Stepping Around The Corporate Veil: Prest In Action

M v M [2013] EWHC 2534 (Fam)

Following a 3 year wait for the judgment of the Supreme Court in Prest v Petrodel Resources Limited [2013] UKSC 34 to be handed down, a record breaking judgment for financial provision following the breakdown of marriage has been made in the case of M v M. In this case the wife, Mrs M secured the sum of almost £54m from her former husband, whose assets (mostly properties) where largely held in complex corporate structures. As in Prest it was held that there these corporate structures were holding the assets on resulting and constructive trusts for the husband, Mr M, and so could be transferred directly to Mrs M, without the need to pierce the 'corporate veil'.

The facts

Mr and Mrs M, both Russian nationals, were married for 17 years and had two children. They first met in Russia in the factory in which they both worked, but during their relationship Mr M, taking advantage of the changes in the Russian free market, built up a successful business. Following their divorce in Russia in February 2009, Mrs M, who has been resident in England since August 2005, applied for financial relief under Part III of the Matrimonial and Family Proceedings Act 1984 (MCA).

Both children remained with their mother, and at the time of the application, one child was 15 and the other attending university.

The husband's wealth was estimated at approximately £107m, of which approximately £91.6m was made up of 11 commercial properties in Russia and the remainder comprising of 8 English properties, which were held (in simplified terms) as follows:

Company A, owned by the husband's son from his first marriage, was the registered owner of 3 properties in London. Company B, a Cypriot company wholly-owned by the husband, was the registered owner of the husband's country home "Quinta Castle". Company C, registered in Nevis (an island in the Caribbean) and owned by Company B, was the registered owner of a London flat. Company D, also registered in Nevis and owned by Company B, was the registered owner of a flat, which was the husband's London home, and a garage. The matrimonial home was the only asset not held in a company structure.

The Court was largely concerned with the 4 properties and the garage own by companies B, C and D (together "the Properties" and "the Companies").

The wife sought an order enabling her to receive the Properties plus a lump sum of £38m representing half the realised value of 11 Russian properties.

The question before...