Getting into a dispute can at times be an unavoidable part of running a business, whether it be with a supplier, a customer, your tenant or landlord.

Unfortunately, disputes can be difficult to resolve by yourself. Understandably there are often strong emotions involved and it can be difficult if not impossible to even talk to the other party. It’s also easy to lose sight of what you are trying to achieve.

Mediation can be a highly effective and efficient way to resolve disputes. It is almost always cheaper and quicker than going to court or a tribunal. In fact, over the long term the overwhelming majority of disputes the Commission deals with are resolved before the need to take this route.

Mediation helps the parties communicate with each other when communication is difficult. It helps people focus on finding a solution that both parties can accept.There are costs to a long, drawn-out dispute, especially if it ends up in court and mediation helps the parties to a dispute weigh all the considerations so they can understand the best outcome for them.

I encourage you to review the content of this guide and make enquiries regarding how mediation may help you. Please avoid unlicensed or unqualified individuals who often represent themselves as specialists or experts in mediation.

The Commission is highly experienced at helping to resolve even the most difficult disputes. Our mediators are qualified and accredited professionals, dedicated tobringing parties together and overcoming roadblocks to find a solution.

This guide explains how the mediation process works and how it helps to resolve disputes. It is aimed at those about to go through mediation, or those considering whether they should. It will also provide useful guidance and tips for those who just want an expert insight into how to resolve a business dispute.

Chris Lamont
NSW Small Business Commissioner

It is a fact of life that business dealings and relationships can lead to disputes.

Contracts regularly strike trouble when something unexpected happens, or when one side doesn’t think the other has delivered what was promised. Maybe you are a subcontractor who remains unpaid for work by a builder. Perhaps you are in conflict over a lease for an office, restaurant, shop or industrial site.

Problems when doing business can also arise from events beyond your control. These could be anything from supply chain issues to market changes, loss of key personnel or even a global pandemic.

These situations can be stressful, frustrating and time- consuming. If you are reading this guide, you may be facing the difficult choice of:

1. doing nothing and waiting to see if things get better
2. trying to negotiate with the other party yourself
3. going to court to seek a legal judgement
4. using a mediator to try to settle the issue early and out of court.

This guide focuses on using a mediator to try to settle the issue out of court. Mediation involves using a neutral third party to help you reach an agreement with another person or business entity as quickly as possible. The NSW Small Business Commission offers a cost-effective and confidential mediation service.

Mediation is usually the best way to resolve a dispute. It is a fast and flexible approach and available for all civil matters involving businesses. The mediator provides a much-needed circuit-breaker by speaking to the parties, either in person or via videoconference.

As early as possible, the mediator will help everyone find a solution they can accept, without having to pursue litigation through the courts.

In certain types of disputes, you must be able to show that you have tried to resolve your dispute by mediation before a court or tribunal will hear your case. Mediation is required under NSW law before a court will consider

a case that involves retail leases, for example. Many commercial contracts also contain dispute resolution clauses requiring the parties to use mediation if a dispute arises.

Any party at any stage can contact the NSW Small Business Commission and its Mediation Services team about what to expect of the mediation process.

The mediator will help identify all relevant issues and options, and seek to find areas of agreement between the parties. If a settlement is reached, the details will usually be recorded in writing and signed jointly before the mediation session ends. When you have reached a satisfactory conclusion the parties should enter into a binding written arrangement, such as a deed. 

Mediation can also occur when commercial litigation is already underway, such as in contract matters. Here, the judge, magistrate or tribunal member typically orders a pause in proceedings so everyone can try to sort out their differences in private. If an agreement is reached, the parties can request it be recorded and made enforceable as part of the court’s orders.

Finally, mediation can even occur after a court has made its decision. Although less common, this happens where there are still outstanding points of contention. A mediator can help sort out these issues, allowing both parties to move forward.

Speed

Using a mediator is much faster than going to court. If you and the other party reach an agreement, it is best to put it in writing and sign immediately. This effectively becomes a legal contract and is enforceable. (In the rare situation where one party fails to comply, it is possible to obtain enforcement through a court order). By contrast, if a case goes to court, it usually takes many months to gather evidence and prepare for multiple hearings. A court judgement may then have to be enforced through other processes, involving even more time.

Cost

Mediation helps avoid the heavy expense of preparing for and appearing in court. The major cost in any court process will be lawyers, barristers, and expert witnesses, who typically charge by the hour. The unsuccessful party in court can be further penalised by a judge’s order to pay the winner’s legal costs. A mediated settlement avoids most of these costs, and the parties can agree on who pays for whatever costs do arise. Even if you end up in court after an unsuccessful mediation attempt, it is likely that you and the other party will have significantly narrowed downthe issues in dispute.

Flexibility

Mediation gives you more control over how a dispute is handled. A session can be scheduled at a time and location that suits both you and the other party. Rather than have a solution imposed by a court based on a narrow set of legal issues, the parties can decide what to do while looking at the commercial situation in full. Agreements reached through mediation can include practical remedies and personal outcomes – not just purely legal ones.

Confidentiality

Unlike court hearings, mediation remains private and is not open to the public. If a dispute goes to court later, anything said or produced during the mediation session cannot be used as evidence. You also have the option to privately share information with the mediator that can help guide the conversation. This information will not be passed on to the other party without your consent.

Satisfaction

Mediation is a less formal and adversarial way to resolve disputes. This can be important when you want to limit personal stress and anxiety, and if you want to maintain a professional relationship with the other party. Simply talking through the situation can help parties understand each other’s perspective. This calms things down, allowing everyone to refocus on the future.

A neutral, confidential service for resolving disputes.

The NSW Small Business Commission is an independent statutory agency, established by the NSW Government. We provide a neutral, confidential mediation service for retail tenancy disputes and other commercial lease arrangements. We can also help resolve other types of business disputes.

Mediation is also available for matters involving:

• small businesses and government agencies (including local councils)
• contractors and subcontractors
• franchisors and franchisees
• motor vehicle repairers and insurance companies
• motor vehicle manufacturers and distributors.

Trained and accredited as part of the National Mediator Accreditation Standard system, our mediators can help find options when a party to a contract is unable to fulfil commitments or make payments. Personalised support is also available to those facing potential insolvency and bankruptcy.

As noted earlier, if you have a retail lease dispute, it is compulsory under NSW law for you to engage us before going to court.

If you think you will need a mediator, the first step is to get in touch with us before filing an application.

Contacting the NSW Small Business Commission’s Mediation Services team is simple.

Any party to a dispute can approach us directly or encourage the other party to do so. A lawyer, agent or other legal representative can also get in touch with us on behalf of their client or principal. You can even ask the other party for permission to receive a call from us, and then send us their contact details.

An application for mediation should tell us who you are (the applicant) and who the other party is (the respondent). It should also provide basic information about the problem or dispute. We will only need key documents to start with, such as the lease or contract.

There is no application or filing fee.

An officer from the Mediation Services team will be assigned to your dispute. The officer will contact both parties to discuss the process and answer any questions. Our active case management approach offers every opportunity to resolve the matter, even before formal mediation begins.

If your dispute cannot be resolved at an early stage, we will offer a date when a mediator is available. For standard matters, the Small Business Commission aims to offer a date within five weeks of the application being processed. For urgent matters, a mediation session can be arranged within days. In all cases, we aim to set a date and time that works best for all parties.

I haven’t been paid by another business for a job I’ve completed. What can I do?

If you are unable to start a conversation with the other party and negotiate a mutually agreeable outcome, you should contact our Mediation Services team. AMediation Officer can help you to understand your options in a confidential environment.

The owner of my shop premises won’t carry out a repair. What can I do?

You may need to understand what repair obligations you have under the lease, and what the landlord has agreed to. Retail and commercial leases are often very different to residential leases. Our Mediation Services team can assist all parties – including real estate agents, property managers or legal representatives – to understand how best to resolve the issue. Remember that parties to a retail tenancy dispute are required by law to attempt mediation before going to a court or tribunal.

I’m behind on rent and have been locked out of my tenancy or issued with a termination notice. What can I do?

Falling too far behind on rent payments is likely to be a fundamental breach of your commercial or retail lease. There is usually a ‘grace period’ set out in the terms of the lease that allows a certain number of days before you are locked out of the premises, so it’s a good idea to check your commercial contract. Deliberately withholding rent is risky without an agreement or court order, even when the parties are in dispute. You should consider seeking legal advice and contact our Mediation Services team to discuss the options available to both parties.

I’m about to give a tenant notice to vacate the commercial property I own, but I’m concerned they won’t leave in time. What can I do?

If the fixed term of the lease has expired, the tenant can continue to trade on a holdover or month-to-month basis. If the property owner wishes to reoccupy the premises, the lease should specify a notice period. For retail leases, there may also be a notice requirement that applies under that law, regardless of what the lease says. If the tenant would like to stay on for longer, their options would include trying to negotiate for an extension while they relocate or wind up the business, or making an offer to re-sign for another fixed term. Either party can contact our Mediation Services team for further advice.

I’ve sold a faulty product to a consumer, but the manufacturer or distributor will not engage with me. What can I do?

Court action against a supplier, manufacturer or distributor is usually a last resort, particularly if this relationship is vital to your overall supply chain. Negotiation, and potentially mediation, are likely to be the best options to resolve the issue. Contact our Mediation Services team for further advice.

I’m a building and construction subcontractor working on a government project and a dispute has arisen. What should I do?

If the issue you’re experiencing can’t be resolved through communication or any dispute resolution clauses in the contract, you may have several options. These include mediation; adjudication through the Building and Construction Industry Security of Payment Act 1999 (NSW); and obtaining legal advice and going tocourt. Contact our Mediation Services team for help.

Consider what is most important to you.

By engaging a mediator, you and the other party are making a genuine effort to reduce anxiety, stress, and expense – and achieve a better outcome. So, consider what matters to you in resolving this dispute and what doesn’t. Are you trying to minimise costs? Obtain an apology? Or to simply sort out an issue so you canshake hands and go your separate ways, or continue a business relationship? Next, you should consider what is important to the other party, and if their interests mirror yours. Going through this process beforehand will help you communicate effectively during the mediation session.

Gather any key documents.

It’s a good idea to collect any documents that the other side might need to see before mediation begins. This will help you avoid having to adjourn the session just  you can fetch more information. It will also allow you to make the most of your time with the mediator. Having the main records on hand will provide clarity and certainty throughout the process.

Have other support available.

There may be other key people that you would like to be involved in any decision making, at least by phone or video chat, if not in person. If you think you will need an interpreter, you should organise one in advance. Bringing a legal adviser can also be an option. The Mediation Officer assigned to your dispute can helpboth parties understand who will be in attendance and resolve any issues ahead of time.

Mediation is a flexible form of dispute resolution.

Most sessions start with the mediator welcoming the parties and other representatives who may be present in the room. The mediator explains the process they intend to follow and seeks to gain agreement on some ground rules. Both you and the other party will have the opportunity to briefly summarise what led you to this point, and to identify what you believe to be the relevant issues.

The mediator will play a constructive role by framing the conversation, posing questions, encouraging discussion, and offering new ways of looking at the situation. It is common for the mediator to meet with the parties separately during the day. Both you and the other party can take breaks and discuss the matter privately with others, including legal advisers. It is the duty of all parties to the mediation to participate in good faith and observe the agreement to keep everything confidential.

During the session, the mediator and the parties will typically generate and discuss ideas to resolve the matter. There may be several options that satisfy the interests of both parties. Participants will be encouraged to test the consequences of all potential solutions, as well as the likelihood they will be able to honour any commitments made. The mediator can also help the parties compare potential settlement options against the risks of pursuing the matter all the way through to a court proceeding.

The session will continue until the matter settles or it becomes apparent that the parties will be unable to reach an agreement on that day. Further mediationsessions can be scheduled if necessary.

A mediator can help you settle the dispute in full or in part. In other situations, no settlement is possible.

If an agreement has been reached, the parties will be encouraged to make a written record that is legally binding and enforceable. This will help both parties to fulfil any obligations, as well as have a shared understanding of what cannot or should not be done. If court proceedings were already underway, the parties can then notify the judge or magistrate that the matter has settled.

Perhaps the mediation may be inconclusive but offers to settle remain on the table. If so, the parties may make notes to consider in private, with a clear understanding of any deadlines.

If no agreement is reached on the day, either party may request a certificate or letter stating that the mediation attempt was unsuccessful. This is particularly relevant in disputes over retail leases where the parties must show compliance with NSW law.

But remember – even if you are unable to reach agreement, the very process of discussion can clarify what is important and relevant in your dispute. It can also reveal what issues are not worth spending further time, energy and money on. Mediation can always resume if more information emerges. There may be further opportunities to find a settlement as time goes on.

As always, you may have to balance whether making or agreeing to an offer is better than the cost and uncertainty of court action.

Daniel Massey, a mediator for the NSW Small Business Commission, explains why mediation is more helpful than using lawyers and going to court.

“I’m a solicitor, a sole practitioner, and have been working in mediation since 1991, including the last four years with the NSW Small Business Commission, on its external mediation panel. I think it’s a great service that the Commission offers to the public – it’s cheap and it’s efficient.

I’ve been extremely busy in the past year. In November 2021, I did 14 mediations in just 20 business days, all COVID-related lease disputes.

I became a mediator because I had seen how useful it was in disputes when I was acting for clients in the construction industry. I also think the money that’s spent on litigation is often wasted money. What litigation does is keep the parties apart as opposed to bringing them together in an environment where they can have a bare-bones talk about the issues.

If you have spent a lot of money on legal fees it can be a disincentive to settlement. And if the parties in
a dispute are only communicating by sending letters through their lawyers, it can also just dig them further into their positions.

In a mediation, I try to get the parties actually talking directly to one another rather than through their lawyers. Most people still bring a lawyer, though it’s not compulsory.

When you talk to the parties, you find out what’s really important to them. Often people will tell the other side things about their situation that might be nothing to do with the law or the strict application of the regulations. But those things can have a real impact on how a landlord looks at the tenant, for instance.

At the end of the day, it’s the two people in dispute who have to decide to settle, not their lawyers.” 

- Daniel Massey
Mediator

Your choices in any dispute fall into four categories:

1. do nothing and wait to see if things get better
2. try to negotiate with the other party
3. use a neutral third-party mediator to help both parties find an early settlement
4. go to court

Five advantages of using a mediator

1. Speed: Using a mediator is much faster than going to court.
2. Cost: Mediation helps avoid the heavy expense of preparing for and appearing in court.
3. Flexibility: Mediation gives you more control over how a dispute is handled.
4. Confidentiality: Unlike court hearings, mediation remains private and is not open to the public.
5. Satisfaction: Mediation is a less formal, aggressive, and adversarial way to resolve disputes.

Mediation is available to:

Parties to a retail tenancy dispute under the Retail Leases Act 1994

• other commercial leasing disputes
• small businesses and government agencies (including local councils)
• contractors and subcontractors
• franchisors and franchisees
• motor vehicle repairers and insurance companies
• motor vehicle manufacturers and distributors.

We can take applications from sole traders, directors of companies, people employed in the business, agents, and other legal professional or other advisors.