Many of you have been operating over the past 12 months under exceptional circumstances that have brought a great deal of pressure to your business – particularly if you are a retailer in a major city centre. For those franchise operations that operate in a leasing footprint environment, this would be very apparent, some of you may still be feeling the effects on your business and are still trying to negotiate rental relief. It is with this background in mind that I would share with you the process and steps involved in the mediation process via the Office of Small Business Commissioner in NSW.

Why mediate?

Apart from the fact that I believe that mediation in many cases can provide the right environment to facilitate a resolution to a dispute without the need for costly and emotionally draining litigation, under the COVID-19 regulations in NSW, mediation is compulsory.

How do I apply for mediation?

If you have been unable to come to a resolution in relation to a claim for rental relief then you simply need to complete a four-page application form which is administered through the Office of Small Business Commissioner. You need to complete your details, attach the nature of your occupancy agreement, amount of money in dispute and what you seek to achieve as an outcome. You need to email your application to the Office of Small Business Commissioner and then a case officer is appointed.

Your case officer will reach out to you and the other party seeking some preferred dates in order to conduct the mediation. A mediator is then appointed. You will need to complete a mediation agreement including an authority to negotiate (for example where an organisation needs to appoint someone on their behalf to negotiate for them) and pay a mediation fee.

Prior to the mediation, your appointed mediator will reach out to you seeking additional information or asking whether you may wish to submit any additional material which may assist in the mediation.

The mediation

The actual mediation is not conducted in person – my experiences have either been via a Zoom call or phone. The mediation is conducted in strict confidence and this gives the parties the freedom to speak frankly.

The mediation will begin with introductions between the parties and the mediator setting the ground rules. Each party is then given the opportunity to state their position. The mediator's role is not to arbitrate or to make any decisions, but to steer the parties during their negotiations, but drawing on points of similarity and difference.

In the context of a rental relief dispute, the guiding principle will be the regulatory framework. This is often a 'get real moment' where the parties need to face the reality of how they are permitted to press or how much ground they need to give, because the regulations set down certain basic rules in relation to rent relief.

It is often the case that notwithstanding parties expectation and preconceived ideas, the mediation will result in outcomes and issues that the parties may not have contemplated – the notion that what they were originally arguing over becomes insignificant in comparison to other issues that emerge.

The mediations I have been involved in can last two hours, all day or continue on for several weeks of follow up phone calls. The end result can be either:

  1. A settlement that is reduced to a terms sheet and a binding agreement; or,
  2. Certificate that mediation has failed to resolve the dispute.

You need to be comforted by the fact that the binding agreement is enforceable. This means that if either party does not adhere to what has been agreed to then you can rely on this like any other contract. On the other hand, the certificate that mediation has failed to resolve the dispute is an important step should you wish to take more formal legal action in the future.

A meeting of minds

Provided that the parties are prepared to compromise and accept that they may not walk away from the mediation with everything they wish for, it is my view that in many cases the mediation has the potential to restore some goodwill between the parties and get to the bottom of what is causing the dispute. It is often the case that the compromised position may see a party 'out of pocket' but this may still be far more preferable how far they are 'out of pocket' if they need to engage in lengthy litigation.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.