The Supreme Court ruled that a divorced husband, Michael Prest, must transfer to his former wife, Yasmin Prest, properties held by three offshore companies owned and controlled by him, as part of a £17.5m divorce award.
In the ruling, the court noted that there were some instances under English law in which a court may, “in very limited circumstances…pierce the corporate veil”. But in this case, it went on, the fact that the properties at the centre of the case were being held by the husband’s companies, in trust for him, were accordingly “property to which [he was] entitled”.
‘Most authoritative review…since 1897’
Jeremy Posnansky QC, a partner in Farrer & Co, which represented Yasmin, said the judgments in the case were not only important for matrimonial law “but also for company law and entrepreneurs”, and called it “the most authoritative review and refinement of the law about piercing the corporate veil since 1897”.
In terms of matrimonial law, however, he said the decision was also key, as it meant that “manipulative spouses can’t evade their responsibilities by artificially using a corporate structure to protect their assets in the event of a divorce”.
Added Caroline Holly, another member of the Yasmin team: “It is often said that difficult cases make bad law. However, this difficult case has resulted in a judgement which clarifies and confirms the approach which family courts have adopted for many years, preserving the courts’ ability to carry out their primary objective – achieving fairness.”
Claim filed in 2011
The case decided yesterday dates back to 2011, when Yasmin Prest, who married Michael Prest in October 1993, filed a claim for a financial order, following the couple’s divorce earlier that year. Both Prests had a dual Nigerian and British nationality.
The case was known as Prest v Petrodel Resources Limited and Others, because the husband was not a party, but rather a number of companies belonging to the Petrodel Group, which the judge ultimately found to be owned and controlled by the husband.
Michael Prest himself apparently made no secret of his opinion about the case. At one point in the court documents, his conduct during the proceedings is described as having been characterised “by persistent obstruction, obfuscation and deceit, and a contumelious refusal to comply with rules of court and specific orders”.
To read and download the 45-page judgment, click here.
