The Court of Appeal has made a landmark ruling on spouses' ability to break through complex structures to deliver a divorce settlement.

The case of Prest v Prest has hit the headlines several times over the last 12 months not merely because of the high profile of the husband, an 'oil baron,' and the substantial wealth involved or because the case involves cooperation between Courts in different countries. The most topical aspect of the Judgment is to what extent the divorce courts can 'pierce the corporate veil' to get at assets held in complex financial structures.

Michael Prest, the founder of Nigerian energy company Petrodel Resources, separated from his wife of 15 years. In the divorce he claimed that Petrodel's assets did not belong to him, but to a family trust under Nigerian customary law, and that he was in reality in debt to the tune of £48 million. His wife cried foul, and sought a multi-million pound settlement, claiming that Petrodel was 100% owned and controlled by Mr Prest and that he was worth tens, if not hundreds of millions of Pounds. The High Court estimated that he was worth at least £37.5 million and awarded the wife £17.5 million, accusing the husband of a "flagrant breach" of his financial disclosure obligations and of treating the proceedings "as a game."

In the commercial setting there is a long established principle that a company is independent of its shareholders and that ownership of a company, even sole ownership, will not entitle piercing of the corporate veil in legal proceedings to get at the company's assets unless there has been some fraudulent or dishonest use of the company to conceal the truth. Family judges took a more liberal view, especially where companies were owned and controlled by one spouse, there were no third party interests and the companies were used during the marriage as vehicles for the family's lifestyle.

By a majority decision the Court of Appeal has rejected with resounding force the more liberal interpretation that judges in the Family Division have adopted over many years. In the lead Judgment Lord Justice Rimer rejected the notion that there should be a different approach between commercial and family cases and that wives should be "entitled to a preferential exemption" to the strict interpretation of the law long established in the commercial setting.

The Court of Appeal did not, however, upset the decision of the lower Court to transfer the company held family home to the wife. The lower Court held that the property was in reality owned by the husband as he had paid for its purchase with his own money. This is the type of argument upon which claimant spouses will need to rely if there are now to be able successfully to attack corporate structures on divorce.

For over a decade England has come to be seen as a place affording great generosity to claimants on divorce. The Prest decision is a rare example of judicial curtailment of such indulgence.

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