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Drought and the Law

Northland’s current lack of rain has been so significant the government has declared Northland as having an ‘adverse event’.  Drought effects our rural community in a serious way.  Financial hardship through loss of income and extra costs has an inevitable detrimental impact on farmers which spreads into the wider community. Financial pressure  when farmers are not spending in local businesses, as well as increased fire risks and water restrictions takes a major toll on the well-being of a rural community.

With the drought in mind there have been a couple of recent developments in the law in NZ which are particularly relevant to our Northland rural community. 

The Ministry of Primary Industries has spearheaded The Farm Debt Mediation Act 2019 which comes into effect from 1st of July 2020.  The new Act deals specifically with rural debt, which in 2019 reached $63 billion and continues to rise.  With farmers living with such high levels of debt the Act seeks to redress the power imbalance between farmers and lenders by introducing a new mandatory mediation scheme.  The Scheme covers rural debt where the lender has lent for the purpose of farming and the lending is secured over the farm property.  The Scheme requires creditors (including non-bank creditors) who have security interests over a farm property to engage in mediation with farmers prior to taking any enforcement action on a debt default.

Mediation under the Scheme can be accessed by farmers at any stage and creditors must agree to participate unless there is good reason for their refusal.  A creditor can only request mediation once there has been a default by the farmer. The scheme is confidential and has a cap of $2000 for costs and expenses of the mediator. There is also provision of mediation to be based on tikanga Maori (protocols). A mediated agreement reached by the parties will be binding but there is not a requirement that an agreement must be reached.

There is of course specific requirements for both parties where mediation is required, but the perceived outcome of the Scheme is for all parties to use mediation with an independent neutral mediator to resolve issues constructively and equitably, or will provide a dignified exit for the farmer if there are  no options available and the business needs to be wound up.

Along with financial hardship, drought brings the real risk of fire to our rural community. The current fire risk rate in Northland is now at High with a total fire ban.  New legislation, the Fire and Emergency New Zealand Act 2017 (FENZ Act) that came into effect in July 2017 is relatively unknown in rural communities, but its implications are quite striking.

The Act has changed around the responsibility of starting an unwanted fire from “strict liability” to that of “criminalising risky or reckless behaviour”.  This means that in the case of a pure accident, created by events out of your control, you will not be pursued for costs.  Now cost recovery in the form of compensation must be pursued by FENZ through the courts where they must prove risky or reckless behaviour caused the accident. 

The FENZ Act has a maximum penalty for a serious criminal offence of up to two years imprisonment, with the ability to fine an individual up to $300,000 or $600,000 in other cases.  These penalties are applicable where an accused ‘knowingly or recklessly’ through their actions causes or allows a fire to get out of control and spread.  It also includes leaving a burning or smouldering substance in open air which increases the likelihood of harm or damage due to the start or spread of fire. A person has a defence against this serious criminal offence if they notify FENZ of the fire situation as soon as practicable.

Finally, remember to stick by the council bylaws relating to the use of water. Council is able to prosecute, however personal responsibility and awareness is the key for a community to ride out one of the worst droughts for Northland since WWII.

If any of these matters raise issues for you, please feel free to contact Law North for advice or visit our LawHelp clinic to point you in the right direction. 

  • Posted By: Christine Pepper on Wed, 4th Mar 2020 @ 15:06:13

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