Usually, only two parties are involved in family law proceedings. However, in Australia, third parties may become involved in family law disputes in a number of circumstances.
Summary of legal principles
Rule 3.01 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (the Rules) provides that "[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 proceeding, must be included as a party to the proceeding" [emphasis added].
Where a relevant person is not joined by the parties, section 92 of the Family Law Act 1975 (Cth) (the Act) provides that any person may apply for leave to intervene in family law proceedings (other than divorce proceedings). Where leave is granted for a person to intervene, that person is "deemed to be a party to the proceedings with all the rights, duties and liabilities of a party."
Some examples of parties who may be joined or may seek to intervene include:
- third party creditors, including family, friends or financial institutions;
- entities that are controlled by the parties;
- entities (including corporate trustees) in which the parties hold an interest; and
- the Australian Taxation Office, where the parties have significant taxation liabilities
- or taxation issues.
Joinders
A third party will be joined to a proceeding where the joinder is 'necessary' for the Court to determine all the issues in dispute. . Most cases consider the phrase 'necessary' with reference to the decision of Warnick J in Wayne & Dillon1 , which defines 'necessary' as:
"…something more than “useful” or “expeditious” … if there are available alternative means to joinder to the substantive proceedings, of obtaining from a third person or someone already a party what is needed to allow an applicant for joinder to establish an identified “case”, joinder is unlikely to be “necessary”.
However, if a cause of action, recognisable at law, against a third person is particularised, then it is at least highly likely that joinder will be necessary for the court to completely and finally determine all matters in dispute."
The Court therefore looks closely at whether the outcome sought by the applicant can be achieved without the need for a joinder. For example, a joinder will likely not be necessary in circumstances where an alleged payment to a third party could simply be adjusted on the balance sheet if it were established at trial.2
However, parties seeking to resist a joinder on this basis must be able to provide sufficient evidence (including accurate and up to date valuations where necessary) that the asset pool is large enough to appropriately accommodate the adjustment.3 Additionally, a joinder application will be unsuccessful where the application seeks a payment by the third party of those funds specifically.4
Further, the consideration of whether a party is 'necessary' involves considering whether the orders sought are 'necessary'. It is not the case that simply seeking an order requiring a third party to do something renders that party 'necessary'.5 It is therefore important that the application to join third parties to the proceedings, together with any supporting evidence, show an appropriate cause of action against the third party, as well as the basis for the cause of action.6
When considering whether a joinder is necessary, a number of cases also look at whether the application (as against the third party) has no reasonable prospects of success.7 In this regard, applications for joinder are often unsuccessful in circumstances where they fail to seek relief against the relevant third party/ies.8
It must also be kept in mind that where claims against a third party are successfully defended at trial, cost consequences may flow.9 In general, courts are conservative in their approach to joinder applications, with consideration given to the potential expense incurred by a party when joined to proceedings.10
Case Study
Breno & Breno (No 2)11
In this case, the wife sought orders joining two corporations to the proceedings (L Company and M Pty Ltd). Both parents of the husband (who were already parties to the litigation) were directors of these entities.
The wife sought relief under section 106B of the Act to set aside a transfer of an overseas property from the husband to L Company. Although the husband argued that this was unnecessary as his parents (who were already parties) could be compelled by the Court to cause L Company to take any necessary steps to effect relief, this was not accepted.
As specific relief was sought against the company as a separate legal person - which would divest it of property it successful - Harper J was satisfied that L Company should be joined.
In contrast, no specific relief was claimed against M Pty Ltd. The wife alleged that the husband may have caused $570,000 of matrimonial assets to be paid to M Pty Ltd. His Honour formed the view that joining M Pty Ltd was not necessary, as the $570,000 could be considered as a dissipation of the matrimonial pool and accommodated on the balance sheet accordingly.
Antoun & Antoun (No 2)12
This case involved the applicant wife seeking to join the husband's sister to the proceedings. It was asserted that the sister was involved in Deeds of Variation of Trust which were executed after separation, the effect of which was to remove the husband as the appointor of various trusts and appoint his sister.
This arose in circumstances where correspondence had been exchanged between the parties, warning the husband not to proceed with changes to his business structures that he had foreshadowed.
Relevantly, the wife sought orders pursuant to section 106B of the Act setting aside the change in appointors of various entities. The wife also sought an account of profits or equitable compensation from the husband's sister.
It was argued that a joinder was not necessary as an undertaking had been signed by the husband's sister providing that she would refrain from amending trust deeds, removing directors of the corporate trustees, removing trustees and/or changing the appointers in respect to various trusts. It was also argued that the account of profits or equitable compensation claims had no arguable basis.
Although there were some issues with the way in which the orders were sought by the wife, Williams J held that the husband's sister was a necessary party and her rights may be directly affected, particularly in relation to any order made vis-à-vis the Deeds of Variation. As such, she was joined to the proceedings.
Intervening in family law proceedings
Where the parties to the proceedings do not themselves join a third party to the proceedings, a third party has the ability to apply to intervene. If leave is granted for a third party to intervene, then they are deemed to be a party to the proceedings with all the rights, duties and liabilities of a party.13
A third party may intervene with respect to the overall settlement of the matter, or they may also intervene in relation to a specific issue. Once that specific issue is dealt with by the Court, the intervening party can be released from the matter. This is different to the joinder process, where parties are not usually released from the matter until it is finalised. Although leave of the Court is generally required to intervene in proceedings,the following parties do not require the Court's permission to intervene: 14
- a creditor of a party to the proceeding who may not be able to recover a debt if an order for the adjustment of property interests is made; and
- a person whose interest would be affected by an adjustment of property interests.15
If the Court's permission is not required to intervene in the proceedings, then a person seeking to intervene must file a Notice of Intervention by Person Entitled to Intervene and attach a schedule setting out the orders that they seek.
If the Court's permission is required, then a person seeking to intervene must file an Application in a Proceeding and a supporting* Affidavit* outlining why they should be permitted to intervene.
Security for costs
If an intervening party has no assets in, or formal ties to, Australia, the other parties may seek an order that the intervening party provide security for the legal costs that will be incurred as a result of their intervention.
Butler J in Brown and Brown; Eley and Henty (Interveners)16 held that:
“Costs security orders prevent abuse of Court process by inter alia preventing impecunious persons from litigating without responsibility. … Generally orders are made where the defendant is an unwilling participant in the litigation and should not be prejudiced by the plaintiff’s lack of funds … But the Court must carefully balance this consideration against the possibility that the plaintiff might be shut out or unfairly dealt with if security is ordered.”
A security for costs order can be made pursuant to section 117) of the Act and is generally made in conjunction with leave being granted for a third party to intervene.
Whether that security is required to be called upon is determined as part of the final hearing of a matter or the hearing of the specific issue in which the third party has intervened. The Court will consider factors such as the financial circumstances of the parties and whether the intervening party has been wholly unsuccessful in the proceedings.
Case Study
The husband and wife were involved in ongoing financial proceedings in the Federal Circuit and Family Court of Australia.
The husband and his siblings were the beneficiaries of a family trust which was managed by an international corporate trustee wh ich was based in Country A. The family trust was governed by the laws of Country B. During the husband and wife's proceedings in Australia, it was alleged that the husband had misappropriated significant funds from the family trust to fund the purchase of various assets in Australia for his Husband and wife's benefit. These assets formed a significant proportion of the parties' matrimonial asset pool.
The husband's family sought to recover the monies prior to the finalisation of the husband and wife's property settlement and therefore made an application for the international corporate trustee to intervene on behalf of the family trust in the proceedings.
Prior to being permitted to intervene, the international corporate trustee was required to make a Beddoe Application17 in Country B, being the jurisdiction whose laws governed the family trust, to seek authorisation to expend the family trust's monies on litigation.
The Beddoe Application was successful and the international corporate trustee made an application to intervene on behalf of the family trust in the Federal Circuit and Family Court of Australia proceedings.
The intervention application was granted so that the Court could determine whether the family trust's monies were owing and recoverable. The Court was then able to determine the balance of the matrimonial pool available for division between the husband and wife once the debt had been repaid.
To join a third party or intervene?
It is always best to seek advice as to whether:
- You should be joining a third party;
- You as a third party should oppose being joined; or
- You as a third party should seek to intervene in proceedings.
If you are involved in a relationship breakdown or are advising international family law clients in a matter that involves issues with third parties, it is important to obtain specialist Australian family law advice. These cases are often complex and can have considerable costs consequences if the applications are not made in compliance with the Australian legal framework. This is particularly so when the third party is located overseas.
Lander & Rogers has extensive experience in international family and relationship law matters, including international maintenance and child support. Our memberships of the International Academy of Family Lawyers (IAFL), LawAsia, and international referral network, TerraLex, enable us to support the interests of our clients in every overseas jurisdiction.
For more information on these intervening or joining proceedings issues, please contact our experienced international Family & Relationship Law team.
1[2008] FamCAFC 204 at [18] - [19].
2Breno & Breno(No 2) [2024] FEDCFAMC1F 373.
3Yong & Weng[2024] FEDCFAMC1F 440.
4Yong & Weng [2024] FEDCFAMC1F 440.
5Yong & Weng [2024] FEDCFAMC1F 440.
6Lund & Whittall [2024] FEDCFAMC1F 271.
7Yong & Weng[2024] FEDCFAMC1F 440; Abano & Abano [2024] FEDCFAMC1F 331
8Kayce & Wilda(No 2) [2024] FEDCFAMC1F 405; Lund & Whittall [2024] FEDCFAMC1F
271;Yong & Weng[2024] FEDCFAMC1F 440.
9Yong & Weng [2024] FEDCFAMC1F 440.
10Goreshter & Goreshter [2024] FEDCFAMC1F 245.
11Breno & Breno (No 2) [2024] FEDCFAMC1F 373.
12[2024] FEDCFAMC1F 354.
13Section 92 of the Family Law Act 1975 (Cth).
14Section 92 of the Family Law Act 1975 (Cth).
15Rule 3.07 of the Federal Circuit and Family Court of Australia (Family Law) Rules
2021
16(1991) FLC 92-265 (at 78,778).
17Re Beddoe; Downes v Cottam[1983] 1 CH 547
All information on this site is of a general nature only and is not intended to be relied upon as, nor to be a substitute for, specific legal professional advice. No responsibility for the loss occasioned to any person acting on or refraining from action as a result of any material published can be accepted.