Q&A - Can husband's company's assets form part of financial considerations in divorce?

Q: I have recently commenced divorce proceedings against my husband of 25 years. My husband owns a company of which he is in sole control. The company has substantial assets. Can the company's assets be taken into consideration in our financial settlement?

A:  A duly incorporated company is a legal entity wholly separate from those who incorporate it, with rights and liabilities of its own.

Despite this, it became standard practice in family courts for assets held by a company under the sole control of a spouse to be treated as assets belonging to that spouse, providing that no-one with a real interest in the assets of the company would be prejudiced as a result.

But a recent Court of Appeal decision in 2012 (Petrodel Resources Ltd & Ors v Prest & Ors) said that the standard practice was wrong and should no longer be followed. The Court decided that it should no longer be open to Family Judges to make an order against property owned by a company purely on the basis that one of the spouses is a 100% or majority shareholder in the company. The Court can only take this approach if in addition there exists, on the facts of the case, relevant impropriety. The relevant wrongdoing must be in the nature of a fraudulent or dishonest misuse of the corporate personality of the company to conceal the true facts (i.e. extent of the spouse's wealth).

The Supreme Court heard the appeal on Petrodel on 5th and 6th March 2013 and the judgement is eagerly awaited by family lawyers as it will clarify the stance to be adopted in cases where one spouse is in control of a company. As this is clearly an evolving area of law you should seek the advice of a specialist Family Solicitor to discuss the issue further.


Nathan Wright, Partner at GHP Legal

Nathan Wright


A Partner specialising in Family and Matrimonial Law

Alison Peters

Alison Peters


A Partner in our Family and Matrimonial department in Oswestry