Binding Child Support Agreement set aside due to change in care arrangements

Child support – Effect of “dramatic” change of care arrangement on a binding child support agreement – Agreement set aside under s 136(2) of the Child Support (Assessment) Act – Whether change of legislation amounts to “exceptional circumstances”

In Cheyne & Masters & Anor (SSAT Appeal) [2014] FCCA 856 (19 May 2014) Judge Terry considered a case where the father “was paying $239.66 per week” in child support for his son (para 40) under a binding child support 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” (para 36) to “living six nights per week with the father and one with the mother” (para 41). The change of care was “instigated suddenly by the mother” (para 145) who had moved interstate (para 146). Judge Terry said (at para 43):

“The mother confirmed to the CSA that the change had occurred and on 30 April 2012 the CSA advised the parties that:

i) the mother was no longer an eligible parent for the purposes of child support as she had less than 35% care … and the binding child support agreement would no longer be treated as active;

ii) the mother would become the paying parent under a formula assessment from 23 April 2012.”

The Court said it “was common ground at the hearing that [the child] had only spent six nights with the mother between January 2013 and July 2013 and in her affidavit filed on 12 August 2013 the mother conceded that she and [the child] were currently estranged” (para 55).

Judge Terry continued (from para 69):-

“ … there is no terminating event in s 12 [of the Child Support (Assessment) Act 1989 (Cth)] applicable to the agreement except for the termination date specified in the agreement which has not yet arrived. However s 12 was amended effective 6 January 2009 and on 31 July 2008 it contained s 12(2)(b) which provided that one parent ceasing to be an eligible carer was a child support terminating event.

[70] “Eligible carer” is defined in s 7B of the Act as a person who has at least shared care of the child and s 5(3) of the Act provides that a person is taken to have shared care if they have at least 35% and not more than 65% care of a child.

[71] The mother’s care of [X] dropped to about 16% on 23 April 2012 and if s 12 had not been amended the reduction in [X]’s time with the mother on 23 April 2012 would have terminated the agreement.

[72] Counsel for the Child Support Registrar submitted that it was clear beyond doubt that s 12 as it stood on 23 April 2012 and not as it stood at the time the agreement was signed applied to the agreement because Item 29 of the amending legislation provided that the amendments applied in relation to child support terminating events which happened on or after the amendments.

( … )

[74] I accept that the current version of s 12 applies to the agreement.

[75] The final relevant matter to note is that the 2006 amendments which created binding child support agreements made it deliberately difficult for a party to escape from such an agreement because of a change of circumstances.”

The Court concluded there was no error in the SSAT’s decision (that the agreement remained operative and that the initial decision based upon the mother ceasing to be an eligible carer was not correct given the amendment of s 12 of the Act and its applying to the agreement irrespective of its having been signed pre-amendment).

The Court then considered the father’s application to set the agreement aside, saying (at para 124):

“The father’s case turns on whether s 136(2)(d) is enlivened and in order to determine an application pursuant to s 136(2)(d) the court must consider:

i. Whether since the agreement was signed circumstances of an exceptional nature have arisen relating to a party to the agreement or a child in respect of whom the agreement is made;

ii. Whether as a result the applicant or child will suffer hardship if the agreement is not set aside;

iii. If so whether in the exercise of its discretion the court should set the agreement aside.

( … )

[136] The issue of what constitutes exceptional circumstances for the purpose of s 136 (2) (d) has been considered in many first instance decisions.

( … )

[142] For a number of reasons I do not accept the mother’s arguments and am satisfied that exceptional circumstances have arisen since the agreement was signed and first arose on 23 April 2012.

[143] I accept that a change in the care arrangements for a child after an agreement is signed is foreseeable, but that alone does not mean that such a change can never amount to exceptional circumstances.

[144] The change in care arrangements for [X] in April 2012 did not amount to a change of one or two nights but to a radical revision in his care arrangements. The mother’s percentage care of him dropped to 16% on 23 April 2012 and since January 2013 has been 2%.

[145] The change did not come about because of any behaviour by the father to inveigle [X] out of the mother’s care, let alone any undermining behaviour by him designed to impact on his child support obligations. The change was instigated suddenly by the mother.

[146] It was the mother who moved interstate in September 2012 without making any arrangements with the father before she went to spend fixed and regular time with [X]. Her relocation was the catalyst for a further dramatic reduction in her time with [X].

( … )

[150] The effect of the change which occurred in this case has to be considered in the context of the child support legislation and it was so dramatic that unless the agreement is set aside the financial arrangements for [X] will be completely out of kilter with the objects and principals of the Assessment Act.

( … )

[153] If the agreement is not set aside then even allowing for a small financial contribution by the mother if [X] spends time with her in the future the father will be providing almost 100% of the financial support for [X] and almost 100% of the care, and yet instead of the mother paying child support to the father as the objects and principles of the Assessment Act together with her income suggest would ordinarily occur the father will be required to pay the mother $236.63 per week for 2.8 years, equating to $30,000.00, in circumstances where she had made only a trifling outlay to the costs of supporting [X].

[154] I also consider it relevant that the legislation changed after the agreement was signed.

[155] There is a difference of opinion in the first instance cases about whether the fact that amendments to the Assessment Act which came into force on 1 July 2006 and turned certain then existing child support agreements into binding child support agreements and thus made them much more difficult to change is relevant to determining whether exceptional circumstances have arisen since the agreement was signed.

[156] In Daley & Daley [[2009] FMCAfam 398] Judge Brown held that a retrospective legislative change could, when taken with other matters, combine to constitute exceptional circumstances. ( … )

[157] In Keane & Keane [[2013] FamCA 332] Watts J disagreed with this approach ( … )

[158] I have to consider a different legislative change namely the removal of s 12(2)(b) from the Assessment Act after an agreement was signed but the same principles ought to apply in determining whether the change in legislation is something I can take into account in determining whether exceptional circumstances have occurred, and I prefer the reasoning of Judge Brown in this instance.

[159] There can be no doubt that legislative change is a change of circumstances. The drafters of the Family Law (Family Violence) Amendment Act accepted this and made the following provision in that legislation to forestall applications to vary or discharge parenting orders made prior to the amendments:

o The amendments made by this Schedule are taken not to constitute changed circumstances that would justify making an order to discharge or vary, or to suspend or revive the operation of, some or all of a parenting order that was made before commencement.

[160] I accept that the legislative draftsman deliberately chose not to preserve s 12(2)(b) for existing child support agreements when the legislation changed on 6 January 2009 but I am not satisfied that this means that the change of legislation cannot be taken into account when considering whether exceptional circumstances have arisen. There is nothing to indicate that the legislative draftsman made a deliberate choice about how to deal with the situation and it is possible, if the draftsman turned his mind to it at all, that he considered that the ‘out’ of exceptional circumstances would deal with the issue in any particular case.”

Judge Terry also found that the applicant would suffer hardship if the agreement was not set aside and that in the exercise of its discretion it should set the agreement aside.

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