The Farm Business Debt Mediation Bill 2016 ('Bill") was introduced by Leanne Donaldson, the former Minister for Agriculture and Fisheries on 30 August 2016. The aim of the Bill is to provide a process for the efficient and equitable resolution of farm business debt matters between mortgagees and farmers. The Bill was amended on 21 March 2017 and proposed to take effect on and from 1 July 2017.
Prior to the Bill, banks were able to enforce a mortgage by way of foreclosure which is essentially the action of taking possession of a mortgaged property when the mortgagor fails to keep up with mortgage repayments. However, the proposed legislation under the Bill will require mortgagees to give notice by way of an Exemption Certificate to defaulting farmers allowing mediation to occur prior to enforcing a mortgage. The proposed legislation does not limit the time when mediation is to occur. Farmers have the option to enter into mediation even if they are not in default. For example, if a crop has failed and the repayment commitments will cause financial difficulty and possible default. Early discussions with the mortgagee, and if needed the mediation this legislation offers, is in all parties' interests.
The transitional provisions under the Bill are quite clear, in the event repossession has already occurred, power of sale was exercised or if mediation has already occurred under the Queensland Farm Finance Strategy, then the farmer will not be entitled to mediation under the proposed legislation.
The preliminary step of mediation will allow both mortgagees and farmers to examine repayment issues and to come to an alternative arrangement with respect to servicing the debt, which is a more efficient and cost effective method than selling long term family assets and restructuring succession plans.
But as with all mediation, it only works if both parties are prepared to compromise their position and search for a 'Win, win' arrangement.