Jaws will have hit the floor in family law firms across the country today: the Court of Appeal has shocked commentators by ruling that the oil tycoon Michael Prest need not hand over the whole of a massive £17.5 million to his ex-wife.
This is, to coin a phrase, a whopper! A genuinely shocking verdict.
The Court of Appeal judgement related to a High Court ruling last year that Mr Prest must pay his wife of 15 years that significant sum. He is the co-founder of a Nigerian oil company called Petrodel Resources.
As he reportedly had a history of ignoring court orders, he was told to transfer the ownership of 14 properties belonging to Petrodel and other companies in the UK and elsewhere as part payment.
It was that ruling which was reversed at the Court of Appeal. But it was not a unanimous verdict. Very tellingly, Lord Justice Patten and Lord Justice Rimer, who are both commercial judges, failed to reach an agreement with Lord Justice Thorpe, who is a family law judge.
Lord Justice Patten said:
“Married couples who choose to vest asset beneficially [place assets in] in a company for what the judge described as conventional reasons including wealth protection and the avoidance of tax cannot ignore the consequences of their actions in less happy times.”
In his dissenting verdict, Lord Justice Thorpe said the ruling represented a radical departure from the legal principles established by Lord Justice Cumming-Bruce in “big money cases”:
“If the court now concludes that all these cases were wrongly decided they present an open road and a fast car to the money maker who disapproves of the principles developed by the House of Lords that now govern the exercise of the judicial discretion in big-money cases.”
Hooray for Lord Justice Thorpe. The wife has applied for permission to appeal the case to the Supreme Court. Whether she will succeed or not is a different matter.
The Prest ruling demonstrates the extent to which commercial law does not sit comfortably with family law. The self-same argument was made and upheld and in Imerman v Tchenguiz, a case I have repeatedly written about on this blog. As I have made clear, I firmly disagreed with the verdict in that particular case which put an end to the Hildebrand rules in relation to disclosure of documents between spouses and which had worked very satisfactorily. And in the Prest case, the Court of Appeal judges have again applied commercial principles to what is a family law case. But on the other hand, the law is the law no matter in which jurisdiction it is applied.
To quote a member of Mrs Prest’s legal team, Jeremy Posnansky QC:
“It’s a great pity that years of case law and practice which have enabled family law judges to do justice between divorcing couples have been overturned by this non-unanimous decision of the Court of Appeal. Lord Justice Thorpe was right to say that if the law permits husbands to use company law measures to achieve their irresponsible and selfish ends, in other words to avoid making a proper payment to their former wives, it defeats the court’s overriding duty to achieve a fair result.”
It’s time to reassert family law principles in family law cases. I am pretty sure the Justices of the Supreme Court would want to do what they can to put the genie back into the bottle. On the other hand their hands may be tied by what appears to be the most powerful and flawless logic of company law however unfair the result.
So perhaps, the faster the Prest case reaches the Supreme Court the better, because I for one am anxious to see how the Justices of the Supreme Court use their powerful brains to resolve this conundrum, the conflict between overarching fairness between the couple and company law. On the other hand, I am far from sure that family law will in the end win out. Perhaps what is needed is new law.