Taranaki/Manawatu Farming Lifestyles August 2012
Be my Guest A dairy farmer who took the law into his own hands and failed to follow the strict terms of the sharemilking agreement between he and his sharemilker was sentenced to nine months jail and the Court ordered payment of $81,000 to Sharemilkers This week in the District Court at Tauranga, Lance Maxwell Burt, a dairy farmer was sentenced to 9 months jail and an order to pay restitution in the sum of $81,000.00 to sharemilkers, who worked for him 5 years ago. Burt was charged under the Crimes Act with using a computer to commit a crime. Burt sent a direction to Fonterra instructing Fonterra to divert all proceeds due to his sharemilker into his own account. Mr Burt’s Lawyers in Palmerston North then issued a Notice of Termination of the Sharemilking Agreement. Despite being requested on numerous occasions to confirm that they held the money pursuant to the Sharemilking Agreement in their Trust Account, the NZ Law Society’s Manawatu Branch confirmed that the money was not held in the Solicitors Trust Account. Arbitration followed resulting in a decision in favour of the sharemilker. Burt had taken the $81,000.00 and dispersed it amongst other commercial operations he was involved in. The sharemilkers were devastated. It deprived them of their job and access to their money needed to finance the next season’s operations. The Judge described the offending as malicious and intended to cause harm to the sharemilkers. The lesson for owners contemplating withholding payments to sharemilkers, is that they must adhere to the strict
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terms of the sharemilking contract. Owners that direct their dairy company to pay the money to themselves and then failing to place the deductions in their solicitor’s trust account can expect to find themselves in serious trouble. In the Lower Order Agreement there are penalties for unjustifiably and procedurally wrongly withholding payments to sharemilkers and these amount to interest rates ranging from 5% per month compounding up to 8% per month compounding. In the High Court at Whangarei Judge Nicholson in dealing with an appeal against these interest rates commented that the punitive interest rates were justifiable and to be used in discouraging owners from withholding the proceeds due to sharemilkers. Owners contemplating using the offset provisions in their sharemilking agreements are advised to seek professional advice before commencing such action. 40% of milk produced on New Zealand farms comes from sharemilking agreements between farmers and sharemilkers, known generally as lower order and 50/50 Sharemilking Agreements.
Bill Guest, Farmers of New Zealand
In 2001 a new Lower Order Sharemilking Agreement was negotiated and enshrined as a statute of law by Parliament. One of the clauses added was a comprehensive dispute resolution procedure. When the 50/50 sharemilking agreements were amended in 2007 and later in 2010, these dispute resolution procedures were written into the 50/50 agreements. The employer / owner has a right to offset money from a sharemilker’s proceeds subject to the dispute procedures being completed. An owner contemplating withholding proceeds due to the sharemilker must serve notices on the sharemilker setting out the contract breaches and the costs of rectification. If the parties don’t agree, they may ask an independent third party to assist them to resolve the dispute and if the dispute is not resolved within 10 working days must then go to conciliation and appoint a conciliator. If the parties fail to agree on a conciliator within five working days of proceeding to conciliation, a
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conciliator will be appointed from the National Panel of Conciliators who will convene a meeting where the issues are discussed and usually resolved. If not resolved then the owner can instruct the dairy company to withhold the proceeds due to the sharemilker with an upper limit of 75% of any sum due. That money must then be lodged in a Solicitors Trust Account, earning interest until the matter is resolved either by agreement or reference to arbitration. Farmers of New Zealand Inc. provides free sharemilking agreements to members and specialist advice on sharemilking matters.
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Taranaki/Manawatu Farming Lifestyles, August 2012