Piercing the corporate veil

The unanimous judgment of the Supreme Court in Petrodel Resources Ltd v Prest led to a media circus. Now the dust has settled, we have more clarity on the repercussions of the case for those involved in family and company law. Even we were surprised by the rasp of admonition from the Court of Appeal last year in Petrodel Resources Ltd v Prest. Rimer and Patten LJJ identified a particular practice followed in the family courts, which Moylan J at first instance had adopted when giving judgment in the financial claims on divorce between Michael and Yasmin Prest (pictured). That practice was: where a spouse was the only shareholder of a company, which held assets but did not have third-party creditors, those assets could be transferred directly to the other spouse in settlement of his or her claims. Allowing the companies’ appeal, Rimer LJ described Moylan J’s reasoning as ‘heretical’; Patten LJ thundered that the practice ‘must now cease’. The unintended effect was of a Victorian maiden aunt impressing on some unruly charges the need to behave with rectitude and sobriety henceforth.

Written by Nicholas Bennett. To read the full article, click here. For more information on family law attorneys, visit our website http://www.jwbrookslaw.com

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