March 6 (Bloomberg) -- An oil trader’s ex-wife shouldn’t have any claim to properties held by offshore companies in which he invested as part of a 17.5 million-pound ($26.4 million) divorce settlement, lawyers said at a hearing in the U.K.’s highest court.
The three Isle of Man-based companies, including Petrodel Resources Ltd., are “not relevant as a party to the litigation,” Tim Amos, the lawyer representing the companies, said today. The firms have asked the seven-judge panel of Britain’s Supreme Court to dismiss the wife’s claim.
Yasmin Prest appealed an earlier ruling that denied her access to properties controlled by her ex-husband to cover part of the 2011 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.
Nigeria-born Michael 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. Yet British law provides that companies are legally separate entities from their shareholders -- raising a so-called corporate veil -- in order to protect investors from debts or liabilities the company may accumulate.
“We well understand the wife’s frustration with the husband,” Amos said on behalf of the companies today in court. “We make no defense of him.”
The outcome of today’s case, which has seen family and commercial courts collide, may impact London’s reputation as what U.K. Court of Appeal judges have dubbed the divorce capital of the world. Past rulings by courts in the British capital have tended to favor the spouse with fewer assets.
“If the court rules against Mrs. Prest, the general theme of the court’s generosity towards the spouse with less assets won’t necessarily change, but it’ll make it harder for them to get to that result,” William Healing, a family law attorney at Kingsley Napley LLP who isn’t involved in the suit, said in a phone interview.
If the court gives clear guidance when it rules, “then couples can plan their financial affairs appropriately so that, if they divorce, there are no nasty surprises and the case of Prest is not brandished as opening the floodgates to a cheats charter,” said Miranda Green, a lawyer at Mundays LLP who isn’t involved in the dispute, referring to individuals who put assets into offshore companies to protect them in a divorce.
The original court-ordered lump-sum payment of 17.5 million pounds required to be paid to Yasmin Prest “is fully enforceable by law against the husband,” Amos, the lawyer for the companies, said on the second day of the hearing.
Michael Prest was a “wholly unreliable witness,” who played a “game in which he has sought to manipulate the process to his advantage,” Judge Andrew Moylan, said in the original October 2011 ruling in which he awarded the payment.
A review of U.K. divorce law was triggered in September in part by the case of German heiress Katrin Radmacher and ex-JPMorgan investment banker Nicolas Granatino. In 2010, the U.K.’s top court ruled for the first time that a U.S.-style pre-nuptial agreement on dividing assets, reached before marriage, should be enforced.
A three-judge panel in the U.K. Court of Appeal handed down a split decision in favor of Mr. Prest’s companies in October.
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