De facto relationships that ended before 1 December 2002, or were of less than 2 years' duration

Contributed by Heinrich Moser and current to 1 September 2005

In Western Australia, the Family Court does not hear disputes about property or finances between people who have not been married unless the parties were in a De Facto Relationship for at least two years and separated on or after 1 December 2002.

Disputes in most of these cases are still dealt with by the Supreme Court of Western Australia using principles drawn from Common Law and Equity. The sorts of claims that can be made in these situations include the following:

POSSIBLE CLAIMS

Resulting Trust

Where two persons contribute funds to the purchase of an asset but the asset is registered in the name of only one of them, there is a presumption that the person in whose name the asset is held holds the asset on a Resulting Trust for both of them in the proportions of their contributions.

There are special cases where the presumption does not apply, mainly those where the party who makes a contribution without having his or her name registered is in a special relationship with the other, such as a father.

Constructive Trust

A Constructive Trust arises in either of the following situations:

• Where an intention is held by both of the parties as to their respective interests in the asset or on the parties engaging in a joint endeavour (that is, the acquisition and improvement of an asset) which comes to an end through no fault of either party. This is known as the common intention constructive trust; or
• where the party holding the asset is “unconscionably” denying the other an interest: the unconscionability constructive trust.

Under the first scenario, the intention common to both parties is by itself capable of giving rise to a constructive trust. The intention has to be formed at the time of the acquisition of the asset in question. The party making the claim must show that he or she acted against his or her interest in the reasonable belief that by so acting a beneficial interest in the asset would be obtained.

Under the second scenario the court may find that the insistence on the legal title may be unconscionable in circumstances where the joint endeavour of the parties has come to an end. A claim for a constructive trust of this sort can be made in the absence of any common intention and can be imposed regardless of actual or presumed agreement or intention.

A constructive trust can only be imposed on any particular property to which contributions have been made by the party seeking relief. A blanket claim over all of the property of the other party, based on contributions made to the affairs of the other party generally, will not support a constructive trust.

Promissory Estoppel

Promissory Estoppel can be relied on to bring about the enforcement of purely voluntary promises in the absence of any pre-existing contractual relationship between the parties. The principles applicable to the creation of promissory estoppel will apply regardless of whether an agreement existed between the parties.

The factors to be considered are:

• the express or implied representations or promises made by the defendant to the plaintiff to the effect that the plaintiff was entitled to a share in the assets in question;
• the belief held by the plaintiff in reliance on those representations or promises;
• the actions of the plaintiff to the plaintiff’s detriment in reliance on those representations;
• the defendant’s knowledge of the plaintiff’s belief and the defendant’s lack of action to disabuse the plaintiff of that belief and to prevent the plaintiff from acting to his or her detriment.

Unjust enrichment

Unjust enrichment is a claim based on a mistake of fact or law committed by the party making the claim, involving the provision of funds or services in the incorrect belief that, in return, that party would receive an interest in an asset in circumstances and where the other party knew of the mistake. The plaintiff may then seek to have restored to him or her so much of the value of those funds or services as the defendant has been enriched by.

It is a defence if the defendant honestly believes that he or she is entitled to retain the benefit obtained; that is, contributions made by way of a gift cannot be later recovered.

Another defence is that if the defendant has changed his or her position after receipt of the value such that the defendant is no longer enriched, the plaintiff can no longer claim on the basis of enrichment.

There is therefore the risk in any claim for unjust enrichment the plaintiff may not be able to recover anything at all due to circumstances entirely outside the control of the plaintiff.

PARTICULAR ISSUES

What is property?

“Property” includes houses, land, bank accounts, motor vehicles, furniture, tools, caravans or trailers, stocks and shares and personal possessions such as jewellery, clothing etc.

In a de facto relationship, the person in whose name each item is, is deemed to be the person who owns them. The claims set out above assist in changing the entitlements of the parties in the asset in question.

Reaching an agreement

Agreements may be reached and distribution arranged informally between the parties, or put in writing, but may have consequences for taxation, other contractual arrangements and other matters, particularly where property other than personal items is involved. Legal advice should be sought to ensure all such possibilities are properly dealt with, and should be obtained before entering into discussions or agreements. Mediation may be a useful tool in helping to reach an agreement.

Property in joint names or in the other person’s name

Many couples buy a home, vehicles or other assets which are either put into both names, or into one party’s name, although the other person has contributed towards buying or improving them.

Real property

The person whose name is on the certificate of title registered with the Department of Land Information (DLI) is the owner of the house or land. If both names are registered, it belongs to both parties. Real property can be registered either as a joint tenancy or as tenants in common (see page _ above for an explanation of these terms).

Recognition of interest where name not on title

People in de facto relationships often share bank accounts and contribute to payments or improvements to property not in both names but in the belief both parties will profit from any investments or purchases. Some common arrangements are where one party contributes the deposit on a house and the other person makes the payments, or where one party pays for food and bills while the other party puts all his or her money into the mortgage.

Another common arrangement may be where one party has special building, decorating or landscaping skills and has spent time and money improving the property, even though the property is not in his or her name.

Sometimes a party will shift into the other’s home while the home is still at least partly or jointly in the name of an ex-partner or a company etc. Despite this, the person who moves in may still make financial contributions or improvements to the home.

In such situations, the party registered on the title as the owner remains the owner, but the other party may be able to make a claim (see 'POSSIBLE CLAIMS' above).

Lodging a caveat

If a party is advised he or she may have a claim on real property, a caveat may be lodged to protect the party’s interest and prevent dealings with it. A caveat is a notice registered with DLI and attached to the title. The caveat prevents dealings with the property (such as mortgages or sales) without the caveator’s knowledge.

Once the caveat is lodged, the registered owner is notified and may object. If an objection is received, the caveator has 21 days from the date of objection to apply for an order from the Supreme Court to extend the caveat. The court will only do this if satisfied there is a reasonable likelihood of the claim being proven. If an extension is not granted, the caveat will be lifted. If no objection is made to DLI, or if the other party agrees to the caveat being lodged, it will remain in place until lifted by the caveator.

Legal advice should always be sought before lodging a caveat as costs may be awarded if the other party is successful in having the caveat removed.

Rental properties

The party who signed the lease is responsible for the rent and is responsible for keeping the terms and conditions of the lease. If no lease exists, the person who regularly pays the rent remains responsible.

Furniture and household effects

Items such as furniture, TV, computers, books, etc, usually belong to the person who bought them. In general, people leave a relationship with what they brought into it. Disputes about property are resolved by the court determining ownership through evidence such as receipts and other documentation, or by hearing evidence about how, why and by whom the item was purchased, the intention of the purchaser and any other relevant evidence.

Where items were intended as joint property, a division of those items or monetary compensation may be available.

The same principles apply to these items as to real estate, see 'POSSIBLE CLAIMS' above. It should be recalled, however, that for minor claims, the costs involved in pursuing them may outweigh the value of the items.

Cars, caravans, trailers, motorbikes, boats etc

The legal owner of any vehicle or boat is the person who is the licensed owner. That person’s name will be on the licensing papers.

The legal owner may be different from the person who paid for the asset (for example, where the item passed to the owner as a gift). Change to legal ownership can only be shown by transferring the item into the other person’s name. There may be stamp duty payable as a result of transfer.

Shares and business ventures

The legal owner of shares is the person whose name is on the share certificates or the share book of the company concerned. An interest in a business is set out in the company memorandum, the share register or the partnership deed.

Registered partners in a business or shareholders in an unlimited company are responsible for any debts incurred by the business or company until such time as their names are taken off the documents.

Parties concerned about such matters should seek legal advice.

Bank accounts and credit cards

The person whose name is on the account is the legal owner of the account. Where the other party is authorised to use the account or credit card, this does not give that party any rights as an “owner” and the authority may be revoked at any time.

Accounts in joint names

If the account is in both names, it is presumed that any money in it should be divided equally.

Debts

A debt is the responsibility of the person who incurred it. If one party undertook the debt at the request of the other, it will have to be shown that this was the intention of the parties.

Pets

The legal owner of a dog is the person who is on the Local Council register.

Unregistered pet ownership may be proven by such things as veterinary bills or purchase documents from the place the pet was bought, otherwise the person with the pet in his or her possession is usually considered the owner unless a court determines otherwise.

Deceased estates

If a partner dies leaving a will, the person who manages the estate will divide the property according to the will. It is important to know that any will made during a previous marriage will remain valid even if the parties have since divorced and a new relationship commenced. The only way to change that is to change the will.

Any person can be excluded from benefiting under a will, but this is open to a challenge by that person through the Inheritance (Family & Dependants Provision) Act 1972 (WA). This Act allows people, especially children or others who were dependent or who could reasonably expect to have been provided for, to make a claim.

If the person dies without a will, the Administration Act 1903 (WA) sets out a formula for distributing the person’s assets. For further information, see the WILLS, ESTATES AND FUNERALS.

Preventing removal of funds

In certain circumstances, an injunction may be issued to prevent one party removing funds from an account, but it is extremely unlikely that an injunction would be granted to prevent a party removing funds from an account in that person’s sole name.

Where a joint account requires both signatures before money can be withdrawn, the parties should be relatively safe until arrangements are finalised. If one party is concerned about fraud or forgery of a signature, the bank should be requested to stop activity on the account until the matter is resolved.

A joint account requiring only one signature may have to be “frozen” pending resolution of any dispute. Banks differ on when and how they will freeze a joint account. Freezing an account means that neither party can withdraw until the bank is satisfied that the dispute is settled.

Alternatively, a party could request the bank to issue a post no debts status on the account. A post no debts status means that deposits to the account can be made, but no-one can withdraw money until the bank is notified. Banks’ policies on this differ and there is no obligation on them to comply with such a request.