83. She asked the court to lift the corporate veil and treat her ex-husband and the companies as being effectively the same. 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). "[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". 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 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. Facts: Mr Prest was an oil-trader. 22 P Bailey, ‘2013: That Was The Year That Was in Company Law’ Co. L.N. In this case the reality is plain. •LAND AND OFFSHORE DRILLING 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? Because Munby J had rejected these possibilities in Ben Hashem v Al Shayif[9] his order must have been incorrect. Prest v Petrodel Resources Ltd [2013] UKSC 34. For specific statutory purposes, a company's legal responsibility may be engaged by the acts or business of an associated company. The same legal incidents will not necessarily apply if they are not. 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 … Prest v Petrodel Resources Ltd concerned the financial settlement following the divorce of a Nigerian oil trader, Michael Prest, and his wife Yasmin. 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. 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. Prest v Petrodel. 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. 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 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. I should first of all draw attention to the limited sense in which this issue arises at all. 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. Lord Neuberger, Lord Walker, Lady Hale, Lord Mance, Lord Clarke, Lord Wilson, Lord Sumption. [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". 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 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. 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’. Appeal from – Petrodel Resources Ltd and Others v Prest and Others CA 26-Oct-2012 The parties had disputed ancillary relief on their divorce. The veil can only be pierced if there is impropriety. 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 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. [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]. Lord Sumption gave the first judgment. 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. 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 had set up number of companies. However, there are three points to be made about that formulation. [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. In order to pierce the veil, both control by the wrongdoer and impropriety must be demonstrated. It is only right to acknowledge that this limited doctrine may not, on analysis, be limited to piercing the corporate veil. [2] Mr Prest contended that he was not entitled to the properties. 2014, 347, 1-4,2 One of Mr Prest’s failings was to provide funding without properly documented loans or capital subscription. 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. There was no need to pierce the corporate veil, which could only be done in limited situations. 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. Claim by Mrs. Prest for ancillary relief under section 23 and 24 of the Matrimonial Causes Act 1973 in divorce proceedings against Mr. Prest. Richard Todd QC and Stephen Trowell (later joined by Daniel Lightman) acted for Mrs Prest throughout. [12] He said the following. The metaphor of piercing was thought to be unhelpful by most of the judges in the Supreme Court. 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. 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). The Petrodel business is focused on bringing value added to Africa’s oil and gas sector. SHORELINE POWER COMPANY LIMITED: Part I – Prest 2. The company was established 15 years ago and is engaged in business in over 20 African nations. No judgment of a court, no order of a Minister, can be allowed to stand if it has been obtained by fraud. 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. 64. Ownership and control were not in themselves sufficient to pierce the corporate veil. [17] Or to disapply a statutory time bar which on the face of the statute applies. Lord Neuberger emphasised that piercing the corporate veil should be the last resort. Properly speaking, it means disregarding the separate personality of the company. If the law permits him so to do it defeats the Family Division judge's overriding duty to achieve a fair result. They had married in 1993 and divorced in 2008. 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. Petrodel Resources Ltd. | 26 followers on LinkedIn. It describes the process, but provides no guidance as to when it can be used. "Piercing the corporate veil" is an expression rather indiscriminately used to describe a number of different things. 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. The business is geared towards driving the modernisation and rehabilitation programme of Nigeria’s power generation, transmission and distribution infrastructure. 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’. I would be surprised if that were not often the case. 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. That must now cease. Mr Prest was represented by Martin Pointer QC, Kate Davidson QC and Simon Webster. English law has no general doctrine of this kind. 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. 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. 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. Inbound Travel Restrictions. The Supreme Court unanimously overturned the Court of Appeal and held that Mr Prest beneficially owned the assets of the Petrodel Resources Ltd companies under a resulting trust because he contributed to their purchase price. The court therefore had jurisdiction to make a transfer order. [4] In reviewing the law as it relates to piercing the corporate veil, he noted the following principles:[5], In that regard, he found that piercing was justified, not under the general principles,[6] but by virtue of the Act. 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