Prest v Petrodel: Supreme Court landmark ruling – Collyer Bristow comments
12 Jun, 2013
Michael Drake, family law specialist and Collyer Bristow partner comments on this landmark case;
‘Piercing the corporate veil’ is still likely to be very difficult but the view appears to be that there is ‘a small residual category of cases’ where this may prove possible. This was not one of them.
However, drawing the inference that properties held within companies can nevertheless be held on resulting trust for the husband who controls those companies, certainly gives encouragement to wives, although the cases will be fact specific, and are more likely to be relevant and effective where the property in question is the matrimonial home.
Practitioner antennae will have to be even more finely tuned when advising on pre-nuptial agreements, to ensure that property owning structures are not likely to frustrate entitlement of the spouse in the event of breakdown; and in the event of separation and divorce, then very great care will be needed, probably alongside other specialist advice, to establish whether financial claims and their enforcement, are viable, depending on the circumstances. Having said that, the number of cases where this will arise is likely to remain a relatively small proportion.
The case does however raise issues in other fields, which could cause concern. Shareholders, lenders, insolvency practitioners, auditors, may well need to look far more rigorously at corporate property portfolios to establish whether there are competing claims from a spouse, whether it is safe to lend on the security of property held within the company but possibly subject to a resulting trust in favour of the proprietor, and may also feel the need to assess the matrimonial situation generally.