The director of 'ToxicDisposal Ltd' deliberately creates a new company, 'CleanEarth Ltd', solely to transfer assets away from ToxicDisposal Ltd to avoid paying a massive environmental fine.

What legal action can the courts take in this specific scenario?

The courts cannot intervene because Salomon v Salomon established absolute separate legal personality.

The courts can 'pierce the corporate veil' because the new company is being used as a facade or sham to evade an existing legal obligation.

The courts will automatically dissolve both companies without a hearing.

The courts will hold the shareholders liable, but not the director.