The Family Law Amendment (De Facto Financial Matters and Other Measures) Act 2008 (Cth) (“the De Facto Act”) inserted a new division into the Family Law Act 1975 (Cth) (FLA) — Pt VIIIAB — which commenced on 1 March 2009 (and from 1 July 2010 South Australia) and deals with financial matters relating to de facto relationships in all states except Western Australia. In Western Australia, Pt 5A of the Family Court Act 1997 (WA) (FCWA) deals with financial matters for de facto relationships which commenced in 2002. In Western Australia the FCWA continues to govern how financial matters for de facto parties are dealt with and any reference in the content below about the FLA should be taken to mean “applying in all States and Territories except Western Australia”.

Financial agreements for de facto parties under the Family Law Act 1975 (Cth)

Since 1 March 2009 (or 1 July 2010 or South Australia), s 90UB(1), s 90UC(1) and s 90UD(1) has provided for parties, either wishing to enter into, continue or leave a de facto relationships to enter into agreements in relation to financial matters. In Western Australia, the relevant provisions are ss 205ZN, 205ZO and 205ZP of the Family Court Act 1997 (WA). (For the definition of a de facto relationship, see De facto law under the Family Law Act 1975 and De facto law — state based).

There are geographical requirements which must be met for parties to de facto relationships to enter into financial agreements: s 90UA FLA. That is, spouse parties can make a Pt VIIIAB financial agreement only if they are ordinarily resident in a participating jurisdiction (s 90RA) at the time of making the agreement. Note that this geographical requirement differs from that required for de facto relationship applications seeking property adjustment and/or maintenance: s 90SD or s 90SK.

Although there is a separate Part of the FLA for de facto couples, the court has approached the determination of financial matters for a de facto couple in the same way as married couples in terms of property division, maintenance, superannuation splitting and other such matters. The requirements for a de facto or same-sex relationship agreement are the same as the requirements of a married or soon-to-be-married couple and are set out in ss 90UJ(1)(b) and 90UJ(c). These requirements include:

• • that the parties sign the agreement;
• • that they receive independent legal advice about the effect of the agreement on their rights;
• • that they receive a statement to that effect from a legal practitioner; and
• • that they receive a statement of independent legal advice from the practitioner on behalf of the other party.

Financial agreements for de facto parties under the Family Court Act 1997 (WA)

In Western Australia, the legislation regarding de facto couples, including same sex couples, is almost identical to the provisions of the FLA. The main differences relate to the treatment of superannuation and minor differences in relation to financial agreements. Sections 205ZN, 205ZO and 205ZP of the FCWA provide for parties, either wishing to enter into or continue in a de facto relationship or leaving a former de facto relationships to enter into agreements in relation to financial matters in much as the same terms as the FLA provisions.

Note however the different definition of what constitutes a de facto relationships in the FLA compared to the FCWA. Also see Truman v Clifton for a review of the law concerning de facto relationship in Western Australia by Thackray J, Chief Judge of the Family Court of Western Australia and the absence of an equivalent provision to s 90G(1) and 90DA(4) in the FCWA.

Truman v Clifton [2010] FCWA 91

90DA(4), Family Law Act 1975 (Cth)

s 90G(1), Family Law Act 1975 (Cth)

Financial agreements made pursuant to the FCWA (that is, agreements for de facto parties in Western Australia who are not contemplating marriage) may include a separation declaration but there is no requirement to have one. When drafting an agreement, it is prudent to include provision for one to provide clarity as to when the relationship has broken down.

Financial agreements generally

A financial agreement, unless set aside, continues in operation after the death of the party.

Some advantages of a financial agreement are:

• • there is no need for approval by the court;
• • there is no requirement that the agreement must be fair and reasonable or even proper for it to take effect.

A valid binding agreement pursuant to ss 90UB, 90UC or 90UD, FLA or ss 205ZS, 205ZN or 205ZO, FCWA for Western Australia is determinative of a party's rights on breakdown of the de facto relationship. It may be enforced in a court having jurisdiction under the relevant act in the same manner as if it were an order of that court.

Disadvantages of financial agreements are:

• • The financial or other circumstances of the parties can change significantly over time. It is difficult to predict what those changes might be. A financial agreement may be inflexible in these circumstances.
• • The court has shown a willingness to read agreements down: Black v Black (2008) 38 Fam LR 503 and Kostres v Kostres (2009) 42 Fam LR 336.
• • The court will determine whether it is fair and reasonable: Thorne v Kennedy (2017) 350 ALR; BC201709420.
• • there is a potentiality for a legal adviser who does not cover all eventualities to be sued for professional negligence if an agreement proves unsatisfactory or is read down by a court.

Section 90UM or s 205ZV, FCWA sets out the grounds upon which equitable principles may be applied to set aside, rectify or enforce an agreement. Often parties will commence an action to set aside an agreement by asking the court to declare either that a de facto relationship exists or does not exist before seeking orders to enforce or set aside the agreement. Where an agreement is set aside, assuming that the court finds that it has jurisdiction, the parties can apply for orders under s 79, FLA or s 205ZG for an adjustment of their property entitlements. Where a court finds there is supporting evidence for allegations of duress or unconscionable conduct, this may be sufficient for the agreement to be set aside.

As in agreements between married parties, de facto parties may make a financial agreement that can be found to be non-binding if does not meet the requirements of s 90UJ, FLA. Strict compliance is no longer necessary but it is essential for the court to find that it would be unjust and inequitable for an agreement to be set aside.

s 90UJ, Family Law Act 1975 (Cth)

A financial agreement cannot be varied. If amendments are sought to an agreement already existing, a fresh agreement must be made: ss 90UB(4), 90UC(4), 90UD(4) and 90UL, FLA and ss 205ZN(4), 205ZO(4) and 205ZP(4) of the FCWA.

If for any reason both parties no longer wish to be bound by the agreement and wish for it to be terminated, the parties must enter a termination agreement stating that the agreement is no longer in force.

See the following:

• • Before cohabitation;
• • During cohabitation; and
• • After separation.