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Going separate ways

Feature Articles

Cite as: (2008) 82(9) LIJ, p. 34

Courts will now have to consider relationship agreements when determining property entitlements and maintenance after unmarried couples break up.

By Adrian Stone and Kathryn Downs

The Victorian Relationships Act 2008 (the Act) was assented to on 15 April 2008. Subject to earlier proclamation, the substantive provisions of the Act will come into effect on 1 December 2008.

The Act represents a significant development in the law relating to domestic relationships.

The expressed purposes of the Act (as detailed in s1) are to:

  • establish a relationships register in Victoria for the registration of domestic relationships;
  • provide for relationship agreements;
  • provide for adjustment of property interests between domestic partners and the rights of domestic partners to maintenance; and
  • repeal Part IX of the Property Law Act 1958 and make consequential amendments to other Acts.

The repeal of portions of the Property Law Act 1958, insofar as it currently relates to the distribution of property between domestic partners, allows for the introduction of a new regime for determining the just and equitable division of property between separating de facto and same-sex couples.

Changes to the current approach have been foreshadowed for some time. While in November 2002 then federal Attorney-General Daryl Williams announced that each of the states and territories had agreed “to a referral of powers to the Commonwealth in relation to dealing with property disputes relating to separating de facto couples”,1 that referral has yet to be given effect. Indeed, Victorian Attorney-General Rob Hulls identified the lack of progress in that regard as the prompt for the introduction of the Act when he said: “I should point out that it is only necessary to enact these property-related provisions because of the [federal] government’s failure to act on Victoria’s referral of powers made by the Commonwealth Powers (De Facto Relationships) Act 2004 in respect of same-sex domestic partners”.2

The legislation seeks to achieve its stated aims in the following ways.

1. The relationships register

The Registrar of Births, Deaths and Marriages will maintain a register through which a domestic couple (irrespective of gender) can formally record the existence of their relationship. In introducing the legislation, the Victorian Attorney-General indicated that the purpose of the register is “to enable couples who want the dignity of formal recognition of their loving relationship to register it, to receive a certificate, and to have the security of knowing that their decision to commit to a shared life with each other is respected in Victoria”.3

In the event of a breakdown of a registered domestic relationship, formal steps need to be taken to effect the revocation of the registration.

2. Relationship agreements

Part 3.2 of the Act establishes “relationship agreements” as a means of delineating the distribution of property or the provision of maintenance in the event of the breakdown of a domestic relationship. Relationship agreements can be made between parties who are contemplating entering into a relationship, by parties to an existing domestic relationship, or as a means of formalising a settlement after a relationship has ended.

These agreements are a form of deed which, subject to compliance with formal requirements such as the provision of a certificate from independent legal practitioners, will permit parties to a domestic relationship (as defined, and irrespective of the registration of the relationship) to “contract out” of the provisions of the Act which relate to property and maintenance.

While it is currently the case that a written agreement between domestic partners is a factor which a court must have “regard to” when determining a just and equitable distribution of property between them (see s285(1)(c) of the Property Law Act 1958), where a valid relationship agreement exists a court will not be permitted to make an order that is inconsistent with the terms of the agreement.

There are provisions in the Act that permit the variation or setting aside of relationship agreements by a court, essentially in circumstances that would otherwise vitiate a contract, but significantly also where a change in the circumstances of the parties (or either one of them) since the making of the agreement would lead to “serious injustice” were the agreement to be enforced: s37.

3. Property and maintenance

The terms of the Act relating to financial distributions between domestic partners, insofar as they entail the introduction of rights of domestic partners to maintenance, represent a significant departure from the law as it now stands. The new provisions for property and maintenance are contained in Part 3.3 of the Act and will replace the provisions in Part IX of the Property Law Act 1958.

In the second reading of the Relationships Bill in December 2007, the Victorian

Attorney-General said that the legislation “provides a single location for statutory requirements governing property matters in the event of a breakdown of a domestic relationship, whether or not that relationship is registered. [It] allows partners in domestic relationships that have broken down to apply for the adjustment of interests in the property of the relationship and also establishes a limited scheme for maintenance. While [the Bill] specifies eligibility requirements to be met before an order for property adjustment or maintenance can be made, these requirements do not apply where the domestic relationship has been registered . . . To achieve this [the Relationship Bill] repeals Part IX of the Property Law Act 1958, which currently deals with the property of domestic partners, and incorporates these provisions, making some amendments to accord with additional provisions relating to maintenance and relationship agreements”.4

For the purposes of Part 3.3, a “domestic relationship” is defined in s39 to mean either a registered relationship or “a relationship between two persons who are not married to each other but who are living together as a couple on a genuine domestic basis (irrespective of gender)”. This definition is more limited than the definition in Part 3.2, which relates to the eligibility of parties to enter into relationship agreements.

Part 3.2 extends to cover “the relationship between two adult persons who are not married to each other but are a couple where one or each of the persons in the relationship provides personal or financial commitment and support of a domestic nature for the material benefit of the other, irrespective of their genders and whether or not they are living under the same roof, but does not include a relationship in which a person provides domestic support and personal care to the other person (i) for fee or reward or (ii) on behalf of another person or an organisation (including a government or government agency, a body corporate or a charitable or benevolent organisation)”: s35.

For the provisions of Part 3.3 to apply to unregistered domestic relationships, there are certain eligibility criteria carried over from the current legislation (such as a general threshold of a two-year relationship, subject to certain exceptions: s42(3)).

There must also exist a nexus between the relationship and the Victorian jurisdiction, namely that one of the domestic partners is living Victoria on the day on which the application is made and either (a) both partners lived in Victoria for at least one third of their relationship or (b) substantial contributions were made in Victoria by the applicant to the acquisition, conservation or improvement of property or financial resources of one or both parties or to the welfare of the domestic partnership: s42.

Property

Pursuant to the terms of the Act, a court (which, depending on jurisdictional limits, can be the Magistrates’ Court, the County Court or the Supreme Court) has the power to make a declaration as to the title or rights, or to make an order for the adjustment of interests in relation to, the “property” of one or both of the parties. “Property” is defined to include:

  • real and personal property;
  • any estate or interest in real or personal property;
  • money and any debt;
  • any cause of action for damages (including damages for personal injury);
  • any other thing in action; and
  • any right with respect to property: ss39(1) and 35(1).

In essence, the legislation relating to the distribution of property between domestic partners in Victoria will now move closer to the provisions of the Family Law Act 1975 (Cth).

Section 45 of the Act provides that on application for a property adjustment (which is to be made within two years of the date of separation) a court may make an order that seems just and equitable having regard to:

  • the financial and non-financial contributions made directly or indirectly by or on behalf of the domestic partners to the acquisition, conservation or improvement of any of the property or to the financial resources of one or both of the partners;
  • the contributions, including any contributions made in the capacity of homemaker or parent, made by either of the domestic partners to the welfare of the other domestic partner or to the welfare of the family constituted by the partners and one or more of the following: (i) a child of the partners; (ii) a child accepted by the partners as one of the family, whether or not the child is a child of one or both of
    the partners;
  • the nature and duration of the domestic relationship; and
  • any relevant matter referred to in s51.
  • While the nature and duration of the relationship is not a specific factor in the Property Law Act 1958, it is the inclusion of relevant matters set out in s51 of the Act that represents the significant change to the current approach to the distribution of property.
  • Section 51(2) of the Act (which, much like s75(2) of the Family Law Act 1975, stands alone in relation to maintenance applications but is also relevant to the determination of property adjustments) provides that a court must have regard to:
  • the income, property and financial resources of each domestic partner (including, subject to sub-s(3), the rate of any pension, allowance or benefit paid, payable or entitled to be paid to either partner) and the physical and mental capacity of each partner for appropriate gainful employment;
  • the financial needs and obligations of each domestic partner;
  • the responsibilities of either domestic partner to support any other person;
  • the terms of any order made or proposed to be made under s45;
  • any payments provided for the maintenance of (i) a child of the domestic partners; or (ii) a child accepted by the domestic partners as one of the family, whether or not the child is a child of one or both of the partners;
  • the standard of living that is reasonable for each domestic partner in all the circumstances;
  • the extent to which the payment of maintenance to the domestic partner whose maintenance is under consideration would increase their earning capacity by enabling them (i) to undertake a course of education or training; or (ii) to establish a business; or (iii) otherwise to obtain adequate income;
  • the extent to which the domestic partner whose maintenance is under consideration has contributed to the income, earning capacity, property and financial resources of the other partner;
  • the age and state of health of each domestic partner;
  • the length of the domestic relationship;
  • the extent to which the domestic relationship has affected the earning capacity of the domestic partner whose maintenance is under consideration; and
  • any other facts or circumstances the court considers relevant.

It should be noted that while contributions to the financial resources of one or both of the domestic partners may be relevant to the assessment of what is an equitable distribution of their property, the court does not have the power to distribute those financial resources themselves.

Maintenance

A party has the ability to obtain an order for continuing financial support from their domestic partner, whether on an interim or final basis, after the breakdown of the domestic relationship. Such an application can be made even if it is the only application before the court. The court will make an order, however, only if it is satisfied that the applicant is unable to support themselves adequately because their earning capacity has been adversely affected by the circumstances of the domestic relationship or because of any other reason arising wholly or in part from the circumstances of the domestic relationship.

In determining the quantum of any maintenance order, the court will apply the criteria in s51(2) as listed above. The right to receive maintenance ceases on the recipient marrying or entering into another domestic relationship, or where either of the domestic partners dies.

Conclusion

Much of the parliamentary debate regarding the introduction of the Relationships Act 2008 centred on the establishment of the register and the ability of same-sex couples to enter into formally recognised and regulated
relationships.

However, the real import of the legislation, insofar as the great majority of people in unregistered domestic partnerships are concerned, is likely to be the introduction of maintenance obligations. The creation of such obligations is likely to be a significant issue where unregistered domestic partners have either specifically sought to avoid the legal consequences of a de jure marriage, or have otherwise been unaware of the legal ramifications of developing a relationship that meets the definition in Part 3.3 of the Act.

As an equivalent to the “clean break” provision set out in s81 of the Family Law Act 1975 (Cth), s44 of the Act provides that, so far as is practicable, a court must make an order for the distribution of property that will finally determine the financial relationships between domestic partners and avoid further proceedings between them. This is likely to entail the capitalisation of (and adjustment for) future needs when determining property entitlements between domestic partners. While at present the assessment of what is a just and equitable distribution of property is primarily determined by reference to their past contributions, the courts will now be obliged to consider the prospective financial needs of each party.

On 25 June 2008, the federal government introduced the Family Law Amendment (De Facto Financial Matters and other Amendments) Bill 2008 into Parliament with a view to giving effect to the state and territory transfer of jurisdiction regarding de facto property matters. The terms of any resultant Act are yet to be determined, but they may affect the operation of the current Victorian legislation.


ADRIAN STONE and KATHRYN DOWNS are accredited family law specialists with Richard Calley Family Lawyers.

References to sections of the Act in the article refer to the Relationships Act 2008 (Vic).

1. “Commonwealth wins de facto property powers”,
Attorney-General’s Department press release, 8 November 2002.

2. Hansard, Legislative Assembly, 6 December 2007, p4394.

3. Hansard, Legislative Assembly, 6 December 2007, p4393.

4. Note 2 above.

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