Business dispute? Mediation is a step back from courting disaster

From COVID-19 to climate change, there could be any number of contributing factors to what many experts view as a rise in contract disputes, but in his decades as a mediator, Michael Miller has found the vast majority boil down to one thing.

“At face value, the dispute might be as simple as ‘I haven’t been paid’. But once you kick back the layers, there are usually deeper issues, and they almost always boil down to miscommunication,” he says.

“Someone said they’d do something, and they forget, or it wasn’t done in the way expected; perhaps external forces have changed how they delivered it.”

When the rent is due, for example, and you can’t seem to get paid, reasons can seem more like excuses, and the best path around them can be obscured by the fog of ill feelings.

In his capacity as director of Mediation Services for the NSW Small Business Commission, Michael will share his expertise in resolving commercial leasing and business-to-business contract disputes at NSW Small Business Month Expos during NSW Small Business Month 2024.

Ninety per cent of the 2500-odd matters that come to Michael’s team are resolved before reaching the courts, which he says is invariably a better outcome for all involved – if it can be managed.

“Court is expensive, but it’s not just money you may stand to lose – it’s a question of time, opportunity, relationships. People don’t usually come out of court, shake hands and say ‘congrats’ and then continue doing business,” he says.

“If we can get people talking more productively about options, more often than not, they’ll get better outcomes than they’ll find on the steps of court.”

Michael says the first step toward any dispute resolution is to understand your pathways.

“This is often where people stumble. Yes, one option is to pursue legal action; pretty much any matter can have its day in court. But it’s important to understand what that entails before you go down that path,” he says.

While Michael can’t provide legal advice, he can give clients an idea of what court might look like in practice and, importantly, help them assess whether it’s worthwhile.

“A low dollar matter is risky in court, even if you win. And while it’s easy to be swept up in an emotionally charged situation, or your friends might tell you that you have to fight, they don’t know the realities. That’s something we help clients understand – what it actually looks like,” he says.

“Consider early that even if you get a judgement, that’s just a piece of paper, not money. It grants you some certainty, but you can’t feed your family with it, nor will it pay your bills. You have to enforce it, and in cases of insolvency, even a judgment might not be fully enforceable. You may just find yourself waiting in a long queue for payment that may or may not come, and you’re out all the legal costs.”

Timing also plays a key role in deciding on your pathway. There will be circumstances in which deferring action is the most practical approach, or sometimes, even walking away altogether if the issue isn’t critical.

“Think big picture,” Michael says. “There’s no point in resolving a small lease issue if you’re three months away from the end of the lease.”

In some circumstances mediation can be achieved without a facilitator. NSW Small Business Commission’s Mediation Services will often help both parties ascertain if they can conduct their own private negotiation.

One of the advantages of having a neutral third party involved, however, is the removal of emotion from the decision-making process.

“Sometimes the matter is too far gone, or there’s a deal that can be made, but the parties can’t find it,” Michael says.

“Businesses are ultimately people – humans who make decisions and have stakes, small and large. Communication is difficult for many people, particularly under stress, and sometimes that stress isn’t even related to the other party – it could be that interest rates are going up or supply costs are skyrocketing.”

Michael will delve further into these issues as part of a line-up of experts at the NSW Small Business Month Expos throughout October.

Visitors can expect to come away with immediate and practical advice to apply to their own circumstances and have their eyes opened to the many resources available to them in a range of fields geared towards small business success.

Featuring a series of speakers and numerous networking opportunities, the expo is a must for small business owners and those who support them, such as lawyers, accountants, commercial real estate agents and other professional services.

The expo allows small business owners and their staff to network with government agencies and large organisations, connect with other small businesses, gain knowledge and learn new skills.

Michael says visitors will not only gain valuable insights, but also motivation, momentum and inspiration.

“Small businesses are incubators for ideas. They are the people and places that interface with our local communities,” he says. “This is an opportunity for them to make connections with each other, and form ideas as to what to pursue next.”

The NSW Small Business Month Expos take place across October in multiple locations, including Dubbo on 9 October, Wollongong on 22 October, Batemans Bay on 24 October and Queanbeyan on 29 October.