He had set up number of companies. But where, say, the terms of acquisition and occupation of the matrimonial home are arranged between the husband in his personal capacity and the husband in his capacity as the sole effective agent of the company (or someone else acting at his direction), judges exercising family jurisdiction are entitled to be sceptical about whether the terms of occupation are really what they are said to be, or are simply a sham to conceal the reality of the husband's beneficial ownership. "[22] In South Africa, "[t]he law is far from settled with regard to the circumstances in which it would be permissible to pierce the corporate veil". It is a very specific statutory power to order one spouse to transfer property to which he is legally entitled to the other spouse. They had married in 1993 and divorced in 2008. Prest v Petrodel Resources Ltd [2013] UKSC 34, [2013] 2 AC 415 is a leading UK company law decision of the UK Supreme Court concerning the nature of the doctrine of piercing the corporate veil, resulting trusts and equitable proprietary remedies in the context of English family law. A clear divide emerged between family practitioners, who warned of a ‘cheat’s charter’, and company practitioners keen to protect the long-established principle of separate corporate personality. The court may then pierce the corporate veil for the purpose, and only for the purpose, of depriving the company or its controller of the advantage that they would otherwise have obtained by the company's separate legal personality. Kosmopoulos v. Constitution Insurance Co. "UK divorce ruling removes protection from some offshore assets", "Oil tycoon's wife warns husbands should 'beware' after landmark divorce victory", "Supreme court rules against oil trader in divorce case", https://en.wikipedia.org/w/index.php?title=Prest_v_Petrodel_Resources_Ltd&oldid=993671061, Supreme Court of the United Kingdom cases, United Kingdom corporate personality case law, Creative Commons Attribution-ShareAlike License. Also as he said in VTB Capital plc v Nutritek International Corp[26] it is wrong to foreclose all future possibilities of piercing the veil. Appeal from – Petrodel Resources Ltd and Others v Prest and Others CA 26-Oct-2012 The parties had disputed ancillary relief on their divorce. Piercing the corporate veil: a new era post Prest v Petrodel. So, MCA 1973 section 24 did not give judges power to order Mr Prest to transfer property that he was not entitled to in law. But when we speak of piercing the corporate veil, we are not (or should not be) speaking of any of these situations, but only of those cases which are true exceptions to the rule in Salomon v A Salomon & Co Ltd,[13] i.e. This is supported by the recent Supreme Court decision in Prest v Petrodel Resources Ltd, where a divorced wife claimed shares in houses owned by companies in which her ex-husband was the controlling shareholder. Petrodel’s strategy is predicated upon developing regional systems, from exploration and development of oil and gas reserves through crude trading, processing, supply, storage and wholesale distribution of refined products, shipping and ship’s agency services. [21] In New Zealand, "'to lift the corporate veil' … is not a principle. Mrs Prest said they held legal title to properties that he beneficially owned, including a £4m house at 16 Warwick Avenue, London. The veil can only be pierced if there is impropriety. 52. The argument is that that is a power which can, because the husband owns and controls these companies, be exercised against the companies themselves. The Joint Venture plans to tender for oil blocks in the Niger Delta in the bidding rounds scheduled for October as well as for other projects in some West African countries. Property legally vested in a company may belong beneficially to the controller, if the arrangements in relation to the property are such as to make the company its controller's nominee or trustee for that purpose. It's fast and easy... Kadaria Ahmed on 01 4934023-5 ext 226 or 0802 536 7401 or email Kadaria at, Tim Le Breton on 0941 2131371 or 0805544558 or email at. Further, at least in some cases where it may be relied on, it could probably be analysed as being based on agency or trusteeship especially in the light of the words "under his control". Piercing The Corporate Veil: Prest Vs Petrodel Resources The Supreme Court has handed down a landmark judgement in favour of Mrs Prest in high profile matrimonial dispute. "Piercing the corporate veil" is an expression rather indiscriminately used to describe a number of different things. This is a case with regard to family law. If someone did try to frustrate a claim, the MCA 1973 section 37 made provision for setting aside certain dispositions. It may be an abuse of the separate legal personality of a company to use it to evade the law or to frustrate its enforcement. However, if either or both those points were correct, it would not undermine Lord Sumption's characterisation of the doctrine: it would, if anything, serve to confirm the existence of the doctrine, albeit as an aspect of a more conventional principle. I conclude that there is a limited principle of English law which applies when a person is under an existing legal obligation or liability or subject to an existing legal restriction which he deliberately evades or whose enforcement he deliberately frustrates by interposing a company under his control. 18. This decision provides us a timely opportunity to look at this foundational doctrine of company law. A limited supply of COVID-19 vaccinations is available! There had been no evidence that Mr Prest had set up the companies to avoid any obligations in these divorce proceedings, so there was no ground for piercing the corporate veil. SHORELINE POWER COMPANY LIMITED: In so far as it is based on "fraud unravels everything", as discussed by Lord Sumption in para 18, the formulation simply involves the invocation of a well-established principle, which exists independently of the doctrine. 22 P Bailey, ‘2013: That Was The Year That Was in Company Law’ Co. L.N. UKSC 2013/0004. where a person who owns and controls a company is said in certain circumstances to be identified with it in law by virtue of that ownership and control. I find it difficult to understand how that can be done unless the company is a mere nominee holding the property on trust for the husband, as we have found to be the case with the properties in issue here. The court therefore had jurisdiction to make a transfer order. Of course in so operating them husband ignored all company law requirements and checks. There is a range of situations in which the law attributes the acts or property of a company to those who control it, without disregarding its separate legal personality. However, on the facts, the Petrodel Resources Ltd companies could be ordered to transfer the properties under MCA 1973 section 24 because they belonged to him beneficially: under a resulting trust. That must now cease. [12] He said the following. These considerations reflect the broader principle that the corporate veil may be pierced only to prevent the abuse of corporate legal personality. However, because Mr Prest had been "entitled" to the assets of his companies under a resulting trust, under the Matrimonial Causes Act 1973 section 24 the court had jurisdiction to transfer half the value of the properties to Mrs Prest. Central to Prest was the extent to which property held by a company controlled by a party However, there are three points to be made about that formulation. Better Business Bureau helps Washington consumers find businesses and charities they can trust. It describes the process, but provides no guidance as to when it can be used. Learn more at the City of Seattle vaccination page. 20 E Roxburgh, ‘Prest v Petrodel Resources Ltd: Cold Comfort for Mrs Prest in Scotland’ (2013) SLT 32 223-225, 225. 2014, 347, 1-4,2 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. 161. Petrodel Resources Limited and Shoreline Power Company Limited announce joint venture for integrated energy and power projects. Student I'D: 694321The judgment of the Supreme Court in the case Prest v Petrodel Resources Ltd 5 represents a consistent reluctance against disregarding the corporate veil. 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