The jurisdiction of the Federal and Family law courts to make a property settlement order in a de facto relationship turns upon the breakdown of a de facto relationship.
Section 90SM of the Family Law Act provides that in property settlement proceedings after the breakdown of a de facto relationship, the court may make such order as it considers appropriate, including by altering the interests of the parties to the de facto relationship in their property, provided it is just and equitable to make the order.
For a summary of the gateway requirements and other considerations of the Court in determining whether two parties are in a de facto relationship, see our article: Am I in a De Facto Relationship?
This article addresses the issue of whether and when a de facto relationship will be seen as having broken down.
Breakdown of a de facto relationship
The Family Law Act does not include any exhaustive definition of the term ‘breakdown’. It therefore falls to be determined by the case law as to what constitutes the ‘breakdown’ of a de facto relationship.
The cases do however infer that ‘breakdown’ refers to the end of a de facto relationship.
Therefore, separation, including involuntary separation will not always justify a conclusion that a relationship has ended without an intention to separate being present, so as to trigger the ability of the Court to intervene to make a property settlement order. Living together is a requirement for a de facto relationship to be said to exist, which may mean cohabitation of some residence by a couple for a period of time, but cohabitation of a residence is not a necessary feature of living together.
This was the case in Stanford & Stanford where the parties were married for 37 years. The Wife had a stroke and developed dementia and was admitted into full time care while the husband remained at the matrimonial home. The Husband continued to provide care for the Wife and put $40,000 into a bank account to contribute for her medical needs. The Court found in that case that:
- the bare fact of involuntary separation does not, without more, demonstrate that it is just and equitable to make a property settlement order;
- When both parties are competent it can be assumed that any ‘necessary or desirable adjustment’ to their previous financial arrangements will be made consensually;
- If one of the parties has become incompetent it is not to be assumed that the other party lacks the will and ability to make those necessary or desirable adjustments.
The Court ultimately held that it was not just and equitable to make a property settlement order requiring sale of the residence as the wife had not expressed a wish to divide the property, an order would have required the husband to sell the matrimonial home in which he lived and the necessary or desirable adjustments were being made by the Husband to meet the wife’s needs and there was no evidence to suggest her needs would not continue to be met by him.
Importantly however, the Court did not have to determine whether the parties had separated, because in a married relationship, it is not a requirement for the parties to have separated, in order for the Court to have jurisdiction to make an order, provided it is just and equitable to do so.
So, noting that the breakdown of a de facto relationship is a gateway requirement to the Court having jurisdiction to make orders, if physical separation including involuntary separation is not necessarily sufficient to justify a conclusion that a relationship has ended, the question remains, what factors are relevant/determinative that a de facto relationship has broken down?
Read on about the case of Fairbairn and Radecki to find out.
Fairbairn & Radecki – breakdown of a de facto relationship
On 11 May 2022, The High Court ruled in the case of Fairbairn & Radecki, which has now clarified circumstances in which a de facto relationship can be said to have broken down.
The De Facto Wife (Fairbairn) and the De Facto Husband (Radecki) entered into a de-facto relationship around 2005/2006. Both were in their fifties and had separate adult children from previous marriages.
The parties had agreed to keep their assets strictly separate during the relationship but lived in a house owned by Fairbairn.
In 2015, Fairbairn’s cognitive health declined and by 2017 she was diagnosed with dementia.
The ongoing management of Fairbairn’s personal and financial affairs was an issue of contention as Radecki was in dispute with Fairbairn’s children over how her needs should be met such that he and the children were involved in litigation from 2015 to 2018.
In January 2018, the NSW Trustee and Guardian was appointed to make health and welfare decisions on behalf of Fairbairn and she was subsequently admitted to an aged care facility where she thereafter resided.
The Trustee sought to sell the home, a property valued at around $700,000, to fund Fairbairn’s ongoing care, whilst Radecki, who was living in the property, opposed this, and was refusing to move out. Radecki resented the involvement of the Trustee in Fairbairn’s financial affairs.
This led to the Trustee, on behalf of Fairbairn, filing an application for property settlement order, seeking sale of the home. In doing so, the Trustee argued that there had been a breakdown in the de facto relationship between Radecki and Fairbairn.
The primary Judge’s decision
The primary judge at the Federal Circuit Court declared that the de-facto relationship between Radecki and Fairbairn had broken down.
The primary judge found that Radecki’s conduct during the demise of Fairbairn’s mental capacity was inconsistent with a fundamental premise of their relationship, namely, the strict separation of their assets, that conduct, all of which occurred when Fairbairn lacked capacity to make decisions in her interests, was as follows:
- the entry into a new enduring power of attorney that favoured Radecki’s rights over Fairbairn’s rights;
- Radecki instructing solicitors to prepare an updated will on terms vastly more favourable to him;
- Radecki’s unwillingness to cooperate with Fairbairn’s children in the administration of her affairs;
- Radecki’s persistent refusal to permit the trustee to sell the home to cover Fairbairn’s refundable accommodation deposit whilst refusing to pay any of her ongoing care costs,
- Radecki’s proposal that Fairbairn’s super be used to meet her costs and subsequent proposal that he pay at first instance but be reimbursed by Fairbairn’s estate;
- Radecki’s ongoing and deliberate frustration of the Trustee’s lawful administration of Fairbairn’s financial affairs
The trial judge found this conduct to be unequivocally indicative of and consistent only with the cessation of the de facto relationship by 25 May 2018, when Radecki suggested that Fairbairn’s ongoing expenses be paid by her super while he remained in the home.
On an objective assessment of Radecki’s conduct, she imputed an intention by Radecki to separate from Fairbairn such that there had been a breakdown of the de facto relationship.
The Full Court Appeal
Subsequently, Radecki made a successful appeal to the Full Family Court, with the Full Court determining that the de facto relationship had not broken down.
The Full court found that none of the conduct identified by the primary judge was found to be fundamentally inconsistent with the continuing de facto relationship. Some of it was considered ‘bad behaviour’ on the part of Radecki but that such behaviour was all too often a hallmark of a relationship. Therefore there was insufficient evidence that the de facto relationship had broken down.
The Court found that there was not a breakdown of the relationship on the evidence.
In addition to the above, the two big ticket matters that informed the court’s decision were that Radecki had:
- previously used his own funds to be pay for Fairbairn’s care; and
- he continued to visit Fairbairn regularly.
In her last will executed in 2016, the wife had also provided that the husband could live in the property for 6 months upon her death, and the only change to the Wife’s Will in that regard was to extend the provision in her Will for him to live in the house from six months to a life estate.
The High Court Decision
Fairbairn appealed to the High Court.
The High Court referred to Stanford and held as follows:
- Separation, including involuntary of the parties, is not on its own sufficient to justify a conclusion that the relationship has broken down as physical cohabitation at a single home is not a necessary feature of an ongoing relationship. A de facto relationship may continue even though the parties reside at different locations.
- When both parties are competent it can be assumed that any ‘necessary or desirable adjustment’ to their previous financial arrangements will be made consensually;
- Mental incapacity on its own is also insufficient. If one of the parties has become incompetent it is not to be assumed that the other party lacks the will and ability to make those necessary or desirable adjustments;
- The making of necessary or desirable adjustments by one party to the interests of the other, supports the continued subsistence of a de facto relationship;
- Where the necessary or desirable adjustments are not made by one party to the other and one party acts contrary to the interests of the other in relation to the property of the parties it may be possible to conclude that the mutual commitment to a shared life has ceased, and therefore the relationship has broken down (para 38 judgement);
- In this case, in all the circumstances, including the fact that the parties had occupied separate bedrooms since 2017, that Fairbairn was living in an aged care facility from January 2018, and Fairbairn’s conduct conduct justified a finding that the de facto relationship had broken down by no later than 25 May 2018.
- It was an essential feature of the relationship that the parties kept their assets separate and by 2017 Radecki was acting as if he was no longer bound by this arrangement;
- The conduct of Radecki, demonstrated a persistent refusal by him to make the necessary and desirable adjustments which might have evidenced an ongoing relationship including as follows:
- he secured a new EPOA giving him considerable control over Fairbairn’s assets including the home;
- he procured a revised will while Fairbairn was hospitalised which favoured his financial interests;
- he took these steps when Fairbairn’s capacity to act in her own interests was impaired;
- Radecki’s conduct was so marked that it lead to intervention by the Civil and Administrative Tribunal and appointment of the Trustee to act in Fairbairn’s interests;
- Radecki thereafter refused to permit the property to be sold, made unwilling attempts to make financial contributions to support Fairbairn’s care, refused to cooperate with the trustee and the appellant’s children regarding her ongoing care and failed to disclose assets to centrelink.
- Radecki’s persistent refusal to allow the home to be sold served his and not Fairnbairn’s interests.
- Whilst there had been a degree of a commitment to a shared life, that commitment ceased when Radecki refused to make the necessary or desirable adjustments in support of Fairbairn and by his conduct, acted contrary to her needs;
- After the appointment of the Trustee, it was the Trustee and not Radecki who made and was trying to make the necessary and desirable adjustments.
In summary, because of the husband’s conduct, the Court found that Radecki was no longer acting in Fairbairn’s interests, in fact he was acting contrary to them, and he was longer making the necessary or desirable adjustments to her, which imputed that there was no longer a mutual commitment to a shared life and that the relationship had therefore broken down.
Lessons Learned – breakdown of a de facto relationship
In marriages, the breakdown of the relationship is not a requirement before the Court has jurisdiction to make orders, but it is certainly a consideration of the Court in determining whether it is just and equitable to make orders, in that if the parties have ongoing love and affection for one another, provided that one party is making the ‘necessary or desirable adjustments’ (as was the case in Stanford) then the Court might find it is not just and equitable to make an order, because the conduct of one party by making the necessary or desirable adjustments to care for the other, evidenced an ongoing relationship and degree of commitment to a shared life.
However, in a de facto relationship, the breakdown of the relationship is necessary before the Court has jurisdiction to make orders.
In determining whether the de facto relationship has broken down, from the most recent cases, including Stanford and Radecki & Fairbairne, it appears that following factors are relevant but not determinative to a relationship breakdown:
- An intention to separate and actions by a party that clearly identify such intention, e.g. by leaving the home or moving to a separate bedroom: Clarence & Crisp [2016] FamCAFC 157;
- Where the ‘necessary or desirable adjustments’ are not made by one party to the other party and the first party acts contrary to the interests of the other such that it is possible to conclude that the mutual commitment to a shared life has ceased, and therefore the relationship has broken down. In other words, a party’s conduct acting against the other party’s interests may demonstrate an intention/imputed intention to separate;
- Physical separation, including involuntary separation, but with the addition of other conduct supporting the imputation of an intention by one party to separate;
The factors that will not sufficient on their own, and certainly not determinative of a relationship breakdown, are the following factors:
- When two parties stop living together, whether the separation is voluntary, or involuntary, without other supporting conduct;
- Mental incapacity;
- bad behaviour by a party to the relationship, as it is all too often a hallmark of a relationship.
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