Farmers and their mortgagees will shortly be operating under a new mediation regime in Queensland. On 21 March 2017, the Farm Business Debt Mediation Bill 2016 was passed by the Queensland Parliament. The new laws bring Queensland into line with New South Wales and Victoria in requiring mediation as a pre-requisite to enforcement action by farm mortgagees.

Mediation as a pre-requisite to enforcement action in Queensland is not new. Up until now, the mediation process has been undertaken on a voluntary basis by mortgagees who are signatory to the Queensland Farm Finance Strategy. Under that scheme, financiers agreed to attend mediation as a compulsory step before enforcing a farm mortgage. The same approach is adopted in the new laws, but they apply to all farm mortgagees. The new laws also regulate the finer details of the mediation process including the exchange of documents prior to mediation.

The laws also give farmers new rights to prevent enforcement action. A farmer can now apply for an enforcement action suspension certificate to prevent a mortgagee taking enforcement action where a mortgagee has failed to participate in mediation. That application is made to the Queensland Rural and Industry Development Authority with that authority’s decisions subject to internal review. External review falls within the jurisdiction of the Queensland Civil and Administrative Tribunal. The authority will also be responsible for accrediting mediators.

Farmers and mortgagees will share the costs of the mediator equally but otherwise bear their own costs of the mediation process. An exception to that general rule is where another mediation meeting is required because a person representing a party at the mediation does not have sufficient authority to settle. In those circumstances, that party must pay the other party’s costs and the meditator’s fees for the other meeting.

Farmers who are insolvent are excluded from the operation of the Act, as are those who have already been through the mediation process with the mortgagee, entered into an agreement and defaulted under it.

The new laws are expected to receive royal assent shortly and come into force on 1 July 2017. In the meantime, financiers should undertake a review of their enforcement processes and policies to ensure they are ready to observe the new laws.