Hi Lewis
Please see this factsheet:
Australian Immigration Fact Sheet 35. One-Year Relationship Requirement
I would argue against this "living together" nonsense quite strongly myself.
It is completely contrary to the moral code provided by Catholicism, is strictly contrary to Islamic law and so forth.
One of the older Partner Visa Booklets had the cheek to permit DIAC to ask impertinent questions about the couple's "sleeping arrangements." That - quite rightly - was kicked in to touch and DIAC were made to revise their intrusive, offensive ideas.
Sure there is an understandable desire to prevent marriages of convenience and so forth, but I don't think cohabitation alone proves anything anyway. I'm sure I could put up with Godzilla From Oz under my roof if I wanted a Spouse/de facto visa for Oz that badly! I might even be half nice to him if he were my passport to Oz!
The whole cohabitation idea is specious in my view. I can give you the name of a very tough, punchy and effective Australian Immigration Law specialist solicitor if your bro in law finds that he needs a bit of help to do some no nonsense negotiating with DIAC about this. He is an expert on the workings of the Australian Constitution - which is a written Constitution - and I'll bet that it contains a pivotal statement supporting Catholicism. If so then the 'requirement' for physical cohabitation might well be unlawful, in fact.
Best wishes
Gill