The recent blog by Antonia Love, Farleys’ Head of Family Law, on the Supreme Court’s ruling in the case of Prest and Petrodel caught my eye this week. In addition to the implications this matter has for family law and divorce cases, it is also interesting from a Company Law perspective.
As brief background, the case involves a wealthy businessman, Michael Prest and his former wife Yasmin. In what has been a long and bitter divorce settlement, lasting some five years, the Supreme Court became involved in relation to the allocation of Mr Prest’s thirteen properties. The Judges ruled that seven properties at the centre of the divorce dispute could be counted as the personal assets of Mr Prest despite Mr Prest’s insistence that the properties could not be transferred to his wife as part of the divorce settlement. He had argued that the properties belonged to a number of companies – which had their own separate legal personality – and were therefore not owned by him.
The Court ruled that, as Mr Prest had provided the original funds for the properties to be purchased, the company held the properties in trust for him, even though the properties were registered in the name of the company.
Although the facts of this case were quite specific, the Supreme Court has made it clear that assets which are held in the name of a company, but are in truth owned beneficially by a spouse, can be accessed by the family court. This is another example of the judiciary piercing the corporate veil when it appears to them to be fair and equitable to do so. From a strict company law perspective the assets were not under the ownership of Mr Prest due to the company’s separate legal standing.