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Binding and Limited Agreements

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In 2008, how did CSA determine whether an agreement was binding or limited?

The following is an extract from CSA's web guide.  I made an agreement pre-2008 that did not include the range of requirements stipulated below - or the advice - the agreement must be flexible to adjust to changing circumstances.  However my agreement is deemed binding despite this.  Does anyone know how CSA determined whether an existing agreement was binding or not - and whether there is any course for appeal??

2.2 (a) Binding child support agreements

Binding agreements are intended to provide a high level of certainty and finality about child support arrangements for parents. Legal advice is therefore required to ensure that parents understand the consequences of making such an agreement, and to provide some protection against coercive or misleading behaviour. Any transfer of an amount (such as a house) under the "lump sum payment" provisions effective from 1 July 2008 must be made via a binding agreement (subsection 84(7)(a)).

Binding agreements must contain a statement that each party obtained independent legal advice before the agreement was signed. Each part's legal practitioner certifies, in an annexure to the agreement, that they have provided independent legal advice as to:

  • the effect of the agreement on the rights of that party;
  • the advantages and disadvantages, at the time that the advice was provided, to the party of making the agreement.
Note that the agreement may have an effect not only on the child support of the parties, but also on their entitlement to Family Tax Benefit Part A, and therefore result in advantages or disadvantages in that respect (see below chapter 2.3).

The terms of a binding child support agreement can be for more or less than the relevant formula assessment for child support. A formula assessment does not need to be in place before the agreement is lodged.

Binding agreements are intended to provide for longer term arrangements. If the parents both wish to end the agreement before the agreed end date, they must once again seek independent legal advice and make a formal Termination Agreement, or a new binding agreement that also terminates the previous agreement (section 80D).

If only one parent wishes to end the agreement, they may seek a court order to set the agreement aside, but such an order will be available only in very limited circumstances. The court must be satisfied that the agreement of the party was obtained by fraud or failure to disclose material information, or through undue influence, duress, or unconscionable conduct such that it would be unjust not to set the agreement aside. The court can also set the agreement aside where it is satisfied that exceptional circumstances have arisen since the agreement was made, such that the child or applicant will suffer hardship if the agreement remains in place (subsection 136(2)(d)).

Due to these requirements for ending a binding agreement, it is particularly important that binding agreements are drafted in a way that takes account of the changing circumstances in which parents may find themselves. More information on binding agreements is available in chapter 2.7.1 of The Guide: CSA Law and Policy, available at www.csa.gov.au.
Frankappaz:

The CSA Guide (Extract) - 2.7.1 said
 Transitional Agreements

These are child support agreements that were made and accepted by CSA prior to 1 July 2008 and continue to have effect from 1 July 2008. These agreements are considered to be binding child support agreements. However, some different rules apply to these agreements as compared with binding child support agreements discussed above.

Further details about these agreements can be found under the heading Transitional Arrangements in Chapter 2.7.4.

Transitional agreements also have different requirements for termination from other binding child support agreements (see Chapter 2.7.5).

The relevant part of 2.7.4 is:

The CSA Guide (extract) - 2.7.4 said
Transitional arrangements for child support agreements

Prior to 1 July 2008, CSA reviewed all child support agreements that would be in force on that day (Item 73, Schedule 5, Reform of the Child Support SchemeNew Formula and Other Measures Act) (the Reforms Act).

CSA considered each agreement to determine whether the agreement contained provisions that would continue after 1 July 2008. Regulation 21 of the Child Support Reforms Regulations specifies which provisions of an agreement would continue to operate after 1 July 2008.

Where the continuity of the agreement provisions are not affected by the changed legislation, then it became a special type of binding child support agreement known as a transitional child support agreement (item 74(1)(b)(i) of the Reforms Act).

CSA will not issue notional assessments in relation to transitional child support agreements. Where the assessment is determined under a transitional agreement, a parents entitlement to Family Tax Benefit Part A will be assessed on the basis of the agreed amount of child support pursuant to the transitional agreement.

A transitional agreement can be ended by a written agreement entered into without legal advice (item 75(6) of the Reforms Act).

Where a child support agreement contained provisions that do not operate after 1 July 2008, e.g. based on components of the previous child support formula that no longer exist, it was terminated by CSA as at 30 June 2008 (item 74(1)(b)(ii) of the Reforms Act). An administrative assessment based on the child support formula was made for the period after 1 July 2008, where an administrative assessment was in place before the child support agreement was accepted. If no administrative assessment was in place before the child support agreement was accepted then CSAs decision to terminate the child support agreement has the effect of a terminating event (item 74(2) of the Reforms Act).

CSA notified the parties in writing of the decision to terminate or make binding each such agreement (item 74(3) of the Reforms Act). The parties were also advised of their objection and appeal rights (items 74(4) to (6) of the Reforms Act).

The relevant part of 2.7.5 is:

The CSA Guide (extract) - 2.7.5 said
A binding child support agreement can be terminated:

    * by a subsequent binding child support agreement that includes a provision to the effect that the previous agreement is terminated (section 80D(1)(a));
    * by a binding child support agreement to the effect that that previous child support agreement is terminated, known as a termination agreement (section 80D(1)(b)); or
    * by a court order setting aside the child support agreement under section 136 (section 80D(1)©)(see Chapter 4.3.2 Applications and orders about decisions under the Assessment Act).


A transitional child support agreement can be terminated:

    * as for other binding child support agreements; or
    * by an agreement in writing signed by both parties to the effect that the previous child support agreement is terminated(item 75(6) of the Reforms Act).



The relevant legislation is:

The Child Support Assessment Act 1989 said
74  Registrar to review all agreements
(1)   Before 1 July 2008, the Registrar must:
   (a)   review every child support agreement made before that day that will be in force:
   (i)   immediately before that day; or
   (ii)   after that day; and
   (b)   determine in writing whether each such agreement is:
   (i)   to be taken to be a binding child support agreement; or
   (ii)   to be terminated.

(2)   If, in accordance with subitem 73(2), the Registrar accepts a child support agreement on or after 1 July 2008 under the Assessment Act as in force immediately before that day, the Registrar must:
   (a)   review the agreement; and
   (b)   determine in writing whether the agreement is:
   (i)   to be taken to be a binding child support agreement; or
   (ii)   to be terminated.

(3)   After the Registrar makes a determination under subitem (1) or (2), the Registrar must serve notice in writing of the determination on each of the parties to the agreement.

(4)   The notice must include, or be accompanied by, a statement to the effect:
   (a)   that the party may, subject to the Registration and Collection Act, object to the decision (the original decision); and
   (b)   that if the party is aggrieved by a later decision on an objection to the original decision (no matter who lodges the objection), the party may apply, subject to that Act, to the SSAT for review of the later decision.

(5)   A contravention of subitem (4) in relation to a decision does not affect the validity of the decision.


75  Effect of determinations
Effect of determinations
(1)   If the Registrar makes a determination under subparagraph 74(1)(b)(i) or (2)(b)(i), then, for the purposes of the Assessment Act and the Registration and Collection Act, at the time specified in subitem (4) (if the agreement has not been previously terminated):
   (a)   the agreement is taken to be a binding child support agreement; and
   (b)   the amendments made by this Schedule do not affect the continuity of any assessment, in force at that time, of the annual rate of child support that is payable under the agreement.

(2)   If the Registrar makes a determination under subparagraph 74(1)(b)(ii) or (2)(b)(ii), then, for the purposes of the Assessment Act and the Registration and Collection Act, for any day in a child support period that is on or after the time specified in subitem (4) (if the agreement has not been previously terminated), the agreement is terminated by force of this item.

(3)   Subitems (1) and (2) do not affect the operation of provisions in an agreement that do not have effect for the purposes of the Assessment Act or the Registration and Collection Act.

When determinations take effect
(4)   For the purposes of subitems (1) and (2), the following time is specified:
   (a)   if the determination is made under subparagraph 74(1)(b)(i)the time that item 5 of this Schedule commences;
   (b)   otherwisethe latest of the following times:
   (i)   if the decision of the Registrar to make the determination becomes finalat the time when that decision becomes final;
   (ii)   if a decision of the SSAT relating to the Registrars determination becomes finalat the time when that decision becomes final (within the meaning of subsection 110W(1) of the Registration and Collection Act);
   (iii)   if neither subparagraph (i) nor (ii) appliesat the time when a decision of a court relating to the Registrars determination becomes final (within the meaning of subsection 110W(2) or (3) of that Act);
   (iv)   at the time when the agreement takes effect.

(5)   For the purposes of subparagraph (4)(b)(i), a decision of the Registrar becomes final at the end of the period within which an application could have been made to the SSAT under section 80 of the Registration and Collection Act (as it applies because of subitem 74(6) of this Schedule).

Terminating deemed binding child support agreements

(6)   In addition to section 80D of the Assessment Act (as inserted by this Schedule), an agreement that is taken to be a binding child support agreement under subitem (1) may be terminated by another agreement that:
   (a)   is in writing; and
   (b)   is signed by the parties to the original agreement.
Thanks for that Mike.  In all my reading I can't determine the basis on which CSA determined whether an agreement was binding or not - there does not appear to be any criteria for the decision which makes me think that all agreements were simply transferred as Binding agreements?  That's point/question one.  Secondly, 74 (4) stipulates that a party can object to the decision.  What are/were the grounds for objection - I can't find any reference to potential grounds.
The reason I am investigating this is that it interests me that a limited agreement can be terminated once it is three years old or when the agreement varies from the notional assessment by more than 15%.  My notional assessment varies by more than 100% - so if I can raise sufficient doubt regarding the decision to make my agreement binding, it may assist my cause to have the agreement set aside.  My solicitor did not sight my agreement and provided no advice around it.  In the circumstances outlined in the document I posted I believe it raises doubt on whether the outcome would have been the same.
Frankappaz,
                 with very little doubt the determination would have been based upon a contradiction of the object of the legislation as set out in section 4 (this states that the object of the act is to ensure that parents provide the proper financial support for their child or children). That is that as the CSA would be collecting or transferring more, and thus reducing the amount of FTB (i.e. increasing the hidden taxation component). As for objecting the time-frame for objecting is well past (basically 28 days from the date of notification, if I recall correctly).

You can object on any grounds, however rarely do objections have any satisfactory outcome as the CSA appear, like most other Government departments, to rely upon bureaucracy to all but enforce their unfair decisions. Also by not specifying grounds makes it that much harder for people to actually object and for objections to be discounted.
Without an objection within the time-frame then recourse to SSAT is not possible. Thus the path to a court potentially making a fair decision is not available. I believe that you would simply be throwing money away to try to right the obvious wrong decision with regard to your agreement being changed to a binding agreement.





Mike - I had a face to face meeting with an objections employee the other day and he actually said it was good that the legislation was being tested via the appeals process.

In the case above I think frankaapaz would be able to apply to a court under s.110.
Fairgo said
Mike - I had a face to face meeting with an objections employee the other day and he actually said it was good that the legislation was being tested via the appeals process.

Good for whom?

Good for those who do not have the faith to enter into the process?
Good for those who enter only to have a valid objection dismissed and then give up?
Good for those who take it further who then get one of SSAT's decisions that is lacking and then doesn't take it to court?
Good for the brave person who takes it to court and gets a just decision at great personal expense?
Good for the employee kept in a job because of the artificial/useless job created and maintained by a system that promotes and rewards our tax payer monies being spent in such a way?

I think I now understand I see it's good that our taxpayer dollars keep such incompetence out of the the private sector where such reliance upon untested implementations would result in losses, hardships and deaths here there and everywhere. :)
Mike - You are right, there are more cost effective and less painful ways of testing legislation. However perhaps utilising their appeals processes is the most effective mechanism of protest we have to show just how bad for Australia C$A's legislation is.

If all C$A payers respond to the Minister's order, to get all income estimates up to date, by going through the appeals process to the fullest extent, then further change will occur as the result as the order would have costed more than it collected.

People like me were criticised some time ago for advocating that we go through the appeals process every time we believe the decision was unfair or incorrect. We were labelled as those that tie C$A up in paper work.

I can clearly see how the appeals etc… have influenced further legislative refinements like those that are proposed for July 2010.

I have given examples of how FAO works much more efficiently than C$A when undertaking similar tasks. The writing is on the wall that further changes to C$A will occur, especially if we have a change of Government, so let's keep the pressure up by advocating that clients only correspond with C$A in writing and use the appeals process to the max.

Now that C$A have openly come out stating that all employees have COLLECTION ingrained into their work ethic and will receive a .5% pay bonus if they succeed in increasing collection, we can easily show just how these initiatives are causing more conflict between parents and are not in the best interests of the children. We can also show just how inefficient the ineffective their appeals process is when compared to other agencies.

With the next lot of legislative refinements coming up we should be engaging on a campaign to inform all people to abandon C$A's care percentage calculation method in favour of Family Assistance.

Frankappaz - sorry for hijacking your thread for my rant but I believe if you have it in you to go through the appeals process, then go for it as you might get a positive result.
My view is that if you think CSA has wronged you with a decision you should test it through the appeals process. You may not win, but you will contribute to turning the spotlight onto this unaccountable organisation.
If you build and steer your case on honesty, integrity and smarts, you will win.

Sounds easy, but a lot of time and effort will be afforded.  First and foremost, you have to know you have the correct interest in mind.  And understand the possible fallouts, of which there will be many.      The kids.

Let them know you will explain it to them when they are 18 if they question your actions or motives. Don't sway.  Best of luck.
Since I posted this post I have done a significant amount of research into judgements around this issue (in the Federal Magistrates Court).  To summarise.
Although Section 136 allows for the setting aside of an agreement where fraud or undue influence have occurred, it appears that most judgements circle around exceptional circumstances and resulting hardship - to either the payee or child(ren).
There are several judgements that debate binding and limited agreements and the fact that the law has changed since the agreement has been made - and it certainly seems to influence the magistrates - one using this fact to feature as a part of the exceptional circumstances.  There seem to be several definitions of exceptional circumstances - two or more events, an unusual feature of the case, the fact that the legal framework has changed, etc.  Hardship seems to have been defined by the full court as any diminishment in financial circumstances.
What has also interested me is the consideration of the objects of the act - something that all magistrates seem to do regardless of the fact that section 136 does not stipulate this.  It seems to feature as a part of exceptional circumstances - ie one of the objects is that the diminishment of living standards should be equally shared by both parties - where this is not the case the magistrate seems to consider it as a part of a range of other considerations.
I may be wrong but I think I can cover both exceptional and hardship.
I must confess I'm slightly confused by some of the posts here.  Am I right in understanding that there is a consensus view that I might benefit by also challenging the CSA on it's decision to determine that my agreement is binding??
If so, what would be my case??
As I understand it (possibly wrongly), agreements either passed over as binding (in which case the legal construct is one agreement ending 31 June 2008, another starting 1 July 2008) or were terminated - I don't think any agreements transferred as limited.
My agreement did say it was binding - so I would think it's difficult to argue that.  I think I could however argue that the second agreement should have been adjusted to have Part A Periodic payments equivalent to the new assessment - as the original agreement was constructed that way.

However, does the Registrar, under the legislation, have the power to adjust an agreement; or does he only have the power to accept as binding or terminate??

Interesting post - thanks for your contributions - looking forward to hearing your thoughts!  
 
frankappaz said
There seem to be several definitions of exceptional circumstances - two or more events, an unusual feature of the case, the fact that the legal framework has changed, etc.  Hardship seems to have been defined by the full court as any diminishment in financial circumstances.
This is interesting info - are you able to post a link to where you found this?

frankappaz said
What has also interested me is the consideration of the objects of the act - something that all magistrates seem to do regardless of the fact that section 136 does not stipulate this.  It seems to feature as a part of exceptional circumstances - ie one of the objects is that the diminishment of living standards should be equally shared by both parties - where this is not the case the magistrate seems to consider it as a part of a range of other considerations.
This is also an interesting piece of information…
Please see the attached files.  They are judgements from the FMC site - have highlighted relevant paragraphs.  I do have others but these are a good start.



Attachment
Daley/Daley Judgement



Attachment
Leonard/Leonard Judgement
Try reading this section:

98K Registrar may initiate a determination under this Part
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