Litigation Learnings Series
Practical tips on how to avoid
being caught up in litigation
By Paul Vincent
Paul Vincent has been working in the litigation field for over 30 years and during that time has been involved in hundreds of very costly disputes, many of which could have been avoided. This series of short articles draws on Paul’s litigation experience and provides practical tips on how to avoid being caught up in litigation. Each topic will be supported by an actual case study that will demonstrate the importance of being “Litigation Smart.”
Types of Disputes
In my last paper, I discussed the general types of disputes you may become involved in and the steps you might take to avoid a dispute. However, the time will come when, despite your best efforts, you find yourself involved in a dispute.
Before we discuss how you might resolve your dispute, it is important to understand what type of dispute it is, as that may influence how you go about resolving it.
My next paper will discuss options for resolution but this one will help you identify what type of dispute you have. Let me remind you of the types of disputes you may encounter:
- Disputes on Matters of Principle
- Disputes in Law or Legal Interpretation
- Disputes Requiring Compromise
- Win/Lose Disputes
All disputes have one thing in common………..they all get resolved.
I am going to use fictitious Jane’s turbulent life as a case study in this paper.
Disputes on Matters of Principle
Jane operates the only vet clinic in a small country town and has just sacked her assistant Wayne because she has just discovered that Wayne has been using a leather strap on the animals to discipline them. Jane does not tolerate any cruelty to animals, and once she discovered Wayne mistreating the animals Jane immediately sacked him.
Wayne is suing for unfair dismissal and wants his job back. Wayne loves working with animals and that has been his only job since finishing school.
This is a matter of Principle. Jane will not work with anyone who she believes is cruel to animals and Wayne is unlikely to change his behaviour. The question of re-instatement is not negotiable for Jane. If Wayne insists on seeking re-instatement, then this matter should go straight to a hearing.
In disputes where conflicting principles are at issue, the court is usually the best means of resolution.
However, if Wayne chose not to press for re-instatement, resolution would be just about money and a resolution could be negotiated.
Disputes in Law or Legal Interpretation
Jane has leased her vet premises from Bill and Paul Pty Ltd (the “Company”). The lease drafted by the Company’s lawyer Kevin, sets out that the term of the lease is for 5 years from 1 June 2007 with annual CPI increases and a further option period of 5 years again with CPI increases. The base rental for the option period is the annual rental in year 5 of the initial term.
The lease expressly provides that Jane must give notice to the Company “before the beginning of the last month of the 5th year from commencement of the lease.”
The Company allowed Jane occupation of the premises in early May 2007 (the first month was rent free) before the lease was finalised (as some minor lease terms in respect of outgoings were being amended). The lease was eventually signed in October 2008.
On 10 September 2012 Jane telephoned Bill (a director and shareholder of the Company) and advised him of her intentions to renew the lease for the 5 year option period and Bill agreed on behalf of the Company. Paul now claims on behalf of the Company, that Jane should have exercised her option by the end of May 2012 by written notice to the registered office of the Company and that Bill’s agreement could not bind the Company to the option.
Both parties want to continue the tenancy, but the Company wants a fresh lease so it can increase the rental, as property values have tripled in five years and a CPI increase is way short of market rental. Jane of course wants to take advantage of the lower than market rental for the next 5 years.
This is a matter of legal interpretation and more than likely will need to be resolved in court.
Disputes Requiring Compromise
Jane owns her own home but is nearing retirement. Some time ago, her son Wayne convinced Jane to mortgage her home to secure a loan that he took out with the Big Bank. Wayne defaulted on the loan and spent all his money on drugs and gambling and has vanished. The Big Bank is planning to exercise its power of sale under the mortgage documents but that sale will not fully satisfy Wayne’s outstanding loan.
What are the options here for Jane and the Big Bank?
How is this dispute best resolved?
What are the issues for Jane?
What issues for the Big Bank?
A compromised settlement is likely here with a low likelihood of going to court.
Jane has been waiting for a kidney transplant for the last 3 years. She is on dialysis 3 days a week and with proper management could last 3 more years on dialysis. Jane has been on top of the waiting list for 1 year but the last three donor kidneys were not compatible so they went to others down the waiting list. Jane is desperate.
Tom was added to the waiting list 3 months ago and is at the bottom. He’s a heavy smoker and overweight and less stable than Jane. He is also on dialysis but won’t survive more than 6 months.
A kidney has just become available and is compatible with both of them.
Should they sit down and negotiate who gets the kidney? How is this dispute resolved?
Someone must win and someone must lose. It is probably kinder in this case to have someone independent make the decision. Imagine asking them to negotiate for the kidney from their respective hospital beds. That’s why there are clear and fair guidelines for these events. Someone independent will make the decision based on these guidelines.
In which category does your dispute fit?
An Important Message
While every effort has been made to provide valuable, useful information in this publication, this firm and any related suppliers or associated companies accept no responsibility or any form of liability from reliance upon or use of its contents. Any suggestions should be considered carefully within your own particular circumstances, as they are intended as general information only.