PETRODEL RESOURCES LTD
Michael Prest (husband) and Yasmin Prest (wife) were married for 15 years and had four children before the wife petitioned for divorce in March 2008. During the marriage the matrimonial home was in England, though for most of the time the husband was found to be resident in Monaco and there was also a second home in Nevis. Petrodel Resources Ltd (PRL), which was incorporated in the Isle of Man, was the legal owner of the matrimonial home and five other residential properties in the United Kingdom. PRL was part of a group of companies, one of which was the legal owner of two more residential properties in the United Kingdom. Moylan J, in ancillary relief proceedings, found that PRL and the other companies within the group were fully owned and controlled, either directly or indirectly, by the husband. However, due to the contumacious refusal of the husband to comply with his disclosure obligations and successive orders of the court, the evidence did not permit the assembly of a conventional schedule of assets – on the material available, the husband’s net assets were assessed at £37.5m. The husband was required, by an order dated 16 November 2011, to procure the transfer of the matrimonial home to the wife free of encumbrances and to make a lump sum payment to her of £17.5m together with £24,000 pa and school fees for each of their children. While the judge had found that the matrimonial home was held by PRL on trust for the husband beneficially, he made no corresponding finding about the other seven properties – it was clear from his judgment that he had decided it was unnecessary for him to declare that the husband was their beneficial owner because, while he had concluded there was no general principle of law that entitled him to disregard the companies’ legal personality by piercing the corporate veil in the absence of evidence that it was being abused for an improper purpose, he considered that he had a wider jurisdiction to treat the companies’ properties as though they were legally owned by the husband for the purposes of s24 of the Matrimonial Causes Act 1973 (MCA). On this basis, he ordered the husband to procure the transfer by PRL and its associated company of those seven properties to the wife in partial satisfaction of the lump sum award. PRL and two other companies appealed on the ground that there was no jurisdiction to order their property to be transferred to the wife and the Court of Appeal, by a majority, held that the practice which had for some years been adopted by the Family Division to treat the assets of companies substantially owned by one party to the marriage as available for distribution provided that the remaining assets were sufficient to satisfy creditors – an approach that almost amounted to a separate system of legal rules unaffected by the relevant principles of property and company law – must now cease. That practice was beyond the jurisdiction of the court unless:
Richard Todd QC (1 Hare Court, Temple, London EC4Y 7BE, tel 020 7797 7070, e-mail firstname.lastname@example.org), Daniel Lightman (Serle Court, 6 New Square, Lincoln’s Inn, London WC2A 3QS, tel 020 7242 6105, e-mail email@example.com) and Stephen Trowell (1 Hare Court, Temple, London EC4Y 7BE, tel 020 7797 7070, e-mail firstname.lastname@example.org) instructed by Farrer & Co (66 Lincoln’s Inn Fields, London WC2A 3LH, tel 020 3375 7000, e-mail: email@example.com) for the appellant.
Tim Amos QC and Oliver Wise (Queen Elizabeth Building, Temple, London EC4Y 9BS, tel 020 7797 7837, e-mail firstname.lastname@example.org), Ben Shaw (Erskine Chambers, 33 Chancery Lane London WC2A 1EN, tel 020 7242 5532, e-mail email@example.com), and Amy Kisser (Queen Elizabeth Bldg, 3rd Floor, Queen Elizabeth Bldg, Temple, London EC4Y 9BS, tel 020 7797 7837, e-mail firstname.lastname@example.org), instructed by Jeffrey Green Russell Ltd (Waverley House, 7-12 Noel Street, London W1F 8GQ, tel 020 7339 7000, e-mail: email@example.com) for the respondent.