Covid-19 and binding child support agreements

What is a binding child support agreement?

A Binding Child Support Agreement is a written agreement between parents or carers as to the payment of child support for a child. Both parties are required to obtain legal advice before entering into a binding child support agreement.

When can a binding child support agreement be terminated?

Typically, a binding child support agreement will continue to operate until the date specified in the agreement. However, a binding child support agreement can be terminated in the following limited circumstances:

1. by entering into a subsequent binding child support agreement that includes a provision to the effect that the previous agreement is terminated
2. by a binding child support agreement drawn specifically to terminate the previous child support agreement
3. by a court order setting aside the child support agreement
4. if a parent entitled to receive child support ceases to be an eligible carer

A person will cease to be an eligible carer if their care of the child falls below 35%.

A binding child support agreement will be automatically terminated if the parent or carer’s care level remains below 35% for 28 days, unless there is a contrary clause in the binding child support agreement.

When should a court application be made?

In some circumstances, a court application can be made to set aside (i.e. terminate) a binding child support agreement.

A parent or carer to a binding child support agreement can make an application to the family law courts to set aside the agreement if the original agreement was improperly obtained by fraud, duress or failure to disclose relevant material. This will depend on the specific circumstances surrounding the making of the agreement.

Parties can also apply to set a binding child support agreement aside when ‘exceptional circumstances’ arise after the making of the agreement and either the party or child will suffer hardship if the agreement is not set aside.

Would COVID-19 be considered an “exceptional circumstance”?

The circumstances must be out of the ordinary and not foreseen or envisaged by the parties when the binding child support agreement was entered into. A period of unemployment, whilst causing hardship to a party, is not an ‘exceptional circumstance’ as a period of unemployment can be expected to occur at some point throughout a working adult’s life.

However, in a recent decision of Martyn & Martyn [2020] FamCA 526, the Family Court of Australia accepted that the economic effects of COVID-19 can amount to ‘exceptional circumstances’. In this case the financial impact of COVID-19 restrictions were so significant that the reduction in sales for the father’s business were 90%. The court set aside the binding child support agreement.