Sunday, July 3, 2022

Focus on problem solving

Disputes are an inevitable fact of life, but mediation over farm business disputes may deliver more creative, ‘win:win’ outcomes for both parties at a cost far lower than formal court-based litigation or arbitration.

Brendan Cullen, a director for Hamilton based law firm McCaw Lewis, outlined some options for parties locked in disputes at a recent KPMG agribusiness seminar.

He has seen a number of disputes where communication had broken down entirely, parties were completely alienated from each other, and violence was even breaking out between individuals. In one case that involved one party attempting to run the other down with a tractor.

Before things degenerated to that extent however, ‘alternative dispute resolution’, a non-binding, non-court based approach was often a pathway to an acceptable outcome.

Mediation between parties could often deliver more creative solutions to dispute problems that court bound litigation is unable to accommodate.

“For example, suppose there’s a farm deal where one party claims the other still owes $1 million. It could go to court and go either completely in favour of one, paying the $1m, or completely against.”

A mediated solution may recognise the inability of one party to pay the full amount, and build in a solution that could allow for part-payment immediately, and future payment in the form of silage or hay over a set number of years, for example.

“It is a solution a judge or arbitrator just could not mould themselves,” he said. “Sometimes in court settlements even the people who win are not happy with the outcome. There is greater opportunity to achieve that through mediation.”

In addition, using the skills of an experienced mediator will generally cost significantly less than arbitration or seeking a court sanctioned litigated settlement on a dispute.

Mediation was a suitable option when problems needed to be resolved in a reasonable timeframe, preferably in the absence of publicity, as mediation is a private and confidential process. When the positions of the two parties were reasonably close, and there was a desire to continue the relationship after dispute settlement, mediation offered a possible pathway.

If the dispute involved a number of parties it might also be easier to put together a constructive settlement via a mediator.

Cullen said the ‘without prejudice’ aspect of mediation, namely that any open discussion was not available as evidence in possible future court action, allowed for freer, more open discussion between parties. However there were times when mediated resolutions were not the preferred solution.

“It could be neither party sees any value in a rapid solution, or a legal precedent is required to interpret some aspect of a contract.”

If the relationship had completely deteriorated and urgent action was necessary, a court-ordered injunction may be the only option to protect livestock or property involved in the dispute.

A number of standard form farming agreements such as sharemilking agreements include dispute resolution provisions which provide for conciliation, a process which has a number of similarities to mediation.

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