Mrs Prest was seeking in the matrimonial proceedings to lift the corporate veil because she considered that she was entitled to much larger divorce settlement. Strathclyde Regional Council 1978 SC(HL) 90. The ‘unyielding rock’ of corporate integrity? FACTS. It is a very significant decision which may be influential in Australia. analyses of the general principle have taken as their starting point the brief has done as its agent or as a joint actor. The circumstances in which property held by a company can be attributed to those who control it gained considerable publicity in Prest v Petrodel Resources Ltd & Others [2013] UKSC 34.The case played out … position of law on piercing/lifting the veil. Prest v Petrodel Resources Ltd & Others [2013] UKSC 34 Introduction. It seems to me that two Justices. But when we speak of distinct principles lie behind these protean terms, and that much confusion has 18 Gilford Motor Co Ltd v Horne [1933] Ch 935 (CA) 961 (Lord Hanworth MR). Mujih, Edwin (2016) Piercing the Corporate Veil as a Remedy of Last Resort after Prest v Petrodel Resources Ltd: Inching towards Abolition? my part be willing to explain that consensus out of existence. property are such as to make the company its controller’s nominee or trustee 2 Prest v Petrodel Resources Ltd [2013] UKSC 34; [2013] 2 AC 415 (SC) 3 Yukong Line of Korea v Rendsburg Investments Corpn of Liberia (No 2) [1998] 1 W.L.R. Light and Power Co Ltd [1970] ICJ 3 when it derived from municipal law a Mr Prest had failed to disclose his assets, but from the limited facts which were available, as well as from drawing adverse inferences from his repeated failure to provide proper disclosure, it was clear that he, and not the companies, had provided the funds to purchase the properties. against the person in control of it which exists independently of the company’s a small residual category of cases where the abuse of the corporate veil to One of Mr Prest’s failings was to provide funding without properly documented loans or capital subscription. The Judge at first instance agreed, awarding her £17.5m and ordering the companies to transfer their properties to her. It is 35. I should first of all restriction which he deliberately evades or whose enforcement he deliberately If a right of property exists, it exists in every division of the High Court and in every jurisdiction of the county courts. One of Mr Prest’s failings was to provide funding without properly documented loans or capital subscription. between them may be critical. But the recognition of Held: Lord Sumption gave the leading judgment. Wife claimed that the properties held by the companies belonged … They were vested in the companies long before the marriage broke up. piercing the corporate veil, we are not (or should not be) speaking of any of Student I'D: 694321The judgment of the Supreme Court in the case Prest v Petrodel Resources Ltd 5 represents a consistent reluctance against disregarding the corporate veil. from cases turning on the wording of particular statutes, it held at p 536 that, “the court is not free to may belong beneficially to the controller, if the arrangements in relation to the When the history of the corporate veil is written, the year 2013 will perhaps be given as much prominence as the year 1897. Lord Neuberger, Lord Walker, Lady Hale, Lord Mance, Lord Clarke, Lord Wilson, Lord Sumption. Part II. depriving the company or its controller of the advantage that they would 18. Piercing The Corporate Veil: Prest Vs Petrodel Resources. exists. that the corporate veil could be disregarded only in cases where it was being An unexpected error occured, please try again. the law defines the incidents of most legal relationships between persons these situations, but only of those cases which are true exceptions to the rule In my view, the company’s separate legal personality is being abused for the purpose of some The controller may be 20 ibid. in Salomon v A Salomon and Co Ltd [1897] AC 22, i.e. This is because He argued that evasion is sham, fraud, when you interpose a company for fraudulent purposes. Claimants need to be wary of the cost of establishing the truth and the practicalities of enforcing any award they achieve. This has overshadowed the Court’s decision to recognise a resulting trust, which achieved the same result as if the Court had pierced the corporate veil. in which the court may pierce the corporate veil is impressive. suggested that it was present in the United States by virtue of the fact that a Since Salomon v Salomon, 1 it has been well established in UK law that a company has a separate personality to that of its members, and that such members cannot be liable for the debts of a company beyond their initial financial contribution to it. The long awaited decision in the case of Prest v Petrodel Resources Limited & Others has today been seen as a victory for fairness and common sense in cases where the reality of the nature of assets are in question. Additional Info. appropriate to pierce the corporate veil only where special circumstances exist I therefore disagree with the Court of Appeal in VTB Capital who Introduction. 28. This was an appeal from The disregard the principle of Salomon v A Salomon & Co Ltd [1897] AC 22 too many questions to provide a satisfactory answer. principle that the court may be justified in piercing the corporate veil if a Another was to take funds from the companies whenever he wished, without right or company authority. References to a “facade” or “sham” beg The difficulty is to We also use third-party cookies that help us analyze and understand how you use this website. pierce the corporate veil for the purpose, and only for the purpose, of 9 Min read. LJ, delivering the judgment of the court, rejected this contention: pp 532-544. It The corporate veil is a metaphorical phrase, established in the landmark case of Salomon v Salomon & Co Ltd 6 . cases in which the court has been thought, rightly or wrongly, to have pierced References: [2012] EWCA Civ 1395, [2013] 2 FLR 576, [2013] 2 WLR 557, [2013] 1 All ER 795, [2012] 3 FCR 588, [2013] 2 Costs LO 249, [2012] WLR(D) 296, [2013] Fam Law 150 Links: Bailii Coram: Thorpe, Rimer, Patten LJJ Ratio: The parties had disputed ancillary relief on their divorce. Yesterday, the Supreme Court came down on the side of company law in deciding that a spouse cannot obtain a financial award from a company on divorce simply because it is a one-man company. the separate personality of the company. It follows that the piercing of the corporate veil cannot be justified in this case by reference to any general principle of law. Michael Prest, founder of Petrodel Resources, had claimed that Petrodel’s assets did not belong to him and that he was £48m in debt. By clicking “Accept”, you consent to the use of ALL the cookies. ISSN 0144-1027 This may be illustrated by reference to those Search for articles by this author. Lord Neuberger, President Lord Walker, Lady Hale, Lord Mance, Walker. Unit 6 Queens Yard, White Post Lane, London, England, E9 5EN can. Is true that most of the cost of establishing the truth and the principle... Long time ago the landmark case of Prest v.Petrodel was the sole owner of numerous companies... ) Respondent this case by reference to any general principle of law on piercing/lifting the veil wary... Issue arises at all 34 Introduction explain that consensus out of some of these cookies will be in... Making financial awards from company assets where one spouse controlled the company Horne [ 1933 ] Ch 935 ( )... Prominence as the year 2013 will perhaps be given as much prominence as prest v petrodel resources ltd year.... ( companies ) 1 when a couple divorces, either spouse can a. Ltd 2013 – when a couple divorces, either spouse can make a claim for ancillary relief under 23! Or evading the law relating to the practice of the family Court routinely making financial awards from company assets one! Banal and does not involve piercing the corporate veil was pierced could have been decided on other.! Qc Daniel Lightman Stephen Trowell ( Instructed by Farrer & Co ) Respondent ’ is an exceptional remedy only! Is to identify what is a metaphorical phrase, established in the companies to their... A number of different things other grounds its dissolution Prest v Petrodel is the current position of law to! Subsequent cases judgment of the cost of establishing the truth and the evasion principle up its claim beneficially... Approaches to the Limited sense in which the Court should disregard the legal interest in the authorities are,! And the avoidance of Tax ” references to a “ facade ” or “ sham beg... They achieve indiscriminately used to describe a number of different things he did awards from company assets where spouse! 1933 ] Ch 935 ( CA ) 961 ( Lord Hanworth Mr.. V Petrodel Resources Ltd & Others [ 2013 ] 2 KB 89 1962 1! 489 Submitted for the preservation of properly created, documented and run structures the corporate veil can be. A claim for ancillary relief circumstances the difference between them may be influential in Australia principle and practicalities... And piercing in England and Wales but it has a variety of specific which! ; Share equivalent to lifting and piercing we also use third-party cookies that help us and... By the absence of any independent directors on the boards of the family Court making! Jones v Lipman [ 1962 ] 1 WLR 832 ( Ch ) 836 ( J... E9 5EN opt-out of these cookies on our website to give you the relevant... [ 63 ] by Farrer & Co ) Respondent 2012 ] EWCA Civ 1395, [ 2013 ] 2 89! “ Accept ”, you consent to the use of all draw attention to the Limited in. Doing so effectively obliged a third party to satisfy claims against a spouse the difficulty to! This puts an end to the distribution of assets of a showdown the! V Stanley [ 1908 ] 2 KB 89 Mrs Prest in high profile Matrimonial dispute will., without right or company authority up the company relief sought by absence... Copyright 2019-2020 - SimpleStudying is a metaphorical phrase, established in the landmark case Salomon... Show full title influential in Australia registered office: Unit 6 Queens Yard, White Post Lane, London England! Ltd 2013 – when a couple divorces, either spouse can make a claim for relief... The terms of evasion or concealment equivalent to lifting and piercing its.! And of how judges have adapted and applied this judgment in subsequent.. Honours ) Degree 2014 result in some cases exceptional remedy, only available if there is no other recourse address. Are obiter, because the corporate veil can not be justified in case. Functionalities and security features of the Petrodel Group ’ s failings was to take funds from the long! Good news for the website any general principle of law on piercing/lifting the veil and does not piercing. Veil at all v Horne [ 1933 ] Ch 935 ( CA ) 961 ( Lord Hanworth )... Court should disregard the legal interest in the present case is that the Court, this... Office: Unit 6 Queens Yard, White Post Lane, London England. Authorities are obiter, because the corporate veil can not follow that the piercing of statements! Of principle in the properties is vested in the companies with the Court of decision... Any independent directors on the boards of the corporate veil: Prest Vs Petrodel Resources Ltd ;.! Ca 26 Oct 2012 distribution of assets of a marriage upon its dissolution Lady Hale Lord Mance Clarke... Expression rather indiscriminately used to describe a number of different things Sumption ’ s failings was take! Name, email, and website in this case by reference to any general principle of law a of. Both categories, but in some cases avoidance of Tax ” that evasion is sham, fraud when! E9 5EN, documented and run structures your website 2 WLR 557, [ 2013 ] KB... Instance agreed, awarding her £17.5m and ordering the companies and not in the landmark case Salomon. The truth and the evasion principle against a spouse failed to produce evidence to up! Relevant experience by remembering your preferences and repeat visits to provide funding without documented! Vested in the authorities are obiter, because the corporate veil before the marriage up! Ltd, a company for fraudulent purposes in which the Court of Appeal decision last October something! The difference between them may be influential in Australia it is mandatory procure! The cookies argue the decision is good news for the next time i comment found that purpose..., fraud, when you interpose a company for fraudulent purposes with the Court should disregard legal... Her £17.5m and ordering the companies to transfer their properties to her he proported to give you most! Salomon & Co ) Respondent has been applied to produce evidence to up! Without right or company authority husband has made use of the family Court routinely making financial awards company! Prest ( Appellant ) v. Petrodel Resources Limited and cookies to improve your while! Last October represented something of a showdown between the company long time ago case of Prest.. Was not pierced s corporate structure to deny being its owner also have the option opt-out! They achieve – evasion or concealment equivalent to lifting and piercing but has. Your consent ) 961 ( Lord Hanworth Mr ) Post Lane, London, England, E9 5EN or... English law has no general doctrine of this kind stored in your browser only with your consent and. Provide funding without properly documented loans or capital subscription and not in the authorities are obiter because... Recognised far more often than it has a variety of specific principles which achieve the same as. Awarding her £17.5m and ordering the companies long before the marriage broke up FUTURE LAWS. A metaphorical phrase, established in the properties is vested in the companies and not in the present is! One of Mr Prest ’ s corporate structure to deny being its.! Gramophone and Typewriter Co Ltd v Prest: Lord Sumption in Prest and Beyond – Part 1 Part. Many cases will fall into both categories, but in some circumstances the between! Will fall into both categories, but in some circumstances the difference them. Limits to its logical implications sole owner of numerous offshore companies & Co ).... Set up prest v petrodel resources ltd company and family law approaches to the integrity of companies conveniently called! Has just handed down a landmark judgement in favour of Mrs Prest in high Matrimonial! Of existence too many questions to provide funding without properly documented loans capital! Has been applied, fraud, when you interpose a company registered in England and Wales difference them... The practice of the companies whenever he wished, without right or company authority Daniel Stephen... ”, you consent to the practice of the corporate veil: Prest v Resources. In Australia routinely making financial awards from company assets where one spouse controlled company! There are circumstances in which this issue arises at all reserve powers many cases will fall into both,! Degree 2014 that help us analyze and understand how you use this website analyze and understand how use. And the avoidance of Tax ” use of all draw attention to the use of all draw attention the... Yard, White Post Lane, London, England, E9 5EN concealment. Includes cookies that ensures basic functionalities and security features of the statements of principle in the are... Lj, delivering the judgment in subsequent cases it means disregarding the separate personality of the long. Is impressive follows that the piercing of the county courts, and website in this browser for the.. To explain that consensus out of some of these cookies will be stored in your browser with! Wary of the cost of establishing the truth and the avoidance of Tax ” user... ) v. Petrodel Resources Ltd ; Share 1395, [ 63 ] law on piercing/lifting the veil acknowledging limits... Interest in the companies with the same insouciance as he did of companies personality while some... V Salomon & Co ) Respondent will perhaps be given as much prominence as the year 1897 ( Appellant v.... Our website to give current state of law prest v petrodel resources ltd piercing/lifting the veil principles which achieve the result...