In brief - Mediation may not be necessary if it would not
resolve the dispute
In Fordham Laboratories Pty Limited v Sor & Anor,
the New South Wales Supreme Court held that mediation is not
necessary before commencing an action under the Retail Leases Act if the court is satisfied that
mediation would not resolve the dispute. However, mediation is
normally a necessary step where it may resolve the dispute. Courts
should normally stay proceedings until mediation occurs.
This means that in certain circumstances you may not have to do
mediation before commencing proceedings under the Retail Leases
In 2003 Fordham Laboratories leased retail premises in South
Camden to Kim-Po Sor and Vattanak Im for a period of three years
with an option to renew the lease for two further three-year terms.
Kim-Po Sor and Vattanak Im took up the first option and continued
their lease for the further three years.
After the lease expired in 2009, they continued to occupy the
premises as a monthly tenancy. Eventually Fordham Laboratories told
Kim-Po Sor and Vattanak Im that they wanted to end the tenancy and
required them to vacate the premises by 31 July 2009.
Fordham Laboratories brings action for cost of repairing retail
In November 2009 Fordham Laboratories brought an action in the
Local Court for $68,201.65 against Kim-Po Sor and Vattanak Im for,
among other things, the costs of repairing the retail shop
Kim-Po Sor and Vattanak Im argued that the proceedings could not
continue until the claim had been mediated in accordance with the
Retail Leases Act. The Act states that a retail tenancy
dispute may not be the subject of proceedings before any court
until a written certificate is produced stating that mediation has
failed to resolve the dispute, or the court is satisfied that
mediation is unlikely to resolve the matter.
The Local Court held that Fordham Laboratories had commenced
proceedings before complying with the requirements of the Act and
as a result the proceedings were struck out.
Fordham Laboratories successfully appeals Local Court
Fordham Laboratories appealed this decision, arguing that the
judge had erred in preventing the commencement of proceedings
before complying with the requirements of the Act.
On appeal, the New South Wales Supreme Court overturned the
decision of the Local Court and found in favour of Fordham
Laboratories. The Court held that mediation is not always required
before the commencement of proceedings.
This is because the Act allows courts to hear disputes where
they are satisfied that mediation is unlikely to resolve the
disputes. However, the Court noted that in cases where mediation
may resolve the dispute, courts should at their discretion stay
proceedings until mediation occurs.
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