The Supreme Court has ordered divorced husband Michael Prest to transfer to his former wife, Yasmin Prest, properties held by companies owned and controlled by him, as part of a £17.5m divorce award.
In 2011 High Court judge Mr Justice Moylan ordered Mr Prest, the founder of Nigerian energy company Petrodel Resources, to hand over £17.5m to Yasmin Prest, his former wife of 15 years.
Moylan J said that, as Mr Prest was unlikely to hand over the assets given that he had flouted court orders, he should transfer 14 properties in the UK and abroad that were held by Petrodel Resources and other companies owned by him to his former wife as part payment.
Petrodel challenged the order and the CoA reversed the decision, in effect creating what family lawyers called a “cheats charter” (26 October 2012).
The ruling marks a win for the Farrer & Co team led by partner Jeremy Posnansky QC. To lead the appeal, Posnansky instructed 1 Hare Court’s Richard Todd QC, leading Stephen Trowell of the same set and Serle Court’s Daniel Lightman.
Supreme Court justice Lord Sumption gave the substantive ruling, finding that the properties in question were held by Petrodel on trust for Mr Prest and therefore were his to be handed over to the wide.
The court found that it was possible to “pierce the corporate veil” where the company has been set up to in some way evade the law or its enforcement. In this particular case, Sumption SCJ held, that the court was able to infer that the husband had failed to disclose that the assets belonged to the husband.
Family lawyers said the ruling would narrow the gap between the family courts and the chancery division in establishing under what circumstances the corporate veil could be pierced.
Stewarts Law partner Sam Longworth said the ruling was surprise to many because the court had gone out of its way to establish a fair decision. Longworth said while the wife had lost in many points, the court had taken a step back to make a ruling against a husband who had deliberately evaded court orders.
Serle Court barrister Daniel Lightman, who appeared as a junior for Mrs Prest, added: “The Supreme Court has made clear that assets which are held in the name of a company but which in truth are owned beneficially by a spouse can be accessed by the family court – and has encouraged family judges to draw adverse inferences against spouses who fail to disclose relevant documents or provide pertinent information.
“Family judges, says Lord Sumption, are entitled to draw on their experience and to take notice of the inherent probabilities when deciding what an uncommunicative economically dominant spouse is likely to be concealing.Where the matrimonial home is held in the name of a company, it can frequently be inferred that the property is held on trust for the spouse who owns and controls the company.”
The ruling is a loss for QEB’s Tim Amos QC, who was instructed by Jeffrey Green Russell solicitor Sarah Ingram to lead Erskine Chambers’ Ben Shaw, and QEB’s Oliver Wise and Amy Kisser for Petrodel.
More reaction to follow.