Divorcing husband cannot protect assets in his companies
The Supreme Court has delivered a landmark ruling that divorcing husbands cannot protect their assets by signing them over to companies – a practice described as a “cheat’s charter” by some lawyers.
The case involved the high profile couple, Michael and Yasmin Prest. Last year the High Court ordered that Mrs Prest should receive £17.5m as part of the couple’s divorce settlement.
Mr Prest appealed, saying that the assets belonged to three of his companies and could not be touched. The Court of Appeal ruled in his favour. It held that a company’s assets belonged to the company itself, not to its shareholders. This applied even if, as in this case with Mr Prest, all the shares were owned by one person.
Many lawyers expressed concern that the ruling would encourage divorcees to try to protect their assets from each other by sheltering them in companies which they own.
The case continued when Mrs Prest appealed to the Supreme Court, which has now ruled in her favour. The ruling is hugely significant for divorcing couples.
Mrs Prest’s barrister, Jeremy Posnansky, QC, said: “The Supreme Court’s decision shows that dishonest husbands can’t cheat their wives by hiding behind a web of deceit and a corporate façade.
“The decision means that manipulative spouses can’t evade their responsibilities by artificially using a corporate structure to protect their assets in the event of a divorce.
“It puts reality and fairness back in this area of family law while at the same time giving proper respect to company law.”