Agreements between de facto couples made before a 2001 law change bringing de facto relationships into the regime mandating a 50/50 split of relationship property are enforceable even when the couple later marry, and then separate. Subsequent marriage by a de facto couple does not nullify their prior property agreement.
The Court of Appeal ruled a former spouse was entitled to share in one million dollars held in term deposits generated by her former husband’s practice as a barrister. In court proceedings the two were identified only as M and H.
The court was told they signed a property sharing agreement in June 2000, when in a de facto relationship. The agreement set out what was to be treated as relationship property; what was separate property. Detailed provisions specified re-characterisation in future of separate property as relationship assets. This included a progressive reallocation of rights in their primary residence over time: the wife was entitled to a 15 per cent share in the first year; stepping up over subsequent anniversaries to a 50/50 split after three years. They married in 2008, eight years after signing their property sharing agreement, and then separated in 2014, six years later.
Validity of the prior June 2000 agreement was challenged. The Court of Appeal ruled legislation bringing de facto relationships into the existing 50/50 matrimonial property regime expressly preserved prior agreements between de facto couples. The June 2000 agreement between M and H was enforceable according to its terms. In dispute was one million dollars in term deposits held as part of the barrister’s finances. Their June 2000 agreement specifically stated his law practice remained separate property. The funds were part of his business, generated from his work as a barrister and held to meet business debts, he said. The court was told his income net of tax for the 2012 tax year was $430,000. The one million dollars were not part of his business, the Court of Appeal ruled. They were not needed to meet business debts, as evidenced by the barrister in fact using the money to buy a house after the couple separated. If the barrister were to have sold his law practice, the one million dollars in term deposits would not be sold as a business asset. The term deposits fell to be divided 50/50 as relationship property under their June 2000 agreement.
M. v. H. – Court of Appeal (26.11.18)
19.011