The Queensland Government has introduced the Farm Business Debt Mediation Bill 2016 into the Queensland Parliament to establish a new process for the resolution of farm business debt matters between mortgagees and farmers to replace the current voluntary negotiated farm debt mediation framework.

The proposed legislation is mainly consistent with farm debt mediation legislation of both New South Wales and Victoria however unlike New South Wales and Victoria the Bill only extends to mortgages over farming land and water allocations. The finance of farm machinery in Queensland is already covered by the Credit (Rural Finance) Act 1996.

Mediations will be conducted by an accredited mediator and the scheme will be administered by the Queensland Rural and Industry Development Authority.

A mortgagee which intends to take enforcement action under a farm mortgage must serve the farmer with an enforcement action notice and give them a copy of the mediation information package, whilst also providing a copy of the notice to the Authority.

An enforcement action notice must, among other things, state the name of the farmer and the mortgagee, identify the farm property and state the enforcement action the mortgagee intends to take, and state that the farmer may ask for mediation and by when they may do this. The notice must also advise the farmer of consequences under the Act for not asking for mediation by a day stated in the notice which must be no later than 15 business days after the notice is served on the farmer.

The Bill will not apply where the farmer is bankrupt, is subject to a petition under a bankruptcy law that was not made by the mortgagee or the farmer is an externally-administered corporation. Also, the Bill will not apply where the farmer and mortgagee entered into an agreement entered into as a result of previously taking part in mediation under the Bill and the farmer has defaulted in relation to the agreement.

A mortgagee will be prohibited from taking enforcement action under a farm mortgage unless the Act does not apply or an exemption certificate has been obtained.

If the mortgagee fails to mediate (or does not mediate in good faith) the Authority may issue a certificate prohibiting enforcement of the farm mortgage for a period of up to 6 months.

The Bill gives the farmer the right to request information from the mortgagee including documents relating to any default.

Transition
The Bill applies to a farm mortgage for a farm business debt whether or not the mortgage was entered into or the debt incurred before or after commencement of the Act. However, the Act will not apply if the farmer and the mortgagee took part in mediation for the farm business debt under the previous Queensland Farm Finance Strategy and entered into a heads of agreement as a result of that mediation. The Act will also not apply if, prior to the commencement of the Act, the mortgagee or their agent entered into possession under the mortgage or the mortgagee exercised power of sale under the farm mortgage and a contract of sale was entered or a judgement was obtained for the farm business debt.