How binding are Child Support Agreements?

10-May-2018 Family Law By Mel Collins

Binding Child Support Agreements (BCSAs) are an increasingly common method of formalising agreements for the payment of child support, often as part of a package of documents that finalise all the issues at separation, including property consent orders, spousal maintenance agreements and parenting orders.

BCSAs allow for parents to enter their own private agreements for the payment of child support, which as the name suggests, are legally binding. Part of the attraction of a BCSA is that it can require a parent to pay over and above an assessment of the Child Support Registrar and it can provide for payment of items not otherwise covered by a child support assessment, such as private school fees, health insurance, orthodontics, extra-curricular activities and the like. These things are known as “non-periodic” child support payments.

It is important to note, however, that a BCSA can still be set aside (altered) even if it otherwise meets all of the legal requirements. The Child Support Assessment Act allows a party to apply to the Court to have the BCSA set aside if exceptional circumstances have arisen since it was made that would cause the applicant or child to “suffer hardship” if the agreement is not set aside by the Court.

Commonly, a paying parent under a BCSA will lose his/her job, have a business fail or otherwise experience a significant reduction of income after entering into the agreement. It is also commonplace for a paying parent to enter into a new relationship or otherwise have further children for which they are financially responsible, thereby causing financial hardship. These things alone are not necessarily “exceptional circumstances” for which to set aside an agreement but the legislation requires the Court to look at the whole of the circumstances together when considering if financial hardship is established. Each case will be decided on its individual merits. The paying parent must be the one to prove financial hardship in these cases.

The case of Telama & Telama (15 September 2017) was an appeal from a decision setting aside a BCSA after the paying parent argued he no longer had the income available to pay child support at the level required under the BCSA. The Full Court allowed the appeal and remitted the case for rehearing on the basis that the father had not made full financial disclosure, meaning the trial judge didn’t have all the evidence. The case highlights that if a parent’s income falls so significantly below the level it was when the BCSA was made, and there is no property to otherwise satisfy the child support obligation, it is at risk of being set aside for hardship.

Anyone considering settling property interests as a trade-off for increased child support under a BCSA needs to be aware that the level of child support required to be paid under the agreement may not be sustainable in the future if the paying parent suffers severe financial hardship.

It’s important you always obtain advice from a specialist family lawyer when considering your options.

For further information and confidential advice, contact Streeterlaw’s experienced specialists in Family Law on on 1300 293 593 or email advice@streeterlaw.com.au.

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