Alternative Dispute Resolution
Bailment law disputes - February 2024
Bailment law disputes - February 2024
Alternative dispute resolution (ADR) describes a range of processes for resolving a matter outside of court.
This resource will assist in identifying what ADR processes may be appropriate for resolving a matter outside of court and your role as a legal representative. There are different types of ADR. This resource describes the most commonly used types: negotiation, mediation, and conciliation
It is most time and cost effective to attempt resolution via ADR before commencing proceedings. However, ADR can be used at any time during a dispute, including before you start a legal case, while a case is going on or even after a court or tribunal has made a decision.
This resource includes:
ADR service providers can be located through the NSW Communities and Justice page at the following link: Alternative Dispute Resolution service providers (nsw.gov.au)
If a dispute arises, and it cannot be resolved by the consumer and the service provider through negotiations, a consumer may seek to escalate the dispute by issuing letter of demand to the service provider. The letter may be prepared and sent by the consumer or with the assistance of a legal professional or other advisor.
A letter of demand is written communication sent by one party to another requesting payment or some other specific action to be taken to remedy a situation. Its primary purpose is to formally communicate the claim or grievance to the other party and provide them with an opportunity to address the issue before resorting to legal proceedings.
We have prepared a template letter of demand that you can download and adapt to your client’s purposes, here:
This can be used by the consumer (or their legal representative or other advisor) to communicate to the service provider the consumer’s concerns and demands to resolve those concerns. The template includes guidance notes and tips to enable the consumer to adjust the letter as needed and on a case-by-case basis.
Whether the service provider complies with the letter of demand at first instance or not, the letter of demand can serve as a first step for the parties to engage in negotiations or settlement discussions (or if those processes are unsuccessful – court or tribunal proceedings).
Negotiation is a voluntary and informal process where parties involved in a dispute communicate directly with each other to reach a mutually acceptable resolution. It is often the first step in resolving a conflict.
Negotiation can occur:
informally between parties themselves;
formally, with parties’ legal representatives or other advisors present; or
between only the parties’ legal representatives or advisors.
To prepare for a negotiation, you should:
Familiarise yourself with the facts of the matter and identify the various legal and non-legal issues that arise. You should be completely across the background of the matter and the events leading up to the parties’ dispute, so that there are no surprises in the negotiation;
Understand what each party wants. It can be easy to be swept up in the process and rhetoric of a negotiation, but never not lose sight of why the negotiation is happening in the first place. Having the client’s preferred outcome front of mind when engaging in any negotiation will keep them focussed and ensure arguments are coherent.
Seek the client’s instructions and make sure to understand their expectations and boundaries. The client should be able to clear identify not only on their preferred outcome, but also any matters on which they are unwilling to compromise. Conversely, they should also identify any matter on which they might be prepared to compromise, in the interest of resolving the dispute.
You should ensure that you understand the risk appetite of the client and have a formulated BATNA (Best Alternative To Negotiated Agreement) and WATNA (Worst Alternative To Negotiated Agreement) in place. Having a BATNA and WATNA is important and will prove to be effective in any of the ADR processes outlined in this Handbook.
Some examples of the questions that the client can be asked prior to the negotiations are as follows:
Remember that all discussions and offers should be made ‘without prejudice’ to protect the client should the matter go to court at a later date. A ‘without prejudice’ communication cannot later be used as evidence against the client in any court or tribunal proceedings.
During the negotiation, focus on the dispute and not the individuals themselves (or their personalities). It may be beneficial to start with determining any common ground the parties have, and then moving to the issues in dispute and how to resolve them.
Take detailed notes of the negotiation. If an agreement is reached, it is essential to make a written record and enter into a binding agreement as soon as practicable following the negotiation. If you wait too long, you risk either party changing their mind or otherwise backing out of the agreement.
If the parties are unable to reach an agreement at the negotiation or soon afterwards, you can attempt another form of ADR, as described below, or proceed to commencing court proceedings.
Mediation involves an independent third party, the mediator, assisting the parties to identify the issues in dispute, come up with options and alternatives for resolution, and ultimately try to reach agreement. The mediation will almost certainly be conducted on a confidential and without prejudice basis.
Before entering into the mediation process, you should advise the client on their rights and responsibilities and present them with their options in the event an agreement cannot be reached.
Mediation is an appropriate ADR mechanism where the parties:
feel comfortable and safe having a conversation with each other;
want a third person to assist the discussion;
want to be in control of the outcome and make the decision themselves (as opposed to having the decision made by an independent third party);
want to maintain the best possible ongoing relationship with the other participants;
want to keep discussions confidential; and/or
want to find innovative solutions to a problem.
The role of lawyers (or advisors) in a mediation will usually depend on the type of case. For example, in disputes between individuals with a personal relationship, there may be several issues requiring resolution that are not just about legal rights. In these types of cases, a more informal mediation process between only the parties and the mediator, or with the lawyers (or advisors) in attendance but taking a passive role, is generally more effective. For large or complicated disputes that involve mainly legal issues, it is more common to have lawyers (or advisors) present and actively involved in the mediation process.
You should discuss with the client beforehand how you intend to approach the mediation, including how they should communicate information to you during the mediation and what role they should play. Take the time to ensure the client fully understands what to expect at mediation—while you might attend several mediations as a lawyer (or advisor), this may be the first and only mediation the client attends.
Once again, you should ensure that you understand the risk appetite of the client and have a formulated BATNA (Best Alternative To Negotiated Agreement) and WATNA (Worst Alternative To Negotiated Agreement) in place. Having a BATNA and WATNA is important and will prove to be effective in any of the ADR processes outlined in this Handbook.
When selecting a mediator, it is worth considering engaging a mediator with past experience dealing with bailment law or with disputes with similar factual circumstances. This is because bailment law is a discrete area of the law, and it may assist to have a mediator who understands all the nuances that may be present.
You may also need to consider whether a pre-mediation conference is appropriate and/or necessary. A pre-mediation conference is a preliminary meeting that occurs before the actual mediation process begins. It gives the parties an idea of what to expect at the mediation and provides the mediator with a snapshot of the dispute, which may assist them in preparing for the mediation.
Ensure you tailor your mediation approach to the particular circumstances of the dispute before you. Your mediation approach relates to any number of the following:
The number of people from the client’s side that will be attending the mediation: For example, if the other side is self-represented, it may be inappropriate to have numerous lawyers (or advisors) in attendance. If the dispute is particularly large or complex, and especially if the other party is anticipated to have multiple representatives, it could be a strategic choice to also bring in several attendees from your side.
Your negotiation style. For example, if the other side is self-represented, you may be better placed speaking in plain, simple terms and avoiding any legal-ese. Any mediation is unlikely to be successful if the other side cannot understand your position.
Location: the location of the mediation can also affect peoples’ attitudes. Usually, a neutral outcome is preferable, so that all of the parties attending the mediation are at ease.
Conciliation is where an independent third party, the conciliator, helps parties in a dispute to identify the disputed issues, develop options, consider alternatives, and try to reach an agreement.
Conciliation may be voluntary, court ordered or required as part of a contract. It is often part of a court or government agency process.
The role of conciliators is similar to that of mediators except that the conciliator may also:
have specialist knowledge and give the participants some legal information;
suggest or give the participants expert advice on the possible options for sorting out the issues in their dispute; and
actively encourage the participants to reach an agreement.
Conciliation is likely suitable for the client if they:
want to reach an agreement on technical or legal issues;
want assistance with the process;
want to make the decision with the other participants involved; and/or
want advice on the facts in their dispute.
Conciliation may also be suitable if the parties have tried mediation and still cannot reach agreement with the other party. This is because the conciliator may take a more active role in suggesting solutions and proposals to bridge the gap between the parties.
The legal representatives can usually be present during conciliation, though some conciliation processes do not require lawyers (or advisors) to participate. In some cases, experts may also be present. Whatever the arrangement may be, this should be discussed with the conciliator before the process begins.
If the above ADR mechanisms are unsuccessful, you may consider making a claim in court.
The steps and processes for commencing court proceedings are described this resource:
This resource was last updated on 14 February 2024. This is legal information only and does not constitute legal advice. You should always contact a lawyer for advice specific to your situation. You can read our full disclaimer here: Disclaimer and copyright for our Disaster Legal Support Resource Hub – Justice Connect.