When is it necessary for other parties to become involved in financial proceedings?

In most cases, Court proceedings to resolve the financial issues arising from a divorce will only involve the separating couple themselves.

It is quite unusual for other parties to need to become involved. However, there are certain circumstances when it is necessary for other parties to be brought into these proceedings.

A separating couple’s home may have been purchased using money provided by their parents (or other family members). On separation, a dispute arises as to whether these monies were a loan or a gift to the couple. This can be particularly difficult to resolve if there is no clear documentation, such as a signed loan agreement, to record the position. In these circumstances, the family member who provided the money may need to be joined in the proceedings to seek to ensure that this is repaid to them.

Another example would be if one, or both, of the spouses have an interest in a business, perhaps together with other family members, and there is a dispute regarding the extent of their interest. There may also be a dispute about whether the spouses’ shares in the business can be sold or transferred as part of their divorce settlement. In these circumstances, the other owners of the business may need to be joined in the proceedings to seek to protect their own interests.

Other parties may claim to have an interest in the couple’s property. For example, a former spouse or partner may allege that they still have a beneficial interest in the property which needs to be resolved before the property is sold.

A parent may have transferred their home to the couple, on the understanding that they would have the right to live there for the rest of their lives. If this agreement has not been properly documented, they may need to be joined in the proceedings to resolve this issue.

These are all examples of circumstances in which it may be necessary, and beneficial, to join the interested third parties in the proceedings. If they are joined, they become a party to the proceedings and must accept all decisions made by the Court and will be legally bound by any orders made.

However, it is important to be aware that there are also potential consequences of being joined in these proceedings. If a party is joined and is unsuccessful in their claim, they may be required to pay the couple’s costs. If a party is joined and is successful in their claim, the separating couple may be required to pay some or all of the costs.

The value of the claim being brought should always be carefully considered, and if it is worthwhile to incur the legal costs involved, especially if there are concerns about the prospects of success. Due to the potentially significant cost consequences for all parties, every effort should be made to resolve these third-party disputes by agreement.

A party can be brought into financial proceedings following their own application (with permission from the Court), or by either spouse applying for them to be joined, or by the Court exercising its own powers to join them in the proceedings.

If a party is joined in the proceedings, it will be necessary for their claim to be considered by the Court at the earliest possible opportunity. Often this will involve a separate hearing, known as a Preliminary Issue Hearing, where their claim will be heard and a judgment made by the Court.

In these cases, it will be crucial for specialist legal advice to be obtained at the earliest possible stage, as the potential costs consequences of being joined in proceedings are significant.

For more advice on separation, divorce or legal assistance for families please contact the Family Law department on 0161 832 3434 or email info@kuits.com.