Child support during COVID-19 – Findings from recent Family Court case

For many of us, the COVID-19 pandemic has created significant financial difficulties. Whether it be being in receipt of job keeper or seeker payments or the closure of international trade routes, it has had and will continue to have a lasting impact.

For many of our clients, their income and / or parenting arrangements have altered due to the pandemic which therefore affects their ability to pay child support. Particular issues may arise where parents have a Binding Child Support Agreement (“BCSA”) in place which have strict criteria surrounding termination.

To successfully set aside a BCSA, the Court must be satisfied that:

  1. there are exceptional circumstances that relate to a child or party to the BCSA;
  2. the exceptional circumstances arose after the BCSA was made; and
  3. the applicant or child will suffer hardship if the BCSA is not set aside.

I have recently been placed on job keeper payments, can I terminate my BCSA?

The Family Court recently considered this question in Martyn and Martyn [2020] FamCA 526 (“Martyn and Martyn”). The relevant factors are as follows:

  1. The parties’ entered into the BCSA in 2012 which provided the Father pay to the Mother the sum of $1,350 per month.
  2. In 2016, the Father issued proceedings in the Family Court seeking his BCSA be set aside on the basis that his business was suffering financial hardship. The Husband’s business was in financial difficulty and had accrued substantial business debts due to the Father being unable to meet his expenses. The Court ordered that the Father stop paying the Mother the rate stipulated in the BCSA and began paying a reduced amount of $580 per month.
  3. In January 2020, the Father again issued proceedings in the Family Court seeking the BCSA be set aside due the existence of exceptional circumstances.
  4. The Father submitted the following to the Court:
    (a) his business had been financially difficulty since 2016;
    (b) international commerce had been halted due to the global pandemic;
    (c) the usual sales made by the Father’s company had been reduced by 90% due to COVID-19;
    (d) 100 of his employees had been stood down;
    (e) the Father and his current partner were receiving job keeper payments; and
    (f) the Father submitted that unless interstate and international boarders reopened by September 2020, he would be required to declare bankruptcy.
  5. The Court, when taking the Father’s submissions into consideration, found that the impact of COVID-19 upon the father’s business and financial circumstances justified setting aside the BCSA rather than staying or suspending the BCSA.
  6. The Court’s decision importantly considered the impact of the pandemic on global markets was not yet known and that the Father’s business may not recover.

How we can help

A loss of reduction or income due to COVID-19 and whether this constitutes exceptional circumstances will be dependent on the facts and circumstances of each case.

If you have lost your job, your income has reduced or your business is suffering financial hardship, it is important you seek legal advice regarding your BCSA and in particular your obligation to continue to pay child support. For more information or guidance, please do not hesitate to contact us.