Oil tycoon's ex-wife wins landmark UK divorce ruling

LONDON Wed Jun 12, 2013 2:14pm EDT

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LONDON (Reuters) - The ex-wife of a Nigerian oil tycoon won a landmark divorce settlement battle in the UK's Supreme Court on Wednesday in a closely watched case that had raised concerns about the accessibility of corporate assets in wealthy divorces.

Family law practitioners and wealth managers were watching to see how the court could issue a fair judgment without piercing the legal "corporate veil" which treats companies and their shareholders as separate entities.

In a decision that will affect anyone seeking to protect personal assets by putting them into a corporate structure, Britain's most senior judges upheld a ruling which awards Yasmin Prest a share in seven properties controlled by her husband's company Petrodel Resources Ltd.

The court ruled the property, initially represented as assets of the offshore company, was actually held in trust for her oil trading ex-husband Michael Prest from whom she was seeking the balance of a 17.5 million pound ($27 million) divorce settlement.

"I'm delighted and relieved that the Supreme Court has ruled as it did," Britain's Press Association reported Yasmin Prest as saying after the judgment in the case Petrodel Resources.

"None of this would have been necessary if Michael had been sensible and played fair."

Sandra Davies, head of Family Law at top British law firm Mishcon de Reya, told Reuters that although the court ruled the assets be transferred to Yasmin Prest, it did not set a legal precedent on access to corporate assets because the property was actually held in trust for Michael Prest.

"There has to be a situation where the husband has done something to evade, frustrate, put the company beyond his control with deliberate intention," she said. "There has to be some element of unfairness, illegality about it."

Despite the careful ruling, family law partner Sam Longworth at Stewarts Law firm said Wednesday's decision would have a significant weakening effect on court powers when dealing with sophisticated wealth structuring in a divorce setting.

"This will encourage wealthy spouses to consider 'divorce planning' before and during marriage, which risks further undermining the institution of marriage," he told Reuters in an email.

Solicitors for Yasmin Prest said that the court's ruling left legitimate companies with little to fear, while restoring an element of fairness in the area of family law.

"This is a great result for Mrs Prest and for others who might find themselves in a similar position," said Farrer & Co Partner Jeremy Posnansky.

"The Supreme Court's decision will ensure that dishonest husbands can't cheat their wives and flout court orders by hiding behind a web of deceit and a corporate fa├žade."

(Reporting by Paul Casciato, Editing by Belinda Goldsmith)

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Comments (3)
fred62172 wrote:
The family courts in all of the english speaking countries are heavily biased against men. The internet is making men aware of how corrupt the divorce industry ,family courts are. In part because of that more men are opting out of marriage. High earning , well educated men have too much to loose. I n the United States any women can go see a judge in a secret meeting and get a restraining or protective order against her male dpmestic partner. He is met at the end of his driveway upon coming home from work by law inforcement. He is told by the cop that he will be arrested if he tries to enter his home. He will not be able to see his children or pets for months until he capitulates to his female partners lawyers demands. She never had to give the judge any proof or evidence of abuse. The corrupt judges just sign the po/ro. There is no due process for the male partner. No rights.

Jun 12, 2013 3:59pm EDT  --  Report as abuse
fred62172 wrote:
The family courts in all of the english speaking countries are heavily biased against men. The internet is making men aware of how corrupt the divorce industry ,family courts are. In part because of that more men are opting out of marriage. High earning , well educated men have too much to loose. I n the United States any women can go see a judge in a secret meeting and get a restraining or protective order against her male dpmestic partner. He is met at the end of his driveway upon coming home from work by law inforcement. He is told by the cop that he will be arrested if he tries to enter his home. He will not be able to see his children or pets for months until he capitulates to his female partners lawyers demands. She never had to give the judge any proof or evidence of abuse. The corrupt judges just sign the po/ro. There is no due process for the male partner. No rights.

Jun 12, 2013 3:59pm EDT  --  Report as abuse
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While I appreciate that currently a greater percentage of individuals with less assets in a marriage are female, these changes are not just “a victory for women”. You just need to look at the Radmacher case for an example of the divorcing husband having fewer assets.

However, one would be wilfully blind to assume that the wealthier person in a divorce is not going to react to this decision. This is especially true given the relatively large amounts of money involved. If you look to the willingness to react to tax changes (which effect a percentage of income), it is reasonable to believe that they will react to possible matrimonial awards (which are a larger percentage of CAPITAL!).

The most obvious countermove would be to remove oneself from the jurisdiction/comity of the UK courts. this would involve 1) establishing comity with a more favorable family law jurisdiction and 2) selling or equity stripping any remaining UK immovable assets. HNW individuals are increasingly freed by global “flattening effects” from being only located in the UK to maintain their business and personal lifestyle. Therefore I believe a natural outcome of this decision will be a dramatically increased number of HNW individuals leaving the UK as a tax and family law jurisdiction.

While this would obviously impact the spouse of the departing individual, it also will dramatically effect society as a whole. Whether you think it “fair or unfair”, the reality is that the top 1% (aka Golden Geese) contribute over 1/3rd of the total personal tax revenue collected. Therefore when a single Golden Goose decides to leave the UK (for family law and/or tax purposes), this results in an enormous asymmetric negative impact on future tax revenues.

In closing, I am not saying that today’s decision is not a just one from a family law point of view. I am simply pointing out that it will probably have a much larger impact on society as a whole, than was ever contemplated by the parties litigating this case.

Jun 13, 2013 1:43pm EDT  --  Report as abuse
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