The Supreme Court handed down a unanimous decision yesterday enabling Yasmin Prest to share in her oil tycoon husband’s fortune.
After a battle lasting for five years, the Supreme Court found that Mr Prest, the sole owner and controller of Petrodel Resources Ltd, was’ beneficially entitled’ to properties the company legally owned. This allowed the Court to order a transfer of seven multi-million pound properties to Mrs Prest in order to meet her 17.5 million divorce settlement.
The Supreme Court’s decision upheld the same result for Mrs Prest as Mostyn J had ruled in the initial hearing. However, the Court of Appeal initially overturned his decision, relying on the strict legal principle that a company is a separate legal entity from its owner and only in situations where you can prove impropriety and ‘pierce the corporate veil’ can you extract a company’s assets.
Whist the Supreme Court’s ruling gave the same result as the initial judgment for Mrs Prest, their reasoning for finding that Mr Prest was really the beneficial owner of the company’s properties was different. The Supreme Court reached the decision that the specific circumstances of the case meant that the companies held the properties on resulting trust for Mr Prest so that they were really his assets. Although many family law practitioners will take the view the judgment achieved fairness between the former spouses, it set out a clear warning to family practitioners not to try and ‘bend the law’ to strive to achieve what might seem fair.
The decision is widely considered to offer protection to the weaker financial party (often the wife) from attempts on the part of their ex-spouse to defeat their claims by relying on a corporate facade. However, the decision has not set a concrete precedent as many practitioners had perhaps expected. The Supreme Court made it clear that the circumstances of each case would have to be considered carefully and that it was not possible for general guidance on cases like this to be given.
Where does this leave divorcing couples? The judgment offers some security for wives that a fair result may still be reached despite their husband’s attempts to conceal assets. For one-person companies, there continues to be a risk that their corporate structure might count for little in a disputed divorce. What it does signal is the need for parties with complex financial arrangements to think about planning for future eventualities - even divorce.