The recent case of AA v BA [2025] EWFC 278 (B) shines a spotlight on one of the trickier corners of financial remedy litigation: what happens when third parties—often parents—claim an interest in matrimonial assets?
In this case, the husband’s parents intervened, arguing that they were the true beneficial owners of the family home, an investment property, shares, and even an ISA held in the husband’s name. They said large sums they advanced were “loans” and not gifts. The wife, by contrast, argued the payments were part of inheritance tax planning and intended as gifts, with no expectation of repayment.
The Court’s Task
District Judge Sundstrem-Brown treated the matter as a preliminary issue. The legal framework is well established:
- Where a property is in the sole name of one party, an intervenor must prove a common intention constructive trust or rely on a resulting trust presumption.
- Intention is key. The court will look at the evidence of what was agreed or understood, alongside the “whole course of dealing” between the parties (Stack v Dowden principles).
- Bare assertions of loans are not enough—clear, consistent, and contemporaneous evidence is required.
Why the Intervenors Failed
The court found the intervenors and the husband lacked credibility. Their figures didn’t add up; witness statements were inconsistent and in part written by the husband himself; and explanations changed under cross-examination.
By contrast, the wife’s evidence—that the payments were part of inheritance tax planning—was consistent and supported by the surrounding facts. The judge concluded that the transfers were effectively gifts or “soft family loans” with no binding obligation to repay.
The intervenors’ claims were dismissed in full, with costs awarded against them.
Key Points for Practitioners
- Evidence is everything: If parents claim an interest in property, they must produce proper documents—bank statements, agreements, or trust declarations. Without them, the court is unlikely to accept retrospective assertions.
- Soft loans vs real loans: As seen in this case, “family loans” with no terms, no repayment schedule, and no enforcement history are very likely to be treated as gifts.
- Inheritance tax planning arguments: Courts are alive to the reality that many parental contributions are motivated by tax considerations, not genuine ownership arrangements.
- Intervenor credibility matters: The court took a dim view of the husband effectively drafting his father’s witness evidence. Independent, consistent testimony is essential.
- Costs risk: Intervenors who fail in their claims can be ordered to pay costs—an important warning where elderly parents may be encouraged into litigation.
Final Thought
Intervenor claims are increasingly common in financial remedy cases, especially where property has been purchased with parental contributions. But AA v BA is a reminder that only well-evidenced, consistent claims will succeed. Parents hoping to protect contributions must formalise arrangements at the outset—otherwise, what starts as “helping the kids” may end as nothing more than a very expensive gift.
