Defacto Couples

Property Proceedings in The Family Law Courts

Amendments to the Family Law Act commenced on 5th December 2008, enabling unmarried couples to seek resolution of property disputes in the Family Court of Australia and Federal Magistrates Court of Australia. Chris Turnbull reports.

The Family Law Amendment (De Facto Financial Matters and Other Measures) Act 2008 came into force on 5 December 2008. This Act creates a new Part VIIIAB of the Family Law Actand amends a number of other related Acts. Financial matters arising out of separation of de-facto couples can now be resolved in a Court exercising jurisdiction under the Family Law Act.

What is a “de facto” relationship?

A person is in a de facto relationship with another person if the persons are not legally married to each other, they are not otherwise related by family, and having regard to all of the circumstances of their relationship, they have a relationship as a couple living together on a genuine domestic basis.

A de facto relationship can be between members of the opposite sex or members of the same sex.

The circumstances of the relationship may include the duration of the relationship, common residence, a sexual relationship, financial interdependence, care and support of children, and public reputation (s. 4AA). There is no threshold requirement of cohabitation.

This is a broad test.  In the context of child abduction proceedings, the Full Court of the Family Court has interpreted similar (New Zealand) provisions widely.

A Court may make an order or declaration if the Court is satisfied that the period, or the total of the periods, of the de-facto relationship is at least two (2) years, or there is a child of the de-facto relationship, or if failure to make the order or declaration would result in serious injustice to the applicant (s. 90SB).

Orders that can be made

The Court may make such orders as it considers proper for the maintenance of a party (s. 90SE (1), for a declaration of an interest in property (s. 90SL (1)) and for alteration of property interests (s.90SM (1)). Part VIIIB (Superannuation Interests) is extended to apply to a de-facto relationship.

Third parties may be included in de facto property proceedings (in a similar way to the existing Part VIIIA).
The Court may make an order or declaration about the existence or otherwise of a de facto relationship (s.90RD).

Time Limits

Proceedings must be commenced within the standard application period, which is defined as two (2) years from the date of separation. Leave may be granted for a party to apply after the end of the standard application period, if hardship is established.

Participating Jurisdictions

Not all States have referred power to the Commonwealth. For parties to be eligible to apply, they must be ordinarily resident in a participating jurisdiction. Presently, this includes all States and Territories except South Australia and Western Australia.

If the parties are ordinarily resident in these States, then the laws of those respective States still apply.
In Queensland the Family Law Act will apply to the exclusion of Part 19 the Property Law Act 1974 (Qld). Queensland Courts will have no jurisdiction. (s.90RC).

For a Court to have power to make orders for alteration of property interests and for maintenance of a party, then either or both of the parties to the de facto relationship must meet the geographical requirement.

The requirement is that either or both of the parties were ordinarily resident in a participating jurisdiction when the application for the declaration or order was made (or when they separated), and both parties were ordinarily resident in that jurisdiction during at least a third of the de facto relationship.

There is an exception to this rule if the applicant for the declaration or order made substantial contributions in a participating jurisdiction (s.90SK; 90SD).

Agreements

Financial Agreements can be made before, during and after the de-facto relationship (s90UB, 90UC, 90UD). Financial Agreements are binding if the requirements in s. 90UJ are met. Those requirements are precisely the same as those for Binding Financial Agreements for Married couples.

Agreements can be set aside (in the same way as present Binding Financial Agreements). A Court will apply a strict interpretive approach and strict compliance requirements should be applied.  Failure to comply with the requirements will result in the agreement being set aside.

Recognized Cohabitation and Separation Agreements made under Part 19 Property Law Act (prior to the commencement date) remain binding provided that a State Court could not make an order that is inconsistent with the agreement.

Parties separated prior to commencement

Parties to a de facto relationship that broke down before commencement may choose for the new provisions to apply.  Such a choice can be made if (a) no final order in respect of the property or financial resources of the de-facto parties, (b) no Recognized Agreement made pursuant to Part 19 Property Law Act (Qld) has been entered into, or (c) that such an agreement has been entered into but ceased to have effect without any property being distributed or maintenance being paid.

The choice must be made in writing, signed by both of the parties to the de facto relationship, and each of the parties was provided with independent legal advice and there is a certificate evidencing such advice.
There are no provisions in the Family Law Act that could enable a State Court to compel a party to ‘opt-in’.  If proceedings have commenced (and provided the time limitation has not yet expired) both parties could agree to discontinue the State Court proceedings and re-commence in the Family Court or Federal Magistrates Court.

Key differences

Where parties have separated after the commencement date, recognized separation agreements under the Property Law Act will be ineffective. The only options are to either prepare an agreement that meets the requirements of the Family Law Act, or by way of consent order pursuant to the Family Law Rules.

If a recognized agreement is in existence, at least in Queensland, it will not have been able to deal with the maintenance of a party, or parties, to the de facto relationship. Fresh agreements might be required to cover the possibility of a maintenance claim.

If the time limit has not yet expired, spousal maintenance claims might be able to be made even where there is a final division of property. In any event, a Court may make such orders for maintenance of a party, including lump sum orders, and orders for transfer of property to meet a maintenance liability, as it may consider appropriate.

Superannuation will be treated as property, and can now be split, either by agreement or by Court order. The full range of options previously available to Married couples can now be used, including provision of fixed based amounts, percentage splits, and splits during the payment phase. This includes self-managed superannuation funds.  Orders can now be made binding on Third parties.

The Jurisdiction of the Courts in Bankruptcy will be able to be utilized.

Most importantly, parties will have access to the Rules and Procedures of the Family Court of Australia and Federal Magistrates Court of Australia, with the benefit of individualized case management, early intervention dispute resolution processes and pre-action proceedings (for applications to the Family Court of Australia).

De facto couples with both parenting and property disputes will be able to have all matters determined in one Court. In most cases, this will mean a significant cost saving for litigants.

Further information

To assist in interpretation of the amendments, the explanatory memorandum to the Bill (as it was), and the Bill digest are both available on the Australian Parliament website