Compensation Guidelines

Introduction

MAF is responsible for determining compensation claims for losses or damage occurring from the exercise of powers under the Biosecurity Act 1993, and has developed guidelines to help ensure a fair and timely compensation process.

Legal criteria for compensation

The legal requirements for the payment of compensation are set out in section 162A of the Biosecurity Act 1993.

Under section 162A compensation can only be paid for a loss that:

  • is verifiable; and
  • results from damage to, or destruction of property, or from restrictions placed on the movement or disposal of goods; and
  • is caused by the exercise of powers under the Biosecurity Act for the purpose of managing an unwanted organism.

Section 162A also provides that, while every claim for compensation will be considered on its merits, compensation must not be paid:

  • for a loss related to unauthorised goods or uncleared goods;
  • for a loss suffered before the time the exercise of powers commenced;
  • to any person who has failed to comply with the Biosecurity Act or regulations made under the Act where the failure is serious or significant or contributed to the presence or spread of the organism being managed or eradicated;
  • damage caused by an unwanted organism.

It is also a generally accepted legal principle that anyone receiving statutory compensation is under a duty to mitigate their loss. This means that a person applying for compensation must take steps to prevent their loss from being any greater than it needs to be.

More information:

Duty to Mitigate Losses

It is an accepted principle at common law that anyone who receives statutory compensation is under a duty to mitigate their loss so that it does not escalate, including escalation over time. This means that, because MAF gives advance warning of each aerial spraying operation, you are able to take some simple measures to avoid potential losses, and it is your duty to take such measures where practicable.

In assessing claims, and particularly claims for the same recurring loss, MAF needs to explore, with the claimant, reasonable mitigation options that may have been available to them in their particular circumstances. MAF invites claimants to discuss mitigation options with MAF if and when it appears that recurrent losses eligible for compensation will be incurred.

Where reasonable attempts to mitigate losses have been made, MAF will compensate the reasonable cost of mitigation and, if necessary, compensate any eligible residual losses that could not be mitigated. The following process summarises the parties responsibilities with respect to mitigation:

First, MAF will identify possible mitigation options that were reasonably open to the claimant in their circumstances, using the following general principles:

  • The claimant is not required to do more to prevent the escalation of loss than is reasonable in his or her circumstances. The duty is not an onerous one, and it is up to the Crown to show that reasonable steps have not been taken. This involves the Crown identifying what reasonable options were open to the claimant, in his or her circumstances.
  • The claimant is entitled to recover expenses reasonably incurred in mitigation (even where the steps taken were unsuccessful).
  • If the claimant lacks the necessary means she or he cannot be required to spend money in mitigation, and the claimant is not required to dispose of his or her capital assets.

Secondly, MAF will obtain expert technical or professional advice on the reasonable probability that the claimant could have taken those steps.

Thirdly, using the probability ratio advised by the experts, MAF will calculate the percentage of loss that should have been mitigated by the claimant, (taking into account any actual mitigation by the claimant), and deduct this from the amount of compensation payable.

Processing compensation claims

MAF has set up a compensation procedure for processing claims arising from the exercise of powers under the Biosecurity Act.

Claimants should prepare their claim in such a way as to assist MAF to determine the claims within a reasonable time. Where claims are more complex, MAF may seek advice from industry or professional experts before a decision and an offer of compensation is made. Claims can only be considered after losses or damage has been incurred.

The Biosecurity Act provides for arbitration where eligibility for, or the amount of, compensation is disputed.

Applying for compensation

Any person who considers they are legally entitled to compensation should lodge a claim with MAF as soon as possible after they believe they have suffered loss or damage. Any subsequent claim should exclude those losses for which a claim has already been lodged.

Claim forms and general advice on compensation may be obtained from the MAF Biosecurity Authority by writing to the Compensation Coordinator, C/- MAF Biosecurity, PO Box 2526 Wellington.

Page last updated: 7 August 2008