not be used on routes operated by Core Airways Ltd. Three weeks later, James Farmer set up another company, Peak Airways Ltd, where he is the sole director and shareholder. The planes purchased from Core Airways Ltd and all the other assets of Spark Airways Ltd have been transferred to Peak Airways Ltd, and the planes are now flying on the routes operated by Core Airways Ltd. Task: Advice Core Airways Ltd on its legal rights and remedies (50 Marks). Here it must be said that James could be accused of setting up a new company to avoid existing liabilities - he is a former director of Core Airways Ltd so even after employment he can be obligated to do not have any conflict with the company. This mean that court could lift the corporate veil. Based on Lord Sumption in Prest v Petrodel Resources ltd legal personality of the company could be disregarded only in two situations: evasion principle or concealment principle. While writing about corporate personality the case of Salomon v A Salomon should also be mentioned. Also, James sold the planes to another company where he owns shares to this is selling to himself - please mention the Farrar v Farrars Ltd case. Also, as stated in the companies act 2006 s.7(2) companies cannot be formed for any unlawful purpose - this can be used here a well. Please mention at least few UK cases as this is crucial.