Prest –v- Petrodel Resources Ltd & Others ‘Beware’ Business Owners going through divorce
After more than 5 years, Yasmin Prest said she was ‘delighted’ and ‘relieved’ with the decision reached by 7 senior judges in the Supreme Court, last month. Mrs Prest succeeded in her claim for financial provision as the judges ordered her millionaire husband, Michael Prest, an oil tycoon, to transfer his company properties to his wife.
Mr & Mrs Prest married in 1993 and had four children. They primarily lived between a multi-million pound house in London and homes in Nigeria and the Caribbean. Mrs Prest petitioned for divorce in March 2008. Mr Prest then moved to live in Monaco.
Mr Prest resisted his wife’s claims for financial relief on a number of bases, but mainly (and the most significant for the purposes of the recent Supreme Court hearing) was his contention that certain properties could not be transferred to his wife as they did not belong to him but belonged to a number of companies which had their own legal personality and were not owned by him. He was hoping to be protected by the ‘corporate veil’.
The High Court had described Mr Prest as a manipulative and a ‘wholly unreliable witness’ whilst ordering the transfer of 13 properties from his companies, as part payment of his multi-million pound settlement to his wife.
But later, an appeal by the Petrodel Group companies to the Court of Appeal was allowed. The judges said that Mrs Prest could not claim the assets.
The matter was then taken to the Supreme Court by Mrs Prest. Mrs Prest was only given permission to appeal to the Supreme Court on the issue of whether the court had power to make transfers of properties belonging to the company, to her. Family lawyers insisted that the decision of the Court of Appeal was not ‘fair’ and would lead to the wealthy simply hiding assets in companies and ignoring court orders. On the other hand, commercial experts said that ‘piercing the corporate veil’ in such family cases would create an impossible position allowing spouses to tread where other creditors could not.
However, the Supreme Court ruled that on the basis that the companies were wholly owned by the husband, which is what the evidence before them suggested, then Mrs Prest was entitled to the properties. They said that the companies were ‘beneficially’ owned by him and that the corporate veil could be pierced, but only in very exceptional cases, such as this.
Sumption SCJ said that ‘Where assets belong to a company owned by one party to the marriage, the proper claims of the other can ordinarily be satisfied by directing the transfer of the shares’. He went on to say that ‘judges exercising family jurisdiction are entitled to draw on their experience and to take notice of the inherent probabilities when deciding what an uncommunicative husband (or the dominant party, whether it be the husband or wife) is likely to he concealing’.
Mrs Prest’s lawyer, Jeremy Posnansky QC said that ‘Decent husbands and wives have nothing to worry about…But for those who misuse companies to cheat their spouses on divorce and for company directors who hide the truth behind bogus corporate façade, the Supreme Court has shown that truth and reality will prevail’.
Mrs Prest’s barrister, Richard Todd QC said that ‘ultimately the decision represents a triumph for the recognition of reality’.
If you are going through a divorce and own assets, then please contact our Family Solicitor, Mrs Satvinder Sokhal on 020 8280 2710 for full advice in relation to the distribution of assets.