7 minute read
Are you dispute ready?
Setting yourself up for success in litigation
Anna Taylor MICM
Nick Boyce MICM
By Anna Taylor MICM and Nick Boyce MICM*
With cash becoming tighter and collection and insolvency action on the rise, there is often a direct correlation to an increase in disputes.
Not all disputes are avoidable, however, during periods where customers may be feeling the pinch, the “disputes” that are raised tend to be more dubious and are quite often a tactic to either buy more time or obtain some other benefit (such as a discount or completely avoiding liability).
It is these types of “disputes” that can either be avoided or swiftly dealt with if you are well prepared.
The stages at which a dispute may be resolved are as follows. 1. Pre-dispute 2. Emerging dispute 3. Dispute The ‘Dispute Ready Checklist’ within this article will assist you to identify whether you are equipped to adequately and swiftly deal with a dispute.
Pre-dispute
The best way to deal with a dispute is to avoid it altogether. Most disputes are the product of a failure to employ and enforce sound practices and policies.
Examples of these include failures to: 1. identify the contract or terms the parties are trading on; or 2. adequately evidence the provision of the goods or services supplied. Conducting regular reviews of customer accounts and assessing your position and potential risks are essential to avoiding issues that may arise in the future.
Unfortunately, most issues are only considered in retrospect when a dispute has been raised, the relationship has soured and you are considering what rights you may have, only to find out the contract that you thought you could rely on is unenforceable or you cannot provide sufficient evidence to clearly substantiate your claim.
It is these little things that can put you in the strongest position to either succeed in defeating a claim or negotiate the best possible outcome.
From a litigation perspective, the more you can limit factual disputes and resolve them in your
favour, the more likely you are to be successful and less time and money you will spend on the way through.
Emerging dispute
The next phase in the dispute cycle is where a dispute is just starting to emerge. An example of this may be the customer mentioning they are having some issues with the quality of particular products, or they have concerns in relation to delays in the supply of services.
The worst thing that you can be doing in that situation is pretending you did not hear the complaint and sticking your head in the sand.
What is paramount in this phase is to ensure that you: 1. keep the dialog open with the customer; 2. discuss the issues with a view to coming to a resolution; and 3. document any resolution, including which party will be liable for any loss or damage. The third point is the most important. So often a matter progresses to legal proceedings and the client says something like “they told me it was all good, don’t worry about it and we’ll sort it all out later”. Unfortunately taking the “she’ll be right” approach can result in expensive and time consuming litigation that could have been simply resolved by the parties documenting what they ultimately agreed between them.
Dispute
If you have not managed to either avoid or resolve the issue in the earlier two phases it is likely that legal proceedings may be imminent.
At this stage, you should be: 1. collecting and collating your evidence to substantiate your claim; 2. obtaining expert advice on your legal position and the strategy that should be employed to resolve the matter; and 3. giving consideration to whether any attempts should be made to resolve the matter on a commercial basis prior to incurring the costs of engaging in contested litigation. ➤
Achieving an outcome in litigation is all about momentum and pressure.
By employing a strategy that places the most pressure on the defendant you can put them in a position where their only option is to capitulate to your demands. What this means from a client perspective is being able to promptly provide instructions to your solicitors and produce the evidence necessary to support your claim.
If the defendant’s strategy is to delay, the court process can be manipulated to accommodate this. This is were the preparation during the earlier stages can be used to your advantage either through: 1. an application for summary judgment; or 2. promptly progressing the matter to mediation, or a trial (if required).
Summary judgment allows a plaintiff to have a matter determined without a full trial. It can only be used in the clearest of cases where there is no evidence that requires testing. For example, if the parties dispute whether a particular conversation or event occurred, the court needs to hear each parties’ version, have that tested by crossexamination and then determine which parties’ version more likely occurred.
We recently acted for a client in a matter where we were able to employ most of the strategies outlined above. A dispute had arisen between our client and its customer and a statutory demand was issued. The parties agreed on terms to settle the dispute that were recorded in a deed of settlement. The deed contained terms to the effect that it was the ‘entire agreement’ between the parties, thereby excluding any representations made during negotiations, and our client was entitled to judgment in the event of default.
A default subsequently occurred and legal proceedings ensued. To our client’s surprise, a defence was filed alleging that representations were made during negotiations to the effect that terms within the
DISPUTE READY CHECKLIST
Subject Question If the answer to any of the questions is NO, then…
Contract Do you have a contract with your customer?
If you already have a contract, do the rights you have under it adequately protect you and set you up to best deal with a dispute?
Performance of contract Do you document how you perform your obligations under the contact?
Do you have the customer contemporaneously acknowledge performance of your obligations?
Resolution Have you recorded the resolution of a dispute in a document that identifies which party may bear any fault or liability? Negotiate the terms and reduce the agreement to writing.
Consider having your contractual suite of documents re-drafted to give you the best protection and include clauses like: 1. an entire agreement; 2. no set off; 3. limitations on liability for certain matters; 4. indemnity costs; and 5. a bar on disputes being raised after a certain time period after performance.
Implement processes to ensure that you evidence performance and can promptly produce this to the customer or your solicitors if required
Reduce any agreement to writing.
deed of settlement would not be enforced and further time would be afforded to the defendant to raise sufficient funds through a capital raising process to resolve the matter.
Our client promptly filed an application for summary judgment and was successful in obtaining judgment for the full amount of the claim, interest and costs on the indemnity basis because they took the simple step to oust the prospect of a future dispute by way of an appropriately drafted deed of settlement.
Summary
Disputes are costly and can be a significant distraction from more important matters within a business.
If litigation is required, there are strategies that can be employed to build momentum and put you in the best position to achieve a positive outcome, however, this is never as simple as taking the steps that could avoid a dispute altogether.
Employing sound policies and practices will help you to promptly knock any disputes on the head, keep the money flowing into the business and avoid having to pay your solicitor’s fees (whilst our fees are reasonable, we know that we don’t come cheap).
*Anna Taylor MICM Principal Results Legal T: 07 3234 3205 E: ataylor@resultslegal.com.au
*Nick Boyce MICM Results Legal Principal T: 1300 757 534
resultslegal.com.au
