What disputes we can assist you with

At A. W. Pitman & Co, as dispute resolution lawyers, we have experience in commercial disputes, estate dispute matters and tax dispute matters.

In this article we explore early resolution of commercial disputes.

The letter of demand

Commercial disputes can appear relatively straight forward but once commenced can involve significant time, effort and cost. So for example, what may appear to be a simple debt recovery claim may be met by counter claims and defences for misleading and deceptive conduct, breaches of warranty and breach of contract.

It is therefore worthwhile before filing any court document to have your legal representative serve a letter of demand on the debtor setting out the basis of your claim and requesting payment within 14 days of the demand letter. The letter of demand should state if payment is not made, legal proceedings will be commenced and the amount claimed will include the amount of the debt, interest and legal costs.

The debtor may respond by raising issues that you were not aware of that may be more effectively resolved by negotiation or mediation than by commencing legal proceedings.

For the debtor in receipt of a letter of demand, this is an opportunity to negotiate without admission of liability by responding through your lawyers with a “without prejudice letter”. It may also be the occasion to attempt to settle the claim by making an offer to the lawyers issuing the letter of demand on behalf of the creditor and marking the letter “without prejudice save as to costs”, which may may have the effect of protecting you the debtor against legal costs in the event you lose the case and the judgment obtained by the creditor is less than the amount of your offer.
In more complicated commercial disputes involving allegations of breach of contract, the details of the breach will require more specificity in the letter of demand letter than a mere demand for payment of money. In such circumstances the letter of demand can assist by putting the debtor on notice of the details of your claim and invite them to respond. This can assist you, the creditor, in negotiations and in framing your claim to be filed in court. You are not limited by what you have claimed in the letter of demand – in other words the court claim you file may expand upon what you sought in your letter of demand.

The settlement deed

It is not uncommon for parties to reach a settlement of their dispute either prior to the commencement of legal proceedings or at any time between commencement of proceedings and before the court appointed hearing date.

Settlement by hand shake is rarely done without the parties to the dispute signing a settlement deed, also known as a deed of settlement and release.

The settlement deed not only records the financial terms of settlement – how much is to be paid and when payment is to be made – but also records:

1. the relevant facts to the dispute – this is usually incorporated in the recitals of the deed which are placed just below the details of the parties named in the deed. The facts recorded in the recitals of the deed are an acknowledgment by each party of the nature of the dispute and can be relied upon in any later proceedings that are commenced by either party where the subject matter of those later proceedings is the same subject matter covered in the settlement deed;
2. mutual releases – each party gives up their claim against the other party arising from the subject matter of the dispute as recorded in the recitals. A deed of settlement could be negotiated just on mutual releases where the claim of one party is equally met by the counter claim of the opposing party. It is important that the release is properly defined. For example, the debtor may agree to make a payment to the creditor on terms that the release given by the debtor does not include a release of any warranty claims the debtor may have against the creditor;
3. non admission statements – statements that payment by one party to the other is not an admission of liability by the paying party;
4. confidentiality of terms – the parties agree to keep their terms of settlement confidential so as to avoid an adverse publicity, mainly caused to the debtor;
5. deed may be pleaded as a bar to any future proceedings – this clause acts in tandem with the provision for mutual releases. It means the deed itself can be used by the debtor as a defence to any future claim brought by the creditor arising out of the same subject matter of the deed of settlement;
6. discontinue court proceedings – if court proceedings have been commenced, the deed should contain a provision that the parties file a notice of discontinuance with the relevant court notifying the court that the matter has settled and the court matter to be struck from the court list;
7. default clause – the purpose of the default clause is to set out what happens if the deed of settlement is not complied with. For example, what is to happen if the debtor fails to make one or more instalment payments under the deed. In such circumstance the default clause may provide that the debtor is to pay whole of the amount claimed less any payments made by the debtor within 7 days failing which the creditor can sue for the amount due as a liquidated debt with judgment in the amount of the liquidated debt registered in the court so that execution (or recovery) of the registered debt can take place without delay.

Mediation

Mediation may be the next step to resolve a dispute in the event the parties are unable to negotiate a settlement themselves.

The process of mediation is usually set by the mediator or the guidelines of a reputable mediation body such as Resolution Institute  or the Australian Disputes Centre.

Mediation involves:

1. appointment of a mediator – neutral to both parties;
2. mediation agreement setting out the roles of the parties and the mediator, confidentiality of the mediation, documents to be submitted by the parties to the mediator, costs of the mediation;
3. exchange of position papers – each party may be required to provide to the mediator and exchange with each other a brief position paper of the factual and legal issues in dispute. Such papers are between 5 to 7 pages long.

The utility of holding a mediation should not be overlooked despite it being seen as an additional cost in the process of resolving a dispute. Yes, the mediation may be unsuccessful, with the unavoidable commencement of court proceedings. However, despite being unsuccessful, the mediation may result in the following outcomes:

1. continued negotiations between the parties leading to an agreed settlement;
2. understanding of each party’s case, their strengths and weaknesses, to assist when deciding on whether to continue negotiations or commence or continue proceedings.

Ultimately, it is the goodwill of the parties that results in a productive mediation, whether or not a settlement is achieved.

Legal advice

At A. W. Pitman & Co, lawyers Sydney, we can assist you dispute resolutions.