15 Feb 2016

For a number of years, we have noticed an increasing number of parties entering into Binding Child Support Agreements.  A question often arises as to how and when a Binding Child Support Agreement (“BCSA”) can be set aside.  The setting aside of a BCSA essentially results in a termination of the Agreement.  There are limited circumstances in which a BCSA can be terminated.  A BCSA can be terminated:

1) If you enter into a new BCSA that includes a provision to the effect that the previous agreement is terminated (Section 80D(1)(a) of the Child Support (Assessment) Act);

2) If you sign a Termination Agreement to the effect that the previous BCSA is terminated (Section 80D(1)(b) of the Child Support (Assessment) Act); or

3) If the Family Court makes an order setting aside the BCSA (section 136 of the Child Support (Assessment) Act)

In relation to point #3 above, the Court may make an order setting aside a BCSA only in very limited circumstances.  The Court must be satisfied:

1) That the agreement of a party was obtained by fraud or failure to disclose material information, or

2) That the agreement of a party was obtained by through undue influence or duress; or

3) That the agreement of a party was obtained by unconscionable conduct such that it would be unjust not to set the agreement aside; or

4) That exceptional circumstances have arisen since the Agreement was made, such that the child or the applicant will suffer hardship if the Agreement remains in place.  (Section 136 (2)(d) of the Child Support (Assessment) Act)

In our experience, the practical reality is that it is difficult to succeed on the Points #1 to #3 of the above grounds because each party will have obtained their own independent legal advice before signing the Agreement.

In relation to point #4, the recent decision in Cheyne & Masters & Anor (SSAT Appeal) [2014] FCCA 856 offers some guidance as to what the Court will consider to be an exceptional circumstance.  In Cheyne, the father “was paying $239.66 per week” in child support under their Agreement when the child’s living arrangements changed from spending time with the father for “five nights per fortnight and for half of the school holidays” to “living six nights per week with the father and one with the mother.”  The change of care was “instigated suddenly by the mother” who had moved interstate.  The mother argued that regardless of the fact that the child now lived with the father for six out of seven nights each week, the binding child support agreement was valid and the father ought to continue to pay her child support at the agreed weekly rate.

Common sense would dictate that if a child no longer lived with a parent, that parent should not receive child support.  The court noted that this was indeed the common sense approach, but the mother (who represented herself) submitted that common sense had no role to play in the decision or the appeal.  In relation to this argument the court said that:

The mother must have been aware all along of the consequences of opposing the father’s s.136 application and although she might argue that she genuinely believed that the law was on her side, applying common sense to the problem ought to have given her cause for reflection. I do not accept the mother’s contention that the application of common sense has no place in legal disputes.

The Court was satisfied that after their Agreement was signed exceptional circumstances had arisen and that the father would suffer hardship if the Agreement was not set aside.

In Lincoln [2015] FCCA 18 the father sought to set aside a BCSA signed in February 2012 by which he was to pay the sum of $2,200 per month as child support for one child.  Three months after the father signed the Agreement, his business went into liquidation and he signed a Part X Personal Insolvency Agreement.  The Court concluded it was clear that the father was simply not in a position to pay $2,200 per month in child support and that this constituted ‘an exceptional circumstance that had arisen since the Agreement was made’.

The cases highlight that while the Court will carefully consider all circumstances relevant to a particular matter, the criteria for setting aside a BCSA are strict and the Court has the ultimate discretion (even if the criteria are satisfied) as to whether or not it will set aside a BCSA.  Parties should therefore give very careful consideration to the content and drafting of a BCSA they propose to enter into, including the circumstances in which their agreement will terminate.

If you are in situation where you thinking about entering into a Child Support Agreement, we recommend you seek legal advice as this is a complex area of law.  You may contact our Family Law team at HHG who can provide advice tailored to your specific circumstances.

This is only general information and does not constitute specific legal advice.  If you would like further information in relation to this matter or other legal matters please contact our office on Freecall 1800 609 945 or email us now.

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