The Supreme Court unanimously allowed an appeal in June this year by Mrs Prest, in the case Prest v Petrodel, allowing her to obtain a share in assets held by her husband in numerous companies in his name.
In this heavily contested case, Mr Prest was assessed to own assets worth £37.5m held within a corporate structure, including the matrimonial home plus six other properties.
In settlement of financial matters on their divorce Mr Prest was ordered to transfer four London properties and an interest in a fifth, all held in the name of Petrodel Resources Ltd, a company owned in his name over which he had sole control together with two London properties held in the name of V Petrodel Ltd, to his wife. Mr Prest failed to comply with the terms of the order and his wife was forced to take action to secure her award. He argued that he did not own the properties since they were held by the two companies and was not entitled to such assets and could not therefore transfer them to his wife.
The Supreme Court, after hearing the case, found that Mr Prest had provided the original funding for the properties and not the companies, and in applying general trust law principles, the Judges decided that the properties were held on trust for Mr Prest by the companies. As a result, the properties were deemed to be under the control of Mr Prest and could be transferred to Mrs Prest as part of the divorce settlement. Family solicitor, Julie-Ann says,”Much was made in the legal press of whether the family courts would try to “pierce the corporate veil” in other words undermine legal principles and law relating to company ownership and structure that has been in place for over 100 years.” It was however made clear by Lord Sumption that the only reason to look behind a company structure is where directors have behaved dishonestly in an attempt to relieve themselves of personal assets into a company to avoid a claim. The moral being act fairly and honestly.
For a free initial chat about divorce, please call 01202 499255 and Julie-Ann or a member of her team will be happy to discuss any questions that you may have.