Sale of Appellant's Home Opposed by Respondent
Fairbairn v Radecki [2022] HCA 18 (11 May 2022)
The appellant and respondent had been in de facto relationship and resided in the appellant's home. The appellant subsequently suffered rapid cognitive decline and was diagnosed with dementia. The Trustee moved appellant into an aged care facility permanently and resolved to sell appellant's home to fund aged care facility costs. However, the respondent opposed the proposed sale of the home. The Court, in adjudicating this case, assessed whether or not the de facto relationship had broken down.
Facts:
In late 2005 or early 2006, the appellant and the respondent commenced a de facto relationship. They agreed to keep their assets strictly separate but lived in a house owned by the appellant ("the home"). The appellant was subsequently diagnosed with dementia. By 2017, the appellant's capacity to make long-term decisions was largely, if not completely, absent.
In January 2018, the NSW Civil and Administrative Tribunal ("NCAT") appointed the NSW Trustee and Guardian ("the Trustee") to make health and welfare decisions on behalf of the appellant and, subsequently, to be her financial manager. In March 2018, the Trustee decided to move the appellant into an aged care facility, where she has since resided. The Trustee wished to sell the home to fund the appellant's ongoing care. The respondent opposes this.
The Trustee, on behalf of the appellant, sought property settlement orders from the Federal Circuit Court of Australia, including for the sale of the home.
The primary judge found that the respondent's conduct during the demise of the appellant's mental capacity was inconsistent with a "fundamental premise" of their relationship, namely the strict separation of their assets.
That inconsistent conduct, all of which occurred while the appellant was "labouring under an incapacity", comprised:
- the entry into a new enduring power of attorney that "favoured [the respondent's] rights over hers";
- the respondent instructing solicitors to prepare an updated will "on terms vastly more favourable to him";
- the respondent's "unwillingness to cooperate" with the appellant's children in the administration of her affairs;
- the respondent's "persistent" refusal to permit the Trustee to sell the home to cover the RAD while "neglecting to pay any of the [appellant's] care costs", thus depleting her estate;
- the respondent's proposal that the appellant's "super be used in the first instance to meet her costs";
- and then his subsequent proposal that "he pay the DAP fees in the first instance and be reimbursed by the [appellant's] estate";
- and the respondent's "ongoing and deliberate frustration" of the Trustee's lawful administration of the appellant's financial affairs.
The primary judge found that this conduct was "unequivocally indicative of and consistent only with ... the cessation of the de facto relationship as it previously existed".
His Honour held that the relationship had ceased at the latest by 25 May 2018, when the respondent suggested that the DAP be paid for in the first instance from the appellant's superannuation while he remained in the home. On an objective assessment of the respondent's conduct, the primary judge imputed an intention to separate from the appellant. It followed that there had been a breakdown in the de facto relationship.
Issue:
Whether or not the de facto relationship had broken down.
Applicable law:
Family Law Amendment (De Facto Financial Matters and Other Measures) Bill 2008 - provides that the jurisdiction of the federal family law courts to make property settlement orders for de facto relationships arises from a series of referrals made to the Parliament of the Commonwealth by several States.
Family Law Act 1975 (Cth), s 90SM(1)(a) - relevantly provides that "[i]n property settlement proceedings after the breakdown of a de facto relationship, the court may make such order as it considers appropriate" and "in the case of proceedings with respect to the property of the parties to the de facto relationship or either of them" may alter "the interests of the parties to the de facto relationship in the property".
Family Law Act 1975 (Cth) s 90SM(3) - provides that the court must not make an order under s 90SM unless it is satisfied that, in all the circumstances, "it is just and equitable to make the order".
Family Law Act 1975 (Cth) s 4AA(4) - provides that consistently with the reality that human relationships are infinitely mutable, in determining whether a de facto relationship exists a court is entitled to have regard to such matters, and to attach such weight to any matter, as may seem appropriate.
Family Law Act 1975 (Cth) s 44(5)(a)(i) - provides that a party to a de facto relationship may apply for an order under s 90SM if the application is made "2 years after the end of the de facto relationship".
SZOXP v Minister for Immigration and Border Protection [2015] FCAFC 69 - provides that "living together" must be construed to take account of the many various ways in which two people may share their lives together in the modern world.
Migration Act 1958 (Cth), s 5CB(2)(a) - where for the purposes of the definition of "de facto relationship" in s 5CB(2). Section 5CB(2) provides, amongst other things, that a person is in a de facto relationship with another person if: "they have a mutual commitment to a shared life to the exclusion of all others".
Hopes v Hopes [1949] P 227 at 234 - provides that a husband and wife could live "separately and apart" where "there is such a forsaking and abandonment by one spouse of the other that the court can say that the spouses were living lives separate and apart from one another".
Stanford v Stanford [2012] HCA 52; (2012) 247 CLR 108 - held that the "bare fact" of involuntary separation would not demonstrate, for the purposes of s 79(2) of the Act, that it was "just and equitable to make a property settlement order".
Stanford [2012] HCA 52; (2012) 247 CLR 108 at 122 - observed that when both parties are competent it can be assumed that any "necessary or desirable adjustment" to their previous financial arrangements will be made consensually.
FO v HAF [2006] QCA 555; [2007] 2 Qd R 138 at 149 - relied upon in holding that Section 4AA does not prescribe any way by which a couple may share life together. Its language is sufficiently broad to accommodate the great variety of ways a de facto relationship may exist.
Yesilhat v Calokerinos [2021] NSWCA 110 - provides that a de facto relationship cannot exist if two people have never lived together.
Analysis:
The appellant's primary argument was that a de facto relationship breaks down when the parties stop "living together". The appellant submitted that the phrase "living together" in s 4AA(1)(c) requires cohabitation at some place and in some way, and that this is an irreducible minimum of what a de facto relationship, as defined, must continuously display.
The appellant's alternative argument was that the de facto relationship between the appellant and the respondent had broken down by no later than 25 May 2018 and that "breakdown" does not necessarily mean "end". However, it would be productive of injustice if two people who live apart (including for reasons of health) were incapable of remaining in a de facto relationship.
Two people, for any number of reasons, may not reside in the same residence, but nonetheless be in a de facto relationship in the sense required by s 4AA. "Living together", consistently with authority, should be construed as meaning sharing life as a couple. Section 4AA does not prescribe any way by which a couple may share life together. Its language is sufficiently broad to accommodate the great variety of ways a de facto relationship may exist
Conclusion:
The Court allowed the appeal. The Court set aside orders 2, 3 and 4 of the Full Court of the Family Court of Australia made on 11 December 2020 and, in their place, order that the appeal to that Court be dismissed. The NSW Trustee and Guardian pay the costs of both parties of the application for special leave to appeal and of the appeal.