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. Please click the 'Read More' link below to view our Cookie Policy, how we use them on our site and how to change your cookie settings. 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. The Matrimonial Causes Act 1973, s24 gives the court the power to order one party to the marriage to transfer any property to which he or she is “entitled” to the other party to the marriage. Prest v Petrodel- the facts In Prest v Petrodel the husband was a wealthy oil trader who had built up a portfolio of properties; all of which were in the names of various companies. Capital v Nutritek and, last week, Petrodel v Michael Prest. short, after Mr and Mrs Prest divorced, Moylan J. awarded Mrs Prest a sum of £17.5 million as a fair division of Mr Prest’s assets. Attorney advertising. This company was the family’s main and most valuable asset. However, he held that in applications for financial relief ancillary to a divorce there was a wider jurisdiction to pierce the corporate veil under section 24 of the Matrimonial Causes Act 1973. In Trustor and Genco, at the risk of over-simplification, a claim was made that a former Background . In the recent case Prest v Petrodel, the doctrine of separate legal personality and the instances in which a court may pierce the corporate veil were discussed. to the principle that a company is a separate legal entity from its shareholders. The recent judgment in SLA v HKL (FCMC 75000/ 2010) may be Hong Kong’s first case to apply the recent UK Supreme Court landmark decision of Prest v Petrodel [2013] UKSC 34. In 2013, the case of Prest v Petrodel [2013] UKSC 34 left the family law fraternity debating and divided. between the concealment and evasion principle which is parallel with the piercing and lifting distinction in the case may lead to the continuous avoidance of the Salomon principle in the absence of clarifications on these distinctions. Those names might be familiar to some of those reading theses notes as the actions of multi-millionaire oil tycoon Mr Prest received the attention of the national media between 2008 and 2011. 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. You understand and agree that transmitting information to Brown Rudnick by e-mail does not establish an attorney-client relationship. Mr and Mrs Prest (who had dual British and Nigerian citizenship) had their matrimonial home in London but it was determined by the court that Mr Prest was based in Monaco. The divorcing couple, Mr and Mrs Prest, were wealthy. Supreme Court’s decision in Prest v Petrodel Resources Ltd with a view to determining whether the decision is a step towards the abolition of piercing the corporate veil doctrine. He rejected the husband had done anything improper relating to the companies to allow piercing the corporate veil. basis on which parties deal with companies. 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. Claim by Mrs. Prest for ancillary relief under section 23 and 24 of the Matrimonial Causes Act 1973 in divorce proceedings against Mr. Prest. Thank you for your interest in Brown Rudnick. The husband was an engineer by training and upon the family’s relocation from Sweden to Hong Kong, established and maintained a successful business which provided a comfortable lifestyle. The divorcing couple, Mr … This article argues against this approach as it is so narrow that it practically abolished the jurisdiction. In 2013, Lord Sumption, delivering the leading judgment of the Supreme Court of the United Kingdom in Prest v Petrodel Resources Ltd, Also see Lady Hale’s distinction in … The difficulty in this case was that the husband and the companies were abroad in places which might not give direct effect to English orders. In giving judgment on 12 June 2013, the … This article examines the judicial approach to the corporate veil post-Prest v Petrodel Resources Ltd. Lady Hale (with whom Lord Wilson agreed) and Lords Mance and Clarke agreed with Lord Sumption’s judgment but wished to reserve the position as to whether it would be possible to pierce the corporate veil other than in cases of evasion, although they sounded a warning that any other exception would not be easy to establish (paragraphs 92, 102 & 103). 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. Facts. 935 and Jones v Lipman [1962] 1 WLR 832 with, on the other, Genco ACP v Dalby [2000] 2 BCLC 734 and Trustor AB v Smallbone (No 2) [2001] 1 WLR 1177). Prest v Petrodel Resources Ltd & Ors United Kingdom Supreme Court (12 Jun, 2013) 12 Jun, 2013; Subsequent ... of "piercing the veil" has been deployed as part of the reasoning for a decision representing an exception to the basic principle in Salomon v A Salomon & Co Ltd [1897] AC 22. He considered that two distinct principles underlie these terms, namely the concealment principle and the evasion principle. This essay will argue the decision has done little to fault the Salomon principle. The circumstances in which property held by a company can be attributed to those who control it gained considerable publicity in Prest v Petrodel Resources Ltd & Others [2013] UKSC 34.The case played out … Prest v Petrodel Resources Ltd UKSC 34 This is the key case where SC considered the issue of whether the court possesses a general power to pierce the corporate veil in the case where these specific legal principles do not apply. Para. However the decision, given by a panel of seven justices, is also of importance to commercial lawyers as the Supreme Court considered the doctrine of piercing the corporate veil and has effectively limited the circumstances in which it can be invoked to cases of evasion where: “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.”. But fiction is the whole foundation of English company and insolvency law i.e. Analysis In Prest v Petrodel Resources Ltd UKSC 34, the UK Supreme Court has recently reviewed the English law in this area, concluding that the Court has … In this case, the husband had effectively purchased a number of properties in England which he had put into the names - Sebastian Hughes, Counsel, Prince’s Chambers, - Sasha Allison, Solicitor, Hampton Winter & Glynn, UKSC Reviews “Illegality” Defence in a Professional Negligence Setting, Overview of the Law Reform Commission’s Consultation Paper on Sentencing and Related Matters in the Review of Sexual Offences, When the Legal Industry Meets Technology (Part 2). The barrier between the company’s assets and those of its members is known as the ‘veil of incorporation’. The Law Society of Hong Kong | Sweet & Maxwell | Westlaw Asia | Contact Us. Prest v Petrodel Resources Limited 15. Both sides of the profession were affected differently. This essay will argue the decision has done little to fault the Salomon principle. In Prest v Petrodel Resources Ltd [2013] 3 WLR 1, Lord Sumption narrowly confined veil-piercing at common law to those cases where a controller had used a company under his control to evade a pre-existing legal liability. The first is the ‘evasion principle’; the second is the ‘concealment principle’. The Supreme Court’s unanimous decision was given by Lord Sumption JSC, although the rest of their Justices also voiced their opinions on the issues raised and in particular on the doctrine of piercing the corporate veil. These are narrow exceptions to the general rule. Those names might be familiar to some of those reading theses notes as the actions of multi-millionaire oil tycoon Mr Prest received the attention of the national media between 2008 and 2011. The Supreme Court’s judgment should prevent the doctrine being invoked to achieve this purpose in view of the statement that the doctrine can only be invoked where “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.”. Introduction In Prest v Petrodel [2013] UKSC 34 the English Supreme Court undertook a review of the principles of English law which determine in what circumstances, if any, a court may set aside the separate legal personality of a company from its members Given that there had been very, if any, reported instances of the corporate veil being pierced even before the Prest v Petrodel decision, it seems even less likely that the doctrine will be successfully invoked now, other than in the clearest of cases. The Supreme Court’s decision A limited company has a separate legal personality from its members, or shareholders. In Prest v Petrodel at para. The husband was an engineer by training and upon the family’s relocation from Sweden to Hong Kong, established and maintained a successful business which provided a comfortable lifestyle. 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. The court was asked as to the power of the court to order the transfer of … Another was to take funds from the companies whenever he wished, without right or company authority. 136 - see Gencor and Trustor cases re piercing the veil to impose liability on the company for the controller’s liability as Mrs Prest sought in Prest v Petrodel. Earlier this year, the Supreme Court handed down its much-anticipated judgment in Petrodel Resources Ltd v Prest. Roger Kennell. Hong Kong case applying Prest v Petrodel In SLA , the couple were married for 17 years. He also noted that in many instances it will not be necessary to order the companies to transfer assets because the husband can be ordered to transfer the shares in the companies (paragraph 40). 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. Introduction. Mrs. Prest appealed to the Supreme Court. 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 to resolve the issue of when the corporate veil can be pierced. The issue was whether those properties could be brought into the calculation of the matrimonial assets. 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. Corporate legal personality a corporate group | Sweet & Maxwell | Westlaw Asia | Contact Us present the view law... Ltd [ 2013 ] UKSC 34 30 July 2013 wider in scope not establish an attorney-client relationship connection with Michael! One hand, Gilford Motor Co v Horne [ 1933 ] Ch under section 23 and 24 of the in. 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