Prest – Piercing The Corporate Veil? Or Going Around?

The Supreme Court's much-publicised judgment in the case of Prest v Petrodel Resources Limited [2013] UKSC 34 was handed down on Wednesday 12 June 2013.

The plight of Mrs Prest had drawn much attention from the press at each stage of the procession of her case though the Courts, and the Supreme Court's ruling is no exception.

The Facts

Mr and Mrs Prest were married in 1993 and had four children during the course of their marriage. The marriage broke down and Mrs Prest petitioned for divorce in March 2008, obtaining a decree absolute in November 2011. Mrs Prest applied for ancillary relief against her husband on 11 March 2008, and following many months of contested litigation obtained judgment against her husband on 4 October 2011.

The circumstances in which Mrs Prest obtained judgment in October 2011 are worthy of exploration. In her application for ancillary relief, Mrs Prest joined five companies that she alleged (on various bases) were owned, wholly or partly and/or controlled by her husband, and in turn that these companies were used as vehicles for her husband's assets. The reason Mrs Prest was interested in the property assets of the companies (rather than Mr Prest's shareholdings in the companies themselves) was because they were UK property, rather than offshore company shareholdings, making enforcement against them materially simpler. The first instance Judge (Moylan J) set out the principal issues that he considered he needed to address:

The extent of Mr Prest's wealth including the nature and extent of his interest in the respondent companies; and Whether or not he had the ability or power to make orders directly against properties and shares held in the names of some or all of those respondent companies. The findings made by Moylan J have been well reported and were considered at the time to be in keeping with the Family Division's usual approach to such matters. In his judgment, Lord Sumption summarised the position that Moylan J had taken, saying:

"For some years it has been the practice of the Family Division to treat the assets of companies substantially owned by one party to the marriage as available for distribution under s.24 of the Matrimonial Causes Act, provided that the remaining assets of the company are sufficient to satisfy its creditors"

This refers to the order eventually made by Moylan J - having found that Mr Prest had (including his company assets) wealth of approximately £37.5m, Moylan J ordered Mr Prest to...