Circumventing The Veil: M v M And Yuri Barkov And Ors

There have been a number of cases this year considering how, and in what circumstances the assets of a company owned by one spouse may be recovered for transfer to the other spouse in the context of ancillary relief proceedings.

The most important of these was the Supreme Court decision in Prest v Petrodel given in June this year. In that case, the Supreme Court confirmed the decision of the Court of Appeal that there is no separate jurisdiction available under section 24 of the Matrimonial Causes Act (MCA) to pierce the corporate veil of a company to access its assets for the benefit of a spouse in ancillary relief proceedings. Rather the corporate veil may only be pierced in cases where a person seeks to evade or frustrate the enforcement of an existing legal obligation, liability or restriction by interposing a company under his control.

However, the Supreme Court found that, in the circumstances of the case in Prest, the properties held by the companies were beneficially owned by the controller of the companies, the husband. As such, the court was able to order their transfer to the wife.

The judge at first instance in DR v GR (decided in May before the Prest decision was handed down), took a different approach, which we review in our article looking at the decision ( click here). Most recently, there has been another decision in the Family Division in M v M and Yuri Barkov and Ors. Unlike the decision in DR v GR, M v M was decided in the light of the Supreme Court's decision in Prest.

M v M bore a number of similarities to Prest in that, in both cases, the husband had failed to disclose his assets as he should have done as part of the ancillary relief proceedings and, in fact, had done everything he could to ensure that those assets were unavailable for transfer to his former spouse. In M v M, it appears that the husband had gone so far as to forge his wife's signature on a share transfer form in order to transfer her half share in a property owning company in the UK (which included a number of residential properties including the matrimonial home) to an offshore company, and subsequently, together with his own half share, to his son by a previous marriage, Yuri Barkov.

The husband in M v M took virtually no part in the proceedings, in fact he was in contempt of court a number of times for failing to do so, and there was very little evidence as to his intentions in relation to the property-owning companies, the assets of which (a...