Changing a Binding Child Support Agreement and Disclosure

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Child support can be a source of conflict in separated parents. Ordinarily, one parent would apply to the Department of Human Services – Child Support for a child support assessment and the Department would consider factors such as the income of both parents and percentage care of the child/children. The Department would then calculate the child support payable by the other parent.

Because the child support can fluctuate depending on the factors used to calculate child support, this can create a real source of conflict and instability in separated parents. Additionally, separated parents may want agreement for payment of additional expenses for the children. Common expenses include clothes, electronic devices, or private school fees.

In this regard, after parties have obtained independent legal advice, some parents enter into a binding child support agreement. They generally do so to obtain an additional level of certainty, which also allows parties to fully ventilate specific terms about additional payments. These parents generally pursue these agreements for stability and certainty, in avoidance of the regular changes in assessments which may be raised by the Department.

However, the financial or family circumstances of the parents can significantly change. After all, child support is ordinarily paid until a child turns 18.

Under the Child Support (Assessment) Act 1989 (Cth), there are powers of the Court to set aside binding child support agreements in certain circumstances, which include “exceptional circumstances, relating to a party to the agreement or a child in respect of whom the agreement is made, that have arisen since the agreement was made, the applicant or the child will suffer hardship if the agreement is not set aside.”

In proving that exceptional circumstances have arisen, the Court will need to be satisfied of the evidence which shows those exceptional circumstances have arisen.

In the recent case of Telama & Telama (No. 2) [2017] FamCAFC 194, involved an appeal which considered the above issues.

In the primary judgment, the husband was successful in obtaining an order for the binding child support assessment to be set aside, because the primary judge was satisfied that (without limitation):

  • The husband primarily had debts. As his assets, he only his income, modest superannuation and personal items;
  • When the husband signed the binding child support agreement, he assumed that he would continue in his employment, or be employed in a job that had a similar level of remuneration; and
  • Not setting aside the agreement would result in a continuing and increasing debt which the husband had no capacity to pay. This would be a significant hardship.

However, the wife brought an appeal, noting that the husband had (without limitation):

  • Not given any evidence as to his taxable income in any year under consideration;
  • He had personally prepared, but had made no attempt to obtain copies of relevant taxation returns; and
  • Failed to disclose monies he had received from an employment dispute and sale of shares.

The Full Court of the Family Court of Australia allowed the wife’s appeal, noting that the primary decision was “attended by sufficient doubt to warrant it being reconsidered by the Full Court.” The matter was remitted back to the Federal Circuit Court of Australia for a re-hearing.

This decision highlights some important messages for separated parents who are contemplating entering into a Binding Child Support Agreement.

Firstly, full and frank disclosure in all family law matters is important. Failing to disclose your financial circumstances appropriately can lead to difficulties and unnecessarily prolonged or costly disputes.

Additionally, it is important for your Binding Child Support Agreement (when in the drafting stages) to contemplate and deal with significant changes in a parent’s circumstances, such as health, changes in where the children reside, or employment circumstances. This can result in costs savings in the future.

Speak to one of our team

If you would like assistance with negotiating, disputing or preparing an agreement in relation to child support, please contact one of our business development officers today. They’ll find out more about you, have a chat with you about your situation and book in a meeting with one of our family lawyers.

Call us on 07 3252 0011

Written by James Tan (Associate).