Copyright © 2021 CustomWritings. In 2013, the United Kingdom Supreme Court handed down a seminal judgment on the law of corporate veil, Prest v Petrodel Resources Ltd and Others UKSC 34, in which Lord Sumption proposed the evasion and concealment principles. In part satisfaction of this sum, the judge ordered three Petrodel group companies to transfer the seven properties in question to Mrs Prest. To conclude, it has been suggested by academic commentary that the decision reflects a ‘progressive trend of restricting the doctrine’. short, after Mr and Mrs Prest divorced, Moylan J. awarded Mrs Prest a sum of £17.5 million as a fair division of Mr Prest’s assets. On the other side of the coin, it would be less harmful than having ambiguous rules. It was established, inter alia, that Mr Prest was the Prest v. Petrodel UKSC 34 The Supreme Court has recently issued a decision confirming that English law permits a claimant to ignore the separate legal identity of a company, and " pierce the corporate veil " in certain circumstances. However, these cases are and will remain exceptional. As Lazarus explained “no court will allow a person to keep an advantage which had been obtained by fraud” This principle underpinned all of the early attempts to pierce the veil meaning that the court will not allow a corporate personality to be used to protect individuals from wrongdoing. The legal team representing Prest stated that ‘the decision is of major importance not only for family law and divorcing couples, but also for company law (…. However, it can be contemplated that slightly narrowing a doctrine which Supreme Court judges do not agree with does not mean that it is progressive. Prest v Petrodel Resources Ltd concerned the financial settlement following the divorce of a Nigerian oil trader, Michael Prest, and his wife Yasmin. It would possibly be applied in conjunction with other laws which would have the same effect and outcome as piercing the corporate veil. Using this essay writing service is legal and is not prohibited by any university/college policies. Both sides of the profession were affected differently. 4 0 obj It can be thus shown, that not much has changed and the decision makers are still unsure as to when the doctrine can be applied. Henceforth, this shows that Prest only narrowed only one specific factor in piercing the corporate veil, a factor which cannot be used in all cases. March 2013 - VTB Capital v Nutritek [2013] UKSC 5; [2013] 2 WLR 398 5. The recent Supreme Court judgment in Prest v Petrodel has prompted an avalanche of comment in the legal literature ‒ much of it on the implications for corporate rather than family law. Reasoning provided by Lord Sumption in Prest v petrodel: 16. It could be considered that an alternative approach would be to put the doctrine on a statutory basis so that the courts would have a guide to follow instead of consistently establishing conflicting views between themselves. An international forum for the discussion of law. On 12 June 2013 the Supreme Court handed down its decision in the second of the two cases, Prest v Petrodel Resources Limited. Prest was of particular interest because of the legal cross-over between family law and corporate law. 3 Prest v Petrodel Resources Ltd [2013] UKSC 34, [2013] 2 AC 415 at [19] per Lord Sumption. endobj 6. 3 0 obj observed in Jetivia SA v Būta (UK) Ltd [2013] EWCA Civ 968, para.21 : "The importance of protecting the separate rights of even a one-man company to its own property is critical to the interests of its creditors." Prior to Prest, in Lipman,the only way to lift the veil was if the company was regarded as a sham or mere façade. Most significantly, Neuberger also found that in cases where piercing the veil was considered, it either did not apply in the facts, or it was applied on the facts but the results could have been arrived at on some other legal basis. 22nd Dec 2020 Law Reference this. The value of the judgement was not in question, as the courts had already ruled the husband – a Nigerian oil tycoon – would have to pay his wife £17.5m, largely due to his conduct during the case, and he was not arguing over this. 1, para.8, per Lord Sumption. Mrs Prest was still able to get her 7 million from the money that Mr Prest was keeping in his companies by arguing that all the money that the companies held were put there by Mr Prest only, thus, it belonged to him on the grounds of resulting trust. Prest v Petrodel Resources Ltd & Others [2013] UKSC 34 Introduction. The fact that none of these questions seem to provide a clear picture further creates problems today as for a doctrine to develop or adapt to the new changes, the reasoning’s behind the past decision needs to be understood thus, if one cannot do that then how can the doctrine be established. Whеthеr yоu strugglе tо writе аn еssаy, соursеwоrk, rеsеаrсh рареr, аnnоtаtеd bibliоgrарhy, soap note, capstone project, discussion, assignment оr dissеrtаtiоn, wе’ll соnnесt yоu with а sсrееnеd асаdеmiс writеr fоr еffесtivе writing аssistаnсе. It was of key interest as it was a legal cross over between family law and company law. In 2017, it is very difficult to predict what the future path for the doctrine will take as there are many conflicts on this topic even from the Supreme Court judges. If one keeps on rebutting every proposal that is brought forward then that is not progressive, it does not feel like any decision makers has tried to find a solution for this problem. By clicking “Proceed”, you agree to our terms of service and privacy policy. The whole concept of lifting the veil was derived from Salomon v Salomon where corporate veil was established. Prest brings a new kind of uncertainty. The Background Of Racial Profiling International Law Essay, CustomWritings – Professional Academic Writing Service, Tips on How to Order Essay. For some the most helpful case is the decision in Pennyfeathers limited v Pennyfeathers property company limited. Notwithstanding, since Prest, it is no longer sufficient for a company to show that it is ‘a mere façade or a sham’; one must show that control of the company by the wrongdoer was used as a device to conceal the wrongdoing.  A new provision on how the doctrine should be established was brought in Prest. <>/ExtGState<>/XObject<>/ProcSet[/PDF/Text/ImageB/ImageC/ImageI] >>/MediaBox[ 0 0 595.44 841.68] /Contents 4 0 R/Group<>/Tabs/S/StructParents 0>> Lord Mance argued that “It is dangerous to seek to foreclose all possible future situations which may arise and I would not wish to do so”  Furthermore, it should be considered that Prest only dealt with one specific class of asset which were held by those of corporate entities. It can be indicated that if Prest was successful in providing a set answer as to what piercing the corporate veil entails then there would have been many cases which would have pierced the veil post Prest. As stated above, Lord Neuberger, Lord Clarke and Lady Hale were not entirely convinced on the validity of the doctrine and seeing it as merely a metaphor which was unclear and inchoherent. The critical points which would be analysed in this essay would be whether Prest has brought us closer to what the principle of lifting the corporate veil can be defined as, what it entails or whether the whole doctrine should be set aside. %PDF-1.7 It seems that it is going around in a vicious circle without reaching an end-point. It seems that the judges only deal with these when and how it comes. In Prest, they all accepted the existence of a general common law veil piercing as being limited to rare and exceptional circumstances. Analysis The decision in Prest v Petrodel is an important and helpful one as it makes some attempt to identify the principle underpinning the jurisdiction and to clarify the situations in which it will be possible to pierce the corporate veil and to limit its application to those situations in which it is justified. This could create further confusion as to what the doctrine of piercing the corporate veil originally intended to do. <> Has Prest v Petrodel made the law clearer? It can be disputed that this is a never ending vicious circle. It seems as if it is an entertaining ground for judges to see what new solution can be made this time around. Learn How to Order Essay Online. <> It seems that we are at a halt with the long marathon until, a case can fully apply the two provisions in Prest. It is said to be a better example of facts for giving rise to the principle of piercing the veil. On the contrary, it seems that even if the doctrine is set aside, the principles would still be applied unknowingly by judges, it would perhaps not be defined as ‘piercing the veil doctrine’. The principles of lifting the corporate veil for the past eight decades seemed to have never been wholly established as judges always contradicted each other and never reached a unanimous decision. Most recently, analysed by Lord Sumption where he identified the concealment and evasion principle. A Digman A, John Lowry, Company Law (8th edn OUP Oxford), Birds J, Boyle Clark B et al, company Law (9th edn, Jordan Publishing), Dr Wilde C, Smith and Keenan’s Company Law ( 17th edn Pearson), Lowry J, and Arad Reisberg, Company Law & Corporate Finance (4th Edn, Pearson, Akansha Dubey et al, ‘Family Law’ (2014) 3(1), A Alcock ‘piercing the veil- A dodo of a Doctrine (2013) 25 denning LJ 241,243, A Bowden ‘Concealment, Evasion and Piercing the corporate veil: Prest v Peterodel Resources Ltd [2013], Greens Business law, April 2014, Bull S, ‘piercing the corporate veil in England and Singapore’ [2014] Heinonline, C Hare, ‘Piercing the corporate veil in the supreme court (again)’- The Cambridge Law Journal, 72 [2013] 511-515, Chrysthis N Papacleovoulou, “lifting” or “piercing”, ‘the corporate veil in Cyprus: a doctrine under challenge- an analysis of English and Cyprus case Law analysis’ (2016) 27 (4) ICCLR, D Lightman, ‘Petrodel Resources Ltd v Prest: Where are we now?’ – Trust & Trustees (2013) 19 (9):877, J McDonagh, ‘Piercing the corporate veil in the family division: Prest– the latest from the court of appea’l- Trust and Trustees (2013) 19 (2) 137, J Payne ‘Lifting the corporate veil: A reassessment of the fraud exception’ Cambridge law Journal, 56 (2) July 1997, Mujih E, ‘Piercing the corporate veil as a remedy after Prest V Petrodel resources Ltd: Inching towards Abolition’ [2016] Westlaw 17,17, Pey Woan Lee, ‘The Enigma of Veil- Piercing’ (2015) 26 (1) ICCLR 28, 30, Spear’s, ‘Expert analysis of the Prest Judgement’ (Spear’s ,11 June 2013), Tan Cheng-Han, ‘Veil piecing- a fresh start’ (2015) 1 JBL, Spear’s, ‘Expert analysis of the Prest Judgement (Spear’s ,11 June 2013) <> accessed 8th March 2017, Simon Mcleod- ‘The Corporate Veil And Its Piercing As Clear As…?’, Akzo Nobel NV v Competition Commission [2013] CAT 13, Antonio Gramsci Shipping Corp & ors v Aivars Lembergs [2013] EWCA Civ 730, DHN Food Distributors Ltd v Tower Hamlets London Borough Council [1976] 1 WLR 852, Lazarus Estates Ltd v Beasley [1956] 1 QB 702, Prest v Petrodel Resources Ltd UKSC 34, [2013], Trustor AB v Smallbone (No 2) [2001] EWHC 703, VTB Capital plc v Nutritek International Corp [2013] UKSC 5, Woolfson v Strathclyde Regional Council [1978] UKHL 5, French D, Mayson S & Ryan C, Company law (31st edn, OUP) 127, Lowry J, and Arad Reisberg, Company Law & Corporate Finance (4th Edn, Pearson) 35, Birds J, Boyle Clark B et al, company Law (9th edn, Jordan Publishing) 60, Alistair Alcock ‘piercing the veil- A dodo of a Doctrine (2013) 25 denning LJ 241,243, Prest [69] (lord Neuberger) Alistar Alcock (n 18) 250, Piercing the corporate veil in the family division: Prest– the latest from the court of appeal- Trust and Trustees (2013) 19 (2) 137, Piercing the corporate veil in the supreme court (again)- The Cambridge Law Journal, 72 [2013] 511-515, Pennyfeathers limited v Pennyfeathers property company limited [2013] EWHC 3530 (Ch), Bull S, ‘piercing the corporate veil in England and Singapore’ [2014] Heinonline 39,39,   Simon McLeod- ‘The Corporate Veil And Its Piercing As Clear As…?’, Akansha Dubey et al, ‘Family Law’ (2014) 3(1) 214,217, Tan Cheng-Han, ‘Veil piecing- a fresh start’ (2015) 1 JBL 20,21, Chrysthis N Papacleovoulou, “lifting” or “piercing”, ‘the corporate veil in Cyprus: a doctrine under challenge- an analysis of English and Cyprus case Law analysis’ (2016) 27 (4) ICCLR 129,130. Contrarily to the above, despite there not being a set doctrine, it seems that the Lordships all agree on one aspect. Moreover, another approach could be piercing the veil by removing limited liability towards involuntary creditors, notably tort victims. Abstract In a seminal judgement in 2013, Prest v Petrodel, the English Supreme Court clarified the law of piercing the corporate veil. There has been extensive discussion as to whether a court can ignore the principle of separate legal personality and treat a company’s property, rights and obligations as belonging to a person who owns and controls the company. This could perhaps be a starting point of a well-established doctrine. 216 Thus, even if it is given its quietus, the doctrine would still be there transparently. 8, Lord Sumption said separate personality and property of a company is sometimes described as a fiction, and in a sense it is. This was because ‘references to a façade or sham beg too many questions to provide a satisfactory answer” He attempted to give an explanation; He stated that the veil would be restricted to two principles: the concealment principle and the evasion principle. <>/Metadata 299 0 R/ViewerPreferences 300 0 R>> stream Could this perhaps suggest that it is better to abandon the doctrine as a whole rather than to try and figure out what the principle actually proposes to do. %���� The article offers an evaluation on whether the judgment in Prest, has indeed, provided much needed clarity on the judicial approach to the concealment/evasion … Prest v Petrodel Resources Ltd [2013] 3 W.L.R. It was of key interest as it was a legal cross over between family law and company law. On these grounds, this could show that the doctrine does not necessarily need to exist as the same outcome can be arrived on some other legal basis. John Wilson QC of 1 Hare Court analyses the Supreme Court’s judgment in the landmark case of Prest v Petrodel and considers its implications for family lawyers. Lifting the corporate veil has been viewed narrowly to be the process used by the courts to either determine what exactly is going on behind the shell of incorporation. It was held that a limited company was viewed “like any other independent person with its right and liabilities appropriate to itself”  The Salomon principle has been the foundation on which company law and business corporations have thrived on for years. 2 0 obj It can be indicated that the doctrine could perhaps only exist to give reassurance to corporate businesses in order to ensure them that they have a sense of security in case something goes wrong, but in reality, it does not exist and is rarely applied. The relatively short and significant judgment in the Supreme Court case of Prest v Petrodel Resources Ltd has gathered vociferous interest from academics and practitioners. More importantly, the HL emphasised that “it is only appropriate to pierce the corporate veil where the circumstances indicate that the company is merely a façade concealing true facts. The case raised important issues regarding the scope of section 24 of the Matrimonial Causes Act 1973, the doctrine of piercing the corporate veil and the law of resulting trusts. By classifying veil-piercing as evasion, his Lordship suggested that concealment cases were not truly veil-piercing. In Smallbone,Sir Morritt brought forward the argument that it is uncertain as to which circumstances a company can be considered as a sham or whether the company need to do something illegal for immorality to suffice.  Hence, this suggests that there is no clear structure to be followed. More recently, in Akzo Nobel in its arguments had suggested that the Competition Commission had tried to attribute the activities of the subsidiaries to Akzo Nobel which was in effect piercing the corporate veil. This article examines the judicial approach to the corporate veil post-Prest v Petrodel Resources Ltd. !��G� ��#���p��߯��D;�s��}���g���d�wf�;��1Q���\4��'�d/>^�ø���L.e詧�R��� �^�Bw;��n��'�͹��@�E������3��Y����ޙE��ٜ�yw)}�a�?f���a���뉯.N�OH���A�Dbp���\h�����g>=�0�`�0��Ύ��i|��7=px\� N{j�<��� &�����A,:0b��g�*9 b��Y;�"ya�`�@��nq����v6\�Z&�^|>��|��1,Χ������a����������Eʋ��$�����S��������t�g`S��C��*���.�a�K. The court reaffirmed in Prest the well-established judicial conservatism approach that the corporate veil could only be pierced in ‘very rare cases’ Therefore, despite the doctrine not being clear, it is well established that the doctrine is not be considered in all corporate cases but, ought to be considered only rare ones. The relatively short and significant judgment in the Supreme Court case of Prest v Petrodel Resources Ltd has gathered vociferous interest from academics and practitioners. Mr Prest wholly owned and controlled (directly or indirectly, through intermediate entities) a number of non-UK resident companies which, between them, owned seven residential properties in the UK. It seems that in every case that involves piercing the veil, the defendants always argue that there is “no such thing as piercing the corporate veil” thus, could it be that many wrongdoers have been able to escape liabilities simply because the doctrine was not well established. On the other hand,it can be argued, that the strictness of the approach led to the doctrine existing more as a matter of legal theory than as a feature of legal practice. It therefore appears that where litigants can show that the relevant tests are satisfied, the courts will allow them to obtain judgement against assets that were intentionally placed out of their reach. The decision had the potential radically to change the legal landscape for family practitioners, … Analysis of Prest v Petrodel Resources Ltd. 4485 words (18 pages) Essay. High-quality, original, refereed academic writing ; Contemporary substantive law, legal theory and history, and other aspects of the study of law in its social and cultural context In Prest v Petrodel at para. Prest v Petrodel Resources Ltd UKSC 34, 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. Empirical Analysis, 1885–2014 Alan Dignam* and Peter B Oh** Abstract—For over a century UK courts have struggled to negotiate a coherent approach to the circumstances in which the Salomon principle –that a corporation is a separate legal entity–will be disregarded. ), and it is the most important reviews since Victorian times on the law regarding piercing the corporate veil’. The wife, Mrs Prest, divorced her husband, Mr Prest, who owned several ... analysis is that English law does not allow the piercing of the veil simply The case concerned a very high value divorce . endobj The new approach found in VTBand Prest significantly restrictive approach to piercing the corporate veil which in effect has relegated the doctrine to a principle of last resort. The reception which the doctrine received forty years ago is still echoed to this day in Prest. The interest of the whole group both financial and non- financial matters would be recognised. He observed that there is no English case which unequivocally underpinned a power to lift the veil; however, recognition is given to a limited power as a valuable judicial tool to undo wrongdoing in cases where no other solution exist’ It gives the impression that every judge will come up with a new principle every now and again which would be relied upon but then a couple of years after, a new judge will find criticism in the doctrine. However, despite this important distinction, the courts have always been wary that there must be some limit to the protection afforded by limited liability to ensure that business dealings remain honest. Medforth v Blake and others - [1999] 3 All ER 97 On Demand Information Plc & Ors v Michael Gerson (Finance) & Ors [2002] UKHL 13 Powdrill v Watson [1995] 2AC 394 Ricketts v Ad Valorem Factors Ltd [2004] 1 All ER 894 Taylor Industrial Flooring Ltd v M & H Plant Hire (Manchester) Ltd [1990] B.C.L.C. Prior to Prest, there was no clear, consistent or compelling justification for piercing the corporate veil. After that, we will subject it to critical analysis (sub III). Courts most commonly did so in the following circumstances. Furthermore, there could be an extension which established distinct body rules for corporate groups such as in Germany. Provided that the principle was to be properly established then there is one thing that all decision makers would agree upon which would be that “the company was used in an attempt to immunise himself from the liability of wrongdoing”  This is consistent in DHN just as much as it is in Gramsci. Abstract. Since Salomon v Salomon, 1 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 initial financial contribution to it. The concealment principles is “the interposition of a company or perhaps several companies so as to conceal the real actors” But, he noted that this does not actually involve piercing the veil; the court is simply looking behind the façade to discover the true facts. When taking into consideration how the law has developed in this area, Cheung describes that it is evident the House of Lords decision in Woolfson came to be source for guidance in subsequent cases. The relatively short and significant judgment in the Supreme Court case of Prest v Petrodel Resources Ltd has gathered vociferous interest from academics and practitioners. Analysis is undertaken of the judgment in Prest and of how judges have adapted and applied this judgment in subsequent cases. Post Prest cases such as R v McDowell and R v Singh shows that the superior courts exercising restraint in disturbing the principle in Salomon. Lord Clarke argued that Sumption’s distinction “…the circumstances in which the doctrine apply are rare” This similar reaction has been echoed in the past. In Prest, Lord Sumption argued for a narrower and clearer approach by restricting the circumstances in which the veil may be pierced. x����h$`&��$'��Ӧ�O�Crh���H�>������.��L2ǵ�L3��m��/��ӢJo���y�������e�p�_�ߏ/6���6��*ͳ��U�M�x�''���s��_��=�)%�w�^:*d^��"y��?9��g�/_�ec�:�7/_0�;� "G̃��5���B:�%,���7e�����י��\���o`���|����9��Y^U�z|o�rB8#�=�=k��9��|x���!J9ǟ�F����������(r�9�"�FQR�'! It will be argued that the law should not be given its quietus as it seems that judges are somewhat getting closer to an answer. 4. Furthermore, this can be mirrored in Prest where Lady Hale and Lord Wilson doubted whether it is possible to classify all cases “neatly into cases of either concealment or evasion”  Therefore, even to this day there are a lot of question marks as to when and how the doctrine is applied; there are still a lot of unanswered questions which have not been dealt with. Long marathon until, a case can fully apply the two cases, Prest v Petrodel Resources Ltd Others! That Mr Prest was the Abstract question to Mrs Prest Neuberger drew conclusions. Approve which is that the judges only deal with these when and how it.. Agree on one aspect part satisfaction of this sum, the doctrine ’ analysed by Lord argued. Satisfaction of this sum, the judge ordered three Petrodel group companies to transfer the seven properties in to! Rise to the principle of piercing the veil would only be pierced Lord Sumption ’ s prest v petrodel critical analysis... 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