Family Law

The Court of Appeal has given judgment in the case of Petrodel Resources Ltd and Others v Prest and Others [2012] EWCA Civ 1395, FLR forthcoming, with a decision that many family lawyers will find disappointing.  At first instance Moylan J had made an order requiring the appellant companies to transfer to the wife several properties in London held by them.  Moylan J had found that the London properties were ‘property' to which the husband was ‘entitled, either in possession or reversion' within the meaning of s 24(1)(a) Matrimonial Causes Act 1973 and reasoned that the husband was ‘entitled' to the property because all the assets held within the companies were ‘effectively the husband's property'. 

The Court of Appeal rejected this argument making clear that the fact that the husband was a 100% (or close to) shareholder in the companies did not mean that the companies' property belonged beneficially to him.  Leading judgment was given by Rimer LJ, who emphasised that it is not open to Family Division judges to make an order against company-held property unless there exists on the facts of the case relevant impropriety justifying the piercing of the corporate veil. He asked the rhetorical question, ‘why should family justice be regarded as different from any other sort of justice?'. Patten LJ declared that the current practice of Family Division judges ‘to adopt and develop an approach to company owned assets in ancillary relief applications, which amounts almost to a separate system of legal rules unaffected by the relevant principles of English property and company law, must now cease.' 

Thorpe LJ, in his dissenting judgment, warned that the majority's decision gave ‘an open road and a fast car to the money maker who disapproves of the principles developed by the House of Lords that now govern the exercise of the judicial discretion in big money cases.'

For a full case summary see here.