Lorraine Harvey discusses 'The Corporate Veil'

Sarah Thompson, Slater & Gordon Lawyers

As a specialist matrimonial solicitor, I often deal with complex Financial Settlements. One of the issues which can be the most complicated to deal with is business assets - what they are worth and how they should be treated within a final settlement. As many people will know, a limited company has its own separate legal identity. When the majority of a couple's wealth is held within such a company, it becomes more complicated than if the assets were owned by either the husband or the wife personally. It is not uncommon for one of the parties in a marriage to be the major beneficiary and controller of a company, meaning that in reality, they treat the business and its assets as if they are personal when, legally, it is the company that does. Trying to get behind this legal personality, to look at the reality of ownership and control is generally referred to as "piercing the corporate veil". Historically, the family courts have generally refused to do this, which can be frustrating for the other party in the case. Two wives going through a Divorce have recently challenged this practice, trying to insist that the court should look at the practical reality, rather than the legal 'veil', when deciding how Matrimonial Assets should be divided and how any financial settlement orders should or can be enforced, especially against a party who is not co-operating. In the first of these cases, VTB v Nutritek, the Supreme Court ruled that the corporate veil should remain in place, un-pierced, and that matrimonial orders cannot go behind it. The second case, Petrodel v Prest, is scheduled to be heard by the Supreme Court on 5th March, and the judgment is therefore awaited with anticipation. Prest focuses on the problem of enforcing financial orders. The wife is seeking to argue that she should be allowed to pierce the corporate veil of the Husband's companies and enforce her financial order directly against properties the company owns. The husband argues that as the order is against him personally, it cannot be enforced against a separate legal entity. If the Supreme Court allows her to do this, it will mark a significant change in previous practice, and will be good news for the spouses of individuals whose wealth is all contained within their company. Whether the Supreme Court is willing to take that step, however, remains to be seen. Given the ruling in the "Nutritek" case, the signs are not promising. Contact our specialist Family Law team If you would like to talk to any of our Family Law Solicitors please contact them on 0800 916 9055, or e-mail enquiries@rjwslatergordon.co.uk. Our Family Lawyers operate across the country and can offer immediate and accessible representation anywhere in England & Wales.