Hey Presto !

By Rodney Hylton-Potts

The Supreme Court’s decision to order an oil tycoon to hand over assets held by his companies to his former wife has been hailed as a victory for fairness and justice by lawyers.

But lawyers are divided on the implications of judgment in Prest v Petrodel Resources Limited.

The court used trust rather than company law to resolve the matter, declaring that the seven disputed properties were, in the particular circumstances of the case, held on trust for the husband and could therefore be passed to his wife.

Some lawyers feel that the court had ‘parted the corporate veil’ and claimed that the decision is a blow against cheating spouses.

Others, however, warned of a danger of overreacting to the judgment. It may not have the wider significance that some feel and that the Supreme Court effectively said that any spouse with significant wealth can tie up their assets in a business to protect themselves in the event of marital breakdown.

‘This could give the economically powerful even more power during the divorce process and lead to greater financial imbalance in many post-separation outcomes.

The case raised issues in other fields. Shareholders, lenders, insolvency practitioners and auditors may need to look far more rigorously at corporate property portfolios to establish whether there might be competing claims from a spouse