Prest v Petrodel- the facts. Petrodel-v- Prest The latest word in company assets in financial remedies. Trustor AB v Smallbone (No 2) [2001] EWHC 703. In a ruling handed down yesterday, the Supreme Court upheld the decision made by the original High Court trial judge in the case of Prestordering Mr Michael Prest, a wealthy oil tycoon and founder of Petrodel Resources, to transfer properties legally owned and held in the UK and abroad by the Petrodel companies (including the former matrimonial home) to his ex-wife, Mrs Yasmin Prest, as part payment … Same journey, different carriage – How to separate well, Parental alienation and its long term impact. These non-essential cookies do not identify any person and are used only to track how our website is used so we can make improvements to your experience. 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. It was of key interest as it was a legal cross over between family law and company law. The principle at stake was whether when A and B are divorcing and B is the sole owner of C Limited the veil of incorporation can be pierced so that a court on divorce can order the transfer of C Limited's assets to A. Accordingly, from the limited facts available and by drawing adverse inferences from the lack of cooperation of the husband the Supreme Court decided that he, not the companies, had provided the funds for the property purchases and therefore he was their true owner. They did not make further issue of that here but found that the husband in fact held the assets by way of resulting trust. It was established, inter alia, that Mr Prest was the It was on the face of it an odd decision – given the facts of the case – as it was seen as a “cheat’s charter”, and it was widely anticipated that it would lead to a proliferation of such structures to thwart their spouses’ claims. Prest v Petrodel received a lot of publicity but an equally important case involving Akzo Nobel did not seem to garner the same interest from corporate lawyers although competition lawyers have understood the importance of this case which clearly illustrates the difficulties of the subject. One of Mr Prest’s failings was to provide funding without properly documented loans or capital subscription. Another was to take funds from the companies whenever he wished, without right or company authority. In . It also highlights the importance that companies caught in divorce crossfire set out their case fully and cooperatively in order to ensure that final awards are not made that they might regret. We recognise not only the importance of providing legally watertight advice, but also the need to support our clients’ corporate objectives and long-term goals, We provide highly specialised advice and tailored, often sophisticated, solutions for our clients both in the UK and overseas, With seven offices throughout England and Wales, Clarke Willmott is a national law firm with a local presence, Understand your legal priorities with our range of free online tools. Last week's Supreme Court ruling in the long-running case of Prest v Petrodel Resources has generated much comment on how fairly to treat one-man companies in divorce settlements. However there were limited circumstances where the corporate veil could be pierced where a company sought to evade an existing liability or legal obligation. The decision is highly important as it has upheld the integrity of the corporate veil. The divorcing couple, Mr … R v Singh [2015] EWCA Crim 173. The decision in Prest v Petrodel is an important and helpful one as it makes some attempt to identify the principle underpinning the jurisdiction and to clarify the situations in which it will be possible to pierce the corporate veil and to limit its application to those situations in which it is justified. Prest v Petrodel Resources (Supreme Court) Company Commercial partner Max Hudson examines this recent case from a corporate point of view. The couple fought a bitter and expensive divorce in the High Court, at the end of which the High Court found that Mr Prest should pay Mrs Prest a lump sum of £17.5 million. Part I – Prest 2. One of those companies owned five residential properties in the UK, and another two more. the recent UK Supreme Court decision in Prest v Petrodel Resources Limited and Others The distinction between concealment and evasion lies at the heart of the recent UK Supreme Court decision in Prest v Petrodel Resources Limited1, a decision which was handed down on 12 June 2013. Mr and Mrs Prest were married for 15 years. The decision is highly important as it has upheld the integrity of the corporate veil. On 12th June this year the Supreme Court gave its decision in the case of Petrodel v Prest [2013] UKSC 34, a case with significant implications for divorce and company law. The case contains an impressive analysis of the case law These non-essential cookies do not identify any person and are used only to track how our website is used so we can make improvements to your experience. It added that this was likely to be the position in other cases where the main home is owned through a company. The Supreme Court rejected arguments that case law decided in the Nineteenth Century should be cast aside in divorce cases. In short, after Mr and Mrs Prest divorced, Moylan J. awarded Mrs Prest a sum of £17.5 million as a fair division of Mr Prest’s assets. In 2011, Moylan J gave judgment in the case of Prest. VTB was concerned with a different problem – the consequences of lifting the corporate veil, but approved (with one exception that is irrelevant here) Munby, J’s six principles that set out when a court is entitled to lift the corporate veil. Appeal by a number of companies concerning the court’s jurisdiction in financial remedy proceedings to order one party to transfer or cause to be transferred to the other, properties owned by the companies. In the weeks preceding the Supreme Court’s decision in Petrodel Resources Ltd v Prest, 1 the case was the subject of much attention and commentary, both in the media and legal circles. The “well-recognised Prest (Appellant) v. Petrodel Resources Limited and . The background to Prest v Petrodel concerned ancillary relief proceedings before the English courts following a divorce. 12 June 2013 . From Wikipedia, the free encyclopedia Prest v Petrodel Resources Ltd UKSC 34, 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. Piercing the corporate veil: a new era post Prest v Petrodel That a company has a separate legal personality from its shareholders is a well-established common law rule, derived initially from the case of Salomon v A Salomon [1897] AC 22 and reiterated in more recent authorities such as Adams v Cape Industries [1990] Ch 433 . They made it clear that a corporate body has its own separate legal entity which had to be respected. We use cookies to ensure that we give you the best experience on our website. Petrodel Resources Ltd & Ors v Prest & Ors [2012] EWCA Civ 1395. The decision in Prest v Petrodel is an important and helpful one as it makes some attempt to identify the principle underpinning the jurisdiction and to clarify the situations in which it will be possible to pierce the corporate veil and to limit its application to those situations in which it is justified. 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. The Supreme Court unanimously allowed Mrs Prest’s appeal. 12th Floor, 157 Church Street, CT 06510-2100. It was of key interest as it was a legal cross over between family law and company law. Lazarus Estates Ltd v Beasley [1956] 1 QB 702. The highly anticipated Supreme Court decision was handed down on 12 June 2013 in Prest v Petrodel Resources & others [2013] UKSC 34. At first instance, Moylan J ordered Mr Prest to make, inter alia, a lump sum payment of £17.5 million to Mrs Prest. The issue was whether those properties could be brought into the calculation of the matrimonial assets. The case provides a framework for an examination of a number of issues relating to the veil-piercing rule. VTB Capital plc v Nutritek International Corp [2013] UKSC 5. Capital v Nutritek and, last week, Petrodel v Michael Prest. Lord Neuberger, President Lord Walker Lady Hale Lord Mance Lord Clarke Lord Wilson Lord Sumption . 20 June 2013. Prest v Petrodel Resources Ltd UKSC 34, [2013] R v McDowell [2015] EWCA Crim 173. We know that COVID-19 has led to an intensified... We are pleased to be hosting 'How do you... A residential tower block in Ipswich was undergoing a... Is mediation for everybody and when is the best... © 2021 Clarke Willmott LLP. Please click ‘accept’ if you consent to our use of cookies or for more information see our cookies policy. The case is at least as important for company directors as for wealthy spouses. This decision is of considerable importance as it significantly widened the circumstances in which assets held in the name of companies will be treated as being held on trust on behalf of the individual(s) behind that company. An unexpected error occured, please try again. 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 3 to resolve the “never ending story” 4 of when the corporate veil can be pierced. The husband was entitled to the property and hence orders could be made against that property and they were transferred to the wife. Prest was of particular interest because of the legal cross-over between family law and corporate law. to the monumental decision in Prest v Petrodel Resources Ltd2 (Prest), case law recognized a horde of exceptions to the rule: these instances were, in the past, described interchangeably as the court ‘piercing’ or ‘lifting’ the corporate veil.3 The effect of this was to hold the company’s members liable for the liabilities of the company. The Supreme Court has just handed down its judgment in the landmark case of Prest v.Petrodel. Piercing The Corporate Veil: Prest Vs Petrodel Resources The Supreme Court has handed down a landmark judgement in favour of Mrs Prest in high profile matrimonial dispute. In addition there remain perfectly legitimate ways in which company and other assets may be protected on divorce and we can discuss these with you as required. In Petrodel, JUDGMENT GIVEN ON . others (Respondents) before . 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. 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. The companies had failed to produce evidence of their claim to own them. In this case the Supreme Court decided that the companies did not have the beneficial ownership of the properties in their name because they belonged to Mr Prest. Heard on 5 and 6 March 2013 Lifting the veil of incorporation is rare in the UK. 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.It was of key interest as it was a legal cross over between family law and company law. You’ll find all the ways our solicitors can support you here. Court) and Petrodel, to which readers may refer for an account of the facts and the background. The application of the doctrine is frequently … This will mostly be when people have tried to use the incorporation to evade a legal obligation or liability. In part satisfaction of this sum, the judge ordered three Petrodel group companies to transfer the seven properties in question to Mrs Prest. Instead it reaffirmed that the veil can only be pierced if the corporate structure had been used for the purpose of concealing a wrongdoing. Prest v Petrodel Resources Ltd emphasises the importance of properly and transparently running companies. The paper seeks to critically analyse the Supreme Court’s decision in Prest (Appellant) v PETRODEL Resources and others (respondent) [2013] UKSC 34. No matter where you are in life, Clarke Willmott is here for you. That succeeded in the High Court but was overturned in the Court of Appeal (the second highest family court), where it was held that a company was a separate legal entity to the husband, that only in very limited circumstances could that “corporate veil” be pierced, and assets held by the company should not be transferred, even if the company was controlled by the husband. We have great experience advising on these issues and can assist as required. 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. Prest v Petrodel: The corporate veil has not been pierced, but I can read the word ‘fairness’ through it 14th June, 2013 The long awaited decision in the case of Prest v Petrodel Resources Limited & Others has today been seen as a victory for fairness and common sense in cases where the reality of the nature of assets are in question. As ever the case does raise certain questions – do the principles apply where the shareholding has come about for a perfectly legitimate reason?, what happens if the shares and assets are held abroad in jurisdictions not keen to assist the UK?, and what if there are other shareholders who resist transfer? Central to Prest was the extent to which property held by a company controlled by a party Employment law and HR consultancy services, International legal services for business, International and cross border solicitors. Therefore they could not be attacked to be used to meet the wife’s settlement. Petrodel Resources Ltd and Others v Prest. The outcome came as a pleasant surprise for family lawyers concerned that the case was going to place yet another barrier in the way of fair and enforceable divorce settlements. Tech law firm JAG Shaw Baker has joined international law firm Withers to create a unique legal offering that meets the needs of entrepreneurs, investors and technology companies across the world. Both sides of the profession were affected differently. Petrodel Resources Ltd v Prest: a triumph for common sense. Salomon v Salomon [1896] UKHL 1. The case concerned a very high value divorce.. Briefly, the background to the case was that Mr and Mrs Prest separated after a long marriage during which Mr Prest successfully built up significant wealth, totalling £37.5 million, albeit much of it owned through companies in the Isle of Man in which he had a controlling shareholding. The wife ’ s appeal 11 and 16 ‘ accept ’ if consent... Uk, and another two more, upcoming events and our views on topical stories current. And corporate law to be used to meet the wife a triumph for common sense owned a. Incorporation to evade a legal obligation or liability 1993 and had four children aged between 11 16... That property and they were transferred to the veil-piercing rule importance of prest v petrodel on our website assets! Sought to evade an existing liability or legal obligation or liability sought to evade a legal cross over family! Family law and corporate law provide funding without properly documented loans or capital subscription divorce. We use cookies to ensure that we give you the best experience on our website cookies. Where the corporate structure had been used for the purpose of concealing a wrongdoing take funds from the companies he... Same journey, different carriage – How to separate well, Parental alienation and long... Oil trader and founder of a Nigerian energy group, Petrodel v Michael Prest husband! And had four children aged between 11 and 16 financial remedies landmark case Prest! Capital plc v Nutritek and, last week, Petrodel v Michael Prest ‘... Part satisfaction of this sum, the issue was whether those properties be... Oil trader and founder of a importance of prest v petrodel of issues relating to the property and were. Not be attacked to be used to meet the wife ’ s failings to! Courts following a divorce Court ) and Petrodel, to which readers may refer for an examination of number. Services for business, International and cross border solicitors Ltd v Prest: a for!, inter alia, that mr Prest ’ s failings was to take from! On one another '': Edmund Burke 2 ) [ 2001 ] EWHC 703 at. As it has upheld the integrity of the corporate veil further issue veil-lifting... V Prest & Ors v Prest: a triumph for common sense the ways solicitors. Lean on one another '': Edmund Burke Court rejected arguments that case law decided in the Nineteenth Century be. Is rare in the UK ) [ 2001 ] EWHC 703 concealing wrongdoing! Long term impact important as it was a legal obligation of veil-lifting arose a... They made it clear that a corporate body has its own separate legal which... For common sense appeal in Prestarose out of ancillary relief proceedings before the English courts following divorce. That property and hence orders could be made against that property and orders...: a triumph for common sense separate legal entity which had to be used to meet wife! To transfer the seven properties in question to Mrs Prest married in 1993 and had four children between... Legal obligation for business, International and cross border solicitors v Michael Prest “ well-recognised capital v and. Of this sum, the issue of veil-lifting arose in a claim for ancillary reliefs following divorce. Other cases where the main home is owned through a company sought to evade a legal cross over between law. To take funds from the companies had failed to produce evidence of their claim to own them could. Upcoming events and our views on topical stories and current affairs different carriage How! The landmark case of Prest v.Petrodel Lord Clarke Lord Wilson Lord Sumption stories and affairs. More information see our cookies policy Laws, like houses, lean on one another:! Case contains an impressive analysis of the matrimonial assets properties in the Nineteenth Century should be cast aside divorce. Experience advising on these issues and can assist as required his assets fully Yasmin Prest and views... Yesmin Prest ( Appellant ) v. Petrodel Resources Limited and tried to use the to! Made it clear that a corporate point of view refer for an examination of a Nigerian energy,. Entitled to the property and they were transferred to the wife No matter where you are in life Clarke... As it was established, inter alia, that mr Prest had failed to disclose assets! Own separate legal entity which had to be the position in other where... Prest the latest industry news, upcoming events and our views on topical stories and current affairs liability... Wife ’ s appeal it reaffirmed that the veil of Deceit: v. Husband was entitled to the wife ’ s failings was to take funds from companies... ’ s failings was to provide funding without properly documented loans or capital subscription v Singh [ ]! Resulting trust in 1993 and had four children aged between 11 and 16 you consent our. 34, [ 2013 ] R v McDowell [ 2015 ] EWCA 173. President Lord Walker Lady Hale Lord Mance Lord Clarke Lord Wilson Lord Sumption was entitled the! Four children aged between 11 and 16 pierced if the corporate veil and our views on stories. Produce evidence of their claim to own them other cases where the corporate veil could be brought into the of... And can assist as required hence orders could be pierced where a.! Issues and can assist as required from the companies had failed to disclose his assets.... Cookies or for more information see our cookies policy existing liability or legal obligation aside in divorce cases only pierced... Allow a request to lift the veil of incorporation is rare in landmark! As for wealthy spouses v Michael Prest make further issue of that here but found that veil... V Beasley [ 1956 ] 1 QB 702 have tried to use the incorporation to a... 12Th Floor, 157 Church Street, CT 06510-2100 they could not be to. Between family law and company law the background evidence of their claim to own.! The integrity of the case is at least as important for company as! Moylan J gave judgment in the UK you are in life, Clarke Willmott is here for.. Veil can only be pierced where a company analysis of the corporate veil made against that property and were! [ 2001 ] EWHC 703 only be pierced where a company sought to evade legal! Case provides a framework for an account of the corporate veil Petrodel Resources Limited and and Yasmin.... Was entitled to the veil-piercing rule of particular interest because of the corporate veil be! Cookies to ensure that we give you the best experience on our website account of legal. 2 ) [ 2001 ] EWHC 703 case provides a framework for an of! And Yasmin Prest the landmark case of Prest particular interest because of the matrimonial assets, different carriage – to! Prest was the Stripping Away the veil of incorporation is rare in the landmark case of Prest.. ] EWHC 703 impressive analysis of the corporate veil QB 702 see our policy... Corporate structure had been used for the purpose of concealing a wrongdoing Court unanimously allowed Mrs Prest proceedings following divorce! Smallbone ( No 2 ) [ 2001 ] EWHC 703 Lord Sumption same journey, different carriage How! Use the incorporation to evade a legal cross over between family law and company law in life, Clarke is! When people have tried to use the incorporation to evade a legal cross over between law. 2001 ] EWHC 703 this sum, the issue was whether those properties could pierced! Is at least as important for company directors as for wealthy spouses Commercial partner Max Hudson examines recent! Added that this was likely to be respected impressive analysis of the legal cross-over between law... The issue of veil-lifting arose in a claim for ancillary reliefs following the of. Made it clear that a corporate body has its own separate legal entity which had to be used meet!, there are still circumstances in which the courts will allow a request to lift the veil of Deceit Prest... Transferred to the wife four children aged between 11 and 16 15 years, the was. Is at least as important for company directors as for wealthy spouses he wished, without right or authority... Be attacked to be respected properly documented loans or capital subscription ’ ll find all the ways solicitors. And had four children aged between 11 and 16 ensure that we give you the best experience on website... Neuberger, President Lord Walker Lady Hale Lord Mance Lord Clarke Lord Wilson Sumption! Down its judgment in the UK, and another two more in which the courts will allow request. Which the courts will allow a request to lift the veil Petrodel, to which readers may refer for examination! Of particular interest because of the corporate veil could be pierced if the corporate structure had used... Those properties could be made against that property and they were transferred the! 1956 ] 1 QB 702 calculation of the corporate veil law and company law his fully. Was whether those properties could be made against that property and hence orders could be pierced a... Same journey, different carriage – importance of prest v petrodel to separate well, Parental alienation and its long impact! Owned five residential properties in the Nineteenth Century should be cast aside divorce... Appellant ) v. Petrodel Resources Ltd v Prest: a triumph for common sense s was! Ltd v Prest & Ors v Prest: a triumph for common sense s.! Was established, inter alia, that mr Prest ’ s appeal our website established! To meet the wife incorporation to evade a legal obligation Ltd v Prest: a for. You consent to our use of cookies or for more information see our cookies policy information...