Partner, Kingsley Napley LLP:
In this article, William Healing of Kingsley Napley LLP suggests the solution the Supreme Court might adopt in the eagerly anticipated 5/6 March Supreme Court hearing in Petrodel v Prest.
Mrs Prest seeks to appeal the Court of Appeal's decision that it was improper to pierce the veil of her husband's complex property owning corporate structures, including Petrodel. The Court of Appeal overturned 30 years of case-law in the family sphere. It said family High Court judges have exercised a poor discipline in allowing assets owned in separate corporate structures, to be attacked within the wide discretionary powers available to the family judge, where the judge looks at the 'reality of the situation'. Judges had not respected the established chancery case law giving separate legal identity to corporations.
The Court of Appeal however was not asked to examine the findings at first instance about the Husband's alleged impropriety. Despite manifest concealment by the Husband, and total personal control of his companies, the High Court had decided, surprisingly, he had not behaved 'improperly'. Instead it used the more discretionary line of authorities, now overturned.
The author argues that the disciplined test of 'control and impropriety' should be endorsed by the Supreme Court as the correct test. If so, the family division will have its own test, derived from corporate law, but which achieves justice in those family cases where spouses use their companies as their personal fiefdoms.
The full version of this article appears in the March 2013 issue of Family Law.