Corporate Veils And Nuptial Settlements - Protecting Assets Within Marriage
Hashem -v- Shayif [2008] EWHC 2380 (Fam)
Facts
This case stemmed from divorce proceedings before the English
High Court in which the wife (the
"Wife") was seeking to obtain financial
provision for herself.
The only relevant assets within the jurisdiction were two
properties which were owned by a Jersey company (the
"Company"). The shares in the Company
were held as to 30% by the husband (the
"Husband") and as to 70% by a number of
the Husband's children from a previous marriage (the
"Children"). The shares belonging to the
Children, however, had been paid for by the Husband and effectively
gifted to them by him.
At the time of this judgement the Wife had apparently broken
into one of the two properties and was now being allowed to live
there by the Company on condition that the Husband paid all
outgoings until the divorce proceedings had been finalised.
Submissions
The Wife argued that the two English properties should be
regarded as being owned by the Husband's and therefore
available to form part of the financial settlement she was seeking
on divorce. She put this claim on a number of different footings,
the most important of which were:
that the Company was simply the Husband's alter ego and the
Children held shares simply as the Husband's nominees, so the
"corporate veil" should be pierced and the Company simply
looked through; and
that the English properties should be treated as having been
settled into a "nuptial settlement" within the meaning of
section 24(1)(c) of the United Kingdom's Matrimonial Causes Act
1973 and that the Court should use its power to vary the terms of
that settlement so as to make the properties available to the Wife
as part of the divorce settlement.
Decision
Dealing first with the submission that it should simply look
through the Company, the Court found that the following principles
applied to any attempt to pierce a corporate veil:
ownership and control of a company by an individual were not of
themselves sufficient to allow the Court simply to treat the
Company as if it didn't exist;
even if no third party rights would be adversely affected, a
corporate veil cannot be pierced solely because to do so would be
"in the interests of justice";
before a Court will pierce the corporate veil it must be
established that some kind of impropriety had been committed which
would justify doing so;
that impropriety must be linked to the use of the company
concerned to conceal or avoid liability;
it therefore follows that...
To continue reading
Request your trial