a. Introduction
This case note examines Prest v Petrodel Resources Ltd [2013] UKSC 34, a landmark Supreme Court decision addressing the piercing of the corporate veil in the context of matrimonial proceedings. The judgment provides important clarification on when courts may disregard separate corporate personality, particularly where company assets are controlled by a spouse. It remains essential reading for understanding the limits of veil-piercing doctrine.
b. Case facts
Michael Prest, a wealthy oil trader, had transferred several properties to offshore companies he controlled, including Petrodel Resources Ltd. Following the breakdown of his marriage, Yasmin Prest applied for financial remedies under the Matrimonial Causes Act 1973. She argued the company-held properties should be treated as her husband’s assets. The companies were joined as respondents, raising the question of whether the corporate veil could be pierced to satisfy the wife’s claims.
c. Legal Issues
The principal issues concerned the circumstances in which the court may disregard the separate legal personality of a company under the veil-piercing principle. The Court also considered whether the properties were held on resulting trust for Mr Prest, thereby allowing orders for transfer without invoking veil-piercing.
d. Decision and Ratio
The Supreme Court unanimously allowed Mrs Prest’s appeal. Lord Sumption held that veil-piercing is available only in rare cases where a company is used to evade an existing legal obligation or frustrate its enforcement. Here, the properties were beneficially owned by Mr Prest; therefore, they could be treated as his assets without piercing the veil. The ratio emphasises that impropriety alone is insufficient; there must be a relevant legal right being evaded.
e. Analysis
Prest narrows the scope of veil-piercing previously suggested in cases such as Adams v Cape Industries. The Court rejected a general “facade or sham” test, preferring a more principled approach based on evasion. This provides greater predictability for commercial parties while recognising that family courts may still reach company assets through other routes, such as trusts or statutory provisions. The decision arguably strikes a balance between respecting corporate separateness and preventing abuse.
f. Conclusion
Prest v Petrodel clarifies the limited role of veil-piercing and reinforces the primacy of separate legal personality. It demonstrates that alternative equitable remedies may achieve similar outcomes without undermining established company law principles. The judgment continues to influence both family and corporate litigation.
References
- Prest v Petrodel Resources Ltd [2013] UKSC 34, [2013] 2 AC 415.
- Adams v Cape Industries plc [1990] Ch 433 (CA).
- Dignam, A. and Lowry, J. (2022) Company Law. 11th edn. Oxford: Oxford University Press.
- Mulheron, R. (2020) ‘The Supreme Court and the corporate veil: Prest v Petrodel Resources Ltd’, Modern Law Review, 83(1), pp. 165–179.
