Prest v Petrodel Resources Ltd (2013)

English Family Law

 

Prest
‘City Buildings’ by Jose Trujillo

‘Piercing the corporate veil’ and the lawful applicability of s.24(1)(a) of Part II of the Matrimonial Causes Act 1973 are uneasily paired to establish liability in this post-matrimonial conflict of property transition, while the extensive evaluation of this mis-applied doctrine in cases of reminiscent yet distinguishable natures gives rise to ponder its continued relevance.

Following the lengthy divorce of a shrewd businessman and his estranged wife, the order of the court to transfer title of a number of properties to the appellant was met with continued evasion and somewhat aggressive objection when the ex-husband consistently went to great lengths in order to frustrate proceedings, and through his refusal to permit the submission of evidence in order to expedite the legal obligation put before him.

First developed in Re Barcelona Traction Light and Power Co Ltd the intended effect of ‘piercing the corporate veil’ was to stymie the deliberate and fraudulent actions of those parties holding controlling shares of limited companies for the sole purpose of self-interest and avoidance of legal duties, while s.24(1)(a) of the 1973 Act provides that:

“[A]n order that a party to the marriage shall transfer to the other party, to any child of the family or to such person as may be specified in the order for the benefit of such a child such property as may be so specified, being property to which the first-mentioned party is entitled, either in possession or reversion…”

However on this occasion there were a number of other properties acquired by the respondent through his established companies, while the majority of the funds used were alleged to have been sourced individually. 

While it was accepted that the matrimonial home would be handed over, the time wasted by the respondent in clarifying his legal and beneficial entitlement to the remaining seven properties led the High Court of Justice to rely upon the above principle in order to establish precise liability and enforce the transfer on grounds that:

“[A]ll the assets held within the companies are effectively the husband’s property. He is able to procure their disposal as he may direct based again on his being the controller of the companies and the only beneficial owner.”

Thus when challenged in the Court of Appeal the appellant argued against the piercing of the corporate veil on grounds that the narrowness of the principle’s design prevented it from such arbitrary application, whereupon the Court upheld the appeal while holding that:

“[T]he only entity with the power to deal with assets held by it is the company.”

Whereupon the case was finally presented before the UK Supreme Court, who took the time to examine previous judicial exercise of this rigid and yet shoe-horned legal moral before upholding the appeal on grounds that transfer of title could take effect through statute, while reminding the parties that:

“[T]he corporate veil may be pierced only to prevent the abuse of corporate legal personality.”

Back at the helm…

United States Law: A Case Study Collection

Finish Line
‘The Finish Line’ by Guiy Buffet

It’s been a wee while since my last blog post, and yet so much has happened, including a relocation from Cambridge to Cornwall, the commencement of my legal career, countless readjustments, and our annual Christmas preparations, and yet one of the more pressing questions was whether, with all of the work ahead of me now and moving forwards, I would be able to find sufficient time to complete my latest and most ambitious book titled ‘United States Law: A Case Study Collection’.

Having worked out how best to finish this labour of both love and a passion for law, I’m now happy to say that I’ve sketched out a plan that will hopefully bring things to a close sooner rather than later, and so I suppose the real purpose of this post is simply to say that I am now firmly back on track, and feel very confident that the book will be published in the first quarter of 2020.

With little more to add besides my palpable sense of relief at picking up the proverbial thread, I will duly sign off and get cracking, as there’s almost two years of arduous legal research and writing just waiting to be shared with the world.

Oh, and should I forget to say it at any point – “A Happy New Year to all!”

Electronic Signatures Neil

Hinz v Berry (1970)

English Tort Law

 

Hinz v Berry
‘Grief’ by Cynthia Angeles

Damages for nervous shock (and even secondary nervous shock) are now not uncommon across many jurisdictions, as was outlined in my academic paper ‘A Comparative Analysis of Secondary Nervous Shock within Tort Law’ and as explored within McLoughlin v O’Brian, however in this matter, the courts were less certain as to how best to regulate the level of award, yet forged ahead regardless of any potential to undermine the cost of psychological trauma.

In spring of 1964, the respondent was returning home from a day trip with her sizeable family, when after parking their Bedford Dormobile in an available lay-by, an out-of-control car ploughed into the family, as she, the recently pregnant mother of eight children, stood helplessly watching from the other side of the road. With her husband pronounced dead, and almost all of the children suffering injuries, the respondent was left to pick up the pieces of her already challenging life, after which she initiated proceedings for damages.

Claiming pecuniary loss as a result of her husbands death, the court awarded £15000, along with an additional £4000 for nervous shock, as had been privy to such claims for the preceding quarter century. Upon appeal, the defendant-appellant cited a gross overestimation of the award for nervous shock, relying upon an absence of damages based tariffs in this particular area for justification.

With examination of recent case precedent and the comments of her consultant psychiatrist, who remarked during the trial that:

“[T]here is no medical doubt at all that she is suffering from a morbid depression; she is now officially ill.”

And how:

“In other circumstances I would probably have brought her into hospital, at least for a rest, but possibly for electrical treatment and it may come to that yet.”

The Court acknowledged the robustness of the respondent and her tenacity in the face of such a massive loss, yet illustrated that while English law precluded a right to compensation for grief and sorrow, evidential and medically diagnosable trauma proved an exception to that rule where such symptoms were demonstrable.

It was then that the Court uniformly outlined how it was beyond the power of the courts to undermine the significance of nervous shock, and that in any respect, judicial consensus supported the amount awarded through the comprehensive evaluation of the numerous years of suffering and morbid depression faced by the respondent in addition to her expected mourning. It was for these reasons that the Court upheld the award and dismissed the appeal.

R v Stone (1976)

English Criminal Law

R v Stone (John Edward)
‘The Earth (Zemliia)’ by Bohdan Pevny

In this landmark criminal law case, the distinction between indifference to, and perception of risk, are carefully weighed, in order to appreciate that when compared for their relevance to recklessness, the outcome remains the same, despite differing routes to dire consequences.

In 1972, an eccentric sibling moved into the home of her older disabled brother after a falling out with her sister. The terms of the living arrangement was that of a landlord and tenant, in so much that rent was paid and each were free to live their lives independently of one another. While the brother lived with his mistress and housekeeper along with his mentally challenged son, the sister occupied the front room of the home and maintained a high degree of privacy, despite openly suffering from anorexia nervosa (although undiagnosed at the time); a condition that precluded regular meals in favour of a low bodyweight, that in many instances was known to result in premature death, or at best, extreme immobility.

After a period of almost nearly three years, the sister’s health deteriorated to a point that she became permanently bedridden and unable to clean or feed herself. Despite repeated express concerns from the mistress to the brother regards his sister’s condition, there were no attempts made by the either party to extend their efforts in seeking medical help beyond that of unsuccessfully trying to locate her doctor. When matters continued with no real intervention, the now seriously ill woman was eventually found dead in her bed, amidst evidence that no care had been taken to tend to her toiletry needs or physical health requirements, prior to her death.

When reported to the police, the two defendants were summoned and convicted of manslaughter upon grounds of a breach of duty of care through recklessness, whereupon the two parties appealed under the presumption of diminished responsibility. When considered under appeal, the judges found that irrespective of whether the couple claimed to have taken limited steps to get the deceased help, there was insufficient evidence to avoid the conviction of recklessness, as (i) there was adequate foresight of the risk posed to the dying woman while under the assumed care of her brother and mistress, and (ii) that the conduct taken to redress such a risk, was made with little regard to the seriousness of her condition.

Ultimately, and when taken in context, the court felt that it mattered not which route had been taken, only that the destination resulted in her death; and that both parties had been made aware of possible options, yet continued to ignore the duty bestowed upon those assigned the care of a vulnerable person, in particular a close relative with a history of self-neglect and malnutrition.

McLoughlin v O’ Brian (1983)

English Tort Law

Mcloughlin v O'Brian
Image: ‘Collage Car Crash’ by Patrick O’Brian

As with Topp v London County Bus (South West) Ltdthe principle of proximity proves the distinguishing criteria, however this earlier case pushed further the scope of award for damages, with an emerging appreciation for psychiatric nervous shock or trauma.

When the husband and father of four young children is involved in a collision with a commercial articulated vehicle (that had itself just collided with another articulated vehicle), the resulting injuries leave the youngest of the girls dead within minutes, and the father seriously injured, while lapsing in and out of consciousness. After being notified of the crash almost two hours later, his wife (and mother to the children) is escorted to the nearest hospital, where she is confronted with the aftermath of the accident, and left in a state of deep shock and profound distress; the effects of which were to be felt for many months afterwards.

Having chosen to pursue a tortious claim through the owners of the commercial vehicles, the original judges found that proximity and foreseeability precluded eligibility for damages, and so while admission of the daughter’s manslaughter provided financial remedy, the anguish and emotional turmoil of the mother did not.

However, upon appeal, the scope of award for incidents such as this was, for the first time, given consideration enough to result in a new precedent in English tort law, and significant allowances for the impact of psychological trauma upon secondary victims previously considered too remote for inclusion.