Alternative Dispute Resolution (ADR) is gaining traction as a popular alternative to litigation to resolve disputes. It is now a core subject taught to many law students across Australian Universities.
Leasing disputes are no exception and ADR, especially mediation, is increasingly used to resolve leasing disputes and preserve Landlord/Tenant relationships.
Leasing disputes can arise at any time during the lease relationship, such as:
- pre-lease negotiations,
- during the term of the lease, and
- make good requirements at the end of a lease.
Many leases are 5 or 10 years in length, including option periods.
This is a long period and understandably, or perhaps inevitably, a Landlord and Tenant might have a difference of opinion during a leasing relationship.
Mediation v Litigation
Landlords and Tenants can choose to resolve disputes through litigation or ADR.
This article concentrates on mediation as an alternate way to resolve disputes. Notably, however, processes such as early neutral evaluation or arbitration can be employed to resolve a dispute.
Litigation can be:
- Expensive – the solicitor/client costs and for the unsuccessful party, party/party costs;
- Long – it can take a number of years to resolve the matter, particularly if the party appeals a decision; and
- Uncertain – until the Court has made its decision the outcome is never known.
On the other hand, mediation:
- is a more informal process than litigation;
- is cheaper – parties can share the costs and the dispute can be resolved relatively quickly;
- is confidential, with mediations conducted on a “without prejudice” basis; and
- provides certainty for parties. While the parties may have to compromise their respective positions, at least both parties walk away knowing that position and can move forward with certainty.
Mediation can also be beneficial in that it brings the parties together face to face and helps them see and appreciate the other parties position, hopefully meeting somewhere in the middle.
Does Mediation Preserve Relationships?
If the parties have an ongoing business relationship, this change in perception can be invaluable.
Leasing disputes fall squarely into this category with most Landlords and Tenants having an ongoing relationship with one another. If mediation successfully resolves the Landlord and Tenant issues early on, the balance of the lease term may continue. This resolution may also allow any make good discussions to proceed smoothly.
When parties choose litigation, they commonly tend to become entrenched in their positions. You can easily maintain a combatant position when ensconced in your lawyer’s office and not sitting across the table from your opponent and considering his or her point of view.
A successful mediation relies upon the willingness of all of the parties to participate fully and voluntarily in the process. It requires the parties shifting their perception. They need to focus on resolving the problem, rather than rehashing past behaviour and slinging personal attacks.
Is Mediation right for your dispute?
Although Mediation is not necessarily successful in all disputes, it is certainly worth pursuing and committing to the process wholeheartedly. It might prove a cheaper and less stressful way to resolve your dispute.
Should you have any questions, please do not hesitate to be in touch. We have experienced leasing lawyers and dispute lawyers who advise on commercial leases and leasing disputes. We would be delighted to assist so please call our legally trained client care team on 1300 544 755.