Divorce ruling will impact future cases, legal experts say
In a landmark decision that has divided experts, the Supreme Court
has ruled that the wealthy cannot hide their assets from divorced spouses
using their business interests as an excuse.
Business assets in divorce cases
The Supreme Court unanimously ordered that a £17.5million settlement
against Michael Prest, who founded a Nigeria-based oil company, must be enforced. This is despite his assertion that his assets were inextricably linked to his business
The court determined that, as controller of the firms in question, Mr Prest owned their assets
, a decision that could end many years of uncertainty
over how divorce law relates to company law.
The ruling centred around 'corporate veil'
– a legal principle by which a firm's assets cannot be plundered to pay shareholders' debts
. It follows a 5-year legal battle
between Mr Prest, believed to be worth some £37.5million
, and his ex-wife, Yasmin.
Family breakdown and divorce
The couple, who have 4 children, were married for 15 years
before their 2008 separation and subsequent divorce. Although Yasmin Prest was awarded a settlement of £17.5million
, which mainly comprised valuable properties, she has yet to receive most of it.
The case was originally before Mr Justice Moylan, who rejected Mr Prest's claims of heavy debts
and found him to be a "wholly unreliable" witness. The judge also said that other directors of Mr Prest's firms were "simply stooges".
A legal challenge in the Court of Appeal brought by 3 of the companies then led to a 2012 ruling that Mrs Prest could not take ownership of many of the properties
However, this judgment has now been reversed by the Supreme Court
, in a ruling many believe will significantly affect future divorce cases
Divided opinions of legal experts
However, experts in family law are divided on the issue
. One leading solicitor felt the Supreme Court had paved the way for family assets to be plundered
: "The old law could be said to have been a cheat's charter
. The new law will be seen by many as a gold-diggers' charter
However, others believe the decision to be a "victory for common sense".
Emma Pearmaine, a specialist family lawyer with Simpson Millar LLP, has represented many estranged couples in cases where assets have been legally owned by companies and family trusts
"In essence, these are not 'matrimonial assets', so they are not available to the courts for distribution
between parties in divorce cases," Emma said.
"However, we have always approached each case according to its own merits
. And most judges will apply common sense
and include company assets in a divorce settlement where it is fair, and if it becomes clear to the court that the party hiding assets behind the corporate veil is doing so simply to prevent their spouse making a claim
Emma believes England is considered the "divorce capital of the world" for very good reasons. "Our judges are known for applying fairness
and using their discretion based on the individual facts of each case. This shines through in the Prest judgment.
"I think that for any future case where it's made clear to the courts that assets are not in company ownership
purely to prevent matrimonial claims, I would not expect such assets to form part of a settlement."