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Prest v Petrodel [2013] UKSC 34: What It Really Decided
Part of: Financial Settlement after Divorce
Prest v Petrodel Resources Ltd [2013] UKSC 34 decided how far a family judge can reach assets that sit inside a company. Seven justices heard it, and they gave judgment on 12 June 2013.
Most summaries of it are wrong in the same way. They say the Supreme Court pierced the corporate veil to get at a husband’s property. It did the opposite, so this page sets out the mechanism the court actually used.
You may be reading this for an exam. You may equally be reading it because you suspect your own spouse has put everything in a company name. Both answers are below, and our family law specialists deal with the second situation often.
What did Prest v Petrodel decide?
The court decided two things, and they pull in opposite directions. It refused to pierce the corporate veil on these facts, yet it still ordered seven London properties transferred to the wife.
Lord Neuberger put the split in two lines at paragraph 57. The appeal was:
“(i) allowed on the basis that the properties were acquired and held by the respondents on trust for the husband, but (ii) dismissed in so far as it relies on piercing the veil of incorporation, or on section 24(1)(a) or (c) of the Matrimonial Causes Act 1973.”
So the wife won, and she won on trust law rather than on company law. That distinction is the whole case, and it is the reason the decision still shapes financial cases today.
Put simply, a family court cannot ignore a company just because the case is a divorce. Instead it has to prove that the company holds the asset for your spouse.
The facts behind Prest v Petrodel
Michael and Yasmin Prest married in 1993. He was an oil trader who left his employer in 2001 and began running his own group of companies, with an Isle of Man company called PRL at the centre of it.
The couple’s London home and a string of other London properties sat in the names of those companies. The wife petitioned for divorce in March 2008.
Moylan J described how the husband ran the case. The Supreme Court repeated his findings at paragraph 4, and the language is unusually strong for a judgment:
“the husband’s conduct of the proceedings has been characterised by persistent obstruction, obfuscation and deceit, and a contumelious refusal to comply with rules of court and specific orders”
The judge ordered him to pay a lump sum of £17.5 million and to transfer seven UK properties towards it. He also found that PRL held the matrimonial home on trust for the husband. The companies appealed. The Court of Appeal agreed with them, which is how the case reached the Supreme Court.
Why Prest v Petrodel refused to pierce the corporate veil
Piercing the veil survives, but only just. Lord Sumption accepted at paragraph 27 that the power exists, because without it “the law is not to be disarmed in the face of abuse”.
He then drew the distinction the case is famous for, at paragraph 28. Two different ideas had been hiding behind words like facade and sham.
- The concealment principle. Someone uses a company to hide who the real actors are. A court simply looks behind it to find the facts. This is “legally banal and does not involve piercing the corporate veil at all”.
- The evasion principle. Someone already owes a legal obligation, and interposes a company so that its separate personality defeats that obligation. Only this one justifies piercing.
Paragraph 35 then narrows it almost to vanishing point. The court may pierce only where a person “deliberately evades” an existing obligation, and only to strip away the advantage the company gave them. Two sentences in that paragraph matter most:
“Like Munby J in Ben Hashem, I consider that if it is not necessary to pierce the corporate veil, it is not appropriate to do so, because on that footing there is no public policy imperative which justifies that course.”
Lord Sumption added that the principle “has been recognised far more often than it has been applied”. Lord Walker went further still at paragraph 106, calling it “not a doctrine at all, in the sense of a coherent principle or rule of law”.
Why the husband’s dishonesty did not open the door
The husband had plainly behaved badly. Even so, paragraph 36 explains why that did not open the door.
He had misapplied company assets for his own benefit. However, in doing so he concealed and evaded no obligation he owed his wife. The properties had gone into the companies long before the marriage broke down, and the judge found his purpose was “wealth protection and the avoidance of tax”.
There is also a wider principle in paragraph 37, and it is the sentence practitioners quote most:
“Courts exercising family jurisdiction do not occupy a desert island in which general legal concepts are suspended or mean something different.”
In other words, there is no special family-law version of company law. If a right of property exists, it exists everywhere, and if it does not, no divorce can conjure it up.
The mechanism Prest v Petrodel actually used
The properties moved because the companies held them on resulting trust for the husband. That made them property he was “entitled” to under section 24(1)(a) of the Matrimonial Causes Act 1973, so the ordinary transfer power applied.
The reasoning is ordinary equity, not family law. The husband and his family had moved three of the properties to PRL for £1 each, and nobody ever explained why. Paragraph 49 draws the obvious conclusion:
“Since no explanation has been forthcoming for the gratuitous transfer of these properties to PRL, there is nothing to rebut the ordinary presumption of equity that PRL was not intended to acquire a beneficial interest in them.”
For the rest, Lord Sumption traced the purchase money. PRL had not begun trading when it bought them, so the funds must have come from the husband. He therefore held the beneficial interest, and the companies were bare trustees.
Why the family home is the easiest one to prove
Paragraph 52 contains the most useful sentence in the case for anyone in this position. Beneficial ownership is fact-specific, yet one pattern recurs:
“in the case of the matrimonial home, the facts are quite likely to justify the inference that the property was held on trust for a spouse who owned and controlled the company”
The logic is simple. A company gains nothing from housing its owner’s family rent free, so the arrangement rarely makes commercial sense. Here the family paid no rent at all, which the judge treated as a particularly clear example.
Some structures genuinely rebut this. Still, where a husband negotiates the terms of occupation with himself, paragraph 52 says a family judge is “entitled to be sceptical” about whether those terms are real.
Non-disclosure and adverse inferences after Prest v Petrodel
This part of the judgment gets less attention and does more work. Paragraph 45 explains why a family judge may draw inferences that an ordinary civil judge might not.
Financial remedy proceedings are different in shape. There is a public interest in proper provision, the process has a substantial inquisitorial element, and one spouse usually depends entirely on the other’s disclosure. So the burden of proof cannot operate as it does in commercial litigation.
The court then set the limit and the licence in the same paragraph:
“These considerations are not a licence to engage in pure speculation. But judges exercising family jurisdiction are entitled to draw on their experience and to take notice of the inherent probabilities when deciding what an uncommunicative husband is likely to be concealing.”
Lady Hale agreed, with Lord Wilson, and added the duty behind it at paragraph 85. Both of you owe a duty of full and frank disclosure, not only to each other but to the court. Fail it, and a judge may draw whatever inferences the material properly allows.
Lord Sumption also recorded his “surprise” at paragraph 54 that the companies could appeal without first purging their contempt. Silence, in other words, is not a free tactic.
What Prest v Petrodel means for you
If you believe your spouse holds property through a company, this case tells you what to prove. Forget the company structure for a moment, and follow the money instead.
Four things worth proving
Four practical points come straight out of the judgment.
- Trace the purchase price. Who funded it, and when? That question decided five of the seven properties.
- Nominal consideration is gold. A transfer for £1 with no explanation raises a presumption the other side must rebut.
- Start with the family home. Paragraph 52 makes it the most winnable one, especially where nobody ever paid rent.
- Press disclosure properly. Inferences are available, but a judge needs material to reason from, so somebody still has to seek the orders and chase them.
Our guide to the financial settlement after a divorce covers the wider process, and once you agree terms you will need a financial consent order to make them binding.
Use the questions below to see how strong the trust argument looks on your own facts. Nothing you tick leaves your browser.
Every box you can tick feeds the resulting trust argument rather than a veil-piercing argument. The last one feeds the inference argument instead, which paragraph 45 opens up when a spouse stays silent.
The calls a checklist cannot make for you
- Whether the facts support a trust, an inference, or neither yet.
- Which disclosure orders to seek, and in what order, so the paper trail arrives in a usable form.
- Whether a company or a trustee needs joining to the proceedings, and when.
- Whether you need a freezing or preservation order before anything moves.
Get these wrong early and the evidence often vanishes before anyone asks for it.
Book a free initial consultation
One of our specialists will give you initial advice on your own situation.
What we see in practice
A client was certain the answer was to prove her husband was dishonest. She had collected a great deal of material about how he spoke about the business, and almost nothing about where the purchase money had come from.
We asked a duller question instead. When did the company buy the property, and what was it doing commercially at the time? The answer turned out to be that the company had barely traded in that period.
That single fact did more than every allegation about his character. The Supreme Court made the same move, because funding and timing prove a trust while bad behaviour on its own proves nothing.
The habit is worth copying. Chase the completion statement and the source of funds before you chase anybody’s conduct.
Shared by Hannah Overton, family law specialist. Details changed so nobody can identify the client.
Prest v Petrodel and Radmacher v Granatino compared
These are the two Supreme Court decisions that most shape financial outcomes on divorce. One concerns the money itself, and the other concerns what you promised about it.
Radmacher v Granatino [2010] UKSC 42 set the test for how much weight a marriage agreement carries. This case sets the route for reaching assets your spouse holds through a company.
| Prest v Petrodel (2013) | Radmacher v Granatino (2010) | |
|---|---|---|
| The question | Can a family court reach assets held by a company? | How much weight does a marriage agreement carry? |
| The answer | Only by proving a trust, not by ignoring the company | Hold the parties to it, unless that would now be unfair |
| Who won | The wife; seven properties sat on trust for the husband | The wife; the husband’s appeal failed |
| The statute in play | Section 24(1)(a), Matrimonial Causes Act 1973 | Section 25, Matrimonial Causes Act 1973 |
| The practical lesson | Follow the purchase money, not the character evidence | What you signed matters, and so does what has changed since |
If you signed an agreement before you married, read both. One decides the weight of your promise, while the other decides how far a judge can reach for the money behind it.
Common questions about Prest v Petrodel
Did Prest v Petrodel pierce the corporate veil?
No. Lord Neuberger recorded at paragraph 57 that the appeal failed so far as it relied on piercing the veil. The properties moved because the companies held them on resulting trust for the husband, which is a different route entirely.
Can a court still pierce the corporate veil?
Yes, but rarely. Paragraph 35 confines it to someone who deliberately evades an existing legal obligation by interposing a company they control, and only to strip the advantage that gave them. Lord Sumption noted the principle has been recognised far more often than applied.
What is a resulting trust in this context?
It is equity’s default answer when a company receives property without paying for it, or with money someone else provided. The beneficial interest results back to whoever funded it. In this case that was the husband, so the companies held legal title as bare trustees.
Is Prest v Petrodel still good law?
Yes. The Supreme Court decided it in June 2013 and it remains the leading authority on both the veil and section 24(1)(a). Lord Sumption’s concealment and evasion distinction is now the standard starting point in company and family cases alike.
What happens if my spouse refuses to disclose anything?
A judge may draw adverse inferences. Paragraph 45 allows a family judge to use experience and the inherent probabilities to decide what an uncommunicative spouse is concealing, while warning that this is no licence for pure speculation. Someone still has to seek disclosure orders and pursue them.
Must a company join the proceedings?
Here the wife joined the companies, because her case was that they held the properties in trust and she sought orders against them. Whether your facts call for that step is a tactical decision, and it is far easier to take early than to repair later.
Does this decision apply outside England and Wales?
The statutory analysis concerns section 24 of the Matrimonial Causes Act 1973, which applies in England and Wales. The company law reasoning on the corporate veil has been influential well beyond family cases, but the transfer power itself is the English statute.
Think assets are sitting in a company? Act before they move
Cases like this turn on documents that exist now and may not exist in a year. Completion statements, bank transfers and company accounts are what prove a trust, and they are easiest to obtain early.
We will look at what you already know, tell you honestly how strong the argument looks, and set out which orders to seek first.
![Prest v Petrodel [2013] UKSC 34: What It Really Decided](https://www.kabirfamilylaw.co.uk/wp-content/uploads/2026/10/Prest-v-Petrodel-1024x572.jpg)
![Radmacher v Granatino [2010] UKSC 42: What It Decided](https://www.kabirfamilylaw.co.uk/wp-content/uploads/2026/10/Radmacher-v-Granatino-1024x572.jpg)
