... 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 … In 2013, the case of Prest v Petrodel [2013] UKSC 34 left the family law fraternity debating and divided. 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. The court was asked as to the power of the court to order the transfer of assets owned entirely in the company’s names. 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. However, in applying those exceptional circumstances, the Supreme Court held Mr Prest had not deliberately attempted to stymie Mrs Prest's claim. 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. in many evasion cases – indeed, evasion is commonly achieved. Prest and Beyond – Part 1 and Part 2 (Companies) 1. 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. 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". In the light of this finding, Mr Prest had not used the corporate structures for wrongdoing. 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. 34 William Day, “Skirting around the Issue: The Corporate Veil after Prest v Petrodel”. Following decisions at first instance and on appeal, the Supreme Court reached a unanimous decision that it would be contrary to prior authorities and principles to extend the circumstances in which the corporate veil can be pierced. 136 - see Gencor and Trustor cases re piercing the veil to impose liability on the company for the controller’s liability as Mrs Prest sought in Prest v Petrodel. the specific facts show that the assets are genuinely held on trust for a party to the proceedings. In part satisfaction of this sum, the judge ordered three Petrodel group companies to transfer the seven properties in question to Mrs Prest. The Supreme Court has handed down a landmark judgement in favour of Mrs Prest in high profile matrimonial dispute. 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. 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. Whatever your industry or situation, we relish change, thrive on solutions and love building long-term relationships with our clients. Prest v Petrodel was finally adjudicated by the Supreme Court. This article will critically evaluate the significance of the Prest v Petrodel Resources Ltd[1] decision in light of the corporate veil doctrine. The Law Society of Hong Kong | Sweet & Maxwell | Westlaw Asia | Contact Us. By classifying veil-piercing as evasion, his Lordship suggested that concealment cases were … This case can also been seen as a reminder that the court can take into account a party’s access to wealth and assets whether acquired through gifts if enjoyed habitually as an established way of life. In this context, Lord Sumption sheds further light on the doctrine of abuse of corporate personality under English law. Prest was of particular interest because of the legal cross-over between family law and corporate law. PIERCING THE CORPORATE VEIL: THE POSITION FOLLOWING PETRODEL V PREST. Philippa is a professional support lawyer in the divorce and family. 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. In some instances the properties had been 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 … This is the doctrine that a company is a separate and independent legal person, which is distinct in law from its members. The Court of Appeal agreed with the trial judge that these underlying assets could be taken into account in the division of the marital assets and looked at the reality of the situation from past conduct. One of Mr Prest’s failings was to provide funding without properly documented loans or capital subscription. The same point applies to Jones v Lipman, para 135. Many of the assets (primarily properties in London) were held by overseas companies controlled by the husband. Para. In CWG v MH, some of the offshore provision was made prior to the handover of Hong Kong as asset protection in 1997. 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.. This was described by Lord Sumption in the case of Prest v Petrodel Resources Ltd [2013] UKSC 34 as the "evasion principle". UKSC 2013/0004. The Bryan Cave Leighton Paisner (BCLP) Private Client team advises international high and ultra-high net worth individuals and their families on all matters affecting their business, personal and family wealth, as well as the institutions entrusted with the effective management of that wealth. 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. 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. One of Mr Prest’s failings was to provide funding without properly documented loans or capital subscription. 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 Court of Appeal rejected this approach in Prest. In reaching its decision, the court had to consider the law surrounding the piercing of the corporate veil. Justices. 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 court was asked as to the power of the court to order the transfer of … The corporate veil is a metaphorical phrase, established in the landmark case of Salomon v Salomon & Co Ltd 6 . through concealment”.39Taking Gencorand Trustor(the supposed. 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 … 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. But in Prest this was achieved via a different route. 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). By classifying veil-piercing as evasion, his Lordship suggested that concealment cases were not truly veil-piercing. However, as in the case of VTB, the court could not be persuaded to pierce the corporate veil. 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