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Financial remedies – company assets

A recent ruling illustrates when a court can treat a company-owned asset as as a matrimonial asset.

As a general rule, assets registered as a company asset are not treated as matrimonial assets as they are owned and controlled by a separate legal entity. Exceptionally, the court can ‘pierce the corporate veil’ and treat such assets as a matrimonial asset.

In this very high-value divorce case, W sought to enforce financial provision orders of more than £450m. H had taken elaborate steps to conceal his wealth. The court noted that there was a history of evasion on H’s part in relation to his dealings with the company, and he had conducted a campaign to evade and frustrate enforcement of a judgment debt against him.

The court found that H had intentionally taken exceptional steps to put an asset (a yacht, the Luna) beyond the reach of the English courts by way of a fake sale after the divorce proceedings had been issued. But there was ‘no reality or validity to this transaction: it was merely a device whereby H (a) moved title to M.V. “Luna” into a Panama company and (b) divested himself of a very substantial sum of money under the cloak of an artificial sale arrangement’. The court found no difficulty ‘in inferring, in all the circumstances, that H did not genuinely intend to part with beneficial ownership of either the cash or the vessel but intended to remain the real owner throughout. This is a clear case of the beneficial owner simply trying to change the label on the tin’.

The court therefore ruled that the ‘evasion’ principle applied, and it was appropriate to pierce the ‘corporate veil’ in this case. This was necessary in the interests of justice.

W was granted all the relief sought to assist her in the enforcement of the substantive relief granted by the main order. This included enforcement against additional parties, joinder, an extension of a worldwide freezing order – and a declaration that the yacht was in fact beneficially owned by H. H was ordered to transfer the yacht to W. Akhmedova v Akhmedov [2018] EWFC 23 (Fam). Source: www.familylawweek.co.uk.

 

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