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Home > Judgments > 2012 archive

Prest v Prest [2012] EWCA Civ 325

Application for permission to appeal the judgment of Moylan J in complex financial remedy proceedings where one of the issues was the circumstances in which it is possible to pierce the corporate veil.

The husband and the companies (joined as interveners) in the financial remedies proceedings sought permission to appeal the order of Moylan J given in a reserved judgment at the conclusion of the final hearing.

The three members of the Court of Appeal hearing the application for permission granted permission on the issue as to when and in what circumstances a judge may pierce the corporate veil, on the issue of Nigerian customary law and also on the issue as to whether it is open to the court to allow a lump sum order and property transfer order to be made at the same time when the latter has been solely to ensure implementation of the first.

Permission was refused to appeal the judge's finding on the value of the husband's main trading company and on the wife's budget because the valuation finding had been dependent entirely on the judge's assessment of witnesses and on documents. The assessment of the wife's budget had been an exercise of the judge's discretion.

However, the Court of Appeal attached conditions to the permissions to appeal: the husband is to discharge historic and assessed costs totalling £617,000 and the husband and the companies to secure the wife's costs of appeal of £200,000 (90% by the husband and 10% by the companies).

Summary by Richard Tambling, barrister, 1 Garden Court


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Case Nos: B4/2011/3168, B4/2011/3169,
B4/2011/3170, B4/2011/3171
Neutral Citation Number: [2012] EWCA Civ 325
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE PRINCIPAL REGISTRY OF THE FAMILY DIVISION
(MR JUSTICE MOYLAN)
Royal Courts of Justice
Strand, London, WC2A 2LL

Date: Thursday, 16th February 2012

Before:

LORD JUSTICE THORPE
LORD JUSTICE RIMER
and
LORD JUSTICE PATTEN

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PREST 
Appellant
 
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PREST & ORS 
Respondents
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(DAR Transcript of
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Mr Tim Amos QC (instructed by Jeffrey Green Russell) appeared on behalf of the Appellant Companies.

Mr Martin Pointer QC & Ms Kate Davidson (instructed by Alexiou Fisher Philipps) appeared on behalf of the Appellant Husband.

The Respondent Wife was not represented.

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Judgment
Lord Justice Thorpe:
1. Moylan J had the unenviable task of deciding very complex ancillary relief proceedings between Yasmin and Michael Prest.  A number of companies were joined as interveners because they all seemed to be trading vehicles operated by the husband.  The case would have been difficult enough had there been the cooperation from the parties to which the court was entitled, but that cooperation was sadly lacking not only on the part of the husband but also on the part of the companies.  The judge, having heard all oral evidence adduced, delivered a reserved judgment on 4 October, no doubt requiring him to sacrifice many hours of his long vacation.  It runs to some 230 paragraphs. 

2. The court reassembled on 16 November, when the judge delivered a short judgment settling the form of order.  Both the husband and the companies, dissatisfied with the outcome, applied for permission to appeal, and on 15 December I simply ordered that there should be an oral hearing without notice so that some of the complexity could be explained to us by leading counsel, who had appeared for the husband below, Mr Martin Pointer QC, and also counsel for the companies.  Mr Wagstaffe QC, who appeared below and who settled the skeleton argument on behalf of the companies, has today been replaced by Mr Tim Amos QC. 

3. There is a real point of substance which this court must decide, and that is which of the two streams of first instance authority we should validate on the perennial question in ancillary relief proceedings, when and in what circumstances does the judge pierce the corporate veil?  So that is the fifth of the seven identified issues in Mr Pointer's skeleton argument, and we give permission for any ground that falls under that head, the veil of incorporation issue.

4. The husband in the court below ran the argument that Nigerian customary law regulated not only his management and distribution of personal property but also of shares in his main trading company, an argument rejected by Moylan J.  Mr Pointer asserts that the judge was dismissive of contemporaneous Nigerian proceedings which considered this same issue, and that since 4 October the Nigerian court has delivered a judgment which confirms the husband's London case that Nigerian customary law extends to the shareholding in the Petrodel Upstream company.

5. So we give permission for the Nigerian customary law point to be argued, and we give leave to the husband to adduce fresh evidence, namely the relevant Nigerian judgment.

6. There is a small point, but not insignificant, as to whether the form of order drawn by the judge on 16 November is permissible, given earlier decisions which suggest that it is not open to the court to make at the same time a lump sum order and a transfer of property order, if the sole purpose of the latter order is to ensure the implementation of the first.  So permission is given for that issue to be pursued.

7. I would refuse permission to appeal the judge's finding on the value of Petrodel.  That finding depends entirely on his assessment of witnesses who gave oral evidence and on documents that survive from an earlier period.  Equally, I would refuse the application for permission to appeal the wife's budget.  That is essentially an exercise for the discretionary assessment of the trial judge.

8. Another argument has been advanced to whether we should grant permission to appeal the judge's conclusion that the husband was the beneficial owner of the former matrimonial home in Warwick Avenue, as the consequence of him having paid the original purchase price with his own money, thereby creating a resulting trust in his favour.  The argument has been that this was not a case pleaded in points of claim that had been directed by Baron J, and that it first emerged in the assertion of the wife in her statement of 15 May 2011, some four weeks before trial.  There is a veiled submission that the husband was ambushed by this assertion, that the judge should not have invested in it, and that the husband should now be given leave to adduce fresh evidence which he has obtained by researching material contemporaneous to the purchase.

9. I am completely unimpressed by that argument advanced by Mr Pointer and elaborated by Mr Amos.  As far as the husband is concerned, he had ample time to challenge that assertion.  It seems that he first challenged it in his oral evidence; he did not file a statement in opposition, nor did he seemingly seek adjournment to complete his trawl for the contemporaneous material.  I do not see Mr Amos in a whit better position, given that his clients were simply, by their own election, non-participating in the proceedings at vital stages and particularly in the weeks preceding trial.  So I would refuse permission to appeal the judge's alternative conclusion that the husband was the beneficiary of the property as a consequence of the resulting trust.

10. It is at least pleasant to record that the property has now been transferred to the wife by the relevant company as a result of extreme pressure applied by the trial judge in December.  Unfortunately, the transfer has been effected subject to a charge in favour of Paribas, which secures the husband's trading capital.  The position is that the charge is in favour of the bank.  It burdens the wife, who takes the transfer subject to the charge.  It is the husband who is obliged to discharge the mortgage, and that obligation is plain from the judgment below, and certainly we draw attention to that obligation from which the husband is not released by virtue of the permissions which we today give.

11. I now turn to conditions which should be attached to the permissions to appeal.  They are conditional upon the husband's compliance in the near future with the following obligations.  He must within 14 days discharge the historic costs itemised in paragraph 6(3) of Mr Posnansky's skeleton.  Within the same period he must discharge the on-account assessment of the trial costs and earlier costs made by the judge in the sum of £600,000, reduced today to £540,000 as a result of yesterday's payment by the company of their allocated 10 per cent share.  So the summation of those two liabilities, the historic and assessed costs in the sum of about £77,000, plus the £540,000 on account, must be paid within 14 days.

12. Finally, or almost finally, the husband must secure the wife's costs of the appeal in the sum of £200,000, of which he must secure £180,000 and the companies must secure £20,000; that is to maintain the same 10 per cent ratio.  A final condition of the permission is that the husband will continue, pending the determination of the appeal, to pay such sums as are identified in paragraph 2 of the order of 16 November.  His obligation to pay periodical payment expressed in paragraph 8 of the order is suspended to avoid double-counting.

13. The time estimate for the appeal is two days and it will be heard by the same constitution as has determined the permission applications today.  My Lords have read into the case, and it is simply a saving of resources if we maintain the same constitution.  It is also important that there should be a very significant Chancery contribution to the argument on the main point, the piercing of the veil.  So that is what I propose.

Lord Justice Rimer:
14. I agree.

Lord Justice Patten:
15. I also agree.

Order:  Application granted.