Why it's important to have a contracting out agreement (pre-nup)

Unlike a marriage, which comes with a party and a certificate, de facto relationships often have no fanfare to announce their beginning. You probably assume that you have to share a house, or bedroom, before you will be in a de facto relationship. The reality is that sharing a common residence is not necessary before a Court can find a de facto relationship exists and the implications of being in one apply.

A recent High Court case shows the difficulties of deciding what indicates a de facto relationship exists. In 2007 when the parties met the woman was in another relationship. It was accepted that there was an overlap in the relationships but by October 2007 the two were in an exclusive relationship.

In January 2008 the man gave the woman two diamond rings, although there was no agreement on what the comments might have been that accompanied the gift. From this time the parties spent increasing periods of time with each, with children and extended family. Photographs were taken.

In July 2008 the woman moved to another town for the purposes of her son’s education. During this time the man spent increasing periods with her, up to 4 days a week. In September 2009 the parties became engaged, and in October 2009 the woman moved back and into the man’s home.

Ten years later the Court was asked to determine when the relationship morphed into a de facto relationship. The woman said January 2008, the man said October 2009.

The Court decided March 2009. By that stage the parties were spending a good part of their time together in the woman’s home. By then they had been together for nearly two years. The man had started to make financial contributions to the woman and her family, for example paying for repairs to the son’s vehicle in July 2009. The parties got engaged about 6 months later so by that stage they had a mutual commitment to a shared life. The Judge’s view was that that commitment would have been present before the actual engagement.

The Judge did not accept argument they did not become a de facto relationship until they moved into the husband’s property because, in the context of the particular relationship and its circumstances, the only reason the woman was residing away was because of the son’s education. However the Judge also did not accept the earlier gift of rings, or gifts for the woman’s children, indicated a de facto relationship. Rather they were seen as being in the context of an intense but relatively new relationship (the rings) or a feature of many relationships that would not legally be considered de facto relationships (the gifts to children).

This question needed to be answered prior to the Court then moving on and determining the parties’ rights and obligations, including claims in respect of a trust and company. The woman was largely unsuccessful in her claims however by the time this matter was decided the parties had been separated for more than four years effectively in limbo. Both parties had come to the relationship with assets from their previous relationships. They both had children from those previous relationships. As unromantic as they are, a properly thought out and executed contracting out agreement (or pre-nup) could have saved a lot of economic and personal stress at the end of the relationship and allowed the parties to move on much more quickly.

Hindsight is a wonderful thing.