How third party interests affect divorce proceedings

As life has become more complicated so have divorce and financial remedy proceedings. More and more cases need intervention by a third party who for a plethora of reasons may need to become a party in the financial remedy proceedings.

The most common scenario is when a family member has an interest in a property that forms part of the matrimonial assets. For example, parents who provided funds to purchase the family home. Was it a gift? Was it a loan? Do they own a share? If it was either of the later two, they may need to intervene.

How do they fit in to divorce proceedings

If an interest is asserted then the court will usually need to determine the extent of the third party’s interest in a separate procedure before it can resolve the financial claims between the spouses. As such, the third party, upon application, will be formally joined to proceedings at the earliest opportunity so that their claim can be dealt with prior to proceedings between the divorcing couple. An intervening party can also claim their costs so it is important that these issues are resolved at the earliest possible opportunity.

Limiting third party interests

The following steps can be taken to limit these types of disputes and the involvement of third parties:

1. Ensure that any interest of friends or relatives is recorded in a declaration of trust or loan agreement
2. Register a restriction at the Land Registry so that the party with an interest is notified before the asset is sold
3. Keep evidence of any financial contributions made. 

Example

Recently, in Behbehani v Behbehani [2019] EWCA Civ 2301, the Court of Appeal gave guidance on the joinder of third parties where financial relief is sought, but not the transfer of a specific asset.

More informationIf you’d like to understand more about how third party interests could potentially impact financial remedy proceedings, please contact Kiren Dhillon, Senior Associate, on 01708 229444 or fill out an enquiry form. ​
This article was written by Kiren Dhillion, Senior Associate in the Family Team at Pinney Talfourd LLP. The contents of this article are for the purposes of general awareness only. They do not purport to constitute legal or professional advice. Specific legal advice should be taken on each individual matter. This article is based on the law as of February 2020.​