Supreme Court’s landmark judgment on divorcing couples’ assets
The Supreme Court handed down a landmark judgment on Wednesday in the case of Prest v Petrodel, when it overturned the (majority) judgement of the Court of Appeal, which had been in favour of the husband and his companies – but on a basis not previously argued in the case.
The key issue in Prest v Petrodel was whether a court had power to compel transfer to the wife of seven properties owned by companies of which the husband was the sole shareholder. The Supreme Court confirmed this could not, on the facts of the case, be done by “piercing the corporate veil” and that cases where this was appropriate would be rare.
The Supreme Court went on to confirm there was no general principle in family law entitling a court to routinely disregard the corporate veil and treat assets owned by a company of which a spouse was the shareholder as belonging to that spouse.
However, the Supreme Court unanimously decided on the particular facts of this case that the companies held the properties on trust for the husband (and it was irrelevant to this that he was the only shareholder and controlled the companies). The judgement will come as good news to many divorcing spouses (but perhaps not to their other halves!)
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Posted on Jun 13th, 2013 by Lyons Davidson