The principle was stated in its most absolute form by Denning LJ in a famous dictum in Lazarus Estates Ltd v Beasley:[15], "No court in this land will allow a person to keep an advantage which he has obtained by fraud. 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. The Petrodel business is focused on bringing value added to Africa’s oil and gas sector. 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. One of these principles is that the law defines the incidents of most legal relationships between persons (natural or artificial) on the fundamental assumption that their dealings are honest. Mr Prest was represented by Martin Pointer QC, Kate Davidson QC and Simon Webster. The metaphor of piercing was thought to be unhelpful by most of the judges in the Supreme Court. There was no need to pierce the corporate veil, which could only be done in limited situations. 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. A company may be a façade even though originally incorporated without deceptive intent. 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 … 52. 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 foundations of the Petrodel business are firmly embedded in long term relationships developed through investment in the people’s of the African continent. 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…". Richard Todd QC and Stephen Trowell (later joined by Daniel Lightman) acted for Mrs Prest throughout. Justices. The business is geared towards driving the modernisation and rehabilitation programme of Nigeria’s power generation, transmission and distribution infrastructure. 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. They had married in 1993 and divorced in 2008. 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. 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. 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. Also as he said in VTB Capital plc v Nutritek International Corp[26] it is wrong to foreclose all future possibilities of piercing the veil. "Piercing the corporate veil" is an expression rather indiscriminately used to describe a number of different things. Prest v Petrodel. [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. It describes the process, but provides no guidance as to when it can be used. [11] The same was true under the MCA 1973 s 24. This is not a liability under the general law, for example for breach of contract. Thus, it would presumably apply equally to a person who transfers assets to a spouse or civil partner, rather than to a company. 106. The impropriety must be linked to the use of the company structure to avoid or conceal liability. This essay will argue the decision has done little to fault the Salomon principle. Of course in so operating them husband ignored all company law requirements and checks. 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. 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". 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. 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. Claim by Mrs. Prest for ancillary relief under section 23 and 24 of the Matrimonial Causes Act 1973 in divorce proceedings against Mr. Prest. 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. Lord Neuberger emphasised that piercing the corporate veil should be the last resort. The corporate veil is a metaphorical phrase, established in the landmark case of Salomon v Salomon & Co Ltd 6 . However, in the recent landmark decision of Prest v Petrodel Resources Ltd and others [2013] UKSC 34 (“Prest v Petrodel”), the UK Supreme Court has attempted to clearly enunciate the core legal principles behind piercing the corporate veil. 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. On the contrary, that is what incorporation is all about.... 35. 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. Judgment details. 161. [12] He said the following. 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. This page was last edited on 11 December 2020, at 21:21. Prest v Petrodel Resources Ltd emphasises the importance of properly and transparently running companies. 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. Prest v Petrodel Resources Ltd concerned the financial settlement following the divorce of a Nigerian oil trader, Michael Prest, and his wife Yasmin. In order to pierce the veil, both control by the wrongdoer and impropriety must be demonstrated. [10] Patten LJ commented on other Family Division cases leading to similar results. 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. 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. One of Mr Prest’s failings was to provide funding without properly documented loans or capital subscription. [7] The husband's properties were worth approximately £37.5 million, and therefore the wife's fair award was valued at £17.5 million.[8]. 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’. That must now cease. 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 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. Facts: Mr Prest was an oil-trader. The evidence was obscure, but this was because of Mr Prest’s obstruction and mendacity. 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 principle is properly described as a limited one, because in almost every case where the test is satisfied, the facts will in practice disclose a legal relationship between the company and its controller which will make it unnecessary to pierce the corporate veil. . If someone did try to frustrate a claim, the MCA 1973 section 37 made provision for setting aside certain dispositions. 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. Prest v Petrodel Resources Ltd [2013] UKSC 34. 17. Ownership and control were not in themselves sufficient to pierce the corporate veil. [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". 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 . 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. This principle is frequently referred to as 'piercing' or 'lifting the corporate veil'. Central to Prest was the extent to which property held by a company controlled by a party But under MCA 1973 s 24(1)(a) ancillary relief was wider. 64. Petrodel Resources Ltd. | 26 followers on LinkedIn. [20] In Canada, "[t]he law on when a court may … '[lift] the corporate veil' … follows no consistent principle". 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. 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. 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. 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. 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. 20 E Roxburgh, ‘Prest v Petrodel Resources Ltd: Cold Comfort for Mrs Prest in Scotland’ (2013) SLT 32 223-225, 225. 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 … •LAND AND OFFSHORE DRILLING But it has a variety of specific principles which achieve the same result in some cases. 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. However, there are three points to be made about that formulation. 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. 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. So long as the marriage lasted, the husband's companies were milked to provide him and his family with an extravagant lifestyle. All people over 65 years old and all people over 50 years old who cannot live independently are currently eligible to get vaccinated. 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 companies were represented by Tim Amos QC, Christopher Wagstaffe QC, Oliver Wise and Ben Shaw. This article will critically evaluate the significance of the Prest v Petrodel Resources Ltd[1] decision in light of the corporate veil doctrine. Prest v Petrodel Resources Ltd & Ors [2013] UKSC 34 (12 June 2013) March 22, 2018/in Company /Private Law Tutor. "[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". This is a case with regard to family law. [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. 12 Jun 2013. 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. Better Business Bureau helps Washington consumers find businesses and charities they can trust. 34. Lord Mance emphasised that future possible situations where the veil could be pierced should not be foreclosed. 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. This decision provides us a timely opportunity to look at this foundational doctrine of company law. 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. [16] Or to abrogate a right derived from a legal status, such as marriage. 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. 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. Because Mr Prest’s properties were worth £37.5 million, Mrs Prest’s fair award was valued at £17.5m. Whether assets legally vested in a company are beneficially owned by its controller is a highly fact-specific issue. No judgment of a court, no order of a Minister, can be allowed to stand if it has been obtained by fraud. 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. 93. Petrodel Resources Ltd. is an oil & energy company based out of 21 Circular Rd, Isle of Man, Isle of Man, United Kingdom. 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. 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. Properly speaking, it means disregarding the separate personality of the company. 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. The Court of Appeal, with Rimer LJ and Patten LJ in the majority, allowed an appeal by the companies. 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