As the legal title of the properties was owned by the companies, the wife argued that the court should lift the veil since the husband was entitled to the properties because he owns shares in the companies. 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 consequences. Company Registration No: 4964706. In some instances the properties had been It was of key interest as it was a legal cross over between family law and company law. Lord Neuberger, Lord Walker, Lady Hale, Lord Mance, Lord Clarke, Lord Wilson, Lord Sumption. This author would submit that cynicism aside, it remains the unfortunate position that although Prest has limited the doctrine by confirming that it is only to be used as a remedy of last resort, a future decision will be required to confirm exactly when the doctrine may be applied. Case Summary ... Prest33 was a matrimonial case in which the Supreme Court did not pierce the corporate veil since the company was established prior to the matrimonial dispute.34 Lord Sumption identified two separate principles regarding Wife claimed that the properties held by the companies belonged beneficially to the husband. Many of the assets (primarily properties in London) were held by overseas companies controlled by the husband. In 2011, Moylan J gave judgment in the case of Prest. Save my name, email, and website in this browser for the next time I comment. Is piercing the corporate veil possible under the special power given under s.24 MCA 1973? Wife claimed that the properties held by the companies belonged beneficially to the husband. 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. On the facts of the case the court did not consider that the grounds were made out to pierce the corporate veil and ignore the separate legal personalities of the Petrodel group of companies. Mrs Prest appealed the decision to the Supreme Court. Do you have a 2:1 degree or higher? Any information contained in this case summary does not constitute legal advice and should be treated as educational content only. There is perhaps some room to He failed to comply with the court orders requiring for full and frank disclosure of his financial position, and the companies also failed to file a defence or at least to comply with orders for disclosure. 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. This case summary discusses the UK Supreme Court case of Prest v Petrodel Resources Ltd [2013] UKSC 34; [2013] 2 AC 415; [2013] 3 WLR 1 in which the majority held that the corporate veil should only be pierced where all other remedies were not available. Since Salomon v Salomon,1 it has been well established in UK law that a company has a separate personality to that of its members, and that such members cannot be liable for the debts of a company beyond their initial financial contribution to it. Appeal from – Petrodel Resources Ltd and Others v Prest and Others CA 26-Oct-2012 The parties had disputed ancillary relief on their divorce. With these two judgments the Supreme Court have PRESS SUMMARY Prest (Appellant) v Petrodel Resources Limited & Others (Respondents) [2013] UKSC 34 . 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. The relatively short judgment in the United Kingdom Supreme Court case of Prest v Petrodel Resources Ltd1(herein, Prest) has garnered vociferous interest from academics and practitioners. UKSC 2013/0004. Another was to take funds from the companies whenever he wished, without right or company authority. Prest (Appellant) v Petrodel Resources Limited and others (Respondents) Judgment date. VAT Registration No: 842417633. 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. The corporate veil is a metaphorical phrase, established in the landmark case of Salomon v Salomon & Co Ltd 6 . 12 Jun 2013. The leading judgment was given by Lord Sumption, who observed that the law relating to the circumstances in which it would be permissible for the courts to pierce the corporate veil was characterised by “inadequate reasoning”.10 Despite this confusion in the law, Lord Sumption asserted that the position established in Adams v Cape Industries11, is that the doctrine of veil piercing required some dishonesty on the part of the company member and was not simply a device that could be employed to ensure justice in a particular case.12 His lordship went on to observe that this principle had been affirmed Trustor AB v Smallbone (No 2)13 in which it was also established that the dishonesty must involve company law being used as a sham or façade to disguise the true ownership of property. One of the companies was the legal owner of five residential properties in the UK and another was the legal owner of two more. The Supreme Court has recently given judgment in the case Prest (Appellant) v Petrodel Resources Limited and others (Respondents), following an appeal from the Court of Appeal. They owned a substantial matrimonial home in the UK and a second home in Nevis.5 Mrs Prest contended that her husband’s wealth vastly exceeded this and argued that properties held by several companies of which Mr Prest “wholly owned and controlled” were in reality owned by him. Disclaimer: This work was produced by one of our expert legal writers, as a learning aid to help law students with their studies. 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 opportunity3 to resolve the “never ending story”4 of when the corporate veil can be pierced. Prest was of particular interest because of the legal cross-over between family law and corporate The relatively short and significant judgment in the Supreme Court case of Prest v Petrodel Resources Ltd has gathered vociferous interest from academics and practitioners.It was of key interest as it was a legal cross over between family law and company law. One of Mr Prest’s failings was to provide funding without properly documented loans or capital subscription. Prest v Petrodel case In a ruling handed down yesterday, the Supreme Court upheld the decision made by the original High Court trial judge in the case of Prest ordering Mr Michael Prest, a wealthy oil tycoon and founder of Petrodel Resources, to transfer properties legally owned and held in Michael Prest, founder of Petrodel Resources, had claimed that Petrodel’s assets did not belong to him and that he was £48m in debt. When the companies were incorporated there was no implication of impropriety. Justices. The three companies, each in the substantial ownership of the husband, challenged the orders made against them saying there was no jurisdiction to order their property to be conveyed to the.. Some commentators have asserted that the decision in Prest is to be “welcomed”20 as although it does confirm that the Salomon principle remains a cornerstone of UK company law,21 it also recognises that there will be circumstances in which the veil can be pierced in order to grant a remedy. New Judgment: Prest v Petrodel Resources Ltd & Ors [2013] UKSC 34. Prest v Petrodel Resources Ltd [2013] UKSC 34. Prest v Petrodel Resources Ltd emphasises the importance of properly and transparently running companies. 2 Introduction In a landmark judgment delivered on 12 June 2013 in the case of Prest v Petrodel Resources Ltd and Others1, the United Kingdom Supreme Court (UKSC) reviewed the law relating to piercing the corporate veil. Mr Prest wholly owned and controlled (directly or indirectly, through intermediate entities) a number of non-UK resident companies which, between them, owned seven residential properties in the UK. However, he argued that he wasn’t at all entitled to the properties. Indeed, one rather cynical commentator has argued that Lord Sumption “almost seemed relieved”22 that the veil could not be pierced in Prest because it meant he did not need to determine the “definitive”23 circumstances in which the veil may be pierced in the future. This is a case with regard to family law. Lord Sumption asserted however that the terms sham or façade should be replaced with ‘evasion’ and ‘concealment’.14 Where there has been concealment of liability, he argued, there will be no need to pierce the corporate veil because, as Lord Neuberger agreed, all that would be required would be to look behind the veil to establish the true actors.15 Lord Sumption asserted that this was the position adopted by Lord Neuberger in VTB16, although he argued that due to the fact that the court in that case had not needed to pierce the veil, it could not be used as authority in Prest.17 The judgement in Prest therefore clarified that piercing the corporate veil would only be possible when company law had been used to evade liability, although this alone would not be enough, and that even where such impropriety had arisen, it would usually be possible to apply another area of law in order to grant a remedy,18 in this case the application of trust principles to ensure Mrs Prest was entitled to a beneficial interest in the properties. There is perhaps some room to Many of the assets (primarily properties in London) were held by overseas companies controlled by the husband. Appeal by a number of companies concerning the court’s jurisdiction in financial remedy proceedings to order one party to transfer or cause to be transferred to the other, properties owned by the companies. 4 Prest v Petrodel Resources Ltd and others [2013] UKSC 34. The relatively short and significant judgment in the Supreme Court case of Prest v Petrodel Resources Ltd has gathered vociferous interest from academics and practitioners. However, there have been circumstances in which the courts have been prepared to “pierce the veil”2 of corporate personality to find the members of the company liable for company actions in certain circumstances. Piercing the corporate veil: a new era post Prest v Petrodel 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 . In Prest v Petrodel Resources Limited the Supreme Court considered the basis on which the corporate veil might be pierced (see post).The comments were strictly speaking obiter and were made in the context of a case concerning transfer of properties following a divorce. Mr. Prest was the sole owner of numerous offshore companies. This paper examines the Supreme Court’s most recent endeavour to elucidate the doctrine of piercing the Lord Sumption distinguished the concealment and evasion principle: “The concealment principle is legally banal and does not involve piercing the corporate veil at all. The judgment of the Supreme Court in Prest v Petrodel Resources Ltd [2013] UKSC 34 was eagerly anticipated by family and corporate lawyers alike. To export a reference to this article please select a referencing stye below: Our academic writing and marking services can help you! Prest therefore established that although it is possible that the corporate veil may be pierced in some circumstances, it is not clear what these circumstances are beyond the fact that the remedy is only a last resort19 and as such it seems that the decision failed to take advantage of the opportunity to clarify the law. It is that the court may disregard the corporate veil if there is a legal right against the person in control of it which exists independently of the company’s involvement, and a company is interposed so that the separate legal personality of the company will defeat the right or frustrate its enforcement”. The Supreme Court ordered that seven disputed properties, owned by companies controlled by Mr Prest, be transferred to Mrs Prest in partial satisfaction of their £17.5 million divorce settlement. The value of the judgement was not in question, as the courts had already ruled the husband – a Nigerian oil tycoon – would have to pay his wife £17.5m, largely due to his conduct during the case, and he was not arguing over this. JUSTICES: Lord Neuberger (President), Lord Walker, Lady Hale, Lord Mance, Lord Clarke, Lord Wilson, Lord Sumption . The appeal concerns the position of a number of companies belonging to the Petrodel Group which were wholly owned and controlled by Michael Prest, the husband. They owned a substantial matrimonial home in the UK and a second home in Nevis. Mr. Prest was the sole owner of numerous offshore companies. However, this author finds such a view difficult to accept. Case ID. It is that the interposition of a company or perhaps several companies so as to conceal the identity of the real actors will not deter the courts from identifying them, assuming that their identity is legally relevant. In view of all that had … Take a look at some weird laws from around the world! Prest v Petrodel (Supreme Court) A welcome clarifying authority on the principle of piercing the corporate veil Prest v Petrodel Resources Limited & Others [2013] UKSC 34 It is a fundamental principle of corporate law that a company and its members have separate legal personalities (Salomon v … 12 Wednesday Jun 2013 Prest v Petrodel Resources Ltd concerned the financial settlement following the divorce of a Nigerian oil trader, Michael Prest, and his wife Yasmin. 16th Jul 2019 The Supreme Court rejected lifting the veil but instead found a resulting trust. Since Salomon v Salomon, it has been well established in UK law that a company has a separate personality to that of its members, and that such members cannot be liable for the debts of a company beyond their … Claim by Mrs. Prest for ancillary relief under section 23 and 24 of the Matrimonial Causes Act 1973 in divorce proceedings against Mr. Prest. Introduction. 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”. Registered Data Controller No: Z1821391. Veil-piercing jurisprudence serves as a graphic illustration of the perplexities bedevilling juridical understandings of the modern company. The issue for the Supreme Court was how to ensure that, particularly in cases of divorcing spouses and in single-man companies, company law could not be used as a tool to conceal assets or avoid liability in relation to those assets, whilst maintaining the integrity of the Salomon principle. The most crucial part in the case was whether the husband was entitled to the properties? 45-- 6 7 I 99 4556 The “well-recognised 2014, 347, 1-4,2, 23 S Peppy, ‘Cheat’s Charter Endorsed – Existing Family Division Practice Must Now Cease’ (2012) Family Affairs 56 Winter, 10. Claim by Mrs. Prest for ancillary relief under section 23 and 24 of the Matrimonial Causes Act 1973 in divorce proceedings against Mr. Prest. Copyright © 2003 - 2021 - LawTeacher is a trading name of All Answers Ltd, a company registered in England and Wales. The Prest v Petrodel decision followed another Supreme Court judgment where the issue was considered at length, VTB Capital plc v Nutritek International Corp and others [2013] UKSC 5, although the VTB case was decided on another ground so carries less legal weight. Prest v Petrodel Resources Ltd & Others [2013] UKSC 34 Introduction. The Supreme Court has just handed down its judgment in the landmark case of Prest v. Petrodel. In the weeks preceding the Supreme Court’s decision in Petrodel Resources Ltd v Prest, 1 the case was the subject of much attention and commentary, both in the media and legal circles. BACKGROUND TO THE APPEAL Introduction On 12 June 2013 the UK Supreme Court delivered judgment in Prest v Petrodel, a divorce case, and decided that properties purchased in the name of companies owned and controlled by the husband were held on trust for him and thus formed part of his assets. In some instances the properties had been Looking for a flexible role? 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