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This article has been reproduced from FAMILY MATTERS no.30 December 1991, pp.30-33

The legal system and de facto relationships

Margaret Harrison

The legal rights to property when a de facto relationship breaks down are confusing. Unlike a married couple who can take their grievances before an independent adjudicator in the form of the court acting under the auspices of the Family Law Act, de facto couples must rely on a tangle of largely unspecific state property laws that vary from state to state.

The Joint Select Committee on Certain Aspects of the Operation and Interpretation of the Family Law Act is required under one of its terms of reference to consider 'the proper resolution of family law property disputes, including the question whether it is desirable that the Family Law Act be extended to property disputes arising out of de facto relationships'.

The Role of the Australian Constitution

Property and financial settlements after a de facto relationship breaks down are subject to state laws, which inevitably are not uniform. The continued lack of federal involvement has not arisen out of mere whimsy, because of public policy considerations or a sense of moral outrage, but because of the nature of the Constitution, which determines the balance of legislative responsibilities within the Commonwealth.

Section 51 of the Australian Constitution vests power in the Commonwealth to legislate with respect to 39 specified subject matters only. Where no power exists, or the Commonwealth chooses not to exercise its power, the states may fill the vacuum, with the proviso that any state legislation that is inconsistent with a valid exercise of Commonwealth power is struck down.

In relation to family law, the two relevant constitutional subject matters are:

Marriage has been defined in case law and in statutes such as the Family Law Act as the voluntary life-long union of a man and a woman to the exclusion of all others. Homosexual relationships, or those involving heterosexual unmarried cohabitants, no matter what their duration or purpose, are not included in that definition.

The meaning of 'matrimonial causes', although somewhat more elusive, enables the Commonwealth to 'deal with divorce and its consequences for the children, property and finances of the former spouses' (Advisory Committee to the Constitutional Commission 1987). De facto relationships obviously fall outside this ambit also, and would have been considered aberrant and unorthodox at the turn of the century, when the Constitution was drafted.

Not so today. Although available information on the incidence of de facto relationships suggests that only 6 per cent of all couples are living together outside marriage at any one time, there appears to be a high level of social acceptance (or at least a lack of concern) about informal marriages. It is therefore not surprising that there is a considerable body of literature and legislation about the position, rights and obligations of cohabitants.

But cohabitation is not a static or homogeneous institution, and Wade (1985) has rightly pointed out that de facto marriages are part of a spectrum of 'marriage' relationships which attract varying degrees of legal consequences ranging from long-term, full-status ceremonial marriages down to other more casual arrangements.

Somewhere near the middle of this spectrum appear de facto relationships of from one to five years' duration, together with shorter relationships that have produced offspring. The inclusion of these relationships at different points in the spectrum indicates the different legal consequences attaching to them. To further complicate matters, there are a myriad of state and federal laws that rely on different definitions applying in different circumstances, causing de facto relationships to attract more legal recognition in one state or for one purpose than they do in or for others.

The Common Law Position and Early Legislative Remedies

In February 1981, the Institute's first working paper, Informal Marriages, was published (Harrison 1981). It pointed out the growing legal recognition of unmarried cohabitants, and stressed the problems associated with inconsistent laws. In the following decade, there has been a burgeoning of such legislation, particularly at state level, and the lack of uniformity has become more pronounced.

The most comprehensive legal recognition of disputes arising out of de facto relationships is contained in the New South Wales De Facto Relationships Act 1984. This was heavily influenced by a 1983 report from that state's Law Reform Commission, which had been granted a reference to inquire into and review the rights and obligations of people living in de facto relationships.

The Commission's report discussed the incidence of such relationships, attitudes towards them, the various approaches of other jurisdictions to their legal recognition, and suggested draft legislation, which, with minor changes, was accepted and subsequently enacted.

The Commission at that time regarded as of serious concern the fact that 'there is no statutory basis for adjusting the property rights of de facto couples on the ground that a variation would be fair or would meet their special circumstances' (p.123). Before the passage of the first national divorce and matrimonial causes legislation in 1959, the states' laws in that area operated on a strict interpretation of the separate property principle for all couples. Later criticism that this principle operated unfairly in relation to disputes involving married people was of more concern than its inflexibility in relation to the unmarried.

Under a separate property regime, the legal title to an asset determines the beneficial interest in it should there be a dispute. Thus, a jointly owned property would be held to be owned equally by the parties, whether they were business partners, cohabitants or married couples with dependent children. Similarly, if property were registered in the sole name of one spouse, the other would be excluded from obtaining a share in it, regardless of the nature of the asset or the manner of its acquisition, the use to which it had been put, or the needs of other family members.

While the harshness of this approach was modified somewhat by equitable principles which were sometimes applied in the case of married couples (and more hesitantly in the case of cohabitants), attempts to construe trusts or gifts in certain circumstances were contrived and artificial, and often provided the weaker party (almost invariably the woman) with a token rather than a realistic share in the disputed property.

The Matrimonial Causes Act of 1959 provided the first statutory departure from the common law separate property principle, but this only applied to married couples. The wider approach was extended significantly and specifically to such couples by the Family Law Act some 16 years later, by provisions that required courts to take into account financial and non-financial contributions made directly or indirectly to the acquisition, preservation or improvement of property, and the contribution made to the welfare of the family, including that made in the capacity of homemaker and parent.

Despite criticisms that the Act still confers excessive discretion on judges (McDonald 1986; Australian Law Reform Commission 1987), who give insufficient weight to non- financial contributions (Scutt and Graham 1984), the position of married couples was further differentiated from that of unmarried couples with the passage of the Family Law Act in 1975, subsequent amendments to it and the case law that has developed around its property provisions.

With seemingly adequate provisions having been made for married couples, the attention of family lawyers and judges in the early 1980s turned to the unmarried. Concern was expressed that where unmarried couples were claiming a share in 'matrimonial' property, they were exposed to substantial injustice because of the reliance on legal title and the inability of courts to take account of issues such as non-financial contributions or the needs or vulnerability of the financially weaker party. The NSW Law Reform Commission considered that the 'basis for the intervention of law in conferring rights or imposing obligations on de facto partners is, in general, the minimisation of injustice or the removal of significant anomalies' (p.105).

A Threat to 'Real' Marriage?

Of course, there are several policy considerations associated with extending legal recognition to de facto relationships and their members. Not the least of these is the frequently expressed concern that the institution of marriage will be damaged and its attractions reduced if the differences between de jure and de facto marriage are virtually extinguished. From a different quarter, cohabitants who have expressly avoided marriage may be loath to have the legal obligations and status associated with it foisted on them after, for example, they have lived together for a certain period.

The NSW Law Reform Commission did not recommend that there should be equivalence between the legal consequences of de facto and de jure marriages. It preferred to examine specific legal areas to determine whether there were injustices or significant anomalies and, where they were found, to determine what remedial action should be taken.

The NSW De Facto Relationships Act came into effect in July 1985. It defines a de facto relationship as the relationship between a man and a woman who have lived together on a bona fide domestic basis although not married to each other. It further stipulates that, except where a child is born of the relationship, or the applicant has made substantial contributions that would otherwise go uncompensated, or has care and control of the respondent's child, the parties must have cohabited for at least two years before any order may be made.

The main provisions in the Act are those relating to the adjustment of interests with respect to property, and the approach is that recommended by the NSW Law Reform Commission, namely the incorporation of the Family Law Act provisions on non-financial contributions.

In relation to 'spousal' maintenance, the Act states specifically that there is no general right to support. However, it allows that in limited circumstances an order may be made. These circumstances are the inability of applicants to support themselves because they have the care of a child under 12 years of age, and/or to compensate for the loss of earning capacity brought about by the relationship, by allowing them to undertake a course of training or education.

Apart from a 19th Century Tasmanian provision that allows a woman left without support after a de facto relationship of at least 12 months duration to apply for maintenance, the general Australian approach is that maintenance is not available for the members of informal relationships. This is consistent with the restrictive approach to spousal maintenance adopted by the Family Law Act and confirmed in Family Court decisions since the mid-1970s.

The Act also recognises the validity of cohabitation and separation agreements to determine financial matters between the couple, provided they are in writing, signed by the parties and are accompanied by a solicitor's certificate to the effect that each party received independent legal advice. Provisions protecting one partner from domestic violence occasioned by the other are also included, as they now are in legislation operating in all other states.

The Victorian Experiment

In September 1986 the Victorian Government made its first attempt to introduce de facto relationships legislation similar in scope to that of NSW. The Bill generated considerable debate, with cries from the conservative Opposition that it threatened the sanctity of marriage. It consequently lapsed, was reintroduced in March 1987 and was withdrawn several months later.

As a compromise, amendments to the Victorian Property Law Act received assent in December 1988. These allow a de facto partner to apply to a state court for an order for the adjustment of real property interests, and in any such proceedings the court will have regard to the types of contribution defined originally in the Family Law Act.

Despite this, the amendments fall far short of the provisions of the NSW Act. In the first place, only real property is included, thus the court has no power over the allocation of the personal property of either or both partners, nor over financial resources such as superannuation. In addition there is no provision for the recognition of cohabitation or separation agreements, nor is there any reference to maintenance.

In October 1989, the Victorian Government again attempted to broaden the rights of cohabitants, this time in the areas of intestacy and testator's family maintenance. When a person dies intestate, that is, without leaving a valid will, his or her estate is distributed among family members according to a table of intestacy which varies somewhat from state to state but essentially allows greater shares to closer family members. Other than in NSW and South Australia, de facto spouses are not included as family members for the purpose of any such distribution.

However, testator's family maintenance provisions allow certain categories of people to challenge the terms of a will if they were, in their view, inadequately provided for or even if they were excluded as a beneficiary. A main reason for challenging a will in such a situation is that the applicant was financially dependent on the deceased at the time of his or her death and requires continuing support. Neither Victoria, Tasmania nor the ACT allows a de facto spouse to bring a claim under testator's family maintenance legislation, and the states that do allow such a claim have different eligibility criteria.

The Victorian Government sought to overcome this omission in state law by allowing distribution in specified circumstances. Given the possibility of there being competing interests between de jure and de facto spouses, and bearing in mind the Opposition's track record on less controversial legislation, the fate of the Bill was no surprise. The original Bill was withdrawn and replaced by a somewhat different set of provisions in March 1991, but at the time of writing these had not been debated.

Children Born to Unmarried Parents

Recent evidence suggests that approximately half of ex- nuptial births are to de facto couples (McDonald 1990). On 1989 figures of ex-nuptial births being approximately 20 per cent of all births, and with a total annual birthrate of 250,853, the number of children born to de facto couples was therefore around 25,000 in that year.

Legislation abolishing the status of illegitimacy and preventing discrimination against ex-nuptial children was passed in all states except Western Australia in the early 1970s. However, except in Western Australia (where a separate family court has been in operation since 1976), if their parents' relationship broke down, these children were unable to have disputes relating to their custody, guardianship or access determined in the Family Court.

Furthermore, where both nuptial and ex-nuptial children were members of the same household, matters concerning them were determined in different courts and according to a variety of provisions.

The reason for these anomalies was once again the distribution of constitutional powers between the states and the Commonwealth. The solution was obvious as long ago as the mid-1970s; it was sought by many groups and individuals for more than a decade and succeeded finally in 1988 when four states referred their powers over ex-nuptial children to the Commonwealth. Since then, Queensland has also referred powers. This essentially political solution, although tortuous to obtain, was more feasible than seeking to have the Constitution amended by referendum, a course of action that has rarely succeeded since Federation.

The primary effect of the referral of powers was to extend the principle that both parents are guardians and have custody of their children in the absence of a court order to all children, regardless of the status of their parents' relationship. In addition, disputes concerning these children are now the province of the specialist Family Court, which, of course, includes its counselling service.

One Law for All

In 1987 the Advisory Committee on the Distribution of Powers, which was appointed under the aegis of the Constitutional Commission, made a number of recommendations on family law. One of these was that Commonwealth power should be extended to cover 'the property and financial disputes between parties to a de facto marriage'.

As with several other recommendations relating to extensions of such power, the Committee was influenced by changes in family formation and attitudes to non-traditional relationships which were unforeseen when the Constitution was drafted. It was also influenced by the proliferation of state legislation seeking (often in different ways) to achieve similar or identical treatment for de jure and de facto couples, and the artificiality that would occur if the then foreshadowed reference of powers over children led to unmarried couples relying on federal laws and courts where their children were involved, and differing state laws and courts where the property and finances of the relationship were involved.

Since that recommendation was made, powers over ex- nuptial children have been referred to the Commonwealth and the cross-vesting scheme has been introduced. Cross- vesting is an attempt to prevent actions failing in state or federal courts because of a lack of jurisdiction caused by proceedings being instituted in the wrong forum.

The primary objective of cross-vesting is to vest state courts with federal jurisdiction and vice versa. One consequence is that matters such as the determination of property and the welfare of children in a de facto relationship may be dealt with concurrently in one court, either federal or state. It is a complicated scheme as it requires the passage of both state and federal legislation, and consequently a considerable amount of co-operation, as does the referral of powers.

The Role of Public Opinion

If there were sufficient support and accompanying political will for the property disputes of de facto couples to be determined according to the Family Law Act, it would be less cumbersome if the Act's jurisdiction were extended by way of constitutional amendment rather than relying on either a referral of powers or cross-vesting.

However, the level of support is unknown, as is the extent to which the relevant term of reference has attracted submissions to the parliamentary joint committee's inquiry into the Family Law Act. Past history as well as constitutional requirements suggest that a referendum would be unlikely to succeed, even if the public as a whole wanted change. A referral of powers by the states would therefore be the most likely manner of implementation.

If there is insufficient public support for such an extension of the jurisdiction of the Family Law Act, the opposition is most likely to have come from those who do not want to have the particular legal status of de jure marriage watered down. This is, of course, a legitimate concern, as much for so-called traditionalists as for those who eschew marriage and all it is seen to stand for. However, many may be surprised that very few areas of law do now distinguish between de facto and de jure marriages, and family law may be seen almost as a last bastion of the demarcation between the two states.

For example, although for several years 'married person' has been defined as including a de facto spouse, definitions of 'de facto spouse' and 'married person' in the Social Security Act were replaced in early 1990 by a reference to a 'marriage-like relationship', and guidelines were introduced to determine whether such a relationship exists. From another perspective, the operation of the cohabitation rule is intended to prevent unmarried couples who live together on the same basis as married couples from being placed in a better financial position.

In relation to taxation, since the 1984-85 financial year both categories of spouses have been treated in the same manner for the purpose of the dependent spouse rebate and payment of the Medicare levy.

In May 1981, a Joint Standing Committee on Migration Regulations reported on the difficult issue of change of status to permanent resident on the basis of marriage or de facto relationship with an Australian. Several months earlier the minister had announced the introduction of new regulations for spouse applicants. To prevent abuses, these require all applicants, regardless of their marital status, to live in Australia for two years before being classified as a permanent resident, and de facto spouses must cohabit for six months before applying for the two-year entry permit.

In state legislation, in addition to the provisions on discrimination, domestic violence, spousal maintenance, intestacy and testator's family maintenance mentioned earlier, all state workers' compensation legislation and several Acts relating to fatal accident claims allow de facto partners to claim payment after the death of or injury to their 'spouse' providing their relationship has continued for a particular time, which varies from state to state.

If on this occasion or at a later time the green light is given to the Family Court to consider the property disputes of cohabitants, it must be asked whether the legislation that brings this into effect will be restricted to real property, as in Victoria, or will follow the Family Law Act and the NSW model.

It may also be asked why only property disputes are included and why not also the recognition of written agreements as in NSW, issues such as intestacy and testator's family maintenance as in several states, or even the inclusion of bona fide homosexual relationships.

Once some but not all barriers are removed, the continuance of any distinction between de facto and de jure relationships becomes, in a sense, more logically problematical.

References

Advisory Committee to the Constitutional Commission (1987), Distribution of Powers, Report of the committee, Canberra.

Australian Law Reform Commission (1987), Matrimonial Property, Report No.39, AGPS, Canberra.

Harrison, M. (1981), Informal Marriages, Working Paper No.1, Australian Institute of Family Studies, Melbourne.

McDonald, P. (ed.) (1986), Settling Up: Property and Income Distribution on Divorce in Australia, Prentice-Hall, Sydney.

McDonald, P. (1990), 'The 1980s: social and economic change affecting families', Family Matters, No.26, April.

New South Wales Law Reform Commission (1983), Report on De Facto Relationships, Sydney.

Scutt, J. and Graham, D. (1984), For Richer or Poorer: Money, Marriage and Property Rights, Penguin, Melbourne.

Wade, J. and the CCH family law editors (1985), Australian De Facto Relationships Law, CCH Australia, North Ryde, New South Wales.




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