Dementia, old age and de facto relationships: the High Court’s decision in Fairbairn & Radecki [2022] HCA 18

When elderly people such as an aging parent or spouse, have been in a long-term relationship but their cognitive decline is becoming a huge problem for them, it sometimes becomes necessary to place them into residential care. With their mental capacity waning and such a big transition in their life occurring, this can be a time fraught with complexity. Especially for those in blended families, where the declining health of one partner can have onlookers questioning the integrity of the relationship.

What do you do as an adult if your mother or father has re-partnered and now requires financial assistance to pay a residential care home bond? What do you do if the other side of the family, including stepparents and stepchildren, are not onboard? How do you approach making the necessary adjustments if your parent’s partner – your de facto stepparent – no longer really has their best interests at heart or has their own strong competing interests? Are the “gloves off?” and are you in for a rough ride or is there a settled pathway to sensibly help support your loved one through the next stage of life? Living longer and the rising incidence of dementia makes this scenario a reality for more people than you think.

The High Court recently provided clarity on this conundrum in the context of a de-facto relationship in the matter of Fairbairn v Radecki [2022] HCA 18.

To make it easier to understand what was said in this case it is important to get to know the particular facts of this family:

The parties began their de facto relationship in late 2005 under the key premise that they were to keep their finances separate. To this end, they entered a “Domestic Relationship Agreement (Cohabitation Agreement)” which recorded their intention to separate their assets and have the home they both lived in remain in Ms Fairbairn’s ownership.

In 2015, Ms Fairbairn suffered from rapid cognitive decline and was eventually diagnosed with dementia in 2017. At this point, the parties slept in separate rooms of the home and Ms Fairbairn had qualified for full-time placement in an aged care facility. Despite the precarious nature of Ms Fairbairn’s health, Mr Radecki embarked on a three-month overseas trip. Whilst away, Ms Fairbairn executed an enduring power of attorney in favour of her children who subsequently prevented her from accessing her bank accounts given her deteriorating mental condition.

Dissatisfied with what had transpired, Mr Radecki manipulated Ms Fairbairn in her confused state to revoke her existing power of attorney in favour of her children and had it replaced by another in favour of himself and her brother. He also arranged for a new will to be drawn up which granted him a life estate in her home.

In light of the above, in January 2018, the NSW Civil and Administrative Tribunal (“NCAT”) appointed the NSW Trustee and Guardian to make decisions regarding her health on her behalf and reviewed the new enduring power of attorney. The Trustee eventually made the decision to place Ms Fairbairn into an aged care facility, however, a dispute arose regarding how such placement was to be funded.

The Trustee believed that it was in Ms Fairbairn’s best interests to sell her home to pay her accommodation deposit to the aged care facility. Mr Radecki argued that her accommodation fees should instead be paid from her superannuation. Alternatively, he suggested that he could pay the accommodation fees and be reimbursed from her estate. Both options allowed Mr Radecki to remain in the home rent-free whilst Ms Fairbairn’s estate deteriorated. Mr Radecki argued that such an outcome was consistent with Ms Fairbairn’s wishes and maintained that there had been no breakdown in the de facto relationship, despite the contrary views of the Trustee. Unfortunately, due to the decline in Ms Fairbairn’s cognitive ability, it was impossible to determine whether she wished to remain in the relationship or had the capacity of coming to such a decision herself.

The Trustee commenced property settlement proceedings in the Federal Circuit and Family Court of Australia, seeking an order that Ms Fairbairn’s home be sold so that the sale proceeds could be used for the deposit. This raised the issue as to whether the de facto relationship had broken down – a fundamental requirement for making a property settlement order in de facto relationships.

At trial, the primary judge found that, when considering Mr Radecki’s conduct and the agreement to separate their assets that underpinned the parties’ relationship, it was possible to impute an intention to separate. This decision was later overturned by the Full Court, who determined that it was not possible to impute an intention to separate by Mr Radecki and that poor behaviour was sadly “…all too often a hallmark of a relationship.”

On appeal to the High Court, it was found that the relationship broke down when it no longer met the criteria of a de facto relationship. This was found to have occurred not as a result of Ms Fairbairn’s lack of capacity or her physical separation from Mr Radecki but because his self-serving conduct was inconsistent with a commitment to a shared life and undermined the arrangements to separate their assets upon which their relationship was based.

The decision in Fairbairn v Radecki should provide hope for those who may find their parents in financially abusive de facto relationships in their old age. It highlights the importance of looking at the conduct of the other partner and whether it is consistent with the fundamental premise of a relationship. It also highlights the importance of the assumptions that parties base their relationships on and the need for the Court to have regard to this when determining a parties’ property settlement entitlements.

Blended families can start with the best of intentions but as with any relationship things can change and ultimately break down. This decision means the courts can recognise when someone is taking advantage of a relationship and is no longer in it for the right reasons.   Are you facing difficulty with an aging or vulnerable parent and their new partner? Doolan Wagner Family Lawyers can help guide you and let you know what options are available. Speak with an accredited specialist family lawyer on 02 9437 0010.

About the Authors:

Lisa Wagner is Managing Director and Principal of Doolan Wagner Family Lawyers. Lisa is an Accredited Family Law specialist, a Collaboratively trained Family Lawyer and a Family Dispute Resolution Practitioner. Lisa has close to 30 years experience as a specialist family lawyer, experienced litigator and skilful negotiator in all family law matters.

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Oliver Lacey is an Associate at Doolan Wagner Family Lawyers. Currently undertaking a Masters in Applied Law (Family Law), Oliver has a special interest in complex parenting and property matters, with significant experience in protracted disputes.
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Disclaimer:

These posts are only intended as an overview or comment on current issues that may interest you and are not legal advice. If there are any matters that you would like us to advise you on, then please contact us.

Doolan Wagner Family Lawyers offer specialist family law advice in St Leonards on Sydney’s North Shore.  We have a dedicated team of experienced family lawyers prepared to handle your matter effectively and efficiently, providing reliable, direct and practical advice.  If you have recently separated of have a family law enquiry, please contact us on (02) 9437 0010 or email enquiries@familylawyersdw.com.au