The law in this area has been rife with conflicting principles and many commentators felt that the Supreme Court decision in Prest v Petrodel provided a unique opportunity to resolve the issue of when the corporate veil can be pierced. The authors would like to thank the Editorial Board and the peer We use cookies on our website. Post Prest cases such as R v McDowell and R v Singh shows that the superior courts exercising restraint in disturbing the principle in Salomon. Prest v Petrodel Resources Limited 15. The other justices concurred in Lord Sumption’s analysis but did add some thoughts of their own on various issues. The difficulty in this case was that the husband and the companies were abroad in places which might not give direct effect to English orders. Prest v Petrodel Resources Limited 15. However, courts have still been willing to ignore the Salomon principle, most notably in Chandler v Cape plc [6] . It may be an abuse of the separate legal personality of a company to use it to evade the law or to frustrate its enforcement. Mrs. Prest had joined these companies to the application and sought a transfer of the properties. Mrs. Prest appealed to the Supreme Court. Both sides of the profession were affected differently. the husband was the beneficial owner of the shares purportedly transferred to his business associates, and that the company held its assets on trust for the husband; the value of the shareholding and the known assets of the company were to be included in the asset pool for assessment of the wife’s ancillary relief application; and. In this case, the husband had effectively purchased a number of properties in England which he had put into the names Hong Kong case applying Prest v Petrodel In SLA , the couple were married for 17 years. Claim by Mrs. Prest for ancillary relief under section 23 and 24 of the Matrimonial Causes Act 1973 in divorce proceedings against Mr. Prest. In the weeks preceding the Supreme Court’s decision in Petrodel Resources Ltd v Prest, 1 the case was the subject of much attention and commentary, both in the media and legal circles. For the past 30 years orders have been made against the assets of a company that are considered to be the alter ego of a spouse to satisfy a capital award made by the court in respect of the other spouse.1In 2012 the Court of Appeals ruling in Petrodel Resources Ltd & Ors v Prest & Ors2set a new precedent stopping an ex-wife being able to investigate a company’s assets when she believes her husband has concealed assets within that company. In Trustor and Genco, at the risk of over-simplification, a claim was made that a former 6. This doctrine goes back to the 1897 case of Salomon v A Salomon & Co Ltd, and any exceptions to this rule are limited. This article examines the judicial approach to the corporate veil post-Prest v Petrodel Resources Ltd. The recent judgment in SLA v HKL (FCMC 75000/ 2010) may be Hong Kong’s first case to apply the recent UK Supreme Court landmark decision of Prest v Petrodel [2013] UKSC 34. You may delete and block all cookies from this site, but parts of the site will not work. This argument for lifting the veil is targeted at companies within a corporate group. The appeal concerns the position of a number of companies belonging to the Petrodel Group which were wholly owned and controlled by Michael Prest, the husband. The relatively short and significant judgment in the Supreme Court case of Prest v Petrodel Resources Ltd has gathered vociferous interest from academics and practitioners. Capital v Nutritek and, last week, Petrodel v Michael Prest. His Lordship considered that the failure of the husband and the companies to cooperate with the ancillary relief proceedings and to provide proper disclosure suggested that proper disclosure of the facts would have revealed the properties to be beneficially owned by the husband (paragraph 47). It is not an abuse to cause a legal liability to be incurred by the company in the first place. This has been said to put an end to what has been described as a “cheat’s charter”, following the Court of Appeal’s decision that those assets could not be considered the husband’s. If you would like to discuss becoming a client, please contact one of Brown Rudnick's attorneys to arrange for a meeting or telephone conference. - Sebastian Hughes, Counsel, Prince’s Chambers, - Sasha Allison, Solicitor, Hampton Winter & Glynn, UKSC Reviews “Illegality” Defence in a Professional Negligence Setting, Overview of the Law Reform Commission’s Consultation Paper on Sentencing and Related Matters in the Review of Sexual Offences, When the Legal Industry Meets Technology (Part 2). In giving judgment on 12 June 2013, the … Prest v Petrodel Resources Ltd emphasises the importance of properly and transparently running companies. The relatively short judgment in the United Kingdom Supreme Court case of Prest v Petrodel Resources Ltd1 (herein, Prest) has garnered vociferous interest from academics and practitioners. the evasion principle by comparing, on the one hand, Gilford Motor Co v Horne [1933] Ch. Stripping Away the Veil of Deceit: Prest v Petrodel. The court may then pierce the corporate veil for the purpose, and only for the purpose, of depriving the company or its controller of the advantage that they would otherwise have obtained by the company’s separate legal personality. The case provides a framework for an examination of a number of issues relating to the veil-piercing rule. I conclude that there is a limited principle of English law which applies when a person is under an existing legal obligation or liability or subject to an existing legal restriction which he deliberately evades or whose enforcement he deliberately frustrates by interposing a company under his control. It was of key interest as it was a legal cross over between family law and company law. A limited company has a separate legal personality from its members, or shareholders. In Prest v Petrodel Resources Ltd UKSC 34, the UK Supreme Court has recently reviewed the English law in this area, concluding that the Court has … This was certainly how parties had attempted to use the doctrine, such as in the VTB v Nutritek case for example, where an attempt was made to pierce the corporate veil and make another party liable on a contract. Another was to take funds from the companies whenever he wished, without right or company authority. These considerations reflect the broader principle that the corporate veil may be pierced only to prevent the abuse of corporate legal personality. Piercing The Corporate Veil: Prest Vs Petrodel Resources The Supreme Court has handed down a landmark judgement in favour of Mrs Prest in high profile matrimonial dispute. The relatively short and significant judgment in the Supreme Court case of Prest v Petrodel Resources Ltd has gathered vociferous interest from academics and practitioners. 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