“Because we are separated everything separates us, even our efforts to join each other” Simone de Beauvoir.


Joinder within financial proceedings – what does this mean, and how does the Court deal with such applications?

With the cost of living increasing and no end in sight to financial pressures on all fronts, newly-weds will frequently need as much financial help as possible getting onto the ladder of home ownership, including a gift or loan from family or friends. How would this financial help be dealt with during separation or divorce?

When financial remedy proceedings on divorce include a dispute about the interest of a third party in a property or asset, the Family Procedure Rules 2020 permit that party to be “joined” to proceedings in order to help the Court resolve the overall division of assets on divorce.


Third Parties in Financial Proceedings

A decision to join a third party is an important one to make and must be made early on in proceedings, particularly if one of the following situations arises:

  • One party to the marriage claims that the other party may be beneficially entitled to a property which is held by a third party. The third party may then need to be joined to the proceedings for this to be determined and to ensure that the party is bound by the Court’s result.
  • Where a third-party states that they have a beneficial interest in a property held in the name of one or both parties or in the joint names of the parties. This frequently occurs in the case of the ownership of the matrimonial home and in respect of family loans or gifts to purchase this property.
  • A third party has “loaned” significant monies to one of the parties and claims such a loan has to be repaid, increasing the liabilities of one party considerably.


How the Court will deal with this

When dealing with a third party interest in property, assets or liabilities, the Court will consider the documentary evidence of such an interest, reviewing how the legal and beneficial ownership of any property is held. For example, is there a Declaration of Trust? If so, is it valid, and did all parties have knowledge of such documentation being signed (if the property is in joint names)?

The Court will also consider the transaction itself to ensure that monies were paid in exchange for any such interest. If this relates to an interest in the matrimonial home, what each party was told in the lead-up to the wedding or before the purchase of such a property will be relevant. Furthermore, the intention of the third party, or “intervenor”, is crucial. If an intervenor wishes to make assertions within these proceedings, the burden of proof is on the intervenor to satisfy the Court of their case.

If a third party claims there is a “loan”, the Court will consider whether it would be enforced by the third party, as distinct from a “gift” where there is no possibility of it being repaid and if it is not repaid, whether it is likely to be enforced. If it is a “hard loan”, i.e. a commercial obligation to a finance company, with specifical terms and a request for payment, the Court will consider this as a liability to be repaid, reducing the sums within the matrimonial asset pot. The recent case of PvQ (Financial Remedies) [2022] EWFC B9 clarified the distinction between a hard and soft loan in circumstances where money is given to a party by their family before or during the marriage. If it is a “soft loan”, the reality is that such a sum will be left out of division on divorce since it would not be enforceable. The Court said, “a common feature of these cases is that the analysis targets whether or not it is likely in reality that the obligation will be enforced”.

In this respect, a loan from a member of a family to assist in the purchase of a home is highly likely to be seen as a gift – to both parties, not to one of them. In Abbott v Abbott [2007] UKPC 53, Lady Hale held that: if a parent gives financial assistance to a newly married couple to acquire their matrimonial home, the usual inference is that it was intended as a gift to both of them rather than to one alone:2 see McHardy and Sons (A Firm) v Warren [1994] 2 FLR 338, at 340, [1994] Fam Law 567; Midland Bank plc v Cooke [1995] 4 All ER 562, at 570, [1996] 1 FCR 442, [1995] 2 FLR 915.


The process

When deciding whether to join a third party, the Court will consider the factors set out in rule 9.26B(1) of the Family Procedure Rules to determine whether it is desirable to add the new party so that the court can resolve all the matters in dispute.

If, however, as detailed, in the above circumstances, the ownership of a jointly held asset, or other assets, is involved and the determination of this issue is crucial when dealing with the outcome of financial proceedings on divorce, it is likely the Court will accept that such joinder is “desirable”.

Determining the “desirability” or otherwise of joinder will involve considering the proportionality of doing so, including what each party is seeking in relation to the division of overall assets. The Court of Appeal, in the case of Behbehani v Behbehani and others [2019] EWCA Civ 2301, provided that if a sale or transfer is sought, it would be prudent to join the third party, but if a sale or transfer is not sought, joinder may not be required (for example if one party is seeking a lump sum instead of the sale or transfer).

A Form D11 must be completed to apply to be joined, with brief reasons for the application, what order is being sought and why the applicant is seeking such an order. A draft order must be attached.


When to make such an application

Pursuant to the case of TL V ML [2005] EWHC 2860 Fam, the application must be made at an early stage of proceedings. This case also confirms that the issue must be fully pleaded by points of claim, points of defence and separate witness statements. The matter should be heard as a preliminary issue before the FDR hearing, meaning that the application for joinder really should be made at a First Appointment hearing if possible.

The case of Fisher Meredith v JH and PH (Financial Remedy: Appeal: Wasted Costs) [2012] EWHC 408, [2012] 2 FLR 536 held that if a party to the marriage asserts that a property is owned beneficially by a third party, it may be possible for the FDR judge to express a view on the ownership of the asset at the FDR, possibly saving the cost of protracted additional proceedings if the matter were to settle.


The costs consequences

The joinder process will inevitably result in additional litigation and cost for both parties and must be considered carefully. As the “no order for costs” principle in the FPR, r 28.3 does not apply, the Court can make an order for such costs that it considers just in the circumstances. This may result in the unsuccessful party being responsible for both the other party’s costs and the intervenor’s if they are unsuccessful in the claim.


Solicitor for Financial Proceedings

At Marks Law, our solicitors will advise you on a fair outcome considering your financial position.

To speak to us today, please call 020 7123 4600 or email contact@marks-law.co.uk.