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Parties to Property Proceedings – The Husband, The Wife and Who Else? Who can and should intervene in Proceedings? Third Parties in Property Proceedings.

13/05/2019

It is generally thought that the parties to Family Law Proceedings would be the husband and wife.  This is not always the case as there may be circumstances where a “third party” comes into the proceedings by either:

  1. Being brought into the proceedings by the husband or wife; or
  2. The third party intervening in the proceedings by seeking an order that they be joined to the proceedings as their rights or obligations are likely to be affected or the subject of orders made by the Court.

When can There be a Third Party?

This can occur in circumstances for example where:

  1. An order is sought in relation to an asset claimed by the husband or wife.  However the other party to the marriage or de facto relationship or a third party may claim that same property is owned beneficially by a third party.  In other words there is a dispute going beyond the dispute between the husband and wife as to the entitlement or share of a property between the husband and wife as to who owns the property.
  2. Where someone has transferred property (claimed by the husband or wife) to another person or company.  If that transfer is valid it would affect the rights of the husband and wife in the proceedings.  However the circumstances of the transfer for example, to a third party at an under value, the transfer may have been done deliberately so as to remove property from the asset pool so that that property is not available to the husband or wife. 
  3. There may be a creditor of the husband and wife (third party creditor) who seeks to have the debt to them satisfied before the husband and wife receive all of the assets in the pool. 
  4. Assets need come back into the asset pool by reason of there having been a sham transaction. 
  5. The result sought to be achieved in the family law proceedings in terms of transfer and division of property requires the co-operation of some person or entity other than the husband or wife so an order of the Court is required to direct that person to carry out the transaction. 

When Can These Situations Occur? 

  • An example is where the significant assets of the marriage have been placed into a Family Trust and the effective control of that Trust is in either the husband or the wife and the other cannot control or access the assets that are within the Trust. 
  • An example is where the husband had received money from the estate of his late grandmother.  The husband said that the money received was by way of repayment of a loan.  The wife asserts that the money was a gift and need not be repaid. 
  • The legal representatives of the Estate could be joined as a party to the proceedings so that they could effectively advance the interest of the Estate and receive repayment of the loan made by the Estate to the husband. 

Caution Required

Care should be taken to ensure that it is appropriate that the persons or entities being joined to the proceedings as there could be cost consequences of joining someone to proceedings in circumstances where ultimately, the Court determined that they had no need to be joined to the proceedings.  In such circumstances where the third party had incurred legal costs and expenses, the party who failed in the claim is likely to be ordered to pay the costs and expenses of the third party from their share of the asset pool.

Watson & Watson are experienced Family Law Solicitors dealing in all aspects of a marriage or de facto breakdown.  If you are entering into financial/property settlement with your partner/spouse and are there is the possibility of a third party to the proceedings and you unsure how this will impact on the final asset spilt, please contact Richard Watson Senior Family Law Solicitor or Shereen Da Gloria his assistant to discuss your concerns and obtain the appropriate advice.

This is only a preliminary view and is not to be taken as legal advice without first contacting Watson & Watson Solicitors on 9221 6011.

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