Usually only two people are involved in family law proceedings, being the parents of children or spouses/de facto spouses. Third parties may become involved in family law disputes in a number of circumstances. Sometimes joining third parties to family law proceedings may become necessary.
When is joining third parties in family law proceedings appropriate?
Pursuant to rule 3.01 of the Family Law Rules, a person whose rights may be directly affected by an issue in a proceeding, and whose participation as a party is necessary for the Court to determine all issues in dispute in the proceedings, must be included as a party to the proceeding.
The word ‘necessary’ has been described as more than useful or expeditious. If there are available alternate means to joinder to the substantive proceedings, of obtaining from a third party or someone who is already a party, what is needed, joinder is unlikely to be necessary.
Joining third parties in Parenting Proceedings
In appropriate circumstances, the Court may join third parties such as parents and grandparents.
Under section 65C of the Family Law Act 1975, a person concerned with the care welfare and development of a child pay apply for a parenting order.
Third parties can apply for orders in relation to the time and communication with a child of the parties and in relation to the allocation of parental responsibility.
The Court will determine such application having regard to what orders are in the child’s best interests.
A common example where a third party may apply for joinder to a proceeding is where there is a grandparent or significant other who has been involved in the care of a child due to e.g. drug abuse or mental health issues of a party, or another person concerned with the care and welfare of a child who seeks to be involved in the future care of a child of the relationship, and is being prevented from doing so.
For more information about Non-Parent Parenting orders, click the link to our article on this topic.
Joining third parties in Property Proceedings
Third properties might be a company or trust that is directly related to the parties, an unrelated entity or an individual with a legal or equitable interest in the property pool such as parents, children, siblings and business partners of either party to the relationship, third party creditors, the bankruptcy trustee, legal personal representatives.
Common applications for joinder involve third party companies or trusts associated with one of the parties to the relationship.
Entities such as the ATO or Centrelink may also be joined as a party where there has been significant tax default.
In property disputes, a spouse may join a third party, or a third party may themselves apply for joinder to the court proceedings, in circumstances where:
- a party claims that an asset owned by a third party should be the property of one or both parties to the relationship/marriage;
- Where one party has transferred an asset to a third party in an attempt to defeat an order of the court, and the spouse seeks to set aside that transaction;
- there is a third party creditor whose rights might be affected by a property settlement order between the parties;
- a third party should be restrained from taking certain actions that may affect or defeat the spouse’s entitlements;
- there are insufficient assets in the pool to satisfy the property division sought by the spouse, without including the matrimonial assets held by a third party entity; or
- an order needs to be made directed to a third party to assist in carrying out the property settlement sought by a party to the proceeding.
A frequent scenario in property proceedings is that a family trust holds assets that the court determines are, in reality, assets of the marriage. Recent case law shows that where one of the party’s have control of the trust, a beneficial interest in the trust, or where assets of the trust having been sourced from matrimonial property, this can potentially result in the assets of the trust being regarded as assets of the marriage.
The following articles address how trust are dealt with in property proceedings and in what circumstances trust assets can form part of the matrimonial pool:
- How Trusts are dealt with in property settlement;
- Can a discretionary trust protect my assets in a property settlement?
A third party should seek advice about whether they need to be joined to family law proceedings if:
- there is a significant asset legally owned by one party to property proceedings that the third party considers to be their own asset; or
- the third party’s rights are being affected by orders sought by the spouse, and the court has not been put on notice of the third party’s rights. This is often the case if one spouse might be going bankrupt or is the subject of litigation, and there is a concern that assets may be transferred to the spouse who is not at risk, without taking into account the liability to the third party.
How do I join someone to family law proceedings?
A third party may become a party to family law proceedings by being named as a party in an Application, Response or Reply: Rule 3.03 Family Law Rules.
A party may only add another party to proceedings after the first court date, by order of the Court, by filing an application in a proceeding.
An affidavit should be filed with the Application/Response/Application in a proceeding, setting out the facts relied upon to support the addition of the new party and the third party should be served with a copy of the relevant documents.
A person may apply to be included as a party in a proceeding by filing an application in a proceeding and an affidavit stating the person’s interest in the proceeding and the order sought: Rule 3.04 Family Law Rules.
A person who is not a party may seek to intervene in proceedings by filing a Notice of Intervention and an Affidavit setting out the reasons they seek to intervene and the orders sought: Rule 3.07 Family Law Rules.
In Kachmar & Madero [2022] the Wife successfully applied to join as parties to the proceedings the Husband’s mother and the Husband’s partner.
The Application to join the Husband’s mother was due to the agreed fact that the Husband had sent some of the parties funds overseas and he had failed to disclose how those funds had been used. The Wife alleged some of those funds had been transferred to the husband’s mother who owned an apartment overseas where the husband and his partner stayed occasionally. The Husband’s evidence was that his mother would not permit him to disclose the address of the apartment.
The Application to join the Husband’s partner was solely for the purpose of compliance with a limited disclosure order, and thereafter that she be removed as a party.
A party may apply to be removed as a third party to the proceeding by filing an application in a proceeding and an affidavit: r3.05 Family Law Rules.
However, in Rigby & Kingston, which involved the Husband, the Wife and several third party entities, the Court removed third parties and held:
- joining a third party for the sole purpose of obtaining disclosure, albeit more efficient, is an abuse of process and an impermissible purpose;
- the husband failed to establish how the unit trusts were necessary parties as there was no pleading identifying how the rights of the unit trusts (in which neither the wife nor the entities controlled by her held units) may be directly affected.
What are other options to joining third parties to proceedings?
Other options available instead of joining a third party to proceedings are:
- Seeking consent of the third party affected by the order, to the order – e.g. a party’s superannuation fund;
- Subpoenaing documents from a third party that are relevant to an issue in dispute;
- Seeking cooperation of a third party to an order – e.g. where it is alleged that a third party has a legal/equitable interest in an entity – that the unrelated entity do all acts and things to facilitate a valuation of the entity and all assets of the entity.
These options are less risky and less costly.
Joining a third party inevitably involves an increase in costs for both parties and the joined third party and there may also be a requirement that an order be made for security of costs i.e. that the party applying for joinder agree to cover any costs associated with the joinder, if in fact the Court later finds that joinder of the third party was not necessary.
Binding third parties who are not parties to proceedings
Pursuant to section 90AE of the Family Law Act, the Court may make an Order under section 79 that is binding on a third party.
Section 90AF enables the Court to make an injunction under section 114 that is binding on a third party.
Under section 90AE(2) and 90AF(2) the Court may make any order/injunction, that:
- directs a third party to do a thing in relation to the property of a party to the marriage; or
- alters the rights, liabilities or property interests of a third party in relation to the marriage.
Examples of orders that may be made against third parties include:
- a restraint against the third party prohibiting them from selling or encumbering an asset;
- an order directed at a creditor to transfer liability of debt between the parties or to differ the debt proportions;
- an order that a company director transfer shares from one party to the other;
- the third party may be directed to do something in relation to the property of a party or both parties to the relationship.
Pursuant to section 90AE(3) and (4) and 90AF (3) and (4), the above powers may only be exercised when:
- The making of the Order is reasonably necessary, or reasonably appropriate and adapted, to effect a division of property between the parties to the marriage, and
- If the Order concerns a debt of a party to the marriage – it is not foreseeable at the time that the order is made that to make the order result in the debt not being paid in full, and
- The third party has been accorded procedural fairness in relation to the making of the order, and
- The court is satisfied that, in all of the circumstances, it is just and equitable to make the Order, and
- The court is satisfied that the Order takes into account the following factors: the taxation effect of the Order on the parties to the marriage, the taxation effect on the third party, the social security effect on the parties to the marriage, the third party’s administrative costs in relation to the Order and if the Order concerns a debt of the parties to the marriage, the capacity of a party to the marriage to repay the debt after the Order is made.
In the High Court Case of Commissioner of Taxation v Tomaras [2018] HCA 62, the High Court held that it has power under section 90AE(1)(b) to order that the husband be substituted for the wife with respect to a tax debt owed by the wife. The court held that there will seldomly if ever be occasion to exercise power under section 90AE and adversely affect the ATO or other creditors.
Joining third parties to proceedings – are you a third party or do you want to join a third party to proceedings?
Contact one of our experienced Brisbane Family Lawyers to book an appointment and have a confidential discussion about your individual circumstances.
