Corporate personality: utilising trust law to invoke the application of the concealment principle

The landmark Supreme Court judgment in Prest v Petrodel Resources Ltd provides a significant re-assessment of the law relating to a court’s ability to circumvent corporate personality. The Supreme Court considered that the application of ordinary legal principles (‘the concealment principle’) should ordinarily override a court’s ability to apply an equitable veil-piercing doctrine (‘the evasion principle’). Whilst accepting the primacy of the concealment principle, this article disputes the correctness of the Supreme Court’s implied assertion that, in cases concerning ‘one man-type’ companies, the concealment principle should be advanced through application of agency-derived principles. Rather, this article contends that the concealment principle should be progressed by adopting solutions derived from the law of constructive trusts and associated principles of equity. To an objective of providing a doctrinally sound framework for the development of the law in the post-Prest era, this article further suggests that the constituent elements of the evasion principle could be consistent with the operation of a distinct species of constructive trust. Moreover, it is argued that, in future, this ‘evasion trust’ should, in complete abrogation of the equitable piercing doctrine, be developed so as to apply in all cases exhibiting intentional and fraudulent abuses of the incorporation process.