Prest v Petrodel Resources 2013] UKSC 34: UK Supreme Court, Company Law, piercing the corporate veil.
June 18, 2013
In Prest v Petrodel Resources 2013] UKSC 34 the UK Supreme Court considered when it was appropriate to pierce the corporate veil of companies. It is a very significant decision which may be influential in Australia.
The appeal relates to ancillary relief sought by the respondent following divorce proceedings. The Appellant, the wife, sought recovery under the Matrimonial Causes Act or orders which would permit the court to pierce the corporate veil of a number of companies which were wholly owned and controlled by the the husband. At first instance the trial judge found there was no general principle which entitled him to reach the companies assets by piercing the corporate veil . The wife was unsuccessful on appeal to the Court of Appeal.
The wife was successful on the basis, the court found, that the husband, and not the companies, had originally provided the funds for the properties in dispute to be bought. Trust law principles were applied and the court found that the companies held the properties in trust for him. As he was ‘entitled’ to them the court could transfer them to the wife.
While the Appellant was unsuccessful in her appeal seeking order to pierce the corporate veil the judgment was most significant in its consideration of the principle as to when the corporate veil may be pierced and the limitations on the doctrine.
His Lordship commenced his analysis by discussing what piercing the corporate veil actually means and, critically, what it doesn’t mean. As to its meaning he said “..properly speaking, it means disregarding the separate personality of the company…” where “.. a person who owns and controls a company is said in certain circumstances to be identified with it in law by virtue of that ownership and control .” he drew a distinction between those circumstances and where the law attributes the acts or property of the company to those who control including:
- where the controller Read the rest of this entry »