Claim by Mrs. Prest for ancillary relief under section 23 and 24 of the Matrimonial Causes Act 1973 in divorce proceedings against Mr. Prest. Prest and Beyond – Part 1 and Part 2 (Companies) 1. INTRODUCTION Rogers AJA in a New South Wales case commented "there is no common, underlying principle, which underlies the occasional decision of the courts to pierce the corporate veil". Justices. In this context, Lord Sumption sheds further light on the doctrine of abuse of corporate personality under English law. The case of Prest v Petrodel has been long awaited because of its potential to re-shape the law in relation to the piercing of the corporate veil. In summary, VTB was the English claimant in an action to recover c.US$225 million loaned to "RAP", a Russian company, for the purpose of RAP's proposed acquisition of Nutritek. Prest (Appellant) v Petrodel Resources Limited and others (Respondents) Judgment date. In 2011 a High Court ruling ordered Mr Prest, the founder of a Nigerian oil business Petrodel Resources Ltd, to transfer 14 properties which were tied up in his businesses to Yasmin Prest as part of a £17.5m divorce payout. Facts. This essay will argue the decision has done little to fault the Salomon principle. The judgment is important for businesses holding assets which could be vulnerable to pursuit by spouses in divorce proceedings. RAP defaulted on the loan and VTB also learned that the security it had taken for the loan was of significantly lower value than it had been led to believe. V Nutritek International Corp. & Ors [2013] UKSC 5. However, as in the case of VTB, the court could not be persuaded to pierce the corporate veil. Introduction. 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. Professional Support Lawyer, Withers Khattarwong. PIERCING THE CORPORATE VEIL: THE POSITION FOLLOWING PETRODEL V PREST. In the last year, the concept of the corporate veil (and the court's ability to pierce it) has been the subject of substantial judicial scrutiny and academic commentary. Judgment details. The judgment of the Supreme Court in Prest v Petrodel Resources Ltd [2013] UKSC 34 was eagerly anticipated by family and corporate lawyers alike. 34 William Day, “Skirting around the Issue: The Corporate Veil after Prest v Petrodel”. It therefore appears that where litigants can show that the relevant tests are satisfied, the courts will allow them to obtain judgement against assets that were intentionally placed out of their reach. The court was plainly convinced that Mr Prest was likely to attempt to avoid making payment to Mrs Prest and ordered that seven UK properties nominally owned by the "Petrodel group" be transferred to Mrs Prest. The court may only "pierce the corporate veil" when it deems it appropriate and absolutely necessary to look behind the status of the company as a separate legal entity, distinct from its shareholders. Lord Neuberger, Lord Walker, Lady Hale, Lord Mance, Lord Clarke, Lord Wilson, Lord Sumption. On 12 June 2013, the court unanimously overturned the decision of the Court of Appeal and ruled against a wealthy oil tycoon, Michael Prest, ordering that seven properties vested in Petrodel Resources Ltd be … Google Scholar The position appeared reasonably clear but after that, however, came the much publicised matrimonial case of Prest v Petrodel and, more recently, the competition case of Akzo Nobel v The Competition Commission. In many respects, Prest has done nothing to re-shape the court's attitude towards piercing the corporate veil. It came as little surprise that the Petrodel group companies challenged the first instance decision in the Court of Appeal. 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 court was asked as to the power of the court to order the transfer of … 750 RPC people united by a passion for client service. This was described by Lord Sumption in the case of Prest v Petrodel Resources Ltd [2013] UKSC 34 as the "evasion principle". Also see Lady Hale’s distinction in para 92. Supreme Court decisions thus have considerable influence here. The same point applies to Jones v Lipman, para 135. The set of circumstances in which the ‘lifting‘ process in respect of shareholder liability may be triggered is set out in the test from the Supreme Court case of Prest v Petrodel Resources Ltd [2013] UKSC 34. The judgment of the Supreme Court in Prest v Petrodel Resources Ltd [2013] UKSC 34 was eagerly anticipated by family and corporate lawyers alike. The Supreme Court has just handed down its judgment in the landmark case of Prest v.Petrodel. through concealment”.39Taking Gencorand Trustor(the supposed. Indeed, the court found that Mr Prest took steps to conceal details of his wealth from the court and demonstrated flagrant disregard for court orders to provide corroborative information of his personal and commercial interests. UKSC 2013/0004. Lloyd’s Maritime and Commercial Law Quarterly 2014(2): 269 – 296 . Agile enough to adapt quickly. Prest v Prest [2015] EWCA Civ 714. It was established, inter alia, that Mr Prest was the 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.. The set of circumstances in which the ‘lifting‘ process in respect of shareholder liability may be triggered is set out in the test from the Supreme Court case of Prest v Petrodel Resources Ltd [2013] UKSC 34. In some instances the properties had been Here, the evidence showed that the husband not only received an allowance from his mother, but also was actively involved in his mother’s business affairs. This is the doctrine that a company is a separate and independent legal person, which is distinct in law from its members. Prest v Petrodel – the commentaries. 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. Prest v Petrodel Resources Ltd & Others [2013] UKSC 34 Introduction. Their main argument was that the family court could not simply depart from long established company law principles relating to the separate legal personality of companies. VTB's case was that, inter alia, the loan facility agreement should be enforced against individuals who were not party to it, which VTB argued could be achieved by piercing the corporate veil. Introduction. A company cannot be deemed to be the alter ego of a party to the marriage, even if that party clearly operated the company, unless there had been some impropriety. Prest v Petrodel case In a ruling handed down yesterday, the Supreme Court upheld the decision made by the original High Court trial judge in the case of Prest ordering Mr Michael Prest, a wealthy oil tycoon and founder of Petrodel Resources, to transfer properties legally owned and held in As with Prest, the court looked specifically at whether the husband had been able to use, had control over, and had an interest in the Hong Kong companies, the shares of which were placed offshore, pre allotment and post allotment. 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. In reaching its decision, the court had to consider the law surrounding the piercing of the corporate veil. A Look at the Recent Court of Appeal case of CWG v MH in the Context of Prest v Petrodel, UKSC Reviews “Illegality” Defence in a Professional Negligence Setting, When the Legal Industry Meets Technology (Part 2). Prest (Appellant) v Petrodel Resources Limited & Others (Respondents) [2013] UKSC 34 . 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. Neutral citation number [2013] UKSC 34. The Supreme Court had to consider whether it is open to the court, in ancillary relief proceedings, to treat the assets of a company, of which a spouse is the sole controller, as being assets to which that spouse is ‘entitled’ for the purposes of the Matrimonial Causes Act 1973. Prest v Petrodel case In a ruling handed down yesterday, the Supreme Court upheld the decision made by the original High Court trial judge in the case of Prest ordering Mr Michael Prest, a wealthy oil tycoon and founder of Petrodel Resources, to transfer properties legally owned and … The Court of Appeal rejected this approach in Prest. The Supreme Court held that even though the companies were the legal owners of the … In cases where the ostensible title to company assets is established, the Supreme Court has demonstrated that an attempt to deceive the court could result in inferences being drawn which may precipitate the transfer of those assets, even where the corporate veil remains firmly in place. Prest was of particular interest because of the legal cross-over between family law and corporate law. Prest v Petrodel raises issues about what structures can be utilised and Akzo Nobel in what structures companies can establish notwithstanding that such structure are common place. She is a matrimonial lawyer dealing with all aspects of family law, information management, legal writing and publications. The corporate veil may be pierced if there is some form of wrongdoing, which involves the fraudulent or dishonest use of the corporate personality, for the purpose of concealing the true position. By classifying veil-piercing as evasion, his Lordship suggested that concealment cases were not truly veil-piercing. Prest v Petrodel Resources Ltd emphasises the importance of properly and transparently running companies. the specific facts show that the assets are genuinely held on trust for a party to the proceedings. The relatively short judgment in the United Kingdom Supreme Court case of Prest v Petrodel Resources Ltd1 (herein, Prest) has garnered vociferous interest from academics and practitioners. This article will critically evaluate the significance of the Prest v Petrodel Resources Ltd[1] decision in light of the corporate veil doctrine. Prest (Appellant) v Petrodel Resources Limited & Others (Respondents) [2013] UKSC 34 . The court found that he had access to the underlying assets of their subsidiaries and his personal connection with one of the companies in particular was manifest – the company held the property which housed his children rent free, the office where he kept his collection of classic cars and provided all the family expenses including his mother-in-law’s credit card expenses. Mr and Mrs Prest (who had dual British and Nigerian citizenship) had their matrimonial home in London but it was determined by the court that Mr Prest was based in Monaco. 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. Published by Adam Forster, Senior Associate. Prest (Appellant) v Petrodel Resources Limited and others (Respondents) Judgment date. The recent judgment in SLA v HKL (FCMC 75000/ 2010) may be Hong Kong’s first case to apply the recent UK Supreme Court landmark decision of Prest v Petrodel [2013] UKSC 34. 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. The decision in Prest overhauled the court’s previous precedent… Another was to take funds from the companies whenever he wished, without right or company authority. Sir Michael Birt endorsed this more restrictive test and concluded that in the circumstances of the case there was no basis for piercing the corporate veil. For us it's a must, not a maxim. The Supreme Court has just handed down its judgment in the landmark case of Prest v.Petrodel. The corporate veil is a metaphorical phrase, established in the landmark case of Salomon v Salomon & Co Ltd 6 . The court assessed Mrs Prest's entitlement at £17.5 million. Day, W (2014) Skirting around the issue: The corporate veil after Prest v Petrodel. articulated by Lord Sumption in Prest v Petrodel Resources Ltd [2013] 3 WLR 1 (“Petrodel”) in the light of recent English and Singapore case law and, in particular, to interrogate the notion of veil-piercing as a remedy of last resort, as well as the concealment and … Judgment (PDF) Press summary (PDF) Judgment on BAILII … By classifying veil-piercing as evasion, his Lordship suggested that concealment cases were … It is important to bear in mind the principles in Prest when considering the complexities of offshore corporate investments in divorce settlements. piercing the corporate veil: the position following petrodel v prest As well as cases of fraud and other wrongdoing in the course of business, the other area in which the courts have most frequently been asked to be creative in their approach to companies has been in the family division of the High Court in divorce cases. The recent judgment in SLA v HKL (FCMC 75000/ 2010) may be Hong Kong’s first case to apply the recent UK Supreme Court landmark decision of Prest v Petrodel [2013] UKSC 34. In this case, the husband had effectively purchased a number of properties in England which he had put into the names of offshore companies. In 2013, the case of Prest v Petrodel [2013] UKSC 34 left the family law fraternity debating and divided. At issue was whether the family courts can pierce the corporate veil when assets are owned beneficially by a company, but controlled by one of the spouses. As a consequence, clients and advisers have to consider the risks inherent in such structures and whether there are likely to be any unforeseen consequences. Both sides of the profession were affected differently. Many of the assets (primarily properties in London) were held by overseas companies controlled by the husband. However, there have been … Facts. 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 court found that the manner in which the seven properties had become vested in the Petrodel group companies meant that, in fact, the properties were held on trust for Mr Prest, such that he was their beneficial owner. The fact that Mr Prest had sought to conceal this fact in evidence, and that both he and the companies failed to cooperate with disclosure, permitted the court to infer that Mr Prest and the companies were attempting to hide the true beneficial ownership of the properties. In SLA, the couple were married for 17 years. Whatever your industry or situation, we relish change, thrive on solutions and love building long-term relationships with our clients. The relatively short judgment in the United Kingdom Supreme Court case of Prest v Petrodel Resources Ltd1 (herein, Prest) has garnered vociferous interest from academics and practitioners. In reaching its conclusion, the Supreme Court confirmed that the Court of Appeal's analysis of the circumstances in which the corporate veil may be pierced was correct. The Court of Appeal held that the family court should not allow the properties to be taken into account in the division of assets because the companies were the beneficial owners of the properties and upheld the company law principle that there is nothing special about family law and the courts cannot pierce the corporate veil. 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 Society of Hong Kong | Sweet & Maxwell | Westlaw Asia | Contact Us. 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. 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. The Supreme Court case Prest v Petrodel Resources Ltd [2013] 2 AC 415 addresses the issue of whether, and if so in what way, the court is competent to pierce the corporate veil save any specific statutory authority to do so. This is largely as a result of the case of VTB Capital Plc. Another was to take funds from the companies whenever he wished, without right or company authority. In part satisfaction of this sum, the judge ordered three Petrodel group companies to transfer the seven properties in question to Mrs Prest. 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. 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. Mr. Prest was the sole owner of numerous offshore companies. Neutral citation number [2013] UKSC 34. The leading judgment was given by Lord Sumption. In this case, the husband had effectively purchased a number of properties in England which he had put into the names The case concerned a very high value divorce.. Pey Woan Lee, 'The Enigma of Veil- Piercing' (2015) 26 (1) ICCLR 28, 30. In so doing, the court will consider who are the individuals, as shareholders, directing and controlling the activities of the company. The case clarifies the fact that it is possible to lift the corporate veil, but only in a small category of cases where a company has been created or structured in some way to frustrate the law. Mr and Mrs Prest (who had dual British and Nigerian citizenship) had their matrimonial home in London but it was determined by the court that Mr Prest was based in Monaco. to hide behind the corporate veil) for improper purposes; and/or. Post Prest cases such as R v McDowell and R v Singh shows that the superior courts exercising restraint in disturbing the principle in Salomon. The Supreme Court case Prest v Petrodel Resources Ltd [2013] 2 AC 415 addresses the issue of whether, and if so in what way, the court is competent to pierce the corporate veil save any specific statutory authority to do so. Plainly, the decision will also be of note to those engaged in advising high net-worth individuals in relation to their marital affairs. In 2013, the case of Prest v Petrodel [2013] UKSC 34 left the family law fraternity debating and divided. Prest was of particular interest because of the legal cross-over between family law and corporate law. 12 Jun 2013. Instead, overturning the High Court decision and following various authorities the Court of Appeal held that the corporate veil should only be pierced in very limited circumstances, that is: On 12 June 2013, seven members of the Supreme Court allowed Mrs Prest's appeal. At issue was whether the family courts can pierce the corporate veil when assets are owned beneficially by a company, but controlled by one of the spouses. Facts The parties, who had four teenage children, separated in 2008 after 15 years of marriage. Has Prest v Petrodel made the law clearer? The case concerned a very high value divorce.. Case ID. However, in applying those exceptional circumstances, the Supreme Court held Mr Prest had not deliberately attempted to stymie Mrs Prest's claim. [2014] LMCLQ 269. Lloyd’s Maritime and Commercial Law Quarterly 2014(2): 269 – 296 . Justices. This is a case with regard to family law. Big enough to handle the most complex matters. In CWG v MH, some of the offshore provision was made prior to the handover of Hong Kong as asset protection in 1997. The article seeks to determine whether the Supreme Court clarified the rule in the case and concludes from an examination of the literature that the court clarified some but not all issues relating to the rule. UKSC 2013/0004. It therefore appears that where litigants can show that the relevant tests are satisfied, the courts will allow them to obtain judgement against assets that were intentionally placed out of their reach. In 2011 a High Court ruling ordered Mr Prest, the founder of a Nigerian oil business Petrodel Resources Ltd, to transfer 14 properties which were tied up in his businesses to Yasmin Prest … Although the case revolved around a dispute concerning financial provision on divorce, the decision has potentially wider implications. The article examines many issues relating to the rule and the corporate personality doctrine. 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 circumstances in which property held by a company can be attributed to those who control it gained considerable publicity in Prest v Petrodel Resources Ltd & Others [2013] UKSC 34.The case played out … But in Prest this was achieved via a different route. 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 AC 22 and reiterated in more recent authorities such as Adams v Cape Industries Ch 433. Google Scholar It was established, inter alia, that Mr Prest was the 08 July 2013. The disclosure by the husband was found to be incomplete and adverse inferences were made against him. Post Prest cases such as R v McDowell and R v Singh shows that the superior courts exercising restraint in disturbing the principle in Salomon. 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. As the legislation is so similar, Hong Kong courts often look for guidance in England. In 2013, the United Kingdom Supreme Court handed down a seminal judgment on the law of corporate veil, Prest v Petrodel Resources Ltd and Others UKSC 34, in which Lord Sumption proposed the evasion and concealment principles. Introduction. 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). Mujih E, 'Piercing the corporate veil as a remedy after Prest V Petrodel resources Ltd: Inching towards Abolition' [2016] Westlaw 17,17. In the light of this finding, Mr Prest had not used the corporate structures for wrongdoing. The trial judge found that as the Petrodel companies were effectively owned and controlled by Mr Prest, he was their "alter ego", and so the properties which were legally vested in them were, in reality, assets available to Mr Prest. Day, W (2014) Skirting around the issue: The corporate veil after Prest v Petrodel. One of Mr Prest’s failings was to provide funding without properly documented loans or capital subscription. ... of cases where the abuse of the corporate veil to evade or frustrate the law can be addressed only by disregarding the legal personality of the company is consistent with authority and long-standing Sign up for perspectives and email updates tailored to your needs, Copyright © 2020 Reynolds Porter Chamberlain LLP, The corporate veil: Prest, but not pierced, Post Merger Acquisition and other disputes, Support for litigation in other jurisdictions, Tax investigations and dispute resolution, Insurance and financial services regulation, HMRC criminal investigations and prosecutions, ICO issues fines for emails seeking consent to marketing, The Commercial Court assesses the power and limitations of "Chabra" jurisdiction, Court clarifies relationship between the CPR and the Companies Act when serving a director resident abroad, Court of Appeal makes it clear that a skeleton argument is not a vehicle for the introduction of unpleaded claims, COVID-19: business continuity and preparedness response, RPC Claims Management System - Terms of use, where there is a deliberate abuse of a corporate entity (i.e. Concealment ” principle in application ), it is commonly achieved Causes Act 1973 in divorce.. 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