Developing strategies to deal with farm debt mediation
By Matt Dombrovski – Solicitor
10 August 2016
Many people have heard the horror stories of farmers being evicted from their property. However, here in New South Wales, there are certain protections in place which prevent a mortgagee from simply selling up farming property – the most notable of which is the Farm Debt Mediation Act 1994 (“the Act”).
Under the Act, before taking any action against a farmer concerning a farm debt, a mortgagee must first offer the farmer the opportunity to mediate the dispute.
Some key things to know about Farm Debt Mediation:-
Mediation is a completely voluntary process. You don’t have to participate in mediation with your Mortgagee, but if you choose not to, then you’ll lose the protections afforded to you by the Act.
A farmer has twenty-one (21) days from the date of receiving the notice from the Mortgagee to elect to mediate the dispute. It’s important you respond within this time frame. If you don’t, a Mortgagee can proceed immediately to obtain approval to either take possession of the property or commence other enforcement proceedings.
Mediation must take place within ninety (90) days of the farmer electing to mediate. Again, if mediation doesn’t take place within this timeframe (unless agreed otherwise), a Mortgagee may be able to take further action.
The Mediator is an independent, neutral person. The Mediator’s role is not to make a decision that’s binding on the parties. Rather, his/her role is to assist the parties to come to an agreement as to what the process will be going forward. This can include trading out of debt.
Once the mediation’s been completed, a formal Heads of Agreement will be entered into by the parties, documenting the agreement (if any) reached at mediation.
This document is binding on both parties, but there’s a cooling off period of 14 days in which a farmer can rescind the agreement.
Once mediation’s completed, the Mediator will write to the Rural Assistance Authority advising them that mediation has occurred and providing them with a copy of the Heads of Agreement.
Going through mediation can be a stressful process, but remember, you don’t have to go it alone.
If you receive a notice from your mortgagee asking you to enter into mediation, you should immediately contact your solicitor, accountant and/or local Rural Financial Counsellor and seek advice about your options.
Your advisors are also able to attend at the mediation to advise you on any proposals provided by the Mortgagee on the day.
In my time at Commins Hendriks I’ve seen firsthand the relief our clients experience from resolving a matter at mediation. Our team here has many years of experience with Farm Debt Mediation and, together with your financial advisors, can assist you in negotiating the best possible outcome, taking into account your personal circumstances.
For more details and assistance, please contact us on 1800 643 779.