7 Dec 2016

Third Parties in Family Law

The third party provisions of the Family Law Act give explicit power to the Family Court to alter the rights of third parties as part of family law property proceedings. This means that the Family Court can make an order or grant an injunction that is directed to, or alters the rights, liabilities or property interests of a third party.  In simple terms, the Court can make an order that affects people other than the husband and wife (or former de facto partners) involved in the proceedings.

 

Though the exercise of the power is limited to matters which fall within matrimonial proceedings, the impact of a marriage breakdown extending to creditors, businesses, companies, trusts and other third parties cannot be underestimated.

 

What is a “third party”?

A third party is defined very broadly as “a person (or entity) who is not a party to the marriage”.  In practice, the third party most often joined into family court proceedings are one of the following:

 

  1.  the parents or siblings of the parties to the marriage; and/or
  2. the entities in which the parties to the marriage are involved in such as companies and trusts

 

When do the third party provisions apply?

Parties cannot contract out of the third party provisions of the Family Law Act, with one limited exception – being where there is a  binding financial agreement.

 

Section 90AC of the Family Law Act also provides that the third party provisions of the Family Law Act are effective:

 

  • despite anything to the contrary in any other law of the Commonwealth, State or Territory;
  • despite anything in a trust deed or other instrument (document).

 

Any act done by a third party in compliance with an order of the Family Court made under the third party provisions also overrides the other law or instruments referred to above and is deemed not to be in contravention of those law or instruments.

 

However, the Family Court may only interfere with third party property interests if certain criteria are met, including whether the involvement of a third party is reasonably necessary to ensure the married parties obtain their just and equitable entitlements at law. 

 

Obtaining advice about the operation of third party provisions in your matter

Third party involvement in Family Law Court proceedings can be technically complex and can be expensive if not dealt with appropriately.

 

We recommend that you obtain expert advice if you are a third party or potential third party in Family Court proceedings.  Similarly, if you are a party who wishes to join a third party to your Family Court proceedings, we also recommend that you obtain expert advice as the ramifications of an unnecessary joinder may result in your Family Court proceedings becoming more complex, time consuming and expensive than would otherwise be the case.

 

This is general information only, and does not constitute specific legal advice. If you would like further information in relation to this matter or other legal matters please contact our office at reception@hhg.com.au or call us on 1800 609 945.

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