An oil trader's attempt to conceal his wealth inside a company has been defeated by a supreme court ruling that closes a potential loophole in divorce settlements.

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In a unanimous judgment, seven justices upheld an appeal by Yasmin Prest, the ex-wife, who is seeking a share in seven properties in London and the West Indies owned by Petrodel Resources Ltd.

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The decision will set a precedent for anyone seeking to protect their possessions from a former partner by setting up a business.

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Delivering the ruling, Lord Justice Sumption said that the "husband [Michael Prest] had deliberately sought to conceal [that the properties were held for him] in his evidence and failed to comply with court orders with particular regard to disclosing evidence.

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"Adverse inferences could, therefore, be drawn against him. The court inferred that the reason for the companies' failure to co-operate was to protect the properties, which suggested that proper disclosure would reveal them to [be] beneficially owned by the husband."

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The Prests, who have dual British and Nigerian citizenship, have four children. Since marrying in 1993, they have lived mainly in London; their home in Maida Vale is said to be worth at least £4m.

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At an earlier hearing, Michael Prest had been ordered to pay a lump sum of £17.5m to the wife. He failed to do so, claiming he was £48m in debt. Petrodel and several related companies under his control are registered in the Isle of Man.

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The ruling was welcomed by divorce experts as a victory for their branch of the law over commercial regulations. James Copson, a solicitor with the law firm Withers, said: "Putting assets into corporate structures for wealth protection reasons might not now protect that wealth against divorce claimants. Wealth planning professionals are going to have to devise new ways to prevent the potential erosion of family wealth following a divorce."

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Miranda Green, a solicitor at Mundays, said: "By ruling in favour of Mrs Prest, the supreme court has recognised that all assets in a marriage must be assessed to achieve fairness in a divorce – even if that means piercing the corporate veil when it is fair and just to do so.

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"Had the supreme court ruled the other way, this would have given rise to the so-called 'cheats' charter' with the real danger that spouses may look at ways of hiding money in company assets to avoid a just split in a divorce agreement."

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Source: The Guardian