Has your child support agreement been terminated?

Retrospective changes to child support legislation

On 1 July 2018, amendments were made to the Child Support (AssessmentAct 1989 (“The Act”) by virtue of the the enactment of the Family Assistance and Child Support Legislation Amendment (Protecting Children) Act 2018.

The amendments directly impact the enforceability of binding and limited child support agreements by way of introducing a suspension period and then terminating event where a parent of a child ceases to be an eligible carer in accordance with the Act.

Masters & Cheyne [2016] FamCAFC

The amendments are the result of a parliamentary committee report which addressed the decision of the Full Court of the Family Court in Masters & Cheyne [2016] FamCAF where the Father was obligated to continue to pay child support to the Mother despite the child residing with him on a full time basis.

In summary, the Mother and Father signed a binding child support agreement on 31 July 2008 with respect to their three children.  The agreement provided the Father was to pay the Mother $220 per week per child until they reached the age of 18 years.  At the time of signing the agreement, the children lived with the Mother and spent time with the Father.

Fast forward to 2012, the Mother relocated to NSW and the youngest child resided with the Father. The two eldest children were now adults. The Father made an Application to the Family Court to have the agreement set aside on the basis that:

  1. exceptional circumstances had arisen since the signing of the agreement resulting in the younger child residing with the Father; and
  2. the Father would suffer financial hardship if he was obliged to continue to pay $220 per week to the Mother despite the child residing in his care full time.

Ultimately, the matter proceeded to Appeal. Unfortunately for the Father, the Full Court of the Family Court dismissed the Father’s application and noted that although exceptional circumstances had arisen with a change to care arrangements, the Father, who earned approximately $192,000 gross per annum and had net assets valued at an excess of $1.1 million would not suffer hardship if the agreement was not set aside.

Suspension and Termination of Assessment

The amendments to the Act have attempted to address the decision upheld in Masters & Cheyne to provide a fairer outcome.

The amendments stipulate:

  1. As of 1 July 2018, if a parent who is entitled to receive child support payments ceases to be an eligible carer of that child (less than 35% care of the child per year) the binding child support agreement will be suspended for a period 28 days or 26 weeks in certain circumstances.
  2. If the 28 day suspension period ends without the former carer again having becoming an eligible carer, the binding child support agreement is terminated.
  3. Termination has effect on the day the former carer ceases to be an eligible carer.

How we can help

The changes made to the child support legalisation are retrospective. It is likely many people may have a child support agreement in place that does not contemplate the amendments and already be suspended or in some cases, terminated.

It is imperative that practitioners are aware of the legislative changes and carefully draft agreements that provide for a change in care arrangements and a role reversal between parents.

We would welcome a discussion with you or your clients about the risk of a prior agreement being terminated and how to ensure a future child support agreement is binding.

If you have any queries, please do not hesitate to contact us.