The case was a matrimonial dispute between Nigerian businessman Michael Prest and his ex-wife who sought to have the assets of Prest's wholly owned offshore companies counted as his personal property for the purposes of her financial remedy in divorce.
In its unanimous decision, the Supreme Court asserted that the English family courts, like other courts, cannot in general ‘pierce the corporate veil’ but in this case they could in effect do so because the companies actually held their assets on trust for Michael Prest as beneficial owner.
Mrs Prest won her case and both commercial and private client lawyers have been debating the judgment since, much of which appeared to turn on the dim view which the Court took of Mr Prest’s deliberate evasion of court orders and where adverse inferences could be drawn from a failure to disclose relevant documents or provide pertinent information.
So is this simply a judgment made on the particular facts of this case?
Many contributors to the debate thought otherwise where the decision was deemed to have prompted a “chink of light” through the corporate veil.
That said the Supreme Court’s decision was that the husband, not the companies, had originally provided the funds for the properties to be bought. So, applying trusts law principles, the companies held the properties in trust for him and therefore the court could transfer them to his ex-wife.
There was no conclusive evidence of him providing the funds but the Court said it could draw that conclusion where the husband and the companies had been deliberately obstructive.
Irrespective of the views of the legal world and the Court’s reasoning, whether commercial or trust based, it means that wealth planners will need to think of alternative structures to preserve assets from the auspices of the divorce courts based on this ruling.