The business is geared towards driving the modernisation and rehabilitation programme of Nigeria’s power generation, transmission and distribution infrastructure. The evidence was obscure, but this was because of Mr Prest’s obstruction and mendacity. The court is careful not to find fraud unless it is distinctly pleaded and proved; but once it is proved, it vitiates judgments, contracts and all transactions whatsoever…". The companies were represented by Tim Amos QC, Christopher Wagstaffe QC, Oliver Wise and Ben Shaw. 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. This is not a liability under the general law, for example for breach of contract. 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. 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:   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. The Joint Venture plans to tender for oil blocks in the Niger Delta in the bidding rounds scheduled for October as well as for other projects in some West African countries. Petrodel Resources Ltd. is an oil & energy company based out of 21 Circular Rd, Isle of Man, Isle of Man, United Kingdom. Justices. I should first of all draw attention to the limited sense in which this issue arises at all. If the law permits him so to do it defeats the Family Division judge's overriding duty to achieve a fair result. 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 . 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. 106. . 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. The same legal incidents will not necessarily apply if they are not. Fraud cuts through everything. •LAND AND OFFSHORE DRILLING This did invoke property concepts with established meanings, and did not mean something different in matrimonial proceedings. 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. 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? But I venture to suggest, however tentatively, that in the case of the matrimonial home, the facts are quite likely to justify the inference that the property was held on trust for a spouse who owned and controlled the company. It is a very specific statutory power to order one spouse to transfer property to which he is legally entitled to the other spouse. 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. 18. Because Mr Prest’s properties were worth £37.5 million, Mrs Prest’s fair award was valued at £17.5m. In many, perhaps most cases, the occupation of the company's property as the matrimonial home of its controller will not be easily justified in the company's interest, especially if it is gratuitous. This essay will argue the decision has done little to fault the Salomon principle. 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. 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. Of course, structures can be devised which give a different impression, and some of them will be entirely genuine. Prest (Appellant) v Petrodel Resources Limited and others (Respondents) Judgment date. [19] In Australia, "there is no common, unifying principle, which underlies the occasional decision of courts to pierce the corporate veil", and that "there is no principled approach to be derived from the authorities". They had married in 1993 and divorced in 2008. 16. The argument is that that is a power which can, because the husband owns and controls these companies, be exercised against the companies themselves. Because Munby J had rejected these possibilities in Ben Hashem v Al Shayif[9] his order must have been incorrect. Shoreline Power Company Limited, CEO Kola Karim,  says ‘There is a natural synergy that exists between our two companies and this JV is between two serious and like minded entities determined to bring a fair deal in energy and power resource to the people’s of the African Continent. In order to pierce the veil, both control by the wrongdoer and impropriety must be demonstrated. 17. 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. 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 … 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. 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. But when we speak of piercing the corporate veil, we are not (or should not be) speaking of any of these situations, but only of those cases which are true exceptions to the rule in Salomon v A Salomon & Co Ltd,[13] i.e. The authorities show that there are limited circumstances in which the law treats the use of a company as a means of evading the law as dishonest for this purpose. English law has no general doctrine of this kind. 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. Paradise Papers - Nevis corporate registry Entity: PETRODEL RESOURCES (NEVIS) LTD. [17] Or to disapply a statutory time bar which on the face of the statute applies. 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. Part I – Prest 2. These considerations reflect the broader principle that the corporate veil may be pierced only to prevent the abuse of corporate legal personality. The court therefore had jurisdiction to make a transfer order. It describes the process, but provides no guidance as to when it can be used. Another was to take funds from the companies whenever he wished, without right or company authority. 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. It is not an abuse to cause a legal liability to be incurred by the company in the first place. [21] In New Zealand, "'to lift the corporate veil' … is not a principle. The Family Division’s practice of treating the assets of companies substantially owned by one party to the marriage as available for distribution under MCA 1973 section 24(1)(a) was beyond the jurisdiction of the court unless the corporate personality of the company was being abused. The veil can only be pierced if there is impropriety. It is only right to acknowledge that this limited doctrine may not, on analysis, be limited to piercing the corporate veil. Thus, it would presumably apply equally to a person who transfers assets to a spouse or civil partner, rather than to a company. 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. 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. Claim by Mrs. Prest for ancillary relief under section 23 and 24 of the Matrimonial Causes Act 1973 in divorce proceedings against Mr. Prest. Mrs Prest said they held legal title to properties that he beneficially owned, including a £4m house at 16 Warwick Avenue, London. 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. Facts: Mr Prest was an oil-trader. [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. [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. [20] In Canada, "[t]he law on when a court may … '[lift] the corporate veil' … follows no consistent principle". 21 JHY Chan, ‘Should ‘Reverse Piercing’ of the Corporate Veil be Introduced in English Law’ (2014) Comp Law 35(6) 163-171, 163. This article will critically evaluate the significance of the Prest v Petrodel Resources Ltd[1] decision in light of the corporate veil doctrine. That must now cease. 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. The Petrodel business is focused on bringing value added to Africa’s oil and gas sector. Petrodel Resources Ltd. | 26 followers on LinkedIn. Student I'D: 694321The judgment of the Supreme Court in the case Prest v Petrodel Resources Ltd 5 represents a consistent reluctance against disregarding the corporate veil. Of course in so operating them husband ignored all company law requirements and checks. [11] The same was true under the MCA 1973 s 24. A limited supply of COVID-19 vaccinations is available! 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. He did not comply with orders for full and frank disclosure of his financial position, and the companies did not file a defence. 20 E Roxburgh, ‘Prest v Petrodel Resources Ltd: Cold Comfort for Mrs Prest in Scotland’ (2013) SLT 32 223-225, 225. But under MCA 1973 s 24(1)(a) ancillary relief was wider. This page was last edited on 11 December 2020, at 21:21. 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. The Court of Appeal, with Rimer LJ and Patten LJ in the majority, allowed an appeal by the companies. This is supported by the recent Supreme Court decision in Prest v Petrodel Resources Ltd, where a divorced wife claimed shares in houses owned by companies in which her ex-husband was the controlling shareholder. 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. 34. There had been no evidence that Mr Prest had set up the companies to avoid any obligations in these divorce proceedings, so there was no ground for piercing the corporate veil. It was of key interest as it was a legal cross over between family law and company law. In the majority's view, this conflicted with Salomon v A Salomon & Co Ltd, as affirmed in Woolfson v Strathclyde Regional Council and Adams v Cape Industries plc. 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. However, there are three points to be made about that formulation. For specific statutory purposes, a company's legal responsibility may be engaged by the acts or business of an associated company. In this case the reality is plain. 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. [16] Or to abrogate a right derived from a legal status, such as marriage. There is a range of situations in which the law attributes the acts or property of a company to those who control it, without disregarding its separate legal personality. [3], Moylan J, in the Family Division of the High Court, held that Mr Prest had the ability to transfer the properties in practice, so he was “entitled” to them under MCA 1973 s 24(1)(a). 92. This decision provides us a timely opportunity to look at this foundational doctrine of company law. A company may be a façade even though originally incorporated without deceptive intent. I would be surprised if that were not often the case. 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. 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". 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. The corporate veil is a metaphorical phrase, established in the landmark case of Salomon v Salomon & Co Ltd 6 . No judgment of a court, no order of a Minister, can be allowed to stand if it has been obtained by fraud. 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). 12 Wednesday Jun 2013 Most advanced legal systems recognise corporate legal personality while acknowledging some limits to its logical implications. Petrodel Resources Limited and Shoreline Power Company Limited announce joint venture for integrated energy and power projects. Inbound Travel Restrictions. 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. One of Mr Prest’s failings was to provide funding without properly documented loans or capital subscription. 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 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. I conclude that there is a limited principle of English law which applies when a person is under an existing legal obligation or liability or subject to an existing legal restriction which he deliberately evades or whose enforcement he deliberately frustrates by interposing a company under his control. Thorpe LJ (a former judge of the Family Division) dissented, and said the following. 83. 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