Crash the Court Room or Command the Case? Intervenor Claims in Financial Remedy Proceedings

In family law, financial remedy proceedings can sometimes extend beyond the separating couple themselves. It is not uncommon for third parties, often family members, business partners, or trusts, to become involved in the proceedings because they have a financial interest that may be affected by the outcome. These individuals are known as intervenors, and their involvement can significantly affect the course, complexity, and cost of proceedings.

In circumstances where family financial support is more common than ever, it is a good time to reflect on the key principles, practical lessons, and potential pitfalls in these types of cases.

TL;DR: Intervenors are third parties – often relatives, business / trust connections – whose claimed interests in assets may need to be determined within financial remedy proceedings on divorce. If they are not joined, orders can be made without their evidence, creating serious risk to both assets and costs.

What is an intervenor?

An intervenor is a third party whose financial interests are entangled in a dispute between separating spouses. Intervenors are not automatically parties to financial remedy proceedings on divorce but may need to be joined to the case to ensure their interests are properly considered.

There are various ways that issues involving third party rights might arise in financial remedy proceedings, but the most commonly seen circumstances are where:

1. One party to the marriage alleges that the other party is beneficially entitled to property held in the name of a third party.

This might include, for example, a situation where a wife suggests that a house owned by the husband’s parents or siblings is held on trust for him, such that the assets available for division on divorce are greater than it appears.

2. A third party alleges that they have a beneficial interest in property held in the name of one or both of the parties to the marriage.

This might include, for example, a situation where the husband’s father claims that he has an interest in the family home held in the joint names of the parties to the marriage OR where the wife’s parents claim that they are the beneficial owners of shares held in the family company in the name of the wife.

It is often the case that the intervenor’s case will be supported by one party to the marriage but disputed by the other.

Why should intervenors join the proceedings?

As above, intervenors are not automatically parties to financial remedy proceedings and an application must be made for them to be joined, if they wish to ensure that any final financial order accurately reflects the true ownership of the asset(s) in which they have a financial interest.

If an intervenor is not joined to the financial remedy proceedings, the court may proceed without hearing their evidence, and orders may be made that affect or even dispose of their claimed interests without their input or consent. This can lead to the loss of the asset, enforcement action against it, and limited to no opportunity to challenge the outcome later, save for the costly and uncertain route of an appeal or separate litigation regarding the issue.

It is also in the interests of the parties to the marriage to ensure that any potential third-party claims are addressed within the financial remedy proceedings. Otherwise, the court may order a division of assets on the assumption that no such claims exist and, if that assumption proves to be wrong and a third party pursues their claim in separate civil proceedings thereafter, the foundation of the order made in financial remedy proceedings could be undermined and unravel entirely.

How are intervenors joined to proceedings?

Intervenors are usually joined under the Family Procedure Rules Part 9.26B.

If a third party is defending a claim made by one of the parties to the marriage against an asset in their name, the party seeking to prove that claim must take the necessary steps to ensure the third party is joined to the proceedings.

The situation is slightly different if the third party is claiming an interest in an asset held by a party to the marriage. In those circumstances, the third party, or the party to the marriage who is supporting the third party’s claim, will take the necessary steps to join them to the proceedings.

In considering an application for a third party to be joined to the proceedings, the court will consider whether the intervenor’s involvement is necessary to resolve the issues fairly and justly.

The legal framework and who bears the burden?

The starting point in any intervenor case is the burden of proof. There is a firm presumption that beneficial ownership follows legal ownership and, accordingly, the party contending that the registered owner is not the true beneficial owner bears the burden of proving it.

Process and practical considerations

From a procedural point of view, once a claim is raised, the court will usually hold a preliminary hearing to determine whether the third party should formally intervene. Directions will then follow, including disclosure obligations and timetabling for evidence and hearings.

The involvement of intervenors often requires parallel case management, a detailed consideration of legal ownership versus beneficial ownership, and thorough witness preparation. While manageable, preparation is key as third party claims can add significant complexity and extend the timeline of the proceedings.

Strategic Lessons: Avoiding the Pitfalls

Cases involving intervenors often turn on the quality of evidence. Courts are wary of vague or speculative claims, particularly where they appear to be raised late in the day or are unsupported by documentation.

The following should be considered key lessons to abide by:

1. Be clear early on about the nature of any third-party interest.

It is essential to identify at an early stage the precise nature of any third-party interest, whether it is asserted as a legal ownership, a beneficial interest under a resulting or constructive trust, an equitable charge, or another proprietary claim. Vague or shifting descriptions of the interest risk confusion, procedural delay, and a loss of credibility in the eyes of the court.

2. Pleadings matter, as ill-defined or inconsistent statements can undermine credibility.

It is essential that the party trying to displace the presumption of beneficial ownership sets out their case with clarity at the earliest stage. The legal and factual basis for the claim must be identified from the outset, together with the evidence relied upon, so that the issues are properly defined. A late-emerging or shifting case risks procedural disadvantage, evidential gaps, and the court drawing adverse inferences.

It is therefore equally important that parties responding to such a claim also set out their position with clarity as early as possible. A failure to properly engage with the claim at an early stage may result in the court proceeding on the unchallenged evidence, drawing adverse inferences, or limiting the responding party’s ability to introduce evidence later.

3. Costs can follow the event

One of the lesser appreciated aspects of intervenor claims is the potential for significant cost exposure. Unlike standard financial remedy cases (which often involve a no-order-as-to-costs approach), intervenor claims are more akin to civil litigation, and the losing party may well be ordered to pay the legal costs of the others.

In making an award for costs in these circumstances, a judge does not generally have to give any consideration as to whether the paying party can afford to pay costs or how they might do so, and interest will be payable on any late payment of a costs order.

4. Rejection of unmeritorious or tactical claims

The court will not hesitate to dismiss claims that are unmeritorious or advanced purely for tactical reasons. Where the evidence does not support the existence of a genuine interest, or the proceedings appear designed to frustrate or delay the fair distribution of assets, the court may reject the claim and make an adverse costs order.

These key lessons are all illustrated in a 2024 intervenor case in which our Kirsty Morrison and Frank Prior acted for the husband. The wife in that case advanced claims to several properties registered in the names of the husband’s parents, who were thereafter joined to the proceedings as intervenors to defend their ownership. The court ultimately rejected the wife’s claims in its entirety and ordered that the wife pay both the husband and the intervenors costs.

Case example (2024): key takeaways

In the judgment for that case, published in 2024, the judge commented that:

• Throughout the proceedings, the wife’s case was “not particularly clear”, and her claim seemed to be something of a “moveable feast”, with the wife even introducing a new claim, for the first time, on the day of the final hearing.
• The wife was clearly provided with evidence to disprove her claim to at least one of the properties in 2022, prior to the issue of proceedings and that it was therefore “wrong of [her]…to have pursued her claim, which was always fanciful and no more than a fishing expedition”.
• The wife’s evidence was “imprecise or hyperbolic… and peppered with inaccuracy”.
• By contrast, the evidence of the husband and intervenors was “credible” and supported by contemporaneous evidence from three years before the parties met.
• He considered that the biggest problem with the wife’s case was, quite simply, that she had “lied”.

The judgment for this case makes for an interesting read and can be found here: https://www.bailii.org/ew/cases/EWFC/OJ/2024/164.html

Final thoughts

Whether you are a spouse facing a third-party claim, a third-party facing a claim from a spouse, or someone who believes they have a genuine interest in an asset caught up in divorce proceedings, it is essential that legal advice is sought at the earliest possible stage. Intervenor claims are complex, and getting the strategy right from the outset can make all the difference, both in outcome and cost.

If you are facing a third-party claim in financial remedy proceedings, early legal advice is key. Our Family team can help you understand your position and protect your interests. Contact our Family law team to discuss your situation in confidence.

FAQs

1. Can my parents be dragged into my divorce?

Yes, there is potential for your parents to be joined to financial remedy proceedings on divorce. This often happens if your spouse claims that an asset in your parents’ name is really yours (beneficially). Your parents may need to be ‘joined’ to the proceedings to enable the court to determine the issue of beneficial ownership fairly.

2. Do intervenors automatically become parties?

No. An application is usually required so their evidence can be heard and their claimed interest properly considered.

3. Who has to prove what?

The starting presumption is that beneficial ownership follows legal ownership. The person arguing otherwise generally bears the burden of proof.

4. Is there a risk of costs claims / orders in intervenor cases?

Yes. Intervenor claims are treated more like civil litigation and the ‘losing’ party may face an adverse costs order.