One way of finalising child support issues between parties is to complete what is known as a Binding Child Support Agreement (‘BCSA’). BCSAs provide certainty of outcome – both payer and payee know their rights and obligations.
A BCSA is a written Agreement about child support that must be signed and dated by the parties to the agreement. It is a legal requirement that each party obtain independent legal advice from a lawyer about the effect of the agreement, and the advantages and disadvantages of entering into the BCSA, prior to signing. A BCSA can last until the child turns 18 years old and can provide for child support to be paid at a rate that is more, or less, than the administrative assessment set by the Child Support Agency.
Once a BCSA is entered into, it is very difficult to set aside.
A BCSA was recently ‘tested’ in the case of Martyn & Martyn. This was a 2020 decision of the Family Court that involved Mr. Martyn (the father) applying to set aside a BCSA which had been entered into in 2012. The BCSA involved the father paying the mother $1,350 per month (increasing by 2% per year from January 2014) in respect of the 12-year-old child of their relationship.
The main argument advanced by the father, was that his main source of income (an exporting business which had suffered a decline of 90% due to the pandemic) had effectively evaporated.
In order to have the BCSA set aside, the father needed to persuade the Court that:
- There were exceptional circumstances which related to a party to the BCSA or a child in respect of whom the BCSA was made;
- The exceptional circumstances arose after the BCSA was made; and
- The payer (or the child) would suffer hardship if the BCSA were not set aside.
In this case, the father was able to persuade the Court that these three requirements had been met. In addition to the pandemic-based decline in activity noted above, the father:
- Had a tax debt of nearly $450,000.
- His individual tax returns between 2012 and 2019 showed a decline in taxable income from almost $175,000 to just over $41,000.
In this case, the BCSA was set aside.
The father had reduced the amount he paid to the mother over the years, so that he had arrears of child support under the BCSA of just under $32,000. He also applied to the Court to have the arrears extinguished. On this point, however, the Court declined to make the Order. It stated that the outstanding amounts had been incurred before the ‘exceptional circumstances’ of the pandemic, and that the father should not be relieved from paying them to the mother.
Child Support is a complicated area of Family Law and BCSAs are notoriously difficult to set aside. This article is intended as general information only. If you need specific advice about your child support obligations, please do not hesitate to contact Tonkin Legal Group on (03) 9435 9044 to arrange an appointment with one of our experienced Family Lawyers.