A landmark ruling made by the UK Court of Appeal has made it much harder for the weaker financial partner in divorce to break through complex wealth structures to get a divorce settlement, the law firm Withers has warned.

The case of Prest vs Prest concerns the separation of Michael Prest, the founder of the Nigerian energy company Petrodel Resources, and his wife of fifteen years, Yasmin. The husband claimed that the assets of Petrodel did not belong to him, but to a family trust under Nigerian customary law, and that he was in reality in debt to the tune of £48 million ($77.3 million). Meanwhile, his wife contended that the firm was in fact 100 per cent-owned and controlled by him, leading the High Court to award the wife £17.5 million on the basis that the husband was worth at least £37.5 million.

However, the Court of Appeal reversed this ruling, with Lord Justice Rimer rejecting the notion that there should be a different approach between commercial and family cases, and that wives should be “entitled to a preferential exemption” to the strict interpretation of the law long-established in the commercial setting.

In commercial cases a company is held to be independent of its shareholders and that, except in cases of fraud or dishonesty, ownership (even sole ownership) is no basis for “piercing the corporate veil” in legal proceedings to get at the company’s assets. In contrast, in a family law context judges have usually taken a more liberal view, especially where companies were owned and controlled by one spouse, there were no third-party interests and the companies were used during the marriage as vehicles for the family’s lifestyle.

“The [Court of Appeal] decision is a disappointing one for many wives who confront on divorce a tangled web of companies used to shelter their husbands’ wealth,” said James Copson, partner in the family team at law firm Withers.

“This ruling puts the genie back in the bottle. The Court has effectively sanctioned for other cases the use of what could be perceived by the general public to be a cheat’s charter.”

Judgment Lord Justice Thorpe, who has spoken out against the Court of Appeal ruling has said it gives “an open road and a fast car to money-makers who are not prepared to act fairly.”

Meanwhile, the legal profession is anxiously awaiting another landmark UK ruling which could have big implications for high net worth divorcing couples. This case, involving Alexander and Mandy McRoberts, has raised questions as to whether matrimonial debts can be cleared if a person becomes bankrupt. Here, the husband’s business collapsed after his divorce from his wife and he is arguing that he should no longer have to give her maintenance payments. If the Court rules in favour of the husband many legal professionals fear that this could lead to a flood of bankrupt divorcees applying for the same rights and avoiding the family court’s orders.