RELATIONSHIP BREAKDOWN & PROPERTY DISPUTES
In the area of relationship breakdown, there are two broad categories of relationship. These are de facto relationships, and marriage.
DE FACTO RELATIONSHIPS
In Western Australia a de facto relationship is defined as a relationship other than a legal marriage between two persons who live together in a marriage-like relationship (s.13A Interpretation Act 1984). The term applies both to couples of different sex and the same sex, and to people who are legally married to someone else, or are in another de facto relationship. (s. 13 A (3)). The Interpretation Act lists nine indicators which may show two people are in a de facto relationship, though the Act says that none of these indicators are essential. They are:
a) the length of the relationship between them;
b) whether the two persons have resided together;
c) the nature and extent of common residence;
d) whether there is, or has been, a sexual relationship between them;
e) the degree of financial dependence or interdependence, and any arrangements for financial support, between them;
f) the ownership, use and acquisition of their property (including property they own individually);
g) the degree of mutual commitment by them to a shared life;
h) whether they care for and support children;
i) the reputation, and public aspects, of the relationship between them
The law concerning property disputes between de facto couples is State law.
MARRIAGE
Marriage, strangely enough, is not defined either in the Family Law Act or the (Commonwealth) Marriage Act. The latter instructs civil celebrants to say to parties words to the effect ‘Marriage is a union of a man and a woman to the exclusion of all others voluntarily entered into for life’. A useful working definition of a marriage is a relationship of that sort which will be recognized as a marriage by the Family Court. It included foreign marriages, if they are of this sort, but excludes polygamous marriages and unions between people of the same sex.
The law concerning property disputes between people who are, or have been married to each other is Commonwealth law.
TIME LIMITS
DE FACTO RELATIONSHIPS
Western Australian de facto relationship law does not apply to a de facto relationship which ended before Part 5A of the Western Australian Family Court Act commenced. This was 1 December 2002. (Family Court Act 205 U (2) ).
Generally, a court will only make orders relating to a de facto relationship that has existed for at least two years. However, there are two exceptions to this two-year requirement. The first is where there is a child of the relationship under 18 years of age, and refusing to make such an order would result in serious injustice to the person caring for the child. The second exception is where the person applying has made substantial contributions to the property of the parties and failure to make an order would result in serious injustice to the applicant.
(Family Court Act 205 Z (1) ).
An application for a de facto property settlement may only be brought within one year of the end of the relationship. If a person can show they would suffer hardship if not allowed to proceed, they may seek leave to proceed out of time. (Family Court Act 205 ZB).
MARRIAGE
The only time limit for a person who is or has been married to the other party to bring an application for property settlement is one year from a decree absolute of divorce. (Family Law Act s. 44 (3)). Again, if a party can show that this would create hardship for them, or a child, they can seek leave to proceed out of time. (s. 44 (4) ).
SPOUSAL MAINTENANCE
Under the Family Law Act, parties to a marriage who are unable reasonably to maintain themselves can seek spousal maintenance from the other party. (Family Law Act s. 72). The Western Australian Family Court Act has a similar provision closely patterned on the Commonwealth model (s. 205 ZC).In both cases, there is a one year time limit, which in the case of a marriage runs from decree absolute of divorce (Family Law Act s 44. (3)), and in de facto situations from the end of the relationship. (Family Court Act s. 205 ZB). Parties can seek leave to apply out of time in circumstances of hardship, in the same way as for property applications.
DECLARATION OF INTERESTS IN PROPERTY
In both married and de facto situations, a court can make a declaration as to the interests that a person has in regard to property. If a court makes a declaration like this, it can go on to make orders relating to possession or sale of the property. (Family Law Act s. 78 and Family Court Act s. 205 ZA).
In a situation concerning people who are or have been married to each other, this provision is not subject to any time limit. (Family Law Act s. 44 (3)). The Family Court Act does not except declarations of interest in property from the general time limit referable to de facto property matters (S. 205 ZB). Accordingly, in de facto matters the same time limits apply to declarations of interest in property as to other property matters.
GEOGRAPHICAL CONNECTION
DE FACTO MATTERS
As a State law, the Family Court Act only applies to matters within the State’s jurisdiction. To make a de facto property or spousal maintenance order, a court must be satisfied that one or both of the parties were resident in Western Australian on the day the application was made; and that both parties have lived in Western Australia for at least one-third of the relationship, or that substantial contributions to the acquisition, conservation or improvement of the property of the parties, or contributions to the welfare of the de facto family have been made by the applicant in Western Australia.
MARRIED MATTERS
As a Commonwealth Act, the Family Law Act provides that a property proceeding can only be brought if one (or both) of the parties is an Australian citizen, or ordinarily resident in Australia, or present in Australia at the date the application is made.
FINANCIAL AGREEMENTS
Under both State and Commonwealth law, parties to a de facto relationship or marriage can enter a financial agreement before, during or after the relationship. (Family Court Act ss 205 ZN, 205 ZQ and 205 ZP; and Family Law Act sections 90B, 90C and 90D). Both Acts provide these agreements are binding on the parties if they contain a certificate from a legal practitioner that the party has had detailed advice as to the effect of the agreement on the rights of the party, and the advantage or otherwise to the party of entering the agreement (Family Court Act 205 ZS and Family Law Act 90G).
CONSENT ORDERS
For many years a cheap and popular way of resolving a property dispute between persons who were or had been married was the Form 12A Application for Consent Orders. With the commencement of the de facto property provisions in December 2002, this avenue became available to de facto couples. On 29 March 2004 the Rules and Forms of the Family Court were completely overhauled. It is still possible to resolve property disputes by an Application for Consent Orders both for people who are or were married (Family Law Act s. 80 (1) (j), and Family Law Rules 2004 10.15 (1) (b) ) and for de facto situations (Family Court Act s. 205 ZI (1) (j) and Family Court Rule 12). The Court form now used for both married and de facto situations is Form 11.
PRE-ACTION PROCEDURES
In contrast with the cheapness and relative informality of an Application for Consent Orders, an ordinary application for property settlement orders relating both to married and de facto situations must now be preceded by Pre-Action Procedures. (Family Law Rules 2004 1.05 and Family Court Rule 12 (1) ). These require each party to a case to make a genuine effort to resolve a dispute by taking part in primary dispute resolution by negotiation and other non-court processes; exchanging a notice of intention to claim and exploring options for settlement by correspondence; and complying with a duty of disclosure. If there are unusual circumstances of urgency, or allegation of fraud or violence, parties may go straight to court. (Schedule 1 to Family Law Rules 2004)
DE FACTO MATTERS – EXCLUSIVE JURISDICTION
Before the commencement of the de facto property provisions in the Family Court Act, parties to a de facto relationship had to go to the Supreme Court to seek orders relating to title to real estate. Section 205 V of the Family Court Act now provides that persons who are or were eligible to apply for an order under its de facto property provisions cannot apply to the Supreme Court. This not only channels all present applications to the Family Court, but prevents a person who had a claim but did not pursue it in the Family Court from proceeding in the Supreme Court as a way of circumventing the time limit. A person who could have pursued a claim in the Family Court but did not can only seek to proceed out of time by using the provisions of 205 ZB (2) mentioned above.
A person who was in a de facto relationship that ended before 1 December 2002 can still apply to the Supreme Court for orders, subject to the time limit applicable in the Supreme Court, which (depending on how the action is framed) is arguably twelve years. (Limitation Act s 32).
PRINCIPLES OF PROPERTY SETTLEMENT
In regard to both de facto property matters, and property disputes between parties who are or have been married to each other, the principles of property settlement are closely similar. In deciding how property is to be divided between parties the court should take into account certain factors relating to the contributions that each of the parties has made (directly and indirectly) and a number of other factors that might be referred to as the need considerations of the parties.
Contributions are analysed from the point of view of the financial contribution made by a party to the acquisition, conservation or improvement of the property, the contribution other than a financial contribution made by either to the acquisition, conservation or improvement of any property, and the contribution made by a party to the welfare of the family, including any contribution made in the capacity of home maker or parent. (Family Law Act s.79 (4) and Family Court Act s. 205 ZG (4) ).
In regard to the need factors, the matters focused on are the effect of any proposed order on the earning capacity of either party, and matters including the age and state of health of each of the de facto partners, the income, property and financial resources of each, whether either has the control or care of a child of the relationship who has not attained the age of 18 years, and a number of other detailed factors which are set out in section 75 of the Family Law Act and section 205 ZD of the Family Court Act .
SUPERANNUATION
With effect from 28 December 2002, the Family Court can make orders relating to superannuation interests of parties who are or who have been married to each other. The legislation allows for ‘splitting’ and ‘flagging’ of superannuation interests. The legislation uses the power of the Commonwealth which is able legislatively to control superannuation, and over-rides provisions in the trust deeds of particular superannuation funds. The essential idea is that the trustees of superannuation funds may be ordered to split entitlements between parties to a marriage, or to flag the interest of a party to a marriage in a superannuation fund of their partner or former partner. Superannuation is now able to be dealt with in married situations in a way similar to that which would be applicable if it were property. (Family Law Act s. 90 MA to 90 MZH)
There are no parallel provisions in regard to de facto partners. The Commonwealth lacks power under the Constitution to make laws with respect to de facto parties, unless that power is ceded to them by a State. The State Parliament does not have power to regulate superannuation funds, other than superannuation funds created by or under State law. Accordingly superannuation is one area in which there is a major difference between the rights of parties who are or have been married to each other and de facto partners.
PROPOSAL FOR CHANGE
There is a bill before the Parliament in Western Australia proposing to refer power to the Commonwealth with respect to the superannuation interests of de facto couples. This bill makes separate referrals of powers with regard to heterosexual de facto couples and same sex de facto couples. The reason for this is that it is thought unlikely that the present Commonwealth Parliament would legislate with regard to the superannuation interests of same sex de facto couples, although it is thought likely that it will legislate with respect to the superannuation entitlements of heterosexual de facto couples.
Accordingly if this legislation passes, the present situation in regard to the difference between the superannuation interests of de facto and formerly married couples will change significantly.
JOINT OWNERSHIP & INDEMNITIES
In most cases in the Family Court only the two former partners to the marriage or de facto relationship are parties to the action. The case normally results in a shifting of ownership of property, and liability for debt between them. Third parties such as banks and other creditors are not directly involved in the action. The outcome is that these third parties are not bound by the result. Their legal rights and duties are normally unaffected. There is some difference between the position of secured and unsecured creditors.
SECURED CREDITORS