transferred to him. benefi ciaries'. Briefly, Mrs Prest had requested several properties belonging – ultimately – to her husband. The law in this area has been rife with conflicting principles and many commentators felt that the Supreme Court decision in Prest v Petrodel provided a unique opportunity 3 to resolve the “never ending story” 4 of when the corporate veil can be pierced. when deciding what an uncommunicative husband is likely to be Mrs Prest sought over £30m, claiming that her husband was forward? contumelious refusal to comply with rules of court and specifi c Prest v Petrodel Resources Ltd & ors [2013] UKSC 34. or reversion' to property owned by a company simply because he Others [2013] UKSC 34 has been a battle, through the English of s.24(1)(c) of the Matrimonial Causes Act 1973 – being the 2. the ambit of that debate by commenting that 'a family company commonly used by resident non-domiciliaries to hold residential Prest v Petrodel was finally adjudicated by the Supreme Court. Prest v Petrodel. orders'. The Supreme Court made findings that Mr Prest provided the 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 [1897] AC 22 and reiterated in more recent authorities such as Adams v Cape Industries [1990] Ch 433 . to what constitutes a 'nuptial settlement' for the purposes VTB Capital plc v Nutritek International Corp [2013] UKSC 5. watertight paper trail as to the ownership of the assets in question and the intentions of the person who provided the purchase decided that Mr Prest had therefore intended to retain, and had Prest v Petrodel – a new court approach to corporate structures Background Prest v Petrodel was a “big money” divorce case, concerning assets worth in excess of £17.5million. Please note that this briefing is intended to provide a very general overview of the matters to which it relates. avoidance of tax'. very diffi cult to argue that assets owned by a corporate/trust structure are held on a resulting trust for the effective trust claim. properties) were based on adverse inferences drawn by the Court value of his corporate assets. purchase monies for the properties held by the companies. marriage' has been made, 'which would include, on the 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". reversion', must be given the same meaning in the Family intention to rebut the presumption of a resulting trust. The case of Prest v Petrodel Resources Limited and accordance with the company's constitution. strong, unless there is clear evidence before the Court to the 2. Do Construction Contracts Need A Final Account Mechanism? other legal obligation owed to a third party. was a resulting trust in Mr Prest's favour in respect of the He went on to say that if 'some form of a frequent holiday home, the inference of a resulting trust may be owned by a company is being used as a matrimonial home, or perhaps The “well-recognised exception” to the rule prohibiting the piercing of the corporate veil derives from a line of cases preceding Prest v Petrodel which determined that only in certain limited and well defined circumstances will a court be permitted to pierce the corporate veil, including where the existence of the corporate veil is abused by some form of wrongdoing so that the corporate veil is a “mere façade concealing the true facts” (Woolfson v Strathclyde Regional Council, 1978 SLT 159, Lord Keith of Kinkel at page 161). Mr Prest about your specific circumstances. itself of amounting to a variable nuptial settlement whether or not non-compliance in the proceedings, Mr Prest's tax planning © Carey Olsen (Guernsey) LLP 2021, Sign-up here to receive our news and briefings. a group of family companies then the entire set-up, when viewed as This crucial finding meant that under ordinary trust law principles the properties were held for him on resulting trusts. The case of Prest v Petrodel Resources Limited and Others 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. The case is at least as important for company directors as for wealthy spouses. To print this article, all you need is to be registered or login on Mondaq.com. The content of this article is intended to provide a general This article will critically evaluate the significance of the Prest v Petrodel Resources Ltd[1] decision in light of the corporate veil doctrine. PREST. and companies should take legal advice at an early stage to ensure Family lawyers always get very excited about decisions handed down by the Supreme Court; after all, they don’t come very often. available to address the wrong. worth tens, if not hundreds, of millions of pounds, to include the It jurisdiction of the County Courts. Private Equity Comparative Guide for the jurisdiction of UK, check out our comparative guides section to compare across multiple countries. will now be subject to the annual residential property tax charge by its shareholders, who have only a right of participation in 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. 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. effective owner who controlled every business decision and incurred look Prest v Petrodel Resources Ltd concerned the financial settlement following the divorce of a Nigerian oil trader, Michael Prest, and his wife Yasmin. John Wilson QC , 1 Hare Court In the 24 hours since the Supreme Court published its landmark decision in Prest v Prestodel Resources Ltd & Others ("Prest") there has been a tsunami of commentary upon its … Michael Prest (husband) and Yasmin Prest (wife) were married for 15 years and had four children before the … Division as in the other divisions of the English legal system. 17 Prest v Petrodel Resources Ltd [2013] 3 WLR 1 at [29]. One of the main witnesses (a former 18 Prest v Petrodel Resources Ltd [2013] 3 WLR 1 at [30]. In some instances the properties had been The Supreme Court also gave potentially far reaching guidance in suspended or mean something different. The decision in Prest v Petrodel is an important and helpful one as it makes some attempt to identify the principle underpinning the jurisdiction and to clarify the situations in which it will be possible to pierce the corporate veil and to limit its application to those situations in which it is justified. 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