Property and financial matters upon the breakdown of de facto relationships

CFCA Paper No. 24 – September 2014

Introduction

Prior to 1 March 2009, people in de facto relationships were able to access the federal family law system in relation to their post-separation parenting arrangements. However, their property and financial settlements were covered by separate legislation that applied in their state or territory. Property and financial settlements generally accommodate the arrangements for dividing the former couple's assets and liabilities and whether (and if so, how much) maintenance is to be payable.

In practical terms, this legal situation meant that where matters could not be resolved by agreement, separating de facto couples were required to issue proceedings in the federal family law system with respect to their parenting arrangements, and to issue separate proceedings in their state/territory system in relation to their property and financial issues. This contrasts with the situation of separated married couples Australia-wide who have been able to access the federal family law system since its inception, for both their parenting and property/financial matters under the Family Law Act 1975 (Cth) (hereafter referred to as "the FLA"). Previously, a broader range of considerations applied to the property and financial settlements of married people as compared to those applicable under some de facto property/financial regimes.

Recent changes to the FLA (applicable to all states and territories except Western Australia) mean that most same-sex and opposite-sex de facto couples can now have their property and financial disputes dealt with in substantially the same way as married couples, within the same specialist, federal family law system.1 This means that these de facto couples are no longer required to incur the stress, financial expense and inconvenience of issuing separate proceedings in two different court systems for their post-separation parenting orders and property/financial settlement. It also means that the wider range of considerations for dealing with property and financial arrangements and the broader decision-making approach to the application of the relevant legislative provisions taken by the Family Law Courts applies to most couples who have separated, regardless of whether they were in a marriage, same-sex or opposite-sex de facto relationship.

To enable this change, all states, except Western Australia,2 referred the relevant legislative powers to the Commonwealth, leading to the enactment of Part VIIIAB of the FLA, so that the Family Court of Australia and the Federal Circuit Court of Australia can now deal with property and financial matters arising from the breakdown of de facto relationships.3 The reforms also provided for the extension of the superannuation splitting provisions (that allow for the division of superannuation funds between married couples) to former de facto partners and also for FLA binding financial agreements to be an option for de facto couples.

This research paper is aimed at providing non-legal professionals in the family law sector with a general outline of these significant reforms, which were introduced by the Family Law Amendment (De Facto Financial Matters and Other Measures) Act 2008 (Cth) (hereafter referred to as "the reforms"). Following a summary of the reforms, including the concept of a de facto relationship and an outline of the applicable considerations in the determination of property and financial matters, the paper will consider the rationale for these reforms. This will be followed by a discussion of arguments in favour of and critical of the reforms, and implications arising from their introduction.

Footnotes

1 Couples falling outside the Family Law Act 1975 (Cth)definition of de facto relationship may still be covered by state/territory legislation and/or by general law, including common law and the law of trusts and equity.

2 The Family Court Act 1997 (WA) provides for the Family Court of Western Australia to make property and financial orders for same-sex and opposite-sex de facto partners separating after 1 December 2002 (subject to the hurdle requirements, including the relationship requirements in s 205Z of the Family Court Act 1997 (WA)). See s 13A of the Interpretation Act 1984 (WA) for guidance in relation to the term de facto relationship in this context.

3 The Australian states referred the relevant legislative powers regarding the financial matters arising out of de facto relationships in accordance with s 51(xxxvii) of the Commonwealth of Australia Constitution Act. Note that the Commonwealth relied upon its powers over the territories to apply the amended Family Law Act 1975 (Cth) to the Northern Territory and to the Australian Capital Territory. The Commonwealth's power to legislate in family law matters for married couples derives from s 51(xxi) ("marriage power"), s 51(xxii) ("divorce and matrimonial causes power") and s 51(xxxix) ("incidental power") of the Commonwealth of Australia Constitution Act.