We have written previously about Binding Child Support (“BCS”) Agreements. As the name suggests, once parties enter into a BCS Agreement, it is binding on them for the length of the agreement.
The only way to terminate a BCS Agreement is to obtain a court order setting aside the agreement. However, a court will only set aside a BCS Agreement if it is satisfied of the following three factors:
- That there are exceptional circumstances that relate to a party to the BCS Agreement or the child in respect of whom the BCS Agreement was made;
- That those exceptional circumstances must have arisen after the BCS Agreement was made; and
- That the person applying for the orders to set aside, or the child, will suffer hardship if the BCS Agreement is not set aside.
This raises the question of what counts as an “exceptional circumstance”?
Can COVID-19 count as an “exceptional circumstance”?
In the recent judgment of Martyn & Martyn  FamCA 526, the Family Court Deputy Chief Justice was asked to decide whether a father could set aside a BCS Agreement which required him to pay the mother $1,350 per month. The father argued that he could no longer afford to pay the child support due to the impacts of COVID-19 on his business.
After considering the facts and circumstances, including evidence that the father’s business’ sales had fallen by 90% due to COVID-19, the Court decided that:
- the COVID-19 pandemic did amount to “exceptional circumstances”; and
- the father would suffer hardship if the BCS Agreement was not set aside.
The Court also considered whether it should merely suspend, rather than set aside, the BCS Agreement. The Court held that “there is an understandable absence of evidence as to the likely duration and impact of the COVID-19 pandemic on international commerce”, and as such decided that suspension of the BCS Agreement was not appropriate.
The Court seems to have accepted that the financial impacts of COVID-19 on businesses can constitute an “exceptional circumstance” for the purposes of setting aside BCS Agreements.
However, it is important to remember that the Court did not make a blanket statement that all impacts of COVID-19 would count as exceptional circumstances. Rather, the Court considered the specific level of impact that COVID-19 had on the business, which was a reduction in sales by 90%.
Therefore, parties seeking to set aside a BCS Agreement will still need to convince the court that their unique hardship constitutes “exceptional circumstances”.
If you have further questions please contact us at firstname.lastname@example.org.
This is not legal advice.