Setting aside a Binding Child Support Agreement

Setting aside a Binding Child Support Agreement

Maher & Walsh

The Australian Child Support Commentary provides:

[16-130] Change in circumstances — binding child support agreements

The test for setting aside a binding child support agreement on the basis of a change in circumstances is difficult to meet. This is the balance that government has set between allowing sufficient certainty, while still making provision for cases where there has been a change in circumstances. Section 136(2)(d) requires the applicant to show that the change in circumstances are: “exceptional circumstances” — that have arisen since the agreement was made, resulting in “hardship”. Clearly, this is intended to be a more difficult test to satisfy than those in s 136(2)(c), or any analogous test in s 117. In Haoucher v Minister for Immigration & Ethnic Affairs [1990] HCA 22; (1990) 169 CLR 648, McHugh J considered the term, saying:

          “[23] No doubt the term ‘exceptional circumstances’ is vague. [however] … mere disagreement … does not constitute ‘exceptional circumstances’.”


The term is used in other contexts: see for example Stern v McArthur [1988] HCA 51; (1988) 165 CLR 489; Cabal v United Mexican States [2001] HCA 42; (2001) 180 ALR 593; Carr v The State of Western Australia [2007] HCA 47. In Tanwar Enterprises Pty Ltd v Cauchi [2003] HCA 57; 217 CLR 315; 201 ALR 359; 77 ALJR 1853, Kirby J, when speaking of the phrase as used in equity pointed out (at [106]):

          “In judging whether the circumstances are ‘exceptional’, regard must be had to the entire relationship between the parties, the concern of equity being with substance, not form. The entire circumstances must be judged as exceptional.”


More poetically, in Nikac & Ors v Minister for Immigration and Ethnic Affairs [1988] FCA 400, Wilcox J said (at [56]):

          “Like beauty, ‘exceptional circumstances’ lies in eye of the beholder.”


In Balzano & Balzano (2010) FLC 98-048; [2010] FamCAFC 11, Warnick J said:

        “38. The term ‘exceptional circumstances’ has been considered in a number of cases, not necessarily in relation to its use in the Assessment Act. These include Sandrk and Sandrk

(1991) FLC 92-260

          , where Gee J said (at 78,750):


    ‘What amounts to exceptional circumstances is very much a question of fact and degree and the question in this case, as in that case, is whether what occurred subsequent to my orders of 22 May 1989 were such as to take it out of and beyond the ordinary circumstances in which such a change might be reasonably expected to occur.

          A feature in Simpson and Hamlin (supra) which Lambert J, saw as significant, and indeed as did the Full Court in agreeing with his Honour in this respect, was whether or not the change occurred unexpectedly and quickly after the making of the property order so that it could not have been regarded within the reasonable contemplate or expectation of the parties. It seems to me that that is the situation in this case.’ [emphasis added]<li “=””>39. In Daley & Daley

    [2009] FMCAfam 398; (2009) FLC 98-039

            , Brown FM said:


      ‘85. Exceptional is defined by the New Shorter Oxford English Dictionary as follows:


      Of the nature of or forming an exception; unusual, out of the ordinary; special; (of a person) unusually good, able, etc.


      86. Accordingly, for circumstances to be exceptional, they must be unusual, out of the ordinary or special. In the child support context, in respect of an application for departure, Kay J held that “special circumstances” were “facts peculiar to the particular case which set it apart from other cases”. [see Savery & Savery [1990] FamCA 30; (1990) FLC 92-131]’


              41. The explanatory memorandum stated:


        ‘Setting aside binding agreements


        As currently drafted, courts could set aside binding child support agreements (made with legal advice) in a range of circumstances, including circumstances that may have been contemplated and dealt with in the agreement. It is not intended that binding agreements should be set aside lightly. This amendment restricts the scope for the setting aside of binding child support agreements, by specifying that exceptional circumstances relating to one of the children or parties to the agreement must have arisen since the making of the agreement, and that the child or party would suffer hardship if the agreement were not altered or set aside.’ (emphasis added)”


        Warnick J also referred to Simpson v Hamlin (1984) FLC 91-576 (a case with respect to the term as it appears in s 79A of the Family Law Act).


        “Exceptional circumstances” must, as a matter of construction, mean something different to “special circumstances”. In Gallup & Gallup [2009] FMCAfam 839, Demack FM considered the term, saying:

                ‘52. “Exceptional”, it seems to me, carries with it something more than “special”. In its most basic sense, “exceptional” is derived from “except”. This provides the starting point for understanding that the word is meaning to exclude or create a barrier. Circumstances, then, which are “exceptional”, must be outside the normal experience, in such a way that they are the exception and something more than a minor abnormality. As the exceptional circumstances are arising in the context of change, the expression in Simpson and Hamlin op cit seems apt: that the change was such as to “take it out of and beyond the ordinary circumstances in which such change might be reasonable expected to occur.<li “=””>53. The legislation clearly contemplates the relevant circumstances being in the plural, and I may well consider that although severally no circumstance was exceptional, jointly, their character changed to create exceptional circumstances.’”


        Importantly, her Honour found that it was appropriate to consider the whole of the circumstances of the case in order to determine whether sufficient has been established. In Gallup her Honour summarised the relevant circumstances saying:

              “The father would have me take into account the following cumulative factors to demonstrate that the circumstances here are exceptional:

                a. His pre-existing mental health which was worsened by the breakdown of the matrimonial relationship and the loss of time with the children and the subsequent impact upon his capacity to find employment bearing in mind his history of self-employment;b. Due to the longer than expected period of unemployment, his need to use his capital to support himself;c. His new relationship with his now wife having to be facilitated between Australia and Thailand;d. That his new wife’s visa restrictions mean that she will remain a financial burden to the father for at least the first two years of her time in Australia;<li. That the father and his new wife have a child together, for whom, only the father can receive government benefits and his wife cannot contribute at all financially;f. That the father’s new child is a legitimate cause for expenditure by the father and should be taken into account;g. That the main capital base of the father’s was a share portfolio, and that is now worthless following the downturn in the share market due to the present global financial crisis.

              90. It seems to me that none of the factors, of themselves, put forward by the father are exceptional but that cumulatively they take on a different character, which I find to amount to exceptional circumstances. It could not have been within his knowledge or contemplation that he would lose the ability to supplement his income through his share portfolio due to the downturn in the share market at the same time as having difficulty finding work, while still responding emotionally to the end of a marriage and the loss of regular meaningful face to face contact with his children, made more difficult because of his history of misusing alcohol and being depressed, whilst forming a new relationship with a woman who has no lawful capacity to assist with bringing income into the household, and who bears him a child, thus creating a further financial burden.”

            1. In Jessup & Jessup [2010] FMCAfam 124, a period of unemployment was not an unforeseeable event and in itself does not amount to an “exceptional circumstance”. In McNicol & McNicol [2009] FMCAfam 1034it was said that “remarriage or more children “may not be out of the ordinary”.
            2. In the Australian Child Support Commentary the practical issues that are recommended to consider are:
              Practical Issues


        When bringing an application to set aside a child support agreement there is a number of practical matters that should ordinarily be covered in the affidavit material:


        • What would the formula assessment have been at the time of the agreement?


        • What were the circumstances of the parties at the time of the agreement?


        • What are the financial circumstances of the parties now?


        • If it is a culmination of factors case, what is the list of factors to be relied upon?


        • What would a formula assessment produce now?


        • From what date is the agreement to be set aside, and will this require refunds or leave debts for either of the parties?


        • Does the case require a departure from the formula assessment (a s 117 application) that will replace the agreement if it is set aside?


        In many cases it may be clear that the agreement should be set aside form a date that leaves neither debt nor refund payable by either party, yet be unclear as to what is the appropriate assessment for the future. In such cases, it may be more cost effective to set aside the agreement, allow a formula assessment to be issued and engage in administrative departure process to seek to have the formula assessment adjusted.”



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