Seven generations of Alex Benton's family farmed this south Wairarapa property, Wainawhenua. But it was sold by receivers in March, and he was declared bankrupt this week.

Since he was three years old, Alex Benton dreamed of running the south Wairarapa dairy farm his family has owned since 1861.

Instead, after decades of sweat, his bank has sold it out from under him, and he is relying on friends for a roof over his head.

Benton struggled to describe his feelings after a High Court judgment declared him bankrupt on Thursday.

FAIRFAX NZ Alex Benton in 2004, back when his farm was debt-free.

"I don't know how to even begin to describe it. I've always wanted to be a farmer, and the farm has been taken away from me," he said.

Benton bought Wainawhenua from his father in 1992, in partnership with his Australia-based brother. The farm was never gifted, with six generations buying it from the one before; Benton was the seventh.

He toiled hard and, by the early 2000s, the farm was debt-free.

But then, he says, he was convinced to borrow heavily for an irrigation scheme. Supporters say the bank that lent him the money, Rabobank, did the convincing.

When the scheme ran into consenting, legal and construction problems, his debt to Rabobank spiralled to nearly $5 million in about a decade.

The bank called in receivers, and the farm was sold in March for $3.5m, leaving Benton bankrupt, unemployed and homeless.

He has been evicted, is living with friends, and putting together a last-ditch appeal to the Government to overturn the sale.

His problems began about 2007, when he engaged Irrigation Services (Wairarapa) to install a scheme using a bore drilled on the farm by another company.

When the bore collapsed, clogging the irrigation gear with silt and peat, the Bentons refused to pay the irrigation firm. In 2012, Irrigation Services won a High Court judgment ordering payment of more than $350,000.

But Benton disputed the judgment, claiming poor legal advice led to him wrongly blaming Irrigation Services when the fault really lay with the driller.

As legal, consent and remedial costs multiplied, Rabobank told Benton in December 2012 it would not lend to him any more, and that he should sell the farm to pay his debts.

He then tried to get some breathing room by claiming damages from the legal firm for its earlier advice.

But a High Court judge ruled he had no way to fund that action, since Rabobank had cut off his borrowing and the farm was in receivership.

Benton sought help, first from National MP John Hayes, and later from NZ First.

Wairarapa list MP and NZ First deputy Ron Mark said Benton had been treated badly by the bank, which he claimed "talked [Benton] into" borrowing heavily for irrigation, based on high dairy prices.

When milk payouts fell, the bank refused to entertain a debt recovery proposal put together by Benton and his supporters, Mark said.

"We believe the bank was not blameless, and played a part in allowing the debt levels to get that bad ... then they could have taken a haircut, but they decided to proceed [with foreclosure]."

The Greater Wellington Regional Council had also been "unfair" on Benton in its irrigation consenting process, he said.

He called for the establishment of an independent body to establish whether banks had failed debt-burdened farming clients.

NZ First is helping Benton prepare a proposal to overturn the sale, agriculture spokesman Richard Prosser said. Ironically, the irrigation scheme's problems were finally resolved and Benton's farm turned a profit last year.

"He's just about got to the end of the tunnel, and the light has bars over it," Prosser said

Benton said he had always worked hard and acted honestly. "I haven't secreted money away."

Bankruptcy stung, but not as much as being denied the chance to pass the farm to an eighth generation.

A Rabobank representative said all decisions about clients' farming operations were made by the clients, not the bank.

"In the unfortunate – and rare – instances where the bank takes recovery action, it is a matter of last resort, and always based on the long-term viability of a business, not because of short-term adverse circumstances, such the current dairy price downturn.

"In such cases, Rabobank works with clients, often over many years, to explore every opportunity to resolve their financial situation. It is only when all reasonable avenues to reach a solution have been exhausted that the bank moves to recovery action."

SOUR MILK

* Rabobank, which services about 15 per cent of the dairy sector, has already said it won't support everyone through this season's downturn.

* The Reserve Bank says that, if dairy prices stay at current levels for another three seasons, banks could lose up to 15 per cent of their loans, or several billion dollars' worth.

* In March, the Reserve Bank said banks could be left managing large amounts of land for years. In a severe scenario, close to 10 per cent of total loans – roughly $4 billion – would be written off by 2020.

* Total bank profits today are about $5b a year.

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