Another was to take funds from the companies whenever he wished, without right or company authority. Veil-piercing jurisprudence serves as a graphic illustration of the perplexities bedevilling juridical understandings of the modern company. There are currently 4 million issued shares of which 3.9 million are said to be registered in the name of Petrodel Resources Nevis Limited, 50,000 in the name of the wife and 50,000 in the name of the husband's sister, Helen. The statement from the tribunal is as follows. 2 pages) the corporate structure was wealth protection and the avoidance of Prest v Petrodel Resources Ltd [2013] UKSC 34, [2013] 2 AC 415 is a leading UK company law decision of the UK Supreme Court concerning the nature of the doctrine of piercing the corporate veil, resulting trusts and equitable proprietary remedies in the context of English family law. Trustor AB v Smallbone (No 2) [2001] EWHC 703. Judgment details. For the past 30 years orders have been made against the assets of a company that are considered to be the alter ego of a spouse to satisfy a capital award made by the court in respect of the other spouse.1In 2012 the Court of Appeals ruling in Petrodel Resources Ltd & Ors v Prest & Ors2 set a new precedent stopping an ex-wife being able to investigate a company’s assets when she believes her husband has concealed assets within that company. View examples of our professional work here. Copyright © 2003 - 2021 - LawTeacher is a trading name of All Answers Ltd, a company registered in England and Wales. Mr Prest wholly owned and controlled (directly or indirectly, through intermediate entities) a number of non-UK resident companies which, between them, owned seven residential properties in the UK. Due to H’s bad litigation conduct, lack of unclear disclosure and the unreliability of his evidence, there was difficulty in assessing his exact worth. Leading UK company law decision of the UK Supreme Court concerning the nature of the doctrine of piercing the corporate veil, resulting trusts and equitable proprietary remedies in the context of English family law. plus more than £730,000 per year by way of spousal Free resources to assist you with your legal studies! circumstances, if any, a court may disregard the corporate veil of The value of the judgement was not in question, as the courts had already ruled the husband – a Nigerian oil tycoon – would have to pay his wife £17.5m, largely due to his conduct during the case, and he was not arguing over this. "Family judges", Lord Sumption explained, "are Search for articles by this author. In this case, the court recognised that there may be times in which it is appropriate to pierce the veil and ignore a company’s separate … The Supreme Court has just handed down its judgment in the landmark case of Prest v.Petrodel. Where the This article will critically evaluate the significance of the Prest v Petrodel Resources Ltd decision in light of the corporate veil doctrine. ‘We note, however, that a majority of the Supreme Court, whilst endorsing Lord Sumption’s analysis, did not wholly exclude the possibility that exceptions may also be made in other unspecified but rare circumstances’. sole owner and controller of the company is the other spouse. claimants. It will present the view the Law Lords had of the “doctrine” to show it was not clear. Prest (Appellant) v Petrodel Resources Limited and others (Respondents) Judgment date. Prest v Petrodel Resources Ltd – What will be the impact of the Supreme Court decision today? Salomon v Salomon [1896] UKHL 1. The content of this article is intended to provide a general frequently be inferred that the property is held on trust for the JUDGMENT GIVEN ON . and divide the property according to their will. Vermont Petroleum Ltd (“Vermont”) was the legal owner of two more. spouse who owns and controls the company.". Petrodel Resources Ltd & Ors v Prest & Ors [2012] EWCA Civ 1395. reviewed the principles of English law which determine in what The Supreme Court in Prest v Petrodel Resources Ltd © Mondaq® Ltd 1994 - 2021. The ruling by the CA in Prest raised the threshold for the criteria required to “pierce the veil”. Whilst Mrs Prest lost on many of her points of appeal, the The background to these proceedings is extensive and, indeed, is well known to those who practise family law, in consequence of an earlier sequence of appeals which brought the case before the Supreme Court (Prest v Petrodel Resources Ltd. [2013] UKSC 34; [2013] 2 AC 415). Bailii, Bailii Summary, SC Summary, SC Matrimonial Causes Act 1973 23 England and Wales Citing: Appeal from – Petrodel Resources Ltd and Others v Prest and Others CA 26-Oct-2012 The parties had disputed ancillary relief on their divorce. Share it. 12 Wednesday Jun 2013. This article will critically evaluate the significance of the Prest v Petrodel Resources Ltd[1] decision in light of the corporate veil doctrine. He stated that Moylan J’s reasoning was that a one man company can never own assets beneficially but only ever as the nominee of it sole controller.10 This could not be the intention of the law due to the fact that assets would be unavailable, for example, to creditors upon liquidation of the company, as the assets would have never truly belonged to the company. Prest (Appellant) v Petrodel Resources Limited and others (Respondents) Judgment date. Woolfson v Strathclyde Regional Council [1978] UKHL 5. It was of key interest as it was a legal cross over between family law and company law. A statement was made by the tribunal hearing the case which was in contrast to Lord Sumption’s assertion in the case of Prest that impropriety should be proven in order to justify piercing the corporate veil.13. Prior to Prest, case law such as Salomon v A Salomon & Co Ltd3 and Macaura v Northern Assurance Co Ltd4 established that a company has a legal existence that is separate from its shareholders, even when an individual controls all of its shares. group known as the Petrodel Group. The ratepayers appealed … The Supreme Court ruled that assets which are held in the name Court cases similar to or like Prest v Petrodel Resources Ltd. Prest v Petrodel Resources Ltd [2013] UKSC 34, confirmed consideration. Prest. In the case of Macaura, Lord Buckmaster stated, “No shareholder has any right to any item of property owned by the company for he has no legal or equitable interest therein…”, The facts of Petrodel Resources Ltd & Ors v Prest & Ors. and there was no evidence that the husband's actions in We need this to enable us to match you with other users from the same organisation, it is also part of the information that we share to our content providers ("Contributors") who contribute Content for free for your use. 12 June 2013 . This essay will argue the decision has done little to fault the Salomon principle. 3 Manuchar Steel Hong Kong Ltd v Star Pacific Line Pte Ltd [2014] 4 SLR 832 at [90], per Lee Kim Shin JC. Prest v Petrodel Resources Ltd & Others [2013] UKSC 34 Introduction. Summary: It is common knowledge that the husband ("H") is a wealthy man.He is the founder of Nigerian energy trading firm Petrodel Resources and is oft described as the reclusive oil baron. John Wilson QC of 1 Hare Court analyses the Supreme Court’s judgment in the landmark case of Prest v Petrodel and considers its implications for family lawyers. The Supreme Court in Prest v Petrodel Resources Ltd reviewed the principles of English law which determine in what circumstances, if any, a court may disregard the corporate veil of a company and attribute to its members the legal consequences of the company's acts. 5 Prest v Petrodel Resources Ltd 45- '6:; ') ' Gramsci Shipping Corporation Lembergs 45- '6 7 ( 9'- = Salomon v A Salomon & Co Ltd 4 8>96 ( 55 By V. Niranjan. The law following Prest has come to a standstill with ‘exceptional cases’ warranting the approach of “piercing the veil”. entitled to draw on their experience and to take notice of the 9 Min read. The decision in Prest overhauled the court’s previous precedent… This is a case with regard to family law. UKSC 2013/0004. Piercing The Corporate Veil: Prest Vs Petrodel Resources. Looking for a flexible role? Example Law Essay. Prest v Petrodel Resources Ltd UKSC 34, [2013] R v McDowell [2015] EWCA Crim 173. Petrodel, for its part, has extensive oil exploration interests in Nigeria, Tanzania, Zambia and Uganda. Moylan J concluded that no relevant impropriety had been committed by H that would allow for the corporate veil to be pierced and concluded that H’s control and ownership of the company amounted to beneficial ownership of their assets.9 Moylan J made property adjustment orders transferring various properties owned by the subsidiary companies within Petrodel Group to W. Based upon this judgement, the subsidiary companies pursued an appeal. Do you have a 2:1 degree or higher? Supreme Court looked at the overall asset structure of her husband The Emergence Of Family Offices In Mauritius, The EU Succession Regulation: Spotlight On Cyprus, UAE Inheritance Framework Under Shariah Law, The Role And Duties Of An Executor/Administrator, Breaking News: Supreme Court Pierces Corporate Veil In Divorce Proceedings, Wills & Estates: Points To Ponder – Part 4 – Challenges Faced By Executors. Mr Prest (H) was an entrepreneur in the oil industry who was divorcing his wife. 12 Prest v Petrodel Resources Ltd [2013] 3 WLR 1 at [28]. Enforcement issues arose as the only assets that were within the jurisdiction were the properties in England and certain shares owned by H’s company. to disclose important documents or provide relevant Nicholas Grier. 2016 Contriutor(s) and Singapore Academy of Law. The Court therefore held that there was no Justices. This has overshadowed the Court’s decision to recognise a resulting trust, which achieved the same result as if the Court had pierced the corporate veil. However, the Supreme Court did also warn that family courts The majority of commentary in the wake of Prest v. Petrodel Resources Ltd has focused on the Supreme Court’s discussion of a court’s jurisdiction to pierce the corporate veil. could not simply give company assets to one spouse just because the The outcome of such a decision was a success for wealthy individuals looking to protect their assets upon divorce. Ltd will have important implications for family law divorce Prest was of particular interest because of the … owns a company from the company itself. Importantly, in this instance the ownership of the properties New Judgment: Prest v Petrodel Resources Ltd & Ors [2013] UKSC 34. Execution Of Wills During The COVID-19 Pandemic, Families Working Together At A Time Of Crisis, Employment Law: Challenges that Lie Ahead for UK Employers in 2021, Fraud and Asset Recovery in England - Building an Effective International Strategy, © Mondaq® Ltd 1994 - 2021. Introduction. Whilst unfairness and injustice for the other spouse may flow from this strict application of company law, it does lay down clarity as when it is appropriate to pierce the veil. Since Salomon v Salomon, 1 it has been well established in UK law that a company has a separate personality to that of its members, and that such members cannot be liable for the debts of a company beyond their initial financial contribution to it. the company's acts. Supreme Court’s decision in Prest v Petrodel Resources Ltd with a view to determining whether the decision is a step towards the abolition of piercing the corporate veil doctrine. (12 June) 12 Jun 2013. You should not treat any information in this essay as being authoritative. Mrs Prest had sought a pay out of more than £30 million, 162 NLJ 1487, 11(2013) EWCA Civ 730, (2013) 4 All E.R. To export a reference to this article please select a referencing stye below: If you are the original writer of this essay and no longer wish to have your work published on LawTeacher.net then please: Our academic writing and marking services can help you! Stripping Away the Veil of Deceit: Prest v Petrodel. 6(2012)WCA Civ 808, (2012])All ER (D) 147 (Jun), 9Craig Rose, “Family: Hidden assets”? of Man: Petrodel Resources Limited ('Petrodel') and another The case is at least as important for company directors as for wealthy spouses. This essay will argue the decision has done little to fault the Salomon principle. Moylan J ruled that these properties were all H’s assets and therefore were classed as his property. 212 Singapore Academy of Law Journal (2016) 28 SAcLJ fall into both the concealment and evasion … Mr. Prest was the sole owner of numerous offshore companies. pierced will be of significance in cases before the courts in all (b) Petrodel Resources Nigeria Limited is registered in Nigeria. In what has been described as a “landmark ruling”, in Petrodel Resources Ltd v Prest [2013] UKSC 34 the Supreme Court has, for the second time this year, considered the question of “piercing the corporate veil”, this time in the context of matrimonial proceedings for ancillary relief. Richard Todd QC Daniel Lightman Stephen Trowell (Instructed by Farrer & Co) Respondent . 2. Upon conclusion of the case Moylan J found H’s worth to be £37.5 million and awarded W a sum of £17.5 million. VAT Registration No: 842417633. All Rights Reserved. evaded court orders and tried to keep assets out of the reach of Divorces involving busy professionals and family businesses are our bread and butter. Claim by Mrs. Prest for ancillary relief under section 23 and 24 of the Matrimonial Causes Act 1973 in divorce proceedings against Mr. Prest. Jackie Wells, head of our family law team, comments on the issues and impact of this landmark Supreme Court decision. with rights, liabilities and property of its own. and made a ruling against him, as it found that he had deliberately Prest v Petrodel Resources Ltd [2013] UKSC 34; [2013] 2 AC 415; [2013] 3 WLR 1 This case summary discusses the UK Supreme Court case of Prest v Petrodel Resources Ltd [2013] UKSC 34; [2013] 2 AC 415; [2013] 3 WLR 1 in which the majority held that the corporate veil should only be pierced where all other remedies were not available. He held this was a developing area of law and that the Supreme Court’s ruling on “piercing the corporate veil” in Prest v Petrodel Resources Ltd [2013] UKSC 34 still left further questions open which may be relevant in this case. Prest v Petrodel Resources Ltd & Ors [2013] UKSC 34 (12 June 2013) March 22, 2018/in Company /Private Law Tutor. other common law jurisdictions, including the Isle of Man. Info: 1313 words (5 pages) Example Law Essay The appeal concerns the position of a number of companies belonging to the Petrodel Group which were wholly owned and controlled by Michael Prest, the husband. Justices. Trustor AB v Smallbone (No 2) [2001] EWHC 703. Heard on 5 and 6 March 2013 . 2 Of the companies in the Petrodel Group, Petrodel Resources Ltd. (“PRL”) was the legal owner of five residential properties in the UK and. In a tweet: Demonstrates the use a corporate structure can be in protecting wealth. 12 Jun 2013. spouse can be accessed by the family courts - and has encouraged Company Registration No: 4964706. Prest v Petrodel Resources Ltd emphasises the importance of properly and transparently running companies. The Supreme Court has recently given judgment in the case Prest (Appellant) v Petrodel Resources Limited and others (Respondents), following an appeal from the Court of Appeal. The law following Petrodel Resources Ltd & Ors v Prest & Ors. It was further held to be likely that it had been the revealed the properties to have been held beneficially by Mr Prest (Appellant) v. Petrodel Resources Limited and . Disclaimer: This essay has been written by a law student and not by our expert law writers. company ultimately owned by Mr Prest, Vermont Petroleum Limited Prest v Petrodel Resources Ltd - FICs as an alternative to a trust. 5 [1897] AC 22. cases, the Supreme Court's comprehensive judgment describing POPULAR ARTICLES ON: Family and Matrimonial from Isle of Man, Statistics have it that the number of ultra-high net worth individuals are increasing year on year adding to the equally increasing number of high-net-worth individuals – which means that the demand. Mrs Prest (W) assessed his wealth in the region of between tens and hundreds of millions of pounds, which H denied. The question … VTB Capital plc v Nutritek International Corp [2013] UKSC 5, [2013] 2 AC 337 is an English company law case, concerning piercing the corporate veil for fraud.. In Prest v Petrodel [2013] UKSC 34 the English Supreme Court undertook a review of the principles of English law which determine in what circumstances, if any, a court may set aside the separate legal personality of a company from its members and attribute to its members the legal consequences of the company’s acts. draw from the respondent companies' continued refusal to engage To print this article, all you need is to be registered or login on Mondaq.com. 'relevant impropriety' on the part of the husband Prest v Petrodel Resources Ltd. Share. The law in this area has been rife with conflicting principles and many commentators felt that the Supreme Court decision in Prest v Petrodel provided a unique opportunity to resolve the issue of when the corporate veil can be pierced. Prest v Petrodel Resources Ltd & Others [2013] UKSC 34 Introduction. VTB Capital plc v Nutritek International Corp [2013] UKSC 5. The case concerned a very high value divorce . a company and attribute to its members the legal consequences of children. However, the decision of the Supreme Court in the case of Prest v. Petrodel Resources Limited & Others [2013] UKSC 34 cuts through the thickets and … She asked the court to lift the corporate veil and treat her ex-husband and the companies as being effectively the same. 13 Prest v Petrodel Resources Ltd [2013] 3 WLR 1 at [35]. The Supreme Court has handed down a landmark judgement in favour of Mrs Prest in high profile matrimonial dispute. This is supported by the recent Supreme Court decision in Prest v Petrodel Resources Ltd, where a divorced wife claimed shares in houses owned by companies in which her ex-husband was the controlling shareholder. Published: 6th Aug 2019 in Specialist advice should be sought However, as the point in this appeal relates, narrowly, to the enforcement of the ultimate judgment, it is not necessary to do more than … control it gained considerable publicity in Prest v Petrodel Resources Ltd & Others [2013] UKSC 34.The case played out some of the historical tensions between the Family and Chancery division over the ownership of property. In the course of ancillary relief proceedings in a divorce, questions arose regarding company assets owned by the husband. June 12, 2013 . effective control of both of the companies but had claimed they *You can also browse our support articles here >, Petrodel Resources Ltd & Ors v Prest & Ors. The Supreme Court has just handed down its judgment in the landmark case of Prest v. Petrodel. VTB Capital plc v Nutritek International Corp [2013] UKSC 5. arranging for the companies to own the properties was intended to This principle is frequently referred to as 12 Jun 2013. were his own. Twitter; Facebook ; LinkedIn; On appeal from: [2012] EWCA Civ 1395. were in fact independent from him. Resources Ltd1(herein, Prest) has garnered vociferous interest from academics and practitioners. One of Mr Prest’s failings was to provide funding without properly documented loans or capital subscription. 2014, 130 (Jul), 373-377. Lord Neuberger, President Lord Walker Lady Hale Lord Mance Lord Clarke Lord Wilson Lord Sumption . The Court found that the husband either wholly owned, or had The relatively short judgment in the United Kingdom Supreme Court case of Prest v Petrodel. The corporate veil is a metaphorical phrase, established in the landmark case of Salomon v Salomon & Co Ltd 6 . However, with reference to guidance from the case of Hashem v Shayif,5 whose judgement was affirmed in VTB Capital Plc v Nutritek International Corporation,6 a finding of impropriety is necessary to pierce the corporate veil7. Earlier this year, the Supreme Court handed down its much-anticipated judgment in Petrodel Resources Ltd v Prest. matrimonial home is held in the name of a company, it can The first of two recent cases that reflect this are Antonio Gramsci Shipping Corporation & Ors v Recoletos Ltd and Ors.11 The question was whether the veil could be pierced to establish the consent of several individuals to a jurisdiction clause even though the company didn’t provide consent. The corporate veil effectively separates the legal person who x. UKSC 2013/0004. Petrodel Resources Ltd and Others v Prest and Others: CA 26 Oct 2012 References: [2012] EWCA Civ 1395, [2013] 2 FLR 576, [2013] 2 WLR 557, [2013] 1 All ER 795, [2012] 3 FCR 588, [2013] 2 Costs LO 249, [2012] WLR(D) 296, [2013] Fam Law 150 held on trust for him by Petrodel and Vermont. about your specific circumstances. The background to these proceedings is extensive and, indeed, is well known to those who practise family law, in consequence of an earlier sequence of appeals which brought the case before the Supreme Court (Prest v Petrodel Resources Ltd. [2013] UKSC 34; [2013] 2 AC 415). The case of Prest v Petrodel Resources Limited and Others [2013] UKSC 34 has been a battle, through the English High Court, Court of Appeal and Supreme Court, between the principles of corporate integrity on the one hand and fairness on divorce on the other, as much as between Mr and Mrs Prest and the companies in which Mr Prest had an interest. others (Respondents) before . Lazarus Estates Ltd v Beasley [1956] 1 QB 702. inherent probabilities when deciding what an uncommunicative Since Salomon v Salomon, it has been well established in UK law that a company has a separate personality to that of its members, and that such members cannot be liable for the debts of a company beyond their … "Laws, like houses, lean on one another": Edmund Burke. Take a look at some weird laws from around the world! Case ID. 4 Cap 50, 2006 Rev Ed. The recent Supreme Court judgment in Prest v Petrodel has prompted an avalanche of comment in the legal literature ‒ much of it on the implications for corporate rather than family law. entirely clear or settled. The Supreme Court instead Rimmer LJ stated that the principle laid down in Saloman should still be applied: “A one man company does not metamorphosis into the one man simply because the person with a wish to abstract its assets, is his wife”. Judgment details. limited circumstances in which this doctrine may be invoked by the Sign Up for our free News Alerts - All the latest articles on your chosen topics condensed into a free bi-weekly email. reasons might not now protect that wealth against divorce properties (which included the former matrimonial home), legal In 2011, Moylan J gave judgment in the case of Prest. When the history of the corporate veil is written, the year 2013 will perhaps be given as much prominence as the year 1897. It is suitable for not only Muslims but can be applied to inheritance cases involving people of any religion and nationality. courts, but the principles on which the courts can do so are not The Supreme Court ordered that seven disputed properties, owned by companies controlled by Mr Prest, be transferred to Mrs Prest in partial satisfaction of their £17.5 million divorce settlement. Wills & Estates: Points To Ponder – Part 1 Why Make A Will? As part of the settlement, Mrs Prest had asked for an He had set up number of companies. For the past 30 years orders have been made against the assets of a company that are considered to be the alter ego of a spouse to satisfy a capital award made by the court in respect of the other spouse.1In 2012 the Court of Appeals ruling in Petrodel Resources Ltd & Ors v Prest & Ors2set a new precedent stopping an ex-wife being able to investigate a company’s assets when she believes her husband has concealed assets within that company. were then subsequently transferred to the companies for minimal The relatively short and significant judgment in the Supreme Court case of Prest v Petrodel Resources Ltd has gathered vociferous interest from academics and practitioners. order to uphold Mrs Prest's appeal. The decision in Prest overhauled the court’s previous precedents regarding “piercing the corporate veil”, a decision to treat the rights of a corporation as the rights of its shareholders. company is a legal entity separate from those who incorporate it, Part I – Prest 2. The Supreme Court (12,June 2013) case of Prest (Appellant) v Petrodel Resources Limited & Others (Respondents) [2013] UKSC 34 On appeal from: [2012] EWCA Civ 1395, outlines the proceedings for financial remedies following a divorce between Michael and Yasmin Prest. To seek an alternative route to this end, Moylan J relied upon the Matrimonial Causes Act 1973, S 24 (1) (a) to make a property order.8 He determined that H’s properties in England and his shares were “property” to which he was entitled “either in possession or reversion” within S24 (1) (a), despite these being in the companies name. ('Vermont'). proceedings. 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The Supreme Court ) company Commercial partner Max Hudson examines this recent case from a corporate of! Commercial partner Max Hudson examines this recent case from a corporate point of view the ”! Will and divide the property according to their will the ratepayers appealed … Prest v Petrodel expert writers! Veil doctrine of issues relating to the veil-piercing rule 34 Introduction 34, [ 2013 ] UKSC 34 [. Ex-Husband and the avoidance of tax but nothing more of five residential properties in the case of Prest v.Petrodel the! Company from the company itself browse our Support articles here >, Petrodel Resources Ltd decision in of. Should I agree to our use of cookies as set out in our Privacy Policy Ltd ; Share s Analysis... The Personal law in UAE permits the non-Muslim to draft a will and divide the according! A free bi-weekly email - 2021 - LawTeacher is a metaphorical phrase established... 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To their will decision today husband sufficient to 'pierce the corporate veil 2011, Moylan J H!