(Enfield Independent - Advertising Feature)
Official figures released in December 2012 show that the number of divorces has dropped by 1.7% in the last year, but statistics continue to peak in the period following Christmas, with the second week in January notorious for couples taking the decision to part.

Following a recent landmark judgement in the Court of Appeal, lawyers are warning that divorcing couples will find it tougher to separate any family assets held in companies and are predicting an increase in protection of family wealth through corporate structures.

The controversial judgement was delivered late last year in the case of Petrodel Resources Ltd & Ors v Prest & Ors. Although the case involved a super-rich international oil trader, the ruling is likely to impact on any spouse trying to get a share of a family-owned business.

Until the decision of the Court of Appeal in the Petrodel case, the family courts have approached company-held assets as part of the overall ‘pie’ to be divided.  That was the approach taken by the High Court in earlier Court hearings for the Petrodel case itself, awarding the ex-wife a share in her ex-husband’s corporate assets.

The assets involved 14 properties in various countries, held by a number of companies, including Petrodel Resources, a Nigerian oil company which was co-founded by the ex-husband, Mr Prest. At the High Court hearing in 2011, Mr Justice Moylan ruled that the properties were effectively Mr Prest’s assets and ordered him to transfer the properties to his ex-wife as part of the settlement process.

However, Mr Prest drew a controversial success when appealing the ruling, as Lord Justices Patten and Rimer in the Court of Appeal found in favour of his company Petrodel, saying that the High Court had been wrong to find that Mr Prest’s sole ownership of the property-owning companies entitled him to freely dispose of their assets.

The ruling means that future financial proceedings arising out of divorce cannot rely on settlements drawing on company-held property. In thoery, this means that if one party ties up their assets within the structure of a legitimate limited company, they may be able to avoid their financial obligations on divorce.

However, in the ruling, Lord Justice Thorpe dissented, referring to the fundamental principle of entitlement to assets. He said that allowing Mr Prest to shield the companies’ properties from the settlement would defeat “the Family Division judge’s overriding duty to achieve a fair result.”

Undoubtedly this is a controversial decision. It opens the door to spouses escaping substantial settlements, although the ex-wife has appealed the decision, with the appeal due to be heard in March 2013. Parties to a divorce should always seek advice to make sure their interests are being protected.

Failure to do so can lead to a financial settlement that is not representative of the true position.