When Can a Binding Child Support Agreement Be Set Aside?

Under the Australian child support legislation, parents can reach agreement about the amount of child support to be paid, by entering into a child support agreement. There are two types of child support agreements, a Limited Child Support Agreement and a Binding Child Support Agreement. Limited Child Support Agreements can give parents some flexibility to make arrangements without committing themselves to a long term agreement. They can be entered up to three years or set aside in certain circumstances.

Binding Child Support Agreements are different in that, for example, parents must seek independent legal advice. They can only be set aside in limited circumstances such as fraud, non-compliance with the requirements under the legislation for entering into such an agreement, undue influence or duress, unconscionable conduct, or where, because of an exceptional circumstance, that has arisen in relation to a parent or child, a parent or child would suffer hardship if the agreement was not set aside.

A recent Federal Circuit Court case has explored the meaning of "exceptional circumstances" leading to "hardship".

In Cheyne and Masters & Anor (SSAT Appeal) [2014] FCCA 856 the parties entered into a Binding Child Support Agreement in 2008. At the time, the youngest child was living with the mother and spending five nights per fortnight and half school holidays with the father. The Binding Child Support Agreement provided that the father pay $220 per week to the mother by way of child support for one of the children, child X.

Four years later, in April 2012, and by agreement between the parties, X began living with the father for twelve nights per fortnight and later that year the mother moved interstate. A dispute arose as to whether the father was required to continue paying child support to the mother.

The father contacted the Child Support Agency ("CSA") to inform them about the change in care arrangements, and the CSA told the father that he did not need to apply to have the agreement set aside, and assessed the mother to pay child support to the father.

The matter came before the Federal Circuit Court. The mother's argument was the the Binding Child Support Agreement required the father to keep paying child support until the termination date (the child's 18th birthday) regardless of the amount of time X was spending with her. One of the arguments raised by the father was that the Binding Child Support Agreement should be set aside under Section 136 (2)(d) of the Child Support (Assessment) Act 1989, being the ground of: "exceptional circumstances, relating to a party to the agreement or a child....that have arisen since the agreement was made [such that] the applicant or the child will suffer hardship if the agreement is not set aside".

The Judge determined that in the circumstances of this case, exceptional circumstances had arisen. Although changes in care arrangements are not of themselves unforeseeable, this does not mean that such a change can never amount to exceptional circumstances. here the change was not simply one or two nights but a complete revision in the care arrangements.

After finding that there were exceptional circumstances, the Judge went on to consider whether as a result in that change, the father or child would suffer hardship and if so the court should set the agreement aside. The Judge was satisfied that the father would suffer hardship in the sense of being required to make a payment to the mother in circumstances not contemplated by the Child Support Legislation, and not being able to obtain a contribution from the mother to the costs of caring for X. The Judge made these findings, even thought the father had an income of $198,000. The Court exercised its discretion to set aside the agreement.

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