Binding Child Support Agreement set aside as the financial impact of COVID-19 gives rise to a finding of exceptional circumstances

The financial effects of COVID-19 are being felt far and wide in our community.  Many people are finding they are no longer able to sustain financial commitments they made prior to the pandemic.

The Court has recently been required to consider whether a Father’s obligation pursuant to a Binding Child Support Agreement should be set aside as a result of the significant impact the global pandemic has had on his business and in turn his income.

Martyn & Martyn [2020] FamCA 526

In the recent decision in Martyn & Martyn [2020] FamCA 526 the Court was required to consider whether a Binding Child Support Agreement (“the Agreement”), entered into in 2012, should be set aside as a result of the detrimental impact that COVID-19 had had on the income of the Father.

The Father operated a business supplying product to international companies. The total sales of his business had reduced by 90% as a result of the COVID-19 pandemic.  The Father submitted that both he and his current partner were now reliant on Job Keeper and the business they operated had laid off 100 casual workers. The international and domestic border restrictions the downturn and the Father anticipated an insolvency event by September 2020.

The Mother opposed the Agreement being set aside and argued that the Agreement should be suspended to allow the impacts of COVID-19 to pass, rather than terminating the Agreement.

Binding Child Support Agreements are not easily set aside or departed from without agreement.  In order to set aside a Binding Child Support Agreement, the Court is required to be satisfied of the following three matters:

  1. That there are exceptional circumstances which relate to a party to the agreement or a child in respect of whom the agreement is made;

  2. That those exceptional circumstances arose after the agreement was made; and

  3. That the applicant or the child will suffer hardship if the agreement is not set aside.


In this matter the Court found that:

  1. The Father would be unable to pay child support as required by the Agreement due to his significantly reduced income;

  2. The COVID-19 pandemic was an exceptional circumstance; and

  3. If the Court did not set the Agreement aside the Father would suffer hardship.


The Court declined to exercise its discretion to suspend the Agreement rather than set it aside as was sought by the Mother.  In doing so the Court said that there was an “understandable absence of evidence as to the likely duration and impact of the COVID-19 pandemic on international commence”.

This decision highlights the devastating financial effects that the COVID-19 related restrictions have had on individuals financial circumstances and in turn the effect this has and will continue to have on the ability of people to meet their financial obligations, including payment of child support.

Navigating Leases and the COVID-19 Outbreak – Part 8

On 20 August 2020, the Victorian Treasurer announced an extension to the existing rent relief scheme and some further measures to assist landlords and tenants.

The details of the existing rent relief scheme are housed in the COVID-19 Omnibus (Emergency Measures) Act 2020 (“the Omnibus Act”) and the COVID-19 Omnibus (Emergency Measures) (Commercial Leases and Licences) Regulations 2020 (“the Regulations”).

Among other things, the Omnibus Act and the Regulations sought to implement temporary measures to apply to tenants and landlords under certain eligible leases to mitigate the effect of measures taken in response to the COVID-19 pandemic, and to implement mechanisms to resolve disputes concerning eligible leases.

Amendments to the Omnibus Act were not unexpected, as the Omnibus Act automatically expires on 29 September 2020.

The proposed extension and amendment to the rent relief scheme are contained in the COVID19 Commercial and Residential Tenancies Legislation Amendment (Extension) Bill 2020 (“the Bill”) which was debated in the Victorian parliament last week.

Should the Bill pass, the Omnibus Act will be amended in the following ways:

  1. The operation of the commercial tenancy provisions of the Omnibus Act will be extended from 29 September 2020 to 26 April 2021.
    It is unclear at this stage whether the prohibitions on terminations extend to both termination for non-payment of rent and termination for not trading.

  2. To allow the definition of ‘eligible lease‘ under section 13 of the Omnibus Act to be prescribed by the Regulations.

  3. The Omnibus Act currently defines an ‘eligible lease’ to be a lease under which the tenant is an SME tenant and an employer who qualifies for and is a participant in the JobKeeper scheme.
    This amendment may address issues that have arisen around the requirement that a tenant be an employer, which has created difficulties for tenants who are sole traders and tenants who operate a service company, and the requirement that the tenant itself be a participant in JobKeeper, which can cause problems for tenants who use a service company.
    The Bill also allows the making of binding orders directing landlords under eligible leases to give or agree to give specified rent relief to tenants under eligible leases and conferring jurisdiction on VCAT to enforce such orders.


The Bill also seeks to make amendments to the Residential Tenancies Act 1997 (“the RT Act”), including:

  • The operation of Part 16 (COVID-19 temporary measures) is extended until:

    • 28 March 2021; or

    • if a later date is fixed by Governor in Council (being a date after 28 March 2021 and before 27 April 2021), that date.




Part 16 of the RT Act outlines the temporary provisions to apply for tenancy agreements, residency rights in rooming houses, residency rights in caravan parks, site agreements and Specialist Disability Accommodation (SDA) residency agreements during the COVID-19 pandemic.

We are closely monitoring these changes and will provide a further update once the amended Regulations are enacted.

Wisewould Mahony will continue to provide assistance to both our landlord and tenant clients with respect to lease negotiations.  If you require our assistance with these negotiations, or to prepare a Deed of Variation of Lease, or to refer a dispute to mediation if you are unable to reach an agreement, or advice in relation to the recent changes to the Acts and Legislation, please do not hesitate to contact any member of our leasing team.

Navigating Leases and the COVID-19 Outbreak – Part 7

On 20 August 2020, the Victorian Treasurer announced an extension to the existing rent relief scheme and some further measures to assist landlords and tenants.

The details of the existing rent relief scheme are housed in the COVID-19 Omnibus (Emergency Measures) Act 2020 (“the Omnibus Act”) and the COVID-19 Omnibus (Emergency Measures) (Commercial Leases and Licences) Regulations 2020 (“the Regulations”).

Among other things, the Omnibus Act and the Regulations sought to implement temporary measures to apply to tenants and landlords under certain eligible leases to mitigate the effect of measures taken in response to the COVID-19 pandemic, and to implement mechanisms to resolve disputes concerning eligible leases.

Amendments to the Omnibus Act were not unexpected, as the Omnibus Act automatically expires on 29 September 2020.

The proposed extension and amendment to the rent relief scheme are contained in the COVID19 Commercial and Residential Tenancies Legislation Amendment (Extension) Bill 2020 (“the Bill”) which was debated in the Victorian parliament last week.

Should the Bill pass, the Omnibus Act will be amended in the following ways:

  1. The operation of the commercial tenancy provisions of the Omnibus Act will be extended from 29 September 2020 to 26 April 2021.It is unclear at this stage whether the prohibitions on terminations extend to both termination for non-payment of rent and termination for not trading.

  2. To allow the definition of ‘eligible lease‘ under section 13 of the Omnibus Act to be prescribed by the Regulations.

  3. The Omnibus Act currently defines an ‘eligible lease’ to be a lease under which the tenant is an SME tenant and an employer who qualifies for and is a participant in the JobKeeper scheme.This amendment may address issues that have arisen around the requirement that a tenant be an employer, which has created difficulties for tenants who are sole traders and tenants who operate a service company, and the requirement that the tenant itself be a participant in JobKeeper, which can cause problems for tenants who use a service company.The Bill also allows the making of binding orders directing landlords under eligible leases to give or agree to give specified rent relief to tenants under eligible leases and conferring jurisdiction on VCAT to enforce such orders.


The Bill also seeks to make amendments to the Residential Tenancies Act 1997 (“the RT Act”), including:

  1. The operation of Part 16 (COVID-19 temporary measures) is extended until:

    • 28 March 2021; or

    • if a later date is fixed by Governor in Council (being a date after 28 March 2021 and before 27 April 2021), that date.




Part 16 of the RT Act outlines the temporary provisions to apply for tenancy agreements, residency rights in rooming houses, residency rights in caravan parks, site agreements and Specialist Disability Accommodation (SDA) residency agreements during the COVID-19 pandemic.

We are closely monitoring these changes and will provide a further update once the amended Regulations are enacted.

Wisewould Mahony will continue to provide assistance to both our landlord and tenant clients with respect to lease negotiations.  If you require our assistance with these negotiations, or to prepare a Deed of Variation of Lease, or to refer a dispute to mediation if you are unable to reach an agreement, or advice in relation to the recent changes to the Acts and Legislation, please do not hesitate to contact any member of our leasing team.

Employment Law Update: Stage 4 Restrictions

With Stage 4 restrictions now in effect, businesses across a range of industries will be required to close or reduce operations throughout Metropolitan Melbourne for at least six weeks. These restrictions will no doubt have further significant impact on businesses and employees who are already facing severe financial hardship as a result of the current COVID climate. In this update, we provide a breakdown of the changes imposed by the Victorian Government and the obligations of employers and employees to ensure compliance. We also provide an overview of options available for businesses and individuals who are impacted by the recent restrictions.

Closed and Restricted Work Premises and Activities

On-site operations across a number of industries will be required to shut down, including contact-based retail trade, some manufacturing, administration services and some wholesale trade, unless otherwise permitted. Exceptions may include retail businesses that provide ‘click and collect’ or contactless services such as dry cleaning.

Some industries may be permitted to operate in a restricted capacity or under industry-specific obligations including meeting the ‘Universal’ or ‘enhanced High-Risk’ COVID Safe Plan obligations.

Businesses have until 11:59PM on 7 August 2020 to enact the required ‘COVIDSafe plan’.

Permitted Work Premises and Activities

Some businesses may still be permitted to operate on-site during Stage 4 restrictions, however in very limited and strict circumstances.

Apart from those involved in frontline response, this may include ancillary and support businesses required on-site to ensure closed or restricted businesses can continue operating, services connected to animal welfare and essential services such as supermarkets.

The complete overview of the effected industries can be accessed here.

Permitted Worker Permit

Businesses permitted to operate on-site are responsible for providing each individual employee, contractor and/or sub-contractor (including sole traders) an individual Permitted Worker Permit (‘PWP’) if workplace attendance is absolutely necessary and the employee cannot work from home. A PWP is required even in circumstances where work is irregular (such as for some casual employees) or if a shift is unexpectedly picked up last minute.

Eligibility for worker permit

Employers can issue a worker permit to their employee if:

  • the organisation is on the list of permitted activities;

  • the employee is working in an approved category for on-site work; and

  • the employee cannot work from home.


An employee must not use a worker permit, even if they have been issued one, if:

  • they test positive to coronavirus (COVID-19) and are required to self-isolate; and

  • they are a close contact of someone who has tested positive.


The official PWP form can be accessed here.

It is worth noting that a PWP is not required in very limited circumstances including if an employee holds official employer-issued photo identification (usually held only by law enforcement, emergency services workers or health workers).

Penalties for non-compliance

Penalties of up to $19,826 (for individuals) and $99,132 (for businesses) may apply if an employer operates despite not being a Permitted Work Premises.

In addition, there will be on-the-spot fines of up to $1,652 (for individuals) and $9,913 (for businesses) for anyone who breaches the Permitted Worker scheme requirements, including employers and employee who do not carry their worker permit when travelling to and from work.

Business Support Fund – Expansion Grants

In an effort to support effected businesses, the Victoria Government is offering a one-off $10,000 grant to effected ‘employing businesses’ in Melbourne and Mitchell Shire and $5,000 to effected ‘employing businesses’ in regional Victoria.

Eligible businesses should apply for the grant by 14 September 2020, if they haven’t done so already.

Coronavirus (COVID-19) Worker Support Payment

The Victorian Government is incentivising self-isolation and quarantining by offering a one-off $1,500 payment to eligible Victorian workers who are directed to stay home due to a positive COVID-19 test result or as a result of coming into close contact with someone with the virus.

Amongst other criteria, eligible workers (whether permanent, casual, part-time, fixed term or self-employed) must live in Victoria, have exhausted all leave entitlements from work and do not receive JobKeeper payments or other Australian Government income support.

Pandemic Leave Disaster Payment

Alternatively (if the COVID-19 Worker Support Payment has not been claimed), eligible Victorians may now receive $1,500 from the Federal Government if they do not have any income (including sick leave entitlements) because they must quarantine at home or self-isolate.

This payment may be claimed each and every time the applicant meets all the required criteria rather than just once.

JobKeeper, Your Obligations, Rights & Entitlements

Now more than ever, an increased number of employers will inevitably have to explore every possible avenue to cope with the impact of Stage 4 restrictions. For the first time, this may include applying for JobKeeper, considering standing-down employees or in the worst-case scenario, making positions redundant.

Consequently, we implore both employers and employees to familiarise themselves with their respective legal obligations, rights and entitlements to avoid preventable legal action.

Please refer to our previous Employment Law update for more details.

If you are an employee or an employer that is affected in any way by the COVID-19 ramifications and would like to discuss your legal rights/obligations, please do not hesitate to contact our employment law team.

Navigating Leases and the COVID-19 Outbreak – Part 6

Victoria has now passed the COVID-19 Omnibus (Emergency Measures) (Commercial Leases and Licences) Regulations 2020 (VIC) (“Regulations”).

The Regulations broadly follow the principles of the Mandatory Code of Conduct announced by the Federal Government in April 2020 with a number of significant exceptions.

The exceptions include that the amount of rent relief offered by landlords to tenants does not need to be directly proportionate to the reduction in the tenant’s turnover. Also, a formal rent relief offer process must be followed.

Below is a summary of the Regulations.

Objectives

The objectives of the Regulations are:

  • to implement temporary measures to apply to tenants and landlords under certain eligible leases to mitigate the effect of measures taken in response to the COVID-19 pandemic; and

  • to implement mechanisms to resolve disputes concerning eligible leases.


Relevant Period

The Regulations apply retrospectively, commencing on 29 March 2020, and concluding on 29 September 2020 (they operate for a 6 month period).

Eligible Leases

The Regulations only apply to “eligible leases”.

An eligible lease is a lease under which the tenant is a small-medium sized business, has an annual turnover of up to $50 million and qualifies for and participates in the JobKeeper program.

A formal rent relief offer process must be followed in accordance with the Regulations.

Rent Relief is defined in the Regulations to mean any form of relief provided to a tenant in respect of the obligation under an eligible lease to pay rent, including a waiver, reduction, remission or deferral of rent.

Rent Relief Request by Tenant to Landlord

In order to have the benefit of the protection of the Regulations:

  • The tenant must make a written request to the landlord for rent relief that complies with the requirements of the Regulations. This includes ensuring the request contains a statement by the tenant that it is an eligible lease that is not excluded by the corporate group provisions of the legislation and evidence that the tenant is an SME that qualifies for and participates in the JobKeeper scheme;

  • The tenant follows the negotiation procedure set out in the Regulations, which may include participating in a compulsory mediation; and

  • If an agreement regarding rent relief has been reached, the tenant complies with that agreement. The tenant has the right to make a further request for rent relief, even after an agreement has been reached, if the tenant’s financial circumstances have changed since the agreement was reached.


Landlord’s Offer under the Regulations

  1. On receipt of the tenant’s rent relief request, the landlord has 14 days (or a different timeframe by agreement) to make an offer for rent relief. The terms of the landlord’s offer are governed by the Regulations as follows:

  2. A landlord’s offer of rent relief must be based on all the circumstances of the eligible lease and:

  3. relate to up to 100% of the rent payable under the eligible lease during the relevant period; and

  4. provide that no less than 50% of the rent relief offered by the landlord must be in the form of a waiver of rentunless a landlord and a tenant otherwise agree in writing; and

  5. apply to the relevant period; and

  6. take into account –

    1. the reduction in a tenant’s turnover associated with the premises during the relevant period; and

    2. any waiver given pursuant to the regulations; and

    3. whether a failure to offer sufficient rent relief would compromise a tenant’s capacity to fulfil the tenant’s ongoing obligations under the eligible lease, including the payment of rent; and

    4. a landlord’s financial ability to offer rent relief, including any relief provided to a landlord by any of its lenders as a response to the COVID-19 pandemic; and

    5. any reduction to any outgoings charged, imposed or levied in relation to the premises.




Does a Tenant need to provide financial material to its Landlord?

It should be noted that a landlord’s offer of rent relief must be based on “all the circumstances” of the eligible lease. Such a construction is obviously broad and allows some latitude in terms of the landlord’s offer. The Regulations are unfortunately unclear as to what financial information a tenant is required to provide to their landlord.

The Small Business Commission has foreshadowed guidelines on the financial information to be provided. In the meantime, given the landlord’s discretion in terms of any rent relief offer, in our view it would be important for a tenant to provide at least some financial material for consideration by their landlord. It would be difficult for a landlord to properly consider the tenant’s ability to pay different prospective rents without at least some financial information.

Landlord’s Financial Position

In determining the rent relief to be offered by a landlord, the Regulations entitle the landlord to take into account its own financial ability to offer rent relief, including any relief provided to the landlord by any of its lenders, and any reduction in outgoings levied (including land tax waivers and the like).

Whilst these provisions could be interpreted to entitle a landlord to reduce any offer based on its own precarious financial position, the alternative interpretation is that these provisions are designed to ensure that any financial allowances received by a landlord are passed on to their tenant.

Prohibition on rent increases

A landlord under an eligible lease must not increase the rent under the lease between 29 March and 29 September 2020, unless otherwise agreed or the relevant rent is based on turnover.

Next Steps

Any agreements for rent relief must be confirmed in writing by a variation to the lease or a side agreement. We again recommend that the landlord and tenant enter into a deed of variation of lease to formalise the agreement.

If the landlord and tenant cannot reach an agreement, either party can refer the matter for mediation at the Small Business Commission for determination. If the mediation fails to resolve the dispute, the parties can elect to go either to VCAT or Court to have disputes under the Regulations determined. If the parties go to VCAT, each party would bear its own legal costs.

Wisewould Mahony will continue to provide assistance to both our landlord and tenant clients with respect to lease negotiations.  If you require our assistance with these negotiations, or to prepare a Deed of Variation of Lease, or to refer a dispute to mediation if you are unable to reach an agreement, please do not hesitate to contact any member of our leasing team.

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