Dispute Resolution

Business disputes

Every business will at some point become involved in a dispute.  Most of the time, the dispute can be easily resolved during the normal course of business.  There will be times, however, when a dispute will require closer attention to ensure that it does not blow out of proportion.

The dispute can arise with anybody that a business deals with from day-to-day:  customers, suppliers, distributors, partners, employees, investors and even government agencies.  It is almost inevitable that this will occur, and the key is really to ensure that it is resolved quickly and effectively so that it does not become a costly exercise for all the parties concerned.

While it will of course cost money, it is sometimes actually more cost-effective to involve lawyers at an early stage.  For instance, this ensures that the real issues in dispute (and who is actually at fault) are identified quickly, and strategies for an early resolution are proposed such as:

• Negotiation over the telephone;
• Negotiation by an exchange of correspondence;
• Attendance at a settlement conference;
• Attendance at a mediation;
• Referral to a third party arbitrator;
• Referral to an experienced barrister for an independent opinion; and
• Commencement of legal proceedings (to preserve your rights).

For more information on legal proceedings, go to “Litigation”. (link)

Your lawyers will also ensure that, once a dispute is resolved, it is resolved “once and for all” so that there will be no further legal avenues against you later down the track.

Winthrop Mason Lawyers can assist you by:

• Conducting a factual investigation into the circumstances giving rise to the dispute;
• Providing an opinion as to who is likely to be found at fault in a court of law;
• Proposing strategies for resolving the dispute at an early stage, and in a cost-effective manner;
• Negotiating the best possible legal and commercial outcome for your business;
• Representing your interests at a settlement conference, mediation or arbitration;
• Drafting settlement agreements, including appropriately worded confidentiality and release, discharge and indemnity clauses, in order to protect your interests;

Disputes need not become a stressful or expensive exercise for your business.  For a no-obligation initial consultation, go ahead and give us a call.

Financial Ombudsman Service

The Financial Ombudsman Service (FOS) is a non-government body overseen by consumer representatives and financial services representatives. Its function is to fairly and independently resolve disputes between consumers (including some small businesses) and financial services providers who have appointed FOS as their external dispute resolution provider.

How much does it cost?

FOS is a free service to consumers.  The scheme is wholly funded by financial services providers who subscribe to the scheme by nominating FOS as its external dispute resolution service provider.

One of the drawcards of going through the FOS scheme is that there are no adverse cost implications involved – that is, you will not be required to pay the financial services provider’s legal costs (whatever they may be).  It is not like the court system, where the loser pays.

Who can lodge a FOS complaint?

Only individuals and small businesses can lodge a FOS complaint.

Small business is defined as any non-manufacturing business (including a company) with less than 20 employees, or any manufacturing business with less than 100 employees.

When will FOS have jurisdiction?

FOS may only hear a dispute where it concerns a financial services provider who is a member of the FOS scheme.  A financial services provider includes banks and non-bank lenders, insurance companies, financial advisers, investment managers and custodial service providers.  To find out whether or not a financial services provider is a member of the scheme, you can search the FOS website here (link to http://www.fos.org.au/members/search-for-members/).

The dispute must also relate to whether or not the member financial services provider has complied with its contractual obligations, or other obligations imposed under Australian law.

FOS will not have jurisdiction where the dispute is simply about investment performance (except where the underlying issue is non-disclosure or misrepresentation), the amount of the fee being charged (unless the underlying issue is non-disclosure, misrepresentation or the incorrect application of the fee), or about the financial services provider’s internal assessment of the credit risk posed by the consumer as a borrower.

FOS will also generally not want to be involved where there are already legal proceedings instituted in court, or where the dispute is already before another external dispute resolution scheme.

What are the key risks or challenges under FOS?

For consumers, the key challenge is that, even though it is an informal process, the issues are still determined based on the parties’ underlying legal position.  In order to succeed, therefore, it is necessary for consumers to:

• Structure their case in such a way as to ensure that it will fall under FOS’s jurisdiction;
• Have a proper understanding of their legal rights and obligations;
• Have a proper understanding of their financial services provider’s legal rights and obligations;
• Present only relevant evidence and other documentation;
• Present their submissions in such a way as to clearly address the relevant legal issues;
• Present their submissions in such a way as to highlight the weaknesses in the financial services provider’s case; and
• Calculate their losses in accordance with how a court would normally so calculate;

This sounds a lot like lawyers’ work, right?  Well, in most instances, yes.

Unfortunately, consumers often grossly underestimate both the amount of work and the level of technical skill involved in presenting a strong case before FOS – to their detriment.  They also mistakenly assume that just because they are “clearly in the right”, or that the FOS case manager is sympathetic to their situation, necessarily means that they will win in the end.  However, we have seen too many people with an arguable case spend a considerable amount of time pushing their matter through FOS over the course of many months only to receive an unfavourable determination simply because they have failed to comply with the elements set out above.

For those people, the whole exercise ends up becoming costly, time-consuming and, worse of all, demoralising.

To ensure that you do not fall into this trap, you should always seek advice from a lawyer, particularly from someone who has experience in financial services law.

Are FOS determinations final and binding on the parties?

FOS determinations are final and binding on the financial services providers (by reason of their contractual relationship with FOS).  On the other hand, determinations will only be final and binding on consumers where the consumer elects to accept its determination.  If a consumer disagrees with FOS’s decision, then the only other alternative left is to commence legal proceedings.

Winthrop Mason Lawyers can assist you by:

• Advising you on your prospects of successfully securing a favourable FOS determination;
• Collating all the necessary documents and other evidence to substantiate your case;
• Requesting all relevant documents retained by the financial services provider;
• Drafting your formal submissions on liability and quantum (amount of compensation);
• Representing you at a telephone settlement conference;
• Regularly liaising with the FOS case manager as part of advancing your case;
• Advising you on whether or not to accept the FOS determination or commence legal proceedings.

Especially if your potential claim is over $5,000, we would strongly recommend that you seek legal assistance in preparing your FOS complaint.  Leave nothing to chance.  For a no-obligation initial consultation, go ahead and give us a call.

Relevant Videos

Credit Ombudsman Service Limited

The Credit Ombudsman Service Limited (COSL) is a non-government dispute resolution service overseen by consumer representatives and industry representatives.  Like the Financial Ombudsman Service, its function is to independently and impartially resolve disputes between consumers (including some small businesses) and financial service providers who have appointed COSL as their external dispute resolution provider.

The ASIC-approved scheme currently has over 16,500 participants ranging from credit unions, building societies, non-bank lenders, mortgage and finance brokers, financial planners, investment managers, debt services and a wide range of other financial services and product providers.

How much does it cost?

COSL is a free service to consumers.  The scheme is wholly funded by financial services providers who subscribe to the scheme by nominating COSL as its external dispute resolution service provider.

One of the drawcards of going through the COSL scheme is that there are no adverse cost implications involved – that is, you will not be required to pay the financial services provider’s legal costs (whatever they may be).  It is not like the court system, where the loser pays.

Who can lodge a COSL complaint?

Only individuals and small businesses can lodge a COSL complaint.

Small business is defined as any non-manufacturing business (including a company) with less than 20 employees, or any manufacturing business with less than 100 employees.

When will COSL have jurisdiction?

COSL may only hear a dispute where it concerns a financial services provider who is a member of the COSL scheme.  A financial services provider includes banks and non-bank lenders, mortgage managers and mortgage brokers.  To find out whether or not a financial services provider is a member of the scheme, you can search the COSL website here. (link)

The dispute must also relate to whether or not the member financial services provider has complied with its contractual obligations, or other obligations imposed under Australian law.

COSL will not have jurisdiction where the dispute is simply about the amount of the fee being charged (unless the underlying issue is non-disclosure, misrepresentation or the incorrect application of the fee), or about the financial services provider’s internal assessment of the credit risk posed by the consumer as a borrower.

COSL will also generally not want to be involved where there are already legal proceedings instituted in court, or where the dispute is already before another external dispute resolution scheme.

What are the key risks or challenges under COSL?

For consumers, the key challenge is that, even though it is an informal process, the issues are still determined based on the parties’ underlying legal position.  In order to succeed, therefore, it is necessary for consumers to:

• Structure their case in such a way as to ensure that it will fall under COSL’s jurisdiction;
• Have a proper understanding of their legal rights and obligations;
• Have a proper understanding of their financial services provider’s legal rights and obligations;
• Present only relevant evidence and other documentation;
• Present their submissions in such a way as to clearly address the relevant legal issues;
• Present their submissions in such a way as to highly the weaknesses in the financial services provider’s case; and
• Calculate their losses in accordance with how a court would normally so calculate;

This sounds a lot like lawyers’ work, right?  Well, in most instances, yes.

Unfortunately, consumers often grossly underestimate both the amount of work and the level of technical skill involved in presenting a strong case before COSL – to their detriment.  They also mistakenly assume that just because they are “clearly in the right”, or that the COSL case manager is sympathetic to their situation, necessarily means that they will win in the end.  However, we have seen too many people with an arguable case spend a considerable amount of time pushing their matter through COSL over the course of many months only to receive an unfavourable determination simply because they have failed to comply with the elements set out above.

For those people, the whole exercise ends up becoming costly, time-consuming and, worse of all, demoralising.

To ensure that you do not fall into this trap, you should always seek advice from a lawyer, particularly from someone who has experience in banking and finance law.

Are COSL determinations final and binding on the parties?

COSL determinations are final and binding on the financial services providers (by reason of their contractual relationship with COSL).  On the other hand, determinations will only be final and binding on consumers where the consumer elects to accept its determination.  If a consumer disagrees with COSL’s decision, then the only other alternative left is to commence legal proceedings.

Winthrop Mason Lawyers can assist you by:

• Advising you on your prospects of successfully securing a favourable COSL determination;
• Collating all the necessary documents and other evidence to substantiate your case;
• Requesting all relevant documents retained by the financial services provider;
• Drafting your formal submissions on liability and quantum (amount of compensation);
• Representing you at a telephone settlement conference;
• Regularly liaising with the COSL case manager as part of advancing your case;
• Advising you on whether or not to accept the COSL determination or commence legal proceedings.

Especially if your potential claim is over $5,000, we would strongly recommend that you seek legal assistance in preparing your COSL complaint.  Leave nothing to chance.  For a no-obligation initial consultation, go ahead and give us a call.

Debt collection

Debt collection is an essential part of managing a business.  Poor debt collection practices reduce the cash flow of a business as well as result in loss of productivity and, in extreme cases, can result in insolvency.

There can be a number of steps involved in the debt collection process depending on the nature of the dispute and the amount of money involved.  Bearing in mind time and cost considerations, the steps can include one or more of the following:

• Issuing formal letters of demand;
• Negotiating via telephone or exchange of correspondence;
• Negotiating affordable payment arrangements;
• Commencing legal proceedings, where necessary;
• Seizure of the collateral and other assets of the borrower;
• Arranging the garnishee of the debtor’s wages; and
• Lodgment of a caveat over the debtor’s real estate, where possible.

For more information on legal proceedings, go to “Litigation”.

For more information on caveats, go to “Caveats”. (link)

Note that debt collectors and creditors are required to comply with ASIC’s Regulatory Guide 96 Debt collection guidelines for debt collectors and creditors.  For example, a collector must not:

• Make contact the debtor where it is not strictly necessary or reasonable to do so;
• Threaten action (legal or otherwise) where they do not actually have authority to do so;
• Represent that they have entitlement to certain goods beyond that granted by law;
• Engage in harassment, intimidation or other unconscionable conduct;
• Demoralise, tire out or exhaust the debtor;
• Embarrass the debtor in front of other people (such as their employer).

Lawyers acting for creditors are additionally bound by the Australian Solicitors Conduct Rules, which amongst other things, provide that they must not:

• Make any statement which grossly exceeds the legitimate assertion of the rights or entitlements of their client, or which misleads or intimidates the other person;
• Threaten the institution of criminal or disciplinary proceedings against the other person if a civil liability to their client is not satisfied; or
• Use tactics that go beyond legitimate advocacy and which are primarily designed to embarrass or frustrate another person.

Winthrop Mason Lawyers can assist you by:

• Developing appropriate debt collection procedures for your business;
• Drafting template letters of demand, and other related correspondence;
• Corresponding with the debtor and negotiating prompt payment of the debt owed;
• Advising you on your prospects of successfully recovering from a prospective debtor;
• Commencing legal proceedings on your behalf, where it is necessary to do so;
• Commencing enforcement proceedings once a court judgment has been secured.
• Liquidating any collateral or other assets seized from the debtor;
• Arranging for a garnishee of wages with the debtor’s employer.

Poor debt collection practices can not only be counter-productive, they can also expose you to legal risks which would not otherwise have existed.  For a no-obligation initial consultation, go ahead and give us a call.

Settlement conference

Settlement conferences are simply a cost-effective avenue for disputing parties to get together to try to resolve their differences instead of going to a trial.

The parties may or may not already be involved in legal proceedings, although typically one party would have already instituted legal proceedings before a settlement conference is convened.  This does not have to be the case though, as the parties are free to call a settlement conference at any point in time.

Legal proceedings may have been instituted due to a perceived lack of options (eg. earlier attempts to negotiate have been unsuccessful), for strategic reasons (eg. to put pressure on the other party) or out of necessity (eg. there may be limitation periods which are due to expire).

Winthrop Mason Lawyers can assist you by:

• Advising on a range of alternative dispute resolution processes;
• Advising on your legal position on liability, risks, options and strategies;
• Advising on appropriate strategies for optimising settlement outcomes;
• Negotiating the resolution of the dispute at the settlement conference on your behalf;
• Taking certain steps to protect your interests in the event that  a trial is required;
• Preparing an appropriately worded Release, Discharge & Indemnity document;
• Monitoring the parties’ compliance with agreed settlement terms.

Paying for good quality advice can often save you a lot of money in the long run.  For a no-obligation initial consultation, go ahead and give us a call.

Mediation

A mediation is simply a cost-effective avenue for disputing parties to get together to try to resolve their differences instead of going to a trial.  It is very similar to settlement conference except that an independent third party is involved to facilitate the settlement process.

The mediator is jointly appointed by both parties, and is generally a very senior, well-respected legal practitioner (typically a barrister of many years’ standing).  It is common practice for the two disputing parties to equally share the costs of a mediator, which can range anywhere between $2,000 to $12,000 for a one-day mediation.

The parties may or may not already be involved in legal proceedings, although typically one party would have already instituted legal proceedings before a mediation is convened.  This does not have to be the case though, as the parties are free to call a mediation at any point in time.

Legal proceedings may have just been instituted due to a perceived lack of options (eg. earlier attempts to negotiate have been unsuccessful), for strategic reasons (eg. to put pressure on the other party) or out of necessity (eg. there may be limitation periods which are due to expire).

Winthrop Mason Lawyers can assist you by:

• Advising on a range of alternative dispute resolution processes;
• Advising on your legal position on liability, risks, options and strategies;
• Advising on appropriate strategies for optimising settlement outcomes;
• Negotiating the resolution of the dispute on your behalf at the mediation;
• Taking certain steps to protect your interests in the event that a trial is required;
• Preparing an appropriately worded Release, Discharge & Indemnity document;
• Monitoring the parties’ compliance with agreed settlement terms.

Paying for good quality advice can often save you a lot of money in the long run.  For a no-obligation initial consultation, go ahead and give us a call.

Arbitration

An arbitration is an avenue for disputing parties to have their differences resolved without going to a trial.  It is very similar to mediation except that the independent third party actually makes a determination that is binding on both parties, instead of merely facilitating a resolution.

Due to the court-like function of an arbitrator, the nature and volume of work that goes with preparing for an arbitration can almost be the same as that for a trial.  It is therefore not a cheap process to go through – unlike  settlement conference or mediation – but it can still prove to be a cheaper option than a trial.

The arbitrator is jointly appointed by both parties, and is generally a very senior, well-respected legal practitioner (typically a barrister of many years’ standing or a retired judge).  It is common practice for the two disputing parties to equally share the costs of an arbitrator, which often ranges anywhere between $10,000 to $30,000 if not higher.

The parties may or may not already be involved in legal proceedings, although typically one party would have already instituted legal proceedings before an arbitration is proposed.  This does not have to be the case though, as the parties are technically free to call for an arbitration at any point in time.

Legal proceedings may have just been instituted due to a perceived lack of options (eg. earlier attempts to negotiate have been unsuccessful), for strategic reasons (eg. to put pressure on the other party) or out of necessity (eg. there may be limitation periods which are due to expire).

Winthrop Mason Lawyers can assist you by:

• Advising on a range of alternative dispute resolution processes;
• Advise on the suitability of arbitration for your particular dispute;
• Advising on your legal position on liability, risks, options and strategies;
• Advising on appropriate strategies for optimising settlement outcomes;
• Preparing your case for arbitration, and presenting submissions on your behalf;
• Taking certain steps to protect your interests in the event that a trial is required;
• Preparing an appropriately worded Release, Discharge & Indemnity document;
• Monitoring the parties’ compliance with agreed settlement terms.

Paying for good quality advice can often save you a lot of money in the long run.  For a no-obligation initial consultation, go ahead and give us a call.