With the cost of justice being pretty high for most people, solving small disputes can easily become uncommercial. Thanks to a particularly commercial client, I recently had cause to create a process by which these small disputes can be resolved and was able to see how it worked in practice. As I went through this process, I found myself feeling a bit like Judge Judy, tv’s source of quick fix solutions to legal problems.
In this article, I share the story of this matter, changing all key details to protect the confidentiality of my clients.
What was the dispute?
Ken owned an industrial block with an old, damaged warehouse. He contacted Ari who ran a demolition business to get a quote for clearing the block. Ari provided a quote which stated that it covered “Full demolition of site as per drawings”. The drawings showed that there were four large trees and several smaller trees on the site. The quote also had a condition that “tree removal close to the boundary will be cut near to ground level …”
After receiving the quote, Ken and Ari met onsite to clarify what was included. Ken’s architect was also present at the meeting. There was a discussion about trees that were on the property, but the parties have different recollections of whether it was agreed about them.
As works were progressing, Ken and Ari met onsite again. Ari advised Ken that the trees were not included in the quote and that an additional amount of $4,300 would be payable if Ken wanted the trees removed. Ari had already removed the smaller trees at the front of the property. Ken believed the tree removal was included in the quote and did not agree to pay the additional sum.
Ari completed the demolition of the site excluding the tree removal. Ken was very happy with the work done. When Ari issued the invoice Ken paid the amount invoiced less $4,300 for the tree removal work.
What the clients wanted
Both parties wanted to finalise this dispute. Although the amount was small, each needed closure. Ari wanted to be paid the full amount of the invoice and was happy to remove the trees – the cost of which had increased to $8,000 as it would be done as a stand-alone service. Ken wanted the trees removed and was happy to pay the outstanding amount once that work was completed.
Each party understood that the cost of legal advice and VCAT proceedings would easily exceed the value of the dispute.
The process
After being approached by Ken, I created a solution which would give the parties the best chance of reaching an amicable resolution. The process looked like this.
Ken and Ari signed an agreement appointing me as an independent Neutral to hear their arguments and make a determination of an outcome. Under the agreement, they agreed that they would be bound by my decision.
Upon signing of the agreement and payment of the fee, each party had the opportunity to speak with me and/or put forward their case in a written document.
We then arranged a joint video conference where I explained to the parties my perspective of the dispute - what the key issues were, what could be the result if it went to court and what the alternatives for each party looked like. I then spoke individually with each person to test out some possible outcomes before making my decision.
After the individual meetings, I communicated my decision to the parties. This was recorded in a Terms of Settlement document which was digitally signed by the parties.
My goal in coming to an outcome for the parties was to take into account the legal position, but also to look at the commercial realities along the way.
In this case, it was clear that the disagreement arose because of miscommunication during the quoting phase. Given the parties had met onsite before the quote was accepted, it should have been that the quote was amended to included clarifications that were made verbally. The fact that this was not done, led to this dispute being possible. Either Ken or Ari could have taken responsibility for making that happen. Neither did.
The outcome
Given that the miscommunication could have been cured by either party following the meeting, it did not seem fair to full hold one party responsible for the whole issue. On balance, the documents seemed to suggest that Ken was in a stronger position given that the quote was for “Full demolition” of the site and no exclusions were noted.
Also, Ken felt that the amount quoted by Ari for removal of the trees was above market and he was confident that he could find someone to do the job at a lower rate.
On that basis, Ken was ordered to pay $1,100 to Ari in full settlement of Ari’s invoice. Ari was not required to remove the trees. Both parties accepted the outcome as a practical one one that gave them closure without delay and excessive cost.
How can this process be used?
This Judge-Judy like process is a useful one to consider when both parties accept that a matter is uncommercial to pursue in court. The value of the dispute is likely to be $20,000 or less but could be larger depending on the clients. Both parties need to be willing to agree to be bound by the Neutral’s decision.
If you would like to explore how you could use this process to manage your own disputes, please reach out for a confidential, no-obligation discussion.
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