Australia: What are the differences for de facto couples and married couples in Western Australia? (Also, the differences for de facto couples in WA and the rest of Australia!)

On 1 December 2002, the Family Court Amendment Act 2002 came into operation, inserting Part 5A in the Family Court Act 1997 (WA) ('FCA'). This legislation allowed de facto couples in Western Australia, separating after 1 December 2002, to enter into arrangements much like those provided for married couples with the Family Law Act 1975 ('FLA'), instead of through the Supreme Court.

Following amendments made to the FLA, after 1 March 2009, referring states now had a regime which extended the financial settlement available under the FLA to de facto couples, including to split their superannuation interests as part of their family law property division.

WA is not a referring state. It did not refer power to the Commonwealth with respect to de facto relationships and so the FCA continues to apply.

This article deals with some significant differences between de facto relationships and married relationships in WA, and de facto relationships in WA and the other states. It is not intended to be comprehensive.

De Facto – A Definition

Unlike its FLA counterpart ( section 4AA of the FLA), the FCA does not define a de facto relationship. The definition of a de facto relationship is set out in section 13A of the Interpretation Act 1984 (WA). There are differences between the wording of the 2 sections which need to be considered, but they are largely similar.

It may be surprising, but whether parties are or are not in a de facto relationship is not always clear cut. There have been a number of cases that deal with this, which go beyond the scope of this overview.

Jurisdiction

In accordance with section 205Z of the FCA the Family Court may make orders in relation to de facto couples where:

• There has been a de facto relationship for at least 2 years; or
• There is a child of the de facto relationship under the age of 18 and not making orders would result in serious injustice to the partner caring for/responsible for the child; or
• The Applicant has made substantial contributions.

The time period for a de facto relationship set out in the FLA and FCA is a limitation to the making of orders in Court only. A de facto relationship can exist with no minimum time period depending on the existence of the factors set out in section 13A, yet parties cannot make an Application in the Court for orders in accordance with section 205Z(1) unless that specific section is satisfied.

This is irrelevant when it comes to Financial Agreements, as whether a Financial Agreement is made prior to the de facto relationship, during, or after separation, the parties need to both agree that it is contemplated that they are entering into a de facto relationship or that a de facto relationship exists.

Geographical connection

In order for the Family Court to make orders in relation to de facto couples, pursuant to section 205X of the FCA:

• At least one third of the de facto relationship must have occurred in WA; OR
• Substantial contributions have been made in WA: and
• At least one de facto partner resides in WA on the day the Application is filed.

It is relatively important to note that if one party is ordinarily resident outside of WA and one party is ordinarily resident in WA, the FLA allows parties to obtain orders outside of WA (provided they meet the criteria in section 90RG of the FLA) but does not allow them to enter into a financial agreement outside of WA. Pursuant to section 90UA of the FLA both parties must be in a participating jurisdiction and WA is not a participating jurisdiction.

It is noted at this time there is no equivalent geographical requirement for the making of a Financial Agreement in WA.

In the situation set out above where one party is ordinarily resident outside of WA and one party is ordinarily resident in WA they could therefore enter a Financial Agreement in WA.

However, it does not apply to any de facto couple who wants to make a Financial Agreement in WA. Pursuant to section 90RC of the FLA, if a de facto couple would be eligible to apply under the FLA, the FCA does not apply e.g. a couple who are ordinarily resident in NSW can enter into a Financial Agreement there, and therefore cannot choose to enter into a Financial Agreement in WA.

One of the scenarios in which it may benefit couples outside of WA is where they want to enter into a Financial Agreement but are not ordinarily residing in that jurisdiction. For instance, a de facto Australian couple live in London. They would be able to enter into a Financial Agreement in WA which would then oust the jurisdiction of the Court in the event of their separation/upon their separation, enforceable under section 90RC of the FLA as a Part VIIIAB financial agreement.

De facto couples should however note issues relating to superannuation as set out below.

Limitation period

Pursuant to section 205ZB of the FCA, de facto partners whose relationship have ended may apply for financial orders only if the application is made within 2 years after the relationship ended. Any application made after the application period requires leave of the Court, and leave is only granted provided the Court is satisfied that hardship would be caused to a de facto partner if that leave were not granted.

In contrast, the FLA expands this in section 44 to include scenarios where it is within 12 months of a financial agreement being found to be invalid, or set aside, or where both parties consent to the application (unless section 44(5A) applies)). It also expands the categories where leave can be granted where, for an application for maintenance, the applicant would have been unable to support themselves without an income tested pension, allowance, or benefit.

De Facto Partner Maintenance

Section 205ZD of the FCA provides that a Court may make such order as it considers proper for the maintenance of a de facto partner.

This is in contrast with its FLA counterpart ( section 90SE of the FLA) which requires there to be a breakdown of a de facto relationship.

This suggests that a de facto partner in WA who is not separated can apply to the Court for maintenance.

(I would be surprised to see cases where this is done, as I hypothesize that such an application would quickly result in the breakdown of the relationship, but it is certainly a possibility.)

De Facto – the treatment of Superannuation

Importantly, de facto couples in WA are still not eligible to split their superannuation interests, whether through orders or financial agreements.

Superannuation is taken into account as a financial resource but it cannot be divided/rolled over to another party.

Practically speaking, an assessment will often be made of the other assets such that the de facto party with no/less superannuation receives more of the non-superannuation pool. However, this is not possible for all couples. As an example only of who this might affect:

• Person A and Person B are in a de facto relationship and have 3 children under the age of 18.
• They have been in a de facto relationship for 20 years.
• Person A works full time and has accumulated $500,000 of superannuation over the course of the relationship.
• Person B has been a full time homemaker and has nominal superannuation.
• The parties have a home that is fully paid off and is presently worth $300,000 due to the real estate downturn.
• Apart from their home and Person A's superannuation, they have no other assets save for their vehicles and personal possessions of approximately equal value.
• When Person A and Person B separate, it is agreed that there should be a 50:50 division of all property and superannuation and that Person B will retain the home.
• However, no superannuation can be transferred to Person B under the present arrangements. The 50:50 division of assets cannot be effected.

On 4 July 2006, Royal Assent was given to the Family Legislation Amendment Bill 2006. The Bill incorporated amendments made to the FLA to put de facto couples in WA and their ex nuptial children in the same position as their married counterparts and the children of those marriages.

However, the Act was to come into operation on a day fixed by Proclamation. The Act was never proclaimed and therefore never took effect.

13 years later, the Family Law Amendment (Western Australia De Facto Superannuation Splitting and Bankruptcy) Bill 2019 was introduced in Parliament on 27 November 2019. It is presently being considered and is widely seen as a positive step forward.

The Senate Legal and Constitutional Affairs Legislation Committee handed down a report on 13 March 2020 but with COVID-19 issues ramping up at that time, it has yet to be incorporated into government amendments moved during the consideration in detail stage and has not yet made its way to the Senate.

At this stage it is unclear when/if it will be passed.

De Facto – the treatment of Bankruptcy

The Bill referred to above is also designed to refer power in circumstances where one de facto partner is a bankrupt.

At this time, the Family Court cannot make orders in relation to a de facto couple in WA where one partner is a bankrupt. That couple will need to engage in separate proceedings in 2 Courts i.e. the Family Court and with respect to bankruptcy proceedings in the Federal Court of Australia or the Federal Circuit Court of Australia.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.