In Bottomley v Smith [2013], the Court of Appeal tested and upheld the principle of corporate protection, established in the case of Prest [2013]. Provided that assets had been transferred to a company structure for legitimate commercial reasons, the courts will not distribute company assets at settlement.
Ms Smith and Mr Bottomley cohabited for 10 years. Upon the breakdown of the relationship, Ms Smith claimed that she was beneficially entitled to a half share of properties held by a company wholly owned and controlled by Mr Bottomley.
When the parties rekindled their relationship after a period apart, Ms Smith claimed that Mr Bottomley had promised her "everything we have is 50/50." Shortly after the couple got engaged for a second time, Mr Bottomley, a property developer, incorporated the company as a vehicle to make purchases.
The Court of Appeal found that Ms Smith was not beneficially entitled to assets held by the company based on a personal promise made to her by Mr Bottomley before the company was incorporated.
Conrad Adam, partner in the department, says, "Smith v Bottomley indicates to me that holding assets in corporate structures is probably the way forward in terms of asset protection prior to marriage if a pre-nuptial agreement is not contemplated. It could also serve as a means to protect assets from an application to vary maintenance on a capitalised basis post-divorce."
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.