News & Thinking
Avoiding and dealing with sharemilking disputes
The end of the dairy season is here, so many sharemilking arrangements are coming to a close or are set to be renewed.
For those of you who have entered Federated Farmers Contract Milking Agreements (Agreement), here are some points you should be mindful of when entering and exiting those Agreements.
Many differences and disputes arise out of sharemilking arrangements. For example, an incoming sharemilker or farm owner might find that:
- Houses/accommodation are in poor condition on entry or left in poor condition;
- The herd is in poor condition;
- Grass is in poor condition; or
- There is a lack of or defective supplementary feed.
A sharemilker may want to raise the issues above with their farm owner, and likewise, the farm owner might want to raise them with the outgoing sharemilker. This can sometimes result in farm owners dealing with defending a claim from the incoming sharemilker, while also bringing a claim against the outgoing sharemilker.
Where this is the case, sharemilkers and farm owners should review their respective Agreements and carefully consider the dispute resolution provisions in their Agreement. This is because the dispute resolution process dictates how parties should bring disputes and how disputes are managed. There are also strict timeframes that parties to Agreements need to adhere to.
First steps to resolving the dispute/early resolution
When a dispute arises under an Agreement, the parties should first refer to their Agreement and identify the relevant clauses and point those out to the other party – we strongly suggest parties seek legal advice when doing this.
The parties are then required to constructively discuss the key issues and attempt to resolve them. If there is a resolution, then this should be recorded in writing and preferably signed by both parties to the Agreement.
If no early resolution, there are strict timeframes within which to bring a claim
If there is no resolution after seven days, then the parties can either file a claim in the Disputes Tribunal if the amount in dispute is under $30,000 (this is usually the most inexpensive way to deal with smaller disputes) or initiate the dispute resolution process in the Agreement.
For other disputes (greater than $30,000 in value), a claiming party (claimant) has 28 days within which to bring a claim under the Agreement. Those 28 days run from either:
- The date of the alleged breach; or
- The last day in the season in which the alleged breach arose (31 May).
The claim must be brought by a formal Notice of Dispute served on the responding party (respondent). The Notice of Dispute must specify the nature of the dispute to the respondent. The respondent then has seven days to serve on the claimant its Notice of Reply on the claimant outlining its position on the dispute.
It is important to note the 28-day timeframes above, as the Agreement is clear that no claim will be recognised or made by either party unless the Notice of Dispute is given within those timeframes.
Once those strict timeframes are met, the straightforward dispute resolution process starts
Once the parties have complied with the above timeframes and provided each other with the required Notice of Dispute and Notice of Reply, the parties must then attempt settlement by negotiating in good faith.
If, after 14 days of the Notice of Dispute being served, the dispute is still not resolved by good faith negotiation, then the parties will need to proceed to conciliation.
If, after conciliation, the dispute is still not resolved, then the parties need to proceed to arbitration, which is a formal process like a court. Arbitrator’s awards are final but may be appealed to the High Court in certain circumstances.
How we can help with your sharemilking disputes
The dispute resolution process in the Federated Farmer’s Agreement is strict, and there are potentially major consequences for parties wanting to bring a claim if the strict contractual formalities and timeframes are not complied with. Parties might find that they are not able to bring a dispute as they have not complied with formalities and timeframes.
If you consider you have a dispute arising out of your sharemilking arrangement, we recommend seeking legal advice as soon as possible.