Prest v Petrodel Resources Ltd and Others [2013] UKSC 34; [2012] EWCA Civ 1395; [2013] 2 AC 415

KEY POINTS

• In financial relief cases between husband and wife, the issue of transferring property, especially those controlled by companies controlled by the husband, become crucial.

• In this case, the wife alleged that certain offshore properties belonged beneficially to the husband. Challenges arose when the husband and his companies failed to comply with orders for disclosure.

• Courts could order the husband to transfer properties to the wife or ensure their transfer.

  • The determination involved assessing the husband's entitlement to the property and establishing conditions for piercing the companies' corporate veils.

  • The court could also draw adverse inferences regarding the beneficial ownership of properties.

• The jurisdiction to order the husband to transfer properties held by companies to the wife was guided by the Matrimonial Causes Act 1973 (c 18), specifically section 24(1)(a).

FACTS

• Yasmin Aishatu Mohammed Prest (“Wife”) sought ancillary relief under the Matrimonial Causes Act 1973, alleging her husband's use of offshore companies to conceal property ownership.

  • Despite court orders for disclosure, Michael Jenseabla Prest (“Husband”) and his companies failed to comply.

• The judge, acknowledging impropriety, applied a broader jurisdiction under section 24(1)(a) to pierce the corporate veil, citing the Husband's practical ability to transfer properties.

• The court mandated the transfer of several properties held by the Husband's companies.

• On appeal, the Court of Appeal, by a majority, sided with the companies, stating that the Family Division's practice exceeded jurisdiction unless corporate personality abuse was evident.

JUDGEMENT

• The court held that piercing the corporate veil was only justified if a person deliberately evaded a legal obligation through a controlled company.

  • In this case, there was no evidence of the Husband avoiding relevant obligations, and general legal principles didn't support piercing the corporate veil.

  • Section 24(1)(a) of the Matrimonial Causes Act 1973, dealing with property matters, didn't grant the power to transfer property not legally owned.

• However, the companies could be ordered to transfer properties if beneficially owned by the husband, considering incomplete evidence due to the husband's obstruction.

• The order requiring property transfer to the Wife was restored.

COMMENTARY

• The case involved issues surrounding financial relief between a Husband and Wife, specifically regarding the transfer of properties held by companies controlled by the husband.

  • The Wife alleged beneficial ownership of these properties by the Husband, leading to challenges with non-compliance in disclosing information.

• The legal discussion explored the jurisdiction's authority to order property transfers, examining the Husband's entitlement and conditions for piercing the corporate veils of involved companies. 

  • The judgment interpreted the Matrimonial Causes Act 1973, highlighting section 24(1)(a) for jurisdiction in property transfer.

  • The Wife's claim exposed the Husband's exclusive ownership of offshore companies and their alleged misuse to control properties.

• Despite court orders, the Husband's non-compliance resulted in legal consequences.

  • The judge justified piercing the corporate veil under section 24(1)(a).

  • However, the Court of Appeal questioned the Family Division's practice, limiting the jurisdiction to specific circumstances of abuse.

• The court's ruling clarified when piercing the corporate veil was justified, emphasizing deliberate evasion of legal obligations.

• While the court restored the property transfer order based on incomplete evidence, the case underscored the legal interplay between matrimonial proceedings, corporate structures, and equitable relief.