The ex-wife of a Nigerian oil tycoon won a landmark divorce settlement battle in the UK’s Supreme Court on Wednesday in a closely watched case that had raised concerns about the accessibility of corporate assets in wealthy divorces.
Family law practitioners and wealth managers were watching to see how the court could issue a fair judgment without piercing the legal “corporate veil” which treats companies and their shareholders as separate entities.
In a decision that will affect anyone seeking to protect personal assets by putting them into a corporate structure, Britain’s most senior judges upheld a ruling which awards Yasmin Prest a share in seven properties controlled by her husband’s company Petrodel Resources Ltd.
The court ruled the property, initially represented as assets of the offshore company, was actually held in trust for her oil trading ex-husband Michael Prest from whom she was seeking the balance of a 17.5 million pound ($27 million) divorce settlement.
“I’m delighted and relieved that the Supreme Court has ruled as it did,” Britain’s Press Association reported Yasmin Prest as saying after the judgment in the case Petrodel Resources.
“None of this would have been necessary if Michael had been sensible and played fair.”
Sandra Davies, head of Family Law at top British law firm Mishcon de Reya, told Reuters that although the court ruled the assets be transferred to Yasmin Prest, it did not set a legal precedent on access to corporate assets because the property was actually held in trust for Michael Prest.
“There has to be a situation where the husband has done something to evade, frustrate, put the company beyond his control with deliberate intention,” she said. “There has to be some element of unfairness, illegality about it.”
Despite the careful ruling, family law partner Sam Longworth at Stewarts Law firm said Wednesday’s decision would have a significant weakening effect on court powers when dealing with sophisticated wealth structuring in a divorce setting.
“This will encourage wealthy spouses to consider ‘divorce planning’ before and during marriage, which risks further undermining the institution of marriage,” he told Reuters in an email.
Solicitors for Yasmin Prest said that the court’s ruling left legitimate companies with little to fear, while restoring an element of fairness in the area of family law.
“This is a great result for Mrs Prest and for others who might find themselves in a similar position,” said Farrer & Co Partner Jeremy Posnansky.
“The Supreme Court’s decision will ensure that dishonest husbands can’t cheat their wives and flout court orders by hiding behind a web of deceit and a corporate façade.”