The extra guest at the Christmas table: Understanding intervenors in financial proceedings

The festive season is often a time for family, generosity and reflection. But for some, Christmas can also bring financial tensions to the surface – especially if you’re going through divorce. In the ordinary course of divorce and related financial matters, there is usually just two spouses. However, sometimes a third party steps in, claiming an interest in assets or is joined to proceedings by one of the spouses. These individuals are known as intervenors, and their involvement can significantly affect a financial settlement. It is essential to properly manage these claims to avoid delays and additional legal fees.

Who is an intervenor?

An intervenor is a third party (being either a person or an entity) who claims a beneficial interest in an asset within financial proceedings. Common examples include:

• Parents or relatives: Who assisted with funding for a property purchase – perhaps even as a Christmas gift some time ago
• Business partners: Who wish to protect their business and their share in the company
• Trustees or beneficiaries: Where are trusts assets are involved, for example family trusts

If a third party claims they have a beneficial interest in any of the matrimonial assets, the court may join them to the financial proceedings, so their claim can be properly considered and evidenced before dividing those matrimonial assets between the spouses.

When might this happen?

Intervenor claims often arise when:

• A family member has contributed funds for a property purchase and expects repayment or ownership rights
• A family member purchases a property with a spouse (often parent and child) by way of inheritance planning, which often leads to the other spouse claiming that property interest entirely belongs to their spouse, and the family member has no legitimate interest
• There is a dispute over whether money was a gift or a loan – a common issue in financial proceedings and formalities of this may be forgotten when Christmas generosity is at play
• Business assets or trusts interests overlap or intertwine with matrimonial assets

By way of an example, if a parent paid £50,000 towards a couple’s home, was this a gift, loan or an investment? If the question of this becomes an area of dispute between the spouses and a parent claims a beneficial interest, the court may join that parent to the proceedings to evidence their claim.

The legal framework

The Family court can join third parties under Part 9 (Rule 9.26B) of Family Procedure Rules 2010 where “there is an issue involving the new party and an existing party which is connected to the matters in dispute in the proceedings, and it is desirable to add the new party so that the court can resolve that issue.”

Once joined to the proceedings, the intervenor will be directed by the court to provide evidence supporting their claim. Upon review of the intervenor’s evidence, the court will decide whether the asset should remain as part of the matrimonial pot for division or be excluded entirely.

The court has the power to make property adjustment orders in favour of a spouse to the marriage or to any child of the family under Section 24 of the Matrimonial Causes Act 1973.

How will an intervenor impact a financial settlement?

If an intervenor successfully proves their interest, the asset may be removed from the matrimonial pot which is available for division between the spouses. This can inevitably impact the financial settlement.

Top tips to avoid future disputes on divorce

If discussions at the Christmas table this year turn to potential financial contributions from family or friends, it is very important to do the following:

• Document the financial arrangement clearly and ideally with legal advice – it should clearly explain whether the financial contribution is a gift, loan or an investment opportunity. The intentions of all parties involved should be clearly set out
• With regards to property, consider a Declaration of Trust, as this can clearly set out any third party beneficial interests. Again, this should be done with legal advice as the interest can be registered at the Land Registry

Following the above steps can be crucial for any future dispute, it can prevent costly court proceedings and the stress which can impact family relationships.