Mediation: farmers/banks should be equal

Catchwords: Property law, Farm Debt Mediation Act, fairness, imbalance of power, bank officers experienced

I had a spirited response to my column, “Why banks like mediation” (The Land May 27, p25) about the necessity for farm debt mediation before banks can call up farmers’ mortgages and take possession or exercise a power of sale.

Calls to the Bush Barrister reveal that farmers think agreements reached at mediation with their banks were unfair because they didn’t have the right representation, or had none at all, and that they were overborne or cajoled by their bank.

The report, commissioned by the Rural Assistance Authority, raises this issue of the farmers’ perception of unfairness in agreements reached at mediation.

In the report, the fairness of the mediator was not an issue to the farmers. However, 71 percent of farmers believed the bank had an advantage at the mediation.

The most common response was that the farmer thought the bank had more experiences at mediation and that there was a power imbalance in the procedure.

The next most common response that the farmer felt mediation was intimidating and emotionally draining.

Of the representatives of the farmers at mediations, 89 per cent thought banks had an advantage over the farmer at mediation and 68 percent thought farmers were not able to participate as equals.

The report shows that the banks’ representatives were almost twice as experienced as farmers’ representatives at mediation. The average bank representative had attended 36 mediations. Of those surveyed, they had more than six years’ experience in the lending/finance sector with 57 percent having more than 15 years’ experience.

Farmers reported they were represented by lawyers in only 34 percent of mediations. The report concludes that farmers’ representatives at mediations were comparatively inexperienced. It suggests the procedural imbalance would be improved if farmers had representatives who were experienced in mediation.

Curiously the Farm Debt Mediation Act (S17) acquiesces in non-lawyer representation for farmers at mediation. A party is “not entitled to be represented by an agent” unless the mediator approves, perhaps on conditions.

The farmer is entitled to be advised rather than represented during the mediation by a person who does not have to be legally or professionally qualified.

Paradoxically, a corporation, such as a bank for example, can be represented automatically by an “officer”.

The farmers’ concern – are these “officers” really gentlemen? They are certainly very experienced gentlemen.

On the one side banks have the choice of experienced representation automatically. On the farmers’ side, they are offered representation with the mediator’s permission and the carrot of legal advice, rather than automatic representation.

Why shouldn’t farmers’ representations be openly balanced and experienced?

Section 17 of the Act certainly opens up access to a variety of forms of representation. But fools can rush in where the angels fear to tread.

The de-lawyerisation of mediation may be a commendable policy on the part of the legislature, but at what ultimate cost to the farmer who has a lot to lose? Lawyers can and do help people.

The report demonstrates an alarming 43pc of farmers were not satisfied with the outcome in 72 percent of total mediations.

Surely farmers’ perception of fairness would be enhanced if they were legally represented during mediation, as of right!

If farmers are waiving important rights, don’t they need a lawyer? Shouldn’t the Act positively encourage farmers to be represented by a solicitor or a barrister, actually warn them and level the playing field? Right now, the system is not perceived as equal.

Jonathan de Vere Tyndall

Updated 6 April 2015, originally published in The Land on 17 June 1999

Editors note: The articles published contain comment only and not legal advice, for which you should retain a solicitor. No responsibility is accepted for the accuracy of the contents.