Casenote Prest V Petrodel Ltd
Undergraduate Laws
Case note
March 2014: Important case note
LA3021 Company law
Prest v Petrodel Ltd [2013] EWCA Civ 1395
Facts
The parties were married in 1993. The wife was granted a divorce in 2008. In an action for ancillary relief the husband argued that properties could not be transferred to the wife as they were legally owned by various companies. These companies were wholly owned and controlled by the husband. The question on appeal was whether the court has power to order the transfer of the properties to the wife given that they legally belong not to him but to his companies.
Held
The appeal would be allowed on the grounds that the disputed properties vested in the companies were held on trust for the husband.
Comment
This case aroused considerable media interest, featuring on the pages of the national press even unto pictures of a rejoicing Mrs Prest! However, we lawyers must attend to sterner matters. Prest is of interest not only to students of
Company law, though that will be our focus, but also to those students reading
Family law.
The case is significant because it is the first time the Supreme Court have had an opportunity to review the doctrine of veil lifting. In the case of Woolfson v
Strathclyde [1978] SC (HL) 90 Lord Keith observed that it ‘is appropriate to pierce the corporate veil only where special circumstances exist indicating that it is a mere façade concealing the true facts’. A number of academics, notably Dignam and Lowry, state that this signalled a retreat from the interventionist years where the courts, notably Lord Denning in the Court of Appeal, had been only too willing to ‘look behind the veil’. The definitive case on veil lifting was Adams v Cape Industries [1990] Ch 433, although that case was, inter alia, predominantly concerned with parent and subsidiary companies.
The judgment of Lord Sumption sheds light on the nature and extent of the doctrine. In his judgment he reviews the leading authorities many of which
Case note
March 2014: Important case note
LA3021 Company law
Prest v Petrodel Ltd [2013] EWCA Civ 1395
Facts
The parties were married in 1993. The wife was granted a divorce in 2008. In an action for ancillary relief the husband argued that properties could not be transferred to the wife as they were legally owned by various companies. These companies were wholly owned and controlled by the husband. The question on appeal was whether the court has power to order the transfer of the properties to the wife given that they legally belong not to him but to his companies.
Held
The appeal would be allowed on the grounds that the disputed properties vested in the companies were held on trust for the husband.
Comment
This case aroused considerable media interest, featuring on the pages of the national press even unto pictures of a rejoicing Mrs Prest! However, we lawyers must attend to sterner matters. Prest is of interest not only to students of
Company law, though that will be our focus, but also to those students reading
Family law.
The case is significant because it is the first time the Supreme Court have had an opportunity to review the doctrine of veil lifting. In the case of Woolfson v
Strathclyde [1978] SC (HL) 90 Lord Keith observed that it ‘is appropriate to pierce the corporate veil only where special circumstances exist indicating that it is a mere façade concealing the true facts’. A number of academics, notably Dignam and Lowry, state that this signalled a retreat from the interventionist years where the courts, notably Lord Denning in the Court of Appeal, had been only too willing to ‘look behind the veil’. The definitive case on veil lifting was Adams v Cape Industries [1990] Ch 433, although that case was, inter alia, predominantly concerned with parent and subsidiary companies.
The judgment of Lord Sumption sheds light on the nature and extent of the doctrine. In his judgment he reviews the leading authorities many of which