According to the case of Smith, Stone & Knight Ltd v Birmingham Corporation [1939], the parties had issues regarding the compensation to be paid for the acquisition of land. Birmingham Corporation, a local council, compulsorily purchased land owned by Smith Stone. However, the land was let on an annual lease to Birmingham Waste, the Smith Stone subsidiary. The local council claimed that Birmingham Waste had no right to claim compensation as a tenant. However, Birmingham Waste would act as a separate agent and department for Smith Stone, as it does not have a separate account book or even staff. The dispute arose when Smith Stone wanted to claim compensation for disruption of activity on the acquired land. The court held that there was an implied agency relationship between the holding company and the subsidiaries and that, therefore, Smith Stone would own the business carried on by Birmingham Waste. . Smith Stone is entitled to claim compensation from the subsidiary for the troubles caused by the municipality.