Supreme Court allows appeal in Prest v Petrodel
A seven-strong Supreme Court has unanimously allowed an appeal by an oil tycoon’s former wife and ordered him to hand over assets held by his companies.
In Prest v Petrodel Resources Limited & Others  UKSC 34, the court, led by Lord Sumption (pictured), used trust law rather company law to declare that the seven disputed properties are in the particular circumstances of the case, held on trust for the husband.
In commercial cases, there is a long-established principle that a company is independent of its shareholders and that ownership of a company will not entitle piercing of the corporate veil in legal proceedings to get at assets unless there has been fraudulent or dishonest use of the company.
Family judges traditionally take a more liberal view, especially where companies are owned and controlled by one spouse, there were no third-party interests and the companies were used during the marriage as vehicles for the family’s lifestyle.
In this case, the court ruled that the ‘most plausible inference’ from the known facts was that each of the properties was held on trust for the husband. The trial judge found that the husband had deliberately sought to conceal the fact in his evidence and failed to comply with court orders and disclose evidence.
Alison Hawes, of national firm Irwin Mitchell, said that the ruling ‘is a very useful one for people - usually wives - worried about hidden or protected assets’.
It means that business people cannot deliberately hide assets in businesses and corporate structures to protect them in future in the event of a divorce, she said. ‘For more than 20 years family law judges have argued that where it appeared necessary they could tap into the resources of businesses in the interests of awarding a fair settlement.
‘The law will no longer be drawn as widely as that, but today’s ruling provides clarity on the circumstances in which the courts can lift the corporate veil,’ she said.