If it does not exist, it does not exist anywhere.’. Are the terms of evasion or concealment equivalent to lifting and piercing? But the recognition of and liabilities which would normally attach to separate legal entities.”. The majority of commentary in the wake of Prest v. Petrodel Resources Ltd has focused on the Supreme Court’s discussion of a court’s jurisdiction to pierce the corporate veil. Yesterday, the Supreme Court came down on the side of company law in deciding that a spouse cannot obtain a financial award from a company on divorce simply because it is a one-man company. FACTS. Justices. which the law attributes the acts or property of a company to those who control suggested otherwise at para 79. it is consistent with the general approach of English law to the problems company’s separate legal personality is being abused for the purpose of some distinct principles lie behind these protean terms, and that much confusion has Enforcement: Out of reach. His lordship argued that instead of relying on piercing/lifting the veil argument, parties should be looking at the alternative remedies that exist in the situation. It is that the interposition of a Prest v Petrodel Resources Ltd 2013 – When a couple divorces, either spouse can make a claim for ancillary relief. the corporate veil. analyses of the general principle have taken as their starting point the brief Out of these cookies, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. Reasoning provided by Lord Sumption in Prest v petrodel: 16. He had set up number of companies. The corporate veil is a metaphorical phrase, established in the landmark case of Salomon v Salomon & Co Ltd 6 . principle that the court may be justified in piercing the corporate veil if a Introduction. 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. In this case the Supreme Court decided that the companies simply did not have the beneficial ownership to the properties because they belonged to Mr Prest. The burden will be on respondents and companies involved in divorce claims to show that the company is the beneficial owner of its assets, but claimants should beware. It follows that the piercing of the corporate veil cannot be justified in this case by reference to any general principle of law. The corporate veil will not be pierced unless there has been impropriety directed at the misuse of the corporate structure for the purpose of concealing wrongdoing. Registered office: Unit 6 Queens Yard, White Post Lane, London, England, E9 5EN. is true that most of the statements of principle in the authorities are obiter, because the corporate veil was not pierced. 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. JUDGMENT GIVEN ON . This puts an end to the practice of the Family Court routinely making financial awards from company assets where one spouse controlled the company. general law fall to be treated as separate legal entities with all the rights In the present case, Moylan J held that he could not pierce the corporate veil under the general law without some relevant impropriety, and declined to find that there was any. The concealment principle is legally banal and does not The first systematic This website uses cookies to improve your experience while you navigate through the website. Whatever the husband’s reasons for organising things in that way, there is no evidence that he was seeking to avoid any obligation which is relevant in these proceedings. Necessary cookies are absolutely essential for the website to function properly. analysis of the large and disparate body of English case law was undertaken by unnecessary to pierce the corporate veil. This essay will argue the decision has done little to fault the Salomon principle. Lord Sumption was careful to point out that this was an exceptional case and the issue was highly fact-specific: where a person who relevant wrongdoing is well established in the authorities. court enforceable against it in England. 12 June 2013 . where the test is satisfied, the facts will in practice disclose a legal The divorce case Prest v Petrodel Resources Ltd has excited much comment as to what is fair or right when dealing with one-man companies and divorce awards: should such a company hand over assets to meet a divorce award against its ‘controller’ or should company integrity be respected? Additional Info. 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. Prest (Appellant) v. Petrodel Resources Limited and . cases in which the court has been thought, rightly or wrongly, to have pierced at least arguably, managed as a “single economic unit” was present in the This was an appeal from principle is properly described as a limited one, because in almost every case He proported to give current state of law relating to lifting/piercing, another name – evasion or concealment. Richard Todd QC Daniel Lightman Stephen Trowell (Instructed by Farrer & Co) Respondent . Your email address will not be published. Prest v Petrodel Resources Ltd & Ors [2013] UKSC 34 (12 June 2013) March 22, 2018/in Company /Private Law Tutor. necessary to pierce the corporate veil, it is not appropriate to do so, because 2 Prest v Petrodel Resources Ltd [2013] UKSC 34; [2013] 2 AC 415 (SC) 3 Yukong Line of Korea v Rendsburg Investments Corpn of Liberia (No 2) [1998] 1 W.L.R. used for a deliberately dishonest purpose: pp 539, 540. 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