Oil tycoon ordered to transfer properties held by firms owned and controlled by him to his wife as part of a divorce settlement.
This appeal arose out of proceedings for financial remedies following a divorce between Michael and Yasmin Prest and a divorce settlement of £17.5 million.
The couple, both in their 50s, married in 1993 and spent most of their time in London. They had properties in Nigeria and the Caribbean, and lived their life to a “very high standard”. The Husband claimed to be worth £48 million but the wife said he could be worth hundreds of millions.
The appeal concerned the position of a number of companies belonging to the Petrodel Group which were wholly owned and controlled by Michael Prest, the husband. One of the companies was the legal owner of five residential properties in the UK and another was the legal owner of two more. The question on this appeal was whether the court has the power to order the transfer of these seven properties to the wife given that they legally belong not to the husband but to his companies.
High Court’s decision
The husband had argued the properties, worth millions of pounds were not personally owned by him but by off-shore companies. The High Court ordered the husband to transfer the properties to the wife.
Court of Appeal’s decision in October 2012
In the Court of Appeal, three of the companies challenged the decision on the ground that there was no jurisdiction to order their property to be conveyed to the wife. The majority in the Court of Appeal agreed and criticized the practice of the Family Division of treating assets of companies substantially owed by one party to a marriage as available for distribution under the Matrimonial Causes Act 1973.
The Court of Appeal therefore ruled that the High Court judge had earlier wrongly ordered the husband to transfer properties, worth millions of pounds and held in the names of companies he controlled to the wife.
Supreme Court’s judgment
The Supreme Court unanimously allowed the appeal by the wife and declared that the 7 disputed properties vested in the companies, were ones that the husband was “entitled, either in possession or in reversion” and that in the particular circumstances of the case, they were therefore held on trust for the husband. During the legal proceedings, the husband was criticized for failing to be frank about the true extent of his wealth and the Supreme Court judge held that his conduct had been “characterized by persistent obstruction, obfuscation and deceit”.
The new ruling could potentially have significant implications for divorcing couples as the Supreme Court has sent a clear message that those seeking to avoid responsibilities to their divorcing spouses and children will not be allowed to succeed. This means that business people cannot deliberately hide assets in businesses or corporate structures to protect them in future in the event of a divorce.
If you would like further advice in connection with the matters raised in this article then please contact Miss Vincent or Miss Booth in our family department on 01926 422 101.