Piercing the Corporate Veil – the Supreme Court Rules Again

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In Prest v. Petrodel Resources Ltd the Supreme Court confirmed that the separate legal personality of a company cannot be disregarded unless the company is being abused for a purpose that is in some relevant respect improper. Specifically, the Court concluded that the separate legal personality of a company should only be disregarded 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.”

Background -

This decision arose out of proceedings for ancillary relief under the Matrimonial Causes Act 1973 (the 1973 Act), brought by Mrs. Prest following her divorce from Mr. Prest. The dispute concerned the position of a number of companies (the Companies) belonging to a group found to be wholly owned and controlled by Mr. Prest. The Companies were joined as additional respondents to Mrs. Prest’s application for ancillary relief.

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