Attwood Marshall Lawyers Family Lawyer Laura Dolan joins Robyn Hyland on Radio 4CRB to discuss a recent High Court decision that reassesses the definition of what constitutes a “de facto” relationship for an elderly couple who were separated under the same roof. Laura also explains how you can protect your financial interests if your relationship comes to an end.
Introduction
Whether you are married or in a de facto relationship, separating from a partner whom you have lived with may have financial implications.
Whilst the letter of the law may sometimes be very black and white, applying the law in daily practice can be a grey area in many situations. This is especially so with de facto relationships and Family Law disputes. There are so many different relationships in our modern-day society with a myriad of factual circumstances and ‘ingredients’ that may apply.
It is important to understand the discretionary nature of Family Law and how it may apply to you if your relationship comes to an end.
Much of the court’s decision-making rests on case law, which is made up from the precedents laid down in how the law is applied by Judges to certain facts. Given the broad discretionary powers of the Family Court, it can be difficult for people to know what outcome to expect from their own unique set of facts when a de facto relationship ends.
Do you have to register a de facto relationship?
In Queensland, you can choose to register your de facto relationship by doing so through the state’s Registry of Births, Deaths and Marriages.
However, if you choose not to register your relationship, that does not mean your relationship won’t be seen as a de facto relationship in the eyes of the law.
Currently, the Family Law Act 1975 considers that a person is in a de facto relationship with another if they are living together on a genuine domestic basis. Additionally, either party cannot be married or related by family to be deemed in a de facto relationship.
What qualifies as a genuine domestic basis is often disputed when a relationship ends. The factors a court may consider are:
The Fairbairn v Radecki Case: Living together but no longer “together”
In a recent High Court of Australia decision, Fairbairn v Radecki [2022], an elderly de facto couple who had ceased their relationship continued to live together under the same roof for several years.
Their finances and assets were separate.
When the female party suffered dementia and lost capacity, the NSW Civil and Administrative Tribunal appointed a trustee as her guardian to make health and welfare decisions on her behalf. It was decided by the trustee that her house must be sold to facilitate her move into aged care.
Her former partner, who was residing in the home they shared, although not as a couple, opposed the sale of the property as he wished to continue to live there. His opposition seemed to demonstrate that it was no longer his intention to keep their finances separate, alluding to the fact a de facto relationship still existed.
In determining whether the de facto relationship existed or if it had indeed broken down, the court had to consider a few factors, including:
The court recognised that cohabitation was no longer a necessary feature of an ongoing relationship in the current day and age. This is an important decision as it challenges the widely held preconceived notion that a de facto relationship does not exist when couples do not live together.
In this case, while there may have been a degree of mutual commitment to a shared life, that commitment ceased in the eyes of the law when the male party refused to make the necessary adjustments to support his former partner, and by his conduct, acted contrary to her needs.
This case is significant and may change the way de facto relationships are defined in the future. It suggests that a de facto relationship can endure even when the parties do not live together if there remains a commitment to a shared life.
An examination of the parties’ behaviour is crucial in determining if, when, and whether a breakdown in the relationship has occurred.
In Fairbairn v Radecki, evidence showed that a breakdown occurred when one party refused to make the necessary or desirable adjustments to support the interests of their partner, and their conduct went against their partner’s needs.
It is an important finding as there are many de facto relationships that may exist even when both parties no longer reside together, because perhaps one party has had to move into an aged care facility, or there may be other contributing circumstances. The fact that our society is aging and more people are transitioning to care is also reflected in this decision. It is likely we will see many more similar circumstances to this case and different permutations with the possible intervention of the Public Trustee. The well-publicised issues involving the conduct of the Public Trustees across the nation could add another layer of expense and complexity to an already difficult scenario.
On the flip side, it’s important to highlight that just because one party may suffer an illness that impairs their capacity, such as dementia, that does not automatically mean that the relationship will cease in the eyes of the law.
Whatever the scenario, the court will take all facts into consideration when determining if a de facto relationship existed for the purpose of family law proceedings.
How to protect your assets in a de facto relationship
No one has a crystal ball as to what the future may hold. Relationships are more diverse than ever before, with many people maintaining healthy de facto relationships later in life after already been through marriages and divorce. It is fair to be hesitant when starting a new relationship, especially if you have previously battled family law proceedings.
Upon starting a new relationship, it can be beneficial to keep your finances separate.
This can mean maintaining separate bank accounts, having no jointly owned assets, paying your living expenses separately, or paying rent to your partner if you are living in a home that is owned by your partner.
These are informal ways to try to protect your assets, however, the best protection you can get is to enter into a Binding Financial Agreement.
A Binding Financial Agreement can be made at any time during a relationship, whether it be at the start, or at the end when the relationship has broken down and you want to finalise the division of property without involving the court. Having this agreement in place can simplify the property settlement process, avoid disputes arising, and help all parties move on with their lives quicker.
The benefits of a Binding Financial Agreement in a de facto relationship
A Binding Financial Agreement is a document two people sign and agree to which outlines how property, superannuation, and spousal maintenance may be divided if their relationship comes to an end.
These agreements can be entered into by both married couples and de facto couples.
A financial agreement is almost always much more cost-effective than attempting to negotiate a property settlement or go through the court to resolve a dispute.
A financial agreement will also continue to operate despite the death of either party, and will operate in favour of, and be binding on, the legal representative of that party.
It’s important to also note that any binding financial agreements put in place should be mirrored in both parties’ Wills and estate plans.
A Binding Financial Agreement will bind the estate of a de facto couple so that if one party loses mental capacity or dies, the estate must honour the terms of the agreement for the division of finances and assets.
These documents cannot be prepared without engaging a suitably qualified family lawyer. There are strict compliance requirements to adhere to in order to execute a binding financial agreement and ensure that it is not set aside if the time comes, and you need to depend on it. You should also use this opportunity to update your estate planning and review your Wills and Enduring Powers of Attorney so that this is consistent with your agreement.
Whilst the upfront fee for preparing a Binding Financial Agreement may seem like an unnecessary cost, because in a perfect world you won’t need to rely on it, the cost of finalising a property settlement in court after separation far outweighs the upfront cost.
Attwood Marshall Lawyers – helping families resolve disputes quickly and cost-effectively
With a dedicated team of lawyers who practice exclusively in family law, we believe in helping families maintain positive relationships, and resolve disputes efficiently, to allow all parties to move on with their lives as quickly as possible.
As modern relationships continue to evolve, become more complex, and challenge our legal system, it is important to understand how the law applies to your unique situation, and what you can do to protect yourself and your family.
If you need legal help with a family law matter, please contact our Family Law Department Manager, Donna Tolley, on direct line 07 5506 8241, email dtolley@attwoodmarshall.com.au or free call 1800 621 071 at any time.
