For a child support agreement to be binding, it needs to meet certain requirements

The importance of a Child Support Agreement being prepared correctly was explored in detail in the case of Piper & Talbot. This decision is also important for its discussion in relation to the ability of a Financial Agreement to also constitute a Binding Child Support Agreement.

Background of facts

This decision was in relation to an appeal from a decision of the Administrative Appeals Tribunal (AAT) made on December 2018 in relation to whether a Financial Agreement pursuant to s90UD of the Family Law Act on 14 April 2015, also contained a Child Support Agreement for the purposes of Part 6 of the Assessment Act.

In April 2015, the parties entered into a Financial Agreement upon the breakdown of their de facto relationship.

In March 2018, the wife applied to the Child Support Register to have the agreement accepted as a BCSA pursuant to s80C of the Assessment Act.

In May 2018, the Registrar accepted the agreement as a BCSA.

In June 2018, the husband lodged an objection to the Registrar’s decision. In August 2018 the objection was disallowed.

The husband applied to the AAT in September 2018 for a review of the objection decision. In December 2018 the AAT affirmed the decision under review.

In January 2019, the husband appealed the AAT decision to the Federal Circuit Court. The husband sought orders for a declaration that the s90UD Financial Agreement did not constitute a Binding Child Support Agreement, on the following grounds:

1. That the tribunal failed to determine whether there was an agreement between the parties for the purposes of s81 and s90C of the CSAA;
2. That the Certificates of Legal Advice made pursuant to s90UD of the FLA did not meet the requirements of s80Cof the CSAA;
3. That the tribunal failed to consider, or failed to adequately consider the nature and extent of legal advice provided to the parties in relation to the provisions of the s90US Agreement relating the child support; and
4. That the s90UD agreement did not comply with the provisions of s84(6) of the CSAA.

Decision

The Court upheld all 4 grounds of appeal, and made a declarative order, as sought by the husband, that the s90UD Financial Agreement did not constitute a Binding Child Support Agreement.

The decision was made on the following grounds:

Ground 1

For an agreement to be accepted under the Assessment Act, it must first be determined that the parties intended to be bound by the agreement. The Court held that the principles of law and equity do and must apply when determining whether a Child Support Agreement is binding on the parties.

The Judge stated that:

“s84(5) of the Assessment Act states that the same document can be both a Child Support and a parenting plan, a Child Support Agreement and a Maintenance Agreement or Financial Agreement under the Family Law Act or a Child Support Agreement and a Part VIII AB Financial Agreement. 

Given my finding that the principles of law and equity are applicable to Binding Child Support Agreements, it will be necessary for the parties to have intended that the component of their joint document which relates to child support be a Binding Child Support Agreement under the Assessment Act.”

The Judge found that the Tribunal erred when it stated that there is “no requirement in the legislation or relevant case law requiring that there be a specific and expressed intention that an agreement be a binding child support agreement”.

It was held that the common law doctrines of law and equity cannot be ousted when entering into a BCSA because of the considerable impact the agreement has on the rights of the parties under the Assessment Act. The effects that a BCSA has on the rights of the parties were summarised in the judgment, and include the following:

• ousts the parties capacity to have recourse to the Assessment Act to have the level of child support paid or recovered by them determined on the basis of an objective formula that is adjusted to reflect any change in their circumstances over time;
• does not allow a variation of their agreement;
• limits the circumstances in which an agreement can be terminated to where the parties agree to terminate the agreement, enter a new agreement or it is court ordered under s136 of the Assessment Act;
• ousts recourse to the Registrar to review the level of child support; and
• limits the Court’s capacity under s136 of the Assessment Act to set aside a Child Support Agreement to fraud or failure to disclose relevant information, undue influence or unconscionable conduct by a party or someone acting for a party, or “exceptional circumstances” after the agreement is made which causes a party or child “hardship”.

Ground 2

The Court held that to oust the rights of the parties under the Assessment Act requires stringent requirements to be met. That is because of the exceptional circumstances threshold. The Court found that the statements of independent legal advice made no reference to the Assessment Act. All references to the legislation referred to the Family Law Act. The document is labelled “Section 90UD Financial Agreement”. Every page of the document is headed “Section 90UD Financial Agreement” including the pages containing each parties’ statement of legal advice.

The certificates of legal advice were signed on basis of s90UD of the Family Law Act. There was no reference made to s80C of the Assessment Act. The Court held that there was no evidence that advice under s80C was given to the parties. The AAT made no reference to the certificates being expressed to being given only under that section.

Ground 3

The Court held that the advice given has to be in relation to the effect of the agreement as it relates to the parties’ rights under that Act and the advantages and disadvantages of the agreement in the context of child support. At no time was the husband given advice in relation to the effect of his rights or the advantages and disadvantages of the agreement in the context of child support. The legal advice given only related to the document as a Financial Agreement under the Family Law Act.

Ground 4

The husband also submitted that the AAT erred in finding that the financial agreement complied with the provisions of the Assessment Act concerning non-periodic child support.

Where there is a provision that provides for a non-periodic payment, s84(1)(d)(ii) of the Assessment Act requires that there be a statement in the agreement that complies with s84(6) of the Act. Section 84(6) requires that statement to set out how the non-periodic payment affects the annual rate of periodic child support set out in the agreement.

When an agreement provides for both periodic and non-periodic child support, a failure to comply with s84(1)(d)(ii) and 84(6) requires the orders for both periodic and non-periodic payments to be set aside. The agreement did not meet the mandatory requirements in s84(6). There are no other provisions in the agreement relevant to child support, therefore there is no Binding Child Support Agreement.

Conclusion

This decision is important for its discussion in relation to the ability of a Financial Agreement to also constitute a Binding Child Support Agreement. Despite legislative provision for this to occur, it is clear that stringent requirements must be met, due to the considerable impacts that Binding Child Support Agreements have on the rights of the parties.

Antunes Lawyers can assist in the preparation of a Binding Child Support agreement, ensuring all the requirements under the Assessment Act have been met and you have a binding, enforceable agreement.