Farm Debt Mediation Act 1994

This Act may be cited as the Farm Debt Mediation Act 1994.

This Act commences 2 months after the date of assent, except in so far as commenced sooner by proclamation.

The object of this Act is to provide for the efficient and equitable resolution of matters involving farm debts. Mediation is required before a creditor can take possession of property or other enforcement action under a farm mortgage.

In this Act:

approved form means the form approved by the Authority.

Authority means the New South Wales Rural Assistance Authority constituted by the Rural Assistance Act 1989.

business day means a day that is not a Saturday, a Sunday or a public holiday throughout New South Wales.

creditor means a person to whom a farm debt is for the time being owed by a farmer.

default, in relation to a farm mortgage, means failure to perform an obligation that, under the terms of the mortgage, is a ground for enforcement action.

Note—

Examples of default on the part of a farmer include failure to pay the principal, interest or other money the payment of which is secured by a farm mortgage; failure to keep the property subject to the farm mortgage insured; and failure to submit financial statements required by the creditor.

draft mediation agreement means a draft agreement prepared under section 18J.

enforcement action, in relation to a farm mortgage, means taking possession of property under the mortgage or any other action to enforce the mortgage, including the giving of any statutory enforcement notice, or the continuation of any action to that end already commenced, but does not include:

the completion of the sale of property held under the mortgage in respect of which contracts were exchanged before the commencement of this Act, or

the enforcement of a judgment that was obtained before the commencement of this Act.

exemption certificate—see section 13.

farm means land on which a farmer engages in a farming operation.

farm debt means a debt incurred by a farmer for the purposes of the conduct of a farming operation that is secured wholly or partly by a farm mortgage.

farm machinery means any of the following things that are commonly used for the purposes of a farming operation:

a vehicle, machine or other implement,

any other thing of a class prescribed by the regulations.

farm mortgage includes any interest in, or power over, any farm property securing obligations of the farmer whether as a debtor or guarantor, including any interest in, or power arising from, a hire purchase agreement relating to farm machinery, but does not include:

any stock mortgage or any crop or wool lien, or

the interest of the lessor of any farm machinery that is leased.

farming operation—see section 4AB.

farm property means:

a farm or part of a farm, or

farm machinery used by a farmer in connection with a farming operation, or

an access licence (within the meaning of the Water Management Act 2000) held by a farmer in connection with a farming operation.

farmer means a person (whether an individual person or a corporation) who is solely or principally engaged in a farming operation and includes a person who owns land cultivated under a share-farming agreement and the personal representatives of a deceased farmer.

function includes a power, authority or duty.

hire purchase agreement has the same meaning as it has in the Duties Act 1997.

mediation—see section 4AA.

mediation agreement means an agreement entered into under section 18K.

mediation request—see section 18B.

mediator means a person accredited as a mediator under section 16.

notice inviting mediation—see section 18A.

prohibition certificate—see section 9.

statutory enforcement notice means:

a notice under section 57 (2) (b) of the Real Property Act 1900, or

a notice under section 111 (2) (b) of the Conveyancing Act 1919, or

a notice under section 71X (1) (b) of the Water Management Act 2000, or

a notice, given under any Act or statutory instrument, that is prescribed by the regulations as being within the scope of this definition.

A reference in this Act to satisfactory mediation is a reference to:

a mediation that has achieved a resolution of a matter involving a farm debt, or

a mediation that has proceeded as far as it reasonably can in an attempt to achieve a resolution of a matter involving a farm debt but has nevertheless failed to resolve the matter, or

a mediation specified or of a class described in regulations made for the purposes of this subsection to be a satisfactory mediation.

(Repealed)

Mediation is a structured negotiation process in which a mediator, as a neutral and independent party, assists the participants in the process:

to communicate effectively with each other, and

to reach agreement on the issues in dispute, and

to achieve their own resolution of the dispute.

The regulations may declare that any process of a specified kind is, or is not, mediation for the purposes of this Act.

A farming operation is a business undertaking that primarily involves one or more of the following activities:

agriculture (for example, crop growing and livestock or grain farming),

aquaculture,

the cultivation or harvesting of timber or native vegetation,

any activity involving primary production carried out in connection with an activity referred to in paragraphs (a)–(c).

A farming operation does not include a business undertaking that primarily involves wild harvest fishing or the hunting or trapping of animals, birds or reptiles in the wild.

The regulations may declare that any business undertaking of a specified kind is, or is not, a farming operation for the purposes of this Act.

Notes included in this Act do not form part of this Act.

This Act applies in respect of creditors only in so far as they are creditors under a farm debt.

This Act does not apply in respect of:

a farmer whose property is subject to control under Division 2 of Part X of the Bankruptcy Act 1966 of the Commonwealth, or

a farmer whose property is the subject of a bankruptcy petition presented by any person, or

a farmer, being a corporation, that is an externally administered corporation within the meaning of the Corporations Act 2001 of the Commonwealth.

This Act does not apply in respect of a farm debt secured by a farm mortgage if:

the farmer is in default under the farm mortgage, and

the farm mortgage secures all or part of the balance outstanding under an earlier farm mortgage, and

the farmer and the creditor have previously entered into a mediation agreement under this Act in relation to the farm debt.

Nothing in this Act affects the operation of the Contracts Review Act 1980 or any other Act or law that deals with the granting of relief in respect of harsh, oppressive, unconscionable or unjust contracts or on the grounds of hardship.

Nothing in this Act is to be construed as affecting the operation of the Banking Act 1959 of the Commonwealth and, in particular, the duty of the Reserve Bank under Division 2 of Part II of that Act.

Except as otherwise expressly provided by this Act, this Act does not affect or limit a civil right or remedy that exists apart from this Act, whether at common law or otherwise.

Other than as provided in this section, this Act has effect despite any other Act.

A creditor must not take enforcement action in respect of a farm mortgage unless an exemption certificate granted to the creditor is in force in respect of the farm debt concerned.

Maximum penalty:

for a corporation—2,500 penalty units, or

for an individual—500 penalty units.

Enforcement action taken by a creditor in respect of a farm debt in contravention of this Act is void.

This section does not invalidate any statutory enforcement notice or other process given, served or executed in order to fulfil a condition precedent to the taking of any enforcement action, but operates to prohibit the taking of the action concerned and the enforcement by a court or tribunal of any such notice or process.

Subsection (3) does not affect any proceedings authorised under section 15 (5) to be continued or concluded after the expiry of an exemption certificate.

A farmer who is in default and who has requested a creditor to mediate in respect of the farm debt concerned may apply to the Authority for a certificate prohibiting the creditor from taking enforcement action (a prohibition certificate).

An application for a prohibition certificate may be made whether or not the farmer has been given a notice inviting mediation in respect of the farm debt.

An application is to be in the approved form.