In the judgments of Mr Justice Moylan in the High Court and Thorpe LJ in a minority judgment in the Court of Appeal, they considered that it was enough, under section 24(1)(a) of the Matrimonial Causes Act 1973, to justify an order to transfer properties from the husband to the wife, that the husband should have the practical ability to procure their transfer, whether or not he was their beneficial owner.
Other than confirming that this view about the meaning and effect of section 24(1)(a) is wrong, the Supreme Court judgment in Prest v Petrodel did not establish any new law. For more than 300 years the courts have had power, depending on the facts, to hold that a person holds the legal title in an asset on trust for another, whether the person holding the legal title is a company or an individual. Equitable principles are still available in order to produce an equitable outcome. A victory for the rule of law, but I shudder at the thought of the amount of costs incurred in order to confirm such a simple principle.
There will be more work for auditors. They will have to think like divorce lawyers and chancery lawyers when looking at the assets in a company balance sheet. That will cause them some problems that will need a solution.
As a matter of principle, a person dealing with a company should be entitled to assume that the assets in a company balance sheet are beneficially owned by the company in the absence of actual notice of a trust. Perhaps before long we will see a Supreme Court judgment on that issue, when someone has a go at the company auditors and/or the beneficiary or alleged beneficiary of the trust.
Philip Elwood, Richmond, Surrey