Brief history of Newwalk Chambers



Find by month


Find by label

Blog

Chambers Blog

Entries matching label fraud:

Lifting the Corporate Veil in Matrimonial Law

25 Jun 2013, 09:25 by Priya Bakshi

Labels: barrister, commercial, commercial-law, court, divorce, family-law, fraud, lawyer, legal-proceedings, matrimonial-law

In commercial cases the key principle is that a company is independent of its shareholders and so one cannot get at the company's assets in legal proceedings unless there has been fraudulent or dishonest use of the company, 

On 12 June 2013 the Supreme Court unanimously allowed the corporate veil to be lifted in financial divorce proceedings in the case of Prest v Petrodel Resources Limited and others [2013] UKSC 34. The question in this appeal brought by Mrs Prest was whether the court had power to order the transfer of properties to her given that they legally belonged not to Mr Prest but to his companies. 

Under the Matrimonial Causes Act 1973 section 24(1), it states that the court may order that "a party to the marriage shall transfer to the other party...such property as may be so specified, being property to which the first-mentioned party is entitled, either in possession or reversion."

On the facts of this case, Mr Prest, and not his companies, originally provided the funds for the acquisition of the properties. He had control of the company assets as if they were his own during the marriage. Mr Prest concealing these facts coupled with the continuous failure to cooperate with disclosure and transparency, the Court inferred that both he and the companies were attempting to conceal the true beneficial ownership of the properties. 

Mrs Prest won in her appeal and the Court held that the properties invested in Mr Prest's companies were on trust for him. It was ordered that these assets be handed over to his wife. Therefore, in these exceptional circumstances, the Court disregarded the corporate veil in order to give effective relief. 

This landmark ruling has provided some clarity as to when the courts can lift the corporate veil, and that business people cannot deliberately hide assets in companies to protect them in the event of a divorce.

 

0 comments


Displaying entries 1-1 of 1.



The New Walk Chambers Blog page is only intended to provide an accessible forum for a general overview and discussion of the topics posted on it. It is not meant to be a substitute for taking legal advice in any particular situation and should not be so used. Neither New Walk Chambers nor the author(s) accept any responsibility for anything done or not done on the basis of the contents of the Blog page.


Website developed by Focus New Media