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In Fairbairn v Radecki [2022] HCA 18, the High Court of Australia considered the meaning of ‘breakdown of a de facto relationship’ for the purposes of section 90SM of the Family Law Act 1975 (Cth).

Facts

The parties to the dispute, Ms Fairbairn (appellant) and Mr Radecki (respondent), commenced a de facto relationship in or around late 2005.

In 2010, they entered into a formal agreement whereby they agreed to keep their assets separate. Under the agreement, even though Mr Radecki would live in Ms Fairbairn’s home, the property was to remain owned absolutely by her.

In 2015, they updated their agreement to include the quarantining of a property since acquired by Mr Radecki.

Ms Fairbairn was subsequently diagnosed with dementia and, by 2017, her capacity to make long-term decisions was largely or completely absent.

On the advice of her doctor, she executed an enduring power of attorney in favour of her children from a prior relationship.

Soon afterwards, in July 2017, Mr Radecki drove Ms Fairbairn to a local courthouse whereupon the existing enduring power of attorney was revoked and replaced by another enduring power of attorney in favour of Mr Radecki and Ms Fairbairn’s brother.

Mr Radecki also arranged for a solicitor to attend on Ms Fairbairn to draw up a new will which was more favourable to him than Ms Fairbairn’s previous will: it conferred to him a life estate in the home. In contrast, Ms Fairbairn’s previous will gave Mr Radecki only a right to live in the home for six months after her death.

In January 2018, the NSW Civil and Administrative Tribunal appointed the NSW Trustee and Guardian (‘the Trustee’) to make decisions on behalf of Ms Fairbairn regarding her health and welfare and, subsequently, to be her financial manager.

In March 2018, the Trustee moved Ms Fairbairn into an aged care facility and sought to sell her home to pay for her ongoing care.

Mr Radecki, opposed the sale of Ms Fairbairn’s home.

The Trustee then sought property settlement orders from the Federal Circuit Court, including for the sale of Ms Fairbairn’s home.

Legislative Framework

Under section 90SM of the Family Law Act, for the Court to have jurisdiction to make property settlement orders in relation to a de facto relationship there needs to be a ‘breakdown’ of that relationship.

Section 90SM(1) relevantly provides: “In property settlement proceedings after the breakdown of a de facto relationship, the Court may make such order as it considers appropriate”.

Moreover, pursuant section 90SM(1)(a), “in the case of proceedings with respect to the property of the parties to the de facto relationship or either of them” the Court may alter “the interests of the parties to the de facto relationship in the property”.

To note, however, section 90SM(3) stipulates that the Court must not make an order under section 90SM “unless it is satisfied that, in all the circumstances, it is just and equitable to make the order”.

Procedural History; Trial Judge and Family Court of Australia

Whilst there was no dispute that a de facto relationship had existed between Ms Fairbairn and Mr Radecki, the question was whether the de facto relationship had broken down and if so by what date.

The primary judge held that, for the purposes of section 90SM of the Family Law Act, the de facto relationship between Ms Fairbairn and Mr Radecki had broken down by no later than 25 May 2018.

The primary judge found that Mr Radecki’s conduct during the demise of Ms Fairbairn’s mental capacity was inconsistent with a ‘fundamental premise’ of their relationship, namely the strict separation of their assets.

According to the primary judge, that inconsistent conduct, all of which occurred while the appellant was “labouring under an incapacity”, comprised actions by Mr Radecki such as:

• the entry into a new enduring power of attorney that favoured Mr Radecki’s rights over the rights of Ms Fairbairn;
• Mr Radecki instructing solicitors to prepare an updated will “on terms vastly more favourable to him”;
• Mr Radecki’s “unwillingness to cooperate” with Ms Fairbairn’s children in the administration of her affairs;
• Mr Radecki’s “persistent” refusal to permit the Trustee to sell Ms Fairbairn’s home;
• Mr Radecki’s proposal that Ms Fairbairn’s “super be used in the first instance to meet her costs”; and
• Mr Radecki’s “ongoing and deliberate frustration” of the Trustee’s lawful administration of Ms Fairbairn’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”.

The Full Court of the Family Court disagreed. In overturning the primary judge’s decision, the Full Court found that none of Mr Radecki’s conduct was fundamentally inconsistent with a continuing de facto relationship.

Although some of Mr Radecki’s conduct could be considered to be “bad behaviour”, such behaviour, the Full Court observed, is “all too often a hallmark of a relationship”.

At most, their Honours concluded that Mr Radecki’s conduct demonstrated that a dispute existed between him, on the one hand, and the Trustee and Ms Fairbairn’s children, on the other, “as to how best to manage” Ms Fairbairn’s affairs.

High Court of Australia, the Appellant’s Arguments

On appeal to the High Court, Ms Fairbairn’s primary argument was that a de facto relationship breaks down when the parties stop “living together”, as required by section 4AA(1)(c) of the Family Law Act.

In this case, Ms Fairbairn argued, the breakdown of her relationship with Mr Radecki occurred when she moved into the aged care home.

Ms Fairbairn submitted that the phrase “living together” in section 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 must continuously display. She argued that permanent cessation of cohabitation, whether voluntarily undertaken or involuntarily imposed, and for whatever reason, would in every case result in a de facto relationship ending.

Alternatively, Ms Fairbairn argued that her de facto relationship with Mr Radecki had broken down by no later than 25 May 2018 by reference to the circumstances listed in section 4AA(2).

Under section 4AA(2) of the Family Law Act, circumstances that may indicate the existence of a de facto relationship include any or all of the following:

(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 or was registered under a prescribed law of a State or Territory as a prescribed kind of relationship;
(h) the care and support of children;
(i) the reputation and public aspects of the relationship.

Consequently, Ms Fairbairn’s alternative argument was that the de facto relationship had broken down by no later than 25 May 2018 by reason of Mr Radecki’s conduct.

High Court of Australia

The High Court rejected the notion, argued by Ms Fairbairn, that a de facto relationship is considered to have broken down at the point when the parties cease to cohabit.

The High Court noted that, “living together for the purposes of section 4AA(1) will often, perhaps usually, mean cohabitation of some residence by a couple for some period of time. But cohabitation of a residence or residences is not a necessary feature of ‘living together’”.

The High Court held that the phrase “living together”, in section 4AA(1), means “sharing life as a couple” and “must be construed to take account of the many various ways in which two people may share their lives together in the modern world.”

The High Court reasoned that, for any number of reasons, two people “may not reside in the same residence, but nonetheless be in a de facto relationship in the sense required by section 4AA.”

Accordingly, the High Court stated that in situations where one party in a de facto relationship “fundamentally acts contrary to the interests of the other in relation to the property of the couple, it may be possible to conclude that the mutual commitment to a shared life has ceased.”

The High Court found that it was an “essential feature” of the relationship of Ms Fairbairn and Mr Radecki that they keep their assets separate from each other.

However, by 2017, Mr Radecki had started to act as though he were no longer bound by the earlier commitment to keep the parties’ assets strictly separate. This was evidenced by the actions of Mr Radecki, referred to by the trial judge, such as facilitating a new power of attorney, executing another will, and refusing to allow Ms Fairbairn’s home to be sold.

On that basis, the High Court allowed Ms Fairbairn’s appeal. The High Court upheld the primary judge’s finding that the de facto relationship of Ms Fairbairn and Mr Radecki had broken down by no later than 25 May 2018.

This decision paved the way for the property settlement sought by the Trustee on behalf of Mrs Fairbairn.

Conclusion

Separation, especially where involuntary, or the mere fact that the parties in a de facto relationship are living apart is not sufficient to establish that the relationship has ‘broken down’.

To similar effect, mental incapacity on its own is not determinative and will not likely be enough for a finding to be made that the de facto relationship has ceased especially where one party can make the necessary or desirable adjustments to support the other.

Rather, the person’s conduct and their persistent refusal to make the “necessary or desirable adjustments” that would demonstrate an ongoing relationship may be reflective of a ‘breakdown’ of the relationship.

It follows, where the “necessary or desirable adjustments” are not made by one party to the relationship, or their actions are different to the interests of the other, it may be inferred that the mutual commitment to a shared life has ceased, or that the relationship has ‘broken down’ for the purposes of the Family Law Act.

In Fairbairn v Radecki, the parties’ mutual commitment to a shared life ended when Mr Radecki refused to act in support of Ms Fairbairn and instead acted contrary to her needs.

The High Court found that these factors ultimately amounted to the de facto relationship breaking down by 25 May 2018.