Australia: Smooth grazing – trouble-free agistment

Last Updated: 7 September 2015
Article by Ari McCamley

Particularly in times of inconsistent seasonal conditions across Queensland and beyond, stockowners look to agistment as a bridge to improved seasonal conditions at home or to add value in good times. Equally, landowners with excess pasture can profit from agistment without the upfront costs or risks associated with increasing their own herds. Agistment arrangements could be considered "tried and true" examples of the collaborative farming concept discussed by my colleague Bill Loughnan in a recent article.

However, for all the successful collaborations between stockowners and landowners, agistment arrangements regularly give rise to disputes. So, how do you avoid agistment-related disputes in the first place, and how do you resolve them if they arise?

Reaching agreement

All going to plan, written agistment agreements will be read once when they are signed and never again taken out of the bottom drawer. However, if problems arise, having a carefully prepared, written agistment agreement will make it much easier for the landowner, or the stockowner, to prove that he or she is doing the right thing.

Every agistment arrangement is unique and relying only on handshakes or incomplete notes can give rise to costly legal disputes about the details of the arrangement. For example, in Hornery v McDonald & Anor [2006], the owners of cows and calves agisted on a property at Blackall sued the landowners claiming that insufficient feed was provided for the stock, resulting in the failure of a subsequent artificial insemination program.

Relying only on handshakes or incomplete notes can give rise to costly legal disputes.

The Court's decision turned on whether the landowners had accepted an obligation to ensure the cows were in above average condition in preparation for artificial insemination, which in the circumstances would have required supplementary feeding. The landowners and the stockowners had documented a short agistment agreement. However, the Court accepted that discussions between the landowners' manager and the stockowner created additional obligations on the landowners' part that were not in the written document.

Fortunately for the landowner, the Court found those obligations did not extend to keeping the cattle in above average condition and the stockowners' claim failed, but things could have been different had the stockowners' version of events been accepted. A complete written agistment agreement should have put the dispute to rest before it reached the courts.

Protecting ownership of agisted stock

When the Personal Property Securities Act (PPSA) commenced in 2012, it introduced a new risk for the owners of stock on agistment: the potential loss of ownership of those stock if the landowner goes into bankruptcy, liquidation, administration or the like.

In effect, the PPSA requires agistment arrangements to be documented and registered in order to protect the stockowner's ownership of the livestock. There is a limited exception for certain arrangements that have a fixed term of less than 12 months (including options to extend), but even in these circumstances registration could avoid potentially costly disputes.

Agistment arrangements should be documented and registered in order to protect the stockowner's ownership of the livestock.

Registration should be completed no later than 15 business days after the livestock has been delivered to the landowner's property or the agistment agreement has been signed (whichever is the earlier).

Registration is undoubtedly an additional administrative burden and the risks of not registering are still being ignored by many stockowners. However, with good advice and assistance, registration is a quick and inexpensive process.

Unpaid agistment fees

It may come as a surprise to many landowners taking stock on agistment that they do not have an automatic right to refuse to redeliver stock until agistment fees are paid, or to sell stock to cover unpaid fees.

Landowners taking stock on agistment...do not have an automatic right to refuse to redeliver stock until agistment fees are paid.

The issue was most recently considered by the Queensland courts in Fearnley v Finlay [2014], where there was no written agistment agreement and the landowner sought to rely an oral agreement to recover $225,000 in unpaid agistment fees relating to a period of agistment in excess of three years.

The landowner claimed a lien over the cattle under the Storage Liens Act, which would have allowed the landowner to sell the agisted stock and retain the unpaid agistment fees from the proceeds. However, the landowner's claim failed because the Court found that the agistment arrangement did not fall within the scope of the Storage Liens Act. Further, the Court noted that the general law, in most circumstances, will not imply a lien in agistment agreements.

The Court's decision reminds landowners taking stock on agistment that, in order to obtain an effective lien over the livestock, it should be documented as part of a written agistment agreement and further steps should be taken to ensure the lien has priority over other claims (for example, any claims of the stockowner's financier), including registration of the landowner's interest under the PPSA.

If a lien or other security (for example, payment in advance) is not obtained at the outset, it can be very difficult to recover payment from a stockowner. However, we have assisted clients settle disputes without litigation.

A practical solution in some instances may be for the landowner and the stockowner to jointly instruct a livestock selling agent to sell the agisted stock. The irrevocable instructions to the agent would be to retain the agent's commission and meet other selling costs out of the proceeds of sale, remit the unpaid agistment fees and transport costs to the landowner and then pay the balance to the stockowner.

Unwanted stock

A related problem occurs where stock are left on agistment beyond the agreed period, usually in circumstances where there are unpaid agistment fees, or after earlier termination of the agistment agreement because of unpaid fees.

Again, a lien and power of sale incorporated into a written agistment agreement from the outset would be a landowner's best remedy.

Another remedy may be for the landowner to impound the stock, effectively cutting his or her losses and freeing up carrying capacity. The impounding of stock is controlled by the various local governments throughout Queensland. As local laws vary between areas, legal advice should be sought before a landowner proceeds down this path.

As a last resort, a court can order the removal of livestock. In Tocchini & Anor v Paroz [2011], a property at Mt Mort had been sold by statutory trustees for sale as a result of a dispute between family co-owners. Following the sale, one of the former owners entered into a written agistment agreement with the new owner for the continued agistment of the former owner's livestock. However, he never paid the agreed agistment fees, destroyed a section of fencing to give his cattle better access to water and ultimately ignored the landowner's demands to remove his cattle from the property. The landowner successfully sued to recover close to $48,000 in unpaid agistment fees and the cost of fence repairs, and obtained an order requiring the stockowner to remove his stock.

Templates and advice

Thynne + Macartney has worked with AgForce Queensland to develop a template agistment agreement for use by AgForce members, and can assist to prepare a cost-effective tailored agreement whenever required. We also assist landowners and stockowners resolve disputes if they arise.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Mondaq Advice Centre (MACs)
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.