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Prest and the Corporate Veil

Today, the Supreme Court begins hearing the case of Michael and Yasmin Prest, in what could end up as one of the most significant rulings in recent family law history. The case centres on whether the court has the power to order companies operated by Mr Prest to make payments of lump sums to Mrs Prest in satisfaction of her claims arising on the couple's divorce.

The issue at stake is whether a company, which has its own legal status, can be ordered to pay out on behalf of someone else, albeit someone who controls that company in the first instance. So far, the courts have been divided, with the Court of Appeal being divided on the issue. Family lawyers have come to refer to this as "piercing the corporate veil". Of the the three Court of Appeal judges who heard the case last time, two judges, whose backgrounds are very much in civil law, remain convinced that the veil should remain in tact. That means that the company retains its own legal persona. As it is not a party to the case, it cannot be ordered to make the payments.

The third judge, whose background is in family law, took a different view. He saw the company as providing for the family's wealth during the marriage because of the way it had been controlled by the husband. Is it now fair, he argued, for the husband to hide behind the "corporate veil"?

So the highest court in the land has to wrestle with the competing interests of the parties as well as the way the law is interpreted. Their ultimate decision could have very far reaching consequences in determining how "big money" cases in England are decided.

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