Child Support Agreement – Change in Circumstances – recent case – Father’s application to Vary the child support agreement – Preparation required

10/01/2018

At Watson & Watson we advise parties in relation to family law matters including property matters and other related matters generally.  In many cases there are claims or issues including one or more of property settlement, child support and the time the children spend with each of their parents, future spousal maintenance or support.  Generally the matters are settled as a package.

Care should be taken as to the package and the documentation of the package.

Generally we do not consider it appropriate for a high income earner with young children to agree to child support by way of a Child Support Agreement without having appropriate checks and balances in the agreement to cover circumstances where the high income earner has a significant change of circumstances.

A recent case referred to as Telama decided in September 2017 by the Full Court of the Family Court illustrates the difficulties associated with such circumstances.  At the time of the settlement including a Binding Child Support Agreement the father who was well off, had a successful company and earned about $700,000 per year.   As with many people he did not believe that he would end up in such an adverse financial position that he later found himself in.  The business failed. 

The Child Support (Assessment) Act gives power to the Court to set aside a Child Support Agreement or termination of agreement in certain circumstances including:

(a)       That the parties agreement was obtained by fraud or failure to disclosure material and information; or

(b)       That the parties to the agreement or somebody acting for that party exerts undue influence or duress or engaged in unconscionable or other conduct to the extent that it would be unjust not to set aside the agreement; or

(c)       In the case of a Binding Child Support Agreement that because of exceptional circumstances that have arisen since the Agreement was made the Applicant or the child will suffer hardship if the Agreement is not set aside.

The above case deals with an Application made by a father to set aside a Binding Child Support Agreement on the basis of “exceptional circumstances” having arisen.

Those exceptional circumstances were said to be that the father had:

(a)        Material reduction in his income from $710,000.00 per annum (when the agreement was made) to $220,000.00 per annum.

(b)        That he had become liable for significant and unmanageable debts including debts to the Australian Taxation Office.

(c)        That he had become liable for a significant claim by a liquidator of a company of which he had an interest.

One of the issues that arose in the original hearing in the Federal Circuit Court to vary the terms of the Child Support was that the father had failed to provide adequate disclosure of relevant facts relating to his financial position.  In this particular case financial disclosure of his financial circumstances was critical in particular in relation to:

(a)       His changed financial position.

(b)       The changed circumstances as to his income.

(c)       The changed circumstances in relation to debts and claims that he was to meet.

Notwithstanding that the father failed to disclose his financial position as required by the Family Court Rules and that the father was aware of his obligation to disclose; the Trial Judge held that there were “exceptional circumstances” which enabled the Court to set aside the Binding Child Support Agreement that the father entered into with the mother.

The mother appealed that decision.

A person who asserts a fact which is required as the basis to make a claim must prove the relevant fact to establish the validity of the claim.

The failure to disclose in this particular case was critical as without evidence of the father’s current financial position and the circumstances which gave rise to the position the Court had no evidentiary basis to properly make a finding of the facts which would establish “exceptional circumstances” and which would be a basis for the Child Support Agreement to be set aside.

In those circumstances on appeal, the Full Court of the Family Court of Australia allowed the appeal and found that the Trial Judge was in error in varying the Binding Child Support Agreement.

The Appeal Court did not substitute its decision however remitted or sent the matter back to the Federal Circuit Court for a re-hearing, however before a different Judge.

This is a case in which one would expect that upon full disclosure it would assist the parties to attempt to resolve the matter and further if full disclosure had been given it may very well have been that the decision of the Court at first instance was the correct decision.

If there is a fundamental failure to prepare the case with appropriate evidence even if you are successful at the initial hearing then on appeal one would expect that the Appeal Court will set aside the original judgment based on the lack of evidence.  Without evidence you will not obtain a just result.

At Watson & Watson we advise what is required and a cost efficient manner to conduct the case.  Mostly that advice is taken and the matter proceeds in a cost effective manner and most often a settlement.

If you are in an unfortunate situation that you have found yourself in separation of a marriage or de facto relationship and you are seeking (as you should) appropriate legal advice please telephone Richard Watson or his Personal Assistant Shereen DaGloria for a conference so that you are aware of your circumstances, the alternatives available, the processes and the costs including the parameters which make the costs much greater than they may otherwise be.

This is only a preliminary view and is not to be taken as legal advice without first contacting Watson & Watson Solicitors on 02 9221 6011.

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