Family Law

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Fixing A Rate Of Child Support By Agreement

Trading Certainty For Flexibility
 

Child support is a simple enough concept on its surface. The law compels parents to each contribute towards their children’s daily cost of living. The amount payable is calculated by a default formula, ensuring that there are basic rights and obligations for separated parents across the country. The concept of a child support agreement is also simple enough at first, there being mandated types of agreements that enable parents to create their own obligations to pay support and by doing so, replace the default formula with their own agreed entitlements and obligations. Parents can agree upon the amount to be paid, when payments are made, or the method of payment (lump sums, payment of school fees and so on). A child support agreement can be appealing to both parents, as it provides fixed and certain arrangements, unlike the default formula, which changes to reflect each parent’s circumstances over time.

Parenting, however, is a journey for parents and children alike. Kids grow older and circumstances change. Because of this, locking in long term child support obligations via an agreement needs to be thought through. What happens if things radically change down the track?

This was the case for Mr Cheyne in the recent Full Court case of Masters & Cheyne, where a binding Child Support agreement compelled the father to pay $240 per week to the mother. That agreement was struck when the parents’ son lived with the mother and spent 5 nights per fortnight with the father. Circumstances changed when the mother moved interstate. The child commenced living with the father, leaving him with an unwanted, ongoing obligation to pay the mother support pursuant to their agreement.

Despite seeking relief from the Court, the Full Court of the Family Court decided that Mr Cheyne remained liable to pay the mother – or more accurately, that there were no grounds to set the agreement aside. Let’s look at why.

Firstly, the 3 Judges who heard the case had different views as to when obligations pursuant to a child support agreement come to an end. One said that such an obligation could only end in the manner described in the legislation – which is one of 3 ways: i) per the terms of the agreement itself; ii) a further agreement; or iii) the Court setting the agreement aside where there is “exceptional circumstances” and “hardship”. Another Judge said that there was a fourth option, being when the default formula ends. This includes the death of parent, the child turning 18, or the child becoming a member of a couple. The third Judge said that this particular issue did not need to be decided.

Secondly, all members of the Full Court held that there was no evidence that the changed circumstances created hardship for Mr Cheyne, particularly when his superior financial position was considered. Passages of the judgment stress that binding agreements are necessarily difficult to set aside. There is no requirement for an agreement to provide for a “fair deal” or that the agreed obligations reflect the default formula in any way. Further, parents entering into binding agreements can be assumed to have elected for “certainty” over “flexibility”, such that a parent wishing to rely upon a later change of circumstances can expect firm resistance, if they have not explicitly made provision for their agreement to end in particular circumstances.

Mr Cheyne’s tale is one with lessons for all parents who receive or pay child support, or are considering a child support agreement. Where the vicissitudes of life itself make changes foreseeable – be it care arrangements; work and unemployment; salary; children’s expenses; or a parent’s financial position generally – a parent choosing to proceed with a binding agreement must carefully consider when they want an agreement to end – in effect, trading certainty for flexibility. As highlighted in Masters & Cheyne, the benefits of locking in an arrangement are accompanied by some potentially onerous obligations if circumstances change. Ideally, parents should obtain legal advice around their child support options and any proposed agreement, as one size does not fit all.

The second point to take from the case is that the law as to child support agreements is still developing. Specialist legal advice can assist parents keep up with the latest trends.

Craig Nicol

cnicol@smh.net.au

Craig is an Accredited Specialist in Family Law, a Partner at Small Myers Hughes Lawyers and Co-editor of ‘The Family Law Book’ - a publication for family lawyers across Australia. 

Posted in: Family Law at 23 March 17

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