Information & Articles

When can you be joined to someone else’s case as a third party?

If you are the parent of an adult child who is separating, you might think your assets are off limits in any claims, and probably 95% of the time that would be right. Their spouse didn’t marry you did they?

But not all family law matters fit into the ‘house and garden’ mould, where assets are simply held in the names of the separating couple. One of the many reasons family law financial settlements are challenging, and are becoming more so, is the increasing complexity of the personal and financial arrangements made in families and between couples. The complexities found in these cases are not only in deciphering the legal ownership structure, and the consequences of that structure, but also whether there are interests or entitlements in assets held by third parties.

Under the Family Law Act, the Court can make an order that is “directed to, or alters the rights, liabilities or property interests of a third party”.

Among the most common joinder applications are the parents or children of the parties in relation to a family trust or business, and directors or shareholders of family companies or trusts.

There might be a claim that real estate which is held in the name of a parent is really held beneficially for the adult child who is now separating from their partner.

A third party will not be limited to an individual however and may include companies that directly relate to the parties, corporate trustees, or any entity whose participation as a party is necessary for the Court to determine all issues in the case.

Deciding whether to join a person or entity to a case requires a careful consideration of the risks and the advantages, and the possible outcomes, of doing so.

In some matters, it may be unavoidable.

There are multiple reasons which make it necessary or favourable to include a third party in family law proceedings which include, but are not limited to, the following:

  • The order to be sought directly affects the interests of the third party.
  • To prevent steps being taken by a third party that have a deleterious effect on the property of the parties (for example, disposal of assets by a third party).
  • To require the third party to take particular steps or actions to give effect to orders.
  • A third party has a legal or equitable interest in the property involved in the asset pool.
  • A third-party creditor has an interest in the dispute.
  • A legal personal representative (executor or administrator of an estate) has an interest in the dispute.

Third parties can be joined to proceedings by an application of one of the parties of a case, by the Court, or by an application of the third party themselves. However, a third party has the right to be heard regarding joinders, and, as such, the decision to join third parties will rest with the Court.

If you are joined to the case, you become a party in the same way that the couple are parties in their case. All the Court’s Rules and procedures apply to you. You will be required to participate in the case to protect your own interests.

When considering whether to  join third parties, it is important to note that the cost implications are often significant. If the action against a third party is unsuccessful, a costs order is likely to be made against the applicant. Further, the added complexity of a case with several respondents will likely lead to increased costs and a potential increase in the length of the trial.

Therefore, if the assets sought to be claimed are in the hands of others, think carefully about the options, or indeed if there are, in fact, any options.

And if you are the third party, get advice quickly!

Blanchfield Nicholls’ Principal and Doyles Guide Leading High Value/Complex Property Matter lawyer, Cathie Blanchfield presented at the 8th Annual Family Law Forum on High Value & Complex Property and Financial Settlements on 30 November 2022, providing attendees with a seminar on the topic of ‘Looking Beyond the Veil: Identifying the Real Assets – Who Owns What?’.

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