Last week, the High Court handed down its decision in Fairbairn v Radecki [2022] HCA 18, which considered whether a de facto relationship between two parties had broken down, and, if so, by what date.

The facts of the case, as outlined by the seven justices of the court, were that the appellant and respondent were in a de facto relationship in which they had agreed to keep their assets “strictly separate”, but lived in the appellant’s home.

The appellant was subsequently diagnosed with dementia and, by 2017, was largely incapable of making long-term decisions. By early 2018, the NSW Civil and Administrative Tribunal appointed a trustee to make health and welfare decisions on her behalf and determined to move her into an aged-care facility, which would be funded via the sale of the appellant’s home.

The respondent opposed this, which – according to Ramsden Family Law senior associate Daniel Rod – “seemed to demonstrate that it was no longer his intention to keep their finances separate”.

In determining whether the de facto relationship had indeed broken down or remained intact, he listed, the court considered factors including: that the two parties occupied separate bedrooms by 2017, the de facto husband acting as if he were no longer bound by the essential premise of the relationship that the parties keep their assets separate, his refusal to permit the appellant’s house to be sold, and that his conduct justified the intervention of NCAT and the appointment of a trustee.

“The court, in essence, held that those circumstances, in aggregate, demonstrated the respondent’s persistent refusal to make the adjustments that might have evidenced an ongoing relationship, therefore marking the end of the parties’ de facto relationship,” Mr Rod explained.

The appeal must be allowed, the court said, not because the appellant had to move into aged care or due to her incapacity. Those factors may be relevant, the court held, but are not determinative.

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“While there may have been a degree of mutual commitment to a shared life, that commitment ceased when the respondent refused to make the necessary or desirable adjustments in support of the appellant and, by his conduct, acted contrary to her needs,” the court espoused.  

Rethinking de facto relationships

In conversation with Lawyers Weekly, Bartier Perry partner Alicia Toberty – who spoke earlier this year on The Boutique Lawyer Show about exiting abusive relationships and the need for the law to catch up on the myriad forms of abuse being perpetrated – said that the decision “pays tribute to relationships in the modern world”.

The court recognised, she said, that cohabitation is no longer a necessary feature of an ongoing relationship in the current day and age.

The decision is important, she said, because it challenges the widely held preconceived notion that a de facto relationship does not exist when couples do not live together.

“It suggests that de-facto relationships can endure even when the parties do not live together, either voluntarily or involuntarily, if there remains a commitment to a shared life together. An examination of the parties’ behaviour is crucial in determining if, when and whether a breakdown has occurred,” she outlined.

“Significantly, the case suggests that a breakdown occurs when one party refuses to make the ‘necessary or desirable adjustments’ to support the interests of their partner, particularly when their conduct is contrary to their partner’s needs.”

Balance Family Law principal Perpetua Kish – who last year won the Sole Practitioner of the Year category at the Australian Law Awards and has recently spoken with Lawyers Weekly about embracing the “new normal” and the need for adaptability to ensure success – added that the case highlights the “discretionary nature of family law”, given that the case made it all the way to the High Court.

The decision might exemplify, Ms Kish noted, that justice and a non-controversial view of morality, including and especially protection of the most vulnerable, “should always persevere”.

“Actions inconsistent with being a decent human being and partner were considered [in this case], with findings that Radecki had not been acting in Fairbairn’s interests, instead prioritising his own interests, to Fairbairn’s detriment,” she reflected.  

“This very human element of family law applies when we scrutinise and judge the actions of the parties (with acknowledgement of the ‘no fault divorce’ principle), and how we approach matters as advisors.

“The discretionary nature of family law prompts family lawyers to routinely exercise their own personal judgement, informed by their personal biases, values, and moral anchors.” 

Mr Rod – who has spoken previously with Lawyers Weekly about why funding for family law clients is critical and also about knowing when to close one’s practice – added that the court seems to have acknowledged that “human relationships are complex, life is complex, and circumstances can be complex”.

This, he added, is what the Family Law Act and case law also suggest.

“Whilst parties can be in de facto relationships and not live together; conversely, where parties have lived together but no longer live together does not automatically suggest that the de facto relationship has ceased,” he detailed.

“The court’s decision held that the relationship had indeed broken down for the purposes of the Family Law Act, on the basis that looking at all of the circumstances (including those set out in s4AA of the act) the court could be satisfied that the parties ‘no longer had a relationship as a couple living together – that is, sharing life as a couple – on a genuine domestic basis within the meaning of s 4AA(1)’.”

Where the decision is important, Mr Rod continued, is that merely because someone loses their capacity or that parties no longer live together, this does not mean that these in isolation or considered in conjunction automatically assume that a relationship has broken down.

“People who have long term relationships in some cases do have one partner going into an aged care facility whilst continuing their relationship,” he advised.

“Similarly, just because a party has dementia doesn’t automatically mean that a relationship will have to cease. Rather, a court is entitled to have regard to such matters as may seem appropriate.”

The need for binding financial agreements

Looking ahead, and in order to balance the “vacillating nature of the human element”, Ms Kish mused, advisers can offer guidance and a means for greater control and clarity via binding financial agreements (BFAs), made prior to relationship breakdown.

“One has the benefit (or one hopes) of a clearer mind less impacted by the pressures of separation and before the fall of the many vicissitudes that come with life, such as Fairbairn’s cognitive decline and resulting incapacity,” she posited.

“Human versus pragmatic elements (not always at odds, but can be) may then be assessed more objectively, with care taken to ensure actions and intentions are aligned throughout any agreement (including the carrying out of the agreement) and clients are cognisant of the same.”

A well-considered BFA, in the event of separation, contemplates family law consequences alongside estate planning and elder law implications, Ms Kish continued.

Moreover, they take into account the impact on any potential government benefits and services, with a consistent approach throughout.