Q: When are you in a De Facto Relationship? Answer: When a Court tells you that you are

Observations on SMITH -v- RADONICH [2017] WASC 290

In this case a claim for further provision by the Plaintiff, who alleged she was the de facto spouse of the Deceased, failed.

Master Sanderson said that there were three issues to determine:

1) Was the Plaintiff the de facto spouse of the Deceased?

2) If so, was the provision made in the will “adequate and proper”?

3) If the provision made in the will was not adequate and proper, what provision should be made for the Plaintiff?

The facts:The elements of the ‘de facto’ relationship.

The Deceased died aged 61 in 2015. He had never married and had no children. However, he had a close relationship with the children of his late brother George (who was much older than he was). When their parents had died, George had ‘taken the Deceased in’ (although not stated, the implication was that the Deceased treated the children of George – his niece and two nephews- as his younger siblings). These were the defendants to the action.

In 2001, when he was 48, the Deceased formed a relationship with the Plaintiff. She was aged 43 at that time and was a divorcee with three adult children (twins aged 21 and a 23 year old).

The Deceased had a property in Munster and the Plaintiff a property in Noranda. Throughout the relationship (which continued until the Deceased’s death) the parties maintained separate residences. The Deceased would, however, spend most alternate weekends at the Plaintiff’s house. In the first few years of the relationship, the Plaintiff would travel down to the Deceased’s property at Munster. There were occasional mid-week visits. That there was a sexual element to the relationship was not contested. They traveled on overseas holidays together (which the deceased paid for) and socialised together on weekends.

From October 2009, the deceased paid the Plaintiff $1,800 a month. This made up the shortfall between what the Plaintiff made from her part time employment and her living expenses. The Plaintiff and the Deceased otherwise kept their finances separate. The only common financial commitment was the lease of a ‘shack’ at Naval Base.

The Estate and the will.

The Deceased’s estate comprised various properties and a Superannuation fund. The net estate was agreed (at trial) to be worth “between $2,046,307.57 and $2,111,302.50” (the value being dependent upon what various properties would sell for).

The Deceased made a ‘home made will’, he gifted the various properties to his neice and nephews. He divided the residue between the Plaintiff and his neice and nephews. However, the main asset forming the residue was his self managed super fund. The super fund’s main asset was a property that had negative equity.

The result was that there was effectively no residue. Although it is not clear from the judgment, it is apparent that the Plaintiff did receive one of the properties owned by the Deceased. This is to be inferred from paragraph 39 of the judgment where it is stated that “As the will is presently structured she will receive an amount of $400,000.”

The Decision.

Was the Deceased the De facto spouse of the Deceased?

Master Sanderson found that the Plaintiff was not the de facto of the Deceased. He stated : “In this case although I would accept there was a degree of mutual love and affection between the parties their relationship does not seem to me to have been ‘marriage like’. They did not live together, they did not intermingle their finances (save with respect to the Navel (sic) Base shack), and they appear to have had a significant degree of independence.”

There were a number of interesting aspects of this case:

1) The Defendant did not cross examine the Plaintiff on her claim that she was the de facto of the Deceased (she of, course, had no doubt that she was). The Master commented that this was a ‘bold forensic decision’ on the part of counsel for the Defendant. He went on to say (at para 12) : “At the time I was surprised; in retrospect it was a wise decision. As counsel for the first and second defendants said in his closing submissions the evidence of the plaintiff spoke for itself. Nothing would have been gained by counsel cross-examining the plaintiff when he had no conflicting evidence to advance. An acrimonious exchange would have been in no one’s interests. In the brief time she was in the witness box it did not appear as though the plaintiff was the type of person who would have crumbled under cross-examination.”

2) There were other proceedings on foot between the Plaintiff and the First Defendant (as Executor of the Deceased’s estate). In those proceedings the Plaintiff had pleaded she was the de facto of the Deceased and this had been admitted by the Defendant in his defence. On that issue, the Master said: “The admission made by the first defendant is neither here nor there in the other action let alone in these proceedings. Moreover, in these proceedings the question of whether or not the plaintiff was the de facto partner of the deceased goes to jurisdiction. If she was not the deceased’s de facto partner then there is no jurisdiction to make an award. An admission by the first defendant cannot serve to enliven a jurisdiction which does not exist.”

3) At para 20, the Master said: “In determining whether or not a de facto relationship exists the decided cases are really of little assistance. Reference was made to the decision of Harper J in Sinclair v Forsyth [2008] VSC 250. In that case the plaintiff and the deceased did not live together and appear not have intermingled their finances. Yet his Honour found they did live in a de facto relationship. But the case was significantly different to this one. The relationship was far closer and far more consistent.”

In the event that he was wrong in reaching the conclusion that the Plaintiff was not the de facto of the deceased, the Master went on to consider whether the provision made for the Plaintiff was adequate and proper. That is did she meet the jurisdictional threshold test?

The Master considered the respective positions of the parties. I summarise those as follows:

a) The Second Defendant stated his net assets to be just under $200,000.00. The deceased had operated an earth moving business with the second defendant and this had suffered from the current economic downtown. The value of the business was uncertain. The second defendants assets were around $2 million dollars but his liabilities similar.

b) The third Defendant put his net assets at around $450,000.

c) The fourth Defendant, with her husband, had net assets (in the form of equity in their home) of about $700,000 and superannuation of $600,000.

d) The Plaintiff’s financial and personal circumstances were summarised (at para 27 ) as: ” As at the date of trial she is aged 62. She was the sole owner of the property in Noranda which was valued at around $700,000. As at the date of death of the deceased she was working in a permanent part-time position three days a week. She had held that position for some 17 years. As at the date of death of the deceased she was earning a net amount of $2,400 per month from her employment. She had superannuation in an amount of $72,000 and owned parcels of Telstra and Bank of Queensland shares valued at $4,500. She owned a motor vehicle valued at $13,000. The Noranda property was mortgaged in an amount of $80,000.”

More succinctly, her net assets at the date of trial ‘were approximately $506,500.’

Counsel for the Plaintiff and the Defendant (not surprisingly) summarised the proper approach to be taken when the claimant is the widow of the Deceased differently.

Counsel for the Plaintiff cited cases that reflected the New South Wales postion (see paras 34-35) citing Graham v Graham [2011] NSWSC 504 and Hertzberg v Hertzberg [2003] NSWCA 311.

Counsel for the Defendant (see para 36) said that the case should ‘be considered in the context of contemporary community standards of modern Australia. That must involve an analysis of the relationship…”

The Master said (para 37 to 38):

“37 With respect to counsel I am not sure either of the two formulations of principle accords with the law in this State. It would appear the New South Wales approach to claims by a widow have not been reduced to the formulations suggested by counsel for the plaintiff in this jurisdiction. That said there is really nothing in that formulation which is at odds with general principles. But each case must depend upon its own circumstances. Those comments apply equally to the statement of principle advanced by counsel for the first and second defendants. It has always been the case the nature of the relationship between the parties is one of the factors to be considered in determining whether or not the jurisdiction question is answered in favour of a plaintiff. Whether there is some ‘moral obligation’ on a deceased to provide for a plaintiff or whether the proper view is an assessment must be made in light of ‘community standards’ is the subject of debate.

38 In the end it is a matter of fact as to whether adequate provision has been made for a plaintiff. But in determining that fact certain value judgments must be made. That really means nothing more than looking at all the surrounding circumstances to determine whether or not the jurisdiction question is answered in the plaintiff’s favour.”

The Master concluded that the Plaintiff failed the jurisdictional test.

Some Observations

The Master’s comment that it was for the Court to decide whether the Deceased and the Plaintiff were in a de facto relationship highlights the fact that it is not to the point whether the Plaintiff or Defendant believed that such a relationship did or did not exist between them. Parties may expressly disavow (and commonly do) the existence of a de facto relationship but are found to be in one by the Court. It is not the subjective opinion of the parties but the objective opinion of the court that matters.

One can, however, sympathize with anyone who wonders whether or not they are in a de facto relationship, particularly given the apparently different conclusions that might be drawn from the circumstances in which the issue falls for determination. So, for example, for Centrelink purposes most people assume that if they maintain separate residences they are not ‘living in a marriage like relationship’. Other people adopt the view (presumably from the Centrelink interpretation) that if they live with someone for 6 months then ‘that’s a de facto relationship and an equal division of assets would occur should the parties separate’. Then, of course, there is the Superannuation Death Benefit context where a de facto relationship seems to be found merely on the say so the surviving contender.

The case highlights that the nature and extent of a ‘common residence’ (factor 2c) of Section 13A of the Interpretation Act remains a critical factor in determining whether the parties truly are in a marriage-like relationship. It is not to the point that some married couples live apart: married couples in a committed relationship live in the same premises unless it is, as a matter of practicality (work, illness etc) impossible for them to do so. They certainly don’t maintain separate residences (who can afford that?).

Putting aside the issue of whether the claimant was the de facto, the claim would have failed anyway. This seems to reinforce the impression that Plaintiffs cannot assume their claim will be successful.

Postscript: perhaps unsurprisingly, an appeal has been filed.

This entry was posted in Uncategorized on October 12, 2017.