The decision has shocked many family lawyers and legal commentators.
The issue arose earlier this year when the High Court identified some properties belonging to companies owned by Mr Prest.
The judge held that Mr Prest was the sole owner of these companies and in sole control of them. It therefore followed that he was the beneficial owner of their assets, which meant those assets could be included as part of the divorce settlement.
The judge ordered that Mr Prest should therefore hand over some of those properties worth a total of £17.5m to his former wife.
However, the Court of Appeal has now overturned that decision. It held that a company’s assets belonged to the company itself, not to its shareholders. This applied even if, as in this case with Mr Prest, all the shares were owned by one person.
The ruling has surprised many lawyers who fear it will encourage divorcees to try to protect their assets from each other by sheltering them in companies which they own.
The Court of Appeal decision was not unanimous. Lord Justice Thorpe dissented, saying that the ruling represented a radical departure from established legal principles in big money cases.
Jeremy Posnansky, QC, one of Mrs Prest’s legal team, said: “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.”
Mrs Prest has applied for permission to appeal to the Supreme Court. We shall keep clients informed of developments.
Please contact Charles Goodbody in our Warminster office on 01985 214444 or firstname.lastname@example.org if you would like more information about the issues raised in this article or any aspect of family law.