Oil tycoon loses offshore assets in HK$212m divorce case

Ex-wife to get overseas wealth in HK$212m suit judged 'significant' for rich divorcing couples

PUBLISHED : Thursday, 13 June, 2013, 12:00am
UPDATED : Thursday, 13 June, 2013, 1:49am


Britain's top court yesterday handed an oil tycoon a costly setback in a divorce case, ruling he must give his ex-wife assets held by an offshore company he owns as part of a £17.5 million (HK$212 million) settlement.

In a case with significant implications for wealthy divorcing couples, the Supreme Court ruled that Nigeria-born Michael Prest should surrender seven properties to his English former wife, Yasmin.

British law provides that companies are legally separate entities from their shareholders - raising a corporate veil - in order to protect investors from debts or liabilities that the company may accumulate.

But Alison Hawes, a specialist family lawyer at law firm Irwin Mitchell, said yesterday's ruling meant "that business people cannot deliberately 'hide' their assets in businesses and corporate structures to protect them in future in the event of a divorce".

The couple, now in their 50s, married in 1993 and lived in Britain before divorcing in 2011. Michael Prest was ordered to transfer the properties as partial payment of the settlement.

He challenged the decision, and last year the Court of Appeal ruled that the companies constituted a separate legal entity and could not be included in the divorce.

But seven Supreme Court justices ruled the properties held in trust by Petrodel Resources were assets to which Michael Prest was "entitled" and should be included in a divorce settlement.

The court insisted it was not establishing a general principle allowing courts to "pierce the corporate veil" and seize assets in divorce cases. But legal experts said the judgment was still significant.

"The Supreme Court has handed down a landmark decision in which, for the first time since at least the end of the 19th century, it has accepted a general exception to the rule against 'piercing the corporate veil'," said Michael Hutchinson, a partner at law firm Mayer Brown.

"This is an extraordinary decision and the implications for corporate governance are potentially huge."

Yasmin Prest said the judgment was "more a case of satisfaction and relief than celebration. None of this would have been necessary if Michael had been sensible and played fair".

Her lawyer, Jeremy Posnansky, said the decision meant that "manipulative spouses can't evade their responsibilities by artificially using a corporate structure to protect their assets in the event of a divorce".

Michael Prest is "prominent in and successful in international oil development and trade," and estimated to be worth about £38 million, according to an earlier ruling.

He was not in court yesterday.

Additional reporting by Bloomberg