Corporate structure comes in play when love boat hits rocks

Family law potentially takes account of all assets of the parties when considering financial provision on divorce. Both parties are obliged to disclose their wealth from all sources. It is common, particularly in Hong Kong, for private companies owned by the parties, or one of them, to fund the lifestyle of the family. In addition, corporate vehicles often hold matrimonial assets such as the family home or investments.

Company law and family law, traditionally, take different approaches to corporate-held assets. Company law regards assets held within a corporate structure not to be the property of the shareholders - the so-called "corporate veil". The commercial courts will only contemplate piercing the corporate veil in cases involving fraud, but the family courts have done it more regularly in the name of fairness to satisfy financial claims on divorce.

In the recent case of Petrodel Resources and others versus Prest and others, the two have come into conflict.

In Prest, the English Court of Appeal by a 2:1 majority placed a significant roadblock in the way of claimants in a divorce seeking to access corporate-held assets. Notably, the two judges from a commercial/corporate background clashed with the third judge, whose background was in the family courts.