The recent Court of Appeal decision in Petrodel Resources Limited v Prest has (for now) clarified the basis on which courts in matrimonial cases are entitled to look behind the principle of separate legal personality for companies.

From a company law perspective, the decision sends a strong message that simply treating the company's assets as though they are assets of a spouse should only be done in limited circumstances, and also made clear that a number of previously decided cases on this point in the family courts were incorrect. 

From a family law perspective, the decision has caused concern particularly for those cases whereby complex company or trust structures are used to hide, divest or divert wealth or create obstacles for the non-owing spouse or the Court when assessing financial claims on relationship breakdown.

This briefing by James Carroll, partner, Kate Hamilton, partner, and David Webster, partner, looks at the tensions between a formal approach applying the company law rules which have acted as the foundation for limited liability companies for over a century, and a more pragmatic approach reflecting commercial reality in a context where those historic rules were not really designed to operate and in an effort to resolve disputes fairly.

Piercing the corporate veil - applying company law principles to modern family law cases - Dec 2012v2.pdf