Dan and Serena have been in a relationship for 5 years. Serena has a lucrative career and earns a high income. Dan earns a modest income, and he lives beyond his means. They spend a lot of time together, but they don’t live together. They regularly stay over at each other’s houses. They own their own properties and have separate bank accounts. They socialize as a couple, and attend social functions and family events together. Serena often provides Dan with financial assistance, and from time to time, has paid for his speeding fines, general living expenses and other necessities. On rare occasions, Serena applied some of her income to Dan’s mortgage repayments. Dan has also become accustomed to Serena’s extravagant lifestyle.
What Dan and Serena do not realize is that their seemingly “no strings attached” relationship may be considered a de facto relationship in the eyes of the law, and unbeknownst to them, they may be bound by the same rights and obligations as those attached to a marriage.
How does the Court determine if two people are in a de facto relationship?
The determination of whether a de facto relationship exists will turn on its individual facts, and the Court looks at each relationship on a case-by-case basis.
Section 4AA of the Family Law Act 1975 (“the FLA”) provides some guidance in this area, and defines a de facto relationship as one in which a couple are “living together on a genuine domestic basis” having regard to “all the circumstances of their relationship”. The “circumstances” may include “any or all” of the following factors:
(a) the duration of the relationship;
(b) the nature and extent of their common residence;
(c) whether a sexual relationship exists;
(d) the degree of financial dependence or interdependence, and any arrangements for financial support, between them;
(e) the ownership, use and acquisition of their property;
(f) the degree of mutual commitment to a shared life;
(g) whether the relationship is registered;
(h) the care and support of children;
(i) the reputation and public aspects of the relationship.
The Court has wide discretion when determining the existence of a de facto relationship or lack thereof. Whether there is a common residence will not necessarily override over other factors.
What is interesting is that the nature and extent of a common residence, or whether the couple actually reside together, is one of many factors that the Court may consider, and is not conclusive in determining the existence of a de facto marriage. Accordingly, there is a common misconception that a couple must actually live together to be considered de facto partners.
In Jonah v White  FamCA 221, Murphy J referred to Vaughan v Hoskovich  NSWSC 706 in which it was observed that it is "... difficult to see how parties could be said to be living together as a couple if they never had a common residence". However, his Honour concluded that it "is the nature of the union rather than how it manifests itself in quantities of joint time. It is the nature of the union - the merger of two individual lives into life as a couple ...".
If we consider the relationship between Dan and Serena, it is arguable that the couple have developed and are contributing towards a “common enterprise”. Notwithstanding that they live separately, they both contribute to the good of the relationship and are mutually committed to a shared life. They’ve been together for 5 years, and they are known amongst family, friends and work colleagues as a couple.
However, Dan and Serena have separate assets, as well as separate bank accounts. Recently, Dan asked Serena for a key to her house because it would “easier” to come and go. Serena refused. Their relationship is not registered, and there are no children of the relationship. These are all factors that the Court would need to take into consideration in weighing up whether a de facto relationship exists.
What it all means
Whether you intend it or not, you may be involved in a de facto relationship and you may have obligations to your partner pursuant to family law. This may be the case whether you are married to someone else, or whether the relationship is heterosexual or same-sex. The ramifications of this are that your assets may form part of the relationship’s “asset pool”, or your partner may be eligible to make a claim of spousal maintenance.
Accordingly, the merging and protection of assets is not something that should only be considered by couples contemplating marriage. Fortunately, couples can enter into binding financial agreements for security in the event that the relationship breaks down. These agreements can deem certain assets as not forming part of the asset pool, or even dictate how property is to be divided upon separation.
If you require advice in relation to asset protection, or if you are contemplating entering into a financial agreement, our lawyers at RKL would be pleased to assist you.
This article is intended to provide general information only and is not a substitute for legal advice. To obtain legal advice tailored to your situation please contact RKL on (03) 9519 9888.