Farm Debt Mediation Act 2018

This

Act may be cited as the Farm

Debt Mediation Act 2018.

The object of this Act is to provide for the efficient and equitable resolution of farm debt disputes by requiring creditors to provide farmers with the opportunity to have the disputes referred to mediation before the creditors are able to take possession of property or other enforcement action under farm mortgages.

In this Act, unless the contrary intention appears—

commencement day means the day on which this Act comes into operation;

Commission means the Small Business Commission established under section 3A of the Small

Business Commission Act 2011;

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 a failure to perform an obligation that, under the terms of the mortgage, is a ground for enforcement action;

Examples—

1 Failure to pay the principal, interest or other money the payment of which is secured by a farm mortgage.

2 Failure to keep the property subject to the farm mortgage insured.

3 Failure to submit financial statements required by the creditor.

director of a body corporate includes—

a person occupying or acting in the position of director or member of the governing body of the body corporate, by whatever name called and whether or not validly appointed to occupy or duly authorised to act in the position; and

any person in accordance with whose directions or instructions the directors or members of the governing body of the body corporate are accustomed to act;

enforcement action, in relation to a farm mortgage, means the taking of possession of property under the mortgage or any other action to enforce the mortgage, including 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 a contract has been executed before the commencement day; or

the enforcement of a judgment that was obtained before the commencement day;

exemption certificate means a certificate issued in respect of a farm mortgage under section 15;

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 goods or equipment acquired for the purposes of a farming operation:

a harvester, binder, tractor, plough or other agricultural implement;

any other goods or equipment of a class commonly used for the purposes of a farming operation;

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

a stock mortgage or a crop or wool lien; or

the interest of the lessor of any farm machinery that is leased; or

a security interest (within the meaning of section 12 of the Personal

Property Securities Act 2009 of the Commonwealth) in stock, crops or wool;

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 irrigation right within the meaning of the Irrigation

Act 2009 issued to a farmer for the purposes of a farming operation; or

an authority to take water under the Landscape

South Australia Act 2019 issued to a farmer for the purposes of a farming operation; or

property of a prescribed kind;

farmer means a person or body solely or principally engaged in a farming operation, and includes—

a person who owns land cultivated under a share-farming agreement; and

the personal representative of a deceased farmer;

farming operation means any of the following activities undertaken for commercial gain:

agricultural, pastoral, horticultural, viticultural, forestry or apicultural activities;

poultry farming, dairy farming or any business that consists of the cultivation of soils, the gathering of crops or the rearing of livestock;

aquaculture or the propagation or harvesting of fish or other aquatic organisms for the purposes of aquaculture;

an activity prescribed by regulation;

function includes a power, authority or duty;

mediator means a person engaged by the Commission under this Act to mediate farm debt disputes between creditors and farmers;

prohibition certificate means a certificate in respect of a farm mortgage issued under section 13;

satisfactory mediation means any of the following:

a mediation that has achieved a resolution of a farm debt dispute;

a mediation that has proceeded as far as it reasonably can in an attempt to achieve resolution of a farm debt dispute but has failed to resolve the dispute;

a mediation of a prescribed class;

statutory enforcement notice means—

a notice under section 55A of the Law of Property Act 1936;

or

any notice designated by the Minister as a statutory enforcement notice.

The

Minister may by notice in the Gazette designate a notice under an

Act to be a statutory enforcement notice.

The

Minister may by further notice in the Gazette vary or revoke a notice under subsection (2).

This

Act applies to creditors only in respect of farm debts.

This

Act does not apply to—

a farmer whose property is subject to control under Part X Division 2 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 that is an externally-administered body corporate within the meaning of the Corporations

Act 2001 of the Commonwealth.

Enforcement action taken by a creditor to whom this Act applies otherwise than in compliance with this Act is void.

Nothing in this Act affects the operation of the following Acts:

the

Limitation of Actions Act 1936;

the

National

Consumer Credit Protection Act 2009 of the Commonwealth;

the

Personal

Property Securities Act 2009 of the Commonwealth.

Nothing in this Act affects the operation of the Banking

Act 1959 of the Commonwealth and, in particular, the duty of the Australian

Prudential Regulation Authority under Part II Division 2 of that

Act.

A creditor must not take enforcement action against a farmer under a farm mortgage unless—

the creditor has given notice to the farmer in accordance with this section; and

21 days have expired since the day on which notice was given.

Notice under subsection (1)—

must state that the creditor intends to take enforcement action under the farm mortgage; and

must state that, under this Act, mediation between the farmer and the creditor is available; and

must state that the farmer has 21 days from the day on which the notice was given to request mediation with the creditor in respect of the farm debt; and

must be given in a manner and form approved by the Commission.

This section does not apply to a creditor if an exemption certificate is in force in respect of the farm mortgage.

A farmer who is liable for debt (whether or not the farmer is in default) may request mediation under this Act.

A farmer who is given notice under section 8 may, within 21 days from the day on which notice was given, notify the creditor, in a manner and form approved by the Commission, that the farmer requests mediation concerning the farm debt involved.

A farmer to whom notice has not been given under section 8 and who is liable for a farm debt may notify a creditor that the farmer requests mediation concerning the farm debt.

Notice of a request for mediation by a farmer under subsection (2) or (3) must be given in a manner and form approved by the Commission.

A creditor who receives a request for mediation from a farmer under section 9 may, by notice given to the farmer, agree or refuse to participate in mediation in respect of the farm debt involved.

Notice of a response by a creditor under subsection (1) to a request for mediation must be given in a manner and form approved by the Commission.

If a creditor refuses to participate in mediation with a farmer who has made a request under section 9—

where the farmer is not in default, the refusal by the creditor does not, of itself, give rise to any claim or other consequence under this

Act;

where the farmer is in default, the refusal by the creditor provides the farmer with grounds to apply to the Commission under section 12 for the issue of a prohibition certificate.

If a creditor agrees to participate in mediation with a farmer who has made a request under section 9, the creditor must, within 10 days after giving notice to the farmer under subsection (1), notify the Commission, in a manner and form approved by the

Commission, that the parties have agreed to participate in mediation.

If a farmer has made a request for mediation under section 9, the creditor must not take enforcement action in respect of the farm mortgage concerned unless an exemption certificate is in force.

Note—

Enforcement action taken in breach of this section is void under section 6.

A farmer is, on application to the Commission, entitled to be issued with a prohibition certificate if—

the farmer is in default under a farm mortgage; and

an exemption certificate is not in force in respect of the farm mortgage; and

the farmer has notified a creditor in accordance with section 9(2) or (3) that the farmer requests mediation concerning the farm debt; and

following the farmer's request for mediation under section 9(2) or (3)—

satisfactory mediation has not taken place because—

the creditor has refused to participate in mediation (or has failed to respond to the farmer's request for mediation); or

mediation has commenced but the creditor does not wish to continue to participate in mediation; or

at least 3 months have elapsed since a request was made by the farmer under section 9(2) or (3) and throughout that period the farmer has attempted to participate in mediation in good faith but no satisfactory mediation has taken place between the farmer and the creditor.

An application under subsection (1) must—

be made in a manner and form approved by the Commission; and

specify the circumstances under which the farmer made the request to participate in mediation; and

if relevant, specify the circumstances of the creditor's refusal to participate in mediation.

The

Commission must issue a prohibition certificate to a farmer who is entitled to a certificate under section 12.

If mediation has taken place under this Act, the Commission must have regard to the report of the mediator who conducted the mediation to determine whether satisfactory mediation has occurred.

A creditor must not commence enforcement action against a farmer if a prohibition certificate is in force in respect of the farm mortgage held by that creditor.

A prohibition certificate expires—

6 months after the day on which the prohibition certificate was issued; or

on the day on which the farmer and creditor enter into mediation in respect of the farm debt, whichever is the earlier.