Dispute Resolution Case Studies
Information and case studies
Dispute resolution occurs when a disagreement between parties is resolved without going to court, even though there may be grounds for legal action. Dispute resolution is commonly associated with low-level cases, such as a dispute between neighbours or separating couples. Dispute resolution is also important for businesses and employers, as disputes frequently occur in the workplace or over contracts for example. Generally, there are few civil matters that cannot be resolved through dispute resolution, which also tends to be cheaper and quicker than going to court.
Occasionally a court will actually order parties to attempt dispute resolution before their case will be heard. Civil cases brought before the magistrates court or family disputes are common examples of cases a court will not hear unless dispute resolution has been attempted.
Dispute resolution generally involves the parties involved coming together and engaging in discussion in an attempt to find agreement. The parties may obtain assistance from a lawyer or professional mediator when undertaking dispute resolution.
There are various types of dispute resolution, including:
– Disputing parties communicate directly through speech or writing in an attempt to reach agreement. This is usually the first step in the dispute resolution process, often more action is required for an agreement to be found.
– Involves the inclusion of an impartial person (the mediator) in discussions in an effort to help the disputing parties find resolution. Mediation is especially useful if the parties involved in a dispute have are in clear conflict with one another.
– A process similar to mediation, but for groups that are in conflict rather an individuals. Facilitation is also led by an impartial person (a facilitator).
– Is basically a specialised form of mediation. Conciliation is carried out between disputing parties with the assistance of a conciliator. The conciliator is generally an impartial person who has experience in the matter of the dispute and is able to advise the parties on their rights and obligations. Useful in situations where advice on rights and responsibilities may be required, such as equal opportunities disputes.
– A more formal process, arbitration involves disputing parties submitting a case to an independent third party (the arbitrator). The parties are then bound by the arbitrator’s decision. Arbitration may be voluntarily entered by both parties, but often one party applies and the other is then ordered to participate. Arbitration is most often used in commercial contract disputes, or industrial relations disputes such as those between unions and employers.
Arbitration is the only form of dispute resolution where the parties involved do not come to their own agreement. Mediators, facilitators, and conciliators offer advice and information but are not able to make a decision on how the dispute is to be resolved.
Victoria’s state government operates the Dispute Settlement Centre of Victoria, which offers free advice on dispute resolution processes (excluding disputes related to family law).
Some law firms also offer dispute resolution services, or will represent you in the dispute resolution process.
Case studies from the Victorian Small Business Commissioner
Franchise dispute – resolved through mediation
A franchisee purchased a business from a franchisor based on representations made by the franchisor relating to the costs or running the business as well as earning capacity. When these expectations were not realised, the franchisee lodged a dispute application with the Victorian Small Business Commissioner under the Victorian Small Business Commissioner Act 2003.
Both parties agreed to attempt dispute resolution through mediation, and both the franchisee and the franchisor were represented by lawyers at the mediation session.
The mediation proved to be successful and the dispute was resolved. Terms of settlement included
- The waiving of a monthly franchisee fee for a specified period;
- The repayment of outstanding rent in instalments by the franchisee to the franchisor;
- The franchisor paying set-up costs;
The franchisor assisting in the sale of the franchised business at a fair market price, for a certain period of time.
Lease negotiation dispute – resolved through mediation
A tenant was running a business that turned over a substantial amount annually, on a very large area of land which where the amount of rent charged had not changed for years. The landlord approached the tenant seeking to obtain a new lease agreement, this time at double the amount of rent previously charged.
The tenant refused to pay the increased rent and made a claim with the Victorian Small Business Commissioner.
During mediation it became clear that it was cost more than $2 for the tenant to relocate the business, if they were even able to find a suitable location to relocate to. Therefore, it was in the best interests of the tenant to secure a long-term lease that included reasonable terms.
The landlord believed that they were entitled to raise the rent, seeing as it had not changed in many years. However, it was identified that the landlord would likely face difficulty trying to find an alternative tenant should the current one relocate.
As a result of mediation the dispute was eventually resolved, with the parties settling on a new lease made up of four terms of three years. The rent was to be incrementally increased and there were to be opportunities to review market rent at the end of each term.
The dispute resolution process was successful in this case, as it resulted in the tenant obtaining security of their tenure. The landlord maintained an ongoing tenancy agreement with the added benefit of reasonable increases to rent scheduled to be made at regular intervals.