Mediation is a process where a neutral third party called a mediator helps people in conflict negotiate a mutually acceptable agreement. The process assists both parties to understand the other party's point of view and reach a compromise.
During the course of 2020, the COVID-19 Omnibus (Emergency Measures) (Commercial Leases and Licences) Regulations 2020 (Regulations) (and further regulations) were enacted that required any party to a commercial (including retail) property dispute attend a mediation before issuing a claim in the Victorian Civil and Administrative Tribunal (VCAT). The Victorian Small Business Commission (VSBC) offered free mediation services for landlords and tenants who were in dispute. A number of matters were heard by the VSBC with the majority resolved successfully.
A compulsory mediation is no longer a requirement and is an option that can be used at any time by the parties for a minimal fee. So how does the process work and how can you use it to your benefit? Below are a few tips and tricks for you to refer to in preparation for a mediation.
When to use a mediation
Mediation is appropriate to use in a wide range of disputes and covers almost any kind of dispute you can think of. It is frequently used in family law disputes and civil disputes with forms of mediation even being used in criminal law.
In relation to property issues, mediation can be used for any (or all) of the following):
- Disagreements about terms of the lease
- Break lease clauses
- Rent reviews
- Non-payment of rent
- Repairs and maintenance disputes
- To settle various issues at once: for example a dispute over claims made by a tenant for rectification works and a claim for outgoings
Who controls it?
Mediation is generally a voluntary process that is controlled by the parties to a dispute and assisted by an impartial facilitator, the mediator. The mediator does not act as a judge or give legal advice. To be effective, the mediator has to remain neutral in the process.
Due to the presence of an impartial mediator, the mediation process has the ability to address power imbalances between the parties. You often have battles between the big end of town and the small end of town, between the mum and dad and the bank or the insurance company. If you have an effective mediator, this imbalance will not be played out in the mediation.
How does mediation work?
In a textbook mediation, the mediator will call all the parties into a room together, give an opening spiel about how the process works and then allow each party to address the other party and the mediator about what their view of the dispute is and how they would like to see it resolved.
The parties will then break off into private rooms where the mediator will go between each party and have confidential discussions.
Currently, due to COVID-19 restrictions, the majority of mediations are being conducted through Zoom meaning parties do not have to be in the same physical room . Parties just need to ensure they have a clear computer screen and good internet connection. The mediator will set up the Zoom conference and send the details as required.
Preparing for mediation
Below is a list of questions to consider before you attend the mediation.
- Do you have authority to make a decision?
- What outcome do you want to achieve?
- What is your bottom line?
- What compromises would you accept?
- If it is a monetary dispute, prepare a spreadsheet of calculations
- If it is a dispute about building defects – have images
- Prepare a short statement on behalf of the landlord
- Check your legal position – do you need to speak to a legal advisor?
- Confirm the current position with the landlord
- Consider all the issues (i.e. any settlement amount inclusive of GST)
Positives and Negatives
Below are some pros and cons of the mediation process.
Do's and don'ts
To be successful in a mediation, you should consider the below do's and don'ts.
Tips for a successful mediation
No two mediations will be the same. To be successful in a mediation the key is to be prepared for any outcome. Remember:
- It is all about strategy, mediate like you are playing poker or chess – calculated and never showing your hand (until absolutely necessary).
- You need to expect the unexpected. Be prepared to change your game plan, anything can happen on the day.
- Keep the emotions out of it. Know what you are trying to achieve and keep this in mind when attending the mediation.
What happens if you don't settle?
If you do not settle at the mediation, it does not mean that it is all over. A few things you might consider doing after the mediation:
- Send a letter of offer later that evening. After the mediation, parties may tend to have a change of heart. There is nothing stopping you from sending a follow up offer.
- Schedule another mediation.
- Issue proceedings at VCAT. If the mediation is unsuccessful, then the mediator will issue a Certificate of Unsuccessful Mediation, which will allow you to take the matter to VCAT. However, if your claim is for rent then it may not be necessary to go to VSBC or VCAT; there are circumstances in which you can initiate the matter immediately to the Magistrates Court.
Who to contact for mediation information
The primary legal bodies for these kind of disputes in Victoria are:
- The Victorian Civil and Administrative Tribunal (VCAT)
- The Victorian Small Business Commissioner (VSBC)
- The Law Institute of Victoria (LIV)
- The Real Estate Institute of Victoria (REIV)
We also set out below a list of service providers for each state that can be used to facilitate the mediation process.
|VIC||Victorian Small Business Commission||$195 for half day$390 for full day||Complete the relevant application form here. The VSBC will decide if mediation is appropriate and contact the relevant parties.|
|NSW||Small Business Commissioner||$152 per hour||Complete an 'Application for mediation of a lease or bond dispute' form here. The NSWSBC will organise a date for mediation and appoint a mediator.|
|ACT||Local Business Commissioner||Free||Contact the COVID-19 Local Business Commissioner here.|
|QLD||Queensland Small Business Commissioner||Free||Lodge an application on the QSBC website. The QSBC will decide whether or not to assign a mediator to the case.|
|TAS||Consumer, Building & Occupational Services ('CBOS')||Free for residential buildings||Provide Notice of Dispute to other party, then lodge an
application with CBOS – contact page here.The Director
of Building Control then decides if mediation is appropriate.
The website suggests this service is for residential building disputes only; however, it does recommend referring retail lease disputes to CBOS as well.
|NT||Commissioner of Business Tenancies||Free||Complete the 'Application to Commissioner of Business Tenancies for Determination of Retail Tenancy Claim' form here.|
|SA||South Australia Small Business Commissioner||$195 per session||Lodge dispute at the SA Small Business Commissioner website. The Commissioner will decide which form of ADR is appropriate and appoint a mediator if necessary.|
|WA||Small Business Commissioner||$125 per session||Contact the Small Business Development Corporation, whose business advisers will advise if mediation is appropriate.A case manager will then appoint a mediator for the parties|
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. Madgwicks is a member of Meritas, one of the world's largest law firm alliances.