An oil trader’s ex-wife won a U.K. Supreme Court ruling giving her the right to force offshore companies owned by her former husband,Michael Prest, to turn over assets as part of a 17.5 million-pound ($27.4 million) divorce settlement.
Petrodel Resources Ltd. held several U.K. properties in trust for Prest -- and his wife, Yasmin Prest, can access them to satisfy the award in the divorce case, the U.K. Supreme Court ruled today. The court said the relationship between Prest and the companies was so close that it created an exception to the traditional separation of corporate and personal assets.
“In the particular circumstances of the case, the properties were held by the husband’s companies on a resulting trust for the husband, and were accordingly property to which the [husband] is entitled, either in possession or reversion,” the court said in a statement summarizing Justice Jonathan Sumption’s ruling today.
Past divorce rulings in the British capital have tended to favor the spouse with fewer assets, leading a U.K. appeals court to call the country the “divorce capital” of the world. The Supreme Court today sought to issue a measured opinion that addressed the facts of the case while limiting the right to pierce the corporate veil, said Sam Longworth, a lawyer at Stewarts Law LLP in London.
“The decision highlights the willingness of the court to look at the reality of a situation in order to achieve a fair outcome,” Longworth said in an e-mailed statement. “Whilst Mrs. Prest won her appeal, she lost on almost every point and the Supreme Court went in an entirely different direction to achieve the outcome it considered fair.”
Yasmin Prest appealed an earlier ruling that denied her access to properties controlled by her ex-husband to cover part of the divorce settlement, which Michael Prest hasn’t paid, according to court documents at the U.K. top court. Her ex-husband isn’t a party to the litigation.
“The decision means that manipulative spouses can’t evade their responsibilities by artificially using a corporate structure to protect their assets in the event of a divorce,” Jeremy Posnansky, Yasmin Prest’s lawyer at Farrer & Co., said in an e-mailed statement. “The judgments aren’t only important for matrimonial law, but also for company law and entrepreneurs. It’s the most authoritative review and refinement of the law about piercing the corporate veil since 1897.”
Nigeria-born Prest is “prominent in and successful in international oil development and trade,” and estimated to be worth about 38 million pounds, according to an earlier ruling. British law provides that companies are legally separate entities from their shareholders -- raising a corporate veil -- in order to protect investors from debts or liabilities the company may accumulate.
Lawyers representing Petrodel Resources didn’t immediately respond to a request for a comment on the ruling.
The case is Petrodel Resources Ltd. and others (Respondents) v Prest (Appellant), U.K. Supreme Court
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