Content area
Full Text
This article discusses the UK Supreme Court's decisions in Prest and VTB Capital and in particular the circumstances in which the corporate veil might be pierced. Following these decisions, it is arguable that the bar for situations in which the corporate veil might be pierced has been set even higher. The decision in Prest is likely to be welcomed by practitioners outside the family law arena as a return to certainty, the Supreme Court having twice now made it clear that extending the circumstances in which the corporate veil might be pierced would cut across established principles of company and insolvency law, both essential for protecting those dealing with companies.
On 12 June 2013, the UK Supreme Court overturned the UK Court of Appeal's decision in the case of Prest v Petrodel Resources' and in doing so ordered the transfer of several valuable properties to Mrs Prest from companies owned and controlled by Mr Prest as part of a £17.5m divorce settlement. However, the decision is likely to be of interest to practitioners outside the family law arena as the result was achieved by applying the law of trusts, while considering en route whether the corporate veil should be pierced. In particular, the Supreme Court unanimously agreed that it would be contrary to prior authorities and established principles of English law to extend the circumstances in which the corporate veil should be pierced. As in VTB Capital,2 the court was able to reach its decision (and in the case of Prest the same decision as was reached at first instance) without piercing the corporate veil and disregarding the separate legal personality of the relevant companies. The decision in Prest builds on the comments made in the Supreme Court's decision in VTB Capital by Lord Neuberger, who cited with approval the test laid down in Hashem,3 particularly that in order to pierce the...