Third Parties

The Family Courts have significant powers to deal with the interests third parties involved in a family law dispute between husband and wife.

It is common for parties to have their financial affairs intertwined with a third party.  If a third party is likely to be involved parties should seek assistance from a family law specialist.

The Family Courts have had the ability to deal with the interests of third parties in a range of circumstances including:

  1. In exercise of the Courts accrued jurisdiction.
  2. The power to set aside transactions likely to defeat an order or an anticipated order.
  3. Treating the assets of the third party as a financial resource of the parties under Section 75(2).
  4. In circumstances where the third party is in fact the alter ego of one of the parties.
  5. If the third party transaction is a sham.
  6. If the third party is a puppet of one of the parties.
  7. If the third party is an accomplice to a party to the marriage.
  8. To make a declaration of interests between the parties and the third party.

The involving or joining of a third party is a big step.  The joining of the third party or attempting to deal with the interests of the third party renders a property settlement complex.  See our Information Guide about complex cases.  An experienced family lawyer should be consulted if it is likely that a third party will be involved.  Beacon Family Lawyers have significant experience handling cases with third parties.

Sometimes a third party may request to be joined to the proceedings in an effort to ensure that their interests are not defeated.  The Family Courts have not shied away from allowing third parties to joined to proceedings if the third party’s interests may be defeated.

The joining of a third party is an onerous a step, because adding an additional party necessary complicates a resolution of the proceedings.  The additional risk with joining third parties is the exposure to an order for legal costs in the event of failure.  Thus, apart from increasing the work to be performed in resolving the matter by having a third party involved, there is also the risk that third party may be awarded costs.

A prime example of a third party is the mortgagee bank that provided a mortgage to purchase the former matrimonial home.  There are numerous other examples of cases in which third parties can be involved such as family members and relatives and associated companies and trusts.

There are numerous creative ways in which the Family Courts have been able to deal with and the interests of third parties.  The problem being that the Family Courts in dealing with the interests of third parties have been limited by the limited extent of the marriage constitutional powers.

In proceedings between parties for a property settlement, the Family Courts may make any of the following orders against a third party:

  1. an order directed to a creditor of the parties to the marriage to substitute one party for both parties in relation to the debt owed to the creditor;
  2. an order directed to a creditor of one party to a marriage to substitute the other party, or both parties, to the marriage for that party in relation to the debt owed to the creditor;
  3. an order directed to a creditor of the parties to the marriage that the parties be liable for a different proportion of the debt owed to the creditor than the proportion the parties are liable to before the order is made;
  4. an order directed to a director of a company or to a company to register a transfer of shares from one party to the marriage to the other party;
  5. directs a third party to do a thing in relation to the property of a party to the marriage; or
  6. alters the rights, liabilities or property interests of a third party in relation to the marriage.
  7. The Family Court may only make an order against a third party if:
  1. the making of the order is reasonably necessary;
  2. it is not foreseeable at the time that the order is made that to make the order would result in the debt not being paid in full;
  3. the third party has been accorded procedural fairness;
  4. the court is satisfied that, in all the circumstances, it is just and equitable; and
  5. the court is satisfied that the order takes into account as follows:
    1. the taxation effects, if any, of the order; ;
    2. the social security effect, if any, of the order;
    3. the third party’s administrative costs in relation to the order;
    4. the capacity of a party to the marriage to repay the debt after the order is made;
    5. the economic, legal or other capacity of the third party to comply with the order;
    6. any other matters raised by the third party; and
    7. any other matter that the court considers relevant.