It is no secret that legal proceedings are time consuming and expensive whether you are the one making the claim or the one defending a claim. It is therefore often the case that the best option for all parties is resolving civil disputes without commencing legal proceedings. In saying that however, resolutions can occur even after legal proceedings have commenced.
This article will provide information on alternatives to legal proceedings for resolving civil disputes.
Offer of compromise before commencing proceedings
If you are the Claimant or potential Claimant in the matter, you would normally have to notify the Defendant or potential Defendant what is commonly referred to as a “Letter of Demand” or “Notice of Demand”. This letter or notice sets out the Claimant’s demand and is usually the first step towards commencing legal proceedings.
However, in addition to sending a Letter of Demand, it may be a good idea to make an offer to compromise. Conversely, when a Defendant receives a Letter of Demand from a Claimant, the Defendant themselves can respond by offering a compromise.
Offers of compromise if accepted have obvious benefits. Firstly, it is more likely that offers of compromise would be adhered to compared to a court order compelling someone to pay. This is because by the time an order is made, the unsuccessful party may have exhausted their funds defending the matter. Secondly, resolving civil disputes by way of a compromise means that parties avoid the tedious, costly and time-consuming court process.
Offer of compromise after commencing proceedings
Even if legal proceedings have commenced, this does not mean that it is impossible for the parties to resolve the dispute without proceeding to trial. Firstly, as part of the court process, Pre-Trial Conferences (if in the Magistrates Court) or Mediations (in the District Court and Supreme Court) are usually compulsory steps in the court process and occur relatively early on in the proceedings.
However, in actuality parties, can settle the matter at any point up to the trial, which may be many months or even years from the commencement of the proceedings. To do this, parties file Consent Orders, which are a set of orders whose terms and conditions the parties agree to be bound by.
If legal proceedings have commenced and the party that wishes to make an offer of compromise is represented by a lawyer, then that party has the option of making a particular kind of offer called a Calderbank Offer.
A Calderbank offer is derived from the principles of a well-known 1975 case called Calderbank v Calderbank. That case established the principle that if a party makes an offer and the other party rejects it and at the conclusion of the trial that other party is successful but is awarded a judgment that is less than the offer that was made, then that party will be ordered to pay the legal costs of the unsuccessful party.
As a result, if a party makes an offer, it is very important that it is considered seriously before a decision is made to reject it. Calderbank offers are therefore often times used for tactical purposes to pressure the opposing party by encouraging them not to drag on the legal proceedings unnecessarily.
Deed of settlement
If parties are able to agree on a resolution, it is recommended that a Deed of Settlement be entered and executed. A Deed of Settlement is a contractual agreement whereby the parties explicitly set out the terms and conditions of the resolution. With regards to a claim for money, for a Claimant, the Deed of Settlement ensures that the Defendant will comply with its obligation to pay the Settlement Sum as if it is breached, it allows the Claimant to make a claim against the Defendant under the Deed which is significantly easier than having to prove their claim.
For a Defendant, it is also advantageous in that generally speaking a Deed of Settlement will include a “bar to litigation” clause whereby the Claimant is restricted from claiming against the Defendant.
It is highly recommended that you obtain legal advice prior to considering a Deed of Settlement.
Alternative dispute resolution
Increasingly and more commonly, parties are electing to participate in various external alternative dispute resolution processes such as arbitration in the interests of resolving civil disputes. There are numerous forms of alternative dispute resolution and they are often advantageous in that they offer a more cost and time efficient way for parties to settle their disputes.
Sometimes, contracts and agreements have clauses which make it compulsory for parties to attempt alternative dispute resolution before commencing legal proceedings. Parties should therefore always check the contract or agreement that gave rise to the dispute for clauses that compel alternative dispute resolution as prematurely commencing legal proceedings may result in the proceedings being stayed (put on hold) or in a worst case scenario, dismissed.
GTC Lawyers has a team of highly trained expert lawyers who are more than capable of advising and assisting their clients any resolution process whether it before or after court proceedings have commenced. Each solicitor will carefully review the merits of the matter and provide sound advice as to maximise the chance of the dispute being resolved on favourable terms.
For more information on this process or on any of the associated elements or processes for resolving civil disputes, please contact Go To Court Lawyers.