Court Determines Validity of De Facto Cohabitation Agreement Where No Certificate of Independent Legal Advice Produced

The case of Franklin v Ennis [2015] FCCA 2099 (6 August 2015) was an application to the Federal Circuit Court of Australia for settlement of financial matters between an estranged de facto couple.  The Respondent claimed that the couple had entered into a cohabitation agreement under state legislation in 1997.  She claimed this estopped property settlement matters under the agreement from being heard by the Court.

The Court had to determine if the cohabitation agreement was valid.  If the agreement was valid, the court then had to determine if it would preclude the Applicant from bringing de facto property settlement proceedings under Part VIIIAB of the Family Law Act 1975 (Cth) (the “Act”).

Background

At the time of the hearing, the male Applicant was aged 70 years of age.  The female Respondent was aged 61 years of age.  They had commenced their de facto relationship together in 1995.  At this time the Applicant moved into the Respondent’s home and remained there for the duration of the relationship.  The couple separated sometime between October and December 2013.

The Respondent claimed that in May 1997 the couple had entered into a cohabitation agreement under the Property (Relationships) Act 1984 (NSW).  The effect of the terms in the agreement was that upon separation all property in each party’s name is retained by that party and all joint assets are divided equally between the parties.

While the Applicant submitted his signed cohabitation agreement to the Court the Respondent could not find her signed copy of the agreement.

De Facto Relationships and the Family Law Act 1975

Prior to 1 March 2009 de facto relationships involving disputes over property and financial matters were governed by state and territory legislation.  By a referral of powers, most states and territories referred de facto powers to the Commonwealth Government (the only not referring state is now Western Australia).  The Commonwealth Government passed the Family Law Amendment (De Facto Financial Matters and Other Measures) Act 2008.  This allowed de facto disputes involving property and financial matters to be resolved under the Act.

Under Schedule 1, section 88 of the Family Law Amendment (De Facto Financial Matters and Other Measures) Act 2008 de facto agreements made before 1 March 2009 under a preserved law of a state become Part VIIIAB financial agreements under the Act.  However, any agreement must meet the requirements of the preserved state legislation.

Was the Cohabitation Agreement Valid?

As the cohabitation agreement was made in 1997 it had to meet the requirements of section 47 of the Property (Relationships) Act 1984 (NSW).  If it was valid under this legislation the agreement would become a section 90UC agreement under the Act.  This would prevent the Court from making an order against the terms of the agreement.

Section 47(1) of the Property (Relationships) Act 1984 (NSW) requires that an agreement:

1. be in writing;
2. signed by the party against whom the agreement is being enforced; and
3. that the party who seeks the protection of the agreement has a valid certificate of independent legal advice signed by a solicitor.

The Respondent was able to provide through the Applicant a written and signed copy of the cohabitation agreement.  However, the Respondent could not produce a certificate of independent legal advice.

To find the agreement enforceable the Court had to be satisfied with the Respondent’s oral evidence that she had a certificate of independent legal advice.  However, inconsistencies were found in the Respondent’s affidavits referring to her alleged copy of the cohabitation agreement.  The Court was not satisfied that the Respondent’s certificate of independent legal advice actually existed.  As a result, the cohabitation agreement was not binding on the Parties.

Conclusion

In this case the Applicant and Respondent were in a de facto relationship.  The Respondent attempted to stop the Applicant from bringing a property settlement claim against her by relying on a cohabitation agreement.

The cohabitation agreement was entered into under state legislation before de facto relationships were governed by the Family Law Act 1975 (Cth).  As a result, the agreement had to meet state legislation requirements.  While the Respondent met most requirements including providing a written agreement signed by the other party, she could not provide a certificate of independent legal advice.  The Court was not satisfied that one existed and as a result, the agreement was unenforceable.

This case shows the importance of ensuring financial agreements meet strict legislative requirements.  It shows that those entering into financial agreements must be able to fulfill the evidentiary burden of proving that a valid agreement exists.  This requirement continues for the life of an agreement.