Petrodel – An Open Road and a Fast Car to Evading Divorce Settlements?
The Court of Appeal has this week given it decision in the Petrodel Resources v Prest case. The Husband in the case was an oil tycoon. His Wife was awarded £17.5 million upon their divorce.
Moylan J decided that he could make Orders directly against the Husband’s companies and Ordered that eleven London properties held by the companies be transferred to the Wife together with three properties in Nevis and shares in a Nevis company. The Judge found that throughout the case the Husband had been deliberately evasive, undertaking various manoeuvres and strategies to avoid providing full and frank disclosure.
The companies appealed arguing that they have separate legal personalities to the Husband and as such they should not be ordered to transfer assets belonging to them to the Wife. The companies were successful in the Court of Appeal, a decision which we find surprising on the facts.
The dissenting Judgement was given by Thorpe LJ. He concluded that on the facts of the case that Moylan J was fully entitled to Order the companies to transfer the properties and shares to the Wife. He strongly disagreed with the other two Judges who took the view that the companies were separate legal entities and therefore the previous Orders should not have been made. The dissenting Judgment of Thorpe LJ makes very interesting reading and he went as far as suggesting that by allowing the Appeal it would potentially “present an open road and a fast car” to those who disapprove of decisions of the Court and wish to evade compliance.
The implication of the Petrodel case is potentially far reaching. A Husband who seeks to frustrate his Wife’s divorce claims and ties all of his wealth upon in a limited company may in theory be able to evade complying with Orders if the Court’s hands are tied by the Petrodel decision not to make Orders against limited companies. This is not likely to be the end of this case however and a further Appeal is expected to the Supreme Court which may potentially overturn the Court of Appeal decision.
Partner
Family Law
PLancaster@LawBlacks.com
0113 227 9285
View profile
Paul Lancaster
