Supreme Court Allows Appeal in Prest v Petrodel
Three months ago, I reported on the case of Prest v Petrodel in which the Supreme Court, the country’s highest Court, was being asked to make a ruling on whether divorcing couples can protect assets by citing company law.
The Supreme Court has delivered its judgment and has unanimously allowed an appeal by the former wife of a Nigerian oil tycoon and ordered him to hand over assets held by his companies.
The 7-strong Court used trust law rather than company law in ruling that 7 properties at the centre of the dispute, belonging to the husband’s company, could be included as assets belonging to him personally. He had argued that the properties, worth several million pounds were not personally owned by him and ought to not form part of the matrimonial pot.
The ruling establishes a fair balance between the competing interests of the family and the chancery / commercial Courts. It means that attempts by business people to deliberately hide assets within corporate structures to protect them, in the event of a divorce, will fail.
Jeremy Posnansky QC, representing Jasmine Prest said:-
‘The importance of the Supreme Court decision is two-fold.
‘First it shows that the Courts will look at the reality of a particular situation and won’t be easily mislead, so the fact that an asset may be held in the name of a company doesn’t necessarily mean that it is owned by the company.
‘Secondly, and of importance to entrepreneurs and company lawyers, the Supreme Court has largely reinforced the separate identity of companies and made it clear that it will be very rare that the corporate veil can be pierced.’
The judgment is a very useful one for divorcing couples (usually wives) who are worried about assets hidden or protected by their husbands.
If you require any further information about the issues raised, please contact Liz Hebden on 01756 700200 or [email protected]