De facto relationships and property settlement

by The FindLaw Team

We here at FindLaw have often made reference to how complicated the law can be, and when you take into account how the laws may not be uniform across the States and Territories, the complexities can be even more pronounced – with property settlement in de facto relationships being no exception. Although, in 2008 the Commonwealth did introduce laws that attempted to create greater uniformity regarding de facto property settlement with the majority of States and Territories being subject to the laws, except for South Australia and Western Australia who aren’t participating jurisdictions. We should also further highlight that although the Commonwealth laws supersede any State legislation that deal with the same issues, this does not change the fact that there may still be different de facto property laws that may have an effect on the rights and obligations of the parties. 

What is a de facto relationship?

Under the 2008 Commonwealth laws, a de facto relationship is defined as:

  • parties to a relationship who are not married to one another;
  • parties who are not related by family; and
  • parties who are in a relationship as a couple and who are living with one another on a genuine domestic basis.

Further additional qualifying factors must also be satisfied to ensure that a de facto relationship is recognised as such in order for the parties to make an application in regards to property, and they are:

  • the duration of relationship was at least two years; or
  • there was a child which was the result of the relationship; or
  • any party who is making the application to the court had made substantial contributions to the relationship; or
  • there would be a serious injustice if the court did not make an order or declaration for the applicant; or
  • the relationship is registered under State or Territory law.

Who is part of a ‘couple’?

In considering whether or not parties to a de facto relationship can be considered as a ‘couple’, a conclusion can be ascertained by taking into account the following factors:

  • the length of the relationship;
  • the nature and extent of the parties who were living together;
  • if the couple was engaged in a sexual relationship;
  • the type of financial arrangements between the parties;
  • the type of property arrangements between the parties;
  • the degree of mutual commitment of a shared life between the parties;
  • whether the relationship was registered in either State or Territory law;
  • care and support of any children;
  • reputation and the public aspects of the relationship.

We should emphasise that the factors are considered on an individual basis and there is no obligation to prove all of the aforementioned points when establishing whether a de facto relationship had existed.

Oh, one more important point we should make is that the laws expressly cover both heterosexual and same sex relationships.

What happens when de facto couples separate?

If a de facto relationship comes to an end, then the date of separation may be of importance in regards to property law, and the question that needs to be asked is: When did the de facto relationship come to an end? When making a determination as to when a de facto couple is no longer considered as such, the same factors used in determining the existence of a de facto relationship will be reversed.

Private property settlement

The law encourages parties to settle their differences without resorting to litigation, and two ways in which property settlement can be achieved by de facto couples is the use of either binding financial agreements or consent orders.

Binding financial agreements: under the provisions of the Family Law Act (the FLA) binding financial agreements can be used to cover property or financial resources that a couple have bought into, or accumulated during the relationship.

One of the aspects that parties may find advantageous in the use of binding financial agreements is that such arrangements can remove the authority of the courts in making an order of property settlement in which the courts would ordinarily be able to make in the absence of such an agreement.

Furthermore, there is no requirement when a binding financial agreement can be created; therefore, an agreement can be created before cohabitation, during cohabitation, or upon the breakdown of the de facto relationship.

Formal requirements of creating binding financial agreements: in order for binding financial agreements to be enforceable, the following requirements must be met:

  • the agreement is in writing and signed by both parties;
  • the parties have signed a statement specifying that they have received independent legal advice from a lawyer in regards to specific matters;
  • certification from the lawyers which is attached to the agreement;
  • the agreement is not to be terminated or set aside; and
  • a signed copy is given to each of the parties to the agreement.

We should also point out that there is no requirement that a binding financial agreement is to be filed with the courts.

Consent orders: are made by the courts and the prior consent of both parties must be obtained and the order has addressed the agreed upon position of the issues either during dispute resolution, or settlement negotiations. Although, consent orders are created with the approval of both parties, there is however no requirement that all parties draft the order, although they can choose to do so.

Parties can make an application for a consent order in the following ways:

  • orally during a hearing or a trial;
  • giving a draft consent order to a judicial officer, magistrate or judge during an event in court; or
  • by filing an application (Family Law Rule 10.15).

Property consent orders: the courts will consider property consent orders to be ‘appropriate’ if the following factors are evident:

  • matters relating to maintenance, future needs and resources in property matters (ss 75, 75(2), or ss 90SE, 90SF(3));
  • obligations to support a spouse (s 72);
  • the powers and considerations of the courts in the distribution of property (ss 79, 79(4) or 90SM(4));
  • the duty of the courts in attempting to finalise relations between the parties in property matters (s 81 or s 90ST); and
  • requirements in dealing with superannuation interests.

Property orders made by the court must be ‘just and equitable’ under the circumstances, and furthermore, the courts can make orders which it considers ‘proper’ for maintenance.

What do the courts consider as a ‘just and equitable settlement’?

In assessing what is a ‘just and equitable settlement’, the courts will use a multi-step process in its determination, which includes the following:

  • identifying and valuing the assets and liabilities that form the global pool of property subject to settlement;
  • assessing the financial contribution of each party to the family assets;
  • assessing of non-financial contributions which may include the caring of children maintenance of the home;
  • considerations of any ‘negative’ contributions, such as violence, gambling or substance abuse;
  • consideration of the future needs of the parties taking into account such matters as age, health, the ability of the parties to support him or herself, and any other commitments;
  • the overall fairness of a determination that takes into consideration all of the circumstances of the case.

This piece is only a very general overview of property settlement in de facto relationships and if you, or anyone you know needs help with such a matter, please seek the help of a lawyer who will be able to assist.



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