AN I.T. DISPUTE
The names of the parties are kept confidential.
The facts in brief:
- This dispute was between a Principal IT contractor and a sub-contractor.
- The Principal Contractor won a major IT contract worth millions of dollars from a major client.
- The Principal had to rely on the sub contractor to perform some of the project work.
- There were 44 different locations of the client that had to be fully integrated into a communication network.
- The Principal replaced the sub contractor following a number of complaints from the Client in order to protect its long-term relationship with the Client.
- However, the Principal still needed to rely on the sub contractor to complete certain aspects of the project work.
- The Principal stopped paying the sub contractor its monthly instalments.
- There was no signed written contract between the Principal and the sub contractor.
- The sub contractor claimed just over 1 million dollars of unpaid fees and expenses.
- The Principal refused to pay on basis that it had to pay for a new contractor to step into the breach, suffered loss of reputation due to the defective work of the sub contractor and had to devote a lot of its own time and resources to avoid losing the project contract.
- This type of commercial dispute, if litigated, could easily tie the parties up in the Supreme Court or Federal Court for years and cost each of them over a $100,000 in legal fees.
To avoid this the parties approached CDMC.
CDMC set up a tailor made dispute management and dispute resolution protocol and blueprint that was designed to resolve the dispute within 6 weeks at a total cost of under $10,000.
The key steps in this protocol and blueprint were:
- Manage the inter party communications to stop the dispute from escalating further.
- Request each party to prepare and send CDMC a history and outline/summary of the dispute as understood by that party with a chronology of relevant dates and events.
- Meet each party separately to get a full understanding of each party’s view of and perspective on the dispute.
- Design a questionnaire to send out to each party designed to get additional facts and information and production of relevant documents.
- Based on the responses to the questionnaires to then design a further set of questions for each party designed to test certain assumptions and to help each party better see and understand the other party’s point of view and to explore options and parameters for settlement.
- Reduce the entire dispute down to an agreed list of chief issues signed off by both parties.
- Schedule a day long Mediation with the aim of getting the chief issues resolved and a binding agreement signed to end the dispute.
A Residential Development Application Dispute
Facts in brief:
This was a dispute between a major land developer who wanted to develop a site to build about 80 new apartment units.
The problem was that one of the homeowners in the designated area for the DA was holding out for more money that the developer was not willing to pay.
The developer made its final offer and that was rejected.
The Local Council was in a dilemma. The DA was in an area designated for higher density residential living. On the other hand its local development plan expressly stated that the Council was against allowing isolated sites in new developments.
Council knew that whichever way it decided the DA – either allowing the development to proceed with an isolated site or rejecting the DA because of the isolated site, it would end up in the Land & Environment Court and cost it a lot in legal fees.
It had a history of disputes with this particular developer. Legal costs per dispute were in the region of $50,000.
This time the Council took a different approach.
It approached CDMC to trouble shoot the dispute between the developer and the homeowners.
CDMC was fully briefed by the Council including with consents from both parties in the dispute to participate in a dispute resolution process established by CDMC.
The timeline given to CDMC to resolve the dispute was about 5 weeks. This was as much time Council could give before it would be obliged to make a final determination on the DA.
The dispute was resolved in just under 5 weeks.
The developer and homeowner made a deal both could live with.
The buy out price agreed on was less than what the owners had wanted but was better than the last best offer made to them by the developer.
From the developer’s perspective the price agreed on would still allow them to make an acceptable profit to make the deal commercially sensible.
The CDMC Process
- Met with each party twice, first to get their side of the story and second time to help each party better understand the other party’s position;
- Brought in an independent valuer to help balance the opposing views re comparative market values;
- Set up a way for the experts to talk to each other and iron out some of the thorny issues;
- Then scheduled a half-day mediation held at the Council Chambers.
At the start of the mediation the developer’s CEO and the homeowners were very polarised and their body language was aggressive (CEO) and defensive and distrustful (Owners).
Three hours later when the deal was done and signed off the CEO approached the owners and wrapped them in a big bear hug and pledged to look after them during the 12-month transition period of the deal (it was an options agreement).
It was smiles and laughs all round.
This is what makes this work so enjoyable. I have ever seen this happen at the end of a piece of hard fought litigation where most often there are no real winners.
A Website Dispute
Facts in brief:
A website developer and SEO/Adwords/Online Marketing services company agreed to do certain work for a business owner client.
This included building a new site and then optimising it for search engines (mainly Google of course) and constructing certain AdWords campaigns to drive traffic to the site.
The client ended up not being happy with the results and requested a full refund of the $20,000 paid to the web developer.
The web developer’s position was that the poor results were not its fault but rather due to the client not following through on the web developer’s instructions and recommendations.
The website developer tried to mend the relationship by offering to do certain additional work free of charge. It did not offer any refund.
The client rushed off to get a lawyer.
The lawyer sent a legal letter to the web developer threating litigation unless a full refund was offered.
There were allegations of misleading conduct.
At this point the web developer looked for and found CDMC to try and avoid the distraction and cost of litigation.
The CDMC Process
CDMC ascertained that there was no written contract.
This substantially weakened the former client’s case re allegations of misrepresentations and misleading conduct.
But it also left the web developer exposed because there was no written document defining the precise services, scope of works and limitations or qualifications regarding level of services to be provided to the client and expressly stating what the client’s own obligations were to ensure that the desired outcomes were achieved.
CDMC opened up a constructive and positive dialogue with the former client’s lawyer, the aim of which was to contain the dispute and commence de-escalating it away from threats of court action to cooperative action that led to:
- Identifying the chief issues
- Testing the credibility and reliability of the evidence relied on by each party on each issue
- Exploring possible options for early settlement, and particularly ones that might have some chance of healing the broken commercial relationship and restoring it to a mutually beneficial one.
CDMC resolved the dispute in 4 weeks.
The web developer’s reputation as an expert in its field was restored as was its credibility and integrity with the former client who resumed being a client.
The developer gracefully accepted that a big part of the problem was poor communication on its part and deficiencies in its project management system.
It agreed to a partial refund of the price for work done to date and committed to achieving certain agreed targets without further charges levied on the client.
The client agreed to a commit to a list of actions that had to be taken each week to dovetail with the work being done by the developer to drive traffic to the site.
As both parties were happy with the outcome they happily agreed to share CDMC’s costs, which totalled about $3,500 to complete the dispute resolution plan.
Had the dispute been litigated it would have easily run up a total legal bill for each party exceeding $25,000.
A Workplace Bullying Dispute At A Well Known Public Hospital
Facts in brief
The hospital appointed a new CFO.
The new CFO did not get along with one of the senior accounting managers in the hospital’s finance and accounting department.
The CFO had not been in the job for more than a month before the Head of Accounting made a complaint of bullying.
This dispute had real potential to get nasty very quick.
The hospital brought in an external investigator to investigate the complaints made by the Head of Accounting.
The Investigator was unable to substantiate most of the complaints due to lack of evidence. In these situations other employees don’t like to step forward to indict their boss, so they stay silent.
During investigation of the complaints the Head of Accounting went on stress leave.
When the investigator findings were made available to her she felt devastated. She could not return to work, reporting to the CFO, without certain protections in place.
She faced the prospect of having her employment terminated if she did not return to work.
Someone referred her to CDMC and we accepted the assignment.
The CDMC Dispute Resolution Blueprint
The first thing we did was approach the CEO of the Hospital requesting a face-to-face meeting.
We outlined a protocol to deal with this dispute discreetly but quickly as it was in the hospitals and the employee’s best interests to have it resolved fast and without litigation. The hospital agreed.
We had three different round table meetings with the hospital CEO and the Head of Human Resources.
We explored a number of settlement options. Returning to work, to same position reporting to the CFO, was not a viable option.
In view of the investigation findings the hospital had no leverage to caution the CFO or attach any special conditions to the way she communicated with the Head of Accounting.
Both parties believed that an exit strategy was the only viable settlement option.
The parties failed to reach agreement on a payout figure.
The hospital then referred the matter to their lawyer, to take over the negotiations.
After a further few weeks of negotiations a deal was struck and implemented via a Deed of Release.
Had the matter gone to court it would have taken close to two years to get a decision and each side would have incurred legal costs well in excess of $50,000.
A Partnership Dispute
The facts in brief
There were three partners in a Technology Company that had produced some fantastic education programs and software for mid to large companies to assist them with their recruitment and human resource management.
The company had expanded into the USA.
Two of the partners were married. They fell out and eventually divorced. As part of the divorce settlement the former husband became a silent partner. The former wife and the other partner ran the daily operations of the company.
This went well for a while but then relations between the active partners and the silent partner started to deteriorate and become tense. It got to the point where the two partners running the company felt that they could not continue to do so due to interference by the silent partner.
When they approached CDMC to try and trouble shoot the dispute for them, the real objective of all partners was to make the company ready for a sale to a bigger operator – a buy out. Millions of dollars were at stake.
If they succeeded is working out a way to work cooperatively together to achieve the sale they would all walk away with millions in their pockets.
On the other hand, if the dispute continued to fester and disrupt the sale they could end up with one of the partner’s seeking a dissolution of the partnership via Supreme Court proceedings and the market value of the company would tumble and they would all be losers.
The CDMC Dispute Resolution Process
The first thing was to take firm control of the communications between the partners. They had become toxic and highly damaging. So a protocol was set up to stop this from further escalating and disrupting the dispute resolution process.
We then worked on getting a good understanding of each side of the dispute – the active partner’s perspective and the silent partner’s perspective. This was done mainly using skype for one on one sessions and then eventually group sessions where we could explore certain discreet issues in the dispute.
We also created and dispatched tailor made questionnaires to each of the parties and the information gained from this was invaluable in allowing us to identify the key issues and possible avenues/options to steer the parties to a deal that would allow them to collaborate on the sale of the business.
It culminated in a daylong mediation session.
Many of the key issues were resolved at the mediation but some matters remained unresolved. We agreed on some further steps to be taken to address those remaining issues.
It was a difficult dispute to manage due to the animosity and lack of trust that existed between the two sides to the dispute.
The main agreement reached outlined the steps to be taken to prepare the company for sale and then to take it to sale. This covered all critical expenses that would have to be incurred from third parties such as accountants and brokers so that future dispute over such matters was avoided.
A SYDNEY FLORIST – A DISPUTE WITH THE SUPPLIER
Facts in Brief
A lady who had a florist business in Sydney was referred to CDMC when her main supplier of flowers had her lawyer write a letter of demand to her.
The message was pay up or we will sue you.
The debt was about $50,000.
The florist had been relying on the suppliers credit for too long to supply the flowers she needed but her business was then running at a loss and she had no plan to dig herself out of the debt hole.
On top of this, she was recently separated from her husband and was moving towards divorce. Money that might have been there to help her pay down the debt was now no longer accessible.
The CDMC Dispute Resolution Blueprint
The first thing we did was start up a dialogue with the supplier’s lawyer.
We made it clear that we were committed to finding a way for the debt to be repaid by instalments and at same time find a way for the debtor florist to turn her business around so that at the end of each month she had sufficient surplus revenue to pay the debt down and cover her own living costs.
Two things had to happen, and fast.
First, she had to move to better premises and on better lease terms. Second, she needed an investor/business partner to give her some new capital.
Luckily her old lease was near its end and so she could start immediately to find better premises.
She set to work and found the right place and managed to secure the lease on better terms than the old lease.
This produced immediate savings. The Location was also much better to attract more custom.
And yes, she found a willing investor who also wanted to learn how to be a florist – A perfect match.
We negotiated the terms of a Deed with the Supplier/Creditor that fully acknowledged the debt and included an agreed instalment plan to get it paid off over 2 years.
The Supplier agreed to keep supplying the florist but on much tighter credit terms.
The new business is doing well. The supplier is happy, the florist is happy and the investor/student is happy. A win/win all round.
Had the dispute ended up in litigation it would have spelt the demise of the florist, and she would most probably have had her business sold off for whatever the supplier could get and then she would have been sued for the unpaid balance and driven into bankruptcy.
In matters such as this, it just takes a little creativity and initiative, and a cooperative stance by the creditor, and the problem is managed and resolved without any need to go to court.
It took about 6 weeks to resolve the dispute and the total costs for the florist to turn the situation around was about $8,000. She now has a much stronger business and the debt is under control.
Wills & Estates – Claim For Family Provision
Every year hundreds of claims are made under the Succession Act for what is called “family provision”.
This happens when someone dies and leaves a Last Will and Testament in which the testator states how his or her estate is to be distributed to certain named beneficiaries.
Often someone who was expecting to be provided for in the Will isn’t or complains that the testator failed to make adequate provision for him or her and therefore wants the Supreme Court to make an adjustment to the Will in order to make proper provision for the claimant.
Most of these claims are made by children or other close relatives of the deceased.
I recently mediated one of these types of disputes where the testator left the bulk of her estate to a 41-year-old granddaughter (over $1.3 million) and just a few thousand to her only son now aged 70. The son filed the claim for family provision.
The mediation was requested soon after the claim was filed in court and before the parties had incurred huge legal fees.
Such claims, if fully litigated, can cost a lot of money, and this has the potential to seriously diminish the value of the residual estate.
The parties decided to mediate early in the hope that the dispute could be resolved without consuming 2 years of their lives and draining about $100,000 out of the net value of the estate.
The CDMC Process and Outcome –
The first step was to get each party to exchange certain information with each other to help them better understand each other’s perspective, including their current financial situation and future needs.
The dispute was a bit complicated because the granddaughter was the biological daughter of the claimant, but born was born as a result of a secret affair her father had whilst married.
She was raised by her aunt and grandparents and only found out who her biological father was when she turned 20. They never managed to forge an emotional bond or a normal father daughter relationship.
The dispute was further complicated by the fact that the granddaughter’s marriage had just broken up and she had two young children to care for and the main asset bequeathed to her in the Will was her grandmother’s house where she had grown up in the care of her grandparents and where she had later cared for them in their old age.
It was also the house where her children had lived since they were born.
Because of that history, the granddaughter was not prepared to countenance the sale of that house under any circumstances in order to raise funds to pay extra provision to her biological father.
Finally, the case was complicated because both the granddaughter and her father had health issues the management of would require private funding not covered by Medicare.
Both parties attended the mediation accompanied by their lawyers (barrister and solicitor).
The key point in this Case Study is that I was able to achieve a successful outcome between the parties only because of the assistance given by the two teams of lawyers.
Often, in cases of this nature, each lawyer’s approach and attitude to the other side’s claim or defence, will dictate whether or not a deal can be done early and before full trial preparation.
So it is easy for mediation to fail if the two parties legal positions are poles apart so that each party’s financial expectation becomes irreconcilable.
This is exactly how it was when I commenced the mediation of this dispute.
The major issue was that the only way the granddaughter could raise sufficient money to meet the minimum financial needs and expectation of the father to achieve settlement was by selling the house.
She was not prepared to do this, and if no way around this impediment could be found, she would not hesitate to go to trial.
The initial gap between the parties’ positions was over $400,000.
The parties themselves were so locked up in their own emotions and bitterness that they could not think laterally to find a solution.
Luckily, the lawyers who attended this mediation were of the creative sort and therefore much of my time, to try and resolve the impasse, was spent in discussion with the two sets of lawyers rather trying to work directly with the two parties themselves.
This was the sort of case where I was able to effectively apply my own knowledge and experience in this field of law to conduct highly effective discussions with the lawyers representing the parties.
A mediator who lacked such expertise and experience would not have been able to do this.
This raises an important issue about Mediators.
There are many mediators who adopt the view that a mediator should never offer any suggestions as to HOW the dispute might be resolved, but should confine himself or herself to simply helping the parties (including their lawyers) progress their negotiations by helping them (1) identify the key issues and (2) explore those issues to seek possible ways to reach settlement.
In a generic sense, this is the true role of a mediator – simply to facilitate and to help dissolve roadblocks and impasses. But, in my view, there are times where a mediator who has the right background expertise and experience, needs to become more directly involved if that will help get the parties over the line.
After the first 60 minutes of this mediation it became clear to me that it was going to end in failure simply because the two lead lawyers were blocked in their own ability to find a solution.
They had nothing more they could take to their clients to find a way through or around the $400,000 roadblock.
When I saw this, I realised that there was a way to dissolve the roadblock and move the parties closer together, but to make it happen I would have to focus on opening the lawyer’s eyes to what it was.
This is what I did and it worked and the $400,000 gap immediately started to close.
The key to this was to get the father to recognise that his daughter’s LIMIT as to what she would offer to him at mediation was controlled by two forces – (1) her emotional attachment to the house and her refusal to countenance its sale to pay him more; and (2) the limit of her borrowing capacity.
The big shift happened when the father accepted that he should not force his daughter to have to sell the house and should rather focus on structuring a deal that depended on what the daughter could finance via bank loans.
Once this shift happened, all parties could focus on the issue of what the daughter could achieve by way of loan finance.
In this context the father trimmed his own expectation and needs down to the bare essentials, and culled all non-essential or core needs from his list.
It came down to three things – having enough to buy a better house to suit his needs relating to age and health; paying off his debts and getting a new car.
This brought down his total claim to a figure that was achievable for the daughter via loan finance. Part of that total could be financed immediately and the balance over a further period of two years.
The skill of the mediator here is to shift each party’s perspective to the point where each of them comes to the realisation that a deal is achievable TODAY and that this deal, although not the ideal outcome each wants, is better for each of them (for reasons each can clearly see and accept) RATHER than taking their chances in court and staying locked into litigation and the stress and costs of litigation for another 12-18 months.
Workplace Investigation Of Bullying Gone Off The Rails
Jenny was a teacher at a well-known private school.
She taught children who had English as their second language (ESL).
She was a highly qualified teacher and had been in this teaching role for many years.
She worked in a division of the school with a number of other teachers.
She had a falling out with a teacher of similar rank to herself but who was the supervisor in that division.
The situation between them gradually became worse and Jenny felt that her supervisor was deliberately trying to undermine her.
Jenny became aware that her supervisor was saying things to other teachers that were disparaging of Jenny and of her professional abilities.
This led to a number of ugly confrontations between them in front of other staff.
This led to Jenny being given a number of warnings that laid the ground for the school terminating her employment.
Jenny felt she was being set up by her supervisor who wanted to get her sacked.
Jenny lodged a complaint with the school HR manager alleging bullying and harassment.
The school, by its own internal policy, had to investigate the matter.
Jenny requested a mediation.
The school decided to appoint an external mediator to conduct a workplace investigation and provide a report to the school.
Jenny felt that the mediator failed to conduct a proper process and she totally lost trust in the process adopted by the mediator.
The mediator’s report said that she found no basis at all for the allegations of bullying and harassment and pointed the finger at Jenny as being the main instigator of the problems.
As a result, the school sent Jenny a termination letter, terminating her position at that school but offering her the chance of a transfer to another school. Jenny rejected the deal because the other school was much further away and the daily travel would be too much for her.
Jenny’s mental state deteriorated and she was diagnosed as suffering from depression.
CDMC National’s involvement
Someone told Jenny about CDMC National.
Jenny asked to retain CDMC on her own behalf to try and negotiate a better outcome for her with the school.
Jenny agreed It would be better for her to move to another school, but she wanted time to find a better opportunity that what had been offered to her.
But to get a position with another private school, she had to have a good reference from her old school.
The school was refusing to give her a written reference.
Steps taken by CDMC to achieve a successful outcome –
- Firstly, we got very clear on Jenny’s perspective on the facts as to the cause of the problems between her and her supervisor.
- We then carefully reviewed the external mediator’s report to the school and identified a number of serious gaps in how the mediator had accumulated and evaluated the available evidence and also relevant witnesses that had been totally ignored by the mediator.
- We then called a meeting with the school’s HR manager and pointed out these gaps and made out the case that the investigation process was open to valid criticism.
- The HR Manager conceded there were deficiencies in the mediator’s process and was receptive to finding a way around the problem.
- The solution found, and agreed to by the school, was that nothing adverse or prejudicial to Jenny would be contained in the school file. The file would show that Jenny resigned for personal reasons.
The file record would state that Jenny was a competent ESL teacher. If any other school enquired about her past record, the response would be to confirm she had a sound record of employment and chose to leave for personal reasons.
- Jenny was satisfied, and so was the school.
- She went on to find another suitable appointment at another school that was not too far away from where she lived.
- Jenny was not in a strong bargaining position because she could not afford to litigate against a rich catholic school.
- The school, however, did not want its reputation tarnished.
- Neither party wanted to litigate the dispute.
- Jenny lacked the ability to negotiate directly with the school as she was too emotionally involved and hurt by the poor outcome of the external mediator’s investigation. She felt extremely vulnerable.
- Jenny and the school benefited by CDMC’s involvement to finding a solution both could endorse and live with.
- Assisted or facilitated negotiation can often be the best option to resolve a dispute quickly and cost effectively.