I am not sure whether it is possible to classify all of the cases in which the courts have been or should be prepared to disregard the separate legal personality of a company neatly into cases of either concealment or evasion. Further, at least in some cases where it may be relied on, it could probably be analysed as being based on agency or trusteeship especially in the light of the words "under his control". Amongst them is his invocation of company law measures in an endeavour to achieve his irresponsible and selfish ends. [20] In Canada, "[t]he law on when a court may … '[lift] the corporate veil' … follows no consistent principle". In this case the reality is plain. Petrodel Resources Limited and Shoreline Power Company Limited announce joint venture for integrated energy and power projects. The company’s business volume has grown at a steady rate and Shoreline Power Company Limited has increased its customer base both among Government establishments as well as private industries. Because Munby J had rejected these possibilities in Ben Hashem v Al Shayif[9] his order must have been incorrect. [16] Or to abrogate a right derived from a legal status, such as marriage. The argument is that that is a power which can, because the husband owns and controls these companies, be exercised against the companies themselves. In recognition that the greatest development challenges facing African nations in the 21st century concern access to affordable energy and power resources, Petrodel Resources Limited and Shoreline Power Company Limited are pleased to announce the formalisation of their strategic co-operation in a joint venture. 12 Wednesday Jun 2013 The evidence was obscure, but this was because of Mr Prest’s obstruction and mendacity. . 106. I find it difficult to understand how that can be done unless the company is a mere nominee holding the property on trust for the husband, as we have found to be the case with the properties in issue here. 161. A limited supply of COVID-19 vaccinations is available! A clear divide emerged between family practitioners, who warned of a ‘cheat’s charter’, and company practitioners keen to protect the long-established principle of separate corporate personality. The principle is mainly familiar in the context of contracts and other consensual arrangements, in which the effect of fraud is to vitiate consent so that the transaction becomes voidable ab initio. The Matrimonial Causes Act 1973 section 24 required that for a court to be able to order a transfer a property, Mr Prest had to be ‘entitled’ to the properties held by his companies. It is not possible to give general guidance going beyond the ordinary principles and presumptions of equity, especially those relating to gifts and resulting trusts. If you would like more information on the joint venture between Petrodel and Shoreline Power or to schedule an interview please contact: Would you like to make this site your homepage? The jurisdiction that Munby J purported to recognise would, however, cut across the statutory schemes of company and insolvency law that protected people dealing with a company. 16. This is a case with regard to family law. More to Read: FAQ on Seattle’s Reopening Status // FAQ on Seattle Street Safety Updated: Monday, January 11, 2021 COVID-19 Global Pandemic . This principle is frequently referred to as 'piercing' or 'lifting the corporate veil'. That must now cease. 22 P Bailey, ‘2013: That Was The Year That Was in Company Law’ Co. L.N. [18] These decisions (and there are others) illustrate a broader principle governing cases in which the benefit of some apparently absolute legal principle has been obtained by dishonesty. [1], Ms Yasmin Prest claimed under Matrimonial Causes Act 1973 sections 23 and 24 for ancillary relief against the offshore companies solely owned by Mr Michael Prest. Mrs Prest said they held legal title to properties that he beneficially owned, including a £4m house at 16 Warwick Avenue, London. New Judgment: Prest v Petrodel Resources Ltd & Ors [2013] UKSC 34. Learn more at the City of Seattle vaccination page. [11] The same was true under the MCA 1973 s 24. This article will critically evaluate the significance of the Prest v Petrodel Resources Ltd[1] decision in light of the corporate veil doctrine. [2] Mr Prest contended that he was not entitled to the properties. They may simply be examples of the principle that the individuals who operate limited companies should not be allowed to take unconscionable advantage of the people with whom they do business. Better Business Bureau helps Washington consumers find businesses and charities they can trust. Property legally vested in a company may belong beneficially to the controller, if the arrangements in relation to the property are such as to make the company its controller's nominee or trustee for that purpose. However, there are three points to be made about that formulation. If the law permits him so to do it defeats the Family Division judge's overriding duty to achieve a fair result. Prest v Petrodel Resources Ltd [2013] UKSC 34. These examples illustrate the breadth, at least as a matter of legal theory, of the concept of abuse of rights, which extends not just to the illegal and improper invocation of a right but to its use for some purpose collateral to that for which it exists. However, if either or both those points were correct, it would not undermine Lord Sumption's characterisation of the doctrine: it would, if anything, serve to confirm the existence of the doctrine, albeit as an aspect of a more conventional principle. The corporate veil is a metaphorical phrase, established in the landmark case of Salomon v Salomon & Co Ltd 6 . But what the cases do have in common is that the separate legal personality is being disregarded in order to obtain a remedy against someone other than the company in respect of a liability which would otherwise be that of the company alone (if it existed at all). He said there was only a limited power to pierce the corporate veil, namely when people were under an existing legal obligation which is deliberately evaded. Such a course is, I would have thought, at least normally, a matter for the legislature.... Lady Hale gave a judgment concurring in the result, with which Lord Wilson agreed, though added a qualification to Lord Sumption's decision. All people over 65 years old and all people over 50 years old who cannot live independently are currently eligible to get vaccinated. 18. Equitable remedies, such as an injunction or specific performance may be available to compel the controller whose personal legal responsibility is engaged to exercise his control in a particular way. The corporate form needed to be used for an improper purpose, or it had to be shown that the companies held the properties on trust for Mr Prest. Most advanced legal systems recognise corporate legal personality while acknowledging some limits to its logical implications. Petrodel Resources Limited (1), Petrodel Upstream Limited (2), Vermont Petroleum Limited (3) v Yasmin Aishatu Mohammed Prest (1), Michael Jenseabla Prest (2), Elysium Diem Limited (3) [2012] EWCA Civ 1395 (Court of Appeal, Lord Justice Thorpe (dissenting), Lord Justice Rimer, Lord Justice Patten, 26 … This page was last edited on 11 December 2020, at 21:21. Lord Mance emphasised that future possible situations where the veil could be pierced should not be foreclosed. They were Petrodel Resources Ltd ("PRL"), Petrodel Resources (Nigeria) Ltd ("PRL Nigeria"), Petrodel Upstream Ltd ("Upstream"), Vermont Petroleum Ltd ("Vermont"), Elysium Diem Ltd, Petrodel Resources (Nevis) Ltd ("PRL Nevis") and Elysium Diem Ltd (Nevis). control it gained considerable publicity in Prest v Petrodel Resources Ltd & Others [2013] UKSC 34.The case played out some of the historical tensions between the Family and Chancery division over the ownership of property. Tim Le Breton Petrodel Resources MD says ‘We have identified our role in the African market and whilst we are currently active in Nigeria, Tanzania, Uganda, The DRC and South Africa the goal is the creation of a Pan African energy and power resource providing affordable energy and power to the people’s of the African Continent’. Judgment details. SHORELINE POWER COMPANY LIMITED: The controller may be personally liable, generally in addition to the company, for something that he has done as its agent or as a joint actor. What we have in this case is a desire to disregard the separate legal personality of the companies in order to impose upon the companies a liability which can only be that of the husband personally. He rejected the husband had done anything improper relating to the companies to allow piercing the corporate veil. Lord Walker said he welcomed "the full discussion in the judgments of Lord Neuberger, Lady Hale, Lord Mance and Lord Sumption" and concluded with the following. 52. So, MCA 1973 section 24 did not give judges power to order Mr Prest to transfer property that he was not entitled to in law. The intention will normally be that the spouse in control of the company intends to retain a degree of control over the matrimonial home which is not consistent with the company's beneficial ownership. PETRODEL has accumulated an extensive fleet of flexible, mobile oilfield equipment that can meet the challenging demands of the oil and natural gas industry. The court may then pierce the corporate veil for the purpose, and only for the purpose, of depriving the company or its controller of the advantage that they would otherwise have obtained by the company's separate legal personality. Lord Neuberger emphasised that piercing the corporate veil should be the last resort. The Supreme Court in Prest v Petrodel Resources Ltd reviewed the principles of English law which determine in what circumstances, if any, a court may disregard the corporate veil of a company and attribute to its members the legal consequences of the company's acts. 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. But where, say, the terms of acquisition and occupation of the matrimonial home are arranged between the husband in his personal capacity and the husband in his capacity as the sole effective agent of the company (or someone else acting at his direction), judges exercising family jurisdiction are entitled to be sceptical about whether the terms of occupation are really what they are said to be, or are simply a sham to conceal the reality of the husband's beneficial ownership. This did invoke property concepts with established meanings, and did not mean something different in matrimonial proceedings. Mr Prest was represented by Martin Pointer QC, Kate Davidson QC and Simon Webster. 17. The significance of Prest was that it suggested that piercing the veil was usually a last resort, and that remedies outside of "piercing" the veil, particularly in equity, or the law of tort, could achieve appropriate results on the facts of each case. Part I – Prest 2. Once the marriage broke down, the husband resorted to an array of strategies, of varying degrees of ingenuity and dishonesty, in order to deprive his wife of her accustomed affluence. Prest v Petrodel Resources Ltd [2013] UKSC 34. •LAND AND OFFSHORE DRILLING Prest v Petrodel Resources Ltd concerned the financial settlement following the divorce of a Nigerian oil trader, Michael Prest, and his wife Yasmin. I should first of all draw attention to the limited sense in which this issue arises at all. Piercing The Corporate Veil: Prest Vs Petrodel Resources The Supreme Court has handed down a landmark judgement in favour of Mrs Prest in high profile matrimonial dispute. Central to Prest was the extent to which property held by a company controlled by a party He noted that in other Commonwealth countries there was also little consensus. These considerations reflect the broader principle that the corporate veil may be pierced only to prevent the abuse of corporate legal personality. However, because Mr Prest had been "entitled" to the assets of his companies under a resulting trust, under the Matrimonial Causes Act 1973 section 24 the court had jurisdiction to transfer half the value of the properties to Mrs Prest. In so far as it is based on "fraud unravels everything", as discussed by Lord Sumption in para 18, the formulation simply involves the invocation of a well-established principle, which exists independently of the doctrine. Prest v Petrodel Resources Ltd [2013] UKSC 34, [2013] 2 AC 415 is a leading UK company law decision of the UK Supreme Court concerning the nature of the doctrine of piercing the corporate veil, resulting trusts and equitable proprietary remedies in the context of English family law. Properly speaking, it means disregarding the separate personality of the company. Petrodel and Shoreline know from experience that the challenges and demands that face Africa today are unique and as such require tenable solutions which can only be provided by companies like Petrodel and Shoreline who are prepared to make a long term commitment to the continent while at the same time adhering to the highest professional standard in corporate governance. The three companies, each in the substantial ownership of the husband, challenged the orders made against them saying there was no jurisdiction to order their property to be conveyed to the . He agreed that Munby J in Ben Hashem v Al Shayif[25] was correct that the veil could only be pierced where all other possibilities were exhausted. Shoreline Power offers a complete range of power generation equipments in modular / static form for rapid deployment and possesses the manpower to provide total power management. It is not an abuse to rely upon the fact (if it is a fact) that a liability is not the controller's because it is the company's. Piercing the corporate veil: a new era post Prest v Petrodel. In civil law jurisdictions, the juridical basis of the exceptions is generally the concept of abuse of rights, to which the International Court of Justice was referring in In re Barcelona Traction, Light and Power Co Ltd[14] when it derived from municipal law a limited principle permitting the piercing of the corporate veil in cases of misuse, fraud, malfeasance or evasion of legal obligations. Examples are the provisions of the Companies Acts governing group accounts or the rules governing infringements of competition law by "firms", which may include groups of companies conducting the relevant business as an economic unit. Petrodel and Shoreline entered into this joint venture to unite Petrodel’s expertise of strategic supply and price risk management with Shoreline Powers infrastructure, manufacturing and management capabilities in order to best serve clients on the African continent who often require integrated energy and power solutions. This is the key case where SC considered the issue of whether the court possesses a general power to pierce the corporate veil in the case where these specific legal principles do not apply. No judgment of a court, no order of a Minister, can be allowed to stand if it has been obtained by fraud. In the weeks preceding the Supreme Court’s decision in Petrodel Resources Ltd v Prest, 1 the case was the subject of much attention and commentary, both in the media and legal circles. [24] In conclusion he said the following. However, on the facts, the Petrodel Resources Ltd companies could be ordered to transfer the properties under MCA 1973 section 24 because they belonged to him beneficially: under a resulting trust. But it has a variety of specific principles which achieve the same result in some cases. In any event, the formulation is not, on analysis, a statement about piercing the corporate veil at all. In Prest v Petrodel [2013] UKSC 34 the English Supreme Court undertook a review of the principles of English law which determine in what circumstances, if any, a court may set aside the separate legal personality of a company from its members and attribute to its members the legal consequences of the company’s acts. Even where there was no unconnected third party interest the veil could not be pierced only because it is necessary in the interests of justice. Since Salomon v Salomon, it has been well established in UK law that a company has a separate personality to that of its members, and that such members cannot be liable for the debts of a company beyond their … "[22] In South Africa, "[t]he law is far from settled with regard to the circumstances in which it would be permissible to pierce the corporate veil". Of course in so operating them husband ignored all company law requirements and checks. Shoreline Power Company Limited was established in 2004 and in June 2005, acquired ABB ELS, the manufacturing arm of ABB Nigeria with the vision of transforming the company into a one-stop Electric Power solution provider for the African continent. 64. A veil could be pierced only for the purpose of depriving the company or its controller of the advantage they would otherwise obtain from the company’s separate legal personality. He did not comply with orders for full and frank disclosure of his financial position, and the companies did not file a defence. [21] In New Zealand, "'to lift the corporate veil' … is not a principle. 2014, 347, 1-4,2 But it has been applied altogether more generally, in cases which can be rationalised only on grounds of public policy, for example to justify setting aside a public act such as a judgment, which is in no sense consensual, a jurisdiction which has existed since at least 1775. 92. Petrodel Resources Ltd. | 26 followers on LinkedIn. Justices. It's fast and easy... Kadaria Ahmed on 01 4934023-5 ext 226 or 0802 536 7401 or email Kadaria at, Tim Le Breton on 0941 2131371 or 0805544558 or email at. Richard Todd QC and Stephen Trowell (later joined by Daniel Lightman) acted for Mrs Prest throughout. Prest v Petrodel Resources Ltd [2013] UKSC 34 is a leading UK company law decision of the UK Supreme Court concerning the nature of the doctrine of piercing the corporate veil, resulting trusts and equitable proprietary remedies in the context of English family law. That was only possible because the companies were wholly owned and controlled by the husband and there were no third party interests. For specific statutory purposes, a company's legal responsibility may be engaged by the acts or business of an associated company. [10] Patten LJ commented on other Family Division cases leading to similar results. It describes the process, but provides no guidance as to when it can be used. I would be surprised if that were not often the case. 83. He ordered Mr Prest to transfer to the wife six properties and an interest in a seventh which were held in the name of two of the husband’s companies. The metaphor of piercing was thought to be unhelpful by most of the judges in the Supreme Court. And if the formulation is intended to go wider than the application of "fraud unravels everything", it seems to me questionable whether it would be right for the court to take the course of arrogating to itself the right to step in and undo transactions, save where there is a well-established and principled ground for doing so. This is not a liability under the general law, for example for breach of contract. This essay will argue the decision has done little to fault the Salomon principle. Facts: Mr Prest was an oil-trader. Petrodel’s strategy is predicated upon developing regional systems, from exploration and development of oil and gas reserves through crude trading, processing, supply, storage and wholesale distribution of refined products, shipping and ship’s agency services. In the converse case, where it is sought to convert the personal liability of the owner or controller into a liability of the company, it is usually more appropriate to rely upon the concepts of agency and of the "directing mind". Prest v Petrodel Resources Ltd & Others [2013] UKSC 34 Introduction. Neutral citation number [2013] UKSC 34. For the past 30 years orders have been made against the assets of a company that are considered to be the alter ego of a spouse to satisfy a capital award made by the court in respect of the other spouse.1In 2012 the Court of Appeals ruling in Petrodel Resources Ltd & Ors v Prest & Ors2set a new precedent stopping an ex-wife being able to investigate a company’s assets when she believes her husband has concealed assets within that company. Thorpe LJ (a former judge of the Family Division) dissented, and said the following. It may be an abuse of the separate legal personality of a company to use it to evade the law or to frustrate its enforcement. 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