November 2008

De-Facto or not De-Facto, This is the Question

Unlike its predecessor, the provisions of the Property (Relationships) Act 1976 “the Act” applies to de-facto relationships. The previous legislation, the Matrimonial Property Act 1976 applied only to married couples. The Act governs the division of property upon a separation.

However, unlike a marriage which has a clear starting point, being the date of the marriage ceremony, the start of the de-facto relationship can be a lot harder to ascertain. The date the relationship began can often be important as it may determine whether an asset is one partner’s separate property and therefore not be shared with the other partner upon separation, or it may determine whether an asset is relationship property and therefore to be shared equally upon a separation.

Recognising that there would be difficulty on some occasions in ascertaining when a de-facto relationship began, the legislation provides a number of indicators that are to be taken into account in determining whether a de-facto relationship exists or not. Interestingly, it is not necessary to live together for there to be a de-facto relationship.

Living Together

In deciding whether two people “live together as a couple” the Court takes into account any of the following:

  • The duration of the relationship;
  • The nature and extent of a common residence;
  • Whether or not a sexual relationship exists;
  • The degree of financial dependence or interdependence, and any arrangements for financial support, between the parties;
  • The ownership use and acquisition of property;
  • The degree of mutual commitment to a shared life;
  • The care and support of children;
  • The performance of household duties;
  • The reputation and public aspects of the relationship;
  • In a Court decision from 2006, the parties lived in separate countries and only intermittedly lived in a common residence. It was held nevertheless that there was a de-facto relationship because it was found that the parties had the intention of co-habiting whenever possible.

Contracting out Agreement

Given the uncertainty that exists in determining whether a de-facto relationship exists or otherwise, and given the serious consequences that this can have upon the division of property in the event of an eventual separation, it is our strong advice that those individuals who are in a committed relationship seek advice as to whether a contracting out agreement should be entered into which will protect assets in the event of a separation. A contracting out agreement allows partners in a relationship to “write their own rules” as to how their property will be divided in the event of a separation by essentially contracting out of either all or some of the provisions of the Act.

If you wish to discuss a contracting out agreement please contact one of our family law team.