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At face value, a family law matter is between two people whose relationship has come to an end and need to decide on the division of property or how they plan to raise children from the relationship into the future.
In fact, however, it’s quite common for third parties such as parents and business partners to also become involved, particularly when it comes to property settlements.
Perhaps the family home in which the ex-couple lived is partly owned by the parents of one of them, or they provided a loan for its purchase which is not yet paid back. There may also be other assets that form part of the matrimonial property pool which involve financial relationships with third parties.
Naturally enough, the third party will wish to protect their interest when a property settlement between ex-partners can potentially diminish their interest in the asset.
Changes made in 2004 to the Family Law Act 1975 (Cth) (‘the Act’)’ allowed the Court to alter the rights, liabilities or property interests of third parties in relation to family law property proceedings, including for de facto relationships.
Section 92 of the Act provides for ‘any person’ to apply for permission to intervene in property proceedings between separated parties to a marriage. Additionally, Rule 6.02 of the Family Law Rules 2004 stipulates that a person must be included as a party where their rights may be ‘directly affected by an issue in a case, and whose participation as a party is necessary for the Court to determine all issues in dispute in the case’.
As a result, the advice and guidance of legal professionals with expertise in family law should be sought.
Who are the typical third parties in family law matters?
When two people formerly in a relationship begin property settlement proceedings, those who may have the interest to be decided in the dispute commonly include:
- Any individual with a legal or equitable interest in the property within the asset pool, such as the parents of one or both parties;
- third party creditors, as well as those who allege to be so;
- business partners or associates of one or both of the separating parties;
- where one party to the relationship has transferred an asset to a third party and the other party alleges this to be an attempt to defeat their claim;
- bankruptcy trustees;
- the Taxation Commissioner;
- individuals with ownership, the power of appointment, or who act as trustee of a trust;
- trustee companies;
- legal personal representatives (such as an executor or administrator of a deceased estate); and
- claimants in civil proceedings.
How do third parties become a party to settlement proceedings?
A party to the proceedings can add a third party by filing an amendment or a response to the initiating application and including a supporting affidavit.
A person or persons who regards themselves as a third party to proceedings may also file their own application with supporting affidavit material. A third party may also include companies, corporate trustees and government departments.
In either situation, the decision as to whether a third party’s application is accepted ultimately rests with the court.
Preparing these applications and the supporting affidavits is why expert legal advice from experienced family lawyers such as South Geldard Lawyers is essential.
Moreover, once joined to proceedings, third parties are invested with all the rights, duties and liabilities of a party unless otherwise ordered by the Court. Like the other parties, this means they must make full and frank disclosure of all pertinent financial information to the case.
How does the Court deal with third parties?
Under the Act, the court may make orders binding a third party.
Orders may include:
- that a creditor of the parties to the former relationship substitutes one party for both parties in relation to the debt owed to that creditor;
- that a creditor of one party to the relationship substitute the other party, or both parties, for that party in relation to the debt;
- that a company register a transfer of shares from one party to the relationship to the other party.
The Court can also make any other order that directs a third party to do a thing in relation to the property of a party to the relationship; or one that alters the rights, liabilities or property interests of a third party in regards to the relationship.
These orders might consist of setting aside loan agreements, guarantees and deeds; dividing property between the third party and one or both of the ex-partners; making a declaration about the beneficial ownership of the property; and severing a joint tenancy.
An injunction binding a third party can also be made.
In making an order that is binding on a third party the Court must consider that it is reasonably ‘necessary or appropriate’ to facilitate the property division; will not result in the debt not being paid in full; conforms with the need for procedural fairness for the third party; and is just and equitable.
The Court must also consider the taxation implications of any order on the separating parties and the third party; any effect on social security entitlements of the parties; the third party’s administrative costs in complying with the order, and their capacity to meet other economic and legal requirements; and the capacity of the parties to the relationship to repay the debt.
Third parties and parenting orders
Where ex-partners seek parenting orders from the Court, it is not uncommon for third parties such as grandparents, siblings and other close relatives to become involved. The Act provides for any person concerned with the ‘care, welfare and development of the child’ to apply for a parenting order under section 65C of the Act.
These third parties can apply to the Court for orders relating to time spent and communication with children from the relationship, as well as allocation of parental responsibility, in some cases. The Court always proceeds in the best interests of the child. Sometimes this may mean it will order children to live with or spend time with a grandparent, step-parent or relative.
Speak with South Geldard Lawyers
The involvement of a third party in property settlement proceedings can complicate and lengthen the path to a resolution, as well as add to the overall cost, but in many of the situations outlined above their involvement is necessary in order to bring the dispute to a close.
Whether you’re a party to a property settlement with your ex-partner, or a potential third party looking to protect your interest, the guidance of experienced family law professionals such as South Geldard Lawyers is invaluable in helping you towards a satisfactory conclusion.
Call us today for an initial consultation.
It is important to seek specific advice regarding your circumstances as this fact sheet provides general information only and does not constitute legal advice.
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