There are two types of mediation available under Farm Debt Mediation Act 1994 (NSW)

(“the Act”). The first is creditor initiated mediation, which results from a creditor issuing a

notice under the Act.

The second type of mediation is farmer-initiated mediation. This is mediation where a

farmer, rather than the creditor, takes the initiative to request mediation.

The object of mediation is to provide for the resolution of farm debt disputes and is required

before a creditor can take possession of property or other enforcement action under a farm

mortgage.

Mediation is a voluntary and confidential process whereby the farmer and the creditor

attempt to reach agreement on the financial relations between them.

The farmer and the creditor may bring solicitors, accountants, rural financial counsellors or

other family members, with the prior approval of the mediator.

The parties to the mediation usually share the costs of mediation, unless they agree

otherwise.

Under the Act, the parties are required to make reasonable attempts to negotiate a

settlement to their matter at mediation; however, if an agreement cannot be reached by

mediation, the creditor can commence an enforcement action.

Once the farmer has received a notice of availability of mediation from the creditor under the

Act, the farmer may request mediation to discuss the farm debt. If the farmer elects to

exercise his/her right to mediation, he or she must advise the creditor, in writing to that

effect.

If the farmer fails to respond, to the notice from the creditor in writing, within 21 days the

farmer will lose all rights he/she may have under the Act.

There is to be a 14-day cooling period for any Heads of Agreement entered into by a farmer.

The cooling off period may be extended by agreement between the farmer and the creditor.