TWO men have become the first same-sex couple in NSW to be declared the parents of a baby that was born through a surrogate, with a court ruling it was in the child's "best interests".

In transferring the guardianship of the child to the two men, a Supreme Court judge was satisfied the pregnancy wasn't the result of an illegal commercial agreement and that the woman who carried the baby wasn't paid to do so.

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The child, born in April, 2010, now has the two Sydney men as parents, with the birth mother agreeing to no longer be recognised on the birth certificate.

The judgment was handed down in the Supreme Court last month, with Justice Paul Brereton noting it was "the first application under the Act of which I am aware in which in the intended parents are a same sex couple".

The court heard the three had only an "oral arrangement" for the surrogacy but an affidavit from the birth mother was tendered, indicating she "consents" to the two men being declared the parents.

The Surrogacy Act, brought into effect last year, imposes penalties of up to two years jail or a $110,000 fine for people found to have entered into a commercial surrogacy arrangement where a woman is paid to carry a child for a couple who cannot sustain their own pregnancy.

Altruistic surrogacy, when a woman isn't paid for the pregnancy except for medical expenses, is rare but permitted in NSW - with the new legislation intended to make it easier for parentage to be transferred.

Same-sex couples and singles are banned from using altruistic surrogacy in Western and South Australia but it's believed only one in 20 couples who want to use a surrogate do so in Australia, with most having babies born through a foreign surrogate.

"I am satisfied that, having regard to the surrogacy arrangement, and the care arrangements for the child since birth, the making of the parentage order would be in the best interests of the child," Justice Brereton said.

"It would be appropriate to make a parentage order."

The court was told that - as the trio had entered into a "pre-commencement surrogacy arr-angement" - they didn't need to seek legal advice before the pregnancy began.

Sam Everingham, president of Surrogacy Australia, hailed the decision as a "landmark" and said the couple were "very lucky" to "receive the legal recognition and protection (of a family)".

"Most people who use a surrogate go their whole lives without being legal parents. It's part of the torment they go through, as most people cannot find a surrogate in Australia and have to go overseas," he said.

Originally published as Child now has two dads, no mum