Hashem v Shayif & Anor

In ancillary-relief proceedings, the corporate veil may be pierced only in tightly confined circumstances. The claimant must establish both the relevant degree of control and an impropriety involving use of the company as a device or façade to avoid or conceal liability. Ownership and control, family connections, artificiality, or the interests of justice alone are insufficient.

A company’s property remains distinct from the property of its shareholders. A matrimonial settlement may arise from an arrangement providing continuing matrimonial accommodation, but the court’s power under Matrimonial Causes Act 1973, section 24(1)(c), extends only to property comprised in that settlement. The court must act fairly and should not confiscate innocent third-party property to satisfy a spouse’s claim.

The proceedings concerned a wife’s claim for ancillary relief following a civil marriage which was void because the husband remained married to another woman. Related Chancery proceedings were brought by Radfan Limited and the husband’s children concerning the beneficial ownership of two properties and the children’s shares in the company.

The wife alleged that the company was the husband’s alter ego, that the children’s shares were held on resulting trusts, that the properties were held on trust for the husband, or that they formed part of nuptial settlements capable of variation. The central issues were the corporate veil, resulting and constructive trusts, section 24(1)(c) of the Matrimonial Causes Act 1973, and the effect of the bigamous marriage on ancillary relief.

1. Corporate veil. The wife’s claims against the company and the children failed, save that she was entitled to reasonable notice before removal from 17 Kensington Heights. The governing principle was that the corporate veil could be pierced only where there was both control by the wrongdoer and impropriety involving use of the company as a device or façade to conceal or avoid liability. Ownership or control alone was insufficient, and the court could not disregard the company merely because justice appeared to require it. The same law applied in the Family Division and the Chancery Division.
2. The children held genuine minority interests and were not nominees. The professional and other directors were not mere ciphers. There was therefore insufficient control. In any event, no anterior or independent wrongdoing had been identified. The husband was taking advantage of an existing corporate structure, not using the company to immunise himself from liability for wrongdoing.
3. Trusts. The husband’s funding of acquisitions did not itself establish a beneficial interest. The court had to determine whether money was advanced by way of gift, loan, or contribution as purchaser. The company’s records showed that advances for most properties were treated as loans credited to the husband’s loan account. Other evidence showed that the company was intended to own the properties beneficially. The claims for constructive or resulting trusts therefore failed. The children’s shareholdings were also beneficially theirs; in any event, the presumption of advancement was not rebutted.
4. Section 24(1)(c). A settlement requires continuing provision for one or both spouses, with or without provision for children, and must be assessed by examining the true character of the arrangement. The use of 57 Forest House was temporary and derived from shareholder status, so it was not a nuptial settlement. The arrangement concerning 17 Kensington Heights was sufficiently enduring and matrimonial in character to constitute a settlement, but the settled interest was no more than a revocable licence or tenancy determinable on reasonable notice. The company’s whole leasehold interest was not comprised in the settlement.
5. The discretion under section 24(1)(c) was unfettered in theory but had to be exercised by reference to section 25, all the circumstances, and fairness. The settlement should not be interfered with further than necessary. The court should be slow to prejudice innocent third parties and could not require the company to fund the wife’s mortgage or outgoings from property outside the settlement. The wife was entitled to at least six months’ notice before removal from 17 Kensington Heights.
6. Bigamy and ancillary relief. The wife was not barred from relief merely because she knowingly participated in a bigamous marriage. The court had to assess the seriousness of the conduct and all surrounding circumstances. Both parties knew the marriage was bigamous, neither was deceived, and their religious marriage was valid. Bigamy therefore had little, if any, effect on the quantum of relief in this case.
7. The wife’s ancillary-relief claim against the husband succeeded. An award of £7,061,570 was made, structured to include her income and housing needs, debts, retraining and litigation funding. The husband’s loan account with the company was to be transferred to her, with the amount received set off against his total liabilities.

First-instance judgment. The judgment records earlier orders and decisions in the same proceedings, including the decree of nullity and interlocutory orders, but no appeal from this judgment.