New De Facto Property Regime
New De Facto Property Regime
The Family Law Amendment (De Facto Financial Matters and Other Measures) Act 2008 provides that the majority of heterosexual and same sex de facto couples have their property and maintenance matters dealt with under the Family Law Act 1975 (“the Act”) in the event of a breakdown of their relationship on or after 1 March 2009. If the breakdown of the relationship occurs before 1 March 2009, the relevant state legislation applies which, in the case of Victoria, is the Relationships Act 2008. The Relationships Act came into force on 1 December 2008 and repealed Part IX of the Property Law Act 1958.
Parties whose relationship breaks down before 1 March 2009 can opt in to the new regime providing that the choice to opt in is in writing, signed by both parties to the relationship and each party has obtained independent legal advice from an legal practitioner regarding the advantages and disadvantages in making the choice. The legal practitioner providing the advice must provide a signed statement that the necessary advice was given. Parties might choose to opt in because they want to split the superannuation entitlements of one or other of the parties which cannot be done pursuant to the state legislation. They may also wish to access the Family Court or Federal Magistrates Court which are more accessible than the state courts.
The new de facto laws rely on the states referring power pursuant to Section 51(xxxvii) of the Constitution. All states except South Australia and Western Australia have referred their powers to the Commonwealth.
A de facto relationship is defined by Section 4AA of the Act if:
(a) The parties are not legally married to each other; and
(b) They are not related by family; and
(c) Having regard to all circumstances of their relationship they have a relationship as a couple living together on a genuine domestic basis.
The Act also lists a set of factors to which the Court must have regard when determining whether parties are in a de facto relationship, e.g. the duration of the relationship, whether the parties registered the relationship, whether a sexual relationship exists, the nature and extent of common residence, the degree of financial dependence or interdependence, the ownership use and acquisition of property, the degree of mutual commitment to a shared life, the reputation and public aspects of the relationship and the care and support of children.
In addition to satisfying the Court that a de facto relationship exists, an applicant must also satisfy the Court that one of four possible gateway requirements are also satisfied:
(a) That the relationship is of at least two years duration; or
(b) There is a child of the de facto relationship; or
(c) The party applying for an order or declaration made substantial contributions and not to make the Orders/declaration would result in serious injustice to the applicant; or
(d) The relationship was registered under a prescribed law of a state or territory.
There are certain geographical requirements in order for the legislation to apply. Parties must be:
1. Ordinarily resident in a referring state during at least one third of the de facto relationship; or
2. The applicant must have made substantial contributions to the acquisition, conservation or improvement or property or substantial contributions as home maker and parent; or
3. The parties to the de facto relationship participating jurisdiction when the relationship broke down.
A financial application can only be bought in a de facto matter if the application is made within two years after the end of the de facto relationship. There are two exceptions to this rule:
(a) If hardship would be caused to the party or a child if the leave were not granted; or
(b) For maintenance applications, at the end of the two year period the applicant was unable to support himself or herself without an income tested pension, allowance or benefit.
Parties in a de facto relationship who satisfy one of the four gateway requirements and the geographical requirements can make an application to the Family Court or Federal Magistrates Court whereas previously they could only make an application to one of the state Courts. The Federal Magistrates Court and the Family Court are more accessible and less costly than the state Courts. For parties who separated prior to 1 March 2009 who do not opt in to the new regime however we will continue to make an application to the state Court for relief Magistrates.
The provisions in the Family Law Act that apply to de facto couples who meet one of the gateway requirements and the geographical requirements virtually replicate the provisions that apply to married couples, including providing for the splitting of parties’ superannuation entitlements. In assessing the division of the parties’ assets a Court will take into account the parties future needs as well as their financial and non financial contributions to the relationship. In addition de facto couples are able to apply for maintenance from the other party.
Interestingly, parties can be in the marriage and de facto relationship concurrently and the Act may well apply to situations such as that of the late Richard Pratt, i.e. where a party has a wife and a mistress. Where there are claims by multiple parties, these can be consolidated. Where a de facto partner in an application against another de facto, a married party can join the proceedings. On the other hand where there is an application on foot by a married party against another married party, a de facto party can join into proceedings.
Parties in or considering entering into a de facto relationship who do not want the Family Law Act to apply to them can enter into a Financial Agreement with each other, setting out how the assets acquired by them before and/or during the relationship will be divided in the event of a relationship breakdown. Financial Agreements can also deal with what, if any, maintenance is payable by the parties. Strict requirements applicable to Financial Agreements prior to, during or after a marriage also apply to Financial Agreements entered into by parties prior to, during or after a de facto relationship e.g. the parties must obtain independent legal advice and a certificate of independent legal advice must be signed by each of the legal practitioners and annexed to the agreement.
Same Sex Parenting
Section 60 H of the Act provides that where a child is born to a woman as a result of an artificial conception procedure while the woman was a de facto partner of another person and the 2 parties consented to the carrying out of the procedure, whether the child is biologically the child of the woman or the intended parent, the child is a child of both parties. This applies retrospectively and applies to children born at any time. It means that in the event of a breakdown of the relationship both parties have rights as a parent to e.g. spend time with or communicate with the child. They also have the obligations of a parent to financially support the child and may be assessed by the child Support Agency.