It wasn't actually necessary to disregard the formalities of corporate existence in Prest v Petrodel Resources Ltd, [2013] UKSC 34, but Lord Sumption and his colleagues give a nice little overview of 'the large and disparate body of English case law' on the subject, including its application to disputes over matrimonial property. At issue in the case before them was whether a wife could pierce the corporate veil to get at assets which her former husband had transferred to his companies. In the end, this exercise wasn't required, as the assets were found to have been held on a resulting trust. Lord Sumption observed in his reasons that most actual veil-piercing cases could have been decided on other grounds, as here.
In Lord Sumption's view, veil-piercing is appropriate where 'a company's separate legal personality is being abused for the purpose of some relevant wrongdoing', but that identifying the wrongdoing is the tricky bit. Labelling things a 'façade' or a 'sham' isn't particularly helpful; it is more useful to think in terms of 'the concealment principle and the evasion principle'. Concealment does not necessitate veil-piercing, as a court will simply look for the actual perpetrators of the wrongdoing. Evasion is different, because the court does not look behind the corporate façade but instead disregards it. A court ought to do so only in circumstances where 'a person is under an existing legal obligation or liability or subject to an existing legal restriction which he deliberately evades or whose enforcement he deliberately frustrates by interposing a company under his control.' In most instances, the facts will actually disclose a legal relationship between the company and its controlling mind which will make veil-piercing unnecessary.
On the facts of Prest, the husband had 'acted improperly in many ways', but had not transferred the assets in question with a view to concealing or evading any legal obligation to his ex-wife, including obligations with respect to distribution of property on the dissolution of marriage. To disregard corporate formalities would require an 'insouciance' which was not warranted on the facts. It was justifiable, however, to make the inference that while legal title to the matrimonial home was held by the husband's companies the beneficial interest was really his, held on trust for him and transferrable to his ex as part of the settlement of their divorce.
Lord Sumption's is the main judgment, but the concurring views of his colleagues are also worth reading. Lord Walker, for example, muses that piercing the corporate veil is 'not a doctrine at all, in the sense of a coherent principle or rule of law' but 'simply a label' that is often used 'indiscriminately'.
http://www.supremecourt.gov.uk/decided-cases/docs/UKSC_2013_0004_Judgment.pdf
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
